Washington D.C.--There's an interesting passage in here where IRS agent Troy Burrus and AUSA (Assistant US Attorney) Daniel P. Butler "misspoke," down towards the bottom hinting accidentally that there could be issues of Palfrey misreporting her income, a tax issue, not one of simple "money-laundering."
No worries, Judge Roberston let them off-the-hook, but he appears to be covering his ass as well...like when he quit the FISA court.
It's a potentially telling exchange, and could mean something about what Palfrey actually made, and what the government was actually able to find regarding all of her assets/money.
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1 (TROY BURRUS, GOVERNMENT witness, having been duly sworn,
2 testified as follows:)
3 DIRECT EXAMINATION
4 BY MR. BUTLER:
5 Q. Would you state your name please, and spell your last name?
6 A. Troy Burrus, B-U-R-R-U-S.
7 Q. And Mr. Burrus, what's your occupation?
8 A. I'm a special agent with the Internal Revenue Service.
9 Q. How long have you been an agent with the IRS?
10 A. For almost nine years.
11 Q. And what is your back ground for that job?
12 A. I have a bachelor's of science degree in accounting from
13 Auburn University, and I spent 10 years working as a public
14 accountant, and I'm a certified public accountant.
15 Q. And did you work in the field as a public accountant?
16 A. Yes.
17 Q. For you said how long?
18 A. Approximately 10 years.
19 Q. And after that you went to the IRS?
20 A. That's correct.
21 Q. As part of your duties with the IRS, were you involved in an
22 investigation of Pamela Martin & Associates?
23 A. Yes.
24 Q. And did there come a time when charges were brought in that
25 case?
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1 A. Yes, they were.
2 Q. A case against Pamela Martin & Associates?
3 A. Yes.
4 Q. And were you involved in processing the defendant on that
5 case at that time?
6 A. Yes, I was.
7 Q. And the name of the defendant was what?
8 A. Deborah Jeanne Palfrey.
9 Q. And do you see Ms. Palfrey in the courtroom today?
10 A. Yes, I do.
11 Q. Would you identify --
12 MR. BURTON: We'll stipulate.
13 THE COURT: She's identified. Go ahead.
14 BY MR. BUTLER:
15 Q. How did you get involved in this case?
16 A. We received a call, my supervisor received a call from the
17 United States Postal Inspection Service in approximately March
18 of 2004. They said that they needed some assistance on an
19 investigation, some financial analysis assistance.
20 Q. After you became involved, what particularly did you do?
21 A. My role in this investigation was to analyze all the
22 financial records, whether they be bank records, brokerage
23 records, any records related to money and money transfers.
24 Q. And what financial records did you review, generally
25 speaking?
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1 A. I reviewed bank records, I reviewed brokerage account
2 records, and all the different items that go into the bank
3 records themselves.
4 Q. And these were bank records for whom?
5 A. For Deborah Jeanne Palfrey.
6 Q. And what type of financial documents did you review?
7 A. We also reviewed the tax return information, plus the
8 brokerage account information with Charles Schwab.
9 Q. And that was whose account?
10 A. Deborah Jeanne Palfrey.
11 Q. This jury has heard about money orders. Were money orders
12 reviewed in this case?
13 A. Yes. Postal money orders, money orders from other sources,
14 whether they be 7-11, Western Union. Those were all reviewed.
15 Q. Bank records?
16 A. Bank records, and not only the bank statements but the
17 deposit items, whether they be the postal money orders, whether
18 they be personal checks or traveler's checks. All the check
19 items -- in other words, checks that she wrote to pay for bills
20 or expenses, any kind of money transfers between accounts or to
21 other accounts.
22 Q. And from where did you get the bank records?
23 A. The bank records were subpoenaed from Wells Fargo Bank.
24 Q. And any other financial institutions?
25 A. Charles Schwab was also subpoenaed, and records were
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1 received from them.
2 Q. And why Charles Schwab and Wells Fargo?
3 A. The postal money orders that the U.S. Postal Inspection
4 Service had identified, we traced those as being deposited into
5 both the Wells Fargo account, and some were deposited into the
6 Charles Schwab account.
7 Q. And in terms of the financial documents you reviewed, are
8 those documents here in court?
9 A. Yes, they are. They're on the table.
10 Q. And that's the binders that are in front of the jury here?
11 A. Yes.
12 Q. Which have been marked as BNK-17, 18, 19, 20, 21, and 22.
13 Is that correct?
14 A. That's correct.
15 Q. Did you review tax returns?
16 A. Yes.
17 Q. For which years?
18 A. We received tax returns from the Internal Revenue Service
19 through an ex parte order for the years 2000 through 2005.
20 We also reviewed tax returns from 1991 through 2005,
21 that were found at the defendant's home when we executed the
22 search warrant.
23 Q. Did you compare those two sets of tax returns in terms of
24 the ones that you obtained from the IRS versus the ones you
25 obtained from the search?
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1 A. Yes.
2 Q. And what did the comparisons show?
3 A. The comparisons showed that for the years 2000 through 2005
4 they were exactly the same.
5 Q. And did you take steps for the years that were prior to
6 those years, take steps to compare the tax returns that you
7 obtained during the search warrants?
8 A. Yes, but we were unable to get those older tax returns.
9 Q. Why is that?
10 A. The Internal Revenue Service only keeps tax returns going
11 back for a certain amount of years.
12 Q. So you reviewed the ones you did have?
13 And in terms of the Wells Fargo records, for what years
14 did you have those?
15 A. I looked at records starting approximately January 1st of
16 2000 through June of 2006.
17 Q. And again, why not before or after that?
18 A. Banks only keep records going back so many years. And due
19 to the statute of limitations on the various charges we were
20 looking at, we didn't go back further than 2000.
21 Q. And in terms of the money orders, you reviewed those; did
22 you add up the dollar figures over the years that you had?
23 A. Yes.
24 Q. And how much money was involved there?
25 A. For the time period 2000 through 2005, it was approximately
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1 $880,000 or somewhere around there.
2 Q. And did you prepare a chart of those amounts?
3 A. Yes.
4 Q. And I would like to at this time -- can you see that?
5 A. Yes, I can see it.
6 Q. That's a chart you prepared, and that's BNK-23. Is that
7 correct?
8 A. That's correct.
9 Q. And just walk the jury through that document, please.
10 A. This spreadsheet --
11 THE COURT: You want the jury to see it?
12 MR. BUTLER: I'm sorry.
13 BY MR. BUTLER:
14 Q. This is from the review of your bank records, the bank
15 records -- I'm sorry, the money orders you reviewed in this
16 matter. Is that correct?
17 A. This spreadsheet shows not only money orders, but also
18 personal checks that were received, and traveler's checks
19 relating to the business activity of Pamela Martin & Associates.
20 MR. BUTLER: I would move to admit BNK-23, Your Honor.
21 MR. BURTON: No objection.
22 THE COURT: Received, and you may show it to the jury.
23 (Government Exhibit BNK-23 was moved into evidence.)
24 BY MR. BUTLER:
25 Q. Could you walk the jury through what that document shows,
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1 please?
2 A. The document shows in the columns the years 2000 through
3 2005, with the final column being the total. And then the
4 receipts per the bank records, and the asterisk indicating it
5 includes all money orders, checks, traveler's checks deposited
6 into the accounts related to the business activity of PMA,
7 including both Wells Fargo Bank and Charles Schwab.
8 And then you have the individual amounts per year, to
9 total up to the $882,649.48.
10 Q. And just for the record, would you read off the years, the
11 individual years in terms of what the amounts are, please?
12 A. For 2000, it is $185,265.25; for 2001, it's $177,098.17;
13 2002, $124,605; 2003, $142,341.06; 2004, $158,835; and 2005,
14 $94,505.
15 Q. And in lay terms, what does this diagram show? What is the
16 purpose of this diagram?
17 A. This diagram just shows only the business receipts that were
18 deposited into her account. So it's an analysis of seeing how
19 much income she was receiving for the business over this period
20 of time.
21 Q. And when you say she, to whom are you referring?
22 A. Deborah Jeanne Palfrey.
23 Q. Did you do another diagram or another graph of that same
24 information, to show it in a different format?
25 A. Yes, I did a graphical column bar chart to show the same
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1 amounts.
2 MR. BUTLER: I need to show this to the witness but not
3 the jury for one moment.
4 THE COURT: All right.
5 BY MR. BUTLER:
6 Q. This is BNK-24.
7 THE COURT: It's just the same numbers in a bar chart?
8 MR. BURTON: Yeah, it's just cumulative.
9 THE COURT: It's not very edifying. Why don't we move
10 on? I think the jury can handle those numbers.
11 MR. BUTLER: Is there any objection to its admission?
12 MR. BURTON: Objection.
13 THE COURT: It's been objected to as cumulative. The
14 objection is sustained.
15 BY MR. BUTLER:
16 Q. Would the chart that you already talked about show all
17 postal money orders, or just those that were deposited?
18 A. It would only show those that were deposited. If the postal
19 money order had been cashed, it would not be included on that
20 chart.
21 Q. You mentioned earlier a search warrant that was done at the
22 residence of Deborah Jeanne Palfrey?
23 A. That is correct. A search warrant was done on the 4th of
24 October 2006.
25 Q. And was there a search warrant obtained for that search?
443
1 A. Yes.
2 Q. From where?
3 A. It was obtained from the magistrate judge in Sacramento,
4 California.
5 Q. And when was that search?
6 A. The search was actually on October 4th, 2006.
7 Q. Were you involved in that search?
8 A. Yes, I was.
9 Q. What was recovered during that search generally,
10 category-wise?
11 A. The search of the defendant's residence in Vallejo, we
12 uncovered all types of financial records: Binders containing
13 information on the individuals who were working for the
14 organization, phone records, utility records, tax returns,
15 checks, appointment books. Just a lot of different
16 correspondence information.
17 Q. And those are the tax returns that you already testified
18 about, that went beyond the ones the IRS had. Is that correct?
19 A. That's correct. We found tax returns from 1991 through
20 2005.
21 Q. And did you review those earlier returns as well?
22 A. Yes.
23 Q. And did they show how far back Pamela Martin & Associates
24 went?
25 A. Yes. The 1993 tax return indicates that that is the
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1 beginning year for Pamela Martin & Associates.
2 Q. I'm sorry, you said which year?
3 A. 1993.
4 Q. Let me also have you take a look at -- not to the jury at
5 the moment, but the --
6 I would like you to take a look at what's been marked
7 as TAX-310 through 334. You've reviewed these documents before.
8 Is that correct?
9 A. Yes.
10 Q. These are the ones you talked about?
11 A. Yes. I'm waiting for it to come up on the screen.
12 Q. And what is the first page of TAX-310? What is that?
13 A. It is a copy of Deborah Jeanne Palfrey's form 1040, page
14 one, for 1993.
15 Q. And in terms of the -- if we flip through the pages of that,
16 would the entire tax return be there?
17 A. Yes.
18 Q. And I would like to take a look at TAX-285 through 309.
19 What is that?
20 A. 285 is a copy of Deborah Jeanne Palfrey's form 1040 for
21 1994, page one.
22 Q. And if we flip through the pages, would we have the rest of
23 the tax return?
24 A. Yes.
25 Q. I would like to review TAX-271 through 284.
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1 A. 271 --
2 THE COURT: I think I know where we're going with this,
3 counsel. Is there a stipulation?
4 MR. BURTON: That's why I'm taking a look at the hard
5 copy, judge. I think we'll be able to arrive at one pretty
6 quickly.
7 MR. BUTLER: That's fine, Your Honor.
8 THE COURT: Why don't you take a second and see if you
9 can? Because nobody can really see these things as they go by,
10 anyway.
11 (OFF THE RECORD.)
12 MR. BURTON: We don't object to these returns coming
13 in. We can expedite this.
14 THE COURT: Just give us the TAX numbers of the
15 earliest and latest, tell us briefly what they are, and they'll
16 all be offered in a lump.
17 Don't take this personally, Mr. Burrus.
18 MR. BURTON: I'm sure he gets it all the time.
19 MR. BUTLER: Your Honor, you want just the first number
20 of the different years of returns?
21 THE COURT: Just do it the fastest way you can.
22 MR. BUTLER: Okay. The numbers are all -- the first
23 number, it's in sort of a reverse order. Well, let me start it
24 this way, Your Honor:
25 TAX-9 through TAX-334 are the tax returns in reverse
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1 order of the years; in other words, going 2005, 2004, 2003,
2 2002, 2001, 2000, 1999 --
3 THE COURT: All the way back to 1993?
4 MR. BUTLER: Yes, Your Honor.
5 THE COURT: Offered into evidence?
6 MR. BUTLER: Yes, Your Honor.
7 THE COURT: Received. Thank you.
8 (Government Exhibits TAX-009 to TAX-334 were moved into
9 evidence.)
10 MR. BUTLER: And I would also like to offer the binders
11 as well, Your Honor, the ones I previously referred to.
12 THE COURT: 17 through 22?
13 MR. BUTLER: BNK-17 through 22, yes.
14 THE COURT: Now, are these going to be the subject of a
15 Rule 1006 summary?
16 MR. BURTON: Yes, Your Honor.
17 MS. CONNELLY: I have a stipulation.
18 THE COURT: I don't think all those documents have to
19 be in evidence if they're made available under Rule 1006.
20 There's no point in sending all that back to the jury room and
21 letting the jury think they have to go through all that if
22 they're just getting a summary.
23 MR. BUTLER: That's fine, Your Honor. I believe we
24 have a stipulation that will cover it.
25 MR. BURTON: We entered a stipulation that these are
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1 financial documents, so...
2 THE COURT: Okay. Moving right on.
3 MR. BURTON: Your Honor, could I read this stipulation
4 at this time?
5 THE COURT: Yes.
6 MR. BUTLER: Thank you. "The United States and
7 defendant Deborah Jeanne Palfrey, after consultation with her
8 counsel, stipulate and agree that: The government has
9 established the authenticity and admissibility of the financial
10 business records, documents, records, reports, and data
11 compilation under Federal Rules of Evidence 803.6; and has
12 produced declarations conforming to Federal Rules of
13 Evidence 902.11 from a custodian of records for business records
14 relating to accounts maintained on behalf of the defendant by
15 the following businesses:
16 Wells Fargo & Company, and Charles Schwab & Company
17 Incorporated, a subsidiary of the Charles Schwab Corporation.
18 The parties agree that the defendant may still object
19 to such records on the basis of relevancy, Federal Rules of
20 Evidence 402, and any improper prejudice, Federal Rules of
21 Evidence 403."
22 THE COURT: Very well.
23 BY MR. BUTLER:
24 Q. If I could just pull out the -- and this might be easier,
25 Agent Burrus. I'll hand you TAX-0096 through 138. What is
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1 that?
2 A. This is a copy of the 2002 form 1040 filed by Deborah Jeanne
3 Palfrey.
4 Q. And would you go to the Schedule C -- I'm sorry, the line C
5 on that document? Is that for an individual or for a business?
6 A. Form 1040 is for an individual filing.
7 Q. For what? I'm sorry --
8 A. The form 1040 is a U.S. individual income tax return.
9 Q. Would you go to line C on that document?
10 A. Line C of -- you mean Schedule C?
11 Q. I mean Schedule C. Thank you.
12 A. (Witness complies.) All right.
13 Q. What is a Schedule C in a tax return?
14 A. A Schedule C that's attached to the form 1040 is to report
15 profit or loss from a business of a sole proprietorship or a
16 single-member L.L.C.
17 Q. And was that Schedule C filed by Ms. Palfrey in this matter?
18 A. Yes, she did file a Schedule C.
19 Q. For what business?
20 A. For the business listed as Pamela Martin & Associates.
21 Q. And is there a Schedule A in there, too?
22 A. Yes, there is a Schedule A.
23 Q. And what is a Schedule A?
24 A. A Schedule A is where you report your itemized deductions,
25 which includes taxes you may have paid, interest on your home,
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1 gifts to charity, casualty/theft losses, and other miscellaneous
2 expenses.
3 Q. And does the tax return say what type of business Pamela
4 Martin & Associates was?
5 A. It lists it as a "Service/Personal business."
6 Q. And what document within the tax return is that?
7 A. That is listed on Schedule C, line A.
8 Q. And does the tax return say the accounting method that was
9 used for that business?
10 A. Yes. On line F she selected or chose accounting method as
11 "cash."
12 Q. On the Schedule C?
13 A. That's correct.
14 Q. And what does that mean?
15 A. A cash basis method of accounting means that when you
16 receive income, you report it in the year that you actually
17 receive it. And when you incur expenses or actually pay the
18 expenses, you can take those as expenses.
19 Q. And is that on a gross receipt, net receipt? How was that
20 done?
21 A. I'm not sure I understand the question.
22 Q. Does Ms. Palfrey's return show gross receipts or net
23 receipts?
24 A. It shows gross receipts.
25 Q. And where does it show that?
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1 A. On line one, under part one for the income, it shows the
2 gross receipts.
3 Q. And what is gross receipts, just to make sure?
4 A. Gross receipts in this instance would be all the income that
5 was received by the business during that year.
6 Q. So that would include Ms. Palfrey as well as her employees.
7 Is that correct?
8 A. Actually, it should include the monies that she actually
9 received, that was sent to her.
10 Q. And did you compare the tax returns to the bank records for
11 Ms. Palfrey? [Ed.--Emphasis added.]
12 A. Yes.
13 Q. And what did that show?
14 A. The comparison of the bank records for this year, 2002, show
15 that there was a greater amount of gross receipts than was
16 reported on this line. [Ed.--Emphasis added.]
17 MR. BURTON: Can we approach, Your Honor?
18 THE COURT: Yes.
19 (BENCH CONFERENCE ON THE RECORD.)
20 MR. BURTON: I don't know where this is going.
21 MR. BUTLER: I'm not going to any tax discrepancy, or
22 anything to that effect. [Ed.--Emphasis added.]
23 THE COURT: You just saddled her with basically what is
24 false reporting. [Ed.--Emphasis added.]
25 MR. BUTLER: Well, I don't think it's gone that far
451
1 yet, Your Honor. I'm not going any further with this line of
2 inquiry.
3 THE COURT: Well, now you've put the defense in the
4 position where they have to respond to this. How are they going
5 to do that?
6 MR. BUTLER: Well, Your Honor, that was not the intent
7 of my question, but I appreciate what the Court is saying.
8 THE COURT: What was the intent of the question?
9 MR. BUTLER: My intent of the question, Your Honor, was
10 directed at the gross receipts that were deposited into this and
11 comparing it with the bank records that we have. It was a
12 poorly phrased question. That's all I can say about it. I
13 don't know anything more than that.
14 THE COURT: Well, where are you going next?
15 MR. BUTLER: Your Honor, I'm going next with -- can I
16 just have a moment, Your Honor?
17 Your Honor, there's another chart in terms of -- I just
18 need to grab it, just to answer the question more explicitly, if
19 I can have a moment.
20 THE COURT: How much more do you have with this guy?
21 MR. BUTLER: Not very much at all, Your Honor.
22 MS. CONNELLY: I think there's a bunch more documents.
23 MR. BUTLER: Well, there's other documents we need to
24 admit through him, yes.
25 THE COURT: Can he come back in the morning?
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1 MR. BUTLER: We can do that, Your Honor.
2 THE COURT: I think I want to instruct the jury that
3 there was no tax charge, no tax claim in this case.
4 MR. BUTLER: That's fine, Your Honor.
5 THE COURT: Maybe I'll even instruct them they are to
6 disregard that last answer because it's not relevant to your
7 case. ...
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