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2 ------------------------------x
4 v. S2 07 CR 541 (RPP)
5 DANIEL B. KARRON,
6 Defendant.
7 ------------------------------x
8 June 3, 2008
9 9:20 a.m.
10
10 Before:
11
12
12 District Judge
13
13
14 APPEARANCES
14
15 MICHAEL J. GARCIA
17 CHRISTIAN EVERDELL
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25
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15 comment?
17 backdoor the fact that they don't have records. They brought a
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22 entries.
24 address and let us know what entries they are talking about.
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1 what entries in advance that they are talking about, but the
11 Books ledger that we have been talking about, but it's just
12 that, a snapshot.
16 document, you save it, you print it out, that's what we have,
20 expenditures?
22 expenses that were paid for using grant money that should not
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1 payment of that?
4 I've told Mr. Rubinstein numerous times. The way we are trying
7 dispute that there is some confusion about the books and it's
11 were misapplied.
24 Mr. Rubinstein?
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20 worked with the defendant in his company, who are going to tell
21 us that when they worked with him they would make certain
23 again into a grant expense when they have told him repeatedly
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3 to elicit --
6 way.
11 become obvious why it's relevant that the defendant then went
16 I mean the jury is going to have a hard time. Not all of these
17 jurors have a law degree or what have you. If they don't know
22 they are going to talk about some of the examples where you
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1 relate to expenditures --
6 the government auditor that those were the types of things that
8 forth, and they are going to relate back to those topics with
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5 together.
9 together.
13 testimony.
23 perfectly valid.
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1 basically saying, that the way you are approaching it, you need
5 extent --
7 I have proceeded the other way myself. But you do whatever you
9 and you deal with the expenditures first and then you have a
12 to.
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5 issue of what the binders contain, and that your Honor was
13 (Recess)
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1 (Jury present)
8 that need to be taken up before you get into the jury box.
14 and the excerpts are what they are going to show on the board
21 you have freedom to look at the books and with respect to that
24 evidence already.
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1 to go ahead.
4 THE COURT: Ms. Lide, you are reminded are you still
5 under oath, and the jury is instructed that any time a witness
7 of court procedure must remind them that they are still under
8 oath. You are not to draw any inference from the fact that the
9 court reminded them they are still under oath. All right.
14 is.
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3 without objection.
9 objection.
13 management division.
20 BY MR. KWOK:
21 Q. Ms. Lide, are you personally familiar with the rules and
23 A. Yes, I am.
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8 the budget?
9 A. Yes, there are. For any given budget year, for the amount
12 in the budget.
15 A. They must ask for permission and get written prior approval
18 A. They must ask for permission and get written prior approval
21 A. No.
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13 the actual start date of the project can be charged to the U.S.
14 government.
15 Q. How do grantees know about all of these rules that you just
16 described to us?
24 rules and regulations, ask if there are any questions, and make
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7 meetings?
19 think you better take out your books and look at the excerpts.
23 page. I'm just directing Ms. Moussa to the bottom part of the
24 page.
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1 can read the whole thing on the board? You are using less than
2 half of the screen. You're still using less than one half of
3 the screen. You better get someone there who knows how to use
4 it.
8 the screen.
16 eyesight, but the jury -- can all the jury read that, or does
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5 also have the jury binders there so they can look at the paper
6 copy if they can't see the copy on the screen. The documents
9 when you show these things on the board you have a laser or
10 something like that to point to the exact language that you are
13 BY MR. KWOK:
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6 MR. KWOK: Ms. Moussa, can we have the next page up?
10 page 6.
12 binder, your Honor. It's the instructions for form NIST 1262,
13 item K.
16 page 6, I presume you mean page 7 when you say the next page.
23 your Honor. It's the next page in what has been given to the
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9 with only this ATP project but rather are incurred by all of
11 Q. And when do you typically hand out this booklet that we are
18 2.
24 Technology Program.
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8 they get the document that says you are now a recipient, this
18 need prior written approval for any change in the budget over
20 Q. And what does it say your obligations are if you create new
23 category.
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2 says?
12 disposition certification."
15 performance" --
21 officer, the recipient shall report to NIST every two years the
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6 value of $5,000?
9 A. Right.
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19 apply, and we are very clear at that. But again once the grant
24 document?
25 A. This is the Power Point presentation that was used for the
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1 kick-off meeting.
16 such as you must hire someone with this expertise, or you must
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7 point. I will ask the witness to explain the last item, ATP
8 audit guidelines.
12 one and an audit after the project ends, and these are the
17 award?
19 whole set.
22 Honor.
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4 a --
22 about it.
24 award package.
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2 the recipient.
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1 Q. Now, Ms. Lide, are you familiar with the term, fringe
2 benefits?
3 A. Yes.
13 BY MR. KWOK:
15 how fringe benefits can be paid for using grant money as part
19 benefits.
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2 benefits --
3 A. Well --
14 A. A company must --
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6 go to Exhibit 3?
22 point five.
23 Q. Ms. Lide --
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3 (Pause)
9 BY MR. KWOK:
18 from our grants office and she knows those documents part by
24 Q. Ms. Lide, did there come a time when you became involved in
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1 A. Yes.
3 A. Yes.
5 he's wearing?
6 A. He's at the second table with the dark suit and glasses
12 MR. KWOK: Your Honor, may the record reflect that the
25 A. In Gaithersburg, Maryland.
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16 on behalf of NIST?
17 A. Myself and two colleagues, Miss Jane Orthwein and Miss hope
18 Snowden.
20 A. Hope Snowden represented the NIST grants office and was the
25 Technology Program.
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8 response.
9 Q. What if, any rules, about the program did you focus on in
10 your presentation?
15 statement.
18 was said.
20 regulations.
23 some of them in the exhibits, the need for prior approval among
24 them.
25 Q. And --
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6 of the project.
8 indirect costs?
11 A. We went over the fact that direct costs are paid by the
12 U.S. government, and any cost share that the proposer, proposed
15 find out whether a request for more occasion, the budget would
16 be granted or denied?
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5 Q. At the time the project was approved at CASI, did you have
7 his research?
11 Center.
14 Q. Ms. Lide, I'm showing you what has been marked for
19 identification.
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9 evidence.
13 All right. 10A.? Ms. Lide, do you know what that is.
20 what it is?
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3 plan first. If that passed, then we asked them for part two,
5 plan.
10 technology is successful.
24 BY MR. KWOK:
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6 CASI.
11 admitted in evidence.
17 BY MR. KWOK:
20 is?
24 Stanley.
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11 letter.
25 of what Dr. Karron received under the previous letter from Mark
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6 evidence.
10 is?
11 A. Yes.
12 Q. What is it?
15 for the company and from NIST and then describing funding
19 BY MR. KWOK:
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2 in evidence.
6 A. Yes.
7 Q. What is it?
11 A. CASI.
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2 12?
4 assistance award.
14 Q. Are those the same rules and conditions that you outlined a
15 moment ago?
19 THE COURT: The only ones that apply are the ones that
24 hole in it.
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5 A. D. B. Karron.
7 A. President.
9 A. 5 October, '01.
13 grantee.
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6 THE COURT: I just don't see where that is, what you
7 read from.
10 grants --
15 (Pause)
17 require, is that --
20 budget?
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2 paragraph seven, cost share. Ms. Lide, what is the cost share
3 arrangement at CASI?
10 actually withdrawn?
13 THE WITNESS: No, sir, over two years. Only 800 could
18 project.
19 Q. Now, Ms. Lide, after the kickoff meeting, did you have any
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14 he --
24 the project?
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8 responsive.
10 rent?
18 difference.
20 A. Yes.
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7 could propose this to the grants officer and see what would
17 A. Yes.
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2 Q. Fringe benefits?
5 benefits?
15 Q. Can you unpack some of those terms, what do you mean when
20 assistance whatever. And one must have a written plan for what
21 one will give one's employees. All employees must receive the
25 plan?
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6 A. Yes, we did.
25 to?
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8 Q. And what did you observe when you went into that apartment?
11 before that.
19 this visits?
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3 A. Yes.
4 Q. Now, Ms. Lide, was this the only site visits you made to
5 CASI?
10 2002.
11 Q. Now, for the other grants that you oversee, Ms. Lide, how
13 A. The typical --
16 Q. Ms. Lide, why did you go to this site visit for a second
17 time?
25 Q. What did you hope to accomplish going back the second time?
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3 major issue in this grant, was to get a budget that the awardee
4 could live with, and yet met the government rules and
5 regulations.
10 year one.
13 figures for the year one, what had actually been spent.
19 on that.
20 Q. And what did you tell Dr. Karron that he had to do?
22 in equipment and who was working on the project under ATP money
24 Q. Now, aside from these two site visits, did you have other
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1 A. Yes. There was one, possibly two times that the defendant
4 meeting?
5 A. Once again, the budget was the big deal, to iron out the
9 meeting?
16 staff --
22 them, justify them and get written approval before the project
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17 A. Yes, I do.
21 project.
22 Q. And which grants and company does this letter relate to?
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4 BY MR. KWOK:
16 A. Yes, it was.
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1 actions.
7 stated my objection.
10 get a break at this point and come back while we have our
11 discussion and see if we can kill two birds with one stone, as
16 Rubinstein?
25 course of business.
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2 403 --
8 some sort?
15 the witness.
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5 different budgets.
7 this memo was trying to relate to was that the numbers in those
8 five different budgets were all different, and this memo was
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4 Judge?
8 possible.
10 (Recess)
11 (Jury entering)
20 30.
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1 identification 31 is?
7 BY MR. KWOK:
8 Q. Let's turn --
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14 A. Yes.
15 Q. What is that?
17 20th.
20 missing a narrative.
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4 on that budget.
13 budget; the second page is the estimated budgets, and then the
20 THE COURT: What was the exhibit 33, when was that?
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17 '03, again two parts to it, the budget itself, and the
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2 the last four budgets, which should have reflected year one
4 Q. When you refer to year one actual costs, what exactly are
6 A. Well, during the course of the first year, one can estimate
8 the year's over, one should have receipts and know exactly how
11 from another?
12 THE WITNESS: Yes, sir. The last four where year one
13 should have been actual, because year one ended September 30th.
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4 especially the actuals for year one, we were concerned that the
13 you.
16 30 is not in evidence?
20 requesting an audit.
24 admitted in evidence.
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4 Q. Ms. Lide, why did the fact that the numbers were
9 exactly what was spent for year one, and when it was unable to
16 costs from the five budgets submitted after year one, and they
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5 Q. When you did speak to the defendant on this issue, what did
8 a --
11 talking to him?
20 correct.
21 THE COURT: And did you discuss with him the fact
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4 ahead.
7 A. Yes, he did.
10 A. Yes, I do.
11 Q. What is it?
15 relate to?
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1 BY MR. KWOK:
4 A. Yes.
5 Q. What is it?
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12 first name.
16 A. Yes, I do.
17 Q. What is it?
19 for the second year of the project. If you remember, for the
20 first year I said that the project could expend $800,000, and
24 A. 7/16/02.
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6 A. Yes, I do.
7 Q. What is it?
8 A. It's amendment 4.
10 A. 7/23/302.
19 evidence.
23 A. Yes, I do.
24 Q. What is it?
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3 A. 12/17/02.
5 25.
12 A. No.
14 money on?
15 A. No, with the exception that we did add year two money. It
19 A. No.
21 one.
23 We would have to put the second year money in the system early
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2 Q. Yes.
8 A. Yes, I do.
9 Q. What is it?
11 award.
24 A. The reason --
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1 here --
11 BY MR. KWOK:
13 number 7?
24 Q. Ms. Lide, what if any involvement did you have with the
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6 and work with the grants officer and grants office to make sure
7 that happened.
8 Q. What happened?
9 A. Nothing.
13 No further questions.
15 Mr. Rubinstein.
17 CROSS EXAMINATION
18 BY MR. RUBINSTEIN:
20 A. Good morning.
21 Q. Now, when is the last time that you saw Dr. Karron before
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3 correctly.
5 A. Either 2004 or 5.
8 A. Yes, I did.
13 A. Yes, I did.
14 Q. And did you submit that -- did you give those notes to
15 anybody?
16 A. Yes.
21 A. Yes.
23 A. Yes.
25 A. Rachel Ondrik.
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2 restricted"?
3 A. Absolutely.
8 351-A and ask you if that is the report that you submitted to
9 the agent.
25 Q. And when did you prepare -- at that meeting, were you asked
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3 A. No.
4 Q. Did there come a time that you were asked to prepare notes?
5 A. Yes.
11 Q. And did the agent discuss the case with you on the first
12 occasion?
14 agent.
15 Q. Did you prepare any notes after you met with the special
16 agent?
18 Q. Yes.
19 A. No, sir.
24 as historical documents.
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1 notes?
9 supervised by NIST.
13 that --
15 Q. And how voluminous would you say that project file is?
17 documents are held, it's probably two feet long. The official
18 file resides in our grants office though, and I don't know how
23 this trial?
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2 Q. Right.
5 A. Correct.
11 if --
14 memory.
15 Q. And did you review this document before you came here to
16 testify?
18 Q. When you say a while ago, how long ago was that?
19 A. Two months.
22 this -- when did you meet the members of the prosecution team
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1 A. Approximately.
3 the agent in 2006 until 2008, did you have any contact with
7 you make any notes at the time that you met with Dr. Karron?
11 Q. And do you have with you the notations of any notes of the
12 formal meetings that you had? Are you talking about the two
13 site visits?
14 A. Correct.
15 Q. And you are also talking about the original meeting with
20 A. Correct.
22 A. Yes, I am.
25 Program.
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4 Q. All right. And you would have seminars, would you not,
7 wanted to apply.
9 A. Yes.
10 Q. Who is she?
18 A. Yes, I do.
22 Technology Program.
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1 A. Barbara Lambis?
12 A. I did.
16 sure.
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1 assessment.
5 or $700,000 a year, but they could just as well apply for one
10 go to small companies.
12 A. Yes.
16 or less.
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3 A. Oh.
7 in developing technology?
10 80 to 90 percent.
16 does not think of the project as a success unless not only the
19 percentages.
21 grants?
24 the fund?
25 A. And that's why I said except for cost share, yes, sir.
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3 A. Um-hum.
4 Q. Of about 5 percent.
5 A. Correct.
6 Q. Right?
7 A. Yes.
9 ATP project?
13 funds.
14 Q. And the money that you give away, where do you put the
15 $800,000 that Dr. Karron was entitled to the first year of the
16 grant?
21 A. Correct.
23 A. Correct.
25 to CASI?
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3 Q. And the costs that are acquired by in this case CASI before
10 not?
16 Exhibit 12.
19 the award period near the top it says the award period is
20 October 1st.
23 withdrawn $800,000.
25 month by month.
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3 correct?
5 month.
8 is a little different.
9 Q. But the bottom line is that under this, he didn't need any
14 a fair term.
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2 A. That is correct.
10 the first month, at the end of the first month they have to
11 justify how much of that was spent on ATP, and anything that
13 account.
16 find it hard to believe that they could get their whole yearly
18 Q. Now, isn't it a fact that Dr. Karron was advised that this
19 grant was approved prior to the October date that you told us
20 in Exhibit 12?
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4 once she signs it, they're Fed Exed out. So it could be that
9 A. No.
10 Q. Are you familiar with 48 CFR? Are you familiar with that?
17 not allow any project costs before the start of the project.
20 here today?
22 Q. 48 CFR 31.
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1 12.
13 Mr. Rubinstein.
15 recipient --
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1 and, yes, that document is part of the award package which the
5 there? CFR --
19 correct?
20 A. Correct.
22 A. Probably, yes.
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3 A. Yes, sir.
5 correct?
7 award package.
10 A. No, sir, that's Fed Exed to the recipient with the actual
11 award that the recipient signs several copies of and sends some
13 Q. And could you describe to the jury in volume how large this
20 mantra.
22 unfinished?
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3 product?
4 A. One hopes that the grantee does and also the United States
6 our nation.
12 them this funding and we are very pleased when they are
16 bragging rights.
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9 correct?
12 A. Yes.
16 Q. And the only special condition was that CASI cofund for the
17 5 percent, correct?
20 condition.
23 Q. And the number that you gave before of 50 some odd thousand
24 dollars, that was for the first 21 months of the grant when the
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5 Q. In fact --
7 that's my recollection.
13 second year?
17 together.
22 Q. And are you aware that after the suspension on June 27,
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8 A. Yes.
16 Q. Isn't it a fact that under the rules of ATP, that you could
24 grant an award?
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8 individual's records.
9 Q. How about whether or not they pay their income tax, do you
10 check that?
17 unless they look at income tax. But ATP certainly does not
25 through.
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2 with ATP that they have cleared CASI to receive $800,000 in one
3 year?
4 A. Do agencies --
7 Q. Let me ask you this. You are familiar with the office of
9 A. Yes.
11 pointed out who was here before, she is with that organization,
12 correct?
13 A. Yes.
16 A. To the best --
24 was put.
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1 to segregate these ATP funds from any other funds that the
5 Q. A system, correct?
6 A. An accounting system.
8 correct?
15 A. That's encouraged.
18 A. Correct.
21 2001.
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1 funding agencies.
8 knowledge.
10 THE COURT: You are just repeating what they told you.
16 Exhibit 3501-DDDDD?
25 A. Sure.
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12 about New York state, attempting to get New York state funding?
15 Q. And you said something about that they had indicated they
24 A. Correct.
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10 A. Correct.
12 A. Correct.
14 A. Correct.
16
17
18
19
20
21
22
23
24
25
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2 behalf of CASI?
5 Q. Now, you say you went to the 300 East 33rd Street where
7 A. Correct.
8 Q. Could you, when you went there, on your -- you went there
13 October.
14 Q. And when you went on this site visit, could you describe to
21 lot of computers.
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2 correct?
7 Q. Well, are you aware that CASI was asked to submit their
9 A. No, I was not aware. But any approval for that would have
13 it's the witness' answers that are the evidence before you.
15 conclusions from the fact that the lawyer asked the question.
16 It's what the witness answers that is the evidence before you.
17 Q. Well, there were -- did you ever hear of the term, site
18 preparation?
24 is that so?
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2 who pays for that, and ATP does not pay for major renovations.
5 direct examination?
6 A. Correct.
10 Q. Well, how about the next line, does it say, reading from
23 responsive.
24 THE COURT: Well, the later the part of it, the last
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3 Q. The proposal, itself, in other words when you met with Dr.
4 Karron, did you tell him that, you know, in 15 years we've
5 never once allowed any kind of site preparation costs; did you
9 disapproves, correct?
21 these items.
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1 correct?
21 A. Yes, sir.
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3 A. Correct.
16 about?
18 think.
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2 were reduced from 375 to 325. However, that was offset by the
6 A. Correct, and they upped the travel and the materials. The
8 Q. The concept of ATP is, don't spend more than the 800,000,
9 correct?
10 A. You cannot spend more than 800,000 during the first year of
12 Q. And when CASI submitted their budget, did anybody from ATP
18 oral review, or there are documents that go back and forth with
19 questions and answers. But the final document is the one that
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7 part of exhibit --
10 THE WITNESS: Oh, it's the one, two, three, the fourth
12 changes.
14 contracting costs.
19 employee.
24 right?
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1 change in this budget that would anyway reflect the request for
5 A. Yes, sir.
7 A. Absolutely.
11 Q. And when you made that site visit, you saw a number of
12 individuals there who were not listed in the budget that was
17 room versus who was in the proposal, and we reminded Dr. Karron
19 Q. And did you discuss who those people were in the apartment?
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4 without compensation?
7 funds.
8 Q. You found that -- by the way, when you would get e-mails
9 from Dr. Karron, what hours of the day or night would you say
12 Q. Yes.
15 Q. And are you aware of any other project that CASI was
16 involved in?
19 have you done, and there were several in the original proposal.
21 A. Correct.
22 Q. And, in fact, you knew that this was the only project that
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1 complimentary research.
4 A. Uh-huh.
11 correct?
13 progress.
15 technically exciting?
17 not.
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2 cumutatively over year one, only $80,000 could have been moved
12 slides.
15 A. Yes, sir.
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2 the cost, your cost and submit a revised budget and a narrative
8 slides, correct?
9 A. Yes, sir.
16 Exhibit 4.
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9 second. Here.
10 Q. That is one of the pages that you show at the first meeting
12 A. Correct.
14 it not, ma'am?
15 A. Yes, it does.
21 A. Correct.
25 A. Correct.
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9 Judge.
13 BY MR. RUBINSTEIN:
16 money, correct?
18 Q. Okay.
20 this time.
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5 THE COURT: You have to wait till the jury leaves, and
9 Mr. Rubinstein?
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2 regs, and I have copies of it, I have enough for the jury, it's
3 not in the sanction program, but we can use the Elmo for it.
11 notice of the fact that it's the CFR reg, either way is fine
12 with me.
20 misleading.
25 into evidence because it's the CFR and you can take notice of
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2 just doing this for the purposes so the jury to follow along
5 CFR.
8 picking, I learned it. And they have a 100 page document and
13 which is not --
23 want to.
25 (Luncheon recess)
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1 A F T E R N O O N S E S S I O N
2 2:00 p.m.
11 (Jury entering)
15 BY MR. RUBINSTEIN:
16 Q. Miss Hayes, I'm sorry, Ms. Lide, CASI was a unique company,
17 was it not, in the fact that it only had the ATP grants that
20 Mr. Rubinstein.
23 BY MR. RUBINSTEIN:
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1 A. Yes.
4 other work and they don't apply to costs, divide up the costs
7 Q. Yeah.
8 A. Or statement?
9 Q. It's a question.
13 wanted the government to share the risk. But they also wanted
14 to know that the for profit company had something at risk also.
16 Omnibus Trade Bill of 1988 established that, and that was the
21 ATP statute for a single company, is that they pay their own
24 Q. And they could request that ATP permit them to pay some
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1 A. They have to pay all their own indirect costs. They don't
5 the project?
7 Q. And how many -- do you have -- are you aware of the amount
9 A. It's my --
13 time that doctor, all the time that Dr. Karron was working on
14 the project. Let's, please, let's get the questions that this
20 Q. Now, the Exhibit 4 you said were slides that you show --
23 Q. Now did you -- when you call them slides, were they
24 actually slides that you put on the screen or you just handed
25 them?
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9 A. Yes.
11 original exhibit?
12 A. Uh-huh.
13 Q. Did you discuss each page with Dr. Karron and Lee Gurfein,
18 page highlighting the key events on each page. There are three
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11 A. Yes.
15 Q. Now, take a look at exhibit four. You see the first page
16 of Exhibit 4?
21 the page -- oh, and I was right, it's November 8th. I do see
25 your Honor.
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7 Honor?
10 Judge.
17 Q. Are you telling us that this is the same document that you
21 and --
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2 A. Uh-huh.
3 Q. Now, do you see that the ATP is, you say that's from the
4 same file?
5 A. Absolutely.
15 speech.
24 name change, that they had to notify and get prior approval?
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1 government exhibit --
10 in writing.
11 Q. Did you ever receive a request for the name change of CASI?
13 Q. Are you --
20 amendment.
21 Q. Now, when you came for the site, the first site visit and
22 you came -- you met with Dr. Karron, did you meet Joan Hayes at
23 that time?
24 A. I have met Joan Hayes. I would assume she was at that site
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2 you went to lunch with Dr. Karron, with your partner, Jane
4 A. I believe so.
7 dining room?
10 pay for your own lunch when you go out with somebody who is a
13 financial remuneration.
14 Q. So there never was a time that Dr. Karron took you out for
16 right?
18 Q. And so did you think that he was making a joke when you
19 testified that he told you if he, if he took you out for a nice
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11 Q. Well, was it, the computers that Dr. Karron had, did they
21 Q. Well, did you discuss with Dr. Karron, when you met him or
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5 needed to be purchased.
7 equipment, correct?
9 Q. And did you ever check the financials to see whether or not
16 A. Yes, sir.
21 correct?
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7 conditions say that they have to account for it every two years
11 understand how you are using the term depreciate, the company
12 depreciating it.
14 they still have the equipment, the government doesn't come and
17 to use?
18 A. Yes.
19 Q. And it's theirs to use until it's not worth $5,000 correct?
22 Q. But after it's not worth $5,000, then they could keep it
23 right?
24 A. Correct.
25 Q. Now, CASI had equipment when they received the grants that
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2 A. Yes.
5 co-funding, correct?
11 money?
23 procurement standards?
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1 correct?
2 A. Yes.
3 Q. Was there any written -- did CASI have any written policies
4 and procedures?
10 A. The company.
16 A. Not --
17 Q. Correct?
19 into an audit.
23 between 2001 and 2002, and -- I'm sorry, and it's -- let's see.
25 2002.
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2 A. It is exhibit 22.
5 A. Yes, sir.
9 a percentage of salaries.
11 is a percent of salary?
13 narrative. If you look at the salaries and then the next block
14 says what are the fringe benefits and it says, you know,
15 34 percent or whatever.
18 It clearly goes with the written document that you have that is
24 the honor system, but it does come to play when the company is
25 audited.
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12
13
14
15
16
17
18
19
20
21
22
23
24
25
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1 BY MR. RUBINSTEIN:
7 budget revision?
9 discussions.
10 Q. And who was involved? Was Lee Gurfein involved from the
11 CASI side?
14 exactly the time frame for each of them, but Lee Gurfein was
15 one of them.
16 Q. And after Lee Gurfein, there was a fellow named Peter Ross?
22 A. Let's see. They did not -- they should have had either Dr.
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3 if possible.
4 Q. And in fact you even sent -- in fact they even sent you at
9 A. Right.
11 CASI?
18 the submissions.
25 last statement.
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2 3501-FFFF and ask you if you can look at that and see if it
9 report, wrong report. Jane opened some e-mail that said it was
10 the wrong report, and Jane and I in the subsequent e-mail were
13 sorry, sir, but just "wrong report" doesn't tell me what kind
14 of report it was.
18 follow.
19 Q. Now, you also, did you not, you wanted to get the actuals,
20 right?
21 A. Absolutely.
24 correct.
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1 2002 that you wanted to get the information back so that you
5 us to recommend approval.
6 Q. And who did you understand was responsible for giving the
8 A. That's not in my --
13 by Dr. Karron?
16 Q. Do you recall being told by Dr. Karron that Joan Hayes was
18 A. Mom?
23 government?
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4 A. Correct.
12 like that.
13 Q. And did Dr. Karron suggest to you that you and Jane should
20 Exhibit 3501-PPP.
25 Dr. Karron wanted you and your partner Jayne Orthwein to speak
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8 his own words it says hopefully Joan Hayes can join us.
13 time --
18 chronological order.
22 A. I certainly do.
23 Q. Good.
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5 document.
24 Exhibit 3501-PPP.
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15 for the meeting, and we can perhaps whack each audit issue dead
24 conferences?
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3 remember correctly.
4 Q. And I think this morning you said that in fact there were
9 You had contact with a man named Bob Benedict, did you
10 not?
12 sir.
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4 23rd of --
6 Mr. Rubinstein?
14 to relevant questions.
23 problems that you were having with Dr. Karron and CASI,
24 correct?
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2 Q. Right.
4 the year one actuals, and we were asking for an auditor's help.
9 difference.
11 A. Correct.
15 on June 23, 2003 you invited Dr. Karron to a NIST workshop the
20 invited him, we did not know -- we did not have the information
22 Q. What did you acquire between June 25 and June 27 that you
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10 June 26th. It was like the day of the suspension, perhaps the
11 day before.
12 Q. And the day before that you invited him to speak on behalf
13 of NIST, right?
21 Q. OK. Now, at the time that the grant was suspended on June
22 27, 2003, are you aware whether or not Dr. Karron had
24 project?
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2 Goldstein?
6 authority at the time for every amendment and his award, and
9 attempting --
16 A. Yes.
22 from him during that time, or are you answering you as regards
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6 Q. In fact, ma'am, on August 11, '03 Dr. Karron sent you and
16 that time, and now the director of the project -- to you saying
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10 sent you and Jayne Orthwein an e-mail asking when can we talk?
11 A. OK.
12 Q. Is that a fact?
16 asking you if he could sit down and talk to you about getting
25 A. Did we meet him after that? No, we did not meet him.
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6 grants office?
18 resolutions.
21 Q. Isn't it a fact --
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6 suspended.
9 it.
15 evidence.
24 important that a bill not be generated for the funds that CASI
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4 REDIRECT EXAMINATION
5 BY MR. KWOK:
9 A. Yes, I do.
13 A. I don't remember the whole list, but the three that were
18 A. Dr. Karron.
24 A. Um-hum.
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2 that?
3 A. I think so.
7 Exhibit 1, page 6.
9 book?
13 5.
14 Q. Could you read us the first sentence after just the second
15 heading?
20 principles..."?
22 cost principles.
24 A. We do not pay any what we call sunk costs, which are costs
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6 the $60,000 some odd dollars that Dr. Karron allegedly put into
8 A. Yes, correct.
10 there?
23 Q. Aside from what you might have heard from other people, do
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5 project.
8 preparation costs?
9 A. No, no.
11 A. No. There was only the one approved budget that we have
15 budget?
21 22, sir.
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1 underlined there?
6 A. Annual.
12 actually.
16 MR. KWOK: No, it's not, but it's now displayed on the
17 screen.
21 A. Yes.
23 A. Yes.
25 explain to us?
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6 your estimated budget for year two and three were not correct,
9 award and add year two, we ask if there are any such changes,
13 A. No.
16 bullet point?
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9 this, point to the section you are talking about, and then you
10 can explain.
20 A. I do.
24 A. I do.
25 Q. Are there any other purposes aside from that that ATP does
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15 A. I do.
21 knowledge. So, the larger font came from the grants person.
22 She created her own slides because she has the intimate
24 Program created our own slides using a smaller font. Our goal
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4 A. Yes, I do.
5 Q. You remember him asking you about the limit that can be
6 done?
7 A. Yes.
11 recollection.
16 (Record read)
19 (Record read)
21 Mr. Kwok.
24 cost share?
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1 if possible.
12 THE COURT: You have to ask her whether she has seen
15 THE COURT: You can show her the document and ask her
16 if she has seen it before. She can't tell unless she looks at
17 it.
19 only.
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3 third.
10 Dr. Karron?
11 A. I do.
12 Q. After the grant was suspended, what was the reason that you
16 award.
20 I believe 2, 3501-FF?
25 entirety?
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2 of it.
4 e-mail?
14 Additionally" --
15 Shall I continue?
16 Q. Yes.
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2 Commerce.
4 A. I do.
11 RECROSS EXAMINATION
12 BY MR. RUBINSTEIN:
24 Q. Didn't you say when you first answered that question that
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3 and when in doubt our expert is our grant specialist who works
5 Q. Isn't it fair to say that your answer was, before you were
8 cost share.
9 Q. Now?
11 the grantee?
14 A. Um-hum.
15 Q. Is that right?
16 A. Correct.
22 Q. Before. That they actually spend the money. They paid for
24 pay for that computer that they're going to start using after
25 October 1st for the purposes of that grant, that's a sunk cost,
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1 right?
3 purchase, yes.
5 A. Or, well, if they order it. They can't order it before the
6 start of the grant and then charge ATP. They ordered it before
7 the grant.
8 Q. Isn't it a fact they can't pay for it before the grant and
9 get reimbursed, but if they charge it and pay for it after they
24 budget?
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3 budget.
5 A. Yes.
6 Q. Now you were asking for the actual costs of CASI in order
8 A. Yes.
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10 documents.
15 you ever tell Dr. Karron in all the times he e-mailed you or
16 called you that you can't speak to him and that he should be
18 Kirk Yamatani? Did you ever tell Dr. Karron that that's what
23 instructions.
24 Q. Did you tell him you can't talk to him month after month?
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1 those people?
3 e-mail --
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
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1 BY MR. RUBINSTEIN:
2 Q. Did you ever notify Dr. Karron that you had been instructed
7 Q. So you had Dr. Karron keep calling you and begging you to
10 A. No.
15 Snowden.
19 DIRECT EXAMINATION
20 BY MR. EVERDELL:
24 A. Good afternoon.
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2 Technology in Gaithersburg.
4 A. Yes.
6 A. Yes.
10 A. Grants specialist.
14 A. I administer grants.
16 responsibilities?
20 costs.
22 grants?
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1 are approved.
3 A. Yes, I do.
6 grants.
15 A. Nine years.
17 grant?
18 A. Yes.
19 Q. Or ATP grants?
20 A. Yes.
23 A. Yes, I have.
24 Q. And about how many ATP grants have you been a grant special
25 list for?
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3 are you familiar with the rules governing the ATP grants?
4 A. Yes, I am.
6 grants, in general?
7 A. Yes.
14 Q. All right. Ms. Snowden, did there come a time when you
17 A. Yes.
19 A. Dr. Karron.
21 A. Yes, I do.
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2 A. He has --
12 within CASI?
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3 Q. And what grants did Dr. Karron and CASI receive at that
4 point?
11 A. $2 million.
13 A. Over three year period, the first year being 800,000, and
15 Q. And where did money come from that funded the grant?
20 Q. So how long after the grant was approved did the kickoff
21 meeting happen?
25 A. Yes, yes.
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10 just questions.
15 A. He contacted me.
21 not statements.
23 her. She can state what he said in the conversation and what
25 is in his mind.
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2 Q. All right, Ms. Snowden, let me ask you this question. You
4 A. Yes.
6 A. Yes.
8 conversations?
9 A. Was he allowed to pay for rent and utilities, with the ATP
16 Q. And what was your response to the question, can rent and
25 expense under the grant rules if the only project that the
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1 grant was recipient was working on was the project that was
3 A. No.
12 A. He contacted me.
13 Q. And why -- oh, withdrawn, your Honor. Did you two have a
14 conversation?
15 A. Yes.
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4 then it continued.
7 with --
13 Lee would call me one day, and then Dr. Karron would call me
23 Gerfein, but what did you two discuss, you and the defendant?
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3 during this time was 9/11, and the State of New York had told
4 them they would give him some space. And I guess, I don't know
5 what agreement they had, but since 9/11 they rescinded the
10 Q. And about how many times were you contacted about this?
11 A. Numerous times. Between Lee and Dr. Karron, they would tag
12 taking team. They would both call me and ask the same
13 questions like a day apart, and they would consistently get the
16 A. They were unallowable costs and, no, you can not use
17 federal funds.
18 Q. Did you ever tell the defendant or Lee Gerfein that rent
20 A. Never.
21 Q. Did you ever approve any rent or rent payment requests from
23 A. No, never.
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2 A. Yes.
10 A. Yes. There is more than one way. When you receive a grant
13 with all the regulations that govern the award, also there are
15 the internet.
18 A. Yes.
21 screen. I know the folders are jumbled, but if you could find
22 exhibit 12.
23 A. Okay.
25 A. Yes.
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2 A. Yes.
3 Q. What is that?
10 this one?
11 A. Yes.
12 Q. And is this the one that was sent to Dr. Karron and CASI?
13 A. Yes.
14 Q. And these checked items, do you see the ones that are
15 there?
16 A. Yes.
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3 companies.
4 Q. And were these documents sent along with the grant award?
5 A. Yes.
7 A. D. B. Karron.
15 Q. All right, let's discuss now the kickoff meeting that you
18 program side of the house and the recipient, that the person
25 So, basically, it's a time where we come together you can see
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4 A. I recall Dr. Karron and Dr. Lee Gerfein -- and Lee Gerfein.
7 Q. And what does the NIST grant office hope to achieve at this
8 kickoff meeting?
9 A. We hope to give you a nice outline and tell you about the
11 their liaison for the grants office. I mean, you have these
14 call me and I'll help you out, and if I don't know the answer,
19 A. Yes, I did.
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4 A. Yes.
7 the kickoff.
9 A. Okay.
10 Q. Put that up on the screen. I'm not sure the jury has page
12 A. Yes.
14 A. Yes.
16 people present?
19 So I usually go over this slide and tell them that these are
20 the rules and regulations that not only govern each one
23 Q. Did you tell them if they have any questions what they can
24 do?
25 A. If they have any questions, they have to call me. I'm the
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2 Q. Can they question you about any questions about the rules
4 A. Yes, yes.
14 follow it.
25 A. No.
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2 orally?
3 A. No.
5 A. That's it. That's the only how you can get approval.
7 the meeting?
12 suppose you have a full exhibit. Yes, you can turn to page 11.
15 A. Yes.
16 Q. It says budgets?
17 A. Uh-huh.
19 A. Yes.
20 Q. And you see that second, I guess bullet point, review costs
23 A. Yes.
24 Q. Can you explain what you mean what you mean by that bullet?
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4 A. Yes.
7 get over a three year period, you get allotment of money. The
8 first year was 800,00, second year 600,000, third year 600,000.
14 budget that was approved is the budget that you have to abide
18 this grant was like October 1st, 2001 until September, so it's
19 a year. It's one year. But within, within that year you could
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2 THE COURT: 800, 600 and 600. How does that relate to
9 therefore, you should review your budget for the following year
15 A. Yes.
17 A. Yes.
19 year's budget that you're operating in, how are those approvals
24 approve your revised budget dated October 1st, 2004 and we'll
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1 it.
2 Q. Okay. Now I'd like you to look at page seven of the same
4 that up. See page seven? You see page seven, Ms. Snowden?
5 A. Yes.
6 Q. All right. And you see the bullet that says, budget line
9 A. Yes.
11 A. Yes, I did.
16 officer.
19 A. Yes.
22 A. Yes.
24 A. Yes, it is.
25 Q. And you see the title relationship between cost share and
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1 ATP funds?
2 A. Yes.
3 Q. Did you discuss this issue of cost share with the people
4 from CASI?
5 A. Yes.
8 ATP funds are the federal funds. Those are the funds that the
12 which is the federal funds and the non-federal funds from the
19 requirement?
24 A. 30 percent.
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5 A. That's it.
6 Q. Contribution?
7 A. Yes.
9 times before the CASI kickoff meeting did you give this slide
10 presentation?
13 Q. Did you do anything differently for the CASI group when you
25 Q. All right.
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5 more about the rules of the ATP grant. Let's talk first about
7 familiar with the rules concerning fringe benefits for the ATP
8 fund?
9 A. Yes.
25 more, they have to itemize them and under that they don't, so
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9 Q. All right, Ms. Snowden, you said you're familiar with the
11 A. Yes.
14 exhibit.
17 left-hand side C(1). You see that line their, that paragraph
19 A. Yes.
22 incurred will be charged to the award and that all costs will
25 A. Yes.
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1 Q. And then below the next line says, recipients shall also
5 A. Yes.
12 this is --
18 appropriate, you ask them if they have any questions about the
19 materials?
21 questions, yes.
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1 the comment.
4 Q. All right. Ms. Snowden, I'll ask the question again this
7 term?
12 means?
17 it explained?
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6 please?
8 BY MR. EVERDELL:
10 could take down that and put up Government's exhibit 10B, which
14 BY MR. EVERDELL:
16 A. Yes, I have 10B. It's your budget letter, looks like this.
21 out by them, the recipient fills this portion out. This is how
22 they outline how -- this corresponds with the budget that they
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4 they sign the document, and this is attached and they're saying
5 everything is correct.
8 A. Yes.
9 Q. All right. Seeing the same page now that I believe is the
10 last page of that exhibit, you see the top portion there?
11 A. Yes.
13 A. Yes.
23 benefits?
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5 below.
7 A. Yes.
9 A. Yes.
17 A. Yes.
19 A. Yes, it does.
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11 indirect cost to your company, you still must follow the same
25 written standards?
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5 business, yes.
9 come back at 9:30. And I have a note from one of the jurors,
15
16
17
18
19
20
21
22
23
24
25
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10 Rubinstein and myself a head's up about what the two issues are
12 them.
14 want to once again advice the Court and defense counsel we may
18 jury.
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14 the jury.
17 and I told him aside from the color, I had no problem. Now
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1 INDEX OF EXAMINATION
10 GOVERNMENT EXHIBITS
12 1 . . . . . . . . . . . . . . . . . . . . 85
13 2 . . . . . . . . . . . . . . . . . . . . 86
14 3 . . . . . . . . . . . . . . . . . . . . 86
15 4 . . . . . . . . . . . . . . . . . . . . 86
16 10 . . . . . . . . . . . . . . . . . . . 111
17 10A . . . . . . . . . . . . . . . . . . . 112
18 10B . . . . . . . . . . . . . . . . . . . 113
19 11 . . . . . . . . . . . . . . . . . . . 114
20 12 . . . . . . . . . . . . . . . . . . . 115
21 13 . . . . . . . . . . . . . . . . . . . 116
22 14 . . . . . . . . . . . . . . . . . . . 116
23 41 . . . . . . . . . . . . . . . . . . . 136
24 31 . . . . . . . . . . . . . . . . . . . 137
25 32 . . . . . . . . . . . . . . . . . . . 137
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1 33 . . . . . . . . . . . . . . . . . . . 138
2 34 . . . . . . . . . . . . . . . . . . . 139
3 35 . . . . . . . . . . . . . . . . . . . 139
4 36 . . . . . . . . . . . . . . . . . . . 139
5 30 . . . . . . . . . . . . . . . . . . . 141
6 21 . . . . . . . . . . . . . . . . . . . 144
7 22 . . . . . . . . . . . . . . . . . . . 145
8 23 . . . . . . . . . . . . . . . . . . . 147
9 24 . . . . . . . . . . . . . . . . . . . 147
10 25 . . . . . . . . . . . . . . . . . . . 148
11 26 . . . . . . . . . . . . . . . . . . . 149
12 DEFENDANT EXHIBITS
14 A . . . . . . . . . . . . . . . . . . . . 221
15 B . . . . . . . . . . . . . . . . . . . . 230
16
17
18
19
20
21
22
23
24
25
(212) 805-0300