Complete CIETC trial transcript

1 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF IOWA CENTRAL DIVISION - - - - - - - - - - - - - - - -X UNITED STATES OF AMERICA, : : Plaintiff, : : vs. : : RAMONA CUNNINGHAM, JANE BARTO, : KAREN TESDELL, JOSEPH : ARCHIBALD BROOKS, JR. and : DAN ALBRITTON, : : Defendants. : - - - - - - - - - - - - - - - -X Criminal No. 07-008 Volume I TRIAL TRANSCRIPT West Courtroom U.S. Courthouse 131 East Fourth Street Davenport, Iowa Tuesday, April 8, 2008 8:30 a.m. BEFORE: The Honorable ROBERT W. PRATT, Chief Judge, and a Jury. EILEEN HICKS - CERTIFIED SHORTHAND REPORTER 2 APPEARANCES: For the Plaintiff: WILLIAM C. PURDY, ESQ. JOHN S. COURTER, ESQ. Assistant U.S. Attorneys U.S. Courthouse Annex 110 East Court Avenue Des Moines, Iowa 50309 LEON F. SPIES, ESQ. Mellon & Spies Suite 411 102 South Clinton Street Iowa City, Iowa 52240 AARON HAMROCK, ESQ. TIMOTHY McCARTHY II, ESQ. McCarthy & Hamrock 1200 Valley West Drive Suite 400 West Des Moines, Iowa 50265 PAUL D. SCOTT, ESQ. Cook, Brown & Scott 8554 Alice Avenue Des Moines, Iowa 50325-7112 For Defendant Barto: For Defendant Tesdell: For Defendant Albritton: 3 1 2 3 4 5 6 7 Kevin Miller 8 Dennis Swafford 9 10 11 E X H I B I T S 12 13 14 15 16 17 18 19 20 21 22 23 24 25 GOVERNMENT EXHIBIT NO: 1 - Audit Report 35-40 - Personnel file salary/wage/bonus letter 41-46 - Personnel file salary/wage/bonus letter 47-52 - Personnel file salary/wage/bonus letter 53-58 - Personnel file salary/wage/bonus letter 59-60 - Personnel file salary/wage/bonus letter 62-64 - Personnel file salary/wage/bonus letter 65-70 - Personnel file salary/wage/bonus letter 71-75 - Personnel file salary/wage/bonus letter 76-78 - Personnel file salary/wage/bonus letter 79 - Draft Executive Employment Agreement Cunningham 80 - Draft Executive Employment Agreement Bargman 87 - Personnel Policy Manual, 7/15/1999 88 - Personnel Policy Manual, 8/19/2004 89 - Personnel Policy Manual 116 - 1st Letter from IWD to Regional Office 117 - 2nd Letter from IWD to Regional Office 122 - E-mail dated 10/26/2005 123 - E-mail 124 - E-mail 125 - E-mail OFFERED RECEIVED 89 209 210 212 213 215 215 216 217 218 166 168 228 228 229 174 176 124 126 126 127 91 209 210 212 213 215 215 216 217 218 166 168 228 228 229 174 176 124 126 126 127 Tami Higar 202 135 188(Spies) 198 (McCarthy) 244(Hamrock) 120 133(Spies) Corrine Johnson 51 WITNESS For the Government: Carl Salmons 5/15 38(Spies) 48 39(McCarthy) 43(Scott) 92(Spies) 118 102(McCarthy) I N D E X DIRECT CROSS REDIRECT RECROSS 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 DEFENDANT BARTO EXHIBIT: 16 A - E-mail containing estimate of remaining funds 17 B - E-mail response from Swafford to Cunningham 18 19 20 21 22 23 24 25 193 193 E X H I B I T S (Continued) GOVERNMENT EXHIBIT NO: 127 - E-mail 129 - E-mail 130 - E-mail 131 - E-mail 132 - E-mail 133 - E-mail 134 - E-mail 135 - E-mail 139 - Letters from Personnel Files 140 - Letters from Personnel Files 143 - Fax to Salmons' Office from CIETC 148 - Letter to CIETC from Salmons containing Bylaws and 28(e) agreement OFFERED 127 128 129 129 130 131 131 132 230 231 33 14 RECEIVED 127 128 129 129 130 131 131 132 231 231 34 14 SALMONS - DIRECT 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. A. Mr. Salmons, would you tell the jury your occupation. I'm an attorney licensed to practice law in the State of P R O C E E D I N G S (Jury selection reported but not transcribed.) (A jury was duly empaneled and sworn on Monday, April 7, 2008.) (Opening statements were reported but not transcribed.) THE COURT: Mr. Purdy, you may call your first witness. MR. PURDY: calls Carl Salmons. CARL SALMONS, GOVERNMENT'S WITNESS, SWORN THE COURT: MR. PURDY: Counsel, you may proceed. Thank you, Your Honor. Thank you, Your Honor. The Government Before I question Mr. Salmons, to assist the jury, I believe Mr. Salmons' testimony will assist in understanding count 1 of the indictment. DIRECT EXAMINATION Iowa. Q. A. And what type of law do you practice? By and large it's been municipal law of one type or another throughout my career. Q. A. By municipal law, what do you mean by that? I was an assistant attorney general for a good--well, about SALMONS - DIRECT 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 another. Q. A. How long have you been engaged in that practice? Well, since, gosh, 1977, I believe is when I went to the 2 1/2 years, representing the State of Iowa. I went to a law firm--a private law firm in about 1979 and began representing county government, sometimes city government. So it's mostly Iowa municipalities of one type or attorney general's office. Q. During the course of your practice in this area have you ever had an occasion to become involved with an entity known as CIETC? A. Q. A. Yes, Sir. Would you tell the jury what type of entity CIETC was. CIETC, Central Iowa Employment and Training Consortium, was a corporation that was formed under Iowa statutory law, Iowa Code Chapter 28E. That was created out of seven counties and the city of Des Moines. Iowa Code Chapter 28E permitted by the legislature the aggregation of the coming together of many counties and other municipalities for the purpose of achieving common goals, if you will. So this particular code chapter allowed for the creation of an organization to serve those particular goals. Q. What type of goals did CIETC have? SALMONS - DIRECT 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. CIETC--and I'm going to refer to CIETC as being created in 1982, because there was a predecessor also under Iowa Code Chapter 28E that had similar goals, but I'm going to focus on 1982 to the present. CIETC as created in 1982 had a goal as defined by seven counties and the city of Des Moines as providing job training services within the central Iowa area, those seven counties and the city of Des Moines at that time specifically under federal statute known as the Job Training Partnership Act. Q. What types of things was CIETC tasked to do under that job training act? A. The Job Training Partnership Act was a change from an earlier federal law, the Comprehensive Employment and Training Act, and under that act, a similar structure, a like corporation, was formed, but that existed of 72 cities within the seven county region. It was just a nightmare to deal with that many cities, and the group that was created at that time was responsible directly to the U.S. Department of Labor. When CIETC came along under the Job Training Partnership Act, it was responsible now to the state that received federal funding, also from the Department of Labor, but its focus was much the same. It was to provide job training programs for those who were undereducated, not educated well enough, who had lost jobs by layoff or plant closings, that type SALMONS - DIRECT 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of thing. Q. So you mentioned this 28E agreement. Is that a formal document? A. Q. Yes, Sir, it is. And what power does an entity like CIETC have without a 28E agreement? A. In the absence of a 28E agreement an entity like CIETC would have no power. It, CIETC, under this 28E Iowa Code chapter only derives its powers from the powers that Iowa law has instead given or bestowed upon the individual counties themselves or the city of Des Moines under different other parts of Iowa law. So you can take in one hand the city's powers and in another hand the counties' powers, bring them together by authorization of Iowa Code Chapter 28E, and then the law says they can do together what the law otherwise confers upon them to do singularly. Q. When this 28E agreement is prepared, is that something you would do in your normal course of business? A. Q. A. Q. Yes, Sir. And did you in fact do one or more 28E agreements for CIETC? Yes, Sir. In addition to-Well, sticking with the 28E agreement, what happens to it after the agreement is drafted? A. Well, the agreement is drafted and of course the agreement SALMONS - DIRECT 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 itself reflects those who will be members in it, in this case seven counties and the city of Des Moines. The agreement is the, if you will, the constitution of this organization. It is the higher forming law. It goes back to each of the members to make sure that the potential members that create the resulting corporation understand what powers they have conferred, what their responsibilities are, what their liabilities are, their budgets, that type of thing, and what it is they think they're carrying forth in trying to achieve. Q. In addition to the 28E agreement are there other rules or internal sets of procedures that an entity like CIETC is required to follow? A. Q. A. Well, yes. Yes. What would those be? In the first order would be the bylaws. The bylaws are directly implemented under the power of the 28E agreement, this supervening corporate document which authorizes the creation of the bylaws; and then underneath the bylaws are the personnel policies that dictate more specifically the obligations of certain employees, their compensation, all of their rights as employees, sick leave, vacation that type of thing. Q. During the course of your working with the entity known as CIETC, did you have occasion to draft or prepare bylaws? A. Q. Yes, Sir. And did you have occasion to draft or propose personnel SALMONS - DIRECT 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 policies? A. Q. Not personnel policies, no. Specifically, with regard to CIETC, what role did you play over the course of the years? A. I was, in general, outside counsel. I suppose I'd put it My that way. I was a member of a private law firm since 1979. partner, a fellow named Lee Gaudineer, was a municipal lawyer also, and I would assist him early on in representing the Central Iowa Employment and Training Consortium. So my role kind of followed his path, and eventually I took over responsibility for the corporation on an as-needed basis. In other words, I had a private practice in law. When the corporation required any assistance or legal help, I would be called upon from time to time by the corporation board or usually by the executive director at the request of the corporation board. Q. Let's talk about that line of communication. During the course of your representation of CIETC did you communicate directly with the board chairperson from time to time? A. Q. Yes, Sir. Did you communicate directly with the executive director of CIETC from time to time? A. Q. Yes, Sir. Did you communicate directly with any of the oversight entities above the local board, either regional board or state SALMONS - DIRECT 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 or federal oversight authorities? A. Q. A. Yes. Yes, I did. And in what regard would you do that? Well, let me answer it this way: When Congress came along--and I'm going to focus now on I think 1996, 1997--the Job Training Partnership Act that had been created in 1982, the federal Congress comes along in 1996, 1997, that may be '98, and it passes something called the Workforce Investment Act, which supercedes or takes the place of the Job Training Partnership Act. Things got very complicated at that point because there's been a major change in federal law that affects my organization insofar as it exists to provide job training services. At that point whatever the changes are have got to be read and understood. So my responsibility on behalf of the corporation was to read the federal statute and try to compare it side by side with the old federal statute. That would be No. 1. No. 2, I would take whatever was available from the federal agency that was in charge, and, as I recall, it was the United States Department of Labor, and I would read their regulations. The agency, the federal agency, would write implementing regulations under this new federal statute, and that would be more specific than the federal statute in describing what the agency viewed as the local responsibilities SALMONS - DIRECT 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to be. So I would read those. Then because of the way the Workforce Investment Act worked, it established an intermediate relationship with the Iowa Workforce Development Department, so you had an arrangement whereby under federal statutory and regulatory law, there was to be this intermediary with the Iowa Workforce Development Department, which is also created by law, but state law. So there had to be an implementing statute under state law, and then because the Iowa Workforce Development Department was also a state agency, there were state regulations the agency would write, just like the federal government had written, that focused on what the state agency believed its responsibilities were under this new federal statute. So I would read federal statute, federal regulations, state statute, state regulations, and then having all of that in mind, try to create structures and communicate with those at the state level to whom my corporation would become primarily responsible in the rendition of the services under this Workforce Investment Act. Q. I'm going to show you what's been marked as Government's Does that appear on your screen? Exhibit 148. A. Q. A. No, Sir. Is it on your screen yet, Mr. Salmons? No, Sir. THE COURT: Mr. Purdy, why don't we proceed. I don't SALMONS - DIRECT 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor? Q. Showing you, Mr. Salmons, what has been marked as know why it's not displaying. paper copy. MR. PURDY: THE COURT: May I approach, Your Honor? You may. Why don't you proceed with the There's a rule I mentioned in voir dire, they have to ask permission to approach the witness. MR. PURDY: Actually, may I approach again, Your Government's Exhibit 148, do you have that in front of you? A. Q. A. Yes, Sir, I do. Can you identify that for the Court? This is a letter that I wrote to the then executive director of the Central Iowa Employment Training Consortium dated March 7 of 2002, and it has attached to it the redrafted 28E agreement creating CIETC and also the bylaws that were amended to conform with that redrafted 28E agreement. Q. And you mentioned that letter is directed towards the former Who is that individual? executive director of CIETC. A. Q. That's Ms. Ramona Cunningham. And when we talked earlier about preparing bylaws and 28E agreements for the entity known as CIETC, attached to this letter is that an example of what we were talking about? A. Q. Yes, Sir, it is. Both the 28E agreement and the bylaws? SALMONS - DIRECT 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 jurors. BY MR. MR. PURDY: Q. Mr. Salmons, what do you recall is the substance of this MR. PURDY: THE COURT: A. Correct. MR. PURDY: Your Honor. MR. SPIES: MR. HAMROCK: MR. SCOTT: THE COURT: Without objection. No objection, Judge. No objection, Your Honor. Received. (Government Exhibit No. 148 was offered and received in evidence.) Permission to publish, Your Honor? You may. The government moves to admit Exhibit 148, When they publish, that means they show it to you letter? A. Gosh, I was communicating with Ms. Cunningham at the behest I had been instructed-- of the chair of the consortium board. Well, let me back up a little bit. I had been requested by the chair of the consortium board back in the fall of 2001-MR. SPIES: the witness briefly? THE COURT: You may. Excuse me. Your Honor, may I voir dire When they voir dire the witness, they want to try to lay a foundation for making an objection. Voir dire means SALMONS - DIRECT 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. A. Mr. Salmons, the context of this letter again? In 2001 I had been requested by the chair of the consortium BY MR. SPIES: Q. Mr. Salmons, the answer you're about to give, is this inquire in this context, just like it does in jury selection. Whether or not I let them do it is in my, quote, sound discretion, so I'm going to let Mr. Spies do it. It tends to interrupt the presentation, but if they have a good legal reason, I wait to hear that. Mr. Spies, you may proceed. VOIR DIRE EXAMINATION introduced for the purpose of showing what motivated you to write this letter to Ms. Cunningham? A. Yes, Sir. MR. SPIES: THE COURT: All right. Okay. Thank you. Mr. Purdy, when he left off, or the Well, let me back last response was, "I had been instructed-up a little bit. I had been requested by the chair of the Then Mr. Spies consortium board back in the fall of 2001." asked to voir dire, so if that helps you. DIRECT EXAMINATION (Resumed) board, a fellow named K. C. Valster, at that time to redraft and recreate a 28E agreement that reflected changes caused by the potential absence of Polk County as a member. SALMONS - DIRECT 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Together with that I had been requested to also redraft the bylaws of the corporation to reflect the absence of that member, potentially, Polk County. What happened eventually was that Polk County decided to remain in the consortium, but it was time for a rewrite of the documents. I followed the chair's directions. I rewrote both the consortium 28E agreement and the bylaws, and I finished that project in late December of '01 and sent a letter to the chair explaining this, this and the other about what the changes were and how to compare them and how to think about them for purposes of having the other consortium members vote on them. This letter, Exhibit 148, reflects the fact that by March 7 of 2002 the board had apparently met and decided what changes they wanted to see in the final corporate documents, both the 28E agreement and the bylaws at that time, and I was sending therefore to Ms. Cunningham, the executive director of CIETC, the originals of the revised 28E agreement as well as the bylaws so that the corporation board members could then begin the implementation process of adopting those. Q. Turn if you will to the 28E agreement. Page 3 of the document? You say page 3? Do you have that in front of you? A. Q. A. Yes, Sir. Yes. I have it. SALMONS - DIRECT 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Looking at the first paragraph, this document was in draft Final form but not yet executed; is that form; is that correct? correct? A. Q. Correct. The first paragraph talks about that Workforce Investment Act that you mentioned, and, again, as I understand it, that's part of the federal statute and the federal regulations we were talking about earlier; is that correct? A. Q. Yes, Sir. You also mentioned that CIETC had to comply with state laws and state regulations as well; correct? A. Q. Correct. Turning your attention, if you will, to paragraph 2 at the bottom of that page where it talks about members. A. Q. I see it. I believe you testified earlier that there were a number of counties involved in the makeup of this organization; is that correct? A. Q. Correct. And would paragraph 2 represent the counties and the municipality that were part of this agreement? A. Q. Yes, Sir. Turn if you will to paragraph 5 of this document. On page 2 do you see that, where it says consortium board, voting and bylaws? SALMONS - DIRECT 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Correct, I see it. And would you read the last sentence of that paragraph, please. A. "The board of directors may adopt bylaws for the regulation and management of its affairs not inconsistent with law or this agreement." Q. A. And what does that sentence mean to you? Well, it means two things: That "inconsistent with law or In the this agreement" establishes two different standards. first place, any bylaws that are written must be consistent with law, both federal, more likely state law; second, the bylaws that are drafted must be entirely consistent chiefly with the 28E or consortium agreement. Q. So if there's a dispute between the 28E agreement and the bylaws, which document would control? A. Q. Oh, the 28E agreement, clearly. And the 28E agreement can't authorize CIETC or any members of authorization to do something that the law doesn't allow them to? A. Q. A. Q. That's correct. What would happen if it did? Say again, please. What would happen if the 28E agreement or the bylaws would authorize something that was contrary to law? A. Well, these are just documents. They're just papers. SALMONS - DIRECT 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 break. If there were some act or some omission that was carried on by corporate board members that was inconsistent with one of these documents, and it came to light, then you would have a problem, because the documents and the law supply the parameters of the boundaries of proper lawful conduct. And if that came to light and legal advice were sought, we would try to conform the conduct with both the law and these documents. If it didn't come to light, obviously then the problems would persist. Q. During the course of preparing and proposing these bylaws and 28E agreements to CIETC, did you have occasion to discuss the proposed 28E agreement and/or bylaws with any of the defendants? A. Q. A. In this case? In this case. No, Sir. THE COURT: Mr. Purdy, I want to give the jury a I'm going to give you a If you You've been sitting an hour. moment just to stretch and then resume the testimony. want to stretch in place, you may do so. (Short pause.) THE COURT: All right. Mr. Purdy, when we left off you had just asked and the witness had answered whether he had ever discussed the 28E agreements or bylaws with the defendant SALMONS - DIRECT 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. and he said no. BY MR. PURDY: Q. Mr. Salmons, I'm going to ask you to turn to the bylaws Do you have that in front of you? attached to this document. A. Q. A. Q. Yes, Sir. Again, these are the bylaws for the entity known as CIETC? Correct. Turning your attention to Article II, section 1, the General Do you see that article? Oh, yes. I'm sorry, yes. Powers. A. Q. A. Q. Article II? Section 1 entitled General Powers? Correct. In that section there's an entity identified as the executive committee; is that correct? A. Well, let me take a look here. Yes, there is. Would you explain the concept of the executive committee to the jury, please. A. Well, to understand the executive committee, you have to understand the board structure. There are seven counties and the city of Des Moines and there were 14 votes in the corporation. In this case each of the seven counties had one vote, the city of Des Moines had three votes, and Polk County because of its population had four votes, so there's a total of 14 SALMONS - DIRECT 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 votes. The corporation, the board of directors, having these votes, could only exercise its powers at a meeting. You know, you go through the public notice under the Open Meetings Act, that kind of thing, and make a decision by all members present or at least a quorum present. on a monthly basis. In the absence of a corporation meeting, because the folks in the corporation were themselves representatives of county government or city government, the executive committee was created to address itself on an as-needed basis to problems that came up between the board meetings, so that if something came up, they would be empowered in committee, three members, who could meet. It's easier to have three people meet than all Three people meet and make a decision for That would typically take place these other members. the corporation in the interim before the next regularly scheduled board meeting. So the executive committee, and its powers are elsewhere defined, largely stood as kind of an acting consortium body in the absence of the full consortium at a regular meeting. Q. Okay. So as I understand what you said to me, then, the Would that executive committee can act in rare circumstances. be a fair statement? A. Q. You say rare? Rare circumstances. SALMONS - DIRECT 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. I do. And what does that article--what's the heading on that A. Q. Yes, Sir. When there's some business that can't wait until the next regularly scheduled meeting? A. Q. Yes, Sir. And then if they do take action, that action is supposed to be presented to the full board at the following meeting? A. Absolutely, to be ratified, to be considered by the corporation board for what had occurred in the interim, what action was taken, and then for that board itself to accept it by motion or ratification or procedure. Q. Turn if you will to Article III, section--Article III, first. Do you have that article in front of you? article? A. Q. This addresses the officers of the corporation. Can you explain the concept of the officers of the corporation to the jury, please. A. The officers of the corporation--well, let's back up and The board under the 28E agreement are, if talk about the board. you will, the analogy would be to a private corporation the board of directors. The officers are those individuals who are identified in this Article III as having the responsibilities more on a daily basis of supervising the running of the SALMONS - DIRECT 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 corporation. Here we have defined what those positions are, and of course you'll see later on there's a chair, the vice-chair, the treasurer, the secretary, that type of thing. Q. Okay. I direct your attention to paragraph 5 under Article Do you have that in front of you? III, chairperson. A. Q. A. Yes, Sir. Would you read that for the jury, please. "The chairperson shall be the principal executive officer of the consortium and subject to the control of the consortium board, shall in general supervise and control all of the business and affairs of the consortium. "He or she shall, when present, perform all duties incidental to the office of chairperson, and such other duties as may be prescribed by the consortium agreement, bylaws, or by the consortium board." Q. I believe when you indicated earlier that you had talked with the chair of the board, that that's the office of the chairperson. A. Q. A. Q. A. Q. Correct. And that's Mr. Valster? At that time it was. What was the context of that communication? Concerning what? I'm sorry. Is that what you're talking about? Concerning the March 11th that you subsequently sent to Ms. SALMONS - DIRECT 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Cunningham. A. It was the conveying through to Ms. Cunningham of these In other final documents that we're speaking of in Exhibit 148. words, the finally drafted--the version that was finally accepted apparently by the consortium members was now being conveyed in its final form by direction of Mr. Valster, the chair of the board, to Ms. Cunningham so that the original counterparts of that document could be disseminated to the seven counties and the city of Des Moines for them to review one final time and then start to follow the procedure for adoption. Q. I believe you indicated that about this point in time Polk County had some reservations about remaining in the consortium; is that correct? A. Not at that time. Earlier in 2001 they had had reservations about remaining in, yes. Q. At any point during your working with the board chair or the board executive--I'm sorry the executive director, Ms. Cunningham, were you presented with bylaws that had been adopted or bylaws that had been prepared by somebody other than yourself? A. Q. No, I was not. No modifications were presented to you that are not in this version? A. Well, yes. Okay, to answer it that way, yes, I was. Well, let me see. I became aware-- Some time during my redraft in December of '01 at the SALMONS - DIRECT 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. direction of Mr. Valster of the corporation agreement, the 28E agreement and also the bylaws, I became aware of a change that had been made to the bylaws that was not in the original of the documents I had redrafted back in 1998 when the Workforce Investment Act came along and was implemented. Q. A. What was the substance of that change? Well, may I explain at some length here? When the 28E agreement comes together, you're bringing these governments together, they're accepting a lot of responsibility under federal law, a lot of liability for the moneys that federal law passes down for these job training purposes. MR. SCOTT: nonresponsive. Excuse me, Mr. Salmons. It's I'm going to object. Overruled. THE COURT: When that money comes down through the pipeline that I've described, there's got to be a continuing consent, and this is the way it worked in practice, on a periodic basis of the members to want to be or stay in this corporation. corporation. And so on an annual basis, sometime before the fiscal year started, and it would start July 1 of any year, there was what was called the reattestation process, and that would involve confirming with each of the counties and the city of Des Moines that they wanted to continue their membership in this corporation for the next fiscal year. This was a SALMONS - DIRECT 26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 question. And I reiterate, that was done on an annual basis. That involved Ms. Cunningham, the executive director. THE COURT: Mr. Salmons, I want you to listen to his I think "What was the substance of that change?" that's what Mr. Scott's objection, and I think--I mean it's very difficult for me to get my--to understand this, but just tell the jury the substance of the changes we're talking about, if you would please. A. All right. The substance of the change was rather than having a provision in the earlier corporate documents involving reattestation on an annual basis, the change I had discovered was the attestation process was now 4 years instead of 1 year. BY MR. PURDY: Q. Did you discuss that change that came to your attention with anybody? A. Q. I would have discussed it with the chair, yes, Sir. Mr. Valster. Would you have discussed it with Ms. Cunningham? A. I'm certain I did, but I have no distinct recollection of I do remember talking about it with Mr. Valster. that. Q. A. Q. A. Q. Did you discuss that change with Ms. Barto? Yes. When would that conversation have taken place? Sometime in 2001, early 2002, in that time frame. Why did you discuss that change that had been brought to SALMONS - DIRECT 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. sorry. THE COURT: "Question: Why did you discuss that your attention with Ms. Barto? A. Ms. Barto was--I forget what her title was working in the Iowa Workforce Development Department, and as I recall it, I had been told by Ms. Cunningham that the reason for the change-MR. SPIES: THE COURT: Objection; hearsay. Ladies and gentlemen, we're going to take Whether or not you can this answer subject to the hearsay. consider it at the close of the case will be up to some legal requirements. But you can receive it now conditionally. It may be subject--it will be subject to a later ruling. You can answer. THE WITNESS: Can you read back the question? I'm change that had been brought to your attention with Ms. Barto? "Answer: Ms. Barto, was--I forgot what her title was working at Iowa Workforce Development Department, and as I recall it, I had been told by Ms. Cunningham that the reason for the change--" MR. SPIES: THE COURT: Objection; hearsay. The Court made its ruling. Do you have it now, Mr. Salmons? THE WITNESS: Yes, Sir. Thank you. I was informed by Ms. Cunningham that there was a state requirement, emanating from the Iowa Workforce Development SALMONS - DIRECT 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Department, across the board, a state requirement that the agreement be 4 years in length, which struck me as odd, and I had a conversation with Ms. Barto at that time. BY MR. PURDY: Q. A. And what did Ms. Barto relate to you? Ms. Barto related to me that there was no such state requirement. Q. I direct your attention to Article VII of the bylaws. Do you have that document in front of you? A. Q. A. Q. A. I do. And what's the caption on Article VII? It talks about amendments. Could you explain to the jury how the bylaws may be amended? Well, this document, the bylaws themselves, say how they are to be amended; and bylaws--these bylaws can be changed if there is a need for change and if the board members believe that the change should occur. This document, these provisions, say essentially this: That the changes shall be sent to each of the board members, seven counties, city of Des Moines, for consideration of the city council and the boards of supervisors of the seven counties, and then brought back to the consortium board, the 28E consortium board, at the next meeting, and there's got to be a space--this thing I think says 30 days--30 days before the consortium board can vote on them. So there's a little pause in SALMONS - DIRECT 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. I do. And what is the caption for Article VIII? This is the executive committee article. And we talked about the executive committee earlier being I'd ask you to look at section 2. Do you see there that people can use to reflect on what is being changed. Q. Okay. So if I understand what you told me, in order for these bylaws to be changed, they have to be brought to the attention of the board, a 30-day waiting period, and then debated? A. Q. Correct. Turning your attention to Article VIII, if you would, of the bylaws. Do you have that in front of you? three members. that? A. Q. A. The duty section, yes, Sir. And would you read subparagraph C of that article? All right. "The duties of the executive committee are as follows: Subsection C, to recommend the employment and salary of the executive director to the consortium board for approval." Q. A. And what does that mean? Well, here you have an executive committee with responsibility in the absence of the full consortium to take a look at the responsibilities of the executive director and Ms. Cunningham's salary, and they would analyze that, these SALMONS - DIRECT 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 three people; and then at some later board meeting would make some reference back to the full board for its consideration of whatever changes in responsibilities or pay that they recommended. Q. I direct your attention to Article X of the bylaws. Do you have that in front of you? A. Q. A. Q. A. Q. A. I do. What's the caption on Article X? Duties of the Executive Director. Directing your attention to section 3, do you have that? I do. Would you read that to the jury, please. "The executive director may recommend to the consortium any He or she shall exercise policy amendments or revisions. discretion in the interpretation of policies and procedures as provided for by the consortium and bylaws." Q. Does that section of that article give the executive director the power to change policy? A. Q. A. No, it does not. What does it require? Well, the executive director is--I'm going to make another analogy--the president, the acting CEO of the corporation. In that position running the corporation that person may become aware of the need for changes in policies, in revision to the way the corporation operates. SALMONS - DIRECT 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 This says to me that the executive director is obligated to make--report back to the consortium board or perhaps the executive committee proposed changes that that person spots so the corporation can be run more efficiently or whatever change is needed. Q. Again, this document that we've been looking at was March of 2002; is that correct? A. Q. Correct. Since that time did you have occasion to become involved Strike that. Since 2002 were you ever tasked to work on the 28E agreement or bylaws of CIETC again? A. Q. No, I was not. Did you ever have occasion to receive the 28E agreement or with-- bylaws again? A. Q. A. Q. I did. Can you tell the jury in what context and when that was? This would have been I'm thinking April 3 of 2006. Why were you asked to look at the--why did you look at the bylaws and the 28E agreement again? A. The context is that over the weekend preceding April 3, a It had Monday, 2006, you know, the CIETC thing had blown up. become newsworthy. Q. Stop right there. You said the CIETC thing had blown up. Can you tell the jury what you're talking about? SALMONS - DIRECT 32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. The press over the weekend had reported that there was -MR. SCOTT: THE COURT: Objection; hearsay. Sustained. Why don't we go back to the question you didn't answer. Why did you ask to look at--why did Do you want to Maybe we can get you look at the bylaws and 28E agreement again? tell the jury the answer to that, Mr. Salmons. back on track that way. A. Yes, Sir. I took it upon myself to want to possess or come into possession of the bylaws and the consortium agreement on Monday, April 3. MR. PURDY: THE COURT: BY MR. PURDY: Q. Showing you what's been marked as Government's Exhibit 143, May I approach, Your Honor? You may. can you identify Government Exhibit 143? A. Q. A. I can. What is that? This is a fax to my law office from the CIETC corporation headquarters in Des Moines, on Monday, April 3. Q. A. Is this the document that was obtained at your request? Yes, it was. MR. PURDY: THE COURT: MR. PURDY: Permission to publish, Your Honor? Is it in? It is not. I'm sorry. The government moves admission of Exhibit 143. SALMONS - DIRECT 33 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. SPIES: MR. HAMROCK: THE COURT: MR. PURDY: BY MR. PURDY: Q. At the time you received this fax, Mr. Salmons, were you (Government Exhibit No. 143 was offered in evidence.) Objection; hearsay. Same objection. You want to lay some foundation, counsel. Certainly. still representing CIETC, the entity? A. Q. A. Q. I was. And were you in communication with representatives of CIETC? I had been, yes. Were they asking you to perform services related to, using your words, the blowup of the CIETC? A. Q. Yes. And was this fax obtained in the regular course of your business in representing CIETC, the entity? A. It was. MR. PURDY: Exhibit 143. MR. SPIES: THE COURT: MR. PURDY: THE COURT: Same objection, hearsay. It will be received. Permission to publish, Your Honor? You may. The government moves the admission of SALMONS - DIRECT 34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. Looking at the front page of that fax transmission, do you (Government Exhibit No. 143 was offered and received in evidence.) have that in front of you? A. Q. I do. And you mentioned the date as April 3rd. Who was the sender of this fax, if you know? A. Q. A. A lady named Dianne Bolden. Who is Dianne Bolden? Dianne Bolden was an employee of CIETC that I believe worked for Ramona Cunningham as a secretary. Q. A. Q. And are there attachments to this document? There are. Let's take a look at page 3 of that document. Do you have that in front of you? A. Q. A. Q. A. I do. It's entitled Resolution; is that correct? Yes. What does that purport to be? This would have been a resolution apparently passed by the Polk County Board of Supervisors adopting the CIETC agreement. Q. I believe that your testimony earlier said that a 28E agreement, in order for it to be properly approved, it had to circulate amongst the various counties and get approval at the SALMONS - DIRECT 35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. various county levels; is that correct? A. Q. That is true. And this purports to be the one approved by Polk County. Is that your testimony? A. Q. A. Q. A. It appears so, yes, Sir. Okay. I do. Again, what is this part of the fax that you received? Well, this would be the first page of the 28E agreement that That is Turning to the next page, do you see that? came to me with the resolution we just talked about. from Polk County, and you can see it's dated right there at the top April 30, '02. Q. Also attached to this fax is another document; is that correct? A. Just a minute here. Yes, Sir. And what is also attached to this? That would be the bylaws. Why were you sent the 28E agreement and the bylaws from CIETC? A. Q. Well, because I requested those. Did you request any set of bylaws and any set of 28E agreement? A. I requested the most recent corporation agreement, the 28E agreement, and the most recent bylaws. SALMONS - DIRECT 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Okay. Looking at the bylaws, I want to direct your attention back to Article III, section 5. A. Q. A. Q. A. Q. A. I have it. Again, Article III's caption is? Officers. Officers. And section 5? Deals with the chairman. Would you read that section, please. The chairman section says "The chairperson shall be the principal executive officer of the consortium and subject to the control of the consortium board, shall in general supervise and control all of the business and affairs of the consortium. "Said chairperson shall set the executive director's salary and give incremental supplemental pay based on performance. "He or she shall, when present, perform all duties incidental to the office of chairperson and such other duties as may be prescribed by the consortium agreement, bylaws, or by the consortium board." Q. Now, that paragraph, how does that compare with the one in 2002 that we talked about a minute ago? A. Q. A. There was a sentence inserted in the one I'm looking at now. And which sentence was that? The sentence that reads, quote, Said chairperson shall set the executive director's salary and give incremental SALMONS - DIRECT 37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 supplemental pay based on performance, end quote. Q. Okay. And under the prior agreement, the executive director's pay was set by who? A. As I recall, the executive committee would he evaluate the pay of the executive director and make a recommendation to the full consortium board for approval of that pay. Q. A. Q. And in this one it goes to the chairperson; is that correct? Correct. Turn, if you will, to section--I'm sorry Article VIII, section 2. A. Q. A. Q. All right. I have that. Do you have that? Yes, Sir. The 2002 agreement we talked about had in section 2, if you recall, or if you would like to take a look at Exhibit 148, is a provision regarding recommending the employment and salary of the executive director of the board; is that correct? A. Q. A. Just a minute here. Let me get it. Article VIII, section 2. Article VIII, section 2 of the 2000 agreement that I drafted had subparagraph C which did that, that is correct. Q. A. Did what? I'm sorry. The executive committee was to recommend, quote, to recommend the employment and salary of the executive director to the consortium board for approval. SALMONS - CROSS - SPIES 38 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SPIES: Q. A. Q. Good morning, Mr. Salmons. Good morning, Sir. Mr. Salmons, as you explained to the jury, the 28E agreement Q. And is that provision contained in what was faxed to you in April of '06? A. Q. No, Sir, it's not. During the course of your representation of CIETC did you ever draft the bylaws that made those changes? A. Q. No, Sir, I did not. Based on your experience in this area and with CIETC, is that change on who authorizes payment of the executive director a significant change? A. Q. A. Significant? Yes. Oh, very. MR. PURDY: THE COURT: MR. SPIES: No further questions. Mr. Spies, do you have examination? Briefly, Your Honor. CROSS-EXAMINATION and the bylaws that were a part of that set of rules for the CIETC Board, did the bylaws and the 28E agreement set out not only the powers of the members of that board, the counties and the cities, that you referred to but also their responsibilities? SALMONS - CROSS - McCARTHY 39 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. McCARTHY: Q. A. Q. Good morning, Mr. Salmons. Good morning, Sir. With regard to this board of directors, Karen Tesdell was A. Q. It certainly did. And among the responsibilities was oversight of CIETC, the organization? A. Q. A. Q. A. Q. A. It was. Including the financial operations of CIETC? Certainly. The pay of the directors? Yes. The conduct of their chair? Correct. MR. SPIES: THE COURT: Thank you. I have no other questions. Mr. Hamrock or Mr. McCarthy. Thank you. CROSS-EXAMINATION MR. McCARTHY: not on the board, was she? A. Q. A. Q. A. Q. She was not. She certainly wasn't chairman of the board? No. She certainly wasn't on the executive committee? No. Who in fact was the chief executive officer of the SALMONS - CROSS - McCARTHY 40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 corporation? A. Q. A. Q. A. At what period of time, Sir? In 2002. You say chief executive officer? Yes. That would have been, well, executive director Ramona Cunningham, if that's what you mean. Q. A. And how long had she been in that position? Oh, gee whiz, she would go back I believe to the late 1980's. Q. Now, you really stopped contact with CIETC in 2002; is that right? A. Q. Yes. You quit going to the board meetings and so forth; is that right? A. Q. I did. Through the Nineties and up to 2002 Ramona was in charge, was she not? A. Q. A. She was. She called the shots? Subject to board approval--executive board approval, that's correct. Q. A. Q. She made a lot of the decisions? On a daily basis that was her responsibilities, yes. Was there anybody under her that made the same calls that SALMONS - CROSS - McCARTHY 41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 she did? A. No. Her position was defined I think by the bylaws to be the acting CEO of the corporation, so she was the top person in the corporation on a daily basis. Q. A. Q. A. Q. A. So she ran the show and she called the shots; is that right? That would be true. And she determined salaries, did she not? I'm sorry? She determined salaries and gave those numbers to the board? She determined salaries subject to the overview at least under the documents of the executive committee and its recommendation to the full consortium board. Q. Now, when a person in a 28E corporation, an employee, receives a salary as sanctioned by the board, that can be perfectly legitimate; is that right? A. Q. Presumed, yes. An employee of a 28E corporation receives a bonus accompanied with a letter from either the director or the chairman of the board, there's a presumption that that bonus is legitimate; isn't that true? A. I don't think so. And I'm speaking only from my own experience. Q. Now, if Karen Tesdell received a bonus with a thank you letter from Archie Brooks, giving her a bonus approved by the board, are you saying that's not legitimate? SALMONS - CROSS - McCARTHY 42 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Sir, I wasn't there at the time. What else would an employee expect with a bonus? In all of the time that I served as the corporation counsel for this organization there were never bonuses, never. Q. Okay. Are you aware that the bonuses that Karen Tesdell received all came with a letter--a thank you from Archie Brooks? A. Q. I am not aware of that. Now, we've talked about earlier Exhibits 143 and 148. You actually had no contact with Karen Tesdell concerning those documents? A. Q. No. You can't even state for any certainty that she had any awareness of these documents themselves? A. I don't know what she knew. This I don't think would be within her skein. Q. And you indicated earlier you had no conversations with Karen Tesdell; is that correct? A. Q. A. Q. A. About these documents, that's true. You had a number of conversations with Ramona Cunningham? About these documents? Yes. Well, no. I think my conversation with Ramona would have been-THE COURT: Ms. Cunningham. Ms. Cunningham, Mr. Salmons; not Ramona. SALMONS - CROSS - SCOTT 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. BY MR. SCOTT: Q. Mr. Salmons, I'd like to address a couple of things with you A. I'm sorry. My conversation with Ms. Cunningham would have I would have had more extensive conversation with been limited. the chair, who was at that time Mr. Valster. Q. Are you aware of any lies, trickery or deceit concerning Karen Tesdell? A. No. MR. McCARTHY: THE COURT: MR. SCOTT: Nothing further. Mr. Scott, any questions? Yes, Your Honor. Thank you. CROSS-EXAMINATION briefly here. THE COURT: can you hear? Go ahead, counsel. In regard to the ratification process of a board, I believe When they're away from that microphone, you testified on direct examination that if an agent of the board of directors does something that is not necessarily authorized by the operating agreement, that the nonconforming conduct would somehow be brought into and become conforming. that correct? A. Q. A. Is that what you testified to? You're close. Is Something like that. I'm close. It's a ratification; correct? It is a ratification of conduct done by the executive SALMONS - CROSS - SCOTT 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 committee and taken for consideration by the full consortium board, yes, Sir. Q. And a board has the authority, does it not, to ratify unauthorized conduct; isn't that correct? A. It would, yes. THE COURT: Mr. Scott, why don't you help the jury. I'm not sure they know. Ask the witness what ratification is. Q. Could you describe for us what the term ratification means or define that for us, please. A. Certainly. Ratification is the process by which a board of superior power will take a look at an act done earlier by an inferior body, in this case the executive board, and determine that the executive board did correctly what the board itself would have done had the issue come directly before the board. Q. A. Q. Mr. Salmons--is it "Sammons" or "Salmons"? Salmons. Mr. Salmons, ratification doesn't necessarily just occur for acts that are done by the executive board, though, does it? A. Q. Not necessarily. It's not so limited, that's true. Well, that was the definition that you gave to the jury? The prior acts don't And I just wanted to clear that up. necessarily just have to have been done by the executive board. They can have been done by any agent of the corporation; isn't that correct? A. So long as knowledge of those acts is brought to the SALMONS - CROSS - SCOTT 45 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 attention of the full board for formal acceptance of those acts. Q. it? A. Well, acceptance doesn't necessarily need to be formal, does It can be expressed or implied; isn't that correct? That's a concept of law. I'm talking about formal ratification as addressed in these documents, Sir. Q. I understand. And I'm talking about ratification in general. And ratification of general act, whether or not those acts are authorized by the board, can be ratified by those boards; correct? A. Q. A. Q. A. Implicitly or expressly, that is true. And implicitly means it's brought to the board's attention? No. That's expressed. And implicit -- Expressed. Means that the board is aware of a prior act and does nothing to disavow it or to accept it. Q. Thank you. I want to just touch base on a couple of other things. It's my understanding that you stopped attending board meetings in 1997 or 1998; is that correct? A. No, that's not correct. I would have stopped attending board meetings sometime, oh, gosh, I would think about 2000, thereabouts. Q. Why did you stop attending board meetings? I'm sorry. Is it because-- Excuse me. I didn't mean to ask that question. Were you asked to stop attending board meetings, or did you stop on your own accord? SALMONS - CROSS - SCOTT 46 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Probably a little of both, to be honest with you. Who would have asked you to stop coming to board meetings? Well, you know, I guess I'm going to take back that. I do not have a specific recollection of being asked not to attend board meetings. Q. Let me-- I just was asking you whether or not somebody asked you to stop coming to board meetings? A. Q. No, not that I recall. So the reason you--or not the reason, but you stopped attending board meetings on your own accord, is that correct, without direction? A. Q. A. I would have to say yes. You began representing CIETC in what year? Well, this corporation came into existence first in 1982. My firm had represented a variation of it for I represented-- 5 years prior--strike that, not 5 years, back in 1979. Q. Okay. But when did you start representing CIETC? Would it have been at the inception of the organization? A. Q. Yes. All right. The organization of CIETC, did you also represent the predecessor organization? A. Q. Yes. And during the course of your representation at CIETC, did you regularly attend board meetings up until 2000? A. No, not always. SALMONS - CROSS - SCOTT 47 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. The board met monthly? True. How frequently would you attend meetings? Only when requested or when there was some legal issue that needed to be addressed to the full board membership. Q. So you would not be aware of whether or not certain issues, such as pay raises or salary increases or bonuses, were ever discussed by the full board? A. Q. Not if I wasn't there, that's true. Are you aware of whether or not the changes that you have testified to in regard to the bylaws--whether or not those changes were ever disseminated to the entire board? A. Q. I am not aware of that. Are you aware of how those changes were made to the bylaws, if they weren't approved by the board? A. Well, I drafted the changes. I mean how they were made, I'm not sure I understand. Q. When I'm referring to the changes, I apologize, I'm referring to the changes in respect to the copy that you would have received in Exhibit 143 versus 148. A. Q. Yes, I have that. Specifically with regard to the setting the salary by the Are you aware of how those changes were made to chairperson. the bylaws? A. No, Sir. SALMONS - REDIRECT 48 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. Mr. Salmons, Mr. McCarthy asked you about the presumption of My question to it. THE COURT: MR. PURDY: THE COURT: Mr. Purdy, do you have any redirect? Yes, Your Honor. Is it very long? Because if it is, I'm Q. Are you aware of whether or not those changes were ever discussed at board meetings? A. Q. A. Q. A. Q. No, I'm not. You didn't draft them? No, Sir. And you have no idea how those changes were made? Exactly right. Are you aware of whether or not these bylaws that are part of Exhibit 143, are you aware of whether or not those bylaws were disseminated to the board members? A. Q. I am not aware of that. Are you aware of whether there were board members who were aware of those changes that are reflected in Exhibit 143? A. No, Sir, I'm not. MR. SCOTT: All right. Thank you, Sir. I appreciate going to give the jury a break. MR. PURDY: Just a couple of questions, Your Honor. REDIRECT EXAMINATION whether salaries or bonuses would be legitimate. SALMONS - REDIRECT 49 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you is, are those salaries and bonuses still subject to the laws and regulations that we talked about? A. Q. They certainly are. And if they're in violation of those laws and regulations, they're not legitimate, are they? A. Q. That would be correct. One more question. Mr. Scott asked you whether a board has the authority to ratify unauthorized conduct, and my question to you again is, what a board has authority to ratify must be subject to the laws and regulations that we discussed; is that correct? A. Q. That is true. They have no authority to ratify unlawful conduct; is that correct? MR. PURDY: THE COURT: MR. SPIES: THE COURT: I'll withdraw the question. Mr. Spies. Nothing further, Your Honor. Mr. McCarthy. Nothing further. Thank you. MR. McCARTHY: THE COURT: MR. SCOTT: THE COURT: Mr. Scott. Nothing further. Ladies and gentlemen, since this is the Here's the first witness, I recognized the lawyer for redirect. way presentation of evidence works for those of you who have not served before. The initial examination is called direct 50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 examination. The lawyers on the other side or lawyer on the Then the lawyer for other side has a chance to cross-examine. the presenting party can redirect questions and then there's recross. It doesn't go on forever. It's supposed to go on as So long as the judge uses his or her, quote, sound discretion. that's the reason we'll call it direct and cross and redirect and recross. This is our first recess since testimony began so I want you to remember instruction 15. again. I'm not going to repeat it Don't discuss the case amongst yourselves yet, keep an open mind until you've heard all of the testimony. We'll be in recess until 10:30. (Short recess.) THE COURT: Please be seated. Mr. Purdy, Mr. Spies, Mr. McCarthy, Mr. Hamrock, Mr. Scott, the jurors tell me that because of the rain and the witness and the lawyers not speaking into the microphone, they're having difficulty hearing you, so enough said. up. Secondly, my law clerk has to go through a series of about five clicks to get the exhibit up, so here's what: If you Speak agree on the exhibit without foundational requirements, we can turn it on and show the jury when you're talking. help with the presentation. That will JOHNSON - DIRECT 51 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. Ms. Johnson, would you please tell the jury what you do for When you don't agree on the exhibit, walk it up, lay your foundation, then I'll rule, then we can turn on the screen if it comes in. Does that work for all of you? MR. PURDY: THE COURT: Yes, Your Honor. All right. And, Mr. Purdy, if you want to proceed, you may do so. MR. PURDY: The government calls Corrine Johnson. CORRINE JOHNSON, GOVERNMENT'S WITNESS, SWORN THE COURT: Ms. Johnson, when you speak and respond to any of the lawyers, you have to pull the microphone in front of you and speak loudly and clearly. You may proceed, counsel. MR. PURDY: Thank you, Your Honor. DIRECT EXAMINATION a living. A. Q. I am a senior auditor with the state auditor's office. What type of duties do you have associated with that position? A. I work in the performance investigation division, and we handle special investigations as well as performance audits for the State of Iowa. Q. Can you tell the jury the difference between the two types JOHNSON - DIRECT 52 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of audits that you mentioned. A. Q. A. Between performance and specials? Yes. Performance audits tend to look at economy and efficiency of Therefore we look primarily to state agencies state government. and how there can be improvements made to the processes. Special investigations generally result as concerns are brought forward to our office about a particular entity or a particular city government, state government, school district. Any type of governmental entity where there's concerns that there may be misappropriation or other types of areas of concern we follow up with procedures. Q. Are both of those types of audits something that is done through the auditor of state's office on a regular basis? A. Q. A. Q. Yes. In the normal course of business? Yes. I think you indicated that "when concerns are raised." What did you mean by this? A. Oftentimes someone will contact our office with concerns about city government, state government, any type of governmental entity. We see concerns about city clerks, misappropriations of funds within governments, a wide variety of various areas that our office is approached about. JOHNSON - DIRECT 53 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. How long have you been with the auditor's office? I started with the auditor's office in June of 2003. I left in January of 2005 and returned in November of 2005, and have been there since. Q. A. Q. What did you do prior to working with the auditor's office? I was a student at the University of Northern Iowa. And what type of background, educationally, do you have that would assist you in your duties as a senior auditor for the auditor's office? A. I have a bachelor's degree in accounting, and I am a certified public accountant. Q. During your employment with the auditor of state's office did you have occasion to come into interaction with an entity known as CIETC? A. Q. Yes. Would you describe for the jury how that interaction commenced. A. When I returned to employment with the auditor's office in November of 2005, CIETC was the first engagement that I was assigned to work on. We had some preliminary concerns that were brought forward to our office from an employee with IWD, Iowa Workforce Development, and our intent was to follow up on their concerns and determine what action needed to be taken next, if any. Q. Okay. During the course of--you called it an engagement. JOHNSON - DIRECT 54 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Can you tell the jury what an engagement means. A. Q. An audit. And what type of audit was the audit of CIETC at this point in time? A. At this point in time we initially were doing preliminary procedures to determine if we needed to develop additional procedures. Generally we try to look into areas of concerns to determine if an audit or an investigation is warranted before we pursue. So at that point in time it was initially a review. It became a special investigation once we had identified that there were legitimate concerns. Q. What type of concerns were brought to the auditor's attention? MR. SPIES: THE COURT: MR. PURDY: THE WITNESS: MR. PURDY: THE COURT: auditor's attention?" A. We were presented with concerns about bonus payments Excuse me. Overruled. You may answer. Okay. Can you repeat the question? Objection; hearsay. Would you read the question back, please. "What type of concerns were brought to the provided to employees of CIETC. Q. At that point in time were any other concerns raised to the auditor's office? JOHNSON - DIRECT 55 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. We were also provided with a federal monitoring report, I believe it was performed by the Department of Labor, which also discussed similar concerns of bonus payments and salary structure. Q. When the auditor's office is presented with these types of concerns, how does that process move from point A and on down through the investigation you talked about? A. What we do is we develop an audit program which would be steps that we believe are necessary in order to validate any concerns that are brought forward to us. So at that point we developed an audit program. Initially we contacted Iowa Workforce Development and obtained documentation of the contractual agreement between CIETC and IWD. Q. Okay. When you mentioned contracts between IWD and CIETC, what do you mean? A. There is a contract between IWD and CIETC that establishes the types of funding, amounts of funding that's awarded to CIETC from IWD. Q. Okay. So when you say contracts between IWD, Iowa Workforce Development, IWD and CIETC, some of the funding of CIETC then comes flowing through Iowa Workforce Development; is that correct? A. Q. Correct. Are there other funding sources or streams of money that JOHNSON - DIRECT 56 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 come to CIETC? A. Yes. CIETC also receives some direct grants from the Department of Labor, some money from the city of Des Moines, some money from Polk County. I believe there may be a few other small areas of funding that CIETC may oversee, but predominantly most of the funding received from CIETC was from the Iowa Workforce Development. Q. And during the course of your investigation did you determine approximately how much on an annual basis CIETC was receiving in funds from these various sources? A. About 98 percent of money received by CIETC was state or governmental funds, I believe there was approximately 2 percent of funding to CIETC that was from another source. Q. Okay. And when you say state or governmental funds, are we talking federal funds, state funds, local funds? A. Federal funds passed through. You have IWD federal funds received directly, local funds received from the city and council. Q. A. What type of local funds are we talking about? Predominantly, Promise Jobs and the Workforce Investment Act were the majority of funds that were received through Workforce Development. Q. What quantity of funds are we talking about, so you can give the jury a feel for how much money you're talking about? A. I believe I'd have to refer to my audit report. JOHNSON - DIRECT 57 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PURDY: THE COURT: MR. PURDY: Okay. May I approach, Your Honor? You may. I'm showing the witness what's been marked for identification purposes as Government Exhibit 1. A. Are you asking for a specific year or over the course of the entire period? Q. Just generally. Well, let me take a step back. What period of time did your investigation cover related to CIETC? A. Q. Our period covered July 1, 2003 through December 15th, 2005. And on an annual basis approximately how much money would CIETC receive from the various funding sources we talked about? A. The total funding for CIETC was approximately just shy of 5 million dollars would be an approximation each year, of revenues that they received. Q. So we're talking July 1 of '03 through June 30th of '04 approximately 5 million dollars? A. Q. A. Q. A. Q. Correct. And each of the subsequent 2 years, 5 million dollars? Correct. Approximately? Correct. I believe you said fiscal year. Could you explain fiscal year to the jury. A. The state reports on a fiscal year as opposed to a calendar A fiscal year runs year which funds from January to December. JOHNSON - DIRECT 58 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 from July 1st through July 30th. Q. So when we're talking fiscal year, it's the July 1 through June 30 period? A. Q. A. Q. Yes. Over a 3 year period or 2 1/2 year period? Yes. Back to the funding streams. The federal money that would come to CIETC through Iowa Workforce Development, what type of funds, what program, what federal agency do they come from? A. Promise Jobs came from Health and Human Services and LEO came from the Department of Labor. Q. And how was that fund money or how do those sources of money Can you describe that procedure? trickle down to CIETC? A. to-- The state receives a bulk of money which is then distributed There are 16 regions within the State of Iowa that Workforce Development distributes money to, and they allocate the funds that they received to each of the 16 regions so that services can be provided to local residents. Q. A. And in these regions, was CIETC in one of these 16 regions? Yes. CIETC was the fiscal agent for region 11. And fiscal agent would be the entity that CIETC awards the contract to to ensure that the services are provided to the citizens. Q. Okay. We talked about contracts. Then does CIETC have contracts with Iowa Workforce Development for these federal funds? JOHNSON - DIRECT 59 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. Yes. Okay. Yes. What other type of-Well, what type of things did you--as And in each of the 3 years we're talking about? an auditor's office, what type of things were looked at in the investigation of CIETC? A. Our procedures initially started with the review of documentation available from Iowa Workforce Development, which included contracts, any amendments made to the contracts, amounts established annually as the budget for CIETC and other providers. We also performed procedures at CIETC where we reviewed salary structure, we examined disbursements, we reviewed internal controls within IWD and CIETC related to areas of concern that we had identified. We also contacted other regions within the State of Iowa to establish operating procedures and salary structures for the comparable regions. Q. When you started gathering information on this--I think you called it a review first and then followed by an investigation; is that correct? A. Q. A. Correct. What was the focus of the review? The initial concern brought to our attention involved specifically a bonus payment that was paid from a $200,000 JOHNSON - DIRECT 60 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 budget award to CIETC at the end of the fiscal year, and so we originally pulled the contract for which that payment would have applied to, and from that point attempted to determine the purpose for that payment and how those funds then were distributed within CIETC. Q. When you're reviewing an entity like CIETC, what are the basic ground rules that you're looking at that CIETC--that you have concerns or that you look at to see if CIETC is in compliance? A. We look at the grant agreements, the terms of the grant We also look at allowability for state and federal agreements. regulations to determine that the funds were spent in accordance with state and federal laws and also in accordance with any contractual agreements. Q. So when you say allowability, what do you mean by that? Can you explain that a little further? A. For federal funds there is a--it's call OMB circular A87, I believe; and what that does is it establishes guidelines for how federal dollars can be spent. Q. Okay. So the circular you're talking about, is that federal rules or is that state rules or what is that? A. Q. Federal rules. Okay. And CIETC was governed by how those rules applied to it; is that correct? A. Yes. JOHNSON - DIRECT 61 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Other than your review and investigation into CIETC, did you review or investigate any other entity? A. As part of our investigation we contacted eight other regions within the State of Iowa and visited each of those regions, as well as performing procedures at CIETC. Q. So are we talking about regions that delivered the same type of services as CIETC? A. Q. Yes. They are also fiscal agents as CIETC was. Other than the agencies that received or agents that received funds through these programs that we've been talking about, did you do any investigation of any state agency? A. Q. A. We did perform procedures at Iowa Workforce Development. And when you say "procedures," what do you mean by that? Again, that would involve looking at the contracts that were available at Iowa Workforce Development, discussions with staff of Iowa Workforce Development, I think were--predominantly were the procedures that we performed. Q. So you looked at CIETC to some extent and IWD to some Is that a fair statement? extent. A. Q. Yes, yes. You mentioned this money paid from end of the year funds. Do you recall which fiscal year we're talking about? A. Q. A. That was for the fiscal year ended June 30th, 2005. And how many dollars are we talking about? $200,000 was awarded to CIETC at the end of the fiscal year. JOHNSON - DIRECT 62 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 document. Q. And what prompted the concerns about that particular payment? MR. SPIES: Your Honor. THE COURT: Sustained. I'm going to object on hearsay grounds, Mr. Purdy, the lawyers and I have that--you've given us this reference document. You didn't tell the jury what count the witness is testifying about or counts. I think we know, but they don't have this reference Did you want to tell the jury what count? MR. PURDY: Yes, Your Honor. I apologize. Ms. Johnson's testimony we believe will be related to all counts in the indictment. BY MR. PURDY: Q. So you've testified that you obtained certain things at CIETC, certain things at IWD; is that correct? A. Q. Yes. Could you describe what Iowa Workforce Development, the agency, is to the jury, as you understand it. A. Iowa Workforce Development is a state agency. I believe it predominantly provides or works to provide services with the employment arena within the State of Iowa. Q. And could you describe the entity known as CIETC as you understand what that entity is. A. CIETC was the fiscal agent for IWD region 11, predominantly JOHNSON - DIRECT 63 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to provide Promise Jobs services and WIA services to clients located within that. Q. A. Q. You mentioned WIA. What do you mean by WIA? Workforce Investment Act. In your review/investigation of CIETC, did you get into the internal operations of CIETC? A. Q. A. We did to some extent for certain areas. Can you tell the jury what you did there. We obtained payroll documentation for CIETC. We also We did some examined time sheets. We looked at bonus payments. testing of disbursements within the entity. Q. Did your investigation reveal how many employees were at CIETC? A. I believe at December 15th, 2005, the ending date of our report, there were 72 employees that we identified on staff. Q. And were any of those employees designated differently than other sorts as far as where they received their benefits or if there were differences in benefits they received? A. Certain employees on CIETC's payroll were identified to us When we looked further into by CIETC as contract employees. that, there were funding agreements awarded from CIETC to--or from IWD to CIETC for specific programs, specifically to Disability Navigator, a tax redesign program from IWD, and a New Iowan Center Program from IWD, which these employees received salary and benefits paid through CIETC and the funding came from JOHNSON - DIRECT 64 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 IWD. Q. How does that work? Explain that to the jury. You say the funding came from IWD but CIETC paid the salaries. A. Well, initially the way we identified it to be unusual, these employees did not receive bonus payments as other employees from CIETC did, so that led us into questioning the difference between the types of employees. And upon further examination and discussions with officials of IWD, we determined that the performance and salaries were set and monitored by IWD, even though the employees were paid from CIETC. Q. And the funding stream used to pay those employees came from where? A. IWD. Q. Did they come down from the federal level or state level or There were a couple of different fundings. They came from both? A. Q. Both. So you've got 24 employees that are considered contract employees and then the remainder are CIETC employees? A. Q. Yes. Okay. But the contract employees were paid through CIETC, just funded differently? A. Q. Yes. Did your investigation or review take a look at executive JOHNSON - DIRECT 65 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 compensation? A. Yes, it did. We obtained employment agreements for the executives of CIETC. Q. A. And which executives are you talking about? We obtained employment agreements for Ramona Cunningham, John Bargman and Karen Tesdell. Q. Do you recall what positions each of those people held at CIETC at the time of the review? A. I do. Ramona Cunningham was the director, John Bargman was the chief operating officer, and Karen Tesdell was the chief accountant. Q. I think you mentioned that part of the procedures that you used was reviewing a monitoring report by the Department of Labor; is that correct? A. Q. A. Yes. Can you tell the jury what that entails? In December of 2004 a federal review was completed by the In their report Department of Labor, and they issue a report. they identified that-MR. SPIES: Your Honor, excuse me. If I may interrupt, I assert a hearsay objection to the contents of the report. THE COURT: BY MR. PURDY: Q. The Department of Labor monitoring visit in December of '04 Sustained. JOHNSON - DIRECT 66 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 was part of your investigation; is that correct? A. Q. It was. Okay. You mentioned this OMB circular A87. Does it have guidelines as to what costs are allocable or allowable for CIETC? A. Q. Yes. And give the jury a description of how that type of analysis or what the regulations require. A. Basically the OMB circular requires that costs be reasonable by a prudent examination and also that they be allocable to a federal program. Q. How do you determine if they're reasonable when you're dealing with an issue of executive compensation? A. In a situation like that, the circular would require that you would look at the compensation paid to executives in a similar position providing similar services or another means to determine what a market rate may be for the type of work provided. Q. Did your investigation or review look into executive administrative salaries-A. Q. Yes. --compensation? And what did you find related to that compensation as it applies to Ms. Cunningham, Mr. Bargman and Ms. Tesdell? A. We found the compensation package to be excessive when JOHNSON - DIRECT 67 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. compared to salaries paid for similar work within the State of Iowa. Q. at? A. You say compared to. What did the review/investigation look What did they compare salaries to? We did a couple of comparisons. Our first comparison was to visit eight additional regions within the State of Iowa that were providing the same services, and we compared compensation packages providing to the executive staff for those entities. We also looked within the State of Iowa at salary structure and what our expectations would be for positions that would be similar within state government. Q. Let's take these individuals one by one. Ms. Cunningham, what did you compare her salary to? We compared her salary to executive directors within the other regions of the state. Q. And what was your findings related to the compensation paid to Ms. Cunningham for fiscal year 2004, '5 and '6? A. Ms. Cunningham's salary payments were excessively larger For example, in than the payments provided to other directors. fiscal year 2005, which would have ended June 30th, 2005, Ms. Cunningham received $368,236 for her services to CIETC. When we reviewed other regions within the State of Iowa, we found that their executive directors received pay from approximately $54,900 to $85,000 annually. Q. Okay. What about the chief operating officer position held JOHNSON - DIRECT 68 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 by Mr. Bargman, did you do similar comparisons for his salary? A. We did. We found only one other entity that had a position similar to the position that Mr. Bargman held, and that individual received a salary of $49,420 in fiscal year '05. Mr. Bargman received $360,010. Q. And did your investigation review do a comparable analysis of Ms. Tesdell's salary? A. Yes, we did. In fiscal year '05 Ms. Tesdell received $129,168 compensation. For the eight other entities that we reviewed, For the remaining two of them did not have similar positions. six that did, there were salary comparisons we found between $31,951 up to $54,662 annually. Q. Other than contacting the other regions, did you do any other comparisons for the executive administrative staff at CIETC? A. We did. We looked at the state salary structure. We looked at what directors of state agencies within the state government receive annually for their salary. In Ms. Tesdell's case we looked at an accounting position in the salary structure for accounting positions within the State of Iowa. Q. And let's start with Ms. Tesdell. What were the results of the comparison of those salaries? A. We found Ms. Tesdell's salary to be higher than the salary The State of Iowa has their structure for the State of Iowa. JOHNSON - DIRECT 69 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 accountants structured in certain levels. There's accountant 2, accountant 3, accountant 4, based on qualifications, length of service, things of that nature. We established a salary range for accountant 3 and accountant 4. here. Okay. 63,877 annually. The range for an accountant 3 is 42,203 to The salary range for an accountant 4 is 51,355 It's going to take me just a second to find it to 77,106 annually. Q. And Ms. Tesdell's salary is in excess of either one of those levels; is that correct? A. Q. Yes, it was. Did your investigation review compare any executive staff salary to any other sources? A. We also looked at what state agency directors received within the State of Iowa, as well as presidents of Iowa's three universities. Q. Start with the state agency executives. What were their salary ranges that you discovered? A. The highest paid state agency executive we found was within the Iowa Lottery, and in fiscal year 2005 he was paid $215,040. Q. A. The lowest? The lowest paid state agency director that we have documented was for the Department of Civil Rights, and that director earned $76,965 in fiscal year '05. JOHNSON - DIRECT 70 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. And would those salaries be comparable to which executives at CIETC? A. I would say based on the duties described in the employment agreements that we reviewed, it would most likely be comparable to Ramona Cunningham; however, John Bargman also carried administrative duties that could be similar to the types of services provided by directors of state agencies. Q. And just to be clear for the jury, when we talked about these state agency salaries that were compared, the executive directors or heads of those agencies, we were not comparing Ms. Tesdell's to those; is that correct? A. We were not. However, she did exceed the salary paid to most of those individuals. Q. And what other sources did you compare salaries of the I think you mentioned university executive staff to? presidents? A. We did. We compared salaries to the presidents of the University of Iowa, Iowa State and the University of Northern Iowa. The president of the University of Iowa was the highest paid of the three, and for fiscal year 2005 the president was paid $300,450. Q. And did you compare that salary-- Who did you compare that salary to as far as the executive staff of CIETC? A. That salary would have been compared to the salary of that JOHNSON - DIRECT 71 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 paid to Ramona Cunningham and John Bargman. Q. A. Again, not Ms. Tesdell for that? I don't believe that her job duties were similar to job duties performed by university presidents. Q. I think we had a word mentioned a little bit ago. I want to go back to have some explanation. and allocable. A. You talked about allocation What does that mean? What that would mean would be, to break it down, when you are working and doing your day-to-day activities, in terms of salary, that would be how you would record on your time sheet where your time should be charged to in the accounting records. So basically it's stating what program you worked on for that time period. Q. So you're comparing time sheets to the work done and the funding streams that those people are paid from; is that correct? A. Q. Correct. And what did your review/investigation show about how the executive staff at CIETC was allocating their time? A. The executive staff at CIETC allocated their time directly onto their time sheet, which means that they were able to say, I spent 3 hours on this program, I spent 4 hours on this program for that day. However, when we looked at the job descriptions for each of the executive staff, we determined that it was not JOHNSON - DIRECT 72 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 likely that the staff could fairly determine what programs to charge because their activities would cover general administrative type operations of the entity. Which we believe then should have been allocated to the funds on an indirect cost basis. An indirect cost basis For would be a means to fairly charge each of the programs. example, what we've seen with other entities is that maybe a time study is done showing--for employees showing how much time is devoted to each of the programs. And then the administrative staff would allocate their time that covers the administrative aspects of the entity fairly among the programs. Q. A. Q. Okay. And the time study. You lost me a little bit. Let's take an example. When a CIETC employee hands in their time sheet, time allocation means what? A. That would be, for example, when I reviewed the CIETC time sheets, there would be the days of the week across the top, and down the side there would be the funding. For example, if the employee spent all of their time working on the Promise Jobs program, they would have time entered on their time sheet each day for Promise Jobs. And if they had worked on the Workforce Investment Act program, it would be the same. It if they had worked on multiple programs, it would show for each day how much time they JOHNSON - DIRECT 73 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 spent on each program. Q. Okay. And was that true for the executive staff as well, she would submit their time sheets that way? A. Q. Yes. And so as I understand what you're saying, they would submit their time sheets allocated to specific programs? A. Q. Correct. I think you mentioned that part of the review/investigation looked at certain things at IWD; is that correct? A. Q. A. Yes. Tell me what you looked at at IWD and the review process. Within IWD we looked at Promise Jobs and Workforce Investment Act contract awards predominantly. We looked at amendments that were to the grant funds for each of the fiscal agents. We looked at the year-end funding. We examined the monitoring procedures in place at IWD for each of the regions. We looked at how the regions report their numbers to IWD as well as actions taken by officials of Workforce Development. Q. Let's start with the big picture. I think you said that there are 16 regions that perform these services in Iowa; is that correct? A. Q. Yes. Okay. And take me from how the money is handed down from JOHNSON - DIRECT 74 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 IWD to these 16 regions in general. A. IWD would receive an award from the federal government, which it in turn then would allocate out to each of the regions. Q. Okay. So each of the 16 regions gets a budget. Is that what I'm hearing? A. Q. Yes. And CIETC I think you testified was in region 11. That practice was the same; is that correct? A. Q. Yes. And how is CIETC told how much money is coming to it under this program? A. Within IWD the budgets are allocated to each of the regions. I think the It also There's a formula for WIA and for Promised Jobs. major aspect of the formula is the number of clients. looks at how much was awarded in the prior year, and so there's a couple of different things that are taken into consideration when establishing the regional budgets. Q. Okay. Is this an agreement in writing on how much an entity like CIETC would receive? A. Q. Yes. Okay. And I think you called them contracts, or are they grants, or what's the proper terminology? A. Q. Grant agreements. Okay. So there's a written grant agreement between IWD and CIETC on receiving certain funds from a funding stream? JOHNSON - DIRECT 75 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes. And that would be true whether it's Promise Jobs or Workforce Investment Act? A. Yeah. I believe how it worked within IWD is that there would be one grant agreement, and then there would be a section for each of the funding sources received by the entity. Q. Okay. And I think you said something about amendments. What did you mean by that? A. We during the course of reviewing the grant agreements identified that there were occasions where CIETC was provided with additional money above and beyond what had already been established as a budget for that entity. We did find also another region which did receive a budget amendment for Promise Jobs. And there were also a couple of other entities that received some money at the end of the year, fiscal 2005. Q. Okay. You mentioned the 200,000 at the end of fiscal 2005 Is that one of these amendments that we're that went to CIETC. talking about? A. Q. Yes. Okay. So you have the overlying contract, and you have Is that what we're talking about? amendments. A. Q. Correct. Okay. What is done when an amendment is made to document that that amendment has been made for a particular entity? JOHNSON - DIRECT 76 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Based on my review of the grant agreements, there would be a Sometimes there would be an e-mail that would say For example, from cover sheet. a certain amount of money needed to be added. region 11 there would be e-mails that would say for Ms. Barto, XX dollars need to be added to the budget for CIETC. Q. Okay. And would these documents that are associated with the amendments, would they indicate why the funds were being given? A. No. We did not see any sort of detail to indicate the purpose for the amendments, I don't believe. Q. Comparing CIETC to the other fiscal agents that you've mentioned around the state, how did CIETC compare in receiving contract amendments with those other regions? A. For the period of our review, CIETC received, let's see, six additional amendments from July 1, 2003 through December 15th of 2005. Cumulatively their funding was increased by $418,000 for those six amendments. We did identify that there was one region that received $2,000, and then at the fiscal--the end of fiscal year 2005, there were three additional regions that received amounts of money in the amount of 13,000, 10,000 and $2,000. Q. So at the end of fiscal year 2005, other than the entity known as CIETC, $25,000 was awarded total to three other entities; is that correct? JOHNSON - DIRECT 77 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Of the $225,000 that was awarded, 200,000 went to CIETC and the remaining 25 was disbursed among three other entities. Q. When you talked about--I think you used the word unobligated What did you mean by that? funds. A. Our understanding is that at the end of your fiscal year 2005 an employee of IWD had determined that there were some funds within the budget of IWD for Promise Jobs that had not yet been spent, and that would be what you would call unobligated funds, money that's left in the budget to be spent or returned to HHS. Q. I believe one of the other areas you indicated that your office took a look at related to IWD was in relation to monitoring, is what you called it. A. What do you mean by that? IWD provided monitoring of each of the regions within the My understanding of the procedures is that there State of Iowa. is a budget analyst that would physically go to each of the regions, I believe it was twice a year, and they would look at certain aspects of the entity related to the spending of money that was received from IWD. Q. Is that something that IWD was required to do under the rules and regulations of these grants? A. I believe the grant agreements did say that IWD would provide monitoring. Q. Okay. And did your investigation or review of the entity known as CIETC and IWD, did you go through that monitoring JOHNSON - DIRECT 78 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 process from both sides or one side or how did you do that? A. Q. I'm not sure I understand the question. I'm not sure I understand the question either. Let me rephrase that. IWD had some monitoring responsibilities for the funds that were being handed out; is that correct? A. Q. That is correct. So they were one of the oversight entities on how that money was used; is that a fair statement? A. Q. Yes. Did your investigation or review of this matter include talking to the various monitors involved in this process? A. We did. I talked with in particular one budget analyst--or She was the IWD I would say, well, I spoke with Mary Bowser. employee that I believe was responsible for performing monitoring of CIETC. Q. Did you talk with other IWD employees about the monitoring process? A. I did. I spoke with Kelly Taylor, who I believe at that time would have been Mary Bowser's superior, and I also spoke with Ms. Barto and Erv Fett. Q. A. Q. And who is Erv Fett? Erv Fett was a division director within IWD at the time. And explain the process to me, to the best of your ability, when the monitoring occurs, what that process involves. JOHNSON - DIRECT 79 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. The budget analyst would physically go to the regions. Based on our review of the monitoring reports, they would pull a sample of payments to clients from the funds that they had received. Q. A. Okay. And what happens next in the monitoring process? The budget analyst would issue a report then, disclosing any findings or comments that they had identified in the course of their monitoring visit. Q. Okay. So they go out to the entity. They take a look. They look at all the records? A. I don't believe they looked at all the records. I believe I you would have to pick a sample. It was a smaller scope. don't think that their visits typically lasted more than a couple of days. Q. And you said there would be findings or conclusions. What did you mean by that? A. For example, if they were looking at a client payment, and it appeared that the payment was improperly paid, maybe the client was paid too much or too little, the budget analyst would report that and require that the entity have corrective action to fix the problem. Q. If the entity did not agree with the findings, what rights did the entity have? A. I believe there was an appeals process by which the entity Well, let me step back. Initially my could come back and-- JOHNSON - DIRECT 80 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 understanding is that they would comment. They would in turn have a chance to comment, and then IWD could either accept or reject that comment. And then at that point my understanding is it would go through an appeals process. Q. Did your investigation or review involve entities that CIETC would contract with, other than IWD? A. We did see that there were subcontractors from CIETC. We did not perform many procedures, other than, I believe, to just document that CIETC did in turn subcontract some of its funds to other entities. Q. A. And what do you mean by subcontracting to other entities? CIETC would have the money provided to them either directly from the federal government or passed through from Iowa Workforce Development, and then you maybe could say that CIETC hired another entity then to provide the services, might be a way to look at what subcontracting is. Q. And did you identify in your investigation or review subcontracts that CIETC was involved in? A. I believe that CIETC had subcontracted with an entity for I believe that might have been the Iowa That's what I can recall. I don't the WIA youth services. Comprehensive Services. recall other entities at this time. Q. Okay. You mentioned earlier that CIETC had contracted with IWD and there were 24 contract employees; is that correct? JOHNSON - DIRECT 81 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Center. Navigator. A. Q. Yes. And explain that to me as to what entities you found or what functions you found that CIETC had those contract employees for. A. There are three different programs that we identified these The programs were a tax UI project from employees worked on. IWD. My understanding of that project was, it's for unemployment insurance for entities when they are paying their unemployment insurance to the state, can make their payments online, and so there were two employees on CIETC's payroll to help establish that program for IWD. And in addition, there was a program called Disability My understanding of that program is that there are navigators located throughout the state who help individuals with disabilities find job positions. And there were also employees for the New Iowan I believe that those are centers also located throughout the state, which help individuals relocating to Iowa or just moving to Iowa to assist them in finding new jobs. Q. And I think for at least the last two, Disability Navigator and New Iowan, you indicated those offices or there were people placed in offices around the state; is that correct? A. Q. Yes. You mentioned that you had talked with Ms. Barto about this When did that discussion take place? review or investigation. A. I believe we spoke with her on March 21st. JOHNSON - DIRECT 82 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. THE COURT: THE WITNESS: Year? 2005. I'm sorry, what year? 2005. Did the-Go ahead. I think it was March 2006. Okay. Because I think you said your agency was involved or the audit involved November of '05 forward; is that correct? A. Q. Yes. So we're not talking about an interview or discussion with Ms. Barto about these matters in March of '05; it's '06? A. Q. Yes, that's correct. Do the records of the review and investigation indicate that Ms. Barto was talked to on this matter prior to March 21 of 2006? A. Yes. Ms. Barto did have discussions with officials of my office prior to March 21st, 2006. Q. A. Q. Do you know when that would have occurred? I don't recall the exact dates. Talk to me about the March 21st, 2006 discussions. Were you personally present? A. Q. Yes, I was. Okay. And what did you talk-Well, let's go by topic. What do you recall, if anything, about that conversation with Ms. Barto? Who else was present at that conversation? JOHNSON - DIRECT 83 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Annette Campbell and Tammy Kusian from my office were present, as well as Erv Fett from Iowa Workforce Development, and Ms. Barto. Q. A. Okay. And what was the nature of the conversation? The conversation was to discuss with Ms. Barto questions that we had prior to the release of our report, and to discuss certain items with her for her response. Q. What type of items, if you recall, did you discuss with Ms. Barto at that meeting? A. We talked with Ms. Barto about a lease agreement between We also discussed the I believe we Iowa Workforce Development and CIETC. Disability Navigator and New Iowans programs. discussed the monitoring process, as well as the June 30th, 2005 payment paid to CIETC. Q. Okay. Let's take them one at a time. What was the discussion around the Disability Navigator, New Iowan projects? A. Our discussion was to see if we could determine why these employees were on CIETC's payroll and not on IWD's payroll. Q. A. And what response did you get from Ms. Barto? Ms. Barto informed us that initially the employees were hired through Merit Resources, which would be, I believe, like a short-term employment agency. And there's I believe a state rule that says after 18 months the employees can--you can't have your employees for more than 18 months, so Ms. Barto had stated that at that point the JOHNSON - DIRECT 84 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 employees were put on CIETC's payroll to provide consistency to payroll and benefits. In addition I recall Ms. Barto stated that the funding streams were unknown how long the funding would be available for these particular positions, and that the process to add employees to the state's payroll was long and arduous. Q. Did you discuss the process for removal of employees under these programs? A. In addition, Ms. Barto had stated that if the program was cut, it would be easier to remove employees from CIETC's payroll than it would be to remove employees from the State of Iowa. Q. When IWD awarded these--would they be grant contracts or agreements as well for these programs? A. Q. Yes. Okay. They were sections of the grant agreement. Would there be a portion of those funds that were awarded to CIETC available then for administrative costs? A. Q. Yes. And did your review/investigation reveal whether CIETC in fact took administrative expenses out of those contracts? A. We did determine that, for example, for the Navigator program, CIETC received $169,292.51, of which approximately $16,000 was used for CIETC's administrative expenses. Q. Let's talk about the-THE COURT: Mr. Purdy, before we do that, ladies and If you gentlemen, you've been sitting an hour since we resumed. JOHNSON - DIRECT 85 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 want to take a moment to stretch, you may do so. (Short pause.) BY MR. PURDY: Q. During your March conversation with Ms. Barto, did you discuss the contract amendments that we were talking about earlier? A. Q. A. Yes, we did. Can you tell the jury about that part of the conversation. I recall Ms. Barto had indicated that CIETC was picking up Let me take a step back. For the Promise Jobs extra clients. program, clients were served--there were IWD employees that served clients. clients. And so that budget for the Promise Jobs program then was split between IWD and CIETC, and those entities would mutually agree on who would get how much of the allocation. Ms. Barto had stated that there were some employee turnover issues on the IWD side, and that CIETC was picking up some of those clients, and so in some of the instances the shifting of the budget from IWD to amend more money to CIETC was to compensate CIETC for the additional client load. Q. Did you investigate Ms. Barto's representation regarding the There were also CIETC employees that served IWD work shortage? A. We did contact a supervisor on the IWD side who did not concur with that statement. JOHNSON - DIRECT 86 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. SPIES: Your Honor, I object on hearsay grounds and ask that my objection precede the witness' spontaneous answer and ask that the objection be sustained and the answer stricken. THE COURT: the last answer. BY MR. PURDY: Q. During the course of the March 21st or March of 2006 meeting Ladies and gentlemen, you should ignore The objection is sustained. with Ms. Barto, did you talk about the $200,000 distribution to CIETC at the end of fiscal year 2005? A. Q. Yes. And could you tell the jury what the substance of that conversation was. A. We inquired as to how it was determined that CIETC would receive $200,000. Q. A. And what were you told? Ms. Barto told us that it was a joint decision between Kelly Taylor and--my understanding was between Kelly Taylor and herself. Q. And did she indicate to you what input Mr. Taylor had in regards to that decision? A. I recall that she had stated that Mr. Taylor knew that the payment would be to provide salary increases for CIETC staff. Q. Did your conversation in March of 2006 involve--I think you said it involved monitoring as well; is that correct? JOHNSON - DIRECT 87 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes. What part-Tell the jury the substance of the conversation related to the monitoring events. A. We had examined the monitoring report for CIETC that had been done by Workforce Development in December of 2005. The budget analyst who completed the monitoring visit then drafted her report with her comments to CIETC, and we determined that at some point along the line is the comment-MR. SPIES: Your Honor, I apologize for interrupting the witness, but I'm not sure if we're going to be venturing into hearsay here, and I would ask that counsel proceed with question and answer so I could interpose an appropriate objection. THE COURT: BY MR. PURDY: Q. Did Ms. Barto tell you anything in this conversation as to You can continue, Mr. Purdy. the monitoring from November of 2005 as it relates to what IWD budget analysts found? A. I believe our discussion on the monitoring at that point was with Erv Fett. Q. Okay. During the March 2006 conversation with Ms. Barto, did you discuss the compensation levels of CIETC administrative staff? A. I don't recall that we disclosed the amount of compensation. However, we did ask Ms. Barto if she was aware of supplemental JOHNSON - DIRECT 88 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 bonus payments being paid to employees of CIETC. Q. A. And what was her response? I recall that her response was that she was not aware that such payments existed until after her office had completed their monitoring report. Q. A. And that report was completed when? The monitoring visit was in December of 2005, and the final report was completed in January of 2006. Q. The monitoring visit you're talking about, is that the one that Ms. Bowser went on? A. Q. Yes, it was. After the review and the investigation of the CIETC entity and the related IWD components, did your office issue a report of your findings? A. Q. We did issue a report on March 31st, 2006. Prior to that report being issued, who was made aware of the contents of that report? A. That report was held very closely within our office. I was the auditor in charge. Annette Campbell, who is the director of the division that I worked for, and Tammy Kusian, who is the deputy of the director that I worked for, were aware of the findings. We did at sometime have certain staff assist us with work, but I don't recall that we had shared the findings of our report beyond us. We did provide CIETC with a copy of our report 24 JOHNSON - DIRECT 89 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 objection. MR. SCOTT: Your Honor, I would also join in that MR. SPIES: Honor. (Government Exhibit No. 1 was offered in evidence.) Your Honor, Defendant Barto objects on hours before it was issued. Q. Did any IWD officials receive it before the official report was issued? A. Q. I don't recall. Did the report--was it compiled in the ordinary course of your duties of performing this special investigation? A. Q. Yes. The auditor's office has responsibility for oversight of use of government money; is that correct? A. I would say yes. MR. PURDY: The government offers Exhibit 1, Your grounds that the report is a combination of hearsay, information from agencies constituting multiple layers of hearsay. It's an expression of opinion which is not properly the subject of opinion testimony. It constitutes summaries of information that we don't know by way of foundation that are appropriately considered in the culmination of presentation of that report, and, furthermore, it's 403 evidence. MR. McCARTHY: Defendant Tesdell would join in that JOHNSON - DIRECT 90 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 objection and also ask that the Court note my previously filed motion in limine with regard to this. THE COURT: Mr. Purdy, I'm unclear. It looks to me like 9022.4, is this a certified copy of a public record or a business record? MR. PURDY: THE COURT: MR. PURDY: It is not, Your Honor. It is not what? Not certified, I don't believe. I could ask the witness if it is a certified. THE COURT: BY MR. PURDY: Q. A. Ms. Johnson, do you know whether this is a certified copy? I guess I'm not sure of the criteria for being a certified Our document is a public document. It's a public record. Okay. copy. Once our reports are released, anybody that wishes to examine our report may do so. THE COURT: The other thing I'm unclear about from Because your testimony is, is the entire exhibit her audit? there are attachments that do relate to items that are the subject of Mr. Spies' objection. I can't tell what's the audit and what's attachments, or is it all part of the audit? BY MR. PURDY: Q. Ms. Johnson, the exhibits and appendixes that are attached to the audit, are they part of the investigation and review that JOHNSON - DIRECT 91 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. Ms. Johnson, did your report of the auditor of state reach a was conducted? A. Q. IWD? A. Yes. MR. PURDY: audit, Your Honor. THE COURT: Okay. It will be received. (Government Exhibit No. 1 was received in evidence.) They would be considered part of the Yes, they are. Were those items obtained from sources within CIETC and/or conclusion as to whether Ms. Cunningham received excessive compensation for the years we discussed? A. We did conclude that Ms. Cunningham received compensation in excess of what we would determine to be reasonable. Q. A. Q. And that's for each of the three fiscal years involved? Yes. Did your report of the auditor of state in this matter reach a conclusion as to whether Mr. Bargman received excessive compensation for each of the three years that we're talking about? A. We did. We concluded that Mr. Bargman was receiving compensation in excess of that that we determined to be reasonable. JOHNSON - CROSS - SPIES 92 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SPIES: Q. A. Q. Good morning, Ms. Johnson. Good morning. Ms. Johnson, at the very outset of your examination this Q. And did your report, based on this review and investigation, make a conclusion as to whether Ms. Tesdell received excessive compensation for each of the fiscal years in this report? A. We did also conclude compensation to Ms. Tesdell was excessive and that which we would not consider reasonable. MR. PURDY: THE COURT: MR. SPIES: No further questions, Your Honor. Mr. Spies, do you have cross-examination? I do, thank you. CROSS-EXAMINATION morning you talked about a concept called a performance review. Could you tell us what a performance review is, please. A. A performance review would be an examination of our office For example, we've recently into a very specific scope. released what we would consider a performance audit on strategic sourcing, which involved the State of Iowa contracting with a certain vendor in order to issue savings, and the purpose of our report then was to determine whether or not the savings were received by the State of Iowa. So a performance audit is a fairly specific purpose that we're looking at to determine efficiency, for example, of state government. JOHNSON - CROSS - SPIES 93 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Okay. And were you involved at the very beginning of this review of CIETC and IWD? A. Q. Yes, I was. And did you actually do on-site reviews at the CIETC offices and at the IWD offices? A. Q. Yes, I did. And your examination of these issues involves some performance reviews as well, didn't it? A. Q. A. Performance reviews of? Of CIETC. Of CIETC? We did examine performance reviews or monitoring reviews that IWD had performed of CIETC, yes. Q. All right. And a performance review, to simplify it, would be an examination of whether an agency or an organization is doing what they contracted to do for the state? A. Q. A. Yes. Providing the services that they've agreed to provide? I can't speak to the specific criteria that IWD would do within their performance review, but I would say that, yes, the intent of the review should be to determine whether or not the entity is in compliance with the grant agreement. Q. Okay. And in doing this examination of CIETC and of IWD, did you look back at other reviews that had been done by other organizations into CIETC's work and what IWD was supposed to be doing for the state? JOHNSON - CROSS - SPIES 94 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. We looked at audit reports, financial audit reports of CIETC that were completed by their CPA firm. We also looked at a Department of Labor monitoring review that was performed at CIETC. Q. Okay. And to just touch on those briefly one by one, CIETC is a private organization; right? A. Q. A. No. I disagree. I mean it's a quasi-private public organization? It's established under a 28E agreement and is a culmination of local governments coming together to form an entity. Q. Right. And the local governments run CIETC and hire independent CPA's or auditors to look at the financial operation of CIETC? A. Q. A. Q. Absolutely. And in fact they did that in this situation, didn't they? CIETC did receive an annual audit. And so CIETC's board would hire independent accountants to come in and look at the books to examine the financial integrity and the financial operations of CIETC? A. Q. A. Q. Yes. And this was done on an annual basis? Yes. And you reviewed the independent investigation done by these hired accountants? A. I didn't review the specifics of the investigation. What I JOHNSON - CROSS - SPIES 95 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 reviewed was this product of their work, which would have been their financial statement audit, which would have expressed an opinion on the financial statements of CIETC. Q. So did you meet with the accountants to determine what they went through in their audit of CIETC? A. Q. I did not. Now, you told us that in addition to the independent CPA firm that annually reviewed CIETC's finances, that they also had a review by the United States Department of Labor? A. Q. A. Q. That is correct. And that DOL examination was done when? I believe it was completed in December of 2004. And you knew that the Department of Labor inquiry also looked into the reasonableness of salaries? A. Q. Yes. And they made their own conclusion, and you reviewed that as part of your investigation? A. From what I recall, the Department of Labor contacted our office and asked us if we would be performing any additional procedures to follow up on what they believed were compensation issues within CIETC. Q. Now, as part of your review, Ms. Johnson, did you also look at the quality of the services that CIETC was providing? A. We did not go into--that far into detail. We didn't speak with clients if that's what you're asking. JOHNSON - CROSS - SPIES 96 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Or did you get any assessment from the IWD people or from any other state agency whether CIETC was doing the work in a quality way, the way it was hired to do that work? A. Q. I would say no. In other words, whether the state was getting services for the money it was expending? A. Q. I'm sorry, could you repeat the question. Yeah. Whether the state in hiring CIETC was getting the services it had contracted to get from CIETC? A. I guess my answer to that would be that my understanding is However, that, yes, CIETC was providing services to clients. because of the excessive compensation issues we identified within CIETC, we believe that there could have been more services that could have been provided had the compensation not been paid. Q. Sure. As part of your review, did you also review the process that the CIETC Board used in reviewing the compensation of this executive staff? A. Q. We did contact a few board members, yes. And also the oversight responsibilities that the CIETC Board had in reviewing compensation for its executive directors and the employees of CIETC? A. Q. We did speak with a few board members. So in addition to the independent accounting firm that reviewed CIETC's books on an annual basis, the Department of JOHNSON - CROSS - SPIES 97 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Labor review that was done in December of 2004, the board--the CIETC Board also reviewed as part of its responsibilities the compensation of its employees? A. My understanding is that the CIETC Board was to provide However, the board members that we had talked to oversight. were not aware of some of the compensation being paid. Q. A. Q. That was their responsibility, though? I would say yes. Ms. Johnson, I wanted to turn now to the $200,000 that you described for us here, and you said that you examined that, discussed that with the IWD staff, as well as a lease between IWD and CIETC, the Disability Navigator program, the monitoring process, and contractual amendments. Taking those in reverse, every time that there was a change in the funds given to CIETC by IWD, there would be a contract amendment? A. Q. Correct. And these contract amendments would go back years and years, wouldn't they? A. Q. Yes. So this was a routine part of the process, to document and to justify the changes in the funds or the money that was given to CIETC? A. Q. Yes. And you learned as part of your auditing process that these JOHNSON - CROSS - SPIES 98 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 would be prepared many times by the auditors that went in to review the contract changes? A. I don't recall who prepared the budget amendment work sheets. Q. But then the budget amendments contracts or the amendments would be signed by representatives for IWD? A. Q. A. Yes. And signed by a representative from CIETC? I don't recall if the budget amendment was signed. I would have to refer to my workpapers. Q. But, in any event, there would be some paper documentation to show what changes had been made? A. Q. Yes. Okay. And then apparently in annual reports either of CIETC or of IWD, those changes would be summarized and included in some annual report? A. I'm not sure what type of annual report was provided by IWD. I know that the amount of money received by CIETC would have been documented in their financial statement audit. Q. And that is--these are the audits that would be performed by the independent CPAs? A. Q. Yes. All right. So these contract amendments were nothing They were a regular part of the process of strange or new. moving funds from one entity, IWD, to CIETC? JOHNSON - CROSS - SPIES 99 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. For CIETC it was not unusual. We did not identify similar budget amendments for other entities. Q. But I think you identified that there were changes in the funding streams or shifting of funds, and those were documented in some way; right? A. Q. A. For CIETC? No, for other regions. Yes, actually I do. We did identify a few occasions where other entities had received a budget amendment. Q. All right. Now, Ms. Barto was asked specifically about the use of non-IWD employees to perform services for the state, and I think you described that process for us? A. Q. Uh-huh. She said it was easier to remove employees, if funds suddenly disappeared, by using the process that they used? A. Ms. Barto had indicated that if the program funding was cut, it would be an easier process to terminate employees from CIETC's payroll than it would be to terminate employees from the State of Iowa's payroll. Q. All right. And she was also interested in maintaining benefits for those employees as well? A. Ms. Barto stated that bringing employees onto CIETC's payroll would bring consistency to their payroll and benefits. Q. Okay. Now, next I would like to ask you some questions You said that there was a about the monitoring report. JOHNSON - CROSS - SPIES 100 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 monitoring report that was completed by the IWD monitors in about December of 2005. A. Q. Yes. And this would be a monitoring report that you discussed with Mr. Fett? A. I discussed that monitoring report with Mr. Fett during my meeting with Mr. Fett and Ms. Barto, yes. Q. A. Q. A. Q. In March, March 21 of 2006? Correct. And your audit report was released in April of 2006? March 31st of 2006. And isn't it true, Ms. Johnson, that a draft of that report was furnished to Ms. Barto and to the IWD staff before it was reported? A. Q. A. I don't recall. Was it released to the press before that? No. No. Our report would have been provided to the press upon its release, which I can tell you was March 31st, 2006 at 2 p.m. Q. Okay. Well, finally, going back to this $200,000 that was shifted from IWD or a portion--or allocated from IWD to CIETC, there were more people involved in that process than Ms. Barto, weren't there? A. Q. In terms of actually providing the funds? Providing the funds and allocating the funds. JOHNSON - CROSS - SPIES 101 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. I can't speak to the process within IWD. I would say probably there would have been other people involved, but I don't know that. Q. And you know as a matter of fact that there were exchanges of e-mails about these funds? A. We did receive e-mails that--or we did examine e-mails that were filed with the amendment paperwork. Q. A. Q. A. And there was a contract amendment that was entered into? Yes. There was a check written by the State of Iowa? I can't say. I believe that the payments were EFT, but I don't know if it was a check or an electronic funds transfer. Q. A. You don't know that? The grant agreement required that an electronic funds However, I believe for transfer provide the money to CIETC. that June 30th, 2005 amendment of $200,000 a check was issued. Q. So there would be a paper document that actually shows that transfer? A. Q. For that transfer, yes. There wasn't anything secretive about that, there was a piece of paper that you or somebody saw? A. Q. A. Q. Uh-huh. Yes? Yes. And isn't it a fact that that transfer was accomplished on JOHNSON - CROSS - McCARTHY 102 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 received. stay. (In open court, out of the presence of the jury.) THE COURT: Mr. Purdy, you offered the audit, which I This goes to recess. BY MR. McCARTHY: Q. Ms. Johnson, I have a few questions to ask you concerning July 5th of 2005? A. I believe that's the date that CIETC actually received the check. MR. SPIES: All right. Thank you, Ms. Johnson. Those are all the questions I have for you. THE COURT: Mr. McCarthy. Thank you, Judge. MR. McCARTHY: CROSS-EXAMINATION your report. Directing your attention to page 11, it lists the 3 years of salaries for Ramona Cunningham, John Bargman -THE COURT: Mr. McCarthy, if you're going to go into that, maybe we should take our noon recess because I have some questions about it before you go into that. Ladies and gentlemen, we're going to take our noon You should remember the admonition that I read as Don't discuss the case yet. The lawyers should preliminary instruction 15. We'll reconvene at 1 o'clock. The first two pages is a press release. Mr. Spies' objection. I think there's a difference between the JOHNSON - CROSS - McCARTHY 103 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 was. THE COURT: of Exhibit 1. That's why I asked counsel if it was part audit, which is a record and therefore has the force of the rule exceptions, and the press release. conclusions. conclusions. Is it your point that the press release comes into evidence as part of the audit? MR. PURDY: No, Your Honor. The government would ask The press release contains I think counsel was about to go into one of the that the press release be removed. THE COURT: All right. Because I didn't hear it. And, Mr. McCarthy, why did you want to question about the press release? Was there something that I missed? No. I was going to go into the MR. McCARTHY: discrepancy between the two officers and Karen Tesdell's salary amounts. It was just a summary that I was going to use. THE COURT: release in? MR. McCARTHY: It's marked Exhibit 1. I thought it Okay. But you don't want the press He tells me it's not. The government is willing to stipulate it MR. PURDY: not be part of 1. THE COURT: Do you want the press release in? No. I thought it was already in. MR. McCARTHY: That's why I was questioning. JOHNSON - CROSS - McCARTHY 104 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: We'll be in recess. The first two pages The rest is in. will not be admitted as part of Exhibit 1. We'll be in recess. (Recess at 12:00 noon until 1 o'clock p.m.) JOHNSON - CROSS - McCARTHY 105 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 awarded. BY MR. McCARTHY: Q. Ms. Johnson, I do have some questions concerning Exhibit 1. THE COURT: AFTERNOON SESSION Please be seated. Mr. McCarthy. MR. McCARTHY: Thank you, Judge. CORRINE JOHNSON, GOVERNMENT'S WITNESS, PREVIOUSLY SWORN CROSS-EXAMINATION (Resumed) Do you have that in front of you? A. Q. I do. I'm also going to place a few pages on the ELMO. It should be on the screen there. I'll refer to the page numbers as the This would be page 8 out of your original report page number. detailed findings. Paragraph 1 down at the bottom, CIETC payroll, could you read that paragraph for the jury, please. A. "According to CIETC's policy manual because CIETC does not use a pay schedule with pay grade increases, a supplemental wage and incentive system will be used to recognize staff performance and augment staff wages. "If funding is available, semiannual incentives may be The manual also states additional incentives and supplemental wages may be awarded at the discretion of the chief executive officer or the CIETC board chairperson. "No single award is to exceed 15 percent of the JOHNSON - CROSS - McCARTHY 106 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 individual's regular annual wage. The policy manual does not limit the number of supplemental payments any individual can receive." Q. Based on your audit, did Karen Tesdell ever receive a bonus or incentive pay of over 15 percent? A. Q. No. Looking at page 10 of your audit, let's go over-- The CEO is Ramona Cunningham; is that right? A. Q. Yes. For the year ending June 30 of '04 she received a total of 254,000, plus; is that right? A. Q. Yes. For the year ending June 30th, '05 the number jumped up to 368,000 plus; is that right? A. Q. A. Q. Yes. And then for the 6 months of '05 it was 173,000? Yes. That would be annualized, would you agree with me, to 350,000 if it was a full year period? A. Q. A. Q. A. Q. We annualized Ms. Cunningham's salary at $357,344. For the year, for that fiscal year; is that correct? Correct. The COO is John Bargman; is that right? Yes. And his numbers reflect for the period ending JOHNSON - CROSS - McCARTHY 107 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. June 30th, '04, 241,000 plus change; is that right? A. Q. A. Q. Yes. For the period ending June 30, '05, $360,000? Yes. And for the half year ending 12-15 of '05, $166,000; correct? A. Q. Yes. And then the third line down is the chief accountant Karen Now her numbers are a lot different, aren't they? Tesdell. A. Her numbers are--her salary numbers are lower, yes, than the chief executive. Q. A. And incentive pay and bonuses are all lower, aren't they? I don't believe that Ms. Tesdell's job duties are necessarily -Q. That wasn't my question. THE COURT: chance to answer. Had you completed your answer? I would expect that the salary payments to Ms. Tesdell to be Counsel, now, you've got to give her a lower than the payments to the chief executive officer and the chief operating officer. When comparing Ms. Tesdell's salary, you would need to, per se, compare apples-to-apples, so her salary would then need to be compared to a comparable salary within state government for her job duties and not compared to the salary of JOHNSON - CROSS - McCARTHY 108 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. another entirely different job position. MR. McCARTHY: nonresponsive. THE COURT: Overruled. Your Honor, move to strike as Would you agree with me that a total compensation of 115,000 is significantly less than 350,000? A. Q. Yes. Would you agree with me that $129,000 is significantly less than $368,000? A. Q. Uh-huh, yes. Would you agree for a 6-month period that 48,000 is significantly less than 173,000? A. Q. Yes. Turning to page 13 of your report, this talks about the annual percentages of salary increases for the three parties; is that right? A. Q. It is, yes. Would you agree with me that CEO Ramona Cunningham and COO John Bargman had significant salary increases during this time period? A. Q. Yes. Compared to the chief accountant Karen Tesdell, she had about a 4 percent raise; is that right? A. Q. Yes. Now, if you can, read the highlighted portion, which is your JOHNSON - CROSS - McCARTHY 109 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 conclusion as to salary increases for the CEO and COO. A. "Allowing for the base salary increase awarded to the CEO and COO, in early July 2003 the CEO's and COO's base salaries increased 94 percent and 102 percent respectively by September 8, 2005." Q. A. What did Karen Tesdell's salary increase by? I don't have that calculated. However, looking at our exhibit, it appears that her salary increases were less than 2 percent annually. to her payroll. Q. A. Q. A. That would be cost of living? That's correct. Same adjustment everybody else at CIETC got? Yes, at CIETC. Calculation of the COLA granted each I believe her increases were COL adjustments employee a flat dollar increase to their annual salary. Q. I'm going to place on the ELMO page 65, which is your Are you familiar with that? organizational chart. A. Q. A. Q. A. Q. A. Q. Yes, I am. Who's at the very top? Ms. Cunningham. Ramona Cunningham. Uh-huh. Directly below her? Mr. John Bargman, who was the chief operating officer. And where is Karen Tesdell? Chief executive officer; correct? JOHNSON - CROSS - McCARTHY 110 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. According to the organization chart here, it would appear that Karen Tesdell would report to John Bargman. Q. A. Q. She's right down here, isn't she? Correct. Where I circled. So she's two levels down from Ramona Correct? Cunningham; is that right? A. Q. A. Q. Based on this description, yes. Well, who made this? No. Did the State of Iowa make this? This is a document that we obtained from CIETC. So according to this document that was in your report, Karen Tesdell is two levels down from Ramona and at least one level down from John Bargman; is that right? A. Q. Based on this report, yes. In your report you, in the appendixes attached thereto, you've enclosed a number of letters from both Ramona Cunningham to different employees and from Archie Brooks; is that right? A. Q. Correct. And I'm referring to page 73. Describe that letter for me, please. A. This appears to be a letter that Ms. Cunningham had issued to Ms. Tesdell to award her a bonus of $2,000 for work that she had performed setting up their accounting software. Q. So on or about December 3rd of '03, Karen got a $2,000 bonus awarded to her from Ramona Cunningham; is that right? A. Yes. JOHNSON - CROSS - McCARTHY 111 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. This letter came along with the check, I'm presuming? I presume so. Or direct deposit, one of the two; correct? Yes. And did your investigation reveal whether or not taxes were taken out of that $2,000? A. We did not look at the tax impact. We looked at gross wages. Q. Well, would you agree with me that taxes were taken out and IPERS was taken out and all the appropriate things? A. Q. I can't speak to that. There were other letters from Archie Brooks, specifically Describe what this one is on page 79, dated May 19th of '04. this letter is. A. This looks like a letter that Mr. Brooks would have provided to authorize a semiannual supplemental payment. Q. A. Do you recall how many people got bonuses on this occasion? I don't recall. I would need to refer to my workpapers to give you the names. Q. There's a copy of page 80. These are the people that got the bonuses, a whole slew of people; is that right? A. Q. For this particular occasion, yes. And Karen Tesdell is listed there, right there, 10 percent; correct? A. Correct. JOHNSON - CROSS - McCARTHY 112 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. The highest was 10 percent--nope, excuse me, John Bargman The lowest is 2 percent; is that right? got 15 percent. A. Q. A. Yes. Again, this bonus was authorized by Archie Brooks? According to that letter it appears to have been signed by Mr. Brooks. Q. Page 84 of your report reflected this letter to Ramona from Archie, again giving a number of people bonuses; correct? A. Q. Correct. And your report has a number of these. Would you agree with me on that? A. Q. I'm sorry, I didn't hear the question. Your report has a number of these letters with a number of Would you agree with me on that? people getting bonuses. A. Q. We do have several letters in our report. And not all of them included Karen Tesdell. Would you agree with me on that? A. Q. I would agree, yes. Specifically page 93, January 11th, '05, we have a bonus. It's a letter to Ramona from Archie Brooks, Ramona Cunningham, and it lists four people, Karen Tesdell not being one of them; is that correct? A. Q. A. Yes. So she wasn't always in the bonus loop, was she? Based on these letters it appears that every time a bonus JOHNSON - CROSS - McCARTHY 113 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 was awarded, Karen did not receive one. Q. According to your report-- This is part of your report; correct? A. Q. Correct. At times there were a number given to--like a $10,000 bonus They weren't always given to a number of different people. different. question. Do you recall that, for instance-- I'll rephrase my On January 4th of '05 this is a letter to Ramona Cunningham from Archie Brooks authorizing an incentive pay of $10,000 to each of these people. A. Q. Yes. We have Ramona Cunningham, John Bargman, Victor Scaglione, One being Karen Tesdell? Ralph Marasco, Karen Tesdell, Steve Mauro and Charles Brooks all got $10,000? A. Q. Yes. Was there a time--based on your investigation, was there a time when a bonus was given Karen Tesdell that she did not get a letter thanking her from either Ramona Cunningham or Archie Brooks? A. I believe for every supplemental payment that Karen received we were able to tie it to a letter. Q. Tie it to a letter. Either the chief executive officer gave her the bonus or the chairman of the board? A. Q. Correct, according to the letters. Now, you're familiar Karen Tesdell had an employment JOHNSON - CROSS - McCARTHY 114 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 agreement with CIETC. A. Q. I am. Page 129 of your report, can you read what her salary is for Are you familiar with that? me, please. A. "CIETC shall pay the chief accountant a base annual salary of $94,286 for services payable on a biweekly basis. "Annually your performance will be reviewed, and if it is determined that your performance has fallen below its current level, this agreement may be terminated." Q. A. Q. This is signed by who? It appears to be signed by Mr. Brooks. Now, when you did your comparisons on her job versus other jobs in state government, I just wondered, did you check in the private sector? A. We did not in our report include that we had checked into the private sector because we don't believe CIETC is comparable to an entity in the private sector because it is an governmental organization. Q. So the answer is no, you didn't check into the private sector? A. Q. No. You didn't check to see what the chief accountant for Red Cross was making, for instance? A. Q. No. We didn't feel it was necessary. You didn't check to see what the chief accountant was making JOHNSON - CROSS - McCARTHY 115 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 at Pepsi-Cola? A. Q. No. You didn't check to see what the chief accountant was making at Microsoft? A. Q. No. Would you agree with me all three of those scenarios, the salary and bonuses would probably exceed what those persons would get on a state salary? A. Q. I can't speak to that. I haven't done the research. It's not uncommon in state government for state employees to get performance bonuses and retention bonuses, is it? A. Again, I can't speak to that. I've heard of it happening. I believe it is not a very common occasion but, again, without looking into the research of that, I don't know. Q. The Des Moines Register on April 13th-MR. PURDY: THE COURT: Objection. Well, you've got to wait until he poses a question, counsel, before you object. BY MR. McCARTHY: Q. A. Q. A. Q. Do you read the Des Moines Register? I'm sorry? Do you read the Des Moines Register? On occasion. Are you aware of the story they published about the 19 state employees that got $57,000 worth of bonuses in a 6-month period? JOHNSON - CROSS - McCARTHY 116 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. I did see the line for that, yes. So people in state government get bonuses; correct? Yes. And did any of--have any of these 19 been indicted? Probably not; correct? A. Q. A. Probably not. During your-- How long did the audit take? We began our field work in November of 2005, and we issued our report on March 31st of 2006. Q. A. And you had full access to the CIETC offices; is that right? I would disagree I had full access. I did field work in the CIETC office and as I requested records, they were provided to me. Q. Did you ever find a memo outlining the alleged conspiracy between Ms. Tesdell and Ramona Cunningham? A. Q. I don't recall such a memo. How about any documents at all to reflect the existence of a conspiracy? A. Q. I don't recall having seen any documents, no. So Karen Tesdell was receiving--her last months at CIETC she was receiving a salary of $94,000; correct? A. Q. A. Q. That is correct. And she was receiving sporadic bonuses? That is correct. That totaled--what was your finding, total in the last JOHNSON - CROSS - McCARTHY 117 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 6 months she received 4,000 something in bonuses; is that right? A. Q. In what time period? The last 6 months she was there. For the 5 1/2 months ending 12-15-05, your report on page 10 reflects compensation of 43,466 and bonus of $4700. A. Would you agree with that? However, it was cut off at For that fiscal year, yes. December 15th of 2005, so we don't know what bonuses may have been awarded to Ms. Tesdell for the remainder of the fiscal year. The 2 years prior the bonus amounts were significantly higher than $4,700. Q. A. Q. A. Q. A. Q. From 94,000 to 129,000. For the difference? That's the difference; correct? I'm sorry? Fiscal year ending 6-30-05. Yes. At 6-30-05 Ms. Tesdell was paid $129,168. Roughly a $35,000 pay incentive, cost adjustment and bonus? Correct. That would be compared to John Bargman's of over $200,000. Correct? A. Q. A. Again, if you're comparing the numbers, that's correct. And Ramona Cunningham had even more than that, didn't she? Uh-huh. MR. McCARTHY: THE COURT: MR. SCOTT: Nothing further. Thank you. Mr. Scott, do you have any questions? I have no questions for this witness, JOHNSON - REDIRECT 118 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. BY MR. PURDY: Q. Ms. Johnson, Mr. Spies asked you about the benefits of the Your Honor. THE COURT: examination? MR. PURDY: Yes, Your Honor. REDIRECT EXAMINATION Mr. Purdy, do you have any redirect contract employees at CIETC, those 24 we were talking about, and I believe you gave him an indication as to what Ms. Barto said about that in the March 2006 meeting. Do you recall that conversation? I believe so, yes. And what did Ms. Barto say about the benefits of those contract employees versus the CIETC employees? A. That employees that were IWD--or, pardon me, the employees that were on CIETC's payroll by contract did not receive supplemental payments. Q. And is that inconsistent with what Ms. Barto told you, or did she tell you that? Let me ask it a different way. artfully phrased. You had a conversation with Ms. Barto in March of 2006; correct? A. Q. Correct. Part of that conversation dealt with contract employees from It was not very JOHNSON - REDIRECT 119 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Thank you. Disability Navigator, New Iowan, and Tax Redesign; correct? A. Q. That is correct. Now, what did Ms. Barto, if anything, tell you at that meeting as to the benefits those employees received? A. The employees received benefits through CIETC, health benefits and other benefits through CIETC. Q. Okay. Were those benefits comparable with what the CIETC employees received? A. I believe so, with the exception of the Supplemental Payment Policy. Q. A. Okay. And did they receive COLA's from CIETC as well? I believe that the payroll was I do not think so. established by IWD. Q. Okay. Mr. McCarthy asked you whether Ms. Tesdell received more than 15 percent bonus at any one time, and you responded, "No, she did not;" is that correct? A. Q. Correct. Regardless of how much Ms. Tesdell received in bonuses at any one time, is she still bound by the rules that say her salary must be reasonable and necessary? A. Yes. MR. PURDY: THE COURT: MR. SPIES: Thank you. Mr. Spies, any recross? No additional questions, Your Honor. MILLER - DIRECT 120 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. A. Mr. Miller, would you tell the jury what your occupation is. Today I work for Microsoft. I am a technical specialist, THE COURT: MR. PURDY: THE COURT: Mr. McCarthy? No, thank you, Judge. MR. McCARTHY: THE COURT: You may step down. (Witness excused.) You want to call your next witness. The government calls Kevin Miller. The government believes Mr. Miller will be assisting the jury with count 1. THE COURT: All right. KEVIN MILLER, GOVERNMENT'S WITNESS, SWORN THE COURT: Please be seated. Counsel, you may proceed. DIRECT EXAMINATION and I work with products that Microsoft sells related to e-mail security. Q. Okay. How long -THE COURT: Pull the microphone closer to you, please. Thank you. The jurors will hear you better if you do that. A. Q. A. I started employment with Microsoft in July of last year. Where did you work prior to that? Prior to that I worked for the State of Iowa in the Department of Administrative Services. MILLER - DIRECT 121 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. And how long were you so employed in that capacity? I worked there for 6 years. What did you do for the State of Iowa in that capacity? I was the lead technical architect for messaging, so e-mail and all things related. Q. Explain to the jury--explain to me in better terms and maybe it will help the jury, it will certainly help me, what that job entailed. A. Sure. So I was the technical expert that essentially developed the e-mail system that's used at the State of Iowa. When I first came to the State of Iowa 6 years prior, it was more of a departmentalized e-mail system, and over the term of my time there it became more of a statewide messaging system. So I was classified as a state employee as an information technology enterprise expert was my official state title, and I led the team that managed e-mail, managed things like BlackBerries, managed all the different type of communications that were electronic. Q. Was one of the agencies on that--was this a statewide system? A. It was not. All state agencies hadn't yet adopted it, but most had. Q. By the time you left and during the course of your 6 years was Iowa Workforce Development on that system? A. They were. MILLER - DIRECT 122 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. Was an entity known as CIETC on that system? They were. And explain to the jury how come an entity like CIETC was on the same system as the state agencies. A. I don't know what led to CIETC being on the system; but Iowa Workforce Development had extended the services of e-mail to CIETC, and it was commingled with IWD mailboxes. Q. At some occasion did you have an opportunity to become involved in the matter regarding the investigation of CIETC? A. Q. A. Yes, I did. And what-Explain what role, if any, you had in that. When the investigation first started, I was approached by the FBI to help in securing e-mail that may be related to the case. Initially I was asked to make a copy of all of the e-mails that were in mailboxes of the people that they were interested in. e-mail system. And then over the next several weeks and months we actually went in and started to recover from the backup tapes that existed on those same mailboxes in an effort to try and make sure that we had a comprehensive list of all the e-mails. What we were able to get the first time, we just made a copy of what was there, included just what was there that day and not anything that may have been sent or received and later So we made a copy of those off of the live MILLER - DIRECT 123 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. deleted. So the purpose of going to the back-up tapes was to try to make sure we had everything that was possibly available. So what we did is we restored back-up tapes, and then we--from those back-up tapes we extracted out the mailboxes of the same people that the FBI was investigating, and then we narrowed the range of e-mails to the date range that they were focused on and produced those for the FBI. Q. Okay. Is that a long way of saying you got some e-mails off the system? A. Absolutely. MR. PURDY: THE COURT: May I approach, Your Honor? You may. I've given you what's been marked for identification Would you take a look at those. purposes a number of items. A. Q. Yes. Let's start with at the top. It's Government's Exhibit 122. Do you see that one? A. Q. is. A. This is an e-mail from Kelly Taylor of IWD to Ramona Yes. Can you identify for the jury what Government's Exhibit 122 Cunningham, a copy to Jane Barto. Q. A. And what's the date of that e-mail? October 26th, 2005. MILLER - DIRECT 124 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PURDY: THE COURT: BY MR. PURDY: Q. me. So for sample purposes, can you go through this e-mail with At the top there's a number, an item that says Message What does that Q. Is that one of the e-mails that you recovered from the IWD system or the CIETC system based upon the recovery process we talked about? A. Yes. MR. PURDY: THE COURT: MR. PURDY: Your Honor. THE COURT: MR. SPIES: Counsel? Without objection, Your Honor. No objection, Judge. Permission to publish, Your Honor? Are you offering? I'm sorry. Move to admit the exhibit, MR. McCARTHY: MR. SCOTT: THE COURT: No objection. Received. (Government Exhibit No. 122 was offered and received in evidence.) Permission to publish, Your Honor? You may. 0064, and Subject, From, Date, To, and CC. information convey to you. A. Starting at the top, the Message 0064 is a number that was applied to the message from the system we use to capture all of the e-mails. MILLER - DIRECT 125 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Vault. We used a product from Symantec called Enterprise Earlier I described that we went to back-up tapes, and we extracted e-mails from those back-up tapes. We then input those extracted e-mails into the Symantec Enterprise Vault, and that product indexes the e-mail. It also--what I mean by index is it goes through and looks for every word in both the message and any attachments that would have been part of that e-mail message. So when that's complete, when we've input all of those data or those e-mails and all of that information has been indexed, it allows us then to do searches, and the searches were done to narrow the range based upon either the sender or the recipient, the date range or key words. So what we were focused on was messages to and from, in this case it would have been Ramona and Jane Barto, and the date range was January 2002 to April of 2006. Q. I'd ask if you would turn then to Government's Exhibit 123, Do you have that in marked for identification purposes as 123. front of you? A. Q. Yes, I do. Is this e-mail consistent with the information that you were asked to retrieve and in fact did retrieve? A. Yes, it is. MR. PURDY: MR. SPIES: Government moves admission of Exhibit 123. Without objection. MILLER - DIRECT 126 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. I'd ask you to look at Government's Exhibit 125. Do you BY MR. PURDY: Q. I ask if you would look at exhibit marked for identification Do you have that in front of you? MR. McCARTHY: MR. SCOTT: No objection, Judge. Your Honor, I am going to object on the basis that I believe this information is hearsay with respect to my client. THE COURT: Received. (Government Exhibit No. 123 was offered and received in evidence.) as Government's Exhibit 124. A. Q. Yes, I do. Is that e-mail consistent with those stored on the IWD and/or CIETC system that you were asked to retrieve? A. Yes, it is. MR. PURDY: The government moves the admission of Exhibit 124, Your Honor. MR. SPIES: No objection. No objection. MR. McCARTHY: MR. SCOTT: THE COURT: Same objection. Received. (Government Exhibit No. 124 was offered and received in evidence.) have that in front of you? MILLER - DIRECT 127 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. I'd ask if you would look at Government's Exhibit 127. Do A. Q. Yes, I do. Is that exhibit consistent with an e-mail that you were asked to retrieve from the IWD and/or CIETC systems? A. Yes, it is. MR. PURDY: MR. SPIES: The government moves Exhibit 125. No objection, Your Honor. No objection. MR. McCARTHY: MR. SCOTT: THE COURT: Same objection. Received. (Government Exhibit No. 125 was offered and received in evidence.) you have that in front of you? A. Q. Yes, I do. Again, is that an e-mail consistent with an item recovered from the IWD and/or CIETC system that you were asked to retrieve in this matter? A. Yes, it is. MR. PURDY: MR. SPIES: Government moves admission of Exhibit 127. Without objection. No objection, Judge. MR. McCARTHY: MR. SCOTT: THE COURT: The same objection, Your Honor. Received. MILLER - DIRECT 128 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. I direct your attention to Exhibit 130. Do you have that in BY MR. PURDY: Q. I ask you to look at Government's Exhibit 129. Do you have (Government Exhibit No. 127 was offered and received in evidence.) that in front of you? A. Q. Yes, I do. Is that e-mail consistent with the e-mails that you were asked to recover from the IWD and/or CIETC systems? A. Yes, it is. MR. PURDY: Your Honor. MR. SPIES: Objection; hearsay. Likewise, Your Honor. Government moves admission of Exhibit 129, MR. McCARTHY: MR. SCOTT: THE COURT: Same. Received. (Government Exhibit No. 129 was offered and received in evidence.) front of you. A. Q. Yes, I do. Is that e-mail consistent with e-mails from the IWD and/or CIETC system which you were asked to retrieve? A. Yes, it is. MR. PURDY: Government moves admission of Exhibit 130, MILLER - DIRECT 129 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor. MR. SCOTT: THE COURT: It's hearsay, Your Honor. Received. BY MR. PURDY: Q. I direct your attention to what's been marked for Do you Honor. THE COURT: Received. (Government Exhibit No. 130 was offered and received in evidence.) Your Honor. MR. SPIES: Objection; hearsay. Join in, Your Honor. MR. McCARTHY: MR. SCOTT: I also object as it being hearsay, Your identification purposes as Government's Exhibit 131. have that in front of you? A. Q. Yes, I do. Is that e-mail consistent with the documents and e-mails that you were asked to retrieve from the IWD and/or CIETC system? A. Yes, it is. MR. PURDY: Your Honor. MR. SPIES: This is hearsay as to Defendant Barto. Likewise to Defendant Tesdell, Your Government moves admission of Exhibit 131, MR. McCARTHY: MILLER - DIRECT 130 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. I direct your attention to what's been marked as Do you BY MR. PURDY: Q. I direct your attention to Government's Exhibit 132. Do you (Government Exhibit No. 131 was offered and received in evidence.) have that in front of you? A. Q. Yes, I do. Is this e-mail consistent with those e-mails that you were Is that asked to recover from the IWD and/or CIETC system? consistent with that? A. Yes, it is. MR. PURDY: Your Honor. MR. SPIES: Objection; hearsay. Join in, Your Honor. The government offers Exhibit 132, MR. McCARTHY: MR. SCOTT: THE COURT: I also join, Your Honor. Received. (Government Exhibit No. 132 was offered and received in evidence.) Government's Exhibit 133 for identification purposes. have that in front of you? A. Q. Yes, I do. And is that exhibit consistent with an e-mail that you were asked to retrieve from the IWD and/or CIETC systems related to MILLER - DIRECT 131 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. I direct your attention to Government's Exhibit--what's been hearsay. THE COURT: Received. (Government Exhibit No. 133 was offered and received in evidence.) Barto. MR. McCARTHY: MR. SCOTT: Join in, Judge. this investigation? A. Yes, it is. MR. PURDY: Your Honor. MR. SPIES: Hearsay, Your Honor, as to Defendant Government moves admission of Exhibit 133, Your Honor, I also object that it's marked as Government's Exhibit 134 for identification purposes. Do you have that in front of you? A. Q. Yes, I do. Is that e-mail consistent with the e-mails you were tasked to retrieve related to this investigation? A. Yes, it is. MR. PURDY: MR. SPIES: Government moves Exhibit 134, Your Honor. No objection. No objection, Judge. MR. McCARTHY: MR. SCOTT: THE COURT: Your Honor, I have the same objection. Received. MILLER - DIRECT 132 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PURDY: Your Honor. THE COURT: MR. SPIES: Mr. Spies, do you have cross-examination? I do, Your Honor. Judge. MR. SCOTT: THE COURT: I also object on the grounds of hearsay. Received. (Government Exhibit No. 135 was offered and received in evidence.) No further questions for this witness, BY MR. PURDY: Q. And I direct your attention to what's been marked as Is that (Government Exhibit No. 134 was offered and received in evidence.) Government Exhibit 135 for identification purposes. e-mail consistent with an e-mail that you were tasked to recover in relationship--recover from the IWD/CIETC system in relation to this investigation? A. Yes, it is. MR. PURDY: The government moves the admission of Exhibit 135, Your Honor. MR. SPIES: Your Honor. MR. McCARTHY: Hearsay as to Defendant Tesdell also, Objection; hearsay as to Defendant Barto, MILLER - CROSS - SPIES 133 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q. BY MR. SPIES: Q. Mr. Miller, you've described for the ladies and gentlemen of CROSS-EXAMINATION the jury and for us this e-mail system that included--my shorthand uneducated version, including CIETC and the state e-mail system. A. Q. Yes. Now, we've heard testimony earlier in this trial that there Am I right? were 16 regions that were handled by Iowa Workforce Development and that CIETC was one of the 16 regions. that concept? A. Q. No, I'm not. Can I ask you this, Mr. Miller. Do you know if the other 15 Are you familiar with regions, even though you don't know about them, were included in the state e-mail system? A. I do not know. MR. SPIES: THE COURT: Your Honor, may I approach the witness? You may. Mr. Miller, I'm handing you what I've marked as Defendant Is this one of the e-mails you retrieved in Barto's Exhibit A. the course of your recovery? THE COURT: They're not hearing you. Is this one of the e-mails you recovered in the course of your recovery process that you described for Mr. Purdy? A. It appears to be, yes. MILLER - CROSS - SPIES 134 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: MR. PURDY: THE COURT: Q. And this would be covered by a message number at the top. Is this part of your retrieval process? A. Yes, it is. MR. SPIES: All right. We will not offer it at this time but we'll keep it marked as Defendant Barto's Exhibit A for identification. THE COURT: MR. SPIES: THE COURT: examination? MR. McCARTHY: THE COURT: MR. SCOTT: No questions, Judge. All right. I have no other questions of this witness. All right. Mr. McCarthy, do you have any Mr. Scott? I have no questions, Judge. You may step down. (Witness excused.) You want to call your next witness. The government would call Dennis Swafford. Mr. Purdy, before I swear the witness, tell me what's the count of the indictment he's going to testify about? MR. PURDY: Your Honor, the government believes Mr. Swafford will provide assistance to the jury in respect to all counts of the indictment. THE COURT: All right. Mr. Swafford, would you please stand, face the ladies and gentlemen of the jury, and raise your SWAFFORD - DIRECT 135 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. A. Mr. Swafford, would you tell the jury where you're employed. I work for the United States Department of Labor in the right hand. DENNIS SWAFFORD, GOVERNMENT'S WITNESS, SWORN THE COURT: MR. PURDY: evidence, Your Honor? THE COURT: You may. DIRECT EXAMINATION Please be seated. Permission to approach and retrieve the Chicago regional office. Q. A. In what capacity? I'm a financial analyst in the Division of Financial Management and Administration. Q. A. Can you tell the jury what that job entails. Well, in the regional office we oversee Department of Labor grants that are given out to ten states throughout the Midwest. We have federal project officers that oversee direct grants for employment and training activities given throughout the Midwest. We have state reps who take the lead on formula funds that are given to state governments for the state's efforts to conduct employment training programs. And then we have four staff accountants. I'm one of those staff accountants, and I'm assigned the states of Iowa, Minnesota and Indiana. SWAFFORD - DIRECT 136 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Prior to your employment with the Department of Labor, where were you employed? A. I've also been employed with the General Services Administration, a federal agency that handles the government's contracting, and I've worked for the Defense Department as well as a contracting officer and a finance analyst. Q. A. Q. How long have you been employed in those areas? I've been a federal employee for 10 years. During the course of your employment have you had occasion to interact with an entity known as CIETC? A. Yes. When I came to the Department of Labor, I was assigned the State of Iowa back in 2004, and our unit conducts on-site compliance monitoring. And during the fiscal year 2005, which begins actually October 1st of '04, I selected CIETC as one of our grant recipients to do compliance monitoring for that fiscal year as part of our work planning for the year. Q. Okay. You mentioned a couple of terms I'd like to have you You said CIETC was a grant What do you mean by explain a little bit further. recipient from the Department of Labor. that? A. Well, CIETC received a variety of Department of Labor funds, types of funds, either pass-through funds through the state or direct awards that came from the Department of Labor. I had selected two discretionary grants, we call them, SWAFFORD - DIRECT 137 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that were given directly from the Department of Labor directly to CIETC that hadn't passed through the state. The two grants that I selected for review, one was an H1B project. H1B Visa funds that are collected from companies for foreign workers are sent into a pot that the Department of Labor hands out for various types of training activities. And in this case the grant that I selected was a 2.9 million dollars grant to CIETC to provide high tech health care and nursing training to folks that wanted to go into those professions, underemployed or unemployed people in that area. The second type of grant I had selected to audit at CIETC was a discretionary grant or an earmarked grant. Senator Harkin from Iowa had put a line item appropriation into the appropriation bill for that year, and it was a $794,000 award so that CIETC could set up a computer lab for disabled folks. It was a disability type of lab where those types of folks could come in and get job and training services. Q. Okay. The jury's heard a little bit this morning about Are different types of grants that flow down through the state. there such grants that come from the Department of Labor as well? A. Correct. They get--the State of Iowa gets well over a hundred million dollars over the last few years under the Workforce Investment Act. And they hand those funds out for three types--general SWAFFORD - DIRECT 138 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 types of purposes. The Workforce Investment Act is based upon programs to help three types of persons--adult, youth, and dislocated workers. Those are the three primary categories that are funded under the Workforce Investment Act, and so the state is given an allocation. All the states get an allocation based on their population and their unemployment numbers. received their allocation. The State of Iowa They turn around and allocate out to CIETC was the 16 different local areas in the State of Iowa. coordinating service provider for one of those 16 areas. And so they had quite a bit of money to conduct the Workforce Investment Act program. Q. I'd ask you then, other than the WIA grants, the jury also has heard something about temporary assistance for needy families for Promise Jobs funds. Does the Department of Labor have anything to do with either giving those funds or monitoring the use of those funds? A. Act. Correct. Well, I've talked about the Workforce Investment There's also the Wagner-Peyser Act that provides employment security funds that are given out to the state, and those are turned into a program called the Promise Jobs Program. So CIETC also has funds for that program. I think we've identified CIETC had individual grants training, something like two dozen individual grant streams for these various types of employment training and job security SWAFFORD - DIRECT 139 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 support. There were about 24 different funding streams going into that agency. Q. And does the Department of Labor have oversight over all of those that go to CIETC? A. No. Under the Workforce Investment Act, money that passes through the state, it's up to the state to oversee the compliance of the conduct of those programs. The only thing we're responsible for in the Chicago regional office is oversight for any direct awards that don't pass through the state, discretionary awards, earmarks, those kinds of things. Q. What type of rules does an entity like CIETC have to play by when they're receiving or using the funds from either of those sources? A. Well, there's something called the Codified Federal Regulations, and the regulations that apply to CIETC are at 29 CFR part 97. There's that. There's the Codified Federal Regulations, but the Office of Management and Budget, the federal agency in DC, also puts out OMB circulars, they're called. And they're sort of an--they're a more easier to read explanation of what the rules are for grant compliance. Anybody that gets federal moneys, right in the grant agreement it will tell them what they can find, what OMB SWAFFORD - DIRECT 140 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 circulars would apply to them, where the Codified Federal Regulations can be found. And, of course, there's other language in the grant agreement itself that they must comply with. Q. In addition to the regulations and the OMB circulars, is there a statutory provision that would provide these funds--or rules that must be followed? A. Well, there's also the state has the state code. They've got to follow the State of Iowa code. They would also have to follow any internal compliance requirements that they have, and, of course, the Workforce Investment Act at the top of the thing would be something they would have to comply with. Q. The Workforce Investment Act, is that a federal statute or a state statute? A. Q. That's a federal statute. Okay. So we have the federal statutes, regulations, OMB circulars, and whatever state rules apply? A. Q. Correct. Sounds like a lot of rules. Does the Department of Labor provide assistance in helping entities to understand those rules? A. Yes, we do. We do quite a bit of training. Anybody that were to receive a direct discretionary grant or an earmark from us, one of the first things they get in their introductory award SWAFFORD - DIRECT 141 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 packet would be an invitation to training. It's typically a week-long event that goes through all the things that they need to know for fiscal and administrative compliance, program design. All of the things that would be generally necessary for them to know how to be in compliance with the federal rules would be covered during that week. In addition to that, we regularly hold training events throughout the country, and we're constantly inviting folks to these types of events so they can be as familiar as they need to be with what the federal rules are. Q. Let's talk about some of the rules. What kind of rules would apply to an entity like CIETC on how they spend the money they receive? A. Well, we've got something called the cost principles. I've talked about those OMB circulars. They put out one special to cost, meaning the types of things that you can spend federal grant dollars on. And it's a very sort of thin circular. maybe 40 or 50 pages long. It's only It lists specific items of cost, so if a grantee had a question about whether they can pay for meals at a meeting or something like that, they can go look into the cost circular to find out is that allowable. federal moneys for that. In addition to that, there's an additional test in the beginning of that cost principle that talks about if there's Can they use SWAFFORD - DIRECT 142 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 anything not in the circular, we use something called the necessary, reasonable and allocable test. And so for a cost to be allowable it has to be necessary, it has to be reasonable, has to be market reasonable, you're not overpaying for something. And then it has to be allocable. The federal project In other doesn't pay for things unless our program benefits. words, we wouldn't pay for--we wouldn't pay for an automobile if it doesn't benefit our program. That's the general test that we look at if we don't have a specific cost itemized in the circular. Q. Okay. You indicated certain circulars apply to these cost What circular is that? principles. A. A87 is the circular that would apply to state and government entities. Q. A. Q. That OMB? OMB circular A87, yes, Sir. When you're looking at these cost principles, do they cover salary and compensation? A. No. There's nothing in the circulars and the grant agreement and the regulations that stipulates what appropriate salary levels are, except for the necessary and reasonable and allocable test, which usually means market norms. Q. Okay. Let's talk about that. Necessary-The three parts. Necessary, what does necessary mean under that circular? SWAFFORD - DIRECT 143 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. It means you can't spend federal dollars on something unless it's needed for the conduct of the program. Q. A. What does reasonable mean under that circular? Reasonable means that it's a market rate, that you're not paying 400 dollars for a pencil; that whatever you're paying for something is typical in a local market area for that product or service. Q. And the third component you mentioned was allocable. What does that mean? A. Allocable means that--an example would be if you have a large organization, such as CIETC, where you're running lots of different programs, and every month you gets a light bill, you need to figure out how to distribute the cost of the light bill out to all these different benefitting activities. You wouldn't charge the whole bill--the whole light bill just to one, like the federal funding stream for adult workers. way. Q. You would allocate it out, distribute it out in a fair That's what allocable means. So you indicated I think that, for example, WIA has-- Workforce Investment Act--WIA adult, WIA youth, and dislocated workers; is that correct? A. Q. Yes, Sir. To give us an example, if you have an entity that has 1/3 of its operations in each of these programs, for an example, how would they--how would they allocate their light bill then? SWAFFORD - DIRECT 144 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Well, the federal rules only require that it be fair. There's a couple of ways that are typical for people to allocate costs. If you've got a building such as this, you've got maybe 5 different programs running, you could divide it up based on square footage. If this program is using 20 percent of the square footage and this one is using 10, and so on and so forth, space is one way to allocate costs fairly. Another way is time sheets. You figure out, you know, when someone sits down every 2 weeks to do their time sheet for 8 hours a day, typically you would expect them to allocate time or identify time as working on a different project. That's another way to allocate based on how much time people are spending on what. And then just staffing, just the basic number of people is another example. Those are the three most common, but there are other ways that are acceptable to us. Q. How does an entity allocate its administrative expenses? Is it different than what you've explained? A. The administrative expenses are those types of things that would be really overburdensome from the accounting perspective to try to figure out how to allocate costs. An example might be, well, administrative costs are these kinds of things: They're the legal costs, the costs of SWAFFORD - DIRECT 145 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. the personnel department, the finance department, the cost of the guy removing the snow out front. These are--there are two There's types of things buried into administrative costs. administrative costs and facilities. And typically what a large organization will do is rather than try to allocate each and every little penny that they spend, they will dump it all into a pool and then allocate the pool out according to some pre-approved methodology. Q. Tell me how an entity accounts for the time of its employees, what they're required to do. A. Well, there are two basic ways that we accept. By far the most common way that we accept people charging their time to us is through the use of time sheets. If we have an individual who works on three different programs in a 2-week pay period, they would have to do a time sheet on a day-by-day basis to kind of delineate in a fair way how much time they're spending on various programs. Once you have that time sheet at the end of the 2 weeks, the accounting staff would take it, and they would use how you've broken down that time to bill your paycheck back against these funding streams. That's how they would allocate those costs. Is there a term for that type of allocation? It's just cost allocation. Is it actual, after the fact, or based on projections, or SWAFFORD - DIRECT 146 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 what is it? A. Q. It's always actual, after the fact. So if an entity uses a time sheet method, their employees are supposed to record what they work on? A. Q. Correct. And then that is submitted and ultimately funds paid based on what people actually work? A. Q. Yes, Sir. Back to the administrative costs for a second. Are there caps under these programs for what can be charged to administrative caps? A. We'll put a 10 percent cap on administrative costs. That doesn't include the facility's costs. It's just admin costs, the costs of the executives at the highest level of an organization. It would be the cost of the attorney fees and the All those payroll department, the human resource department. things are admin in nature, and we would typically cap under our grant awards you can only use 10 percent of the money for that overhead. We want the rest of it going for services and support for our participants. Q. Is that Department of Labor grants or all federal grants, if you know? A. It's a little of both. 10 percent is a common number. We But permit some of our grantees to negotiate up to 15 percent. that's a common number that I've seen with other federal SWAFFORD - DIRECT 147 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 an hour. resume. (Short pause.) agencies as well. Q. Are you familiar with how CIETC allocated their time? Was it the time sheet method, or was it some other method? A. Q. Most of the employees were using time sheets. I think you indicated earlier that you had--your first contact with CIETC was a monitoring visit related to discretionary grants; is that correct? A. Correct. In December of 2004 we went on site to review the H1B grant that I talked about earlier and also the discretionary earmarked awards. Q. In December of '04 when you went out to monitor, you actually went physically to the CIETC offices? A. That's correct. It was myself, the federal project officer that was from the Department of Labor side was overseeing the program aspect. records. I went to look at the financial and accounting And we had sort of a trainee staffer that had just joined the department that I took along, and Tom Moya, so there were three of us from the department that went on site from the Department of Labor. relay what happened. Q. If you would tell us what the monitoring process -THE COURT: Ladies and gentlemen. You've been sitting We were on site for four days, and I can If you want to take a stretch break and then we'll SWAFFORD - DIRECT 148 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Mr. Purdy, when I interrupted you, your proposed question that the witness didn't have a chance to respond to is, you began, "If you would tell us what the monitoring process" and then I interrupted you. Q. Mr. Swafford, would you tell the jury generally before we get to specifics what the monitoring process involves when you go out to an entity like CIETC. A. Sure. Typically once we have selected a grant or more than one grant for review at a site, we will contact the director of that agency and try to work out a schedule for when we can come out because we're going to need key staff at that organization to be on hand to provide us with records. In this case I contacted their--CIETC's director, Ramona Cunningham, and we selected the second week in December of 2004 and went on site. Before we got there, we provided a couple of things. We had a document request list for Ramona that she presumably would give to her financial staff. records. We also indicated that we would be reading their policies and procedures. We requested that we could have those We were requesting financial kinds of things ready to go when we arrived. And we worked through that process to sort of plan out and schedule the on-site review. That all went fine, and we arrived I think it was SWAFFORD - DIRECT 149 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 better. We do this--we do on-site monitoring visits, you know, constantly in our job. That's one of the things we do. So we December 14th of 2004. And we held an entrance interview, we call it, in which we go in and we describe the reason for our on-site visit, and there typically are two reasons. We go on site to test compliance with the federal rules for the conduct of their grant. And then we also are there to provide technical assistance wherever we can. We go through things to try to help make that program went through--during the entrance interview we went through the reasons for our visit, what records we wanted to look at. requested the general ledger, all payments charged in their accounting system to our grant funds for both projects that we were there to look at, and then we answered any questions they had. And once the entrance interview was finished, then we spent the next-Q. Let me stop you there for a second. You do your entrance interview. in your entrance interview? A. The entrance interview was Ramona Cunningham and John That's my recollection. Who did you meet with We Bargman. SWAFFORD - DIRECT 150 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. And the types of things you asked for, would they be the typical types of things when you go out to do a monitoring visit? A. Q. A. Q. Correct. These are routine things we looked for. There was nothing special that triggered this one? No, Sir. I think the jury has heard a little bit about WIA funds, the Were either of the grants that three types that you mentioned. you were looking at any of the WIA adult, youth, or dislocated programs? A. No, Sir. They were both direct grants from the department, and we tried to compartmentalize our review to just those two activities. Q. Okay. Now, after you got your entrance interview, then what do you do next in the monitoring visit? A. Then we get to work. The first couple of days are spent reading policies and procedures, you know, their personnel manual their financial accounting and procedures manual, and conducting interviews with the key staff. In this case we also--and this is typical--we asked for a general ledger with all the charges listed out of their accounting system posted against these two grant funds in their accounting system and then we select samples. And so I think it was probably something like 30 or 40 pages of ledger activity that we were provided, and then we SWAFFORD - DIRECT 151 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of stuff. highlight perhaps 40 or 50 different transactions, hand it back to them and ask for the defense behind those postings. An example would be if it's a salary payment for a staffer, we would look for the time sheets. If it were a payment for some copy paper, we might look for the receipt. If it's a payment to a contractor, we'd look for a lot We might look for the contract, but also all their procurement paperwork to show that they had done the procurement in a fair and open way. All payments--we tried to sample at least one of every different type of transaction. No matter what organization you go to there's usually about 20 to 25 types of transactions no matter where you go. Q. They're all at that same pattern. And when you asked for this from CIETC, did you receive that type of information? A. Q. Yes, Sir, we did. Who at CIETC did you work with in reviewing these things after the entrance interview? A. Q. Pulling the financial transaction records was Karen Tesdell. Did your team work with Karen Tesdell on this monitoring visit? A. Q. I'm sorry? Did your monitoring team work with Karen Tesdell at all during this visit? A. Yes. She was pulling records for us. We would see SWAFFORD - DIRECT 152 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 transactions. If there was more detail or more paperwork behind She was what we were requesting, we would ask her for that. basically pulling the records for us. Q. When an entity draws down funds from these various funding streams, how does that happen? A. The draw-downs occur--it's a little bit like having a bank Health and Human Services, that federal agency, is account. basically the bank. They run the activity or they provide PIN numbers and draw down account access, not just for HHS, but also for several other agencies, including the Department of Labor. So for an agency like CIETC to draw down federal funds to conduct their program, they would have a PIN number and an account number. It would all be pre-approved. They go through a process to obtain that stuff. And then they would draw down those funds from the federal treasury within the online HHS system. Q. Did any part of your December of '04 review deal with that part of the process? A. We looked at draw-downs, and we asked them for the backup. We asked them--the We walked through the process with them. basic question is, "Okay. If you decide this week that you're going to draw down a hundred thousand dollars from the HHS system, how do you know it's a hundred thousand? come up with the accounting records?" How do you SWAFFORD - DIRECT 153 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 You know, what's your process? And so they walked through that process with us to show how they did their drawdowns. Q. Do you know who was authorized at CIETC to do that draw-down of those funds? A. Q. I believe it was John Bargman. And do you know at CIETC during your monitoring visit who you worked with regarding that type of information? A. That would have been Karen Tesdell and John Bargman. I mentioned that Karen was pulling records for us. Mr. Bargman and Ramona Cunningham spent a significant amount of those--of that review week in the room with us, answering questions and helping us with some of the things we were looking at. Q. After your monitoring visit has gathered this information and digested this information, then what happens? A. Then we have an exit interview in which we sit down with the We describe any compliance principals at the organization. findings that we have, findings of noncompliance, any observations or positive practices that we see. We'll discuss in a preliminary predecisional way what we're seeing, and we will tell the folks there on the other side of the table, "Here's what we're seeing at this time." going to take it back to our regional office. write a report. We're We're going to We will vet that report through our executive Typically we try to staff, and then we will issue the report. SWAFFORD - DIRECT 154 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 do it within 30 days from the exit interview. Q. Okay. And during this 12--December of '04 visit, who did you conduct your exit interview with? A. I recall that Ramona and John Bargman certainly would have I don't recall who else may have been in the room. been there. Certainly there would have been program staff. Pam Gillock, my colleague, was looking at the program side. There would be others in the room but I don't remember who they were. Q. A. Q. A. You mentioned Ramona. Yes, Sir. What transpired in the exit interview of this case then? Well, we had four findings and one observation and so we Was that Ramona Cunningham? walked through the findings. The first finding that we had had to do with the absence of accounting policies and procedures. In the period--the several weeks running up before the time that we were on site they had implemented a new accounting system. And typically we would expect to see accounting policies and procedures available to all the finance staff, and they didn't have that. They had a draft, but they hadn't yet implemented that draft within the organization. That's--for us, that's an internal control issue. wrote it up as a compliance finding. We SWAFFORD - DIRECT 155 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Let me stop you there. When you say you wrote it up as a compliance finding, what does that mean? A. That means we write a report when we go back and we detail our findings, and we format it in such a way we'll go one by one, here is a condition we've seen on site. deficiency. We're identifying a deficiency. Here is the It's a violation of good accounting practices, but more than likely it's a violation of one of our federal regulations. So in this case the federal regs. require them to have good internal controls, good accounting practices, but they didn't have any written policies and procedures for their accounting systems. And if-They had all kind of memorized how they do things; but if somebody were to not show up for work one day, they hit the lottery, you wouldn't have anybody be able to come in behind them and know this is how we do things. That's an internal control deficiency that we identified as our first finding. Q. What about--you mentioned four findings. What was the second finding? A. The second finding was related to the building they were in. They had just moved into a new building, and I could see in the accounting records that they had set aside money. They had obligated funds or set aside funds from our grant to pay for the cost of the new building, the rent. SWAFFORD - DIRECT 156 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 funds. levels. Obviously they need to have a lease agreement in place between CIETC and the state. They didn't have that. They didn't own the building. state didn't even own the building. lease with a private party. We were told that the The state had signed a The state was paying the rent, but the state had yet to bill or enter into a leasing agreement with CIETC. Now, that was a problem for a couple of different But from the accounting side, they were setting aside funds to be able to pay the rent if and when the state ever got around to billing them for that, but these funds have a life to them and for one of the grants, the money was about to die. Meaning that they would no longer be able to spend the It was one-year money, and if they don't spend it within that one year, they can't spend it. So we had a problem. We realized, well, if they're not charging our program fairly here, if the money dies before the program has a chance to pay its fair share of the rent, then we have a problem because other parts--other programs will be carrying an unfair load of the rent. So there were a couple of--you know, you're in a building without a lease. There's just a couple of problems there that that creates, not just on the accounting side but just kind of an improper way to do business. SWAFFORD - DIRECT 157 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 time?" Q. A. Okay. Accounting policies, manual, rent. Other issues? The third finding that we have was a compliance issue We related to the director of the agency, Ramona Cunningham. could see--in the general ledger we could see staff charging their time to our grant program. We could see everybody there that kind of should have been there except for the executive director, Ramona Cunningham. And we asked, "Why isn't Ramona charging some of her She, during the interview process, told us, "Yeah, I work on these programs all the time." Well, we couldn't see that she was charging our time at all for that, which means that she was overcharging other programs. So she wasn't allocating her time. We asked why. And she told us that that's just what she directed staff to do, that she didn't want to overcharge this program for whatever reason. She never gave a good answer to that. Q. Okay. If I understand correctly, the third finding was actually that Ms. Cunningham wasn't charging time to one of your grants? A. Q. That's correct. And, again, this relates back to the fair and reasonable and necessary, what each program or each grant should pay their fair share of costs? A. Yes, Sir. SWAFFORD - DIRECT 158 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Okay. What was the fourth finding? It started The fourth finding was a fairly complex finding. when we were looking at the general ledger and payments made to staff. We could see bonus payments being made to certain staff members out of our two grant fund accounts. And we looked at a payment made to the chief operating officer, John Bargman, the second in command at CIETC, and we looked at the payment. We asked for the defending documents behind those payments, and I could see that they provided us a time sheet, so I could tell that they had charged 6 percent of the bonus to our grant funds, and then I extrapolated the amount of the bonus out to be--what it would--what the full amount would be, and realized there was a very sizeable bonus payment. And my recollection is it was in the teens, it was 13, 15 thousand dollars, something to that effect. So we began digging a little bit further behind the bonus payment practices at CIETC, and we could see that--we asked, okay, you know, why did you get the bonus payment? know, is there some special event? You And they provided us the policy at CIETC that permitted 15 percent bonus, 15 percent of a person's salary. They could be paid a bonus twice a year. We asked for what starts this bonus payment and who approves this, and we were given a letter from the chair of the local Workforce Investment Board. He had signed--or his signature was on the document authorizing the bonus payment. SWAFFORD - DIRECT 159 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 So we started digging further and further into this. We looked at the salary and compensation levels, and we could see a couple of things. No. 1, for Mr. Bargman, his base salary had increased dramatically over the 2-year period prior to when we were on site, very nearly doubling. In addition to that, we could see that there were-instead of twice a year bonus payments as was authorized by the personnel manual, they had had a document they were showing us that authorized automatic quarterly bonus payments of 15 percent of their base salary. So as we dug further into this. We realized the director, Ramona Cunningham, had a base salary of something in the neighborhood of $120,000. John Bargman was in the same neighborhood, $120,000, but they had been receiving these automatic quarterly bonus payments of 15 percent, which puts them up, you know, their total compensation in cash up to approximately $180,000. Now, the department can't tell an organization such as CIETC what the proper salary structure is for the secretary, for an executive, any of those folks. The only thing we test for in terms of compliance is that it's necessary and reasonable. Are those salary payments-- is this compensation package within labor market norms for this type of work, this type of area, and we determined that this SWAFFORD - DIRECT 160 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 isn't right. This is way beyond the pale of in terms of what's normal for this type of work. Now, as I mentioned, we can't tell an organization what the proper salary is, and so I had to try to find a way to figure out what's the proper way to do this. How should they have done this? I began asking questions about, well, these bonus payments, how do you link these back to performance in some way? They didn't have an answer for that either. The solution for us, in order to compel the organization to comply with the necessary and reasonable, was for the organization to enter into an executive employment agreement, which describes for the top folks in an organization, this is the salary structure. performance. It's going to be based on this And that These are your responsibilities. executive employment agreement would then have to be approved by the entire Workforce Investment Board which oversees this organization. Because we couldn't tell them what the appropriate salary was. The only thing we could tell them was this is the kind of thing that the board has to approve. I could see in the records it was apparent to us that Archie Brooks, the chair of the board, was the only person authorizing these payments, and that was told to us verbally by Ramona Cunningham, that he's really the only one that approves SWAFFORD - DIRECT 161 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 these bonus payments. So that was our finding. executive employment agreement. board looking at this thing. We needed to have an We needed to have the full You need to be able to defend the salary structure, the executive compensation package that you have in place at this organization. We can't tell you what it is, but right now what you have isn't defendable, and so that was our finding. Q. Okay. So that's the fourth finding. Again, accounting policies, lease payments, the executive director not being billed to a specific funding stream, and then the supplemental payments; is that correct? A. Q. Yes, Sir. Okay. And I think you mentioned there's also a conclusion that you reached after all this or a different-A. We had a legitimate observation. The observation, one of the things we look at when we go on site is we have to ask, "Have you had your annual audit done?" They had had their annual audit done for the past or for the review period, the past three years, and we looked at those audit reports to see, you know, to see the adequacy of the audit. We wrote up as an observation our concern that they--whether they were hiring an audit firm that had a background and an expertise in government compliance or SWAFFORD - DIRECT 162 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 compliance with respect to federal grants. Because we noticed in the report the citations weren't quite right, the regulatory citations weren't right. It didn't appear to us that the audit firms that had been used the prior three periods really had a strong background. And so we made a recommendation that next year when you hire your audit firm, try to find somebody that has a strong background in government compliance in addition to just making an affirmation that the financial statement is accurate, which is what they had done. Q. Okay. Now, are these findings and this observation conveyed at the exit interview or sometime later? A. Well, verbally we go over the findings, and then within 30 days our internal performance standard in our office is to get that monitoring report within that 30 days, and that's what we did in this case. Q. You did the exit interview, you leave CIETC and then within 30 days send them a written set of findings? A. Q. A. Q. That's correct. And did that happen in this case? Yes, it did. And then what happens after that monitoring and report goes out to CIETC? A. Well, with each finding we include a corrective action, and SWAFFORD - DIRECT 163 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the corrective action is usually a fairly strong--we try to compel the agency to follow our corrective action. We usually are a little bit flexible. better way to solve the problem, we're all ears. In this case we issued the report. It was I believe If they have a late January of 2005, and over the next 4 to 6 weeks I had an ongoing sort of--I had several phone conversations with Ramona Cunningham about the proper way to resolve these four findings. There was one other-There's one other thing that happened in the interim that hasn't happened before or since to me. Because I felt like the full board had not--may not be aware of the bonus payments that were being made, I contacted the board chair by phone, and I had asked--even before I left on site I was trying to get in touch with this board chair while we were on site, and because of his schedule or whatever it took us 3 or 4 weeks to where we were able to finally get on the phone with each other. It was Archie Brooks was the chair of the Workforce Investment Board, and I wanted to speak with him directly, because I wanted to be clear about what may not be apparent in the way we wrote the findings. I was fearful that either the directors at CIETC or the board would think that we were trying to direct them what to pay their staff in some way. SWAFFORD - DIRECT 164 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Instead I wanted to call the director directly and communicate to him this idea that we think we may have overcompensation here. We can see that it hasn't been approved by the board, we haven't seen any market comparisons, that you've got a problem here with your compensation package with these executives, and we think you--in addition to that, we want you to take a hard look at that, but we also want this executive employment agreement that we're asking you to execute, we want that to be voted on by the full board prior to its implementation. Q. Okay. And after these findings were given to CIETC, they have an opportunity to respond; is that correct? A. They do. We'll give them 30 to 45 days. Maybe a little longer if it's a real difficult correction they have to make; but in this case I think we gave them 30 or 45 days. Q. And how did CIETC respond to the bonus payment/supplemental payment issue? A. Well, in a couple of ways. My phone conversation with Mr. Brooks, he gave me verbal assurances over the phone that, yes, we're going to follow your corrective action. to take this to the board, we'll look at this issue. I also got similar assurances from Ramona Cunningham on the phone. She provided me a draft copy that didn't have the We are going amounts filled in for the executive employment agreement salary amounts, but it was a draft template of an executive employment SWAFFORD - DIRECT 165 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. agreement that did describe all their duties. bonus payments, all those things. She sent it to me and I approved it. I thought it was It did describe a good template for them to use for which to construct and to link their role as overseer, their roles as executives both to the board and to their agencies. Q. Let me ask you this: What you requested, was that for Who was the Ms. Cunningham or Ms. Cunningham and others? employment agreement that you were looking for? A. I don't recall that we stipulated exactly who would be covered by such an agreement. I think that's the kind of thing where the board needs to decide how far down the chain do we need to enter into these kinds of agreements. MR. PURDY: THE COURT: Permission to approach, Your Honor? You may. I'm showing you what's been marked as Government's Exhibits 79 and 80 for identification purposes. Let's start with Government's Exhibit 79. that in front of you? A. Q. A. Yes, Sir. And I'd ask you to identify that? It looks to me to be the draft executive employment I say draft because it doesn't Do you have agreement for Ramona Cunningham. have a salary amount filled in here. SWAFFORD - DIRECT 166 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PURDY: THE COURT: BY MR. PURDY: Q. Okay. So when we're talking about Exhibit 79, the draft Q. Okay. And is this the employment agreement for Ms. Cunningham that you would have received after your December of '04 monitoring visit? A. It looks like it, yes. MR. PURDY: MR. SPIES: The government moves to admit Exhibit 79. Without objection. No objection. MR. McCARTHY: MR. SCOTT: THE COURT: No objection. Received. (Government Exhibit No. 79 was offered and received in evidence.) Permission to publish, Your Honor? You may. employment agreement between CIETC and Ramona Cunningham, and you indicated there were no salary amounts filled in, is that paragraph 2? A. Q. Yes. At this point were you concerned about-Strike that. Is that correct? When you made your request for these types of agreements to be sent to you, what was your concern? A. When I arranged for these agreements to be sent to me, what was my concern? Q. Yes. SWAFFORD - DIRECT 167 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Well, I wanted to ensure that they had good agreements. An agreement such as this has a lot of different building blocks which make it a good agreement. It might have dispute resolution, it will have performance standards in here. And this is a good agreement. It has--lots of different types of issues are treated in this agreement that might arise for an executive of an agency like CIETC, situations that could create a problem for the agency. Q. Okay. You indicated earlier that you had asked them and they didn't really have a good answer for why or what performance was related to the receipt of bonuses; is that correct? A. Q. That's correct. Okay. When you were in there and doing your monitoring visit, I think you said that it was a bonus payment to Mr. Bargman that triggered your inquiry? A. Q. Correct. Did you go through and evaluate all bonuses received by all staff related to your grants? A. No. Indirectly I did, because I pursued the top two executives of the agency, looking for bonus payments made to those two. I wanted to find out if these bonuses--the ones that I had sampled was an out-sized bonus, a very large bonus. I wanted to look at these top two executives because my sense was SWAFFORD - DIRECT 168 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that these two executives may be gaming the system in some way in the way that these bonuses were being awarded, so that's what I focused on. In the process of looking at that I saw where they provided me letters authorizing bonuses that were not just for them but also for the entire staff. Q. Take a look if you will at what's been marked for Do you have identification purposes as Government's Exhibit 80. that in front of you? A. Q. A. Yes. And can you identify that to the jury. It looks like the draft executive employment agreement for John Bargman, the chief operating officer. Q. And is this the employment agreement that you had requested CIETC provide you related to his services? A. Q. This looks like it, yes. And, again, you weren't directing CIETC as to the salary or the specifics of the agreement, but you wanted more structure; is that correct? A. I have no authority to do that. MR. PURDY: Exhibit 80. MR. SPIES: Without objection. No objection. Correct. The government moves admission of MR. McCARTHY: MR. SCOTT: No objection. SWAFFORD - DIRECT 169 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PURDY: THE COURT: MR. PURDY: of that page. BY MR. PURDY: Q. So again we're talking about a draft agreement, paragraph 2 THE COURT: Received. (Government Exhibit No. 80 was offered and received in evidence.) Permission to publish? You may. Again if you would zoom in at the top half salary, salaries not completed, and that was not the issue you were concerned with at that time; is that correct? A. Q. Correct. All right. After the monitoring visit in December of '04, the follow-up, when was your next encounter with CIETC and in what regard? A. After we resolved the--well, once we issued our report, there was a period there where CIETC had gone through the process of resolving the findings. explaining what they had done. They sent us a letter We accepted that letter and We closed the findings based on the verbal assurance that-- had-- all those indications were that the situation was being handled. We had received documents on a couple of the findings that defended what they were doing to create remedies for these findings, and we had accepted. All of these things together we accepted, and we closed the findings. SWAFFORD - DIRECT 170 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. And after the findings were closed on that monitoring visit, what happened next? A. It was a closed matter. I hadn't heard anything about CIETC I received an e-mail until the morning of November 8th, 2005. from the chief financial officer at the State of Iowa, Iowa Workforce Development, indicating or asking for-MR. SCOTT: THE COURT: BY MR. PURDY: Q. A. Q. When did CIETC next hit your radar screen? November 8th, 2005. And was there a particular issue that was raised to you that Your Honor, I object. It is. Sustained. It's hearsay. caught your attention? A. The chief financial officer asked me for direction for the department's position on a couple of issues. He did this via e-mail. It was James Quinn. And he sent me an e-mail that morning, asking for guidance on two situations that they were trying to address. One was conflict -MR. SCOTT: hearsay, Your Honor. THE COURT: to have to speak up. MR. SCOTT: We're going into hearsay, the exact same I can't hear you, counsel. You're going Objection. Again we're going into thing that was just objected to. SWAFFORD - DIRECT 171 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: MR. PURDY: THE COURT: have the records. MR. PURDY: BY MR. PURDY: Q. A. Q. A. Q. You said you were contacted by Mr. Quinn; is that correct? Correct. And when did that contact occur? The morning of November 9th. And were you in discussion with Ms. Barto at Iowa Workforce Okay. Okay. Do you have the e-mails, counsel? Let me approach. I believe we do. Why don't you lay foundation and we can Development regarding any of these issues that Mr. Quinn raised? A. Yes. The afternoon of November 8th I received a phone call She from Jane Barto, it was a bit of a conference call. indicated that sitting around the table with her on the end of the phone were Erv Fett, Tony Dietsch and Kelly Taylor, all senior staffers who work for Iowa Workforce Development. Q. Had you had communications with those individuals prior to this phone conversation? A. Q. Earlier in the day Kelly Taylor-Don't go into what he said, just have you had those conversations? A. Q. Yes. Had you ever communicated directly with Mr. Fett prior to this? SWAFFORD - DIRECT 172 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. No. Had you ever communicated with Mr. Dietsch directly prior to this? A. Q. No. Now, tell me what Ms. Barto conveyed to you in that conversation. A. She conveyed to me that some of the things told to me by Mr. Quinn, the chief financial officer, were rumor, unsupported innuendo. department. There had been allegations made in prior communications that would have caused us to create an incident report, which is an allegation of fraud or criminality. She indicated that that was false. were false. We talked about the issues that were raised about excessive compensation at CIETC. And I communicated to Jane Those allegations She indicated that he did not speak for the Barto that the allegations we received are allegations of criminality. She indicated that wasn't the case. She asked if the department would permit Iowa Workforce Development to conduct the investigation on their own into these allegations. Q. A. And what were your responses to Ms. Barto with that request? My responses to her were that, No. 1, the Department of I encouraged her to Labor takes these allegations seriously. SWAFFORD - DIRECT 173 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 conduct a full investigation into these allegations, into these excessive payments. I reminded her of their obligation to do so under 20 CFR 667.600, which is the regulation that requires the state to investigate any kind of allegation like this. And I said--I told her that, yes, at this time we will permit the state to conduct the investigation. Q. And what happened next? Did you have any further communication with Ms. Barto on this issue? A. The state provided us, I believe, it was six or seven days later after that phone call, the very next week, they sent a regional office letter, indicating the state's position that they had looked at the allegations and there was nothing to them, that CIETC had adequately defended their compensation practices. But the state didn't provide us any back-up documentation to that, and our position was that the state had not conducted the kind--the kind of investigation into these allegations that we would consider remotely adequate. MR. PURDY: THE COURT: BY MR. PURDY: Q. I'm showing you what's been marked as Government's Exhibit Permission to approach, Your Honor? You may. 116 and 117 for identification purposes. Start with Exhibit 116. Do you have that in front of SWAFFORD - DIRECT 174 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PURDY: THE COURT: BY MR. PURDY: Q. Could you enlarge it on the bottom. Tell the jury what the Honor. MR. SPIES: Without objection. No objection. you? A. Q. A. Yes. Can you identify Exhibit 116. This is a letter from Iowa Workforce Development to our regional office, dated November 18th. Q. You indicated that about a week after this November 8th phone conference you received a letter from Iowa Workforce Development. A. Is this that letter? This is that letter, correct. MR. PURDY: The government offers Exhibit 116, Your MR. McCARTHY: MR. SCOTT: Your Honor, I'm going to object to this as hearsay as to Mr. Albritton. THE COURT: Be received. (Government Exhibit No. 116 was offered and received in evidence.) Permission to publish 116, Your Honor? You may. substance of this letter is. A. Well, the substance of this, this is the state's first attempt to report back to us on the results of their SWAFFORD - DIRECT 175 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. investigation into excessive compensation practices at CIETC. They list what they had done here. They list copies of--or they list records that they say they have obtained, which justify the necessary, reasonable and allowableness of these executive compensation pay rates, and they indicate to us their belief--IWD's belief that there was no fraud, no criminality involved in this situation. Q. Were the documents referenced in this letter attached to this letter? A. Q. A. No, they were not. Did you hear from IWD again about this matter? I did. I contacted them, to communicate to them that this It does not letter does not adequately resolve the matter. constitute an adequate investigation in our view, and we asked them to take another bite at the apple. Q. I refer you to what's been marked as Government's Exhibit 117 for identification purposes. Do you have that in front of you? Yes, I do. And can you identify that for the jury? This is the second letter we received. This was what they sent us after their second attempt at conducting an investigation. It appears to me to be principally the same letter but with the actual documents attached behind it. Again, we reviewed this material, and we determined SWAFFORD - DIRECT 176 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PURDY: THE COURT: BY MR. PURDY: Q. I think you indicated this is the second letter you Are there attachments to this letter? this was not adequate. Q. Before you go any further, so this letter is in response to your indication that the first letter was not adequate; is that correct? A. That's correct. MR. PURDY: Okay. Government moves admission of Exhibit 117, Your Honor. MR. SPIES: Without objection. No objection. MR. McCARTHY: MR. SCOTT: Your Honor, I'm going to object to it on behalf of Mr. Albritton as hearsay, and I'm also going to object that it is hearsay within hearsay subject to the rule 805. THE COURT: Received. (Government Exhibit No. 117 was offered and received in evidence.) Permission to publish 117, Your Honor? You may. received. A. Q. A. Yes, there are. Okay. Would you look through those attachments, please. The first thing they There's a couple of things here. attached was-Q. Hang on a second. This is--the first page of the letter is SWAFFORD - DIRECT 177 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that what you have in front of you? A. Q. A. Q. A. Yes, Sir. Would you go to the second page, please? Okay. And what's on the second page? The second page is a meeting agenda from Thursday, August 19th, 2004, and I think the intent of providing us the meeting agenda is to show us that the board had approved changes to the personnel policy manual at CIETC, changes which authorized the board chair Archie Brooks to approve bonus payments of this type. Q. Could you zoom in on item 5, please. And so item 5 on the August 19th of 2004 agenda item is personnel policies a motion; is that correct? A. Q. That's correct. Okay. And this was in support of IWD's investigation as to CIETC having authority to award bonuses as they had done and had been questioned; is that correct? A. Q. A. Q. A. That's correct. Would you go to the next page, please. Yes. And what does this show? This is the meeting minutes from that meeting, the August 19th meeting. Q. And if you would zoom in on item 5 please. Directing your SWAFFORD - DIRECT 178 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 attention to item 5, what do you find there? A. Changes that were made to the personnel policy manual. It's a list of those. Q. And let's go through those. Do you see the first bullet point? A. Q. A. Yes. And would you read that to the jury, please. The first change indicated here in the meeting minutes says "The nepotism policy has been updated to reflect changes made with the Workforce Investment Act." Q. And that change has nothing to do with the authority to award bonuses, does it? A. Q. A. Correct. The next bullet point, please? Removed references to steps and merit pay in the employee compensation section to reflect changes made previously. Q. That doesn't talk about awarding supplemental or bonus payments, does it? A. Q. A. No. The third item? Changed Private Industry Council to Regional Workforce Investment Board. Q. That change doesn't have anything to do with salary and bonuses does it? A. No. SWAFFORD - DIRECT 179 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. The next item? Changed JTPA to WIA. That item doesn't change anything with regard to who has authority to direct salary or supplemental payments, does it? A. Q. A. Q. No. Next item? Changed the vacation and sick leave policy to PTO. Again, that one has nothing to do with salary or bonus payments, does it? A. Q. A. No. The next item? Sped up hiring process by allowing hiring from applications on file prior to outside recruitment. Q. A. Q. A. Q. The next item? Eliminated requirement to punch in and punch out for lunch. Next item? Changed salaries to wages. None of those three items had anything to do with the awarding of bonuses or supplemental pay, did they? A. Q. A. Correct. The next three, please? Clarified that only nonexempt staff received overtime Added policies on FMLA, removed the requirement compensation. for an exit interview when leaving CIETC employment. Q. And, again, none of those items have anything to do with the SWAFFORD - DIRECT 180 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 or child. Q. Okay. And none of those items have anything to do with award of salary or compensation; is that right? A. Q. A. Right. The next three, please? Revised the leave without pay policy to allow for an extended leave without pay, 30 days. Eliminated the leave of absence policy. Added extended funeral leave for the death of a spouse awarding of salary or benefits or supplemental payments; correct? A. Q. A. Correct. Finally the last three, please? Remove the requirement for meal receipts on out-of-town travel, added a cell phone use policy, added an EEO statement. Q. Again, none of those discuss salary bonuses or supplemental pay; is that correct? A. Q. Correct. Okay. So this document purporting to show support for or authority for the changes or how CIETC awarded supplemental pay doesn't address it in any of those items, does it? A. Q. Correct. The next page, please. And if you could zoom in at the bottom. Is this a document showing when those policies were put in place? A. Yes. That's what it appearance to be, yes. SWAFFORD - DIRECT 181 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. It purports to be what date? The most recent change was effective August 19, 2004. The same date as the agenda on a couple pages previously? Yes, Sir. Next page, please. And if you'll zoom in on item 1, please. And that talks about-- Would you read item 1? A. "The consortium chairperson shall set the employment and salary of the chief executive officer." Q. So that purports to be authorization for the consortium chairperson to set the salary; is that correct? A. Q. A. Q. A. Q. Yes. And who was the consortium chairperson, if you know? Archie Brooks. At this point in time? Archie Brooks. Next page, please. Next page, please. Did the Department of Labor accept Exhibit 117 and its attachments as support authorizing Mr. Brooks to set salaries? A. Q. No, we did not. Okay. Did you contact Iowa Workforce Development and tell them that that did not? A. Q. No, we did not. Why didn't you contact Iowa Workforce Development after this letter? SWAFFORD - DIRECT 182 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Because an incident report had been filed with our Office of There had also been notification to the the Inspector General. Iowa State Office of Audit who had already begun an investigation into these allegations. Q. You mentioned the word or term incident report on several Would you explain that to the jury. occasions. A. Under the federal regulations, anyone involved in our program or programs that becomes aware of an allegation of fraud or criminality involving our funds, they have an obligation to notify the Department of Labor first and foremost. There's only--under those rules there's only one individual who has the authority to assign investigative responsibility, and it's the inspector general, James Vanderberg in the Chicago regional office. The process works like this: I happen to handle incident reports for our regional office also. We get an incident report in. times a year. We take it up to the OIG. It happens several Mr. Vanderberg looks His own at it, and he will assign investigative responsibility. office can take the case. He can assign it to us. He can assign it at the state level. He can even assign it, if it's a small item, to a local area to investigate. Once he makes that assignment, then I turn around and notify those individuals that are responsible for the investigation. SWAFFORD - DIRECT 183 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 In this case we referred this matter to the Office of the Inspector General. MR. SPIES: He was aware-Excuse me. I'm going to object to the witness' testimony about what the inspector general is aware of, and it's not within the witness' competence. objection precede the answer. THE COURT: I don't think, Mr. Spies, there's been any Did I not I ask that the testimony about what the inspector general said. understand your objection? MR. SPIES: Yeah, it was inartful, Your Honor. What I meant to say was that this witness is not competent to testify about what the inspector general knew or believed. THE COURT: any of that? I agree with that. Has he testified to I don't remember if he has. That's where I thought it was going. MR. SPIES: That's why I interrupted the witness, Your Honor. THE COURT: BY MR. PURDY: Q. A. Q. Mr. Swafford, where was this investigation referred to? The Iowa State Office of Audit. And did you work with the Iowa State Office of Audit in the All right. You may proceed, counsel. conduction of this investigation? A. Yes. I began a dialogue with Tammy Kusian of the Iowa State Office of Audit. Q. And what was your role in this investigation? SWAFFORD - DIRECT 184 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. I requested--once we became aware of the allegations and she contacted me to indicate they were investigating, I requested an incident report from that office, indicating what they were seeing--they had already begun their investigation--asking for more information. They forwarded us an incident report. They also-- Tammy also communicated to me that they anticipated having an investigative report completed sometime within the next couple of months. Q. And did you periodically follow up on the status of that investigation? A. Yes, we did. Once we knew that it would be a couple of months, it was several--a couple of months after that I contacted her and asked her for a status update. We were about due, according to She her initial timeline, for the release of that report. indicated it would be a couple of extra weeks. She sent the department a draft a few days before the report was actually released to see if there was anything the Department of Labor saw within the report that we felt was improper or they weren't quite understanding the way the federal programs worked. We reviewed the draft. We made no recommendations. And then they eventually released the report in I think March. Q. And this is the Auditor of State's report in March of '06. SWAFFORD - DIRECT 185 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 regs. Q. So the State of Iowa auditor's office issues its report. Is that where we're at? A. Q. That's correct. And after that report was issued, then what, if anything, did the Department of Labor do with the information in that report? A. Once the report was released, we recognized it as one of the state's own audit reports that under the Workforce Investment Act regulations required resolution. It was an audit with outstanding questioned costs. communicated to Iowa Workforce Development their obligation to pursue those questioned costs through the initial determination and final determination process. We recognized that first report as an initial determination. We directed the state that they must follow We their audit resolution processes, and if necessary, to disallow costs and pursue cost recovery. requires of them. We reminded them of all those obligations under the That's what the regulation You direct them to follow up and say, hey, you've got--you raised questions here, finish it up? A. We directed Iowa Workforce Development to resolve that report. Q. Okay. And would that be through the normal review SWAFFORD - DIRECT 186 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 monitoring process, go out and search the records and come up with the numbers? A. Iowa Workforce Development does monitoring like this all the They have an audit resolution process that they have, and time. they follow--and we directed them that this state office of audit report would have to be treated through that normal process, in accordance with the regs. Q. And was that report treated through that process in the normal scheme of things? A. Yes, it was. MR. SPIES: BY MR. PURDY: Q. I believe you talked about the disallowance process. Can Excuse me, Your Honor-No objection. you explain that to the jury. A. Well, the initial report was questioned costs, meaning that CIETC wasn't able to defend what at that time was 1.8 million in questioned costs. Once the initial report was issued, there was a time period, and I think it was several months, that CIETC was given to defend those costs, to try to come up with missing documents or whatever they could, such to reduce or eliminate completely that 1.8 million in questioned costs. That happened in this case. They were given several months, and they were reduced--able to reduce the 1.8 million down to I think it was 1.365 million. The Iowa Workforce SWAFFORD - DIRECT 187 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Development then issued a final determination disallowing 1.365 million. Again we, as outside observers, we informed the state of their obligation to pursue cost recovery of that 1.365 million dollars. MR. PURDY: Okay. Let me stop you there. No further questions, Your Honor. THE COURT: MR. SPIES: THE COURT: Mr. Spies. Thank you, Your Honor. Mr. Spies, I don't know how long you're going to be, so if you think the presentation is better made-If it's going to be short, we'll continue. If it's going to be longer then that, and you think your presentation would make more sense not interrupted, I'll take our break now. me what you prefer. MR. SPIES: Given those guidelines, I think a break You tell would be appropriate, Your Honor. THE COURT: a recess until 3:15. about before. Ladies and gentlemen, we're going to take Remember the admonition that I told you We'll be in recess. (Short recess.) THE COURT: Mr. Spies. MR. SPIES: Thank you, Your Honor. Please be seated. SWAFFORD - CROSS - SPIES 188 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. BY MR. SPIES: Q. Hello again, Mr. Swafford. Mr. Swafford, I'm not going to CROSS-EXAMINATION recap all of the findings that you made, but I do want to turn you back to the initial monitoring that you did of the CIETC program back in 2004. A. Q. Okay. You told the ladies and gentlemen of the jury and us that Okay? you had four specific findings, and one of the findings was on the issue of compensation. Am I right? Correct. And you also made it clear to us that as a representative of the United States of America Department of Labor, you don't superimpose your judgment of what's reasonable on to the grantees that you monitor and evaluate? A. Q. That's correct. So, in other words, you don't sit back and set compensation levels for programs like CIETC? A. Q. Correct. And you described the standards of necessary, reasonable and allocable; right? A. Q. Allocable, yes. Allocable. All right. And eventually, after you conducted your initial monitoring of CIETC, you asked him to submit some SWAFFORD - CROSS - SPIES 189 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 additional information to you to justify the findings that you made or to resolve the findings that you made? A. Q. We requested corrective remedies be put in place, yes. And those corrective remedies would have been put into place by John Bargman? A. There would have been several people. All of the members of the board would have been involved in approving future compensation. Q. A. Q. The CIETC Board? Correct. All right. I guess I misled you with my question. What I meant was, in getting information back from CIETC in response to your findings, who was giving you this information from CIETC? A. Q. Ramona Cunningham. All right. Now, during the monitoring process at the CIETC office, you told us that Ms. Tesdell provided you with some documentation or reports. A. Q. Correct. And Ramona Cunningham participated in your monitoring Am I right? review? A. Q. A. Q. Correct. And John Bargman did as well? Correct. But it's true, is it not, Mr. Swafford, that when you were asking for fiscal information from Ramona Cunningham, she would SWAFFORD - CROSS - SPIES 190 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 turn to Mr. Bargman and ask him to answer your questions about specific fiscal questions? A. Correct. Some of the more technical questions she referred to him or to Karen, correct. Q. Right. And as a matter of fact, another one of the findings that you made in your monitoring of CIETC was some concerns about the accounting system that was in place at CIETC? A. I don't recall the system being problematic. I recall that they didn't have procedures laid out that everyone in the organization could follow, where everyone was sort of reading off the same sheet of music. Q. Well, as a matter of fact, was there a problem with not everybody in the office knowing how to use it? A. Q. Correct. And did you learn during the course of your monitoring review that John Bargman put that accounting procedure into effect? A. It was--in terms of the implementation of that policy procedure manual it was conveyed to us that now everyone in the--everyone in the finance team has that manual. Q. A. Q. I don't think that was my question, so I'll ask it better. Okay. Were you told that John Bargman was responsible for implementing the accounting system, the software accounting system? SWAFFORD - CROSS - SPIES 191 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes. And did you also learn that his wife Deb Dessert was a consultant with CIETC to help implement that accounting system? A. Q. Yes. And did Mr. Bargman then prepare this change in the policy manual so that other people would understand how to use this accounting system? A. I don't recall that they made many changes to the manual. It was simply a matter of I had seen a draft of the manual. implementation of sharing that among the staff. Q. So then after you made these findings and you gave these findings to CIETC and you gave them instructions to respond to your findings? A. Q. A. Q. Correct. And they did? Yes. And they satisfied you that the four shortcomings that you saw in their program, at least from the Department of Labor's point of view, had been resolved? A. Yes. They gave us assurances that various remedies were being implemented, that in combination with documents they provided to us, we made the determination that they had adequately met their corrective remedy burden. Q. Well, in fact, one of the findings that you made was your concerns about excessive compensation? SWAFFORD - CROSS - SPIES 192 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Honor? THE COURT: You may. A. Q. Correct. And the information that they gave you--"they" meaning CIETC, Ramona Cunningham, John Bargman--the information they gave you satisfied you, the Department of Labor, that the problem had been resolved? A. Q. That's correct. In fact, you gave them a glowing review that they had resolved your concerns? A. I don't recall giving them a glowing review. I recall complimenting them on the quality of their template executive employment agreement, and I thanked them for the courtesy and responsiveness in working with us on this review. MR. SPIES: And if I may approach the witness, Your Mr. Swafford, I'm going to hand you what's been marked as Barto Exhibit B and ask if you recognize Barto Exhibit B? A. Q. A. Yes. Can you tell us what it is, please? It's a response that I sent to Ramona Cunningham after I received their review response fact package, and in here I indicate "Well done on the response package. each finding as resolved." Q. And Exhibit B is an e-mail that you sent to Ramona Please consider Cunningham acknowledging her response to your concerns? SWAFFORD - CROSS - SPIES 193 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. MR. SPIES: BY MR. SPIES: Q. And as you've said in Barto Exhibit B, as you've told the Honor. MR. PURDY: No objection. No objection. A. It's acknowledging their response report. MR. SPIES: We offer Defendant's Exhibit B, Your MR. McCARTHY: MR. SCOTT: THE COURT: No objection. Received. (Defendant Barto's Exhibit B was offered and received in evidence.) Thank you. ladies and gentlemen of the jury-MR. SPIES: THE COURT: If I may publish, Your Honor? You may. That you reviewed their response package and have gone through each item, "Well done, please consider each finding as resolved"? A. Q. That's correct. Now, could you tell the ladies and gentlemen of the jury, Mr. Swafford, what resolved means in the Department of Labor vernacular? A. It means we have to pursue corrective action for each of our That's the termination of our pursuit or our findings. oversight in terms of whether they have completed the corrective SWAFFORD - CROSS - SPIES 194 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 action we've asked them to. Q. All right. So after having resolved the concerns that you had in your monitoring review of CIETC, did you send a copy of your monitoring review report to Iowa Workforce Development? A. Q. No, I did not. The next thing is you told us that came up on your radar screen was contact that you had with representatives of Iowa Workforce Development in November of 2005; right? A. Q. That's correct. And in November of 2005 you had this contact with IWD. You had a conference call with, among others, Jane Barto; right? A. Q. Correct. And during this conference call, Mr. Swafford, you discussed that one of the concerns that had been brought to your attention was conflict of interest. A. Q. Correct. And this conflict of interest that we're discussing is--and that you told us Ms. Barto said was rumor and conjecture, dealt with a conflict between Ramona Cunningham and a member of her board of directors. A. me. There were two types--two conflicts that they raised with One was between Ramona and members of the board. The other was the friendship between Jane Barto and Ramona Cunningham. Q. A. And by "they," you mean? Kelly Taylor and James Quinn. SWAFFORD - CROSS - SPIES 195 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Okay. And, in fact, you got an e-mail from James Quinn on the morning of November 8, 2005, didn't you? A. Q. That's correct. In that e-mail isn't it true, Mr. Swafford, that Dennis--that James Quinn said the conflict of interest is between a board member and Ramona Cunningham? A. And in that e-mail, yes, that's correct. I had a subsequent telephone conversation. Q. A. Q. I think you've answered my question. Okay. So armed with this information, you then had a conference Thank you. call with Jane Barto, and this wasn't just a secret conversation between you and her, was it? A. Q. Correct. Erv Fett participated in it, and I think you said Kelly Taylor? A. Q. And Tony Dietsch. And Tony Dietsch. And in this communication with Ms. Barto and her staff, they asked you if they could investigate these allegations? A. Q. A. Q. That's correct. And you said that's fine. I told them they could, yes. In fact, it's not uncommon, is it, Mr. Swafford, for the Department of Labor, if you raise a concern, just as you did SWAFFORD - CROSS - SPIES 196 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 with the CIETC staff or with the IWD staff, to give them an opportunity to try to resolve it at a local level? A. Q. That's correct. The standard practice in your monitoring and in getting responses to your monitoring? A. Q. That's correct. So then as you've already told us in response to the concerns that were raised during this conference call, you got information from Erv Fett? A. Q. A. Q. That's correct. Okay. The letter came under his signature, correct. Right. And in communicating with the IWD staff in November of 2005, the issues that were being brought to your attention, you informed them that you looked into some of these same things back in December of 2004; correct? A. Q. Correct. And you had concluded in December of 2004 that there was no criminality arising from a conflict of interest? A. That's--I communicated to Mr.-Can you repeat your question, Sir. Q. Sure. Did you tell the staff that you were talking with in this conference call that you had looked at this conflict of interest in 2004? A. I had told them we looked at excessive compensation in 2004. SWAFFORD - CROSS - SPIES 197 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Did you tell anybody on November 8th that you had looked into a conflict of interest in December of 2004 and found no criminality? A. Between the--I think it was a 9:30 e-mail from Mr. Quinn and the 2:30 conference call with Jane Barto, I had had two or three separate phone conversations with Mr. Taylor and Tammy Kusian at the state office of audit and there had also been a second e-mail from Mr. Quinn. During that time period I may have talked about the fact that we looked at the Deb Dessert/John Bargman connection with regards to the procurement or the purchase of the new accounting system. We also, I think, may have talked about the--my knowledge that there was a personal relationship and the history between Archie Brooks and Ramona Cunningham. So I hope that answers your question. talk about some of those relationships. Q. A. Q. So the answer is yes? Yes. And in fact you looked at those relationships, and you found Yes, we did no criminality? A. No, we never made a determination about criminality with respect to conflict of interest that would have been present. MR. PURDY: THE COURT: May I approach the witness, Your Honor? You may. SWAFFORD - CROSS - SPIES 198 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Mr. Spies, I might say if they don't object, why don't you just put it on the screen. out. MR. SPIES: Your Honor. THE COURT: Oh, okay. I'm not going to offer it into evidence, That way we won't leave the jury Yeah, you have a question? Yes. Did you indicate to somebody on November 8 that you looked into conflict of interest in December of 2004 and found no evidence of criminality? A. Yes. We indicated that we found no evidence of a direct conflict of interest suggesting of fraud. Q. A. Q. Criminality? Correct. Now, after this telephone conversation with Ms. Barto and her staff, you then instructed, as I understand it, the Iowa Workforce Development people to provide you with information about your concerns, and Mr. Fett from IWD responded to those concerns; correct? A. They asked for authorization to conduct an investigation, and we--and I told them, yes, go ahead and conduct an investigation. Q. And you told us that you received a letter dated November 18, 2005 that didn't have any attachments, and that was from Mr. Fett? SWAFFORD - CROSS - McCARTHY 199 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. McCARTHY: Q. A. Q. Good afternoon. Hello. The exhibits that we looked at earlier, 79 and 80, the blank A. Q. Correct. And then you received a second letter about 5 days later from Mr. Fett with attachments? A. Q. Correct. And these attachments and the letters did not satisfy the Department of Labor? A. Q. A. Q. Correct. But you didn't tell that to Jane Barto, did you? That's correct. And there was nothing that Jane Barto did to interfere with your investigation of CIETC? A. We had no investigation into CIETC. MR. SPIES: THE COURT: Thank you. No further questions. Mr. McCarthy, do you have any examination? I do. Thank you. MR. McCARTHY: THE COURT: You may proceed. Thank you, Judge. CROSS-EXAMINATION MR. McCARTHY: employment contracts, those came about at your suggestion; is that right? A. Correct. SWAFFORD - CROSS - McCARTHY 200 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 command? A. Q. Correct. You used that terminology earlier today. Who was first in Q. Those were something that you recommended that the top executives at CIETC do; is that right? A. Q. That's correct. And they follow through. Okay. You indicated that John Bargman was second in command? A. Q. Ramona Cunningham. You referred a couple of times to these executives, the top I'm assuming you're referring to John Bargman two executives. and Ramona Cunningham that worked for CIETC? A. Q. That's correct. Now, if you find someone, a group, a corporation that's in noncompliance, isn't the first thing you do is pull the funds? A. Q. A. Q. No, that's not the first thing we do. What is the first thing you do? We pursue corrective remedies. With the possible outcome if they don't follow through on those corrective remedies would be to pull the funds? A. That's one of the sanctions, one of the remedies we have available to us if we can't get an entity to comply with the federal rules. Q. And based on your compliance check in December of '04, that SWAFFORD - CROSS - McCARTHY 201 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: MR. PURDY: did not happen at CIETC, did it? A. Q. A. Q. The pulling of funds? Right. That did not happen. Also, in some of your comments to the prosecutor you referred to CIETC as "they," and again I'm going to presume you're referring to Ramona Cunningham and John Bargman; is that right? A. Well, it depends on the context of the statement I made. I don't know. Q. In your report you refer to senior management. Would that be Ramona Cunningham and John Bargman? A. Q. A. Correct. Okay. With respect to the fourth finding because I did not look at compensation for any other individuals other than those top two. MR. McCARTHY: THE COURT: MR. SCOTT: THE COURT: MR. PURDY: THE COURT: Okay. Thank you. Mr. Scott, any examination? No, Your Honor. Mr. Purdy, any redirect? No, Your Honor. You may be excused. (Witness excused.) You want to call your next witness. Yes, Your Honor. The government calls HIGAR - DIRECT 202 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. A. Q. Ms. Higar, would you tell the jury where you're employed. I'm currently employed at Des Moines Area Community College. And what job do you perform for Des Moines Area Community Tami Higar. The government believes her testimony will assist the jury in consideration of all counts but count 27. May I approach, Your Honor, to retrieve the exhibits? THE COURT: You may. TAMI HIGAR, GOVERNMENT'S WITNESS, SWORN DIRECT EXAMINATION College? A. I work part time in the business office and part time in the payroll office. Q. A. What kind of functions do you do for DMACC? I deal with the DMACC ID card, DMACC 1 card, ID card coordinator. Q. A. Q. A. Q. A. Q. A. Could you sit a little closer to the microphone. And I also have duties regarding payroll. Where did you work prior to working for DMACC? Central Iowa Employment and Training Consortium. An entity commonly known as CIETC? Yes. When did you start your employment at CIETC? March of '98. HIGAR - DIRECT 203 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. In what role did you start your employment at CIETC? I started as Karen Tesdell's assistant. What job duties did you have? I reviewed time sheets and time cards and leave requests to make sure that they matched. Q. What do you mean when you say time sheets, time cards and leave requests? A. Q. A. We had time cards which were punch cards. Okay. Time sheets, where we took the hours off our punch cards and recorded them on the regular sheet, and then if you were going to take time off, you had to fill out a leave request. Q. A. Q. Okay. Yes. Yes. If somebody would forget to turn in their time sheet And your duties, you said you reconciled those? or punch card, what would you do? A. Q. A. Q. I would go ask them for that. Same if they forgot to fill out their leave slips? Yes. What job duties did you acquire over time in CIETC in addition to those duties? A. I began doing personnel work, became the personnel manager, and then in the end I was also doing accounts payable. Q. Let's talk about accounts payable. What did you do for CIETC in that regard? HIGAR - DIRECT 204 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. I'd receive the invoices and write the vouchers and get it prepared for payment. Q. A. Q. Once it was prepared for payment, what did you do with it? I would enter them into the computer. And then would ultimately a payment--electronic or check--be issued? A. Q. Yes. And did you have anything to do with the issuance of the payment? A. Q. Could you repeat that? Yes. Did you have anything to do with the issuance of the payment, either the check or the electronic transfer? A. I entered them into the computer, and John Bargman would approve those, and then I would print the checks, and mail the checks. Q. A. Q. A. What duties did you perform as personnel manager? I kept the employee personnel files up to date. What would you do in that regard? I'd enroll people in benefits. Terminate their benefits if they quit. If there were salary increase letters, I would put those in their files and make sure that that was up to date, as well as bonus letters. Q. When the salary increase letter would be generated, is that something you would produce? A. Yes. HIGAR - DIRECT 205 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. Okay. And at whose direction would you produce that? Ramona Cunningham. When a bonus letter would be produced, is that something you would produce? A. Q. A. Q. Yes. And at whose request would you produce those? Ramona Cunningham. And Ramona Cunningham is the former chief executive officer of CIETC; is that correct? A. Q. Yes. When you say put them in their personnel files, how did that What would you do? happen? A. I tried to keep them in a chronological order, with the most current on top. Q. So if some employee were to get multiple bonuses, you'd keep them all in a file with the most recent and the highest to the top? A. Q. A. Correct. Would you have anything to do with issuing those payments? Yes. I would type the checks or produce the checks on Fundware on computer. Q. So Fundware is a computer system that generated checks; is that correct? A. Q. Yeah. If somebody didn't have or had an electronic transfer on HIGAR - DIRECT 206 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 file, would you do checks for them, or would you do electronic transfers to them? A. Q. We'd do electronic transfers for those. Who would decide, if you know, the amounts of the bonuses to be paid to respective CIETC employees? A. Q. John Bargman and Ramona Cunningham. And were a number of these bonus letters and salary increase letters generated during the time that you were at CIETC? A. Yes. MR. PURDY: THE COURT: MR. PURDY: Your Honor, permission to approach? You may. Your Honor, I believe in consultation with opposing counsel, they have indicated to me that they would stipulate that they have no foundation objections to the bonus and salary increase letters I'm about to show Ms. Higar. THE COURT: the screen then. Q. Okay. Showing you what's been marked as Exhibit 35. Could All right. You want to just put them on you enlarge that, please. And in looking at Exhibit 35, is that a letter to Ramona Cunningham indicating that she's receiving a cost of living allowance increase effective July 1st of 2003? A. Q. A. Yes. And what's the date of that letter, if you can see that? July 1st, 2003. HIGAR - DIRECT 207 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. And does that letter indicate what her salary is as of that date? A. Q. A. Q. Yes. And how much is her salary as of that date? $96,403. Is this the type of letter you would put in the personnel files? A. Q. Yes. Showing you what's marked as Exhibit 36, and can you identify this exhibit for the jury. A. Q. That is a bonus letter to Ramona Cunningham. And what's the amount of the bonus referenced in that letter? A. Q. 15 percent. And is that the type of letter that you would put in a personnel files? A. Q. Yes. I direct your attention to Government's Exhibit 37. This is a little bit longer letter. Is that the type of letter you would generate for any bonus or supplemental reward? A. Q. No. Okay. Do you know who at CIETC would generate that type of letter? A. Q. No. Is that the type of letter that you would put in personnel HIGAR - DIRECT 208 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 files if you were directed to do so? A. Q. Yes. Showing you what's marked as Exhibit 38. And in this letter--the body of this letter, could you describe to the jury what's contained in that letter. would. A. "On behalf of the Central Iowa Training and Employment Go ahead and read it if you Consortium I am awarding to you and John Bargman a 15 percent supplemental wage and incentive pay in April for the excellent work that you and John have done in regards to obtaining CIETC new office facilities. "Your diligence and time commitment have provided CIETC with not only a new facility that will better meet the needs of the client, but it will be done at a cost savings to the agency. "Also because of her role in working with Iowa Workforce Development on the transition plans for the new facility I'm authorizing you to give a $2,000 supplemental wage and incentive pay to Kelly Ayers. doing a job well done. Q. I congratulate all of you for Keep up the great work." Is that the type of letter that you put in respective personnel files? A. Q. A. Yes. And who is Kelly Ayers, if you know? Kelly Ayers is Ramona Cunningham's daughter. HIGAR - DIRECT 209 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. A. Q. Q. A. Q. Is she a CIETC employee as well? Yes, she was. Showing you what's marked as Government's Exhibit 38, 39, and 40? MR. PURDY: THE COURT: MR. PURDY: May I approach, Your Honor? You may. I think you already put in 38. 39 first. 39 and 40. Same type of letter that you put in personnel files? Yes. Exhibit 40 is that the same type as well? Yes. Wait until you see it. Sorry. There you go. This one talks about semiannual supplemental Same type of letter? wage incentive pay. A. Yes. MR. PURDY: 35 through 40. MR. SPIES: The government moves admission of Exhibits No objection. No objection. MR. McCARTHY: MR. SCOTT: THE COURT: No objection. Received. (Government Exhibits 35 through 40 were offered and received in evidence.) HIGAR - DIRECT 210 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. I'd like to show you what's been marked as Government's Do you see 41? Exhibit 41 through 46. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Yes. Same type of letter? Yes. And Exhibit 42? Yes. 43? Yes. 44? Yes. And 45? Yes. And one more, 46, same type of letter? Yes. MR. PURDY: The government moves admission of Exhibits 41 through 46. MR. SPIES: No objection. No objection. MR. McCARTHY: MR. SCOTT: THE COURT: No objection. They'll be received. (Government Exhibits 41 through 46 were offered and received in evidence.) HIGAR - DIRECT 211 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. Yes. 48? Yes. Let's take a look at 48 a second. Go back to 48, this type BY MR. PURDY: Q. Showing you what's marked as Government's Exhibits 47 through 52, and as they pop up on the screen identify by number if those are letters that you would put in personnel files. 47? of letter has a number of individuals identified to receive a bonus. A. Q. Would you type this type of letter up? I don't think I typed this one. Okay. Let's move on to 49. Same type of letter you found in the personnel files? A. Q. A. Q. A. Q. A. Q. A. Yes. And Exhibit 50, another bonus letter? Yes. Routinely put those in your personnel files? Yes. 51? Yes. And 52? Yes. MR. PURDY: The government moves admission of Exhibits 47 through 52. HIGAR - DIRECT 212 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. Take a look at Exhibits 53 through 58. 53, same type of MR. SPIES: MR. HAMROCK: MR. SCOTT: THE COURT: No objection. No objection. No objection. Received. (Government Exhibits 47 through 52 were offered and received in evidence.) letter? A. Q. Yes. Let's look at the next page of 53. Can you see that list that has itemized amounts as to bonuses? A. Q. A. Q. Yes. Is that something you would prepare? I did not prepare this one. And would that be something if you were directed to put in personnel files, you would do so? A. Q. Yes. Exhibit 55, please. I'm sorry, 54, please. Same type of letter? A. Q. A. Q. A. Yes. 55? Yes. 56? Yes. HIGAR - DIRECT 213 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 admission. THE COURT: Well, they're now in. (Government Exhibits 53 through 58 were offered and received in evidence.) Q. Okay. Let's take a look a little closer at 56. What's the date of this letter? A. Q. July 5th, 2005. And this indicates the salary for Ms. Cunningham on that date, does it not? A. Q. A. Q. A. Q. A. Yes, it does. And what's the amount on that one? $186,906. The next exhibit, please. Yes. And 58, the same type of letter? Yes. MR. PURDY: The government moves admission of Exhibits 57, the same type of letter? 53 through 58, Your Honor. THE COURT: MR. SPIES: MR. HAMROCK: MR. SCOTT: THE COURT: They will be received. Objection? No objection. No objection. No objection. Well, if they're stipulated in, I assume Am I right, Mr. Purdy? they're coming in in any event. MR. PURDY: Well, I didn't ask to stipulate to the HIGAR - DIRECT 214 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. Exhibits 59 and 60. Same type of letters? letter, Ms. Higar? A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. Yes. Exhibit 60? Yes. Exhibit 62, please? Yes. 63? Yes. 64? Yes. And 65? Yes. And zip back to 64, if you would, please. 64 appears to have a signature by Ms. Cunningham; is that correct? A. Q. That's correct. Some of these letters were executed purportedly by 59 is that the same type of Ms. Cunningham and some purportedly by Mr. Brooks that we've been talking about; correct? A. Correct. MR. PURDY: 59 through 64. The government moves admission of Exhibits HIGAR - DIRECT 215 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. Yes. 66, please? Yes. 67? Yes. Looking at Exhibit 67 a little closer, what's the date of BY MR. PURDY: Q. Take a look at Exhibit 65. Same type of letter? objection. (Government's Exhibits 59, 60, 62, 63 and 64 were offered and received in evidence.) MR. SPIES: MR. HAMROCK: MR. SCOTT: MR. PURDY: Without objection. No objection. No objection. I would note for the record we did not include Exhibit 61 in that list. THE COURT: That's right. The exhibits you've offered will be received without that letter? A. Q. A. Q. July 1st, 2004. And it's directed to whom at CIETC? John Bargman. And this indicates that his annual salary is increased through this letter to how much? HIGAR - DIRECT 216 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. Exhibit 71, I would note this is to Ms. Tesdell but it's Do you see that? A. Q. A. Q. A. Q. A. Q. to? A. Q. A. Q. A. John Bargman. And it indicates his annual salary is what as of that date? $183,768. What's the date of that letter? July 5th, 2005. MR. PURDY: 65 through 70. MR. SPIES: MR. HAMROCK: MR. SCOTT: THE COURT: No objection, Your Honor. No objection. No objection. Received. (Government Exhibits 65 through 70 were offered and received in evidence.) The government moves admission of Exhibits $121,804.80. 68, please, same type of letter? Yes. 69? Yes. And 70? Yes. Looking at this letter a little closer, who's that directed unsigned. HIGAR - DIRECT 217 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes. And is that something that you would have put in her personnel file if you had been directed to? A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Yes. 72, another letter for Ms. Tesdell; is that correct? Yes. Same type of letter that you would put in her file? Yes. Exhibit 73. Yes. And purportedly signed by Mr. Brooks; is that correct? Yes. Exhibit 74? Yes. Exhibit 75? Yes. MR. PURDY: 71 through 75. MR. SPIES: MR. HAMROCK: MR. SCOTT: THE COURT: Without objection. No objection. No objection, Your Honor. Received. (Government's Exhibits 71 through 75 were offered and received in evidence.) The government moves admission of Exhibits Same type of letter? HIGAR - DIRECT 218 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. A. Q. A. Now, once the bonus was awarded, how were they announced? To me or to the employees? To the employees. They would get a copy of a bonus letter with their check. BY MR. PURDY: Q. A. Q. A. Q. A. Just a few more letters. Yes. Exhibit 77? Yes. Exhibit 78? Yes. MR. PURDY: 76 through 78. MR. SPIES: MR. HAMROCK: MR. SCOTT: THE COURT: No objection. No objection. No objection. Received. (Government Exhibits 76, 77 and 78 were offered and received in evidence.) The government moves admission of Exhibits Exhibit 76. If it wasn't a check and they had direct deposit, they would get a copy of the bonus letter. Q. A. Who would distribute that bonus letter? Normally Ramona would, or if she didn't have time, she would tell me to go ahead and pass them out. HIGAR - DIRECT 219 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 hearsay. Q. A. Q. When you say Ramona, you mean Ms. Cunningham? Yes. Okay. And once the bonuses were approved, what role did you have with getting those funds paid? A. Once the bonus amounts were given to me, I could allocate dollars to special programs, whatever the employee was supposed to charge their time to, and enter that into the computer. Q. A. Okay. And then what would happen? John Bargman would approve--electronically approve the dollar amounts, and then I would print the checks or do the ACH deposits. Q. A. Q. The ACH deposit, what do you mean by that? Electronic deposits. When these bonuses were being awarded, did the employees talk about them amongst themselves? A. They talked about whether or not we would be receiving them or not. Q. A. Q. Once they were awarded, did they talk about who got what? No. Did you receive instructions from anyone regarding discussion of bonuses? A. Q. Yes. And who gave you instructions? MR. HAMROCK: Objection, Your Honor, calls for HIGAR - DIRECT 220 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Well, I've got to hear who it is. It might be a valid exception. Do you want to ask who it is, Mr. Purdy, for foundational purposes. BY MR. PURDY: Q. A. Yes. Who directed you about discussing bonuses? Ramona Cunningham and Karen Tesdell. THE COURT: Just a minute. It will be taken subject to the objection. You can receive it conditionally, ladies and gentlemen, and I'll give you an instruction at the conclusion of the testimony about whether you can consider it in your verdicts. You may answer. BY MR. PURDY: Q. I think you indicated Ms. Cunningham and Ms. Tesdell. What were you told about discussing bonuses by Ms. Cunningham? A. Q. A. Q. That bonus amounts were not to be shared. Did she tell you why? No. Performance based. And you indicated Ms. Tesdell talked to you about discussing What was that conversation about? bonuses. A. That she had once had an assistant before, and that person told somebody what Ramona Cunningham made, and that person was fired. Q. So bonuses were a taboo subject? HIGAR - DIRECT 221 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes. When the bonuses were prepared, did you do anything associated with payroll taxes being taken out of those checks? A. The correct amount of payroll taxes were taken out of bonus checks. Q. Was that done automatically? Was it done by an individual at CIETC? A. It was done by the computer, and in the computer you had to set parameters. Q. A. What do you mean by that? There were caps on I think Social Security. You only had to pay Social Security up to a certain amount, and then anything above that amount wasn't subject to Social Security. Q. And would you do those Social Security calculations or would somebody else? A. The computer did those, being specified by somebody to tell the computer what percentage or what dollar amount, and John Bargman would set those. Q. Now, you mentioned earlier some duties associated with the Did you tell the jury what your responsibility was time sheets. with those? A. My responsibility was to collect them and to make sure that the hours added up to 80 hours for the pay period. Q. A. And how would you ensure that that happened? I collected the punch cards also, and I would write on the HIGAR - DIRECT 222 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 punch cards how many hours per day that person worked and checked it to their time sheet and made sure that it was matched. Q. When a person fills out a time sheet at CIETC, how do they allocate their time? A. When I first started doing the time sheets, they did not allocate their times. Q. A. Q. A. Q. And then a different practice came in to being? Yes. And what was that different practice? They were given percentages to allocate to each program. So explain to the jury when you say they were given percentages to allocate to these different programs, what do you mean by that? A. CIETC got dollars from many different sources for certain programs, and if you worked--had duties from three different programs, you had to allocate your time three different ways, one to each of those programs. Q. So how much time you worked on each program was supposed to be put on your time sheet; is that correct? A. Q. A. Q. Correct. How were you directed to allocate your time? My time was allocated through many programs. Did you do it based on your actual hours you worked or did you do it based on other information? HIGAR - DIRECT 223 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. I did it based on allocations, percentages that were given to me. Q. Let's talk about that. So somebody gave you percentages to put in on your time sheet for a variety of programs; is that correct? A. Q. A. Q. Correct. And who would direct you to do that? Karen Tesdell. And how would she do that? Would it be based on a written direction or an oral direction or both? A. It was written. It would be on a regular copy of a time sheet that was blank, and it would be handwritten what the program was and what percent that needed to be allocated to that program. Q. And to your knowledge, did Ms. Tesdell direct other people to indicate on their time sheets certain allocations? A. Q. Yes. Other than Ms. Tesdell directing you on how to allocate time, were you ever directed by anybody else at CIETC on how to allocate your time? A. Q. A. Q. Yes. And who was that? John Bargman. Was it ever explained to you why you were directed to allocate time to a particular program? HIGAR - DIRECT 224 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. No. And when you say allocated against different programs, what do you mean by that? A. We had several programs, and one was the Workforce Investment Act, and there was subprograms to that, I guess. Like the adult program and the youth program, and then there was administration. There was dislocated workers, there was Promise Jobs, Promise Jobs administration. Q. A. Q. So a variety of programs? Several, yes. Okay. And those programs then would be associated with money that was drawn down from those various funding streams? A. Q. Correct. Did you have anything to do with drawing the money down from the funding streams? A. Q. A. Q. A. Q. No. Or requesting up the line "We need reimbursement for this"? No. Who at CIETC was in charge of that? Karen Tesdell and John Bargman. Okay. And start with Ms. Tesdell. When she would request funds from a funding stream, how would she do that? A. I'm not sure how she came up with the dollar amount for Promise Jobs, but for the other programs, I could--by writing the vouchers I could give her kind of a ball park amount, or she HIGAR - DIRECT 225 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 could just--she would look at them and figure out a ball park amount, and then she would do a funds request, and that would go to Iowa Workforce Development. Q. And was this a written request, an electronic request, if you know? A. Q. A. Q. Both. And then after the request was made, what would happen then? I don't know. When the bonus checks were calculated, did you have anything to do with the payroll tax calculations on that? A. Q. A. Q. No. Did somebody at CIETC have that responsibility? Karen Tesdell. So when bonuses were being awarded, Ms. Tesdell had the responsibility of calculating the payroll task associated to those checks? A. Q. To pay the payroll taxes. So she would be aware of how much the bonuses were going out at any given time? A. Q. A. Q. Yes. And to which individuals? Yes. Let's talk about your other duties at CIETC. Did you have duties in addition to these payroll functions and personnel functions that we've been talking about? HIGAR - DIRECT 226 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Yes. What other types of duties did you have? I was a backup receptionist. I did all the ordering of supplies; and if a counselor needed supplies they would come to me. Q. A. Q. Did you ever have anything to do with personnel policies? Yes. And tell the jury what you had to do with personnel policies at CIETC. A. The personnel policy book was reviewed and revised, and I took out all the old language that was in there, like Job Training Partnership Act that was no longer a program that CIETC had. And there was another program that I had to remove. I can't recall what that program was. Q. A. Where were the personnel policies of CIETC kept? In my office. MR. PURDY: THE COURT: May I approach, Your Honor? You may. Showing you what's been marked for identification purposes as Government's Exhibits 86, 87, 88 and 89, I ask if you recognize those? A. Q. Yes. And let's start with Exhibit 86. What is Government's Exhibit 86? A. CIETC personnel policies. HIGAR - DIRECT 227 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. Q. And I think you indicated there were a number of changes How do you know through what effective date the personnel made. policies manual is? A. Q. On the first page it has a list of dates. Okay. And for Government's Exhibit 86, is that one of the personnel policies that was stored in your office location? A. Q. I'm not sure. All right. But you indicated that the personnel policies were kept in your office; is that correct? A. Q. A. Q. Yes. Were they kept in binders like this? Yes. Look at Exhibit 87, if you would. Can you identify what Exhibit 87 is? It's a CIETC personnel policy manual. Effective date? July 15th, 1999. Is that the type of policy that was stored in your office? Yes. Was it stored in your office in a routine course of business? A. Yes. MR. PURDY: Exhibit 87. MR. SPIES: No objection. The government moves admission of HIGAR - DIRECT 228 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: for an hour. BY MR. PURDY: Q. I'll ask you to take a look at an exhibit marked as Can you MR. HAMROCK: MR. SCOTT: THE COURT: No objection. No objection. Received. (Government Exhibit No. 87 was offered and received in evidence.) Government's Exhibit 88 for identification purposes. identify for the jury what Exhibit 88 is. A. Q. A. Q. CIETC personnel policy manual. Effective what date? August 19th, 2004. Is that the type of personnel policy that was stored in your office on a routine basis? A. Yes. MR. PURDY: 88, Your Honor. MR. SPIES: MR. HAMROCK: MR. SCOTT: THE COURT: No objection, Your Honor. No objection. No objection. Received. (Government Exhibit No. 88 was offered and received in evidence.) Ladies and gentlemen, you've been sitting The government moves admission of Exhibit You want to take a minute to stretch before we HIGAR - DIRECT 229 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. Ms. Higar, in addition to the bonus letters that we've run admission. MR. SPIES: MR. HAMROCK: MR. SCOTT: THE COURT: Without objection. No objection. No objection. It will be received. (Government Exhibit No. 89 was offered and received in evidence.) A. Q. Yup. Is that the type of personnel policy that would be stored in Q. A. Q. continue. (Short pause.) THE COURT: MR. PURDY: Mr. Purdy, you can proceed. Thank you, Your Honor. I don't believe I asked you about Exhibit 89, did I? No. Would you take a look at what's been marked for identification purposes as Government's Exhibit 89. Do you have that in front of you? your office on a routine basis? A. Yes. MR. PURDY: The government moves Exhibit 89 for through very briefly that were stored in personnel files, what other types of materials would be stored in personnel files? HIGAR - DIRECT 230 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor. MR. SCOTT: THE COURT: that right? I'll join in that objection. 139 is a one-page document, Mr. Purdy. Is Honor. MR. HAMROCK: Same objection by Ms. Tesdell, Your MR. SPIES: Q. A. People were able to flex their time, and so their flex time Benefits enrollment applications or sheet was in their file. terminations were in their file. Q. If there was any adverse action taken against an employee, would that be kept in their file? A. Yes. MR. PURDY: THE COURT: Permission to approach, Your Honor? You may. I'm showing you what's been marked as Government's Exhibits Do you have those in front of you? 139 and 140. A. Q. Yes. Are these the type of letters that would be kept in the employee's personnel file on a routine basis? A. Yes. MR. PURDY: The government moves admission of Exhibits 139 and 140, Your Honor. (Government Exhibits 139 and 140 were offered into evidence.) We object on relevance grounds, Your HIGAR - DIRECT 231 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. SPIES: MR. HAMROCK: MR. SCOTT: THE COURT: 140. (Government Exhibit No. 140 was offered into evidence.) Object on relevance grounds, Your Honor. Same objection, Your Honor. I'm not going to object. Received. THE COURT: MR. PURDY: THE COURT: BY MR. PURDY: Q. Turning your attention to Exhibit 140, do you have that in MR. PURDY: THE COURT: That's correct, Your Honor. It will be received. (Government's Exhibits 139 was received in evidence.) By the way, I don't have you offering 86. I'm not going to offer it. Okay. Thank you. front of you? A. Q. Yes. Is that the type of letter that would be kept in personnel policies in the ordinary course of business? A. Q. Yes. And that was one of your duties to keep those personnel policies; correct? A. Correct. MR. PURDY: The government moves admission of Exhibit HIGAR - DIRECT 232 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. Honor. THE COURT: You may. A. Q. A. Q. A. Q. Your Honor? THE COURT: BY MR. PURDY: Q. Can you zoom in a little closer? Keep the date, though. You may. MR. PURDY: (Government Exhibit No. 140 was received in evidence.) Permission to publish Exhibit 139, Can you see the date of this letter? July 1, 2002. Okay. And addressed to which employee at CIETC? Jack Cline. And who is Mr. Cline. He was the program manager. And does this letter then reflect what his salary was as of July 1st, 2002? A. Q. A. Yes. What is that amount? $90,826. MR. PURDY: Permission to publish Exhibit 140, Your And again the date at the top of this letter is what date? January 6, 2002. And the second paragraph of that letter, do you see another date? HIGAR - DIRECT 233 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. January 6th, 2003. If you would read paragraph 2 to the jury, please? "Therefore, in order to avoid a reduction in client services and staff layoffs, I have decided to relocate management staff to the second floor at 215 Watson Powell Jr Way and reduce the wages of management staff. Effective today January 6, 2003, The wage situation" -- your new annual salary will be $80,826. Q. A. Q. Okay. I'm sorry. Go ahead. "The wage situation will be reviewed on an ongoing basis." I apologize for interrupting. So this appears to be a letter reducing Mr. Cline's salary; is that correct? A. Q. Correct. Tell me--I'm sorry, tell the jury where CIETC was located up until the time you quit working for that entity. A. Initially it was located at 215 Watson Powell Jr Way, and then we moved to 430 East Grand Avenue. Q. And when did the move to the East Grand location take place approximately? A. Q. I believe it was August of 2004. And where were management staff offices located at that location? A. Q. A. Q. At 430 East Grand. Yes. Where at in the building? The third floor. Who at CIETC was located on the third floor? HIGAR - DIRECT 234 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Jack Cline, John Bargman, Ramona Cunningham, Sam Fucaloro, Nathan Brooks, myself, Karen Tesdell, Karen Cogan, Mary Eubenis, Dianne Bolden, Lynn Mann, Rhonda Ward Cunningham, and Gina Scaglione. Q. So Mr. Bargman, Ms. Cunningham and Ms. Tesdell were all on the third floor; is that correct? A. Q. Yes. Did you have occasion during your employment at CIETC while you were on the same floor with those individuals at that building to observe Ms. Cunningham, Mr. Bargman and Ms. Tesdell? A. Q. Yes. Okay. Let's talk about Ms. Cunningham. How often would you see her in that location? A. Q. Almost every day, Monday through Friday. Okay. And did you have occasion to see who came and went from the third floor offices at CIETC? A. Q. A. Q. A. Q. Yeah. Sometimes? Yes. Not all the time? Yes. Did you ever see Mr. Albritton on the third floor at that building? A. Q. Yes. Tell the jury how often you would observe Mr. Albritton at HIGAR - DIRECT 235 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 those offices. A. Q. At 430 East Grand I didn't see him very often. Okay. Roughly, are we talking once a month, once a week, once a year, how often? A. Q. Once every couple months. Okay. And then at the office building before that, I think you said it was 215 Watson Powell? A. bit. Q. And was some management staff including Ms. Cunningham on Yeah. He was there on third floor at that building quite a the third floor of that building? A. Q. A. Q. Yes. And were you on that floor? Yes. And when you say "quite a bit," are we talking multiple times a day, a week, a month, a year? A. Q. Multiple times a month. Okay. Did you have occasion to see how Ms. Cunningham and Mr. Albritton interacted between each other? A. Q. A. Q. A. Q. Yes. Okay. And how would you describe their interaction? Most of the time it was friendly. Sometimes it wasn't? No. Any other board members come to 215 Watson Powell with the HIGAR - DIRECT 236 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 frequency that Mr. Albritton did? A. Q. No. Any other board members come to the 430 East Grand location with the frequency that Mr. Albritton did? A. Q. A. Q. Yes. And who would that be? The board meetings were held in that building. Okay. And at some point in time did the board meetings transfer out of that building? A. Q. A. Q. No. The 430 East Grand building? No. Board meetings, I'm talking--we're talking board of directors, is that correct, or are we talking some other board? A. Q. I don't know. Okay. Fair enough. Did you have occasion to observe whether or not Ms. Barto came to those offices? A. Q. A. Q. I don't recall ever seeing her. Okay. No. Okay. And did you have occasion to observe Karen Tesdell at At either office? those offices? A. Q. A. Yes. Okay. What job did Karen Tesdell have? I think she drew down money from the programs for payroll HIGAR - DIRECT 237 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 and the expenses, and she paid payroll taxes, and I think she did some budgeting. Q. A. Q. So accounting-type work? Correct. You said--I think you said, and correct me if I'm wrong, that when you started, you were an assistant to Ms. Tesdell; is that correct? A. Q. Correct. And when you first started, what were her job functions; the same? A. Q. A. Q. No. Okay. What were her job functions when you first started? Budgeting, payroll, accounts payable. Okay. And if I understand your testimony correctly, you inherited the payroll job; is that correct? A. Just the reconciling time sheets, time cards and leave requests. Q. A. Q. Okay. No. Okay. Did that remain in Ms. Tesdell's job description Ultimately did you do the actual payroll or not? during the course of your employment at CIETC? A. Q. Yes. And what type of other duties would Ms. Tesdell have? You mentioned certain accounting functions. did? Anything else that she HIGAR - DIRECT 238 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. She ordered the supplies and held supplies. You needed supplies, you went to Ms. Tesdell? Yes. Did you have occasion to observe Ms. Tesdell's work habits? Yes. Can you tell the jury what you observed about Ms. Tesdell's work habits? MR. HAMROCK: THE COURT: BY MR. PURDY: Q. As part of your job functions did you ever have occasion to Objection, Your Honor, relevance. Sustained. issue any checks to Mr. Albritton? A. Q. A. Q. A. Q. A. Q. Yes. And tell the jury about that. I paid him a monthly consulting fee. At whose direction did you make those payments? Ramona. Again, Ms. Cunningham? Yes. For what period of time did you make those payments, if you can recall? A. Q. It was at least a year. Did you have anything to do with the preparation of any consulting contracts for Mr. Albritton? A. No. HIGAR - DIRECT 239 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Other than issuing checks for services, did you have any other function related to Mr. Albritton's consulting contracts? A. Q. No. How much were the checks that you would issue him, if you recall? A. Q. I can't recall. Okay. You indicated that you currently work for Des Moines Area Community College; is that correct? A. Q. A. Q. A. Q. Correct. When did you start working for them? November 1st, 2006. And when did you stop working for CIETC? October 31st, 2006. Okay. Explain to the jury the transition from one job to the other; the same duties? A. Q. Yeah, initially. Okay. How did you come to be employed by DMACC instead of CIETC? A. Q. DMACC took over as the service provider. Okay. So at some point CIETC what, went out of business, What did they do? went on to other things? A. Q. Eventually CIETC dissolved. And the job training and education and employment type functions that CIETC served were taken over by DMACC; is that correct? HIGAR - DIRECT 240 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. DMACC and one of the CIETC boards. What knowledge do you have about-Strike that. At some point in time did you become aware that the state auditor's office was doing an investigation of CIETC? A. Q. A. Q. A. Q. A. Q. Yes. When did you first become aware of that? I saw the auditors there. The state auditors in the offices of CIETC? Yes. And when would that have been? I believe sometime in 2005. And at some point in time did you become aware that the auditors issued a report? A. Q. A. Q. Yes. And when did that occur? March 30th, 2006. Were you in the offices of CIETC when that report was given to CIETC? A. Q. Yes. Explain to the jury, if you will, what you were able to observe on that date about the auditor's report being provided to CIETC. A. Ramona came in to the office late in the day when normally she would have already left, and she had a talk with Dianne Bolden and myself, and the auditor report, a preliminary draft, HIGAR - DIRECT 241 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 she got somewhere on the Internet or through an e-mail or something, and ultimately she e-mailed it to me to have it printed. Q. A. Q. you? A. I went back to my office and I printed it. It took several And is this a lengthy report, short report? It was quite lengthy. So what did you do after Ms. Cunningham e-mailed that to hours to print. And then she wanted 14 copies of it, so I made the copies, and then she wanted those stapled, so I stapled them. Q. A. Q. Do you know why she wanted the 14 copies? No. Did she ask you to do anything else associated with that report? A. Q. A. Q. No. Did she ask you to mail any packages? No. Who else was present that evening when you were printing off that report? A. Q. A. Q. John Bargman. Okay. No. Anybody else? Dianne Bolden had left in the meantime. After the report came out, did you have occasion to observe Ms. Cunningham, Mr. Bargman or Ms. Tesdell at CIETC offices HIGAR - DIRECT 242 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 sorry. The 31st must have been just like a normal day, and it must have been the following Monday when I actually got to work at the same time as Ramona Cunningham and Karen Cogan, and then we went up to Karen Tesdell's office. Q. And what, if anything, did you discuss about the auditor's again? A. Q. Yes. Okay. Let's start with Ms. Cunningham. What did you observe about her at CIETC offices again, if anything? A. I believe the 30th was a Thursday, so it would have been the morning--Friday morning, the 31st of March, I arrived at the office the same time as Ramona did as well as Karen Cogan. Q. A. Okay. And what did you observe when you arrived? We came up the steps all three together, and went to--we all went to Karen Tesdell's office. Q. A. Q. A. Q. A. And did you then have a discussion? Yes. Was the discussion about the auditor's report? Not directly. When you say not directly, what do you mean by that? Actually, it wasn't Friday. I made the copies on the 31st or on the 30th, I'm report? A. I had asked Ramona if my salary was going to be cut in half. HIGAR - DIRECT 243 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I had heard a rumor over the weekend that that was going to happen. fine." And so I asked her. And she said, "No, you'll be just And we were in Karen Tesdell's office and my cell phone rang, and it was my daughter's father, and I left the office to go take the phone call. Q. I think you testified previously that you were aware that the audit was going on; is that correct? A. Q. Yes. The auditor's office people came to CIETC. Is that what you said? A. Q. Yes. Okay. Before the auditor's people came out to CIETC, were you advised that the auditors were coming? A. Q. No. Were you directed by Ms. Cunningham to do anything with any of the records you keep at CIETC? A. If they requested something, I was supposed to contact her first. Q. A. Q. And did she tell you why? No. Prior to the auditors coming out, did anyone at CIETC give you direction to destroy any records or documents? A. Q. A. Yes. Can you tell the jury about that. It was--I have no idea what day it was. I came to work one HIGAR - CROSS - HAMROCK 244 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 GgBY MR. HAMROCK: Q. Ms. Higar, my name is Aaron Hamrock, and I represent morning and there was a box of old time cards on my desk, and Ramona told me to take them out to the dumpster right away. Q. A. Q. Did she tell you why? No. And these were the punch-in time sheets that you referred to previously? A. Correct. MR. PURDY: THE COURT: MR. SPIES: THE COURT: No further questions, Your Honor. Mr. Spies, do you have examination? I do not, Your Honor. All right. Mr. Hamrock or Mr. McCarthy. CROSS-EXAMINATION Ms. Tesdell. When were you employed at CIETC? of your employment again? A. Q. March of '98 through October of 2006. And when you were at CIETC, your-Well, the last time you Was it 45,000? What were the dates received a raise at CIETC what was your salary? A. Q. A. Q. Somewhere in that ball park. All right. Sometimes. And then you get bonuses on top of that? While you were at CIETC did you continue to get raises through the years of your employment? HIGAR - CROSS - HAMROCK 245 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. Yes. Did you ever refuse any of those raises? No. While you were at CIETC, did you get bonuses through the years? A. Q. A. Q. A. Q. Yes. Did you ever refuse any bonus? Yes. How many bonuses did you refuse? One. When you would receive bonuses, we went through a bunch of documents earlier, you did with Mr. Purdy, there would be letters attached to those bonus checks explaining why it was being issued, you were doing a good job or you had done something extra, words to that effect; correct? A. Q. Correct. And those bonus letters--all of your bonus letters were signed by either Ramona Cunningham or Archie Brooks; is that correct? A. Q. I don't know who signed them. Do you recall getting letters with your checks that had a signature at the bottom? A. I recall getting the letter. I can't say for sure it had a signature or whose signature it might have been. Q. A lot of the letters that were shown to this jury today and HIGAR - CROSS - HAMROCK 246 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to you had the signatures of either Mr. Brooks or Ms. Cunningham; correct? A. Q. Correct. Mr. Brooks or Ms. Cunningham would sign letters that would go out to all employees when they received a bonus check; correct? A. Q. Correct. And you knew this because you would get a copy of the letter that would go into that employee's personnel file; correct? A. Q. Most of the time. Other employees would take those bonuses and they would not reject them or refuse them; correct? A. Q. Correct. And when you received a bonus that had a letter accompanying it that was signed by your boss, Ms. Cunningham, or the chair of the board of directors, Mr. Brooks, it would appear to be a legitimate bonus that was issued by the company; correct? A. Q. A. Q. Correct. Now, you reported directly to John Bargman; is that correct? Correct. Let me show you what's been previously admitted. Can you see this document all right on your monitor? A. Q. A. Yes. Does this appear to be the organizational chart of CIETC? Is Ramona Cunningham at the top? HIGAR - CROSS - HAMROCK 247 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. I'm sorry. Yes. If and you would report, you're down here and you would There. I apologize. report directly up to Mr. Bargman? A. Q. Correct. And Mr. Bargman it would appear reported to Ms. Cunningham; is that correct? A. Q. Correct. In this organization, Ms. Cunningham was the person who called the shots; is that correct? A. Q. Correct. Mr. Bargman would talk with Ms. Cunningham and they might have conferences together, but ultimately the decision would be made by Ms. Cunningham. A. Q. Yes. Now, you talked about one of your duties being to input time You would add them up and input them on to Is that your understanding? from time sheets. the computer system; correct? A. Q. Could you repeat that. One of your duties when Mr. Purdy was asking you questions that you told this jury, or at least I thought I heard you tell this jury, would be that you would add up the time sheets or time cards from all of the employees; correct? A. Q. I would match the time sheets and the time cards, correct. Yeah. You would add them up to make sure they were 80 hours HIGAR - CROSS - HAMROCK 248 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 a week and they would be added amongst different grants or funds that CIETC would have; correct? A. Q. I didn't do that initially. But it evolved--Mr. Bargman had you--or at least towards the end doing that, where you would divide those things up or you would make sure the time cards were divided up amongst the different grants; right? A. Q. Yes. Time sheets. And if I misstate something, please correct me because I certainly don't want to intentionally try to misstate anything, and I don't want you to be confused. the questions that I'm asking. A. Q. Okay. Fair enough. Now, you said during cross-examination or during direct examination, excuse me, that Ms. Tesdell would designate how to--or how employees should divide their work up on the time cards as to what programs. statement? A. Q. On the time sheets, yes. Do you recall being interviewed by I believe it was the Do you remember making that I want you to understand Federal Bureau of Investigation on August 4th, 2006? A. Q. Could very well have been. Prior to today do you recall being interviewed by a government employees about the events at CIETC? HIGAR - CROSS - HAMROCK 249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. Yes. And do you remember speaking with this person? Yes. Now, back--or I'll ask you again. After you've refreshed Q. A. Yes. MR. HAMROCK: THE COURT: May I approach the witness, Your Honor? You may. Ma'am, I would like to show you something just to help So I'd like for you to read it refresh your recollection, okay. to yourself, but please read the highlighted portion of this. And is that your name at the top? your recollection, isn't it true that Mr. Bargman would direct employees on how to designate their work time and as to what programs they were to designate on their time cards? A. Q. On their time sheets. Yes, he did. And after you would review those time sheets, you would then give them back to Mr. Bargman or give them to Mr. Bargman so that he could review them to make sure they met his satisfaction; correct? A. Q. A. He reviewed them electronically. So you would e-mail them to him? He could sign into the computer program that we did our time sheets on and he could see them. Q. All right. So maybe you wouldn't physically walk them down to his office but you would somehow notify him when you were HIGAR - CROSS - HAMROCK 250 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 done, and he could get into this computer program and view all of the employees and how they've allocated their time on his own computer screen? A. Q. Correct. Did he have the capability of making changes from his computer if he wanted to reallocate an employee's time? A. Q. A. Q. Yes, he could. Do you know, did he ever do that? I don't know. Did he ever direct you or tell you, "Ms. Higar, I want you to reallocate this employee's time"? A. He would give me a spreadsheet that had their name in bold Then I would if he wanted their time allocations to change. notify that employee. Q. So Mr. Bargman would bold a spreadsheet so that the name would stand out amongst the other names on the spreadsheet; correct? A. Q. Correct. Mr. Bargman, if I'm understanding your statement, would then tell you on this spreadsheet how he wanted it allocated? A. Q. Correct. You would then tell the employee, you know, Mr. or Mrs. Employee, Mr. Bargman wants your time reallocated to different programs, and you would tell them how to allocate their time? A. Correct. HIGAR - CROSS - HAMROCK 251 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. And then the employee would have to--would they retype that into the computer system? A. Q. Yes. They could go into the computer and change it. And if the employee had an issue about how they were going to allocate their time, they would then be directed to take that up with Mr. Bargman, wouldn't they? A. Q. Correct. While you were employed at CIETC, people--the number of people getting bonuses were not just limited to Ms. Cunningham, Mr. Bargman, Ms. Tesdell and yourself, were they? A. Q. A. Q. No, they were not. In fact, several people would get bonuses; is that correct? Correct. Would you say that nearly 80 to 90 percent of the employees at CIETC would get some form of bonus payment? A. Q. Sometimes, yes. And I understand that--I hope the jury understands that with each bonus, not everybody was included; is that right? A. Q. A. Q. A. Q. A. Correct. There were times when you were not included; is that right? Correct. Times when Ms. Tesdell was not included; is that correct? Probably. Times when other employees would not be included; right? Correct. HIGAR - CROSS - HAMROCK 252 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. As an example, I'm going to show you what's previously been This is--the title is Promise Jobs Supplements admitted. June 30, 2005, and then below are a list of employees with percentages next to them. Would that seem to indicate to us that all of these employees would have received that percentage of their salary in the form of a bonus? A. Q. Correct. Let me show you another document that's been previously By looking at this, is this a report that you would admitted. generate, or would somebody else generate this type of a report? A. I generated it, but it could be generated by--reprinted by somebody else. Q. All right. And this seems to indicate, does it not, names of people on the left-hand side, employees of Central Iowa Employment Training Consortium? A. Q. Correct. And then it would indicate under the earnings column it gives a figure; is that correct? A. Q. Correct. Those figures that are shown there relate to bonus or a bonus payment; is that correct? A. Q. Yes. And then as we look over further to the right. There are deductions for taxes taken out; is that correct? HIGAR - CROSS - HAMROCK 253 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Correct. So every time you would help prepare letters or help do work to prepare bonus payments that would go out to employees, taxes always got taken out of those bonuses; correct? A. Q. Not always. Would there be some employees that wouldn't have any tax taken out? A. Q. Correct. All right. Let me ask a better question then. All the bonuses would be run through like a normal paycheck, and if the employee is in a position where they have to have some taxes taken out, taxes would then be taken out; correct? A. Q. A. Q. Yes, they would. Thank you. There was a time-You answered my question, thank you. Did you know of anybody ever turning down a raise that either Ms. Cunningham or Mr. Bargman would give to an employee? A. Q. No. There were some questions about personnel policies. Every employee when they came to work for CIETC received a personnel policy; correct? A. Q. Correct, with the exception to one. There was a letter that was shown to you about Mr. Cline. Do you know, did he actually end up taking a salary cut? 254 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: questions? MR. SCOTT: THE COURT: MR. PURDY: THE COURT: No. Mr. Purdy, any redirect? No, Your Honor. You may be excused. (Witness excused.) Ladies and gentlemen, I'm going to give We're going A. Yes, he did. MR. HAMROCK: Could I have one second, Your Honor? (Discussion off the record.) MR. HAMROCK: questions at this time. THE COURT: All right. Mr. Scott, do you have any I don't think I have any further you 4 minutes off but don't think I'm getting soft. to adjourn for the evening. Please remember the admonition. As I told you a I couple of times, the lawyers are relying on you to do so. want to compliment you on your attentiveness. I can tell you're a very engaged and participatory jury, which is a very important part in getting the case right, so I want to thank you in advance for that. We'll be in recess until 8:30 tomorrow morning. (Recess at 4:58 p.m. until 8:30 a.m., Wednesday, April 9, 2008.) 255 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 /s/ Eileen Hicks CERTIFIED SHORTHAND REPORTER C E R T I F I C A T E I, the undersigned, a Certified Shorthand Reporter of the State of Iowa, do hereby certify that I acted as the official court reporter at the hearing in the above-entitled matter at the time and place indicated; That I took in shorthand all of the proceedings had at the said time and place and that said shorthand notes were reduced to typewriting under my direction and supervision, and that the foregoing typewritten pages are a full and complete transcript of the shorthand notes so taken. Dated at Des Moines, Iowa, this 3rd day of June, 2008. 256 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF IOWA CENTRAL DIVISION - - - - - - - - - - - - - - - -X UNITED STATES OF AMERICA, : : Plaintiff, : : vs. : : RAMONA CUNNINGHAM, JANE BARTO, : KAREN TESDELL, JOSEPH : ARCHIBALD BROOKS, JR. and : DAN ALBRITTON, : : Defendants. : - - - - - - - - - - - - - - - -X Criminal No. 07-008 Volume II TRIAL TRANSCRIPT West Courtroom U.S. Courthouse 131 East Fourth Street Davenport, Iowa Wednesday, April 9, 2008 8:30 a.m. BEFORE: The Honorable ROBERT W. PRATT, Chief Judge, and a Jury. EILEEN HICKS - CERTIFIED SHORTHAND REPORTER 257 APPEARANCES: For the Plaintiff: WILLIAM C. PURDY, ESQ. JOHN S. COURTER, ESQ. Assistant U.S. Attorneys U.S. Courthouse Annex 110 East Court Avenue Des Moines, Iowa 50309 LEON F. SPIES, ESQ. Mellon & Spies Suite 411 102 South Clinton Street Iowa City, Iowa 52240 AARON HAMROCK, ESQ. TIMOTHY McCARTHY II, ESQ. McCarthy & Hamrock 1200 Valley West Drive Suite 400 West Des Moines, Iowa 50265 PAUL D. SCOTT, ESQ. Cook, Brown & Scott 8554 Alice Avenue Des Moines, Iowa 50325-7112 For Defendant Barto: For Defendant Tesdell: For Defendant Albritton: 258 1 2 3 4 5 6 7 8 John Bargman III 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Susan K. Mrzena Kelly Ayers 516 520 483 (Scott) 514 (Scott) 356 451 (Spies) 481 (Hamrock) 506 511 (Spies) 513 (Hamrock) 327 (McCarthy) 332 (Scott) WITNESS I N D E X DIRECT CROSS REDIRECT RECROSS On Behalf of the Government: Dianne Bolden 261 320 (Spies) 350 353 (Scott) 259 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 DEFENDANT BARTO EXHIBIT: 17 H - Memo from Brooks 18 DEFENDANT ALBRITTON EXHIBIT: 19 20 21 22 23 24 25 A - 2004 Audit Report B - 2005 Audit Report 487 487 487 487 GOVERNMENT EXHIBIT NO: E X H I B I T S OFFERED RECEIVED 418 418 81 - Signed copy of Cunningham Employment Agreement 82 - Signed copy of Bargman Employment Agreement 83 - Revised Employment Agreement-Cunningham 84 - Revised Employment Agreement-Bargman 85 - Employment Agreement of Karen Tesdell 99 - Packet from August Joint Board Meeting 101 - Minutes from August Board Meeting 102 - Audio Clip of Board Meeting, 8/19/2004 104 - Sign-in Sheet for August Board Meeting 106 - Packet prior to November LEO Board Meeting 107 - Minutes from November Board Meeting 108 - Audio Clip of Board Meeting, 11/10/2005 109 - Handwritten Notes from November Meeting 110 - Sign-in Sheet from November LEO meeting 112 - Letter from Brooks to CIETC Board Members 113 - Plea Agreement - Bargman 115 - Attendance Policy Documents 119 - Memo 141 - Albritton Retainer Agreement I 142 - Albritton Retainer Agreement II 144 - Packet issued prior to April Board Meeting 145 - Handwritten notes from April Board Meeting 146 - Sign-in Sheet for LEO April Board Meeting 147 - Minutes from April Board Meeting 150 - Certified Copies of Polk County Resolutions 419 419 421 421 422 422 423 424 283 283 289 289 Stipulated 294 295 298 298 299 299 Stipulated 301 301 303 303 450 450 361 361 518 518 307 307 443 443 444 444 266 266 277 277 279 279 281 281 Stipulated 260 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: P R O C E E D I N G S Please be seated. Mr. Purdy, you can call your next witness. MR. PURDY: Before the government calls its next witness I've got several matters that the parties have stipulated to that I'd like to present to the Court. THE COURT: Ladies and gentlemen, if you remember from the instructions, you'll hear this again, a stipulation is an agreement between the parties. The law will tell you that what you hear should be taken as proven. Proceed. MR. PURDY: Thank you, Your Honor. There are five exhibits I'd like to reference regarding the stipulation that the parties have agreed can be admitted into evidence without objection. Those exhibits are Exhibit 102, which is an audio clip of a portion of a board meeting that will be discussed further today that occurred on August 19th of 2004. Exhibit 108, which is an audio clip of a board meeting--a portion of a board meeting that will be discussed later today that occurred on November 10th, 2005. And Exhibits 150, 151 and 152, which are certified copies of certain Polk County, Iowa resolutions that have been certified by the proper official of Polk County. Thank you, Your Honor. stipulation. That's the extent of the BOLDEN - DIRECT 261 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DMACC is. employed. A. Q. A. Iowa Employment Solutions at DMACC. And how long have you been employed at that entity? Since they took over from CIETC, which I believe was BY MR. COURTER: Q. Ms. Bolden, be sure the microphone is close enough for the THE COURT: MR. PURDY: All right. The government would call Dianne Bolden. The government believes that Ms. Bolden will be of assistance to the jury on all counts but count 27 of the indictment. DIANNE BOLDEN, GOVERNMENT'S WITNESS, SWORN DIRECT EXAMINATION jury to be able to hear you when you speak. Would you tell the jury where you're currently December of 2007. Q. Where were you employed before you were employed at Iowa Employment-THE COURT: Mr. Purdy, you might tell the jurors what We're not in central Iowa. BY MR. PURDY: Q. A. Q. Can you explain to the jury what you mean by DMACC. Des Moines Area Community College. And where were you employed prior to being employed at DMACC? BOLDEN - DIRECT 262 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. Central Iowa Employment Training Consortium. How long were you employed at CIETC? I began there officially in September of 1995. And did you indicate that you had been employed at CIETC until it was--the duties of CIETC were assumed by another entity? A. Q. A. Correct. What duties did you perform while you were at CIETC? I was the executive secretary. I performed any secretarial duties for the director, for upper management staff that they requested. I also arranged for board meetings, the location, the food, took care of the minutes, mailed out agendas previous to the meeting along with packets of information. Q. Tell me about the process for board meetings at CIETC and your involvement with those. A. We had three boards. The Local Elected Officials was the CIETC Board. They met monthly. The Regional Workforce Investment Board was an advisory board that oversaw the Workforce Investment Act program. They also met monthly. They would alternate. One meeting would be the two boards together, the next month would be the boards would meet separately. There was also a Youth Advisory Committee that would BOLDEN - DIRECT 263 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. advise the Regional Workforce Investment Board on youth activities, youth programs that were necessary in the area. I would arrange meeting places, the location for the meeting on the correct date. I would take minutes at the meeting and type those up. Those would be included in the packet with the agenda for the next month's meeting when that went out. I would also post the meeting agendas and mail them out to the newspapers and any other news organizations that were interested in receiving them. Q. In addition to preparing the minutes for those meetings, did you indicate you took notes during the meeting? A. Q. A. That's correct. Did you also record these meetings in any manner? Yes. They were all tape-recorded until we got a new digital recorder, and at that point they were digitally recorded and then burned onto a CD. Q. Did you perform any other functions in your capacity as an employee of CIETC? A. Well, one of the things was other duties as assigned, and that included a lot of things. I also had a Promise Jobs caseload for a few years. The jury has heard a little bit about how the timekeeping Were you an employee that was required to punch system worked. in? A. Yes, I was. BOLDEN - DIRECT 264 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. And did you also keep your time in another way? Yes. We had a time sheet that we turned in every 2 weeks. When you turned your time sheet in, did you have to allocate your time to various programs? A. Q. Yes. And did you allocate them all to one program or more than one program? A. Q. It was spread among several programs, most of the programs. And during the course of your employment at CIETC were you ever directed on how to allocate your time by somebody in the CIETC executive administrative staff? A. Yes. We were given a sheet that broke down the percentages we were to use. Q. And let's start when you first got there, was this process in place? A. Q. I don't recall. Okay. I believe so. And who, if anybody, at CIETC would have directed you on how to fill out your time sheet--allocate your time? A. Q. Karen Tesdell at the beginning. And at some point did the person who indicated that you should allocate your time, did you get instructions from somebody else? A. Q. A. At one point it changed over to John Bargman. And do you recall when that would have occurred? Not exactly. The last few years after he started. BOLDEN - DIRECT 265 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q. I'm going to ask you some questions about several board meetings and talk to you about the record keeping associated with that. I'm going to play some audiotapes here in a minute, but I'd like to start by showing you some exhibits. MR. PURDY: THE COURT: May I approach, Your Honor? You may. I'm going to show you packages associated with three I'm going to start with this one. And I'm different meetings. going to put the other two to the side. this meeting. So we'll start with Directing your attention to an item that has been marked as Government's Exhibit 144 for identification purposes, do you have that in front of you? A. Q. A. Yes, I do. And could you identify what that document is. 144, that is the packet that was sent out prior to the April 18th board meeting. Q. And when you say packet, is there a number of things attached to this? A. Q. Yes. And would this packet be what you described as something you would compile? A. Q. Yes. Would this be done in the ordinary course of your duties as executive secretary? BOLDEN - DIRECT 266 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PURDY: THE COURT: BY MR. PURDY: Q. Okay. Is this a typical format you would use for the board A. Yes, it would. MR. PURDY: 144, Your Honor. MR. SPIES: No objection. No objection. The government moves admission of Exhibit MR. McCARTHY: MR. SCOTT: THE COURT: No objection. Received. (Government Exhibit No. 144 was offered and received in evidence.) Permission to publish, Your Honor? You may. meetings? A. Q. Yes, it is. And starting at the top of 144, it indicates that there is-Okay. This is on CIETC could you get to the very top. letterhead; is that correct? A. Q. Yes. And it indicates that there's in the upper right-hand corner a notice of meeting; correct? A. Q. Yes. Okay. And you indicate in your testimony it's for the April 18, 2002 meeting. The time is indicated as--what time is this meeting BOLDEN - DIRECT 267 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 going to take place? A. Q. A. Noon. And was that the typical time-Well, I'm sorry, lunch is at noon. The meeting itself is at 12:30. Q. And is that the typical time the CIETC Board meetings would take place? A. Q. Yes, it was. You mentioned three different boards. I want to make sure the jury understands. A. What type of meeting was this notice for? This is a joint meeting between the Local Elected Officials Board and the Regional Workforce Investment Board. Q. Let's talk a little bit about those two boards. The Local Elected Officials Board, what does that mean? A. The consortium itself, Central Iowa Employment Training Consortium, is a consortium of the counties that are listed along the side there. population. Each county had representation based on On that board there was one member from each of the outlying counties, three members from the city of Des Moines and four members from Polk County, I believe. They were all local elected officials or appointed by the county board of county supervisors to represent the Local Elected Officials. Q. And you mentioned a Regional Workforce Investment Board was part of this meeting as well? BOLDEN - DIRECT 268 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Correct. Okay. That was a governor-appointed board. In terms of having the most direct input into CIETC matters, which of those two boards are we talking about? A. Q. I believe the Local Elected Officials would have been. At the end--well, strike that. At this point in time who was the chairperson of that Local Elected Officials Board? A. Q. A. At that point in time? Yes. In April of '02? I believe that would have been Archie Brooks at that time. Well, let me see. No, I take that back. Looking I'd have to-- at my minutes, it was K. C. Valster. Q. And the Local Elected Officials Board had a chairperson and other members from the counties and the city that were part of the consortium; correct? A. Q. Correct. So when we talk about Local Elected Officials Board or board of directors, I want to be clear when we're explaining to the jury, so help me as we go through that which board we're talking about. The Regional Workforce Investment Board, who was the head of that, if you recall? A. Q. Carnel Manuel. So maybe that will help us if we talk about this was a local board versus regional. Okay. So looking down through the agenda, it has a BOLDEN - DIRECT 269 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 number of items. Let's just go through this one and see what So item 1 is what? this agenda contains. A. Q. A. Call to order and roll call. Okay. And what does that mean? The roll Well, the chair would call the meeting to order. call, we generally sent around a sign-in sheet for each member to sign. Q. Would people who were in attendance other than the board members sign in? A. Q. Usually yes. Were there people other than the board of directors of the Local Elected Officials and the Regional Workforce Investment Board in this case, were there other people who would typically attend these meetings? A. Q. Yes. For example, give as an example of some meetings, who would attend? A. Q. A. Q. Ramona Cunningham, Jack Cline. So you're talking about CIETC staff? Yeah. Other than CIETC staff, on a routine basis would there be anybody from state agencies or other organizations that worked with CIETC or job training? A. Like for the Regional Workforce Investment Board very often there were people there from Iowa Comprehensive Community BOLDEN - DIRECT 270 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Services, which is the subcontractor for the youth Workforce Investment Act program. And occasionally there would be other individuals there that had interest. Q. A. Q. A. In either the agenda or the mission of the CIETC? Correct. Item 2 in this particular one, what does that say? That is to approve the minutes, meeting minutes from the past meetings. Q. And I see under that or off to the right of that minutes What does that mean? it's got a gold with a check mark on it. A. The gold is--the gold or the orange or the other is the color of the paper tab that was in between the sections to aid in finding that section. The asterisk means received and filed. indicates that it requires action by the board. Q. And under the minutes of this particular meeting there's two Would you read those to the jury and tell us The check mark items, A and B. what those means? A. The March 21st, 2002 Local Elected Officials meeting minutes and the February 21,2002 joint meeting minutes, so one was the meeting of just the Local Elected Officials Board by themselves. The other was the previous joint meeting. Q. Okay. So you have a check mark, and I think you indicated What board action would be required that required board action. BOLDEN - DIRECT 271 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 in regards to-A. Q. To approve the minutes. Okay. So they're given a written copy of the minutes. Is that something you would prepare? A. Q. A. Q. Yes. And then you would approve it at the following meeting? Correct. Let me take that back. After a meeting you compiled minutes to present at the next meeting? A. Q. At the next meeting or the one after. Okay. It depends on... Item three on this particular agenda, would you identify that and tell the jury what that is. A. 28E agreement and bylaws. And this would have been pertaining to the Local Elected Officials. The 28E agreement is what organizes the consortium and holds them together, and then the bylaws are the bylaws of the board. Q. So these are internal rules that the board has to utilize when they're working on CIETC business? A. Q. A. Correct. And by this item being on this agenda, what does that mean? That would mean that there were changes for amendments proposed for the 28E agreement and the bylaws and they were requiring the board's approval. Q. And that again--the check mark means that board action was BOLDEN - DIRECT 272 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 required? A. Q. Correct. And the orange designation, that was one of the filler pages? A. Q. Correct. Does Exhibit 144 that you have have those color filler pages in there? A. Q. Yes, it does. Would you hold that up and display that to the jury. Just to show them what you're talking about. A. Q. (Witness complied.) So they're dividers between the various sections of the agenda; is that correct? A. Q. Correct. And the attachments. Okay. Scroll down if you will to the next several agenda items. Let's take this all the way through this agenda. Item 4, youth council appointments, the green check mark, what does that mean? A. The Local Elected Officials had the final say in appointing And there were--it looks members to the Youth Advisory Council. like two individuals that were applying to be part of the Youth Advisory Council that the Local Elected Officials needed to approve. Q. Okay. And again the check mark, board action required? BOLDEN - DIRECT 273 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Right. Okay. Item 5, what is that and what does that mean? The Regional Workforce Investment Board, as I said, it's a governor-appointed board, but the Local Elected Officials needed to select members, and then forward those nominations on to the governor before the governor would appoint them. So that was--there is information here about people who were being recommended to serve on the Regional Workforce Investment Board. Q. A. Q. A. And item 6? Credit card update. Okay. And what does that mean? I don't recall exactly, and the information was hand carried to the meeting and not included in the packet. Q. I was going to ask you, it says hand carried. Can you explain that to us? What does that mean? A. That means it was passed out at the meeting rather than being mailed in advance. Q. And was that something that would happen on occasion that certain items that were not mailed in advance were presented to the board? A. Q. A. Correct. Item 7, if you would identify that and explain that to me. Oh, certification of Workforce Investment Act training The Regional Workforce Investment Board was--there's providers. BOLDEN - DIRECT 274 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 a list of training providers that are approved for Workforce Investment Act funds to be used to pay them for training. Such as the dislocated workers program, if someone is laid off from Maytag and they want to take a course at Iowa State University, Iowa State University's course would need to be approved in order for the Workforce Investment Act dollars to pay for that individual to take training there. Q. A. Okay. And item 8. Those were the various reports that were distributed to the board on a regular basis. Q. And I see the asterisk there again. Again would you remind me what the asterisk was for? A. The board was required to receive and file those. There was no actual action--approval or anything like that required. Q. And take me through the reports in this particular agenda. Item A? A. That's the fiscal report that was prepared by Karen Tesdell each month. Q. Okay. Let's flip to the fiscal report. Is that in the package that you have in front of you? A. Q. A. Q. Yes, it is. Do you have it in front of you? Yes. I think we have it here. My apologies for not having this queued up for you. Is this an example of the fiscal report that BOLDEN - DIRECT 275 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you were talking about? A. Q. Yes. And it has a number of columns describing--if you can give a summary of what's described in the fiscal report. A. The--well, like it says, budget compared to actual disbursements for the different programs that we operated. Q. A. Q. Does it have the items indicating expenditure of funds? The amount that's been expended to date, yes. Okay. And is that broken down at all by salaries or individual salaries of people in CIETC? A. Q. No. Back to the first page if you would, please. All right. So there are other reports as well if you would zoom in on the bottom half of that, please. Looking at the bottom half of Exhibit 144, other reports, would it be typical that the board would receive a number of reports at a board meeting? A. Q. A. Yes. And item 9, what's that? It was just kind of a catchall category for any other items that weren't outlined in the agenda. Q. And would there be an opportunity for board members to bring things up in this area that wasn't on the agenda? A. Q. They could, yes. And if there were late additions to the agenda, would they BOLDEN - DIRECT 276 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 be brought in under this one, or would there be a new agenda issued? A. Generally there would be a new agenda issued. The other wouldn't have been anything that required board action that needed to be published in the agenda. more general kinds of things. Q. A. Q. A. Q. A. Q. Okay. Item 10? It was Old business and new business. And item 11? Public comment. And item 12? Adjournment. So under old business, new business what would come up in that type of area? A. Very seldom anything. If anything like one of the partners from the Regional Workforce Investment Board might say that their organization was having an open house and everyone was invited, those kinds of things were a lot of times announced at that point. Q. Okay. And what about adjournment, the meeting is over, at that point the board adjourns? A. Q. Correct. Now, was there a separate agenda then for the Regional Workforce Investment Board when they would meet in a joint meeting like this or would it be the same agenda? BOLDEN - DIRECT 277 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PURDY: THE COURT: BY MR. PURDY: Q. Okay. So these are notes that you would make 145. MR. SPIES: Without objection. No objection. A. Q. Generally it was the same agenda. I'm going to ask you to look at what's been marked as Do you Government's Exhibit 145 for identification purposes. have that in front of you? A. Q. A. Q. Yes. And can you identify what that is. Those are my handwritten notes from that meeting. Okay. And you indicated that you typically took handwritten notes at the meeting; is that correct? A. Q. A. Yes. These are kept in the normal course of each meeting? Yes. MR. PURDY: The government moves admission of Exhibit MR. McCARTHY: MR. SCOTT: THE COURT: No objection. Received. (Government Exhibit No. 145 was offered and received in evidence.) Permission to publish? You may. contemporaneous with what's going on at the meeting; is that BOLDEN - DIRECT 278 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 correct? A. Q. Correct. I direct your attention to the Article III or item 3 listed Do you see that item 3 that has the motion Do you see that item 3 on there? on those notes. right across the top of that. A. Q. A. Yes. Would you read item 3 to the jury, please. "Motion approved modified 28E agreement and bylaws. Mail for signing, return by next month to be enacted, 7-1-02 by Dave Reed." I'm indicating the motion is by Dave Reed, seconded by Leo Van Elswyk and carried. If any county wants Ramona Cunningham present at the county supervisors meeting, let her know. Q. Okay. So what would those notes indicate to you occurred at the board meeting? A. Q. That they approved the modified 28E agreement and bylaws. Okay. And that agreement is the one that is attached to the minutes; is that correct? A. Q. Yes. I direct your attention to what's been marked for Do you identification purposes as Government's Exhibit 146. have that in front of you? A. Q. A. Yes. And could you identify what that is. That is the sign-in sheet for the Local Elected Officials BOLDEN - DIRECT 279 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PURDY: THE COURT: BY MR. PURDY: Q. Okay. I think we scrolled through one of these earlier, but 146. MR. SPIES: No objection. No objection. attending that meeting. Q. And this is the April 18 of 2002 meeting we're still talking about? A. Q. Yes, correct. And that's something that would be kept in the ordinary course of business? A. Yes. MR. PURDY: The government moves admission of Exhibit MR. McCARTHY: MR. SCOTT: THE COURT: No objection. Received. (Government Exhibit No. 146 was offered and received in evidence.) Permission to publish? You may. this one I think you indicated was from this particular meeting. Is that correct? A. Q. Yes. Okay. And I think you indicated that a number of people I direct your attention to the top left-hand Do you see that? would sign in. column under members. BOLDEN - DIRECT 280 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. Yes. And what does that mean? Those are members of the Local Elected Officials Board. Okay. At the very top it says LEO. That's the Local Elected Officials that you're talking about? A. Q. Yes. And a number of individuals were present at that meeting; is that correct? A. Q. Yes. And the next--the same column but down towards the bottom, what is the title to that column? A. Q. Other Attendees. And a number of people are in attendance at this meeting. Can you identify the four names under Other Attendees? A. Ramona Cunningham, Jack Cline, John someone from Madison County, I'm not sure of the last name there, and then Michael Smith. Q. Okay. So when somebody else, other than the board members, would come, they would also sign in on these sign-in sheets? A. Q. A. Q. They're supposed to, yes. Occasionally the sign-in sheets didn't catch everybody? Occasionally. I direct your attention to what's been marked for Do you have that in identification purposes as Exhibit 147. front of you? BOLDEN - DIRECT 281 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PURDY: THE COURT: BY MR. PURDY: Q. Okay. So take us down from the top. I think you said you A. Q. A. Q. Yes. Can you identify what that is? That is my typed up minutes for the meeting. And were those minutes something then that you would do in the ordinary course of your performing your job? A. Q. Yes. The government moves admission of Exhibit 147, Your Honor? MR. SPIES: Without objection, Your Honor. No objection. MR. McCARTHY: MR. SCOTT: THE COURT: No objection. Received. (Government Exhibit No. 147 was offered and received in evidence.) Permission to publish. You may. would prepare these minutes yourself? A. Q. Yes. And would they be based on your participation at the meeting or attendance at the meeting? A. Q. A. Q. Yes. And the record that you recorded at that meeting? Correct. Including your handwritten notes and the tape-recording we BOLDEN - DIRECT 282 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 talked about? A. Q. Exactly. Directing your attention to item 3, again entitled 28E Agreement and Bylaws, would you read that part to the jury, please. A. "Motion by Dave Reed for the Local Elected Officials to approve the modified 28E agreement and bylaws and have them mailed to each county and the city of Des Moines to be signed and returned by next month, to be enacted by July 1, 2002. Seconded by Leo Van Elswyk, motion carried." K. C. Valster noted that Ramona Cunningham would be available to attend any county supervisors or Des Moines city council meetings to answer questions about the 28E or bylaws. Q. And so a little bit more detail than your handwritten notes; correct? A. Q. A. Q. Right. Again, covering the same type of action? Yes. Okay. And then these minutes would be presented at the next board meeting; is that correct? A. Q. Correct. Do you recall if these minutes were in fact presented at the next board meeting? A. Q. No, I don't. I direct your attention to the stack marked Exhibit 99. Do BOLDEN - DIRECT 283 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PURDY: THE COURT: BY MR. PURDY: Q. A. Q. There's handwriting on this one. No, it's not. Do you know whose handwriting it is? Is that your handwriting? 99. MR. SPIES: Without objection. No objection. A. Q. Yes. And what's been marked as 99 for identification purposes, you have that in front of you? And what's -- could you identify to the jury what that is? A. It's the packet for the August 19th joint meeting which included the Local Elected Officials the Regional Workforce Investment Board and the Youth Advisory Council. Q. Again, was this agenda prepared under normal course of your duties? A. Correct. MR. PURDY: The government moves admission of Exhibit MR. McCARTHY: MR. SCOTT: THE COURT: No objection. Received. (Government Exhibit No. 99 was offered and received in evidence.) And permission to publish? You may. BOLDEN - DIRECT 284 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. A. Q. It's Ramona Cunningham's. Okay. And is this the agenda for the August 19th, 2004 meeting? A. Q. Correct. It has a number of items to be presented at that meeting. Do you see those? A. Q. Yes. Okay. Let's go through those items on this agenda as well. Item 1, again, what is that? Call to order and roll call. Taking attendance; is that correct? Yes. Two, item 2? Approval of minutes. And you talk about approving prior minutes that's done or that's one of the items here? A. Q. A. Yes. Item 3? Certification of Workforce Investment Act training providers. Q. A. Q. A. Q. Again, similar to the one we discussed on 2002? Correct. Item 4? Customer service plan modification. And what is that? Can you explain that to me a little bit? BOLDEN - DIRECT 285 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. The customer service plan is in place to--it's the plan of how customers will be served under the Workforce Investment Act. Q. A. Q. And item 5? The Regional Workforce Investment Board reappointments. So when it says RWIB, that's Regional Workforce Investment Board? A. Q. Correct. That's not the Local Elected Officials we were talking about earlier, it's the other organization? A. Q. A. Exactly, yes. Item 6? Presentation on disability program navigator initiative by Linda Galley. Q. And is that one of the programs that was administered by CIETC? A. Q. No. It's actually through the state. And that item was on CIETC Board meeting agenda to discuss that program; is that correct? A. Q. A. I believe more informational than anything. Okay. Item 7? Presentation on the Jim Casey youth initiative by Ruth Wright and Sue Tew. Q. Again, another matter to be presented to the board for their consideration? A. Yes. BOLDEN - DIRECT 286 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. A. But not action? I don't believe so. Item 8? Again, that was the regular monthly reports. Item 9? Discussion of the Regional Workforce Investment Board meeting times. Q. A. Q. A. Q. A. Q. A. Q. Item 10? Other. Item 11? Old business/new business. Item 12? Public comment. And item 13? Adjournment. Okay. So Government's Exhibit 99 was the one that was mailed to the board members prior to the meeting; is that correct? A. Q. Yes. In those 13 items we just looked at, there's nothing in those items that discusses personnel policies or changes to personnel policies, is there? A. Q. No. I direct your attention to what's been marked for Do you have that in identification purposes as Exhibit 101. BOLDEN - DIRECT 287 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PURDY: THE COURT: front of you? A. Q. A. Q. A. Q. A. Yes. I'm sorry, 100? Okay. Skipped one. Yes, 101 is the amended agenda of that same meeting. And tell me how amended agendas come into effect. Someone, Ramona or someone--generally Ramona would tell me that something needed to be added to the agenda or the agenda needed to be changed, so an amended agenda would be mailed out to board members if there was time, or hand carried to the meeting if there wasn't. Q. And was Exhibit 100 something you did in the ordinary course of your business in preparing that amended agenda? A. Yes. MR. PURDY: The government moves admission of Exhibit 100, Your Honor. MR. SPIES: No objection. No objection. MR. McCARTHY: MR. SCOTT: THE COURT: No objection. Received. (Government Exhibit No. 100 was offered and received in evidence.) Permission to publish. You may. BOLDEN - DIRECT 288 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that? A. Q. A. Q. Yes. Okay. And what does that say? BY MR. PURDY: Q. Again, looking at the agenda for the--the amended agenda for the August 18th, 2004 meeting, if you could zoom in on the items. I direct your attention to item 5 there. Do you see Personnel Policies, it indicates that a motion is required. Okay. So on the original agenda mailed to the board members, nothing about personnel policies; is that correct? A. Q. Correct. And at the amended agenda, there is an item identified as Personnel Policies; correct? A. Q. A. Q. Correct. And was this amended agenda delivered at the meeting itself? I don't recall. Do you recall whether any attachments were attached to this packet with the proposed amendments? A. Q. I don't recall. I direct your attention to what's been marked as Exhibit 101 Do you have that in front of you? for identification purposes. A. Q. A. Yes. And would you identify for the jury what item 101 is. This is the minutes that I typed up for the August 19th BOLDEN - DIRECT 289 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 there. A. Q. A. The Personnel Policies. If you would, please. "Dan Albritton told the boards he had worked on a committee Do you want me to read? MR. PURDY: THE COURT: BY MR. PURDY: Q. Again, to identify for the jury, this is the type of minutes meeting. Q. And were those done in the ordinary course of performing your job for CIETC? A. Yes. MR. PURDY: 101, Your Honor. MR. SPIES: No objection, Your Honor. No objection. The government moves admission of Exhibit MR. McCARTHY: MR. SCOTT: THE COURT: No objection. Received. (Government's Exhibit No. 101 was offered and received in evidence.) Permission to publish? You may. that you would type after the meeting has occurred; is that correct? A. Q. Yes. And scroll down if you will to item 5. Under item 5 would you identify what's contained BOLDEN - DIRECT 290 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 with staff to review and completely update the personnel policy manual. Q. The changes are outlined below." And if you'd take them one bullet point at a time, Okay. please? A. "The nepotism policy has been updated to reflect changes made with the Workforce Investment Act. "Removed references to steps and merit pay in the employee compensation section to reflect changes made previously. "Changed Private Industry Council to Regional Workforce Investment Board. "Changed JTPA to WIA. "Changed the vacation and sick leave policy to PTO. "Sped up hiring process by allowing hiring from applications on file prior to outside recruitment. "Eliminated requirement to punch in and out for lunch. "Changed salaries to wages. "Clarified that only nonexempt staff received overtime compensation. "Added policies on FMLA. "Removed the requirement for an exit interview when leaving CIETC employment. "Revised the leave without pay policy to allow for an extended leave without pay, 30 days. "Eliminated the leave of absence policy. BOLDEN - DIRECT 291 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. "Added extended funeral leave for the death of a spouse or child. "Removed the requirement for meal receipts on out of town travel. "Added a cell phone use policy. "Added EEO statement." Are any of those items directed towards-Let me back up. Where did you get those lists of items to put in the minutes of the meeting that was distributed? A. I believe it was given to me, because the changes were implemented. Q. A. Q. And do you recall who gave you that information? No, I don't. Are there any items listed under item 5, any bullet points that address the authorization of the chairperson of the LEO, the Local Elected Officials Board of CIETC, to designate the salary of the executive director? A. Q. No, there's not. Are there anything in these bullet points that indicate that Strike that. the reporting requirement-- We'll just go with what's there. Item 103, do you have that in front of you, what's been marked for identification purposes as Exhibit 103? A. Q. Yes. And could you identify for the jury, what item 103 is? BOLDEN - DIRECT 292 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PURDY: THE COURT: BY MR. PURDY: Q. And, again, are those your handwritten notes for that 4A A. Q. A. These are my handwritten notes. For which meeting? It doesn't indicate. It would have been in the folder with whatever ones it was, but it does not indicate on it. Q. Let's back up. 103 is the--I'm sorry, 101 is the typed meeting minutes for August 19th; correct? A. Q. Correct. Would item 103 have been something you prepared in the normal course of performing your duties at CIETC? A. Q. A. The minutes from the meeting? The handwritten? Yes. MR. PURDY: 103, Your Honor. MR. SPIES: There's no objection. No objection. The government moves admission of Exhibit MR. McCARTHY: MR. SCOTT: THE COURT: No objection. Received. (Government Exhibit No. 103 was offered and received in evidence.) Permission to publish? You may. meeting? BOLDEN - DIRECT 293 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Yes. And I direct your attention to item 5. Yes. And could you read what's under item 5 to the jury, please. "Dan A worked with staff. Dan A/Cy-M carried." That Do you see that? indicates to me that Dan made the motion and Cy seconded it. Q. A. Q. Okay. And then item 5 is what item? Personnel Policies. Okay. And then it's followed by something in parentheses. What is that? A. Q. A. "Leo only." What does "Leo only" mean? That means that the regional Workforce Investment Act and Youth Advisory Council wouldn't have participated in that item. Q. So these handwritten notes then would indicate that Mr. Albritton worked with staff on personnel policies; is that correct? A. Q. A. Q. A. Q. not? A. Yes, he is. Correct. He made the motion to amend the policies; is that correct? Correct. And CM, do you know who that is? Cy McDonald. And Dan Albritton is present in the courtroom today, is he BOLDEN - DIRECT 294 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 104. MR. SPIES: Without objection. No objection. Q. And without pointing at Mr. Albritton, would you indicate where he is sitting? A. Q. A. Q. A. To my right. Okay. Yes. And what is he wearing? He's wearing a blue shirt and a sport coat. MR. PURDY: I ask that the record reflect that the And is that one of the counsel tables here? witness has identified Mr. Albritton. THE COURT: determine that. Q. I direct your attention to what's been marked for Do you Well, the jury is going to have to identification purposes as Government's Exhibit 104. have that in front of you? A. Q. A. Yes, I do. And can you identify that for the-- That is the sign-in sheet for the Local Elected Officials of the August 19th, 2004 meeting. Q. And would that be something you keep in the ordinary course of performing your duties at CIETC? A. Yes. MR. PURDY: The government moves admission of Exhibit MR. McCARTHY: BOLDEN - DIRECT 295 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PURDY: THE COURT: BY MR. PURDY: Q. Again, those in attendance at this particular meeting, is MR. SCOTT: THE COURT: No objection. Received. (Government Exhibit No. 104 was offered and received in evidence.) Permission to publish? You may. that what this would reflect? A. Q. Yes, it is. And does it have a date as to what meeting we're talking about? A. Q. A. Q. August 19th, 2004. You were in attendance at this meeting; is that correct? Yes. And you indicated you typically recorded the meetings. Did you record this meeting? A. I don't recall specifically, but I would have, yes. MR. PURDY: Government's Exhibit 102 has been admitted At this time the government would into evidence previously. like to play the audio recording of this meeting, at the same time while displaying a transcript of the conversation for the jury to assist in understanding what's on the audio. THE COURT: I believe before the jury came in we had an agreement with respect to 102, which is the 8-19-04 meeting. BOLDEN - DIRECT 296 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Am I correct? MR. PURDY: THE COURT: Correct, Your Honor. All right. You may do so. (Audio played for the jury.) On the transcript that's being displayed to the jury there are names associated with the conversation that's taking place. Do you see those, Ms. Bolden? A. Q. Yes. Did you have occasion to listen to this audio clip prior to testifying in court? A. Q. Yes, I did. And did you assist with identifying the names of people who are participating in this meeting? A. Q. Yes. And when it references Archie on this transcript, who is that referencing? A. Q. Archie Brooks. And what position did Mr. Brooks hold with the entity known as CIETC in regards to this meeting? A. Q. A. He would have been the chair. Chair of the Local Elected Officials Board? Correct. MR. PURDY: Continue. Sorry for the interruption. (Recording continued to be played.) MR. PURDY: Would you stop. BOLDEN - DIRECT 297 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q. We've scrolled through some comments by an individual known Who was that individual? as Ramona. A. Q. A. Q. Ramona Cunningham. And what position did she hold at CIETC? Executive director. And we've got another voice identified as Dan. Who is the Dan on this audio? A. Dan Albritton. MR. PURDY: Okay. Continue, please. (Recording continued to be played.) Ms. Bolden, from that audio and transcript that was played and displayed to the jury, was there any discussion at this board meeting regarding executive salaries or compensation? A. Q. No, there wasn't. And was there any discussion regarding personnel policies that were directed towards how the executive director was to be compensated? A. Q. No, there wasn't. I direct your attention to the final stack that you should have in front of you, starting with Government's Exhibit-what's been marked for identification purposes as Government's Exhibit 105. A. Q. A. 105? No, I'm sorry, 106. Oh, yes. Do you have that in front of you? BOLDEN - DIRECT 298 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PURDY: THE COURT: BY MR. PURDY: Q. Could you go through the agenda items for this November 10th Q. A. And can you identify that for the jury. That is the packet that was sent out prior to the November 10th, 2005 meeting for the Local Elected Officials only at this time. Q. And is that something that you prepared with in the normal course of performing your duties at CIETC? A. Yes. MR. PURDY: And the government moves admission of Exhibit 106, Your Honor? MR. SPIES: Without objection. No objection. MR. McCARTHY: MR. SCOTT: THE COURT: No objection. Received. (Government Exhibit No. 106 was offered and received in evidence.) Permission to publish? You may. of '05 meeting. A. Call to order/roll call. Approval of October 27th, 2005 joint meeting minutes. The reports, other, old business/new business, public comment and adjournment. Q. Is there anything on this agenda that was-Was this agenda BOLDEN - DIRECT 299 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PURDY: THE COURT: BY MR. PURDY: Q. And if you would zoom in on that a little bit closer. 107. MR. SPIES: No objection. No objection. sent to board members in advance? A. Q. Yes, it was. Anything on this agenda that would indicate that personnel policies are going to be discussed at this meeting? A. Q. No, there's not. I direct your attention to what's been marked as Do you see that? Government's Exhibit 107. A. Q. A. Q. Yes, I do. And can you identify for the jury what that is? This would be my typed minutes from that meeting. And those would be kept and prepared in the ordinary course of performing your duties at CIETC? A. Yes. MR. PURDY: The government moves admission of Exhibit MR. McCARTHY: MR. SCOTT: THE COURT: No objection. Received. (Government Exhibit No. 107 was offered and received in evidence.) Permission to publish? Yes, you may. BOLDEN - DIRECT 300 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 board. A. Q. A. Yes. Could you read that to the jury, please. "Other. Archie Brooks said that in the past per the CIETC Looking at item 5, do you see that? personnel policies he approved supplemental wage payments. "Archie noted that in July, for instance, he told the board he had approved supplemental pay for staff paid through one of CIETC's funding streams. "He said he wanted a reconfirmation of his authority. He reviewed CIETC's personnel policy and requested confirmation by the board. "Motion by Dan Albritton to reaffirm the CIETC personnel policies and that the board chair had the authority to set wages and supplemental pay levels for CIETC staff. "Seconded by Ako Abdul-Samad. Motion carried. "After discussion Archie also stated that he would in future consult with the executive committee on these matters. "As always, a report will also be made to the full A packet containing personnel policies and employment agreements were provided at the board meeting." Q. I direct your attention to what's been marked as Government's Exhibit--for identification purposes Government's Exhibit 109. A. Q. Yes. Can you identify what that is to the jury. Do you have that in front of you? BOLDEN - DIRECT 301 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PURDY: THE COURT: MR. PURDY: BY MR. PURDY: Q. On the second page of these notes do you see that, 109. MR. SPIES: No objection. No objection. A. These are my handwritten notes from the November 10th, 2005 meeting. Q. And those were kept in the ordinary course of performance of your duties at CIETC? A. Yes. MR. PURDY: The government moves admission of Exhibit MR. McCARTHY: MR. SCOTT: THE COURT: No objection. Received. (Government Exhibit No. 109 was offered and received in evidence.) Permission to publish? You may. Is there a second page to this? Ms. Bolden, that starts out No. 4? A. Q. Yes. Okay. Could you read that portion of your handwritten notes? A. "Other. Personnel policy, reported in June there was bonus Motion to reaffirm the personnel policies and that being given. the board chair has the authority to set wages and supplemental BOLDEN - DIRECT 302 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. pay levels for CIETC staff. "Motion by Dan, second Ako, carried." And you're talking motion by Dan. Dan Albritton. And the seconded by Ako? Ako Abdul-Samad. So these would be the handwritten notes associated with that Who are you referring to? November 10, 2005 meeting; is that correct? A. Q. Correct. I direct your attention to-THE COURT: Mr. Purdy, the jurors have been sitting an hour, so if you want to take a moment to stretch you may do so before we continue. (Short pause.) THE COURT: Mr. Purdy, you can continue. You were about to direct the witness' attention to the next exhibit. Q. I direct your attention to what's been marked as Do you Government's Exhibit 110 for identification purposes. have that in front of you? A. Q. A. Yes. Can you identify that for the jury? This is the sign-in sheet for the Local Elected Officials for the November 10th meeting. Q. And is that a document that would have been kept in the ordinary course of business during the performance of your BOLDEN - DIRECT 303 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. Previously the Government Exhibit 108 has been admitted. duties at CIETC? A. Yes. MR. PURDY: Exhibit 110. MR. SPIES: No objection. No objection. The government moves admission of MR. McCARTHY: MR. SCOTT: THE COURT: No objection. Received. (Government Exhibit No.110 was offered and received in evidence.) Did you record this meeting, if you recall, in the normal course of your business? A. Yes. MR. PURDY: At this time the government proposes listening to Exhibit 108 with a transcript to be provided to assist the jury in understanding the audio portion of Exhibit 108 during the course of their listening to it. At this time the government proposes listening to Exhibit 108. THE COURT: They agreed on this before we started. I think it's the agreement of the parties additionally you won't have this transcript, it's not part of the evidence in the case. BOLDEN - DIRECT 304 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Am I right, counsel? MR. PURDY: THE COURT: Yes. You may proceed. (Audio played for the jury.) MR. PURDY: Your Honor, in a moment we'll get a hard copy transcript that I can place on the ELMO. THE COURT: All right. (Audiotape played for the jury.) MR. PURDY: Please stop at that point. We've had a-- Ms. Bolden, have We've had several voices. you been following along? A. Q. Yes. We've had several voices identified as Archie. Is that Mr. Brooks again? A. Q. A. Q. A. Yes, it is. And a voice identified as Dan, and who is that? Dan Albritton. And a voice identified as Ramona and who is that? Ramona Cunningham. MR. PURDY: Thank you. Continue. (Playing of audiotape resumed.) BY MR. PURDY: Q. An individual identified as Pothoven, who is that, Ms. Bolden? A. Howard Pothoven. BOLDEN - DIRECT 305 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q. A. Q. A. And what role, if any, does he have with CIETC? He was one of the board members. Again with the Local Elected Officials Board? Yes. MR. PURDY: Okay. Continue. (Playing of audiotape resumed.) MR. PURDY: Stop it there. Could you Mr. Brooks is referencing the executive board. tell the jury what that board is? A. That would be the chair, the vice-chair and the secretary/treasurer of the Local Elected Officials. Q. And during the course of this conversation there's a person Could you tell the jury who that identified as Dave Reed. person is. A. Q. A. He was the vice-chair at that point. So he would have been a member of the executive board? Yes. MR. PURDY: Continue. (Playing of audiotape resumed.) BY MR. PURDY: Q. Ms. Bolden, the audio recording that the jury just listened to is discussing compensation issues; is that correct? A. Q. A. Yes. And supplemental or bonus payments-Yes. BOLDEN - DIRECT 306 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. --to CIETC employees? At some point they're referencing documents. Do you know whether any personnel policies were distributed to the board at this meeting? A. Q. I don't recall. I direct your attention to what's been admitted as Do you have that in front of you? Government's Exhibit 109. A. Q. Yes. And in about the middle of the bottom of the page under the reference marked page 37, there's another reference that starts with "send." A. Q. A. Q. A. Q. Do you see that? It starts with what? "Send." Where it says page 37? Under that. Oh, yes. "Send Howard Pothoven a personnel policy manual." And does that indicate to you that they did not have the personnel policy in front of them that they were debating? A. Q. That's what it sounds like. I direct your attention-Do you have in front of you what's been marked for identification purposes as Exhibit 119? A. Q. A. Yes. Can you identify what that is? This is the memo that went with the personnel policy manual and the copy of the audit to-- BOLDEN - DIRECT 307 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PURDY: THE COURT: BY MR. PURDY: Q. So following the November 10th meeting that we just listened Q. Before you get into the substance, okay, so you've got a memo in front of you; is that correct? A. Q. A. Q. A. Yes. Is that something you prepared? Yes. In the ordinary course of performing your duties at CIETC? Yes. MR. PURDY: And the government moves admission of Exhibit 119 Your Honor. MR. SPIES: No objection, Your Honor. No objection. MR. McCARTHY: MR. SCOTT: THE COURT: No objection. Received. (Government Exhibit No. 119 was offered and received in evidence.) Permission to publish? You may? to, there's a memo, and can you describe who the memo is to and who it's from? A. Q. It's to Howard Pothoven from myself. And Mr. Pothoven was one of the individual's voices that we heard in the last presentation? A. That's correct. BOLDEN - DIRECT 308 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. And the date of your memo? November 14th, 2005. And that is shortly after the November 10th meeting that we just listened to; correct? A. Q. A. Q. A. Yes. And what's the subject of this memo? Personnel policy manual and audit. And would you read the comments on the memorandum. "Enclosed is the copy of the CIETC personnel policy manual If you have any questions regarding the PTO you requested. policy, please contact Kelly Ayers" and gives her phone number. "Kelly is one of the staff who helped on the committee that put this policy together. Also enclosed is a copy of our audit report which needs to be recorded by your county auditor." Q. And again the substance of this memo then is that you're sending Mr. Pothoven information; is that correct? A. Q. A. Q. Yes. That he requested? Yes. Let's talk a little bit about your duties associated with certain things at CIETC. Did you have any responsibilities related to preparing or distributing the 28E agreement that we talked about? A. When a new 28E agreement was developed, generally what I would do is change the dates and send it out, if there wasn't BOLDEN - DIRECT 309 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Okay. anything more substantive that needed to be changed. But nothing beyond typing stuff up. And, again, we looked at earlier a 2002 28E agreement; is that correct? A. Q. Yes. Do you recall any modifications to CIETC's 28E agreement following the 2002 period? A. I don't recall specifically. That was one that we received from Carl Salmons' office. Q. Tell the jury what, if anything, you had to do with regards to bylaws of CIETC. A. If there were proposed changes that needed to go to the board, occasionally I would type up the proposed changes. Q. When you worked on-Would you draft or make changes to the 28E agreement? A. Q. A. Q. A. Q. I would type them up as given to me, type up the draft, yes. And would you type then the bylaws proposed changes? Yes. Where did you type these materials up at? On the computer in my office. And did persons other than yourself have access to that computer? A. Q. A. Yes. And who would those persons be? All the upper management staff and the accountant, assistant BOLDEN - DIRECT 310 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. object. THE COURT: I'm sorry? That would be hearsay, Your Honor, any accountant Tami Higar all had keys to my office. Q. You mentioned that Mr. Salmons would request information or you received information from Mr. Salmons regarding these two items; is that correct? A. Q. Yes. What do you recall in regard to communicating with Mr. Salmons regarding these items? A. Q. I guess I'm not sure in what instance you mean. Let me rephrase it. Did you receive information from Mr. Salmons related to 28E or bylaws that needed to be changed? MR. McCARTHY: Your Honor, that would be hearsay and I MR. McCARTHY: statements made by Mr. Salmons to her. THE COURT: Okay. I think she can say if she got Is that your question? documents from Mr. Salmons. MR. PURDY: That was the question. I believe they came to Ramona, and then she passed them on to me. BY MR. PURDY: Q. A. Q. A. And by Ramona, you mean Ms. Cunningham? Yes. Do you recall sending any documents to Mr. Salmons? A number of different occasions over the years, yes. BOLDEN - DIRECT 311 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Tell me how that would work and what the basis of those requests were. A. If he didn't have something handy that he needed, like a copy of our bylaws, he might ask me to fax him a copy. Q. That would be something that would be--something you do under the normal course of performing your duties at CIETC? A. Q. Correct. I direct your attention to an exhibit that's been previously admitted, Government's Exhibit 143. Do you recognize this document? before you. A. Q. Yeah. Okay. That would be the cover sheet of a fax that I sent. And tell the jury what you recall about why you would It's not in the stack send that fax to Mr. Salmons. A. That was right after the state audit report when Carl was going through things, and he asked me to send him a copy of the bylaws. Q. Look at the attachments to 143, if you will, if you would scroll through the attachments. Do you see this first attachment? That would actually be the 28E agreement, yes, for Polk County. Q. A. Q. So at the top it says Resolution; is that correct? Yes. And the next page, please. BOLDEN - DIRECT 312 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Yes. And would you read that section to the jury, please? "The chairperson shall be the principal executive officer of A. Q. Yes. In the middle--I'm sorry, not that one, Article III. Looking at section 5, Article III, do you see that? A. Q. A. Q. A. Q. A. Q. A. Q. Yes. And can you identify this portion of the fax? That's the 28E agreement itself. So the first page was the resolution-Correct. --adopting the 28E, and this is the 28E; is that correct? Correct. And go to the next attachment. Keep scrolling through. Okay. Can you identify this portion of the fax? That would be the bylaws. And why did you send Mr. Salmons the bylaws? At his request. I assume he didn't have his handy. I direct your attention to Article III, section 5 of the bylaws. Can you see that okay? the consortium and subject to the control of the consortium board, shall in general supervise and control all of the business and affairs of the consortium. "Said chairperson shall set the executive director's BOLDEN - DIRECT 313 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 salary and give incremental supplemental pay based on performance. He or she shall, when present, perform all duties incidental to the office of chairperson and such other duties as may be prescribed by the consortium agreement, bylaws or by the consortium board." Q. The sentence that talks about said chairperson shall set the executive director salary, do you see that? A. Q. Yes. In the meetings that you attended, did you ever attend a meeting where that particular topic was discussed by the board? A. Q. A. Q. A. Q. A. Never that I recall. Where were your offices located in the CIETC building? At 430 East Grand. I was on the third floor. Is that the last location CIETC was located? Yes. And who else was on the third floor with you? Karen Tesdell in the MIS department, Mary Ubinas, Tami Higar, Jack Cline, John Bargman, Ramona Cunningham. Q. During the performance of your duties did you have occasion to observe those employees in their daily work setting? A. Q. Yes. Can you describe for me, if you would, your observations of Ms. Tesdell during that period of time that you were in that building? MR. McCARTHY: Your Honor, I'm going to object to BOLDEN - DIRECT 314 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 counsel. vague. BY MR. PURDY: Q. Did you have occasion to observe Ms. Tesdell in the that. THE COURT: Do you want to rephrase your question, that. were. It calls for-It's not relevant what her observations We had an I'm not sure where he's going with it. objection to that yesterday. THE COURT: So your objection is on relevancy? It goes to work habits, everything like MR. McCARTHY: I think it is relevant, but I think the question is performance of her duties at CIETC? A. Q. A. Q. A. Q. Yes. What type of duties did she perform? Fiscal reporting and other reporting. How often would you see Ms. Tesdell? Pretty much on a daily basis. During the course of your observations of Ms. Tesdell, did you have occasion to observe the frequency with which she was doing her work? A. Q. Frequency? Yes. Was she doing--was she always doing work-related items? A. Q. Not always, no. What was she doing when she wasn't working? BOLDEN - DIRECT 315 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. MR. McCARTHY: THE COURT: Your Honor, objection, relevance. Overruled. There was time I observed that she was reading magazines, looking through supply catalogues, playing computer games. BY MR. PURDY: Q. And Ms. Tesdell was involved with the supplies at CIETC; is that correct? A. Q. Yes. During these occasions when you observed her doing other How things, would you classify them as occasional, frequent? would you classify them? A. Q. Probably frequent. During the time that you were located in--let's leave it at Did you have occasion to observe the 430 East Grand building. people that would come and go from Ms. Cunningham's office? A. Q. A. Q. Some. How close in proximity were you to Ms. Cunningham's office? Across the hall and down two doors. Did you ever have occasion to observe Mr. Albritton at that facility? A. Q. Yes. Okay. And how often would you say you observed Mr. Albritton at that facility? A. Q. Occasionally. Occasionally being once a week, once a month, once a year? BOLDEN - DIRECT 316 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Maybe a little more often than once a month. Did you see other board members of the CIETC LEO, Local Elected Officials Board, with the same frequency you saw Mr. Albritton? A. Q. A. Q. Some close to. Okay. Who would those individuals be? Sherry Howard. And could you tell the jury who Sherry Howard is as it relates to the CIETC Board? A. Sherry Howard represented Story County, and she was the secretary/treasurer of the board. Q. Was she a member of the executive committee that we've heard about? A. Q. Yes. Did you have occasion to observe Mr. Albritton and Ms. Cunningham's interaction? A. Q. Occasionally, yes. Based on your observations, how would you categorize their relationship--friends, business friends, acquaintances--if you would? A. I would say business friends, maybe leaning more towards friends as well. Q. Did you have occasion during the course of your employment and at this East Grand location for CIETC to observe Ms. Barto in the facility? BOLDEN - DIRECT 317 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes. And how would you describe how frequently Ms. Barto was there? A. Q. Infrequently. Okay. And when you say infrequently, are we talking once a How often are you month, once every quarter, once a year? thinking? A. Q. Once a quarter or between that and once a year. Did you have occasion to observe the interaction between Ms. Barto and Ms. Cunningham? A. Q. Yes. How would you classify their relationship--friends, business How would you-- friends, associates? A. Q. Business friends. During the course your employment at CIETC were you aware Mr. Albritton--whether he had any contracts with CEITC? A. Q. A. Yes. Can you describe for the jury what you were aware of. I knew that there had been a consulting contract drawn up that I had typed the letter for on occasion, and I had seen a bill or two that had come in. Q. Did you ever see any work product associated with this contract? A. Q. No. Let's talk about bonuses. Did you ever receive bonuses in BOLDEN - DIRECT 318 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 your employment at CIETC? A. Q. A. Q. A. Q. Yes. And how often did you receive bonuses? It varied; no more than twice a year. And in what type of amounts are we talking about? Generally 2 to 3 percent. Did you receive a bonus related to end of the year funds on June 30th of 2005 or approximately around there? A. Q. A. Q. A. Yes. That one bonus was 10 percent. So 10 percent of your pay? Correct. What was the rationale behind that bonus, if you were told? What I was told is it was moneys tied to Promise Jobs, and that the reason I was receiving a 10 percent bonus was because of my work over and above my executive secretary duties and carrying a caseload of Promise Jobs clients. Q. So you actually did perform Promise Jobs duties, and the bonus was related to those duties; is that right? A. Q. A. Q. Yes. Was it related to any other duties? Not that I was told. During your tenure at CIETC, were salaries ever discussed at the board meetings? A. Q. No, not that I recall. Other than this November 10th meeting where some discussion BOLDEN - CROSS - SPIES 319 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 about supplemental payments occurred; is that correct? A. Yes. I mean I don't recall specific amounts ever being I thought that's what you were asking. Specific amounts, let's start for discussed. Q. Let me ask it that way. compensation for Ms. Cunningham, were those ever discussed at board meetings that you attended? A. Q. No, not that I recall. It appears as part of your job you were responsible for a Is that a true number of documents and preparing documents. statement? A. Q. A. Q. A. Yes. Were you ever asked by anyone at CIETC to alter documents? Yes. Can you relay to the jury what that was about. Right at the time that the state auditor's report came out, there were minutes that Ramona had wanted me to go back and change. Q. And do you recall what the subject was of the minutes that she wanted you to change? A. Q. I believe it had to do with the personnel policies. And did you discuss Ms. Cunningham's request for you to alter documents with anybody? A. Yes. I went to Karen Tesdell and John Bargman and asked their advice on whether or not to do it. Q. And when you went to Mr. Bargman, was it separately or at BOLDEN - CROSS - SPIES 320 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SPIES: Q. A. Q. Good morning, Ms. Bolden. Good morning. Ms. Bolden, my name is Leon Spies. I represent Ms. Barto in "First of the same time? A. Q. A. Q. A. They were together. Okay. What did you ask them? What I should do, because Ramona wanted me to do this. Okay. And what were their responses? They discussed it with Ramona and advised her that it wouldn't be appropriate because the auditors had already reviewed the minutes. MR. PURDY: THE COURT: morning recess now. No further questions. Ladies and gentlemen, we'll take our You should remember the admonition that you've heard throughout the trial. We'll be in recess until 10:30. (Short recess.) THE COURT: Please be seated. Mr. Spies, did you want to cross-examine? MR. SPIES: Thank you, Your Honor. CROSS-EXAMINATION this case. I have a couple of questions for you. all, you described for the ladies and gentlemen of the jury the makeup of the two boards that were involved in oversight of BOLDEN - CROSS - SPIES 321 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CIETC's activity. One was the Elected Officials Board, and that's made up of the people who have actually been voted on by the citizens of their respective counties? A. Either them or people that they've, you know, chosen to represent them. Q. So, for example, a county board of supervisors could delegate somebody to serve on the CIETC Board? A. Q. That's correct. All right. And I think you've told us that the people on the Elected Officials Board came from Polk County, the counties surrounding Polk County, and the city of Des Moines? A. Q. That's correct. So those people would have been either elected by the citizens of their counties or nominated and delegated by the boards of supervisors or city councils of those jurisdictions? A. Q. That's correct. And then the other board that you described for us is the RWIB, and that board was appointed by the governor of the State of Iowa? A. Q. Yes. From nominations given by Local Elected Officials. So the people who served on the LEO, the elected Got you. officials board, the Local Elected Officials Board, they would make nominations to the governor to serve on the RWIB board? A. Q. Correct. And then the governor would make the appointment, and they BOLDEN - CROSS - SPIES 322 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 would serve on that board? A. Q. Correct. Okay. Now, Jane Barto was not a member of either of those two boards, was she? A. Q. No. And I wanted to ask you a couple of questions about some of the minutes that you've described for us and some of the records that you brought for us today. Among the exhibits we saw earlier were your handwritten notes of the minutes that you kept during the meetings you attended? A. Q. Yes. And then the actual typewritten notes or minutes that you prepared from those handwritten notes? A. Q. In conjunction with the recordings. Right. And you also referred to sign-in sheets, and these would be sign-in sheets that the elected officials would have to sign in on if they were there for an LEO meeting? A. Q. Correct. And if there were other attendees, they would sign in as well? A. Q. Correct. And then you would incorporate those--or maybe you didn't-- into your actual typewritten minutes? A. No. Generally said the attached sign-in sheet will serve as BOLDEN - CROSS - SPIES 323 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 roll call. Q. Okay. I'd like to focus your attention, Ms. Bolden, on a period of time after John Bargman became the COO of CIETC. Okay? A. Q. Okay. Typically would Mr. Bargman attend the board meetings conducted by the Local Elected Officials? A. Q. Yes. And, for example, in some of the exhibits that you've shown us this morning that were displayed, his name would be on the sign-in sheet? A. I don't know if he was on those, but he would be on the meetings he attended. Q. Okay. But in any event, if he did attend, he would sign in just like everybody else? A. Q. Yes. And Mr. Bargman, did you work with him on a day-to-day basis? A. Q. Not closely, but yes. Was he familiar with or did he serve the role at CIETC of being familiar with a lot of the federal and state programs that CIETC administered? A. Q. A. Yes. He was very knowledgeable about those programs, wasn't he? That's correct. BOLDEN - CROSS - SPIES 324 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. And not only was he knowledgeable about how those programs worked but about how they were financed and how that money got to CIETC? A. Q. A. I believe so, yes. Did he have a role in budgeting? I believe so, but I wasn't involved in that process, so I don't know the details. Q. All right. And did he have a role in allocating money between individual employees that worked for CIETC? A. Q. A. I believe so, yes. Preparing time sheets? I believe at least after he had been there he was the one who drew up the percentages that we were to use. Q. Okay. Now, you didn't have a chief financial officer at CIETC, did you? A. Q. No. And maybe this vernacular is inappropriate but was he kind of the money guy at CIETC? A. Q. He was involved in that area, but he wasn't the accountant. I understand that. But as far as budgeting and making reports of finances, was he the person responsible for that, if you know? A. For some of it, but again I didn't work closely with that so I don't know exactly how it was laid out. Q. Okay. I wanted to ask you just a couple of questions about BOLDEN - CROSS - SPIES 325 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 a couple of the exhibits I think you may still have in front of you there. A. Q. A. Q. Okay. Exhibit 107. Okay. And I'm going to ask you to look at--this is a minute of the Am I right? meeting held on November 10, 2005. A. Q. Yes. And this is a meeting about which you've testified at some length, and I'd like to have you take a look at item No. 3, Roman numeral 3. A. Q. Yes. This refers to the agenda was amended to add the annual audit report? A. Q. A. Yes. And do you remember what an annual audit report was? It was the report prepared by the auditors that did our annual audit. Q. Okay. And I think you mentioned in the minutes here that He reviewed the Do you Alan Kincheloe presented the audit report. report and pointed out it was an unqualified opinion. remember that subject being brought up at the November 10 meeting? A. Q. Yes. And do you know from your own knowledge, Ms. Bolden, what an BOLDEN - CROSS - McCARTHY 326 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 unqualified report is? A. I believe that it just meant that they found no issues, no problems. Q. Okay. And, in fact, again as part of Exhibit No. 107, again on that same paragraph, there is discussion about a financial balance, unused PTO. A. Q. Correct. And that was discussed as well, but apparently That would be personal time off? Mr. Kincheloe's audit report was discussed at the meeting? A. Q. A. Q. A. Yes. Do you know who Dan Keeley is? He was the auditor who actually-And who is Dan Keeley? He was the auditor who was actually at the CIETC offices Yes, I do. doing the audit work. Q. 110? A. Q. Okay. Ms. Bolden, do you have in front of you Exhibit No. This is the sign-in sheet. Yes. And it may be a double-sided copy. Can you see the second page of that? A. Q. Yes. Okay. And I have it on the front of the ELMO here. Can you tell, is Dan Keeley one of the sign-ins to the November 10, 2005 meeting? A. Yes, that's correct. BOLDEN - CROSS - McCARTHY 327 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. McCARTHY: Q. A. Q. Good morning, Ms. Bolden. Good morning. I've got a couple of questions for you. You pretty much Q. And after his name it says "representing Faller and Kincheloe"? A. Q. Correct. And is that the private accounting firm that CIETC employed or the board employed to review the books and numbers of CIETC? A. Q. A. Q. Yes. And right below Mr. Keeley's name is John Bargman? Correct. And that's the same John Bargman that we've been talking about today? A. Q. A. Yes. Jane Barto was not at that meeting, was she? Not that I recall, and she didn't sign in. MR. SPIES: Your Honor. THE COURT: cross-examine? MR. McCARTHY: Yes, Your Honor. CROSS-EXAMINATION Thank you. Mr. McCarthy, do you want to Thank you. I have no other questions, wore two hats; is that correct? You were Ramona Cunningham's secretary, and you were secretary to the board; is that right? BOLDEN - CROSS - McCARTHY 328 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. Yes. You worked with Ramona on a daily basis; is that right? Correct. You also did a lot of board duties; is that right? Yes. Did Karen Tesdell have anything to do with preparing the agenda for these board meetings? A. Q. A. Not generally. Well, any specifics? If there was something that pertained to her that needed to be on the agenda, she might let me know if the annual report needed to go on it that she was aware of; but nothing specific that I recall. Q. Other than supplying budget numbers, she didn't supply any information; is that correct? A. Q. A. Q. I don't believe so. You don't believe she did or that is not correct? Not that I recall. Okay. You handled a lot of secretarial duties for Ramona. You did travel arrangements; is that right? A. Q. A. Q. A. Correct. You did that for her and John Bargman; is that right? Yes. You did not do that for Karen Tesdell? No. BOLDEN - CROSS - McCARTHY 329 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. You did the majority of Ramona Cunningham's typing; is that right? A. Q. Yes. However, when it came to bonuses and pay increases, Mr. Bargman did that; is that true? A. on. There were some bonus letters for staff that I typed early I never typed any bonus--or salary letters for Ramona, John or Karen. Q. Now, did every bonus come--at least the ones that you received, did every bonus come with a letter? A. Q. Yes. And you received them twice a year and then you received a big one in the end of June of '05; is that right? A. I didn't always receive them twice a year, but no more than that, yes, and then the big one, yes. Q. A. Q. A. Q. Did you also receive COLA increases along the way? Yes. Did you ever turn back a bonus at CIETC? No. I refer your attention to the time that Ramona Cunningham Do you remember that? asked you to alter the documents. A. Q. A. Q. Yes. That would have been an illegal act, would it not? Yes. Karen Tesdell never asked you to do an illegal act, did she? BOLDEN - CROSS - McCARTHY 330 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. No. Now, you indicated on direct examination with Mr. Purdy this morning that the response from her and Mr. Bargman was that the papers had already been reviewed, the minutes had already been reviewed by the auditor so it wouldn't do any good. what you recall saying this morning? A. Q. Yes, and that it was inappropriate. So Karen Tesdell told you that it would not be proper to do Is that that? A. Q. A. Q. A. Q. A. Q. Correct. Okay. Ramona. No hesitation with that answer, was there? No. She ran the show? Yes. Did Karen Tesdell ever appear at a board meeting that you In your opinion, who was the boss at CIETC? were at? A. I think she may have at one or two, but nothing specific that I recall. Q. A. Q. Can't give me the date to check on, though, can you? No. But generally, to the best of your recollection, Karen Tesdell did not appear at board meetings? A. Correct. BOLDEN - CROSS - SCOTT 331 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. She had no input unless there was a budgetary item in the agenda; correct? A. Q. A. Q. Correct. And she had no input to the 28E agreement, I'm presuming? Not that I'm aware of. Now, we had an agreement here this morning that was an agenda that you sent out and had a printout--a budget that Karen had prepared? A. Q. A. Q. Yes. Do you recall that? Yes. That did not--that document did not include salaries or bonuses for anybody, did it? A. Q. No. From where your office was on the third floor to where Karen's office was on the third floor, you could not see directly from your office into her office? A. Q. No, I could not. So when you made statements this morning about how she was maybe not the best worker, how could you see that unless you were standing in her office? A. Q. A. As I was walking by. So you walked by all the time to keep an eye on her? No. MR. McCARTHY: I have nothing further. BOLDEN - CROSS - SCOTT 332 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SCOTT: Q. A. Q. Good morning, Ms. Bolden. Good morning. I want to briefly start out with you concerning your role THE COURT: MR. SCOTT: Mr. Scott. Thank you, Your Honor. CROSS-EXAMINATION and responsibility regarding the board and Ramona. You've told us that you had--basically you were responsible to two different groups, is that right, Ramona and the board? A. Q. Yes. And your responsibilities with the board amounted to preparing the agenda; is that correct? A. Q. A. Q. A. Q. That's one of the items, yes. And you prepared the minutes? Yes. And you tape-recorded? Yes. And would your minutes--would those be derived from the tape-recordings or would those be derived from the notes that you took contemporaneously as the meeting was going on? A. Q. A combination of both. So you would listen to the meeting tapes after the meeting was concluded? BOLDEN - CROSS - SCOTT 333 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Not always, but for clarification of my notes. If you needed some clarification, would you go back and listen to them? A. Q. Yes. Okay. And were you also responsible for including the information that would be attached to the agenda that went out prior to the meeting? A. Q. At Ramona's direction, yes. So Ramona would be the person that would give you the stuff to include with the meeting agenda that would be sent to the board members? A. Q. A. Q. Yes. Jack? Cline. Okay. So either Jack Cline or Ramona would give you Ramona and maybe Jack. information to attach to the agendas that went out to the board? A. Q. Generally, yes. If you received information to be attached to the agenda from anyone other than those people, would it have been unusual? A. Q. Yes. And so as something that was unusual in your daily routine, that would be something that you would remember; correct? A. Q. Possibly. It would be something that you would remember if a board Would you member were to provide you with agenda items? BOLDEN - CROSS - SCOTT 334 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you. A. Q. remember that? A. Q. Possibly. Would you remember if a board member provided you with items to be attached onto the agenda concerning the personnel policy manual? A. Q. Probably. And do you remember who provided you with the--I apologize We've got a lot of exhibits. It's going to take me a for this. second to find it here. Who provided you with the information that-I still can't find it, but the amended agenda for the August 18th, 2004 meeting? A. Q. Who told me to amend it? Who provided you with the information that was contained on Let me back up. that agenda? You had an agenda, and I assume that's in front of I can't find the exhibit number. Yes. For the 2004 board meeting where the policy manuals were approved? A. Q. Uh-huh. Do you have that agenda? THE COURT: MR. SCOTT: THE COURT: Mr. Scott, it's 102. Thank you, Your Honor. And the date you had was wrong. It's BOLDEN - CROSS - SCOTT 335 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. August 19, I think. MR. PURDY: Your Honor, 102 is the audio portion. The amended agenda is 100, if that's what they're looking at. THE COURT: I know he's referring to that meeting. Yes, I have the amended agenda in front of me. BY MR. SCOTT: Q. So originally you prepared an agenda for this meeting; correct? A. Q. A. Q. Correct. And subsequent to your-Yes. And subsequent to that agenda, an amended agenda was And that agenda was mailed out? prepared? A. Q. A. Q. Correct. That amended agenda was prepare by you; correct? Yes. And the inclusion of item No. 5 on Exhibit 100, that was typed in by you? A. Q. A. Q. A. Q. A. Yes. At Ramona's direction? I believe so. Personnel policy motion? Correct. Exhibit 101, do you have that in front of you, Ma'am? Yes. BOLDEN - CROSS - SCOTT 336 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Do you see under that where it says, Roman numeral 5, or on that exhibit do you see that Roman numeral 5? A. Q. A. Q. Yes. And it says Personnel Policies? Yes. And is Exhibit 101 your recollection of the policies that were discussed-A. Q. A. Q. Yes. --at that meeting? Yes. So when the meeting was going on, you wrote down contemporaneously with the meeting these agenda--or, excuse me, these items; is that right? A. Q. Yes. And Exhibit 103, do you have that in front of you? THE COURT: think she can see it. Q. A. Q. A. Q. Exhibit 103, are you familiar with that? Yes. My handwritten minutes. Counsel, if you put it on the screen, I Those are your handwritten minutes? Yes. And those are your handwritten minutes of the August 19, 2004 board meeting; correct? A. Q. Correct. And on there, under Roman numeral 5, or actually I guess BOLDEN - CROSS - SCOTT 337 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 it's No. 5, it's not Roman numeral, just No. 5, do you see that? A. Q. Yes. Under that does it outline the 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18 changes or so that were typed into your minutes that were provided to the board at a later date that are reflected in Exhibit 101? A. Q. No, it does not. So the information that is contained on--and I'm going to The information that's contained on show you now Exhibit 101. Exhibit 101 under paragraph 5 regarding personnel policies, that exhibit or those items were not taken down by you contemporaneous with the debate or the discussion on those--on that--on the changes to the employee manual; is that correct? A. Q. Correct. The changes that are provided right here that you put into your agenda--or, excuse me, your minutes that were then sent out to the board, were those sent out to the board prior to the following--the next meeting? A. You mean after the August 16th meeting, for the September I don't recall. meeting? Q. A. Q. A. Q. Well, the meeting? The minutes were. Correct. Yes. The minutes go out with the agenda for the next meeting? The minutes are sent out in your packet; correct? BOLDEN - CROSS - SCOTT 338 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes. The minutes for the meeting the month before are sent out with the packet for the current meeting? A. Q. Correct. These minutes in Exhibit 101 were sent out prior to the September meeting; correct? A. Q. A. Q. Correct. At some point in time you typed up these minutes; correct? Correct. At some point in time somebody directed you and gave you the information to put into these minutes with regard to personnel--with regard to Roman numeral 5; correct? A. Q. A. Q. A. Q. Yes. And that person was Ramona Cunningham; isn't that correct? Probably. Probably? I don't recall specifically. Dan Albritton didn't show up and provide you with those changes, did he? A. Not that I recall specifically. I think something was handed out at the meeting but I don't recall the details. Q. If Dan Albritton would have come to your office and provided you with stuff to put in to the minutes, that would have been something unusual, and you would have remembered it; isn't that right? BOLDEN - CROSS - SCOTT 339 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. I know he had been there working with staff on the personnel policies, but he didn't give me the list is specifically that I recall. Q. Do you recall whether or not--do you recall whether or not this--the amended agenda for the August 19th meeting was mailed out to the board members or was it handed out? A. I don't recall specifically. I believe it was handed out at the meeting. Q. And who would hand that agenda out? Would you be present at the meeting to hand that out? A. Q. Yes. But usually Ramona went around and passed them out. And at the time that amended agenda was handed out, were the amended policies handed out with that amended agenda? A. Q. I don't recall. I seem to recall from the tape that whoever's voice it was, and I'm not sure that it was--I think it was Archie's voice? THE COURT: MR. SCOTT: Mr. Brooks, you mean? Excuse me. Pardon me, Your Honor. Mr. Brooks' voice that said "you should all have a copy of Do you recall that? the new personnel policies." A. Q. A. Q. Yes. And that's most likely what should have happened. You recall that from the tape? Yes. And do you recall whether or not any of the board members present reviewed those policies prior to voting on them? BOLDEN - CROSS - SCOTT 340 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. I don't remember the specifics, no. Nobody asked to look at the old policies and see how they were changed? A. Q. A. I don't believe so. Did you type in the changes to the personnel policies? I don't think so. I believe that's when Tammy Higar was doing it. Q. Okay. Tammy Higar is the person that you believe typed in the changes to the personnel policy? A. Q. I believe so, yes. All right. Would changes to the bylaws, would that be something that you would be responsible for typing in? Obviously you didn't make the changes to the bylaws, but actually changing the bylaws on your computer, would that be something that you would do? A. It's something that I would possibly do, or Carl Salmons. It could be one or the other. Q. Well, would Carl come over to your office and make changes to the bylaws? A. No, but his office had sent revised bylaws at different times. Q. And would those be sent to you in paper format or over the--via the e-mail, or how would you get those? A. He would either fax a copy for review--anything official he would have mailed over or had dropped off. BOLDEN - CROSS - SCOTT 341 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. I'm sorry? Or had dropped off. Did you have on your computer a copy of the bylaws? Yes. And did you have on your computer a copy of the employee I don't mean to-- manual or the employee policy manual? A. Q. A. Q. Yes. At that time I don't believe I did. At what time? At the time of this meeting. At the time of the August 19th meeting in 2004 you would not have had a copy of the employee policy manual on your computer? A. Q. A. I don't believe so. Would that have only been available in hard copy? I believe Tami had the--Tami Higar had the copy on her At that time, that point, I had taken it off of mine computer. and given it to her, I believe. Q. Okay. What do you mean you took it off of your computer and gave it to her? A. I put it on a disk and gave it to her and erased it from my hard drive. Q. A. did. Why would you erase it from your hard drive? Just to keep-I don't recall specifically, but I think I I know I did at one time just to keep from having multiple copies that were the wrong copy. Q. At CIETC were you folks networked? BOLDEN - CROSS - SCOTT 342 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. No. So Ramona from-Yes. Would Ramona be able to access your computer from her-No. --desk? She wouldn't be able to access any of the Did Ramona have a computer on her desk? information that was contained on your hard drive via her computer? A. Q. A. Q. A. Q. No. Did she have the ability to get on to your computer? In my office, yes. Was your computer password protected? No, it was not. So anybody, really, would have had access to your computer at any time? A. Q. A. Q. A. Anyone with a key to my office, yes. Who had keys to your office? All of the upper management staff and Tami Higar. And by upper management staff, who would that include? Ramona Cunningham, John Bargman, Jack Cline, Karen Tesdell, Karen Cogan. Q. Are you aware of whether or not there were ever any changes typed into the personnel policies or the bylaws via your computer? A. Yes. BOLDEN - CROSS - SCOTT 343 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. When did those occur? A number of different instances. Tell me about those. Tell me about the first time somebody changed the bylaws via your computer. A. There were times that Ramona had me type in proposed I don't remember all the specific instances. changes. Q. Do you recall when the first time Ramona had you type in a change to those bylaws? A. Q. No. And when she asked you to type in a change to those bylaws, did you have some directive from the board of directors to do that? A. No. Usually Ramona would have me make any changes like that, then it would be brought to the board to be proposed. Changes were--would have been typed in in red so that they could be seen, and then the board could compare the original with the changes. Q. And at some time do you think that--are you aware of whether or not the change that was made to the bylaws, which gave the chairman of the board the authority to set the salary for the executive director of CIETC, do you recall that by law? A. Q. I recall it, yes. And do you know whether or not that bylaw was ever changed at a board meeting? A. It was not. BOLDEN - CROSS - SCOTT 344 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. Was it ever voted on at a board meeting? No. And do you recall ever being asked to type that change into the bylaws? A. I was asked to type a lot of things. I don't remember specifically typing that, but I very well might have. Q. And that change in the by law, if you typed it in, you would have received direction from Ramona Cunningham to do that? A. Q. Yes. Dan Albritton would not have shown up in your office and told you to change that bylaw, would he? A. Q. No. And he didn't come to your office and tell you to change that bylaw, did he? A. Q. No. I want to talk to you for a minute about the board meetings You attended all of them. Is that basically themselves. correct? A. Q. A. Q. All but I think two over the course of my time at CIETC. And how long were you at CIETC? 12 years. And during the course of your tenure with CIETC, do you recall the makeup of the various boards in general? A. Q. Yes. And prior to Mr. Albritton being appointed to the board, do BOLDEN - CROSS - SCOTT 345 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. you know who his predecessor was? A. I'm not sure specifically, because there were several representatives for both the city of Des Moines and Polk County. Q. Do you know that Mr. Albritton was an appointed--excuse me, was a locally elected official appointed by Polk County? A. Q. Yes. And are you aware that the president of the South Central Federation--South Central Iowa Federation of Labor president prior to Mr. Albritton was a board member? A. Q. Yes, Perry Chapin. Thank you. And are you aware of whether or not any of Mr. Chapin's predecessors -A. Q. No. Perry Chapin was on the board when I started. So from the time that you started until Mr. Albritton was appointed to the board, there was a labor representative appointed by Polk County, and it was from the South Central Federation of Labor and he was Mr. Chapin; is that correct? That's basically three questions, I know, in one. THE COURT: MR. SCOTT: Which one do you want her to answer? All three if you can. I know he was I know Perry Chapin was on the board. appointed by Polk County. Whether or not it was because of his labor affiliation, I have no knowledge. Q. Okay. Were you present at--you were present at board meetings when Mr. Albritton attended; correct? BOLDEN - CROSS - SCOTT 346 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. Yes. And during Mr. Albritton's tenure on the board of directors, was his participation always like the one we heard on this tape? A. Q. I don't know what you mean. By that I mean did he in general just sit passively while things were discussed, or were there times when he would participate in debates quite vigorously? A. Q. Yes, there were. And do you recall what issues those would revolve around when Mr. Albritton would be debating vigorously? A. Q. I don't recall any specifics, no. But there were times when, if he was--there were times when Mr. Albritton wanted a particular issue dealt with in a particular way, and he would argue vigorously for his position; is that correct? A. Q. Yes, I believe so. Let me briefly ask you about, again, returning to the changes in the policy manual that were adopted during the August 19th, 2004 meeting. Are you familiar with how those changes were made? Some of them. Are you familiar with the--well, tell me which ones you're familiar with. A. I sat on a committee of CIETC staff that discussed the PTO policies and those changes. BOLDEN - CROSS - SCOTT 347 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. no. Q. Did you provide Mr. Albritton information from that PTO meaning? Paid time off. And was Mr. Albritton a participant in that committee? I don't recall him sitting in on the meetings specifically, committee? A. Q. No. As a part of that PTO committee, were you responsible for collecting information and providing it to anyone? A. Q. A. Q. A. Q. A. Q. A. Q. A. No. A different staff person did that. Who would that have been? Susan Mrzena. So-I believe. You were a participant then? Yes. Or a member of the committee? Yes. Was it an actual committee? I believe so. I don't know what you mean by actual committee. Q. A. Q. Well, who put you guys together? I believe that was Ramona. And what was the group of people? BOLDEN - CROSS - SCOTT 348 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Who? Do you mean who? Who was in the group? Ginny Spracher, myself, Kathy Armstrong, I think Sam I'm not sure of who else. Fucaloro. Q. Was there any other committee that was put together to review any other policies in that employee manual? A. There may have been. I don't recall. I don't know who else worked on what. Q. You're not aware of whether or not there were multiple committees or one committee? A. Q. I only know about the PTO committee that I worked with. Are you aware of whether or not there was a committee to change the pay--the method of pay and the way pay was--I guess that's the same question again, isn't it? Are you aware of whether or not there was a committee to determine how salaries and bonuses would be determined? A. Q. A. Q. A. Q. A. Q. No. You're not aware of that? No. Do you know, was there one? Not that I'm aware of. Is that something that you would have been aware of? Not necessarily. I'm not sure whether Mr. Purdy provided this to you. Do you have a copy of Exhibit 143 in front of you? 143 is an exhibit BOLDEN - REDIRECT 349 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that's previously been admitted, which is some facsimile transmissions between you and Carl Salmons on April 3rd, 2006? A. Q. A. Q. I don't think I do. Do you recall discussing this exhibit with Mr. Purdy? Yes. If you could flip through that exhibit, and on page 3 of the bylaws, section 5, that's where we've got the chairperson being able to set salary for the executive director; correct? A. Q. Correct. If you look down at the very bottom of that page, there appears to be a watermark of some sort or a mark of some sort down there. A. Do you know what that is? Would have been the date that these were probably approved last, and I hadn't--yes. Q. Does that date have anything to do with when this document was generated? A. Q. I don't believe so. Who puts that down--that number or that date down there, do Would that be something you did? you know? A. Q. A. Q. Yes. How would that have been generated? What do you mean? Well, is that--I mean is that automatically generated? Is it something that the computer automatically puts on there because you put some sort of setting on a word processor, or is BOLDEN - REDIRECT 350 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. Ms. Bolden, I believe Mr. Spies asked you about the 11-10 of that something you actually typed on the bottom of that document? A. Q. That would have been typed in there. So 1995 would have been the last time that those bylaws were changed? A. Q. No. No. Okay. This copy, then, that you provided to Mr. Salmons, well, if you page through that document, it appears that the date 7-27-95, is on every page of that document at the bottom? A. Q. That's correct. Now, if that date signifies the last time they were changed, is that what you told me? A. That's what it's supposed to signify. They were changed in 2002, and on this copy in the computer, that was never changed. That was an oversight. MR. SCOTT: THE COURT: MR. PURDY: I believe that's all I have. Mr. Purdy, any redirect? Yes, Your Honor. REDIRECT EXAMINATION Thank you. '05 meeting that the audit was presented by the Kincheloe and Faller firm; is that correct? A. Yes. BOLDEN - REDIRECT 351 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. In attendance at that meeting I believe you indicated a Mr. Keeley was in attendance as well; is that correct? A. Q. A. Q. Correct. And those are both from that audit firm? Yes. Now, do you recall whether a copy of the audit was handed out at that meeting? A. Q. I believe it was. Okay. I direct your attention to Government's Exhibit 119. Again, looking at the body of this memorandum that you sent to Mr. Pothoven, would you look at the last sentence on this memo? A. Q. A. Yes. And what does that say? "Also enclosed is a copy of our audit report which needs to be recorded by your county auditor." Q. Okay. Why would you have to send him an audit report if he got one at the meeting? A. Q. He requested it for some reason. Continuing on with this memorandum, look up above, the last Do you have that? sentence of the first paragraph. A. Q. A. Yes. Could you read that, starting with "Kelly"? "Kelly is one of the staff who helped on the committee that put this policy together." BOLDEN - RECROSS - SCOTT 352 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. I believe Mr. Scott asked you about Mr. Albritton working on personnel policies, and your response was that he was there, working with staff on personnel policies; is that correct? A. Q. I believe he did, yes. Okay. And this memo indicates that Kelly Ayers is an individual that worked on at least a portion of those personnel policies; is that correct? A. Q. on. Yes. And you indicated that there was a committee that you sat Did that committee address all the personnel policy changes or only a portion of them? A. Q. A. Q. Only a portion. And what portion did that committee that you served on-The paid time off. Okay. And that's when leave was changed from one format to another for CIETC employees? A. Q. Correct. Okay. I believe your testimony response to Mr. Scott's question was that Mr. Albritton did not participate in your group addressing that issue; is that correct? A. Not that I recall. MR. PURDY: THE COURT: MR. SPIES: THE COURT: Nothing further, Your Honor. Mr. Spies, any recross? Nothing further, Your Honor. Mr. McCarthy? BOLDEN - RECROSS - SCOTT 353 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SCOTT: Q. Mr. Purdy's redirect reminded me of a couple of questions. In respect to the audit report, do you know how often audits were conducted? A. Q. Annually. And those audits would have been conducted by an outside CPA MR. McCARTHY: MR. SCOTT: Nothing further, Your Honor. Yes, please. RECROSS-EXAMINATION firm? A. Q. Correct. And they were done annually throughout the entire time you were there? A. Q. A. Yes. And who did those audits? The last 3 years I think it was Faller and Kincheloe. Before that I can't remember the name of the firm off the top of my head. Q. A. Q. A. Q. A. KPMG? Yes, that's it. And those audits were always passed out to the board? Yes. They were always made available to the board? Yes. Their county auditors had to, you know, receive them in their offices. BOLDEN - RECROSS - SCOTT 354 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. The county auditor. Why--do you know why they had to receive them in their office? A. Q. It's part of the laws. I don't know. Was it a requirement of the 28E agreement that each county be provided with a yearly audit report to be put on their or provided to their county auditor? A. I don't know if it was in the 28E agreement, but probably. I don't recall. Q. And the last thing I want to ask you about briefly is, Tami Higar, again, that's the one--she's the woman who typed up the personnel policy change manual; is that correct? A. She was the one who took it over, yes. I had done it at one time. Q. And she's the one who typed in or typed up the 2004 version that was provided to the board? A. Q. A. Q. A. Q. I believe so. You're not sure about that? No. Did she ever have her own private office? Yes. Did the executive staff have the ability to access her office? A. Q. I believe so, yes. If your computer was not password protected, hers wasn't either, was it? BOLDEN - RECROSS - SCOTT 355 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: MR. PURDY: A. Q. I don't know. When the audit reports were presented to the board, would the CPA firm that conducted the audit speak to those audits? A. I don't know that they did every year, but I know that year they did. Q. Would they do a presentation or would they just be present at the meeting in case someone had questions about the audit? A. I don't know that they were always present, but I know at that meeting Alan Kincheloe did make a presentation. Q. A. Q. A. Q. Are you aware of why he made the presentation? No. Did somebody request his presence? I do not know. During the course of that presentation was the board alerted to anything that would have been unusual? A. Q. No. Was the board alerted to any concerns that may have been brought up in the audit? A. No. MR. SCOTT: THE COURT: Thank you. You may step down. (Witness excused.) You want to call your next witness. The government calls John Bargman. BARGMAN - DIRECT 356 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. A. BY MR. PURDY: Q. A. Q. Good morning, Mr. Bargman. Good morning. Would you tell the jury how you came-- Strike that. Were you employed by the entity known as CIETC? Pardon? Were you employed by the entity known as CIETC? Yes. And when did you start employment there? March 2000. In what capacity were you employed at CIETC? I was hired to begin a statewide association of Workforce JOHN BARGMAN III, GOVERNMENT'S WITNESS, SWORN DIRECT EXAMINATION centers. Q. A. Q. A. Prior to March of 2000 where were you employed? I was employed at Iowa Workforce Development. And how long were you employed there? I'd say 8 to 10 years. Before that I was employed by other entities in the state. Q. A. What other entities? Iowa Department of Economic Development and the Governor's Office for Planning and Programming. Q. A. What duties did you perform for Iowa Workforce Development? The last duties I performed, I implemented the Workforce BARGMAN - DIRECT 357 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Investment Act, did the planning for that, helped plan a transition from the Job Training Partnership Act to the Workforce Investment Act across the state. Q. What duties did you perform for CIETC-Strike that. At some point you left Iowa Workforce Development to go to CIETC; is that correct? A. Q. Correct. Explain to the jury why you left and what job you were supposed to be doing at CIETC when you arrived there. A. Iowa Workforce Development had a new director and was reorganizing, didn't look like I was going to fit in to that organization, so I worked with Jane Barto and Ramona Cunningham to find a position within CIETC. Q. And Ms. Barto, is that the same Ms. Barto that is a defendant here today? A. Q. Yes. And what did-Let's talk about her involvement. What was her involvement in getting you a job at CIETC? A. She acted as the go-between between Ramona and myself, I would say promoting me to Ramona, that I would be a good addition to the CIETC team and talked about starting the state association of Workforce Development centers. Q. When you say starting an association of Iowa Workforce Development centers, what do you mean by that? A. There's across the state in each--there are 15 regions. BARGMAN - DIRECT 358 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Each region has a Workforce Development center entity, and several organizations participate in that. Came up with a concept that we'll start an association that will help promote those centers, provide training to the staff. It was modeled after a national association, and several other states have similar associations. Q. Okay. Did you ask Ms. Barto to approach CIETC on your behalf? A. Q. A. Q. I had asked Ms. Barto to talk to Ramona, yes. And by Ramona you mean Ms. Cunningham? Correct. And did you have communications with Ms. Cunningham regarding employment at CIETC? A. Yes. After a period of time I dealt directly with Ramona Cunningham. Q. But initially the introductions were through Ms. Barto; is that correct? A. The discussions, right. And I knew Ramona Cunningham anyway, but Jane was just promoting me in this concept. Q. A. Q. A. Q. A. Were you subsequently hired at CIETC? Yes. And what salary did you start your employment at CIETC at? Approximately 72,000 a year. And how long did you work at CIETC? I worked until the end of March of 2006. BARGMAN - DIRECT 359 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 work? Q. Q. A. Q. Why did you leave CIETC? I was dismissed for the results of the audit. And by audit, do you mean the report of the Auditor of the State of Iowa regarding CIETC? A. Q. Right. And the high salaries. Following your dismissal from CIETC, did you become embroiled in the controversy over salaries paid to certain individuals at CIETC? A. Q. Yes. And did you in fact become aware that you were a target of an investigation of the United States? A. Q. Yes. And following becoming aware of that, did you have an opportunity to negotiate through counsel a plea agreement with the United States? A. Yes. MR. PURDY: THE COURT: May I approach, Your Honor? You may. Showing you what's been marked as Government's Exhibit 113. THE COURT: Mr. Purdy, is there some objection to this, do you know, by the lawyers? MR. SPIES: There is a matter we'd like to take up with the Court outside the presence of the jury. THE COURT: You want to try a side-bar? Will that BARGMAN - DIRECT 360 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 together. MR. SPIES: Yes. (Side-bar conference not reported.) THE COURT: Ladies and gentlemen, I hate side bars, they know that, that's why we haven't had any so far, because it leaves you out. You want to stretch, you've been sitting an hour, before we continue, and they'll do a little work on the exhibit and we'll be able to see it in just a minute. (Short pause.) Ladies and gentlemen, you may see the lawyers working Remember I told you in the preliminary voir dire The lawyers working In fact, it's about the duties of the judge. professionally together is not incompatible. consistent with vigorous advocacy. So the lawyers can work together, exchange ideas or conflicts, and it's not unusual to see them. That's the very definition of, quote, a professional. So if you see them working together, that doesn't--that shouldn't make any undue suspicion on your part. It's the part of lawyering that I think the public for the most part doesn't understand and overlooks. So I noticed the lawyers have worked together quite well in this case so you might take note of that. Mr. Purdy, you may proceed. MR. PURDY: Thank you, Your Honor. BARGMAN - DIRECT 361 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. 113. A. Q. I believe, Mr. Bargman, I've given you Government's Exhibit Do you have that in front of you? Yes, I do. And that's been marked for identification purposes, and I would like to ask you to identify what that is for the jury? A. That is the plea agreement that I signed, entered into back in January of 2007. Q. And did you have counsel with you when you executed this agreement? A. Q. Yes. Yes, I did. I'm going to go through several portions of it, and I don't Is want you to address any portion of it that I don't address. that okay? A. Yes. THE COURT: they can see it. MR. PURDY: Do you want to put it on the screen so The government moves admission of Exhibit 113 as ordered redacted. MR. SPIES: have no objection. MR. HAMROCK: MR. SCOTT: THE COURT: No objection, Your Honor. No objection. Received. Subject to the redaction, Your Honor, we BARGMAN - DIRECT 362 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 education. Q. BY MR. PURDY: Q. This is the plea agreement you entered into with the (Government's Exhibit No. 113 was offered and received in evidence.) government; is that correct? A. Q. That's correct. I direct your attention to paragraph 1. Would you read that paragraph for the jury, please? A. "Defendant will waive indictment and plead guilty to a two count information which charges a violation of, A, Title 18 United States Code section 371, conspiracy to defraud the United States, and, B, Title 18 United States Code section 666A, a misapplication of funds concerning programs receiving federal funds." Q. So by virtue of this agreement you pled guilty to two federal offenses; is that correct? A. Q. A. Q. That's correct. I ask you to look at paragraph 3. Yes, I do. And would you read that to the paragraph, please. THE COURT: Mr. Purdy, the jurors all have a very good They can read it. Do you see that? We don't need him to read it. As part of this agreement would it be fair to say the government agreed not to prosecute you for any other offenses-A. Correct. BARGMAN - DIRECT 363 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. --related to the CIETC matter? Correct. I direct your attention to paragraph 4 of this agreement. That paragraph sets forth the maximum punishment that you may be exposed to; is that correct? A. Q. That's correct. And that includes a maximum term of imprisonment of up to 5 years on the conspiracy count and up to 10 years imprisonment on the second offense; is that correct? A. Q. That's correct. And it also subjects you to potential fines; is that correct? A. Q. Yes. And maximum fines on both counts of $250,000; is that correct? A. Q. Correct, yes. Looking at the sentencing considerations in paragraph 6, do you see where it says Sentencing Guideline Factors? A. Q. Yes, I do. And it indicates that the sentence that is to be imposed on you by virtue of you pleading guilty to these charges is to be imposed at the discretion of the Court; is that correct? A. Q. That's correct. You've not been promised by the government under this agreement what the term of your imprisonment, if any, would be; BARGMAN - DIRECT 364 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 is that correct? A. Q. That is correct. At the bottom of page 2 it talks about paragraph C, Do you see acceptance or lack of acceptance of responsibility. that? A. Q. Yes, I do. And the government recommends that you receive 3 levels of acceptance under the guidelines for your cooperation; is that correct? A. Q. That's correct. At the top of page 3 of this agreement, the plea agreement discusses in paragraph C at the top, do you see that, the applicable advisory sentencing guidelines? A. Q. Yes, I do. And that indicates that those sentencing guidelines, the parties suggest to the Court that that range is 37 to 46 months; is that correct? A. Q. That's correct. So you face exposure to imprisonment possibly for that term, possibly for the statutory term; is that correct? A. Q. That's correct. And based on your cooperation with the government, maybe less than that; is that correct? A. Q. That's correct. Looking at paragraph 8 at the bottom of page 3, after you BARGMAN - DIRECT 365 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 entered into this agreement, you have no right to withdraw from this agreement, do you? A. Q. That's correct. And if the sentence that a judge imposes on you is greater than you think it's going to be, you don't have any right to withdraw, do you? A. Q. That's correct. At the bottom of page 4 there's a paragraph that talks about Do you see that? cooperation. A. Q. Yes, I do. And in that paragraph you are requested or you agree to fully cooperate with the government in its investigation of this matter; is that correct? A. Q. A. Q. A. Q. That's correct. You agree to answer any questions that we pose to you? Yes. You agree to not withhold information; is that correct? That's correct. And you agree not to try to protect any other person or entity through false information or omission; is that correct? A. Q. That's correct. Looking at paragraph 14 of the plea agreement on page 5, it indicates that you agree to provide truthful testimony at trial in this matter; is that correct? A. Yes, that's correct. BARGMAN - DIRECT 366 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Regardless of whether it's myself, any of the defense attorneys or the Judge that would ask you questions; is that correct? A. Q. That's correct. Okay. And if you don't tell the truth, you're subjected to a potential prosecution for perjury; is that correct? A. Q. That is correct. At the top of page 6 of the plea agreement, the first full paragraph requires you to be available for debriefing by law enforcement government officials on this matter; is that correct? A. Q. That's correct. And, in fact, did you participate in debriefing sessions with the government? A. Q. Yes, I did. Looking at the top of page 7, a paragraph headed by Substantial Assistance, do you see that? A. Q. Yes, I do. And in that paragraph it indicates that the government may file a motion suggesting that the Court depart from the sentencing guidelines range that we talked about earlier; is that correct? A. Q. Yes. It does not require the government to submit such a motion, does it? BARGMAN - DIRECT 367 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. No. The amount of a reduction, if any, under paragraph 20 shall be determined by the Court; is that correct? A. Q. That's correct. It's not to be determined by the government; is that correct? A. Q. That's correct. At the bottom of page 7 of your plea agreement it indicates that this plea was entered into voluntarily; is that correct? A. Q. Yes, that's correct. Looking at paragraph 23 of the plea agreement on page 8, it indicates that this agreement is the entire agreement between yourself and the government; is that correct? A. Q. That's correct. And there are no other promises that have been made to you regarding this prosecution; is that correct? A. Q. No. Looking at page 11, under the paragraph indicating signatures, paragraph 33, is that your signature affixed to this plea agreement? A. Q. A. Q. Yes, it is. And the date of this agreement, again? Is January 16, 2007. Okay. Mr. Bargman, back to your time at CIETC, I think we left off with when you were first hired in March of 2000. BARGMAN - DIRECT 368 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Explain to me what the--explain to the jury what the job was that you were to perform for CIETC at that time. A. My job was to try to start a statewide association of Some were community And the purpose entities around the state, like CIETC. colleges, some were local planning commissions. of the association was to help promote the Workforce Development system, do staff training, conferences, that type of work; and I was to be the executive director of that association. Q. And, in fact, did that association get developed and get off the ground? A. Q. Not under my guidance, no. And what duties did you end up performing for CIETC after that opportunity did not present itself? A. When that didn't work out, that position ended, and I became The duties of what they called a special projects director. that was to apply for federal grants, do special projects, serving clients, as CIETC. Q. And what was your salary associated with the beginning of those duties? A. Q. I was reduced to 55,000 annually. And what period of time are we talking about that this occurred? A. I believe that was summertime, around June or July or August of 2000. Q. At some time after July of 2000 did you become or did you BARGMAN - DIRECT 369 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 assume other duties and responsibilities at CIETC? A. I did the applications for special projects, and then 2 years later, it was either late 2002, early 2003, I took on administrative duties and was responsible for the information technology section, the accounting section, and the projects that we had going at the time. Q. When you say you were responsible for those areas, what do you mean? A. I would supervise the person who was supervising the other staff in those sections. Q. A. Which employees would you supervise? Karen Tesdell, and she was the accounting department, and, I'm sorry, I can't remember the other lady's last name, but her first name was Karen. technology. Q. So you would supervise those two and they would supervise She was in charge of information the staff below them; is that correct? A. Correct. And Karen Tesdell and I shared supervisory duties over Tami Higar, who was the accounting clerk. Q. And why were you switched in late 2002 early 2003 to those duties? A. Ramona thought the operations needed--Ramona Cunningham thought the operations needed to be tightened up, plus we had a problem with budget, running out of funds, or coming close to running out of funds on some of the programs, so Ramona one day BARGMAN - DIRECT 370 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 decided that I would be responsible for those things. Q. Let me ask you, were you successful when you did your prior duties as far as applying for federal funds? A. Q. Yes. And as a result of those duties did CIETC in fact receive various grants from various entities? A. Yes. We received four or five grants from the Department of Labor. Q. When you were working with grants at CIETC, had you had prior experience in working with grants? A. I didn't have experience writing grant applications. I had approximately 23, 25 years working with programs under the Department of Labor, knew the regulations and the laws and some of the individuals that worked for the Department of Labor. THE COURT: Mr. Purdy, I know the government's default position is that the witness testifies to all counts, but I don't think again we told the jury what counts the witness would be testifying about. You might want to do that. I apologize for interrupting. MR. PURDY: No, my apology for not saying. We believe that Mr. Bargman's testimony will assist the jury in their deliberations for all counts in the indictment. THE COURT: Okay. And your last question was "When you were working with grants at CIETC, had you had prior experience in working with grants," and then he responded to BARGMAN - DIRECT 371 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that when I interrupted. Q. Now, you indicated that when you first got hired at CIETC Ms. Barto was involved in the discussions at that stage and assisted in obtaining employment for you at CIETC; is that correct? A. Yes. Like I said, she acted as a go-between to keep the conversation moving with Ms. Cunningham. Q. At that point in time what was Ms. Barto's position? Was it with Iowa Workforce? A. Q. A. Yes, she worked for Iowa Workforce Development. What was her position at that point in time? At that point in time I believe she was providing technical assistance to some of the regions in the state on implementing the Workforce Investment Act, and CIETC was one of her regions. Q. A. Q. her? A. We worked in the same office in Carroll, Iowa, and How long have you known Ms. Barto? From the late seventies. Did you work with her from that point on when you first met eventually I became her supervisor when I took a job in Des Moines. Q. A. Q. A. And when was that? That would have been in the early 1980's. So you've known her for a long time? Yes, I've known her for a long time. BARGMAN - DIRECT 372 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. Worked with her for a long time? Yes. And was there ever any point in time while you were at Iowa Workforce Development where she became your supervisor? A. Q. No. When you found employment at CIETC, were you and Ms. Barto in the same area at Iowa Workforce Development or did you have different areas that you worked in? A. We worked in the same building. Her actual office location was Carroll, but she was in Des Moines most of the time. Q. And as far as duties, did you guys have the same type of duties or did you have completely different functions? A. I was her supervisor, and she was working on the same material that I was working on, implementing the Workforce Investment Act, and she was working with the regions to help--some of the regions to help transition. Q. And was this--in 2000 when you left employment at the Workforce Development, were you her supervisor at that point? A. job. Q. A. What do you mean by that? They were doing a reorganization and hadn't decided how they Right before I left I was transitioned just into a holding were going to utilize me. Q. Who was the director at Iowa Workforce Development at that time? BARGMAN - DIRECT 373 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Richard Running. Is that the individual responsible for putting you in this-- how did you describe it? A. A holding job. It would have been him and Irene Schultz, who would have been my immediate supervisor, the division administrator. Q. A. Q. A. Did you enjoy that holding position that you were in? No. That was one of the reasons I wanted to leave. What was that--what did that position entail? Mostly it was just tracking the Workforce Investment Act implementation, but I only held that for a short period of time before I left. Q. Did Mr. Running have anything do with your assignment to that position? A. I believe he did, but I don't know directly. I don't have direct information about that. Q. A. Do you and Mr. Running get along? I haven't seen him for a few years. When I did see him when He came to I was at CIETC, we talked. We weren't best friends. my going-away party when I left Iowa Workforce Development. Q. A. Q. Any animosity that existed between the two of you? I don't have any, but I can't speak for him. Okay. Back to your duties at CIETC, then. We're in late 2002, 2003. What duties did you perform from that point forward until you left CIETC? BARGMAN - DIRECT 374 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. I continued to write grants for projects. I directed the disability grant project that we had. And also we had three other projects that were going. Finally one ended after another. I continued to supervise Karen Tesdell and Tami Higar and the information technology section and other duties as I got assigned. Q. A. Q. Who would assign you other duties? Ramona Cunningham. There's been some testimony that the jury has heard that you Would that be a fair statement? Some people were No. 2 in command at CIETC. A. Yeah. I think that would be a fair statement. looked at me that way. Ramona treated me that way most of the time. became what she called chief operating officer. Q. A. Would that be the late 2002, early 2003 period? It was the same position. The name got changed around 2004, Yes, I early 2005. Q. A. And the change in the job title from what to what? I can't remember the exact title of the first one. Something similar to director of administrative services to chief operating officer. Q. I want to talk a little bit more specifically about CIETC, the entity, with you. What type of entity was CIETC and where did they get their money to operate from? BARGMAN - DIRECT 375 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. CIETC was formed through an agreement made by the counties there in central Iowa, surrounding Polk County, including Polk County, and the city of Des Moines. It's what is called in Iowa a 28E agreement, and a 28E refers to a section in the Iowa Code that allows governmental entities to come together and do functions jointly that they have the authority to do independently. CIETC was formed expressly to provide Workforce Development and training services in central Iowa as its sole purpose. Q. A. And where does CIETC obtain funds to provide those services? CIETC received its funding from Iowa Workforce Development. One was Workforce It received two funding streams from there. Investment Act that provides services to youth, adults and dislocated workers. The other one was the Promise Jobs program which provided services to individuals receiving welfare. And then the other funding or the grants that we received directly from the Department of Labor. Q. So would it be fair to say that CIETC had a number of pockets of money it was able to draw out of based on these underlying grants and agreements? A. Q. Correct. And were these grants for multiple years, one year at a How did those work? time? A. The funding that we received from Iowa Workforce Development BARGMAN - DIRECT 376 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 years. Q. So CIETC had a variety of funding sources or pockets of One of them you mentioned was WIA, Workforce Investment Could you describe for the jury what the funding for the was 1 year at a time. Though there was a multiyear plan in place for the Workforce Investment Act funding, but the funding would be allocated each year, and that allocation would change dependent upon statistics. The grants could be anywhere from 12 months to 3 money. Act. WIA programs was based on when it was given from IWD to CIETC? A. The state as a whole received funding from the Department of Labor, and as does each state in the country, and it's allocated on a formula that's set in legislation. That funding goes from the Department of Labor to Iowa Workforce Development, and then they have a formula that's established by law that allocates it to each region within the state. And CIETC was Region 11, and within the WIA funding there's three programs, one for youth, one for adults and one for the dislocated workers. Q. You mentioned the formula was used to calculate what kind of funds would be distributed? A. Q. Right. From IWD to the various regions; is that correct? BARGMAN - DIRECT 377 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Correct. And one of those regions was the region CIETC was in? Correct. What goes into make up that formula, if you know? I don't remember all the formulas at this point in time but it dealt with unemployment rates in the region compared to other regions in the state. workers you may have. It dealt with the number of dislocated It dealt with the number of economically disadvantaged individuals in your area. Items like that were built into the formula, and, as I said, the formula was set by federal law. Q. Okay. Another funding stream or pocket of money that you mentioned, I believe, was the Promise Jobs program? A. Q. Right. Could you describe where that money came from and how it got its way to CIETC? A. That money was actually two sources in the state. Part of it was federal money that came from the Department of Health and Human Services to the Department of Human Services here in Iowa. And they received matching state funds from the state legislature, and through a contract then it was contracted to Iowa Workforce Development, and through a formula that was set by the state, then it was allocated to each region within the state. And they were the same regions that received the BARGMAN - DIRECT 378 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Workforce Investment Act funding. Q. So even though it was coming from a different federal agency down through that process, in part matched by the state, it was distributed around the State of Iowa through these various regions that we've been talking about? A. Correct. One other thing I'd like to add to that, that is in this case, approximately half or more of the money went to the Workforce Investment Act entity, and the other half stayed at the local Iowa Workforce Development center entity in the region, so it was--the Promise Jobs program was actually operated by Iowa Workforce Development and the Workforce Investment Act entity. THE COURT: our noon recess. We'll be in recess until 1 o'clock. admonition I told you about before. (Recess at 11:57 a.m. until 1 o'clock p.m.) Remember the Ladies and gentlemen, we're going to take BARGMAN - DIRECT 379 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. Mr. Bargman, we've talked then about the WIA, Workforce question. THE COURT: The last question was, "So even though it AFTERNOON SESSION THE COURT: (1:00 p.m.) Please be seated. If you Mr. Purdy, I can read back where you were. want to just begin, that's fine. MR. PURDY: Whatever your preference is. If you wouldn't mind reading back the last was coming from a different federal agency down through that process, in part matched by the state, it was distributed around the State of Iowa through those various regions that we've been talking about. "Answer: Correct. One other thing I'd like to add to that, that is in this case approximately half or more of the money went to the Workforce Investment Act entity and the other half stayed at the local Iowa Workforce Development center entity in the region, so it was--the Promise Jobs program was actually operated by Iowa Workforce Development and the Workforce Investment Act entity." JOHN BARGMAN, GOVERNMENT'S WITNESS, PREVIOUSLY SWORN DIRECT EXAMINATION (Resumed) Investment Act, funding stream or pocket that money--the pocket of money that came down from human services. In addition to those two funding streams or pockets of money, did CIETC receive BARGMAN - DIRECT 380 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 funds from other sources? A. Q. CIETC received grants directly from the Department of Labor. Another pocket of money to assist with operations; is that correct? A. Q. Correct. Would the direct funding be distributed differently than the other funding we've been talking about? A. Those grants were to do special projects to serve a certain Like there was one grant to serve the group of people. disabled. There was another grant that was to provide certain So in that respect types of sacrifice to dislocated workers. they were treated differently. those services. Q. Different staff would provide When you talked about performing duties that were related to obtaining grants on behalf of CIETC, are we talking more about these direct fundings or the WIA/PJ money? A. Q. The direct funding. In addition to direct funding from the Department of Labor, WIA and Promise Jobs money, were there other funding sources that CIETC had to provide certain services? A. Received funding from Polk County for a 2- or 3-year period. We received a direct pot of money from Polk County approved by the board of supervisors of Polk County. We also received some money from Polk County that came through I think it was federal housing assistance to help on on BARGMAN - DIRECT 381 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 a program that dealt with individuals with disabilities. And we received some small pots of funding from Prairie Meadows. Q. Did CIETC ever obtain money from the State of Iowa where CIETC would act as a fiscal agent and direct subgrantees or subrecipients of that money? A. Q. A. Yes. Could you explain those to the jury, please. We received three pots of money from Iowa Workforce CIETC acted as what we would call a fiscal agent. Development. We would hire the individuals, pay their salary, their fringe benefits, keep their personnel records. The staff would be They would supervised by staff of Iowa Workforce Development. be disciplined. They would be--Iowa Workforce Development would decide who would get hired and who would be released if somebody had to be released. So actually all we were doing were the accounting functions for those individuals. The projects were operated by Iowa Workforce Development. Q. Do you recall as you sit here today the names of those three projects? A. There was a New Iowan project. There was tax redesign project. And there was a project that dealt with individuals I can't remember the exact name right now. with disabilities. If I heard it, I'd know it. BARGMAN - DIRECT 382 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Those individuals, then, you indicated were paid by CIETC, but everything else IWD did--the selection and disciplining and terminating? A. Q. A. Q. A. Correct. The supervision of those employees was done by who? Iowa Workforce Development. Did you have any role in working with those three programs? Yes. Once Iowa Workforce Development decided how many people were going to be hired, and they decided what the salaries were going to be, then I'd put together a budget by position, the cost of the salary, the cost of fringe benefits, if there was going to be travel reimbursement paid or conference fees paid and what those costs would be. And some of that information I would get, you know, if there was going to be a conference, I would get from Iowa Workforce Development. I'd come up with a total budget for the project, and then CIETC would charge Iowa Workforce Development 10 percent on top of that as an accounting fee function. Q. A. Q. Administrative type fee to do the accounting? Right. And who would you work with at Iowa Workforce Development regarding those programs? A. Doug Keast. He worked on the one that dealt with the disabilities. The other two names escape me. I had a few conversations with Jane Barto, trying to BARGMAN - DIRECT 383 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 get the budgets finalized and moving forward. Q. Explain those conversations to me. What do you mean by that? A. What I mean is, you know, they wanted to move the project forward, and we needed a contract in place in order to start hiring those individuals and being able to pay them. Q. A. Q. And what-And draw that money down. And what conversations specifically, if you recall, did you have with Ms. Barto about those? A. Q. Getting the contracts in place in order to make it function. Do you know whether CIETC approached IWD about those projects or the other way around? A. Ramona Cunningham told me that she had conversations with Jane Barto about those projects, and that Jane had approached her. And Ramona was more than willing to take on that responsibility. Q. A. Q. Especially if it came with administrative money? Correct. Other programs that CIETC worked with, for example, I believe you mentioned Workforce Investment Act, youth program. Did CIETC work with any other contractors or subcontractors regarding that program? A. The youth program was subcontracted out to Iowa The director is Jim Comprehensive Human Services, ICHS. BARGMAN - DIRECT 384 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Underwood, and through the planning process of the CIETC Board and the Workforce--local Workforce Investment Board they had made a decision to contract out youth services. So a good portion of that money went to ICHS to provide youth services. Q. A. And the money would originate from where? The money would originate from Iowa Workforce Development, just like the adult program or dislocated worker program. Q. And then CIETC would subcontract with ICHS? I believe that's what you told me. A. Q. Correct. Any other situations with CIETC that you recall similar to that to subcontract out services? A. In several of the projects we subcontracted out with Des That was on the special projects Mercy Moines Area Community College. that we got direct funding from the Department of Labor. college. Q. A. now. Q. I think that was it. Any subcontracts-Oh, there's another one. I can't remember the name right But they were a small subcontract. Did CIETC ever enter into a contract with an entity known as Creative Visions, to your knowledge? A. Q. A. Yes. And explain that contract. That contract was to establish a sort of a career center at Creative Visions and provide job search--career search BARGMAN - DIRECT 385 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 assistance with individuals, low income youth and adults. Q. So we have a number of funding streams or pockets of money Did those funding streams come with rules that CIETC drew from. CIETC was supposed to play by? A. Q. A. Yes. Okay. What kind of rules are we talking about? There's federal regulations that deal with how the money can be used, what individuals can be served as far as being eligible to receive those services. For instance, on the dislocated worker program you must have been a worker that had previously lost your job, dislocated from your job, so they all carried eligibility requirements and they carried requirements on how you could spend the money. Q. Okay. In relationship to these funding streams or pockets of money we're talking about, what specifically did you have to do with administering those grants or contracts? A. The direct grants, I did the grant application for those funds and did the oversight, or I was a director of that project. The Workforce Investment Act and the Promise Jobs, I did the budget work. In other words, for the coming year this is how we anticipate spending the money, and then as I said, I supervised the accounting staff. Q. Did you ever have any direct working relationship with the BARGMAN - DIRECT 386 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Iowa Comprehensive Human Services Grant? A. Q. A. Q. A. On the youth grant? Yes. Is that what you're asking? Yes. No. We had another contract under our special projects that The youth offender project I worked with ICHS. Ramona was with the-- I did the budget work on the youth funding. and the Workforce Investment Board decided how much money was going to be given to ICHS. The remainder of the money stayed in-house at CIETC, and I did the budget work on how that was going to be spent. Q. From what point in time did you do the budget work on these types of grants that we've been talking about? A. The direct grants I started when I went from trying to start that association to being a special director for projects. The others started I would have to say in July or thereafter of '03, maybe a little bit before. Q. Okay. And who did that function prior to you taking those duties? A. Q. Karen Tesdell did. We talked a little bit about some of the pockets of money, In one of them being WIA, one of them being Promise Jobs. relationship to the total funding sources available to CIETC, the pockets of money to draw from, what percentage would you say BARGMAN - DIRECT 387 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 WIA, Promise Jobs and then combined that they provided, approximately, if you know? A. Approximately--I would say approximately 50 percent, 40 to It just depended on how much 50 percent of the total budget. special projects were active during the year, but it provided the majority of the funding. Q. It was the stable ongoing funding. Turning your attention to the WIA program in particular, you indicated there was a process by which the regions would be allocated money from the state. How would you have allocated within that region? think you stated CIETC was Region 11; correct? A. Q. A. Correct. Within Region 11 how does that WIA money get allocated? The local Workforce Investment Board and the CIETC Board I would do a plan on how the money was going to be spent as far as services and clients, and so forth. The actual decision on how much was going to be spent on staff, how much was going to be for office space, telephone, supplies, and so forth, that was done in-house with Ramona-Q. A. Q. A. Q. Ms. Cunningham? Right. Yes. Okay. Having the final say-so and taking the lead in those cases. Were these WIA funds as a source of money, were they granted on an annual basis? BARGMAN - DIRECT 388 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes. And was there an underlying contract then that would authorize CIETC to receive a certain amount of funds? A. Q. Yes, there was. Were there ever amendments to those contracts to allow CIETC to get more money? A. Q. A. Yes, there was. Explain that process and how that works. On the Promise Jobs program, if additional money was received by the region, the contract would be amended by Iowa Workforce Development and just added into the contract. Workforce Investment Act, that main funding, it seldom if ever got amended. The only time it did get amended is at the Then the beginning of the fiscal year after 2 or 3 months. actual money that we'd left over from the previous year would be indicated in there. If we received any small amounts of money from Iowa Workforce Development to serve dislocated workers, that would be amended into the contract after we submitted a budget proposal. Q. You indicated, I believe, the WIA money was rarely amended. The PJ money was amended more frequently; is that correct? A. Q. Correct. That contract. Tell me about how the PJ money would get amended. A. Did you have anything to do with it? I didn't have anything to do with the amendment, but Ramona BARGMAN - DIRECT 389 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 would discuss receiving more money on Promise Jobs with Jane Barto, and they would come to an agreement and eventually we'd get a contract modification. Q. A. Q. Do you know-And get additional moneys. Do you know whether Ms. Cunningham approached Ms. Barto or Ms. Barto approached Ms. Cunningham about these additional funds? A. It would be Ramona approaching Ms. Barto to request more moneys. Q. From time to time did CIETC in fact get additional grants of money? A. Q. Yes, we did. What role did you play in distributing the moneys received through these amendments? A. Most of the time those funds were used to pay bonuses, and so I would make sure that within our budget we weren't going to go over with those additional funds, how it fit in. If a bonus was going to be paid to me or Ms. Cunningham or Karen or some other individuals, I would draft a letter for the board chair, CIETC Board chair, Archie Brooks to sign. Q. A. Q. When you say Karen, do you mean Ms. Tesdell? Yes. Did an additional sum of money become made available to BARGMAN - DIRECT 390 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CIETC at the end of fiscal year 2005 from the Promise Jobs funding stream? A. Q. A. Q. That would be June 30 of '05? Correct. Yes, $200,000. Tell me specifically what you knew about receiving those funds prior to them coming in, if anything? A. Ramona Cunningham during the year had told me that she kept talking to Ms. Barto about do not let excess Promise Jobs funds return back to the state or to the Department of Human Services. Make sure they get spent. The fear is if you don't spend the money, then you may not get as much next year. The last three or four days of the fiscal year, that last week, there was an e-mail that was sent out to the directors around the state, you know, similar to CIETC director. Ms. Cunningham had said that there was additional funding available from Promise Jobs. them know. Ramona requested $200,000 and we received $200,000. On the last day of the year, June 30th, Ramona had me make a list of all the people who worked on Promise Jobs, either administratively or programwise, direct program services, and indicate a bonus amount for each one of those individuals. When she looked at the list, she said that didn't If you need some money, to let BARGMAN - DIRECT 391 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor. THE COURT: MR. PURDY: 2--801(D)(2)(e). THE COURT: Ladies and gentlemen, we're going to Do you have any response, Mr. Purdy? Your Honor, I think this would be an 801, spend all $200,000. She made some changes, and then bonus letters and checks were cut for that. That afternoon, and I was not there, I had taken off on vacation, Kelly Taylor from Iowa Workforce Development brought the check over. Q. The bonus checks were issued. Is it your understanding that the request from Iowa Workforce Development, that if you needed additional funds, came to CIETC prior to CIETC asking for funds, or vice versa? MR. SPIES: I'm going to object to that as calling for combined hearsay and opinion, not properly the subject of the opinion testimony and not within the witness' personal knowledge. THE COURT: BY MR. PURDY: Q. Do you personally have any knowledge of whether the request Sustained. came from CIETC to IWD before the end of the year or IWD made the information known that there would be end-of-the-year funds available? A. What I know is what Ramona Cunningham told me. MR. SPIES: Then I object on hearsay grounds, Your BARGMAN - DIRECT 392 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. receive this conditionally, just like you've had two other instances where this has happened yesterday as well. We're going to receive this subject to the objection. You can listen to it conditionally, there will be a final instruction from the Court as to whether or not you can consider it as part of your deliberations. You may answer. Ramona Cunningham told me for a period of time that she was going to ask for a large sum of money, and she told me that she had conversations with Jane about the $200,000 that she wanted. And then an e-mail came, like I said, that last week of the fiscal year, and Ramona made the request for the money. BY MR. PURDY: Q. Do you recall whether CIETC had received supplemental funds or amended funds from the PJ program earlier that month? A. I don't recall earlier that month. There were other times that we received funding, yes. Q. Okay. Did you have any direct involvement in CIETC obtaining funds from IWD through the PJ grant amendments? A. My involvement was in acknowledging, you know, that those funds were coming in, and like I mentioned earlier, seeing that they were spent, and they were usually spent on bonuses or equipment. Q. A. Did those bonuses include bonuses to yourself? Yes, they did. BARGMAN - DIRECT 393 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. Did they include bonuses to Ms. Cunningham? Yes, they did. Did they include bonuses to Ms. Tesdell? Yes, they did. All the administrative staff at CIETC shared in those in some proportion; is that correct? A. Q. Not every time, but those three individuals, yes. So CIETC receives money from a variety of pockets. How do you decide or how did CIETC decide where that money was to be applied? A. That decision laid with Ms. Cunningham based on a budget that I would draw up. Q. Let's talk about that process a little bit. You indicated there were rules that CIETC had to play by on how to distribute that money; is that correct? A. Q. A. Q. Correct. Okay. Or how to spend that money. Spend that money. And part of that money was spent for salaries and compensation; is that correct? A. Q. A large percentage, yes. How do you--how did CIETC determine what amount of money was to be paid for salaries? A. Ramona Cunningham set the salary levels. The number of BARGMAN - DIRECT 394 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 people that were doing those functions, you know, was decided by Ramona, and it was my job to, you know, calculate those costs out. Q. A. What do you mean by "calculate those costs out"? Well, I took--I had a huge spreadsheet that had each individual listed on it, what their salary was going to be for the year, their fringe benefit costs, the costs attributed to them for office space, telephone, supplies, et cetera. I had that for each individual, and it all summed up to a total budget by program by cost category. Q. Let's turn your attention to bonuses. Who would decide at CIETC which employees got bonuses? A. Q. Ramona Cunningham. Did you ever participate in discussions with Ms. Cunningham as to who should receive bonuses? A. Yes. I had discussions with her. Usually it was she wants A few times I'd make to give these bonuses to these people. some recommendation. Q. She'd either accept those or not. To your knowledge, did Ms. Tesdell ever participate in any of those decisions to award bonuses? A. Yes, a couple of times. Karen discussed with me having received a bonus. Sometimes she'd ask about a bonus and I would refer her to Ramona. Q. Again, when you say Karen, you're talking about Karen Tesdell? BARGMAN - DIRECT 395 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. Karen Tesdale. And Ramona, you're talking about? Cunningham, yes. You say she approached you about a bonus. Was that for some of her staff or her staff or her or both? A. Q. A. Q. It was for her. And on how many occasions would you say that occurred? Two. Why would she approach you for bonuses? MR. HAMROCK: THE COURT: BY MR. PURDY: Q. A. Q. You can answer if you know. Oh, I don't know. Okay. How would an individual employee at CIETC allocate Objection; calls for speculation. You can answer if you know. their time with all these funding streams or pockets of money we've been talking about? A. If someone worked 100 percent of the time on a program, then They knew which program that was. And that was easy for them. as they did their time sheet they would put down 100 percent. For those that worked on two or more programs, they were told what percent to charge against each program. Q. A. You say they were told. Who told them? Tami Higar gave them the information, which she received from me. BARGMAN - DIRECT 396 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. And from the time you started at CIETC was this one of your functions. A. No, I didn't take that function on until I became responsible for the accounting and the information technology section. Q. A. Q. And was that the middle of '03? Is that what you said? Approximately, yes, it was either late '02 or early '03. And this was in conjunction with a switch over at CIETC to a different computer system? A. Q. A. A new accounting system, correct. Take me into that just a little bit. What did that involve? The accounting package that was being used when I started It was off the shelf, as we say. It there was Peachtree. wasn't designed specifically to do what we were doing accountingwise. We went through a process where we released a request for proposal, in other words, people sent in proposals on here's a new accounting package, and we selected one. And we were told by Iowa Workforce Development that we couldn't use that one because they already had a license to a different accounting package and therefore if we bought that one, they would question the costs. So we ended up with the one we did, and through that they customized it to our functions. Q. When the old accounting system, the Peachtree I think you called it, was used by CIETC, who did the directions, if BARGMAN - DIRECT 397 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 worked? A. Only those that worked a hundred percent. In other words, anybody, on how employees should allocate their time? A. Q. Karen Tesdell did. And then after the switch over to the new accounting software, did you do that completely, or did you share those responsibilities with anybody? A. I did the majority of it. I had discussions with Karen and Ramona Cunningham and Jack Cline. Q. A. Q. Karen again being Ms. Tesdell? Yes. So tell me, then, if an employee worked in multiple areas how they would be directed to allocate their time. A. When I first took over that function, there was a meeting with me and Karen Tesdell, Jack Cline, and we went through each employee and came up with an estimate on how much time they spent on each program, if they worked more than one program. And then that information, as I said, was put into a budget spreadsheet, and eventually given to Tami Higar for her to let each employee know how they were to allocate their time to each program. Q. Did you ever become aware that those-Strike that. Did the time allocations reflect what people actually it was reverse of what it should have been. Q. What do you mean by that? BARGMAN - DIRECT 398 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. I mean if you worked two or more programs, then you should be recording your time or you should be doing your time sheet based on actual time worked on each program. Q. So as I understand what you've told me, you've got time allocations being distributed to the employees, and they're told how to allocate their time; is that correct? A. Q. A. Q. A. Q. Correct. And that's being done in advance? Yes. How far in advance? Each quarter. So they would be told how to allocate their time quarter by Would it change every quarter or not necessarily? Most stayed the same quarter. A. Some people may change in the quarter. during the year. Q. And directing your attention strictly to other than administrative staff, CIETC employees, did they always allocate their time pursuant to the jobs that they were performing? A. Q. A. Yes, with one exception. What was that exception? There was a gentleman hired, Nathan Brooks, to work with When Creative Visions on the center that was established there. it first started the first year, he spent all of his time there. After that, he was redirected by Ramona to do other duties, but he was continued to be paid from that funding BARGMAN - DIRECT 399 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 objection? stream. Q. When we look at these federal regulations that underlie the rules on how CIETC is to allocate those funds, is that within the purview of those rules? A. Q. A. No. And why not? On the allocation of time, as I mentioned, you're to actually record the time you actually spend on each program. That's how it's supposed to be recorded and paid. On a program--you can't charge time against a program that you do not work on. You have to actually work on that program in order to charge time against it. Q. So when CIETC employees were directed to allocate their time upfront to certain programs, it didn't necessarily correlate to what they actually did; is that correct? A. Q. Percentagewise, no. So in some circumstances some employees would allocate their time in a greater amount to a program that they weren't working that much on; is that correct? A. Q. Correct. And in some occasions they may have allocated their time to a program less than they were working on; is that correct? A. Right. MR. SPIES: Your Honor, may I interpose a brief Mr. Purdy is leading this witness, and I know BARGMAN - DIRECT 400 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 they're preliminary, but I think we should proceed with questions and answers. THE COURT: suggests the answer. Ladies and gentlemen, leading is one that And generally witnesses are not supposed Sometimes it happens with to give narrative answers. preliminary matters, as Mr. Spies has indicated. But whether or not there are leading questions, you, as the jury, have to determine whether the response of the witness is credible, and that may depend upon the nature of the question. If it's leading, for instance, then it's the lawyer testifying. You would perhaps give that less credibility. That's the reason we don't permit leading questions on direct examination. I don't think that was an objection. proceed, Mr. Purdy. I know it's difficult when you have these explanatory matters to not lead. Your last question was "And in some So you may occasions they may have allocated their time to a program less than they were working on; is that correct." "Right." I think that's when Mr. Spies interposed about don't be leading all the witnesses. BY MR. PURDY: Q. Mr. Bargman, how did administrative staff allocate their BARGMAN - DIRECT 401 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 time? A. The staff that worked in the information technology section allocated their time based on a formula I gave them that was based on the number of and type of clients they had in their database, which is an authorized method under the federal regulations. In other words, if 40 percent of their clients were Workforce Investment clients in that database, and 30 percent were Promise Jobs, and 30 percent were something else, then that's how they would allocate their time because that was the records they worked on. The other staff, Karen Tesdell and myself, Ramona Cunningham, Tami Higar, it was the same as with all the staff, I gave them percentages. Q. Okay. Did the different funding streams or pockets of money have different rules on how much could be paid to administrative staff or what portions of the funds received could be paid to administrative staff? A. Each program or funding stream had a limitation on how much money could be spent on administrative functions. Q. And let's take the two big pots of money we've been talking Did they have the same about, the WIA funds and the PJ money. rules or different rules on that? A. They had different rules. The Promise Jobs money was Prior to the beginning of each basically just one pot of money. BARGMAN - DIRECT 402 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 et cetera. program year, fiscal year, we did a one-page budget that detailed out how we were going to spend the money. There was a line item for admin staff, program staff, When it was received all as one pot of money, it was all the same type of money to the state. The Workforce Investment Act had a strict limitation on how much could be spent on administration. percent. Q. Would CIETC employees be required to account for their time That was 10 in any particular way? A. CIETC used two methods. When I first started there, there was a paper time sheet, and you would complete that based on the percentages of time you were told to report. And then there was, as some people used, a time clock, so they used both. When we went to the new accounting system after about a year, we implemented an electronic time sheet. continued to use time cards. Some people And they They were required to. also then had to complete the electronic time sheet. Q. Let's talk about salaries and compensation. Let's start with you. If you would look at Government's Exhibit 63, please. It's already been admitted into evidence. While we're waiting for that to come up, Mr. Bargman, explain to me the salary structure that you had at CIETC as far BARGMAN - DIRECT 403 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Yes. as base salary, any bonuses or supplemental. A. Q. A. That I personally had? Yes. Not going into amounts, just the setup of it all. There was an employment agreement the last year and a half, 2 years that I was there, that was assigned by the board chair that set my salary and then allowed for a quarterly bonus of up to 15 percent, and then additional bonuses if someone authorized that. Q. A. And prior to the employment agreement being enacted? It was the same setup, but there was no employment agreement. When I first went there, there was the personnel handbook allowed for bonuses to be paid, I believe up to 10 or 15 percent total for a year, not at one time but total for a year. The salaries were set by Ramona Cunningham, and bonuses usually when I first started were issued in June and in December. Q. Let's take a look at Exhibit 63. Do you recognize this? I do. And what is Exhibit 63? Each year staff were given a cost of living increase based Karen Tesdell would get that It was issued--I can't remember on the Consumer Price Index. information from the Internet. BARGMAN - DIRECT 404 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. the federal agency that did it, but it's set. And then that's applied against total salaries in the agency and it comes up with a dollar amount, and that's split evenly between all the employees. So if that--if the Consumer Price Index went up 1 percent, you apply that against all the salaries for the year. If it came up to $10,000, then 50 employees would split $10,000 as a cost of living increase. Q. If you back out just a little bit on that. And this letter is dated what date? July 1st, 2003. And does it reference your annual salary? Yes. And what's the amount of as of July 1st, 2003? 91,166. During the course of your employment at CIETC, did you receive increases to your base salary? A. Q. A. Yes, I did. And we talked about COLA's. Yes. Would there be raises as well? I received raises until my salary reached 175,000, my base salary. Q. Would there be other forms of bonuses or supplemental payment? A. Q. Yes. There was several bonuses during each year. This has been Let's go to Government's Exhibit 37. BARGMAN - DIRECT 405 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. A. previously admitted. And do you have that in front of you? Yes, I do. And what's this letter? It was a letter giving Ramona Cunningham and myself a salary increase. Q. A. Q. A. Q. Does it say how much? It raised my salary to a little over 120,000. What's the date of this letter? January 16th, 2004. And so 6 months earlier in July of '03 you were making Now you're up to the 120--I'm sorry, approximately 91,000. what's that figure? A. Q. 120,432. And I believe you testified earlier that you participated in Is this correct? drafting letters like that. A. Q. Yes. I drafted this letter. Would you go to the signature block, please. And who does that signature purport to be? Archie Brooks. And would you explain to the jury who Mr. Brooks is? Mr. Brooks was the chair of the CIETC Board. I direct your attention to Government Exhibit 38 that's been previously admitted. Do you see that one? BARGMAN - DIRECT 406 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Yes, I do. And what's the nature of this letter? It provided a bonus to me and Ramona Cunningham and Kelly Ayers. Q. A. Q. And what was the bonus provided to you and Ms. Cunningham? 15 percent of our annual salary. And this is less than 3 months after you received a previous 15 percent increase; is that correct? A. Q. Correct. I direct your attention to what's been admitted as Do you see that in front of you? Exhibit 39. A. Q. A. Yes, I do. And can you describe for the jury what that is. It's a bonus or a supplemental payment to Ramona Cunningham and myself. Q. A. Q. In what amount? 15 percent of annual salary. And so in Exhibits 37, 38 and 39 that we just looked at, in a matter of approximately 3 months you received 45 percent in bonuses; is that correct? A. Q. A. Q. Correct. Who decided how much these bonuses were going to be? Ramona Cunningham. And how--explain how she would come to you on a course like this and direct you to write these letters. BARGMAN - DIRECT 407 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes. And explain the list to the jury, please. A. I can't explain what prompted her, but she would come into my office or call me into her office and say it was time for a bonus, and we would discuss that from the standpoint of would it fit into the budget or not. Sometimes I argued against it, but most of the time I went along with it. And she would direct me to draft a letter, and I would draft that letter, and she would take it to be signed. Q. From approximately 2003 forward, July of 2003 forward, did your bonuses and pay increases roughly approximate what Ms. Cunningham was receiving? A. Q. A. Q. 40. A. Q. Yes. And the same type of schedule, same type of percentages? Right. I direct your attention to what's been admitted as Exhibit And do you recognize this letter? Yes, I do. And would you describe to the jury the nature of this letter. A. It was a bonus letter for several staff members. I think there's a list attached. Q. Turn if you will to the next page of this exhibit, please. Is that the list you're talking about? BARGMAN - DIRECT 408 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. It's a list of almost the entire staff but not all the staff, and a percent of their annual salary that they would receive as a bonus. Q. I believe you indicated that Ms. Cunningham would direct you on who to pay how much; is that correct? A. Q. That's correct. Okay. Would that be--when bonuses were granted to a larger group like this would that still be true? A. Q. That would still be true. So the percentages here would be a reflection of instructions from Ms. Cunningham; is that correct? A. Q. Correct. I direct your attention to what's been previously admitted Let's take a look at this one first. as Government's Exhibit-- You're on this list, are you not? A. Q. A. Q. A. Q. A. Q. A. Q. Yes, I am. And what's the amount of the bonus? 15 percent. And that's again under base salary? Correct. And is Ms. Tesdell's name on this list? Yes, 10 percent. And is Ms. Cunningham's name on this list? Yes, 15 percent. Okay. And what are the percentages of most of the employees BARGMAN - DIRECT 409 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. at CIETC? A. Q. 2 or 3 percent. I direct your attention to what's been previously admitted as Government's Exhibit 54. Do you recognize that exhibit? Yes, I do. Okay. Can you explain to the jury the nature of that exhibit. A. This was to give salary or to give bonuses to the staff that It ties directly back to worked on the Promise Jobs program. the $200,000 that we received in June. Q. Look at the top of the letter if you would. Do you see the date? A. Q. A. Q. A. Q. A. Q. A. Yes. What's the date on this letter? June 30, 2005. Is 2005 handwritten? It's handwritten. And what's crossed out at the top? 2003. Do you know why that happened? When the letter was drafted, and I did the draft, I did it from another letter that had the 2003 date on it and didn't catch it. Q. Okay. Caught it later. So were bonuses awarded out of the $200,000 Promise BARGMAN - DIRECT 410 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Jobs money? A. Q. A. Q. Correct. And this was the end of fiscal year '05? Correct. And would you turn to the next page of this exhibit, please. And again another list of individuals identified to receive bonuses; is that correct? A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. Correct. And who directed you, if anybody, to prepare that list? Ramona Cunningham. Is your name on that list? Yes, it is, 15 percent. Is Ms. Cunningham's? Yes. And how much is hers? 15 percent. And is Ms. Tesdell? Yes, 15 percent. This is June 30th of 2005; correct? Correct. I direct your attention to what's been previously admitted as Government's Exhibit 55. Do you see that one? Yes, I do. Would you explain the nature of this exhibit to the jury. BARGMAN - DIRECT 411 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. It authorized a 15 percent bonus payment to myself and to Ramona and a 5 percent bonus payment to Karen Tesdell. Q. A. Q. Any other employees referenced in this letter? No. And this is a matter of less than a week after the last bonus; is that correct? A. Q. Correct. I direct your attention to what's previously been admitted as Government's Exhibit 71. Do you recognize this letter? I've seen it before, yes. Did you prepare this letter? No. Okay. Other than yourself, who prepared bonus letters for employees at CIETC, if you know? A. Q. A. Q. A. Q. A. Tami Higar. Back to Exhibit 62, do you see that one in front of you? Yes. Did you prepare this letter? Yes, I drafted that letter. Okay. And what's the substance of this letter? Previously there had been a stop put on all bonus payments And after a wage survey was done, then this by Mr. Brooks. reauthorized bonus payments. Q. Is this a letter purportedly signed by Mr. Brooks? BARGMAN - DIRECT 412 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. Yes. And what's the bonus award in this letter to yourself? It would have been 15 percent for myself and Ramona. Any other employees awarded a bonus in this letter? 5,000 to Karen Tesdell. This letter is dated March 6th of 2006. Were you aware at this time that an audit was being performed by the state auditor's office? A. Q. Yes. And part of that audit included examination of compensation of executive staff at CIETC? A. Q. A. Q. A. Q. Yes. Whose idea was this bonus? Ramona Cunningham's. And you went along with it? Yes. Is that correct? Let's talk a little bit about the state audit. When did you first become aware that there was an audit in process or an investigation in process by the state auditor's office? A. I became aware that there was going to be an investigation or auditing in November of 2005, and shortly after became aware that the state auditor was going to start doing a formal audit in December. BARGMAN - DIRECT 413 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. grounds. MR. HAMROCK: THE COURT: MR. PURDY: THE COURT: I join that objection, Your Honor. Is this Bell material? Yes, Your Honor. Ladies and gentlemen, again you're going Q. You said you became aware in November of 2005. What did you become aware of and how did you become aware of it? A. Ramona Cunningham called me at home early one evening and said that she had-MR. SPIES: Excuse me. I'm going to object on hearsay to receive this conditionally subject to a later ruling. You may proceed. I received a call from Ramona that she had a discussion with Jane Barto that a complaint or an allegation had been filed with the Department of Labor about pay at CIETC, and we discussed that briefly, and-BY MR. PURDY: Q. A. You say we? Ramona Cunningham and I. And Ramona Cunningham told me that there was going to be a meeting with Jane Barto the next morning and some of her staff. Q. Did she tell you what the substance of that meeting was going to be? A. To discuss the allocation or the allegation, and Ramona Cunningham and I talked about providing documentation to those BARGMAN - DIRECT 414 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 allegations. And so that evening, Ramona Cunningham and I went to the office and gathered up documents, the employment agreements, personnel policies, some bonus letters, some minutes, I believe, from a board meeting, and went to that meeting on November 10th. Q. A. Q. Let me ask you, you gathered these items up? Right. When did you--or did you meet with representatives of IWD following gathering these documents up? A. Ramona and I met that evening. The next morning approximately 9 o'clock, I believe it was, we met with Jane Barto, Tony Dietsch, Erv Fett, and then Ramona Cunningham and myself were there. Q. you? A. Q. A. Q. A. yes. Q. At that meeting did Ms. Barto communicate with you and Correct. Did you take it with you? Yes, we did. Did you present it to officials of IWD? We presented it to those three individuals that I named, Okay. And you had gathered this information to take with Ms. Cunningham? A. Q. Yes. Tell the jury the substance of the conversation that you BARGMAN - DIRECT 415 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 heard from Ms. Barto? A. She communicated to us the allegation about the use of money to pay compensation at CIETC. She made a comment about our $250,000 salary. We talked about the documents that we presented her with, and she informed us that she was going to forward that on to the Department of Labor and have a cover letter put on it. Q. In your presence, did any communications with the Department of Labor take place at that meeting? A. Q. No. Any other conversation with Ms. Barto regarding this issue on that date? A. No. Oh, I'm sorry, I left one issue out. She informed Ramona Cunningham and myself that at the board meeting we needed to have the board reaffirm Archie's authority to set wage levels and provide bonuses. Q. A. Q. A. Q. Okay. And when you say Archie, you mean Mr. Brooks? Mr. Brooks. And Mr. Brooks is who? He's the--he was the chairperson of the CIETC Board. So you were advised there was a meeting at IWD, you go, you present your--would it be fair to say your supporting documents for your compensation packages? A. Q. Correct. You indicated that Ms. Barto used a figure of $250,000; is BARGMAN - DIRECT 416 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. that correct? A. Q. Correct. And in fact, was your compensation above, below or at that $250,000 level on an annual basis? A. At that time it was considerably higher. The year before or so it was about that amount. Q. Did either you or Ms. Cunningham correct her when she indicated that the $250,000 salary is what you were being paid? A. No. THE COURT: for an hour. Ladies and gentlemen, you've been sitting If you want to take a minute to stretch, you can. (Short pause.) Mr. Bargman, several times you've mentioned employment Did you have anything to do with the preparation of agreements. employment agreements? A. I drafted the employment agreements based on a template that I found on the Internet. Q. A. What did you do with those draft agreements? I gave them to Ramona Cunningham. She made a few comments. They were finalized, and she forwarded them on to Mr. Brooks. Q. A. Do you know what happened to them after that? They were signed by ourselves and Archie Brooks. A blank copy of it was also forwarded to the Department of Labor. Q. And I believe the blank copies have been previously admitted as Government's Exhibits 79 and 80. BARGMAN - DIRECT 417 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Q. Would you please pull up Exhibit 79, please. Is this the blank employment agreement that we're talking about? A. Q. A. Q. A. Q. Yes. And who is this for? This one is for Ramona Cunningham. And Exhibit 80, please. That was for myself. And this is the blank one that was forwarded to the Department of Labor; is that correct? A. Yes. MR. PURDY: THE COURT: May I approach, Your Honor? You may. I'm showing you what's been marked as Government's Exhibits 83, 4--I'm sorry 81, 2, 3, 4 and 5 for identification purposes. Do you have those in front of you, Mr. Bargman? Yes, I do. Could you identify for the record what Exhibit 81 is, please. A. 81 is a signed copy of Ramona Cunningham's employment agreement. Q. Is this the employment agreement that you indicated that you prepared and was subsequently signed by Mr. Brooks? A. Q. Yes. And this was prepared in the course of your employment at BARGMAN - DIRECT 418 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. Yes. And is this document executed? Yes, it is. And does it have a date? January 10th of 2005. I direct your attention to what's been marked as Do you have that exhibit in front of MR. PURDY: THE COURT: BY MR. PURDY: Q. And would you flip to the last page of this exhibit, please. Do you have that in front of you? CIETC? A. Yes. MR. PURDY: The government moves admission of Exhibit 81, Your Honor. MR. SPIES: MR. HAMROCK: MR. SCOTT: THE COURT: Without objection. No objection. No objection. Received. (Government Exhibit No. 81 was offered and received in evidence.) Permission to publish? You may. Government's Exhibit 82. you? A. Q. Yes, I do. And could you identify for the jury what that exhibit is. BARGMAN - DIRECT 419 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PURDY: Q. A. Q. And what's the date of this agreement? January 10, 2005. Was there an event that spurred the need to have these A. Q. That's a signed employment agreement by myself or for me. And was this the document that you indicated you prepared for yourself? A. Q. A. Yes, it is. As part of your duties at CIETC? Yes. MR. PURDY: 82, Your Honor. MR. SPIES: MR. HAMROCK: MR. SCOTT: THE COURT: There's no objection from me. No objection. No objection. Received. (Government Exhibit No. 82 was offered and received in evidence.) The government moves admission of Exhibit employment agreements? A. The Department of Labor was at CIETC in December of 2004 and did a monitoring of the special projects that we had directly funded from the Department of Labor. They reviewed the salary, the compensation for me and others, and since our compensation was in the most part paid through bonuses, they recommended that an employment agreement BARGMAN - DIRECT 420 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 be put in place. Q. Okay. And the documents that have been submitted to the Department of Labor didn't have salary figures in it, did they? A. Q. No. Ramona Cunningham didn't want salary figures in them. And Exhibits 81 and 82 do have salary figures; is that correct? A. Q. Yes. And what's the salary as of January 10th 2005 for Ms. Cunningham? A. Q. A. Q. $178,006. And what's the salary for yourself at that time? $175,011. To your knowledge, were these agreements ever submitted to the board of directors of CIETC for their approval? A. Q. Not to my knowledge. I direct your attention to what's been marked for Do you have that in identification as Government's Exhibit 83. front of you? A. Q. A. Yes, I do. And can you identify what that document is. It was a revised employment agreement that went into effect July 1, 2005. Q. A. Q. And who's that agreement for? Ramona Cunningham. Is that a document you prepared? BARGMAN - DIRECT 421 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. MR. PURDY: THE COURT: BY MR. PURDY: Q. Would you go to the last page of this agreement, please. Is this document signed? Yes, it is. And what's the date of this document? It's September 8th, 2005. I believe you indicated that this took effect July 1st, A. Q. A. Yes, I drafted this one. At whose direction did you draft that? Ramona Cunningham's. MR. PURDY: Exhibit 83. MR. SPIES: MR. HAMROCK: MR. SCOTT: THE COURT: No objection. Without objection. No objection. Received. (Government's Exhibit No. 85 was offered and received in evidence.) Permission to publish? You may. The government moves admission for 2005; is that correct? A. Q. A. Correct. Why is it dated 2 months later? Ramona Cunningham wanted a new employment agreement and She wanted again to do wanted it backdated to July 1st, 2005. BARGMAN - DIRECT 422 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PURDY: THE COURT: BY MR. PURDY: Q. A. And this agreement is for yourself; is that correct? Correct. an employment agreement each fiscal year. Q. I direct your attention to what's been marked for Do you have identification purposes as Government Exhibit 84. that in front of you? A. Q. A. Q. A. Q. A. Yes, I do. Is that a document you prepared? Yes. In the course of your performance of your duties at CIETC? Correct. And could you identify for the jury what that document is? It's my employment agreement for the fiscal year beginning July 1st, 2005. MR. PURDY: Exhibit 84. MR. SPIES: MR. HAMROCK: MR. SCOTT: THE COURT: No objection. No objection. No objection. Received. (Government Exhibit No. 84 was offered and received in evidence.) Permission to publish? You may. The government moves admission of BARGMAN - DIRECT 423 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. Q. And would you scan to the last page, please. Is this document executed? Yes, September 8th, 2005. Again, backdated to July 1st? Correct. At whose instruction? Ramona Cunningham. I direct your attention to what's been marked for Do you have identification purposes as Government's Exhibit 85. that in front of you? A. Q. is. A. Q. A. Q. A. Q. It's an employment agreement for Karen Tesdell. Is that an agreement you prepared? Yes, I did. And at whose direction? Ramona Cunningham's. Yes, I do. Okay. And can you identify for the jury what that document And this was prepared in the normal course of your duties at CIETC? A. Yes. MR. PURDY: Exhibit 85. MR. SPIES: MR. HAMROCK: No objection. No objection. The government moves admission of BARGMAN - DIRECT 424 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Yes. What's the date of this document? September 28, 2005. MR. PURDY: THE COURT: BY MR. PURDY: Q. Now, this document looks a little bit different. What's the differences between this document and the prior documents? A. There's several differences. One is that the duties of the MR. SCOTT: THE COURT: No objection. Received. (Government Exhibit No. 85 was offered and received in evidence.) Permission to publish? You may. position aren't as long or explanatory. Some of the provisions were removed that were in the other two agreements, one for Ramona Cunningham, one for myself. There were some provisions in there about additional vacation time in my agreement and Ramona Cunningham's agreement, or termination pay, so those type of items were removed. Q. Does this document for Ms. Tesdell spell out the duties she was to perform? A. Q. Yes. Scan if you would to the last page of this document. Is this document executed? BARGMAN - DIRECT 425 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. Is it retroactive to July 1st as well? Yes. And was that done at anybody's direction? Ramona Cunningham. Why was it executed September 28th and yours were executed on September 8th? A. Q. I believe it just took additional time to finish. We went through a lot of salary increases and bonuses that were paid; is that correct? A. Q. Correct. And there were more bonuses and salary increases than what we showed the jury today; is that correct? A. Q. That's correct. In fact, you received salary or bonus increases just about every month; is that correct? A. Q. Probably on average it would be close to that, yes. At the time you were receiving those salary increases did you know that they were significant pay raises and bonuses? A. Q. A. Q. A. Q. A. Yes. Did you have taxes taken out of those? Yes, I did. And who would perform the payroll tax function at CIETC? Karen Tesdell. So she was aware these bonuses were being paid then too? Yes. BARGMAN - DIRECT 426 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 right now. But the previous December Ramona Cunningham, a friend of hers, myself, my wife, Jack Cline and his wife, Sam Fucaloro and his wife went out to dinner, and afterwards Ramona Cunningham had a room at the motel across from the airport and gave us all drinks, and Jack Cline and Ramona got into a discussion about Jack taking vacation time between Christmas and -MR. SCOTT: Excuse me, Mr. Bargman. At this time I'd Q. During the course of your employment at CIETC a number of bonuses were handed out and pay increases were handed out that you were aware of; is that correct? A. Q. A. Q. A. Correct. Were you ever aware of an employee having their salary cut? Yes. Would you tell the jury the circumstances of that situation. Jack Cline, one of the program managers, had his salary cut by $10,000. That was done in January. I don't remember the year like to interject an objection, No. 1, based on hearsay and, No. 2, relevance. THE COURT: understanding this. Okay. Now, Mr. Purdy, maybe I'm not The way I get this, is this a declarant He's got--I'm confused about who's a member of the conspiracy? who he says is speaking. BARGMAN - DIRECT 427 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Do you know, Mr. Scott? MR. SCOTT: THE COURT: MR. SCOTT: testimony in about? THE COURT: MR. SCOTT: Yeah, do you know who it was? Well, the conversation apparently is Do I know? I mean you made the objection. Do I know who he's trying to bring It's your objection. between Ramona Cunningham and Jack Cline. THE COURT: MR. SCOTT: THE COURT: But who's the speaker? He's about to say what the discussion was. Okay. Well, I want to know who the speaker is and I'll get to the discussion. Who's the speaker, Mr. Purdy? MR. PURDY: the conversation. THE COURT: Okay. Do you want to lay some foundation I believe he's referencing both sides of so we can get the record correct? MR. PURDY: BY MR. PURDY: Q. Did Ms. Cunningham indicate at this meeting anything in I will. regard to Mr. Cline taking vacation? A. Q. A. Yes, she did. And what did Ms. Cunningham represent? Ms. Cunningham objected to Jack Cline's plan to take vacation at the end of December between Christmas and New BARGMAN - DIRECT 428 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Year's. Q. A. Q. To your knowledge, did Mr. Cline take that vacation? Yes. What did Ms. Cunningham tell you, if anything, about what was going to happen to Mr. Cline? MR. SCOTT: Excuse me. Before we go there, Your Honor, I'm going to object to this again on hearsay grounds, and I don't think that this falls within the co-conspirators definition based on the fact that I don't think this is any connection to the alleged conspiracy. THE COURT: the conspiracy? MR. PURDY: Yes, Your Honor. We're claiming that Are you claiming this is in furtherance of there was manipulation of salaries at CIETC, and this was one of them. THE COURT: MR. PURDY: THE COURT: MR. PURDY: THE COURT: BY MR. PURDY: Q. Let's go back to the $200,000 that was awarded at the end of This is a vacation reprimand, isn't it? Well, we're getting to the salary part. This is a vacation reprimand, isn't it? Yes. Objection is sustained. June of 2005. After the money was awarded, did you become aware that Iowa Workforce Development was going to follow up the use of BARGMAN - DIRECT 429 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that money? A. I became aware of it when Mary Bowser showed up to do a monitoring. Q. And when you say Mary Bowser, could you tell the jury who Mary Bowser is. A. Mary Bowser is--I believe she's a budget analyst or similar And she did oversight position at Iowa Workforce Development. or monitoring on our accounting functions. Q. And when did she show up at CIETC to do monitoring on this particular transaction? A. Q. A. It was late summer, early fall. Were you there when Ms. Bowser did her monitoring visit? She was in a room that we had set up for the monitors or auditors; and Ramona Cunningham called me in there to discuss the $200,000 with her. Q. And what did you discuss in relationship to this $200,000 received at the end of fiscal year 2005? A. Mary questioned me and Ramona Cunningham about using only Promise Jobs money to pay the bonuses. Q. Now, the Promise Jobs 200,000 is one of the exhibits we looked at earlier; is that correct? A. Q. Correct. And bonuses were awarded to a number of employees out of that? A. Correct. BARGMAN - DIRECT 430 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 no answer. A. Yes. Her objection was that for those individuals who worked on more than one program, their bonus should have been split between the programs. Ramona Cunningham's and my argument was that they were being rewarded for Promise Jobs work and therefore it should have been only paid out of Promise Jobs. Q. A. Q. And were you able to convince Ms. Bowser of your position? No, I was not. Did Ms. Bowser continue to look into the use of that 200,000 at that monitoring visit? A. Ramona Cunningham went to her office, and she told me she was going to call Jane Barto. MR. SPIES: Your Honor, if I may interject, I think it called for a yes or no answer, and I'll object to the narrative of the witness as irrelevant and unresponsive. THE COURT: THE WITNESS: THE COURT: Do you remember the question? No. "Did Ms. Bowser continue to look into the use of that $200,000 at the monitoring visit?" I think Mr. Spies says the question requires a yes or You want to answer yes or no. BY MR. PURDY: Q. Okay. Did you do anything after having your discussion with Ms. Bowser related to her inquiry into that $200,000? BARGMAN - DIRECT 431 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. I started to go back to my office. Ramona was walking down the hallway with me and told me that she was going to call Jane Barto. Q. And in fact did Ms. Cunningham, to your knowledge, call Ms. Barto? A. Yes. I was called back into Ramona's office, and Mary Bowser was on the telephone talking to Jane. Q. And from the portion of the conversation that you could overhear, did you get the drift or substance of the conversation taking place? MR. SPIES: Excuse me, Your Honor. I'm going to object to the form of the question as calling for "the drift of the conversation." I don't know what it's calling for but it sounds like hearsay and perhaps opinion and speculation. THE COURT: BY MR. PURDY: Q. Did Ms. Bowser at that time have any concerns regarding Okay. Sustained. compensation levels at the executive at CIETC? A. Q. She did not express any. She only talked about the 200,000. So as of this monitoring visit, the only issue you were aware of was the $200,000 use of the PJ money; is that correct? A. Q. Correct. And then I believe you testified earlier you went to a meeting at IWD at which Ms. Barto and other IWD officials attended, you attended, Ms. Cunningham attended. Was that BARGMAN - DIRECT 432 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 $200,000 one of the issues discussed at that meeting? A. Q. Not that I recollect, no. Okay. And what was the issue or issues discussed at that meeting? A. Q. The compensation level. Okay. And about how long after Ms. Bowser's visit did that meeting at IWD take place? A. Q. Within 1 or 2 months. At some point did you become aware that the state auditors were looking into these issues? A. Q. Yes. Okay. And that included both the 200,000 and the regional compensation? A. Q. A. Q. A. Q. A. Correct. When did you first become aware? In early December. And how did you become aware? From Ramona Cunningham and Jane Barto. And tell us, first, what Ms. Cunningham told you. She informed me that she had been told that the state She had auditor's office was going to come and do an audit. been informed by the state auditor. Q. A. Q. And what did Ms. Barto tell you about this? The same thing. And was this same conversation or separate conversations? BARGMAN - DIRECT 433 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Separate conversations. Okay. When Ms. Barto advised you that the state auditors were looking into these issues, what did she tell you? A. That the Department of Labor hadn't accepted documentation that was turned over to the state auditor's office, and the state auditor had agreed to do the audit on behalf of the Department of Labor, and that's what was going to happen. Q. During the course of the auditor's investigation, did the auditors come to CIETC? A. Q. A. Q. Yes, they did. And did you participate in that part of the audit process? Yes, I did. And can you explain to the jury when that occurred and what your role was. A. The state auditor's office was there in December, off and on They looked at payroll system in January, February, March. compensation, looked at invoices that were paid, back-up documentation. Q. Okay. That was it. Did you assist in providing the auditor's office information when they would request it? A. Q. A. Yes, I did. And what type of assistance would you provide? I was the funnel for the majority of the information. Phone records were pulled. Karen may pull those, or some invoices. I ran out payroll records, and then I would meet with BARGMAN - DIRECT 434 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the Corrine Johnson from the auditor's office and provide that information to her. She two or three times would send me an e-mail requesting different types of information. It would take me a week or two to be able to pull that information together and gather it up and then provide that to her. Q. During the course of this audit did you have contact with any employees from the Iowa Workforce Development? A. Q. A. I talked to Jane Barto several times. When did these conversations occur? From December through March. Ramona Cunningham decided she She asked me to didn't want to talk directly with Jane Barto. be sort of a go-between, which I didn't understand but I did anyway. Q. Did you take information from Ms. Cunningham and convey it to Ms. Barto? A. Q. Yes, and the other way around also. So information from Ms. Barto, you conveyed it to Ms. Cunningham? A. Q. A. Q. Right. During the course of this audit process? Correct. What was the nature of the conversations you had with Ms. Cunningham? A. She was wanting to know from Jane Barto what she knew about BARGMAN - DIRECT 435 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the audit, whether the auditors had been in her office, just, you know, up-to-date type of issues. Q. And what was the substance of the conversation you had with Ms. Barto? A. Jane would discuss with me what the auditor's office was looking at at CIETC, what type of items, what questions they had, when I thought they were going to be done. Eventually I got tired of being the go-between and told Ramona Cunningham if she had issues with Jane, then she just needs to call Jane. Q. During the course of this audit or investigation did you have any other communications with any other Iowa Workforce Development staff regarding-A. I talked to Tony Dietsch once. The auditor's office was sending out a survey around the state about compensation, and I called Tony Dietsch to see if he knew anything, and let him know that that was happening. it somehow. Q. The issue of executive compensation and salaries and Ramona Cunningham had gotten a copy of supplemental pay, were you present at any board meetings where that issue was discussed? A. Q. A. Q. Yes. Okay. In November of 2005. And what role, if any, did you have in that meeting? I sat there and listened to the discussion. And I believe you indicated earlier that prior to this BARGMAN - DIRECT 436 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 stricken. THE COURT: BY MR. PURDY: Q. Mr. Bargman-Sustained. meeting there was a meeting at IWD at which Ms. Barto attended? A. Q. Yes. And there were instructions from Ms. Barto to yourself and Ms. Cunningham about authorization of those payments; is that correct? A. Correct. Ms. Barto told Ramona to have the board reaffirm Archie Brooks' authority to provide compensation levels and bonuses. Q. A. Did she tell you why she wanted that done? Just thought it would be a good idea, is my impression. MR. SPIES: Excuses me, Mr. Purdy. I'm going to object to the witness' spontaneous statement about "my impression." He's not competent to testify about impressions. It's speculation. I ask that my objection precede his answer because of its spontaneous nature and ask that my objection be sustained and that portion of the answer stricken. THE COURT: Well, Mr. Spies, I can't tell whether he's repeating what she told him or whether it's his impression from his response, can you? MR. SPIES: Then I'll ask that the entire answer be BARGMAN - DIRECT 437 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: You should ignore the answer, as I told you in the preliminary instructions, and it should go out. BY MR. PURDY: Q. Mr. Bargman, did Ms. Barto indicate to you or Ms. Cunningham in your presence why that reauthorization of Mr. Brooks needed to take place? A. Q. No. What is your understanding of what was being reauthorized at that November 2005 board meeting? A. That Archie Brooks had the authority to set staff compensation levels and to provide bonuses or award bonuses. Q. Were you present during the conversation that took place regarding that issue at the board meeting? A. Q. Yes, I was. What was discussed regarding the compensation and supplemental pay structure of CIETC staff at that meeting, if you recall? A. There was a 15-, 20-minute discussion about whether or not one individual should have the sole authority to set compensation or provide bonuses, that maybe it should be more than one individual or the entire board. Q. Do you remember a discussion in that meeting as to the amounts of bonuses that CIETC employees were receiving? A. Ramona Cunningham talked about 2 or 3 percent on an occasional basis. BARGMAN - DIRECT 438 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. As you sat there, in fact you knew that that's not a true statement, didn't you? A. Q. Yes. You knew that many, many more bonuses were being paid than occasional bonuses, didn't you? A. Correct. MR. HAMROCK: Your Honor, I'm going to ask that the line of questioning--and ask that the prosecutor not be leading the witness and ask nonleading questions. THE COURT: Okay. You want to phrase the questions and answers as opposed to leading? MR. PURDY: THE COURT: BY MR. PURDY: Q. Mr. Bargman, as you sat at that meeting, did you have I will, Your Honor. That's counsel's concern. It is leading. knowledge as to the extent of bonuses being paid to CIETC employees? A. Yes. I knew they were considerably higher and more frequent than what was being discussed by Ramona Cunningham. Q. And did you interject yourself in that meeting and tell the board or set the record straight? A. Q. A. No. Why? Primarily you did not correct Ramona Cunningham. You would I sat silent. lose your job. And also because I was a beneficiary of those BARGMAN - DIRECT 439 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 bonuses. Q. After that meeting and the meeting at IWD with Ms. Barto present, did you undertake or CIETC undertake any methods to justify your salaries? A. Q. A. Yes. We decided to do a wage survey. Tell the jury what you mean by that. What I mean by that is to--I should call it an independent wage survey, is to have a third party do a survey of entities that do similar work to CIETC and see what the compensation level is being paid to similar positions. Q. A. Do you recall how that wage survey was conducted? We found someone to do that survey. They--that individual, I believe it was Caspar Consulting, started by contacting the Department of Labor in DC, got a list of entities to contact. You know, from there I don't know what process she used, or whether she called them or did it by mail, but she came back and had a report. Q. Okay. Do you recall discussing with Caspar Consulting the purpose of the wage survey? A. Ramona Cunningham told her that the purpose was to--in case I left or Ramona left, then what the compensation level should be. Ramona said she didn't want to get into the audit situation with Caspar Consulting. Q. Was that representation that these wage surveys were done in anticipation of your or Ms. Cunningham leaving, was that a true BARGMAN - DIRECT 440 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 statement? A. No, other than the from the standpoint that I was It was solely for considering retiring; but, no, it was not. the purposes of substantiating the compensation levels for the audit. Q. I believe you talked about providing certain information to IWD at the meeting in November of 2005; is that correct? A. Q. Correct. I'd like you to take a look at Government's Exhibit 117 that's previously been admitted. In the body of this letter there are items referenced. Do you see those items referenced? A. Q. Yes, I do. And is that information that you provided at your November meeting to Iowa department of--or Iowa Workforce Development? A. Q. Yes, they are. During the course of your employment at CIETC did you have occasion to observe Mr. Albritton at the CIETC offices at any time? A. Q. Yes. And would you describe for the jury how frequently Mr. Albritton was in the CIETC offices. A. He was in quite frequent. You know, I can't say every day or every week, but he was there several times a month, probably more so when we were on Keo Street than up at on Grand Avenue. BARGMAN - DIRECT 441 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 But he was there frequently meeting with Ramona or attending a board meeting. Q. A. Q. Okay. And the CIETC Board. Did you have occasion to observe his interaction with He was on the Workforce Investment Board. Ms. Cunningham? A. Q. Yes, I did. And would you describe his relationship with Ms. Cunningham How would as friends, business associates, business friends? you categorize it? A. They would argue at times. They would talk business at times. I would say they were more friends than business associates. Q. Did you participate in any social functions following CIETC hours at which Ms. Cunningham and Mr. Albritton would be present? MR. SCOTT: Excuse me, Mr. Bargman. Before you answer that, Your Honor, I'm going to object at this time as to the relevance. THE COURT: BY MR. PURDY: Q. Were you aware of whether Mr. Albritton had any contractual Sustained. relationship with CIETC? A. Q. Yes. And can you explain how you were aware? BARGMAN - DIRECT 442 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. I met with Ramona Cunningham and Mr. Albritton to discuss a Ramona had informed me that $10,000 a year consulting contract. she was going to enter--have CIETC enter into a contract with Mr. Albritton. MR. PURDY: THE COURT: May I approach, Your Honor? You may. Mr. Bargman, I'm showing you what's been marked as Government's Exhibits 141 and 142. Do you see those items? Yes, I do. Could you identify what Exhibit 141 is, please. It was an agreement to pay Dan Albritton $10,000 during a year's time in return for services that included a variety of things. Q. A. Q. A. Q. Did you prepare this contract? No, I did not. Do you know who did? Tami Higar. Is it consistent with the compensation that Ms. Cunningham discussed with you about Mr. Albritton? A. Q. Yes. Were you ever directed to obtain funds or provide a source for funds for those payments? A. Q. I was instructed to make the payments, yes. And would that have been in the ordinary course of your job BARGMAN - DIRECT 443 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. MR. PURDY: THE COURT: BY MR. PURDY: Q. A. Q. A. Q. And this document is entitled what? Retainer Agreement. And is it executed at the bottom? The 7th of January 2004. And this agreement deals with that $10,000 per year to be at CIETC? A. Yes. MR. PURDY: 141, Your Honor. MR. SPIES: MR. SCOTT: MR. HAMROCK: THE COURT: Objection; irrelevant. I have no objection, Your Honor. No objection. Received. (Government Exhibit No. 141 was offered and received in evidence.) Permission to publish? You may. The government moves admission of Exhibit paid to Mr. Albritton pursuant to this agreement; is that correct? A. Q. Correct. I direct your attention to Government's Exhibit 142. Do you have that in front of you? Yes, I do. Can you identify that document for the jury. BARGMAN - DIRECT 444 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PURDY: THE COURT: BY MR. PURDY: Q. A. Q. A. Q. And again this agreement is dated what date? January 7, 2005. And it's executed at the bottom? Yes. Back to the state audit. At some point did you become aware that a report was A. Q. A. Q. It's another retainer agreement starting in January of 2005. Is that consistent with the terms of the previous document? Yes. Is that something that you were directed during the course of your employment to find funds for? A. Q. A. Yes. And who directed you to do that? Ramona Cunningham. MR. PURDY: 142, Your Honor. MR. SPIES: MR. HAMROCK: MR. SCOTT: THE COURT: No objection. No objection. No objection. Received. (Government Exhibit No. 142 was offered and received in evidence.) Permission to publish? You may. The government moves admission of Exhibit BARGMAN - DIRECT 445 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 going to be issued by the auditors? A. Q. Yes, I did. And can you tell the jury when you first became aware of that. A. Q. A. In March of 2006. And how did you become aware of that? The auditor's office informed us that they were going to I became aware of it also from Ramona finalize their report. Cunningham and from a discussion with Jane Barto. Q. Let's take first the discussion with Ms. Cunningham. What was that discussion about? A. That she was waiting for the final audit report, was anxious to have it over with, find out what it was, and that she had been informed that they were probably going to issue it at the end of the month. Q. A. And your conversation with Ms. Barto about it? It was the same conversation, that there was discussion of did she know when the final report was going to be done, when it was going to be issued, how it was going to be issued, were we going to get a copy ahead of time. Q. Did you originate that phone call or did Ms. Barto, if you recall? A. Q. A. That would have been Ms. Cunningham initiated that. And all of you were on the phone at the same time? Speaker phone. BARGMAN - DIRECT 446 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. And where were you when this conversation took place? In Ms. Cunningham's office. During the course of your employment at CIETC and at IWD, you indicated that you knew who Ms. Barto was; is that correct? A. Q. Right. Did you have occasion during your employment at those two agencies to observe Ms. Barto's interaction with Ms. Cunningham? A. Q. A. Q. Yes. Okay. And how would you describe their relationship? I would describe them as friends and work associates. At the end of the audit process when these conversations were taking place, did you get involved in any way to address the CIETC employees or the boards regarding your position about the bonuses or compensation being paid? A. I had a meeting with Ramona Cunningham and Dan Albritton about compensation, revising the compensation levels at CIETC, and the purpose of that meeting was to come up with a plan, you know, new compensation plan and submit that to Mr. Brooks. Q. A. Q. A. Q. A. Q. Where did that meeting take place? It took place in Ramona Cunningham's office. And at what point in time are we talking about here? That would have been during the last week of March. So shortly before the audit report comes out? Correct. Was anybody present besides yourself and Ms. Cunningham and BARGMAN - DIRECT 447 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Yes. Do you recognize this message? Yes, I do. Okay. I drafted it. Mr. Albritton? A. Q. No. I'm going to direct your attention to Government's Exhibit 129 that has previously been admitted. Do you see the top of this message? Can you tell the jury what this message involves. As I mentioned previously, the purpose of that meeting was to come up with a new compensation plan for CIETC. I was aware the day before that the meeting was going to take place. I had gone in with a compensation plan that reflected that the state compensated their employees for similar positions. Mr. Albritton rejected that one. He didn't like it. We talked about the details of this, and Dan seemed to be taking the lead or did take the lead. I shouldn't say seem, did take the lead in proposing new compensation levels for my position, Ramona Cunningham's position, Karen Tesdell's position, Jack Cline. Q. Okay. And if you'll scroll down on this exhibit, bottom half, was a proposal or plan agreed to between the three of you? A. Yes. It also included Kelly Ayers. BARGMAN - DIRECT 448 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q. A. Q. A. And who is Ms. Ayers? Ramona Cunningham's daughter. What was her position at CIETC? She was a job developer for the project that served the disabled. Q. A. Q. A. She was not an administrative staff, was she? No. All right. What plan was proposed? The job developer, Kelly Ayers' position, was going to be Jack Cline's position was going to be cut to cut to $50,000. 72. Ramona Cunningham's salary was going to be cut to a base salary of 90,000, with an additional $25,000 for each 10 years that she had worked at CIETC, which would give her to start with a 50,000 additional to her base salary because she had been there 20 years. And then it would allow her for a 15 percent bonus twice a year. The bonuses were going to be I believe held for 2 years because she was on probation. My position was going to be eliminated. What was going to happen to Ms. Tesdell's position, if anything? A. Q. It was going to be cut to 48,000. Now, all of these were substantial reductions in pay; is that correct? A. Yes. BARGMAN - DIRECT 449 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q. A. out. Q. During the course of this plan and discussion, was And what was the purpose of making that proposal? It was in response to the audit that was going to be coming Mr. Brooks brought into that, as far as you know? A. Q. No. During the end of this process, right before the audit report came out, did Mr. Brooks do anything or did anybody at CIETC do anything on Mr. Brooks' behalf to advise the board of the situation? A. A letter was drafted under his name with a packet of information to be sent out to each board member. Q. A. And who prepared that letter? I drafted that letter in Ramona Cunningham's office based on the instructions she was giving me at the time. Q. Did anybody besides yourself or Ms. Cunningham participate in the drafting of that document? A. Not that I can remember, no. And the only reason I hesitate is that people were always coming in and out of her office. MR. PURDY: THE COURT: Permission to approach, Your Honor. You may. Showing you what's been marked as Government's Exhibit 112, do you have that in front of you? A. Q. Yes, I do. Can you identify that document for the jury. BARGMAN - CROSS - SPIES 450 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. To your knowledge, was Mr. Brooks aware that this document 112. MR. SPIES: MR. HAMROCK: MR. SCOTT: THE COURT: Without objection. No objection. No objection. Received. (Government Exhibit No. 112 was offered and received in evidence.) A. It's a letter addressed from Archie Brooks that was to go out to the CIETC Board members and to the local Workforce Investment Board. It laid out the audit that had been going on and allegations of malfeasance and fraud. Q. Let me stop you there. Was this document prepared in the ordinary course of your duties at CIETC at the direction of Ms. Cunningham? A. Correct. MR. PURDY: The government moves admission of Exhibit was being crafted? A. Q. A. Q. A. He had no direct knowledge, no. Do you know whether this letter was in fact sent? If this letter was sent? Correct. Ramona Cunningham said she was going to personally deliver BARGMAN - CROSS - SPIES 451 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SPIES: Q. Mr. Bargman, before we get into the meat of your testimony two of these. Whether she did or not, I don't know. And the others, I don't know if they were sent or not. Q. A. Q. So you don't have any knowledge if it was sent out? No. Okay. MR. PURDY: No further questions. I'm sorry. I'm sorry, did I offer that exhibit? THE COURT: Yes, you did. Yes. 112 is in. Mr. Spies, do you have cross-examination? MR. SCOTT: Your Honor, before we get started on cross-examination could we have a quick side-bar? THE COURT: MR. SCOTT: No. What do you want? I'd like to approach and talk to the Court before we go any further. (Side-bar conference held but not reported.) THE COURT: Mr. Spies, you can proceed. CROSS-EXAMINATION I'd like to start from the back and work forward. Your last testimony was about Government's Exhibits, I believe, 112, in which you described a letter that you drafted under the name of Archie Brooks that was intended to be circulated to the LEO, the Elected Officials Board, and the RWIB members. Am I right? BARGMAN - CROSS - SPIES 452 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Correct. MR. SPIES: THE COURT: May I approach, Your Honor? You may. Mr. Bargman, I'm going to hand you a copy of that letter that I've marked for identification as Barto Exhibit H and ask you to compare it to Government's Exhibit 112. A. Q. A. Q. They seem to be similar other than the typing. The same letter but different fonts? Correct. Different spacing. I'm going to hand you a yellow highlighter, Mr. Bargman. I'd like you to highlight on Defendant Barto's Exhibit H the statements in that letter that you believe to be true. A. Q. A. Q. How about if I mark what I believe is not true? Fair enough. (Witness complied.) Mr. Bargman, let's turn back now to the beginning of your testimony and your description of getting a job at CIETC. You told us that you had approximately 20-plus years of experience in mastering federal and state employment regulations and requirements? A. Q. Correct. And you told us about moving from Iowa Workforce Development to CIETC? A. Q. Correct. And was it Iowa Workforce Development when you worked there? BARGMAN - CROSS - SPIES 453 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. Yes, it was. And who was your boss at Iowa Workforce Development? Before I left? Yes. Irene Schultz. All right. At one time was Deb Dessert the interim director of Iowa Workforce Development? A. Q. is. A. Q. She's my wife. And was Ms. Dessert acting director before Mr. Running Yes. Tell the ladies and gentlemen of the jury who Deb Dessert became the director? A. Q. A. Q. Yes. And did Mr. Running discharge Ms. Dessert? Yes. And it was during the time after Ms. Dessert was discharged by Mr. Running that you were put into this--I believe you described it as a holding job? A. Q. A. Q. Correct. You were disenchanted by being put in that holding job? Yes. But nonetheless you had 20-plus years of impressive skills mastering federal and state regulations about work employment and job training? BARGMAN - CROSS - SPIES 454 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Correct. And CIETC was getting its feet under it, a new program? CIETC had been in existence for a long time. It was transitions to a new program. Q. All right. And armed with the skills that you had, you were a good fit for CIETC? A. Q. Yes. And you applied the skills--these master skills that you had at CIETC during your employment there? A. Q. Yes. Mr. Bargman, Mr. Purdy examined and introduced into evidence your plea agreement that you reached with the United States. The plea agreement is a contract between you and the United States Government? A. Q. Correct. And as part of this contract you agree, as part of that plea agreement, to cooperate with the United States in its investigation and prosecution of others? A. Q. Correct. And as part of that agreement to cooperate, you understand that the United States Government, Mr. Purdy, or the United States Attorney, had asked the Court at your sentencing to reduce your sentence? A. Q. Yes. And by that I mean that the United States Government at your BARGMAN - CROSS - SPIES 455 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 sentencing if they believed that you provided substantial assistance in their investigation and prosecution of other people can make a motion to the sentencing judge? A. Q. I believe that's stated in the agreement. Right. It's a motion under section 5K1 of the federal sentencing guidelines? A. Q. I'm not familiar with that. I'll state it differently. It's a motion for a reduction of sentence? A. Q. A. Q. Yes. And only the United States Attorney can make that motion? And my attorney. Well, yes. And only if the United States Attorney in their judgment determines that your cooperation has been substantial? A. Q. That's my understanding according to the agreement, yes. So stated differently, maybe more simply, in order to get this motion to reduce your sentence, you have to cooperate with the United States Government and provide what in their judgment is substantial assistance? A. Q. A. Q. I've agreed to cooperate, yes. To get that motion? I have no idea if I'll get that motion or not. Let's turn now, Mr. Bargman, to your role at CIETC, especially during the last 4 or 5 years of your work there. You were a chief operating officer at CIETC? BARGMAN - CROSS - SPIES 456 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Correct. That was my title. And part of your job as a chief operating officer was to provide budget information? A. Q. A. Q. Yes. And you provided budget information to the CIETC Board? No. I provided budget information to Ramona Cunningham. And Ramona Cunningham in turn conveyed that to the CIETC Board? A. The CIETC Board received a monthly report that was prepared by Karen Tesdell. Q. Well, what was your budget? What was your budget duty at CIETC, Mr. Bargman? A. I did an operating budget that was to make sure we didn't exceed our budget authority. Q. So if I could paraphrase that, did you have to keep track of kind of the ebb and flow of the funds available to CIETC to carry out its mandate? A. Q. Correct. So you were the one who had your finger on the pulse of the inflow and the outflow of money into CIETC? A. I knew what our contract authority amounts were, and based on reports that I got out of the accounting system, I would compare that to my budget. Q. And that accounting system you described for us earlier began as a Peachtree off-the-shelf software program? BARGMAN - CROSS - SPIES 457 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. A. Correct. It was later changed into something else? Right. And what was this new program called? The name escapes me right now. Something fund? Yeah. It started out as American Fund and then it changed hands nationally a couple of times. Q. And did you have a role, Mr. Bargman, in implementing that new accounting software into the CIETC operation? A. Q. Yes. And did CIETC hire--CIETC did hire a consultant to assist in the implementation of that software? A. Q. A. Q. A. Q. A. Q. Yes. And that consultant was who? Deb Dessert. Your wife? Correct. She was a paid consultant of CIETC? Yes. And she was also working with another state agency at that time? A. Q. A. No. No. Not in the beginning. BARGMAN - CROSS - SPIES 458 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. for? A. Q. A. Q. The state auditor's office. The same state auditor's office that audited CIETC? Correct. Mr. Bargman, in gathering the information that you needed to Not at the beginning? No. Not to implement that software, no. After she implemented the software, she then went to work put your finger on the pulse of the coming and going of funds into CIETC and out of CIETC, there were a lot of people that relied on the information that you got about those funds. A. Q. Could you ask that again? Yeah. It was a bad question. For example, Jane Barto relied on your representations about the state of health of the funds at CIETC? A. Q. I mean I don't know what she relied on. Well, if you told her that CIETC was out of money, she relied on that, didn't she? A. Q. I would assume so, yes. And if, for example, you told Ramona Cunningham that CIETC needed more money, and she was going to go to Jane Barto or IWD or Rich Running to get more funds, they were relying on you? A. I never told Ramona Cunningham that we needed more money, other than one instance. Q. Well, she was relying on you, wasn't she? BARGMAN - CROSS - SPIES 459 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. In that instance. Now, you've already told us, I think, Mr. Bargman, that you were the one that was responsible for implementing and making available bonuses and salary adjustments? A. Q. A. Q. A. Q. I did not implement bonuses or salary adjustments. Did you set those levels? No, I did not set those levels. Ramona Cunningham set those levels? Yes. And you had to tell Ramona Cunningham whether there was enough money to pay those bonuses? A. Q. Correct. Mr. Bargman, let's turn specifically if we could right now to the $200,000 that was transferred from IWD, Iowa Workforce Development, on June 30th, 2005 to CIETC. A. Q. Okay. Now, you told us that you were in charge of knowing the ebb Okay? and flow of funds in and out of CIETC; right? A. Q. Yes. And you were running out of funds at that time of the year, weren't you? A. Q. No. You told people that you were running out of funds, though, didn't you? A. I did not, no. BARGMAN - CROSS - SPIES 460 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Did you tell Ramona Cunningham that you were running out of funds? A. Q. No. Did Ramona Cunningham tell people that you were running out of funds? A. Q. From what Ramona Cunningham told me, yes. And people relied on that representation. You know that to be true? A. Q. Yes. And it was learned by you and Ramona Cunningham in advance of June 30th that there were funds available in the Promise Jobs Program that could be made available to CIETC? A. Q. Correct. And the Promise Jobs is one of the programs we've heard that you used and implemented at CIETC? A. Q. Correct. Now, it's not unusual, is it, Mr. Bargman at the end of a fiscal year for a state agency to have access to money--to take advantage of that money because you use it or you lose it? A. If you did not have carryover authority from the legislature, that's correct. Q. And being a master of federal and state regulations and laws, you knew that in the case of Promise Jobs money, it was use it or lose it? A. There was that possibility. BARGMAN - CROSS - SPIES 461 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. And you knew from your long experience in state government and your long experience working with CIETC and with the state legislature that sometimes if you didn't use that money and it went back or reverted back to the program where it started, that it would affect your next year's allocations? A. Q. Correct. So it wasn't just CIETC or IWD that would take advantage of this opportunity, a lot of state agencies would do it, wouldn't they? A. Q. Correct. Now, the $200,000 that was transferred from IWD to CIETC was intended for supplemental salaries? A. Q. Yes. And you had to provide the budget information to justify that money being used for supplemental salaries? A. Q. There was no budget information. But the representations that were made that CIETC needed that money? A. Q. That's the representation that Ramona Cunningham made, yes. And it was a representation that was made not just to Jane Barto but to Kelly Taylor, wasn't it? A. Q. I don't have direct knowledge of that. But you would agree with me that the mission of this $200,000 going from Iowa Workforce Development to CIETC was to pay supplemental salaries? BARGMAN - CROSS - SPIES 462 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes. And the supplemental salaries, at least the reason being given for these supplemental salaries is that people who worked at CIETC for Promise Jobs programs had been denied pay adjustments in years past? A. Q. Everybody had a cost of living increase each year. I'm not talking about cost of living, Mr. Bargman. Was it represented to IWD that this $200,000 was going to be used to adjust salaries for people who worked at CIETC who hadn't got adjustments in the past? A. Q. I've heard Ramona Cunningham say that, yes. And not only did she say that but she said that they hadn't gotten adjustments in the past because there wasn't enough money? A. Q. A. I've heard her say that too, yes. And she told that to Jane Barto? I'm not a direct witness of that, but that's what Ramona Cunningham informed me. Q. Now, the $200,000 that went from the State of Iowa to CIETC, there was a paper trail for that, wasn't there? A. Q. A. Q. A. Yes. There was an exchange of e-mails; yes? Yes. There was a contract adjustment that was made? Yes. BARGMAN - CROSS - SPIES 463 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. And a contract adjustment is just--it's really not an amendment to a contract, but it's rather a memorial showing a change in funding? A. Q. Correct. And this change in funding, this amendment would be signed by a representative of your board? A. Q. Archie Brooks. And a representative from the agency that provided the money? A. Q. A. Q. A. Q. A. Q. Correct. And there was a contract adjustment for this $200,000? If I'm remembering correctly, yes. And do you know who prepared that contract amendment? I do not have firsthand knowledge. Did you see the check? No. But you know that there was a check issued by the State of Iowa by the state treasurer, the check was delivered to CIETC? A. Q. A. My common sense tells me that must have happened, yes. Because it went to the bank? Because it went in the bank, and we would have had a deficit had it not. Q. A. So the state treasurer had a record of this $200,000? Yes. BARGMAN - CROSS - SPIES 464 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. A. Q. Your bank had a record of this $200,000? Correct. This check, was it delivered to you? No. You were gone? I was gone. So somebody delivered the check, and they of course knew that the check went from the state treasurer to CIETC? A. Q. Correct. Now, you told us what this money was used for, and you told us that the money was used for the payment of what you called bonuses? A. Q. A. Q. A. Or supplemental pay, yes. All right. Yes. Supplemental pay, though, is it a term of art? Supplemental pay is a term that's mentioned in the It's, my opinion, a softer word than bonus. Are they the same thing? regulations. Q. Okay. So the term supplemental pay would appear in some of these federal and state regulations and laws that you were familiar with over the past 20 years? A. Q. Yes, and so is the term bonus. Okay. So there wasn't anything magic about the fact that the expression supplemental pay was conveyed to Iowa Workforce Development as the use to which this $200,000 was to be put? BARGMAN - CROSS - SPIES 465 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. No. Now, you also said that some of this money was perhaps intended for use for equipment? A. No. I didn't-I said that state agencies in the past would use end-of-the-year money for equipment or other such items. Q. All right. Well, I misunderstood you. So this $200,000 then was intended solely for supplemental payments? A. Q. Correct. All right. So you were the one that in conjunction with Jane Barto figured out how much the bonuses were going to be; right? A. Q. In conjunction with Ramona Cunningham. Yes. And did you actually come up with dollar figures or just percentages? A. Q. They were percentages. And who did the multiplication to see if you could bring it in under $200,000? A. Q. A. I did. Jane Barto had no role in that? No. THE COURT: Mr. Spies, when you get to a place that you think is a good break in presentation, let me know, I'll give the jury a break. MR. SPIES: I'm about to make a transition so this BARGMAN - CROSS - SPIES 466 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Court. would be a good spot. THE COURT: Ladies and gentlemen, we're going to be in The lawyers want to make some Remember the admonition that recess until 3:30 with the jury. record so the lawyers should stay. I told you about before. (In open court, out of the presence of the jury.) THE COURT: Please be seated. The record should show that we had a side-bar. Mr. Scott. MR. SCOTT: Mr. Scott requested to make a record. Thank you, Your Honor. May it please the Your Honor, at this time I would respectfully move the Court for a mistrial or at a bare minimum a curative instruction. During the direct examination of Mr. Bargman the government asked a series of leading questions. objected, and the objection was sustained. questioning line as leading. Mr. Spies He objected to the The Court sustained the objection. And in addition to sustaining the objection, the Court went into a narrative about why leading questions are impermissible I believe on direct examination. As an explanation, the Court stated that answers given--or the Court stated that answers--basically that answers given in response to leading questions are less credible than those that are answered in response to nonleading questions; and the basis for my objection and my motion is that I believe that BARGMAN - CROSS - SPIES 467 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 objection. Here's what I said, "Ladies and gentlemen, leading is one that suggests the answer. Generally witnesses are not Mr. Scott. Mr. Spies objected and then later said it wasn't an it completely undercuts the credibility of answers given by witnesses during cross-examination as the tool of--using leading questions is the primary tool that is used by defense attorneys in a criminal case by any attorney during cross-examination. THE COURT: Mr. Purdy, do you join in the request for a mistrial or do you resist? MR. PURDY: THE COURT: MR. SPIES: The government would resist, Your Honor. All right. And Mr. Spies? Well, Your Honor, I'm in a delicate situation, having been the catalyst for Mr. Scott's motion, but cross-examination has been described as the greatest tool for searching for the truth, and so the answer is yes. THE COURT: Okay. And Mr. Hamrock or Mr. McCarthy? MR. McCARTHY: THE COURT: We would also join, Your Honor. Mr. Spies, here's what I said--or supposed to give narrative answers." That was in response to Mr. Spies having said "I know this is preliminary but I think we should proceed with questions and answers." The Court went on to say "Sometimes it happens with BARGMAN - CROSS - SPIES 468 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Mr. Scott. told them? MR. SCOTT: this motion. THE COURT: Okay. Well, my preliminary instruction 11 Mr. Scott, first I absolutely do or I wouldn't have made preliminary matters, as Mr. Spies has indicated, but whether or not there are leading questions, you as the jury have to determine whether the response of the witness is credible and that may depend upon the nature of the question. If it's You leading, for instance, then it's the lawyer testifying. would perhaps give that less credibility. That's the reason we don't permit leading questions on direct examination." MR. SCOTT: Yes, Your Honor, I agree. But that is not necessarily--and I don't even believe that that is the primary reason why leading questions--the credibility of the witness and the credibility of the statement, in response to the leading question, has not got to do with the credibility, it's got to do with the friendliness of the witness and the burden of proof, in my opinion. THE COURT: Well, here's what I want to know, Do you genuinely think this is prejudicial, what I said--was the general credibility instruction. of all, if you thought it was prejudicial, I certainly wish you would have raised it at the time. MR. SCOTT: THE COURT: Well, I understand that, Your Honor. And all of you, if I'm somehow preventing BARGMAN - CROSS - SPIES 469 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 3:30. (Short recess.) THE COURT: Please be seated. you from bringing things to my attention, you should tell me. Okay. It wasn't my intent, Mr. Scott. MR. SCOTT: THE COURT: I'm sure it was not. But here's what I'm saying. If you think Okay. what I say is wrong, I want you on your feet telling me. Don't wait 2 hours like you did here. MR. SCOTT: Well, I waited until the conclusion of direct examination when we had a natural break. THE COURT: MR. SCOTT: THE COURT: MR. SCOTT: THE COURT: You didn't wait, you had a side-bar. At a natural break. So don't wait again. Okay. All right. We'll be in recess until The motion is overruled. Mr. Spies, your last question was--and answer was, "Jane Barto had no role in that?" MR. SPIES: BY MR. SPIES: Q. Let's turn now, Mr. Bargman, to a couple of questions about The response was "No." Thank you, Your Honor. some of the general duties and observations that you made while working at CIETC, and specifically you knew that CIETC as an BARGMAN - CROSS - SPIES 470 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 organization that was receiving state and federal funds was subject to review? A. Q. Yes. And specifically the money that you received--and by "you" I mean CIETC--that CIETC received was subject to review? A. Q. Correct. You had a board of directors that was composed of Local Elected Officials and they had an oversight responsibility; right? A. Q. Correct. And you had another board that consisted of members It was another appointed by the governor of the State of Iowa. board? A. Q. A. Q. Correct. And they also had an oversight responsibility? Yes. And they were furnished periodically reports from CIETC about money that was coming in, money that was going out; right? A. Q. Yes. And you also knew that because you were receiving federal funds for federal programs, that the United States Department of Labor was periodically reviewing you? A. Q. Yes. And in fact we know that Dennis Swafford from the United States Department of Labor came to CIETC to review some issues BARGMAN - CROSS - SPIES 471 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 involving money in December of '04, I believe? A. Q. Yes. All right. And I think you referred to or maybe Mr. Purdy mentioned it in his examination of you that you had an independent accounting firm in the Des Moines area that every year reviewed your books? A. Q. Yes. And that accounting firm issued a report, and that report in turn was furnished to your boards? A. Q. Yes. Now, was that report also used by you, Mr. Bargman, as a planning tool for your budgeting? A. Q. A. Q. No. You did your own numbers? Yes. Now, you also know, and we all know now, that you also were monitored by Iowa Workforce Development? A. Q. Yes. Twice a year a budget monitor or analyst would come over to your offices and pick up random or select samples of files to review? A. Q. Yes. And included in the files that they would review would be some of your money files? A. Yes. BARGMAN - CROSS - SPIES 472 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. And we know now that in 2005 Mary Bowser came to CIETC to monitor some of your activities? A. Q. Yes. And before Mary Bowser came to monitor the books or to monitor CIETC, you knew that she was going to be coming over? A. Q. A. Yes. And that this $200,000 was going to be reviewed? I didn't know that the 200,000 was to be reviewed. I wasn't informed of that until she was there. Q. Okay. In fact, when Mary Bowser came over, you kind of described in a picture fashion that you had a room set aside for her where she could sit and go through the charts of the material that you provided to her; right? A. Q. That was provided to her, yes. By you or Ramona Cunningham or whomever provided her that information? A. Q. Karen Tesdell and Tami Higar. All right. And as she looked through this material, I guess what you're telling me is the first information you had that there was an issue was when Ramona Cunningham asked you to come to her office? A. Q. Go to that office that Mary Bowser was in, yes. And the issue, as I think you've described it, was not the amount of the money but how it was going to be allocated? A. Correct. BARGMAN - CROSS - SPIES 473 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. And by allocated, you mean--you mean what programs that $200,000 was supposed to be apportioned to in awarding bonuses? A. What I mean is for those individuals who worked on more than Promise Jobs, her contention was that a portion of the bonus that they received should have been paid out of that program other than Promise Jobs. Q. A. Q. Okay. Right. Right. And I don't want to have you and me fogging over on So I think maybe I asked you in reverse. this, but as you got into this discussion with Mary Bowser about how to allocate this bonus money, you had one view and she had another view? A. Q. Correct. And the view that you had was that all of this bonus should be paid out of the Promise Jobs money? A. Q. Correct. And she said that some of these CIETC employees were working on projects or programs other than Promise Jobs, and therefore some of the bonus should be allocated for the funding out of those other programs? A. Q. A. Q. Correct. And is that a fair assessment of it? Yes. And you had a personnel policy that you thought reinforced your position on this? BARGMAN - CROSS - SPIES 474 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. We didn't have a personnel policy. It was just my interpretation of the federal regulations on charging costs to a program. Q. All right. And so how did you resolve this dispute with Ms. Bowser? A. Did you say "We'll just have to agree to disagree? That led to the telephone conversation that Ms. Bowser had with Jane Barto. Q. Okay. And, again, it was conveyed that you were somehow By the way, did you get on the phone going to be able to tell-with Ms. Barto? A. Q. A. Q. No, I did not. You were in the room when Ramona Cunningham called her? No, I was not. Were you in the room when Mary Bowser got on the phone with Ramona Cunningham? A. Q. A. Q. Yes, I was. And there was a conversation? Yes. And then apparently that didn't resolve the disagreement between you and Mary Bowser? A. Q. No. Mary Bowser left then. And then eventually she didn't engage in any more conversation with you about how to allocate this money? A. Q. No. But at no time during her visit at CIETC did the amount of BARGMAN - CROSS - SPIES 475 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the bonuses or who they went to come up? A. Q. No. As a matter of fact, Mr. Bargman, you thought and still think that those bonuses were technically correct? A. Q. A. Q. A. Q. A. Q. A. I think they were technically correct, but they're high. And, in fact, these bonuses were approved by the board? They were reported to the board. And approved by Archie Brooks? Yes. Reviewed by the Department of Labor? No. Your salary was reviewed by the Department of Labor? Yes. Oh, when you back up, when you say these bonuses, are you referring to the 200,000, or any bonus? Q. You're right. I'll ask a more precise question. The bonuses you received before December of 2004 had been reviewed by the Department of Labor? A. Q. Yes. And the Department of Labor didn't say these are unreasonable? A. Q. No. Now, we know that after Mary Bowser's monitoring visit to CIETC in November of 2005 that about a week or a little bit more than a week after that there was a meeting with you and Ramona Cunningham, Erv Fett, and Tony Dietsch at the IWD offices? BARGMAN - CROSS - SPIES 476 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Correct. And the purpose of this meeting was, as you've described it, that the subject of your salaries had been brought to the attention of the Department of Labor? A. Q. Yes. And there was also an issue about a conflict of interest, wasn't there? A. Q. Yes. Okay. And at this meeting--and it wasn't just a meeting with Jane Barto, was it? A. Q. A. Q. A. Q. No. She had Erv Fett, and what is Mr. Fett's position? He was a division administrator. All right. And what about Mr. Dietsch? He's another division administrator for programs. All right. And you met together with them at the IWD office? A. Q. Correct. On about November 9, 2005. And you were told that you needed to get documentation for your salaries, for your compensation? A. Q. We provided documentation at that meeting, yes. Okay. And the stuff you brought you described for us today, and were you asked to get some more information? A. I don't recall being asked for any more. BARGMAN - CROSS - SPIES 477 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Well, you were asked to gather this information for Mr. Fett? A. Q. A. Q. A. Q. Yes. And you provided-For that meeting. Yes. Right. And you understood that Mr. Fett in turn was going to pass You provided that information to Mr. Fett? this information on to the Department of Labor to try to satisfy their inquiry? A. At the time we provided that information to Mr. Fett, Mr. Dietsch, Ms. Barto; and when we went into the meeting, I had no idea on where it was, you know, who was going to do what with it. Q. A. Q. You just took it to Mr. Fett and Ms. Barto, and Mr. Dietsch? Right. And I think you've already told us but I want to make sure that I'm sure. That during this meeting on November 9, 2005, you did not tell Ms. Barto, Mr. Fett, Mr. Dietsch the real size of your salary? A. Q. A. Q. No. Yeah. Right. Okay. You didn't tell them? You're talking about--I think it was November 10th? November 9 or 10. BARGMAN - CROSS - SPIES 478 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. No. You didn't tell them the real amount of your bonuses? No. Jane Barto was in the dark on that subject on November 10? I didn't say anything about it. Now, you've told us, Mr. Bargman, that shortly thereafter you learned in I think you said late November or early December that the state auditor had been delegated the responsibility by the Department of Labor to look into this executive compensation at CIETC? A. Q. Correct. And you described for us that there were conversations that you had with Ms. Barto during this audit process, and Ramona Cunningham during this audit process, it's a fact, isn't it, Mr. Bargman, that Ms. Barto was trying to find out from you what you knew about what the audit was looking into? A. She wanted to know what the auditors were looking at as they were moving along. Q. A. Q. Okay. Yes. She asked you if there was anything wrong or illegal at And how the audit was going? CIETC? A. Q. Correct. And at this point she still didn't know the amount of your total compensation, did she? BARGMAN - CROSS - SPIES 479 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. I did not tell her, no. In fact, she told you that the attorney general's office had advised her that she was not to communicate with Ramona Cunningham? A. She informed me that someone thought--yeah, it was the attorney general's office that it might be construed as collusion. Q. A. Q. She wasn't supposed to communicate with Ramona Cunningham? That was late in the process, yes. Well, Mr. Bargman, I think it's your recollection that you had a final conversation with Ms. Barto in late March 2006, right before the audit came out? A. Q. Correct. And it was right before the audit report was released by the Did you get an advanced copy of that, by the state auditor. way? A. Q. About 2 hours. Okay. And was this an in-person conversation or was it a telephone conversation? A. Q. A. Q. It was a telephone conversation. And was Ramona Cunningham on the conversation too? No. And Ms. Barto wanted to know from you exactly how much money you made? A. Correct. BARGMAN - CROSS - HAMROCK 480 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. And you told her that you were under orders from Ramona and Archie Brooks not to tell? A. That I was under orders from Ramona, and that Archie Brooks had communicated to Ramona not to tell. Q. A. Q. A. And she was upset? Yes. And she threatened to pull the Promise Jobs contract? She discussed the Promise Jobs contract that might be pulled I can't remember details about that. I just or something. remember discussing the Promise Jobs contract and that she was upset. Q. Mr. Bargman, you never discussed with Jane Barto that this $200,000 that IWD transferred to CIETC on June 30th, 2005 was going to be used to pay you and Ramona Cunningham and others huge bonuses, did you? A. Q. No. And she gave you no instructions about what to do with that money? A. Q. No. She gave you no instructions about how to account for that money? A. Q. No. She gave you no instructions about trying to conceal that money? A. No. BARGMAN - CROSS - HAMROCK 481 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. HAMROCK: Q. Mr. Bargman, my name is Aaron Hamrock. I represent Karen Q. She gave you no instructions about how to cover up what became of that $200,000? A. Q. A. Q. A. Q. you? A. Q. A. Q. A. No. Ramona Cunningham was good at using people, wasn't she? Yes. Was she even told you that Jane Barto was stupid? That was her view of everyone, yes. MR. SPIES: THE COURT: Thanks. Mr. Hamrock or Mr. McCarthy. CROSS-EXAMINATION No. She didn't get any of that money? No. No kickback? Not from me. Well, Mr. Bargman, you did not conspire with Jane Barto, did Tesdell in this matter. Ms. Tesdell worked at CIETC, or whatever the name would have been, before it became CIETC, for about 20 years at her capacity; correct? A. Q. That's my understanding. And -- BARGMAN - CROSS - SCOTT 482 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. 19 to 20 years. Right. She was employed by CIETC or its predecessor name for about 20 years, maybe just a shade more than 20 years. A. Q. Correct. When you came in to CIETC in 2000, you had certain duties In late 2002, that you discussed with Mr. Purdy and Mr. Spies. maybe the beginning of 2003, but I think you said late 2002, you took over the time sheet duties along with Tami Higar? A. Q. Higar. Higar. You and she took over the time sheet duties and how the time was being allocated, those sorts of things; correct? A. Q. I took over July of '03, yes. Mr. Bargman, can you see the chart on your monitor there in front of you? A. Q. Yes. And this is your name appearing as the chief operating officer; is that correct? A. Q. A. Q. A. Q. A. Q. Correct. Who appears at the top? Ramona Cunningham. Would you agree with me that Ramona Cunningham was the boss? Yes. And she was certainly the person in charge? Yes. And she ruled CIETC with an iron fist. I mean she told BARGMAN - CROSS - SCOTT 483 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SCOTT: Q. A. Q. Good afternoon, Mr. Bargman. Bargman. Thank you. Well, I'd like to start out with, how frequently Is it "Bargeman" or "Bargman"? questions. THE COURT: MR. SCOTT: Mr. Scott, do you wish to cross-examine? Yes. Thank you, Your Honor. people what to do? A. Q. Yes. And I think you testified earlier that if you didn't do what Ms. Cunningham ordered, you would be fired? A. Q. Yes. Mr. Bargman, there is not any type of a written conspiracy document between you and Mrs. Tesdell, is there? A. Q. No. And, Mr. Bargman, there's no oral conspiracy or no oral conspiracy between you and Ms. Tesdell; is that correct? A. Correct. MR. HAMROCK: I don't think I have any further CROSS-EXAMINATION did you attend board meetings? A. Q. A. The CIETC Board? Correct. The beginning of my time there, I did not attend; and as I entered into my new positions, I attended probably half of them BARGMAN - CROSS - SCOTT 484 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 or maybe more. Q. A. Q. A. Q. A. Q. A. Q. After you became COO or I guess-Administrative services. The title you had before that director of-Yes. You attended board meetings more frequently? Yes. Are you familiar with the membership on the board? For the most part, yes. I wanted to correct one thing that you had mentioned. Dan Albritton was not a member of the Regional Workforce Investment Board, was he? right? A. He was a member of the CIETC Board. I might be wrong about He was a member of the CIETC Board. Isn't that the Workforce Investment Board. Q. A. Q. That was just a misstatement on your part; correct? Yes. I mean I'd have to look at the list again, but... Well, do you recall him being a member of the Regional Workforce Investment Board? A. I remember him being in the office at some of the meetings, but that's why I stated it that way; but if he's not on the list, then he wasn't a member. Q. A. But he was a board member of CIETC? He was a CIETC Board member, yes. That I have no doubt about. BARGMAN - CROSS - SCOTT 485 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. You talked about Mr. Albritton's consulting contract. Do you recall that? A. Q. Yes. And that Mr. Albritton had entered into an agreement with CIETC to provide consulting services? A. Q. Correct. And there were a list of things that he was to assist or consult about; is that right? A. Q. Correct. And in fact, there are exhibits that have been entered into the record that indicate that Mr. Albritton signed a contract with CIETC; is that correct? A. Q. Correct. You also have visited about the audit reports that were sent Do you recall that? in by Faller Kincheloe. A. Q. A. Q. Yes. The accounting firm Faller Kincheloe? Right. Those accounting reports, those audits, were they done at your behest? A. Q. A. They're required by federal regulation. Did CIETC request Faller Kincheloe to do annual audits? CIETC released a request for audit or request for an No one responded. And so we contacted that firm to auditor. come in at the last minute and do an audit. BARGMAN - CROSS - SCOTT 486 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q. A. Who contacted that firm? I did. And we had to get an extension from the Department of Labor to turn our audit in late. Q. Okay. Thank you. When the audit reports would be returned to you, would you have the opportunity to review those audit reports? A. Q. A. Q. They were discussed with me and Ramona and Karen Tesdell. Did you have an opportunity to review the audit reports? I looked at them, yes. And those audit reports were done in the regular course of business; is that correct? A. Q. Correct. They were provided to you as you just stated, because they were statutorily required or federally required? A. Q. Federally required. I am going to-MR. SCOTT: THE COURT: May I approach, Your Honor? You may. I just handed you what I've marked for identification Are you familiar with purposes as Albritton Exhibits A and B. those documents? A. Q. A. Q. I've seen them before, yes. Do those appear to be audit reports? Yes. From Faller Kincheloe? BARGMAN - CROSS - SCOTT 487 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. BY MR. SCOTT: Q. If you could take a look at Albritton Exhibit A, please, you? A. Yes. MR. SCOTT: Your Honor, at this time I would move that A. Q. A. Q. Yes. For the years 2005 and 2004? Correct. Can you page through those briefly, please. Are those the reports that would have been provided to Albritton Exhibits A and B be admitted. MR. PURDY: MR. SPIES: MR. HAMROCK: THE COURT: No objection. Without objection. No objection. Received. (Defendant Albritton Exhibits A and B were offered and received in evidence.) Sir, and flip over to page 24 of that exhibit. THE COURT: MR. SCOTT: THE COURT: You want to put it on the screen, counsel? I will. Okay. Mr. Bargman, it's there on the screen for you. THE WITNESS: Thank you. Mr. Bargman, that is a notation in the audit report provided to the board of CIETC regarding related party transactions; BARGMAN - CROSS - SCOTT 488 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 correct? A. Q. Correct. And in that there is a notation regarding that a board member--excuse me, another member of the board of directors received $6,000 during the fiscal year ended June 30th, 2004, for providing consulting services to CIETC; correct? A. Q. A. Q. Correct. That would be Mr. Albritton's consulting contract? Correct. In addition to Mr. Albritton's consulting contract, there are additional related-party transactions that are listed there, aren't there, Sir? A. Q. Correct. And those involve board of directors, CEO having--a board of director CEO of another nonprofit having a contract with CIETC? A. Q. Correct. And also reflects a $19,620 payment that a relative of management during the fiscal year got paid? A. Q. A. Q. A. Q. Yes. Would that have been your wife? Yes. That was her contract with CIETC? Correct. And in addition to that, there's another notation that indicates that an insurance agent who's a relative of a board BARGMAN - CROSS - SCOTT 489 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes. And also that again discusses that a member of the board is member; correct? A. Q. A. Q. A. Q. Correct. And this document was provided to the entire board; correct? Correct. There was nothing secret about it? No. The board had the opportunity to review it and ask questions about it at any time? A. Q. Yes. And in fact in 2005, Mr.--I believe Mr. Kincheloe was at the board meeting when his--when the 2005 audit was presented; correct? A. Q. Yes. He was there to present the audit and take questions from any board member who might ask some? A. Q. Correct. I'd like you to take a look at Albritton Exhibit B, please. And, again, it's actually on two pages here, so I'm going to--that is page 25, correct? A. Q. Yes. Page 24. Can you see that on your page? Well, I'm sorry, yes, page 24. Have you got that? also the CEO of a nonprofit that has a contract with CIETC; BARGMAN - CROSS - SCOTT 490 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 correct? A. Q. Correct. And then continuing on on page 25 that paragraph 8 concerning related-party transactions, it continues on to discuss the same transactions that we were just visiting about on Exhibit A; correct? A. Q. A. Q. A. Q. Correct. It indicates Mr. Albritton's consulting contract? Correct. Your wife's contract; correct? Yes. And also the CIETC uses an insurance agent who's a relative Is that correct? of a board member; correct? A. Q. Correct. Again these--this related-parties transactions paragraph that was contained in the audit report by Faller Kincheloe, that was provided to the board of directors in 2005; correct? A. Q. Correct. And the board of directors had the opportunity to ask questions about that; correct? A. Q. Yes, yes. Were you in attendance at the 2005 board meeting when this audit report was presented to the board? A. I was at the previous one in which the auditor was there. I believe I was at this one also. I can't say for BARGMAN - CROSS - SCOTT 491 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 sure. Q. You were present at the board meeting when Mr. Kincheloe was present, the auditor was present? A. Q. Correct. That I can say for a certainty. And at that time was there any board member who raised any question concerning the related-party transaction section of that audit? A. Q. No. Contained in the audit or when the auditor does his audit does it also indicate what salaries are paid? A. Q. A. Q. No. It doesn't indicate that in any way, shape or form? No. How does an auditor do an audit without suggesting what a company pays out in salaries? A. It goes through the payroll and to see if there's supporting documentation for the salaries or bonuses that were paid. Q. So the auditor would have the ability during the course of the audit to look at payroll, see what salaries were paid, what bonuses were paid; is that correct? A. Q. Correct, would have pulled a sample. When an auditor reviewed the payroll, he would have had access to the salary information of CIETC; correct? A. Q. Correct. He would have had access to the bonuses that were paid out BARGMAN - CROSS - SCOTT 492 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 at CIETC; correct? A. Q. Correct. Is there any notation in either the 2004 audit report or the 2005 audit report about excessive salaries? A. Q. No. Any notation in either of those two reports about excessive bonuses? A. Q. No. Was there a single concern raised in the 2004 or the 2005 audit reports about any concern about the payment of salaries, wages, at CIETC? A. Q. No. And this is the financial--this is the company, Faller Kincheloe, upon which the board of directors relied for the audit; correct? A. Q. Correct. It's also my understanding that CIETC was reviewed on a periodic basis by the Department of Labor; is that correct? A. Q. Correct. The Department of Labor came in and they conducted audits of CIETC? A. Q. The last one that I was present for was December 2004. The Department of Labor came in and they would do audits periodically at CIETC; correct? A. Yes. BARGMAN - CROSS - SCOTT 493 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Iowa Workforce Development, they also came in and did periodic-A. Q. A. Q. A. Q. A. Q. Yes. --audits at CIETC? Yes. And how frequently were those done? They did a financial audit twice a year. So every 6 months or was it twice a year? It was twice a year. It just depends on timing. And prior to the problems that Ms. Bowser brought up with regard to the $200,000 Promised Jobs grant, all of those audits came back with a clean bill of health too; correct? A. Q. A. Q. Yes. They were minor issues. $600 payments here, $30 payment there, they were minor? Correct. Mistakes. Would the board of directors have been informed about the Iowa Workforce Development audits in which CIETC passed with flying colors? A. Q. Ramona Cunningham would, yes. She would inform the board that we just got through another audit? A. Q. A. Q. She would make mention of it at the next meeting, yes. And we passed? Yes. And did she make mention of the audits to the board of BARGMAN - CROSS - SCOTT 494 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Mr. Scott? MR. SCOTT: THE COURT: MR. SCOTT: THE COURT: BY MR. SCOTT: Q. You're familiar with the redrafting of the employee policy Please. You did say Department of Justice. Kind of the same thing here, isn't it? We'll write that down. directors, the Department of Labor audits? A. Q. A. Q. Yes. Did I call them the Department of Justice before? I don't think so. Now, that I'm saying that I think I called them Department I meant Department of Labor. of Justice. They provide--the Department of Labor conducted periodic audits; correct? A. Q. Correct. Yeah. THE WITNESS: THE COURT: I heard the Department of Labor, so... You want an answer to your question, manual, are you not, Sir? A. Q. Yes. And were you a member of the committee that was charged with redrafting that policy? A. Q. No. Do you know who was on that committee? BARGMAN - CROSS - SCOTT 495 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. There was actually two groups. Kelly Ayers was taking the lead on that. She was working with Dan Albritton, and then there was--I don't know if anyone else participated on that. Kelly was to get Dan's input on the handbook. And then there was four to six individuals that worked on the PTO. Q. A. PTO is? It's time off. Instead of vacation and sick leave, you have one pot of hours and it's personal time off. Q. Do you know what the purpose of personal time off is as opposed to sick leave? A. It was to discourage the use of sick leave. In other words, if you started calling in sick all the time, then you were using your--actually using your vacation time too. Q. How would you develop that? If somebody had 2 weeks vacation and 3 days sick time, would they get 15 days of PTO? A. When the policy went into effect it transitioned to PTO. So we no long--you no longer accrued sick It was all combined. leave. Q. And that the PTO group, that was a separate group from the Albritton Ayers committee? A. Q. A. Q. Yes. What was the Albritton Ayers committee charged with doing? To review the entire handbook. So their job was to review the entire handbook, and then BARGMAN - CROSS - SCOTT 496 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 there was a select group of people that just did a little bit on one particular section; is that correct? A. Q. Correct. And at some point in time a product was produced by the committee; is that right? A. There were recommendations turned in to Ramona Cunningham and to me. Q. A. Q. And those recommendations-They didn't redraft? There was some redraft of sections. They provided you with what they thought to be the correct recommendations; is that right? A. Q. Correct. And did you have contact with Kelly Ayers during the tenure of this committee? A. Q. Yes. And did you have contact with Dianne Bolden during the tenure of the PTO committee? A. Q. I don't remember Diane, meeting with Diane. Let me back off and say do you know who the members of the subcommittee that dealt with the PTO were? A. Q. A. Q. Suzie Mrzena-- I can remember 3 or 4 names. Did you have contact with any of those people? Yes. And at some point in time, recommendations to policy changes were made to you? BARGMAN - CROSS - SCOTT 497 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. A. And to Ramona, yes. And you reviewed those changes? With Ramona, yes. Edited those changes? Yes. Made changes of your own? I made changes that were directed by Ramona Cunningham, yes. I did some editing changes too. Q. And then in fact Ms. Cunningham, on her own, made changes as well; isn't that right? A. Q. Correct. So it really went through three or four levels; correct? The PTO committee? A. Q. A. Q. Yes. Then you had the general committee; correct? Correct. Then you had you and Ramona review committee, for lack of a better term? A. Q. It wasn't a committee, but yes. The two of you reviewed it together and made changes and alterations? A. Q. A. Q. Yes. And then finally, last but not least, Ramona was given-She did a final read of it, and-Produced the final changes? BARGMAN - CROSS - SCOTT 498 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Made some final changes, yes. Are you aware of whether or not Mr. Albritton participated in the committee meetings in regard to changes to the personnel policy? A. I had a conversation with Kelly Ayers that she had gotten some recommendations from Dan Albritton. Q. And other than your conversation with Kelly Ayers, were you aware of whether or not Mr. Albritton participated in committee meetings in regard to changing the personnel policy? A. Q. A. Q. No. No, he did not participate? I'm not aware. Are you aware of the changes that were made to the board of directors bylaws, any changes? A. Q. No. Were you aware of the changes in the board of directors bylaws that centralized or--I guess centralized Archie Brooks' authority or the chairman of the board's authority, excuse me, to unilaterally set the pay of the executive direct? A. Q. A. Q. Are we talking bylaws? Bylaws of the board of directors. No. You're aware of the fact that that change was made to the policy manual; correct? A. Yes. BARGMAN - CROSS - SCOTT 499 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. Was that done at Ramona's direction? Yes. I'm going to put up on the screen here what's previously It's a 2-page been admitted as Government's Exhibit No. 109. document. Do you see what that says on the top there, November 10, '05 LEO meeting? A. Q. A. Q. A. Q. A. Q. A. Q. Correct. LEO. Locally Elected Officials; correct? Correct. Of which Dan Albritton was one? Yes. Down here I've got highlighted No. 4. Yes. It says Reports? Yes. And under Reports it says, "New Maytag deadline is 11/18. Do you see that? Dan Albritton, Boswell's office, called working with D"? A. Q. A. Q. Yes. Do you see that? Yes. That was a report made by Dan Albritton about the status of dislocated workers at Maytag; is that correct? A. Q. A. Correct. And about his contact with Representative Boswell; correct? Correct. BARGMAN - CROSS - SCOTT 500 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. No. What I'm referring to is the e-mail which talks about your Q. One of the things that was contained in his consulting agreement that he was to do; correct? A. Q. Yes. It's a little bit of a disorganized mess up here that I created. Do you have Exhibit 129 up there? meeting with Ramona Cunningham and Dan Albritton concerning the salary levels at CIETC. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Yes. You were asked about it on direct examination. Yes. And do you remember that meeting with Mr. Albritton? Yes. That took place at the offices of CIETC; is that correct? Ramona Cunningham's office. Took place in Ramona Cunningham's office? Yes. That was located in the office of CIETC? Right. And in this e-mail, it's drafted by who? By me. Who's it from? It was from Ramona Cunningham. Do you remember that e-mail? BARGMAN - CROSS - SCOTT 501 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. A. Q. A. Q. And it was to who? Archie Brooks. How about up top here under the message, do you see that? Yes. It says from Ramona Cunningham, and it says to J. Bargman? Correct. Are you J. Bargman? Yes. And then Ramona also sent this document to Archie Brooks; correct? A. Q. A. Q. Yes. This meeting took place on when? Must have been the middle of the last week of March. Why do you say that it took place in the middle of the last week in March? A. Q. That's just my recollection. During the middle of the last week in March were you aware of the fact that the state was auditing CIETC? A. Q. A. Q. Yes. And auditing your salary level and bonus? Yes. And other people were aware of that as well, correct, within the CIETC organization? A. Q. Yes. Within the board? BARGMAN - CROSS - SCOTT 502 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. I'm not sure about within the board. Well, apparently Dan Albritton found out about it; correct? Yes. Well, Dan would know, yeah. So Dan came in and had a meeting with you folks; correct? Yes. And during the course of that meeting, Mr. Albritton requested that he be provided with the previous audits that were done--or, excuse me, the monitoring reports that were done by IWD; correct? A. Q. A. Q. A. Q. I do not remember that request. You don't remember that request? No. Do you remember producing those for him? No. Do you remember providing him with copies of previous audit reports that were done by Iowa Workforce Development? A. Q. No, I do not. Do you remember at that meeting that Dan Albritton was mad as hell? A. Q. A. Q. A. Q. Yes. And he was mad about the salary levels? Yes. That were going on? Yes. And he was mad about the bonus levels too, wasn't he? BARGMAN - CROSS - SCOTT 503 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes. And really was upset with the way you guys were conducting business over there, wasn't he? A. Q. He was upset about those compensation levels, yes. I'd like to talk to you for a minute about the Were you reauthorization that occurred on November 10th, 2005. present during that board meeting? A. Q. Yes. And were you present for any discussions--or, excuse me, did you have any discussions with Ramona Cunningham concerning the reauthorization of Archie Brooks or really the chairman of the board's power to set salaries? A. Q. A. Q. Yes. You had a conversation with Ms. Cunningham about that? His reaffirming the authorization, yes. And did she tell you that that would be a good idea and that the board should do that? A. Q. Yes. And is it your recollection of that meeting that during the course of that November 10th, 2005 meeting that Archie Brooks, then chairman of the CIETC Board of directors, gave a little presentation about why he needed to be reauthorized? recall that? A. I remember the board members discussing it, and I remember Do you Archie saying that in the future he would have the executive BARGMAN - CROSS - SCOTT 504 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 committee do it. Q. Do you recall that the need for that motion was brought up by Mr. Brooks during that meeting? A. Q. A. Q. Yes. He's the one who initiated the discussion? Yes. He's the one who talked about it and debated for it; correct? A. Q. Correct. And do you recall that during Mr. Brook's discussion at that board meeting that he said that it had always been done that way? A. Q. Yes. And is it your recollection that the chairman of the board of directors of CIETC had always unilaterally by himself on his own set the salary for the chief executive officer, Ramona Cunningham's position? A. Q. Yes. That's how it had been done in the past by board members before Mr. Brooks came on board; isn't that right? A. Q. That's my understanding, yes. The board of directors, to your knowledge, never voted on Ramona Cunningham's salary; correct? A. Q. Never while I was present, no. The board of directors didn't know what Ramona Cunningham's BARGMAN - CROSS - SCOTT 505 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 salary was, did they? A. Q. A. Q. I never informed them, no. They didn't know what bonus levels were, did they? I never informed them. They were never informed at any meeting you were present at, were they? A. Q. No. And in the auditor's report by Faller Kincheloe, those things weren't lined itemed either, were they? A. Q. Correct. Those audit reports by Faller Kincheloe, they gave CIETC a clean bill of health, both of them, didn't they? A. Q. Correct. And to the best of your knowledge, were those reports done and implemented through standard auditing procedures? A. Yes. MR. SCOTT: THE COURT: MR. PURDY: THE COURT: I believe that's all I have. Thank you. Mr. Purdy, do you have redirect? Yes, Your Honor. Ladies and gentlemen, before he does that, Why don't you stand and you've been sitting almost an hour. stretch before he starts redirect. (Short pause.) THE COURT: Go ahead, Mr. Purdy. BARGMAN - REDIRECT 506 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. Mr. Bargman, taking you back to events before the 11-10 of REDIRECT EXAMINATION '05 board meeting, when did you first learn that there was going to be a discussion at that meeting about reauthorizing Mr. Brooks' authority? A. Q. In that meeting with Jane Barto, Erv Fett and Tony Dietsch. And when did that meeting happen compared to the board meeting? A. It took place the morning of November 10th. The board meeting took place in the afternoon. Q. Did you discuss that that was going to take place with Ms. Cunningham after the meeting with Ms. Barto? A. It was Ms. Cunningham discussed it with me on the way over to Jane Barto's office that we need to have the board reaffirm Archie's authority. Q. A. Q. Did she tell you why? No. And that subject was brought up at the meeting at IWD; is that correct? A. Yes. In the meeting with Jane Barto, Erv Fett and Tony Dietsch, Jane suggested that Ramona had the board reaffirm Archie's authority. Q. Okay. When Ms. Bowser was in the offices of CIETC, conducting her monitoring visit, what, if anything, did BARGMAN - REDIRECT 507 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Ms. Cunningham tell you she was going to discuss regarding that monitoring visit with Ms. Bowser? MR. SPIES: MR. HAMROCK: THE COURT: MR. PURDY: Objection; hearsay. Join in that objection. Mr. Purdy. Your Honor, again, the Bell situation related to what Ms. Cunningham told her. THE COURT: Again, this is going to be a conditional receipt of the evidence subject to a later ruling by the Court. You may answer. THE WITNESS: MR. PURDY: BY MR. PURDY: Q. What, if anything, did Ramona tell you she was going to Could you ask that again, please. Yes. discuss with Ms. Bowser regarding the monitoring visit? A. Q. A. Discuss with Ms. Bowser? I'm sorry, Ms. Barto. After we had a discussion with Mary Bowser, Ramona Cunningham told me she was going to call Jane Barto and get this clarified. Q. A. Q. And-The issue about the $200,000 allocation. And after Bowser talked to Barto on the telephone, did Ms. Bowser continue her monitoring duties as it related to the $200,000? BARGMAN - REDIRECT 508 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. No. She said she's to pack up and go back to the office. Mr. Scott asked you about Mr. Albritton's consulting contracts and showed you a portion of some minutes at the board meeting related to a discussion by Mr. Albritton at that meeting and the dislocated workers; is that correct? A. Q. Correct. Did you ever see any written work product produced by Mr. Albritton relating to those contracts? A. Q. No. You indicated that at the end of this string of events Mr. Albritton, yourself, and Ms. Cunningham had a discussion as to how to come up with a plan; is that correct? A. Q. A. Q. Correct. What to do? Compensation plan. And I think you indicated that your proposal about salaries compared to state workers was rejected by Mr. Albritton; is that correct? A. Q. A. Correct. How did his plan compare to your plan? His plan kept the compensation level for the CEO position real high, close to what it had been, at least up in that high level. Mine would have brought it down probably close to 100,000 or less. BARGMAN - REDIRECT 509 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. What was your annual compensation level--what do you think it would have been had you completed the full year of fiscal year '06 at CIETC, approximately? A. Q. Approximately, about 200,000, maybe 250. And in the prior year it was even higher than that; is that correct? A. Q. The prior year it was 378, I believe, 378,000. As you sit here today do you believe that compensation to be reasonable? A. Q. be? A. Q. It would have been a few thousand more. As you sit here today, do you believe the compensation paid No, not at all. What was Ms. Cunningham's salary for those 2 years going to to Ms. Cunningham for those 2 years was reasonable? A. Q. No. It's excessive. What was Ms. Tesdell's salary for those last 2 years at CIETC? A. The last year would have been approximately 120,000 including bonuses, something in that neighborhood. Q. A. Q. Do you recall what the prior year was? No. As you sit here today, do you believe that Ms. Tesdell's salary at $120,000 would have been reasonable? MR. HAMROCK: Excuse me, Your Honor. I'm going to BARGMAN - REDIRECT 510 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 object to this question as, first of all, it's outside the scope of direct examination or redirect examination. for speculation. reasonableness. THE COURT: BY MR. PURDY: Q. Did you ever discuss Tesdell's bonus situation with Sustained. Two, it calls It's asking this witness to speculate on Ms. Cunningham? A. Q. Yes. What did Ms. Cunningham convey to you about Ms. Tesdell bonuses? MR. HAMROCK: Excuse me, Your Honor. I would also object to this that once again it's outside the scope of redirect examination. THE COURT: scope, Mr. Purdy? on cross. Two, it's hearsay. What's your response to the outside the I don't remember any of this I think it is. Was there some? MR. PURDY: Maybe my memory is failing me. I believe several of the parties discussed the excessive salaries at CIETC, specifically Mr. Albritton's attorney Mr. Scott raised through the auditors reports no findings of any excessive salaries. THE COURT: Overruled. You can answer. The question--the answer will be subject to what I told you before, I'll receive it conditionally, and I'll make a BARGMAN - RECROSS - SPIES 511 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SPIES: Q. Mr. Bargman, I may have misunderstood your answer, but you ruling later on it. A. The only discussion I had with Ramona Cunningham about Karen Tesdell's bonuses was in March of 2006, in which Ramona was having that last bonus paid to her, to me and to Karen; and I asked Ramona, "You always indicated to me that you did not like Karen Tesdell. Why do you give her bonuses?" And she told me "to keep her mouth shut." MR. PURDY: THE COURT: No further questions. Mr. Spies any recross? RECROSS-EXAMINATION were asked by Mr. Purdy on redirect examination whether or not Ramona Cunningham on June 30th, 2005 during the audit--during the monitoring visit by Mary Bowser told you what she was going to call Jane Barto about. And did I understand that your answer was that she was going to get it clarified? A. She was going to get it clarified or get it stopped, get it She was ranting and raving. fixed. Q. Well, you told the Grand Jury, didn't you, Mr. Bargman, that Ramona called you in there, into her office, because Mary--Mary Bowser was questioning whether or not the people that received that bonus, whether some of it should have been paid from Workforce Investment Act or some other funding agreement that BARGMAN - RECROSS - SPIES 512 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 they may have worked on, and we talked about that, and my view was that they would be rewarded for the work they did on Promise Jobs, therefore Promise Jobs should pay it. A. Q. Yes. That's what Ramona Cunningham told you she wanted to call Jane about, wasn't it? A. No. As we were walking down the hallway she said she wanted to get Mary stopped looking at the 200,000. Q. Well, you said to the Grand Jury, didn't you, "I left the Ramona went to her office and she called Jane Barto." Ramona went to her office, and I went to room. A. We left the room. my office, and Ramona called me back in her office. Q. A. Q. A. Q. And-When Mary was on the phone. To Jane Barto? Correct. And it's your recollection that Mary Bowser then packed up and left? A. Q. Mary Bowser, yes. Again, the issue, the last you knew, was not the amount of any bonuses or who they went to but how they should be allocated? A. Q. A. That was my contention, yes. And that was the discussion with Mary Bowser? That was the discussion I had with Mary Bowser, yes. BARGMAN - RECROSS - HAMROCK 513 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. HAMROCK: Q. A. Q. Mr. Bargman? Yes. You're not aware of any written conspiracy agreement between THE COURT: MR. SPIES: THE COURT: MR. HAMROCK: Does that mean you're done, Mr. Spies? I am. I'm sorry. Yes. You may cross-examine. Thank you, Your Honor. RECROSS-EXAMINATION Ms. Cunningham and Ms. Tesdell, are you? A. Q. No. And as we established earlier, Ms. Cunningham was the boss, and she directed what was to happen at CIETC; correct? A. Q. Without a doubt. This last statement that you made concerning Ms. Tesdell that Ramona Cunningham told to you, you never--Ms. Tesdell never said she was getting paid to keep quiet, did she? A. Q. No. Ms. Tesdell wasn't even present when Ms. Cunningham allegedly made the statement; correct? A. Q. She was not present, no. Ms. Tesdell could have, in looking at the--or strike that. I'm going to show you what's been previously admitted. Ms. Cunningham could have made that statement about any number of 25 people listed on this sheet of paper; correct? BARGMAN - RECROSS - SCOTT 514 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SCOTT: Q. Mr. Bargman, I'm going to show you again Exhibit 129. A. Yes. MR. HAMROCK: THE COURT: MR. SCOTT: No further questions. Mr. Scott. Yes, thank you, Your Honor. RECROSS-EXAMINATION Thank you. Exhibit 129, this again is the e-mail that we've been talking about; correct? A. Q. Yes. And in it you just got done talking to Mr. Purdy about how this really didn't reduce anybody's salary; right? A. Q. A. Q. It-That's what you talked to Mr. Purdy about; right? Right, didn't reduce Ramona's Cunningham salary. Well, in fact, it reduces Ramona's salary to $90,000 a year; isn't that right? A. Q. A. Q. A. Q. But then she would get an additional 50,000. Sir, it does reduce her salary to $90,000 a year; correct? Correct. And then it does provide for certain bonuses; correct? In longevity pay, yes. In longevity pay then, and as you read on in that paragraph it says she's on probation for a period; correct? A. Correct. BARGMAN - RECROSS - SCOTT 515 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: MR. PURDY: Q. A. Q. How long? Two to three years. And who is that determination to be made by, the Would that have been the board of probationary period? directors? A. Q. I would have to assume that, yes. And that's really what the intent is here, right? You were there at the meeting? A. Q. Yes. And then if you read on, down through that paragraph, does it not say that she would not be eligible for bonuses during her probationary period? A. Q. Correct. In regard to your position at CIETC, you were getting ready to retire; correct? A. Q. Yes. And so the discussion was, not just we're going to eliminate your job, but it was we'll eliminate this position when you retire; correct? A. Correct. MR. SCOTT: THE COURT: Thank you, Sir. You may step down. (Witness excused.) Do you have a witness prepared, Mr. Purdy? We do, Your Honor. MRZENA - DIRECT 516 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. Would you state your full name and spell your last name, MR. COURTER: to call Suzie Mrzena. THE COURT: All right. Actually I do, Your Honor, and we'd like Mr. Courter, while the witness is coming in, what count of the indictment would the witness be asked to help or will the witness testify about? MR. COURTER: Your Honor. THE COURT: All right. It would essentially be for count 1, SUSAN K. MRZENA, GOVERNMENT'S WITNESS, SWORN DIRECT EXAMINATION please. A. Q. A. Q. A. Q. My name is Susan K. Mrzena, M-R-Z-E-N-A. Where are you employed? I'm not employed right now. What was your last previous employment, Ma'am? Iowa Employment Solutions through DMACC. And prior to Iowa Employment Solutions at DMACC where were you employed? A. Q. Central Iowa Employment Training Consortium. And the Iowa Employment Solutions through DMACC was the successor organization to CIETC; correct? A. Correct. MRZENA - DIRECT 517 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. How long did you work at CIETC? I started April 4th of 1988. And when did you finish as it transitioned into IES through DMACC? A. Q. A. Q. August 17th of 2007. So approximately 19 years? 19.5. In 2004, as part of your duties for CIETC, were you assigned to any personnel committees? A. Q. A. Yes, I was. What personnel committee were you assigned to? The committee that was transferring our regular health leave to PTO. Q. In conjunction with your assignment to that policy committee, what were your specific duties? A. To see how we could move our health and our sick and vacation days and investigate through the employers around the state and our board members what their sick policies were. Q. You have previously provided some documents to the FBI; correct? A. Q. Yes. And did you provide any documents to the FBI that outlined your work that you did on the policy committee there for CIETC? A. Yes. MR. COURTER: May I approach, Your Honor? MRZENA - DIRECT 518 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. COURTER: THE COURT: Q. THE COURT: You may. Ms. Mrzena, I'm going to be handing you what's been marked Would you just Government's Exhibit 115 for identification. look through that multipage document. A. Q. Okay. The government's exhibit what's been marked Exhibit 115, does that appear to be some of the documentation that you compiled while working on the policy committee there at CIETC? A. That's a summary. The only thing not included there is the printout of each company and what their policy is. Q. A. Q. You actually prepared these documents? Yes, I did. And did you give these to the FBI during the course of the investigation into CIETC? A. Yes. MR. COURTER: Exhibit 115, Your Honor. MR. SPIES: I have no objection, Your Honor. No objection. We'd move to admit Government's MR. McCARTHY: MR. SCOTT: THE COURT: No objection. Received. (Government Exhibit No. 115 was offered and received in evidence.) We'd move to publish at this time. You may. MRZENA - DIRECT 519 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. The first page of the document has a list of names, Ms. Mrzena, with you at the top; correct? A. Q. A. Q. Yes. And there are five names after you; correct? Yes. Who are those other five names and what's their relationship to the policy committee? A. Q. you? A. Q. Yes. Were there any other employees that were involved in the They're co-workers, and they were line staff, same as me. Did they work on the PTO attendance policy committee with attendance policy committee with you and the five individuals identified on Government's Exhibits 115? A. Q. A. Q. A. Q. No. Do you know Mr. Dan Albritton? Yes. Is he here in the courtroom here today? Yes. Would you just point out which table he's sitting at and just generally describe what he's wearing? A. Q. Right there. During the time that you sat on the attendance policy committee and formulated these documents, was Mr. Albritton on AYERS - DIRECT 520 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor. MR. PURDY: Your Honor. KELLY AYERS, GOVERNMENT'S WITNESS, SWORN THE COURT: Mr. Purdy, why don't you tell what counts The government would call Kelly Ayers, THE COURT: MR. COURTER: you. THE COURT: Mr. McCarthy? No questions, Your Honor. Thank you. further. THE COURT: MR. SPIES: Mr. Spies? I have no questions, Your Honor. Thank the board of directors, to the best of your knowledge? A. Q. Yes. Did Mr. Albritton or any other member of the board of directors have any input in your policy committee or any input in drafting what's contained in Government's Exhibit No. 115? A. No. MR. COURTER: Thank you, Ms. Mrzena. I have nothing MR. McCARTHY: THE COURT: MR. SCOTT: THE COURT: Mr. Scott? No questions. You may step down. Thank you. (Witness excused.) Mr. Courter, call your next witness. We're switching back to Mr. Purdy, Your the witness will testify about. AYERS - DIRECT 521 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. PURDY: Q. A. Q. Ms. Ayers, at some point in time were you employed at CIETC? Yes, Sir. Could you tell the jury when that was and what your job MR. PURDY: Your Honor, I believe the witness will be of assistance in discussion regarding count 1 of the indictment. THE COURT: All right. DIRECT EXAMINATION duties were. A. Between 2004 and 2006, give or take 6 months on either side of that, I was hired to be a intake specialist for the Tom Harkin Learning Center which was under development at the building at that time. So before that I was just kind of doing anything they needed me to do. I was kind of a Jill of all Trades until the I worked or administrative things, new building was built. clerical things that kind of stuff. Q. Okay. Did you have occasion to work on any personnel policies related to CIETC? A. Q. Yes, Sir. Could you tell the jury your role in working on those policies. A. I did the typing, like the data entry type of operation. I also researched some of the information that we were going to update the manual with, such as the Family Medical AYERS - DIRECT 522 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Leave Act was missing from the manual and disability information, and policy on nepotism. Q. A. Q. During your-Sick leave. I'm sorry. During your work on the personnel policy When would That's all right. committee, what time frame are we talking about? this be, what year? A. Q. 2004, I believe. In working on personnel policies did you work with any other individuals at that time CIETC? A. Q. Yes. I worked with Mr. Albritton. Describe for the jury how you interacted with Mr. Albritton as it related to personnel policies. A. To my best memory, several years ago now, I was summoned by either John or Ramona, I can't remember which, and they-Q. A. Q. A. Stop. When you say John or Ramona, last names, please. John Bargman and Ramona Cunningham. Okay. Thank you. That I would be working with Mr. Albritton on the updating of the personnel policies. Q. Did you in fact work with Mr. Bargman or Mr. Albritton at that meeting? A. Q. With Mr. Bargman or Mr. Albritton? I'm sorry. You indicated the meeting was with Mr. Bargman and Ms. Cunningham? AYERS - DIRECT 523 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. It was one or both of them. That gave me the instruction. Are you related to Ms. Cunningham? She's my mother. Okay. At this meeting with Ms. Cunningham and Mr. Bargman, where you were informed that you would be working on personnel policies? Were you told who you would be working with at that point in time? A. Q. Mr. Albritton. Okay. And did you in fact then have occasion to work with Mr. Albritton on the policies? A. Q. A. Yes, Sir. How did you work with Mr. Albritton? I recall one meeting in my cubicle where he came down and we sat and we discussed what we were going to do as far as what we were going to include in the manual that was outdated, and there was a lot of programs that had not been in existence for up to 10 years, and we were going to replace the old outdated names with the new program names. Q. Do you recall working with Mr. Albritton on any policies related to executive salary or compensation? A. I do not have any memory of changing anything regarding executive salary or any salary for that matter. Q. A. When you say you did the typing, what do you mean by that? I entered, for example, there was a program called Promise Jobs, that is now called Workforce Investment Act, so in this AYERS - DIRECT 524 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 manual, however many pages long it was, I went in, and every instance where it says Promise Jobs, I changed it to the current program. I also added the Family Medical Leave Act, which I found just on the Internet under the federal--some federal Website. Q. Those kinds of things. I just typed those things in. Mr. Albritton I believe you said came to your cubicle, I believe you said? A. Q. A. For one meeting. And what was the substance of that meeting? He instructed me on the things that he felt were missing and outdated and told me that I needed to update it. Q. A. Q. Did you make those changes? Yes. What did you do with the document after you made the changes? A. As I recall, that sat on the edge of my desk for a long We moved on to other things. It sat there. I believe I time. probably e-mailed it to Mr. Bargman. I don't remember ever sending it to Mr. Albritton or Ramona Cunningham, but I do believe I sent it to--and this is guessing--John or Tami Higar. Q. A. Q. Okay. How long did you work at CIETC? It was 2.4 years. I just got my IPERS statement yesterday. During the course of your employment at CIETC, did you have occasion to interact with Mr. Albritton on any other level other AYERS - DIRECT 525 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 than the personnel committee? A. I was working with Mr. Albritton in the very beginning of On Keo the move to the new building from Workforce Development. there was an old building, and we moved to the brand new employment building that's now on Grand where it's currently located. Mr. Albritton was going to rent space in that building, and I was working with IWD, which is the Iowa Workforce Development, managers to decide where people were sitting, and I worked on carpet choices and where phones were going to be, and so I was working with finding a spot for Dan Albritton as well. Q. And did you subsequently find a spot for Mr. Albritton in that building? A. it. Q. Other than working with him on potential office space and I believe that we did offer him space, and he did not accept personnel policies, did you work with Mr. Albritton in any other capacity? A. I don't remember having any other work with Mr. Albritton in any other capacity. Q. During the time that you were working at CIETC, did you have occasion to observe Mr. Albritton interacting with your mother? A. Q. Yes. Can you tell the jury your observations about that AYERS - DIRECT 526 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 interaction. A. It's my opinion that it was negative. They--he seemed to create controversy and want people to pay for, you know, get it done, change it now kind of thing, things like that. It wasn't a pleasant interaction and I often was not happy about it. Q. During the course of your employment at CIETC, did you have occasion to interact with Karen Tesdell? A. Q. Yes. And could you tell the jury what type of interaction you had with Ms. Tesdell? A. I've known Ms. Tesdell since I was about 9, 10 years old. She's worked with my mom for that many years so I'd see her as a child, and never worked with her at all in any formal sense that I can remember. her. Q. But I would stop up and say good morning to But I never worked with her on anything that I can recall. Okay. Did you have occasion to observe interaction between your mom and Ms. Tesdell while you worked at CIETC? A. Just the day-to-day interactions of someone you've worked They were very friendly. with for 20 years. Q. During the time that you worked at CIETC did you have occasion to observe or interact with Ms. Barto? A. Q. A. Not really for work that I can remember. Okay. Yes. Did you ever see her at the CIETC building? 527 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you. MR. McCARTHY: MR. SCOTT: No questions. Q. A. But you didn't interact with her there? I said hello. She may have been at one of the building meetings. Q. A. Did you ever see her interact with your mom? In a very limited capacity. She would be--I sat on the second floor and the executives were on the third floor. Q. Did you have occasion to observe Ms. Barto and your mom on any other occasions? A. As we talked about before, I had on at least two, possibly three occasions met those two ladies after work, and had a glass of wine and some appetizers before I went home. Q. Okay. And would you describe for the jury your belief about How would you describe it, friends, their relationship. business associates, whatever, in your words. A. I felt that they had a mutual respect for each other and a friendship, that they were very nice to each other, and I never saw them interact on a personal level, like in a "go out to dinner" kind of situation, but they seemed to have a mutual respect and fondness for each other. MR. PURDY: THE COURT: MR. SPIES: No further questions, Your Honor. Mr. Spies. I have no questions, Your Honor. Thank No questions. 528 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: THE COURT: THE WITNESS: All right. You may be excused. Thank you very much. (Witness excused.) Ladies and gentlemen, we're going to be in Remember the admonition We'll be recess until 8:30 tomorrow morning. that I gave you before that was the final instruction. in recess until 8:30. MR. COURTER: Your Honor, I need to make some brief record after the jury is gone. THE COURT: All right. Go ahead. (In open court, out of the presence of the jury.) THE COURT: Please be seated. Mr. Courter indicated now that the jury has left that he wishes to make a brief record. Go ahead, Mr. Courter. MR. COURTER: Your Honor, on Government's Exhibit 115 that was admitted into evidence I erroneously gave your clerk my working copy rather than the original, so I'd just like to switch those out, and that's all I need, Judge. THE COURT: All right. Counsel, how are we doing in terms of timing and completion of your case or do you have any indication? And if you don't, that's fine. I don't want to try to run your side of the case, but I think if we tell the jury or give them some encouragement maybe Thursday or Friday about scheduling so they can plan accordingly. 529 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 10, 2008.) MR. PURDY: I think the government is optimistic we can be done with this case before the break. THE COURT: Okay. We'll be in recess. (Recess at 5:00 p.m. until 8:30 a.m., Wednesday, April 530 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CERTIFIED SHORTHAND REPORTER C E R T I F I C A T E I, the undersigned, a Certified Shorthand Reporter of the State of Iowa, do hereby certify that I acted as the official court reporter at the hearing in the above-entitled matter at the time and place indicated; That I took in shorthand all of the proceedings had at the said time and place and that said shorthand notes were reduced to typewriting under my direction and supervision, and that the foregoing typewritten pages are a full and complete transcript of the shorthand notes so taken. Dated at Des Moines, Iowa, this 6th day of June, 2008. 531 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF IOWA CENTRAL DIVISION - - - - - - - - - - - - - - - -X UNITED STATES OF AMERICA, : : Plaintiff, : : vs. : : RAMONA CUNNINGHAM, JANE BARTO, : KAREN TESDELL, JOSEPH : ARCHIBALD BROOKS, JR. and : DAN ALBRITTON, : : Defendants. : - - - - - - - - - - - - - - - -X Criminal No. 07-008 Volume III TRIAL TRANSCRIPT West Courtroom U.S. Courthouse 131 East Fourth Street Davenport, Iowa Thursday, April 10, 2008 8:30 a.m. BEFORE: The Honorable ROBERT W. PRATT, Chief Judge, and a Jury. EILEEN HICKS - CERTIFIED SHORTHAND REPORTER 532 APPEARANCES: For the Plaintiff: WILLIAM C. PURDY, ESQ. JOHN S. COURTER, ESQ. Assistant U.S. Attorneys U.S. Courthouse Annex 110 East Court Avenue Des Moines, Iowa 50309 LEON F. SPIES, ESQ. Mellon & Spies Suite 411 102 South Clinton Street Iowa City, Iowa 52240 AARON HAMROCK, ESQ. TIMOTHY McCARTHY II, ESQ. McCarthy & Hamrock 1200 Valley West Drive Suite 400 West Des Moines, Iowa 50265 PAUL D. SCOTT, ESQ. Cook, Brown & Scott 8554 Alice Avenue Des Moines, Iowa 50325-7112 For Defendant Barto: For Defendant Tesdell: For Defendant Albritton: 533 1 2 3 4 5 6 7 David W. Reed 8 9 10 11 12 Harold James Pothoven 13 14 15 16 17 Charles Joseph Brooks 18 19 20 21 Darrell Lee Jensen 22 23 24 25 794 804 (Spies) 805 (Scott) Samuel John Fucalora 741 711 732 (Hamrock) 778 (Spies) 781 (Scott) 791 Ako Abdul-Samad 686 659 673 (Hamrock) 677 (Scott) 700 (McCarthy) 701 (Scott) 682 Sherry Howard 640 620 629 (McCarthy) 634 (Scott) 650 (McCarthy) 654 (Scott) WITNESS For the Government: Joseph Archibald Brooks 535 585 (Spies) 593 (McCarthy) 595 (Scott) 613 619 (Scott) I N D E X DIRECT CROSS REDIRECT RECROSS 534 1 2 GOVERNMENT EXHIBIT NO: 3 114 - Brooks Plea Agreement 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DEFENDANT ALBRITTON EXHIBIT: C - Letter from Fucalora 788 788 536 536 OFFERED RECEIVED E X H I B I T S J. A. BROOKS - DIRECT 535 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. Mr. Brooks, would you state your full name and spell your THE COURT: P R O C E E D I N G S Please be seated. Good morning. Mr. Courter or Mr. Purdy, whoever's presenting, you may proceed. MR. COURTER: Joseph Archibald Brooks. Your Honor, the government would call We state we believe his testimony will relate to all counts of the indictment. THE COURT: All right. JOSEPH ARCHIBALD BROOKS, JR., GOVERNMENT'S WITNESS, SWORN DIRECT EXAMINATION last name, please. A. Q. Joseph Archibald Brooks, Junior, B-R-O-O-K-S. And while Joseph is your given first name, you go by Archie Brooks; right? A. Q. That's correct, Sir. Mr. Brooks, you were previously indicted in this case along with Ramona Cunningham, Jane Barto, Karen Tesdell and Dan Albritton; correct? A. Q. Yes, Sir. And you have previously entered pleas of guilty to count 1, conspiracy to misapply funds of the United States, and count 13, which is misapplication of funds concerning programs receiving federal funds; correct? J. A. BROOKS - DIRECT 536 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. Yes, Sir. Now, did you and your attorneys enter into a written plea agreement with myself and Mr. Purdy prior to entering those guilty pleas? A. Yes, Sir. MR. COURTER: THE COURT: May I approach, Your Honor? You may. Mr. Brooks, I just handed you what's been marked You can go Government's Exhibit No. 14 for identification. ahead and take that out of the binder. a moment and go through that document. MR. COURTER: MR. SPIES: Excuse me, 114. I want you to just take Your Honor, while Mr. Brooks is examining the document, can I consult with counsel for a second? (Discussion off the record.) BY MR. COURTER: Q. Mr. Brooks, Government's Exhibit No. 114, is that the copy of the executed plea agreement that you and your attorney signed? A. Yes, Sir. MR. COURTER: Your Honor, we'd move to admit Government's Exhibit 114. MR. SPIES: Your Honor, having conferred with counsel, we have no objection to the exhibit in its form as it's been presented to the witness. J. A. BROOKS - DIRECT 537 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. MR. McCARTHY: MR. SCOTT: THE COURT: No objection Your Honor. No objection, Your Honor. Received. (Government Exhibit No. 114 was offered and received in evidence.) MR. COURTER: THE COURT: May it be published, Your Honor? You may. In paragraph No. 1, Mr. Brooks, those outline the two counts you pled guilty to; correct? A. Q. That's correct, Sir. And paragraph 4 outlines the maximum penalties available for the offenses you pled guilty to; correct? A. Q. Yes, Sir. Moving on to the third page there's a second subsection B-It's agreed upon that at the excuse me, second subsection C. time of your sentencing the government will recommend a prison term somewhere in the 21 to 27 month range; correct? A. Yes, Sir. Could you speak up? Ladies and gentlemen, are you hearing THE COURT: Mr. Courter all right? Mr. Courter, you want to speak up a little bit into the microphone. Q. Look at paragraph C, Mr. Brooks. Would you agree with me that the agreed upon recommendation from the government is that you serve 21 to 27 months in prison? J. A. BROOKS - DIRECT 538 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes, Sir. And under that last paragraph, paragraph E, is it also agreed that your amount of restitution would not exceed $400,000 in this case? A. Q. Yes, Sir. Now, Mr. Brooks, your plea agreement also calls for you to cooperate with the government; correct? A. Q. Yes, Sir. What's your understanding of what the terms of your cooperation with the government entails? A. That my cooperation be evaluated by the attorney's office or prosecuting office and make a recommendation to the judge, and the judge has the final say-so in this matter. Q. Does the cooperation terms require you to give truthful testimony at all times? A. Q. Yes, Sir. I believe what you just talked about was what was called substantial assistance; correct? A. Q. Correct Sir. And does substantial assistance mean for you that there's a potential for you to get a reduced sentence based upon cooperation against other individuals who are on trial today and at later trials that may occur? A. Q. Yes, Sir. Has anybody made you any promises or any guarantees that you J. A. BROOKS - DIRECT 539 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 will receive such a motion from the government? A. Q. No, Sir. If a motion would be filed, do you understand who has the final determination as to, No. 1, whether your sentence will be reduced, and, No. 2, the extent of any reduction? A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. Yes, Sir. Who will make that final determination? Judge Longstaff. Your sentencing judge, whoever that may be? Yes, Sir. Mr. Brooks, you obviously know Ramona Cunningham; correct? Excuse me? You know Ramona Cunningham? Oh, yes, Sir. And the other named defendants are Jane Barto, correct? Yes, Sir. Is she here in the courtroom here today? Directly to your left shoulder. And Defendant Tesdell? Against the wall on the table, I guess. And Defendant Albritton? Yes, he's over against the wall. As it relates to Defendant Cunningham, Ramona Cunningham, you had more than just a professional relationship with Ms. Cunningham; correct? J. A. BROOKS - DIRECT 540 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes, Sir. Would it be fair to say that you had during a period of time in the past an intimate relationship with her that was sexual in nature? A. Q. Yes, Sir. And what time frame are we talking about when this sexual relationship occurred? A. Q. It would have been March '04 through the first of June '05. And approximately how many times during that approximately 15-month period did you have physical contact with Ms. Cunningham that was of a sexual nature? A. Four for sure and there may have been a fifth time; four for sure. Q. Four or five times during that time period. Now, Mr. Brooks, you've been involved with CIETC for a number of years; correct? A. Q. Yes, Sir. Why don't you describe to the jury how you first became involved with CIETC. A. There was a Central Iowa Regional Association of Local There was a planning organization, and at that Governments. time the planning organization also was the operating agency for CETA, which was the Concentrated Employment Training Act. Mayor Olson appointed me I think sometime in about 1978 to the CIRALG board. J. A. BROOKS - DIRECT 541 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. So was that CIRALG the precursor to CIETC? It was an operating agency for CETA, yes, but, I guess you could say that, yes. Q. Approximately when, based upon your knowledge, did CIETC formally come into existence? A. CIRALG, Central Iowa Regional Association of Local Governments-Q. That works both ways for the microphone, I need to talk into it and so do you. A. Okay. I was trying to. And Bill Hood from Kansas City came up from the Department of Labor and discovered that some of the salaries for the planning people and CIRALG was funded out of CETA funds, so at that time and I think it would be about 1983-84, I'm not too sure of the time period, there was a separation. CIRALG became its own entity, and that was the creation of Central Iowa Employment Training Consortium, and it became a separate identity so the funds would not have a chance to be commingled. Q. A. Q. And that was in 1983 or approximately that time frame? Yes, Sir. You indicated that the mayor had appointed you to serve with CIETC or what became CIETC; correct? A. Q. A. Yes. What was your governmental capacity at that time? I was fourth ward councilman for the city of Des Moines. J. A. BROOKS - DIRECT 542 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. City of Des Moines was a signatory and participant in CIETC; correct? A. Q. Yes, Sir. Based upon that participation, did the city of Des Moines automatically have at least one seat on the board of CIETC? A. Q. A. Q. A. Q. Three, Sir. Three. And did you fill one of those three seats? Yes, Sir, until 1995. What happened in 1995? I lost an election. You were obviously no longer on the city council and therefore no longer the council's representative to CIETC; correct? A. Q. A. Q. A. Q. That's correct, Sir. Did you run again for city council? In May of 1999. Did you win that election? Yes, I did, Sir. After you resumed or won the election for the city council and resumed your duties there, did you go back on the CIETC Board? A. I was called and asked by Ramona Cunningham if I would serve There was a vacancy in the city of Des Moines. on the board. Q. A. And when approximately was that? I would say June or July 1999. J. A. BROOKS - DIRECT 543 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. testify. Do you remember the question? The question was, what she had told me was that the nepotism objection. THE COURT: Received--overruled. Withdrawn. You may Q. What was your response to Ms. Cunningham's request to serve again on the CIETC Board? A. That I could not because there was a nepotism policy and my brother was employed by CIETC. Q. A. Q. And your brother is Charles Brooks; correct? Yes, Sir. What did Ms. Cunningham tell you as it relates to your concerns about the nepotism? A. That the-MR. SPIES: THE COURT: MR. COURTER: Objection; hearsay. Counsel. Your Honor, I don't believe this is for the truth of the matter asserted, just for subsequent conduct. THE COURT: MR. SPIES: Mr. Spies. Based on that representation, no policy had been amended and that I could serve. BY MR. COURTER: Q. So you believed initially the fact that your brother worked at CIETC would preclude you from serving on the CIETC Board? A. When I left in 1995 there was a nepotism policy in effect. J. A. BROOKS - DIRECT 544 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. So obviously at least according to Ms. Cunningham that must have changed sometime between '95 and you being requested to go back on the board in '99; correct? MR. SPIES: THE COURT: BY MR. COURTER: Q. A. Q. A. Did you go back on the board in May of '99? Probably June or July, Sir. Of 1999? When she told me that, I went to the mayor. He put the Objection, Your Honor. Sustained. This is leading. recommendation in front of the city council, and I was appointed back on the CIETC Board. Q. At some point after you going back on the CIETC Board in the middle of 1999, did you become chairman of the board? A. Q. A. On January 1st, 2003. And how did it occur that you became chairman of the board? The previous chairman from Dallas County lost an election, There was a nomination committee appointed created a vacancy. by Ms. Cunningham, and that committee nominated myself for the chairman. Q. A. Q. A. Q. Did you agree to serve as chairman of the CIETC Board? Yes, I did. Beginning January 1 of '03? Yes, Sir. What were your duties as chairman of the board? J. A. BROOKS - DIRECT 545 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Basically to run the meeting. When you say meeting? Well, there was a monthly meeting of the CIETC Board, and It every other month a Workforce Development board would meet. would be a joint meeting. And at that time the two chairmen would stand side by side and run the meeting from the agenda. Q. How many individuals made up the board of directors for CIETC during this time? A. Governments, there was 12 counties and the city of Polk County had four representatives, and the city Des Moines. of Des Moines had three, and all the other counties only had one representative. Q. A. Who prepared the agendas for these meetings? Ms. Cunningham through Ms. Bolden. She would mail them out to us and then call for confirmation on attendance. Q. If items would come up that may be considered by the board after the initial agenda had been prepared, how would those be brought to the board's attention? A. Q. I'm sorry, John, I'm picking up this rain up here. Your hearing is picking up the rain. You said the initial agenda was set by Ms. Cunningham and prepared by Ms. Bolden? A. Q. Yes. How far out in advance of the meetings would that agenda be submitted to the board members? A. I would say a week. J. A. BROOKS - DIRECT 546 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. If something came up in the week after the agenda had gone out, but prior to the meeting occurring, how would those issues get on the agenda? A. When we arrived at the meeting, there would be another agenda on the table with bold letters across the top saying amended. Q. A. Q. A. Q. Who would prepare that? Dianne Bolden. Who did that? Yes, if you know? I assumed Dianne Bolden passed them out. Do you remember a board meeting that occurred on August 19th of 2004? A. Q. Yes, Sir. During that board meeting was there any action taken on personnel policies for CIETC? A. Q. Yes, there was. What do you recall occurring as it relates to the personnel policies for CIETC at that August 19, '04 board meeting? A. Basically when we came to that item on the agenda, Ms. Cunningham would always sit to my right, and she told me that Dan Albritton, a member of the personnel committee, would make the recommendation or the presentation, and I called upon Mr. Albritton. Q. A. To make a presentation concerning what? Changes in the bylaws--oh, I'm sorry, the administrative J. A. BROOKS - DIRECT 547 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 policy. Q. When you say administrative policy, those were personnel policies? A. Q. A. Q. A. Q. Personnel policies, yes. These weren't changes to the 28E agreement; correct? No, Sir. And they weren't changes to the formal bylaws; correct? No, Sir. During the time that you were the board chairman, to the best of your knowledge, were there any formal changes to the 28E agreement or to the CIETC bylaws? A. Q. No, Sir. What were the substance of the personnel policy changes as brought up by Mr. Albritton during that August 19th of 2004 meeting? A. The only one that I can remember, and I think it was the only one questioned on the floor, and that was an agreement--I can't remember exactly what it's called--where you don't get so much vacation, so much sick time, that it's all lumped together in one thing and you just get so many days a year. THE COURT: Mr. Courter, the jurors are telling me you've either got to have him speak up or into the microphone. Q. Mr. Brooks, why don't we go ahead and adjust that microphone Give her a shot. so it's right in front of you. A. Yes. Is that better? J. A. BROOKS - DIRECT 548 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. A. you. Q. That's better. Let's try-Mr. Courter, I apologize for interrupting THE COURT: The last response was, the only one that I remember, and I think it was the only one questioned, only one questioned on the floor, and that was the agreement, I can't remember exactly what it's called, to adopt vacation, so much sick time. Anyway, you can clarify it, but I interrupted you. I think it's -POB or something like that. PTO? PTO. What would that stand for, do you recall? My wife has it as Mercy Hospital and she tells me all the Personal-- I don't know, Sir. Personal -- time. Q. In any event, it was a combination of sick time and vacation time? A. Q. Yes, put them all together. Was notice given in the agenda, do you recall, as to whether personnel policy changes would be brought up at this meeting? A. Q. A. No--on the agenda? Was that unusual? Well, it was the only one that came up during the period No, Sir. that I was there, and so I couldn't tell you if it was unusual or not. Q. When you say it was the only one that came up during your J. A. BROOKS - DIRECT 549 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 time there, what do you mean by that? A. That was the only time that when I chaired a meeting, that there were changes to the personnel policy. Q. Was that listed on the agenda for that day's meeting, do you recall? A. Q. A. Q. In August? Correct. Yes, Sir. Do you recall Mr. Albritton or Ms. Cunningham bringing up anything in that meeting as it relates to your specific duties or your authority as chairman of the CIETC Board? A. Q. No, Sir, that was not discussed. What was your understanding of what your role was, going into the August 19th of 2004 board meeting, as it relates to your authority to set salaries and/or supplemental bonuses for CIETC employees? A. Originally I thought it was the same prior to, you know, 1995 where the board set it. Subsequently when I took office in 2003, I was informed that the bylaws had been changed and giving myself the authority to give raises to Ms. Cunningham. Q. A. Anybody else other than Ms. Cunningham? On the--if I remember how the bylaws said, how she said it, that the chairman has the right to give raises to the CEO, in her case, and other members; or that she, as the CEO, had the J. A. BROOKS - DIRECT 550 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 authority to give pay raises on her own behalf, other than herself. Q. A. Q. Did she tell you those were changes made to the bylaws? Yes, Sir. Did you ever look at the bylaws to see if that's in fact what they said? A. Q. No, Sir. I had no reason to dispute her. You indicated that Ms. Cunningham stated to you that Mr. Albritton would bring this up at the meeting and give the presentation; correct? A. Q. Yes, Sir. Was there any indication from either Mr. Albritton or Ms. Cunningham that Mr. Albritton was in fact on the personnel policy committee? A. She told me that he was a member of the personnel policy committee. Q. At this point was Mr. Albritton also a member of the board of directors for CIETC? A. Q. He was an appointee by Polk County, yes, Sir. Do you recall how long he had been on the board of directors at CIETC back in this August 2004 time frame? A. Q. I would say at least 2 years. It could have been more. Strike Did you request Ms. Cunningham or any other member-- that. Did you have any discussions or requests that J. A. BROOKS - DIRECT 551 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Mr. Albritton serve on the personnel committee? A. Q. No, I did not, Sir. During your time there from 2003 forward as chairman of the board, did you appoint any other board members to any personnel committees as it relates to the operation of CIETC? A. Q. No, Sir, I did not. Do you know how Mr. Albritton appeared as a member of this personnel policy committee board for CIETC? A. Ms. Ramona Cunningham made the appointments to that committee, all staff members, and I assume she appointed him when she told me he was a member. Q. Were there formal minutes kept of these meetings, Mr. Brooks, personnel policy meeting -A. Q. A. Q. No. -- of the August 19, 2004 meeting? Yes, there was. There was a tape-recording. After the meetings would be finished, what, if any, duties did Ms. Bolden have as far as memorializing or writing down or formalizing the action the board had taken in that board meeting? A. She would summarize the meeting from the tape and then put it in a written form and give it to us at the next meeting so that the board could adopt the minutes of the previous meeting. Q. A. Did that occur in this case? Yes, in September. J. A. BROOKS - DIRECT 552 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 there. Mr. Brooks, would those be the minutes as produced by Ms. Bolden outlining what had occurred during that August 19th of 2004 meeting as it relates to the personnel policies? A. Q. Yes, Sir. Is there any mention in paragraph No. 5 as outlined there on Q. Mr. Brooks, I'm going to show you what's been admitted into evidence as Government's Exhibit 101. Would you highlight section 5, the bottom section the screen of anything giving you the authority to set salaries or bonuses for CIETC employees? A. Q. No, Sir. The issue of your authority or alleged authority to set salaries and bonuses came up in a later board meeting; correct? A. Q. A. Q. Yes, Sir. And do you recall when that board meeting occurred? November 2005. Was a written agenda prepared for that November 10, 2005 board meeting? A. Q. Correct, Sir. Was there anything included on that agenda as it relates to any reauthorization or any request for reauthorization of your authority to set salary and bonuses? A. Q. No, Sir. Was that unusual? J. A. BROOKS - DIRECT 553 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Yes, it was, when she brought it up to me. Okay. When you say she brought it up? I'm sorry, Ms. Cunningham brought it to my attention as something that needed to be discussed. Q. A. When did she bring this up to you? Prior to the meeting we always had a buffet dinner that we went through. Q. A. Excuse me, you had what? A buffet dinner. MR. SPIES: Excuse me, Your Honor. It sounds like Mr. Brooks is going into hearsay, and I wanted to object and ask for another question. THE COURT: MR. COURTER: THE COURT: Mr. Courter. Again it's 2(e)information, Your Honor. Ladies and gentlemen, this is another instance where you can receive the evidence conditionally subject to a later ruling by the Court as to whether or not it can be considered in your deliberations. You may proceed. BY MR. COURTER: Q. Mr. Brooks, what was the substance of your conversation with The objection is noted. Ms. Cunningham during your luncheon or buffet dinner prior to the November 10, 2005 board meeting? A. She leaned over and told me that Jane Barto requested that we get confirmation on my authority under the personnel policies J. A. BROOKS - DIRECT 554 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. to grant pay raises in regards to a sum of money that was given to us on June 30th, 2005. Q. And that sum of money, do you recall how big that sum of money was? A. Q. $200,000. Did Ms. Cunningham indicate to you why Jane Barto wanted this reauthorization or authority to be brought to the CIETC Board? MR. SPIES: MR. COURTER: THE COURT: conditionally. A. That basically the state auditor had picked up that Objection; hearsay. Same response, Your Honor. Same ruling. You can receive it expenditure and was questioning it and that she, Ms. Barto, wanted confirmation that I had the authority to do that under the administrative rules. BY MR. COURTER: Q. Anything else that Ms. Cunningham told you as it related to this issue that she and Ms. Barto wanted discussed at the meeting? MR. SPIES: MR. COURTER: THE COURT: At the November-THE COURT: Mr. Brooks, let me finish. You can Hearsay, Your Honor. Same, Your Honor. Sale ruling. You can receive it-Objection. J. A. BROOKS - DIRECT 555 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. receive it conditionally subject to a later ruling. Proceed. At the November meeting? BY MR. COURTER: Q. A. Q. Yes. No, that was pretty much at her request. That was one time. Did you have any conversations with Ms. Cunningham concerning why this issue wasn't placed on the agenda for the meeting? A. I did ask her why, and she said it just came up prior to the meeting, the request from Ms. Barto. Q. A. Q. Was Ms. Barto present at the meeting? No, she was not. How was this issue raised during the course of the board meeting? A. Q. I think it came under new business. Did any member of the board of directors actually raise this issue or bring it up for discussion? A. Howard Pothoven, a supervisor, questioned it quite a bit, was surprised that one person had the authority to do it, and kind of just questioned the whole thing basically at that point. And I think Mr. Vlassis from the city of Des Moines also questioned that it could be large sums of money and nobody know it. Q. Was a motion eventually brought up during the course of this J. A. BROOKS - DIRECT 556 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 meeting for a vote to be held on this supposed reauthorization of authority? A. Q. A. Yes, there was. Who brought that motion to the floor? Mr. Albritton made the motion, and Mr. Ako seconded the motion. Q. And do you recall just in general what the substance of that motion was? A. Basically, if I remember right, it was reconfirming my authority as the chairman of the board to, under the personnel policies, to grant pay raises at my discretion. Q. A. What was the board's action on that? If I remember, it was a unanimous vote. Unanimous vote, and then I made a comment that in the future I would let the executive board know if there was any further pay raises. Q. So you essentially, then, undercut or put another layer of oversight into this by saying you would take it to the full board? A. Q. I think I said I would take it to the executive board. Why don't you describe the difference between the executive board and the CIETC Board. A. The executive board was myself as the chairman, Dave Reed as vice-chairman, and Sherry Howard who was treasurer, three members on the executive committee, and those were the three members that were elected by the board annually. J. A. BROOKS - DIRECT 557 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. What were their duties in addition to their normal duties on the CIETC Board? A. Dave Reed would fill in as chairperson if I was absent. Sherry Howard was treasurer, and she was supposed to sign off on vouchers. Q. What, if any, were the duties of the executive board as it related to setting any salaries or supplemental pay for CIETC employees? A. Q. Under the adopted personnel policies of August 2004, none. Then the meeting in November of 2005, was that allegedly to confirm prior board action? A. Q. A. Yes, Sir. When did that prior board action supposedly occur? August 2004, during the adoption of the personnel policy changes. Q. And we just saw in Government's Exhibit--I believe it was 101, the bullet points outlining what the changes were that were adopted by the board? A. Q. In the minutes of September, yes, Sir. And nowhere in those minutes was there any mention of any change in your authority to set salaries; correct? MR. SPIES: THE COURT: BY MR. COURTER: Q. In that August 2004 meeting, was there any mention or any Objection; leading, Your Honor. Sustained. J. A. BROOKS - DIRECT 558 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. discussion of your authority to set salaries and bonuses? A. Q. There was no discussion, Sir. How do you reaffirm something that didn't exist? MR. SCOTT: THE COURT: Objection; argumentive. Overruled. It did exist because it was in the policy, that none of us-And when it did get but not brought to our attention, so-- reconfirmed, most of the members questioned why it was even there or how it got there. BY MR. COURTER: Q. Were you aware, Mr. Brooks, of some concerns the Department of Labor had concerning how CIETC was operated as it relates to the employment of their top executives? A. Yes. There was an audit in December 2004, and Ms. Cunningham, I think, came forward in late December, maybe first of January, saying that the Department of Labor was requesting labor contracts. Q. A. Q. A. Q. A. Q. When you say labor contracts, what do you mean by that? Employment contracts with the top three executives. Who were the top three executives? Ramona Cunningham, John Bargman, and Karen Tesdell. So the CEO, COO, and head accountant of CIETC; correct? Yes, Sir. Do you know why the Department of Labor was requesting these employment contracts or employment agreements? J. A. BROOKS - DIRECT 559 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Again, Ms. Cunningham told me that because of the--there was no set salary on her, and supplemental pay raises and bonuses was not a standard practice, and that we should have a formal agreement of employment. Q. What, if any, instructions did you give Ms. Cunningham as far as the preparation of these employment agreements? A. I gave her none. She came and presented me a draft, and that draft was submitted to Department of Labor in Chicago. Q. Let's stop right there for a second. She submitted you a draft. A. Q. A. Q. A draft of her employment agreement? Of all three, Sir. Defendants Cunningham, Bargman and Tesdell; correct? Yes, Sir. Do you know who had prepared those or how those employment agreements had been prepared? A. Q. A. Q. I assume she did, but I did not ask. You indicated these were in draft form; correct? Yes, Sir. On these draft forms that you received from Ms. Cunningham, are these draft employment agreements, were there any figures filled out as it related to salary for any of the three? A. Q. A. No, Sir. What happened to those draft agreements? They were sent to the Department of Labor in Chicago. I don't remember the gentleman's name. Subsequently he wrote back J. A. BROOKS - DIRECT 560 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 range. through an e-mail and said that the drafts were acceptable. Q. The drafts that were sent to the Department of Labor in Chicago, did those include any salary figures? A. Q. I do not think so, no. I think they were just the drafts. What happened next as it relates to after you received--or Ms. Cunningham had received approval of the draft forms of these employment agreements? A. She brought the three over, and at that time she had dollar figures in the agreement. If I remember right, hers was 185,000 or in that When I asked her-- Basically told her that was twice what I made, and asked her about it, and in my mind I gave her a signed-off raise in 2003--a letter giving her a raise to about 126,000, I think it was. Q. A. What year was that? 2003. And that was the only time that I had given her a raise, and it was subsequent--you know, bonuses and stuff in between, so we figured that when she figured up the cost of living and tenure on the board, 186 was what we agreed to. Q. A. 186,000 for Ms. Cunningham; correct? Yes, if I remember that amount correctly. It could be, you know, some odd change. Q. Do you recall what the figures were as it related to Mr. Bargman or to Ms. Tesdell? A. No, I do not, Sir. J. A. BROOKS - DIRECT 561 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Did you ever take these employment agreements to the executive board or the full CIETC Board for approval? A. Q. A. No, I did not, Sir. Why not? Basically under the personnel policies I had the authority to sign those. Q. Going back to the authority that was allegedly granted to you in August of 2004 and reaffirmed in November of 2005? A. Q. Yes, Sir. To the best of your knowledge, was there ever any formal vote taken on changes to the personnel policy that granted you that supposed authority? A. Q. Could you repeat that again, please. In 2004 was there any formal vote taken to grant you that authority? A. That August 2004 vote on the personnel policies had that, although nobody knew it was in there. Q. Was it your testimony that that authority was in the personnel policies but not presented to the board? A. Q. Yes, Sir. Did you have an opportunity throughout, from 2003 until the end of CIETC, to observe Defendant Jane Barto and Defendant Ramona Cunningham interact? A. I met Ms. Barto three times. Once was at the annual Christmas thing when we presented a plaque to her. J. A. BROOKS - DIRECT 562 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The second time was the old CIETC offices where the executive board, Ms. Cunningham and Ms. Barto talked about space needs; and the third time was Ms. Cunningham called me and asked me to come down to the Savery because they were at the auditor's and they were celebrating a perfect audit of no finding, and I went down there, and Ms. Barto joined the group, as did Sam Fucaloro and another male member that I can't remember. Q. When you talk about this last meeting at the Savery and the audit, what sort of time frame are we talking about, Mr. Brooks? A. Q. A. I would say I guess it would be spring 2005. Who performed that audit? A private firm, Ken--I can't remember the last name. Alan Kincheloe was one of the auditors. Q. A. Q. Was that an auditing firm or CPA firm in the State of Iowa? Yes, Sir. It was awarded through a bidding process. Now, this audit, was that required by either federal or state law? A. I never questioned it, but I assumed it was, Sir, because it was a standard practice every year. Q. A. Q. A. You would have an outside auditor come in? Yes, Sir. What sort of finding did that auditor make? I can't remember her exact words, but I say it was like no She used another term, but it was basically what you findings. would call a perfect audit, no findings and no notes. J. A. BROOKS - DIRECT 563 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. At any point during the time you became chairman of the Strike board in 2003 until the end of your service at CIETC-that. When was the end of your service at CIETC? April 2005, I'd say maybe the first week of April 2005. I'm not sure of the exact date, but it was within I think 7 days of the state audit coming out. Q. A. Q. Was that '05 or '06? '06. I'm sorry. During the time of 2003, when you became chairman, to your resignation from CIETC in April of 2006, were you aware of any personal relationship between Defendant Dan Albritton and Defendant Ramona Cunningham? A. When I first came on in 2003, Polk County supervisor John Mauro made a comment to me-MR. SPIES: THE COURT: BY MR. COURTER: Q. Do you have any personal knowledge of any relationship Objection. Sustained. between Dan Albritton and Ramona Cunningham in the 2003 to 2006 time frame? A. Q. Only through what Mr. Mauro told me. Did you have the opportunity to observe Ramona Cunningham and Dan Albritton interact during the course of the 3 year period for 2003 to April of 2006? J. A. BROOKS - DIRECT 564 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. When I approached Ms. Cunningham and asked her if there was--if her and Dan were living together, and she told me no. Subsequently after that it was like I was a referee, they were bantering back and forth. He wanted an office in the CIETC building, and she subsequently told me that she had called Jane and had stopped that. And he would sit at a board meeting and say he wanted a person downstairs in the elevator lobby to make sure the public could get to the board meeting, and it just kind of went back and forth. She was going to give a day off for the employees for an annual Christmas party. He called me and objected to that. Subsequently we didn't give the employees time off or a whole day off. Q. A. Q. Did it appear to be a somewhat antagonistic relationship? Yes, Sir. You had indicated that Mr. Albritton wanted office space; correct? A. Q. Yes, Sir. Why don't you tell me about that. When did that occur and what office building are we talking about? A. I'm not-MR. SCOTT: Your Honor, excuse me. First I'm going to object because I don't think a proper foundation has been laid on the grounds that--I don't think proper foundation has been laid for this witness to testify about this. We don't know J. A. BROOKS - DIRECT 565 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 counsel. MR. COURTER: BY MR. COURTER: Q. When did this first issue of Mr. Albritton requesting office Yes, Your Honor. about how he knows about it, No. 1; and No. 2, it sounds like he's getting into hearsay. THE COURT: Okay. Do you want to lay some foundation, space come to your attention? A. Through Ms. Cunningham. She brought it to my attention after she said she had talked to Ms. Barto about-MR. SCOTT: Excuse me. Excuse me. Your Honor, again I think we're getting into hearsay here. THE COURT: MR. COURTER: THE COURT: Mr. Courter. 2(e), Your Honor. The answer will be received conditionally You'll just like the other offers that have been made thus far. be told at the end of the case if you can consider it as part of your verdict. You may proceed, counsel. BY MR. COURTER: Q. You had indicated this first came to your attention from Ramona Cunningham; right? A. Q. Yes. What sort of time frame are we talking about, Mr. Brooks? When did this occur, approximately? J. A. BROOKS - DIRECT 566 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. It had to be 2004, I want to say. It was right maybe 6 I'm not too sure months after we moved into the new facility. of the exact date. Q. Well, when you say "the new facility," what new facility are you talking about? A. We were located in the office on Keo, and the state rented offices on Grand Avenue on the east side of Des Moines, and we were offered space as we were previously in the old facility, and a lease agreement with Iowa Workforce Development. Q. Now, the East Grand location, that was for CIETC's operational space? A. Q. A. Q. And Iowa Workforce Development. Was that in the Harkin Learning Center? Yes, Sir. What did Ramona Cunningham indicate to you as it relates to Mr. Albritton requesting office space in that building? A. Well, I said to her--she told me she called Jane to get it stopped, and that he was trying to move into the office so he wouldn't have to pay rent at the location that he was on Locust Street. Q. At this point in time he was still a member of the board of directors? A. Q. Yes, Sir. Did you find that unusual? MR. SPIES: Objection; irrelevant. J. A. BROOKS - DIRECT 567 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: BY MR. COURTER: Q. Did any other members of the board of directors or the Sustained. executive board request office space in the Harkin building when CIETC moved in? A. Q. A. Q. Myself and no other member requested that. Do you know a CIETC employee by the name of Diane Smith? I'm not certain on that one. Do you know-Let me ask you another question, Mr. Brooks. Do you know if CIETC ever hired any employees that had worked for Mr. Albritton? A. Oh, okay. Yes. We had a part-time secretary that subsequently I found out was also a part-time secretary to Mr. Albritton. Q. Why don't you describe to me, No. 1, the time frame that we're looking at when this issue came up. A. I think it was in 2005. There was a request put on the agenda by Ms. Cunningham, requesting that a waiver on the policy of providing insurance to part-time employees 20 hours or less be waived, and that the other employer would make a contribution to CIETC for the cost--their cost of the insurance. Q. A. Q. A. The other employer? That's how it was presented, Sir. And Ms. Cunningham put that on the agenda? Yes, Sir. J. A. BROOKS - DIRECT 568 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. At any time during that board meeting did Ms. Cunningham or any other individual reveal who this other employer was? A. Q. A. No. I did afterwards. You asked somebody afterwards? I asked Ms. Cunningham afterwards who she was talking about. During that discussion where that came up there was quite a bit of discussion, because it was setting a precedent; and in closing the discussion we finally agreed that we would send it to an attorney, and if the attorney agreed that we were not setting a precedent and opening a door for future requests, that it would be approved. Q. A. Q. A. Future requests as? Another part-time employee seeking the same benefit. And do you recall who this part-time employee was? After the meeting I asked Ms. Cunningham. I said "Who is the employer" and so forth, and she said Dan Albritton. Q. Did you have any conversation with Ms. Cunningham concerning why CIETC should be hiring on a part-time basis an employee of Mr. Albritton? A. She told me at that point--Ms. Cunningham told me that--I want to think that this person, must be Diane Smith, had worked for us for 5 to 6 years or really a long-term period, and it was something that she agreed with Dan on that, it would be less expensive for CIETC to do it and him make the payment to us than for him to provide it separately as a single policy. J. A. BROOKS - DIRECT 569 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. You completely lost me on that. You indicated that who had worked for you for 5 or 6 years? A. This part-time secretary. Ms. Cunningham said that she had worked for us for a period of time. Q. A. Q. On the payroll? Yes. She told the board that too. Did you have any knowledge prior to this meeting that this individual had worked for CIETC? A. Q. No, Sir. During the course of your time as chairman of the board from 2003 through April of 2006, did CIETC hire any other employees on a part-time basis that were also employees of any of the other members of the board of directors? A. Not that I'm aware of, Sir, no. Or at least not brought to the board or my attention. Q. Were you aware during the time that you were chairman of the board in the '03 to April of '06 time frame, that Mr. Albritton had a consulting contract with CIETC? A. Q. No, I did not, Sir. Was that ever brought up for board approval or executive board approval? A. Q. No, Sir. Were you aware of any other member of the board of directors or executive board being hired as a consultant for CIETC? A. No, Sir. J. A. BROOKS - DIRECT 570 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Now, you had indicated previously in your testimony about the reauthorization in November of 2005; correct? A. Q. Yes, Sir. And then Ms. Barto had requested that based upon the $200,000 in June of '05; correct? A. Q. Yes, Sir. When did you first become aware, back in June of '05, that potential money may be available to CIETC? A. I received a call from Ms. Cunningham early in the morning, 8 o'clock, I would say, in that area. Q. A. What time frame are we talking about? June 30th. The last day of the fiscal year. And that Jane had called and said that she had a million dollars, and Ramona said she could take $200,000 of it. Q. A. Slow down one second. Jane had called? Jane--Ms. Cunningham told me that Ms. Barto had about a million dollars that she had to dispose of, I guess, so that it would not be a reduction in her future budget, and that we could handle $200,000 of it. Q. A. What was your response to that? And I asked, you know, where it was going, and she said Subsequently she brought over a letter with a Promise Jobs. list of employees and an amount of money, and I signed it, and we had less than 8 hours to spend the money by the close of the business day. J. A. BROOKS - DIRECT 571 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. You find out on June 30th of 2005 that $200,000 is available out of the Promise Jobs fund; correct? A. Q. Yes. What was your understanding as to how this money was to be spent? A. That it was supposed to be spent on salaries through Promise Jobs, and that's what I was told by Ms. Cunningham. Q. A. Q. To employees at CIETC? Yes, Sir. Did you have any input or did you determine which employees would get this money or what sums of money they would get? A. No, I did not. She brought over a letter, like she always had done in the past and already had the--this time it had amounts on it instead of percentages. Q. A. Q. Was that common for her to do that? Yes, Sir. Did you ever prepare bonus letters as it relates to this 3-year time period? A. Just once in 2005 regarding the governmental source funding that was provided to us, and in the letter I designated--I asked her for the names, and then she gave me the recommendation on the amounts. up the letter. and I signed it. Q. We'll get to that in a second, but as it relates to the I changed one. And I typed up the--I didn't type She had the letter typed up, brought it to me, J. A. BROOKS - DIRECT 572 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2005, the $200,000, did you have any input on determining which--excuse me, which employees would share in that? A. Q. No, I did not, Sir. The letter that she brought you that outlined the list of employees and the amounts, did you sign that? A. Q. Yes, Sir. At any point after June 30th of 2005, did you bring this information to either the executive board or the full CIETC Board? A. At the July meeting I brought it up to the board that we did receive money on June 30th, had less than 8 hours to spend the funds, that it was given to Promise Jobs employees, and basically wanted them to know about it. I felt uncomfortable about that money coming on the last day of the fiscal year and made it public. Q. As it relates to bonuses being distributed in a lump sum, would $200,000 be high for you to sign off on authorization or low? A. Q. A. Q. That was the highest I've ever signed off on. Is that why you brought it to the board? Yes. Did you have any conversation with Ramona Cunningham concerning her thoughts on bringing this up to the full board? A. No, I did not discuss it prior to bringing it up. I brought it up just under new business. J. A. BROOKS - DIRECT 573 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 After the meeting with Ms. Cunningham, the day after-MR. SPIES: Objection. Objection to hearsay to any conversation; nonresponsive to the question after the meeting. MR. COURTER: THE COURT: I'll ask another question, Your Honor. You should disregard what part of the answer was out before the objection came. BY MR. COURTER: Q. You indicated, Mr. Brooks, you didn't speak with Ms. Cunningham before this board meeting; correct? A. Q. A. Q. That's correct. Did you speak with her after this board meeting? Yes. And was that concerning this $200,000 that had come in on the last day of fiscal year 2005? A. Q. Yes. What was the substance of that conversation you had with Ms. Cunningham as it relates to-MR. SPIES: MR. COURTER: Objection; hearsay. It's 2(e) but I'll finish the question also at the Court's direction. THE COURT: Okay. You finish your question and then I'll let Mr. Spies object, and he can make his record. Go ahead counsel. BY MR. COURTER: Q. What was the substance of the conversation you had with J. A. BROOKS - DIRECT 574 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Ramona Cunningham after you had brought up the issue of the $200,000 to the full board at the July meeting? MR. SPIES: THE COURT: Objection; hearsay. You can again receive this conditionally subject to a later ruling. You may answer. Ms. Cunningham called and informed me that she had talked to Ms. Barto, and Ms. Barto was very unhappy that I had made it a public item of discussion. Q. Did Ms. Cunningham indicate to you why Ms. Barto was unhappy for you bringing up this issue to the full board? MR. SPIES: THE COURT: MR. COURTER: THE COURT: receive it. BY MR. COURTER: Q. Why don't you restate that answer. We had a number of Objection; hearsay, Your Honor. Same claim by the government? Yes, Your Honor. Same ruling. Conditionally you can people talking at the same time. A. Q. At that time, no, she did not explain anything. Did you have a conversation with her in any subsequent time concerning Ms. Barto's reaction to you bringing this up to the full board in July of '05? A. Q. In August-Of 2005? J. A. BROOKS - DIRECT 575 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. --2005, a month later, Ms. Cunningham-MR. SPIES: Objection now to this portion of the answer that appears to be calling for hearsay, and I ask that my objection precede the answer of the witness given its spontaneity and ask that any response to the question be stricken. MR. COURTER: THE COURT: conditionally. BY MR. COURTER: Q. What was the substance of your conversation with Again, 2(e), Your Honor. Same ruling. You can receive it Ms. Cunningham in August of 2005 regarding Ms. Barto's reaction to the disclosure of this to the full board? A. Ms. Cunningham told me that Ms. Barto was not happy that it was brought up, that the auditors of the state had really picked up that $200,000 on the last day of the year, and that she told me that she told Ms. Barto that if you're ever going to dump money again, dump it in January instead of the last day of the year. Q. Did you have any further conversation or did you understand Ms. Cunningham's statement concerning an auditor had picked up on this $200,000? A. Q. No, Sir. Not at that point. During the course of your time as chairman of the board at CIETC, Mr. Brooks, did you sign off on bonus letters for Ramona J. A. BROOKS - DIRECT 576 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Cunningham, John Bargman and Karen Tesdell? A. Q. A. Q. Yes, Sir, and other employees. That was my next question. Okay. Did you sign off on other employees in addition to the top management of CIETC? A. Q. Yes, Sir. Why don't you describe to me the procedure, how this would come about for you to sign off on the bonus letters. A. Ms. Cunningham would come over to the office early in the morning, sometimes on Monday, and basically maybe have a contract amendment and then obtain--and she always prefaced these by saying that we had obtained more money--or I might have to say it, I know it's going to be objected to--and that Jane had given us -MR. SPIES: Your Honor, I'm going to object to this portion of the answer as calling for hearsay, and ask that my objection precede the answer and ask that the answer be stricken. THE COURT: I think he had completed the answer. The objection is sustained in any event. Go ahead, Mr. Courter. MR. SPIES: answer be stricken? THE COURT: You should ignore the last answer. Excuse me, Your Honor. May I ask that the J. A. BROOKS - DIRECT 577 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 place. (Short pause.) THE COURT: Mr. Courter, some of the jurors have to BY MR. COURTER: Q. You had indicated that Ms. Cunningham would bring these letters to you for signature; correct? A. Q. A. Q. A. Yes, Sir. Did you ever prepare those letters? No, Sir. Do you know who prepared those letters? As far as I know, Ms. Cunningham did. THE COURT: Mr. Courter, I know it's rude of the judge to interrupt, but they've been sitting for over an hour, so if this is a convenient time to give everybody a stretch break, I'm going to do it. MR. COURTER: THE COURT: That's fine, Your Honor. You can take a moment and stretch in use the rest room, we're going to take a break now so the jurors can do that. We'll be in recess until 10 minutes to 10. the admonition. (Short recess.) THE COURT: Please be seated. Remember Ladies and gentlemen, the presenters, the lawyers, who are doing the hard work here, want you to be able to hear with J. A. BROOKS - DIRECT 578 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the competing rain, and if you need to use the rest room or anything else, you know, just signal me, because the lawyers don't want you sitting there in pain or unable to hear, okay? So I try to watch you along the everything else, so, you know, just tell me and I'll interrupt the lawyers and tell the lawyers, so if we can have that agreement? All right. Mr. Courter, when I interrupted you--well, maybe you know where you are or I can go back here, however you want to handle it. MR. COURTER: THE COURT: BY MR. COURTER: Q. Mr. Brooks, I believe that you indicated that Ms. Cunningham I think I'm ready, Your Honor. Go ahead. would bring the letters to you already prepared; correct? A. Q. A. Q. Correct, Sir. Would they come to you for your signature? Yes, Sir. Did you have any conversations when Ms. Cunningham would bring you these bonus letters as to what the source of funds were to pay the bonuses outlined in the letters? A. Never specifics, other than she would just say-MR. SPIES: Excuse me. I apologize, Mr. Brooks. I object on hearsay grounds, Your Honor, and ask that my objection precede his answer, which I thought was calling for a yes or no; ask that the objection be sustained and the answer stricken. J. A. BROOKS - DIRECT 579 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. MR. COURTER: THE COURT: to a later ruling. You may answer. The only thing she ever commented on was that Ms. Barto had 2(e), again, Your Honor. You can receive it conditionally subject forwarded some more funds for different, you know, Promise Jobs or et cetera. BY MR. COURTER: Q. A. Q. And Ms. Cunningham told you that; correct? Yes, Sir. And those would be the sources of funds used to pay the bonuses; correct? A. Q. Yes, Sir. I'm going to show you a number of exhibits that will be coming up on your screen there, Mr. Brooks, starting with Government's Exhibit No. 37. Government Exhibit No. 37 appears to be a letter dated January 16 of 2004, concerning pay increases for Ramona Cunningham and John Bargman; correct? A. Q. Yes, Sir. Go to the second page of that, please. You see the signature for that, correct, Mr. Brooks? A. Q. A. Yes, Sir. Did you sign that document? Yes, Sir. J. A. BROOKS - DIRECT 580 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. I'm going to show you now Government Exhibit No. 39, which appears to be a letter or which is a letter dated April 26, 2004, concerning a salary increase, supplemental wage and incentive payment for John Bargman and Ramona Cunningham; correct? A. Q. A. Q. Yes, Sir. Is that your signature at the bottom? Yes, Sir. Showing you Government Exhibit 51, that's a letter dated April 11 of '05 awarding $10,000 each to John Bargman and Ramona Cunningham; correct? A. Q. A. Q. Yes, Sir. Is that your signature at the bottom? Yes, Sir. Government's Exhibit No. 54, this is a letter dated June 30th of 2005 concerning the $200,000 that we previously discussed; correct? A. Q. Yes, Sir. Go to the second page, please. Is that the list of employees that were to receive payment out of that $200,000 sum of money? A. Q. Yes, Sir. Go back to page 1. Is that your signature there at the bottom of Government's Exhibit 54? J. A. BROOKS - DIRECT 581 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes, Sir. I'll show you now Government Exhibit No. 38. This is a letter dated April 2nd of '04 outlining a 15 percent supplemental wage and incentive pay for John Bargman and Ramona Cunningham; correct? A. Q. A. Q. A. Q. Yes, Sir. Is that your signature at the bottom? No, Sir. Do you know who signed that document? No, I do not, Sir. Government Exhibit No. 41. It's a letter dated May 19th of '04 concerning additional bonuses for management; correct? A. Q. A. Q. A. Q. Yes, Sir. Is that your signature at the bottom of Exhibit No. 41? No, Sir. Do you know who signed that? No, I do not, Sir. Government Exhibit No. 44, an August 18th of 2004 letter Is that your regarding the supplemental wage and incentive pay. signature at the bottom of Government Exhibit No. 44? A. Q. A. Q. No, Sir. Do you know who signed that? No, Sir. Government Exhibit No. 47, again another letter dealing with supplemental wage and incentive pay dated December 9 of 2004. J. A. BROOKS - DIRECT 582 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Is that your signature at the bottom? A. Q. A. Q. No, Sir. Do you know who signed that? No, Sir. Government Exhibit No. 47--46, another letter regarding Is supplemental pay or supplemental wage and incentive pay. that your signature at the bottom? A. Q. A. Q. No, Sir. Do you know who signed that? No, Sir. Government Exhibit 50, a letter dated February 16th of 2005 Is concerning quarterly supplemental wage and incentive pay. that your signature at the bottom? A. Q. A. Q. No, Sir. Do you know who signed that? No, Sir. Government Exhibit 57, another letter dated August 19, 2005, also regarding quarterly supplemental wage and incentive pay, is that your signature at the bottom? A. Q. A. Q. No, Sir. Do you know who signed that? No, Sir. Government Exhibit 58. A letter dated October 27, 2005, concerning semiannual supplemental wage and incentive pay, did you sign that letter? J. A. BROOKS - DIRECT 583 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. No, Sir. Do you know who did? No, Sir. Government Exhibit 70, a July 5th, 2005 letter concerning an Is that your signature on annual salary raise for John Bargman. that letter? A. Q. A. Q. No, Sir. Do you know who signed that? No, Sir. Government's 73, a May 19th, 2004 letter concerning a Is that your 10 percent bonus to Defendant Karen Tesdell. signature on that letter? A. Q. No, Sir. Out of all these letters that you answered no, that was not your signature, did you have any knowledge of that being prepared and/or signed as it related to bonuses or supplemental wage increases? A. Q. No, Sir. For the letters that were brought to you for signature by Ramona Cunningham during the March 4th of '04 time frame through the June of '05 time frame were you involved in a physical sexual relationship with Ms. Cunningham? A. Q. Two times, Sir. So on two occasions when you had sexual contact with Ms. Cunningham, she also brought letters for your signature as J. A. BROOKS - DIRECT 584 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 it relates to bonuses and supplemental pay; correct? A. Q. 131. That's an e-mail from Ramona Cunningham to Dan at scifl.org on November 10th, 2005 at 9:09:31 seconds a.m. Would that be before--excuse me, November 10th, 2005 at 9:09 and 31 seconds a.m. start for CIETC? A. 11, 11:30 was the lunch or the dinner, and then 11:30 the What time did the board meeting Yes, Sir. Let me show you what's been marked Government Exhibit No. meeting would start. Q. Prior to the meeting of--the board meeting on November 10 of 2005 when the reauthorization occurred, were you aware of this e-mail message between Ramona Cunningham and the defendant Dan Albritton? A. Q. No, I was not, Sir. Did you ever receive any e-mail from Dan Albritton concerning this message from Ramona Cunningham prior to that meeting? A. No, I did not, Sir. MR. COURTER: THE COURT: MR. SPIES: Nothing further, Mr. Brooks. Mr. Spies. Thank you, Your Honor. Thank you. J. A. BROOKS - CROSS - SPIES 585 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SPIES: Q. A. Q. Good morning, Mr. Brooks. Good morning. Mr. Brooks, I want to get over just some nuts and bolts And you were CROSS-EXAMINATION before we get into the meat of your testimony. asked by Mr. Courter if you were aware of certain consulting contracts or consulting agreements involving members of your board. A. Q. A. Q. Do you remember that testimony? Yes, Sir. Did you know Mr. John Bargman? Yes, Sir. And Mr. Bargman was the chief operating officer at CIETC during your term as chair of the board? A. Q. A. Q. Yes, Sir. Did you know his wife Deb Dessert? No, Sir. Were you aware that Mr. Bargman's wife, Deb Dessert, had a consulting agreement with CIETC? A. Q. Not until after this all came out, Sir. Okay. Mr. Brooks, Mr. Courter has reviewed with you the plea agreement that you entered into with the United States Attorney and you have that in front of you. A. Q. Yes, Sir. And in that plea agreement you admit that you were part of a J. A. BROOKS - CROSS - SPIES 586 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 conspiracy, weren't you? A. Q. A. Q. Conspiracy with Ramona Cunningham, yes, Sir. You weren't in any conspiracy with Jane Barto, were you? No, Sir. Now, Mr. Brooks, Mr. Courter has gone through with you a number of dates where you were asked to sign letters or you had conversations with Ramona Cunningham, and I want to focus on some of those dates now. A. Q. Yes, Sir. When you signed a letter, I think it was around June 30th of Do Okay? 2005, awarding bonuses to Promise Jobs employees at CIETC-you remember talking about that? A. Q. Yes, Sir. And we just saw the exhibit on the screen of a cover letter and then a separate page that lists the percentages. A. Q. A. Q. Yes, Sir. And you remember seeing that letter before you signed it? Yes, Sir. And when you signed that letter, according to your testimony, you were told by Ramona Cunningham that this money came from Jane Barto? A. Q. Yes, Sir. Now, the money really came from Iowa Workforce Development, didn't it? A. Yes, Sir. J. A. BROOKS - CROSS - SPIES 587 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. And CIETC got money from Iowa Workforce Development, but it got money from lots of other places, too, didn't it? A. Q. I don't know what you mean by a lot. It was a poor question. Where else did CIETC get money from? A. Polk County, there was a grant, annual grant that Ms. Cunningham applied for. Q. A. And how much was that annual grant or did it vary? I think it was 250,000 every year. I think 3 years, I think. Q. A. Where else did CIETC get money? I think there was youth employment, which might have been I'm not too sure. And that was passed to a federal money. vendor Jim Underwood. Workforce Development. And I'm not too sure on the other funding sources. There could have been some federal Department of Labor, but I don't know what grant it would have been. Q. Would I be wasting my time to ask you to review the annual budget for CIETC? A. Q. A. Q. Yes, you would, Sir. All right. Okay. But getting back to this letter that you signed that was Then we won't go there. dated June 30th, 2005-A. Yes, Sir. J. A. BROOKS - CROSS - SPIES 588 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. --awarding percentages of bonuses to CIETC employees? Yes, Sir. Did you know at the time--or did you think at the time that you signed that letter that these bonuses were legitimate? A. Q. Yes, Sir. And because you were told by Ramona Cunningham that these were earned by Promise Jobs employees at CIETC? A. Sir. Q. So you weren't intending to defraud the United States by Yeah. That the money was earmarked to Promise Jobs, yes, signing that letter, were you? A. Q. No, Sir. And then you also talked with us about the employment Remember there was an employment contracts that you signed. contract, contract for Ramona Cunningham for about $186,000? A. Q. A. Q. A. Q. Yes, Sir. There was an employment contract for John Bargman? Yes, Sir. That had some amount in it that you don't remember? That's correct. And then there was an employment contract for Ms. Karen Tesdell? A. Q. A. Yes, Sir. And did Ramona Cunningham present you with those contracts? Yes, Sir. J. A. BROOKS - CROSS - SPIES 589 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. And when you signed those contracts on behalf of the board of directors of CIETC, did you think you were defrauding the United States? A. Q. No, Sir. And in November of 2005, when you brought before the board of directors this request to reaffirm your authority to set salaries and bonuses, when you brought that before the board of directors of CIETC, you were addressing representatives from Polk County? A. Q. A. Q. A. Q. Yes, Sir. The city of Des Moines? Yes, Sir. All of the counties that surrounded Polk County? Yes, Sir. And when you brought that matter before the board, as its chair, did you think that you were defrauding the United States of America? A. Q. A. Q. No, Sir. Mr. Brooks, Ramona Cunningham manipulated you, didn't she? Yes, Sir. And she used her personal relationship with you to get you to sign things? A. No, Sir, that's not correct. I would have signed those like I had signed previous ones, so, no, that's not correct. Q. So when you signed letters at her request, you didn't think J. A. BROOKS - CROSS - SPIES 590 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you were defrauding the United States, did you? A. Q. No, Sir. But apparently she prepared documents with your name on it, letters, that you didn't sign? A. Q. A. Yes, Sir. And she misled you about that, didn't she? I never had any knowledge of them, so I don't know how to If I didn't have knowledge they were signed or even answer it. there, I guess she could not have misled me. Q. If these letters were used for her to get money, she was misleading you and the board of CIETC, wasn't she? A. Q. Yes, Sir. And after all of the monthly meetings that you were involved in as chair of the board of directors, and after all these audit reports that were done by the accounting firm, and after the auditing that was done by the other government agencies that reviewed CIETC's books, you still didn't know what the real salary was that Ramona Cunningham was getting, did you? A. Actual, no, Sir. I had like a ball park figure in my head, but no, I did not. Q. And the ball park figure that you had was based on a contract? A. $126,000 and I figured she was making right around 210, 220 at the most. Q. Okay. So she told you lots of things that you know now J. A. BROOKS - CROSS - SPIES 591 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 weren't true? A. Q. Yes, Sir. And so when Ramona Cunningham told you that Jane Barto told her that you needed to do something, you don't know that that was true, do you? A. I have a strong feeling it was, Sir, because it was a continuous pattern of Ramona saying Jane this or Ms. Barto this. Q. A. Q. But you didn't talk to Jane Barto about it, did you? No, Sir. So you don't know whether what Ramona Cunningham was telling you was true or not? A. I guess you could say no, Sir, but I have a strong feeling--okay. Q. A. Q. A. Q. A. Only on what Ramona Cunningham told you? Yes, and the events that were taking place. And what? And the events that were taking place. Such as? The June 30th money and just the follow-up auditors starting to come in. Q. Sure. But you don't know that Jane Barto was doing anything wrong about that, if there was a paper trail and this was all being documented, followed up by appropriate auditors, do you? A. Q. No, Sir. But the important point is that Jane Barto never told you to J. A. BROOKS - CROSS - SPIES 592 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 sign any letters? A. Q. A. Q. That's correct, Sir. Never told you to approve any agreements? No, Sir. She never told you that you had to affirm any personnel policies? A. Q. A. Q. Directly? Correct. No. She never said that you had to approve any bonuses or salaries? A. Sir, I think I explained earlier on the three times that I met Ms. Barto. Q. A. Q. A. Q. A. Yes. And one of those was what, an award ceremony? She was given a plaque, yes. Annual Christmas party. On behalf of the board of directors of CIETC? Yes, Sir. For her service? We gave one to an employee, one to a vendor and so forth. There were like four given out each year. Q. And the other was a social event at the Savery where you were sitting around? A. No. There was a space meeting for the new facility to decide how much space we would take. Q. And then you said there was-- J. A. BROOKS - CROSS - McCARTHY 593 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. McCARTHY: Q. A. Q. Good morning, Mr. Brooks. Good morning. A couple of questions on your plea agreement Exhibit 114. A. Q. The one at the Savery. Okay. And none of those situations did Ms. Barto say to you that you needed to do anything on her behalf? A. That's correct, Sir. MR. SPIES: Thank you, Mr. Brooks. Those are all the questions I have for you. THE COURT: Mr. McCarthy. Thanks, Judge. CROSS-EXAMINATION MR. McCARTHY: Do you have that in front of you, or I can put it on the screen here. This is the plea agreement that you signed along with your attorneys; is that right? A. Q. Yes, Sir. And toward the back of it on page 14 there is a Stipulation Do you remember reading that? of Facts. A. Q. Yes, Sir. And you and your attorneys read this and signed off on it on the next page or two pages later; is that right? A. Q. Subsequent pages, yes. The stipulation of facts is basically an agreement between J. A. BROOKS - CROSS - McCARTHY 594 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you and the government on what you did wrong in this case; is that right? A. Q. Yes, Sir. And you admitted in the stipulation of facts that you had a conspiracy with Ramona Cunningham; is that right? A. Q. Yes, Sir. You did not put anything in the stipulation of facts about Karen Tesdell, now, did you? A. Q. No, Sir. And isn't it true, Sir, you did not have a conspiratorial relationship with Karen Tesdell? A. Q. A. Q. No, Sir. And you are a codefendant in this case; correct? Yes, Sir. Now, referring to the letter, the bonus letter of June 30th, 2005 that we talk so much about, page 2, that has 25 people listed. A. Q. Do you recall that? Yes, Sir. And Karen Tesdell's right there, getting a 15 percent bonus; correct? A. Q. A. Q. A. Yes, Sir. So is Rhonda Ward, do you see that? Yes, Sir. Now, did Rhonda Ward get indicted in this case? No, Sir. I don't even know who Rhonda Ward is. J. A. BROOKS - CROSS - SCOTT 595 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SCOTT: Q. A. Q. Good morning, Mr. Brooks. Good morning. My name is Paul Scott, and I represent Dan Albritton. I want to ask you starting out a few questions about your service on the board, and you told us earlier that you were involved as a board member on the precursor organization to CIETC; is that correct? A. Q. A. Yes, Sir. I can't remember what you said the name of that was? CIRALG, Central Iowa Regional Association of Local questions. Q. A. Q. A. Q. A. Well, she got a 15 percent bonus? Well, I don't know very many of the employees over there. How about Tami Higar, she got a 15 percent bonus? Yes, Sir. Did she get indicted in this case? No, Sir. MR. COURTER: THE COURT: Object as to relevance, Your Honor. Sustained. Mr. Brooks, I have no further MR. McCARTHY: Thank you. THE WITNESS: THE COURT: MR. SCOTT: Thank you. Mr. Scott. Thank you, Your Honor. CROSS-EXAMINATION J. A. BROOKS - CROSS - SCOTT 596 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Governments. Q. A. Q. A. Q. Okay. And you were a board member on the CIRALG board? Yes, Sir. And did you ever serve as chair on the CIRALG board? Yes, I did, Sir. While you were chair on the CIRALG board did you ever set salaries for the executive director or have anything to do with setting salaries or giving bonuses to the executive director of CIRALG? A. Q. No, Sir. Was that something that was done by the entire board of directors? A. Q. Yes, Sir. And you recall having those issues brought before the entire board of directors? A. That was 25 years ago. I don't want to be exact on that, I'm sorry. Q. I don't know, I'm just asking. I don't have any document up I'm just asking about here that says it didn't happen that way. it. A. Q. I cannot remember. Fair enough. It's been over 25 years. And the board became CIETC in 1983--not the board but the organization became CIETC in 1983? A. Yes, about in that period, Sir. J. A. BROOKS - CROSS - SCOTT 597 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. Somewhere in that range? Yes. And after the organization became CIETC, did you have the opportunity to serve as the chairman of the board of directors? A. Q. Yes, I did. And during the time frame between 1983 or approximately there, when the CIRALG became CIETC and when you got off the board in 1995, did you have the opportunity to serve as the chairman of the board of directors? A. Q. Yes, Sir. And during that time frame were you involved in setting salaries or setting bonus levels for any of the employees at CIETC? A. Sir, I don't remember, and I don't think I did. No, I can't remember. Q. In 1999 when you came back, you were again--you were at first just a regular board member; correct? A. Q. Correct, Sir. And then at some point in time you became chairman of the board? A. Q. Yes, Sir. And was it your understanding at that point in time that you had the authority as the chairperson to set the salaries of--or, excuse me, the salary of the executive director? A. I was told by Ms. Cunningham that in the 2002 bylaw change J. A. BROOKS - CROSS - SCOTT 598 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that the chairperson had that authority. Q. Prior to that time, though, were you not of the understanding--was it not your understanding that the chairperson had the authority to set the salary of the executive director? A. Q. A. Prior to that? Yes. No. When I was chairman, up to-Sir, prior to, there was a committee that did that. Q. I'm almost positive of that. Prior to coming in here you have had conversations with the Federal Bureau of Investigation, haven't you? A. Q. Yes, Sir. And you've been interviewed by them on several occasions; correct? A. Q. Twice--once by the FBI, Sir, yes. Do you recall being interviewed by the FBI in August of 2006? A. Yes, Sir. MR. SCOTT: THE COURT: MR. COURTER: bench, please? THE COURT: Yes. May I approach, Your Honor? You may. At this point may counsel approach the (Side-bar conference not reported.) MR. SCOTT: May I approach? J. A. BROOKS - CROSS - SCOTT 599 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: BY MR. SCOTT: Q. Mr. Brooks, if you would just take a look down here and I don't want you to read it out loud, just review You may. review that. it to yourself, please. A. Q. Yes, Sir. Mr. Brooks, was it your understanding that you had always had the authority and that the chairperson for the board at CIETC had always had the authority to set the salaries of the executive director? A. Q. Yes, Sir, according to what Ms. Cunningham told me. Are you-You're familiar with the setup of CIETC; correct? Let me clarify that a little bit. The jury's heard this quite a bit, but CIETC is authorized by a 28E agreement; correct? A. Q. Correct, Sir. Then the 28E agreement authorizes the board or CIETC to form a board; right? A. Q. A. Q. Yes, Sir. And that board is governed by the bylaws; correct? Yes, Sir. And the policy manual is--the employee policy manual is not something that governs the conduct of the board of directors, is it? A. No. It's more of rules. J. A. BROOKS - CROSS - SCOTT 600 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. It's the rules for the employees of CIETC; correct? Right. So regardless of anything that goes on in the changes of a policy manual, the employee policy manual, that has nothing to do with what authority you as the chairperson had; isn't that right? A. Q. Yes, Sir. The bylaws are the sole document giving the board of directors authority to act or do anything; correct? A. Q. I would say yes, Sir. Mr. Courter talked to you quite a bit about the time or the--where Mr. Albritton was seeking space at the CIETC offices. Do you recall discussing that with Mr. Courter earlier today? A. Q. Yes, Sir. During your course as a board member did you become familiar with a program called Dislocated Workers? A. Q. Yes, Sir. And during your tenure as a board member, isn't it in fact true that Dislocated Workers--the Dislocated Workers Program was run by the United Way; is that correct? A. Q. Yes, Sir. And the Dislocated Workers Program, the employees of the Dislocated Workers Program, those employees were located at the offices of the South Central Federation of Labor labor, isn't that correct? J. A. BROOKS - CROSS - SCOTT 601 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. With rent being paid, yes, Sir. They were located at? Yes, Sir. And, in fact, Ms. Smith is employed by or was employed by the South Central fed--South Central Iowa Federation of Labor; correct? A. Q. Yes, Sir. She also worked for the Dislocated Workers Program, isn't that correct? A. I don't know what the other job details, Sir, so, no, I don't know. Q. And at some point in time there was an effort by Ramona Cunningham to get the Dislocated Workers Program removed from the control of the United Way and put under the umbrella of CIETC. A. Q. A. Q. Isn't that correct? Yes, Sir. And eventually she was successful; isn't that correct? Yes, Sir. And at that point in time the dislocated workers left the offices of the South Central Federation of Labor labor and went over to CIETC; isn't that right? A. Q. A. Q. Not immediately, Sir. Not immediately but eventually? I think it was a year. And when the Dislocated Workers Program moved over to the J. A. BROOKS - CROSS - SCOTT 602 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 woman. Q. Dan Albritton was not her employer, was he? She was CIETC offices, that is the same approximate time that Diane Smith moved over to the CIETC offices and became a part-time employee at CIETC. A. Isn't that the case? I don't know, Sir, when her employment and what her duties were. Q. A. You talked about it here. You told the jury all about it. I told them what happened at a board meeting when they asked about the insurance for a part-time employee. Q. Okay. And you talked about how she came over and was That's what you employed at CIETC by Dan Albritton's request. told the jury today? A. My statement, Sir, was that I said that they brought it in front of us and asked for an exception to a 20-year--a 20 hour or less employee and that her other employer would make a contribution to CIETC for the insurance, and that we adopted that subject to a legal review. And subsequently I asked who the other employee was--employer was, and I was told it was Dan Albritton. I never knew what her had job was. I never met the employed by the South Central Federation of Labor labor; isn't that right? A. Q. I don't know that, Sir. So who told you that? I just know what I was told. J. A. BROOKS - CROSS - SCOTT 603 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Ms. Cunningham. Thank you. Did you attend all the board meetings or pretty much all of them? A. Prior to being chairperson, no. And then as chairperson, I missed my annual vacation, I would take the second week of June, and was hospitalized a couple of times. Q. You attended many board meetings in which Dan Albritton was present; correct? A. Q. Correct, Sir. And did you attend--or you attended board meetings where Mr. Albritton was present and vigorously argued for issues that he felt strongly about; correct? A. Q. A. Q. A. Q. Yes, Sir. Such as the Dislocated Workers Program? Newton, the Maytag. The Maytag program? Yes. That's the one that came on mainly. And he would be quite vocal about issues that he felt strongly about; isn't that correct? A. Q. Yes, Sir, plus the representative from that area. The meeting where the employee policy manual was adopted by the CIETC Board of directors, you recall that meeting? A. Q. In August, yes, Sir. August of 2004? J. A. BROOKS - CROSS - SCOTT 604 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes, Sir. Dan Albritton was asked by you to make the presentation; correct? A. Q. A. Q. A. Yes, Sir. And do you recall what his presentation amounted to? Not exactly word for word, Sir, no. He didn't say much of anything, did he? No. I think he made a few comments and then answered questions. Q. A. Q. A. Q. Did he answer questions about any changes? Again, I've got to refer to that-To your recollection? PTO, or that combination of the vacation and sick time. And to your recollection, do you recall whether or not any debate followed the presentation of those policy manuals for approval to the board? A. I don't even--I only remember one comment by Mr. Tom Vlassis and the city of Des Moines, and then I think he subsequently made the motion. Q. A. Q. A. Q. A. To adopt them? To adopt them, yes, Sir. Vlassis made the motion? I'm sure he did, Sir. That's your recollection? Tom always moved items. J. A. BROOKS - CROSS - SCOTT 605 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Mr. Albritton gave no impassioned speech for the approval of those policy manuals or, excuse me, that policy manual? A. Q. Not that I can remember, Sir. I don't know. Did anyone make any kind of impassioned speech or any kind of persuasive argument that these policy changes should be adopted? A. Q. Not that I remember, no, Sir. Do you recall whether or not the policy manual was handed out to the board members as they came in to the board meeting? A. Q. In the August meeting, Sir? Yes. I'm sorry, the August 2004 meeting where the policy manual was adopted. A. Q. A. Q. A. Q. A. Q. A. Q. I think they were handed out at the door. And those were available for your review? Mine and other board members. And all the board members for their review? Yes, Sir. That was unanimously passed; correct? If you say so. I don't know. Do you recall that at all? No, I don't, Sir. Do you recall whether there was a single dissenting comment or vote? A. I would say there probably was not because board meetings were very short and very--they moved fast. J. A. BROOKS - CROSS - SCOTT 606 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Did you ever, as the chairman of the--as the chairman of the board, review the bylaws that gave you authority? A. Q. No, Sir. Did you ever review--ever review those bylaws? At no point in time have you ever reviewed those bylaws; is that right? A. Q. A. Q. Not until after the fact. After the fact? After March of 2006. Okay. At any point in time did you, as a board member or as chairman of the board, ever review the employee policy manual? A. Q. No, Sir. You visited with Mr. Courter a little bit about the Faller Are you familiar with those? Kincheloe audits. A. Q. Yes, Sir. And you're familiar with the fact that those audits were done on a yearly basis; correct? A. Q. Yes, Sir. And you're familiar with the fact that those audits were provided to the board at a yearly board meeting; correct? A. Q. Yes, Sir. And did you, as a board member, ever review the audit report? A. What I would do is go to the back and there are usually Instead of reading, you know, each findings back there. document, usually audits have the findings in the back, and J. A. BROOKS - CROSS - SCOTT 607 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 these audits did not have any findings, to the best of my recollection. Q. Did you--well, you testified about the fact that you didn't know that Dan Albritton had a consulting agreement with CIETC? A. Q. I'm sorry? I'm sorry. You testified to the fact that you didn't know that Dan Albritton had a consulting agreement with CIETC; correct? A. Q. That's correct, Sir. Were you aware of the fact that the audit report contains information concerning that consulting agreement? A. Q. No, Sir, I'm not. Were you aware of the fact that the consulting agreement--excuse me, the audit report contained information regarding a consulting contract between CIETC and Deb Dessert? A. Q. No, I am not. Were you aware of the fact that the audit report contained information concerning an insurance contract between an insurance agency that was a relative of the board of directors of CIETC and CIETC? A. Q. No, Sir, I did not. Were you aware of the fact that the audit agreement contained information concerning a contract between CIETC and a nonprofit organization to which one of the board members at CIETC was the chairman of the board on? J. A. BROOKS - CROSS - SCOTT 608 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. No, I am not. Were you aware of any of those items that we just discussed, period? A. Q. In the audit? No, aware of them for any reason at all, outside of the audit? A. Well, the insurance with Mr. Mauro's involvement, that was public and always under question by different people and groups, so I was aware of that, that it was put out for bid and was told by Ramona, and when I looked into it and talked to Mr. Mauro, I found that there was no reason to investigate any further. Q. A. Q. A. Q. A. So you were aware of that? Yes. That concern? Yes, Sir. But the other contracts you were not aware of? The only time I learned of Mr. Albritton's was at the state capitol when Ms. Cunningham brought it out. Q. Were you aware of-When CIETC entered into contracts with various other organizations or service providers, were you aware of those contracts? A. Q. Such as Jim Underwood and the youth? No. Such as any kind of service that would be provided to CIETC, would you, as a routine, would they come to you, as the chairman of the board chairman, of the executive committee, and J. A. BROOKS - CROSS - SCOTT 609 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 say, hey, is it okay to enter into this contract? A. The only one I was aware of and made aware of was I think December 2005 or January 1st, 2006, Ramona Cunningham hired a firm to do a wage survey. Q. That was the only contract that CIETC entered into that you were made aware of? A. Q. A. Q. Yes, Sir. Prior to CIETC entering into the agreement? Yeah. Yes, Sir. Was it a requirement--to your knowledge, was it a requirement that CIETC needed approval of yourself or the board of directors to enter into any type agreement? A. I thought those agreements--I thought the board was supposed to approve formal contracts, but the executive director had the power to hire temporary employees and subcontractors. Q. A. Q. A. Q. A. Okay. That's your understanding? Yes, Sir. How did you come about that understanding? Well, because just over the years that I was there. That's just how it was done? That was just how it was done. I can't remember what they were called, but it was some kind of a training contract that we adopted almost every month that participants would want to go to. Q. Do you recall the November 10th, 2005 meeting when you J. A. BROOKS - CROSS - SCOTT 610 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 were--your authority to set personnel--or, excuse me, executive director's salary and give out bonuses? You recall that meeting, when that authority was reauthorized? A. Q. Yes, Sir. And the reason you thought that reauthorization was unusual is because you believed you had always had that authority; correct? A. No. I was asked by Ms. Cunningham, requested to do it per her--Ms. Barto's request. Q. And do you recall that you've seen some information that says that Dan was going to make that motion; is that right? A. Q. I had seen an exhibit, that last exhibit. Were you told that Dan Albritton was going to make that motion? A. Q. No, Sir. Ramona Cunningham didn't come up to you before the meeting and say, "Hey, Archie," or, excuse me, "Hey, Mr. Brooks"--I apologize--"Mr. Brooks, Dan's going to make this motion for you." A. Q. not? A. Q. At her request, yes. And Dan, Mr. Dan Albritton, basically said, "Are you asking She didn't say that to you, did she? No, she did not. In fact, you dictated the motion into the record, did you for a motion," or something to that effect? J. A. BROOKS - CROSS - SCOTT 611 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Made the motion, if I remember. Technically made the motion, "I'll make that motion"? Yeah. You dictated the language in; correct? I told the board what--why I was bringing it up and what was involved. Q. A. Q. A. Q. Told them why you needed it? Yes. And why you wanted to have it reauthorized; is that right? By request, yes. And then at that point, again, that issue was debated by the Is that your recollection? board, correct? A. Q. A. Q. Specifically by two board members. But anybody could have debated it? Yes. And there was quite a discussion about it at the board meeting; correct? A. Q. A. Q. Yes, Sir. It lasted quite a while? For those meetings, yes, Sir. Right. That's what I mean. Relatively speaking, it was a long debate; correct? A. Q. Yes, Sir. Mr. Albritton did not speak in favor, did not debate in favor of this motion, did he? J. A. BROOKS - CROSS - SCOTT 612 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. No, Sir. I don't have the tapes here in front of me. Well, it wasn't one of those--you remember the Maytag, the dislocated workers issue; correct? A. Sir. Q. Right. Well, that was a time when Mr. Albritton vigorously That was a big issue the whole board was involved in, yes, argued for his position; correct? A. Q. Yes, Sir. He wanted something done and he wanted it done for his people, correct, or for people he was helping? A. Q. Yes, Sir. In this case, with regard to the November reauthorization of your powers to set salary levels for the executive director, Mr. Albritton gave no impassioned or vigorous speech in favor of adoption, did he? MR. COURTER: been asked and answered. THE COURT: MR. COURTER: I can't hear you. I'm going to object, Your Honor. This I'm going to object, Your Honor. It's has been asked and answered several times. THE COURT: BY MR. SCOTT: Q. You were appointed as chairman of CIETC by a nominating Sustained. committee; is that correct? A. Yes, Sir. J. A. BROOKS - REDIRECT 613 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. Mr. Brooks, during the time frame of 2003 through 2006, when Q. And it's your understanding that that nominating committee was put together by Ramona Cunningham; is that correct? A. Q. Yes, Sir. And the nominating committee, that committee consisted of board members; correct? A. Q. Yes, Sir. Was it typical that Ms. Cunningham would be the one who set the membership of committees? A. Q. A. Yes, Sir. That was the way it was normally done? Yes, Sir. MR. SCOTT: THE COURT: MR. COURTER: THE COURT: I believe that's all I have. Thank you. Mr. Courter, do you have any redirect? I do, Your Honor. Ladies and gentlemen, you've been sitting If you want to stretch before about 50 minutes, 55 minutes. Mr. Courter begins his redirect. (Short pause.) THE COURT: Mr. Courter. REDIRECT EXAMINATION you were chairman of the board, Mr. Albritton was also a board member. What was his position with the South Central Iowa Federation of Labor? J. A. BROOKS - REDIRECT 614 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. I don't know the exact position. I thought Mark Smith was actually head of it, and I thought he was just an employee or a second in command. Q. I'm not too sure exactly what his title was. The Dislocated Workers Program you indicated that at some point in time it switched over from being administered by United Way to CIETC; right? A. Q. A. Yes, Sir. I'm having a hard time hearing you. Do you recall when that occurred? Not exact day, Sir. No. In fact, two people lost the election, it had to be in 2005. Q. Where was the Dislocated Workers Program located when it was being run by the United Way? A. I'm not too sure. I assume it was out of the union hall. I'm not too sure, Sir. Q. Well, after CIETC took it over, where was it being operated from, the Dislocated Workers Program? A. Ms. Cunningham was going to move it, because it was at the union hall, and I said we would honor the contract, and we stayed I think for 1 year and paid rent. Q. A. When you say it was at the union hall, which union hall? It's on Delaware in Des Moines. No, I don't. I'm not too sure what the name of it is. I've been there many times, but I've never looked at the outside. Q. Do you know if Mr. Albritton had any affiliation with the union hall that was housing the Dislocated Workers Program? J. A. BROOKS - REDIRECT 615 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. There, yes, Sir. What was his involvement with that union hall? There again, I don't know his title, but if I remember right, he was back in the--all the way down the corridor on the left. Q. He had an office. Dislocated Workers was paying rent to this union hall that Mr. Albritton was involved with; correct? A. Q. Yes, Sir. Was this a joint partnership between United Way/CIETC as it relates to the Dislocated Workers Program and Mr. Albritton's union, or was this a situation where the Dislocated Workers Program was renting space from the union hall? A. It was--United Way was not involved after CIETC took over. It was a very heated debate, took 2 or 3 months to pass and eventually cost two members an election at a later period. Then subsequently so it was CIETC was located in the union hall and paid rent. Q. Was that the only involvement between CIETC at that time and the union hall, was the fact that they were paying rent to use space in the union hall? A. Q. Yes, Sir. Did the union hall or members of that union have any say over how CIETC was running the Dislocated Workers Program? A. Q. Not to my knowledge. You had talked with Mr. Spies concerning your knowledge of J. A. BROOKS - REDIRECT 616 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the level of Ms. Cunningham and other top executives' salary at CIETC; correct? A. Q. Yes. Yes, Sir. We've also talked about some of the audits that were involved as this investigation was starting to heat up; correct? A. Q. Could you say the first part of that again? I'm sorry. We talked about the level of salaries for Ms. Cunningham and other members of the executive committee--excuse me, other members of management at CIETC; correct? A. Q. Yes, Sir. And you've also talked about a number of the audits that have come into play as the whole investigation began to unfold; correct? A. Q. Yes, Sir. When did you first become aware of the investigation concerning the $200,000 that was received from Iowa Workforce Development? A. In August when Ms. Cunningham made those remarks to me that it had drawn the attention of some auditor of the state or Iowa Workforce Development. Q. When were you informed that a full blown audit by the state auditor's office was being done? A. Late December, maybe first of January. She called me and said-Q. Stop right there. Late December, early January. What year J. A. BROOKS - REDIRECT 617 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 are we talking about? A. Q. A. Q. A. Late December 2005 or first of January 2006. Who called you? Ms. Cunningham. Did she call you in relationship to this audit? Basically that, yeah, they were under audit by the state and there were six documents missing of pay raises and wanted to know if I would sign those, postdate them, and she brought them over, and I did. Q. A. Q. A. Q. A. Q. You indicated to postdate them? Yes. They were dated at a previous date, yes. And you did sign those documents? Yes, I did. She provided those documents to you? Yes, Sir. Did you hear anything from Ms. Cunningham from this late December '05, early January of '06 time frame through April of 2006 that this investigation was going further? A. About a week, maybe 5 days before, maybe the same week. If I remember correct, it came out on a Friday. Q. Stop one second. We got a copy-- A week before or week or five days before what? A. Q. March 31 I think the state auditor released the report. Were you aware of that state auditor's report before it was released? J. A. BROOKS - REDIRECT 618 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Yes. Ms. Cunningham called me earlier that week, said that the report was coming, it was going to be very embarrassing for her, her and other staff members having high wages, and, you know, that I'd be brought into it. you know, "Why did you do it?" Q. A. Q. Is that a quote? Yes, Sir, that's a quote. When you said, "Why did you do it" or "Why did we do it," And I asked her basically, She said, "We got greedy." what was that in reference to? A. At that point I felt like she took advantage of me, that basically I failed to perform my job of oversight and, as other board members did, I really felt like she had used me at that point during that discussion. eyes. Q. During that time frame was there any communication between It kind of made me-- I opened my you and Ms. Cunningham concerning potential new salaries, if she would continue her employment at CIETC? MR. SPIES: Excuse me, Your Honor. I'm going to object as beyond the scope of cross-examination. THE COURT: MR. COURTER: THE COURT: MR. SPIES: THE COURT: Sustained. Nothing further. Thank you, Mr. Brooks. Mr. Spies, any recross? No further questions, Your Honor. Mr. McCarthy? Nothing further. MR. McCARTHY: J. A. BROOKS - RECROSS - SCOTT 619 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SCOTT: Q. Mr. Brooks, I would just like to clear up a couple of things THE COURT: MR. SCOTT: Mr. Scott? Yes. Thank you, Your Honor. RECROSS-EXAMINATION in regard to the Dislocated Workers Program. The Dislocated Workers Program was located in the union hall; correct? A. Q. From my understanding, yes. The union hall was owned by the Machinists Union; isn't that correct? A. Sir, as I told you earlier, I don't know who owned the hall. I've been there many times. Q. When CIETC took over the dislocated workers, it was in 2001 or 2002; isn't that right? A. Q. A. Q. A. I'm not too sure, Sir. You don't recall? No, I don't. Well, up here earlier you have said it was 2005? And I guess that's wrong, because K.C. and them lost the Because I related it election in 2002; so I guess you're right. to the loss of election of two people on the board. Q. So it occurred in 2001? Not Mr. Valster's loss of the election but the dislocated workers issue? A. Sir, I can only relate it to the period of two people REED - DIRECT 620 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. Mr. Reed, would you state your full name and spell your last Dave Reed. And Mr. Reed--we believe his testimony will be relevant to we believe all counts of the indictment, Your Honor. THE COURT: All right. THE COURT: MR. COURTER: leaving. Q. A. Q. A. Q. Right. Yes. So it happened prior to 2002? Prior to 2002. Are you aware of the fact that after CIETC took over the And that happened in 2002? Dislocated Workers Program and prior to the Dislocated Workers Program moving into the CIETC offices, that they were paying rent to the Machinists Union and not the South Central Iowa Federation of Labor? A. Sir, I don't know who the rent was paid to. We just paid rent for that hall. MR. SCOTT: THE COURT: Okay. Thank you, Sir. You may step down. (Witness excused.) You want to call your next witness. Your Honor, the government would call DAVID W. REED, GOVERNMENT'S' WITNESS, SWORN DIRECT EXAMINATION REED - DIRECT 621 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 name, please. A. Q. A. Q. A. Q. David W. Reed, R-E-E-D. Where are you employed? Boone County. I'm the Boone County supervisor. Elected to the board of supervisors in Boone County? Pardon? Have you been elected to the board of supervisors in Boone County? A. Q. Yes, I have. How long have you been on the Boone County Board of Supervisors? A. Q. A. Q. This is my 20th year. 20 consecutive years? Yes. Is Boone County or was Boone County also a member of an organization known as CIETC? A. Q. Yes, Sir. By virtue of Boone County's membership in CIETC, did Boone County have a seat on the board of directors for CIETC? A. Q. A. Q. A. Yes. Did you fill that position for Boone County? Yes, I did. When did you begin serving on the CIETC Board of directors? I believe it was about 17 years ago. It wasn't my full 20 years, but I think it was about 17 years, maybe 18. REED - DIRECT 622 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. Has that been continuous years of service on that board? Yes, Sir. Were you also at some point in time also on the executive board at CIETC? A. Q. A. Q. A. Q. A. Q. A. Q. Yes. When did you first go on the executive board? I believe about 3 years ago. How did you-2 or 3 years ago, I can't remember. How did it come to be that you were on the executive board? Well, I was elected by the other members to be vice-chair. Of the CIETC Board? Yes. So you were vice-chair and Archie Brooks was the chairman; correct? A. Q. Yes. Was it by your position as vice-chair that automatically makes you part of the executive board? A. Q. Yes. What were your specific duties as you understood them as it related to your service on the executive board? A. Well, as a member of the executive board you're the chair--excuse me, I'll back up a minute here. As a member of the executive board you could make decisions which would be ratified by the full board at other REED - DIRECT 623 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 times if it was deemed necessary. Q. A. Q. Did you attend regular board meetings of CIETC? Yes, I did. Would you say that you attended most of those meetings during the course of your 17 years of service on the CIETC Board? A. Q. Yes. I want to direct your attention to a board meeting that Do you recall any meetings in that occurred in August of 2004. time frame dealing with personnel policy? A. I remember one time personnel policywise we were dealing--it was changing sick leave to or comp time to sick leave or sick leave to comp time, something of that type. Q. During the course of that meeting do you have any recollection of any changes being made to the bylaws--excuse me, to the personnel policy as it relates to the authority of the chairman of the board to set salaries and supplemental bonuses for the management of CIETC? A. Q. No, Sir. If in fact that issue had been brought up, do you think that was something that you would remember? A. Q. Oh, I believe so, yes. Do you recall any meetings after the one you've just described where they discussed PTO dealing with any authority of the chairman of the board to set salaries or supplemental pay REED - DIRECT 624 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 object. relevant. THE COURT: Sustained. for the management of CIETC? A. Q. No. Were you aware of certain individuals that had consulting contracts with CIETC? A. Q. A. Q. A. No, Sir, I was not. Did you know an individual by the name of Deb Dessert? Oh, yes. Wait. If you don't, that's fine. I don't want you to guess. No. I mean the name is there, but I just can't come out with it, okay. Q. During the course of your service on the board of directors at CIETC and also on the executive board, did you know that Mr. Albritton, Dan Albritton, had a consulting contract with CIETC? A. Q. No, I did not. If that would have been brought up for a vote at the board of directors, would you have approved that? A. Q. A. Probably not. Why is that? Well-MR. SCOTT: Your Honor--excuse me, Sir--I'm going to It calls for speculation, and it's frankly not REED - DIRECT 625 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. During the time that you were serving on the CIETC Board, was Dan Albritton also a board member? A. Q. Yes, Sir, he was. During the time that you were serving on the CIETC Board, did you have any personal knowledge of any relationship between Dan Albritton and Ramona Cunningham? A. Q. No, I did not. During the course of your time on the CIETC Board, were you aware of the salary levels for the top management at CIETC, that being Ramona Cunningham, John Bargman and Karen Tesdell? A. Q. No, I was not. When is the first time that you became aware of the level of compensation that those three individuals were receiving? A. Q. A. When I received an audit from the state auditor's office. Do you recall when you received that audit, Mr. Reed? It was on a Saturday. Boy, right after everything happened with CIETC. Q. A. Can you just give me a general time frame, Sir. I would say probably about March--between the 1st and 15th of March in '06, I believe, then. Q. Were any of those salaries or levels of compensation brought to the attention of the executive board? A. Q. I didn't hear you. I'm sorry. Were any of the levels, that being salary or supplemental REED - DIRECT 626 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 pay, of those three individuals brought to the attention of the executive board? A. Q. No. If you had known of the level of compensation that was being paid to Ms. Cunningham, Mr. Bargman, and Ms. Tesdell, what, if anything, would you have done as a member of the executive board and the board of directors? MR. McCARTHY: Your Honor, objection. Calls for speculation, what would he have done. THE COURT: BY MR. COURTER: Q. Mr. Reed, after finding out the level of compensation that Sustained. was being paid to those three individuals, do you have an opinion as to whether that was a reasonable salary? MR. McCARTHY: Objection, Your Honor, calls for speculation, no proper foundation. THE COURT: BY MR. COURTER: Q. Mr. Reed, I would assume that you've served on other boards You want to lay some foundation, counsel. based upon your duties as a Boone County board of supervisor; correct? A. Q. Yes. And are you familiar with--why don't you just describe to us some of those boards that you serve on. A. Red Rock Community Action, which is low income heating REED - DIRECT 627 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 assistance winterization programs, Central Iowa Juvenile Detention Center at Eldora, HIRTA, Heart of Iowa Regional Transit Authority. Q. In your duties with those boards have you come to know the salaries of employees that work in those agencies? A. Q. A. Q. A. Q. Yes, somewhat. I'm not told the exact dollars, but... Were you familiar with the work of CIETC? I'm sorry, was I familiar with what? The work of CIETC? The work of? The work that CIETC performed, the duties that they undertook? A. Q. Yes. Are you familiar with the size of CIETC as it relates to employees? A. no. Q. Are you aware of the general duties of Ramona Cunningham, I wasn't as aware of how many employees we had at the time, John Bargman, and Karen Tesdell as it related to their employment at CIETC? A. Q. A. Q. A. Do you want me to say what I think each one of those was? All I'm asking is if you're aware in general-Yes. --what their duties were at the organization? Well, I thought so. Karen basically was the computer REED - DIRECT 628 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor. THE COURT: Mr. McCarthy. Thank you, Judge. point. director. Q. Based upon your knowledge, general knowledge of the duties person, bookkeeping, that type of thing, accountant. John Bargman was grant writer. And Ramona was that they undertook, in conjunction with your knowledge now of the total level of compensation they received, do you believe that the work requirements that they undertook for CIETC justified the level of compensation they received? MR. McCARTHY: Your Honor, I'm going to object at this There are three We have-- It's a compound question. different people here with three levels of salary compensation. I think it's an unfair question to lump Karen Tesdell in with the other two. THE COURT: BY MR. COURTER: Q. Did you believe their level of compensation was reasonable Overruled. in conjunction with the duties they performed? A. No. MR. COURTER: THE COURT: MR. SPIES: Thank you. Mr. Spies. Thank you. I have no questions, Your Nothing further. MR. McCARTHY: REED - CROSS - McCARTHY 629 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. McCARTHY: Q. A. Q. A. Q. Good morning, Mr. Reed. Good morning. I'll try to talk loud so we all can hear. Good. Were you aware what Ramona Cunningham made for the 12 months CROSS-EXAMINATION that ended 6-30-04? A. Q. A. Q. A. No, Sir. Would over $254,000 surprise you? Yes. Are you saying that's not correct? No, I'm not saying that's not correct. You said would it surprise me. Q. John Bargman, the same time period, would it surprise you to know that he earned over $241,000? A. Q. Yes. Karen Tesdell had a salary of $89,000. Are you aware of that? A. Q. A. Q. No. Are you saying that is unfair compensation? All of them? Yes. For that 12-month period I'm talking about Karen Tesdell. her base salary was $89,000. Are you saying that that is unfair compensation for the chief accountant, bookkeeper and computer REED - CROSS - McCARTHY 630 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 person, as you just said, of CIETC with 70-some employees? A. Q. Probably more in line. Certainly it's more in line compared to the other two; right? A. Q. Yes. We have two separate situations here. We have Bargman, Mr. Bargman, and Ms. Cunningham drawing down huge salaries in that year of over $250,000; correct? A. Q. A. Q. A. Q. Uh-huh. You have to say yes for the court reporter. What was that? You have to answer out loud for the court reporter, please. What do you want me? I'm sorry. You said "uh-huh." I'm asking you to answer yes or no. A. We'll start over. Would you rephrase that, Yeah, your question to me is-- please? Q. I will be happy to. I'm asking you if you think that compensation that Ms. Cunningham and Mr. Bargman received for the 12 months ending 6-30-04, which is in excess of $250,000-A. Q. Right. --is at a little different level than the $89,000 that was Karen Tesdell's base salary? A. Then I would say hers was probably more in line. REED - CROSS - McCARTHY 631 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Thank you. In the 12-month period ending June 30th, '05, we have Ms. Cunningham--are you aware of her salary and bonuses for that year? A. Q. No. Would it surprise you to learn that hers went up to $368,000? A. Q. A. Q. Yes. And you feel that's out of line, don't you? Yes. And Mr. Bargman received a total of $360,000. You feel that's out of line? A. Q. Yes. Karen's base salary went from 89,000 to 92,000. Do you feel that's inappropriate? A. Q. A. Q. In a one-year period? Right. No. And then she received bonuses of $35,000 for a total of $129,000. A. Q. I would say that's excessive. But your own policy allowed for 15 percent increases, bonus incentives, did it not? A. Q. I cannot answer that. I don't know. Certainly the numbers that Karen Tesdell received were significantly lower than Ramona Cunningham and John Bargman. REED - CROSS - McCARTHY 632 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 You would agree with me on that? A. Q. Yes. Was Karen Tesdell the only one in that time period getting bonuses from CIETC? A. Q. A. Q. A. Q. That I don't know. Well, you were vice chairman of the board. Uh-huh. Shouldn't you have known? Should have but didn't. Well, doesn't your position as vice-chairman of the board and on the executive committee put you in a position of oversight? A. Q. Yes. So you don't know what was going on, you don't know who was You didn't at that time? getting bonuses, do you? A. Q. No. Do you have any information that Karen Tesdell did anything wrong to obtain these bonuses? A. Excuse me. You're going to have to say that again, with this rain behind me. Q. I'm trying not to yell. Do you have any information that Karen Tesdell did anything wrong during this 12-month prior to 6-30-05, June 30th, '05, to obtain the bonuses that she got? MR. COURTER: I'm going to object, Your Honor, at this REED - CROSS - McCARTHY 633 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Sustained. BY MR. McCARTHY: Q. A. The bottom line is, you should have known? You have to have a trust with the director and the people answered. THE COURT: BY MR. McCARTHY: Q. Do you know the nature and circumstances of Karen Tesdell Sustained. point. No. 1, it's beyond the scope of direct; No. 2, relevance and foundation of this witness. THE COURT: BY MR. McCARTHY: Q. As the vice-chair of the board, during the first 6 months of Sustained. '05 you did not know who was getting bonuses? A. Q. No. Were you aware that on June 30th, 2005, basically 25 people Were you aware of that? got 10 percent or more in bonuses? MR. COURTER: I'm going to object to that; asked and getting her bonuses? MR. COURTER: It's beyond the scope. THE COURT: I think he said he doesn't know. I'm going to object again, Your Honor. who you're working with, and I trusted those people, yes. Q. And obviously that was misplaced trust in this case; correct? REED - CROSS - SCOTT 634 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SCOTT: Q. A. Q. A. Q. Good morning, Mr. Reed. Good morning. Can you hear me okay? Yes. I'm not sure that I heard you. Did you say that you were on A. Evidently. MR. McCARTHY: THE COURT: MR. SCOTT: I have nothing further. Mr. Scott, do you have any questions? Yes. Thank you, Your Honor. CROSS-EXAMINATION the board for 18 years? A. Q. 17 or 18 years, I believe. And during that time have you ever served as the chairman of the board? A. Q. A. Not until recent. Are you currently the chairman of the board? Currently CIETC is no longer in existence, but I was until that time, yes. Q. Okay. So are you in any way connected with the new entity that has taken over for CIETC? A. Q. A. Q. RWIA. RWIA, that's the name of it? The new name. Are you in any way connected with RWIA? REED - CROSS - SCOTT 635 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. I still am on their board, yes. Are you the chairman of the RWIA board? No. I was until just a couple of months ago. And now Mark Hanson from Dallas County is. Q. A. Q. And RWIA, that's the acronym for? Regional Workforce Investment Alliance. And as chairman of the board of RWIA, you were aware of the fact that there was an executive director; correct? A. Q. A. Q. Yes. And that executive director is paid $90,000 a year; correct? I'm going to have to say I'm not positive on that. You're not aware of the salary of the successor organization to CIETC? A. Q. No. You're not aware--are you aware of the salary of any of the officers on RWIA or in leadership positions at RWIA? A. Q. No, Sir. Referring back to the August 2004 meeting, you recall that the policy manual was revised--or, excuse me, the revised policy manual was put up for debate and approval for the board? A. Q. A. Q. A. Excuse me, which one are you saying now? In August of 2004. The one we talked about earlier? There was a board meeting; correct? I assume so. REED - CROSS - SCOTT 636 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. And, well, you testified earlier about an August 2004 board meeting? A. Q. Right. Datewise, okay. Well, at that board meeting--we don't need to go datewise. The board meeting where the employee policy manual that had been revised at that board meeting that was voted on, do you recall that board meeting? A. I remember the discussion of changing, as I said, sick leave. Q. A. Q. I'm just asking you if you recall the meeting? I'm trying to, yes. I'm not asking you what you recall about it, but do you recall being there? A. Q. A. Q. I must have been, yes. Do you remember the executive committee at that time, 2004? I'm not positive on that. You remember that there was some discussion on the policy changes; is that right? A. Q. A. Q. A. Q. A. It was explained to us, I know that. It was explained to you by Ramona Cunningham; correct? Yes. It wasn't explained to you by Dan Albritton? No. It wasn't explained to you by Archie Brooks? No. REED - CROSS - SCOTT 637 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Ramona Cunningham is the one who explained to you what the changes were? A. Q. A. Q. Yes. And do you remember the fact that there was-To the best of my recollection, yes. Correct that's all I'm asking is what you can remember. And there was no debate that took place on whether or not the revisions should be adopted; isn't that correct? A. Q. I don't believe so, no. Do you recall that at the onset of that meeting that you were--that the policy manual was distributed to you? A. Q. No, I don't remember that. As a board member, do you recall that periodically you would receive audit reports that were done at CIETC? A. Q. Yes. And do you recall that an accounting firm by the name of Faller Kincheloe provided audited reports for CIETC? A. Q. A. Q. Yes. That's a private CPA firm that does auditing; correct? Uh-huh, yes. And do you recall that as a board member you were provided with those audit reports? A. Q. A. Yes. Did you ever review those audit reports? I would normally look at their comments that they would REED - CROSS - SCOTT 638 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 have. There would be--at one of our meetings usually somebody from that firm would be there and explain it, and everything was fine. Q. And so you're not aware of the fact that--the fact that Mr. Albritton had a consulting agreement with CIETC was contained in the pages of that audit? A. Q. A. Q. I never saw it. You never saw what? Would you repeat that again. I sure will. Since you never reviewed thoroughly the audit reports that were provided to you, you would not, then, be aware of the fact that Mr. Albritton had a consulting agreement with CIETC; is that right? A. Q. Right. And since you didn't review those reports, you obviously were unaware of the fact that that information was contained inside the audit report? A. Q. A. Q. I never saw it. Because you didn't read it? Yes, evidently. The last thing I'd like to talk to you about just real quick is, your authority as a board member is derived from the bylaws of the board of directors; correct? A. Yes. REED - CROSS - SCOTT 639 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: MR. COURTER: A. Q. It is not derived from the employee manual. Isn't that correct? A. Q. Yes. You, as a board member, are not an employee of CIETC; correct? A. Q. A. Uh-huh. Is that a yes, Sir? Yes, uh-huh. MR. SCOTT: Wait a minute. That's all I have. Would you repeat that, at the Excuse me. end there. Q. Sure. What I said was, you are not an employee of CIETC, are you? A. Q. No. The policy manuals, the employee policy manual, does not dictate the authority of the board of directors; correct? A. Correct. MR. SCOTT: THE COURT: MR. COURTER: THE COURT: Okay. Mr. Courter, any redirect? No, Your Honor. You may step down. (Witness excused.) You want to call your next witness. We would call Sherry Howard, Your Honor, and again I would believe this is relevant to all counts of the HOWARD - DIRECT 640 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. Would you state your full name and spell your last name, indictment. SHERRY HOWARD, GOVERNMENT'S WITNESS, SWORN THE COURT: Ms. Howard, as the lawyers will tell you, we're competing with the rain, so it's necessary to pull the microphone close to you and respond to the lawyers when they ask you questions. Mr. Courter, go ahead. DIRECT EXAMINATION please. A. Q. A. Q. A. Q. A. Q. Sherry Howard, H-O-W-A-R-D. Where are you currently employed? I am retired. What was your last place of employment? I worked for Story County. What did you do for Story County? I was the administrative officer. How many years were you the administrative officer there at Story County? A. Q. A. Q. A. 29. And from what years to what years? January of '79 until January of 2008. So you just retired then; correct? Yes. HOWARD - DIRECT 641 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. What were your--just in general your duties as the administrative officer there at Story County? A. I worked a lot on human resources area, benefit administration, labor negotiations. Q. Did you work closely with the board of supervisors there at Story County? A. Q. Yes. Is Story County or was Story County a member of an organization known as the Central Iowa Employment and Training Consortium or CIETC? A. Q. Yes. Story County being a member of CIETC, did they have the opportunity to put an individual on the board of directors? A. Q. A. Q. A. Q. Yes. Did you ever serve in that capacity for Story County? Yes. When did you first go on the CIETC Board? Probably early to mid-eighties. Did you serve continuously on the CIETC Board at that time until you retired? A. I served until CIETC no longer existed. At that point I resigned from the CIETC Board. Q. CIETC ceased to exist after the final auditor's report came out and everything came to a head; correct? A. Correct. HOWARD - DIRECT 642 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. So it would be fair to say that you served on the CIETC Board from the early Eighties until sometime in 2006? A. Q. A. Q. A. Q. Correct. Were you ever chairman of the board at CIETC? Yes. When were you chairman of the board for CIETC? I'm thinking probably 1993 to 1996. During the period of 1993 through 1996 was Ramona Cunningham employed at CIETC? A. Q. A. Q. Yes. What was her position? I believe she was executive director. Do you know if Karen Tesdell was employed at CIETC during the '93 to '96 time frame? A. Q. A. Q. Yes. What was her position at that time? She was accountant. During the '93 to '96 time frame when you were chairman of the CIETC Board, how were salaries set for executive personnel at CIETC? A. We did have a salary schedule in place and then positions were designated by grade. Q. Let's talk about that, you indicated there was a salary schedule in place? A. Uh-huh. Correct. HOWARD - DIRECT 643 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. on? A. Q. I don't recall. Okay. You indicated that it had different grades on the Where did this salary schedule come from? What was it based salary schedule? A. Q. A. Yes. What does that mean? We would look at a position, job duties, entry requirements to, you know, do that particular job, and then a grade was assigned to that particular position, and a salary range for that particular grade. Q. Is that based upon the analysis of the work that was being done for the person filling that position? A. Q. Yes. Back in the '93 to '96 time frame, was supplemental bonuses or supplemental pay awarded to CIETC employees that you're aware of? A. Q. Not that I'm aware of. When you stepped--when you ended your term as chairman of the board in '96, did you obviously stay on the full CIETC Board? A. Q. Yes. At some point in time after 1996 did the procedure change for setting the salaries of the management personnel at CIETC? A. Could you repeat your question, please. HOWARD - DIRECT 644 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. After you left as chairman of the board in 1996, are you aware of any changes in policy as it relates to the setting of the salaries for the executive employees of CIETC? A. Q. In most recent years, yes. When you say "in most recent years," what years are we talking about, Ma'am? A. Q. A. Q. The last probably 3 or 4 years. The last 3 or 4 years that you served on the board? Yes. So if you went off in 2006, from the 2002 to 2006 time frame, somewhere in there? A. Q. I would say yes, probably. Were you a member of the executive board as well as the regular CIETC Board of directors? A. Q. A. Yes. What years were you a member of the executive board? It would have been at the same time that Archie Brooks was appointed chair and Dave Reed vice-chair. Q. A. Q. 2003? That sounds right. What were your-Did you have any additional duties as a member of the executive board that would be more than a normal duty as a board member on a full CIETC Board? A. Typically the one thing that I did was to sign off on vouchers. HOWARD - DIRECT 645 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. Now, vouchers were used for what? Payment of claims. And when you say payment of claims, does that relate to salary? A. Q. A. Q. A. Q. A. Q. Salary, office rent, supplies, telephone. All the expenses of CIETC; correct? Correct. Did you prepare the vouchers? Prepare, no. Who, if you know, prepared the vouchers for your signature? My understanding is that Karen Tesdell prepared those. You indicated that these vouchers that you signed for approval of payment concerned salaries; correct? A. Q. Yes. Were those for the salaries for the entire employee base of CIETC? A. Q. Yes. Were those broken down individually by each person and their salary or was it just a lump sum given? A. Q. What I recall was a lump sum. So you weren't aware, at least at that point when you were signing off on the vouchers, the individual amounts of compensation for each employee? A. Q. Correct. How did the procedure change from what it had been when you HOWARD - DIRECT 646 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 were chairman of the board? How did it change in this 2002- 2006 time frame as it relates to the salary and total compensation of members of the executive staff of CIETC? A. Q. How did it change? Correct. Did you continue to use the salary schedule that you had talked about that you had used when you were the board chair? A. I can't answer that. I don't know whether that was still in place at that time. Q. Do you know how the salaries were set for the executive employees at CIETC in the 2002 to 2006 time frame? A. Q. I do not know how they were set. Did you ever recall any board meetings having any discussions concerning how these employees salaries would be set and who would set them? A. Q. I don't recall any board discussion about that. You obviously worked-Strike that. You obviously were on the board of directors for quite some time; correct? A. Q. Correct. Now, are you familiar with the general duties that the chief executive officer would undertake for CIETC? A. Q. Somewhat, yes. You know that Ramona Cunningham filled that position; correct? HOWARD - DIRECT 647 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes. Did you know John Bargman during the time that you were working or while you were on the board of directors at CIETC? A. Q. I did know who John was, yes. Were you aware in general the extent of his duties during his employment at CIETC? A. Q. Very limited knowledge of what he did. Karen Tesdell, did you know her--obviously you knew her during the course of your time on the board of directors; correct? A. Q. A. Q. Yes. And she was the chief accountant for CIETC; correct? Correct. And you worked with her. She would provide you with the vouchers for your signature, correct, for payment of bills due for CIETC? A. Q. A. Q. A. Q. That was my understanding, yes. How often would you sign those bills? Once every 3 months. So quarterly? Roughly, yes. And Karen Tesdell, I believe, had been the accountant or chief accountant for CIETC I would believe for the entire course of your service on the board of directors; correct? A. That sounds right. HOWARD - DIRECT 648 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Okay. You don't recall any conversations at any board meetings concerning how salary would be set for Ramona Cunningham, John Bargman or Karen Tesdell? A. Q. A. Q. I do not recall anything. Did you attend board meetings on a regular basis? Pretty regular basis. I'm going to show you, Ms. Howard, and it will come up on your screen there in front of you, page No. 10 from Government's Exhibit No. 1. You're aware the State of Iowa auditor's office performed a full audit on CIETC; correct? A. Q. Correct. And it was the result of some of the findings of that state audit that CIETC existed in that form; correct? A. Q. A. Q. Yes. Have you seen the state auditor's report when it came out? Yes. You actually were still serving on the board at that time; correct? A. Q. Yes. Now, the exhibit that's up is page 10 from that auditor's And looking at the top it deals with the salaries of report. three employees for certain periods of time; correct? A. Q. Yes. Would you agree with me that during those times in question, HOWARD - DIRECT 649 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 as outlined in that graph, that Ramona Cunningham was the chief executive officer? A. Q. A. Q. A. Q. Yes. And that John Bargman was the chief operating officer? Yes. And that Karen Tesdell was the chief accountant? Yes. In taking that first column that we have there, the 12 months ended 6-30 of 2004, do you see where Ms. Cunningham's total compensation from CIETC was 254,000 and change; correct? A. Q. Yes. And Mr. Bargman's total compensation was 241,493 and change; correct? A. Q. Yes. And Ms. Tesdell's total compensation for that time period was $114,878 and change; correct? A. Q. Yes. Obviously as we go across that graph for each of those three individuals, the next 12-month period for Ms. Cunningham was 368,000 plus, Mr. Bargman was 360,000 plus, and Ms. Tesdell was 129,000 plus; correct? A. Q. Yes. And then the last column is just for the 5 1/2 months ending 12-15 of '05; correct? A. Yes. HOWARD - CROSS - McCARTHY 650 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. McCARTHY: Q. Good morning. Q. And you see those salaries, 173 and change for Ms. Cunningham, 166 and change for Mr. Bargman and 48,000 and change for Ms. Tesdell; correct? A. Q. Yes. And based upon your knowledge of how CIETC operated and the general duties of each of those three positions, do you have an opinion as to whether the salaries paid to Ms. Cunningham, Mr. Bargman and Ms. Tesdell were reasonable? MR. McCARTHY: of foundation also. THE COURT: BY MR. COURTER: Q. Do you have an opinion as to whether those salaries are That's just a yes or no answer. Overruled. Objection; calls for speculation, lack reasonable, Ms. Howard? A. Q. A. No. You don't have an opinion on that? Right. Well, my opinion is those are not reasonable. MR. COURTER: THE COURT: MR. SPIES: THE COURT: Nothing further, Ma'am. Thank you. Mr. Spies, do you have any questions? I do not, Your Honor. Mr. McCarthy? Yes, Your Honor. Thank you. Thank you. MR. McCARTHY: CROSS-EXAMINATION HOWARD - CROSS - McCARTHY 651 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Good morning. If you can't hear me, let me know. I'll try to speak into the microphone here. These vouchers that came from Karen Tesdell, they came on a quarterly basis? A. They were processed weekly or every 2 weeks, but I only signed off on them about once every 3 months roughly. Q. And these were not line item vouchers, these were just lump sums; is that right? A. Q. A. Q. I'm trying to recall. That's fine. I don't recall seeing a line item. Now, these vouchers had been prepared by Karen Tesdell the same way over the last 20 years; correct? A. Q. I would assume so, unless there were some law changes. Did you see any changes in 2002, 2003, 2004, 2005 from the Did the vouchers change over that perspective of the vouchers? time period? A. Q. I don't recall, Sir. Do you have any information that Karen Tesdell was presenting false vouchers? A. Q. I do not. You would agree with me after looking at the document that Mr. Courter showed you that Ramona Cunningham and John Bargman were receiving significantly larger pay than Karen Tesdell? HOWARD - CROSS - McCARTHY 652 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. Yes. Not even in the same ball park. I think it was about half. Well, 368, we know, for the 12 months? I don't have that on my screen at the moment. Here we go. The 368 right here, compared to 129, that's a lot less than half, isn't it? A. Q. Yes. In the 5 1/2 months ending 12-15-05, do you see the bonuses Would you agree? that Ramona received up here 54,000, 28,000; correct? A. Q. Correct. Let's look down and Karen Tesdell's. She didn't get any bonuses, did she? A. Q. No. You took some corrective action in April of '06, did you not, as a board member? A. Q. A. Q. A. Q. Yes. What I'm referring to is your trip to the bank? Yes. Do you recall doing that? Yes. You and Mr. Reed went to the bank and took Archie off the accounts; is that right? A. Yes. HOWARD - CROSS - McCARTHY 653 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. hear you. Q. And it's my understanding you went to the CIETC offices looking for the rubber signature stamps of Archie Brooks; correct? A. I know the stamps existed. I'm trying to remember the disposition of those. Q. A. Q. A. Q. A. Q. You wrote a report, did you not, to the board? Yes. Dated September 12th, '06? Yes, I did. And you mentioned those rubber stamps in there. Yes. If I showed you that report right now, would that refresh your recollection? A. Yes. MR. McCARTHY: THE COURT: BY MR. McCARTHY: Q. For the record, I am handing you your report dated May I approach, Your Honor? You may. September 12? THE COURT: Mr. McCarthy, they indicate they can't The jurors indicate they cannot hear you. MR. McCARTHY: I will go back to the microphone. If you would turn to the last page? Okay. There is a highlighted portion that talks about the rubber HOWARD - CROSS - SCOTT 654 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SCOTT: Q. A. Q. Good morning, Ms. Howard. Good morning. You were on the CIETC Board and its predecessor. You were Is My name is Paul Scott. Q. A. stamps, and I'd like you to read it to yourself. A. Q. Okay. Without reading it, tell me what you reported to the board about the rubber stamps, either stamp or stamps, you tell me, of Archie Brooks. A. My understanding, there were two rubber stamps that existed, one with the Archie Brook's signature and one with Dave Reed's signature, and those were in the possession of Ramona and John Bargman. Q. Thank you. MR. McCARTHY: May I approach? Certainly Karen Tesdell did not have one of those stamps? I was not aware that she did, no. MR. McCARTHY: THE COURT: MR. SCOTT: Thank you. I have nothing further. Mr. Scott, do you have any questions? Yes. Thank you, Judge. CROSS-EXAMINATION involved with that organization for approximately 25 years. that what you said? A. Q. I'm sorry, I couldn't-You were involved with CIETC and its predecessor HOWARD - CROSS - SCOTT 655 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 organization for approximately 25 years; is that correct? A. Q. Correct. And served as it's chairman and its treasurer; is that correct? A. Q. Yes. And are those the only two positions that you had during your tenure on the board? A. Q. I can't honestly answer yes or no to that. How long were you on the executive committee as treasurer? A. Q. '04? A. Q. Yes. That was kind of a tentative answer, and if you're not sure, Two years. So you resigned in '06, so you would have been on there in please let me know that. A. Q. I'm not sure. Because I wasn't sure from your testimony on direct Can you hear me? examination-A. Q. I'm trying. I wasn't sure from your testimony on direct examination whether you stated you became treasurer at the same time that Archie Brooks was elected president--or, excuse me, chairman of the board. A. Yes. Is that right? At the time that Archie became chair Dave Reed was HOWARD - CROSS - SCOTT 656 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 vice-chair and I was secretary/treasurer. time frame that I'm talking about. Q. So you were elected as treasurer at the same time--you were So that would be the on the same slate as Mr. Brooks for the executive positions on the board? A. Q. Yes. Are you familiar with the fact that there are two separate boards of directors, one was for CIETC and one was the Regional Workforce Investment Board? A. Q. Yes. And were you familiar with the membership of the Regional Workforce Investment Board? A. Q. A. Q. Is this at the time at CIETC? Correct. Yes. And at the time, during the--excuse me, Dan Albritton was a member of the CIETC Board at the same time you were; correct? A. Q. Yes. And Mr. Albritton was not a member of the Regional Workforce Investment Board, isn't that correct? MR. COURTER: I'm going to object, Your Honor, No. 1 as to relevance and, No. 2, is the scope of direct. THE COURT: Sustained. HOWARD - CROSS - SCOTT 657 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SCOTT: Q. As the treasurer of the board of directors for CIETC, what were your responsibilities? A. Q. Basically just to sign off on the vouchers. So your responsibilities as treasurer had nothing--no oversight of the finances of CIETC? A. I got the same financial information as other board members received. Q. You didn't receive financial information on a more frequent basis? A. Q. A. Q. No. You did receive audits; correct? Yes. You received the yearly audit that was done by Faller and Kincheloe; is that correct? A. Q. A. Q. A. Q. A. Yes. And did you review those audits? Briefly. You never read through them thoroughly? No, I did not. Are you familiar with auditing procedures? Very limited knowledge. MR. SCOTT: THE COURT: MR. COURTER: I believe that's all I have. Mr. Courter, any redirect? No, Your Honor. Thank you. HOWARD - CROSS - SCOTT 658 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: You may step down. Ladies and gentlemen, we're going to be in recess until 1 o'clock. before. (Recess at 11:51 until 1 o'clock p.m.) Remember the admonition that I've given you POTHOVEN - DIRECT 659 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. Mr. Pothoven, would you state your full name and spell your AFTERNOON SESSION (1:00 p.m.) THE COURT: Please be seated. Mr. Courter, you can proceed. MR. COURTER: Pothoven, Your Honor. The government would call Howard We believe Mr. Pothoven's testimony will be relevant to all counts in the indictment. HOWARD JAMES POTHOVEN, GOVERNMENT'S WITNESS, SWORN DIRECT EXAMINATION last name, please? A. Q. A. Q. A. Q. Howard James Pothoven, P-O-T-H-O-V-E-N. What county do you live in? Marion. What's the county seat there? Knoxville. Are you a member of the board of supervisors in Marion County? A. Q. Yes, I am. Is Marion County or was Marion County a member of an organization known as CIETC or the Central Iowa Employment Training Consortium? A. Q. Yes. Based upon Marion County's membership in CIETC, did Marion County have a seat on the board of directors for CIETC? POTHOVEN - DIRECT 660 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes. Did you ever fill that position as Marion County's representative on the board of directors at CIETC? A. Q. A. Q. Yes. When did you first join the CIETC Board of directors? January 1, 2003. Did you ever hold any positions on the CIETC Board as in chairman or vice-chairman? A. Q. No. Have you ever been on the executive board of the board of directors? A. Q. No. Mr. Pothoven, I want to direct your attention to a board of How often were the board of directors directors meeting. meetings held for CIETC? A. Q. A. Q. Basically once a month. And did you regularly attend those meetings? I think I only ever missed one. Do you recall a meeting in August 2004 in which personnel policies were discussed? A. I remember a brief discussion. Sounds about right. I do not remember the exact date. Q. What do you recall that was discussed as it relates to the personnel policies at CIETC? A. I'm a little confused whether this was the discussion about POTHOVEN - DIRECT 661 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. changing the structure and procedure with the executive committee or whether you're talking about workers down the line and like the personnel policies with them. you're asking. Q. Well, why don't we start with the workers down the line. I'm not sure what What do you recall about that meeting? A. Very little discussion. I think we wanted to change--it was recommended by the director that we change something as far as benefits. Just a minute. I think that had to do with somewhat Whether we could give some of the of a bonus policy, I believe. people that were perceived as being the better workers, giving them a bonus, and it was stated, I remember very clearly, that there was a few other little changes that were not discussed. Q. When you say, Sir, that there were changes that were not discussed, what do you mean by that? A. That's what I mean. That's all that was said. And nobody questioned anymore and nothing was discussed about that. Q. A. Okay. That, I assumed, as we all did, that that was something very minor, but we did not have a discussion about that statement. I do remember that. You indicated that there was another meeting or another instance in a meeting that dealt with issues relating to line workers; correct? POTHOVEN - DIRECT 662 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Yes. And what workers was that meeting dealing with? Well, that was more with the fact that most organizations have or about all of them have executive committees, and quite often they can take action without the total board and then you get it approved by the board at a later date. What I'm thinking about, and I'm not sure it was in 2004, I'm not sure of the dates, it's too long ago for me to remember that, but it was a discussion about whether we would give the chairman of the board the power to represent what used to in the past be an executive committee, as far as okaying things when the total board was not available. I might be mixing two things, but I don't know the time of the second one I just mentioned. Q. A. Q. We're just going to work on your memory, okay? Okay. Do you recall any specific discussions in any of your board meetings concerning the authority of the chairperson to set salaries? A. I remember distinctly approving bonuses. Setting salaries, that being defined as a person's base salary, I don't remember a discussion of that. Q. A. You don't remember a discussion of what, Sir? Of the base salaries. I remember a discussion of approving bonuses, which to me is two different things. POTHOVEN - DIRECT 663 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. During the time that you sat on the CIETC Board, did you ever vote on or was it ever brought up at a board meeting concerning the salaries of the chief executive officer, the chief operating officer or the chief accountant of CIETC? A. Q. Not really, no. I'd have to answer that no. You dealt with Ramona Cunningham during your time at CIETC; correct? A. Q. A. was. Q. Yes. And what was her position at CIETC? She was the executive director. I think it was director. Did you deal with John Bargman during the time that you were I'm not sure what her title on the board at CIETC? A. No, Sir, I never have talked to John. He attended one or two board meetings, one for sure, and that's the only time I ever saw him. Q. Did you deal with Karen Tesdell at all or did you know who she was during the time that you were on the board? A. I knew her name and I really did not know her, and she might I'm not sure she ever did. She have come to one board meeting. might have been there once. Q. A. Q. A. Do you know what her position was at CIETC? Yes, I do. And what was her position? She was chief accountant, I call it, or--I guess that's how POTHOVEN - DIRECT 664 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I see it. Q. She was the chief number cruncher, let's call it. During the course of your time of serving on the board of directors at CIETC, did you become familiar just in general with the operation of CIETC? A. Yes. I think I--it took a while. It was a self-learning process. I did a pretty good job of usually reading all the information that went out, and I kind of tried to be informed. Q. Based upon the information that you received and your own independent work relating to your work on the CIETC Board, did you come to know in general what the duties and responsibilities were of Ramona Cunningham and Karen Tesdell? A. Q. Yes. During your time on the CIETC Board, was Dan Albritton also a member of the board of directors? A. Yes--well, excuse me. He was a member of the RWIB board, He was not and each of those boards had a specific obligation. actually on the same board I was. Q. A. Q. It was the other board. You were on the CIETC Board; correct? Yes. And is it your testimony that Mr. Albritton was not on the CIETC Board? A. Well, he was on the WIA board, and I don't know how much you This is all rather complicated if you want to know all folks-- the details, which we don't have time for. Q. I'll tell you what, why don't you give the jury a brief run- POTHOVEN - DIRECT 665 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the board. down on the differences between the two boards and how they interact with each other as you understand it. A. Q. A. Is that a privilege for me to do that? It is. Okay. The elected board that I was on was called the CIETC Board. It was made up of representatives of Des Moines, the city, Polk County, and seven outlying counties, which formed the region, which was the central Iowa CIETC Board. Our obligation as a board--that's a 28E agreement for Our obligation was primarily to set policy and do Some of those things we did very well and some what boards do. of those things we did very poorly. When you're on a board like this you have an obligation to do what's best for the board not what my personal interest is for my county, no. We do what the mission statement is of CIETC, and what their obligations are and their duties and responsibilities are, and we're supposed to work with that, and do what our job is as board members. Now, setting policy was a lot of that. Now, then we have another board over here which was appointed, I believe, by the governor, I could stand corrected on that, but I think the governor makes appointments to the RWIB board. Q. A. Are you saying RWIB? Yes, just a minute. Is than acronym for something? Regional Workforce Investment Board I POTHOVEN - DIRECT 666 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 boards. Now, there's a lot of other things that happened, where it might have been a responsibility of one board versus the other. That's just a real crude breakdown of our different obligations. Q. Would it be fair to say that the CIETC Board you sat on and guess it is. wrong. I would like to stand corrected on that if I'm If nobody says anything, I guess maybe I got it right. I'm sorry, I should know that better. Q. A. That's okay. That board also has responsibilities, and one of the main things that-- A lot of things had to be passed by both boards as far as policy and decisions. One of the main things that I saw when I was there that we both worked with was, CIETC probably contracts with I'm going to say 250, at least, providers that provide services in the State of Iowa, and I think we even got a few out of state. All of those providers had to be approved by I think both boards at one time. quite involved in. And that was something that we all got We got the financials about the new applicants, and we had to decide on that. And that was a joint cooperation between the two how you describe the RWIB board coordinated to provide services and joint interests of area, which was job training? POTHOVEN - DIRECT 667 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Yes. They would have had a responsibility to be concerned about fulfilling the mission of CIETC, which is the job training and the help, education and relocating people and all those responsibilities. Q. That was the goal for both boards, obviously. During the course of your time as a CIETC Board member, were you ever aware of the fact that Mr. Dan Albritton had a consulting contract with CIETC? A. While I was a board member, before the spring of 2006, I had no knowledge of that. Q. Do you have any knowledge of any other board members, either on the CIETC Board or the RWIB board, having a consulting contract with CIETC? A. I was not aware of it. The only information I have is what I read in the newspaper. Q. During your time on the CIETC Board, I want to restrict that time at least for this answer from January 1 of 2003, when you came on the board, to the middle of March or late March 2006. Did the level of total compensation being paid to Ramona Cunningham, John Bargman or Karen Tesdell ever come up in front of the board? A. Q. No. Prior to-Let me ask you this. You're aware of a state auditor's report that came out concerning CIETC; correct? A. Which one? Yes, I'm familiar with the initial one and the one we just got a week or so ago. POTHOVEN - DIRECT 668 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 question. A. Q. A. Q. A. Q. A. And I'm talking about the initial one. Initial one. Thank you. Do you recall when that came out? Yes, I do. When did that come out, Sir? I don't know, but I know I read it all the same day. That would have been the spring of '06. I don't know the exact date. Q. I think it was March something. You indicated that you read that auditor's report as it related to CIETC after you received it; correct? A. Q. Yes, I did. How did you receive it? MR. SPIES: Excuse me, Your Honor. Irrelevant. I think it was mailed. THE COURT: THE WITNESS: MR. SPIES: Just a minute. Excuse me. I'm sorry, I may have misunderstood the I thought received it as in how he took it. THE COURT: MR. SPIES: MR. COURTER: Do you withdraw your objection? I do, Your Honor. Thank you. I'll rephrase the question, Mr. Pothoven. BY MR. COURTER: Q. A. How did the auditor's report come into your possession? I think it was mailed to us. All the board members as I POTHOVEN - DIRECT 669 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. recall anyway, it was mailed to us. Q. And in that auditor's report did you become aware of what the total level of compensation was for several years as it relates to Ramona Cunningham and John Bargman and Karen Tesdell? A. Q. Yes, I was very concerned about that. Prior to you reading this auditor's report that you received, you believe in March of '06, did you have any idea of the level of compensation that those three officials at CIETC were receiving? A. Q. No, I did not. I'm going to show you, Mr. Pothoven, what is page 10 of what's previously been admitted as Government Exhibit No. 1. Have you seen that chart before, Mr. Pothoven? I believe so. Would you agree with me that the first vertical column indicating the 12 months ended 6-30 of '04 shows the total compensation for Ramona Cunningham, total compensation for John Bargman, and the total compensation for Karen Tesdell? A. Q. Yes, I understand that. And the second column shows the total level of compensation for those same three individuals during the period ending June 30th of '05; correct? A. Q. Yes. And the third column shows the total compensation for the 5 1/2 month period that ended December 15th of '05; correct? POTHOVEN - DIRECT 670 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes. And based upon your work with the CIETC Board and your overall knowledge of the duties and responsibilities of Mr. Bargman--excuse me, Ms. Cunningham, Mr. Bargman and Ms. Tesdell, do you have an opinion as to whether those salaries are reasonable or unreasonable? A. My own opinion is they were very unreasonable. MR. HAMROCK: Objection, Your Honor. Excuse me, I'd ask that my objection precede this witness' spontaneous answer. The question called for yes or no, and he started to go into an answer. My objections would be, Your Honor, one, that there's been a lack of foundation for this witness to give an opinion as to reasonableness or unreasonableness of certain salaries, and would ask that that be stricken. THE COURT: MR. COURTER: BY MR. COURTER: Q. You had indicated, Sir, that during the course of your work You want to lay some foundation, counsel. I will, Your Honor. that you became familiar with the duties of Ramona Cunningham and Karen Tesdell; correct? MR. HAMROCK: Your Honor, I would once again object to the leading questions that are being asked of this witness and ask that counsel rephrase and not ask leading questions. THE COURT: Overruled. POTHOVEN - DIRECT 671 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Yes. MR. COURTER: You may answer, Sir. BY MR. COURTER: Q. Do you serve on other boards in conjunction with your duties as a member of the board of supervisors of Marion County? A. Yes. I serve on several regional boards and many local Probably boards due to the county position as a supervisor. about 15. Q. And during the course of your work on these other boards, have you become familiar with the nature of the duties and responsibilities of the employees of the boards you sit on? A. Q. Yes, I am. Would it be fair to say that you've done the same thing as it relates to CIETC, and the duties and responsibilities of Ramona Cunningham and Karen Tesdell? A. Q. Yes. Based upon that knowledge, do you have an opinion as to whether the total compensation as outlined on page 10 of Government's Exhibit 1 for Ms. Cunningham and Ms. Tesdell is reasonable or unreasonable? at this point. A. Unreasonable. MR. HAMROCK: Again, Your Honor, I would object to the And that calls just for a yes or no answer ask that my objection precede this witness' answer as the government did ask for a yes or no answer and I was going to POTHOVEN - DIRECT 672 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 wait until the next question came up. It would be lack of foundation, Your Honor, and also this witness is not qualified to render an opinion as to whether or not the salary of Ms. Tesdell was reasonable or unreasonable. THE COURT: Mr. Courter, do you want to pose your question again with the question being limited to yes or no. MR. HAMROCK: Your Honor, may the previous response be stricken from the record? THE COURT: MR. COURTER: THE COURT: BY MR. COURTER: Q. Mr. Pothoven, the level of compensation as outlined on page Yes. You should ignore the last answer. I'll just rephrase the entire question. That's fine. 10 of Government Exhibit No. 1, as it relates to Ramona Cunningham and Karen Tesdell, do you believe that that level of compensation is commensurate with the duties they performed? A. No. MR. HAMROCK: Same objection, Your Honor, and ask that it precede this witness' answer. THE COURT: I think the answer is responsive. The objection is overruled. MR. COURTER: THE COURT: MR. SPIES: THE COURT: Nothing further, Your Honor. Do you have cross, Mr. Spies? I do not, Your Honor. Mr. McCarthy. Thank you. POTHOVEN - CROSS - HAMROCK 673 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. McCARTHY: THE COURT: Mr. Hamrock. Mr. Hamrock. CROSS-EXAMINATION BY MR. HAMROCK: Q. A. Q. Good afternoon, Mr. Pothoven. Good afternoon. You said previously that while you sat on the board or the CIETC Board, there was never any discussion of the salaries or base salaries of the all the employees at CIETC; correct? A. Q. Right. That's something, though, that you could have asked about if you wanted to; correct? A. Q. That's right. So the board chose not to specifically discuss any salaries; correct? A. Q. Repeat your question, please. The board chose to not specifically discuss salaries of individuals at CIETC? A. It was not presented to us, so I suppose if that's because we didn't ask, yes, I'll say yes. Q. Now, Ms. Cunningham, who you said you're familiar with, ran Those were your previous words; is CIETC like a dictatorship. that correct? A. Q. Yes. And employees that worked at CIETC knew that they had to be POTHOVEN - CROSS - HAMROCK 674 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 concerned or more concerned about Ms. Cunningham than they did about the CIETC Board; right? MR. COURTER: I'm going to object, Your Honor, No. 1, on relevance; and No. 2, it's beyond the scope of direct. No. 3, it calls for speculation on the part of CIETC employees. THE COURT: BY MR. HAMROCK Q. You talked about having some knowledge of the duties of Did you ever look at all of the duties that she Sustained. Ms. Tesdell. would perform at CIETC? A. Q. A. Q. No. I never got a job description. You never asked for a job description? No. I had no reason to. So as far as you know, you know her to be an accountant or I think you used the term number cruncher at CIETC, and that's pretty much your limited knowledge of Ms. Tesdell. A. Q. Yes. All right. You rendered an opinion just a few moments ago Right? to this jury about whether or not at least Ms. Tesdell's salary was commensurate with the work that she performed. Do you remember that? A. Q. A. Q. Yes. And you said it was not; right? Yes. Yet, you don't have any idea what Ms. Tesdell does other POTHOVEN - CROSS - HAMROCK 675 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 than number crunching; right? A. Is that correct? Well, I think I know about what people have to do in an organization like that. Q. I just asked you a few moments ago if you knew specifically what Ms. Tesdell's job duties and job descriptions were, and you said no. A. Is that still a correct answer? I have It depends on how you want to phrase the question. an idea of what an accountant, if that's her right title does, yes. Q. A. Q. A. Q. I have an idea of that. Do you have any idea. Do you know? No. Do I know exactly what they did every day? Do you know any other duties that Ms. Tesdell had at CIETC? No. So when you gave your opinion as to whether or not her salary was commensurate with the duties that she performed at CIETC, that was really just giving a gut opinion to this jury; right? A. Q. No. Because I have-May I elaborate on my "no" or not? Thank you. I'll ask another question. Now, how many years has Ms. Tesdell been at CIETC? A. Q. I don't know. Longer than I have. If I told you that she was employed at CIETC for at least 20 years, would you have any reason to dispute that? A. Q. No. Would you agree with me that people generally get increases POTHOVEN - CROSS - HAMROCK 676 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 or merit bonuses on their job for each year that they work there? A. Q. Yes. That's common. And cost of living adjustments, or whatever the case may be; right? A. Q. No, not whatever the case may be. If it's reasonable. You were asked about an exhibit of the audit that you Do you recall that? reviewed. A. Q. It's right here. And let me have you take another look at this exhibit. Sir, the base salary of Ms. Tesdell 12 months ending June 30th, 2005 was $89,000 and some change; is that correct? A. Q. A. Q. Yes. I'm pointing to it. Yes. The next fiscal year it went from $89,000 to $92,000 and Do you know what percent increase that would be? some change. A. Q. About 4 percent range. That's not an unreasonable amount of money or not an unreasonable amount of a raise, is it? A. If you take the year before and if that's the right number, If that's the wrong number, then it then it's not unreasonable. is unreasonable. Q. Sir, have you performed any type of studies, nationwide studies, as to what somebody with Ms. Tesdell's years of POTHOVEN - CROSS - SCOTT 677 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 experience and abilities and education and job description, what kind of a salary that person should make on average across the nation? A. Well, you'll have to stop me if I'm not answering your question. Q. A. yes. Q. So in answering this as a yes, does that mean you have I'm just asking for a yes or no. Yes. Have you done any studies? That's what I wanted to answer you is to explain my looked into all of Ms. Tesdell's job descriptions and job duties with CIETC? A. I did not say that. I didn't know what her exact job description was. I've had a lot of experience in working with numbers, and all this, and if you want to hear that, I'll tell you my resume. If you don't want to hear it, I won't. I don't think I have any further MR. HAMROCK: questions for this witness. THE COURT: MR. SCOTT: Mr. Scott. Yes, Your Honor. Thank you. CROSS-EXAMINATION BY MR. SCOTT: Q. A. Q. Good afternoon, Mr. Pothoven. Good afternoon. When you were visiting with Mr. Courter earlier you were talking about a couple of board meetings that are of particular POTHOVEN - CROSS - SCOTT 678 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 interest to this trial. A. Q. Yes. Do you recall that? One of the meetings I believe, to your recollection, was Do you recall that meeting? discussing bonuses. A. Q. Yes. And would the other meeting have been the meeting where personnel policies were discussed, if you recall? A. I'm sorry, but I'm not sure they were separate meetings or I am not totally sure so I it was all done at one meeting. don't know how to answer that. Q. Okay. Do you recall any of the details concerning the meeting where, as you recall, the power to determine bonus levels was reauthorized for the chairperson? meeting? A. Q. Yes, I do recall that meeting. And at that meeting you spoke up and debated whether or not Do you recall that that was something that was appropriate for a chairman of the board; correct? A. Q. Yes. And at that time had you familiarized yourself with the bylaws of the board of directors? A. Q. Yes. And do you recall the version of the bylaws that you read? In that version do you recall what it stated the power of the chairperson was in regard to the salary and bonus issues? POTHOVEN - CROSS - SCOTT 679 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. As I recall, it was passed by the board that the chairman had the authority to approve bonuses at the request of the director. Q. And did you review that bylaws or were you aware of that provision of the bylaws prior to this meeting where you were debating the reauthorization? A. I think I assumed--and it was I think stated at the meeting I think that that it took more than one signature to do that. was the executive committee, which normally is three or four people. Q. A. Q. A. Q. A. Q. A. Go ahead. Depending on if secretary/treasurer was one spot or two. And that was what your recollection of-That's what my recollection is. Of the bylaws of the normal course of business? That's the way it was normally done. And how are you aware of that? I'm not sure whether it was discussed or whether I read it I'm not a hundred percent sure. or whether I thought I read it. Q. A. Q. Okay. That's what I had in my mind. Okay. That's all I know. And you disapproved of the fact or you disapproved of one person having complete authority to make those decisions; correct? A. I believe I made that statement, yes. POTHOVEN - CROSS - SCOTT 680 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. And then based on the assurances of then chairperson Mr. Brooks, you eventually voted in favor of it; correct? A. I honestly don't remember how I voted. I'll tell you why that's--I have to say that. Once in a while in county government if I lose a vote 2 to 1 and it's not that big of issue or if for some other reason I have argued against something, and then just for unanimity and to make the board look like we have a consensus, I'll just go along with it. I might have done this on this day, I don't know. And I know how I felt, but I'm not even sure how I voted because I don't remember. Q. A. You don't recall how you voted; is that fair? Yes. I know how I think I should have, but I'm not a hundred percent sure, but you can find that in the record. Q. A. Q. A. Q. A. Q. A. Q. Right. So are you going to tell me? Sure, I'll tell you. Okay. I did that. You voted for it. It was a unanimous vote. I couldn't lie about that because I honestly don't remember. I don't think you're lying. Okay. Thank you. Do you recall that at the beginning of board meetings you would receive an agenda of what was to occur during the board meeting? POTHOVEN - CROSS - SCOTT 681 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes. And that would either be sent out a week before or if there were any changes you might get the agenda that day? A. There were times when an amended agenda was sent out less than the 7 days required by law. Q. A. Q. And-More than once, actually. Do you recall that during certain meetings you would be provided information like if you were voting on the policy manual, you would receive the policy manual? A. I don't know that we ever received policy manuals at a board I don't recall. meeting, but maybe we did. Q. Okay. And do you ever recall receiving or are you aware of the fact that yearly audits were done of the CIETC? A. Q. Yes. And you're aware of the fact that those audits were provided to you; correct? A. They were, but I'm not sure it was all of them. I cannot say that for sure. Q. Okay. You began as a board member in 2003, and you served 2004, 2005; is that correct? A. Q. Yes. And do you recall ever seeing an audit that was produced to you in either 2004 or 2005? A. I cannot give you an answer. I don't know. POTHOVEN - REDIRECT 682 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. Mr. Pothoven, in response to one of Mr. Hamrock's questions MR. SCOTT: Okay. Thank you, Sir. That's all I have, Your Honor. THE COURT: Mr. Courter, do you have any redirect? REDIRECT EXAMINATION you indicated that you had performed some research as it would relate to a salary for Karen Tesdell; correct? A. Q. Yes. And you had indicated that you had some experience in the past, I believe your words were in dealing with numbers; correct? A. Q. Yes. You need to answer out loud. Excuse me. Why don't you briefly run down what your experience is in that area. A. Well, I have somewhat of an accounting background. I was a banker for 25 years and very I've read financial I've taught accounting. involved in making major loan decisions. statements all my life. Many millions and millions of dollars worth of loans I've made based upon my opinion of looking at financials, and I have been an HR person for the bank I worked in, and I've been a county supervisor now for a few years. I do basically the head lead on the budgeting for the whole county, which is a few million dollars, and I am I guess to the point I wanted to make about all this is and I don't have POTHOVEN - REDIRECT 683 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to back it up because it's a fact, there's a lot of difference in salaries for the private sector than the government sector. And I work with nonprofits and I've worked with all kinds of people, and I can't give you the exact numbers of differences, but I can see when a nonprofit--there's just a lot of difference than the normal. MR. HAMROCK: Your Honor, at this time could I ask the government go question and answer? THE COURT: MR. HAMROCK: I'm sorry? The witness had answered the government's original question, I believe, and I was just asking if they could go in question and answer. THE COURT: MR. HAMROCK: THE COURT: Is that an objection, counsel? Narrative. Okay. Mr. Pothoven, why don't you wait for the lawyer to pose a question. THE WITNESS: THE COURT: BY MR. COURTER: Q. What specific factors did you look at in coming to the Okay. I was trying to answer. No, no, no, that's fine. opinion that you've previously given that Ms. Tesdell's salary was unreasonable? A. My opinion is that, like I basically said, I'll have to repeat a little bit of what I said, I am very aware of the differences in what's acceptable in the profit and nonprofit POTHOVEN - REDIRECT 684 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Yes. MR. HAMROCK: witness' answer. THE COURT: BY MR. COURTER: Q. Have you compared or do you know, based upon your It is leading. The answer will go out. Ask that the objection precede the type business versus the public sector. We all know what some of the people in the private sector make, but that's not palatable in the nonprofit type businesses. Q. Let me ask you this, Sir: Would you agree with me that there's one set of or a general range of pay that may be applicable to, say, I mean the public sector of government work? A. I'm sorry, I missed a little bit of the first part of your question. Q. That was a very bad question. Would you agree that there's a difference in the pay that employees in the public sector make in comparison to some employees in the private sector? MR. HAMROCK: Objection; leading. experience, if there's a difference between public sector pay and private sector pay? A. Q. A. Q. Definitely a firm difference. Which sector is higher? The private sector tends to be much higher. And was it based upon that knowledge that you, at least in POTHOVEN - REDIRECT 685 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor. THE COURT: MR. SPIES: THE COURT: MR. HAMROCK: THE COURT: MR. SCOTT: THE COURT: Mr. Pothoven. All right. Mr. Spies. part, based your opinion on the unreasonableness of Ms. Tesdell's salary? A. Yes. And if allowed, I would like to comment, because I think the jury needs to know this, so I'm throwing this out for you folks. When we get grants-THE COURT: Sustained. Mr. Pothoven, you have to--you can't throw out things. You have to wait for the lawyer to--one Then you have to respond of the lawyers to ask you a question. to it. Okay? THE WITNESS: THE COURT: I know better. I forgot. Thank you. It's very I don't mean to be critical. easy to--compared to being a witness, being a judge is easy, so you've got the hard job. you. I'm not. MR. COURTER: I don't have anything further, Your So don't think I'm being critical of Thank you, I have none. Mr. Hamrock? Nothing further, Judge. Mr. Scott? No, Your Honor. All right. You may step down. Thank you, ABDUL-SAMAD - DIRECT 686 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. Mr. Abdul-Samad, would you state your full name and spell MR. COURTER: Abdul-Samad, Your Honor. THE COURT: MR. COURTER: through 23. AKO ABDUL-SAMAD, GOVERNMENT'S WITNESS, SWORN DIRECT EXAMINATION The counts of the indictment, counsel? Yes, Your Honor. Count 1 and counts 21 the jury. (Witness excused.) The government would call Ako THE WITNESS: THE COURT: I don't get to say what I want to? You can say what you want to but not to your last name, please. A. Q. A. Q. A. Q. A. Q. A. Q. Ako Abdul-Samad, A-K-O, first name, A-B-D-U-L-S-A-M-A-D. How you are you employed, Sir? I'm the CEO of Creative Visions Human Development Institute. Where is that located? In Des Moines, Iowa, 1343 13th Street. How long have you been with Creative Visions? 12 years. Are you the founder of Creative Visions? I'm the founder of Creative Visions. What's the mission statement or what sort of work does Creative Visions do? ABDUL-SAMAD - DIRECT 687 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. We work with high at-risk youth, young adults and adults. We help provide resources for them to make some healthy choices, change their lives, that type of thing. have a clinic. We have a job training program, we have a We computer lab, a men's and women's group, that type of work. Q. Sir, have you ever served on the board of directors for the Central Iowa Employment Training Consortium? A. Q. A. Q. A. Yes, I have. When did you first join that board? 2003, I believe it was. How did it come to be that you joined the CIETC Board? I was asked by the city if I wanted to sit on the board, and I was appointed by I believe at that time Mayor Preston Daniels. Q. The city of Des Moines asked you if you wanted to sit on the board? A. Q. A. Q. Yes. And Mayor Daniels appointed you to the board? Yes. What were your general duties as it related to being a member of the board of CIETC? A. General duties, my understanding, was to help oversee CIETC and, you know, sit on the board and function as a board member. Q. We'll go back to your board work in a little bit, but I want to talk to you about Creative Visions. As it relates to CIETC, were there some things that ABDUL-SAMAD - DIRECT 688 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. you were doing at Creative Visions as it relates to job training that were similar to some of the services provided by CIETC? A. Q. Yes. At any point in time since you came on the board in 2003, did Creative Visions receive money through CIETC for its job training or other purposes? A. Q. Yes. CIETC became our fiscal agent. Why don't you describe what a fiscal agent is and when CIETC became your fiscal agent. A. We--I think it was later in 2000--2003. Just before 2003, just before I got on the board, there was some money that was allocated to us to run a program. The first money came-When you say "allocated to us," do you mean Creative Visions or do you mean CIETC? A. Well, it was actually allocated, from my understanding, to Creative Visions from Iowa Workforce Development, and CIETC then managed the money that was allocated to us from Iowa Workforce Development. Q. So the money originated with Iowa Workforce Development; right? A. Q. Yes. And what was CIETC's duties as the fiscal agent for this program? ABDUL-SAMAD - DIRECT 689 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. To make sure that we spent the money properly and, you know, to actually check our numbers and, you know, we turned our numbers in to them. Q. A. What was that money for? That was to provide a stipend and help young adults to receive employment, also given a stipend to help get work clothes, you know, and transportation, that type of thing. Q. How much money did Creative Visions receive under this program? A. I don't know exactly the time. At different times of year-- at one point we got 27,000, and another year we got 35,000, and then another year we got about 40, I think, thousand dollars. Q. And would these all be in the year subsequent to 2003, forward? A. Q. Right. How would the money flow from IWD to CIETC to you at Creative Visions? A. It was reimbursement. We would spend the money, and then we would turn in a voucher, and then we would receive our money back. Q. Who did you deal with as it relates to CIETC being your Who at CIETC did you deal with on that issue? fiscal agent? A. Our vouchers would go down and we would turn them in, and there was a couple of people, you know, that we would turn them into at CIETC. And that was actually--our COO at that time then ABDUL-SAMAD - DIRECT 690 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 would turn them in, and I do believe I think Karen was one that we turned them into, you know, but there was someone else, but that's how we sent them in. Q. A. Q. A. Q. When you say Karen, who are you referring to? Karen that's sitting there. Karen Tesdell? Yes. I'm sorry. Did you have any dealings with Ramona Cunningham as it related to this money that was flowing from IWD through CIETC to Creative Visions? A. Q. Yes. What was the extent of your involvement with Ms. Cunningham as it relates to this funding? A. She would tell us how much we got, you know, just like she Each year the money was not guaranteed, you would make a call. know, and she would--she informed me that, you know, if we had some money, then we would continue funding the program. didn't, then we wouldn't fund the program. And normally I got the call from her and she would say we did find some money and we're funding the program. Q. So Ramona Cunningham through CIETC would inform you how much If we money Creative Visions could be reimbursed for? A. Q. Exactly. I believe you indicated those were 27,000 in one year, 35,000 in the next year, and 40,000 in the following year? ABDUL-SAMAD - DIRECT 691 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 this. A. Something in that realm. Those probably aren't exact. In fact, I had the e-mail that was sent that, you know, would state how much we would actually get for the reimbursement, you know, how much money we had coming to Creative Visions. Q. So we're talking about a fair amount of money in each of these years but not huge amounts; correct? A. Q. Correct. What did--if you know, what did CIETC get by acting as the fiscal agent for this flow-through of money from IWD to Creative Visions? A. Q. I don't know. During the years that you talked about, the three years with approximately 27,000, approximately 30,000 and approximately 40,000, did you know how much money was available overall to CIETC that could have been used by Creative Visions? A. Q. No. At any time subsequent to those three years and the level of funding you received in those years, did you learn how much money could have been available to Creative Visions? A. I was informed there was some other money that could have been available. Q. A. What sort of sums are we talking about, Sir? Well, I was-MR. SCOTT: Excuse me, Sir. I'm going to object to That's my objection, Your The answer calls for hearsay. ABDUL-SAMAD - DIRECT 692 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. answer. hearsay? MR. SCOTT: THE COURT: Overruled. MR. COURTER: Mary Ubinas-Do you have a number? I was told 180,000. Would that have been for the entire 3 years that you were You may answer, Sir. Yes. Okay. I don't think it does. You can Honor. The question calls for hearsay. THE COURT: you talking about? else told him. Overruled. I guess what sort of sums were Just don't have him repeat what somebody You don't think I guess that's the question. that calls for hearsay, do you, "What sort of sums are you talking about"? MR. SCOTT: His previous answer was that he wasn't sure, and the answer to the previous question, I believe, was he wasn't sure and he was told by someone. THE COURT: Right. You think this question calls for receiving money from Creative Visions or-A. Q. A. That's my understanding. So 180,000 total? Yes. THE COURT: should go out. Ladies and gentlemen, the answer he gave Counsel was right It came from somebody else. ABDUL-SAMAD - DIRECT 693 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 so... BY MR. COURTER: Q. A. Q. A. Do you know an individual by the name of Nathan Brooks? Yes, I do. How do you know Nathan Brooks? I knew Nathan when he was Polk County--on the Polk County and I was wrong. You should ignore the question--the answer. And as you've been told, questions are not evidence, Board of Supervisors, and then he began to work with CIETC and work with the directors counsel. Q. Do you know approximately when he started working with CIETC? A. Q. A. Probably about 2003, I think it was. So approximately the same time you came on the board? Right. Toward the end, because we had a project going at that time. Q. A. What's the director's council, sir? The director's council is a number of nonprofit agencies that have come together, you know, to leverage, you know, our resources and our money to be able to serve the community. Q. Was Mr. Brooks, while he was employed at CIETC, ever involved with assisting Creative Visions with any of its job training programs or any of the other endeavors that Creative Visions undertook? A. Yeah, he was working with us when we were developing a ABDUL-SAMAD - DIRECT 694 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. computer lab, you know. We had actually started working with the computer lab a year before, you know, he came on, you know; but then he was assisting that, because he was coming on to work actually with the director's council to help us leverage our resources, and part of that was working with Creative Visions in helping to secure the lab. Q. How long did he work with Creative Visions on this project through his employment at CIETC? A. It took us about a year to finally get the lab up and running. Q. How often would you see Mr. Brooks working directly on-- Strike that. Was the computer lab located at Creative Visions? Yes, it was. So that was there where your organization is located; right? Yes. Would Mr. Brooks come to work at your location when he was dealing with the computer lab? A. Yeah. There was times that he would come there, and, you know, work with, you know, some of the workers, because we had union workers and nonunion workers that were working together and several individuals that had volunteered to help us get the lab, you know, up and running. Q. During the year that you indicated Mr. Brooks was working with Creative Visions on the computer lab, how often would you ABDUL-SAMAD - DIRECT 695 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 see him there at your Creative Visions headquarters? A. Mr. Brooks was probably throughout--in a week was there maybe two or three times a week, sometimes more. Q. A. Q. Did he maintain an office at your location, Sir? No. There was no office for him at Creative Visions. You indicated that he completed his work after approximately The duration of his work lasted approximately 1 year; 1 year. is that correct? A. Q. That's correct. After he had completed the work on the computer lab, did he do anything else as it relates to Creative Visions? A. Indirectly, yes, because he still worked with the directors council. Q. A. Correct. You know, and the directors council, with all of us there, were working on different projects, so he was still the liaison, you know, with the directors council to CIETC itself. Q. But as far as actual hands-on work on a specific funded project, was his work done as related to Creative Visions? A. Q. As related to Creative Visions it was. During your time as a member of the board of directors at CIETC, did you attend the board meetings? A. Q. Yes. I attended some of the board meetings. And when you say some, are we talking most, a few, random, occasionally? ABDUL-SAMAD - DIRECT 696 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Over the 3-year period I think I could probably say about 75 percent of them. Q. A. Q. And how often were those held, Sir? Monthly. Do you recall a board meeting in August of 2004 when personnel policies were discussed? A. I don't know. Can you-You say 2004 and personnel policies? Q. No, I don't actually remember that meeting. Do you recall any meetings dealing with the issue of paid time off or PTO as it relates to CIETC? A. Yeah, I think there was a couple of meetings like that, so... Q. Nothing stands out in your mind about those meetings, though? A. No. The only meeting that actually stands out in my mind, and I can't give you the date, is a motion that was made that I've been, you know, criticized about and talked to about, and that type of thing. Q. A. Okay. Why don't you just tell me what motion was made. Well, we were at a meeting, and there was a motion that was made, and I seconded that motion, and that motion was made to-so that Archie Brooks, the president of it, you know, had stated and there was some conversation about him taking on the responsibility of assigning bonuses and some other things, that would be his responsibility, and at the end that would be ABDUL-SAMAD - DIRECT 697 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 reported to the executive committee and then the executive committee would report that to the board. Q. A. Q. A. Q. A. You indicated that you seconded that motion? Yes, I did. Who made that motion? Dan Albritton made that motion. Do you recall approximately when that meeting occurred, Sir? I don't remember the exact date, but that was the motion that was made, and I thought it was a good motion. Q. A. Why is that? Because I thought--because during the time that I was there, I don't remember one time that it was actually reported about bonuses and that type of thing, and I thought this was an opportunity, you know, for us then to learn more. Q. A. Q. A. When you say "us," who do you mean "us"? The board. Okay. Because during the time we had two boards that were meeting, the LEO Board and--the Local Elected Officials Board--and the other board we met, and there was some information that was there. You know, different information was given and I don't remember at any time, you know, that all the information was being given to the board itself. So I looked at it to the fact that, you know, this was ABDUL-SAMAD - DIRECT 698 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 an opportunity for us to get some information that would be given to us. THE COURT: for over an hour. can do so. (Short pause.) THE COURT: BY MR. COURTER: Q. Did Ramona Cunningham have any conversations with you prior Mr. Courter, you can proceed. Ladies and gentlemen, you've been sitting If you want to take a minute to stretch, you to that motion being made, asking you to second that motion? A. I've been asked that several times by several people, and, And I no, she didn't ask me to make that motion, you know. don't remember any conversation that was made beforehand. Q. Did any of the members of--any of your other members of the board of directors have any conversations with you before that motion was made asking you to second it? A. Q. No. Prior to this motion being made and you seconding it, had there been any prior discussions at board meetings that you had been at that discussed the salaries and/or bonuses of the executives of CIETC? A. Q. Not that I remember. You do recall that the state auditor did a full financial investigation of CIETC; correct? A. Yes. ABDUL-SAMAD - DIRECT 699 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 also. THE COURT: BY MR. COURTER: Q. During the time that you were on the board of directors, Sustained. Q. Did you have an opportunity to review that report when it was released by the state auditor's office? A. I looked at it when I--I think I received a copy in the mail at my home, and at the same time that I received a copy in the mail, it was in the newspaper that there had been some issues, you know, pertaining to bonuses, and at that time, I, of course, I started looking at it. Q. Prior to that time, from the time you went on the board to the time that it hit in the press and the state auditors, did you have any idea what the level of compensation was for Ramona Cunningham, John Bargman, or Karen Tesdell? A. Q. No, I did not. Were you surprised when you read, either through the media or in the auditor's report, the level of compensation being paid to those three individuals? MR. SPIES: Objection; irrelevant. I'm going to interpose an objection MR. McCARTHY: Sir, were you aware that Mr. Albritton had a consulting contract with CIETC? A. Q. No. No, I wasn't. Were you aware of any other members of the board of ABDUL-SAMAD - CROSS - McCARTHY 700 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. McCARTHY: Q. A. Q. Good afternoon. Good afternoon. My name is Tim McCarthy. Aaron Hamrock and I represent further. THE COURT: MR. SPIES: THE COURT: All right. Mr. Spies, any questions? Thank you. directors that had a consulting contract with CIETC? A. Q. No, I wasn't. Would it be fair to say you didn't have any consulting contracts with CIETC; correct? A. No, I did not. MR. COURTER: Thank you, Sir. I don't have anything I have none, Your Honor. Mr. McCarthy. Briefly, Your Honor. CROSS-EXAMINATION MR. McCARTHY: Karen Tesdell. You indicated by looking at her and smiling at her that you knew her and you pointed her out? A. Q. A. Q. A. Yes, I do know her. Tell me about that. She worked at CIETC. How much contact did you have with her? Rare, not a lot of contact. I mean mostly my COO did, and How do you know her? then I did if there was any question about, you know, our ABDUL-SAMAD - CROSS - SCOTT 701 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SCOTT: Q. A. Q. Good afternoon, Sir. Good afternoon. I represent Mr. Albritton, and I'd like to discuss with you My name is Paul Scott. numbers or something like that. Q. A. Q. A. Q. Okay. And then I talked to Karen. So it was more of a professional relationship? Totally professional relationship. Did she do what you asked her to do? MR. COURTER: Did she do her job? Objection, Your Honor, calls for speculation; also relevance. THE COURT: You want to rephrase, counsel. Sure. MR. McCARTHY: BY MR. McCARTHY: Q. A. Q. to? A. Q. A. Yes. You turned in vouchers to her; is that right? Correct. Did she take care of those vouchers like she was supposed Did you have any complaints? No. MR. McCARTHY: THE COURT: Okay. Thank you. Mr. Scott. CROSS-EXAMINATION ABDUL-SAMAD - CROSS - SCOTT 702 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 a couple of things. Des Moines; correct? A. Q. A. Q. A. Correct. Are you still a board member of the successor to CIETC? No. No, Sir. I resigned. When did you resign from the board? I don't know You were appointed by the city of You resigned. I resigned after we had a closed meeting. exactly. It was--we had a closed meeting, and right after that, that's when I resigned. Q. Was it--it was after the auditor's report came out in March of 2006; is that correct? A. Yeah, it would have been after that, but it was after our You know, the auditor's report had come out, closed meeting. and we had been in a closed meeting and found out that there was two sets of bylaws, and then that's the thing that prompted me to resign. Q. Let me ask you about that: You're obviously familiar with the CIETC setup, the way it's set up; correct? A. Q. A. Q. A. Basically, yes. And there are bylaws that the board operates under? Yes. And you saw--have you seen those bylaws? No, I hadn't seen them. I was made aware we were under bylaws. You know, them being a nonprofit and understanding a nonprofit structure there were bylaws. ABDUL-SAMAD - CROSS - SCOTT 703 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. So during your tenure on the board you were never shown any bylaws? A. Q. No, I did not get a set of bylaws. During your tenure on the board did you ever receive the employee policy manual? A. Q. No, I did not get an employee policy manual. Were you present at the meeting where the employee policy manual was voted on, the revised edition was voted on? A. Q. I might have been. If a policy manual would have been handed out at that meeting, obviously you would have received it; correct? A. Q. A. Q. Right. If you were present? Right. You were present, however, during the November meeting that you discussed with Mr. Courter; correct? A. Q. A. Q. Where I made the motion, or which one? Yes. Yeah, where I made the motion, I was there. The motion concerning the chairman's power to set bonuses and salaries? A. Q. A. Yes. And do you recall how that motion was made? I believe the discussion came up, and when the discussion came up, then the motion was made by Dan, and there was some ABDUL-SAMAD - CROSS - SCOTT 704 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 discussion took place. Well, I seconded, then some discussion took place, you know, and then it was passed. Q. Do you recall Mr. Brooks telling the board what he wanted to be done before the motion was made? A. I don't know if it was exactly before, but I remember him discussing the fact that--you know, the responsibility, and this was done before, and it was also stated in the bylaws that this also could be done. Q. A. Q. A. Q. Mr. Brooks stated that? Yes. That's your recollection? That's my recollection. Do you remember whether or not Ramona Cunningham was present at that meeting? A. Q. Yes, she was there. And did she make any comments about whether or not the reaffirmation should be passed, to your recollection? A. Q. No, I don't remember that. Do you recall during your tenure on the board whether there were ever times when Mr. Albritton would argue vigorously in favor of a motion? A. Q. For a motion? Or for any subject that might come up during the meeting? MR. COURTER: I'm going to object, Your Honor, as beyond the scope of direct and also to relevance. ABDUL-SAMAD - CROSS - SCOTT 705 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. A. MR. SCOTT: THE COURT: Your Honor, can I respond to that? You want to have a side-bar? (Side-bar conference not reported.) BY MR. SCOTT: Q. Mr. Abdul-Samad, do you recall whether or not there were ever meetings where Mr. Albritton was vigorous or aggressive about the way he supported a particular issue? MR. COURTER: Same objection. THE COURT: I don't know. Overruled. I don't know. I don't think-- I didn't I'm going to object again, Your Honor. I'm trying to think. I'm sorry, Sir. MR. SCOTT: hear the Judge rule. THE COURT: MR. SCOTT: Yeah, he did. I'm sorry, I didn't hear that. You know, if I say, yes, you know, I mean there are so many board meetings, individuals talked and, you know, were passionate about, you know, an issue or what went on, you know, and you would have to be there to see the structure of our board meetings at that time. I mean they weren't long board meetings. everything--paperwork was there. It was there. You come in, If there was a motion that was made, you know, I know there was one point that there was one program under question, and several board members, and I think Dan was one of them, were questioning about numbers ABDUL-SAMAD - CROSS - SCOTT 706 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that were being made that were under, you know they didn't reach their quota and stuff like that, and that type of thing. can't give you, you know, an exact, when, where, what the subject was and that type of thing. BY MR. SCOTT: Q. Okay. Well, I appreciate that. This motion with regard to I couldn't do that. But I the reaffirmation of Mr. Brooks or the chairman's power, Mr. Albritton did not debate in favor of that motion at all, did he? A. Q. It wasn't a debate. No one debated it. After he made the motion, He didn't discuss in favor of? there was no discussion on his part in favor of that motion; isn't that correct? A. No. He made the motion. He made the motion. It was seconded. Q. A. Okay. And there was hardly no discussion on it. Because they showed us the one set of bylaws, and I don't know which set they showed us, but they showed us a set of bylaws. Q. A. Q. At the meeting where-Right, they just said it was in the bylaws. Okay. And they showed them to you at that meeting. They showed you the bylaws at that meeting? A. Well, somebody held them up and said these are the bylaws, and it's in the bylaws, and then nobody questioned it. ABDUL-SAMAD - CROSS - SCOTT 707 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Did you get a copy of those, or somebody just held it up? No. They didn't give us a copy. I didn't get a copy at the closed meeting. You know, at the closed meeting that's when the two sets were held up. Q. During direct examination you were questioned briefly about whether or not you knew that Dan Albritton had a consulting contract with CIETC. correct? A. Q. Yeah, I didn't know. Do you recall whether or not you ever received copies of the And you were unaware of that; is that audit report from Faller and Kincheloe? A. Q. Yeah, I did receive that. And your contract with CIETC was contained within that audit, wasn't it? A. Q. A. My understanding, yes, it was. And did you read that section? No, I didn't read the that section because I already knew what I was getting, so I wouldn't have read that section. Q. I'm going to quickly show you a copy of what's previously been admitted as Albritton Exhibit A. THE COURT: MR. SCOTT: Your Honor. Q. You're familiar with this document? You received that Is this in evidence, counsel? It is. This has been previously admitted, document at board meetings; correct? ABDUL-SAMAD - CROSS - SCOTT 708 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. The letterhead -This is the first page--this is the first page of the Have you financial statement provided by Faller and Kincheloe. been provided with that document? A. I probably was. If this is the audit that they had given and reported on, then I probably did receive it. Q. A. Q. At a board meeting? At a bord meeting. I'm going to show you page 24 of that exhibit. Can you see that, Sir? A. Q. A. Q. Yes, I can. And it says, B, Related Party Transactions? Uh-huh. Or 8, excuse me. And the first paragraph there talks about your contract with CIETC; correct? A. Where it says a member of the board of directors is also chief executive officer for a nonprofit organization and that has received funding from CIETC in the amount of 22,000. Q. A. And that would be Creative Visions; correct? Well, yeah, I would assume that would be Creative Visions without our name being in there, so... Q. A. Well, and-There were several nonprofit agencies that were receiving money from CIETC, you know, and there was another youth program ABDUL-SAMAD - CROSS - SCOTT 709 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that was there, and the individual that was receiving money from CIETC was also a chief executive officer. Q. A. Q. On a nonprofit? Yes. So there was at least--there was one other nonprofit organization of which a chief executive officer was on the board of directors? A. Oh, no, he wasn't on the board. That's right, no, he wasn't. Q. So this probably is pertaining to me. The next line down says another member of the board of directors received 6,000 for providing consulting services to CIETC; correct? A. Q. It does say that, yes. And if you review all of those, it really doesn't say who the individual is directly, does it? A. Q. No, it doesn't. But these financial statements that were done by Faller and Kincheloe, they were provided to you as a board member; correct? A. Q. I would say yes. And if you had reviewed them, you would have been able to ask questions of the accounting firm about particular sections contained within that report; correct? A. Q. A. If I reviewed that section, I would have probably, so... You would have had the ability do that? Yeah. ABDUL-SAMAD - CROSS - SCOTT 710 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. The Creative Visions lab, when that was-That was built through use of CIETC-A. Q. A. No, it was not. Tell me about that again, then. We actually started the computer lab, and we started that actually a year before I even got on the board. And that was in 2002. We had actually worked with-- and I worked with Dan and several other of the union individuals, and we worked with Spectrum Resources at that time to start preparing. lab. Q. Okay. And Mr. Albritton assisted in providing labor to help We raised the money ourselves to build that build that lab, correct? A. Very instrumental in providing labor to help us, labor he got us with the unions, and they came in and did some things that officers, you know, the nonunion people could not do. Q. A. Q. A. And that time was donated to you; correct? That time was donated. And Mr. Albritton facilitated that? Yes, he did. MR. SCOTT: THE COURT: MR. COURTER: THE COURT: Thank you, Sir. Mr. Courter, any further examination? No, Your Honor. You may be excused. (Witness excused.) C. J. BROOKS - DIRECT 711 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. Mr. Brooks, would you state your full name and spell your THE COURT: MR. COURTER: Chuck Brooks. through 19. THE COURT: All right. You want to call your next witness. Your Honor, the government would call We believe his testimony is relevant to counts 1 CHARLES JOSEPH BROOKS, GOVERNMENT'S WITNESS, SWORN DIRECT EXAMINATION last name, please. A. Q. Charles Joseph Brooks, B-R-O-O-K-S. And your younger brother is Joseph Archibald Brooks, Jr.; correct? A. Q. That's correct. Mr. Brooks, did you have the occasion to be employed at the Central Iowa Employment and Training Consortium--excuse me, the Central Iowa Employment Training Consortium? A. Q. A. Q. A. Yes, Sir. When did you first start with CIETC? May 15th, 1996. And how long did you work there, Sir? My last actual workday was February 16th of 2007. Though the actual ending date of employment was May 31st of 2007. Q. Had you switched over at that point in February of '07 from CIETC to the successor organization with DMACC? C. J. BROOKS - DIRECT 712 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Actually I think we--November 1st of '06 I think is when we went from CIETC to Iowa--to DMACC, and it was the Iowa Employment Services, IES, I guess. Q. Just in general, what were your duties during the time you were employed at CIETC? A. I was employability specialist, and I was in the Promise All the time I was there I was Jobs Program and that's all. always in the Promise Jobs. Q. So a hundred percent of your time was dedicated to Promise Jobs Program; correct? A. Yes. There was a period where part of my work was Welfare to Work, which is the supplement of the Promise Jobs program. Q. A. So that would be a subcategory of the Promise Jobs? I believe that's how it was. It's just that there was a period of time where part of our--of my time sheets were part Welfare to Work and part Promise Jobs. Q. During the course of your employment at CIETC, did you get to know Ramona Cunningham? A. Q. A. Q. A. Yes. She was the executive director. During the entire time you worked there, Mr. Brooks? Yes, Sir. Did you interview with her prior to being hired at CIETC? Yes, Sir. Actually, Sir, I was hired as an intern on May 15th of '96, and then I was offered a counselor job on July 1st of '96 for $9.40 an hour. C. J. BROOKS - DIRECT 713 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Fucaloro. Q. A. Any other employees? There were certain people that were instrumental in her Q. A. Q. Who offered you that position in July of '96? Ramona Cunningham. And she was the chief executive officer throughout the tenure of your employment at CIETC? A. Q. Yes, Sir. Based upon your experience while you were working at CIETC, were there a group of employees that, for lack of a better term, could be considered Ramona's favorites? A. Q. Yes, I feel that's a fair explanation. Who all would be considered, at least in your mind, as part of this group of Ramona's favorites? A. Well, myself and Victor Scaglione were considered by everybody else in the building as being her favorites. The most favored, I think, of hers would be Sam becoming executive director that it was sort of assumed that they could never be fired. Q. Right now, Sir, all I'm looking for is names. Do you have any other names of other individuals that you would consider to be on this favored list? A. I really don't know, Sir. I didn't pay much attention. I stuck to myself and my work, and the only person I ever discussed anything with was Victor Scaglione. C. J. BROOKS - DIRECT 714 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor. Q. During the course of your employment, did you ever go gambling with Ramona Cunningham? A. Q. Yes, Sir. Why don't you describe to me how this occurred, how you started gambling with Ramona Cunningham. MR. SPIES: Your Honor, I'm going to object on relevance grounds and rule 403. THE COURT: MR. COURTER: Mr. Courter. It would be a speaking objection, Your Would you like me to do it at side-bar--or speaking response, anyway. THE COURT: Yeah. Ladies and gentlemen, rather than having us again leave you out of something, you're going to take your afternoon break early. So we'll reconvene with you at 10 minutes to 3, remember the admonition. The lawyers will stay. (In open court, out of the presence of the jury.) THE COURT: Be seated. We had a side-bar. Mr. Courter The jury has left. began to describe to me why he thought this evidence to which Mr. Spies has objected on relevance grounds was relevant. The Court's view is that it was better to make a record now rather than proceed and let the lawyers make a record after the Court's ruling. Mr. Courter. C. J. BROOKS - DIRECT 715 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. COURTER: Your Honor, the government believes that this testimony will be relevant for several reasons: No. 1, the overall count in count 1 is conspiracy to defraud through misapplication and misuse of federal funds. The 2 through 19 deal with the misapplication of funding provided to CIETC from various sources through the federal government. As also outlined in count 1 with the overt acts, at least one of the overt acts that's included as the manner and means of the conspiracy is this gambling time that I believe this witness will testify to. And other additional witnesses will testify in essence that they accompanied Ramona Cunningham and Mr. Brooks and a number of other employees, accompanied Ramona Cunningham to area casinos during what would be considered to be normal CIETC work hours. That they would spend anywhere from a couple of hours to a half day at these casinos but no leave time was taken, that there was certain trips taken out of state allegedly for training purposes where people either, A, did not attend the training at all and spent it gambling or drinking or doing other things other than attending the conference, or spending parts of the conference when they were supposed to be in the conference engaging in these activities that were not work related. Based upon that, Your Honor, one of the things the government has to prove obviously is an overt act in the C. J. BROOKS - DIRECT 716 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 conspiracy. We believe these outlines--this outlines, No. 1 overt acts of the overall conspiracy; No. 2, it shows the misapplication of federal funds. We believe that these witnesses will testify that when they were these trips with Ramona Cunningham and other members or other employees of CIETC, that time sheets were continually submitted, showing that they worked a full 8-hour day that day and billed it to a federal program when in fact it was not billed to a federal program. So that goes to another prong of the misuse of the federal funds. And in addition, Judge, we believe that some of these funds were diverted unlawfully and excessively to the compensation of the top three executives at CIETC. So based upon those grounds, Your Honor, we believe that the government should at least be able to inquire while maybe not as in-depth as if Ms. Cunningham were here at trial, at least be allowed to touch on that briefly, establishing the existence of these trips and how time was accounted for and who participated in them. THE COURT: All right. Mr. Spies, do you want to make any record beyond what you've already objected on relevance grounds? MR. SPIES: I do, Your Honor, and I also want to clarify that at side-bar--I should not say at side-bar, but in my objection, my objection was not only on relevance grounds but C. J. BROOKS - DIRECT 717 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 on rule 403, my argument being that the probative value of this testimony or testimony about off-hours activities is likely to be outweighed by a tendency to confuse, prejudice the jury against these defendants. Now, I can understand the government's argument in attempting to prove overt acts to which any of the seated defendants acquiesced or aided and abetted, or in some manner facilitated, for example, by fabricating time sheets to accommodate the off-hours activities of these witnesses, or in some manner or means to conceal those activities. But otherwise, certainly as to Ms. Barto, who had no connection by my recollection to any of this off-hours activity, I think it would be highly prejudicial to her. So the sum of my argument, and maybe I'm going astray here, is that I think that 403 governs this situation, that it may relate to Ms. Cunningham, what she knew, permitted, participated in or acquiesced, but not as to any of these named defendants at trial. THE COURT: Well, are you admitting the relevance and you're saying it's outweighed by prejudice? MR. SPIES: No. I'm saying it's not relevant. It's certainly not relevant to Ms. Barto. THE COURT: MR. SPIES: MR. HAMROCK: Any additional argument? No, Sir. Thank you. Your Honor, we would join in Mr. Spies' C. J. BROOKS - DIRECT 718 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 request? MR. SPIES: No. objection. THE COURT: MR. SCOTT: THE COURT: until 10 till 3. MR. SPIES: THE COURT: MR. SPIES: Your Honor, may I make any further record? You can make any record you want. Then I would ask for a limiting Right. Defendant Albritton also. I'm going to admit it. We'll be in recess instruction that this--the jury be told that it's relevant only to proving an overt act in the indictment, or that it's not relevant to Ms. Barto. THE COURT: Mr. Courter said. Okay. Well, I don't think that's what The indictment says I'm I think it's relevant. misreporting of time is one of the allegations, I know. just going to tell them it relates to count 1 and can be used for that purpose. That's why I think he's offering it. I don't think it relates to 27 against your client, nor the specific counts against Defendant Tesdell or Defendant Albritton. I'm going to tell them it's limited to count 1. Do you have any objection to that? MR. SPIES: Your Honor. THE COURT: Okay. Do you have any other limiting I'll stand on the request that I made, C. J. BROOKS - DIRECT 719 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. COURTER: I guess as far as the limiting goes, Your Honor, I mean we do believe that--I mean the allocation of time, we believe that Ms. Tesdell was responsible overall for the submission of-THE COURT: Well, here's what I'm trying to get at, I'm going to Mr. Courter, for purposes of their record. treat this testimony as objected to by all three of them on relevance and 403 grounds, the idea that even if relevant, it's outweighed by the prejudicial impact. I'm going to tell the jury they can only consider it with respect to the conspiracy count. Do you have a problem with that? MR. COURTER: THE COURT: As far as just the gambling goes? Well, that's all we've gotten so far. Is there going to be more? MR. COURTER: THE COURT: now with Mr. Brooks? MR. COURTER: I don't think I really need to make it. There is going to be more. Okay. Well, you want to make more record I mean I would anticipate the next three or four witnesses that come in for the government are going to be testifying, not only to gambling on company time, but to meeting for drinks on company time, to doing work at Ramona Cunningham's residence on--excuse me, on work hours, all of these happened on work hours, to going to Mr. Albritton's house to do work at his C. J. BROOKS - DIRECT 720 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 residence on work hours, to-THE COURT: Here's what we'll have to do to protect They'll have the rights of the government and the defendants. to make their record and you can make your record, and we'll just have to do it that way. I don't know any other way to do it unless you lawyers have a different suggestion. MR. SPIES: No. I think the Court has long ago abandoned standing objections, so I think we'll have to make our record as we go. THE COURT: No, I understand. We'll be in recess. (Short recess.) (In open court, out of the presence of the jury.) THE COURT: Counsel, the only way I know how to do this is to tell the jury that the evidence is limited to counts 1, 28, 29 and 30, and let you make your objections, because I think you're right, Mr. Spies, that's the best way to handle it. And we're going to have to go that way. work, Mr. Courter? MR. COURTER: Other than, I mean the misapplication Does that counts contained in 2 through 19, we believe that the testimony that he's going to give would be that-THE COURT: I couldn't find that in 2 through 19. I found it in 28, 29 and 30. Where in the 2 through 19 are they? It's a very long indictment, I may have missed it. MR. COURTER: Your Honor-- C. J. BROOKS - DIRECT 721 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: and so does 30. MR. COURTER: I believe counts 11 through 19 deals I mean 28 has misapplied moneys, 29 does, with the Promise Jobs funds, Your Honor, and I think Mr. Brooks has already testified that a hundred percent of his time was billed to the Promise Jobs funds. THE COURT: All right. You want to get the jury, Larry. THE CSO: Yes, Sir. (In open court, in the presence of the jury.) THE COURT: Please be seated. Mr. Courter, do you want me to go back to where you ended or do you have a sense of it? MR. COURTER: THE COURT: BY MR. COURTER: Q. Mr. Brooks, from January of 2003, through April of 2006 did I have a sense of it, Your Honor. All right. You may proceed. you go gambling with Ramona Cunningham during what would be considered normal CIETC hours? MR. SPIES: and rule 403. THE COURT: MR. HAMROCK: Your Honor. MR. COURTER: You may answer, Mr. Brooks. Overruled. We would like to join in that objection, Excuse me. I object on relevance grounds C. J. BROOKS - DIRECT 722 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. A. A. Yes, Sir. BY MR. COURTER: Q. On approximately how many occasions during that time frame did you go gambling with Ms. Cunningham during what would be considered normal CIETC working hours? MR. SPIES: THE COURT: Same objection, Your Honor. Same ruling. I would say a hundred, maybe 125 times through that period of time. BY MR. COURTER: Q. Would other CIETC employees accompany you and Ms. Cunningham on these gambling trips? MR. SPIES: MR. HAMROCK: THE COURT: MR. COURTER: Same objection, Your Honor. I join. Same ruling. You may answer. The only other person in the car when we went on gambling I always drove the car. Ramona trips was Victor Scaglione. would request that I bring the car around. driving. Q. A. Driving from where to where? I always did the Well, the most frequent places that we went would be Prairie Meadows. Q. A. That's in Altoona, Iowa; correct? Yes, Sir. C. J. BROOKS - DIRECT 723 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Honor. MR. HAMROCK: THE COURT: Same objection. Overruled. Q. Approximately out of these 100 to 125 times that occurred during this time period, how many times did you, Ms. Cunningham and Mr. Scaglione go to Prairie Meadows? A. Q. A. Well, we went to other places around the state. Correct. I would sort of say that most of it was Prairie Meadows, That's the probably 90, 95 of them, maybe a hundred of them. best I can recall of this. Q. What other casinos did you visit during normal work hours with Ms. Cunningham and Mr. Scaglione? MR. SPIES: Objection on relevance and 403, Your Meskwaki probably three or four times. BY MR. COURTER: Q. A. Q. A. Where is that located? Tama, Iowa. Any other casinos? We went to Omaha area casinos or the Council Bluffs area Both of those trips casinos maybe three or four times again. were not popular because it was too long a drive. Q. Was there any set pattern for days of the weeks that these trips would fall on? A. Oh, normally often on a Monday. Then more often Thursday. C. J. BROOKS - DIRECT 724 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. objection. MR. HAMROCK: THE COURT: 10, 10:30. Same objection. Overruled. They always encompassed the lunch hour. Q. And what time would be an average time that you would leave the CIETC office to-A. Sir, I didn't mention the other place that we frequently went to, second only to Prairie Meadows was that Lakeside Casino, is what it was called then. called now. Q. A. Q. Is that in Osceola, Iowa? Yes, Sir. And I believe you previously indicated that Mondays and I don't know what it's Thursdays were the days that the bulk of these trips occurred on? A. Q. Yes. There was some Fridays, but... In general, what time would you, Ms. Cunningham and Mr. Scaglione leave the CIETC office to go on these gambling trips? MR. SPIES: Again relevance, 403, Your Honor, BY MR. COURTER: Q. A. Q. In the morning? Yes. What were your normal work hours at CIETC? C. J. BROOKS - DIRECT 725 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. I pretty much worked 6 to 3:30 or 3. 6 a.m. to 3 or 3:30 p.m.? Yes. Was Mr. Scaglione on essentially the same working schedule that you were? A. Q. Yes. And you would leave at 10:30. Just in general what time-- approximately what time would the three of you return back to the office? A. We usually had to be back before 1, so we would leave about--oh, we were supposed to leave at 12:30, we would often have to wait for Ramona, but no later than 20 till because it takes that long to get back to the office. Q. A. Q. No later than-20 till 1. How about the trips to Omaha and to Tama, how long a duration were those trips? A. Those were started early in the morning, I mean 7, 7:30, 8 o'clock; and we would head home around 1, 1:30. Q. A. Q. What time would you get back to the office? Usually around 2:30, quarter to 3, somewhere in that range. Were any of these hundred or 125 trips, did you submit a leave slip for paid time off for the time that you were out of the office? A. No, Sir. C. J. BROOKS - DIRECT 726 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. 403. MR. HAMROCK: THE COURT: Same objection. Ladies and gentlemen, this is another Q. Did Ramona Cunningham ever have any discussion with you concerning whether you needed to fill out leave slips? MR. SPIES: Objection; hearsay and relevance grounds, instance of what I told you yesterday and the day before about receiving evidence conditionally subject to a later ruling by the Court. You may proceed. I'm sorry. The question? BY MR. COURTER: Q. Did you ever have any conversations with Ramona Cunningham concerning whether you needed to fill out a time slip for these times that you spent gambling with her during normal CIETC working hours? A. Q. No, Sir. Would your time slip for the days that you were gone on these gambling trips show that you had worked a full day on the Promise Jobs program? A. Q. Yes, Sir. During the trips to these--during these gambling trips, you indicated that it was always at least in your case yourself, Ms. Cunningham and Mr. Scaglione; correct? A. Yes, except Victor wasn't with us all the time. Sometimes C. J. BROOKS - DIRECT 727 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. No. A. also. MR. HAMROCK: THE COURT: Same objection. Just a minute, Mr. Brooks. Overruled. he couldn't go because of appointments. Q. What percentage of those hundred to 125 trips that you previously testified to did Victor Scaglione accompany you and Ramona Cunningham? MR. SPIES: Relevance, Your Honor. I object. 403 You're asking me how many times Victor didn't go or did go? BY MR. COURTER: Q. What were the percentage of those hundred to 125 times that you went that he accompanied you and Ms. Cunningham? A. Q. Oh, probably 80 percent of the time, 85. I don't know. Did you ever meet any other groups or any other individuals employed at CIETC when you would go on these gambling trips? Would you meet anybody else at the casinos? MR. SPIES: THE COURT: Objection, Your Honor, relevance, 403. Overruled. On the days that we went with Ramona, Victor and myself, I drove, as I said, and she would have me pull the car around and I always drove, and Victor was the only one that we ever--was ever in the car when I went out there, I believe. we played slots. Q. A. And Darrell Jensen-And Is he a CIETC employee? Yes. --and Sam Fucalaro, they used to ride out together, C. J. BROOKS - DIRECT 728 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 salary. And then I think I've received as many as maybe three but not necessarily on the times that we went out there, though I had seen them there, but they weren't playing slots. walked on through the slot area. cards. Q. A. Q. Was this during normal CIETC business hours? Yes. During the course of your employment at CIETC, did you They had I assumed they went to play receive any bonuses? A. Q. A. Q. Yes, Sir. Do you recall how many bonuses you received? No, I do not. Who informed you that you were going to be receiving a bonus? A. Ramona would come in and I think just--oh, it was always in an envelope, give me a check in an envelope with a letter, and I was told never to tell anyone that I had received it or how much it was. Q. What sort of sums of money are we talking about that you received in bonuses, Mr. Brooks? A. I think before-In that time period you're talking about, the '3-'4 and '4-'5 and the '5-'6 fiscal years, they would be in the 5,000, usually the $5,000 range. Prior to that they were percentages of your base C. J. BROOKS - DIRECT 729 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 $10,000 bonuses--maybe two. Q. I don't know for sure. Did Ramona Cunningham ever ask you to forge anyone's signature on any documents? A. Q. A. Q. A. Q. Yes. On how many occasions did she ask you do that? Once. Do you recall, Mr. Brooks, approximately when that occurred? I think it was summer of '05. Can you describe to the jury how that came to be that she asked you to forge someone's signature? A. She just called down and asked me to come to her office and she said it was a routine. Q. A. Take it one step at a time. I was at my desk working, and she called and asked me to come to her office. Q. A. Q. A. Q. A. Did you go to her office? Yes. Was anybody else in the office other than Ramona Cunningham? No. What did she ask you to do? She said that this was a routine document that she needed Archie's signature on because Archie was in a meeting and she had to have it, and it was nothing important, it was important for the board or whatever, but Archie was in a meeting and she wanted--asked me if I would sign it. C. J. BROOKS - DIRECT 730 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Sign his name? Yes. Sign Archie's name. Did she show you the document she wanted you to sign? Not really. She wanted me to practice, and then the document just had the exposed part for his signature, so I don't know whether-I just didn't like the situation and I told her I told her I write Palmer and God only knows I couldn't do it. what Archie writes. Q. You indicated that she only showed you the signature line; correct? A. Yeah. She didn't show me the content of it. Though she indicated it was routine, and I think I wasn't supposed to be privy to the content. Q. I don't know. Well, did she just hand you a piece of paper with a signature line and ask you to sign Archie's signature? A. No. It was flat on her desk and it was covered by a white piece, and then she wanted me to practice, and she had a copy of Archie's signature, and, anyway, the bottom line is I told her I couldn't do it. Q. A. Q. So in fact you didn't forge your brother's signature? That's absolutely true, I did not. Was that the only time she asked you to do something or asked you to forge Archie's signature? A. That's the only time. You're aware of what happened right after that, I assume? C. J. BROOKS - DIRECT 731 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 it. BY MR. COURTER: Q. Mr. Brooks, what happened shortly thereafter, shortly after Q. A. I am. Okay. MR. SPIES: Your Honor, may I ask that that brief interchange between the witness and counsel be stricken? THE COURT: MR. SPIES: THE COURT: MR. SPIES: THE COURT: You may, and it will be. Excuse me? You may ask, and it will be stricken. Thank you. When I strike something, you should ignore this incident where Ms. Cunningham asked you to forge your brother's signature? A. I went back to my office. I started to do some printing, and my ink cartridge was out, so my office is on the second floor. Q. A. Q. I went back to the third floor to get an ink cartridge. And did you see Ms. Cunningham up on the third floor? Well, her door was closed, and-Did you have a conversation with Ms. Cunningham when you went back to the third floor? A. Q. No. So she didn't stop you again then and ask you to forge your brother's signature; correct? A. That's correct. C. J. BROOKS - CROSS - HAMROCK 732 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. HAMROCK Q. A. Q. Good afternoon, Mr. Brooks. Good afternoon. My name is Aaron Hamrock, and I, along with Tim McCarthy, Honor. THE COURT: Mr. McCarthy, Mr. Hamrock? CROSS-EXAMINATION MR. COURTER: Mr. Brooks. Thank you. Mr. Spies, do you have cross-examination? I have no questions for this witness, Your I don't have anything further, THE COURT: MR. SPIES: represent Ms. Tesdell. The government has just asked you a question. I guess it kind of piqued my interest a little bit, and here's what I understood was that Ms. Cunningham had asked you to sign your brother's name on a document that had the top part of that document covered up, and first practice and then sign your brother's name? A. Q. That's correct. And you, after an exchange, told her told her, "No, I'm not going to do that"? A. Q. That's correct. And your office was on the second floor of this building; is that-A. That's correct. C. J. BROOKS - CROSS - HAMROCK 733 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. So you went back downstairs at that time to your office and went to go to work? A. Q. Yes. And you needed some office--you needed some more pens or something? A. Ink cartridge. I was trying to print a narrative to go into a file, and it didn't print, so that meant my cartridge was empty. Q. A. Where are the ink cartridges kept? On the third floor in a closet. So I would go to the third I floor and have to go by Ramona's office and then to a closet. think I had to stop at Tami's office to get the key to get into the cabinet to get the ink cartridge. Q. So the supplies were--at least some of the supplies were kept up on the third floor? A. Q. Yes, all of them were. Now, when you walked by Ms. Cunningham's office, could you see into her office? A. Q. A. Q. A. Q. A. Yes. Could you see Ms. Cunningham in her office? Yes. Could you see anybody else in the office? Yes. Who else was in her office? Sam Fucaloro. C. J. BROOKS - CROSS - HAMROCK 734 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 answer. BY MR. HAMROCK Q. A. Q. Was Ms. Cunningham's door open or closed? No, closed. But there was a window in her office that you could see from Q. And was Mr. Fucaloro standing in about the same position that you had been standing when you were in her office? A. I wasn't standing, I was sitting. He was sitting in the same chair I was sitting in previously. Q. A. Q. Could you see a pen in his hand? Yes. And I know you didn't talk to him, but it looked like he might have been practicing something? MR. COURTER: speculation. THE COURT: BY MR. HAMROCK Q. A. Q. A. Was his hand resting on the desk with a pen in it? Sam was writing very slowly. Did you interrupt them at all? No. I just presumed that she was trying to get Sam to write I don't know. Your Honor, I object. Calls for Sustained. Objection, Your Honor. Calls for Archie's name. MR. COURTER: speculation. Move to strike. Sustained. You should ignore the last THE COURT: C. J. BROOKS - CROSS - HAMROCK 735 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the hallway into the office? A. All offices have that. It's a fire type thing that they have to be open so that you can always see in an office. Q. Now, you said during direct examination that you went to work at CIETC--was it 1996? A. Yes. May 15th I started as an intern and I worked as an intern, $9.40 an hour until July 1st, when I then was offered the counselor job, and I started at base pay of about $26,300. Q. All right. So when you started at the 9.50, that would Is that a fair equate to about $20,000 a year at salary. statement? A. Q. A. Yeah, but I only worked that for 6 weeks. And then you moved into your counseling job? Yes. Then I was truly employed rather than just a temporary intern hire. Q. And you stayed in your counseling job from 1996 on through It looks like you were there about 11 years; is that the years. correct? A. Q. A. Q. A. Q. That's right. Did you continue to get pay raises? Yes. And you got bonuses? Yes. The last year that you were there, what was your salary, approximately? C. J. BROOKS - CROSS - HAMROCK 736 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. That would be the 2006 year, which is after this investigation hit in March, but my salary--and I had one $5,000 bonus in January of '06, so with my salary I think it was around 67,000, 69,000. Q. A. Q. A. Was your base salary? No. My base salary was 63,000, I believe. How about the year prior to that? Base salary was probably very similar the year before without the cost of living on it. Q. A. And did you get some nice bonuses that year? The year before, yeah. '05 was the year that we were shocked with the bonuses, to be honest with you. The '05 year, because bonuses came at the beginning of the year and at the end of the year and all fell in the same year was, I believe, $82,000 total wages and bonuses. Q. A. So-When I received the bonuses, I felt that I earned them Treadway and Bobby Mauro had because two employees had left. left, and Ramona gave us both $10,000 raises, meaning myself and Vic Scaglione, if we would assume their caseload. So while many workers were carrying a caseload of 60, Victor and I had caseloads of around 160. And even though we went on these gambling trips, we both worked Saturday mornings and many holidays. Q. We had to to keep up with the workload. Now, you mentioned that Sam Fucalaro was in Ms. Cunningham's C. J. BROOKS - CROSS - HAMROCK 737 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 office on that day? A. Q. A. Q. Yes. Did you know Mr. Fucalaro? Yes. Had you formed an opinion of Mr. Fucalaro as to whether or not you believed he was honest and trustworthy? A. Sam didn't work. Sam had a television in his office. His office was right next to Ramona's. Sam went. Wherever Ramona left--went, Sam was pretty much her pet, her boy, or as basically people called it, he was Ramona's bitch. Q. Have you previously stated that Mr. Fucaloro would do what--whatever he would need do to-A. I always said Sam would do whatever he could to cover his own ass or protect himself. Q. A. Q. Now, the casino trips that Mr. Courter asked you about? Uh-huh. On those 100 to 125 different occasions, how many times did Karen Tesdell attend? A. Q. Ms. Tesdell never went gambling, to my knowledge. So when other people might leave to go on a trip to--maybe it was to a casino, Ms. Tesdell was at work? MR. COURTER: I'm going to object, Your Honor. No. 1, asked and answered; No. 2, speculation on what happened when Mr. Brooks was out of the office. THE COURT: Sustained. C. J. BROOKS - CROSS - HAMROCK 738 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 are we? THE COURT: "And it was not Ms. Tesdell's job to BY MR. HAMROCK Q. Mr. Brooks, I'll ask a different question. Ms. Tesdell never rode with you or appeared during the workday at a casino? A. I never saw Karen Tesdell at any casino and she never rode with me. Q. And it was not Ms. Tesdell's job to account for every minute of your day, was it? A. Absolutely not. MR. COURTER: going to object. I'm going to object, Your Honor. I'm No. 2, One, it's beyond the scope of direct. No. 3, it's not relevant. it calls for speculation. THE COURT: Overruled. You can answer. MR. HAMROCK: THE WITNESS: I'm sorry? I'm confused on where I am now. Where account for every minute of your day, was it?" A. Absolutely not. BY MR. HAMROCK Q. A. Nor was it her job to account for any employee's time? That wasn't Ms. Tesdell's job. She was the accountant for the agency. We turned in our W-4's and W-2's, or maybe I've got C. J. BROOKS - CROSS - HAMROCK 739 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. that reversed, I don't know. pleasant to me. MR. COURTER: question asked. MR. HAMROCK: Your Honor. THE COURT: BY MR. HAMROCK Q. Now, you were asked about your trips to the casino that Proceed. I'll be happy to ask another question, I object, being nonresponsive to the Ms. Tesdell was always very occurred typically on either Mondays or Thursdays or maybe a Monday and a Thursday? A. Q. Right. Did you go in on any other day of the week, like the weekends, and perform work to make up time? MR. COURTER: been asked and answered. THE COURT: Overruled. Saturdays usually 6 till noon, Victor came in Saturdays. I'm going to object, Your Honor. It's I worked Saturdays. sometimes 1 o'clock or so. When the holidays hit on Mondays, we often came in those mornings too. It was needed to keep up on the workload, as I said. Jack Cline was our direct supervisor. He was the supervisor for Promise Jobs, so he was our direct supervisor. MR. COURTER: Object again, Your Honor, No. 1, this is C. J. BROOKS - CROSS - HAMROCK 740 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 beyond the scope of the witness--excuse me, of the question that was asked; No. 2, as to relevance. THE COURT: Sustained. I think it has been asked and answered at least twice. MR. HAMROCK: BY MR. HAMROCK: Q. Just a couple of final questions, Mr. Brooks: Did you have One moment, Your Honor. an opportunity to observe interactions between Ms. Tesdell and Mr. Bargman? A. Q. Yes. And let me ask a follow-up question. In your opinion, did Mr. Bargman and Ms. Tesdell get along or not? A. Frequent conflicts. When I drove Ramona out to Prairie Meadows, she often spoke in front of us. MR. COURTER: it's narrative. I'm going to object, Your Honor. No. 1, It's beyond the scope of the question that was asked to him and relevance. THE COURT: Mr. Brooks, you can answer the question to Do you remember the the extent that it's your own knowledge. question? A. The fact that Tesdell and Bargman were in frequent conflict. And I know that primarily because of what Ramona said to me in the car, said to myself and Victor, that she was having to go back to the office to be referee between them again, and-MR. COURTER: Object as to hearsay, Your Honor. FUCALORO - DIRECT 741 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. Mr. Fucaloro, would you state your full name and spell your THE COURT: MR. COURTER: Your Honor. SAMUEL JOHN FUCALORO, GOVERNMENT'S WITNESS, SWORN DIRECT EXAMINATION A. That's about it. THE COURT: MR. COURTER: Sustained. We would move to strike that and ask that the objection be interposed before the question. THE COURT: The part about the fact that Tesdell and The rest of it Bargman were in frequent conflict will stay in. goes out. The part that began and I know primarily because of That's stricken. what someone else said to him, that goes out. The other part is in. MR. HAMROCK: I don't think I have any further questions for this witness. THE COURT: MR. SCOTT: THE COURT: MR. COURTER: THE COURT: Mr. Scott. I have no questions, Your Honor. Mr. Courter. Nothing further, Your Honor. You may step down. (Witness excused.) You want to call your next witness. The government would call Sam Fucalaro, last name, please. FUCALORO - DIRECT 742 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to you. Q. A. Q. A. Q. A. Q. A. Q. A. Q. as? A. Q. CIETC. During the course of your testimony here today I want to Samuel John Fucaloro, F-U-C-A-L-O-R-O. Where are you employed, Mr. Fucaloro? Iowa Employment Solutions. Is that through DMACC out of Ankeny, Iowa? Yes. Prior to becoming known as IES, what was that entity known talk to you about the time when you worked for CIETC, when it was still known as CIETC. A. Q. A. Q. A. Q. A. Yes. When did you first become employed with CIETC? January of '96 or '97. What position were you hired to do at that time? MIS, data, computer data. And just in general what did your job duties entail? Just data input. THE COURT: Mr. Fucaloro, pull that microphone close Okay? The jury can't hear you unless you do. How long did you stay in that MIS position? Probably 3 months. Where did you go next as far as your job duties are related? I moved into a welfare counselor position. What in general were your duties with that? FUCALORO - DIRECT 743 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Be a caseload, take in participants who's on the system and help them become self-sufficient. Q. Prior to going to work for CIETC had you ever met Ramona Cunningham? A. Q. No. During the course of your employment at CIETC did you interview with her to first be hired there? A. Q. A. Q. A. Q. A. Q. Yes. Is that the first time you had ever met her? No. When had you met her prior to that first interview? It was a phone call over the phone. Was that in relationship to you applying for a job at CIETC? Yes. So would it be fair to say that your first contact with Ramona Cunningham was related to you seeking employment at CIETC? A. Q. Yes. Was she involved in promoting you from the MIS position to the welfare counselor position? A. Q. Yes. During the course of your employment at CIETC how would you characterize your relationship with Ramona Cunningham? A. Q. Became very close to her. When you say very close, why don't you tell me what that FUCALORO - DIRECT 744 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. means. A. Q. I considered her one of my best friends. I'll just ask you straight out, Mr. Fucaloro, was there ever any physical relationship of a sexual nature between you and Ms. Cunningham? A. Q. Absolutely not. Being in the position where you were with Ms. Cunningham, did you get certain privileges that weren't allotted to other CIETC employees? A. Q. Yes. What sort of privileges did you get based upon that relationship with Ms. Cunningham and other employees did not get? MR. SPIES: MR. HAMROCK: MR. SCOTT: THE COURT: MR. COURTER: Objection; relevance and rule 403. I would join in that objection. I would too, Your Honor. Overruled. You may answer. Pretty much whatever I wanted to do. BY MR. COURTER: Q. A. Q. Did you have to work a full day if you didn't want to? No. Did you get paid for a full day regardless of whether you worked it? A. Yes. FUCALORO - DIRECT 745 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. Was Ms. Cunningham aware of that? Yes. I want to talk about the time frame of January of 2003 through April of 2006. During that time did you ever gamble during normal CIETC work hours? A. Yes. MR. SPIES: MR. HAMROCK: MR. SCOTT: THE COURT: BY MR. COURTER: Q. If I ask you a question and one of the defense counsel Objection; relevance and rule 403. Same objection. Same objection. Overruled. objects, wait to give your answer until the Judge rules on it. A. Q. I apologize. That's okay. I'll just ask it again. During that time frame from January of '03 through April of '06 did you ever gamble during times that were normal CIETC work hours? A. Q. Yes. Did you ever gamble with Ramona Cunningham during times that would be normal CIETC work hours? MR. SPIES: MR. HAMROCK: THE COURT: MR. COURTER: Relevance, Your Honor, 403. Same objection. Overruled. You may answer. FUCALORO - DIRECT 746 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. A. Yes. BY MR. COURTER: Q. Approximately how many times did you gamble with Ramona Cunningham on what would be considered normal CIETC work hours? MR. SPIES: MR. HAMROCK: THE COURT: MR. COURTER: I can't even count. Same objection, Your Honor, please. Same objection. Same ruling. You may answer. BY MR. COURTER: Q. A. Q. A. Q. A. More than 10? Yes. More than a hundred? I'll say close to that maybe. What casinos would you go to? Prairie Meadows, Meskwaki, I'm not sure of the other one out there that changed names, Las Vegas. Q. Were other CIETC employees along on these gambling trips Mr. Fucaloro? A. Q. Yes. What other CIETC employees, in addition to yourself and Ramona Cunningham, were on those trips? A. On the trips, it would be myself, Dan Albritton, Ramona, John Bargman went on a trip, Chuck Brooks, Vic Scaglione, Jack Cline, maybe Ralph Morasco. FUCALORO - DIRECT 747 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Were these trips here locally or were these out of state or out of town trips? A. Q. Both. You indicated that Mr. Albritton had gone on one or more of these gambling trips; correct? A. Q. A. Q. Yes. Mr. Albritton wasn't a CIETC employee, though, was he? No, Sir. Was he on the board of directors during this time, do you know? A. Q. A. Q. A. Q. At one point, yes. What trips did you take that Mr. Albritton was also there? We went to Las Vegas and to Palm Springs, Florida. Were these CIETC trips? Yes. Who paid for the travel expenses from Des Moines to Las Vegas and Palm Springs, Florida? MR. SCOTT: Excuse me. Your Honor, at this point I'm We don't have proper going to interject an objection. foundation as to this witness' knowledge about-THE COURT: BY MR. COURTER: Q. Let's take them one at a time, Mr. Fucalaro. You indicated Want to lay some foundation. you went on a trip to Las Vegas; correct? A. Yes. FUCALORO - DIRECT 748 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. A. Q. Was that related to your work at CIETC? Yes. What was the purpose of the trip to Las Vegas? I don't know what the conference was about. You went there allegedly for a conference? Yes. Who told you that you were going on this Las Vegas trip? MR. HAMROCK: MR. COURTER: THE COURT: Calls for hearsay. 2(e), Your Honor. You may answer. This is another matter you'll get a later ruling on. You can receive it conditionally. You may answer. I went with Ramona. BY MR. COURTER: Q. A. Q. A. Ramona Cunningham? Yeah, and Dan Albritton. They both went on that trip? Yes. We went separate, though. THE COURT: Wait a minute, counsel. That's not the question that's pending. The question that's pending is "Who told you you were going on this trip?" Is that what he responded to? MR. COURTER: I believe he answered Ramona. FUCALORO - DIRECT 749 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: interrupting then. Q. A. Q. A. Q. A. Is that correct, Mr. Fucaloro? Could you repeat that? Who told you you were going on the trip to Las Vegas? Ramona. Ramona Cunningham? Ramona Cunningham. THE COURT: Counsel, excuse me. Then he followed it Do you know that, Okay. All right. Excuse me for up with another answer that the jury heard. Mr. Scott? Do you have that? MR. SCOTT: THE COURT: MR. SCOTT: THE COURT: I heard that. I'm sorry? I did hear that answer. Okay. Could we have a side-bar. (Side-bar conference not reported.) BY MR. COURTER: Q. We're going to take Las Vegas just from the top, Who informed you that you would be going to Las Mr. Fucaloro. Vegas on this trip? A. Q. Ramona Cunningham. Ramona Cunningham. Who else went on this trip with you to Las Vegas? A. Q. Dan Albritton. It was you and Dan Albritton? FUCALORO - DIRECT 750 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. And Ramona Cunningham. The three of you went to Las Vegas; correct? Yes. And what was the purpose of this trip? It was a conference. Did you ever attend any of this conference? No. How long was this conference supposed to last? Five days, I believe. Did you go to any of the conference at all? No. Did CIETC pay for you to go to Las Vegas as far as it relates to your travel expenses and per diem and things along those lines? A. Q. Yes. Yes. What did you do for those five days in Vegas when you didn't go to the conference? A. Q. Gambled, drank, ate. Did Ramona Cunningham know that you were not attending any of the conference? A. Q. Yes. Did she spend time with you gambling and drinking and eating throughout the course of these 5 days that the conference was going on? A. Not all 5 days, no. FUCALORO - DIRECT 751 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Were there parts of those 5 days when the conference was going on that you would gamble with her? A. Q. Yes. Did you have any conversation with Ms. Cunningham concerning whether you had to attend this conference that CIETC was paying for? A. Q. Yes. What was the substance of that conversation? MR. SPIES: MR. HAMROCK: MR. COURTER: THE COURT: Objection; hearsay, irrelevant, 403. I would join in that objection. 2(e). As to the hearsay part of it, you can As to the receive this conditionally subject to a later ruling. other two objections, they're overruled. You may answer. I would be mostly with Dan. BY MR. COURTER: Q. A. Q. A. Q. Dan Albritton? Yes. Is he here in the courtroom today? Yes. Would you point to which table he's sitting at and what he's wearing. A. Q. Right there. I'm color blind. He's wearing glasses. What was the substance of your conversation with Ramona FUCALORO - DIRECT 752 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 please? THE COURT: Yes. Cunningham concerning whether you would be attending this conference or not? MR. SPIES: This I think is where my hearsay objection was lodged at, Your Honor, relevance; 403. MR. HAMROCK: THE COURT: to a later ruling. BY MR. COURTER: Q. A. Q. You may answer. Could you please repeat that, Sir. What was the substance of the conversation that you had with Same objection. Conditionally you can receive this subject Ramona Cunningham concerning whether you had to attend the conference in Las Vegas, the actual conference. A. The conversation was I was going to Las Vegas. I had to go with her because Dan was going. MR. SPIES: Your Honor, may I be heard at side-bar, (Side-bar conference held but not reported.) THE COURT: I won't leave you out of this side-bar. This is all about the difficulty of letting the lawyers do their job and getting the testimony to you, so we'll let the lawyers proceed without further comment by the Court, but that's what all of the lawyers are concerned about, doing their jobs and making sure we have the trial proceeding in a timely fashion. FUCALORO - DIRECT 753 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Mr. Courter. MR. COURTER: question that was posed? (Question read by the reporter.) BY MR. COURTER: Q. Your answer to that Mr. Fucaloro? She read you the Eileen, would you please read back the question. THE WITNESS: THE COURT: I didn't hear it. Mr. Fucaloro, here, listen carefully. I'm going to read exactly what Ms. Hicks just said to you so the jury can hear. "What was the substance of your conversation with Ramona Cunningham concerning whether you would be attending this conference or not?" A. Yes. There was conversation that she wanted me in Las Vegas I had to be with with her and Dan, to make a long story short. Ramona so... Q. A. Q. A. Q. A. Why? Pardon me? Why? So nobody knew that Dan was with her. Why was that? It was--I was told by Ramona and Dan several times that the relationship was secret. Q. You indicated that you were--became close personal friends FUCALORO - DIRECT 754 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. with Ramona Cunningham; correct? A. Q. Yes. What sort of relationship-Back during the January 2003 through April 2006 time frame what sort of relationship did you have with Mr. Albritton? A. Q. Very close too. What sort of things would you and Mr. Albritton do together? MR. SCOTT: THE COURT: Objection; relevance, Your Honor. Overruled. You can answer. Boating, drinking, gambling, going to his home, he would come to my home. BY MR. COURTER: Q. During the time that you were in Las Vegas, did you spend time with Mr. Albritton? A. Q. Yes. How much of that trip to Las Vegas did you spend with Mr. Albritton? A. Q. Quite a bit. How much of that time occurred during the hours that the conference would be held or was going on? A. I couldn't even tell you what the hours were even. I don't even know when the hours of the conference were. I don't know what time they started, what time they ended, so I can't even answer that. Q. At any point in time during this time frame, January of '03 FUCALORO - DIRECT 755 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 through April of '06, did you do any work at Mr. Albritton's house during what would be considered normal CIETC work hours? A. Q. Yes. What sort of work did you do at Mr. Albritton's house that would be considered to be done during normal CIETC work hours? A. Tilled the garden. One day he helped me put my daughter's gift together, one of those three-wheelers. Q. A. Q. A. Q. A. Q. You indicated you tilled a garden? Yes. Was that at Mr. Albritton's residence? Yes. What--just in general, what city is that located in? Ankeny, Iowa. How did it come about that you tilled Mr. Albritton's garden? A. Q. A. Q. A. Q. A. Q. A. Q. Ramona asked me to do it. What time of the day did this occur? Probably 11 in the morning. How long were you there at Mr. Albritton's house? Probably 7, 8 o'clock that night. Was Mr. Albritton there? Yes. Was there any other CIETC employees there besides yourself? Yes. Who else was there? FUCALORO - DIRECT 756 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Darrell Jensen, and of course Ramona and her daughter Kelly Ayers. Q. Did you fill out any leave slip or any PTO slip for this time that you spent at Mr. Albritton's house tilling the garden? A. Q. No. During the time that you were in Las Vegas or any other trips, did you fill out any leave slips when you didn't attend the conferences that you were sent there for? A. Q. No. Did you have any conversations with Ramona Cunningham concerning whether you had to fill out a leave slip? A. Q. A. Q. me. No. Who was your immediate supervisor at that time? Jack Cline. Did you ever fill out and submit any leave times-Did you ever fill out and submit any leave slips to Excuse Mr. Cline? A. Q. Once in a blue moon. During the trips that you had made to the local gambling places with Ramona Cunningham, did you have any conversation with her concerning whether you had to fill out a leave slip? A. Q. No. Did you ever go out for drinks or happy hour or cocktails during normal work hours with Ms. Cunningham? A. Once in a while, yes. FUCALORO - DIRECT 757 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. A. Where would you go to do these activities? Buzzard Billy's. Where is that located, just what city? On Court Avenue, I believe. In Des Moines? Yes, in Des Moines. The Fort Des Moines, I believe it's The Raccoon Brew Company in Des Moines. called, in Des Moines. Q. Would there be other CIETC employees present during these functions? A. Q. A. There would be a few. Who else would be present? Once in a while there would be Johnny Vacco, Darrell Jensen, maybe once in a while Kelly Ayers from the CIETC part and Jack Cline, if I didn't mention him. Q. Did you ever fill out any leave slips or take any paid time off or PTO time for these events? A. Q. No. What did your time slip show as it relates to work time during the periods that you were gone, not performing CIETC work? A. Q. As I was at work. During this January '03 to April '06 time frame, how many time slips did you turn in that didn't accurately reflect the number of hours you had actually put in working for CIETC? A. I couldn't even tell you. FUCALORO - DIRECT 758 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. an hour. Q. A. Q. A. Q. A. Q. A. More than one? Yeah. More than 10? Somewhere in there, yeah. More than 20? It's just--it was a long period. Would it be fair to say quite a few? Quite a few, yes. THE COURT: Ladies and gentlemen, you've been sitting While we got to stretch, you didn't, so if you want to take a stretch break, you can do so. (Short pause.) Mr. Fucaloro, do you know defendant Jane Barto? Yes. Is she here in the courtroom here today? Yes. Would you just point to what table she's sitting at and describe what she's wearing. A. Q. A. Q. A. Q. A. Right behind you, black shirt. How did you first meet Ms. Barto? Through Ramona. Did you know where Ms. Barto worked? As time went on, yes. Where did you know that she worked? Iowa Workforce Development. FUCALORO - DIRECT 759 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Did Ms. Barto ever meet you and Ramona Cunningham and other individuals during these happy hour get-togethers or afternoon drinks, things-MR. SPIES: interrupting. Excuse me, Your Honor. I'm sorry for Irrelevant; 403. Same objection. Is this on business hours, quote-unquote? Yes. Or after hours? Let me ask a better question. That MR. HAMROCK: THE COURT: MR. COURTER: THE COURT: MR. COURTER: wasn't a good question. BY MR. COURTER: Q. What sort of times during the day would you and Ms. Cunningham and other CIETC employees meet to have drinks? A. It would be--there would be a certain amount of people that would go during the day, but the times that I would have cocktails with Jane and Ramona, it would be after work hours. Q. So-MR. SPIES: Then I object as irrelevant, 403, ask that it be stricken, ask that my objection precede the answer, Your Honor. MR. SCOTT: THE COURT: attention to it. go out. I would join in that, Your Honor. It's irrelevant. You shouldn't pay any It has nothing do with the case, and it will FUCALORO - DIRECT 760 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. Was there ever an occasion when you were with Ramona Cunningham and Jane Barto when they had a discussion concerning funding for CIETC? A. Q. Yes. How many times did those conversations occur in your presence? A. Q. Maybe three, four times. Were these all in the January '03 to April of '06 time frame, Mr. Fucalaro? A. That I can remember, yes. MR. SPIES: THE COURT: BY MR. COURTER: Q. Why don't we just take them individually. The first one I'm sorry, I didn't hear that answer. "That I can remember, yes." that you remember, where did that occur and approximately when did that occur? A. Q. A. It was either at the Raccoon Pub-Is that in Des Moines? In Des Moines. And from what I remember, Ramona was hounding her for money. Q. Approximately when did this conversation occur, Mr. Fucalaro? A. Q. I honestly can't remember. Was this money related to CIETC? FUCALORO - DIRECT 761 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes. What, if any, response did Ms. Barto make in your presence concerning this funding request from Ms. Cunningham? A. From what I can remember, "You always want money, Ramona. You always want money." I'll see what I can do. Q. A. Q. A. Q. A. Q. And who made that statement? Jane. Jane Barto? Yes. Was that the extent of that conversation? Yes. The second time that you remember that occurring, where did that occur and approximately when did that occur? A. I believe it was the same bar. Maybe a few months down the line. Q. A. Q. A. Q. A. Who all was present during that? Myself, Jane, Ramona. Jane Barto and Ramona Cunningham? Yes. And I believe Darrell Jensen might have been there. What was the conversation as it related to CIETC funding? Ramona would say, "Did you ever find any money? Can you find any money," you know. Q. A. What was Ms. Barto's reply? "You always want money." You know, it was more of a--a dialogue. It was kind of the same dialogue each time, if that FUCALORO - DIRECT 762 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 makes sense. Q. When was the third time that this conversation occurred, Mr. Fucalaro, or conversations of this nature? A. Q. A. Well, there was a phone call. A phone call from who to who? I was with Ramona having cocktails. Her cell phone rang. I was listening to the conversation. the money. Q. She said, "Yes, we can use Yes, I can get rid of the money." And so you could hear Ms. Cunningham's side of the conversation? A. Q. Yes. Approximately when did that or did you hear that conversation? A. '05. Q. A. Q. How long did Ms. Cunningham engage in that conversation? Probably 3 to 5 minutes. After she finished the conversation on the telephone, did Approximately when? Maybe '06--'05. I would probably say you have a conversation with her concerning the nature and substance of that conversation? A. Q. Yes, I did. What was the substance of that conversation you had with Ms. Cunningham? MR. SPIES: MR. SCOTT: Objection; this is hearsay, 403. I join in that, Your Honor. FUCALORO - DIRECT 763 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. COURTER: THE COURT: 2(e), Your Honor. You can receive this conditionally with The relevance and 403 are regard to the hearsay objection. overruled. A. You can answer. That I was going to get a bonus. BY MR. COURTER: Q. A. Why were you going to get a bonus? From what Ramona told me after she hung up the phone, that that was Jane, she was in Chicago. Q. A. Jane Barto? Jane Barto. There was a certain amount of money that needed to be disposed of within so many days, so many hours, and she says "You're getting a bonus," and not to say anything to Jack Cline. Q. Did she tell you why you weren't supposed to say anything to Jack Cline? A. Q. A. Q. A. Q. She wanted Jack out. Out of what? CIETC, out of everything. Why? My personal opinion? No. Did she ever tell you why she wanted Jack Cline out of CIETC? A. Q. He's lazy and he doesn't do his job. You weren't exactly the poster boy for hard-working CIETC, FUCALORO - DIRECT 764 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 answer. BY MR. COURTER: Q. As it relates to the first two conversations where you were A. were you Mr. Fucalaro? A. Q. No, I was not. I'll be the first to admit it now. This last conversation that you overheard Ramona's side and then talked to her about, was that the only one of the three conversations where Ms. Barto actually procured money for CIETC? MR. SPIES: I'll object to that, not within the witness' knowledge, therefore irrelevant as well. THE COURT: It's hard to say. You can answer if you know. Just hard to say. BY MR. COURTER: Q. I believe you testified that there were three occasions when you were present when Ms. Cunningham and Ms. Barto had conversations about funding for CIETC; correct? A. Q. Correct. Do you know whether any money was procured for CIETC by Jane Barto as a result of those first two conversations? A. I received bonuses. MR. SPIES: I'm going to ask that that answer be stricken as not responsive, ask that my objection precede the answer. It's irrelevant, not within the witness' personal knowledge, and 403. THE COURT: It's not responsive. You can ignore the FUCALORO - DIRECT 765 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Yes. present when Ms. Cunningham and Ms. Barto discussed Ms. Barto procuring additional funding, did Ramona Cunningham ever have a conversation with you concerning whether money--whether Jane Barto had actually procured money on either one of those two occasions for CIETC? A. Q. Yes. What did she tell you? MR. SPIES: MR. COURTER: THE COURT: Hearsay. 2(e). Same ruling. You can receive this conditionally subject to a later ruling. You can answer. On one of the occasions she did say on a Monday morning that Jane is going to get us some money. BY MR. COURTER: Q. Did that have any impact on you personally? MR. SPIES: Again, Your Honor, I'm going to object that this witness doesn't have personal knowledge. THE COURT: MR. SPIES: THE COURT: MR. SPIES: THE COURT: MR. COURTER: THE COURT: On whether it impacted on him personally? Yes. "It," the money? Yes. Mr. Courter? Yes. Overruled. You can answer. FUCALORO - DIRECT 766 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Yes, I received a bonus. BY MR. COURTER: Q. A. Q. How large of a bonus did you receive? I think it was 1300, 1400, on one of them. During the course of your employment did you receive bonuses and/or supplemental pay? A. Q. Just bonuses. During the January of '03 to April of '06 time frame, did you receive any bonuses? A. Q. A. Q. Yes. Approximately how many bonuses did you receive? Maybe three, four. And do you recall the quantities or the size of those bonuses that you received? A. Q. A. Q. A. Q. A. Q. A. I do recall one, it was for 5,000. Was that the largest one that you received? Yes. How were you made aware that you were receiving a bonus? She--Ramona called me. At work? No. I was at the bank. What did she say? You're getting a 15 percent bonus from your salary. That's how the bonuses were determined. Q. Did she indicate any reason why you were getting a 15 FUCALORO - DIRECT 767 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Yes. A. percent bonus? MR. SPIES: MR. COURTER: THE COURT: Objection; hearsay. 2(e). You can receive it conditionally again subject to a later ruling. You can answer. She said she got some money. BY MR. COURTER: Q. Was that in relationship to any of the three phone conversations you previously testified to concerning conversations between Ramona Cunningham and Jane Barto regarding funding for CIETC? A. Q. It was in the same ball park time, the same time frame. Well, you indicated on this third conversation that Ms. Cunningham told you that Jane Barto had procured a sum of funds that needed to be spent within hours or days; correct? A. Q. Yes, Sir. Was there any conversation between yourself and Ramona Cunningham concerning your receiving a bonus out of those funds? MR. SPIES: MR. COURTER: THE COURT: Objection; hearsay. 2(e). Again, you can receive this conditionally, subject to a later ruling. You may answer. Yes, I did get a bonus out of that money. FUCALORO - DIRECT 768 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. Did you in fact receive a bonus at some point in time after that conversation occurred? A. Q. Yes. Approximately how long after that conversation occurred did you receive a bonus? A. Q. A. Q. I'm going to say within 2 to 3 days. Do you recall the size of that bonus? No, I don't recall. You know a defendant Karen Tesdell in this case; is that right? A. Q. Yes, I do. And would it be fair to say that you would see her at the CIETC office? A. Q. Every morning. Other than that, did you have much contact at all with Ms. Tesdell during the course of your employment at CIETC? A. Q. Just coffee talk. Mr. Albritton, you indicated that you had a close personal friendship with Mr. Albritton; correct? A. Q. Yes. And you also had a close personal friendship with Ms. Cunningham; correct? A. Q. Yes. Were you aware of a personal relationship between Dan FUCALORO - DIRECT 769 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Albritton and Ramona Cunningham? A. Q. Yes. How did you become aware of a personal relationship between Mr. Albritton and Ms. Cunningham? A. Ramona told me. MR. SCOTT: Okay. Excuse me, Your Honor, I'm going to And I'm going to ask that my object to that as hearsay. objection precede the answer and that the answer be stricken. MR. COURTER: THE COURT: the answer. It's 2(e), Your Honor. Again, Mr. Scott's objection can precede We're going to receive this conditionally subject to a later ruling. THE COURT: question again. MR. COURTER: THE COURT: BY MR. COURTER: Q. Approximately when did Ms. Cunningham tell you about her I believe that the answer was in. Yeah, the answer is in. I'm sorry. Mr. Courter, you want to pose your relationship or a relationship with Mr. Albritton? A. Q. I'm going to say around 2005, maybe late 2004. What did she tell you about her relationship with Mr. Albritton? A. Q. A. That she was seeing Dan Albritton. In more than a professional sense? No, they were seeing each other. It was not professional. FUCALORO - DIRECT 770 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 more time? BY MR. COURTER: Q. What was the substance of your conversation with A. Yes. here? THE COURT: MR. SCOTT: THE COURT: THE WITNESS: THE COURT: You may. It's hearsay. Overruled. Yes-You may. I can answer; correct? Q. A. Q. Boyfriend/girlfriend seeing each other? Absolutely, absolutely. Did you have any conversations with Mr. Albritton concerning his relationship with Ms. Cunningham? MR. SCOTT: Excuse me. May I interject an objection I personally talked to Dan about it. BY MR. COURTER: Q. What was the substance of your conversations with Ms. Cunningham--excuse me, with Mr. Albritton concerning his relationship with Ms. Cunningham? MR. SCOTT: Excuse me. Once again, Your Honor, I'd like to interject an objection of hearsay. THE COURT: Overruled. You can answer. THE WITNESS: Would you repeat that, I'm sorry, one Mr. Albritton concerning his relationship with Ms. Cunningham? FUCALORO - DIRECT 771 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Yes. A. That they were dating, they were seeing each other, and they were in love with each other. Q. Did Mr. Albritton or Ms. Cunningham ever tell you to not relay the fact that they were seeing each other to anyone else? MR. SCOTT: Excuse me. Once again, Your Honor, I'm going to ask that--or, excuse me, I'm going to object to this as hearsay. THE COURT: Okay. Overruled. BY MR. COURTER: Q. A. Q. Was it one or the other or was it both of them? It was both of them. Did they have this conversation with you when they were together or separate? A. Q. Together and separate. What was the general substance of the conversations you would have with Mr. Albritton and Ms. Cunningham concerning the extent of their relationship and whether it should be public knowledge? MR. SCOTT: THE COURT: BY MR. COURTER: Q. A. Q. You can answer. From what I was told, it would be a conflict of interest. What would be a conflict of interest? Excuse me. Overruled. Objection; asked and answered. FUCALORO - DIRECT 772 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Their relationship. What sort of things did you do with Mr. Albritton and Ms. Cunningham as it relates to their personal relationship? MR. SCOTT: MR. COURTER: THE COURT: BY MR. COURTER: Q. Did Mr. Albritton and Ms. Cunningham ever discuss with you Objection; relevance and 403. I'll rephrase that, Your Honor. Okay. the fact that they intended to get married? A. Yes. MR. SCOTT: THE COURT: Objection; hearsay, relevance, and 403. Well, it's sustained on relevance grounds. The other two are overruled. You should ignore the answer. BY MR. COURTER: Q. A. Q. Did you see Mr. Albritton at the CIETC office building? Yes. How did he and Ramona Cunningham act towards each other that you could observe while other employees were present? A. Q. A. Q. A. Q. They couldn't stand each other. Couldn't stand each other? They could not stand each other. That was in front of other employees? Yes. Did Ms. Cunningham or Mr. Albritton ever have any FUCALORO - DIRECT 773 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. 2(e). discussions with you concerning the way that they would treat each other at the CIETC office in front of the other employees? MR. SCOTT: THE COURT: response, Mr. Courter? MR. COURTER: As to Ms. Cunningham my response is Objection; hearsay, relevance. Well, as to Ms. Cunningham, what's your For Mr. Albritton it's the same response. THE COURT: Okay. It calls for a yes or no. You can again receive this subject to the later ruling. You may answer. Did they ever have a conversation is the question. They had an argument, arguments, which I was aware of. BY MR. COURTER: Q. Let's just take that one step at a time. You indicated that they had an argument. A. Q. A. Q. A. Q. A. Q. A. Q. Yes. Who is they? Ramona Cunningham and Dan Albritton. Where did that occur? In Ramona Cunningham's office. The CIETC building? The old building. Where was that located? 215 Watson Powell. In Des Moines? FUCALORO - DIRECT 774 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. A. Q. A. Q. Des Moines. What sort of an argument did they have? Can I explain? No. 1, let's talk about what you personally observed at the office or heard. A. I heard Dan was very upset because he was not allowed-MR. SCOTT: THE COURT: MR. COURTER: Dan was upset. Objection; hearsay. Overruled. You can answer. He was in screaming and yelling at Ramona due to the fact he could not have an office in the new building. That's when we were switching over to 430 East Grand. BY MR. COURTER: Q. A. Q. A. That occurred in Ramona Cunningham's office? Yes. And my office was right next-door. What, if anything, could you hear Ms. Cunningham say? "He's not getting the office. Jane does not want him in the And he was screaming and office." And that was pretty much it. yelling and he was mostly blaming Jane. Q. A. Q. A. Q. A. Jane being Jane Barto? Yes, Jane Barto. What time of the day did this occur, Mr. Fucaloro? It was in the morning. Approximate time? 9, 10. FUCALORO - DIRECT 775 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. Were there other employees present on that floor? Yes. Who all had their offices on that floor besides yourself and Ms. Cunningham? A. Dianne Bolden, I believe John Bargman, Jack Cline, and Karen I'm not very sure where Karen's office was, but that Tesdell. was--it was a small corner at the back of the building. Q. Were you aware that this confrontation was going to take place on that morning? A. Q. Yes, I was. How were you aware that this confrontation was going to take place? A. Q. A. Q. A. Ramona and Dan called me the night before. Separately or together? Together. In Ankeny? In Ankeny. To let me know what was going to go on, because They were living together in Dan's home. they knew I have a temper, they knew how close I was--I was to Ramona, so it was a setup, is what it was. Q. Did they indicate to you why they were going to stage this verbal altercation at the CIETC office? A. Q. Yes and no. Let's take the yes part. What did they say to you as to why they were going to have this verbal altercation? A. Because Ramona was telling Dan no, and Dan's not the type of FUCALORO - DIRECT 776 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor. THE COURT: It is. person to be told no. Q. A. Q. Telling him no for what? He's not getting the office in the new building. Why would they call you the night before to tell you they were going to have this confrontation? A. Because I have a temper and I was very close to Ramona, and if it was true-Q. A. If what was true? If it was a real altercation, then there would have been a problem. Q. A. Q. When you say "a problem," what do you mean? I probably would have went after Dan. And when you say "went after," what do you mean by "went after"? A. Q. A. Q. Stopped him, threw him out, did whatever. Physically restrained him? Absolutely. Did Ramona Cunningham ever give you a specific reason why they were going to stage this altercation at the CIETC office? A. It's hard to explain. MR. SCOTT: It had to do-It's nonresponsive, Your Excuse me. Mr. Fucaloro, it's important that you listen to the lawyer's question before you respond. Try to be responsive to FUCALORO - DIRECT 777 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 what he asks. THE WITNESS: THE COURT: MR. COURTER: BY MR. COURTER: Q. During the conversation that you had with Mr. Albritton and I apologize. That's all right. I'll ask another question, Your Honor. Ms. Cunningham the night before this verbal altercation, what did Ramona Cunningham tell you concerning the purpose of this altercation? A. Q. A. Because they wanted to show people they hated each other. Why? Because they did not want anyone to know that they were together. Q. A. Q. A. That's what Ms. Cunningham told you that night? Absolutely. What did Mr. Albritton tell you that night, if anything? He was just in the background. I really didn't talk to him that much. joke. He was just saying, "Hey, it's going to be--it's a We know what we're doing. That was coming Don't Don't worry about it. get worked up. Don't lose your temper." through the other side of the phone as I was talking to Ramona. Q. And they told you that so you wouldn't become potentially involved in a physical altercation with Mr. Albritton? A. Q. Yes. Because, in fact, in your past you've been involved in FUCALORO - CROSS - SPIES 778 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SPIES: Q. Mr. Fucaloro, can you describe to the ladies and gentlemen further. THE COURT: cross-examine? MR. SPIES: I would. CROSS-EXAMINATION Mr. Spies, would you like to physical altercations; correct? A. Q. Yes, Sir. And in fact you've previously been convicted of a criminal offense including a penalty in excess of 1 year? A. Q. Yes, Sir. And that was in relationship to some assaultive behavior; correct? A. Q. A. Q. A. It was a fight, yes. That didn't involve anybody at CIETC, did it? No. It was my brother. How long ago did that occur, Mr. Fucaloro? Three years ago. MR. COURTER: THE COURT: MR. COURTER: Could I have one moment, Your Honor? You may. Thank you, Mr. Fucaloro, nothing of the jury the funding sources for CIETC when you were employed there? A. No. FUCALORO - CROSS - SPIES 779 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Can you identify whether the funding sources were state funding sources or federal? A. Q. I have no idea, Sir. So the three conversations about which you testified concerning Ms. Barto and Ms. Cunningham, the first I understand you can't remember when that occurred? A. Q. A. Q. A. Q. A. Q. A. Q. I don't remember the date, no, Sir. Was it a festive atmosphere? Drinking involved. Good feelings, high spirits? Sure. Shop talk being exchanged? There was always shop talk. As well as just social conversation? More shop talk than social, yes. The second conversation, the date of which you described as some months later, can you fix that in time at all? A. Q. No, Sir. Again, was that a festive night after work, sort of situation? A. Q. Yes. And the third conversation about which you testified, Mr. Fucaloro, the one where you heard Ramona's side of the conversation, because she was on a cell phone; right? A. Yes, Sir. FUCALORO - CROSS - SPIES 780 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Tell us what her cell phone number was, please. Give me a minute. I'll get you that cell phone number. It's been a while since I've It might be 240-0873. called Ramona. Q. And in this conversation, half of which you heard, you told us that after Ms. Cunningham got done with the conversation, she said to you that "You're going to get a bonus"? A. Q. A. Q. There was more than that. She did say that, yes, she did. She said to you, "You're going to get a bonus"? Yes. And you also told us she said not to say anything to Jack Cline? A. Q. Exactly. Yeah. Now, you were asked about this same incident by FBI agent Dow-Wyatt, weren't you? A. Q. A. Q. I believe I was. And you were asked about that on June 16th, 2006? Okay. And didn't you tell Ms. Dow-Wyatt, Agent Dow-Wyatt, that after Ms. Cunningham hung up the phone she said, "We're getting some money"? A. Q. Yes, I did say that. You didn't tell Ms.--Agent Dell-Wyatt "You're getting a bonus"? A. That's the same thing when it--no, I did not. No, I did FUCALORO - CROSS - SCOTT 781 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SCOTT: Q. A. Q. Good afternoon, Mr. Fucaloro. Good afternoon. Are you aware of whether or not at CIETC flex time was in not. MR. SPIES: MR. HAMROCK: Your Honor. THE COURT: MR. SCOTT: Mr. Scott. Thank you, Your Honor. CROSS-EXAMINATION No other questions, Your Honor. I don't think we have any questions, place? A. Q. A. Q. Sure. You know what flex time is? Absolutely. And during the summertime was there also something called Are you familiar with that? summer hours? A. Q. A. Q. No. You're not familiar with summer hours at CIETC? No. Just flex time. That's what You and Mr. Albritton were very good friends. you've told us today; correct? A. Q. Yes. Let's talk about this trip to Las Vegas for a minute. Did you have any idea what the conference that you were going to was FUCALORO - CROSS - SCOTT 782 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 called? A. Q. A. Q. No. What it was for? No, Sir. Were you aware of the fact that the conference in Las Vegas had absolutely nothing to do with CIETC? A. Q. Like I said, I don't know what it was about. Are you aware of the fact that it was actually the gaming expo that took place in Las Vegas? MR. COURTER: I'm going to object, Your Honor. No. 1, it's been asked and answered. this witness' knowledge. THE COURT: BY MR. SCOTT: Q. No. 2, it's beyond the scope of No. 3 it's irrelevant. Overruled. Mr. Albritton was on the board of directors at Prairie Meadows as well as the board of directors at CIETC; isn't that correct? A. Q. A. Q. A. Q. A. Q. Yes, Sir. He was also on several other boards; isn't that correct? Those are the only two I was aware of. You're good, good friends; right? Absolutely. Those are just the two you know about? Exactly. Do you know whether he's on the United Way board? FUCALORO - CROSS - SCOTT 783 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. Don't know, don't really care. Orchard Place? Pardon me? Orchard Place? Don't know. The time you went to till the garden, Darrell Jensen was there also? A. Q. Yes, Sir. Did Darrell Jensen arrive at Mr. Albritton's home at the same time that you did? A. Darrell Jensen and I arrived together because Darrell Jensen had the tiller. Q. A. Q. A. You came to Dan's house with Darrell Jensen? Yes, I believe so. Do you know? Well, these things happened every day, it's kind of hard to Or I could have rode out with Ramona. keep track. Q. You didn't go to Dan's house every day and Rototill his garden? A. Q. No, not at all. You didn't go to Dan's house every day and Rototill his garden during business hours? A. Q. No, not at all. But that's what you testified to today. You're testifying about going to his house and Rototilling; correct? FUCALORO - CROSS - SCOTT 784 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Absolutely. The fight you had with your brother, you were charged with felonious assault; is that correct? MR. COURTER: I'm going to object, Your Honor. This is improper impeachment under 609. THE COURT: BY MR. SCOTT: Q. You were convicted of a crime of which-MR. COURTER: THE COURT: Same objection, Your Honor. He can ask--under 609 he can ask if he's Sustained. been convicted of a crime that exceeds 1 year. BY MR. SCOTT: Q. A. Q. A. Q. A. Q. A. Q. --for which the penalty exceeded 1 year; is that correct? Yes. And you were put on probation? I went to the Fort, the corrections and probation. So you went to the Fort Des Moines. Fort Des Moines Correctional Center. What is it? It's a work release program. So you were involved in a work release program as part of You were put on work release? What is that? your conditions; is that right? A. Q. Yes. And terms and conditions of your work release consisted of you had to sign a contract; right? FUCALORO - CROSS - SCOTT 785 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. Absolutely. Commit no more crimes? Absolutely. No drinking? Absolutely. No drugs? Absolutely. And when did this happen? Three years ago. Were you employed at CIETC at that time? Yes. And during that time obviously you drank? Yes. Which was against the terms and conditions of the contract? Yes, it was. Did you sign that contract? Yes. While you were housed at the Fort Des Moines do you remember When were you at the Fort? corresponding with Dan and Ramona? A. Q. Yes. And you remember telling them how wonderful of friends they were? A. Q. Yes. How deeply appreciative you were of everything that they had done for you? FUCALORO - CROSS - SCOTT 786 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. A. Both of them, yes. How they had taken you under their wings? Yes. Taken you into their home on Christmas--Thanksgiving? Never on Thanksgiving, never on Christmas. I have my own family for that. Q. A. Q. A. Did you spend a Christmas Eve with them? No. Did they ever drop you off somewhere on Christmas Eve? On Thanksgiving day they dropped me off at the Fort. MR. SCOTT: THE COURT: May I approach, Your Honor? You may. Mr. Fucaloro, I'm showing you or you have in front of you right now a letter that's been marked for identification purposes as Albritton Exhibit C. letter? A. Q. A. Yes, I am. Did you write that letter? Yes. Let me finish reading it if I could. Do you want to Are you currently reading that give me a minute on this? Q. A. Q. A. Sure. Thank you. You're welcome. Yeah, that's a nice letter I wrote to them. They dropped me off on Christmas Eve, if you read it. They dropped me off at FUCALORO - CROSS - SCOTT 787 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the Fort. Q. A. Q. On Christmas Eve? On Christmas Eve. They dropped you off at the Fort. It wasn't Thanksgiving, it was Christmas Eve? A. Q. Yeah. I misspoke and you misspoke; correct? I said you spent Christmas with them; right? A. Q. A. Q. Right. That was a misstatement? Right. I apologize for that. You spent Christmas Eve or at least part of Christmas Eve with them, didn't you? A. Q. No. I was at work that day. If they dropped you off, you were in their vehicle, you spent part of your day with them, didn't you? A. No, Sir, I had to be at work. Because I was on a work release I had to be at work. Christmas Eve, if you look at this I had to be at work for date, that was on a Friday I believe. my job. Then I was dropped off by those two. I was the only one in the office because Ramona gave people Christmas Eve off. day. I was the only one in the office that They came and picked me up on Christmas Eve from my office and dropped me off at the Fort. FUCALORO - CROSS - SCOTT 788 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SCOTT: Q. I believe Mr. Spies asked you, do you recall being Q. Terrific. And you wrote this letter to them in thanks for that? A. Absolutely. THE COURT: so, all right. MR. SCOTT: At this time, Your Honor, I'd move to Mr. Fucaloro, we have microphones here, admit Defendant Albritton's Exhibit C. MR. COURTER: THE COURT: No objection. Received. (Defendant Albritton's Exhibit C was offered and received in evidence.) interviewed by Special Agent Dow-Wyatt? A. Q. Yes. And do you recall telling her why you were coming forward with the information that you've told us today? A. Q. Could you rephrase that, please. Do you recall telling her why you came forward? Why are you looking at her? A. I? Q. Do you recall telling her why you were coming forward with I can look at her. I can look at anybody I want to, can't your story about Dan and Ramona? A. Yes. FUCALORO - CROSS - SCOTT 789 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. And that was because you were upset with them; right? Yes. They had called you stupid one too many times and you were going to show them what's for; right? A. Q. A. Q. That's not--you're on the right track but may I explain? You can answer my question. Yeah, I did. You were also afraid that they were going to turn you into Did you tell her that? your probation officer; isn't that right? A. I was threatened with that, yes. Mr. Albritton did threaten me, yes. Q. You told Agent Dow-Wyatt that you were nervous that they were going to turn you in to your probation officer; correct? A. I was threatened that they were going to turn me in, that Dan was going to turn me in, yes. Q. And you've testified in front of the Grand Jury; is that correct? A. Q. Sir? A. Q. As many times as they wanted to talk to me. Well, do you recall how many times you were interviewed by Yes. You've been interviewed by the FBI on how many occasions, them? A. No. If they want to call me up and see me, I see them. I'm not going to tell them no. FUCALORO - CROSS - SCOTT 790 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. In all the times that you were interviewed by the FBI and during the course of your testimony to the Grand Jury, not once did you ever tell this story about the fight at CIETC offices. A. I was never asked at the Grand Jury, so how could I tell if I was never asked. Q. During your interviews by the FBI you never told this story about the alleged made-up fight, pretend fight, did you? A. Q. A. Q. A. Q. Yes, I did. To the FBI during your statements? Yes, I did. When? I don't recall when it was. I told them. So if it's not in any of their reports, then they just neglected to write that down? A. Q. I told them. I'm telling you, I told them. Do you know how many times since you've been on the witness stand that you've used the phrase "I'm going to say," "I'm going to guess," "It might have been"? MR. COURTER: it's argumentative. THE COURT: MR. SCOTT: THE COURT: MR. COURTER: I'm going to object, Your Honor. No. 1, No. 2, it's irrelevant. Sustained. I have no further questions. Mr. Courter, any redirect? Yes, Your Honor. FUCALORO - REDIRECT 791 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. BY MR. COURTER: Q. Mr. Fucaloro, Mr. Spies asked you about funding streams for REDIRECT EXAMINATION CIETC; correct? A. Q. Yes. During that January 2003 through April of 2006 time frame, what program were you working? A. I was working Promise Jobs. There was another program called Life Skills. And when you would do a time sheet, you had You had to put so much time for this to break down your time. funding, so much time for that funding. Q. Correct. THE COURT: MR. COURTER: Go ahead. Yes. Mr. Courter, would you use the microphone. Sorry, Your Honor. When you fill out your time slip? When you fill out your time slip, you know, you put so much time for this Life Skills class or so much time for PJ, Promise Jobs. Q. A. Q. PJ is Promise Jobs; correct? Right. Now, the Life Skills, what program did that fall under if you know? A. Q. I don't know what that fell under. But that was-- What was the majority of your time allocated to, which program over the January of '03 through April of '06 time frame? FUCALORO - REDIRECT 792 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. The majority? Yes. Promise Jobs. Mr. Scott asked you if you had any knowledge of boards that Mr. Albritton served on; correct? A. Q. A. Q. Yes. And you knew he was on the CIETC Board; correct? Yes. Are you aware of the fact of whether he had a consulting contract with CIETC? A. Q. Yes. How did you become aware of the fact that Mr. Albritton had a consulting contract with CIETC? A. Because Ramona Cunningham was telling me she was tired of listening to him bitch of not getting his check on time. Q. Did you ever have any conversations with Dan Albritton about his consulting contract with CIETC? A. Q. No. But I seen him pick up checks, though. You in fact contacted the FBI in this case when everything first started hitting at CIETC; correct? A. Q. Yes, Sir. And in fact you did tell during one of the interviews with the FBI about this staged fight you testified to? A. Q. Yes, I did. Why did you come or why did you initially contact the FUCALORO - REDIRECT 793 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Federal Bureau of Investigation after the auditor's report was released in this case? A. Q. A. Q. A. Q. I was threatened. Who threatened you? Dan Albritton. What did Dan Albritton say to you to then? You want me to tell you? I want you to tell me to the best of your knowledge what he told you. A. I better keep my mother-fucking mouth shut. "I'm going to By the go to your mother-fucking PO and I'll bury your ass." way, it was over the phone, okay. Q. A. Q. A. Q. A. This conversation occurred by up phone? It was a message he left for me over the phone. He left you a message? Yeah. When approximately did this occur? I don't recall. The first day I called Traci. I don't recall. Q. A. Q. She would know. Was it after the auditor's report had been released? Yes. So based upon that phone message you received from Mr. Albritton, you contacted the FBI; correct? A. Q. Yes. And Special Agent Dow-Wyatt has been the agent that's been JENSEN - DIRECT 794 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. Mr. Jensen, would you state your full name and spell your THE COURT: further. THE COURT: MR. SPIES: THE COURT: MR. SCOTT: THE COURT: Mr. Spies? None. Mr. Scott? No. Thank you. involved in this from the very beginning; correct? A. Q. A. And Mike. Mr. Decker? Mike Decker. MR. COURTER: Thank you, Mr. Fucaloro. Nothing You may step down. (Witness excused.) Mr. Courter, I have 20 to 5. Do you have a witness that you can get on and off quickly? MR. COURTER: THE COURT: MR. COURTER: Jensen, Your Honor. DARRELL LEE JENSEN, GOVERNMENT'S WITNESS, SWORN DIRECT EXAMINATION Yes, Your Honor. All right. The government would call Darrell last name, please. A. Q. Darrell Lee Jensen, J-E-N-S-E-N. Where are you employed, Sir? JENSEN - DIRECT 795 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. I work for Iowa Employment Solutions. What was--is that the successor corporation or the successor organization to another organization? A. Q. They took over CIETC. How long did you work for CIETC before it was taken over by IES or changed into IES? A. Well, I've been there 14 1/2 years, and they took over a little over a year ago. Q. All of your testimony that I'm going to--or all the questions I'm going to be asking you here today, Mr. Jensen, refer or will relate to the time that CIETC was CIETC. A. Q. Correct. Why don't you give us a real brief rundown of the different Okay? program areas you've worked at CIETC. A. I started as a case manager, went to a team leader, and then I'm now a case I was project manager for two federal programs. manager again. Q. From the January 2003 to April 2006 time period, which program area did you work in? A. Q. A. I would have been working on H1B federal programs. What is an H1B federal program? It's a federal training program where when they bring people in from overseas, the company sponsoring them gives X amount of dollars to the government. The government then takes that money, makes it available to different training institutions to JENSEN - DIRECT 796 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 train people here in the United States to cover this certain occupation that they deem there's a shortage. The two that we worked on, the first one was information technology. Q. The second was the health care field. During the January of '03 to--excuse me, April of '06 time frame, did you travel out of state in relationship to your CIETC employment for any training? A. Q. Yes, I did. Did you make a trip to New Orleans during somewhere in that time frame? A. Q. A. Q. A. Q. A. Q. A. Q. A. Yes, I did. When did you go to New Orleans? I'm lousy on dates. It would have been in February. Do you recall what year? '04 or '05. '04 or '05? Yes. Was there a conference being put on in New Orleans? Yes, there was. What did that conference relate to, Sir? It wasn't disability but different federal funding-- I'm It was basically back on the H1B. trying to concentrate now. Q. Did any other CIETC employees go with you to New Orleans for this conference? A. Ramona Cunningham and Kelly Ayers. JENSEN - DIRECT 797 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Did you attend board meetings during this time frame or had you attended board meetings? A. Q. Yes, I did. Were you familiar with who the members of the board of directors for CIETC were? A. Q. A. Q. A. Q. A. Q. Fairly, yeah. Do you know Dan Albritton? Yes, I do. Is he here in the courtroom today? Yes, he is. Would you point to the table that he's sitting at? Yeah, sitting over there. Did any members of the board of directors go to New Orleans on this trip? A. Q. A. Q. Dan was on that trip. Dan Albritton? Yes. Any other members of the board of directors for CIETC on that board? A. Q. A. Q. No. No? No. During the time-How long did this conference last in New Orleans? A. I think it was like a 3-day conference. JENSEN - DIRECT 798 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. A. Q. Did CIETC pay for travel expenses and hotel and per diem? Yes. Did you attend all that conference? Not all of it. How much of the conference did you attend? Half. What did you do for the other 50 percent of the time when you weren't going to the conference sessions? A. Went to the casino across the street, spent some time there, spent time on Bourbon Street. Q. A. Q. Essentially just enjoying yourself; correct? Yes. Was Ms. Cunningham and Ms. Ayers and/or Mr. Albritton with you during these times when you weren't at the conference when it was still going on? A. Q. A. Q. Part of the time. Who was with you; all three of them? I'd say all three of them, yeah, at different times. You didn't put in any leave slips as it relates to the time you weren't at the conference; correct? A. Q. No. During this January of '03 to April of '06 time frame, did you do any work at Mr. Albritton's residence? A. Q. Tilled a garden, a garden spot. And just what town does Mr. Albritton--or at the time what JENSEN - DIRECT 799 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 town did Mr. Albritton live in? A. Q. Ankeny. How did it come about that you ended up tilling Mr. Albritton's garden? A. Q. A. Q. A. Q. A. Q. A. Ramona asked me to. Do you recall what day of the week this occurred on? No, I do not. Weekday. Afternoon. Do you recall when in the afternoon? Oh, probably 2, 2:30, somewhere in there. What were your normal work hours at CIETC, Mr. Jensen? I did not punch a time clock. They varied from the normal It was a weekday. Do you recall what time of the day you went there? work hours starting at 7, 7 to 3 o'clock, but there were times I worked until 8 clock at night, 9 o'clock at night if I had meetings, stuff like that. Q. Okay. Any other CIETC employees go with you to Mr. Albritton's residence? A. Q. A. Q. Sam Fucaloro. Did he drive or did you drive? I believe I would have been driving. Sam never drives. When you got to Mr. Albritton, what did you say, between 2 and 3 o'clock? A. Q. Correct. Was Mr. Albritton at his residence? JENSEN - DIRECT 800 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. I really can't remember that. If not, he was there shortly after. Q. A. Q. A. Q. Was Ramona Cunningham there? Yes, she was. When you and Mr. Fucaloro arrived? Yes. At that time were you aware of any relationship between Ramona Cunningham and Dan Albritton? A. That was about the time I was just finding out there was, you know, some sort of relationship. Q. And do you recall the time frame that this garden tilling occurred when you started becoming aware of their relationship? A. Q. A. Q. A. You mean what time of the year? Yeah. Been spring. Spring of--do you recall which year? It would have been probably 2005, 2004. Closer to 2005, I would say. Q. Did Ramona Cunningham ever have a conversation with you during this time frame concerning her relationship with Mr. Albritton? A. Q. A. him. I was always led to believe there wasn't one. How were you led to believe that there wasn't one? She would kind of down2play him, not talk favorable about JENSEN - DIRECT 801 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Did you ever have any conversations with Mr. Bargman--excuse me, with Mr. Albritton concerning his relationship with Ms. Cunningham? A. Q. A. Q. No. Did you ever see Mr. Albritton in the CIETC offices? Frequently. Did you ever witness any verbal altercation between Mr. Albritton and Ms. Cunningham at the CIETC offices? A. Q. A. Q. You mean an argument? Correct. No. Did you ever go out for drinks with Ramona Cunningham or other CIETC employees, happy hour or in the afternoon on work days? A. Q. A. Q. A. Q. A. Yes. Would Ramona Cunningham be there? Yes. Would Ramona Cunningham set those up? Most of the time. What other CIETC employees would be there? Sam Fucaloro, Kelly Ayers. Bargman would be there. It would depend on who was It kind of changed. Sam was there. normally part of it. Q. And is this still in the January '03 to April of '06 time frame? JENSEN - DIRECT 802 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. Yes. It would have been the latter part of that. So more towards the '05-'06 time frame? Correct, '04-'05. '04-'05 time frame? Yeah. Do you know Jane Barto? Yes, I do. Is she here in the courtroom here today? Yes, she is. Would you point to the table she's sitting at? Jane is behind you. Did she ever come to any of these cocktail gatherings? Yes, she did. Did you ever hear any conversations between Jane Barto and Ramona Cunningham concerning funding for CIETC? A. Ramona was continually asking people for money. That included Jane. Q. A. Q. A. Q. So did you hear conversations? Yes. Between Ramona Cunningham? She was wanting this and wanting that. On approximately how many different occasions did you hear these conversations occur? A. Q. It was pretty much the norm. Well, on how many occasions did Ms. Barto come and meet you JENSEN - DIRECT 803 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 and Ms. Cunningham and other employees for drinks? A. Oh, I would say average once a month or something like that. That probably ended in, oh, mid to late, oh, it would have been '05. Q. During the course of your employment at CIETC did you receive any bonuses or supplemental pay? A. Q. A. Bonuses. How would you receive those? Check. Didn't really know it was coming unless it was the cost of living raise or the Christmas bonus, and that was kind of an annual thing. Q. A. Q. Who would present those bonuses to you? Ramona. Were there ever any conversations that you personally heard between Ramona Cunningham and Jane Barto concerning bonuses being paid at CIETC? A. Q. A. No. Was Mr. Albritton ever at any of these drinking gatherings? Yes. I don't-I don't think he would have been at the ones that Jane was at. Q. A. Q. He would have been at different ones? Yes. You indicated you saw him quite frequently at the CIETC offices; correct? A. Correct. JENSEN - CROSS - SPIES 804 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SPIES: Q. Mr. Jensen, just a couple of short questions for you. You Q. Were you aware of the fact that Mr. Albritton had a consulting contract with CIETC? A. Q. A. Not until this all came out. So during the time-Yeah, I had no idea. MR. COURTER: THE COURT: Nothing further, Mr. Jensen. Mr. Spies. CROSS-EXAMINATION Thank you. described some of these drinking get-togethers that you and Ramona Cunningham and others would attend? A. Q. Yes. And you said once or occasionally once a month Ms. Barto would attend those as well? A. Q. A. Correct. Would these be after hours after work? Jane-Ours would normally start before our normal closing time. time. Q. Jane would normally show up after her normal closing Okay. And sometimes people that work with the governor would show up at these meetings; correct? A. Q. A. Correct. And Ramona asked them for money? Ramona asked everybody for money. JENSEN - CROSS - SPIES 805 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. There was a drinking occasion after this all blew up that occurred, I believe it was at the Fifth Street Pub in West Des Moines. A. Q. she? A. Q. A. Q. A. Correct. And this was after the state audit report had come out? This is when the big day--it all hit the news. Okay. And everybody was kind of shellshocked, wanting to know what Yeah. Do you remember that? We called Ramona and asked her to come out there. And she came out there with John Bargman, didn't All right. was going on. Q. A. And you were in shock? Definitely. MR. COURTER: the scope of direct. THE COURT: Well, I think you asked about the Overruled. I object, Your Honor, as being beyond conversations, counsel. BY MR. SPIES: Q. So at this drinking occasion, after this had all blown up, did you ask Ramona Cunningham if all this money was going to her and John Bargman? A. We asked about the money, and she said that it was normal salaries and stuff like that. Q. Okay. And you gave a figure or a figure that was floating JENSEN - CROSS - SCOTT 806 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SCOTT: Q. Good afternoon, Mr. Jensen. As an employee at CIETC, what around was like 1.3 million dollars? A. Q. Somewhere in there. And you asked her about this, and she said that covered everybody's? A. Q. A. Q. A. Correct. At CIETC? Correct. And John Bargman was standing right there? Correct. MR. SPIES: MR. HAMROCK: Your Honor. THE COURT: MR. SCOTT: Mr. Scott. Yes. Thank you, Your Honor. Thank you. I don't think we have any questions, CROSS-EXAMINATION was your job title again? A. Q. A. At that time I was a project coordinator. And what were your duties and responsibilities? Basically I recruited people, recruited as received and enrolled and monitored and assisted with employment. Q. Are contracts that CIETC--the consortium CIETC, are contracts that they would enter into typically something that you would be aware of? JENSEN - CROSS - SCOTT 807 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. No. As an employee at CIETC, you had flex time; is that right? Correct. And can you describe for us what flex time means. You could work four 10-hour days, five 8-hour days, four 9 1/2 hour days and a half day on Friday. Q. And do you recall during the summer that there was something call summer hours? A. Q. I don't believe I remember that term. I'm sorry, could it have been known under another way of getting Fridays off during the summer if you made up for your time during the rest of the week? A. Q. That would have been the four 10-hour days. Thank you. I know this happened a long time ago, but when you went over and did the tilling at Dan's house, that was a favor to Dan, is that right, favor to Ramona? A. Q. A. it. Q. A. Friends just going over a friend's house and helping out? I do a lot of that. MR. SCOTT: THE COURT: MR. COURTER: That's all I have. Thank you, sir. Ramona, yeah. It was a favor? Yeah. It's a 10-by-10 plot of dirt, run a material through Mr. Courter, any redirect? No, Your Honor. Nothing further. 808 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the jury. THE COURT: All right. (Witness excused.) Ladies and gentlemen, I know you want to know the schedule because you've asked me, and I'll talk with the lawyers after you leave tonight. We'll try to tell you in the morning so you can make some plans with regard to our schedule, and I know a couple of you have asked are we on schedule. I don't know the answer to that. But it's important that you do remember the final instruction about not doing any research, not reading anything in the newspaper, not watching television, listening to radio, discussing the case yet amongst yourselves or with anybody else. And I know that's difficult when you go home and people say what happened today, but you have to follow that, because the parties are relying on you to do so. We'll be in recess until 8:30 tomorrow morning with The lawyers should stay. (In open court, out of the presence of the jury.) THE COURT: Please be seated. Counsel, could you tell me about our schedule so I can try to tell the jurors what time frame we're looking at? MR. COURTER: Your Honor, the government believes that we're still on schedule, and we believe that we will be resting hopefully by close of business on Monday, this coming Monday. THE COURT: Monday, okay. 809 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Mr. Spies, have you been talking with the government about scheduling any evidence you wish to offer? MR. SPIES: THE COURT: This is the first. All right. Okay. And do you have any indication of how long--I'm not holding you to anything. MR. SPIES: We were talking about that, and I'm guessing probably a day. THE COURT: Mr. McCarthy? Best estimate at this point, Your MR. McCARTHY: Honor, half a day. That may be longer. Okay. Thank you very much. THE COURT: MR. SCOTT: THE COURT: My best estimate would be no time. Okay. All right. We'll be in recess until 8:30 tomorrow morning. (Recess at 5:00 p.m. until 8:30 a.m., Friday, April 11, 2008.) 810 1 2 3 4 5 6 7 8 9 10 11 12 13 14 CERTIFIED SHORTHAND REPORTER 15 16 17 18 19 20 21 22 23 24 25 C E R T I F I C A T E I, the undersigned, a Certified Shorthand Reporter of the State of Iowa, do hereby certify that I acted as the official court reporter at the hearing in the above-entitled matter at the time and place indicated; That I took in shorthand all of the proceedings had at the said time and place and that said shorthand notes were reduced to typewriting under my direction and supervision, and that the foregoing typewritten pages are a full and complete transcript of the shorthand notes so taken. Dated at Des Moines, Iowa, this 6th day of June, 2008. 811 IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF IOWA CENTRAL DIVISION - - - - - - - - - - - - - - - -X UNITED STATES OF AMERICA, : : Plaintiff, : : vs. : : RAMONA CUNNINGHAM, JANE BARTO, : KAREN TESDELL, JOSEPH : ARCHIBALD BROOKS, JR. and : DAN ALBRITTON, : : Defendants. : - - - - - - - - - - - - - - - -X Criminal No. 07-008 Volume IV TRIAL TRANSCRIPT West Courtroom U.S. Courthouse 131 East Fourth Street Davenport, Iowa Friday, April 11, 2008 8:30 a.m. BEFORE: The Honorable ROBERT W. PRATT, Chief Judge, and a Jury. EILEEN HICKS - CERTIFIED SHORTHAND REPORTER 812 APPEARANCES: For the Plaintiff: WILLIAM C. PURDY, ESQ. JOHN S. COURTER, ESQ. Assistant U.S. Attorneys U.S. Courthouse Annex 110 East Court Avenue Des Moines, Iowa 50309 LEON F. SPIES, ESQ. Mellon & Spies Suite 411 102 South Clinton Street Iowa City, Iowa 52240 AARON HAMROCK, ESQ. TIMOTHY McCARTHY II, ESQ. McCarthy & Hamrock 1200 Valley West Drive Suite 400 West Des Moines, Iowa 50265 PAUL D. SCOTT, ESQ. Cook, Brown & Scott 8554 Alice Avenue Des Moines, Iowa 50325-7112 For Defendant Barto: For Defendant Tesdell: For Defendant Albritton: 813 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Richard Running 16 17 18 19 20 BARTO EXHIBIT: 21 I - Promise Jobs contract modification 22 23 24 25 1007 1007 OFFERED RECEIVED E X H I B I T S Erv Fett William T. Hockensmith Robert Brownell Angela R. Connolly Jim Underwood Tony Dietsch 936 941 948 954 961 David Lee Stanley Mary Christina Zimmerman Diane Marie Smith Jack Arthur Cline Nathan Brooks Emil Joseph Giovannetti 848 869 880 892 912 927 WITNESS I N D E X DIRECT CROSS REDIRECT RECROSS Behalf of the Government: Kathy Lynn Armstrong Pamela Jones Susan Stewart 814 827 839 821 (Spies) 823 (Hamrock) 835 (Hamrock) 844 847 (Hamrock) 861 (Scott) 890 907 910 925 934 935 (Scott) (McCarthy) (Scott) (Scott) (Spies) (McCarthy) 947 (Spies) 1000 1018 (Spies) 1014 (Hamrock) 1020 1039 1051 (Spies) 1050 (Hamrock) 1053 1061 1068 (Spies) 1068 (Hamrock) 1052 (Spies) ARMSTRONG - DIRECT 814 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. Would you state your full name and spell your last name, THE COURT: P R O C E E D I N G S Please be seated. Good morning. Mr. Courter, you told me before we started this morning that you neglected to tell the jurors when you called the last two witnesses as to what counts they were to support, so if you want to inform the jury of that, you may do so. MR. COURTER: Thank you. As far as it relates to Mr. Fucaloro and Mr. Jensen that testified at the end of yesterday's trial session, the government believes their testimony--both of the witnesses' testimony goes to counts 1 through 20. THE COURT: MR. COURTER: Call your next witness. We would call Kathy Armstrong, Your Honor, and we believe that her testimony would go to counts 1 through 19. KATHY LYNN ARMSTRONG, GOVERNMENT'S WITNESS, SWORN DIRECT EXAMINATION please. A. Q. A. Q. Kathy Lynn Armstrong. Where are you employed? Iowa Employment Solutions at DMACC. Prior to Iowa Employment Solutions at DMACC, where were you employed? ARMSTRONG - DIRECT 815 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. CIETC. And Iowa Employment Solutions through DMACC would be the successor organization for CIETC; correct? A. Q. A. Q. Yes. How long were you employed with CIETC? 14 years. What were your general duties during the course of your employment at CIETC? A. I did different programs and did the JTPA program, NEOF program. Q. A. Q. A. Q. JTPA, what's that stand for, Ma'am? Job Training Partnership Act. And how about NEOF? NEOF is--it's for -What did the NEOF program do? What were you doing for the NEOF program? A. Working with Creative Visions and helping youth get jobs in inner cities. Q. Did you do work with any other programs during your work at CIETC? A. Q. Promise Jobs. How did you allocate for your time during your employment at CIETC, Ms. Armstrong? A. We had a breakdown of what we were supposed to put on our time sheets. ARMSTRONG - DIRECT 816 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. When you say a breakdown, what do you mean by that? We were told what percentage to use. So you accounted for your time by percentage? Percentage, yes. Were those percentages allocated between the different programs? A. Q. Yes. During the course of your employment at CIETC, did anyone give you a standard percentage or a standard formula to use when you allotted for your time? A. Q. A. Q. A. Q. A. Q. Yes. Who gave you that? Either Karen or Tami. When you say Karen, do you mean Karen Tesdell? Yes. Is she here in the courtroom today? Yes. Would you just point to which table she's at and what she's wearing. A. Q. A. Q. A. Q. She's wearing a blue outfit. What was Karen Tesdell's position at CIETC? Bookkeeper. You indicated Tami had also given you some time to put in? Yes. Who is Tami? ARMSTRONG - DIRECT 817 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. Tami Higar. What was her position? She helped Karen. What sort of formula did Ms. Tesdell or Ms. Higar give you as it relates to the allocation of your time? A. Q. I don't remember. The formula that they gave you, is that what you put on your time sheets? A. Q. A. Q. Yes. Was that at their direction? Yes. The formulas that they gave you, did that accurately reflect the percentage of time you actually spent working in those program areas? A. Sometimes. You never know which--you might work on something else longer. Q. Were those formulas given to you in advance of when you would fill out your time sheets? A. Q. Yes. Would it be fair to say, then, Ma'am that prior to filling out a time sheet, you had already been instructed as to how to account for your time regardless of which program you worked in? A. Q. Yes. Were there ever times when Karen Tesdell gave you percentages to put on your time sheet that included work in ARMSTRONG - DIRECT 818 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 areas you didn't work in? A. I just marked down whichever ones that they told me and did the percentage on them. Q. Did Karen Tesdell or Tami Higar ever tell you to allocate a portion of your time to the WIA youth program? MR. HAMROCK: Objection, Your Honor, calls for hearsay specifically to Tami Higar. THE COURT: MR. COURTER: THE COURT: BY MR. COURTER: Q. Did Karen Tesdell ever tell you to allocate time on your Mr. Courter. I'll rephrase, Your Honor. Okay. time sheet to the WIA youth program? A. not. Q. Did she ever tell you to allocate times to programs you I can't remember whether the youth program was on there or didn't work in, Ms. Armstrong? A. I don't remember. Just whatever they tell me, that's what I marked down. Q. Well, when you were marking down the allocations, was that Strike that. When you fill out a time sheet, supposed to be-- was it supposed to be filled out according to the program areas that you worked? A. It was supposed to be according to whatever Karen told you I to do for where you worked, for what programs you were doing. ARMSTRONG - DIRECT 819 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 didn't do youth program. Q. A. Q. A. Q. You never did WIA youth; correct? No. At all during the time that you worked at CIETC? No. So if your time sheets would indicate allocation of your time to WIA youth, it would be your testimony here today that you did not do any work in the WIA youth program? A. Q. No, I did not. Now, you know Ramona Cunningham has also been indicted in this case; correct? A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. Yes. And she's not here at trial at the present time; correct? Yes. What was your relationship with Ramona Cunningham? She was my friend and my boss. Do you know Mr. Dan Albritton? I know who he is. Is he here in the courtroom here today? Yes. Can you point out what table he's sitting at. The first one. Did you ever have any conversations with Ramona Cunningham concerning any relationship she had with Mr. Albritton? MR. SCOTT: Excuse me, Ms. Armstrong. ARMSTRONG - DIRECT 820 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Your Honor, I'm going to object to that based on hearsay and relevance. MR. COURTER: THE COURT: 2(e), Your Honor. It's overruled as to relevance. With respect to the hearsay, it's accepted conditionally. This is another one of those rulings that you'll get a later--this is a tentative ruling. You can consider it conditionally, subject to a later ruling. You may answer. BY MR. COURTER: Q. A. Q. Do you want me to ask the question again? Please. Did you ever have any conversations with Ramona Cunningham concerning any relationship she had with Dan Albritton? A. Q. Oh, I just thought they were friends. Did you have any specific conversations as to whether they were more than friends with Ramona Cunningham? A. Q. No. Do you know the defendant--one of the defendants in this case Jane Barto? A. Q. A. Q. A. I know who she is. And is she here in the courtroom here today? Yes. Would you just point out what table she's sitting at. Right behind you. ARMSTRONG - CROSS - SPIES 821 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SPIES: Q. A. Q. Good morning, Ms. Armstrong. Good morning. Ms. Armstrong, in your day-to-day work at CIETC did you have Q. A. Q. Did you ever see Ms. Barto at the CIETC offices? Yes. Did you ever have any conversations with Ramona Cunningham concerning any relationship she may have had with--excuse me, which she had with Ms. Barto? A. Q. A. Q. A. Q. Jane was our field rep. What does that mean? She was our field rep with IWD and CIETC. Was that prior to her becoming the deputy director of IWD? Yes. Did you ever have any occasion to see Ramona Cunningham and Jane Barto interact? A. Q. A. Yes. How did they act towards each other? As friends. MR. COURTER: Ms. Armstrong. I don't have anything further, Thank you. Mr. Spies. Thank you, Your Honor. CROSS-EXAMINATION THE COURT: MR. SPIES: interaction with another person named John Bargman? ARMSTRONG - CROSS - SPIES 822 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. Not if I didn't have to. Pardon me? As little as possible. Okay. And why was that? I don't like him. Did you work with him, doing any activities with him at the office? A. Q. A. Q. A. Q. No. Did you have anything to do with Fundware? No. That was the accounting program that was used at CIETC? Yes. And would you ordinarily have had anything to do with the accounting? A. Q. No. Okay. Finally, Ms. Barto--you said that she was the field representative when she was out on the road and working the regions, including CIETC? A. Q. A. Q. A. Q. Yes. Okay. Yes. Friendly person? Yes. Industrious? MR. COURTER: I'm going to object; beyond the scope of And you got along okay with her? ARMSTRONG - CROSS - HAMROCK 823 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. HAMROCK: Q. A. Q. Good morning, Ms. Armstrong. Good morning. My name is Aaron Hamrock. I represent Ms. Tesdell along direct and also relevance. THE COURT: BY MR. SPIES: Q. A. Q. Industrious? I didn't get to talk to her much. All right. Worked hard and kept close tabs on the work of Overruled. CIETC? A. Q. A. Q. her? A. Yeah, I didn't see that much. MR. SPIES: THE COURT: MR. HAMROCK: All right. Mr. Hamrock. Thank you, Your Honor. CROSS-EXAMINATION Thank you very much. Yes. Okay. Yes. And after she became deputy director did you see less of When she was a field representative? with Mr. McCarthy. You talked-for how many years? A. 14. Well, first of all, you worked at CIETC ARMSTRONG - CROSS - HAMROCK 824 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. So when did you start at CIETC? What year would that have been? A. Q. I have no idea. Well, were you talking 14 years from prior to 2006, or are you talking 14 years back from today? A. 14 years from--it would be back from November 1st, but I was on work experience in Indianola for 180 days before I came into the Des Moines office to work. Q. So would you have started at CIETC somewhere in the range of 1994? A. Q. A. Q. '90-something. Middle Nineties? Something like that. And when you started at CIETC, Ms. Tesdell, you indicated, would give you some percentages of time allocations? A. Q. Yes. These percentages, though, would be given to you before your time was actually worked; correct? A. Q. Yes. And then you would know based upon how you're supposed to allocate your time that you were supposed to do, you know, work some for this program and some for that program and maybe there was a third program; correct? A. Q. Yes. All right. It wasn't that you would do all the work and ARMSTRONG - CROSS - HAMROCK 825 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 then just before you filled out the time sheets Ms. Tesdell would hand to you the percentages that you were supposed to mark down; correct? A. That was not the case? No, because you can't put a time on when somebody's going to come in and when they're not. Q. All right. I just wanted to make sure that the percentages that you were given were before, let's say, your 2-week work period and then you were to try to follow or follow those work percentages through the 2-week work period before you did your time sheet; correct? A. At the end, when time sheets were due, use those percentages and did them. Q. Right. Now, sometime in the early 2000's, maybe around 2001 or 2002, Ms. Higar and Mr. Bargman became involved and took over the time sheets. A. Q. Yes. As far as, you know, giving you the allocations and telling Would that be correct? you how to allocate, those sorts of things? A. Q. Yes. And, Ms. Armstrong, you did do work with the WIA youth program; correct? A. No, I never worked with WIA youth. WIA adult and youth for NEOF. MR. HAMROCK: THE COURT: May I approach the witness, Your Honor? You may. ARMSTRONG - CROSS - HAMROCK 826 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: MR. COURTER: Q. I would like to show you your statement that was previously Would you given, and I've underlined in blue ink a sentence. just read that to yourself, please. A. Q. A. Q. A. Q. A. Armstrong-No, no, just read it to yourself. Sorry. Have you had a chance? Okay. Did that help refresh your memory? Not really. I quit because she wanted me to work youth. I quit for 4 months. MR. HAMROCK: Your Honor. THE COURT: MR. SCOTT: THE COURT: MR. COURTER: THE COURT: Mr. Scott. No, thank you, Your Honor. Mr. Courter, any redirect? No, Your Honor. All right. You may step down. (Witness excused.) Do you want to call your next witness. The government would call Pam Jones, I don't think I have anything further, Your Honor, and we believe her testimony would potentially go to counts 1 through 20. JONES - DIRECT 827 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. A. Q. A. Q. A. Q. A. Q. A. Q. State your full name and spell your last name, please. Pamela Jones, J-O-N-E-S. Where are you employed, Ms. Jones? IES DMACC. Is IES DMACC the successor organization to CIETC? Correct. Prior to being with IES, you were at CIETC; correct? That's correct. When did you first become employed with CIETC? '93, the year of the flood. Have you been continuously employed there through the ending PAMELA JONES, GOVERNMENT'S WITNESS, SWORN DIRECT EXAMINATION of CIETC and being reinvented as IES? A. Q. That's correct. What have been your job duties during the approximately 15 years you worked at CIETC? A. I have been a counselor, LBP specialist, team leader and welfare-to-work counselor. Q. A. Q. A. Q. Which program areas have you concentrated in? Promise Jobs. You worked a hundred percent of your time on Promise Jobs? Yes. That's through the course of your career at CIETC; correct? JONES - DIRECT 828 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Except for when I ran--I mean we worked with some of the welfare-to-work program, a certain percent of that I think came out of that. Q. A. Q. A. Q. When was that, Ma'am, do you recall? No, I do not recall the year. Would it be recently? No. Promise Jobs now, all Promise Jobs. How long has it been--how many years have you worked exclusively in the Promise Jobs section? A. Q. A. Q. Well, probably 15. You know Ramona Cunningham; correct? Correct. What was the extent of your relationship with Ms. Cunningham? A. Q. A. Q. A. Q. A. Q. A. Q. A. Work relationship. Do you consider yourself friends? Well, I would have, yes. Do you know Dan Albritton? I know who Dan Albritton is, yes. Is Dan Albritton in the courtroom today? Yes, he is. Would you just point to what table he's sitting at. (Witness complied.) Did you ever see Mr. Albritton at the CIETC offices? Yes. JONES - DIRECT 829 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. In which offices did you see him at? Both at 215 Keo and at our current office. That's on East Grand? Correct. We've had--I've heard 215 Keo and 215 Watson Powell. Were those different office locations? A. Q. A. Q. No, it was the same location. Just a name change for the streets? Yes. Did you ever have any conversations with Ramona Cunningham concerning the extent of her relationship with Mr. Albritton? A. Q. Yes. What did Ramona Cunningham tell you as it relates to her relationship with Dan Albritton? MR. SCOTT: Excuse me, Ms. Jones. Your Honor, at this time I'd like to interject an objection of hearsay as well as relevance. MR. COURTER: THE COURT: 2(e), Your Honor. The relevance would be overruled. The evidence can be received conditionally by you subject to a later ruling by the Court. You may answer. Yes, I asked her if she was seeing Dan. BY MR. COURTER: Q. Why did you ask her that? JONES - DIRECT 830 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Well, I had--he had come to a party with her, a Superbowl party. Q. A. Q. A. Q. A. Q. They had come together? Yes. Do you recall which year of Superbowl we're talking about? Well, I think it would have been about 5 years ago, 6. Maybe the 2003 Super Bowl, somewhere in that area? Probably. What was Ms. Cunningham's response to you as to whether she was seeing Mr. Albritton or not? A. him. Q. A. Q. A. Q. A. Q. Ramona said that Dan Albritton was gay? Yes. Okay. And denied seeing him? The first time Ramona said he was gay. She wasn't seeing Correct. How many times did she tell you that Dan Albritton was gay? Only the one time. Did she ever make any statements to you after the "Dan Albritton's gay" statement concerning her relationship with Mr. Albritton? A. Q. Yes. When did the "Dan Albritton's gay" comment, when was that made by Ms. Cunningham? A. I'm not certain of exactly when that was said. It's when JONES - DIRECT 831 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. I--I know I first thought possibly they were seeing one another. Q. Would that have been somewhere after the Superbowl party you just discussed? A. Q. I believe that it was just prior to the Superbowl party. Subsequent to the Superbowl party did you have any conversations with Ms. Cunningham concerning her relationship with Mr. Albritton? A. Q. Yes, I did. How long after that Superbowl party did that conversation occur? A. I'm not certain. Maybe 5 months or something like that. It was a considerable amount of time. Q. What did Ms. Cunningham tell you at that time concerning her involvement with Mr. Albritton? MR. SCOTT: Excuse me. Once again, Your Honor, I'd like to interject the same objections, relevance and hearsay. MR. COURTER: THE COURT: 2(e), Judge. Same ruling as to both. You'll be told later if you can consider this and receive it conditionally. You may answer. She said she was seeing Dan. BY MR. COURTER: Q. How many conversations did you have with Ms. Cunningham concerning her relationship with Mr. Albritton? A. That would have been pretty much--that would have been it JONES - DIRECT 832 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 sustained. BY MR. COURTER: Q. A. Q. A. Q. A. Q. A. Q. A. Do you know Jane Barto? Yes. Is she here in the courtroom here today? Yes, she is. Would you point out what table she's sitting at. (Witness complied.) How did you come to know Jane Barto? In my years of working around state employees. Did you ever see Jane Barto at the CIETC offices? Yes. pretty much. Q. After she informed you that she was seeing Mr. Albritton, did you see them together in the CIETC office? A. Q. A. Maybe a couple of times. They were in a different area. Did you see them together outside of the CIETC office? No. MR. SCOTT: Excuse me, Your Honor. I'm going to object to this line of questioning as cumulative. THE COURT: before, counsel. What's your response? We have heard it His claim is that it's cumulative. And answer to that was in the negative, MR. COURTER: and that was the last one I was going to ask, Judge. THE COURT: Okay. I guess in that case we'll say JONES - DIRECT 833 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Which offices would you see her at? Both the 215 Keo and the Grand office. How long have you been at the Grand office? Oh, quite frankly, I don't know what year we moved in there. Sorry. Q. A. Q. A. Q. A. Within the last several years, 10 years ago? Yes. Last several years? Yes. How often would you see her in the Grand offices? You know, in the Grand office--I don't know that I did see Jane in the Grand office. Q. A. Q. How about the Keo office? Keo office, I used to see her there maybe once a month. How long was CIETC housed at the Keo office prior to moving over to the Grand Avenue office? A. Q. Probably since we were housed from I think around '94. Did you have the opportunity to see Jane Barto and Ramona Cunningham interact? A. Q. No. Did you ever have any conversations with Ramona Cunningham concerning the extent of her relationship with Jane Barto? A. Q. No, not really. What was the extent of your relationship with Jane Barto? MR. SPIES: Objection, Your Honor. It's irrelevant. JONES - DIRECT 834 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. THE COURT: Overruled. You can answer. We did not have any relationship. BY MR. COURTER: Q. A. Q. A. Q. A. Q. Do you know Karen Tesdell? Yes, I do. Is she here in the courtroom today? Yes, she is. Would you just point out what table she is sitting at. (Witness complied.) What was the extent of your involvement with Karen Tesdell at the CIETC offices? A. I've worked with Karen ever since I started my employment We had offices next-door to each other some part of Just a relationship at work, co-worker. with CIETC. that time. Q. A. Q. What was her title during your time at CIETC? She was the accountant. Did you ever observe or were you able to observe the contact between Ms. Tesdell and Ramona Cunningham? A. Q. Yes. Did Ramona Cunningham ever have any conversations with you concerning her relationship with Ms. Tesdell? A. Q. A. Q. You mean as--during employment? Correct. Well, yes. What was the substance of those conversations with JONES - CROSS - HAMROCK 835 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. HAMROCK: Q. Good morning, Ms. Jones. My name is Aaron Hamrock. I Ms. Jones. A. Ms. Cunningham concerning Ms. Tesdell and the CIETC operation? MR. SPIES: MR. COURTER: THE COURT: to a later ruling. You can answer. Sometimes when our money didn't balance, I mean, you know, Objection, Your Honor, calls for hearsay. 2(e). You can receive this conditionally subject they would be pulling from different programs, she would-Q. When you say they would be pulling from different programs, who would "they" be? A. Well, I mean when they would allocate our money, how we spread out our time sheet allocations, sometimes those were changed, and she would state that Karen had messed the books up. Q. A. Ramona would say that? Yes. MR. COURTER: Thank you. THE COURT: MR. SPIES: THE COURT: Mr. Spies. I have no questions. Mr. Hamrock. CROSS-EXAMINATION Thank you. I don't have anything further, represent Ms. Tesdell along with Mr. McCarthy. You started working at CIETC in 1993? JONES - CROSS - HAMROCK 836 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes. Correct? Okay. And when you started working at CIETC, you talked a little bit about the time sheets and the time allocations, do you remember that, with Mr. Courter? A. Q. Yes. When you started working at CIETC, before you would work, let's say, a two-week period, you would receive an allocation that you were supposed to work so much time for this project and so much time for that project. that was given to you; correct? A. Q. That would be correct as to how to do it, yes. All right. Well, that's what happened is that prior to the There would be an allocation work, you got some allocation; correct? A. Q. Correct. Right. We knew how to spread it. So you're being told how to spread your time over the next 2 weeks, and at the end of the 2 weeks we want you to bill, you know, X number of hours to this project, X number to that project and so on and so forth; correct? A. Q. Correct. Sometime in 2001 or 2002 did John Bargman and Tami Higar take over the time sheet and the allocation process? A. Tami took over a lot of Karen's jobs that she used to do. I'm not certain about John Bargman taking over that at all. Q. All right. So with that answer, did I hear you say that, JONES - CROSS - HAMROCK 837 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. yes, Tami Higar took over the allocation of time that would go out to employees before they would work their 2-week period of time? A. Could you repeat the year on that, that you thought that happened. Q. A. Q. Was it sometime in 2002 that that took place? I'm not certain on when it actually took place. You indicated earlier that Ms. Cunningham would make statements to you about Ms. Tesdell or Ms. Tesdell's job performance. I think you said something about she messed the books up, or words to that effect? A. Q. Correct. You knew Ms. Cunningham to be a person that would intentionally start rumors; correct? MR. COURTER: I'm going to object, Your Honor, No. 1, as to relevance; No. 2, it's beyond the scope of direct; and, No. 3, it's still irrelevant. THE COURT: BY MR. HAMROCK: Q. you? MR. COURTER: I'm going to object again, Your Honor. No. 2, it calls for speculation. You can answer. Are there times when Ms. Cunningham would not be truthful to Sustained. No. 1, it calls for opinion. THE COURT: Overruled. Would you repeat that question? JONES - CROSS - HAMROCK 838 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. COURTER: Your Honor. through 20. BY MR. HAMROCK: Q. Were there times that Ms. Cunningham would not be truthful in her statements to you? A. Yes. MR. HAMROCK: THE COURT: MR. SCOTT: THE COURT: MR. COURTER: THE COURT: A JUROR: THE COURT: Thank you. Mr. Scott. No questions. Thank you, Your Honor. No further questions. Redirect, counsel? No, Your Honor. You may step down. Your Honor, may we have the counts? Thank you, Ms. May. One of the jurors asked for the counts that Ms. Jones was testifying to. I think at least my record shows that Mr. Courter announced 1 through 20, but I'll rely on Ms. Hicks. Did you say that, Mr. Courter? MR. COURTER: Counts 1 through 20 is correct, Judge. Counts 1 through 20. If I didn't say that, I apologize. THE COURT: Well, the record should show the juror raised her hand is the reason the Court recognized her. You may step down. (Witness excused.) The government would call Susan Stewart, We believe her testimony would also go to counts 1 STEWART - DIRECT 839 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. Ma'am, would you state your full name and spell your last SUSAN STEWART, GOVERNMENT'S WITNESS, SWORN DIRECT EXAMINATION name. A. Q. A. Q. A. Q. A. Q. A. Q. Susan K. Stewart. Where are you employed? IES. IES is the successor to CIETC; correct? Yes. Were you employed at CIETC? Yes. When did you start with CIETC? November of 1999. And you've been continuously employed there through CIETC and then as it became IES? A. Q. Yes. What sort of--what have been your job responsibilities during the time you've been at CIETC? A. I've been a case manager for Promise Jobs, and right now I do the outer counties. Q. A. Q. You do what? The outer counties. Outer counties. Why don't you just describe what that entails. STEWART - DIRECT 840 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. I drive to a different office every day in Boone and Dallas County and manage the Promise Jobs cases in those counties. Q. And Boone County and Dallas County are participating or participants in CIETC/IES; correct? A. Q. Yes. How do you account for your time or how did you account for your time when you were employed at CIETC? A. At first we manually filled out a sheet, and then later towards the end it was on a computer. Q. Do you recall approximately what year it was when it switched over to being entered on computer? A. Q. A. Q. A. Q. Not really. You started in 1999; correct? Yes. And that was you filled it out by hand on a time sheet? Yes. What did you do with the time sheet that you would actually fill out when it was in the manual stage? A. Q. A. Q. A. Q. Put it in a box for Jack Cline to sign. Was he your supervisor? Yes. How did it work once you switched over to computer? We just went to the computer and entered it on there. When you say you would enter it, whether it be by computer or prior to that manually by hand, how would you break down the STEWART - DIRECT 841 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 time that you worked during the pay period? A. Well, Karen Tesdell would give us a sample sheet of how we were supposed to break down our time, and we just followed that. Q. A. Q. A. Q. A. Q. So obviously you know Karen Tesdell; correct? Yes. Is she here in the courtroom here today? Yes. Would you just point out what table she's sitting at? (Witness complied.) When would Ms. Tesdell give you these percentages to fill out on your time card? A. Well, if it were going to change, I mean we just followed the example unless there was a change; and then if there was a change, she would tell us what the change was. Q. So let's say, for example, on January 1 of a given year, she would give you a formula to put in dividing your time; correct? A. I don't remember that it was every year that it changed. I just--I don't remember that there was any certain time frame that it changed. Q. A. Q. A. Q. What sort of formula would she give you, Ma'am? It was just percentages. Would those percentages be broken up by program categories? Yes. Were you instructed to use those program category allocations regardless of the time that you actually worked in STEWART - DIRECT 842 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 those areas? A. Q. Yes. As it relates to your own personal situation, were you allocating time on your time card pursuant to Ms. Tesdell's instructions in areas that you did not actually work in? A. Q. Yes. Do you recall which areas that you did not work in that Karen Tesdell instructed you to fill in on your time sheet? A. Q. It was the WIA program. Do you recall what percentage of time she would ask you or instruct you to fill in on your time sheet to WIA that you did not work? A. Q. A. Q. A. Q. No, not-No. So you don't recall a specific percentages? No. But you know you didn't work WIA; correct? Correct. And if we would go back and look at your time sheets, that would show us what percentages you filled in during that time period; correct? A. Q. A. Yes. Were you ever supposed to work the WIA program? No. I did referrals for the WIA program, so if any of my clients qualified for it, then I would refer them to the people that did the WIA program. STEWART - DIRECT 843 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you. THE COURT: MR. SPIES: Mr. Spies. I have no questions, Your Honor. Q. But other than that, you did no actual work under the WIA program; correct? A. Q. No. When you received these instructions or these allocation percentages from Ms. Tesdell, was that some sort of direction from management of CIETC that you were actually supposed to work in those areas? A. Q. I don't think I understand that question. As part of your normal job duties, did any of your supervisors tell you that you were supposed to work in the WIA area? A. Q. A. Q. No. And that was common knowledge; correct? Yes. Do you recall how often the time allocations would change that you received from Ms. Tesdell? A. Q. Not specifically. I'd say maybe three or four times. And during the course of those changes did Ms. Tesdell instruct you to account for time in program areas that you weren't actually working? A. Yes. MR. COURTER: Nothing further, Ms. Stewart. Thank STEWART - CROSS - HAMROCK 844 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. HAMROCK: Q. Good morning, Ms. Stewart. My name is Aaron Hamrock. I THE COURT: Mr. Hamrock. CROSS-EXAMINATION represent Ms. Tesdell along with Mr. McCarthy. me again, when did you start working at CIETC? A. Q. November of 1999. Would you tell And you worked in what was called the outer county programs or the outer counties? A. Originally I worked in the Polk County office, and then I think after 2 years I moved to the outer counties. Q. When you were in the-So sometime in 2001 you moved to the outer counties? A. Q. I believe so, yes. When you were in the outer counties, people out there worked That would be the WIA program and the in two main areas. Promise Jobs program; correct? A. No. It was--somebody from Des Moines would come up and handle the WIA applications. Q. A. Q. Your supervisor was Jack Cline? Yes. Now, you were given or told how to allocate your time prior to working those hours; correct? A. Q. Yes. And what you're telling me is that you--at the end of your STEWART - CROSS - HAMROCK 845 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 two-week period or at the end of the pay period you would write down your time different than how you were told to allocate your time. A. Q. A. Q. Did I understand that correctly? I wrote it down how I was told to. Which is different-- No. Right. And the percentages that I was told to. But that's different than how you were told to--what you actually worked was different than what you were told to work or how you were told to allocate your time; right? A. Q. If I understand the question, yes. All right. Well, sometime in 2002 John Bargman and Tami Higar took over the accounting time slip function of CIETC; correct? A. Q. A. Q. I didn't know that they did, but okay. Well, no, I'm asking, do you have knowledge of that? No, I don't. I don't know who was doing the time. So all that you really know is that you believe back in sometime after 1999 when you started working at CIETC, Ms. Tesdell was doing the time sheets, but at some other time it could have changed and you were not notified of that? A. Q. Right. And you have no idea if Ms. Tesdell continued to do time sheet allocations in 2000? A. Q. I don't remember specific dates, no. Okay. You wouldn't know who was doing it in 2000? STEWART - CROSS - HAMROCK 846 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 questions. A. Q. A. Q. A. Q. A. Q. No. You didn't know who it did in 2001? No. You didn't know who did it in 2002? No. Or any time beyond that? No. And you never sent a memo or an e-mail indicating to Ms. Tesdell that you didn't actually do any work in the WIA program, did you? A. Q. No. And when you were in the outer county, did you say was it Boone? A. Q. Boone and Dallas. All right. When you worked in the Boone and Dallas County regions, you wouldn't even see Ms. Tesdell, would you? A. No, I did not, only on Fridays. MR. HAMROCK: I don't think I have any further Thank you, Your Honor. THE COURT: MR. SCOTT: THE COURT: MR. COURTER: All right. Mr. Scott. No, thank you, Your Honor. Mr. Courter, any redirect? Just briefly, Your Honor. STEWART - REDIRECT 847 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. Ms. Stewart, you indicated that you saw Ms. Tesdell on REDIRECT EXAMINATION Fridays; is that correct? A. Q. A. Yes. Why would you see Ms. Tesdell on Fridays? Just because we were in the same building. I didn't necessarily go to her office or report to her or anything. Q. You indicated that you were in the outer county program; correct? A. Q. A. Yes. Were you out of county 5 days a week, every day? I was out, yeah, Monday through Thursday. I was only in the Des Moines office on Friday. Q. Okay. So Monday through Thursday you were in Boone and Dallas Counties, and then Friday you'd be in the Des Moines CIETC office? A. Q. A. Q. Yes. And that was the same office Ms. Tesdell worked; right? Yes. Did you ever do any work on those Fridays in Des Moines on the WIA program at all? A. No. MR. COURTER: THE COURT: Thank you. You may step down. STANLEY - DIRECT 848 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. Mr. Stanley, would you state your full name and spell your THE COURT: MR. COURTER: (Witness excused.) You want to call your next witness. The government would call Dave Stanley. Your Honor, we believe Mr. Stanley's testimony is relevant to counts 1 through 20. DAVID LEE STANLEY, GOVERNMENT'S WITNESS, SWORN DIRECT EXAMINATION last name, please. A. Q. A. Q. A. Q. A. Q. Yes, Sir. David Lee Stanley, S-T-A-N-L-E-Y. Where are you employed? Currently DMACC. It was formerly CIETC. Okay? I want to talk to you about your CIETC time. Yes, Sir. When were you first employed with CIETC? I've been there 8 years now, Sir. What have been your general responsibilities during the time of your employment at CIETC? A. I was hired as a Promise Jobs counselor overseeing welfare clients, and about 6 months after starting, my duties expanded to include building and maintaining a Website for CIETC, because of my background. Q. A. What is your background? Mostly computer geek stuff. STANLEY - DIRECT 849 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ruling. Q. Okay. How would you account for your time when you were employed at CIETC? A. After assuming the Website duties, 50 percent of doing managing caseloads, and the other 50 percent doing Website work. Q. So that would be the actual amount of time you would spend on average in a given week? A. Q. On average, yes, Sir. When did you start dealing with the Website applications of CIETC? A. Q. A. About 6 months, Sir, after I was hired. How long did that continue? I believe about 1 year, Sir, after our management team was let go, because of this. Q. Because of everything that happened with CIETC and what caused it to change to IES; correct? A. Q. Yes, Sir. Approximately how many years have you been dealing with the Website management, things along those lines? A. Q. Six to 7 years. Did anyone at CIETC ever instruct you how to allocate your time when you would fill out time sheets? MR. HAMROCK: MR. COURTER: THE COURT: Objection, calls for hearsay. 2(e), Your Honor. You can receive this subject to a later STANLEY - DIRECT 850 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ruling. You may answer. BY MR. COURTER: Q. A. Q. A. Q. A. Q. Who is Tami Higar? She was our human resources person. Did she work at the CIETC offices? Yes, Sir. Who else did she work with at the CIETC offices? Did she work with, Sir? Correct. A. You may answer. I honestly don't remember, Sir. It seemed in my best memory that I was 97 percent funded through Promise Jobs money, and then 3 percent of what they called general administration for my Website work. BY MR. COURTER: Q. Do you recall who gave you those allocations to use on your time sheets? A. I believe that would have been Tami Higar. MR. HAMROCK: Objection, Your Honor. Calls for hearsay; ask that my objection precede this witness' answer. THE COURT: this is 2(e)? MR. COURTER: THE COURT: I believe that it is, Your Honor. You can receive this subject to a later Mr. Courter, is the government's claim STANLEY - DIRECT 851 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Karen Tesdell, John Bargman, Ramona Cunningham and Karen Tesdell. Q. A. Q. We've got her-That's pretty much it, Sir. Do you know if Ms. Higar did any accounting duties with Ms. Tesdell? A. Q. I do not know that, Sir. You had indicated that you believe that your time sheet would show 97 percent Promise Jobs and 3 percent administration; correct? A. Q. Yes, Sir. I believe your testimony was that you spent 50 percent of your time on your actual caseload; correct? A. Q. A. Q. A. Q. Yes, Sir. Was that a Promise Jobs caseload? Yes, Sir. And exclusively Promise Jobs? Yes, Sir. And then approximately 50 percent of the time on the administrative aspect relating to the Website; correct? A. Yes, Sir. It would vary, Sir, I'm just giving you an average. Q. A. Q. Do you know Dan Albritton? Yes, Sir. Is he here in the courtroom here today? STANLEY - DIRECT 852 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. A. Q. A. Yes, Sir. Could you just point to the table that he's at? Over here, Sir. Do you know Ramona Cunningham? Yes, Sir. Did you ever see Mr. Albritton at the CIETC offices? Yes, Sir. Which office buildings did you see him at? Well, we changed location. We were at 215 Keo, I saw him at that location. And also at our new location at 430 East Grand where we currently are. Q. A. Where was your office located in the 215 Keo building? Initially on the second floor, Sir. And then approximately 3, 3 1/2 years into my tenure, Ramona moved some of us upstairs to the third floor at the old location. Q. So you moved up to the third floor at the Keo building; correct? A. Q. Yes, Sir. Who else was officed up on the third floor at the Keo building? A. Ramona Cunningham, Jack Cline, John Bargman, Karen Tesdell, Sam Fucaloro, I believe Tami Higar, Sir. Q. Did you see Mr. Albritton on occasion on the third floor at the 215 Keo office building? A. Yes. STANLEY - DIRECT 853 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Mr. Scott. MR. SCOTT: cumulative. THE COURT: I think we've had like six or seven Is there a reason that you need to go Your Honor, I'm going to object to this as witnesses who said that. into this? MR. COURTER: Yes, there is, Your Honor. It will be coming about two questions down the road concerning an altercation between Ms. Cunningham and Mr. Albritton. MR. SCOTT: Your Honor, again, Mr. Courter seems to be He did it the last time and testifying from the witness stand. I let it go. THE COURT: Well, if he did, that was my mistake, I think the jury knows that what the lawyers say is I've told them that a number of times and I'm not evidence. sure they'll follow that instruction. Mr. Courter, you may proceed. BY MR. COURTER: Q. Mr. Stanley, was there an occasion when you were officed at the third floor of the Keo building when you either saw or overheard an altercation between Ramona Cunningham and Dan Albritton? A. Q. A. Yes, Sir. Approximately when did that occur, Sir? I don't want to guess on the year, Sir. It's been approximately 2 years before we moved to the new location, to STANLEY - DIRECT 854 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 counsel. BY MR. COURTER: Q. A. What occurred that day, Mr. Stanley? I was in my office, working. My office was approximately the best of my memory. Q. Why don't you describe to the jury what you heard that day. MR. SCOTT: it calls for hearsay. THE COURT: You want to rephrase your question, Excuse me. I'm going to object to that as three offices down from Ramona Cunningham's. Q. A. Q. Was this during normal CIETC office hours? Yes, Sir. Do you recall whether it was in the morning or the afternoon? A. Q. A. Q. I believe it was in the afternoon, Sir. Okay. You're in your office working, what happened? I heard loud voices, someone yelling. Could you distinguish between whether the voices were male or female? A. Q. A. Male. Where was the yelling coming from? Down the hall, so I stepped out of my office just to see who was--what was going on. Q. A. What did you see when you stepped out in the hallway? I saw Mr. Albritton exiting the floor. STANLEY - DIRECT 855 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 objection. Q. A. Q. What was his demeanor at that time? Angry. How could you tell that? THE WITNESS: THE COURT: THE WITNESS: THE COURT: May I swear on the stand, Your Honor? I'm sorry? May I swear on the stand? You can respond to the question. Did you lawyers hear what he asked me? MR. COURTER: THE COURT: MR. SPIES: MR. HAMROCK: MR. SCOTT: I did. Mr. Spies? Yes. Yes, Sir. No, I didn't, Your Honor. (Discussion off the record.) BY MR. COURTER: Q. Mr. Stanley, the Judge indicated you can answer that question. A. I heard Mr. Albritton-MR. SCOTT: Excuse me. I'm going to interpose an I believe that he is now getting into hearsay. MR. COURTER: THE COURT: 2(e), Your Honor. Again, this is a conditional ruling. You can consider this subject to a later ruling by the Court as to whether or not you can consider it in your deliberations. You may answer. STANLEY - DIRECT 856 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. The only distinguishable conversation I could understand, Sir, was when Mr. Albritton was exiting the third floor, and he was yelling at Ms. Cunningham. Q. A. Q. He said "you f-ing bitch." What was the level of his voice when that comment was made? Yelling. How far away physically from where you were at to where Mr. Albritton was exiting the third floor? A. Q. A. Q. 20 feet. Did Ms. Cunningham come out of her office? Yes. Did you hear her make any comments to Mr. Albritton after that statement was made? A. Well, because she was my boss, I asked her, "Is everything okay?" Q. A. Q. A. What was her response to you? "Yes. I'll take care of this." Did she say anything else? No, Sir. She exited the third floor and followed I heard nothing after that. Mr. Albritton down the stairs. Q. What was her demeanor when you had this conversation with her immediately after Mr. Albritton exited her office? A. Q. She was visibly upset and angry. In addition to your work on the Website, I believe you indicated your background was in computers; correct? A. Yes, Sir. STANLEY - DIRECT 857 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 board. Q. Well, let's just take those in order. As far as political Q. A. Q. Do you have any background in photography? In regards to Website work, yes, Sir. Did you ever put those skills to work as it relates to the time you worked with CIETC? A. Q. Yes, Sir. Why don't you tell me what you did as it relates to photography and your work at CIETC? A. I photographed political events. I attended the yearly labor fest, Labor Day fest, every Labor Day at the fairgrounds to take photos of the parade and of the speakers that appeared, mostly political speakers, and also took pictures at board meetings, when there were presentations of plaques and awards and so forth to the different board members. I also photographed Ako during his run for the school events go, you've talked about Ako running for the school board; correct? A. Q. A. Q. A. Q. Yes, Sir. Who instructed you to go to that event and take pictures? Ramona Cunningham. Do you recall when that occurred, Mr. Stanley? I don't remember the year, Sir. Approximately how much time did you spend taking photographs during this event of Mr. Abdul-Samad's run for the school board? STANLEY - DIRECT 858 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. There were a few events, Sir. One event where he spoke at the now closed food market on 6th and University in Des Moines. There were a couple of occasions, I believe, that I took photos at Creative Visions, Ako is the head of. And on the night of the elections, where he won that election, I was at the Holiday Inn downtown taking photos of the event. Q. A. Ako. Q. A. Q. A. Q. Did you do that? Yes, Sir, I did. Who instructed you to do that? Ramona Cunningham. Were these events occurring during normal CIETC business What did you do with the photos after you took them? I was instructed to burn them to a CD and present that CD to hours? A. Some did, Sir, and some did not. Some were after normal work hours. Q. Were you paid your normal wage for the ones that occurred during work hours? A. Q. A. Q. A. Yes, Sir. What about the ones that were after normal work hours? I took that as comp time off, Sir. Who instructed you to do that? Ramona Cunningham. STANLEY - DIRECT 859 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Any other political events that you photographed at her direction? A. Q. Just the yearly annual Labor Day Fest. Why don't you describe--obviously in conjunction with Labor Day itself; correct? A. Q. A. Yes, Sir. Where did this Labor Day Fest occur? At the--well, there was a parade, Sir, from the state capitol up Grand Avenue in Des Moines all the way to the Iowa State Fair grounds. Q. Did this happen during the week or on a weekend, do you recall? A. Q. A. Q. It's on the holiday, Sir, on Labor Day. Was this a one-day event, do you recall, Sir? Yes, Sir, each year. What did Ms. Cunningham instruct you to do as it relates to this Labor Day festival? A. To take pictures of the parade, of the speakers, of the large union crowd that gathered every year to celebrate Labor Day. Q. A. Q. How many years did you do this, Mr. Stanley? Five years in a row, to the best of my recollection, Sir. And do you recall what sort of time frame that we're dealing with over that 5-year period, when it began and when it ended? A. You mean how many hours during that day each time I did STANLEY - DIRECT 860 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 this? Q. A. Q. A. Q. A. Q. A. Q. A. Was it '99 to '04, '01 to '06? I believe, Sir, 2001 through 2005. Was Mr. Albritton present at these Labor Day festivals? Yes, Sir. He was one of the main speakers. Were there any booths set up at this Labor Day festival? For CIETC, Sir? Correct. Yes, Sir. What sort of booth did CIETC have at this labor festival? It was just a table, a booth, our banner up above, and had volunteers that handed out candy to the children. Q. What did you do with the photographs that you took at these events? A. Those were posted on the CIETC Website and additionally I would provide those photos on a CD to Mr. Albritton. Q. Do you know if Mr. Albritton was on the board of directors at CIETC during some or all of these Labor Day festivals? A. Q. A. Q. Yes, Sir. And was he on the board of directors? Yes, Sir. How were you compensated or were you compensated for working on the--over the Labor Day holiday? A. Q. Comp time. Who instructed you to take comp time? STANLEY - CROSS - HAMROCK 861 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. HAMROCK: Q. Good morning, Mr. Stanley. My name is Aaron Hamrock. I, A. Ramona Cunningham. THE COURT: Ladies and gentlemen, you've been sitting If you want to take a minute to an hour and 15 minutes. stretch, you may do so. (Short pause.) THE COURT: want me to read back? MR. COURTER: Your Honor. THE COURT: Do you remember where you were or do you Actually I have no further questions, Oh, all right. Mr. Spies, do you have any questions? MR. SPIES: THE COURT: I have none, Your Honor. Mr. Hamrock, do you have any questions? CROSS-EXAMINATION along with Mr. McCarthy, represent Ms. Tesdell. A. Q. Yes, Sir. From your direct testimony it sounds pretty clear that you took your marching orders from Ramona Cunningham; is that correct? A. Q. Yes, Sir. You also indicated that you did some work on the Website or that 50 percent of your time was allocated to your Promise Jobs caseload 50 percent was allocated to Website development; is STANLEY - CROSS - SCOTT 862 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SCOTT: Q. A. Q. Good morning, Mr. Stanley. Good morning, Sir. I believe that you testified that part of your duties or that correct? A. Q. Yes, Sir. The Website, did the Website stuff have anything to do--did it promote Promise Jobs at all along with other CIETC programs that they had? A. Q. Yes, Sir. All right. So it did have something to do with the Promise Jobs. Now, with your time cards, you said that you were marking down--was it 97 percent Promise Jobs and 3 percent administration? A. Q. A. Q. Yes, Sir. And who would those time cards get turned into? Tami Higar. You never went to Ms. Tesdell and told her that you were not working 97 percent on Promise Jobs, did you? A. No, Sir. MR. HAMROCK: THE COURT: MR. SCOTT: I think that's all I have. Mr. Scott? Yes. Thank you, Your Honor. Thank you. CROSS-EXAMINATION STANLEY - CROSS - SCOTT 863 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 part of the things that you did at CIETC was take photographs; is that right? A. Q. Yes, Sir. And one of the times that you took photographs was during the Labor Day festival; is that right? A. Q. Yes, Sir. And that Labor Day festival, that took place at the Iowa State Fairgrounds? A. Q. That's where it ended up, yes, Sir. And the booths that were set up those were in the Varied Industries Building; is that right? A. Q. I believe so, Sir. And the photographs that you took, they weren't just of Mr. Albritton or of labor, they were of the festival in general; correct? A. Q. Yes, Sir. And, again, those photographs just weren't placed on a disk for Mr. Albritton, you in fact placed some of those photographs on the CIETC Website; isn't that correct? A. Q. Yes, Sir. I want to talk to you a little bit about your job duties at You said that you were a caseworker? CIETC. A. Q. Yes, Sir. And I think we've heard a lot of testimony about case workers, and maybe I missed it, but I don't even know what a STANLEY - CROSS - SCOTT 864 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 time. caseworker does. A. What did you do as part of your job? When I started, Sir, I inherited 89 case files, and a case file is basically a manila folder with all the information on a welfare client, any barriers that they had to employment or training issues. A case manager would meet with the client from time to If the client had any questions or needed anything or was having a crises, they would contact us. We would just kind of guide them through the bureaucracy of public assistance, in general explain what the rules of participation were in order to receive their monthly check and food stamp assistance and so forth. Q. So if someone was on public assistance, what you did was manage that person's file until they were able to get off of public assistance? A. Yes, Sir. The goal was always self-sufficiency, which is a term we use for being successful and making enough income to leave the welfare system, yes, Sir. Q. As part of your duties and responsibilities at CIETC, did you also attend board meetings? A. Q. Yes, Sir, I did. And were you also a member of the personnel policy revision committee? A. Q. You're stretching my memory. I believe so. Were you asked to be on a committee to make revisions to the STANLEY - CROSS - SCOTT 865 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 policy manual? A. Q. it. Do you recall ever meeting with Dan Albritton in regard to changing the personnel policy manual? A. Q. No, Sir, I did not. Did you meet with other people at CIETC about changing the Yes, Sir. Do you recall that? Not in great detail, but yes, Sir. Well, I really only have a couple of questions for you about personnel policy manual? A. Q. Yes, Sir. Did you meet with Ramona Cunningham in regard to changing the personnel policy manual? A. Q. A. Q. She sat in on the first meeting. And John Bargman? I don't want to guess, Sir. Good. I don't remember. That's good. I'm glad you don't want to guess. Anybody else that you recall being at the meeting or on the committee? A. I believe Kathy Armstrong, myself, Jenny Spracher, a former And I honestly can't remember who else, Sir, a very employee. small group. Q. You mentioned on direct examination that during board meetings that you had attended sometimes taking photographs for when employees got awards; is that right? A. Mostly board members got awards, but sometimes an employee, STANLEY - CROSS - SCOTT 866 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 yes, Sir. Q. A. Q. A. Q. Would bonus checks ever be handed out at board meetings? No, Sir. Never? No, Sir. During your experience at the meetings you went to you never saw anyone receive a bonus check at the meeting? A. Q. A. Q. A. No, Sir. How often did you attend meetings? Every month, Sir. You went--why did you go every month? Ramona Cunningham instructed me to be there and from time to time, Sir, we would lose a member, and then they would replace a new member, and my job was to get a photograph of the new board member and put that on the Website with their name, phone number, fax number, contact information. And sometimes, Sir, they had questions about the Website, and I was there to answer those as well. Q. Were you responsible for putting the--did you put the agenda on the Website? A. Q. A. Q. A. Yes, Sir. And amended agendas? Yes, Sir. Minutes from the meetings? Yes, Sir. STANLEY - CROSS - SCOTT 867 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. So that's another reason why you were present at meetings to get that stuff? A. Well, Ramona's secretary, Dianne Bolden, actually recorded and wrote and typed the actual meeting minutes, and then she would give those to me within a short time frame after that. Q. A. Q. So you were aware of how the minutes were produced? Yes, Sir. And are you aware of whether or not there were times when meetings would take place and discussions would take place but those items would be eliminated or removed from the minutes? A. Q. A. Only one time, Sir. Can you describe that for me. Yes, Sir. There was a conversation regarding the former director of the dislocated worker program, which CIETC ended up taking over, and I believe there was some brief discussion regarding Chris Zimmerman's salary, and I honestly do not remember who made the motion, but I think they felt that was a confidential human resource thing and they did not want her salary published on our Website. Q. Do you recall meeting with the FBI during the course of the investigation into the CIETC matter? A. Q. A. Yes, Sir. And do you recall being interviewed in June of 2007? I don't remember the month, Sir, but I do recall being interviewed. STANLEY - CROSS - SCOTT 868 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. MR. SCOTT: THE COURT: Just review that. Have you had an opportunity to review that, Sir? Yes, Sir. MR. SCOTT: THE COURT: May I approach again, Your Honor? You may. May I approach the witness, Your Honor? You may. Do you recall discussing whether or not certain agenda items Do you recall might be removed from the minutes of a meeting? discussing that now with the FBI? A. I do not, Sir. Other than the occasion I spoke about with Chris Zimmerman's salary. Q. After reviewing your statement to the FBI, that does not refresh your memory as to what you told the FBI? A. Q. No, Sir. You do not recall telling the FBI that sometimes Cunningham asked Bolden to strike out items? A. Q. A. That would have been told to me by Ms. Bolden, Sir. Do you recall telling the FBI that? I don't recall everything he spoke about, no, Sir. I don't remember all of that. MR. SCOTT: THE COURT: MR. COURTER: THE COURT: Thank you. That's all I have. A lot of questions. Mr. Courter, any redirect? No, Your Honor. You may step down. ZIMMERMAN - DIRECT 869 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to you. you. Q. A. Q. What was your answer, ma'am? United Way. Was there a time in the past when you were employed by the BY MR. COURTER: Q. Would you state your full name and spell your last name, counsel. MR. COURTER: Yes. Your Honor, we believe Honor. THE COURT: You want to tell the jury the counts, THE COURT: MR. COURTER: (Witness excused.) Call your next witness. We would call Mary Zimmerman, Your Ms. Zimmerman's testimony will be relevant to counts 1 through 20. MARY CHRISTINA ZIMMERMAN, GOVERNMENT'S WITNESS, SWORN DIRECT EXAMINATION please. A. Q. A. Q. A. Mary Christina Zimmerman, Z-I-M-M-E-R-M-A-N. Where are you currently employed? Pardon? Where are you currently employed? United Way. THE COURT: Ms. Zimmerman, just pull that mike close Thank The jurors can hear you better if you do that. ZIMMERMAN - DIRECT 870 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Central Iowa Employment and Training Consortium? A. Q. A. Q. Yes. What were the dates of your employment with CIETC? July 1st, 2001 through June 30th, 2003. How did it come about that you became employed by CIETC, Ms. Zimmerman? A. The program that I worked with before from 1982 until June 30th of 2001, it was the United Way Dislocated Worker Program, and CIETC took the program over as of July 1st of 2001, and I went with the program. Q. What were your general duties when you switched over to employment with CIETC? A. Primarily the same duties that I had had before. I was the project director of the employment and training funds that came to CIETC for dislocated workers. Q. Who would have been your supervisor at that time at CIETC? Who did you answer to? A. Q. A. Q. Ramona Cunningham. Do you know an individual by the name of Diane Smith? Yes, I do. Did you ever have any conversations with Ramona Cunningham concerning Diane Smith? MR. SCOTT: for hearsay. MR. SPIES: Same objection. Objection, Your Honor. The answer calls ZIMMERMAN - DIRECT 871 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. COURTER: THE COURT: 2(e), Your Honor. You may again receive this conditionally subject to a later ruling. You may answer. THE WITNESS: BY MR. COURTER: Q. Did you have any contact--or, excuse me, did you have any Repeat the question, please. conversation with Ramona Cunningham concerning Diane Smith? A. Q. Yes, I did. What was the substance of that conversation? Actually, first, when did that conversation occur? A. In early 2002 I received a phone call from Ramona She said that she was-Excuse me, Ms. Zimmerman. Your Honor, I'm Cunningham. MR. SPIES: going to impose an additional objection that this is beyond the scope of the indictment. THE COURT: BY MR. COURTER: Q. A. Q. A. Q. Is Diane Smith an employee at CIETC? Yes. Did you hire Diane Smith? I did not. Did anyone instruct you to hire Diane Smith or to interview Sustained. Diane Smith? MR. SPIES: Objection; calls for hearsay. ZIMMERMAN - DIRECT 872 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. COURTER: THE COURT: 2(e), Your Honor. Again, this is a conditional ruling, subject to a later ruling, whether you can consider it in your deliberations. You can answer. THE WITNESS: BY MR. COURTER: Q. Did anyone instruct you concerning hiring Diane Smith at The question again, please? CIETC? A. Q. A. Q. Yes. Who was that? Ramona Cunningham. Prior to Ms. Cunningham having this conversation with you, did you know Diane Smith? A. Q. A. Yes. How did you know her? She worked in the building that I worked in. She was the secretary for Dan Albritton. Q. And would that be with the South Central Iowa Federation of Labor? A. Q. Yes. Do you know if prior to being hired at CIETC whether she was employed full time at the South Central Iowa Federation of Labor? A. Yes, she was. ZIMMERMAN - DIRECT 873 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. What did Ramona Cunningham say to you concerning the hiring of Diane Smith? MR. SPIES: MR. COURTER: THE COURT: Hearsay. 2(e). Same ruling as before about a later ruling as to whether or not you can consider it in your deliberations. It will be received conditionally. BY MR. COURTER: Q. A. Q. Do you want me to repeat that? Yes, please. What did Ramona Cunningham say to you concerning the hiring of Diane Smith? A. She said that she was hiring her in a part-time capacity as a favor to Dan Albritton, because he didn't have the funds to keep her on full time. Q. A. She was supposed to work part time for CIETC; correct? Yes. Specifically Ramona instructed me to find work for her to do at the Dislocated Worker Center. Q. You indicated that for a number of years you worked in the same building with Ms. Smith; correct? A. Q. Yes. And did you know her personally prior to coming to work with CIETC? A. Yes. She actually was an employee of the Dislocated Worker Program in previous years. ZIMMERMAN - DIRECT 874 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. That's when it was being run by what organization? United Way. So she had worked for Dislocated Workers when it was run by United Way; correct? A. Q. A. Q. A. Q. Yes, prior to when she started working at South Central. Do you recall when she started working for South Central? No, I don't. I don't remember. Was it prior to you beginning to work at CIETC? Yes. Did you have any conversation with Ramona Cunningham concerning how this part-time employment at CIETC would-Strike that. Did you have any conversation with Ramona Cunningham concerning how benefits would be paid to Ms. Smith due to the fact that she was only working on a part-time basis? A. Q. A. Q. A. Q. No. Was Diane Smith subsequently hired at CIETC? Pardon? Was Diane Smith subsequently hired at CIETC? Yes. As part of your duties with the Dislocated Workers Program when you were working with CIETC what input did you have as far as budgeting money went? A. Initially, during the first several months, of course our allocations were received in March, April, May for the upcoming ZIMMERMAN - DIRECT 875 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 object. year. We knew what we were going to be spending. And initially I had some input into how much was allocated for the employment and training programs, meaning the direct client services. Q. You indicated that initially you had input into how that was spent; correct? A. Q. Yes. At some point in time during the course of your employment at CIETC did that change? A. Q. Yes. Do you recall at what point during your course of employment with CIETC that your ability to give input changed? A. Q. I don't remember the exact date, but it was in 2002. What happened in 2002 as it relates to your ability to give input to the budget of the displaced workers program? A. I had requested budget information for the upcoming program I had sent several e-mails to Karen Tesdell. year. Q. A. Q. A. Q. Is she here in the courtroom here today? Yes, she is. Would you just point out what table she's at. (Witness complied.) What was the purpose of these e-mails you sent to Ms. Tesdell? MR. HAMROCK: Your Honor, at this time I'm going to This line of questioning, at least as it relates to 2002, is outside the scope of the indictment. ZIMMERMAN - DIRECT 876 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 response? MR. COURTER: We do, Your Honor. We believe this is THE COURT: Mr. Courter, does the government have a pattern evidence pursuant to 404. THE COURT: Okay. Ladies and gentlemen, we're going to take our morning recess, and the lawyers and I are going to discuss something. In any event, we'll give you until 10:30. Remember the admonition of the Court that I've told you about numerous times. The lawyers should stay. (In open court, out of the presence of the jury.) THE COURT: Please be seated. Mr. Courter, tell me the law on pre-indictment evidence, when it's admissible. MR. COURTER: Well, Your Honor, I believe I would agree that the time frame outlined in the conspiracy as formally charged in the indictment does not include the 2002 time frame. However, I believe that if Ms. Zimmerman is allowed to testify, as she has in this vein, that these essentially predicate acts show the beginning of the forming of a conspiratorial relationship between certain members of the conspiracy. THE COURT: testimony is. Here's what I want to know: Not what her I want to know what the law is with regard to ZIMMERMAN - DIRECT 877 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 pre-indictment time frame and evidence. MR. COURTER: I believe that testimony that is relevant to show the establishment of a relationship between co-conspirators before a formal conspiracy is charged is relevant to show plan, preparation, motive, intent, lack of mistake, all of those factors, Your Honor. THE COURT: MR. SPIES: Okay. Mr. Spies, what's the law? The law is that the pre-indictment activity can be introduced for a limited purpose to establish relationships, but it still has to pass the muster test of rule 403. It has to be far more probative than prejudicial. Prejudicial, and not likely to confuse or discourage the jury from the attention of the indictment activities, so I think the 403 argument should be made here, and I'm respectfully making it on behalf of my colleagues. THE COURT: I assume, Mr. Hamrock, Mr. McCarthy, Mr. Scott, you share Mr. Spies's views? MR. HAMROCK: MR. SCOTT: THE COURT: than probative? MR. SCOTT: MR. SPIES: THE COURT: I do. Yes, Your Honor. Now let's hear the testimony, Mr. Courter, What's she going to Absolutely. We do. And the claim that it's more prejudicial just not from the witness, but from you. ZIMMERMAN - DIRECT 878 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 reprimand? MR. COURTER: THE COURT: MR. COURTER: I believe that it is-Well, why don't you ask her. I will. say? MR. COURTER: I believe that the testimony will be that it was conversations that Karen Tesdell did not return these e-mails other than to tell Ms. Zimmerman to continue to obligate funds in an improper manner as it relates to some of the Displaced Workers Program funding. That Ms. Zimmerman followed the instructions of Ms. Tesdell, obligated those funds, and then was formally reprimanded by Ms. Cunningham and placed on probation for obligating funds in an improper manner as directed to do so by Ms. Tesdell. THE COURT: MR. COURTER: And is the reprimand pre-January 1, '03? That reprimand is-I believe she would also testify that she was called into a meeting in Ramona Cunningham's office where this action was discussed, that Mr. Albritton was present during the course of that conversation and was present when Ms. Zimmerman was placed on a probationary status because of following the instructions relating to the obligation of funding that she received from CIETC executives and management. THE COURT: Okay. And is it pre-1-1-03 or post, the ZIMMERMAN - DIRECT 879 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you. THE COURT: MR. HAMROCK: MR. SCOTT: THE COURT: Mr. Hamrock. No questions, Your Honor. We have no questions, Your Honor. You may step down. questions. THE COURT: Mr. Spies. MR. SPIES: I have no questions, Your Honor. Thank All right. Thank you. BY MR. COURTER: Q. Ms. Zimmerman, when did that occur? Was that before January 1 of 2003 or after, do you recall? A. Q. A. Q. A. It was-You left your employment at the end of July of 2003. Right. And you started-It was in 2002. MR. COURTER: THE COURT: Objection sustained. We'll be in recess until 10:30. (Short recess.) THE COURT: Mr. Courter. MR. COURTER: Your Honor, I have no additional Please be seated. 2002, Your Honor. Okay. I'm not going to let it in. SMITH - DIRECT 880 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. A. Q. A. Would you state your full name and spell your last name. My name is Diane Marie Smith, S-M-I-T-H. Ms. Smith, where are you employed? I'm employed at IES in the morning and then at South Central THE COURT: MR. COURTER: (Witness excused.) You want to call your next witness. The government would call Diane Smith. We believe Ms. Smith's testimony would be relevant to counts 1 through 20. DIANE MARIE SMITH, GOVERNMENT'S WITNESS, SWORN DIRECT EXAMINATION Iowa Federation of Labor in the afternoon. Q. A. Q. So you work half time between both positions? Yes. Why don't we take those in order. IES, is that the successor group to CIETC? A. Q. A. Q. A. Q. job? A. South Central Iowa Federation of Labor. Correct. Were you employed at CIETC prior to it become IES? Correct, yes. When were you hired at CIETC? I believe it was 2002. As it relates to your other job, what's your other part-time SMITH - DIRECT 881 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 hear you. A. I help put on the Solidarity Fest that we did every year. Q. When did you start with the South Central Federation of Labor? A. Q. March of 1990. When you started with South Central Federation of Labor in 1990, was that a full-time position? A. Q. Yes. What were, just in general, your duties during the course of your employment with South Central? A. Okay. I did pretty much the books and bulk mailings, Helped with the mailing minutes and stuff to our delegates. Solidarity Fest we did every year. THE COURT: Ms. Smith, the jurors tell me they can't We had a banquet that we have, awards banquet, worked on that. Secretarial duties. Q. A. Q. A. Q. You indicated you worked on the books? Yeah. Doing the finances for South Central? Yes, correct. And that was full-time employment from March of 1990 until 2002; correct? A. Q. Correct. How did you first become aware of an open position at CIETC prior to your being hired there? SMITH - DIRECT 882 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. A. Q. I wasn't aware of an open position. How did you become aware that you were going to be hired at CIETC or how did you get hired at CIETC? MR. SCOTT: Excuse me, Ms. Smith. Your Honor, I'm going to object to this as hearsay and also going to object to it on the same grounds as the previous witness' testimony. THE COURT: Overruled. You can answer. I was brought down an application and asked to fill it out. BY MR. COURTER: Q. A. Q. A. Who brought you the application? Chris Zimmerman. Who's Chris Zimmerman? She was the project director for the Dislocated Worker Program. Q. Where were you officed at with South Central Iowa Federation of Labor? A. Q. A. Q. A. Q. A. Q. At that time we were at 2000 Walker. Is that in Des Moines? Correct. Where was the Dislocated Workers Program located? They were located at 2000 Walker also. You worked in the same building? Yes. Did you know Ms. Zimmerman prior to her giving you this SMITH - DIRECT 883 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 application? A. Q. Yes, I did. Who was your boss at this time at South Central Iowa Federation of Labor or your supervisor? A. Q. A. Q. A. Q. A. Q. Dan Albritton. Is he here in the courtroom here today? Yes. Would you point out what table he's sitting at. He's over there, the first table. When did he become your supervisor, if you recall? I believe it was around 2000, in the year 2000. Did you have any conversation with Mr. Albritton concerning this application for CIETC? A. No. MR. SCOTT: THE COURT: BY MR. COURTER: Q. A. Q. A. Q. A. Q. A. Prior to 2002 had you ever worked for CIETC? No. Had you ever heard of CIETC? Yes. How had you heard of CIETC? Well, the Dislocated Worker was taken over by CIETC. What did you do with this application? I filled it out. Objection. Overruled. Hearsay, Your Honor. SMITH - DIRECT 884 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. And then what did you do with it? And then it was given to--I suppose it went to Ramona. What did you personally do with it? I don't know. I might have given it to Chris. I can't really remember. Q. What was the next step after you filled out the application What happened next as far as the hiring and turned it in? process at CIETC? A. Well, I received a letter from Ramona, welcoming me aboard to CIETC. Q. A. Q. A. From Ramona Cunningham? Yes. Did you find this all unusual? Yes. MR. SCOTT: Your Honor, I'm going to object to it. First off, I'm going to object to it on relevancy grounds; and--well, and ask that my objection precede the answer. THE COURT: BY MR. COURTER: Q. During what time frame did you receive this letter from You should ignore the last response. Ms. Cunningham? A. I believe it was in March, pretty close to when I started-- was going to start work. Q. A. And when did you formally start with-It was around March 11th of 2000. SMITH - DIRECT 885 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 or not. THE WITNESS: BY MR. COURTER: Q. Yes. When you left--not left but when you became a halfCould you repeat that again. Q. A. Q. 2000? No. I'm sorry. 2002. You were working half time then for CIETC and half time for South Central Iowa? A. Q. Correct. You had indicated that you were responsible for handling the accounting and bookkeeping for South Central; correct? A. Q. Correct. Had there been any change in the financial condition of South Central Iowa where your salary could no longer be covered by their resources? MR. SCOTT: THE COURT: Objection; relevance. Overruled. I don't know if it's relevant time employee at CIETC and a half-time employee at South Central Iowa, you were responsible for doing South Central Iowa's bookkeeping; correct? A. Q. Yes. So you were aware of the financial condition of South Central Iowa at that time? A. Q. Correct. Was there anything about the South Central Iowa's financial SMITH - DIRECT 886 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 condition that would make that organization unable to pay you on a full-time basis? A. Q. I didn't believe so. You didn't believe that South Central was in any financial difficulties? A. Q. No. How would it have worked as far as-Strike that. What benefits did you receive when you were a full-time employee at South Central Iowa? A. Q. A. Q. A. Q. A. Q. I had my insurance. Health insurance? Yes. Life insurance? Yeah, an annuity, for me. Any other forms of benefits? No. What sort of benefits did you receive when you started working--when you dropped to half time at South Central and picked up half time at CIETC? A. Q. A. Q. I didn't receive any benefits over at CIETC. So no benefits at CIETC? Correct. What sort of benefits were you receiving from South Central Iowa? A. Well, I was getting my medical over there and my sick leave. SMITH - DIRECT 887 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. So is it your testimony here today that you were receiving the same benefits as a half-time employee at South Central that you were receiving as a full-time employee at South Central? A. Q. Yes. Did you have any conversations with Mr. Albritton concerning you going to this half-time position at CIETC? A. Q. No, I didn't. Do you remember within the last several weeks, Ms. Smith, when you met with agents of the FBI to go over your trial testimony? A. Q. Yes. Has anybody approached you since that meeting in an attempt to influence your testimony in any way? A. Q. No. Do you believe your testimony today is consistent with the statements you made to the FBI-A. Q. Yes. Can I finish? Do you believe that your statements here today are consistent with the statements you made to the FBI within the last several weeks? A. Q. Yes. Now, are you still responsible for the bookkeeping functions at South Central Iowa Federation of Labor? A. Q. Yes, I am. Are there any checks sent from the South Central Iowa SMITH - DIRECT 888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Federation of Labor to CIETC to pay a portion of your benefits that you receive? A. Q. No. Are you the only person that's responsible for writing checks at the South Central Iowa Federation of Labor? A. Yes. MR. COURTER: THE COURT: BY MR. COURTER: Q. Ms. Smith, when you changed from your full-time position at Can I have a moment, Your Honor? You may. South Central to half time at South Central and half time at CIETC, did your insurance carrier change as it relates to your medical insurance? A. Yes. I didn't have-My insurance at South Central was getting expensive, and so we worked out, we did a check to CIETC for my insurance. Q. A. Q. It was picked up over there. So CIETC provides your insurance? Yeah, but South Central paid for it. I mean the insurance, as part of your benefits, your benefits are ongoing as part of your employment; correct? A. Q. Correct. How often is a check cut from South Central Iowa to CIETC to cover your insurance benefits? A. We did--I believe we did a couple of checks, and then it was going to COBRA, and at that time-- SMITH - DIRECT 889 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Thank you. THE COURT: MR. SPIES: THE COURT: Mr. Spies. I have no questions, Your Honor. Mr. McCarthy. No questions, Judge. Q. A. Q. A. Q. COBRA would be a carryover when you changed insurance? Yes. So it would be changing from South Central to CIETC; right? Yeah. So how often are these checks written from South Central to CIETC? A. Q. A. I believe we did just two of them. Well, in what time frame are we talking about? I'm trying to think. It was--it seems like we did it in March and April. Q. A. Q. Of what year, Ma'am? I think 2000--I think 2006. I'm not sure. Were any checks written from South Central Iowa to CIETC to pay for any portion of the benefits you received from 2002 up to these two checks you talked about in 2006? A. No. MR. COURTER: I don't have anything further, Ma'am. MR. McCARTHY: THE COURT: MR. SCOTT: Mr. Scott. Just a few, Your Honor. Thank you. SMITH - CROSS - SCOTT 890 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SCOTT: Q. A. Q. Good morning, Ms. Smith. Good morning. I just want to ask you a couple of quick questions. Let's CROSS-EXAMINATION clear up this benefits stuff. When you became half time at South Central and half time at CIETC, your benefits remained through South Central; correct? A. Q. A. Well, for a short time, yes. When did they change to CIETC? I was trying to think of the year. I can't remember. Sorry. Q. A. Q. A. Q. A. Q. Okay. Your benefits are health insurance? Correct. And you receive a life insurance policy, did you say? I have an annuity. Annuity. Yes. South Central pays for the annuity, correct, and South Central pays for your life insurance correct? A. Q. I just have the annuity. Excuse me. And then you have medical leave, is that what you said? A. Q. Yes, yeah. Is that different than medical insurance or health SMITH - CROSS - SCOTT 891 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 insurance? A. I believe so. We have a short-term disability at South Central bought for me. Q. A. Q. A. Q. A. Q. So South Central pays for your short-term disability? Yes. And then you have health insurance? Over at IES. At IES? Yes. At some point in time your health insurance transferred from South Central to IES? A. Q. A. Correct. And you're not aware of when that happened? I had insurance and, like I said, it got so high, and I went When we were paying insurance over there, I think we to CIETC. only did it for a couple of months, and then it seemed like everything broke in the paper, you know, regarding the CIETC story. Q. Okay. So when everything broke in the paper concerning the CIETC story, is that when you recall that your benefits were then started--or, excuse me, your health insurance premiums started to be paid by CIETC? A. Q. Yes, I believe so. And prior to the time that the story broke, your health insurance premiums were paid by South Central? CLINE - DIRECT 892 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. Mr. Cline, would you state your full name and spell your THE COURT: MR. COURTER: A. Q. Correct, correct. And currently you are still half time South Central, half time IES? A. Q. A. Q. Correct. The successor to CIETC? Correct. And Dan Albritton, he is the president of South Central Iowa Federation of Labor; isn't that right? A. Q. A. Correct, yes. And he is currently on unpaid leave of absence; correct? Correct. MR. SCOTT: THE COURT: MR. COURTER: THE COURT: Thank you. Mr. Courter. Nothing further, Your Honor. You may step down. (Witness excused.) Do you want to call your next witness. The government would call Jack Cline. I have nothing further. We believe Mr. Cline's testimony would be relevant to counts 1 through 19. JACK ARTHUR CLINE, GOVERNMENT'S OR DEFENDANT SWORN EXAMINATION last name, please. CLINE - DIRECT 893 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. Jack Arthur Cline, C-L-I-N-E. Mr. Cline, you're currently retired; correct? Yes, I am. Prior to your retirement, where did you work? I worked at Iowa Employment Solutions. And that's the successor organization that CIETC became; correct? A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. Yes, it is. Prior to it becoming IES, did you work for CIETC? Yes, I did. How many years did you work for CIETC? Started in 1982. When did you retire, Sir? October last year. So October of '07? Yeah. So you were only with IES a very short period of time? Yes, Sir. Your testimony today is just going to center on when you Okay? worked for CIETC when CIETC was still CIETC. A. Q. Okay. Why don't you give the jury a general rundown on what your duties and responsibilities were during the course of your employment at CIETC. A. Starting with the beginning? CLINE - DIRECT 894 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Just in general. Okay. I started out as an employability service specialist job developer; worked with that several years, then I became an employability services specialist working with clients, and then I became program manager, which was my position when I retired. Q. A. Q. Now, program manager, would that be a supervisory position? Yes, it was. Mr. Cline, in the time frame of January of 2003 to April of 2006, were you still working in your supervisory capacity at CIETC? A. Q. Yes, I was. During that time frame, were there any occasions when you would be gambling on what would be considered CIETC normal business hours? A. Yes, there was. MR. SCOTT: Your Honor, I'm going to object to that on 403 grounds and ask that my objection precede the answer. THE COURT: Overruled. BY MR. COURTER: Q. On approximately how many occasions in that beginning of '03 It may precede the answer. to April of '06 time frame do you believe that you were involved in gambling on what would be considered CIETC work time? MR. SPIES: MR. HAMROCK: Hearsay, relevance, 403, Your Honor. I join in that objection. CLINE - DIRECT 895 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 response. MR. COURTER: I believe that the question is how many I don't MR. SCOTT: THE COURT: I join as well. Well, I got the relevance; overruled. As to the hearsay, Mr. Courter, the government's times he gambled on CIETC time during that time frame. believe that calls for-MR. SPIES: I misunderstood the question. I withdraw that portion of the objection. THE COURT: MR. SPIES: I'm sorry? I misunderstood the question. I withdraw that portion of the objection. THE COURT: Obviously the Court did as well. Sometimes my defense is that I'm tired, but that doesn't work with the Court of Appeals I've noticed, so, Mr. Courter, do you want me to--you want to restate it, or do you want me to read it back? MR. COURTER: Yes, Your Honor. THE COURT: "On approximately how many occasions in If you have it verbatim, that's fine. the beginning of '03 to April of '06 time frame do you believe that you were involved in gambling on what would be considered CIETC work time?" A. I would say around 9 or 10 times. CLINE - DIRECT 896 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. COURTER: Q. A. Where did these gambling trips take place, Mr. Cline? Various places. Council Bluffs, Tama, Lakeside, and Prairie Meadows. Q. Approximately how long would you spend during the workday on And why don't we break them down. As it these gambling trips? relates to Council Bluffs, how many times did you go to Council Bluffs? A. Q. A. Q. A. I believe there was twice. Any other CIETC employees that went with you on that trip? Yes, there were. Who was that? Ramona Cunningham, Chuck Brooks, Vic Scaglione, Sam Fucaloro, Darrell Jensen, I believe. Q. Now, out of those individuals, obviously you didn't supervise Ramona Cunningham; correct? A. Q. No. When those trips occurred, were you the supervisor for either Chuck Brooks, Vic Scaglione, Sam Fucaloro or Darrell Jensen? A. Q. Yes. Which one of those four or which ones out of those four did you supervisor--were you their supervisor during those trips? A. Q. Vic, Chuck and-Darrell or Sam? CLINE - DIRECT 897 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Sam. On those trips, did you submit any leave slip or any paid time off slip for the time you were out of the office? A. Q. I don't recall exactly. I could have or I could not have. Is being the supervisor for Chuck Brooks and Vic Scaglione and Sam Fucaloro, would it be your responsibility to receive leave slips from those three individuals? A. Q. Yes. To the best of your recollection, did you receive any leave slips or paid time off slips from Chuck Brooks, Vic Scaglione or Sam Fucaloro as it relates to the Council Bluffs gambling trips? A. Q. A. Not that I recall. How many times did you go to Tama? A couple also. MR. SCOTT: Excuse me. I'd like to ask that we get some kind of a time frame here so we can see whether or not we have other objections that are appropriate. THE COURT: All right. Do you want to get some foundation for time, Mr. Courter. BY MR. COURTER: Q. Would you agree with me--I think with the initial question I asked you, Mr. Cline, is the trips that occurred between January of 2003 and April of 2006; correct? A. Q. Yes. And the trips that we're discussing, did they all occur CLINE - DIRECT 898 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 during that time frame? A. Q. A. Q. Yes. How many times did you go to Tama? I would say twice. Were there other CIETC employees that went with you on those trips? A. Q. A. Q. A. Q. Yes, there were. Who were those employees? I believe it was Chuck, Vic and Ramona. So Chuck Brooks, Victor Scaglione and Ramona Cunningham? Uh-huh. How long did you spend at those--on those two trips to the Tama casino that would be considered CIETC work hours or work time? A. Q. Probably 4 to 5 hours, I would guess. Did you submit a leave slip for those hours that you were gone? A. Q. My recollection is probably not. Okay. And at that time were you still supervising Chuck Brooks and Victor Scaglione? A. Q. Yes, I was. Do you recall if Mr. Brooks or Mr. Scaglione submitted leave slips for those two trips? A. Q. I don't believe so. The Lakeside casino, is that the one in Osceola? CLINE - DIRECT 899 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. Yes. How many times during this time frame did you go down to Lakeside during CIETC work hours? A. Q. A. Q. A. Q. I'd say maybe 3 or 4 times. Were there other CIETC employees that went on those trips? Yes, there were. Who were those, Mr. Cline? Chuck Brooks, Vic, Ramona, possibly Sam. And on average how many hours would you spend down at the Lakeside casino during time that would be considered CIETC work time? A. Q. I would say up to 4 hours. Did you submit any leave slips or any paid time off slips for those? A. Q. A. Q. Not that I recall. I don't believe so. Were you still supervising Chuck and Vic during this time? Yes. Do you recall either one of those employees submitting any time slips-A. Q. No. --for leave? Prairie Meadows, how many times during this time frame did you go on gambling trips there on CIETC time? A. Not very many. I couldn't go for a certain period of time, and I'd say I was out there maybe, I don't know, during that CLINE - DIRECT 900 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 time frame two or three times. Q. A. Q. A. Q. Were there other CIETC employees involved in those? Yes, there was. Who were they? Normally Chuck, Vic and Ramona. Did that seem to at least be the core group of you and Ramona Cunningham, Chuck Brooks and Vic Scaglione? A. Q. Yes, it was. So if you went on a gambling trip, they were also there; correct? A. Q. Normally, yes. How long would you spend at Prairie Meadows that would be considered--or how many hours would you spend at Prairie Meadows during time that would be considered CIETC work time? A. Q. A. Q. Normally like two hours. And did you submit any leave slips for those, Mr. Cline? No, Sir. And did Chuck Brooks or Vic Scaglione submit any leave slips? A. Q. I don't believe so. Did you have any conversations with Ramona Cunningham concerning these gambling trips as far as how they were instigated? A. Well, yeah. I mean it's like, you know, "We're going to Get ready to go, and let's go." Prairie Meadows. CLINE - DIRECT 901 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. Who would say that? Ramona. So Ramona would instigate these trips? Yeah. Do you have any personal knowledge of Ramona Cunningham and other CIETC employees taking gambling trips that you did not go on? A. Q. A. Q. A. Q. Yes, sir. Did that involve Ms. Cunningham? Yes. What other employees did that involve? Chuck and Vic usually, maybe Sam later on. On approximately how many occasions were you aware of gambling trips taken by Ramona Cunningham, Chuck Brooks, Victor Scaglione and possibly Sam that they went on that you did not go on? A. In the later years, probably, you know, a couple of times a week. Q. A. Q. So several times a week? Yes. Over how many weeks? Over how long a time frame are we talking about, Mr. Cline? A. Oh, I'd say during the time frame, the entire time frame you're talking about. Q. So several times a week during the entire-- CLINE - DIRECT 902 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 hearsay. A. Q. A. Q. A. Q. A. Q. Yes, Sir. --January of '03 to April of '06? You do know Mr. Dan Albritton, correct? Yes, I do. Is he here in the courtroom today? Yes, he is. Right over there. Obviously you know Ramona Cunningham? Yes. Did Ramona Cunningham ever have any conversations with you about a relationship with Mr. Albritton during this time frame? MR. SCOTT: Your Honor, I'm going to object. It's It's cumulative. MR. COURTER: THE COURT: This is 2(e), Your Honor. What about the second part, the cumulative objection, counsel? MR. COURTER: THE COURT: Want me to respond at side-bar? Is this new or different? I think that's probably the inquiry that I need to know, because we have heard a lot about the relationship. MR. COURTER: THE COURT: May we approach, Your Honor? You may. (Side-bar not reported.) BY MR. COURTER: Q. I'm just going to ask you a different question, Mr. Cline. During the time of your employment at CIETC, and CLINE - DIRECT 903 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. specifically in this January of '03 to April of '06 time frame, do you know whether Mr. Albritton was on the board of directors for CIETC? MR. SCOTT: Your Honor, excuse me. Once again I'm going to object as to cumulative. THE COURT: Overruled. You can answer. Yes, he was. BY MR. COURTER: Q. Where were the offices of CIETC located during this time frame, Mr. Cline? A. I believe originally we were at 215 Watson Powell Junior Parkway, and then we moved over to 430 East Grand. Q. A. Q. Do you recall when you moved to 430 East Grand? I'm thinking the fall of '04. Did you ever see Mr. Albritton at the 215 Keo or 215 Watson Powell office building? A. Q. Yes, Sir. On how many occasions would you see him there during this time frame, just approximately? A. Q. A. Once or twice. Where was your office located at this time? It was located at various places, but I believe we were on the third floor at Watson Powell the times I saw Mr. Albritton. Q. Your office was on the third floor? CLINE - DIRECT 904 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Yes. Who else's offices were on the third floor? Ramona Cunningham, John Bargman, Karen Tesdell, Tami. Tami? Higar, I think. And there was somebody else up there. I can't remember who it was. Q. On one of these occasions when you observed Mr. Albritton on the third floor there of that office building, did you either see or overhear an altercation between Mr. Albritton and Ramona Cunningham? A. Q. A. Q. A. Q. A. Q. A. Yes, I did. Was that during normal working hours? Yes, it was. Do you recall whether it was the morning or the afternoon? I don't. How far away was your office from Ramona Cunningham's? My office was next-door. Where did this altercation occur? It started in her office, I believe, and then it extended out into the hallway and down the stairs. Q. Just in general what did you first hear? You indicated it started in Ms. Cunningham's office; correct? A. Q. Yes, Sir. What in general did you hear that drew your attention to this? CLINE - DIRECT 905 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. I just heard the raised voices. How many voices were raised? Two, not at the same time, or sometimes at the same time, I guess you could say, yeah, two voices. Q. A. Q. And prior to this event, had you talked with Mr. Albritton? Have I? Yes, I mean just in general in the time frame when he was on the board of directors forward? A. Oh, I'm sure I'd say hi and how are you doing or whatever, yeah. Q. Would you recognize whether his voice was one of the voices raised? A. Q. A. Q. A. Q. A. Q. Yes. Who did the other voice belong to? Ramona. What were the tone of the raised voices that you heard? Loud. Did they appear to be angry? I don't know if I'd call it angry. What did you do when you first started hearing the raised voices in Ms. Cunningham's office? A. Q. I didn't do anything right away. Okay. How long did this altercation occur before you did do anything? A. Actually, I would say maybe a couple of minutes before Dan CLINE - DIRECT 906 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 left the office and then they came out of the office. Q. A. Take me back through that. What did you just say? I said I suppose they had a discussion for 2 or 3 minutes and then it was Dan leaving the office and Ramona coming out, chasing him down the hallway. Q. Was it raised voices during the course of this couple of minutes? A. Q. A. Q. A. In the office, yes. Did you ever actually exit your office during the course-Yes, I did. And at what stage did you exit your office? At the time that Dan left the office and Ramona came out of the office, yelling after him. Q. Okay. What did you observe when you walked out of your office? A. Just Ramona was--I believe Dan was already in the stairwell, but Ramona was running after, yelling after him to stop. Q. Was the conversation still--or the conversation. Was the altercation still in raised voices? A. yes. Q. To the best of your knowledge, had Mr. Albritton left the Well, the yell to Dan, "Stop," yes, was in a raised voice, 215 Keo offices at that time? A. Q. I believe he did. Did Ms. Cunningham, to the best of your knowledge, return to CLINE - CROSS - McCARTHY 907 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. McCARTHY: Q. A. Q. A. Q. Good morning, Mr. Cline. Good morning. I've got a couple of questions for you. Okay. From January 1st of '03 to April of '06 you talked about all Honor? THE COURT: You may. the third floor? A. Q. Yes, she did. Did you have any conversation with Ms. Cunningham concerning what you had just heard and what you had witnessed? A. Q. A. Q. A. Yes, I did. What did you ask her? I asked her what was up with what went on. What was her response? She said Dan was just being an asshole. MR. COURTER: Could I have just one moment, Your (Discussion off the record.) MR. COURTER: THE COURT: MR. SPIES: THE COURT: Thank you, Mr. Cline. Mr. Spies. I have no questions, Your Honor. Mr. McCarthy? Thank you, Judge. CROSS-EXAMINATION Nothing further. MR. McCARTHY: CLINE - CROSS - McCARTHY 908 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 these trips to gambling casinos--Prairie Meadows, Tama, Council Bluffs and Osceola; correct? A. Q. A. Q. A. Q. Yes, Sir. You went with Ramona? Yes, Sir. Normally Chuck Brooks and Victor Scaglione? Yes. Did Karen Tesdell ever during that time period go on a gambling trip with you? A. Q. A. Q. A. Q. A. Q. Not that I recall. Well, think about it. No. Did she? No. You're sure about that? I'm sure. She was at the office working when you guys were gambling; I want an answer. Did she? isn't that right? MR. COURTER: speculation. MR. McCARTHY: BY MR. McCARTHY: Q. Do you know where Karen Tesdell was when you were off with I'll rephrase. Objection, Your Honor, calls for Ramona gambling? MR. COURTER: Objection, again calls for speculation. CLINE - CROSS - McCARTHY 909 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 relevance. THE COURT: Sustained. Nothing further. THE COURT: BY MR. McCARTHY: Q. A. Q. A. Q. Did you see Karen Tesdell at the office when you left? Yes. Did you see Karen Tesdell at the office when you returned? If I returned, yes. If you returned. Sometimes these gambling excursions went Sustained. past 5 clock? A. Q. If we left in the afternoon, they could have. In fact you developed a gambling problem, did you not? MR. COURTER: MR. McCARTHY: THE COURT: THE WITNESS: THE COURT: BY MR. COURTER: Q. A. Q. You developed a gambling problem, did you not, Mr. Cline? I don't believe I have a gambling problem, no. Was it true you've been banned from Prairie Meadows for Objection, Your Honor, as to relevance. Goes to credibility. You can answer. Overruled. I can answer? You can answer. life? MR. COURTER: I'm going to object again as to MR. McCARTHY: THE COURT: Mr. Scott. CLINE - CROSS - SCOTT 910 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. SCOTT: Q. A. Q. A. Q. Mr. Cline, you were Sam Fucaloro's supervisor? Yes, Sir. He directly reported to you? Yes, Sir. And when Mr. Fucaloro would be out doing things like MR. SCOTT: Yes. Thank you, Your Honor. CROSS-EXAMINATION gambling or other things on CIETC time, but not doing CIETC work, he would fill out a time sheet; is that correct? A. Q. A. Q. Yes, he would. And he would give that time sheet to you; correct? Yes, he would. And contained in that time sheet would he write down that he was doing stuff at CIETC? A. Q. A. Q. A. Q. He would put in hours of work. Hours of work? Yes, Sir. What do you mean by "hours of work"? Work hours. So if Sam Fucaloro showed up at the office at 8 o'clock in the morning, left to gamble with Ramona Cunningham at 2 in the afternoon and never came back, would he post an 8-hour day and turn that in to you? A. Yes, normally, I would say. CLINE - CROSS - SCOTT 911 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. And as his direct supervisor, obviously you would know that he's not in the building; correct? A. Q. A. Q. A. Q. Yes, I did. You knew that he was out gambling with Ramona; correct? Yes, I did. You saw him leave? Not always, but I knew when they were gone. And he filled out these time sheets and they were lies; correct? A. Q. A. Q. A. Q. Yes, Sir. And you were responsible for approving those; correct? Yes. And you sent them on to somebody else as lies; correct? Yes. Did you maintain the same position at IES that you had at CIETC? A. Q. Yes, I did. Did you maintain supervision over Sam Fucaloro after he moved to IES? A. Q. A. Yes, I did. When did you leave? October '07. MR. SCOTT: Thank you, Mr. Cline. Nothing further, Your Honor. MR. COURTER: Nothing further, Your Honor. N. BROOKS - DIRECT 912 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Sir? A. Q. Two years. Prior to working at Employee and Family Resources, where did BY MR. COURTER: Q. Mr. Brooks, would you state your first name and spell your MR. COURTER: THE COURT: You may step down. (Witness excused.) The government would call Nathan Brooks, Your Honor, and we believe his testimony will be relevant to counts 1 through 19, 21 through 23. NATHAN BROOKS, GOVERNMENT'S WITNESS, SWORN DIRECT EXAMINATION last name, please. A. Q. A. Nathan B-R-O-O-K-S. Mr. Brooks, where are you employed? Employee and Family Resources. THE COURT: Mr. Brooks, you're going to have to get The jurors and the lawyers can't hear close to that microphone. you unless you are. Thank you very much. How's that? Better. THE WITNESS: MR. COURTER: How long have you been with Employee and Family Resources, you work? A. Q. I worked at CIETC. When did you start at CIETC? N. BROOKS - DIRECT 913 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. A. January of 2003. When did you end your employment at CIETC? May of 2006. How did you get hired at CIETC, Sir? Dan Albritton had suggested I call Ramona Cunningham, that she was looking for a position, and a grant fund position. I called Ramona and sent her a resume. How much prior to January of '03 did Mr. Albritton contact you about a CIETC position? A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. November, December-ish. Of '02? Yes. You obviously know Mr. Albritton; correct? Yes, I do. Is he here in the courtroom today? Yes. Would you just point out what table he's sitting at? On the end. How long have you known Mr. Albritton? 10 years maybe. And just in general how did you get to know Mr. Albritton? Through political circles. I was a community activist, worked on a lot of campaigns. Q. A. You, in fact, have run for political office before; correct? Yes, I did. N. BROOKS - DIRECT 914 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. A. Q. A. What political offices have you run for? I was a county supervisor in Polk County. And what years were you a county supervisor in Polk County? 2000 through 2002. Did you know what Mr. Albritton did back in those years? Yes. What was his position, as you understood it? 2000 through 2002 we were at--he was the lobbyist and political liaison for the steelworkers and then he became the South Central Federation president. Q. A. Q. That would be the South Central Federation of Labor? Yes, Sir. Either he or the South Central Iowa Federation of Labor supported you in your run for a seat on the Polk County Board of Supervisors that you won in 2000? MR. SCOTT: THE COURT: BY MR. COURTER: Q. After you had the conversation with Mr. Albritton in Objection, Your Honor, relevance. Sustained. November or December of 2002 concerning a job at CIETC, what did you say that you did? A. Q. I'm sorry? You had this conversation with Mr. Albritton about the job at CIETC; correct? A. Yes. N. BROOKS - DIRECT 915 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. Did he contact you or did you contact him? I don't recall. I believe he called me. What did you do after you received that phone call as it relates to applying for a job at CIETC? A. Q. I called Ms. Cunningham. Had you ever met Ms. Cunningham before or did you know Ms. Cunningham? A. I did not know her personally but I knew who she was, and I was aware of CIETC. Q. A. What happened next? I submitted a resume. I believe we played phone tag a couple of times, and she called me and set up a time for an initial interview. Q. A. Q. A. Q. A. Q. Did you go in for that interview? Yes, I did. Did you interview with Ramona Cunningham? The first time, yes. How many interviews did you go through? Three. Was anybody else present during the first interview, other than Ramona Cunningham? A. Q. I don't believe so. Approximately how long after your first interview did the second interview occur? A. A week maybe. N. BROOKS - DIRECT 916 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. A. Q. A. Q. A. Where did you go for that interview? 215 Watson Powell. The CIETC offices? Yes. Who did you interview with there? That time it was Ramona, John Bargman, I believe Ako Abdul-Samad was at that particular interview and then later Jane Barto entered the meeting area. Q. A. Q. A. Did you know Jane Barto prior to that interview session? Never met her before then. Was she there for the purposes of your interview? I'm not sure. She came late. The way the meeting room was set up, it was actually a central hall that they had turned into a meeting space. Q. A. Q. A. on. Did she participate in any way? Yes, she did. What was the extent of her participation? Really, vision and focus for the program that I was working There was a desire for the one-stop center to increase its Creative Visions was the main--one They did a lot of outreach in the inner city. of the main tools, main agencies to do that. outreach, did the intake and service for a lot of disadvantaged people in the central city. Q. So those would be in general the things that you discussed about with Ms. Barto during the course of this interview? N. BROOKS - DIRECT 917 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. SPIES: Excuse me, Your Honor. May I ask counsel to speak a little bit more closely into the microphone. BY MR. COURTER: Q. This would be in general the things you discussed about or the things you talked about with Ms. Barto during the course of this interview; correct? A. Q. A. Q. A. Q. A. Q. A. Q. Yes. How long did this second interview last? Hour, maybe. How long of that one-hour period was Ms. Barto present? Half hour, maybe, 20 minutes. Is she here in the courtroom today? Yes. Just point which table she's sitting at. At the end. You indicated you had a third--I believe a third and final interview, Mr. Brooks? A. Q. A. Q. Yes, with Ramona and John. When you say John, is that John Bargman? John Bargman. Approximately how long after the second interview did the third interview occur? A. Q. Maybe a week again, few days. Anybody else present other than Ramona Cunningham and John Bargman? N. BROOKS - DIRECT 918 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Q. A. Q. A. Q. No. You subsequently then were offered employment at CIETC? Yes. Did you accept that employment? Yes, I did. What were going to be your specific duties as it related to your new employment at CIETC? A. Coordinate the expansion of services at Creative Visions, serve as a liaison between the two entities, and find new ways to increase usage by unemployed residents in the area. Q. Let's talk about your first year of employment. What specifically did you do in those program areas during your first year of employment at CIETC? A. Creative Visions was going through a renovation. They built a new computer lab. There were certain specs that CIETC was requiring, so that it could be literally a satellite of the onestop center in the inner city. project, meet those specs. Also outreach efforts, coordinating the other not for profits as well. Q. Would it be fair to say that during that first year of I helped them finish that employment there you essentially spent 100 percent of your time with the Creative visions project? A. Q. Yes. How did you account for your time for that first year? How N. BROOKS - DIRECT 919 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 did you allocate your time? A. Q. We had an E time card. Why don't you just describe how--what an E time card is and how it works. A. There's a computer that has everyone's names, files, you go It's broken down by codes, four in, you fill out your time. different grants or projects that you are a part of or work on. Q. How would that operate in a real world sense? I mean how often would you allocate your time or submit a time sheet? A. You're required to do it biweekly. I usually tried to do it once a week. Q. Did you ever have any conversations with any of the supervisory staff at CIETC concerning how you were supposed to fill out your personal time sheet? A. Q. A. Q. A. Q. A. Q. The first year? Correct. After it was explained to me, no, not really. Who explained it