Timothy Mcginn Testimony 1103

1 McGINN - DIRECT - COOMBE 1

TIMOTHY McGINN,

2

having been duly sworn by the Clerk of the Court, was

3

examined and testified as follows:

4 5

THE CLERK:

just ask that you speak into the microphone.

6 7

THE COURT:

You can adjust that to make it as

comfortable as you wish.

8 9

Just take a seat up there and

THE WITNESS:

Thank you.

DIRECT EXAMINATION BY MS. COOMBE:

10

Q.

Good morning, Mr. McGinn.

11

A.

Good morning.

12

Q.

Could you please introduce yourself to the ladies

13 14

and gentlemen of the jury. A.

Yes.

My name is Timothy McGinn.

I live in

15

Niskayuna, New York, and I'm chairman of the board of McGinn

16

Smith & Company, which is an investing banking and merchant

17

banking firm headquartered in Albany.

18 19 20

Q.

Thank you.

Can you please tell us about your

educational background? A.

I have a Bachelors of Science in mechanical

21

engineering from the Rochester Institute of Technology.

22

also studied statistical analysis and operations research at

23

the masters level at Union College.

24 25

Q.

I

Now, you mentioned already that you are the CEO,

is that correct? BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

2 McGINN - DIRECT - COOMBE 1

A.

Chairman of the board.

2

Q.

Chairman of the board of McGinn Smith.

3 4

Tell us

again, what kind of company is McGinn Smith? A.

McGinn Smith is an investment banking slash

5

merchant banking slash stock brokerage firm which was

6

founded in Albany in 1980.

7

Q.

Do you have any partners?

8

A.

Yes.

9

Q.

Who is your partner?

10

A.

I have two partners, David Smith and Tom

11 12 13

Livingston. Q.

Do you -- how long has Mr. Livingston been one of

your partners?

14

A.

Since January of 19 -- of 2004.

15

Q.

Before that time, how did you and Mr. Smith divide

16 17 18 19 20

up the responsibilities of running McGinn Smith & Company? A.

I basically ran the banking practice and David ran

the brokerage side of the business. Q.

And has that changed since Mr. Livingston has

joined you?

21

A.

Well, it's changed a couple of times since then.

22

Q.

Can you tell us, do you still generally run the

23

investment banking?

24

A.

I do.

25

Q.

And Mr. Smith still generally runs the brokerage BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

3 McGINN - DIRECT - COOMBE 1

business?

2

A.

Correct.

3

Q.

What does Mr. Livingston do then?

4

A.

Mr. Livingston is no longer affiliated with the

6

Q.

What did Mr. Livingston do?

7

A.

He ran the syndicate desk for the firm.

8

Q.

Now, as the broker, what does McGinn Smith do?

9

A.

McGinn Smith trades on all of the securities

5

firm.

10

exchanges in the United States with the exception of

11

commodities.

12

Q.

As an investment banker, what does McGinn Smith

A.

McGinn Smith raises capital for various businesses

13 14

do?

15

and non-profits, health care related, security alarm

16

related, cable TV related, various other industries, and has

17

done so for 30 years.

18 19 20

Q.

Does McGinn Smith do anything else in connection

with its investment banking work? A.

We write fairness opinions.

We offer valuations.

21

We give advice relative to mergers and acquisitions.

22

That's, that's pretty -- a pretty broad category.

23

Q.

Do you know Senator Joseph Bruno?

24

A.

I do.

25

Q.

Did McGinn Smith ever employ Senator Bruno? BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

4 McGINN - DIRECT - COOMBE 1

A.

Yes.

2

MS. COOMBE:

3

THE COURT:

4 5 6

Your Honor, may I approach? Please.

BY MS. COOMBE: Q.

Mr. McGinn, I'm showing you what's Government's

Exhibit G A 1.

Do you recognize it?

7

A.

I do.

8

Q.

What is it?

9

A.

This is a letter which was written by me to

10

Senator Bruno.

The date of the letter is December 17, 1992.

11

Q.

Could we please look at the second page of the

12

letter.

13

A.

It is.

14

Q.

All right.

Is that your signature there, Mr. McGinn?

If we could go back and look at the

15

first page of the letter please.

At the top, it's the

16

McGinn Smith Incorporated letterhead.

17

two terms there, investment bankers and investment brokers,

18

and they're separated with a bullet in between them.

19

were the terms separated like that?

And you see there's

Why

20

A.

Well, their different functions.

21

Q.

Now, the letter is addressed to Senator Bruno.

22

And let's look at the first sentence.

It reads:

The

23

following will describe the relationship between yourself

24

and the firm, as is currently envisioned.

25

it says job description.

And then you see

And if you keep going farther

BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

5 McGINN - DIRECT - COOMBE 1

down, under number three, do you see that there's a part

2

that says money management relationships with labor unions?

3

Do you see where I am, Mr. McGinn?

4

A.

I do.

5

Q.

And it says assist in the development of money

6

management relationships with labor unions, pension plans.

7

Why did you focus on those categories of relationships in

8

this letter that you wrote to Senator Bruno?

9

A.

Well, these are large accounts.

The Taft-Hartley

10

was large and growing.

11

universe that McGinn Smith did not have deep penetration in.

12

We were looking to expand that penetration, and we believed

13

that Senator Bruno would be a significant ally in that

14

attempt.

15

Q.

It was a part of the investment

And just to make sure that I understand, what did

16

labor unions have that made targetting relationships with

17

unions attractive?

18

A.

Well, labor unions had a vast amount of capital

19

invested in their pension plans.

20

of trustees who determined who would manage those funds.

21

That board of trustees was made up of both union people and

22

management people.

23

for us if we could have someone spearhead it.

24

Senator Bruno to do so.

25

Q.

They typically had a board

We felt that it was a good target market And we chose

Could you look back at the exhibit again, G A 1, BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

6 McGINN - DIRECT - COOMBE 1

and do you see where it says compensation?

2

A.

I do.

3

Q.

And it says there, monthly draw of $2,000 versus

4

fees generated.

5

that.

And then there are some percentages below

Do you see where I am?

6

A.

I do.

7

Q.

Can you explain what a draw versus fees generated

8 9

compensation agreement means? A.

Basically what it means is that we live in what I

10

would characterize an eat what you kill environment.

11

the extent that this became a very profitable business, that

12

draw would increase.

13

profitable business, at some point that draw would cease.

14

Q.

So to

To the extent that it was not a

Did Senator Bruno, in fact, generate fees for

15

McGinn Smith related to the job description, assist in the

16

development of money management relationships with labor

17

unions?

18

A.

Yes.

19

Q.

From which labor unions were fees generated for

20 21 22 23 24 25

McGinn Smith & Company? A.

Well, there were a couple.

There was the

Hospitality Workers Union, as well as the Teamsters. Q.

Was that business from labor unions in the nature

of investment banking or investment brokerage business? A.

That was on the brokerage side. BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

7 McGINN - DIRECT - COOMBE 1

Q.

Other than from labor unions, did McGinn Smith

2

obtain any business as a result of Senator Bruno's

3

relationship with McGinn Smith?

4

A.

I don't believe so.

5

Q.

All right.

Now, if you could continue on in the

6

letter and look at the next page, please.

Underneath

7

anticipated grant up at the bottom there, if you look a

8

little below that, you see it says, as we discussed ... we

9

would provide office space at McGinn Smith offices to be

10

furnished by us or with your furniture, your choice.

11

that ever occur?

12

McGinn Smith?

Did Senator Bruno report to an office at

13

A.

We provided an office for Senator Bruno.

14

Q.

Okay.

15

A.

On occasion.

16

Q.

How often did he use it?

17

A.

Oh, I don't recall how often.

18 19 20

Did

Did he use that office?

It wasn't terribly

frequent. Q.

Can you give us some idea of how many times a year

he used it?

21

A.

Half a dozen.

22

Q.

And can you give us an idea for how many years he

23

used it about a half a dozen times a year?

24

A.

I, I would be guessing.

25

Q.

When was -- I'm sorry, go ahead. BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

8 McGINN - DIRECT - COOMBE 1

A.

(No response.)

2

Q.

When was the last time that Senator Bruno used the

3

offers space at McGinn Smith?

4

A.

2000.

5

Q.

All right.

Do you see in the next paragraph it

6

says, our intent would be to issue simultaneous press

7

releases announcing the affiliation.

8

press releases announcing Senator Bruno's affiliation with

9

McGinn Smith & Company?

Did you ever issue

10

A.

No.

11

Q.

Why not?

12

A.

I believe that the Senator deferred from making

13 14 15 16

those public announcements. Q.

What do you mean the Senator deferred from public

making the public announcements? A.

We never got it done.

17

Senator Bruno didn't press it.

18

those things.

19 20 21

Q.

We didn't press it. And we, we never did any of

Did Senator Bruno indicate that he had some

reservations about doing that? A.

I don't know if he specifically said he had

22

reservations, but we didn't do it, and we didn't do it

23

largely because Senator Bruno was, was not interested in

24

doing that.

25

Q.

You also -- the letter goes on to say, appropriate BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

9 McGINN - DIRECT - COOMBE 1

tombstone ads would be placed in public occasions jointly

2

selected.

3

A.

What's a tombstone ad? A tombstone ad is typically something that occurs

4

after a transaction has been completed or a significant hire

5

has been announced, and it merely states the facts.

6 7

Q.

Did Senator Bruno agree to the placement of

tombstone ads?

8

A.

We didn't do any placements of tombstone ads.

9

Q.

Was that for the same reasons that the press

10

releases were not done?

11

A.

I believe so.

12

Q.

The letter goes on to say further, engraved

13

announcements will be sent to a list jointly generated.

Did

14

Senator Bruno ever agree to sending engraved announcements?

15

A.

We never did that either.

16

Q.

Was that for the same reason?

17

A.

I think so.

18

Q.

The letter states, additionally, we would wish to

19

host a dinner with our larger clients welcoming you to the

20

firm.

Did Senator Bruno ever agree to such a dinner?

21

A.

We never had that dinner.

22

Q.

Was that for the same reason?

23

A.

Yes.

24

Q.

Did you meet with Senator Bruno to discuss his

25

possible employment by McGinn Smith? BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

10 McGINN - DIRECT - COOMBE 1

A.

Yes.

2

Q.

Who arranged the meeting?

3

A.

James Featherstonhaugh.

4

Q.

Who was present at that meeting?

5

A.

Senator Bruno, myself, and Mr. Featherstonhaugh.

6

Q.

Where did that meeting take place?

7

A.

I recall it taking place at the University Club.

8

Q.

Please tell us what you recall saying to Senator

9

Bruno and what he said to you during that meeting.

10

A.

Well, the meeting was in 1992.

Seventeen years

11

ago.

My recollection is that we described the opportunity.

12

Senator Bruno was familiar with the firm.

13

firm to do some work for his company Coradian.

14

to describe the types of things that we had done and were

15

doing where we thought there were business opportunity,

16

where we thought he could provide strategic input and

17

assistance, talked in general about compensation levels, and

18

further elaborated to that point in this letter dated

19

December 17th, and told Senator Bruno we would be

20

delighted to have him join the firm.

He had hired the We went on

21

Q.

What was Senator Bruno's reaction at this meeting?

22

A.

Oh, I think he was flattered.

He indicated that

23

this was something he would have to run by his, his ethics

24

people and his counsel, but he would get back to us; he

25

would think about it and get back to us. BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

11 McGINN - DIRECT - COOMBE 1 2

Q.

Did Senator Bruno ever bring any lawyers from the

New York State Senate to any meetings with you?

3

A.

No.

4

Q.

You mentioned earlier that McGinn Smith & Company

5

obtained business from two accounts.

6

the first one?

7

one was the hospitality?

How did you refer to

One was the Teamsters account, and the other

8

A.

That's correct.

9

Q.

And that was as a result of Senator Bruno's

10

efforts?

11

A.

Correct.

12

Q.

Was that business directly with the unions?

13

A.

No.

The way the business worked was that the

14

unions would employ an investment adviser.

15

Wright Investors Services.

16

would execute trades through McGinn Smith & Company.

17

that's how McGinn Smith & Company would be compensated.

18 19 20

Q.

In this case

And Wright Investors Services And

Did McGinn Smith have any arrangement with Wright

Investors Services? A.

Well, the arrangement we had was that, to the

21

extent that our efforts delivered accounts to Wright

22

Investors Services, that we would be the beneficiary of the

23

commissioned business.

24 25

Q.

Did McGinn Smith have a written agreement with

Wright Investors Services to that effect? BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

12 McGINN - DIRECT - COOMBE 1

A.

No.

2

Q.

Was there some meeting or discussion with

3

representatives of Wright Investors at which this

4

arrangement was agreed to?

5

A.

Yes.

6

Q.

When did that meeting occur?

7

A.

I don't know.

I don't know exactly when that

8

meeting occurred.

9

by my partner Mr. Smith, who, as I said earlier, runs the

10

I believe that the meeting was attended

brokerage side of the business.

11

Q.

Did you attend that meeting?

12

A.

I don't believe so.

13

Q.

Was each account on when Wright agreed that McGinn

14

Smith would get commissions a labor union?

15

A.

Well, that's the way it turned out.

16

Q.

You remember that there were two unions that were

17

involved in generating commissions for McGinn Smith, the --

18

A.

True.

19

Q.

-- Hospitality and the Teamsters?

20

A.

Correct.

21

Q.

Why was it that Wright Investors agreed that

22

McGinn Smith would get commission business on trades

23

involving the Teamsters account?

24 25

A.

Well, that's a normal and customary practice in

the industry. BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

13 McGINN - DIRECT - COOMBE 1

Q.

Why was it a normal and customary practice in the

2

industry?

3

give McGinn Smith that brokerage business?

4 5 6 7

What did McGinn Smith do to convince Wright to

A.

Well, McGinn Smith was instrumental in delivering

that business to Wright. Q.

How was it instrumental in delivering that

business to Wright?

8

A.

The door was opened by Senator Bruno.

9

Q.

Who was the person at the Teamsters who Senator

10 11 12

Bruno contacted to open the door for Wright? A.

The fellow's name was Whitey.

I can't recall his

last name.

13

Q.

What was his role at the Teamsters?

14

A.

He was a trustee.

15

Q.

Did he have any role within the union itself other

16 17

than being a Teamster? A.

Well, he was a trustee of the pension plan, and I

18

believe he may have been the executive director of that

19

particular Local.

20 21

Q.

Regardless of what the title was, do you remember

that he was the head of that particular Local?

22

A.

Yes.

He was very influential.

23

Q.

Now, you also mentioned the Hospitality as one of

24

the unions from which McGinn Smith obtained commissioned

25

business. BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

14 McGINN - DIRECT - COOMBE 1

A.

Correct.

2

Q.

Was it that Wright agreed that McGinn would get

3

commissioned business on trades involving the Hospitality

4

union?

5 6 7 8

A.

Again, that was a piece of business that McGinn

Smith delivered to Wright Investors Services. Q.

Who was the person at the Hospitality union who

Senator Bruno contacted?

9

A.

I believe that was Mr. Wolfgang Hammer.

10

Q.

What was his role at the union?

11

A.

I believe he too was a trustee of the pension plan

12

and may have been -- his title may have been executive

13

director of that particular Local.

14

Q.

How long did that agreement between McGinn Smith

15

and Wright Investors Services regarding brokerage trade

16

executions for clients referred by Senator Bruno, how long

17

did that last?

18

A.

Well, it was supposed to last indefinitely.

It,

19

it, it lasted for, perhaps, eight years, seven years, six

20

years.

21 22 23

Q.

I, I, I don't have the date in front of me. What happened during the course of that

relationship? A.

Well, during the course of the relationship, we

24

had some very good years with Wright, and then their

25

business began to tail off.

We went back to Wright and said

BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

15 McGINN - DIRECT - COOMBE 1

hey, why aren't we getting some more business?

And they

2

gave us lots of reasons, some of which we believed.

3

some point in time, it just, it just tailed off to a point

4

where it became -- the relationship became quite

5

unprofitable and we terminated the relationship.

And at

6

Q.

When did that occur?

7

A.

I would think somewhere in the 2003, 2004 time

8 9

frame. Q.

Now, when you say you terminated the relationship,

10

was that McGinn Smith & Company's relationship with Wright

11

Investors Services?

12

A.

Well, actually, Wright Investors Services had de

13

facto terminated that relationship.

14

was our relationship with Senator Bruno.

15 16

Q.

What I was referring to

When you say that Wright Investors Services had de

facto terminated the relationship, what do you mean by that?

17

A.

The business flow stopped.

18

Q.

In other words, you didn't get brokerage

19

commission -- I'm sorry -- you didn't get trades to execute

20

any more for those accounts?

21

A.

That's correct.

22

Q.

Did you ever have a discussion with Senator Bruno

23

in which the topic of the ethics of his working for McGinn

24

Smith was raised?

25

A.

Well, I can recall two such conversations. BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

16 McGINN - DIRECT - COOMBE 1 2 3

Q.

Is there -- there's some event that had occurred

that enables you to remember one of those conversations? A.

Well, the first event was the initial meeting at

4

the University Club with Mr. Featherstonhaugh.

5

was a subsequent meeting a luncheon meeting that was

6

attended by myself, Senator Bruno, and my partner Dave

7

Smith, and that occurred shortly after Senator Bruno had

8

been elected or had been -- had risen to the level of Senate

9

Majority Leader.

10

Q.

And there

Please tell us what Senator Bruno said to you at

11

this meeting and what you said to him on the topic of the

12

ethics of Senator Bruno working for McGinn Smith.

13

A.

Well, when Senator Bruno became the majority

14

leader, he became more concerned about the ethics issue.

He

15

indicated to us at that time that his new responsibilities

16

would take on a greater purview, cover more of the

17

landscape, and he wanted to go back to his ethics people and

18

make sure that, as the Senate Majority Leader, he would, he

19

would be okay to continue in the same vein that he had

20

previously.

21

Q.

Did he ever get back to you on that?

22

A.

He did not.

23

Q.

Do you remember that at some point he came back to

24 25

you on that issue? A.

Well, at some point he came back to us and said BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

17 McGINN - DIRECT - COOMBE 1

yeah, we're clear to go ahead, because we did go ahead.

2

Q.

Did he tell you who had cleared it to go ahead?

3

A.

Not specifically, no.

4

Q.

Did he tell you generally?

5

A.

No.

6

Q.

During this discussion, did Senator Bruno tell you

7

what he had disclosed about soliciting labor unions?

8

A.

No.

9

Q.

Now, you mentioned there had been an earlier

10

conversation, the one that you've already testified about

11

earlier today.

12

the ethics issues or the ethics issues involved in him

13

working for McGinn Smith?

14

A.

What did Senator Bruno tell you then about

Well, as I said earlier, he had indicated that any

15

such arrangement would be subject to the review of his

16

various counsel and ethics committee people and came back to

17

us when we decided to go forward jointly and indicated that

18

whatever they said was, was a tacit approval of such an

19

arrangement.

20

Q.

21 22 23

And that occurred at the time that you first met

with him? A.

It clearly occurred sometime prior to

December 17th, 1992.

24

MS. COOMBE:

25

THE COURT:

May I approach, your Honor? Please.

BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

18 McGINN - DIRECT - COOMBE 1

BY MS. COOMBE:

2 3

Q.

Mr. McGinn, I'm showing you what's been marked as

Government's Exhibit G A 3.

Can you tell us what this is?

4

A.

This is an IRS Form W-4.

5

Q.

Do you see a handwritten note at the bottom of the

6

exhibit where it says per TMM...

7

to you, Mr. McGinn?

Does that look like an M

8

A.

It does.

9

Q.

DLS...

10

A.

Yes.

11

Q.

1/15/93, pay $2,000 per pay period.

12

A.

TMM are my initials and DLS are David Smith's

initials.

15

Q.

I mentioned a date there as well, January 15th of

16

1993.

17

Bruno began to work for McGinn Smith & Company?

18

Is that consistent with your memory of when Senator

A.

Yes.

19

MS. COOMBE:

20

THE COURT:

21 22 23

Whose

initials are TMM and DLS?

13 14

Does that say start?

May I approach, your Honor? Please.

BY MS. COOMBE: Q.

Mr. McGinn, I'm showing you what has been marked

as Government's Exhibit G A 4.

24

A.

I do.

25

Q.

What is it?

Do you recognize that?

BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

19 McGINN - DIRECT - COOMBE 1 2

A.

This is a W-2 form for tax purposes.

It's an

earning summary.

3

Q.

Does that indicate who the employer is?

4

A.

It does.

5

Q.

Who does it indicate that the employee is?

6

A.

Joseph L. Bruno.

7

Q.

Does it indicate how much money McGinn Smith paid

8

Senator Bruno in 1994?

9

A.

Yes.

10

Q.

How much?

11

A.

$24,500.

12

MS. COOMBE:

13

THE COURT:

14 15 16

May I approach, your Honor? Please.

BY MS. COOMBE: Q.

Mr. McGinn, I'm showing you now what's been marked

as Government's Exhibit G A 5.

Do you recognize that?

17

A.

I do.

18

Q.

What is it?

19

A.

G A 5 is a series of three checks, front and back,

20

dated 12/16/98, 12/20/98 and 2/10/99.

21

Q.

Who are the checks made payable to?

22

A.

Each of these checks is made payable to Business

23

Consultants Inc.

24

Q.

Do you recognize the address on the checks?

25

A.

I do. BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

20 McGINN - DIRECT - COOMBE 1 2 3 4

Q.

And that's 345 Bulson Road in Troy, New York.

you know whose address that is? A.

That's the address for Senator Bruno's consulting

business.

5

Q.

Do you know who lives at 345 Bulson Road?

6

A.

I have no idea.

7

Q.

Do you know where Senator Bruno's lives?

8

A.

I do.

9

Q.

Have you been to his house?

10

A.

Yes.

11

Q.

Do you know where it is?

12

A.

It's in Bulson Road, but I don't know the exact

13 14

address. Q.

I'm going to show you now...

15

MS. COOMBE:

16

THE COURT:

17 18 19 20

Do

May I approach, your Honor? Please.

BY MS. COOMBE: Q.

Mr. McGinn, this is Government's Exhibit G A 14.

Can you tell us what that is? A.

G A 14 is a spreadsheet which is a vendor history

21

indicating the payments made by McGinn Smith & Company Inc.

22

to Business Consultants Inc. for various fiscal years.

23

Q.

Now, this exhibit appears to be in chronological

24

order of fiscal year with the most recent first.

25

to the last page of the exhibit and look at the earliest BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

Let's turn

21 McGINN - DIRECT - COOMBE 1

entry.

What fiscal year is that entry for?

2

A.

Well, there --

3

Q.

Let's focus first on the vendor history, not the

4

last page of the exhibit, Mr. McGinn, but the last page of

5

the vendor history.

6

A.

1995.

7

Q.

The far left column is a title Vendor.

8

A.

Yes.

9

Q.

All the way over to the left.

10

A.

Correct.

11

Q.

What is the vendor listed?

12

A.

Bruno J.

13

Q.

Is that a reference to Senator Bruno?

14

A.

I assume so.

15

Q.

And the next column, if we could just look at the

16

beginning of it there.

17

see that?

The next column reads Name.

Do you

18

A.

I do.

19

Q.

Do each of these entries show the same name in

20

that column?

21

A.

Yes.

22

Q.

What is it?

23

A.

Business Consultants Inc.

24

Q.

All right.

25

exhibit now?

Can we look at this last page of the

BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

22 McGINN - DIRECT - COOMBE 1

A.

Sure.

2

Q.

Do you see that that is a different spreadsheet?

3

A.

I do.

4

Q.

And this last page, do you see that it includes

5

1993 and 1994, which were not on the vendor history that we

6

just looked at?

7

A.

Yes.

8

Q.

Do you also see that there's an overlap between

9

the two spreadsheets for 1995 through 2002?

10

A.

Yes.

11

Q.

Do the figures for the overlapping years on each

12

spreadsheet roughly correspond to one another?

13

A.

Yes.

14

Q.

Are there some variations?

15

A.

There are timing variations.

16

Q.

Could you explain what you mean by that?

17

A.

Timing variations, for instance, if you look at

18

'95 and '96, the total amount would have been 144,000, yet

19

the schedule, as shown on page four, does not show it broken

20

out as the same amount per year, but the total is the same.

21

Which is to say that there was more paid in '96 in one

22

column than the other by $6,000.

23

Q.

Okay.

If we could look at the last page of this

24

exhibit again, do you see where it says net commission, rev,

25

R-E-V? BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

23 McGINN - DIRECT - COOMBE 1

A.

Yes.

2

Q.

Is that an abbreviation, rev?

3

A.

Net commission revenue.

4

Q.

Is that the revenue generated by accounts which

5

Senator Bruno introduced?

6

A.

Yes.

7

Q.

Okay.

8

was the 1994 W-2.

If we could go back to look at G A 4. Do you have it, Mr. McGinn?

9

A.

I do.

10

Q.

Other than that W-2 for 1994, did McGinn Smith

11

ever issue any other W-2s to Senator Bruno?

12

A.

I don't think so.

13

Q.

Could we go back and look at Exhibit G A 14.

14

A.

Okay.

15

Q.

Did McGinn Smith issue to Business Consultants

16

That

Incorporated any W-2s, 1099s, or any other tax documents?

17

A.

I doubt it.

18

Q.

Why do you doubt it?

19

A.

Well, we have lots of vendors and we don't issue

20

109s to vendors or office supplies or coffee or whatever

21

else that we buy in the normal course of business, or Coke

22

machine, Bloomberg services, and so forth.

23

vendor kind of relationship, and we keep track on a general

24

ledger, which is shown here.

25

issued 1099s.

It's just a

But we probably would not have

BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

24 McGINN - DIRECT - COOMBE 1

Q.

Does it have anything to do with the fact that

2

Business Consultants is a corporation, does that affect

3

whether a W-2 or 1099 has to be issued?

4

MR. LOWELL:

Objection, your Honor.

I

5

suppose she's calling on some form of tax expertise.

6

don't know that she's laid the foundation to know if a

7

corporation's existence has anything to do with whether a

8

W-2 or W-4 --

9

THE COURT:

10

objected.

11

question.

I don't need a speech.

The objection is overruled.

I

You've

You may answer the

12

A.

Would you repeat the question please?

13

Q.

Of course.

Did the fact that Business Consultants

14

Incorporated, that it appeared to be a corporation, did that

15

have any affect on whether McGinn had to issue a W-2, 1099,

16

or any other form of tax document?

17

A.

No, I don't think so.

18

MS. COOMBE:

19

THE COURT:

20

MS. COOMBE:

Your Honor, may I have a moment? You may. Your Honor, at this time the

21

Government would like to offer Exhibit G B 1, which has been

22

admitted by stipulation.

23

jury.

24 25

THE COURT:

And I would like to read it to the

The defense concurs that G B 1,

by stipulation -- well, it's already been offered and BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

25 McGINN - DIRECT - COOMBE 1

received.

You may publish it.

2

MS. COOMBE:

3

THE COURT:

4

Thank you, your Honor. Let me ask you before you do, do

I see you holding a single page?

5

MS. COOMBE:

I have -- actually, I have

6

another page, I wasn't holding it, but I have two more pages

7

and then less than five questions, your Honor.

8

THE COURT:

9

MS. COOMBE:

10 11

THE COURT:

MS. COOMBE:

16 17

Thank you. Thank you.

You anticipated where

I did, your Honor.

I saw where

we were going.

14 15

Go ahead.

I was at.

12 13

All right.

THE COURT: your back.

I'm watching the clock.

It's to

Go ahead. MS. COOMBE:

Yes, your Honor.

I'll try to

get there quickly.

18

THE COURT:

19

MS. COOMBE:

You're fine. I'm going to read G B 1 to you,

20

ladies and gentlemen.

It states that the State of New York,

21

Department of State, and it states as follows:

22

certify that a diligent examination has been made of the

23

index of the corporation -- of corporation limited

24

partnership and limited liability company certificates filed

25

by this Department for a certificate of incorporation or BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

I hereby

26 McGINN - DIRECT - COOMBE 1

limited partnership or articles of organization for Business

2

Consultants, and that upon such examination, no such

3

certificate of incorporation, certificate of limited

4

partnership, or articles of organization has been found on

5

file with this Department.

6 7

And it's signed by Special Deputy Secretary of State, dated January 8 of 2009.

8 9

Now we're going to look at G B 2, ladies and gentlemen, and I'm going to read that to you as well.

It is

10

a certificate of individual doing business under an assumed

11

name, and it states:

12

It is hereby certified that:

The undersigned

13

is transacting business at 89 Bulson Road, City of Troy,

14

County of Rensselaer, State of New York, under the name of

15

Business Consultants.

16

is Joseph L. Bruno, and his residence address is 89 Bulson

17

Road, City of Troy, County of Rensselaer, State of New York.

18

Three, the undersigned is of full age and no other person is

19

interested as a partner, part owner or otherwise in the

20

business or of the conduct of it.

21

executed and filed pursuant to Section 130 of the General

22

Business Law.

23

signature Joseph L. Bruno.

24

that there's a notary public's entry dated August 31 of

25

1992.

Two, the full name of the undersigned

This certificate is

It's dated August 31 of 1992.

And it has the

And then at the bottom, you see

If you turn the page, ladies and gentlemen, you will BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

27 McGINN - DIRECT - COOMBE 1

a see that there's a certification that this is a true copy

2

of a record filed in the Office of the Rensselaer County

3

Clerk's Office.

4

BY MS. COOMBE:

5

Q.

Mr. McGinn, was it your idea to make checks

6

payable to Business Consultants Incorporated for McGinn

7

Smith & Company?

8

A.

No.

9

Q.

Was it somebody's idea at McGinn Smith & Company?

10

A.

I don't believe so.

11

Q.

Whose idea was it?

12

A.

Ah, I believe it was Senator Bruno's request.

13

Q.

What explanation, if any, did Senator Bruno

14

provide to you as to his reason for making the checks

15

payable to Business Consultants Incorporated, rather than to

16

Senator Joseph L. Bruno?

17 18 19

A.

I'm not sure he gave us any reasons.

It didn't

matter to us. Q.

During the time period that McGinn Smith was

20

paying Senator Bruno to obtain labor union commission

21

business for McGinn Smith through Wright Investors Services,

22

did you believe Senator Bruno was also being paid by Wright

23

Investors Services?

24

A.

No.

25

Q.

Did you know that while McGinn Smith was paying BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

28 McGINN - DIRECT - COOMBE 1

Senator Bruno, Senator Bruno obtained labor union business

2

for Wright for which McGinn Smith did not get the

3

commissioned business?

4

A.

No.

5 6

MS. COOMBE:

Your Honor, I have no further

questions.

7

THE COURT:

8

MR. LOWELL:

9

THE COURT:

10

it's 10 after 12.

11

recess until 10 after 1.

12

to the jury room.

13

conduct.

I presume there is cross? There will be some. All right.

Ladies and gentlemen,

We're going to adjourn for the luncheon When you come back, please return

As always, remember the rules of good

Have a nice lunch.

Thank you.

14

(Jury excused at 12:10 PM.)

15

(Court reconvened at 1:10 PM.)

16

THE COURT:

There's a request that's been

17

pending, and I don't know whether you've seen it or not.

18

The press is seeking access to exhibits that have been

19

received in evidence and are, therefore, Court documents.

20

That's a process that Judge McAvoy authorized in a recent

21

prosecution that he handled.

22

my decision in Strevel that there is any reason to deny them

23

that access.

24

be heard on that issue before -- because that motion is

25

still pending before me.

I'm not sure when you look at

I wanted the defense to have an opportunity to

Defense have a position on that?

BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

29 McGINN - CROSS - LOWELL 1

MR. LOWELL:

Once an exhibit is admitted into

2

evidence and a public record, Judge, we don't have any

3

objection to it being a public record.

4 5

THE COURT:

Then I'll issue that order, John.

Okay.

6

(Jury present at 1:10 PM.)

7

THE COURT:

8

MR. LOWELL:

9 10

Cross-examination, please. Thank you, your Honor.

CROSS-EXAMINATION BY MR. LOWELL: Q.

Good afternoon, Mr. McGinn.

My name is Abbe

11

Lowell, and I'm one of the lawyers who represents Joe Bruno.

12

Before the lunch, you were talking about the creation of the

13

business relationship that you had with Mr. Bruno and your

14

company McGinn Smith, and you were asked questions about a

15

lunch that occurred and then that lunch led to an agreement.

16

Do you remember those questions?

17

A.

Yes.

18

Q.

There was quite a bit more to the decision by you

19

to hire Mr. Bruno then simply having one lunch with him and

20

Mr. Featherstonhaugh, isn't that right?

21

A.

That's correct.

22

Q.

And you didn't just know Mr. Bruno at the time

23

that the lunch occurred close to the time of the employment;

24

you had known him earlier than that, isn't that right?

25

A.

That's correct. BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

30 McGINN - CROSS - LOWELL 1

Q.

Indeed, you had known him some years before that

2

in his business capacity in another entity all together

3

known as Coradian, isn't that true?

4

A.

That's correct.

5

Q.

And in that time you actually had some dealings

6

with his company Coradian.

In fact, you and the company

7

Coradian, you hired McGinn Smith to do work for it; isn't

8

that right?

9

A.

That's right.

10

Q.

So by the time that you made the decision to

11

engage Mr. Bruno, you knew something about him to do so,

12

right?

13

A.

Yes.

14

Q.

And you decided it was valuable to your company to

15

have that relationship, is that fair?

16

A.

Yes.

17

Q.

What was it about Mr. Bruno's abilities and

18

experience that caused you to conclude that it would be good

19

for your business to hire him?

20

A.

Well, there are a number of considerations.

First

21

of all, Joe was a respected member of the community.

22

been a businessman running Coradian.

23

Coradian.

24

York State Senate nine times.

25

high regard for his dedication, for his work ethic, for his

He managed Coradian.

He had

He was a founder of

He was elected to the New He was a man who was held in

BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

31 McGINN - CROSS - LOWELL 1 2

integrity, for his honesty. Q.

Was there anything in particular about his

3

background that caused you to think that he would add value

4

to the pitches, to the opening the doors that you talked

5

about during your direct?

6

A.

McGinn Smith is a company that was formed by two

7

young guys in 1980.

Neither of those two persons, myself or

8

Mr. Smith, were born to privilege.

9

a story that can be told of Senator Joseph Bruno.

We worked hard.

That's Growing

10

up in a large family, having a parent die at an early age,

11

putting himself through Skidmore nights, while delivering

12

ice, tremendous perseverance, tremendous work ethic,

13

tremendous ambition, and as I said earlier in my testimony,

14

we live in an eat what you kill world.

15

fund, we don't get checks from the government, we eat what

16

we kill.

17

that I've just enumerated would be very beneficial in

18

pursuing our business goals.

19

Q.

We don't get Taft

And we felt that Joe Bruno and the characteristics

In addition to those traits that you just

20

described that went into your thinking before you decided

21

that this would be a fruitful business relationship, did you

22

take into account that after he was involved in Coradian and

23

did business, he was prepared to give back by running for

24

and then serving as a public official?

25

anything to do with it?

Did that have

BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

32 McGINN - CROSS - LOWELL 1

A.

As I said, he was elected to the New York State

2

Senate nine times.

3

times in a row, although some have, and live to tell about

4

it.

5

commitment, and remain so.

6

I don't think you could fool people nine

So we were impressed with that standard of service and

Q.

After you made that decision, you had the lunch,

7

you made the decision that you wanted to hire him.

I think

8

you were shown a copy of the letter that you sent that you

9

identified as the terms of the agreement.

And that was done

10

before lunch.

I think that should still be before you.

11

think that letter is marked as Government's Exhibit G A 1,

12

is it?

13

A.

Yes.

14

Q.

Do you still have it there?

15

A.

I do.

16 17

MR. LOWELL:

And paragraph 3.

Would you highlight paragraph three, as the

19

Government did, please.

20

BY MR. LOWELL:

21

Would you please put G A 1

initially on the screen again, please.

18

I

Q.

Do you remember, when you were shown this

22

document, Miss Coombe zoomed in on paragraph three and asked

23

you questions about it.

Do you remember that?

24

A.

I do.

25

Q.

And do you remember that when she did that, she BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

33 McGINN - CROSS - LOWELL 1

asked you about whether or not the labor unions had

2

something to do with the arrangement?

3

asked you that?

Do you remember she

4

A.

I do.

5

Q.

But that's not all the story of this letter, is

A.

No.

6 7 8 9

it? That's one sentence.

One part of one

sentence. Q.

Would you please open up the whole letter?

Now

10

let's go through the entirety.

Isn't it true that the

11

description of the work that Mr. Bruno was supposed to do

12

and your intent that he did do was a great deal more than

13

targetting unions and their pension funds?

14

A.

Yes.

15

Q.

And doesn't paragraph one say that he was supposed

16

to assist in areas of investment banking?

Do you see that?

17

A.

I do.

18

Q.

Doesn't paragraph two talk about a consultant

19

practice?

Do you see that?

20

A.

Yes.

21

Q.

Paragraph three isn't just about unions, is it?

22

A.

No.

23

Q.

Paragraph three talks about pension plans,

24

corporate accounts, and wealthy individuals as potential

25

clients; doesn't it do that as well? BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

34 McGINN - CROSS - LOWELL 1

A.

It does.

2

Q.

Paragraph four says, provide advice and counsel to

3

the senior officers of the firm; is that right?

4

A.

Yes.

5

Q.

So if you focused on the word "unions" in

6

paragraph three of this letter that set up your letter

7

agreement, that wouldn't tell the whole engagement that you

8

intended Mr. Bruno to have with you, would it?

9

A.

No.

10

Q.

I would like to go to the top of that letter

11

please, and I would like you to highlight McGinn Smith's

12

title, and as Miss Coombe did, point out investment bankers

13

and investment brokers with the dot in between.

14

that?

Do you see

15

A.

Yes.

16

Q.

Describing what McGinn Smith said, it was a

17

merchant banker, you talked about various of the things the

18

company did, right?

19

A.

Yes.

20

Q.

But they're not all listed on your stationary, is

22

A.

No.

23

Q.

And it wasn't an attempt by you to mislead people

21

it?

24

in the public that you weren't doing those other functions,

25

was it? BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

35 McGINN - CROSS - LOWELL 1

A.

Not at all.

2

MR. LOWELL:

3

screen, please, Frank.

4

BY MR. LOWELL:

5

Q.

You can take that off the

Now, when you decided that it was a good idea to

6

hire Mr. Bruno, you were aware that state legislators did

7

business outside of being public officials, correct?

8

A.

Correct.

9

Q.

And in the beginning of the arrangement, you were

10

aware that there were attorneys involved in coming up with

11

the agreement that occurred between you and Mr. Bruno and

12

Mr. Bruno's arrangement?

13

A.

You were aware of that, right?

I was aware that Mr. Bruno had -- Senator Bruno

14

had indicated to us that he would consult with his, excuse

15

me, his ethics people and his counsel regarding the

16

proprietariness -- the proprietary nature of this

17

relationship.

18

Q.

So your understanding was not that he was getting

19

somebody involved to make sure he cut a good deal from a

20

business point of view, but to get somebody involved to make

21

sure he was doing it right under the rules and under the

22

ethics law, is that right?

23

A.

That's correct.

24

Q.

Now, you said to Miss Coombe before lunch that you

25

didn't remember any meeting with lawyers for Mr. Bruno; and BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

36 McGINN - CROSS - LOWELL 1

that's your memory?

2

A.

That's correct.

3

Q.

I would like to show you, with the Government's

4

permission, a Government Exhibit, G A 2.

5 6

MR. LOWELL:

And if you would put that on the

screen.

7

And may I approach the witness, please?

8

THE COURT:

9

MR. LOWELL:

10 11

Please. Thank you.

BY MR. LOWELL: Q.

I will proffer to you --

12

MR. LOWELL:

By the way, your Honor, pursuant

13

to our agreement with the Government, we're asking this be

14

admitted into evidence.

15

THE COURT:

16

MS. COOMBE:

17

THE COURT:

18 19

Any objections? No objection, your Honor. Admitted.

BY MR. LOWELL Q.

I'll offer to you, Mr. McGinn, that this is an

20

entry from a calendar kept in Senator Bruno's office, and if

21

you'll look at the date December 23.

22 23

MR. LOWELL:

And if you highlight the day and

year on the top please, John, and the year, please.

24

A.

December 23, 1992.

25

Q

Yes, sir.

So that's prior to the fact that the

BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

37 McGINN - CROSS - LOWELL 1

date of the contract that you saw, Government Exhibit Number

2

1, is that right?

3

A

No, it's not.

4

Q

No, no, let me look at Government's Exhibit Number

I'm sorry.

It's afterwards.

5

1.

It's right after the date.

Now, it's in the

6

same week that this agreement is sent, is that right?

7

A

That's correct.

8

Q

And if you'll turn to the left column and if

9

you'll look at the entry.

10

MR. LOWELL:

11

highlight that.

12

calendar please.

13

Q.

14

JLB, --

And if you would please

And you can take the letter off.

Just the

That's good.

You see it says 11:00, and the initials say

15

A

Yes.

16

Q

-- TC, Tim McGinn, Ken Riddett, Dave Smith, 99

17

Pine Street, top floor, is I think what that says.

18

let me ask you, where is 99 Pine Street?

19 20

A

First

99 Pine Street is about 350 yards from here.

It's

where my headquarters are located.

21

Q

And that would be an address of your office?

22

A

That's correct.

23

Q

And in it there's an indication on that date of a

24 25

meeting, do you see that? A.

I do. BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

38 McGINN - CROSS - LOWELL 1 2

Q

And it says -- one of the names is Tim McGinn, do

you see that?

3

A

Yes.

4

Q

And one is Ken Riddett?

5

A

Yes.

6

Q

And you see initials JLB?

7

A

Yes.

8

Q

Probably recognize that as Joseph L. Bruno?

9

A

I do.

10

Q

Do you know a man by the name of Tim Collins?

11

initials would be TC.

12

A

I do not.

13

Q

Do you know who he is?

14

A

I have no idea.

15

Q

Have you heard of a man named Ken Riddett?

16

A

Yes.

17

Q

Do you know Mr. Riddett to be a lawyer --

18

A

I do.

19

Q

-- that worked in the Senate on behalf of

20

Mr. Bruno and others?

21

A

Yes.

22

Q

And do you -- David Smith, that was the partner

23

His

that you referred to?

24

A

Correct.

25

Q

So does this calendar entry serve to refresh your BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

39 McGINN - CROSS - LOWELL 1

recollection that a meeting was set up in which you,

2

Mr. Bruno, and at least one ethics lawyer would be involved?

3 4 5

A

I don't recall that meeting.

I, I just don't

recall that meeting. Q

Okay.

If this meeting was set up and if your

6

testimony was, as you said it, you understood that Mr. Bruno

7

sought the advice of people on the ethics side, what was

8

your understanding as why ethics lawyers would be involved?

9

What was your understanding as why ethics lawyers would be

10

involved?

11

MS. COOMBE:

12

THE COURT:

13 14

Objection. Sustained.

BY MR. LOWELL: Q

Now, when you talked about the conversation that

15

you had with Mr. Bruno about it being run by people and he

16

got the go-ahead to do, you were not involved in the process

17

of how any such letter, how any such request was put

18

together to the State Senate, is that right?

19

A

That's correct.

20

Q

But you were aware that somebody was?

21

A

Yes.

22

Q

And at the time that you first engaged Mr. Bruno,

23

it was your understanding that you, McGinn Smith, had no

24

business that could be called in front of the State

25

Legislature, is that right? BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

40 McGINN - CROSS - LOWELL 1 2 3 4

A

That's correct.

And we were very specific and

very explicit about that. Q

Because at the time both and you he were sensitive

to make sure that that did not happen, right?

5

A

That's right.

6

Q

It was a concern of yours?

7

A

We didn't want to do business with the state.

8

Every time we had done business with the state in the past,

9

we regretted it.

10 11 12

We wanted nothing to do with the State of

New York. Q

And it was a concern that was articulated that

that would not be part of the engagement, is that right?

13

A

That is correct.

14

Q

I take it that you would agree that in addition to

15

that, there was never a single time that you directed

16

Mr. Bruno to go after any client that did business in front

17

of the New York State government, is that right?

18

A

That is correct.

19

Q

And that was not part of your engagement with him

20

at all?

21

A

That is correct.

22

Q

In addition to which, in addition to going after

23

the union pension funds, that was one part of the contract,

24

that letter agreement, it was your intent and he made

25

efforts to try to get clients other than such funds, is that BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

41 McGINN - CROSS - LOWELL 1

right?

2

A

That is correct.

3

Q

That was your intention in the beginning to do

5

A

Yes.

6

Q

Now, it turns out over time that those kinds of

4

that?

7

relationships did not come about; that's what you testified

8

to?

9

A

That's right.

10

Q

But it was your intent that they would?

11

A

Correct.

12

Q

And he made efforts in that regard, correct?

13

A

Yes.

14

Q

And that included companies, is that right?

15

A

Yes.

16

Q

And one was, I think, a company called -- I may

17

not say it right -- Golub, G-O-L-U-B?

18

A

Yes.

19

Q

And one was Price Chopper?

20

A

Well, Price Chopper is --

21

Q

Same one?

22

A

-- is an operating subsidiary of Golub.

23

Q

So there was an attempt?

24 25

do that? A

There was an effort to

Am I right about that? Yes, you are. BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

42 McGINN - CROSS - LOWELL 1

Q

Earlier today, when you testified before lunch,

2

you were asked questions about the forms of payments, the

3

amounts, the way they took place, and the documents that

4

describe them; do you remember that?

5

A

Yes.

6

Q

So to begin with, the decision as to how to pay

7

Mr. Bruno and what to pay him and how much, that was a

8

decision of McGinn Smith, right?

9

it to you?

That was not him dictating

You made that decision?

10

A

That was, that was our decision.

11

Q

He didn't pressure you to make that decision?

12

didn't threaten you to make that decision?

13

business judgment on your part?

He

That was a

14

A

Correct.

15

Q

Now, in the material that you were shown today --

16 17 18

MR. LOWELL:

And if you would, would you put

up G A 3, please. Q.

This was one of the documents that should be in

19

front of you.

This was a form, a W-4 form you were asked

20

about.

21

United States government, is that right?

A W-4 form is a document that's generated by the

22

A

By the Internal Revenue Service.

23

Q

And it's what you file or somebody files to show

24

what is going to become a withholding provision under a

25

salary arrangement, is that your understanding? BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

43 McGINN - CROSS - LOWELL 1

A

Yes.

2

Q

Is it put into your files and locked away or is it

3 4

actually filed somewhere? A

Well, it's put into our files for certain.

5

as well, we would send a copy of this to the payroll

6

processing people who in our case would be ADV.

And,

7

Q.

And, as well, it would go to the IRS?

8

A

That may be the case.

9

Q

And on this form that would not be locked away and

I don't know.

10

would be given to your payroll people and presumably sent to

11

the IRS, who does it indicate is your employee?

12

A

Joseph Bruno.

13

Q

Right there in black and white?

14

A

Black and white.

15

Q

And if you would turn please to the exhibit that

16

was marked as G A 4, please.

And these were W-2 earning

17

summaries, and it indicates again the employer is, your

18

company McGinn Smith, correct?

19

A

Correct.

20

Q

And there in black and white as the person who has

21

the relationship with McGinn is listed Joseph L. Bruno,

22

correct?

23

A

Correct.

24

Q

And, again, this is a document that -- it's a W-2,

25

it's created by the IRS, it's not something that McGinn BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

44 McGINN - CROSS - LOWELL 1 2 3

Smith created, is that right? A

Well, it's actually created by the payroll

processing people.

4

Q

The actual W-2 is a requirement?

5

A

And it's then filed with the IRS with one's tax

6 7 8

return. Q

Got it.

So it is something that gets filed, in

your understanding?

9

A

Yes.

10

Q

Now, if you'll look at G A 5 please.

And that

11

would be the next document.

12

checks that were created were then sent to Business

13

Consultants.

14 15 16 17

A

Do you see that?

I do, but it's a different, it's a different

period, different time period. Q

I was going to ask you if that was the same time

period and you jumped ahead.

18 19

It indicates that the payroll

Now, there was no question in your mind that Joseph Bruno had a consulting company, right, or --

20

A

Correct.

21

Q

-- an entity?

22

A

That's right.

23

Q

And you knew its name?

24

A

I did.

25

Q

And you knew its name to be Business Consultants? BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

45 McGINN - CROSS - LOWELL 1

A

Correct.

2

Q

And the form you were showed earlier today, a form

3

that had columns in it, it had vendor and it had name and it

4

had a map; do you remember that?

5

A

Right.

6

Q

Government's Exhibit 14?

7

A

I do.

8

Q

Do you have that in front of you?

9

A

I do.

Q.

Would you please go to G A 14 and if you'll go to

10 11

the vendor side.

Do you see where it says Bruno?

12

A

Yes.

13

Q

And the name Business Consultants, do you see

15

A

Correct.

16

Q

In the books and records of McGinn Smith, it was

14

17 18

that?

absolutely clear that Business Consultants was Joe Bruno? A

There was no doubt in anyone's mind that Business

19

Consultants was the entity through which Mr. Bruno wanted to

20

be paid.

21

Q

And we did so. Now, the idea that people will get paid through a

22

company or a doing business as or a partnership or a

23

venture, that is not an unusual event in business, is it?

24

A

Not at all.

25

Q

Your company, by the way, is not yourself doing BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

46 McGINN - CROSS - LOWELL 1

business?

You have a company?

2

A

Correct.

3

Q

Now, you have a company so that you can deal with

4

taxes, deal with liability, other legal issues; it's the way

5

people do business, isn't that right?

6

A

That's correct.

7

Q

By the way, as to this exhibit, Government's

8

Exhibit 14, this document, Mr. Bruno had nothing to do with

9

its being created, did it -- did he?

Sorry.

10

A

No.

11

Q

This was your internal document?

12

A

Yes.

13

Q

So how it says it, what it says, what it lists and

14

how it says it, those are not issues that Mr. Bruno had any

15

input on at all?

16

A

Correct.

17

Q

I would like you then to pull up, please, G B 2.

18

I have -- I'm sorry.

Yes.

Government B 2.

19

ago we talked about the issue of doing business as.

20

a form that Miss Coombe showed you and a document that's

21

called a certificate of an individual doing business under

22

an assumed name.

Do you see that?

23

A

Yes.

24

Q

That's what it's called?

25

A

That's what it says. BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

Now, a moment This is

47 McGINN - CROSS - LOWELL 1

Q

You understand this is a form that got filed,

2

right?

3

A

Correct.

4

Q

Now, if you look in the upper right.

5 6 7 8

MR. LOWELL:

The part that talks about the

clerk's office, please, John. Q.

And highlight that.

Do you see where it got filed?

Do you see it says

Rensselaer County Clerk?

9

A

Yes.

10

Q

Okay.

And if you look down at the rest of the

11

document and see what does it say, as I think Miss Coombe

12

read it into the record, I won't repeat it, but I want to

13

point out one part of it, and that's where it says:

14

undersigned is transacting business under the name Business

15

Consultants.

Do you see that?

The

And who's the undersigned?

16

A

Joseph L. Bruno.

17

Q

And where was it filed?

18

A

I'm sorry?

19

Q

Where was it filed?

20

A

Rensselaer County.

21

Q

At the clerk's office?

22

A

Yup.

23

Q

A public place?

24

A

Yes.

25

Q

Darn way to hide your existence as Business BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

48 McGINN - CROSS - LOWELL 1

Consultants, isn't it?

2

MS. COOMBE:

3

THE COURT:

4

7

Sustained.

Argumentative. Save it for summation

please.

5 6

Objection.

MR. LOWELL:

You can take it off.

BY MR. LOWELL: Q.

Mr. McGinn, you were asked a series of questions

8

before lunch, and one of them had to do with the office that

9

you put aside for Mr. Bruno.

Do you remember that question?

10

A.

I do.

11

Q.

Was it part of his arrangement with you that he

12

had to do the job that you wanted him to do by being in an

13

office?

14

A.

Not at all.

15

Q.

Indeed, he could do that job by being on the phone

16

or making connections or being at luncheons or dinners or

17

receptions or out and about; in fact, that's where he should

18

have been, isn't that right?

19

A.

Correct.

20

Q.

If he had stayed in his office chained to his

21

desk, not gone outside to the outside world, he would have

22

no chance to succeed in what you wanted him to do; isn't

23

that right?

24

A.

That's correct.

25

Q.

He didn't have to produce any written reports to BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

49 McGINN - CROSS - LOWELL 1

McGinn, did he?

2

A.

No.

3

Q.

He didn't have to punch a time clock, did he?

4

A.

No.

5

Q.

Now, I think you were asked a question or two

6

about the announcement letter that said we will do a

7

tombstone ad, we will send out engraved cards.

8

weren't done, you pointed out.

Those

9

A.

They were not done.

10

Q.

But nevertheless, Mr. Bruno started making

11

connections on behalf of your company.

12

A.

Yes, he did.

13

Q.

And in doing so, he was telling people hi, I would

14

like you to consider using McGinn Smith, right?

15

A.

Well, that's true.

16

Q.

So it wasn't like he got the job, you sent the

17

agreement, you started paying him and he didn't do anything,

18

right?

19 20 21

A.

He did enough business so that the firm received

through 2002, $419,000 of revenues. Q.

And even though you decided not to do the ads or

22

send out the engraved cards, he was out there telling people

23

that he was doing business for McGinn Smith, isn't that

24

right?

25

A.

To the tune of $419,000. BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

50 McGINN - CROSS - LOWELL 1 2

Q.

And one of the people he was doing it with you

said was the hospitality workers, I think you called them?

3

A.

Yes.

4

Q.

And another was one of the Teamsters?

5

A.

Correct.

6

Q.

And they knew that he was working on behalf of

7

your company?

8

A.

Yes.

9

Q.

Wasn't a secret?

10

A.

No secret.

11

Q.

He and you didn't say, look it, I want to get you

12

the business, but I don't want to tell anybody that I'm

13

doing it so let's figure a way to do that; that wasn't a

14

conversation you had with him, is it?

15

A.

Of course not.

16

Q.

Along the way, in addition to having done the work

17

he did for you, it turns out that you're the person who

18

introduced him to the people at Wright Investors Services,

19

isn't that a fact?

20

A.

That's right.

21

Q.

And it wasn't because you thought that was a waste

22

of time or a waste of money, but I assume you thought it was

23

a good idea.

24

A.

That's right.

25

Q.

For you? BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

51 McGINN - CROSS - LOWELL 1

A.

Yes.

2

Q.

And for them?

3

A.

Yes.

4

Q.

And, of course, Mr. Bruno too?

5

A.

Yes.

6

Q.

And you understood that when you made that

7

introduction, it was going to end up in an ability perhaps

8

for you and Mr. Bruno to do better?

9

A.

Correct.

10

Q.

And you would do better if Wright was able to

11

generate more business in the way of investment managing

12

that might create derivative business for your company?

13

A.

Correct.

14

Q.

That was clearly on the table?

15

A.

Yes.

16

Q.

No secret?

17

A.

No secrets.

18

Q.

And, indeed, I think you said that you understood

19

that any account that Mr. Bruno helped pull into Wright, you

20

would get the trades for and therefore get a benefit?

21

A.

Correct.

22

Q.

Now, you knew Wright before the time that you made

23

the introduction of Mr. Bruno to the Wright company, didn't

24

you?

25

A.

Yes. BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

52 McGINN - CROSS - LOWELL 1

Q.

They were a good company?

2

A.

I'm sorry?

3

Q.

A good company?

4

A.

Yes.

5

Q.

One that's experienced in the area of investment

6

managing?

7

A.

Yes.

8

Q.

Indeed, in some ways, you were trying to get into

9 10

their side of the business, right? A.

Well, we had shown other investment managers the

11

various potential clients and we would often compete against

12

Wright and they beat us like a rented mule.

13

that it would be better to join them than fight them.

14

established that relationship.

15 16 17 18 19 20

Q.

So we decided So we

And you were aware that various pension funds did

business with Wright prior to Mr. Bruno being introduced? A.

Yes.

We knew that Wright had a very significant

Taft-Hartley practice. Q.

Now, when you say Taft-Hartley, that's referring

to a federal law, right?

21

A.

Correct.

22

Q.

Which regulates these kinds of funds, right?

23

A.

That's right.

24

Q.

That have as their membership in some ways unions,

25

pension funds, is that right? BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

53 McGINN - CROSS - LOWELL 1

A.

Yes.

2

Q.

And Wright had that kind of practice before you

3

introduced Mr. Bruno to them?

4

A.

They did.

5

Q.

And have that to this day?

6

A.

As far as I know they do.

7

Q.

And they had quite an extensive such practice

8

prior to the introduction, is that right?

9

A.

Yes.

10

Q.

You mentioned prior to lunch that the way that a

11

decision would be made for somebody to hire you or to hire

12

Wright for which you might get the derivative benefit of

13

trades was a process; you were aware there was a process

14

involved?

15

A.

Yes.

16

Q.

And that process had a few steps, correct?

17

A.

It did.

18

Q.

So it's not as if you or Mr. Bruno or me or

19

anybody would go to a union official and say, union

20

official, I want you to hire Wright to be your pension fund

21

manager?

That's not the way it worked at all, is it?

22

A.

No.

23

Q.

Sometimes, the union official might be the same as

24 25

a trustee, correct? A.

That's correct. BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

54 McGINN - CROSS - LOWELL 1

Q.

Sometimes not?

2

A.

That's also correct.

3

Q.

Indeed, these pension funds had a board of

4

trustees, that's right, isn't it?

5

A.

Yes.

6

Q.

And among them was more than one person, correct?

7

A.

Yes.

8

Q.

And there were union folks involved?

9

A.

Union and management.

10

Q.

And management, is that right?

11

A.

Yes.

12

Q.

Now, management means that their the employer

13

side, correct?

14

A.

That's correct.

15

Q.

And often what the union thinks is right in a job

16

situation, an investment situation, or any situation is

17

different than what management and employers think, isn't

18

that fair?

19

A.

Yes.

20

Q.

And that was the whole point of the law that

21

required these funds to be managed by both unions and

22

managers, isn't that right?

23

A.

Correct.

24

Q.

After that trustee group would get together, they

25

simply didn't always make the decision, even themselves; BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

55 McGINN - CROSS - LOWELL 1

they had others involved often, as you know it, correct?

2 3

A.

There were often consultants involved in the

selection of investment managers.

4

Q.

And these consultants were somewhat independent

5

financial advisers that would evaluate Wright Investors or

6

McGinn Smith as against anybody else?

7

A.

Correct.

8

Q.

And make a recommendation to the trustees as to

9

who was better and who was not?

10

A.

That's correct.

11

Q.

So after an introduction was made and a

12

presentation was made and managers were involved and

13

trustees were involved and an adviser was involved and other

14

consultants that you indicated were involved, then and only

15

then would an investment decision be made, as you understand

16

it?

17

A.

That's correct.

18

Q.

Miss Coombe showed you a chart that showed all the

19

payments that were made to Mr. Bruno while he was an

20

employee.

21

that question.

22

Oh, I'm sorry, before I get there -- withdraw

As to Wright Investors Services and your

23

introduction and the decision-making process that you just

24

said, did you and Wright ever have discussions in which the

25

topic was, okay, let's not tell anybody that Joe Bruno is BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

56 McGINN - CROSS - LOWELL 1

working for us?

Did that ever come up?

2

A.

Of course not.

3

Q.

Indeed, the opposite occurred; that people did

4

know that Joe Bruno was working for both Wright and McGinn,

5

and you knew that as a fact, didn't you?

6

A.

I think it was well known in the community that

7

Joe Bruno had an affiliation with McGinn Smith.

8

important affiliation, and we certainly made no effort to

9

conceal that.

10

Q.

It was an

In fact, quite the opposite.

Indeed, didn't you also know that as to the hotel

11

workers or the hospitality workers, that the individuals

12

involved a Mr. Bennett, I think you -- or Whitey I think you

13

called him?

14

A.

Yes.

15

Q.

He was aware of Mr. Bruno's relationship with both

16

Wright and McGinn; did you say that?

17 18

The Teamsters.

A. true.

19

I don't know if I said that, but it happens to be I don't know if it was asked.

Q.

I'm sorry, let me clarify that for the record.

20

You know of your own knowledge that at least one of these

21

individuals, and here we're talking about the man you called

22

Whitey, you identified as being Teamsters, you have your own

23

knowledge that he knew of Mr. Bruno's affiliation, you just

24

said?

25

MS. COOMBE:

Objection.

Foundation.

BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

57 McGINN - CROSS - LOWELL 1

THE COURT:

Yeah, I'll sustain it.

2

establish a foundation for that.

3

the scope of direct.

4

to how he knows this.

5

BY MR. LOWELL:

Please

Technically, it's beyond

Ask him some foundational questions as

6

Q.

How did you know this man Whitey?

7

A.

I was introduced to him by Joe.

8

Q.

And at that introduction, did you hear from your

9 10 11

own ears that Mr. Bruno made clear his relationship with the individual that you were meeting with? A.

Absolutely.

12 13 14

THE COURT:

I'm satisfied.

Thank you.

BY MR. LOWELL: Q.

And if people understood, as they were being

15

introduced by you or Mr. Bruno or Wright and the company,

16

was it possible just from the setting to be able to connect

17

the dots that this was a financial relationship?

18 19 20

A.

The dots weren't that far apart, so it would be

pretty easy to connect the dots. Q.

Now, I would like to go back to where I started.

21

You know that chart that you saw that showed the amount of

22

money that McGinn paid Mr. Bruno over those many, many

23

years?

24

A.

Yes.

25

Q.

At any time did you intend that money to be a BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

58 McGINN - CROSS - LOWELL 1

gift?

2

A.

No.

3

Q.

To be treated as a gift?

4

A.

No.

5

Q.

Did you think of it as a gift?

6

A.

No.

7

Q.

To this day?

8

A.

No.

9

Q.

Do you believe Mr. Bruno did all he could to

10

fulfill all his obligations under the agreement?

11

A.

Yes.

12

Q.

And did you do all you were supposed to try to do?

13

A.

Yes.

14

Q.

Some business arrangements work out better,

15

correct?

16

A.

Correct.

17

Q.

And some not quite as well as we wanted?

18

A.

That's also correct.

19

Q.

Doesn't mean at the beginning it wasn't supposed

20

to work out?

21

A.

Correct.

22

Q.

By the way, last question.

You know that none of

23

the counts that the eight the Government has brought has

24

anything to do with any of the transactions of McGinn,

25

correct? BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

59 McGINN - REDIRECT - COOMBE 1

MS. COOMBE:

2

THE COURT:

3

MR. LOWELL:

4

if I can.

5

BY MR. LOWELL:

6 7 8

Q.

I sustain that objection.

Make this my last question then,

join together to break any law? A.

Absolutely not. MR. LOWELL:

10

THE COURT:

11

MS. COOMBE:

13

Yeah.

Did you and Mr. Bruno ever, to your knowledge,

9

12

Objection.

No other questions. Redirect. Yes, thank you, your Honor.

REDIRECT EXAMINATION BY MS. COOMBE: Q.

Good afternoon, again.

In response to

14

Mr. Lowell's questions, you indicated that Senator Bruno

15

told you that he was getting advice on the ethics issue at

16

the beginning of the engagement, and that would have been

17

back around the time of when?

1992?

18

A.

Yes.

19

Q.

Do you remember testifying in the grand jury?

20

A.

Yes, I do.

21

Q.

All right.

22

MS. COOMBE:

23

THE COURT:

24

MR. LOWELL:

25

May I approach, your Honor? Please. Would counsel please give us a

page and line? BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

60 McGINN - REDIRECT - COOMBE 1

MS. COOMBE:

2

podium.

3

transcript.

I will when I get back to the

I wanted to give the witness the grand jury

4

There you are, Mr. McGinn.

5

It's page 34, line 13 to line 17.

6 7

BY MS. COOMBE: Q.

Mr. McGinn, if you would turn to page 34 and

8

you'll see some lines on the side of the page, numbers.

9

Line 13.

Do you see where I am, sir?

10

A.

I do.

11

Q.

All right.

Were you asked this question:

You

12

want to go to 1994.

13

anything happened before that on this issue.

14

don't recall specifically anything happening before that.

15

Answer:

I

Were you asked that question and did you give that

16

answer?

17

A.

18

First I would like to find out if

Well, I -- it appears in the transcript, so I

wouldn't dispute that.

19

MS. COOMBE:

Your Honor, the Government would

20

move the admission of that portion of Mr. McGinn's grand

21

jury transcript as substantive evidence.

22

THE COURT:

23

MR. LOWELL:

Objections? Yes.

It's not either a

24

contradictory or inconsistent statement.

25

object.

Of course I

BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

61 McGINN - REDIRECT - COOMBE 1

THE COURT:

2

MS. COOMBE:

3 4

Overruled.

Admitted.

Thank you, your Honor.

BY MS. COOMBE: Q.

Mr. McGinn, I would like you to look at

5

Government's Exhibit G A 14, and that's that chart that

6

we've been looking at, the vendor history.

7

A.

Yes.

8 9

MS. COOMBE: difficulty.

10 11 12

Just having a technical

THE CLERK:

It's on.

BY MS. COOMBE: Q.

Could you look not at the last page of that

13

exhibit, but the second to last page which covers the fiscal

14

years 1995 and 1996.

15

A.

Yes.

16

Q.

Do you see the amount that was paid in 1995 and

17

then 1996?

18

A.

I do.

19

Q.

All right.

And if you could look at the page

20

after that.

There's -- do you see where it says paid

21

commissions, and for 1993 it says $43,000?

22

A.

Yes.

23

Q.

For 1994 it says $24,500?

24

A.

Yes.

25

Q.

And then in 1995, it's $72,000? BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

62 McGINN - REDIRECT - COOMBE 1

A.

Correct.

2

Q.

What happened between 1994 and 1995 that caused

3

McGinn Smith to increase the amount of money that Senator

4

Bruno was being paid?

5

majority leader?

Is that when Senator Bruno became the

6

A.

It is.

7

Q.

What was there about Senator Bruno's becoming the

8

Senate Majority Leader that made him more valuable to McGinn

9

Smith?

10

A.

Let me answer that with a sports metaphor.

Tiger

11

Woods got more endorsement money from Nike after he won the

12

Masters for the first time.

13

When Senator Bruno became the Senate Majority

14

Leader, his notoriety increased substantially, his stature

15

in the community increased substantially, and we felt that

16

he was going to be more productive for the firm.

17

Q.

I'm glad you picked a sports metaphor that I

18

understood.

19

that I might not follow.

20

Thank you.

21

I was worried that you would pick something But Tiger Woods I understand.

Now, Mr. Lowell, if we could look at G A 1 again.

22

That was a letter from you to Senator Bruno about Senator

23

Bruno's anticipated job responsibilities at McGinn Smith?

24 25

THE COURT:

Mr. Lowell is seated behind you.

You mean Mr. -- you mean the witness. BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

63 McGINN - REDIRECT - COOMBE 1

MS. COOMBE:

I do.

2

A.

I've been called worse.

3

Q.

I apologize.

I'm sorry.

Just got a little confused.

4

Now, Mr. Lowell did spend sometime talking to you

5

about this letter and about other areas of the letter other

6

than the part about labor unions.

7

business that Senator Bruno did that generated money for

8

McGinn Smith other than contacting labor unions?

9

generated money for McGinn Smith.

Now, are you aware of any

That

10

A.

No.

11

Q.

Now, Mr. Lowell also asked you some questions

12

about labor union interests before the Legislature.

13

aware of what business, if any, the hospitality and

14

Teamsters Locals had before the New York State Legislature?

15

A.

I have no idea.

16

Q.

How about the Golub Corporation?

17

A.

I have no idea.

18

MS. COOMBE:

19

THE COURT:

20

(Pause.)

21

MS. COOMBE:

22

Are you

May I have a moment, your Honor? Please.

I have nothing further, your

Honor.

23

THE COURT:

24

MR. LOWELL:

25

THE COURT:

Recross? No. You may step down.

BONNIE J. BUCKLEY, RPR, CRR UNITED STATES COURT REPORTER - NDNY

Thank you.