Trudeau Civil Case Document 723 Attachment 6 of 9-07-22 13 Transcript of 05-21-13 Hearing

8/22/2019 Trudeau Civil Case Document 723 Attachment 6 of 9-07-22 13 Transcript of 05-21-13 Hearing

1/34

cosmicconnie.blogspot.com

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

1

IN THE UNITED STATES DISTRICT COURTNORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

FEDERAL TRADE COMMISSION,

Plaintiff,

vs.

KEVIN TRUDEAU,

Defendant.

)))))))))

No. 03 C 3904Chicago, IllinoisMay 21, 201310:00 a.m.

TRANSCRIPT OF PROCEEDINGS - MOTION

BEFORE THE HONORABLE ROBERT W. GETTLEMAN

APPEARANCES:

For the Plaintiff: FEDERAL TRADE COMMISSION600 Pennsylvania Avenue, N.W. M-8102BWashington, DC 20580BY: MR. JONATHAN COHEN

MR. MICHAEL MORAMS. AMANDA COSTNER

FEDERAL TRADE COMMISSION55 West Monroe Street, Suite 1825Chicago, Illinois 60603BY: MR. DAVID A. O'TOOLE

For Defendant Trudeau WINSTON & STRAWN LLPLaw firm of 35 West Wacker DriveMarc J. Lane and Chicago, Illinois 60601Marc J. Lane: BY: M R. KIMBALL ANDERSON

MR. THOMAS L. KIRSCH, IIMS. KATHERINE CROSWELL

Official Reporter: JENNIFER S. COSTALES, CRR, RMR219 South Dearborn StreetRoom 1706Chicago, Illinois 60604(312) 427-5351

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

2

(Proceedings in open court.)

THE CLERK: 03 C 3904, FTC versus Kevin Trudeau; for

hearing.

MR. ANDERSON: Good morning, Your Honor.

Kimball Anderson for Mr. Trudeau.

MR. COHEN: Good morning, Your Honor.

Jonathan Cohen for the Federal Trade Commission. With

me as well are Michael Mora, Amanda Costner, and David O'Toole.

MR. ANDERSON: And I would be remiss if I did not

mention Mr. Kirsch, my partner is here.

MR. KIRSCH: Good morning, Your Honor.

THE COURT: Good morning.

MR. ANDERSON: And our colleague, Katherine Croswell.

THE COURT: Good morning.

MS. CROSWELL: Good morning.

MR. ANDERSON: And our client, Kevin Trudeau, is here a

well pursuant to Your Honor's request.

THE COURT: Good morning, everybody. Very good.

A couple of things I want to mention before we begin.

First of all, there is a lot of motions pending, including the

one we're here about, the motion to hold Mr. Trudeau in contemptThat's document 481. There is a bunch of other motions that I

think are moot at this point that we can just withdraw I think

without prejudice to the extent that that means anything in this

context.

1

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

The FTC's motion to compel Winston & Strawn and Marc

Lane, I think we're beyond that, aren't we?

MR. COHEN: Yes, we are.

THE COURT: Okay. I mean, if you need to renew it, if

anything comes up -- I just want to get these off the books.

That's 538.

Somebody got a phone on? Please turn your phones off.

Mr. Sant's motion to quash his subpoena. The FTC's

motion to compel Sant to comply with the subpoena. That's 590

and 593.

MR. COHEN: All mooted, Your Honor.

THE COURT: Right. And the FTC's motion to hold Marc

Lane, GIN, WSU, and KTRN in contempt.

MR. COHEN: Your Honor, with respect to that one, it is

mooted with respect to Mr. Lane as a result of an agreement

between Mr. Lane and the FTC that resolved that motion. I'm not

certain, the FTC is uncertain that it's mooted with respect to

the entities in light of the fact that the FTC's position is that

the entities have not produced an adequate 30(b)(6) designee to

date.

THE COURT: Because Mr. Trudeau took the Fifth?

MR. COHEN: That's correct.

MR. ANDERSON: But they selected him knowing that he was

going to take the Fifth. They made that election.

THE COURT: All right. I'll tell you what, let's put

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

4

that aside for now then. We won't deal with -- we'll leave that

motion pending. We have other things to deal with today.

The other thing I wanted to mention to you is the

proceedings that we had in chambers yesterday, we went into

chambers because it was my understanding from what Mr. Anderson

said that we might be talking about some type of privileged or

potentially privileged information or communications that we're

going to deal with on a document by document or a question by

question basis.

And actually just briefly looking at the rough

transcript, and it was just yesterday afternoon, I think we all

have a pretty good memory of it, I don't remember any such

communications being disclosed at that in chambers conference.

So I would unseal that record, unless there is an objection. If

you object to unsealing the record, I'll let you order a

transcript, and then you can tell me what part, if any, of the

transcript you would care to ask me to continue to seal.

MR. ANDERSON: Your recollection is probably correct.

But I would like the opportunity to look at at least the rough

transcript if I could.

THE COURT: All right. I won't unseal it now, but, yo

know, let me know within the week, a week from now whether or no

you agree or not, because I think, as you know, our circuit, and

certainly I join that, prefers to have as much as possible in th

public record. And I don't think there is anything in there tha

PXA:1

Case: 1:03-cv-03904 Document #: 723-6 Filed: 07/22/13 Page 13 of 142 PageID #:12204


2/34


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

5

shouldn't be in the public record.

MR. ANDERSON: I will do that.

THE COURT: Okay, thank you. All right. Now, I've got

two -- I've got a lot of documents here. In fact, I've got two

binders from Mr. Trudeau. I was a little surprised to see

Mr. Trudeau submitting exhibits when you told me he intends to

assert his Fifth Amendment rights.

MR. ANDERSON: Oh, but a lot of the exhibits have been

produced by the entities. And they have been testified to by,

for example, Michael Dow, who is a CPA, the accountant.

THE COURT: But, I mean, for purposes of today's

proceeding as I understood it from yesterday, you told me

Mr. Trudeau was going to assert his Fifth Amendment rights. So,

therefore, I wouldn't have anticipated you offering any exhibits

into evidence today.

Now, as we also discussed, you're going to be

designating depositions and setting, we'll be setting a briefing

schedule on the entire matter, at which time, of course, you

would have the opportunity to do just that as part of your

submissions, but I didn't see that as happening today.

MR. ANDERSON: Well, then we may have miscommunicated.But what the parties did is we exchanged exhibit lists last week,

and we're in the process of exchanging deposition designations.

And we reached agreement on a lot of the exhibits, so we thought

we would put those before the Court, at least I'm going to

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

6

perhaps comment on a few of them that we've agreed that are in

evidence. I don't think we ought to be arguing about stuff that

is not in evidence yet. We've agreed on some stuff that's in

evidence. So I was going to address some of that as to what the

evidence would show in our opening statements today. So I think

both sides just submitted to you the documentary evidence that w

expect --

THE COURT: Okay.

MR. ANDERSON: -- will be --

THE COURT: That's fine. So you don't have to do it

again during the briefing. I have them here is basically what

you are saying.

MR. COHEN: Your Honor, if I may, it is their burden of

production today. So they need to -- I think we disagree as to

whether those exhibits satisfy their burden of production.

THE COURT: Well, that's what the disagreement is all

about, and that's what I'll have to decide. I think you're

right. Just to put this all in context, I've already found that

the government, that the FTC has made a prima facie showing of

contempt. And then it's up to Mr. Trudeau to meet his burden of

showing that he is unable to comply with the order to pay the $3million. And that's what this is all about. And the burden is

on Mr. Trudeau to do that. So that's what these proceedings are

part of, not conclusive, but they are part of.

And one other thing I wanted to mention to you, and th

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

7

is giving more thought to our conversation with respect to

Mr. Lane, I just want to tell you that having given that matter

more thought, I think it's likely that he will probably have to

testify. And I just wanted to put you on notice, Mr. Anderson,

because I know you have some decisions to make about that. And

the more I thought about it, even looking over some of the

exhibits, I obviously haven't had a chance to look them over,

look over all of them, and looking over my notes on the case, I

just wanted to give you a heads-up that if you're planning, you

know, whatever planning you're doing, I think you have to just,

if you made that assumption, it would be the safest thing to do.

So that's just more of a comment.

MR. ANDERSON: All right. Back to the exhibits then, so

we just consider both sides' exhibits submitted as of today?

THE COURT: That's fine, that's fine.

MR. ANDERSON: Thank you.

THE COURT: You know, I wish you had the electronics

here, because it would be a lot easier to look at them that way.

But there is a lot of binders here. You'll have to help me sort

through them today.

But how do you propose to proceed, Mr. Cohen, today?

MR. COHEN: Your Honor, it's their burden of production.

As such we'd propose that they proceed first. In the event that

all Trudeau intends to do is put forth those exhibits, then at

that point in time we would ask Your Honor to find Mr. Trudeau in

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

8

contempt on the basis that those exhibits do not meet the

governing legal standard, which is that he clearly and

unmistakably, categorically, and in detail established his

inability to pay. So we'd ask the Court to rule on that motion

first. And then in the event that that motion is taken under

advisement, we would at that point proceed with our case.

THE COURT: Well, it will be taken under advisement,

because you just dropped about thousands of documents on me, and

I'm not a speed reader. I'm not that speedy, that's for sure.

I anticipated you putting Mr. Trudeau -- Mr. Trudeau ha

attempted to meet his burden by submitting the sworn financial

statement. And that's the last thing that Mr. Trudeau has

basically submitted. And I think that his position has been tha

that's enough to meet his burden. And then it's your position I

think, I don't know if the burden shifts, but you're testing tha

position I think. So I would have expected you to put him on.

Mr. Anderson, do you have anything to say? I mean, do

you disagree with that proposition?

MR. ANDERSON: I don't. I'll just add a footnote that

we've now in the boxes that you have before you submitted

additional evidence that's probative of the inability to pay in

both deposition testimony and documentary evidence. So you have

evidence in addition to the financial statement.

I don't really feel too strongly about who goes first

with their opening statement. But this is the FTC's,

PXA:1



3/34


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

9

fundamentally it's their motion. Whether the burden has shifted

here or there or back, they have the burden, ultimate burden at

the end of the day. And so if Mr. Cohen would like to go first,

that's okay. If you'd like to hear from me, I'll go.

MR. COHEN: Your Honor, I'm happy to go first.

THE COURT: Okay. We have settled that part of it.

MR. COHEN: Thank you, Your Honor.

THE COURT: Mr. Mora, I think, wants to say something.

Did you want to say something, Mr. Mora?

MR. ANDERSON: Mr. Kirsch is whispering in my ear --

THE COURT: There is a lot of whispering going on.

MR. ANDERSON: Yeah. Well, I know we talked about the

formal submission of the exhibits. And I don't know whether we

need to make a formal motion. But on behalf of Trudeau,

Mr. Trudeau, I'm moving to admit the exhibits that we put in the

boxes before you. And the FTC, by the way, has stipulated to the

admissibility of those. So that's my formal motion for the

record.

THE COURT: Well, I literally just got those before I

came on the bench.

MR. ANDERSON: I understand.THE COURT: There are documentary exhibits. Are there

also deposition excerpts in there?

MR. ANDERSON: We have not yet submitted the deposition

excerpts, although we have designated them. But you don't have

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

10

them because Mr. Cohen hadn't had a chance to do his

designations, so we agreed yesterday we would do that on the 29t

or something like that.

MR. COHEN: I think it may have been the 30th, but

regardless we've reached an agreement with respect --

THE COURT: You said the 30th yesterday.

MR. ANDERSON: Yes.

THE COURT: So we'll talk about schedules after, after

we start. All right then.

MR. ANDERSON: I think both parties anticipate in about

a week submitting designations and cross-designations, because I

don't believe Mr. Cohen had that opportunity to do that as of

yesterday.

THE COURT: All right. Let's use the time today to hea

some brief opening statements, and then we'll hear from

Mr. Trudeau, and then we'll take it from there.

MR. COHEN: Two other just brief issues. The FTC has

proposed and offers approximately 300 exhibits, many of those

exhibits are contested. And we want to make clear for the reco

that I think the procedure that we're going to undertake is that

the Court may make rulings on certain of those exhibits today.Perhaps that will give guidance that will enable the parties to

reach stipulations over the next few days with respect to the

remainder of those exhibits. We want to clarify that that's the

Court's understanding as to that.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

11

THE COURT: Well, yeah, that's fine. But let's put this

in context too. I mean, this is tried to the bench, and we don't

have to get into arguments about relevance and that sort of

thing. Authenticity for sure, you know, if there is some

privilege issues, for sure, that sort of thing. But other than

that, you know, when you're trying a case to the bench of any

kind, the rules are a lot more flexible.

MR. COHEN: Finally, Your Honor, in addition to the

binders that the FTC has provided to the Court, we also have a

selection of exhibits that we anticipate using today, and we'd be

happy to provide those to the Court if that would make it easier

for the Court to follow along.

THE COURT: My chiropractor would agree with that.

MR. COHEN: I'm sorry?

THE COURT: I said my chiropractor would agree with

that. Sure, fine, whatever makes it easier for everybody.

MR. ANDERSON: Well, you're only going to use admitted

exhibits. You're not going to use stuff that's contested.

MR. COHEN: Or we're going to move to admit those

exhibits.

THE COURT: All right. Let's start, let's start with

your opening, Mr. Cohen.

MR. COHEN: Your Honor, the issue is whether defendant

Kevin Trudeau is in contempt of this court for his failure to

comply with this Court's June 2010 order that he pay or repay

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

12

more than $37 million. As the Court is well aware, this is the

amount that Trudeau owes more than 800,000 consumers that he

misled through contemptuous infomercials that he aired more than

I believe 30,000 times.

The Court has already held as the Court just mentioned

that the FTC has established a prima facie contempt case,

including that Trudeau failed to make reasonable and diligent

efforts to comply.

The only remaining matter is his defense, which is

alleged inability to comply. Put differently, the question is

whether Trudeau's two payments last year totaling only $54,000

are all that he could have paid and that he can pay nothing more

The law is very clear that he must produce evidence

establishing his inability to pay categorically and in detail.

His proof must be clear, plain, and unmistakable. And he must

further show, this is significant, that the alleged inability to

pay was not self-induced.

In the event that Trudeau meets this difficult burden,

burden which the courts have characterized as a difficult one,

the FTC will establish that Trudeau's ability to pay has been an

remains vastly greater than his $54,000 payment, and that any

purported inability to pay that remains is entirely self-induced

The documents will show that over the past two, nearly

three years, since the Court entered the June order to pay,

Trudeau has spent more than $10 million, including $5 million to

PXA:1



4/34


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

13

his corporate counsel, Marc Lane, more than $1.7 million to his

litigation counsel, and $3.2 million on personal expenses ranging

from everything from groceries to nights at the Four Seasons.

The documentary evidence will also show that Lane worked

with Trudeau to coordinate a sophisticated asset protection plan

designed to render Trudeau the legal owner of limited assets, but

the beneficial owner of substantially more, including multiple

companies associated with the Global Information Network and a

trust that contains important significant assets.

Through testimony and deposition transcripts, we will

also present testimony from the four key players: Those are

Trudeau; Ms. Babenko, Trudeau's wife; Neil Sant, whom Trudeau has

characterized as his right-hand man; and Marc Lane, who is

Trudeau's corporate counsel and asset protection planner.

Two of those four witnesses, that's Ms. Babenko and

Mr. Sant, have already asserted their Fifth Amendment rights.

Marc Lane, the corporate counsel and asset protection planner,

has offered nothing through his deposition testimony that in any

way contradicts the FTC's position. And it's anticipated that

Trudeau will not be answering our questions here today.

In short, the evidence will show that Trudeau hascontrol and continues to control significant assets. As such,

Your Honor, his defense fails, and he should be held in contempt.

THE COURT: Thank you.

Mr. Anderson.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

14

MR. ANDERSON: Mr. Cohen, may it please the Court.

I thought I would talk about what the evidence will

show, and let me begin by what the most recent evidence will

show. That evidence will show that we have been asking the FTC

on behalf of our client, Mr. Trudeau, what do you want from this

hearing? Mr. Trudeau had provided his accounting. The companie

have provided their financial statements, their bank records.

There is a lot of paper here.

And the response that we heard from the FTC and the

Court heard it in court last week was the FTC really didn't trus

Mr. Trudeau's accounting, so they wanted an independent

accountant. So we said, the evidence will show we said: Fine.

Let's do that. We're happy to agree to any reputable independen

accounting firm.

We also contacted Mr. Donnellon, who as the Court knows

represents Website Solutions, KT Radio Network, GIN USA, and

Ms. Babenko.

THE COURT: Can I just stop you for one second. I'm

sorry to interrupt. But Mr. Donnellon I don't see as being here

today. He knows that he was not going to be telephoned in to

this?MR. ANDERSON: That is my understanding, Your Honor.

THE COURT: Okay.

MR. ANDERSON: That is my understanding.

THE COURT: All right. I just want to make sure. All

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

15

right.

MR. ANDERSON: We contacted Mr. Donnellon, and we asked

if his clients would agree to a full and independent accounting,

and he said yes.

So we said, the evidence will show, to the FTC that if

there are any assets that can be used to pay the judgment, you

know, let's find them. We'll immediately turn them over to pay

the judgment. And we told the FTC that we were ready to proceed

with the accounting. And the FTC has not really been responsive.

So the first thing I want to do today is just simply to

urge the Court to immediately order an accounting by an

independent accounting firm. We will stipulate to the entry of

an order. And why, I ask, should the Court be consumed with

reading literally thousands of pages of documents and deposition

testimony, and why should the parties suffer the cost of briefing

the evidence and the law?

If there are assets, Mr. Trudeau and the FTC should be

put at ease, progress will be paid toward paying the judgment,

and if they're not, the litigation should end. And so I say

let's get started with the accounting.

Mr. Cohen talked a little bit about the law. But I

frankly don't think that his discussion of the law was complete

or entirely fair. And I don't want to sound like a broken

record, because we have, you know, briefed this issue before.

And I'm sure the Court is fairly well aware of the seminal

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

16

Supreme Court decisions on coercive contempt. But in short, the

Supreme Court in the Bagwell decision that we've cited has

pointed out that the purpose of coercive contempt is not to

punish for past conduct. It's not even to deter future conduct

And the Seventh Circuit in the In Re: Grand Jury

Proceedings that we've cited several times has said the same

thing, that civil contempt is coercive in nature, and there is n

justification for confining on a civil contempt hearing a person

who has already agreed to comply or lacks the ability to comply

Now let's briefly review the factual history that leads

us here. The Court as you know entered a final corrected

judgment on June 2, 2010, against Mr. Trudeau. And that was, th

amount was a little over $37 million reflecting the amounts that

consumers paid to purchase this Weight Loss Cure book. And as

the FTC has previously conceded both here and before the Seventh

Circuit, Mr. Trudeau did not receive that $37 million. The mone

was collected by ITV Global, a company that is independent of

Mr. Trudeau. And the FTC separately sued ITV Global for the sam

37 million. And, frankly, there is not record evidence of how

that collection action is going. We don't know on behalf of

Mr. Trudeau.

But Mr. Trudeau, who didn't receive the 37 million, had

some choices to make after the judgment. And he could appeal th

judgment or try to earn enough money to pay the judgment. And

the evidence will show that he elected to do both. He hired

PXA:1



5/34


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

17

lawyers who appealed the judgment unsuccessfully, I regret to

say, all the way to the United States Supreme Court. And he

began working with companies who hired him to do what he does

best. He is a motivational speaker. He is a New York Times best

selling author. And he's hired to travel really around the world

and give speeches and workshops on how to live healthy and

successful lives. And the evidence will show that there are

thousands of people, probably tens of thousands of people who

attend these conferences and events to hear Mr. Trudeau and other

motivational speakers.

There are others, for example, just by way of example,

Mr. Trudeau once traveled to Australia with General Norman

Schwartzkopf and Former President Gorbachev to give motivational

speaking before thousands of paying customers. So that was 2010.

And then the FTC did nothing for two years to collect

the judgment. It did not initiate any citation to discover

assets under federal or Illinois law. It did not put liens on

any assets. It did not garnish any accounts. It did not garnish

any wages.

The FTC was not spurred, did not awaken until

Mr. Trudeau on the advice of counsel filed a motion with thisCourt on June 11, 2012 to modify the final judgment judgment

order so that he with our assistance could hire a reputable class

action administration firm that the FTC had used in the past,

namely, Rust Consulting. And the concept was that he would

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

18

create a fund from future earnings sufficient to provide refunds

to any purchaser of the book who wanted one.

And to that end Mr. Trudeau borrowed $2 million, which

he placed on deposit with the Court so that he could resume the

infomercial business and generate funds for this consumer

remediation plan which we envisioned would be administered by

Rust Consulting.

The FTC vehemently opposed that motion and also rebuff

Mr. Trudeau's attempts through his lawyers to work out a payment

plan. The FTC refused to disclose whether it had a plan, let

alone the details of it.

And so within a month after Mr. Trudeau approaching the

FTC about a remediation plan, about an installment payment plan

the FTC filed its motion to hold Mr. Trudeau in contempt of cou

for failing to pay the judgment, and this motion asked to

incarcerate Mr. Trudeau.

Attendant to the FTC's motion, they launched a blizzard

of discovery requests. They served over 20 subpoenas on everyo

who does business with or associates with Mr. Trudeau, his law

firms, his banks, credit card companies, his wife, various

companies. Curiously the FTC meanwhile never asked Mr. Trudeaudirectly for a deposition or any discovery.

He did try to make payments to the FTC. Mr. Cohen

mentioned them. He sent the FTC a few checks in partial payment

of the judgment. The FTC, however, refused to cash the checks.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

19

They remain uncashed today. And so Mr. Trudeau decided that was

fruitless, and he stopped.

The subpoenas as I mentioned went out to everybody who

has done business with Mr. Trudeau, and they had some results.

Documents were produced, but the respondents were intimidated.

Banks closed accounts. Customers were scared away. Employees

quit, others had to be laid off. And Mr. Trudeau's future

earning power dried up, and then he filed for bankruptcy.

If you choose to look through all the paper and

deposition testimony, which as I said at the outset I think is

unnecessary, because Mr. Trudeau has agreed to an accounting, but

if you choose to do that, I think the evidence is going to

clearly show several things.

First, Mr. Trudeau never transferred any money or any of

his own money or any of his assets to these corporate entities.

This is not a situation where he had 37 million or 10 million or

$5 million, and he parked it in some company to avoid paying the

judgment. It just didn't happen. There are no fraudulent

transfers.

Second, the businesses at issue, they were actual

operating entities. You will see from the testimony and the

exhibits that Website Solutions USA employs over 30 people, a CFO

and a CEO, none of these people, by the way, Mr. Trudeau.

Mr. Trudeau was the talent. He's the motivational speaker.

Website Solutions provided marketing, accounting, and

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

20

operational support for the companies that hired Mr. Trudeau as

motivational speaker. These were not sham companies set up to

hide assets as Mr. Cohen keeps arguing. They were real operatin

companies with revenues, expenses, and real creditors.

Third, the evidence will show that all of these

companies unfortunately as of today have no net assets. You wil

see the bank statements. You will see the financial statements

The companies unfortunately are broke. Expenses have exceeded

revenues.

Website Solutions, for example, has millions of dollars

in revenues for fees that it earned for services provided to GI

USA, which is the host of these motivational speaking events.

But it also as the financial statements will show has incurred

many million dollars more in expenses for renting hotels, cruise

ships, marketing for these events.

The financial statements show that the companies are

broke, and the FTC has really no evidence to the contrary. And

some of the companies are simply defunct. They have been that

way for a long, long time, some well before the judgment.

The fourth thing that the evidence will show is that th

FTC's compilations, they have had one of their office paralegal

submit some compilations of revenues. But to state the obvious

revenues are not assets. To state the obvious, revenues minus

expenses equals net income.

And the FTC's compilations have ignored the expenses,

PXA:1



6/34


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

21

and they ignore the losses. And we will when we have an

opportunity to brief the evidence, if the Court affords us that,

we'll show where the money went and how it was spent on

legitimate business operating expenses.

Fifth, the evidence is also going to show that the

companies reimbursed Mr. Trudeau for substantial expenses

associated with his international travel and motivational

speaking. The FTC points to allegedly extravagant expenses for

which he was reimbursed. And you've already seen in prior papers

arguments about the purchase of a Bentley automobile. Well,

Website Solutions did purchase a Bentley automobile. And

Mr. Dow, Michael Dow, who is the CPA for the company, testified

at deposition. He was asked by FTC counsel question:

"What were those Bentleys used for if you know?"

Mr. Dow's answer was as follows:

"They were taken to some of the major events. They were

shipped there. For example, we had a dream weekend. And the car

would be there so people could sit in it. And if you build your

life, you can afford a nice life like this."

That's at page 84, line 12, of Mr. Dow's testimony that

will be before the Court.Of course, Website Solutions later had to sell the

Bentley to pay for operating expenses.

Similarly the FTC has argued about a home in Oak Brook,

I think it's in Oak Brook, it's in the western suburbs, that the

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

22

FTC repeatedly characterizes as Mr. Trudeau's lavish house.

Well, it's owned by Website Solutions -- no, it's not. They re

it. They currently rent it, and they use it for company

executives and speakers. Currently residing there is the acting

CEO of Website Solutions, who is not Mr. Trudeau or his wife.

Sixth, and finally, I think the evidence will show that

Mr. Trudeau did exercise some influence, although not legal

control, over the finances of these companies. He exercised som

influence over his wife, for example, who owns some of the

companies. And sometimes she bailed him out on legal expenses

and other expenses, and sometimes she did not.

But it was in the company's best interest to keep

Mr. Trudeau on the speaker circuit and generating revenues for

the companies. In the end, however, the companies became

insolvent.

And there are some cases out there that have dealt with

the issue, this issue of present or past alleged ability to pay

judgment. And one case I wanted to call the Court's attention t

that I have not previously cited it, it's a U.S. Supreme Court

decision. It's called Maggio, M-a-g-g-i-o, versus Zite, Z-i-t-e

and the cite is 333 US 56.I think it's worth looking at, because it's a civil

contempt case, and the Supreme Court there acknowledged that

there was some record evidence that the defendant at one time ma

have had the ability to comply with a turnover order.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

23

And based on this record evidence, the appellate court

below had applied a presumption of a continuing ability to pay

that could, quote, "be overcome by the accused only when he

affirmatively showed some disposition of the property to him,"

end quote.

Well, the Supreme Court held that was error, and the

Supreme Court held as follows, quote, "The sole question is

whether the bankrupt is presently able to comply with the

turn-over order previously made and accordingly whether he is

disobeying the order," end of quote. And I want to emphasize the

word "presently."

I think that the Supreme Court precedent renders much of

the FTC's evidence irrelevant. It does not matter I suggest as a

matter of law that Mr. Trudeau spent money on legal fees and

travel expenses and living expenses two or three or four years

ago. The money is gone. If the FTC had wanted to take control

of his earnings and expenses at the time, it had remedies

available to it. Specifically, the FTC could have garnished

Mr. Trudeau's wages as a motivational speaker. It could have

filed citations to discover assets under Rule 69 of the Federal

Rules of Civil Procedure and under the State of Illinois Code of

Civil Procedure 5/2-1402.

These procedures require a citation notice that among

other things recognizes the debtor's state and federal statutory

exemptions of certain assets. And the service of the citation

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

24

creates a lien on the debtor's assets. After that you can't mov

things around if I understand the state law of property.

Well, so the remedy for the spending that allegedly

occurred, whether it was business or some of it personal, lies i

these state and federal citation procedures. The FTC as the

Court knows however, you know, deliberately, they made a choice

they avoided these procedures even though we pointed them out to

them. They instead went ahead with a civil contempt motion,

which as the United States Supreme Court has repeatedly said and

I keep repeating myself, is not a remedy for past conduct.

The FTC pursued the wrong procedure. They had remedies

available a couple years ago. They avoided them. And instead

they embarked on the wrong remedy. They embarked on this

scorched-earth discovery on their contempt motion. And now they

have come up empty-handed. Nothing in Mr. Cohen's remarks or in

any of his papers has identified any assets that could be used t

satisfy this judgment.

So having found no assets, all they want to do is argue

about the past. And I suggest respectfully that the past is not

relevant to this contempt motion.

And the proof I think that the FTC came up empty lies

not only in the financial statements before the Court and the

bank records, but also in the obvious fact that if the FTC had

discovered any substantial assets available to pay the judgment

it immediately would have seized them. They haven't, because

PXA:1



7/34


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

25

there is nothing to seize.

Furthermore, common sense teaches us if Mr. Trudeau had

the money to pay the judgment, he would have done so rather than

suffer months of discovery, threats of incarceration, and

ruination of his business as a motivational speaker.

And I suggest that no responsible regulatory agency

sincerely interested in consumer remediation would have foregone

the opportunity to seize assets if they existed. I think all of

this teaches us that there are not presently assets to pay the

judgment.

And the FTC continues to argue that Mr. Trudeau in the

past could have spent his money differently. But he didn't.

He's not an indentured servant for life to the FTC. He has

federal and state law protections against garnishing all of his

income. To be specific, federal and state law allow a creditor

to garnish only up to 15 percent of his earnings. And

Mr. Trudeau through his lawyers offered that to the FTC long ago,

and they refused.

I don't fully understand their legal position, but I

think their position is that federal and state laws affording

rights to debtors do not apply to the FTC. And although we'vepressed them for authority on that proposition, we have seen

none.

And, you know, just to use an analogy, what the FTC has

really done here is that they have taken the position that if

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

26

Mr. Trudeau ordered the stay, he really should have had chicken

and he should have turned the savings over to the FTC. And if

the companies for which he was doing a motivational speaking

event had a Bentley for people attending the dream convention to

sit in, they should have had a Ugo. But there is no legal

authority whatsoever for these extreme legal propositions by the

FTC.

So here we are. The FTC points to past conduct but

ignores the present reality. The FTC points to millions of

dollars of revenues of various companies but ignores expenses an

losses. The FTC points to what it calls Mr. Trudeau's lavish

lifestyles, but ignores that you have to spend money to make

money in the motivational speaking business.

The FTC wants a turn-over of Mr. Trudeau's assets but

ignores that the Bankruptcy Act prevents such a turn-over to any

particular creditor. The FTC wants an accounting, a complete

accounting for Mr. Trudeau but ignores the fact that he's

provided one and has agreed to an independent accounting.

Mr. Trudeau has also implored the various entities that

he is not open -- to open their books for a full accounting, and

Mr. Donnellon advises that they have consented.So as I said at the outset today, this Court should

order the accounting. The Court I believe should not wait for

weeks of briefing and further evidence. If it's the FTC's view

it does not trust Mr. Trudeau, despite all the documentary

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

27

corroboration, then let's hire that independent accounting firm

that the FTC and the Court can trust. The firm could begin the

work this week and probably finish it before the briefing is even

completed on this motion. And I again ask why put the Court and

parties to the expense of wading through and briefing thousands

of pages of documents.

If there are assets that can be used to pay the

judgment, that's a win win for everyone. Mr. Trudeau will be

pleased. The FTC will be pleased. And if there are not assets

presently available, we are prepared as we have been for some

time to implement a consumer remediation plan. Mr. Trudeau has

one thing, and that is he has substantial future earnings power

as an author and a motivational speaker. We can put those

earnings potential to work and use it to distribute it to

consumers who want a refund.

And there is $2 million sitting in the Court escrow that

would probably satisfy refunds for everyone who wants one. So

I'm urging the Court and the parties here today to look for

practical solutions and to discontinue this destructive and

wasteful contempt litigation, because this is not creating one

dime for any consumer remediation.

I'm about done, but before I sit down I want to talk

about Mr. Trudeau's testimony. We at Winston & Strawn have

advised him to assert his Fifth Amendment right not to testify.

The Fifth Amendment to the United States Constitution exists to

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

28

protect the innocent. And Mr. Trudeau has a constitutional righ

not to expose himself to unfair government prosecution or in the

FTC's case unfair persecution.

He wants to testify, but I believe there is ample

evidence supporting his inability to pay defense without his

testimony. And moreover the FTC as I've said before has really

not expressed any interest in consumer remediation. It seems to

be focused like a laser on incarceration. So under these

circumstances we advised him not to testify, not because he's

guilty of anything, because he is not, but because he wants to

stay out of jail, earn a living for himself and his family, and

to generate revenues for a consumer remediation plan. And that

is why today you'll hear Mr. Trudeau exercise his Fifth Amendmen

right.

In conclusion let me say also that Mr. Trudeau has done

everything the Court has ordered him to do. He provided a sworn

financial statement. He appeared for deposition. He's here

today in court. He's agreed to any and all forms of accounting

He agrees to turn over any assets that the independent accounti

firm concludes is available to pay the judgment. And basically

he's surrendering. There is nothing more he can do that has not

been already requested by the FTC.

So that completes my opening remarks, Your Honor. Than

you very much.

THE COURT: Thank you, Mr. Anderson.

PXA:1



8/34


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

Trudeau - direct29

All right. Mr. Cohen.

MR. COHEN: The FTC calls Mr. Kevin Trudeau.

THE COURT: Please raise your right hand.

(Witness duly sworn.)

THE COURT: Have a seat, please.

MR. COHEN: Your Honor, as I mentioned earlier, we have

a subset of documents that we're happy to provide to the Court

for the Court's convenience.

THE COURT: And to the witness?

MR. COHEN: To the witness as well, yes. May we go

ahead and do that?

THE COURT: And to counsel as well?

MR. COHEN: I believe yes, to counsel as well.

THE COURT: All right. Good.

MR. COHEN: If I may approach?

THE COURT: Sure. Just give it to my clerk, please.

MR. COHEN: If I may approach the witness as well, Your

Honor?

THE COURT: Sure.

KEVIN TRUDEAU, DEFENDANT HEREIN, SWORN

DIRECT EXAMINATIONBY MR. COHEN:

Q. Mr. Trudeau, you currently reside in Zurich, Switzerland,

isn't that true?

A. Correct.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

Trudeau - direct30

Q. And you've resided there since last summer, isn't that true?

A. Correct.

Q. You control assets, isn't that true?

MR. ANDERSON: Object to the form of the question.

And I advise you, Mr. Trudeau, to assert your Fifth

Amendment right.

BY THE WITNESS:

A. On the advice of counsel, I assert my Fifth Amendment

privilege.

BY MR. COHEN:

Q. You control assets worth more than $1 million, isn't that

true?

MR. ANDERSON: I object to the form of the question.

And my advice to Mr. Trudeau is the same.

BY THE WITNESS:

A. On the advice of counsel, I invoke my Fifth Amendment

privilege.

MR. COHEN: Your Honor, just to move things along, the

FTC is willing to accept a shorter version of that and just have

the witness state "I assert my Fifth Amendment rights."

THE COURT: Is that agreeable, Mr. Anderson, to savesome time?

MR. ANDERSON: Yeah, I'm in favor of saving time.

BY MR. COHEN:

Q. And Mr. Trudeau --

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Trudeau - direct31

THE COURT: Can we have a standing objection to form

then so we don't have to keep objecting to form?

MR. ANDERSON: Okay. If the FTC stipulates that I'm not

waiving any objection to the form of the question, many of which

I think are overly broad and just argumentative.

MR. COHEN: We so stipulate.

THE COURT: All right. It is adverse examination, and I

would probably overrule the objection. But he's taking the Fifth

anyway, so it seems to be a moot point.

MR. ANDERSON: Okay. Then I will --

THE COURT: We'll assume, just for the record, I will

regard Mr. Anderson and Mr. Trudeau as having a standing

objection as to form. If there is any particular question that

you feel you have to add something to, please let me know.

BY MR. COHEN:

Q. Mr. Trudeau, you control assets worth more than $1 million

that you could have used to satisfy the order to pay, isn't that

true?

A. I assert my Fifth Amendment privilege.

Q. At times since June 2nd, 2010 you have controlled assets,

isn't that true?


Q. At times since June 2nd, 2010 you have controlled assets

worth more than $1 million, isn't that true?


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Trudeau - direct32

Q. At times since June 2nd, 2010 you have controlled assets tha

you could have used to satisfy the Court's order to pay, isn't

that true?


Q. Mr. Trudeau, at this time I'd like to direct your attention

and the Court's attention to what's been premarked for

identification as FTC Exhibit 12-L, which is a set of e-mails

from Mr. Lane, Marc Lane, to you on December 19th, 2008. Do you

see that?

A. Say that again.

Q. It's a set of e-mails. And we're particularly interested in

the second e-mail on the page, which is an e-mail from you to

Mr. Lane on December 19th, 2008.

A. I have the file that you gave me.

Q. Are you looking at what is FTC, marked for identification as

FTC Exhibit 12-L?

A. Do you have a set of reading glasses?

Q. I don't. But perhaps counsel does.

THE COURT: What power do you need?

THE WITNESS: I don't know.

THE COURT: I think I have one. These are from my

younger days, Mr. Trudeau. So if they're not powerful enough,

let me know if that's what you need to read. But they're also

kind of dirty. Here.

THE WITNESS: Thank you.

PXA:1



9/34


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

Trudeau - direct33

THE COURT: Give it a try. Otherwise my law clerk says

he has got a drawer full of them.

THE WITNESS: Okay.

THE COURT: Do they help you?

THE WITNESS: Perfect.

THE COURT: Good.

BY THE WITNESS:

A. Your question, Jonathan?

BY MR. COHEN:

Q. Do you see in what has been marked for identification as FTC

Exhibit 12-L there are several e-mails. And I direct your

attention to the e-mail, the second e-mail on the page which is

an e-mail from Mr. Marc Lane to you on December 19th, 2008.

A. I see that.

Q. [email protected], that's your e-mail address, is it not?


Q. And Marc Lane is your attorney, is he not?


Q. And he was your attorney at the time this e-mail was sent,

isn't that true?

A. I assert my Fifth Amendment privilege.MR. COHEN: Your Honor, at this time the FTC moves

Exhibit 12-L into evidence.

THE COURT: Any objection?

MR. ANDERSON: Well, I object to it, Your Honor. There

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

Trudeau - direct34

is no foundation for it. It's 2008, before the judgment is

entered. And as I indicated in my opening remarks, the law is

quite clear that this kind of past conduct, whatever it is, is

not probative of any present ability to pay. So it's just not,

it's just not an admissible document. It's 2008.

THE COURT: Well, are you contesting the authenticity o

the document?

MR. ANDERSON: No, we are not.

THE COURT: You are contesting --

MR. ANDERSON: No, we're not contesting the

authenticity. I'm contesting the admissibility of it.

THE COURT: Are you contesting the relevance of it?

MR. ANDERSON: I'm contesting relevance, also appears t

be hearsay. So yes, those are the grounds, Your Honor.

THE COURT: Well, that objection will be overruled.

You'll have an opportunity to argue your point or brief your

point if that's necessary with respect to the relevance of the

past on the present. Obviously I'm sure there is a good quote

from somebody a lot smarter than I am about how we get to the

present through the past. But I think that's the only way to ge

to the present.MR. ANDERSON: There are --

THE COURT: Whether it is relevant, excuse me, whether

it is relevant or not, whether it is so far out of the time

period that you claim is relevant here or that I need to examine

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Trudeau - direct35

really goes to weight more than it does relevance or

admissibility. So for those reasons I'm overruling the

objection. And I will overrule the objection, and I'll consider

you having a standing objection for similar documents just to

move this along that counsel --

MR. ANDERSON: To be clear, my objection is on relevancy

and on hearsay. And I will accept the Court's invitation to

submit a brief on the admissibility of these and similar

exhibits. There is authority, other judicial authority on this

issue. I don't know whether it's written by anyone smarter than

Your Honor, but there is judicial authority on this issue.

THE COURT: I wasn't considering judicial authority

necessarily. But I will just say as far as hearsay goes, you

may, I'll give you an opportunity to convince me about that. But

obviously Mr. Trudeau's state of mind is quite relevant to this

inquiry. And a lot of this goes to his state of mind. And a lot

of this is written by him and to him. So ordinarily the hearsay

rule wouldn't apply. Also, Mr. Lane is acting as his agent.

There is probably all kinds of exceptions I can think of for now.

But for now I'm overruling the objections.

(FTC Exhibit 12-L was received in evidence.)

THE COURT: All right. Please proceed.

BY MR. COHEN:

Q. Mr. Trudeau, you instructed Marc Lane to create the Global

Information Network, isn't that true?

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Trudeau - direct36

A. I invoke my Fifth Amendment privilege.

Q. And looking at this December 19, 2008 e-mail, you wrote to

Lane, "We'll give you potential owners next week for Radio and

GIN." Do you see that?


Q. "Radio" refers to KT Radio Network, isn't that true?


Q. And "GIN" refers to Global Information Network, isn't that

true?


Q. You chose who would own the Global Information Network, isn

that true?


Q. And you chose who would own KT Radio Network, isn't that

true?


Q. And then your e-mail continues, "No need to tell FTC about

GIN," isn't that correct?


Q. You gave Marc Lane that instruction, because you intended to

control the Global Information Network, isn't that true?


Q. And you understood that your control over the Global

Information Network would render its assets exposed to the

Federal Trade Commission, isn't that true?

PXA:1



10/34


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

Trudeau - direct37


MR. COHEN: Your Honor, we'd like to point you and the

witness to what has been premarked for identification as FTC

Exhibit 12-D, which is an e-mail from Mr. Trudeau to Mr. Lane on

January 7th, 2009.

BY MR. COHEN:

Q. Mr. Trudeau, do you see that e-mail? We're going to focus on

the second e-mail on the page.


Q. That is your e-mail address on the second e-mail on the page,

is it not?


Q. To your knowledge that's Mr. Lane's e-mail address, is it

not?

MR. ANDERSON: Less there be any waiver, the government

hasn't offered the exhibit into evidence. They just seem to be

launching right into the content of it. So I object to that.

And I object to the admissibility of the exhibits on grounds of

hearsay and relevancy.

MR. COHEN: Your Honor, the FTC --

THE COURT: Again, I'm overruling those, I'm overrulingthose objections on the exhibits, the two I've seen based on

that.

Are you offering this into evidence at this point?

MR. COHEN: Your Honor, at this point the FTC moves FTC

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

Trudeau - direct38

Exhibit 12-D into evidence.

THE COURT: All right. With that understanding I'll

admit it.

(FTC Exhibit 12-D was received in evidence.)

BY MR. COHEN:

Q. In this e-mail you wrote to Marc Lane that he needs to,

quote, "Pull the trigger on Global Information Network," isn't

that true?


Q. And that's because founding the Global Information Network

was your idea, isn't that true?


Q. Let's turn to what's been premarked as FTC Exhibit 31, whic

is a May 4th, 2009 e-mail from the witness to Mr. Lane and

Mr. Neil Sant. Do you see that?


MR. COHEN: Your Honor, we move to admit this exhibit

into evidence as FTC Exhibit 31.

MR. ANDERSON: Your Honor, we object. It's hearsay.

It's also irrelevant.

THE COURT: Same ruling. It will be admitted.(FTC Exhibit 31 was received in evidence.)

BY MR. COHEN:

Q. In the first sentence "Neil," that refers to Neil Sant, isn

that true?

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Trudeau - direct39


Q. And you sent this e-mail, isn't that true?


Q. And this is Neil Sant's e-mail address at the top of the

page, isn't that true?


Q. And he's a close business associate of yours, isn't that

true?


Q. In fact, you've referred to him as your right-hand man, isn't

that true?


Q. You wrote in this e-mail, "Neil, it is very urgent that Marc

Lane set up GIN entity and set up the bank account ASAP," isn't

that true?


Q. And "GIN" refers to the Global Information Network, isn't

that true?


Q. You instructed that the GIN entity be set up, isn't that

true?


Q. And the e-mail continues, "Set up the bank account ASAP,"

isn't that true?


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Trudeau - direct40

Q. You instructed that its bank account be set up, isn't that

true?


Q. In fact, the Global Information Network was part of your

vision, isn't that true?


Q. You shared that vision with Mr. Lane, isn't that true?


Q. And when you shared that vision with Mr. Lane, you never tol

anyone at Mr. Lane's firm that what you characterized as your

vision was actually your wife's vision, isn't that true?


Q. That vision expressed in 2009 included a GIN headquartered i

Nevis, isn't that true?


Q. Global Information Network FDN is now based in Nevis, isn't

that true?


Q. And your vision included a GIN that would contract with a ne

Swiss company called Website Solutions Switzerland, isn't that

true?


Q. And a new Swiss company called Website Solutions Switzerlan

was, in fact, formed, isn't that true?


PXA:1



11/34


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

Trudeau - direct41

Q. I'll refer for convenience to Website Solutions Switzerland

as WSS, is that understood?


Q. And your vision included WSS employing you, isn't that true?


Q. And your vision also included a contract between WSS and a

company called Website Solutions USA, isn't that true?


Q. And there is now a contract between Website Solutions

Switzerland and Website Solutions USA, isn't that true?


Q. I'll refer to Website Solutions USA as WSU. Do you

understand?


Q. Your vision expressed in 2009 also included that Website

Solutions USA would employ Neil Sant, isn't that true?


Q. And until last month, Website Solutions USA did, in fact,

employ Neil Sant, isn't that true?


MR. COHEN: Your Honor, I direct the Court's attentionand the witness's attention to what's been premarked as FTC

Exhibit 12-I. And that may be one that is omitted from what we

provided to the Court, so we'll provide the Court with another

copy.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

Trudeau - direct42

THE COURT: I have it.

MR. COHEN: I just don't have it.

MR. KIRSCH: What number?

MR. COHEN: 12, FTC Exhibit 12-I, which is an e-mail

from --

MR. ANDERSON: Excuse me, Mr. Cohen. Is that in the

batch you just gave us?

MR. COHEN: It may have been omitted in the batch, but

it's in the binders marked for identification as 12-I.

MR. ANDERSON: Okay. I didn't see it in the batch you

gave me. Could I have a moment?

MR. COHEN: Yes.

THE COURT: October 20th?

MR. COHEN: That's correct, October 20th, 2009.

Mr. Anderson, just let me know when you've had an

opportunity to catch up.

MR. ANDERSON: 12-I. I've located it. Thank you.

BY MR. COHEN:

Q. Mr. Trudeau, do you also have a copy of what's been premarke

as 12-I?

A. I invoke my Fifth Amendment privilege.Q. 12-I is an e-mail from Mr. John Lipinsky to various persons

including Mr. Trudeau dated October 20th, 2009.

MR. COHEN: Your Honor, the FTC moves to admit this as

FTC Exhibit 12-I.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Trudeau - direct43

THE COURT: Who is Mr. Lipinsky?

MR. ANDERSON: I object to the exhibit, Your Honor.

THE COURT: I was asking a question, Mr. Anderson.

MR. ANDERSON: I'm sorry.

THE COURT: I'm sorry, you may not have heard, but I was

going to ask the question, who is Mr. Lipinsky?

MR. COHEN: Mr. Lipinsky is an attorney at the Law

Offices of Marc J. Lane. And if it would be helpful, I can

inquire of the witness to that effect.

MR. ANDERSON: Well, may I be heard, Your Honor?

THE COURT: You may.

MR. ANDERSON: Mr. Trudeau doesn't even appear to be on

this document. He doesn't appear to be an author. He doesn't

appear to be a recipient. It wouldn't be proper to ask

Mr. Trudeau about this under any circumstances. So I object to

the form of the question. I object to the lack of foundation.

And I object to hearsay and to relevancy.

MR. COHEN: Your Honor, if I may? The Law Offices of

Marc J. Lane are the agents of Mr. Trudeau, and this is a

communication between two agents of Mr. Trudeau.

MR. ANDERSON: Your Honor, I disagree with that. It's

just blatant hearsay. There is no hearsay, there is no hearsay

exception here.

MR. COHEN: There certainly is a hearsay exception for

agents of a party opponent.

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Trudeau - direct44

THE COURT: Well, it may be a business record as well.

I'll admit it conditionally. You go ahead and ask questions to

try to establish a foundation. We can talk about that later.

BY MR. COHEN:

Q. Mr. Trudeau, John Lipinsky was an attorney at Marc Lane's la

firm, isn't that true?


Q. And Marc Lane's law firm was representing you as of October

20th, 2009, isn't that true?


Q. This document contains a subheading toward the top entitled

"Mr. Trudeau's Vision," isn't that true?


MR. ANDERSON: I object to the form of the question.

There is no basis to ask Mr. Trudeau about a document he didn't

author, receive, send. I object to the form of the question.

THE COURT: You can ask him if he's ever seen it befor

BY MR. COHEN:

Q. Mr. Trudeau, have you ever seen this document before?


Q. Mr. Trudeau, this document accurately recounts what your

vision was, isn't that true?


Q. Mr. Trudeau, you had a conversation with attorneys at Marc

Lane's law firm in which you expressed to them what your vision

PXA:1



12/34


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

Trudeau - direct45

was, isn't that true?


Q. And this is a document that reflects the substance of that

conversation with your agents at Marc J. Lane Law Firm, isn't

that true?


Q. And this document accurately recounts what your vision was,

isn't that true?


Q. You're a member of the Global Information Network, isn't that

true?


Q. And in that capacity you have received commissions, isn't

that true?


Q. In fact, you're the highest ranking member in the Global

Information Network, isn't that true?


Q. And you've received hundreds of thousands of dollars in

commissions from the Global Information Network, isn't that true?

A. I invoke my Fifth Amendment privilege.Q. And you haven't used any of that to comply with this Court's

order to pay, isn't that true?


Q. You're familiar with an entity known as GIN USA, Inc, isn't

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

Trudeau - direct46

that true?


Q. It was created by Mr. Lane -- strike that. It was created b

Marc Lane's law firm at your instruction, isn't that true?


Q. And you instructed Lane to create GIN USA as an entity that

your wife, Babenko, would nominally own, isn't that true?


Q. That entity was recently dissolved isn't that true?


Q. And it was dissolved on your instruction, isn't that true?


Q. Before it was dissolved, you decided who its directors would

be, isn't that true?


Q. Before it was dissolved, you made the financial decisions fo

GIN USA, isn't that true?


Q. And you made the banking decisions for GIN USA, isn't that

true?

A. I invoke my Fifth Amendment privilege.Q. And you made the decisions for GIN USA regarding its busines

strategy, isn't that true?


Q. And you decided where GIN USA would be located, isn't that

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Trudeau - direct47

true?


Q. You decided that it would be located at 130 Quail Ridge Drive

in Westmont, Illinois, isn't that true?


Q. And that's where other companies you own are also located,

isn't that true?


Q. And you made decisions regarding GIN USA's intellectual

property, isn't that true?


Q. And you made legal decisions for GIN USA, isn't that true?


Q. Mr. Trudeau, I draw your attention and the Court's attention

to what's been premarked as FTC Exhibit 11-Q, which is an e-mail

from the witness to Neil Sant on September 4th, 2012.

MR. COHEN: Your Honor, the FTC moves to admit this

document into evidence.

MR. ANDERSON: And I object, Your Honor, on previously

stated grounds.

THE COURT: All right. Same ruling then. It will be

admitted.

(FTC Exhibit 11-Q was received in evidence.)

BY MR. COHEN:

Q. Mr. Trudeau, you write, "We need lawyers to represent GIN,"

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Trudeau - direct48

isn't that true?


Q. And "We need lawyers," you write, "We need lawyers to

represent Natashya and all of her companies," isn't that true?


Q. And you write, "We need lawyers to represent the trust,"

isn't that true?


Q. And that trust is KMT Fiduciary Trust, isn't that true?


Q. Legal decisions you made for GIN USA include GIN USA's legal

strategy in these proceedings, isn't that true?

A. Can you rephrase that question?

Q. You made legal decisions for GIN USA, isn't that true?


Q. And some of those legal decisions included GIN USA's legal

strategy in these proceedings, isn't that true?


Q. The Lane firm represented GIN USA sometime after June 2010,

isn't that true?


Q. And the Lane firm provided advice to GIN USA, isn't that

true?


Q. When the Lane firm provided advice to GIN USA, it sometimes

PXA:1



13/34


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

Trudeau - direct49

provided that advice to you, isn't that true?


Q. But no one authorized you to receive legal advice on behalf

of GIN USA, isn't that true?


Q. And sometimes you requested legal advice from the Lane firm

on behalf of GIN USA, isn't that true?


Q. But no one ever authorized you to request legal advice on

behalf of GIN USA, isn't that true?


Q. At times since June 2nd, 2010, GIN USA possessed assets,

isn't that true?


Q. At times since June 2nd, 2010, GIN USA has possessed assets

that you could have used to satisfy the Court's order to pay,

isn't that true?


Q. Let's turn to Global Information Network FDN. You're

familiar with an entity known as GIN FDN, are you not?

A. I invoke my Fifth Amendment privilege.Q. You instructed that GIN FDN be created as a foundation that

your wife would nominally own, isn't that true?


Q. It's based offshore in St. Kitts, is it not?

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

Trudeau - direct50


Q. It was your decision to locate GIN FDN there, isn't that

true?

A. Where?

Q. It was your decision to locate GIN FDN in St. Kitts and

Nevis, isn't that true?


Q. You decided GIN FDN's business plan, isn't that true?


Q. You make GIN FDN's financial decisions, isn't that true?


Q. And you make the banking decisions for GIN FDN, isn't that

true?


Q. Those decisions included opening a bank account in

Lichtenstein, isn't that true?


Q. And Mr. Lane helped GIN FDN set up that bank account in

Lichtenstein, isn't that true?


Q. And Mr. Sant also traveled to Lichtenstein to help GIN FDNset up an account there, isn't that true?


Q. Just to be clear, Mr. Lane traveled to Lichtenstein to help

GIN FDN set up a bank account there on behalf of GIN FDN?

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Trudeau - direct51


Q. You told Sant what to tell bank officers in Lichtenstein,

isn't that true?


MR. COHEN: Your Honor, we direct the Court's attention

and the witness's attention to what has been previously marked as

FTC Exhibit 11-F, which is a series of e-mails between Trudeau

and Sant dated July 21st, 2010. Your Honor, we move to admit

this proposed exhibit.

MR. ANDERSON: I object on previously stated grounds,

Your Honor.

THE COURT: All right. Same ruling. Go ahead. It will

be admitted.

(FTC Exhibit 11-F was received in evidence.)

BY MR. COHEN:

Q. Mr. Trudeau, I direct your attention to the third e-mail down

from the top of the page, which is an e-mail from you to

Mr. Sant. Do you see that?


Q. You write to Sant, "I need the address of the bank. We will

drive there and meet you someplace close to the bank. The deal

should be that Natalie does not run GIN." Isn't that what the

e-mail says?


Q. And "Natalie" is a reference to your wife, isn't that true?

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Trudeau - direct52


Q. The e-mail continues, "She has turned it all over to you.

You had GIN hire Web Solutions in Zurich and America to handle

everything and CPI and Jeff's company. You pretty much know

everything. Natalie knows nothing." You gave Neil that

instruction, isn't that true?


Q. And the e-mail continues, "Most of her answers should be 'I

do not know, Neil handles it.'"

Natalie, your wife, has nothing to do with running GIN

FDN, isn't that true?


Q. A bank account was, in fact, set up in Lichtenstein, isn't

that true?


Q. And that bank account was set up on behalf of GIN FDN, isn't

that true?


Q. And that bank account in Lichtenstein holds cash, isn't that

true?


Q. In fact, in accordance with the court order, you paid $2

million into an escrow account, isn't that true?


Q. You said that that money was a loan from a GIN affiliate,

PXA:1



14/34


1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

Trudeau - direct53

isn't that true?


Q. And that loan was never documented, isn't that true?

A. What does "documented" mean?

Q. That loan was never recorded in writing, isn't that true?


Q. And that loan was never repaid, isn't that true?


Q. And the $2 million paid into escrow on your behalf came from

GIN FDN, isn't that true?


Q. Before you paid the $2 million into escrow, you considered

posting a bond instead, isn't that true?


MR. COHEN: Your Honor, we turn the Court's attention

and the witness's attention to what has been premarked for

identification as FTC Exhibit 12-K, which is e-mails between

Mr. Lane sent to the witness and copied to Mr. Sant. The first

e-mail at the bottom of the page is dated December 1st, 2011.

Your Honor, we move to offer this exhibit into evidence.

THE COURT: Same objection? Same ruling.MR. ANDERSON: Yes, Your Honor.

THE COURT: All right. Thanks.

(FTC Exhibit 12-K was received in evidence.)

BY MR. COHEN:

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

2122

23

24

25

Trudeau - direct54

Q. Mr. Trudeau, we direct your attention to that earlier e-mai

which begins in the bottom of the first page, dated December 1st

2011 and continues on to the second page. Do you see that?


Q. You wrote, "Neil, you need to work out the details of having

another company like GIN buy a $2 million bond so we can start

producing and airing infomercials ASAP." Isn't that true?


Q. And if you look at the first e-mail on the first page, Lane

wrote back to you the next day and said, "KT, I think this is an

excellent idea and, in fact, raised this very possibility with

Neil yesterday." That's what the e-mail says, isn't that true?


Q. Lane continued writing to you, "As you've recognized,

securing a bond and keeping it beyond the FTC's reach will

require careful planning." Lane wrote that, isn't that true?


Q. Your goal was to get $2 million that you controlled into the

escrow account while keeping it beyond the FTC's reach, isn't

that true?

MR. ANDERSON: Your Honor, I object to the form o

Trudeau Civil Case Document 723 Attachment 6 of 9-07-22 13 Transcript of 05-21-13 Hearing

Documents

Transcript of Trudeau Civil Case Document 723 Attachment 6 of 9-07-22 13 Transcript of 05-21-13 Hearing