Motion to Compel Discovery of — United States ex rel. James R. Berkley v. Ocean State, LLC (Dkt. 47-3, D.R.I.)
Summary
Deposition transcript pages of Eric Thompson, taken March 21, 2024 in United States of America ex rel. James R. Berkley v. Ocean State, LLC, et al., Case 1:20-cv-00538-JJM-PAS, U.S. District Court for the District of Rhode Island, filed as Document 47-3 on 05/17/24. The pages include the caption, index and exhibit list, and testimony about Exhibit 12, a memo dated May 6th, 2020 regarding Fyzical's eligibility to receive CARES Act PPP funding. Thompson testifies that he drafted the majority of the memo, that it went to the board, and that business concern refers to Fyzical Acquisition Holdings as the franchise brand. In redirect, Thompson testifies that he was 100 percent confident that Fyzical was eligible when the loan application was submitted.
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
Cite this document
“Motion to Compel Discovery of — United States ex rel. James R. Berkley v. Ocean State, LLC (Dkt. 47-3, D.R.I.).”
Original at archive.org. Archived at Pandemic Darlings, https://pandemicdarlings.com/source-documents/motion-to-compel-discovery-of-united-states-ex-rel-james-r-berkley-v-o-7cbec84853/
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Case 1:20-cv-00538-JJM-PAS Document 47-3 Filed 05/17/24 Page 1 of 12 PageID
#: 2059
In The Matter Of:
United States of America ex rel. James R. Berkley v.
Ocean State, LLC, et al.
Eric Thompson
March 21, 2024
Min-U-Script® with Word Index
Case 1:20-cv-00538-JJM-PAS Document 47-3 Filed 05/17/24 Page 2 of 12 PageID
United States of America ex rel. James R. Berkley v.#: 2060 Eric Thompson
Ocean State, LLC, et al. March 21, 2024
Page 1 Page 3
1 UNITED STATES DISTRICT COURT 1 INDEX
FOR THE DISTRICT OF RHODE ISLAND
2 2
3 CASE NO.: 1:20-cv-00538-JJM-PAS 3 Deposition of ERIC THOMPSON
4 4
UNITED STATES OF AMERICA ex rel.
5 JAMES R. BERKLEY 5 Page number
6 Plaintiff, 6 Direct Examination by Mr. Renner: 6
7 vs. 7 Cross-Examination by Mr. Weeks: 149
8 OCEAN STATE, LLC, 8 Redirect Examination by Mr. Renner: 165
NEW HARBOR CAPITAL FUND LP, NEW
9 HARBOR CAPITAL FUND II LP, 9 Certificate of Reporter 168
NEW HARBOR CAPITAL MANAGEMENT
10 LP, BLUEPRINT TEST PREPARATION, 10 Certificate of Oath 169
LLC, FYZICAL ACQUISITION
11 HOLDINGS, LLC 11 Errata Sheet 170
12 Defendants. 12 Read and Sign Letter 171
______________________________________/
13 13
14 14
DEPOSITION OF ERIC THOMPSON
15 15 Exhibits
16 Taken on Behalf of the Plaintiff 16 Number Description Identified Marked
17 17 Plaintiff's
DATE TAKEN: March 21, 2024
18 18 Exh 1 Fyzical Acquisition Holdings'
19 TIME: 9:07 a.m. 19 Objection to Deposition Notice 12 6
20 20 Exh 2 Fyzical Acquisition Holdings'
REPORTED BY: SHARON F. BUTLER
21 Court Reporter 21 Responses to Interrogatories 12 6
Notary Public
22 State of Florida at Large 22 Exh 3 Fyzical Acquisition Holdings'
23 23 Limited Liability Company
PLACE: The Westin Sarasota
24 100 Marina View Drive 24 Agreement Dated 2/28/19 12 6
Sarasota, Florida 34236
25 25
Page 2 Page 4
1 1 Exhibits (Continued)
2 APPEARANCES FOR THE PLAINTIFF
3 2 Number Description Identified Marked
ERIC E. RENNER, Esquire
4 Duffy & Sweeney, LTD. 3 Exh 4 Diagram 15 6
321 South Main Street
5 Suite 400 4 Exh 5 Structure Chart dated 12/21/17 15 6
Providence, Rhode Island 02903
6 erenner@duffysweeney.com 5 Exh 6 Professional Services Agreement 37 6
7 6 Exh 7 Fyzical Corporate Org Chart 41 6
8 7 Exh 8 Audit Report dated 12/31/20 43 6
9 APPEARANCES FOR THE DEFENDANTS 8 Exh 9 Fyzical's Franchise
10 9 Disclosure Document 54 6
PATRICK J. WEEKS, Esquire 10 Exh 10 PPP Borrower Application Form 57 6
11 MAX SAMELS, Esquire
Kirkland & Ellis LLP 11 Exh 11 Email Exchange Dated 5/13/20 68 6
12 300 North La Salle Drive
Chicago, Illinois 60654 12 Exh 12 Memo by Mr. Thompson 69 6
13 patrick.weeks@kirkland.com
max.samels@kirkland.com 13 Exh 13 Copy of Federal Register 74 6
14
14 Exh 14 PPP FAQs Dated 6/13/23 75 6
15
15 Exh 15 SBA Franchise Directory Page 113 6
16 * * *
16 Exh 16 Fyzical Acquisition Holdings
17
17 Board of Managers Document
18
18 Dated 5/13/20 117 6
19
19 Exh 17 Letter from SBA Dated 4/4/20 117 6
20
20 Exh 18 Fyzical Quarterly Update -
21
21 First Quarter 2020 120 6
22 22 Exh 19 Fyzical Business Update
23 23 Dated 4/24/20 121 6
24 24 Exh 20 Fyzical Document Dated 3/31/20 131 6
25 25
Min-U-Script® Imperial Court Reporting (941) 260-9000 (1) Pages 1 - 4
Case 1:20-cv-00538-JJM-PAS Document 47-3 Filed 05/17/24 Page 3 of 12 PageID
United States of America ex rel. James R. Berkley v.#: 2061 Eric Thompson
Ocean State, LLC, et al. March 21, 2024
Page 69 Page 71
1 you if I addressed it to the board, it would have 1 board on where we were with PPP.
2 been sent to the full board. 2 Q. So at the top, it says, "Regarding
3 Q. So if you sent this email, it would -- 3 Fyzical's eligibility to receive CARES Act PPP
4 A. It would go to the nine members of the 4 funding."
5 board that I went through earlier. 5 A. Yes.
6 Q. Okay. All right. This is Exhibit 12. 6 Q. And then throughout the document it
7 Do you recognize this document, sir? 7 refers to Fyzical?
8 A. Yes, I do. 8 A. Correct.
9 Q. And did you draft this document? 9 Q. Who were you referring to when you used
10 A. I did. 10 the term Fyzical?
11 Q. Did anyone else assist you in drafting 11 A. Fyzical Acquisition Holdings.
12 this document? 12 Q. All right. So this is specific to
13 A. Yeah. We had -- I ran it by Brian 13 Fyzical Acquisition Holdings?
14 Belmont. And, also, I did seek some help from 14 A. Correct.
15 Reed Smith just to read over it. Correct. 15 Q. As opposed to some other Fyzical entity?
16 Q. All right. But you drafted the document? 16 A. Correct. It's specific to that.
17 A. Oh, yeah. I mean, I didn't draft every 17 Q. All right. So under number 1, "Fyzical's
18 single word in here, but I drafted the majority of 18 eligibility to receive funding," where did you get
19 this. Correct. 19 the information stated here under number 1?
20 Q. Well, what did you -- 20 A. From -- I believe it was from the SBA
21 A. -- including the Excel schedule. 21 guidelines. But we were getting information from
22 Q. Okay. Sorry. 22 a lot of different sources, because APTA was
23 What did you not draft? 23 putting out a lot of stuff. There's a dental firm
24 A. Oh, I don't recall. I mean, I don't 24 I follow, they put out a lot of stuff.
25 know, but I know I spent a ton of time on it. 25 But overall, I mean, it was -- we were
Page 70 Page 72
1 Q. All right. And it's dated May 6th, 2020. 1 swimming in information at that point.
2 A. Correct. 2 Q. All right. And then the second
3 Q. Is that when you drafted this document? 3 paragraph, at the bottom of the second paragraph,
4 A. That's when the document was going out to 4 it refers to "any business concern operating as a
5 the board. 5 franchise." Do you see that?
6 Q. All right. When did you start drafting 6 A. Yes.
7 this document? 7 Q. How did you define -- how do you define
8 A. I don't -- it was probably in -- I mean, 8 the term "business concern"? Or does that mean
9 obviously, I didn't finish the document in a day, 9 Fyzical Acquisition Holdings, or something else?
10 so it would be sometime in April. 10 MR. WEEKS: Objection to form. Calls for
11 Q. Was it after the PPP application? 11 a legal conclusion.
12 A. I don't recall. 12 But you can answer in your own personal
13 Q. So you said this was sent to the board, 13 capacity.
14 right? 14 BY MR. RENNER:
15 A. Yes. 15 Q. When you fill out this memo, you know --
16 Q. Other than the board, did it go to anyone 16 A. Yeah.
17 else? 17 Q. And at the time of the application, in
18 A. I don't recall. I don't think there 18 your mind, how did you define the term "business
19 would have been a reason to, but I -- definitely 19 concern"?
20 it would have been sent to the board. 20 MR. WEEKS: Objection to form. This is a
21 Q. But you just can't say one way or another 21 quote from the SBA guidance. He didn't write
22 if it went to anyone other than the board? 22 that.
23 A. No. I mean, if -- I don't know if I 23 MR. RENNER: I'm not saying he wrote it.
24 copied someone on the email or not. I don't know. 24 I'm just saying, in his mind, what does
25 But it was drafted because I wanted to educate the 25 "business concern" refer to.
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Case 1:20-cv-00538-JJM-PAS Document 47-3 Filed 05/17/24 Page 4 of 12 PageID
United States of America ex rel. James R. Berkley v.#: 2062 Eric Thompson
Ocean State, LLC, et al. March 21, 2024
Page 73 Page 75
1 MR. WEEKS: Objection to form. 1 document here refers to an interim final rule.
2 A. Anything that -- I would say it's 2 And if you look at Exhibit 13 on the second page,
3 anything that involves a franchise brand. So 3 at the footnote there, it refers to the section of
4 Fyzical Acquisition Holdings we consider to be the 4 the CARES Act here that's referenced in your memo.
5 franchise brand. 5 Did you refer to this document when
6 BY MR. RENNER: 6 preparing your memo, Exhibit 13?
7 Q. All right. So in your mind, is it 7 A. Yes. It was one of several documents
8 accurate to say that business concern referred to, 8 that -- that was involved in drafting this
9 you know, what, all of the Fyzical entities 9 document, in drafting the document that went to
10 underneath Fyzical Acquisition Holdings? 10 the board.
11 MR. WEEKS: Objection to form. 11 Q. All right. It says here, "Business
12 A. There is -- what this is is the 12 concern operating as a franchise." Right?
13 affiliation waiver, and it was for the franchise 13 A. Yes. Yes, it does.
14 brand. And, yes, Fyzical Acquisition Holdings 14 MR. WEEKS: Where are you pointing?
15 is -- did deserve the waiver underneath that 15 MR. RENNER: In the memo.
16 definition. 16 MR. WEEKS: Okay.
17 BY MR. RENNER: 17 BY MR. RENNER:
18 Q. All right. How did you come to that 18 Q. So did you give any thought to whether or
19 conclusion that Fyzical Acquisition Holdings 19 not Fyzical Acquisition Holdings was operating as
20 deserved a waiver? 20 a franchise as opposed to being merely a holding
21 A. Because that's what -- 21 company?
22 MR. WEEKS: Objection. Objection to 22 A. I view it -- it is the franchise. It's
23 form. 23 the one who owns it.
24 Go ahead. And I'm just going to caution 24 Q. Did you give any thought, though, to
25 you not to reveal anything that implicate 25 whether or not, you know, a holding company -- the
Page 74 Page 76
1 conversations with counsel. You can answer in 1 distinction between a holding company as opposed
2 your own personal capacity if you landed at 2 to an operating company, was that part of your
3 that conclusion. 3 thought process?
4 A. Yes. The SBA franchise identifier code 4 MR. WEEKS: Objection to form.
5 is where -- I specifically found that out on the 5 A. Again, I just view Fyzical Acquisition
6 internet when I went to go search for our 6 Holdings as the brand. That's even what I get
7 franchise brand. 7 audited on. I mean, that's my parent. That is
8 BY MR. RENNER: 8 Fyzical.
9 Q. Well, that wasn't -- so that wasn't 9 BY MR. RENNER:
10 really my question. My question was -- 10 Q. All right. I'm going to show you
11 MR. RENNER: Well, can you read back my 11 Exhibit 14. And if you could turn to page 10.
12 last question, please. 12 And, again, these are my highlights in
13 (Record read back.) 13 here, yellow highlights.
14 MR. WEEKS: So that's the question. 14 So your memo that's Exhibit 12 refers to
15 A. So can you state that again, please? 15 Response Number 23 in the SBA Frequently Asked
16 BY MR. RENNER: 16 Questions. And it says what you say, "Addresses
17 Q. Yeah. How did you come to the 17 the eligibility of franchise operations for PPP
18 determination that Fyzical Acquisition Holdings 18 loan proceeds."
19 deserved a waiver from the affiliation rules? 19 A. Yes, I've read it.
20 A. Because to me, it's pretty clear there. 20 Q. All right. So your memo, Exhibit 12, at
21 Operating as a franchise, Fyzical Acquisition 21 the bottom of the first page, you know, you refer
22 Holdings is the business concern that's operating, 22 to Response Number 23.
23 and we have the SBA identifier code. 23 A. Correct.
24 Q. All right. I'm going to show you 24 Q. Right. And then you say, Response 23
25 Exhibit 13. There's a footnote there. Well, the 25 addresses the eligibility of franchise operations
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Case 1:20-cv-00538-JJM-PAS Document 47-3 Filed 05/17/24 Page 5 of 12 PageID
United States of America ex rel. James R. Berkley v.#: 2063 Eric Thompson
Ocean State, LLC, et al. March 21, 2024
Page 165 Page 167
1 reviewed related to the PPP loan eligibility, how 1 or waive?
2 confident were you when you submitted the loan 2 MR. WEEKS: We will read.
3 application that Fyzical was eligible to receive 3 MR. RENNER: Yeah, we'll need a
4 the loan? 4 signature.
5 MR. RENNER: Objection. 5 THE COURT REPORTER: And ordering
6 A. I was 100 percent confident, because I 6 transcripts?
7 will tell you, my signature was on that document. 7 MR. WEEKS: Yes, please.
8 And there is no way I would have moved forward 8 MR. RENNER: Yes.
9 without being extremely confident, in fact, 100 9 THE COURT REPORTER: Who's ordering the
10 percent confident of our ability and how deserving 10 original?
11 we were of PPP. 11 MR. RENNER: That would be me, I guess.
12 MR. WEEKS: All right. I have nothing 12 (Thereupon, this deposition was concluded at
13 further. 13 1:05 p.m. Reading and signing were not waived.)
14 MR. RENNER: I just have a few 14
15 follow-ups. 15
16 REDIRECT EXAMINATION 16
17 BY MR. RENNER: 17
18 Q. Did you ever seek legal counsel regarding 18
19 what's been called the franchise waiver? 19
20 MR. WEEKS: Objection to form. 20
21 You can answer yes or no, but don't 21
22 reveal anything -- 22
23 BY MR. RENNER: 23
24 Q. And by "you," I mean -- 24
25 MR. WEEKS: -- you talked to counsel 25
Page 166 Page 168
1 about. 1 REPORTER'S DEPOSITION CERTIFICATE
2 BY MR. RENNER: 2 STATE OF FLORIDA )
3 Q. -- Fyzical? 3 COUNTY OF SARASOTA)
4 A. Yes. 4 I, SHARON F. BUTLER, Court Reporter,
5 Q. Okay. You just testified regarding the 5 certify that I was authorized to and did
6 SBA, various follow-ups about corporate structure. 6 stenographically report the deposition of ERIC
7 Do you remember that? 7 THOMPSON; (Pages 1 through 170) that a review of
8 A. Yes. 8 the transcript was requested; and that the
9 Q. Were you saying the SBA or were you 9 transcript is a true and complete record of my
10 talking about Webster followed up? 10 stenographic notes.
11 A. I don't recall the exact names on the 11 I further certify that I am not a
12 email, but I know that Webster was involved and 12 relative, employee, attorney, or counsel of
13 partnering with the SBA. I don't recall if the 13 any of the parties, nor am I a relative or
14 SBA people were on it or if it was direct to 14 employee of any of the parties' attorney or
15 Webster. But it definitely was for the 15 counsel connected with the action, nor am I
16 forgiveness with the SBA. 16 financially interested in the action.
17 Q. Are those emails in -- have they been 17 Dated this 2nd day of April, 2024.
18 produced, to your knowledge? 18
19 MR. WEEKS: Objection to form. 19
20 Foundation. 20
21 A. I don't know. 21 __________________________________
22 MR. RENNER: All right. That's all I 22 SHARON F. BUTLER, Court Reporter
23 have. 23
24 MR. WEEKS: I have nothing further. 24
25 THE COURT REPORTER: Do you guys do read 25
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Case 1:20-cv-00538-JJM-PAS Document 47-3 Filed 05/17/24 Page 6 of 12 PageID
United States of America ex rel. James R. Berkley v.#: 2064 Eric Thompson
Ocean State, LLC, et al. March 21, 2024
Page 169 Page 171
1 CERTIFICATE OF OATH
2 STATE OF FLORIDA )
3 COUNTY OF SARASOTA)
4 I, the undersigned authority, certify
5 that ERIC THOMPSON appeared before me and was
6 duly sworn.
7 WITNESS my hand and official seal this
8 2nd day of April, 2024.
9
10
11
12
13
14
15 __________________________________
16 SHARON F. BUTLER, Notary Public
17
18 SHARON F. BUTLER
MY COMMISSION # HH 089253
19 EXPIRES: MARCH 30, 2025
Budget Notary Services
20
21
22
23
24
25
Page 170
1 ERRATA SHEET
2 Page Line Correction and reason therefor
3 ______________________________________________
4 ______________________________________________
5 ______________________________________________
6 ______________________________________________
7 ______________________________________________
8 ______________________________________________
9 ______________________________________________
10 ______________________________________________
11 ______________________________________________
12 ______________________________________________
13 ______________________________________________
14 ______________________________________________
15
16 I, ERIC THOMPSON, do hereby state that
17 the foregoing transcript is true and accurate
18 except as above. Signed this _____ day of
19 ___________, 2024.
20
21
22 ________________________________
23 ERIC THOMPSON
24
25
Min-U-Script® Imperial Court Reporting (941) 260-9000 (43) Pages 169 - 171
Case 1:20-cv-00538-JJM-PAS Document 47-3 Filed 05/17/24 Page 7 of 12 PageID
#: 2065 John Roselli 03/14/2024
Confidential
·1· · · · · · ·UNITED STATES DISTRICT COURT ·1· · · · · · · · · · I N D E X
·2· · · · · ·FOR THE DISTRICT OF RHODE ISLAND ·2· ·WITNESS· · · · · · · · · · · · · · · EXAMINATION
·3· ·UNITED STATES OF AMERICA· ·) ·3· ·JOHN ROSSELLI
· · ·ex rel. JAMES R.· · · · · ·) ·4· · ·BY MR. RENNER· · · · · · · · · · · · · ·4, 168
·5· · ·BY MR. MOORMAN· · · · · · · · · · · · · 152
·4· ·BERKLEY,· · · · · · · · · ·)
·6
· · · · · · · · ·Plaintiffs,· · )
·7
·5· · ·vs.· · · · · · · · · · · )· No. 1:20-cv-OO538
·8
· · ·OCEAN STATE, LLC, NEW· · · ) ·9
·6· ·HARBOR CAPITAL FUND LP,· · ) 10
· · ·NEW HARBOR CAPITAL FUND· · ) 11· · · · · · · · ·E X H I B I T S
·7· ·II LP, NEW HARBOR· · · · · ) 12· ·NUMBER· · · · · · · · · · · · · · ·MARKED FOR ID
· · ·CAPITAL MANAGEMENT LP,· · ·) 13· ·ROSELLI Deposition
·8· ·BLUEPRINT TEST· · · · · · ·) · · · ·Exhibit No. 1· · · · · · · · · · · · · ·4
· · ·PREPARATION, LLC,· · · · · ) 14· · ·Exhibit No. 2· · · · · · · · · · · · · ·4
·9· ·FYZICAL ACQUISITION· · · · ) · · · ·Exhibit No. 3· · · · · · · · · · · · · ·4
15· · ·Exhibit No. 4· · · · · · · · · · · · · ·4
· · ·HOLDINGS, LLC,· · · · · · ·)
· · · ·Exhibit No. 5· · · · · · · · · · · · · ·4
10· · · · · · · ·Defendants.· · )
16· · ·Exhibit No. 6· · · · · · · · · · · · · ·4
11
· · · ·Exhibit No. 7· · · · · · · · · · · · · ·4
12· · ·The CONFIDENTIAL DEPOSITION of JOHN ROSELLI, 17· · ·Exhibit No. 8· · · · · · · · · · · · · ·4
13· ·called for examination pursuant to the Rules of · · · ·Exhibit No. 9· · · · · · · · · · · · · ·4
14· ·Civil Procedure for the United States District 18· · ·Exhibit No. 10 (withdrawn)· · · · · · · 4
15· ·Courts pertaining to the taking of depositions, · · · ·Exhibit No. 11· · · · · · · · · · · · · 4
16· ·taken before MARY KAY ANDRIOPOULOS, Certified 19· · ·Exhibit No. 12· · · · · · · · · · · · · 4
17· ·Shorthand Reporter in the State of Illinois, at · · · ·Exhibit No. 13· · · · · · · · · · · · · 4
18· ·300 North LaSalle Street, Illinois, on 20· · ·Exhibit No. 14· · · · · · · · · · · · · 4
19· ·March 14, 2024, at the hour of 10:00 a.m. · · · ·Exhibit No. 15· · · · · · · · · · · · · 4
21· · ·Exhibit No. 16· · · · · · · · · · · · · 4
20
· · · ·Exhibit No. 17· · · · · · · · · · · · · 4
21
22· · ·Exhibit No. 18· · · · · · · · · · · · · 4
22
· · · ·Exhibit No. 19· · · · · · · · · · · · · 4
23 23· · ·Exhibit No. 20· · · · · · · · · · · · · 66
24· ·REPORTED BY: MARY KAY ANDRIOPOULOS, CSR 24
25· ·LICENSE NO.· 084-002248 25
1 3
·1· ·APPEARANCES: ·1· · ***CONFIDENTIAL DEPOSITION OF JOHN ROSELLI***
·2 ·2· · · · · · · · · ·(Whereupon, ROSELLI Deposition
·3· · · · · DUFFY & SWEENEY, LTD. ·3· · · · · · · · · · Exhibit Nos. 1-19 were marked
·4· · · · · BY: MR. ERIC E. RENNER ·4· · · · · · · · · · for identification.)
·5· · · · · 321 South Main Street ·5· · · · · · · · · ·(Whereupon, the witness was duly
·6· · · · · Suite 400 ·6· · · · · · · · · · sworn.)
·7· · · · · Providence, Rhode Island 02903 ·7· · · · · · · · · · ·JOHN ROSELLI,
·8· · · · · 401.455.0700 ·8· ·having been first duly sworn, was examined and
·9· · · · · Erenner@duffysweeney.com ·9· ·testified as follows:
10· · · · · · · ·Representing the Plaintiffs; 10· · · · · · · · · · · EXAMINATION
11 11· ·BY MR. RENNER:
12· · · · · KIRKLAND & ELLIS, LLP 12· · · ·Q.· ·Good morning, Mr. Roselli.· My name is
13· · · · · BY: MR. RYAN MOORMAN 13· ·Eric Renner.· I represent the plaintiff in a
14· · · · · · · MR. PATRICK J. WEEKS 14· ·lawsuit pending in Rhode Island Federal Court.
15· · · · · 300 North LaSalle Street 15· · · · · · I'm here to today for your deposition.
16· · · · · Chicago, Illinois 60654 16· ·I don't know if you've been deposed before or
17· · · · · 312.862.3755 17· ·not.
18· · · · · Ryan.moorman@kirkland.com 18· · · ·A.· ·I have not.
19· · · · · Patrick.weeks@kirkland.com 19· · · ·Q.· ·Never, okay.
20· · · · · · · ·Representing the Defendants. 20· · · · · · So I'll just go over kind of some
21 21· ·ground rules.
22 22· · · · · · I'm going to be asking you questions.
23 23· ·If you don't understand my question, please let
24 24· ·me know, I'll try to rephrase so that you
25 25· ·understand the question; is that okay?
2 4
McCorkle Litigation Services, Inc. 1..4
Chicago, Illinois· (312) 263-0052 YVer1f
Case 1:20-cv-00538-JJM-PAS Document 47-3 Filed 05/17/24 Page 8 of 12 PageID
#: 2066 John Roselli 03/14/2024
Confidential
·1· ·would not otherwise have been eligible under the ·1· ·program came out in like late March, and, you
·2· ·affiliation rules due to New Harbor's ownership? ·2· ·know, you were applying like a week later.
·3· · · ·A.· ·Well, that would just be speculation, ·3· · · · · · They had -- they had hotlines that you
·4· ·because we did. ·4· ·could call, e-mails you could send, and nobody
·5· · · · · · Like we had an SBA loan from Deerpath, ·5· ·responded to any of those.· They weren't even
·6· ·and we qualified waiving the affiliation ·6· ·picking up the phone.
·7· ·requirements, so -- ·7· · · · · · So we had to go with, you know, the
·8· · · ·Q.· ·So did you -- when I say you, I mean ·8· ·legal counsel we were getting and --
·9· ·Ocean State -- did Ocean State undertake any ·9· · · · · · MR. MOORMAN:· Don't say anything you
10· ·analysis as to whether or not the affiliation 10· ·talked about with lawyers.
11· ·rules would have precluded it from being 11· · · · · · THE WITNESS:· And, you know, we had to
12· ·eligible if the SBIC didn't apply? 12· ·go with, you know, our banker's advice, and all
13· · · · · · MR. MOORMAN:· Let him finish his 13· ·the webinars we were doing, and all the other
14· ·question. 14· ·things we were doing, and it clearly stated in
15· · · · · · Are you done? 15· ·the Small Business Administration explanation
16· · · · · · MR. RENNER:· Yes. 16· ·documents that you can qualify one of two ways;
17· · · · · · THE WITNESS:· So in the -- in the SBA 17· ·you know, you have 500 or less employees and a
18· ·loan explanations that we got from the Small 18· ·certain amount less revenue, and in that
19· ·Business Administration, it clearly stated in 19· ·situation you have to identify your affiliates,
20· ·there affiliation requirements are waived if you 20· ·or if you're already SBIC qualified, you know,
21· ·already have credit from an SBIC accredited 21· ·getting money from an SBIC qualified lender, you
22· ·lender. 22· ·can waive the affiliation requirements.
23· · · · · · So the affiliation waived the 23· ·BY MR. RENNER:
24· ·affiliation requirements. 24· · · ·Q.· ·All right.· And so if the affiliation
25· ·BY MR. RENNER: 25· ·rules weren't waived, you'd agree that there
53 55
·1· · · ·Q.· ·Fair enough. ·1· ·would have been more than 500 employees, right,
·2· · · · · · My question, though, is if the ·2· ·if you take into account all of the New Harbor
·3· ·affiliation rules weren't waived, would you ·3· ·--
·4· ·agree that Ocean State would not have been ·4· · · ·A.· ·Again, I don't know why we have to
·5· ·eligible for a PPP loan? ·5· ·speculate.· That wasn't the case.· They were
·6· · · ·A.· ·I mean, it -- ·6· ·waived.
·7· · · · · · MR. MOORMAN:· Objection, calls for ·7· · · ·Q.· ·I know, I mean, I know that's what
·8· ·speculation, calls for a legal conclusion. ·8· ·you're saying, but I just want to confirm,
·9· · · · · · THE WITNESS:· So again, we specifically ·9· ·though, that if you -- if Ocean State were to
10· ·waived the affiliation, because we had SBA 10· ·have considered the employees of Ocean State
11· ·lending, so there's no reason to speculate. 11· ·combined with the various other portfolio
12· ·BY MR. RENNER: 12· ·companies owned by New Harbor, then that would
13· · · ·Q.· ·Maybe I'm not asking the question the 13· ·have been more than the 500 employee limit,
14· ·right way. 14· ·right?
15· · · · · · Let's -- well, so is it fair to say 15· · · ·A.· ·Yes.
16· ·then that because Ocean State determined that it 16· · · ·Q.· ·Okay.· And likewise --
17· ·received SBIC funding, it did not undertake any 17· · · ·A.· ·And so that's why the portfolio
18· ·analysis as to whether or not it otherwise would 18· ·companies we had that weren't -- that didn't
19· ·have been precluded under the affiliation rules 19· ·have money from an SBIC lender, did not take PPP
20· ·from eligibility? 20· ·money.
21· · · ·A.· ·So we did quite a bit of analysis and 21· · · ·Q.· ·Okay.· And like for the same reason you
22· ·consultation with the bankers that facilitated 22· ·mentioned, the revenue amount would have
23· ·the loan, our CFO did a whole bunch of webinars 23· ·exceeded the revenue amount allowable --
24· ·to try to understand what was going on. 24· · · ·A.· ·Yes.
25· · · · · · You have to remember, the PPP loan 25· · · ·Q.· ·-- for a PPP program?· Okay.
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·1· · · · · · MR. MOORMAN:· And my objection is the ·1· ·their lawyers.
·2· ·same. ·2· · · · · · You can answer his question in your
·3· · · · · · The corporate representative is not ·3· ·capacity as somebody who was involved in the
·4· ·going to articulate the basis of a legal ·4· ·process about what you did to -- or what
·5· ·argument its lawyers are making in a future ·5· ·provides the foundation for your reasonable
·6· ·filing in the midst of that discovery. ·6· ·belief and the lawfulness of your conduct.
·7· · · · · · If he wants to say he's going to rely ·7· · · · · · MR. RENNER:· No, but I'm asking him as
·8· ·on his lawyers, he can say he's going to rely on ·8· ·the 30(b)(6) witness.
·9· ·his lawyers. ·9· · · · · · MR. MOORMAN:· You can testify why from
10· · · · · · MR. RENNER:· All right.· So then for 10· ·a factual point of view based on what you did at
11· ·No. 17, you know, which continues on to Page 25, 11· ·the time you had a reasonable belief that Ocean
12· ·the same statement is made about further 12· ·State was acting lawfully.
13· ·documents.· I assume that the same objection 13· · · · · · MR. RENNER:· I'm asking Ocean State.
14· ·applies? 14· · · · · · MR. MOORMAN:· I just said that.
15· · · · · · MR. MOORMAN:· Right.· Like, this is a 15· · · · · · THE WITNESS:· I understand.
16· ·-- we're going to file a motion for summary 16· · · · · · MR. RENNER:· You said you.
17· ·judgment, a directed verdict motion, there's no 17· · · · · · MR. MOORMAN:· I just said Ocean State.
18· ·expectation to lay all of that out in an 18· · · · · · THE WITNESS:· Yeah.
19· ·interrogatory. 19· · · · · · MR. RENNER:· No, you said you.
20· · · · · · We've already provided significant 20· · · · · · I mean, I think we're all on the same
21· ·detail, and certainly no expectation for a 21· ·page.
22· ·witness to testify about that, and I would add, 22· · · · · · THE WITNESS:· Yeah, yeah.
23· ·there is considerable detail in the 23· · · · · · MR. RENNER:· When you said you --
24· ·interrogatories already. 24· · · · · · THE WITNESS:· This references Blueprint
25· · · · · · MR. RENNER:· Yeah, the point of my 25· ·and Fyzical.· I can't speak to that.· I'm
145 147
·1· ·question is just to figure out what is the ·1· ·talking about Ocean State.
·2· ·universe of factual support for that defense? ·2· · · · · · So we had the SBA detailed explanation
·3· · · · · · MR. MOORMAN:· It's in the ·3· ·documents of the loan program with a whole bunch
·4· ·interrogatory, and if there's more documents ·4· ·of, you know, FAQs that specifically stated in
·5· ·before the close of fact discovery, if we have ·5· ·-- specifically stated affiliation requirements
·6· ·more information, we'll supplement the ·6· ·are waived for those that already have an SBIC
·7· ·interrogatory.· It's a civil obligation to our ·7· ·loan from, you know, an SBIC guaranteed lender.
·8· ·Rule 37. ·8· · · · · · So we relied on that.· We relied on our
·9· ·BY MR. RENNER: ·9· ·bank helping us.· We did rely on some legal
10· · · ·Q.· ·All right.· So Interrogatory 18 on 10· ·counsel and --
11· ·Page 25 asks Ocean State to state the basis for 11· · · · · · MR. MOORMAN:· Don't get into anything
12· ·its fifth affirmative defense that relators 12· ·with --
13· ·claims are barred in whole or in part, because 13· · · · · · THE WITNESS:· Yeah, I'm not going to --
14· ·defendants had a reasonable belief in the 14· · · · · · MR. MOORMAN:· -- counsel.· You can say
15· ·lawfulness of their conduct, and in your 15· ·you consulted with counsel.
16· ·response -- supplemental response on Page 26, 16· · · · · · THE WITNESS:· Yeah, and we consulted
17· ·among other things, it states that defendants 17· ·among the portfolio of New Harbor Capital,
18· ·diligently investigated the applicable laws and 18· ·because everybody was looking at this, we
19· ·regulations in order to ensure the lawfulness of 19· ·consulted with Deerpath, and they gave us a lot
20· ·their conduct. 20· ·of advice and counsel, because they were dealing
21· · · · · · So what specific laws and regulations 21· ·with a lot of their portfolio companies that
22· ·did Ocean State investigate? 22· ·were dealing with this, so I'm very confident
23· · · · · · MR. MOORMAN:· So I'm going to caution 23· ·that we were operating legally.
24· ·the witness not to disclose any communications 24· ·BY MR. RENNER:
25· ·that he or anyone else at Ocean State had with 25· · · ·Q.· ·Okay.· But my question was specifically
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·1· ·with respect to the applicable laws and ·1· ·endless huge bank account that New Harbor had
·2· ·regulations that Ocean State investigated, and ·2· ·that we could just tap into it, and I made it
·3· ·you mentioned the FAQs regarding affiliation? ·3· ·clear to him that that's not how this works.
·4· · · ·A.· ·Yeah. ·4· · · · · · You know, they're an owner in the
·5· · · ·Q.· ·Other than that, any other laws and ·5· ·business, and they choose to or choose not to
·6· ·regulations? ·6· ·invest additional equity.
·7· · · · · · MR. MOORMAN:· Again, don't answer this ·7· · · ·Q.· ·So that's what you meant by that's not
·8· ·question to the extent that the rules and ·8· ·how it works?
·9· ·regulations were investigated by counsel you ·9· · · ·A.· ·Yes.
10· ·retained to assist you in this process. 10· · · ·Q.· ·All right.
11· · · · · · I also object that this question was 11· · · ·A.· ·And then he turned off -- and then he
12· ·asked and answered. 12· ·turned off our garbage collection and our
13· · · · · · He provided a full response to this 13· ·utilities.
14· ·question. 14· · · ·Q.· ·For nonpayment?
15· · · · · · THE WITNESS:· Yeah, I told you what we 15· · · ·A.· ·Because that's what he could do.
16· ·did, so -- 16· · · ·Q.· ·Were there other conversations with Mr.
17· ·BY MR. RENNER: 17· ·Berkley?
18· · · ·Q.· ·All right.· So the testimony is 18· · · ·A.· ·I mean, I think there was more than
19· ·complete on the record then? 19· ·one, there was more than one e-mail, but those
20· · · ·A.· ·Yeah. 20· ·were the gists of the discussions.
21· · · ·Q.· ·Okay.· All right.· So now I want to 21· · · ·Q.· ·And at some point did you speak to his
22· ·talk about your dealings with the plaintiff, 22· ·wife, Heidi Berkley?
23· ·James Berkley, and I believe you also had 23· · · ·A.· ·I think the first discussion was with
24· ·interactions with his wife. 24· ·his wife.
25· · · · · · So this is in your personal capacity as 25· · · ·Q.· ·What was the nature of that discussion?
149 151
·1· ·opposed to your 30(b)(6) capacity. ·1· · · ·A.· ·It was letting them know that we were
·2· · · ·A.· ·Yeah. ·2· ·unable to pay rent, and she -- as I remember it,
·3· · · ·Q.· ·Can you describe for me the ·3· ·she was, you know, very upset about it, and said
·4· ·communications you had with Mr. Berkley, ·4· ·that, you know, this is -- you know, we're just
·5· ·whether, you know, via e-mail or orally? ·5· ·a small investor, this is how we pay our -- you
·6· · · ·A.· ·I think we might have talked on the ·6· ·know, this is how we pay for our lives, like,
·7· ·phone a few times, and I think we exchanged ·7· ·you're going to make us go bankrupt.
·8· ·e-mails a few times. ·8· · · ·Q.· ·I have marked for the record -- I don't
·9· · · · · · Never met in person. ·9· ·need to question you about it -- but I have
10· · · ·Q.· ·What were the nature of the telephone 10· ·marked for the record as Exhibit 19, Ocean
11· ·conversations? 11· ·State's responses and objections to the 30(b)(6)
12· · · ·A.· ·It was around our inability to pay our 12· ·notice.
13· ·rent, trying to negotiate, you know, rent 13· · · · · · MR. MOORMAN:· Understood.
14· ·abatement. 14· · · · · · · · · ·(Whereupon, a discussion was had
15· · · ·Q.· ·And do you recall the subject being 15· · · · · · · · · · off the record.)
16· ·raised by Mr. Berkley of New Harbor Capital 16· · · · · · MR. RENNER:· That's all I have.
17· ·contributing funds to pay the rent? 17· · · · · · MR. MOORMAN:· Okay.· Can I ask some
18· · · ·A.· ·Yes. 18· ·questions?
19· · · ·Q.· ·All right.· What can you tell me about 19· · · · · · It's okay if we go straight through?
20· ·those conversations? 20· · · · · · MR. RENNER:· Yes.
21· · · ·A.· ·Well, I tried to explain to him that 21· · · · · · MR. MOORMAN:· Okay.· Great.
22· ·that's -- I think my exact words were that's not 22· · · · · · · · · · EXAMINATION
23· ·how it works. 23· ·BY MR. MOORMAN:
24· · · · · · So, you know, he was under the 24· · · ·Q.· ·You can put that to one side, Mr.
25· ·impression that there was this sort of an 25· ·Roselli.
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·1· ·consult Ocean State's financial records, they ·1· · · · · · ·UNITED STATES DISTRICT COURT
·2· · · · · ·FOR THE DISTRICT OF RHODE ISLAND
·2· ·would show what they show, right, I mean,
·3· ·UNITED STATES OF AMERICA· ·)
·3· ·they'll show, you know, financial performance in ·4· ·ex rel. JAMES R.· · · · · ·)
·4· ·2020 versus 2019? ·5· ·BERKLEY,· · · · · · · · · ·)
·5· · · · · · MR. MOORMAN:· You don't have to endorse ·6· · · · · Plaintiffs,· · · · ·)
·7· · ·vs.· · · · · · · · · · · ) No. 1:20-cv-OO538
·6· ·a document you have not seen.
·8· ·OCEAN STATE, LLC, NEW· · · )
·7· · · · · · If you need to see a document to answer ·9· ·HARBOR CAPITAL FUND LP,· · )
·8· ·the question, you can say that. 10· ·NEW HARBOR CAPITAL FUND· · )
·9· · · · · · THE WITNESS:· Yeah, I guess, I would 11· ·II LP, NEW HARBOR· · · · · )
12· ·CAPITAL MANAGEMENT LP,· · ·)
10· ·need to see the document to actually --
13· ·BLUEPRINT TEST· · · · · · ·)
11· ·BY MR. RENNER:
14· ·PREPARATION, LLC,· · · · · )
12· · · ·Q.· ·I'm just saying in general. 15· ·FYZICAL ACQUISITION· · · · )
13· · · ·A.· ·You know, it's been a number of years 16· ·HOLDINGS, LLC,· · · · · · ·)
14· ·since all this transpired, so it's difficult for 17· · · · · Defendants.· · · · ·)
18· · · · · I, JOHN ROSELLI, being first duly sworn,
15· ·me to say 20 -- how we did in 2020 versus '19,
· · ·on oath say that I am the deponent in the
16· ·so I'd prefer having the document in front of me 19· ·aforesaid deposition taken on March 14, 2024;
17· ·to answer that question. · · ·that I have read the foregoing transcript of my
18· · · ·Q.· ·And fair enough.· I appreciate that. 20· ·deposition, and affix my signature to same.
21· · · · · ______________________________
19· · · · · · I'm not asking about a specific
· · · · · · · · · · · · · ·JOHN ROSELLI
20· ·document. 22
21· · · · · · I'm just saying generally speaking, · · ·Subscribed and sworn to
22· ·that Ocean State's financial records will bear 23· ·before me this· · · · ·day
· · ·of· · · · · · · · · · , 2024
23· ·out, you know, the financial performance of the
24
24· ·company? · · ·Notary Public
25· · · · · · MR. MOORMAN:· Are you asking if the 25
169 171
·1· ·financial records are accurate? ·1· ·STATE OF ILLINOIS· · ·)
·2· · · · · · THE WITNESS:· My -- ·2· · · · · · · · · · · · ·)· ·SS:
·3· · · · · · MR. RENNER:· Yeah, I mean, they show ·3· ·COUNTY OF C O O K· · ·)
·4· ·what they show, right? ·4· · · · · I, MARY KAY ANDRIOPOULOS, CSR, a notary
·5· · · · · · THE WITNESS:· Yeah, my understanding is ·5· ·public within and for the County of Cook County
·6· ·you have the financial documents, and they'll ·6· ·and State of Illinois, do hereby certify that
·7· ·show what they show. ·7· ·heretofore, to-wit, on March 14, 2024,
·8· · · · · · MR. RENNER:· That's all I'm asking. ·8· ·personally appeared before me, at 300 North
·9· · · · · · THE WITNESS:· Okay. ·9· ·LaSalle Street, Chicago, Illinois, JOHN ROSELLI,
10· · · · · · MR. MOORMAN:· All right.· Are you done? 10· ·in a cause now pending and undetermined in the
11· · · · · · MR. RENNER:· Done. 11· ·United States District Court, for the District
12· · · · · · MR. MOORMAN:· All done. 12· ·of Rhode Island, wherein UNITED STATES OF
13· · · · · · THE COURT REPORTER:· Signature? 13· ·AMERICA ex rel. JAMES R. BERKLEY are the
14· · · · · · MR. MOORMAN:· Yes, please. 14· ·Plaintiffs, and OCEAN STATE, LLC, NEW HARBOR
15· · · · · · ·(FURTHER DEPONENT SAITH NOT.) 15· ·CAPITAL FUND LP, NEW HARBOR CAPITAL FUND II LP,
16· · · · · (Proceedings concluded at 2:42 p.m.) 16· ·NEW HARBOR CAPITAL MANAGEMENT LP, BLUEPRINT TEST
17 17· ·PREPARATION, LLC, FYZICAL ACQUISITION HOLDINGS,
18 18· ·LLC are the Defendants.
19 19· · · · · I further certify that the said JOHN
20 20· ·ROSELLI was first duly sworn to testify the
21 21· ·truth, the whole truth and nothing but the truth
22 22· ·in the cause aforesaid; that the testimony then
23 23· ·given by said witness was reported
24 24· ·stenographically by me in the presence of the
25 25· ·said witness, and afterwards reduced to
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·1· ·typewriting by Computer-Aided Transcription, and
·2· ·the foregoing is a true and correct transcript
·3· ·of the testimony so given by said witness as
·4· ·aforesaid.
·5· · · · · I further certify that the signature to
·6· ·the foregoing deposition was reserved by counsel
·7· ·for the respective parties and that there were
·8· ·present at the deposition the attorneys
·9· ·hereinbefore mentioned.
10· · · · · I further certify that I am not counsel
11· ·for nor in any way related to the parties to
12· ·this suit, nor am I in any way interested in the
13· ·outcome thereof.
14· · · · · IN TESTIMONY WHEREOF:· I have hereunto
15· ·set my verified digital signature this 20th day
16· ·of March, 2024.
17
18
19
20· · · · · · · ·__________________________________
21· · · · · · · ·MARY KAY ANDRIOPOULOS, CSR
22· · · · · · · ·LICENSE NO. 084-002248
23
24
25
173
·1· · · · · · · ·McCorkle Court Reporters, Inc.
· · · · · · · ·200 N. LaSalle Street Suite 770
·2· · · · · · · ·Chicago, Illinois 60601-1014
·3
·4· ·DATE:· March 20, 2024
·5· ·KIRKLAND & ELLIS, LLP
· · ·MR. RYAN MOORMAN
·6· ·300 North LaSalle Street
· · ·Chicago, Illinois 60654
·7
· · ·IN RE:· USA and BERKLEY V. OCEAN STATE, et al.
·8· ·COURT NUMBER:· 1:20-cv-00538
· · ·DATE TAKEN:· MARCH 14, 2024
·9· ·DEPONENT:· JOHN ROSELLI
10· ·Mr. Moorman:
11· ·Enclosed is the deposition transcript for the
· · ·aforementioned deponent in the above-entitled
12· ·cause. Also enclosed are additional signature
· · ·pages, if applicable, and errata sheets.
13
· · ·Per your agreement to secure signature, please
14· ·submit the transcript to the deponent for review
· · ·and signature.· All changes or corrections must
15· ·be made on the errata sheets, not on the
· · ·transcript itself.· All errata sheets should be
16· ·signed and all signature pages need to be signed
· · ·and notarized.
17
· · ·After the deponent has completed the above,
18· ·please return all signature pages and errata
· · ·sheets to me at the above address, and I will
19· ·handle distribution to the respective parties.
20· ·If you have any questions, please call me at the
· · ·phone number below.
21
22· ·Sincerely,
23· ·Cynthia Alecia· · · · Court Reporter Present:
· · ·Signature Department· Mary Kay Andriopoulos, CSR
24
· · ·cc: All counsel of record
25
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