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Christina Lother, CSR #8624
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SAN DIEGO, CALIFORNIA; TUESDAY; NOVEMBER 7, 2017;
9:17 A.M.
---oOo---
THE COURT: All right.
MULTIPLE SPEAKERS IN UNISON: Good morning,
Your Honor.
THE COURT: Good morning. Ready to proceed?
MR. MARR: Yes, Your Honor.
MR. COUGHLIN: Yes.
THE COURT: Okay.
MR. COUGHLIN: The defense calls Mark Arabo.
THE COURT: All right.
MARK ARABO,
called as a witness on behalf of the
Defendants, having been first duly sworn,
testified as follows:
THE WITNESS: I do.
THE CLERK: Please take a seat at the witness
chair.
Please state your name and spell it for the
record.
THE WITNESS: Mark Arabo, M-a-r-k, A-r-a-b-o.
THE CLERK: Thank you.
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Christina Lother, CSR #8624
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DIRECT EXAMINATION
BY MR. COUGHLIN:
Q. Good morning.
A. Good morning.
Q. I'd like to first bring up Exhibit 1079,
please. So 1079 is the current operating complaint. Do
you recognize this document?
A. Yes.
Q. Okay. And can we go to page 4, please. Okay.
And if we could actually go to page 5 and scroll in on
paragraph 21, which is the allegations against you in
this complaint. Okay? It is that you received a
$210,000 bonus and $38,000 in travel expenses. Is that
your understanding?
A. Yes.
Q. Okay. So let's talk about the $210,000 bonus.
Now, we've all seen the minutes from that meeting a
number of times. Did you have a vote at that meeting?
A. No.
Q. Okay. Prior to the meeting, did you know that
the board intended to propose a bonus to you?
A. No idea.
Q. Okay. And --
A. I had -- I had -- excuse me. I had no idea so
no.
Q. So subsequent to the board meeting and
subsequent when the bonus was granted, did you come to
learn what the reasons were that the board granted you
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Christina Lother, CSR #8624
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the bonus?
A. I found out later when I was asked to come
back into the boardroom of their decision, and what
they've -- what they granted.
Q. Okay. And was one of those reasons your
involvement in the sale of the NMA building?
A. That's what they told me, yes.
Q. Okay. And to move things along, we've
ultimately seen that that building ultimately sold for
3.32 million, right?
A. Yes.
Q. So can you describe in your own words what you
believe your primary contribution was to achieving that
purchase price.
A. Sure. We got an offer in the fall of 2013 for
2.6 million and prior to that, the board had to get a
loan and we had an appraisal for 1.7 million. So the
board, when we got a 2.6 offer, they were head over
heels. They said we have to take it. It's a great
offer. And it's a no-brainer because our tenant was not
a national tenant. It was a franchise. They were
worried about if the tenant doesn't pay their rent and
they were ecstatic.
Q. Okay. And so were -- was the board willing to
accept -- ready to accept the $2 .6 million offer?
A. Not only were they willing to accept it, they
were, like I said, head over heels and I spent countless
meetings with each board member individually, one by
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Christina Lother, CSR #8624
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one, convincing them not to take the $2.6 million. And
if anyone could see it's extremely hard -- Your Honor,
it's very hard to convince a Chaldean not to take
$2.6 million when they think it's worth 1.7.
Amad Attisha alone, I met with him 11
different times within that two to -- few week period
and to convince him that the building is worth a lot
more and primarily because we had a lot next door,
1.4 acres, and my argument to each board member was we
could do a lot split ourselves, develop the land, and
keep the building, and not sell the building. Just
develop the land. And so I went to Mike and we said,
"Mike, we need to do better. We got -- we need to have
more."
Q. And just -- I don't mean to interrupt you, but
Mike, you mean Mike -- who do you mean by Mike?
A. I'm sorry, Mike Habib, the real estate broker.
Q. Okay. So go ahead.
A. So I told Mike, we need to do more and he
said, Mark, it's a fantastic offer. The board's happy.
I said we could do better. And so at some of my lunches
or coffees with board members, they would tell me, you
know, this deal is on you. If you don't -- if we lose
the deal, your career with us is -- we'll look -- it
won't be good. So I said, oh, well we won't lose the
deal, but we could do better.
And even if the developer walks away, we'll
develop it. We'll do a lot split. We'll develop that
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Christina Lother, CSR #8624
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land it's right next to the other apartments in Fashion
Valley across from the mall and they way we can maximize
the dollars for the association.
And then I was telling Mike let's do a bidding
war. So I reached out to some of my people that I know
in Orange County, reached out to people in San Diego and
said, look, I have a great piece of real estate across
from Nordstrom in Fashion Valley with 1.4 acres. It's
next to the development I have and we're entertaining
offers, you know, Mike Habib did a great job but I am
certain that we would not get more than 2.6 if we didn't
have that strategy of holding out, meeting with every --
almost every board member one by one, convincing them
don't take the 2.6.
Q. Did any of the board members actually tell you
that they wanted to accept Mr. Habib's recommendation to
take the 2.6 million?
A. Yes, most of them did.
Q. Do you remember the specific ones?
A. Amad did, Ramzi did, Bashar did.
Q. Okay.
A. Amir did.
Q. Okay. And so -- so what happened next?
You're meeting with these board members. They tell you
they want to take the 2.6 million, they're telling you,
look, if this doesn't work out, that's not going to be
good for you from the employment standpoint. What
happened next?
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Christina Lother, CSR #8624
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A. We -- we created a bidding war. We were able
to bring in another offer, Mike brought an offer from
mission hills development. I told Mike there's a lot of
interest and frankly if we don't sell the building we
will develop it -- we will develop it ourselves. We
will do a lot split in the city of San Diego and develop
that piece of land.
Q. Okay. And do you believe but for your efforts
to try to persuade the board to not accept the 2.6
offer, that they would have voted and approved it at
2.6?
A. Absolutely and if it wasn't for the increase
of over $700,000 in many ways, we would not be here
today.
Q. Okay. And so this was in the fall of 2. --
excuse me -- of November -- well, it was November and
December of 2013. Can we bring up the closing
statement.
Okay. Do you recognize -- can we scroll in on
this date here (indicating). Okay. Is this when the
transaction ultimately closed?
A. Yes.
Q. So about approximately 10 months later?
A. Yeah. From the -- the final LOI for
3.32 million to this date was around eight months.
During that period I met with Steven Hinckley. He was
the managing partner I believe at LandCap, and I told
him that if he has any issues with the City of San Diego
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Christina Lother, CSR #8624
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as far as development or entitlements, we would be here
to help him as far as access. And we wanted to make
sure that the deal would ultimately close because
development deals are complicated deals in the city of
San Diego. And he was a very -- very open-minded and
very good guy.
Q. Okay.
A. And -- and back of our head -- I mean back of
my head ultimately I always wanted -- I felt that the
board should have done the lot split and develop the
land next door and keep the building but they wanted to
sell it.
Q. Okay. Okay. Scroll to the bottom. And just
scroll in on the purchase price. So that was the
ultimate purchase price that was obtained?
A. Correct.
Q. Okay. And okay. I'm going to jump ahead a
second while we're on this document to the second cause
of action in the complaint, okay? And if we could jump
back to 179, please.
Okay. And go to page 5. Now, the second
cause of action isn't particularly clear. If I
understand the gist through discovery was that you're
not a licensed real estate broker and the plaintiffs are
contending the bonus paid to you was actually some type
of commission. Is that your understanding?
A. My -- my -- no my understanding is the board
gave me a performance bonus.
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Christina Lother, CSR #8624
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Q. Right.
A. Not a commission.
Q. Okay. And -- but I -- but I believe this
allegation in the complaint, the plaintiffs are
contending somehow -- and I think ultimately we're going
to see testimony in the form of videotape that this was
withdrawn, but at least in the allegation in the
complaint is that this was some type of commission and
it was illegal compensation. But you don't believe that
to be the case?
A. That is not the case.
Q. Okay. So on that note at all times -- and
this is on the second cause of action for alleged
illegal compensation, at all times during the pendency
of the real estate transaction from the time the LOI was
first issued to the time the transaction closed, were
you acting as the president of the Neighborhood Market
Association?
A. Yes.
Q. Okay. So you weren't acting for some third
party?
A. No I was not.
Q. Okay. So you were acting on a behalf of the
principal of the seller, I mean the seller, the
principal?
A. Correct.
Q. Okay. So that's the second cause of action.
Okay. Let's go back to -- and also I want to go back to
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Christina Lother, CSR #8624
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the closing statement as well.
And if we could scroll in on this part
(indicating). I'm sorry. I was a lot too quick here.
This part (indicating). Okay. And this shows the
commissions that were given from the transaction. Do
you work for Coldwell Banker.
A. No.
Q. Okay. Do you work for Keller Williams?
A. No.
Q. Okay. And Coldwell Banker, who -- who was
that commission, to your knowledge?
A. Coldwell Banker is Mike Habib and Keller
Williams is Tony Don net.
Q. Okay. And so those are the only commissions
paid from the transaction?
A. Correct.
Q. Okay. So let's go to -- back to cause of
action No. 1. I wanted to jump and just get rid of
cause of action No. 2. Let's go back to cause of action
No. 1.
Okay. And let's bring up 454. Okay. And do
you recognize this document?
A. Yes.
Q. Okay. Do you know what it is?
A. This is the letter that Mike Habib wrote for
me to give to the NMA executive board.
Q. Okay. And whose idea was it to have this
letter written?
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Christina Lother, CSR #8624
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A. Amad and Bashar asked me to get a letter from
Mike Habib to put in my file to memorialize any and all
of my efforts on the sale of the building since it was
so significant for the association.
Q. Okay. Did you suggest to Mike Habib any of
the language in this letter?
A. No.
Q. Okay. Did you suggest to Mike Habib even one
word of this letter?
A. Not one word.
Q. When was the first time you saw the letter?
A. The first time I saw the letter was I believe
the day before the board meeting or the night of or the
day of.
Q. Okay.
A. I sent him a text message saying I need the
letter for the board meeting because they wanted to
discuss the sale and that's when I received it.
Q. Okay. When you first saw the letter did
you -- did you read it?
A. Yes.
Q. Okay. And when you read the letter, did you
believe everything in the letter was one hundred percent
true?
A. Yes.
Q. And looking at the letter today, do you still
believe everything in the letter is 100 percent true?
A. Absolutely.
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Christina Lother, CSR #8624
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Q. And has Mike Habib ever told you that anything
he put in this letter is not true?
A. Never.
Q. Okay. And did you ever -- did you ever -- did
you ever state anything to any of the board members
about your involvement in the real estate transaction
that was not true?
A. I've never misstated anything to the board
that was not true.
Q. Okay. Okay. So that is the 210 part of the
first cause of action.
Okay. Let's talk about -- and let's go back
to 1079. Okay. And if we could go to page 4 again.
Excuse me. Page 5. So there's two causes of action
against you in the complaint, right, and this is the
first cause of action if we could scroll in here. The
first cause of action -- the other part of the first
cause of action alleges that -- a $38,000 payment to you
was improper; is that correct?
A. Correct. That's what it -- it states.
Q. Okay. So -- and we've seen the minutes again
from that meeting so we don't need to burden the Court.
Prior to the board making that $38,000 payment
to you and granting that at that meeting did you know
they were going to do it.
A. No, I didn't know and I didn't ask for it.
Q. Okay. What in your words is your
understanding of why the NMA board voted on and approved
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Christina Lother, CSR #8624
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that $38,000 payment?
A. The $38,000 payment is very simple. I drew
upon Section Four of my employment agreement given to me
from the board under compensation using my personal
expense account. I used my personal vacation time
because of the issue -- the humanitarian work is a very
close one to my heart. We had a board meeting and the
board asked me, are you doing this on your own time?
And I said I am using my personal vacation. They said
how are you paying for it? I said I'm paying for it
personally through my expense account. And then I left
the room and they came back and they said we're going to
grant this dollar amount from you, which I didn't give
them a dollar amount, but it was -- it was drawn upon
Section Four of my contract and the board explained to
me that they felt it -- it helped the community outreach
aspect and the standing of the association locally,
statewide, and nationally. So the board of directors
exercised Section Six of my contract to reimburse the
money I drew based on Section Four.
Q. Okay. So let's bring up 1066 and I think this
is the 2012 employment agreement and I think we can all
recite this verbatim now. But if you can go to the
second page. And if you could scroll in here
(indicating) -- actually scroll up at the top. Sorry.
I mean, this section (indicating). When you say Section
Four, you're referring to the personal expense account
term of your employment agreement?
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Christina Lother, CSR #8624
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A. I'm referring to the Section Four compensation
term of my employment agreement.
Q. Okay. And when you -- referring to Section
Six, if we can go to page 3 as to which the
reimbursement was actually made. If we can scroll in
here. Is this what you're referring to?
A. Yes.
Q. Okay. And if we could go to Exhibit 1095 and
this is the profit and loss detail for 2014, right?
A. Correct.
Q. Okay. And when you say you drew upon your
personal expense account in your employment agreement --
actually, can we go to page 20?
Not quite there. I think that's page 18.
Okay. When you say you drew upon your personal expense
account in your employment agreement in 2014, is this
where you're referring to?
A. Yes, that was the general ledger in the
QuickBooks where they would track it.
Q. Okay. And instead of you having to draw on
your personal expense account term in your employment
agreement, the board decided to reimburse it to you
under Section Six of your employment agreement?
A. Yes, I drew it from Section Four. They chose
to reimburse it through Section Six.
Q. Okay. And again, you never asked for it,
right?
MR. LiMANDRI: Leading.
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THE WITNESS: I never asked -- I never asked
for it.
MR. LiMANDRI: And I'm going to ask him not to
ask leading questions.
THE WITNESS: I never expected it. It was a
complete surprise to me.
BY MR. COUGHLIN:
Q. Okay. So that is that part of the first cause
of action against you.
Okay. Let's go back to page 4 of, I'm sorry,
1079, which is a -- if you go to section 19 -- I mean
paragraph 19. So under a generous reading of the
complaint, the plaintiffs are also contending that you
received excess expense reimbursement for your personal
benefit. Is that your understanding of the at best the
third part of the first cause of action against you?
A. That's my understanding of what they're
alleging.
Q. Okay. And initially that was -- seemed to be
that they didn't understand that you had a personal
expense account term in your employment agreement,
right?
A. I don't know if the plaintiffs knew or not.
They devised the contract so I would assume that they
knew.
Q. Okay. Okay. So -- and I'm not going to
belabor the point. You had that term in your employment
agreement. So -- and that was -- goes back to 2010.
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We're going to move it along because the Court I'm
sure -- can recite those documents verbatim.
Since 2010, has the -- well since 2010 when
the personal expense term was first included in your
employment agreement, has the NMA board given you any
direction as to how that can be used.
A. Yeah, I remember that 2010 and 2012, they --
there's three ways the board said I could draw on my --
my money under the personal expense account. One way is
through the American Express. Another way is through
checks, reimbursement. Another way is just checks for
any items that -- any personal and they would sign it.
Q. Okay. And that was per direction of the NMA
board at the time?
A. Yes.
MR. LiMANDRI: Leading.
THE WITNESS: And also in 2010, there are
minutes that show when I was -- I was able to secure the
Blue Bunny contract and the check for $238,500 where
that board in 2010 had an action item where they granted
me a $10,000 bonus in cash or a vacation package. So
since 2010, and going over to 2012, what they -- what I
guess the chairman also has testified to is the NMA was
trying to avoid payroll tax.
BY MR. COUGHLIN:
Q. Okay.
A. It was something that when they offered, I
said why don't you just pay me normally? Like you paid
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me in 2008? They said these are the terms.
Q. They said these are the terms, take it or lead
it?
MR. LiMANDRI: Leading.
THE WITNESS: In so many words, "This is the
contract we wrote for you. This is what we're
offering." And whoever knows our board and our
community knows that they're very type A, they're the
boss, and, "This is the offer. You take it or you
don't."
BY MR. COUGHLIN:
Q. Okay. In 2010, how old were you?
A. In 2010, I was 26.
Q. 26. Okay.
A. 26 or 27.
Q. Were you represented -- were you represented
by a lawyer?
A. No, no. The NMA had their lawyer but I never
had an attorney.
Q. Okay. So at the time, what did your -- what
was your understanding as the propriety of a type of
term like that in an employment agreement?
A. I don't understand the question.
Q. Did you believe it was okay at the time? You
were 26 and the board said take it or leave it?
A. Yeah, I mean, we had a CPA on the board.
Every board member explained, this is a great way for
the association to save money. We had an attorney and
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Christina Lother, CSR #8624
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our attorney, Spencer Skeen, drafted the agreement, and
they said this is a way for our company, association, to
save and this is the deal and I said, well, just lump it
up together and pay me normally and they said no, this
is -- this is your offer. You accept it or you don't.
And I looked up to all the -- I was the youngest person
in the organization. Every board member -- not just
older than me, but much more successful than me. They
have businesses, they have properties. I trusted them.
And they said, this is it.
Q. Okay.
A. And I said okay.
Q. Since 2010, has any board member ever told you
that the term "personal expense" means business expense?
A. Never.
Q. So in this case the plaintiffs and more
precisely Dany Shaba, has contended that you received
amounts in excess of what you were entitled to under the
personal expense account term in your employment
agreement. Is that true?
A. No.
Q. Okay. And you were here for Mr. Shaba's
testimony?
A. I was.
Q. And you were at Mr. Shaba's deposition?
A. I was.
Q. Okay. So is it true, though, that Mr. Shaba
would deliver on occasion groceries and other personal
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Christina Lother, CSR #8624
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items to your house?
A. Dany Shaba would deliver groceries as a
friend. Dany Shaba was like my younger brother. To
give everyone a perspective, he named my third -- my
third son. So Dany didn't do anything like that during
company hours. If he were to do it, then he would make
it up later, but he would sometimes sleep in my garage
or smoke hookah. He would be at my house five to six
days a week for dinner with my wife and my kids. His
sister, Kathy, was like my younger sister. Every time
Dany would buy anything for me, I would always pay him
cash and I would always give him money for gas.
Q. Okay. When did you first discover that
Mr. Shaba may have been using the NMA credit card to buy
personal items for you, not telling you, and then going
to collect the cash from you?
A. The first time that all the pieces came
together when Mr. Jonna was doing his exam of Dany Shaba
when he showed the text messages and he shows receipts
and he shows statements, and that's when for me the
light bulb went off and I said, "I can't believe you did
that." I still -- I still can't believe him and Marlo
did that.
Q. Okay. So on that note, between Mr. Shaba and
Mr. Georgis, did you have a process in place to try to
prevent that type of fraud in terms of coding the AMEX
expenses?
A. The custom and practices that were in place
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Christina Lother, CSR #8624
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was put on and developed by the board of directors. It
wasn't me. And the board of directors are the ones also
that ordered cards for every cardholder. And they felt
that they wanted different people to code it than to
charge it, so that way you could avoid what they both
testified to. No one thought they would collude with
each other and cover up for each other, and -- and hurt
the organization.
Q. So what do you mean there would be different
people who would be a cardholder and different people
that would code it? Can you explain that process?
A. Yeah, primarily the main one that the board
charged for collecting all the receipts and coding the
receipts was Marlo, and there was a specific process
from the time the mail came in to the check went out
that the board developed, that Ramzi had developed
and --
Q. Okay.
A. -- and so on and so forth.
Q. What was your understanding of the personal
expense account term in your employment agreement if you
didn't use your entire allotment for a year?
A. The way the board explained it to me is when I
signed the contract that it's automatically vested.
That's my money. That if I use over, then the next
month it gets deducted. If I use less then the next
month it gets carried over. It's my vested money.
Q. And what about on a year by year basis?
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A. If it was, again, over, it would roll over.
If it was less, then it would be deducted.
Q. So -- so -- and let's use some round numbers.
So let's say -- I don't know if these necessarily match
up with the contract, but let's say for one year the
number was $30,000, okay? And in that year you actually
incurred $35,000 in personal expense. What would happen
the next year?
A. It would either be minused [sic] from my
future expense account if I were to go over, but we
never had an instance where I drew over the personal
amount.
Q. Well --
A. But if it was under -- so -- so 2010, say it
was $10,000, usually I'd have credit and it would be
rolled over to the following year.
Q. I see.
A. Like in 2014, I took more because I had credit
built up from '10, '11, '12, '13.
Q. Okay. And going back to the beginning, have
you done any type of accounting to account for the total
amount that you were entitled to in your personal
expense account and the total amount that was
actually -- you actually incurred?
A. Yes, the way we did myself, Jennifer, Amad and
Bashar, both the chairmans of the board, the San Diego
chairman and executive chairman, did an audit, and we
gave it to the plaintiffs weeks before my deposition in
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Christina Lother, CSR #8624
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hopes that they would go over it and ask me about it.
Q. Okay. Did they?
A. They did not.
Q. And what was the result -- what was the result
of that, the accounting for all of the personal expenses
under the expense term in your employment agreement
compared to the amount that you actually incurred?
A. The result of that I'm owed money.
Q. So meaning that -- and just to be clear, just
to finish up with cause of action No. 1, over the term
of the -- over the lifetime of the employment agreement,
excuse me, in which you were entitled to personal
expense, you did not incur personal expense beyond the
amount allowed under the contract? Is that the result
of the accounting?
A. I have never exceeded my personal monies that
the board gave me.
Q. Okay. Okay. So that's the 210, 38, and the
expense account in the first cause of action.
Okay. So that's it for the actual allegations
in the complaint. So let's get to what I like to call
the smokescreen part of the plaintiffs' trial
presentation.
MR. LiMANDRI: Objection. Argumentative,
Your Honor. It's not closing argument.
MR. MARR: And gosh, how much of that have we
heard --
MR. LiMANDRI: Well, then object.
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Christina Lother, CSR #8624
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MR. MARR: -- from plaintiffs.
MR. LiMANDRI: Well, then object and Your
Honor will rule.
THE COURT: His objection is correct. Let's
go on and ask your question.
BY MR. COUGHLIN:
Q. Okay. Let me -- let me do -- let's look at a
little bit of your background and how you got involved
with the NMA. Okay?
A. Okay.
Q. Can you just give me a brief history of your
family, where they came from, and their involvement with
the NMA and local business.
A. Sure. My grandparents are from Tel Kaif, the
same village as Mr. Zetouna and Mr. Salem, their --
their parents or grandparents. My parents came -- fled
from bag dad for their religious persecution and they
came to America in 1979. I was born in 1983, we owned
a -- opened the first grocery store called Wrigley's
Market when they first came to America and I remember I
first started working at seven years old bagging
groceries, pushing carts, mopping the floor and I -- and
I remember when, you know, I was a teenager and Food 4
Less opened up down the street. We lost a lot of
business and it was -- it was hard to see the toll it
did on my family because here it is my dad working
18-hour days and then a big chain comes up and hurts
them. And that really resonated with me. That, you
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know, we have a mom and pop that worked so hard for
provide for their family and put their kids through
college and just make a living and then you have a big
chain like Food 4 Less or Wal-Mart come in town and just
demolish them.
And so I grew up in the industry. You know, I
love the -- I love the grocery industry. And when I --
you know, go on trips, I would visit -- visit markets or
stores, and it's in my blood.
Q. So when you say you grew up in the business,
what specifically do you mean?
A. I grew up -- my weekends were spent bagging
groceries, pushing carts, helping customers to their
car, seeing firsthand that small mom and pops need
representation. They need someone at the helm or to
advocate for them to make sure they're safe, to make
sure they're secure, to make sure they're margins are
protected, to make sure legislation doesn't hurt them,
to make sure that they thrive and, you know, the
Chaldean community is a -- is a beautiful community.
And there's -- there's always actions and arguments but
at the end of the day we're one big -- one big
community.
Q. Okay. Okay. So tell me about your education.
A. So I graduated high school in 2001, Valhalla
High School, and then I went to San Diego State
University. I graduated in 2004 in business in
integrated market communications, and then I worked for
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Anheuser-Busch, the beer company, did sales and
marketing. I always wanted to do commercials.
And -- and in 2006, my late father got really
sick, and by the time the company -- there was -- to
move up in a corporate America, you would have to move,
and I was primary caretaker, would take him to the
doctor appointments. And my brother, Auday, he -- he --
he left the DA's office, worked at the association. He
told me come and help me out at the -- at the time
California IGCS, which is today the Neighborhood Market
Association, and help the organization grow, vendor
programs and business.
I was reluctant because, you know, they're
going to say, oh, it's his younger brother, you know, he
comes on in. So I said I'll give you guys six months
and that's when I first -- you know, I knew Mr. Zetouna.
I knew Arkan Somo, I knew Samir Salem. That's when I
really got to know them. I really liked them. I --
I -- I had a very fond respect for all three of them.
So I gave them six months, and I remember I told my dad,
I said, you know, the community is -- they complain a
lot. You know, you could do everything for them but
then they'll find something. He said, well, for every
one person that complains, there's nine people that are
silent that really appreciate you. So look at the nine.
Don't listen to the one.
So I worked there for six months. They hired
me as a director of sales. It was -- we were in La Mesa
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in our building. And after six months came along, the
board said -- I said, okay, guys, I wanted to go to
program defibrillators. I was accepted to Arrhythmia
Technology Institute. It was a passion of mine because
my late father had -- he was on the list for a heart
transplant, and he had a defibrillator that saved his
life three times.
So I was accepted to school in South Carolina,
was going to move there. I told the board, thank you,
guys, for the opportunities, it's been a good six
months. And my dad ended up passing away August 17th
that year. The board said you should -- we want you to
stay because you're bringing in programs, you're doing a
magazine, you're bringing us money.
And Auday, my brother was doing the public
policy, he was in front. I never liked to be in front.
I always liked to do the business part of it. So we had
a good team. They offered me a one year contract, which
I accepted and then they promoted me to vice president
of marketing and development in 2006, and then in 2007,
they promoted me to the chief executive officer of the
corporation, and that was exactly 10 years ago, so I was
24 years old and then my older brother ran for state
assembly and then he lost. He came back, and the
board -- the board told him your brother is doing such a
good job. We might not want to hire you back. And
really broke his heart because he put everything he had
in this organization. He was reluctant to come, to
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leave the District Attorney's Office to run a grocers
association.
And they put him on ice for a month and it
really -- it really broke his heart and then at the same
time the group in Michigan called associated food and
petroleum dealers, similar to the NMA but they were
started in the 19 hundreds, recruited him and so he was
so hurt, he just took the job at AFPD and moved to
Michigan and then the board in 2008 appointed me as
their president and CEO of the company.
Q. Okay.
A. And we had a -- we had -- we had a great
relationship, I mean, we -- we -- I always told --
because the different groups always fight. It's like
family court. It's a big divorce. And right now
it's -- I mean, it's gotten to a point where it's over
the top. And I tried so hard to get the Attishas and
the Salems to get along, to get the Orams and the
Zetounas to get along, to get the Ballos and Somo to get
along. I've tried so hard. I've had dinner with Sam
Salem after the 2011 election and drinks with him and
Issam, and said I'll talk to Amad, I'll do my best. And
the other side said, well, it's an election, the members
vote them in, the members do this.
Then I go to the other side. Well, they said
this. Well, we want to be on the board. And they
had -- they -- you know, Sam Salem and Basil Zetouna
were very hurt when they were voted off the board in
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Christina Lother, CSR #8624
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2010, and I was equally hurt. They came to my office in
La Mesa and they said, Mark, you have to call the
election void. And I said, why? And they said because
all these members voted together, it's never been done
before. We have all these families that should be
represented on the board. You have to step up.
I said, what can I do, it's an election? They
said you have to do something. They said think about
this. This is our baby, we created it, we did it. And
then when it's big, someone else comes and takes your
baby, how would you feel?
And I hurt for them. I -- I empathized with
them. And I went to Amad, I went to Bashar, I went to
Ramzi, I said, guys, you should make peace with the
other group. Let's bring them on board. We're stronger
if we're together. And they said, it's an election.
Everything is done appropriately. If the members don't
vote them in, the members don't vote them in.
And for years, from 2011 till they filed this
lawsuit, I've been trying to make amends and peace
between the two -- the two -- the groups that are really
fighting and -- and in this lawsuit right now. I
guarantee you, if Mr. Salem or Mr. Zetouna were on the
board, this would never happen. No lawsuit would be
filed because they could hash out their issues in a
boardroom as opposed to a courtroom. And I tried my
absolute best, and I know Mr. Salem knows that, I know
Mr. Zetouna knows that, and Mr. Attisha knows that,
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Mr. Ballo knows that --
MR. LiMANDRI: Your Honor, I'm going to
object. There's no question pending and the witness is
giving a speech.
THE COURT: All right. Next question.
MR. COUGHLIN: Thank you, Your Honor.
BY MR. COUGHLIN:
Q. So you're referring to a time period after the
2010 election; is that correct?
A. Yes.
Q. And just to clarify, what happened in the 2010
election?
A. The 2010 election, five board members, which
are big families -- Basil Zetouna, Sam Salem, Tony
Konja, Doug Dallo, Steve /PWA Tina -- were voted off,
voted off the board **.
Q. Is that election by -- by the -- all the
members of the association?
A. Yeah. All the members would vote. One thing
we did when we grew the organization is we wanted to
embrace elections. We wanted to embrace the democratic
process and so one thing we did was elections.
Q. Okay. And so the meetings you're referring to
and trying to bring the families together, those
occurred after that election?
A. Yeah, before 2010, there were no issues
because everyone was -- they were still fighting, there
were still arguments but it was in -- it was in a
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boardroom.
Q. Okay. So I want to go back to earlier in 2010
if we could.
A. Okay.
Q. And if we could bring up 1042, and this is a
board meeting April 27, 2010. We've seen this document
before. If you could go to the bottom of page 2. Okay.
This is the motion by Saad Hirmez to create a committee
to discuss extending your contract. Do you kind of
remember when this was going on about them wanting to
create the 2010 employment agreement?
A. Yes.
Q. So were you ever present when they were
actually discussing the terms of that employment
agreement?
A. I was never in the room when any board member
would talk about me and any compensation or any
contract.
Q. Okay. So -- but you remember this kind of
happening around this time?
A. In 2010, they -- that's when they offered me
my first formal employment agreement.
Q. I see. Okay. Let's move along. Could we go
to Exhibit 1043. And this is the July 2010 -- July 19,
2010, meeting. If we could go to page 4. Okay. Let's
scroll in on this Section K.
Okay. And we've gone through this document
before. This is essentially the vote to approve your
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2010 employment agreement. Were you present when this
was being discussed?
A. I was not in the room when they talked about
the agreement. They offered it to me after --
Q. Okay.
A. -- they voted.
Q. Okay. And it reflects Mark's notes and
Spencer's notes. I know this was seven years ago --
well, who was Spencer?
A. Spencer Skeen was our general counsel of the
association.
Q. The NMA general counsel?
A. Yes.
Q. I know it was seven years ago. Do you
remember any of your notes or any of Spencer's notes?
A. I don't.
Q. Okay. And ultimately it was voted on and
approved.
Can we go to Exhibit 1041. Okay. And what's
this document.
A. This is my 2010 employment agreement.
Q. Okay. And we had talked about the 2010
election, but just to confirm, were any of the
plaintiffs on the board when this was voted on and
approved?
A. Yeah. Mr. Salem and Mr. Zetouna were on the
board.
Q. Okay. Okay. And let's go to page 2, and
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scroll in on this section (indicating).
And this is -- we already looked at your 20 --
2012 employment agreement. Is this the -- kind of the
identical personal expense term?
A. Yeah. I remember they offered me 140,000 and
I said, well, okay. They said we're going to break it
up you have a personal expense account and you have your
salary. And I said pay me just regular. And they said,
no, this is how we're going to save money for the NMA.
Q. Okay.
A. And -- and then they broke it up that way.
Q. Had Mr. Zetouna or Mr. Salem ever told you
that they believe the term personal expense means
business expense?
A. No, never. And both of them are very smart.
I mean, and the whole board, they wanted to save -- the
NMA wanted to save payroll taxes. The board is a very
smart organization that owns hundreds of stores, and
they're very good at what they do, and -- and I guess
there's -- there was a CPA on the board and they said
this is a creative way for the association to -- they
felt like it was a good way to save money for them.
Q. Okay. Did you feel like you had any real
input into -- well you testified you wanted to take it
all in compensation, correct?
A. Correct.
Q. Okay. And did you -- what did the board do
when you asked them that?
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A. They said, this is your offer. This is your
offer. Do you want to take it or not? And anyone
that's -- knows the board and knows the community, you
know, they're survivors of the genocide. They're
strong-minded people and either take it or leave it
basically.
Q. Okay. Okay. So I'm going to jump forward
just real quickly to the 2012 employment agreement
again, and that's 1066.
Okay. And go to Section Four and scroll in.
So nothing changed, correct?
A. Yeah, the 2012 agreement was a carry over of
2010 and I believe the board, this increase, increased
the amounts and extended the life of the agreement.
Q. Okay. And can we go to the next page, Section
Six, reimbursement for expenses. What -- in your
understanding what does this term of the agreement
intend to cover?
A. So this is the reimbursement expenses for the
corporation. If it was under -- the custom and practice
is, that's how it's always been since I started and they
gave me -- they made me an executive, was if it's under
a thousand dollars, I would make the call. If it was
over a thousand dollars, I would call one of the
chairmans of the board and say we need this, shall we
get it, and they would tell me yes or no.
Q. Okay. Is that what you did?
A. Yes.
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Q. Okay. And just this term in general, though,
as compared to the personal expense term in your
employment agreement, what do you -- what was this
intended to cover?
A. Okay. So the personal expense as it was
explained to me from the board is compensation. It's my
money that gets vested immediately when I sign the
contract, it carries over if I don't draw enough or too
much, it gets deducted. That's compensation, Section
Four.
Section Six, as they explained to me was
expense reimbursement, that's corporation business for
the corporation. And they said charge the card and make
the call if it's under a thousand. If it's over check
with one of us and we'll give you the go-ahead.
Q. Okay. And this term in this second paragraph
of Section Six what is that intended to cover?
A. That is the auto allowance, health insurance
and telephone.
Q. And -- and so was it your practice then if you
were going to incur an expense over a thousand dollars
that you would, in fact, call a board member?
A. I would.
Q. Now, there were some expenses that were
essentially -- the board knew that you were going to
incur, so, for example, a golf tournament or something
like that.
A. Correct.
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Q. And on those, would you call the board for
every single expense that you incurred?
A. So the custom and practice for the
Neighborhood Market Association was they would use prior
year financials as the budget. Every meeting we'd have
financials and we'd compare the current year to previous
year, and that's how they would do their comparison.
And it was not a formal budget, but they would
use prior years' financials to show, okay, golf
tournament last year you spent 30,000, this year you
spent -- you know, you spent 30, try to -- if you can do
more revenue, do more expense, if you could not and so
on and so forth.
Q. I see. Okay.
A. That's how the board set it up.
Q. Was there a process in place by which your
personal expense, that section of your compensation, was
tracked?
A. Yes.
Q. Can you describe that, please.
A. Okay. There's three ways of taking the
personal expense account. There's a check that they can
just write for something that's purely mine, it's not
the association's. There's the AMEX that they said
charge the AMEX and we'll go over it, we'll distinguish
what's personal, what's not, and there's a
reimbursement, there's a personal reimbursement. I
would say -- I don't know a percentage, but for the most
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part it was the American Express, probably 60 or
70 percent of the time. The American Express would come
into the office, the mail would go to me. I would give
the statement to Marlo, and then he'd come -- or other
staff. Sometimes it would be Daniela or whoever we had
at the time, but the board charged Marlo with the duties
of this specific one.
He would come and sit down with me first. I'd
bring out all my receipts, business and personal, and
we'd go one by one, okay, this is business, this is
personal, this is business, personal. And then the
statement would stay with me. I'd always be the first
one that would go over it. Then a board member comes
in, one of the chairmans. Would say, okay, this month
on your charges, you spent $800 for you and you spent
the rest for association. Okay. Write down 800 bucks.
So we'd write it down, goes in the general ledger.
Then I give the statement to Marlo and the
board charged Marlo with sitting down with every single
cardholder and they would tell them exactly what they
spent on what and what not and then after Marlo would do
that another board member would come and sign the check
and then give it to the bookkeeper and the bookkeeper
would just input it and send it over.
Q. Okay.
A. So you would have a board member -- either the
same or a different board member looking at the
statement twice.
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Q. Okay. So -- okay. So just to change course a
bit, there's been a lot of discussion in this case
between 2011, 2015 about the overall financial condition
of the association. Okay? Going back to let's say
2011, 2012, was there any type of strategy in place --
A. Yes.
Q. -- in that respect? Can you explain that.
A. If you -- I'm really good with exhibits, so if
you could pull up the financials I could go over them
one by one with you.
Q. Okay. So let's bring up --
A. 85 percent of the association's revenue comes
from the sponsorships. Sponsorships -- or deals that we
negotiate from suppliers where they give the association
residuals and they give our retailers rebates that we
negotiate for them. And a lot of the membership dues,
the members would pay and then they would get it back as
far as rebate. But the way the association makes money
and the reason why, you know, from 2006 when I started
the revenue was around half a million and then we were
able to ramp it up, we were doing a like 1.1 million.
We ramped it up mainly from suppliers and sponsorships
but the way you do it is you show the perception of
unity, to show the suppliers that we're a chain, we're
united, we're together. And if -- if Coca-Cola wants us
to sell Diet Coke Max, we can get all these stores to
sell Diet Coke Max and we would try it. We would send
members out, our field reps to try to do that.
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Christina Lother, CSR #8624
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And the big hit happened in 2000 --
Q. Well, let's do this. Let's bring up the
financials --
A. Go ahead.
Q. -- so we can just kind of follow along. Okay.
Let's bring up -- let's bring up 2083 and let's go to
page 13.
Okay. So just before you move on that's the
profit and loss for all those years. It's '13 --
A. So if you want -- if you could go back to
'2006 to '9 so I could show.
Q. Okay. Going back to the first page.
A. Where's the revenue?
Q. Okay. So this is the income line for 2004,
going to 2006, when you started?
A. Yeah.
Q. Go to this next page, please. And so the
income --
A. Okay. Right there.
Q. -- during 2005 --
A. So 2005, the revenue was 624,000. I started
March 2006, and the main thing we would focus on was
suppliers, vendors, treating the list, not just as a
secret, but at an added value to endorse suppliers.
And so we went from 624,000 immediately to
907,000, and then I got promoted the fall of 2006, and
then to vice president marketing and development,
focusing on bringing in money for the association, when
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Christina Lother, CSR #8624
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Auday was doing the public policy legislation, laws and
so on and so forth. We went to 1.1 million because we
kept negotiating great deals, Coast Citrus, Blue Bunny,
Coca-Cola, Pepsi-Cola and what we did is I created a
program endorsement committee where we put board members
in a committee and every month we'd have vendors come
in, four or five, they had a half hour slot and they
would present to us as if we were a chain and they
would -- one year we'd push Coke. Coke would increase
two or three percent market share. The next year Pepsi
comes and says we want to be endorsed. So we'd sell
Pepsi and Coke, bid on the business and so they would do
another bid and then we would negotiate thousands of
dollars for the members and thousands of dollars for the
association and the terms of a residual, which we would
then earmark to say, okay, reps, go out in the field
because we wanted to replicate, 7-11, AM/PM and be a
chain not just have a bunch of stores just to have a
bunch of stores. You want to do something with them,
you want to promise something to supplier and deliver on
what you promise and that's how we were able to raise
the revenue from 907,000 to 1.1 million.
And we were investing. We said we need -- we
need to grow. You know, nonprofit, you have to further
your mission and your goals and objectives, but you need
to grow, and so that's 2007. If you go to 2008 -- so
2007 I was vice president --
Q. Let's do this. Let me stop here for a second,
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Christina Lother, CSR #8624
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okay?
A. Okay.
Q. You had mentioned something about the list and
how that played into the substantial revenue increase.
A. Right.
Q. What do you mean by the list and how did it
affect that substantial revenue increase?
A. Sure. So from what I -- okay. From what I
understand the list was protected from 2004, but I
didn't start working until March -- I think March 1,
2006. The main thing that I did to the list is really
protect it, super protect it, no one could get access to
the list, because that was what we sell. We sell a
perception, we sell a list, and we sell our negotiating
talents and our brand because we have to build up our
brand as, you know, we're together. At the time we were
dominantly Chaldean, but we work together, and we'll
push programs.
And the biggest check that I was able to
secure was from Blue Bunny ice cream for 238,000 and
they paid up front just for one letter that I wrote and
our membership list. They paid for the list. The
distributor, Rock Distribution, which is not Blue Bunny,
was brought in years prior I believe by either Mr. Salem
or Mr. Zetouna, but it was a different company. Rock is
just the distributor. Blue Bunny is the parent company
from Le Mars, Iowa.
And so once we made the list, not just protect
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Christina Lother, CSR #8624
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it, super protect it, we were able to make sure that the
value of it was there, because when we tell Coca-Cola,
listen, for the fiscal -- for the calendar year of 2018
we're going to push Coke as an endorsed supplier with
our logo, we're going to cobrand it and so on and so
forth, we would give them the list, and we'd tell them
only use it for the program and they would give us a
check, a check for the members based on what they sell,
only NMA members, and then give us a check for a
residual to the association to keep our operations
going. But 85 percent of our revenue is derived from
our brand in the supplier community. So that's 2006 I
started.
Q. Okay. So let's go to the next page.
A. Okay.
Q. Okay. Keep going till we get to -- keep
going -- 2008, here we go.
Okay. And --
A. What was the revenue?
Q. Let's go to the next page.
A. Okay. So 2008 we did 1.1. 2009, 1.1. 2010,
1.1. 2011, 1.1. Very healthy years. We were in
La Mesa. We had a really small office, probably the --
and we were just grinding away to -- we were just
negotiating. In 2008 is when I assumed the president
and CEO position and my brother went to Michigan.
Q. Okay. So let's fast-forward a little bit.
Let's go to --
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Christina Lother, CSR #8624
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A. But one thing to point out. So 2010 was with
the board. In 2011 was when you could call it the --
the Chaldean civil war started. Five of the families
were voted off the board and now you have a bunch of
drama. And now suppliers, the perception is you're
fragmented, you're not united, you're fighting, why
would we give you money?
That's the conversation that would happen with
suppliers: Oh, you're fighting with each other. The
Salems are not on the board. The Zetounas aren't on.
Oh, yeah, but there's an election, but, yeah, why aren't
you guys getting along?
And so that was a big factor of losing revenue
but at the same time trying to invest and making sure
we're diversified, we're not just relying on one
community, and that's what I could explain for '12, '13,
'14, if you want to go to it.
Q. Yeah. Well, let's go to page 13 then.
A. So we lost -- okay. Go ahead.
Q. Okay. Page 13 we're kind of -- we're going to
the next grouping of years after 2011, and this is 2012
till the year that the lawsuit was filed?
A. What is the revenue?
Q. Okay. Let's go to the next page. Okay. So
here is the income. There's 2014, that was the year you
sold the building, right, so that's an anomaly?
A. Right. So '12, '13, '14, I was working really
hard to bring the families together because without the
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Christina Lother, CSR #8624
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perception of unity, you didn't have to be united but
you need to show suppliers that you're united, without
that perception, you can't get big contracts. Nobody
will invest in a corporation that they think is
fighting. Nobody will invest in a corporation that they
think is in turmoil. And so one idea that the board had
was let's go national. Forget San Diego. Forget this
fighting with the Chaldean community. Let's go to get
the Koreans. Let's go to Fresno to get the Indians.
Let's go to Sacramento to get the Sikhs. And we did. I
negotiated -- we did -- we did -- I negotiated and
secured a merger with California America -- California
Small Business Owners Association. We automatically
gained 400 new members in Sacramento.
And so we tried to go national, and we doubled
down. We said we need to diversify, and the reason why
it's important to go national for the organization and
for the membership is you could avoid a conflict like
you have today where if one community is fighting, the
corporation could just become insolvent. If one
community is fighting but then you have the Korean
grocers still united, you have the Indian grocers
united, because most of the stores are immigrants, it's
the nature of the industry. And that's one of the
reasons why we invested and we invested and we invested
on one hand, when I say we, the board made that decision
to invest on one hand, and then I tried my best to make
peace on the other hand because we want to put out a
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Christina Lother, CSR #8624
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fire here but grow here to make sure that the
organization could thrive.
Q. Okay. So other than diversifying to avoid the
difficult impacts of a fight like this --
A. Right.
Q. -- within one community were there any other
reasons why you and the board thought it was of benefit
to the members --
A. Yeah.
Q. -- to go big go national?
A. We have to go national and the reason why the
idea was -- behind it was when you're a regional
organization, California, Arizona, Nevada, you're
talking to the regional rep from Pepsi or UniFirst or
Dreyer's Ice Cream. When you're national, you're flying
to Somers, New York to talk to the executive from Pepsi,
Pepsi National. Frito-Lay, you go to Plano, Texas, to
talk to Frito-Lay. UniFirst, you go to Massachusetts to
talk to them.
When you become a national organization, even
if it's a 100 stores in New Mexico or a 100 in Texas or
50 in Tennessee, if it's under the same umbrella, you
automatically get more buying power which you leverage
to give to your members. So if I'm talking or whoever
is talking to the owners -- the CEO of Dreyer's ice
cream, you tell Dreyer's Ice Cream, well -- or Nestle,
we're a national organization, and these are our pockets
and these are who we represent. They have a much bigger
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Christina Lother, CSR #8624
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budget because they're in a national budgeting and which
would not just help the association, not just the
diversifying, more money would come to the stores, more
money would come for the association and you could grow
the organization if you go national.
So the board had decided to invest. We sent
sales reps to LA, we sent sales reps to Fresno, we sent
sales reps to Sacramento, we sent sales reps to Nevada,
we sent sales reps to Arizona, and we tried the
different strategies.
Q. So --
A. And then we also -- we sold La Mesa and
then -- no, we first -- we bought Fashion Valley and we
were trying to sell La Mesa. There was a time where we
were paying two mortgages and the organization, the
board wanted to do it. You know, they overstretched
themselves financially. And different philosophies.
Different board members think differently.
Q. So was there any government relations benefits
to the members that you anticipated would accrue by
going nationally?
A. Absolutely. I mean, if you're a local group,
you have a seat at the mayor's office. If you're a
state group, you have a seat at the governors office.
If you're a national group you have a seat at the
Whitehouse.
Q. Why is that seat important?
A. It's extremely important because you want to
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Christina Lother, CSR #8624
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protect your members from federal legislation that could
hurt them. You want to protect them from state
legislation that could hurt them. You want to protect
them from local legislation that could hurt them.
We have -- and we still have good
relationships with both sides of the aisle on all levels
of government. I mean, when they're crafting Obamacare,
one argument we made as a group was a small business
exemption because, you know, regardless of the policy,
we -- we had to think about how does it affect our
members, how does it affect their bottom line, and how
does it affect the association?
So we had to have -- when you go national, you
just become a -- a greater organization, and that's what
the board tried to and instructed me to do with the
hopes that we would also make peace locally and we grow
the organization to a big, strong group.
Q. So in those efforts to go national, just give
us a general idea of where those dollars were spent.
And this is in this kind of 2012 to 2015 range. Where
were those dollars spent?
MR. LiMANDRI: Your Honor, just object on
relevance at some point. I don't see how any of this
has to do with the actual issues in dispute. Maybe
they're going to lead somewhere with it, but they could
talk all day about issues, how they ran the NMA but
that's not the issues that we're here about.
MR. COUGHLIN: Well, I agree with
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Christina Lother, CSR #8624
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Mr. LiMandri, okay, but all we've heard from
Mr. LiMandri is how bad of a financial condition this
company was in for weeks and Mr. Arabo is explaining it
and why.
THE COURT: Well, I understand there may be
reasons why, but the question -- the question in this
trial is, is it proper to spend certain monies when you
are in financial problems, whatever caused the financial
problems.
MR. LiMANDRI: Exactly.
THE COURT: So I mean, I understand what the
issue is. If -- if you want to explain in a nutshell
how the association got where it got in terms of cash
flow problems and all that, that's okay. But let's do a
summary.
MR. COUGHLIN: Okay. Thank you, Your Honor.
BY MR. COUGHLIN:
Q. Let's get to page 13. Okay. And go down,
scroll down here. What is NMA residuals? What is that
category?
A. NMA residuals is a -- monies the NMA gets when
we negotiate with companies for programs. And you
basically sell your reputation, your goodwill, and your
perception of unity. And if you see some companies like
Blue Bunny would pay three years in advance so they'll
give one check for 300,000, unless they earmark it for
the next three years, so it will look like, well, one
year you had 480,000, next year 121, but really it's
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Christina Lother, CSR #8624
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spread across.
Q. Okay.
A. But that's how they input it.
Q. So this is 2013, there was 480 for those NMA
residuals and who makes up that number? What vendors?
A. You have Coast Citrus. You had Coast Citrus.
You had Blue Bunny. You had UniFirst. You had
Coca-Cola. You had First Data. You had Bank of
America.
Q. Why was this number so much lower in 2015?
A. 2015?
Q. This 2015 right here. 2015.
A. Right. Was it '15 or '14? It was --
Q. This is '14 --
A. No, '14 was low.
Q. That's '14 --
A. So 2014 we forecasted to get the Blue Bunny
contract, because we were getting it every year, every
three years. That's when we had -- it was at Bamboo
Sushi in December. Ramzi Murad was there and myself and
I think Amad Attisha and Margaret McCowell ^ from Blue
Bunny mentioned -- we said, well, we're going to renew
the agreement. She said, yeah, but I heard -- yeah, we
don't know, the sales aren't that good.
We said, no, we should -- we have a good
relationship, we've been together for all these years.
You've donated over 700,000 to us over the few -- the
last few years.
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Yeah, but there's a lawsuit. What's this
lawsuit about?
Yeah, you know, infighting with the community.
And they said, oh, we'll still support you,
but let's see how it goes.
Q. Was that -- when was that money supposed to
come in? What part of the year in 2015 was that money
supposed to come in?
A. I believe it was supposed to come 20 -- I
think 2013 Coast Citrus that's why it made it that high
and I think it was supposed to come in I think 2014.
Q. Okay. And it didn't come in?
A. It did not and we also lost Coast Citrus so
Coast Citrus and Blue Bunny, two companies, were -- they
were responsible for maybe $400,000 to our bottom line
every year, or every -- every couple years, and we
forecasted for it.
Q. So in 2014 the board was forecasting a
substantial -- well, the income that it had been
receiving for years?
A. They -- they expected it, and if you look at
the association from -- it's important to see -- you
can't look at it in a vacuum. You have to look at it in
the big picture as far as the history of it. You had
downs, you had ups, you had downs, and now you're
stabilized. In 2016, we did not lose money. If you
back out the legal fees because we are paying legal fees
contrary to what anyone else would tell you.
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MR. LiMANDRI: I'm going to object,
Your Honor. There's -- it's a non-burning limits
insurance policy. They're not paying legal fees.
THE WITNESS: That -- that's -- we are,
Your Honor. There were supplemental bills.
THE COURT: Well, if it -- if it's an issue,
somebody can present some evidence, I suppose.
BY MR. COUGHLIN:
Q. Okay. So -- well, let's just go on that
point. And we'll go back, but you said the word
stabilized now. The NMA is stabilized. What do you
mean?
A. We're stabilized. When we -- when the NMA did
the -- the Refined Management contract, one of the
reasons why is to make sure that it didn't become
insolvent. One of the driving forces behind the board
entering into the agreement, it wasn't to what the
plaintiffs said a shell game. It wasn't anything like
that. The board and the organization could not have
afforded the contract they had given me and if I were to
keep the contract and they had the same expenses and the
same rent and the same payroll and the same services,
then they would be out of business by now. That's why
if you could see 2015, they lost almost 600,000. In
2016, if you back out legal fees, they broke even, and
the big cloud right now is this lawsuit because
companies will not invest money in an organization
that's in turmoil. They will not invest money in an
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Christina Lother, CSR #8624
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organization that has a receiver. They will not
money -- this isn't a property. It's not a liquor store
or a gas station. They pay for your services and your
reputation. Mainly your reputation.
Q. Okay. So let's bring up 1164. And go all the
way to the top. What is this document?
A. That's the 2016 P&L.
Q. Okay.
A. Oh, that's for Refined Management.
Q. For Refined Management. Okay. So if you
scroll down kind of in the middle showing the expenses.
These are all -- well, describe what these expenses
were. Were these previously NMA expenses?
A. Yes. So when the Neighborhood Market
Association board contracted with Refined Management,
the Refined Management absorbed all of the liabilities
and the operations with the exception of the cost of
goods for example. If the NMA has a banquet at the
Manchester Hyatt and the bill is $80,000 for steak and
chicken, the NMA would pay for the steak and chicken.
Q. Previously?
A. No, no.
Q. Now?
A. For events, but this covers all payroll, all
community outreach, all government relations, all
meetings, all rent, all services, period, and if the
organization, if Refined Management can't do it, Refined
Management loses money. If you compare the total profit
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Christina Lother, CSR #8624
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of that year 2016 with the payroll and you compare that
to what I would have made if my employment agreement was
still into place with the Neighborhood Market
Association, I took a -- we could do it right now.
Q. Let's scroll down to the payroll section.
Which is right here?
A. Okay. It's 52,000 and then go to the total
profit.
Q. Okay. Next page.
A. 36,000. So say 90,000, okay? Pull up, if you
could, my employment agreement in 2012.
Q. 2000 -- okay. So that would be 1066 and
you're referring to your employment agreement for the
years 2016?
A. Correct.
Q. And that would be the second page.
A. Yeah. So 2016 would be what year?
Q. Let's see here. 2016 would be here
(indicating).
A. Yeah. So 2016 if Refined Management never
existed, the board said forget Refined Management, it
doesn't make sense, we're going to pay our obligations
under the employment agreement and the contracts we have
in place, the board of directors would have paid me
$200,000 that year, not including my auto allowance, my
health insurance and my phone reimbursement. Not
including rent, employees, community outreach,
government relations, event logistics, public relations.
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The reason why we -- the NMA did it was to stay in
business. And I have made the commitment to the
organization that we will never go out of business,
because NMA has no real debt. They have no creditors.
They're completely solvent. They don't owe anyone any
money. The Refined Management has absorbed and will
continue to absorb all the liability of the Neighborhood
Market Association to make sure we stay in business.
Q. When you say by liability you mean like the
overhead risk?
A. The overhead, the rent, the -- the employees,
the meetings. The organization sells a service. It's
not tangible. It's not like a can of Pepsi. We don't
sell gasoline. We sell a reputation and our service and
the perceived -- the perceived unit -- excuse me --
unity, because you have to convince Fortune 500
companies to invest in the organization that has to
deliver something, and that is the one thing that we try
to do.
Q. Okay. So let's go back to 283, please, which
is the profit and loss for the NMA for 2004 through
2016. And let's go to the last page, 23. And at the
top. So this is the bottom line. Now, this was not
through the end of the year, which is almost -- almost
all the way through the year, but this is the exhibit.
A. Okay.
Q. And so when you're talking about how the
Neighborhood Market Association has stabilized its
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Christina Lother, CSR #8624
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finances through the Refined Management contract, what
are you referring to?
A. Right. We stabilized it. There's no -- all
of the outstanding issues or all of the issues that has
been raised don't exist. There are no company credit
cards. There are no Marlo Georgises. There are no Dany
Shabas. There are no issues that they complain about.
And also it's important to look at that total number so
if they look at the snapshot of my career with the
Neighborhood Market Association, that's relevant because
we've had good years, we've had great years, we've had
really bad years. It's ups and downs. But we're still
here.
Q. Okay.
A. And we'll be fine.
Q. If can go to the prior page --
A. Sean, sorry, can you look up 2004 and 2005,
the net income?
Q. Well, let me do this. Before we do -- I know
you're the client. I'm supposed to listen to you.
A. Sorry.
Q. But let's go back to page 23, the prior page.
Okay?
So these numbers here for the association.
A. Right.
Q. They no longer have these numbers?
A. I'm sorry?
Q. So these are -- this is the -- for 2016 for
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Christina Lother, CSR #8624
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the Neighborhood Market Association. There's no rent.
A. Right.
Q. There's no salaries.
A. It's all been absorbed, all the liabilities.
NMA has no real debt, no creditors, paying their bills
on time.
Q. Okay.
A. No issues currently.
Q. Okay. So let's go back to page 1, which is --
actually, let's do this. I want to go into 1134 just
before we -- before we get on that topic. Okay. When
you're referring to the Refined Management contract --
well, tell me what this is.
A. This is the Refined Management contract that
the board discussed and discussed and approved and voted
upon and they offered it to me to accompany them, the
president of Refined Management, and they list every
single item from line 1 to line 9.
A couple of weeks ago, I know we had a holiday
package show. We were in court. It was a liquor show
in El Cajon in the crystal ballroom. It was our most
successful liquor show, the NMA's most successful liquor
show in the eight years we've done it. We were in court
when we were having our liquor show. We're in business,
and we'll get better. We need to get the cloud of doubt
over our heads -- off our heads.
Q. So who -- even though this contract was
entered, okay, and you're no longer the official or the
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Christina Lother, CSR #8624
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actual president and CEO, who ultimately still has the
ultimate decision-making authority?
A. The board. I -- I serve -- the board is the
boss and whoever thinks otherwise doesn't know the board
and the personalities on the board.
MR. COUGHLIN: Your Honor, is this a good time
for a break?
THE COURT: Sure. Let's take a break.
(Recess.)
THE COURT: Okay. Mr. Coughlin.
MR. COUGHLIN: Thank you, Your Honor.
BY MR. COUGHLIN:
Q. I just want to shift gears for one second.
Now, the bonus, the $210,000 bonus that was granted to
you in October 2014; is that right?
A. Correct.
Q. So the plaintiffs have intimated that you
somehow needed the money or Amad Attisha needed you to
have the money in connection with a few transactions
between you and Mr. Attisha. Is that true?
A. That's not true.
Q. Okay. So you were -- did you ever try to
Seau's restaurant with Mr. Attisha?
A. We tried to purchase Seau's restaurant in May
I believe 2012.
Q. So two and a half years prior to the 2014
bonus?
A. Correct.
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Christina Lother, CSR #8624
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Q. Okay. And at some point Mr. Attisha helped
you buy a home, your personal residence, right?
A. Mr. Attisha helped me with the -- I couldn't
qualify for the house because my credit -- debt to
credit ratio, and we used -- it was my money that we put
as a down payment and the loan officer said that if we
could do it that way, put it under his name, and then I
would pay the payments every month and after six months
of seasoning, I assumed the loan and then I assumed --
and then he quitclaimed the house, similar to a cosign
but much -- a little -- a little more complicated. But
that's the way the loan officer explained it to me.
Q. Okay. And when did -- when did Mr. Attisha
actually quitclaim the deed back -- the house to you,
back to you?
A. I believe September 2012.
Q. Okay.
A. And that year 2012 I don't believe Mr. Attisha
was the chairman of the board.
Q. Okay.
A. The chairmans were I believe Saad Hirmez and
Ramzi Murad.
Q. Okay. But in any event it was two years
before the October 2014 bonus to you?
A. Correct.
Q. Okay. And at some point you bought an
interest Lulu's Market from Mr. Attisha. Can you
explain that?
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Christina Lother, CSR #8624
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A. Yeah. He had a -- him and his brother had a
Save-A-Lot in El Cajon, and there were other people
bidding on it. I was one of them. And I think /TPHAS
seem Salem was of them, and I think the owner of North
Park Produce was one of them. And purchasing from him,
we just closed escrow even recently, but I believe that
was December -- initiated in December of 2015, more than
a year after the October 12th -- October 2nd board
meeting.
Q. So as of October of 2014, did you have any
concept of potentially ever even buying an interest
Lulu's Market?
A. No.
Q. So there's been a lot of questions about Jesus
Cardenas and his companies. Do you know when the NMA
board first hired Mr. Cardenas and why?
A. I believe the board used Jesus for the ban on
the beach with a liquor ban, when the NMA was fighting
the liquor ban on the beach, that's when they first used
the services and as time grew, the board used him more.
Q. When -- when was the -- when was the NMA
fighting the ban on the beach?
A. It was -- I'm bad at that. Maybe -- it was
when Mr. Salem and Mr. Zetouna were on the board, so it
had to be between -- between 2008 and 2010. I don't
know the exact -- it was a referendum where I believe
the city council passed something and put it on the
ballot, and I would go with Mr. Salem and Mr. Zetouna to
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Christina Lother, CSR #8624
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different stores and we'd collect checks, and the
association would also -- we donated a significant
amount of money to that effort.
Q. Okay. And Mr. Cardenas, to your memory, was
involved in that process?
A. On the political side, the strategic strategy,
yes, he was.
Q. Okay. And so there have been a lot of
questions about the amount of money that the NMA paid to
Mr. -- paid to Mr. Cardenas over let's say the 2012 to
2015 period and what he did.
A. Right.
Q. Can you kind of explain that.
A. That was the time where the board wanted to go
national. The board hired Jesus. They would negotiate
with Jesus different services they need. Jesus at times
would provide the NMA with somewhere, 8 to 10 employees,
staffers, volunteers. When we had a golf tournament, he
would -- there's two 18 holes and we would have food and
drinks of a lot of the holes and he would provide
staffing for the events. He would provide staffing for
the banquet for the trade show for the holiday packet
show. He would also do government relations and
consulting so it's an arrangement between Jesus and the
board, and he did a good job because I think we saved --
the NMA saved money by outsourcing a lot of stuff you
don't have the carry over of employees, you don't have
liability, you don't have a lot of issues that are into
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Christina Lother, CSR #8624
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play in California.
Q. When you say Mr. Cardenas did a good job, can
you expand on that, just in your thoughts, your opinion?
A. The board was very happy with him, and the
board is very hard to please and they've -- he would
attend every board meeting, he would report what he did.
They would ask him questions. I think they got their
money's worth out of him, but ultimately it's the
board's decision. Till today, you know, I -- I work for
the board. When I was the president, I worked for the
board. I'm an employee. I don't have a vote. I don't
prepare the agenda. I'm not there when they talk about
me. So as a colleague, Jesus was my colleague. I
thought -- I thought the board was very happy with him.
My perception.
Q. One of the things you mentioned when I asked
you what he did you said that he was retained in
connection with the -- the NMA board's strategy to go
national.
A. Correct.
Q. Can you tell me what Mr. Cardenas's
involvement was in that process.
A. He would have sales reps to go to Los Angeles,
to Fresno, sometimes Sacramento, Arizona, Nevada. He
would do the sales strategy. We also had -- the NMA
also had him at times, used him to negotiate with some
of the suppliers because he had some better relationship
than others. And I believe whatever the board wants
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Christina Lother, CSR #8624
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they go to Jesus. He's like the -- my perception is
they thought he was a jack-of-all-trades. You need
something, go to Jesus. You know, we have an event
coming up, go to Jesus. You have this -- that would be
between them.
Q. Did you ever hear any board member saying, who
is this Jesus Cardenas and what is he doing?
A. Never.
Q. Why is that?
A. He was -- Jesus and his team, it was a staple
in the organization. He -- they -- my perception and
the board can answer this better than I could because
it's just my belief, is they treated Jesus as a COO,
like he was running a lot of the staffing. He would do
events. He would do logistics. I would go bring money.
I would go negotiate. I would be with elected
officials. I would talk about ordinances. I would
travel. He would be the nuts and bolts and that's how
the board set it up.
Q. Okay. And with respect to the strategy to go
national over this time period, did -- did the NMA
actually have the resources to do the things that
Mr. Cardenas and his companies could do?
A. The board felt they -- that they did. They
had financials at every meeting. The board wanted to
invest, they invested.
Q. Well, my question was a little different. Of
the things that Mr. Cardenas did over that time period
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Christina Lother, CSR #8624
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and his companies did for the NMA, but for Mr. Cardenas,
did the NMA itself have the resources to do the things
that Mr. Cardenas was doing?
A. I don't understand the question.
Q. Okay. Did the -- did the NMA actually have
the staff and the wherewithal and the know how over that
time period to do all the things they were paying
Mr. Cardenas to do?
A. No, it was different work. So the staff NMA
had it was taking care of San Diego, because San Diego
is home base, where Jesus is charged with strategy,
growing national, LA, Fresno, Sacramento, Arizona,
Nevada. And the staff we currently had -- Marlo, Dany,
and David -- focused on San Diego, because in the
Neighborhood Market Association there's different
districts. There's San Diego, Los Angeles, Fresno,
Sacramento, Arizona and Nevada. And so the idea was
we'd grow every district but at the same time go
national and try to merger.
And we tried -- it's in the minutes. We tried
to merger with AFPD to do a national organization but
the board for the NMA and the board of AFPD, another
predominantly Chaldean group, they didn't get along and
the merger never happened. But the idea from the board
was go national, go big. Let's get more rebates, let's
get more representation to help out the membership.
Q. Okay. And just to touch on something that's
been discussed by the plaintiffs, was your wife ever an
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Christina Lother, CSR #8624
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employee of any of Mr. Cardenas's companies?
A. She was never a -- she was never an employee
of Mr. Cardenas.
Q. Did she ever receive any wages or anything
like that from Mr. Cardenas?
A. She never received wages. Jesus is a friend
of -- of mine and has been a friend -- I met him through
the association. The board hired him, not me. The
board paid him, not me. He had -- he had surgery I
think 2012, '13 where his sister called me and he almost
died. He had almost -- it's his health, but he didn't
have health insurance at one time and he went to -- he
had to have surgery in Tijuana. I personally loaned him
money. One time I had furniture when I was moving
houses. I sold him my furniture. But he -- he's a --
he's a good friend, a lot like David was, like Marlo
was, like Dany was, like everybody.
Q. Did you ever advance any personal -- did you
ever advance anything else to Mr. Cardenas, any other
expenses personally?
A. Personally I did, yeah.
Q. Okay. Did he ever repay those to you?
A. He did.
Q. Okay. So in addition to being a co-worker,
would you say Mr. Cardenas became a friend of yours as
well?
A. In the very beginning, we didn't get along
because -- just personalities clashed, but then over
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Christina Lother, CSR #8624
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time we became really good friends. But just like every
one else at the organization, the staff and the board
and everyone, it's like one big family, we spend so many
hours together working on events, working on programs,
working on everything, so --
Q. Okay. Who was Samantha Dabbash?
A. Samantha Dabbash is also a good friend, she
was the vice president of the Neighborhood Market
Association, and I think she left in -- I think
December 2011.
Q. Okay. And there has been a contention by the
plaintiffs that somehow Cardenas did the same --
Mr. Cardenas and his companies did the same things as
Mrs. -- as Mrs. Dabbash; is that true?
A. That's not true. Samantha was focused on
government relations. She would attend meetings and
Jesus was a -- from the -- my perception again, the
board would be able to better testify to this, was --
Jesus is a jack-of-all-trades. He brings you sales
reps, he brings you staff. He staffs golf tournaments.
He would bring the catering companies. He would -- I
mean, you name it, you ask him, he gets it done. He was
efficient. Where Samantha was focused on government
relations, community outreach, public relations. So I
would say Jesus maybe absorbed maybe 25 percent of what
Samantha was doing and the rest I absorbed.
Q. And she was -- was she a lawyer?
A. She's an attorney, but she wasn't our counsel.
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Christina Lother, CSR #8624
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Our counsel was Spencer Skeen.
Q. Okay. Okay. So I want to go back to 283, and
is there a way to put up page 10 and page 16 side by
side?
Okay. Okay. So let's -- on the one on the
left, on page 10, if we could scroll in on this part,
which is total payroll for that year for 2010
(indicating).
Okay. So this is when Ms. Dabbash was still
employed, correct, in 2010 and 2011?
A. Correct.
Q. And when did she leave?
A. I believe she left the end of 2011.
Q. Okay. So I don't have my calculator, but in
the two years prior to Ms. Dabbash leaving was total
payroll about 400,000 average?
A. Correct. Yes.
Q. So let's go to after she left and let's go to
the next page and scroll down at the bottom. And for
these years -- and let me get my glasses -- did the
payroll -- total payroll reduce?
A. Yes.
Q. Okay. And why was that?
A. Well, because we never filled -- we never
filled the position. The board asked me if you could
fill it and I felt like let's save the money.
Q. So over the average of the two years prior
from -- from 2010 and 2011 and 2012, dropped about 80 --
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Christina Lother, CSR #8624
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well 80,000 or so, 88,000, and then dropped about
97,000, and then in this year, 2014, this was part of
your bonus that was paid in that year, right?
A. Correct.
Q. Okay. So -- but for part of your bonus paying
that year, it would have dropped, let's say, what --
A. If you add it up from -- so we were -- the
association was paying four 14 when Samantha was there.
If you add up the savings throughout the years when she
wasn't, it's a -- just do the quick math, it's around
385,000 --
Q. Okay.
A. -- that was saved.
Q. Through 2014?
A. What's that?
Q. Through 2014?
A. Correct.
Q. Okay. So I want to go back, also -- can you
bring up 1172.
When we were looking at the financials, you
had seen the -- just kind of the summary drop in the
income from the Blue Bunny account.
A. Yes.
Q. And if we could look at -- let's see 2009.
A. So 2009, we've got 200 -- 238,500. That was
when the board at the time gave me a $10,000 bonus in
cash or vacation package. Then in 2010, we got 120,000.
Q. Okay. Scroll down.
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Christina Lother, CSR #8624
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A. 2011, the association got 99,000.
Q. Okay.
A. 2012, 140,000.
Q. Well, were these -- how were these contracts
set up? So how were the payments made with Blue Bunny?
A. We would negotiate -- well, I would meet with
them and negotiate and say, you know, we have a program.
Similar strategy we used for the building, we did a
bidding war. You know, I would sit down with Blue Bunny
and I would sit down with Dreyer's and I would sit down
with Unilever ^ , and we'd say, okay. Who wants to be
the endorsed company for our membership? Give me a
program.
So they'd give the board a program, and then
Blue Bunny would be the highest bidder, and they would
donate. They would fly out from Le Mars, Iowa their
corporate folks, and we would secure monies for the
association. And this does not include the hundreds of
thousands we were able to get for our membership.
Q. Okay. This is just the money --
A. Just for the NMA.
Q. The NMA.
A. Yeah.
Q. So in addition to this money, Blue Bunny -- it
resulted in additional financial benefits to the
members?
A. At least over a million dollars, either
off-invoice pricing or -- I mean, keep in mind these are
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Christina Lother, CSR #8624
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just residuals. These are not rebates. This is money
for the NMA. The rebates would be either off-invoice or
they would be in the form of rebate, but most of them --
most of the discounts we have are off-invoice so the
retailer gets it immediately.
Q. So, for example, if Blue Bunny delivered a box
of ice cream and then was a thousand dollars or
whatever, the price to the member would be, what, for
example?
A. Well, Blue Bunny one time we negotiated where
they would get a free fill. So the first bunker of ice
creams were free, which is around $500.
Q. For each member?
A. Each member. And one time we signed over 800
stores so do the quick math, 800 times 500, that's how
much they invested just in our membership. That's not
including the NMA. And so what they would also do they
would pay money and they would say over three years. So
the 2014 money was supposed to be for '14, '15, '16. If
you see the last payment they made was 2000 -- the last
significant payment, I should say, was in 2013.
Q. Right.
A. 2014 they just -- they didn't pay. 2015, they
didn't pay. But I think the drop off was 2015. It
wasn't '14.
Q. Were you -- was the board --
A. Because -- I'm sorry. Because what we do is
some of the money they allocated for '14, I guess the
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Christina Lother, CSR #8624
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way it was accounted for was previous years. So the big
check was supposed to come 2015 for '15, '16, '17.
They'd always pay in three-year increments.
Q. Okay.
A. So we met with them in December, I believe
2015.
Q. Okay. And in 2014 was the board -- I think
you may have testified to this -- the board forecasting
the continued income from Blue Bunny?
A. I mean, the board would have to testify to
that, but my perception was, yeah, the organization I
think was expecting it.
Q. Okay. And I want to bring up 2000 -- excuse
me 1137 as well. Okay.
A. Coast Citrus.
Q. Okay. And who is Coast Citrus?
A. Coast Citrus is a contract that I -- I
negotiated and secured for the Neighborhood Market
Association. These -- this money was only for the
Neighborhood Market Association. We were able to
negotiate -- I was able to negotiate around three times
that amount for the membership.
Coast Citrus invested approximately three and
a half million dollars total where they gave two and a
half million, approximately, to our membership and one
million to the association's bottom line. And they
would do it in the form of -- see, look at that line, it
says one percent residual to NMA for executing program
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Christina Lother, CSR #8624
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for Q3 2008, but we -- I negotiated a 3 percent for the
membership. So the quarter, we get 50,000; the
membership gets 150,000.
And Coast Citrus is a produce company so it
would go to our supermarket members, and it was very
helpful that we had Doug Dallo on the board because he's
a big supermarket. And so when he got -- when he was
voted off by the membership, you know, we just -- it's
hard -- it's harder to negotiate a deal with a big
company if a big customer of theirs isn't on the board.
Q. Okay. So let's just run through these
quickly. 2008, there's 215,000.
A. Right.
Q. Let's go down to 2009.
A. 196.
Q. 196. Go down.
A. 169, 142, 134. You can see the decline. So
2010, so 2010 was the year that the membership voted out
Doug Dallo.
Q. Uh-huh.
A. And the Dallo family is a very prominent
family that owns super markets. They own about 11 or 12
of them, and so when Doug was no longer on our board, I
was able to keep the contract but only for some time.
And you can see the -- I mean, you go from 215 to Doug
was off the board was to 142, you automatically take an
80 -- what is that -- $80,000 hit.
Q. Let's go down to 2012.
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A. And then 2012 it was 134, and then it goes to
91, 36, 20, and you can just see the -- and also, the --
I mean I know we said it before, but the perception of
unity is what really pushes companies to give us money
and it was declining year after year because they're not
united. They're fighting with each other.
Q. So other than Blue Bunny and Coast Citrus, did
the NMA have similar contracts over this time period
with other --
A. We did.
Q. -- suppliers?
A. We had -- we had a contract like right now --
Q. No, no, no, during this time period, just, you
know, 2012 --
A. We had a program with UniFirst, a program with
Bank of America, a program with First Data, a program
with Money Gram, a program with Coca-Cola. What else?
We had programs with Liberty Mutual.
Q. Okay.
A. We tried to get one company each industry
almost. Each category.
Q. Okay. And did the NMA see declines in income
or revenue from those other vendors as well during this
time period?
A. Yes.
Q. Okay. And why do you believe that was?
MR. LiMANDRI: Your Honor, again, object on
relevance grounds. I think we have allowed quite a bit
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of leeway, but as His Honor pointed out, it's not how
they got in the bad financial condition, it's the fact
they're in it and what they did when they're there.
They keep explaining --
THE COURT: That's really what the case is
about, I think.
MR. COUGHLIN: Well, I think it does show and
this is something he's testified to is that the board
was in 2014 forecasting continuing receiving this
revenue, and --
THE COURT: Right. And Mr. Arabo has
explained that these companies didn't have confidence in
the association any longer from his perspective because
of the fight between the families internally.
MR. COUGHLIN: Okay.
THE COURT: So I understand that.
MR. COUGHLIN: Okay.
BY MR. COUGHLIN:
Q. So I want to go back -- there's a term in your
agreement -- in your employment agreement regarding
expenditures over a thousand dollars.
A. Correct.
Q. Okay? And if we could bring up Exhibit 002.
Do you know what this exhibit is and what it's meant
to --
A. Yes. Can you give me -- is there a copy?
So this exhibit --
MR. COUGHLIN: May I approach, Your Honor?
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THE COURT: Sure.
THE WITNESS: Okay. This -- this exhibit, I
saw it -- thank you -- as an exhibit list that I believe
the plaintiffs submitted to appear to say NMA,
nonroutine checks and credit over a thousand, which is
completely false, and I could go -- and I want to go,
if -- if you allow me to, the Court will allow me to,
line item by line item and show them why they're wrong.
MR. LiMANDRI: Well, Your Honor, we didn't
even introduce this exhibit and now he's going to go and
try to disprove the exhibit. We closed our case without
ever using this exhibit. So I don't know how it's
material for him to try to impeach an exhibit that we
didn't put in evidence.
MR. COUGHLIN: Well, is there a withdrawal of
the contention that there were expenses in excess of a
thousand dollars that were not approved?
MR. LiMANDRI: No. The witness admitted that
from his deposition. But we didn't use this -- this
particular exhibit.
MR. COUGHLIN: Well, this is their exhibit
intended to prove that.
MR. LiMANDRI: No, it's not. We didn't use
it.
THE COURT: They didn't use it.
THE WITNESS: It's in the -- well --
THE COURT: So I mean if -- if there's -- if
there is evidence of expenditures in excess of a
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thousand dollars that were approved, we can -- we can
look at that evidence, but I don't know that this is it.
MR. COUGHLIN: Well, let me do this maybe
short circuit and not go line by line and just ask
general questions. Is that fair enough, Your Honor?
THE COURT: Okay. But it -- again it's not an
exhibit that the plaintiff ever used for anything, but
go ahead.
BY MR. COUGHLIN:
Q. Okay. Have you --
MR. LiMANDRI: It's something we tracked and
made available in discovery but we decided that it
wasn't going to be that useful. So we didn't use it.
BY MR. COUGHLIN:
Q. Okay. Have you gone through a list of
expenses that it has been contended exceeded $1,000?
A. Yes.
Q. Okay. And after reviewing of that list of
expenditures, did you come to the conclusion that any of
those were not approved by the NMA board?
A. No, they were all approved, and I -- and I'll
be very, very quick. So the exhibit shows 2014, 2015,
and the bottom of 2014 it says $770,000 and the bottom
of 2015 it's $459,000, and it's titled 2015 NMA
nonroutine checks over a thousand dollars per
QuickBooks, and what was thrown in here is all these
expenses from golf tournaments and banquets and Cardenas
and legal fees and Education Foundation money that was
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Christina Lother, CSR #8624
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earmarked in the guise of, oh, this is nonroutine a
thousand dollars spent.
One thing very helpful though in this exhibit
is that it outlines every expenditure I made on the NMA
card per Section Four of my agreement under compensation
for the $38,000 humanitarian trip. And if you add up
all of the trips that's highlighted, and it totaled to
the travel for 2014, their exhibit shows $42,141 minus
11,284.06, which shows a total travel of $30,857.39.
Now, if you add to that the Facebook
advertising that was purchased under my Facebook, it was
11,934 minus the credit of 7,407 for a total of
$4,526.97.
If you add the numbers that they put in their
exhibit that they put under my charges on my American --
on the NMA American Express under my personal expense
account under Section Four of my compensation, the total
is approximately $35,000.
Also on this exhibit, they marked -- they put
in their nonroutine, I highlighted them, it's $19,211
that was spent on behalf of NMA Education Foundation
when NMA was an agent of the foundation.
There's also on there two checks to me, one
for 13,000, one for 12,500, which I paid back 25,500,
which is not included in there.
Another thing in here --
MR. LiMANDRI: I'm going to object,
Your Honor. All that information was subsequently
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updated after this was done, long before trial and
testified to. So I don't know -- now, they're --
they're, again, trying to impeach an exhibit that we did
not use for the purchase for which they're trying to use
it now in trial.
MR. COUGHLIN: Well, we're entitled to use
their exhibit. There's no prohibition on us using their
exhibit.
THE COURT: Well, I know, but I'm not sure
what -- I mean, if we have some sort of independent
evidence of board approval, that's really the point, I
think, isn't it? I mean, this -- this is just a
compilation. It doesn't --
MR. COUGHLIN: Okay. Well, let me ask that
question, Your Honor.
BY MR. COUGHLIN:
Q. How did the -- how did the NMA board approve
expenditures over a thousand dollars?
A. If it was under a thousand, I would make the
call. If it was over a thousand, custom -- custom and
practices of the board is I would call the chairman. I
would say should we spend it or not? That's with NMA
expenses. For my personal expenses, it was my personal,
which we tracked. The reason why this exhibit is that
the plaintiffs put -- although they didn't bring it up,
they put in the exhibit for the trial and it's very
misleading. So we could talk about every single item.
Q. That's fine. Let me ask you this --
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MR. LiMANDRI: Your Honor, it can't be
misleading if we never used it. It was done by my
office by Mr. Wilson, not even by one of our experts.
THE COURT: Okay.
BY MR. COUGHLIN:
Q. Let me ask you this, Mr. Arabo. Did any board
member ever tell you, no, you need to submit to us in
writing a request for preapproval for any expense
incurred over a thousand dollars?
A. They've never done that. Actually the custom
and practice was to let them know. Amad Attisha said
call me; Bashar Ballo said call me; Ramzi Murad call me.
If it was over a thousand, give us a call.
Q. Okay.
A. And they had that time to approve it and they
also had another chance when the American Express came
in. I never signed a check. I never wrote a check.
Q. Were you even an authorized check signer at
any point?
A. I was never an authorized check signer at any
point.
Q. Okay. And was that procedure the same when --
in 2010 when Mr. Salem and Mr. Zetouna were on the
board?
A. That procedure was the same since I started in
March 1st, March 2006, nothing has changed for me.
Q. Okay. So I'm going to wrap up. I -- I want
you to have an opportunity, though, to tell us in this
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2012 to 2014 period, did you -- what -- what
accomplishments, if anything, were you most proud of
during that time period?
A. There's a lot of things that we all did as a
group, and, you know, one thing I'm most proud of, the
reason why I started was in -- in March 2006, one of my
lifelong friends, I went to school with her, was
murdered, and the NMA at the time put a $100,000 reward
to find her -- find the person that did it, and they
found him, and the person is serving life.
So since then, I created a protected by the
partnership, and what it is it's a program with the
district attorney with the Sheriff's Department, the
San Diego Police Department, and Crime Stoppers, which I
was a board member of, and it goes to every store, and
it says we automatically pledge $10,000 for every -- any
crime in our member's locations.
And since the institution of that, thank God,
we haven't had one homicide in the last 11 years.
Literally you would have a store here and a store here
and this store's a member and this store's not. This
store would be robbed five times. This store would be
not, because the gangs or whoever would talk and say
don't mess with this -- because we put it all over the
stores, a big -- I don't know if you put it as an
exhibit, but you could show the Court a big poster that
we put in every store that, you know, we have our
member's back. Biggest thing when they go to work in
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Christina Lother, CSR #8624
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the morning, they have to come back at home to their
family at night.
It's very personal for me because I grew up in
the business. My dad was a member. I worked at the
grocery store when I was seven years old. That's one of
them. There's other ones -- there's the Blue Bunny,
there's the Coast Citrus, there's -- there's the merger.
But a lot of things I'm also disappointed in.
I'm disappointed that I wasn't able to make peace
amongst the families. I wish we could. I tried my
best. I never misrepresented anything to the board. I
never said anything that wasn't true. I was always very
transparent, and you could see it by the agenda. There
was financials at every meeting, but -- I mean I could
go on and on but I don't want to talk about myself.
Q. Okay. Just on that note and -- did Nashat
Damman ever come to you and ask for any financials?
A. Nashat Damman has never asked me for
financials and I denied him. No board member can ever
say -- can ever say that they asked me for -- they asked
me for a financial and I said no. That never happened.
That never happened.
Q. And where -- so the meetings, all the board
member meetings were at the -- not all of them, but most
of them were at the NMA offices?
A. Some were at the NMA offices, some were
outside if we get a vendor to underwrite. Sometimes
they'd invite us and provide food and --
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Christina Lother, CSR #8624
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Q. Okay.
A. -- when it would be off site, so if we go to
Viejas or Barona.
Q. Could any NMA board member come by the office
at any time they wanted?
A. Of course. They own -- they own it. It's
theirs.
Q. And where are the financials for the NMA kept?
A. On the QuickBooks and wherever the
bookkeeper's computer.
Q. Okay. And there are physical records as well,
correct?
A. Correct.
Q. And where are those kept?
A. In the association office.
Q. So at any time any board member could come by
and ask you to see anything they wanted?
A. Correct. Any time. And at every board
meeting, we would have financials with the exception of
maybe -- maybe two.
Q. Okay.
A. And -- and they were given to anyone that ever
asked for financials. The biggest dispute was the
membership list. The board and Spencer felt like we're
not budging, we're not giving the membership list. Saad
Hirmez said let's give them a generic list not our list.
The other side no, we want the membership list. The
board says no. That's been in the dispute. It's never
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been -- from my understanding, me being there, living
it, seeing it, the dispute wasn't financials. The
dispute was over this membership list, and we're here
today.
Q. Okay. And when you say Spencer, when you say
Spencer, was there a back and forth between Spencer
Skeen and one or more of the plaintiffs regarding the
request for the membership list going over that time
period?
A. Yeah. Mr. Salem asked Spencer and he asked
the two chairmen, Saad and Ramzi and myself on the
e-mail, I think, asking for the membership list. And
Spencer would send a long e-mail and Sam would send me
an e-mail and the board and I would respond back to Sam.
We're friends before all this litigation, and I still
have nothing against anybody. But they would fight,
Spencer and Sam. Not fight. They'd have a debate over
an e-mail. Spencer would say this code, this section
says this, and Sam says no, it doesn't, you're not --
you're not McDonald's. It's not a trade secret.
Spencer says, yeah, we'll give you a reasonable other
option. Sam says, no, I don't care for the reasonable
option, I want the list.
Q. Okay.
A. It's between them.
Q. Okay. And Spencer was not your lawyer, right?
A. No.
Q. Okay. So he was -- he was asking -- acting on
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Christina Lother, CSR #8624
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behalf of the NMA as its general counsel?
A. Acting on behalf of what the board told him.
Q. Okay. And so was an it in your control at any
point whether or not to turn over the membership list --
A. No.
Q. -- to anyone who requested it?
A. No it was never under my control nor was it my
decision.
Q. Okay.
A. Nor did they listen to me when I said -- what
I said to them.
Q. Okay. Okay. No further questions,
Your Honor.
CROSS-EXAMINATION
BY MR. MARR:
Q. Mr. Arabo I want to just ask a few questions
and follow up on the membership list. There's been
allegations that in particular my client, Amir Oram,
gained access to that membership list. Have you heard
those allegations before?
A. I heard the allegations.
Q. Okay. Okay. And can you just briefly
describe where the membership -- membership list was
kept, because you kept it, correct?
A. I did keep it, yeah.
Q. Okay. Please describe what safeguards were in
place to keep that.
A. The membership list is on a computer at the
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Christina Lother, CSR #8624
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NMA, and it is only on one computer, and the membership
list itself is printed out in my desk and nobody -- no
board member since I've been there has ever received a
copy or anything remotely like a membership list.
Q. Okay. So --
A. We protected it so much so because it
generated a lot of money.
Q. Okay. So is your testimony that there was a
printed hard copy version and then a -- I guess a
computer or disc type of version of that?
A. Correct.
Q. And where precisely were those kept?
A. At the NMA office.
Q. Okay. In a desk in a drawer or where?
A. In a drawer in a desk and on the computer.
Q. Was that locked or unlocked?
A. It was locked.
Q. Okay. Who had the key?
A. I did.
Q. Anybody else?
A. No.
Q. Did you ever give it to Amir Oram?
A. I would never -- no, I did not.
Q. Okay. Did you ever give him a printed copy of
the list?
A. I never gave him a printed copy.
Q. Was any board member to your knowledge during
the time that you have been acting as CEO or president
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Christina Lother, CSR #8624
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ever obtained or been given a copy of that list by you?
A. Never.
Q. Okay. Between 2010 and 2015, did you attend
most of the board meetings?
A. I attended most of them with the exception of
maybe a couple when I was sick.
Q. Okay. And between that time period was there
a group of board members that tended to be more active
than others?
A. Yes.
Q. And who were they?
A. The most active board member I would see all
the time is Amir Oram and he would be the -- the
cheapest board member because he would always come to
have lunch at the -- he would come all the time. Amir
was very active.
Q. So were some of the other people that were
perhaps active, can you tell me other names?
A. Amad was very active. Ramzi was very active.
Bashar was very active. Amir was very active.
Q. How about Raad Attisha?
A. Raad is somewhat active. He'd come maybe once
every couple of weeks.
Q. Okay.
A. But the other board members would be there I
would see a different board member almost every day --
Q. Okay.
A. -- that I was in the office.
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Christina Lother, CSR #8624
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Q. And would you regularly interact with that
group of individuals?
A. All the time.
Q. Okay. And would you discuss action items or
strategy from time to time that the board intended to
implement?
A. They would tell me what they think should be
done for the organization, for the members, and I
listened to their orders and I executed it to the best
of my ability.
Q. Okay. And in regards to the testimony without
going back all over it with really regard to the
vendors, was that direction being given to you by the
board?
A. I'm sorry?
Q. You testified at length about a number of
vendor programs?
A. Right.
Q. Is that correct?
A. Yes.
Q. And was that something you came up with on
your own or was that --
A. No, no, no, I worked at the pleasure of the
board. The board had the idea of let's formalize it,
let's make the NMA more of a chain, let's do a
committee.
Q. Okay.
A. And even the program endorsing -- endorsement
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Christina Lother, CSR #8624
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committee, I never had a vote on that committee.
Q. You testified earlier as to the process by
which American Express statements would first come to
your desk.
A. Right.
Q. I don't need to cover all of that. At some
point in time towards the end of that process, would it
get in front of a board member for execution and
signature?
A. Yes.
Q. Okay. And --
A. The board member would sign.
Q. And was Amir Oram one of those board signers?
A. He was.
Q. As compared to another board member versus
Amir, were -- was he a little more active? Can you
describe that?
A. Amir was very thorough. He was there all the
time. He would go over everything and ask about
anything all the time and he would -- some checks he
says no, show this to Amad, show this to Bashar. But he
would -- Amir is a numbers guy. He -- he -- he doesn't
come off -- he can't give a good speech but he's a good
numbers guy. He would look one by one, he would look at
every speech, he would look at every little thing.
He'll cross-check it and when we do rebates we probably
print out 400 rebate checks and he would sign these
checks and he would say, oh, well, this store -- this
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store does joint this or they owe -- they might owe
money or they might -- double-check this store,
double-check that store.
Q. Did you ever feel -- let me scratch that
question?
Did you work fairly closely with Amir Oram
relative to checks that perhaps needed to be approved or
signed from time to time during this period of time 2010
to 2015?
A. Yes, he was the -- I would say the most
accessible.
Q. Okay. And why was that?
A. He loved -- he loved the organization. He
loved being there. He would come in -- I remember
coming in at 10 o'clock, he's there, and then he's
there, I see him at 12 o'clock taking a nap on the
chair. He would sleep till about 1:00. And then he has
lunch. Then he looks at checks, talks to employees.
What are you doing? Did you visit members? What are
the members saying? What programs do you have? Where's
the labor law posters? What's this guy doing? Who is
that guy? Who is that person? He would also grill
Jesus, what are you doing here? What are you doing
there? He would give everybody -- not a hard time, but
he would always ask questions.
Q. Based on your interaction with him do you feel
that he tried to do his very best to monitor the
finances of the NMA?
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A. I think so. I think that the -- the board
custom and practices were as such, and he follows the
custom and practices of the board as well as I did.
Q. Was -- was it a situation over the 2010 to
2015 period where you ever observed an instance of
Mr. Oram failing to follow the custom and practices that
you just described?
A. I've never witnessed him failing any custom or
practice that the board had.
MR. MARR: Your Honor, I have no further
questions.
THE COURT: Okay.
MR. MARR: I don't know if Mr. Lahiri has any
questions.
MR. LAHIRI: I don't have any questions,
Your Honor.
THE COURT: Do you want to start? We have a
few minutes.
CROSS-EXAMINATION
BY MR. LiMANDRI:
Q. All right. Let me just pick up with the last
question, you were asked if Amir Oram ever failed to
follow the procedure. Now we heard the procedure was
that before a check signer -- and he was a check signer,
right, because he was the executive secretary/treasurer,
correct?
A. He was the executive treasure, correct.
Q. Thank you, sir. Before they were to sign a
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check, they would make sure that they would have both
the bill and the receipt to match it, correct?
A. Yes.
Q. Okay. But, in fact, we know that with regard
to Marlo Georgis and Dany Shaba's purchases on the NMA
American Express card that was issued in -- to them in
your name, they didn't turn in any receipts, did they?
A. That's a misrepresentation because --
Q. Well --
A. -- it wasn't in my name that they had the
card, Mr. LiMandri.
Q. Well, the statement came in. I thought it
says Mark Arabo on the statement and broke it down by
individual card members, am I correct on that or do we
need to display one of the statements?
A. It was a card that the board gave for every
employee and Amir would -- would go through the process.
Q. Okay. Well obviously he was not looking at --
at the receipts, was he? Because Dany Shaba said they
were never asked for by him and we know he's telling the
truth because he had his own receipts with him. He
never turned them in. That being the case, Mr. Oram was
not following the procedure by asking for the receipts,
wouldn't you agree?
MR. COUGHLIN: Assumes facts not in evidence,
Your Honor.
MR. LiMANDRI: It's in evidence.
MR. COUGHLIN: Mr. Shaba's testimony --
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MR. MARR: It's limited to his receipts.
THE WITNESS: Yeah.
BY MR. LiMANDRI:
Q. Okay. And as to those receipts, that's my
question, obviously they were not presented with those
AMEX statements for Mr. Oram in order to be able to
determine whether or not it was a valid NMA purchase or
not. Would you agree?
A. I would not agree because one way or doing it,
Mr. Shaba and Mr. Georgis, from their testimony, they're
pretty slick in colluding, so one way of doing it is
they would keep the receipt, he would sign it and then
he gives it to the bookkeeper, Mr. Shaba could have went
back and got his receipts back.
Q. You have no evidence of that whatsoever, do
you, you're just speculating?
A. The other one is speculation as well,
Mr. LiMandri.
Q. No, it's not because Mr. Shaba came in and
testified and he had the receipts. Are you saying that
he went in and got the receipts after Mr. Oram looked at
them?
A. I'm saying it's a possibility and I can't
speak on behalf of Mr. Oram. I can only speak on behalf
of myself what I know at the moment.
Q. You've heard testimony that there were not
always receipts. I think about -- we heard testimony
that many times there were not receipts. Do you recall
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that?
MR. COUGHLIN: Objection. Vague.
THE WITNESS: I recall -- I sat in maybe 30
depositions and I recall most of them said there were
receipts.
BY MR. LiMANDRI:
Q. Okay. Not all of them, correct?
A. From my recollection, most of them.
Q. Where are they? Where are those receipts?
A. I would have to be -- the question to the
board for the custom and practices.
Q. Well, you were the -- and are effectively,
apparently, the CEO and president. Isn't that a
question you should be able to answer for the Court
since so much depends upon whether or not those were
valid purchases? Where are those receipts?
A. I believe Mr. Attisha, the executive chairman,
testified that either they didn't keep them or after
they saw the charges and verified them, they don't have
them. So I would rely on the board members' testimony
to get that answer.
Q. Okay. And as a CEO and president, don't you
believe that you should bear some responsibility if
they're not following standard acceptable business
practices in keeping those receipts as required by the
IRS?
A. I serve at the pleasure of the board. If this
is what the board says, just like the personal expense
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account, the board says and does what the board wants to
do.
Q. Since it was your personal expense account and
apparently no one else was really tracking it, don't you
think you had some responsibility to make sure those
receipts were saved so that if the IRS ever wanted to
know, for example, expenses that you were deducting,
that somehow you would be able to answer those questions
with the receipts?
MR. COUGHLIN: Assumes facts not in evidence.
Misstates prior testimony.
THE COURT: Overruled. Go ahead.
THE WITNESS: The custom and practices were
after they would look at them and verify them, they did
with the receipts what they wanted to do with the
receipts. I am an employee of the board. I have never
set customs or practices.
BY MR. LiMANDRI:
Q. And the board doesn't listen to be you. If
you were to say, for example, I think we better do
something a little differently because it would be a
better business practice, do you think they would just
ignore you?
A. I told the board to not sell the building and
keep the land. They didn't -- they ignored me.
Q. Thank you.
A. So the board is very strong -- strong headed.
Q. Is that --
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A. Very strong minded.
Q. Is that in the minutes anywhere where you said
don't sell the board -- don't sell the building to the
board?
A. I don't -- I can't speak to the minutes. I
didn't take them. But you can ask the board members,
especially Mr. Attisha. It took me 11 meetings to try
to convince him.
Q. But it's interesting it's not in any of the
minutes in any of those 11 minutes, is it?
A. Those meetings happened one-on-one. I have to
go to every single board member and talk to them.
Q. Oh, I see. I see.
THE COURT: Mr. LiMandri, we're right at noon.
So let's start again at 1:30.
MR. LiMANDRI: Thank you, Your Honor.
* * * *
Lunch Recess
* * * *
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SAN DIEGO, CALIFORNIA; TUESDAY; NOVEMBER 7, 2017;
1:39 P.M.
---oOo---
THE COURT: Okay. Mr. LiMandri.
MR. LiMANDRI: Thank you, Your Honor.
CROSS-EXAMINATION (RESUMED)
BY MR. LiMANDRI:
Q. Good afternoon, Mr. LiMandri.
A. Good afternoon.
Q. Before we took our lunch break I was asking
some questions about the receipts for purchases on the
NMA credit card and how often we would expect to see
receipts submitted with the invoices to the check
signers. And I wanted to briefly display the trial
testimony of Jennifer Virabouth in that regard. You
were here for her testimony during trial, were you not,
sir?
A. Yes, I was.
Q. And she was the bookkeeper -- was and is, I
understand, the bookkeeper for NMA and now for Refined
Management, correct?
A. Can you be specific in the years? Because we
have multiple bookkeepers.
Q. Okay. Well, certainly at various key points
in time, Ms. Jones was a bookkeeper and I believe you
said she assisted in preparation of what you called the
audit that you prepared?
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A. Yes.
MR. LiMANDRI: Okay. Can we display the trial
testimony regarding receipts if you have that available,
please.
I'm sorry. I thought that was loaded to go
up. Do you know off the top of your head the page
numbers for the actual --
(Attorneys confer.)
MR. LiMANDRI: I thought that was just loaded
and ready to go.
I believe it is page -- okay. Here we go.
No, that was a different one whether Mr. Oram
ever reviewed any financial documents.
Well, we'll -- okay. Here we go.
BY MR. LiMANDRI:
Q. "Would you say that receipts were attached
regarding those expenses about half the time when you
entered them into QuickBook office expenses?
"ANSWER: As far as the American Express
charges or --
"QUESTION: Yes.
"ANSWER: Yes."
BY MR. LiMANDRI:
Q. We -- at the beginning this morning you were
asked questions about the bonus on the sale of the
building and whether or not you knew the board was going
to award you a bonus on October 2, 2014. But you did,
in fact, request Mike Habib, that he prepare a letter of
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recommendation for you, correct?
A. I was relaying the message from Amad Attisha
and Bashar Ballo to ask Mike Habib, so the request came
from the chairmans of the board.
Q. Okay.
A. And --
Q. And you knew there would be a board meeting on
October 2, 2014, right?
A. Yes.
Q. Okay. And you knew that when you were in
contact with Mr. Habib in the early morning hours of
October 2nd asking for that letter, and we saw the text
messages yesterday, right?
A. I asked Mr. Habib earlier than that, but that
was the text message that --
Q. Because it was important that you had it in
time for that meeting, true?
A. Both of the chairmans wanted it at that board
meeting.
Q. Okay. But it's your testimony you had no idea
that they tried to use that, in fact, would use it in
order to justify a bonus for you? You had no idea that
was going to happen?
A. I had absolutely no idea.
Q. Okay. Mike Habib testified yesterday he
thought the offer of 2.6 million and any offer prior to
the final offer of 3.2, approximately, was too low. Do
you recall that testimony?
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A. I -- I don't recall.
Q. You were here for his testimony yesterday,
right?
A. I was, yeah.
Q. Okay. You don't recall him saying that you
both agreed that the initial offer of 2.6 million was
too low?
A. I remember that he said that we both said we
could do better.
Q. Okay.
A. But I don't -- I don't remember him saying
that it was too low, but I --
Q. You don't recall him saying as well he did not
talk to the board members, he only spoke to you?
A. I think he said he talked to me not the board,
correct.
Q. Right. So he certainly was not in a position
to be recommending to the board that they accept a
$2.6 million offer since he wasn't even talking to them,
wouldn't you agree?
A. I was the one that was communicating with the
board through Mike Habib.
Q. Right. Thank you.
You also said that you had I think some
countless board meetings, but isn't it true that between
that first offer of 2.6 million and the final offer --
counteroffer, actually, which was extended and then
accepted by Keller Williams, was only approximately
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three weeks, right?
MR. COUGHLIN: Misstates testimony,
Your Honor.
THE WITNESS: I said that --
THE COURT: Overruled. You can answer. Go
ahead.
THE WITNESS: Thank you, Your Honor.
I said I had countless meetings, one-on-one
meetings were various board members. I didn't say
countless board meetings.
BY MR. LiMANDRI:
Q. I see. By the way, you're aware that the
board meeting minutes actually talk about you spending
hundreds of hours trying to persuade the owner to pay
3.2 -- 3.32 million, right, you've seen that?
MR. COUGHLIN: Objection. The minutes speak
for themselves, Your Honor.
THE COURT: I'm sorry. What was the --
MR. COUGHLIN: The minutes speak for
themselves.
THE COURT: Well, he's asking if he's seen
them.
MR. LiMANDRI: Right.
THE WITNESS: I was in Mr. Attisha's testimony
when he testified to making that statement to the board.
BY MR. LiMANDRI:
Q. All right. Since the objections were raised,
let's look at Exhibit 307-002 one more time. Under
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Christina Lother, CSR #8624
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executive chairman's report, original offer 2.6 million.
Many board members said let's accept. NMA president
worked for months and hundreds of hours to persuade new
owner to pay 3.32 million.
That statement was not correct, right, because
it was only three weeks between the 2.6 million and the
3.32 million, do you agree?
A. No. My perception of that statement made by
Mr. Attisha, I think he was referring to from the
original LOI for 2.6 to the date it closed, which is I
believe August 2014. Because the transaction never gets
finalized until you close escrow. So I think that's
what he means by saying that. I don't read that to say
LOI to LOI because LOI is really just an intent.
Q. Up until the time that they offered
3.32 million and whatever was said to the buyer to
persuade them to do that, those communications were
between not you and the buyer but between Mike Habib and
Toni Donnet, correct?
A. It was between me and Mike Habib and Mike
Habib would relay to Toni Donnet by us creating a
bidding war.
Q. Okay. And, in fact, you admitted in your
direct exam that it was Mike Habib that brought the
offer from Mission Hill developers that created the
bidding war that caused Keller Williams to match it,
right?
MR. COUGHLIN: Misstates the prior testimony,
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Your Honor.
THE WITNESS: I said that I would talk to
potential buyers and then Mike Habib would talk to
potential buyers as well and we said let's create a
bidding war, I'll talk to people, you talk to people.
BY MR. LiMANDRI:
Q. And he brought in Mission Hill developers,
right?
A. He did bring Mission Hill developers, correct.
Q. Thank you.
Okay. And as far as what this bonus was
intended to reflect, there's no question from 307-003
that was actually calculated as a percentage of what was
perceived to be the actual sale, the profit -- net
proceeds, 15 percent of the net proceeds, correct?
That's how they calculated it?
A. That's how the board calculated it, correct.
Q. Okay. And you were informed by Mr. Williams
the -- Ryan Williams, the CPA for the NMA, that that was
being characterized as a commission that was being paid,
correct?
A. No, I believe Mr. Williams was at the board
meeting and his discussion was with the board members
directly. He would speak to the board directly and
Mr. Williams also had the copy of our closing statement,
which states -- which states very clearly who the
commission was payable to.
Q. Can we look at Exhibit 392, please.
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Christina Lother, CSR #8624
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Okay. This is an e-mail from Ryan Williams to
Mark Arabo dated November 16, 2015. I just finished
with the tax return. It says we used a 60-40 business
to rental space allocation. Included your bonus as a
commission against the sale.
So he informed you that that's what they were
doing in this e-mail to you on this date, wouldn't you
agree?
A. Per that e-mail, but I know that he was at the
October 2nd meeting where him and the board directly
discussed how to take the commission. That was a
conversation and a decision made between the NMA board
of directors and Ryan Williams and --
Q. The e-mail was -- the e-mail was to you,
right?
A. 40 -- around 40 days later, after him and the
board have already discussed what to do. He was just
informing me of what him and the board were discussing.
And Mr. Williams had a copy of our closing statement
from escrow that clearly disting- -- distinguishes what
is commission and payable to.
Q. Did you e-mail him back and say, you know, I'm
not a licensed real estate broker, you should be aware
of that?
A. I don't even remember if I responded.
Q. I see.
And, in fact, the brokers we know from the
closing statement we looked at this morning only got
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Christina Lother, CSR #8624
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99,000 each commission on the sale of the building. So
the two brokers, the actual brokers combined, the
licensed real estate brokers combined made less than you
did on the sale of the building. Wouldn't you agree?
A. I agree with that statement, correct.
Q. Thank you.
Okay. The board meeting minutes -- again,
we've seen them multiple times for October 2, 2014, when
they talked about the 38,000, the second board meeting
on the same day, October 2, 2014, page 0 -- 307-005 at
the top, it says "I have personally paid for all the
travel expenses of myself and the bishop and clergy that
traveled with me." It doesn't say here that you were
telling the board I didn't actually pay for it. I used
the NMA credit card, but what I did do is I used my
vacation time. It doesn't say that anywhere in the
minutes, does it?
A. That statement is a true statement. The
personal expense account is my money.
Q. Okay.
A. So -- and the board members had the statement
to show.
Q. And then it goes on to say: I don't think
Mark should be paying for all -- for any or all of these
expenses out of his own pocket because the NMA is
getting a lot of credit.
Again, it doesn't show where you corrected a
misperception that the board may have that, in fact, you
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Christina Lother, CSR #8624
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used the NMA credit card, wouldn't you agree?
A. But I don't agree because when I say I
personally paid for all travel expenses, if you take the
minutes as transcribed as verbatim, and I'm explaining
that -- that Section Four of my employment agreement, it
allows me to tap into my personal expense account --
Q. I see.
A. -- which is my money, and then this discussion
shows Section Six where the board exercised their
authority.
Q. It doesn't say anything about the employment
contract or Section Four or Section Six separate and
apart from how you prepared to give that answer with
your lawyer before trial?
MR. COUGHLIN: Objection, Your Honor. Come
on.
BY MR. LiMANDRI:
Q. That did not -- discussion did not take place
in the board -- before the board as reflected in the
minutes of the board.
MR. COUGHLIN: Your Honor, just ongoing, I
mean, come on.
THE WITNESS: Mr. LiMandri --
THE COURT: Just ask the questions.
MR. LiMANDRI: Okay.
MR. COUGHLIN: Thank you, Your Honor.
BY MR. LiMANDRI:
Q. Okay. You'll agree nowhere in the board
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Christina Lother, CSR #8624
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meeting minutes does it even suggest that you were
talking about these very sections of your contract, you
would agree with that, right, the document speaks for
itself?
A. I want to -- Mr. LiMandri, I was at the
meeting, and the board members were at the meeting, and
I could tell you what happened at the meeting very
clearly.
Q. Okay. The minutes don't reflect it, right?
A. That's not what I said.
Q. I'm asking you. That's a question I'm asking
you.
A. Oh, okay. So --
Q. The minutes do not reflect that discussion,
correct?
A. That's -- that's the explanation the board
gave me.
Q. Okay. And you did not endeavor at the next
board meeting when the minutes were reviewed and
ratified to correct them to make it clear that the board
knew that you were using vacation time and not using
your own money. You did not clarify the board meeting
minutes so that they would read that way, correct?
MR. COUGHLIN: Assumes facts not in evidence.
Misstates testimony.
THE WITNESS: From the best of --
THE COURT: Overruled. Go ahead.
THE WITNESS: Yeah. Thank you, Your Honor.
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From the best of my knowledge the custom and practices
for the Neighborhood Market Association board of
directors is when they ratify minutes, they only look at
motions. That's their policy. I have -- I can't attest
to the minutes. I didn't take them. I don't vote on
them. The board decides how they do it. And if you
look at every minutes, you have 12 to 15 people in a
room, and then you have a three-hour conversation, and
if that were truly transcribed, it should be a hundred
page minutes not an eight page or four page. So the
content is a summary, but it's not taken as verbatim,
but the motions -- when the motion happens, everything
stops.
BY MR. LiMANDRI:
Q. All right. You --
A. And the person taking the minutes reads
back --
Q. You agree there should be accurate minutes,
right?
A. I think whatever the board thinks is accurate
and -- what I'm trying to explain is the board --
MR. LiMANDRI: Your Honor, we will never
finish this cross-exam if I can't just get answers to my
questions.
THE WITNESS: No, I agree, we should have
accurate minutes, Mr. LiMandri.
BY MR. LiMANDRI:
Q. Thank you. Thank you.
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Christina Lother, CSR #8624
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Now let's just assume that you use -- you blew
the whole wad on the personal expenses on this trip and
38,000 went against your personal expense account. What
was your personal expense account total limit for 2014?
Do you know?
A. I do. In 2014, I had a credit that rolled
over from the previous years, so I believe -- it's on
the general ledger in our QuickBooks that I had more
than -- than the employment agreement showed for that
year.
Q. Let's just stick with the employment agreement
for right now.
A. Okay.
Q. It showed between 33,000 and 36,000 dollars
for your personal expense limit, correct?
A. Correct. But --
Q. Okay.
A. I want to --
Q. No. I understand you're going to start
rolling things over.
A. Okay.
Q. The -- the -- nowhere does it say in your
contract that you can start rolling over the personal
expenses, does it?
A. The NMA board explained to me that it's
automatically vested and it rolls over.
Q. And you can show me that in the minutes?
A. That's what they explained to me.
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Christina Lother, CSR #8624
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Q. Okay. So it's not in the minutes?
A. I haven't read that part of the minutes.
Q. That's fine. We have. Thank you.
A. Okay.
Q. Assuming that the contract says 33,000 to
36,000 and they awarded you 38,000, if there had been
nothing that rolled over, you would have totally
exhausted -- more than exhausted your personal expense
account for 2014. Would you agree with that?
A. Assuming that there was no rollover?
Q. Right.
A. That's a correct statement.
Q. Okay. Two summary exhibits we prepared from
the AMEX statement, one was Exhibit 604. You have that
loaded. Can we -- this is what I show as all travel in
the time frame of 2014, and you can see there's flight
and there's flight upgrades. There was taxis. There is
hotels on here somewhere.
Let's go to the next page. Travelocity,
Expedia. All in this time frame in the fall of 2014
while you were making trips to Washington, DC and -- and
New York, New York, DC, all in the same September 2014
time frame, August 2014 time frame.
Let's go to the next page.
Okay. Next page.
So I show those total --
(The Court and the clerk confer.)
MR. LiMANDRI: -- $32,790 -- I'm sorry. This
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Christina Lother, CSR #8624
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is a new exhibit. A couple of these will be and I
apologize.
THE COURT: Well, you'll need to --
MR. LiMANDRI: Make sure the clerk gets it.
THE COURT: -- mark it and update the exhibit
list.
MR. LiMANDRI: We'll do that, Your Honor.
MR. COUGHLIN: And give us a copy.
MR. LiMANDRI: We will do that. These are
just summaries instead of pulling up individual AMEX
statements.
THE COURT: Right, and Mr. Coughlin would like
a copy as well.
MR. LiMANDRI: Yes, we will do that.
MR. MARR: And just so we're clear, this was
an exhibit that was prepared by your staff?
MR. LiMANDRI: It was prepared by my staff and
I can go in in each case --
MR. MARR: It's okay. I just wanted to know
how it was prepared.
MR. LiMANDRI: Thank you. I will say in each
entry there's an AMEX statement exhibit number, so
instead of pulling up 50 pages of AMEX statements, we
just pulled out what looked like it was travel to New
York and DC in this time frame.
BY MR. LiMANDRI:
Q. But in any event we all agree that it's in the
range of 30 thousands of dollars. Maybe I missed
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Christina Lother, CSR #8624
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something. Maybe I included something that I shouldn't.
But you think those trips are probably roughly
in the range of what the board discussed and what they
gave you, $38,000 credit, I have it lower, but I'll
assume that maybe you had some legitimate expenses in
there that brought it up to 38, but that sounds about
right?
A. No.
Q. Okay.
A. Mr. LiMandri, can you unzoom and I can explain
that because that was taken from that exhibit that we
talked about earlier. The trips from November 14, '14,
all the way down to 11-21-14, that was not humanitarian.
That was a trip I did on behalf of the Neighborhood
Market Association when I had the meeting at the
Whitehouse for DACA. And the reason why DACA was very
important for our members because a lot of our members'
employees are affected by DACA. So the 11 -- the 11-14
all the way down to 11-21, I think it's around $2,600.
Q. Yes.
A. Because I used that exhibit that you provided
and I broke them down.
Q. Yeah.
A. So that -- more accurately would be if you
take 32,790 and minus around 2,600.
Q. Okay.
A. So approximately 30,000.
Q. All right. I was trying to give you the
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Christina Lother, CSR #8624
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benefit of the doubt, but what you're telling me maybe
the board overcompensated you by close to $8,000.
MR. COUGHLIN: Misstates testimony,
Your Honor.
THE WITNESS: No, because another thing
that -- that exhibit you put was very helpful because
part of that exhibit was the Facebook charges, which is
also personal expenses for my Facebook.
BY MR. LiMANDRI:
Q. Okay.
A. So if you add Facebook, it was around 5,000.
So the total is around 35,000.
Q. All right. Thank you. I thought in the
ballpark.
A. Yeah.
Q. Okay. Now, again, assuming there was no
rollover on the personal expenses and you've exhausted
the personal expense account with this trip or trips
that you've allocated against that personal expense
account, you still had other personal expenses you
incurred in 2014 and a few of those we went ahead and
also summarized in Exhibit 605, which I'll represent is
another new exhibit summary.
(Court's Exhibit No. 605, DESCRIPTION, marked
for identification.)
BY MR. LiMANDRI:
Q. And I'll ask you about those because I recall
from your video deposition testimony, you said, for
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Christina Lother, CSR #8624
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example, if you wanted to use Costco cards against your
personal expense account, you would have a nice round
number. Isn't that true?
A. That is true.
Q. All right. So it's safe to assume that these
Costco card charges in 2014 are all charges that you had
against your personal expense account? You went in and
used your NMA credit card, got Costco cash cards, and
then you used those for your personal expenses, right?
A. Some of that part is correct, and some of it's
not. If I can elaborate. The Eminem tickets, I
don't -- that was a raffle item. I didn't go to an
Eminem concert.
Q. Okay.
A. The Regenix is mine.
Q. Okay.
A. Some of that Costco, I'll have to look at the
QuickBooks general ledger. And I don't know what a TRM
Resale Hollywood Tickets is.
Q. Okay.
A. So it's a safer assumption, if you want to
make an assumption, to back out the Eminem tickets and
you back out the Resale.
Q. Okay. But the -- that's fair enough. Thank
you for clarifying.
But in any event, the Costco more than likely
round numbers, your testimony, personal expense.
Certainly the Regenix is.
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Christina Lother, CSR #8624
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Now, are you saying somewhere in the
QuickBooks it should reflect where you rolled over
personal expenses you did not use in 2013 into the 2014
period?
A. I believe in the general ledger -- I don't
know if it show this, under AMEX 1002 -- it shows how
the bookkeeper would input it. I don't put stuff into
QuickBooks, so I just rely on what I've seen.
Q. Okay. Well, the two people that said, the
2015 time frame anyhow -- I think prior to that, there
weren't any QuickBooks [sic] that testified here -- were
Jennifer Virabouth and David Rabban. We can display
their testimony. But do you recall Ms. Virabouth saying
she did not keep track of your personal expenses? I've
got these trial transcript references if you want to see
them.
A. Sure. I believe Jennifer Virabouth testified
that she worked to the middle of 2013. I don't know if
you can see that in her testimony, that she was not
working at 2014 at the Neighborhood Market Association.
Q. Okay. So who was?
A. David was working there. I think Daniela was
working there.
Q. Well, you saw in David's -- Rabban's
deposition that I read, and I could again read it again,
he said he didn't even know you had a personal expense
account. Do you remember that?
A. I don't remember, but it's in the general
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Christina Lother, CSR #8624
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ledger in the QuickBooks.
Q. Okay.
A. So somebody had to put it in there.
Q. I see. Do you recall Mr. Rabban saying that
they're really was no accounting system per se, that
QuickBooks you just enter numbers but it's not an
accounting system?
A. I think that was -- may have been taken out of
context, but I don't remember him saying that.
Q. We'll look at it verbatim when we come to it.
A. Okay.
Q. Now, you also admitted that the NMA was trying
to avoid paying payroll tax, and of course you said it
was all the board. But were you there for the video
portion of Mr. Ballo's testimony where he basically said
you were the final decisionmaker at the NMA? Do you
recall that testimony?
A. Again, I was at his deposition and if we have
a clip of the entire thing, we could see it. The board
is always the ultimate decisionmaker.
MR. LiMANDRI: See if we can find Ballo 309 --
page 309, line 9, to page 309, line 16. If not I --
there we go.
(Videotaped deposition played in open court;
not reported per California Rules of Court,
Rule 2.1040 (d).)
BY MR. LiMANDRI:
Q. And as to the October 13, 2011 board meeting,
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Christina Lother, CSR #8624
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we've seen this before, 301-008.
MR. COUGHLIN: Your Honor, I just want to be
clear, did you see the final answer on that clip?
THE COURT: I saw it. It said "the board."
MR. MARR: Okay.
BY MR. LiMANDRI:
Q. Okay. Mark Arabo is saying -- it says Mark,
anyhow: As you all know I run the day-to-day functions
and operations exclusively.
And then it goes on to say -- if we could keep
going down a little bit -- Mark: "We need procedures.
Let me explain my relationship with the board. A board
member cannot say 'do this' as far as daily activities.
I have full authority."
So do you remember making those statements at
that board meeting at that time on October 13, 2011?
A. I think this was also asked at my deposition
and at the same time I don't remember making that
statement, and it doesn't sound like anything I would
say. I -- especially with the board. Anyone who knows
our board, I believe if anyone -- employee makes that
representation to the board, the board would fire them
because the board is very type A as you've met many of
them. So I don't remember -- and I don't think that --
that those comments are attributed to me or maybe taken
out of context.
Q. Okay. But you don't deny you were the Mark
present at that board meeting, do you, especially if
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Christina Lother, CSR #8624
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we're talking about issues dealing with the day-to-day
functions of the NMA? There wouldn't be any other Mark
that would be making statements as to what your
responsibilities would be, was there?
A. I have to see it -- I don't think there's
another Mark, but I have to look at the attendance, but
they may have put a different name of who said that.
Q. Okay. And as far as the board being
responsible for how they categorize the personal expense
account, again, looking at 301-004 -- we've all seen
this -- Mark: I got an idea from Congress where I can
take a bonus as an expense account. It would save us on
taxes and then Saad says: What did you make in 2010
with us? You go to the next page and it says, you're
talking around 160,000.
So this discussion would have been with you,
right? You're the one talking about you would have made
around 160,000, correct?
A. Again, if you look at the minutes and compare
this year to my employment agreement, that year I was
making 116,000. To show that the words are not either
verbatim, and I -- I think it might have been Attisha
testified that -- of who said the idea from Congress but
I am almost certain that that did not come -- that
statement did not come from me. And at this meeting I
think they were discussing the bonus payout. My
employment agreement in 2010 was already in effect.
Q. So where it says, what is your annual expense
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Christina Lother, CSR #8624
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account -- this is 2011 -- and someone says Mark says I
don't have an expense account, are you questioning
whether that's you speaking?
A. Yes. It wouldn't make logical sense when
clearly in 2010 I had an expense account. I was using
it in 2010 as I was using it in 2015. Custom and
practices haven't changed. That statement would not be
logical, and I don't think -- I know it shows it's
attributed to me, but I --
Q. And you didn't --
A. I can't attest to the accuracy of it. I
didn't take it.
Q. You do review the minutes of the board of
directors of the NMA, do you not?
A. I focus on the motions.
Q. I see.
A. Yeah, because the motions are the action
items.
Again, if you -- if you take the amount of
time a board meeting starts and finishes and you add the
people in the room, if the minutes were verbatim, the
minutes should be around a hundred pages, not eight.
Q. I get that, but one would think the minutes
they do have you don't want to be shockingly false.
Where it says "Mark" it has to be somewhat related to
the company, so for every month I can spend it on Costco
cards and can have those, that would be you speaking,
correct?
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Christina Lother, CSR #8624
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A. I don't think that it was -- again, it shows
it as such.
Q. Okay.
A. And another thing that's odd about that is
when they talk about usually my compensation or anything
to do with me, I'm out of the room. And also in 2010,
there's minutes where the board gave me a bonus as a
vacation package or cash.
Q. Okay.
A. So --
Q. I'm not asking about that. Thank you.
There wasn't anybody else on the board that
was using an NMA credit card to buy Costco cards, was
there?
A. No, there was not.
Q. Thank you.
And it goes on to say that someone should be
checking with the CPA. Spencer, you said he's a lawyer,
we want to help him on the tax base. I assume he's
referring to you. But we have to make sure we aren't
doing anything wrong. I suggest we bless the number we
have given Mark but make sure our CPA that this is
right.
Did you ever check with the CPA to see if this
whole tax avoidance plan was something he would agree
with? Because we heard him testify he said he didn't
even know about it.
A. Who is that?
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Christina Lother, CSR #8624
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Q. Ryan Williams.
MR. COUGHLIN: Objection, Your Honor,
compound. Which question --
THE WITNESS: Yeah. I don't understand the
question.
BY MR. LiMANDRI:
Q. Did you ever check with Ryan Williams, the CPA
for the NMA, to see if they could do this in order to
save you money?
A. From reading that, I would take away that it
would be the responsibility of the chairman to check
with the CPA.
Q. I see.
A. Not the employee that was receiving it. It
would be up to my boss.
Q. I see. The people that are serving on a
volunteer basis, correct, not the full-time paid
employees of the NMA, right?
A. To make an example for -- for example --
Q. I don't need an example.
A. -- as a volunteer firefighter --
MR. COUGHLIN: There was a question,
Your Honor. There was a question and he's answering it.
MR. LiMANDRI: Your Honor, I'm entitled to a
yes-no answers for the questions that call for that, not
an example of a volunteer firefighter. We'll be here
for two days.
THE COURT: Okay. Ask your question again.
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Christina Lother, CSR #8624
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BY MR. LiMANDRI:
Q. In fact, you're the full-time paid employee,
not the volunteer board member, so you would be in the
best position to talk to the CPA about your own
compensation, wouldn't you agree?
A. I do not agree and I think your expert of duty
of care would agree that the board is the ultimate boss
and the ultimate boss should be the one that checks with
the CPA of the organization to make sure everything with
the organization is right. I think your own expert
testified to that.
MR. LiMANDRI: Your Honor, I'm going to move
to strike everything after "I do not agree," and I'm
going to ask you to please, Your Honor, respectfully
admonish the witness that if he can answer the
questions, his own attorney will be able to elicit all
of this additional testimony so we can finish.
THE COURT: Well, let's have short questions
and short answers, please.
MR. LiMANDRI: Thank you, Your Honor.
THE WITNESS: Okay, Your Honor. Thank you.
BY MR. LiMANDRI:
Q. Now, Dany Shaba testified he did a number of
personal errands for you and we saw some text messages
that show that during the workdays. Would you agree
that Dany Shaba, in fact, did run personal errands for
you during the workday at times?
A. I would agree he did personal errands, but it
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Christina Lother, CSR #8624
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would be either on his lunch break or it would be after
or before hours.
Q. I see.
A. I would -- if I were to text him, it's not
that he's doing it that moment. I would just text him
at that time that moment.
Q. I see. I see. So you assume that he did
everything either at the lunch break or after hours. Is
that your testimony?
A. No. That's what he would tell me because I
would pay him --
Q. I see.
A. -- personally.
Q. And you would personally pay him without
looking at any receipts and you would expect that he
would give you the exact correct amount so you knew how
much cash and how much change to pay, right?
A. I can tell you exactly what happened. He
would bring stuff, and I'd say, Dany, how much? He'd
say, for example, $40, bro, but give me gas, and I'd
give him $50.
Q. All right. So you never actually asked to
look at the receipt to make sure that you're actually
not shortchanging him or perhaps overcompensating him?
A. I would never. This is a man I considered
like my younger brother who would sleep at my house
so --
Q. You know, most people who have a business,
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Christina Lother, CSR #8624
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including me, I turn in all my receipts. I mean you
don't think that you would need to turn in receipts?
A. No, you're saying as a personal friend, not as
a business. Business, we did turn the receipts in.
Q. You knew he had a NMA credit card, right?
A. I did.
Q. Okay. So you didn't think that he would
sometimes use the NMA credit card if you're having him
buy things for the NMA and perhaps some personal items
at the same time?
A. I would never in a million years think that he
would use the NMA card and tell me that he paid for it.
Q. So everything you asked him to buy would only
be personal. You never asked him to buy anything on the
NMA card?
A. I don't understand the question.
Q. Well, did you expect him to ever use the NMA
card?
A. If he bought stuff for the NMA office --
Q. Okay. Did you --
A. -- I would expect him --
Q. I'm sorry. Did you ever ask him to buy things
for the NMA office?
A. I don't -- I'm sure I have, but I don't know
specifics.
Q. You asked him to buy things for you personally
obviously, right?
A. I have.
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Christina Lother, CSR #8624
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Q. Did it ever occur to you that he might be
buying things for the NMA and for you personally on the
same card at the same time?
A. Never.
Q. I see.
How much money in cash do you think you
shelled out to Dany Shaba while he worked for you?
We're talking, presumably, looking at the statements,
thousands of dollars?
A. I would rely more on his receipts. It makes
sense that he would keep them, and his testimony was he
wanted to keep receipts in case it, I think he said,
caught up to him or something. So I would add up his
receipts and that would probably give a good estimation
of why he would keep receipts.
Q. But I'm asking you. It sounds like you're
running an operation like you have an ATM at home where
you could keep shelling out thousands of dollars in
cash. I mean, how much did you actually pay him, do you
think? Because he was spending thousands of dollars
apparently.
A. I don't know how much of it he was spending
was for me personally and how much was for the NMA, but
he could testify to that.
Q. Okay. He did. He said $60,000 for you I
think in 10 months. Does that sound about right?
A. That sounds ridiculous and it does not sound
right.
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Christina Lother, CSR #8624
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Q. Okay. But you -- you were not checking?
A. The board had Marlo in charge of checking.
Q. I see.
A. And I trusted both of them and not in a
million years would I think they would collude.
Q. You were in charge of hiring and firing?
A. I was to a degree, but I'd always have to have
a buy in from either the chairman -- one of the
chairmans at a time.
Q. Okay. You said that a light bulb went off
when you heard Dany Shaba talking in court or
testifying, and that's the first time I guess you
realized that he was using the NMA credit card for
personal expenses, correct?
A. That is correct.
Q. All right. But you also testified that you
had prepared an audit which you presented to us prior to
your deposition, right?
A. Correct.
Q. And you had apparently Jennifer Virabouth and
David Rabban and I think you said Amad Attisha all
working on the audit and you helped them, correct?
A. Correct.
Q. All right. And all of you guys, supposedly
familiar with the procedures and the ones who actually
input all these amounts, never picked up when you did
your audit that Dany Shaba was using the NMA credit
cards for personal expenses until you heard him testify
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Christina Lother, CSR #8624
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in court. Is that your testimony?
A. Yes. And my testimony is it was -- wasn't
when he was testifying, it was when Mr. Jonna was going
through text message, receipt, and AMEX.
Q. Now, you actually saw the AMEX statements,
right, because Jennifer Virabouth said she'd open them,
put them on your desk, and you would be the first person
to have access to them, correct?
A. First person to have access, but I would
always only be looking at my charges and the distinction
between my personal and my business.
Q. And you didn't notice that Dany Shaba was
spending thousands of dollars on the AMEX, American
Express Card, when you looked at the statements?
A. All the charges I took at face value as if he
were doing them for the Neighborhood Market Association,
and that's why the board appointed Marlo to be the
person to consistently sit down with each person and go
through each one.
Q. And Marlo and Dany were your good friends,
right, practically lived at your house?
A. They were -- they basically lived -- they were
like my younger brothers and I trusted them.
Q. The board of directors was not at the NMA
offices every day, but that was something that you would
be expected to do on a regular basis, correct?
MR. COUGHLIN: Objection. Vague.
THE WITNESS: The board --
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Christina Lother, CSR #8624
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MR. COUGHLIN: Do what?
MR. LiMANDRI: To be at the NMA offices.
MR. COUGHLIN: Okay.
BY MR. LiMANDRI:
Q. He's there. He's running -- you're running
the office not the board, right?
A. The board members -- the days I would be in
the office if I wasn't traveling, probably 70 percent of
the time one board member would be there, either Bashar
or Amad or Ramzi. More likely than not Prince. Prince
was there when I was at the office when I was not at the
office. Prince is Amir, sorry.
Q. Okay. And if you're not there and the AMEX
statement comes in and people are looking at your AMEX
charges and trying to code them, how would they know if
it's personal or business if you're away and you're not
there to tell them?
A. I have my receipts in my desk.
Q. I see. So before you would go on any trip you
would actually save your receipts, correct?
A. When I had charges and I have receipts, I open
my desk and I put them there, and Marlo would know these
are the receipts, go through them.
Q. But you never ever asked for any receipts from
Dany Shaba for any purpose, not personal and not NMA?
A. I never asked for receipts from Dany Shaba or
STHEUPBG Shamu or Jesus or Marlo.
Q. And there's no separate tally of your personal
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expense account. We have to go into QuickBooks and try
to figure it out. Is that what you're saying?
A. No, that's not what I said. There is a
separate tally.
Q. Okay.
A. Every month we'd go over it with a board
member and we'd have it and then it's also in the
general ledger for the QuickBooks.
Q. So if I was to give you the QuickBooks, you
could pretty quickly tell me how much you spent for your
personal expense account for 2011, '12, '13, '14, and
'15. Is that what you're telling me?
A. It should be there, but the most accurate
thing would be the audit because the audit we went and
we developed it and we gave it to your side weeks before
my deposition hoping we could get -- and even today you
can bring it up and --
Q. And that audit -- we have it and we'll talk
about it.
A. Okay.
Q. And trust me, we're going to get to that but
you didn't have any receipts when you did the audit, did
you?
A. We had the statements.
Q. You had the AMEX statements, you had the
QuickBooks accounts, you had no receipts?
A. When the statements are coded, it -- the idea
from the board was they wanted verification of the
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charges. So once they see them and it's coded, they're
okay with it. What they explained to me, the statement
for them became the receipt after they verified it.
Q. And so you're -- you're confident and you're
satisfied, you're comfortable that all of the AMEX
statements were always correctly coded at all times so
you didn't need to keep the receipts?
A. I was not the one coding them. I can only
testify to myself and what I did.
Q. You said that the prior year's financials were
used in place of a budget; is that correct?
A. The board would -- at every meeting we would
have financials, the current and previous, and we would
use that as a barometer to see how the association is
doing and see where we need to save money, see where the
board wants to invest money, and that's what they would
use.
Q. And so, for example, you guys lost money
several years, 2010, quite a bit, over 250,000; 2011 and
'12, you were net profit a little bit, we've got all the
statements; 2013, you lost over a quarter million; 2014
operational losses of 800,000; 2015, 579,000.
So how were you using the prior year's
financials as a budget when you were losing for several
years in a row hundreds of thousands of dollars? I
could see how it would be like the U.S. Congress that
has a trillion dollar deficit because it's not their
money, but is that what you're saying, you had no
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budget, you would just keep spending because a prior
year you spent? Is that what --
MR. COUGHLIN: It's like six questions,
Your Honor. Compound.
BY MR. LiMANDRI:
Q. I'm making a point. Are you saying that you
felt comfortable using the prior year's financials when
you had -- if you had lost a lot of money the year
before?
MR. COUGHLIN: Your Honor, again, can we stick
to question, answer, and not closing arguments.
MR. LiMANDRI: Well, that's my question.
THE COURT: That's his question. Were you
comfortable?
THE WITNESS: Those -- that's the custom and
practice of the board since I started. We've always --
that's how it's always been run.
BY MR. LiMANDRI:
Q. Okay.
A. They would use it and some years we -- the
association made money. Some association -- some years
the association lost money, like in your -- in your
chronology right now, you said loss, loss, loss,
operational loss, loss, loss, when it should be loss,
loss, gain, loss, break even, to show the full picture.
But the budgets, the expenses, as far as
anything was a decision of the board of directors.
These aren't just volunteer board of directors that show
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up and eat food and go home. They were very active --
Q. I see.
A. And they made the policies. I just did what
they told me to do.
Q. I see. I meant to ask about Dany Shaba and
the receipts. Does it make sense to you that if Dany
Shaba was buying all of these items on the NMA card
telling you he was using his own cash, that he would
keep the credit card receipts when it would incriminate
him? I mean, those very receipts show that he was using
the NMA credit card, but he saved them and brought them
into court. You didn't save receipts. No one else did.
MR. COUGHLIN: Objection, Your Honor.
BY MR. LiMANDRI:
Q. So is it your testimony that he saved these
receipts that somehow would benefit him if someone
falsely accused him?
MR. COUGHLIN: That was four questions again,
Your Honor.
THE COURT: Well, that's the last -- the last
one is the question.
MR. COUGHLIN: So he's not expected to answer
the first four of those.
MR. LiMANDRI: I'm making a preface so that --
MR. COUGHLIN: So the prefaces are in the form
of questions. I just want to make sure we're all on the
same page as to which question he's answering.
THE COURT: Do you understand the question?
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THE WITNESS: I understand.
THE COURT: Go ahead. You can answer.
THE WITNESS: Okay. Dany's testimony combined
with Marlo's testimony for me was -- showed me the full
picture. When Dany said I came here -- I'm
paraphrasing, but I believe he said I came here for a
clean slate and I saved all these receipts, and then
when Marlo was asked, he had his explanation. My
personal opinion, because if you're asking my personal
opinion, it would make sense for Dany to keep receipts
because if he's in the seminary and wants a clean
conscience, he would -- he would keep something that he
did was wrong. That does make sense.
BY MR. LiMANDRI:
Q. I see.
A. And the case that comes -- his words was it
comes back to me. That's what he said I believe in his
testimony.
Q. So your opinion is that when he was living in
your house, using his NMA credit card, letting you pay
him all this cash under false pretenses, smoking hootch
[sic], whatever it was you said he was smoking in your
garage, that he had the wisdom and foresight to know
years later when he's in the seminary and there might be
a lawsuit, he could come into court and present his
credit card receipts so that he'd have a clean slate?
That's a lot of foresight. Maybe he should have been a
profit not a seminarian.
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MR. COUGHLIN: Objection. Calls for
speculation. Argumentative, Your Honor. I mean --
THE COURT: Go ahead. You can answer.
THE WITNESS: Okay. Okay. I'm telling you
what I believe Dany Shaba's testimony was.
BY MR. LiMANDRI:
Q. Right. Yeah, the clean slate he said was
because he spent a couple hundred bucks on personal
items and didn't tell you. He didn't say anything about
a clean slate on having an embezzlement scheme with
Marlo Georgis, did he? He didn't say that?
A. I mean, he did not say that but when -- when
you take his testimony, which was, for me, bizarre, and
then you have Marlo's testimony, which is even more
bizarre, and you complete the two pieces, it tells for
me the story.
I realized it when Mr. Jonna did his
presentation, the message, receipt, AMEX, because I knew
for a fact, and I told my attorney, I paid him cash. I
paid Dany Shaba cash. I knew that for a fact because I
did it.
Q. Can you estimate whether the cash you paid
Dany Shaba for your personal items the entire time he
worked for you, was that more than five thousand, less
than 10,000, between 10 and 15,000? Can you kind of
give me a ballpark anyhow so the Court has some idea how
much cash we're supposed to believe you're actually
paying this guy?
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A. The best thing I would use for an assumption
is if you add up every receipt he had and that would
give a tally, because Dany, Marlo, and other cardholders
would be told by board members, buy this for the office,
buy that for the office. Not everything he bought -- I
would assume not everything he bought was for him or for
anyone else. I mean, they were supposed to buy NMA
stuff with it.
Q. Yeah, I get it. I'm not talking about the
credit card used for NMA purposes because you've already
made it clear that you want us to believe that he was
only supposed to use it for that purposes. I'm talking
about your testimony that all the cash items that you
reimbursed him for because you thought he was actually
paying cash for those personal items, how much cash did
you pay him in ballpark figures to reimburse him for
what you thought he purchased, not with the NMA credit
card, but with his own personal credit card with his own
personal cash?
MR. COUGHLIN: Vague. Compound, Your Honor.
THE WITNESS: There's no --
THE COURT: Do you understand the question?
THE WITNESS: I think I do.
THE COURT: Go ahead.
THE WITNESS: I don't think there's any way
for me to determine how much he did through an NMA card,
how much he did through himself. I know he kept
receipts, which is a good base to start off, and then he
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Christina Lother, CSR #8624
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would know or even Marlo would know what they were
doing.
BY MR. LiMANDRI:
Q. Okay. You --
A. But I would be -- I would be just assuming. I
don't want to assume.
Q. You have no idea if you paid him a $100,000 or
$50,000 or $25,000. You had so much money, that
apparently didn't occur to you to even have any type of
idea how much money cash you were giving him; is that
right?
MR. COUGHLIN: Objection. Argumentative.
Compound.
THE COURT: It is. Sustained.
BY MR. LiMANDRI:
Q. Do you have any idea how much cash you paid
him, sir?
A. Again, I would be assuming.
Q. You can't give me a rough estimate?
A. I don't -- I don't want to give -- I don't
want to assume.
Q. Okay. So -- but it would be less than a
hundred thousand, wouldn't it?
A. I would think, yeah.
Q. It would be less than 50,000 probably? You
probably don't keep 50,000 in cash around the house,
right, or in your pockets?
A. I don't -- okay. What's the question? I
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don't understand the question.
Q. How much cash -- see, I'm having a hard time
understanding how much cash you paid him when we're
looking at thousands of dollars in credit card
purchases. I don't keep that kind of cash. I don't
know who has that kind of cash. Maybe you do. Was it
less than 50,000 in cash that you paid him for all these
personal purchases?
MR. COUGHLIN: Your Honor, misstates testimony
that he has this big stack of cash in his house that
he's paying from.
MR. LiMANDRI: Well --
MR. COUGHLIN: And it assumes facts not in
evidence that that was the case.
THE COURT: Okay. Can you give us any kind of
a ballpark figure of how much cash you gave to Dany?
THE WITNESS: Without seeing the receipts,
it's hard, but if you could -- if we could pull up the
receipts, I'm happy to go through them one by one.
BY MR. LiMANDRI:
Q. I understand. But you never asked him to keep
receipts, right?
A. No, but it's an indicator, because I know for
a fact that what he -- everything he bought me, I paid
him cash --
Q. Okay.
A. -- and --
Q. Thank you.
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Christina Lother, CSR #8624
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A. -- my wife does the shopping for the house.
So Dany wouldn't be shopping all the time getting
groceries from me.
Q. I see. Did she pay him cash, too, then or
just you?
A. I would pay him cash.
Q. Okay. I want to ask you about the membership
list. Marlo Georgis said yesterday that they had a list
to go around to visit the various members of the NMA.
Do you recall that testimony?
A. I do.
Q. So they would, in fact, staff members, have to
have access to the list of the members in the NMA so
they knew who to visit on what dates, correct?
A. They would get a printout of 10 stores to
visit, but they wouldn't be the full membership list.
So they would get a route that we would print out for
them.
Q. All right. Would it be the goal to visit all
the members within a certain period of time?
A. Our goal is when we give them the paper when
he's done we would have a system where he gives it back
to the office so we would make sure no employee keeps
the list and we would have someone in the office call
each member as a follow-up: Did you get a visit from
your rep, how did it go, what can we help you with.
So we would give a list, he'd use it to visit
stores, gives it back, and we would keep it, and after
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Christina Lother, CSR #8624
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they do the follow-up survey, they would give it back
and I would keep it or destroy it.
Q. All right. Now, in terms of membership access
to the list, you're aware of both the bylaws and the
bylaws refer to the California Corporations Code, do
have provisions that deal with the right of members to
the membership list? You're aware of that, correct?
MR. COUGHLIN: Objection. Calls for a legal
question, Your Honor. He's not --
THE COURT: Well, he's only asking if he's
aware of it.
MR. COUGHLIN: Okay.
THE WITNESS: No, I'm not aware of it.
THE COURT: He said no, he's not.
THE WITNESS: I'm not aware of it.
BY MR. LiMANDRI:
Q. You're never read the bylaws?
A. No, I've read the bylaws, and I know there was
a good amount of e-mail exchanges from our general
counsel and Samir Salem. At one point I told -- I
always asked the lawyer. I said, what do you think,
Spencer? And he said --
Q. I'm not interested in what the lawyer said.
Thank you.
A. Okay. I'm sorry.
Q. That's okay.
But you know there was a lawsuit. You sued my
clients from trying to reverse-engineer the membership
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Christina Lother, CSR #8624
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list, and you saw what I read from Judge Medel's
findings that it's not a trade secret and you guys lost
that lawsuit, correct?
A. I have never -- I have never sued anyone in my
life. I have not sued your clients.
Q. I'm sorry. Well, the NMA did, right?
A. Please make a distinction.
Q. All right. The NMA did, right?
A. The NMA did, yeah.
Q. Okay. You had mentioned how valuable the
membership is -- list is to the various vendors, but you
also said what the vendors are really paying for is the
endorsement of the NMA; isn't that correct?
A. I think there was -- no, what I -- it's a
combination of the list and the endorsement.
Q. Okay.
A. Because the list they know where to go and we
would do mailers out to it with -- it's a combination of
the list and the endorsement letter.
Q. But if they wanted to know, for example, all
the liquor stores in San Diego, they can get that list,
for example, from the Alcohol and Beverage Control
office. They have a list of all liquor stores with beer
and wine licenses, right?
A. Correct.
Q. Thank you.
And you've mentioned how you did your
so-called audit from the QuickBooks, but you also saw
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Christina Lother, CSR #8624
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the e-mails back and forth with Jennifer Virabouth and
you and David Rabban and heard the trial testimony that
the QuickBooks for at least for a time there were a
mess. Do you remember that testimony?
A. I remember seeing the e-mail and my response
to them in the e-mail was please take care of it as soon
as possible. So once the staff would give any issue to
me, I would say, make sure it gets taken care of.
Q. The testimony from David Rabban at trial that
you said I took out of context dealing with whether the
QuickBooks constitute an actual accounting was at 114-02
to 114-15. I don't know if that can be displayed or
not. If not, then maybe you could pull up or maybe you
gave him already 114 of Mr. Rabban's trial testimony. I
saw it earlier. We'll come after. I don't want to take
the time here, but see if you can find 114-02, 114-15.
You also mentioned that there was general
unhappiness in the Chaldean, I guess, community of
liquor stores and such starting after my clients were
voted off the board and some other major families in the
time frame of 2011. But isn't it true that the actual
dispute that brought the parties here was when -- after
the October 2, 2014, board meeting minutes it was
discovered you had been paid $248,000 after the NMA had
sold its business? So it really wasn't until after the
October 2014 board meeting when the actual dispute with
my clients arose, wouldn't you agree?
A. I do not agree.
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Christina Lother, CSR #8624
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Q. Okay.
A. I do agree with the first half of it. Many
people were unhappy. I was one of the people that was
unhappy that they were voted -- that the members didn't
vote them in because I was friends with them.
As you can see by their e-mails that were put
in discovery, shortly, I believe, right after, Mr. Salem
would e-mail Mr. Somo, what did they do? Look at this.
What else are they doing? And you would see a trail of
e-mails back and forth: Let's meet at D.Z. Akins.
Don't tell anybody. Out of east county. And it was
all --
Q. All right.
A. -- discovery that your clients gave and that's
how I read them.
Q. The actual --
MR. COUGHLIN: He's answering the question as
to when these disputes began. He's answering the
question.
THE WITNESS: And there's a letter,
Mr. LiMandri, dated -- I hope it's an exhibit -- 2011, I
think January 2011 where the five -- the board members
from the families who were voted off by the membership
wrote to I believe the chairman and said call this
election -- I don't know if you saw it -- call this
election void and this is --
BY MR. LiMANDRI:
Q. Okay.
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A. -- very wrong --
Q. The fact is Mr. Somo started trying to get the
financial records after the October 2, 2014, board
meeting. We've all seen those letters. Your attorney
wrote back, said all kinds of terrible things about him,
and then he got booted out of the NMA. That all
happened in the time frame after the October 2, 2014,
board meeting, correct?
MR. COUGHLIN: Just in general, Your Honor, I
think it misstates the evidence but --
THE WITNESS: Yeah.
MR. COUGHLIN: -- he can answer the question.
THE WITNESS: My --
THE COURT: Go ahead. You can answer.
THE WITNESS: Thank you, Your Honor. My
attorney has never written a letter.
BY MR. LiMANDRI:
Q. The NMA?
A. Yeah.
Q. Okay.
A. That was -- it's a big -- it's a big
difference, Mr. LiMandri.
Q. Okay. That all happened after the October 2,
2014, board meeting that there was exchange of letters
between Norman Grissom, the plaintiffs' attorney, and
the attorney for the NMA, correct?
A. I don't understand the question. Is it when
the -- this lawsuit --
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Q. Right.
A. -- dispute happened?
Q. The whole thing requesting the financial
records, that was after the October 2, 2014, board
meeting?
MR. COUGHLIN: Vague. Overbroad --
THE WITNESS: I -- I believe so.
MR. COUGHLIN: -- the whole thing.
THE COURT: He understood the question. He
answered it.
MR. COUGHLIN: Thank you.
BY MR. LiMANDRI:
Q. And you also mentioned that money was supposed
to come in from Blue Bunny and a Coast Citrus
organization, if I said that correctly, in 2014, right?
A. No. I said when the five families were voted
off in 20 -- 2011-2012 election, end of 2010, Coast
Citrus year by year would decrease because Mr. Dallo,
Doug Dallo, was a big board member --
Q. I see.
A. -- owned a lot of grocery stores and he was a
big customer --
Q. I see.
A. -- and then it was a slow decline --
Q. Okay.
A. -- and then the -- yeah.
Q. And then --
MR. COUGHLIN: He's asking a question. He
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Christina Lother, CSR #8624
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should be allowed to answer it.
BY MR. LiMANDRI:
Q. Mr. Dallo --
THE COURT: Did you finish your answer?
THE WITNESS: No, I didn't.
THE COURT: Go ahead and finish your answer.
THE WITNESS: Okay. So there was a slow
decline from when the five families were voted off, and
then when members would see within the community turmoil
and fighting and factions, people were reluctant to
invest and then when the lawsuit came -- not really the
lawsuit, it was the publicity around the lawsuit, it was
the press releases, it was the articles, it was a
combination of everything, where suppliers were saying,
I don't know if I want to give you guys money.
BY MR. LiMANDRI:
Q. Yeah, the lawsuit was late 2015. Your
testimony on direct was that the Blue Bunny and Coast
Citrus funds were supposed to come in before that time,
correct?
A. No. The Blue Bunny -- the winter of 2015, at
Bamboo Sushi in December, Ramzi Murad was there. That's
where she mentioned it.
The Coast Citrus was a decline that started
from when Mr. Dallo was voted off the board. It was a
combination of many, many things.
Q. Gotcha. But it all happened prior to the
lawsuit in late 2015.
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MR. COUGHLIN: Misstates the evidence,
Your Honor. Misstates the testimony.
THE WITNESS: No, no, the lawsuit was I
believe fall of 2015.
BY MR. LiMANDRI:
Q. Okay.
A. And the meeting with Blue Bunny -- because
Blue Bunny would pay at the end of the year for the next
three years. So they were supposed to pay us around
200 -- usually they would pay us 200-, 250,000, and it
would be spread across, like 80,000 per year. So we
would account for that in 2015. So if that were to come
in, that year we would have only lost approximately
300,000 or 320,000 instead of the 587.
Q. As far as Dallo leaving, that had nothing to
do with this lawsuit, right?
A. No, I was explaining the decline --
Q. Right?
A. -- of -- the genesis, because you're asking me
how -- how did you guys lose revenue, because as you
see, there was forecasts. We expected --
Q. I never asked about how --
A. I'm sorry.
Q. Yeah, okay. I wanted to show you the David
Rabban trial testimony from page 114, lines 2 through
15. I have he said in response to the question: And
based upon your knowledge, has the method for inputting
information into QuickBooks stayed the same since you
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Christina Lother, CSR #8624
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started working there?
"ANSWER: In regard to like categorizations?
"QUESTION: Correct.
"ANSWER: The categorizations usually stay the
same as far as the line items on the thing. In regards
to the style in which the bookkeeper does it, QuickBooks
has a few different ways you can enter data. QuickBooks
is, I guess, it's not an accounting software. It's a
glorified data entry software. You enter the numbers.
It spits out the reports. That's the way I look at it.
We never did really accounting. We did glorified data
entry and the accountants did the accounting.
Do you agree with that, sir?
A. I wasn't using QuickBooks. Do I agree with
David Rabban's assessment of what the staff did --
Q. Right.
A. -- in QuickBooks? Is that the question?
Q. Right.
A. I mean, QuickBooks you -- yeah, you enter it
in --
Q. Thank you.
A. -- and you give it to the accountant and they
give you the report.
Q. So if you enter the wrong data or the wrong
amounts or the right amounts in the wrong categories,
it's only as good as the inputted data, correct?
A. To an extent, because --
Q. Thank you. Thank you.
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And you tried to testify on direct that one of
the reasons there's been financial losses is attorney's
fees, but it is true that all of the fees of all of
these attorneys are being paid by a third party, not the
NMA?
MR. LAHIRI: Objection, Your Honor.
THE WITNESS: That's not --
MR. LAHIRI: The payment of attorney's fees
through insurance or any other collateral source --
MR. LiMANDRI: They opened the door,
Your Honor. I wouldn't have raised it --
THE WITNESS: I'll answer --
THE COURT: It was talked about. So let's
talked about it. State what you know.
THE WITNESS: It's not true.
BY MR. LiMANDRI:
Q. Okay. You're going to tell me that the
attorneys in this room are not being paid by the
insurance company?
A. That's not what I said. I said that the NMA
is also paying for some of the legal fees in this case.
Q. I see. Not the million dollars plus the
insurance company has already paid to your small army of
lawyers, right?
MR. LAHIRI: Objection.
MR. COUGHLIN: Argumentative, Your Honor. I
mean --
MR. LAHIRI: Assumes facts.
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THE COURT: They take umbrage they're larger.
MR. LiMANDRI: I'm not saying they haven't
earned it either.
THE COURT: Next question.
BY MR. LiMANDRI:
Q. You don't know what they've paid, sir?
A. No, I do.
Q. Okay.
A. There's -- there's supplemental bills.
Q. I see. Okay. Never mind.
You also mentioned the Refined Management
contract and how much money you're making under that
contract, but isn't it true if you refer to Exhibit 5050
02 that it also allows for commission payments that
involve bonus -- bonuses based on a percentage and
allows for annual draws, right? In addition to the
payments under the preceding paragraph, NMA will make
bonus payments to RMI, Refined Management, Inc., of
50 percent, based on a three-year cumulative structure
with a 25 percent bonus draw annually. Is that correct?
A. That is correct.
Q. Okay. And by the way, nowhere in this
document does it actually reserve to the board the final
authority over decisionmaking that is going to be made
by Refined Management, does it?
A. I don't -- I don't believe so, but I want to
make a clear point with that bonus. When I had my
employment agreement and I -- and the board said, to
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Christina Lother, CSR #8624
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save the organization, we need to change the way we do
business, I took a $100,000 pay cut.
Q. Well --
A. That's black and white. That's just factual.
You could show my P&L compared to the employment
agreement.
Q. You have not at any time in this litigation
produced your personal tax returns, your 1040s, for any
of these years in question between 2010 and the present;
isn't that true?
MR. COUGHLIN: Objection, Your Honor, taxpayer
privilege.
MR. LiMANDRI: Well, he's making assertions,
Your Honor, about --
THE COURT: Well, the question is whether he
has produced any tax returns, and I assume the answer is
no.
THE WITNESS: It's no, and I believe I have a
protected right --
MR. COUGHLIN: Hold on. Hold on. The
question --
MR. LiMANDRI: He didn't produce them. I just
wanted the Court to be aware that we don't have the
actual numbers as to what he earned based on this --
what he told the IRS.
THE WITNESS: I don't know if that's a
question.
MR. COUGHLIN: Hold on. There's no question
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Christina Lother, CSR #8624
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pending.
MR. LiMANDRI: The next question is --
MR. COUGHLIN: Sorry, Your Honor. I don't
mean to --
BY MR. LiMANDRI:
Q. -- you indicated that if the vendors and
apparently members find out about discord and disharmony
that it could be bad for business and that's
understandable. That's your statement, correct?
A. Can you repeat the question, please.
Q. Yeah. If vendors and members find out that
there is not harmony in the NMA, then you're saying that
could be bad for the NMA's business, right?
A. Correct.
Q. But if that disharmony is caused by bad
management and the NMA loses members and vendors because
of bad management, that would not be my client's fault.
Wouldn't you agree?
MR. COUGHLIN: Objection. Vague. Overbroad.
Assumes facts.
THE WITNESS: If you're assuming it's bad
management, but I know exactly --
BY MR. LiMANDRI:
Q. Thank you.
A. -- the facts of what's happening.
Q. I understand your version. Thank you.
You said now there's no Marlos and no Danys;
is that right?
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Christina Lother, CSR #8624
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A. Correct.
Q. But they were yours friends and you brought
them to the NMA, correct?
A. That is not correct.
Q. Okay.
A. Bashar Ballo was the one that told me he
thinks I should hire Dany. Okay?
Q. The guy who lived in your house at the time?
MR. COUGHLIN: Well --
MR. MARR: He's answering the question.
MR. COUGHLIN: Let him answer the question.
MR. LiMANDRI: I'm sorry. They're right. Go
ahead. I'm sorry.
THE COURT: Finish your answer.
THE WITNESS: Marlo Georgis was referred from
David Rabban, and he met with Amad Attisha, and Amad
said we should use him as a -- to visit stores.
BY MR. LiMANDRI:
Q. Okay. You could have told the board you
don't -- you don't trust these guys and I don't think
they should be working for the NMA? You could have said
that?
A. If I didn't trust them, Mr. LiMandri, I
wouldn't have had them over to my house five days a week
to eat dinner with my wife and family.
Q. Thank you.
You said there's been some good years and bad
years. I think you actually said there's been some
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Christina Lother, CSR #8624
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great years since 2011. Is that true?
A. I personally think -- well, it depends how you
look at -- how you define -- if you -- if it's --
Q. Well --
A. If it's a -- if it's a bottom line, if it's
dollars and cents, then we've had some rough patches,
but if you say successes we've made and inroads that
we've had with the -- with the cards that we have been
dealt, I've always said the management of this
organization is like playing a game of poker. I would
love to have a 10 jack. I would love to have the
members give me two aces. Samir's a 10. Basil's a
jack. But if they give me a seven and a nine, I have to
work with the cards I have. That's my boss.
Q. As do we all, sir.
In terms of what the actual Form 990s say
going back to 2010, we could display them, but is it
your recollection that in 2010 the NMA's total revenues
less expenses was a negative $274,826? That was 2010.
A. I'd rely more on the P&L because the tax
return has depreciation.
Q. Okay. And in -- well, didn't you hear
Mr. Attisha say he relies more on what the CPA actually
produces for the tax returns than he does on the P&Ls
prepared by the data entry from the NMA staff?
A. Which is my point exactly. Mr. Attisha has a
much different idea than I have.
Q. Okay. And in 2011, the 990s prepared by the
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Christina Lother, CSR #8624
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CPA using the P&Ls after they've had a chance to
interact with you regarding getting the questions
answered show in 2011 it was an actual positive, 27,954,
correct?
A. The P&Ls or the tax returns?
Q. The tax returns.
A. If you could bring it up, I could, please --
Q. Okay. Exhibit 233-001.
MR. COUGHLIN: I'm sorry, Chuck.
MR. LiMANDRI: Okay. We'll --
MR. COUGHLIN: I'm sorry. I didn't mean to
interrupt you, Chuck. What number is that? I'm so
sorry.
MR. LiMANDRI: Exhibit 233.
MR. COUGHLIN: 233.
MR. LiMANDRI: And these extra exhibits,
please enlarge line 19, all of them.
BY MR. LiMANDRI:
Q. 19 says for 2010 minus 274. 2011, 27954.
Does that sound right to you?
A. That's -- so the left side is 2010 and the
right side is 2011?
Q. Correct.
A. Yeah.
Q. Okay.
A. That's true.
Q. As a matter of fact, your bonuses only -- what
they called mandatory bonuses only start to kick in if
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Christina Lother, CSR #8624
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the NMA has a net profit of 50,000 or more, correct?
A. Yeah, but my -- but my employment agreement
based bonuses on the P&L's based on accrual accounting.
They never -- the NMA board custom and practice was they
never used tax returns to award a bonus. They always
used the NMA P&Ls that was done on accrual accounting.
Q. Let's look at 2012, the Form 990s.
Oh, I'm sorry. Exhibit 241-001.
Again, for the prior year 2011, we have that
same number, 27954. And now it shows in 2012 they made
35,637, correct?
A. That's for the tax return.
Q. Right.
A. But when you talked about the bonus, the board
used the P&Ls --
Q. Okay.
A. -- and the employment agreement. That's what
it states in there.
Q. Okay. And then I'm just talking about whether
you -- what you told the IRS and the general public from
your public filing here on the 990s.
For 2013, the 990s --
MR. COUGHLIN: Objection, Your Honor. Assumes
facts. He's not the NMA when he says you told the IRS.
MR. LiMANDRI: Okay. I'm not referring to the
NMA, Your Honor.
BY MR. LiMANDRI:
Q. What the NMA -- but then you signed these
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Christina Lother, CSR #8624
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under penalty of perjury, correct? The last one that we
looked at, 2012, again, it's still up there, Mark Arabo,
president, CEO. You signed them under penalty of
perjury, correct?
A. I think that was the first and -- I don't know
if it was the first, but I know it was the last because
the board told me to sign it, and afterwards I said I'm
not responsible for this, you guys have to sign it. And
then the board elected somebody else to sign it moving
forward.
Q. And you also signed it in 2011, right? Do you
want to go back?
A. I believe so. I --
Q. Okay.
A. One of the years was the final one where I
told them, I said, the board is accountable.
Q. Okay. Let's look at 2013 and see if that was
a great year, according to the Form 990, which is
Exhibit 247. Again, we know from prior testimony
looking at line 19 that it was a negative $251,434,
correct?
A. On the tax return, correct.
Q. Okay. And then on 2014, which is Exhibit 256,
we have already gone through this analysis of how if you
subtract what you made on the building, the 920 from the
115 on line 19, you will have operational losses of
about $805,000. Do you remember that testimony?
A. I remember the testimony, yes.
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Christina Lother, CSR #8624
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Q. Okay. And then for 2015, the year you
switched over to Refined Management, Exhibit 250 -- 260,
260, the actual losses on line 19 -- is this the right
one? No, it's not.
MR. WILSON: Go to the next page.
(Attorney and client confer.)
BY MR. LiMANDRI:
Q. Next page, I'm sorry. Go to the next page on
that.
That's not it either.
I wanted the Form 990-2050. I was given that
exhibit number. You don't know where it is?
MR. WILSON: It's 256.
MR. LiMANDRI: 256?
MR. WILSON: 2015, I'm sorry.
MR. LiMANDRI: 2015.
BY MR. LiMANDRI:
Q. Well, do you recall it's 579,000 in losses --
revenues minus expenses for 2015?
A. I believe so, yes.
MR. MARR: Your Honor, would this be a good
time for a break --
THE COURT: Sure.
MR. MARR: -- if that's okay?
MR. LiMANDRI: Sure.
MR. MARR: Thank you.
THE COURT: Let's take a break.
(Recess.)
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THE COURT: Okay.
BY MR. LiMANDRI:
Q. You were asked some questions on direct
examination, Mr. Arabo, about whether or not any of your
outside business interests with other members on the
board would have overlapped with the awarding of the
bonus and the so-called reimbursement for travel
expenses in October 2014, but isn't it true that even
though you attempted to buy Junior Seau's restaurant in
2012, that that litigation was not only ongoing, but
reaching a crucial juncture in the period of September
and October 2014?
MR. COUGHLIN: Objection. Vague.
BY MR. LiMANDRI:
Q. Okay. Well, there was settlement conferences
and there was a trial setting conference in September
and October of 2014 on that lawsuit, correct?
A. I wouldn't know about that specifically
because Amad Attisha was the one that handled all the
litigation for that, and he paid for all the attorney's
fees, and the lawsuit against I believe Don stock line
for Seau's restaurant. **.
Q. And although you testified before our break
that you never sued anybody, actually that's not
correct, because you're actually a named plaintiff in
that lawsuit; isn't that true?
A. That is true, the Seau's, that's true.
Q. And the other co-plaintiffs with you include
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Christina Lother, CSR #8624
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Amad Attisha, who made the motion to give you the bonus
for $210,000 and it was seconded by Bashar Ballo. He's
also a plaintiff with you in that lawsuit that was
ongoing at the time that bonus was awarded, correct?
A. I did not know it was ongoing because Amad was
handling the entire litigation. He --
Q. You didn't know --
A. He handled --
Q. -- that there was a trial and a settlement
conference that were being scheduled at that time
period?
A. I did not attend, and all they told me is he
would front all the expenses for the attorneys and get
it back, and if there's money back, I will get a share
back, in which they settled and I got some of my money
back.
Q. So when the settlement conference was
scheduled on September 30, 2014, to take place on
October 31, 2014, nobody told you about that?
A. I don't remember whatsoever. And I don't
think I attended. Amad, he has been in a lot of
lawsuits, from what I understand, and he took the -- he
said, I'm going to sue them and we'll get money back and
I'll deal with it. And he -- and he paid for all the
attorney's fees and I said go ahead.
Q. Okay. You were already also asked by
Mr. Coughlin regarding the home loan situation. As I
understood your testimony, that you occupied the house
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Christina Lother, CSR #8624
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for a time when it was under the name of Amad Attisha;
is that correct?
A. Yeah. I think I explained the process of
how --
Q. Yeah, you did, just -- and forgive me because
I'm not super experienced other than knowing that
whenever I bought a home it required that the owner be
the occupier. You didn't have that type of a situation
where the lender wanted to make sure that the person
paying the mortgage is living in the home so that, you
know, they don't get defaulted and kicked out of the
home? You didn't have that type of provision?
MR. COUGHLIN: Vague, compound, Your Honor.
THE WITNESS: All I remember is we had --
THE COURT: No, go ahead. Go ahead.
THE WITNESS: Thanks, Your Honor.
-- we had a loan officer and he suggested this
is the way of doing it and it's the way we did it.
BY MR. LiMANDRI:
Q. Okay. You were also asked some questions
about Mr. Cardenas. You saw some of his invoices
displayed in court where you would have just consulting
services, for example, and have thousands of dollars
worth of charges. Did you feel those were sufficiently
detailed invoices?
A. That would be -- be between him and the NMA
board, the people that pay them. It wasn't my decision.
Q. And the board, we know that one year, anyhow,
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Christina Lother, CSR #8624
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2014, they had three meetings on one day. Did you
really think those board members were fully up to speed
on what was going on in terms of the details of -- of
the NMA's financial condition attending one board
meeting?
MR. COUGHLIN: Calls for speculation,
overbroad, compound.
MR. LiMANDRI: One day of the year?
THE COURT: Overruled. Go ahead.
THE WITNESS: So there's a San Diego board and
an executive board. So there was three executive board
meetings that year because it was hard to get a quorum
for the executive board, but there were other San Diego
board meetings that year. You have to keep in mind
there's San Diego board meetings and there's executive
board meetings. In the bylaws, the San Diego board
meetings you have to have anywhere from two to six, and
for executive board meetings you had to have three or
four. But the decision to do that was the chairman of
the board. We -- we did attempt to have other meetings
that year, but without a quorum, which is 50 -- I think
it's 50 percent or 50 plus one, you can't have a
meeting.
BY MR. LiMANDRI:
Q. All right. You've never produced any minutes
of any board meetings of any of the San Diego NMA board,
right? We haven't seen them if you did.
A. I am Mark Arabo. I'm not NMA -- I don't have
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Christina Lother, CSR #8624
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the minutes for the San Diego board. I don't know --
Q. Do they keep them?
A. -- what you guys --
Q. Do they keep minutes?
A. Does the NMA keep minutes?
Q. The San Diego board.
A. Yes.
Q. Our records show Mr. Cardenas admitted he was
paid over 600,000 in 2013 and 2014. Do you know if --
his various organizations. Do you know if that amount
was ever discussed with the board in any of those three
meetings on October 2, 2014, that Mr. Cardenas had
already been paid -- is being paid up to $600,000 in
that two-year period?
A. I know that the -- Mr. Cardenas would attend
board meetings. He would attend San Diego board
meetings and executive board meetings. And it would be
the board that charged him with staffing or events or
sales strategy, whatever -- whatever arrangement the NMA
board had with Jesus, they're fully aware because
over -- I'd say about half of the staff, over than half
of the staff in the office was Jesus's staff that the
NMA board was paying for.
Q. You saw he had different entities by different
names. Do you believe the board members when they
looked at the financial statements would automatically
associate all the different names of his various
companies, that they were under Jesus Cardenas?
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A. I believe everything was accounted for in the
P&Ls, and they were -- I believe they were fully
aware --
Q. Okay.
A. -- and -- of the different entities Jesus had.
Q. We'll look at Bashar Ballo's deposition. He
was someone that's been on the board since, what, 2010
or something like that?
A. I believe 2010, yes.
Q. Yeah. Do you recall his -- his testimony that
he didn't know what the various companies were that
Mr. Cardenas owned?
A. I don't know if the question was asked him do
you know or do you know if this company is Jesus
Cardenas, because it depends on --
Q. We'll see --
A. -- like the last clip that you showed were --
Q. We'll go through it.
A. Okay.
Q. Now, running the office was actually your job,
correct? It still is, running the NMA office?
A. The board gave me that responsibility, yes.
Q. Yes. And they -- and you're telling me,
though, for a time you stepped aside and let
Mr. Cardenas run the office instead of you?
A. That's not what I said. What I said earlier
in my direct was my -- the staff and myself were
focusing on home base, San Diego. What Jesus, the board
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Christina Lother, CSR #8624
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was using him for going national, LA, Sacramento,
Fresno, Arizona, Nevada.
And the idea was he had bridges with Northgate
with by /AR at that ^ , large supermarkets, that if we
were able to engage going in the big supermarkets, we
could secure Coast Citrus again or other big produce or
meat or milk companies to get residuals for our -- NMA
and rebates for our membership.
Q. You saw the e-mail for a time and you said
that Mr. Cardenas was acting as office manager. Do you
recall that?
A. I'm sorry?
Q. There was an e-mail where Mr. Rabban was
complaining about what was going on in the office and
you said Mr. Cardenas is acting as office manager. Do
you recall that?
A. I remember the e-mail, yeah.
Q. Okay. I don't see where Mr. Cardenas actually
made any presentations to the board based upon our
review of the minutes of the board. Do you recall him
ever doing that?
A. I do recall he was at the board and they would
ask him questions and a lot of board members would talk
to him on the side and -- and, hi, Jesus, how are you
doing? And one of the board members' ideas was have
Jesus have an office at the NMA so they have a good idea
and a good watch on what is he providing to the
organization.
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Christina Lother, CSR #8624
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Q. When you showed us the payroll on Exhibit 283
for the office and said that it went down when Samantha
Dabbash left, wasn't part of the reason for that was
that Mr. Cardenas was retained to hire office staff and
that did not show up under the payroll anymore, it
showed up as outside services?
A. That's not fully accurate. So if you -- I
know if you could pull up the exhibit, we can go over
it --
Q. Can you answer it without me having to do
that?
Exhibits 283, I mean, wouldn't it be -- was
Jesus Cardenas under payroll?
A. Jesus Cardenas --
Q. Right.
A. -- was not under payroll.
Q. Okay. That's my question. Thank you.
Okay. You were asked about whether or not you
were required to obtain consent for expenses over a
thousand dollars, and just to refresh your recollection
on your 2012 contact -- contract, page 335-002 at the
very top, it states -- enlarge that right there -- last
sentence, so that first paragraph: In no event shall
employee incur any financial obligation on behalf of the
corporation in excess of $1,000 absent the prior written
consent of the board of directors.
Let's take a look at your deposition
testimony. I don't know if this has been loaded. Arabo
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Christina Lother, CSR #8624
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Exhibit [sic] 201-21 to 201-24, do you have that?
THE VIDEOGRAPHER: Yes.
MR. LiMANDRI: Can you play that for us,
please.
(Videotaped deposition played in open court;
not reported per California Rules of Court,
Rule 2.1040 (d).)
BY MR. LiMANDRI:
Q. Do you have Attisha 195-13 to 195-21?
I could read it.
Okay. So the question is: Do you ever
remember granting -- from the signing of this employment
agreement, which was signed May 4th of 2012, did you
ever give Mr. Arabo written consent on behalf of the
board to incur obligations on behalf of the corporation
in excess of $1,000?
"ANSWER:"
I can just read it, Your Honor.
The answer is: "WITNESS: I don't believe
so."
There we go.
BY MR. LiMANDRI:
Q. You mentioned that Amir Oram was the most
active member on the board in response to questions by
Mr. Marr. He was also the executive
secretary/treasurer; is that correct? I think you said
that earlier.
A. He was one of them, correct.
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Christina Lother, CSR #8624
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Q. Okay. And do you recall the testimony of
Jennifer Virabouth that she said she was never aware
that he ever reviewed the financial books and records of
the NMA? Do you recall that testimony?
A. Can you say what year she's referring to.
Q. She didn't specify. The question didn't
specify. Just did she ever see and review the books and
records.
A. Oh, I see.
Q. She said no. Do you want me to pull that up?
A. No, if that was her testimony --
Q. Okay.
A. -- that was her testimony.
Q. You said that you used your vacation time for
that $38,000 reimbursement, but isn't it true you don't
even know how many hours of vacation you were entitled
to?
A. At the time I know I had a lot of vacation
because I rarely ever took any vacation, but the
specific time, maybe I didn't have a --
Q. You don't --
A. -- exact answer. It's not that I didn't know,
I knew, but I didn't have an exact number because it was
a lot of it, because I rarely ever took a vacation.
(Attorneys confer.)
MR. LiMANDRI: It's a really long answer.
Forget that. Never mind. It's too long of an answer.
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Christina Lother, CSR #8624
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BY MR. LiMANDRI:
Q. But in any event, it is true you did not keep
track of your time, correct?
A. I said I rarely took -- I believe in my
deposition I said I rarely took vacation and I worked a
lot.
Q. Okay. In Exhibit 339, if you show that real
quick, it's the check for 38,000. And it simply says --
we've seen it before -- reimbursement.
So just to be clear you weren't being
reimbursed anything, correct? You were just being given
credit for vacation time, right?
MR. COUGHLIN: Misstates prior testimony,
Your Honor.
THE COURT: You can answer.
THE WITNESS: My understanding is the board
felt that my work, humanitarian work, helped the
association and helped the community outreach and the
standing, and so they felt that --
BY MR. LiMANDRI:
Q. So the answer to the question --
MR. COUGHLIN: He's not --
THE COURT: Let him finish, please. Go ahead.
THE WITNESS: Thank you, Your Honor.
They asked me to walk out, and I walked back
in. They said we're giving you $38,000 for your work,
to pay for whatever you're paying for, for what you're
doing. This is the value brought to the organization,
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Christina Lother, CSR #8624
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and they said they used Section Six of my contract to
exercise that right and I said thank you.
BY MR. LiMANDRI:
Q. Did you tell anybody it wasn't technically a
reimbursement or not?
No?
A. The reimbursement was because it was drawn on
Section Four of my personal --
Q. Okay.
A. -- expense account that was tracked in the
general ledger and it's in one of your exhibits.
Q. Let's talk about the statement you made that
you never made a misrepresentation, referring to the
board meeting minutes of May 25, 2011, I believe it's
Exhibit 300-002, is this where you say that you had
made -- can you help me with this -- right here
(indicating), right in the middle, enlarge that, please.
Mark -- no, that's not it. There was a
$300,000 figure we just looked at.
Right there.
Mark: We had higher taxes [sic] plus higher
income for May. We've done really well the last five
years. We have $300,000 in net income in 2010, which is
phenomenal.
We already looked at the Form 990 for 2010,
and as you will recall that the amount of money that it
shows the NMA lost that year was $274,826. Are you
going to tell me that the P&Ls are that far off to the
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Christina Lother, CSR #8624
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tune of 570 -- almost $575,000?
A. I would have to see the P&L for that they
reviewed at that meeting. I would have never made a
representation of any number if the board didn't have
the P&Ls in front of them and they could verify it.
It's a very smart board, and you don't tell them,
especially numbers, that's not accurate.
So the -- if you -- if you could pull out for
me by any chance the financials that were ratified at
that meeting, that could probably explain it, but keep
in mind that the P&Ls is what the board of directors
would ratify.
Q. Okay.
A. Not the 990.
Q. And then when it's talking about your bonus in
301-004, you said you were never present in the room
when the bonus was being discussed.
MR. COUGHLIN: Objection. Misstates
testimony, Your Honor.
BY MR. LiMANDRI:
Q. Is that true, they would normally ask you to
leave the room when your bonus was being discussed?
A. The cus -- the custom and practice was during
the moments where they talked about money or decisions
that have to do with me, they would ask me the leave the
room.
However, if it's a mandatory bonus, if it's
something that's already in my contract, there would be
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Christina Lother, CSR #8624
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a possibility that I would be there because it's just a
calculation as opposed to a decision.
Q. This is a -- should be a board meeting of
October 13, 2011.
MR. WILSON: No, this is 300. You probably
want 301.
MR. LiMANDRI: Oh, 301-004. I'm sorry.
(Attorneys confer.)
BY MR. LiMANDRI:
Q. Okay. Were you present -- oh, yeah, it's the
idea from Congress thing again. But do you recall they
were discussing calculating your bonus for 2010 and
they're using that $300,000 figure and they're basically
coming up with 28,000 -- 300,466, for $28,819?
A. I would have to see the P&L for the meeting,
but if you look at the top, so there's independent
expenditure that the board decided to do for those two
candidates, and what they did, they back -- it looks
like based on the minutes they backed that number out,
so -- and the P&L, based on the minutes --
Q. Let's look at --
A. Okay.
Q. Well, there was a bonus in 2011 of 28,000
plus. So if we look at the P&L for that year, it's what
exhibit?
MR. WILSON: 283, page 012.
BY MR. LiMANDRI:
Q. 283-012. Okay. And we're talking about 2010.
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Christina Lother, CSR #8624
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So although the Form 990 showed something like, what,
275,000 in losses, your P&L you're relying on somehow
shows a net of a hundred thousand 297. It doesn't show
$300,000, does it?
A. I don't know at the time what it showed to the
board, but I didn't prepare the P&Ls or the QuickBooks.
Also, the number was supposed to be 200,000, not
300,000. If you go back to the minutes, it shows that a
$100,000 from the IE wasn't accounted against the --
Q. Okay. So -- so it's 200,000. So it's a
$100,000 off the P&Ls and it's something like, I don't
know, 3 or 400,000 off the 990s. Is that what you're
telling me?
A. I mean, that's what it shows, but I --
Q. And you got a bonus --
MR. COUGHLIN: Your Honor, he hasn't answered
the question.
MR. LiMANDRI: Never mind. Thank you.
THE COURT: Did you finish your answer?
THE WITNESS: Well, I can't testify to
stuff -- okay. Every -- if you go back to the minutes
and you see what financials -- what financials are
ratified and if that report is indifferent than what was
shown to the board, I don't know.
BY MR. LiMANDRI:
Q. You testified --
A. It should not be.
Q. Okay. You testified that you don't recall who
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Christina Lother, CSR #8624
169
kept the books for the NMA, there were multiple
bookkeepers, sometimes temporary help, sometimes
permanent. Is that correct?
A. That is correct. In 2010, Mr. LiMandri, the
plaintiffs were on the board.
Q. Okay. And you had no person -- not in 2011
when you got your bonus.
You had no personal knowledge of whether the
NMA used an accrual basis or a cash basis of accounting;
isn't that true?
A. At the -- at the deposition, I think I said I
don't recall, but I think it was, based on all these
exhibits that I've seen over the last eight months, it
seems like they used accrual accounting with the P&L.
Q. And isn't it true -- again, this is all
deposition material I'm going to be going through for
the next few questions.
A. Okay.
Q. -- you had very little or zero input, your
quotes, in the process when bills that came in were
opened, reviewed, and a check written by a signer.
A. Me specifically, correct, other than my
specific charges.
Q. And you testified you could hire and fire the
employees?
A. If you could read me the full context to where
I said that because --
Q. Well, you said it over two pages, so let's
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Christina Lother, CSR #8624
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move on.
A. Okay.
Q. And you testified that the handwriting on the
American Express statements -- I think we saw the video
on this anyhow -- marking expense categories could have
been yours. Would you agree?
A. What I was referring to in the deposition when
that was asked is when I was going over my charges under
my -- my summary after it was already coded, because I
remember that part of the deposition where they're
asking -- asked me for a process and I said, well, the
mail comes in, comes through my desk and so on and so
forth --
Q. Let's look at Exhibit 600-003. You saw
this -- some of this with Mr. Georgis. We understood
this to say: Put under AMEX. Goes under my expense,
I'm not sure of the rest of this, but is this your
handwriting?
A. I can't tell right now exactly. It's not the
way I have been writing the last few years. I usually
do block --
Q. Let's go to -- put under AMEX my personal,
wouldn't that be you saying that? That wouldn't be
Marlo Georgis saying that, would it?
A. I can't read that.
Q. Put under AMEX my personal?
A. Well, I think David Rabban testified he reads
it as MA.
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Christina Lother, CSR #8624
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MR. MARR: Does the witness need to look at
that more clearly? Do you need to stand up and look at
it?
MR. LiMANDRI: I could share my copy of the
hard copy if it helps.
THE WITNESS: What year was this?
BY MR. LiMANDRI:
Q. These show 7-8-11, July 8, 2011.
A. So before Dany Shaba and before lay Shamu ^ .
Q. Yeah. This particular charge being notated as
June 21, that's the top, but this particular charge is
June 21, 2011.
A. It would be very rare, if at all.
Q. There you go. Let's look at the next page and
see if it helps, 600-004. Let's enlarge the first one.
Put under AMEX expense. I can't read that. It's
under --
A. None, looks like. It's under none?
Q. Does that look like your handwriting for mine?
A. No, I don't read that as saying mine.
Q. You don't recognize that whether that's your
handwriting?
A. No. I use usually block handwriting.
Q. Okay. Do you know who would be making these
entries at this time in 2011? Was Marlo working there?
A. Marlo was working there. He was working in
2010. But I would be speculating.
Q. Okay.
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Christina Lother, CSR #8624
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A. It could have been multiple people.
Q. Dany wasn't there, was he?
A. No. Dany started in 2013, I believe.
MR. LiMANDRI: Your Honor, I would like to ask
the witness since we're still having a problem
identifying whose handwriting is which, to do the same
thing that Mr. Georgis did, give us handwriting samples.
You can do that either on a break or something if you
think it would save time or -- can I give it to the
witness now?
MR. COUGHLIN: We can do it now.
THE COURT: Huh?
MR. COUGHLIN: We can do it now. It's fine.
THE COURT: Do it now? Okay.
BY MR. LiMANDRI:
Q. If you could just write to the right here,
Mr. Arabo, I should probably give you black. That's
blue. The black will copy better. I'm sorry. Is there
a black pen?
Got one better?
MR. COUGHLIN: Here, I've got one.
MR. LiMANDRI: Okay. Good. We'll use
Mr. Coughlin's. Thank you.
MR. COUGHLIN: Sure.
BY MR. LiMANDRI:
Q. It's a ball point. If you can just write in
your own handwriting, sir, please to the right of what's
depicted, I would appreciate it.
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Christina Lother, CSR #8624
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A. (Witness complies.)
MR. MARR: Your Honor, for the record, defense
counsel would like a copy of that again.
MR. LiMANDRI: Yes.
MR. MARR: If we could when we get to it.
THE COURT: You'll take care of that,
Mr. LiMandri?
MR. LiMANDRI: Yes, Your Honor.
THE COURT: Thank you.
MR. LiMANDRI: You're welcome.
BY MR. LiMANDRI:
Q. If you are able to write in the same style of
writing you would have written when you were doing these
entries, that would be helpful. Mr. Jonna points out he
thinks you testified you actually changed your style of
handwriting. Is that true? You went to block?
A. I usually -- what's that?
Q. You've changed your style of handwriting since
these entries would have been made?
A. No.
Q. Okay.
A. Well, no, I said that I usually write block.
Q. Is that something you've done for the past
five years?
A. At times, usually, that or cursive.
You know, you can use also -- there's my
contract. You can always pull up my employment
agreement, look at how I do cursive.
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Christina Lother, CSR #8624
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Q. I thought the writing on your employment
agreement was --
A. My signature, look at my signature.
(Attorneys confer.)
BY MR. LiMANDRI:
Q. You're done, sir?
A. Yes.
Q. Thank you.
(Attorneys confer.)
BY MR. LiMANDRI:
Q. You'll have a couple of example of
handwritings. I'd like you to please identify referring
to Exhibit 610-9 [sic]. Is this your handwriting, sir?
It says, Jenn, make sure we already paid this if we
didn't pay it, Mark.
Is that your handwriting?
A. It's hard to -- I think that would be Marlo at
the time. Can I see the full --
Q. Sure, if we have something more. I don't
know.
No, that's it. So you can't identify whether
this is you or not?
A. This does not look like my handwriting.
Q. Okay.
A. That's very messy.
MR. COUGHLIN: Misstates the test- -- I mean,
it misstates the document that clearly reads Mark, it
could be Marlo. Just for the record, just for the
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Christina Lother, CSR #8624
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transcript.
THE WITNESS: Well, if you could pull up my
employment agreement, you can see my cursive. That's
not my cursive.
BY MR. LiMANDRI:
Q. All we have is a signature.
A. Yeah, but --
Q. 335-006.
A. I'm sorry.
Q. This is what you're saying is your signature,
correct?
A. At that time, yeah.
Q. Okay. And then we have another document,
610-12.
Yeah.
Is this from you?
A. You just showed me that.
Q. Oh, I'm sorry. Let's see. Which one would
be --
MR. WILSON: At the top.
BY MR. LiMANDRI:
Q. Tell me if this is you: Wish you a very happy
birthday and many more years of health, happiness, and
peace. God bless -- may God bless you and your family,
Mark. Is that you?
A. At the time -- either that or I told someone
to write it for me, but --
(Attorneys confer.)
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BY MR. LiMANDRI:
Q. Pardon me? Is that you? You can't say --
A. If that's me I haven't written like that in a
long time because that's -- it says a message from me,
but --
MR. LiMANDRI: I'm going to ask the bailiff if
you would, I'm sorry, show this to the judge.
BY MR. LiMANDRI:
Q. Well, all of the writing we've asked is --
look at 610-009 -- we've asked for is in cursive and
what we got there is obviously all block print. Is this
one yours, Dear Crime Stoppers? It looks like it says,
thank you, Mark.
A. No, that's not mine.
Q. That's not yours either?
A. No.
Q. Okay. It says: Dear Crime Stoppers. We are
having tough times and would like to cut our sponsorship
to $400 per year so it matches our level of sponsorship
of SD Crime Stoppers. Please change contact info to me.
Thank you -- looks like Mark to me.
A. What year was it?
Q. Go to the top of the page, please. Top left.
It says bill to Mark Arabo. So can you tell me if
that's your handwriting or not?
A. I don't believe it is.
Q. I'm going to, sometime, we're not using court
time, we're going to ask you to rewrite this because
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Christina Lother, CSR #8624
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none of the handwriting that we have is in block print
like that.
A. I could -- my attorney has notes from all the
depositions, he could show you my -- my writing.
Q. Okay. Thank you. Let's see if we can get
that.
A. We have months of them.
Q. Let me finish with another section.
You were not asked about the NMA Education
Foundation. Does the NMA Education Foundation still
exist?
A. I checked on that and I guess the attorney
never closed it. At the time at my deposition, I -- I
said that it is closed. Later I -- I called and I
double-checked it, and if you have a question, I could
answer it.
Q. The question is: Does it still exist?
A. In my deposition, I remember saying that it's
closed, but from my understanding right now it's still
open.
Q. Okay. In any event, at the time of your
deposition you said it was a separate entity, separate
foundation, separate organization altogether with a
separate board; is that correct?
A. Correct.
Q. Okay. And you also said that $75,000 gift
from the NMA Education Foundation to the NMA itself was
for a sponsorship in the new NMA building; is that
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Christina Lother, CSR #8624
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right?
A. I did say that and I'd like to elaborate
because it was -- there's much more to that than that
deposition.
So one of the main things the association does
is community outreach, and so the reason why the -- in
my deposition I said it was transferred over because it
was one of the factors of driving -- it's
paraphrasing -- to purchasing the -- the building.
To elaborate on that, the main reason is
community -- okay. Five tiers. One of the tiers is
community outreach. So the community outreach was
basically the NMA Education Foundation funds were
used -- were used in -- was transferred to the NMA to
fund the community outreach aspects and so the NMA
became an agent of the NMA Education Foundation
furthering its mission goals and objectives. A good
example -- and if you had like to have an offer of proof
to show how those funds were used from our QuickBooks
with checks that fall right into the scope of the NMA
Education Foundation. So it was transferred over about
the time of the building but not for operation costs,
not to pay anyone's salary, not to buy the building. It
was done to be used for the community outreach aspect of
the Neighborhood Market Association.
Q. It wasn't use for scholarships, was it?
A. It was and let me explain and actually your
exhibit if you could pull it up I'll show you under the
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Christina Lother, CSR #8624
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Brad Fowler scholarship foundation that the NMA gave,
they gave on behalf of the NMA Education Foundation.
Also, the charities to SIMNSA, which was a golf charity
for -- also for scholarships.
So it was used for -- the NMA basically became
an agent of the NMA Education Foundation and that's what
the transfer was and they did it at the time of the
building because instead of using operating dollars for
community outreach, they used the grant from the NMA
Education Foundation.
Q. Are there any minutes of the NMA Education
Foundation that show this?
A. I don't know. I would have to check.
Q. I want to read from your deposition, page 120,
lines 7 through 13: And at the time it was the
foundation wanted to be one of the big sponsors for the
NMA building so was it transferred to or it was a
donation or gift to the Neighborhood Market Association
and that was the only way they were able to -- not the
only way but that was the driving factor in purchasing
the building and remodeling it to make sure that it was
habitable.
And I also want to display Exhibit 300-002 --
(Attorneys confer.)
BY MR. LiMANDRI:
Q. -- where it says Mark -- let's see. Mark:
It's tough getting a loan. We had 300,000 in profit
last year, including the money we spent in the IE. We
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Christina Lother, CSR #8624
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put 378,000 on the down payment of the new building with
the 7,000 mortgage. There is lots of upside with the
new building, tenants, starting demolition. There is
237,000 general fund, not including in the education
foundation, where we have 100,000. We can tap into
that, but we should not unless it's an emergency.
Do you recall making that statement in the
board meeting of October 13, 2011?
A. I think we also talked about this before and I
don't remember making them and I think it's out of
context. As I said before the minutes are not verbatim.
The education foundation, the purpose of it, the
transfer, was to fulfill and fund the community outreach
aspect of the Neighborhood Market Association.
Q. Okay.
A. And when I explained that in my deposition, we
talked about the building because when we were at the
building we were naming rooms and we named one of the
rooms that we were supposed to use for training and ABC
seminars and lead training, we named that room the NMA
Education Foundation room.
And we also had -- the NMA Education
Foundation was a sponsor in one of the year's banquets
to try to get more people to get aware of the
organization.
Q. Okay. In the current situation where Refined
Management is now running the NMA, they also share
offices with the NMA, do they not?
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Christina Lother, CSR #8624
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A. Right now -- I don't understand the question.
Can you --
Q. Does Refined Management basically operate out
of the same office space as the NMA?
A. The NMA -- Refined Management pays for the
office as one of the obligations from the contract, and
in Refined Management's office, the NMA headquarters is
there, and it's a sublease we do, and part of the
agreement with NMA is Refined Management has absolved --
not absolved -- has -- has all the liability and all the
operating expenses now falls on Refined Management so
that all the money still goes to NMA. All the income
still goes to NMA. But all the liabilities has been
transferred over to the Refined Management.
Q. You can listen carefully to the question. I
just asked you if you operated out of the same office
complex not the financial arrangements.
And in that same office complex is there not
also housed the Minority Humanitarian Foundation?
A. Minority Humanitarian Foundation also pays
rent. It's a sublease. Every organization pays their
share.
Q. And you run that organization as well?
A. No, the founder of the organization.
Q. Okay. And does Grassroots Resources operate
out of the same offices?
A. Grassroots Resources also pays the shared
rent. So each entity pays their share to the master
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Christina Lother, CSR #8624
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lease and they get that space that they paid for.
Q. Okay. I asked you some questions in your
deposition -- we're almost done with your deposition
questions -- about the NMA tax returns, and isn't it
true the reason the 2011 NMA 990 and the 2011 W-2 for
you don't match is because of an error by those who
are -- who prepared the document, either Considine &
Considine or the bookkeepers. Is that your testimony?
A. I remember one year, I believe it was 2011,
and I think Mr. Williams testified to that, where they
put officer wages -- under Mark Arabo, they put -- they
combined -- I believe his testimony was they combined my
salary and the other officer, which was Samantha
Dabbash.
Q. And you also testified the 2012 Form 990 and
the W-2s don't match either; is that correct?
A. I don't -- I don't -- if -- at the time of the
deposition, if they were to show me the documents and
Mr. Grissom probably asked do they match and I would say
"yes" or "no." If you can show me the documents now I
can tell you.
Q. We'll look at them in a minute.
A. Okay.
Q. Mr. Ballo made the statement in his
deposition: All finances of the NMA are audited and
reviewed by the NMA CPAs. That's not a correct
statement, is it?
A. That is not correct.
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Christina Lother, CSR #8624
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Q. You also testified that you're only supposed
to get a bonus when the NMA is making money. Do you
agree with that?
A. I agree that when the -- how they base the
bonus, the board decides not me. They get presented a
P&L and they -- they decide.
Q. Isn't it true that you believed -- Mr. Ballo
said he agreed with you -- that it was a good idea to
decrease the membership and raise dues to provide better
service in 2013?
A. That statement was made, but if I can give you
the full concept of the statement. The idea was what
vendors and suppliers want is for us to deliver
something as far as when we have members. So the idea
was 300 strong members as opposed to a thousand weak
members, as far as schematics, as far as displays,
because if you have 300 -- for example, 300 chain, like
a 7-Eleven, you have 300 7-Elevens, they could sell
Pepsi or Coke or Frito-Lay, we'll give you this position
in the store, you could be able to negotiate a greater
deal for the membership as opposed to having a thousand
members that you have no control over.
So the idea that the board had, and I agreed
with, was you want to have -- to be like a chain, so
that way if you talk to 7 Up and they want to sell their
new 7 Up, you could say I guarantee you 300 new
locations, and you could turn on like a flip of the
light switch, and you can get monies for the association
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Christina Lother, CSR #8624
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and you get money for the members. So that's what I
meant by that comment.
Q. All right. So that's Exhibit 310-003 and you
said it was the position the board had and you agreed
with it.
A. Uh-huh.
Q. Somewhere here. It says Mark: I don't
believe it will hurt the association at all. For
example, if we have 300 members at 500 a year and that
is the same membership revenue we are getting now. And
300 strong members is a lot better than 1,000 weak
members.
So that came from you, correct?
A. I -- yes, but it didn't encapsulate the entire
idea or what I said. Because if you look at revenue, if
you have 300 strong members -- what I mean by strong, I
explained this at the board meeting -- schematics,
displays, lighting, pricing -- you could leverage that
to talk to Coca-Cola and tell Coca-Cola I have 300
stores. The residual they're going to give the
association and rebates to the members is going to far
surpass the membership dues.
Q. Okay. If you can listen to the question. I
wasn't asking you to justify the statement. I just
wanted to know if you made it --
A. Yeah.
Q. -- because I'd like to finish it.
A. I believe I made that statement, correct.
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Christina Lother, CSR #8624
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Q. 310-002. The statement is made that people
complained of poor service. Do you see that? Problems
are not programs. Not enough business to their stores.
A. Can you highlight it?
Q. Yeah, we will. People complaining. Right
here. Bashar Ballo: People have complained of poor
service --
A. Okay.
Q. -- and many other things about the
association.
A. Can you read the line, two lines at the top of
that.
No, no, no, right above.
Q. Our current membership structure is not
sustainable.
A. No, sorry.
Q. We should look at changing it to become a
better association.
But in this time frame did Mr. Ballo make the
statement and did you agree with it that people
complained of poor service and many other things about
the association?
A. I -- I -- I can't tell you right now, but
that's what the minutes state, but can you read right
above because it shows the context of the conversation?
Q. No, we'll get to that later.
A. Okay. Because it's a very -- because the
title of the conversation gives you a context of what
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Christina Lother, CSR #8624
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they're speaking about, not just a line within the
conversation.
Q. Then were members also complaining that the
NMA was short of staff?
A. Again, if you could get the whole picture and
get -- look at the very top of that point and highlight
it --
Q. Yeah, that's fine. You go right into
executive chairman's report. Oh, 307-002 is what I was
looking at, 307-002. Executive chairman's report: Sold
building due to member complaints which included the
lack of services and constrained cash flow.
Was that something you remember being a reason
for selling the building?
A. I believe -- I think Amad Attisha testified to
that.
Q. Okay. Mr. Ballo said that he knew Cardenas
Consulting, but he did not know the names of their other
companies.
Do you recall that testimony or do you want me
to display that for you?
A. I don't know how -- in what context he was
asked, but that's his -- that's his testimony.
Q. Okay. But if he didn't know, do you think the
other board members knew the names of Mr. Cardenas's
other companies so when they read the financial
statements they knew where all the money was going?
A. Absolutely they knew. They signed every check
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Christina Lother, CSR #8624
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and it was all accounted for.
Q. Who signed? Not every board member?
A. Whoever was available from the board that
would sign it.
Q. Mr. Ballo said the only authorized check
signers were the chairman and the secretary/treasurer.
We was he misinformed?
A. No, but Mr. Ballo was explaining the process
that the NMA board custom and practices were set up.
They had the chairman and the treasurer and I believe
the vice chairman would be the signers elected from the
board, and in every board meeting there would be
financials that display every category where every penny
was spent.
Q. Do you recall Mr. Ballo testifying that he
supervised Dany Shaba by making sure that he was
visiting the members and he asked what he was doing and
Shaba also reported to the board. Do you recall that
testimony from Mr. Ballo?
A. Again, I don't at the top of my head, but if
you could read it, I'm sure -- it's his testimony.
Q. Okay. He also testified that Mr. Shaba seemed
responsible in how he performed his duties with the NMA.
Do you agree with that?
A. Do I agree that Bashar said that or do I agree
with the statement?
Q. Do you agree that Bashar said that being at
his deposition?
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Christina Lother, CSR #8624
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A. I don't remember the deposition, but if you're
telling me that's in the deposition, I take your word
for it.
Q. And Mr. Ballo also testified that Mr. -- he
never knew Mr. Shaba to lie. Do you recall that being
at the deposition?
A. Again, if it's in your deposition notes as his
testimony, it's his testimony.
Q. He also said that Arkan Somo never talked to
him about forming an organization to compete with the
NMA. Were you aware of that?
A. I think it was Amad Attisha's testimony that
Arkan talked to him, not Bashar's, two different board
members. I don't remember Bashar saying one thing or
the other.
Q. And Bashar testified there was no review and
approval by any independent person of the compensation
for your salary. Do you recall that and do you agree
with it?
A. I do not agree with it, and -- well, it
depends on a couple of things. It's a loaded question.
What is the context of the question that was asked?
Q. Let's see. 140, line 14 through 141, line 3
of Bashar Ballo. I just have a brief snippet here, so I
don't want to mislead you.
(Videotaped deposition played in open court;
not reported per California Rules of Court,
Rule 2.1040 (d).)
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Christina Lother, CSR #8624
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BY MR. LiMANDRI:
Q. I was reading a tax form. Do you remember
that?
A. Oh, you were reading him a tax form --
Q. Right.
A. -- and after he read the tax form, he said
that's what it shows right here so I agree.
Q. Yes, that's correct. Do you disagree?
A. What -- what's the question? Of an
independent -- what's your definition of an independent?
Q. Well, the way the IRS -- I'd have to find it
now. That was Exhibit 10 at the deposition, if you have
Mr. Ballo's deposition, but it was --
A. Are you asking if the board -- are you talking
about independent --
Q. Independent organization would have to review
and approve --
A. Oh, as far as an --
Q. Right.
A. -- accounting firm, independent review?
Q. Right.
A. No, the board never did that.
Q. Okay. Thank you.
A. Yes.
Q. I'm going to skip over some of these
questions.
Now, Mr. Attisha testified that your NMA
credit card was effectively your personal credit card.
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Christina Lother, CSR #8624
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Do you recall that testimony?
A. I do.
Q. So -- and you had this personal expense
account that you believed you could use for any purpose,
correct?
A. That is not correct. The NMA credit card was
one of the ways the custom and practices that the board
set up for me to draw upon my personal expense account.
Q. Okay.
A. So --
Q. Whatever that was, within the range, say, 25,
35,000, whatever it was, it's your testimony you could
use that for any personal reason, correct?
A. Based on my employment agreement and
conversations I've had over the last -- since 2010 to
now?
I'm confused. Is your question for my -- is
my personal expense account I could use however I want?
Q. Yeah, that's all.
A. Oh, yeah, it's my money.
Q. Right. And you knew that Dany Shaba had an
NMA credit card, right?
A. Yes, I did.
Q. So why did you expect him to pay cash and you
to reimburse him for cash when you had this personal
expense account? Why didn't you just have Dany Shaba
buy you personal items on the NMA card, which he was
doing, and just write that off as part of your personal
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Christina Lother, CSR #8624
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expense account? Why would you keep paying cash?
You -- you believed you had the right to use it and
presumably he could use it on your behalf.
MR. COUGHLIN: Objection. Compound. Which
question does he want --
THE COURT: Do you understand the question?
THE WITNESS: Kind of. What's the question?
BY MR. LiMANDRI:
Q. Why would you have Dany Shaba pay cash to buy
you personal items when you knew he had an NMA credit
card and you believed that you could use that NMA credit
card for your personal expenses?
A. Oh, okay. It's -- it would be very messy that
way. The personal expense account should only be used,
my understanding -- I mean, theoretically all the staff
could, but the tracking will be very difficult, even --
even harder, and that's the reason why we -- the board
had the custom and practices and the checks and
balances. I would use my credit card for my personal
expense account. I would never want Marlo -- Marlo
or -- okay.
Q. Go ahead.
A. When -- when Dany Shaba would buy stuff for me
as a friend --
Q. Right.
A. -- I'd pay in cash.
Q. Right.
A. I wouldn't want Dany Shaba to use the credit
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Christina Lother, CSR #8624
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card.
Q. Yes.
A. Is he able to do that, based under the thing
is that what you're saying?
Q. Yes, sure. Just take the receipt like you
would take your own and say here it is to the
bookkeeper, this gets charged against my personal
expense account. You could have easily done that,
right?
A. It's possible, yes.
Q. Okay. There's a couple of items, not many, I
just wanted to ask you about that you charged on your
personal expense account --
A. Okay.
Q. -- that were larger numbers, for example,
Exhibit 014-003. Can you help me here? Which one is
the CRS? Here?
A. CBR.
Q. CBR. So that is something, I assume --
A. Purely personal.
Q. Okay. What does that mean, expense account?
Is that you -- your initial M with a circle?
A. No. I mean, that's --
Q. Or Marlo?
A. -- presumed -- no, that's -- well, that's
coded under --
Q. But do you know whose writing that is?
A. Looks like --
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Christina Lother, CSR #8624
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Q. No?
A. No.
Q. Let's go to 038-007.
A. What year is that? Sorry. 2011?
Q. 211.
A. Yeah.
Q. Here's one from 2013.
A. Okay.
Q. 038-007. There's one that's only $91 if we
could find it. If you can help me, Dean.
MR. WILSON: Which one?
MR. LiMANDRI: This one, is this it?
Nordstrom's?
MR. WILSON: Yeah.
BY MR. LiMANDRI:
Q. If you can enlarge that. Men's fine
furnishing -- fragrance, fragrance. I'm sorry. I don't
know. Is that cologne or something? It says office
expense.
A. Under whose card is that, sir?
Q. Oh, golly. Well, Mark Arabo at the top.
A. No, no, no. Under whose card is that charge?
Q. Dean is going to have to --
MR. COUGHLIN: You can just scroll back on the
statement?
MR. LiMANDRI: Can you scroll up on this
exhibit until we get to where it gives the name?
It starts Mark Arabo. We'd have to go --
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Christina Lother, CSR #8624
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that's page 003, and I'm asking you for page 007. Is
there any other name --
MR. WILSON: Yeah, the other ones don't start
until 8. Dany's starts at the top of 8.
MR. LiMANDRI: 8. Is it -- oh, I see. So
this is all Mark. The next page 8 is Dany Shaba,
correct?
THE WITNESS: Okay.
BY MR. LiMANDRI:
Q. Yeah. All right. So do you know why that
expense, this one example, was coded as office expense
for men's fine fragrance at Nordstrom's?
A. It could have been cologne for the office. We
had many items in the office. We had makeup, we had
cologne, we had food.
Q. An organization that's losing hundreds of
thousands of dollars, do you think it's prudent business
expense to have cologne and makeup and around-the-clock
food?
A. Okay. The food decision was the board's
decision. And actually we saved money by it because we
got a lot of volunteers to do internship hours for the
food.
The makeup was because of a lot of interviews
we were doing with different news stations. So we had
to have makeup.
The cologne, I mean, you don't see hundreds of
bottles of cologne, it's one bottle of cologne, would
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Christina Lother, CSR #8624
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have been so the board comes, they have cologne. It was
like -- think of --
Q. You don't have a locker room there, do you? I
mean, I've seen --
A. No, that's a good example. No, it was -- it's
not locker room but we had a lot of amenities for the
staff.
Q. You're sure that wasn't brought to your house
and just miscoded?
A. There's a possibility, but I don't --
Q. Let's look at Exhibit 271-009, a charge of
$3,615. Is this the right one?
A. That's the Black Friday one, right, that you
guys showed with Dany?
Q. 3615.60. Yeah, Dany Shaba produced this from
Best Buy and --
A. Right.
Q. -- it said that -- I believe he showed a
picture Happy Hanukkah or something like that.
A. Uh-huh.
Q. Was this, in fact, brought to your house or
brought to the office?
A. Great question, and I'm glad you brought it
up.
Q. Pardon me?
A. Let me answer your question.
Q. Okay.
A. This -- the -- Marlo and Dany would do
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Christina Lother, CSR #8624
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shopping on Black Friday. We'd have raffle prizes for
golf tournaments, trade shows, and so on and so forth.
He texted me or called me that day and he said, Mark,
there's a great deal on iPads or laptops. And I also
bought it, but this receipt was for -- the 3,600 was for
the Ralph. It wasn't for me personally. So that
date -- does that make sense? He went --
Q. Yeah.
A. He went to Black Friday and he called me and
said there's a great deal. Do you want anything for you
personally? I said, yeah, sure, get me this and that.
He goes, I'll buy a bunch of stuff for the raffle for
NMA.
Q. Was one also bought for you personally?
A. Not on the NMA card -- well, I don't know what
Dany did, but I know what he bought for me I paid him
for it.
Q. You paid him $3,615 cash?
A. No. I'm trying to explain that to you. This
stuff that he bought was for the raffle, raffle items we
did, and there are exhibits of other stuff, if you want
us to enter it, Sean has them, of raffle items we used
to give out to membership when we do programs. It was
not uncommon to buy stuff on Black Friday. It was
actually very common. And we used to hold it in the
office and give it to raffles for different items and so
on and so forth. The stuff he bought for me was around
800 or $900.
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Q. Okay. Well, what was the item that -- where
it said Happy Hanukkah to your wife? Do you recall
that?
A. Well, he texted Happy Hanukkah to my wife, and
if you could bring up the -- bring up the text message,
we'll see it.
Q. I'm just asking you -- I don't have the
number -- I would, honestly, but he would have to find
it, but was that a personal item or not?
A. That was an item that I paid for that he
called me and said there's -- I'm buying stuff for the
NMA for a raffle.
Q. Okay. How much did you pay for that item?
A. I don't remember. I think I gave him, like,
maybe a thousand dollars or 1,200.
Q. You gave him a thousand or $1,200 cash?
A. Yeah.
Q. You just had that on you?
A. I mean, I -- yeah.
Q. Okay. Okay. We're getting -- we're making
progress, believe it or not.
A lot of these questions I've asked, just if
I'm taking a moment, I'm skipping over questions.
A. Okay.
Q. Okay. The same three meetings they had on
October 2, 2014, after you were awarded the 210,000 and
then after you were awarded the 38,000 in the second
meeting, it was in the third meeting where you made the
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Christina Lother, CSR #8624
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statement that the board had -- or excuse me -- the NMA
had been in a survival mode for the past four years. Do
you recall that?
A. I recall that I made that over many meetings
over many times prior to October 2nd, and the agenda was
giving to the board members for them to see along with
the financials with a CPA present.
Q. Yeah, but the minutes of that meeting reflect
that you did not make the statement the NMA had been in
a survival mode until the third meeting in that day
after you had already been given 210,000 at the first
meeting and 38,000 at the second meeting.
Do you believe the entire board knew that it
had been in a survival mode before it had awarded you
that 248,000 in the first two meetings before that
statement was made on the record by you in the third
meeting?
A. Absolutely, and I'll explain to you why.
Q. You don't need to. Thank you. We want to get
through this.
MR. COUGHLIN: It's all right.
THE WITNESS: Absolutely they knew.
BY MR. LiMANDRI:
Q. Thank you, sir.
A. You're welcome.
Q. Did you inform the board that before you
accepted that bonus and that reimbursement that the
board had -- NMA had lost over 250,000 the year before?
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Christina Lother, CSR #8624
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A. Our CPA was there, and the board was fully
aware of the condition of the Neighborhood Market
Association when the board decided unilaterally to ask
me to leave the room and come back --
Q. Okay.
A. -- and grant me whatever they granted.
Q. It's your testimony, I take it, that the board
would have known that if they had not sold its building,
that it would have had operational losses of over
$800,000 that same year that it awarded you the 248,000;
is that right?
A. I think the executive chairman testified to
that, as long as -- as long as -- also Sam Oram did as
well.
Q. Is it true that after December 2013, that
there was no further coding on the AMEX statements, at
least none on the copies that we've received?
A. I can't tell you one way or another.
MR. COUGHLIN: Misstates the evidence,
Your Honor.
MR. LiMANDRI: Your Honor, I'm making a
representation I've been told the copies we have just
have -- after 2013 are not coded but if counsel would be
good enough on redirect to show us those, I'd be happy
to stand corrected.
MR. COUGHLIN: Well, I don't know. I think
there's statements in evidence in 2014 where there's
coding.
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Christina Lother, CSR #8624
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MR. LiMANDRI: Yeah, can I see them?
(Attorneys confer.)
BY MR. LiMANDRI:
Q. Let's look at 46-005?
Okay. 46-005.
Okay. There's one, two, three, four codes
here, but none after that on this page. Any following
pages on this? 006? No. No coding here.
Is there another page? No coding here. Do
you mean why there is only coding on the first three
items? On this statement?
A. No idea. It was accounted in QuickBooks so it
should have been coded.
(Attorneys confer.)
BY MR. LiMANDRI:
Q. Well, we'll go on to the next page if you want
to show. Go ahead. The next page. Next page. Go to
047. Next statement. Go ahead. Next page. Next page.
No coding.
Can you explain why there's no coding on these
statements in 2014?
No? You don't know?
Let's go 048.
A. These records -- did you get them from the NMA
or from American Express? American Express or the NMA?
Q. My understanding is they all came from the
NMA.
MR. LAHIRI: There's a Bates stamp number at
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Christina Lother, CSR #8624
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the bottom --
MR. WILSON: Your Honor, I put the Bates stamp
on there just to keep track.
BY MR. LiMANDRI:
Q. If the NMA did --
MR. LAHIRI: Did you remove the NMA Bates
stamp number?
MR. WILSON: These were Bates stamped with
digits but no letters, and so I put the A-M-E-X in front
of the digits that were there just to keep track. They
did not come with letters to differentiate them from the
other documents that were produced, but they came from
the NMA because they had those annotations.
MR. LiMANDRI: Well, certainly the first one
we looked at had three annotations on it.
MR. WILSON: They were all in a single file.
They were out of order. I pulled them all out and put
them together by month and then I added the A-M-E-X.
BY MR. LiMANDRI:
Q. So do you have any explanation for why none of
these statements, assuming they came from the NMA, as
has been represented by Mr. Wilson, have no coding on
it?
A. No. He represents those are the ones he got
from the NMA?
Q. Yes.
A. No.
Q. Okay.
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Christina Lother, CSR #8624
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A. Are you sure that's not from AMEX? That's
from the NMA?
Q. I'm told that they are not.
A. Okay.
Q. Okay. A few more questions.
A. Okay.
Q. Did you ever inform members that they could
not deduct all of their dues because it would be under
political activity that the NMA was doing through Jesus
Cardenas?
A. On the member -- yes. On the membership
application. On the membership application, it says in
bold print PAC dues are not tax deductible. That's the
custom and practices of the NMA board.
Also, when Mr. Williams e-mailed me after
Refined Management, we directed one of the staff to
write a letter to the members explaining it.
Q. Okay.
A. We could give it to you --
Q. No.
A. -- if you would like to add it today as an
exhibit.
Q. That would be 2015. I'm talking about NMA
informing members not as to the PAC but as to their
regular dues to join the NMA that they could not deduct
all of their dues. Were they ever sent a letter to that
effect prior to Refined Management sending it?
A. Regarding the proxy tax, is that your
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Christina Lother, CSR #8624
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question?
Q. Yes.
A. Yeah, I answered that question. Regarding the
proxy tax, once Ryan Williams informed me, we asked
someone to write a letter to the members explaining
that, and on the application -- I don't know if it
was -- it's an exhibit or not -- it says very clearly on
there, PAC dues are not tax deductible.
Q. Let's look at Exhibit 393.
Okay. This is November 16, 2015.
A. Uh-huh.
Q. It says: We need to talk about the lobbying
expenses when you have a moment. Unless NMA is sending
out the dues deductibility notices to members regarding
their monthly dues, the lobbying expenses could be
taxable to the NMA.
Did a letter go out regarding the NMA's
monthly dues to the members in or about this time frame
of November 2015?
A. So that's what I'm trying to explain to you.
It's annual dues, and once I had received that, we did
send a letter out.
Q. Do you have a copy of that?
A. I believe we can get it from NMA. They
could -- they could provide it as an exhibit in the --
in the trial. Once we're told -- once I'm told
something about some action, we -- I take it very
seriously.
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Christina Lother, CSR #8624
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Q. All right. All right. There's two other
memos, Exhibit 394. You say once you're told, this goes
out -- this is now a later memo from Ryan Williams.
Here is the information regarding IRS rules on lobbying
expenses. Any payments made to the PAC are not
deductible. I did see a check written to California --
let me know what you think.
Had the letter already gone out before you
received this memo?
A. I don't remember. How long was it between the
two e-mails? Can you tell me?
Q. Okay. How about 397? I'm told that was about
the same time. 397 is a year later.
One thing is also -- one thing also you need
to send out a letter to your members/vendors telling
them that their dues are nondeductible.
So did a letter go out between November 2015
and November 2016 regarding this issue?
A. I believe we sent a letter out regarding the
PAC contribution once I received the e-mail from Ryan
Williams about that 20 --
Q. Do you know why this is --
A. -- this one 2016 -- 20 -- the 2015 --
Q. Okay. Do you know -- do you know why that --
A. I'm sorry.
Q. -- has not been produced?
MR. COUGHLIN: Your Honor, I know why, because
the whole thing about the dues statements came up by
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Christina Lother, CSR #8624
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them after the close of discovery. So --
MR. LiMANDRI: Well, it was certainly in
evidence before trial, and they could have included it
on their exhibit list.
All right. Let's move on.
Williams was also asked about it at his
deposition and at trial and he could not answer the
question.
BY MR. LiMANDRI:
Q. There was also Exhibit 356 and also
Exhibit 521. 356, the top check, check to Nathan
Fletcher for a $100,000, October 21, 2013, in the year
the NMA lost 251 -- or over $250,000. What -- I do not
see anywhere in the minutes that this was approved by
the board before the check was issued.
A. It was absolutely approved by the board.
Q. Do you know why it's not in the minutes?
A. Again, I don't know what requests you had to
the Neighborhood Market Association --
Q. For all the minutes.
A. -- but -- every exhibit you showed me was
executive board. But this was approved. The $100,000
contribution to Nathan Fletcher was approved.
Q. Okay. Did the board also approve and advance
the pledge of a $100,000 to the organization founded by
Amir Oram's son?
A. Yes, for the Chaldean Chamber of Commerce,
Chaldean --
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Christina Lother, CSR #8624
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Q. Right, that's not the minutes --
A. -- of California?
Q. -- was it?
A. I've been telling you there's San Diego
minutes and there's executive minutes.
Q. The San Diego minutes have never been
produced, though, have they?
A. Mr. LiMandri, I have my own -- NMA is a
different party than me. You never -- I don't have the
NMA minutes.
Q. Nash Damman, when he was executive secretary,
he was never asked to sign any checks on behalf of the
NMA, was he?
A. He was never asked, correct.
Q. And even though Nash Damman was the executive
secretary/treasurer of the NMA state board, Amir Oram
was actually signing NMA checks, correct?
A. There was two San Diego -- there was two
treasurers of the association at all times. There's the
local one and a state one. Nashat Damman was never that
active in the association. You could see that through
the minutes. Amir Oram was very active. So whoever the
association could get ahold of at the time that was a
board member would look at everything and sign it.
Q. Amir Oram testified in his deposition in
Arabic or Chaldean because he said English is not his
first language. You're aware of that fact, correct?
A. English is not his first language. He knows
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Christina Lother, CSR #8624
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English, but he doesn't know it that well because of the
court proceedings, and he's very -- he's a very good
numbers guy, but he's always -- he's very, just in
general, he's an old -- he's -- he gets nervous very
easily. So I -- from my understanding he felt more
comfortable with a translator.
Q. Okay.
THE COURT: Can I ask you a question?
THE WITNESS: Yeah.
THE COURT: Are there two different
associations with the same name, a local one and a
statewide one?
THE WITNESS: Oh, no, there's one association,
but there's different boards, and there's overlap in
responsibilities from the different boards. So
there's --
THE COURT: Who has the bank account?
THE WITNESS: The -- the same organization,
but there's a local board that makes a decision and the
state board that makes decisions. But it's the same
organization.
MR. LiMANDRI: My understanding from the
testimony, Your Honor, the deposition where I was very
confused was eventually there's only one set of books.
They apparently have two boards, a state board and a
local board, and the local board apparently can meet
more frequently than the state board. The state board
is supposed to meet three times a year. And in the
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Christina Lother, CSR #8624
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bylaws, they actually split out two different
treasurers, but the executive secretary/treasurer is
responsible for the state board, and they're the ones
who have the money and have the books. There's no
separate books.
THE WITNESS: No, no, no. That's not true.
MR. LiMANDRI: Well, we can --
THE WITNESS: Mr. LiMandri, I'm telling you
custom and practices of the Neighborhood Market
Association.
MR. MARR: Respond to the judge, Mark. He's
asked you a question.
THE WITNESS: I'm sorry.
THE COURT: Tell me how it works.
THE WITNESS: Okay. There's two treasurers,
there's two chairmans, there's two vice chairmans, and
they have overlapping responsibilities. Everything the
local chapter does at times goes to the state board, the
San Diego board also acts on San Diego issues. So, for
example, Nathan Fletcher is a San Diego issue. The
San Diego board would rule on that. That's how it was
set up. But it's the same account, same organization.
But it was split up.
So they have in the bylaws, like a treasurer
for San Diego district and a treasurer for the state;
chairman for the local, chairman for the state; vice
chairman for local, vice chairman for state.
THE COURT: And these are different people?
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Christina Lother, CSR #8624
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THE WITNESS: Different people.
THE COURT: So does one association know what
the other one is doing --
THE WITNESS: Yeah.
THE COURT: -- when somebody writes a check?
THE WITNESS: Oh, yeah, because it's
overlapping so whatever -- it's a great question. So
the financials would always go to the executive board,
and all the information goes to the executive board, but
also the local board, so 50 percent of the executive
board, the big board, 50 percent of it is made of the
San Diego board. So it overlaps, so it's the same --
it's the same people from the San Diego board on
executive board, but the executive board has also
representation from Arizona, Nevada, Sacramento, Fresno,
and has statewide suppliers. So it's -- it's the same
people but it's also different people.
So San Diego -- so 50 percent of the executive
board would always know what the San Diego board is
doing because they sit on that board.
Does that make sense?
THE COURT: Sort of.
THE WITNESS: Okay. Well, I can explain.
Okay. The San Diego board has 12 retailers and six
suppliers. Out of 12 retailers, the San Diego board
elects 10 people to the big board as executive board.
So every decision that the San Diego board does by
default, because it's the same people, 10 of them it's
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Christina Lother, CSR #8624
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the same people, the executive board knows.
THE COURT: Well, we're at the end of the day.
THE WITNESS: So I'm sorry, Your Honor.
THE COURT: Let's start again in the morning.
MR. MARR: Your Honor, I just wanted to
disclose quickly, as a matter of housekeeping, just --
and we were talking with your clerk. We've only got one
expert because we thought the other two experts were
going to be next week. That is Carol Schaner. I don't
know that we're going to have a whole day. I realize
Mr. LiMandri is going to continue on cross. We've got
redirect, but we'll probably not have witnesses to go
the full day.
THE COURT: Tomorrow, you're talking about?
MR. COUGHLIN: Tomorrow.
THE COURT: Okay.
MR. MARR: Yes. So respectfully I'm
anticipating that -- hopefully we're going to do the
remaining two experts, who are experts, are going to do
on the Tuesday the 14th if my eyes here --
THE COURT: Yeah.
MR. MARR: And then we would probably be
attempting to do closing arguments perhaps the afternoon
of the 14th and into the 15th. We're mercifully praying
for all of us that we don't have to go into the 16th.
But that's kind of the schedule.
THE COURT: Okay.
MR. LiMANDRI: That's fine, Your Honor.
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Christina Lother, CSR #8624
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Your Honor, I have to leave for San Francisco to argue
before the Ninth Circuit on the 15th. So if we can get
done earlier that day -- I mean, the Friday the 16th,
I'm going to argue, but the 15th I have to leave for
San Francisco. I was hoping that we won't be late on
the 15th.
THE COURT: Well, we'll see where we are when
we get there.
MR. MARR: We'll certainly accommodate
counsel's schedule, Your Honor, as needed.
MR. LiMANDRI: We should be done by then.
MR. MARR: I think he'll probably want to go
anyway and just let us finish.
THE COURT: All right. I'll see you in the
morning.
MR. LiMANDRI: Thank you, Your Honor.
MR. COUGHLIN: Thank you, Your Honor.
(Proceedings adjourned at 4:33 p.m.)
---oOo---
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