REALAUCTION BANKRUPTCY AND OWNERSHIP SERIES

A collection of public documents from a recent patent infringement action and related bankruptcy proceedings that show who really owns Realauction.com.

Realauction Accused of Deception and Mismanagement in Bankruptcy Court Filing

Description:
Bankruptcy judge asked to either: 1) dismiss the case (which would permit enforcement of the $8.1M judgment against Realauction), 2) appoint a Trustee to run Realauction or 3) appoint an Examiner to investigate the allegations against Realauction.

Note: These documents were obtained from Grant Street Group, Inc. v. Realauction.com, LLC, Case No. 2:09cv-01407-MRH, in the United States District Court for the Western District of Pennsylvania and from In re Realauction.com, LLC, Case No. 13-28260-RBR.

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UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF FLORIDA FORT LAUDERDALE DIVISION www.flsb.uscourts.gov In re: Case No. 13-28260-RBR REALAUCTION.COM, LLC, Chapter 11 / MOTION AND INCORPORATED MEMORANDUM OF LAW FOR AN ORDER (1) DISMISSING THIS VOLUNTARY PETITION [DE 1], (2) APPOINTING A CHAPTER 11 TRUSTEE, OR (3) APPOINTING AN EXAMINER Creditor, Grant Street Group (Grant Street), by and through its undersigned counsel, hereby moves the Court for the dismissal of the Voluntary Petition of the Debtor, RealAuction.com, LLC (Realauction or Debtor) [DE 1], the appointment of a Chapter 11 Trustee, or the appointment of an Examiner, and in support thereof states as follows: BRIEF STATEMENT Grant Street has filed this motion because it believes that the Debtor has instituted and is prosecuting this bankruptcy proceeding under false pretenses. Specifically, among other material falsehoods put forth by the Debtor, Grant Street contends that the largest secured debt that Realauction identified in its First Day Motions -- the purported loan from Adila Enterprises, S.A. (Adila) -- is, in reality, an equity investment in the Debtor. Based on testimony and documents produced by Realauction and its accounting firm in the pending patent litigation in the Western District of Pennsylvania, see Grant Street Group, Inc. v. RealAuction.com LLC, No. 2:09-cv-01407-MRH (W.D. Pa. filed Oct. 20, 2009) (the Pennsylvania Lawsuit), Grant Street asserts that Adila is not entitled to secured creditor status because the purported Existing Loan from Adila to Realauction consists of equity investments by Adila and/or other third parties. Moreover, the Debtors prior testimony and statements concerning, among other subjects, the

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ownership, funding and control of Realauction have been conflicting, misleading and flat-out incredible. Indeed, testimony at trial from Mr. Lloyd McClendon (the Debtors CEO) prompted United States District Court Judge Mark R. Hornak, who presided over the trial, to comment later on the record that Mr. McClendons testimony strained [the] credulity of the credulous and that Mr. McClendons inability to understand the financial statements, who the investors were, or his unwillingness to do so was stark. See Ex. 1, 7/25/13 Hearing Tr. at 118. Throughout this case, and in litigation in Western District of Pennsylvania (see Grant Street Group, Inc. v. RealAuction.com LLC, No. 2:09-cv-01407-MRH (W.D. Pa. filed Oct. 20, 2009) (the Pennsylvania Lawsuit)), Realauction has provided materially inconsistent explanations--or no explanations at all--for what should be routine and simple matters regarding its financial structure and condition. The evidence shows that Realauction has manipulated its books and records to the point where nothing it says on the subject of its finances and ownership is credible. In fact, Realauction, Hatchett Developments Limited (Hatchett), and Adila

Enterprises, S.A. (Adila) have been playing a shell game that disguises equity interests as loans, and shifts obligations from party to party. The same issues dogged Realauction in the Pennsylvania Lawsuit 1 Grant Street submits that, based upon that evidence and additional evidence that it expects to adduce through pending Rule 2004 examinations, this Court should either dismiss the petition or, at a minimum, install a trustee or examiner to ensure that its sole true significant creditor is being treated fairly. Simply put, Realauction should not be permitted to thwart and/or delay Grant Streets ability to enforce and collect its judgment from the Pennsylvania Lawsuit by abusing the judicial
1

The relationships at issue in this litigation were not squarely at issue in the Pennsylvania Lawsuit (and in fact were not disclosed until after the discovery period there), so Grant Street is seeking in this proceeding Rule 2004 Examinations from Realauction and its owners and investors and respectfully reserves the right to supplement its support for this motion when it obtains that discovery. -2-

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process and filing a bad faith bankruptcy petition that is designed to delay and frustrate its creditors. Grant Street believes that the wrongful conduct by Realauction and its abuse of the judicial system warrants dismissal of the bankruptcy petition. Even if this Court were to give Realauction the benefit of the doubt, its misstatements and ignorance of its own financial structure constitutes evidence of gross mismanagement. In the alternative, Grant Street believes that the appointment of a trustee or an examiner would be appropriate so as to allow an independent investigation of the facts surrounding the Debtors financial condition, and its relationships with Adila, Hatchett, and others. JURISDICTION The Court has jurisdiction to consider this matter pursuant to 28 U.S.C. 157 and 1334. This is a core proceeding pursuant to 28 U.S.C. 157(b)(2). BACKGROUND I. The Pennsylvania Lawsuit After the Pennsylvania Lawsuit trial resulted in a jury verdict in the amount of $8,100,000.00 in favor of Grant Street, Realauction moved for an order staying execution of the judgment, and requested a bond in an amount of $117,912, but not to exceed $1,000,000. See [Pennsylvania Lawsuit DE 678]. The Court granted that motion, but required a bond in the amount of $4,381,059.00. See [Pennsylvania Lawsuit DE 684]. Realauction failed in its

subsequent motion for reconsideration, see [Pennsylvania Lawsuit DE 686], and accordingly never posted any bond. Instead, on the very day that Grant Street was allowed to register and enforce its judgment in the Florida federal courts, Realauction filed for bankruptcy, continuing its efforts to evade paying the judgment to Grant Street. See [DE 1]. In its filing here, Realauction named Adila as a secured creditor with a promissory note secured by chattel mortgage and Hatchett as being a corporation that directly or indirectly owns -3-

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10% or more of Realauctions equity interests. See [DE 2]; [DE 3]. Other than Grant Street and its $8,100,000.00 judgment, Realauction identified no other significant creditors. As such, Adila was identified as the only secured creditor. Based on sworn testimony and evidence already developed in the Pennsylvania Lawsuit and the facts that Grant Street expects to establish through discovery propounded in this proceeding, Grant Street contends and believes that Adila is not entitled to a secured creditor status because the purported loan from Adila to Realauction constitutes an equity investment by Adila and/or other third parties. Among other things, Adila and Hatchett (both purported 70% owners of Realauction) are related entities that are part of Realauctions elaborate scheme to conceal the fact that Gulf Group Holdings, LLC and/or Jonathan Politano (collectively Gulf Group), a major bidder and purchaser of tax certificates in the online tax certificate auctions that Realauction conducts for Florida tax collectors, provided start-up and further equity capital to Realauction. 2 Although Grant Street is pursuing discovery to further support this motion

(including discovery from Adila, Hatchett and Gulf Group, who were not deposed in the Pennsylvania Lawsuit), the following facts demonstrate that this motion is well-founded. First, Realauctions testimony in the Pennsylvania Lawsuit regarding its ownership and relationship with Adila has been wildly inconsistent and contradicts Realauctions assertions in this proceeding that Hatchett is an owner of Realauction and Adila is simply a lender. For example, in June 2011, Mr. Thomashaw (the Debtors CFO) testified on behalf of Realauction that he and Mr. Lloyd McClendon owned Realauction. Q. A.
2

And do you own 50 percent of Realauction.com, LLC Realauction.com, LLC, Im a managing member of this firm and had the same

Gulf Group desires to conceal its majority ownership interest in Realauction because it gives rise to a serious conflict of interest in the sense that Gulf Group is both bidder and auctioneer in the auctions conducted by Realauction. -4-

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ownership class that Lloyd has. Were equal partners. Q. A. Q. A. So you own 50 percent of Well, I would say -- the company? that Lloyd has a higher percentage as far as that goes, because in an LLC, one person has to own more than 50 percent of a particular company. And since he was the one that got this particular company started, he owns a higher share than I would say I would own. But we always are on equal footing between each other. As far as the exact ownership, to us, it doesnt really matter really who owns more, who owns less. We share in the wealth, we share in the good times, we share in the bad times. But how is it papered in terms of ownership percentage? That, I do not have the exact knowledge of.

****** Q. A.

See Ex. 2, 6/28/11 M. Thomashaw Depo. Tr. at 18-19. A day later, Mr. McClendon contradicted Mr. Thomashaws testimony: Q. A. Q. A. Q. A. Q. A. Sir, who owns Realauction.com, LLC? I do. One-hundred percent? I dont believe its 100 percent, but I do. What percentage do you own? Im unfamiliar with the percentage. Is it a 50/50 split with Mr. Thomashaw? No, I dont believe Mr. Thomashaw has ownership in Realauction.com.

See Ex. 3, 6/29/11 L. McClendon Depo. Tr. at 14-15. This testimony is inconsistent with Mr. Thomashaws sworn statements to this Court that he and Mr. McClendon own 15% of Realauction and Hatchett owns 70%. See [DE 11]. Even more remarkable than that inconsistency is the fact that none of the sworn statements above are consistent with financial statements that Realauction provided to the court in the Pennsylvania Lawsuit on July 24, 2013. See Ex. 4, 7/24/13 M. Thomashaw Dec. In the July 24, 2013 financial records, Realauction identified Adila, not Hatchett, as having a 70% ownership -5-

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interest in Realauction ($210,000 of $300,000 in capital stock). Id. at Ex. 4. Just eight days later, the Debtor contradicted itself again, indicating in its First Day Motions in this Court that Hatchett owned 70% of the Debtor and listing Adila only as a secured creditor. In fact, documents filed in this proceeding show the same address for both Hatchett and Adila, Trident Chambers, P.O. Box 146, Road Town, Tortola, British Virgin Islands. See [DE 3, 27]. Second, regardless of whether Adila or Hatchett is the actual majority owner of the Debtor, Realauction has admitted that Hatchett and Adila are related, if not one and the same entity. Mr. Thomashaw testified in the Pennsylvania Lawsuit that Mr. Enrique Torbay owns 100% of both Adila and Hatchett. See Ex. 5, 10/18/11 M. Thomashaw Depo. Tr. at 52-53, 75-77. Realauction could not (or would not) provide any further information about Adila, Hatchett or Mr. Torbay. Indeed, both Mr. Thomashaw and Mr. McClendon testified that they have never met or spoken with Mr. Torbay. 3 Mr. McClendon further testified that although Hatchett supposedly invested in Realauction in 2004, Mr. McClendon could not provide any details about the investment or Hatchett in general. Q. A. Q. A. Q. A. Q. A. Q.
3

Has Realauction ever had any other investors, other than possibly Ms. Rub, you and Mr. Thomashaw or entities owned wholly by the two of you? Yes. Who would they be? There was one other that was, I believe its called Hatchet [sic]. Hatchet? Yes. Whats Hatchet? As far as I know, its an investment company. Where is it located?

According to Realauctions January 1, 2011 Operating Agreement, Mr. Torbay also was the only Class B Manager of Realauction. Based on Realauctions voluntary petition for bankruptcy, it appears that Nalvija Adum has either replaced or joined Mr. Torbay as a Class B Manager. -6-

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A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q. A. Q.

I dont know. Somewhere in South America. How did Hatchet come to invest in Realauction? I dont recall. Who did you deal with at Hatchet? It was an attorney. What is that persons name? I dont recall the attorneys name. So can you tell me anything about Hatchet, other than that they were an investor in Realauction.com somewhere from South America? No. How much did they invest? I dont recall. When did they invest? Sometime after 2004. Are they still invested? I believe they are. Do you have contact with them as somebody thats invested in your company? No. Do you communicate with them at all on any subject regarding their investment? No. Have they ever sought any return on their investment or money back? No. Have you ever provided them with any return on their investment? Not that Im aware of. Can you give me an order of magnitude of their investment? No. So you cant tell me whether its a dollar, ten thousand dollars or five million dollars? I cannot. Who would know about the details of the Hatchets relationship? Hatchet. Who at Realauction? -7-

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A. Q. A. Q. A.

Lloyd. Lloyd? Me. Thats it? Yes.

Ex. 4, 6/29/11 L. McClendon Depo. Tr. at 18-21, 24. Third, discovery in the Pennsylvania Lawsuit revealed that Realauction has been manipulating its financial records and making false statements concerning its ownership, financing and control for years to disguise Gulf Groups ongoing ownership and control of Realauction. For example, Realauctions outside accounting firm, Binstock, Rubin, Adler,

Aldecoa & Ellzey, P.A. (Binstock), who also serves as the accountant for Gulf Group, Adila and Hatchett, produced Realauction financial records and provided testimony in the Pennsylvania Lawsuit that shows the so-called loan from Adila actually was a front to disguise capital investments by Gulf Group. 4 See Ex. 6, 6/7/13 Trial Tr. at 205-18. Binstocks records revealed that amounts originally entered on Realauctions books as capital investments in 2004 and 2005 by entities owned or controlled by Gulf Group were inexplicably changed to loans by Binstock in or around 2006. Id. 5 Binstock first attributed those purported loans to Gulf Group and then, in 2007, the loans were changed to Adila. Binstock could not explain under oath how and when the equity was purportedly converted to debt or how and why, in 2007, Realauction suddenly attributed the money to Adila instead of Gulf Group. Neither Binstock nor
4

Curiously, until March 2013, Gulf Group Holdings, LLC listed Greenberg Traurig (specifically Ozzie Schindler) as its mailing address on its Florida Annual Reports filed with the Florida Department of State. Mr. Schindler also is identified as a required copy on Notices related to a subordination agreement between Realauction, Adila and Financial Markets (another lender).
5

Binstock produced the identified documents pursuant to a confidentiality order entered in the Pennsylvania Lawsuit. See W.D. Pa. Local Patent Rule 2.2. Thus, Grant Street is precluded from attaching the documents to this Motion but upon request, can provide the Court with the documents for in camera review. -8-

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Realauction ever produced any written notes or agreements relating to these transactions. While no one was able (or willing) to say why Realauction made this change, the documents show that Mr. Politano instructed Binstock how to treat the money purportedly attributable to Adila. Similarly, Mr. Thomashaw and Mr. McClendon falsely testified in the Pennsylvania Lawsuit that entries on its books under the name RA Partners reflected investments by Mr. Thomashaw and Mr. McClendon when in reality Gulf Group provided those funds. In the first of two Rule 30(b)(6) depositions of the Debtor, 6 Mr. Thomashaw testified that RA Partners was Lloyd and I. Ex. 2, 6/28/11 Deposition of Marc Thomashaw Tr. at 98-99. Similarly, Mr. McClendon testified that RA Partners was a designation to track investments in Realauction but conveniently knew nothing more about RA Partners; he testified: Q. A. Who is RA Partners? I believe RA Partners was a I believe RA Partners was an initial investment we made. I cant recall whether it was just me or a partner at the time or someone investing at the time or it was my business and not me personally. What are the possibilities? The possibilities are it was the possibilities are it was someone I dont recall at the time. Do you know who RA Partners is now, who owns it? I dont know who is designated as RA Partners, no.

Q. A. Q. A.

Ex. 3, 6/29/11 L. McClendon Depo. Tr. at 17. At the continuation of Realauctions Rule 30(b)(6) deposition (and after Binstock produced to Grant Street the documents revealing Gulf Groups interest in Realauction), Mr. Thomashaw finally came clean and admitted that RA Partners is Gulf Group. Q. The only financial statements or materials that youve given to us are the Exhibit number 2 that you produced this morning, correct?

Because Realauction was utterly unprepared in the first Rule 30(b)(6) deposition to testify on the subjects of its ownership and loans from Adila, Grant Street obtained an order from the court in the Pennsylvania Lawsuit compelling Realauction to appear for a second Rule 30(b)(6) deposition with a prepared witness. -9-

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A. Q.

I dont know what else you have, but we gave you stuff this morning; thats correct. Okay. And youre pointing to line entries that are under, on Exhibit 2, under RA Partners, correct? I see the last page that says Gulf Group Holdings. Well, the last page says, as printed out from Quickbooks register, long term liability shareholder loans RA Partners? Right. Correct? Thats a label. Like I explained to you a long time ago today, that was there for anybody that was going to invest. Is Gulf Group is one of the firms that decided to loan money at an interest rate return.

****************** A. Q. A. Q. A. Q. A.

Ex. 5, 10/18/11 M. Thomashaw Depo. Tr. at 233-34; see also Ex. 7. Realauctions RA Partners Quickbooks entries shows that Gulf Group initially invested $100,000 in Realauction in October 2004 (the same time period that Mr. McClendon testified Hatchett invested in Realauction) and continued funding Realauction with millions of dollars from 2006 through at least 2011. See Ex. 7. 7 Finally, although Realauction has represented to this Court that the Adila funding is a loan, it has unmistakable characteristics of equity. Discovery in the Pennsylvania Lawsuit revealed (1) Realauction did not make any debt service payments to Adila from 2007-2011; (2) Realauction and Adila did not have a formalized loan agreement until 2010 (three years after Realauction attributed the so-called loan to Adila in its financial records); (3) in 2007 when Realauction began to attribute the loan to Adila, there is no evidence that the purported loan

Remarkably, when Grant Street confronted Mr. McClendon with these Quickbooks entries at trial in the Litigation, Mr. McClendon initially denied any knowledge of investments or funding received from Gulf Group, but did admit to receiving short term funding. See Ex. 8, 6/11/13 Trial Tr. at 41-47. - 10 -

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was secured by any collateral; 8 (4) Adila did not take any steps to collect interest or principal for at least four years; and (5) executives at Realauction gave little attention to the purported loan despite its massive size relative to Realauctions business. Indeed, Mr. Thomashaw testified that he had never seen and was completely unaware of the Adila loan agreement and an Operating Agreement listing Hatchett as a 70% owner until they were sent to him by a mysterious person known only as Jose from Ecuador. According to Mr. Thomashaw, the mysterious Jose called Mr. Thomashaw out-of-theblue from Ecuador, supposedly to provide information to Mr. Thomashaw regarding Realauctions ownership structure and loans and then Jose sent him the Operating Agreement dated January 1, 2011 that Mr. Thomashaw supposedly signed; and (2) the $3.8 million dollar promissory note from Realauction to Adila. Q. A. Q. A. Q. A. Q. A. Q. A. And where did the operating statement you just referred to come from? From Ecuador. And who provided that? Hatchett, somebody in that organization. Now, you previously testified that you requested from Hatchett any documents in their possession that would be needed for todays testimony, is that accurate? Today, yes. Okay. And who at Hatchett did you contact? I didnt contact anybody. Well, how did you make your inquiry of Hatchett? I got a call on my cell phone from an unknown number. I answered the call. It was difficult to understand, because it seems theres a language barrier. I dont speak Spanish, and that particular person, there might have been other people that were privy to the conversation I was having, but I wanted to try and get some information on the background of the company, that I didnt have at the last deposition, and the information was supplied to me.

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8

In July 2010, after Realauction had to obtain a loan from an entity known as Financial Markets, Realauction filed a Uniform Commercial Code Financing Statement that purports to identify the collateral for the Adila loan. - 11 -

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Q. A. Q. A.

Did they say was it a woman or a man on the other end? It was a male. And did he identify himself? His name was Jose or thats the best that I was able to get from that particular individual. He said he was with Hatchett Developments, as best as I was able to understand, and I said, well, Im looking for some information regarding our lawsuit, because I didnt have certain information on the stocks, and the conversation ended with me obtaining certain information to be helpful with this particular in this case litigation, whatever you guys call it. How long did you speak with Jose? I dont know. Five or ten minutes. And what specific information did you ask Jose for? I wanted to know, historically, who owned the company and things that I didnt have previous knowledge to, and what happened as the years went on, for any transfer of responsibility. I also needed to ask him if there were any pertinent documents related to the ownership of the company. Any notes that I wasnt aware of, that were promissory notes for the loan with Adila, and that information was given to me or mailed to me.

Q. A. Q. A.

10/18/11 M. Thomashaw Depo. Tr. at 40-42; see also id. at 43-65. There is no legitimate reason, and Mr. Thomashaw could not provide one, for an unknown man named Jose to have Realauctions ownership and loan documents while no one at Realauction had those documents. Yet, presumably based on this five to ten minute telephone conversation with Jose, Mr. Thomashaw has now represented to this Court that Hatchett has 70% ownership interest in Realauction (even though just days earlier he had represented to the federal court in Pennsylvania that Adila was a 70% owner). Furthermore, although Mr.

Thomashaws absurd story about receiving the Debtors Operating Agreement and the Adila loan documentation from the mysterious Jose from Ecuador was not played to the jury in the Pennsylvania Lawsuit, the videotaped testimony from Mr. Thomashaw that was shown to the jury and Mr. Thomashaws declarations submitted to the federal court in Pittsburgh about Realauctions funding prompted Judge Hornak to comment that his videotaped testimony was

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in some ways inexplicable and his declarations were riddled with gaps, inexplicabilities, or uncertainties . . . . See Ex. 9 at 118-20. MEMORANDUM OF LAW 1. This Court Should Dismiss this Case for Cause Pursuant to 11 U.S.C. 1112(b), as the Voluntary Petition [DE 1] was Filed in Bad Faith with an Intent to Delay and Frustrate Grant Streets Enforcement of the Pennsylvania Lawsuit Judgment On the request of a party in interest, and after notice and a hearing, absent any unusual circumstances, bankruptcy courts shall convert or dismiss a Chapter 11 case if the movant establishes cause. See 11 U.S.C. 1112(b). This procedure is designed to protect the best interests of the creditors and the estate. Filing a petition in bad faith is one scenario that constitutes cause for dismissal, as well as gross mismanagement of the estate, or unexcused failure to timely satisfy a filing or reporting requirement. See 11 U.S.C. 1112(b)(4). Good faith is an implicit requirement for filing for bankruptcy protection, and accordingly, a petition filed in bad faith is subject to dismissal for cause. See Phoenix Piccadilly Ltd. v. Life Ins. Co. of Va., 849 F.2d 1393, 1394-1395 (11th Cir. 1988) (identifying a nonexhaustive list of factors evidencing a bad faith filing). The inquiry that a court will undertake essentially asks whether the debtor filed its petition for reasons consistent with the congressional intent of rehabilitating and reorganizing the business, or whether it instead filed for the improper purpose of delaying and frustrating a creditor from enforcing its rights. See In re Sar-Manco, Inc., 70 B.R. 132, 136-139 (Bankr. M.D. Fla. 1986); see also Phoenix Piccadilly, 849 F.2d. at 1394-1395 (court noting that as a factor that indicates a bad faith filing, [t]he timing of the Debtors filing evidences an intent to delay or frustrate the legitimate efforts of the Debtors secured creditors to enforce their rights.). The bankruptcy court has broad discretion to dismiss Chapter 11 cases for cause and may consider other factors that evidence intent to abuse the judicial process. See MacElvain v. I.R.S., 180 B.R. 670, 674-675 (Bankr. M.D. Ala. 1995). - 13 -

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This Court has held that [w]here the primary purpose of a Chapter 11 filing is as a litigation tactic, the petition may be dismissed for a lack of good faith. In re A.Z. Servs., 208 B.R. 578, 581 (Bankr. S.D. Fla. 1997)(citing In re C-TC 9th Avenue Partnership, 193 Bankr. 650, 654 (Bankr. N.D. N.Y. 1995)); see also In re Moog,159 B.R. 357 (Bankr. S.D. Fla. 1993)(citing In re Karum Group, Inc., 66 Bankr. 436 (Bankr. W.D.Wash. 1986) for case dismissed where debtor filed as a litigation tactic to avoid posting supersedeas bond)(additional citations omitted). Other courts have dismissed bankruptcy petitions when judgment debtors have used similar litigation tactics in two-party disputes. See, e.g., In re Paolini, 312 B.R. 295, 318 (Bankr. E.D. Va. 2004); see also In re Mosser, 2009 Bankr. LEXIS 1168 *15-*16 (Bankr. D. Mont. May 13, 2009)(Additionally, a debtor's intent to use the automatic stay imposed by 11 U.S.C. 362 as a substitute for posting a supersedeas bond, without any genuine intent or ability to reorganize, is evidence of bad faith)(citations omitted). In this case, it is abundantly clear that Realauction has filed this bankruptcy petition for no other reason than to frustrate Grant Streets attempts to enforce its rights pursuant to the Pennsylvania Judgment. It was only after the court denied Realauctions motion for

reconsideration regarding the bond amount that it filed this bankruptcy casein fact, the bankruptcy action was filed the very morning that the Pennsylvania court had ruled Grant Street could begin enforcing the action and collecting its judgment. See [Pennsylvania Lawsuit DE 684]. The convenient timing of the bankruptcy filing is only one fact that supports a finding that this filing was done solely to evade the judgment for the benefit of equity investors, not to protect true creditors. Realauctions list of creditors also supports that conclusion. Realauctions only other purported creditor of any significance (other than Grant Street) is Adila. As described at length above, however, Adilas status as a secured creditor is simply a recent fiction. Grant - 14 -

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Street submits that Adila is nothing more than an equity holder in Realauction. See Ex. 4 (July 24, 2013 Realauction financial records identifying Adila as having a 70% ownership interest in Realauction, attached to the Declaration as Exhibit 3). If nothing else, it has already been made clear that the so-called loan provided by Adila to Realauction lacks many of the defining traits of a loan, as there were no debt service payments from 2007 to 2011, it took over three years for a formalized loan agreement to be created, there was limited evidence of any collateral, Adila failed to collect interest or principal for at least four years, and Realauction management seemed completely ignorant of the alleged loan, even though it was substantial in size. See In re Transcapital Fin. Corp., 433 B.R. 900, 905 (Bankr. S.D. Fla. 2010) (identifying a maturity date, promissory note, and a stated interest rate as the hallmarks of a loan). This would mean that the entire bankruptcy case is just a continuation of Realauction and Grant Streets dispute, simply being fought in the Southern District of Florida Bankruptcy Courts instead of the Western District of Pennsylvania. Even in a best case scenario for Realauction, if its inconsistent

statements about its biggest purported secured debt are not deliberate deceptions, then they are certainly evidence of gross mismanagement, and therefore still warrant dismissal. See 11 U.S.C. 1112(b)(4)(B) (identifying gross mismanagement of the estate as constituting cause warranting dismissal). Therefore, pursuant to 11 U.S.C. Section 1112(b), and in accordance with the best interests of the creditors and the estate, the Court should dismiss this case for cause as a bad faith filing. 2. The Appointment of a Chapter 11 Trustee is Appropriate Pursuant to 11 U.S.C. 1104(a), as the Debtor Has Constantly Provided Misleading and False Information Throughout Both this Bankruptcy Proceeding and the Pennsylvania Lawsuit If the Court determines that dismissal of the bankruptcy proceeding at this early stage is improper, Grant Street respectfully requests that a trustee be appointed due to the apparent fraud - 15 -

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and dishonesty of the Debtor, as that appointment would be in the best interests of the creditors. Under the Bankruptcy Code, the Court shall appoint a trustee (1) for cause, including fraud and dishonesty, or (2) if the appointment of a trustee would be in the best interests of the creditors. See 11 U.S.C. 1104(a). Appointment of a trustee can be an alternative to dismissing the case, if in the best interests of the creditors and the estate. See 11 U.S.C. 1112(b)(1). As the term for cause is not exhaustively defined with the Bankruptcy Code, courts have reviewed a broad range of factors. These factors include but are not limited to: 1) Materiality of the misconduct; 2) Evenhandedness or lack of same in dealings with insiders or affiliated entities vis--vis other creditors or customers; 3) The existence of pre-petition voidable preferences or fraudulent transfers; 4) Unwillingness or inability of management to pursue estate causes of action; 5) Conflicts of interest on the part of management interfering with its ability to fulfill fiduciary duties to the debtor; [and] 6) Self-dealing by management or waste or squandering of corporate assets. See In re SunCruz Casinos, LLC, 298 B.R. 821, 830 (Bankr. S.D. Fla. 2003) (citing In re Matter of Intercat, Inc., 247 B.R. 911, 921 (Bankr. S.D. Ga. 2000)). Many of these factors relate to the requirement that the debtor-in-possession is meant to be a fiduciary to the creditors. In re SunCruz, 298 B.R. at 829 (citing In re Microwave Prods. of Am., Inc., 102 B.R. 666, 671 (Bankr. W.D. Tenn. 1989). Importantly, if the Court finds that cause exists, then it has no discretiona trustee must be appointed. Id.; see also In re Sundale, Ltd., 400 B.R. 890, 900 (Bankr. S.D. Fla. 2009) (The use of the word shall leaves no discretion in appointment once cause is found.). Similarly, the term the interests of the creditors is not defined in the Bankruptcy Code. Accordingly, bankruptcy courts have reviewed a very broad range of factors including (1) the trustworthiness of the debtor; (2) the debtor in possessions past and present performance and prospects for the debtors rehabilitation; (3) the confidenceor lack thereofof the business community and of creditors in present management; and (4) the benefits derived by the

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appointment of a trustee, balanced against the cost of the appointment. In re Sundale, Ltd., 400 B.R. at 901 (citing In re Euro-Am. Lodging Corp., 365 B.R. 421, 428 (Bankr. S.D.N.Y. 2007)). In this case, Realauction has displayed a propensity for dishonesty and deception, or, at the very least, gross mismanagement. As discussed at length above, Realauction has been inaccurately and inconsistently describing its finances and specifically its financial relationship to Adila, both in court filings and in communications and discovery with Grant Street. Courts in the Southern District have appointed a trustee in similar situations, such as when conflicts of interest and other failures evidence a lack of evenhandedness in dealing with insiders or affiliated entities vis-a-vis other creditors. See In re SunCruz, 298 B.R. at 830 (court also noting that there were allegations of fraudulent conveyances, which was another factor supporting the appointment of a trustee). Unlike In re Sundale, where the court ultimately chose not to appoint a trustee, there are numerous instances in the immediate case of dishonest and fraudulent behavior that more than warrants a trustee. In re Sundale, 400 B.R. at 905 (noting that the movants have failed to establish these omissions were deliberate attempts by others in Debtors management to conceal the transfers.). Here, Realauction has clearly attempted to conceal multiple sources of its funding, as is evidenced by the sharply conflicting testimony by its CFO and its CEO regarding what individuals owned what percentage of the company. See Ex. 2, 6/28/11 M. Thomashaw Depo. Tr. at 18-19; Ex. 3, 6/29/11 L. McClendon Depo. Tr. at 14-15. The web of deception further unravels when one considers the role that Gulf Group has played, and how alleged loans from Adila are nothing more than capital investments by Gulf Group. See Ex. 6, 6/7/13 Trial Tr. at 205-18. Even Realauctions CFO ultimately admitted (after testifying to the contrary in an earlier deposition) that Gulf Group had loaned money to Realauction under a label

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that he had previously claimed was composed of Realauction management. See Ex. 2, 6/28/11 M. Thomashaw Depo. Tr. at 98-99; Ex. 5, 10/18/11 M. Thomashaw Depo. Tr. at 233-234. Likewise, the In re Sundale court found that there was not evidence of extreme ineptitude on the part of management to the detriment of the organization and there was missing elements that hint at fraud 400 B.R. at 907. In the instant case, Realauctions frankly unbelievable testimony that a single phone call from an unknown number used by Jose from Ecuador was managements best and only source of information about a 70% ownership interest in Realauction certainly is evidence of at least extreme ineptitude by Realauction management. See Ex. 5, 10/18/11 M. Thomashaw Depo. Tr. at 40-65. The In re Sundale court also found that there was no objective reason that the estates creditors should have lacked confidence in the debtor. See In re Sundale, 400 B.R. at 910. In this case, however, even District Court Judge Hornak was taken aback by how unbelievable Realauctions CEOs testimony was concerning the financial situation of his company. See Ex. 9, 7/25/13 Hearing Tr. at 118 (noting that the CEOs testimony strained credulity of the credulous and the CEOs inability to understand the financial statements, who the investors were, or unwillingness to do so was stark). management. Therefore, pursuant to 11 U.S.C. Section 1104(a), the Court should respectfully appoint a trustee to this case so as to protect the interests of the creditors amidst the Debtors improper conduct. 3. The Appointment of an Examiner is Proper Pursuant to 11 U.S.C. 1104(c) to Investigate the Debtor Based on Its Repeated Failure to Conduct Itself Transparently and Honestly with Both the Creditor, and More Importantly, the Courts. When there are concerns that a debtor in the bankruptcy process may be engaged in fraudulent, dishonest, or other untoward conduct, the Bankruptcy Code also allows for a - 18 This type of reaction would certainly cause one to lose confidence in

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disinterested examiner supervised by the Court to undertake an investigation of the alleged misconduct. In addition to providing an independent, professional, and timely investigation into the matter, this route also allows the Debtor to focus on its reorganization while the examiner proceeds. It is a less invasive alternative to appointing a trustee, as the examiner works

independently while the other parties continue navigating the bankruptcy process. Requests for the appointment of an examiner are governed by Section 1104(c) of the Bankruptcy Code, which provides in relevant part: [O]n request of a party in interest or the United States trustee, and after notice and a hearing, the court shall order appointment of an examiner to conduct such an investigation of the debtor as is appropriate, including an investigation of any allegations of fraud, dishonesty, incompetence, misconduct, mismanagement, or irregularity in the management of the affairs of the debtors of or by current or former management of the debtor, if (1) such appointment is in the interests of creditors, any equity security holders, and other interests of the estate; or (2) the debtors fixed, liquidated, unsecured debts, other than debts for goods, services, or taxes, or owing to an insider, exceed $5,000,000. See 11 U.S.C. 1104(c). The examiner, once appointed, shall investigate the acts, conduct, assets, liabilities, and financial condition of the debtor, the operation of the debtors business and the desirability of the continuance of such business, and any other matter relevant to the case or to the formulation of a plan. See 11 U.S.C. 1106. Bankruptcy courts have utilized examiners in complex cases to investigate all aspects of a debtors bankruptcy proceeding, including investigating acts, conduct, assets, liabilities, and the financial condition of the debtor. See In the Matter of First Amer. Health Care of Ga., Inc. 208 B.R. 992, 994 (Bankr. S.D. Ga. 1996) (Section 1104 clearly contemplates that if an investigation of any fraud, dishonesty, incompetence, misconduct, mismanagement, or irregularity in the management of the affairs of the debtor by current or former management is

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necessary either to protect the interests of creditors, equity security holders, and the estate, or if the debtors unsecured debt exceeds $5 million, the Court shall order the appointment of an examiner on motion and after notice and a hearing) (emphasis in original); In re Public Serv. Co. of N.H., 99 B.R. 177, 182 (Bankr. D. N.H. 1989) (noting that an examiner shall investigate the acts, conduct, assets, liabilities, and financial condition of the debtor, the operation of the debtors business and the desirability of the continuance of such business, and any other matter relevant to the case or the formulation of plan); In re A.H. Robins Co., 88 B.R. 742, 744 (Bankr. E.D. Va. 1988) (appointing an examiner with authority to monitor the progress of the formulation of a plan of reorganization and to evaluate and suggest proposed elements of plan of reorganization). This independent and disinterested examiner is then able to perform the investigation without any bias or undue pressure from any constituency that may have a conflict of interest with the Debtors. See In the Matter of First Am., 208 B.R. at 995 (The involvement of an examiner will contribute valuable perspective to a case with many competing interests at stake). Bankruptcy courts in the Southern District have previously appointed examiners when parties have raised serious allegations of possible fraud, dishonesty, incompetence, misconduct, mismanagement, and irregularity of the Debtors affairs. See In re Vision Dev. Grp. of Broward Cty., LLC, No. 07-17778-BKC-RBR, 2008 WL 2676827, at *3 (Bankr. S.D. Fla. June 30, 2008). For all of the reasons discussed at length above in the trustee appointment analysis, the appointment of an examiner is appropriate here. Realauction has consistently been inconsistent in its financial disclosures, officer testimony, and general narrative that it has provided to the courts and to Grant Street, its creditor, concerning its financial condition. An examiner would be in a unique position to investigate these concerns.

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Therefore, pursuant to 11 U.S.C. Section 1104(c), the Court should respectfully appoint an examiner to investigate Realauctions allegedly improper conduct. CONCLUSION WHEREFORE, Grant Street respectfully requests that the Court enter an Order dismissing the Debtors Voluntary Petition [DE 1] and effectively dismissing this bankruptcy proceeding, or alternatively enter an Order appointing a Chapter 11 Trustee, or alternatively enter an Order appointing an Examiner. Dated: September 11, 2013 Respectfully submitted, K&L GATES LLP /s/ Jeffrey T. Kucera Jeffrey T. Kucera Florida Bar No. 0068233 jeffrey.kucera@klgates.com 200 S. Biscayne Boulevard, Suite 3900 Miami, Florida 33131 Telephone: 305.539.3300 Facsimile: 305.358.7095 and Christopher M. Verdini, Esq. Patrick J. McElhinny, Esq. Thomas E. Birsic, Esq. Thomas M. Joseph, Esq. K&L Gates LLP 210 Sixth Avenue Pittsburgh, PA 15222 Attorneys for Creditor Grant Street Group, Inc.

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CERTIFICATE OF SERVICE I HEREBY CERTIFY that a true and correct copy of the foregoing was electronically filed with the Clerk of the Court using CM/ECF. I also certify that the foregoing document is being served this day on all counsel of record or pro se parties identified on the Service List below in the manner specified, either via transmission of Notice of Electronic Filing generated by CM/ECF or in some other authorized manner for those counsel or parties who are not authorized to receive electronically Notices of Electronic Filing on this 11th day of September, 2013. /s/ Jeffrey T. Kucera Service List Case No. 13-28260-RBR Eyal Berger, Esq. Catherine Douglas, Esq. Akerman Senterfitt 350 East Las Olas Boulevard, Suite 1600 Ft. Lauderdale, FL 33301 Phone: 954-463-2700 Fax: 954-463-2224 Email: eyal.berger@akerman.com Email: catherine.douglas@akerman.com Proposed Attorneys for Debtor-in-Possession RealAuction.com, LLC Ari Newman, Esq. Mark D. Bloom, Esq. Greenberg Traurig, P.A. 333 SE 2nd Avenue, Suite 4400 Miami, FL 33131 Phone: 305-579-0500 Email: newmanar@gtlaw.com Email: bloomm@gtlaw.com Attorneys for Adila Enterprises, S.A. Office of the U.S. Trustee Email: ustpregion21.mm.ecf@usdoj.gov

Jeffrey P. Bast, Esq. Morgan Edelboim, Esq. Bast Amron LLP SunTrust International Center One SE Third Avenue, Suite 1440 Miami, FL 33131 Phone: 305-379-7904 Fax: 305-379-7905 Email: jbast@bastamron.com Email: medelboim@bastamron.com Attorneys for Hatchett Developments Limited - 22 -

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II

IN THE UNITED STATES DISTRICT COURT OF WESTERN PENNSYLVANIA GRANT STREET GROUP, INC., a Pennsylvania corporation, Plaintiff, vs. REALAUCTION.COM , LLC., a Florida limited liability company, Defendant. Transcript of MOTION HEARING held JULY 25, 2013 United States District Court, Pittsburgh, Pennsylvania BEFORE: HONORABLE MARK R. HORNAK, DISTRICT JUDGE CIVIL DIVISION No. 09-1407

For the Plaintiff:

Patrick J. McElhinny, Esq. Christopher M. Verdini, Esq. Thomas E. Birsic, Esq. K&L Gates, LLP. 210 Sixth Avenue Pittsburgh, PA 15222 Thomas N. Joseph, Esq. Grant Street Group, Inc.

For the Defendant:

David S. Brafman, Esq. Akerman Senterfitt 222 Lakeview Avenue Suite 400 West Palm Beach, FL 33401 Karen N. Earley, RDR-CRR 6260 U.S. Courthouse 700 Grant Street Pittsburgh, PA 15219 412-201-2660

Court Reporter:

Proceedings reported by mechanical stenography. Transcript produced by computer-aided transcription.

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from the defendant, putting aside either the desire or necessity that the verdict winner would have had to engage in cross-examination, but there is simply no record evidence from which this Court can conclude that the net worth, the available assets, the available infusions of cash, whether it's by capital, loans, or otherwise, renders the net worth of the defendant so low that they cannot post security in a sufficient amount or that they are unable to get a surety bond that will protect the verdict. I will also note the trial testimony of Mr. McClendon, the CEO, relative to the financial statements of RealAuction paraphrased Justice Scalia from a recent opinion strained credulity of the credulous. His inability to understand the financial statements, who the investors were, or unwillingness to do so was stark. I found the testimony that was presented during trial by deposition, video deposition of Mr. Thomashaw, was in some ways inexplicable and his declarations filed in support of this motion were wholly conclusory, and there are substantial gaps in the financial records and reports that were submitted with them, not the least of which is the complete absence of accounts receivable or accounts payable from the balance sheets or the other financial records of the defendant at a time of year where the evidence is consistent

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from both sides, that this is the most significant period of time, given the nature of RealAuction's business, for the issuance of invoices and the receipts of cash and compensation for those services. Thus, the Court necessarily concludes that there is sufficient net worth and ability to post bond, which I must presume to be the case from a business that is otherwise alleged to be in good standing and to be a going concern. There is simply no evidence from which the Court can conclude that its net worth or bonding ability is insufficient or non-existent. The third factor is the location of the assets. To the Court's knowledge, there are no assets of the defendant that are present within the jurisdiction of the Court, and while I may have impersona jurisdiction over the defendant, there has not been a sufficient representation to give the Court any comfort that it's within the jurisdiction over the assets that would be used to satisfy a judgment or within the Court's jurisdiction at all or if they are easily and readily within the Court's reach. RealAuction has the burden of proving inability to secure a judgment for the stay they seek, that in all material respects has simply not been met, and I find the declarations of Mr. Thomashaw, the CFO, as I stated, to be so riddled with gaps, inexplicabilities, or uncertainties as to be of no

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assistance to the Court whatsoever. Given that, the Court concludes that it will enter a stay pursuant to Federal Rule of Civil Procedure 62(b) that is conditioned upon the timely filing by RealAuction of its post-trial motions directed to the question of damages in the nature of a remitter or for a new trial. If such motions are timely filed and the deadlines are currently set or may be set by further order of the Court, that stay will continue in force pending disposition by this Court of such motions. I will require that RealAuction post security in the form of cash or an approved surety or in combination in the total penal amount and sum of $4,381,059 running in favor of the plaintiff, Grant Street. The approved surety for this Court are available from the office of the Clerk of the Court and the mechanisms for posting such security, whether it's by cash, surety, or in some combination form, can be arranged with the Clerk of Court. Pending the posting of such a bond or surety or the expiration of the automatic stay, because the financial records of RealAuction and the explanations of them have caused the Court to have doubt as to them, the Court will also place as part of its order a prohibition on the payment of any

dividends, bonuses, or distributions to any investors, officers, or directors during the balance of the automatic

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Page 1 IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA CIVIL ACTION NO. 2:09-cv-01407 GRANT STREET GROUP, INC., a Pennsylvania corporation, Plaintiff,

REALAUCTION.COM , LLC., a Florida limited liability company, Defendant.

Miami, Florida June 28th, 2011 9:30 A.M. - 4:00 A.M.

Mw NERM 0 off AM

Taken Before Ronni N. Koebel Notary Public in and for the State of Florida at Large, pursuant to Notice of Taking Deposition in the above cause.

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1 -APPEARANCES2 3 4

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 ALSO PRESENT: David Zeber, Videographer 22 23 24 25 Page 3

On behalf of the Plaintiff:

K&L GATES LLP BY: PATRICK I. McELIIINNY, ESQUIRE and BY: THOMAS E. BIRSIC, ESQUIRE and BY: CHRISTOPHER M. VERDINI, ESQUIRE 210 Sixth Avenue Pittsburgh, PA 15222 (412) 355-6500 and GEORGE P. FAINES, ESQUIRE 1800 Allegheny Building 429 Forbes Avenue Pittsburgh, PA 15219 (412) 391-5555

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Videotaped deposition of MARC THOMASHAW, a witness of lawful age, taken by the Plaintiff for the purpose of discovery and use as evidence in the above-entitled cause, wherein GRANT STREET GROUP is the Plaintiff and REALAUCTION.COM is the Defendant, pending in the United States District Court for the Western District of Pennsylvania, pursuant to notice heretofore filed, before RONNI M. KOEBEL, a Certified Shorthand Reporter and Notary Public in and for the State of Florida at Large, on the 28th day of June, 2011, at 200 South Biscayne Boulevard, Miami, Florida, commencing at 9.32 A.M. THEREUPON: (Thereupon, Plaintiffs Exhibit Number 1 was marked for Identification.) THE VIDEOGRAPHER: This is the videotaped deposition of Marc Thomashaw taken in the matter of Grant Street Group, Inc., versus RealAuction.com , LLC. This deposition is being held at 200 South Biscayne Boulevard, Miami, Florida. Today's date is June 28th, 2011. The time is
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On behalf of the Defendant:

AKERMAN SENTERFFLTr BY: DAVID BRAFMAN, ESQUIRE 222 Lakeview Avenue Fourth floor West Palm Beach, Florida 33401-6147 (561)653-5000

I-N-D-E-X

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2 3 WITNESS 4 Direct Examination by Mr. McElhinny Page 5 5 Cross Examination by Mr. Brafinan Page 199 6 Re-Direct Examination by Mr. McElhinny Page 201 7 8 9 EXHIBITS 10 11 EXHIBIT PAGE 12 1 4 13 8 2 14 3 32 15 42 4 16 43 5 17 49 6 18 7 90 19 8 150 20 9 154 21 10 158 22 11 179 23 12 184 24 192 13 25 192 14

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9:32 a.m. The court reporter's name is Ronni Kugler with the firm of Worldwide Reporting. The videographer is David Zeber with the firm of Action Video. Would counsel now please introduce themselves. MR. McELHINNY: Pat McElhinny of K&L Gates on behalf of the Grant Street Group, Inc. And I have with me Tom Birsic, George Fames and Chris Verdini, MR. BRAFMAN: David Brafinan from Akerman Senterfitt for defendant RealAuction.com .

15 Thereupon: 16 MARK THOMASHAW 17 a witness named in the notice heretofore filed, being 18 of lawful age and being first duly sworn in the above 19 cause, testified on his oath as follows: 20 DIRECT EXAMINATION 21 BY MR McELHINNY: 22 Q. Good morning, Mr. Thomashaw. My name is 23 Pat McElhinny. We're here today for your deposition. 24 Could you state your full name and 25 residential address for the record, please.

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A. It's Marc David Thomashaw, 12560 Northwest 76th Street in Parkland, 33076. Q. Sir, and do you have a business address? A. 861 Southwest 78th Avenue, Suite 102, in Plantation, 33324. Q. Mr. Thomashaw, you understand that you're under oath today? A. I am. Q. And will you agree that if you don't hear or understand a question, that you ask me to restate or rephrase it? A. Yes. Q. Are you represented by counsel today? A. I am. Q. That's Mr. Braftnan immediately to your left? A. Yes. Q. Is there any reason why you can't give accurate and truthful testimony today? A. No. Q. Sir, do you understand that you have been designated by RealAuction as testifying on its behalf with certain -- with respect to certain areas of inquiry? A. Yes.
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~. Q. And has it always been the practice that you and Mr . McClendon draw a salary or guaranteed payments at the same rate? A. Yeah. Yeah. We always are, for the most part or all parts, equal partners . We've always shared in, you know, the good times and the bad times. So we're always usually on the same page for decision-making , and we both work just as hard as one another , so we' re pretty much equal as far as that

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13 Q. And do you own 50 percent of RealAuction.com , 14 LLC? 15 A. RealAuction.com, LLC, I'm a managing member 16 of this firm and had the same ownership class that 17 Lloyd has. We're equal partners. 18 Q. So you own 50 percent of -19 A. Well, I would say
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A. -- that Lloyd has a higher percentage as far as that goes, because in an LLC , one person has to own more than 50 percent of a particular company. And since he was the one that got this particular company started , he owns a higher share than I would say I
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would own. But we always are on equal footing between each other. As far as the exact ownership, to us, it doesn't really matter really who owns more, who owns less . We share in the wealth , we share in the good times, we share in the bad times. Q. Okay. So you act as though it's a 50/50 partnership , correct?
A. Correct.

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10 Q. But how is it papered in terms of ownership 11 percentage?

12 A. That, I do not have the exact knowledge of. 13 Q. Is it possible that Mr. McClendon owns a 14 hundred percent of RealAuction.com , LLC? 15 A. I can't speak for that . I -- It's not 16 real -- I don't believe it's a possibility , but I 17 wouldn't know the exact percentage. 18 Q. And if he testified that he owned a hundred

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19 percent -20 A. I wouldn't have a problem with it I mean, 21 we share on a 50 / 50 level . We trust each other 22 implicitly, so -23 Q. Is there any written agreement to that
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A. Pm not aware of one.

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Q. Do you know what the term of the loan is, or any of the-A. I think we already covered that We don't have terms of the loan. When the loan is able to be paid back, we pay it back We don't have anything written regarded to those particular loans. And it's as simple as that. We needed cash in the business, we loaned our personal money, and it will get paid back as soon as the money is available to pay it back Q. But what's the interest rate? A. I think we covered that already. On or about ten percent. But I'd have to double-check the exact rate. Q. Okay. And what would you check for that? A. Quick Books and the calculation. Q. There's a loan to RA Partners? A. Uh-huh. Q. There's -- Strike that. There's a loan listed for RA Parters. What is RA Partners? A. That's Lloyd and I. Q. The amount of that loan is $200,000?
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Q. When was it made? A. I'd have to look back Q. Was it made within the last year? A. It was made between the time we needed the money and today. I don't know what that time frame was. I'd have to look back. You're asking -- This is not a -- This is dated June 17th. I don't have the details of Quick Books at my fingertips. Q. Okay. And neither do we. Is RA Partners an entity, or is it just a term for the two of you? A. It's just a term. Q. Why is it listed as RA Partners instead of individually like the other two? A. Because that's how I recorded the loan structure. Q. Okay. The next page of Exhibit 3 you see entries for capital stock. A. I do. Q. Could you explain them for me, the three entries there? A. I don't have any capital stock invested personally. This is before my time. And I never got

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IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA CIVIL ACTION NO. 2:09-CV-01407 GRANT STREET GROUP, INC., a Pennsylvania corporation, Plaintiff,

REALAUCT ION. CON, LLC, a Florida limited liability company, Defendant.

June 29, 2011 Wednesday - 9:30 a.m. Suite 3900, 200 South Biscayne Boulevard, Miami, Florida 33131

RJ3t)i
il

LLOYD EARL MCCLENDON, III

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APPEARANCES PATRICK MCELHINNY, ESQ., THOMAS E. BIRSIC, ESQ., CHRISTOPHER M. VERDINI, ESQ., of the law flirn of K&L Gates, 210 Sixth Avenue, Pittsburgh, Pennsylvania 15222, 412355-6500, patrickmcelhinnykIgates.com , on behalf of the Plaintiff. GEORGE P. FAINES, ESQ., General Counsel, Grant Street Group, Suite 1800, 429 Forbes Avenue, Pittsburgh, Pennsylvania 15219, 4123915555, george.fhinesgrantstxeetcom, on behalf of the Plaintiff DAVID S. BRAFMAN, ESQ., of the law finnofAlcemsan, Senterfitt, Suite 400, 222 Lakeview Avenue, West Palm Beach, Florida 33401,
561653-5000,

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david.brafinan@akerman.com , on behalf of the Defendant

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THE VIDEOGRAPHER: This is the videotaped deposition of Lloyd McClendon taken in the matter of Grant Street Group, Inc. versus RealAuction.com , LLC. This deposition is being at 200 South Biscayne Boulevard, Miami, Florida. Today's date is June 29, 2011. The time is 9:48 a.m. The court reporter's name is Steve Wasserman with the firm of Worldwide Reporting. The videographer is David Zeber with the firm of Action Video. Would counsel now please introduce themselves. MR. MCELHINNY: Pat McElhinny of K&L Gates on behalf of Grant Street Group. With me is Tom Birsic, Christopher Verdini and George Fames. MR. BRAFMAN: David Brafirlan from Akerman, Senterfitt for defendant RealAuction.com. THEREUPON: LLOYD EARL MCCLENDON, III a witness named in the Notice heretofore filed, having been first duly sworn, deposes and says on his oath as follows: DIRECT EXAMINATION
Page 5

1
2

1 2

INDEX 3 WITNESS DIRECT CROSS 4 LLOYD MCCLENDON 5 (By Mr. MElhinny) 4 6

7

DIBFS 8 9 PLAINTIFFS EXHIBITS FOR IDENTIFICATION 10 1 6 11 2 IS 3 32 4 54 5 58 13 6 62 7 65 14 71 8 76 9 15 l0 79 II 80 16 12 99 13 105 17 14 109 117 15 1.8 16 120 17 120 19 18 122 127 19 20 128 20 21 133 21 22 142 23 148 22 24 153 25 154 23 26 156 163 27 24 28 172 29 176 25 19 30

PAGE

1 BY MR. MCELHINNY: Q. Good morning, Mr. McClendon. Could you 3 state your full name for the record, please. 4 A. My full name is Lloyd Earl 5 McClendon, M. McClendon is M-C-C-L-E-N-D-O-N. 6 Q. Please state your residential and 7 business addresses. 8 A. My residential address is 660 El Dorado 9 Parkway, Plantation, Florida 33317. My business 10 address is 861 Southwest 78th Avenue, Unit 102, 11 Plantation, Florida 33324. 12 Q. Sir, you understand you're here for your 13 deposition today? 14 A. Yes. 15 Q. You understand that you're under oath? 16 A. Yes. 17 Q. And we agree that if you don't hear or 18 understand a question, you'll ask me to restate or 19 rephrase it? 20 A. Yes. 21 Q. Are you represented by counsel today? 22 A. Yes. 23 Q. Is that Mr. Brafman immediately to your 24 left? 25 A. Yes.
2 (Pages 2 to 5)

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Page 14

1 of softwaS re, 2 Q. Such as?

2 2

A.

I developed software used by Bell South

3
4 5 6 7 8 9 10 11 12 13 14 15 16 17
18

sI~~

Page 16

5 6 7 8 9 10 11 12 13 14 15 16 17
18

for accessing 411. I developed software for accessing county data. I developed individual applications for projects that people asked me to develop. I developed software for the company I was working for at the time to process information. Various software projects. Q. Had you ever developed software for people to interact with it in terms of bidding on products or services? A. No. Q. And when you founded RealAuction, did you have to out-source the work to do that kind of or to develop that kind of software? MR BRAFMAN: Objection. Vague and
ambiguous.

19 THE WITNESS: Did I have to? I don't 20 knowifIhadto. 21 BY MR. MCELHINNY:

19 20 21
22
23

22
23

Q. But you did.

A. Yes.

24
25

Q.
A.

Sir, who owns RealAuction.com, LLC?

Ido. Page 15

24
25

Page 17

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
16 17 18 19 20 21 22 23 24

Q. One-hundred percent? A. I don't believe it's 100 percent, but I do. Q. What percentage do you own? A. I'm unfamiliar with the percentage. Q. Is it a 50/50 split with Mr. Thomashaw? A. No, I don't believe Mr. Thomashaw has ownership in RealAuction.com . Q. When you say RealAuction.com, and when we say it during the rest of the deposition, either RealAuction.com or RealAuction, can we agree that we're talking about RealAuction.com , LLC, the defendant in this case? A. No. You'll have to be specific. There are two companies.
Correction. I believe, yes, we can use the term RealAuction.com or RealAuction for RealAuction.com . Q. There's a RealAuction.com , Inc., but that company had a name change, correct? A. That's correct. Q. And if I mean that during the course of the deposition, Pll say Inc. and I would ask you to do the same, okay?

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
16 17 18 19 20 21 22 23 24

A. I don't recall. Q. Who is RA Partners? A. I believe RA Partners was a I believe RA Partners was an initial investment we made. 1 can't recall whether it was just me or a partner at the time or someone investing at the time or it was my business and not me personally. Q. What are the possibilities? A. The possibilities are it was -- the possibilities are it was someone -- I don't recall at the time. Q. Do you know who RA Partners is now, who owns it? A. I don't know who is designated as RA Partners, no.
Q. You reference the possibility of another partner at the time. Is there anyone that could have been besides Mr. Thomashaw? A. Well, originally there was a -- we had set up the company in a separate manner. So I don't know when the change was made or how it was divided at the time. Q. Have you ever had another investor in RealAu ction other than you, Mr. Thomashaw or

25

A.

Yes.

25 entities owned wholly by the one or both of you?

5 (Pages 14 to 17)

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Page 1 .8

Page 20

A. Yes. Q. Who are those investors? A. I believe originally there was -- I believe Eva Rub was an original investor for a very 5 short time. 6 Q. Who is Ms. Rub? 7 A. She was my attorney. 8 Q. How much did she invest? 9 A. I don't recall the amount. 10 Q. Did somebody buy her out or is she still 11 invested? 12 A. I don't recall. She's no longer 13 invested. 14 Q. Do you have any relationship with her 15 other than attorney/client? 16 A. No. 17 Q. Did you ever?
1

1
2 3

2 3 4

4
5 6 7

8 9 10 11
12 13 14 15 16 17

18

A.

No.

19

20 21 22 you? 23 A. 24 Q. 25 A.

Q. Has RealAuction ever had any other investors, other than possibly Ms. Rub, you and Mr. Thomashaw or entities owned wholly by the two of

18 19
20 21 22 23 24 25

Yes.
Who would they be? There was one other that was, I believe
Page 19

A. No. Q. How much did they invest? A. I don't recall. Q. When did they invest? A. Sometime after 2004. Q. Are they still invested? A. I believe they are. Q. Do you have contact with them as somebody that's invested in your company? A. No. Q. Do you communicate with them at all on any subject regarding their investment? A. No. Q. Have they ever sought any return on their investment or money back? A. No. Q. Have you ever provided them with any return on their investment? A. Not that I'm aware of. Q. Can you give me an order of magnitude of their investment? A. No. Q. So you can't tell me whether it's a dollar, ten thousand dollars or five million dollars.
Page 21

1 it's called Hatchet. Q. Hatchet? A. Yes. Q. What's Hatchet? A. As far as I know, it's an investment company. Q. Where is it located? 8 A. I don't know. Somewhere in South 9 America. 10 Q. How did they come to invest in 11 RealAuction? 12 MR. BRAFMAN: We're going to designate 13 this testimony as confidential, attorneys' 14 eyes only under the protective order. 15 BY MR. MCELHINNY: 16 Q. How did Hatchet come to invest in 17 RealAuction? 18 A. I don't recall. 19 Q. Who did you deal with at Hatchet? 20 A. It was an attorney. 21 Q. What is that person's name? 22 A. I don't recall the attorney's name. 23 Q. So can you tell me anything about 24 Hatchet, other than that they were an investor in 25 RealAuction.com somewhere from South America?
2 3 4 5 6 7

1
2 3 4 5 6 7 8

9 10 11
12 13 14 15 16 17

18
19 20 21 22 23 24 25

I cannot. Q. How did they make the investment? Did they deal directly with you? A. No. I think it was attorney to attorney. Q. Hatchet's attorney to your attorney. A. I believe so. Q. Are there documents that reflect their ownership interest? MR. BRAFMAN: Objection. Misstates the prior testimony. Assumes facts not in evidence. BY MR. MCELHINNY: Q. Are there documents that reflect their investment? A. There may be. Q. Do you know the nature of their investment, whether it's ownership or some other form? A. No. I'm not familiar with it, no. Q. Did you seek out an investment for any particular reason? A. Yes. Q. Why? A. I don't recall all reasons why, but I
A.

6 (Pages 18 to 21)

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Case 13-28260-RBR Doc 53-4 Filed 08/29/13 Page 6 of 6

Page 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 23 Page 24 Q. So no other investors; is that correct? A. Not that I'm aware of Q. Who would know about the details of the Hatchet's relationship? A. Hatchet. Q. Who at RealAuction? A. Lloyd. Q. Lloyd? A. Me. Q. That's it? A. Yes. Q. And you've told us everything you know about it. A. I've answered all of your questions. Q. I want to know everything that you know about the relationship with Hatchet. A. Okay. Ask me questions. I will answer them. Q. I just did. MR BRAFMAN: Objection. Vague and ambiguous. Calls for a narrative. BY MR MCELHINNY: Q. Tell me about Hatchet's investment -when was it made? How much was it? Who else you dealt with? How you communicate with them? Page 25

[-]

7 (Pages 22 to 25)

Case 13-28260-RBR

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~
~ ~ ~ ~

Case 13-28260-RBR

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IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA GRANT STREET GROUP, INC. a Pennsylvania corporation, Plaintiff,
V.

Civil Action No. 09-1407 Judge Mark R. Hornak

REALAUCTION.COM, LLC, a Florida limited liability company, Defendant.

JULY 24, 2013 DECLARATION OF MARC D. THOMASHAW Mark D. Thomashaw hereby makes the following Declaration in accordance with the provisions of 28 U.S.C. 1746: 1. I am the Chief Financial Officer of Defendant Realauction.com , LLC

("Realauction"). In this role I have personal knowledge of the facts set forth in this Declaration. 2. Attached as Exhibit 1 is a true and correct copy of Realauction's most recent

checking account statement, for the period from June 1, 2013 through June 30, 2013. 3. Attached as Exhibit 2 is a true and correct copy of Realauction's most recent

savings account statement, for the period from June 1, 2013 through June 30, 2013. 4. Attached as Exhibit 3 is a true and correct copy of Realauction's Balance Sheet

for the period from January 1, 2013 through July 21, 2013. 5. Attached as Exhibit 4 is a true and correct copy of Realauction's Profit and Loss

statement for the period from January 1, 2013 through July 21, 2013. 6. Realauction's checking account statement shows an ending balance of $94,678.62

for the period ending June 30, 2013. Ex. 1.

{26792628;1)

Case 13-28260-RBR

AM, I ii ~ '1111

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7.

The savings account statement shows an ending balance of $1,113,526.23. Ex. 2.

As of July 21, 2013, the balance was $1,612,294.57 in this account. Ex. 3 at 1. 8. Realauction maintains two other bank accounts that, as of July 21, 2013, had a

balance of $1.00 and $4,000 respectively. Ex. 3 at 1. Those bank accounts are used in connection with Realauction's operations, such as temporarily holding money received for one of its customers. They are not used to hold Realauction's earned income. 9. Other than the bank accounts described above, Realauction has no other accounts

or liquid assets. 10. Realauction has no available lines of credit. Realauction's previous attempts to

obtain a loan were denied. My understanding is that the reasons for the denial were that Realauction has no significant assets with which to secure the loan and that Realauction has a large loan still outstanding to Adila Enterprises (Ex. 3 at 1). As these facts have not changed there is no reason to believe that a bank would agree to extend a credit line to Realauction to pay for a bond. I declare under penalty of perjury pursuant to 28 U.S.C. 1746 that the foregoing is true and correct. Executed on: July 24, 2013
All,

Marc Thomashaw

(26792628;1)

Case 13-28260-RBR

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1* 4

TIN , w 4a

il l
b

nk

Case 13-28260-RBR

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Case, '2 uQ rf-01407-MRH Document 691-1 Filed 07/31/13 Page 2 of 8

H
Bank of America. N.A. Page I of 7
Statement Period 06/01/13 through 06;30-'13

P.O. Bois 25118

Tampa. FL 33622-5118

EO P PA OA 62
Enclosures 0

02[6710

Account Number

Bus PlatinumPrivileges
(

nlln1lln1llu1l.11lnlnlln1l1lln1lnllud,lln1ln1lll
01075 001 SCM999

REAL AUCTION.COM , LLC 861 SW 78TH AVE STE 102 PLANTATION, FL 33324-3273

Our Online Banking scr ice allons you to check balances, track account activity and more With Online Banking you can also view up to IN months of this statement online. Enroll at wtcw.bankofamcrica.convsmallbusiness.
~

Deposit Accounts
Bus Platinum Privileges Relationship Business Advantage Checking
REAL AUCTION.COM . LLC
Your Account at a Glance

Account Number _ 06/01/13 through 06/30/13 Statement Period Number of Deposits/Credits 61 Number of Withdrawals/Debits 114 Number of Deposited [terns 46
Number of Days in Cycle 30

Statement Beginning Balance Amount of Deposits/Credits Amount of Withdrawals/Debits Statement Ending Balance
Average Ledger Balance

5173.756.32 $1,662,177.62 51.741.255.32 $94,678.62

$219,775.65

Case 13-28260-RBR

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Case 2:09-cv-01407-MRH Document 691-1 Filed 07/31/13 Page 3 of 8

1061
Page 2 of 7 Statement Period 06/01/13 through 06/30/13 EO P PA OA 62 Enclosures 0 Account Number

REAL AUCTION.COM . LLC

Deposits and Credits Date Posted 06/03 06/03 06/03 06/06 06/07 06/07 06/10 06/10 06/10 06/12 Bank Reference 813103642504166 813103642504170 813103642504168 813105142765522 813103242737215 813103242609810 813104442337191 813104442337187 813104442337185 903706120135891

Amount (S) Description 1,323.00 Deposit 588.00 Deposit 49.00 Deposit 50,000.00 Deposit 64,980.00 Deposit 14,063.00 Deposit 34,986,00 Deposit 1,470.00 Deposit 119.35 Deposit 109,846.86 Wire Type:Wire IN Date: 130612 Time:1034 Et Trn:2013061200135891 Seq:1306120055041000643 Orig:Realauction Corn Lie 11):000182380441473 Snd Bk:J.S. Bank, N.A. ID:075000022 Plnt Det:Bid Ch K Refunds Realauetion.Com Llc 861 SW 78 Ave 4102 P 105,060.00 Deposit 23,520.00 Deposit 21,560.00 Lee County Clerk Des:Achvendors ID:00440676 Co ID:1596000703 Ctx Indn:Realauction Coin Additional Information Is Available For This Pint. Contact A Treasury Sales Officer For Assistance. 5,635.00 Deposit 1,600.00 Deposit 660.00 Deposit I.D:Real Auction 77.650.00 Barbara Ford Des:Payables Co ID:1596000854 Ccd lndn:Real Auction 41,990.00 Man Co Tax Coll Des:A/P EFT ID:01-015138 lndn:Realauction.Com Llc Co ID:5596000733 Ccd 29,400.00 Deposit 10,070.00 Deposit 2,646.00 Deposit 676.00 Realauction.Com , Des:Quickbooks ID:Xxxxxxxxx Co ID:1722616653 Ppd Indn:Gonzalez, Alain 40.00 Deposit 141.498.00 Duval Co Tax Col Des:Web Fee ID:Realauction.Com lndn:Realauction.Com Lic Co ID:3596000344 Ccd 60,540.00 Deposit 50,561.00 Deposit 23,912.00 Deposit 19,800.00 Deposit 14,259.00 Deposit 10,339.00 Deposit 9,251.00 Deposit 6,174.00 Fine and Forfeit Des:Escambiaco I1?:2592 Co TD:2592237754 Ccd lndn:Realauction 5,341.00 Deposit 300.00 Deposit ID:39578-3827 1.42 Levy County Tax Des:Epay Co 11):5330903620 Ppd Indn:Realauctioncom Llc 232,659.00 Lee County Tax C Des:Payinentjnl ID:A0000306 indn:0000Realauction.Com Co ID:9596000707 Ctx 12,152.00 Deposit 11,711.00 Deposit 2,107.00 Deposit 28.23 Deposit

06/13 06/13 06/13

81 3104242332726 813104242170735 902364005151923

06/13 06/13 06/13 06/14 0611.4 06/14 06/14 06/14 06/14 06/14 06/17 06/17 06/17 06/17 06/17 06/17 06/17 06/17 06/17 06/17 06/17 06/17 06/18 06/18 06/18 06/18 06/18

813104242170733 813104242170737 813104242170731 902364007001664 902365011103950 813105142499732 813103242059501 813103242059503 902364003083648 813105042863887 902365011783629 813105242968227 813105242968229 813105242968215 813105242968219 813105242968221 813105242968223 813105242968213 902368007178262 813105242968217 813105242968211 902368003153179 902365010727813 813105542212145 813105542212147 813105542212149 813105542212151

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Case 2:09-cv-01407-MRH Document 691-1 Filed 07/31/13 Page 4 of 8

1:1
Page 3 of 7 Statement Period 06/01/13 through 06/30/13 E0 P PA (IA 62 Enclosures 0 Account Number

REAL AUCTION_CON1. LLC

02167/ 2

Deposits and Credits - Continued Date Posted 06/20 06/20 06/20 06/20 06/20 06/20 06/21 06/21 06/21 06/24 06/24 06/24 06/24 06/27 06/28 06/28 06/28 06/28 06/28 06/28 06/28 Amount ($) Description 64,380.00 Deposit 43,267.00 Deposit 27,400.00 Deposit 17,000.00 Deposit 500.00 Deposit ID:27-90006 1.55 City Of Linden Des:Epay Indn:Realauction.Com Lie Co ID:5330903620 Ppd 45,800,00 Rhonda Skipper W Des:Invoice Pa ID:999957 Co ID:9596002568 Ced Indn:Realauction 41,060.00 Deposit 1D:13-90006 1.09 City Of Trenton Des:Epay Co ID:5330903620 Ppd lndn:Realauction.Com Lic 126,552.00 Deposit 13,622.00 Deposit 11.550.00 Deposit 4.851.00 Deposit 15,617.00 Deposit 34,678.00 Deposit 9,849.00 Deposit 6,566.00 Citrus County Cl Des:Vendor Pint ID:306550 Co 1D:1596000547 Ppd Indn:Realauction.Com LIe 676.00 Realauction.Com , Des:Quickbooks ID:Xxxxxxxxx Co ID:1722616653 Ppd lndn:Gonzalez, Alain 140.00 Deposit 100.00 Deposit ID:67-90006 1.12 Township Of Toms Des:Epay Co ID:5330903620 Ppd Indn:Realauction.Com LIc bank Reference 813104042454375 813104042454371 813104042454373 813104042079915 813104042079917 902371008569147 902371012615215 813104742212410 902372003764192 813105042619067 813103242613790 813103242613788 813103242613792 813105542048777 813104442153716 813104442153714 902378009282447 902378005104310 813104442153712 813104042023352 902379010219498

Case 13-28260-RBR

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Page 8 of 27 BE m s~

Pic REAL. AtJCTtON.COM . LLC

I' E

f 7 i'od
\

A 0

ctir:

Withdrawals and Debits Checks Check 6891 (899' 6901* 6902 6904*
6905 6906

Date 80 00 .100.00 1,490.00 100.00 17,000.00 17.000,00

.

Bank 813104l .29548 t. 83105182 11502 1 $13106292165773 813105382150304 813103642027225 813103642027226

813101092918853

Check umber 6910

6941 6912 6943

nount$

Date Bank Post ed Reference

06:20

06105 06/03
06/03

545.02

06/07 06/03
06/03 06/03

456,30 266.17 1,179.00

676.00

00 20
0o:20

813106292319335 8131062923 19336

813106292319334

06 17
,

6944 6945
6946

06/17

248.13
110.00

06/18
06/17

813109792159558 813109992297913 813108992200422

813109992049259

227.92

6907 6908 6909 (0)11 13 6914 6915 6916 6917 6918 6919 6920 6921 6922 6923 6924 6925 6926 6927 6928 6929 6930 6931 6932
6933 6934 6935 6936 6937

1,440.02 1.081,56 11,760.00 3,300.00 684.00 1167,25 6,187.50 560.00 72.00 676.00 3,500.00 645,00 550,00 600.00 605.00 610.00 550.00 550.00 578,83 464.75 507.00 633.75 47320 447.85 388.70
371.80 3.297,30 57445 592.28 595.72

06/05 06/03 06/03 06/06 06/06 06/10 06/10 06/07 06/11 06/10 06/14 06/10 06/10 06/12 06/11 06/10 06/21 06/17 06/13 06/13 06/13 06/13 06/12 06112 06/12
06/12 06/12 06/12 06/11 06/18

813102112153479 813105482011050 813105482011051 813106792$u7719 813100392875086 813106092330704 813104442-160160 813109392611990 813108892632453 813109892477112 813105042240489 813109792418752 813101782723588 8131091,92008431 813103842898652 813109792817757 813106492855087 8131098923 10790 813106592465173 813106592465 172 813106592465175 813106592165174 8131063966447 8113106392686444 813106392686445
813106392686446 813109092436518 813109092436519 813108892243046 813105992457519

6947 6948 6949 6950 6951 6952 6953 6954 6955 6956 6957 6958 6959 6960 6962* 6964* 6965 6966 6967 6969* 6970 6971 6972 6973 6975*
6976 6978* 6979 6980 6986*

7,904.90 128.45 352.57 113,562.00 250.00 1430.40 2.342,20 13,226.51 3,172.82 4,384.15 532.35 718.25 511.22 473.20 300.00 1,310.97 55.81 12.440.45 5,989.49 350,00
50000

06/19 06/21
0/21

06/24 06/28 06/18 06/18 06/21 06/21 06/21 06/26 06/26 06/26 06/26 06/25 06/21
06/25

813109292112838 813100792851837 813109592182201 813100870194945 813109692564253 813103642306677 813103642306679 813109592157410 813102392557154 813109592159623 813105892095627 813105892095626 813107092345734 813107092345733 813105242253212 813100892916870
813106992328338

06/26 06/24 06/24

06/21

813107092857569 813106692368644 813 105382429277

813109592089203

44.00 1 226 00 1.021.20 6,250,00 10,000.00 224,22

, .

06/27 06/27 06/27 06/27 06/25 06/27

06/26 06/27 06/28

813109492313728 813109492313727 813109392058252 813102112389467 813105142888784 813105582549245

813105482519136 813 105582549246 813106192352264

6938 6939

760,50
405,60

06/18 06/18

813105992457520 813105992457521

6989*

97.00 6,560.00 65,00

1,407.78

06/28

813104042563971

Gp in sequent a I Check 1113111 hers

Other Debits Date Posted

06/05 06/10 06/11 06,'11 06/12

Amount (5)
50,000.00 109.90 2.197,90 1.09 109,846,86

Description
Online Banking transfer to Say 1546 Confirniation# 3742764845 1D:1201751433 Intercept Corpor Des:lc Fees Co ID: 1450430894 Ccd Indn:Realauction.Com Manual B Des:14058 M I ID:(469) 675-9920 Forte Indn:ReaI Auction Co 1Dr5330903620 Ccd ID:1-90006 City Of Trenton Des:Epay Indn :Rea!auction.Coin Llc Co 11):533090-3620 Ccd Online Banking transfer to Chk 2061 Confirmation# 4104941059
-

Bank Reference
957106057531181 902358005873103 902362002647076 902362002647020 957106127565151

Case 13-28260-RBR

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Case 2:09-cv-01407-MRH Document 691-1 Filed 07/31/13 Page 6 of 8

Page of 7 Statement Period REAL AUCTION.COM_ LLC

06/01/13 through 06/30/13

E0 P PA OA 62 Enclosures It Account Number

0216714

Withdrawals and Debits - Continued Other Debits Date Bank

Posted
06/13 06/13 06/13 06/14 06/14 06/14 06/17 06/17 06/17 06/17 06/17

Amount (5)
76,590.04 23,757.22 127.87 200,000.00 77,650.00 10,070.00 141,498.00 50,561.00 41,990.00 19,800.00 9,251.00

Description
Intuit Payroll S Des:Quickbooks ID:Xxxxxxxxx Indn:Realauction.Com. Lic Co ID:1722616679 Ccd ID:W7750 American Express Des:ACEI Pint lndn:Marc Thomashaw Co ID:1133133497 Web AT&T Des:Payment ID:Xxxxxxxxxnbi Indn:Real Auction.Com Co ID:9992200580 Web Online Banking transfer to Sav 1546 Confirmation# 0121643183 Online Banking transfer to Sav 1546
Confirmation# 3920619650

Reference
902364001732928 902364005968763 902363008582990 957206147573568 957106147523176 957206147566026 957206177564663 957106177548583 957106177557389 957106177547393 9.57106177547933 902368003153337 957106187588468 957206187512836 957106197542625 957206197573796 957106217563253 902372006530673 957106247587847 957106247551053 957206247533316 957106267515071 902378003600098 957106287572893 946306050414969 946306080081091 946306110255525 946306110614169 946306120227770

Online Banking transfer to Sav 1546 Confirmation# 1723090930 Online Banking transfer to Sav 1546 Confirmation# 0229326035 Online Banking transfer to Sav 1546 Confirmation# 4048394329 Online Banking transfer to Sav 1546
Confirmation# 3929321437

Online Banking transfer to Sav 1546

Confirmation# 2948388424

Online Banking transfer to Sav 1546 Confirmation# 4048391038 06/17 1.12 Township Of Toms Des:Epay ID:1-90006 Co ID:5330903620 Ccd Indn:Realauction.Com Lic 60,540.00 Online Banking transfer to Sav 1546 06/18 Confirmation# 2754983730 Online Banking transfer to Sav 1546 06/18 32,659.00 Confirmation# 1455170802 06/19 64.380.00 Online Banking transfer to Sav 1546 Confirmation# 4066546363 27,400.00 Online Banking transfer to Sav 1546 06/19 Confirmation# 1466543137 45,800.00 Online Banking transfer to Sav 1546 06/21 Confirmation# 4281225589 ID:W5500 6.086.59 American Express Des:ACI3 Pmt 06/21 Co ID:1133133497 Web lndn:Mare Thomashaw 126,552.00 Online Banking transfer to Sav 1546 06/24 Confirmation# 4210091441 Online Banking transfer to Sav 1546 41,060.00 06/24 Confirmation# 4289752202 11,550.00 Online Banking transfer to Sav 1546 06/24 Confirmation# 1410088794 15,617.00 Online Banking transfer to Sav 1546 06/26 Confirmation# 4028300061 178,491.06 Intuit Payroll S Des:Quickbooks ID:Xxxxxxxxx 06/27 Indn:Realauction.Com. Llc Co ID:1722616679 Ccd 34,678.00 Online Banking transfer to Sav 1546 06/28 Confirmation# 2744056634 Card Account # 4635 7600 0730 3542: 06/05 Publix Super M 06/05 #000414969 Purchase 29.53 311.00 Sam's Club 06/08 #000081091 Purchase 06/10 06/11 27.69 Wal-Mart Super 06/11 #000255525 Purchase 06/11 11.04 Publix Super M 06/11 #000614169 Purchase 15.87 06/12 Publix Super M 06/12 #000227770 Purchase

Case 13-28260-RBR

Doc 67-4

Filed 09/11/13

Page 10 of 27

Case 2:09-cv-01407-MRH Document 691-1 Filed 07/31/13 Page 7 of 8

H
Page 6 of 7 Statement Period 06/01113 through 06/30/13 EO P PA OA 62 Enclosures 0 Account Number

REAL AUCTION.COM_ LLC

..........

Withdrawals and Debits - Continued Other Debits Date Bank

Posted

Amount ($)

Description

Reference

395.13 Subtotal Card Account # 4635 7600 0841 1443: 203.00 CT Traveler Cc 06/02 #000374064 Withdrwl 06/03 CT Travelea Cc 06/02 #000374064 Withdrwl 2.00 06/03 Total Wine And 06/25 #000524384 Purchase 250.00 06/25 455.00 Subtotal Daily Ledger Balances Date 06/01 06/03 06/05 06/06 06/07 06/10 06/11 Balance ($) 173,756.32 126,851.84 75,302.29 121,118.29 199.501.29 225,819.99 222,312.99 Date 06/12 06/13 06/14 06,/17 06/18 06/19 06/20 Balance (5) 216,143.82 271,519.36 142,771.36 219,131.66 377,807.34 278,122.44 429,403.50 Date 06/21 06/24 06/25 06/26 06/27 06/28

946306020374064 946306020374064 946306250524384

Balance ($) 440,752.53 298,264.04 287,658.23 257,268.76 79,069,28 94,678.62

Case 13-28260-RBR

Doc 67-4

Filed 09/11/13

Page 11 of 27

i:i Page ro,r

m/w^

FIRST, start with your Account Register/Checkbook: / List your Acco u nt Rog ister/C h eck bo ok Balance hore __ -- _ _ -- _ _ ' ' - $_________'

2. Subtract an y serv i ce char sw* othe r deduct i ons not prev i ousl y recorded that are listed w this statement ~ ............................................. u___________________ . Add any credits not prev i ously recorde that are listed vo this *mpmmv (for exuo * /'*^~ at) '____-____- _- ~ ' $_________' 4. This is your NEW ACCOUNT RFGISTER BA[,,AN(F ---_ -_-_'_ _-_-_' _ _ ~ $_________

NOW, with your Account

Statement:

1. List your Statemen t Endin g Balance here __________________$ 2. Add any deposits not shown oil this statement $

SUBTOTAL 3. List and total 111 outstanding checks,ATM, C h eck Card and other electro n ic wit h drawals Checks, AIM, Check Card, Electronic Withdrawals Date/Check # Amount Checks, ATM, Check Card, Electronic Withdrawals Date/Check # Aittouctt Checks. Al M, Check Card, Electronic Withdrawals Date/Check w Ailiouni

4. TOTAL OF CUT STANDING CLIECKS,A TM, Check Card and other electronic withdrawals .__._______-'-___. $ x Subtract total outstanding checks, ATM, Check Card and other electronic withdrawals front Subtotal This Balance shotrld match y our - =________=______

Upon receipt of your 5tritement, differences,if a n y, should be reported to ill(- bank promptly in writinL j m u ll in accordance with provisions in yo u r de p osit agreement. IMPORTANT INFORMATION FOR BANK DEPOSIT ACCOUNTS Change of Addres s , Please call us at the telephone number listed Oil the front 01 this statement to tell us about a change ol addre s s. Deposit Agreement. When you opened your account, you received a deposit agreeirleilt antI lee schecicile mcI agreed tlrat your account would be go veri ieouy the teriris of these documents, as we ma y amend [bent trots tune *time These wuu,m,* a r e /p,'m,/ecv^^nc,for yourou ^,^`mxw ;'ind govern all transactions relating to your ;Iccotint, including all deposits and withdrawals, Copie s of both the depos i t agreement and toe schedjjle ~ which contain tile current vers i on of the ternis and conditio n s of Your acCOLInt relationship, ma y no obtained at our bankin g centers. Electronic Trmomo In of errors or questionsabout your electronic transfers If you think yo u r statement or receipt I ,,, w r ong or if You aeOd More information about an electronic, fransf(w (e. q _ ATM transactions, direct deposits or withdrawals, point of sale transactions) on the Statement or recelpt, tele p hone or write, LIS at the 'i d dress in(' nuraher listed oil tile front of fill ,., statement as soon as you can. We frost hear from you no later than 60 cla ys after we sent you wFIRST Statement oil which the error or problem appeared, Tell ^^uapm*'"mvmv . Describe the error or the tran5fer you are UJIFLIre about, and explain as clearl y as you car) why you believe there /,00 error or why you need more l, fatuity or ho u sehold purposes, we will investigate your couiptsirit arid will correct any error prourptly. If we take more tItan TO business days (10 calender days if you are a Massachusetts customer) (20 business days it you are a new customer, br electronic transfers occurring during the first 30 days alter tite fii'st deposit is ntade to your account) to do this, we will recredit your account for tIle nttltontnt you tIe nk is in error so that you will have use of the ii ioney dun ng lIre tin ie it takes us to complete our investigation. For ot h er accounts, we investigate, and if we find we have made air error, we credit Your account at the conclusion of our Investi gation.
Reporting Other Problems. You must exantine your statement carefull y and promptl y . You are in the best positio n to discover errors and unautinori z ed tramtsactmom; on your account. If you fail to notify us mr writing of suspected problems or unauthorized ti'anrnactions within tIre t u lle periods specified Cr the deposit a greement (which peri o ds are no more than 60 days after we make the statement available to you and mt some cases are 30 days or less), we are lot liable to you for, and YOU not to ninke a cllim against us for the problems, or unauthorized trno*"`m,u.

^ Tell its tIre dollar amount Of the suspected erro r. For consumer accountS used

Direct

If you have

have di

deposits

t at least once every 60 da v . froin the same pe r sonor company, you

may call us at tIre telephone riumljer listed on the front of this statement to find outt if tire deposit was unarm": s. si

Case 13-28260-RBR

Doc 67-4

Filed 09/11/13

Page 12 of 27

1 13

Bank

Case 13-28260-RBR Doc 67-4 Filed 09/11/13 Page 13 of 27 Case :/ u03 -cvCl- 4-07-MRH Document 691-2 Filed 07/31/13 Page 2 of

I;'
Bank of America, N.A. P.O. Box 25118 Tampa. FL 33622-5118 Page I of 3 Statement Period 06/01/13 through 06/30/13 EO P PA (IA 23 Enclosures 0 Account Number C

0663846

,t

Bus Platinum Privileges

I UIliitlliiilltt1l Ilillllitll,ttllllittl Ulliiilillii,littlll

01075 001 SCM999

REAL AUCTION.COM LLC MARC THOMASHAW CFO LLOYD MC CLANDON CEO 861 SW 78TH AVE STE 102 PLANTATION, FL 33324-3273

Our Online Banking service allows you to check balances, track account activity and more Enrollat www.bankolamcrica.com .

.. _.

.. , ...

Depbsit Accounts : '

''

Select Bus int Max - FL Bus Platinum Privileges Relationship Business Interest Maximizer
REAL AUCTION.COM LLC MARC THOMASIIAW CFO LLOYD MC CLANDON CEO
Your Account at a (,lance

Account Number 06/01/13 through 06130/13 Statement Period 20 Number of Deposits/Credits 0 Number of Withdrawals/Debits Number of Days in Cycle 30

Statement Beginning Balance Amount of Deposits/Credits Amount of Withdrawals/Debits Statement Ending Balance Average Collected Balance Average Ledger Balance

$52.425.79 $1,061,100.44 $0.00 $1.113,526.23 $521,821.93 $521.821.93

Interest Information Amount of Interest Paid Annual Percentage Yield Earned This Statement Period $44.44 0.10% Interest Paid Year-to-Date Withholding Year-to-Date $135.93 $0.00

Case 13-28260-RBR Doc 67-4 Filed 09/11/13 Page 14 of 27 Case 2:09-cv-01407-MRH Document 691-2 Filed 07/31/13 Page 3 of 4

H
Page 2 of 3 Statement Period 06/01/13 through 06/30/13 Eo P PA OA 23 Enclosures 0 Account Number

REAL AUCTION.COM LLC MARL THOMASHAW CFO LLOYD MC CLANDON CEO

Deposits and Credits

Date Bank

Posted
06/05 06/14 06/14 06/14 06/17 06/17 06/17 06/17 06/17 06/18 06/18 06/19 06/19 06/21 06/24 06/24 06/24 06/26 06/28 06/28

Amount$) Description
50,000.00 Online Banking transfer from Confirmation# 3742764845 200,000.00 Online Banking transfer from Confirmation# 0121643183 77,650.00 Online Banking transfer from Confirmation# 3920619650 10,070.00 Online Banking transfer from Confirmation# 1723090930 141,498.00 Online Banking transfer from Confirmation# 0229326035 50,561,00 Online Banking transfer from Confirmation# 4048394329 41,990.00 Online Banking transfer from Confirmation# 3929321437 19,800.00 Online Banking transfer from Confirmation# 2948388424 9,251.00 Online Banking transfer from Confirmation# 4048391038 60,540.00 Online Banking transfer from Confirmation# 2754983730 32,659.00 Online Banking transfer from Confirmation# 1455170802 64,380.00 Online Banking transfer from Confirmation# 4066546363 27,400.00 Online Banking transfer from Confirmation# 1466543137 45,800.00 Online Banking transfer from Confirmation# 4281225589 126,552.00 Online Banking transfer from Confirmation# 4210091441 41,060.00 Online Banking transfer from Confirmation# 4289752202 11,550.00 Online Banking transfer from Confirmation# 1410088794 15,617.00 Online Banking transfer from Confirmation# 4028300061 34,678.00 Online Banking transfer from Confirmation# 2744056634 44.44 Interest Earned Chk 1865 Chk 1865 Chk 1865 Chk 1865 Chk 1865 Chk 1865 Chk 1865 Chk 1865 Chk 1865 Chk 1865 Chk 1865 Chk 1865 Chk 1865 Chk 1865 Chk 1865 Chk 1865 Chk 1865 Chk 1865 Chk 1865

Reference
957106057531182 957206147573569 957106147523177 957206147566027 957206177564664 957106177548584 957106177557390 957106177547394 957106177547934 957106187588469 957206187512837 957106197542626 957206197573797 957106217563254 957106247587848 957106247551054 957206247533317 957106267515072 957106287572894

Daily Ledger Balances Date 06/01 06/05 06/1.4 06/17 Balance (S) 52,425.79 102,425.79 390,145.79 653,245.79 Date 06"18 06/19 06/21 06/24 Balance ($) 746.444.79 838,224.79 884,024.79 1,063,186.79 Date 06/26 06/28 Balance ($) 1,078,803.79 1,113,526.23

Case 13-28260-RBR

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Page 15 of 27

Page 3 o1

/*'xm

FIRST, start with your Account Register/Checkbook: ` List yo u r xcmw^Reqismxcortcmmv Balance here _-- _ _ _
~~

- '_ _ _

_ _ _'

_ $

2. Subtract an y serv i ce chai gesmmoer dedwxmmowvrevmmrmww^ that are liste m this stateme n t ................................................ $ 3. Add any cradrt! ~ not provio risly recorclod that are listed oil this Statement (for examp l e interest)____________-' $ ^ m/`/,y^*wmvAocuuxxncoSxmuxmwcc _ _ -__-_----_
~

_-_-

List your Statement Endin g Balance here 2. Add an y deposits not shown on this statement __

$ $

SUBTOTAL
List and total all outstanding checks, ATM, Check Card and other electronic withdrawals

Checks, ATM, Check Card, Electronic Withdrawals Date/Check # Anlount

Checks, ATM, Check Card, Electronic Withdrawals Date/Check # Anlouril

Checks, ATM, Check Card, Electronic Withdrawals

Date/Check # Amount

$ __________________ Upon receipt of your Statement , differences, if my should bo reported to Ili( ,. bank promptly Ili writin g and in accor d ance with provisions Ili your depo s it

4. TOTAL OF OUTSTANDING CHECKS ATM , Check Card arid other electronic withdrawals 5. Subtract total outstand This Balance should match yo u r new Account Re g ister Balance

$ _________

Change of Address, Please call us at the telephone number listed on the front of thms statement to tell us about a change of address. Deposit Agreement. When you opened your account, you received a deposit agreement antI lee schedule and agreed that your account would be goverited by tlte tennis of these docunieets, as we i -nay amend Ibm a froi - ri tirue to time. These docunreuts are part of the coi tract for your deposit account antI govern all transactions relating to your account, includiirg all deposits tied withdrawals, Copies of both the deposit agreement arid fee schedule, which coetaiii the current version oh the tern is and conditions of your account relationship, tray he obtained at our banking centers. Electronic Transfers; In case of errors or questions about your electronic transfers If you think your st;n:m:mirent or receipt is wrong or if yoti need more information about an electronic transfer (e.g., ATM transactions, direct deposits or withdrawals, polar tm sale transactions) oit the statement or receipt, telephone or write us at the address and number listed cii tIre trout of thiS siaternmeet

Tell us your nauie mm account number. Describe the error or the transfer you are unsure about. and explain as clearl y as yoti can why you believe there is all error or why you need more information Tel tic the dollar of the suspected error For consunmmur accounts rised prirriarily for personal, fanmrily or household purposes, we will investigate your cornplammtt arid will correct any error pronrptly. If we take more tItan 10 business days (10 calender days if yoti are a Massachusetls custonter) (20 business days if you are a new custonter, for electronic transfers occurring during the first 30 days after tIne first deposit is ittade to your account) to do this, we will recredit your account for the amount, you tlninik is in error, so that you will Irave rise of the money during ttre time it takes us to complete our investigation. For othei accou n ts, We investigate, arid if we find we have made air error, we credit your account at tIre conclusion of our investi gation. Reporting Other Problems. You must exa.`^ne your statement carefully d promptly. You are in the best position to discover errors and unauthorized transactions un your oo^on,.xnw fail w"ouly",m writin g m suspected problems or unauthorized transactions within the time petiods specified ill ,woep"mt agreement (wwxm periodsti-re o^^m,om0000 da y s rifler pmmako the *wmm"' available w you aoo'o 'mitre cases are ao da y s or/oss),ne are not liable m you for, and you agre e trot m make u claim against u* for me problems o,u^"umor/aatransactions. Direct Depos i ts, If you have arran ged to have direct d sits made to your accounrt at leasl once ever y 60 days from front the the settle pers-on or compan y , you
inlay call us at tile telphoee nuanber listed on tire front of rh is statement tO lard our ii tire du-iposit was trade as sn:hedu hind

Case 13-28260-RBR

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Filed 09/11/13

Page 16 of 27

I OkJTK14

Case 13-28260-RBR

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Filed 09/11/13

Page 17 of 27
Page 2 of 3

Case 2:09-cv-01407-MRH Document 691-3 Filed 07/31/13

2:04 PM
07/24113

Realauction.com , LLC

Balance Sheet
As of July 21, 2013
Jul 21, 13 ASSETS Current Assets Checking/Savings BOA Fiduciary Checking BOA Regular Checking BOA Regular Savings USBank Regular Checking Total Checking/Savings Total Current Assets Fixed Assets Accumulated Depreciation Computer Equipment Furniture & Equipment Leasehold Improvements Office & Computer Equipment Office Furniture Phone System Equipment Total Fixed Assets Other Assets Accumulated Amortization Website Construction-Asset Total Other Assets TOTAL ASSETS LIABILITIES & EQUITY Liabilities Current Liabilities Other Current Liabilities Payroll Liabilities Total Other Current Liabilities Total Current Liabilities Long Term Liabilities Accrued Interest Long Term Liabilities Loans -Adila Enterprises, SA. Loans -Kelley Phillips Total Long Term Liabilities Total Long Term Liabilities

Accrual Basis

100 237,059.33 1,612,294.57 4,816.27 1,854,171.17 1,854,171.17 -412,966.00 295,213.84 33,525.67 43,977.14 48,388.76 17,319.75 28,184.55 53,643.71 -2,078,470.00 2,129,516.91 51,046.91 1,958,861.79

4,263.46 4,263.46 4,263.46 150,043.48 2,577,311.11 -300.00 2,577,011.11 2,727,054.59

Page 1

Filed 09/11/13 Page 18 of 27 Case 2:09-cv-01407-MRH Document 691-3 Filed 07/31/13 Page 3 of 3
2:04 PM 07/24/13 Accrual Basis

Case 13-28260-RBR

Doc 67-4

Realauction.com , LLC

Balance Sheet
As of July 21, 2013
Jul 21, 13 Total Liabilities Equity Capital Stock Capital Stock-Adila Enterprises Capital Stock-LLC partners Capital Stock-Lloyd Total Capital Stock Retained Earnings Net Income Total Equity TOTAL LIABILITIES & EQUITY 2,731318.05

210,000.00 1,000.00 90,012.50 301,012.50 -2,613,763.02 1,540,294.26 -772,456.26 1,958,861.79

Page 2

Case 13-28260-RBR

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Page 19 of 27

I aW4
T,

S o

l 113 lie

Case 13-28260-RBR

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Filed 09/11/13

Page 20 of 27

Case 2:09-cv-01407-MRH Document 691-4 Filed 07/31/13 Page 2 of 9

2:05 PM
07124113

Realauctioncom, LLC

Profit & Loss

January 1 through July 21, 2013
Jan 1- Jul 2l,13 Ordinary Income/Expense Income Reimbursed Bidder Auct Deposits Sales Sales - RA Sales-Foreclosures & Tax Deeds Sales-Tax Deed Applications-TDA Sales-Tax Lien Certificates Sales-Tax Lien Certificates Az Sales-Tax Lien Certificates Co Sales-Tax Lien Certificates Fla Sales-Tax Lien Certificates Md Sales-Tax Lien Certificates Ne Sales-Tax Lien Certificates NJ Sales-Tax Lien Certs Cty Held Total Sales-Tax Lien Certificates Total Sales - RA Total Sales Sales-Services-Income Sales-Services-DTR Services-Other Total Sales-Services-Income Total Income Expense Advertising and Marketing BusinessWire Trade Show supplies Trade Shows Total Advertising and Marketing Automobile Expense Automobile Expense Automobile Expense-BlacklsleLLC Automobile Expense-Daphne Automobile Expense-Doug Automobile Expense-Jan Automobile Expense-John Automobile Expense-Lloyd Automobile Expense-Marc Automobile Expense-Maria S Automobile Expense-other Automobile Expense-trial

Accrual Basis

0.00

2895900.00 10,905.00 71,942.00 12,645.00 1,515,814.34 4,271.00 45,000.00 1000.00 53,708,82 1 704 381.16
, ,

4,611,186.16 4,611,186.16 68,425.00 27,500.00 95,925.00 4,707,111.16

920.00 8,063.51 14,289.86 23,27337

7,089.54 518.14 1907 1,176.32 29975 8,326.96 8,399.83 1,874.62 3,850.00 8475

Case 13-28260-RBR

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Filed 09/11/13

Page 21 of 27

Case 2:09-cv-01407-MRH Document 691-4 Filed 07/31/13 Page 3 of 9

2:05 PM 07/24/13 Accrual Basis

Realauctioncom, LLC

Profit & Loss

January 1 through July 21, 2013
Jan 1 - Jul 21, 13 Total Automobile Expense Total Automobile Expense Bank Service Charges Bank Service Charges-ACH Bank Service Charges-Other Total Bank Service Charges Computer Center Cloud Infrastructure Amazon Comp Equip NAP Offsite Storage Total Computer Center Contractor Labor Alice Anne Pareti Amanda Pitts Andrea Moreno Debra Crawford Jim Aguilar Jorge Lopez-Sandin Katalyn Stark Leslie Baca Rebecca Gil Rolando Rodriguez Samantha Samuels Thomas Grant Total Contractor Labor Contributions Charity Total Contributions Domain Names Domain Name Fees Total Domain Names Dues and Subscriptions Dues and Subscriptions-Other Florida Dept Glance Networks Mail Chimp Netflix Dues and Subscriptions - Other Total Dues and Subscriptions Equipment Page 2 1,161.70 143.75 799.00 960.00 178.85 524.00 3,767.30 2,176.70 2,176.70 1,450.00 1,450.00 800.00 2,660.00 2,445.00 65.00 2,195.00 505.00 1,780.00 500.00 1,935.00 60.00 2,050,00 2,070.00 17,065.00 61,742.80 23,370.76 85,113.56 20,523.22 335.50 20,858.72 31,638.98 31,638.98

Case 13-28260-RBR Doc 67-4 Filed 09/11/13 Page 22 of 27 Case 2:09-cv-01407-MRH Document 691-4 Filed 07/31/13 Page 4 of 9
2:05 PM
07/24/13

Realauction.com , LLC

Profit & Loss

January 1 through July 21, 2013
Jan 1 - Jul 21, 13 Computer Equipment Computer Expense Total Equipment Guaranteed Payments Guaranteed Payments - Lloyd Guaranteed Payments - Marc Total Guaranteed Payments Insurance Cobra Health/Dental Dental Insurance Disability Insurance Health Dental Life Vision Life Insurance Key man Professional Liability Ins Vision Insurance Workers Compensation Total Insurance Interest & Financing Loan Interest-Adila Enter SA Total Interest & Financing Licenses and Permits Office Supplies Office Supplies Office Supplies-Black Isle LLC Office Supplies-Daphne Office Supplies-Doug Office Supplies-Greg Office Supplies-Jerry Aron Office Supplies-John Office Supplies-Judy Office Supplies-Lloyd Office Supplies-Marc Office Supplies-Maria S Office Supplies-Robert Office Supplies-Whit Software Total Office Supplies Total Office Supplies Parking & Tolls Parking & Tolls Parking & Tolls-Black Isle LLC 552,317.11 552,317.11 1,924.60 158,000.00 158,000.00 30,032.59 3,975.98 34,008.57

Accrual Basis

112 -1 411RIM
-21.78 -34.56 5,857.62 36,838.39 2,010.00 14,103.76 -9.00 2,938.96 61,683.39

2.96 85,40 210.21 350.00 412.20 9.31 35.86 317.16 5,050.00 496.84 1,301.12 2,101.33 4,236.23 14,608.62 14,608.62

842.19 Page 3

Case 13-28260-RBR

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Case 2:09-cv-01407-MRH Document 691-4 Filed 07/31/13 Page 5 of 9

2:05 PM
07/24113

Realauction.com , LLC

Profit & Loss

January 1 through July 21, 2013
Jan 1 - Jul 21, 13 Parking & Tolls-Daphne Parking & Tolls-David Parking & Tolls-Doug Parking & Tolls-Jan Parking & Tolls-John Parking & Tolls-Lloyd Parking & Tolls-Maria S Parking & Tolls-trial Total Parking & Tolls Total Parking & Tolls Payroll Expenses BONUS SALARY Wage Garnish Alain Gonzalez Wage Garnish Alvita Garcia Wage Garnish Robert Cruz Payroll Expenses - Other Total Payroll Expenses Postage and Delivery Postage and Delivery Postage and Delivery-Fedex Postage and Delivery-Other Total Postage and Delivery Total Postage and Delivery Printing and Reproduction Printing and Reproduction Total Printing and Reproduction Professional Development Professional Development-Guru Total Professional Development Professional Fees Accounting Consulting Fees Cons Fees-Black Isle, LLC Cons Fees-Court Reporting Cons Fees-David C Parkes Cons Fees-Davis & Hosfleld Cons Fees-FRI Inc. Cons Fees-Geekarati, LLC Cons Fees-Hill Ward Henderson 6,500.00 81,773.20 14,906.37 112,055.00 65,581.31 30,500.00 25,116.00 688.00 Page 4 1,600.20 1,600.20 11,604.98 11604,98 105,940.00 943,830.42 7,345.01 750.00 1,172.01 2,776.98 1,061,814.42 25.55 60.00 100.56 167.60 6.00 313.95 357.95 44.00 1,917.80 1,917.80

Accrual Basis

1,459.16 1114.99 2,574.15 2,574.15

Case 13-28260-RBR

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Case 2:09-cv-01407-MRH Document 691-4 Filed 07/31/13 Page 6 of 9

2:05 PM 07124/13

Realauction.com , LLC Profit & Loss

January 1 through July 21, 2013
Jan 1 - Jul 21, 13 Cons Fees-Jerry E Aron Cons Fees-Savannah Cons RA Cons Fees-Tekgroup Cons Fees-The Vann Group, LLC Cons Fees-TrialGraphix Total Consulting Fees Legal Fees Legal Fees RA Total Legal Fees Lloyd McClendon-dtr Total Professional Fees Public Data Files Recruiting Rent Rent-Plantation office Total Rent Repairs Computer Repairs Equipment Repairs Exterminating Exp Janitorial Exp Lease Car Repairs Total Repairs Taxes Payroll-Fica,W/H,Med Property Tangible Taxes Unemployment Tax Total Taxes Telephone Telephone Telephone-Black Isle internet Telephone-Black Isle LLC cell Telephone-Comcast internet Telephone-Computer network card Telephone-David cell Telephone-David internet Telephone-Doug cell Telephone-Doug internet Telephone-Greg cell Telephone-John cell Telephone-Ken cell 77,290.71 300.00 15,338.11 92,928.82 24.95 269.05 360.00 9,915.00 70.91 10,639.91 1030500 53,520.00 38,968.75 40,385.00 28,760.50 502,559.13 57,953.78 57,953.78 38,225.00 605,237.91 2,915.00 1,702.00 75,642.57 75,642.57

Accrual Basis

486.83 877,89 1,369.82 852.49 600.00 25.00 1,145.36 150.00 325.00 360.00 480.00

Case 13-28260-RBR

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Case 2:09-cv-01407-MRH Document 691-4 Filed 07/31/13 Page 7 of 9

2:05 PM 07/24113 Accrual Basis

Realauction.com , LLC

Profit & Loss

January 1 through July 21, 2013
Jan 1 - Jul 21, 13 Telephone-Lloyd cell Telephone-Lloyd internet Telephone-Marc cell Telephone-Maria S cell Telephone-Office line Telephone-Robert C cell Telephone-Robert C internet Telephone-Whit cell Telephone-Whit efax Telephone-Whit internet Telephone XO Services Total Telephone Total Telephone Travel & Ent Entertainment Entertainment Entertainment-Black Isle LLC Entertainment-Doug Entertainment-Judy Entertainment-Lloyd Entertainment-Marc Entertainment-Maria S. Entertainment-Robert Entertainment-Savannah Cons Total Entertainment Total Entertainment Fuel Fuel Fuel-Black Isle LLC Fuel-Daphne Fuel-Jan Fuel-John Fuel-Lloyd Fuel-Marc Fuel-Maria S Fuel-Steven Fuel-trial Total Fuel Total Fuel Meals Meals Page 6

60000 .$, ,. 566.00 370.00

I

33,889.23 33,889.23

1,064.73 316.61 339.63 1,689.23 1,300,20 194.43 223.30 400.00 5,528.13 5,528.13

3,232.13 266.22 968.35 98.63 1,631.59 305.05 1,211.02 82.12 25.07 7,820.18 raw1*IL;]

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Realauction.com , LLC

Profit & Loss

January 1 through July 21, 2013
Jan 1 Meals-Black Isle LLC Meals-Daphne Meals-David Parkes Meals-Doug Meals-Jan Meals-John Meals-Judy Meals-Lloyd Meals-Marc Meals-Maria S Meals-Robert C Meals-Savanah Cons Meals-Steven Meals-trial Total Meals Total Meals Travel Travel Travel-Black Isle LLC-air Travel-Black Isle LLC-hotel Travel-Daphne-hotel Travel-David Parkes-air Travel-David Parkes-taxi Travel-Jan-hotel Travel-Jerry Aron-air Travel-Jerry Aron-taxi Travel-Lloyd-air Travel-Lloyd-hotel Travel-Lloyd-taxi Travel-Marc-air Travel-Marc-hotel Travel-Marc-taxi Travel-Maria S-air Travel-Maria S-hotel Travel-Maria S-taxi Travel-Savanah Cons-hotel Travel-trial-taxi Travel-Trial Pittsburgh-hotel Travel-Whit-air Total Travel Total Travel Total Travel & Ent 250667 265.65 356.32 179.06 63.29 116.43 612.45 3,745.08 1,717.32 842.45 997.63 234.29 63.56 15.84 11,716,04 11716,04
-

Accrual Basis

Jul 21, 13

4,977.35 8,592.02 289.68 850.50 300.18 1,276.82 670.00 98.00 3,283.90 5,717.33 188.05 1770.40 1,823.53 143.40 686.80 1,945.22 100.00 3,381.10 94.96 30,574,80 321.78 67,085.82 67,085.82 92150,17

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Realauction.com , LLC

Profit & Loss

January 1 through July 21, 2013
Jan 1 -Jul 21, 13 Utilities Utilities Alarm System Gas and Electric Total Utilities Total Utilities Total Expense Net Ordinary Income Other Income/Expense Other Income Interest Income Total Other Income Net Other Income Net Income

Accrual Basis

1,18456 6,937.48 8,122.04 8,122.04 3,168,62512 1538,48604

1,808.22 1808.22 1808.22 1,540,294.26

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IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA Civil Action No. 2:09-cv-01407 Judge Donetta N. Ambrose Special Master Paul A. Beck, Esq.

GRANT STREET GROUP, INC., a Pennsylvania corporation, Plaintiff,

REALAUCT ION . CON, LLC, a Florida limited liability company, Defendant.

-- - - - - - - - - - - - - x
Wachovia Financial Center 200 South Biscayne Boulevard Suite 3900 Miami, Florida 33131 October 18, 2011 10:00 a.m. - 6:00 p.m.

RULE 30(b) (6) VIDEO DEPOSITION OF MARC THOMASHAW, Taken before Michael Jay Kugler Notary Public in and for the State of Florida at Large, pursuant to Notice of Taking Deposition in the above cause. CONFIDENTIAL FOR ATTORNEY EYES ONLY

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-APPEARANCESOn behalf of the Plaintiff K&L GATES, LLP K&L Gates Center 210 Sixth Avenue Pittsburgh, Pennsylvania 15222-2613 412 355-6500 BY: THOMAS E. BIRSIC, ESQ. and CHRISTOPHER M. VERDINI, ESQ. On behalf of the Defendant

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8 AKERMAN SENTERFITT 222 Lakeview Avenue Suite 400 10 West Palm Beach, Florida 33401 561 653-5000 BY: DAVID S. BRAFMAN, ESQ. 11 12 ALSO PRESENT: ACTION VIDEO, INC. 13 3475 Sheridan Street Suite 309 14 Hollywood, Florida 33021 15 9549854078 BY: ANTHONY ESTEVEZ, VIDEOGRAPHER 16 17 18 19 20 21 22 23 24 25 9

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THE VIDEOGRAPHER: We are now on the video record. Today's date is October 18, 2011. The time is 10:07 a.m. This is the video deposition of Marc Thomashaw, taken in the matter of Grant Street Group, Incorporated versus RealAuction.Com, LLC. Case number 2 point 09 dash CV dash 01407. We're located at 200 South Biscayne Boulevard, Miami, Florida. The Court Reporter is Michael Jay Kugler. The Videographer is Anthony Estevez. Will counsel now introduce themselves, for the record. MR. BIRSIC: Thomas Edward Birsic of the law firm of K & L Gates, representing Grant Street Group. Christopher Verdini on behalf of the Grant Street Group. MR. BRAFMAN: David Brafman for the RealAuction.Com , LLC. THE VIDEOGRAPHER: Will the Court Page 5 Reporter please swear in the witness. MARC THOMASHAW, was called as a witness by the Plaintiff, and after having been first duly sworn, was examined and testified as follows: DIRECT EXAMINATION BY MR. BIRSIC: Q Good morning, Mr. Thomashaw? A Good morning. Q My name is Tom Birsic. I'm one of the lawyers representing Grant Street Group in this litigation, and I'm going to be asking you questions today concerning the case. First, could you state, for the record, your full name and your current employer? A Marc David Thomashaw. RealAuction.Com , LLC.

1-N-D-E-X 1 2 WITNESSES DX CX RDX RCX 3 4 FOR THE PLAINTIFF: 5 226 228 5 Marc Thomashaw 6 7 EXHIBITS 8 9 PAGE ID EVID 10 11 FOR THE PLAINTIFF: 12 1 - Notice of Rule 30(b)(6) 29 13 Deposition 2 - Account QuickRepoit 1/1/0634 14 10/17/11 83 3 - Operating Agreement 86 15 4 - Promissory Note 100 5 - F. -Mails 16 6 - 2005 Limited Liability Annual 105 Report 17 7 - 2010 Limited Liability Annual 105 Report 18 8 - Balance Sheets & Profit & Loss 120 Sheets 142 19 9 - Profit & Loss Sheets 157 10 - Printout of Numbers 164 I 1 - General I_edger Sheets 20 170 12 - Fax Dated 3/7/07 21 13 - Balance Sheet & Profit & Loss 175 Sheets 189 22 14 - General Ledger Sheets 198 15 - Balance Sheet 200 23 16 - Bank Of America Statement 205 17 - Florida Department Of State 229 24 18 - List 25

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Q And where did the operating statement you just referred to come from? A From Ecuador. Q And who provided that? A Hatchett, somebody in that organization. Q Now, you previously testified that you requested from Hatchett any documents in their possession that would be needed for today's testimony, is that accurate? A Today, yes. Q Okay. And who at Hatchett did you contact? A I didn't contact anybody. Q Well, how did you make your inquiry of Hatchett? A I got a call on my cell phone from an unknown number. I answered the call. It was difficult to understand, because it seems there's a language barrier. I don't speak Spanish, and that particular person, there might have been other people that were privy to the conversation I was having, but I wanted Page 39 Page 41 1
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to try and get some information on the background of the company, that I didn't have at the last deposition, and the information was supplied to me. Q Okay. So if I understand your testimony, at some point in time you got a call on your cell phone from a number that was unknown to you, correct? A That's correct. Q And there was someone on the other end who you believed to be associated in some fashion or manner with Hatchett? A I would say that's a good assumption. Q Did they say -- was it a woman or a man on the other end? A It was a male. Q And did he identify himself? A His name was Jose or -- that's the best that I was able to get from that particular individual. He said he was with Hatchett Developments, as best as I was able to understand, and I said, "well, I'm looking for some information regarding our lawsuit", because I didn't have certain information on the stocks, and the conversation ended with me obtaining certain information to be helpful with this particular -- in this case litigation, whatever you 11 (Pages 38 to 41)

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guys call it. Q How long did you speak with Jose?

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A I wanted to know, historically, who owned the company and things that I didn't have previous knowledge to, and what happened as the years went on, for any transfer of responsibility. I also needed to ask him if there were any pertinent documents related to the ownership of the company. Any notes that I wasn't aware of, that were promissory notes for the loan with Adila, and that information was given to me or mailed to me. Q Okay. So each of those subjects that you just related, did you specifically ask a person on the other end of this call for those items? A Specifically those items, no. I asked for any items that they might have in their possession that would help with this litigation. Q Okay. So just so I'm clear on what you told the person who called you, is it fair to say that you asked that person, please provide me with any
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Q Anything else did you get as a result of this call? A Physically, that's all that was in the envelope. Q And did you get any information over the phone, any factual information regarding any subject matter? A Yes. Q What factual information did this person on the other end tell you? A Information on ownership. Q Pardon? A Information on ownership. Q What did the person tell you on ownership? A There were three individuals that started this company. One individual dropped off or sold their shares, or something happened to that individual where they disbursed their shares to a second individual, and then that particular individual transferred their ownership stake or equity stake, whatever you want to call it, to Hatchett. Q Okay. So what were the names of these individuals that previously or currently have an interest in Hachett?
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information that you have that could help with this litigation; is that a fair characterization? A I would say yes. Q And -A And there was a language difficulty, so -Q There was a language difficulty. Did the person on the other end ask you what the lawsuit was about? A No. I would assume they must have known. Q Why do you make that assumption? A Because Hatchett owns some of RealAuction, according to the operating statement. Q Well, did you get any materials -- as a result of this phone call, did any materials, or were any materials sent to you? A I mentioned that I already was sent or mailed, it came, actually DHL, two documents, a promissory note, which you folks have, I believe. I believe they have it, and then the operating statement. Q So the promissory note is the promissory note from Adila, that was sent? A Correct. Q And the operating statement, that was sent? A That's correct.

A Currently? THE VIDEOGRAPHER: We need to go off the record. MR. BIRSIC: Okay. Let's take a break. THE VIDEOGRAPHER: The time is 11:06 a.m. We're now coming off the video record. (Whereupon a recess was taken at 11:06 a.m. to 11:17 a.m., after which the following occurred:)
AFTER RECESS.

THE VIDEOGRAPHER: The time is 11:17 a.m. We're now back on the video record. DIRECT EXAMINATION CONTINUED BY MR. BIRSIC: Q Mr. Thomashaw, during the break did you consult any documents, databases, or materials relating to the subject matters for which your designated to testify today? A During which break, this break? Q Yeah, the break we just took? A I talked to my counsel about --

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MR. BRAFMAN: Don't discuss what we talked about. Just answer his question. A So the answer is no. Q Okay. Did you learn any facts related to the subject matters for which you're designated to testify, during the break? A During the break just now? Q Yeah. Did you learn any new facts concerning the subject matter? A Nothing that I didn't already know. Q Okay. Fair enough. Now, before the break you were telling us that as a result of this telephone call that you received from an unknown number, you received a DHL package containing two documents. One was a copy of the promissory note for the Adila loan, and the other was a copy of an operating statement, correct? A That's correct, there were two documents. Q Now, and you also indicated that you had a discussion with the person on the other end of this call, who you believe was named Jose, correct? A That's correct. Q And during that conversation you learned some facts relating to the history of the Hatchett Page 47

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information? A No, but there was a break when I'd ask, and there was a lot of Spanish talking, and then he would tell me in English the answer to my question. Q Okay. So you identified three people? A Correct. Q Eva Grub, is it? A Rub. Q R-U-B? A I'm assuming that that's how the name is spelled, but I can't be sure. I didn't have the document that had the name spelled out. Q And what did this mysterious Jose say to you about Ms. Rub? MR. BRAFMAN: Objection to the characterization. A He didn't say anything about Ms. Rub. I just asked about who began RealAuction, if they had any knowledge of it, and that's the answer I got. Q Why would you be asking Jose about the origins of RealAuction? A Because you wanted as much information as possible, and I didn't know where else to get the information from, so I asked the question. Page 49
Q And you asked the question of Jose, who was on the other end of this call? A Yes. Q Okay. Did you ask anybody else in preparation for this deposition, about the origins of RealAuction? A I asked Lloyd. Q Okay. And anybody else? A No. Q Okay. So let's go back to your conversation with Jose? A Okay. Q All right. And this is the ten minute conversation you had, correct? A I didn't time it, but let's call it ten minutes. Q Okay. And he told you about Eva Rud (sic)? A Rub, Rud. Q And he told you about Yvette? A There was an Yvette Chico, Barosi, whatever that name was. Q Did you take notes during this telephone call? A No. Q Okay. Had you heard that name before, 13 (Pages

1 ownership, correct? 1 2 2 A There wasn't -- I don't know that 3 3 whether it was to be Hatchett ownership. We were 4 talking about RealAuction ownership. 4 5 5 Q Well, you indicated something about 6 someone's telling you that there was someone that had 6 7 7 an interest in Hatchett that 8 8 A There were three individuals. You asked me 9 9 who they were. 10 10 Q And the three individuals, this was 11 11 information that you learned during your telephone 12 12 conversation? 13 13 A That's correct. 14 14 Q And who are the three individuals that were 15 15 being discussed? 16 16 A Well, there was a person named Eva Rub. 17 There was a person named Yvette Chico something or 17 18 other, something of an arduous Spanish name, but 18 19 Barosi or something to that effect, and Lloyd. 19 20 20 Those three individuals were the original 21 21 people involved in RealAuction. 22 22 And this is information that Jose provided Q 23 23 to you on this telephone conversation? 24 24 A Correct. 25 25 Q And did you ask him where he got this

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Yvette? A The name Yvette, yes, I heard that from Lloyd, but I didn't hear the entire name. I had no idea what this person's full name was. Q Okay. And this is the first time you heard the full name? A Oh, yes. Q Okay. And what did you learn about Yvette? A That this particular individual owned a share or partial ownership of RealAuction. Q And what time period did Yvette have an ownership interest in RealAuction? A Yvette? Q Yes. A I would say until Hatchett took over those shares. Q And that's what you learned on your telephone call? A Well, there's an operating statement that I also learned information from, that when I read it, so Q And that information is contained in the operating statement, you believe? A I don't remember which, but I tried to
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the original people involved in RealAuction, and there was some Spanish speaking, and then that's the information I received. Q Okay. What other information did you learn from Jose during this telephone call? A I asked, can they send me whatever documents they have in relationship to the company. Q The company being what? A RealAuction. Q Okay. A I was mostly interested in trying to get information on the loan, because at the end of the last deposition it was open ended as to whether this was a real loan or not, because at that point whoever it was in your position asking me questions, and I don't remember his name, questioned that because there wasn't any documentation. Q What loan are you referring to in your prior comment? A I'm talking about the Adila loan. So you understood that Jose, on the other Q end of this phone call, was providing you with information concerning the Adila loan? A I was trying to get whatever documents were related to RealAuction.
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piece it all together. Q Okay. And what was the nature of Yvette's ownership interest? A That I couldn't tell you. It's just an ownership interest. Q Is she a U.S. citizen, Yvette? MR. BRAFMAN: Objection, lack of foundation. A 1 have no idea. Q What information did you learn about Yvette? A All I got was the names. Q Okay. Do you know where she currently resides? A I have no idea. I didn't ask that question. She's no longer a current shareholder, or owner, or whatever, according to the operating statements, so, um, I just wanted to try to get some historical information, and so that's what I got. Q Okay. And the third person that Jose, on the other end of this telephone call, discussed with you, was Lloyd, right? A We didn't discuss it. We just know that Lloyd has an ownership interest. So I asked who are

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I was hoping to get some information on the Adila loan and any historical data related to ownership. Q Well, did Jose tell you that Hatchett was related to the Adila loan? A I found out that Adila and Hatchett are both owned by the same individual. Q And when did you find that out? A On that phone call. Q And who is that individual? A His name is Torbay. Q And is that what Jose told you? A Yes. Q Okay. And did he provide you with any documentation of that? A No, but I could see that Torbay is listed as a manager on Sun Biz, so that made sense to me. Q Okay. So what else did you learn from Jose during this telephone call? Tell me everything that you learned? A That was it. It was a very quick conversation. They would mail me what he had available, whatever documents that he could find. There was some Spanish speaking, and then 14 (Pages 50 to 53)

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goodbye. Q And how is it that you had got this call? A What do you mean, how did I get it; I answered the phone. Q Okay. And did you expect to receive a call? A No. Q Had you made inquiry of anybody that prompted this call coming to you? A I didn't. Q You didn't? A No. Q Do you know if anybody did, on your behalf? A I don't know what other people do. I can only tell you what I did. Q Well, tell me what you did; did you do anything -A That's it. Q -- that would have caused Mr. Jose, from someplace unknown, to call you? A I didn't, no. Q Do you know of anybody on your behalf who did? A Like I said, I don't. Q So do you have any idea why Mr. Jose called
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A Well, I don't remember the date. Q Well, was it within the last two weeks? A No. It was before then. Q When did the phone call take place? A Sometime in August. Q In August of this year? A Uh huh. Q Okay. Do you know -- can you be more specific? Where were you when you received this phone call? A In my office. Q What time of day was it? A About three p.m., two thirty, something like that. Q Okay. A It was in the afternoon. It was after lunch. Q So they reached you on your cell phone, at your personal number, or was it through your work? A No, it's on my personal cell phone. Q Did you ask him how he got the number? A No, I didn't. Q Were you curious about that? A No, my number's well published. I've had
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A No, not unless there was somebody that 2 wanted to know something about the litigation, but I 3 couldn't -- you're asking me what a third party would 4 think. 5 6 Q No, I'm asking you what your best information is about why you got a mysterious call 7 from somebody at an unknown number named Jose, who 8 started to provide you with information regarding the 9 origins of RealAuction, as you've testified? 10 MR. BRAFMAN: Object, mischaracterizes 11 the testimony. 12 A I think we've covered that. 13 1 got a phone call, I asked the questions. 14 This particular person happened to know, 15 had information related to Hatchett and Adila. 16 1 guess the individual, other than him, 17 maybe didn't speak any English. 18 In the background there was Spanish 19 speaking, and all I can tell you is that's the 20 information that I was able to get. 21 That's the documents they were able to 22 provide. That's the mailing I received, and the 23 documents that I received I gave to my counsel. 24 25 Q And when did you receive the documents'?

the same number since 1994, so -Q What is that cell phone number? A 558. Q 558? A 0748. Q 0748. Okay. What area code? A 954. Q All right. So was this DL (sic) package that you received sent directly to you'? A Yes. Q And did you keep the DL (sic) package that it came in, the document? MR. BRAFMAN: Objection, mischaracterizes the testimony. A No, I threw it out. Q Am I mischaracterizing your testimony, did you not receive a DHL package? A Yes I received a DHL package. Q Okay. Did I, in any other way, mischaracterize your prior testimony? A I don't think so. I mean, you asked me if I received a package. Q Right. A I received it. Q And I thought I was pretty straight 15 (Pages 54 to 57)

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forward, but your counsel keeps objecting, so I just wanted to be sure. A Well, he's entitled to. MR. BRAFMAN: Mr. Birsic, you're -MR. BIRSIC: He's entitled to object and he does frequently, and I just want to make sure if he's doing it to be annoying to me, or if I'm misstating the testimony. MR. BRAFMAN: Mr. Birsic, I really don't appreciate your negative aspersions. It's improper. MR. BIRSIC: Thank you for your speech, Mr. Braf nan. Q Now, let's get back to the question, can we, Mr. Thomashaw? Okay. So you threw away the DL, the DHL package, correct? A Yeah, I don't -Q Did you check the address where it came from? A It came from Ecuador. I know that because there was a yellow Manila envelope in it, with a return address, so the country that it was sent from was Ecuador. Q What was the return address on the
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Q So a week or ten days after your call you got this package in your office? A Yeah. Q And did it have a name of anyone that sent it? A It actually did. It had a name of Jose, I don't know, I don't remember, it was a Spanish name, but I guess there must be major customs issues when somebody sends something from a foreign country, especially a country such as Ecuador. I don't know if that's what we would consider a third world county at this point, but I guess they have to supply documents to be able to do a mailing. Q And did you turn over that package with the return address to your lawyers? A No, nobody asked me for the package of what something was mailed in. Q Okay. A You guys weren't looking for package information. You were looking for documents. Q So a week or ten days after the call you got the package, and you opened it up, and when did you give it to your lawyers? A I do not remember the date that our
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envelope? A I don't remember the exact address. I could just tell you that I remember it saying Ecuador. Q You didn't write down the return address anywhere? A No. Q Okay. So you -A Why would you think I would? Q So you well, didn't you think it was a little strange that you got this call out of the blue from someone who you didn't know, and who you can't identify now, who provided this information to you who you allegedly was seeking (sic)? A I don't know how I could explain the call. I could just say that the call came in and I answered it. Q I understand. Okay. But you didn't think any of that was strange? A No, because it gave me the opportunity to try and get some information, and I thought that that would be helpful to all of your requests. Q So when after the telephone call did the package come in? A Oh, God, I don't remember. A week, ten days. I don't know.
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attorneys were given it, but -Q So this would be -A I don't know. Q Sometime in late August or early September, is that fair enough? A I don't want to pinpoint it. I don't want to guess at it, so I'm going to say that I don't remember the exact dates or the timeframe, but -Q Did you -A Our attorneys got those documents. Q Did you review the documents and study them when you got them? A Oh, well, I didn't review the operating statement right away. My main focus was the promissory note. Q So you reviewed the promissory note, right? A Yeah. Q And then before you sent it to your lawyers? A I read the promissory note immediately. I thought that it was quite helpful, because I didn't know -- when the other guy was doing the deposition, and he asked me when there was a payment due, I didn't know that there was a payment due at that time. 16 (Pages 58 to 61)

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Once I had a promissory note, that Would make my life a lot easier, as learning the finance area of the company as to what to prepare for as far as payments go. Q Okay, fair enough. And so you reviewed the promissory note, and you didn't review the operating statement? A Well, I worked on one thing at a time. Q Okay. And so did you then turn them over the day you got them, to your lawyers, or was there some delay? A I don't remember. I really don't. Q Okay. Now, did you have any other telephone calls with Jose or anyone else? A I got whatever documents, or I asked for whatever documents were available. They sent me the package of whatever documents they had available. Q Well, how -A That was it. Q How do you know these are the only documents they have available related to the litigation? A How do I know that?
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Q And you knew about Yvette? A I didn't. I knew that Yvette was -- I found out that Yvette was one of the three people that were involved in the company. Q Well, did you know that before Mr. Jose told you that? A I don't remember whether Lloyd mentioned it or not. I never really thought about it, because this particular person it didn't really matter to me who owned the company prior to my coming aboard. Q Now, you keep referring to a conversation or information that you received from Lloyd. Did you speak with Mr. McClendon in preparation for your deposition? A We speak all the time. Q Okay. But did you specifically seek information from him relating to the subject matters that you're designated to testify to on behalf of the company, today? A Well, I tried to confirm who the people were that were involved in the original establishment of RealAuction. Q And what did he tell you on that subject? A Yes, those are the people.
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1 A Well, all I could tell you is, I asked them 1 2 2 for whatever documents they had, could they forward 3 3 those to me, and these are the documents that I 4 received. 4 5 5 Q And as I understand your prior testimony, 6 you asked him for whatever documents they had 6 7 7 available relating to the litigation, correct? 8 8 A Related to the loan and the ownership. 9 9 So you said the loan and the ownership? Q 10 10 A Yes. I was looking to try and get 11 11 information on the loan and the ownership. 12 12 Q And did you do anything to verify any of 13 13 the information that Jose told you over the phone? 14 14 A I don't understand that particular 15 15 question, but 16 16 Well, you learned things for the first Q 17 17 time? 18 18 A Yes. 19 19 Q There was -20 20 A Yes. I definitely learned information 21 related to the loan, that was new to me. 21 22 22 Q And how about the information related to 23 the ownership of RealAuction, as you've testified; was 23 24 that new information to you? 24 25 25 A No, that pretty much I knew.

Q Did you speak with him after you spoke with this fellow Jose? A Yes. Q And did you tell him what Jose said? A Yes. Q And did you ask him, is that correct? A Correct. Q And did he verify the information? A He said yes, those were the individuals that were originally involved in RealAuction. Q And did he know who Yvette was? A I don't think so. I don't think he ever met that particular person. Q Do you know how she made an investment in RealAuction, without anyone knowing her name or anybody meeting her? A You're asking that particular question that I don't have the answer for. Q Okay. But it's your understanding, based on your conversation with Mr. McClendon, that he never met Yvette, and didn't know her name, is that true'? A I know he never met her. Q He told you that? A Or, you know what, I don't even know if it's a her. 17 (Pages 62 to 65)

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MR. BRAFMAN: Objection, asked and answered. A To the best of my knowledge, I believe it is Mr. Torbay. Q A hundred percent? MR. BRAFMAN: Objection, lack of foundation. A Do I know if that company is owned one hundred percent? Q Yeah. A By Torbay? I believe it is. I don't have any reason to dispute it. Q Well, what's the basis for you to believe that Hatchett is owned a hundred percent by Torbay? A It was given to me as information when I was on the phone. Q With Mr. Jose? A Yeah. Q Okay. And what's the -A I think we've covered that. Q What's your understanding of who owns Adila? A Mr. Torbay. Q Is it your understanding that he owns Adila Page 77 a hundred percent? A That's my understanding. Q And what's the basis of your understanding? A I asked who owns these companies. Q And who did you ask? A Jose. Q And that's what he told you? A Then I heard Spanish speaking. Q Yup. A Then he said, yes, that's true, or something to that effect, yes. He confinned it. Q So you asked him if Mr. Torbay -A I don't have any documents that show it. I just have a verbal confirmation that -- so the way I see it is, if Mr. Torbay owns Adila and owns Hatchett, Hatchett has a seventy percent equity stake, I guess I would call it, in RealAuction, but Adila has the loan, so Adila must be the company that's the lender or where the money came from, as the loan on the books. Q And when did Hatchett acquire seventy percent equity ownership in RealAuction? A I believe that to be in 2009, but I'm not quite sure of that date. Q When did you first learn that Hatchett had an equity ownership in RealAuction, when you got -20 (Pages 74 to 77)

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1
Q Were you surprised to learn, when you read the operating agreement, that Hatchett Development owned seventy percent of RealAuction? A Was I surprised? Urn, I don't know if I call it -- I do not know if I call it surprised. I mean, they have a pretty big loan on the books. Q And the loan that you're referring to is the Adila loan? A Yes. Q So it's your testimony that the Adila loan is owed to Hatchett? MR. BRAFMAN: Objection, mischaracterizes his testimony. A Yeah, I didn't say that. Adila is a separate company, and Hatchett's a separate company, but the connection is, they have common ownership. Q So it's your understanding that Adila and Hatchett have the same ownership? A Yes. Q And who owns Hatchett?

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Q The only financial statements or materials that you've given to us are the Exhibit number 2 that you produced this morning, correct? A I don't know what else you have, but we gave you stuff this morning; that's correct. Q Okay. And you're pointing to line entries that are under, on Exhibit 2, under RA Partners, correct? A I don't have Exhibit 2 in front of me. Q Well, get it. A Well, get it? Q It's in front on the stack in front of you. Take a look at it. A I see the last page that says Gulf Group Holdings. Q Well, the last page says, as printed out from Quickbooks register, long term liability shareholder loans RA Partners? A Right. 59 (Pages 230 to 233)

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Q Correct? A That's a label. Like I explained to you a long time ago today, that was there for anybody that was going to invest. Q Is -A Gulf Group is one of the firms that decided to loan money at an interest rate return. Q How would anybody know, looking at this entry that says shareholder loans RA Partners, that that means Gulf Group or Mr. Politano? MR. BRAFMAN: Objection, it's a misleading question. A I don't know. I didn't know we were going to have to specifically have Gulf Group's name on a separate category. Q Okay. So there is no separate category on the financial statements, for Gulf Group or Mr. Politano, correct? A That would be correct. Q Okay. A That's not a separate category. Q It's-A He's lumped into RA Partners. Q Let's take a look at -- the register says long term liabilities, shareholder loans, correct?
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IN THE UNITED STATES DISTRICT COURT OF WESTERN PENNSYLVANIA CIVIL DIVISION No. 09-1407 Plaintiff, vs. REALAUCT ION. CON, LLC., a Florida limited liability company, Defendant. Transcript of JURY TRIAL held JUNE 7, 2013 United States District Court, Pittsburgh, Pennsylvania BEFORE: HONORABLE MARK R. HORNAK, DISTRICT JUDGE

GRANT STREET GROUP, INC., a Pennsylvania corporation,

For the Plaintiff:

Patrick J. McElhinny, Esq. Christopher N. Verdini, Esq. Thomas E. Birsic, Esq. K&L Gates, LLP. 210 Sixth Avenue Pittsburgh, PA 15222 David S. Brafman, Esq. Jacqueline N. Arango, Esq. Akerman Senterfitt 222 Lakeview Avenue Suite 400 West Palm Beach, FL 33401 Karen N. Earley, RDR-CRR Julie Kienzle, RMR-CRR 6260 U.S. Courthouse 700 Grant Street Pittsburgh, PA 15219 412-201-2660

For the Defendant:

Court Reporters:

Proceedings reported by mechanical stenography. Transcript produced by computer-aided transcription.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Politano. history? proof?

THE COURT: Okay. Mr. McElhinny, who is going to make the offers of

Do you want to do Gulf Group first and prosecution

MR. McELHINNY: Mr. Birsic. THE COURT: Mr. Birsic. MR. BIRSIC: Your Honor, as Your Honor knows, the Court and the parties have been dealing with a variety of evidentiary issues during the trial, which I will refer to as, for lack of a better shorthand term, the Gulf Group evidence issues, and those would be matters that have been precluded as a result of Judge Ambrose.ts order dated September 25, 2012 -THE COURT: 484 order. MR. BIRSIC: -- related to Gulf Group and Jonathan

I just want, for purposes of the record, because as Your Honor knows, as the case is preceded, we tried to toe the line there and not have to stop at every occasion when this subject came up. I thought for purposes of the record, this might be an opportunity to briefly summarize some of the testimony and the documents that we would have sought to admit had that order not been in place. 1 think the best way to organize that is for us to

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start and try to proceed by witness. We would have called and elicited testimony and documents from Mr. Thomashaw, who was the CFO of RealAuction and a 30(b) (6) deponent. We would have entered evidence and testimony from Mr. Thomashaw's depositions in this case under oath on June 28th, 2011 and October 18, 2011. We would have sought to admit Trial Exhibits P-51, P-387, P-116, P-86, P-359, P-56, P-87, P-88, P-90, P-427, P-89, P-153, P-429, and P-424. For purposes of brevity, I won't go into what each of those exhibits are because they are a lot of financial statements that were discussed during that deposition. I would say as a purpose of just brief summary of what we believe the facts that would be established through that testimony and the documents are as follows: That P-154, which is a document that would reflect QuickBooks printed out by Mr. Thomashaw from the books and records of RealAuction dated October 17, 2011, based on his testimony would show that under the designation of the heading in the QuickBooks, RA Partners, that those entries for loans and financial transactions really related to Gulf Group, Inc. and Mr. Jonathan Politano, and that they would show several

millions of dollars of transactions involving investments and loans and payments by and to Mr. Politano going back as early

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as October 18, 2004, including on October 18, 2004, the initial $100,000 capital contribution that was shown on the books and records of RealAuction. That ledger will show that from October 18, 2004, through and including the time period of September 2011, millions of dollars of transactions, including a deposit on July 19, 2007 of $925,000 alone and many, many deposits throughout that entire time period. The facts and testimony from Mr. Thomashaw will also show that although these were described initially on the books, these cash infusions by Gulf Group as investments, later Mr. Thomashaw attempted to characterize them as loans. We went through each of the P&L statements that the company RealAuction produced from 2004 until 2011 with Mr. Thomashaw, and we showed there was not one indication on any P&L of any interest payment being made on any alleged loan by Gulf Group or Mr. Politano. The implication in our proffer on that would be that those were investments and not loans. The evidence would also show, specifically Trial Exhibit 50, they will reflect that the Gulf Group investments were re-characterized and rolled into a loan on the books of RealAuction called Adila.

We will show through Trial Exhibit 96, an operating agreement that was dated as of January 1, 2011, which showed

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that the owners of RealAuction are Lloyd McClendon, Thomashaw and some entity called Hatchet Development, LTD, which is a British virgin Island company. We would show through Mr. Thomashaw's testimony, that Mr. Thomashaw has no information allegedly about Hatchet except that it is represented by a lawyer from Ecuador named Enrique Torbay, who he has not met and never spoken to. We would show through Trial Exhibit 86 that Mr. Torbay is listed as a managing member of RealAuction on the -- as of the 2010 limited liability filing with the State of Florida as of January 5, 2010. We would then show the loan from Adila for several million dollars also has been documented and the documentation showed up and Mr. Thomashaw identified it, although he said he received it shortly before his deposition in October of 2011 and he had never seen the document before it was sent to him by some mysterious person named Jos from Ecuador. Mr. Thomashaw has no knowledge of Adila except that Torbay is somehow connected to Adila. We would also show through Mr. Thomashaw that cash outflows from RealAuction to Gulf Group of large sums starting in or about the time periods after our lawsuit was filed in this case. With respect to additional evidence, we would have called Mr. Ronald Rubin through his deposition testimony as

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taken in this case. Mr. Rubin is a partner in the accounting firm of Binstock. We would have sought to admit through his testimony Trial Exhibits P-146, P-446, P-65, P-55, P-456, P-67, P-147, P-69, P-148, P-50, P-371, P-81, P-79, P-80, P-378, P-372, P-394, P-448, P-150, P-396, P-393, P-417, P-56, P-116, P-66. The testimony -- our summary of the testimony that we believe we would have entered through Mr. Rubin's deposition was that since the inception of RealAuction, he has served as the outside accounting firm for RealAuction, although he has never met, spoken, or communicated with Lloyd McClendon except in connection with a subpoena that our law firm served on him in this litigation for documents and records related to RealAuction. We would show that Mr. Rubin has served as the outside accountant to Joseph Politano and Gulf Group companies for more than 15 years. We will show through Mr. Rubin's testimony and documentary evidence that he took direction and instructions from Joseph Politano regarding the characterization and treatment of entries on the balance sheets, profit and loss statements, and other books and records of RealAuction over the years, including specifically moving amounts from accounts

of capital accounts under the names of Polo Holding and Gulf Group on the books and records for RealAuction into a loan

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under the name of Adila. Mr. Politano also personally directed Mr. Rubin as to how to account for amounts of accrued interest on the Adila loan. We would then have also elicited the following additional testimony from Mr. Harrington during the course of the proceeding: That prior to the first online tax certificate auctions in Florida conducted by Grant Street in 2004, Mr. Harrington met with Gulf Group and Jonathan Politano to demonstrate the proposed software at the request of Florida tax collector to preview and explain the new upcoming auction format for the tax certificate sales. During that meeting, Gulf Group asked Mr. Harrington to modify the software system in several respects, including a modification that would have allowed multiple bidders when there were multiple bidders all represented by the same entity, in this case, Gulf Group, when the only bids submitted on a particular tax certificate, no matter what the bid level, were all based coming from an affiliated entity that by default, that certificate would be sold at the highest interest rate, 18 percent, rather than the actual interest rate's bid. Mr. Harrington refused to allow that modification in the system.

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We would also show Gulf Group sued Grant Street and the tax collectors for two of the four counties in attempting to stop the automatic tax computer-mediated tax auctions from going forward in 2004. We would show after the 2004 auction, Gulf Group endorsed RealAuction and RealAuction issued a no lawsuit guarantee from institutional investor bidders such as Gulf Group as part of its marketing and sales efforts. We will also have entered into evidence that during the conversation between Lloyd McClendon and Myles Harrington on March 15, 2004, that Mr. McClendon specifically told him he had worked extensively with Gulf Group. We would have also introduced through Mr. Harrington P-146, which was the document
--

that didn't

have anything to do with Gulf Group. That has already been discussed. We won't make that part of this proffer. We would also offer testimony on this subject from Mr. Yorty, the following additional testimony would have been elicited from Mr. Yorty: That in 2002, in the County of Miami-Dade where Mr. Yorty was eventually the tax collector, there was a scandal involving bribery and bid rigging in connection with tax certificate sales and there were approximately 20 members

of the tax collector staff, who were indicted and implicated in accepting gifts and other inappropriate amounts and

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 suit? MR. BIRSIC: That was settled. THE COURT: I take it he was not indicted for criminal charges? MR. BIRSIC: He was not indicted, no. We would have brought out from Mr. Yorty that Lloyd McClendon did extensive work with Gulf Group. THE COURT: Whoa. Whoa. Did extensive work with them in that he worked for them, interacted with them? MR. BIRSIC: He worked for them extensively in connection with providing real estate and other information on the delinquent tax properties so that the bidders such as Gulf Group would have that information in a form of their business in terms of bidding on the various properties. accommodations from certain institutional bidders and that Mr. Politano was implicated in that. THE COURT: Was he indicted? MR. BIRSIC: We would have shown Mr. Politano -- a Civil Action was brought by the State of Florida against Mr. Politano and Gulf Group alleging violations of the Unfair Trade Practices Act in connection with the improper gifts to tax collectors associated with that. THE COURT: What would have been the outcome of the

We would have called Eric Benson through deposition testimony. Mr. Benson is the member and a founder of the Tek

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Group, which is the group that Mr. McClendon went to develop the auction platform used to compete with Grant Street, and we would have brought out through that testimony that before Mr. Benson set up the Tek Group, Mr. Benson worked for many years with one of Mr. Politano's companies. That's a fair summary of the evidence that we would have adduced under this issue. We would have offered relevance on three broad areas. First, willfulness. We believe that this is -- these facts are important to establish what RealAuction's frame of mind was at the time that they learned of our patent and their behavior in terms of entering this business, copying our auction site without concern of our patent or intellectual property rights. This ground for relevance has been briefed heavily, Your Honor, so I am not sure I'm going to say much more on this, and it also goes to motive to harm Grant Street Group, particularly because our theory would be that Mr. Politano sponsored Mr. McClendon in this business as a way of maintaining control. One other point through Mr. Harrington's testimony. We would have brought out that RealAuction's platform allows the modification, that Mr. Politano requested of

Mr. Harrington and Grant Street refused to accommodate. We also believe it was relevant to damages

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concerning the explanation for the pricing strategies or lack of strategies that RealAuction has had. Finally, we think, as we previously noted, that counsel for RealAuction and in this proceeding particularly through opening statements has used Judge Ambrose's order not only as a shield but as a sword to wrongfully mischaracterize Mr. McClendon, Mr. McClendon's motivations for getting into the business, so we think that was an additional ground for us to be able to enter this evidence. THE COURT: A couple questions. I understand substantively, putting aside relevancy or the application of the rules of evidence, I understand substantively how willfulness is a substantive issue in the case and, therefore, is a matter of consequence as to which relevant evidence should be admitted. Tell me under the infringement theory or the damage theory the Court has allowed in the case how the motive of either RealAuction or Gulf Group or Mr. Politano or anybody else, how motive is -- is substantively a matter of consequence in the action? MR. BIRSIC: Well, I'm not exactly sure what the Court is asking. Let me take a crack at it. I think you saw through cross-examination of our

damages expert Mr. Hofmann, there was much discussion about the fact that the tax collectors would have wanted the lower

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pricing and that RealAuction has been able to sustain lower pricing in they have gotten along fine at the lower pricing levels, when, in fact THE COURT: Which is an eight million dollar question as I understand Mr. Verdini's handiwork at the end. MR. McELHINNY: I think it's 12. THE COURT: 12, if it's the higher lost profits. It's a question of eight to twelve million dollars when I understood Mr. Verdini's artistic endeavors at the end of the redirect. MR. BIRSIC: Our theory is simply that this is a competitor who is sponsored and really set up by the largest institutional bidder on these tax certificates and has not disclosed its interest in this company any point along the way. So what you have -THE COURT: Other than in response to your subpoenas and deposition questions, they're not publicly talking about it. MR. BIRSIC: No. It's not revealed in RFPs that RealAuction files, for good reason, because as we pointed out in our prior motion papers, we believe there are directives from the State Treasury Department in Florida that make conflicts of interest like this inappropriate. THE COURT: As a matter of substantive patent law,

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not getting into whether there is sufficient record evidence to do it, but as a matter of substantive patent law, could an entity standing in the shoes of Gulf Group or Mr. Politano been named as a defendant in this action? MR. BIRSIC: I -- at the time the action was filed, we had no knowledge of the specifics here, a general -- really this was in many respects surprising to us, but I don't believe so because their fingerprints, except as I describe are, no where -- they don't even acknowledge -THE COURT: The reason I ask is I grew up, as counsel may have figured out, not as a patent lawyer, but as a labor lawyer. One of the things we learn about is the Joint Employer Doctrine and that is on the face of things Susie works for the Ajax Company, but when you dig into it, you find out the paycheck says Ajax, W2 and employment contract says Ajax Company, but you learn that the Acme Company is running the show. In employment law Ajax isn't left off the hook but Acme enjoins the matter. I did not know whether under the substantive law of patent infringement claim does a similar doctrine exist. MR. BIRSIC: I'm going to ask Mr. McElhinny if he has anything to add on that. I do not know the answer. THE COURT: That makes two of us.

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MR. McELHINNY: I would have to think about it a little bit more. I think there would be some theories for inducing infringement, theories about joint infringement, which might particularly, interestingly in this case on the '099. We would have to look into it a little bit. This is not information we uncovered as erected until after the close of discovery. MR. BIRSIC: The only other issue we have that closes the book on our proffer for the Gulf Group, Your Honor, as you also know during the course of Mr. Harrington'S testimony, we had the issue of over whether we would be permitted through Mr. Harrington to develop a fact that Grant Street Group made an information disclosure. THE COURT: Let's put a hold on that. Let's take care of the first proffer first. There are a number of things we need to accomplish with that. MR. BIRSIC: That's it. THE COURT: One question relative to that, when I was watching I believe Mr. Hofmann's testimony, listening to it, I can't recall whether this was -- I'm confident it was a slide Mr. Verdini put up but I'm not certain of that. I'm almost certain it came up during cross of Mr. Hofmann or redirect, and there were on the entire screen, left side and right side, there were excerpts of the deposition transcript of Mr. Thomashaw, which the Court

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thought could be fairly read as saying we have no idea how we set our prices or why we set them the way we do. We don't look at it. We don't think about it. Is that in evidence? MR. BIRSIC: No, Your Honor, not yet. That's part of the Thomashaw deposition that we decided to hold for either rebuttal or depending upon how the evidence goes, when RealAuction puts their case in. THE COURT: Mr. Brafman, this is not to exhaust your opportunity to speak on this. I have a question at the moment. Do you anticipate that Ms. Rinke is going to testify because you call her to the stand? MR. BRAFMAN: At this point we do expect that, Your Honor. THE COURT: Do you expect that to occur in the first phase of your case rather than the last end of rebuttal? When you get going on Monday before you are done, Ms. Rinke is going to testify? MR. BRAFMAN: Yes, but not on Monday. THE COURT: Sometime between Monday and Wednesday? MR. BRAFMAN: Yes. THE COURT: Is she coming live or by deposition? MR. BRAFMAN: Live. THE COURT: Okay.

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10/17111 Accrual Basis

Account QuickReport
January 1, 2006 through October 17, 2011 Type
Retained Earnings
Closing Entry Closing Entry Closing Entry Closing Entry Closing Entry Total Retained Earnings 12131/2006 12/31/2007 12131/2008 12/31/2009 12/31/2010 70,450.41 235.055.03 337,205.25

a
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Split

Date

Num

Name

ti~
Amount

Memo

518,035.57
"6'M ~ErSR'7' ~
1,775,400.98

Interest & Financing Loan Interest Adila Enter SA

Check 9/7/2011

5398

Adila Enterprises S.A. loan payment... BOA Checking

500,000.00
500,000.00

Total Loan Interest-Adiia Enter SA

Total Interest & Financing TOTAL

~

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AA

Page 1

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Realauction.com , LLC
Register: Long Term Liabilities: Loans -Adila Enterprises, SA. From 01/01/2005 through 10/17/2011 Sorted by: Date, Type, Number/Ref

Date
12/23/2008 03/06/2009 04/17/2009 05/05/2009 05120/2009

Number DEP DEP DEP DEP DEP

Payee Deposit Deposit Deposit Deposit Deposit

Account BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking

Memo

Increase C 200,000.00 X

Decrease

Balance 2,325,000.00 2,475,000.00 2,525,000.00 2,575,000.00 2,625,000.00

150,000.00 X 50,000.00 X 50,000.00 X 50,000.00 X

cj/-,rnc.'c

trj O?
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Case 13-28260-RBR Doc 53-8 Filed 08/29/13

Realauccion.com , LLC
Register: Long Term Liabilities:Loans -Adila Enterprises, SA. From 01/01/2005 through 10117/2011 Sorted by: Date, Type, Number/Ref Date 03/03/2005 04/05/2005 04/05/2005 05/12/2005 05/1212005 06/27/2005 09/12/2005 09/12/2005 09/30/2005 09/30/2005 11/08/2005 11/25/2005 12/28/2005 01/30/2006 01/30/2006 02/15/2006 02/2312006 03/01/2006 05/12/2006 05/25/2006 06110/2006 12/30/2006 07/1812007 12/10/2007 01/11/2008 02/12/2008 02/23/2008 05/09/2008 Number DEP EFT DEP EFT DEP DEP EFT DEP EFT DEP DEP DEP DEP EFT DEP DEP DEP DEP DEP DEP DEP YE 06 DEP DEP DEP DEP DEP DEP
Payee

Account BOA Checking BOA Checking [split] BOA Checking BOA Checking [split) BOA Checking BOA Checking BOA Checking [split] BOA Checking BOA Checking [split] BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking [split] BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking Long Term Liabilities:Stockhol... BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking

Memo LLC Partners deposit LLC Partners deposit LLC Partners deposit LLC Partners deposit LLC Partners deposit LLC Partners deposit LLC Partners deposit LLC Partners deposit LLC Partners deposit LLC Partners deposit LLC Partners deposit LLC Partners deposit LLC Partners deposit LLC Partners deposit LLC Partners deposit LLC Partners deposit posting error

Increase 50,000.00 75,000.00 25,000.00 100,000.00 50,000.00 50,000.00

C X X X X X X X X X X

Decrease

Balance 50,000.00

Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit

75,000.00 25,000.00

-25,000.00 50,000.00 25,000.00 50,000.00 150,000.00

50,000.00 50,000.00

100,003.00 150,000.00 100,000.00 150,000.00 200,000CC 250,000.00 350,000.00

50,000.00 X 50,000.00 X 100,000.00 10,000.00 15,000.00 10000.00 10,000.00 40,000.00 50,000.00 50,000.00 100,000.00 1,000,000.00 100,000.00 100,000.00 50,000.00 200,000.00 50,000.00 X X X X X X X X X X X X X X X X 10,000.00

340,000.00 350,000.00 365,000.00 375,000.CC 385,000.00 425,000.00 475,000.00 525,000.00 625,000.00 1,625,000.00 1,725,000.00 1,825,000.00 1,875,000,00 2,075,000.00 2,125,000.00

q(

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Realauction.com , LLC
-

Register: Long Term Liabilities:Stockholders Loans From 0110112004 through 10/17/2011 Sorted by: Date, Type, Number/Ref Date
05/29/2007

Marc

Number DEP 2388 DEP 2416 DEP DEP

3576

Payee Deposit Deposit Deposit Deposit

Account BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking [split] BOA Checking

Memo

Increase

Decrease

Balance 40,000.00

40,000.00 X
X

05/30/2007
06/12/2007

40,000.00 50,000.00

0.00 50,000.00 0.00 60,000.00 77,000.00

50,000.00 x X 60,000.00 17,000.00 X X

X

06/17/2007 12/02/2008 05120/2009 06/23/2009 01/29/2010 02/09/2010 02/11/2010 02/11/2010 02/23/2010 03/11/2010 05/17/2010 05/20/2010 06/11/2010 10/15/2010 10/18/2010 10/26/2010 11/1112010 11115/2010 07/01/2011

77,000.00 300,000.00

0.00 -300,000.00 -230,000.00 -170,000.00 -65,000.00 60,000.00

3980 DEl' DEP DEP DEP 4083 4209 DEP 4287 DEP 4590 DEP DEP 4654 5227 Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit

X 70,000.00 60,000.00 105,000.00 X X X X X 11,526.05 4,000.00 reverse incorrect dep... 50,000.00 30,000.00 short term loan repay... X X X
X

BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking [split] BOA Checking BOA Checking BOA Checking

125,000.00 X 10,000.00 11,526.05 50,000.00 4,000.00

50,000.00 38,473.95 50,000.00 0.00 4,000.00 0.00 50,000.00 80,000.00

X X X 30,000.00 50,000.00

50,000.00 0.00

CJL/-

O%

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Realauction.com , LLC
Register: Long Term Liabilities:Stockholders Loans - Lloyd From 01101/2004 through 10/171201 1 Sorted by: Date, Type, Number/Ref Date 09/23/2004 09/23/2004 04/04/2005 04/18/2005 04/29/2005 05/13/2005 06/14/2005 06/14/2005 06/15/2005 07/07/2005 08/30/2005 08/3012005 09/01/2005 09/20/2005 10/03/2005 10/03/2005 11/02/2005 11/02/2005 11/22/2005 11/22/2005 11/30/2005 12/09/2005 12/09/2005 12/2012005 12/20/2005 12/29/2005 12/29/2005 03/09/2006 Number EFr 1 Dep 1080 Dep 1085 DEP 2 Dep 1120 EFT 3 DEP 1160 EFT DEP EFT DEP EFT DEP DEP EFT DEP EFT DEP EFT
DEP

Payee Lloyd E McClendon Network Solutions Deposit Lloyd E McClendon Deposit Lloyd E McClendon Deposit TekGroup International Deposit Lloyd E McClendon Deposit TekGroup International Deposit Lloyd E McClendon Deposit Deposit Deposit Deposit Deposit Maricopa Property Appraiser Pinellas Property Appraiser Deposit Deposit Deposit Deposit Deposit
Deposit

Account BOA Checking [split] Domain Names:Domain Name ... BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking [split] Website Construction BOA Checking BOA Checking BOA Checking [split] Website Construction BOA Checking BOA Checking BOA Checking [split] BOA Checking BOA Checking [split] BOA Checking BOA Checking [split] Public Data Files Public Data Files BOA Checking [split] BOA Checking BOA Checking [split] BOA Checking BOA Checking [split]
BOA Checking

Memo

Increase C X

Decrease 7,875.00

Balance -7,875.00 0.00 6,000.00

domain name purchase Tek payment Tek payment Tek payment Tek payment Tek March invoice Tek payment Tek payment Tek May invoice part... Tek payment Tek payment Tek payment Tek payment Az Fl Tek payment Payroll
Office Rent

7,875.00 X 6,000.00 10,000.00 X X X X X 41,637.50 X X X 10,000.00 10,000.00 X X X X 5,000,00 5,000.00 1,100.00 255.00 4,000.00 15,000.00
5,000.00

6,000.00 10,000.00 41,637.50

0.00 10,000.00 0.00 -41,637.50 0.00 8,000.00

8,000.00 X 8,000.00 10,000.00

0.00 -10,000.00 0.00 10,000.00

10,000.00 5,000.00 5,000.00 1,100.00

0.00 -5,000.00 0.00 -5,000.00 0.00 -1,100.00 0.00 255.00

X X X X X X X X X X X
X

4,000.00 15,000.00 5,000.00

-3,745.00 255.00 -14,745.00 255.00 -4,745.00

255.00

DEP

Deposit

BOA Checking Page I

5,000.00

5,255.00

cM1l4I;/ -AEt

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Case 13-28260-RBR Doc 53-8 Filed 08/29/13

Realauction.com, LLC
Register: Long Term Liabilities:Stockholders Loans From 01/0112004 through 10/17/2011 Sorted by: Date, Type, Number/Ref Date 03/10/2006 03/13/2006 03/28/2006 04/01/2006 04/13/2006 04/13/2006 05109/2006 05/10/2006 05/10/2006 05110/2006 05/10/2006 1212212006 07/23/2007 07/24/2007 07/3112007 08115/2007 11/04/2008 04/18/2009 06/24/2009 10126/2010 11/06/2010 11/1912010 07/01/2011 4674 5226 DEP DEP EFT 3578 DEP Deposit Deposit Deposit Number DEP EFT DEP 1683 1715 EFT DEP 1754 EF'l' EFT dep 2139 2474 EFT Deposit Deposit Deposit Lloyd E McClendon Deposit Deposit Deposit Payee Deposit Account BOA Checking Office Furniture BOA Checking BOA Checking BOA Checking BOA Checking [split] BOA Checking BOA Checking BOA Checking [split) BOA Checking [split) Office Furniture BOA Checking BOA Checking [split] BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking [split] BOA Checking [split] BOA Checking [split] BOA Checking BOA Checking BOA Checking loan to cover Frankli... 50,000.00 6,660.00 36,000.00 36,000.00 25,000.00 desk furniture Tek payment 150.00 550.00 mise bills Memo ACH furniture office build out Increase 200.00 9,000.00 C X X X X 5,000.00 X 150.00 X X X X X X X X X X X X X X X 6,660.00 50,000.00 85,000.00
-

Lloyd

Decrease

Balance 5,455.00 5,955.00 14,955.00

500.00 X 9,000,00 5,000.00

5,955.00 955.00 5,955.00 6,105.00

150.00 550.00

5,955.00 5,405.00 5,555.00 6,105.00

550.00 5,555.00 72,000.00

5,555.00 0.00 -72,000,00 -36,000.00 0.00 60,000.00 85,000.00 0.00 50,000.00 56,660.00 50,000,00 0.00

60,000.00 X

/?J4i

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Date 01/13/2009 06/24/2009
10/19/2009

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II$7AVI1lJIICJJWI

Realauction.com , LLC

Register: Long Term Liabilities:Loans -Ahmet Kerem Eroglu From 01/01/2009 through 10/17/2011 Sorted by: Date, Type, Number/Ref Number DEP
3577

Payee Deposit Ahmet Kerem Eroglu Ahmet Kerem Eroglu Ahmet Kerem Eroglu Deposit

Account BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking

Memo

Increase 200,000.00

C x X X

Decrease

Balance 200,000.00

loan repayment perso... 25,000.00 30,000.00

200,000.00 25,000.00 30,000.00

0.00 -25,000.00 0.00 -30,000.00 0.00

3787 DEP 4567 DEP

10/2612009 10/06/2010 10/12/2010

X X X

CdP /:
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)~( o
Register: Long Term Liabilities:Loans -Financial Markets LLC From 01/01/2010 through 10/17/2011 Sorted by: Date, Type, Number/Ref ,saLe Number rayce
02/13/2010

Realauction.com, LLC

Account BOA Checking [split] BOA Checking [split] BOA Checking BOA Checking BOA Checking

Memo

Increase C
1,500,000.00

Decrease

Balance 1,500,000.03 1,500,000.03 500,000.00 100,000.00

r

02/13/2010 07/30/2010 10/28/2010 10/31/2010

EFT EFT EFT EFT 4591

Financial Markets LLC Financial Markets LLC Financial Markets LLC Financial Markets LLC

1,080,000.00 400,000.00
100,000.00

pM/- '1Fc

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Realauction.com, LLC

Register: Long Term Liabilities:Stockholders Loans -RA Partners From 01/0112004 through 10/17/2011 Sorted by: Date, Type, Number/Ref Number DEP DEP DEP DEP DEP DEP DEP DEP YE 06 DEP DEP DEP DEP DEP DEP DEP DEP DEP DEP EFT DEP DEP DEP 2933 DEP 4359 DEP DEP Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Payee Deposit Deposit Deposit Deposit Deposit Deposit Deposit Deposit Account BOA Checking [split] BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking -splitBOA Checking BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking [split] BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking BOA Checking [split] BOA Checking BOA Checking Page I 100,000.00 100,000,00 100,000.00 loan 50,000.00 50,000,00
(,

Memo

Increase 100,000.00 50,000.00 75,000.00 50,000.00 100,000.00

C X X X X X X

Decrease

Balance 100,000.00 150,000.00 200,000.00 300,000.00 375,000.00 425,000.00 450,000.00 550,003.00

10/18/2004 04/26/2006 09/0812006 09/22/2006 10/2712006 1112212006 12/08/2006 12/23/2006 12/30/2006 01/16/2007 01/31/2007 02/16/2007 03/08/2007 03127/2007 04/06/2007 04/24/2007 05/11/2007 05130/2007 0611512007 07/19/2007 04/25/2008 05/2812008 06/11/2008 07/05/2008 04/10/2010 07/10/2010 01/20/2011 02/09/2011

50,000.00 X
100,000,00 X

25,000.00 X postin g error 25,000,00 50,000.00 40,000.00 60,000.00 50,000.00 50,000.00 60,000.00 50,000.00 100,000.00

450,000.00 475,000.00 525,000.00 565,000.00 635,000.00 665,000.00 715,000.00

765,000.00

X X X X X X X X X 925,000.00

40,000.00 X

825,000.00 875,000.00 925,000.00 U.00 50,000.00 100,000.00 150,000.00 150,000.00 100,000.00 0.00 100,000.00 0.00 100,000.00 200,000.00

50,000.00 X

50,000.00 X X X X X X X X

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Realauction.com , LLC
Register: Long Term Liabilities:Stockholders Loans -RA Partners From 01/01/2004 through 10/17/2011 Sorted by: Date, Type, Number/Ref Date 05/07)2011 06/14/2011 06/16/2011 07/05/2011 07/07/2011 07/08/2011 Number DEP DEP 5182 5231 5233 5235 Payee Deposit Deposit Gulf Group Holdings and Ac... Gulf Group Holdings and Ac... Gulf Group Holdings and Ac... Gulf Group Holdings and Ac... Account BOA Checking BOA Checking BOA Checking (split) BOA Checking BOA Checking BOA Checking Memo Increase 100,000.00 400,000.00 C

Decrease

Balance 300,000.00 700,000.00

400,000.00 100,000.00 100,000.00 100,000.00

300,000.00 200,000.00 100,000.00 0.00

W7" 1

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IN THE UNITED STATES DISTRICT COURT OF WESTERN PENNSYLVANIA GRANT STREET GROUP, INC., a Pennsylvania corporation, CIVIL DIVISION No. 09-1407 vs. REALAUCTION.COM , LLC., a Florida limited liability company, Defendant. Transcript of JURY TRIAL held JUNE 11, 2013 United States District Court, Pittsburgh, Pennsylvania BEFORE: HONORABLE MARK R. HORNAK, DISTRICT JUDGE

For the Plaintiff:

Patrick J. McElhinny, Esq. Christopher M. Verdini, Esq. Thomas E. Birsic, Esq. K&L Gates, LLP. 210 Sixth Avenue Pittsburgh, PA 15222 David S. Brafman, Esq. Jacqueline N. Arango, Esq. Akerman Senterfitt 222 Lakeview Avenue Suite 400 West Palm Beach, FL 33401 Karen N. Earley, RDR-CRR Julie Kienzle, RMR-CRR 6260 U.S. Courthouse 700 Grant Street Pittsburgh, PA 15219 412-201-2660

For the Defendant:

Court Reporters:

Proceedings reported by mechanical stenography. Transcript produced by computer-aided transcription.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A. I don't believe we have ever received -- I don't believe we received funds in 2004 from Gulf Group, no. Q. Well, my question was, okay, but it's true that you received from Gulf Group or Mr. Politano hundreds of thousands of dollars in funding to RealAuction at various times throughout 2006 and into 2011, correct? A. I know we received short-term funding during some of the multiple lawsuits so, yes, I know we have. Q. And that totaled hundreds of thousands of dollars, correct? A. I don't know the total. Q. Now, isn't it true -MR. BIRSIC: Your Honor, I seek to cross the witness on Exhibit 154. THE COURT: Why don't you begin by asking him if he can identify it, Mr. Birsic. MR. BIRSIC: I will, Your Honor. MS. ARANGO: Your Honor, may I have a copy, please. THE COURT: I think that's a good idea. MR. BIRSIC: I have another copy. BY MR. BIRSIC: Q. Mr. McClendon, can you take a minute and take a look at Exhibit 154. A. Yes, sir. Q. Do you recognize these as the financial records of

Case 13-28260-RBR Doc 67-8 Filed 09/11/13 Page 4 of 9 Case 13-28260-RBR Doc 53-9 Filed 08/29/13 Page 4 of 9

so

1 2 3 4 5 6 7 8
9

RealAuction.com from the account Quick}.pott as of from January 1, 2006 through January -- October 17, 2011? A. I couldn't say. I have never seen them before, no.
Q.

So you don't recognize these as your own financial

records? A. I have never seen these before. It appears to be QuickBooks reports from our company, but I have never seen them before, no.
Q.

Do you recognize Mr. Thomashaw -- who is Mr. Tom

10 11 12 13 14 15 16 17 18
19

Thomashaw, he's your CFO, right? A. He's the CFO, correct.

Q.

Do you recognize his handwriting in the upper left-hand

corner on the first page? A.

Q.

No, sir. Can you go to the second to the last page. Do you recognize that as Mr. Thomashaw's

handwriting? A.
Q.

No, sir. So, it's your position that you don't recognize these

20 21 22 23 24 25

documents and you can't authenticate them as your own financial record; is that correct? A. I'm saying I have never seen the report before and I don't recognize his handwriting. I'm not disputing that they're not ours, I'm saying I have never seen them before.
Q.

But whether or not you've seen them before, do you agree

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

that these are the financial records

01

kcriAuction as

maintained in the ordinary course of business? A. Yes, I would probably agree, yes. MR. BIRSIC: Seek to admit, Your Honor. THE COURT: Ms. Arango? MS. ARANGO: Your Honor, I would object. Relevance. There's no contradiction of testimony, so I don't believe that there's any basis under 613 or any other rule of evidence to allow their admission. THE COURT: Ms. Kienzle, can you read back the last question and answer. (Whereupon, the previous question and answer were read.) THE COURT: Overruled. Admitted. MR. BIRSIC: Could you please publish the first page of 154, please. Go to the top. BY MR. BIRSIC: Q. Are you familiar with your QuickBook accounting system that you use at RealAuction? A. I understand we use QuickBooks. I don't -- I'm not a user of the system, no. Q. But you do see that at the top here this says RealAuction.com QuickBook Report. Correct? A. Yes, sir.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Q.

Can you go to the second to the last page. You're at the second to the last page,

Mr. McClendon? A. Q. Yes, sir.

This identifies, does it not, long-term liabilities:

Stockholder loans under something called RA Partners. Do you see that? A. Q. Yes, sir.

Can you zoom back and go up to the handwriting at the top. Do you see where it says Gulf, 16 percent?

A. Q.

Yes, sir. Do you know if that is Mr. Thomashaw, your CFO's

handwriting? A. Q. A. Q. No, I don't know.

You don't recognize that? No. Go down further to the first line entry. Do you see that entry for October 18, 2004 for

$100,000? A. Q. Yes, sir. You deny that this is an amount that was provided to you

by Gulf Group or Mr. Politano, correct? A. Q. Yes, sir. Can you go down and scroll down. Do you see the rest of these amounts?

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HE
1

Let's go down and look at the 2006 amounts. So the amounts in 2006, do you deny that these amounts were provided to you by Gulf Group? A. Q. Yes, sir. Go down to the 2007 amounts. Do you see these amounts? A. Q. A. Q. Yes, sir. On the dates that are indicated? Yes, sir. Do you deny that these amounts were provided to you by

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. Yes.

Gulf Group or Mr. Politano? A. Q. Yes, sir. Go down to the next group for 2008 through 2011. So this is showing some amounts, loan from 2008 through 2011. Do you deny these amounts were provided to you by Gulf Group or Mr. Politano? A. Q. Yes. There's a middle column that says Decreases. It seems

that there's some repayments here. on July 19, 2007, $925,000. Do you see that?

One repayment of the loan

Q.

Do you deny that's a repayment to Gulf Group and/or

Mr. Politano?

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NM

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

A. I don't know the specifics about the -- I don't know the specifics about the repayment, no. Q. So you just don't know one way or the other? A. No, I really don't. Q. Would that be inconsistent with what your testimony is concerning the level of funding that you received from Gulf Group or Mr. Politano? A. I'm sorry, can you say that again. Q. I said, is this a payment to somebody in this amount, $925,000 in 2007, is that inconsistent with your understanding of amounts that you received from Mr. Politano or Gulf Group? MS. ARANGO: Objection. Vague. THE COURT: I think it's argumentative. You can rephrase, Mr. Birsic. Sustained, Ms. Arango. BY MR. BIRSIC: Q. Can we go to the next page. Continuing on here now, these are all payments in 2011 and it says: Gulf Group Holding and AC. I believe that's correct, right? A. Yes. Q. Now, do you accept that those are payments to Gulf Group? A. It says: Payments to Gulf Group. I don't believe we have ever written a check to Gulf Group. I don't know what this is. I don't.

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Q. So you deny any knowledge of these financial statements, correct? A. Yes, I don't have personal knowledge about it, no. Q. Last question. So, isn't it true that at the time that Ms. Ahmed was making her statements about the no-lawsuit guarantee, you knew you had the endorsement for that no-lawsuit guarantee from Gulf Group in your pocket, right? A. No. I knew that we weren't performing the objectionable items that all the investors were interested in, which were the three items that I mentioned yesterday, so, it was impossible that we would be sued for the same reason. Q. Well, Gulf Group was the company that sued Grant Street and several of the tax collectors to stop the 2004 auctions, correct? MS. ARANGO: Objection. Relevance. We're getting outside the scope. THE COURT: Overruled. THE WITNESS: They did file a lawsuit asking for certain relief, that's correct. MR. BIRSIC: No further questions, Your Honor. THE COURT: Thank you, Mr. Birsic. Mr. McClendon, you may step down. Thank you very much. Mr. Brafman.