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1 2 -----------------------------------X 3 In the Matter of 4 The Trusteeship Proceeding 6 Docket Number 03-21T 7 -----------------------------------X 8 11 December 9, 2003 13 14 15 B e f o r e: 16 PETER F. VAIRA, ESQ. 19 INDEPENDENT HEARING OFFICER. 20 21 22 23 24 25
1 A P P E A R A N C E S: 2 Messrs. THOMAS & ASSOCIATES 6 By: ROBERT M. THOMAS, JR., Esq., of Counsel 7 10 BY: MATTHIAS A. LYDON, Esq., of Counsel 12 Messrs. FARACI & FARACI 15 BY: PETER S. FARACI, Esq., of Counsel 16 17 PRESENT: 18 KATHLEEN M. NAGLE, Esq., Messrs. Vaira & Riley 19 20 21 22 23 24 25
1 THE INDEPENDENT HEARING OFFICER: Ladies and 2 gentlemen, let's go on the record. I think Mr. Lydon-- 3 MR. LYDON: We're ready to proceed. The only 4 thing we would just comment on is the fact that we're 5 starting a bit late, would ask for a little bit of 6 tolerance in the way we proceed this morning. Mr. 7 Faraci, who was with us, had to depart. He was 8 intending to put on and had prepared to put on two 9 witnesses today, both Mr. Lamont and Mr. DeBofsky. And 10 he was called to the hospital. His father was taken by 11 ambulance to the hospital. He can't be here. I assume 12 we're going to be able to move through this somewhat 13 easily. 14 And pursuant to a discussion that we had off 15 the record just a short time ago, Mr. Thomas and you, 16 Mr. Hearing Officer, and me, it's agreed that there's 17 going to be legal briefing on these ERISA issues. And 18 in that vein I'm anticipating Mr. DeBofsky's testimony 19 will be abbreviated. 20 THE INDEPENDENT HEARING OFFICER: We will 21 work around it. You move that issue. I was going to, 22 at the end of the day, say, "Gentlemen, I think there's 23 some legal issues that I'm going to need some guidance 24 on." The last witness yesterday talked about raising 25 some issues in 501(a) and a number of these, which were
1 more than apparent from the beginning of this hearing, 2 but they are not. And in fact if it had not occurred, 3 I would still probably have stopped and asked for some 4 additional guidance. 5 I noticed yesterday, and let me put this on 6 the record, that the Union, the Local 1001, had a large 7 amount of support. A number of at least 125 of its 8 persons -- members came here yesterday. They were here 9 and they were here all day in active support. And 10 because of the crowded situation I talked to the 11 officers this morning and said they cut it down. So 12 it's a little bit more -- a little easier. You 13 mentioned yesterday -- there was a very large number of 14 members here and who spoke out and -- 15 MR. LYDON: In fact I believe many of them 16 had to sign in. Wasn't there a sign-in sheet? 17 THE INDEPENDENT HEARING OFFICER: Yeah. So 18 anyway, I wanted to bring that to your attention. And 19 so we'll move on this morning. 20 All right. Mr. Faraci was here yesterday, 21 the father. 22 MR. LYDON: He was. 23 THE INDEPENDENT HEARING OFFICER: He's been 24 here observing a number of times. He looked okay, but 25 you never know.
1 MR. LYDON: Well, he was taken by ambulance I 2 guess this morning to the hospital. 3 THE INDEPENDENT HEARING OFFICER: Okay. Well 4 let's begin. 5 MR. MENDENHALL: At this time, Mr. Vaira, we 6 will call James Lamont. 7 THE INDEPENDENT HEARING OFFICER: Mr. Lamont, 8 come on up. 9 The young lady will swear you in. 10 (Witness duly sworn.) 11 JAMES LAMONT, 12 called as a witness herein, having first been duly 13 sworn, was examined and testified as follows: 14 EXAMINATION 15 BY 16 MR. MENDENHALL: 17 Q. Good morning, Mr. Lamont. My name is Sam 18 Mendenhall. We met briefly the first time this 19 morning; am I correct? 20 A. Yes. 21 Q. Can you please state your full name and spell 22 your last name for the benefit of the court reporter? 23 A. James Lamont, L-a-m-o-n-t. 24 Q. And Mr. Lamont, how are you currently 25 employed?
1 A. I'm employed with Caliber CPA Group. 2 Q. And are you an accountant by trade? 3 A. Yes. 4 Q. And can you tell us briefly your educational 5 background. 6 A. I have a Bachelor of Science in Business from 7 Eastern Illinois University with a major in Accounting. 8 Q. And Mr. Lamont, how long have you been with 9 Caliber? 10 A. Caliber CPA Group just started in January of 11 this year. 12 Q. And can you just briefly walk us through your 13 employment history. Let's start with Caliber and 14 working backwards, if you could, up until -- what year 15 did you finish at Eastern Illinois? 16 A. 1975. 17 Q. From Caliber back to 1975. 18 A. Well before Caliber I was with Thomas Havey, 19 LLP for 15 years. 20 Q. And what would be the time -- can you give us 21 the dates? 22 A. Would have been 1988 through 2002. Two years 23 prior to that I worked construction, and then for 24 almost nine years I was employed with Allis Chalmers 25 Corporation, A-l-l-i-s, C-h-a-l-m-e-r-s.
1 Q. And Mr. Lamont, can you briefly describe for 2 us the type of work you perform at Caliber? 3 A. Currently I'm a senior manager in charge of 4 their Payroll Audit Department. 5 Q. And can you briefly describe for us the type 6 of work you performed at Thomas Havey. 7 A. It would have been the same function, 8 although when I started at Thomas Havey I actually 9 performed payroll audits and worked my way up to a 10 supervisor and then to manager and then senior manager. 11 Q. And during your time at Thomas Havey, did you 12 have an opportunity to perform work for Local 1001. 13 A. I did not actually perform any work for 1001. 14 All I did was perform payroll audits for Thomas Havey. 15 Q. Can you just explain what you mean by that? 16 It sounds like Thomas Havey was retained by the Local 17 -- strike that. 18 Thomas Havey was retained by some entity that 19 asked you to perform an audit of the Local? 20 A. We were one of three accounting firms 21 employed by the Fund to perform payroll audits. 22 Q. When you say "Fund", what Fund are you in 23 reference to? 24 A. It would have been Health and Welfare, 25 Pension, I believe the dues were audited, and then I
1 think there was a Training Fund audited also. 2 Q. So Thomas Havey was in fact working for the 3 Pension Fund and the Health and Welfare Fund. 4 A. Yes. 5 Q. So Local 1001 has never been your client in 6 that regard. 7 A. Not me personally, no, although they were a 8 client of Thomas Havey. 9 Q. And Mr. Lamont, turning now to the audit that 10 was performed of Local 1001, did that occur in or 11 around 1998 to the best of your recollection? 12 A. I believe it was in the fall of 1998, yes. 13 Q. And can you just walk us through that process 14 briefly. 15 A. Well I did not actually perform the payroll 16 audit itself. That was performed by Jim Kemperas of 17 our firm. 18 Q. What was that name again? 19 A. Jim Kemperas, K-e-m-p-e-r-a-s. 20 Q. And did anyone else at Thomas Havey assist 21 Mr. Kemperas. 22 A. In the actual audit itself he might have 23 talked to the partner in charge or -- which would have 24 been Donna Hubert, and he also might have talked to Joe 25 Thierman who was the manager, I believe, that oversaw
1 that account. 2 Q. What role, if any, did you have in connection 3 with the payroll audit of Local 1001? Any supervisory 4 role or anything? 5 A. The audit would have been reviewed. It would 6 have had a technical review done by Bill Holland who 7 was a partner in the firm, and then I did a quality 8 review after that. 9 Q. And Mr. Lamont, after this audit was 10 completed in the fall of 1998, did there come an 11 occasion where Mr. James Jorgensen from the Fund 12 contacted you regarding this audit? 13 A. I received a call from Jim Jorgensen, the 14 Fund Administrator, and Pete Dowd, the attorney, in 15 regards to requesting some additional information that 16 they wanted in regards to the audits of several of the 17 Local Unions. 18 Q. At this time, Mr. Lamont, I would like to 19 direct your attention to the volume of exhibits to your 20 right and ask that you locate Local 1001 Exhibit 34. 21 A. Okay. 22 Q. Will you please take a moment to review that 23 and let me know when you're done. 24 A. Okay. 25 Q. And Mr. Lamont, have you seen this document
1 before? 2 A. Yes. 3 Q. And is this a document you prepared? 4 A. Yes, it is. 5 Q. And is this the document -- does this 6 document reference the phone conversation you just told 7 us about? 8 A. Yes, it does. 9 Q. Can you please tell us what this document is? 10 A. It's just an internal memo that I prepared 11 after the phone call just to remind myself of what took 12 place during the phone call. 13 Q. And is that your standard custom and practice 14 sometimes -- to sometimes prepare memos to remind 15 yourself? 16 A. I like to think it is, but it doesn't always 17 happen, no. 18 Q. Understandable. 19 And outside of this memo, Exhibit 34, I 20 believe you stated you had an independent recollection 21 of the phone call. 22 A. Briefly, yes. 23 THE INDEPENDENT HEARING OFFICER: You may 24 read this if you want. 25 MR. MENDENHALL: Okay. But I think it's very
1 brief. And thank you, Mr. Vaira, but just can you 2 briefly tell us what you do recall about the phone 3 conversation. Then also as Mr. Vaira stated, if the 4 memo helps to refresh your recollection, please feel 5 free to add in that regard as well. 6 THE WITNESS: I think the memo pretty much 7 states what I recall from the conversation. It wasn't 8 very long. 9 BY MR. MENDENHALL: 10 Q. Did they explain to you why they were 11 requesting you to supply them with information on any 12 employee of the Local Union office that was not 13 contributing into the Funds for all hours worked? 14 A. I don't recall exactly. I think there was 15 some concern that there might have been contributions 16 made below the actual hours that people were working. 17 Q. And Mr. Lamont, what position did Mr. 18 Jorgensen hold with the Fund in 1999? 19 A. I would believe it would be the Fund 20 Administrator at that time. 21 Q. And who was Mr. Peter Dowd? 22 A. My understanding of that was the District 23 Council was put in a Trusteeship and the firm of Robert 24 Bloch and Peter Dowd were the Trustees of the District 25 Council. And that's my recollection of his duties at
1 that time. 2 Q. And was it common for either of them or both 3 of them to call you concerning issues? 4 A. It wasn't uncommon. I mean I did receive -- 5 when there was questions about certain things, they 6 contacted me. 7 Q. And did either -- and did these gentlemen 8 contact you or did you initiate the phone call? 9 A. I'm sure they would have contacted me. 10 Q. Mr. Lamont, I now would like to direct your 11 attention to Exhibit 35. 12 A. Okay. 13 Q. Will you please take a moment to review this 14 document and let me know when you're done. 15 A. Okay. 16 Q. And have you seen this document before? 17 A. Yes, I have. 18 Q. And did you see it on or around April 26th, 19 1999? 20 A. Yes. 21 Q. And can you please tell us what it is. 22 A. Well when I had the conversation with them I 23 requested that they send me something in writing so 24 that we would have a clear definition of exactly what 25 it is that they wanted, and that's what this letter
1 does. It relates to the type of information that they 2 were looking for. 3 Q. So this was essentially a follow-up to the 4 April 23rd, 1999 phone conversation. 5 A. Yes. 6 Q. And at that time did they tell you why they 7 wanted this specific information? 8 A. Not that I recall. Again, no, I think it 9 probably would have been in reference to the fact that 10 there were some concerns that contributions were making 11 under the required levels. 12 Q. Did they request -- by what date did they 13 request this information be sent to them by. 14 A. They had a meeting on May 3rd. 15 Q. So they needed the information prior to that 16 date. 17 A. That's my recollection, yes. 18 Q. And did you ultimately provide them the 19 information responsive to this request made in Exhibit 20 35. 21 A. Yes. A report and a letter was prepared, 22 yes. 23 Q. And Mr. Lamont, I direct your attention to 24 Exhibit 36. Will you please take a minute to review 25 this exhibit and let me know when you're done.
1 A. Okay. 2 Q. And have you seen this document before? 3 A. Yes. 4 Q. And is this a document that you prepared on 5 or around April 30th, 1999. 6 A. Yes. 7 Q. And that would include the attachments to it 8 as well, sir? 9 A. Yes. 10 Q. And can you please tell us what Exhibit 36 11 is. 12 A. The cover letter itself, and then the reports 13 are the -- a listing of the people that worked in the 14 various unions that they requested, and to the best of 15 our ability the hours that they worked based on the 16 wages that we saw. 17 Q. And Mr. Lamont, and you sent this letter out 18 to Mr. Jorgensen at that time; am I correct? 19 A. Yes. 20 Q. And was this letter ever returned to you by 21 the U.S. Postal Service? 22 A. Not to my knowledge, no. 23 Q. Was this letter ever returned to you by any 24 source? 25 A. Again, not to my knowledge, no.
1 Q. Did Mr. Jorgensen ever call you to say that 2 he did not receive a response to his April 26th, 1999 3 letter. 4 A. Not that I recall, no. 5 Q. Did Mr. Jorgensen ever write to you to tell 6 you that he did not receive a response to his April 7 26th, 1999 letter. 8 A. There was a letter that came, but I believe 9 it was in 2002. 10 Q. So in between April 30th, of 1999 and 2002, 11 you had never heard anything from Mr. Jorgensen. 12 A. Not that I recall, no. 13 Q. Okay. 14 Mr. Lamont, I now would like to direct your 15 attention to Exhibit 37. Can you please take a look at 16 that document and let us know when you're done. 17 A. Okay. 18 Q. And have you seen this document before, sir? 19 A. Yes, I have. 20 Q. And is this a document you prepared? 21 A. Yes. 22 Q. And you prepared it on or about May 7th, 23 1999; am I correct? 24 A. Yes. 25 Q. Can you please tell us what this document is.
1 A. Again, it's just a reminder, a memo to myself 2 and the file to recap what Peter Dowd requested in his 3 phone call. 4 Q. Now this is a separate phone call from the 5 April 23rd, 1999 phone call, correct? 6 A. Yes. 7 Q. And he's requesting different information; am 8 I correct? 9 A. Yes. 10 Q. During this phone conversation with Mr. Dowd, 11 did he ever mention to you that the Fund had not 12 received a response to their April 26th, 1999 request 13 for information. 14 A. Not that I recall, no. 15 Q. Directing your attention now, Mr. Lamont, to 16 Exhibit 38. Can you please take a look at that 17 document and let me know when you're done. 18 A. Okay. 19 Q. And have you seen this document before? 20 A. Yes, I have. 21 Q. And is this a document you also prepared? 22 A. Yes. 23 Q. And did you prepare this document on or about 24 May 20th, 1999? 25 A. Yes.
1 Q. Can you please tell us what this document is. 2 A. Well Peter had asked if -- I had explained to 3 Peter previously that when we started the audits at the 4 Local Unions we had requested from Gordon Lund at the 5 Fund office if there were any participation agreements 6 or guidelines specific to contributions for the Local 7 Unions. Mr. Lund had indicated there weren't any. And 8 Peter had asked if I would recap with Gordon for his 9 file, which I did. 10 Q. And for the benefit of everyone in the room, 11 when you say "Peter", you're in reference to Peter 12 Dowd; is that correct? 13 A. Yes. 14 Q. Am I correct? 15 A. Yes. 16 Q. And during your correspondence with Mr. Dowd 17 concerning this May 20th, 1999 letter, did he ever 18 mention to you at that point that the Fund had not 19 received your -- a response to their request for 20 information on April 26th, 1999. 21 A. Not that I recall, no. 22 MR. MENDENHALL: I have nothing further, Mr. 23 Vaira. 24 THE INDEPENDENT HEARING OFFICER: Okay. 25 Thank you.
1 Mr. Mendenhall just asked you a question. 2 When you -- referring to your Exhibit 36, this is just 3 for my sake. The relevant part of that you want me to 4 take a look at is probably the last paragraph of 36? 5 MR. MENDENHALL: Yes, but he sent it as -- my 6 understanding, Mr. Vaira, is he sent it as an entire 7 document. 8 THE INDEPENDENT HEARING OFFICER: I 9 understand that. 10 MR. MENDENHALL: But you're absolutely 11 correct, that is the relevant portion, sir. 12 THE INDEPENDENT HEARING OFFICER: All right. 13 Mr. Thomas. 14 CROSS EXAMINATION 15 BY 16 MR. THOMAS: 17 Q. Good morning, Mr. Lamont. 18 A. Good morning. 19 Q. We have never met or spoken before, have we? 20 A. No, we have not. 21 Q. You mention that you went from Thomas Havey 22 to Caliber. 23 A. Yes. 24 Q. Wasn't there something called Legacy in 25 between there?
1 A. No. Legacy currently exists. There was a 2 firm Thomas Havey that split up, and Legacy is one 3 portion of that and Caliber is another portion of that. 4 Q. Okay. So if we've seen a document with your 5 name on it with the Legacy letterhead, how would that 6 connect with you -- what you described? 7 A. I don't think that would exist to my 8 knowledge because I have never worked for Legacy. 9 Q. Maybe I can -- I guess during the period of 10 transition did you occasionally -- did anyone ever 11 correspond to you addressing it to Legacy as opposed to 12 Caliber? Was there ever any confusion in that 13 splitting? 14 A. Probably just the one time when Mr. Jorgensen 15 sent a letter to my name under the Legacy address. 16 Q. But in fact you were with Caliber. 17 A. Yes. 18 Q. All right. There was part of your testimony 19 I didn't follow the sequence of. You worked from 20 approximately 1988 to 2002 for Thomas Havey, right? 21 A. Yes. 22 Q. And you were working construction two years 23 prior to that? 24 A. Yes. 25 Q. And then Allis-Chalmers.
1 A. Yes. 2 THE INDEPENDENT HEARING OFFICER: 3 Allis-Chalmers. We're talking about a farm -- 4 THE WITNESS: Yes. 5 BY MR. THOMAS: 6 Q. What type of company was that? 7 A. It was a -- Allis-Chalmers, as Peter here 8 recalls, manufactured farm equipment all across the 9 country and the world actually. I worked for a 10 division that manufactured forklifts or lift trucks in 11 Madison, Illinois. 12 Q. And just generally speaking, what was the 13 nature of that work that you did for them? 14 A. I worked in the Cost Accounting Department. 15 Q. And was that the job you took coming out of 16 Eastern Illinois? 17 A. Yes. 18 Q. So from roughly '75 to '86 you worked with 19 them. 20 A. '75 through '84. 21 Q. '84? Okay. And then was it 1984 that you 22 took the construction job? 23 A. I worked construction off and on between '84 24 and '88. 25 Q. Got it.
1 Now I didn't hear you mention, and maybe it 2 just wasn't asked, whether or not you have a CPA 3 license. 4 A. It was not asked, and no, I do not. 5 Q. So other than your BS in Business, do you 6 have any other degrees? 7 A. No, I do not. 8 Q. Any licenses? 9 A. No. 10 Q. So I take it from that answer that no such 11 license is required to do a payroll audit and the type 12 of work you did at Havey. 13 A. No. In fact, many of the people that work in 14 the Payroll Audit Department do not have degrees. 15 Q. When you were at Thomas Havey, you were one 16 of -- Thomas Havey was one of three accounting firms 17 doing the payroll audits for the Funds, correct, Mr. 18 Jorgensen's Funds? 19 A. Yes. 20 Q. Who were the other two? 21 A. Graft Ballard and Bainsley & Keeter was at 22 one point. Before that there were others involved with 23 us also. Grant Thornton, (Phonetic) as I recall, was 24 one, and I'm not sure of the others. 25 Q. And this was done, for lack of a better term,
1 on a rotating basis, right? 2 A. I'm not sure of the question. 3 Q. Well the Funds would dictate which entity you 4 were asked to audit, right? 5 A. That's correct. They provided us with a list 6 of employers to be audited, yes. 7 Q. And sometimes it would be this list and other 8 times it would be a different list, correct? 9 A. That's correct, yes. 10 Q. Am I right that there -- there was no 11 expectation on your part or Thomas Havey's part that 12 you were automatically going to get a particular 13 employer every time. That was up to the Funds, right? 14 A. Yes, that's correct. 15 Q. Now you mentioned that Local 1001 had been a 16 client of Thomas Havey's in the relevant time period, 17 right? 18 A. Yes. 19 Q. And that was to do what type of work for 20 Local 1001? 21 A. Again, I was not involved with that, but I 22 believe it was tax work, probably the LM-2's, things of 23 that nature. I don't know if they did monthly work for 24 them or not to be honest with you. 25 Q. But basic accounting work for an employer.
1 A. I believe that's probably what it was, yes. 2 Q. Now it is the normal practice of Thomas Havey 3 and other accounting firms to disclose to a client like 4 the Funds if they've actually been doing accounting 5 work for the entity to be audited, right? 6 A. That you would have to ask the partners of 7 Thomas Havey. I really wouldn't be involved with that. 8 Q. So you have no familiarity with that issue? 9 A. I do know that our firm -- it was not 10 infrequent to audit clients of ours whether they be 11 Local Unions, commercial clients, or what have you. 12 Q. But you have no experience as to whether or 13 not that was disclosed in any conflict -- 14 A. Again that would have been a function of the 15 partners who oversaw those particular accounts. 16 Q. You were not a partner during these periods? 17 A. No, I was not. 18 Q. So let me make sure I understand the chain of 19 command as it were. The person who's on the ground 20 doing the work for the audit that we've just been 21 talking about, the person whose last name began with a 22 K., Kemperas? 23 A. Yes. 24 Q. So that's the person who actually went to the 25 premises?
1 A. Well the premises -- the books and records 2 were at our office, so the audit was performed in our 3 office. 4 Q. All right. So the Local 1001 records that 5 were audited were actually at Thomas Havey's office. 6 A. That's correct, yes. 7 Q. But to your knowledge it was Kemperas who did 8 the actual physical work. 9 A. Yes. 10 Q. There was no actual visit to 1001 to your 11 knowledge? 12 A. An actual visit, I don't think so. There 13 might have been phone calls. I don't know. 14 Q. Okay. And then there was Donna Hubert and a 15 Joe someone? 16 A. Joe Thierman. 17 Q. Joe Thierman? 18 A. Um-hum. 19 Q. And they were higher in rank to Kemperas? 20 A. Well they were not in the same department, 21 but yes, they were also higher in rank. 22 Q. And did they have some reviewing function? 23 A. Not of the payroll audits themselves, no. 24 Q. Did they have -- I just didn't understand the 25 context in which you mentioned their names.
1 A. Well, because they were involved with the 2 actual accounting work for the Local Union, and when 3 Jim Kemperas needed the information, it would have been 4 those two that he would have seeked out to get the 5 information. 6 Q. Okay. So your assumption then, if I'm 7 understanding you correctly, is that Kemperas would 8 have presumably talked to Donna and Joe at Thomas Havey 9 to get the relevant record? 10 A. That's correct. 11 Q. But Donna and Joe were not involved in the 12 audit of those records. 13 A. Not per se. 14 Q. Maybe to answer any questions Kemperas had. 15 A. Yes. 16 Q. Then there was a Mr. Holland who was above 17 you; is that right? 18 A. Yeah. At that particular time he was the 19 partner in charge of the Payroll Audit Department, yes. 20 Q. Okay. So in terms of the reviewing function, 21 the work went from Kemperas to -- Kemperas to you to 22 Holland. 23 A. No. Kemperas to Holland to me. 24 Q. All right. So Kemperas directly to a 25 partner, right?
1 A. Yes. 2 Q. And then what would your role be after the 3 partner's review? 4 A. Again what I did -- we had two reviews. One 5 was a technical review, which is a pretty thorough 6 review, of all of the information in there. Once -- if 7 there's corrections that have to be made it's given 8 back to the auditor. Once it has passed the technical 9 review, then it's just a final what we call a quality 10 review just to make sure all the papers are in there 11 and there's no typos or clerical errors. 12 Q. And so your role was the latter? 13 A. That's correct. 14 Q. So Mr. Holland reviewed it for the, I think 15 you used the term, technical review, the overall 16 technical substance of it. 17 A. Yes. 18 Q. And then you reviewed it to make sure that it 19 looked right and the math added up and the pages 20 were -- 21 A. No, not even so much the math adding up. 22 That would be done in the technical review. 23 Q. So what was Mr. Holland's first name? 24 A. Bill. 25 Q. And where is he now?
1 A. Unfortunately he passed away from Lou 2 Gehrig's disease back in August. 3 Q. Of this year? 4 A. Yes. 5 Q. Sorry to hear that. 6 So I guess he was ill when this split of 7 Thomas Havey happened. 8 A. Yes. He had retired already, yes. 9 Q. So your role, if I'm understanding this, was 10 not necessarily to check the substantive accuracy of 11 these representations to the Funds; is that right? 12 A. That's correct, yes. 13 Q. Whose role was that? 14 A. It would have been Bill Holland. 15 Q. And ultimately Thomas Havey. 16 A. Ultimately Thomas Havey, yes. 17 Q. So -- to your right there's a stack of 18 exhibit books. If you could take a look at Volume 19 Four. 20 THE INDEPENDENT HEARING OFFICER: GEB Volume 21 Four. 22 BY MR. THOMAS: 23 Q. I want to start with Number 26. Do you have 24 Number 26 in front of you? 25 A. Yes, I do.
1 Q. And this is a Thomas Havey document dated 2 November 20, 1998, correct? 3 A. Yes, it is. 4 Q. Okay. And this is what appears to be a 5 routine audit of an employer known as Local 1001, 6 right? 7 A. Yes. 8 Q. Were you involved in this? 9 A. No, I was not. 10 Q. It appears that Mr. Kemperas did this work, 11 correct? 12 A. Yes. 13 Q. In this one you played no role at all? 14 A. In the actual audit itself -- wait a minute. 15 This is the audit itself. 16 Q. This is November, 1998. 17 A. Right. But again, my involvement was the 18 quality review if that's what your question is. 19 Q. Did you do a quality review of this one? 20 A. There's only one that I know of. 21 Q. Did you do a quality review of this one. 22 A. Yes. 23 Q. So that was -- this relates essentially to 24 what you've just been describing, Mr. Kemperas did the 25 work, Mr. Holland reviewed it, and then you reviewed it
1 secondarily. 2 A. Yes. 3 Q. So this document, Exhibit 26, is the work 4 that Thomas Havey did in the fall of 1998 with respect 5 to Local 1001, and at least three representatives of 6 Thomas Havey had input in this final product going to 7 the client. 8 A. Yes. 9 Q. Now in the cover letter it talks about the 10 procedures that were employed. Do you see that in the 11 first record? 12 A. Yes. 13 Q. And it says that payroll records were looked 14 at. Do you see that? 15 A. Yes. 16 Q. Do you know whether that was actually done? 17 A. I believe so. 18 Q. Why do you believe so? 19 A. Because during the normal course of a payroll 20 audit they would look at the payroll records. 21 Q. So you would expect -- 22 A. I would expect, yes. 23 Q. But you didn't actually see him do it. 24 A. No, I did not. 25 Q. And it goes on to say, "The purpose of our
1 review was to assist you in determining whether 2 contributions to the Trust Funds are being made in 3 accordance with the collective bargaining agreements in 4 effect and with the Trust Agreements of the Funds." Do 5 you see that, end of the first paragraph? 6 A. Yes. 7 Q. Do you know whether that work was actually 8 done? 9 A. I'm not exactly sure of the question. When 10 you say -- I mean when the payroll auditor does a 11 payroll audit, I don't know that he's actually looking 12 at this letter. There's common steps in a payroll 13 audit program that is performed. 14 Q. Fair enough. Let me rephrase it. 15 Do you know whether or not anyone actually 16 looked at -- anyone from Thomas Havey actually looked 17 at the Trust Agreements as part of this audit? 18 A. I would say they did not, no. 19 Q. Do you have any understanding why they did 20 not? 21 A. Again, normally during the course of a 22 payroll audit they would not look at the Trust 23 Agreement. 24 Q. Unless there was some reason to. 25 A. Yes.
1 Q. First sentence of the second paragraph. "Our 2 procedures included a review of the pertinent 3 provisions of the collective bargaining agreements and 4 compared underlying employer payroll records to Fund 5 contribution records." Do you know whether or not that 6 was an accurate statement? 7 A. No, it would not be an accurate statement 8 because there were no collective bargaining agreements 9 or participation agreements to follow. 10 Q. Quite right. And so that's sort of -- I'm 11 assuming that that must be something like boilerplate 12 that's in these letters generally speaking. 13 A. That would be a very fair assessment, yes, 14 sir. 15 Q. Let's take out the collective bargaining 16 agreement phrase there, okay? 17 A. Um-hum. 18 Q. Because for the reasons we've just discussed. 19 And the sentence would then read, "Our procedures 20 included a review of the pertinent provisions -- sorry. 21 "A review of -- our procedures included a comparison of 22 underlying employer payroll records to Fund 23 contribution records." Fair enough? 24 A. Yes. 25 Q. Do you know whether that happened?
1 A. They would have looked at the Fund's 2 contribution records, yes, and they would have compared 3 those to some type of payroll source, yes. 4 Q. All right. So -- and the point of that, as 5 you understand it, is to see that if someone worked 40 6 hours, that the payroll record says 40 hours, then if 7 the contribution report would also reflect 40 hours, 8 right? 9 A. That is correct, yes. 10 Q. Did you know when this letter went out that 11 there were -- in November of 1998 that there were a 12 number of people whose compensation was listed as zero 13 on LM-2's and whose compensation on payroll records was 14 listed as zero but who nonetheless were being reported 15 to the Funds as 160 hours a month? 16 MR. MENDENHALL: I'm going to enter an 17 objection to this question and any line of questioning. 18 The witness established his only involvement was 19 reviewing for typos and at the quality level, and he 20 did no review of the technical information and the 21 underlying documents. That was Bill Holland and Mr. 22 Kemperas. But subject to my objection, I'll defer to 23 your ruling. 24 THE INDEPENDENT HEARING OFFICER: Okay. I 25 think he said he did a quality review though.
1 MR. MENDENHALL: For typos. 2 MR. THOMAS: If Mr. Mendenhall is offering 3 this witness as a typographical witness -- 4 THE INDEPENDENT HEARING OFFICER: No, I don't 5 think he is. You can proceed on to that. I take it 6 into consideration what he said. He said he did a 7 quality review, and I don't know exactly where are we 8 going here, but -- 9 MR. THOMAS: Well if this is the only witness 10 that they're calling from Thomas Havey, that's not 11 meant as any disrespect for Mr. Lamont, and they can 12 call if they want. I'm simply trying to figure out who 13 did what in this audit. 14 BY MR. THOMAS: 15 Q. Mr. Lamont, the question was whether you have 16 any understanding -- 17 THE INDEPENDENT HEARING OFFICER: And I'm 18 going to overrule his objection. Proceed on, but just 19 tell me where you're going after a certain points and 20 we'll see where you're going with this witness. 21 BY MR. THOMAS: 22 Q. Mr. Lamont, do you know whether or not Mr. 23 Kemperas or anyone else at Thomas Havey actually 24 compared the payroll records to the contribution 25 report.
1 A. Yes. 2 Q. You know that for a fact. 3 A. That Mr. Kemperas would have done that, yes. 4 Q. Would have done that or did it? 5 A. Did it. 6 Q. How do you actually know that as a fact? 7 A. Because the review of the file, if he hadn't 8 done it, would have been given back to him to do that. 9 So I guess if your question is do I? No. Based upon 10 circumstances that I saw, yes. 11 Q. So it was your expectation and the standard 12 procedure that that work would be done. 13 A. That's correct, yes. 14 Q. Are you aware today that there are a number 15 of people at Local 1001 whose compensation was listed 16 as zero but whose contribution reports to the Funds 17 indicated 160 hours actually worked. 18 A. Am I aware today? Yes. 19 Q. You're aware of that today. 20 A. Yes. 21 Q. Were you aware of that back in November of 22 1998? 23 A. In November of 1998, no, I would not have 24 been. 25 Q. So was anyone at Thomas Havey who did that
1 comparison aware of that discrepancy? 2 A. I believe Mr. Kemperas was, yes. 3 Q. Why do you believe Mr. Kemperas was aware of 4 that? 5 A. Because I believe he had that in his work 6 papers. 7 Q. In his work papers. 8 A. Correct. 9 Q. Did you see the work papers? 10 A. I believe I saw them when the file came 11 through probably, yes. 12 Q. And what did the work papers say on that 13 issue? 14 A. That there were individuals in lieu of 15 compensation -- in lieu of compensation received 16 contributions to the Funds. 17 Q. So the work papers say that there are 18 people-- 19 A. I believe they do. Again, I have not seen 20 the file for awhile. 21 Q. That's your best recollection. 22 A. That's my best recollection. 23 Q. So your best recollection is that the work 24 papers that you reviewed prior to this letter going out 25 said there were people receiving compensation in lieu
1 of salary, or words to that effect, or contributions in 2 lieu of compensation. 3 A. Yes. 4 Q. Does that fact or that statement show up 5 anywhere in this November, 1998 -- 6 A. Not to my knowledge it does not, no. 7 Q. And in fact you indicated -- or your firm 8 indicated at the bottom, "There were no exceptions 9 found in the contributions reported to the Funds during 10 our payroll audit period," right? 11 A. Yes. 12 Q. So in your judgment it was not an exception 13 that someone who had a full-time job elsewhere and gets 14 zero compensation from the Local would have 160 hours 15 reported to the Funds. 16 A. Well again, when you say zero compensation, I 17 believe the people that oversaw that account explained 18 to Mr. Kemperas that in lieu of compensation they were 19 receiving contributions to the Funds, so I believe he 20 took that as compensation. 21 Q. All right. Let's hold that thought for a 22 moment. 23 The people you're referring to, are they 24 Thomas Havey people or Local 1001 people? 25 A. Those would have been the Thomas Havey
1 people. 2 Q. So Donna and Joe, you're assuming, talked to 3 Kemperas. 4 A. Again, you would have to ask Mr. Kemperas and 5 Donna and Joe Thierman, but I believe that was what Mr. 6 Kemperas explained to me, yes. 7 Q. So he explained this to you. 8 A. After a period of time yes. 9 Q. Later when things started to be questioned? 10 A. Well, when I put together the April 30th 11 report, I asked Mr. Kemperas at that time, because I 12 knew it was not on the original report, and I said, 13 "These individuals, what is their status?" And at that 14 time he explained that in talking with the people at 15 Thomas Havey that it was explained to him that these 16 individuals in lieu of compensation were receiving 17 contributions to the Funds. 18 MR. LYDON: If I can interject just for the 19 record. That letter to which you referred is Exhibit 20 35-- 21 MR. THOMAS: We'll get to that. 22 MR. LYDON: -- of the Local 1001 exhibits. 23 MR. THOMAS: It's in the record on both 24 parties' exhibits and we'll get there. 25 MR. LYDON: That's fine.
1 BY MR. THOMAS: 2 Q. Mr. Lamont, in the November, 1998 time frame, 3 those issues were not noted, were they? 4 A. Not to my knowledge, no. 5 Q. Do you want to look at the document? Have 6 you looked at it recently? 7 A. Yeah. 8 Q. It's not in there, is it? 9 A. No. 10 Q. So from the Funds' standpoint, at least by 11 November of 1998, there is no indication here that 12 there are people that have zero hours reflected and 13 zero compensation reflected on the payroll records, but 14 160 hours of actual work reflected on the contribution 15 reports, correct? 16 A. You're asking me if the Funds' records 17 reflect that or you're asking me if Thomas Havey's 18 report reflected that. 19 Q. If Thomas Havey's report -- 20 A. Thomas Havey's report did not reflect that in 21 November, no. 22 THE INDEPENDENT HEARING OFFICER: I don't 23 think there is a dispute as to this. 24 MR. MENDENHALL: Exactly. 25 THE INDEPENDENT HEARING OFFICER: And I
1 realize that there's maybe an issue of -- where are we 2 going with this? I know -- is there any dispute in the 3 record that this practice occurred and there was no -- 4 MR. THOMAS: Yes, there is. I mean this is 5 the first step in a series of events that Mr. Jorgensen 6 and Mr. Lamont have a disagreement as to what happened. 7 Specifically the April of 1999 correspondence, we have 8 different versions of that. 9 THE INDEPENDENT HEARING OFFICER: I 10 understand that. But the difference in the -- as to 11 what happened to that correspondence. But in the 12 overall effect, where are we going here? 13 MR. THOMAS: Well, the letter represents that 14 certain work took place. 15 THE INDEPENDENT HEARING OFFICER: Um-hum. 16 MR. THOMAS: And there is no indication in 17 the Thomas Havey records that that is anywhere 18 communicated to the client until at least April, 1999 19 if you accept the version of events that the letter was 20 actually mailed in the time frame. And our position 21 clearly is that the Funds, who requested and paid for 22 this work, were in a position to -- were entitled to 23 know of this issue and that it was material discrepancy 24 that's not disclosed here. 25 THE INDEPENDENT HEARING OFFICER: Okay.
1 MR. THOMAS: So -- 2 THE INDEPENDENT HEARING OFFICER: I think you 3 pretty much established that. Where is the dispute? 4 I'm looking to the dispute as to what was -- 5 MR. LYDON: In this hearing with respect to 6 these charges, I agree. I don't understand -- 7 THE INDEPENDENT HEARING OFFICER: I 8 understand that there is a discrepancy and that the 9 Funds didn't know for awhile until this was discovered, 10 and Havey came in and there was some question about how 11 much they -- 12 MR. THOMAS: Well, Mr. Vaira, he is a fact 13 witness who was involved in the process -- he and other 14 members of his firm were involved in a certain process. 15 The fact that these practices were allowed, did in fact 16 go on for a period of time, is highly relevant to the 17 Trusteeship charges. And this witness is the only 18 person who we've heard from Thomas Havey who can 19 shed any light on how that happened and how it was 20 reviewed by that firm, who was in the business of 21 reviewing it. 22 THE INDEPENDENT HEARING OFFICER: Tell me 23 where the relevance is. We know that it occurred and 24 didn't come to light as soon as one would expect in a 25 professional review or accounting system. How is it
1 relevant here? We know it occurred. We know what 2 happened. Now how about -- what's the further 3 relevance of the line of questioning? 4 MR. THOMAS: The relevance is trying to 5 determine the facts as to whether certain work actually 6 happened or not. It's represented that it happened. 7 We have an involved witness here who was at the firm 8 when it happened, and he is in a unique position, 9 rather than the rest of us reading documents, to say 10 what actually happened and whether payroll records were 11 looked at, whether LM-2's were looked at and the like. 12 THE INDEPENDENT HEARING OFFICER: Assume he 13 did look at them. What does that do to the issues here 14 before us? Assuming he did. 15 MR. THOMAS: I assume they did not look at 16 the records but represented that they did. 17 THE INDEPENDENT HEARING OFFICER: Um-hum. 18 MR. THOMAS: Well, it certainly casts light 19 on the entire chain of events that follows from that, 20 because the Funds have been accepting -- part of the 21 basis for the Trusteeship here is that the Funds have 22 been accepting money not realizing that these people 23 were ineligible. 24 THE INDEPENDENT HEARING OFFICER: I 25 understand that.
1 MR. THOMAS: And the story of how that 2 happens is relevant to these proceedings because Local 3 1001 is a very critical player in the chain of events 4 of how that happens. And what they communicate to 5 Thomas Havey and what Thomas Havey communicates to the 6 Funds is all part of that story. 7 Now I'm prepared to move on to the April 8 sequence because I've gone as far as I want to go with 9 this. 10 THE INDEPENDENT HEARING OFFICER: Move on to 11 the April sequence. There is no dispute that these 12 payments occurred. And whether they were proper or not 13 is a legal dispute that we're looking at. But what 14 Thomas Havey did here, I mean, we're -- there's not a 15 suit against Thomas Havey for malpractice, but -- and 16 in what they did may or may not have been -- have some 17 relevance, but I think we may have exhausted that. 18 Okay. 19 BY MR. THOMAS: 20 Q. All right. Mr. Lamont, moving on to the 21 April -- April, 1999 time frame. That was most of 22 where Mr. Mendenhall's questions came from. 23 There was a request that came from Mr. 24 Jorgensen to take a look at several different Locals, 25 right?
1 A. Yes. 2 Q. Just put in your own words, if you would, 3 what the underlying nature of that request was. 4 A. They wanted to know as best -- again, what we 5 could give them as far as information as to the actual 6 number of hours worked by these individuals that 7 contributions were being made on. 8 Q. Was there any particular event that caused 9 that request to happen? 10 A. Other than the conversation and the phone 11 call from Dowd and Mr. Jorgensen, I don't recall, no. 12 Q. Did this just come out of the blue? 13 A. Pretty much as I recall, yes. 14 Q. And were there any District Council policies 15 that were coming into effect that were clarifying the 16 fact that these contributions had to be based on actual 17 hours worked? 18 MR. MENDENHALL: Objection. Beyond the scope 19 of this witness' knowledge as to District Council 20 policies. No foundation that he has any such 21 knowledge. 22 THE INDEPENDENT HEARING OFFICER: He may 23 answer that question. If you're doing some sort of an 24 audit, there's got to be some reference. Overrule the 25 objection.
1 THE WITNESS: Again, the only -- as far as 2 guidelines or policies, we made that request to Gordon 3 Lund and did not receive any. 4 BY MR. THOMAS: 5 Q. I wanted to ask you about that. Who was 6 Gordon Lund? 7 A. Gordon Lund, I believe his title was the head 8 of the field reps at the Fund office. 9 Q. Okay. And he was the person that you got 10 some input about policies; is that right? 11 A. Well, most of the information as far as the 12 list of employers to be audited and our main contact at 13 that office at that time was Gordon Lund. 14 Q. What was the issue that you asked Lund about? 15 What was the input you sought from him? 16 A. Well anytime you're auditing, let's say, a 17 non-collective bargaining agreement unit such as a 18 Local Union, the request is always made to find out 19 from the Fund office if there are any particular 20 written guidelines or policies that relate strictly to 21 those entities and their contributions to those Funds, 22 and that's what we requested. 23 Q. In your conversations with Mr. Dowd did he 24 say anything to you about the Trust Agreements being 25 based on the actual hours worked?
1 A. I believe he did reference something in the 2 Trust Agreement, yes. 3 Q. That was back in this '98, '99 time frame? 4 A. It would have been in the '99 time frame, 5 yes. 6 Q. So at the time that you were engaged in this 7 correspondence with Mr. Dowd in April of '99, you 8 understood that the context was, "We actually have to 9 understand actual hours worked," right? 10 A. That's the point that he was making, yes. 11 Q. Okay. And did you understand, therefore, 12 that -- at least as of that moment it required a 13 certain level of scrutiny on Thomas Havey's part of the 14 records to determine actual hours. 15 A. At that particular time, yes. 16 Q. Okay. Now you've since learned that Mr. 17 Jorgensen says he never got your letter, right? 18 A. That's correct, yes. 19 Q. But your position is you sent it and the 20 document is what it purports to be. 21 A. I have no reason to believe otherwise, no. 22 Q. Now that -- both sides have this document in 23 their exhibit books, the one in front of you, it's 24 going to be Exhibit Number 29 or Defense 35. 25 Disregarding the July, 2002 cover letter for
1 the moment and just going back to the pages that are 2 attached, this is the same exhibit that we looked at 3 just a moment ago, right? 4 A. Yes. 5 Q. Okay. It's got your cover letter and April 6 30, 1999 to Mr. Jorgensen and then some work sheets 7 that follow, right? 8 A. Yes. 9 Q. Now this document -- 10 THE INDEPENDENT HEARING OFFICER: What's your 11 GEB exhibit again? 12 MR. THOMAS: This is 29. 13 BY MR. THOMAS: 14 Q. So the underlying work that's attached to 15 this, the charts, for example, specifically those two 16 spread sheets? 17 A. Yes. 18 Q. Do you have those? 19 A. Yes. 20 Q. Who actually did the work on that? Was that 21 Mr. Kemperas again? 22 A. No. I believe I did that. 23 Q. So you did this work. 24 A. That's correct, yes. 25 Q. Tell us what you actually did to compile
1 these two spread sheets. 2 A. We would have went back --excuse me. Not we. 3 I would have went back and looked at the wages that 4 these individuals were receiving, and based upon those 5 wages, as best I could, determine whether they were 6 full-time employees or not. 7 Q. Okay. And did you see any changes from the 8 -- in the clerical staff with respect to 160 hours 9 shifting to 120 at any point? 10 A. If I did, it would be in here. 11 Q. So you didn't notice that. 12 A. No. 13 Q. But you do notice -- you did notice that 14 there are seven people, according to your notes, who 15 did not receive wages, but in lieu of wages 16 contributions were made on their behalf to the Funds, 17 correct? 18 A. Yes. 19 Q. Now did you talk to anyone about that 20 finding? 21 A. Yes. 22 Q. Who did you talk to? 23 A. The partner in charge, Donna Hubert. 24 Q. So she was now a partner or always had been? 25 A. Well, not always, but at that particular
1 time, yes. 2 Q. Okay. What did you tell Miss Hubert? 3 A. What did I tell Miss Hubert. 4 Q. Yeah. You said you talked to her about it. 5 A. Well I asked her, I said, "In this particular 6 situation I just want to clarify this. These 7 individuals are listed on the LM-2 with a job title, 8 but they do not receive wages. What is the status?" 9 And she informed me that that -- these particular 10 individuals in lieu of compensation received 11 contributions to the Funds made on their behalf. 12 Q. So Donna who does the audit -- or CPA work 13 for the Local and wearing that hat, informed you that 14 this is how this is being handled. 15 A. That's correct, yes. 16 Q. Where is Donna today? Is she around? 17 A. She works for Legacy. 18 Q. All right. Here in Chicago? 19 A. Yes. 20 Q. And so that was the end of the matter as far 21 as you were concerned? 22 A. Yes. 23 Q. Now did you talk to anyone at the Funds about 24 this issue or any representative of the Funds. 25 A. Not that I recall, no.
1 Q. Did you talk to Mr. Dowd? 2 A. I don't believe so, no. 3 Q. Did you talk to Mr. Jorgensen? 4 A. No. 5 Q. Did you talk to anyone at the Funds to ask 6 them whether this practice was okay. 7 A. Not that I recall, no. 8 Q. What documents did you physically look at to 9 make this finding that this practice had gone on? 10 A. I believe it would have been the LM-2 -- or 11 let me back up. Your question is -- 12 Q. What documents did you physically look at to 13 make this -- 14 A. To make these spread sheets. 15 Q. No. To make this last paragraph. 16 A. It would have been a combination of looking 17 at the LM-2 and also talking with Donna Hubert. 18 Q. Anything else? 19 A. Not that I recall. 20 Q. So if I'm understanding your answer 21 correctly, you spotted names on an LM-2 -- 22 A. You know I -- 23 Q. Hold on. Wait for the question. 24 You spotted names on an LM-2 and noticed that 25 there were a certain list of names there that didn't
1 necessarily match up exactly with the payroll records; 2 is that right? 3 A. I don't know that in forming this document I 4 would have actually looked at the payroll records. I 5 might have looked at some quarterly wages. I might 6 have looked at just the LM-2. I don't recall. 7 Q. What do you recall seeing on the LM-2's that 8 caught your eye? 9 A. The fact that these individuals had job 10 titles and classifications but no wages. 11 Q. So in other words, there was a zero under 12 "Compensation" for them, right? 13 A. That's correct, yes. 14 Q. Now the -- your note here indicates that 15 these people received contributions in lieu of wages, 16 right? 17 A. Yes. 18 Q. As an accountant do you view that as a form 19 of compensation? 20 MR. MENDENHALL: Mr. Vaira, this is way 21 beyond the scope of my direct testimony. I know you're 22 giving Mr. Thomas great latitude, but this issue of 23 whether or not this is reportable to the IRS and all of 24 that is way beyond the scope of this witness' 25 testimony.
1 THE INDEPENDENT HEARING OFFICER: Let me put 2 it this way. I think Mr. Thomas finally got to the 3 place -- you put this in. I was waiting for him to get 4 there. He may have asked a lot of other things. I 5 think he can explore this. We've pretty much 6 established the facts here. You can proceed on a 7 little further. I'll overrule the objection right now, 8 but I'm -- I want to know where we're going with this 9 because we've pretty much established the LM-2's. 10 MR. THOMAS: I'm asking his opinion on 11 whether this was compensation. 12 THE INDEPENDENT HEARING OFFICER: You may ask 13 him that. 14 THE WITNESS: Well let me answer that by 15 saying that in any public accounting firm you have 16 various departments that have expertise in certain 17 fields, and we would have had a Tax Department, an 18 Audit Department. I worked strictly in the Payroll 19 Audit, Compliance Audit. So if your question is in 20 regards to compensation and taxes, I really would not 21 have knowledge enough in that area. 22 BY MR. THOMAS: 23 Q. So you don't know. 24 A. No. 25 Q. Just as an intuitive matter --
1 MR. LYDON: Objection. 2 BY MR. THOMAS: 3 Q. -- do you view this as compensation. 4 THE INDEPENDENT HEARING OFFICER: We've 5 plotted this ground before and we've asked several 6 other persons on the stand whether it was or not, and 7 that may be a question for me to decide, but -- 8 BY MR. THOMAS: 9 Q. Mr. Lamont, did you ever look at the 10 contribution reports. 11 A. Yes. 12 Q. In the same time frame that you generated 13 this report? 14 A. Absolutely, yes. 15 Q. So for the people that you saw zero 16 compensation on the LM-2's, what did you see in terms 17 of actual hours worked on the contribution reports. 18 A. Probably it would have been in the same 19 category as the others, 160 hours. 20 Q. Did that strike you as odd in any way? 21 A. Again, based upon the information that I 22 received from the partner and her understanding of it, 23 no. 24 Q. So from -- understanding that there's a 25 partner who ultimately had arguably more authority on
1 this or more control over this, did you have any 2 understanding that the contribution reports that went 3 to the Funds had to report actual hours worked. 4 A. Under a normal circumstance, yes. 5 Q. Okay. So for example -- and the reason for 6 that is that the Funds may have documents that control 7 whether participants are eligible or not eligible, 8 right? 9 A. It would be my understanding of it, yes. 10 MR. MENDENHALL: Objection, Mr. Vaira. 11 THE INDEPENDENT HEARING OFFICER: All right. 12 I think we've exhausted this particular line of 13 questioning here. 14 MR. THOMAS: Very well. One moment. 15 BY MR. THOMAS: 16 Q. Mr. Lamont, for how many other clients that 17 you've done payroll audits have you seen this pattern 18 where people who were not employed at the Local in a 19 full-time capacity received Pension and Welfare 20 contributions as if they were full-time employees. 21 A. I would have no recollection of knowing all 22 the audits that we've done for different Local Unions. 23 Q. What's your best recollection of how many 24 times you've seen this elsewhere. Do you have any 25 recollection of ever having seen this before?
1 A. No, I do not. 2 Q. Mr. Dowd, you indicated that he was part of 3 Dowd, Bloch & Bennett, right? 4 A. That's my understanding, right. 5 Q. And you indicated that you thought the call 6 from Mr. Dowd was coming as Trustee of the District 7 Council? 8 A. I don't know that he referenced his position 9 at that particular time. I just earlier expressed that 10 was my understanding, that Dowd and Bloch were the 11 individual law firm that was the Trustees of the 12 District Council at that time. Now his exact capacity, 13 Mr. Dowd's, at that time I don't know. 14 Q. The question really is a simple one. Did you 15 have no understanding that when Mr. Dowd was calling 16 you he was counsel to the Funds? 17 A. I don't recall. 18 Q. You didn't know in what -- 19 A. I went to a lot of meetings where there were 20 -- where Jorgensen was there, where three or four other 21 attorneys were there, Dowd was there. They never 22 really explained to me exactly what their position or-- 23 Q. So even today you're saying you don't know in 24 what capacity Dowd was calling you? 25 A. Again, no.
1 Q. Okay. The part of the audit that you 2 reviewed talks about dues -- checking dues and so 3 forth. Do you remember that? 4 A. Yes. 5 Q. What physically is done to check-off on dues? 6 How do you determine that dues have been paid? 7 A. Well, the only way -- 8 Q. Withheld. I'm sorry. 9 A. As far as if they're withholding dues? 10 Q. Yes. When your firm does this audit and 11 sends a letter saying, "Among other things we've 12 determined whether people have had dues withheld and 13 dues have been paid," and so forth, what physically 14 happens? 15 A. When we receive information from the Funds' 16 computer, it only details the hours that were used for 17 contribution purposes. It does not have a breakdown of 18 the particular Funds. So if we see 160 hours, we have 19 -- the only thing to go on is that's representing all 20 the Funds and entities involved. If 160 hours for the 21 Health and Welfare Fund and no other contributions were 22 made to the other Funds, we would have no knowledge of 23 that. 24 Q. What about dues though? Your firm does, 25 among other things, say, "We check to see whether dues
1 have been paid." 2 A. They look at individual's payroll to see if 3 dues are being withheld from the payroll. 4 Q. And what's the document that would actually 5 show that? 6 A. Normally it would be some type of a payroll 7 journal where it would show all the deductions from the 8 individual's check. 9 Q. Take a look at Exhibit 26 again. 10 A. Okay. 11 Q. And the third page in there's a chart that 12 starts at the top "Laborers' District Council." 13 A. Yes. 14 Q. And then in the text there it says, "No 15 discrepencies were noted." Do you see that? 16 A. Yes. 17 Q. And then down at the bottom there's a line 18 entry for Mr. James Capasso. Do you see that? 19 A. Yes. 20 Q. It says, "Dues were deducted." 21 A. Yes. 22 Q. Understanding that Mr. Kemperas may have 23 actually done this work, what's your operating 24 assumption of what he actually looked at to determine 25 that Mr. Capasso's dues were deducted.
1 A. I don't know. I can't answer that. You 2 would have to ask Mr. Kemperas that. 3 Q. Some payroll record presumably, right? 4 A. Presumably, yes. 5 MR. THOMAS: Thank you. Nothing further, Mr. 6 Vaira. 7 MR. MENDENHALL: No redirect. 8 THE INDEPENDENT HEARING OFFICER: Thank you, 9 sir. You're all set. Thank you. 10 (Witness excused.) 11 MR. LYDON: We call Mr. DeBofsky. 12 (Witness duly sworn.) 13 MARK DEBOFSKY, 14 called as a witness herein, having first been duly 15 sworn, was examined and testified as follows: 16 EXAMINATION 17 BY 18 MR. LYDON: 19 Q. Would you state your name please spelling 20 your last name. 21 A. Mark DeBofsky, D-e-B-o-f-s-k-y. 22 Q. Mr. DeBofsky, what is your occupation? 23 A. I'm an attorney. 24 Q. For how long have you been an attorney? 25 A. More than 23 years.
1 Q. Where are you licensed? 2 A. State of Illinois and various federal courts. 3 Q. Just briefly what's your educational 4 background? 5 A. I received a BA from the University of 6 Michigan in 1977, and my JD from the University of 7 Illinois Col |