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UNITED STATES DISTRICT COURT WESTERN DISTRICT OF NEW YORK ------------------------------------ RICHARD E. GRAHAM, 91-CV-800 Plaintiff, Buffalo, New York -vs- LARRY E. JAMES, October 15, l993 Defendant. ------------------------------------ TRIAL BEFORE THE HONORABLE JOHN T. ELFVIN UNITED STATES DISTRICT COURT JUDGE APPEARANCES: For the Plaintiff: DENIS A. KITCHEN, ESQ. 8340 Main Street Williamsville, New York 14221 For the Defendant: JAMES OSTROWSKI, ESQ. 384 Ellicott Square Building Buffalo, New York 14203 Court Recorder: JEANNE B. SCHULER Transcription Service: ASSOCIATED REPORTING SERVICE Lower Level One 120 Delaware Avenue Buffalo, New York 14202 716-856-2328 Proceedings recorded by electronic sound recording. Transcript produced by transcription service. P R O C E E D I N G S THE COURT: On the record. (KENNETH C. HELINSKI, Defendant's Witness, Previously Sworn) CROSS EXAMINATION BY MR. KITCHEN: Q. Mr. Helinski, I believe when we stopped yesterday we were talking about the various events that occurred in Las Vegas at the Comdex, and I believe you had originally stated that the only people there that were involved with your business were yourself and Mr. Graham, but that you then subsequently recalled that there was somebody else who was also there, and who was that? A. Louis Manze. Q. And -- THE COURT: Pardon me? THE WITNESS: Louis Manze. THE COURT: Yeah. BY MR. KITCHEN: Q. And you indicated that he, I believe that he showed -- THE COURT: He was there trying to elbow his way into the business. THE WITNESS: Yes. THE COURT: Right. MR. KITCHEN: Right. BY MR. KITCHEN: Q. And he showed up rather unexpectedly? A. Yes. Q. How long had you been there when he showed up? A. He was there when I had arrived in Las Vegas. Q. Oh. A. I had a previous appointment. That's why I did not go out to Las Vegas with Mr. Graham. Q. Well, now, didn't you indicate that you were there and Mr. Graham came later? Isn't that what your previous testimony was? You were there in Las Vegas and Mr. Graham showed up later? A. No. I said I had a previous appointment. That's why I was not in Vegas with Mr. Graham at the same time. Q. So what you're saying is that Mr. Graham was in Las Vegas before you were? A. Yes. Q. And was Mr. Graham there for the purposes of the Comdex show? A. Yes. Q. And did he, did he set up the booth for the show? A. Yes. Q. And where was Mr. Manze? Was he there with Mr. Graham? THE COURT: You're asking him about before Mr. Helinski arrived or -- MR. KITCHEN: Yes. THE COURT: How would he know that? If he wasn't there, how would he know it? That's all I'm -- MR. KITCHEN: Well, I might ask him how he knew, but -- BY MR. KITCHEN: Q. In any event, was -- Mr. Manze and Mr. Graham were there when you got there? A. Yes. Q. Okay. But you didn't know Mr. Manze was going to be there? A. No, I did not. Q. And you indicated Mr. Manze himself had no connection with the business at all? A. He was somebody that I knew that I had spoken to about the business. Q. Well, I expect you, anticipate you probably spoke to quite a few people about the business, didn't you, while you were trying to get the business going, right? A. Well, that would be natural. Q. Yes. But not everybody you spoke to showed up in Las Vegas unexpectedly and tried to elbow their way into the company, did they? A. No. Q. Okay. And you said you had a previous appointment. Where was your previous appointment? A. I had some business I had to take care of prior to attending the Comdex show. THE COURT: Are you able to answer the question? Where was it? THE WITNESS: It was in Australia. MR. KITCHEN: Okay. THE COURT: Where? THE WITNESS: Australia. THE COURT: Oh. BY MR. KITCHEN: Q. How long were you in Australia? A. Three days. Q. You were there for, just for business? A. Yes. Q. Okay. You've been to Australia more than once? A. Yes. MR. OSTROWSKI: Objection. THE COURT: Go ahead. It's been answered. BY MR. KITCHEN: Q. Now, this -- so you came to Las Vegas directly from Australia? A. Yes. Q. You didn't go back to Buffalo? A. No. Q. Did Mr. Manze have any financial interest in the business? A. He did make an offer for some money. THE COURT: He had made an offer? THE WITNESS: Yes. BY MR. KITCHEN: Q. And when did he make this offer? A. It was prior to our trip to Las Vegas. Q. What did he offer? He offered to buy the business, in other words? A. No. He didn't offer to buy it. He offered a cash infusion of $50,000. Q. Okay. And that -- you didn't accept that offer, apparently? A. We were negotiating with it at the time, but with what happened in Vegas I discontinued my relationship with Mr. Manze. Q. Well -- A. Because I had found out that Mr. Graham and Mr. Manze had started their own -- Q. Well, wait a minute. Let me -- A. -- partnership, after had gotten back to Las Vegas. Q. Just a minute. I move to strike that. It's not responsive to the last question. THE COURT: Go ahead. BY MR. KITCHEN: Q. The -- your relationship with Mr. Manze then was limited to simply him making an offer to put some money into the business? A. That's correct. Q. And you refused that offer? A. Well, I was negotiating with him at that point for -- Q. Well, I realize -- A. -- payback terms -- Q. Just a minute. A. -- for interest and for his claim in the company. Q. Just a minute. I ask the question, whether you refused the offer, and you give me a long story. Now, can you tell me, did you or did you not refuse the offer of a $50,000 cash infusion from Louis Manze? A. No, I did not. Q. Did you accept the offer of $50,000? A. Yes, I did. Q. All right. And he gave you the $50,000? A. Yes. Q. And when did he give you the $50,000? A. Prior to the Comdex show in Las Vegas. Q. Oh. And what did he receive in exchange for the $50,000 that he gave you prior to the Las Vegas trip? A. Well, at the point we were still drafting what we would be, you know, his position with the company. Q. Is the answer then, nothing? A. That's correct. Q. Okay. THE COURT: Meaning you had the money actually in hand. No obligation to return it. And you hadn't spelled out the quid pro quo? THE WITNESS: Not prior to him giving me the money. THE COURT: All right. You received the money under some obligation to turn it back if the deal didn't fly? THE WITNESS: Yes. That's correct. BY MR. KITCHEN: Q. How long before the, before the Comdex show did he give you the money? A. That was just a matter of a few days prior to it. Q. How did -- A. Probably no more than a week or so. THE COURT: Before you went to Australia. THE WITNESS: No. Prior to the Comdex show. THE COURT: Prior to what? THE WITNESS: Prior to going to the Comdex show. THE COURT: Is that Las Vegas? MR. KITCHEN: Yes. THE WITNESS: Yes. THE COURT: But you were three weeks in Australia. THE WITNESS: Three days. THE COURT: Oh, three days. THE WITNESS: Yes. THE COURT: I'm sorry. BY MR. KITCHEN: Q. Was your trip to Australia in connection with that same business? A. Yes. Q. And did you receive the $50,000 before you left for Australia? A. Yes. Q. Did you use part of the $50,000 for your trip to Australia? A. No, I did not. Q. Did you use part of your $50,000 for the Las Vegas -- A. Some of it went to pay for expenses, yes. Q. All right. Now, you said you paid for everything for the Las Vegas trip? A. Yes. Q. And was the -- so you paid for, you paid for Mr. Graham's plane ticket? A. Yes. Q. You paid for your plane ticket? A. Yes. Q. And you paid for Mr. Manze's plane ticket? A. No, I did not. Q. Was there anybody else there? I mean, or was it just the three of you? A. Just the three of us. Q. Okay. Nobody other than you, Mr. Graham and Mr. Manze? A. That's correct. Q. All right. And were you staying in the same hotel? A. Yes. Q. What hotel was that? A. Easy 8 Motel located one block behind the Excalibur. Q. Okay. And were you all in the same room? A. No. Q. Okay. Were you in a room by yourself? A. No. I was sharing a room with Mr. Graham. Q. Okay. And where was Mr. Manze? A. He was in his own room. Q. Okay. Nearby or -- A. I would assume so, yes. He was in the same hotel. Q. And he was in that room by himself, as far as you know? A. As far as I know, yes. Q. All right. Are you acquainted with Mr. Manze's son? A. No. I'm not familiar with him. Q. You have never met him? A. He didn't mention his son, but I am not familiar with him. Q. You've never met him? A. No. Q. Okay. So Mr. Manze's son wasn't there in Las Vegas? A. Not that I know of. Q. Not that you know of? Well, you would have been aware of it, right? A. Well, if you've been to Comdex, there's 600,000 people that go through a show. Q. Well, let me ask you. That was a yes or -- A. I don't keep track of every one of them. THE COURT: Let him finish his answer. There's 600,000 people, so you wouldn't know if he was there. Is that your answer? THE WITNESS: I don't pay attention to everybody. No, I don't. BY MR. KITCHEN: Q. I see. I see. How long were you there in Las Vegas? A. Five days, Monday through Friday. Q. And was Mr. Graham and Mr. Manze there the same -- well, were they there every day that you were there? A. I know Mr. Graham was with me, and Mr. Manze was there during the time, but he wasn't at our booth the full time. Q. To your knowledge, was Mr. Graham and Mr. Manze in Las Vegas during the five days that you were in Las Vegas? A. I would assume so, yes. Q. On what is your assumption based? A. That Mr. Graham was with me during the whole time, and I had seen Mr. Manze intermittently during that week. Q. Well, did you see him the first day you arrived? A. The first evening, yes. Q. I see. And did you see, see him the last day when you left? A. He was there that morning. Q. I see. So, and you have no reason to believe that he left Las Vegas during that five days, do you? A. None that I know of. Q. Did you go to any other shows in connection with this business? A. Yes. We went to a multi-media -- THE COURT: Business show you mean. MR. KITCHEN: Business show. Yes, sir. THE WITNESS: Yes. MR. KITCHEN: Yes, sir. THE WITNESS: Yes. We went to a multi-media show in Boston, Massachusetts. BY MR. KITCHEN: Q. When was that? A. That would be in September of 1990. Q. Okay. A month before the Comdex show? A. Approximately. Q. And when you say we went, who's we? A. Myself, Mr. Graham and Mr. Morgan. Q. Is that Chuck Morgan? A. Yes. Q. And was Mr. -- were you involved with Mr. Manze at that time? A. He had just introduced himself to me. Q. I see. So you just had nothing more than an acquaintance at that time? A. Correct. Q. And so, he had not then made any offer to infuse capital into the business at that time, did he? A. No. He was -- that's when an offer had first come up as far as presenting money to the business. Q. Oh. So when he introduced himself is when he also offered the money? A. Correct. Q. And before that, you didn't even know him? A. That's correct. Q. So when he made your acquaintance, he -- is it about the same time he handed you $50,000? A. No. It was after that. Q. Okay. But shortly after that? A. About two weeks afterwards, yes. Q. And you indicated you gave him nothing. Did you, did you give him a receipt or anything to indicate that he -- A. No, I did not. Q. Now, when you were in Las Vegas, you indicated that Mr. Graham stole $7,000 from you and also all your leads? A. That's correct. Q. Where was this $7,000 when it was taken? A. It was in our hotel room. Q. And did you actually see Mr. Graham take the $7,000? A. No, I did not. Q. So you don't really know whether it was Mr. Graham who took the $7,000? A. Well, considering that the business leads were missing -- Q. That was a yes or no question. A. -- anybody that would have a business interest would take everything. Q. That was a yes or no question. MR. OSTROWSKI: He's answering the question, Your Honor. MR. KITCHEN: No. He -- MR. OSTROWSKI: He's subject to interpreting the word no. He's the witness. MR. KITCHEN: Yes. He's also required to answer the questions. BY MR. KITCHEN: Q. The question, was that the only two things taken, the money and the leads? A. Yes. THE COURT: Money and what? MR. KITCHEN: The leads. BY MR. KITCHEN: Q. And how were these leads, what form were they in? A. They were on paper. When you go to a trade show like that, you get a plastic card with your name, company name and phone number on it. And when you go up to a, an exhibitor that you want information on, they run the card through, similar to a Master Card machine, that imprints the information on a piece of paper. Q. I suppose it being the Comdex, one would expect things to be automated? A. Yes. Q. Well, where was the $7,000 in your room? A. It was in the top right-hand drawer of the dresser that was in the room. Q. And where were the leads? A. In the same drawer. Q. And when did you last see them? A. It was in that morning, the Friday morning that we were preparing to go to the exhibit for the closing day. Q. And when did you find that they were missing? A. When I had returned to the room that evening, after the show had closed. Q. And did you report this missing money to the police? A. No, I did not. Q. Did you report this missing money to the hotel management? A. No, I did not. Q. Did you report this missing money to anybody? A. No, I did not. Q. So the first time you've revealed then that this $7,000 and the leads were taken is here in this Court? A. Yes. Q. Did you and Mr. Graham and Mr. Manze have any arguments before the end of this Las Vegas trip? A. No. We had -- there was a lot of tension there but no arguments to speak of. Q. Okay. You indicated that your business never incorporated, correct? A. Correct. Q. And we were looking at a contract that referred to this as a corporation in the State of New York, and you indicated that it, you were going to, but you never did? A. Correct. Q. Did you ever incorporate in any other State? A. Yes, I did. Q. So you were a corporation? A. Yes. I did have the papers filed as a Subchapter S corporation in the State of Nevada. Q. Okay. And -- THE COURT: You did incorporated in Nevada. THE WITNESS: Yes. BY MR. KITCHEN: Q. So in fact you were a corporation? A. Yes. Q. Okay. And when -- THE COURT: When was that? THE WITNESS: That would have been approximately July of 1990. BY MR. KITCHEN: Q. And did you have an attorney do that incorporation? A. No. It was done through a business service that had a seminar locally that I attended. Q. Now, was that corporation then also registered to do business in the State of New York? A. That's what I was filing for after I had gotten my papers back from Nevada. Q. Okay. So -- THE COURT: From where? THE WITNESS: Nevada. BY MR. KITCHEN: Q. So that corporation is still in existence? A. No. It's been dissolved. Q. And who dissolved that? A. I did. Q. When did you dissolve it? A. It was in December of 1990. Q. And who was the, who were the shareholders of that Nevada corporation? A. Just myself. Q. And who were the directors of that corporation? A. I was the main person on the board. I had, you know, other people that were helping me. Q. Well, did you have anybody who were, who were elected directors of the board of directors? A. No, I did not. Q. And who were the officers of that corporation? A. I was the chief executive officer. Q. Okay. And were there any other officers? A. No. Q. Did there come a time when you resigned your office? A. No, there wasn't. (Plaintiff's Exhibit #54 was marked for Identification.) Q. Okay. I'm going to show you what's marked Plaintiff's Exhibit 4 -- excuse me, Plaintiff's Exhibit 54, which I think can be described for the Court's purpose as a letter on a, on a -- copy of a letter on a letterhead, with the name CARRS, C-A-R-R-S, at the top, and dated November 15, 1990. Have you seen that before? A. No, I did not. Q. Okay. And take a look at the signature at the bottom. Is that your signature? A. No, it's not. Q. Does it look like your signature? A. No. It looks like a pencil copy thereof. Q. Looks like a pencil copy thereof? A. Yes. My letters are more distinct. The two N's in my name on this signature run together, and also, there's no S in my last name. Q. So you haven't seen that particular piece of paper before? A. No, I did not. Q. Do you recognize the letterhead? A. That's a copy of the original letterhead -- Q. Excuse me. The answer -- or the question was, do you recognize the letterhead? A. Yes. Q. Okay. Where have you seen that before? A. That's the original letterhead that we had designed for the business. Q. Now, and you were the only one involved in the business at that time, right? A. Yes. Q. So when you say we, it's just yourself? A. Yes. Q. All right. So you have no idea -- well, were you the only one who had the stationery for CARRS? A. No. When we went to the Comdex show, we did bring extra stationery with us, to make notes or, you know, for whatever purposes we had, you know, for business meetings or whatever. Q. Now, have you read the contents of that? A. Yes, I did. Q. Okay. And you've never seen those contents before? A. No. Q. Was the subject matter that's discussed in there, was that the subject of discussions between yourself and Mr. Manze? A. It was mentioned at one point, like during some you know, tense moments that we had there. Q. Tense moments. Where, when did these tense moments occur? A. Well, pretty much we had tension during the whole show. As a Comdex show, you're on the floor for 10 or 12 hours a day. I mean, you tend to get on each other's nerves a little bit. Q. Well, we're not asking though about that. We're asking about the tense moments that, in which there was a discussion about the subject matter that's also in that Exhibit 54? A. I don't recall the exact day that we had any, you know, that particular discussion. Q. And at any time did you indicate to Mr. Manze that you would give up your control of the CARRS Corporation? A. It was discussed verbally. Q. And at any time did you agree verbally that you would give up your, your running of the CARRS Corporation? A. I told him that it's something that should be discussed when we got back to Buffalo -- Q. And at any -- A. -- when things would calm down. Q. And at any time, did you agree to give up running the CARRS Corporation? A. I did not indicate that. I did mention it to -- it was brought up by Mr. Manze. Q. Yes. And did -- A. And I told him that, when we get back to Buffalo we could sit down and talk about it after the tension would be over. Q. Okay. And then at any time did you indicate your willingness to give up the running of the CARRS Corporation? A. No. Q. All right. So you never gave it up? A. That's correct. Q. But you did dissolve the corporation? A. Yes. Q. And when did that dissolution occur? A. In December of 1990. Q. Okay. And what became of the assets of that corporation? A. We really didn't have any assets at that point. Q. Who's we? A. Well, the corporation. Q. I see. A. Myself and the corporation. Q. There were no assets at all? A. No. Q. Okay. What became of the assets? A. I just said we didn't have any, that there were no assets. Q. At that time? A. Yes. Q. What became of the assets that had gone through the corporation up until then? A. Mr. Graham had retained possession of the computer equipment that was purchased. Q. I see. Well, I wanted to talk about that, too, but how about the other assets of the corporation? A. Such as? Q. The cash assets? A. There were no cash assets left. Q. I see. So what happened to all the cash assets of the corporation? A. The bank account was subsequently frozen, and I have no idea what the status is of the account as of today. Q. Where was the bank account? A. Through Liberty Bank. Q. I see. And how much was in that account? A. I would estimate probably around $20,000, $25,000. Q. And that was at Liberty Bank? A. Yes. Q. Do you happen to know who or what froze that account? A. When I had gotten back to Buffalo, I was notified by the bank that there was a freeze on the account. Q. Did they indicate who or what froze that account? A. Yes. MR. OSTROWSKI: Objection. Hearsay. THE COURT: He may answer yes or no. THE WITNESS: Yes. BY MR. KITCHEN: Q. And who or what did freeze -- MR. OSTROWSKI: Objection. Hearsay. BY MR. KITCHEN: Q. Who or what did freeze the account? MR. OSTROWSKI: Objection. MR. KITCHEN: Your Honor, he's essentially testifying, you know -- THE COURT: Inasmuch as this is new matter, a new area, I'll impose the hearsay rule. Objection sustained. MR. KITCHEN: All right. BY MR. KITCHEN: Q. And what did you do in response, did you do anything to try and unfreeze it? A. No, I did not. Q. Okay. Do you know what you would have had to do to unfreeze it? MR. OSTROWSKI: Objection. Irrelevant. THE COURT: He may answer. THE WITNESS: I was not aware of my procedure for unfreezing the money. BY MR. KITCHEN: Q. And what is the status of that account now? A. I have no idea. I lost track of it. Q. And in whose name was that particular account? A. That was a joint account between myself and Mr. Manze. Q. So it was in Mr. Manze -- THE COURT: Was it set up with all -- it wasn't set up with all, but from the $50,000? THE WITNESS: Yes. I had a previous account that I was starting up and then when Mr. -- THE COURT: Yeah, I know. Wait a minute. I don't want you to give a narrative. THE WITNESS: Okay. THE COURT: Go ahead. Ask a question. BY MR. KITCHEN: Q. Now, where did that money come from that was in the account? A. That was from a previous established account that I had secured financing for myself for, and -- Q. No, you indicate -- A. -- when Mr. Manze -- MR. OSTROWSKI: Objection to interrupting the witness. MR. KITCHEN: Oh, I'm sorry. No. Let him -- that's fine. THE COURT: Let him answer. MR. KITCHEN: Please finish. THE COURT: Finish your answer. THE WITNESS: And then when Mr. Manze put in his $50,000 that was subsequently deposited to that account. BY MR. KITCHEN: Q. All right. So at, at some point -- well, did you previously testify that you had obtained a loan for some $35,000? A. Yes. I had secured my own financing prior to -- Q. So the answer is yes? A. Yes. Q. And had the $35,000 been put into that account? A. Yes, it had. Q. So once Mr. Manze put in his $50,000 there was at some point $85,000 in that account? A. During the course of the transactions there would have been, but that large amount was never in there at one time. Q. Okay. Was there, has there ever been any litigation between yourself and Mr. Manze? A. No, there hasn't. Q. And I think you indicated you had no agreement whatsoever with Mr. Manze? A. That's correct. Q. So you had no obligation to him with regard to that $50,000? A. That's correct. Q. So you could spend it in any way you wished? A. That's correct. Q. Now, you indicated that some hardware was also stolen? A. The hardware wasn't stolen, and the possession of it was retained by Mr. Graham. Q. I see. When was this hardware acquired? A. It was acquired during the summer of 1990, as I was starting to build the business. Q. And was the, when the hardware was acquired, in whose possession was it placed initially? A. I had purchased it under the business name of CARRS. Q. In whose possession was it placed initially? A. It was kept at Mr. Graham's house. Q. All right. A. To -- because he had existing computer equipment. Q. And -- THE COURT: He had what? THE WITNESS: He had his own computer equipment at that time. BY MR. KITCHEN: Q. And it stayed there at Mr. Graham's house? A. Yes. Q. And there came a time -- did there come a time when Mr., when you demanded that Mr. Graham turn the equipment over to you? A. Yes, there was. Q. And when did you make that demand? A. After we had gotten back from Las Vegas. Q. Okay. How soon after you got back from Las Vegas? A. We had returned on Saturday. I went to see him on Monday morning. Q. And at that time, this was at his house? A. Yes. Q. And what, what took place at his house? A. He wouldn't let me into his house. He got very violent. He threatened me, and I just decided to leave it, you know, leave him alone at that point. Q. Did you, did you go to the police at all about him wrongfully retaining possession of your property? A. No, I did not. Q. And did you bring any legal action against Mr. Graham for wrongfully retaining this? A. No, I did not. Q. Okay. What was the name of your Nevada corporation? A. Computer Assisted Records Retrieval Service. Q. Okay. THE COURT: Same name? THE WITNESS: Yes. BY MR. KITCHEN: Q. Well, the name in Exhibit 14 says Computer Assisted Records Retrieval Systems, Inc. So was that intentionally different? A. No, it was not. That was a mistake on my part. Q. Okay. So in the employment agreement of, marked as Defendant's 14, and in evidence, when you put down Computer Assisted Records Retrieval Systems, Inc., you really meant Computer Assisted Records Retrieval Service, is that correct? A. No. The name would have been correct. I made a verbal mistake. Q. Well, okay. What name would have been correct? A. The one that's in the contract, of Systems, Inc. Q. I see. And when you put down that this was a New York corporation, that was, was that a mistake? A. I was in the process of filing the New York State incorporation papers when this contract was being drawn up. Q. But you were in fact already incorporated? A. In Nevada, yes. Q. Okay. How much compensation did you pay to Mr. Graham? A. Up until the Comdex show, I did not have a chance to pay him anything. Q. You didn't have a chance to? A. No, because I was busy trying to get together for the trade show, plus my business meeting prior to Comdex. Q. All right. So this was just something then that slipped your mind? A. Yes. It would have been caught up had the business stayed together after we had gotten back from Vegas. Q. Well, when you finally had a chance to rest from your labors, did you then pay him the $400 a week? A. No. Because at that point he had already taken $7,000 from me. Q. Did you, did you ever tell Mr. Graham that you thought he had taken $7,000? A. I had indicated that to him when I went to his house on Monday morning. Q. All right. So you never mentioned to him -- it to him before that? A. Correct. Q. Did you ever give any money to Mr. Manze when you were in Las Vegas? A. No, I did not. Q. Did Mr. Manze ever demand any money from you in Las Vegas? A. No, he did not. Q. Did the, did the company sell any products? A. Yes, we did. Q. What did you sell? A. CD Roms. THE COURT: What? THE WITNESS: CD Roms. THE COURT: CD Roms? THE WITNESS: Yes. BY MR. KITCHEN: Q. And how many of those did you sell? A. I would estimate around 250. Q. Total? A. Yes. Q. And how much did you sell them for? A. It was approximately $60 apiece. Q. That would be a total of approximately $15,000? A. Yes. Q. And what was the cost of producing CD Roms? A. At that point it was about $7,500. Q. So in rough terms we say then the gross profit would have been about $7,500? A. Yes. Q. Did you pay any portion of that gross profit, pursuant to the employment agreement, to Mr. Graham? A. The billing hadn't gone through. Q. I think that's a yes or no kind of question. THE COURT: If you want a yes or no, tell him to answer yes or no. BY MR. KITCHEN: Q. Yes or no? A. No. Q. And I believe 15% of the $7,500 would have been $1,125, is that correct? A. Yes, it is. Q. Do you owe any money to Mr. Manze? A. No, I do not. Q. Well, what about the $50,000 that he gave you? A. I had lost contact with Mr. Manze after Las Vegas. Q. You mean you never saw or heard from him again? A. That's correct. Q. You don't know where he is now? A. There is only rumors that are strictly hearsay. Q. Well, if you -- whether you had lost contact with him or not, are you under any obligation to return any of the $50,000 that he gave you? A. There is a moral obligation there. Q. But you do not believe there is any legal obligation? A. If I would be able to meet with Mr. Manze, I believe we could work out some type of a re-payment plan. Q. So that's something you would be willing to do? A. Yes. Q. Now, the -- Phoenix is your current business name, correct? A. Yes. Q. And that's not incorporated? A. No, it's not. Q. So that's just a proprietorship owned by you individually? A. Yes. Q. And you have a business certificate filed? A. There should be one filed, yes. Q. You believe there is then? A. Well, you need a business certificate in order to open up a business banking account. Q. And you do have a business banking account then? A. Yes, I do. Q. Under the name Phoenix? A. Yes. Q. And you produce CD Rom's? A. Yes. Q. What's on your CD Rom's? A. I have a general collection of miscellaneous material covering multiple topic areas. Q. Well, are these like programs and that sort of thing? A. Yes. Q. Are they shareware programs? A. Yes. Q. And some freeware programs? A. Yes. Q. Public domain programs? A. Yes. Q. Is this collection in any way similar to the CD Rom being published by Mr. Graham under the name Night Owl? A. Well, the collection content would be similar. Q. That's I think a yes or no. A. Yes. Q. If that's similar. Okay. So it is similar? A. Yes. Q. Okay. But different in any way? A. Yes. Q. Okay. In what way are yours different? A. Well, I have my own front-end program that I wrote for my disk, so that the entire interfacing is different. I use a different indexing system. My disk runs entirely self- contained from the CD. There is no installation or alteration to an existing computer system by my product. Q. And when you say the front-end system, you're talking about like the retrieval system? A. Yes. Q. Okay. So you don't use the same program that Mr. Graham has for file retrieval? A. That's correct. Q. Okay. Did you ever use Mr. Graham's program on your file for file retrievals? A. For the first, original disks that we were working on, yes. Q. And what versions or names would those have had? A. Well, that would have been the first CARRS disk, and I don't recall which one I had on my first Phoenix disk. Q. Well, when did you, when did you form Phoenix? A. That was in -- THE COURT: It wasn't formed, was it? BY MR. KITCHEN: Q. Well, when did you, when did you open for business, and begin using the name Phoenix? A. Approximately March of '91. Q. And this was many months, or several months, at least, after you had terminated any and all relationship with Mr. Graham, correct? A. Yes. Q. Did you have any access to Mr. Graham's material? A. Yes, I did. Q. Okay. And did you use any of that material? A. Yes, I did. Q. And what did you use? A. I used the files that were on the disk, and the original indexing structure that was on the CD. Q. Okay. The file retrieval system or front-end, as you -- A. Yes. Q. All right. And that was, that was off of Mr. Graham's Night Owl disk, correct? A. Yes. Q. Did you have some agreement or contract with Mr. Graham for the use of that program? A. Not at that point. Q. I see. So at some later time you did have an agreement or understanding? A. No, we did not. Q. All right. So is it safe to say that you didn't have a -- THE COURT: That leaves only an earlier time when you may have had such an agreement. BY MR. KITCHEN: Q. Did you have one at an earlier time? A. When we were agreeing on the original CARRS product, that he would write the retrievals for it. Q. But that was for a, a CD Rom disk that was published under the name CARRS, correct? A. Yes. Q. And the CARRS Corporation had been dissolved by December of 1990, correct? A. Yes. Q. Did you inform Mr. Graham that you were starting a new publishing business for CD Rom's under the name Phoenix? A. No, I did not. Q. And did you tell him that you were going to use the contents of his disk on the, on your new Phoenix disk? A. Being that it's public domain shareware program and that they are meant to be copied and distributed under the Association of Shareware Professionals definition of shareware and public domain material. Q. I see. Now, that's a pretty long answer. Is that a yes or a no? A. Yes. THE COURT: You didn't ask for a yes or no. MR. KITCHEN: Oh, I'm sorry. BY MR. KITCHEN: Q. Now, the -- so you had at that point in March of '91 then, a contract or understanding with ASP? A. No. That's a publicly available definition -- Q. Yes or no? A. No. Q. Did you have any understanding or contract with ASP? A. No. Q. Okay. So did you assume that you just had the right to publish all of these programs? A. Yes, I did. Q. And did you also believe that you had the right to copy those programs directly off Mr. Graham's disk? A. Yes. Q. And did you also feel that you had the right to copy the entire contents of that disk and the arrangement of those programs on it? A. Yes. Q. Mr. Graham's retrieval system that was used on your first disk, however, was not, was not a freeware or shareware program, was it? THE COURT: Was not what? BY MR. KITCHEN: Q. Was not a freeware or shareware program. Was it? Yes or no? A. I don't recall -- Q. Yes or no? A. I don't know. THE COURT: If you can't, if you find yourself unable to answer yes or no, just indicate that. THE WITNESS: Oh. Unable to answer. BY MR. KITCHEN: Q. Did you believe at the time that it was a shareware program? A. Yes, I did. Q. Did you notice or did you read the copyright notice on that program? A. No, I did not. Q. Have you since? A. Have I since what? Q. Have you since read the copyright notice on that program? A. No, I have not. That's a very old disk. I don't make it anymore. Q. I see. How many of that disk did you make? A. Oh, probably about 200 or 300 disks. Q. And how much did you sell them for? A. Approximately $30 a disk. Q. Do you still publish this type of disk? A. Yes, I do. Q. And is that in direct competition with Mr. Graham's disk? A. Yes, it is. Q. And do you still obtain your shareware programs from Mr. Graham's disks? A. No, I do not. Q. And when did you -- how -- what version are you up to now? A. I'm up to version 4. Q. Okay. So I take it you've published four versions? A. Yes. Q. And version 1 was essentially a copy of Mr. Graham's disk, including his retrieval system? A. Yes. Q. Now, how about disk version 2, was that also a copy of Mr. Graham's disk? A. Partially. Q. And but did it include his retrieval system? A. No, it did not. Q. All right. And disk number 3, was that also a copy of Mr. Graham's disk? A. No. Q. Where did you obtain your material for version 3? A. I had other CD's that I used. I have about 60 shareware disks in my possession that I use to make my own collections from now. Q. Okay. So essentially you buy other, or you buy competitive CD Rom disks containing shareware, and you just copy the material from them? A. Pieces of material. Q. All right. Do you, do you bother to try to secure the permission from any authors that require it, to be able to publish this, their particular -- A. I'm in touch with probably 100 to 125 authors that submit material to me directly. Q. And they submit it to you with the idea that you're going to put it on your disk and publish it? A. Yes. Q. Okay. But you didn't do that for the first two versions, did you? A. The second one, I had material from authors on it. Q. How many of the version 2 did you publish? A. Approximately 600. Q. When CARRS was first formed, did it have a business address? A. Yes. Post office box 257. Q. Whereabouts was that post office box? A. Galleria Mall. Q. In Cheektowaga then? A. Yes. Q. All right. And that was back when you first started it, in the summer of 1990 was it? A. Yes. Q. Did it ever have any other business address? A. No. Q. Did it ever have Mr. Graham's address on Potomac Avenue as its business address? A. After Mr. Graham filed his own D/B/A with Mr. Manze, when we had gotten back from Las Vegas. Q. I see. So this was a change in the business address? A. No, it was not. Q. Well, then, you still had the post office box? A. Yes, I did. Q. Did you ever change it, the post office box over to Mr. Graham's address? A. No, I did not. Q. Well, then, how did the business address change from the Cheektowaga post office box to Mr. Graham's address? A. When we had gotten back from Las Vegas, Mr. Graham and Mr. Manze formed a partnership using the name CARRS, and they have a D/B/A on file to that effect. Q. And that D/B/A used Mr. Graham's address? A. Yes. Q. But they, they didn't make any change to your post office box, did they? A. No, they did not. Q. But then subsequent to that, you went to the post office and had their mail transferred from the Potomac address over to your address, correct? A. No, I did not. Q. Did you talk to the post office and ask them to transfer all the mail going to Mr. Graham's address to your post office box in Cheektowaga? A. I would have no interest in the mail going -- THE COURT: Did you or did you not? BY MR. KITCHEN: Q. No. Did you or did you not? A. No, I did not. Q. Were you ever contacted by postal inspectors regarding a change of address from Potomac to post office box, your post office box in Cheektowaga? A. Yes. I was notified subsequently of that. Q. And didn't they indicate to you that what I just suggested had in fact actually happened, that there was a change of address from Mr. Graham's address on Potomac -- MR. OSTROWSKI: Objection. Hear -- BY MR. KITCHEN: Q. -- to send all mail to the -- THE COURT: Pardon me? BY MR. KITCHEN: Q. -- Cheektowaga post office box? THE COURT: Wait a minute. What? MR. OSTROWSKI: Objection. Hearsay. MR. KITCHEN: Well, I'm not asking it for the truth. I'm asking it for Mr. -- THE COURT: For what? MR. KITCHEN: The witness' knowledge as to whether he was -- THE COURT: Why is it relevant? MR. OSTROWSKI: You're impeaching him with a prior bad act. You're offering it for the truth. MR. KITCHEN: I'm, I am asking him whether he was made aware that somebody had changed the address of the -- Mr. -- that sent all Mr. -- all the mail that went to Mr. Graham's house on Potomac over to his business box. And then, of course, I would have some questions as to whether he had received such mail. THE COURT: Well, I think you can get at that with a differently phrased question. BY MR. KITCHEN: Q. Did you at any time start receiving mail originally addressed to the Potomac address and ending up in the Cheektowaga box? A. I had received approximately three or four pieces of mail that had a change of address on it. Q. And did you, were you surprised to see that change of address? A. Yes, I was. Q. And didn't make any change of -- that change of address yourself? A. No. I -- on the yellow sticker that was on the envelope I crossed off a mark to return to sender, and then that afternoon I had gotten back home, I was called by a post office indicating that there was -- MR. OSTROWSKI: Objection. Hearsay. THE COURT: All right. You were called by the post office, period. BY MR. KITCHEN: Q. But you yourself had made no request for that change? A. That's correct. Q. Okay. Do you know who might have made such a change? A. No, I do -- MR. OSTROWSKI: Objection. Speculation. MR. KITCHEN: Oh, I think he can, I think he can let us know, Your Honor, if he is aware of somebody who -- THE COURT: Does he know who made the change? I think he's already answered it three times. MR. KITCHEN: All right. THE COURT: But you can ask him again. MR. KITCHEN: Okay. BY MR. KITCHEN: Q. Well, do you know anybody who would have some advantage -- THE COURT: Who would, or did? MR. OSTROWSKI: Objection. Hearsay -- speculation, I'm sorry. MR. KITCHEN: Well, I, I think that's a -- no, it might be speculation. THE COURT: How would he know what would happen or could happen within the United States Postal Service regulations and rules? Maybe he does. MR. KITCHEN: Well, of course, nobody has heard my question in its entirety, but assuming that -- THE COURT: You've got that word would in there, which raised high suspicions. MR. KITCHEN: Well, I think -- the question I want to ask him is, is he aware of anybody who would have some advantage by having had the mail transferred from Mr., Mr. Graham's address -- THE COURT: Well, the Court will take judicial notice. There might be an advantage to the transferee of another person's mail. MR. KITCHEN: Well, Mr. Helinski might be aware of somebody who also -- I mean, of other people who might have such an advantage. THE COURT: Well, ask that question. Whether there was anybody else using Post Office Box 257 in Cheektowaga, which might thereby receive somebody else's mail. BY MR. KITCHEN: Q. Is there anybody else who had access to that box in Cheektowaga? A. No, there wasn't. Q. Okay. You -- did you -- and you never signed a transfer card, transferring the -- A. No, I did not. Q. Okay. Among the people with whom you consulted regarding the reputation of Mr. Graham, one of them was this Chris Young? A. Yes. Q. What kind of business is he in? A. He's a distributor for computer software. Q. I see. Well, does he publish CD Rom's? A. No, he does not. Q. So he wouldn't be a competitor of Mr. Graham's, would he? A. No. Q. So he wouldn't have any business or financial interest in, in hurting Mr. Graham's reputation, would he? A. No. (Plaintiff's Exhibit #55 marked for Identification.) Q. Okay. Let me show you Plaintiff's Exhibit 5, which, for identification purposes, I guess we could describe as a, a business letter, or advertising piece. THE COURT: Plaintiff's 5? MR. KITCHEN: Yes. One page, 8-1/2 by 11. THE COURT: Seems to be a PDSI-004. MR. KITCHEN: Excuse me? No, no. 55, Your Honor. 55. I'm sorry. THE COURT: Oh, 55. MR. KITCHEN: Yes, sir. THE COURT: All right. Thank you. BY MR. KITCHEN: Q. It's an 8-1/2 by 11 card stock printed as a business letter or advertising piece with the heading of Phoenix at the top, and with some color on it. Have you seen that before? A. Yes, I have. Q. Okay. Could you tell us what it is? A. It was a press release that I had written up for the Boston CD Rom Expo that I attended on my own last year. Q. Okay. So that would have been 1992, approximately when? A. End of September. Q. I see. And what was the purpose of that press release? A. It was to -- it was a press release that I had distributed to magazines and different columnists to inform them of my activities with Mr. Young. Q. I see. Was it your intention in that press release to present truthful information to these various media publications? A. Yes, it was. Q. And does that essentially contain truthful information? A. Yes, it does. Q. Okay. Did you include your name in the piece? A. My business name, yes. Q. And your business name being? A. Ken Anderson. Q. Okay. Does your real name appear on that at all? A. No, it does not. Q. Okay. Is there any mention in that piece of Chris Young? A. Yes, there is. THE COURT: Of what? BY MR. KITCHEN: Q. Chris Young? A. Yes. Q. Okay. Did, did Mr. Young have any connection with Phoenix? A. He was a distributor, and he still is a distributor, for my software. Q. Ah. So Mr. Young does in fact then have -- is in fact distributing CD Rom's? A. Yes. Q. And in fact your CD Rom? A. Yes. Q. The same CD Rom that's competing with Mr. Graham's? A. Yes. Q. Does Mr. Young distribute Mr. Graham's CD Rom? A. No, he does not. Q. He only distributes yours? A. Yes. Q. And he had some connection then with your business other than simply as a distributor? A. Well, he was representing my product when he went to his own shows, to sell it and to market it to the best of his abilities. Q. Okay. MR. KITCHEN: I'll offer Plaintiff's 55, Your Honor. MR. OSTROWSKI: No objection. THE COURT: Plaintiff 55 is received. (Plaintiff's Exhibit 55 marked for identification, was received into evidence.) MR. KITCHEN: Reading from the last paragraph of Exhibit 55, Your Honor -- THE COURT: Why are you reading form it? MR. KITCHEN: All right. I won't. BY MR. KITCHEN: Q. Now, when you published your CD Rom under the CARRS name, where did the material come from that went on that CD Rom? A. The original material came from Mr. Graham's BBS service. Q. Okay. And was it understood that he was the source of that material? A. Yes. Q. In fact, was that his function, his role, in your -- his connection with you? A. Yes. Q. And, and at any time, did Mr. Graham transfer his ownership interest in that material? A. No. He offered it to be used, the material he was collecting, as a basis to develop a CD Rom disk with. Q. Okay. But as far as you were concerned, the information or the material that he collected still belonged to him? A. Well, the finished product was for the company. Q. Okay. A. You know, for CARRS at that time. Q. All right. But, CARRS did not have any exclusive interest in the material before it went on the, on the disk, did it? A. No. Q. So Mr. Graham was free to produce disks later on under his own name? A. Yes. Q. Okay. And did you use or attempt to use the name CARRS in any further business dealings after the end of 1990? A. No, I did not. Q. Did you have any further interest in, in the use of that name? A. No, I did not. Q. So is it fair to say that you had no objection if Mr. Graham then utilized that name "CARRS" on one of his later disks? A. He had used it in November of 1989 -- I mean, 1990. Q. Okay. And, but by that time, you didn't -- well, was that PDSI-002? A. Yes. Q. All right. But by that time you had given up your, your interest in pursuing CARRS? A. No. It was in -- afterwards, in December, when I had dissolved the corporation. Q. Okay. But, well, after then, you didn't care about the use of the name CARRS? A. Not exactly. I just wanted to make sure that there was no mud slinging attached to that name. THE COURT: No what? THE WITNESS: Mud slinging. THE COURT: Muscling? THE WITNESS: Mud slinging. THE COURT: Mud slinging. BY MR. KITCHEN: Q. Well, mud slinging. In other words -- what do you mean by that? Was there mud slinging in connection with the name CARRS? A. Well, with everything that happened in Las Vegas, that's what prompted me to look at a change in business name as well as the business name change for myself personally. Q. Okay. Did you want to become disassociated with the name CARRS after December? A. After that point, yes. (Plaintiff's Exhibit #56 was marked for Identification.) Q. Okay. And I have now Plaintiff's 56, which is a photocopy of a letter bearing date February 13, '91 -- well, no. Excuse me. Bearing date February 3, 1991, under the letterhead Computer Assisted Records Retrieval System. Showing you Plaintiff's Exhibit 56, do you recognize that, Mr. Helinski? A. Yes, I do. Q. And is that a copy of a letter you wrote? A. It looks like it, sir, yes. Q. All right. MR. KITCHEN: I'll offer it, Your Honor. MR. OSTROWSKI: No objection. THE COURT: Plaintiff 56 is received. (Plaintiff's Exhibit 56 marked for identification, was received into evidence.) BY MR. KITCHEN: Q. This was a letter to Nimbus Information Systems, correct? A. Yes. Q. Nimbus. What does Nimbus do? A. They're a production house for CD Rom's. Q. And they were producing CD Rom's for Mr. Graham? A. Yes. Q. And you wrote them a letter claiming that Mr. Graham had, had stolen the material that was on his CD Rom that he was having Nimbus produce for him? A. I indicated to Nimbus that there was a -- that there were two D/B/A's filed under CARRS. Q. Well, did you tell them, did you tell Nimbus that essentially the CD Rom was a stolen CD Rom? A. Yes. Q. And that really wasn't true, was it? A. No. THE COURT: Unless you want me to read them as a foundation for something coming on? MR. KITCHEN: No. BY MR. KITCHEN: Q. Do you have any -- do you have any formal training in, in business? A. No, I do not. Q. No college -- A. I've gone to college, yes. Q. Okay. In business? A. I took one year of business courses. Q. Okay. Never got a degree? A. No. Q. Okay. How about in computer science or related stuff? A. No. Q. Never took any courses or anything? A. No. Just a basic data processing course. Q. Okay. But never pursued a degree? A. No. (Plaintiff's Exhibit #53 marked for Identification.) Q. All right. I'm going to hand the witness Plaintiff's Exhibit 53, which is a clear plastic folder with a number of pages in it, 18 pages, and it's entitled CARRS business plan. Have you seen that? A. Yes, I have. Q. Who wrote it? A. I did. Q. When did you write it? A. That would have been during 1989. Q. And what was the purpose of your writing it? A. It was an attempt to secure financing for my business proposal. Q. And you did in fact secure some financing, correct? A. Yes. Q. And to get the financing you showed people essentially this business plan which is Exhibit 53? A. Yes. Q. And that would be, I think you said M&T Bank, right? A. Yes. Q. Okay. And did you also show it to Mr. Manze before he came up with the $50,000? A. Yes. Q. All right. MR. KITCHEN: I'll offer it, Your Honor. MR. OSTROWSKI: No objection. THE COURT: Plaintiff 53 is received. (Plaintiff's Exhibit 53 marked for identification was received into evidence.) BY MR. KITCHEN: Q. Page 6 of Exhibit 53 states -- THE COURT: Are these numbered pages? MR. KITCHEN: Yes, they are, Your Honor. BY MR. KITCHEN: Q. "We would now like to introduce these special individuals who actually comprise this organization. CARRS is made up of people --" THE COURT: Do what? MR. KITCHEN: Excuse me? THE COURT: You wanted to do what, introduce what? MR. KITCHEN: Oh, I'm reading from page 6. THE COURT: Oh. MR. OSTROWSKI: I object to the reading of the Exhibit. THE COURT: It's in evidence. MR. KITCHEN: Well, yes, but -- well, I wanted to ask further questions to the -- THE COURT: Well, ask him about it. You don't have to read it in the record. You can ask him. Point out to something or quote something from it, and ask him about it. BY MR. KITCHEN: Q. Did you work -- have you been employed in a place that required you to know computers? A. Yes, I have. Q. Where did you work? A. I worked, and I did some data entry work for Empire Bank. Q. Was that the only bank you worked for? A. In a computer related area. I also worked at Goldome Bank. Q. What did you do for Goldome? A. I was involved with microfilm scanning. Q. Did, did their microfilm scanning involve any use of computers? A. No, it did not. It was -- the part that I was involved with was strictly microfilm processing which was later used to, you know, in other parts of a process. I don't know the whole process that was involved. Q. Did you -- were you involved in a computer program at a radio station? A. Yes, I was. Q. What station was that? A. WYRK. Q. And what did you, what did you have to do with that program? A. It was primarily a data entry program that I was working on, to develop a mailing list for different contests that the station was sponsoring. Q. And that was a program you wrote? A. No. That was a pre-purchased software package. Q. Oh, it was. You didn't design that program? A. No, I did not. Q. Okay. It says here, he designed as well as implemented, a very extensive computer program at WYRK-FM radio. So that is untrue, at least to the extent of your design of the program, correct? A. I consulted with the person -- Q. Well, is that yes or no? A. That's correct. THE COURT: What is correct? What you read is correct, or is it correct that it's untrue? THE WITNESS: No. It's correct that it's untrue. MR. KITCHEN: Okay. BY MR. KITCHEN: Q. And where it says here, he graduated from Erie Community College in 1982 with an associates degree in business management, that is also untrue? A. Yes, it is. Q. And then the next sentence, which says, after spending a difficult year seeking suitable employment, he returned to Erie Community College to obtain an associates degree in computer science, that's also untrue? A. Yes. Q. Did you ever work in a bank in Florida? A. No, I did not. MR. KITCHEN: I have no further questions. MR. OSTROWSKI: No questions. THE COURT: Thank you, Mr. Helinski. (Witness excused.) MR. OSTROWSKI: Calling Mr. Gregory Armenia. Come on up. (GREGORY J. ARMENIA, Defendant's Witness, Sworn) THE COURT: And what is your name? THE WITNESS: Gregory Armenia. THE COURT: Spell the last name. THE WITNESS: A-R-M-E-N-I-A. THE COURT: A-R-M -- THE WITNESS: -- E-N-I-A. THE COURT: Do you use a middle initial? THE WITNESS: J. Yes. THE COURT: Where do you live? THE WITNESS: 128 Carmel Road. THE COURT: Where is that, Buffalo? THE WITNESS: Buffalo, New York. THE COURT: All right. Take the witness chair. DIRECT EXAMINATION BY MR. OSTROWSKI: Q. Mr. Armenia, do you know Richard Graham, the plaintiff in the case? A. Yes, I do. Q. Okay. How do you know him? A. Good friends and associate of -- or was a good friend of his, and an associate. Q. When did you meet him? A. It was probably 1990 and -- Q. Would you speak up a little bit. Q. Some time around 1990. A. Speak into the microphone. Q. Okay. And did you ever work with or for him? A. As an associate, yes. Q. Okay. In what business? A. Night Owl's Computer Service. Q. When did you start there? A. It wasn't actually a starting point. It was just, I would say, I used to help Rich out a lot. He used to confide in me as a friend and ask my advice, you know, business-wise, as, you know, he would always confide in me and look for me to help him out, which I of course did. But eventually it got to the point where -- Q. I'd ask you when. A. When, in the summer of -- actually, where I really started helping him out with business was in the summer, I would say, of 1990 -- it was, had to be in, actually, I was part of a sysop of his system first, and-- THE COURT: A what? THE WITNESS: A system operator for his bulletin board service first. That's when he first asked me to -- THE COURT: When was that? THE WITNESS: -- to do something for him, actually. THE COURT: When was that? THE WITNESS: That was in 1991, the summer, in the summer. BY MR. OSTROWSKI: Q. Okay. And how long were you associated with him, from that time until -- A. I got very much so, associated with the business, in a more businesslike association with him in, it was around, let's see, September, right, the beginning of the fall. Q. '91? A. Yes. Q. Did you come to the Court hearing that we had in this case earlier? Do you remember? A. The first -- THE COURT: Was he present? You mean, was he present? BY MR. OSTROWSKI: Q. Yeah. Were you present at a hearing in this case? A. I was present, yes. Q. Do you remember what day of the week it was on? A. No. I couldn't tell you the day of the week. Q. Okay. Do you remember what, approximately when it was, what month? A. The month, the first -- no, I couldn't, I don't think I honestly can tell you that. Q. Okay. A. I'd have to give it some more thought. I'm pretty sure if I could think about it I could come up with it. Q. Okay. Was there a time when you stopped being as closely associated with Mr. Graham? A. Oh, yeah. That was December, in 1991. Q. That was December 1991? A. Yes. Q. And what do you do now? A. I'm a CD Rom publisher. Q. Okay. And are you -- is that pretty much the same business that Richard is in? A. Yes. Q. So you're a competitor? A. Yes. Q. Okay. What's your association with Mr. Graham now? A. Just a friend. A distant friend really, because we don't talk that much. Q. Okay. Do you know Mr. James? A. Yes, I do. Q. Larry James, who's the defendant in the case? A. Yes. Q. Okay. How do you know him? A. He's the author of the retrieval program I used on my CD Rom, and on a business level I know Larry. Q. Okay. And what's your current relationship with Mr. James, business or personal? A. Well, I'm not close to Larry, talk to him a lot. We're not really, we don't do anything together, like me and Rich did, or, it's strictly a, I would call it a, just a business relationship. Q. And what is the business relationship right now? A. Right now, none. Because I had to take Larry off our disk. Q. Now, be specific. When you say, take Larry off your disk, what are you referring to? A. His retrieval program that he wrote for us. Q. Okay. When did he first give you the program? A. The first copy of the program he gave me was right, actually, like a day I think, it was actually hours before I released the disk to the manufacturer. So it was, that had to be in December 1992. Q. Okay. What kind of a program was that that he gave you? A. A retrieval program. Q. And -- A. For the CD Rom, to access the CD Rom. Q. Do you have releases for your CD Rom's, like 1, 2, 3, 4, 5 or -- A. Yes. Yes. I'm on 3 now. Q. And, okay, and each one is a little different from -- A. Yes. Q. -- the one that came before? A. Yes. Q. How many releases did you have with Mr. James' program on it? A. Two. Q. Okay. And you said you're not using it on your next release? A. No. I didn't use it on 3, and I'm also replacing the one that was on 2 for a support for the one that's on 3 now. Q. What was your arrangement as far as compensation for the use of the program? A. It was a dollar a disk, plus a thousand dollars for the initial use of the program, and a dollar a disk for royalties. Q. And what, why are you not using it on your next release? A. Because of the lack of -- I initially carried the program because I felt that, you know, based on the situation that I was in, and what I seen between this Court case between Richard and him -- MR. KITCHEN: I'll object to that as not responsive to the question, Your Honor. THE COURT: It sounds fairly responsive. BY MR. OSTROWSKI: Q. Okay. You can continue. A. Based on what was going on, I felt obligated because, I felt that there was an injustice done to Larry that I felt I should put him on the Rom and give him what I thought he deserved. And I felt that -- MR. KITCHEN: Objection to what he felt, Your Honor. THE COURT: He may answer. THE WITNESS: I felt that, that I, I didn't -- I felt that as a person, that I normally hear two sides of the story. In one case, in this rare instance I did not ever hear Larry's side of the story. And I assumed a lot of things which I shouldn't have. And -- BY MR. OSTROWSKI: Q. Okay. What I'm asking you is, you used the disk, and now you're not going to use it, and -- A. Right. Q. -- exactly -- A. I'm not using the disk now is because it's crippled in a sense that, because of -- I didn't have any idea that this Court would go on, or this trial would go on such a long time. Q. How is it crippled in relationship to the Court proceeding? A. A lot of the functions are not user friendly, which is very important for a program such as this, is that it be user friendly. Larry had to redo the program and take out all the user friendly features, and the mouse support, and it was just a very basic model, so to speak. Q. Why did he have to redo it? A. Well, because the Courts had put a restraint on it from using his program. Q. Okay. A. So he had to rewrite another version of it. Q. And -- I'm sorry. Go ahead. Are you done? A. And I thought I would, regardless of the fact that it was, I knew that it was, you know, below the standards of his capability of writing, and I know that I was going to accept it, you know, as to, you know, try to make, you know, try to make up for some of the -- MR. KITCHEN: I'll object, Your Honor, to the witness' opinion of Mr. James' standards. THE WITNESS: No. It's the standards of the program. BY MR. OSTROWSKI: Q. What I was going to ask is, are you familiar with previous file retrieval programs that Mr. James wrote? A. Yes. Q. Okay. What is your general background as far as operating a computer and/or programming? A. Well, self-taught. I didn't go to school for it. THE COURT: Excuse me? THE WITNESS: I am self-taught. I did not -- THE COURT: Self-taught. THE WITNESS: Yes. I did not go to school for it. But working for Night Owl's and Richard, I was a beta tester for the Night EXE so -- BY MR. OSTROWSKI: Q. What does that mean? A. That means I had access to the codes before they released, there are several versions that are made that you test out, you know, make sure there's no bugs in them, no, anything that needs to be fixed, or to find anything wrong with that program and notify him that, notify Larry of any changes that need to be made. Q. In that capacity were you a - - THE COURT: Trouble shooter? THE WITNESS: Yeah, a trouble shooter. BY MR. OSTROWSKI: Q. Were you familiar with prior versions of Mr. James' file retrieval beyond and before the ones you put on your disks recently? A. Can you ask that question one more time? I didn't hear the first part of it. Q. You put some version of a Larry James file retrieval program on your own disks? A. Right. Q. For your own company? A. Right. Q. Are you familiar with any prior versions of Mr. James' programs? A. Oh, yeah. Oh, yes. Q. Okay. And how does the prior -- and what, how can you -- can you identify that version by the time in which you saw it, or in any other way? A. I do not -- I don't -- Q. The prior version, going back. A. Right. Q. What version did you see? MR. KITCHEN: Your Honor, I'm going to -- well, no, I'm not going to object to this. THE WITNESS: Prior to when I, when Larry's -- of me first using his program? BY MR. OSTROWSKI: Q. When's the first time -- I'm sorry, I'm asking confusing questions. When's the first time you saw Larry James' file retrieval program? A. I saw his program in, I would say definitely the summer 1991, somewhere within there he was working on the retrieval, and I was, Rich was giving me the programs to test out. And if I could find any bugs, me and Rich were both testing them out to, you know, as a, when -- as an author myself, I will give out my retrieval program to friends of mine. It's called beta testing. MR. KITCHEN: Well, I'll object to what he would do if he had -- THE WITNESS: It's a normal procedure for any -- MR. KITCHEN: I'll object to his normal procedure. THE COURT: Yeah. Yeah. We don't care about, we don't care about that. MR. OSTROWSKI: Okay. THE WITNESS: Okay. BY MR. OSTROWSKI: Q. In what form did you see Mr. James' file retrieval program in the summer of '91? A. In what form? Q. Yeah. A. In beta. Q. What is -- beta, what does that mean? A. Beta is, it's not a released version. It's strictly for use for testing. Q. Is it a printout? Is it source codes? Is it -- A. Source code was included with it, yes. Q. Okay. So you saw the source codes -- A. Yes. Q. -- in Mr. James' program? A. Oh, yes. Q. Okay. And did you see his program operate in the sense of how it actually retrieved files? A. Yes. Q. Okay. So what is -- how does the program you saw then compare with the one that he put on your disks commerc -- A. There was a lot of shortcomings. It had, like I said, the user interface was not user friendly anymore. It was -- Q. Which, which one are you talking about? The -- MR. KITCHEN: Your Honor, I'm -- THE COURT: Well, I'm lost as to what you are, what we are talking about. MR. KITCHEN: Well, I -- THE COURT: I think one thing, of course, Mr. Armenia jumped into the middle of your question, so I didn't get the tail end of that. MR. KITCHEN: I have an objection, Your Honor, which isn't necessarily related to confusion, although that is an aspect. My objection is similar to what we had in a previous witness, where now we're going to have essentially hearsay about what's in a program, and if -- MR. OSTROWSKI: It's not hearsay. And I would ask that counsel -- throughout the trial, Your Honor -- THE COURT: Well, the witness started talking about would and should and things like that, which gets into generalities rather than firsthand knowledge of what happened or didn't happen. MR. OSTROWSKI: Well -- THE COURT: And he must confine himself to the latter. MR. OSTROWSKI: Can I ask that counsel make objections and not speeches, Your Honor. He's been making speeches throughout the trial. I've been making objections. He's interrupted -- THE COURT: Well, plus an occasional speech. But not his -- go ahead. MR. KITCHEN: Yes. Well, my concern, Your Honor, is that -- THE COURT: What is the particular objection, legally speaking? MR. KITCHEN: Legally speaking, the objection is both hearsay and best evidence. If he's going to reveal essentially the contents of a document which we claim essentially is what a program is, then we should have the program. I realize we've had a lot of programs here that are already in evidence. If they're properly identified before he talks about what's in them, then I suppose that would be all right. But that's the essence of my objection, Your Honor. THE COURT: Well, I -- perhaps -- MR. OSTROWSKI: There's been a lot of testimony -- THE COURT: Perhaps someone with his background and expertise can take a jewel case and look at its contents and say, ah, yes, that is so and so, but I doubt it. MR. OSTROWSKI: There's been a lot of testimony, Your Honor, in fact -- THE COURT: Well, isn't that true? You don't expect him to just pick up one case and look at a compact disk and say, ah, yes, this is A, B or C. MR. OSTROWSKI: No. In fact, you can't tell what program's on it just by looking at it. I'd point out that the program that is the foundation for plaintiff's claim has not been produced in Court. There's been a lot of testimony about that. Nor has its absence been explained. THE COURT: I think the only thing you can do with Mr. Armenia is to go back and find out what he was doing at particular times, and with whom. BY MR. OSTROWSKI: Q. Did you see the source codes for the program that you put on your own disks that Larry wrote? A. No. Q. Okay. A. No, I didn't. Q. So, have you had an opportunity to run that program from the point of view of a user retrieving files? A. Yes. Q. Okay. How does that, that program compare to the one you saw way back in the summer of '91, as far as operating the computer? MR. KITCHEN: Now, I have, I'm going to have an objection, because-- MR. OSTROWSKI: Well, just make the objection. Don't make a speech. THE COURT: Excuse me. What was the time period you, you put that in your question. MR. OSTROWSKI: I believe he said that -- THE COURT: No. You -- it was in your question. MR. OSTROWSKI: Summer '91. THE COURT: All right. MR. KITCHEN: My objection is hearsay and best evidence. MR. OSTROWSKI: There's no hearsay at all. There's no hearsay at all. THE COURT: Wait a minute, please. Go ahead. MR. KITCHEN: The basis of my objection is, Mr. Armenia is now going to testify about a program that is apparently on a disk that we do not have here, because it was apparently a disk published by Mr. Armenia. If we have the disk, and so we can see the program about which he is about to testify -- THE COURT: Not having the disk, the best testimony is his testimony about it. MR. KITCHEN: Well, then -- THE COURT: The best evidence is his testimony about it. MR. KITCHEN: That's true, but I, unless there's some explanation for the absence of the disk, and the necessity of him to tell us about this disk, when he's the publisher of the disk -- MR. OSTROWSKI: I'm not asking about the contents of a document. I'm asking about -- THE COURT: Given the technical innocence of the trier of fact, I'm probably better off listening to him explain it. MR. KITCHEN: Assuming that that explanation is accurate, Your Honor. But we can verify the accuracy -- THE COURT: Well, if it isn't, of course, I assume somehow he will cut his legs out from under him. MR. KITCHEN: Well, yes, Your Honor, and I realize that sort of thing can be done, but rather than doing a lot of surgery like that, if he has the document, if he has the disk, then we could see what he is talking about. THE COURT: Let's go ahead and we'll see where we are. BY MR. OSTROWSKI: Q. How does the program that Mr. James gave to you for your December '92 CD Rom compare to the older one back in the summer of '91, as far as using it to retrieve files? A. Okay. There's a lot of -- of course, there was a lot of internal changes made in the way that it functions that you can't even see actually from the interface. Q. You've got to be specific though because we don't know what you're -- A. Okay. THE COURT: Wait a minute. THE WITNESS: The headers, the headers so far, that Rich claimed that the headers were like a secret thing to the retrieval, when in fact they were nothing more than a pointer to point where the file was. I was concerned about that, and I had mentioned to Larry -- THE COURT: Wait a minute. Wait a minute. No one asked you whether you were concerned or -- BY MR. OSTROWSKI: Q. Well, what I'm saying, let me ask you this. What did the old version of the program in the summer of '91 do that the newer ones he gave you did not do? A. As far as -- Q. Using -- A. -- user, as a user would see? Q. The user, the user, yeah. A. Or as I would see as a publisher? Q. Both. Either one, or both. A. That's what I was telling you. The first was the publisher. THE COURT: Just take it one at a time. MR. OSTROWSKI: Okay. BY MR. OSTROWSKI: Q. You taking it as the publisher first? A. Right, right. Q. Okay. Go ahead. A. As a publisher I was concerned about the internal workings because I was under the impression that this was -- THE COURT: No. Why you were concerned. THE WITNESS: I was -- pardon me? THE COURT: You were concerned about it. We don't need to know why. Go ahead. BY MR. OSTROWSKI: Q. As a publisher, what did the new programs do that the old ones -- what did the old program do that the new one didn't? A. The old program searched for a header to find a file. Mine did not. Q. Mine being -- A. In certain aspects -- Q. Mine being which one? A. The one that Larry wrote for me. Q. The new one? A. Right. Q. Okay. Anything else? A. The user, the user interface, it didn't also use -- it used different DIR names. Q. The new one? A. Yes. My new one used different DIR names. Q. And what does that -- A. Specific to my, my, my working. Q. And what does that mean? A. Such as on Night Owls you'll see DIR-1, DIR-2, DIR-3. Those are text files which the retrieval program reads to pull up a description of the file and pull a pointer as to where the file is located on the disk. Q. And is that good or bad, that it wasn't there? A. That was, that what wasn't there? Q. Well -- THE COURT: Is that good or bad? BY MR. OSTROWSKI: Q. I'm confused about what you're -- the feature you described. THE COURT: Is it better to have it absent or better to have it present? THE WITNESS: The header? It made no difference whatsoever. BY MR. OSTROWSKI: Q. Is there anything from the user's point of view that was lacking in the new one that was present in the old one? A. In the user? Q. Yeah. A. Or from the user point -- oh, yeah, the install was different. Q. Better or worse? A. Worse. We had to take away some of the, you know, the nice, slim line features, the mouse support wasn't there. There was no more -- the boxes were gone that you use -- usually when you hit a key up comes a box, and then in that box will be more enhanced keys. Everything was now put down on one line and it was just not as user friendly as -- not at all as user friendly as Richard's. Q. As which, the old one? A. As the one, the original one he wrote. Q. Okay. A. And I was under the impression that this had to be -- THE COURT: Oh, wait a minute. Wait a minute. We don't want your impressions. THE WITNESS: Okay. BY MR. OSTROWSKI: Q. Did you record phone conversations between Richard and Mr. James? A. Yes. Q. Okay. A. Twice. Two conversations. Q. And which were the con -- who was in the conversations? Start with the earliest? A. The first one was at Richard's house. It was Richard and Larry. I didn't hear the original conversation. I was in the background. There was only one phone at the time, and Rich was in conversation with Larry. Q. Do you remember when that was? A. That was, had to be in late November or early December, right around there. Q. Of which year? A. Of '92. Q. '92? A. No, I'm sorry, '91. Q. And you did not hear the actual conversation at that time? A. No, not until I heard the tape. I only heard Richard's conversation, I didn't hear Larry's. Q. Okay. A. I was in the room. Q. You could hear Richard on the phone, but you couldn't hear Larry. And did you actually tape record it yourself? A. Yes. Q. Operating how? A. Off a Realistic cassette tape plugged into the phone line. Q. Okay. This is a modular jack -- A. Yeah. Q. -- connected from the tape recorder? A. Right. Q. Not a thing you stick on the phone? A. No, no. Q. Okay. A. This was a pretty, very good way of taping the line, yes. It was very clear, very good. Q. And what other conversations did you tape record for Mr. Graham with respect to Mr. James? A. I had -- that one was at Rich house, then we went back and we wanted to tape Richard Graham, me and another publisher of a, his disk was called Storm, I'm not sure of his name. Q. Who? A. I couldn't tell you his name. Q. Is it, could it be Robert Depew? A. That's the name, yes. Q. And did you actually tape a conversation? A. Yes. We taped that one on a three-way conversation, using -- Q. When was that? A. This was shortly after the other, the other tape. A day -- Q. So would that be in late '91? A. Yes. Same, right around the same time. Q. And who actually spoke on the phone? A. That conversation was Rich and Larry. Q. Well, it was Mr. Depew? THE COURT: Rich is Mr. Graham? THE WITNESS: Yes. Richard Graham. BY MR. OSTROWSKI: Q. Was Mr. Depew on the conversation? A. I don't think he spoke on the conversation. Q. Okay. Did, were there any other tape recordings that you made for Mr. Graham with respect to Mr. James? A. No. Q. Okay. Did you tape a conversation between Richard and Ralph Marquardt? A. Yes. Q. Okay. Did you hear that conversation? A. Yes, I did. Q. Okay. And was that conversation concerning the dispute of Mr. Graham versus Mr. James? A. Yes, it was. Q. Okay. And what can you tell us about what Mr. Graham told Mr. Marquardt in that conversation? A. Well, it was -- it basically was, what I got my -- you want my impressions, or what was actually said or -- Q. No. What is actually, what was said. Not -- THE COURT: What were the actual words, or a close summary thereof. THE WITNESS: Okay. I couldn't tell you everything because it was a very lengthy conversation. So I couldn't actually sit here and tell you what was on the tapes verbatim. All I can give you -- THE COURT: The question I think is, what was said about a particular thing, is that right, or generally? MR. OSTROWSKI: Well, I'm asking him what he recalls of that conversation from Mr. Graham's point of view of -- THE COURT: The whole thing? MR. OSTROWSKI: Well, I take it he -- THE COURT: This lengthy conversation? BY MR. OSTROWSKI: Q. Is there anything outstanding in that conversation -- A. Yes. Q. -- which you can tell us about? A. There was definitely something outstanding in the conversation. It came at the close of the conversation -- Q. Okay. A. -- that I vividly remember because I had questioned Rich about it. THE COURT: All right. Just say what it is. THE WITNESS: Rich had told Ralph that I would take care of you, I will give you a drive, whatever it is that he asked. There was other things that -- he said, and you know I'll take care of you, quote, unquote. I have always taken care of you. I'll give you, I'm going to give you a drive. And there was a mention of something else, but I didn't know what it was they were talking about. And that's what struck me as funny, was that it seemed like they had talked prior. It's like there was a deal that was going on that I knew nothing about, and it just didn't seem right. MR. KITCHEN: Well, now, I'll object. MR. OSTROWSKI: That's, no, that's not responsive. THE COURT: Yes. Let's be specific. BY MR. OSTROWSKI: Q. When they -- before -- THE COURT: Remember what was actually said. And without your own surmise and guessing you may testify. THE WITNESS: Oh, all right. Okay. BY MR. OSTROWSKI: Q. You said that Mr. Graham had told Ralph, I will take care of you, I'll give you a drive. What had been discussed just prior to that? A. What was discussed was, Larry versus Richard Graham, who owns the copyrights of the program. Q. Okay. And what did Mr. Marquardt say near the end of the conversation about that subject? A. He didn't say anything in there that was, to me, my knowledge -- Q. No, no, no, no. Exact, you have to -- not your conclusions or opinions. Just, just what was said by Mr. Marquardt? A. I couldn't tell you exactly what was said. Q. Okay. THE COURT: All right. Don't guess. BY MR. OSTROWSKI: Q. Can you give us a summary? A. The summary was, yeah, this is Rich's program, I was trying to help Larry, I was the middleman for Larry, so to speak, and I was guiding Larry on how to write the codes, and this and that, which I didn't swallow at all because -- THE COURT: Now, wait a minute. Just say, we don't care if you swallowed it or burped or anything else. THE WITNESS: Oh, okay. BY MR. OSTROWSKI: Q. Okay. Did, did Mr. Marquardt say anything else in the conversation that was inconsistent with that statement? A. That was inconsistent with that statement? Q. Yeah. You don't understand the question? A. No. (Plaintiff's Exhibit #16 was marked for Identification.) Q. Okay. I'll scratch it then. Let me -- this is Plaintiff's Exhibit 16, tape recording. I'd like to play it and ask the witness a question. THE COURT: Wait a minute. Wait a minute. MR. OSTROWSKI: Sorry, Your Honor. THE COURT: What are you doing? You're backtracking now. At least you got something that sounded like gobbledygook. MR. OSTROWSKI: Yeah. It is in the middle of the tape, Your Honor, and I'm ask -- THE COURT: Well, you were running it back or something. MR. OSTROWSKI: No. Actually, Your Honor -- THE COURT: Were you starting to play? MR. OSTROWSKI: Yes. It was playing. It's somewhat off speed so -- THE COURT: Why did you start to play? As I remember, you said, I would like to do something, and we never got to the point of your playing it. Well, anyway, that's what you started to do. MR. OSTROWSKI: I was going to play it and then ask a question. THE COURT: I know you were going to. You asked to. MR. OSTROWSKI: I'm not sure what you're asking me, Your Honor. THE COURT: Well, I'm just asking you why you were playing it, or why you need to. MR. OSTROWSKI: Well, perhaps I could ask some foundational questions. THE COURT: Yeah. He may remember a particular thing. MR. OSTROWSKI: I understand. Well, I guess the reason I'm playing it, Your Honor, is that I'd like him to be able to identify this particular conversation as one that he recorded, or else I won't be able to ask him anything. All my other questions would be -- THE COURT: All right. But see, we've been going at this from trying to get from Mr. Armenia what he now remembers about the telephone conversation. And I don't know if you've exhausted that. MR. OSTROWSKI: I -- I -- THE COURT: If you have then perhaps we can resort to his now listening to the conversation, and then your asking him questions about what he had now heard. MR. OSTROWSKI: I understand, Your Honor. I'm not using it to refresh his recollection, Your Honor. This is, I'm moving to a totally different point. THE COURT: All right. You've abandoned that. MR. OSTROWSKI: I -- THE COURT: We no longer are concerned about what he remembers. THE WITNESS: Well, you can -- I do remember a lot more about Rich's conversations. MR. OSTROWSKI: Well, I'm -- THE COURT: We haven't exhausted it. MR. OSTROWSKI: I'm not -- I'm jumping around a bit, Your Honor, because I'm trying to take care of certain things at the beginning that I don't want to forget. And then I, I'm going to go back and -- THE COURT: You want a piece of paper and a pencil? MR. OSTROWSKI: I have some notes, Your Honor. THE COURT: My point is, before we now fill in or help his memory by having him listen to it, that we ought to exhaust what his memory is. Incidentally, have you listened to this at all since the time of the -- THE WITNESS: No. THE COURT: -- recording? THE WITNESS: No. MR. OSTROWSKI: Okay. Well, let me -- BY MR. OSTROWSKI: Q. Do you recall a conversation that you -- do you recall that there was a conversation -- well, what are you doing? I have that set up for a specific -- THE COURT: He wants to see your number. BY MR. OSTROWSKI: Q. Do you recall, how many conversations did you record between Richard and Larry? A. Two. Q. Okay. THE COURT: How many between Graham and Marquardt? THE WITNESS: One, just one. BY MR. OSTROWSKI: Q. And what -- with respect to the first conversation between -- MR. OSTROWSKI: Well, Your Honor, I'm going to have to shift gears and go back and -- because I wasn't planning on doing -- this is later in time. I have to go back and do some earlier things. Let me shift gears a bit. BY MR. OSTROWSKI: Q. Okay. I believe you stated that you, you started working with Mr. Graham in the summer of 1991? A. Yes. Q. And when did Mr. James come into the picture? A. I met Larry for the first time at Rich's house. Larry -- Rich had told me that Larry was working out of the house. THE COURT: The question is when? THE WITNESS: Well, back to the point is, it was in the summer. THE COURT: Of? BY MR. OSTROWSKI: Q. In the summer of 1991? A. August. It actually was around August. Q. And from your own knowledge, what was -- August? A. Yes. Q. Okay. A. September, August. Q. From your own knowledge, what was Mr. James doing for Mr. Graham? A. Well, we were in the house, and Larry had walked in the house. Q. No. I'm just asking generally. A. This is how I met him. This is how I met, knew what he was doing. Q. This is the first time? Okay. A. I know I've heard of him. Richard always told me that he was writing for him. THE COURT: No. I know. But you first met him when? THE WITNESS: Met him. THE COURT: This was August of -- THE WITNESS: I thought that's what you wanted, is when I met him. THE COURT: Excuse me. August of what year, Mr. Armenia? THE WITNESS: 1991. THE COURT: 1991. All right. BY MR. OSTROWSKI: Q. Did you, did you meet him first or hear about him first? A. I heard about him first. Q. Okay. And who did you hear about him from? A. From Richard Graham. Q. And what did Mr. Graham say about him? A. That he made an agreement with him to -- that he was writing a program, and that he made an agreement with him on royalties, as for a dollar a disk for, for the retrieval program. And that he was writing for him. Q. That Mr. James was writing for Mr. Graham? MR. KITCHEN: Pardon me. Pardon me. These are, these are the statements of -- THE WITNESS: That he was writing the retrieval program for Richard Graham Night Owl's Computer Service. MR. KITCHEN: Excuse me. Excuse me, Your Honor. These are the statements of whom? MR. OSTROWSKI: Mr. Graham. THE WITNESS: Richard. MR. KITCHEN: Okay. BY MR. OSTROWSKI: Q. And when, when did he make that statement to you, the first time? A. The first time, in, in, I would say August. I would say August. Q. And how many -- did he ever repeat that statement to you? A. Oh, yeah. Q. How many times? A. Oh, I couldn't even tell you that. I mean, how many times. THE COURT: Pardon me? THE WITNESS: I couldn't tell you how many times. BY MR. OSTROWSKI: Q. More than five? A. Oh, yes. Q. More than 10? A. Yes. Q. Now -- THE COURT: Wait a minute. Did you answer that? THE WITNESS: I said yes, more than 10. MR. OSTROWSKI: Yes, he did. BY MR. OSTROWSKI: Q. So this agreement would be, what, that Larry James would write a retrieval program? I'm asking you what Mr. Graham said here. According to what he said -- THE COURT: Well, what did he say? MR. OSTROWSKI: The agreement -- THE COURT: What did he say? MR. OSTROWSKI: But I'm asking with respect to what -- THE COURT: Yeah. What did he say about something? BY MR. OSTROWSKI: Q. Okay. What did -- what -- according to Mr. Graham, what was the, what was Mr. James' program for? A. A retrieval program for the CD Rom. Q. Okay. Which CD Rom? A. The Night Owl's. Q. Mr. Graham's CD Rom? A. Yes. Q. Okay. And that he would pay him a dollar a disk? A. Right. Q. Okay. Did Mr. Graham ever tell you at that time that Mr. James would receive a dollar a disk when the, when his program was sold commercially to other people? MR. KITCHEN: I'll object to the, to the leading, Your Honor. THE COURT: Just answer yes or no. THE WITNESS: Can -- THE COURT: Just answer yes or no. THE WITNESS: Can I hear the question again? BY MR. OSTROWSKI: Q. Did Mr. Graham, did Mr. Graham ever tell you that he made an agreement with Mr. James that Mr. James would receive a dollar a disk when his program was sold to companies other than Night Owl? MR. KITCHEN: Same objection, Your Honor. THE WITNESS: That I don't recall. THE COURT: He may answer. THE WITNESS: I couldn't answer that question. I would, I can't answer that question -- THE COURT: All right. THE WITNESS: -- because I don't know of any such deal. BY MR. OSTROWSKI: Q. Well, you do not recall him saying that? A. No. Not any such deal like that. Q. Okay. A. I can't recall it. That was, you meant, selling this to a -- THE COURT: Wait a minute. Wait for a question, please. BY MR. OSTROWSKI: Q. Okay. And at some point Mr. James came into the picture. Did you meet him at some point? A. Then I met Larry. Q. Okay. And under what circumstances? A. In Rich's house. I had stopped by Rich's house to visit Rich. Q. When was that? A. That was in August, September, somewhere right around there, 1991. Q. Okay. And what, what was Mr. James doing over there? A. Larry wasn't there, but I was -- THE COURT: How did you meet him? THE WITNESS: Well, I was under the impression that -- THE COURT: Wait a minute. Wait a minute. Wait a minute. The question was, when did you meet him. THE WITNESS: I met him that day. THE COURT: And he wasn't there. THE WITNESS: Well, he wasn't there when I got there. THE COURT: How could you meet him if he wasn't there? THE WITNESS: Well, when I got there, he was not there. THE COURT: I see. Then he later arrived? THE WITNESS: He later arrived -- THE COURT: Ah, all right. THE WITNESS: -- in his taxi, and that's when I met Larry. He came in. THE COURT: All right. THE WITNESS: He brought in a little portable computer, which he was writing on. THE COURT: Wait a minute. Wait for a question. All we have now is, when did you meet him, and you've answered that. BY MR. OSTROWSKI: Q. Okay. And he came over with a portable computer? A. Right. Q. And what did he do with the computer? A. Rich introduced me to him, said this is Larry James, and you know, I said, oh, I heard so much about you, blah, blah, blah. Q. What did you hear about him from Mr. Graham? A. That he was the, writing the program for his Night Owl CD. Q. Okay. Did Mr. Graham make any further comments about his performance in doing that? A. In his performance? Q. Yes. A. You mean, how, what Larry was doing? Q. In other words, was it bad, was it good? A. Oh, well, no. Rich was very happy with his work. Q. Can you remember anything specifically he said, or a summary of it? A. That Larry was a great programmer. Q. Okay. A. And he just loved his work. He always praised him. Q. Okay. A. He also -- THE COURT: Wait a minute. Wait for a question. MR. OSTROWSKI: Well, you've got to wait for a question. BY MR. OSTROWSKI: Q. Did Mr. Graham consult with you about what he should pay Larry? A. Yes, he did. Q. And what did he -- what did you tell him? A. I told him, I told him I disagreed that the dollar -- THE COURT: Pardon me? THE WITNESS: I told him I disagreed, that I thought the dollar was way -- THE COURT: Wait a minute. Wait a minute. What was the question? Did he ask you what he should pay Larry? Yes. What did he tell you? THE WITNESS: As far as with the -- BY MR. OSTROWSKI: Q. What did you tell Mr. Graham about paying Larry? THE COURT: Wait a minute. You're not going to have what Mr. Graham said? MR. OSTROWSKI: I'm sorry. I thought I -- I thought we established that he did talk to Mr. Armenia. I was asking what -- THE COURT: Talked with -- no, we got to the point where Mr. Graham asked Mr. Armenia how much Mr. Graham should pay Mr. James. MR. OSTROWSKI: Well, I'll take either one. Whatever the -- I'm confused at this point. BY MR. OSTROWSKI: Q. What did Mr. Graham tell you, or ask you? A. He asked me if -- he didn't -- he didn't come right out and ask me. I can tell you the conversation verbatim. THE COURT: What did he do? BY MR. OSTROWSKI: Q. Okay. What was the conversation? A. The conversation was, Richard was telling me about the program and that, that he was asking me, beating around the bush type of asking me if I thought the program was worth a dollar a disk. And I was telling him, well, I didn't think the program was worth a dollar a disk, and I would give him my reasons, which I didn't think were too, you know, valid. THE COURT: So Mr. Graham said it was worth a dollar a disk. THE WITNESS: Right. He was trying to convince me that it was worth a dollar a disk, and -- BY MR. OSTROWSKI: Q. And you were saying what? A. I was saying I didn't agree with him. MR. KITCHEN: Your Honor, Your Honor, I'm interrupting because I'm really confused because now Mr. Armenia seems to be talking about a conversation with Larry James, but was this conversation with -- THE COURT: No. He's conversating with Mr. Graham, isn't he? THE WITNESS: It's a conversation with Richard Graham. Yes. THE COURT: Mr. Graham. THE WITNESS: Yes, Richard Graham. And I told him that I didn't think it was worth a dollar a disk, but he kept persisting in like trying to sell me on this dollar a disk, that it was really worth it. And I got to the point where I said, I realized no matter what I said, Rich wasn't listening to me, he was trying to sell me this. And I said, Rich, tell me something, did you make a contract with Larry to sell, you know, to make this, to offer him a dollar a disk, and he said, yes, I did. And I said, Rich, I said, why are you even asking me, you know, whether it's worth a dollar a disk, if you already made the -- if you already made a verbal agreement with him, it's a done deal. I said, your verbal agreement with him is a binding contract, so it's, regardless what I tell you now, you're stuck with a dollar a disk. You got to pay the dollar a disk now because you made the deal with him. BY MR. OSTROWSKI: Q. Okay. Was -- A. So I left it at that, and that was the last I -- Q. That was the end of the conversation? A. That was the end of the conversation. Q. Okay. A. He never mentioned anything about a dollar a disk again. Q. Okay. A. Until December. Q. Okay. Going back to the first conversations you had with Mr. Graham about Mr. James, was there any discussion about the ownership of the file retrieval program? A. Back when? Q. Well, I believe you started talking to Mr. Graham in the summer of '91? A. Right. Q. About Mr. James? A. Yes. Q. Correct me if I'm wrong. A. Yes. Q. Okay. Did -- was there a time, was there any time from that time to the present when you had a discussion with Mr. Graham about ownership or copyright of Mr. James' program? A. Copyright, yes. Q. Okay. Going back to the very first time, what did, what was that discussion? What did Mr. Graham say? A. There was never anything brought up -- THE COURT: Now, wait a minute. MR. OSTROWSKI: You've got to give us the words or -- THE COURT: Something was said, and what was said, and then you say, nothing was said. THE WITNESS: Well, because you're -- it's kind of like a, it's kind of like a trick question. THE COURT: Do you remember what was said? THE WITNESS: Yes. THE COURT: Well, tell us what was said. BY MR. OSTROWSKI: Q. Well, was there something said? THE COURT: Tell us what was said on that subject, if anything. THE WITNESS: About the copyright. You want to know about the copyright? MR. KITCHEN: That's right. BY MR. OSTROWSKI: Q. Yeah. I know we're asking you things out of order, and so on. A. Well, the copyright was -- Rich -- Rich -- well, obviously Rich is claiming that the copyright is his and Larry is claiming the copyright is his. Q. That's in 1993? A. No. This was -- yeah, that was back then. Q. Okay. I'm talking about the very -- THE COURT: Wait a minute. Whom -- you're talking with Mr. Graham about it? THE WITNESS: Yes. THE COURT: And Mr. Graham says that Mr. James is claiming it was his. Is that what you're saying? THE WITNESS: Yeah. Richard told me that Larry was claiming that it was his. BY MR. OSTROWSKI: Q. What I'm asking you is, in the very first conversation with Mr., that you had with Mr. Graham about copyright or ownership, what was said, or when was that? A. The first time we talked about copyrights? Q. Yeah. A. I believe Rich had said he -- Q. Well, do you remember when it was? A. He told me that the copyrights were his. THE COURT: Do you remember when it was? BY MR. OSTROWSKI: Q. When? THE COURT: Excuse me. Do you remember when it was? THE WITNESS: Oh, when it was. That was in, I'd say, oh, could have been the end of September, October. THE COURT: Could have been any time, but -- THE WITNESS: Somewhere past the time, you know, I mean, I'm just trying to guess how many months went by, or weeks, or months. BY MR. OSTROWSKI: Q. Well, was there a time when Mr. James no longer associated with Mr. Graham? A. Yes. Q. And when was that? A. That was probably around October. Q. Okay. A. September, October. Q. And this con -- you did have a conversation with Mr. Graham about copyright? Yes or no? A. Yes. Q. Okay. Was that before or after Mr. James was out of the picture? A. Well, before. Q. Okay. And what was said? A. Rich told me that Larry was trying to steal his program and that he owned the copyright to it. Q. Okay. And when you had the 10 conversations about a dollar a disk, was there any conversation about ownership? A. The how many conversations? Q. Well, you said you had at least 10 conversations. A. I only had one conversation with Rich prior to December about a dollar a disk. There was only actual one conversation. It was never brought up ever again. Q. Prior to December? A. Right. Prior to December or me leaving, and prior -- one week before I left, that's when great emphasis was put on a dollar a disk, and, which I thought was not important if he owned the copyright. But, yeah, the only actual talking about it, that one conversation about a dollar a disk was a one conversation on the phone, and we never brought up the deal about -- THE COURT: You were talking with Mr. Graham on the phone? THE WITNESS: Yes, I was. Defendant's Exhibit #12 marked for Identification.) BY MR. OSTROWSKI: Q. I'm showing you Defendant's Exhibit 12. Can you identify that? A. Yes. This is, this is an article I wrote that we were -- THE COURT: Excuse me? THE WITNESS: This is an article that I wrote -- THE COURT: Yes. THE WITNESS: -- for advertisement, for the Night Owl's Computer Service. BY MR. OSTROWSKI: Q. When did you write that? A. I wrote this in -- this was written in November. THE COURT: Of? THE WITNESS: Approximately November. THE COURT: Of what year? THE WITNESS: 1991. BY MR. OSTROWSKI: Q. Are you familiar with the various CD Rom releases called PDSI? A. Yes. Those are the Night Owl's version numbers, actually codes. (Plaintiff's Exhibit #5 was marked for Identificatiion.) Q. Showing you Plaintiff's 5, does that ring a bell to you? What's the number on there? A. This is PDSI-004. Q. Do you remember, do you have any recollection of that particular disk coming out? A. Yes. This is a disk, this disk came out some time that summer of that year. THE COURT: What summer? THE WITNESS: Or not -- the beginning of, could have been -- THE COURT: When? THE WITNESS: -- 1991, in the, approximately summer, between spring of that year, because we were coming out with 5 after that, and so it had to be some time after, some time around that era. BY MR. OSTROWSKI: Q. Do you recall seeing any copyright notice on that, on the file retrieval -- well, do you know whose file retrieval program is on that? A. Yeah. That's Larry's I believe. Q. Okay. Do you recall seeing any copyright notice on there? A. Yeah. Yes, I do. Q. And do you recall what it said? A. I believe it said, copyrighted by Larry James. Q. Okay. A. For the Night Owl's Computer Service. Q. And when's the first time you saw that copyright notice on the CD Rom? A. On the CD Rom? Q. Yeah. A. Well, I couldn't tell you which -- I mean, the Rom's are, once the Rom's are pressed, they're there permanently, so I couldn't, you know, I'd have to look at them. I can't tell you when I, the first time I seen it. THE COURT: You'd have to put it on a computer. THE WITNESS: Yeah. THE COURT: To see what it said. THE WITNESS: You can't erase them. So whatever they say they are, they are. That's, once they're pressed, they're pressed. BY MR. OSTROWSKI: Q. Well, did you have any role in the production of that disk? A. Not physically in the disk, no. I never had anything physically to do with the disk or the publishing of the disks. Q. Did -- A. Only advertising and marketing. That's where I helped Rich out the most. Q. Did you ever examine that disk in the -- well, did Mr. Graham ever examine that disk in your presence -- A. Oh, yes. Q. -- in terms of putting it on the -- A. Oh, yeah. We went over all the disks. Q. -- putting it up on the -- A. When we were trying to present a case for Larry -- against Larry, we went over all the disks, all the retrievals. Q. No. I'm talking much, much earlier, before the controversy. When the disk first was released? A. I had a copy of the disk, yes. Q. What I'm asking you is, did Mr. Graham -- did you see Mr. Graham looking at that disk? A. Oh, yeah. Q. Okay. And -- THE COURT: Looking at the disk. You mean, holding it in his hand or looking onto the computer? MR. OSTROWSKI: I mean on the screen, up on the screen. THE WITNESS: Well, both ways. I mean -- BY MR. OSTROWSKI: Q. Okay. And did you see Mr. Graham -- A. First thing you do when you get -- as a publisher, the first thing you do when you get a disk and you publish the disk, the first thing you do -- THE COURT: All right. We don't care about that. BY MR. OSTROWSKI: Q. Did he -- A. -- is run it. Q. Did you see Mr. Graham run the file retrieval program on that disk? A. Yes. Q. Okay. And did you see -- was the copyright notice on the screen at some point when he was using it? A. Yes. Q. Okay. And after seeing the -- well, did he, while he was using it, did he have any discussions with you about the copyright notice on it? A. No. Q. Okay. Didn't say anything? A. No. Q. Okay. And -- THE COURT: You have about three minutes. MR. OSTROWSKI: Okay. BY MR. OSTROWSKI: Q. Any of the conversations you recorded between Mr. Graham and Mr. James, were there any interruptions in the recording of any kind? A. None. Q. Did you stop the tape recorder because the cassette was at the end and you had to replace it? A. No, no. Q. Okay. Did you listen to these tapes after, or did you listen to either phone conversation? A. No. I -- Q. You said there were two? A. Did I listen to either of the phone conversations? Q. Yeah. A. One I was a -- yes, I was party to listen -- Q. You listened to one? THE COURT: One you heard as it was ongoing. THE WITNESS: Yes. And one I heard as ongoing, yes. BY MR. OSTROWSKI: Q. Okay. And the other one you heard half of it, because you heard Mr. Graham? A. Right. THE COURT: Did you hear it after, the other one afterwards? THE WITNESS: I heard the, I played the tape back, yes. THE COURT: You did play it. THE WITNESS: We played the tape back twice. Once to, me and Richard played it back to his lawyer, and once me and Rich played it back and heard it ourselves. BY MR. OSTROWSKI: Q. Okay. Do you recall whether there was any inter -- well, let me ask you this. Did you at any time take that tape, the original tape that you recorded, and alter it in any way? A. No, never. Q. Did you take anything out of it? A. No. Q. Do you recall, after listening to the tape, just the first one or two times that you mentioned, were there any interruptions in the tape? A. Not that I could recall. No interruptions. Q. Okay. Are you familiar with audio tapes? A. Yes, I am. Very much so. Q. Okay. Can you -- are you familiar with the sound of stopping and starting, and so on? A. Yes, I am. Q. Okay. Did you hear any stopping and starting on the tape? A. No, I did not. Q. Either tape? A. No. Q. Any interruptions? A. No. Q. Of any kind? A. No. I would have to, I would have had to physically interrupt it, and I didn't. Q. Okay. I'm not talking about where someone didn't speak. That's just silence. A. No. Q. I'm talking about the sound of some mechanical device, or whatever. A. No. Q. Okay. THE COURT: You got one minute. Good point to break? MR. OSTROWSKI: Yes, Your Honor. THE COURT: All right. MR. KITCHEN: Your Honor, I understand we're not continuing this afternoon. THE COURT: We are not. MR. KITCHEN: And, well, what I was going to raise is, I don't know whether this witness has brought along the particular disks which he earlier referred to as containing these retrieval systems, and if not, I was going to ask if it's possible for him to bring them, or I'm trying to make a judgment as to whether a Subpoena is going to be necessary, Your Honor, and obviously, if I can avoid it, I will. THE COURT: All right. Tomorrow morning, 10:30, we're going to have Professor Brown. We're not going to have any other witness tomorrow, other than Professor Brown. You're tied up on Monday. We're going to resume then on Tuesday morning, 9:00 o'clock. MR. OSTROWSKI: Okay. I have a very brief real estate sale. THE COURT: Is that the one you're knocking down the property Tuesday morning? MR. OSTROWSKI: As a Referee. It usually only takes about 10 minutes. THE COURT: I know. You're knocking it down. You're selling. Going, going, gone. MR. OSTROWSKI: It might be a good time for the recess. I'm sure I can do it, pick up my check and run back. It usually takes 15 -- THE COURT: What time do you have to be over there? MR. OSTROWSKI: It's at 10:00. I'd be there five to 10:00. I could probably be back by 10:30. THE COURT: All right. So we'll take our mid-morning recess at five minutes to 10:00. All right. But 9:00 o'clock Tuesday morning. All right. MR. OSTROWSKI: Can we possibly discuss that, since we have the witness there, whether the -- MR. KITCHEN: Can you bring your -- MR. OSTROWSKI: Your disks. MR. KITCHEN: -- CD Rom's, or whatever we've referred to? THE WITNESS: Sure. Yes. Sure. MR. KITCHEN: I think he said he only had four versions. Excuse me. No. That was Mr. Helinski. THE WITNESS: Three versions. THE COURT: All right. We're in recess. We're in recess. (Trial adjourned to 10-19-93) I N D E X Witness Dir Cross Redir Recr Kenneth C. Helinski 44 Gregory J. Armenia 101 Exhibit Ident. Evidence Plaintiff's: (Identified by Witness Helinski) 54 11-15-90 CARRS letter 60 55 Bus. lettere 88 91 56 2-3-91 CARRS letter 93 53 CARRS Bus. Plan 96 97 (Identified by Witness Armenia>) 16 Tape recording 126 5 PDSI - 004 145 Defendant's: (Identified by Witness Armenia.) 12 Ad Article 144