Master exhibit

EXHIBIT A
STATEMENT OF DECISION
Gaggero v. Knapp, Petersen & Clarke, et al
Los Angeles Superior Court
(Case No. BC286925)

EXHIBIT A-2
APPELLATE COURT DECISION
Gaggero v. Knapp, Petersen & Clarke, et al (2010), California
Court of Appeal, Second Appellate District, Division Eight,
(Appeal Case No. B207567)

EXHIBIT B
AMENDED JUDGMENT
Gaggero v. Knapp, Petersen & Clarke, et al
Los Angeles Superior Court
(Case No. BC286925)

RANDALL A. :MILLER (State BarNo.. 116036)
LORIS. BLITSTIEN (State BarNo. 149004)
.VTI<RAM SOHAL (State BarNo. 240251)
MILLERLLP
515 South Flower Street, Suite 2150
Los Angeles, California 90071
Telephone: 213 .493.6400
Facsimile: 888.749.5812
Attomeys for Defendants
KNAPP, PETERSEN & CLARKE,
STEPHEN RAY GARCIA, STEPHEN M.
HARRIS and ANDRE JARDINI
SUPERIOR COURT OF CALIFORNIA
COUNTY OF LOS ANGELES - UNLIMITED CIVIL JURlSDICTION
STEPHEN M. GAGGERO, an individual,
Plaintiff,
v.
KNAPP, PETERSEN & CLARKE,
STEPHEN RAY GARCIA, STEPHEN M.
HARRIS and ANDRE JARDIN!,
Defendants..
CASE NO. BC 286925
p!}lQP6~] AMENDED JUDGMENT IN
FAVOR OF DEFENDANTS
The California Court of Appeal having affirmed this Court's findings that Plaintiff
STEPHEN M. GAGGERO ("Plaintiff") failed to cru:ry his burden ofproofwithrespect to any of '
his c1a1ms, and a judgment having been entered in favor ofDefendants Kt'lAPP, PETERSEN &
CLARKE, STEPHEN RAY GARCIA, STEPHEN M. HARRIS and ANDRE JARDINI
(collectively, "Defendants") and against Plaintiff on each cause of action ofthe Second Amended
Complaint and awarding Defendants $1,202,994.50 in·attomeys' fees and $124,702.90 in costs,
.
[pROPOSED] ANIENDED JUDGMENT IN FAVOR OF DEFENDANTS

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MILLERLLP
LOS ANGELES
, <
" '
plus post-judgment interest at the legal rate, and this Court having now heard and ruled upon
Defendants' Motion for Attorneys' Fees and Costs on Appeal in favor ofDefendants and against
Plaintiff,
IT IS HEREBY ORDERED AND ADJUDGED THAT:
1. Plaintiff shall take notillng by way ofhis Second Amended Complaint and
judgment shall be entered as to all causes ofaction ofthe Second Amended Complaint in favor of
Defendants KNAPP, PETERSEN & CLARKE, STEVEN RAY GARCIA, STEPHEN HARRIS
and ANDRE JARDINI and against Plaintiff STEPHEN M. GAGGERO;
2. Defendants shall be awarded attorneys' fees in the sum of$1,395,718.40 (which
figure includes the award of$192,723.90 in attorneys' fees on appeal) and costs in the sum of ..
$125,224.90 (which figure includes the award of$522.00 in costs on appeal), plus post-judgment
interest at the legal rate; and
3. Defendants shall be awarded $320,591.78 in interest accrued on the previous
judgment as ofNovember 18, 2010 at the rate of$3.54.24 per day for 905 days.
Dated: ~"-=,·.~,-,2..,.,..t.-,.~~·~______
-2-
[PROPOSED] A"MENDED TIJDGMENT IN FAVOR OF DEFENDANTS

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MILLERLLP
Lt"lS ANGELE.~ •
PROOF OF SERVICE
I am a resident ofthe State ofCalifornia, over the age of eighteen years, and nota
party to the within action. My business address is MILLER LLP, 515 South Flower Street, Suite
2150, Los Angeles, California 90071. On December 13,201"0,"I served the within documents:
NOTICE OF LODGING OF [PROPOSEDl.AMENDED JUDGMENT
o by transmitting via facsimile the document(s) listed above to the fax number(s) set
forth below on this date before 5:00 p.m. "
~ by placing the document(s) listed above in a sealed envelope with postage
thereon fully prepaid, in the United States mail at Los Angeles, Californi~
addressed as set forth below.
o
D
o
by causing to be personally served to the person(s) at the addressees) set fo1'th
b e l o w . " "
By causing such document to be transmitted by electronic mail to the office ofthe
addressees".
by causing such document(s) to be sent overnight via Federal Express; I enclosed
such document(s) in an envelope/package provided by Federal Express addressed
to the person(s) at the address (es) set forth below and I placed the
envelope/package for collection at a drop box provided by Federal Express.
David Blake Chatfield
Westlake Law Group
Gary L. Bostwick, Esq.
Jean-Paul Jassy, Esq.
Bostwick & Jassy LLP2625 Townsgate Road, Suite 330
Westlake Village, CA 91361 12400 Wilshire Blvd., Suite400
Los Angeles, CA 90025
I am readily familiar with the firmls practice of collection and processing correspondence
for mailing. Under that practice it would be deposited with the U.S. Postal ServiCe on that same
day with postage thereon fully prepaid in the ordinary course ofbusiness. I am aware that on
motion ofthe party served, service is presumed invalid ifpostal cancellation date or postage
meter date is more than one day after date" ofdeposit for mailing in affidavit.
I declare under penalty ofp.erjury under the laws ofthe State of Califoniia that the above
is true and correct.
Executed 011 December 13,2010, at Los Angeles, California.
Susy Koshkak ' "
1
PROOF OF SERVICE

EXHIBIT C
TRANSCRIPT ON APPEAL
Gaggero v. Yura (2008)
California Court of Appeal, Second Appellate District, Division Five,
(Appeal Case No. B203780).
Gaggero Direct Examination
June 27, 2005 (90-126)

COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
NO. BC 239810
.,.JURTOFAPPEAL· SECUr
Wn[L,~1ID
MAY 20 2008
STEPHEN M. GAGGERO, )
)
)
PLAINTIFF-APPELLANT, )
)
VS. )
)
ANNA MARIE YURA, IN HER CAPACITY )
AS TRUSTEE OF THE FREDERICK )
EARL HARRIS II 1995 TRUST; AND )
DOES 1 THROUGH 15, )
)
DEFENDANTS-RESPONDENTS. )
- - - - - - - - - - - - - - - - - )
JOSEPH A. LANE CierI
Oepul:v ,..
APPEAL FROM THE SUPERIOR COURT OF LOS ANGELES COUNTY
HONORABLE MARY ANN MURPHY, JUDGE PRESIDING
REPORTER'S TRANSCRIPT ON APPEAL
JUNE 27, 2005 AND JUNE 28, 2005
APPEARANCES:
FOR PLAINTIFF-APPELLANT: BOSTWICK & JASSY LLP
BY: GARY L. BOSTWICK, ESQ.
12400 WILSHIRE BOULEVARD
SUITE 400
LOS ANGELES, CALIFORNIA 90025
(310) 979-6059
FOR DEFENDANT-RESPONDENT: MURPHY ROSEN & COHEN LLP
BY: DAVID E. ROSEN, ESQ.
SUITE 1300
SANTA MONICA, CALIFORNIA 90401
(310) 899-3300
VOLUME 2 OF ({p
PAGES 1 - 150-300
PAGES 301 - 431-600
On' ~ q! ALrL .. ~fi
PAULA B. RENTERIA, CSR #9374
OFFICIAL REPORTER

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1 AND AS I SAID WHEN I STARTED THIS OPENING
2 STATEMENT, HE THOUGHT HE'S GOING TO FLEX HIS MUSCLES, HE'S
3 GOING TO MAKE SOME THREATS, AND ANNA MARIE YURA WAS GOING TO
4 BOW DOWN TO HIS REQUESTS AND GIVE HIM WHAT HE WANTED.
5 WHAT HE DID WAS HE PLAYED A GAME OF CHICKEN, AND HE
6 LOST. PLAIN AND SIMPLE.
7 THE COURT: WHAT'S THE "RFR" IN THAT?
8 MR. ROSEN: RIGHT OF FIRST REFUSAL.
9 THE COURT: OKAY. ALL RIGHT. THANK YOU.
10 PLAINTIFF CAN CALL THEIR FIRST WITNESS.
11 MR. BEZEK: THANK YOU, YOUR HONOR. WE CALL
12 MR. GAGGERO.
13
14 STEPHEN MICHAEL GAGGERO,
15 THE PLAINTIFF, CALLED AS A WITNESS ON HIS OWN BEHALF, WAS
16 SWORN AND TESTIFIED AS FOLLOWS:
17 THE CLERK: PLEASE RAISE YOUR RIGHT HAND.
18 DO YOU SOLEMNLY STATE THAT THE TESTIMONY YOU ARE
19 ABOUT TO GIVE IN THE CAUSE NOW PENDING BEFORE THIS COURT
20 SHALL BE THE TRUTH, THE WHOLE TRUTH, AND NOTHING BUT THE
21 TRUTH, SO HELP YOU GOD?
MY NAME IS STEPHEN MICHAEL GAGGERO.
CAN YOU SPELL IT, PLEASE.
THE WITNESS:
THE CLERK:
THE WITNESS:
THE CLERK:
THE RECORD.
THE WITNESS:
THE CLERK:
27
28
26
25 PLEASE STATE AND SPELL YOUR FULL NAME FOR
22 I DO.
24 THANK YOU.
23 PLEASE BE SEATED.

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1 THE WITNESS: G-A-G-G-E-R-O. FIRST NAME IS SPELLED
2 S-T-E-P-H-E-N. MIDDLE NAME, M-I-C-H-A-E-L.
3 THE COURT: YOU MAY PROCEED.
4 MR. BEZEK: THANK YOU, YOUR HONOR.
5
6 DIRECT EXAMINATION
7 BY MR. BEZEK:
8 Q MR. GAGGERO, WOULD YOU TELL US WHERE YOU CURRENTLY
9 RESIDE, PLEASE.
10 A I RESIDE ON A RANCH IN VENTURA COUNTY ON CANADA
11 LARGA ROAD.
12 Q AND HOW LARGE IS THAT RANCH?
13 A IT'S 1,500 ACRES. AND IN MY TRUST WE HAVE -- IN
14 ANOTHER TRUST OF MINE, I HAVE AN ADJOINING 2,000 ACRES.
15 Q SO THE TOTAL IS ABOUT 3,500 ACRES?
16 A THAT'S CORRECT.
17 Q HOW LONG HAVE YOU LIVED THERE?
18 A IT BECAME MY PRIMARY RESIDENCE IN 1999.
19 Q ALL RIGHT. AND ARE THERE ANY ACTIVITIES OF ANY
20 KIND THAT ARE PERFORMED ON THAT RANCH, BUSINESS-TYPE
21 ACTIVITIES, ANY FARMING ACTIVITIES, ANY EQUESTRIAN
22 ACTIVITIES, ANYTHING LIKE THAT?
23 A WE HAVE AN EQUESTRIAN CENTER. WE RUN CATTLE. WE
24 GROW --
25 THE COURT: I DON'T KNOW WHO "WE" IS.
26 THE WITNESS: OH, PARDON ME. MYSELF AND COLLEEN
27 THE COURT: DON'T KNOW WHO "COLLEEN" IS EITHER.
28 THE WITNESS: MY SIGNIFICANT OTHER. AND WE -- SHE

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1 MANAGES THE EQUESTRIAN CENTER. I LEASE THE RANCH OUT TO A
2 CATTLE OPERATION. I LEASE THE GRAZING RIGHTS. I GROW OAT
3 HAY AND HARVEST IT, WALNUTS, AND I RAISE HORSES THERE, AND
4 VARIOUS OTHER THINGS.
5 Q BY MR. BEZEK: NOW, WHERE WERE YOU BORN?
6 A I WAS BORN IN ALTADENA, CALIFORNIA. PASADENA AREA.
7 Q AND HAVE YOU ESSENTIALLY LIVED IN CALIFORNIA ALL
8 YOUR LIFE?
9 A THAT'S CORRECT.
10 Q WHAT'S YOUR EDUCATIONAL BACKGROUND?
11 A I WENT TO HIGH SCHOOL AND COMPLETED THE --
12 THE COURT: WHO'S THE NEW PERSON SITTING AT COUNSEL
13 TABLE?
14 MR. BEZEK: OH, I'M SORRY, YOUR HONOR.
15 THE COURT: I DIDN'T GET AN INTRODUCTION.
16 MR. BEZEK: YOU DID NOT. MY FAULT. THIS IS COLLEEN
17 CONNORS, YOUR HONOR.
18 THE COURT: IS SHE A PARTY?
19 MR. BEZEK: SHE'S MY PARALEGAL.
20 THE COURT: OKAY. IS THIS THE SAME COLLEEN THAT THE
21 WITNESS JUST REFERRED TO, OR A DIFFERENT COLLEEN?
22 MR. BEZEK: A DIFFERENT COLLEEN.
23 THE COURT: ALL RIGHT.
24 MR. BEZEK: THE WITNESS REFERRED TO A COLLEEN O'BRIEN.
25 THIS IS COLLEEN CONNORS.
26 THE COURT: OKAY.
27 Q BY MR. BEZEK: MR. GAGGERO, YOU WERE TELLING US
28 ABOUT YOUR EDUCATIONAL BACKGROUND.

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1 A I WENT HALFWAY THROUGH THE 10TH GRADE. THAT'S IT
2 IN SCHOOL.
3 Q ALL RIGHT. NOW, AFTER LEAVING HIGH SCHOOL, DID YOU
4 EVENTUALLY GET INTO BUSINESS RELATED TO REAL ESTATE, LIKE
5 GENERAL CONTRACTING?
6 A YES.
7 Q CAN YOU GIVE US YOUR BUSINESS BACKGROUND, PLEASE.
8 A I BECAME A LICENSED GENERAL CONTRACTOR IN 1976.
9 PRIOR TO THAT, I WORKED MY WAY UP TO THAT BY BEING A
10 HANDYMAN AND A PAINTER AND A CARPENTER AND THEN ULTIMATELY
11 TOOK MY TEST AND BECAME A GENERAL CONTRACTOR, BUILT FOR
12 OTHERS UNTIL 1985, SOLD THE COMPANY.
13 AND UP TO 1985, I WAS BUILDING THINGS FOR MYSELF
14 WITH SURPLUS PROFITS. AND IN 1985, I STARTED BUILDING ONLY
15 FOR MYSELF AND DEVELOPING MY OWN PROJECTS AND STOPPED
16 BUILDING FOR THE GENERAL PUBLIC, ALTHOUGH FROM TIME TO TIME
17 I DID THE ODD FAVOR OR ODD JOB.
18 Q NOW, WHEN YOU STARTED BUILDING FOR YOURSELF, CAN
19 YOU GIVE THE COURT A KIND OF OVERVIEW OF THE TYPE OF
20 PROJECTS THAT YOU BEGAN TO SPECIALIZE IN, IF ANY, WHERE
21 THOSE PROJECTS MIGHT HAVE BEEN LOCATED, AND THE SIZE OF
22 THOSE PROJECTS?
23 A THEY VARIED IN REAL ESTATE TYPE BUT WERE
24 PREDOMINANTLY CUSTOM SINGLE-FAMILY HOMES, SOME IN THE
25 VALLEY, MOST OF THEM ON THE WEST SIDE. BUT BY AND LARGE
26 I SHOULD SAY SOME, IN THE EARLY STAGES, IN THE VALLEY,
27 BUT -- AND A FEW ON THE WEST SIDE, BUT ALMOST ALL OF THEM,
28 THE IMPORTANT ONES, WERE ALONG THE COAST FROM MALIBU ON

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1 DOWN.
2 AND I ALSO BOUGHT APARTMENT BUILDINGS AND REMODELED
3 THEM, BOUGHT SMALL SHOPPING CENTERS AND REMODELED THEM,
4 SMALL COMMERCIAL CENTERS AND REMODELED THEM, AND KEPT THEM
5 IN MY PORTFOLIO, OR SOMETIMES I WOULD SELL THEM AND THEN
6 ROLL THE MONEY INTO OTHER INVESTMENTS.
7 Q HOW LONG DID YOU DO THAT TYPE OF INVESTMENT
8 ACTIVITY FOR YOUR OWN ACCOUNT, BEFORE CREATING AN ESTATE
9 PLAN?
10 A I STARTED -- I THINK MY FIRST PURCHASE WAS IN 1976.
11 I THINK. AND I CONTINUED BUYING THINGS AND DEVELOPING THEM
12 FOR MY OWN PORTFOLIO UNTIL 1997, AT WHICH TIME I STARTED
13 DEVELOPING AN ESTATE PLAN. AND FROM 1997 ON THROUGH AND TO,
14 I THINK, 1999, MAYBE THE EARLY PART OF 1999, I STARTED
15 MOVING MY ASSET PORTFOLIO INTO AN ESTATE PLAN.
16 Q NOW, WHEN YOU WERE DOING THIS ESTATE PLANNING, DID
17 YOU DO THAT ON YOUR OWN, OR DID YOU HIRE A PROFESSIONAL TO
18 ASSIST YOU?
19 A INITIALLY, IN 1997, I USED SOME ATTORNEYS THAT I
20 HAD, JUST REGULAR GENERAL COUNSEL-TYPE ATTORNEYS. AND THEN
21 IN, I THINK, THE MIDDLE OR LATTER PART OF 1997 I WAS
22 INTRODUCED TO MR. PRASKE, AND I HIRED HIM TO BE THE
23 ARCHITECT OF THE ESTATE PLAN.
24 Q HOW IS IT THAT YOU CAME TO BE ACQUAINTED WITH OR
25 INTRODUCED TO MR. PRASKE?
26 A AN ATTORNEY NAMED LAURA SLOCUMB HAD AN OPPORTUNITY
27 TO WORK WITH HIM IN THE PAST, AND SHE INTRODUCED ME TO HIM.
28 Q AND WHAT PROMPTED YOUR DESIRE AT THAT POINT IN LIFE

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1 TO SEEK PROFESSIONAL ADVICE IN AN ATTEMPT TO CREATE AN
2 ESTATE PLAN?
3 A MY ESTATE WAS -- HAD GROWN RATHER LARGE, AND I HAD
4 JUST WEATHERED THE EARLY 1990'S AND MID-'90S, WHICH WAS A
5 PRETTY ROUGH TIME FOR ANYBODY IN REAL ESTATE. AND I DECIDED
6 THAT IT WOULD BE A PRUDENT IDEA TO GET A LAWYER TO LOOK AT
7 MY PORTFOLIO AND DEVELOP AN ESTATE PLAN SO THAT MY ESTATE
8 WOULD SURVIVE ME AND BE FOR THE BENEFIT OF MY CHILDREN AND
9 NOT BE SOMETHING THAT WAS EXPOSED.
10 Q NOW, AFTER YOU MET WITH MR. PRASKE, DID YOU MAKE A
11 DECISION ON WHETHER OR NOT TO PROCEED WITH AN ESTATE PLAN AT
12 THAT TIME?
13 A I HAD ACTUALLY MADE THE DECISION BEFORE THAT. I
14 THINK THE TRIGGERING EVENT WAS, I SOLD MY HOME IN MARCH OF
15 1997, AND I OWNED THE PROPERTY NEXT DOOR TO MY HOME, AS
16 WELL.
17 Q WHERE WAS THAT HOME LOCATED?
18 A IT WAS IN MALIBU ON ENCINAL BEACH.
19 Q WHAT WAS THE COMBINED SELLING PRICE OF BOTH
20 PARCELS?
21 A $14-1/2 MILLION.
22 Q AND ONCE THAT HOUSE WAS SOLD, ALONG WITH OTHER
23 ASSETS IN YOUR ESTATE, IS THAT WHEN YOU MADE THE DECISION TO
24 ESTABLISH
25 THE COURT: THERE'S NO TESTIMONY -- YOU'RE SORT OF
26 TESTIFYING AT THIS POINT. YOU SAID "ONCE THE HOUSE WAS
27 SOLD, ALONG WITH OTHER ASSETS." I DON'T KNOW THAT HE
28 TESTIFIED TO THAT. SO LET'S LET HIM PUT THE EVIDENCE IN,

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1 SINCE HE'S THE ONE THAT'S UNDER OATH.
2 Q BY MR. BEZEK: WHEN YOU SOLD THE HOUSE ON MALIBU
3 IN MALIBU, DID YOU HAVE OTHER ASSETS IN YOUR PERSONAL
4 PORTFOLIO AT THAT TIME?
5 A YES.
6 Q CAN YOU GIVE US A LIST, AS BEST YOU CAN RECALL, OF
7 THE ASSETS THAT YOU HAD AT THAT TIME, IN ADDITION TO THE
8 MALIBU HOUSE WHICH YOU HAD JUST SOLD?
9 A I OWNED A PARKING LOT IN VENICE BEACH, ON THE
10 BEACH. I OWNED A SMALL SHOPPING CENTER ON THE BEACH IN
11 VENICE BEACH. I OWNED AN APARTMENT BUILDING ON THE BEACH IN
12 VENICE BEACH. I OWNED A MIXED-USE RETAIL AND RESIDENTIAL
13 BUILDING ON THE BEACH IN VENICE BEACH. I OWNED A HOUSE ON
14 BROAD BEACH, IN MALIBU.
15 I OWNED -- WELL, AT THAT TIME -- ARE WE TALKING
16 ABOUT THAT SPECIFIC TIME, BECAUSE I HAD BEEN PUTTING SOME OF
17 THESE ASSETS INTO LIMITED LIABILITY COMPANIES AND LIMITED
18 PARTNERSHIPS, AS I INDICATED, STARTING IN THE EARLY PART OF
19 1997, SO --
20 THE COURT: LET'S GET A SPECIFIC QUESTION WITH A
21 SPECIFIC TIME FRAME SO WE'RE CLEAR ON WHAT YOU'RE ASKING
22 HIM.
23 Q BY MR. BEZEK: IN ADDITION TO THE PERSONAL ASSETS
24 THAT YOU JUST IDENTIFIED FOR US IN YOUR PERSONAL PORTFOLIO,
25 DID YOU ALSO HAVE ASSETS THAT WERE IN OTHER LIMITED
26 LIABILITY COMPANIES OR PARTNERSHIPS PRIOR TO THE TIME THAT
27 YOU ESTABLISHED YOUR ESTATE PLANNING TRUST?
28 A YES, I DID.

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1 Q OKAY. CAN YOU TELL US NOW -- FIRST OF ALL, HAVE
2 YOU GIVEN US, AS BEST YOU CAN RECALL, WHAT THE PERSONAL
3 ASSETS WERE, SUCH AS BROAD BEACH AND THE MALIBU PROPERTIES
4 AND THE OTHER THINGS YOU IDENTIFIED? HAVE YOU PRETTY MUCH
5 IDENTIFIED, AS BEST YOU CAN RECALL, THAT POPULATION OF
6 ASSETS?
7 A WELL, I HAD 2,000 ACRES --
8 THE COURT: IS THAT A "YES" OR "NO"?
9 THE WITNESS: NO.
10 THE COURT: OKAY.
11 Q BY MR. BEZEK: OKAY. WOULD YOU COMPLETE THAT LIST,
12 PLEASE.
13 THE COURT: OKAY.
14 THE WITNESS: I HAD 2,000 ACRES IN OJAI AND VENTURA.
15 AND IN A CORPORATION THAT I WAS THE SOLE SHAREHOLDER OF, I
16 HAD OTHER ASSETS.
17 Q BY MR. BEZEK: ALL RIGHT. NOW, AT THE TIME THAT
18 YOU MET WITH MR. PRASKE, DID THERE COME A TIME WHEN YOU
19 RETAINED HIM TO PREPARE FOR YOU AN ESTATE PLAN?
20 A YES.
21 Q APPROXIMATELY WHEN WAS THAT?
22 A IT WAS LATE 1997 AND EARLY 1998, I BELIEVE, WHEN
23 MR. PRASKE STARTED IMPLEMENTING THE ESTATE PLAN. IT'S NOT,
24 YOU KNOW, ONE THING THAT YOU JUST PULL A TRIGGER AND IT'S
25 DONE. IT TAKES A LONG TIME TO PUT IT ALL TOGETHER.
26 Q AT THE TIME THAT MR. PRASKE BEGAN TO DESIGN YOUR
27 ESTATE PLAN, WHAT WAS THE APPROXIMATE GROSS VALUE OF THE
28 ASSETS THAT WERE BEING PUT INTO THE ESTATE?

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1 MR. ROSEN: OBJECTION. LACK OF FOUNDATION.
2 THE COURT: SUSTAINED. AND I DON'T KNOW WHO OWNS THEM.
3 HE'S TALKING ABOUT THINGS HIS CORPORATION OWNS. I'M JUST
4 NOT CLEAR. THE WAY THIS TESTIMONY IS GOING IN, IT'S NOT
5 VERY PRECISE. SO LET'S -- SUSTAINED.
6 Q BY MR. BEZEK: LET'S FOCUS ON THE PERSONAL ASSETS
7 THAT YOU IDENTIFIED FOR US THAT WERE IN EXISTENCE AT THE
8 TIME YOU STARTED TALKING WITH MR. PRASKE.
9 ARE YOU FOCUSING WITH ME ON THAT?
10 A YES.
11 THE COURT: ARE YOU TALKING ABOUT ASSETS THAT HE OWNS AS
12 AN INDIVIDUAL? WHY DON'T YOU ASK IT THAT WAY.
13 MR. BEZEK: OKAY.
14 Q THESE ASSETS THAT YOU IDENTIFIED EARLIER, WERE
15 THESE ASSETS THAT YOU OWNED IN YOUR INDIVIDUAL NAME?
16 THE COURT: I HAVE NO IDEA WHAT ASSETS HE'S REFERRING
17 TO, BECAUSE SOME OF THEM HE WAS TALKING ABOUT A CORPORATION.
18 SO WE'RE NOT BEING PRECISE HERE.
19 AND I STILL DON'T KNOW WHAT -- YOU'RE TRYING TO GET
20 HIM TO SAY HE OWNED, AT WHAT PERIOD OF TIME, AS AN
21 INDIVIDUAL, AS OPPOSED TO HIS PARENTS, SOME TRUST.
22 YOU KNOW, THAT'S WHAT WE'RE GOING FOR HERE, I
23 THINK.
24 MR. BEZEK: ALL RIGHT.
25 Q FIRST OF ALL, LET'S IDENTIFY WITH PRECISION, IF WE
26 CAN, THOSE ASSETS THAT YOU OWNED IN YOUR OWN NAME AT THE
27 TIME THAT YOU WERE MEETING WITH MR. PRASKE.
28 A THE PROBLEM I'M HAVING IS I DON'T REMEMBER WHICH OF

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1 THE VENICE BEACH PROPERTIES I HAD TRANSFERRED INTO A LIMITED
2 LIABILITY COMPANY JUST BEFORE I MET MR. PRASKE.
3 Q LET ME ASK THE QUESTION THIS WAY. WHETHER IT WAS
4 OWNED IN YOUR OWN NAME OR WHETHER IT WAS OWNED IN THE NAME
5 OF A PARTNERSHIP OR A CORPORATION LET'S START, FIRST OF
6 ALL, WITH ASSETS IN THE NAME OF A CORPORATION. WERE ANY OF
7 THOSE CORPORATIONS OWNED IN WHOLE OR IN PART BY SOMEBODY
8 OTHER THAN YOU THAT HELD TITLE TO THOSE ASSETS?
9 A NO.
10 Q WITH REGARDS TO THE LIMITED LIABILITY COMPANIES,
11 WERE THERE SOME ASSETS THAT WERE IN LIMITED LIABILITY
12 COMPANIES AT THAT TIME?
13 A YES.
14 Q WERE YOU THE MANAGING MEMBER OF THOSE LIMITED
15 LIABILITY COMPANIES?
16 A YES.
17 Q AND DID YOU OWN THE STOCK IN THOSE --
18 A WAIT. I'M NOT SURE I WAS THE MANAGING MEMBER. I'M
19 NOT SURE.
20 Q OKAY. DID YOU OWN THE STOCK IN THOSE LIMITED
21 LIABILITY COMPANIES?
22 THE COURT: YOU MEAN 100 PERCENT OF THE STOCK, OR ANY,
23 1 PERCENT, OR WHAT -- HOW MUCH STOCK ARE WE TALKING ABOUT
24 HERE?
25 MR. BEZEK: I WANTED TO FIND OUT FIRST, YOUR HONOR, IF
26 HE OWNED, AND THEN WE'D TALK ABOUT HOW MUCH. IS THAT OKAY?
27 THE COURT: YOU'RE ASKING THE QUESTIONS.
28 MR. BEZEK: OKAY.

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1 Q DID YOU OWN THE STOCK IN THE LIMITED LIABILITY
2 COMPANIES, ANY STOCK?
3 A I OWNED ALL THE MEMBERSHIP INTERESTS.
4 Q OKAY. IN EACH OF THE LIMITED LIABILITY COMPANIES
5 THAT HELD A REAL ESTATE ASSET?
6 A THAT'S CORRECT.
7 Q IS THERE ANY OTHER CATEGORY OF OWNERSHIP VEHICLE,
8 CORPORATION, LIMITED LIABILITY COMPANY, PARTNERSHIP, THAT WE
9 HAVEN'T COVERED YET THAT HELD YOUR ASSETS AT THAT TIME?
10 A NO. THERE WERE NO TRUSTS AT THAT TIME. AND EVERY
11 ASSET, UP TO THE TIME I MET JOE PRASKE, WAS OWNED
12 100 PERCENT BY ME, EITHER BY VIRTUE OF THE MEMBERSHIP
13 INTEREST, THE SHARES, OR THE DIRECT TITLE TO THE PROPERTY.
14 Q NOW, FOCUSING JUST ON THAT GROUPING OF ASSETS, WHAT
15 WAS THE APPROXIMATE VALUE OF THOSE ASSETS?
16 MR. ROSEN: OBJECTION. LACK OF FOUNDATION, CALLS FOR
17 EXPERT TESTIMONY.
18 THE COURT: HE CAN TESTIFY AS TO THE VALUE OF HIS OWN
19 PROPERTY, RIGHT, IF HE OWNS IT? ISN'T THAT IN THE EVIDENCE
20 CODE?
21 MR. ROSEN: FOR EXAMPLE, I MEAN, IN REAL ESTATE, ARE WE
22 JUST GOING TO GET -- NECESSARILY IT'S GOING TO CALL FOR HIS
23 OPINION ON WHAT HE'S
24 THE COURT: LET'S LOOK AT THE EVIDENCE CODE SECTION AND
25 SEE WHAT IT SAYS. ANYBODY KNOW THE NUMBER WE'RE TALKING
26 ABOUT?
27 MR. BEZEK: I DON'T KNOW THE EVIDENCE CODE, YOUR HONOR,
28 BUT I THINK THE COURT'S RIGHT, THAT --

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1 THE COURT: WELL, LET'S LOOK AT IT AND SEE WHAT IT SAYS,
2 BECAUSE IT MIGHT APPLY TO PROPERTY HE HOLDS IN HIS OWN NAME
3 AND IT MIGHT NOT APPLY TO THE CORPORATE PROPERTY OR THE LLC
4 PROPERTY. LET'S GET THAT EVIDENCE CODE SECTION.
5 I ASSUME YOU'RE RELYING ON THAT TO GET AROUND THIS
6 OBJECTION?
7 MR. BEZEK: YES, YOUR HONOR.
8 THE COURT: ANY OTHER RESPONSE TO THAT OBJECTION?
9 MR. BEZEK: THE CASE LAW ESTABLISHES THAT AN INDIVIDUAL
10 HAS THE RIGHT AND IS COMPETENT TO TESTIFY TO THE VALUE OF
11 PROPERTY THAT THAT INDIVIDUAL OWNS.
12 THE COURT: OKAY. WHAT ABOUT THE PROPERTY IN THE
13 CORPORATIONS AND THE PARTNERSHIPS? THAT'S THE OTHER ISSUE.
14 MR. BEZEK: AS LONG AS THE TESTIFYING WITNESS HAS
15 ESTABLISHED THAT HE IS, IN THIS CASE, THE SOLE OWNER,
16 ALTHOUGH I DON'T THINK --
17 THE COURT: GOT A CASE THAT SAYS THAT? YOU DON'T KNOW
18 WHAT THE EVIDENCE CODE SECTION IS. DO YOU HAVE A CASE THAT
19 SAYS THAT?
20 MR. BEZEK: I DO NOT, YOUR HONOR.
21 THE COURT: OKAY. LET'S FIND THE EVIDENCE CODE SECTION.
22 MR. ROSEN: LOOKS LIKE IT'S IN THE 820 --
23 THE COURT: I THINK EVERYBODY SHOULD BRING THEIR
24 EVIDENCE CODE WITH THEM FOR THIS TRIAL, BECAUSE I AM GOING
25 TO BE ASKING YOU WHAT EVIDENCE CODE SECTIONS YOU'RE RELYING
26 ON. I THINK WE'RE GOING TO GET INTO SOME EVIDENTIARY
27 ISSUES, AS I READ THIS TRIAL BRIEF.
28 WHAT SECTION, COUNSEL?

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1 MR. ROSEN: IT'S IN THE REALM OF 814 TO 824, ARE THE
2 ONES DEALING WITH EVIDENCE OF --
3 THE COURT: YOU MADE THE OBJECTION. LET'S SEE IF WE CAN
4 FIND THIS.
5 MR. ROSEN: RIGHT.
6 THE COURT: THE VALUE -- OKAY. 813.
7 MR. ROSEN: I'M LOOKING AT 813, EXACTLY, YEAH.
8 THE COURT: (READING) :
9 THE OWNER OR THE SPOUSE OF THE OWNER.
10 AN OFFICER, REGULAR EMPLOYEE, OR PARTNER
11 DESIGNATED BY A CORPORATION, PARTNERSHIP,
12 OR UNINCORPORATED ASSOCIATION THAT IS
13 THE OWNER OF THE PROPERTY IF THE DESIGNEE
14 IS KNOWLEDGEABLE.
15 SUSTAINED ON FOUNDATION AS TO EVERYTHING EXCEPT
16 WHAT HE OWNS PERSONALLY. YOU'RE GOING TO HAVE TO LAY THAT
17 FOUNDATION.
18 PLEASE BRING YOUR EVIDENCE CODE TO THIS TRIAL.
19 MR. BEZEK: YES, YOUR HONOR, I WILL DO THAT.
20 Q MR. GAGGERO, AS TO THE PROPERTY IN THE LIMITED
21 LIABILITY COMPANIES AND THE CORPORATIONS I WANT TO FOCUS
22 JUST ON THAT --
23 THE COURT: THE ONES THAT HE'S SAYING HE OWNS, THE LLCS
24 OR THE CORPORATIONS?
25 MR. BEZEK: THE ONES THAT HE SAYS HE OWNS, THAT'S RIGHT.
26 THE COURT: RIGHT, OKAY.
27 Q BY MR. BEZEK: HOW DO YOU KNOW WHAT PROPERTY WAS
28 OWNED BY THOSE ENTITIES AT THAT TIME? THE TIME BEING WHEN

103
1 YOU WERE MEETING WITH MR. PRASKE TO SET UP THE ESTATE PLAN.
2 A BECAUSE I TRANSFERRED THEM FROM MY NAME INTO THE
3 LLCS THAT -- WELL, FIRST WITH THE LLC PROPERTIES I THINK
4 IT'S TWO PROPERTIES IN VENICE -- I TRANSFERRED THEM INTO
5 THESE ENTITIES AND MY ATTORNEY SET UP THE ENTITY.
6 Q AND WHEN YOU MADE THOSE TRANSFERS INTO THE
7 ENTITIES, DO YOU RECALL APPROXIMATELY WHEN THAT TRANSFER OR
8 THOSE TRANSFERS OCCURRED?
9 A YES.
10 Q WHEN WAS THAT?
11 A IN EARLY 1997.
12 Q AT THE TIME THAT YOU TRANSFERRED THEM --
13 A EARLY-TO-MID 1997.
14 Q AT THE TIME THAT YOU WERE ABOUT TO TRANSFER THEM,
15 BUT BEFORE YOU ACTUALLY TRANSFERRED THEM, YOU WERE STILL THE
16 OWNER AT THAT TIME, WERE YOU NOT?
17 A YES, I WAS.
18 Q AT THAT TIME, WHAT WAS THE VALUE OF THOSE
19 PROPERTIES?
20 THE COURT: YOU HAVEN'T ESTABLISHED THE OTHER PART OF
21 THAT, 813(A) (3), KNOWLEDGEABLE AS TO THE VALUE OF THE
22 PROPERTY. AND WE NEED A VALUATION DATE. IS THE VALUATION
23 DATE THE DATE OF THE TRANSFER THAT YOU'RE ASKING HIM WHAT
24 THE VALUE WAS?
25 MR. BEZEK: ALL RIGHT.
26 THE COURT: I'M JUST ASKING YOU. IF IT'S NOT THE DATE
27 OF VALUE, IF IT'S AFTER THE CORPORATION OWNED IT, THEN
28 WHAT'S HIS BASIS FOR KNOWING WHAT THE PROPERTIES ARE WORTH?

104
1 THAT'S WHAT THE FOUNDATION REQUIRES UNDER THE
2 EVIDENCE CODE. SO I DON'T KNOW WHAT DATE YOU'RE GOING FOR
3 HERE.
4 MR. BEZEK: WELL, HE DOESN'T HAVE A PRECISE DATE OF
5 TRANSFER BECAUSE HE DOESN'T RECALL. HE REMEMBERS IT WAS IN
6 LATE '97.
7 THE COURT: THE QUESTION IS -- WHAT ARE YOU ASKING HIM?
8 ARE YOU ASKING HIM FOR THE VALUATION AS OF THE DATE OF
9 TRANSFER?
10 MR. BEZEK: I'M ASKING HIM JUST BEFORE HE TRANSFERRED.
11 Q THE QUESTION WAS, BEFORE YOU TRANSFERRED IT, THE
12 DAY BEFORE YOU TRANSFERRED IT -- LET'S PUT A DATE THAT WAY.
13 THE DAY BEFORE YOU ACTUALLY TRANSFERRED IT, WHILE IT WAS
14 STILL IN YOUR NAME, WHAT WAS THE VALUE OF THAT PROPERTY AT
15 THAT TIME?
16 A I BELIEVE THE TWO PROPERTIES THAT ARE AT ISSUE HERE
17 ARE 523 OCEAN FRONT WALK AND 601 OCEAN FRONT WALK. THOSE
18 ARE THE ADDRESSES. THAT WOULD BE THE PARKING LOT AND THE
19 MIXED-USE RETAIL AND RESIDENTIAL PROPERTY. AND MY OPINION
20 OF VALUE IN 1997 OF THOSE PROPERTIES IS BETWEEN 6 AND $7
21 MILLION OF THOSE TWO PROPERTIES.
22 Q NOW, WITH REGARDS TO THE BALANCE OF YOUR PERSONAL
23 PORTFOLIO THAT WAS IN YOUR PERSONAL NAME BEFORE IT WAS
24 TRANSFERRED TO ANY OTHER ENTITY, DO YOU HAVE AN OPINION OF
25 THE COMBINED VALUE OF THOSE ASSETS?
26 A BETWEEN 35 AND $40 MILLION.
27 Q WHEN YOU MET WITH MR. PRASKE, DID THOSE COMBINED
28 VALUED PROPERTIES THEN BECOME PART OF THE ESTATE PLAN FOR

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1 WHICH YOU USED MR. PRASKE'S HELP TO SET UP?
2
3
A
Q
YES.
NOW, WHEN YOU GAVE US THIS VALUE A MOMENT AGO OF 35
4 TO $40 MILLION AS TO THOSE ASSETS, WAS THAT GROSS VALUE OR
5 WAS THAT NET WORTH, THAT IS, EQUITY?
6
7
8
9
MR. ROSEN:
THE COURT:
MR. ROSEN:
THE COURT:
MR. ROSEN:
THE COURT:
OBJECTION. VAGUE AND AMBIGUOUS.
HOW IS THAT AMBIGUOUS?
GROSS VALUE OR NET WORTH. GROSS OF --
SUSTAINED. GROSS.
12 THANK YOU.
13 WHY DON'T YOU REPHRASE.
14 Q BY MR. BEZEK: WHEN YOU GAVE US THAT NUMBER, THAT
15 VALUE, 35 TO $40 MILLION, WAS THAT THE GROSS FAIR MARKET
16 VALUE OF THOSE PROPERTIES?
17 A YES, THAT'S AN APPROXIMATE GROSS FAIR MARKET VALUE
18 OF THOSE PROPERTIES.
19
20
21
Q
A
Q
DID SOME OF THOSE PROPERTIES HAVE DEBT AGAINST IT?
YES.
CAN YOU TELL US WHAT THE APPROXIMATE EQUITY WAS IN
22 THOSE PROPERTIES AT THE TIME THEY WERE TRANSFERRED INTO THE
23 ESTATE PLAN THAT ULTIMATELY WAS DESIGNED AND IMPLEMENTED
24 THROUGH MR. PRASKE?
25 THE COURT: ARE YOU TALKING ABOUT THE PROPERTIES HE SAID
26 WERE WORTH 35 TO 40 MILLION?
27
28
MR. BEZEK: YES.
THE COURT: WHAT WAS HIS PERSONAL EQUITY IN THOSE

OKAY. BETWEEN 15 -- BETWEEN 15 AND $20
WAS
OH, OKAY.
IN THOSE PROPERTIES THE DAY BEFORE YOU
1
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PROPERTIES BEFORE HE TRANSFERRED THEM?
MR. BEZEK: CORRECT.
THE COURT: THAT'S YOUR QUESTION. OKAY.
MR. BEZEK: CORRECT.
THE WITNESS: AND THE 35 TO 40 IS NOT INCLUDING THE TWO
THAT WERE IN THE LIMITED LIABILITY COMPANIES OR THE LIMITED
PARTNERSHIPS, WHATEVER THEY WERE; IS THAT CORRECT?
Q BY MR. BEZEK: RIGHT. WE'RE GOING TO COVER THOSE
IN JUST A MINUTE.
A OKAY. BETWEEN 15 AND $20 MILLION WAS THE -- OH,
I'M SORRY. THE DEBT. YOU WANTED TO KNOW THE DEBT.
THE COURT: NO. HE ASKED FOR WHAT YOUR PERSONAL EQUITY
THE WITNESS:
THE COURT:
TRANSFERRED THEM.
THE WITNESS:
MILLION.
Q BY MR. BEZEK: ALL RIGHT. NOW, I WANT TO FOCUS ON
THE TWO PROPERTIES THAT WERE INVOLVED WITH THE LIMITED
LIABILITY COMPANIES THAT WE TALKED ABOUT A MOMENT AGO.
THE COURT: THE TWO PROPERTIES IN
THE WITNESS: WAIT. I HAVE TO GO BACK ON THAT BECAUSE
I'M A LITTLE CONFUSED HERE. I'M SORRY. THIS IS ALL -- THE
DAY BEFORE I TRANSFERRED THEM?
MR. BEZEK: YES.
THE COURT: INTO THE TRUST THAT THIS ATTORNEY SET UP,
WHAT WAS YOUR PERSONAL EQUITY IN THOSE PROPERTIES, THE

107
1 PROPERTIES THAT YOU'RE SAYING YOU PERSONALLY OWNED AS
2 OPPOSED TO WHAT WAS IN A TRUST OR A CORPORATE OWNERSHIP?
3 THE WITNESS: THE PROBLEM IS, THE PORTFOLIO PROPERTIES
4 TOOK OVER A YEAR TO GET TRANSFERRED.
5 THE COURT: WE JUST NEED A NUMBER.
6 THE WITNESS: OKAY.
7 THE COURT: ROUGHLY.
8 THE WITNESS: 25 TO $30 MILLION WAS THE NET EQUITY IN
9 THE PROPERTIES THAT ULTIMATELY GOT TRANSFERRED INTO THE
10 ESTATE PLANNING, NOT INCLUDING THE TWO THAT WE TALKED ABOUT
11 IN VENICE BEACH.
12 THE COURT: THAT'S NOT WHAT HE ASKED YOU. HE WANTED TO
13 KNOW WHAT YOUR PERSONAL EQUITY WAS IN THOSE PROPERTIES
14 BEFORE YOU TRANSFERRED THEM, THE ONES THAT YOU SAY YOU OWNED
15 PERSONALLY.
16 THE WITNESS: OKAY. CAN I WRITE THEM DOWN SO I CAN
17 TRACK THIS? IS THAT ALL RIGHT?
18 THE COURT: ABSOLUTELY.
19 DO YOU WANT TO GIVE HIM A PENCIL AND PAPER?
20 THE WITNESS: I HAVE ONE. I JUST WANT TO -- BECAUSE I'M
21 HAVING A HARD TIME GETTING ALL THIS TOGETHER.
22 THE COURT: WE'RE LOSING SOME TIME BECAUSE THE QUESTIONS
23 AREN'T SUPER PRECISE, SO YOU MIGHT WANT TO FOCUS IN A LITTLE
24 ON WHAT YOU'RE ASKING HIM.
25 THE WITNESS: OKAY. I THINK I GOT EVERYTHING I NEED.
26 Q BY MR. BEZEK: ALL RIGHT. AFTER HAVING DONE YOUR
27 ANALYSIS NOW, CAN YOU ANSWER THE FOLLOWING QUESTION: WHAT
28 WAS YOUR PERSONAL NET WORTH IN THE PROPERTIES THAT YOU

108
1 PERSONALLY OWNED THE DAY BEFORE THEY WERE TRANSFERRED TO THE
2 TRUST?
3 LET ME BACK UP, BECAUSE I THINK I UNDERSTAND WHAT
4 YOUR CONFUSION IS.
5 THE COURT: I THOUGHT THE QUESTION WAS, WHAT WAS HIS
6 PERSONAL EQUITY IN THE PROPERTIES.
7 MR. BEZEK: I THINK THERE'S ANOTHER CONFUSION, ANOTHER
8 CONCERN.
9 Q HOW LONG DID IT TAKE FOR THESE PROPERTIES
10 ULTIMATELY TO BE TRANSFERRED INTO THE FINALIZED ESTATE PLAN?
11 A OVER A YEAR.
12 Q OKAY. IS IT POSSIBLE FOR YOU TO FOCUS ON EACH
13 INDIVIDUAL PROPERTY THAT YOU OWNED PERSONALLY AND FOCUS ON
14 THE DATE WHEN THE TRANSFER OCCURRED AND THEN CALCULATE THE
15 VALUE OF EACH ASSET THE DAY BEFORE THAT TRANSFER OCCURRED
16 OVER THAT YEAR PERIOD OF TIME? CAN YOU DO THAT?
17 A I CAN, BUT I'M GOING TO BORE THE HECK OUT OF
18 EVERYBODY HERE WHILE I CALCULATE THAT.
19 THE COURT: WELL, WE'VE JUST WAITED FOR FIVE MINUTES FOR
20 HIM TO DO SOMETHING WITH A PENCIL AND PAPER. SO WHY DON'T
21 YOU JUST ASK HIM THE QUESTION THAT YOU HAD ON THE FLOOR WHEN
22 WE TOOK THE FIVE MINUTES SO HE COULD DO HIS CALCULATIONS.
23 WHAT WAS YOUR PERSONAL EQUITY IN THE PROPERTIES YOU
24 OWNED YOURSELF AS OPPOSED TO THE CORPORATION OR THE LLC
25 BEFORE YOU TRANSFERRED THEM? ROUGHLY.
26 THE WITNESS: AND I CAN USE THE PERIOD -- THAT YEAR
27 PERIOD, WHAT THEY WERE WORTH DURING THAT YEAR?
28 THE COURT: JUST BEFORE THEY WERE TRANSFERRED, ROUGHLY.

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1 THE WITNESS: ROUGHLY, MY -- THERE WAS $11 MILLION IN
2 NET VALUE OF THE ASSETS THAT I HELD PERSONALLY
3 THE COURT: THAT DOESN'T ANSWER THE QUESTION. WE'RE
4 TRYING TO FIND OUT WHAT WAS YOUR PERSONAL EQUITY IN THOSE
5 PROPERTIES BEFORE YOU TRANSFERRED THEM, THE ONES THAT YOU
6 SAID YOU OWNED PERSONALLY. WHAT WAS YOUR EQUITY?
7 THE WITNESS: 11 MILLION.
8 THE COURT: OKAY.
9 Q BY MR. BEZEK: NOW LET'S FOCUS ON THE OTHER TWO
10 ASSETS THAT YOU IDENTIFIED BEFORE THAT WERE NOT PERSONALLY
11 OWNED BY YOU. WHAT ASSETS WERE THOSE?
12 THE COURT: WE'VE GOT THEM, 523 AND 621 OCEAN FRONT,
13 VENICE.
14 IS THAT WHAT YOU SAID?
15 THE WITNESS: 601, YES.
16 THE COURT: OKAY, 601.
17 THE WITNESS: I DIDN'T BREAK THOSE TWO OUT SEPARATELY.
18 WHAT I DID WAS TOOK THE LIBERTY OF INCLUDING THE ONES THAT
19 WERE IN THE CORPORATION AND A LIMITED LIABILITY COMPANY AND
20 ANOTHER LIMITED PARTNERSHIP.
21 THE COURT: IN THE 11 MILLION?
22 THE WITNESS: NO, NO. I THINK WHAT YOU'RE TRYING TO
23 DETERMINE IS HOW MUCH WAS IN THE ENTITIES AND HOW MUCH WAS
24 IN MY PERSONAL NAME.
25 SO INSTEAD OF FOCUSING ONLY ON THE TWO IN VENICE,
26 WE TALKED ABOUT THE CORPORATIONS, AND I WENT AHEAD AND TOOK
27 EVERYTHING I CAN THINK OF, AND I TOOK THE ENTITIES AND DID
28 THE GROSS AND NET ON ALL THE PROPERTIES IN THE VARIOUS

110
1 ENTITIES.
2 THE COURT: WELL, HE GETS TO ASK THE QUESTIONS. IT'S
3 LIKE DANCING. HE LEADS AND YOU FOLLOW. SO HE ASKS THE
4 QUESTION; YOU HAVE TO ANSWER IT.
6 Q BY MR. BEZEK: FOR EACH OF THESE LIMITED LIABILITY
7 COMPANIES THAT HELD TITLE TO THOSE PROPERTIES, WERE YOU
8 THE -- DID YOU MANAGE OR PROVIDE MANAGEMENT SERVICES FOR
9 THOSE ENTITIES?
10 A YES.
11 Q WHAT DID THOSE MANAGEMENT SERVICES INCLUDE IN
12 RELATION TO MANAGING THE ASSET?
13 A ALL OF THE TASKS THAT GO ALONG WITH PROPERTY
14 MANAGEMENT AS WELL AS ALL OF THE ASPECTS OF THE ASSET
15 MANAGEMENT, SUCH AS REFINANCING, DEALING WITH TAX ISSUES,
16 INSURANCE ISSUES, MAKING DECISIONS TO BUY, SELL, BUY OR SELL
17 THE ASSET, TO IMPROVE THE ASSET, OVERSEEING ANY IMPROVEMENTq
18 TO THE ASSET, FINANCING, DESIGNING SOME ULTIMATE DISPOSITION
19 OF THE ASSET.
20 Q WHILE YOU MANAGED THOSE ASSETS FOR THE LIMITED
21 LIABILITY COMPANIES, DID YOU MAINTAIN KNOWLEDGE OF THE VALUE
22 OF THOSE ASSETS?
23 A YES.
24 Q OKAY. NOW, WITH REGARDS TO THOSE LIMITED LIABILITY
25 COMPANY ASSETS, CAN YOU TELL US WHAT THE VALUE OF THOSE
26 ASSETS -- OF THE ASSETS THAT WERE TRANSFERRED IN THERE WERE
27 WHEN THEY WERE TRANSFERRED TO THE TRUST?
28 THE COURT: YOU'RE TALKING ABOUT THE LLC COMPANIES HE

111
1 SAID HE OWNED, CORRECT?
2
3
MR. BEZEK: YES, YOUR HONOR.
THE COURT: THOSE ARE THE TWO COMPANIES IN VENICE,
4 RIGHT -- TWO PROPERTIES IN VENICE?
5 THE WITNESS: YES. IF YOU WANT TO TALK ABOUT JUST THE
6 VENICE PROPERTIES, I'LL ADD THAT UP REAL QUICK, AND THAT
7 WILL BE
8 THE COURT: WE'RE JUST TALKING ABOUT THE LLCS THAT YOU
9 OWNED, THE TWO VENICE PROPERTIES. WAS THERE ANYTHING ELSE?
10
11
12
13
14
15
16
THE WITNESS:
AREA.
THE COURT:
OWNED.
THE WITNESS:
THE COURT:
THE WITNESS:
THERE WAS ANOTHER PROPERTY IN THE VENTURA
MY ERROR. JUST ALL THE PROPERTIES YOU
THE LLCS?
YEAH.
OKAY. THE NET EQUITY IN THE PROPERTIES,
17 IN THE THREE LLC'S, WAS APPROXIMATELY $11-1/2 MILLION.
18 Q BY MR. BEZEK: NOW, THAT'S IN ADDITION TO THE
19 $11 MILLION THAT WE TALKED ABOUT EARLIER FOR YOUR PERSONAL
20 ASSETS?
21
22
A
Q
THAT'S CORRECT.
NOW, IN ANY OF THAT ANALYSIS THAT YOU'VE JUST GIVEN
23 US, DID ANY OF THAT INVOLVE THE VALUE OF THE 2,000-ACRE AND
24 l,500-ACRE RANCH UP IN OJAI, VENTURA?
25 A YES, IT INCLUDED THE 2,000 ACRE ONE BECAUSE THAT
26 WAS AN LLC. IT DID NOT INCLUDE THE ONE THAT WAS IN THE
27 CORPORATION, AND IT DID NOT INCLUDE THE PARTNERSHIP THAT WAS
28 IN MONTECITO.

112
1 Q OKAY. I WANT TO FOCUS ON THOSE TWO CORPORATE
2 TRANSFERS OR ASSETS. ARE YOU WITH ME?
3 A YES.
4 Q OKAY.
5 THE COURT: YOU JUST REFERRED TO A PARTNERSHIP IN
6 MONTECITO AS A CORPORATE ASSET. I'M NOW CONFUSED.
7 MR. BEZEK: NO. IT WAS MY MISTAKE, YOUR HONOR, IN THE
8 QUESTION.
9 THE COURT: OKAY.
10 Q BY MR. BEZEK: LET'S FOCUS, FIRST OF ALL, ON THE
11 1,500-ACRE PARCEL THAT WAS NOT INCLUDED IN THE VALUATION SO
12 FAR.
13 A OKAY.
14 Q WAS THAT IN A -- WHAT KIND OF ENTITY HELD THAT
15 PROPERTY?
16 A A CORPORATION.
17 Q WERE YOU THE MANAGER FOR THAT CORPORATION? DID YOU
18 PROVIDE MANAGEMENT SERVICES FOR THAT CORPORATION?
19 A YES.
20 Q WERE THOSE MANAGEMENT SERVICES SIMILAR TO THE ONES
21 YOU JUST DESCRIBED TO US FOR THE OTHER PROPERTIES?
22 A YES.
23 Q IN THAT CAPACITY, WAS IT YOUR OBLIGATION AND YOUR
24 DUTY TO MAINTAIN KNOWLEDGE OF THE VALUE OF THAT ASSET?
25 A YES.
26 Q WHAT WAS THE VALUE OF THAT ASSET --
27 THE COURT: WERE YOU THE SOLE SHAREHOLDER IN THE
28 CORPORATION?

113
1 THE WITNESS: YES.
2 THE COURT: I'M SORRY.
3 Q BY MR. BEZEK: WHAT WAS THE VALUE OF THAT ASSET
4 WHEN IT WAS TRANSFERRED INTO THE TRUST, THE NET VALUE? I'M
5 TALKING ABOUT AFTER DEBT.
6 A 5.3 MILLION.
7 Q NOW, YOU ALSO MENTIONED AN ASSET IN MONTECITO THAT
8 WAS OWNED BY A PARTNERSHIP?
9 A YES.
10 Q AND WERE YOU THE MANAGER -- DID YOU PROVIDE
11 MANAGEMENT SERVICES FOR THAT PARTNERSHIP SIMILAR TO WHAT
12 YOU'VE ALREADY IDENTIFIED FOR US?
13 A YES.
14 Q MONTECITO IS LOCATED IN SANTA BARBARA?
15 A YES.
16 Q WHAT TYPE OF AN ASSET WAS THAT?
17 A IT WAS AN ESTATE.
18 Q DO YOU RECALL HOW LARGE THE REAL ESTATE PARCEL WAS
19 ON WHICH THIS ESTATE WAS LOCATED?
20 A I THINK IT WAS 11 ACRES.
21 Q OKAY.
22 THE COURT: WAS THE 11 ACRES IN MONTECITO A
23 SINGLE-FAMILY RESIDENCE?
24 THE WITNESS: YES, MA'AM -- YES, YOUR HONOR.
25 THE COURT: AND DID YOU HAVE A PARTNERSHIP INTEREST IN
26 THE PARTNERSHIP AND, IF SO, COULD YOU DESCRIBE IT BRIEFLY?
27 THE WITNESS: I HAD A PARTNERSHIP WITH A BANK, AND THEY
28 HAD 15 PERCENT -- THEY WERE ENTITLED TO THEIR REGULAR

114
1 INTEREST AND THEN 15 PERCENT OF THE NET EQUITY WHEN WE SOLD
2 IT.
3 THE COURT: A PARTNERSHIP AS OPPOSED TO A MORTGAGE?
4 THE WITNESS: IT WAS A PARTICIPATING MORTGAGE.
5 THE COURT: OKAY.
6 Q BY MR. BEZEK: WHAT WAS THE NET EQUITY IN THE
7 MONTECITO PROPERTY AT THE TIME IT WAS TRANSFERRED INTO THE
8 ESTATE PLAN?
9 MR. ROSEN: OBJECTION. VAGUE. IS HE TALKING ABOUT
10 MR. GAGGERO'S NET EQUITY OR THE TOTAL?
11 THE COURT: SUSTAINED.
12 Q BY MR. BEZEK: WHAT WAS THE NET EQUITY OF THE
13 PARTNERSHIP IN THAT ENTITY AT THE TIME IT WAS TRANSFERRED
14 INTO THE ESTATE PLANNING?
15 A I CAN'T ANSWER IT LIKE THAT, BECAUSE IT DIDN'T
16 ACTUALLY GET TRANSFERRED INTO THE ESTATE PLAN. IT -- I'M
17 NOT SURE IF IT GOT -- I'M NOT SURE IF IT GOT TRANSFERRED
18 INTO THE ESTATE PLAN OR NOT, ACTUALLY. I JUST DON'T KNOW IF
19 IT DID. IT WAS SOLD, AND I DON'T KNOW IF IT -- IF ONE OF
20 THE OWNERSHIP ENTITIES WAS PART OF THE ESTATE PLAN WHEN IT
21 WAS SOLD OR NOT. I DON'T RECALL.
22 Q ALL RIGHT. BETWEEN THE PROPERTIES THAT WE HAVE
23 IDENTIFIED SO FAR, IF MY MATH IS CORRECT, WE'RE AT ABOUT 26,
24 $27 MILLION IN NET EQUITY, TWO 11'S AND A 5?
25 A THAT'S CORRECT.
26 Q NOW, WHEN THESE ASSETS FUNDED THE ESTATE PLANNING
27 THAT HAD BEEN CREATED BY MR. PRASKE, DID MR. PRASKE PERFORM
28 ANY OTHER SERVICES OTHER THAN BEING THE LEGAL REPRESENTATIVE

115
1 THAT DESIGNED THE ESTATE PLAN FOR YOU? DID HE CONTINUE ON
2 IN ANY CAPACITY?
3 A YES.
4 Q WHAT CAPACITY?
5 A HE MANAGED THE ESTATE PLAN AFTER HE -- AS I
6 INDICATED, IT TOOK ABOUT A YEAR OR MORE TO GET IT INTO
7 PLACE, AND THEN HE MANAGED IT AND MAINTAINED IT AFTER THAT.
8 AND HE WAS THE TRUSTEE OF THE TWO TRUSTS. I THINK ONE MIGHT
9 BE A FOUNDATION AND ONE IS A TRUST.
10 Q NOW, ONCE THE ESTATE PLAN WAS ESTABLISHED AND
11 MR. PRASKE BEGAN TO PROVIDE SERVICES, AS YOU'VE JUST
12 IDENTIFIED, DID YOU CONTINUE TO PROVIDE SERVICES TO THE
13 TRUST IN TERMS OF LOCATING PROPERTY, FOR EXAMPLE, THAT THE
14 TRUSTS, OR ONE OF THEM, MIGHT WANT TO BUY?
15 A YES. I WAS THE ASSET MANAGER AND, IN THAT
16 CAPACITY, I MADE THE DETERMINATIONS AS TO THE HIGHEST AND
17 BEST USE OF ALL THE ASSETS, THE DISPOSITION OF THE ASSETS,
18 OR WHETHER WE SHOULD RETAIN THEM. AND I LOOKED TO BUILD THE
19 PORTFOLIO BY LOOKING FOR OPPORTUNITIES TO EITHER HOLD AND
20 GRANT, HOLD AND KEEP IN THE FAMILY, OR DEVELOP FOR RESALE.
21 Q AND DID YOU PERFORM THOSE SERVICES FOR THE ESTATE
22 FROM THE TIME THAT THE ESTATE WAS COMPLETE IN ITS FORMATION
23 TO THE PRESENT DATE?
24 A YES.
25 Q NOW, IN JULY, AUGUST OF 1998, DID YOU HAVE ANY
26 CONVERSATIONS WITH MR. PRASKE ABOUT THE 938 PROPERTY THAT
27 YOU HAD LOCATED?
28 A YES.

116
1 Q AND I'M NOT TRYING TO LOCK YOU IN ON THE DATE,
2 BECAUSE I'M NOT SURE WHEN YOU HAD THE FIRST CONVERSATIONS,
3 BUT DO YOU HAVE A RECOLLECTION OF WHEN YOU FIRST BROUGHT TO
4 MR. PRASKE'S ATTENTION THE FACT THAT YOU HAD FOUND 938 AS A
5 POTENTIAL INVESTMENT FOR THE ESTATE?
6 A IT WOULD HAVE BEEN BETWEEN THE END OF MAY AND
7 PROBABLY THE END OF JUNE OF 1998 THAT I HAD DISCUSSIONS WITH
8 MR. PRASKE ABOUT MR. HARRIS' PORTFOLIO PROPERTIES, THE 938.
9 THE COURT: WE'RE GOING TO TAKE OUR 15-MINUTE AFTERNOON
10 BREAK. WE'LL SEE YOU AT 3:15.
12
13 (RECESS TAKEN.)
14
16 Q BY MR. BEZEK: NOW, MR. GAGGERO, WHEN WE BROKE, WE
17 WERE JUST ABOUT TO DISCUSS -- OR WERE IN THE PROCESS OF
18 DISCUSSING WHEN YOU BROUGHT TO MR. PRASKE'S ATTENTION THE
19 FACT THAT YOU HAD LOCATED THE 938 PROPERTY FOR SALE.
20 DO YOU REMEMBER THAT'S KIND OF WHERE WE WERE?
21 A YES.
22 Q DO YOU HAVE A RECOLLECTION, APPROXIMATELY, AS TO
23 WHEN YOU FIRST BROUGHT THIS INVESTMENT OPPORTUNITY
24 THE COURT: HE'S ALREADY ANSWERED THAT.
25 MR. BEZEK: HE DID? ALL RIGHT. THEN I'LL MOVE ON.
26 Q DID YOU MEET WITH MR. PRASKE AND DISCUSS THIS
27 OPPORTUNITY WITH HIM?
28 A MR. PRASKE AND I WERE WORKING TOGETHER ON AN ALMOST

117
1 DAILY BASIS, SO HE WAS PRETTY FAMILIAR WITH EVERYTHING I WAS
2 DOING.
3 THE COURT: YOU KNOW WHAT. YOU'RE GOING TO HAVE TO
4 LISTEN TO WHAT HE ASKS YOU AND ANSWER ONLY THAT QUESTION.
5 THE WITNESS: ALL RIGHT.
6 THE COURT: IT'S GOING TO TAKE -- YOU'RE GOING TO BE UP
7 HERE LONGER IF YOU DON'T DO THAT. LISTEN TO WHAT HE ASKS
8 AND ANSWER THAT QUESTION.
9 WOULD THE REPORTER READ IT BACK.
10 I'M GOING TO ILLUSTRATE WHAT HE ASKED YOU.
11 (THE QUESTION WAS READ BY THE REPORTER AS
12 FOLLOWS:
13 "Q DID YOU MEET WITH MR. PRASKE
14 AND DISCUSS THIS OPPORTUNITY WITH HIM?")
15 THE WITNESS: YES.
16 Q BY MR. BEZEK: WHAT DID YOU TELL MR. PRASKE ABOUT
17 THIS OPPORTUNITY?
18 MR. ROSEN: OBJECTION. HEARSAY.
19 THE COURT: WHAT'S THE EXCEPTION TO THE HEARSAY RULE?
20 MR. BEZEK: WHAT HE SAID, YOUR HONOR, IS NOT NECESSARILY
21 HEARSAY. ALSO, IT'S NOT BEING OFFERED FOR THE TRUTH OF THE
22 MATTER ASSERTED. ACTUALLY, IT'S BEING
23 THE COURT: WELL, A, WHAT'S THE EXCEPTION AND, B, WHAT'S
24 THE NONHEARSAY PURPOSE?
25 MR. BEZEK: RES GESTAE.
26 THE COURT: IT'S A STATEMENT OF A PARTY, SO IT'S
27 HEARSAY. SO WHAT'S THE HEARSAY EXCEPTION AND WHAT'S THE
28 NONHEARSAY PURPOSE?

118
1 MR. BEZEK: ONE IS, IT'S NOT HEARSAY BECAUSE IT'S NOT
2 BEING OFFERED FOR THE TRUTH OF THE MATTER ASSERTED. RATHER,
3 IT IS BEING OFFERED AS RES GESTAE. THAT IS THE PURPOSE FOR
4 WHY A TRANSACTION WAS BEING DONE AND THE BASIS UPON WHICH
5 ACTIONS WERE TAKEN AFTER THE CONVERSATION.
6 MR. ROSEN: THAT RES GESTAE EXCEPTION THAT HE JUST
7 MENTIONED --
8 THE COURT: HE'S SAYING IT'S A NONHEARSAY PURPOSE, NOT
9 AN EXCEPTION.
10 MR. ROSEN: WELL, THAT ONLY APPLIES WHEN THE TESTIMONY
11 ITSELF IS EVIDENCE OF THE FACT OR THING THAT WAS DONE OR NOT
12 DONE. AND I DON'T THINK THERE'S -- I DON'T KNOW WHAT THE
13 FACT OR THING THAT WAS DONE OR NOT DONE IS THAT WE'RE
14 TALKING ABOUT.
15 THE COURT: COUNSEL?
16 MR. BEZEK: THE WITNESS HAS A RIGHT TO PRESENT
17 NONHEARSAY EVIDENCE TO ESTABLISH THE BASIS UPON WHICH
18 ACTIONS WERE TAKEN AND TO SHOW THE STATE OF MIND OF THE
19 PARTIES TO EXPLAIN ACTIONS THAT WERE TAKEN OR TO EXPLAIN A
20 PROCESS OR A PROCEDURE, WHICH IS EXACTLY WHY THIS IS BEING
21 OFFERED.
22 THE COURT: ALL RIGHT. JUST GIVE ME A MOMENT.
23 SUSTAINED.
24 Q BY MR. BEZEK: DID YOU HAVE A MEETING WITH
25 MR. PRASKE CONCERNING THE FACT THAT YOU HAD FOUND 938?
26 A YES.
27 Q AND AFTER MEETING WITH MR. PRASKE, DID YOU TAKE ANY
28 ACTION, ANY FURTHER ACTION, WITH REGARDS TO GOING FORWARD

119
1 WITH THE PURCHASE OF 938?
2
3
A
Q
YES.
WHERE WERE THE FUNDS GOING TO COME FROM TO PURCHASE
4 938?
5 A THAT WOULD DEPEND ON WHEN THE ESCROW CLOSING DATE
6 WAS ESTABLISHED.
7 Q LET ME ASK THE QUESTION THIS WAY. I'M NOT FOCUSING
8 YET ON HOW TITLE WOULD BE TAKEN. I'M ONLY ASKING FROM WHAT
9 GENERAL SOURCE WOULD THE FUNDS COME FROM TO PURCHASE 938.
10 A THERE WAS NO ESCROW CLOSING DATE, BY DESIGN, OF
11 MR. HARRIS IN THE PURCHASE AGREEMENT. MR. HARRIS WANTED TO
12 CONTROL WHEN THE CLOSE OF ESCROW WOULD OCCUR.
13 SO I COULDN'T TELL YOU THEN, AS I COULDN'T TELL YOU
-
14 NOW, WHETHER WE WOULD EXCHANGE INTO THE PROPERTY·BECAUSE WE
15 HAPPENED TO BE SELLING ONE OF THE ASSETS IN THE TRUST,
16 WHETHER WE WOULD TAKE CASH OUT OF THE TRUST AND PURCHASE IT,
17 WHETHER WE WOULD TAKE SOME CASH AND TAKE A REAL ESTATE
18 MORTGAGE, OR WHETHER I WOULD ASK MY PARENTS TO EITHER, FROM
19 THEIR TRUST OR THEM INDIVIDUALLY, TO FUND A PORTION OR ALL
20 OF IT.
21 IT WOULD DEPEND ON THE LIQUIDITY OF THE TRUST AT
22 THE TIME MR. HARRIS MADE A DECISION AS TO WHEN HE WANTED TO
23 CLOSE ESCROW.
24 WE WERE CONTINUING TO DO BUSINESS, AND THE TRUST
25 WOULD SOMETIMES HAVE MILLIONS OF DOLLARS LIQUID AND
26 SOMETIMES IT WOULD NOT HAVE MILLIONS AND ONLY HUNDREDS OF
27 THOUSANDS LIQUID.
28 WE ALWAYS HAD THE ABILITY TO BORROW AGAINST THE

120
1 ASSETS OF THE TRUST.
2 THE COURT: I DON'T KNOW WHO "WE" IS.
3 THE WITNESS: MR. PRASKE AND MYSELF ALWAYS HAD THE
4 ABILITY TO BORROW MONEY AGAINST THE ASSETS IN THE TRUST OR
5 PULL CASH DIRECTLY OUT OF THE TRUST. BUT WE COULDN'T MAKE A
6 DETERMINATION AS TO PRECISELY WHAT -- WHETHER WE WOULD TAKE
7 THE MONEY FROM A BANK ACCOUNT OR WHETHER WE WOULD BORROW IT
8 AS A MORTGAGE OR WHETHER WE WOULD LEVERAGE AN ASSET TO
9 PURCHASE IT UNTIL MR. HARRIS MADE A DECISION WHEN HE WANTED
10 TO CLOSE ESCROW.
11 WE SIMPLY COULDN'T DO OUR ACQUISITION PLANNING
12 UNTIL THAT DATE CERTAIN WAS DETERMINED, IDENTIFIED, AND TOLD
13 TO US. THEN I COULD TELL YOU EXACTLY, AFTER MEETING WITH
14 TAX COUNSEL, MR. PRASKE, AND MY ACCOUNTANTS, I COULD TELL
15 YOU EXACTLY WHERE THE MOST PRUDENT PLACE TO PULL THAT
16 PURCHASE MONEY FROM WOULD BE.
17 Q BY MR. BEZEK: IN EVERY ONE OF THE EXAMPLES YOU
18 GAVE, EXCEPT FOR YOUR PARENTS, WAS THE SOURCE OF THE
19 RESOURCE FROM WHICH THE FUNDS WOULD BE GENERATED THE ESTATE
20 PLAN OR THE ESTATE?
21 A YES.
22 Q ALL RIGHT. IN TERMS OF HOW TITLE WOULD BE TAKEN,
23 WERE YOU ABLE TO DETERMINE HOW TITLE WOULD BE TAKEN BEFORE
24 THERE WAS A CLOSING DATE FOR 938?
25 A NO.
26 Q CAN YOU EXPLAIN WHY?
27 A BECAUSE MR. HARRIS WANTED TO DO, UNDER IRS 1031,
28 WHAT'S CALLED A DIRECT EXCHANGE. WE WANTED THE OPPORTUNITY

121
1 TO DO, UNDER IRS 1031, WHAT IS REFERRED TO AS A DELAYED
2 EXCHANGE. MR. HARRIS DIDN'T WANT TO CLOSE ESCROW UNTIL HE
3 IDENTIFIED AND PUT UNDER CONTRACT A REPLACEMENT PROPERTY.
4 AT THAT TIME, HE WOULD DEFINE AN ESCROW PERIOD AND HE WOULD
5 GIVE US 30 DAYS TO CLOSE.
6 IF, WHEN HE GAVE US NOTICE THAT HE HAD FOUND A
7 REPLACEMENT PROPERTY AND GAVE US 30 DAYS' NOTICE TO CLOSE
8 ESCROW, IF AT THAT TIME THERE WAS AN ASSET IN THE ESTATE
9 PLANNING FACILITY OR IN ANY OF THESE TRUSTS, IF THERE WAS AN
10 ASSET THAT WAS EITHER UNDER CONTRACT, IN ESCROW, OR HAD SOLD
11 WITHIN A 45-DAY IDENTIFICATION PERIOD, WE WOULD HAVE TAKEN
12 THAT OPPORTUNITY TO USE THAT ASSET, AND THE PARTNERSHIP,
13 LIMITED LIABILITY COMPANY, CORPORATION, OR WHATEVER ENTITY
14 OWNED THAT ASSET THAT WAS UNDER CONTRACT OR IN ESCROW OR HAD
15 JUST RECENTLY SOLD, WE WOULD TAKE THAT ENTITY AND IDENTIFY
16 THAT ENTITY, AND WE WOULD ASSIGN THE PURCHASE AGREEMENT TO
17 THAT ENTITY SO THAT IT COULD MAKE A 1031 EXCHANGE IF THAT
18 WAS DETERMINED TO BE THE PRUDENT THING TO DO AT THE TIME.
19 IF, HOWEVER, WHEN MR. HARRIS IDENTIFIED A PIECE OF
20 PROPERTY AND GAVE US AN INSTRUCTION TO CLOSE WE DID NOT HAVE
21 A SALE PENDING OR A SALE THAT HAD RECENTLY COMPLETED, WE
22 COULD LOAN THE MONEY -- AND "WE," AGAIN, WAS THE TRUST,
23 MR. PRASKE AND MYSELF -- WE WOULD CAUSE THE MONEY TO BE
24 LOANED TO STEPHANIE BOREN, MY STEPSISTER, AND SHE WOULD
25 FUNCTION AS AN ACCOMMODATOR. AND BECAUSE SHE'S NOT BLOOD OR
26 HALF BLOOD, SHE'S LEGALLY ENTITLED TO BE AN ACCOMMODATOR
27 UNDER THE IRS RULE 1031.
28 THEN STEPHANIE BOREN WOULD PURCHASE THE PROPERTY

122
1 AND EFFECTIVELY WHAT'S CALLED WAREHOUSE THE PROPERTY, OR BE
2 A FORWARD ACCOMMODATOR.
3 SHE WOULD THEN OWN -- SHE WOULD CLOSE ESCROW ON THE
4 PROPERTY IN THAT 30-DAY PERIOD. AND THEN, WHEN THE TRUST
5 WHEN ONE OF THE ENTITIES WITHIN THE TRUST SOLD A PROPERTY IN
6 THE FUTURE, THEY COULD THEN EXCHANGE INTO -- THEY COULD
7 PURCHASE THE PROPERTY FROM STEPHANIE AND COMPLETE AN
8 EXCHANGE INTO IT.
9 THE COURT: WHAT'S THE TIME LIMIT ON THAT?
10 THE WITNESS: IT'S 45 DAYS WHEN WE ENTERED INTO THE
11 PURCHASE AGREEMENT. THE IRS HAD NOT COMPLETED THEIR -- THEY
12 HAD NOT ESTABLISHED THEIR REVERSE EXCHANGE PROVISION. IT
13 HAPPENED A YEAR LATER. AND SO THERE WAS NO TIME LIMIT WHEN
14 WE ENTERED INTO THE PURCHASE AGREEMENT.
15 THE COURT: WHEN DID THEY ESTABLISH THE 45-DAY TIME
16 PERIOD FOR ACCOMMODATION?
17 THE WITNESS: AH, THAT TIME PERIOD DID EXIST. THAT IS
18 FOR A DELAYED EXCHANGE. BUT FOR WAREHOUSING, THERE HAD NOT
19 BEEN -- A REVERSE EXCHANGE HAD NOT BEEN IDENTIFIED. AND THE
20 LEGISLATION HAD NOT BEEN DRAFTED YET.
21 THE COURT: WHEN DID IT GO INTO EFFECT?
22 THE WITNESS: I THINK IT WAS 1999. IT MIGHT HAVE BEEN
23 2000. SO IF YOU DID A REVERSE EXCHANGE BEFORE THE IRS
24 CREATED THE GUIDELINES FOR A REVERSE EXCHANGE, YOU JUST HAD
25 TO MAKE SURE THAT THE WAY YOUR FORWARD ACCOMMODATOR
26 PURCHASED THE PROPERTY WAS AS ARM'S-LENGTH AND AS CLEAN AS
27 POSSIBLE. FOR EXAMPLE
28 THE COURT: I WOULD LIKE TO KNOW THE DATE THAT THAT

123
1 REGULATION WENT INTO EFFECT, AND I WANT TO SEE THE REG AS
2 WELL, THE IRS REG. IS IT 1039 OF THE INTERNAL REVENUE CODE?
3 I NEED TO SEE THAT.
4 THE WITNESS: I HAVE A BOOK OVER THERE, IF YOU WOULD
5 LIKE.
6 THE COURT: OKAY.
7 MR. BEZEK: DO YOU HAVE IT HERE?
8 THE WITNESS: YES.
9 THE COURT: JUST MAKE A COPY FOR ME AND A COPY FOR
10 COUNSEL TOMORROW MORNING. I WOULD LIKE TO KNOW WHAT THE
11 CODE IS AND WHEN THAT WENT INTO EFFECT, THE 45-DAY RULE ON
12 THE -- OKAY.
13 THE WITNESS: THE 45-DAY RULE DID EXIST FOR A DELAYED
14 EXCHANGE.
15 THE COURT: I HEARD, YEAH, I HEARD WHAT YOU SAID. BUT
16 YOU'RE SAYING IT DIDN'T EXIST UNTIL SOMETIME IN 2000 FOR THE
17 WAREHOUSING SCENARIO.
18 THE WITNESS: YEAH, FOR THE REVERSE EXCHANGE.
19 THE COURT: THAT'S RIGHT. I WANT TO KNOW WHEN THAT RULE
20 WENT INTO EFFECT.
21 THE WITNESS: '99 OR 2000.
22 THE COURT: I WANT TO SEE THE REGS. I WANT TO SEE IT IN
23 WRITING, THE REVERSE EXCHANGE. OKAY.
24 Q BY MR. BEZEK: ALL RIGHT. NOW, DID MR. PRASKE
25 COMMIT THE FUNDS FROM THE ESTATE TO PURCHASE 938?
26 A YES.

124
1 Q BY MR. BEZEK: HOW DO YOU KNOW -- STRIKE THAT.
2 DID YOU HAVE A MEETING --
3 THE COURT: HE JUST FINISHED SAYING THAT HE WOULDN'T
4 KNOW WHERE THE MONEY CAME FROM UNTIL MR. HARRIS MADE THE
5 DECISION, WHICH HE APPARENTLY NEVER MADE, SO THUS THE
6 OBJECTION. DO YOU GET -- DO YOU UNDERSTAND THAT?
7 HOW CAN THE -- HE'S JUST FINISHED TELLING US THAT
8 HE WOULDN'T KNOW WHERE THE MONEY CAME FROM UNTIL HARRIS MADE
9 THE DECISION, AND NOW YOU'RE SAYING DID THE TRUST COMMIT THE
10 MONEY.
11 SO I'M NOT QUITE SURE -- I THINK THAT'S WHY WE HAVE
12 THE OBJECTION.
13 MR. BEZEK: WELL, I THOUGHT WHERE WE WERE, YOUR HONOR,
14 WAS THAT --
15 THE COURT: WHY DON'T YOU ASK THE QUESTION TO CURE THE
16 OBJECTION.
17 IS THAT WHAT YOUR OBJECTION WAS?
18 MR. ROSEN: THAT WAS MY OBJECTION, EXACTLY.
19 THE COURT: OKAY. THAT'S WHAT I THOUGHT.
20 Q BY MR. BEZEK: REGARDLESS OF THE ACTUAL DATE, UNDER
21 ALL SCENARIOS, EXCEPT FOR YOUR PARENTS, WOULD THE FUNDS COME
22 FROM THE ESTATE?
23 THE COURT: HE'S ALREADY TESTIFIED TO THAT.
24 MR. BEZEK: OKAY.
25 Q AND DID MR. PRASKE COMMIT TO YOU THAT, REGARDLESS
26 OF WHEN THERE WAS A CLOSING, THE FUNDS WOULD COME FROM THE
27 ESTATE?
28 A YES.

125
1 Q ALL RIGHT. NOW, SINCE THE FUNDING OF THE ESTATE,
2 SINCE THE COMPLETION OF THAT ORIGINAL FUNDING OF THE ESTATE,
3 YOU TOLD US THAT YOU PERFORMED MANAGEMENT SERVICES FOR THE
4 ESTATE; IS THAT CORRECT?
5 A I MANAGED THE ASSET PORTFOLIO, CORRECT.
6 Q AND AS PART OF THAT, IS YOUR JOB TO TRY TO INCREASE
7 THE VALUE OF THE ESTATE BY FINDING ADDITIONAL PROPERTIES,
8 INCREASING THE VALUE OF THAT ESTATE?
9 A YES.
10 Q HAVE YOU BEEN DOING THAT SINCE THE ESTATE WAS
11 FUNDED IN APPROXIMATELY -- COMPLETED, I MEAN, IN
12 APPROXIMATELY 1998?
13 A YES.
14 Q SINCE THE TRUST WAS ORIGINALLY FUNDED AND COMPLETED
15 IN THAT FUNDING, HAS THE VALUE OF THE TRUST INCREASED OR
16 DECREASED?
17 A INCREASED.
18 Q HAS IT INCREASED CAN YOU GIVE US AN
19 APPROXIMATION OF HOW MUCH IT HAS INCREASED?
20 A 30 TO 40 PERCENT.
21 Q NOW, YOU HAD MENTIONED THAT YOUR FAMILY, YOUR
22 MOTHER AND FATHER, ALSO HAVE A FAMILY TRUST; IS THAT
23 CORRECT?
25 THE COURT: SUSTAINED ON FOUNDATION.
26 Q BY MR. BEZEK: DO YOU KNOW WHETHER OR NOT YOUR
27 FAMILY -- YOUR PARENTS HAVE A FAMILY TRUST?
28 A YES, MY PARENTS HAVE A FAMILY TRUST. IT'S CALLED

126
1 THE GAGGERO FAMILY TRUST.
2 Q AND HAVE YOU EVER BEEN A BENEFICIARY OF THAT TRUST?
3 A I THINK I AM.
4 THE COURT: YOU HOPE YOU ARE.
5 THE WITNESS: I HOPE I AM, YES.
6 Q BY MR. BEZEK: FROM TIME TO TIME, DO YOUR PARENTS
7 INVEST IN REAL ESTATE?
8 A YES.
9 Q DO YOU EVER INVEST TOGETHER IN REAL ESTATE?
10 A YES.
11 Q DO YOU HAVE ANY PENDING TRANSACTIONS IN WHICH YOU
12 ARE A JOINT INVESTOR WITH YOUR PARENTS?
13 THE COURT: HE IS OR THIS TRUST IS?
14 MR. BEZEK: THAT'S A GOOD POINT.
15 THE COURT: HE'S SAYING UNDER PENALTY OF PERJURY THAT HE
16 HAS NO ASSETS IN THE YEAR 2000. SO YOU MIGHT WANT TO BE A
17 LITTLE MORE PRECISE IN YOUR QUESTIONS.
18 MR. BEZEK: THANK YOU, YOUR HONOR. FAIR COMMENT.
19 Q IS THERE A CURRENT CLOSING PENDING IN WHICH YOUR
20 PARENTS ARE INVOLVED AND YOU AS THE MANAGER FOR AN ASSET
21 FROM THE ESTATE ARE INVOLVED?
22 A YES.
23 THE COURT: THE TRUST, RIGHT?
24 MR. BEZEK: THE TRUST.
25 THE COURT: HIS TRUST? WHAT'S THE NAME OF THE TRUST
26 WE'RE TALKING ABOUT?
27 THE WITNESS: THERE'S TWO TRUSTS, YOUR HONOR. ONE IS
28 CALLED THE -- THERE'S ACTUALLY THREE. ONE TRUST IS CALLED

EXHIBIT D
June 28, 2005 (306-321)

306
1 (INDICATING). UNLESS YOU'RE GOING TO MAKE YOUR CLIENT ARGUE
2 IT. HE'S SMILING.
3 MR. BEZEK: DO I HAVE THAT CHOICE, YOUR HONOR?
4 THE COURT: GOOD MORNING.
5 THE WITNESS: GOOD MORNING.
6 THE COURT: YOU'RE STILL UNDER OATH. YOU UNDERSTAND
7 THAT?
8 THE WITNESS: YES.
9 THE COURT: GREAT. YOU MAY PROCEED.
10
11 STEPHEN MICHAEL GAGGERO,
12 THE PLAINTIFF, CALLED AS A WITNESS ON HIS OWN BEHALF, HAVING
13 BEEN PREVIOUSLY SWORN, RESUMED THE STAND AND TESTIFIED
14 FURTHER AS FOLLOWS:
15
16 DIRECT EXAMINATION (RESUMED)
17 BY MR. BEZEK:
18 Q GOOD MORNING, MR. GAGGERO.
19 A GOOD MORNING.
20 Q BEFORE WE GET STARTED TODAY, I WANT TO WORK ON A
21 LITTLE DEFINITIONAL ISSUE THAT I CREATED YESTERDAY, AND I
22 WANT TO MAKE SURE WE'RE CLEAR AS WE GO FORWARD.
23 YESTERDAY YOU DESCRIBED FOR THE COURT THE ESTATE
24 PLAN THAT WAS DESIGNED BY MR. PRASKE. YOU GENERALLY
25 REMEMBER THAT?
26 A YES.
27 Q AS WE GO FORWARD WITH YOUR QUESTIONING TODAY AND
28 THROUGHOUT THE TRIAL, DO YOU HAVE ANY PROBLEM DEFINITIONLY

307
1 WITH ME REFERRING TO THAT ESTATE PLAN THAT WAS CREATED BY
2 MR. PRASKE AS THE ESTATE PLAN?
3 A NO.
4 Q OKAY. SO AS WE GO FORWARD, IF I ASK YOU QUESTIONS
5 ABOUT: DID YOU DO WORK FOR THE ESTATE PLAN, WERE YOU A
6 MANAGER OF THE ESTATE PLAN, OF THE ASSETS --
7 THE COURT: YOU KNOW WHAT? THAT DOESN'T MAKE ANY SENSE,
8 AN ESTATE PLAN. I DON'T KNOW WHAT YOU'RE TALKING ABOUT.
9 ARE YOU TALKING ABOUT TRUSTS? IF YOU'RE TALKING ABOUT
10 TRUSTS, WHY NOT JUST SAY "TRUSTS."
11 Q BY MR. BEZEK: LET ME ASK YOU THIS --
12 THE COURT: I WOULD LIKE THESE QUESTIONS AND ANSWERS TO
13 BE AS PRECISE AS POSSIBLE SO I KNOW WHAT YOU'RE TALKING
14 ABOUT. WHEN YOU SAY "ESTATE PLAN," DO I HAVE TO GUESS EVERY
15 TIME, IS HE TALKING ABOUT TRUSTS?
16 IS THERE ANY REASON WE CAN'T USE THE EXACT TERMS AS
17 TO WHAT THESE INSTRUMENTS ARE? WHY CAN'T WE DO THAT?
18 MR. BEZEK: I CAN GIVE YOU AN ANSWER TO THAT, YOUR
19 HONOR, IF YOU -- THE PROBLEM IS THAT THE ESTATE PLAN THAT
20 WE'VE BEEN REFERRING TO IS COMPRISED OF A TRUST, A COUPLE OF
21 FOUNDATIONS, AND THEN THERE'S A NUMBER OF LIMITED LIABILITY
22 COMPANIES AND PARTNERSHIPS THAT ULTIMATELY FUNDED THAT PLAN.
23 SO HOW WE REFER TO THE PLAN, WHICH IS MULTIFACETED,
24 SO TO SPEAK, IS DIFFICULT BECAUSE IT'S A TRUST -- INVOLVES A
25 TRUST AND INVOLVES FOUNDATIONS.
26 THE COURT: WELL, WHO'S BUYING AND SELLING THE PROPERTY?
27 MR. BEZEK: WELL, IT'S THE ESTATE --
28 THE COURT: LET'S HEAR FROM THE WITNESS.

308
1 MR. BEZEK: ALL RIGHT. LET'S SEE IF WE CAN'T COVER THAT
2 AND GET THIS CLEAR. AND MAYBE IT WILL HELP IF WE TALK ABOUT
3 PROCEDURALLY HOW THESE -- HOW THE ESTATE PLAN WAS FUNDED,
4 HOW THE ESTATE WAS FUNDED.
5 Q WHEN YOU FUNDED IT ORIGINALLY, DID YOU MOVE ASSETS
6 THAT BELONGED TO YOU DIRECTLY INTO THE ESTATE PLAN OR INTO
7 THIS VEHICLE, OR DID YOU --
8 THE COURT: WHY DON'T YOU LET HIM TESTIFY -- HE SEEMS TO
9 BE REALLY FAMILIAR -- AND ASK OPEN-ENDING, NONLEADING
10 QUESTIONS. LET'S TRY IT THAT WAY, SINCE YOU'RE SUPPOSED TO
11 ASK NONLEADING QUESTIONS.
12 Q BY MR. BEZEK: MR. GAGGERO, WHAT PROCEDURE DID YOU
13 FOLLOW WHEN YOU HAD YOUR PERSONAL ASSETS AND YOU WERE USING
14 THOSE TO FUND THE ESTATE PLAN THAT WAS DESIGNED BY
15 MR. PRASKE? LET'S TALK ABOUT THE PROCEDURE THAT'S FOLLOWED.
16 THE COURT: OKAY.
17 THE WITNESS: INITIALLY I TOOK ASSETS AND PUT THEM INTO
18 LIMITED LIABILITY COMPANIES, LIMITED PARTNERSHIPS,
19 CORPORATIONS. AND I -- AND AT SOME POINT IN TIME, I MET
20 MR. PRASKE IN THAT PROCESS, AND I CAN'T TELL YOU EXACTLY
21 WHEN. HE'LL BE ABLE TO HAVE THE DATES AND TELL YOU EXACTLY
22 WHEN.
23 AND THEN I CONTINUED TO TRANSFER PROPERTIES INTO
24 LIMITED LIABILITIES THAT MR. PRASKE WOULD SET UP. FIRST
25 THESE OTHER CORPORATIONS AND LIMITED LIABILITY COMPANIES
26 WERE SET UP BY OTHER ATTORNEYS I HAD, AND THEN MR. PRASKE
27 STARTED SETTING THEM UP AND I WOULD TRANSFER PROPERTIES INTO
28 THOSE VARIOUS COMPANIES.

309
1 AND THEN MR. PRASKE WOULD CHANGE THE OWNERSHIP,
2 STOCK MEMBERSHIP, LIMITED PARTNERSHIP, AND GENERAL
3 PARTNERSHIP OWNERSHIP INTERESTS IN THOSE COMPANIES TO TRUST
4 OR FOUNDATION OWNERSHIPS.
5 Q BY MR. BEZEK: ALL RIGHT. AND IS THAT HOW THE
6 ESTATE PLAN THAT WAS DESIGNED BY MR. PRASKE WAS THEN FUNDED,
7 THROUGH THAT PROCESS, ULTIMATELY?
8 A YES.
9 Q CAN YOU TELL US GENERALLY WHAT IS -~ WHAT COMPRISES
10 THE ESTATE PLAN THAT WAS CREATED BY ATTORNEY PRASKE?
11 A I'M NOT EXACTLY SURE WHAT THERE IS COMPLETELY RIGHT
12 NOW WITHOUT LOOKING AT A LIST, BECAUSE THERE WAS A LOT I
13 HAVE TO REMEMBER ABOUT THAT.
14 Q I'M SORRY. I MISLED YOU WITH THE QUESTION. BAD
15 QUESTION.
16 WHEN IT WAS ORIGINALLY CREATED BY MR. PRASKE BACK
17 IN THE '97-'98 TIME FRAME, WHAT TYPES OF RECEIVING VEHICLES
18 COMPRISED THE ESTATE PLAN?
19 A LIMITED LIABILITY COMPANIES, LIMITED PARTNERSHIPS,
20 GENERAL PARTNERSHIPS, CORPORATIONS, TRUSTS, AND A
21 FOUNDATION.
22 Q OKAY. THAT RESULTING ESTATE PLAN, WITH ALL OF THE
23 THINGS THAT YOU JUST IDENTIFIED COMPRISING THAT PLAN, CAN WE
24 PUT A DEFINITIONAL TERM ON THAT SO THAT, AS WE GO FORWARD,
25 WE CAN REFER TO THAT ESTATE PLAN THAT WAS CREATED AND FUNDED
26 BY MR. PRASKE IN A SHORTHAND WAY?
27 MR. ROSEN: I'M GOING TO OBJECT TO --

310
1 Q BY MR. BEZEK: ALL RIGHT. WITH REGARDS TO THE 938
2 PROPERTY, BACK IN AUGUST OF '98, WHEN THE ORIGINAL -- WHEN
3 YOU WERE ORIGINALLY NEGOTIATING ON BEHALF OF THE -- LET ME
4 SEE HOW I WANT TO PHRASE THAT.
5 WAS ONE OF THE OPTIONS YOU WERE CONSIDERING WHEN
6 YOU WERE TALKING WITH MR. HARRIS ABOUT THE PURCHASE OF
7 938 -- WAS ONE OF THE OPTIONS THAT YOU WERE CONSIDERING
8 PURCHASING THE PROPERTY IN YOUR OWN NAME TEMPORARILY?
9 A YES.
10 THE COURT: CAN YOU PULL THAT MIKE UP.
11 THE WITNESS: YES. IT'S A LITTLE -- THE SCREW NEEDS TO
12 BE TIGHTENED.
13 THE COURT: IT'S AN L.A. COUNTY FACILITY. THE SCREW
14 NEEDS TO BE TIGHTENED. I'M NOT GOING TO MAKE ANY FURTHER
15 COMMENT. MAYBE WE'LL TRY TO GET SOMEONE TO DO THAT. MAYBE
16 I'LL BRING A SCREW- -- WELL
17 THE WITNESS: YOU CAN'T GET THEM?
18 THE COURT: I CAN. I'M SORRY. WE'LL TRY TO GET THAT
19 FIXED.
20 Q BY MR. BEZEK: HAD YOU HAD DISCUSSIONS WITH
21 MR. PRASKE ABOUT WHERE THE MONEY WOULD COME FROM IN THE
22 EVENT YOU WERE TO TAKE TITLE IN THE SALE OF THE 938
23 PROPERTY?
24 A IT WOULD COME FROM ONE OF THE --
25 THE COURT: THAT WAS A "YES" OR "NO" ANSWER.
26 THE WITNESS: OH. YES. I'M SORRY. YES.
27 Q BY MR. BEZEK: WHAT DID YOU --
28 A I JUMPED AHEAD THERE. SORRY.

311
1 Q WHAT DID YOU SAY TO MR. PRASKE?
2 A I DON'T REMEMBER SPECIFICALLY WHAT I SAID TO
3 MR. PRASKE OR SPECIFICALLY WHAT HE SAID TO ME, BUT I KNOW
4 THAT WE DISCUSSED THE SITUATION. I KNOW THAT
5 THE COURT: GIVE ME A SECOND. SORRY.
6 Q BY MR. BEZEK: DID MR. PRASKE COMMIT FUNDS IN THE
7 EVENT THAT YOU WERE THE VEHICLE THROUGH WHICH TITLE WOULD BE
8 TAKEN IN THE SALE OF THE PROPERTY?
9 MR. ROSEN: YOUR HONOR, I'M GOING TO OBJECT --
10 THE COURT: SUSTAINED. PRASKE IN WHAT ROLE? COMMIT
11 FUNDS FROM WHERE?
12 IS THAT WHAT THE OBJECTION IS?
13 MR. ROSEN: THAT'S A BETTER ONE. BUT MY OBJECTION WAS
14 ALSO GOING TO BE HEARSAY TO THE EXTENT HE MADE A COMMITMENT,
15 OTHER THAN TO THE EXTENT IT'S GOING TO HIS STATE OF MIND.
16 IF PRASKE MADE SOME SORT OF ORAL COMMITMENT TO HIM OF FUNDS,
17 THAT'S HEARSAY, AND MR. PRASKE CAN COME IN AND TESTIFY TO
18 THAT.
19 THE COURT: WHAT'S THE EXCEPTION TO THE HEARSAY RULE?
20 MR. BEZEK: IT'S NOT BEING OFFERED FOR STATE OF MIND;
21 THEREFORE, IT'S NOT HEARSAY, AND IT'S COMPLIANT WITH SHOWING
22 WHY MR. GAGGERO DID WHAT HE DID.
23 THE COURT: IS MR. PRASKE GOING TO TESTIFY IN THIS CASE?
24 MR. BEZEK: YES, YOUR HONOR.
25 THE COURT: WE'RE CONTINUING TO BE VERY VAGUE IN OUR
26 QUESTIONS, AND THAT'S SORT OF GOING TO BE WORKING TO YOUR
27 DISADVANTAGE. IF YOU CAN'T SAY WHERE THIS MONEY IS COMING
28 FROM AND EVERYTHING IS SO VAGUE, THAT'S GOING TO BE A

312
1 PROBLEM IN THIS CASE.
2 LET'S TALK ABOUT THAT HEARSAY OBJECTION. THE
3 FOUNDATION WOULD BE THAT THE RECIPIENT OR HEARER OF THE
4 STATEMENT LEARNED CERTAIN INFORMATION BY HEARING OR READING
5 IT AND BELIEVED SUCH INFORMATION TO BE TRUE AND ACTED IN
6 CONFORMITY.
7 THAT'S WHAT YOU HAVE TO ESTABLISH. AND I STILL
8 DON'T KNOW WHAT CAPACITY PRASKE IS IN AND WHERE THIS MONEY
9 IS COMING FROM. THAT'S NOT DEFINED IN THE QUESTION.
10 Q BY MR. BEZEK: DID YOU HAVE CONVERSATIONS WITH
11 MR. PRASKE IN MR. PRASKE'S ROLE AS THE TRUSTEE AND
12 REPRESENTATIVE OF THE ESTATE PLAN THAT WE'VE JUST DISCUSSED
13 THAT WAS FUNDED BY MR. PRASKE?
14 THE COURT: TRUSTEE OF THE TRUSTS IN THE ESTATE PLAN?
15 MR. BEZEK: AS TRUSTEE OF THE ESTATE PLAN THAT WAS
16 FUNDED BY -- LET ME ASK THE QUESTION THIS WAY.
17 Q IN WHAT CAPACITY DID YOU HAVE CONVERSATIONS WITH
18 MR. PRASKE? WHAT WAS HIS CAPACITY AT THE TIME?
19 A HE WAS THE TRUSTEE OF THE TRUST THAT WAS THE
20 GENERAL PARTNER OF THE LIMITED PARTNERSHIPS. HE WAS THE
21 MANAGING -- HE WAS THE TRUSTEE OF THE TRUSTS THAT WAS THE
22 MANAGING MEMBER OF THE LIMITED LIABILITY COMPANIES, OR SOME
23 OF THEM, OR HE WAS THE TRUSTEE OF THE TRUSTS OR OF THE
24 FOUNDATION THAT HAD THE MAJORITY MEMBERSHIP INTEREST.
25 HE WAS THE TRUSTEE OF THE TRUSTS OR THE FOUNDATION
26 THAT OWNED THE SHARES TO THE CORPORATIONS. HE WAS THE
27 TRUSTEE OF THE TRUSTS THAT HELD THE LIMITED PARTNERSHIP
28 INTERESTS OR THE OWNERSHIP INTERESTS OF THE LIMITED

313
1 PARTNERSHIPS. HE WAS THE TRUSTEE OR MANAGING MEMBER OR
2 MAJORITY MEMBERSHIP OWNER OR LIMITED LIABILITY -- OR LIMITED
3 PARTNERSHIP WITH THE 100 PERCENT OWNERSHIP OF ALL OF THOSE
4 VARIOUS ENTITIES, I.E., LIMITED LIABILITY COMPANIES, LIMITED
5 PARTNERSHIPS, OR TRUSTS THAT FORMED GENERAL PARTNERSHIPS.
6 SO, TO SUMMARIZE, MR. PRASKE HAD CONTROL OVER THE
7 OWNERSHIP ENTITIES OF EACH OF THE ENTITIES THAT THEY WERE A
8 PART OF.
9 SAID DIFFERENTLY, SO THERE'S NO CONFUSION -- I KNOW
10 IT'S CONFUSING. IT'S DIFFICULT FOR ME TO SAY --
II THE COURT: IT'S NOT CONFUSING.
12 SO WHAT YOU'RE TRYING TO SAY IS PRASKE HAD CONTROL
13 OVER ALL OF THE ENTITIES IN THE ESTATE PLAN THAT HE CREATED?
14 IS THAT WHAT YOU'RE TRYING TO SAY?
16 THE COURT: OKAY.
17 Q BY MR. BEZEK: AT THE SAME TIME, WERE YOU
18 DESIGNATED BY MR. PRASKE TO MANAGE THE ASSETS?
19 A YES.
20 THE COURT: OF WHAT?
21 MR. BEZEK: THE ASSETS OF THESE ENTITIES THAT HE JUST
22 IDENTIFIED THAT WERE USED TO FUND THE -- OR CREATE THE
23 ESTATE PLAN CREATED BY MR. PRASKE.
25 Q BY MR. BEZEK: WHAT WAS YOUR ROLE -- WHAT WERE YOUR
26 DUTIES IN PERFORMING THAT ROLE?
27 THE COURT: WELL, WHAT WAS YOUR TITLE? DID YOU HAVE A
28 TITLE?

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1 THE WITNESS: I WAS THE ASSET MANAGER. I MANAGED THE
2 ASSET PORTFOLIO.
3 THE COURT: OF ALL OF THE ABOVE?
4 THE WITNESS: OF ALL OF THE ASSETS -- GO ALL THE WAY
5 DOWNSTREAM TO THE TWO TRUSTS AND THE FOUNDATION AND
6 EVERYTHING ABOVE THAT, I WAS THE ASSET MANAGER OF THAT AND
7 THAT PORTFOLIO. I GUESS THAT'S A GOOD WORD FOR IT.
8 Q BY MR. BEZEK: IN THAT CAPACITY, DID YOU HAVE
9 OCCASION TO TALK TO MR. PRASKE IN HIS CAPACITY, AS YOU'VE
10 JUST DEFINED IT, ABOUT 938?
11 A YES.
12 Q WHAT WAS IT YOU DISCUSSED WITH HIM REGARDING 938 IN
13 THE PRE-AUGUST 1998 TIME FRAME?
14 A I DISCUSSED WITH HIM THE STRUCTURE OF THE PURCHASE
15 AND SALE AGREEMENT AND HOW WE WOULD FUND IT IN THE FUTURE,
16 DEPENDING UPON WHEN MR. HARRIS DETERMINED HE WANTED TO CLOSE
17 ESCROW.
18 Q WHY WAS THAT IMPORTANT, TO DETERMINE THE CLOSING
19 DATE, AS PART OF THESE CONVERSATIONS WITH MR. PRASKE?
20 A BECAUSE WE COULDN'T DETERMINE
21 THE COURT: "WE" MEANING?
22 THE WITNESS: MR. PRASKE AND I -- OR I'LL USE "1." I
23 COULDN'T DETERMINE WHICH OF THE ENTITIES, OR IF IT WOULD BE
24 JUST CASH ITSELF COMING FROM THE PARENT TRUSTS AND
25 FOUNDATION, WOULD BE THE FUNDING ENTITY OR TRUST OR
26 FOUNDATION FOR THE ULTIMATE ACQUISITION UNTIL I KNEW AT
27 LEAST THE MONTH AND THE YEAR THAT MR. HARRIS WAS GOING TO
28 DECIDE TO CLOSE ESCROW ON THESE.

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1 BECAUSE THE MOST PRUDENT WAY TO PURCHASE THIS
2 PROPERTY WOULD BE TO PURCHASE IT WITH AN EXCHANGE, A TAX
3 DEFERRED 1031 EXCHANGE, SO THAT WE BOUGHT IT WITH DOLLARS
4 THAT WERE NOT AFTER-TAX DOLLARS, BUT WITH DEFERRED DOLLARS.
5 AND THE ONLY WAY I COULD DETERMINE WHICH OF THE
6 ENTITIES, OR IF I WOULD HAVE TO HAVE THE MONEY FROM THE
7 MOTHER TRUST OR FOUNDATION GIVEN STRAIGHT TO MYSELF OR TO
8 STEPHANIE BOREN TO PURCHASE IT, THE ONLY WAY I COULD
9 DETERMINE WHICH OF THESE ENTITIES WAS THE MOST APPROPRIATE
10 WAS TO KNOW THEIR STATUS AT THE SAME TIME WE HAD A CLOSING
11 DATE.
12 FOR EXAMPLE, IF MR. HARRIS GAVE ME 30-DAY NOTICE TO
13 CLOSE IN JULY OF 1999, I WOULD KNOW AT THAT POINT IN TIME
14 THAT I WOULD LOOK AT THE PORTFOLIO AND SAY: WHICH OF THESE
15 ENTITIES HAVE A PIECE OF PROPERTY THAT IS EITHER UNDER
16 CONTRACT TO SELL, IS IN ESCROW TO BE SOLD, HAS CLOSED ESCROW
17 ALREADY, AND IS WITHIN THE 45-DAY IDENTIFICATION PERIOD,
18 WHICH OF THOSE WOULD BE MY FIRST CHOICE.
19 SO, FOR EXAMPLE, IF MALIBU BROAD BEACH LP HAD JUST
20 SOLD A PIECE OF PROPERTY AND -- OR IT WAS IN ESCROW, LET'S
21 SAY, PENDING AND AT THE SAME TIME MR. HARRIS GAVE ME NOTICE
22 THAT HE NOW WANTED TO CLOSE ESCROW 30 DAYS FROM THIS CERTAIN
23 DATE, THEN I WOULD KNOW THAT THE IDEAL CANDIDATE TO BUY 938
24 WOULD BE MALIBU BROAD BEACH LP BECAUSE THEY WERE IN ESCROW
25 AND ESCROW WAS GOING TO CLOSE WITHIN, LET'S SAY,
26 30 DAYS.
27 IF MR. HARRIS GAVE ME A 30-DAY TIME LIMIT TO CLOSE
28 ESCROW, THEN I WOULD KNOW THAT I COULD EXCHANGE THE FUNDS

316
1 FROM MALIBU BROAD BEACH LP INTO 938 ON A TAX-DEFERRED BASIS.
2 IF, HOWEVER, NOTHING IN THE PORTFOLIO WAS EITHER
3 UNDER CONTRACT OR IN ESCROW OR HAD SOLD AND THE MONEY WAS
4 SITTING WITH AN ACCOMMODATOR, LET'S SAY, THEN I WOULD HAVE
5 TO CAUSE THE TRUST OR ONE OF THE CORPORATIONS IN THE TRUST
6 TO LOAN THE MONEY TO STEPHANIE BOREN TO PURCHASE THE
7 PROPERTY, SHE WOULD BUY IT.
8 AND THEN, LET'S SAY THREE MONTHS FROM NOW, SOMEONE
9 MADE AN OFFER ON ONE OF THE PROPERTIES OWNED BY ONE OF THE
10 ENTITIES IN THE PORTFOLIO, THEN I WOULD TAKE THAT PROPERTY
11 IN THAT ENTITY WHEN IT SOLD, AND I WOULD BUY FROM STEPHANIE
12 BOREN THE ASSET WITH TAX-DEFERRED DOLLARS.
13 SO THAT IS THE PLAN THAT WAS SET UP WITH
14 MR. FAINSBERT AND MR. HARRIS AT THE VERY OUTSET, BECAUSE
15 MR. HARRIS DIDN'T WANT TO BE PRESSURED INTO PICKING AN
16 ESCROW DATE AND THEN BE PRESSURED INTO FINDING A REPLACEMENT
17 PROPERTY WITH THE PROCEEDS FROM THE SALE.
18 HE WANTED TO HAVE COMPLETE CONTROL OVER WHAT MONTH,
19 WHAT DAY, WHAT YEAR THAT PROPERTY SOLD SO THAT HE COULD DO
20 WHAT'S CALLED A DIRECT EXCHANGE, WHICH MEANT THAT WHEN HE
21 CLOSED ESCROW ON 938, WITHIN THE SAME ESCROW HE WOULD BUY
22 ANOTHER PROPERTY.
23 IT'S THE SAFEST WAY TO DO A 1031 EXCHANGE. THERE'S
24 NO DEFERRAL ON IT.
25 AND THAT'S WHAT HE WANTED TO DO, WITH NO PRESSURE
26 IN SHOPPING FOR HIS REPLACEMENT PROPERTY. HE WANTED TO TAKE
27 HIS TIME AND REALLY LOOK AT THE MARKET.
28 THAT PUT ME IN A POSITION THAT I WOULD HAVE TO -- I

317
1 WOULD HAVE ONLY 30 DAYS WITHIN WHICH TO SELL SOMETHING AND
2 BUY HIS UNLESS I USED STEPHANIE AS A WAREHOUSER, WHERE WE
3 WOULD LET HER BUY THE PROPERTY, WE WOULD LOAN HER THE MONEY,
4 SHE WOULD WAREHOUSE IT, ESSENTIALLY, AND WE WOULD BUY IT
5 FROM HER IN THE FUTURE WHEN ONE OF THE ENTITIES OWNING ONE
6 OF THE PROPERTIES IN THE PORTFOLIO SOLD, THEN THAT WOULD
7 WORK.
8 THE COURT: AND IT WOULD ONLY WORK UP UNTIL THE DAY THAT
9 THEY IMPOSED THE 45-DAY LIMIT ON THE FORWARD ACCOMMODATOR
10 RULES?
11 THE WITNESS: EXACTLY.
12 THE COURT: AND WHEN DID THEY DO THAT?
13 THE WITNESS: THEY DID THAT SEPTEMBER 15 OF 2000.
14 THE COURT: AFTER THAT, YOU CAN'T DO THAT?
15 THE WITNESS: EXACTLY RIGHT. BEFORE SEPTEMBER 15, THE
16 PROPERTY WAS TRANSFERRED TO ME, AND THEN THE MONEY WOULD
17 HAVE JUST BEEN GIVEN TO ME TO BUY.
18 THE COURT: THANK YOU.
19 Q BY MR. BEZEK: ALL RIGHT. NOW, DID YOU EVER GET A
20 CLOSING DATE FROM MR. HARRIS BEFORE HE DIED?
21 A NO.
22 Q WE TALKED YESTERDAY ABOUT THE FUNDING OF THE
23 ESTATE, THE ESTATE PLAN THAT WAS CREATED BY MR. PRASKE, WHAT
24 YOU REFERRED TO AS THE MOTHER TRUSTS AND FOUNDATIONS.
25 ONCE --
26 THE COURT: MOTHER TRUST AND FOUNDATION SINGULAR?
27 THE WITNESS: SINGULAR FOUNDATION, TWO TRUSTS.
28 THE COURT: RIGHT.

318
1 THE WITNESS: THAT'S CORRECT.
2 Q BY MR. BEZEK: FROM THE TIME THAT IT WAS -- DO YOU
3 REMEMBER WHEN THE FUNDING WAS COMPLETED, APPROXIMATELY?
4 THE COURT: WHAT FUNDING?
5 Q BY MR. BEZEK: THE FUNDING OF THE ESTATE PLAN THAT
6 HAD BEEN CREATED BY MR. PRASKE, THE MOTHER TRUSTS AND
7 FOUNDATION.
8 A IT WAS IN 1998, EARLY OR MIDDLE 1998, I THINK.
9 Q ONCE YOU BEGAN MANAGING THE ASSETS FOR THE MOTHER
10 TRUSTS AND FOUNDATION, DID YOU PURCHASE ADDITIONAL
11 PROPERTIES ON BEHALF OF THE MOTHER TRUSTS AND FOUNDATION?
12 A YES.
13 Q FROM THAT POINT, WHEN YOU BEGAN THAT PROCESS IN
14 1998-'99, WHENEVER YOU BEGAN -- DO YOU REMEMBER
15 APPROXIMATELY IN '98 WHEN YOU BEGAN THAT?
16 A WE'LL CALL IT MID-1998 FOR AN ESTIMATE.
17 Q FROM THAT POINT FORWARD TO TODAY'S DATE, DO YOU
18 KNOW HOW MUCH PROPERTY WAS PURCHASED ON BEHALF OF THE MOTHER
19 TRUSTS AND FOUNDATION?
20 A YES.
21 Q CAN YOU TELL US HOW MUCH, PLEASE.
22 A $31 MILLION WORTH OF PROPERTY.
23 THE COURT: HOW MUCH OF THAT WAS 1031'S?
24 THE WITNESS: 13 MILLION WAS A 1031, AND I BELIEVE ABOUT
25 A $3-1/2 MILLION WAS A 1031, AND I CAN CHECK AND GIVE YOU --
26 THAT'S ALL I CAN REMEMBER RIGHT NOW.
27 THE COURT: ALL RIGHT. SO YOU'LL GET BACK TO ME WITH
28 THAT FIGURE?

319
1 THE WITNESS: YES.
2 THE COURT: NOW, IN CHAPTER 8, IF YOU READ THAT LAST
3 NIGHT -- AND I HOPE YOU DID YOU WILL NOTICE THAT IN A
4 COURT TRIAL I'M SUPPOSED TO BE SAVING MY QUESTIONS UNTIL THE
5 END OF BOTH SIDES' EXAMINATIONS. HOWEVER, BECAUSE WE'RE
6 DEALING WITH SOME COMPLICATED ISSUES HERE, I'M GOING TO ASK
7 THE QUESTIONS AS THEY COME UP.
8 IF ANYBODY HAS A PROBLEM WITH THAT, I WOULD
9 ENCOURAGE YOU TO OBJECT, AND I'LL SAVE MY QUESTIONS UNTIL
10 THE END. BUT SO FAR I'M NOT GETTING ANY FEELING THAT
11 ANYBODY IS HAVING AN ISSUE, BECAUSE I WANT TO ASK HIM AT THE
12 TIME.
13 MR. BEZEK: YOUR HONOR, I'M AWARE OF THE RULE. I HAVE
14 NOT OBJECTED BECAUSE I ENCOURAGE THE QUESTIONS.
15 THE COURT: DON'T HESITATE TO OBJECT IF YOU FEEL THAT
16 IT'S STRATEGICALLY NOT GOOD FOR THE WAY YOU WANT TO PRESENT
17 YOUR CASE, BECAUSE THIS IS FAIRLY COMPLICATED, AND I WANT TO
18 MAKE SURE -- MY GOAL IS TO UNDERSTAND EVERYTHING AS I GO
19 ALONG.
20 I'M NOT THE TYPE OF JUDGE THAT SITS ON THE BENCH
21 AND DOESN'T -- I WANT TO MAKE SURE I'M WITH THE CURVE IN
22 THIS CASE, THE LEARNING CURVE. NOT BEHIND IT. OKAY?
23 THAT'S MY PURPOSE.
24 MR. BEZEK: THANK YOU, YOUR HONOR.
25 Q NOW, YOU TOLD US A MOMENT AGO THAT YOU PURCHASED
26 $31 MILLION WORTH OF PROPERTY ON BEHALF OF THE MOTHER TRUSTS
27 AND FOUNDATION DURING THE TIME FRAME THAT WE IDENTIFIED. DO
28 YOU RECALL THAT?

320
1 A YES.
2 Q DID YOU EVER HAVE A SINGLE TIME WHEN THERE WAS A
3 PROPERTY UNDER CONTRACT THAT THE PROPERTY WAS NOT OR COULD
4 NOT BE FUNDED FROM THE ASSETS OF THE MOTHER TRUSTS AND
5 FOUNDATION?
6 A NO.
7 Q THIS MIGHT NOT BE A VERY FAIR QUESTION TO YOU, BUT
8 DO YOU RECALL WHAT THE LARGEST SINGLE PURCHASE PRICE WAS
9 DURING THIS TIME FRAME FOR A PIECE OF PROPERTY? IF YOU
10 DON'T REMEMBER, IT'S OKAY. I JUST
11 A IT WAS AROUND 7 MILLION.
12 Q AND THE PURCHASE PRICE ON THE 938 ORIGINALLY,
13 ORIGINALLY --
14 THE COURT: CAN YOU JUST -- DIDN'T YOU JUST SAY THERE
15 WAS A $13 MILLION TRANSACTION THAT WAS A 1031? WOULDN'T
16 THAT HAVE BEEN LARGER THAN THE 7 MILLION?
17 THE WITNESS: I SOLD 13 MILLION, AND I BOUGHT A SERIES
18 OF SMALL PROPERTIES.
19 THE COURT: IT WAS A SALE?
20 THE WITNESS: YEAH. I HAD TO REINVEST 13 MILLION, BUT
21 IT WAS A SERIES OF PROPERTIES.
22 THE COURT: THANK YOU.
23 Q BY MR. BEZEK: WHEN YOU FIRST BEGAN NEGOTIATING
24 WITH MR. HARRIS FOR THE PURCHASE OF 938 ON BEHALF OF THE
25 MOTHER TRUSTS AND FOUNDATION, WHAT WAS THE PURCHASE PRICE
26 THAT MR. HARRIS WANTED?
27 A 1,200,000.
28 Q WHAT WAS THE PURCHASE PRICE THAT WAS ULTIMATELY

321
1 AGREED UPON?
2 A 1,150,000.
3 Q WHY THE DIFFERENCE?
4 A BECAUSE WELL, HE WAS OFFERING BROKER
5 COOPERATION, AND WE REPRESENTED OURSELVES. I REPRESENTED
6 THE TRUST. THERE WAS NO BROKER REPRESENTING ME OR THE
7 ESTATE PORTFOLIO.
8 Q DID MR. HARRIS AND YOU NEGOTIATE THAT PRICE OF
9 $1,150,000?
10 A YES, PREDICATED ON THE FACT HE DIDN'T HAVE TO GIVE
11 $50,000 TO A BROKER.
12 THE COURT: WE'RE GOING TO TAKE A BREAK.
13
14 (BRIEF RECESS TAKEN.)
15
16 THE COURT: OKAY. SORRY ABOUT THE INTERRUPTION.
17 MR. ROSEN: I'M SORRY, YOUR HONOR. THERE WAS A LAST
18 QUESTION AND ANSWER, AND I DON'T KNOW IF HE WAS DONE WITH
19 HIS ANSWER, BUT I ACTUALLY WANTED TO MAKE A MOTION TO
20 STRIKE.
21 THE COURT: OKAY. THE QUESTION WAS: DID MR. HARRIS AND
22 YOU NEGOTIATE THAT PRICE OF 1 MILLION 500 $1,150,000.
23 ANSWER: YES, PREDICATED ON THE FACT THAT HE DIDN'T HAVE TO
24 GIVE 50,000 TO THE BROKER.
25 WHAT'S THE MOTION?
26 MR. ROSEN: MOTION TO STRIKE EVERYTHING AFTER "YES" AS
27 LACKING FOUNDATION AND NONRESPONSIVE AND LACKING
28 FOUNDATION.

EXHIBIT E
June 29, 2005 (616-617)

B20J780COURT OF APPEAL OF THE STATE OF CALIFORNIA
SECOND APPELLATE DISTRICT
NO. BC 239810
_.)UR'TOF APPEAL· SE.COr
lfnJ1~IID
MAY 20 2008
STEPHEN M. GAGGERO, )
)
)
PLAINTIFF-APPELLANT, )
)
VS. )
)
ANNA MARIE YURA, IN HER CAPACITY )
AS TRUSTEE OF THE FREDERICK )
EARL HARRIS II 1995 TRUST; AND )
DOES 1 THROUGH 15, )
)
DEFENDANTS-RESPONDENTS. )
- - - - - - - - - - - - - - - - )
JOSEPH A. LANE Clert
Depuw ('.
APPEAL FROM THE SUPERIOR COURT OF LOS ANGELES COUNTY
HONORABLE MARY ANN MURPHY, JUDGE PRESIDING
REPORTER'S TRANSCRIPT ON APPEAL
JUNE 29, 2005 AND JUNE 30, 2005
APPEARANCES:
FOR PLAINTIFF-APPELLANT: BOSTWICK & JASSY LLP
BY: GARY L. BOSTWICK, ESQ.
SUITE 400
LOS ANGELES, CALIFORNIA 90025
(310) 979-6059
FOR DEFENDANT-RESPONDENT: MURPHY ROSEN & COHEN LLP
BY: DAVID E. ROSEN, ESQ.
SUITE 1300
SANTA MONICA, CALIFORNIA 90401
(310) 899-3300
VOLUME 3 OF lG,
PAGES 601 - 739-900
PAGES 901 - 1054-1200
PAULA B. RENTERIA, CSR NO. 9374
OFFICIAL REPORTER

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SAYING, BUT IT'S MY OPINION THAT ONCE STEPHANIE ASSIGNED THE
PURCHASE AGREEMENT AND RIGHT TO PURCHASE THE 938 PROPERTY TO
ME, SHE EXERCISED THE ASSIGNEE PROVISION IN THE PURCHASE
AGREEMENT. AND THAT MEANS THAT I AM THE ONE THAT MUST CLOSE
THE ESCROW, BECAUSE THERE'S NOT A FURTHER ASSIGNEE
PROVISION, UNLESS THE SELLER AGREES THAT I CAN ASSIGN THE
PURCHASE AGREEMENT ONE MORE TIME.
Q NOW, HAVE YOU SPOKEN WITH MR. PRASKE ABOUT HIS
COMMITMENT OF FUNDS IN THE EVENT THE ESCROW IS CLOSED IN
YOUR NAME?
A YES.
Q AND WHAT HAS BEEN COMMITTED, IF ANYTHING?
A THE SAME COMMITMENT AS IF IT WAS CLOSED IN ONE OF
THE TRUST ENTITIES OR MS. BOREN
THE COURT: WHAT IS THE COMMITMENT? LET'S HEAR WHAT THE
COMMITMENT IS.
THE WITNESS: OH, SORRY. I SEE.
THE COMMITMENT IS THAT THEY WILL FUND THE
ACQUISITION, "THEY" THE TRUSTS, THE TWO TRUSTS AND/OR THE
FOUNDATION, WILL CAUSE THE RESOURCES NECESSARY, THE
FINANCIAL RESOURCES, THE CASH NECESSARY TO PURCHASE THIS
PROPERTY IN MY NAME.
Q BY MR. BEZEK: ONCE THE PROPERTY IS PURCHASED IN
YOUR NAME, WHAT WOULD THE NEXT STEP BE IN TERMS OF RETAINING
TITLE IN THAT PROPERTY?
A TITLE WOULD BE VESTED IN MY NAME UPON CLOSE OF
ESCROW.
Q AND AT THAT POINT, WILL YOU EVALUATE WHAT NEEDS TO

617
1 BE DONE REGARDING THE PLACEMENT OF THAT PROPERTY INTO THE
2 FOUNDATION OR ONE OF THE TRUSTS?
3 A I WOULD HAVE OPTIONS AT THAT POINT. I WOULDN'T
4 HAVE THE 1031 OPTIONS THAT I HAD EARLIER, BUT I WOULD HAVE
5 THE OPTION, JUST LIKE I DID WHEN I CREATED -- WHEN I FUNDED
6 THE TRUST WITH MY ASSET, WHEN I TOOK MY ASSETS AND CREATED
7 MY TRUST, MY PERSONAL TRUST.
8 I COULD TAKE THIS ASSET IN MY NAME, TRANSFER IT TO
9 AN ENTITY, A LIMITED LIABILITY COMPANY, A LIMITED
10 PARTNERSHIP, A GENERAL PARTNERSHIP, OR A CORPORATION, AND
11 THEN HAVE ONE OF THE TRUSTS OR THE FOUNDATION SUBSUME -- IF
12 THAT'S THE RIGHT WORD -- THAT ENTITY INTO THE ESTATE PLAN,
13 JUST LIKE I DID THE OTHER PROPERTIES IN 1997 AND 1998; OR I
14 COULD JUST KEEP THE PROPERTY IN MY NAME.
15 Q ALL RIGHT. I WOULD LIKE TO CHANGE GEARS AGAIN. WE
16 WERE IN THE MIDDLE OF GOING THROUGH THE CHANGES AND ADOPTION
17 OF CHANGES IN THE CC&R'S YESTERDAY. DO YOU REMEMBER THAT'S
18 WHERE WE WERE WHEN WE ENDED THE DAY?
19 A YES.
20 Q I WOULD LIKE YOU TO GO BACK TO EXHIBIT 196.
21 A OKAY. I HAVE 196.
22 Q NOW, DURING THE COURSE OF THE MEETING WHERE THE
23 NOTES WERE DISCUSSED -- STRIKE THAT.
24 DURING THE COURSE OF THE MEETING WHEN THE NOTES
25 WERE TAKEN, AS YOU TESTIFIED TO YESTERDAY, WAS THERE ANY
26 DISCUSSION ABOUT THE STAIR SHAFT ENCLOSURE?
27 A YES.
28 Q CAN YOU TELL US FROM YOUR RECOLLECTION WHAT THAT

EXHIBIT F
Praske Direct Examination
June 30, 2005 (901-945)

(OFF-THE-RECORD DISCUSSION.)
THE COURT: WELL, GOOD MORNING, EVERYONE. YOU'VE GOT
YOUR EXPERT? IS HE AN EXPERT OR PERCIPIENT?
MR. BEZEK: HE HASN'T BEEN DESIGNATED AS AN EXPERT.
THE COURT: SO HE'S PERCIPIENT.
YOU MAY CALL YOUR NEXT WITNESS OUT OF ORDER.
MR. BEZEK: THANK YOU, YOUR HONOR. WE CALL JOE PRASKE.
THE CLERK: STAND THERE AND RAISE YOUR RIGHT HAND.
JOSEPH PRASKE,
CALLED BY THE PLAINTIFF AS A WITNESS, OUT OF ORDER, WAS
SWORN AND TESTIFIED AS FOLLOWS:
THE CLERK: DO YOU SOLEMNLY STATE THAT THE TESTIMONY YOU
ARE ABOUT TO GIVE IN THE CAUSE NOW PENDING BEFORE THIS COURT
SHALL BE THE TRUTH, THE WHOLE TRUTH, AND NOTHING BUT THE
TRUTH, SO HELP YOU GOD?
THE WITNESS: YES.
THE CLERK: PLEASE BE SEATED.
PLEASE STATE AND SPELL YOUR FULL NAME FOR THE
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CASE NUMBER:
CASE NAME:
LOS ANGELES, CA
DEPARTMENT 25
REPORTER:
TIME:
APPEARANCES:
BC 239810
GAGGERO V. YURA
THURSDAY, JUNE 30, 2005
HON. MARY ANN MURPHY, JUDGE
PAULA B. RENTERIA, CSR NO. 9374
A.M. SESSION
(AS HERETOFORE NOTED.)
901

902
BY MR. BEZEK:
Q GOOD MORNING, MR. PRASKE.
A GOOD MORNING.
Q WOULD YOU TELL US WHAT YOU DO FOR A LIVING NOW.
A I'M AN ESTATE PLANNING LAWYER. BUT ALSO AT THIS
TIME, FOR THE PAST APPROXIMATELY FIVE YEARS, I ALSO HAVE A
CONSULTING BUSINESS IN ELECTRONICS MANUFACTURING.
Q CAN YOU GIVE US YOUR EDUCATIONAL BACKGROUND,
PLEASE.
A I GRADUATED FROM UCLA IN 1983, FROM LOYOLA LAW
SCHOOL IN 1987. I TOOK THE BAR EXAM AFTER LAW SCHOOL AND
RECORD.
THE WITNESS: JOSEPH PRASKE. J-O-S-E-P-H, P-R-A-S-K-E.
THE COURT: YOU MAY PROCEED.
MR. BEZEK: THANK YOU, YOUR HONOR.
YOUR HONOR, MAY MS. CONNORS BE EXCUSED FOR A MINUTE
FROM THE COURTROOM, MY PARALEGAL?
THE COURT: THE PARALEGAL? YOU DON'T HAVE TO ASK.
AS FAR AS I'M CONCERNED, UNLESS YOU HAVE A GOOD
REASON TO HAVE A PARALEGAL AT THAT COUNSEL TABLE, SHE'S NOT
ADMITTED TO THE BAR AND SHE SHOULD BE SITTING IN THE BACK
UNLESS SHE'S WORKING WITH YOU. IT'S OKAY IF SHE IS, BUT
TYPICALLY WE DO NOT ALLOW PARALEGALS TO SIT AT COUNSEL
TABLE.
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OKAY.
MR. BEZEK:
YOU MAY PROCEED.
THANK YOU, YOUR HONOR.
DIRECT EXAMINATION

903
1 WAS ADMITTED TO THE BAR IN DECEMBER OF THAT YEAR, '87.
2 Q PRIOR TO GRADUATING FROM THE BAR, DID YOU PERFORM
3 AN INTERNSHIP OR WORK AS A LAW CLERK FOR ANY PARTICULAR LAW
4 FIRMS?
5 A YES. I WORKED FOR RICHARD HONN, AT HONN & SECOF,
6 AND I CONTINUED TO WORK AT THAT FIRM UPON GRADUATION.
7 Q NOW, AFTER GRADUATING, DID YOU HAVE AN AREA OF
8 SPECIALTY?
9 A IMMEDIATELY MAYBE NOT SO MUCH, BUT SOON THEREAFTER
10 I DID MOST OF MY WORK IN ESTATE PLANNING.
11 Q AND THAT WOULD HAVE BEEN ABOUT THE YEAR OF -- WHEN
12 YOU STARTED TO CONCENTRATE ON ESTATE PLANNING?
13 A WITH HONN & SECOF, IN '88 AND '89.
14 Q ALL RIGHT. AND HAVE YOU SPECIALIZED IN ESTATE
15 PLANNING ESSENTIALLY SINCE THAT APPROXIMATE TIME FRAME?
16 A YEAH, BUT I DON'T HAVE A SPECIALIZATION
17 CERTIFICATE. BUT THAT'S MY PRIMARY PRACTICE.
18 Q IS THERE A SPECIALTY CERTIFICATE IN ESTATE
19 PLANNING?
20 A I THINK SO.
21 Q NOW, DURING THIS TIME FRAME, CAN YOU TELL US WHAT
22 YOUR EMPLOYMENT HISTORY WAS FROM HONN TO, ESSENTIALLY, THE
23 PRESENT DATE?
24 A I STARTED MY OWN PRACTICE IN APPROXIMATELY 1990. A
25 FEW YEARS THEREAFTER, I WAS APPROACHED BY A CLASSMATE FROM
26 LAW SCHOOL WHO WORKED AT GIBSON, DUNN & CRUTCHER, AND HE
27 ASKED ME TO GO INTO PRACTICE WITH HIM. SO HE AND I STARTED
28 A FIRM CALLED PRASKE & GROGAN. THAT FIRM GREW TO

904
1 APPROXIMATELY TEN MEMBERS, AND AFTER A FEW YEARS I LEFT THAT
2 FIRM TO GO BACK ON MY OWN. THE FIRM CONTINUED TO PRACTICE
3 UNDER MY NAME FOR A COUPLE OF YEARS. AND THAT WOULD TAKE ME
4 UP TO ABOUT 1997.
5 Q NOW, DID THERE COME A TIME WHEN YOU WERE REFERRED
6 TO STEVE GAGGERO?
7 A HE WAS REFERRED TO ME, YEAH, IN APPROXIMATELY 1997.
8 Q AND HOW DID THAT REFERRAL COME IN?
9 A FROM A LAWYER WHO -- HER NAME WAS LAURA SLOCUMB.
10 AND IT WAS A CLIENT OF MINE WHO KNEW OF HER AND RECOMMENDED
11 ME -- OR DISCUSSED ME WITH HER, AND THEN SHE STARTED TO
12 REFER BUSINESS TO ME.
13 Q ALL RIGHT. AND DID YOU MEET WITH MR. GAGGERO?
14 A YES.
15 Q WHAT WAS THE PURPOSE OF THAT MEETING?
16 A HE CAME IN TO DISCUSS ESTATE PLANNING.
17 Q ALL RIGHT. NOW, I WANT TO TALK ABOUT -- WELL, DID
18 YOU AGREE TO EVALUATE THE -- DID YOU AGREE TO TAKE ON THE
19 ASSIGNMENT FOR MR. GAGGERO TO PREPARE AN ESTATE PLAN?
20 A YES.
21 Q DID YOU ALSO BECOME -- WERE YOU HIRED BY
22 MR. GAGGERO OR BY PACIFIC COAST MANAGEMENT, ONE OF THE
23 ENTITIES, WERE YOU RETAINED TO PROVIDE SERVICES LET ME
24 REPHRASE THE QUESTION.
25 WERE YOU RETAINED TO PROVIDE SERVICES FOR ANY ONE
26 OF THE ENTITIES FROM, SAY, 1997 FORWARD? WHO RETAINED YOU?
27 MR. ROSEN: OBJECTION. LACK OF FOUNDATION, COMPOUND.
28 THE COURT: REPHRASE.

905
1 Q BY MR. BEZEK: WHO RETAINED YOU?
2 A I WAS RETAINED BY ALL OF THE ENTITIES THAT
3 COMPRISED PART OF MR. GAGGERO'S ESTATE PLAN.
4 Q ALL RIGHT. AND DID YOU PERFORM ANY OTHER
5 FUNCTIONS, ANY OTHER JOB DUTIES, OTHER THAN -- ONCE THE
6 ESTATE TRUSTS AND FOUNDATION WAS ESTABLISHED, DID YOU
7 PERFORM ANY OTHER DUTIES?
8 A YES. I ALSO DID A LOT OF ADMINISTRATIVE WORK.
9 Q AND FROM TIME TO TIME, WHEN YOU WERE PERFORMING
10 THOSE SERVICES, WHERE DID YOU WORK OUT OF?
11 A I HAD AN OFFICE AT 2802 SANTA MONICA BOULEVARD. I
12 WENT TO SANTA BARBARA WHERE MR. GAGGERO HAD AN OFFICE. I
13 WENT THERE ONCE A WEEK. AND AFTER A PERIOD OF TIME, I HAD
14 AN OFFICE AT THE 938 PACIFIC COAST HIGHWAY PROPERTY.
15 Q HOW FREQUENTLY WOULD YOU MEET WITH MR. GAGGERO OR
16 OTHER REPRESENTATIVES OF THE TRUSTS AND FOUNDATION?
17 A INITIALLY, APPROXIMATELY TWICE A WEEK. SO I WENT
18 TO SANTA BARBARA ONCE A WEEK, HE CAME DOWN TO L.A. ONCE A
19 WEEK, AND WE GOT TOGETHER PRACTICALLY EVERY TIME HE CAME
20 DOWN.
21 AND THEN WHEN I WORKED AT THE BEACH HOUSE AT 938, I
22 WORKED THERE THREE DAYS A WEEK.
23 Q CAN YOU GIVE US AN IDEA OF SOME OF THE
24 ADMINISTRATIVE FUNCTIONS YOU WERE PERFORMING?
25 A I DID THINGS LIKE ASSISTED WITH INSURANCE MATTERS,
26 SOME OF THE CONTACTS WITH THE CITIES, VARIOUS CITIES WHERE
27 HE HELD PROPERTIES.
28 IT'S HARD TO RECALL EVERYTHING, BUT IT WAS QUITE A

906
1 BIT OF ADMINISTRATIVE WORK IN ADDITION TO JUST THE LEGAL
2 WORK THAT I DID.
3 Q DID YOU FROM TIME TO TIME PROVIDE ANY TAX ADVICE?
4 THE COURT: TAX ADVICE TO WHOM?
5 Q BY MR. BEZEK: TO THE TRUSTS AND/OR THE FOUNDATION.
6 A YES, DEFINITELY.
7 Q NOW, DID YOU COME TO MEET FRED HARRIS?
8 A YES.
9 Q CAN YOU RECALL THE CIRCUMSTANCES UNDER WHICH YOU
10 FIRST MET MR. HARRIS?
11 A I THINK IT WAS THE FIRST TIME WE MET AT A
12 RESTAURANT ON OCEAN AVENUE IN SANTA MONICA. FRED WAS THERE,
13 STEVE GAGGERO WAS THERE, STEVE'S PARENTS WERE THERE.
14 THE COURT: YOU KNOW, THIS IS A TRIAL. WE DO USE PROPER
15 NAMES AT TRIAL, NOT FIRST NAMES. IT BECOMES CONFUSING.
16 THE WITNESS: NOT STEVE?
17 THE COURT: LET'S USE THE -- THIS IS A TRIAL. THIS IS
18 NOT A SOCIAL GATHERING HERE. LET'S USE THE LAST NAMES,
19 PLEASE.
20 THE WITNESS: THE PEOPLE PRESENT WERE MR. HARRIS,
21 MR. GAGGERO, AND MR. GAGGERO'S PARENTS.
22 Q BY MR. BEZEK: AND DID YOU HAVE LUNCH WITH THOSE
23 FOLKS THAT DAY?
24 A YES.
25 Q DO YOU RECALL GENERALLY WHAT WAS DISCUSSED?
26 A IT WAS
27 MR. ROSEN: YOUR HONOR, OBJECTION. LACK OF FOUNDATION
28 AS TO DATE AND TIME WHEN THIS MEETING HAPPENED.

934
1 THE COURT: A PLAN SHOULD BE FORMED?
2 Q BY MR. BEZEK: AN ESTATE PLAN SHOULD BE CREATED.
3 A HE AGREED WITH MY RECOMMENDATIONS.
4 Q WAS AN ESTATE PLAN CREATED?
5 A YES.
6 Q WHO CREATED IT?
7 A I DID MOST OF IT. OTHER PEOPLE WERE INVOLVED.
8 Q AND DID YOU GO THROUGH THE PROCESS OF ANALYZING THE
9 AVAILABLE ASSETS AT THE TIME?
10 A YES.
11 Q DID YOU DESIGN THE PLAN CONSISTENT WITH THE ASSETS
12 AND THE NEEDS OF THE CLIENT AT THAT TIME?
13 A YES.
14 Q WHAT ESTATE PLAN WAS DESIGNED AT THAT TIME?
15 A AS I DO WITH OTHER CLIENTS, I TAKE THE REAL
16 PROPERTY ASSETS AND RECOMMEND THAT THEY SHOULD BE
17 TRANSFERRED TO A LIMITED PARTNERSHIP, LIMITED LIABILITY
18 COMPANIES. AND SO WE DID THE SAME THING IN THIS CASE.
19 Q ONCE THOSE -- AS PART OF YOUR ANALYSIS, WERE YOU
20 ABLE TO DETERMINE, OR WERE YOU INFORMED DURING THAT MEETING,
21 WHAT THE VALUE OF THE ASSETS WERE IN MR. GAGGERO'S ESTATE AT
22 THAT POINT IN TIME, BEFORE ANY OF THE ASSETS WERE
23 TRANSFERRED INTO THESE LIMITED LIABILITY COMPANIES OR
24 CORPORATIONS?
25 A YES, OVER THE COURSE OF THOSE MEETINGS.
26 Q WHAT DID YOU DETERMINE?
27 A THAT THERE WAS NET VALUE OF APPROXIMATELY
28 30 MILLION.

935
1 Q AND GIVEN THE NATURE OF THE ASSETS AND THE AMOUNT
2 OF THE ASSETS, SPECIFICALLY WHAT ESTATE PLAN WAS THEN
3 DESIGNED?
4 A WELL, WE PUT EACH PROPERTY INTO A SEPARATE ENTITY,
5 LIKE I DESCRIBED EARLIER.
6 Q THAT WAS BEFORE ANY TRUSTS OR FOUNDATIONS WERE SET
7 UP?
8 A NO. THE TRUSTS OR FOUNDATIONS WERE ALREADY SET UP
9 SO THAT THE --
10 THE COURT: YOU KNOW WHAT. I MISSED THE TIME FOR THE
11 MORNING BREAK. SORRY TO INTERRUPT YOU IN THE MIDDLE OF A
12 WHY DON'T YOU JUST FINISH THIS ANSWER, AND THEN WE'LL TAKE
13 OUR BREAK.
14 MR. BEZEK: THIS IS FINE, YOUR HONOR. WE CAN JUST BREAK
15 RIGHT NOW.
16 THE COURT: GREAT. WE'LL BE IN RECESS FOR 15 MINUTES.
17
18 (RECESS TAKEN.)
19
20 THE COURT: OKAY.
21 Q BY MR. BEZEK: MR. PRASKE, HOW WAS THE ESTATE PLAN
22 STRUCTURED?
23 A LIKE I WAS SAYING, THAT EACH PROPERTY, EACH REAL
24 PROPERTY, IS PUT INTO A SEPARATE ENTITY, AND THEN SO
25 MR. GAGGERO TRANSFERS EACH PROPERTY BY GRANT DEED TO THE
26 LIMITED LIABILITY COMPANY, FOR EXAMPLE. AND INITIALLY
27 THE -- HE WOULD BE THE SOLE MEMBER OF THE LIMITED LIABILITY
28 COMPANY, AND THEN WOULD TRANSFER THAT MEMBERSHIP INTEREST TO

936
1 A TRUST.
2 Q NOW, WHAT TYPE OF ESTATE PLAN DID YOU STRUCTURE TO
3 RECEIVE THE VARIOUS LIMITED LIABILITY COMPANIES,
4 CORPORATIONS AND LLP'S?
5 THE COURT: DO YOU UNDERSTAND THE QUESTION AS PHRASED?
6 THE WITNESS: NO.
7 THE COURT: NEITHER DID I. BUT THAT'S WHAT HE'S BEEN
8 SAYING.
9 I CAN TELL YOU'RE NOT A TRUST ATTORNEY. WHY DON'T
10 WE TRY THAT AGAIN.
11 Q BY MR. BEZEK: WHEN YOU SET UP THE ESTATE PLAN, WAS
12 THE ESTATE PLAN COMPRISED OF TRUSTS AND A FOUNDATION?
13 A YES.
14 Q CAN YOU
15 THE COURT: WHY DON'T YOU ASK HIM OPEN-ENDED QUESTIONS.
16 IT MIGHT BE BETTER IF YOU LET HIM TALK, BECAUSE HE MIGHT
17 KNOW A LITTLE BIT MORE ABOUT THIS THAN YOU DO. WHAT, WHEN,
18 WHY, HOW, WHERE. YOU KNOW, THE NONLEADING.
19 JUST A SUGGESTION. YOU CAN TRY YOUR CASE ANY WAY
20 YOU WANT. I DON'T MEAN TO BE OVERBEARING.
21 MR. BEZEK: I KNOW GOOD ADVICE WHEN I HEAR IT, YOUR
22 HONOR.
23 THE COURT: OKAY.
24 Q BY MR. BEZEK: HOW DID YOU SET THE ESTATE PLAN UP?
25 A OKAY. THERE ARE, IN MR. GAGGERO'S ESTATE ALREADY,
26 A TOTAL OF THREE TRUSTS. AND THERE ARE -- I DON'T KNOW THE
27 NUMBER -- SEVERAL LLCS AND/OR LIMITED PARTNERSHIPS. THE
28 WHOLE PACKAGE TAKES SEVERAL MONTHS TO IMPLEMENT. AND SO

937
1 EACH PROPERTY -- AT THE END OF THE DAY, EACH PROPERTY IS
2 HELD BY EITHER A LIMITED PARTNERSHIP OR A LIMITED LIABILITY
3 COMPANY.
4 AND THEN I'LL TALK ABOUT HIS RESIDENCE SEPARATELY.
5 AND THEN THOSE LIMITED LIABILITY COMPANIES AND
6 LIMITED PARTNERSHIPS IN TURN ARE HELD BY THESE TRUSTS THAT
7 WERE SET UP, TWO OF THE TRUSTS THAT WERE SET UP.
8 Q DO THOSE TWO TRUSTS HAVE NAMES?
9 A YES. ONE IS CALLED AQUA SANTE FOUNDATION; THE
10 OTHER IS CALLED ARENZANO TRUST; AND THEN THE THIRD TRUST IS
11 FOR HIS RESIDENCE. THAT'S CALLED GIGANIN TRUST.
12 MR. ROSEN: YOUR HONOR, COULD I ASK THE WITNESS TO SPELL
13 THOSE?
15 THE WITNESS: AQUA SANTE, A-Q-U-A S-A-N-T-E, FOUNDATION;
16 ARENZANO, A-R-E-N-Z-A-N-O; GIGANIN, G-I-G-A-N-I-N.
17 MR. ROSEN: ARENZANO WAS A TRUST OR FOUNDATION?
18 THE WITNESS: AQUA SANTE FOUNDATION, ARENZANO TRUST,
19 GIGANIN TRUST.
20 Q BY MR. BEZEK: NOW, YOU SAID YOU WERE GOING TO
21 DISCUSS THE RESIDENCE SEPARATELY, AND YOU'VE INTRODUCED US
22 TO THAT BY TALKING ABOUT THE GIGANIN TRUST.
23 CAN YOU TELL US WHAT RESIDENCE WE'RE TALKING ABOUT?
24 A MR. GAGGERO'S PRINCIPAL RESIDENCE IS A 1,500-ACRE
25 PROPERTY WITH SEVERAL BUILDINGS ON IT, BUT THE OWNERSHIP OF
26 THAT ENTIRE PROPERTY IS IN THE NAME OF GIGANIN TRUST.
27 GIGANIN TRUST IS WHAT'S KNOWN AS A QUALIFIED PERSONAL
28 RESIDENCE TRUST UNDER INTERNAL REVENUE CODE SECTION 2702.

938
1 THE TRUST DOCUMENT IS DRAFTED ALMOST
2 THE COURT: IS THAT IRC WHAT? 2702?
3 THE WITNESS: 2702.
4 THE COURT: MAYBE YOU CAN SHOW HIM THAT DOCUMENT AND ASK
5 HIM WHAT IS -- THAT QUESTIONABLE DOCUMENT YOU GAVE ME
6 EARLIER FROM THE ACCOUNTANT, MAYBE HE CAN IDENTIFY THAT. HE
7 SEEMS TO KNOW.
8 MR. BEZEK: ACTUALLY, YOUR HONOR, WE ASKED HIM TO PULL
9 UP THAT THING.
10 THE COURT: LET'S COVER THAT BECAUSE -- ALL RIGHT. YOU
11 DON'T HAVE TO DO IT NOW. I JUST THOUGHT BEFORE HE LEAVES,
12 WE COULD CLARIFY THAT QUESTION.
13 THE WITNESS: SO SHOULD I GO ON?
14 THE COURT: YEAH. SORRY ABOUT THE INTERRUPTION.
15 THE WITNESS: OKAY. SO THEN THE DOCUMENT FOR THE
16 GIGANIN TRUST IS DRAFTED ALMOST IDENTICAL TO THE LANGUAGE
17 PROVIDED IN THE TAX REGULATIONS UNDER SECTION 2702.
18 Q BY MR. BEZEK: ALL RIGHT.
19 A IT'S NOT REALLY A DOCUMENT THAT I CREATE. THE IRS
20 CREATES THIS DOCUMENT. AND MR. GAGGERO HAS -- HE IS THE
21 TAXPAYER IN THAT DOCUMENT; AND THE TAXPAYER HAS THE RIGHT TO
22 RESIDE AT THE PROPERTY.
23 IT'S AN IRREVOCABLE TRUST WHERE THERE ARE
24 SUBSTANTIAL ESTATE TAX BENEFITS TO PUTTING YOUR PRINCIPAL
25 RESIDENCE INTO SUCH A TRUST.
26 Q NOW, AFTER MEETING WITH MR. GAGGERO, IDENTIFYING
27 THE ASSETS THAT EXISTED -- THIS APPROXIMATE $30 MILLION IN
28 ASSET VALUE THAT WE'RE TALKING ABOUT, NET VALUE -- DID ALL

939
1 OF THAT VALUE -- WAS IT TRANSFERRED INTO LIMITED LIABILITY
2 COMPANIES, PARTNERSHIPS, AND THEN THEREAFTER IT WAS THEN
3 SUBSUMED INTO ONE OF THESE TRUSTS OR THE FOUNDATION THAT WE
4 DISCUSSED?
5 A YES.
6 Q OKAY. HOW LONG DID IT TAKE FOR THIS ESTATE PLAN TO
7 BE FULLY FUNDED?
8 A I WOULD SAY SEVERAL MONTHS. PERHAPS AS MUCH AS ONE
9 YEAR.
10 Q DO YOU RECALL APPROXIMATELY WHEN THE FUNDING WAS
11 COMPLETE?
12 A I LOOKED AT THE DOCUMENTS RECENTLY, AND IT WAS
13 APPROXIMATELY MARCH OF '98, EXCEPT FOR THE PRINCIPAL
14 RESIDENCE, THE GIGANIN TRUST, WAS LATER. I THINK IN
15 EARLY '99.
16 Q NOW, ONCE THIS ESTATE PLAN WAS FULLY FUNDED, DID
17 YOU CONTINUE TO PROVIDE A ROLE BEYOND THAT OF THE ATTORNEY
18 FORMULATING OR CREATING THE ESTATE PLAN?
19 A YES.
20 Q WHAT ROLE DID YOU CONTINUE TO PLAY?
21 A I'M THE TRUSTEE OF THE TRUSTS. I'M THE MANAGER OF
22 LIMITED LIABILITY COMPANIES, GENERAL PARTNER OF LIMITED
23 PARTNERSHIP.
24 THE COURT: OF WHICH? ALL OF THEM? ALL OF THEM? I
25 DON'T KNOW HOW MANY THERE ARE. ARE YOU SAYING YOU'RE THE
26 GENERAL YOU'RE THE MANAGER OF ALL OF THEM?
27 THE WITNESS: I'M THE GENERAL PARTNER
28 THE COURT: HOLD ON. DON'T INTERRUPT ME. THE COURT

940
1 REPORTER CAN'T TAKE TWO PEOPLE SPEAKING AT ONCE.
2 ARE YOU SAYING YOU'RE THE MANAGER OF ALL OF THE
3 LLC'S AND GENERAL PARTNER OF ALL OF THE LP'S?
4 THE WITNESS: WHEN -- NO. I WOULD HAVE TO LOOK AT
5 DOCUMENTS. FOR THE LP'S, FOR TWO OF THE LP'S, I AM THE
6 GENERAL PARTNER.
7 THE COURT: TWO OF HOW MANY?
8 THE WITNESS: TWO OF FOUR.
9 THE COURT: ALL RIGHT. HOW ABOUT THE LLCS? YOU'RE
10 GENERAL MANAGER OF HOW MANY?
11 THE WITNESS: ACTUALLY, I THINK THAT THE MANAGER OF THE
12 LLCS, IN MOST CASES, IS A CORPORATION, OVER WHICH I AM THE
13 PRESIDENT.
14 THE COURT: FOR MOST OF THEM?
15 THE WITNESS: YEAH.
16 THE COURT: OKAY.
17 THE WITNESS: AND I AM THE TRUSTEE OF THE GIGANIN TRUST
18 FOR THE PRINCIPAL RESIDENCE.
19 THE COURT: ALL RIGHT. SORRY.
20 Q BY MR. BEZEK: NOW, IN THAT CAPACITY, IN YOUR
21 CAPACITY, CONTINUING CAPACITY, DO YOU HAVE THE AUTHORITY TO
22 APPOINT A MANAGER OF THE ASSETS?
23 A YES.
24 Q DID YOU APPOINT A MANAGER OF THE ASSETS FOR THE
25 ENTIRE ESTATE PLAN?
26 A YES.
27 Q WHO WAS THAT?
28 A MR. GAGGERO.

941
1 Q WHAT ARE THE DUTIES OF A MANAGER OF THE ASSETS?
2 A HE HANDLES ALL THINGS RELATED TO THE REAL ESTATE
3 PORTFOLIO.
4 Q DOES THAT INCLUDE BOTH PURCHASES AND SALES?
5 A BUYING AND SELLING, FINANCING, TRADING.
6 EVERYTHING.
7 Q DID THERE COME A TIME WHEN MR. GAGGERO IDENTIFIED
8 TO YOU A PARTICULAR PIECE OF PROPERTY THAT HE WAS
9 CONSIDERING PURCHASING ON BEHALF OF THE ESTATE PLAN?
10 A WELL, YES, SEVERAL TIMES.
11 Q OKAY. DO YOU RECALL HIM EVER IDENTIFYING ANY OF
12 THOSE PROPERTIES AS THE 938 PROPERTY IN SANTA MONICA --
13 A YES.
14 Q -- OR WHAT YOU ULTIMATELY LEARNED TO BE THAT?
15 A YES. BUT WHEN WE INITIALLY TALKED ABOUT IT, I
16 DIDN'T KNOW OF IT AS SPECIFICALLY THE 938 PROPERTY. I ONLY
17 KNEW OF IT AS A BEACH HOUSE IN SANTA MONICA WHERE, SINCE HE
18 VISITED THE SANTA MONICA/VENICE AREA FREQUENTLY, HE WANTED
19 TO HAVE A HOME AND HE WANTED TO HAVE A PLACE WHERE HE COULD
20 HAVE LIKE A HOME/OFFICE.
21 Q ALL RIGHT. NOW, AFTER THE FUNDING OF THE PLAN IN
22 ABOUT MARCH OF 1998, MARCH, APRIL, SOMEWHERE IN THAT TIME
23 FRAME, AND MR. GAGGERO WAS THE MANAGER OF THE ASSETS, HAS
24 THE VALUE OF THE ESTATE PLAN, THAT IS, THE TWO TRUSTS AND
25 THE FOUNDATION
26 THE COURT: IS THERE A BETTER WORD THAT HE COULD USE
27 OTHER THAN "ESTATE PLAN"? COULD YOU SUGGEST SOMETHING,
28 PLEASE. "THE ESTATE"?

942
1 THE WITNESS: JUST SAY "THE ESTATE" IS FINE.
2 THE COURT: "ESTATE PLAN" IS NOT THE WAY TO PHRASE IT?
3 THE WITNESS: SAY "TOTAL ESTATE."
4 Q BY MR. BEZEK: TOTAL ESTATE?
5 A YES.
6 Q IT SHALL BE SO.
7 A OKAY.
8 Q HAS THE VALUE OF THE TOTAL ESTATE INCREASED SINCE
9 THE TOTAL ESTATE WAS FUNDED OR DECREASED?
10 A SUBSTANTIALLY INCREASED.
11 Q DO YOU HAVE AN ESTIMATE OF THE INCREASE, THE VALUE
12 OF THAT INCREASE?
13 A AT LEAST 30 TO 40 PERCENT.
14 Q DID YOU AT ANY TIME CONFER WITH MR. GAGGERO ABOUT
15 THE AVAILABILITY OF RESOURCES FROM THE TOTAL ESTATE TO MAKE
16 A PURCHASE OF THE 938 PROPERTY?
17 A YES. BUT LIKE I -- WELL, YES.
18 Q OKAY. NOW LET'S TALK ABOUT INITIALLY WHEN THE
19 INFORMATION WAS BROUGHT TO YOUR ATTENTION. WHEN IT WAS
20 FIRST BROUGHT TO YOUR ATTENTION, WAS IT BROUGHT TO YOUR
21 ATTENTION AS A SPECIFICALLY IDENTIFIED PIECE OF PROPERTY
22 WITH AN ADDRESS?
23 A NO, I DIDN'T KNOW OF IT BY ADDRESS.
24 Q WHO BROUGHT IT TO YOUR ATTENTION?
25 A MR. GAGGERO.
26 Q WHAT DID HE SAY?
27 A THAT HE HAD IDENTIFIED THIS PROPERTY THAT HE WANTED
28 TO PURCHASE, THAT IT INCLUDED A RIGHT OF FIRST REFUSAL OVER

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