1224 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA ELOUISE PEPION COBELL, et . al. . . Plaintiffs, . Civil Action 96-1285 . v. . . Washington, D.C. DIRK KEMPTHORNE, Secretary . Wednesday, June 18, 2008 of the Interior, et al. . 1:32 p.m. . Defendants. . . . . . . . . . . . . . . . TRANSCRIPT OF TRIAL - AFTERNOON SESSION BEFORE THE HONORABLE JAMES ROBERTSON UNITED STATES DISTRICT JUDGE APPEARANCES: For the Plaintiffs: DENNIS GINGOLD, ESQ. Law Offices of Dennis Gingold 607 14th Street, NW Ninth Floor Washington, D.C. 20005 202-824-1448 ELLIOTT H. LEVITAS, ESQ. WILLIAM E. DORRIS, ESQ. Kilpatrick Stockton, LLP 1100 Peachtree Street Suite 2800 Atlanta, Georgia 30309-4530 404-815-6450 KEITH HARPER, ESQ. JUSTIN GUILDER, ESQ. Kilpatrick Stockton, LLP 607 14th Street, NW Suite 900 Washington, D.C. 20005 202-585-0053 APPEARANCES con't. on next page. Jacqueline M. Sullivan, RPR Official Court Reporter 1225 APPEARANCES, con't. DAVID C. SMITH, ESQ. DANIEL R. TAYLOR, JR., ESQ. Kilpatrick Stockton, LLP 1001 West Fourth Street Winston-Salem, North Carolina 27101 336-607-7392 For the Defendants: ROBERT E. KIRSCHMAN, JR., ESQ. JOHN WARSHAWSKY, ESQ. J. CHRISTOPHER KOHN, ESQ. U.S. Department of Justice 1100 L Street, NW Washington, D.C. 20005 202-307-0010 JOHN STEMPLEWICZ, ESQ. Senior Trial Attorney U.S. Department of Justice Commercial Litigation Branch Civil Division Ben Franklin Station P.O. Box 975 Washington, D.C. 20044 202-307-1104 Court Reporter: JACQUELINE M. SULLIVAN, RPR Official Court Reporter U.S. Courthouse, Room 6720 333 Constitution Avenue, NW Washington, D.C. 20001 202-354-3187 Proceedings reported by machine shorthand, transcript produced by computer-aided transcription. Jacqueline M. Sullivan, RPR Official Court Reporter 1226 1 P R O C E E D I N G S 2 COURTROOM DEPUTY: Please come to order and remain 3 seated. 4 MR. GILLETT: Good afternoon, your Honor. 5 THE COURT: Good afternoon. 6 MR. GILLETT: Government's next witness is Gary 7 Grippo. 8 THE COURT: All right. 9 COURTROOM DEPUTY: Please raise your right hand. Do 10 you solemnly swear that the testimony you should give the Court 11 in the matter now on trial should be the truth, the whole truth, 12 and nothing but the truth? 13 THE WITNESS: Yes. 14 COURTROOM DEPUTY: Thank you. Please be seated, Mr. 15 Gillett. 16 GARY GRIPPO, WITNESS FOR THE GOVERNMENT, SWORN 17 DIRECT EXAMINATION 18 BY MR. GILLETT: 19 Q. Good afternoon, Mr. Grippo. 20 A. Good afternoon. 21 Q. Would you please give your full name for the Court and 22 spell your last name? 23 A. Gary Grippo, G-r-i-p-p-o. 24 Q. Thank you. Are you employed by the United States Treasury 25 Department? Jacqueline M. Sullivan, RPR Official Court Reporter 1227 1 A. Yes, I am. 2 Q. And how long have you been employed with the Treasury 3 Department? 4 A. Sixteen years. 5 Q. What position do you have currently hold? 6 A. I'm currently the deputy assistant secretary for fiscal 7 operations and policy. 8 Q. And how long have you been in that job? 9 A. Approximately one year. 10 Q. Could you please provide the Court a brief description of 11 the work you have done for Treasury up to the time of your 12 current position? 13 A. Prior to my current position for four years I was the 14 assistant commissioner for federal finance at the Financial 15 Management Service, the Bureau of the Treasury, where I was 16 responsible for the government's depository banking relation- 17 ships and also for the government's collection deposit systems. 18 Prior to that for about four years I was the chief architect of 19 electronic commerce at the Financial Management Service where I 20 developed payment and collection and accounting systems for use 21 government-wide. 22 Q. Okay. And what do your current responsibilities involve? 23 A. I help oversee the two fiscal service bureaus, the 24 Financial Management Service and the Bureau of the Public Debt. 25 I help establish and implement government-wide financial policy Jacqueline M. Sullivan, RPR Official Court Reporter 1228 1 cash management, credit management, debt collection, and related 2 financial policies. And I have an office that reports to me 3 that manages the cash position of the U.S. government on a daily 4 basis. 5 Q. And in regard to your oversight function with the two 6 bureaus, Financial Management Service and Bureau of Public Debt, 7 could you give us an idea of the framework, the organizational 8 framework where you fit in on that? 9 A. Sure. The two fiscal service bureaus you mentioned report 10 to the fiscal assistant secretary. I work directly for the 11 fiscal assistant secretary and help him in that office in 12 overseeing the two bureaus. The fiscal assistant secretary 13 reports up to the undersecretary for domestic finance. 14 Q. I believe -- 15 THE COURT: Of what? 16 THE WITNESS: Domestic finance. 17 MR. GILLETT: I'm sorry, your Honor. 18 BY MR. GILLETT: 19 Q. You indicated you have responsibilities relating to 20 management of the cash of the United States. Could you briefly 21 describe your responsibilities in that regard? 22 A. My office manages the cash position of the government on a 23 day-to-day basis, as I said. So that means managing the amounts 24 in the TGA or Treasury general account, which would include 25 forecasting the revenues that will come into the TGA, the Jacqueline M. Sullivan, RPR Official Court Reporter 1229 1 expenditures we will make out of it, as well as investing any 2 excess operating cash that may not be needed in TGA for a given 3 day. 4 Q. In your particular position do the terms "cash" and "funds" 5 have different meanings? 6 A. Yes. 7 Q. Could you explain, please? 8 A. Well, "cash" refers to operating cash in a bank account 9 that is available to fund transactions to fund clearing 10 settlement of transactions through the banking system. "Funds" 11 represent amounts in accounts in a general ledger system: 12 assets, liabilities, appropriations, and other such amounts. 13 Q. Where does the U.S. Treasury keep its cash? 14 A. We keep our cash in two basic places. One is in the 15 Treasury General Account or TGA, which is at the Federal Reserve 16 Bank of New York, and the other place we keep it is with 17 Treasury tax and loan banks, commercial depositories. 18 Q. Now, we've heard New York testimony in this case about the 19 TGA. Could you give us a little bit more explanation about 20 Treasury tax and loan accounts? 21 A. Treasury tax and loan accounts are at commercial financial 22 institutions. They serve two purposes. One is to receive 23 deposits of federal taxes from corporations, which amounts for 24 roughly $60 to $70 billion a year in collections flowing through 25 Treasury tax and loan banks, and Treasury tax and loan banks Jacqueline M. Sullivan, RPR Official Court Reporter 1230 1 also serve as the investment vehicle for the Treasury's 2 operating cash, so they will take placements of cash from the 3 Treasury, basically on an overnight basis as a government 4 investment. 5 Q. And you mentioned that the TGA is held in the Federal 6 Reserve Bank of New York. In that sense is the Federal Reserve 7 Bank of New York Treasury's banker? 8 A. Yes. 9 Q. Okay. And on the funds side, is it a fair statement that 10 Treasury performs banking functions for the various agencies of 11 the government? 12 A. That's a fair statement. 13 Q. Do you know in general what Individual Indian Monies is? 14 A. I do in general. 15 Q. What is your understanding? 16 A. My understanding of Individual Indian Monies is there is an 17 I guess what I'll call a federal program or set of statutes 18 under which the federal government check revenues for individual 19 Indians, primarily from land use rights, and in turn disburses 20 those monies to individual Indian beneficiaries. 21 Q. How would the term "cash" that you mentioned earlier relate 22 to IIM? 23 A. Cash relates to IIM the same way that cash would relate to 24 any program or activity of the government. IIM cash would be 25 deposited in the TGA and withdrawn from the TGA. Jacqueline M. Sullivan, RPR Official Court Reporter 1231 1 Q. Generally what happens to cash deposited in the TGA? 2 A. It is spent generally the same day to fund expenditures of 3 the government. 4 Q. Approximately how much money goes through the TGA in a 5 given week? 6 A. Well, in gross nominal terms, about $300 billion a week 7 would flow through the TGA in actual cash. 8 Q. What do you mean by "gross nominal terms"? 9 A. That's the total amount of dollars that would actually be 10 credited to the TGA as deposits. 11 Q. Does that include both receipts and disbursements? 12 A. That would include both, yes, receipts and disbursements. 13 Q. Does the TGA correlate to any particular fund on the funds 14 side? 15 A. No, it does not. 16 Q. Is cash ever set aside or frozen in the TGA? 17 A. No. 18 Q. If the TGA balance somehow went to zero and government 19 spending suddenly came to a stop, would that affect balances in 20 the funds accounted for in the central accounting system? 21 A. It would have no impact on the balances in the general 22 ledger, no. 23 Q. Now, do your responsibilities also relate in any way to 24 debt management for the United States? 25 A. They do relate to debt management, yes. Jacqueline M. Sullivan, RPR Official Court Reporter 1232 1 Q. Are you familiar with how the United States government's 2 borrowing decisions are made? 3 A. Yes, I am. 4 Q. Who is involved in that process? 5 A. Two offices primary: The Office of the Fiscal Assistant 6 Secretary and the Office of the Assistant Secretary For 7 Financial Markets, primarily through suboffices. In one case 8 there's an Office of Fiscal Projections and in the other case 9 there's an Office of Debt Management and those two organizations 10 together make the borrowing decisions. 11 Q. Is there a particular organizational name for the entity or 12 the group that makes those borrowing decisions? 13 A. We call it the financing group. 14 Q. How many individuals are members of the financing group? 15 A. Typically there would be eight people or eight individuals 16 who would sign-off on a borrowing decision. 17 Q. What does it mean to sign off on a borrowing decision? 18 A. Literally we would in a finance group meeting pass around a 19 document that everyone initials to validate the amount borrowed. 20 Q. Are the individuals in the financing group picked on the 21 basis of the position they hold within the Treasury department? 22 A. Yes. It's a function of their position within the Office 23 of the Fiscal Assistant Secretary and the Office of the 24 Assistant Secretary For Financial Markets. 25 Q. Can you tell us when and how often decisions are made in Jacqueline M. Sullivan, RPR Official Court Reporter 1233 1 regard to the sale of securities by the Treasury? 2 A. There is essentially a two-step process. On a quarterly 3 basis we will project the cash and debt needs of the government 4 and prepare a financing plan for that quarter, so we may 5 conclude as an example we need in net marketable borrowing $50 6 million over the next quarter to finance a deficit. We will, 7 based upon that amount, develop a specific financing plan with 8 specific securities and maturities. We will basically make that 9 known to the public through press releases and other public 10 statements, and once that quarterly plan, that baseline plan, is 11 in place, we will on a weekly basis meet, the financing group 12 will meet, to validate the securities that would be issued that 13 week. Primarily not to change the plan that we came up with for 14 the quarter, but to make sure that for any upcoming low point in 15 other cash balance financing is sufficient to make sure that 16 funding is available in the TGA. 17 Q. Is there a phrase that generally describes Treasury's debt 18 management strategy? 19 A. The phrase typically used to describe the strategy is 20 "regular and predictable." 21 Q. And is that phrase well known in the government securities 22 market? 23 A. I would say so, yes. 24 MR. GILLETTE: Could we see Defense Exhibit 502, 25 please? Jacqueline M. Sullivan, RPR Official Court Reporter 1234 1 BY MR. GILLETTE: 2 Q. Do you see on the screen there, Mr. Grippo, what's been 3 marked as DX 502? 4 A. Yes. 5 Q. Are you familiar with that document? 6 A. Yes, I am. 7 Q. I'm not going to ask you to read from that, but if you 8 could just provide for the Court from your experience your 9 understanding of how this regular and predictable strategy works 10 day-to-day. 11 A. Well, regular and predictable means that the timing and the 12 amount and the maturities of the securities we sell are stable, 13 they do not fluctuate up or down very much, they're transparent, 14 meaning the market knows exactly how much we would expect to 15 borrow and what securities over time. In order to provide the 16 market by which I mean organizations or individuals that are 17 buying these securities, we'll have an idea of exactly what we 18 intend to issue over time. 19 MR. GILLETTE: Your Honor, I want to take a moment 20 just to make sure everybody gets a hard copy of that exhibit. 21 BY MR. GILLETTE: 22 Q. Does Treasury borrow even when substantial amounts of cash 23 are on hand, for example, April when tax receipts are high? 24 A. Yes, we do. 25 Q. And is that part of this strategy? Jacqueline M. Sullivan, RPR Official Court Reporter 1235 1 A. It is absolutely a part of that strategy. 2 Q. And in what sense? 3 A. The markets are expecting what we call a certainty of 4 supply, and so even in a particular week when we have plenty of 5 operating cash we are still borrowing and still supplying the 6 market with regular and predictable debt issuance. 7 Q. Approximately how long has that strategy been in place? 8 A. About thirty years. 9 Q. Are you at all familiar with the predecessor strategy? 10 A. In general I'm familiar with it. 11 Q. And in general how did that work? 12 A. In general borrowing decisions would be made on a more 13 tactical basis when there was a specifically-forecasted deficit 14 or cash need in the short-term and securities would be sold 15 specifically to finance that short-term deficit or amount, as 16 opposed to regular and predictable borrowing where we are 17 borrowing not based on the day-to-day or week-to-week or even 18 month-to-month variances of our cash positions, but we are 19 borrowing stable amounts over time to reflect sort of the 20 long-term structural need to borrow. 21 Q. Does every dollar in the government's hands represent a 22 dollar that the government does not have to borrow? 23 A. Not every dollar, no. 24 Q. In relatively simple terms, in a relatively static 25 environment, if the government outlays precisely equaled Jacqueline M. Sullivan, RPR Official Court Reporter 1236 1 receipts, would it be fair to say that any reduction in 2 receipts, no matter how small, would require some equivalent 3 cash increase to cover outlays? 4 A. Yes, that's how the equation would work. 5 Q. Is the environment in which financial management for the 6 United States takes place either simple or static? 7 A. No, not at all. 8 Q. For any given period of time, say, a fiscal year, how 9 likely would it be for the U.S. government outlays and receipts 10 to equal each other precisely? 11 A. It would be extraordinarily unlikely for those two things 12 to match precisely. 13 Q. Can you give the Court a sense of total federal government 14 receipts for fiscal year 2007? 15 A. Our budgetary receipts last fiscal year were about $2.6 16 trillion. 17 Q. Typically do outlays exceed receipts or receipts exceed 18 outlays? 19 A. Typically with outlays would be greater than receipts. 20 Q. And that obviously creates a deficit situation, correct? 21 A. Correct. 22 Q. All right. Do deficits generally necessitate borrowing to 23 cover outlays? 24 A. Yes. 25 Q. What was the approximately total of U.S. government Jacqueline M. Sullivan, RPR Official Court Reporter 1237 1 borrowings in fiscal year 2007? 2 A. The total nominal amount of borrowings was $4.5 trillion. 3 Q. What do you mean by "nominal"? 4 A. I mean the total amount of securities issued nominally was 5 four-and-a-half trillion dollars, which is different from the 6 deficit, let's say. 7 Q. How were most of the proceeds of the sales of securities 8 used? 9 A. The vast majority of the proceeds were used to refund 10 existing maturing debt. 11 Q. Mr. Grippo, I'm going to show you a table that has been 12 referred to as Attachment A. And have you seen this before? 13 A. Yes. 14 Q. If we could go to the last page of this document, I think 15 it's the fourth page, and to the line for year 2007. Do you see 16 in the year 2007, which is right above the totals, a figure for 17 total revenues? 18 A. Yes. 19 Q. And that's in Column E? 20 A. Um-hmm. 21 Q. Okay. What is that number there? 22 A. It looks like it's B minus C. The column is B minus C plus 23 D. 24 Q. But I mean the actual number in 2007. 25 A. Oh, 336 million. Jacqueline M. Sullivan, RPR Official Court Reporter 1238 1 Q. Okay. Now, that's gross receipts, correct, that's before 2 disbursements are taken out in Column F? 3 A. Yes, that's what it looks like. 4 Q. And after Column F we have G, the net of 101 million? 5 A. I see that. 6 Q. Now, focusing just on the 336.68 million, would projected 7 receipts at that level factor into the government's borrowing 8 decisions? 9 A. Receipts on the order of $300 million would not really 10 factor -- would not factor into our borrowing decisions. 11 Q. Why not? 12 A. Because the scale of the borrowing is such that marginal 13 amounts, let's say on a given day $500 million would not impact 14 how much we borrow. 15 Q. And this figure represents an annual receipts figure, that 16 is your understanding? 17 A. Annual for 2007, yes. 18 MR. GILLETTE: Could we see Defense Exhibit 503, 19 please? 20 BY MR. GILLETTE: 21 Q. Does this document look familiar to you? 22 A. Yes. 23 Q. Could you describe what it is, please? 24 A. This is a document we use to track the daily cash position 25 of the federal government, and this would be the primary Jacqueline M. Sullivan, RPR Official Court Reporter 1239 1 document we're looking at when the financing group meets to 2 validate on a weekly basis the borrowing plan we have in place. 3 Q. Okay. Who prepares this document? 4 A. My office. 5 Q. And when is it prepared in relation to when you're going to 6 need it? 7 A. Well, as I indicated earlier, on a quarterly basis this 8 document would be prepared using a baseline forecast of our cash 9 and debt of the government, and then each day as actual amounts 10 are recorded it would be updated, and so if you can see under 11 the box labeled Cash there toward the right there is a column 12 headed ACT that refers to actual, and so this is from May 2008. 13 It is showing all the actual cash balances from last month. 14 Q. Why don't we go through this kind of from left to right, a 15 column or so at a time, if we can do that, Matthew. Could take 16 us through these various columns from left to right, Mr. Grippo? 17 A. Well, the first column, Date, obviously is showing each day 18 of the month of May. The next column entitled Mar 31st, March 19 31st, 2008, is showing the estimated cash balance to the 20 hundred-million-dollar increment. That was developed in the 21 quarterly forecast that was published on March 31st. 22 Q. And let me just stop you there for a second. When you say 23 the "estimated cash balance," the estimated cash balance where? 24 A. I mean the operating cash of the government, so that would 25 include amounts in the TGA as well as amounts that may be in the Jacqueline M. Sullivan, RPR Official Court Reporter 1240 1 Treasury tax and loan system. The total operating cash at the 2 disposal of the Treasury. 3 Q. And then moving over to the right. 4 A. So the next column marked Maturities is showing Treasury 5 bills and notes and bonds in the case of the coupon column that 6 will be maturing on those days. 7 Q. And how do you use those information? 8 A. Well, that represents, as I say, maturing debt, which means 9 we must have enough cash on hand to pay for those maturing 10 securities. 11 Q. And under the pro forma issues, could you explain what that 12 information is? 13 A. Sure. Pro forma issues shows the borrowing plan that would 14 have been put in place at the start of the quarter. You can see 15 different types of securities there, a four-week bill, a 16 thirteen-week bill, a 26-week bill, etcetera. This shows the 17 amount in billions of dollars for each of those securities which 18 we plan to sell to raise cash for the government. 19 Q. And again, who does this planning? 20 A. The Office of Fiscal Projections and the Office of Debt 21 Management within the Treasury. 22 MR. GILLETTE: And Matthew, could we slide over to the 23 next column over, the New Cash? And actually we might as well 24 take that whole group of columns, if we can. All right. 25 BY MR. GILLETTE: Jacqueline M. Sullivan, RPR Official Court Reporter 1241 1 Q. Could you please walk us through these next four columns, 2 Mr. Grippo? 3 A. New Cash Finance is showing based upon what securities are 4 maturing and what new securities we will issue whether the 5 government will be generating new cash or whether it will be on 6 that paying down debt, so if you see a negative number we are 7 paying down debt. If you see a positive number, we are raising 8 cash on that day. You'll note that all of these figures for new 9 cash, well, there's one exception, but generally they occur on 10 Thursdays, which is when all securities transactions settle, so 11 New Cash Finance shows the amount of money we are raising or 12 paying down based upon maturities versus new issues. New Other 13 Cash just refers to the difference in the cash position from our 14 original baseline, which would have been that first column we 15 looked at. And the key column here on this chart that we look 16 at when we are making borrowing decisions is that column 17 Adjusted Cash Balance. That is showing the operating cash of 18 the Treasury for each day. 19 Q. And then the remaining columns there? 20 A. The last two columns show a particular type of investment, 21 term investments, with TT&L banks, so that shows what proportion 22 of the operating cash we would expect to be in term investments 23 with TT&L banks. It doesn't show everything that's in the TT&L 24 system, but terms placements in the TT&L system. Something more 25 than in one day basically. Jacqueline M. Sullivan, RPR Official Court Reporter 1242 1 Q. And to complete this exhibit, if we could just quickly look 2 at the set of columns on the far right under Debt. 3 A. The Debt box is basically there to track existing debt 4 levels based upon the information you see on the left side of 5 the chart against the statutory debt limit, and so you can see 6 in adjusted debt the amount of debt we have accumulated that is 7 subject to statutory limit. If you go a little further down on 8 the chart you will see the actual debt limit, which is currently 9 $9.8 trillion. 10 Q. When the financing group makes the decisions of what to 11 borrow and how much, does it borrow down to the penny? 12 A. No. 13 Q. How does that work? 14 A. We borrow in billion-dollar increments, and so as we are 15 looking at these balances, we are making a determination whether 16 to increase or decrease the borrowing by at least a billion 17 dollars. 18 Q. And what is the target that you are looking at when you -- 19 what point in these projections is the point that you're looking 20 to in deciding how much overall? 21 A. Well, the borrowing plan for the quarter basically 22 establishes what we are going to issue. On a particular day the 23 one thing we would be looking at is whether the adjusted cash 24 balance is approaching five, $5 billion, which is the minimum 25 amount of cash we keep in the TGA to ensure there is a Jacqueline M. Sullivan, RPR Official Court Reporter 1243 1 sufficient balance against an overdraft. 2 Q. And the projections you're looking at, what do they give 3 you in terms of cash flow? 4 A. This adjusted cash balance is listed in hundred billion 5 dollar increments. 6 Q. Now, we looked earlier at the $336 million annual IIM 7 receipts, gross receipts. Do you recall that? 8 A. Yes. 9 Q. What would that be in weekly terms? 10 A. It would be roughly six million. 330 by 52. 11 Q. Would the weekly $6 million in gross IIM receipts impact 12 the decisions about whether and how much to borrow? 13 A. It would not. 14 Q. And what are the major cash sources and uses that you look 15 to in making your forecasts? 16 A. Well, on the receipt side it would be individual income 17 taxes, in particular individual withheld income taxes and 18 employment taxes. Also individual nonwithheld taxes, which 19 would be quarterly estimated taxes or April 15th taxes from 20 individuals. Corporate taxes, customs duties, estate taxes, and 21 unemployment insurance taxes. Those categories I've just listed 22 are more than 98 percent of the receipts of the government. And 23 on the uses or the expenditures, of course there is Social 24 Security payments, Medicare and Medicaid payments, defense 25 spending, and the other one that sometimes we look at would be Jacqueline M. Sullivan, RPR Official Court Reporter 1244 1 education spending, and those constitute the vast majority of 2 spending for the government. 3 Q. Do you know whether the financing group members know 4 specifically the projected IIM receipts for any given period 5 when they make borrowing decisions? 6 A. The financing group has no knowledge of IIM. 7 Q. If that information were known, what, if any, difference 8 would it make? 9 A. It would make no difference to borrowing decisions. 10 Q. Is the IIM fund balance, the 14X6039, relevant to any 11 borrowing decision? 12 A. No, it's not known to anyone making a borrowing decision. 13 Q. If gross IIM receipts were eliminated entirely, would that 14 affect the decision about whether and how much to borrow? 15 A. Those gross receipts of roughly $330 million, I don't know 16 whether they occur or don't occur, would not impact the 17 borrowing decision. This chart shows that we don't even look to 18 a daily amount let alone an annual amount that's under a hundred 19 million dollars, and you can see from all the issues they are 20 all issued in billion-dollar increments, so borrowing decisions 21 are just not sensitive to amounts under, let's say, $500 million 22 for a given day, which might impact a billion-dollar increment 23 up or down in a borrowing decision. 24 Q. Now, you recall in looking at Attachment A the 2007 figures 25 for IIM receipts and disbursements. There was a net figure of Jacqueline M. Sullivan, RPR Official Court Reporter 1245 1 approximately one hundred one million. Do you remember that? 2 A. Yes. 3 Q. If gross receipts would not affect borrowing, would it be 4 fair to say that the net amount of cash remaining after IIM 5 payments are subtracted would not? 6 A. That's fair. 7 Q. If Interior, the Department of Interior purchases 8 securities for individual Indians on the open market, would that 9 impact borrowing decisions? 10 A. No, that would have no impact on our borrowing. 11 Q. If the Department of Interior purchases securities for 12 individual Indians from Treasury, would that have any effect on 13 borrowing decision? 14 A. No, that would not impact marketable borrowing. 15 Q. If Interior deposits IIM receipts in commercial cash, would 16 that amount of cash even theoretically be considered in 17 borrowing decisions? 18 A. I'm sorry, could you repeat that? 19 Q. Yes. If the Department of Interior deposits IIM receipts 20 in commercial banks, could that amount of cash even 21 theoretically be considered in borrowing decisions? 22 A. No, I don't believe there would be effect any borrowing 23 decisions. 24 Q. Are you familiar with the acronym CIHO? 25 A. Yes. Jacqueline M. Sullivan, RPR Official Court Reporter 1246 1 Q. What does that mean? 2 A. It stands for Cash in Investments Held Outside Treasury. 3 Q. What does that mean? 4 A. That means that's a report or a description of cash in 5 accounts that are not part of the Treasury's operating balance, 6 which is to say cash that we are not controlling at Treasury and 7 thus do not impact borrowing decisions, and it reflects 8 investments held with commercial brokers and dealers outside of 9 the Treasury. 10 Q. Is Keogh taken into consideration in debt management? 11 A. It is not. 12 Q. Is Keogh considered available to Treasury? 13 A. No. 14 Q. Are TT&L balances taken into consideration in borrowing 15 decisions? 16 A. Yes, absolutely. 17 Q. And are they available to Treasury? 18 A. Yes, they are. 19 Q. Is cash held by agencies in commercial banks held in TT&L 20 accounts? 21 A. No. An agency would not hold cash in a TT&L account. 22 Q. Okay. Now, does the fact that the amount of IIM coming 23 into the TGA, we're talking cash here, does the fact that that 24 amount is relatively small mean that Treasury ignores IIM all 25 together or that there is some risk of it getting lost in the Jacqueline M. Sullivan, RPR Official Court Reporter 1247 1 system? 2 A. No, that wouldn't mean that at all. Every cash dollar that 3 comes into the TGA is accounted for. The TGA is reconciled 4 every day so all the funds would be accounted for. 5 Q. Isn't it fair to say that some circumstances exist where it 6 would be an error to disregard small incremental amounts where 7 small incremental amounts can add up to large amounts? 8 A. If you could rephrase that. 9 Q. In some circumstances you're looking at small incremental 10 amounts and it would be erroneous to ignore those if the 11 circumstances were such that those small amounts could add up to 12 large amounts. 13 A. If you aggregated them and it added up to a material large 14 amount you'd want to pay attention to that. 15 Q. Do those circumstances apply to what we've been discussing 16 so far? 17 A. I don't believe so, no. 18 Q. Why not? 19 A. We've been talking about an annual marginal amount of IIM 20 funds and, you know, I've said that those marginal amounts are 21 too small, at least in this discussion, to impact our borrowing. 22 Q. Now, what if we grossed up, assume that we grossed up all 23 of the IIM amounts over this 120-year period that's at issue in 24 this case. Would the results of this analysis be any different? 25 Would your answer be any different? Jacqueline M. Sullivan, RPR Official Court Reporter 1248 1 A. I don't think it would. If you gross up all the IIM 2 amounts and then on the other side of the ledger gross up all 3 the borrowing on balance, it would still not change the 4 analysis. 5 Q. Now I'm going to ask you several questions where I'm going 6 to ask you to put aside the testimony you just gave and assume 7 for purposes of these questions that the theory that every 8 dollar in hand eliminates a dollar of borrowing. Do you 9 understand that? 10 A. Um-hmm. 11 Q. Okay. Now, let's go back to Attachment A, please. I want 12 to go to just the 1887 line all the way at the top. You see 13 there in Column G a dollar figure, Mr. Grippo? 14 A. Yes. 15 Q. What is your understanding of that dollar figure? 16 A. That I guess $179,000 is the difference between total 17 revenues and disbursements. 18 Q. Let's assume that for present purposes all the government's 19 outlays and receipts are in sync. Are you following me? 20 A. Sure. 21 Q. Okay. But we pull out that $179,000, creating an immediate 22 need for cash to fill that void. Do you understand that? 23 A. Yes. 24 Q. Would you expect under those circumstances that the 25 government would sell a note for that amount, based on, you Jacqueline M. Sullivan, RPR Official Court Reporter 1249 1 know, obviously you weren't here in 1887, but based on your 2 knowledge today? 3 A. It would not sell a note. 4 Q. But given the assumption that it would have to make up this 5 $179,000 deficit given today's circumstances -- 6 A. Yes. 7 Q. -- would that note have some maturity? 8 A. I said it wouldn't sell a note. A note is sort of a medium 9 term instrument. To make up that deficit we'd sell probably a 10 bill, some short-term instrument, a year or less. 11 Q. So what would the term be, the maturity of that instrument 12 be? 13 A. It would most certainly be less than a year, and probably 14 would be the shortest instrument we have for an amount that 15 small. 16 Q. I just want to be clear, we're not talking about 179,000 17 relative to the trillions that we have today? 18 A. Right. 19 Q. I'm just saying if it was you absolutely had to have an 20 amount of money, any amount of money, even the 336 million we're 21 talking about in 2007, the government would have to sell some 22 kind of securities to make up that deficit, correct? 23 A. Correct. 24 Q. Have you ever heard of the government security with 121 25 year maturity? Jacqueline M. Sullivan, RPR Official Court Reporter 1250 1 A. No. 2 Q. When a government security is paid off, would the interest 3 on that security stop accruing? 4 A. Yes. 5 Q. Is that the interest that the government would save by not 6 having to borrow that amount of money? 7 A. Yes. 8 Q. And typically how are interest payments made on government 9 securities, how and when are they made? 10 A. Well, on a bill which is sold on a discount basis from par, 11 interest would not be paid over time but would be factored into 12 the discounted amount at which it was sold. For a note or a 13 bond or another type of coupon security, interest would be paid 14 under current rules on a semi-annual basis. 15 Q. Would that be simple interest or compound interest? 16 A. Simple interest. 17 MR. GILLETTE: I have no further questions at this 18 time. I would move into evidence Defense Exhibits 502, the 19 Federal Reserve Board of New York article, and Exhibit 503, the 20 one-page in rejection of cash. 21 MR. GINGOLD: Objection, your Honor. There is no 22 discussion of cash and what it means. 23 THE COURT: If that were the rule, there would be an 24 awful lot of evidence in this case that would not be received. 25 I'm going to receive it for what it's worth. The exhibits will Jacqueline M. Sullivan, RPR Official Court Reporter 1251 1 be received. 2 Time for cross-examination. 3 (Defendants' Exhibit Nos. 502 and 503 received into 4 evidence at about 2:14 p.m.) 5 MR. GINGOLD: Good afternoon, your Honor. 6 THE COURT: Good afternoon. 7 CROSS-EXAMINATION 8 BY MR. GINGOLD: 9 Q. Good afternoon, Mr. Grippo. My name is Dennis Gingold and 10 I represent plaintiffs. 11 Mr. Grippo, how long have you been a member of the 12 financing group? 13 A. For about a year. Since last July. 14 Q. Did you attend financing group meetings prior to that? 15 A. No. 16 Q. Sir, are you speaking then or testifying today based on 17 your experience as a member of the financing group? 18 A. Based on that experience and other knowledge. 19 Q. Other knowledge that you directly picked up in association 20 with the financing group? 21 A. Other knowledge that I have as deputy assistant secretary. 22 Q. Does your knowledge go back in time as deputy assistant 23 secretary beyond the year? 24 A. Yes. 25 Q. How far back? Jacqueline M. Sullivan, RPR Official Court Reporter 1252 1 A. Well, I have knowledge of various statutes that have been 2 passed in the past that are still in effect. 3 Q. Are the decisions of the financing group determined by 4 statute? 5 A. The specific amounts that the financing group decides on 6 are not laid out in a specific statute. The framework within 7 which we make those decisions are obviously laid out. 8 Everything we do is laid out on that basis and statute. 9 Q. So with respect to the decisions that have been made since 10 you've been a member of the financing group, other than the 11 framework, the statutes don't have any relevance to the 12 decisions; is that correct? 13 A. I don't know that I would agree with that. 14 Q. Do the statutes provide specifically what funds held by the 15 United States government you are to consider in determining the 16 borrowing needs of the government? 17 A. Yes, that's correct. 18 Q. Okay. Which statute do you recall? 19 A. Well, as an example, 31 USC 323, I believe, lays out what 20 amounts we can invest and where we can invest it. 21 Q. I was unclear, I'm sorry. Do your decisions on the 22 financing group which are determined by statute, are they made 23 based on a statutory requirement that you consider funds, 24 certain funds that are held by the United States government? 25 A. I think the answer is yes. I mean, if there are certain Jacqueline M. Sullivan, RPR Official Court Reporter 1253 1 statutes which give us control over cash, those are factored 2 into our financing decisions. If an agency has authority to 3 hold cash some place else or that is not part of the Treasury 4 operating cash, then that authority constrains what we do in 5 making borrowing decision. 6 Q. So for example, does the statute speak to the Treasury 7 general account, the 31 USC 323, I believe you stated? 8 A. I don't know if the Treasury general account is mentioned 9 in that statute. That statute identifies Treasury tax and loan 10 accounts as banks, as banks in which we may invest excess 11 operating cash. 12 Q. So that's a specific authorization? 13 A. Yes. 14 Q. Generally when you're making the borrowing decisions as a 15 member of the financing group, are those borrowing decisions 16 determined by other explicit statutory authorizations such as 17 Treasury tax and loan account, deposit fund accounts, or 18 anything of that sort? 19 A. I don't think it would be based on specifically on statutes 20 that set up different funds in the general ledger. 21 Q. That's within your discretion, isn't it? 22 A. It is not within our discretion to disburse funds if 23 there's not a sufficient amount in the TGA. 24 Q. Okay. Thank you. Sorry. So TGA is an important factor, 25 isn't it? Jacqueline M. Sullivan, RPR Official Court Reporter 1254 1 A. Certainly. 2 Q. And the funds are in the TGA, wherever those funds came 3 from, those funds are considered as part of the aggregate 4 balance in the TGA in your borrowing decisions; is that correct? 5 A. Yes. The balance of the TGA is considered in the borrowing 6 decision. 7 Q. And quite frankly, you don't care what the composition of 8 the TGA is, you care about the aggregate balance, don't you? 9 A. We care about the balance, that's correct. 10 Q. And if the balance is maintained to a certain level, it 11 affects what you need to borrow; is that correct? 12 A. Yes. 13 Q. And if a balance is at a certain level, it can affect your 14 decisions on which securities to redeem, correct? 15 A. It really wouldn't affect which security we redeem. Those 16 would mature and we would refund those. The last time our 17 operating balances impacted a specific security to redeem would 18 have been six or seven years ago when we were running surpluses 19 and we bought back debt, but otherwise we wait for the debt to 20 mature and then refund it or pay for it. 21 Q. And during the period of time where you were buying back 22 debt, was the government still borrowing money? 23 A. Yes. 24 Q. And when it was borrowing money and when you were having 25 your -- you weren't on the financing group at that time, were Jacqueline M. Sullivan, RPR Official Court Reporter 1255 1 you? 2 A. I was not. 3 Q. Do you know whether or not at the period of time the 4 government was showing surpluses and it was borrowing money at 5 the same time it was considering the aggregate balance in the 6 Treasury general account? 7 A. Yes. It was considering the TGA balance, sure. 8 Q. As a matter of fact, is that something that's standard from 9 as long as you know Treasury, the Treasury general account is an 10 important factor in determining borrowing decisions, correct? 11 A. Yes. 12 Q. Now, you were asked a question by government counsel about 13 what you thought about how transactions may have been handled in 14 1887, correct, based on Schedule A? 15 A. I recall a question on that amount and Schedule A. 16 Q. I'm going to assume you know what happened in 1887. 17 A. Okay. 18 Q. In 1887 do you know how the borrowing decisions were made? 19 A. Not specifically, no. 20 Q. Through what period of time do you have confidence 21 testifying with regard to how the borrowing decisions were made? 22 A. Roughly since 1978. 23 Q. Why 1978? 24 A. Well, that's roughly the time when the regular and 25 predictable borrowing strategy was codified or implemented, and Jacqueline M. Sullivan, RPR Official Court Reporter 1256 1 it's also the time around which the statutes on investing excess 2 operating cash were put in place, and it also happens to be the 3 amount of time when individuals on my staff began working in the 4 Treasury, which provides me with information about how borrowing 5 decisions were made. 6 Q. How long have you been at the Treasury? 7 A. I've worked at the Treasury for sixteen years. 8 Q. So did you work with Mr. Gregg? 9 A. Yes. 10 Q. Did you work with Mr. Hammond? 11 A. Yes. 12 Q. Were you informed at all about Mr. Gregg's testimony in 13 this litigation? 14 A. Yes. 15 Q. What is your understanding of that? 16 MR. GILLETT: Objection; vague. 17 THE COURT: Sustained. 18 BY MR. GINGOLD: 19 Q. Do you know whether or not Mr. Gregg testified in this case 20 that the Treasury general -- that to the extent funds were in 21 the general Treasury account there would be a benefit to the 22 government? 23 A. I guess I recall in general a discussion and his testimony 24 about that. 25 Q. And do you recall whether or not in his testimony it would Jacqueline M. Sullivan, RPR Official Court Reporter 1257 1 involve funds held in the Treasury account would affect 2 decisions on borrowing by the government? 3 A. I have a vague recollection of that. 4 Q. Do you agree with the statement to the extent there are 5 funds that come into the general Treasury account these are 6 considered in the borrowing decisions that are made by the 7 department? 8 A. The level of the TGA is considered in borrowing decisions. 9 Q. Do commercial banks that are agents of the Treasury and 10 sometimes they're referred to as financial agents, are you aware 11 of that term? 12 A. Yes. 13 Q. Do you agree that's a proper term to characterize banks 14 that are authorized to take deposits of government money? 15 A. Yes. 16 Q. Do financial agent banks have components or hold components 17 of the Treasury General Account? 18 A. No. 19 Q. They do not? 20 A. No, they don't. 21 Q. The funds that are deposited in a financial agent bank for 22 ultimate deposit in the Treasury, how are those funds viewed by 23 the Treasury today? 24 A. Oh, I see. There are certain financial agent banks which 25 take deposits over-the-counter from agencies and amounts that go Jacqueline M. Sullivan, RPR Official Court Reporter 1258 1 into those particular financial agent banks that you're talking 2 about are concentrated into the main TGA at the Federal Reserve 3 Bank of New York. 4 Q. And is the Federal Reserve Bank of New York, is that the 5 TGA or is that the government operating account or the Treasury 6 operating account? 7 A. The term "Treasury General Account," as I'm using it, 8 refers to the account at the Federal Reserve Bank of New York. 9 Q. Have you heard the term "operating account" before? 10 A. Colloquially, yes. 11 Q. Are the funds transferred on their way to the Treasury into 12 the federal reserve bank and are held by the federal reserve 13 bank before they're credited to the TGA, or does the credit to 14 the TGA occur simultaneously with posting to the Federal Reserve 15 Bank of New York? 16 A. The TGA is at the Federal Reserve Bank of New York when 17 there is a credit to the TGA that is functioned by the Federal 18 Reserve Bank of New York. 19 Q. When funds are deposited, or I guess it's not funds, when 20 credits are made to the TGA, how long are those credits held in 21 the TGA before a Statement of Transaction authorizes a 22 classification to a particular account like the 6039 account at 23 Treasury? 24 A. The statement of account or statement of transactions is an 25 end-of-the-month process, so that occurs on a monthly cycle. Jacqueline M. Sullivan, RPR Official Court Reporter 1259 1 Q. And until that time the funds continue to be held in the TG 2 -- or the credits continue to be posted to the TGA, correct? 3 A. I don't think that's accurate. 4 Q. Okay. What is the correct situation? 5 A. Well, the agency involved would have its own ledger, 6 subsidiary ledger, which is keeping track of the amounts that 7 should be credited to a fund in the general ledger. That 8 process is synchronized at the end of the month, but I don't 9 think it maps back directly to cash flowing through credits or 10 debits to the TGA. The two are very different concepts. 11 Q. The one individual Indian trust funds are collected and 12 deposited into the Treasury? 13 A. The cash is deposited into the Treasury. 14 Q. Could you describe the process? 15 A. Well, there are various collection mechanisms, but the 16 simplest one would have cash deposited, let's say, at a 17 financial agent bank, and that bank would report that money into 18 our collection and deposit system which would trigger the 19 concentration of the money, the cash, into the TGA. At the same 20 time the responsible agency would need to create credit and 21 debit fund account entries. 22 Q. During what period of time, before the end of the month or 23 at the end of the month? 24 A. I guess agencies do it differently, but the reconciliation 25 of their fund balance with Treasury would happen at the end of Jacqueline M. Sullivan, RPR Official Court Reporter 1260 1 the month. 2 Q. Are you aware of difficulties over the years with regard to 3 the accurate reporting of deposits from all agencies of the 4 government? 5 A. I don't know specifically what you mean. I know that 6 obviously in the course of reconciliation there are statements 7 of differences that need to be reconciled. 8 Q. You're not aware of a general problem that has occurred and 9 Treasury addressed it in 1985? 10 A. No, not specifically. 11 Q. Are you aware as to whether or not Interior itself had 12 out-of-balance ledger issues with respect to funds deposited in 13 the Treasury? 14 A. I don't have any specific knowledge of it. 15 Q. Would that affect Treasury's operation at all if Interior's 16 ledgers were out of balance? 17 A. It would reflect in auditors' opinions of financial 18 statements. 19 Q. For the Interior or for the Treasury? 20 A. Well, certainly for Interior. It may not be material for 21 Treasury. 22 MR. GINGOLD: Plaintiffs would like to have marked for 23 identification Exhibit 136. 24 (Plaintiffs' Exhibit No. 136 was marked for 25 identification at abut 2:29 p.m.) Jacqueline M. Sullivan, RPR Official Court Reporter 1261 1 BY MR. GINGOLD: 2 Q. This exhibit is entitled Improvements Needed in Controlling 3 and Accounting for Treasury Banking Arrangements. This is a GAO 4 report dated April 3rd, 1985. Have you ever seen this report? 5 A. No. 6 Q. I would like you to turn your attention to page seven of 7 this report. In the highlighted section of page seven there's a 8 statement, Past audit work is shown in some agencies. Do not 9 place a high priority on reconciling deposit information. It 10 goes on to say, Therefore, we continue to believe Treasury needs 11 to examine alternative control mechanisms for preventing and 12 detecting bank delays, including agency initiation of the 13 transfers. Treasury's primary objections to -- there is an 14 alternative mentioned -- are that agencies could not be 15 controlled to provide accurate deposit information to the banks 16 and that frequency with which agencies make deposit errors would 17 place an added burden on the banks. However, Treasury officials 18 said the data is not available on the extent to which agencies 19 made deposit errors. 20 THE COURT: What is the date of this letter? 21 MR. GINGOLD: This is a 1985 GAO report, your Honor. 22 It's April 3rd, 1985. 23 BY MR. GINGOLD: 24 Q. Sir, you had not been aware of the concerns about the 25 accuracy of deposits in the Treasury? Jacqueline M. Sullivan, RPR Official Court Reporter 1262 1 A. I've not seen this report. 2 Q. I'd like to also turn your attention to page seventeen of 3 this report. In the middle of the page this is a paragraph 4 dealing with agency reconciliations of deposits may not detect 5 all delays. It says, FMS instructions have centered on 6 reconciling total monthly deposits rather than detecting delays. 7 It is especially important that guidance be given because the 8 agencies have had primary responsibility for using the 9 reconciliation system to resolve deposit differences since 10 January 1983. It goes on, FMS was responsible for the 11 reconciliation prior to that time. 12 THE COURT: Mr. Gingold, this witness said his 13 knowledge goes back just barely to 1985, derivatively through 14 the people who work for him. He doesn't claim any knowledge 15 before that time. Do you really need this witness to really 16 bounce these things off, or could you just put them in evidence? 17 MR. GINGOLD: Well, no. I just thought it was opened 18 up when he was asked questions about what happened in 1887, so I 19 thought going back to 1985 wasn't going too far back. 20 THE COURT: Have at it, Mr. Gingold. 21 MR. GINGOLD: Never mind, your Honor. 22 Plaintiffs would like to identify again Exhibit 139. 23 BY MR. GINGOLD: 24 Q. Mr. Grippo, were you in the courtroom when I was asking 25 your colleague about this particular exhibit? Jacqueline M. Sullivan, RPR Official Court Reporter 1263 1 A. I don't believe I was, no. 2 Q. I would like to turn to page -- this is -- oh, by the way, 3 since you weren't here, I'll explain it. If you can go to the 4 first page, please. It's an item identified as a Fiscal Year 5 2009 Budget of the United States Government Office of Management 6 and Budget. Have you seen this report? 7 A. I'm generally aware of it. I probably know some basic 8 totals in it, but I've not read through the budget. 9 Q. It's a big report, isn't it? 10 A. Yes. 11 Q. First I'd like to turn to page five of this report. And if 12 we can focus in on the headnote in the middle at the top portion 13 of the page. It states, Budget Deficit Or Surplus and Means of 14 Financing. So that is the subject matter of the item I'm going 15 to read to you. We can go to page six, please. In the middle 16 or the top of page six there's a highlighted section. I'm going 17 to read a portion of the highlighted section and ask you if it's 18 consistent with your testimony. Deposit fund balances may be 19 held in the form of either invested or uninvested balances. To 20 the extent they are not invested, changes in the balances are 21 available to finance expenditures and are recorded as a means of 22 financing other than borrowing from the public. I'll stop at 23 that point. Have you ever seen any statement like this before 24 from OMB? 25 A. I have not read this statement before. Jacqueline M. Sullivan, RPR Official Court Reporter 1264 1 Q. And do you have any understanding of what this means based 2 on your experience as a member of the financing committee? 3 A. I'd like to read it. 4 Q. Okay. Go ahead. 5 A. Okay. 6 Q. First, do you have an understanding of what a deposit fund 7 balance is? 8 A. Yes. 9 Q. What is your understanding? 10 A. Deposit fund balance would be the amount in a deposit fund 11 liability account in the general ledger of the U.S. government. 12 Q. Do you know whether the individual Indian trust funds are 13 deposit funds held by the government? 14 A. It's my understanding that the IIM fund is a deposit fund. 15 Q. Do you see there is a distinction between invested and 16 uninvested balances? 17 A. Yes. 18 Q. What is your understanding of that? 19 A. Well, certain amounts in the overall 6039 account may be 20 invested and others may be held uninvested in that fund balance. 21 Q. And with regard to the uninvested balances, what is your 22 understanding of what they may be used for based on this 23 statement? 24 A. Well, this says changes in the balances are available to 25 finance expenditures. I think changes in the amount of cash Jacqueline M. Sullivan, RPR Official Court Reporter 1265 1 coming into or leaving the government in connection with a 2 deposit fund would impact financing and therefore balances may 3 be available to finance expenditures. I don't know that the 4 liability amount in the deposit fund represents any cash that 5 would impact a financing decision. 6 Q. But it would seem to provide that it is available for 7 financing; is that correct? 8 A. That's what it says. I don't believe that the fund balance 9 of the deposit fund is anything we look at in making a financing 10 decision, however. 11 Q. At least that's not what you have looked at since you've 12 been a member of the financing committee or financing group for 13 the last year, correct? 14 A. That's correct. We are not looking at all the general 15 ledger fund accounts, the assets and liabilities of the 16 government. We're looking at our operating cash. 17 Q. And that's not to say you can speak for your predecessor 18 financing committees, correct? 19 A. That's true. 20 Q. You don't know. 21 Plaintiffs would like to again bring up Exhibit 140. 22 140 is identified as an FTY 2006 Performance and Accountability 23 Report For Treasury. This is before you were in the position 24 you're in now, but have you seen this particular document 25 before? Jacqueline M. Sullivan, RPR Official Court Reporter 1266 1 A. I see it. 2 Q. This one itself or subsequent ones? 3 A. No, I've seen this. 4 Q. I'd like to turn to page 134, please. If we can focus in 5 on the top paragraph. Do you know the fund balances? 6 A. Yes. 7 Q. What is it? 8 A. I think of it as an amount that is in a general ledger 9 account in the U.S. central summary general ledger. 10 Q. Is it considered resources of the government? 11 A. Resources of the government? Yes. It could be. 12 Q. Let me -- 13 A. Most of the accounts in the general ledger are liabilities. 14 Q. But a liability can be a resource as well, correct, a 15 deposit liability, correct, because you relend the deposit, 16 right? 17 A. Um-hmm. As with what? 18 Q. You can relend a deposit, you use the funds, correct? 19 A. I'm not following you there. 20 Q. Well, let's go on. 21 Fund balance. Fund balance with Treasury is the 22 aggregate amount of the Treasury Department's accounts with the 23 U.S. government's central accounts from which the Treasury 24 Department is authorized to make expenditures and pay 25 liabilities. It is an asset because it represents the Treasury Jacqueline M. Sullivan, RPR Official Court Reporter 1267 1 Department's claim to the U.S. government's resources. Is that 2 your understanding? 3 A. Yes. 4 Q. Now, do you see there are items -- if we can drop down to 5 the next -- thank you. 6 There are items that are identified for fund balances 7 with Treasury as of September 30, 2006 and September 30, 2005. 8 With regard to the column that we have in front of you now, do 9 you see the particular funds that are considered in the fund 10 balance? 11 A. Yes. 12 Q. And appropriated funds, revolving funds, trust funds, 13 clearing funds, deposit funds, special funds and others, 14 correct? 15 A. Yes. 16 Q. Does your committee consider the balances in these funds in 17 any way in making your borrowing decisions today? 18 A. No. 19 Q. Do you know if your predecessors did? 20 A. I don't believe they would. 21 Q. But do you know? 22 A. But I wasn't in the room for borrowing decisions made a 23 century ago. 24 Q. Well, your predecessors let's say ten years ago, do you 25 know if they did? Jacqueline M. Sullivan, RPR Official Court Reporter 1268 1 A. Ten years ago they would not have looked at this. 2 Q. Beg your pardon? 3 A. They would not have looked at this. 4 Q. Prior to 1985? 5 A. I don't believe they'd be looking at ledger balances in the 6 U.S. standard general ledger. Borrowing decisions are derived 7 from our cash position, not amounts in trust funds, deposit 8 funds, special funds, but the operating cash we have on hand, 9 and so, I mean, while I don't know how borrowing decisions were 10 made a hundred years ago, we borrow in general whether now or in 11 the past, to make sure we have enough cash on hand. 12 Q. Right. And that's why you focus on the TGA, because that's 13 a cash account, correct? 14 A. Correct. 15 Q. And to the extent individual trust funds have been retained 16 in any way in the TGA, they would be considered as well, 17 correct? 18 A. I don't think they're retained in the TGA. 19 Q. To the extent they are, how do they come in -- excuse me. 20 Go ahead. 21 A. Well, I mean, cash gets deposited to the TGA, but a credit 22 to a trust fund or a deposit fund is an entirely different 23 balance. 24 Q. Do you know what happens -- 25 A. In the TGA. Jacqueline M. Sullivan, RPR Official Court Reporter 1269 1 Q. I'm sorry, go ahead. 2 A. No, I'm finished. 3 Q. Do you know what happens when a check is cut on the 14X6039 4 account? 5 A. In general I would know, yes. 6 Q. And what is that? 7 A. Well, in general if a check -- if the Department of the 8 Interior cut such a check it would need to make sure that the 9 fund balance in that account is debited or decremented for that 10 amount to reflect the expenditure. 11 Q. At the time the check is cut, correct? 12 A. Yes. On its own books it should reflect that at the time 13 the check is cut. The agency would on a weekly or certainly on 14 at least a monthly basis inform the Treasury of the checks that 15 it has issued. 16 Q. And what is credited if the 14X account is debited? 17 A. I don't think anything is credited as such. The Treasury 18 records a liability for outstanding checks. 19 Q. So is it your view that the Treasury general account is not 20 credited? 21 A. Treasury general account is absolutely not credited. The 22 account is credited with cash coming in from revenue collection 23 and borrowing. When an agency cuts a check and decrements a 24 fund account, that doesn't magically generate cash going into 25 the TGA, so the TGA would not be impacted. Jacqueline M. Sullivan, RPR Official Court Reporter 1270 1 Q. If the check isn't paid for a year where are the credits 2 for -- 3 A. There's a liability for an outstanding check. 4 Q. But where are the credits held, because the account is 5 debited, correct? 6 A. The fund balance is debited. 7 Q. So where are the credits held? 8 A. I don't think there's a credit held anywhere. There is a 9 corresponding liability for the outstanding check. 10 Q. But the funds haven't left the Treasury, have they? 11 A. No funds have left -- no cash has left the TGA. 12 Q. So is the cash still in the Treasury reflected in the 13 14X6039 account? 14 A. I don't think any cash is reflected there. That's a 15 general ledger account fund balance. 16 Q. Are credits still reflected in the Treasury? 17 A. I don't know what that means. What account, cash basis, 18 fund basis? 19 Q. Well, I'll keep it simple. A 10.00 check is cut on the 20 14X6039, $10.00 is debited. 21 A. The fund balance for? 22 Q. Is debited. 23 A. It's decremented. 24 Q. So it's now $10.00 less than before it was cut? 25 A. Right. Jacqueline M. Sullivan, RPR Official Court Reporter 1271 1 Q. So the check hasn't been paid? 2 A. So there's an outstanding liability for a check. 3 Q. But where is the money that has been debited from the 4 account? 5 A. The money? 6 Q. Uninvested funds. Where are the uninvested funds? 7 A. The fund balance of 6039 would be reduced. At the end of 8 the month when the Treasury is reconciling that account with the 9 Department of the Interior that reconciliation of the fund 10 balance would need to show that the amount of checks issued and 11 possibly paid can be reconciled to the amount that was debited 12 or decremented from the fund balance. 13 Q. But my question was: The check hasn't been paid? 14 A. Right. 15 Q. The check hasn't been paid for twelve months 16 hypothetically. The account is debited that $10.00 for the 17 twelve months, and therefore there's $10.00 left in uninvested 18 funds in that account, correct? 19 A. Yes. 20 Q. And no funds have left the Treasury, correct? 21 A. No cash has left the Treasury. 22 Q. Where is the cash? 23 A. Cash would not be needed until the check is presented for 24 payment. There is no cash moved when a fund balance is dec- 25 remented or a check is issued. Jacqueline M. Sullivan, RPR Official Court Reporter 1272 1 Q. Would the trust balance be invested -- would there be less 2 money available for investment for that twelve-month period 3 because the funds have been or the debit has been made to that 4 account? 5 A. Yes, the fund balance would be lower. 6 Q. So exactly where is that credit? I'm not sure I 7 understand. You're going to have to help me with this. What 8 reflects those funds and where are they held that have been 9 debited? 10 MR. GILLETT: Objection; asked and answered. 11 THE COURT: Well, no. I'll let him try again. I 12 think I understood the answer, but go ahead. 13 You said the money doesn't move anywhere. 14 THE WITNESS: It doesn't move any place. I mean, you 15 know, the fund balance is decremented. We know that in this 16 $10.00 instance a $10.00 check has been issued. The Treasury 17 has an account that shows outstanding checks for $10.00 and that 18 is the extent of the direct entry as a result of that. Until 19 the check is cashed and presented for payment, I don't think 20 there's any other entries that are involved. 21 BY MR. GINGOLD: 22 Q. If the security had to be redeemed to pay the check, the 23 funds -- what happens to the redeemed securities? 24 A. Well, the cash from the redemption would flow into the TGA. 25 The fund balance for the IIM would be incremented by that Jacqueline M. Sullivan, RPR Official Court Reporter 1273 1 amount. 2 Q. But the redeemed securities would be the proceeds would be 3 going to the TGA, correct? 4 A. The cash would. 5 Q. The cash would? 6 A. The cash would go to the TGA, just like any other cash 7 transaction, but the value of those securities would be credited 8 and incremented to the uninvested balance of that fund account. 9 Q. Less $10.00, the amount of the check, correct? Could you 10 please say yes or no? 11 A. Yes. There would be a decrement to the fund balance for 12 $10.00. 13 THE COURT: Are you saying decrement? 14 THE WITNESS: Decrement. I'm sorry. Debit. That 15 fund balance would be lowered, but that does not mean that there 16 would be cash moving somewhere or even that we move cash into 17 the TGA. 18 BY MR. GINGOLD: 19 Q. But do you know whether that's the case, or you're not 20 sure? You said it doesn't -- 21 A. Well, I'm positive about that. In managing the TGA on a 22 day-to-day basis the cash that comes into it would be revenue 23 collections, sales of securities and other things that generate 24 cash, and issuance of a check or decrementing or debiting a 25 deposit fund account doesn't generate cash. Jacqueline M. Sullivan, RPR Official Court Reporter 1274 1 Q. It doesn't generate cash, but the redemption of the 2 security does, correct? 3 A. The redemption of the security would generate cash, yes, 4 and a corresponding credit to the uninvested balance of the 5 deposit fun. 6 Q. Right, but that's only part of the money. The other part 7 goes into the TGA, correct? 8 A. No. They equal each other. The cash from a credit goes 9 into the TGA and a credit or increment from the fund balance 10 would be entered as well. Sell a million-dollar security, a 11 million dollars goes into the TGA, a million dollars is credited 12 to the deposit fund. 13 Q. And whatever however the check was that was written is 14 still deducted from the amount in the deposit account, correct? 15 A. Yes. 16 Q. And no interest is being earned on that, correct? 17 A. That's correct. 18 Q. You talked about general ledgers, I think, or am I wrong? 19 In your direct testimony did you talk at all about general 20 ledgers? 21 A. Yes, I did. 22 Q. What is a general ledger? 23 A. A general ledger is a basic dual-entry bookkeeping device 24 used to show the financial operations of an organization. 25 Q. And is it important to have balanced general ledgers? Jacqueline M. Sullivan, RPR Official Court Reporter 1275 1 A. Yes. 2 Q. Why? 3 A. It ensures basic controls over financial operations. 4 Q. And then it would reflect, if the ledger is balanced it 5 would reflect good controls, wouldn't it? 6 A. Certainly. 7 Q. Are there any other consequences if you don't have ledgers 8 that balance, are you concerned about disbursements, the 9 accuracy of disbursements if that's the case? 10 A. Well, certainly. 11 Q. Are you concerned about the accuracy of collections if 12 that's the case? 13 A. Yes, you would be concerned about the accuracy of any 14 supporting documentation. 15 BY MR. GINGOLD: Plaintiffs would like to call up 16 Exhibit 65, which has already been used in this proceeding. 17 BY MR. GINGOLD: 18 Q. Now, I know you haven't been back in time so I'm going to 19 be asking you a question specifically about a 1954 report 20 dealing with an audit involving the funds on deposit, and I'm 21 going to ask you what your understanding of this problem is and 22 whether or not you believe the problem exists today. 23 A. Okay. 24 Q. If you can turn to page eleven of this. Just for your own 25 information, this is a compilation of a series of audit reports Jacqueline M. Sullivan, RPR Official Court Reporter 1276 1 prepared by the comptroller general, the inspector general, and 2 others dealing with IIM trust-related issues. This is item 49. 3 Item 49 is up? 4 THE COURT: Are you suggesting the compilation was 5 prepared by the comptroller general? 6 MR. GINGOLD: No, no, no, no, no. These are experts. 7 These are linked to the particular reports where the information 8 was. 9 THE COURT: Okay. I just didn't want the witness to 10 get the wrong idea. 11 MR. GINGOLD: No. I wasn't trying to mislead the 12 witness, your Honor. 13 BY MR. GINGOLD: 14 Q. But in one of the excerpts that we pulled, the counsel for 15 plaintiffs did this. It states as follows: Arbitrary Cash 16 Adjustments: Our audit for the fiscal year ended June 30, 1952 17 disclosed numerous unreconciled differences between the balances 18 of the general ledger accounts for appropriated funds on 19 deposits with the Treasury department, regional disbursing 20 officer. I'll skip the parenthetical. As of June 30, 1952 and 21 as account current for June 1952. 22 I'd like to drop down a little bit to the portion of 23 this that says Arbitrary Adjustments. This is right after 1953. 24 Arbitrary adjustments in general ledger accounts for the purpose 25 of reaching agreement with amounts in allotment ledgers or Jacqueline M. Sullivan, RPR Official Court Reporter 1277 1 accounts current rendered by a regional disbursing officer are 2 not acceptable accounting procedure. It should be noted that 3 because of the many deficiencies observed during the audit of 4 IIM accounts we have been able to settle the accounts of the 5 Indian disbursement agent. Now, is this something that -- this 6 was something that was reported 54 years ago and it deals with 7 an out-of-balance condition in ledgers. Were you aware of this 8 at all? 9 MR. GILLETT: Objection; lack of foundation. 10 THE COURT: The question is was he aware of it. 11 Overruled. 12 THE WITNESS: No. 13 BY MR. GINGOLD: 14 Q. Do you know if this condition persisted over a long period 15 of time? 16 MR. GILLETT: Objection. 17 THE COURT: Overruled. 18 THE WITNESS: No. 19 BY MR. GINGOLD: 20 Q. If it has, and I will -- as a matter of fact I will bring 21 up another exhibit so we can talk about it. I'd like to call up 22 Plaintiffs' 151. I'm not going to go through the compilation 23 because there are illustrations of things of this sort, but I 24 want to bring it to a fairly current era. You came into the 25 Treasury department at what time, what year? Jacqueline M. Sullivan, RPR Official Court Reporter 1278 1 A. 1991. 2 Q. There is testimony in this proceeding back in 1999 from the 3 former special trustee for American Indians. This is testimony 4 on June 11, 1999. This is also excerpted from -- I'm sorry. 5 May 2, 2003. This special trustee, former special trustee 6 testified on several occasions. These two excerpts are from the 7 trial transcripts where the special trustee testified in this 8 litigation, and I'd like you to look at the second paragraph 9 here. If you could just read it a moment to yourself and let me 10 know when I can ask you questions. 11 (Witness reviews document.) 12 As you can see, the special trustee testified about 13 out-of-balance conditions, correct? 14 A. I see. 15 Q. And he appears to have expressed concern about the effect 16 of those out-of-balance conditions, is that fair? 17 A. Yes. 18 Q. Now, do you know whether or not the out-of-balance 19 conditions between the Treasury and Interior ledgers have been 20 reconciled? 21 A. I have no knowledge of the differences between the Treasury 22 and Interior on any Interior-specific accounts. 23 Q. And if in fact there was a long-term out-of-balance 24 condition, would it affect the accuracy of disbursement data? 25 A. It could. Jacqueline M. Sullivan, RPR Official Court Reporter 1279 1 Q. And would it affect the accuracy of collection data? 2 A. It could. 3 Q. Would it affect the accuracy of interest earned on invested 4 funds? 5 A. Yes, it could. 6 Q. But you've never been informed about that, have you? 7 A. No. 8 Q. You were asked questions about, I think the 1887 questions, 9 or question, sorry, dealt with I guess what type of security, I 10 think you said T bill, funds should be invested, and I believe 11 you testified a one-year T bill, correct? 12 A. I don't recall the specific question, but I recall 13 discussing that, yes. 14 Q. I don't recall the specific question either, but it was 15 something involving a one-year T bill because you indicated it 16 should be a short-term, not a long-term, instrument, correct? 17 A. Yes. 18 Q. Are you aware of the fact that plaintiffs in their model 19 used a ten-year T bond rate as an estimate for savings to the 20 government? 21 A. I am aware of that. 22 Q. And I think, at least based on your testimony with regard 23 to 1887, you indicated that a ten-year might be too long a bill, 24 maturity, correct? 25 A. I believe that's the case, but not based upon the question Jacqueline M. Sullivan, RPR Official Court Reporter 1280 1 that I was asked earlier. 2 Q. What is your reason? 3 A. Well, that attachment of that model purports to show what 4 the government saved in borrowing costs over time, over long 5 periods of time, and it picks -- it tries to pick a particular 6 security, a ten-year note to serve as a proxy for that borrowing 7 cost or avoided borrowing cost, but I think if you're going -- 8 you know, that's an arbitrary choice of a particular security. 9 If you want to impute the borrowing costs over time you would 10 really want to look at the average maturity of the portfolio and 11 not one particular type of security in the portfolio. 12 Q. Have you done any calculations yourself as to the average 13 maturity in an individual's portfolio? 14 A. I am aware of the average maturity of the portfolio in 15 general. 16 Q. From what period of time? 17 A. Back to 1980. 18 Q. From 1980 to the present what would be your understanding 19 of the average maturity of the portfolio? 20 A. It was slightly less than five years and then slightly more 21 than five years, and now it's about four years eleven months. 22 Q. So it's about five years? 23 A. Right. It's oscillated around that basic number. 24 Q. Is that something that is commonly understood? 25 A. I don't know if it's commonly understood. In debt Jacqueline M. Sullivan, RPR Official Court Reporter 1281 1 management it is well publicized. Every quarter we update and 2 tell the public what the average maturity of the debt is. 3 Q. Are you an economist? 4 A. I'm not. 5 Q. Again, you can't speak to the average maturity of the 6 portfolio prior to 1980, can you? 7 A. I've seen some data on that, but I'm not an expert in it. 8 Q. Do you know the difference in the -- now, are these 9 discount notes or are they interest-bearing notes? Are they 10 yielding? 11 A. It would reflect both. 12 Q. Does it make a difference with regard to the income? 13 A. With regard to the income? 14 Q. If you were dealing with interest rate note or a discount 15 bond? 16 A. No, I don't believe so. 17 Q. You don't believe so. So a discount note would bear simple 18 interest or yield simple interest, is that your understanding? 19 A. It would be amortized over time, but it's a simple issue, 20 yes. 21 Q. And the interest that's paid on the Treasury notes or 22 Treasury bonds are simple interest? 23 A. Yes. 24 Q. That's historical currently? 25 A. Currently, yes. Jacqueline M. Sullivan, RPR Official Court Reporter 1282 1 Q. How far back in time can you speak to in that regard? 2 A. Based on personal knowledge, I don't know how far back I 3 can go. That's certainly the case now for securities that are 4 maturing, so on that level, thirty years. 5 Q. So at least for the last thirty years you believe they're 6 simple interest? 7 A. On a specific security, yes. Simple interest as opposed 8 to? 9 Q. Compound interest. 10 A. Yes. For a particular security it's simple interest. 11 Q. So for the ten-year, for the ten-year T bond it's simple 12 interest, correct? 13 A. Yes, for a particular ten-year note. 14 Q. When you say "particular ten-year note," are there notes 15 that pay compound interest? 16 A. No. I mean, if you looked at a ten-year note we would pay 17 simple interest on it. 18 Q. And that's for all Treasury securities? 19 A. Yes. We pay straightforward simple interest or discount. 20 Q. And it's the same effect, same yield, correct? 21 A. Yes, sir. 22 BY MR. GINGOLD: One moment, please. 23 (There was a pause in the proceedings.) 24 BY MR. GINGOLD: 25 Q. When you refer to simple interest and compound, can you Jacqueline M. Sullivan, RPR Official Court Reporter 1283 1 define what you mean by "simple interest"? 2 A. I mean there is an interest rate that is applied to a 3 principal amount over a maturity period. 4 Q. And when the payment is made, if the payment is made on the 5 note that matures, the payment, if the payment is deposited in 6 an account, that's what the simple interest would reflect, 7 correct? 8 A. I don't understand. 9 Q. You're redeeming the note? 10 A. So we're redeeming the principal? 11 Q. That's right. The proceeds go into the account, correct, 12 the proceeds at redemption? 13 A. Are paid to ultimately the owner of the bond, yes. 14 Q. Right. If the funds haven't been paid out, however, but 15 they're retained and there is a reinvestment of those funds, 16 would the reinvestment of those funds effectively compound the 17 interest? 18 A. I don't believe it would. I think it would be simple 19 interest on a new security. 20 Q. But the new security would be X plus the interest that was 21 earned on the previous security, correct? 22 A. Yes. You're talking about multiple securities over time. 23 Q. Yes, yes. 24 A. That's why I kept saying for a particular bond it is simple 25 interest. Jacqueline M. Sullivan, RPR Official Court Reporter 1284 1 Q. When you have the multiple securities over time, it's 2 effectively compound, isn't it? 3 A. If you're an investor and you're reinvesting principal and 4 interest, that is compounded, yes. 5 MR. GINGOLD: No further questions, your Honor. 6 THE COURT: All right, Mr. Grippo, thank you. You're 7 excused. You may step down. 8 (Witness excused at about 3:05 p.m.) 9 MR. KIRSCHMAN: One moment, your Honor. 10 THE COURT: Is this a good time for a short break? 11 MR. KIRSCHMAN: That would be fine, your Honor. 12 (Recess taken at about 3:06 p.m.) 13 COURTROOM DEPUTY: Please remain seated and come to 14 order. 15 THE COURT: What's the meaning of this? 16 MR. KIRSCHMAN: This is an exhibit we will be going 17 through with Mr. Mushtaq, our next witness. 18 THE COURT: Go ahead. 19 MR. KIRSCHMAN: Your Honor, before I present the 20 government's next witness, I would like to take care of an 21 administrative matter I overlooked when presenting Mr. Hoak. We 22 presented two exhibits, DX 466, and 466 is the only circular, 23 the excerpt of section two. We would move that admission. 24 THE COURT: Received. 25 MR. KIRSCHMAN: And the second is DX 499, which was Jacqueline M. Sullivan, RPR Official Court Reporter 1285 1 Mr. Hoak's two pages of charts. We move that into admission. 2 THE COURT: Received. 3 (Defendants' Exhibit Nos. DX 466 and DX 499 received 4 into evidence at about 3:20 p.m.) 5 MR. KIRSCHMAN: The government would now like to call 6 as its next witness Ali Mushtaq, and your Honor, we are 7 presenting Mr. Mushtaq as a fact witness. 8 COURTROOM DEPUTY: Please raise your right hand. Do 9 you solemnly swear that the testimony you should give the Court 10 in this case now on trial will be the truth, the whole truth and 11 nothing but the truth? 12 MR. MUSHTAQ: I do. 13 COURTROOM DEPUTY: Thank you, sir. 14 ALI MUSHTAQ, WITNESS FOR THE DEFENDANTS, SWORN 15 DIRECT EXAMINATION 16 BY MR. KIRSCHMAN: 17 Q. Please state your name for the record. 18 A. Ali Mushtaq. 19 THE COURT: How do you spell that last name? 20 THE WITNESS: M-u-s-h-t-a-q. 21 BY MR. KIRSCHMAN: 22 Q. And Mr. Mushtaq, where are you employed? 23 A. I'm a statistical contractor with NORC. 24 Q. And as a contractor with NORC who do you report to? 25 A. I report to Dr. Scheuren and Dr. Hinkins. Jacqueline M. Sullivan, RPR Official Court Reporter 1286 1 Q. When did you begin working for NORC? 2 A. A little over five years ago. 3 Q. In your work for NORC what position do you now hold? 4 A. I'm a statistical contractor. 5 Q. Okay. Has your work involved NORC's review and analysis of 6 the IIM accounts generally? 7 A. Yes, and the tribal accounts. 8 Q. Could you please describe for the Court your 9 responsibilities with NORC today? 10 A. I help with sample design and analysis. I perform data 11 analysis and conduct research. 12 Q. Okay. During the course of your work for NORC did you have 13 occasion to review summon packages from the Department of the 14 Treasury and GAO that cover the period 1890 through 1951? 15 A. Yes. 16 Q. And when did you first review these packages? 17 A. In early 2006. 18 Q. Okay. Could you please describe generally to the Court 19 what these packages are? 20 A. The settlement packages are reviewed accounts of the ISSDA, 21 Indian Services Special Disbursing Agent. 22 Q. Okay. So these accounts being settled the accounts of the 23 disbursing agents? 24 A. Yes. 25 Q. What was the purpose of your review in early 2006? Jacqueline M. Sullivan, RPR Official Court Reporter 1287 1 A. It was to determine if there was a regular consistent 2 review process in place. 3 Q. Since that initial review have you had occasion to review 4 summon packages again? 5 A. Yes, I have. 6 Q. And when did you do that? 7 A. I went back to Archives to review those packages for a few 8 days in the summer of 2007 and again last week. 9 Q. Can you explain to the Court why you reviewed again some of 10 the settlement packages back in 2007? 11 A. After the initial review I had some questions I wanted to 12 investigate. One was in some packages it appeared as if GAO was 13 reviewing the accounts on an individual account level and in 14 some other packages it looked like they were not, and so I took 15 a small sample from each to investigate those packages at the 16 Archives. 17 Q. Why did you perform that investigation, who told you to 18 perform that investigation? 19 A. I did that myself. 20 Q. Okay. You stated that you also reviewed packages just a 21 week ago, correct? 22 A. Yes. 23 Q. And generally why did you do that? 24 A. This was after I was warned that I might be testifying so I 25 wanted to round out my presentation with some pictures of Jacqueline M. Sullivan, RPR Official Court Reporter 1288 1 checks. 2 THE COURT: Warned? 3 THE WITNESS: Warned. 4 MR. KIRSCHMAN: It is Cobell, your Honor. 5 THE COURT: Threatened maybe. 6 MR. KIRSCHMAN: Never, your Honor. 7 BY MR. KIRSCHMAN: 8 Q. Why did you have an idea that you would see checks if you 9 went back to review the settlement packages last week? 10 A. The initial review in 2006 I remember seeing checks in the 11 settlement packages. I generally saw checks separate from the 12 packages themselves. They'd be bundled in the box with the 13 packages but separate from the packages. 14 Q. Okay. And when you went back recently to review the 15 settlement packages what did it reveal about the existence of 16 checks? 17 A. I was able to find checks from earlier periods. I wasn't 18 able to find again those checks that I had seen before. 19 Q. Why was it that you weren't able to find the checks that 20 you had seen before back in early 2006? 21 A. I think it's time constraints at the Archives. You're only 22 allowed to pull so many packages and look at them, and I was 23 only back for one day. 24 Q. Now, when you reviewed these GAO settlement packages in 25 early 2007 and last week, did you photograph some of the Jacqueline M. Sullivan, RPR Official Court Reporter 1289 1 material that you reviewed? 2 A. Yes, I did. 3 Q. Okay. And what we'd like to do now is work through a 4 sample of those photographs. With that I'd like to draw your 5 attention to the image that I'm going to ask be put on the 6 screen. It has been marked as DX 504. The collection of 7 photographs is marked as DX 504, and I'm going to ask you to 8 turn your attention to the first page. Is this the photo you 9 took? 10 A. Yes, it is. 11 Q. And are all of the photos that we are going to be reviewing 12 today ones that you have taken personally? 13 A. Yes. 14 Q. Could you please describe for the Court what this first 15 photo pictures? 16 A. This is a picture of a box at Archives containing 17 settlement packages, and you can see packages of varying size. 18 Q. To the best of your understanding how many GAO settlement 19 packages are there in the Archives? 20 A. Between 45,000 and 50,000. 21 Q. And what is your understanding based on? 22 A. I'm sorry? 23 Q. What is your understanding of the number of settlement 24 packages in the Archives based on? 25 A. Anderson had keyed in an index of the GAO ledgers -- I'm Jacqueline M. Sullivan, RPR Official Court Reporter 1290 1 sorry -- of the GAO settlement packages, and that consisted 2 almost of almost 45,000 records, and further analysis we were 3 able to determine that about seven percent of the packages there 4 weren't in that index, so the estimate is that there's between 5 45,000 and 50,000. 6 Q. Okay. I'd like to turn your attention to the next page of 7 DX 504. And can you describe what this document is? 8 A. This is a settlement package and this is settlement package 9 H54365. It's a December account of the special disbursing agent 10 A.G. Wilson. This is a package with IIM ledgers in it. 11 Q. How do you know that the settlement packages has IIM 12 ledgers in it? 13 A. I have gone through this package. At the bottom, the red 14 tape there, that's binding for the ledgers. 15 Q. Okay. Turning your attention to the next photo, can you 16 explain what this document is? 17 A. This is a certificate of settlement. It's the document 18 issued by GAO certifying the balance of the ISSDA. 19 Q. What information generally is contained in the certificate 20 of settlement? 21 A. They have the settlement number listed, the special 22 disbursing agent's name listed, the period being certified, the 23 language "I certify that I have examined and settled the 24 account," and the balances. 25 Q. Now, generally based on your observations, what period of Jacqueline M. Sullivan, RPR Official Court Reporter 1291 1 time do these certificates of settlement usually cover? 2 A. For the most part I have seen the certificates cover a 3 three-month period, a quarterly period, although they can cover 4 just a month and later on, as more often, they'll cover a semi- 5 annual period, but they can cover any period, even a two-month 6 period. 7 Q. Okay. So where based on your experience would you find a 8 certificate, where would it usually appear for the period 9 covered by that certificate? 10 A. The certificate would be found generally in the last month 11 of the certification period, so this one was found in the March 12 settlement package. 13 Q. Okay. I'd like us to focus, if we can, on the middle of 14 the page. There's a box marked "balance to the United States as 15 per account rendered" and in that there's an indication of 16 $231.68 in the category marked REG period. Do you see that? 17 A. Um-hmm. 18 Q. And there is identified $36,932.24 and an S slash D 19 category. Do you see that? 20 A. Yes, I do. 21 Q. And can you explain to the Court what your understanding is 22 as to what these categories represent? 23 A. SD stands for special deposits. 24 Q. What is in that, do you know? 25 A. The IIM balance is in there, along with the special Jacqueline M. Sullivan, RPR Official Court Reporter 1292 1 deposits balance. 2 Q. And now how do you know that the term SD includes both 3 special deposits and Individual Indian Monies? 4 A. You can look at the account current in the package and see 5 that the Indian money balance with the special deposits adds 6 together with the SD balance on that certificate. 7 Q. Let's turn to the next page then of this exhibit. And at 8 the top of this you can see that it is an account current, 9 correct? 10 A. Yes. 11 Q. Generally if you could explain to the Court what 12 information is within an account current. 13 A. From what I've seen, an account current provides the 14 opening balance, closing balance, receipts and payments on an 15 aggregate level of funds in the ISSDA account. 16 Q. Okay. Now, how does this particular account current 17 indicate what is in the S slash D category we saw on the related 18 certificate of service? I'm sorry. Certificate of settlement, 19 what part of the document should we look towards? 20 A. If you look at the right side of the document, the final 21 balance, the three funds listed under Individual Monies, those 22 three numbers add up to give you the SD balance shown on the 23 certificate. 24 Q. Do you see the stamp at the bottom left-hand side of the 25 account current? Jacqueline M. Sullivan, RPR Official Court Reporter 1293 1 A. Yes. 2 Q. And can you read what it says? 3 A. It says, All pencil changes were made by the General 4 Accounting Office, and it's initialed and dated. 5 Q. To the best of your understanding based on what you saw, 6 how often are account currents prepared and what part of BIA did 7 they cover? 8 A. The accounts current, there's generally an accounts current 9 prepared for each month at the agencies. 10 Q. Turning to page five of this exhibit, there is a depiction 11 of two documents. Do you see those? 12 A. Yes. 13 Q. The first on the left is an official receipt. Can you 14 describe what an official receipt is to the best of your 15 understanding and what it shows? 16 A. The official receipt is a supporting document for a 17 collection. 18 Q. Looking at this specific official receipt, can you 19 explain -- it references a Glen MacIntosh. Can you explain what 20 information this tells us regarding Glen MacIntosh? 21 A. I believe this is money collected from Glen MacIntosh 22 that's collected on two contracts that's to be deposited into 23 three individual Indian accounts. 24 Q. Okay. Now, let's broaden our scope to include the official 25 receipts and also the schedule of collections. How are these Jacqueline M. Sullivan, RPR Official Court Reporter 1294 1 documents related, these two particular documents, in this 2 image? 3 A. The schedule of collections is a listing of collections and 4 that listing is supported by the official receipts. 5 Q. Okay. By the way, we have a two-dimensional picture here, 6 but how many official receipts to the best of your recollection 7 are contained in this file? 8 A. You can kind of see the thickness in the middle of the 9 page. Those are all the official receipts there for that 10 particular month. 11 Q. Now, just looking at the official receipt, we talked about 12 the fact it addresses receipts for Glen MacIntosh, correct? 13 A. Yes. 14 Q. And the official receipt has a number associated with it? 15 A. Yes. 16 Q. And can you highlight to the Court where we would find that 17 in the schedule of collections? 18 A. The receipt number is listed as a first column in the 19 schedule of collections there. 20 Q. Okay. Moving on throughout this settlement package to 21 photo six, DX 504, this document is identified as a 22 recapitulation of individual Indian accounts. Do you see that? 23 A. Yes. And this is from a different settlement package 24 actually. 25 Q. Oh, is it? Okay. And what generally is a recapitulation? Jacqueline M. Sullivan, RPR Official Court Reporter 1295 1 A. A recapitulation is a summary here of the individual Indian 2 accounts at an aggregate level. This recapitulation is giving 3 summary level information of the individual volumes that 4 comprise the IIM ledger. 5 Q. Generally when did you see separate recapitulation 6 documents like this one in a settlement package? 7 A. Generally when I see a ledger in a settlement package I 8 will see a prepared recapitulation as well. 9 Q. And looking at this document, it's true to say that it 10 provides information on the disbursement and receipts within the 11 individual Indian accounts? 12 MR. GUILDER: Objection. That calls for speculation. 13 There's been no evidence that this shows actual disbursements or 14 receipts. It's a summary level, as he just testified. 15 THE COURT: Sustained. 16 MR. KIRSCHMAN: Could we highlight the document, 17 please? 18 BY MR. KIRSCHMAN: 19 Q. Let's go through this from left to right, if we could, Mr. 20 Mushtaq. On the left-hand column there's a heading Volume. Do 21 you have an understanding as to what that is? 22 A. Yes. These refer to the specific volumes that make up the 23 IIM ledger, so A9 to B354 are individual accounts within one 24 booklet. That's one booklet of the ledger. Each one of these 25 lines is a different booklet in the ledgers, so there are Jacqueline M. Sullivan, RPR Official Court Reporter 1296 1 several booklets making up all the IIM ledgers in this account. 2 Q. And all these volumes would be in one settlement package, 3 is that what you witnessed? 4 A. In this case, yes, although if there are too many ledgers 5 they'll be in a separate settlement package, but they'll be 6 together. 7 Q. The next column is marked DISV period. Do you see that? 8 A. Yes. 9 Q. And the next one is marked Receipts. Do you see that? 10 A. Yes. 11 Q. And to the best of your understanding, based on your review 12 of these settlement packages, what do those two columns 13 reference? 14 A. The total number of -- the total amount of disbursements in 15 each particular volume and the total amount of receipts in each 16 particular volume. 17 Q. And to be clear, each line is just referencing that 18 particular volume, correct? 19 A. Yes. 20 Q. Okay. Now, you testified that the recapitulation follows 21 IIM ledgers, correct, generally? 22 A. Generally I'll find a recapitulation in the same package as 23 I'll find a ledger. 24 Q. If we could turn to the eighth photo of DX 504. Well, 25 let's stop here just generally. Looking at this photo, what is Jacqueline M. Sullivan, RPR Official Court Reporter 1297 1 that on DX 504 at page seven? 2 A. This is just the second page of the same recapitulation. 3 Q. This second page of the same capitulation specifically 4 states summary receipts, correct? 5 A. Summary of disbursements, yes. 6 Q. And that's spelled out, summary of disbursements? 7 A. Right. 8 Q. Okay. Now, turning to the next page which I had referred 9 to earlier as page eight of this exhibit, can you explain to the 10 Court what this is? 11 A. This is the last volume that was just mentioned in that 12 recapitulation. This is the ledgers of the accounts W522 to 13 Z15. 14 Q. And this is the first page of that last volume? 15 A. This is the cover of that volume, yes. 16 Q. Okay. Can you describe generally for the Court what is 17 contained in an IIM ledger? 18 A. The individual ledger sheets of accounts. 19 Q. Turning to the next page, ninth page of this exhibit, is 20 this a page from the ledger? 21 A. This is the first page of the ledger whose cover we were 22 just looking at. 23 Q. Okay. And what information is on it? 24 A. Excuse me? 25 Q. Can you just describe briefly what information is on it? Jacqueline M. Sullivan, RPR Official Court Reporter 1298 1 A. The ledger shows the listing of transactions in the account 2 and the balances as well. Here we can see the date, amounts, 3 official receipt number with some tic marks by it, and the, 4 yeah, right, the balances. 5 Q. Okay. These tic marks or check marks, it's hard to tell 6 from the paper copy I have, but if we look at the screen we can 7 see they are both red and blue, correct? 8 A. Yes. 9 Q. And those were in pencil? 10 A. Yes. 11 Q. And that's what you observed? 12 A. Right. 13 Q. Okay. Turning to page ten of the exhibit, real briefly 14 what do we see here? 15 A. This is just another sample page from the same volume. 16 Q. Okay. Now turning to the next page, photo eleven or page 17 eleven in this exhibit, what is this? 18 A. This is the last page from that same booklet, so this is 19 the last page from the last volume in the IIM ledger. 20 Q. Okay. And in the middle of the last page is an audited by, 21 quote, audited by in quotes, stamped, correct? 22 A. Right. 23 Q. And that is initialed how? 24 A. It's initialed by someone in blue pencil. 25 Q. And the initials are IWM? Jacqueline M. Sullivan, RPR Official Court Reporter 1299 1 A. Yes. 2 Q. Okay. Now, do you see ledgers similar to this one we just 3 reviewed in every settlement package? 4 A. No. I won't see a ledger in every settlement package. 5 Generally when I see a ledger it's going to fall in the 6 semi-annual period and it's going to cover six months, so I'll 7 generally see ledgers -- when I see ledgers I'll generally see 8 them in a June account or a December account. 9 Q. Okay. I'd like to turn to the next page of this exhibit. 10 And this document is obviously correspondence, correct? 11 A. Right. This is a letter from GAO to the superintendent, 12 and this goes with the ledger we just saw. It's in the same 13 settlement package. 14 Q. I'm sorry, it's in the same what? 15 A. This is in the same settlement package as the ledger we 16 just saw. 17 Q. Okay. And this letter is dated January 19th, 1948? 18 A. Yes. 19 Q. Based on your review of the settlement packages, is 20 correspondence like this something that you would see routinely? 21 A. Generally in a package where I will see IIM ledgers I'll 22 see correspondence like this from GAO to the superintendent, and 23 it uses very similar language. It states, Audit of your 24 Individual Indian Monies voucher reveals the following 25 discrepancies. Jacqueline M. Sullivan, RPR Official Court Reporter 1300 1 Q. But not necessarily in every settlement package? 2 A. Ledgers won't be in every settlement package, no. 3 Q. So the correspondence usually follows the ledgers? 4 A. Correspondence of this type will follow those ledgers. 5 There's also correspondence of other types in all the settlement 6 packages. 7 Q. Okay. The document speaks for itself. 8 The GAO representative is noting that -- noting 9 discrepancies, and on this page the letter states at the 10 following listed journal vouchers are missing and copies are 11 requested. Correct? 12 A. Right. GAO is raising the exception that they haven't -- 13 that they don't have the journal vouchers listed and they're 14 asking the superintendent to provide them. 15 Q. And these listed vouchers are all boxed in by blue pencil, 16 correct? 17 A. Right. 18 Q. And if we looked at the color version of this that's up on 19 the screen, we see that there's a handwritten note in blue 20 pencil. Could you read that, please? 21 A. The note says "received and sent to files." 22 Q. Okay. Turning to the next page, is it correct to say that 23 this is the second page of the same correspondence? 24 A. Yes, it is. 25 Q. Again here each of the paragraphs on the second page are Jacqueline M. Sullivan, RPR Official Court Reporter 1301 1 contained within handwritten blue boxes, right? 2 A. Yes. 3 Q. And turning your attention to the middle of those three 4 boxes, can you describe to the Court just generally what are 5 being addressed in each? 6 A. These are three different exceptions being raised by GAO. 7 The first two deal with the transfer that GAO says is being made 8 to the wrong account. The third one is a check that GAO was 9 stating was drawn from the wrong account. 10 Q. Okay. Looking at the middle one of those three, the amount 11 in question here is for $13.75, correct? 12 A. Yes. 13 Q. And within that blue box there is a notation in blue 14 pencil, and could you please read that into the record? 15 A. It states: Same Indian per agent's letter of 4/14/48. 16 Q. Could we please turn to the next page of this exhibit? And 17 what is this document, this correspondence? 18 A. This is a response from the superintendent to the GAO 19 concerning those exceptions. 20 Q. And what is the date of that response? 21 A. April 14th, 1948. 22 Q. And it also shows with a stamp that it was received by GAO, 23 correct? 24 A. Yes. 25 Q. Regarding the $13.75 apparent discrepancy, did Interior Jacqueline M. Sullivan, RPR Official Court Reporter 1302 1 have a response? 2 A. Yes. In the second paragraph to the bottom the 3 superintendent responds that the two accounts are the same 4 Indian. 5 Q. And that's explained in the paragraph? 6 A. Yes. 7 Q. And next to that again in blue pencil is an "okay" 8 indicated, right? 9 A. Right. 10 Q. Okay. Turning to -- 11 THE COURT: Mr. Kirschman, as interesting as this is, 12 and I love looking at old documents, I wonder if you'd give me a 13 proffer as to the overall meaning of all this. What's the 14 point? 15 MR. KIRSCHMAN: The point of these exhibits, your 16 Honor, and this is just a sample, is it relates to and is a 17 response to Plaintiffs' argument that the documentation during 18 certain time periods is unreliable, and it also goes to the 19 issue as to whether, as plaintiffs have alleged, money could 20 have been taken out of accounts without being known, without 21 being recorded by those in charge of the accounts. This shows, 22 we believe, as Dr. Angel testified briefly, a careful close 23 review of the transactions. 24 MR. GUILDER: Your Honor, I have to object to this 25 point here. I don't understand how the witness is going to Jacqueline M. Sullivan, RPR Official Court Reporter 1303 1 proffer this. I understand Dr. Angel testified to that, but 2 this Court has already decided that these settlement of accounts 3 don't constitute an account, and so I don't understand how Dr. 4 Angel can override that. 5 THE COURT: Well, I'm going to take this, I'm going to 6 ask you to move through these materials. Basically as I said 7 they are interesting but they are at best anecdotal, of course. 8 We don't have any idea how these were selected. You might 9 clarify that point for the record, how these particular 10 settlement packages were selected or these documents were 11 selected, because they, at the most they prove that two or three 12 superintendents at two or three agencies on two or three 13 settlement packages had a lot of check marks on them and people 14 worked over them very carefully, but they don't negate the 15 implication that plaintiffs are trying to bring, and counsel is 16 right, they're not accountings, but I get the point. I think 17 you can get through them pretty quickly. 18 MR. KIRSCHMAN: Thank you, your Honor. 19 BY MR. KIRSCHMAN: 20 Q. Let's turn to the next page. And could you explain 21 briefly, please, Mr. Mushtaq, what this document is? 22 A. This is an abstract of Individual Indian Monies. Sometimes 23 in the June or December account instead of seeing a ledger I'll 24 see an abstract, and it appears to be a substitution for a 25 ledger. Jacqueline M. Sullivan, RPR Official Court Reporter 1304 1 Q. And the image we're looking at, how big was this particular 2 page? 3 A. This is about the size of a standard, 8-and-a-half-by-11, 4 sheet of paper. 5 Q. Okay. Turning to the next image, this is the third sheet 6 of the same abstract, correct? 7 A. Yes, it is. 8 Q. And now looking at this abstract it's filled with blue 9 checks, blue Xs, and some comments, correct? 10 A. Yes. 11 Q. If we look at the bottom right-hand portion of the page we 12 see that there is reference to a journal voucher, 127A, that is 13 listed several times. Do you see that? 14 A. On the left side of the screen it's a bit cut off right 15 here, but yes, it's 127A. 16 Q. And looking at the notations, what do we know about journal 17 voucher 127A? 18 MR. GUILDER: Objection; lack of foundation. I don't 19 believe we've shown or seen 127A. 20 THE COURT: Well, I think he's about to show it to us. 21 Go ahead. 22 THE WITNESS: Well, I'm just going to state that the 23 page here says that it says the word "missing." 24 THE COURT: Well, maybe he's not going to show it to 25 us. Jacqueline M. Sullivan, RPR Official Court Reporter 1305 1 MR. KIRSCHMAN: And your Honor, we will not be showing 2 specifically the journal voucher. 3 BY MR. KIRSCHMAN: 4 Q. But if we could continue quickly, you also saw in your 5 review, Mr. Mushtaq, certain types of documents that GAO used in 6 reviewing the settlement packages. Let's turn to the next image 7 of this exhibit. Let's move on. There we go. And this is page 8 eighteen, I believe, of the exhibit. And what is this document? 9 A. This is one of three forms that I've seen in packages with 10 reviewed ledgers or abstracts prepared by the GAO. This one is 11 the report of Individual Indian Monies receipts. I've also seen 12 a report of Individual Indian Monies disbursements and balances. 13 Q. Okay. Now, the next image in this collection is what? 14 A. This is the reverse of that same page. 15 Q. The back of the page? 16 A. Right. This is the back of the page. We've reviewed the 17 Individual Indian Monies receipts. 18 Q. And looking at the document, it obviously addresses missing 19 journal vouchers, correct? 20 A. Yes. 21 Q. Okay. And do we see reference to journal voucher 127A? 22 A. That is one of the listed missing journal vouchers, yes. 23 Q. Turning to the next image, this is the report of Individual 24 Indian Monies disbursements you made reference to, correct? 25 A. Correct. Jacqueline M. Sullivan, RPR Official Court Reporter 1306 1 Q. And there's a notation, as there was in the previous 2 document, on this document that indicates to see the reverse, 3 right? 4 A. Right. Under IIM it says See Reverse, and also under extra 5 checks in the top middle of the page, yes. 6 Q. Okay. So let's turn to the next image. And we see another 7 column for missing journal vouchers, correct? 8 A. Yes. This is the reverse of that same page, and there are 9 additional missing journal vouchers listed. 10 Q. And is 127A again identified? 11 A. Yes. 12 Q. Where is that? 13 A. On the middle right of the page it shows the missing 14 journal voucher 127A and the various accounts for which 15 disbursements are being made from -- with that journal voucher. 16 Q. And you mentioned three types of documents that you saw. 17 The next image is the third of those reports of Individual 18 Indian Monies balance, correct? 19 A. Correct. 20 Q. Turning to the next page in the exhibit, this is 21 correspondence, and again it is from GAO, correct? 22 A. Right. This is correspondence from the GAO to the 23 superintendent again describing the exceptions they've raised in 24 the account. 25 Q. And on the first page one of the exceptions are again Jacqueline M. Sullivan, RPR Official Court Reporter 1307 1 missing journal vouchers? 2 A. That's correct. 3 Q. And do we see reference to 127A that we've been following? 4 A. Yes. 5 Q. Okay. Turning to DX 504 at 25, what is this? 6 A. This is a response from the superintendent back to GAO 7 concerning those exceptions. 8 Q. And what does the response indicate? 9 A. The response indicates that missing journal vouchers are 10 included. 11 Q. Okay. And that includes 127A? 12 A. Yes. 13 Q. Okay. Now, you testified earlier that one of the reasons 14 you went back recently to review settlement packages was to look 15 for checks? 16 A. That's correct. 17 Q. And did you find any? 18 A. I did. 19 Q. Okay. Could we turn to DX 504 at 26? And can you describe 20 generally what this is? 21 A. This is a bundle of checks included in one settlement 22 package for a three-month period. 23 Q. Now, how did you find it located within the settlement 24 package? 25 A. The check was -- the checks were bundled as you see here Jacqueline M. Sullivan, RPR Official Court Reporter 1308 1 with all the other documents in the settlement package at 2 Archives. 3 Q. So is it fair to describe it as these checks were pancaked 4 in the documents? 5 A. These were, yes. 6 Q. Turning to the next image, and this is? 7 A. This is a bundle of checks from another settlement package. 8 Q. And these checks state specifically in the left-hand side 9 Individual Indian Money, correct? 10 A. Yes. 11 Q. Okay. Turning to the next image of Exhibit DX 504, you 12 have laid on top of an abstract one of the checks you saw, 13 correct? 14 A. Right. 15 Q. What does this photo depict? 16 A. In the background you have the abstract which we just 17 described. This check is a sample check from the first bundle 18 we looked at. This check is made out to account A9 as written 19 in the top left of the check, and on the abstract you can look 20 at account A9 and you can see the -- you can link together the 21 check number and the amount and you can see that there is a blue 22 check mark being made on both the check and the abstract. 23 Q. Turning to the next page of DX 504, which is 29, what does 24 this show? 25 A. This is the back of that check with the endorsement from Jacqueline M. Sullivan, RPR Official Court Reporter 1309 1 the individual. This endorsement is by thumbprint, and there 2 are witnesses signing witnesses to the thumbprint. 3 Q. Okay. The next image on page 30 of DX 504 is another set 4 of correspondence between the GAO and the superintendent? 5 A. Correct. This is from the GAO to the superintendent 6 raising exceptions in the account. 7 Q. Okay. I'd like to turn your attention now to page 32. And 8 can you describe what this document is? 9 A. We've seen this. This is again the report of Individual 10 Indian Monies receipts. It's one of the forms I'd see again in 11 a settlement package with the reviewed ledger or abstract. 12 Q. The bottom of this page has a notation "See Attached 13 Pages." Do you see that? 14 A. Yes. 15 Q. We have not included those here, but did you review those 16 attached pages? 17 A. Yes. I've reviewed those and taken pictures of them. 18 Q. And can you describe to the Court just generally what was 19 attached to this document? 20 A. There were several pages of handwritten notes where GAO was 21 pointing out overpayments and underpayments on an individual 22 account level. 23 Q. Okay. Turning to the next image in DX 504 at page 33, can 24 you describe to the Court what this is? 25 A. This is a statement of differences. It's included in Jacqueline M. Sullivan, RPR Official Court Reporter 1310 1 correspondence from the GAO to the superintendent. This is in 2 the same package as the previous image we just saw and this is 3 the listing of those differences on an individual account level, 4 as I described before. 5 Q. And as we run through these pages within the statement of 6 differences, generally could you explain to the Court what they 7 show? 8 A. There's a column called Excess and a column called Short 9 and there are several exceptions being raised and various IIM 10 accounts are GAO-calculated. They were in excess or short by a 11 certain amount. You can also see some blue notes written within 12 the exceptions. Some of them say "adjusted" and they give a 13 date, and some of them say "received," or this one says "reply." 14 Q. Now, during your trips how many photographs did you take? 15 A. I've taken about 550 photographs. 16 Q. Okay. Are these documents that we just discussed and 17 viewed with the Court similar to the documents you saw 18 throughout the GAO settlement packages you reviewed? 19 A. These pictures are similar to the other, the rest of the 20 pictures I've taken, yes. 21 Q. Okay. 22 MR. KIRSCHMAN: No further questions at this time. 23 THE COURT: Thank you. 24 MR. GUILDER: Justin Guilder for the record. I 25 represent the plaintiffs in this action. Jacqueline M. Sullivan, RPR Official Court Reporter 1311 1 CROSS-EXAMINATION. 2 BY MR. GUILDER: 3 Q. Good afternoon, your Honor, good afternoon, Mr. Mushtaq. 4 I'm going to start off and ask you about this collection of 5 pictures first. I have some other questions about the report 6 you produced in March of 2007. And that report was about 7 essentially the same thing, the settlement of accounts; is that 8 correct? 9 A. Yes. 10 Q. So you went through a few many pictures and one of them 11 talked about the recapitulation, I believe? 12 A. That's true. 13 Q. Okay. And what's your understanding of that document? 14 A. My understanding of the recapitulation is that it is an 15 aggregate level summary of the IIM accounts, the ledger or the 16 abstract. 17 Q. Are you an accountant? 18 A. No. 19 Q. Were you assisted by an accounting firm when you produced 20 your report dated March 31, 2007? 21 MR. KIRSCHMAN: Objection, your Honor. We did not 22 address the report at all during his direct testimony. 23 THE COURT: That's right. 24 MR. GUILDER: Your Honor, this report bears directly 25 on this same evidence. He said that he only investigated this Jacqueline M. Sullivan, RPR Official Court Reporter 1312 1 because he had originally written the report. 2 THE COURT: What does the report have to do with any 3 issue that we're dealing with today? I don't even know what 4 report you're talking about. 5 MR. GUILDER: If we could pull up the document and you 6 get a chance to look at it. 7 THE COURT: Who's offering the record in evidence? 8 MR. KIRSCHMAN: We are not, your Honor. 9 MR. GUILDER: This was introduced in the last trial. 10 It's a document in the administrative record. 11 THE COURT: I know that, but what does it have to do 12 with the issues we're dealing with? 13 MR. GUILDER: Report of the government monitoring of 14 the Indian special disbursing agents, which is the exact same 15 testimony he just gave, Mr. Mushtaq just presented to this 16 Court. 17 THE COURT: All he did was to show me a bunch of 18 documents as to which I expressed considerable doubt as to their 19 importance. 20 MR. GUILDER: If there are some moments in the report 21 that generally that may discuss his credibility about these, is 22 that okay if I go into that area? 23 THE COURT: Yes. If you want to go into credibility 24 about these reports you may, but I'm not going to -- that 207, 25 that 2007 report would be beyond the scope. Jacqueline M. Sullivan, RPR Official Court Reporter 1313 1 MR. KIRSCHMAN: Credibility regarding the photos. 2 THE COURT: I don't know quite what he means by that, 3 but I am ready to be educated. 4 MR. GUILDER: Thank you, your Honor. Some of these 5 exact documents that he talked about the recapitulation, there 6 are references in that report, which is why. 7 THE COURT: It still doesn't open up that report to 8 cross-examination today. I'm not reading that report. I don't 9 know what that report has to do with this decision. 10 MR. GUILDER: I'll move on. 11 THE COURT: You can move on. This trial is still 12 about dollar numbers. 13 MR. GUILDER: Okay. 14 BY MR. GUILDER: 15 Q. Through your review are you able to establish a total 16 disbursement figure for Individual Indian Monies? 17 A. No. 18 Q. Did you see evidence of disbursements that would give a 19 total for the entire period of time that this review was in 20 process? 21 A. No. 22 Q. How many checks did you see? 23 A. I saw checks from three settlement packages last week and 24 I've seen bundles of checks. I wouldn't be able to tell you how 25 many from 2006. Jacqueline M. Sullivan, RPR Official Court Reporter 1314 1 Q. Could you give us an idea of the percentage of the checks 2 you saw in relation to the total number of checks that were 3 disbursed during this time period, 1890 to 1950? 4 A. I would not be able to tell you that. 5 Q. Okay. And how about the same thing for collections, you 6 saw collections in your review of these settlement accounts? 7 A. There are collection totals listed in the account current, 8 yes. 9 Q. Could you give us an aggregate total of the collections 10 during this period, 1890 to 1950? 11 A. No. 12 Q. So you similarly would not be able to say what percentage 13 you saw in relation to the total? 14 A. Percentage of what? 15 Q. Similarly, you would not be able to explain the collections 16 you saw as a percentage as it relates to the total collections? 17 A. True. 18 Q. There were some checks that you did see, though. If we 19 could look at photo number 28, please. And if we could zoom in 20 on the actual check. And do you see that that is on the 21 official credit of the superintendent of the particular Indian 22 agency? It's difficult to read, but do you see that, Mr. 23 Mushtaq? 24 A. That's what it says at the top of the check, yes. 25 Q. Okay. And do you know who controlled that account? Jacqueline M. Sullivan, RPR Official Court Reporter 1315 1 A. I wouldn't be able to say for sure. I believe it would be 2 the superintendent, as listed on the check. 3 Q. Okay. And so you assume that because this represents a 4 disbursement of Individual Indian Money, do you assume that, 5 that this represents a disbursement of Individual Indian Money? 6 A. I assume that's an account A9 as I am. 7 Q. Do you have any support for that statement? 8 A. Other than the fact that the account A9 is listed on the 9 abstract of Individual Indian Monies, no. 10 Q. So it's listed on this abstract. But you're not sure who 11 this check was paid to? 12 A. It says "Paid to the order of Apache," which is the name of 13 the individual Indian account on the abstract. 14 Q. So this is actually paid to an account? 15 A. This is paid to an individual. Apache is the individual 16 whose account number is A9. 17 Q. And do we see Apache's signature anywhere on this check? 18 A. No. This was endorsed by thumb print. 19 Q. By thumb print. 20 A. The next picture shows that. 21 Q. Oh, the next picture shows that. Could we see the next 22 picture? Was there supporting documentation in this settlement 23 of accounts that track the thumb prints so that the GAO could 24 determine the accurate disbursements? 25 A. There are two witnesses to the check. Beyond that I can't Jacqueline M. Sullivan, RPR Official Court Reporter 1316 1 tell you. There are two witnesses. 2 Q. Do you know who the witnesses to the checks are? 3 A. I can't read that, no. 4 Q. Have you ever seen instances where the superintendent 5 himself or herself witnessed this disbursement? 6 A. I can't say that I did, no. 7 Q. Okay. Let me move back to -- I understand you couldn't 8 establish a total based on what you saw, but do you understand 9 that there are totals from this period being used, presented by 10 the government? 11 A. I think so, yes. 12 Q. Have you read, have you seen any of the documentation that 13 essentially gives us a through-put number so to speak, the 14 Defendants' Exhibit 371 or Attachment A of the plaintiffs? 15 A. I've seen it presented in court, but I'm not familiar with 16 them. 17 Q. You're not familiar with it. Could we pull up DX 372? And 18 if we could go to page ten, if we could zoom in on the upper 19 box. Okay. And that shows a listing of fiscal year-end 20 receipts; is that correct, Mr. Mushtaq, do you see that? 21 A. That's what it looks like. 22 Q. And these years, these fiscal years, are they at the same 23 time period of the settlement accounts? 24 A. They 1934 to 1951 would correspond with the GAO settlement 25 period, yes. Jacqueline M. Sullivan, RPR Official Court Reporter 1317 1 Q. Okay. And it's my understanding that you said that these 2 settlement of account packages that you reviewed, you couldn't 3 establish an aggregate total from those; is that correct? 4 A. From what I looked at, no. 5 Q. Do you believe that you could get an aggregate total from 6 all of these settlement packages? 7 MR. KIRSCHMAN: Objection; beyond direct. 8 THE COURT: Sustained. 9 BY MR. GUILDER: 10 Q. Well, let's move on to another topic. You showed on one of 11 the checks -- well, actually, what's your understanding of the 12 condition of these settlement of packages? 13 A. What do you mean by "condition"? 14 Q. The physical condition, how well preserved they are. 15 A. They are maintained at Archives. It's my understanding 16 Archives maintains the records very well. 17 Q. Very well. And did you know where these settlement of 18 accounts were before you engaged on this project? 19 A. Before I started with OHTA I was not aware of the 20 settlement of accounts, no. 21 Q. And did Dr. Angel of Morgan Angel explain to you or your 22 supervisors where these settlement of accounts could be found? 23 A. Morgan Angel assisted us in finding settlement packages, 24 yes. 25 Q. Did you ever have an understanding from Dr. Angel about the Jacqueline M. Sullivan, RPR Official Court Reporter 1318 1 condition of these settlement of accounts? 2 MR. KIRSCHMAN: Same objection, your Honor. 3 THE COURT: Response? 4 MR. GUILDER: Your Honor, he said they're in 5 relatively good condition. I would just like to understand how 6 he came to that. I believe if we looked at a document we have 7 contradictory evidence, if I understand. 8 THE COURT: Not to be too blunt about it, but so what? 9 MR. GUILDER: Well, I believe that -- unless the 10 exercise was simply to say there are pictures and there can be 11 no total from these documents, I mean, if there's suggestion 12 that there can be a total found from these settlement of 13 accounts, perhaps given time, as other witnesses have testified 14 to, I think it bears directly on that point, about whether an 15 actual total can be found. 16 THE COURT: Counsel, I think you're making much more, 17 trying to read much more into this evidence than there was. 18 I've already tried to make it pretty clear that I don't know why 19 we even saw these today, so you're kind of kicking in an open 20 door. 21 MR. GUILDER: Well, then, no further questions, your 22 Honor. 23 THE COURT: Okay. 24 MR. KIRSCHMAN: No redirect. 25 THE COURT: All right. Jacqueline M. Sullivan, RPR Official Court Reporter 1319 1 Thank you, Mr. Mushtaq. You're excused. 2 (Witness excused at about 4:13 p.m.) 3 MR. WARSHAWSKY: Good afternoon, your Honor. 4 THE COURT: Good afternoon. 5 MR. WARSHAWSKY: The government's next witness is 6 Frank Banda. 7 COURTROOM DEPUTY: Do you solemnly swear that the 8 testimony you should give to the Court in this case now on trial 9 will be the truth, the whole truth and nothing but the truth so 10 help you God? 11 MR. BANDA: Yes. 12 COURTROOM DEPUTY: Thank you. Please be seated. 13 FRANK BANDA, WITNESS FOR THE DEFENDANTS, SWORN 14 DIRECT EXAMINATION. 15 BY MR. WARSHAWSKY: 16 Q. Good afternoon, Mr. Banda. 17 A. Good afternoon. 18 Q. State your full name for the record, please. 19 A. Frank Banda. 20 Q. Where do you reside? 21 A. In Brookville, Maryland. 22 Q. What do you do for a living? 23 A. I'm an accountant. 24 Q. Are you affiliated with a particular organization? 25 A. Yes. I am a principal with Resnick Group. It's a national Jacqueline M. Sullivan, RPR Official Court Reporter 1320 1 C.P.A. firm. I'm a certified public accountant. 2 Q. Would you pull up Defendants' Exhibit 508, please? Mr. 3 Banda, are you familiar with DX 508? 4 A. Yes, I am. 5 Q. And what is it, please? 6 A. It's my resume. 7 Q. Does this accurately describe your educational and 8 professional background as a certified public accountant? 9 A. Yes, it does. 10 MR. WARSHAWSKY: Your Honor, we're going to offer Mr. 11 Banda to provide expert opinions on the subjects of accounting, 12 auditing, and financial review procedures, mindful of the 13 judge's comments, your comments earlier with regard to Mr. 14 Mushtaq. We'll make this as quickly as we can. Mr. Banda will 15 be testifying regarding reviews conducted by Resnick Group 16 resulting in two reports in 2006 and subsequent reviews that 17 he's done with respect to the settlement packages for the 18 Treasury and GAO settlement packages, and his opinions will go 19 to the subject of the regularity of reviews of disbursing 20 agents, the oversight by first Treasury and GAO, and this is 21 important with respect to the expressed views that money coming 22 into the system somehow could leak out. That's not what the 23 reviews indicate, so that is why we'll offer Mr. Banda. 24 MR. SMITH: Your Honor, we have no objection to his 25 qualifications as an accountant. We do have an objection to Jacqueline M. Sullivan, RPR Official Court Reporter 1321 1 continuing testimony on settlement packages. I think it's 2 irrelevant. It's cumulative. Judge Lamberth has already ruled 3 on this issue. Basically we're having cumulative, irrelevant 4 evidence. 5 MR. WARSHAWSKY: Judge Lamberth ruled on whether the 6 process conducted by the Treasury and GAO constituted the type 7 of accounting or audits contemplated by the 1994 Act with 8 respect to Individual Indian Money accounts and whether or not 9 that would discharge the government's duty under the '94 Act. 10 What we're dealing with now in this case is a question of 11 whether money coming into the system is accounted for, and to 12 the extent, and particularly when we're dealing with a period 13 from 1890 to 1951, the fact that there was a regular review 14 process -- 15 THE COURT: I'll hear a little bit of it, but first I 16 want to know how much of this Mr. Banda has covered. If he's 17 dipped into a few settlement packages and is prepared to talk 18 about what those few settlement packages look like, well, that 19 will have whatever weight it has. 20 MR. WARSHAWSKY: Very good, your Honor, and I can 21 summarize that right now. 22 THE COURT: You better give me a foundation right now. 23 You might wind up calling Mr. Mushtaq back to the stand. 24 MR. WARSHAWSKY: I'm sorry. Do you want me to 25 describe it? Jacqueline M. Sullivan, RPR Official Court Reporter 1322 1 THE COURT: I want him to describe it. You ask the 2 questions. 3 MR. WARSHAWSKY: Okay. Very good. 4 BY MR. WARSHAWSKY: 5 Q. Mr. Banda, would you provide a general overview of 6 Resnick's engagement with OHTA? 7 A. Sure. In April of 2005 Resnick was asked to perform a 8 pilot review of GAO settlement packages by OHTA, and in that 9 review gained an understanding of what the settlement packages 10 were, the contents of those settlement packages, and what we put 11 together was a work program so that we could review more of 12 those settlement packages in much more detail, which occurred 13 later in that summer. We reviewed -- I'm sorry. 14 Q. Yes. Did Resnick subsequently conduct a review of the 15 settlement packages for the GAO and Treasury? 16 A. Yes. 17 Q. And how were those settlement packages selected? 18 A. We were provided a sample from NORC. 19 Q. And did you have discussions with NORC as to how that 20 sample was? 21 A. It was a random sample that they selected from a population 22 that they had obtained. 23 Q. And do you recall how many settlement packages were 24 selected by NORC for review? 25 A. 90 GAO and 90 Treasury. Jacqueline M. Sullivan, RPR Official Court Reporter 1323 1 Q. And so did Resnick Group subsequently conduct its review of 2 the 180 randomly-sampled packages? 3 A. Yes. 4 MR. SMITH: I want to know how many he reviewed. I 5 think that was the question to this gentleman, not how many 6 Resnick reviewed. 7 THE COURT: Why don't you kind of store up those 8 objections until he's finished what he thinks is laying a 9 foundation and then you can chip in and tell me where it's not 10 good enough. 11 MR. WARSHAWSKY: Will you put up Defendants' Exhibit 12 510, please? 13 BY MR. WARSHAWSKY: 14 Q. Mr. Banda, do you recognize Defendants' Exhibit 510? 15 A. Yes. 16 Q. And what is it, please? 17 A. This is a report that we prepared from our work talking 18 about the work that we did for the review of the GAO settlement 19 packages. 20 Q. And it's dated June 6, 2006, correct? 21 A. Yes. 22 Q. And why is your name indicated under the From column, From 23 section? 24 A. This is work that was performed by Resnick Group. As the 25 engagement principal I am responsible for all work product that Jacqueline M. Sullivan, RPR Official Court Reporter 1324 1 goes to our client, so I review the work papers that are 2 prepared by my staff and review the reports that are prepared by 3 my staff and make comments on those. 4 Q. As the engagement principal are you ultimately responsible 5 for the Resnick report? 6 A. Yes. 7 Q. And similarly, if you would put up Defendants' Exhibit 511. 8 And maybe blow it up so we can actually read it. What is 9 Defendants' Exhibit 511? 10 A. It's similar to the last report, but it covers the period 11 from 1890 to 1920 for when Treasury was responsible for 12 reviewing the providing the settlement for the account currents. 13 Q. This is October, October 31, 2006 report, correct? 14 A. Yes. 15 Q. As the engagement principal were you also ultimately 16 responsible for this report? 17 A. Yes. 18 Q. What did you do before signing this report? 19 A. I reviewed all of the work papers that were prepared by our 20 staff and reviewed this report in detail and compared that, the 21 report to the work papers that were prepared by our staff. 22 Q. You've talked about -- 23 THE COURT: Mr. Banda, both this document and the one 24 previous talk about nonrandom samples. 25 THE WITNESS: Your Honor, this is a little background Jacqueline M. Sullivan, RPR Official Court Reporter 1325 1 about the pilot that was done to gain an understanding of the 2 settlement packages. It was just a little bit of background 3 offered in these reports. The rest of the report describes our 4 work done on the '90 random samples for both, in this case, 5 Treasury, and in the previous report the GAO settlement 6 packages. 7 THE COURT: Yes. 8 MR. WARSHAWSKY: Your Honor, if I can assist here. 9 We're looking right now at Defendants' Exhibit 511. 10 BY MR. WARSHAWSKY: 11 Q. The background section describing the nonrandom sample, is 12 that the pilot study that you talked about earlier? 13 A. Yes. 14 Q. And then referring further down in the Scope of Work 15 section, there's a reference to reviewing a random sample. Is 16 that the 90 packages that you subsequently talked about? 17 A. Yes. 18 Q. And the report that you've issued here and similarly 19 Defendants' Exhibit 510, is that the report based on the random 20 sample? 21 A. Yes. 22 Q. Let's go back -- we'll keep it up here, 511. Can you 23 describe the procedures -- why don't you go to the second page 24 here of this document? Describe the procedures that you 25 undertook referring to Resnick in performing your review of the Jacqueline M. Sullivan, RPR Official Court Reporter 1326 1 Treasury packages. 2 A. Well, we had developed a work plan from our pilot. The 3 purpose of our work was to look through these packages to see 4 whether or not they were complete, meaning that they contained 5 the certificate of settlement, the account currents, and 6 supporting information. We looked to the condition of these 7 records. We wanted to look at correspondence to gain an 8 understanding of the type of -- correspondence that took place 9 in the reviews of the account currents and the settlement and 10 when the settlements were issued, and we tied in the data, the 11 underlying data throughout those packages and made copies of 12 that information so our work papers contained copies of certain 13 of these items: the certificates of settlement, the account 14 currents, and certain of the supporting informations. 15 Q. And when you reviewed work papers in connection with your 16 review as engagement principal, did that include reviewing 17 excerpts from the settlement packages? 18 A. Yes. 19 Q. And let's go to the conclusion of this on page five, 20 Defendants' Exhibit 511. Would you summarize your conclusion 21 with respect to the Treasury packages? 22 A. Our conclusion is that the -- that the Treasury certified 23 and examined the settlement pages for those that we reviewed. 24 Q. And when you talked about Treasury certifying the packages 25 what did you mean? Jacqueline M. Sullivan, RPR Official Court Reporter 1327 1 A. Our understanding of their certification is that they 2 examined the account current that was prepared and their 3 underlying data to ensure that it was correct and accurate, and 4 if there were differences they were brought to the attention of 5 the Office of Indian Affairs and the Indian disbursing agent. 6 Q. In the course of reviewing these packages and the work 7 papers, how small a difference did they look at? 8 A. The one that comes to mind is there was a 90-cent 9 difference that I recall. 10 Q. Okay. The process that you've described for the Treasury, 11 did that also apply with respect to your GAO review? 12 A. Yes, that's correct. 13 Q. And were your conclusions similar for the GAO review? 14 A. Yes. 15 Q. Mr. Banda, since the 2006 reports were issued by Resnick 16 have you conducted any additional work with regard to the 17 settlement packages? 18 A. Yes, I have. 19 Q. Describe what that is, please. 20 A. I have back in April I went back to the National Archives 21 and reviewed four settlement packages. I reviewed six 22 electronic packages that were provided by Morgan Angel who had 23 taken photocopies of all those, of approximately thirteen 24 packages, and then I went back through and we reviewed the work 25 papers, 48 GAO settlement package work papers and 45 Treasury Jacqueline M. Sullivan, RPR Official Court Reporter 1328 1 settlement package work papers. 2 Q. So you reviewed slightly over half of your original work 3 papers from the 2006 work, correct? 4 A. That's correct. 5 Q. As well as the Morgan Angel materials? 6 A. Yes. 7 Q. And materials that you more recently reviewed out of 8 College Park? 9 A. That's correct. 10 Q. Did you review any document to gain an understanding as to 11 the nature of the work that GAO and Treasury auditors were 12 performing? 13 A. Yes. These documents, we did not have these document at 14 the time that we were performing our work back in 2005 and 2006. 15 The one was the bookkeeping and accounting regulations from the 16 Office of Indian Affairs. 17 Q. Let me go ahead and put up Defendants' Exhibit 509. Is 18 this the document that you were just referring to, sir? 19 A. Yes. We reviewed the excerpts from this document. 20 Q. And I don't want to go through the whole thing, but a 21 couple things I want to ask you about. Would you go to page 22 four, please? And highlight paragraph 280 down at the bottom, 23 please. First of all, before you highlight that, there's a 24 section captioned Individual Monies. How did you utilize this 25 section in gaining an understanding of what was done? Jacqueline M. Sullivan, RPR Official Court Reporter 1329 1 A. Section 271, is that what you're referring to? 2 Q. No, the whole section, Individual Monies. 3 A. We just wanted to see that these are the type of activities 4 that were taking place in the accounts. We had a general 5 understanding that this was the type of activity taking place. 6 This just spelled out each of those activities. 7 Q. Okay. And why don't we go down to 280 at the bottom. Was 8 this paragraph one that you found particularly important in your 9 analysis? 10 A. Well, I thought it was important. One of the things that I 11 thought was interesting in reviewing the settlement packages on 12 the account currents, there was always a certification by the 13 Indian disbursing agent, and we felt like seeing this paragraph, 14 it was -- there was a stated control in place holding the Indian 15 disbursing agent personally responsible for the funds that they 16 were accounting for. 17 Q. Is that something you see typically in your work as an 18 accountant? 19 A. Well, we look for internal controls, we look for -- when we 20 perform audits we review the system of internal controls of a 21 company, how many times the policies and procedures will guide 22 us as to what those controls are, and as part of our work we 23 test our controls, but this appeared to be a very strong control 24 that at the Office of Indian Affairs put in place to hold these 25 Indian disbursing agents accountable. Jacqueline M. Sullivan, RPR Official Court Reporter 1330 1 Q. If they couldn't account for it, they had to pay for it? 2 A. That's correct. That was our understanding. 3 Q. Would you turn to the last page of this document, please, 4 and focus on the section at the bottom captioned "Traveling 5 Auditors"? Was there anything -- first of all, let me ask you, 6 what is your understanding of what was meant by a "traveling 7 auditor"? 8 A. This is someone from the Office of Indian Affairs who 9 would -- this is what our understanding was -- that would come 10 out and audit and inspect the records, and as they stated here, 11 the safe vaults and cash boxes of the Indian disbursing agent, 12 and what this section, what we thought was very important is 13 that these Indian disbursing agents must give free and 14 unhampered access to all this information to traveling auditors. 15 Again another stated policy and procedure hopefully, what we 16 refer to as holding people accountable, and, you know, it 17 tells -- it describes what an Indian disbursing agent has to do 18 with respect to opening its books to an auditor. 19 Q. Let me ask you to refer to Defendants' Exhibit 256. Mr. 20 Banda, was this another document that you reviewed in gaining an 21 understanding of the audit work procedures? 22 A. Yes. We reviewed this document. 23 Q. What is it, by the way? 24 A. This is the annual report that was prepared by the GAO for 25 the fiscal year ending June 30th, 1939, and in the report it Jacqueline M. Sullivan, RPR Official Court Reporter 1331 1 describes processes that we observed in reviewing the settlement 2 packages with respect to what GAO -- the process that the Office 3 of the Indian Affairs had to go through in submitting its 4 information to the GAO for examination and settlement. 5 Q. And I want to scale back what I was going to cover with you 6 just to hit a couple of points, if I may. Would you go to page 7 seven, please, and in the middle of the first column there's a 8 paragraph that begins, Disbursing agents -- no, it's not that 9 big. A little bit further down. No. Yes. That's good enough. 10 The paragraph, Disbursing agents are held strictly 11 accountable under their bonds. Do you see that? 12 A. Yes. 13 Q. Again, was that something you considered? 14 A. Again, it's consistent with the policy in tribal, to hold 15 the people, the Indian disbursing agents personally accountable 16 for all the funds that come into their possession. 17 Q. By the way, do you have an understanding as to whether this 18 policy applied simply to Indian disbursing agents or other 19 disbursing agents? 20 A. I don't know if it applied to other than Indian disbursing 21 agents. 22 Q. I'll take that as a no. And would you turn to page 23 fourteen, please, and highlight the section on the left-hand 24 side regarding Individual Indian Monies. Did you consider this 25 section in gaining an understanding of the work performed? Jacqueline M. Sullivan, RPR Official Court Reporter 1332 1 A. Yes. In the section we could not verify any evidence as to 2 the second sentence when it talks about the audit consists of a 3 termination as to compliance of laws, regulations and decisions 4 governing the expenditure of Indian monies. But we saw evidence 5 of an accounting of collections and disbursements for the 6 account of the individual Indian. 7 MR. SMITH: Objection, your Honor, motion to strike. 8 We've already had a ruling on that issue that there has been no 9 accounting of individual Indian funds during this process. 10 THE COURT: I think I understand that, Mr. Smith, but 11 we saw evidence of an accounting of collections and 12 disbursements for the account of the individual Indian. We're 13 not talking about accounting of all the IIM fund. We're talking 14 about review of one single account, are we not, Mr. Warshawsky? 15 MR. WARSHAWSKY: We're talking about the review of the 16 accounts of disbursing agents. In this case as we'll go through 17 very quickly papers related to the review of one of the 18 disbursing agents. 19 THE COURT: Let's not quibble about whether a 20 settlement package equals an accounting, okay. Let's just find 21 out what happened, and I will edit the word "accounting" in 22 accordance with the law of the case. 23 MR. WARSHAWSKY: Thank you, your Honor. 24 BY MR. WARSHAWSKY: 25 Q. Why don't we move on to Defendants' Exhibit 243 and show Jacqueline M. Sullivan, RPR Official Court Reporter 1333 1 the first page, please. Now, you were sitting in court during 2 Mr. Mushtaq's testimony, right? 3 A. Yes. 4 Q. So you probably have seen this very recently. This is the 5 settlement package for an A.G. Wilson? 6 A. Yes. 7 Q. And is this one of the packages that you reviewed in 8 connection with your analysis here? 9 A. Yes. 10 Q. And I'd like to ask you about a few of the pages in here. 11 Let's go to pages 44 and 45. 45 you can just show very briefly 12 and then we'll jump back to 44. It looks like it's all part of 13 the same document. 14 A. Yes. It's part of the account current. 15 Q. And what is an account current? 16 A. The account current is a summary prepared by the Indian 17 disbursing agent of the balance from the previous period plus 18 the receipts less the payments in their control for that period 19 of time. 20 Q. Okay. And down near the bottom right-hand corner, or 21 actually it's the bottom section that says "I certify." Do you 22 see that? 23 A. Yes. 24 Q. What is your understanding of what that certification 25 represents? Jacqueline M. Sullivan, RPR Official Court Reporter 1334 1 A. A person who is signing this is pretty much saying that 2 this is, this information is complete and accurate to the best 3 of their knowledge. 4 Q. Is that the disbursing agent's certification? 5 A. Yes. 6 Q. And the disbursing agent and the superintendent were the 7 same; is that right? 8 A. Yes. 9 Q. And on this document did you notice any marks such as 10 you've heard the reference during Mr. Mushtaq's testimony to tic 11 marks? 12 A. Yes. It appears that balances were checked against 13 something. We don't know exactly what they were checked 14 against, but it appears someone was checking the information and 15 then there was a stamp that said "all pencil changes were made 16 by the General Accounting Office," and it was signed off on by 17 one of their auditors. 18 Q. As an auditor are tic marks something you see in your work? 19 A. Yes. 20 Q. Why do you make or utilize tic marks? 21 A. Tic marks are an indication of the audit procedure are the 22 evidence that was found to support the information on the work 23 paper. 24 Q. Okay. And you are referring to the box near the bottom 25 about, all pencil changes made by the GAO. What, if any, Jacqueline M. Sullivan, RPR Official Court Reporter 1335 1 significance did you attribute to that? 2 A. We couldn't determine for sure, but the tic marks seem to 3 be a check that may have been done by the GAO. 4 MR. SMITH: Objection, your Honor. 5 THE COURT: I'm going to take judicial notice of what 6 a tic mark means. Move on. 7 MR. WARSHAWSKY: Thank you. 8 BY MR. WARSHAWSKY: 9 Q. If you can go to page 45, please, lower right-hand corner. 10 There's a signature under a box that says Commissioner of Indian 11 Affairs. Do you have an understanding as to what's indicated 12 there? 13 A. Yes. What we observed is that the account current is 14 prepared by the Indian disbursing agent. It is then submitted 15 to the Office of Indian Affairs, who then examines it and that 16 examination, once it's complete, is signed off on this schedule, 17 excuse me, on this page, 45, in this case the Commissioner of 18 Indian Affairs. 19 Q. Okay. Let's move through these quickly here. Page 52, Mr. 20 Banda, we're walking through this particular package. Now what 21 is page 352? 22 A. This is our correspondence from the Office of Indian 23 Affairs to the superintendent, the Indian disbursing agent, 24 letting them know that their account has been administratively 25 examined and transmitted to the GAO. However, there were two Jacqueline M. Sullivan, RPR Official Court Reporter 1336 1 exceptions noted in their review. 2 Q. Now, in the course of your review did you gain an 3 understanding as to whether there were two layers of review, in 4 other words, Indian Affairs before GAO? 5 A. Yes. 6 Q. And what did Indian Affairs do? 7 A. Indian Affairs reviewed the underlying information 8 supporting the account current, and they, if they found 9 discrepancies they would communicate those to the Indian 10 disbursing agent. 11 Q. And is our discrepancies noted on this particular page? 12 A. They're discrepancies or problems that they came across. 13 Q. And let's move to page six. Mr. Banda, what is page six? 14 A. Page six is the communication from the Indian disbursing 15 agent to the Office of Indian Affairs of how they cleared the 16 exception or the problem that was noted. 17 Q. So this is the response to the Indian Affairs? 18 A. Yes. 19 Q. Then let's move to page five. What does page five 20 represent? 21 A. Page five is a correspondence to the GAO from the Office of 22 Indian Affairs letting them -- notifying them that the 23 exceptions that were noted have been properly cleared by 24 explanations and accompanying work papers. 25 Q. Okay. So layer one of review is done, correct? Jacqueline M. Sullivan, RPR Official Court Reporter 1337 1 A. Yes. 2 Q. Now let's move on to page four. What is the certificate of 3 settlement of account? 4 A. The certificate of settlement is prepared by the GAO when 5 it reviews the account current and the underlying work papers 6 and examines that information. They are certifying that they've 7 examined the account for the period of time, and in this case 8 October 1st, 1938 to December 31st, 1938, and these are the 9 balances due as of December 31st, as rendered from the account 10 current, and what they came up with during their audit, and they 11 identified a difference of $11.69. 12 Q. Now, when Mr. Mushtaq was covering a similar document there 13 was no difference noted. You mentioned here an $11.69 14 difference in the middle column? 15 A. Yes. 16 Q. And what does that mean? 17 A. When GAO reviewed the underlying document -- it's our 18 understanding that when GAO reviewed the underlying information 19 they came up with a different account balance due than what was 20 reported on the account current from the Office of Indian 21 Affairs. 22 Q. Okay. And let's go to page 58, please. Mr. Banda, have 23 you seen this document in your review? 24 A. Yes. 25 Q. And what is it? Jacqueline M. Sullivan, RPR Official Court Reporter 1338 1 A. It's the form that GAO reported the statement of 2 differences, the difference that they found of $11.69. 3 Q. Okay. And so that ties to the difference that we were 4 talking about earlier? 5 A. Yes. 6 Q. And go back to page four, please. And down at the 7 bottom -- well, not the bottom. There's a signature. It says 8 Fred H. Brown, Comptroller General of the United States. What 9 was the significance of the comptroller general's signature on 10 that page? 11 A. It's our understanding that that person is the person who 12 has taken responsibility for this settlement of this account. 13 Q. Let's move to page 67. And Mr. Banda, did you see this 14 document when you were doing your review? 15 A. Yes, I did. 16 Q. And what is it, please? 17 A. It's a summary of the Individual Indian Money transactions 18 for the period July 1st, 1938 to December 31st, 1938. It 19 includes the opening balances, the receipts and disbursements, 20 and the closing balances. 21 Q. And just to move it along, is it fair to say each line 22 represents the gross value for each group of sur names beginning 23 with a letter? 24 A. Yes, that's correct. 25 Q. Let's take one where there's just one person with a surname Jacqueline M. Sullivan, RPR Official Court Reporter 1339 1 in the group. Letter Q indicates one account, correct? 2 A. Yes. 3 Q. And why don't you pull up, please, we're going to go into 4 Exhibit 244, page 329. Have you seen this document before, sir? 5 A. Yes. 6 Q. And what is it? 7 A. It's an Individual Indian Money statement for a particular 8 individual whose last name begins with Q. 9 Q. And blow it up a little bit so we can see it. And if you 10 scroll up to the top, please. There is the Q name is there, 11 Mary Sophia Quinimosay? 12 A. Yes. 13 Q. It's Q-u-i-n-i-m-o-s-a-y. 14 And did you, just make it very quickly, were you able 15 to tie the numbers shown in this ledger to that lead schedule 16 that we just reviewed in 245, page 67? 17 A. Yes. We were able to tie in the old balance. The Gingold 18 balance was the previous balance on the other schedule. And 19 summarizing adding the payments and the receipts together, those 20 amounts agreed with that previous schedule as well, and then the 21 last balance on this page agreed with the closing balance on the 22 previous page. 23 Q. If you go back to 243, page 67, and focus in on the line 24 for Q, please, preferably the whole line, okay, so you're 25 talking about tying in these entries along the line for Q? Jacqueline M. Sullivan, RPR Official Court Reporter 1340 1 A. Yes. 2 Q. And was there similar detail for all of the other 3 individual Indians summarized in this schedule? 4 A. We did not see anything for X, Y, and Z in the settlement 5 package. It went through W. 6 Q. Very good. And I apologize we don't have this in the 7 excerpts we gave you. Would you pull up page 20 from 243? 8 We'll get you a copy. 9 And this is another account current for that package; 10 is that correct? 11 A. Yes. It's for the month of December 1938. 12 Q. Can you block the section that begins Individual Indian 13 Monies and take it across all the way? Excellent. Yes. And 14 what if anything did you find significant about this particular 15 document? 16 A. We were able to tie in the line that is labeled Indian 17 Balance to the United States of 149,000. I think it's 860. 18 Q. Why don't you blow that up, please, the 149? Over on the 19 right-hand side. Good enough. Yes. The 14986049. 20 A. Yes, we were able to tie that in to the summary of 21 transactions. 22 Q. Go to page 67 real quickly again. And down at the bottom 23 the totals. Is that where you tied in the 14986049? 24 A. Yes. 25 Q. And were the types of documents that you reviewed typical, Jacqueline M. Sullivan, RPR Official Court Reporter 1341 1 that we've reviewed just now, typical of what you saw during 2 your review of all the GAO and Treasury packages? 3 A. When there was in the individual Indian money present in 4 those packages, but they did not all contain this type of 5 activity. 6 Q. When did you see individual Indian money in packages? 7 A. When? 8 Q. Yes. 9 A. Well, when it was there, I mean. 10 Q. I mean, was it periodic or -- 11 A. It was periodic, yes. 12 Q. As a result of your review, have you formed any opinions 13 about the work performed by GAO and Treasury? 14 A. It appears that there was a regular, an orderly 15 examination. 16 MR. SMITH: To establish the foundation for that 17 opinion, he's looking -- 18 THE COURT: I'm going to hear it. You can cross- 19 examine it. 20 BY MR. WARSHAWSKY: 21 Q. I'm sorry, your opinion again? 22 A. From the packages that were reviewed and the work done by 23 our staff, it appears that there was a regular and orderly 24 examination process and settlement process conducted by GAO and 25 Treasury based on the settlement packages reviewed. Jacqueline M. Sullivan, RPR Official Court Reporter 1342 1 Q. Okay. And what if any opinions did you conclude from 2 seeing certifications of the disbursing agents, the sign-offs by 3 the commissioner, and the issuance of a certificate of 4 settlement? 5 A. It appeared that there was a process in place where the 6 Indian disbursing agents prepared these account currents on a 7 monthly basis and submitted them to their -- to the Office of 8 Indian Affairs, and what we saw was a lot of scrutiny when there 9 was information that did not agree in the correspondence between 10 the Office of the Indian Affairs and the Indian disbursing 11 agents, so we felt like there was a thorough review done at the 12 Office of Indian Affairs level, and then since there was -- 13 since we saw the certificates of settlement and there was 14 certification and examination on those certificates of 15 settlement it appears that GAO -- 16 THE COURT: Do you want to back off that mike just a 17 little bit? It's percussive. 18 THE WITNESS: I apologize. 19 It appears that there was a regular examination 20 conducted by GAO and Treasury based on the settlement packages 21 that we reviewed. And based also on the reports that we 22 reviewed from the comptroller. 23 BY MR. WARSHAWSKY: 24 Q. And as part of your review did you form any opinions as to 25 whether Individual Indian Money transactions were regularly a Jacqueline M. Sullivan, RPR Official Court Reporter 1343 1 part of that review? 2 A. When we saw it. I can't say for sure. 3 MR. WARSHAWSKY: Your Honor, I have no more questions. 4 Thank you, Mr. Banda. 5 THE WITNESS: You're welcome. 6 MR. WARSHAWSKY: Oh, your Honor, I would move the 7 admission of DX 509, 510, and 511. DX 243, 244, and 256 were 8 exhibits from the October hearing. We've referenced those as 9 well, and I would ask that they also be introduced. 10 THE COURT: All right. They're all received. 11 MR. WARSHAWSKY: And your Honor, if we could also move 12 from Mr. Mushtaq's testimony Defendants' Exhibit 504, the 13 compilation of photographs. 14 THE COURT: Received. 15 MR. WARSHAWSKY: Thank you, your Honor. 16 (Defendant Exhibit Nos. DX 509, DX 510, DX 511, 17 DX 243, DX 244, and DX 256 received into evidence 18 at about 4:50 p.m.) 19 MR. SMITH: Good afternoon, your Honor. 20 CROSS-EXAMINATION 21 BY MR. SMITH: 22 Q. Mr. Banda, you talked about regulations and processes that 23 you observed and some comptroller opinions that you were 24 provided. Who provided those to you? 25 A. I'm sorry. Can you say that again? Jacqueline M. Sullivan, RPR Official Court Reporter 1344 1 Q. Sure. You indicated you were provided some regulations and 2 some other procedural rules that you reviewed, and also I 3 believe a comptroller's opinion. Can you tell us who provided 4 that to you? 5 A. The regulations and the comptroller report? 6 Q. Um-hmm. 7 A. It was provided by Department of Justice. 8 Q. Okay. And did they provide you any of the audits of the 9 disbursing agents over the years? 10 A. No. 11 Q. Okay. Do you have any knowledge whether those regulations 12 and procedures were in fact followed on a regular basis, other 13 than what you reviewed in individual settlement packages? 14 A. No. 15 Q. Now, you were first employed by Resnick in 2004; is that 16 correct? 17 A. Yes. 18 Q. And it was sometime after that that you first had an 19 introduction to any of the documents related to this case, is 20 that fair? 21 A. That's correct. 22 Q. You hadn't heard of an Indian settlement package prior to 23 that time? 24 A. No. 25 Q. When is the first time that you actually started reviewing Jacqueline M. Sullivan, RPR Official Court Reporter 1345 1 what you've referred to as a settlement package? 2 A. I believe it was April of 2005. 3 Q. To your knowledge had Resnick been employed to review a 4 settlement package prior to that time? 5 A. No, it had not been. 6 Q. And other than in preparation for this litigation, when is 7 the last time that you reviewed a settlement package? 8 A. Other than preparation for this litigation, I believe 9 August of 2005. 10 Q. August 2005? 11 A. Yes. 12 Q. Okay. So since that time you have not been tasked to 13 review any additional settlement packages? 14 A. No. I reviewed the work papers for the reports, but I did 15 not review any additional settlement packages. 16 Q. There were some discussions of some reports that were 17 prepared by your company, and as I understand it, you've 18 reviewed or your company has reviewed two sets of packages. One 19 is Treasury and one is GAO; is that correct? 20 A. That's correct. 21 Q. And the Treasury packages are from a period 1880 to 1920? 22 A. 1890. 23 Q. I'm sorry, 1890? 24 A. Yes. 25 Q. And the GAO settlement packages from? Jacqueline M. Sullivan, RPR Official Court Reporter 1346 1 A. 1921 to 1951. 2 Q. Thank you. 3 A. You're welcome. 4 Q. Now, of those Treasury settlement packages, how many did 5 you personally review? 6 A. I reviewed two complete packages personally. 7 Q. You personally reviewed two complete packages? 8 A. Yes. 9 Q. Okay. And you reviewed work papers from your team for 10 another ninety or so? 11 A. Yes. 12 Q. Now, can you tell us how many settlement, Treasury 13 settlement packages there are out there? 14 A. No, I do not know that. 15 Q. If we could look at Exhibit 154 at 60-8-5. Okay. Let's 16 see the full document, please. And are you familiar with this 17 document from the Resnick Group? I believe your name is on it. 18 A. Yes. 19 Q. Dated September 7, 2005? 20 A. Yes. 21 Q. And is that regarding your review of Treasury settlement 22 packages? 23 A. Yes. 24 Q. And if we could look at 60-8-12, please. And does it 25 appear that there are 20,676 Treasury settlement packages for Jacqueline M. Sullivan, RPR Official Court Reporter 1347 1 the period 1890 to 1920? 2 A. Yes. 3 Q. So you have reviewed two of 20,676 packages; is that 4 correct? 5 A. That's correct. 6 Q. Now, tell me how many GAO settlement packages you 7 personally reviewed. 8 A. I reviewed four recently, and during the -- and I don't 9 recall how many I reviewed when we did the pilot back in 2005. 10 Q. So until recently the only ones you reviewed were during 11 the pilot? 12 A. The complete packages, but I reviewed the work papers since 13 then. 14 Q. Okay. Let's look at Exhibit 154 at 60-8-33. Are you 15 familiar with this document General Accounting Office Settled 16 Indian Agent Account packages at National Archives? 17 A. I may have seen it, I just don't recall. 18 Q. Okay. Let's look at 60-8-75. It indicates what GAO 19 settlement packages were reviewed and who reviewed them and you 20 personally were listed as reviewing five. Does that sound about 21 right? 22 A. Yeah. These are the packages I couldn't recall that I 23 reviewed during the pilot. 24 Q. And two are at the Ponty Agency in 1927, two at the 25 Cherokee Agency in 1930, and one in the Pineridge Agency in Jacqueline M. Sullivan, RPR Official Court Reporter 1348 1 1948; is that correct? 2 A. I'm sure it is. 3 Q. So you reviewed on this occasion packages from basically 4 three agencies over three separate years, correct? 5 A. Yes. 6 Q. And can you tell me how many settlement packages, GAO 7 settlement packages, there are of GAO settlement packages there 8 are during this period? 9 A. I don't know. 10 Q. If we could look at Exhibit 153 at 60-5-1. It's a document 11 entitled from Burt Edwards to Fitz Scheuren reviewed by Resnick 12 Group of settlement packages. Have you seen that document 13 before? 14 A. Yes. 15 Q. If we could look at 60-5-3. See if you could focus in on 16 the highlighted section. 17 A. Yes. 18 Q. Does it indicate the search information was collected so 19 that NORC could develop statistical analysis of the completeness 20 of the GAO population of 31,418 settlement packages? 21 A. Yes. 22 Q. So you initially reviewed five of 31,418 packages. Since 23 that time have you reviewed how many more? 24 A. Four. 25 Q. So a total of 8 of 31,418? Jacqueline M. Sullivan, RPR Official Court Reporter 1349 1 A. Or nine. Five and the four, so ... 2 Q. I'm sorry, nine. You're correct. You're the accountant. 3 A. Thank you. 4 Q. Is it your testimony that you can make judgments regarding 5 what were the regular practices regarding reviewing these 6 packages by reviewing nine of 31,418 settlement packages? 7 A. No. It was based on the work done by our firm. I formed 8 an opinion that what we observed, it was based on the sample 9 that we reviewed. 10 Q. Okay. And your firm reviewed ninety GAO settlements? 11 A. Ninety GAO, yes. 12 Q. So is it your testimony that based on your personal review 13 of nine in your firm's review of ninety that you can make a 14 judgment regarding regular practices when there's a total of 15 31,418 settlement packages? 16 A. The reason why we can make this statement is that we really 17 saw no exceptions to that in the sample that we reviewed. 18 Q. Okay. Now, you provided this information to NORC for a 19 reason, didn't you? 20 A. Yes. 21 Q. And what was the reason you provided this information to 22 NORC? 23 A. It was our outstanding that they were going to use it in a 24 statistical analysis. 25 Q. And did they use it in a statistical analysis? Jacqueline M. Sullivan, RPR Official Court Reporter 1350 1 A. That I don't know. 2 Q. Well, isn't it true, Mr. Banda, that they could not answer 3 the question whether based on that statistical sample there was 4 a systematic check of any individual Indian account, isn't that 5 correct? 6 MR. WARSHAWSKY: Beyond the scope of direct. 7 THE COURT: Oh, I don't think so. 8 THE WITNESS: I don't know the answer to that 9 question. 10 BY MR. SMITH: 11 Q. Okay. If we could see this document, please. 12 THE COURT: I'll make a deal with you, Mr. Warshawsky. 13 You withdraw the direct and I'll sustain your objection. 14 MR. WARSHAWSKY: No deal, your Honor. 15 BY MR. SMITH: 16 Q. I'm showing you what's entitled Government Monitoring of 17 the Indian Service Special Disbursing Agent's accounts, March 18 31, 2007. Have you seen this document before? 19 A. I've seen it, I've not read it. 20 Q. You've seen it but not read it? 21 A. I've seen the front of it but not reviewed it in detail. 22 Q. If we could look at page six, please, and focus in on the 23 the second paragraph. In the fourth line down toward the middle 24 do you see it starts the question of whether, do you see that? 25 A. Yes. Jacqueline M. Sullivan, RPR Official Court Reporter 1351 1 Q. It says, The question of whether account balances were 2 systematically checked at an individual Indian account level has 3 not been answered conclusively. Is that correct? 4 A. That's what it says. 5 Q. Has anybody ever discussed that conclusion with you? 6 A. Yes. 7 Q. And who is that? 8 A. We have talked about it internally with Resnick in 9 preparation for this trial. 10 Q. So you were aware of the conclusion? 11 A. I was aware that there was a conclusion, not that I wasn't 12 aware that it was in this report. 13 Q. So you were aware that there was a conclusion that they 14 could not come to any conclusions from the statistical sampling; 15 is that right? 16 A. No. What I was aware of is that there was a desire to come 17 to that conclusion. 18 Q. If we could look at the next paragraph, focus in on that, 19 the last sentence. Starting third to last line, do you see 20 where it says "the relative"? 21 A. Yes, I see it. 22 Q. It says, The relative frequency which with individual 23 Indian accounts were audited cannot be ascertained, however, 24 because of the varied way the settlement packages were 25 maintained. Were you not aware of that conclusion before today? Jacqueline M. Sullivan, RPR Official Court Reporter 1352 1 A. I was not. 2 MR. SMITH: Your Honor, one second. 3 BY MR. SMITH: 4 Q. If we could look at Exhibit 152, please. And look at 5 152-60. I'm sorry. 60-3-16. 6 THE COURT: You don't have much more with this 7 witness, do you, Mr. Smith? 8 MR. SMITH: You know, I really don't. I'll be 9 finished in about two minutes. 10 THE COURT: Good. 11 BY MR. SMITH: 12 Q. Is this a summary of the ninety Treasury settlement 13 packages have you seen this before? 14 A. Yes, I believe so. Yep. 15 Q. And can you tell the Court of the ninety that were reviewed 16 how many didn't have Individual Indian Money in them? 17 A. I'd have to go through. There were many, but I'd have to 18 go through and count them. 19 Q. I'll tell you, I counted them. It was roughly 42. 20 A. Okay. 21 Q. 42 out of the 90. That's sound about right? 22 A. That sounds about right. 23 Q. I mean, for example, the first two are the Keyawah agency, 24 and it indicates that there's no IIM money in those packages; is 25 that correct? Jacqueline M. Sullivan, RPR Official Court Reporter 1353 1 A. Yes. 2 Q. Was there supposed to be IIM money in those packages? 3 A. That I can't tell you. I don't know. 4 Q. So you can't tell us whether on any of these reviews 5 whether there was money, there should have been money where 6 there wasn't, is that fair, any of these packages? 7 A. I can't tell you where it says there's no IIM money whether 8 or not there should have been IIM money. 9 Q. On any of these reviews was any effort made to determine 10 whether money was actually disbursed to the proper beneficiary? 11 A. No. 12 Q. It wasn't done by you or by the auditors originally, is 13 that fair? 14 A. It wasn't done by us. 15 Q. And you couldn't tell whether the original auditors had 16 done it either, had you? 17 A. We did not look for that in our work. 18 Q. All they're doing here is balancing accounts of the Indian 19 agent; is that correct? 20 A. They were balancing the accounts and providing support for 21 those balances. 22 Q. But they are not auditing or balancing the individual 23 Indian accounts themselves, are they? 24 A. We did not see evidence of an audit of an individual Indian 25 account. Jacqueline M. Sullivan, RPR Official Court Reporter 1354 1 MR. SMITH: Your Honor, I have no further questions. 2 THE COURT: Mr. Warshawsky? 3 MR. WARSHAWSKY: I'll be very quick. 4 REDIRECT EXAMINATION 5 BY MR. WARSHAWSKY: 6 Q. Mr. Banda, Mr. Smith asked you questions about reviewing 7 samples from tens of thousands of packages. Is it a normal 8 audit procedure to use random sampling? 9 A. Yes. 10 Q. And if you use a statistically valid random sample, can you 11 draw inferences about a large population by reviewing a small 12 number? 13 MR. SMITH: He's not an expert in that field. 14 MR. WARSHAWSKY: I'll qualify him, your Honor, if you 15 wish. 16 THE COURT: Well, you're going to have a hard time 17 qualifying him against what NORC has already concluded about 18 this sample. 19 MR. WARSHAWSKY: Well, your Honor, I'll be happy to go 20 to that NORC report as well. 21 THE COURT: Go to the validity of the sample size and 22 all that. Maybe we better bring him back tomorrow morning if 23 that's what you're going to do. 24 MR. WARSHAWSKY: No. What I was going to do, your 25 Honor, is simply establish that auditors rely on random samples. Jacqueline M. Sullivan, RPR Official Court Reporter 1355 1 THE COURT: I'll take judicial notice of that. The 2 question is whether this was an adequate sample and whether the 3 conclusions drawn from this sample are adequate, and if he's 4 prepared to testify about that let me hear his qualifications 5 for it. 6 MR. WARSHAWSKY: He certainly didn't design the sample 7 so I'll move on. 8 BY MR. WARSHAWSKY: 9 Q. And I'm sorry, I didn't get the exhibit number, but the 10 NORC 2007 report that you reviewed, if you could pull that back 11 up. AR436, do you mind pulling that up and go to page six. You 12 remember when Mr. Smith reviewed this with you? 13 A. Yes. 14 Q. And would you highlight that whole paragraph that begins 15 Evidence in some? Well, I mean just blow it up. Evidence in 16 some. 17 A. Right. 18 Q. Do you remember Mr. Smith asked you about a section of 19 that. Did you consider the first sentence when you were 20 answering that question, Evidence in some settlement packages 21 indicate the GAO did at least sometimes examine all individual 22 Indian accounts at a BIA agency? 23 A. I did not review that. 24 Q. Okay. 25 THE COURT: "At least sometimes," that's the Jacqueline M. Sullivan, RPR Official Court Reporter 1356 1 proposition you want to offer this for? 2 MR. WARSHAWSKY: Well, I was going to move a little 3 bit further into this. 4 BY MR. WARSHAWSKY: 5 Q. Let's move on to page seven real quickly. Let's get passed 6 that. Last question. Mr. Smith offered his calculations that 7 half of the settlement packages had IIM accounts reviewed in 8 them. Do you remember that? 9 A. Yes. 10 Q. And do you remember ever learning that IIM was reviewed on 11 a six-month basis? 12 A. Yes. 13 Q. And would that explain why some packages did have IIM and 14 some did not? 15 A. It could. I'd have to go back and look. 16 MR. WARSHAWSKY: Your Honor, I have no more questions. 17 Thank you. 18 MR. SMITH: Nothing further, your Honor. 19 THE COURT: Thank you, Mr. Banda. You're excused. 20 You may step down. 21 What's left here? Where's Mr. Kirschman? What's 22 going to happen tomorrow? Scheuren is coming back for more 23 cross, I assume. 24 MR. KIRSCHMAN: The government has one more witness to 25 present tomorrow morning, and then we have the unfinished Jacqueline M. Sullivan, RPR Official Court Reporter 1357 1 cross-examination of Dr. Scheuren that is part of the 2 government's case. 3 THE COURT: Fine. All right. 4 MR. KIRSCHMAN: And the government will then rest in 5 our responsive case. 6 THE COURT: What's your witness tomorrow? 7 MR. KIRSCHMAN: Joseph Rosenbaum. 8 THE COURT: What's he going to say? 9 MR. KIRSCHMAN: He will be addressing his work on 10 paragraph nineteen and how it relates to his findings related to 11 the named plaintiffs and related -- 12 THE COURT: Okay. And are the plaintiffs going to put 13 a rebuttal case on? 14 MR. DORRIS: A short one, yes, your Honor. 15 THE COURT: And what will that consist of? 16 MR. DORRIS: Three witnesses, your Honor. Mr. Gregg, 17 Mr. Hammond, and then Brian Palmer from CRA who is Mr. Cornell's 18 colleague. Mr. Cornell will not be able to come back, but I 19 told Mr. Kirschman at the lunch break that what I proposed was 20 this: That we go as far as we can with all the other witnesses. 21 Mr. Palmer's analysis is not going to be complete until sometime 22 on Friday where he's gone through, weighed what he's heard, and 23 prepared a new calculation, and that we could provide that to 24 the government then, and would propose to put him on on Monday. 25 THE COURT: That sounds about right. Okay. We'll be Jacqueline M. Sullivan, RPR Official Court Reporter 1358 1 in recess until 9:30 tomorrow morning. Thank you. 2 COURTROOM DEPUTY: This Honorable Court now stands 3 adjourned. 4 (Proceedings adjourned at about 5:11 p.m.) 5 - - - 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Jacqueline M. Sullivan, RPR Official Court Reporter 1359 1 I N D E X 2 3 WITNESSES: 4 GARY GRIPPO 5 Direct Examination by Mr. Gillett 1226 Cross-examination by Mr. Gingold 1251 6 ALI MUSHTAQ 7 Direct Examination by Mr. Kirschman 1285 8 Cross-examination by Mr. Guilder 1311 9 FRANK BANDA 10 Direct Examination by Mr. Warshawsky 1319 Cross-examination by Mr. Smith 1343 11 Redirect Examination by Mr. Warshawsky 1354 12 13 14 15 E X H I B I T S 16 Plaintiffs' 17 Exhibit No. Identification Marked Received 18 No. 136 1260 19 20 21 22 EXHIBITS con't. on next page. 23 24 25 Jacqueline M. Sullivan, RPR Official Court Reporter 1360 1 EXHIBITS, con't. 2 3 Defendants' Identification Marked Received 4 Exhibit No. 5 DX 497 1094 6 & DX 498 7 DX 466 1285 & DX 499 8 DX 509, 1342 9 DX 510, DX 511, 10 DX 243, DX 244, 11 & DX 256 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Jacqueline M. Sullivan, RPR Official Court Reporter 1361 1 CERTIFICATE 2 I, JACQUELINE M. SULLIVAN, Official Court Reporter, 3 certify that the foregoing pages are a correct transcript from 4 the record of proceedings in the above-entitled matter. 5 __________________ JACQUELINE M. SULLIVAN 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Jacqueline M. Sullivan, RPR Official Court Reporter