THE PROGRESSIVE VOICE OF REFORM

RECEIVED OCT 02 1995 

IN THE SUPERIOR COURT FOR THE DISTRICT OF COLUMBIA CIVIL DIVISION

DAVID BUSCH, et al.,

Plaintiffs,

v.

NORML, et al.,

Defendants

C.A. No.: 135895 Cal. 6 - J. van Kann

VOLUME 1

Washington, D.C.

Monday, September 25, 1995

Deposition of

NICOLE TORRENCE

a witness, called for examination by counsel for Plaintiffs, pursuant to notice and agreement of counsel, beginning at approximately 3:35 p.m., at the Law Offices of Miles & Stockbridge, 1450 G Street, Northwest, Suite 445, Washington, D.C., before Shari R. Broussard, a notary public in and for the District of Columbia, when were present on behalf of the respective parties: [page 2] APPEARANCES: on behalf of Plaintiffs:

CARLOS M. SANDOVAL, ESQUIRE ANNA GNADT, ESQUIRE Grossman & Sandoval, P.L.C. 1401 Chain Bridge Road, Suite 300 McLean, Virginia 22101 (703) 448-8100 On behalf of INTERNAL REVENUE SERVICE: WARREN P. SIMONSEN, ESQUIRE Assistant District Counsel 4620 Wisconsin Avenue, N.W. Washington, D.C. 20016 (202) 634 - 5407 [page 3] [Note: exhibits are not included in the text file.].] CONTENTS EXAMINATION BY: PAGE Counsel for Plaintiffs 5 TORRENCE DEPOSITION EXHIBITS:PAGE No. 1 - Notice of Intent to Levy 11 No. 2 - Taxpayer's Copy of Notice to Levy 11 No. 3 - Letter from Harrington with 15 attachments No. 4 - Employment Tax Summary 12/12/92 21 No. 5 - Memo from Jon - 12/9/93 31

[page 4] P R 0 C E E D I N G S Whereupon, NICOLE TORRENCE was called as a witness and, having been first duly sworn, was examined and testified as follows: MR. SIMONSEN: Could I just put on the record what we've gone through today -- MR. SANDOVAL: Sure, sure. MR. SIMONSEN: -- if I may? The Service is present today through the appearance of Nicole -- THE WITNESS: Torrence. MR. SANDOVAL: Torrence. MR. SIMONSEN: --Torrence -- I'm sorry -- in response to a subpoena, which was served on the Service, calling for testimony and certain documentation.

Authorization was given subject to a modification of the Power of Attorney Form 2848, which has been modified to conform to what was requested in the authorization and subject to that modification Nicole Torrence is authorized to (202) 638-2400 BETA REPORTING 1-800-522-2382 (703) 684-2382

[page 5]

testify, as requested today. Thank you. MR. SANDOVAL: Okay. Carlos Sandoval appearing on behalf of the Plaintiffs David Busch, et al. Introduce yourself. MR. SIMONSEN: Warren Simonsen, from Washington District Counsel, here on behalf of Nicole. THE WITNESS: Nicole Torrence. I'm the revenue officer from Baltimore District. EXAMINATION BY COUNSEL FOR PLAINTIFFS

BY MR. SANDOVAL: Q What division is that in the Baltimore in the Baltimore District? A Collection. Q Collection division. Okay. Ms. Torrence, are you familiar with the collection matters surrounding taxpayer National Organization for the Reform of Marijuana Laws, identification number 520909444? A Yes. [page 6] Q Can you tell us what your familiarity with that matter is? A I was the revenue officer that was assigned that case. I'm not sure when I was assigned the case. I don't recollect. But I went out to collect delinquent taxes and secure delinquent income -- I mean returns. Q Were you assigned the case in 1988? A No. Q Was it before 1988 or after 1988? A After 1988. Q Were you assigned the case in 1994? A Yes, I think so. Yes. Q Would that refresh your memory?

What I am handing to Ms. Torrence is a copy of a letter from the collection division addressed to Al Byrne. He's the secretary of NORML and he's on the board of directors. He is a Plaintiff in this matter. I'm Mr. Byrne's attorney. It is a letter dated September 21, 1994. I will allow the witness to look at it and identify this document. [page 7] A Okay. Q Go ahead. You can flip the pages and that sort of thing. A Okay. Q Can you tell us the date at the top of that letter? A This was September 21, 1994. Q Did you prepare that document? A Yes, I did. Q Would you describe for the record what that document is? A It's Letter 1058. It's a letter for final demand. It requests final demand. Q Does the letter give an amount demanded? A Yes. Q And an entity from whom you are demanding? A Yes, NORML, and the amounts are on page two. Q And NORML stands for the National organization -- A National Organization for the Reform of Marijuana Laws. [page 8] Q Can you turn to page two and explain the assessed payments in column three? A The assessed amount would be the tax plus penalty and interest throughout a certain period. Any accruals would be additional periods for some future time. Q What are those periods that are reflected in your correspondence? A 1989 through '94. Q And what is the nature of the amounts assessed? A Employment taxes and the 990. I guess those are penalty assessments. Q In your examination of the amounts owed by NORML to the Internal Revenue Service did you make any determination as to the years that amounts were owed? A No, I don't think so. Q Okay. A Without knowing for sure, I really think these were assessments based on returns that were [page 9] filed by the taxpayer. Q Was it your understanding that there was an amount due and owing from the Internal Revenue Service based on a failure to pay employment taxes during 1994? A Yes. Q How about 1993? A Yes. Q And 1992? A Yes. Q Can you tell us today if the nonpayment of taxes during those years stemmed from income that was purportedly paid out by NORML to a Dick Cowan? A The returns would not show employees. It would just show the wages that were paid for that particular quarter. Q Would copies of the returns refresh your memory as to what those amounts were in the particular quarters? A If you have them, I can look at them. Is that what you're saying? [page 10] Q Right. Is that something that is generally held in your examination file? A Well, yes, I would get a copy of those returns. Q Let the record reflect that we will request the assessments of the 941 and 9 -- what is that? 9? A 990. Q -- 990 documents. A You're requesting Q Right. A -- a copy of the return? Q Right, a copy of the returns and Form 990, 941 for '89 through '94. A Through 94? Q Right. A So you're sure that they filed those returns? Q You've got 6/3/94 -- A I thought you said the 990. Q Okay. Yes. AThe 990 would be through '91? [page 11] Q Right, 990 through '91. I'm sorry. 990 through '91, '89 to '91; and 941, '89 through '94. A And those are just the outstanding liabilities, the current outstanding liabilities? Q Right, and the supporting documents that were filed by NORML for those periods. A I'm not sure what you mean by the supporting documents. Q Right. The actual returns that were filed, the actual -- A Right, that's what-- Q Right. A We have copies of the returns. Q Right, any documentation with respect to those returns.

MR. SANDOVAL: Why don't we mark this as Deposition Exhibit 1. And then why don't we go ahead and mark this number 2 and I'll just go ahead and hand that to her.

(Torrence Deposition Exhibit Nos. 1 and 2 were marked for identification.) [page 12] BY MR. SANDOVAL: Q I'm handing you a document which has been marked Plaintiffs' Deposition Exhibit 2. Could you identify that document for me? A It's a Notice of Levy. Q Did this come out of your branch of the Internal Revenue Service? A ACS, which is the automated collections branch. Q And can you tell what this levy is for? A 941 taxes for the second and third quarter of 1990. Q And can you tell us the amounts that have been assessed? A The total? Q Yes. A $12,006.54. Q Right. Were these funds ever collected from NORML? A I'm not sure. I wouldn't know. Q Do you know if the taxes from NORML have [page 13] been paid up? A I don't think so. Q Is there any document that would refresh your memory or that would provide you with information that you could answer that question? A That I have? Q Yes. A No. Q That would be in the examination file? A It's not examination. It's collection. Q Okay. A But it's probably, yes, in the case file. Q We would also ask that documentation evidencing any payments be provided with respect to the taxpayer NORML. A Payments now from what period? Q Payments from '89, '90, '91, '92, '93,and '94. A So you want to know all payments from that period, '89 through '94? Q Right. In addition to the collection

[page 14] division were any other divisions of the Internal Revenue Service reviewing the books and records of NORML? A I think so. Examination division had the case prior. I think it was exam. Q Had the case prior to you receiving the case? A Right. Q Did they continue their examination or did all matters transfer to you? A I'm not sure. Sometimes you can still have an ongoing examination while we're trying to collect, so I'm not really sure. I think they did close their case out though. Q So, after the case file was turned over to you, essentially the examination of the organization stopped? A Well, actually a case file from exam I never received. I may have gotten -- I was in contact with someone. I can't recall his name, but I think he may have sent me a few documents just for my information. But when the case comes

[page 15] to collection, we create our own case file. So - Q What happens to the case file from examination? A I would not know. Q Do you have access to it at all? Can you request it? A Yes, I believe so. I think so. Q We would also request that the examination file for NORML be provided. And I understand that may be voluminous, but I want to limit it to the years '89 through '94.

Do you know which examination officer reviewed the NORML matters? A No. Q Does the name Mr. Klassman refresh your recollection? A No. MR. SANDOVAL: Mark this. (Torrence Deposition Exhibit No. 3 was marked for identification.)

BY MR. SANDOVAL: Q What I'm handing you is Plaintiffs'

[page 16] Exhibit 3 for identification. Do what that document is? A I guess it's a proposed assessment, I guess. This is not something that we would use in our division, so it's not a letter that I'm familiar with. Q Did that come from another division? A I guess this would be exam. Q Can you tell me the amount that is proposed to be assessed from that document for the periods under review? A That total is a little over 15 -- 15,000. - Q 15,000? A Uh-huh. Q And what period did that cover? A '88 through '90. Q And is it fair to say that you received the file sometime after the issuance of this letter? A Yes, I think so. Q And did you find additional assessments

[page 17] that dated after 1990? A Well, I don't know because there could have been the --'91, '92 and '93, those assessments could have already been on the books, so-- Q Let me go back. I'm going to refer you back to Plaintiffs' Exhibit No. 1, to the third page, which is, as you've testified earlier, your calculation of assessments that stem from '89 to '90 -- I guess it goes all the way up to '94, various amounts assessed.

Is it fair to say that the document marked Plaintiffs' Exhibit No. 3 contains the of the assessments up to 1990 and that your document marked as Plaintiffs' Exhibit No. 1 contains the assessments from 1990 forward, to date? A Yes. Q You didn't duplicate any years that were in Plaintiffs' Exhibit 3? A I don't understand what you're saying. These assessments are already on the books when

[page 18] they come to collection. Q Okay. A The only thing we do is collect on it. So it's not like I would assess these. These assessments are generated when the taxpayer files a return with nonpayment. Q What I'm saying is the assessments reflected in Plaintiffs' Exhibit No. 1 are additional to the assessments reflected in Plaintiffs' Exhibit No. 3? A Yes. Some of them overlap, though, don't they? Q I'm not sure. Can you tell us? A Well, it's the 941 and there are some -the '90s are on here and '89 is on -- there's an '89 period on here. MR. SIMONSEN: If I may, for the record could I just clarify the question? MR. SANDOVAL: Sure. MR. SIMONSEN: I believe your reference of Exhibit 3 to assessments may be confusing in that these are proposed adjustments, if that's [page 19] correct, and these are assessments in Exhibit 1. MR. SANDOVAL: Actual assessments? MR. SIMONSEN: Actual assessments. So there would be no overlap. This is an additional amount that is due and owing after the proposed adjustments are upheld. If that's your question, then perhaps it will help you answer it a little clearer.

THE WITNESS: So the question again? BY MR. SANDOVAL:

Q I was wondering if these two documents reflected almost a continuum in time as to the assessments and I think your counsel just cleared that up a little bit, that Plaintiffs, Exhibit 3 dated March 31, '94, are proposed adjustments from 1988 to 1990, and the assessments in Plaintiffs, Exhibit No. 1, which is a Final Notice of Intent to Levy, reflect, although they reflect years thereafter -- the question is, is there some overlap in terms of what is actually assessed in Plaintiffs' Exhibit No. 1 and what was proposed in Plaintiffs' Exhibit No. 3? Is there some overlap

[page 20] in terms of the taxable years and the periods that -- A If the adjustments were made. Without looking at the case file I wouldn't know. Q But if you had the case file, you would be able to determine that clearly? A To tell you, yes, if the additions are on there. Q The next time we'll have the case file and you will be able to clear that up.

By the way, who is Paul Harrington? A That's the district director. Q Is that of your office? A Of the division. Q Of your division? A Uh-huh. Q In Baltimore? A Yes. Q And do you recognize the examining officer's signature? A No. Q would that be inconsistent with the name [page 21] Walker out of the Baltimore office? A It could be Walker, yeah. Q And this person is also in the collections division or is in some other -- A That would be examination. Q Okay. This is examination? A (Nodding)

MR. SANDOVAL: Mark this as Exhibit 4. (Torrence Deposition Exhibit No. 4 was marked for identification.)

BY MR. SANDOVAL: Q I'm handing you what has been marked Plaintiffs' Exhibit 4. Can you identify Exhibit 4 ? A It says NORML Forms 941 1988 through '90 . Q Next to the employment tax summary 12/21/92 it says the name Walker. Would that be the individual from examination that also signed Plaintiffs' Exhibit No. 3? A I would not know. Q Let me ask you what does this document

[page 22] reflect? A It looks like wages. I'm not sure. Q Can you turn to the top of page two? A (Witness complied) Q What is the title at the top of page two? A "Reclassification of Individuals Issued 1099's for 1990." Q What does "reclassification" mean? A I'm not sure what they use it for in exam. Q Have you ever used that term, "reclassification"? A No. Q Have you ever seen the term "reclassification" used within the Internal Revenue Service? A Not within our division, so I'm not sure. Q Is it possible that reclassification refers to the Internal Revenue Service considering--

[page 23] A New employees maybe. Q Right -- considering someone an employee? Is there a similar work sheet to this one, with respect to the 941 taxes that were assessed in Plaintiffs' Exhibit No. 1, the Final Notice of Intent to Levy, that reflects the amounts levied? Is there a similar IRS work sheet? A No. Again, the only thing that we would collect is what's shown owed on the return. if that -- if the examination branch comes in with additional assessments, we would collect on that. But we do not assess -- Q Do you receive -- A - the tax on these returns. Q Do you receive information from the taxpayer with respect to the Notice of Intent to Levy that's sent out? A If I'm working the case -- if the case is assigned to me, then I would send out the Notice of Intent to Levy. So any notices of intent to levy that were sent out prior to my

[page 24] assignment then, maybe, maybe not. Copies may come with the case file or the taxpayer may provide you with a copy, but not always. Q Did there come a time where you had occasion to meet with staff members of the National Organization for the Reform of Marijuana Laws? A Yes. Q When was that time? A I think it was April of '94. Q And who requested the meeting? A I -- I did I guess because I just went, so - Q Where was the meeting held? A Gosh. I don't remember, but -- is it Connecticut Avenue? I'm not sure. Is it? Q Yes, it is. The offices? A Uh-huh. Q At that time, yes. A Okay. Q So did you travel to the offices of NORML?

[page 25] A Yes. Q When you were in the offices, did you have occasion to meet with Allen St. Pierre and Donnegal Pierce? A Yes. Q What was the topic of the meeting? A I was there to demand full payment. The first time I was there, I think I met with Donnegal Pierce and I may have rescheduled an appointment later with Allen St. Pierre. Q What was Donnegal Pierce's response to demand for full payment? A He stated that the organization was unable to fully pay the tax liability. Q Did he offer any payment at that time? A I don't think I secured any payment that day. Q Did he attempt to look at the check register or examine the financial books to ascertain if there was an amount that he could pay you? A I don't recall. I can't recall. [page 26] Q Approximately how long did the meeting last? A It may have been an hour, if that long, because I know that I had scheduled other meetings and that wasn't the only meeting that I had. Q Did you warn Allen St. Pierre or Donnegal Pierce of the dangers of nonpayment? A Yes. Q What did you tell them? A I probably warned him of levy, that we would close the business, the possibility of the trust fund recovery penalty assessment. Q Is that the 100 percent penalty? A Yes. Q What else? A I think I interviewed him that day. I'm not sure though. Q Did you take notes? A I did a trust fund recovery penalty interview on Donnegal Pierce that day I think. Q What is a trust fund recovery penalty interview?

[page 27] A It's just an interview. It's a series of questions -- it's like a questionnaire actually and you make a determination based on that questionnaire if that particular person is responsible or show willfulness in the nonpayment of taxes. It also gives you information on other officers that could be potentially responsible. Q And did you take notes during the trust fund recovery penalty interview? A I filled out the questionnaire, yes. Q Do you have a copy of that questionnaire with you? A No. Q Is a copy of that questionnaire in the file? A Yes. Q We would ask that you provide a copy of that questionnaire. A All right.

(Mr. Simonsen exited the room) (Discussion off the record) BY MR. SANDOVAL:

[page 28] Q Did you make Donnegal Pierce and Allen St. Pierre aware that Dick Cowan may have personal responsibility for nonpayment of taxes? A I don't think so. I don't recall. Maybe - Q You might have? A Right. Well, I know that they knew that I needed to interview him, so -- Q Did they disclose to you who had signature authority on the bank accounts? A Yes. Q Who did they say had signature authority? A Well, there were different people had signature authority at different periods because I guess they had different directors at different times.

So at that particular time Richard Cowan had signature authority and I'm not really certain who else. Maybe Donnegal Pierce. But, again, without looking at the bank signature cards I can't say for certain.

[page 29] Q Did they make you aware that they were in the process of moving funds out of the District of Columbia into the State of Tennessee? A No. Q Did they make you aware that at that time they were in the process of moving their 900 service, which generated income, out of the Washington, D.C., office and to an unrelated office in California? A No. Q Did they make you aware of the fact that only Richard Cowan and Allen St. Pierre had signature authority on the accounts? A Probably, yes. Yes, it was those two. Q Did they make you aware of the fact that Richard Cowan wrote checks to himself for cash? A No. Q Did you warn them of the possibility of the loss of the 501(c)(3) status of the organization? A No. Q Did they provide any documentation to

[page 30] you during this interview? A I can't recall. I may have taken some financial information, banks. I'm not sure if I completed a collection information statement while I was there or not, so -- Q So they gave you some banking information, but they did -- A Yes, I believe so. Q -- not make you aware that moved the operating account to a bank in Tennessee? A Not that I recall. Q If they would have made you aware of that fact, would your actions at that point in time have been different? A Yes, because, basically, I was under the impression that the organization did not have any money, that they basically were just -- if they didn't get donations in from people, then they wouldn't have money. So -- that's it. Q Do you consider Allen St. Pierre's failure to inform you that the operating account

[page 31] is in Tennessee as a material misrepresentation? A Definitely, yes. Yes, it should have been disclosed. Well, actually all financial information should have been disclosed, so-- MR. SANDOVAL: Mark this, but I don't want to present it to her yet, as an exhibit.

(Torrence Deposition Exhibit No. 5 was marked for identification.) BY MR. SANDOVAL:

Q During your conversation with Donnegal Pierce and Allen St. Pierre, in which you performed the trust fund recovery penalty interview, did they make you aware that certain amounts of money were paid out to the national director and there were no payroll deductions taken on that money? A I don't recall. Q I'm handing you what's marked Plaintiffs' Exhibit No. 5 for your review. If you would look at the regarding line, it says, "Dick's payroll deductions, IRS conference prep." That's short for preparation.

[page 32] Did Allen St. Pierre and Donnegal Pierce make you aware that they were, in essence, writing loans out of the operating account of the organization to Dick Cowan? A No. Q Was there any discussion of any possible personal liability of Dick Cowan for tax penalties during this interview? A With Allen I think so because -actually the day that I interviewed Allen Dick was supposed to be there. I was supposed to interview them both on that particular day, but Dick did not -- he didn't show, so I was unable to interview him.

And, yes, I did explain to Mr. St. Pierre that there was a possibility of the trust fund assessment against Richard Cowan and himself. I believe he was the assistant director. Q Yes. A Okay. Q Yes, he is. What was the response of Allen St. Pierre after you informed him of the

[page 33] possibility of IRS penalties levied against Dick Cowan personally? A I -- I don't recall really. I mean, it was just my understanding from both Allen and Donnegal that they basically acted under the direction of Dick, and any checks or bills that were paid was authorized by him and they were just doing their job.

So -- it was my impression that Mr. Cowan was the person who ran the organization and nothing was done without his approval. Q Can you read the second paragraph of Plaintiffs' Exhibit No. 5? A "Payments to Dick in lieu of salary will not go over well with the IRS when they audit us for 1993, which we have to assume will happen. The same holds for combining expenses and payroll as a line item." Q Did Allen St. Pierre and/or Donnegal Pierce inform you that Dick Cowan had altered the financial reporting documents that were sent to the board such that the board was not able to

[page 34] determine whether or not 941 taxes were paid? A No. Q Did Allen St. Pierre or Donnegal Pierce let you know who Mr. Jon Gettman was? A No, I don't recall the name. Q How many questionnaires were filled out during interviews with vatious staff personnel of NORML? A I can't recall, but I know there were maybe three; Donnegal Pierce, Allen, and there was a former director who lived in Nebraska -- I think it was Nebraska.

And I did a courtesy investigation and someone conducted the interview for me. So I believe there's a questionnaire from him as well. Q We would ask that you provide those questionnaires and the notes associated with those. A Okay. Q Were there any financial documents provided to you during any of those meetings? A Yes, they did provide us a collection

[page 35] information statement. Q And a collection information statement is an IRS form? A Yes. Q Did they provide you with any supporting documentation to those forms? A Again, I don't recall, but probably -there was probably statements with it, but I'm not sure - Q We would ask that you provide the financial documents and supporting documentation provided to you during those interviews. Has the Internal Revenue Service asserted that there are amounts due and owing by Dick Cowan as a result of 941 violations of NORML? A There was a proposed assessment and my understanding that it was appealed and the is in appeals. Q We would like you to provide us with a copy of the proposed assessment.

Do you know who issued the proposed assessment?

[page 36] A I don't. Q Would you have access to it? A Yes. Well, actually it's in appeals. We've been trying to get the case file, so as soon as we get it-- Q Right, then you'll have it at that time. Okay.

Tell me about your involvement in the case. We know that some time during 1994 the case of the NORML collections was referred to your desk. Give me the chronology of what happened during 1994. If you narrow things down to months, that's fine as well. I understand you don't haven your documents with you. A Okay. I believe I received the case in April of 1994. I made contact and demand. The taxpayer was unable to pay, so I started working on the trust fund recovery penalty along with make some collectability determination on how the organization was going to pay.

[page 37] In September -- no. In September of '94 I sent out the letters with the proposed assessments against who I felt was responsible. In October of 1994 I went on an instructor's detail for 12 months.

What has happened during that time I don't know. The only thing I know is that the case is in appeals, that Mr. Cowan did appeal, I'm not sure who else appealed, and the case was reassigned and someone else has worked it. Q And what was the last contact that you made on the case? A It could have been either July of '94 or September of '94, because I know that I was gone for almose a month in August of '94. So --- I guess it was September of '94 because I sent the letters out in September of '94. Q Is the 501(c)3 status of NORML currently under review? A I'm not sure. Q Who or what division would be the entity or the person that would review that?

[page 38] A That would be examination. Q Now, according to your understanding, examination has closed their file on this matter? A I thought the case was closed prior to -- if I received it in April, I would say they closed it in maybe March or early April. I'm not close sure. Q But that would be something that you could determine from your file? A No, not in our case file. Q Or from the examination -- A I might be able to - Q From the examination file? A -- look on the system and find it, but I'm not sure. Q Could you determine that for us in our next meeting? A When it was closed? Q Right. Do you know what amounts were actually assessed to NORML prior to 1991, so the tax year 1990 and the preceding ones, '89, '88? Has an amount been communicated to the

[page 39] organization that was assessed prior to those years or prior to '90? A There -- I think there was an '89 period open. Q Okay. And that was a period that were collecting in? A Right, I think so. Q Okay. A Now, whether or not that has been paid since that letter was sent I'm not sure. Q Okay. A And that -- that's -- that envelope that you have on top, I know that's not from -- is that from my office? Q Collection group 2800. A Okay. Q Yes. A So there -- there's one period on here, the fourth quarter of '89. Q That is still open? A It may be open. It was open on that date.

[page 40] Q Okay. Can you -- A So -- they could have possibly paid that off by now. Q Can you calculate for us, and we got a calculator for you, can you calculate for us and put it on the record the amount of taxes due and owing after 1990? A 126,135.31. Is that right? I can't -- right, 126,135.31. And, again, I didn't that were can't -run a tape, so -- Q Right. But that amount -- A A ballpark, yeah. Q Approximately that amount has accrued since 1989? A Right, through that date or 30 days from that date. Q You've testified that there's approximately 126,000 in tax assessments that have been levied against NORML from 1989 to 1994.

If you would not mind, could you calculate how much of the 126,000 accrued from 1992 to 1994?

[page 41] A Through '94. Let's see here. 109,276. Q 109,276 of penalties has accumulated during 1992, '93 and '94? A Yes. You know, did you want the 990s as well on these? Q Sure. Yes. A Okay. Q Yes, we do. A Then it probably would be a little less. I need to re-add it because I did add in the '89, '90 and '91 on the 990. Q During your interviews with Allen St. Pierre and Donnegal Pierce did they inform you that the bulk of the taxes and penalties have accrued during the tenure of Richard Cowan as national director? A Yes, I believe he did -- he was responsible for the majority of the periods. Q So that in your estimation of the situation Richard Cowan would have personal tax liability for the bulk of the taxes and penalties and other assessments that were levied, as

[page 42] reflected in Plaintiffs' Exhibit No. 1? A Yes, during the period that he was there. Right. Well, is that when he came into office? In '92? Q Yes, '91. 1991. A '91 . Yes. Q I think that we can wrap up today and let's reschedule the remainder of the deposition for Friday at 10 o'clock at this location, Miles & Stockbridge, 1450 G Street [NW], Washington, D.C. A Okay. I'm scheduled to be off on Friday. I can be here, but are you guys-going to start on time? Q Yes, we'll start on time. A The only issue that we had was Al Adams in disclosure. That was the only issue. But now that we're past that, we can move forward. Q One last question, is there a document or record at the Internal Revenue Service that you could bring on Friday that would summarize the total penalties and the total amount paid and tell us what is the total amount outstanding for the

[page 43] various taxable years reflected in Plaintiffs' Exhibit No. 1 and Plaintiffs' Exhibit No. 3? A You want the total amount outstanding? Q Right, and the total amount paid, if any. Understanding, of course, that it may-- A Total amount paid from the fourth quarter of '89? Q Right. We understand that it may be zero, but we'd just like, like if there is a statement or a backup or that would reflect that, that would be fine with us. A So Friday, September 29th at 10:00? Q Yes.

(Discussion off the record) MR. SANDOVAL: Also, let the record reflect that the Defendants in this matter represented by Ginsberg, Feldman & Bress were apprised more than one month in advance of this deposition. Also, Defendant Marvin Miller was apprised of the date of this deposition more than one month in advance, that both sides have chosen

[page 44] not to attend, and that it is the Plaintiffs' intention to use this deposition against the Defendants.

We have provided reasonable notice and they have chosen to fail to appear.

I think that's it. We'll wrap up and continue this deposition Friday at 10 'clock.

(Whereupon, at 4:40 p.m., the deposition of NICOLE TORRENCE was adjourned, to reconvene on Friday September 29, 1995 at 10:00 a.m.)

CERTIFICATE OF NOTARY PUBLIC I, SHARI R. BROUSSARD, the officer before who the foregoing deposition was taken, do hereby certify that the witness whose testimony appears in the foregoing deposition was duly sworn by me; that the testimony of said witness was taken by me in stenotyp[e] and thereafter reduced to typewriting under my direction; that said deposition is a true record of the testimony given by said witness; that I am neither counsel for, related to, nor employed by any of the parties to the action in which this deposition was taken; and, further, that I am not a relative or employee of any counsel or attorney employed by the parties hereto, nor financially or otherwise interested in the outcome of this action. [signed by] SHARI R. BROUSSARD Notary Public in and for the District of Columbia

My commission expires July 14, 2000

[followup deposition was postponed till Thursday, October 5, 1995, at which time the remaining testimony was recorded as "volume III." There is no actual "volume II," which referred to the originally scheduled September 29 followup deposition that did not take place.] ??