Court filing
TRANSCRIPT of Trial Day 16 as to Eric Dean Sheppard held on 01/10/2024 before Judge Beth… — USA v. SHEPPARD (Dkt. 322)
Record facts
| Court | U.S. District Court for the Southern District of Florida |
|---|---|
| Filed | 2025-02-25 |
U.S. District Court for the Southern District of Florida · No. 1:22-cr-20290-BB · Doc. 322 · 2025-02-25 · Docket on CourtListener
Summary
Transcript of Trial Day 16 for January 10, 2024 in United States of America v. Eric Dean Sheppard, Case No. 1:22-cr-20290-BB-1, before the Honorable Beth Bloom and a jury of 12 in the U.S. District Court for the Southern District of Florida, Miami Division. It is Doc. 322, entered on the docket February 25, 2025, and covers pages 1 through 263. The day opens with defense counsel objecting that the government will not say why it intends to call a particular witness in rebuttal, and the court holding that the request is premature because the defense has not yet rested. Government counsel says the defense's remaining witnesses include an accounting expert and that the expert disclosure has been amended five times. The index records the defense resting at page 229, five defense witnesses and one government rebuttal witness.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
Full text
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF FLORIDA
MIAMI DIVISION
CASE NO. 1:22-cr-20290-BB-1
UNITED STATES OF AMERICA,
Plaintiff,
January 10, 2024
9:15 a.m.
vs.
ERIC DEAN SHEPPARD,
Defendant.
Pages 1 THROUGH 263
______________________________________________________________
TRANSCRIPT OF TRIAL DAY 16
BEFORE THE HONORABLE BETH BLOOM
UNITED STATES DISTRICT JUDGE
And a Jury of 12
Appearances:
FOR THE GOVERNMENT: UNITED STATES ATTORNEY'S OFFICE
AIMEE C. JIMENEZ, AUSA
ANA MARIA MARTINEZ, AUSA
99 Northeast 4th Street
Miami, Florida 33132
FOR THE DEFENDANT: SALE & WEINTRAUB, PA
JAYNE C. WEINTRAUB, ESQ.
2 South Biscayne Boulevard, 21st Floor
Miami, Florida 33131
NELSON MULLINS
JONATHAN ETRA, ESQ.
CHRISTOPHER C. CAVALLO, ESQ.
2 South Biscayne Boulevard, 21st Floor
Miami, Florida 33131
COURT REPORTER: Yvette Hernandez
U.S. District Court
400 North Miami Avenue, Room 10-2
Miami, Florida 33128
yvette_hernandez@flsd.uscourts.gov
ALSO PRESENT: Special Agent Sarah Halleran
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Case 1:22-cr-20290-BB Document 322 Entered on FLSD Docket 02/25/2025 Page 1 of 263
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
I N D E X
Certificate..................................... 263
Defense rests .................................. 229
W I T N E S S
ON BEHALF OF THE DEFENDANT:
PAGE
ROBERT KALLMAN
CONTINUED CROSS-EXAMINATION BY MS. MARTINEZ
9
REDIRECT EXAMINATION BY MR. ETRA
37
JOHN JORGENSEN
DIRECT EXAMINATION BY MR. CAVALLO
49
CROSS-EXAMINATION BY MS. MARTINEZ
63
REDIRECT EXAMINATION BY MR. CAVALLO
84
KERBY KLEEF
DIRECT EXAMINATION BY MR. ETRA
85
CROSS-EXAMINATION BY MS. JIMENEZ
88
GLENN SHEPPARD
DIRECT EXAMINATION BY MS. WEINTRAUB
91
CROSS-EXAMINATION BY MS. JIMENEZ
112
SCOTT BOUCHNER
DIRECT EXAMINATION BY MR. CAVALLO
122
CROSS-EXAMINATION BY MS. MARTINEZ
182
REDIRECT EXAMINATION BY MR. CAVALLO
227
ON BEHALF OF THE GOVERNMENT:
PAGE
(Rebuttal)
ALEX ZASLOW
DIRECT EXAMINATION BY MS. JIMENEZ
235
CROSS-EXAMINATION BY MR. ETRA
248
E X H I B I T S
DEFENDANT'S EX. NO.: OFFERED ADMITTED
Z-1
175 175
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Case 1:22-cr-20290-BB Document 322 Entered on FLSD Docket 02/25/2025 Page 2 of 263
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
(Call to order of the Court, 9:15 a.m.)
THE COURT: Hi. Good morning to everyone.
MS. WEINTRAUB: Good morning, Your Honor.
THE COURT: I know that Liz did -- let me acknowledge
the presence of the Defendant.
I know that Liz did advise that we have one juror who
is running a little late with the train.
Go ahead and have a seat.
But I understand there is an issue to address?
MS. WEINTRAUB: Yes, Your Honor, there is. That's
with regard to rebuttal.
Your Honor, it's our understanding that they're going
to call Alex Zaslow in rebuttal. We asked them to narrow it
down and to please provide us the basis for which they intend
to call him, because it's voluminous to prepare anything with
Zaslow's name. Quite candidly, we were surprised that they did
not call him in their case in chief.
The Government refused to advise us why they're
calling him or narrow it down. We emailed them. We asked them
for the professional courtesy of advising us so that we can
prepare and there are no further delays in this case and we can
move forward.
THE COURT: All right. Well, the Defendant hasn't
rested his case.
MS. WEINTRAUB: Correct.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: So it's premature to hold the Government
to an announcement as to what the rebuttal evidence may be.
But, Ms. Jimenez, do you know at this point?
MS. JIMENEZ: I don't fully know, Your Honor.
THE COURT: All right. So I think to ask the
Government at this point to state what it may not know, since
you haven't concluded your case, is somewhat a waste.
MS. WEINTRAUB: Well, Judge, she said now she was
calling Alex Zaslow.
THE COURT: That's right.
MS. WEINTRAUB: So they must know what they're going
to ask Zaslow because the next two witnesses that are going to
testify have nothing to do with Zaslow.
THE COURT: Is that correct, Ms. Jimenez?
MS. JIMENEZ: I don't know that, Your Honor. They
have a tax accountant or some sort of accounting expert that
they are calling as well. That's going to be their final
witness, I believe. I have no idea what -- you know,
everything that he's going to say. They've amended their
expert disclosure five times.
THE COURT: That's fair. I'm not going to press the
Government any further.
Any other issues that we need to address?
MS. WEINTRAUB: No, Judge. We just wanted to alert
the Court because we don't want to have a further delay, and
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
obviously we intend to rest today shortly. They know who we're
calling and -- I know. Famous last words. We're trying. All
the witnesses are here. We're ready to go.
THE COURT: All right, then. I do want to advise for
purposes of scheduling that I have a meeting right at noon. It
is in this building. So we'll need to stop at five to noon,
and then we'll take our one-hour recess for lunch, if that's
all right with both sides.
MS. MARTINEZ: Your Honor, may I confirm with Defense
counsel the order of witnesses?
THE COURT: Has it changed from yesterday?
MS. WEINTRAUB: No. No. And I told Ms. Martinez that
about 10 minutes ago.
MS. MARTINEZ: Well, she first told me she refused to
tell me and then she kindly decided to tell me. So I just want
to --
THE COURT: Okay. I need to remind each of you at
this point -- each of you, meaning all counsel of record --
that you are officers of the court first and foremost. And
your actions, and your comments, and your facial expressions,
as well as your -- your non-verbal conduct in the courtroom is
observed not only by the Court but by these jurors that have
devoted themselves to acting as the -- and serving as the
judges of facts. It is most unfortunate when we observe
conduct that is not befitting of officers of the court.
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Case 1:22-cr-20290-BB Document 322 Entered on FLSD Docket 02/25/2025 Page 5 of 263
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
So I would remind you of your duty of professionalism,
both inside and outside of the courtroom but certainly during
the course of this trial. And that is my comment for this
morning.
MS. WEINTRAUB: Judge, as I advised yesterday, the
witnesses are going to be -- after Mr. Kallman, it will be John
Jorgensen, Kerby Kleef, Glenn Sheppard, and Scott Bouchner. I
believe that's the order I gave the Court yesterday.
THE COURT: And that is the precise order that was
given to the Court last night.
MS. MARTINEZ: Yes, Your Honor. And part of the
reason that I'm asking is because, with respect to Jorgensen,
items were given to me late at night on Sunday. And with
respect to Bouchner, completely revised and additional 37 pages
of charts were given to me late Saturday night, and also
databases that I haven't been able to print because the print
is very small. So part of the reason that I'm asking is
because it requires a level of organization as to what I need
to have in front of me.
And I am -- I may be in a position where I actually
need to ask for assistance from the Defense to provide printed
copies, because -- and Mr. Cavallo has already partially helped
me as much as he can. But I may need to ask for additional
help because I have not been successful in printing everything
that they provided late Saturday night and late Sunday night.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: All right. So as a professional courtesy,
Mr. Cavallo, are you able to assist Ms. Martinez?
MR. CAVALLO: I am, Your Honor.
THE COURT: All right, then. Then that should not be
an issue, and your organization should likely comport with the
order of witnesses.
So if we can bring in Mr. Kallman. We do have all of
our jurors that are present.
Yes. Thank you.
And I do want to remind the Government, since the
Government is tasked with the responsibility of having each of
the uploaded exhibits on a clean laptop, as well as a complete
exhibit list for the jurors, once they begin their
deliberation, which most likely would occur tomorrow.
MS. MARTINEZ: Your Honor, before the jury comes in, I
just wanted to advise the Court, with respect to this witness,
it will very much help to move things along if I can show the
witness certain documents that are in evidence briefly just to,
at a minimum, identify his knowledge or not. And this witness
relates to four out of the six loans that were funded. So that
is part of the reason for asking the level of his involvement
and needing to move things along.
So the reason I mention that to the Court, Your Honor,
is just because I ask for some allowance if the Court does not
immediately see the relevance of my questioning or why I'm
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
briefly showing a document that's in evidence.
MR. ETRA: Your Honor, the rule that Your Honor has
that we've had to live under for cross-examination is we can't
show a witness a document the witness hasn't seen, and we've
been held to that. I think the exception has been the
Defendant, when he testified, when they crossed him. And she's
asking for an exception and we didn't get those exceptions.
THE COURT: With any witness, if the witness does not
know the document, then it makes no sense to ask the witness
questions with regard to that document.
There were certain exceptions with regard to
individuals that came in through entities that produced a
volume of discovery, and certainly the bulk of those exhibits
were admitted into evidence. And as such, that individual as
the keeper of those documents -- it was certainly fair to ask
that individual with regard to those documents. This is
different. The Rules of Evidence are the Rules of Evidence,
and the Court certainly is going to comport with what the law
requires.
So Mr. Kallman, welcome. Good morning. If you'll
remain standing, as well as everyone else, so we can bring in
the jury.
(Before the Jury, 9:22 a.m.)
THE COURT: All right. Good morning, Ladies and
Gentlemen. It's good to see each of you.
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Case 1:22-cr-20290-BB Document 322 Entered on FLSD Docket 02/25/2025 Page 8 of 263
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Please be seated, everyone.
We are ready to get right back to work.
Recall we were in the middle of the cross-examination
of Mr. Kallman.
Mr. Kallman, let me remind you, you were previously
placed under oath. And let us proceed.
Ms. Martinez?
(Pause in proceedings.)
CROSS-EXAMINATION [CONTINUED]
BY MS. MARTINEZ:
Q.
Good morning, Mr. Kallman.
A.
Good morning.
Q.
Yesterday we spoke about companies that you have an
interest in because you have invested with Mr. Sheppard,
correct?
A.
Yes.
Q.
And you have an interest in the shopping center in Orlando
through your company called WAPD Holdings, correct?
A.
Correct.
Q.
That company has 48 percent ownership, meaning almost half,
of another company called HM Four, LLC, which then
99 percent -- that -- HM Four owns 99 percent of HM-UP
Development Alafaya Trails, correct?
A.
I believe so.
Q.
And then HM-UP Alafaya Trails owns the Orlando shopping
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Case 1:22-cr-20290-BB Document 322 Entered on FLSD Docket 02/25/2025 Page 9 of 263
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
center, correct?
A.
I believe so.
Q.
There's another company called HM-UP Development Alafaya
Trails TRU, T-R-U, capital letters. You also have an interest
in that company; isn't that true?
A.
I believe TRU is the company that we had when Toys "R" Us
was the tenant, and then there was many iterations through
refinancings and other business dealings. So I'm not sure if
TRU is actually still a valid company for holdings.
Q.
But you -- as part of your investment, you had also
invested and had an interest in that company, correct?
A.
At one time, I believe so, yes.
Q.
And as part of this joint investment with Mr. Sheppard, you
are liable on a, what, approximately $20 million loan on that
property?
A.
On the whole property, yes.
Q.
In Orlando?
A.
Yes.
Q.
Now, you indicated that you do come to Florida some of the
time. I'm going to focus you on a certain time period.
A.
Okay.
Q.
In 2019, before the pandemic, did you come to Florida once
a year, twice in that year?
A.
In 2019?
Q.
2019.
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Case 1:22-cr-20290-BB Document 322 Entered on FLSD Docket 02/25/2025 Page 10 of 263
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
I owned a residence in Florida for a while, so I'd come
down with my family. So I'm sure I was here more than once in
2019.
Q.
In 2019, did you have more than one business meeting with
Mr. Sheppard?
A.
For the whole --
Q.
In 2019 -- physical -- physical here in Florida?
MR. ETRA: Objection. The question is unclear.
"Business."
THE COURT: Overruled. Does the witness understand
the question?
BY MS. MARTINEZ:
Q.
Meaning as opposed to getting together socially.
A.
I'm sure we did.
Q.
Did you have -- in 2019, did you go to Orlando, to the
property that you own?
A.
I don't recall in 2019 if I was there. Could have been.
Q.
Now, focusing on the approximately, what, 18 years of
knowing Mr. Sheppard, did you say -- how long have you been
investing together with him?
A.
I know him a little longer than that.
Q.
How long do you know him?
A.
I would say probably -- my daughter is -- 23 years maybe.
Q.
And during that span, in addition to meeting with him for
business, you meet with him socially, correct?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
That's correct.
Q.
And your family meets with him and his family meets with
your family, correct?
A.
That's correct.
Q.
So you consider him to be your friend, correct?
A.
Yes.
Q.
And you're his friend, correct?
A.
Yes.
Q.
Now, once the pandemic came, or just around that time, as I
understand it -- we went through a loan document yesterday from
One Florida Bank. Do you recall that?
A.
Yes, I do.
Q.
Now, there was a commercial loan -- well, actually it was a
person line -- a person loan for $600,000 that you and
Mr. Sheppard took out jointly, correct?
A.
That's correct.
Q.
And the purpose of it was to have -- according to the
document that we went over yesterday, the purpose of it was to
have additional funds towards work that was going on at the
Orlando property, correct?
A.
That's not correct. That document was not a loan document,
which you had just referred to.
Q.
Oh, no. I'm sorry. I just meant the purpose that was
stated in the document. Was the purpose stated in the document
wrong?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
That was a deal memo.
Q.
Okay. And was the purpose stated in the deal memo wrong?
A.
No. The intention was to use that money for the project.
Q.
Okay. And again, that personal line was guaranteed by you
personally and Mr. Sheppard personally, correct?
A.
That's correct.
Q.
So you would be personally liable, not your company, if
that money wasn't paid, correct?
A.
That's correct.
Q.
And the interest rate was a variable interest rate that was
not fixed. It would go up and down with the market; isn't that
right?
A.
I believe so. That was market at the time, when that was
drawn up.
Q.
And it was actually -- I realize that you extended it, but
it was actually initially a very short-term loan. Within the
same year, 2020, it had to be paid back, maturity date,
correct?
A.
I believe the initial term was six months, but it was
discussed with One Florida Bank that it might be extended.
They were interested in doing business with us.
Q.
Now I'm going to go back just -- again, just before the
pandemic, 2019, 2018, the years before. You were not involved
in the decisions with respect to HM-UP Development Alafaya as
to whether or not any -- anybody was a W-2 employee or a 1099.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
You were not involved in those decisions; isn't that right?
A.
That's correct.
Q.
And with respect to HM Four, as to whether it ever had any
employees, W-2, whether it had any contracts, such as 1099
contractors, you were not involved in those decisions either as
to HM Four, correct?
A.
Eric is the managing member of the entities and he manages
the property. That's not my role.
Q.
So with respect to decisions regarding whether to have an
employee or not to have an employee with respect to HM Four,
that would be Eric Sheppard, not you; is that right?
A.
It would be the managing member.
Q.
And that's Eric Sheppard; isn't that right?
A.
Yes.
Q.
And with respect to HM-UP Alafaya Trails, the decision as
to whether to have a 1099 contractor or a W-2 employee, where
you do the withholdings -- that decision would not be yours.
It would be Eric Sheppard's; isn't that right?
A.
Again, that would be the managing member.
Q.
And the managing member is Eric Sheppard?
A.
That's correct.
Q.
So likewise -- so that's the way that it was in like 2018,
2019. That didn't change in 2020 and 2021, did it?
A.
Eric's always been the managing member.
Q.
Right. So those decisions were Eric Sheppard's, not yours,
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
correct?
A.
They weren't my decisions, but we always discussed business
as it pertained to the property.
Q.
Did you have specific discussions with Mr. Sheppard as to
who would be a W-2 employee and who would be a 1099?
A.
No.
Q.
So not that?
A.
No.
Q.
You would have other decisions maybe regarding the
profitability of the business, the return of capital, that type
of discussion, correct?
A.
Eric always kept me informed on the financial aspects and
other aspects of the project.
Q.
I mean, in fact, what you have done is provide funds to
Eric Sheppard as an investor, correct? So your primary
contribution is financial; isn't that right?
A.
The majority of it is, but I try and help whenever I can
with him, you know, with business or, you know, business
decisions that would affect the property.
Q.
Right. As an investor and as a very good businessman, your
interest in your investment is that you not lose the money that
you invested, correct?
A.
Yes.
Q.
And that -- for the investment, that you make some profit
on the investment, that you at some point get -- at some point,
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
whether short-term or long-term, that you get more money back
than what you put in; isn't that right?
A.
I think that defines the term investment.
Q.
Right. So you have an interest in protecting your
investment with Mr. Sheppard, correct?
A.
I have an interest in protecting all my investments with
various people.
Q.
Now, with respect to again HM-UP Alafaya, that company, you
were not a signer on the bank accounts, correct?
A.
Could you --
Q.
You did not have signatory authority on the bank accounts,
correct?
A.
No, I do not.
Q.
So you did not make decisions about how to use the money
that went into the accounts that were at SunTrust Bank for
HM-UP Development Alafaya, correct?
A.
No. I had no signature authority.
Q.
And likewise, HM-UP Alafaya Trails had an account in Wells
Fargo. You had no signatory authority in that account either,
correct?
A.
That's correct.
Q.
Now, you are aware that there were accounts, bank accounts,
into which the rent was being deposited, correct?
A.
Of course.
Q.
And you were aware -- you were aware of the rent receipts
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
during any time period, from -- let's say from before the
pandemic and during the pandemic, you were aware of the fact
that the rent receipts were coming in such that you were able
to pay the mortgage on the land; isn't that correct?
A.
That's correct, until Toys "R" Us went bankrupt.
Q.
Until?
A.
Toys "R" Us filed bankruptcy.
Q.
Let me ask you: Have you looked at the bank accounts?
A.
In what regard?
Q.
Have you seen the bank statements -- let me ask you
specifically as to a time period. Have you seen the bank
statements of HM-UP Alafaya, LLC at SunTrust Bank -- have you
seen the bank statements from 2020 to 2021 showing the receipt
of rent into those accounts? Have you seen those bank
statements?
A.
I have not.
Q.
And with respect to Wells Fargo, the account that was also
in the name of HM-UP Development Alafaya Trails, that was
receiving rent money, 2020 -- well, I'm going to go to this
time period for that account, 2019, 2020, 2021. Have you seen
the account of the rent that was being -- from the same
shopping center, different tenants -- have you seen those bank
records from Wells Fargo showing the rent money coming in in
2019, 2020, 2021?
A.
No.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
So whatever knowledge -- whatever understanding you have,
it's not from bank records, correct? It's not from bank
records.
A.
No. But I would get reports from Jeanette. I would call
up and I'd say: "Hey, did all the rents come in?" And one of
the common -- one of the tenants -- one of the larger tenants
would pay late into the month a few days, which we would always
discuss. And then --
Q.
Which time period are you --
MR. ETRA: Objection --
THE COURT: Yes. If you would let the witness answer
the question.
BY MS. MARTINEZ:
Q.
Go ahead, sir.
A.
I just lost my train --
Q.
Let me ask you this: You were talking about a tenant that
was late at one point. Isn't it true that the tenants made up
the money within the next quarter, and actually there was --
from a national -- from the national tenants, by the end of the
year, all the money in rent was made up?
MR. ETRA: Objection.
BY MS. MARTINEZ:
Q.
Isn't that true?
MR. ETRA: Form. Unclear what tenants we're talking
about.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: Does the witness understand the question?
THE WITNESS: I think so.
THE COURT: All right. You may answer the question.
Overruled.
THE WITNESS: I don't think that's totally correct.
Because what you're saying is at the end of the month it was
trued up. If they paid late every month, it would fall into
the next year.
BY MS. MARTINEZ:
Q.
Have you reviewed the bank records to verify what you just
said?
A.
No.
Q.
So this is something that somebody told you, but it's
not -- you have not looked at the bank records to see -- to see
that?
A.
I have not looked at the bank records, but I was told this
by more than one person.
Q.
In the -- in addition to -- the main company that you have
is called Bookazine, correct?
A.
That's correct.
Q.
In addition to that, you have a company called SBK Realty;
isn't that right?
A.
That's correct.
Q.
So during 2020, 2021, you do recall an amount of money,
roughly $20,000, coming from your SBK company into
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Mr. Sheppard's -- the accounts that Mr. Sheppard has signatory
authority over? Do you recall that? Do you recall about
$20,000 coming from your company?
MR. ETRA: Beyond the scope and relevance.
THE COURT: Overruled. I'll allow it.
THE WITNESS: At one point SBK was paying the debt
service on the outparcels. But to my knowledge, my CFO was
paying that directly out of my account.
BY MS. MARTINEZ:
Q.
Do you recall -- are you familiar with the fact that money
from the accounts that Eric Sheppard had, that he was signer
on -- that $30,000 went out to SBK during the pandemic
period --
MR. ETRA: Your Honor --
BY MS. MARTINEZ:
Q.
-- care of -- care of Bookazine?
MR. ETRA: Relevance and beyond the scope.
THE COURT: Noted. Overruled.
BY MS. MARTINEZ:
Q.
Do you recall money from your company during the pandemic
going to Eric Sheppard accounts and money from Eric Sheppard
accounts going back to SBK? Do you recall that?
A.
From which company are you saying the money came or went
back to?
(Pause in proceedings.)
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21
Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MS. MARTINEZ:
Q.
One second. I'll find the financial summary.
A.
Sure.
(Pause in proceedings.)
BY MS. MARTINEZ:
Q.
It was to Alafaya Trails, SunTrust Bank, and then back out
to you -- I mean to SBK. You don't recall that?
A.
You're talking four years ago, right? In 2019 you're
referring to?
Q.
No. 2020 and 2021, the time of the pandemic.
A.
It could have been. I mean, during the pandemic everything
was, you know, in a lot of disarray, so I can't say for sure.
And I was sick at the time.
Q.
Well, I mean, you were sick for -- at the beginning of the
pandemic, right --
A.
I was sick at the end of March into April.
Q.
Right. Of 2020, right?
A.
That's correct.
Q.
Yeah. So again, talking about Mr. Sheppard's business and
your investment with him, Jennifer Sheppard is not involved in
the business that you are a joint partner with Eric Sheppard,
correct?
A.
I don't know that to be correct.
Q.
Is she involved -- is she involved in any of the decisions
regarding who's an employee and who's not an employee?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
I wouldn't have that knowledge.
Q.
Is she -- well, have you ever discussed business with
Jennifer Sheppard?
A.
At certain points. She understands it. She knows what the
business is.
Q.
Has she -- well, I mean, she knows what her husband does
for a living. That's right?
A.
Yeah. That's correct.
Q.
That's right. My point -- are you working together with
Jennifer Sheppard on your business -- your joint investment
with respect to HM-UP Alafaya Trails? Are you working with
Jennifer Sheppard on that?
A.
Eric's still a manager.
Q.
And is she involved in any of the decisions regarding the
building and the tenants?
A.
I wouldn't know what he discusses with her on that nature.
Q.
You have not had any discussions with her of that nature?
A.
Regarding buildings and construction? Is that what you're
asking?
Q.
Do you work with Jennifer Sheppard as part of your
investment? Do you work with her?
A.
Not really.
Q.
No. And with respect to HM Four -- remember, your company
WAPD Holdings owns 48 percent of HM Four and HM Four owns
99 percent of HM-UP Alafaya Trails -- Jennifer Sheppard has no
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
involvement with HM Four; isn't that correct?
A.
I'm not a hundred percent sure what Eric discusses or he
doesn't discuss with her.
Q.
You don't -- you're 48 percent owner of HM Four?
A.
Correct.
Q.
You don't discuss HM Four with Jennifer Sheppard; isn't
that right?
A.
No, not as cost of business. I deal with Eric as the
managing member.
(Pause in proceedings.)
BY MS. MARTINEZ:
Q.
During the pandemic, you're aware -- you participated in at
least one loan that Mr. Sheppard obtained in the name of HM-UP
Alafaya Trails; isn't that right?
A.
Define "participated."
Q.
Well, do you remember -- well, let me just take you there.
From roughly July 24th, 2020, when an application was made, to
September 25th, 2020, when the loan was funded, you
participated in working with a lady called Nelia Palancar, who
was assisting you and Mr. Sheppard in obtaining an Economic
Injury Disaster Loan for HM-UP Development Alafaya Trails;
isn't that right?
A.
I don't know if that was the woman's name. I received one
phone call, which lasted about a minute and a half, to that
regard.
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24
Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Do you remember providing your driver's license as one of
the owners who had an interest in HM-UP Development Alafaya
Trails in order to be able to get that loan?
A.
My driver's license is on file in the office.
Q.
You don't recall providing that driver's license to Eric so
that he could provide it to Ms. Palancar?
A.
As I said, Eric does have a copy of my driver's license in
the office as standard practice of our business if we have to
get loans or do any other kind of business. I can't have him
calling me every five minutes to keep resending him the same
document.
Q.
I'm just asking if you -- you did authorize Mr. Sheppard to
obtain an Economic Injury Disaster Loan on behalf of HM-UP
Development Alafaya Trails as a 48 percent owner -- you
authorized that loan; isn't that right?
A.
Mr. Sheppard had indicated to me that he was trying to
apply. I thought it was -- you know, it was a fine idea at the
time. I mean, that was -- you know, there was programs out
there to help businesses. And if it was applicable, why
wouldn't we, you know, try and apply for it.
Q.
You did not write the application for that Economic Injury
Disaster Loan, correct?
A.
No.
Q.
Did you verify any of the information on the application?
A.
No.
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25
Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
You are aware that at least with respect to that particular
loan in September 2020, $149,900 went to the HM-UP Development
Alafaya Trails account pursuant to an SBA Economic Injury
Disaster Loan? You're aware that that loan was funded,
correct?
A.
I don't remember I was aware that it was funded.
Q.
You're aware that Mr. Sheppard obtained an Economic Injury
Disaster Loan in the name of your company that you have a
48 percent interest in, HM-UP Development Alafaya Trails,
during the pandemic in 2020 -- you're aware that he obtained
funding of an Economic Injury Disaster Loan, correct?
A.
I wasn't aware that the funding came through. I know that
he was going to apply for it. He had mentioned it to me.
Again, as I said, if there was a program out there that was
applicable for our business, we should try and apply for it.
Q.
Okay. So is it -- now that I'm asking you, is this the
first time that you're aware that on September 28th the bank
account of HM-UP Development Alafaya Trails received $149,900
of an Economic Injury Loan where your driver's license was
used? Is today the first time you hear that it was funded?
A.
I don't know if -- that specific date, that's when the
money went in. I wouldn't have knowledge of a specific date.
Q.
Okay. Not this specific date. Is today the first time
you're aware that that loan was funded?
A.
I was aware that he applied and I remember having a
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
conversation. I think he said we got one or two small loans.
Q.
So you were aware that there were one or two small loans,
but you weren't aware that -- I'm just taking one at a time --
that the one loan where your driver's license was provided and
you spoke to Nelly Palancar, that it was $149,900 -- that
amount you were not aware of?
A.
No. And I don't know if it was Nelly Palancar, as you say.
A woman called me on the phone. I spoke to her for about a
minute and a half.
Q.
And it related to an Economic Injury Disaster Loan? Do you
remember that, that that --
A.
I remember it was to verify some information.
Q.
You don't remember what type of loan it was?
A.
No. I was not -- I don't remember specifically what type
of loan it was. I know it was something to do with -- you
know, the CARES Act. They were coming out with many different
programs at the same time. I was trying to do the same thing
for my own business, so I don't know what specifically it was
called.
Q.
So just -- just to clarify what we're talking about, the
particular one that I was asking you that was applied for
July 24th, 2020, and it was funded September of 2020, was an
Economic Injury Disaster Loan where the money comes from the
United States Treasury, SBA. You understand that that was one
of the programs that was available, right?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
I remember hearing the term SBA.
Q.
Do you remember the term "Economic Injury Disaster Loan,"
sometimes abbreviated into EIDL, Economic Injury Disaster Loan?
A.
No. I remember SBA.
Q.
So understanding that it was for an Economic Injury
Disaster Loan, as I talk to you now is the first time that that
really is coming into your mind?
A.
No. As I said, I know that Eric was applying. I
remember -- I definitely remember SBA. I don't remember all
the other acronyms that you're saying after it.
Q.
Well, so do you know that there was a different program
that was called the Paycheck Protection Program, not the
Economic Injury Disaster Loan program -- do you know that there
was a different program called the Paycheck Protection Program?
A.
That -- what you're referring to is the PPP program?
Q.
Yes.
A.
Yes. I'm aware of that.
Q.
Okay. And you are aware that these are two different
programs, right?
A.
They sound to be.
Q.
Okay. And you're aware that they have different purposes,
right?
A.
I'm not aware that they have different purposes.
Q.
Okay. Economic Injury Disaster Loan -- you're not aware
that that is to remediate economic injury?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
No.
MR. ETRA: Your Honor, he says he doesn't know.
THE COURT: Sustained.
BY MS. MARTINEZ:
Q.
Are you aware of what the Paycheck Protection Program was
for?
A.
Yes. I applied for it for my own business.
Q.
And you had to have W-2 employees, meaning employees that
you withhold income tax -- that -- that you withhold Medicare,
Social Security, regular employees to be able to apply for the
Paycheck Protection Program; isn't that correct?
A.
What I understood about the Paycheck Protection Program --
when my CFO first was applying for it, we also consulted with
my -- my accounting firm. And I remember the partner calling
me up on the phone and telling me: "Robert, this is very
complicated because they are changing the rules from Monday to
Tuesday, Tuesday to Wednesday, Wednesday to Thursday. On
Monday they're allowing you to apply, basically taking" -- you
know, I'm going to give an example. You could deduct rent.
Then Tuesday you couldn't deduct rent, but Wednesday you could
deduct insurance. It was very complicated. And I remember my
CFO spending an inordinate amount of time trying to put
together the documents, and this is a seasoned guy who's worked
for large companies, and he indicated to me it was very
confusing. And we went out, you know, to obviously do our best
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
to put the information forth, and we did obtain the loan.
Q.
How much money did you obtain?
A.
I believe there was two loans, to the best of my knowledge.
I think one was a little over a million. And the second one I
think was close to that amount.
Q.
So you have a good number of employees; isn't that right?
A.
That is correct.
Q.
So going back to the investments that you have with
Mr. Sheppard, and the pandemic period, we discussed the one
loan that you do remember speaking to someone, to a female,
regarding authorizing a loan for HM-UP Development Alafaya
Trails. Do you recall Mr. Sheppard asking you to participate
in a loan via PayPal to WebBank, also for HM-UP Development
Alafaya Trails, but that would be in May of 2020 and it would
be a Paycheck Protection Program loan? Do you recall that?
A.
No.
Q.
Are you -- do you know that that loan was funded?
A.
I had had several conversations with Eric regarding
different programs that were out there. I know he was trying
to avail whatever he thought could be helpful to the business
and the situation -- you know, with the situation. It was
just -- I was trying to do the same thing at my main company.
So obviously I knew there was programs out there. We were
trying to see which -- you know, what we could get, what would
work, and how to fill out the paperwork. It was very
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
complicated.
Q.
I understand. I'm just asking you some very specific
questions, and the specific question is: Are you aware that on
May 1st of 2020 WebBank funded a PPP loan that was applied for
by Mr. Sheppard under the name of HM-UP Alafaya Trails, a
company that you have a 48 percent interest, and it was funded
to the amount of $146,457? Did you know that?
A.
No.
Q.
Did you know that the money did not go into the HM-UP
Development Alafaya Trails account but instead was deposited
into the HM Management and Development account? Did you know
that?
A.
I don't get into that type of detail. But what I do know
is that I don't think one of the businesses -- businesses --
one of the entities might have not had a bank account because
we didn't have one for every entity. That, I knew.
Q.
Right. The entity that did not have a bank account was HM
Four; isn't that right?
A.
Could have been. HM Four is the company that does the CAM,
basically.
Q.
That's the company that's the owner -- WAPD, your company,
has a 48 percent interest in HM Four, correct? And HM Four has
a 99 percent interest in HM-UP Development Alafaya Trails;
isn't that right?
A.
That's correct.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
So HM Four is this company in the middle. An owner that --
HM Four is owned partially by you and Mr. Sheppard. And then
that entity, HM Four, then owns HM-UP Development Alafaya
Trails. The company that did not have a bank account until
2020 was HM Four; isn't that right?
MR. ETRA: Objection, Your Honor. Very compound
question with --
THE COURT: Does the witness understand the question?
THE WITNESS: (No verbal response.)
THE COURT: All right. Let's break it down.
Sustained.
BY MS. MARTINEZ:
Q.
HM Four is the company that did not previously have a bank
account; isn't that right?
A.
I'm not a hundred percent sure.
Q.
So you don't know one way or another whether HM Four has a
bank account?
A.
No. I don't get involved in the day-to-day runnings of
that company. Eric's the managing member. I've never had an
issue. He's ran the company. I know we have multiple,
multiple entities. There's bank accounts for some. We collect
rent, we pay the vendors, and we run the shopping center.
Q.
So are you aware -- so you're not aware then, right, that
on November 23rd, 2020 -- remember we had -- let me strike
that.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Remember we had just talked about -- we've already
talked about the fact that there was a PPP loan May 1st, 2020,
to HM-UP Development Alafaya Trails. And you did not know
about that one, correct?
A.
No.
Q.
Okay. Then we talked about the fact that you did know
about the Economic Injury Disaster Loan to HM-UP Development
Alafaya Trails that was funded September 2020, correct?
A.
My understanding was that was an SBA loan.
Q.
Right. It is.
A.
That's the one I spoke to the woman for the two minutes on
the phone briefly. That was the loan.
Q.
So following that, are you aware that after that loan was
funded for HM-UP Development Alafaya Trails, Economic Injury
Disaster Loan, on November 23rd, 2020, there was another loan
funded, Economic Injury Disaster Loan, on behalf of HM Four?
Did you know that?
A.
No.
Q.
And the amount -- are you learning that here today for the
first time?
A.
You're quoting specific amounts on specific days. I don't
have the knowledge of -- I am not there every day. I am not
actively participating in the management. Eric is the managing
member. He has my full support and authority to run the
business on a normal course on a daily basis.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Okay. Let's take back the specific date and the specific
amount. You have a 48 percent interest in HM Four. Did you
know that Mr. Sheppard was successful in getting funding from
the SBA for HM Four, in addition to getting funding from the
SBA for the Economic Injury Disaster Loan that he did tell you
about? Were you aware that two months later he got funding for
your other company, HM Four?
A.
I knew he was applying to different programs and trying to
apply for different programs. I had even had a conversation
with Jeff Graff before he left.
Q.
Now -- right. Jeff Graff left in 2020 -- early 2020; isn't
that right?
A.
I think he left right before -- right before the pandemic
really started.
Q.
Right. So I'm just going to focus you on after -- there's
a loan that you are aware of that -- because at least there was
a phone call. So there's a loan that at least you're aware of
on behalf of your company that was funded September 2020. I'm
just asking: Were you aware that just two months later
Mr. Sheppard was successful, he did obtain another identical
loan for your other company, HM Four? Did you know that, that
he got funding two months later? Did you know that?
MR. ETRA: Asked and answered, Your Honor.
THE COURT: Overruled.
THE WITNESS: Again, I wasn't aware of that.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MS. MARTINEZ:
Q.
Are you learning that here for the first time today?
A.
You're giving me specific information.
Q.
About how much funding he got under companies in your name.
Are you learning that today for the first time?
A.
Again, I knew he applied for different programs. And I
know that the -- we got the -- I refer to it as the SBA loan.
And then, if other ones came in after that, that's fine.
That's the normal course of business. He doesn't call me up
every day to tell me what happens on a daily basis. That's not
how it works.
Q.
Now, let's just finish going through the loans. In
addition, are you aware that in March of 2021, on behalf of
your company that you own 48 percent, HM-UP Development Alafaya
Trails -- March 2021, Mr. Sheppard also obtained $148,397, now
for a PPP loan from Northeast Bank? Were you aware of
that funding, $148,397 on behalf of your company that was an
application made -- successful funding? Did you know that?
A.
No.
Q.
Did you -- are you aware that -- are you aware that he also
sought forgiveness for the first PPP loan that he obtained on
May 1st, 2021 -- I'm sorry -- May 1st, 2020, for your company
HM-UP Development Alafaya Trails?
A.
No. But I would expect him to try and get the forgiveness,
just like every -- you know, I did for my own company.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
You would expect him to do that only if he did the right
thing, correct?
A.
Why would I expect he didn't do the right thing?
Q.
Are you aware that false documents were submitted on behalf
of that forgiveness application?
A.
I have no knowledge that there's false documents.
MR. ETRA: Objection, Your Honor.
THE COURT: The objection is sustained.
BY MS. MARTINEZ:
Q.
Were you aware that during the pandemic money was being
used from the One Florida Bank loan that -- the personal loan
that you obtained with Mr. Sheppard, were you aware that money
was being taken from that, over 200,000, into the accounts that
Mr. Sheppard had signatory authority and that were being used
during the pandemic? Were you aware of that, that the One
Florida loan was actually taking draws?
A.
Yes. We were using that money to do the -- to fund the
construction.
Q.
And were you aware that from the accounts into which the
PPP loans and the Economic Injury Disaster Loans were
deposited -- from those accounts, money was going out to then
pay your personal loan at One Florida Bank? Were you aware of
that?
A.
I have no knowledge of the bank accounts, of what comes in
and what goes out.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Are you aware that during the pandemic after Mr. Sheppard
received funding of PPP and Economic Injury Loans, Mr. Sheppard
was using his bank accounts to pay some of the personal line
that you had taken jointly at One Florida Bank? Isn't that
right?
A.
No. My understanding -- that loan was paid back in full.
And --
Q.
When?
MR. ETRA: She's not letting him answer.
THE COURT: If you'll let the witness answer the
question.
THE WITNESS: Thank you.
THE COURT: Complete your answer, Mr. Kallman.
THE WITNESS: My understanding was that that money
came from Mr. Sheppard, some of his personal funds, to pay off
One Florida Bank.
BY MS. MARTINEZ:
Q.
So you're not aware of how -- from Mr. Sheppard's bank
accounts that received PPP and Economic Injury money -- you're
not aware of how money went out from those accounts to pay your
personal loan? You're not aware of that?
A.
No.
Q.
Mr. Kallman, you're aware that recently in 2023, about
May 2023, there was a foreclosure as filed by a bank against
you and Mr. Sheppard relating to the Alafaya property in
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Orlando?
MR. ETRA: Your Honor, beyond the scope, and I don't
know --
THE COURT: Sustained.
BY MS. MARTINEZ:
Q.
You have an interest in not losing your investment with
Mr. Sheppard; isn't that correct?
A.
I have an interest in not losing any of my investments.
MS. MARTINEZ: I have no further questions, Your
Honor.
THE COURT: All right. Any redirect?
MR. ETRA: Yes, Your Honor.
REDIRECT EXAMINATION
BY MR. ETRA:
Q.
I think you -- Mr. Kallman, I think you testified you did
not discuss with Mr. Sheppard who of the workers at the
construction -- on HM's -- in his companies, whether they were
W-2 or 1099. Did you say that?
A.
That's correct. I knew he had workers. I knew there was
people there. The work was getting done. It didn't get done
by magic. But I never questioned him as to what's the
classification of somebody working for us.
Q.
And if you had questions on that subject, who would you
speak to?
A.
Excuse me?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
If you had questions on that subject, who would you speak
to?
A.
It would be odd for me to even ask that, but I guess it
would probably be -- I don't know -- Jeanette or Jeff.
Q.
Why not Mr. Sheppard for answers about that?
A.
Because he probably wouldn't even know.
Q.
Well, you said that -- I think that the managing member
decides who's a 1099 or a W-2. Do you recall saying that?
A.
I never said the managing member decides that.
Q.
Do you know who in the organization decides who's a W-2 or
a 1099?
A.
I wouldn't have any idea.
Q.
Okay. So you're not saying that Mr. Sheppard personally
made any of those decisions?
A.
No. I wouldn't know.
Q.
How about you with your business? Do you personally make
decisions with all your workers --
MS. MARTINEZ: Objection. Relevance.
THE COURT: Overruled -- oh. In his business. The
objection is sustained.
BY MR. ETRA:
Q.
I want to go back to the driver's license issue. When did
you provide your driver's license to Mr. Sheppard's companies?
A.
He's had it for a while.
Q.
When you say: "A while," could you give me any kind of
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
ballpark?
A.
Probably a couple of years.
Q.
Okay. And why did you provide the driver's license?
A.
Because in normal course of business, if Eric -- you know,
we're always looking to possibly, you know, refinance a loan or
a new opportunity will come up. And you have to obviously
submit applications and/or, you know, documents to banks and
lenders. And that's standard practice to have these sponsors
or the ownership group -- they want to know who they're
potentially lending to and who you are, so they run a
background check.
So my own CFO of my own company holds my license and
my passport because it's just more convenient. I can't be --
every time we do something to have to keep resending the same
document time and time again.
Q.
You were asked about your knowledge of a specific loan from
PayPal/WebBank funded in May 1. It was actually applied for in
April of 2020. In April of 2020, were you spending time
talking to Mr. Sheppard about the HM companies?
A.
No. In April of 2020 I was in the either -- coming out of
the hospital and recovering at home for over a month. I wasn't
discussing much with anybody.
Q.
And as managing member, did Mr. Sheppard have authority --
MS. MARTINEZ: Objection. Leading.
THE COURT: Sustained.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MR. ETRA:
Q.
What authority did Mr. Sheppard as managing member have
with respect to government loans?
A.
Mr. Sheppard had the authority to conduct business for the
company. And if he thought that there was a program or an
avenue that could benefit the company, he as the manager should
pursue it.
Q.
Did he have an obligation to get your permission?
A.
No.
Q.
Did he have -- did he have an obligation to keep you
informed of that?
A.
He would -- Eric would always tell me what was going on on
a high level, not on a nitty-gritty detail level.
Q.
Did he have an obligation to tell you about each
application and each funding?
A.
No.
Q.
Do you feel, from listening to the cross-examination and
the information suggested to you by the prosecutor --
MS. MARTINEZ: Objection to his feelings, Your Honor.
THE COURT: Sustained.
BY MR. ETRA:
Q.
Are you concerned that Mr. Sheppard has hidden information
from you based on the questions from the prosecutor?
MS. MARTINEZ: Leading.
THE WITNESS: No.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: Overruled.
BY MR. ETRA:
Q.
Why not? Why aren't you concerned based on what the
prosecutor was suggesting to you? Do you feel like -- why do
you feel that way?
A.
Several reasons. One, I've had a long-term relationship
with Eric, over 20-something years. There has never been a
question of monies or anything like that. The money -- a ton
of money went into this project, millions and millions of
dollars of our own capital. Eric was under very, very trying
circumstances. It's easy now to sit here and say: "Well,
this, well, that."
During the pandemic, when everybody was locked in the
house, the world shut down, okay, we had terrible timing. We
had to deliver this Burlington to be complete under the most
arduous circumstances possible to have to do that. And
Mr. Sheppard did get the job done. Was there problems after?
Yes, there was problems, but ultimately he got the job done.
Q.
Let me ask you about your knowledge of -- staying on loans
for a moment, do you know what a 4506-T form is?
MS. MARTINEZ: Objection. Beyond the scope of cross.
MR. ETRA: Your Honor, it's within the scope of
authority given on the loans, and that's why --
THE COURT: Then rephrase it. The objection is
sustained.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MR. ETRA:
Q.
Okay. Did Mr. Sheppard have authority to fill out 4506-T
forms for you?
A.
Yes.
Q.
And generally, do you know what a 4506-T form is?
A.
Yes.
Q.
Generally, what is your general understanding?
A.
A 4560-T [sic] is where you're -- a bank has the right --
or a lender or an institution has the right to pull your credit
reports, get personal information. They use that information
to evaluate whether to make a loan or not.
Q.
And why would you give that authority --
MS. MARTINEZ: Objection, Your Honor. This is
completely beyond the scope of cross and what was allowed on
cross.
MR. ETRA: It's --
THE COURT: Sustained.
BY MR. ETRA:
Q.
So let's talk about your knowledge of bank accounts or not
knowledge of bank accounts. And -- what was your -- as the
investor of 48 percent interest, what was your level of focus
on which bank accounts were used?
A.
Not much.
Q.
What was your level of focus on whether Company A -- if one
of the companies needed to put a deposit, which bank account
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
was used? Was that something that you were concerned about?
A.
No.
Q.
Why?
A.
It's not really relevant. Because in the real estate
business you could have a deposit from one company, then you
close out of another company. It's -- the money is all -- it's
a pool to a certain degree. I mean, you keep stuff separate
for business reasons, but you keep the bank accounts...
Q.
When you were asked about knowledge of whether government
money was taken out and used for personal expenses, do you
recall that?
MS. MARTINEZ: Objection. Misstating my question.
THE COURT: Overruled. I'll allow it.
THE WITNESS: Could you repeat that, please.
BY MR. ETRA:
Q.
You were asked whether -- your knowledge of whether
government money was put into a corporate account, business
accounts, and then taken out for personal expenses. Do you
recall that?
MS. MARTINEZ: Objection, Your Honor. I did not say
anything about personal expenses.
THE COURT: All right. With regard to personal. But
you may ask the question. If he recalls.
Overruled.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MR. ETRA:
Q.
Do you recall that? Your memory is your memory.
A.
That money was taken out of the --
Q.
Well, the question is: Do you recall being asked that on
cross about whether money was being taken out for personal
purposes?
A.
(No verbal response.)
Q.
I'll take that as a no.
A.
I don't think it was said: "Personal purposes."
Q.
Let me take a step back.
The -- who paid off the -- did you say that the One
Florida account was fully paid off?
A.
The loan was fully paid off.
Q.
And who paid that off?
A.
Mr. Sheppard.
Q.
And there was a suggestion that money partially came from
the bank accounts of the company. Do you recall being asked
about that?
A.
I recall being asked about that.
Q.
Does that affect your view whether, in fact, Mr. Sheppard
paid off the money -- paid it off with his own money?
MS. MARTINEZ: Objection. I have no time frame of
this payoff.
THE COURT: All right. Sustained.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MR. ETRA: It was whatever she was asking about --
THE COURT: Let's ask the question with some
clarification.
BY MR. ETRA:
Q.
Okay. Mr. Kallman, does the -- again, you recall being
asked about money going from a bank account -- from one of the
company accounts to pay back at least part of the One Florida
Bank loan? Do you recall being asked about that?
A.
Yes.
Q.
Okay. Does that affect your view that that -- that the
money was paid back with personal funds?
A.
My belief is Mr. Sheppard paid that back with his own
personal funds.
Q.
From your experience, do you have knowledge even pre-COVID
whether money was used -- whether the business accounts were
used to pay personal expenses and --
MS. MARTINEZ: Objection, beyond the scope.
THE COURT: Sustained.
(Pause in proceedings.)
THE COURT: Any further redirect?
MR. ETRA: Yes, Your Honor.
BY MR. ETRA:
Q.
The Basis loan -- well, sorry. Do you know the name of the
loan that was about $20 million?
A.
Basis Capital.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Okay. Do you know if that's been paid back?
A.
That was paid back in full.
Q.
And --
MS. MARTINEZ: Objection. Vagueness as to the time
frame.
THE COURT: All right. The testimony has already been
presented. Let's continue.
BY MR. ETRA:
Q.
Okay. With respect to the property -- presently, right,
with respect to the project, what is the status of your
investments at the project?
A.
Clarify "status," please.
Q.
In terms of whether you're still doing active construction
or the properties are stabilized.
A.
The property is 99 percent stabilized. We're just
finishing a little bit of construction on the last outparcel,
which is a Starbucks, 2,400 square feet.
Q.
How significant is -- so what kind of services are required
essentially to keep the project going for your investment?
MS. MARTINEZ: Objection. Relevance.
THE COURT: Sustained.
MR. ETRA: Your Honor --
THE COURT: The objection is sustained.
MR. ETRA: -- bias.
THE COURT: You may continue.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MR. ETRA:
Q.
Do you have any interest in phase 3?
A.
No.
(Pause in proceedings.)
MR. ETRA: Could -- Your Honor, could I show the
witness a document on ELMO, but only for the witness?
THE COURT: All right. What's the exhibit number?
MS. MARTINEZ: I'd like to ask if the witness has seen
this before because I was prohibited from showing documents to
the witness.
THE COURT: Professional courtesy requires that you
show it to Ms. Martinez first. And what is the exhibit number
before it's presented to the witness?
(Pause in proceedings.)
MR. CAVALLO: Your Honor, this will be Defendant's
Z-23.
THE COURT: Thank you.
MS. MARTINEZ: I have no objection to him asking about
it --
THE COURT: All right. Then for the witness only.
MS. MARTINEZ: I do have an objection to him putting
it in because I was not provided that before.
THE COURT: Is this the first time that this is being
shown?
MR. ETRA: Yes, Your Honor.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: Well, then --
MR. ETRA: This is one page.
THE COURT: Yeah. I understand, but this is your
witness. So the objection is sustained.
MR. ETRA: Could I just have a moment to confer with
counsel?
THE COURT: All right.
(Pause in proceedings.)
BY MR. ETRA:
Q.
Do you know if the -- any bank loan with Chase Bank was
paid off as well?
MS. MARTINEZ: Objection. Beyond the scope.
THE COURT: Sustained.
MR. ETRA: No further questions, Your Honor.
THE COURT: All right. Thank you.
Is Mr. Kallman excused? On behalf of the Government?
MS. MARTINEZ: Yes, Your Honor.
THE COURT: On behalf of the Defendant?
MS. WEINTRAUB: Yes, Your Honor.
THE COURT: Thank you, sir. You are excused.
(Witness excused.)
THE COURT: And the Defendant's next witness.
MR. CAVALLO: Your Honor, our next witness is our
computer forensic expert, John Jorgensen.
(Pause in proceedings.)
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MS. WEINTRAUB: Judge, I apologize. He just went to
the men's room.
THE COURT: Do you have another witness to call?
(Pause in proceedings.)
MR. ETRA: Your Honor, he was in the other end, and he
walks with a cane, so --
THE COURT: All right. Not a problem.
(Pause in proceedings.)
THE COURT: All right. Good morning, sir.
THE WITNESS: Good morning, Your Honor.
THE COURT: Sir, let me ask that you remain standing,
raise your right hand to be placed under oath.
JOHN JORGENSEN, DEFENSE WITNESS, SWORN
COURTROOM DEPUTY: Thank you.
You can have a seat.
Would you please state your name and also spell it for
the record.
THE WITNESS: John Jorgensen. J-O-H-N
J-O-R-G-E-N-S-E-N.
COURTROOM DEPUTY: Thank you.
DIRECT EXAMINATION
BY MR. CAVALLO:
Q.
Good morning, Mr. Jorgensen.
A.
Good morning.
Q.
Where are you employed?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
I'm employed at the Sylint Group, S-Y-L-I-N-T, in Sarasota,
Florida.
Q.
What's your position with the Sylint Group?
A.
CEO, president, and chairman.
Q.
Could you just briefly tell us a little bit about your
company.
A.
I'm also the senior forensic engineer at the company. The
company is composed of approximately 49 people right now. We
have multiple offices, one in Tallahassee and another one in
Pennsylvania. And we do digital data analysis forensics and we
do cybersecurity. We write our own software as well.
Q.
Typically, what's the background of the types of people you
hire?
A.
Typically, they are ex-military, ex-law enforcement, FBI
agents, CIA agents, various people like that.
Q.
And what's your personal area of expertise?
A.
I joined the military back in '69, the Army Security Agency
during the Vietnam War.
Q.
Did you leave college to join the military?
A.
Yes, I did. I originally went to college for mathematics,
and I got stuck in the chemical engineering program, and I
hated it and I joined the military for NSA, took some tests.
They gave me an option of either the officer candidate school
or ASA, Army Security Agency, and I elected the Army Security
Agency. It's a four-year enlistment when you do that.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
And has all of your work since then involved digital data
forensics?
A.
Yes, it has. When I was working with the Army Security
Agency, that's what we did, a two-year school for digital data
forensics. And then I -- the Army Security Agency is the
military arm of the National Security Agency. So I was working
really for the National Security Agency.
Q.
How did your experience at the NSA impact what you're doing
now at the Sylint Group?
A.
I had a number of very successful programs while I was
working at National Security Agency and ASA. And I took the
knowledge that I gained there in digital data forensics, and
the security issues that we came up against, and I brought that
process and capability to Sylint Group, and we turned -- we
became very successful in the Sylint Group using that
capability and methods.
Q.
Does your company and yourself provide services to any
government organizations?
A.
We provide services to FBI. We provide services to IRS,
Department of Homeland Security, Secret Service, various law
enforcement agencies throughout the country, and various other
government organizations in the intelligence community.
Q.
Do you personally hold any security clearances now?
A.
Currently, I'm on a "for eyes only" program. Those are
very limited programs. Usually there are -- the number of
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
people involved in those programs are 50 or less.
Q.
Have you been involved in any government briefings
regarding your expertise in digital data analysis and
forensics?
A.
Oh, many briefings.
Q.
With who, for example?
A.
We brief Sedona Conference as an example. We sit on the
Conference Working Group 11. We used to brief the RSA
conferences all the time. We've briefed -- I briefed,
personally done, the Secretary of Defense, and various -- well,
HPSCI. I've also briefed the House Select Committee on
Intelligence. And we've briefed -- at the encouragement of our
government, we've briefed other government entities around the
world.
Q.
Have you ever been formally recognized in your field of
expertise?
MS. MARTINEZ: Objection. Vague. What field of
expertise?
THE COURT: Sustained.
BY MR. CAVALLO:
Q.
Have you ever been formally recognized in the field of
digital data forensics and analysis?
A.
Yes. I received a Army commendation medal for my work in
breaking the SOBE Communication Service system. I received a
Joint Service Commendation Medal. I can't talk about that
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
necessarily. But I received the Defense Meritorious Service
Medal and a personal presentation from the director of NSA for
my work on a signal called M6504.
Q.
And how many times approximately have you testified as an
expert in digital data analysis and forensics?
A.
A couple hundred times.
Q.
Have you ever been appointed by the court in any role?
A.
Yes. I've been appointed by the court as a special master
for federal and local courts.
MS. MARTINEZ: Objection, Your Honor. Vague as
appointed to do what, what field of expertise?
THE COURT: He -- you want to clarify the special
master?
BY MR. CAVALLO:
Q.
Sure. Mr. Jorgensen, have these court appointments you've
just told us about -- have they all involved digital data
analysis and forensics?
A.
Yes. All involving forensics.
MR. CAVALLO: Your Honor, I offer Mr. Jorgensen as an
expert in the field of digital data forensics and analysis.
THE COURT: All right.
BY MR. CAVALLO:
Q.
Mr. Jorgensen, what were you asked to do in this case?
A.
I was asked to look at two documents, actually an email and
a Microsoft Word document, and determine what properties and
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
metadata exist for those documents.
Q.
Could you just briefly tell us what metadata is.
A.
Metadata is information that is attached to a document or a
piece of information derived by a computer system application,
such as Microsoft Word. And that information is frequently
derived from the operating system. And in some cases, as in
emails, the information is derived from the communications --
Q.
Is this something you're typically asked to do in the field
of digital data forensics and analysis?
A.
Yes. Frequently we are asked to do that.
MR. CAVALLO: Could you please put up -- it's in
evidence -- Defense Exhibit M-19, and we'll turn off the ELMO.
BY MR. CAVALLO:
Q.
Do you see this document on your screen?
A.
Yes, I do.
Q.
Just on the face of this document --
MR. CAVALLO: And could you go to the next page, too,
just to scroll through.
BY MR. CAVALLO:
Q.
On the face of the two pages of this document, is this the
email and the attachment you were asked to look at?
A.
What I'm seeing right now -- the email is on the left-hand
side, and the attachment is under "Attachments," the Eric.docm
attachment. And that's a Microsoft macro document.
Q.
I --
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MR. CAVALLO: For the record, this is Exhibit M-19.
BY MR. CAVALLO:
Q.
Could you tell us what a .docm file is?
A.
A docm file is a macro that's typically written by a
company in order to provide the -- provide a format and a
header information and footer information for a document that
you would fill in. So a macro is a pre-derived document
template that's used by Microsoft Word.
Q.
And what did you need in order to be able to review the
metadata of these two documents?
A.
The two documents in their native format.
Q.
Native format?
A.
Yes.
Q.
And did you receive the native version of these two
documents?
A.
Yes, I did.
Q.
Did you assist in the preparation of any demonstrative aids
in connection with your review of this information?
A.
Yes. These demonstrative aids that we have right now.
MR. CAVALLO: Could you put up and just scroll through
for the witness Z-19 through Z-22.
You can go to the next one.
BY MR. CAVALLO:
Q.
Mr. Jorgensen, I'd just like you to look at these briefly,
each one.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Yes.
MR. CAVALLO: You can go to the next one.
THE WITNESS: Yes.
MR. CAVALLO: And you can take it down.
MS. MARTINEZ: Excuse me. I just want to make a
request. I realize that they are only demonstrative, but when
you refer to each one please give me like a number.
MR. CAVALLO: I will. They are separately numbered.
BY MR. CAVALLO:
Q.
Mr. Jorgensen, you were -- these demonstratives, they're
prepared to assist you in your expert testimony today?
A.
Correct.
MR. CAVALLO: Your Honor, I'd like to show these
demonstratives to the jury during Mr. Jorgensen's testimony,
and the Government has no objection.
THE COURT: For a demonstrative aid. Yes, of course.
MR. CAVALLO: I offer them as demonstrative aids.
Could you -- sorry. Please put up Z-19 first.
BY MR. CAVALLO:
Q.
Do you see Z-19 on your screen?
A.
Yes, I do.
Q.
Could you please tell us what is being shown in the middle
of this document.
A.
Well, the document is a email -- email document. And what
is being shown in the middle of this document is the properties
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
that are contained within the document, the email.
MR. CAVALLO: And I'm sorry. Actually, could you
unzoom in for a second.
THE WITNESS: So this is the metadata that would be
associated with this document.
MR. CAVALLO: Okay. Sorry. Could you please --
BY MR. CAVALLO:
Q.
And what does the metadata on this specific demonstrative
show?
A.
If you look under the Internet headings in the center of
the document, you see that this email was sent to
ericsheppard10@gmail.com. That's the email account it was sent
to. And it was received -- next three lines, four lines
down -- it was received by that SMT -- @SMTP address on 12
November 2020 at 08:13:39; however, that is in -- the PST means
Pacific Standard Time.
Q.
Do you have any idea why that would be in Pacific time?
A.
Because Google's email server is routed through California.
That's where their basic servers are. So this would have gone
through that server in California and then back out again, but
it would have a tag of Pacific Standard Time on it. So if you
convert that to local time, that's three hours' difference. So
that would be 11:13:39.
MR. CAVALLO: And just for the record, this is
Demonstrative Z-19.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Could you please put up Demonstrative Z-20.
BY MR. CAVALLO:
Q.
Do you see this, Mr. Jorgensen?
A.
Yes, I do.
Q.
Could you please tell us what this is.
A.
If you look on the right-hand side of the Internet headers,
you see the scroll bar has moved down slightly. So what we're
doing is going through the various properties data in this
center box.
Q.
And what is the metadata that's shown here?
A.
This data says received from a corporation with the address
suntrust. -- suntrust.com. So the SMTP address is suntrust.com
at that IP address.
Q.
Okay. Is there any other date information in this
metadata?
A.
Down on the bottom of it, where it says: "For
EricSheppard10@gmail.com," it says: "Thursday, 12
November 2020, 11:13:38." And again, that's local time so
there's no conversion of the time.
Q.
Given the two times you've seen, it's about a second apart,
correct?
A.
Right. Correct.
MR. CAVALLO: Could you please put up Demonstrative
Z-21.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MR. CAVALLO:
Q.
You see this demonstrative, Mr. Jorgensen?
A.
Correct. And again we've moved down on the scroll bar. So
we're looking at more information contained in the metadata for
the email. And it says -- it says sender was
heimdal.barrios@suntrust.com at that IP address.
Q.
Okay.
MR. CAVALLO: And you can leave it up.
BY MR. CAVALLO:
Q.
Can you just summarize for us what the metadata in the
email showed based on what we've just looked at.
A.
It showed that an email was sent by Heimdal Barrios
@suntrust.com to Eric Sheppard at that Gmail address that was
Eric Sheppard's Gmail address.
Q.
Thank you.
MR. CAVALLO: You can take that down. And please put
up Z-22 demonstrative.
BY MR. CAVALLO:
Q.
Could you tell us what's being shown here, Mr. Jorgensen.
A.
This is the profiles and the properties associated with the
dot -- the dot M -- the dot com M.
Q.
Yeah.
MR. CAVALLO: You know what? Could you put up on the
screen half and half also and 19 on the second page.
THE WITNESS: In the email, there was a document that
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
was an attachment. So this is the attachment on the right-hand
side of the screen that went with the email. On the left-hand
side of the screen is the properties for that attachment.
BY MR. CAVALLO:
Q.
Could you tell us what the metadata of the attachment
shows, and specifically related to the dates that are shown
there.
A.
We've got a created date, a last modified, and a last
printed date. So what happened was the created date gets
established when the file is saved with a certain file name.
So the file name was saved at -- on 11/12/2020 at
11:12 a.m. It's interesting to note that it was printed just
before it was saved. So the document was probably up on the
computer screen, which is not unusual, and the individual
decided that he wanted to print it. And so the actual printing
of the document occurs one minute before the document gets
assigned its name.
Q.
And what's the significance of the created date and the
last modified date being identical?
A.
Well, no other further modifications had been made. It
will give a last modified date the same date as the created
date if there's no modifications made.
Q.
And who was -- according to metadata, who last modified
this email attachment?
A.
It was Heimdal Barrios with the email address. If you
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
click on that "B," you would see the full email address, but
it's -- it was Heimdal Barrios.
Q.
And just for the record, could you please go through and
state the various times that are listed here and what those
show, for example, the time for last printed.
A.
Well, the last print means -- it would be the last date a
print command for this document was sent to a printer.
Q.
And the time listed there, for the record?
A.
Well, it's 11:11 a.m. So the individual that was sitting
on the document, reviewing the document on his computer screen,
issued a print command prior to him saving the document.
Q.
Sorry. The date and the time. So I would just like you
to --
MS. MARTINEZ: Objection, Your Honor. He's already
answered the question, and it's on the document.
THE COURT: Overruled.
THE WITNESS: So the time indicated was 11/12/2020 at
11:11 a.m.
BY MR. CAVALLO:
Q.
And that was for?
A.
The printing.
Q.
Okay. Next?
A.
And the created date was 11/12/2020 at 11:12 a.m.
Q.
And the last modified?
A.
And last modified date was the same, 11/12/2020 at
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
11:12 a.m.
MR. CAVALLO: On M-19 on the right-hand side, could
you just go up one page.
BY MR. CAVALLO:
Q.
And again, just for the record, the metadata that you
reviewed on the left-hand side was for which document?
A.
It's for the attachment, which was named Eric.docm.
Q.
Is there any evidence in the metadata that Mr. Sheppard
ever modified or altered either of these documents?
A.
The evidence in the metadata shows that it would be
impossible for him to do that.
(Pause in proceedings.)
MR. CAVALLO: I don't have anything further, Your
Honor.
THE COURT: All right. Cross-examination -- and
actually, Ms. Martinez, before we proceed, only because we have
been sitting, Ladies and Gentlemen, how is everybody doing? Do
we need a short recess?
All right. My apologies. Since it is a quarter to
eleven, let's go ahead and take a 10-minute recess.
COURT SECURITY OFFICER: All rise.
(Jury not present, 10:44 a.m.)
THE COURT: We're on a 10-minute recess.
(Recess from 10:44 a.m. to 10:56 a.m.)
THE COURT: We just need the witness and the
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Defendant.
Okay. Welcome back. We just need Mr. Sheppard.
All right. Let me acknowledge the presence of the
Defendant.
Can we just make sure we have all of the jurors before
we bring them in.
(Pause in proceedings.)
(Before the Jury, 10:56 a.m.)
THE COURT: All right. Welcome back, Ladies and
Gentlemen.
Please be seated, everyone.
And we will continue with the testimony.
CROSS-EXAMINATION
BY MS. MARTINEZ:
Q.
Good morning, Mr. Jorgensen.
A.
Good morning.
Q.
My name is Annie Martinez. We've never met before, right?
A.
Not that I know of. Right.
Q.
So I do see your resume. Your education was originally in
chemical engineering; is that right?
A.
Yes. But I went to Northeastern for math, but the math
department was full so I ended up in chemical engineering.
Q.
So you studied chemical engineering from 1966 to 1967; is
that correct?
A.
Correct.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
And I see your experience. Your resume describes it as
happening prior to July 1994. That's where your resume
describes your experience; is that right?
A.
That's correct.
Q.
So since 1994, you began founding your company and running
it as a business?
A.
Correct.
Q.
You described in your direct testimony that you had had a
two-year school in digital data forensics. I didn't get the
time period.
A.
So the -- I joined the military delayed entry. Entered the
military in '69, and I went to basic training. And then I went
to Fort Devens, Massachusetts for two years and went to school
for digital data signals analysis.
Q.
And I think you -- so this is signals analysis, like -- for
example, like foreign intelligence?
A.
Any communications that's done with digital data. It can
be from -- as an example, it can be from missiles. It can be
from satellites. It can be communications on the ground. It's
usually signals that are -- since digital data is being used by
computers, it's signals that are single data paths that are
used by computers. So this is in the early days of looking at
a signal and determining where the signal had came from, what
it was made up of, and what type of computer systems were
transmitting the signal.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
That was the beginning of my career. After that two
years, I was assigned to Shemya, Alaska, which is a
three-by-four mile island on the end of the Aleutian chain. We
used to watch the ICBM missiles come into the peninsula and
analyze the signals emitted from those missiles, from those
warheads, and determine how they derive -- what the structure
is, how we could overcome the commands being sent to those
missiles.
And then I went back to Fort Devens. I taught at Fort
Devens for a year, and then I --
Q.
Would you mind if I just pause you, only just because I
think I just want to focus you just on the two years of school
in digital data forensics. I think, if I got it right, that
would be in the late '60s when you did that?
A.
No.
Q.
Early 70s?
A.
In the late 60s, that's when I began my career. After I
came back and came back to NSA, I went to 12, 15 schools in
digital data forensics during the '80s -- '70s and '80s.
Q.
So -- okay. So it was not two years of school in digital
data forensics?
A.
No. Much more than that.
Q.
Okay. When was the last time that you had education in
digital data forensics, yourself -- like yourself, your
training?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
We're on the cutting edge of that.
Q.
No. My question is you, sir.
A.
So we are doing the teaching.
MR. CAVALLO: Objection, Your Honor. Let him finish,
please.
THE WITNESS: We're doing the teaching at the RSA
conference. We hold classes on it for the government --
BY MS. MARTINEZ:
Q.
May I ask who's -- let me just please ask you -- my only
question is: When was the last time you personally got
schooling on digital data forensics, yourself? You yourself,
not your employees.
A.
We develop the classes and we teach digital data forensics.
So we don't go to school for it because we are teaching it. We
are on the cutting edge of it.
Q.
So when -- I understand that you work as a group with
people, but my question relates to you. Have you yourself
received any training regarding digital data forensics in the
last 10 years, yourself? Yourself. Have you?
A.
I have attended RSA conferences on digital data forensics.
Q.
What is RSA?
A.
RSA is a company that holds conferences on legal matters,
as well as forensics, as well as cybersecurity. The
conferences are held in Asia once a year, they're held in the
United States once a year, and they're held in the Netherlands.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
And I have spoken at those conferences and I've attended
classes in those conferences.
Q.
Have you had training in obtaining emails from an
environment such that it's not modified?
A.
Yes.
Q.
And when was the last time you did it yourself?
A.
Yes.
Q.
When was the last time you did it yourself?
MR. CAVALLO: Your Honor, just clarification. Did
what?
BY MS. MARTINEZ:
Q.
When was the last time you obtained an email from its
original environment yourself?
A.
Saturday and Sunday.
Q.
Okay. So you know that the best practice to obtain an
email is from the original environment, such as the Google
mailbox? You know that, correct?
A.
No, it's not.
Q.
The original environment -- have you ever worked on a
criminal case?
A.
Yes. Several times.
Q.
And --
A.
Couple hundred times.
Q.
And have you obtained evidence from a Google environment?
A.
Yes.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
And that is the best place to obtain it from, correct?
A.
No, it's not.
Q.
What would you say is the best place to obtain an email in
its original form so that you can be sure that it has not been
modified?
A.
You would get it from the native -- in its native form from
the computer that transmitted it.
Q.
Okay. That's another good place to go. Did you go to the
computer that had the email message that you are testifying to
the jury about?
A.
It was not necessary because it was in its native format.
The nature format -- if it's in its native format, the native
format stays as a whole from the moment of transmission to the
moment of the reception.
Q.
You are not aware of the fact that a message file can be
modified if it's removed from its environment? If it's
outside --
A.
How? How?
Q.
I ask the questions, sir. I do. You're not aware? Are
you aware of the hex editor?
A.
Pardon me. You are not describing it properly.
Q.
Thank you, sir. Let's go to the basics. A computer files
is zeros and ones, correct?
A.
Correct. Assembly language. I used to program in Assembly
language.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
And that's what the machine reads, correct?
A.
Correct.
Q.
And that can be changed; isn't that right?
A.
I'd fire you or anybody even with a computer understanding
to be able to change at the hexadecimal level.
Q.
Isn't it true that the only way to be sure that something
hasn't been modified is to obtain it from its original
environment and to do it forensically applying science, so that
it can't be changed?
A.
A native file cannot be changed. That's why you ask for
native format. That's why native format is important in any
discovery process.
Q.
So are you -- you've testified in other cases, correct?
A.
Two hundred of them, yes.
Q.
Okay. And are you aware of the concern of preserving data
in its original form?
A.
Yes. I make that a subject of all of my cases.
Q.
And isn't it a fact that the only way to obtain that in its
original form is to go to the source, such as the computer or
the Gmail account?
A.
No.
MR. CAVALLO: Objection, Your Honor. Asked and
answered.
THE WITNESS: No.
THE COURT: Overruled.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MS. MARTINEZ:
Q.
You're not familiar with a hexadecimal editor that can be
downloaded for free from the Internet and that allows you to
modify an MSG file, a message file, once it's removed from a
computer and held statically outside of its environment?
You're not aware of that?
A.
The properties of that file are very, very difficult to
change. We used to do it when we were hunting terrorists in
NSA. We would change files. It is extremely -- it would take
me a month to take and compose that and get the computers
necessary and pool them all together. I'd have to have the
computer that is referenced. I'd have to take and reprogram
them. I'd have to put a different time zone on them. I'd have
to -- in order to take and get around the properties that are
contained in the metadata.
To change an email, the face of the email, the body of
the email, yes, you can do that, but you can't change the
properties. And that's the important issue, is looking at the
properties of the email in defining whether those properties
are valid or not, and I did that.
Q.
Right. But once you remove it from the original
environment, you can re-save it, open it up, use a hexadecimal
editor, and change the properties.
MR. CAVALLO: Objection, Your Honor. Asked and
answered.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE WITNESS: No, you can't. You cannot change the
properties.
THE COURT: Sustained. Sustained. There's no need to
answer the question, sir. The objection is sustained.
BY MS. MARTINEZ:
Q.
Would you agree with me that it is the correct practice to
obtain it from the original source -- to obtain an email from
its original source, not for it to be handed to you by a lawyer
in a static format outside of its environment?
A.
If the email is in its native format -- and I can tell an
email in its native format fairly easily by looking at the
properties. If it's in its native format, you can use the
email in its native format. It's a container that cannot be
corrupted --
Q.
So --
A.
-- without leaving telltale signs behind.
Q.
Did you use any science in this case to determine whether
or not there was those telltale times -- those telltale signs?
A.
I looked at the properties values for the email, and they
were correct. They were valid.
Q.
Isn't it true that the only way to make sure that it hasn't
been changed is to get it from its original source?
MR. CAVALLO: Objection, Your Honor. Asked and
answered.
THE WITNESS: As I said many times --
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: The objection is sustained. There's no
need to respond.
THE WITNESS: Yes, Your Honor.
BY MS. MARTINEZ:
Q.
You're familiar with the fact that in modern times email
are faked all the time, to the fact that part of your
cybersecurity practice includes training people on how to
beware of spoofed emails. Emails can be faked; isn't that
true?
A.
Yes. But you're talking about two different things. You
don't know what you're talking about. Would you like me to
explain to you what it is?
Q.
No, sir. You'll have an opportunity to redirect. You're
not familiar with the fact that an MSG file that has been
removed from its environment can be changed, right?
A.
The body can be changed -- you're asking the question
incorrectly -- but the properties in a native file cannot be
changed.
Q.
Going to the Microsoft Word file. You're familiar with the
fact that now Microsoft Word allows you to change the metadata
so that it doesn't leave when you send it out?
A.
Microsoft Word allows you to change the displayed data in
properties. It does not allow you to change the metadata that
accompanies the file. If you look at the metadata that
accompanies the file, you can see if there are any changes that
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
have occurred and you can detect them. We do it all the time.
Q.
Well, actually, the only thing you did in this case, right,
is that you just did some right-clicking and saw what you could
see superficially. You did not apply any science in this case;
isn't that right?
A.
Are you asking me if I did or are you telling me?
Q.
I'm asking you.
A.
We used -- I used X-Ways, which is a forensics program, to
validate the metadata and validate the properties of a file.
Q.
Validate by opening it?
A.
No. You validate it by collecting information about the
file itself in its native format.
Q.
And those properties, you were not able to say whether it
was modified previously?
A.
I'm able to say that they were not modified.
Q.
In the civil litigation that you were involved in, you're
aware of the emphasis of preserving evidence in its original
form and not altering, right? You're familiar with that?
MR. CAVALLO: Objection, Your Honor. Asked and
answered.
THE COURT: Overruled. I'll allow it.
THE WITNESS: Yes.
BY MS. MARTINEZ:
Q.
You're familiar with the fact that forensic analysts talk
about the fact of going to the source, making sure that they
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
obtain it from the source, and explain how they are sure that
it has not been changed. You're aware of that. You do that as
part of your job, right?
A.
Some of my cases are written up in Westlaw on spoliation
issues and on original evidence issues because of established
precedence. In both cases I've addressed the issue of original
evidence and maintaining and preserving evidence and how you
would go about doing it.
Q.
Right. And isn't it the best practice to go about doing
that to not touch the original environment and to have a
professional go and remove the emails from there to make sure
that it hasn't been modified? Isn't that the best practice?
A.
Not necessarily if you have native format and you can take
and look at -- forensically look at the metadata and you can
validate the data on the original -- on the native format
document that you're looking at.
Q.
You're saying that it's not the best practice?
MR. CAVALLO: Objection, Your Honor. Asked and
answered.
THE COURT: Sustained.
(Pause in proceedings.)
BY MS. MARTINEZ:
Q.
You're aware of litigation regarding metadata being
changed, aren't you?
A.
Yes.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Okay. So it can be changed?
A.
You're talking about the properties values. And you're not
talking about -- I am aware that people have attempted to
change metadata. It leaves all sorts of artifacts behind when
you attempt to change metadata.
Q.
And you did not do an examination like that in this case?
A.
I said I used a forensics program X-Ways, and I validated
the properties values and I validated the metadata that I could
see using X-Ways. Yes, I did it in this case.
Q.
In this case, what you reviewed is an email that was
provided to you by counsel, correct?
A.
Yes. In its native format.
Q.
Right. You never went to the Defendant's computer, right?
You never went to Mr. Sheppard's computer; is that right?
A.
That wouldn't be the place to go to.
Q.
Excuse me?
A.
It would not be the place to go to. It was not the
originator of the email.
Q.
You did not go there?
A.
No.
Q.
Did you take a look -- I'm going to show you a document.
(Pause in proceedings.)
MS. MARTINEZ: Could I have ELMO, please.
Oh. It's up.
Is that what's wrong?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MS. MARTINEZ:
Q.
I'm showing you what's been marked as Government's
Exhibit -- I'm sorry -- Defense Exhibit M-19.
A.
Okay.
Q.
Okay. You've seen this document, right?
A.
Yes.
Q.
And you do see that it says: "On behalf of Heimdal
Barrios." Do you see that at the top?
A.
It says -- it gives the email address, yeah.
Q.
Do you see that it says: "On behalf of Heimdal Barrios"?
A.
It says: "Heimdal Barrios, on behalf of Heimdal Barrios."
Q.
That's right. And you're aware that if it's coming from
the mailbox of Heimdal Barrios, it wouldn't say: "On behalf of
Heimdal Barrios"; is that right?
A.
No. It would.
Q.
It would not.
A.
It would say exactly what it says if it came from Heimdal
Barrios's --
Q.
Actually -- actually --
A.
-- mailbox.
Q.
-- if it came from Heimdal Barrios's mailbox, it would say:
"Heimdal Barrios." It wouldn't say: "On behalf of"; is that
right?
A.
Depends upon how their email system is set up.
Q.
You're not familiar with Microsoft Outlook feature --
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Yes, I am. And it depends upon how the system is set up,
how the company's Microsoft Outlook system -- email system is
established.
Q.
Are you familiar with the feature that allows for someone
else to go into a mailbox and send on behalf of someone else?
A.
Yes. So Heimdal Barrios is sending it on his behalf.
Q.
Are you familiar with the feature that allows, for example,
a secretary to send on somebody's behalf?
MR. CAVALLO: Objection, Your Honor. Asked and
answered.
THE COURT: Sustained.
BY MS. MARTINEZ:
Q.
I'm going to show you part of the Exhibit M-19. This is a
hard copy of the attachment that you reviewed.
A.
Yes.
Q.
Do you recall reviewing that?
A.
I said yes.
Q.
I'm showing you what's been previously identified as 58-3
and it's also identified as Bates label 031143 from Exhibit 58.
(Pause in proceedings.)
BY MS. MARTINEZ:
Q.
Did you analyze --
MR. CAVALLO: Your Honor, I'm just going to object
that this document is outside the scope of direct and what was
discussed yesterday regarding the scope of this expert's
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
testimony.
THE COURT: Is this the same --
MS. MARTINEZ: This is an exhibit in this case.
THE COURT: All right. But this is part of the
document that was used for demonstrative purposes?
MS. MARTINEZ: No, Your Honor.
MR. CAVALLO: No, Your Honor.
MS. MARTINEZ: This is the document at issue in this
case.
THE COURT: I'm going to allow it. Overruled.
BY MS. MARTINEZ:
Q.
Has the Defense shown to you this document that has a
signature?
A.
I've seen this document, yes.
Q.
Were you given this document in PDF format to analyze the
PDF?
A.
Do you know that PDF format --
Q.
Just answer the question.
A.
I have not seen this document in PDF format. I've not, I
believe.
Q.
You did not analyze a document of PDF?
A.
I saw a PDF document. It is not a valid document.
Q.
You did -- so you did receive a PDF?
A.
It's not valid. It's not valid because it was --
Q.
Just answer my question, please.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MS. WEINTRAUB: Your Honor, can he be allowed to
answer?
THE COURT: Yeah. Give the witness an opportunity to
respond to the question.
MS. MARTINEZ: Well, the question calls for a yes or
no.
BY MS. MARTINEZ:
Q.
Did you receive a PDF to review?
A.
I did not receive a PDF to review. I saw the PDF document.
I was not asked to review the document. It's not valid.
Q.
You viewed it on somebody else's computer? I'm trying to
understand. You didn't receive it.
A.
I received the PDF document. I did not review it for
counsel; however, I did see the document, and I noted that
there was a PDF. The PDF document that I received -- oh. The
PDF document I received was not valid. The reason why it was
not valid, it was not in its native format as a container, and
it had a date on it that was the same date as other documents
that was transmitted by prosecution.
So you destroyed the properties of that document when
you PDFed it. I would have to go to the prosecution and say:
"I need to see this document on prosecution's computers because
you have destroyed the evidence by PDFing it and changing the
dates."
Q.
Mr. Jorgensen, you did not ask anyone for a PDF in its
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
original format, how it was received from the SBA. You did not
ask for that, correct? You did not ask for that?
A.
Why should I ask for a document that I know is not valid?
Q.
Well --
A.
I was not asked --
Q.
You don't know what the SBA has unless you ask.
A.
I was not asked to review this document.
Q.
And with respect to your statement with respect to
information on a document, these documents were Bates labeled
when they were provided. So that may be what you're addressing
with respect to the document that you saw; however, if the
document in the case is a PDF, you did not ask for it, correct?
A.
I was not asked to review it.
Q.
Okay.
A.
And when I did look at it, I realized the document
properties had been destroyed in the prosecution's handling of
the document.
Q.
You did not -- now, because you make that statement, I have
to ask you: You did not ask us whether we had another copy
that came from the SBA. You did not ask that, did you?
MR. CAVALLO: Objection, Your Honor. Asked and
answered.
THE COURT: Sustained.
BY MS. MARTINEZ:
Q.
Taking a look at this document, you do see that the PDF is
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
formatted differently than the letter. You see that?
A.
And I would imagine -- yes, I do. And I would imagine that
the reason why it is formatted differently here is because
there were two spaces that were removed. And I would imagine
that Mr. Barrios may very well have removed those spaces
himself when he went to print the document. If you remove
those two spaces, the whole document closes up and it looks
exactly like this document. It's the same font, same spacing,
everything's the same. I measured everything on the document.
It's the same.
Q.
Let me take you back to the document and the metadata, the
Word document. When it says: "Heimdal Barrios" there, what it
really is saying is that there was -- if the metadata is true,
what it really is saying is that it's Heimdal Barrios -- a
computer where Heimdal Barrios was assigned and signed in as
Heimdal Barrios. That's really what it's saying. It's not
saying who was sitting at the computer; is that right?
A.
No. You're wrong.
Q.
You know who is sitting at the computer?
A.
You're wrong in your assumption. It gives the computer.
The word -- the signature Heimdal Barrios comes from the
application and the person that's signed into the application,
not the person that's signed into the computer.
Q.
Right. So if -- but it doesn't tell you who's sitting
there, just who signed in if that metadata is correct, right?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
So by saying that, you're saying that somebody else signed
into his computer at SunTrust and produced the document.
Q.
All -- it's on behalf -- it was sent on behalf of Heimdal
Barrios. It could be a secretary who sat there. Isn't it true
that it could be a secretary who sat there?
A.
If she had his login password and name, and she signed in
as Heimdal Barrios, then it would be Heimdal Barrios -- sending
the email on behalf of Heimdal Barrios.
Q.
Now, looking at this document that I have in front of you,
you have no idea who signed that document, do you?
A.
I'm not a writing expert -- a forensic expert for writing.
Q.
Right. And you don't know Mr. Barrios, right?
A.
That has nothing to do with whether it's his signature or
not.
Q.
You -- you were paid to testify here today, weren't you?
A.
Yes.
Q.
And what is your rate?
A.
Four hundred dollars an hour.
Q.
And so -- and is that the same rate for your review?
A.
No. The rate for the review was 325 an hour.
Q.
So everything that you've done in this case -- have you
already calculated your hours?
A.
No.
Q.
So -- but it would include the review, and the review began
in December?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
No. The review began this weekend. I was engaged on
Friday, formally engaged on Friday.
Q.
The document that you received to review had been saved on
December 27th; isn't that right?
A.
I don't know what date it was.
Q.
You actually didn't check to see the last time that that
document that you got, the native document -- when it had been
saved? You didn't check that?
A.
I do not remember what that date was.
Q.
So everything that you have said here today you're going to
be paid several thousand dollars for; isn't that right?
A.
Correct. That's normal forensics fees.
(Pause in proceedings.)
BY MS. MARTINEZ:
Q.
You're aware that the letter was dated November 11th,
right?
A.
Yes.
Q.
Did you see that?
A.
2020.
Q.
And being former military, you know that that's Veterans
Day, correct?
A.
I don't know that offhand, but I will take your word for
it.
MS. MARTINEZ: No further questions, Your Honor.
THE COURT: All right. Any redirect?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MR. CAVALLO: Very brief, Your Honor.
REDIRECT EXAMINATION
BY MR. CAVALLO:
Q.
Mr. Jorgensen, when you performed forensic work for the
government, are you also paid?
A.
Yes.
Q.
I believe on cross your testimony was if someone had --
when people try to tamper with metadata, ones and zeros and
those things you talked about, there would be artifacts left
behind?
A.
Yes, there are.
Q.
And were there any artifacts of anyone trying to tamper
with the metadata in the two native documents you reviewed?
A.
No, there weren't. If there were, I would have reported it
back.
MR. CAVALLO: Nothing further, Your Honor.
THE COURT: All right. Is Mr. Jorgensen excused?
MS. MARTINEZ: Yes, Your Honor.
MR. CAVALLO: Yes, Your Honor.
THE COURT: All right. Thank you, Mr. Jorgensen. You
are excused.
THE WITNESS: Thank you, ma'am.
(Witness excused.)
THE COURT: And Members of the Jury, I do want to
advise you that at five to twelve we're going to take our
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
one-hour recess for lunch. Unfortunately, I do have a meeting
at noon that I must attend. So we'll start with the next
witness and see how far we go.
The Defendant's next witness, please.
MR. ETRA: Yeah. Defense calls Kerby Kleef.
THE COURT: Is this Mr. Kleef?
Hi. Good morning, sir. If you'll step forward.
If you'll remain standing. Raise your right hand to
be placed under oath.
KERBY KLEEF, DEFENSE WITNESS, SWORN
COURTROOM DEPUTY: Thank you.
Have a seat.
Would you please state your name and also spell it for
the record.
THE WITNESS: My name is Kerby Junior Kleef.
K-E-R-B-Y. Junior, J-U-N-I-O-R. Kleef, K-L-E-E-F.
COURTROOM DEPUTY: Thank you.
MR. ETRA: May I proceed?
THE COURT: Of course.
DIRECT EXAMINATION
BY MR. ETRA:
Q.
Mr. Kleef, good morning.
A.
Good morning, sir.
Q.
Where were you born?
A.
I was born in Haiti.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Where do you live now generally? You don't have to give
your address.
A.
I live in Orlando.
Q.
Are you a United States citizen?
A.
Yes.
Q.
In COVID, did you work at the Burlington job?
A.
Yes.
Q.
Who hired you?
A.
Jeffrey Vasilas.
Q.
Who did you report to when Mr. Vasilas was alive?
A.
I report to him.
Q.
Who paid you?
A.
Jeffrey Vasilas.
Q.
Generally speaking, just describe in your own words the
kind of tasks you performed at Burlington.
A.
I was there to -- helping them out with the drywall and
then pressure wash the building, do the light, light work, have
to do the ceiling. And then also I worked the roof, if we had
a leak in the roof, stuff like that.
Q.
Did you -- were there other workers there when you were
there?
A.
Yes. It was a lot of workers there.
Q.
Other than Burlington itself, did you ever work on any
other buildings or projects in the entire shopping center area?
A.
Yes.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Do you recall what other parts of the shopping center you
worked in?
A.
I do a little bit of work in Chase, Chase Bank that they
built. And I also do some work in DICK'S as well. And then I
also do some work with Eric when he was building a road between
the two properties.
Q.
Let me take a step back. What did you do at the Chase
area? What did you do there?
A.
I was there to like -- it was the fence from the bottom --
when they were building the Chase from the ground up, it was
the fence. I tear it down --
Q.
The groundwork?
A.
Yeah. Groundwork, yeah.
Q.
And did you work on a road?
A.
Yes.
Q.
Who did you work with -- did you work with other people?
A.
Yes.
Q.
Do you recall who you worked with on the road?
A.
Yeah. It was me and Eric and Glenn.
Q.
You say Eric, meaning -- did you say Eric?
A.
Yes.
Q.
Who is Eric?
A.
Eric Sheppard.
Q.
How did you refer to Mr. Sheppard when you worked with him?
A.
Mr. Sheppard.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Okay. Did you refer to him as Mr. Sheppard or Eric?
A.
I refer to him as Eric.
Q.
How was working at the shopping center?
A.
It was great. It was a great environment to work,
everybody friendly, everybody followed direction.
Q.
Did you get paid?
A.
Yes.
Q.
Was it a good job to have in COVID?
A.
Yes.
MR. ETRA: Your Honor, may I have a moment?
THE COURT: Certainly.
(Pause in proceedings.)
MR. ETRA: No further questions.
THE COURT: All right. Any cross-examination?
CROSS-EXAMINATION
BY MS. JIMENEZ:
Q.
Mr. Kleef, when you were working in Orlando -- do you still
work for Mr. Sheppard?
A.
Yes.
Q.
When you were working in Orlando under Mr. Vasilas, what
was the name of the company that paid you?
A.
It's HM Management something.
Q.
Were you -- did you receive wages? Did you get paid and
have some of your pay taken?
MR. ETRA: Objection. Compound question. I would
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
respectfully request that each question be asked.
THE COURT: Yeah. Let's break it down, please.
MS. JIMENEZ: Yes.
BY MS. JIMENEZ:
Q.
You were paid by check?
A.
Yes. By check.
Q.
Were there withholdings from your paycheck? Do you know
what I'm -- I'm sorry. Go ahead.
A.
Can you explain like what you mean by holding?
Q.
Sure. Did you receive like a gross pay and a net pay --
A.
No.
Q.
-- that you're aware?
A.
No.
Q.
Were you provided a W-2 Form at the end of the year?
A.
No.
Q.
Were you provided a 1099 Form at the end of the year to
report to the IRS?
A.
Yes.
Q.
When was the groundwork that you -- I'm sorry -- not the
groundwork. You said you worked on a road with Eric and Glenn?
A.
Yes.
Q.
When was that?
A.
When?
Q.
Yes.
A.
I'm not sure the exact date, but I say around I think last
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
year.
Q.
Was it early -- was it in 2021?
A.
Yes.
Q.
Or was it -- I'm sorry. Last year being 2023?
A.
I think -- it's 2021, I think. I believe so.
Q.
All right. And Mr. Eric Sheppard, how did he look to you?
A.
Can you explain that to me? How he look at me you said?
Q.
How did he look to you? How did he look? Did he do some
of the work?
A.
Yes. We was -- we got some heavy-duty equipment. We was
supposed to tear up the ground, setting up gravel, because we
had dump truck coming in. Like, we got to like fixing some
pipe -- not fixing some pipe. It was a pipe under the ground.
We supposed to protected it. A big gigantic pipe, like it's
not supposed -- because we got to cover it up with cement
because we don't -- when no cars coming in and out, because --
we don't want it to bust. It was like a big pipe under the
ground. We got to protected that. Then we have to move stuff
like concrete out of the way so we can get the work together.
MS. JIMENEZ: Thank you, sir. No other questions,
Your Honor.
THE COURT: All right. Any redirect?
MR. ETRA: No redirect, Your Honor.
THE COURT: Thank you, Mr. Kleef. You are excused.
(Witness excused.)
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: And the Defendant's next witness.
(Pause in proceedings.)
THE COURT: The Defendant's next witness, please.
MS. WEINTRAUB: Glenn Sheppard, Your Honor.
THE COURT: All right. Sir, if you'll come forward.
All right, sir. If you'll come right over here, sir.
Remain standing. Raise your right hand to be placed
under oath.
GLENN SHEPPARD, DEFENSE WITNESS, SWORN
COURTROOM DEPUTY: Thank you.
You can have a seat.
Would you please state your name and also spell it for
the record.
THE WITNESS: My name is Glenn Alan Sheppard.
G-L-E-N-N. Middle name Alan, A-L-A-N. Last name Sheppard,
S-H-E-P-P-A-R-D.
COURTROOM DEPUTY: Thank you.
MS. WEINTRAUB: May I proceed?
THE COURT: Yes, of course.
DIRECT EXAMINATION
BY MS. WEINTRAUB:
Q.
Good morning, Mr. Sheppard.
A.
Good morning.
Q.
Are you related to Eric Sheppard?
A.
Yes. He's my brother.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Do you have any other siblings?
A.
Yes. I have a sister, and she lives in Tampa. She's a
little younger than me. I'm the oldest.
Q.
Where did you grow up?
A.
Well, we grew up in Miami Beach.
Q.
Did there come a point in your young life when you moved
away from Eric?
A.
My parents got divorced. I moved to Reynosa, and then
eventually Asheville, North Carolina. And my sister moved with
me and Eric stayed here.
Q.
Did you go to college?
A.
Yes.
Q.
Where did you go?
A.
I went to the University of North Carolina at Asheville.
Q.
And what did you study?
A.
I studied economics and finance.
Q.
Was your study interrupted? Was there an accident with
your mom?
A.
My mom, when I was a freshman in college, got hit by a
drunk driver. I think that was 1986, if I'm not mistaken. And
she was in a coma for -- God -- six months to a year. She
was -- they -- she had to grow back up. She was like a child.
They hit her, and then we almost pulled the plug on her. But
thank God we didn't, and she's okay now. But yeah, it was bad.
It was bad.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
And was the rehab difficult?
A.
Oh, very difficult. It was like she was reborn again.
It's like she had to learn how to walk and talk. And she
didn't know anything, really. And it took -- I don't know --
five, 10 years for her to really come back and be like a normal
functioning person.
Q.
Mr. Sheppard, did there come a time when you started to
work for your brother Eric?
A.
Yes.
Q.
And when was that?
A.
Approximately 2005 or 2006 I started working for Eric.
Q.
And what were you hired to do?
A.
I was hired as a project manager.
Q.
And what project were you overseeing?
A.
The first project I did was the Golden Sands Hotel. It was
a -- it was right next to Canyon Ranch, and I converted it from
a hotel into a sales center.
Q.
Into a sales center for Canyon Ranch?
A.
For Canyon Ranch. For Canyon Ranch, correct, on 69th and
Collins.
Q.
And how long did that project take to get done?
A.
When I first started the project, it took approximately a
year and a half, two years. Me and Jeff Graff started -- he
worked with me and he helped me get all the paperwork, all the
permits, all that kind of stuff together. And eventually,
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
within six or eight months, he moved back to the office and
they assigned him to another project. And I ended up -- I -- I
acted as the contractor. I hired everybody. If I hired them,
I fired them. I did all the permitting and everything. We did
it -- I bought the materials. We self-performed and we did --
or I did everything.
Q.
Would Eric come by the project site?
A.
Sometimes he would but not -- not that often.
Q.
And did you also work on the Flagler project?
A.
Yes. West Flagler, yes.
Q.
And how many full-time workers -- what is CAM?
A.
Oh, CAM. CAM is common area maintenance. CAM is what I
really do for a living. The tenants, along with their rent --
they pay rent and they pay what's called CAM. CAM takes care
of everything essentially on the exterior of the building.
Q.
So like the landscaping, sprinklers?
A.
If a tenant -- if the tenants share, that's what CAM is.
For example, if you had a roof, and you had four tenants with a
roof, we would take care of that because you couldn't have one
tenant do it. You know, if it leaks, you never know where it's
going to leak. So it can be either one of them. So we would
take care of anything that tenants would share responsibility
for.
Q.
So it was like a maintenance fee in a condo building or
something?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Similar. Yes. The roofs, the fire alarm systems, the
asphalts, the striping, the lights, the planters. What else?
We do all the inspections for the blackflows. We have a lift
station sometimes that we do. Actually, we have a lift station
over at -- not this one, but I do the lift station too. But
it's all common area, yes.
Q.
Now, did there come a -- fast-forward from then. Did there
come a time when you started working on Alafaya Trails --
A.
Yes.
Q.
-- in Orlando?
A.
I started working on Alafaya Trails -- it used to be that
Jeff Graff ran Alafaya Trail approximately 2004, 2005. So me
and him would go occasionally and do, you know, just small
maintenance to the property. And I believe Joe was there. Joe
Beirne would do actually what I do now. He did all CAM at the
Burlington over at -- in Orlando, that property.
Q.
So fast-forwarding to 2017, '18 --
A.
Okay.
Q.
-- did you stay in Orlando and do this work at Alafaya
Trails?
A.
I didn't start staying in Orlando until I started working
for Jeff Vasilas. So --
Q.
And when was that?
A.
That was approximately February, March 2020, somewhere in
there.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
And when you say: "Working for Jeff Vasilas," was that
because Jeff Vasilas was the project manager or executive at
the time of the project?
A.
Okay.
MS. JIMENEZ: Objection. Leading.
THE COURT: Sustained.
BY MS. WEINTRAUB:
Q.
Was Jeff the owner of that property?
MS. JIMENEZ: Objection. Leading.
THE COURT: Overruled. You may answer the question.
THE WITNESS: I'm sorry. Ask the question again.
BY MS. WEINTRAUB:
Q.
Was Jeff Vasilas the owner of that property?
A.
No. He wasn't the owner. He was -- he represented himself
as Eric's partner, like if they were partners together.
Q.
So he would tell people that he was?
A.
He -- he told everybody --
MS. JIMENEZ: Objection. Calls for hearsay.
THE COURT: Sustained.
BY MS. WEINTRAUB:
Q.
What did Jeff Vasilas tell you?
MS. JIMENEZ: Objection.
THE COURT: Sustained.
BY MS. WEINTRAUB:
Q.
Who owned the property?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Eric and his partner owned the property.
Q.
And his partner is?
A.
I believe Rob Kallman is his partner on that property. I
believe that to be true. I know he's a partner there.
Q.
Now, did there come a time when you went up in February,
March 2020 to stay up there for a while at Orlando?
A.
I went -- I used to work on the West Flagler property. We
did the CAM there. They hired a management company. Okay? So
I was asked by Eric: "Hey, you want to go work in Orlando?" I
said: "Yes."
So February 2020, March, we would stay -- we would go
to the hotel there. I forget the name of it. And I would stay
there and I would go for approximately two weeks at a time.
I'd go for 10, 12 days, I'd go home for the weekend, and I'd
come back for 12 days.
Q.
Was that the Holiday Express?
A.
The Holiday Express, right. It's night next to the
property.
Q.
Were you working on Burlington at that time?
A.
I was working on the Burlington, and I did -- I did what
Joe Beirne used to do. Joe Beirne used to do the exterior
work. But my main job was to do the CAM work, the exterior
work at the property in Orlando.
Now, they were building a Burlington, so that would
take priority over what I was doing, all the exterior landscape
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
work. So I would come inside occasionally and do some work
inside too, depending what Jeff asked me to do. Whatever Jeff
said I would do it.
Q.
Who was in charge of the Burlington project?
A.
Jeff Vasilas.
Q.
Did Jeff Vasilas -- was he a hard worker?
A.
Jeff was a very hard worker. He worked very hard. We all
worked very hard. I'd usually work in the morning, but he --
it wasn't uncommon for him to call me at my hotel room to tell
me to come and work at night.
Q.
And did Jeff Vasilas get things done up there? Did he know
what he was doing?
A.
He did know what he was doing and he worked very hard.
Q.
Was Burlington a big job to get built out?
A.
I mean, a 50,000, 60,000 square feet is a pretty big
building. You can judge for yourself.
Q.
Were the ceilings high?
A.
Very high.
Q.
Did you do repairs and work inside sometimes?
A.
Sometimes.
MS. JIMENEZ: Just continued leading, Your Honor.
Just object.
THE COURT: Sustained.
BY MS. WEINTRAUB:
Q.
Were there a lot of people in the Burlington build-out --
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Miami, Florida 33128
(305) 523-5698
MS. JIMENEZ: Same objection.
THE COURT: Overruled.
BY MS. WEINTRAUB:
Q.
You can answer.
A.
I'm sorry. Ask the question again.
Q.
Did you observe a lot of people working in Burlington or
very few?
A.
If you gave me -- asked me a total number of people who
worked in Burlington, I would say a hundred people, maybe a
little bit more. Now, at any point in time you could have
anywhere from four people to 30 people working. Remember, it's
construction. Everything is staged, so you have to wait. One
person does their job, the next person does their job, the next
person does their job.
Q.
And what is staging? I mean, why couldn't you have --
A.
Okay. We tore up all the floor -- the whole floor -- it
used to be a Toys "R" Us. Okay? And the whole floor had to
come up. It was the vinyl, nasty, funky stuff. Okay? So you
can't have the lifts in there and guys working on the ceiling
if you're pulling up the floors. I mean -- I don't know what
else to say.
Q.
Okay. Who bought the materials that were being used?
A.
Eric's credit card bought all the materials.
Q.
Is that the famous AmEx card?
A.
The Black Card, yes. Carte blanche.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Who had that card?
A.
Well, Jeff mostly, but Joe had it a lot too. And actually,
I had it some too.
Q.
So several different people --
A.
Yes. It wasn't just one credit card. There was more than
one credit card.
Q.
And did you go to Home Depot frequently?
A.
I didn't as much, but Joe did. Joe did a lot and so did
Jeff. And if they -- you know, they invited me sometimes. And
sometimes if I needed stuff they would bring me.
Q.
Did you buy tile?
MS. JIMENEZ: Objection to relevance, Your Honor.
THE COURT: Sustained.
BY MS. WEINTRAUB:
Q.
Do you know that materials were bought?
MS. JIMENEZ: Objection. Relevance.
THE COURT: Overruled.
THE WITNESS: Ask me the question again. I'm sorry.
BY MS. WEINTRAUB:
Q.
Do you know what materials were bought?
A.
Okay. If you walked into the Burlington, okay, what we had
was pallets. There was pallets there. There was probably 10
to 15 pallets scattered all over the floor. We had tile. We
had drywall. We had tools. We had HVAC stuff --
Q.
What?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Air-conditioning.
Q.
Got it.
A.
We had ductwork.
Q.
Okay.
A.
We had power tools for the lawnmower. We had -- I mean, we
had a lot of stuff.
Q.
And that was all bought and paid for by whom?
A.
Well, the credit cards. Eric's credit cards, I'm assuming.
Q.
Now, shortly after you got there to stay there, did COVID
hit?
A.
Actually, I believe -- no. COVID was pretty much in full
force when I got there.
Q.
Okay. Now, do you know when there was occupancy -- strike
that.
How big is this property, this Alafaya Trails?
A.
Are you talking all the way from the DICK'S to the
Burlington? Twenty acres, 25, something like that.
Q.
And do you remember when there was occupancy into
Burlington in November? Were you there?
A.
Oh, yeah.
MS. JIMENEZ: Objection. Leading.
THE COURT: Overruled.
THE WITNESS: I was in the property, yes. When
Burlington took over, I was there. I was there working.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MS. WEINTRAUB:
Q.
And do you know when that was?
A.
October, November, December 2020, somewhere in there.
Q.
Now, was there still a lot of work to do after Burlington
moved in?
A.
You're asking about a punch list. Yes. Punch list.
Q.
Was there a punch list?
A.
Yes.
Q.
What is a punch --
A.
A punch list is -- what happens is you get a TCO, okay?
Q.
Wait. Wait. Wait. What's a TCO?
A.
A temporary certificate of occupancy. A temporary
certificate of occupancy allows the tenant to move all their
stuff in. Okay? So you get the TCO, and as they start moving
in they start making a list of things that aren't
necessarily -- they're not horrible things, but little things
that you need to fix --
Q.
Give us an example of some of the --
A.
The doors were broken. The tiles were broken. There's a
hanging wire. The paint is chipped over here, blah, blah,
blah, blah.
THE COURT: And Ms. Weintraub, we are going to stop
for a lunch recess at this time, as I advised. It's five
minutes to 12.
Ladies and Gentlemen, I'll see you back here at one
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
o'clock. Have a pleasant lunch.
COURT SECURITY OFFICER: All rise.
(Jury not present, 11:55 a.m.)
THE COURT: Mr. Sheppard, as you are on the witness
stand, you're not to discuss your anticipated testimony or any
aspect of the case. And I'll see you back here at one o'clock.
Have a pleasant lunch.
MS. WEINTRAUB: Thank you, Judge.
(Recess from 11:55 a.m. to 1:06 p.m.)
THE COURT: All right. Good afternoon. I apologize
for the delay.
Do we have our witness?
MS. WEINTRAUB: Thank you, Judge. Etra is getting
him.
THE COURT: Okay. Good.
Can you check? Do we have all of them ready to go?
Okay. Perfect.
All right. Come on forward, sir.
And if everyone will remain standing for the jury.
COURT SECURITY OFFICER: All stand for the jury,
please.
(Before the Jury, 1:06 p.m.)
THE COURT: All right. Welcome back, Ladies and
Gentlemen.
Please be seated, everyone.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
And we will continue with the direct examination.
MS. WEINTRAUB: Thank you, Your Honor.
BY MS. WEINTRAUB:
Q.
Mr. Sheppard, when you were working on Alafaya Trails, on
the -- at the shopping center, who paid people there?
A.
Jeff Vasilas.
Q.
And do you know where he got the money to pay people?
A.
Mostly from Eric.
Q.
Did Jeff talk about working for Eric in the future and
other projects?
A.
Yes.
MS. JIMENEZ: Objection. Leading.
THE COURT: Overruled. I'll allow it.
BY MS. WEINTRAUB:
Q.
What's phase 3?
A.
Phase 3 is a swampland that is sitting behind the
Burlington and the DICK'S, the current property at Alafaya
Trails.
Q.
Was there approval to start with site work during COVID?
MS. JIMENEZ: Objection. Leading.
THE COURT: Overruled.
THE WITNESS: One more time. I'm sorry.
BY MS. WEINTRAUB:
Q.
Was there approval to start the -- do you know when the
approval came in to start phase 3?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
I don't know the answer to that question.
Q.
Was any site work done on phase 3?
A.
A small portion of site work was done, yes.
Q.
Did anything happen with rental equipment up there that was
a problem?
A.
Jeff rented a total of three front loaders and --
Q.
Hold on. What's a front loader?
A.
You sit in it and it loads and pulls the muck up like this.
Q.
Okay.
A.
Okay? So he went out there -- and I don't know the reason
why. I told him not to. But he tried to flatten out the muck
so -- I think what he said was so people can look and see what
phase 3 would possibly look like.
Q.
And what happened?
A.
Well, the first one sunk. They were able to get it out.
The second one sunk, and they were able to get it out. The
third one he totaled, and they needed this -- I don't even know
how to describe it. It was a crane, 70 feet long, and he -- he
actually ruined it. And they had to actually -- it might have
been two or three cranes. And they had to pull it and yank the
whole thing out and bring it out. It was actually a tourist
attraction. People would come by and take pictures of it.
Q.
What had to be done for Chase Bank to be built?
A.
What -- our personal --
MS. JIMENEZ: Objection. Relevance, Your Honor.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: Sustained.
BY MS. WEINTRAUB:
Q.
Did you work on this -- was Chase part of phase 3?
MS. JIMENEZ: Objection. Relevance.
THE COURT: Sustained.
MR. ETRA: Judge, it's part of the Indictment.
MS. JIMENEZ: No, it's not.
THE COURT: The objection is sustained.
BY MS. WEINTRAUB:
Q.
Let's talk about Eric's home office. After COVID hit, was
the office shut down on Biscayne Boulevard?
A.
We -- was the office -- ask me the question again.
Q.
Did the office on Biscayne Boulevard close during COVID?
A.
Yes. It closed during COVID. Correct.
Q.
And where did the office go?
A.
It went from -- well, we didn't really have an office.
Q.
So where did Eric put the stuff that was in the office?
A.
Well, we had storage and then we had his house.
Q.
Okay. So do you work out of the house -- the home office?
A.
Do I work out of --
Q.
Do you go to the house, Eric's house?
A.
Yes. Right. That's where his office -- if I want to see
him, yes, there's where I go.
Q.
Do other people work in the office at that house?
A.
Some people, yes.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Does Mary Ataca work there?
A.
Yes.
Q.
Is Eric good with the computer?
A.
No.
Q.
What's the best way to communicate with Eric?
A.
Telephone.
Q.
Does Eric work on more than one project at a time?
A.
Eric works on a lot of projects.
Q.
Was there a time when Jeff Vasilas was at the house a lot?
A.
Yes.
Q.
And was he in the office?
A.
Yes.
Q.
And was he good on the computer?
A.
Better than Eric. Yes.
Q.
And was Jeff Vasilas on Eric's computer?
MS. JIMENEZ: Objection. Leading.
THE COURT: Sustained.
BY MS. WEINTRAUB:
Q.
Did you ever see Jeff Vasilas on Eric Sheppard's computer?
A.
Yes.
MS. JIMENEZ: Objection. Leading.
THE COURT: Overruled.
BY MS. WEINTRAUB:
Q.
Did you ever observe Jeff Vasilas -- I'm sorry?
THE COURT: It's overruled. You may answer the
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
question.
THE WITNESS: Did I answer it?
THE COURT: You may answer the question, sir.
THE WITNESS: Well -- I'm sorry. I already answered
it, right?
BY MS. WEINTRAUB:
Q.
Sorry. Have you seen -- did you see Jeff on Eric's
computer?
A.
Yes.
Q.
And did you ever see Jeff use his own computer?
A.
He had a notepad he would carry around with him. He kept
everybody's time and all his permits -- he had like a little
carry thing.
Q.
So does that mean no --
A.
No, I've never seen him with a computer.
Q.
Would Jeff go to the house and --
MS. JIMENEZ: Objection. Leading.
BY MS. WEINTRAUB:
Q.
-- office when Eric was not present?
THE COURT: Sustained. Rephrase, please.
BY MS. WEINTRAUB:
Q.
Were there times when Eric was not home and Jeff Vasilas
was in the office that you observed?
A.
Yes.
Q.
To your knowledge, did Jeff Vasilas have free rein to go in
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
and out of the house in the office in the back -- through the
back?
A.
Free rein? He had access -- I had -- he didn't have free
rein, no.
Q.
Did he have access to get in the house without somebody
letting him in?
A.
Yes. Yes.
Q.
And what about you -- he lives in a gated community?
A.
Yes. There's a gate, and if your name's on the list they
let you through.
Q.
And is your name on that list?
A.
Yes.
Q.
To your knowledge, when Jeff was alive was his name on that
list?
A.
Yes. Uh-huh.
Q.
Have you ever observed people bringing papers in to Eric
working to sign?
A.
Yes.
Q.
And does he stop whatever he's doing and read everything
carefully --
A.
No.
Q.
-- before he signs it?
A.
No.
Q.
To your knowledge and observations, does Eric rely on
others that he works with?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MS. JIMENEZ: Objection. Vague.
THE COURT: Do you understand the question, sir?
THE WITNESS: Ask the question again.
THE COURT: All right. Clarify, please.
BY MS. WEINTRAUB:
Q.
Does Eric rely on other people?
MS. JIMENEZ: Objection. Vague. About -- for what?
THE COURT: Yeah. Let's be a little bit more
specific.
BY MS. WEINTRAUB:
Q.
At work have you observed Eric rely on others?
A.
Yes.
Q.
Such as Jeff Graff?
A.
Jeff Graff, me, Mary, Jeanette.
Q.
Did he rely on Jeff Vasilas?
A.
Yes.
MS. WEINTRAUB: If I can just have a minute, Judge.
THE COURT: All right.
(Pause in proceedings.)
BY MS. WEINTRAUB:
Q.
Glenn, did you get paid during COVID?
A.
Yes. Yes.
Q.
And who were you paid by?
A.
Jeff. Jeff Vasilas.
Q.
And was that by check?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Yes.
Q.
And was it from Eric's company?
A.
There was more than one -- I received checks from different
companies for different things.
Q.
Okay. And were they all -- were those companies owned by
Eric?
A.
Not all of them. No.
Q.
What other companies were there?
A.
Jeff had a company. And if I said King of Diamonds, then
that's what I remember. But it was a company that he owned. I
think that was it, but I'm not a hundred percent sure.
Q.
So some of the checks were from King of Diamonds and some
were from Eric's company?
A.
Yes.
(Pause in proceedings.)
BY MS. WEINTRAUB:
Q.
Are you aware if Jeff Vasilas would leave Orlando, go down
to Miami to Eric's house, get checks, and go back and forth?
MS. JIMENEZ: Objection. Leading.
THE COURT: Sustained.
BY MS. WEINTRAUB:
Q.
Did you ever go back and forth with Jeff Vasilas from
Orlando to Miami on a quick trip?
A.
Yes.
Q.
And what was the purpose of that trip?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
He told me to get money from Eric.
Q.
And did you do that more than once?
A.
I normally didn't go with him. He normally went by
himself.
Q.
And do you know how often Jeff would go?
A.
Well, remember, he lived in Miami. So he would -- at least
once a week, I would think.
MS. WEINTRAUB: I have no further questions, Judge.
THE COURT: All right. Any cross-examination?
CROSS-EXAMINATION
BY MS. JIMENEZ:
Q.
Good afternoon.
A.
Good afternoon.
Q.
Mr. Sheppard, how long have you worked for your brother?
A.
I started approximately 2005 or 2006.
Q.
You still work for your brother, correct?
A.
Yes.
Q.
You helped move -- when the HM Management office shut down
during COVID, you helped move --
A.
Yes.
Q.
-- the papers out of that office?
A.
From 12000 Biscayne Boulevard, you're talking, right?
Q.
Yes.
A.
I -- yes.
Q.
There were binders of records that were moved out of the
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
office?
A.
Yes.
Q.
Boxes of records?
A.
We had like those yellow file cabinets with the drawers.
Q.
The filing cabinets were moved out?
A.
Yeah. Yeah.
Q.
And you helped move things into a storage facility?
A.
Yes. Yes.
Q.
You helped move things into Mr. Eric Sheppard's home
office?
A.
Yes. Yes, ma'am.
Q.
And the office at 12000 Biscayne Boulevard had paper copies
of a lot of records, correct?
A.
Yes. There was -- are you asking how many?
Q.
Well, I'm not asking how many. But it had a lot of paper
copies of -- had paper copies of a lot of different records,
correct?
A.
Yes. I think so. Yes.
Q.
Paper copies of leases, correct?
A.
I know there were leases in there, yes, because I read some
of the leases.
Q.
Paper copies of tax returns, correct?
A.
I don't know about tax returns. Remember, I worked in -- I
did property management. So the leases and all the other
stuff, that would be me. But I didn't really -- I couldn't --
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
I would say no for taxes because I don't know that. You
understand?
Q.
You don't know?
A.
I don't know. So I don't know. Sorry.
Q.
Now, when -- in 2020 and 2021, before Mr. Vasilas passed
away, he was working for Eric Sheppard, correct?
A.
Yes. Yes.
Q.
In 2020, he spent most of his time in Orlando or was he
living in Orlando?
A.
No. We stayed at the hotel, at the Holiday Inn Express,
me, him, and a lot of other people. We had workers there.
Q.
And was he in Orlando in 2020 most of the time?
A.
When you say -- for the whole year?
Q.
In the span of a month, how much time was Jeff Vasilas in
Orlando?
A.
Oh. I would say at least 15 to 20 days.
Q.
Workdays?
A.
Yeah. Working, right. Uh-huh.
Q.
And then after you received -- what is it, the TCO --
A.
TCO.
Q.
-- temporary certificate of occupancy --
A.
Yes, ma'am.
Q.
-- there was a pretty extensive punch list, correct?
A.
Correct.
Q.
Mr. Vasilas continued to work for that Burlington
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
build-out?
A.
Sometimes he took me. But yes, he did a lot of the work
and I think Kleef did a lot of the work too.
Q.
I'm sorry?
A.
Kerby. Kerby Kleef.
Q.
Kerby?
A.
Yes.
Q.
And Mr. Vasilas, in 2021, was going back and forth to
Orlando, correct?
A.
Yes.
Q.
And he was going back and forth to Orlando to work on the
items that were involved in the punch list, correct?
A.
Yes.
Q.
That's what he was doing? I mean, that's what he was doing
in Orlando?
A.
After the TCO, that's what's left is the punch list. I
mean, there's other work -- there's common area work to do.
And I did some of that too. But for Burlington, yes, the punch
list -- after you get a TCO, you go and you do the punch list
because that's what they -- you want to get a CO. The CO is
the goal. A certificate of occupancy is the goal. So once you
finish the TCO, and they move in and everything is done, you
get the CO.
Q.
When did that final certification of occupancy -- when was
that obtained?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
I really don't know the answer to that question. I can't
give you that answer. I remember the TCO because I was there.
And you have to go -- remember, that's the last step and that's
really the goal, is to get the TCO. That way they can move in
and sell their product, Burlington.
Q.
Was the final certificate of occupancy obtained in 2021 or
later?
A.
It's public record. I don't know the answer to that
question, though.
Q.
Did you also yourself go back and forth to Orlando --
A.
Sometimes.
Q.
-- in 2021?
A.
Not as much as Jeff.
Q.
Jeff was also paying -- going back and forth, paying people
in Orlando, correct, the workers, the laborers?
A.
You're talking before the TCO, right, before we got done?
Q.
After the TCO --
A.
Yeah. Less people, but yes.
Q.
And did you obtain checks directly from the Defendant, from
Eric Sheppard, or did you get checks --
A.
Me personally?
Q.
-- from Mr. Vasilas?
A.
Me personally?
Q.
Yes. You personally.
A.
I got all my checks from Jeff.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
You got all your checks from Jeff, not from your brother?
A.
No. I got all my checks -- I worked for Jeff.
Q.
And Jeff worked for your brother, right?
A.
Yes.
Q.
Okay. And so the King of Diamonds checks that you were
paid, you're not suggesting that you were working for King of
Diamonds, correct?
A.
Not at that time I wasn't. But that corporation -- he
wrote checks out of that for whatever reason. But I -- for two
or three weeks I did work at the King of Diamonds, yes.
Q.
All right. Are the checks that you're referencing that
were given to you from the King of Diamonds -- was that for the
two or three weeks that you worked for the King of Diamonds, or
was that for the regular --
A.
Both.
Q.
-- HM-UP Development Alafaya Trails work?
A.
Both. Both. So I -- when I worked there, he gave me a
check for that. And when I worked at Burlington, I got a check
from the King of Diamonds -- one or two, maybe more. And then
HM, I got checks from them too when I worked at Burlington.
Q.
Now, did you ever see Jeff Vasilas do -- when he was doing
work for Eric Sheppard, doing work other than the contractor
type of work that you knew him to do in Orlando?
A.
He spoke about a lot of projects he was working on. And he
actually -- he talked to me about maybe working at a restaurant
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Miami, Florida 33128
(305) 523-5698
he was going to open. But him and Eric always had deals,
different stuff they were working on.
Q.
Different deals that they were working on?
A.
Yeah.
Q.
You said that you saw Jeff Vasilas using Eric Sheppard's
computer?
A.
Yes.
Q.
When did you see that?
A.
You're asking me for -- he did -- occasionally he would be
on the computer because Eric really didn't do computer well.
So he would do it for Eric.
Q.
And what were you doing? How did you have the opportunity
to observe him?
A.
That was Eric's office. I was there. I mean, if you
wanted to talk to Eric, you had to go to his office.
Q.
And when you saw him on Eric Sheppard's computer, was Eric
there as well?
A.
Sometimes.
Q.
And --
A.
Remember, Eric -- what Eric does all day, he walks around
in circles and talks on his phone. So you would be sitting
there talking to Eric, and the phone would ring, he'd pick it
up, and he'd walk out the door and he'd make a circle, and he
did it all day long. And I can't explain to you why he does
that.
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Miami, Florida 33128
(305) 523-5698
So me or Jeff would be inside his office -- or I would
be inside his office working on something else, and he would
just walk out in the middle of a conversation.
Q.
Now, what was Jeff Vasilas working on when he was in Eric
Sheppard's office?
A.
I don't know what he did on the computer. I couldn't tell
you that.
Q.
Did Eric Sheppard -- was Eric Sheppard aware that Jeff
Vasilas was on his computer?
A.
Yes. Yes.
(Pause in proceedings.)
MS. JIMENEZ: May I have a moment, Your Honor?
THE COURT: All right.
(Pause in proceedings.)
BY MS. JIMENEZ:
Q.
Mr. Sheppard, were you a W-2 employee of Eric Sheppard's
companies?
A.
I'm not really sure. I know I got a tax form. But if
you're asking whether it's possible that I am, then I don't --
I hand the form to my wife and my wife does my taxes. So I
don't really -- if you tell me I am, then I'm not going to
argue with you.
Q.
Did you receive a form that said 1099 on it?
A.
I don't remember that. I don't remember.
Q.
You don't know?
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Miami, Florida 33128
(305) 523-5698
A.
I don't know, but it's possible.
(Pause in proceedings.)
BY MS. JIMENEZ:
Q.
Did you see Jeff Vasilas doing work around Eric's house,
like relating to his pool, fixing something having to do with
his pool?
A.
I don't remember.
Q.
Did you ever see that?
A.
I don't remember. I don't recall that. That's possible.
Q.
Did you see him do work that involved repairing his gate,
the front gate to the house or the property?
A.
I don't recall that, but it's possible too.
Q.
Did you see Jeff Vasilas do work around the property for
Eric Sheppard?
A.
We'd occasionally help Eric pick up something or --
remember, he had a lot of tools at his house. And sometimes
we'd store them there and move stuff back and forth, stuff like
that.
Q.
Now, you said that you knew that Jeff Vasilas had access
through the gate. How did you know this?
A.
I know that because I did the same thing he did. If you
come into the gate, and if you're not on the list, they ask for
your ID and they call the house. If you're on the list, they
look it up and you're there.
Q.
Right. So you're on the list?
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A.
Yes. Yes. Of course.
Q.
Right. Right. So when you come through, you know you're
on the list?
A.
They know me, yes. And they let me through, right.
Q.
All right.
(Pause in proceedings.)
MS. JIMENEZ: Mr. Sheppard, I don't have any other
questions.
THE COURT: Any redirect?
MS. WEINTRAUB: No, Judge. Not necessary.
THE COURT: Thank you, Mr. Sheppard. You are excused.
(Witness excused.)
THE COURT: And the Defendant's next witness.
MR. CAVALLO: Your Honor, our next witness is
Mr. Bouchner, our forensic accountant.
THE COURT: All right.
(Pause in proceedings.)
THE COURT: Is this Mr. Bouchner?
MR. CAVALLO: Yes, Your Honor.
THE COURT: Good afternoon, sir.
Sir, if you'll remain standing. Raise your right hand
to be placed under oath.
SCOTT BOUCHNER, DEFENSE WITNESS, SWORN
COURTROOM DEPUTY: Could you please state your name
and also spell it for the record.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE WITNESS: Yes. My name is Scott, S-C-O-T-T,
Michael, M-I-C-H-A-E-L, Bouchner, B-O-U-C-H-N-E-R.
COURTROOM DEPUTY: Thank you.
DIRECT EXAMINATION
BY MR. CAVALLO:
Q.
Good afternoon, Mr. Bouchner.
A.
Good afternoon.
Q.
Where are you currently employed?
A.
Berkowitz Pollack Brant Advisors + CPAs.
Q.
Could you just tell us again, very briefly, a little bit
about Berkowitz Pollack.
A.
Sure. We are a public accounting firm. We're
approximately 400 people. We have four offices in Florida,
another one up in New York. We have -- in addition to the
forensic advisory services work that I do, we also have a full
audit practice, tax practice and other consulting work.
Q.
What is your position with the firm?
A.
I am the director in charge of forensic advisory services.
Q.
And again, very briefly, just a little educational
background.
A.
Sure. My educational background -- I have a bachelor's
degree from George Washington University in Washington, DC.
And then I got a MBA, a Master's in Business Administration
from Columbia Business School in New York.
Q.
Could you please tell us a little bit about your work
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
history over the last few years.
A.
Sure. How far back would you like me to go?
Q.
Nineties.
A.
Okay. So I graduated from Columbia in 1990, and I began
working at Price Waterhouse. Price Waterhouse is the
predecessor to PricewaterhouseCoopers, today one of the Big
Four firms. I worked at Price Waterhouse for about six years.
I then went to KPMG for approximately a year and a half before
I moved down to Florida and joined Coopers & Lybrand, which
merged with Price Waterhouse. And then, in 1999, I began
working at my current firm. I'm just starting my twenty-fifth
year there.
Q.
And how many years have you been working as a forensic
accountant?
A.
Since approximately 1992, so a little over 30 years.
Q.
And what is your area of expertise?
A.
So I am involved in forensic accounting work.
Q.
Can you just give us a brief description of what's involved
in your forensic accounting work.
A.
Sure. So forensic accounting covers many areas, including
investigations. So I'll get involved in corporate
investigations, bank investigations, fraud matters,
embezzlement matters, things that require an analysis of
financial records in order to be able to explain often to
courts what was happening with the target's finances.
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Miami, Florida 33128
(305) 523-5698
I'm also involved doing business valuation work. I
provide expert testimony involving economic damages. So a
plaintiff may hire me to calculate damages that they've
suffered. I may be hired by a defendant to provide rebuttal
testimony. I also do a lot of business valuation work as well.
So all of those areas I think are typically included within
forensic accounting.
Q.
And the investigations that you're typically involved in,
do those usually involve analyzing the source and uses of
funds?
A.
Yes. That's normally one of the central parts of any
investigation, the sources and uses of cash.
Q.
And does that process involve -- usually involve
differentiating between business and personal expenses?
A.
Often that's an issue. Not in every case, naturally. But
beside -- in the investigation area, if it is an issue, it's
also something that would be part of business valuation work,
tax work. Business versus personal expenses are often things
that need to be looked at and categorized.
Q.
It's fair to say that you have experience performing the
kind of analysis you were asked to prepare in this case?
A.
Yes. For the better part of the last 30 years.
Q.
Very briefly, could you just run through some of your
credentials and certifications.
A.
Sure. I'm a certified management accountant. I am a
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Miami, Florida 33128
(305) 523-5698
certified fraud examiner. I'm a certified valuation analyst.
And I am a certified insolvency and restructuring advisor,
which involves bankruptcies, receiverships, things of that
nature.
Q.
Do you also have any involvement with the American
Institute of Certified Public Accountants?
A.
Yes. Over the years I've been very involved with what's
known as the AICPA. I was on their economic damages task
force, where I've written practice aids for the AICPA that are
used by forensic accountants around the country.
I was on the committee that designed the CFF
examination. That's Certified in Financial Forensics. The CFF
is a credential that the AICPA gives to forensic accountants.
Because of the work that I did, I was named the volunteer of --
a volunteer of the year award back in 2016.
I speak at conferences. So yes, I've had a lot of
work in that area.
Q.
How many times have you testified as a expert in forensic
accounting?
A.
Approximately 75 times.
Q.
Which courts have you testified in?
A.
I've testified in federal court, state courts, bankruptcy
court, in arbitrations, and other dispute resolution forums.
MR. CAVALLO: Your Honor, I offer Mr. Bouchner as an
expert in forensic accounting.
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Miami, Florida 33128
(305) 523-5698
MS. MARTINEZ: No objection, Your Honor.
THE COURT: All right.
BY MR. CAVALLO:
Q.
Mr. Bouchner, what were you asked to do in this case?
A.
I was initially asked to review all of the sources and uses
of funds that were at issue for the companies involved in this
case.
Q.
Can you tell me which those companies are?
A.
Sure. HM Management, HM-UP Development Alafaya Trails, HM
Four.
Q.
And did that involve looking at the personal and business
expenses related to those companies?
A.
Yes, it did.
Q.
And just so we're on the same page, when we both refer to
the companies throughout your testimony, could we agree we're
referring to HM-UP, HM Management, HM Four?
A.
Yes.
Q.
Were there any other companies you had records for but you
did not consider in your analysis?
A.
Yes. There was a large production of documents that were
produced by the Government, including bank statements. There
were other companies as well, CJUF, HM-UP TRU. And then there
were other companies owned by Mr. Sheppard that were among
those bank statements.
Q.
And why was the decision made not to include those in the
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Miami, Florida 33128
(305) 523-5698
analysis?
A.
Well, I guess, number one, I was focusing on the companies
that received the government loans. And some of it was per
discussions with counsel as well.
Q.
Did it also relate to which companies were operating at the
Orlando shopping center?
A.
Yes. HM -- HM-UP was the owner of the property. HM
Management was providing management services on behalf of HM-UP
for the property. HM Four was the company that had a
99 percent ownership interest in HM-UP. So they all had some
connection to the Orlando property and a relationship to one
another.
Q.
And just very briefly, because we'll go into it in more
detail, could you please tell us what analysis you were asked
to give and what kinds of opinions you were asked to give in
this case.
A.
Sure. So I was asked to review the information and
initially determine whether the business expenses that were
paid for by the collective group of companies were in excess of
the government loans that were made.
I was asked to also look at the personal expenses and
see how those expenses compared to the monies that came into
the company from non-government sources.
I was asked to look at the historical expenses of the
company for personal expenses and how they -- you know, how
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Miami, Florida 33128
(305) 523-5698
they were before the government loans were made and after.
And I was also asked just in general to talk about the
fungibility of cash and how monies -- that cash is essentially
interchangeable and that monies travel between different types
of accounts as well, and to talk about that.
Q.
What specific information did you review in order to form
your analysis and your opinions?
A.
So I looked at quite a large volume of information. It
started off with the bank statements and the credit card
statements that were produced by the Government. That would
have been the initial documents I would have looked at.
I looked at tax returns that were produced by
Mr. Cupersmith, who testified here. I looked at the general
ledgers and other business documents that were produced by the
company, including leases and some of the agreements. I looked
at records that were maintained by the company related to the
Alafaya Trails project as well. There were others, but those
would be the main documents.
Q.
And what were the sources of -- you described a lot of the
information. What were the sources of that information?
A.
So the bank statements and the credit card statements were
produced by the Government. There were also additional credit
card statements that I got directly from the company that had
certain notations on them that I also considered. These were
contemporaneous records.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Who made those notations on those credit cards?
A.
Ms. Jeanette Gonzalez.
The documents that were maintained for the project I
also reviewed. When I say: "The project," I mean the Alafaya
Trails project. And then there were some other documents that
were given to me involving the leases and other documents that
I reviewed as just part of my overall analysis.
MR. CAVALLO: Could you please -- this is in evidence.
Could you please put up B-8, Defense B-8. B-8.
BY MR. CAVALLO:
Q.
Is this an example of one of the marked-up AmEx expenses
you received from the company?
A.
Yes. This is an April 2020 American Express card
statement.
MR. CAVALLO: You can take it down.
BY MR. CAVALLO:
Q.
What was your understanding of what -- the notations that
were on those AmEx statements?
A.
So per my discussions with Ms. Gonzalez, she would go
through the American Express statements each month, and she
would identify on the face of the document whether they were a
business expense or a personal expense. Normally, when it was
a business expense, there would be a notation as to what it was
for coding in the QuickBooks records. If it was a personal
expense, it would just have an X next to it.
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Miami, Florida 33128
(305) 523-5698
Q.
And did you just rely on what was on those statements or
did you do further analysis beyond that?
A.
It was a starting point. So there would have been
information within the QuickBooks that I would have looked at.
The QuickBooks were the companies' accounting system that they
used, and they maintained all of their financial reporting
through QuickBooks. So I would have seen how things were
classified in the QuickBooks. I would have looked at these
American Express card statements.
I did analysis of the information just to look for
consistencies. Occasionally, there may be a situation where
you might see a vendor, and eight times it would be a business
expense and one time it would be personal or vice versa. So I
would ask questions about why there might be that difference.
Q.
That's my next question. Did you speak to anyone at the
companies regarding the documents you reviewed?
A.
Yes. I spoke with Ms. Gonzalez and I also spoke with
Mr. Sheppard.
Q.
And everything you've just described, the documents you've
reviewed, the conversations you've had, is that the type of
information that's typically and reasonably relied on by a
forensic accountant?
A.
Sure. Sure. I mean, every case is different. It's like
peeling an onion. You have to figure out what's available and
what you need to see. But bank statements are a starting point
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Miami, Florida 33128
(305) 523-5698
for any forensic analysis. And then to the extent that we can
get company records like QuickBooks, it's always information
that we ask for. And it was helpful that the QuickBooks
records were generally consistent with what I saw in the bank
statements. What I mean by that is you could look at all of
the ins and outs of the bank statements, deposits and
withdrawals, and you would see those same transactions in the
QuickBooks.
We would typically follow up that type of analysis
with questions of management, and then supplement it with
additional information based on each case.
MR. CAVALLO: Could you put on the screen what's in
evidence as Government Exhibit 41-5.
BY MR. CAVALLO:
Q.
Mr. Bouchner, you were present for the testimony of the
Government's FBI witness, correct?
A.
Yes, I was.
Q.
Have you been present every day of trial?
A.
Every day.
Q.
You've heard all of the testimony?
A.
I have.
Q.
Do you recognize this document?
A.
Yes, I do.
Q.
What's your understanding of what the FBI witness did to
prepare this document?
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Miami, Florida 33128
(305) 523-5698
MS. MARTINEZ: Objection, Your Honor.
THE COURT: And the basis?
MS. MARTINEZ: This witness's understanding of what
another witness testified to is irrelevant.
THE COURT: It's with regard to his review of the
exhibit. So the objection is overruled. I'll allow it.
BY MR. CAVALLO:
Q.
Go ahead, Mr. Bouchner.
A.
So this was an exhibit which looked at three bank accounts,
one bank account for each of the three companies that we've
been talking about. As it says at the top of the document, it
covered the period of May 1st, 2020, through October 20th,
2021.
And as I reviewed this document and heard the
testimony of the FBI witness, this first page looks at all of
the inflows of cash into these three bank accounts, and those
are organized by some categorization that he had done. And
then the next page has all of the outflows also categorized.
Q.
As it states at the top this was a summary, correct, the
summary of money flow?
A.
Yes. It was a summary exhibit.
Q.
How does your analysis differ from Mr. Hysa's? And you can
use this chart as an example.
A.
Sure. So I think there were a couple of differences
besides a slight difference in the date range, which I'm sure
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Miami, Florida 33128
(305) 523-5698
we'll talk about. Number one, this was limited to three bank
accounts. I looked at all of the bank accounts that were used
for the -- by the three companies.
Q.
You prepared similar summaries -- summaries for time
periods, not summary charts but summaries of your analysis for
time periods, correct?
A.
Yes. I looked at a slightly longer time period, but not
too different from what Mr. Hysa had used. But I included more
accounts for these companies.
Q.
And again -- and please -- how else was your analysis
different?
A.
This was looking solely at the bank activity. I also
incorporated the other sources of information that I had
available to me, including the American Express notations, the
QuickBooks information, conversations that I had with
management, and other information.
Q.
And using -- does your analysis review business expenses
and personal expenses?
A.
Yes, it does.
Q.
And giving an example on this chart, how is that different
from what Mr. Hysa did?
A.
So if we look at the first line, there's $735,571 of
payments made out of the bank accounts to credit cards. This
lumps all of that together into a single number over that time
period. I would have looked at the bank activity, as well as
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Miami, Florida 33128
(305) 523-5698
the underlying credit card statements, in order to be able to
characterize them as personal or business. And in this case
it's all grouped together.
And you can go down this list. I see on here the
IBERIABANK mortgage payments. That would have been
distinguished as a personal payment in my analysis. You don't
see that type of differentiation in Mr. Hysa's schedules.
Q.
And I believe you said another difference was this only
looks at three accounts, correct?
A.
That's correct.
Q.
Why was it important to your analysis to look at all of the
accounts that were in use for the periods you reviewed?
A.
I was interested in knowing what was happening for all of
the bank activity for these companies, not just in the three
accounts that directly received the government funds. So in
order to be able to understand the totality of everything to
have a complete analysis, it was important to be able to look
at not only these accounts but other accounts that had activity
for the three companies.
Q.
Does that relate in any way to the concept of fungibility
or interchangeability of money?
A.
Yes. Of course.
Q.
In very simple terms, can you please explain what
fungibility of money means.
A.
So fungibility would be -- I think the best synonym would
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Miami, Florida 33128
(305) 523-5698
be interchangeability of money that you can exchange a hundred
dollar bill with another hundred dollar bill and you can't tell
the difference. I could probably talk about things that aren't
fungible --
Q.
Well, give us some examples of things that are not
fungible.
A.
So if you think about a car, you have different makes and
models. You even -- if you have the same make and model of a
car, they all have their own individual vehicle identification
number so you can look and track each car individually and cars
are different.
We all carry cell phones. An iPhone is different from
an Android phone. And even the same iPhone has a different
serial number. Those are distinct individual pieces or items.
Cash is cash. It doesn't really matter whether it's a
hundred dollars in Bank Account A or Bank Account B. It's a
hundred dollars is a hundred dollars.
Q.
Can you give us again another simple example to demonstrate
how cash is different in that respect.
A.
Sure. Let's assume that I -- I'm having dinner with my
grandmother, and she says: "Here's a hundred dollars. I'd
like you to go out and buy a video game," and she gives me a
hundred dollar bill. And I walk down the street, and I'm going
home after I thank her for the nice gift. And I walk into a
grocery store, and I have to pick up some groceries for the
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
week, and I take that hundred dollar bill and I use it to
purchase groceries. Then I go home and I go onto Amazon and I
find a video game that's exactly what I like, and it costs a
hundred dollars, and I put that on my debit card.
So even though I took my grandmother's hundred dollar
bill, used it to buy groceries and then used a different
hundred dollar debit card to buy the video game, I still did
exactly what Grandma would have wanted for the money. It
doesn't really matter that it was a different hundred dollars.
A hundred dollars is a hundred dollars.
Q.
Why for your analysis did it also -- was it also important
that you look at these three companies collectively?
A.
Well, for a couple of reasons. Number one, because cash is
fungible, monies get transferred from different accounts to
different accounts. Number two, when I looked at the
companies' historical activity, we see lots of intercompany
transfers where monies move around for different purposes. So
historically you saw those types of transactions. So it was
necessary really to be able to look at all of them
collectively.
Q.
And in your experience, in your expertise, is that unusual?
A.
No. Especially for small businesses. That's often the
case. And even more so involving real estate companies. As
some of the witnesses testified, it's very common for every
individual real estate project to be set up as an individual
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
LLC or other -- or a partnership.
So what I often see in -- among many of my clients are
that monies will be spent where the cash is sitting. So if a
piece of real estate is sold, and there's a lot of cash there,
that cash may be used to be able to fund the needs of other
entities that may not have those higher cash balances. And
then the accountants come in and they straighten it up for the
accounting records. But the cash is basically fungible, so
it's able to be used where the money is.
Q.
Did you hear any testimony during the trial that impacted
your opinion in this regard?
A.
Yes. There has been various testimonies offered by
different witnesses that talked about fungibility of funds.
Yes.
Q.
Was there any testimony you heard regarding commingling of
funds, segregation of accounts?
A.
Sure. So when I listened to the SBA witnesses, Ms. Harris,
Mr. Motes, there were some of the banking experts or the
banking witnesses who were asked questions about segregation of
funds. There was no need to maintain government funds in
segregated accounts.
There were questions about commingling. There was
pretty consistent testimony that it was okay to commingle funds
together. In fact, it was often expected. There was questions
about the need to -- or the need not to trace funds. And there
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Miami, Florida 33128
(305) 523-5698
was --
MS. MARTINEZ: Objection to the narrative, Your Honor.
THE COURT: Sustained.
BY MR. CAVALLO:
Q.
Mr. Bouchner, if it wasn't about tracing, what did you have
to show regarding the use of the government loan funds?
A.
The important thing is that the amount of the monies that
came in as government loans were used for the purposes required
under each of the loan programs. It's the amount of the
monies, not necessarily the tracing of how those funds were
used.
Q.
Did you prepare any charts to assist in the presentation of
your expert testimony today?
A.
Yes, I have.
MR. CAVALLO: Brian, could we just scroll through
those quickly starting with Z-1, and Z-2, Z-3.
It should not be up for the jury yet. I apologize.
THE COURT: Yeah. Let's not put it up on the jury's
screen, please.
MR. CAVALLO: Z-4, Z-5, Z-6, Z-7, Z-8, Z-9, Z-10,
Z-11, Z-12, Z-13, Z-14, Z-15.
BY MR. CAVALLO:
Q.
You prepared these charts, Mr. Bouchner?
A.
I did.
MR. CAVALLO: I would ask these charts be shown to the
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Miami, Florida 33128
(305) 523-5698
jury during Mr. Bouchner's testimony as demonstrative aids.
And the Government -- we've conferred. There's no objection.
THE COURT: All right, then.
MR. CAVALLO: We'd ask that they be admitted as
demonstrative aids.
MS. MARTINEZ: No.
THE COURT: Are you seeking to admit them or just for
demonstrative purposes?
MR. CAVALLO: Demonstrative purposes.
THE COURT: All right, then. Solely for demonstrative
purposes.
MR. CAVALLO: Let's put up Z-1.
BY MR. CAVALLO:
Q.
You're familiar with this chart, Mr. Bouchner?
A.
I am.
Q.
What does that chart show regarding your analysis?
MS. MARTINEZ: Counsel, may I ask that you repeat the
designation that you're giving because I only have them
numbered 1 through 37.
MR. CAVALLO: Of course. No problem. This is Z-1.
BY MR. CAVALLO:
Q.
Mr. Bouchner, what does this chart show regarding your
analysis?
A.
So this chart is the source of funds that came in over the
20-month period May 1st, 2020, through December 31, 2021.
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Miami, Florida 33128
(305) 523-5698
Q.
And actually, I'll stop you. Could you explain what the
significance of that period is.
A.
Sure. May 1st was the date that the funds were received
for the first PPP loan. And December 31st, 2021, was a logical
break. I wanted to be able to cover a period to see how those
funds were used as part of my analysis, and I took the year-end
of 2021 as a reasonable time.
Q.
And what did your analysis show about the amount of funds
from non-government loan sources during this period?
A.
So in total, there was approximately $4.34 million of
monies that came in to the companies' bank accounts from
sources other than the government loans.
Q.
And how much in government program funds?
A.
There were $893,000, approximately, for the government
loans.
Q.
How did the -- for this period of time, how did the amount
of funds from non-government sources compare to the amount of
funds from government programs?
A.
It was approximately four to one. So about --
approximately 20 percent of the monies that came in came from
the government, and approximately 80 percent, give or take,
came from non-government sources.
MR. CAVALLO: Put up Z-2, please.
BY MR. CAVALLO:
Q.
Mr. Bouchner, you're familiar with Z-2?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Yes, I am.
Q.
And could you tell us what this chart shows, focusing on
the header.
A.
Sure. So unlike the first chart, which only looked at the
sources of funds, this chart looks at the sources and the uses
of funds over the exact same time period for the same three
companies.
Q.
The top portion, the funds from non-government sources, we
just covered that, right? That was in the Z-1 chart?
A.
Yes. From the 4.3 million to the 5.23 million. That was
basically the last chart that we looked at.
Q.
Going to the next set of line items down, the business
expenses, could you explain what the chart shows.
A.
Yes. So if we look at that middle section, the one that
starts with: "Business Expenses Paid From Company Bank
Accounts," those four line items identify sources -- or I
should say uses of funds by the companies to pay business
expenses.
Q.
And what was the total amount of business expenses shown in
your analysis for this period?
A.
I'll just talk in terms of rounding. Approximately
$4.75 million.
Q.
And how does the total amount of business expenses for this
period compare to the total amount of government program funds
that were received for this period?
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Miami, Florida 33128
(305) 523-5698
A.
So when you look at the 4.75 million and compare that to
the $893,000 of government loans, it's approximately five to
one, five times as much.
MR. CAVALLO: Could you go to the next category down,
the personal expenses.
BY MR. CAVALLO:
Q.
And again, just explain what this shows.
A.
Sure. When you look at the bottom, you see total personal
expenses. And the total personal expenses that were paid out
of the company's bank accounts was -- well, bank accounts and
American Express purchases, was approximately $813,000.
Q.
And how do the funds from non-government sources compare to
the total amount of personal expenses for this period of time?
A.
It would have been a little bit more than five to one.
So --
Q.
Could you just point us to which two numbers you're
comparing on here.
A.
Sure. If we look at the very top line, the "Funds From
Non-Government Sources," there were approximately $4.3 million
of funds that came in from non-government sources, things other
than the government loans, and you compare that to the 813,000
in personal expenses, and you can see that five-to-six-times
margin.
Q.
Fair to say there was enough non-government funds for this
period of time to cover the personal expenses five to six times
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
over?
A.
Yes. That's correct.
MR. CAVALLO: Could you keep Z-2 on the left-hand side
and put up Z-3 on the right.
BY MR. CAVALLO:
Q.
Could you tell us what Z-3 on the right shows.
A.
So Z-3 is looking to be able to explain that first line in
the middle section, the "Business Expenses Paid From Company
Bank Accounts." So when we look here, this includes everything
that came from the companies' bank accounts other than the
American Express, which I treat separately. But this basically
is a grouping by category of all of the amounts that came from
the companies' bank accounts that were used for business
expenses.
Q.
I'd just like to go through a few of these. The first line
item, "Interest and Other Payments for Basis Loan," can you
tell us what this line item was in your analysis.
A.
Yes. As was testified in trial, Basis Capital provided the
funding for the Alafaya Trails property and there was a
mortgage on the property. And just like a home mortgage, there
are times where there's interest that's paid on it, as well as
real estate taxes and insurance, reserves. Those amounts were
paid for out of the companies' accounts every month. So
collectively those amounts that went to the mortgage was
approximately $2.12 million.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
And approximately how much of that is mortgage interest?
A.
Mortgage makes up the bulk of it. Approximately 80 to
85 percent.
Q.
How about the next line item down, "Payroll to
Individuals"? How did you -- how did you do this calculation
or analysis?
A.
This would have been monies that were paid to workers,
individual workers, as opposed to companies. So that would
have been by going through the bank statements, looking at the
general ledgers, and being able to -- in discussions with
Mr. Sheppard, as well as looking at information that came from
the project management records, to be able to identify
individuals that were working on the property.
Q.
And why did you refer to it as payroll?
A.
For a couple of reasons. When you look on the face of the
general ledger, you would typically see payroll referred to in
the memo item. So when you look at QuickBooks, there's a memo
field and it gives a little description about each transaction,
and that gives a little bit of insight into what was being
thought of when they were being accounted for by the companies'
accounting people.
There were -- when you looked at copies of canceled
checks, it would say: "Payroll" on the canceled check. When I
looked at the records that came from the project management
information that Mr. Vasilas maintained, those documents also
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
would identify individual workers, many of which overlapped in
some ways with amounts that were paid out of the bank accounts.
So with all of that information, I did my best to be
able to go through and categorize those that were workers.
Q.
And skipping a few lines down, "Contractor Companies." Can
you explain the difference between payrolled individuals and
payments to contractors.
A.
Yes. Contractor companies, as its name implies, would be
for people that did -- companies that did flooring work. They
may have done work to the HVAC, painting, electrical work.
These would have been companies that would have received those
checks. Even if they provided workers, it would have been
going to the company rather than to the individuals.
Q.
And again, just skipping some more lines down, the line
item "Cash Withdrawals for Burlington Build-Out," could you
tell us what that includes.
A.
Yes. There were monies that were used, especially during
the COVID period, for petty cash because banks were closed.
You saw a little bit of an uptick in that where $3,000 might be
taken out every couple of weeks, and that would be used for
various expenses that would be paid for on the project site.
So unlike some of these others where we saw a specific payee,
they were cash withdrawals, but they were categorized in the
company's QuickBooks records as petty cash for Burlington
build-out.
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Miami, Florida 33128
(305) 523-5698
Q.
It's not your testimony that there was only 26,000 in
expenses for Burlington, correct?
A.
No. No. Many of these items on this chart here on the
right are Burlington build-out related. Those were just the
cash withdrawals.
Q.
We're showing on the left-hand --
MR. CAVALLO: Could you go to Bates 1058, Defendant's
Exhibit B-19 in evidence.
And Brian, could you zoom in on the bottom where it
says: "LL Work for Tenant."
BY MR. CAVALLO:
Q.
Your line item for cash withdrawals for Burlington
build-out, are those reflected in the QuickBooks?
A.
Yes. I mean, this is for the period shortly before I began
on May 1st.
MS. MARTINEZ: Counsel, is this an exhibit in
evidence?
MR. CAVALLO: Yes. Through the Jeanette
certification.
MS. MARTINEZ: B-19?
MR. CAVALLO: Yes.
MS. MARTINEZ: And is there a particular page in B-19?
MR. CAVALLO: Yeah. We're on Bates Number 1058.
MS. MARTINEZ: And is there a particular company that
you're discussing?
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Miami, Florida 33128
(305) 523-5698
MR. CAVALLO: This is a -- I believe it's the 2020
QuickBooks for -- could you X out and go to the top of the
record.
MS. MARTINEZ: So QuickBooks usually goes by account.
MR. CAVALLO: It's at the top. I'm just -- go to the
first page, please.
BY MR. CAVALLO:
Q.
Mr. Bouchner, for the record, what company does this
QuickBooks relate to and for what period?
A.
This is for the year 2020 from January through December for
HM-UP Development Alafaya Trails.
MR. CAVALLO: Could you go back to 1058, please.
Actually, could you go a few more down till we get to
the period of time Mr. Bouchner is talking about.
A page down.
Zoom in on the bottom.
BY MR. CAVALLO:
Q.
Mr. Bouchner, do you see any -- any of the expenditures you
classified as cash withdrawals for Burlington build-out here?
A.
Sure. So I'm looking -- the middle of the page, there's --
the first transaction on June 3rd, it says: "Cash," and --
Q.
There are a lot of other expenditures here, correct?
A.
Yes. There are payments to contractors, payments to
individuals.
Q.
How did you handle those expenditures in your analysis?
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(305) 523-5698
A.
So if there was an amount that would be -- so I'm looking
at April 22nd. It's outside of my time period, but the example
is the same. There's somebody where it says: "Payroll labor
drywall." If it was in the time period, I would have taken
that payroll and I would have included it as part of payroll.
If we look and see that there were amounts for "Finish
jump pump Burlington" for AMCA Plumbing Corporation, that would
have been a contractor payment. So whatever it was, it would
have been categorized as inconsistent with that.
Q.
For the record, could you please just tell us the total
amount of business expenses from bank accounts for this period
of time on the right-hand side.
A.
Out of the bank accounts, there was $3,848,000, and I'll
round. That would exclude the American Express-related
disbursements.
Q.
And where can we find that line item on your overall
summary chart on the left?
A.
It's the first line in the middle section. You can see the
three million eight forty-eight in both places.
Q.
Thank you.
MR. CAVALLO: Could you please put up Z-4 on the
right. Z-4.
BY MR. CAVALLO:
Q.
Could you please explain what's being shown in this chart
as it relates to your analysis.
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(305) 523-5698
A.
So as also was testified to over the course of the trial,
Mr. Sheppard's American Express card was often used for the
payment of business expenses. So I had done a detailed
analysis, as I alluded to before, of the American Express
statements, and distinguished those that were business in
nature from those that were personal. And what you see here is
a summary grouped by the vendor or the merchant that
received -- for which those goods or services were purchased,
and that is on the right side here.
Q.
In categorizing these, did you also perform any
reasonableness analysis?
A.
Yes. Yes. So what I would do is -- you know, I gathered
all of the information, I grouped it by vendor name, I looked
at the information and how it was categorized on the company's
QuickBooks records. It would typically indicate whether it was
a business expense or not. And then I did a reasonableness
review by going through each of the vendors to make sure that
there was some understandable reason why it would be a business
expense. So...
MR. CAVALLO: Can you scroll to the very bottom for
the total on the right-hand side.
BY MR. CAVALLO:
Q.
What was the total amount of business expense charges for
this period?
A.
Approximately $476,000.
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Miami, Florida 33128
(305) 523-5698
Q.
Can you explain why that 476,000, approximately, in
business expense charges on the AmEx is not seen dollar for
dollar in the second line of your summary chart?
A.
Because not every dollar was paid for using the three
companies. There were some other payments. There were also
some small differences between the beginning balance and the
ending balance. So I needed to make an adjustment based on
what was actually paid by these companies.
MR. CAVALLO: Could you put Z-5 on the left-hand side.
BY MR. CAVALLO:
Q.
And did you prepare a chart to show your analysis as far as
allocating these charges?
A.
Yes, I did.
Q.
Is that shown in Z-5 on the left?
A.
It is.
Q.
Could you explain here the allocation process you went
through.
A.
Sure. Over the course of this entire time period, there
were $831,000 in charges to the American Express card. 476,000
were classified as business related, and you can see that on
the left side. That made up 57 percent of the $831,000 in
charges.
Q.
And can you explain the right-hand column at the top.
A.
Yes. That's where I looked at the total, the 831,772. And
I looked at the 476,000 that was business. That was 57 percent
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
of that total. The 355,000 of personal charges made up
43 percent of that total. And if you add the 57 percent plus
the 43 percent, you get the full hundred percent.
Q.
What did you do with those percentages?
A.
Well, the next thing would be to look to see how many --
how much of the payments for those American Express card
charges were made from the three companies that I'm looking at
as part of this analysis. And I was able to identify looking
at the bank statements $765,000 of payments out of these
companies' bank accounts.
So by taking that 57 percent and multiplying it by
765,000, that would result in $438,474.52 that you see at the
bottom. So I reduced the amount of expenses that I'm including
in my analysis from the 476,000 in total charges, and I did an
apportionment to the 438,000 reducing it for that difference.
Q.
And the numbers at the bottom there, the 438,000 in
business -- payments to American Express allocated for
business, and the 327,000 for payments to American Express
allocated to personal, those are the figures that appear on
your overrule summary chart, correct?
A.
That's correct. Yes.
MR. CAVALLO: You can put Z-2 back up on the left.
MS. MARTINEZ: Counsel, the one that you looked at on
the left, that was Z-5?
MR. CAVALLO: Z-5.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Could you please put Z-6 up on the right.
BY MR. CAVALLO:
Q.
The next line item down on your overall summary chart,
"Tenant Improvements," could you explain what that is,
Mr. Bouchner.
A.
Yes. I believe this was also testified to over the course
of the trial, but there was an amendment to the Burlington
lease. The project was not delivered in time without incurring
a penalty that Burlington would have been entitled to. So
there was an amendment that actually provided a credit for
what's known as liquidated damages that went to Burlington and
was dealt with as a credit back to Burlington from HM-UP.
Q.
Are you familiar with the document X-43, which is in
evidence -- Defendant's X-43, the second amendment to the lease
on the left-hand side of the screen?
A.
Yes, I am.
Q.
And can you please just tell us where in this document you
factored in the lease to your analysis.
A.
So if you look at the bottom of the page to the left,
you'll see where it says: "Roman numeral III, Outstanding
Amounts." And at the very bottom, they identify $1,166,000 as
the settlement amount. In other words, HM-UP Alafaya Trails
had to pay a penalty, in essence, of 1,166,000 because it was
unable to deliver the property in the summer and didn't -- it
didn't happen until November.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
And if you scroll further down on the lease to the next
page, how was that over-$1.1 million penalty going to be paid
by the companies?
A.
So it would be paid over -- it was going to be paid out
over 60 months. If you take the $1,166,000 and divide that by
60 months, you get $19,433.33 each and every month. So if you
look on the right side where I prepared the chart, what you see
there is -- for the 14 months that I'm looking at, you see that
$19,433 cost, that penalty, for each of those months, which
totaled $272,000.
Q.
The penalty to the companies was in reality much higher
than 272,000, correct?
A.
Yes. In fact, I excluded approximately $800,000 from my
overall calculation of expenses because I limited it only to
the period that I'm looking at.
MR. CAVALLO: Could you put Z-2 back up on the left.
BY MR. CAVALLO:
Q.
And again, just to point out where the two -- show us where
the 272,000 in -- pursuant to the second amendment is on your
overall summary chart.
A.
It's the third line in the middle section.
Q.
Why did you include this as a business expense?
A.
Because it actually was an expense. It was a settlement
payment that needed to be made and paid out by HM-UP. It was
treated not as an out-of-cash payment, so it doesn't get
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
reflected in the bank accounts. But the way it worked was it
was an actual reduction in the rent. But it is an expense
nonetheless that needed to be included because the company
received approximately $19,400 less each month than they
otherwise would have if it wasn't for this penalty.
MR. CAVALLO: Could you please put up Z-7 on the
right-hand side.
BY MR. CAVALLO:
Q.
Could you please explain what's being shown in this chart,
and again how it related to your analysis.
A.
So on this chart, this pertained to the -- my review of the
project management reports and records that would have included
copies of checks, copies of credit card statements, individual
receipts, along with lots of Excel schedules that were
maintained by Mr. Vasilas. There were roughly three volumes of
information that had been gathered, and I went through that
information in order to be able to put this summary chart
together on the right-hand side that captured all of that
information.
Q.
The first line item, "Payroll to Individual Workers," could
you tell us how you calculated that.
A.
Yes. By looking at all of the individuals that were
identified on the spreadsheets, looking at checks, I identified
those payments that were going to individuals who were on the
property, and they were identified as such on those documents.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
These were individuals who were represented to have been
paid by Mr. Vasilas, correct?
A.
That's correct.
Q.
Can you please just explain for us in a little more detail
the bottom line item, the "Less Reimbursement of Project
Manager Expenses."
A.
Sure. So when I looked at the roughly $280,000 in total
costs that I identified by going through all of these records,
there were certain expenses that were paid by the company to
Mr. Vasilas as reimbursement for certain costs, and I didn't
want to double count. If I included all 280,000, even though
some of it was reimbursed, I would have included an extra
$89,500 that would have doubled up on it. So in order to avoid
that double counting, I reduced on the bottom as a credit.
Q.
If these costs were -- business expenses were paid by
Mr. Vasilas, why are you crediting them as business expenses of
the companies?
A.
So pursuant to my discussions with Mr. Sheppard, we
discussed a loan that Mr. Sheppard had made to Mr. Vasilas and
that there was an agreement that he would pay for certain costs
out of his own pocket or through his company Diamonds Forever
Miami, and that would satisfy the obligation. So in effect --
go ahead.
Q.
I just want to make sure I'm clear for the record. The
costs that were in this chart, these were paid by Mr. Vasilas
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
from his own pocket, his own company, as opposed to the
companies, correct?
A.
That's right, except for the $89,000, which I credited.
Q.
And I'm sorry I interrupted you. So I'm -- the basis to
include these as business expenses was why?
A.
Because they were related to the project. They were
material costs, payroll to individual workers, amounts paid to
other contractors. All of these things were amounts that were
identified by Mr. Vasilas on the reports that he provided to
Mr. Sheppard. And he paid for them out of his own pocket, so
they don't appear in the bank accounts. So if I didn't include
them, I would have left off those real expenses of the project
that were treated as a satisfaction of a personal obligation,
instead of coming out of the bank account.
Q.
When you say satisfaction of a personal obligation, you're
referring to a loan of some kind?
A.
That's my understanding, yes.
Q.
And the loan -- Mr. Vasilas owed money to who?
A.
To Mr. Sheppard.
Q.
And did you see any evidence of any kind of loan of that
nature in any of the records you reviewed?
A.
There were references to a loan in the documentation.
MR. CAVALLO: Could you put up on the left-hand side
X-10.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MR. CAVALLO:
Q.
So this is Defendant's Exhibit, in evidence, X-10. Could
you please identify this, Mr. Bouchner? Are you familiar with
this document?
MR. CAVALLO: And could you scroll through, Brian.
THE WITNESS: Yeah. Yes. This was among the
documents that were produced as the business records. You can
see checks, and Excel schedules, and other information that was
produced.
MS. MARTINEZ: Counsel, I understand that this is an
exhibit that's been admitted.
MR. CAVALLO: X-10.
MS. MARTINEZ: And if you're showing something to the
jury, could we say that Bates label you're showing.
MR. CAVALLO: Yes. We're showing right now Bates
Label D, for Defendant, 001170.
BY MR. CAVALLO:
Q.
Mr. Bouchner, is this one such business record of the
company that supported the loan you discussed with
Mr. Sheppard?
A.
Yes.
Q.
Could you explain where that is on here.
A.
So if you look towards the top, it says: "Jeff" on the
left and "Loan" in the notes, and it makes reference to a
balance of $185,987.77.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Was that consistent with your discussions with
Mr. Sheppard?
A.
It was actually less than the original 400,000 that he was
talking about. This was a reference that I saw to the loan in
here.
THE COURT: Mr. Cavallo, the jury is in need of a
break.
MR. CAVALLO: Oh. Yeah.
THE COURT: All right. Ladies and Gentlemen, let's
take a 10-minute recess.
COURT SECURITY OFFICER: All rise for the jury.
(Jury not present, 2:24 p.m.)
THE COURT: All right. We're on a 10-minute recess.
MS. WEINTRAUB: Judge, before you take a break, I'm
just asking for scheduling purposes, and want to advise the
Court I was right for once during this case. We are going to
rest after Mr. Bouchner. We did get him on before one or
around one. We're going to rest. I'd like to know what's
going on with rebuttal with --
THE COURT: All right. That's fair.
Ms. Jimenez, Mr. Bouchner is the last witness. Do you
intend to introduce any rebuttal evidence?
MS. JIMENEZ: Yes, Your Honor. We intend to call
Mr. Alex Zaslow.
MS. WEINTRAUB: Are we going to get it narrowed down
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Miami, Florida 33128
(305) 523-5698
now for the rebuttal? I mean, we have no idea -- Zaslow -- so
the Court remembers --
THE COURT: All right. Hold on. Why don't we --
Mr. Bouchner, why don't you go ahead and step outside.
MS. WEINTRAUB: Judge, we're also trying to determine
if it's proper rebuttal because we believe it is not going to
be, and I want to just remind the Court respectfully that
Zaslow could testify to a plethora of hours, leading to hours
and hours of testimony, which is a mess.
I mean, when we think of Zaslow, he's Neal
Cupersmith's partner. He's the one that actually did all the
tax returns for the past seven years. He's the one that they
should have called in their case in chief. Instead, they chose
to call Neal Cupersmith --
THE COURT: All right. So obviously Mr. Zaslow is
going to be rebutting Mr. Bouchner's testimony. Is that
correct, Ms. Jimenez?
MS. JIMENEZ: Well, I don't know at this point if I --
THE COURT: What would be the purpose of the rebuttal?
MS. JIMENEZ: So the main purpose of the rebuttal,
Your Honor, is twofold. There was testimony by the Defendant
that Mr. Cupersmith and Mr. Zaslow gave him advice regarding
the government loans that he was applying for, and companies
that should apply, and the year that he should apply for, and
those kinds of things that were testified to by the Defendant,
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Miami, Florida 33128
(305) 523-5698
and they have emails where they were setting up the conference
call. And so that's going to be a portion of his testimony.
There was supposed business records introduced that
were W-2s, suggested -- and suggested by the Defendant that
this -- these were the tax filings, sort of conflating them
with the 941s. He's going to testify about that.
And I don't know if there was something here in
addition that he would be addressing, but that is the thrust of
it. It is rebuttal. He's not going to be going over tax
returns that Mr. Cupersmith went over and those kinds of
things.
THE COURT: All right. Then certainly the Court can
be in a position to determine whether it's true rebuttal.
Okay?
All right. I'll see you back here in 10 minutes.
(Recess from 2:28 p.m. to 2:42 p.m.)
THE COURT: All right. Welcome back.
Are we ready to continue?
MR. CAVALLO: Yes, Your Honor.
THE COURT: See if they're all there.
Thank you.
(Pause in proceedings.)
MS. MARTINEZ: How much longer do you think?
MR. CAVALLO: I'm more than halfway through.
MS. MARTINEZ: Okay. So maybe?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MR. CAVALLO: An hour, 45 minutes.
(Before the Jury, 2:43 p.m.)
THE COURT: All right. Welcome back, Ladies and
Gentlemen.
Please be seated.
And we'll continue with the testimony.
MR. CAVALLO: Can you put the same document up. On
the left-hand side, put up Z-2.
BY MR. CAVALLO:
Q.
Mr. Bouchner, were your conversations with Mr. Sheppard one
of the reasons you were comfortable including this 191,000 on
your summary chart, even though there was only -- we only saw
185,000 in the project reports?
A.
Yes. It was something I considered.
Q.
Why is that?
A.
Well, the difference between the 185, which was the balance
when that chart was prepared, and the 191 at least provided me
some confirmation that there were loans arranged between the
two men. And Mr. Sheppard's further discussion also helped at
least understand the context of the relationship.
Q.
And could you give us just a simple example in the context
of a loan and why this is a business expense, given your
information regarding the loan?
A.
Sure. Well, let's say that you owed me a hundred dollars
and I owed Ms. Weintraub a hundred dollars, and I said: "Well,
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
why don't you pay her on my behalf." Well, I may not have
actually paid that hundred dollars from my pocket and you did,
but at the end of the day she still gets paid. I'm not getting
the hundred dollars from you, so I'm getting less than I would
have gotten, and collectively it all makes sense. I think
that's what was happening here.
MR. CAVALLO: On the right-hand side, could you please
put up Z-8.
BY MR. CAVALLO:
Q.
Mr. Bouchner, can you explain what's being shown in this
chart as it relates to your analysis.
A.
Yes. This is a summary of the payroll that includes actual
payroll amounts of $677,000, approximately, that were paid out
of the companies' bank accounts, an additional $96,000 of
health insurance that would have been paid to -- paid on behalf
of the companies' workers, as well as 153,674 of payroll that
was paid for through Mr. Vasilas at the project worksite.
Q.
Given your analysis for this time period, what is the total
amount of payroll that was paid by these companies?
A.
Collectively, by including these three sources of payments,
approximately $927,000.
Q.
Can you please tell the jury how that $927,000 compares to
the total amount of government program loans.
A.
For all six loans, it would be $893,000. So this was
approximately $30,000 more.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Payroll exceeds the total amount of the loans, correct?
MS. MARTINEZ: Objection. Argumentative.
THE COURT: Sustained.
BY MR. CAVALLO:
Q.
Payroll exceeds the total amount of the loans, correct?
MS. MARTINEZ: Leading.
THE COURT: Sustained.
BY MR. CAVALLO:
Q.
Mr. Bouchner, the total amount of the loans in your summary
chart, that includes EIDL, correct?
A.
Yes, it does.
Q.
How does the payroll you calculated compare to just the PPP
loans for this period?
A.
Approximately twice as much.
Q.
Payroll is twice as much as in the PPP loan amount,
correct?
A.
The payroll is approximately -- the $926,000 is
approximately a little bit more than twice as much as the
$447,000 or so of PPP loans.
Q.
Could you please tell us where each of -- in the right-hand
chart, could you tell us where each of these line items can be
found in your overall summary chart.
A.
Sure. The payroll and the insurance health would be
contained in the 3,848,000. That's the first line of the
middle section on the left. And the 153,764 would have been
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
part of the 191,000, which was the fourth line in that middle
section.
MR. CAVALLO: You can take down the right-hand side
and put up Z-9.
BY MR. CAVALLO:
Q.
As far as Defendant's Z-9, can you tell us what this chart
shows?
A.
Yes. This is the personal expenditures from the bank
accounts. Those would have been the monies that were paid from
the companies' -- all three companies' collective bank accounts
for items that were not business expenses, and I classified
them as personal in nature.
Q.
Starting with the first line, "Credit Cards," what does
that include?
A.
So in addition to the American Express card, which I
analyzed separately because of the volume of all of the
transactions, there was also a Discover Card and a Barclays
card. These represent a hundred percent of the charges on
those two cards. There may have been some personal -- excuse
me -- some business-related expenses in there, but for
conservatism, since the majority of them were personal, I
included them entirely in this schedule.
Q.
The entire amount of those credit cards you classified as
personal?
A.
That's right. I didn't do a separate line-by-line
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
analysis. I just included them all.
Q.
How about the next line item, "Loan Payment IBERIA," what
does that -- based on your analysis, what was that?
A.
These would have been the monthly payments that were made
on Mr. Sheppard's mortgage for his home.
Q.
Taking the "Loan Payment IBERIA" as an example, how were
these personal expenses handled in the QuickBooks of the
company?
A.
Generally, they were treated as equity distributions, like
a dividend. Mr. Sheppard was not taking a salary, but he was
having the company make certain payments on his behalf. So if
you look at the QuickBooks information, and you look at the
equity account -- I know I'm getting technical, but instead of
showing it as an expense of the business, it would show up as a
distribution or, like I said, a dividend.
Q.
Instead of being shown as a business expense, it was
handled as an equity distribution?
A.
In most cases, yes.
Q.
Skipping to "Loan Payment Via One Florida Bank LOC." Can
you tell us what that line item is.
A.
Yes. There was just under $600,000 of monies that had been
contributed to the business through the personal line of
credit. Mr. Kallman talked about that in his testimony. Some
of those funds were actually repaid back to Mr. Sheppard, and
that $102,000 was the monies that went back -- I treated that
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
entirely as a personal expense.
Q.
Were those payments to Mr. Sheppard or to One Florida Bank?
A.
Actually, it was to One Florida Bank on behalf of both
Mr. Sheppard and Mr. Kallman, who had the line of credit.
Q.
And why did you treat those as a -- you treated those as a
personal expense?
A.
Yeah. I treated them as a personal expense because those
were monies that were part of the sources of the funds that
came in to them through their line of credit. And because it
was repaying back to them, I felt that it would be appropriate
and, you know, arguably conservative by treating it entirely as
personal.
Q.
And again, just to go down to the total, the total amount
of personal expenses paid?
A.
Approximately, $486,000.
Q.
The One Florida Bank repayment, that -- the way you handled
it, it was treated as a reduction in equity as well?
A.
That's correct.
MR. CAVALLO: You could take down the right-hand side
and pull up Z-10, please.
BY MR. CAVALLO:
Q.
Can you please explain what the right-hand chart shows
regarding your analysis of AmEx.
A.
Sure. So prior to the break, I went through a overview of
the American Express business expenses. This is doing the
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Miami, Florida 33128
(305) 523-5698
exact same thing that I had done before, but now these are the
items that were categorized as personal expenses in nature.
As I had mentioned, Ms. Gonzalez had identified on the
face of the American Express statements what was personal and
what was business. I summarized all that information and
grouped it by the merchant that received the payment or where
the purchase was made. And then I sat down with Mr. Sheppard
and -- to go over any questions that I had to make sure that
those categorizations were reasonable.
Q.
How did you handle the personal expenses of Mrs. Jennifer
Sheppard and Jordan Sheppard?
A.
So they each had their own American Express card. So those
were not reviewed on a line-by-line basis, like I did with the
Discover and the Barclays Card. The entire amount of both
Ms. Jennifer Sheppard and Ms. Jordan Sheppard's spending was
captured and put here as personal.
Q.
You gave no credit as business expenses for any of these
charges, correct?
A.
Yes. I made the assumption that there was no business
purpose, even if there may have been.
Q.
And that would include any jewelry purchases that were made
on either of those accounts, correct?
A.
The entirety of everything that was on the American Express
statements over this 20-month period.
MR. CAVALLO: Scrolling to the very bottom of the
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Miami, Florida 33128
(305) 523-5698
chart on the right, please.
BY MR. CAVALLO:
Q.
The total amount of personal expense charges for this
period was what, Mr. Bouchner?
A.
Approximately $355,000.
Q.
And did you have to go through the same process of
allocating those from charges to payments?
A.
Yes. As we discussed when we looked at that allocation
chart, it was the same process. This was just the portion that
would be attributed to personal items.
Q.
On your summary chart, Z-2, could you just point out where
the allocation is shown there.
A.
Sure. When I reduce it for the difference between the
charged amounts and the purchased amounts, it reduces the total
that gets allocated in this case from 355,000 to 326,000.
Q.
And again, just for the record, how did the total amount of
non-government funds in the accounts for this period compare to
the total personal expenses we just went through?
A.
So if we look at the non-government funds, that would be
$4,337,000. You compare that to the $813,000 at the very
bottom of this page and once again you've got approximately a
five-to-one ratio. Five times as many dollars were received
from non-government sources as were used to pay these personal
expenses.
Q.
The overall summary chart on the left is for the
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
May 1st, 2020, through the December 31, 2021, time frame. Did
you perform an analysis related to any other time frame?
A.
Yes. I performed it for a few other periods as well.
MR. CAVALLO: You can take down both and just put up
Z-11.
BY MR. CAVALLO:
Q.
Could you explain what was being shown as it relates to
your analysis in this chart.
A.
So this chart is identical to the analysis that we went
through that was on the left side of the page throughout much
of my testimony --
Q.
The process was identical?
A.
The process was identical. The only thing that's changed
is the date range.
Q.
And is this date range actually a subset of the previous
date range?
A.
Yes. Yes. So all of the expenses that are on this chart
are also included on the first summary chart that we looked at.
It's just smaller numbers because the date range is narrower.
Q.
And what was the significance for your analysis of starting
this date range on 11/23/2020?
A.
So this would have been the date where -- for the loans
that were specifically identified in the Indictment --
MS. MARTINEZ: Objection, Your Honor.
THE COURT: And the basis?
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Miami, Florida 33128
(305) 523-5698
MS. MARTINEZ: I advised counsel that I had an
objection for this witness to testify to what would be legal
conclusions as to what is charged in the Indictment. The
Indictment charges --
THE COURT: All right. Sustained on that ground.
BY MR. CAVALLO:
Q.
Does this chart include just the loans that are
specifically mentioned by name, specific name in the
Indictment?
MS. MARTINEZ: Objection. It's incorrect.
THE COURT: All right. Hold on. With regard to
reference to the Indictment, the objection is sustained.
BY MR. CAVALLO:
Q.
Which government program loans does this analysis include,
Mr. Bouchner?
A.
There is a 2020 EIDL loan that is the $149,900. That was
the 11/23/2020 date. And then there were the two PPP loans in
March of 2021.
Q.
And for just this time period, what -- can you explain to
us what your analysis showed for the source of funds for the
companies?
A.
So the total sources for this time period was 3,258,000, of
which 2,811,000 came from non-government sources and 447,000
came from government sources.
Q.
How does the amount of non-government sources of funds
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
compare to the amount of government program loans?
A.
Between five and six times as much.
Q.
Going down to the next section, can you explain the
business expenses for this time period.
A.
Sure. Once again, the process was identical. I have the
same four account categories, but for these business expenses
the total for this time period was approximately $2.87 million.
Q.
And how did the total business expenses for this time
period compare to the total amount of government loans?
A.
It was approximately six to one. If you divide two million
eight seventy-six by 446,000, that's the ratio that you get.
Q.
There was six times more business expenses than --
MS. MARTINEZ: Objection. Leading.
THE COURT: Sustained.
BY MR. CAVALLO:
Q.
Next category down, the personal expenses, could you
explain that.
A.
Again, the same process. There were $563,000 that were
categorized as personal expenses from the bank accounts and the
American Express card.
Q.
And how did the funds from non-government sources at the
top compare to the total amount of personal expenses for this
period?
A.
It flipped going in the other direction. If you divide the
2,811,000 by the 563,000, again, it's approximately six times
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
as much, give or take.
Q.
Did you perform an analysis for any other time period?
A.
Yes.
MR. CAVALLO: Put up Z-12, please.
BY MR. CAVALLO:
Q.
Could you explain how this chart relates to your analysis.
A.
Yes. So again, the exact same analysis, looking at the
same categories of items. The only difference is that this is
from 3/29/2021 through 9/15/2021.
Q.
Is this yet another subset of the overall summary we first
looked at?
A.
Yes. These are all expenses or expenditures contained in
both the first summary chart and the one that we just
spoke about.
Q.
And what's the significance of this particular time frame?
A.
So this would have been the date that the last PPP loan
monies came in and extended out for 24 weeks.
Q.
Why extend out 24 weeks?
A.
There was testimony in the case that I listened to that
talked about a 24-week period for the repayment of PPP loans
where forgiveness is being sought.
Q.
Did Mr. Sheppard apply for forgiveness for these loans?
A.
Not for these.
Q.
But you looked at this period anyway?
A.
Yes. I was asked to by counsel for illustrative purposes.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Could you start at the top and walk us through the source
of funds for this period.
A.
Sure. So the source of funds for this 24-week period was
$1,288,000, and that was comprised of monies that came from
non-government sources of 991,000. And from the two government
loans, that would have been the 297,000.
Q.
How did the total amount of non-government sources of funds
compare to the total amount of government loans for this time
period?
A.
A little more than three to one.
Q.
And the next section down, the business expenses, could you
walk us through that, please.
A.
Sure. Again, it's the same analysis. I won't go through
it in the same level of detail. But when you add up the four
categories that we have discussed on the prior two charts, we
come to total business expenses of $1,136,000, approximately.
Q.
And how did the total business expenses of this period
compare to the amount of government program loans?
A.
So it's a ratio of approximately four to one.
Q.
And finally, the personal expenses, could you walk us
through that?
A.
Sure. Taking the same two categories, "Bank Account
Personal Expenses" and "American Express Personal Expenses," we
get a total of $240,000 in personal expenses over this 24-week
period.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
And how did the funds from non-government loan sources
compare to the amount of total personal expenses for this
period?
A.
It was, once again, about four to one, but now going in the
other direction.
MR. CAVALLO: You can take it down.
BY MR. CAVALLO:
Q.
Given your analysis of the sources and uses of funds during
these various time periods, what is your opinion regarding the
companies' business expenses?
A.
Well, the companies' business expenses dwarfed the amount
of monies that were received by the companies for government
loans. Generally, what we saw was anywhere from four to six
times as much.
Q.
And given your analysis, what's your overall opinion
regarding the companies' -- the personal expenses paid by the
companies across these various time periods?
A.
Sure. When you look at the total non-government sources,
and you compare that to the amounts that were used by the
company for payment of personal expenses, once again, it was a
large disparity. Three to five times as much money came in
from non-government sources as were expended for personal
reasons.
Q.
Were you asked to give any other opinion in this case?
A.
I was asked to review the historical personal expenditures
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
by the company in order to be able to see how that compared to
what was done after the company began to receive some of the
government funding.
Q.
Okay. I'm going to come back to that.
MR. CAVALLO: I'd actually like first to go back to
Z-1.
BY MR. CAVALLO:
Q.
Mr. Bouchner, Z-1, what was the -- what's the source of the
information in this particular chart?
A.
This particular chart was bank statements.
Q.
This is just a summary of your review of the bank
statements?
A.
Yes. For the sources.
Q.
And --
MR. CAVALLO: Okay. Your Honor, I would like to move
just this particular chart, given Mr. Bouchner's testimony,
into evidence as Defendant Z-1 under Rule 1006 as a summary
chart.
THE COURT: Any objection?
MS. MARTINEZ: No. No objection as to Z-1.
THE COURT: All right. Admitted into evidence.
(Defendant's Exhibit Z-1 received into evidence.)
BY MR. CAVALLO:
Q.
Sorry. Go back to your opinion now.
A.
Sure.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
What was the purpose of looking at the historical payment
of personal expenses by the companies?
A.
I observed that over time a lot of expenses that were
treated as personal during the period after government loans
came in were also paid in prior periods. So I wanted to look
to see whether there was any difference in the behavior or the
amounts that were being paid, you know, in a general way.
Q.
And which personal expenses did you look at for this part
of your analysis?
A.
I looked at the mortgage payments. I looked at amounts
that went to the Florida Prepaid College account. I looked at
American Express. I also looked at certain other expenses that
were identified as well, like for school.
Q.
Why did you focus on those particular personal expenses?
A.
These were expenses that were addressed in trial, and they
were amounts that were recurring in nature and were covered
over the entire period of time.
MR. CAVALLO: Please put up Z-13.
BY MR. CAVALLO:
Q.
Mr. Bouchner, could you tell us what is reflected in Z-13
as it relates to your analysis.
A.
Sure. So when you look at Z-13 here, this would be a
history of all of the payments that were coming from the three
companies that we've been talking about, in order to be able to
pay the mortgage on Mr. Sheppard's residence beginning in 2014
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(305) 523-5698
all the way through 2021.
Q.
And given your review of this period, what did you conclude
about the historical payment of Mr. Sheppard's mortgage from
the companies?
A.
With the exception of a slight difference in 2015, when
some payments were made from something other than these three
companies, you can see that it was pretty consistent, 126,000
in '14, 126 in '16, '17, 128,000 in '18. Really, all the way
up through 2020, it was the same. And in fact, in '21, there
was a reduction in some of the monies that were used out of
these three accounts. But historically what they were doing
after the government loans were made was essentially identical
to what was happening in all of the years that led up to that.
MR. CAVALLO: Please put up Z-14.
BY MR. CAVALLO:
Q.
Mr. Bouchner, could you please explain what's shown in this
chart.
A.
I did a similar analysis. I didn't go back quite as far
because I believe these payments began in 2017. But what you
see here is these were amounts that were paid to the Florida
Prepaid College program. It began in 2017, and you see that in
2017, '18, '19, in nearly every month there was a small payment
made for these programs. And in fact, in 2020 and 2021, the
amounts actually were less than what they were beforehand.
Q.
Fair to say your conclusions based on this chart didn't
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Miami, Florida 33128
(305) 523-5698
change from the previous chart?
A.
No. It's consistent payment. They were doing what I would
say business as usual.
MR. CAVALLO: Please put up Z-15.
BY MR. CAVALLO:
Q.
Can you explain what's shown in this chart.
A.
Sure. So this is a summary of the American Express
activity. It was taken from the American Express statements
and the bank statements in order to be able to look to see how
these charges were handled by the company in the years
preceding and after the government loan program.
Q.
Could you just walk us through this column by column, and
just start with the third column, the furthest column to the
right.
A.
So when we look at the furthest column to the right, this
would be --
MS. MARTINEZ: Excuse me, Counsel. I am just not sure
I have this. Where --
MR. CAVALLO: This is Z-15. It's in the package.
MS. MARTINEZ: Did you file this?
MR. CAVALLO: Yes.
MS. MARTINEZ: What page was it in your filing?
MR. CAVALLO: I don't have it in front of me.
(Pause in proceedings.)
MS. MARTINEZ: I found it. It's at the end.
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Miami, Florida 33128
(305) 523-5698
THE COURT: All right. Let's continue.
MS. MARTINEZ: Thank you for your patience.
MR. CAVALLO: Just for the record, it was filed at
Docket Entry 172-2.
MS. MARTINEZ: Saturday evening.
BY MR. CAVALLO:
Q.
Could you please walk us through -- Mr. Bouchner, would you
please walk us through the furthest column to the right, what
that shows.
A.
Yes. The furthest column to the right would be the total
activity in the American Express statements for each of the
years 2016 through 2021.
Q.
And let's now go to the first column -- well, technically
the second. But the payments from HM Management, HM-UP, HM
Four, the companies we're talking about, how did you prepare
those entries?
A.
So what I did there was I went to the bank statements to
see when payments were used from HM Management, HM-UP, or HM
Four that were used to pay the charges that were identified in
the rightmost column.
Q.
There were significant business expenses paid by AmEx in
2020 and 2021?
MS. MARTINEZ: Objection. Leading.
THE COURT: Sustained.
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Miami, Florida 33128
(305) 523-5698
BY MR. CAVALLO:
Q.
What was the level of business expenses paid by AmEx in the
years 2020 and 2021?
A.
They were considerable as we went through on a prior chart,
where we identified payee or merchant by merchant and the
totals that were over that period of time.
Q.
And now the middle column, "Payments From Other Sheppard
Entities," how did you calculate that?
A.
That would have been basically the difference between the
two columns.
Q.
You subtracted column 1 from column 3?
A.
Yes. If I took the 477,360 in 2016 and subtracted from
that the 299,400, the difference would have been amounts that
were paid from other entities that were not part of these three
companies.
Q.
And what did you conclude as part of your analysis, given
the historical payment of AmEx?
A.
Well, historically, payments were made by Mr. Sheppard's
entities for the payment of the AmEx. The amount of the total
charges was relatively consistent. And that, again, it was a
situation where what I saw after the government loans were
being made was generally consistent with what we saw
beforehand, that there wasn't a change in behavior. It was
business as usual in terms of how these expenses were treated.
Q.
Did you review any other -- the historical payment of any
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(305) 523-5698
other personal expenses not shown in the charts?
A.
Yeah. There were some payments made to Miami Country Day,
and I saw evidence of individual payments made. There were
only a couple afterwards and only a couple made before, but it
didn't really lend itself to a full chart because it was just a
couple of transactions, but that's what I saw.
Q.
That was consistent with what you had seen from your
analysis of other expenses?
A.
That's correct.
Q.
And given this entire analysis of historical payment of
personal expenses from the companies, did you form any opinion?
A.
Yes. I think, as I've been testifying to, what I saw was,
was that there were personal expenses that were clearly paid in
2020 and 2021, but those personal payments were very similar to
the types of payments and in many cases the amounts that were
being paid prior to. This was not a situation where when the
government loans started to come in we saw, like you do in
things that you read about in the paper where Lamborghinis, and
casinos, and world trips --
MS. MARTINEZ: Objection. Relevance.
THE COURT: Sustained.
BY MR. CAVALLO:
Q.
Just to finish your opinion, this was a situation where the
payment of personal expenses were consistent?
MS. MARTINEZ: Objection. Leading.
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Miami, Florida 33128
(305) 523-5698
THE COURT: Sustained.
BY MR. CAVALLO:
Q.
Could you just finish stating your opinion, Mr. Bouchner.
A.
My opinion is, is that the way the money was spent after
the government loans came in was entirely consistent with the
way monies were spent by the company in terms of business and
personal in the years that preceded those loans.
MR. CAVALLO: If I could just have one second, Your
Honor.
THE COURT: All right.
(Pause in proceedings.)
MR. CAVALLO: I have nothing further at this time,
Your Honor.
THE COURT: All right. Cross-examination.
(Pause in proceedings.)
CROSS-EXAMINATION
BY MS. MARTINEZ:
Q.
Good afternoon, Mr. Bouchner.
A.
Good afternoon.
Q.
Your certifications include certified management
accountant; is that correct?
A.
That's correct.
Q.
And that is different from certified public accountant,
correct?
A.
That is different.
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Miami, Florida 33128
(305) 523-5698
Q.
The origins of certified management accountant was cost
accounting; isn't that correct?
A.
That would be certainly an area that would be covered under
the CMA.
Q.
When it was founded, that is, the certification, it related
to analyzing how much it would cost to produce a product by a
company and those type of concerns by management. That's just
the historical foundations for that certification, CMA,
correct?
A.
It's much broader than that in terms of what it now covers,
but that may have been the origins.
Q.
And one difference between a certified management
accountant and a certified public accountant is that certified
public accountants are the ones who do the audits for, for
example, the financial statements of publicly traded companies;
isn't that right?
A.
That could be a role that a certified public accountant
would play. Many don't. But that is one of the
responsibilities for those that do.
Q.
And that is not something that a certified management
accountant does; isn't that right? Certifying that financial
statements have been fairly stated and providing an attestation
after having audited those financial statements, that is not
something that a certified management accountant does?
A.
Sure. The attest function of an audit would be performed
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by a CPA, yes.
Q.
Right.
A.
And not a CMA.
Q.
One of the differences between a CMA, like yourself, and a
certified public accountant is the certified management
accountant works more closely with management and sometimes in
an advisory function; isn't that correct?
A.
I wouldn't say so. I think that there are certified
management accountants that are in many walks of life. Some
work internally within the companies, some are consultants,
some do what I do. There's different roles that different
people play. I don't think you can make a universal, you know,
characterization like that.
Q.
In this particular case, you did rely on representations
that were made to you by Mr. Eric Sheppard, correct?
A.
In some respects. We certainly had conversations. You
know, most of what I did would have been based on the
documentation that I reviewed, with an opportunity for
questions and clarification from Mr. Sheppard.
Q.
In this particular case, you relied on him for a number of
things that you said in your direct examination. For example,
confirming whether something was personal or business; is that
right?
A.
Generally not. It was more being able to get some
additional confirmation. As I had mentioned, the American
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Express statements all were identified line by line as
personal, or professional, or business. The way it was
characterized in the QuickBooks records were also an indication
of whether it fell in one category or the other. I didn't
speak with Mr. Sheppard until after I had done all of that
analysis, grouped all of the expenses by payee, you know, and
grouped them in total dollar amount, and then I would go
through it to ask questions where I felt I needed to.
So you know, I would say his role was in some ways
confirmatory, but generally the documents spoke for themselves
once I put all of that information together.
Q.
And the information -- in addition to -- QuickBooks had
some of the information from the bank records, correct? But it
also had additional notations that you relied on, correct?
A.
Sure. So you would see the dollar amounts for sure. In
some cases you would see -- in addition to maybe the check
number that would be on the bank statement, it might actually
have the payee there, which would be consistent with the
bank -- with the checks that were included.
Dates would sometimes be different because the posting
date may not be exactly the same as the date that it cleared
the bank, but you would see that it was the same transactions.
But in addition to that, they were categorized into account
categories, assets, liabilities, expenses, revenues. That
wouldn't be on the bank statement. And there would be memo
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accounts that would provide additional detail that would be
entered by Ms. Gonzalez.
Q.
That was the point I was getting to. You relied on
information that was input into the QuickBooks by Ms. Gonzalez,
correct?
A.
Yes. These were contemporaneous records that were prepared
in real time, basically. I spoke with Ms. Gonzalez, who told
me that she would regularly update the QuickBooks throughout
the course of the year. The American Express notations that
were identified were done on a monthly basis. So yes, I did
rely on those contemporaneous records.
Q.
Well, in fact, the summary of your testimony, the brief
summary that I was provided, indicated that Ms. Gonzalez
actually did not always categorize things the same way, so you
actually did rely on conversations to make changes to what she
had put in initially; isn't that correct?
A.
Yes. There were rare instances where, when I would group
items by payee, I may see the majority of them as personal and
a small number as business or vice versa. I think I testified
to this. And when I had those types of questions where there
was difference, I wanted to understand whether there would be a
reason for it, and in a couple of instances I would
re-categorize. But we're talking out of the millions of
dollars of transactions that I looked at, the
recharacterization was probably in the thousands of dollars,
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certainly not even in the tens of thousand of dollars.
Q.
You didn't keep a written record of anything that
Mr. Sheppard told you or anything that Ms. Gonzalez told you;
isn't that correct?
A.
It would have been in spreadsheets where the record would
have been the characterization of business or personal. So
what would happen is these were extended periods of time. Once
I had done my analysis, I put it all together, I lined up all
of the individual payees, I sat with Mr. Sheppard, and we would
go through it. And if I had a question about whether something
was personal or business, I would ask him, and the
categorization was the result of that.
Q.
My question relates to: Did you obtain in writing -- any
of the representations that were made to you by Mr. Sheppard or
Ms. Gonzalez, did you either obtain it in writing from them or
did you write it? The answer is no. Correct?
A.
The answer is -- well, if you can include the information
entered into the spreadsheet, that would be it. If you're
looking for handwritten notes, no, I don't have handwritten
notes.
Q.
Well, what I'm looking for is a way that we would actually
know what it was that you changed. We actually don't know
because it's -- the only thing we have is your ultimate
summary. But we don't know what specifically you changed in
any one item and whether it was Mr. Sheppard or Ms. Gonzalez
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who told you; isn't that right?
MR. CAVALLO: Objection, Your Honor. Compound.
THE COURT: Do you understand the question,
Mr. Bouchner?
THE WITNESS: I think I do.
THE COURT: All right. You may answer the question.
THE WITNESS: I don't think that's entirely right
because there really is no category of personal or business in
the QuickBooks or in the bank records. So I started off with a
clean slate, and I took that information -- and all I had were
the notations, and certainly all that information has been
provided, which --
BY MS. MARTINEZ:
Q.
How -- how would I know? Tell me one example of one change
that I would know in writing that you made that is based on
either Mr. Sheppard's or Ms. Gonzalez's representations to you.
How do I know what those representations are? How do we know
what you changed?
MR. CAVALLO: Objection, Your Honor. Form of the
question.
THE COURT: Overruled. You can answer the question.
THE WITNESS: I don't have a listing because it was
done, like I said, in real time. All I can tell you is that
the re-characterizations of what were there were an extremely
small number, you know, very, very few. So it certainly would
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not rise to the level of materiality that I think would be at
all relevant to any of the opinions that I've given in this
case. The information was generally there, and it can be
gleaned from the records that I reviewed and summarized --
BY MS. MARTINEZ:
Q.
So in reality you didn't need to talk to them?
A.
Well, you know, I still feel like it's important to have
conversations, to be able to ask questions about something
that -- maybe where we had the American Express card
statements, where I actually had an item for each and every
one. That wasn't always the case for the bank statements.
There would be amounts that were paid, and I may have asked
Mr. Sheppard: "What was this for," and he would say: "Well,
that was a contractor that did the lighting. That was a
contractor that did the tile." And as he was explaining what
it was, I would say: "Business. Business," because it's
lighting or tile.
If it was something he would say: "Well, that was
personal," I would say: "Okay. If it's personal, then I don't
have to worry about that," and I'll put that as a personal
expense. But I would want to understand what it was, and
that's how I went about doing my analysis.
Q.
Part of what I'm getting at is accounting practices. And
you do agree with me that there are different accounting
practices that include obtaining from management written
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statements as to what it is that the accountant is relying on,
as opposed to just a discussion where there's nothing in
writing. You do recognize that, that the AICPA, which you
teach at -- the Institute of Certified -- American Institute of
Certified Public accountants, which you teach at -- you
recognize that their standards include differences?
MR. CAVALLO: Object to the form of the question, Your
Honor.
THE COURT: Sustained. Rephrase.
BY MS. MARTINEZ:
Q.
Obviously, you know what the AICPA is, correct?
A.
Yes.
Q.
And you recognize that there's different ways that an
accountant in practice relies on representations for
management. One could be discussions. Another one, which
provides more of an assurance, is when you obtain the
management representations in writing. I mean, you're familiar
with that, correct?
A.
I'm generally familiar with that, in that if one was doing
a financial statement audit, there may be -- well, there is
often a management representation letter that would be provided
that would make certain representations. I don't necessarily
think that that adds greater assurance. What it does is it
memorializes certain representations that are being made to the
auditors for purposes of being able to and express an audit
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opinion.
But that's, I think, a different analysis. That's a
different scope of work than what I've done in this case. This
is not a financial statement audit. It is differentiating in
most cases what were obvious business versus personal expenses
and having some limited discussion where there may have been
some small questions.
Q.
Right. And one of the things that would be different about
an audit would be that you would actually not just rely on a
memo line on a check. You would go further to verify what was
behind that check; isn't that right?
A.
There is testing that is involved in an audit. And so,
yes, I mean that could be a part of a different type of
engagement, but that's not what I've done here.
Q.
Right. In this case you did not do an audit, correct?
A.
I did not do a financial statement audit in the context
that we were just discussing.
Q.
Well, in layman's terms, you did not go back and verify,
for example, the example I gave, if a memo line in a payroll --
was in a check and it said: "Payroll," you did not go further
to verify that. You did no testing to make sure that that was
true, correct?
A.
Well, I would have -- besides the memo line, I would see
the account that it was charged to. I would also have the
project records that were maintained by Mr. Vasilas that would
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have similar names and individuals in there.
So there was more than what you're suggesting. But I
did look at every single -- you know, I have a record of every
transaction in the bank account. I have supplemented that with
the QuickBooks records. I supplemented it with the business
records. So I think collectively in some respects this was far
more detailed in many respects than an audit would be where
there may be some testing in order to be able to express an
opinion on the fairness of the overall financial statement
results. Even an audit has materiality issues, where if it's
below a materiality threshold it's not something that an
auditor would be concerned about.
Q.
So for example, another one of your certifications is that
you are a certified fraud examiner; isn't that correct?
A.
Yes.
Q.
And as part of your knowledge as a certified fraud
examiner, you know that you have to look beyond the paperwork
to determine whether something is true; isn't that right?
A.
Well, I think it really depends. That's a pretty broad
question, so it depends on what one's doing. But I feel that
the level of analysis and the documentation that I looked at
was more than sufficient to reach the conclusions that I
provided in court today.
Q.
Right. You did not analyze it for fraud. That's correct?
A.
I did not analyze it for fraud. That was not a specific
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objective of what I was doing. I was trying to understand what
funds came in, what funds went out, and how they were used, as
reflected in many cases by the companies' contemporaneous
business records that preceded this litigation.
Q.
You have been in this courtroom pretty much every day;
isn't that correct?
A.
That's correct. Yes.
Q.
And you do know that this is a fraud case, correct?
A.
I do know that there are accusations that involve fraud,
yes.
Q.
And as you sat in the courtroom looking at the screens in
the back, you saw what everybody in the courtroom -- it's
undisputed that there were false documents that were submitted.
You saw that?
MR. CAVALLO: Object to the form of the question, Your
Honor.
THE COURT: Whether he saw it. Overruled.
THE WITNESS: I saw documents that were presented in
court that were identified as fraudulent.
BY MS. MARTINEZ:
Q.
And forged, correct?
A.
There were allegations of forged documents as part of the
case, yes.
Q.
Actually, you did hear it's undisputed, correct?
MR. CAVALLO: Objection, Your Honor. Beyond the scope
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of direct.
THE WITNESS: I mean --
THE COURT: Overruled on that ground.
THE WITNESS: I saw the accusations. I saw the
documents. I'm not disputing that. I'm just not giving any
opinions as to whether they were there.
BY MS. MARTINEZ:
Q.
You were not asked to look at it in terms of the false
documents that were submitted in this case. You were not asked
to review that?
A.
Not with respect to what was purported to be fraudulent
documents. I'm not providing any testimony in that area.
(Pause in proceedings.
MS. MARTINEZ: Is ELMO -- are we on ELMO?
BY MS. MARTINEZ:
Q.
That's a little numbering that I put in there for Z-2,
which is your summary.
A.
I see it.
Q.
Now, this is your summary. It's a time period from
May 1st, 2020 to December 31st, 2021, covering three companies,
HM Management Development, LLC, HM-UP Development Alafaya
Trails, LLC, and HM Four.
In that document, what's the total that you have --
your own analysis, the work that you did, what's the number
that you have for personal expenses, the total number that you
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have for personal expenses?
A.
$813,000 and change.
Q.
And taking a look at the top, what's the number that you
have for government programs total?
A.
$893,000.
Q.
So during this time period, according to your analysis, of
these company accounts, the Defendant paid over $800,000 in
personal expenses, correct?
A.
Yes.
Q.
And I'm not disputing your point about money being
fungible. I'm just asking this question. It is true from your
own chart that during this time period the money that the
Defendant had to use through these companies was supplemented
by $893,145 in COVID pandemic loans, correct?
A.
The $893,000 was part of the 5,230,000 that came in over
that time period, yes.
Q.
Okay. Let me just -- if you would, just answer my
question. The Defendant, during the time period in your own
analysis, had personal expenses of approximately $813,000 paid
out of the company accounts of these three companies in your
own summaries, correct?
MR. CAVALLO: Object. Asked and answered.
THE COURT: Sustained.
BY MS. MARTINEZ:
Q.
During that time period, I asked -- and you gave an
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explanation, but you didn't answer just a simple question.
During that same period, were the same company accounts
supplemented by pandemic loans in the amount of $893,145?
MR. CAVALLO: Objection. Asked and answered.
MS. MARTINEZ: He did not.
THE COURT: I'll allow that. Overruled.
THE WITNESS: I thought I answered yes at the end of
my explanation, but I'll reverse the order.
BY MS. MARTINEZ:
Q.
Thank you.
A.
Yes, the $893,000 that you asked me about was included as
part of the $5.23 million in total that was received.
Q.
So would you agree with me that someone has more for their
business and more for their personal life when they obtain
$893,145?
MR. CAVALLO: Object to the form of the question.
THE COURT: Sustained.
BY MS. MARTINEZ:
Q.
As a certified management accountant, does additional
monies, such as this several hundred thousand, supplement the
amount that someone has to use to pay personal, business,
everything?
MR. CAVALLO: Object to the form of the question.
THE COURT: Do you understand the question,
Mr. Bouchner?
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THE WITNESS: Yes.
THE COURT: All right. You may answer the question.
THE WITNESS: I don't dispute that there was
$5.23 million that was supplemented by -- which includes
additional funds that came in above and beyond the
non-government sources. I don't think we're disagreeing there
was $893,000 of additional monies that came in over this time
period that were available to the company.
BY MS. MARTINEZ:
Q.
And actually that the amount that came in pretty closely
matched the personal expenses that were paid; isn't that right?
A.
I think that that's coincidental because I've already
established the types of expenses that were incurred were
consistent with what was done in the years that led up to the
2020 and '21 time period. But the numbers are all laid out
exactly on this chart as to what came in and what went out.
Q.
Since you have talked about the amount of non-government
funds, I -- I'm not sure that I got it really from your direct
exactly what the 4.3 was that you have in that -- obviously,
some of that includes rent; isn't that correct?
A.
Yes. Some of that includes rent.
Q.
You don't have the numbers?
A.
Not off the top of my head. I know that there was $600,000
that came in from the One Florida contributions. There was
additional monies -- I think the total monies that were put in
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by the owners in 2020 and 2021 was approximately $800,000,
maybe a little bit more than that.
Q.
May I ask: That $800,000 by the owners, what do you mean?
A.
So there was 600,000 that came from the personal lines of
credit.
Q.
So you're including that?
A.
I'm including that. And then there were additional monies
in 2020 and 2021 that came from Mr. Kallman or his entities and
Mr. and Mrs. Sheppard as tenants by the entireties.
Q.
In the latter part of 2021?
A.
In 2020 and 2021, there was over $800,000, but I'm doing
this from memory now.
Q.
Total?
A.
Yes.
Q.
Now -- and again -- so that's the best you can do in terms
of memory. Number one -- no -- 800,000 that you say 600 you're
allocating to the One Florida loan. Then the other 200 is
coming from where? I'm just trying to identify what is not
rent.
A.
I believe approximately 800 and some odd thousand dollars
was received in 2020 and 2021. I don't have specific cutoffs,
but the majority of it was rent above that. There weren't too
many other items besides the monies that came in from -- as
contributions, plus rent. That made up almost everything.
There may have been a couple of small items that were
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immaterial.
Q.
So the 800 that you're mentioning includes the 600,
correct?
A.
Yes.
Q.
So then that means that -- I would need to go to the -- to
go to get my phone to do a calculation exactly, but maybe you
can do it off the top of your head. If you reduce 800 from the
4.3, what do we have left?
A.
If I just did that math --
Q.
Thirty-five -- 3.5 million maybe?
A.
Something like that, yes.
Q.
So according to your chart, during this time period,
Mr. Sheppard received in his bank accounts 3.5 million in rent?
A.
Again, I don't know if that's the exact number, but I'm
doing the best I can trying to answer your questions.
Somewhere in that direction, give or take a little bit.
Q.
I mean, you understand just -- when I asked you about your
chart, you kept pointing to the non-government funds, so I'm
trying to figure out what those are. Because, again, I didn't
hear it in your direct. So that's all I'm doing.
We have during this time period 3.5 million in rent
and approximately 800,000 more that you're calculating that
includes about 600,000 in the One Florida loan. Do you have
any recollection what the other 200,000 is?
A.
There were periodic contributions that went into equity of
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the company that came from -- most of it I believe was Mr. and
Mrs. Sheppard tenants by the entirety, was how it was
characterized, those deposits.
Q.
And is that in the accounts that were in SunTrust or is
that in the Amerasia accounts that were opened in the summer of
2021?
A.
I don't recall. I'd have to go back and look. I just
don't know.
Q.
You did notice that your summaries extend to the end of
2021, whereas the United States's summaries stopped in
October of 2021, correct? You noticed that?
A.
Yeah. There was a five- or six-week difference.
Q.
Right. And as you heard the witness testify, it was
because the bank accounts that received the PPP and EIDL loans
closed out in October of 2021.
A.
Right. They closed out and they opened new accounts. But
they could have stayed open. There was nothing magic about
those dates. It was just that they made a decision to change
bank accounts, but I'm not sure that there's a practical
importance to that other than that's when those bank accounts
changed over.
Q.
So as a certified management accountant, you know the value
of money today is not the same as the value of money tomorrow,
correct?
A.
I'm familiar with that concept.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Right. So you know, for example, how favorable it was to
get a government loan at a one percent interest rate; isn't
that right?
MR. CAVALLO: Object. Beyond the scope of direct.
THE COURT: Sustained.
BY MS. MARTINEZ:
Q.
Well, isn't it actually that a company is making money --
isn't it a fact that a company is making money if they obtain a
loan at one percent and the inflation rate is higher?
MR. CAVALLO: Object. Beyond the scope of direct.
THE COURT: Sustained.
BY MS. MARTINEZ:
Q.
Now, in your summary did you look at the individual
accounts at all or did you always look at everything together?
Meaning, did you look at, for example, HM Management on its
own, HM-UP Development Alafaya and HM Four separately?
A.
Well, to create the databases, I had to pull in information
from each individual account, but my analysis was based on the
aggregate grouping of these three companies together.
Q.
So you're familiar, for example, that HM Four did not have
a bank account until October 22nd, 2020?
A.
Yes. I'm familiar with that.
(Pause in proceedings.)
MS. MARTINEZ: Should I go to -- it's -- may I go to
ELMO. It's 41-4.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Could you highlight the top half.
BY MS. MARTINEZ:
Q.
You're familiar with the Exhibit 41-4, correct?
A.
I recall reviewing it, yes.
Q.
And it shows that this account basically received one loan,
one Economic Injury/EIDL loan in November of 2020, correct?
A.
Yes.
Q.
Now, it also shows that it received money from HM-UP
Development Alafaya Trails. You see that?
A.
I do.
Q.
And it actually received that money before the Economic
Injury/EIDL loan came in, correct?
A.
I recall that there were monies that came in after the
original $80 deposit. The deposit dates are identified here as
11/16/2020 through 3/31/2021. So I don't believe all 66,000
came in beforehand, but certainly a portion of it did.
MS. MARTINEZ: Can you take this down and put up
39-13.
BY MS. MARTINEZ:
Q.
Have you reviewed this document? This is from Government's
Exhibit 39. It's part of the bank records from SunTrust from
the account that we were just looking at.
A.
I reviewed -- yeah. I reviewed the bank records as part of
my analysis. I don't have the specific recollection of this
deposit, but I do recall on the statement that the deposit was
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
made.
Q.
So is this what you were just talking about that --
before -- first -- the first thing that happens in this account
is that $80 is deposited. And then after that this is the next
deposit; isn't that correct?
A.
That's correct.
Q.
And according to the bank records, it says that Eric
Sheppard, manager of HM-UP Development Alafaya Trails, requests
a withdrawal of 60,000 from the account ending in 5973 and
deposits 60,000 into HM Four, where Eric is also a sole member.
And that's the deposit that we saw going in, correct?
A.
Yes. That's consistent with Mr. Sheppard's testimony.
Q.
Right. And before this money had gone in, nothing else in
the account except $80, correct?
A.
That's my recollection. Yes.
MS. MARTINEZ: Can you put up Exhibit 39-14.
Sorry. In fact, if you don't mind, can you leave the
other one up on the left, 39-13 on one side, 39-14 on the
other.
39-14 is also from Exhibit 39. And I'm going to
identify it with a Bates label. It's 007966. And just for the
record, the previous one, 3913, is Bates label 9168.
BY MS. MARTINEZ:
Q.
Do you see what happened immediately the following day on
November 17th, 2020?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Yes.
Q.
And what did Mr. Sheppard do immediately the next day?
A.
He withdrew $50,000 from this account and transferred it to
a different account.
Q.
Well, he actually transferred it right back to the account
he had removed it from. You see -- it's upside down there, but
you can see the 5973 in there.
A.
Yes. I see that.
Q.
Right. So that's the extent of the activity that there was
in the account before the Economic Injury Loan came in on
November 23rd, 2020; isn't that right?
A.
I would have to review the statement, but I'll take your
word on it if there was no other transactions. I don't recall
in that week period.
Q.
And as part of your review, did you look at this type of
transaction, where $60,000 goes in on one day and the very next
day the same -- a very close amount is moved right back to the
previous account? Did you look at that?
A.
I saw it.
Q.
And you didn't question it?
A.
Well, I don't -- I understood that there were discussions
about the need to create a bank account for purposes of
establishing that there was a company and that had a bank
account, and that it was known by those that Mr. Sheppard was
working with to get the loan that this account needed to be
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
created.
But I don't have any insight into how the -- maybe
$10,000 was needed and he didn't need to put 60,000. I would
be purely speculating by 60,000 was put in, and 50,000 came
out, and 10,000 was left. I don't have an understanding of the
reasons for it.
Q.
Well, actually, you were here in the courtroom and you saw
that on November 17th, the day after depositing the 60,000,
Mr. Sheppard obtained a bank transcript showing that 60,000 was
in the account and he sent it to the SBA.
MR. CAVALLO: Objection, Your Honor. Counsel is
testifying.
BY MS. MARTINEZ:
Q.
Did you see that?
THE COURT: Overruled. I'll allow it.
BY MS. MARTINEZ:
Q.
You were here in the courtroom.
A.
Yeah. I saw that, but it still doesn't explain what the
significance was of the $60,000. I haven't heard anything that
said that in order to be able to obtain a loan there needed to
be 60,000 there. Maybe the number was -- again, I don't want
to speculate. I can tell you what I'm looking at in front of
me, and I don't disagree this is what happened. I just don't
have any knowledge why it happened.
Q.
And you didn't inquire right after -- right after
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Mr. Sheppard obtains the bank statement showing that there's
60,000, he removes 50,000 and puts it right back where it was.
You did not inquire about that type of transaction in this bank
account that had just been created?
MR. CAVALLO: Objection. Asked and answered.
THE COURT: Sustained.
BY MS. MARTINEZ:
Q.
Isn't it a fact, with your experience as a certified fraud
examiner, that this is exactly the type of transaction that
would cause you to question something?
A.
I haven't heard any testimony that the 60,000 was important
in order to be able to obtain a loan and that something less
than that wouldn't have sufficed. Again, I -- you're -- I
don't know if it's important. I haven't seen anything that
would suggest that that dollar amount or those funds needed to
be there. So anything that I would be answering would be
speculating at this point.
Q.
But you do see that immediately after getting the bank
statement he pulled $50,000 out and put it right back where it
was at the Alafaya account?
MR. CAVALLO: Objection. Asked and answered.
THE COURT: Sustained.
MS. MARTINEZ: Can you go back to 41-4.
Just -- yeah. Highlight the -- just highlight the
entire thing for a second.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MS. MARTINEZ:
Q.
Now, you did not review HM Four by itself, correct?
A.
Not by itself.
Q.
Obviously, you're familiar with this exhibit that does
that, 41-4. Isn't it correct that this is it? This is the
extent of the activity in that account. It receives money from
Alafaya Trails, and then it's moved out. You see that,
correct?
A.
I do.
Q.
And then it receives an Economic Injury Disaster Loan
$149,900 on November 23, 2020. You see that, correct?
A.
I do.
Q.
And then after that the money is used in the various ways
shown that you yourself have analyzed -- but you have analyzed
in a combined way. But that's -- within a short time, all the
money is used up, the money that came in, the Economic Injury
Disaster Loan money, correct?
A.
I can agree that $217,480 came in and $217,480 went out
over the life of this bank account.
Q.
And this bank account did not have any payments to
employees, correct?
A.
I don't recall. I mean, I can look at it and I'm not
seeing it specifically identified on here, other than it says:
"Payments to individuals." And I don't believe Mitchell
Lieberman was an employee. I believe Jeanette Mendoza --
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Sorry. I did not mean to do that. I was ready to finish
but you weren't.
MS. MARTINEZ: Can you bring it back up. It's 41 --
it's 41-4.
BY MS. MARTINEZ:
Q.
I apologize. I interrupted you.
A.
It's fine. There are some payments to individuals. But
sitting here right now, I don't recall whether any of these
would be to a worker or not.
Q.
And this particular account did not receive any rental
money, correct?
A.
No.
Q.
In fact, the only money that came into this account other
than the Economic Injury Disaster Loan is the $80, and then
internal transfers -- I call it internal transfers but, you
know, transfers from other accounts in which Mr. Sheppard is a
signer; isn't that right?
A.
Yes.
Q.
And that's it for the source of funds, correct?
A.
That's correct.
Q.
Okay. We both agree.
MS. MARTINEZ: Let's take that down.
BY MS. MARTINEZ:
Q.
Right?
MS. MARTINEZ: Okay. Please, can I go back to ELMO.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MS. MARTINEZ:
Q.
I'm showing you your Exhibit Z-3.
A.
Yes.
Q.
And you see that you have an entry for payroll, meaning --
and you have in parenthesis "individuals"?
A.
Yes.
Q.
So I want to ask you about that. As an accountant, you
know the difference between a W-2 employee and a 1099, correct?
A.
Yes.
Q.
And a W-2 employee is a type of employee that you withhold
income taxes from and also Medicare and Social Security taxes,
and then the employer pays those over to the United States,
correct?
A.
Correct.
Q.
And a 1099 or independent contractor is someone who doesn't
necessarily have the relationship I just described -- does not
have the relationship I just described with the person who's
paying them. They could be a 1099 for one company and also be
a 1099 for another company, correct?
A.
You could be a W-2 employee for one company and a W-2 for
another company. I'm not sure that's a distinction. But
withholdings are in most cases not done for 1099ed employees.
Q.
And in this case -- and you have been here. So
including -- you saw even Defense counsel when he was
questioning the witnesses that were from banks that provided
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
PPP loans, Paycheck Protection Program loans -- you saw that
for the Paycheck Protection Program it had to be a W-2
employee. Just the fact that that's what the regulations were,
as counsel -- Defense counsel questioned witnesses, and that's
what it is agreed to be --
MR. CAVALLO: Object to the form of the question.
Outside the scope of direct.
THE COURT: Sustained.
BY MS. MARTINEZ:
Q.
In this case that relates to Paycheck Protection Program
loans and the Economic Injury Disaster Loan program, you were
not asked to look at whether the people getting paid actually
fit for the Paycheck Protection Program? You were not asked to
look at that?
MR. CAVALLO: Object to the form of the question.
THE COURT: If he was asked. Overruled.
THE WITNESS: That would have been outside the scope
of my testimony, and I don't believe it would have been
relevant to what I had to do.
BY MS. MARTINEZ:
Q.
Right. Right. You were not engaged -- in this fraud case
that relates to the Paycheck Protection Program, you were not
engaged, and you're not offering testimony to the jury, about
whether these individuals actually were the type that anybody
could have gotten a Paycheck Protection Program loan for?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
You're not offering testimony as to that.
MR. CAVALLO: Object to the form of the question and
asked and answered.
THE COURT: Sustained.
BY MS. MARTINEZ:
Q.
With respect to the people that you listed -- you just --
the only thing that you relied on -- to put something in the
name of payroll, the only thing you relied on is a memo line
that said: "Payroll" or something in QuickBooks that said:
"Payroll"? That's it? I mean, just to use the word "payroll,"
that's what you relied on?
A.
That, the contemporaneous records that were made on the
project site as well identifying them. The checks would say:
"Payroll" on them. You know, I'm including them in the way
that the company perceived them to be, what Mr. Sheppard
perceived them to be. So that was my use of the word
"payroll," not necessarily as they relate to a statute that he
may have not been aware of.
Q.
Well, that was a big statement. Did you look at all --
beyond the word "payroll" on either the QuickBooks or a check
memo line, did you look to see whether any of these people were
W-2 employees or 1099s? Did you yourself look into that?
MR. CAVALLO: Object. Asked and answered. Beyond the
scope.
THE COURT: Sustained.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MS. MARTINEZ:
Q.
Did you review bank records in this case?
A.
Yes.
Q.
In the bank records in this case, including in your
summary, you looked at Bank of America, didn't you?
A.
Bank of America was one of the banks, yes.
Q.
And you looked at the Bank of America account 5189, didn't
you?
A.
I don't recall.
Q.
Sorry for my notations, but here you go. You see this is
your summary, correct?
A.
Yes.
Q.
With little notation by me?
A.
Yes.
Q.
So 5189, you reviewed that account, correct?
A.
I did.
Q.
Do you recall that that account was an HM Management
Development account that was labeled "Payroll"?
A.
Yes.
Q.
And do you recall that that account only paid out of that
account Jeanette Gonzalez, Vanessa Gonzalez, and Elva Baluarte?
A.
Generally, yes.
Q.
Just those three people?
A.
I don't recall if I looked at every statement and did that
type of analysis in the way you're asking, but it would have
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
included all that information in my database. And I'd have to
review it to see if what you said is entirely correct, but
generally that's my understanding.
Q.
You do recall that there was a Bank of America account that
was actually titled "Payroll." You do recall that?
A.
I do.
Q.
And you do recall, as these -- just these three individuals
that we just talked about that were the only ones paid out of
that account. You do recall that?
A.
Again, I would have to go back and confirm that, but I'm
generally aware those were individuals who were getting paid
out of that account.
Q.
And you recall that there was no other account -- other
than that Bank of America account that was titled "Payroll,"
there was no other account that was titled payroll --
A.
That was --
Q.
-- that you looked at?
A.
That was the only account titled "Payroll."
Q.
And that it was actually only used through the end of 2019;
isn't that right? This particular account? It closed out.
A.
Again, I would have to go back and look to confirm that.
I'm not disputing it, but I don't have a recollection of when
it was closed.
Q.
And then those individuals, in fact, were no longer being
paid out of that account. They began to be paid out of the
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
other accounts, like HM Management 5973. You remember that,
that then those same individuals began getting paid out of
other accounts?
MR. CAVALLO: Objection, Your Honor. The witness
already said he doesn't remember.
THE COURT: Sustained.
(Pause in proceedings.)
THE COURT: Okay. Ms. Martinez, the jury is in need
of a break. Let's go ahead and take a 10-minute recess.
COURT SECURITY OFFICER: All rise.
(Jury not present, 4:08 p.m.)
THE COURT: Ms. Martinez, how much more
cross-examination do you think you have?
MS. MARTINEZ: I'm going to go for 15 minutes, Your
Honor.
THE COURT: Fifteen more minutes. All right, then.
We're on a 10-minute recess.
MR. ETRA: Your Honor, brief question. When the
Defense rests, will the jury still be here? How are we
handling Rule 29 -- what's the Court -- how does the Court
handle that?
THE COURT: Well, in order to preserve the motion, why
don't you go ahead and just move for it and I'll reserve, so
that we can move right to --
MR. ETRA: In front of the jury?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE COURT: Yes. Well, you want to -- I mean, with
the understanding -- with the Government's understanding that
after Mr. Bouchner concludes his testimony the Defendant will
rest. So if you want to make the motion now, I'm going to go
ahead and reserve, and it will be preserved for purposes of
making it at the close of the Defendant's case.
MR. ETRA: So we do it formally after the close of
Defense case?
THE COURT: Well, you don't need to proceed with
argument. I'll reserve.
MR. ETRA: Right. Got it.
THE COURT: But what I'm saying is that rather than
spending time in front of the jury, you can make the motion,
I'll reserve, and we'll move right to rebuttal. Okay?
MR. ETRA: Okay. Got it. Thank you.
THE COURT: See you back here in 10 minutes.
(Recess from 4:10 p.m. to 4:23 p.m.)
THE COURT: All right. Welcome back. Are we ready to
continue?
MS. MARTINEZ: Yes, Your Honor.
THE COURT: Do we need to wait for Ms. Jimenez?
MS. MARTINEZ: We can proceed, Your Honor.
THE COURT: Are you certain?
MS. MARTINEZ: I love my colleague.
THE COURT: You want to see if she's on her way in and
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
if they're all ready?
Okay. All right. Let's bring them in.
(Before the Jury, 4:24 p.m.)
THE COURT: Welcome back, Ladies and Gentlemen.
Please be seated, everyone.
And we'll continue with the cross-examination.
BY MS. MARTINEZ:
Q.
Mr. -- I want to make sure I pronounce it right. Say your
name.
A.
Bouchner.
Q.
Bouchner?
A.
Yes.
Q.
Mr. Bouchner, I'm showing you your summary Z-1, where you
have 4.3 in non-government sources, and it extends for a time
period from May 1st, 2020 to December 31st, 2021.
Isn't it a fact that if you went closer to March of
2021 as your end date, that that amount of non-government
sources would be substantially smaller?
A.
It would be smaller. I don't have the specific dollar
amount, but it would be smaller.
Q.
Well, for example, I was going to -- you did different time
periods. But for example, what the United States did closing
out at October of 2021, the amount was smaller, correct?
A.
Yes. By the six or seven weeks that wasn't included, yes.
Q.
And for some of your other summaries, where you used
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
different time periods, you did use smaller amounts. Like, for
example, in the last summary that you did, you had stopped in
September of 2021, correct?
A.
I looked at a 24-week period on that chart. Yes.
Q.
Right. And then that reduced the amount of non-government
funds, right?
A.
It reduced the outflows and inflows, both.
Q.
Right. But my point is that the last government loan came
in at the end of March 2021, correct?
A.
Correct.
Q.
You recall that. So then the closer we go to that date,
then the smaller -- if we go beyond that date, we're adding
additional non-government funds because the pandemic is over
and there's no more loans coming in.
A.
That's correct. But we're also adding additional
expenditures. So I was always consistent in that the period,
that I looked at the totality of all the transactions.
Q.
I'm going to ask you just a few questions to clarify your
charts. I'm using this one to -- Z-2, I believe, because I
want to ask you a question about the tenant improvements per
second amendment Burlington lease, just to make sure I
understand. Are you saying that 272,000 left these bank
accounts or are you putting this money in there but it's not
money that is leaving the bank account?
A.
No. I think what I testified to is that this was not
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
something that was reflected and specifically identifiable on
the bank statement because it was netted out of the rent. It
was an expense of the company because they had to pay the
$1.1 million-and-change penalty. But it came out of the rent
proceeds, so the rent dropped by $272,000 over this 14-month
period.
Q.
Walk with me on this for one second. Part of the money
coming in you relied on the bank records, correct? For the
money coming in, the rent coming in, you relied on bank
records, rent coming in, correct?
A.
Correct.
Q.
Okay. So was there less rent that came in?
A.
Yes.
Q.
Okay. And wouldn't that be reflected in the money coming
in? So how would that be -- how could that be reflected as an
expense of money coming out? In other words, if less rent came
in, wouldn't that already be here? Wouldn't already the number
here be less? So that you don't -- if it's reduced, it's
already reduced. So then why would you subtract again the
200,000? I don't understand.
MR. CAVALLO: Object to the form of the question.
THE COURT: Sustained.
BY MS. MARTINEZ:
Q.
Could you help me understand? Do you understand my
question? Did you understand my question or not?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
I don't know how to clear your confusion because I think
you're trying to link things that I didn't link here. It's not
as if I took the four million seven forty-nine and subtracted
it from the five million two thirty. This is just three
different calculations. I believe the $272,000 is a real
expense of the business because they lost rental income in the
form of a penalty, and that's what that is.
Q.
Maybe I just clarify, just to confirm, the $272,000 is not
money that left the account?
A.
It's not a bank transaction. It's an expense of the
business caused by the penalty.
Q.
So -- okay. So I have another question about business
expenses. You organized your business expenses by looking at
the American Express business expenses, and then you separately
looked at bank account business expenses, correct?
A.
Correct.
Q.
So it's just a question of what you did to see whether
these were business expenses of these businesses that you
looked at, HM-UP Development, HM Management, HM Four. Those
are the three you looked at, correct?
A.
Correct.
Q.
Right. So my question is: Did you do any -- I'm going to
show you some business expenses, and I'm going to ask you: Did
you do anything to see whether or not these expenses were
really relating to another company, like, for example, CJUF.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Okay? So let me show you some. So for example, from
the bank accounts you have legal fees, a hundred thousand
dollars, and also in American Express you have legal fees
77,000, 38,000. Without giving me any details, I'm just
wondering did you do anything to see if those were expenses
related to these three companies that you analyzed or possibly
another business litigation that Mr. Sheppard had?
MR. CAVALLO: Object to the form of the question.
THE COURT: Sustained.
BY MS. MARTINEZ:
Q.
Did you do anything to make sure that these were legal
expenses related to these three businesses?
A.
Well, to the extent that HM Management is the management
company for Mr. Sheppard and his entities, it would be an
expense that was incurred by HM Management. So that's one of
these entities. It wasn't an expense that was charged to CJUF,
for example, hypothetically.
I mean, I know that by May of 2020 Mr. Sheppard was no
longer in control of CJUF. I believe at that point he
testified that it had gone to the control of Mr. Wildstein.
But this was an expense that was incurred by HM Management,
which paid the legal expenses for many of Mr. Sheppard's
entities, so that would make it a HM Management expense.
Q.
So I think your answer is that it's possible that it was
another company that was not at least Alafaya Trails and HM
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Four. Is that what you're saying, that it could be another
company that was not specifically HM Management, HM Four, or --
MR. CAVALLO: Object to the form of the question and
it misstates testimony.
THE COURT: Sustained. Rephrase, please.
BY MS. MARTINEZ:
Q.
Is your answer that you don't know for sure whether or not
it related to these three companies that you analyzed?
A.
I have not reviewed the legal invoices to determine what
the matter was, but that HM Management had historically always
paid the legal bills for Mr. Sheppard -- at least many of the
legal bills for Mr. Sheppard and his entities. So therefore it
was appropriately an expense that would be that of HM
Management, which was one of the three companies.
Q.
Again, on Z-2 you have: "Business Expenses Paid by Project
Manager," and I'm just trying to understand. Those expenses
there, are they coming out of the bank accounts or are these
coming out of another bank account that's not in Mr. Sheppard's
name?
A.
So I testified that I reduced the 280,000 by about 89,000.
The 89,000 was the portion that came out of these bank
accounts, which I eliminated. So there was no double counting.
This 191,000 were amounts that were paid by Mr. Vasilas either
direct or through his Diamonds Forever Miami company, and we've
got checks that identify those payments. So those were not --
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
they were paid, like I said, by Mr. Vasilas or his entities in
connection with amounts that he owed, and they handled it in
this way in terms of their dealing with one another.
Q.
Let me just repeat my question. Did 191,000 leave the HM
Four, HM Management, or HM-UP Alafaya -- I'm just trying to
understand what you're saying. Are you saying that that amount
of money came out of the bank account or are you saying that
it's an expense in a different way as you just explained?
A.
It's an expense in a different way. It's not in the bank
account top line. It was additional expenses that were
incurred and handled in a different fashion.
Q.
With respect to American Express Z-5 --
A.
Yes.
Q.
-- you start on May 1st, 2020. Now, does that mean that
you started looking at charges on May 1st, 2020 or did you
start looking at charges that were incurred in March but then
had to be paid in May? Do you see what I'm saying?
A.
This is a database of individual charges.
Q.
So if you have May 1st, then it's charges that are
beginning on May 1st?
A.
Everything starts on May 1st, yes.
Q.
Right. So then if there were payments -- if there were
charges that were made in March but paid in May, they would not
be reflected in your summary there in the charges part?
A.
Right. Which is why I did this allocation. It's difficult
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
to take random payments because it wasn't as if the payments
paid off the card every month. Ten thousand would come in, and
then two weeks later 20,000 would come in. So there was always
these random payments. There was no way of assigning a
specific charge to a payment. So I took the 831,000, looked at
the 765 in total, and then I did the allocation that's on the
bottom. It was the best that I can do, but it kind of goes
both ways. You have the beginning, it's a little bit different
than the end, but it's a pretty good approximation.
Q.
The allocation is an allocation that you also applied to
the credit card of Jennifer Sheppard and Jordan Sheppard,
right? In other words, the total amount for them was just a
little bit higher and it got reduced when you did the
allocation; isn't that right?
A.
Well, it's the same account, so you have the same issue.
But yes, everything got reduced by that roughly eight or
nine percent.
Q.
Right. I'm just saying I think you originally had intended
to cover all of what Mrs. Sheppard and Jordan Sheppard had in
their cards as personal, but then when you did your calculation
you wound up reducing it a little bit with the allocation; is
that right?
A.
Well, I was interested in what the cash does. It doesn't
matter -- if there was a charge that was never paid for, then I
wouldn't include it. So what I was trying to do is I wanted to
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
account for the totality of the actual payments, and I had to
make that adjustment that you see on that page in order to
adjust from the purchases to the paid -- to the payments.
Those charges may have gotten paid. They just may not
have been paid by these three entities. There were other
accounts that may have covered those costs. So I only covered
the portion that would have been relevant to the three
companies that are at issue here.
Q.
During your direct examination -- and I do believe it's
reflected in your chart somewhere -- you described that there
was a loan that -- that Eric Sheppard had made to Mr. Jeff
Vasilas, correct?
A.
Correct.
Q.
In addition to that, were you made aware that Mr. Eric
Sheppard owes -- was left owing Mr. Vasilas $80,000?
A.
I don't recall if I heard that testimony, but --
Q.
No. Were you informed of that? No?
A.
I don't recall.
Q.
And were you informed that Mr. Eric Sheppard also still
owed $50,000 to Lindsey Vasilas?
A.
Again, I don't know anything one way or the other. There
may be allegations, but I'm not aware of any.
Q.
So in reviewing your resume, it was clear a lot of your
practice includes what you're doing here today, reviewing
evidence related to litigation and testifying in a courtroom;
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
isn't that correct?
A.
That's definitely a portion of my work, yes.
Q.
Right. And just, in fact, in this case alone -- we've all
been here for quite awhile, and I think this might be day 15.
So you've been here pretty much full days all that time,
correct?
A.
I've been here whenever the trial was in session.
Q.
And in addition to that, you have spent time, you know,
working on the case and reviewing materials, along with your
staff who assisted you, correct?
A.
Correct.
Q.
So what is your current rate -- is your testifying rate --
your billing rate -- is your testifying billing rate the same
as your review work rate?
A.
Yes.
Q.
And what is that?
A.
Five hundred and 60 dollars an hour.
Q.
So about how many hours have you spent on the case outside
of the courtroom?
A.
I'm not sure of my individual hours.
Q.
Your whole firm. How many hours -- well, let's just go
with your hours. How many hours have -- roughly, just
roughly -- like let's say if we've been here about 15 days,
about how many days roughly do you think you've worked on this
case outside of the court?
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
I haven't produced an invoice. You probably would have as
good an idea of the time that I've spent here in trial.
Q.
Right. That's why I'm asking about your time outside of
court. Do you have any kind of rough estimate?
A.
What time period are you looking at?
Q.
Your entirety of your working on the case for Mr. Sheppard.
A.
Personally, in preparing the work that I had done it was
maybe a little over a hundred hours.
Q.
And that doesn't include the court time, right?
A.
No.
Q.
So just 15 days times eight?
A.
I haven't been billing for full days.
Q.
That's about 120 hours. I'm just roughing it.
A.
Well, we had half days. I don't charge for lunch. I don't
charge --
Q.
Do you want me to reduce that? I'll reduce that to a
hundred hours.
MR. CAVALLO: Object to the form of the question.
THE COURT: I don't think it's a question. But let's
move forward with these calculations, Ms. Martinez.
BY MS. MARTINEZ:
Q.
So your rough estimate of your hours outside of court was?
A.
It was a little over a hundred hours.
Q.
Okay. So now we have about 200 times 560 -- and I do have
a handy calculator.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Okay. I hope I did it right. It comes out to --
112,000 is what you're going to be charging Mr. Sheppard for
your work and your testimony here today; isn't that right --
roughly?
A.
Yeah. That doesn't sound too far off.
MS. MARTINEZ: No further questions, Your Honor.
THE COURT: All right. Any redirect?
MR. CAVALLO: Yes, Your Honor. Brief.
REDIRECT EXAMINATION
BY MR. CAVALLO:
Q.
Mr. Bouchner, you were -- do you remember you were asked in
cross about the QuickBooks you received from the companies?
A.
Yes.
Q.
Did you also receive those QuickBooks from any other
source?
A.
Yes. They were included in the production by
Mr. Cupersmith.
Q.
Did you compare the QuickBooks received from the
Government -- received from -- well, the Government through
Mr. Cupersmith -- or vice versa, from Mr. Cupersmith through
the Government. Did you compare those QuickBooks with the
QuickBooks received from the companies?
A.
I did.
Q.
And what did it show?
A.
Other than the fact that what I received from the company
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
was in Excel and what was produced by Mr. Cupersmith was a PDF,
they were otherwise identical.
Q.
Do you remember in cross you were asked -- you were
questioned about whether you performed a formal audit in
connection with your analysis in this case?
A.
Yes.
Q.
Based on your 30 years as a forensic accountant, roughly,
is a formal certified audit typical to give the kind of expert
testimony you've provided in this case?
A.
No. They're completely different engagements.
Q.
Do you remember on cross you were shown a chart prepared by
the -- a summary chart prepared by the FBI witness regarding HM
Four?
A.
Yes.
Q.
And you were asked to identify any payments to workers in
the use of funds in that chart?
A.
I do.
Q.
And you identified some possibilities, correct?
A.
There were some individuals identified on that chart.
Q.
Were there any transfers to HM-UP identified on that chart?
A.
I believe there were.
Q.
And based on your analysis and review of the documents, was
HM-UP paying payroll to individual workers during the periods
you reviewed?
A.
Yes. They would have been included in my schedules.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Are the opinions you've rendered in this case based on a
tracing analysis?
A.
No, they're not.
Q.
And does anything you were confronted with on
cross-examination change any of the overall opinions you gave
in this case?
A.
No, not at all.
MR. CAVALLO: Just give me one second, Your Honor.
THE COURT: All right.
(Pause in proceedings.)
MR. CAVALLO: I have nothing further.
THE COURT: Is Mr. Bouchner excused?
MS. MARTINEZ: Yes, Your Honor.
THE COURT: All right. Thank you, Mr. Bouchner. You
are excused.
(Witness excused.)
THE COURT: The Defendant's next witness.
MS. WEINTRAUB: Judge, at this time, the Defense
rests.
THE COURT: All right. And any rebuttal evidence on
behalf of the Government?
MS. JIMENEZ: Yes, Your Honor.
The Government calls Alex Zaslow.
MS. WEINTRAUB: Judge, can we have a sidebar first?
THE COURT: Yes. Certainly. Come on forward.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
(At sidebar on the record.)
MS. WEINTRAUB: So you were leaving the bench, as I
was saying: "Should I do it now?" So we had a
miscommunication. But I think it's proper now at this point to
say we want to renew all our motions, objections with the
Court. We intend to argue after the Government rests
specifically the 404 arguments that have come in and the 403
and the cross-examination issues.
MR. ETRA: And the Rule 29.
MS. WEINTRAUB: And we would be moving for the Rule 29
at this time.
THE COURT: All right. At this point, as I indicated,
the Court will reserve ruling and all motions are preserved so
that we can get this case to the jury. All right?
MR. ETRA: Your Honor, we also have an objection that
it's improper rebuttal. I want to make that objection. I
don't want to -- so we're doing it now and we'll have that.
So --
MS. WEINTRAUB: I mean, we have cases on it to show
that it's clearly within the Court's discretion, obviously.
But I think there should be a very specific proffer before this
witness testifies so that the Court could make a knowledgeable
decision.
THE COURT: Well, as I understood the proffer, other
than the additional testimony that this individual is only
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
going to be testifying on a limited basis with regard to the
advice, the W-2 tax filings; is that correct?
MS. JIMENEZ: The advice regarding government loans,
W-2s that were put in. There was direct testimony from the
Defendant eons ago in December, when he started, saying that
these accountants gave him advice on W-2 --
THE COURT: Yes. The advice.
MS. JIMENEZ: -- you know, how to categorize them.
And so -- and -- but primarily it is centered around the emails
in March and April of 2020.
THE COURT: All right. I'll determine whether it's
true rebuttal.
MS. JIMENEZ: And the witness will say that it had to
do with his payment of prior tax returns and the preparation of
tax returns.
MR. ETRA: I would just point out that the reason for
our motion is when Mr. Cupersmith testified, virtually in all
respects he said: "Look, all these subjects, I don't know. It
could have been Mr. Zaslow." And we were expecting Mr. Zaslow
in this case and would have preferred in this case, so we could
respond to a defense. Now we're in a position where they get
the last word, when it really should have been done -- and I
think they decided to hold him back.
THE COURT: All right. Well, I'll see if it's true
rebuttal to what the Defendant has presented.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Okay. Let's continue.
MS. JIMENEZ: Yes. I'm sorry. Let me just -- so the
Defendant testified on direct at the beginning and back in
December that --
THE COURT: You don't have to recall his testimony
I've got it.
(End of discussion at sidebar.)
THE COURT: All right. If we can bring in the
witness, please.
MR. ETRA: Your Honor --
MS. WEINTRAUB: Judge, we have another problem.
MR. ETRA: -- I'm being shown new emails that I have
never seen before and it's a stack.
MS. JIMENEZ: Your Honor, the stack --
MR. ETRA: Well, sorry. It's not a stack. It's --
MS. JIMENEZ: The stack is -- it's 95 percent the
emails that were put in in relation to those communications
around April of 2020.
THE COURT: All right. So these are already emails in
evidence?
MS. JIMENEZ: Most of them are, and then there's March
when this discussion --
THE COURT: All right. Well, how many of those are
not in evidence?
MS. WEINTRAUB: Judge, there is a specific issue we
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
need to bring to the Court before it's even asked about.
THE COURT: All right.
MS. WEINTRAUB: I'm sorry. Could we just come back to
the sidebar?
THE COURT: All right. Come on forward.
Mr. Zaslow, if you'll just have a seat for a moment.
(At sidebar on the record.)
MS. WEINTRAUB: Judge, I don't see how it could be
proper rebuttal. I don't see how it could possibly, possibly,
possibly be proper rebuttal when they are going to go into
again he didn't pay bills. That's not rebuttal of anything.
THE COURT: What are the exhibits that are not in
evidence? Those are the only ones in dispute right now.
MS. JIMENEZ: They had a discussion with the Defendant
beforehand --
THE COURT: Just give me the exhibits not in evidence.
MS. JIMENEZ: That's an attachment. The whole middle
is what's --
MR. ETRA: I don't know what you gave the Judge.
THE COURT: These are emails. So --
MS. JIMENEZ: With an attachment. So the email
communication started about him paying his bill, and this is
why the tax returns were not prepared. And then he contacts
them in April asking for the tax return to be done. And --
THE COURT: Okay.
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Miami, Florida 33128
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MS. JIMENEZ: So this predates the April -- it's
putting the conversations in context because all of the
conversations were about him paying his bill and preparing the
tax returns. They were not about PPP. That's the point.
That's what the conversations were about.
THE COURT: Okay. So why do you need the documents to
ask Mr. Zaslow about --
MS. JIMENEZ: I don't need the --
THE COURT: Yeah. So why do you need these documents
to ask him about his conversations? Why do we need to show all
of these documents?
MS. JIMENEZ: They are the emails that predated the
emails they put in.
THE COURT: Well, what's the point -- I mean, it's
just the paper is not necessary if you're talking about
conversations.
All right. Step back.
(End of discussion at sidebar.)
THE COURT: All right. Mr. Zaslow, come on forward,
sir.
All right, sir. If you'll remain standing. Raise
your right hand to be placed under oath.
ALEX ZASLOW, REBUTTAL WITNESS, SWORN
COURTROOM DEPUTY: Thank you. You can have a seat.
THE COURT: If we can ask for your indulgement about
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10 or 15 minutes and then we'll adjourn for the evening.
All right. Ms. Jimenez?
MS. JIMENEZ: Yes, Your Honor.
COURTROOM DEPUTY: Would you please state your name
and also spell it for the record.
THE WITNESS: Alex Zaslow.
COURTROOM DEPUTY: Can you please spell your last
name.
THE WITNESS: Sure. Z-A-S-L-O-W.
COURTROOM DEPUTY: Thank you.
DIRECT EXAMINATION
BY MS. JIMENEZ:
Q.
Good afternoon, Mr. Zaslow. Where do you work?
A.
I work for Cupersmith, Wilensky, Stempler & Co. We just
merged with another accounting firm as of November 1st called
Verna & Associates.
Q.
All right. Are you a certified public accountant?
A.
Yes.
Q.
When did you join Mr. Cupersmith's firm?
A.
In August of 2008.
Q.
Have you assisted or prepared tax returns for the Defendant
Eric Sheppard and his businesses?
A.
Yes.
Q.
How long have you been doing that?
A.
Since 2008.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Did you deal with an accounting department?
A.
Yes.
Q.
Up until what time did you deal with an accounting
department?
A.
I would say --
MR. ETRA: Your Honor, I object on scope based on
rebuttal.
THE COURT: Yeah. The objection is sustained. If we
can get to the testimony, please.
BY MS. JIMENEZ:
Q.
All right. At some point did you stop dealing with an
accounting department?
A.
Yes.
Q.
When was that? When was that?
MR. ETRA: Your Honor, same objection. It's --
THE COURT: Could we clarify with regard to the
accounting department and then we can get to the testimony.
MS. JIMENEZ: Yes.
BY MS. JIMENEZ:
Q.
When did you stop dealing with an accounting department?
A.
I would say some years back, five to seven years back.
MR. ETRA: Your Honor, objection. This is not the
area that was proffered. They're making argument about the
scope of the accounting department. I move to strike.
THE COURT: All right. Let's just go to the
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
testimony. The objection is noted. It's overruled.
BY MS. JIMENEZ:
Q.
All right. Thereafter, with whom did you deal at
Mr. Sheppard's companies in relation to the preparation of tax
returns?
A.
Most recently, Jeanette Gonzalez.
Q.
All right. With whom -- okay. So you dealt with Jeanette
Gonzalez. Did you deal with anyone else in the last few years
before your firm discontinued their work with the Defendant?
A.
No.
Q.
Focusing on the last several years, say starting in 2017
through -- was it 2022 when you discontinued any work with the
Defendant?
A.
Yes.
Q.
Did you provide any advice regarding W-2 employees or 1099
contractors?
A.
I did not.
Q.
Did you provide any advice regarding how people who were
paid by the companies should be categorized for payroll
purposes?
A.
I did not.
Q.
Did Cupersmith's firm provide payroll services to the
Defendant's companies?
A.
We did not.
MR. ETRA: Your Honor, objection. It's beyond the
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Miami, Florida 33128
(305) 523-5698
scope.
THE COURT: Overruled at this point.
BY MS. JIMENEZ:
Q.
Did you -- are you -- based on your work experience and
being an accountant, are you familiar with W-2s?
A.
Yes.
Q.
Who generates the W-2?
MR. ETRA: Beyond the scope.
THE COURT: Sustained.
MS. JIMENEZ: Well, it goes to the exhibit.
THE COURT: It's sustained with regard to rebuttal
evidence.
BY MS. JIMENEZ:
Q.
Do the W-2s indicate whether the company paid payroll taxes
to the IRS?
MR. ETRA: Beyond the scope.
THE WITNESS: That's an informational return.
MS. JIMENEZ: Your Honor --
THE COURT: Beyond the scope of?
MR. ETRA: Rebuttal.
THE COURT: Sustained.
MS. JIMENEZ: Your Honor, it has to do with the --
MS. WEINTRAUB: You should have called him in your
case in chief.
THE COURT: This is rebuttal evidence. The objection
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
is sustained.
MS. JIMENEZ: Your Honor, we discussed this at
sidebar.
THE COURT: We did. So let's move forward with the
testimony.
BY MS. JIMENEZ:
Q.
Were you provided by HM Management and Development any
W-2s?
A.
No.
MR. ETRA: Objection, Your Honor. Scope.
THE COURT: Overruled.
(Pause in proceedings.)
BY MS. JIMENEZ:
Q.
Does the -- do the W-2s reflect whether any payroll taxes
were paid to the IRS?
A.
It only reflects payroll taxes that were withheld.
Q.
Does it tell you whether 941s are filed with the IRS?
MR. ETRA: Objection. Scope -- beyond the scope of
rebuttal.
MS. JIMENEZ: It's not. It was --
THE COURT: Overruled.
BY MS. JIMENEZ:
Q.
Does it tell you whether any 941s were filed with the IRS?
A.
No, it does not.
Q.
All right. Now I want to take your attention to March of
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
2020. Had you, at that point in March of 2020, prepared the
Defendant's personal tax returns for tax year 2018?
MR. ETRA: Personal tax returns. Beyond the scope of
rebuttal.
THE COURT: Sustained.
MS. JIMENEZ: Your Honor, that is precisely what this
is about.
THE COURT: The Defendant's personal tax returns is
what you're asking Mr. Zaslow about?
MS. JIMENEZ: That is what these emails were about.
MS. WEINTRAUB: Judge, I object to the speaking
dialogue by the prosecutor.
THE COURT: The objection is sustained. You may
continue.
BY MS. JIMENEZ:
Q.
In March of 2020, Mr. Zaslow, were there tax returns for
tax year 2018 that had not been prepared by your firm?
A.
Yes.
Q.
For the Defendant?
A.
Yes.
Q.
Why was that?
A.
Because he --
MR. ETRA: Objection. Beyond the scope.
THE COURT: Overruled. I'll allow that. You may
answer the question, sir.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
THE WITNESS: Generally, with the arrangement with the
client that -- we would ask to be paid before we released
returns. Also, there were financial records that we had not
received to prepare the returns at that point.
MR. ETRA: Your Honor, could we have a continuing
objection on 404(b), 403 issues?
THE COURT: You may.
BY MS. JIMENEZ:
Q.
And then did there come a time at the beginning of April --
MS. JIMENEZ: And that is a Defense exhibit, but I
don't know what exhibit number it is because I have my own
copy.
THE COURT: I need a Defense exhibit number. Perhaps
Mr. Cavallo can help.
MR. CAVALLO: Sure. Can I just see it to confirm
before I say? If I see one thing, I'll be able to tell.
(Pause in proceedings.)
BY MS. JIMENEZ:
Q.
All right. Let me show you Defense Exhibit Q-25.
March 30th, Eric Sheppard writes to you asking for tax returns.
Do you see that?
A.
Yes.
Q.
So what is going on during this email exchange?
A.
He's asking for his personal return. He says he applied
for some government programs. You've covering it.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
All right.
A.
And then he says -- okay. Then he says if the 2018 is not
done they will not process the application.
Q.
What 2018 tax returns were outstanding?
A.
From what I can recollect, it was HM Management, Kansas
City, his personal return. That's all I can recall.
Q.
All right. All right. So...
(Pause in proceedings.)
BY MS. JIMENEZ:
Q.
And -- so I'm sorry. So then March 30th Mr. Sheppard asks
what you need from Jeanette, and then there were a number of
things still outstanding, correct?
A.
That's correct.
Q.
Now, there's an email that was not included. Did you ask
for any payroll tax returns, which was part of this email
exchange?
A.
Yeah. I just saw that part. You're covering it.
MR. ETRA: Your Honor, I thought we weren't doing --
MS. JIMENEZ: Well --
MR. ETRA: Hang on. First of all, it's being --
THE COURT: Are these exhibits all in evidence?
MS. JIMENEZ: Some of them are. Some of the email --
THE COURT: Can you just ask the questions without the
use of the emails that are not in evidence, Ms. Jimenez?
MS. JIMENEZ: Yes.
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400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MS. JIMENEZ:
Q.
So what was outstanding?
A.
I remember from one of the emails it said everything, the
financials, the QuickBooks reports, the profit and loss, the
trial balance, the quarterly payroll tax returns, the general
ledger, in order for me to complete the tax returns.
Q.
Did you obtain any quarterly payroll tax returns?
A.
We did not.
Q.
What did you rely on?
A.
Information provided by them.
Q.
All right. And then there came a point when you set up a
call, correct?
A.
That's correct.
MS. JIMENEZ: This is in evidence as a Defense
exhibit -- actually, April 21st -- April 21st. This is a
Government exhibit.
THE COURT: What exhibit number, please?
MS. JIMENEZ: April 21st, 2020.
THE COURT: All right. While we're looking for that,
come sidebar, please. Come sidebar.
(At sidebar on the record.)
THE COURT: I can't keep this jury here when we are
just going at the slowest pace possible. So how much time do
we need?
MS. JIMENEZ: We need 10 minutes.
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Miami, Florida 33128
(305) 523-5698
THE COURT: Ten minutes. And how much time do you
need on cross?
MR. ETRA: I'm guessing 15, 10 minutes.
THE COURT: All right. Then I'm going to need to
bring this witness back. It's already 10 after five. I can't
keep this jury here. So we need another 30 minutes? Do we
need another 30 minutes total?
MS. JIMENEZ: -- questions about what they actually
discussed on the phone.
THE COURT: All right.
MS. JIMENEZ: I mean --
THE COURT: I can't leave -- and I've got a court
reporter that's doing dailies for you, and I can't have her
here all night. So if you've got -- you know, we'll have to
bring him back tomorrow morning.
MS. JIMENEZ: I think we can be done in 15 minutes. I
really do.
MR. ETRA: I don't think my cross will be that long,
but I'm going to ask some questions about when you were
contacted by the Government. I'm going to cover some of the
basics. I can't promise you my cross will be less than 15
minutes. I hope it is. I just don't know.
THE COURT: I'll ask them for another 15 minutes, but
that's it. And then...
(End of discussion at sidebar.)
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(305) 523-5698
THE COURT: Ladies and Gentlemen, is there anyone here
that cannot stay for an additional 15 minutes? If you cannot,
just raise your hand and let me know.
All right. Then let's continue.
BY MS. JIMENEZ:
Q.
All right. Mr. Zaslow, this is Government Exhibit...
THE COURT: Just call out the exhibit number, please.
MS. JIMENEZ: Go to the end.
(Pause in proceedings.)
MS. JIMENEZ: Apologize for that.
It's Government's Exhibit 81.
BY MS. JIMENEZ:
Q.
All right. So Mr. Zaslow, Mr. Sheppard wrote to
Mr. Cupersmith, and this email was forwarded to you. Did you
see that?
A.
Yes.
Q.
And he is asking to speak with the accountants; is that
right?
A.
Yes.
Q.
And at this point, have you, in -- April 21st, have you
completed the tax returns as he's requesting?
A.
The only tax returns we did not complete was his personal
return at that point and WSG Kansas City.
Q.
Why had you not completed them?
A.
We did not receive payment before we released the returns,
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Miami, Florida 33128
(305) 523-5698
and that was our arrangement.
Q.
That was your arrangement with the Defendant?
A.
Correct.
Q.
What was the arrangement?
A.
So we provided proposals for invoices to do the tax returns
ahead of the jobs.
MR. ETRA: Your Honor, beyond the scope.
THE COURT: Overruled.
BY MS. JIMENEZ:
Q.
So then did you end up having a call with the Defendant not
long after this?
A.
Correct. We had a call to discuss this specific situation.
Q.
What was the situation you discussed in that call with the
Defendant?
A.
That he had not paid us for the returns that we prepared,
and we weren't going to release them until he did.
Q.
All right. In that conversation, did Mr. Sheppard ask you
anything about Paycheck Protection Program loans?
A.
No, he did not.
Q.
Did he ask you anything about Economic Injury Disaster
Loans?
A.
No, he did not.
Q.
Did he ask you anything about any government loans?
A.
No, he did not.
Q.
Did he ask you whether -- you know, as to what company
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Miami, Florida 33128
(305) 523-5698
should be applying for any type of government loan?
A.
No, he did not.
Q.
Did he ask you about what tax year or what year -- what
years' figures or number of laborers he should be using for any
type of loan?
A.
No, he did not.
Q.
Did you provide him -- you or -- was Mr. Cupersmith on that
call as well?
A.
Yes.
Q.
Did you or Mr. Cupersmith provide him or offer him any
advice -- given the time frame we were talking about, April of
2020, did you provide him -- irrespective of whether he
requested it, did you provide him any advice regarding applying
for any government type of loan?
A.
No. We provided no advice on the government loans.
Q.
Did you -- subsequent to that conversation that occurred
shortly after this email, did you at any point in 2020 or in
2021 provide Mr. Sheppard any advice regarding any
COVID-related government loan?
A.
No, we did not.
Q.
Did you provide that advice for other clients?
A.
Sure. Yes.
Q.
After the April phone call, did Mr. Sheppard, whether in
writing or orally, request advice from you about any government
loan and whether he qualified or how he should apply?
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Miami, Florida 33128
(305) 523-5698
MR. ETRA: Asked and answered.
THE COURT: Sustained.
MS. JIMENEZ: That was a different question.
BY MS. JIMENEZ:
Q.
I'm sorry?
A.
No, he did not.
MS. JIMENEZ: That's all I have, Your Honor.
THE COURT: All right. Cross-examination.
MR. ETRA: Could we put up -- put up Exhibit Q-25.
CROSS-EXAMINATION
BY MR. ETRA:
Q.
Good afternoon. We haven't met. How are you?
A.
Good, thanks. How are you?
COURTROOM DEPUTY: Is this in evidence, Counsel? I'm
sorry.
MR. ETRA: It's in evidence, Your Honor. Could we go
to the very bottom here.
BY MR. ETRA:
Q.
Okay. So we're in the last page and hopefully some
language has been highlighted. This is an email from
Mr. Sheppard to you on March 30th, correct?
A.
Correct.
Q.
And he's saying to you: "I applied for some of the
government programs." Do you see that?
A.
Yep.
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Miami, Florida 33128
(305) 523-5698
Q.
So isn't it correct that Mr. Sheppard notified the
Cupersmith firm that he had applied for government programs?
A.
Yes.
Q.
Okay. And you said you provided advice to other clients,
correct?
A.
Correct.
Q.
But you did not provide any advice to Mr. Sheppard about
the government programs. Is that your testimony?
A.
Correct.
Q.
And your firm had been working with the Sheppard companies
for -- before you joined the firm, right?
A.
That's correct.
Q.
Twenty years or so?
A.
That's correct, at least.
Q.
And you joined -- you began working with the Sheppard
companies approximately when?
A.
August 2008.
Q.
August 2008. Okay.
Oh. August 2008. Okay. So you personally have been
working with Ms. Gonzalez since August 2008. So by this point
it's been 12 years, right?
A.
That's not correct.
Q.
Seventeen?
A.
I did not work directly with Jeanette for all those years.
It was only recently.
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Miami, Florida 33128
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Q.
I see. Fair enough.
So you worked with the Sheppard entities for about
17 -- about 12 -- sorry -- about 12 years?
A.
2008 to 2022.
Q.
2008 to -- okay. Great. And nevertheless, you chose not
to -- to tell Mr. Sheppard: "Hey, we should talk about these
government programs." Is that your testimony?
A.
Correct.
Q.
Okay. And that's because you felt you were owed money,
correct?
A.
That's not correct.
Q.
You were owed money?
A.
We were owed money, but that's not the reason why we did
not talk about PPP.
Q.
Well, what was the reason?
A.
The reason was we did not ask because certain clients were
handling them themselves.
Q.
Okay. When did Mr. -- I'm sorry. So you decided that
Mr. Sheppard, when he mentions government programs, that that's
his way of telling you he doesn't want any advice?
A.
He never asked for advice.
Q.
Okay. He never asked for advice, but he's telling you that
he applied for government programs, right?
A.
That's correct.
Q.
And you decided not to respond and say: "Hey, Eric. We
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
should talk. There are some rules here," correct?
A.
That's correct.
Q.
Okay. And did you tell Mr. Cupersmith that -- what you
knew, that Mr. Sheppard had applied for government programs?
A.
I don't recall from that specific email when I told
Mr. Cupersmith.
Q.
And the reason you don't recall is because it was some time
ago, correct?
A.
That's correct.
Q.
Is that something you should be telling your boss: "Hey,
your longtime client, Mr. Sheppard, is applying for government
programs in this crazy time period you're living in in
March 30th"?
A.
Not necessarily.
Q.
Not necessarily. Not important. Okay.
And if we can go to -- in your direct, you looked at
this email, but you only focus on the second part of it about
asking for tax returns, right?
A.
Say that again.
Q.
In your direct you focused -- in the direct examination you
were focused on the rest of this email where Mr. Sheppard is
asking for tax returns, right?
A.
Well, that was the only question he said to answer:
"Please, let me know if you" --
Q.
Is it fair to say you ignored the comment that Mr. Sheppard
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
was applying for government programs?
A.
I didn't ignore it. I read the statement.
Q.
If you didn't ignore it, what did you do with it?
A.
I didn't ask the question: "Do you need my help?"
MR. ETRA: Could we put up --
BY MR. ETRA:
Q.
By the way, do you have any notes of -- the conversation
that you talk about that happens in April, do you have any
notes of those?
A.
No notes.
Q.
So you're going completely from memory?
A.
Yeah. It was a phone call.
Q.
And before you looked at these emails, did you even
remember that he had raised the issue of government programs
with you?
A.
Yes.
Q.
So you remember a few years later that in March 30th
Mr. Sheppard raised the issue of government programs, right?
A.
Correct.
Q.
And you still remember that, even though he raised that
issue with you, you didn't respond and give him any advice. Is
that your testimony?
A.
That's correct. That's also the case with other clients as
well.
Q.
So he's not the only client that when they -- so many of
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Case 1:22-cr-20290-BB Document 322 Entered on FLSD Docket 02/25/2025 Page 252 of 263
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
your clients will tell you they have government programs, and
he's not the only one that you didn't respond to. Is that your
testimony?
A.
That's correct.
Q.
Okay.
MR. ETRA: All right. Could we put up Exhibit Q-24.
BY MR. ETRA:
Q.
This is an email the day before. Do you see that?
MR. ETRA: Sorry. I should say the exhibit number.
MR. CAVALLO: Defendant's Q-24.
BY MR. ETRA:
Q.
Have you seen --
MR. ETRA: Let's do it so that the witness could see
the whole document. And then we'll make it -- should we make
it bigger?
THE WITNESS: I can see it.
BY MR. ETRA:
Q.
Could you just take a moment to review and tell me when
you're ready for me to ask you questions.
A.
(Witness complies.)
(Pause in proceedings.)
THE COURT: All right. Can we proceed with the
questioning.
THE WITNESS: Sure.
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Case 1:22-cr-20290-BB Document 322 Entered on FLSD Docket 02/25/2025 Page 253 of 263
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
BY MR. ETRA:
Q.
Do you recognize the document Q-24?
A.
I don't recall this document.
Q.
Okay. Do you recall documents like this being sent from
your firm to the clients as a whole?
A.
Yeah.
Q.
And basically --
A.
Correct.
Q.
-- offering -- sorry. We're talking over each other.
A.
This looks like a mass emailing from our office.
Q.
Right. And here in this mass email on March 29th your firm
is telling its clients -- which include Mr. Sheppard, correct?
Right?
A.
Yes.
Q.
And Mr. Sheppard owed you money at the time, right?
A.
Correct.
Q.
But you still did the blast -- you included him in the
blast email, correct?
A.
Yes.
Q.
Okay. And that's because you were soliciting -- basically
saying -- I could summarize it or we can go line by line --
"Hey, the PPP program is a daunting task" -- on the bottom --
"So reach out to us if you need any help," or something, right?
A.
Yes. It was a mass email sent to all of our clients on the
email list.
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
Q.
Right. And that included Mr. Sheppard, right?
A.
Correct.
Q.
And you're identifying that the application process for
these programs seems like a daunting task, correct?
A.
Correct.
Q.
And then you say -- or your firm, I should say, "Since we
are familiar with your company and its operations, we can
streamline the process with you"?
A.
Yes. It's general verbiage. It's not specific.
Q.
Well, I know. But in this particular case your firm had
dealt with the Sheppard companies for years, correct?
A.
Uh-huh.
Q.
Correct?
A.
Yes.
Q.
Some of your clients on the blast had been clients for
maybe only a few years, right?
A.
Yes.
Q.
This is probably -- at the time was one of your
longest-standing clients, correct?
A.
Correct.
Q.
So you were probably more familiar with the Sheppard
companies than you were with a lot of your other clients,
correct?
A.
Correct.
Q.
You had a huge history with them?
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Case 1:22-cr-20290-BB Document 322 Entered on FLSD Docket 02/25/2025 Page 255 of 263
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
A.
Correct.
Q.
And the day after this email goes out --
MR. ETRA: If we can go back to Q-25.
BY MR. ETRA:
Q.
-- is when Mr. Sheppard reaches out to you and tells you
he's applying for government programs, right?
A.
Correct.
Q.
And your response is to ignore that -- well, I shouldn't
say ignore -- that wasn't your word. Your response is to not
respond or give any advice or direction, correct?
A.
Correct.
Q.
And what's the other --
THE COURT: How much further cross-examination do you
have, Mr. Etra?
MR. ETRA: It's more than five minutes, Your Honor. I
apologize.
THE COURT: All right. Then we're going to need the
witness to come back.
MR. ETRA: I understand, Your Honor.
THE COURT: All right. Then Ladies and Gentlemen, at
this point in time we are going to adjourn for the evening.
Please remember that you are not to discuss this case
with anyone nor permit anyone to speak with you. Everything
learned about the case is learned in this courtroom.
I would ask that you place your juror notebooks in the
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
jury room. And we will begin tomorrow morning at precisely
nine a.m. I do anticipate that the rest of the witness's
testimony should take no longer than 15, 20 minutes. And then
at that point in time we would proceed to instructions on the
law and closing arguments by the attorneys.
Please have a wholesome breakfast, since we will be
providing lunch to you, but that lunch will be provided at the
time that you deliberate, which I anticipate will be
approximately 1:15. So you can certainly bring some snacks in,
but I would have a large breakfast so that you can anticipate
that we'll have a lunch a little bit later than usual.
So have a pleasant evening. I'll see you tomorrow
morning at nine a.m.
COURT SECURITY OFFICER: All rise.
(Jury not present, 5:23 p.m.)
THE COURT: Mr. Zaslow, I will see you tomorrow
morning at nine a.m. Since you are on the witness stand,
you're not to discuss your anticipated testimony or any aspect
of the case.
Have a pleasant evening, sir.
THE WITNESS: Thank you. This way?
THE COURT: This way, sir.
All right. Please have a seat.
I anticipate that Mr. Zaslow's testimony should take
no longer than 30 minutes. I don't anticipate that his
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
testimony would change the jury instructions that were provided
to the Court late last night. The parties have provided
supplemental instructions. Your objections are preserved by
way of your written filings, so there is no need to proceed
with a charge conference in which the parties are merely going
to reargue. But what I am going to do is give you the Court's
set of proposed jury instructions, and I will see you tomorrow
morning at 8:30. At that time, you will have the opportunity
to place on the record any additional objections to the Court's
proposed instructions.
With regard to the Defendant's motions, certainly I've
reserved ruling, and we can hear that motion at a later time.
I say that because I am certainly sensitive to the fact that
the parties have specifically requested from my court reporter
dailies. She works late into the evening. She works until
close to midnight and then she drives to -- north to another
county. So I'm not going to require that she spend any more
time in this courtroom.
So Josue, my law clerk, will be providing you with
copies of the Court's proposed instructions based on the
submissions that parties have made, and I'll see the parties
here tomorrow morning at 8:30 so we can address any further
issues with regard to the Court's instructions.
MS. WEINTRAUB: Judge, based on what's happening in
real time, we didn't have time to prepare, but I am going to
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
submit, with the Court's permission, one additional proposed
jury instruction on rebuttal testimony.
THE COURT: Well, the Court can certainly consider
that and we can address that tomorrow morning at 8:30. But to
give you an opportunity to prepare for your closing arguments,
I have provided what I intend to instruct the jury with regard
to the law on this case.
With regard to the Court's schedule tomorrow, I do
anticipate that we'll get started right at nine o'clock. We'll
have Mr. Zaslow's testimony until approximately 9:30. The
Court will then give instructions on the law, and I suspect
that will take until ten o'clock. At that point in time, we
will then proceed with closing arguments. The Court is
providing both sides with an hour and a half.
How would the Government like to divide this time?
MS. WEINTRAUB: Judge, I thought we had two hours.
THE COURT: And again, since I do want to allow for
the jury to have lunch, and to allow for the remaining rebuttal
evidence, I am giving the parties an hour and a half.
How does the Government want to divide this?
MS. JIMENEZ: An hour and five minutes, and 25 minutes
for rebuttal.
THE COURT: So we'll proceed with the --
MS. WEINTRAUB: Judge --
THE COURT: Yes?
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MS. WEINTRAUB: With all due respect, there is so much
detail, the documents in this case that we want to simplify for
the jury, it is a mammoth task, one that I have been struggling
with for days. I have finally put it together. I thought we
had two hours and it was still over. And in this three-week
trial that was supposed to be seven days, we have gone
through -- the loans alone are thousands of pages. I need an
hour -- there are 14 charges, Judge. Even at five minutes per
charge, I just -- there's no way that this can be done in an
hour and a half.
I mean, Judge, we told the Court yesterday about
another witness, Mercedes Fonseca, we were going to call. We
made the strategic decision not to call her, get rid of her,
just so we can end today, so we can be finishing this case.
But now to close in an hour and a half after this testimony,
it's --
THE COURT: Here's the problem: The problem is is
this jury needs a break. The jury needs a lunch break. And I
don't want to interrupt either side's closing arguments by
allowing the jury to have lunch and then to have either the
rebuttal close or to then extend -- I would be breaking up the
arguments, and that's the concern that the Court has. And the
hour and a half is sufficient for both sides to remind the jury
of the evidence in this case. So I am permitting an hour and a
half.
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Case 1:22-cr-20290-BB Document 322 Entered on FLSD Docket 02/25/2025 Page 260 of 263
261
Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
MS. WEINTRAUB: Judge, I don't care if you break mine
up. That's how important it is to be able to explain and
simplify --
THE COURT: Well, I think if you're planning on going
through thousands of pages of documents in your closing
arguments, the additional 30 minutes is not going to make a
difference. So an hour and a half for both sides is
sufficient.
I anticipate that we should be done for the jury to
deliberate at approximately 1:15, 1:30, and then we'll allow
the jury to deliberate while they're eating lunch.
I would require that the Government provide tomorrow
morning a clean laptop with all the exhibits uploaded and a
clean Superseding Indictment. The Government should be
providing one exhibit list with the Plaintiff's and the
Defendant's exhibits. So I would expect that the parties
confer this evening so that tomorrow the laptop is uploaded
with all of the exhibits so there is no issue with regard to
the exhibits. You've been provided dailies, so you know what
exhibits have been admitted into evidence.
MS. WEINTRAUB: Judge, in addition to everything else
that's not going on, the Court has permitted not just the
404(b) that was noticed, the Court has permitted at least
eleven additional 404(b) charges that we counted that we will
enumerate when the Court gives us time. Eleven. They have
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Case 1:22-cr-20290-BB Document 322 Entered on FLSD Docket 02/25/2025 Page 261 of 263
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
gone through the INS, the visa documents. They have gone
through it all, not just what they said they would with the
engagement letter. They have gone through numerous, numerous
things. I wasn't even allowed to cross-examine Maged Salem on
his interview with the FBI in which he lied, which I had
evidence of.
Judge, there's such a thing where, you know, the
timing of this -- I understand the Court's in a hurry. I
understand we're all in a hurry. I understand the jury only
has a certain amount of time. But due process has got to trump
some of this other stuff.
THE COURT: I don't think that due process is involved
by giving you an hour and a half as opposed to two hours of
closing argument. So the Court has made its decision. I will
see the parties here tomorrow morning at 8:30.
You can take your time to leave the courtroom, and I
will see you tomorrow morning.
Have a pleasant evening.
COURT SECURITY OFFICER: All rise.
(Proceedings adjourned at 5:31 p.m.)
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Case 1:22-cr-20290-BB Document 322 Entered on FLSD Docket 02/25/2025 Page 262 of 263
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Yvette Hernandez, Official Court Reporter
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
UNITED STATES OF AMERICA )
ss:
SOUTHERN DISTRICT OF FLORIDA
)
C E R T I F I C A T E
I, Yvette Hernandez, Certified Shorthand Reporter in
and for the United States District Court for the Southern
District of Florida, do hereby certify that I was present at,
and reported in machine shorthand, the proceedings had the 10th
day of January, 2024, in the above-mentioned court; and that
the foregoing transcript is a true, correct, and complete
transcript of my stenographic notes.
I further certify that this transcript contains pages
1 - 263.
IN WITNESS WHEREOF, I have hereunto set my hand at
Miami, Florida, this 25th day of February, 2025.
/s/Yvette Hernandez
Yvette Hernandez, CSR, RPR, CLR, CRR, RMR
400 North Miami Avenue, 10-2
Miami, Florida 33128
(305) 523-5698
yvette_hernandez@flsd.uscourts.gov
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Case 1:22-cr-20290-BB Document 322 Entered on FLSD Docket 02/25/2025 Page 263 of 263File and source
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