9290 1 UNITED STATES OF AMERICA Before the 2 OFFICE OF THRIFT SUPERVISION DEPARTMENT OF THE TREASURY 3 In the Matter of: ) 4 ) UNITED SAVINGS ASSOCIATION OF ) 5 TEXAS, Houston, Texas, and ) ) 6 UNITED FINANCIAL GROUP, INC., ) Houston, Texas, a Savings ) 7 and Loan Holding Company ) ) OTS Order 8 MAXXAM, INC., Houston, Texas, ) No. AP 95-40 a Diversified Savings and ) Date: 9 Loan Holding Company ) Dec. 26, 1995 ) 10 FEDERATED DEVELOPMENT CO., ) a New York Business Trust, ) 11 ) CHARLES E. HURWITZ, ) 12 Institution-Affiliated Party ) and Present and Former Director ) 13 of United Savings Association ) of Texas, United Financial Group,) 14 and/or MAXXAM, Inc.; and ) ) 15 BARRY A. MUNITZ, JENARD M. GROSS,) ARTHUR S. BERNER, RONALD HUEBSCH,) 16 and MICHAEL CROW, Present and ) Former Directors and/or Officers ) 17 of United Savings Association of ) Texas, United Financial Group, ) 18 and/or MAXXAM, Inc., ) ) 19 Respondents. ) 20 21 TRIAL PROCEEDINGS FOR 12-8-97 22 9291 1 A-P-P-E-A-R-A-N-C-E-S 2 ON BEHALF OF THE AGENCY: 3 KENNETH J. GUIDO, Esquire (Not present) Special Enforcement Counsel 4 PAUL LEIMAN, Esquire SCOTT SCHWARTZ, Esquire 5 BRUCE RINALDI, Esquire RICHARD STEARNS, Esquire (Not present) 6 and BRYAN VEIS, Esquire (Not Present) of: Office of Thrift Supervision 7 Department of the Treasury 1700 G Street, N.W. 8 Washington, D.C. 20552 (202) 906-7395 9 ON BEHALF OF RESPONDENT MAXXAM, INC.: 10 FRANK J. EISENHART, Esquire 11 of: Dechert, Price & Rhoads 1500 K Street, N.W. 12 Washington, D.C. 20005-1208 (202) 626-3306 16 13 DALE A. HEAD (in-house) 14 Managing Counsel MAXXAM, Inc. 15 5847 San Felipe, Suite 2600 Houston, Texas 77057 16 (713) 267-3668 17 ON BEHALF OF RESPONDENT FEDERATED DEVELOPMENT CO. AND CHARLES HURWITZ: 18 RICHARD P. KEETON, Esquire 19 KATHLEEN KOPP, Esquire of: Mayor, Day, Caldwell & Keeton 20 1900 NationsBank Center, 700 Louisiana Houston, Texas 77002 21 (713) 225-7013 22 9292 1 ON BEHALF OF RESPONDENT FEDERATED DEVELOPMENT CO., CHARLES HURWITZ, AND MAXXAM, INC.: 2 JACKS C. NICKENS, Esquire 3 of: Clements, O'Neill, Pierce & Nickens 1000 Louisiana Street, Suite 1800 4 Houston, Texas 77002 (713) 654-7608 5 ON BEHALF OF JENARD M. GROSS: 6 PAUL BLANKENSTEIN, Esquire 7 MARK A. PERRY, Esquire (Not present) of: Gibson, Dunn & Crutcher 8 1050 Connecticut Avenue, N.W. Washington, D.C. 20036-5303 9 (202) 955-8500 10 ON BEHALF OF BERNER, CROW, MUNITZ AND HUEBSCH: 11 JOHN K. VILLA, Esquire MARY CLARK, Esquire (Not present) 12 PAUL DUEFFERT, Esquire of: Williams & Connolly 13 725 Twelfth Street, N.W. Washington, D.C. 20005 14 (202) 434-5000 15 OTS COURT: 16 HONORABLE ARTHUR L. SHIPE Administrative Law Judge 17 Office of Financial Institutions Adjudication 1700 G Street, N.W., 6th Floor 18 Washington, D.C. 20552 Jerry Langdon, Judge Shipe's Clerk 19 REPORTED BY: 20 Ms. Marcy Clark, CSR 21 Ms. Shauna Foreman, CSR 22 9293 1 2 EXAMINATION INDEX 3 Page 4 5 KENNETH M. GINDY 6 Examination by Mr. Leiman................9294 7 Voir Dire Examination by Mr. Keeton......9388 8 (Cont'd) Examination by Mr. Leiman.......9389 9 10 11 12 13 14 15 16 17 18 19 20 21 22 9294 1 P-R-O-C-E-E-D-I-N-G-S 2 (10:00 a.m.) 3 THE COURT: Be seated, please. The 4 hearing will come to order. 5 Mr. Leiman? 6 MR. LEIMAN: Good morning, Your Honor. 7 I'd like to call our witness for today. 8 Mr. Kenneth Gindy. 9 10 11 KENNETH M. GINDY, 12 13 called as a witness and having been first duly 14 sworn, testified as follows: 15 16 THE COURT: Be seated, please. 17 18 EXAMINATION 19 20 21 Q. (BY MR. LEIMAN) Good morning, 22 Mr. Gindy. 9295 1 For the record, would you please state 2 your full name and spell your last name? 3 A. My name is Kenneth M. Gindy, G-I-N-D-Y. 4 Q. And Mr. Gindy, where do you reside? 5 A. I reside in San Antonio, Texas. 6 Address is 3011 Old Elm Way, San Antonio, 78230. 7 Q. Are you employed in San Antonio? 8 A. Yes, I am. I'm an attorney with the 9 law firm of Oppenheimer, Blend, Harrison & Tate. 10 Q. And how long have you been with that 11 law firm? 12 A. 20 years. 13 Q. Can you be more specific as to when you 14 started? 15 A. I got out of law school 1974 and I went 16 straight to work at -- the firm at that time was 17 Oppenheimer, Rosenberg, Kelleher & Wheatley. 18 Q. The name of the law firm, based upon 19 what you've just said, was different 20 years ago? 20 A. Yes. Our firm name changed about two 21 years ago, three years ago. First when 22 Mr. Wheatley left and then when Mr. Rosenberg 9296 1 left. 2 Q. Okay. While you were -- when you 3 started your job at the law firm of Oppenheimer, 4 Rosenberg 20 years ago, did you work with any 5 particular partner or principal attorney? 6 A. When I started with the firm, I started 7 working for Stanley Rosenberg, who was one of the 8 principals or the founders of the firm and headed 9 the real estate group at Oppenheimer, Rosenberg at 10 the time, Kelleher & Wheatley. 11 Q. Did you develop any expertise in the 12 real estate field? 13 A. I became -- spent almost all of my time 14 in real estate, primarily commercial real estate 15 and various development activities. I'm board 16 certified in Texas as a commercial real estate. 17 I've have had that for, I guess, five or six 18 years, having passed the exam. And I spend almost 19 all of my time in one part of commercial real 20 estate development or the other everywhere from 21 office leasing to site development, subdivision 22 development. I've done theme parks. I've done 9297 1 landfills. I've done just about -- I've done a 2 pretty broad gamut of development activities in 3 south Texas. 4 Q. Tell me about your early experiences at 5 Oppenheimer, Rosenberg working with Stanley 6 Rosenberg. 7 Was that -- did Mr. Rosenberg serve as 8 a tutor or mentor for you? 9 A. He was -- when I came out of the firm, 10 I was assigned to work for Stanley. He was my 11 mentor in the firm. I had known Stanley probably 12 10 or 15 years. He's a family relation. We'd 13 been friends for a long time before that, and I 14 went to work there to work with Stanley. It was 15 one of the reasons to go to that firm. And I 16 started out working primarily for him doing 17 collection activity for a bank that he and a 18 number of other individuals had purchased. They 19 felt it would be a good idea to get some courtroom 20 trial experience as a young lawyer. So, I started 21 out doing collection work. 22 Q. What kinds of work did Mr. Rosenberg 9298 1 do? 2 A. Primarily real estate development work, 3 real estate activities. He's always been pretty 4 well -- well, not always. Since I've been -- when 5 I came to San Antonio out of law school, he's been 6 very active in the San Antonio south Texas real 7 estate market. He started out doing general 8 business work when he first came out of law school 9 at his old firm before he started ours. But as 10 long as I've been there, real estate has been his 11 area of expertise and practice. 12 Q. Did Mr. Rosenberg limit his employment 13 solely to the law firm, or did he have other 14 endeavors in which he made money? 15 A. Stanley has had both a law practice and 16 an active private business practice -- 17 Q. What kind? 18 A. -- at the same time. 19 Q. What kind of private business practice? 20 A. Primarily real estate based, although 21 he has been active in -- involved in bringing 22 forth a number of new upstart companies. But 9299 1 mostly, it would be real estate, raw land 2 acquisition, subdivision of that raw land either 3 for commercial purposes or for residential 4 subdivisions, buying large tracts and dividing 5 them down. He has developed a number of 6 industrial properties. He's developed shopping 7 centers. And then on either side, he's also been 8 involved in some new companies. Ipro, a pawnshop, 9 Builders -- well, what ultimately became Builders 10 Square. It was Handy Dan in the old days. It 11 started in San Antonio, and he was one of the 12 principals. But primarily his activities had been 13 in real estate. 14 Q. You mentioned Builders Square that I 15 guess started out as Handy Dan. 16 What is Builders Square? 17 A. Home improvement center business. It 18 started out -- a gentleman in San Antonio started 19 the Handy Dan stores, and Stanley was involved 20 with them and landlord for some of the early 21 buildings, their early stores, the first two or 22 three in San Antonio, I believe. 9300 1 Q. Where was your -- physically, where was 2 your office relative to Mr. Rosenberg's office at 3 the law firm? 4 A. I officed next door to Stanley. When I 5 originally started, I was in an office that -- 6 well, I shouldn't say always. When I first came 7 to the law firm, I was across the hall and in the 8 hall. When they finally expanded and allocated 9 out offices, I was assigned an office next door to 10 Stanley. And even in the relocations of the 11 offices, I've always been right next-door to him. 12 Q. Was that done by design? 13 A. Yes, it was. 14 Q. What was the purpose? 15 A. I frequently paid visits to Stanley's 16 office. It would not be uncommon for him to call 17 for me either through a phone system or by some 18 other more natural means to step in -- 19 Q. You mean yell? 20 A. The voice could be heard. It wasn't in 21 anger, but "I've got somebody on the telephone. 22 Come in." 9301 1 Q. Okay. And you would respond by going? 2 A. If I was free and could. And if I 3 couldn't, I ignored it. More often than not, I 4 went. A little less often as I got older. 5 Q. Apart from working as an attorney, have 6 you ever held any other jobs? Have you ever 7 worked at a financial institution or held a 8 position at a financial institution? 9 A. I served as a -- I did a lot of real 10 estate lending work on behalf of First City Bank 11 and other lenders. I served as a director and a 12 member of the loan committee for First City Bank- 13 Central Park. Other positions going up. I worked 14 all the way through school. But those were 15 laundromat businesses, you know, other activities. 16 Q. Where is First City Bank-Central Park? 17 A. First City Bank-Central Park was a -- 18 started as Central Park Bank. It was an 19 independently-owned bank in Central Park Mall 20 shopping center. It would be San Pedro and Loop 21 410 just outside of Castle Hills, and that was a 22 bank that Stanley and I think it was Mr. Piece and 9302 1 a couple of others bought. And one of my first 2 assignments out of -- when I went to work was to 3 see what kind of money I could collect from their 4 bad debt portfolio. And then I stayed with it and 5 worked with the same gentleman that was president 6 of the bank, Mr. Lang, that they brought in all 7 the way through. And then the bank was ultimately 8 bought -- Mr. Benson was involved in that bank. 9 It was ultimately bought by First City and became 10 a First City Bank, and I stayed with it until 11 First City closed. 12 Q. You said you worked on the loan 13 committee. What does that involve? 14 A. We reviewed and approved loans or loan 15 transactions, real estate loans, and business 16 loans, although I was more involved in the real 17 estate loans that that bank made. 18 Q. And what year was that? 19 A. Probably from '78 through when First 20 City -- no. Probably later than that. Maybe '79 21 through the time First City closed, which I 22 believe was around '90. I don't recall exactly. 9303 1 Q. And you served on the loan committee 2 and was a director the whole time? 3 A. I became a director -- and I served on 4 the loan committee at the same time -- officially 5 probably around '83. 6 Q. And how long did you do that? 7 A. Until it closed in -- around '90, 8 whatever -- I don't remember when First City was 9 officially closed; but when it closed, our bank 10 was closed with it. It was part of the group. 11 Q. How many other individuals, if you 12 recollect, were on the loan committee with you? 13 A. Actually, I just remembered. I 14 officially came off the loan committee just before 15 the bank closed. They consolidated into one bank 16 and we became ex-official members or unofficial 17 members. And then we -- the bank was closed. On 18 the loan committee, there was probably six or 19 seven people: Myself, the president of the bank, 20 another attorney, Mr. Johnson, Mr. Lutz from Pearl 21 Beer. Basically, I don't recall the others that 22 were on the committee. I actually replaced 9304 1 Stanley in that because Stanley used to be on 2 the -- the director at that bank and he stepped 3 off to become a director at Gross Bank. And when 4 he did that, I got moved up to be the director at 5 First City. 6 Q. Did Mr. Rosenberg serve as a director 7 on any other companies that you're aware of? 8 A. He was a director at at First City. He 9 was a director at Gross. I believe he was a 10 director at the -- I forgot the name of the 11 pawnshop. I believe he was a director of the -- 12 there were several family companies that he was 13 the -- a principal stockholder and director of, 14 but they were all primarily family-owned 15 companies. I think he was a director of MAXXAM. 16 He was a director of -- the internally-controlled 17 companies like Funds Unlimited and Sugar Rose, 18 those type of companies, and there's probably a 19 pretty good list of those. But they were mostly 20 things that he invested in and he participated in. 21 Q. You mentioned among the companies that 22 Mr. Rosenberg was a director of -- you stated 9305 1 MAXXAM was one of those. Is MAXXAM also known as 2 MCO Holdings? Do you know? 3 A. I believe they are the same. 4 Q. Okay. Do you know how he would have 5 become involved with MAXXAM or MCO Holdings? 6 A. As long as I can remember, he was 7 involved with MCO or MAXXAM from coming to the law 8 firm. He and principals of the company, I 9 believe, were -- well, I know were good friends 10 and he was -- I mean, he spoke of it often, that 11 he was involved with it and that he would be going 12 to their meetings or things that he had -- he was 13 tied up doing something for them. I believe he 14 served on a couple of committees. 15 Q. What good friends are you referring to? 16 A. Mr. Charles Hurwitz would be one. I 17 believe there is another gentleman, Mr. Gross. 18 Those were the two that I can think of primarily. 19 There's one or two others that I believe -- they 20 were involved in the -- one of the companies that 21 they took public. I'm not sure if it was the eye 22 glass or the pawnshops. But there was a couple 9306 1 people that they were friends with that they had 2 done business transactions together. 3 Q. You referred to "they." Do you mean 4 Mr. Rosenberg -- 5 A. Mr. Rosenberg and Mr. Hurwitz, 6 Mr. Gross, I believe. I don't remember the 7 attorney in New York. I'm drawing a blank on the 8 name of an attorney in New York that they used. 9 Q. You said that Mr. Rosenberg and 10 Mr. Hurwitz were friends. Was that a longstanding 11 relationship that you're aware of? 12 A. Since before I came to the law firm, I 13 know they were friends. I knew Stanley over 20 14 years. That's a good time. 15 Q. How did you know that they were good 16 friends? 17 A. Well, the San Antonio community is -- 18 I've known Stanley since before I was in law 19 school. Mr. Hurwitz lived in San Antonio. He is 20 friends with Stanley and with some of my uncles. 21 But that was even before I was married. I knew 22 Stanley and I had met him. The community just 9307 1 isn't very large. Our neighborhood area or 2 especially the community I -- social community 3 that we're in, and I knew that they were friends. 4 And I know once I got married, certain social 5 activities, I would run into them both at. And 6 when I started with the law firm, it was not at 7 all uncommon to, you know, hear them talking 8 together, to see messages, or to be in his office 9 when one would call. They were good friends. 10 They certainly went to some social events 11 together, some weddings, things like that. 12 Q. Did you personally know Charles 13 Hurwitz? 14 A. I met him both through my wife's family 15 or my family and through Stanley. Met him, 16 visited with him at social events. 17 Q. And is it fair to say that you are 18 acquainted with him? 19 A. I'm acquainted with him. 20 Q. Is it right to say -- are you friends 21 with him? 22 A. I wouldn't put it in that... 9308 1 Q. Let's go back for a second to a company 2 that you mentioned earlier, Handy Dan and Builders 3 Square. 4 Was there -- you said that 5 Mr. Rosenberg was a director of Handy Dan that 6 became Builders Square. Was -- do you know if 7 Mr. Hurwitz was also involved with that? 8 A. I don't know. I know Stanley -- I'm 9 almost positive Stanley was never director of 10 Builders Square. I think his involvement was 11 earlier in Handy Dan with a gentleman named Dave 12 Sachs who was head of Handy Dan. When it first 13 started in the first couple of stores in 14 San Antonio, like the one at Fans Jackson and the 15 one that was built out on Bandera and the one that 16 was built in Austin on Ben White and one that was 17 built, I think, here in Houston, he was a landlord 18 or a partial landlord. The only one that -- 19 I'm sorry. Your question? 20 Q. Well, whether or not Mr. Hurwitz was 21 also involved in Builders Square, if you know. 22 A. I don't know if he had any involvement 9309 1 in Builders Square. The only thing I can think of 2 or in that day is Handy Dan. I don't know. 3 Q. Okay. What about real estate matters? 4 Was Mr. Rosenberg ever involved with Mr. Hurwitz 5 in real estate matters? 6 A. I can think of the ones that I was 7 involved in or I did work for Stanley on. I took 8 care of a lot of things that he would assign to me 9 to go take care of. I think he was involved in 10 one here in Houston, what I call the Child's 11 World, but I think now it's a Builders Square 12 store. It's over off of 610. There was MRD, 13 which was a big raw land subdivision development 14 in San Antonio, and then I believe there is 15 another one called Clayburn 1686 and we call 16 Rogers Pipeline, which is a combination between a 17 gas pipeline transaction and ultimately a land 18 transaction that got merged -- that the lender was 19 Laredo National Bank on, and I believe he was 20 involved in that. 21 And my recollection -- let's see if 22 there's any others. Those are the three that I 9310 1 can remember. 2 Q. What was your involvement with each of 3 those transactions? 4 A. The first one I worked on some leases 5 on and off with a piece of property here in 6 Houston. 7 Q. When you say the first one -- 8 A. The first one I'm thinking of is the 9 Child's World or the Loop 610 property. I worked 10 on lease questions that were presented to me or 11 reviewed leases. And I can remember working on a 12 liquor store lease. I believe the tenant went 13 bankrupt and there was some questions at one point 14 about -- or went out of business -- about being 15 paid out of that transaction. That property, 16 after a while, went over to Bobby Smith to take 17 care of. And he basically took care of it for 18 Stanley. Once Bobby came to the law firm, that 19 one kind of went over to him and he did most of 20 the activities for as long as Bobby was with the 21 law firm. And then after Bobby left, either Barry 22 Brown or I picked up whatever things that we took 9311 1 care of on it. 2 Q. You mentioned Bobby Smith. For the 3 record, who is Bobby Smith? 4 A. Robert Lee Smith, a real estate 5 attorney in San Antonio. He came to work in our 6 law firm nineteen -- probably -- I don't remember 7 for sure. I guess probably '82, '83. He was an 8 attorney in our building upstairs, 9 development/real estate attorney. He stayed with 10 us until he left and went to Akin, Gump. 11 Q. Did he also work under the guidance of 12 Mr. Rosenberg? 13 A. Yes, absolutely. Stanley was very 14 influential in bringing him into the law firm. 15 Q. Talking now about the Child's World 16 project, I think you said that was in Houston. 17 Right? 18 A. Right. 19 Q. Was -- have you ever heard of a company 20 by the name of -- or a trust or an entity called 21 Federated? 22 A. Federated Development? 9312 1 Q. Yeah. 2 A. It's a New York trust, I believe. 3 Q. Okay. What do you know about that? 4 A. Well, that was the entity that was -- 5 when we talked -- when I speak of Charles Hurwitz 6 being involved in the transaction, I think in each 7 of the ones I was ever involved in, it was 8 actually Federated Development was the partner, 9 which I understand was beneficially owned by 10 Charles Hurwitz or members of his family. Lots of 11 times, we dealt with a gentleman named Mr. Paulin. 12 I think it's James or Jim Paulin was the person we 13 routinely dealt with on a day-to-day matter or if 14 there was a question on things. 15 Q. I wrote down here Culebra 16 -- 16 A. Culebra, C-U-L-E-B-R-A. 17 Q. Where was that? 18 A. That was a -- about 1500 acres of land, 19 I believe, or large land tract. It may not have 20 been that large -- off of Culebra Road just 21 outside of 1604 that Stanley put together a group 22 to buy and own. And it -- it's a raw land. It 9313 1 was a transaction that today -- I don't recall if 2 they still have the piece or not, but it was a raw 3 land development. Highway 211, a new road, was 4 put through it going to the research park; but I 5 don't think there's been any real activity on it. 6 Q. What year, roughly, was the Culebra 7 project? 8 A. I'd say early Eighties. Probably '82 9 or '83 was when it was put under contract 10 originally. 11 Q. And Mr. Hurwitz was involved with 12 Mr. Rosenberg in that, too? 13 A. I thought Federated was involved in 14 that one. I think it is. 15 Q. Okay. And what year was the 16 Federated -- the Child's World project in Houston, 17 if you recall? 18 A. I was working on it -- I was working on 19 it probably by 1980. I'm sure that I worked on it 20 by then. 21 Q. And the -- 22 A. So, it had to pre-date that. 9314 1 Q. Before 1980. And what about the MRD 2 project? 3 A. MRD was a land transaction in 4 San Antonio. Involved that and a pipeline. It's 5 kind of a combination. That one was probably -- 6 I'd say probably 1983 or '84. Also originated. 7 It was on the San Pedro corridor or the Highway 8 281 corridor where Culebra was over on the far 9 west part of the city. They were both major raw 10 land tracts in which Stanley and other groups had 11 been very active. The parcels were a little bit 12 closer in to the city. If you went over to the 13 Culebra side, they had bought and sold tracts at 14 Culebra and 1604 and then they moved out and 15 bought more larger tracts farther out, which 16 Culebra Limited 1606 was one. The same thing had 17 happened on the 281 corridor, that freeway which 18 is due north or the central corridor of the city 19 where they had bought portions -- Encino Park and 20 other land in that area, and they ultimately 21 bought the MRD tract which was a large piece. 22 Q. The MRD tract involved -- that involved 9315 1 land speculation or -- 2 A. Yeah. It was a large raw land tract 3 that Stanley had bought with a developer, 4 Mr. Michaelson, Mr. Rosenberg, Mr. Denton. And 5 then during the course of some events, I believe 6 Mr. Michaelson ended up transferring a portion of 7 those interests. I don't recall exactly that 8 transaction. I know it was involved in the Laredo 9 National Bank settlements, and I remember working 10 with Jim on it. 11 Q. Did there come a time when you worked 12 on any amusement park or entertainment facilities 13 such as Sea World at the law firm? 14 A. Probably the best project -- the most 15 fun project I worked on was Sea World. I started 16 to work on that in nineteen -- let's see. This 17 one started in '84. So, in the spring of '84, I 18 went to work for Harcourt, Brace, Jovaniach, and 19 they had already contracted to buy a piece of land 20 on the far east side of the city and had made a 21 decision not to go forward with that development. 22 Q. Before you describe that, how did you 9316 1 get involved with Harcourt, Brace, Jovaniach? 2 A. I was -- actually, I was out of town. 3 I was on -- someone had recommended my name to 4 Mr. Jovaniach. I was using one of the very large 5 law firms in connection with the transaction that 6 they had done. And my name was given to him as a 7 development lawyer or relocation development 8 attorney. And he called me to come for an 9 interview. I happened to have been in Colorado on 10 spring break. So, I remember it was the spring. 11 And he asked -- he simply asked us to fly home and 12 go to an interview in Austin at the Wyndham Hotel 13 in Austin. He and a number of other people, they 14 were very upset that they had made all these big 15 public announcements and had made decisions to go 16 forward with development of the theme park on the 17 far northwest -- northeast side of town, and it 18 turned out that it was only about a mile from a 19 major upcoming landfill, had soil problems that 20 were difficult for them to use because of the type 21 of clays that were in the area. And they were 22 looking to figure out where they could go and to 9317 1 get people involved that -- an attorney from the 2 San Antonio community as to compared to people 3 coming in from the Houston community primarily to 4 give them advice on the local market and 5 development activities. 6 Stanley and I went to an interview 7 at -- went through the interview. We -- it was a 8 pretty long interview upstairs in this meeting 9 room with them. We left. They called Stanley 10 back upstairs and said that they wanted to hire us 11 and they wanted me to work on it basically full 12 time. And he said, "That's fine. You can have 13 him." And I worked on it for almost three years. 14 Q. When did you start working on that? 15 A. March of '84, almost immediately. 16 Q. And did -- 17 A. Maybe April. 18 Q. There came a time when the site was 19 changed; is that right? 20 A. It was changed several times. The 21 first site was the one on the far northeast side 22 of town. We then went to a site that while they 9318 1 were going through the interview process, that 2 they had contracted for on the Concord Ranch, 3 which was off of Highway 90 in the far west side 4 of town. If you went out Highway 90 from Kelly 5 Air Force Base, it was probably 6 or 7 miles out 6 beyond 1604. And they looked at that site, 7 contracted for it, started doing their due 8 diligence, and found that they couldn't build it 9 there. So, then they moved -- 10 Q. Mr. Gindy, how long did that take? 11 What was the time span between those two events? 12 Was it a matter of weeks or months? 13 A. Probably three or four months. Maybe 14 even longer than that because we started -- when 15 the soil tests started coming back in again, after 16 we started drilling on that site, it was -- there 17 was a lot of clays. So, they started looking for 18 some other site. Mr. Jovaniach didn't want to 19 relocate again if he could avoid it and face the 20 publicity. There had been a great deal of land 21 speculation on the northeast side of town and 22 there was a lot of fallout that he was not in the 9319 1 papers and elsewhere that he didn't like about Sea 2 World having picked up and moved and people having 3 been hurt because they had speculated on the land. 4 Q. What do you mean, "land speculation"? 5 A. Well, in the northeast side, a lot of 6 land around the site that was picked to be the 7 first site were bought by developers or -- land 8 speculators is the term, but primarily developers, 9 I would say, in anticipation of what might happen 10 in the area or growth that would occur. And they 11 paid a lot of farmers, a lot of ranchers, a lot of 12 homeowners that were sitting on property that they 13 thought was worth X dollars suddenly became worth 14 4 and 5 X dollars. And some of them sold and some 15 of them took -- granted options to see if they 16 could get more. Then all of a sudden one day they 17 woke up and there was an announcement in the 18 newspaper that said that Sea World had exercised a 19 right of termination on the contract and had moved 20 180 degrees to the other side of town. So, some 21 people were unhappy. 22 Q. Before I interrupted you, you were 9320 1 describing how the soil tests on the far west side 2 of town proved to be clay soil, as well? 3 A. Clays in the south. And Concord on the 4 south near Highway 90 had a lot of clays in it. 5 So, they decided to look for some other site. The 6 Concord Ranch was, I think, four or 5,000 acres. 7 It was a huge ranch. It ran all the way from 8 Highway 90 down Culebra Road just about to Highway 9 211 in the research park. So, we started looking 10 for some other sites in the far north end of it 11 where it started to become part of the hill 12 country with rocky terrain, which is really what 13 we were looking for to get the stability we wanted 14 for the sidewalks and the pipes and the utilities, 15 better soils. So, we wouldn't have movement. 16 Q. What do you mean, "movement"? Is clay 17 a problem? 18 A. In south Texas, clay -- I guess it's a 19 problem everywhere. But in the San Antonio area, 20 the clays are very expansive. In dry weather, 21 they contract. In wet weather, these expand. It 22 means they move. And in building Sea World park, 9321 1 particularly we had large quantities, hundreds of 2 miles of pipes, primary, secondary, water returns 3 to everyone of the facilities. And it was more 4 important to us to find a site where all those 5 trenches and all those miles of pipe when they 6 were put in the ground wouldn't move and break so 7 you didn't have to worry about pipes breaking than 8 it was to have to worry about digging -- building 9 for foundation for the big tanks. It was easy -- 10 it was more expensive to put the tanks on rock, 11 but it was better to have to be on rock for the 12 sidewalks and all the things that went within the 13 walks, the infrastructure. And if we had built in 14 the clay areas, it was the same effort. You had 15 to have a more expensive foundation for the big 16 buildings or you had to blast for the big 17 buildings or the bigger tanks, but the real 18 problem was all the infrastructure. 19 So, we wanted rock so there would not 20 be movement. We actually dug trenches, put 21 gravel, sand, pipes. And they don't move, so they 22 don't break. 9322 1 Q. So, you found another site and where 2 was that? 3 A. At the very far north end -- or we 4 tried to find a site at the very far north end of 5 the ranch. 6 Q. The Concord Ranch? 7 A. The Concord Ranch near Culebra where 8 Culebra runs into Highway 211. It was an area not 9 real far from Culebra -- well, it was 3 or 4 miles 10 from Culebra 1686 Limited, which was some land I 11 mentioned earlier, and then we were at that site. 12 And we were trying to make a deal with Mr. Powell 13 on that site. He was not as happy to have us move 14 and didn't want to make the same deal at the far 15 north end of the ranch that he had made to try to 16 get Sea World at the south end of his ranch. And 17 the question was, in part, them giving us land for 18 the site, other things that the landowner was 19 willing to put in to attract the development that 20 they anticipated would occur. I mean, basically 21 the sites were offered to us on a very inexpensive 22 basis. Utilities being brought, a lot of things 9323 1 done because these sites were way out in the 2 country, in the county. There were no city sewers 3 or city water, and that had to be done. In fact, 4 the Concord deal included having to build a water 5 treatment plant. 6 Q. And did that -- was that the ultimate 7 site where Sea World was located? 8 A. No. In trying to negotiate our terms 9 with Mr. Powell's company, we ultimately were not 10 able to reach a final contract and get it signed. 11 And it became very disturbing to Mr. Jovaniach 12 that he wanted to get on with it. And in the 13 summer of 1985, 4th of July weekend, he basically 14 made the decision -- or just before the 4th in 15 June, he told them that "Either you get a contract 16 signed and get on with it and make a deal" or he 17 was going to move, look at some other city. 18 Q. '85? 19 A. Summer of '85. No. '84, I guess. 20 '85. 1985, I believe. That you either had to 21 get -- make a deal with Concord and go forward or 22 he was going to look to move it to some other 9324 1 facility or some other area. And there were a 2 number of cities that were approaching him that 3 was well out in the world, in the trade. And we 4 probably got requests from a couple in Arizona, 5 one in Oklahoma. I know Austin. Most of them 6 came across my desk to look at. 7 Q. Had there been land speculation in 8 connection with each of those other sites that you 9 mentioned? 10 A. Well, there really wasn't -- there is a 11 little bit of land speculation on the first one 12 way down on the south end of the Concord Ranch. 13 But basically, the ranch controlled almost all of 14 the land around it except when you went across 15 Highway 90, there were a couple parcels. It was 16 the Vanderwalle family that sold a couple of key 17 corners off at Montgomery Road to people who 18 thought they were going to have the corner going 19 into the park or the corner coming back to San 20 Antonio. But other than that, there wasn't a lot 21 there because there is only one person that owned 22 it. And part of the deal with him was we had to 9325 1 go so far up into the property so that he 2 controlled all the sites going up to the parks 250 3 or 300 acres. There wasn't anything close to 4 speculate on. 5 When we went to the north end of the 6 ranch, there was a lot more room for speculation 7 at that area. There was four or five large 8 parcels that were either abutting or very close 9 that were there and people speculated, put it 10 under contract and options. 11 Q. Do you know anybody who did that? 12 A. I know Stanley, for one, was involved 13 in one of the tracts. 14 Q. Stanley? 15 A. Rosenberg. I believe Randy Dym was 16 involved in another. 17 Q. Now, were these people just guessing as 18 to the location, or had it been announced? 19 A. Well, I mean, there was only three or 20 four soil companies. People were drilling. We 21 hadn't made a deal on the south side. If you 22 really looked at it and you sat down and figured 9326 1 out what -- why it wouldn't go on the east side of 2 town, then you knew that it really wouldn't go on 3 the west side of town in the same type of soils. 4 If you go out Highway 90, you can see the waves in 5 the street, in the highway. So, then, people knew 6 and -- I mean, checked around. It wasn't hard to 7 figure out that you were looking farther north 8 when the soils test and those types of studies 9 were being done. 10 Q. Did you know Mr. Rosenberg was 11 speculating on the land around these sites? 12 A. Not at first. Not until after we 13 moved. 14 Q. And when you moved, where did you move 15 to? 16 A. Well, Mr. Jovaniach told us that we had 17 to make a deal or get -- or -- told Concord they 18 had to make a deal. There was a gentleman in 19 San Antonio named Marty Wender or Charles Martin 20 Wender -- we call him Marty -- who had the 21 Westover Hills, Wiseman Ranch property. And he's 22 a very aggressive salesman. And he had come in 9327 1 and wanted the park on -- I'm sorry. He wanted 2 Sea World to locate in that property around his 3 and he had made numerous attempts to write 4 Mr. Jovaniach letters. I think he even made a 5 trip out, at one point, to Orlando to try to see 6 him and he didn't get anywhere. 7 I've known Marty since I was probably 8 13 or 14. He's from Fort Worth. He was married 9 to a friend -- his wife I had known since I was 10 probably 10 or 12 and, I mean, every time we saw 11 him during the summer, he said, "What do I have to 12 do to get the park on this property?" And I just 13 told him, "We've got a site." 14 And when the site -- when Mr. Jovaniach 15 said he was done with Concord and we were going to 16 go after the 4th of July weekend somewhere else, 17 he -- I prevailed on him to let me talk to Marty 18 to see if we could make a deal. And I went and 19 sat down with Marty Wender and Norman Davis. And 20 we told him what we needed to have, what we wanted 21 to have. He basically said it was a deal. He 22 would do it. 9328 1 The next night we met at a restaurant 2 in a back room of a restaurant, the Barn Door, in 3 their private dining room. Mr. Jovaniach, 4 Mr. Wender, myself. We went through the deal on a 5 legal pad and they said this is the deal he would 6 do. Mr. Jovaniach said, "Fine." They shook 7 hands. They said they had three days -- two days 8 to write the contract. We wrote the contract. It 9 got signed and it got announced. And no one knew 10 it was going down or the changes were being made 11 until we made that announcement. I don't believe 12 anybody knew because there is only about four 13 people involved, or five. 14 Q. Do you know what happened to the 15 property that Mr. Rosenberg was speculating on on 16 the north part of the Concord Ranch? 17 A. I think it's still probably vacant land 18 today. I know Stanley had dropped his option and 19 had just had time to drop it. He was happy that 20 he hadn't gone hard yet. 21 Q. What do you mean by that? What does 22 that term mean with regard to the option? 9329 1 A. Put up earnest money in land 2 transactions. In the San Antonio area, we 3 generally see a person -- if your earnest money is 4 $50,000, it's not uncommon for it to have a 60, 5 90, 120, as long as the buyer can get a valuation 6 period to study the property in which you can send 7 them a letter and say, "I don't like the property 8 and I'm cancelling the contract" and you get your 9 earnest money back from the title company except 10 for sometimes a nominal $100 or a thousand-dollar 11 independent consideration payment. And I mean, we 12 call it going hard when that earnest money is 13 forfeited if you don't buy and you no longer have 14 the option. 15 Q. So, Sea World relocated its announced 16 site to the Wender property -- 17 A. Around right after the 4th of July 18 weekend, the 7th or the 8th, because I remember I 19 came home. 20 Q. And did development begin immediately? 21 A. No. We had a good three or four months 22 of things that had to be put together and arranged 9330 1 under the contract before we would close and 2 purchase the property. Marty didn't own all of 3 the land that we were getting. He had to get some 4 of it from Ray Ellison, and I remember him calling 5 Ellison to see if he could make the deal and 6 Ellison was in Hawaii and Ellison said, "Done 7 deal. I'd like to have him as my neighbor." And 8 he agreed to give up some of the land for the 9 park. And there were a couple other people, 10 Mister -- Dr. Wiseman he had to deal with. We 11 went to the highway department to get -- Highway 12 211 had to be committed to. Well, highway -- not 13 211. I'm sorry. Highway 151, which is sometimes 14 called the Westside Expressway, was on the drawing 15 boards. But there was no way to get to the site 16 where we were building the park. In fact, when we 17 made the announcement, we had to fly people out 18 there by helicopter just about, most of the 19 people. We had to get Highway 151 built. So, we 20 had to get a commitment from the highway 21 department to build the access roads in advance 22 because it was -- we had to get commitments from 9331 1 the highway department to build all of the 2 overpasses so we wouldn't have to worry about 3 heavy blasting later on down the road when they 4 went to go build them, which is a bit unusual for 5 the highway department to do. We had to get a 6 firm timetable from them to build them so that 7 there would be roads for visitors to get to the 8 park when they got there. And then we reached a 9 general agreement on when the main lanes would be 10 built, when traffic demands got to certain levels. 11 Q. What did that involve? 12 A. Traffic counts from Loop 410 to 1604 13 had to reach certain levels. I think it was -- 14 for some reason, I would I want to think it was 15 8,000 cars a day in each direction, but I'm not 16 sure. 17 Q. Let me jump forward for a minute. Did 18 those traffic counts reach the required level at 19 any time during the 1980s? 20 A. No. 21 Q. Did the traffic counts, have they 22 reached those levels yet? 9332 1 A. Yes. They have just recently reached 2 the levels for the main lanes to be built, and 3 those main lanes -- in fact, they have 4 announced -- there is construction -- ongoing 5 construction right now to build the main lanes. 6 Q. The main lanes, when did construction 7 start on those, on the Westside Expressway? 8 A. Potranco overpass was done -- was 9 finished probably a year and a half or two years 10 ago. And they are now working on the rest of it, 11 starting within the last year. 12 Q. So, how did people get to the site 13 during the period nineteen-eighty -- the period 14 you're describing? 15 A. Okay. The freeway -- from -- to get 16 from Loop 410 up to Loop 1604, there was -- I 17 think it's a 600-foot right-of-way that was 18 dedicated or given -- as part of the project, a 19 lot of people gave land and the Westover Hills 20 project. People gave the land to the state to 21 build the road. It was planned to be a four-lane 22 main lane initial construction with room to go to 9333 1 another lane. And then outside of that was a 2 double lane or two-lane access roads on either 3 side going north/south -- I call it north/south. 4 It's probably northwest/southeast direction, but 5 going northerly and south so that you could drive 6 that 5 or 6 miles by driving on the outside or the 7 restricted access lanes of the road. 8 Q. Was there speculation in connection 9 with the selection of the Sea World site at 10 Mr. Wender's property? 11 A. There was some. But again, there 12 wasn't much of an opportunity to do that because 13 part of what was given to people on the west side 14 was an established subdivision. Wender owned 15 everything -- the Wender, Wiseman, Ellison group 16 owned almost everything at 1604 down to, like, 17 Potranco/Culebra area, the Culebra Road, and then 18 from Culebra Road to 410, there was a lot of -- 19 well, there is about six or seven major tracts and 20 they went through a couple changes of hands. 21 Q. What do you mean there was six or seven 22 major tracts that were -- 9334 1 A. Well, you had Westlakes on the east 2 side of -- if the Loop 410 came across this way 3 and you had -- Westlakes was over near -- on the 4 back road side of the new highway. Then you would 5 have what we now call the Park 410 tract. Then 6 next to the Park 410 tract, we had -- I don't 7 remember the name of the development. I think it 8 was the development owned by a couple of doctors 9 was the next tract over. Then you kept -- then 10 you had the tract that ultimately became the Sony 11 tract, I believe. And then you had Dr. Miller's 12 tract, and then there was one or two more tracts 13 going back all the way down to where Culebra Road 14 and 410 came together. 15 Q. What -- 16 A. And Potranco. 17 Q. What was out there? 18 A. It was mostly farmland, ranch land 19 except to the far east end of it, there were a 20 couple of small business uses. There was an 21 automobile garage. Nothing of any large -- or 22 substance. But as you went way down towards the 9335 1 Culebra/Potranco intersection, 410 intersection, 2 there was things you would see in a major highway 3 intersection. Gas stations. I think there was a 4 fast food on the inside, there was a La Quinta. 5 There was Wendy's. An Exxon station, I think, was 6 already in place then. There were a couple of -- 7 primarily as you went west, you saw farmland and 8 ranch land. In fact, that's where we had the Pope 9 visit. 10 Q. I'm sorry? 11 A. That's where the Pope -- when we had 12 the Pope visit San Antonio, that area was all 13 barren, and that's where they built the Pope -- 14 that's where we had the Pope's -- 15 Q. Visit site? 16 A. -- visit site. 17 Q. Exhibit T7161, please. Was one of the 18 reasons that it was -- that the Pope visited there 19 because it was secure, because there was so little 20 around it? 21 A. No. It was really just -- it was a 22 large area that had a lot of flat improvements, 9336 1 and Mr. Wender was willing to put a lot of effort 2 into getting it ready for them to go do it and a 3 lot of other people wouldn't. There -- it's hard 4 to find a place to put that many people and park 5 them. 6 Q. Mr. Gindy, I handed you what previously 7 was marked T7161, which is captioned "earnest 8 money contract. I'd like to know if you had any 9 involvement in preparing this document. 10 A. Yes, I did. 11 Q. What did you do in connection with this 12 document? 13 A. I actually drafted this contract. It's 14 got my initials at the bottom. 15 Q. What does it purport to do? 16 A. This is the contract where Mr. Arburn 17 and Chili McClintick or Charles McClintick were 18 selling 425 -- I guess it's 427 acres of land to 19 Gulf Management Resources, Inc. 20 Q. And if you would, look with me at the 21 date on this. 22 A. November 28th, '84. 9337 1 Q. Okay. 2 A. That would put me off probably one year 3 on my earlier testimony. 4 Q. In connection with what? 5 A. The Sea World location. 6 Q. All right. And so, the Sea World 7 location would have been when? 8 A. Summer of '84. 9 Q. And that would have been on the Wender 10 property? 11 A. Yes. 12 Q. What is the Wender property also known 13 as? 14 A. Westover Hills. 15 Q. Okay. 16 MR. LEIMAN: Your Honor, I offer T7161. 17 MR. KEETON: No objection. 18 THE COURT: Received. 19 Q. (BY MR. LEIMAN) Mr. Gindy, how did 20 you get involved with preparing this contract? 21 A. Gulf Management Resources was a company 22 that was run by a gentleman named Noel Simpson 9338 1 from Dallas. A Dallas attorney had referred them 2 to us in San Antonio, and we handled several real 3 estate transactions. I probably handled eight or 4 ten of them for them in the San Antonio area that 5 they had bought and sold, land developed that I 6 had worked on for them. 7 Q. You say "for them." Who are you 8 referring to? 9 A. For Gulf Management Resources or their 10 principals. They were really a management -- I 11 understood them to be the management company or a 12 service company. Usually whenever they bought 13 something, they would form an entity, a 14 partnership to actually own the land they bought. 15 They had land on the River Walk. They tried to 16 develop a hotel on the River Walk. They owned 17 land out off Culebra Road, a business park, other 18 projects, a couple of office buildings in 19 San Antonio that they built, developed, bought, 20 and sold. 21 Q. And your involvement with this 22 particular contract in this particular property 9339 1 was through Mr. Simpson? 2 A. Noel Simpson and also a gentleman named 3 John Grieshaber who had introduced me to -- also 4 introduced me to Noel Simpson. John Grieshaber 5 was a Realtor in San Antonio who did most of 6 the -- in fact, I think virtually all of the real 7 estate work for Noel Simpson's group. 8 Q. It says here that the property was 9 owned by general partners. Mr. McClintick was 10 involved with that and who else? 11 A. It's my recollection that Mr. Arburn 12 and Mr. McClintick were the general partners and 13 that Alamo Savings Association or one of its 14 subsidiaries was the limited partner. 15 Q. All right. And did you ever have 16 occasion to go to Alamo Savings in connection with 17 this project? 18 A. Several times. 19 Q. All right. And what was your purpose 20 of going there? 21 A. Well, the first time I went there 22 was -- I mean, the purpose of going there was at 9340 1 first to work on the terms and negotiation of the 2 contract and then ultimately in modifications, 3 information, reference with regard to the property 4 for records that were there, and then ultimately 5 closing and then the transaction, going on with 6 it. 7 Q. Do you know why GMR wanted this 8 property? 9 A. Thought it was at a good location on 10 Loop 410 and going northwest right on the proposed 11 highway. Highway 151 was proposed by then to 12 develop as a multi-purpose facility. 13 Q. And isn't it also right that Sea World 14 had been announced just a few months earlier? 15 A. I don't know when their origination had 16 started, but someplace in that course. I believe 17 they started to look at it before we -- before the 18 park was announced to go there. I think they had 19 started to look at it first. It was marketed 20 pretty regularly. I mean, it was -- as early as 21 '83, you could see packages on occasion would come 22 by, different brokers trying to sell the Park 410 9341 1 piece. 2 Q. And had it sold? 3 A. No. 4 Q. All right. So, what did you do after 5 you went to negotiate it at Alamo? 6 A. What did I do afterwards or -- 7 Q. Yeah. 8 A. Once we had gone through the 9 negotiation process, we ultimately -- and reached 10 terms on -- let me back up. 11 I originally went to Alamo to 12 interview -- to do an interview or review of the 13 files and the materials to prepare -- they were 14 seeking letters of intent. And I went there in 15 early November, if that's what you're asking. 16 Okay. When I went there in November, I 17 went there with Noel Simpson, I believe Charles 18 White was with us. John Grieshaber. I don't 19 remember if Al Sachs was -- I think Al Sachs was 20 with us, as well. And we were waiting to go up to 21 meet with Bill Ross and Chili McClintick. 22 Mr. Arburn, I don't think, ever came to any of the 9342 1 meetings or very seldom did. And there was 2 another gentleman from Alamo Savings. 3 We were there to meet them in their 4 offices and we were waiting in the lobby to go up 5 for the meeting and I ran into Stanley coming out. 6 He came down off the elevator. At that time, he 7 was -- 8 Q. Did you talk to him? 9 A. Yeah. I introduced him to my clients 10 and asked him -- it was kind of unusual to see one 11 of your partners in another offices coming out and 12 he was walking out. He introduced me to two 13 people from United Savings. 14 Q. Did you ask him what he was doing 15 there? 16 A. I didn't ask him. He told me. He said 17 that they were there to -- had just come from a 18 meeting with the same people we were going to 19 meet. And so, I became aware that he was there 20 trying to assist United in acquiring the Park 410 21 property that was being offered for sale. 22 Q. Just for the time frame, when was that? 9343 1 A. Early November. Probably the first 2 week of November of 1984. Time of day, if that's 3 what you're asking, I don't remember. 4 Q. Okay. So, after Mr. Rosenberg 5 indicated to you that he was there with some 6 representatives from United Savings, what did you 7 do? 8 A. I went to the meeting because I was 9 there upstairs. It was a several-hour meeting at 10 Alamo where they made available to us a great deal 11 of information regarding -- or what they 12 represented to be accurate information regarding 13 the Park 410 tract. The idea being that people 14 were supposed to prepare and submit letters of 15 intent if they were interested in buying the 16 property, asked questions, looked at some of the 17 documents that were available. But it was, in 18 part, a presentation to us and a chance to ask 19 questions about utilities and easements and other 20 things that -- to get towards preparing a letter 21 of intent. 22 When that was over, I went back to the 9344 1 office. That was -- I met with Stanley later that 2 evening to ask him what had happened, what his 3 involvement was. And he told me that he was 4 assisting United in trying to purchase the 5 property, that he had been recommended or 6 contacted and was to -- he had some relationship 7 with the people -- the other gentleman I couldn't 8 remember his name was Dick Stahl. He and Dick had 9 had some other activities in the banking industry 10 together, I believe, and he was there to try to 11 help them -- 12 Q. Help who? 13 A. Help United enter into a letter of 14 intent or a contract to buy the Park 410 property, 15 at which point I then contacted Noel Simpson and 16 told him I couldn't help him. 17 Q. Why did you do that? 18 A. Well, I couldn't be representing two 19 groups to try to acquire the same parcel of land. 20 It would be too much of a chance -- well, it would 21 be improper, I think, for us to have two clients 22 seeking the same parcel, bidding against each 9345 1 other. Knowledge would step across and it would 2 not be right. So, I told Noel that we couldn't 3 help him and we would not -- I would not be able 4 to prepare the letter of intent or work with him 5 on preparing a letter of intent. 6 Q. Before you took the engagement with Mr. 7 Simpson and GMR, had you checked to see whether 8 the law firm had any possible conflicts of 9 interest? 10 A. Yes. 11 Q. What did you do in that regard? 12 A. I ran a routine conflicts check to see 13 if we had anybody that -- if we had any 14 representation, pending representation of Alamo 15 Savings or if we had any representation of Chili 16 or Robert Arburn or if there was any reference 17 that we were representing anybody buying the 18 property, the last one being the easiest because 19 generally it was Stanley and I and Bobby Smith 20 and we usually knew what each other was doing. 21 And I didn't have any -- I didn't get any 22 indication that we had a conflict. So, I agreed 9346 1 to do it originally. 2 Q. What did you do in connection -- did 3 you set up a billing portfolio for this? 4 A. We opened up a file. Well, I had -- we 5 opened up a file for -- a routine opening up -- 6 well, to do the conflicts check is part of our 7 file opening process at that time and we ran a 8 memorandum, did the inquiry within the firm. File 9 room comes back and tells us if there is any 10 conflicts. And then we asked people for the memo 11 that says "This is what we're doing. Is there a 12 conflict?" In those days, we carried them around. 13 Now E-mail does it. 14 Q. Who did you ask? 15 A. We would have asked all the attorneys 16 in the firm. Would have included Stanley, Bobby 17 Smith, Barry Brown, anyone else that was in the 18 firm at the time. 19 Q. So, you asked -- 20 A. Tom Anthony. 21 Q. You asked Mr. Rosenberg if there would 22 be a problem with your representation of GMR and 9347 1 Mr. Simpson regarding the Park 410 property? 2 A. The memo would have asked him. The 3 memo that -- I did not personally, before I went 4 to the meeting at Alamo, ask Stanley, "Is it 5 okay?" I simply circulated the internal conflicts 6 memo. 7 Q. And got no response? 8 A. Got no negative responses, and that's 9 our system. You can go forward. 10 Q. Okay. I interrupted you. You were -- 11 after you had discovered that there was a possible 12 conflict because Mr. Rosenberg's activity with 13 United at -- United representatives at Alamo, you 14 called Mr. Simpson. Right? 15 A. Mr. Simpson and Mr. Grieshaber. 16 Q. Okay. And what did you tell them? 17 A. I told them I could not represent them 18 in connection with the letter of intent, 19 negotiating and preparing a letter of intent on 20 the property to acquire the Park 410 property from 21 McClintick and Alamo Savings. 22 Q. Then what happened? 9348 1 A. I stayed out -- a couple of weeks went 2 by. I guess about two or three weeks went by and 3 I got a phone call from John Grieshaber one 4 evening who told me that they had the -- let me 5 back up. 6 Before that, I know that we worked on 7 or the firm worked on a letter of intent that was 8 submitted for the property. I remember talking to 9 Stanley, introducing me to -- I think it was David 10 Graham had come to the office one day, and they 11 were working on it. 12 Afterwards, I got this call one night 13 from Grieshaber who told me that Alamo had 14 selected Park 410 as the person they were going to 15 pursue a contract with -- 16 Q. Had selected whom? 17 A. I'm sorry. Noel Simpson, Gulf 18 Management Resources. The Grieshaber/Simpson 19 group is who they were going to sign a letter of 20 intent and had actually signed a letter of intent 21 with for the property. And he then asked me if I 22 would work on doing a contract with them. I 9349 1 checked with Stanley, and Stanley told me that the 2 Simpson group had, in fact, gotten it and that 3 United had not and I was free to go forward to do 4 it. And so, I told them I would. And then I went 5 and met with them the next day and began, based on 6 the letter of intent that was given to me, to 7 prepare this contract in about a three-day period 8 or four-day period, maybe a week. 9 Q. Did you check with any other members of 10 the law firm in connection with your renewed 11 representation of GMR? 12 A. At that point, I don't believe so. The 13 other conflicts check did not raise any conflict 14 at all. 15 Q. Turn with me, please, to Page 4 in 16 Exhibit 7161. Looking at Paragraph No. 8, 17 "Conditions Precedent to Purchaser's Obligation to 18 Close," what is the purpose of this paragraph as 19 set forth here, Mr. Gindy? 20 A. Just one second. (Witness reviews the 21 document.) Okay. This is, in part, the 22 feasibility or the out that was built into the 9350 1 contract. 2 Q. The out? 3 A. The out, I call it. The ability for 4 the buyer to get out of the transaction without 5 paying an exorbitant price or penalty. These were 6 conditions that the buyer -- the purchaser had to 7 be satisfied before it was obligated to pay the 8 purchase price of the property. One was it could 9 conduct a feasibility study to determine that it 10 met the general purposes that it -- for the 11 investment goals that it had. The 37 acres was 12 for the Northwest Expressway that we were talking 13 about. That was -- we had to be able to finalize 14 the location of the site. And the last one was we 15 had to confirm to ourselves that water and sewer 16 were available at that site. Other utilities, but 17 primarily water and the sewer capacity and the 18 sewer easements were a big issue were available 19 to -- for development of that property. 20 Q. What do you mean by the sewer and water 21 easements were an issue? 22 A. Well, it was not so much the -- well, 9351 1 both the easements and the availability or 2 capacity. This talks more to the capacity issues. 3 San Antonio at that point had gone to a fee system 4 where significant platting fees had to be paid or 5 developers had to build the infrastructure to 6 extend both water and sewer service to your 7 property. And there were questions that -- 8 especially with regard to the way this was done, 9 it was not -- Mr. McClintick's group didn't 10 document their transaction quite as well from the 11 development of their property as maybe we saw from 12 some of the other development groups in the city. 13 There was a lot of question as to whether we had 14 sewer capacity, whether all the requisite platting 15 fees, whether the sewer contracts that were in 16 place for the sewer lines that ran through their 17 property allowed connections without having to pay 18 additional fees or building additional lines. And 19 the same applied for water. You don't have that 20 problem with electric or telephone or gas. 21 Q. How did you figure out whether or not 22 it was acceptable? 9352 1 A. Research, getting ultimately 2 confirmations from the various utility companies, 3 reviewing the underlying sewer contracts 4 primarily. 5 Q. Did you do a feasibility study, or was 6 one done, I should say? 7 A. That was part of the feasibility study 8 that was done, but that was a separate requirement 9 from the feasibility study. The feasibility study 10 was a 90-day period, if I recall from this 11 contract, and there really wasn't a time limit on 12 the -- on B and C. They could go -- your 13 satisfaction of those could occur even after the 14 time period was up under A. 15 Q. Were there other problems in connection 16 with drainage easements? 17 A. The Park 410 property, the land itself, 18 had a bunch of real interesting title problems to 19 it. 20 Q. What do you mean by "a bunch"? 21 A. A bunch, primarily easements. When 22 Mr. McClintick or the predecessors to 9353 1 Mr. McClintick's group owned the property, when 2 they went to build the sewer lines or drainage, 3 they gave blanket easements that says "you may 4 build a drainage easement or you may put a sewer 5 line across my 427 acres." And they didn't say 6 where, how wide, how deep, or anything else. And 7 so, this property was encumbered with several 8 blanket easements which made it difficult to plan 9 where you could put a street, plan where you could 10 put a building or anything else. And I mean, when 11 you own a ranch, you say "Yes, you can put a water 12 line or an electric line across my ranch kind of 13 in this area" and it doesn't matter. But for 14 commercial development, you like to know where 15 they are. You have to know where they are. 16 In addition, this property had -- some 17 of this land had a couple of very major drainage 18 creeks that run through there in that part of town 19 coming off of the foot hills of the hill country 20 into Culebra and those needed to be narrowed, 21 channelized, and land taken out of the 100-year 22 flood plain. The improvements had to be made to 9354 1 those drainage ditches and creeks so that portions 2 of the land weren't in it. 3 Q. What is the significance of a 100-year 4 flood plain? 5 A. If the land is in the 100-year flood 6 plain, it's -- as a practical matter, it becomes 7 very difficult to borrow money against to build 8 something on, to get insurance on it without 9 paying special flood insurance premiums. Real 10 hard to work with land that's in the 100-year 11 flood plain if you're going to use it for anything 12 other than a parking lot or grazing or crops. 13 Q. How many acres of -- 14 A. Or a park. 15 Q. How many acres of Park 410 were 16 involved with the 100-year flood plain? 17 MR. KEETON: Could we have an answer as 18 to what point in time because I think it changes 19 depending on the developer? 20 A. I couldn't tell you -- I couldn't tell 21 you what percentage of the Park 410 land was 22 within the 100-year flood plain when it was first 9355 1 acquired. At this time, the contract -- I can 2 tell that you a significant portion of it was, but 3 they had already started to do drainage studies 4 through Pape-Dawson Engineering and had already 5 started Alamo Savings doing the flood studies as 6 to what it would take to channelize the water, 7 what the banks -- what the creeks had to look like 8 or drainage canals had to look like in quantities. 9 And ultimately by the time we got 10 finished with it, all that was -- the only land 11 that's within the 100-year flood plain is the land 12 that's within the dedicated drainage easements. 13 And you're asking me a question -- I couldn't tell 14 you the exact acreage. I'd be guessing. 15 Q. (BY MR. LEIMAN) How big was Park 410? 16 A. 427 acres originally. 17 Q. And what proportion, roughly, was 18 involved with the flood plain? 19 MR. KEETON: At what point? After it's 20 been done or at first? 21 MR. LEIMAN: No. In 1985. 22 Q. (BY MR. LEIMAN) That you're aware of. 9356 1 MR. KEETON: Well, I'm still trying to 2 find out if it's after the work was done or before 3 the work was done. 4 THE WITNESS: I'll answer it both ways. 5 Is that okay? 6 MR. KEETON: That would be fine with 7 me. 8 A. Before the work was done, I can't tell 9 you. I don't know. I can only tell you a 10 significant part of the land, substantial 11 portions. I don't recall seeing a map in recent 12 years when it was done. I'd say -- my guesstimate 13 would be less than 5 percent of it is now and 14 drainage in those canals -- and drainages are well 15 laid out, defined, built, and finished. And I 16 would guess 5 percent of it. 17 THE COURT: We'll take a short recess. 18 19 (A short break was taken 20 at 11:13 a.m.) 21 22 THE COURT: Be seated, please. We'll 9357 1 be back on the record. 2 Mr. Leiman, you may continue. 3 MR. LEIMAN: Thank you, Your Honor. 4 (11:37 a.m.) 5 Q. (BY MR. LEIMAN) What was -- 6 Mr. Gindy, what was the -- if you look with me at 7 Exhibit T7161, looking on the front page of this 8 exhibit, what was the purchase price that was 9 designated? 10 A. $37 million. 11 Q. Was that price ever amended or changed 12 in any way? 13 A. Yes, it was. 14 Q. Okay. 15 A. There were adjustments made through 16 some amendments to the contract. 17 Q. And in that regard, would you look in 18 this very same exhibit, please, at page number 19 Bates OW013284? 20 A. Yes, sir. 21 Q. All right. Now, looking at Paragraph 22 No. 2, what is the significance of the language 9358 1 that's written here on "total sales price"? 2 A. Sales price is converted from a flat 3 price or a fixed price for the entire 427 acres 4 for the parcel of land to a price per net acre of 5 land. And the contract goes on to define what net 6 acres is. 7 Q. Why was that done, Mr. Gindy? 8 A. It had to do with the issues of trying 9 to define the net -- the area that was going to be 10 included in the drainage easements, drainage 11 canals, and how much land was left that could be 12 used. 13 Q. Now, look with me, please, at the page 14 that immediately follows 13284. On my copy, the 15 Bates number is obscured. 16 Do you see there a series of A through 17 F? 18 A. Yes. 19 Q. What do those numbers and paragraphs 20 represent? 21 A. Those were additional price adjustments 22 that were done to encourage the purchaser of the 9359 1 property to pay off the purchase price to Alamo 2 Savings, Mr. McClintick, and Mr. Arburn, as the 3 sellers, earlier or quicker than they would 4 otherwise be required to do so. And there were 5 credits -- well, what this really did, it had an 6 impact on the interest. Just a moment. 7 It adjusted the purchase price as to 8 what interest accrued on and provided for some 9 discounts in the purchase price if you paid off 10 the indebtedness more quickly. 11 Q. And look with me, please, at 12 Subparagraph A. That's the original price, 13 37 million; is that right? 14 A. That is correct. 15 Q. All right. And then that time frame 16 where that price would be applicable is from when 17 till when? 18 A. That was applicable from December 1st, 19 1985, purchase price through -- from the date of 20 the contract through December 31st, 1985. 21 Q. All right. Then what about B? 22 A. B was from January 1st, 1986, which -- 9360 1 through March 31st, 1986. 2 Q. Okay. And what was the -- the amount 3 by which that figure increased from -- 4 A. $1 million. 5 Q. Okay. What about in C? 6 A. There was an -- that figure from 7 April 1st, 1986, through June 30th, 1986, was 8 $38,500,000. 9 Q. And would I be right in thinking that 10 in the subsequent paragraphs, on a quarterly 11 basis, the increment was in half-million-dollar 12 installments? Right? 13 A. That is correct. Each bump was a half 14 million dollars. 15 Q. Until finally from January 1st, 1987, 16 to maturity, the price becomes $40 million; is 17 that right? 18 A. That is correct. 19 Q. Okay. Now, let's look at the last 20 indented paragraph on this page. Can you tell me 21 what the term of this particular agreement that 22 amended the original earnest money contract was 9361 1 for? 2 A. This contract -- I need to look for a 3 moment. (Witness reviews the document.) This is 4 the amendment -- the original contract provided 5 for a cash payment at closing, $37 million cash 6 paid by the buyer at closing. 7 Q. Yes, sir. 8 A. This contract converted it to an 9 owner-carried or paper transaction where the owner 10 carried a note back or a credit transaction for 11 the purchase. And those notes were to be for a 12 term of two years. 13 Q. Okay. Now, what does that mean? What 14 do you mean, "a term of two years"? 15 A. The buyer, at closing, executed 16 promissory notes to Alamo Savings, Mr. McClintick, 17 and Mr. Arburn for the purchase of the -- for the 18 purchase of the property. And rather than paying 19 them cash at closing, a promise to pay two years 20 down the road. 21 Q. Okay. Now, look with me, please, at 22 the next page of this exhibit, which is OW013286, 9362 1 which is Page 3 of the amended agreement here. 2 Look about in the middle of the page. 3 Do you see the language which begins, 4 "The purchase money notes and deeds of trust 5 securing such notes shall provide that the holder 6 of the purchase money notes shall look solely to 7 the property pledged to secure payment of the 8 purchase money notes for repayment of the purchase 9 money notes and that the holder of the purchase 10 money notes or beneficiary of the deed of trust 11 securing same may not seek a deficiency judgment 12 against the makers of the purchase money notes or 13 the purchaser." 14 What does that mean? 15 A. The promissory notes that were executed 16 or the obligations, promises to pay the purchase 17 price could be enforced only from payment -- the 18 promise to pay could be enforced or collected 19 against only assets that had been specifically 20 pledged. It was not a general obligation of the 21 borrower to pay. If the buyer or purchaser chose 22 not to pay the promissory notes, the note holder 9363 1 would look only to the collateral or -- this 2 language here doesn't say they will look for 3 collateral. It says they will not seek any -- 4 they will look solely to the land that was pledged 5 to secure payment of the note and they may not 6 take a judgment for any remaining sums owing on 7 the note after the foreclosure process from the 8 original makers of the note. 9 In Texas, especially at this time, in 10 the foreclosure process, financial institutions 11 have the opportunity to bid in what they choose at 12 the non-judicial foreclosures. We did not have 13 the deficiency statutes at that time. It was 14 not -- they could have bid fair market value of 15 the land. They could have bid less than fair 16 market value of the land. They could bid more 17 than fair market value. But whatever was left 18 owing in that foreclosure sale, if there were no 19 other bidders at the courthouse that overbid them, 20 then the remainder was the deficiency. And in 21 this case, the note holder or Alamo Savings, 22 Mr. McClintick, but primarily Alamo Savings was 9364 1 left with no ability or right to sue the makers of 2 the note. In this case, it was, I believe, 3 Park 410 Joint Venture. 4 Q. Is that what's called a non-recourse 5 note? 6 A. You could -- 7 Q. Is that one way to call it? 8 A. That would have been much more 9 efficient. 10 Q. Okay. Let's talk for a moment about 11 the topic you just touched on which is -- I think 12 you were referring to non-judicial foreclosures in 13 Texas. 14 What -- in terms of valuation of 15 property where a non-judicial foreclosure would 16 apply, what is the relationship between valuation 17 of property, say, through an appraisal and the 18 process known as non-judicial foreclosure? 19 A. At the time this loan was in place or 20 today? 21 Q. No. At the time the loan was in place? 22 A. In Texas at a non-judicial foreclosure, 9365 1 a note holder directs a trustee who holds record 2 title to the property to post the property for 3 sale on the first Tuesday of the subsequent month, 4 posting that notice 21 days in advance at the 5 courthouse at the required public place or, at 6 this time, it was just one place. And the city 7 notice is to the borrower. 8 At that point, the trustee on 9 foreclosure day at the appointed time stands on 10 the courthouse steps and offers the property for 11 sale and are there any bidders? The bidders -- if 12 there are no bidders for the property, it doesn't 13 sell. Traditionally -- I can't think of any 14 situation -- I have not seen that the lender -- if 15 there are no other bidders, always the lender 16 almost always will bid -- make some bid on the 17 property by giving credit on the note for whatever 18 they choose to bid. If a note was $100,000 in 19 indebtedness, the -- and there are no other 20 bidders, the bank or note holder could bid $100 or 21 they could bid $100,000, but whatever sum they bid 22 would be a credit on the note. Whatever was left 9366 1 would be a deficiency. You could add in expenses, 2 attorneys' fees, 3 percent -- 5 percent trustee 3 fee. 4 Q. So, the more the bank bid -- 5 A. -- the less the deficiency. 6 Q. Okay. 7 A. The less the bank bid, the greater the 8 deficiency. 9 Q. Was there concern at the time -- strike 10 that. 11 Was it a practice at the time for some 12 lenders to -- that were friendly with borrowers to 13 make a high enough bid so there was no deficiency? 14 A. I would say that there was a practice 15 that went both ways. We saw people in situations 16 where lenders routinely -- if there was no 17 competition for bidding -- would bid low so they 18 could create a greater deficiency for collection 19 or whatever reasons. We also saw transactions 20 where lenders would bid fair market value based on 21 appraisals, and we also saw transactions where 22 lenders would bid -- or note holders. I shouldn't 9367 1 say lenders because they were just the note 2 holders -- who sometimes bid higher for their own 3 business reasons. 4 Q. Oh, by the way, how long did a 5 non-judicial foreclosure take at this time frame, 6 mid-Eighties? 7 A. Still today, generally for commercial 8 property, you have to post notice 21 days in 9 advance of the first Tuesday of the month. So, 10 depending on when your note -- your note holder 11 told you to post, you sometimes -- if you were -- 12 22 days before the next first Tuesday, there were 13 many nights that we would work late to get notices 14 out. If you missed it by a day, then you had to 15 wait for the following month. 16 Q. So, the whole process took about a 17 month? 18 A. A month, yeah. A month. It would be 19 routinely -- the approximate time, 21 days if you 20 were very efficient on the day you chose to 21 foreclose. 22 Q. You said that sometimes you'd work 9368 1 late. Was this a common practice in the 1980s? 2 A. Very common practice. There was -- you 3 got instructions the first week of every month 4 what to post for the following month's foreclosure 5 sale. And you could pretty well count on a lot of 6 paperwork if you were doing foreclosures to be 7 ground out, notices for posting, affidavits of 8 posting and mailing, all to be done in time for 9 the deadline, which was three weeks before the 10 next month's first Tuesday. 11 Q. Did there come a time in the 1980s when 12 your non-judicial foreclosure practice picked up 13 the pace? 14 A. The mid-Eighties, we saw a lot of 15 foreclosures for residential properties. As the 16 economy turned, we saw a big -- turned downward, 17 we saw a huge increase in foreclosures in Texas, 18 both -- very seldom did we see judicial 19 foreclosures on mortgage loans. We -- 20 traditionally, my clients, 95 percent of the time 21 will go non-judicial. 22 Q. And your clients were primarily 9369 1 commercial? 2 A. Commercial lenders, both for homes and 3 for business. You tried to stay away from being 4 in a courthouse and having to litigate the debt if 5 you could. Only if it were contested. 6 Q. Thank you, Mr. Gindy, for those -- the 7 information on that. I'd like to ask you on 8 Page 3 at the bottom of this particular document, 9 it goes on to say -- well, it says that the 10 purchase money notes are non-negotiable, and it 11 goes on to say that -- four lines from the bottom, 12 "The purchase money note payable to Alamo shall be 13 further secured by letters of credit totaling $4 14 million, which letters of credit shall be issued 15 by one or more financial institutions reasonably 16 acceptable to Alamo in which letters of credit 17 shall have an expiration date not earlier than one 18 year from the date of closing." 19 Why was that done in this particular 20 case? 21 A. The notes that were given to Alamo were 22 for 100 percent of the purchase price. Alamo 9370 1 wanted a down payment or some equity investment at 2 risk by the Park 410 group, the purchasers. And 3 that was done by giving them, as additional 4 collateral, the size of the land, the $4 million 5 in the letters of credit so that when the note -- 6 if there was a default in the payment of the note, 7 Alamo received or could receive payment under the 8 $4 million of letters of credit and could 9 foreclose and take the property back. It was one 10 way of getting $4 million of equity or down 11 payment into the transaction. 12 Q. Do you know if the issuance of such 13 letters of credit would put the issuer at risk for 14 losing that money? 15 A. The $4 million of letters of credit? 16 Q. Yes, sir. 17 A. Well, the issuers -- if the issuers 18 were the banks, yes. If the issuers were also the 19 borrowers that signed for those letters of credit, 20 as well, they were at risk. 21 Q. Now, look with me, please, at 22 Page OW013287. Near the middle of the page, there 9371 1 is a summary in the form of sort of a column 2 summary of the table that we had discussed earlier 3 in connection with the -- we'll call it settlement 4 discounts, or I've heard it referred to as bumps. 5 A. Sometimes we call them bumps. In this 6 transaction, it was actually structured as a 7 prepayment discount. 8 Q. All right. And looking here at the 9 middle of the page, is this reflective of what we 10 saw earlier on Page OW013285, I think, which is 11 Page 2 of this amended agreement? 12 A. What you saw earlier was the 13 computations for the interest that said interest 14 will accrue on certain agreed sums of money or 15 portions for the computation of the interest. 16 This is the actual discount language that impacted 17 the principal. 18 Q. So, there -- 19 A. The numbers are the same as far as the 20 amount of reductions or increases at each step. 21 Q. I see. So, there were -- there was 22 interest due and payable in connection with this 9372 1 agreement; is that right? 2 A. That's correct. 3 Q. And how was that computed? 4 A. Interest accrued on the reduced figures 5 for each of those periods assuming -- I believe it 6 was assuming that the bumps or the discounts were 7 in place and as it went up, the debt went up. I 8 need to go back and look if you want me to check. 9 Well, that is what happened. As each 10 one went forward, the interest was accrued on the 11 larger number. 12 Q. Now, turn with me -- 13 A. Once the bump was lost or the discount 14 was lost. 15 Q. At the time it expired? 16 A. That's correct. 17 Q. All right. Now, looking at Page 8 of 18 this amended agreement, Mr. Gindy, under Paragraph 19 7, it says -- it talks about the purchaser 20 assuming certain obligations. 21 Do you see that? 22 A. The purchaser? 9373 1 Q. Yes, in paragraph -- numbered 2 Paragraph 7. 3 A. I'm sorry. 4 Q. It's on Page No. 8. 5 A. Yes. 6 Q. Okay. What is this -- I'll give you a 7 chance to read this over. But what -- my question 8 to you is going to be or is: What is this 9 referring to in terms of obligations by the 10 purchaser? 11 A. (Witness reviews the document.) These 12 were credits against the money that was owing to 13 Alamo on the notes for different improvements, 14 primarily dealing with drainage and utilities, 15 that the purchaser agreed to perform. The first 16 one had to do with a sewer line. The second one 17 had to do with a sewer line. They were financial 18 obligations that the seller had to either build or 19 complete or pay for portions of the line 20 extensions that serviced this property that 21 Park 410, as the purchaser, agreed to pay for. 22 And by them paying for it, they got a credit 9374 1 against the purchase price. It was things that we 2 thought or the buyer felt was the seller's 3 obligation. And by the buyer paying for it and 4 getting a credit for it, the seller was -- carried 5 the financial burden. 6 The other one, C, D, E, F, G all dealt 7 with the drainage easements narrowing, repairing 8 the walls, side walls, and related activities to 9 bringing the drainage easements to repair them, 10 build them, improve them. 11 Q. Who did the legal work on -- in 12 connection with the easements and the other 13 matters that related to drainage and encumbrances 14 on the Park 410 property? 15 A. The original encumbrances on the 16 property, I don't recall who did them for 17 Mr. McClintick and for Alamo Savings. Ultimately 18 when it came down to Park 410, our group, having 19 it under contract, and narrowing and restricting 20 them, I did those. I did the easement 21 clarification agreement. 22 Q. How long did -- did that take you? 9375 1 About a month? Or how long did it take you? 2 A. We spent over a year on it. It's a 3 document that runs the whole volume in the public 4 records that went in and got agreements of 5 probably 30 of adjoining property owners or 6 various parties to sign off on where we agreed to 7 narrowing blanket easements, restricting them 8 down, agreeing that certain easements fell within 9 certain metes and bounds descriptions so that 10 instead of them covering the whole property or 11 being 150 feet wide, they were narrowed down to 12 50 feet and were restricted in size to increase 13 the usable property. 14 Q. When did you start and when did you 15 finish the work on this? 16 A. We started it right after we put the 17 property under contract, and we didn't finish it 18 until sometime after the United Savings loan was 19 closed. Portions of -- different easements got 20 finished at different times, but the final ones 21 weren't done, I believe, until after '86. 22 Q. After what month in '86? 9376 1 A. I think we finished the last ones in 2 July or August -- 3 Q. Of 1986? 4 A. -- of '86, about a year and a half 5 after we started, a year and four months. I'm not 6 real sure of the final date. I know -- we still 7 had a couple outstanding items when we closed the 8 loan with Ellen Lain and we were confident we 9 could finish them. 10 Q. And Ellen Lain is who? 11 A. Ellen Lain was United's attorney. 12 Q. What law firm does she work for? 13 A. Schlanger, Cook, I think. 14 Q. Okay. And where are they? 15 A. Houston. 16 Q. Okay. This second agreement, this 17 amendment was -- if you look with me on Page 11, 18 it appears to be dated February 19th and was 19 signed by a number of people, signing on behalf of 20 Gulf Management Resources. It appears to be his 21 signature. Can you verify if that's his 22 signature? 9377 1 A. Looks like his signature. 2 Q. Okay. What role did you have in 3 preparing the amendment that we've been looking 4 at? 5 A. I drafted it. I drafted it, and they 6 worked on revisions of it with Pat Gardner at the 7 Foster, Louis law firm, who was Alamo's attorney, 8 and I don't recall the attorney for 9 Mr. McClintick. 10 Q. Let's go to the next page, which is 11 OW013296. It purports to be the second amendment 12 to the earnest money contract. 13 Do you see that? 14 A. Uh-huh. (Witness nods head 15 affirmatively.) 16 Q. Okay. What did this second amendment 17 do? 18 A. This is -- this pushed back a time 19 period for one of the bumps. I think it was the 20 bumps. Let me look. It modified two time dates. 21 The time date of March 1st, 1985, in Article 15 22 was changed to March the 5th, and the date of 9378 1 March 15th, '85 referred to in Article 10 was 2 moved to March 19th. I'd have to look at Articles 3 5 and 10 to see what they were. (Witness reviews 4 the document.) 5 March 1st was a deadline for depositing 6 the $400,000 of earnest money. So, it was delayed 7 to the 5th. And Article 10 was changed to the 8 19th, and that dealt with adjustments in the 9 purchase price. For each day after March the 10 15th, there was a 6,675-dollar price adjustment. 11 So, that coming into effect was extended, as well. 12 So, we delayed certain things from happening or 13 extended the time periods for depositing the 14 earnest money and extended the time period for 15 closing. 16 Q. Now, I notice that there is no -- 17 A. Not closing. To extend the closing 18 date or an election to extend the closing date. 19 Q. There does not appear -- I haven't seen 20 any consideration passing in connection with this 21 second amendment which extended those dates. 22 Was Alamo and -- were McClintick and 9379 1 Arburn amenable to doing this? 2 A. Yes. I mean, they wanted to make the 3 sale. They agreed to it. 4 Q. Do you have any familiarity with -- as 5 of this point in time -- with the financial 6 condition of Alamo Savings? 7 A. Alamo Savings, I believe, at this time 8 was under supervision, I believe is the term. 9 Regulators were involved in the management or 10 review of loans at Alamo Savings. Alamo and 11 Mr. McClintick were anxious to make the sale. 12 Both of them -- it was important for them to get 13 that loan paid or restructured, modified. Their 14 preference was for the sale. They ultimately 15 agreed to this very elaborate loan transaction 16 where the loans signed by Park 410 were 17 collaterally transferred to Alamo. 18 Q. Let's look at the next page, the third 19 amendment to the earnest money contract. And here 20 looking at the end of Paragraph 1, there appears 21 to be another postponement or delay; is that 22 right? 9380 1 A. Yes. 2 Q. And what was the purpose of this third 3 amendment? 4 A. It was a further extension in the 5 closing period, I believe, for putting up the 6 earnest money in order to give an opportunity to 7 cure a number of the defects or -- not defects, 8 but concerns in title, the challenges for 9 narrowing of the easement. The first condition 10 for the time extension was to allow for one 11 particular blanket easement to be narrowed as in 12 A. For certain mineral reservations to have been 13 modified or deleted so that we didn't have to 14 worry about a user coming in to try to mine gravel 15 or clay. And we don't have any oil, but I guess 16 in the area. There was a tenant that needed to be 17 removed. But in order to remove certain title 18 exceptions that we weren't going to live with as a 19 buyer, they needed to be resolved and taken out. 20 Q. All right. Looking at Paragraph 2. It 21 says "If the closing date is extended pursuant to 22 this amendment beyond March 30, 1985, the 9381 1 purchaser shall extend the letters of credit 2 deposited," and it talks about those letters of 3 credit with the title company. 4 What was the purpose of Paragraph 2? 5 A. So that the letters of credit that were 6 posted as earnest money under the contract would 7 not expire before the expiration of the contract 8 so that Alamo and by this point Mr. McClintick -- 9 I believe Mr. Arburn was out -- knew that they had 10 the earnest money at risk under the contract and 11 could pursue a letter of credit that still had a 12 valid issuance term or outstanding term on the 13 letter of credit. 14 Q. So, as of this point in time, if you 15 look down here at the date it was executed, 16 March 13, 1985 -- right? 17 A. Yes. 18 Q. It was signed by, among others, Gulf 19 Management Resources, Mr. Simpson again; is that 20 right? 21 A. Yes. 22 Q. How long did the purchasers of the 9382 1 Park 410 property, as of March 13th, 1985, have 2 before they were required to settle under this 3 agreement as it was amended? 4 A. Two years. 5 Q. From what date? 6 A. From the closing date, which was 7 March 15th or could have even actually shifted to 8 a little bit later than that. 9 Q. March 15th, nineteen -- 10 A. '85. 11 Q. So, closing could have taken place as 12 late as -- 13 A. March '87. And those dates could have 14 even shifted under the contract a little bit 15 later. 16 Q. T7163, please. 17 A. When you asked the question closing, do 18 you mean "closing" as far as Alamo ultimately 19 realizing the sales proceeds, being paid the 37 or 20 39 or $40 million, or do you mean closing that 21 they went from the -- into the loan -- they went 22 into signing the notes and deed of trust and 9383 1 transfer of title? 2 Q. The actual sale of the property. 3 A. The actual sale of the property 4 occurred before -- I mean, it wasn't two years 5 out. The sale of the property occurred when the 6 note -- when land was transferred in '85 from the 7 Alamo group to the Park 410 group and the note and 8 deed of trust were signed. 9 Q. All right. And when would the proceeds 10 have been recognized by -- under this agreement -- 11 perhaps my question wasn't clear. 12 Under this agreement as it stood on 13 March 13th, 1985, when did the Park 410 property 14 need to change hands? 15 A. Title to the Park 410 property would 16 have moved from Alamo Savings and Mr. McClintick's 17 group to the Park 410 group -- and I have to look 18 at the closing date, but it was a fairly short 19 period of time after those conditions occurred. 20 In connection with that transaction, the notes 21 were signed, the $4 million of letter of credit 22 was put up, but Park 410 then owned the land. 9384 1 Noel Simpson's group. 2 Q. And how long did the buyers have to 3 close on the property after that? 4 A. I'm sorry. I don't recall. I'd have 5 to look. (Witness reviews the document.) 6 It was supposed to have been originally 7 March 15th, 1985, and it was extended by the 8 amendment until those conditions were satisfied in 9 the second amendment -- the third amendment. 10 Excuse me. 11 Q. And what was the term of this 12 agreement? Turning back, we looked at a 13 two-year -- do you remember we looked at a 14 two-year term? 15 A. The two-year term was the terms of the 16 notes. That's where I'm confused by your 17 question. Those two-year terms of the notes don't 18 start to run until title is transferred. Under 19 the earnest money contract, that had to close, the 20 land transferred to the buyers, and from that 21 point forward there was two years to run on the 22 notes. So, I mean, Alamo Savings was more than 9385 1 two years away from receiving cash; but title 2 transferred in 1985. 3 Q. All right. And in the event that the 4 buyers wanted to back out of this transaction and 5 walk away -- 6 A. Before it closed, before the actual 7 sale and title transferred, it would have cost 8 them $500,000 which was, I believe, the earnest 9 money under the contract. Once the title -- once 10 the transfer of the land was consummated and 11 transferred to the Park 410 group, the Noel 12 Simpson group, at that point, it would have cost 13 them up to $4 million had they walked away. 14 Q. And they had two years within which 15 to -- 16 A. And they had two years in which to do 17 that. 18 Q. I see. All right. I apologize for the 19 confusion caused by the question. T7163. 20 Although we haven't gotten there yet, Mr. Gindy, 21 and without regard to this exhibit I just handed 22 you, what we're referring to is a period of 9386 1 time -- a theoretical two-year period of time 2 which would have run prior to -- as we'll explore 3 later on -- United making a loan on the property. 4 Right? 5 A. That's correct. 6 Q. All right. Now, let's look at T7163. 7 Did you write this -- 8 A. 7163? 9 Q. 7163, yes. Did you write this letter? 10 A. Yes. 11 Q. And can you tell me what it was? 12 A. In connection with it, Noel had 13 mentioned or had told me that they were looking 14 for a potential partner for the property. I was 15 bringing to his attention that we had recently 16 completed a large transaction that involved 17 Gibraltar Savings and that we would be happy to 18 introduce him to the people at Gibraltar that had 19 been involved in the Encino Park transactions that 20 had just been completed. 21 Q. Was it the practice of GMR to get local 22 investors? 9387 1 A. I can't think of any of the other 2 transactions that I ever dealt with that 3 included -- that they had other partners other 4 than their own group of investors that they raised 5 from overseas. 6 Q. And in connection with this 7 transaction, why were you suggesting this to Mr. 8 Simpson? 9 A. He had indicated that -- he had advised 10 me that he was going to be looking for a lender on 11 this project to finance it. They weren't going to 12 pay all cash for it themselves. And we had just 13 finished a transaction that involved a large 14 residential/commercial multi-use development on 15 the 281 corridor, called Encino Park, that 16 Gibraltar had funded. So, they were involved in 17 dealing in the San Antonio market with very 18 large-dollar loans. 19 Q. This is on November 29th, 1984. In 20 this case, did -- was Gibraltar interested at this 21 point in time? 22 A. I don't think so. I don't think they 9388 1 knew about it. 2 Q. Okay. Did Mr. Simpson pursue it? Do 3 you know or don't you know? 4 A. Not at this point. 5 Q. Okay. 6 MR. LEIMAN: Your Honor, I move 7163. 7 MR. KEETON: I'd like to ask the 8 witness one question on voir dire, Your Honor. 9 THE COURT: All right. 10 11 VOIR DIRE EXAMINATION 12 13 (12:17 p.m.) 14 Q. (BY MR. KEETON) Mr. Gindy, this 15 appears to be a file copy that must have come 16 from, I guess, your files since it's not signed 17 and it doesn't have your letterhead on there. 18 Do you have a recollection that you 19 actually sent this letter? 20 A. I recall that I had told him about 21 Encino's -- Stanley had suggested that we make 22 them aware of it. 9389 1 Q. I'm asking whether you sent this 2 letter. 3 A. I believe so. 4 MR. KEETON: I have no objection, Your 5 Honor. 6 THE COURT: Received. 7 8 CONTINUED EXAMINATION 9 10 (12:18 p.m.) 11 Q. (BY MR. LEIMAN) Following up on 12 Mr. Keeton's question, you have no reason to think 13 you didn't send it, do you? 14 A. No. 15 Q. You don't usually sign your file 16 copies, do you? 17 A. No. At this point, we used a tissue 18 system before we went to copying the signed ones. 19 Q. 7103, please. Let me just take a 20 moment and go back to T7163. 21 Who was it again that told you to send 22 this November 29th, '84 letter out, or at whose 9390 1 suggestion did you do that? 2 A. I don't know if it was mine or 3 Stanley's, but we had just finished doing this 4 transaction with Encino and I knew that -- we knew 5 that we needed a lender and we suggested it. 6 Q. Was Mr. Rosenberg involved in the 7 Encino transaction, too? 8 A. Yes. Very much so. 9 Q. Let's look at T7103. If you would, 10 take a moment to look through this document. I'd 11 like to ask you several questions about it. 12 A. (Witness reviews the document.) Okay. 13 Q. All right. Mr. Gindy, have you seen 14 this document before? 15 A. Yes. 16 Q. Okay. And when did it first come to 17 your attention? When did you first see it? 18 A. About the date of it, the spring of 19 '85. 20 Q. Okay. And do you remember the 21 circumstances? 22 A. It was a rough outline of a plan that 9391 1 was circulated by Noel as to how they would -- as 2 to how they were proposing to structure the 3 ownership of Park 410 property. 4 Q. By this point in time, which was 5 March 1st, 1985, had GMR -- was there a partner 6 with GMR involved in the 410 property? 7 A. GMR had a couple of partners. One was 8 a limited partnership of Grieshaber, Roberts that 9 was there and they had -- and Stanley Rosenberg. 10 Q. Was he actually involved at this point 11 in time? 12 A. In 1985, this would be just about the 13 time of the first closing. 14 Q. Look with me at the second page of the 15 exhibit. 16 A. This is when he was already into the 17 transaction to close the loan for the purchase. 18 Q. Under what conditions do you -- strike 19 that. 20 How did Mr. Rosenberg, if you know, get 21 involved with GMR on the Park 410? 22 A. Noel wanted a partner in the 9392 1 transaction, and I don't know -- I believe Noel 2 called Stanley or Stanley called Noel to -- I 3 don't know which way it occurred -- to tell them 4 that they were interested in the property and 5 wanted to participate in it. 6 Q. Do you know if the document was ever 7 signed and formalized? 8 A. I don't know if this document was 9 signed. The general terms of this as laid out is 10 how their plan ultimately developed. I don't 11 recall seeing a signed copy of it. 12 Q. Look, please, at the third page of the 13 exhibit, which is OW013482. 14 A. Uh-huh. 15 Q. Did you attend a verbal and oral 16 investment presentation by GMR concerning the 17 Park 410 property? 18 A. I attended many meetings by GMR, some 19 that involved investment presentations, some 20 that -- to investors to ask them to invest in it. 21 I don't know which one you're referring to. 22 Q. Did you ever go to a presentation at a 9393 1 facility in San Antonio by the name of the Argyle 2 Club? 3 A. I never went to a GMR function at the 4 Argyle Club that involved a presentation for -- a 5 presentation with regard to the Park 410 property. 6 I had been to many functions at the Argyle, but 7 not with regard to this. 8 Q. Is the Argyle Club limited in its -- 9 A. It's a private dinner club, very 10 restricted membership. 11 Q. Do you belong to it? 12 A. No. I have tried. Been on the list, 13 but not there yet. 14 Q. Was there anybody -- 15 A. I don't even know if my application is 16 still in anymore. 17 Q. Was Mr. Rosenberg a member of the 18 Argyle Club? 19 A. Yes, he was or he still is. 20 Q. Okay. And would he be entitled to use 21 its facilities? 22 A. Yes, he would. 9394 1 Q. Would he be entitled to host an 2 investment presentation at the facility? 3 A. You could host anything you wanted 4 there. He had a couple of -- I know at least one 5 wedding there. I'm sure he could have many a 6 dinner. 7 Q. All right. Looking at this page, are 8 you familiar with this investment presentation, 9 with the written format of it? 10 A. I have seen the presentation package 11 and the materials of it, yes, before it was used. 12 It went through several drafts. 13 Q. Now, if you would, look at 14 Page OW013496. 15 A. Okay. 16 Q. You received a copy of this? 17 A. Yes, I did. 18 Q. And would that have been on or about 19 March 18th, 1985? 20 A. Yes. 21 Q. Looking here next to the name "Stanley 22 Rosenberg," there is an arrow. 9395 1 A. Yes. 2 Q. That refers to -- it says the name 3 David Graham? 4 A. Right. 5 Q. Is that your handwriting? 6 A. No, it's not. 7 Q. Do you know if David Graham would have 8 been sent a copy of this letter? 9 A. That appears to be Stanley's 10 handwriting; and the arrow and the way that's done 11 is the way we would note things to Barbara, his 12 secretary, to send things. So, I would -- it 13 would be an assumption on my part that it was sent 14 to him, but she was very efficient. 15 Q. Barbara was whose secretary? 16 A. Stanley's. 17 Q. Looking at the next page, Paragraph 18 No. 4. That would be OW013497. Do you see where 19 Paragraph 4 refers to Ingram Road? 20 A. Yes. 21 Q. What was the purpose -- well, first of 22 all, let me ask you this: What was the purpose of 9396 1 this memorandum as you understood it? 2 A. There -- the property to the immediate 3 west was called the Westlakes property, and it was 4 owned by a group of individuals -- Mr. Leeper and 5 Gil Savings Association. And it was on the west 6 side of what's now the Westside Expressway. 7 Q. You're referring to this large aerial 8 view of -- what -- let's back up a second. 9 What is this a large aerial view of 10 that we have here in front of the courtroom? 11 A. The general area around the Park 410 12 property, Westover Hills, the Sea World area. 13 Q. Would this be as it was in 1985? 14 A. No. 15 Q. Do you know roughly when this would 16 appear to be reflective of? 17 A. Probably '94. 18 Q. 1994? 19 A. '94. 20 Q. Okay. All right. 21 A. Maybe a little bit later than that. 22 Maybe '95 or -- 9397 1 Q. Okay. You were describing the 2 Westlakes property. 3 A. I was looking at the map to see if 4 certain things were on there. I notice that the 5 lottery ticket manufacturer's name is on there. 6 So, I believe this map was probably -- I don't 7 know about the photograph, but at least the 8 labeling on it -- I think the photograph was 9 probably '94, '95. But the labeling on it, 10 whoever has done it, probably did it in late '96 11 because of the lottery. I don't believe the 12 lottery ticket manufacturer had announced before 13 then. I'm sorry. 14 Q. You were describing the Westlakes 15 property. 16 A. The Westlakes property is the property 17 immediately to the west on Loop 410 to the west of 18 this piece, or maybe it's south at this point. 19 But if the Park 410 property were at the northeast 20 corner, this would be the northwest corner of 21 Highway 151 and Loop 410 toward where Sears is, 22 where you're pointing, that tract, that parcel of 9398 1 land would be the Westlakes property back up to 2 the Park 410 property running from 410 up to 3 Potranco or Culebra. I mean -- 4 THE COURT: Mr. Leiman, would you 5 identify that so that we know where it is in the 6 record? It's a part of an exhibit, is it not? 7 MR. LEIMAN: Yes. Your Honor, let me 8 do this. Counsel and I have jointly agreed that 9 the -- this particular aerial view, we have no 10 objection to it being admitted on a joint basis. 11 Your Honor, we would move that B3851, 12 which is -- you've got a copy of it -- be 13 admitted. 14 MR. KEETON: No objection. 15 THE COURT: Received. 16 Q. (BY MR. LEIMAN) You were saying, 17 Mr. Gindy? 18 A. The Westlakes property would be the 19 parcel -- if you look at the word State Highway 20 151 -- 21 Q. Yes, sir. 22 A. -- that freeway, the Park 410 property 9399 1 is on the side of the road where the words are 2 written. The Westlakes property is towards the 3 bottom of that or on the opposite side of the 4 highway to the southwest where the Sears was. 5 That parcel between Sears going up to Highway 151. 6 Q. Looking at B on the exhibit that I was 7 showing you a few moments ago, 7 -- T7103 -- 8 A. Yes, sir. 9 Q. It states that "In the unlikely event 10 of the freeway not proceeding, each owner would 11 start construction with two years" -- it says 12 "with two years of the agreement." 13 Do you see that? 14 A. Yes. 15 Q. What was your understanding as to why 16 this was couched as -- in a conditional way? 17 A. We anticipated that what's labeled here 18 as the Westside Expressway or Highway 151 would be 19 built and, therefore, there would not be the need 20 for this Ingram Road extension. If it was not, 21 then they were going to build the Ingram Road 22 extension through the Westlakes property, through 9400 1 the Park 410 property, and tie it in to the north. 2 Q. What uncertainty was there at the time 3 that the freeway would not go forward? 4 A. At this point, the highway department 5 had announced plans for 151. They had not let 6 contracts. It was on the master thoroughfare 7 plan, which is a pretty strong indication that 8 it's going to be done; but it was a state highway 9 and the state highway commission could or could 10 not elect to get it done whenever they chose to do 11 it. 12 And so, they weren't certain that it 13 would happen in the near future or not. It's one 14 of the things that we ultimately got committed to 15 in connection with the Sea World purchase. We 16 went to the highway commission, and they agreed to 17 build it and put a time frame on it on the access 18 roads. 19 THE COURT: We'll adjourn until 20 2:00 o'clock. 21 22 9401 1 (Luncheon recess taken at 12:33 p.m.) 2 3 THE COURT: Be seated, please. The 4 hearing will come to order. Mr. Leiman, you may 5 continue with your examination. 6 MR. LEIMAN: Thank you, Your Honor. 7 (2:03 p.m.) 8 Q. (BY MR. LEIMAN) We left off, 9 Mr. Gindy, at Exhibit 7166. Do you have that in 10 front of you? 11 A. 7166? 12 Q. I may not have distributed it yet. 13 Mr. Gindy, have you seen this letter and the 14 attachment before? 15 A. Yes. I wrote the letter and forwarded 16 the attachment. 17 Q. And this is a March 5th, 1985 letter to 18 Bill Ross of Alamo Savings? 19 A. That's correct. 20 MR. LEIMAN: Your Honor, I move T7166 21 into evidence. 22 MR. KEETON: No objection. 9402 1 THE COURT: Received. 2 Q. (BY MR. LEIMAN) Mr. Gindy, what was 3 your purpose in writing this letter? 4 A. Under the terms of the contract, for 5 the purchase of the Alamo Savings tract or the 6 Park 410 tract, the -- we were having to put up 7 letters of credit. The buyer was having to put up 8 letters of credit, and they had the right to 9 approve the issuer of that letter of credit. And 10 they -- Mr. Ross had asked for some financial 11 records on United Savings. And I was forwarding 12 to them. Although the letter says "University," I 13 had just made the error in dictation or I did make 14 the error in dictation. It was United Savings 15 financial information that I had gotten from David 16 Graham that I was forwarding. 17 Q. Was it your understanding that Alamo 18 was going to rely upon the thrift financial report 19 that you submitted along with this letter? 20 A. They came back and told us that the 21 letter of credit from United Savings was 22 acceptable; so, they were relying on this report 9403 1 or some other financial records they obtained. 2 These were the only financial records that we 3 submitted that I'm aware of. 4 Q. Now, there's what appears to be a 5 Post-It note stuck on this with the signature, 6 Sandy. Who's that? 7 A. Sandy was my secretary. 8 Q. And she was simply saying what to you? 9 A. She was telling me that she had placed 10 the call to tell Mr. Ross and Mr. Graham that I 11 had erred in referring to United Savings. I had 12 called them University Savings instead of United 13 in the cover letter when I dictated it. 14 Q. Did you -- 15 THE COURT: So, there is no such thing 16 as University Savings? This is supposed to be 17 United? 18 THE WITNESS: That should be United in 19 this transaction. There is a University Savings, 20 and the cover letter -- the records attached are 21 for United. 22 THE COURT: All right. Excuse me. You 9404 1 may continue. 2 THE WITNESS: I just erred in dictation 3 and did not catch it. We had -- we had, at the 4 time, a University Savings in San Antonio, as 5 well. 6 Q. (BY MR. LEIMAN) Mr. Gindy, look at 7 the second page of the exhibit, the upper 8 right-hand side referring to United, SA of Texas. 9 A. Yes. 10 Q. Okay. And that's United Savings, isn't 11 it? 12 A. That's my understanding. 13 Q. All right. Now, look at the top of the 14 page at the "as of December 31st, 1984." 15 Do you see that? 16 A. That is correct. 17 Q. All right. It's your understanding 18 that this would have been their quarterly 19 financial report as of that date? 20 A. That is correct. 21 Q. Okay. Did you review this TFR, thrift 22 financial report? 9405 1 A. Not really. I've just forwarded it on 2 to Mr. Ross since he was the one making the 3 determination if it was acceptable to him or not. 4 Q. Okay. So, would I be right then in 5 thinking that, for example, on the page that's 6 Bates marked CN078215, in Section D under 7 "income" -- 8 A. I'm sorry. I don't appear to have a 9 Bates number on these copies. The right column. 10 I'm sorry. 11 Q. CN78215. 12 A. Got it. 13 Q. Do you see that? 14 A. Yes. 15 Q. Okay. You did not review the numbers 16 under non-operating income or -- 17 A. No, I did not. 18 Q. -- losses on sale, nothing like that? 19 A. I did not. 20 Q. Okay. You merely were a conduit? 21 A. I was a conduit, forwarded it on to see 22 if Mr. Ross would accept it. He advised me that 9406 1 it was acceptable. 2 Q. Okay. 3 MR. LEIMAN: Your Honor, I don't know 4 if I moved in 7103, T7103, but I do so at this 5 time. 6 MR. KEETON: I'm going to object 7 because it's a compendium of several exhibits. He 8 pointed to two or three of them out of about five 9 or six different documents. And I don't want the 10 whole exhibit coming in when he hasn't identified 11 those other documents or otherwise proved them up. 12 I think we need to take them one at a time. 13 MR. LEIMAN: Specifically, what is the 14 objection, Your Honor? 15 MR. KEETON: Well, there is about six 16 disparate documents in there. They are not 17 internally referring to each other, and I just 18 want to only get admitted the documents that have 19 been proven up. 20 MR. LEIMAN: Your Honor, I respectfully 21 must disagree with counsel. I don't understand 22 what his objection is. Mr. Gindy has indicated he 9407 1 saw the first two pages of the exhibit. He 2 identified the addendum to the investment -- 3 MR. KEETON: I have no problem with the 4 first two pages of the exhibit. That's the 5 business plan. 6 MR. LEIMAN: And Your Honor, I believe 7 we have already, at length, discussed the 8 amendment to the earnest money contract, which -- 9 MR. KEETON: And I have no problem with 10 the amendment to the earnest money contract if 11 that's the one at the back. 12 MR. LEIMAN: No. That's what I'm 13 seeking to determine, what exactly is the nature 14 of the objection here. 15 MR. KEETON: I'm not sure you discussed 16 that one. And then you have two separate pages in 17 here, both dated February 19th, which are 18 addendum, and then you have the last document. So 19 to admit all of 7103 is to admit different things. 20 I think you ought to give them an A, B, C, D 21 number 7103 and then you'll know which one we 22 talked about. 9408 1 THE COURT: Well, I see Page 2 is -- 2 Section A is on assets. The next one it seems to 3 omit B, which I assume is the liabilities, and 4 goes to Section D, E. It looks like it's all one 5 report. It has all the same date. It seems to be 6 missing only one page, one section. 7 MR. KEETON: Your Honor, if you look, 8 the dates at the bottom of each of those two 9 documents are different dates. 10 THE COURT: The top says "report as of 11 December 31st, '84." Right? 12 MR. KEETON: I understand that. But I 13 don't know why we've got different dates at the 14 bottom, whether they went back and redid one and 15 there is a whole report now that is dated 16 February 25th, even if it is as of February 19th. 17 MR. LEIMAN: Your Honor, let me see if 18 I can clarify this. I think we're dealing with 19 Exhibit T7103. 20 THE COURT: Well, I thought we were 21 looking at T7166. Am I wrong? 22 MR. KEETON: No. It was 7103. He went 9409 1 back, Your Honor. 2 THE COURT: I don't even have that. 3 (Whereupon the Court was handed the exhibit.) 4 All right. Mr. Keeton, what are the 5 pages you're objecting to? 6 MR. KEETON: Well, the two pages that 7 have those two different dates on them that appear 8 to be separate from some other report, I object to 9 those. Those are Pages 3 and 4. The amendment to 10 the earnest money was actually part of and 11 introduced without objection as part of 7161. Now 12 they are going to throw it into this one and we're 13 going to have confusion if you put it here. The 14 last two pages, which is the memorandum dated 15 March 18, 1985, I don't have objection to, 16 although introducing different exhibits under one 17 number is going to be trouble some day. 18 MR. LEIMAN: Your Honor, may I say 19 this? Mr. Gindy has indicated he's seen these in 20 this form. In fact, they are consecutively 21 numbered and they were consecutively numbered by 22 the respondents out of the files that presumably 9410 1 came from the institution. Mr. Gindy has seen 2 each of these. If Mr. Keeton would like, we will 3 have -- 4 THE COURT: It looks like most of the 5 exhibit is already in evidence; isn't that right? 6 The first two pages, I think, are already in 7 evidence. 8 MR. KEETON: Correct, Your Honor. 9 THE COURT: So, Page 3 is not; but the 10 following pages are -- 11 MR. KEETON: Page 3 and 4, Your Honor, 12 are not. And then the amendment is already in 13 evidence as -- 14 THE COURT: What is Page 4? 15 MR. RINALDI: Paul? 16 MR. LEIMAN: Yes. 17 MR. RINALDI: The Bates stamps at the 18 bottom of the page indicates that 13483 is missing 19 from my copy. 20 MR. KEETON: I've got 483. I don't 21 know if that's in it or not. 22 MR. LEIMAN: I'm not sure, Your Honor, 9411 1 what exactly the -- so we're all on the same page, 2 so to speak, let me ask Your Honor if you have 3 13483. 4 THE COURT: I do not. 5 MR. LEIMAN: Perhaps that is -- we will 6 reassemble the exhibit later, although -- 7 MR. KEETON: That's agreeable. 8 MR. LEIMAN: If that is the nature of 9 the objection, we will withdraw it. 10 THE COURT: Why don't you talk to 11 Mr. Keeton? I don't think there is a big -- 12 MR. KEETON: I don't think there is 13 either, Your Honor, except on those two pages and 14 then the confusion of putting the amendment in 15 twice and one time just as part of a group. 16 MR. LEIMAN: Can I have Exhibit 17 No. 7167? 18 Q. (BY MR. LEIMAN) Mr. Gindy, this is a 19 casualty insurance binder. Actually, it's several 20 of them. Would you go through this page by page 21 and please tell me if you've seen this before. 22 A. All right. (Witness reviews the 9412 1 document.) 2 Q. Mr. Gindy, would you have seen the 3 exhibit or any part of it? 4 A. I recall for sure seeing -- I know I've 5 seen the covering page of it which was Alexander's 6 master certificate for personal injury 7 limitations, and there is a couple of others of 8 the sub certificates, especially one I recall in 9 which Mr. Rosenberg's name was misspelled and I 10 had gone back to correct. I don't recall them 11 page for page. 12 Q. All right. Would you have seen Page 3 13 of this exhibit? 14 A. Yes. 15 Q. All right. 16 MR. LEIMAN: Your Honor, in the 17 interest of keeping the record short, I will move 18 that Pages 1, 2, and 3 of this exhibit be 19 admitted. 20 MR. KEETON: No objection, Your Honor. 21 THE COURT: Received. 22 Q. (BY MR. LEIMAN) Turn with me, please, 9413 1 Mr. Gindy, to the third page of the exhibit. 2 A. Yes. 3 Q. Looking to the left of the Bates 4 number, do you see the identification of "the 5 business of the named insured is" -- do you see 6 that? 7 A. Yes. 8 Q. Would you read that? 9 A. "Business of the named insured is: 10 Vacant land held for investment." 11 Q. And who was the named insured? 12 A. On this certificate, Westplex 13 Investment Corp., N.V. 14 Q. And who was Westplex Investment Corp., 15 N.V.? 16 A. Westplex Investment was one of the 17 entities that made up the Park 410 group. It was 18 Noel Simpson's investment group. 19 Q. Was Mr. Rosenberg part of that? 20 A. No. 21 Q. What was Mr. Rosenberg's investment 22 held? In what name was that held in? 9414 1 A. Originally, it was held in the name of 2 Stanley D. Rosenberg at this point in time. 3 Q. What is your understanding as to the 4 purpose, the business purpose, of 5 Mr. Rosenberg's -- of the insurance policy having 6 been issued in connection with -- was an insurance 7 policy issued in connection with Mr. Rosenberg? 8 A. We also -- yes. Stanley also had 9 general liability policy that we provided as 10 evidence of insurance for general liability claims 11 on the property. 12 Q. What was the purpose of getting general 13 liability insurance? 14 A. To insure against claims made from 15 someone that might be injured on the property. 16 Q. And do you recall what the business 17 purpose of Mr. Rosenberg's insurance was? 18 A. I do not. 19 MR. LEIMAN: Your Honor, I move Exhibit 20 7167 if I haven't already done so. 21 MR. KEETON: The first three pages. 22 MR. LEIMAN: Yes. The first three 9415 1 pages. 2 THE COURT: I just received that. 3 Q. (BY MR. LEIMAN) 7168. Mr. Gindy, 4 I've handed you Exhibit T7168. Have you seen this 5 before? 6 A. Yes, I have. 7 Q. What is it? 8 A. It's a fee statement from our law firm 9 to Gulf Management, Mr. Simpson's company, for 10 services -- for legal services from our law firm 11 in connection with the acquisition or the 12 contracting to buy the Park 410 property. 13 Q. Look at the first entry -- 14 A. Yes. 15 Q. -- on this. And the date shows 16 11-20-84. Right? 17 A. Yes. 18 Q. Next to that are some initials. Are 19 those your initials? 20 A. Those are my initials. 21 Q. All right. Would that have been -- and 22 what does it state to the right of your initials? 9416 1 A. "Met with John Grieshaber concerning 2 the terms of the proposed contract." 3 Q. All right. And below that? 4 A. "Prepared initial draft of the earnest 5 money contract." 6 Q. What is that referring to? 7 A. It's referring to the meeting that I 8 had with John after they had notified me that they 9 had -- a letter of intent had been signed between 10 Mr. Simpson's or Gulf Management Group and Alamo 11 for the Park 410 property. And we had -- at that 12 point, we went forward to prepare contracts based 13 on that letter of intent to purchase the property. 14 This was after I had determined that Stanley's 15 client had not been successful in entering into a 16 letter of intent with Alamo and we could go 17 forward without a conflict. 18 Q. All right. Would you look down near 19 the bottom of the page dated 11-27-84? 20 A. Yes. 21 Q. The initials BSB, who would that be? 22 A. Barry Brown. 9417 1 Q. And who was Barry Brown? 2 A. Barry Brown was an attorney that worked 3 for me in the office about 10, 11 years in the 4 real estate group. 5 Q. Turn to the next page of the exhibit, 6 please. Look at the third entry down. 7 A. Yes. 8 Q. 1-9-85 and then the initials RLS. Who 9 is RLS? 10 A. Robert Lee Smith or Bobby Smith. 11 Q. And who was he again? 12 A. He was an attorney in our office that I 13 mentioned earlier or referred to earlier. He was 14 with us for several years in the real estate group 15 and then left to go to Akin-Gump. 16 Q. Look down about halfway down the page. 17 On January 10th, 1985, there is SRW. Who is that? 18 A. Scott Wortham. He was an attorney that 19 worked with Bobby. He is now deceased. 20 Q. On 1-17-85, there is a reference to -- 21 your initials are shown there, and it states 22 "Review draft amendment and conference with Dan 9418 1 Crump and Charles White." 2 Who is Charles White? 3 A. Charles White was a gentleman that 4 worked for -- I'm sorry -- Gulf Management or Noel 5 Simpson, as did Dan Crump. Charles did their 6 San Antonio projects, a little bit of construction 7 supervision, whatever needed to be done in 8 San Antonio. Dan Crump at that point was -- I 9 believe still lived in Dallas. 10 Q. Looking farther down the page, on 11 1-17-85, the initials are AG. 12 Who would that be? 13 A. Ann Grandier, a legal assistant in our 14 firm. 15 Q. Now, at the time that this bill went 16 out in nineteen -- on March 27th, 1985 as shown on 17 the first page of the exhibit and for this period 18 from November 20th, 1984, through the end of the 19 bill, February 19th, 1985, there is no reference 20 to -- well, let me ask you the question. 21 Did Mr. Rosenberg's initials appear on 22 this? 9419 1 A. I'll have to look. (Witness reviews 2 the document.) "SLB" is Stanley Blend. No, sir. 3 Q. Do you remember if Mr. Rosenberg did 4 any work in connection with the Gulf Management 5 Resources project under the billing -- heading for 6 Charles R. McClintick? 7 A. I don't know if he -- in the very early 8 stages, he was not at all involved in it. As you 9 got into the winter months, January '95, he became 10 involved with the transaction. 11 Q. You mean 1985? 12 A. Excuse me. 1985. Time flies. He 13 became involved in the transaction but not -- not 14 in the very beginning portions of it. 15 Q. Was this bill paid? 16 A. Yes. In fact, I think the check's 17 attached. The check is attached to the back of 18 it. 19 Q. And where is that, Mr. Gindy? 20 A. OW013267. 21 Q. And so, the 13,600-dollar check dated 22 April 15th, 1985, would have represented full 9420 1 payment of this outstanding bill? 2 A. Yes. There was a small adjustment to 3 the bill, $40. I think that's on the copy. 4 MR. LEIMAN: Your Honor, I move T7168. 5 MR. KEETON: No objection. 6 THE COURT: Received. 7 Q. (BY MR. LEIMAN) T7106. Mr. Gindy, I 8 handed you an exhibit marked T7106 dated 9 March 28th, 1985. 10 Have you seen this document before? 11 A. Yes. 12 Q. When did you have occasion to see it? 13 A. I saw it at the time -- about the time 14 of the date of the letter. I had seen an earlier 15 draft of it several days before that. 16 Q. Whose handwriting is that in the upper 17 right? 18 A. The words that say "copy" and "safety 19 deposit"? 20 Q. Yes. 21 A. That's Stanley Rosenberg's. 22 Q. Did you discuss this letter with 9421 1 Mr. Rosenberg? 2 A. I discussed briefly with him the terms 3 of the letter in an earlier draft that was 4 prepared and sent to United. I don't recall if I 5 drafted it or if I just commented to Stanley on 6 it, but there was an earlier draft of this sent 7 out to David Graham, I believe. 8 Q. Do you have an understanding as to what 9 the purpose of this letter was? 10 A. Yes. 11 Q. What's that? What was the purpose? 12 A. This was the -- evidenced the 13 partnership or the agreement between Stanley and 14 United with regard to their ownership of the half 15 interest in the Park 410 property or the 16 partnership that owned the property and the 17 responsibility of the parties underneath that, 18 between them with regard to the investment. 19 Q. Do you -- are you familiar with how 20 this relationship between Mr. Rosenberg and United 21 came about? 22 A. Well, the original relationship came 9422 1 about, Stanley told me in connection with a 2 meeting -- when I inquired about the meeting at 3 Alamo Savings, was that he had been asked by -- he 4 had been asked to assist United and David Graham 5 in trying to negotiate a purchase of the Park 410 6 property from Alamo Savings and Mr. Stahl, Dick 7 Stahl, who was involved in the management of the 8 savings and loan at that time and responsible, I 9 believe, for the sale of the asset. Apparently, 10 United had had made some efforts at acquiring the 11 property and they were just looking for someone 12 local that was involved or had some relationships 13 with Mr. Stahl to see if that could help in 14 reaching agreement on a letter of intent. That's 15 my understanding. That's what Stanley told me he 16 had done. And he had met with them and that was 17 the purpose of the meeting that was occurring. 18 Once Park 410 got the property, 19 Park 410 -- excuse me. Not Park 410. Gulf 20 Management acquired the property, they began to 21 look for their -- some financial partners. I do 22 not know if Noel called Stanley or if Stanley 9423 1 called Noel, which way that occurred, to let them 2 know that Stanley was still interested or was 3 interested in participating in the Park 410 4 property. But I became aware that they had an 5 interest in working together or Stanley had an 6 interest in pursuing it. A little bit later, 7 towards the end of March, I believe, Stanley went 8 to reduce the arrangement to writing in connection 9 with having to obtain the issuance of the letter 10 of credit and some money being put up. And I 11 remember seeing a draft of the letter and 12 commenting on it. And then that went to David 13 Graham is my recollection. Then this letter 14 apparently came back to Stanley and was signed, 15 and I don't think I saw this letter until a couple 16 weeks later as it actually was done. 17 MR. LEIMAN: Your Honor, I move T7106 18 into evidence. 19 MR. KEETON: No objection. 20 THE COURT: It seems that it's already 21 in as B3822. Do you want -- 22 MR. LEIMAN: I'd like this one in 9424 1 separately, Your Honor, in as much as it has this 2 handwriting up at the top which is in the hand of 3 Mr. Rosenberg. 4 THE COURT: All right. Received. 5 Q. (BY MR. LEIMAN) Mr. Gindy, what was 6 the nature of the partnership arrangement as you 7 understood it between Mr. Rosenberg and United 8 Savings pursuant to this agreement of March 28, 9 1985? 10 A. Stanley and United were to be equal 11 partners in the transaction. With regard to 12 ownership, Stanley held the asset in his name and 13 he was the actual partner in the Park 410 14 partnership. United funded or provided the 15 letters of credit and provided the money that had 16 to be put up by Stanley's side that was to be 17 repaid to them first, and then profits were to be 18 split equally. 19 Q. Were they general partners or limited 20 partners or -- 21 A. It had to be general partners or joint 22 venturers. It was not a limited partnership. 9425 1 Q. Pursuant to this agreement, it was not? 2 A. Pursuant to this agreement, it was not 3 a limited partnership. 4 Q. It was a general partnership? 5 A. General partnership. 6 Q. What does that mean? 7 A. Under partnership law, the partners are 8 jointly and severally liable. Either party can 9 apparently bind the other unless there is some 10 agreement between them that would restrict that 11 that's known. But as to the outside, people can 12 rely on either unless you have reason to believe 13 otherwise. They were general partners. 14 Q. Do you know if this was ever recorded, 15 this particular document? 16 A. As far as recorded in the real property 17 records or the public records in Bexar County, I'm 18 sure it was not. I don't see how it could have 19 been -- it didn't have an acknowledgement on it, 20 and I'm not aware of it ever being recorded in the 21 Secretary of State's office or anywhere else, nor 22 would it normally be so. 9426 1 Q. Why is that? 2 A. You don't record general partnership 3 agreements. 4 Q. Let me have T7165. Mr. Gindy, I've 5 handed you T7165. I'd like you to take a couple 6 of minutes and read this memorandum dated March 4, 7 1985, from SLB who you identified earlier as 8 Stanley Blend in your law firm to Stanley 9 Rosenberg. 10 A. (Witness reviews the document.) Okay. 11 Q. Have you seen T7165 before? 12 A. Yes. 13 Q. And what were the circumstances of your 14 seeing it? 15 A. In early March, we were -- there is a 16 partnership agreement being prepared between 17 Simpson's group, John Grieshaber's group, and 18 Stanley for the Park 410 property. And questions 19 had to do with the allocation of -- in connection 20 with that partnership agreement which Stanley's 21 office was drafting, an issue came up with regard 22 to deductibility of interest, and that's what this 9427 1 is explaining to Stanley, the -- Stanley Rosenberg 2 from Stanley Blend, the limitations on Stanley's 3 ability to deduct interest. 4 Q. Do you still have in front of you, 5 Mr. Gindy -- do you have 7106 in front of you? 6 A. Yes. 7 Q. Would you look at Paragraph 4 in 7106, 8 please? 9 A. Yes. 10 Q. Okay. The reference there to each 11 party being liable to the other for their share of 12 losses -- 13 A. Yes. 14 Q. -- was that -- was Paragraph 4 in your 15 original -- in the draft document that you 16 commented on? 17 A. I do not believe it was there in this 18 format. 19 Q. Okay. Now, what's the purpose of 20 Mr. Blend's counsel in this regard in connection 21 with losses? 22 A. Mr. Blend's counsel with regard to 9428 1 losses is you had to have -- you had to have an 2 economic effect or be at risk for the deduction to 3 occur. I think Mr. Blend's memo, though, here is 4 with regard to the Park 410 venture partnership, 5 not the -- not this partnership between United, 6 although it possibly could be -- it's the same 7 issue. If Mr. Rosenberg wasn't at risk, he may 8 not be able to deduct the interest here. But this 9 memo -- 10 Q. When you say "here," what are you 11 referring to? 12 A. Under the partnership between 13 Mr. Rosenberg and United as to who would be able 14 to deduct the interest expense there. But in -- 15 this memo, I'm sure it was directed to the 16 partnership with Westplex and Grieshaber. 17 Q. And why was this an issue? 18 A. Stanley wanted to be able to deduct the 19 entire interest allocated to his half of the 20 partnership or to the Stanley Rosenberg/United 21 portion of the interest. He was to be able to 22 deduct that is my recollection. 9429 1 Q. Would such interest be deductible 2 pursuant to or consistent with the agreement as 3 shown in T7106? 4 A. T7106 -- T7106, there was no appearance 5 of that in the underlying partnership. The 6 partnership was with Stanley, and the interest 7 expense was allocated to Stanley D. Rosenberg in 8 the partnership with Westplex and Grieshaber. And 9 so, when the interest came to him, how Stanley and 10 United then divided it was a separate issue 11 between themselves. And they may have used this 12 memo in modifying this letter so that Stanley 13 would be able to deduct it all. I don't know 14 that. 15 Q. But Mr. Rosenberg used the letter 16 you've just been talking about, specifically 7165, 17 in connection with the joint venture with GMR; is 18 that right? 19 A. Absolutely. The partnership was 20 modified to incorporate that provision. 21 Q. Was -- why was that an issue, though? 22 A. The issue was that Stanley wanted to be 9430 1 able to -- wanted to be sure that he could deduct 2 the interest expense against other investment -- I 3 guess against other income. I mean, we were 4 looking at changes of tax rules about that time. 5 And it was -- had gone beyond my experience and 6 Stanley Rosenberg's. We went to Blend, who was 7 now drafting most of the partnerships in the firm 8 with tax consequences, and he wanted to ensure 9 deductibility, the maximum deductibility in the 10 early years. 11 Q. Let's look at T7169. 12 A. Maybe "insurance" is the wrong word. 13 Maybe attain maximum deductibility. 14 MR. LEIMAN: Your Honor, I move that 15 T7165 be admitted. 16 MR. KEETON: No objection. 17 THE COURT: Received. 18 Q. (BY MR. LEIMAN) Mr. Gindy, I've 19 handed you T7169. I would ask you whether you 20 have seen this document before. 21 A. Yes, I have. 22 Q. I notice you smiled. Why did you 9431 1 smile? 2 A. This is an agreement that starts off 3 with a modification agreement. This was prepared 4 by me, and it was the beginning of the 5 documentation for clarification of the various 6 easement agreements across the Park 410 property. 7 Q. Is this all of them? 8 A. Is this all of them? Oh, no. 9 Q. No? 10 A. No, no, no. This is the beginning or 11 the basic document that was signed between 12 United -- I mean between Alamo and McClintick and 13 the Park 410 partnership. The actual 14 documentation that modifies them is a whole volume 15 in the records. It comes out of this instrument. 16 Q. In connection with the property you 17 described certain matters that were of concern, 18 especially regarding drainage channels. Another 19 matter of concern, as I understood it, had to do 20 with recertification. 21 What was that about? 22 A. Do you mean the flood plain 9432 1 certification? 2 Q. Yes. And who would do that? What 3 agency would do that? 4 A. FEMA. In connection with the 5 channelization, we had to define the -- one issue 6 was to define the drainage easements. And in 7 narrowing them down from a very broad blanket 8 easements or very broad 150 or whatever the widths 9 of the easements were to more narrow easements, 10 you had to add depth to them in connection with 11 that, the engineers did their flood plain studies, 12 designed the channels, and the water flows through 13 them. You then submitted that to FEMA for a 14 review and approval and FEMA certification as to 15 modification of the flood plain maps in the flood 16 plain areas. 17 Q. Would you look, please, at 18 Page OW0168084? I notice here under the name 19 Stanley D. Rosenberg, joint venturer, your name is 20 typed in. And I would ask you: Is that your 21 signature? 22 A. It's my signature. 9433 1 Q. What was your role in connection with 2 signing this document? 3 A. I was signing on behalf of Stanley as a 4 member of the Park 410 West Joint Venture. I had 5 a general power of attorney from Stanley most of 6 the time that he was with the law firm in this 7 area going forward, and I frequently signed 8 documents for Stanley. 9 Q. What other occasions did you have to 10 sign documents for him? 11 A. I signed loan documents, purchase 12 documents, deeds for sales. I signed and 13 consummated things as his attorney-in-fact for him 14 on a personal basis innumerable numbers of times 15 over a 10- or 15-year period. 16 Q. Did you ever attend meetings in his 17 stead? 18 A. Yes. 19 Q. How often? 20 A. It would -- I mean, it would depend on 21 what the activities were. I mean, if there was an 22 active transaction and he chose not to go to the 9434 1 meetings, sometimes he would send me if it was one 2 that he wanted me to handle. Sometimes he would 3 send Bobby Smith if it was one that he wanted 4 Bobby to handle. Sometimes he would have Barry do 5 it. But often, he would pick one of us to go and 6 act on his behalf. 7 Q. What about in connection with the 8 Park 410 property and meetings held by GMR? Did 9 you ever attend any of those instead of -- 10 A. I went to the majority of the meetings 11 for him and then would meet with him and briefly 12 summarize and give him the materials that came 13 out. He didn't like -- the meetings were very 14 long. 15 Q. And he didn't like what? 16 A. He didn't like the real long meetings. 17 MR. LEIMAN: Your Honor, I move T7169 18 into evidence. 19 MR. KEETON: I'm reminded of the fact 20 that something was knocked out the other day, a 21 10K, because we looked at -- do we really need 40 22 pages of this in the record? I don't have any 9435 1 objection, but it just -- we've got a record with 2 Pages that nobody's ever going to understand. 3 You've gotten your answers. I don't see why you 4 need the document. 5 THE COURT: Received. 6 MR. LEIMAN: Apparently, Your Honor, 7 those -- that particular document is in another 8 box. It will be brought up in a moment. I'll 9 move to another exhibit in the meantime. 10 Q. (BY MR. LEIMAN) 7170. Mr. Gindy, 11 this purports to be an assignment of development 12 agreement -- 13 A. Yes. 14 Q. -- dated March 29th, 1985. Have you 15 seen this document before? 16 A. Yes, I have. 17 Q. When did you have occasion to see it? 18 A. I believe I prepared it in the end of 19 March in connection with the transfer of the 20 property from Park 4 -- from Alamo Savings and 21 Mr. McClintick to Park 410 West Joint Venture. 22 Q. Looking at the second page of the 9436 1 document, it appears that you signed on behalf of 2 Mr. Rosenberg; is that right? 3 A. Yes. 4 Q. Would that have been in the same 5 capacity that you -- 6 A. I signed this and many others in that 7 capacity in connection with the closing. 8 MR. LEIMAN: Your Honor, I move 7170 9 into evidence. 10 MR. KEETON: No objection. 11 THE COURT: Received. 12 Q. (BY MR. LEIMAN) What was the 13 purpose -- Mr. Gindy, what was the purpose of the 14 assignment of a development agreement? 15 A. There were several agreements that the 16 old owners, the Alamo Savings/McClintick group, 17 had entered into contracts with several adjacent 18 property owners in connection with the development 19 of their property and some joint development 20 projects. I believe this was the one with 21 Mr. Lifschutz' group, which would be the piece of 22 property immediately to the east. And they had 9437 1 reached an agreement for construction of a 2 drainage easement across the property, had to do 3 with the dimensions of what that easement was 4 going to be. Some of the requirements of that 5 drainage canal or drainage facility -- let's see. 6 I'd have to go on and read it for a minute. I 7 don't remember it. (Witness reviews the 8 document.) 9 In exchange for them building that, 10 Mr. Lifshutz was transferring some capacity that 11 he had in a sewer outfall line to Park 410 group. 12 And under this document, the Alamo 13 Savings/McClintick group assigned their rights to 14 the Park 410 West group, my clients, and agreed to 15 perform the obligations of the seller or the 16 assignor. And that was it. Transferred the 17 rights -- the obligations and the rights to the 18 sewer capacity to it. 19 Q. Mr. Gindy, you referred again to the 20 aerial that we've got here in front of you. 21 A. Yes. 22 Q. This is B3851. Would you please tell 9438 1 the Court, since you're familiar with the area, 2 what of the identified enterprises on this aerial 3 view were not in existence in 1985? 4 A. If we started on the right-hand side of 5 the page where it says "Loop 410," Southwest 6 Research Institute and the Southwest Foundation 7 for Biomedical Research were there. That's on the 8 inside of Loop 410 right -- just down a little 9 bit, right there, and across the street from it 10 just a little bit farther down the page. They 11 were both there. Those were in existence. 12 If you go across the street to Sony, 13 Sony wasn't there as Sony, but they had -- we 14 already had seen a predecessor company in a 15 portion of that development was there for another 16 micro chip developer. If you came along Loop 410, 17 there is a large building that's, like, the post 18 office facility. It's kind of underneath the "P" 19 for Potranco. 20 Q. Right here? 21 A. Yes. That was not there. If you go 22 above "P" for Potranco, that residential 9439 1 subdivision, I don't believe it was in existence. 2 Q. Here? 3 A. That one. Where it says "reserve at 4 Westover Hills," it was ranch land just as it's 5 showing here at that time. 6 Q. Was it ranch land then, too? 7 A. Yes. 8 Q. And it's ranch land now? 9 A. Yes. VLSI Technology was not in place 10 at that time. Creekside Subdivision was not in 11 place, which is above it. That's just showing to 12 be under construction there. Where it says "the 13 capitalist group," that was a recent sale. Not 14 the capitalist. Boy. A Freudian slip. The 15 Capital Group. 16 Q. Where is that? 17 A. It's at about 7:00 or 8:00 o'clock to 18 VLSI. 19 Q. That was not there? 20 A. That was not there. It was raw land. 21 And I think they have now started their project. 22 QVC, I don't believe, was in place, either of 9440 1 them. BABN, I believe, is the site for the people 2 that print the Texas lottery tickets, and that was 3 not there or sold at that time. Above it where it 4 says "corporate office campus site," that was raw 5 land. It's just identified as a site for -- what 6 they are trying to market to. There is nothing 7 there. 8 Q. Is that right here? 9 A. I was looking at the one below it, that 10 one. 11 Q. These 200 acres? 12 A. 200 acres was vacant and it still is 13 basically vacant today. Going above it where you 14 were on the north side of Wiseman Road where it 15 says "Stonegate Hill and corporate campus sites," 16 those were -- are natural land as they were. Via 17 to the left is the public transportation 18 authority. That's a park and ride facility that 19 was built about 1987 or '8; so, it was not in 20 existence in '85. World Savings is a tract that 21 was just recently sold to them for a servicing 22 facility. So, it was not there. The new Alamo 9441 1 area community college campus was a fairly recent 2 transaction. It was not there in '85. Takata is 3 a Japanese seat belt manufacturing firm that's 4 built their US offices and assembly facility. I 5 don't believe it was there in '85. Sea World was 6 there. That's a 500-acre tract you're looking at. 7 But it was certainly not in that condition in 8 1985. It was a raw -- had just started work. I 9 don't know when in '85 we're talking about. 10 Q. How many acres does that Sea World 11 facility represent? 12 A. 498.2 acres. 13 Q. And is that bordered by Ellison 14 Drive -- 15 A. Ellison Drive. 16 Q. -- Military Drive West, and Loop 1604? 17 A. No. If you look where the letter "W" 18 is in "world" and pretty much go down that line, 19 you'll see there is a residential subdivision 20 under the letters "SEA" and the "W." That 21 residential subdivision was in place when the park 22 was bought. And it really -- there was very 9442 1 little activity in it at that time. It had gone 2 stagnant, I think. It's since filled out, but 3 that is the western boundary of Sea World back up 4 against that subdivision. 5 Q. What about this Hyatt Regency Hill 6 Resort? 7 A. Hill Country Hyatt came after 1985. 8 That's a several hundred-acre golf course hotel 9 resort. 10 Q. Was that there? 11 A. It was not there. If you go down where 12 it says Ellison Drive, below Sea World, you see 13 what looks like I guess an "R" maybe, a block "R." 14 That's the admiralty park facility for mobile 15 homes. That was built after 1985. If you go 16 down, I believe, to -- the Sears center was newer 17 in '85. Almost everything you see in the 18 Westlakes area, there is probably 30 or 40 19 buildings in there. Marbach Road -- 20 Q. Where is that? 21 A. If you follow Loop 410 down underneath 22 Sears, going down that street right there, that 9443 1 intersection, that's a large retail corner. I'd 2 say the majority of that was all there in '85. 3 There have been some additional buildings built 4 there since '85, but there was a big rush -- two 5 or three big shopping centers on those corners at 6 the time. 7 Q. Was the Sears Teleservice Center there? 8 A. The Sears Teleservice Center was not 9 there. 10 Q. What about all of these residential 11 communities that we see? 12 A. If you go to the top right-hand part of 13 the drawing, about where you are now, a lot of 14 those homes were there as part of the great 15 northwest. As you come farther over, like above 16 VLSI to the left, they were not there from 17 about -- 18 Q. Halfway across? 19 A. Over to the left. 20 Q. Those were not there? 21 A. Those were not there. And then if you 22 come down to where it says Potranco Road and Hunt 9444 1 Lane, Potranco down to Hunt, you did not have -- 2 you probably had two-thirds of those houses there 3 is my recollection. A lot of what you see on the 4 inside of Loop 410 was already there at the bottom 5 right-hand side of the page. Most of that was 6 there. 7 Q. All right. Now, let me ask you about 8 the housing, this residential housing. Where do 9 the people that -- to your knowledge, where do the 10 people that reside in those residential 11 communities work? 12 A. Well, the area of the city west of 13 Bandera Road, which is three or four intersections 14 to the east of where you are, if you're standing 15 like where your head is going off to the side, all 16 the way over to this property, we call the great 17 northwest. And a large portion or a good 18 portion -- it's hard to say how many. But a 19 significant number of people that lived in that 20 area worked in the Kelly area. It was a big -- I 21 mean, Kelly Air Force Base, and the overhaul was a 22 major employer. You can't say everybody did or 9445 1 50 percent did, but it was a major employer for 2 the area. And then the home values that were 3 there, it was recognized to be -- one of the 4 reasons that Highway 151 was built was to provide 5 a means of travel for people from Kelly and the 6 Lackland areas to get to the great northwest on 7 the west side of town without having to drive all 8 the way back from I guess about 6 miles to 9 Interstate 10, go up Interstate 10, and come 10 across Loop 410 to get back. And so, that was the 11 purpose. 12 Q. What was the -- in connection with the 13 kind of housing that this was, the kind of 14 residential communities that these were, were they 15 middle income? 16 A. They were middle income. They were 17 what I call large tract builders. Ray Olson, his 18 name is on one of the streets, was a doner of a 19 portion of the property to Sea World. Owned a big 20 portion of this and built a great deal of the -- a 21 large number of the homes in this area, and he 22 built tract homes. You would go in and pick out 9446 1 small variations. Did you want a window here or 2 did you want a bay window? But 15, 20, 30 basic 3 floor plans and each neighborhood had a price 4 range. Some were 50 to 65. Some were 65 to 85, 5 and each one had a definite price range. They 6 were all similar. 7 Q. Now, the Park 410 property would be 8 bounded by this proposed State Highway 151, Loop 9 410, and then Potranco Road; is that right? 10 A. That's correct. And then the Lifshutz 11 property, which is right about where the letter 12 "4" is for Loop 410. 13 Q. Here? 14 A. Uh-huh. 15 Q. And then so, there would be another -- 16 it would be cut here? 17 A. That's correct. 18 Q. Okay. Which is just to the -- I guess 19 it would be the south west of Sony. Right? 20 A. That's correct. 21 Q. Okay. Now, this is undeveloped with 22 the exception of what? 9447 1 A. On Park 410? 2 Q. Yes. What's there today? 3 A. Well, first of all, all the basic 4 infrastructure for Park 410 is in. All the 5 streets, utilities, drainage facilities, a couple 6 of bridges across the drainage easements or the 7 drainage canals. That type of activity is there. 8 There is a regional post office there which is on 9 the property. There is a large -- 10 Q. Where would I find the post office? 11 A. I believe that's the white building. 12 Q. This thing? 13 A. Yes. 14 Q. Right here at this intersection? Okay. 15 A. There is a very -- what's not on this 16 drawing which has been built in the last two and a 17 half years or so is there is one of the large 18 super Albertson's stores which is -- 19 Q. That's a supermarket? 20 A. Supermarket/drugstore facility. One of 21 the big -- I think it's 70 or 80,000 feet with a 22 little bit of supporting retail that is 9448 1 cater-corner if you went directly across the 2 corner. 3 Q. Where? 4 A. From the post office. 5 Q. Right here? 6 A. No. It would be here. It's above the 7 "H" for highway. 8 Q. It's right here? 9 A. Yes. 10 Q. And what about the rest of the 11 property? 12 A. Then there is one other very large 13 furniture rental/office facilities company that's 14 built a large service center building in there. I 15 don't know the size. I guess it's 60,000 feet, a 16 combination display area and offices and 17 warehousing that's in the same basic area. And I 18 think those are all the projects that are built 19 there. 20 Q. Out of the usable space in Park 410 21 property, how many acres or -- well, there were 22 about 328 usable acres; is that right? 9449 1 A. Right. 2 Q. How many have been used? 3 A. I couldn't tell you exactly. It would 4 be would be a guesstimate. 5 Q. What's your guesstimate? 6 A. Between 30 and 40. 7 Q. Between 30 and 40 acres -- 8 A. Not counting the streets, the roads and 9 the drainage. Those came out to get to the -- 10 started out 427 acres. Then it went to about 11 328 acres usable. And of the usable, I would 12 guess that probably 30 of them or so are used in 13 those three major projects. 14 Q. You described a number of other 15 facilities that are located in the area you've 16 described around San Antonio as the great 17 northwest. VLSI Technology -- 18 A. We call this the Westover Hills area 19 where these are. 20 Q. Westover Hills is where VLSI relocated? 21 A. The great northwest is a little bit to 22 your right where the housing and going back 9450 1 towards -- but what you're seeing and what is 2 developed there where VLSI. See where we call 3 that the Westover Hills area or I did? 4 Q. Do you know why these businesses and 5 entities located in these locations in Westover 6 Hills and did not locate in Park 410? Do you know 7 why? 8 A. Well, they chose to come to the west 9 side of the city. Many of them that are already 10 built have large telephone-based employees and 11 they wanted to have that labor force generally 12 available to them with ease of getting there. 13 Most of these were built campus-oriented, which 14 means they wanted larger acreages, larger tracts 15 where they spread their buildings out more, which 16 meant they needed to pay less for their land than 17 you might find the way we were pricing Park 410 at 18 the time because you could buy more land from 19 Mr. Wender or Dr. Wiseman or some of the other 20 groups that had that property in footage for the 21 same dollars. 22 Q. Was the Wender property, was this 9451 1 Westover Hills property directly competing with 2 Park 410? 3 A. Yes. 4 Q. What about the Alamo Downs property? 5 A. Alamo Downs was a business park. 6 Q. Where was that? 7 A. That would be -- on Loop 410, you would 8 follow -- let's see. Do you see where Culebra 9 Road is? It's way in the upper right-hand -- 10 there is Culebra Road where it intersects Loop 11 410. It would be just off the page that you're 12 seeing. If you took the inside of the loop and 13 went right there at the corners of LaQuinta and a 14 Denny's, I believe, and a Wendy's and then next to 15 that is the Northside School District's athletic 16 field. And then next to that is Alamo Downs, 17 which is probably a 200-acre very high-end 18 business park, heavily landscaped, real nice 19 tilt-wall buildings. Nice finish. No outdoor 20 storage or, if it is, it's very well screened. 21 Q. Was that competing directly with -- 22 A. That was competing for that type of 9452 1 product. 2 Q. In 1985? 3 A. With Park 410. In 1985. 4 Q. 1985, 1986? 5 A. Yes. 6 Q. Park 410 was attempting to sell the 7 property and tracts on a per square foot basis; is 8 that right? 9 A. I think everything was really priced on 10 a square foot basis. 11 Q. Right. 12 A. If people asked us how much was it, it 13 was so much a foot. 14 Q. And these other projects in here, how 15 were they priced? 16 A. You could price them in price per foot 17 by doing the computation, but they were more -- 18 Marty was quoting his stuff or his sales either 19 frequently at so much an acre or when we 20 translated amount, he had a couple dollars a foot 21 less than Park 410. 22 Q. Let me ask you this because I'm kind of 9453 1 going off this map a little bit. This is Loop 2 1604 out here past World Savings this area? 3 A. Right. 4 Q. I think I've asked you this before. 5 What's out in this area? 6 A. Primarily ranch land. There is now -- 7 now we're starting to see a few residential 8 subdivisions start to come up on the outside of 9 Loop 1604 in the last three or four years. But 10 then it was ranch land and I believe right in that 11 area, just below where it says "World Savings," 12 there is an Ellison or now Broad & Koffman 13 development. But going farther north and as you 14 did towards UTSA, it's pretty much ranch land. 15 Q. What's the distance roughly, if you can 16 estimate for me, from Park 410 here at the corner 17 of 151 and Potranco Road up here to Culebra Road 18 and Loop 1604? 19 A. I think the Westside Expressway 20 extension from 410 -- from 410 all the way up to 21 1604, my recollection is that's just over 8 and a 22 half miles or 8 miles, something like that. It 9454 1 was the distance of that road. It was not as the 2 crow flies, but as you would drive. It's about an 3 8-mile drive. 4 Q. Could you estimate the number of acres 5 that remain undeveloped that are shown on this 6 aerial view? 7 A. Today? 8 Q. Yeah. Today. 9 A. Would that include people that have 10 committed to build but haven't built yet or -- 11 like, how do you want to count World Savings? 12 That's over 200 acres. They have said they are 13 building a facility. They have started it. It's 14 broken ground. Developed? 15 Q. I think you can count that as 16 developed. 17 A. They are not using all of that to begin 18 with. I would guess -- guesstimate, just looking 19 at the size of the tracts, I know probably well in 20 excess of 4 or 5,000 acres. 21 Q. That are shown here in addition to 22 the -- does that include the -- 9455 1 A. Including Park 410. 2 Q. 4 or 5,000 acres? 3 A. I use that as a 400-acre site and just 4 started trying to match it up. 5 Q. T7107. We'll try this again. I think 6 we now have this exhibit. 7 A. That may be a little bit high in the 8 numbers. It may be 3,000. 9 Q. Mr. Gindy, I handed you an exhibit 10 marked T7107. 11 A. Yes. 12 Q. And I ask you: Have you seen this 13 before? 14 A. Yes, I have. 15 Q. What is it? 16 A. It is the settlement statement for the 17 transfer of the property from Alamo Savings and 18 Chili McClintick to Park 410 West Joint Venture or 19 Noel Simpson/Stanley Rosenberg group. It was 20 prepared by the title company closer who handled 21 the exchange of papers and the transfer of fund, 22 notes, documents and recording. 9456 1 MR. LEIMAN: Your Honor, I move T7107 2 into evidence. 3 THE COURT: T7107? 4 MR. KEETON: No objection. 5 THE COURT: Received. 6 Q. (BY MR. LEIMAN) Mr. Gindy, I handed 7 you an exhibit marked T7108. 8 A. Yes. 9 Q. I'll ask if you have seen this exhibit 10 before or this document before. And I would point 11 out to you that if you look above the words "urban 12 development" appears the typed annotation "final." 13 A. One was initial and one was revised. 14 Q. Have you seen this before? 15 A. I believe so. I think it came out of 16 one of my books. It was the closing statement as 17 revised for that transaction. 18 MR. LEIMAN: Your Honor, I move T7108 19 into evidence. 20 THE COURT: We show it as having been 21 already received. 22 Q. (BY MR. LEIMAN) Let me ask you some 9457 1 questions about -- specifically about T7108, 2 Mr. Gindy, if I could. 3 A. Okay. 4 Q. What does this represent settlement of? 5 A. This is the sale from Alamo Savings of 6 55.9 percent and Mr. McClintick of 44.099 percent, 7 their undivided interest in the Park 410 property 8 to the Park 410 West Joint Venture. And then as 9 you work through it, it shows payments and 10 disbursements that were made by either side in 11 connection with the transaction. On the 12 right-hand side of the transaction is the seller's 13 side, which would be Mr. McClintick and Alamo 14 Savings' side. On the left-hand side where it 15 says "borrower," it is also the buyer's side. In 16 this case, they were the buyer and the borrower, 17 which would be the Park 410 West Joint Venture or 18 the Noel Simpson/Rosenberg group. 19 Q. I notice the contract price for the 20 property indicates that it was $39,017,699.47? 21 A. That's correct. 22 Q. Okay. Does that contract price relate 9458 1 back to the contracts that we saw earlier? 2 A. It should relate back to the math -- I 3 haven't done the math here, but we had adjusted 4 the price determination to a multiplier based upon 5 the survey of the net area that was outside of the 6 flood plain and outside -- and I believe also 7 outside of the platted roads at the time. And 8 that would give us the purchase price. I have not 9 done the arithmetic to see if it came out to 10 39,000, but -- I mean 39 million, but that's 11 approximately the right number. 12 THE COURT: We'll take a short recess. 13 14 (A short break was taken 15 at 3:18 p.m.) 16 : 17 THE COURT: Be seated, please. Back on 18 the record. 19 Mr. Leiman, you may continue. 20 MR. LEIMAN: Thank you, Your Honor. 21 (3:40 p.m.) 22 Q. (BY MR. LEIMAN) Before our break, 9459 1 Mr. Gindy, I was about to refer you back to a 2 previous exhibit that we had seen. And in that 3 regard, I'd like you to turn, if you would, to 4 T7161. 5 A. Yes. 6 Q. And look with me, if you will, please, 7 at Page OW013285. 8 Do you see that? 9 A. I believe that must be -- it's cut off. 10 Is that Page 2? 11 Q. It may be obscure. It is Page 2, yes. 12 A. Yes. Page 2, the addendum. Page 2 of 13 the amendment? 14 Q. Yes, that's correct. Mr. Gindy, are 15 you able to tell, based upon a comparison between 16 T7108 and the contract sales amount and the 17 enumeration in Parens A through F, where this 18 particular contract fell? 19 A. You could not tell simply -- well, you 20 could tell from that. Well, no. I don't 21 understand the question. I believe not. 22 I don't understand your question. 9460 1 Would you restate it, please? 2 Q. Yes. Looking at the contract sales 3 price listed on T7108 of $39,017,000 -- okay? 4 A. Uh-huh. (Witness nods head 5 affirmatively.) 6 Q. And comparing that to the amendment 7 that we see in Exhibit 7161 and specifically on 8 the page that I referred you to, which is Page 2, 9 can you tell where in the delineated parentheses, 10 A through F, where this particular contract price 11 fits or do we need to look at some other document? 12 A. We need to look at other documents. 13 Q. Okay. And what other documents do we 14 need to look at? 15 A. What you'd have to look at is, first of 16 all, you'd have to go first to the third -- I 17 think it's the third addendum or third amendment, 18 which is -- 19 Q. OWO13297? 20 A. Yes. And you would go to that and that 21 document, it provided for a price adjustment -- I 22 think that was it. Maybe I'm on the wrong one -- 9461 1 per acre; is that correct? I'd have to look 2 through it. I don't recall. Maybe it was this 3 one. I'm sorry. I am incorrect. You would look 4 at -- you referred me to Page 2. If you go back 5 to the page before that, we would take the 6 $116,000 -- $116,084.02 per acre and multiply it 7 by the net number of acres. 8 Q. You're on Page OWO13284? 9 A. That is correct. 10 Q. Okay. 11 A. Multiply that by the net number of 12 acres, and that would give us the contract 13 purchase price. That purchase price was not -- 14 did not at this point come into play with these 15 figures on Page 2. These figures that are on 16 Page 2 and then -- that have to do with the 17 computation of interest and then later on have to 18 do with the date of maturity that -- the notes 19 that were signed, there were promissory notes 20 executed for the full purchase price of 39,017.47 21 which is evidenced on Line 208 on both -- on the 22 buyer's side and Line 508 on the buyer's side of 9462 1 that settlement statement where it says 2 $39,017,699.47. 3 Q. Earlier, you indicated, Mr. Gindy, that 4 there was -- the notes that were signed in 5 connection with the Park 410 Joint Venture, 6 Mr. Rosenberg, and that USAT had been a partner 7 in, as well as GMR -- 8 A. Right. 9 Q. -- that that particular arrangement 10 with Alamo and Mr. McClintick had a two-year 11 period during which -- the notes that had been 12 signed with Alamo were two years; is that right? 13 A. That's correct. 14 Q. All right. We see here a settlement 15 date of March 29th, 1985. 16 A. That's correct. 17 Q. Was there some reason that that 18 particular date came into play, or is this the 19 settlement date? 20 A. Well, this is the settlement date for 21 the first purchase. 22 Q. Okay. 9463 1 A. And this is the purchase from -- I say 2 the first purchase. This is the only purchase. 3 This is where the property was bought by the joint 4 venture, the Rosenberg/GMR joint venture. They 5 paid Alamo and McClintick $39,017,699.47 by 6 signing two promissory notes. Those notes had in 7 them language that was consistent with what is on 8 Page 2 of the earnest money contract. And then 9 later on on Page 4 of that same contract, it talks 10 about the discount or the bumps if those notes 11 were paid early. And so, if the note in 12 nineteen -- if the note was paid in March of '96, 13 then you would have gone to the schedule and found 14 that you would have received a 2-million-dollar 15 discount off of the $39,017,699.47. You would 16 have only had to pay 37 million for it. 17 Q. All right. This is the first purchase? 18 A. This is the first -- the first 19 transaction. 20 Q. Okay. 21 A. The first set of notes, the only 22 purchase. 9464 1 Q. Look with me, please, at Page OW013317 2 in Exhibit 7108. Look at the top of the page and, 3 specifically, I'd like you to look at Line 701. 4 By the way, I think you again said 5 1996. You meant '86? 6 A. '86. I'm sorry. I keep -- Line 701? 7 Q. Yes. 8 A. Okay. That's Page 2, the outside 9 settlement charges on the back of the form? 10 Q. Right. The back of the form, which is 11 shown here as Page 2, I believe. Do you know what 12 the $928,365.18 represents? 13 A. That was the real estate commission 14 that the seller of the property -- it's charged to 15 the seller's side -- that the seller agreed to pay 16 to Grieshaber, Roberts in connection with the sale 17 of the property from Alamo Savings and McClintick 18 to the Park 410 group, Park 410 West Joint 19 Venture. So, that's the real estate commission 20 which was -- that was the real estate commission. 21 Q. Would it have been unusual to have paid 22 roughly 1 million or 900,000 plus-dollar real 9465 1 estate commission in connection with a purchase of 2 commercial property at the time? 3 A. At that point, we were seeing a lot of 4 real estate commissions being stair-stepped 5 starting at often 5 or 6 percent and stepping 6 down. Sometime in properties that weren't what I 7 call mass marketing properties, we see much higher 8 commissions in those where you have the free TV or 9 the other incentives to come and look at the 10 property on the marketing side. In large 11 commercial transactions, if I represented the 12 seller, I would certainly encourage them, you 13 know, to start to try to step down the commission. 14 It may be 6 percent for the first million and it 15 may go 5, 4, 3 and stay at 3. It would also 16 depend on how much money and who was footing a lot 17 of the expenses for the marketing efforts. If the 18 broker was mounting large campaigns and he had 19 very extensive overhead, then it might be at 6; 20 but that was a pretty hefty commission. 21 Q. Would that commission be reflective of 22 difficulty in selling the property? 9466 1 A. It could. 2 Q. Do you know if it was in this case? 3 A. I don't. 4 Q. Do you know -- how long was the 5 property on the market, the Park 410 property? 6 A. Well, I know it was on the market for 7 over a year. For at least a year. 8 Q. T7109, please. 9 MR. LEIMAN: I don't have the tab 10 number, Your Honor. I believe this was previously 11 admitted. 12 MR. RINALDI: 810. 13 MR. LEIMAN: Oh, Tab 810. Again, Your 14 Honor, this particular copy has handwritten notes, 15 marginalia that may prove to be significant. I'm 16 going to hand Your Honor a copy, as well and ask 17 the witness about it. 18 Q. (BY MR. LEIMAN) Mr. Gindy, have you 19 ever seen this March 29th, 1985 letter before? 20 A. Yes. 21 Q. And in what context did you see it? 22 A. This was, I believe, the first capital 9467 1 call under the Park 410 partnership for cash in 2 connection -- cash payments in connection with the 3 purchase of the Park 410 West land from Alamo 4 Savings. 5 Q. What is the significance of capital 6 call? 7 A. The partners were required under the 8 partnership agreement to contribute certain agreed 9 sums of cash based upon a budget to the 10 partnership for expenses of the partnership in 11 connection with -- the expenditures of the 12 partnership in connection with the acquisition, 13 development, planning, and land. 14 Q. In this case it states that 15 Mr. Rosenberg should make a check payable to the 16 order of the joint venture in the amount of 17 $155,000; is that right? 18 A. That's correct. 19 Q. And Westplex would be 135,000 or 20 thereabouts. Right? 21 A. That's correct. 22 Q. Now, I see Mr. Grieshaber is written in 9468 1 here at 19,375; is that right? 2 A. That's the Grieshaber and Roberts 3 partnership. Grieshaber and Roberts IV. 4 Q. Why were they being called for capital? 5 A. They and Westplex together equaled 6 50 percent. So, if you add those two together, 7 they also equal 155,000. 8 Q. Do you know whether or not Mister -- 9 whether the Grieshaber venture had -- contributed 10 some form of equity into this partnership? 11 A. They made these capital calls. They 12 paid them. 13 Q. Okay. Now, in connection with 14 Mr. Rosenberg's capital call, who would have paid 15 that? 16 A. Mr. Rosenberg's capital calls, I don't 17 know if Stanley -- I can't -- sometimes Stanley 18 would write the check and then he would be 19 reimbursed. I believe sometimes the -- I don't 20 know if it was done that way on this one or if the 21 request was forwarded to United and if payment 22 went to Stanley and then he paid the capital call. 9469 1 It could have gone either way and did at different 2 times on different ventures, different businesses. 3 Q. Was United paying Mr. Rosenberg's bills 4 in this capital call? 5 A. To my knowledge, all of the capital 6 advances that were required under the partnership 7 were funded by all the partners, including 8 Mr. Rosenberg, and Rosenberg's were funded by 9 United to him. 10 Q. All right. Just to make sure I 11 understand this, Mr. Rosenberg made the capital 12 call and his capital call was funded by United; is 13 that right? 14 A. Yes. 15 Q. Which would have been United Savings. 16 Right? 17 A. Yes. 18 Q. Okay. And that would have been 19 pursuant to what we saw earlier as Exhibit T7106 20 which is that March -- 21 A. Yes. 22 Q. -- March 28th, nineteen -- 9470 1 A. The March 28th letter. 2 Q. Okay. T7111. Before I forget, 3 Mr. Gindy, is there any significance to the 4 marginalia at the top of T7109? 5 A. Yes. 6 Q. And what would that be? 7 A. This was a notation to remind everyone 8 that the payments had to be into the First City 9 bank account by the 1st of April for a 10 disbursement to be made. 11 Q. Disbursement to be made to whom? 12 A. I'd have to go back and look. I don't 13 recall who the payment -- where the funds were 14 being used, but the payments were due in. Noel is 15 writing a note to us to make sure that everyone's 16 got their deposits in the First City account by 17 April the 1st, 1985. 18 MR. LEIMAN: Your Honor, I move T7109. 19 MR. KEETON: No objection. 20 THE COURT: I believe it has already 21 been received. 22 Q. (BY MR. LEIMAN) Mr. Gindy, I have a 9471 1 question about that capital -- one more question 2 about the capital call. 3 Why is it that United Savings didn't 4 get a capital call directly? 5 A. Stanley was the partner in the 6 partnership, and it was Stanley's obligation to 7 the Park 410 West partnership to make the payments 8 into the account. And that's why -- one of the 9 reasons I answered that I'm not certain if Stanley 10 wrote a check that day and then looked back, 11 contacted United to fund it, or if it was funded 12 in advance. It would have depend on timing and 13 when the funds were needed, I think. 14 Q. All right. Would you look with me, 15 please, at T7111? 16 A. Yes. 17 Q. Have you seen this before? 18 A. Yes. 19 Q. And what is it? 20 A. This was our -- this was the initial or 21 the budget that was started off with in Park 410, 22 in the partnership, joint venture after the land 9472 1 purchase during that first -- the terms of that 2 first two-year note or the Alamo note period. 3 Q. Yes. 4 A. This was the budget for going forward. 5 Q. What is the significance of the bottom 6 line on the second page of this exhibit showing 7 $9,465,000? 8 A. The budget that that -- that is a total 9 budget expenditure for the property or for the 10 venture. Based on the budget, if you took all the 11 anticipated expenses, which is in the first 12 column, which is the 9 million 721, deducted the 13 amount that was spent in the period ending in 14 March 29th, which is the way I read this report, 15 being cut off, that would remain under -- leave 16 under the budget 9,400,000 to be spent. 17 $9,465,026.29. 18 Q. And what was the period for expending 19 that $9 million plus? How long a period was that 20 budget applicable to? 21 A. Two years, I believe. 22 Q. All right. By the way, were the other 9473 1 partners, the GMR -- was GMR aware that 2 Mr. Rosenberg and United Savings had struck a 3 partnership separate and apart from that which was 4 between Mr. Rosenberg and GMR as of this point in 5 time, March 29th, 1985? 6 A. I do not know and I don't think Noel 7 knew initially. Very close to that time, he did. 8 I don't know if it was just before or just after, 9 but there was a sequence of questions regarding 10 the letters of credit and the balance sheet. And 11 I don't know exactly at what point Noel became 12 aware or learned that there was an arrangement 13 with United as being Stanley's partner and funding 14 it. I don't think the details ever went to him. 15 Q. You don't think the details of whatever 16 went to whom? 17 A. I don't think the letter was ever given 18 to him -- between Stanley and United was ever 19 given to Noel. 20 Q. You mean the March 28th letter between 21 United Savings and Stanley Rosenberg -- 22 A. Yes. 9474 1 Q. -- never went to Noel Simpson? 2 A. Not that I'm aware of. 3 Q. Do you know why? 4 A. It was not -- he wasn't part of that 5 arrangement. Noel's arrangement was with Stanley, 6 and Stanley was the one that had contracted with 7 him to fund it. Noel ultimately learned -- I 8 don't know that he asked. I just don't know that 9 I ever sent it to him. I don't recall seeing any 10 papers where I forwarded the document on. I 11 wouldn't normally disclose that relationship. May 12 well have gotten, in the terms of it, been 13 disclosed and discussed by the time they got into 14 talking about financing in the loans that were 15 done about a year later; but initially, I don't 16 think that they knew for sure. 17 Q. Did Mr. Rosenberg operate frequently on 18 the basis of having silent partners? 19 A. Quite -- yes. 20 Q. Why did he operate that way? 21 A. Just his practice. He frequently would 22 have partners that would back him in a 9475 1 transaction. They weren't involved in the 2 day-to-day dealings. People didn't see him. 3 Stanley made the decisions, and they just simply 4 chose to invest with him and participate with him 5 in a transaction. They weren't involved in it. 6 They often were not known to the other partners. 7 MR. LEIMAN: Your Honor, I move T7111 8 in, please. 9 MR. KEETON: No objection. 10 THE COURT: Received. 11 Q. (BY MR. LEIMAN) T7176. Mr. Gindy, I 12 handed you T7176, which is a March 31, 1985 13 letter. 14 A. Yes. 15 Q. Have you seen this letter before? 16 A. Yes, I have. I authored it. 17 Q. What's the significance of this letter? 18 A. This is a closing instruction letter. 19 It's addressed to Mr. Justin Rowland of First 20 American Title Company. He was the lead of, I 21 believe, of two, maybe three title companies that 22 participated in a group to write co-insurance on 9476 1 this transaction. And he was responsible for 2 closing the transaction. He received all the 3 documents from the different parties. We all 4 wrote him letters of instruction. He collected 5 the instruments, made sure they were all signed or 6 whatever other instructions we gave to them. He 7 then would -- he just collected the funds to the 8 extent there was funds or original notes that 9 were -- had been delivered to him, disbursed them, 10 recorded, and issued the title insurance. 11 Q. At the time that this letter was sent, 12 am I right in thinking that there were still open 13 issues regarding easements and recertification on 14 the Park 410 property? 15 A. At the time we purchased the property 16 in -- Park 410 West purchased the property in 17 March of '85, after closing, there were still 18 issues that needed to be resolved on drainage, 19 on -- I believe some of the sewer easements. 20 There were several issues still open. 21 Q. All right. And the decision was made 22 to go forward with closing anyway? 9477 1 A. They were comfortable that we could 2 get -- we thought we could get there. There were 3 some built-in credits and adjustments. For 4 instance, there was like a 2-million-dollar escrow 5 that we built in in case we got hit with two-tier 6 platting fees for sewer connections that held 7 back. There were some other things that were 8 done. 9 Q. Were each of the things that are 10 enumerated in this letter accomplished? 11 A. Yes. 12 MR. LEIMAN: Your Honor, I move 7176 13 into evidence. 14 MR. KEETON: No objection. 15 THE COURT: Received. 16 Q. (BY MR. LEIMAN) 7171. Mr. Gindy, 17 have you seen this document before? 18 A. Yes. This instrument is a closing 19 statement for a loan for $750,000 that was made by 20 Alamo Savings Association to the Park 410 West 21 Joint Venture. The loan was made simultaneous 22 with and immediately behind in recording priority 9478 1 of the notes that were executed for the purchase 2 price that was paid by Park 410 West Joint 3 Venture. This loan created a fund of money to pay 4 for certain development costs that were being 5 funded or to fund certain development curative 6 items for the Park 410 property during that 7 two-year period. 8 Q. You say "development curative items." 9 What are you referring to? 10 A. The money could be used for 11 engineering. I believe it was used, in part, to 12 pay easement -- the easement modification and a 13 couple of the items that were on the list of -- 14 like the agreement with Mister -- not with 15 Mr. Lifschutz. His was a straight-up change. But 16 there were a couple other contract obligations 17 that had to be paid that Mr. McClintick and Alamo 18 had originally entered into, and this loan was to 19 be used to fund some of those development costs as 20 we went along. And I believe there is a budget 21 that goes with this. 22 Q. Now, was the loan that -- the 9479 1 750,000-dollar loan shown here on T7171 separate 2 and apart and in addition to the loan that's 3 settled as we saw on T7108, the 39-million-dollar 4 contract price loan that resulted in a 5 40,400,000-dollar ultimate amount due the seller? 6 A. Yes. There were two notes signed in 7 connection with the purchase of the property, and 8 those are the ones that are reflected on T7107. 9 And those two notes were secured by mortgages on 10 the land or first and second, the first being in 11 favor of Alamo. The second being in favor of 12 McClintick. 13 The loan -- this was secured by -- the 14 750,000-dollar loan was a separate loan secured by 15 a separate deed of trust. And I don't recall if 16 it was ahead of or behind Mr. McClintick's note. 17 I believe it was behind Mr. McClintick's note 18 because Mr. McClintick assigned his note also to 19 Alamo. So, Alamo ultimately had all three of 20 them. 21 Q. So, this was more money in addition to 22 what we see here in 7108? 9480 1 A. Yes. 2 Q. Is that right? 3 A. Yes. 4 Q. Okay. Look, if you would, at the -- 5 near the top of the page in the upper quarter of 6 the page, the second page of the exhibit. It 7 refers to a first draw of $12,937. 8 Do you see that? 9 A. Yes. 10 Q. Okay. What would that be for? What is 11 that referring to? 12 A. 12,937? 13 Q. Yes. 14 A. There were a series of fees that 15 basically was the cost incurred with this 16 transaction. If you look down, you'll find that 17 charges were -- if you add up the $21 for 18 recording the deed of trust in the public records, 19 Alamo charged a 1 point or 7,500-dollar loan fee 20 for it. The title insurance premium was 3,636, 21 which was the statutory fee for a mortgagee's 22 title policy or the insurance commission fee 9481 1 and -- scheduled fee. And then the Foster, Louis 2 disbursement of 1,780. Foster, Lewis, Langley, 3 Gardner & Benack was the law firm that represented 4 Alamo Savings. And those expenses were the 5 12,937. Those were the only things that were 6 charged against the loan at that time. 7 Q. Looking at the third page of this 8 exhibit, there is another settlement sheet? 9 A. Yes. 10 Q. March 29th, 1985. 11 A. Yes. 12 Q. Do you know what this settlement sheet 13 would be for? 14 A. This appears to be the settlement 15 sheet. I'd have to look at the other one which is 16 attached. It's the settlement sheet from T7107. 17 It was simply attached because it was a related 18 transaction. Probably attached to it by the title 19 company because the money from that account 20 probably was in this escrow fund and the checks 21 were written out of this account. I don't know 22 for sure. Let me see if they have the same 9482 1 numbers. (Witness reviews the document.) 2 They have the same GF or guaranteed 3 file number on them in the upper right-hand 4 corners. So, the disbursements that went through 5 to pay these bills actually appeared in the same 6 file as this loan closing did at the title 7 company. When you look at the receipt and 8 disbursement schedule of money that came into the 9 title company and money that went out of the title 10 company, these two transactions or settlement 11 statements would be combined on that sheet. 12 Q. All right. Looking above the -- on 13 Line 502, there is a 727,000-dollar charge. 14 A. Yes. 15 Q. Do you know what that charge is for? 16 A. I can't tell you from looking at it 17 here; but if I were to go to the Exhibit T7107, I 18 could look at Page 2 of that document and tell you 19 what that is. 20 Q. Okay. Would you do that? 21 A. If you were to look at the seller's 22 side -- that's a -- that charge appears on the 9483 1 right-hand side of the -- as a charge to the 2 seller's side of the statement. Look at the 3 column on the right on Page 2, and it should add 4 up to that. And the number is -- the 5 500,000-dollar real estate commission, $24,500 6 that was paid to Walter Parks, who I believe was 7 Mr. McClintick's attorney. $176,362.65 which is 8 the title insurance premium to First American 9 Title Company for the 39-million-dollar policy. 10 It says on Line 1114, 26,454.39 for the tax 11 deletion clause. I believe that's an error. I'm 12 pretty certain that that's the figure that should 13 be on the following line, 1115, for the survey 14 deletion, that the fee for a survey deletion is a 15 percentage of the premium. The fee for a tax 16 clause deletion is a fixed sum that is marketably 17 less than that amount of money. It's only two 18 digits beyond the decimal. And if you add those 19 up, it comes to 727,317.04, which is the charges 20 to the seller. 21 MR. LEIMAN: Your Honor, I move T7171 22 into evidence. 9484 1 MR. KEETON: No objection. 2 THE COURT: Received. 3 Q. (BY MR. LEIMAN) T7173. 4 MR. KEETON: That wasn't on the pull 5 list. At least, none of us have it. 6 MR. LEIMAN: Okay. I'm informed by 7 Mr. Keeton that this document is not available at 8 this time to respondents' counsel, Your Honor. 9 So, I would hold it in abeyance until we can get a 10 copy. Apparently, there was some confusion about 11 it. Whether it was on the pull list or wasn't on 12 the pull list, they don't have it. They should 13 have a copy of it, too, to read along. 14 What I'd like to do instead is go to 15 T7174, and we'll pick up T7173 tomorrow if that's 16 all right, Your Honor. 17 Q. (BY MR. LEIMAN) Have you seen T7174 18 before, Mr. Gindy? 19 A. Yes, I have. 20 Q. What is it? 21 A. This is a letter of credit that was 22 issued by United Savings to Alamo Savings 9485 1 Association for $2 million. It was the original 2 letter of credit delivered in connection with the 3 purchase of the property, and I believe it's the 4 one that was referred to in T7176. 5 Q. Whose handwriting is this on this 6 exhibit? 7 A. There are two different persons -- two 8 different -- the handwriting of two different 9 individuals. 10 Q. Who are they? 11 A. At the top where it says "received the 12 original of this 4-17-86," that was myself where I 13 was taking the document back. This was in 14 connection with the closing of the United Savings 15 transaction where Alamo Savings was paid off. 16 When Alamo Savings was paid off on their two or 17 three promissory notes, this was returned and I 18 receipted for it. I then, in turn, delivered -- I 19 wrote -- the word "void" is my handwriting. I 20 then delivered the original of this to Ellen Lain 21 at the same time so that she could return it to 22 her client, United Savings, I presume for 9486 1 cancellation there. 2 Q. Okay. So, your handwriting on this 3 document took place about a year after the date of 4 the document, after -- 5 A. 4-17. On April 17th, 1986. 6 Q. About a year -- roughly -- a little 7 over a year after it had been mailed out to Alamo 8 Savings from United. Right? 9 A. It was over a year after we delivered 10 it. It didn't go by mail. We handed it to them. 11 Q. Look with me at Page US4032 Bates 12 marked on the right-hand side of the second page 13 of the exhibit. Looking at the subparagraph 14 marked (A), what does that mean? 15 A. Starting at the top of Page 2 were the 16 conditions that United Savings, as the issuer of 17 the letter of credit, said on these conditions, we 18 will pay the amount of money on the first page, 19 which was the $2 million, to Alamo Savings or 20 whoever presented the letter of credit on behalf 21 of Alamo if the original letter of credit was 22 presented with an affidavit from an authorized 9487 1 officer of Alamo Savings stating that the Park 410 2 West Joint Venture had defaulted in a payment of 3 any part of the 21,840,000-dollar note dated 4 March 29th, 1985, which is the note the Park 410 5 West Joint Venture gave to Alamo Savings 6 Association for Alamo Savings' 55 percent interest 7 in the land. 8 So, if there was a failure to make a 9 note payment on that note, then the letter of 10 credit could be presented for payment with the 11 affidavit and United had agreed to pay the 12 $2 million in connection with that. 13 Q. And what about the second paragraph? 14 What is the significance of that? 15 A. The second paragraph was the other 16 condition on which the letter of credit would be 17 paid. If any of the letters of credit -- I 18 believe there were three of them -- totaling the 19 $4 million -- if any of those letters of credit 20 were not renewed timely, then -- and there was not 21 at least 120 days remaining on them -- the letters 22 of credit could be presented for payment. That 9488 1 would be in the event of default. It would allow 2 payment. 3 So, the Alamo loan officer would 4 provide the affidavit that the requisite letters 5 of credit had not been renewed at least 120 days 6 before expiration, and we wanted to be paid before 7 the letters of credit -- Alamo wanted to be paid 8 before the expiration of the letter of credit. 9 Q. So, this sets out the terms and 10 conditions under which the letter of credit could 11 come into play? Is that it? 12 A. That is correct. The two conditions 13 under which the letter of credit could be 14 collected upon. 15 Q. Okay. And liability would attach in 16 that regard to whom or to what entity? 17 A. Well, in that -- at that point, the 18 financial institution, United Savings Association, 19 has, by issuance of the letter of credit, 20 contracted to make the 2-million-dollar payment. 21 So, Alamo -- I mean, United Savings had a 22 financial commitment to the holder of that letter 9489 1 of credit, Alamo Savings, to pay $2 million if 2 either of these two events occurred and the letter 3 of credit was shown to them or presented to them, 4 excuse me, with the affidavit. 5 MR. LEIMAN: Your Honor, we're not 6 certain that this has been previously admitted. 7 Given that fact, I'd move that it be admitted at 8 this time. 9 MR. KEETON: No objection. 10 MR. DUEFFERT: It has been previously 11 admitted. I believe it's at Tab 703, according to 12 our records. 13 MR. LEIMAN: Thank you, Mr. Dueffert. 14 Q. (BY MR. LEIMAN) 7175. Mr. Gindy, 15 I've handed you T7175. I'd like to find out if 16 you've ever seen this before. 17 A. Yes, I have. 18 Q. When would you have seen it? 19 A. At the time it was signed, circulated 20 for signature, in March of '85, the end of March. 21 Q. Who's -- can you identify the signature 22 on the second page? 9490 1 A. Stanley signed first. That's his 2 signature. That's Noel Simpson's and John 3 Grieshaber's, it appears, each one of them. 4 Q. What is the significance of this first 5 amendment to the joint venture agreement? 6 A. When -- there were two parcels of land 7 that when they were unimproved were owned north 8 of -- north or west of Loop 410. You had the 9 Park 410 tract and we had the Southwest Ranch or I 10 call it, sometimes, the Gil Savings tract, which 11 is where the Sears is. And -- that's correct. 12 And then Park 410 was above it, above it where 13 Park 410 -- they had a common boundary that runs 14 approximately where the Highway 151 is running. 15 The boundary, when the agreements for 16 the road were laid out and the various parcels of 17 land were contributed for the right-of-way or 18 taken for the right-of-way, whichever way those 19 individual parcels were transferred, resulted in a 20 small parcel of land on the Park 410 or the 21 northern side of Highway 151 being owned by 22 Southwest Ranch or the Gil Savings tract. And 9491 1 that was down towards Loop 410. And it also 2 resulted in a piece of property owned by Park 410 3 on the Gil Savings side of the highway. 4 They were not of equal size, and there 5 was -- they were close to the same size. But 6 there were some arguments about value. And what 7 ultimately happened is we -- as part of the 8 transaction, it did not make sense for these 9 parcels to be owned by the opposite party on their 10 sides of the property. And we negotiated 11 exchanges which required the payment of some money 12 by Park 410 to Southwest Ranch. 13 Q. Looking at the first paragraph numbered 14 1 on this -- on the first page of Exhibit 7175, 15 near the end of the paragraph, it states that "The 16 managing partner is authorized to do all things 17 necessary in the name of the venture to give 18 effect to the agreement that exchanged." 19 What does that mean? 20 A. I believe under our partnership, the 21 exchange required the approval of the three 22 partners to do that and this document could just 9492 1 as easily be entitled "consent" or an 2 "authorization" rather than amendment. And this 3 instrument was intended to tell Noel Simpson's 4 group, as the manager of the venture, that they 5 could go forward and execute the documents for the 6 exchange and make the payment. 7 Q. Mr. Simpson's group, GMR, was the 8 managing venturer? 9 A. Yes. 10 Q. What did that entail? 11 A. Day-to-day management, day-to-day 12 supervision of the activities of the partnership. 13 Q. And had Mr. Rosenberg consented to GMR 14 being the managing venturer? 15 A. Yes. 16 Q. And in that regard, would -- do you 17 have an understanding as to whether or not United 18 Savings would have been bound by that? 19 A. The partnership was with Stanley, and 20 Stanley agreed to be bound in the Park 410 West 21 Joint Venture that GMR had the authority as 22 manager to do certain things, and that bound 9493 1 Stanley. To the extent that United and Stanley 2 had an agreement that dealt with how Stanley's 3 interest of the partnership was governed, I 4 believe that they would have been as bound by the 5 decisions of GMR. The person they derived their 6 rights from had agreed. 7 Q. All right. Turn with me, please, to 8 Page Bates No. CN80868, which is the next page of 9 the exhibit, referring in Paragraph No. 3 under 10 "budget." 11 A. Yes. 12 Q. It refers to a 200,000-dollar boot. 13 A. Yes. 14 Q. Okay. What does that mean? 15 A. That was the difference in value of the 16 property that was paid by Park 410 to Southwest 17 Ranch. There was an expenditure. There was a 18 swap of the land and some money paid, the money 19 being the boot, and that agreed number was 200. 20 It was not in the original budget, and it was 21 added to the budget as an approved expenditure. 22 The partnership agreement required modification to 9494 1 the budget be approved. 2 Q. So, this 200,000-dollar boot, this 3 additional payment of money, also was expended by 4 the Park 410 West Joint Venture; is that right? 5 A. Yes. 6 Q. Okay. 7 MR. LEIMAN: Your Honor, I move T7175 8 into evidence. 9 MR. KEETON: No objection. 10 THE COURT: Received. 11 MR. LEIMAN: T7177. Regrettably, Your 12 Honor, respondents' counsel doesn't have it. I 13 believe we have the pull list, but I think it's of 14 little effect to -- I mean, what we can do is give 15 them another copy. I do believe it was -- 16 MR. KEETON: It's not on the pull list, 17 though. It doesn't matter. Just give me one. 18 MR. LEIMAN: Okay. 19 Q. (BY MR. LEIMAN) Mr. Gindy, I handed 20 you T7177, which is an April 3, 1985 cover letter. 21 And behind that cover letter, there appear to be 22 several documents, including a memorandum of 9495 1 understanding as well as a transmittal memo to the 2 venturers of Park 410 West Joint Venture. 3 Do you see this? 4 A. Yes. 5 Q. Okay. Have you seen this document 6 before? 7 A. Yes, I have. 8 Q. When would you have seen it? 9 A. I saw -- the letter was addressed to me 10 and sent to me. I received the cover letter 11 around April the 3rd or 4th, whenever it actually 12 got delivered to me. The attachment to it was 13 actually prepared by me, the first letter, in our 14 office. And the attachment with regard to the 15 memorandum of understanding was also prepared in 16 our office. It was revised from a draft that had 17 been sent down. 18 Q. Now, Mr. Simpson asks that you arrange 19 for signature by or on behalf of Mr. Rosenberg. 20 That was customary by this time -- 21 A. Yes. 22 Q. -- in connection with the GMR -- 9496 1 A. That's correct. 2 Q. -- relationship; is that correct? 3 A. That is correct. 4 Q. Turning to Page 2 of the exhibit, it 5 refers to a contribution to Wender. We saw 6 earlier on the aerial view that there was certain 7 property that was owned by Mr. Marty Wender; is 8 that right? The Westover Hills property? 9 A. That's correct. 10 Q. Okay. And that would be where Sea 11 World is located, in that part of Westover Hills? 12 A. That is correct. 13 Q. And the Hyatt Regency Country Club 14 Resort there? 15 A. That's correct. 16 Q. Okay. That's also part of it? 17 A. (Witness nods head affirmatively.) 18 Q. Okay. What were you doing in 19 connection with the property pursuant to this 20 March 3, 1985 memorandum? 21 A. When Marty Wender made the agreement to 22 deliver or to locate Sea World on his property, he 9497 1 contributed or gave a substantial portion of the 2 498 acres as an outright free gift to build the 3 park on to -- as an enhancement to come. And he 4 went to several of the property owners in the area 5 that he felt would receive a benefit or a 6 potential benefit from the park locating in the -- 7 and the benefits of having Highway 151 built 8 promptly as compared to some time in the future 9 and obtained agreements from them to do a number 10 of things. 11 One of those things was that they would 12 contribute a portion of their -- a sum of money 13 based upon relative tract sizes to him to help 14 offset the cost that he incurred in giving up the 15 acreage. I believe Mr. Ellison gave about 16 40 acres of land and moved Military Drive's 17 location that had not yet been built as part of 18 his contribution. If you go to where Sea World 19 is, if you go there, there is a parking lot right 20 where your finger is and you'll see a water tank 21 to the right of it. That water tank actually 22 serves all of Mr. Ellison's subdivision down 9498 1 below. And that property was close to the line 2 where Mr. Ellison owned and he moved his property 3 line down, gave the road, and contributed some of 4 that land. I don't know why, but I think it was 5 40 acres. I could be completely wrong. But 6 different people made different contributions in 7 the area, and this was what they had offered or 8 had agreed to contribute. 9 There was also some agreements where 10 all these property owners signed off on 11 restrictions on certain uses that were prohibited. 12 Prohibitions on things like blasting for building 13 the roads during certain hours of the day once the 14 animals were in the park or certain animals were 15 in the park. Use restrictions to prohibit certain 16 activities that Mr. Jovaniach didn't want in the 17 immediate area. Those types of activities. 18 This was one of those agreements, and 19 this letter was confirming that the partners had 20 agreed to do it and that it would be a capital 21 requirement for them to fund. 22 Q. Was there money related to this? 9499 1 A. Yes. 250,000. 2 Q. And had that previously been in the 3 budget, to your knowledge? 4 A. I don't believe it was. 5 Q. So, this 250,000-dollar sum would have 6 come from who? Who would it have come from? 7 A. From the individual partners. Half 8 from the Rosenberg's side and half from 9 Westplex -- Grieshaber, Roberts if they all put 10 their money up. 11 Q. Okay. 12 A. If not, I guess the remainder. 13 Q. Look at the third page of the exhibit, 14 which is a memorandum of understanding hand dated 15 March 3, 1985. Looking the first full paragraph, 16 it refers to a business plan for venture to hold 17 the land for investment purposes for at least six 18 months, after which time the venturer shall use a 19 reasonable period of time not to exceed three 20 months to evaluate the possible development of the 21 property and to elect whether to continue to hold 22 the property for investment purposes or to begin 9500 1 development of the land. 2 Do you see that? 3 A. Yes. 4 Q. Do you know if this plan was ever 5 adopted? 6 A. The plan was signed off by -- this one, 7 by John and by Noel. I don't know if Stanley ever 8 signed one or not, but that's what the partnership 9 did. They held the property and then made the 10 decision to go forward with it and continue to 11 hold it. They had the opportunity to elect a 12 default and turn the property back and didn't. 13 They went forward, and they instructed Grieshaber 14 to try to find a buyer for the whole piece or for 15 parcels, but mostly they primarily decided to 16 divide it up and try to provide infrastructure and 17 improvements to the property and sell it in 18 parcels. 19 If you go on to Paragraph No. 3, which 20 is what they really did, is they decided to 21 proceed with the development of the tract and 22 that's where they went. 9501 1 Q. And when did that -- did the 2 development of the tract start? 3 A. I'd have to go back and look at the 4 minutes, but I think -- the development of the 5 tract -- we started trying to do some of the 6 drainage work to confirm property out of the flood 7 plain and everything immediately. I don't think 8 any real roadwork or dirt work was probably done 9 for a year. 10 Q. So, the first order of business would 11 have been to have gotten -- taken care of the 12 drainage problems? 13 A. And started to get to a site layout and 14 streets and roads that would have been impacted by 15 the drainage and the width of the lots and the 16 land that was available for how the drainage 17 canals or drainage ditches impacted what was left 18 in the land and its configuration. 19 Q. Look at paragraph 3.5 on the next page, 20 which is Bates CN85765. It refers to "The land 21 value to be assigned to the property at the time 22 the development finance package is arranged should 9502 1 reflect a certain sum of equity in the property 2 attributable to the efforts made and risks taken 3 by Park 410 West Joint Venture and such value 4 shall maximize the gain attributable to the 5 long-term capital gain holding period of the Park 6 410 West Joint Venturers." 7 What does that mean? 8 A. Knowing the original author of this 9 document, it's Noel's efforts to state that the 10 partnership would try to enter into certain 11 development improvements to the property and 12 before they made the improvements, to try to 13 establish a capital gain for that portion of the 14 transaction rather than have all of it treated as 15 ordinary income in connection with the sale. If 16 there was some holding period before the 17 development work, you might be able to -- and 18 again, I'm not a tax specialist to be able to tell 19 that you it would work or if you could at that 20 time. I just don't recall. But in the 21 development business, we would sometimes try to 22 allocate gain for investment property and then 9503 1 turn -- once you proceeded into development, 2 that's going to be ordinary income. 3 Q. So, would I be right in thinking that 4 the tax considerations were certainly on the mind 5 of the developers on the GMR side as well as on 6 the Rosenberg side? 7 A. Yes. 8 Q. By the way, in connection with what we 9 saw earlier on the previous page, the March 3, 10 1985 -- I'm sorry -- the two pages prior, CN85761, 11 who would have been responsible for paying that 12 250,000-dollar contribution? 13 A. Well, the partnership -- once this was 14 signed and had been approved by everyone, the 15 partnership was responsible to pay it. So, first 16 of all, each of the partners had a duty to pay 17 their -- pay it themselves and, if not, then the 18 remaining partners were. But the partnership and 19 each of the partners had to pay the 250. So, any 20 one of them or all of them. 21 Q. Let's look now, if we can, at T7179. 22 MR. LEIMAN: Your Honor, I would move 9504 1 into evidence T7177. 2 MR. KEETON: No objection. 3 THE COURT: Received. 4 Q. (BY MR. LEIMAN) T7179 is an April 24, 5 1985 letter to David Graham from you. 6 A. Yes. Yes, it is. 7 Q. Did you send this letter? 8 A. Yes. The indication is it went by 9 Federal Express. 10 Q. And what was the purpose of advising 11 Mr. Graham at this time of the closing statement 12 related to the purchase of the property? 13 A. I'd have to read the letter. I just 14 don't recall at this moment. Just a minute. 15 (Witness reviews the document.) 16 I was forwarding David the information 17 for the initial closing as to the funds that were 18 transferred, forwarding to him that we had 19 actually received some money as a result of the 20 tax pro rations, and it appears that I also 21 forwarded him information on the first capital 22 call or the first advance into the partnership 9505 1 account. 2 Q. Were you sending him a bill? 3 A. It's not attached here. I thought what 4 was attached was the sheet that we saw earlier 5 that showed what the first draw was, the 310,000, 6 and that's what's got me -- I thought that's 7 what's attached to this letter. It's my 8 recollection it would have been. 9 Q. Do you remember it having been 10 attached? 11 A. That's what I was asking for in the 12 letter. It should have been. Why it's not on 13 this, I don't know. 14 Q. All right. And so, what were you 15 doing? What were you sending Mr. Graham? 16 A. Telling David that they needed to fund 17 $155,000 for their share of the capital call to 18 Stanley for Stanley's advance to the partnership. 19 Q. And by "them," you mean -- 20 A. United Savings. 21 Q. Okay. 22 MR. LEIMAN: Your Honor, I move T7179 9506 1 into evidence. 2 MR. KEETON: No objection. 3 THE COURT: Received. 4 Q. (BY MR. LEIMAN) T7180. Mr. Gindy, I 5 handed you a copy of T7180, which is a May 6th, 6 1985 cover letter from you to David Graham. 7 A. Yes. 8 Q. And attached to it is a summary of a 9 meeting that took place purportedly on April 25th, 10 1985. 11 Do you see that? 12 A. Yes. 13 Q. Do you remember sending this letter to 14 David Graham? 15 A. I don't remember. I believe it was 16 sent. The cover letter indicates it. My practice 17 was it should have been sent to him. 18 Q. Do you have any reason to think you 19 didn't send it to him? 20 A. Absolutely not. Sent it to him every 21 couple of days, weeks. 22 Q. What do you mean you sent him -- 9507 1 A. I always forwarded him the minutes of 2 the meetings until I finally got it arranged to 3 where they went to him directly. 4 Q. Looking at the distribution list on the 5 second page of this document, it refers to SDR. 6 Who's that? 7 A. Stanley Rosenberg. 8 Q. And KG? 9 A. Myself. 10 Q. Okay. You're not shown as being 11 present at this meeting. Is that -- 12 A. I was not there. 13 Q. Is there some other way that you can 14 tell you weren't at the meeting? 15 A. I do not recall the early FEMA 16 meetings. I don't know where I was. It said I 17 wasn't there. 18 Q. Look at Page 4 of the file notes that 19 are attached. Item 5.2 talks about -- well, it's 20 an assignment to you regarding the Northwest 21 Expressway road dedication. 22 Do you see that? 9508 1 A. Yes. 2 Q. What does the reference here mean to 3 the expressway road dedication? 4 A. The Highway 151, the portion of the 5 property that was coming out of the Park 410 tract 6 had to be deeded over to the City of San Antonio 7 which then -- I'm sorry. I think it was Bexar 8 County, then turn it over to the State for 9 building a highway. And those conveyances were 10 all due in towards the end of May. 11 Q. And you had that assignment to take 12 care of -- 13 A. I did almost all of the paperwork, all 14 of that type of paperwork, yes. 15 Q. Looking at 6.3 farther down the page, 16 it says "P 410W's" -- is that Park 410 West? 17 A. Right. 18 Q. "Park 410 West's ability to landscape 19 certain portions of Channels A and B around the 20 proposed obligation needs to be preserved. GMR to 21 consult with Ken Gindy." 22 Do you see that? 9509 1 A. Yes. 2 Q. Was it frequently the practice of GMR 3 to consult with you rather than consult with 4 Mr. Rosenberg? 5 A. I was -- they consulted usually with 6 me, especially with regard to technical 7 development details, things involving the city, 8 building restrictions. Most of the meetings, I 9 attended most of them. With regard -- except with 10 the exception of some sales and loan negotiations, 11 I would venture to say most of them were all with 12 me. 13 Q. Looking through here, I don't see any 14 assignments going to Mr. Rosenberg. 15 A. There would be very few assignments to 16 Mr. Rosenberg except with regard to the loan or 17 with regard to sometimes marketing of property. 18 Q. What do you mean "with regard to the 19 loan"? 20 A. Stanley was involved with having to -- 21 both the arrangement of the loan in the early days 22 with United and then later on, he was involved in 9510 1 the renegotiation efforts with regard to the sale 2 of the property. Stanley was the one that was 3 involved. Sometimes they would consult him on 4 sales price, marketing plan. Those are two areas 5 that I believe he was the most involved in. As 6 far as the details of the zoning, the roads, 7 utilities, utility easements, land swaps, that was 8 all -- came to me. 9 Q. T7181. 10 MR. LEIMAN: Your Honor, I move T7180 11 into evidence. 12 MR. KEETON: No objection. 13 THE COURT: It has been received. All 14 right. Received. 15 Q. (BY MR. LEIMAN) Mr. Gindy, I handed 16 you T7181. 17 A. Yes. 18 Q. That's a May 22, 1985 letter. 19 A. Yes. 20 Q. Again directed to David Graham at 21 United Savings Association, and it's from you. 22 A. That's correct. 9511 1 Q. That's your signature at the bottom of 2 the page? 3 A. Yes. 4 Q. Okay. A few minutes ago, you testified 5 that it was your practice to send copies of the 6 minutes -- meeting minute notes to Mr. Graham 7 under cover of your letter. Here in the first 8 full paragraph, you say, "I have asked Charles 9 White to include you on the distribution list." 10 Do you see that? 11 A. Yes. 12 Q. Did you ask Mr. White to include -- 13 A. I asked him -- David wanted to receive 14 copies of all the minutes of all the meeting 15 summaries, copies of correspondence. And so, I 16 asked that he be included and be sent everything. 17 He wanted to be very involved and participate in 18 the day -- in everything that went by. He wanted 19 to know when the meetings were so he would have an 20 opportunity to come to the meetings. And that's 21 why I was telling him that they are usually on -- 22 they were usually scheduled in the minutes of each 9512 1 meeting when the next meeting would occur. 2 Q. Do you have any reason to think 3 Mr. White didn't comply with your instructions? 4 A. No. I'm sure he did. Future minute 5 meetings probably show David's initials. 6 Q. All right. Let's look at the second 7 paragraph here and, specifically, I'd like you to 8 focus on the second sentence in the second 9 paragraph. Here you say -- in connection with a 10 problem with a broker, you say "It may be 11 necessary for you to clarify to the broker that 12 United Savings' participation in the project is as 13 a lender and a partner to Mr. Rosenberg and not as 14 a result of actions by this broker." 15 Do you see that? 16 A. Yes. 17 Q. What did you mean by "United's 18 participation was as a lender and partner to 19 Mr. Rosenberg"? 20 A. We had received a claim from a real 21 estate broker who had apparently shown the 22 Park 410 property to United Savings and was their 9513 1 agent, real estate agent, in connection with the 2 sale -- or the negotiations with Alamo Savings to 3 try to acquire the property. When the letter of 4 intent process was going on, they weren't the 5 successful buyer. The broker determined later on 6 that United was involved in the transaction and 7 made a claim against Alamo Savings Association for 8 a commission. Alamo reported to them that they 9 had sold the property to Noel Simpson's group 10 which, under the letter of intent, initially 11 involved Stanley Rosenberg and not United as a 12 partner in the transaction or as the buyer of the 13 property, that it was Noel Simpson's group and the 14 commission was paid to Grieshaber. 15 At that point, there was a bit of a 16 dispute or a claim; and we were asking David to 17 contact the broker that he had originally dealt 18 with and tell him that the arrangement with United 19 was that United was dealing with Stanley and was 20 Stanley's partner in the transaction or -- either 21 lender or partner to advance funds, whatever that 22 agreement turned out to be. It was already 9514 1 written. I guess it was a partnership between 2 them. But that they weren't entitled to a 3 commission in connection with the 4 39-million-dollar sale. And, in fact, they went 5 away. 6 Q. You mentioned a few minutes ago in your 7 testimony that Mr. Rosenberg was involved with GMR 8 in connection with marketing and you also said in 9 connection with loan functions. 10 What did you mean when you said that? 11 A. Well, in 1985, he was involved in some 12 of the discussions for the loans -- for the two 13 loans, the terms of the 24 -- I'd have to look at 14 it. (Witness reviews the document.) 15 The 17-million-dollar loan and the 16 12-million-dollar notes that were given to Alamo 17 Savings, when we negotiated that loan amendment, 18 he was involved in some of the discussions as to 19 what the terms of the loans would be, the two-year 20 notes, and was that enough time to take a good, 21 hard look at the property and decide if they were 22 going to go forward or not, find another lender. 9515 1 And then Stanley was also supposed to 2 participate in securing a lender if they chose to 3 go forward with development and develop the 4 property, to provide the financing for the land 5 and the infrastructure advances. 6 Q. That was his job? 7 A. No. He was supposed to participate in 8 it. Noel was active in pursuing it also, or 9 pursued his own sources. Stanley was more 10 successful. 11 Q. He was more successful in pursuing his 12 sources? 13 A. Yes. 14 Q. What do you mean? 15 A. Well, the loan -- Stanley arranged the 16 loan with United. 17 Q. United Savings? 18 A. United Savings. 19 Q. And when did he do that? 20 A. Discussions for the loan started 21 probably in the fall -- late fall, early winter, 22 late November, December of '85. Got -- there were 9516 1 more intense discussions in the spring of '86. I 2 mean, not -- the winter of '86. January, 3 February. And we ultimately closed the loan end 4 of -- well, actually, the first part of April of 5 '86. 6 Q. Who did he contact at United Savings or 7 other lending institutions? Do you remember? 8 A. Stanley directed me first to other 9 institutions. I know we discussed it with David 10 at United, and they had -- 11 Q. Mr. Graham? 12 A. David Graham. Other institutions, we 13 went to Mr. Kosberg, Gibraltar Savings, First 14 State Savings in San Antonio. I want to say 15 Holiday Finoglio was a mortgage broker in 16 San Antonio. Those are some of the ones that I 17 know that Stanley went to. 18 Noel, I believe his contacts were the 19 rep of the First Interstate group or Bank One, 20 also. I don't know if Bank One was there then. I 21 can't remember the trend. In San Antonio, the 22 same institution went through those groups, those 9517 1 different entities. But whoever his contacts 2 were. And I don't know where else he went. I 3 think he went offshore, as well. 4 Q. Is there a particular reason that 5 Mr. Rosenberg was given the assignment of finding 6 the lending institution? 7 A. That's -- he had a close relationship 8 with several financial institutions and people, 9 one of which was United Savings. 10 Q. Anybody at United Savings in 11 particular? 12 A. He was -- it was very clear to us that 13 he had a very good friend in the owner of United 14 Savings. 15 Q. Who was that? 16 A. Mr. Hurwitz. 17 Q. Charles Hurwitz? 18 A. Yes. 19 MR. LEIMAN: Your Honor, it's 20 5:00 o'clock. Perhaps this is a good place to 21 stop. 22 THE COURT: All right. We'll adjourn 9518 1 until 9:00 o'clock tomorrow morning. 2 3 (Whereupon at 5:02 p.m. 4 the proceedings were recessed.) 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 9519 1 STATE OF TEXAS COUNTY OF HARRIS 2 REPORTER'S CERTIFICATION 3 TO THE TRIAL PROCEEDINGS 4 I, Marcy Clark, the undersigned Certified 5 Shorthand Reporter in and for the State of Texas, 6 certify that the facts stated in the foregoing 7 pages are true and correct to the best of my ability. 8 I further certify that I am neither 9 attorney nor counsel for, related to nor employed 10 by, any of the parties to the action in which this 11 testimony was taken and, further, I am not a 12 relative or employee of any counsel employed by 13 the parties hereto, or financially interested in 14 the action. 15 SUBSCRIBED AND SWORN TO under my hand 16 and seal of office on this the 8th day of 17 December, 1997. 18 ____________________________ MARCY CLARK, CSR 19 Certified Shorthand Reporter In and for the State of Texas 20 Certification No. 4935 Expiration Date: 12-31-97 21 22 9520 1 STATE OF TEXAS COUNTY OF HARRIS 2 REPORTER'S CERTIFICATION 3 TO THE TRIAL PROCEEDINGS 4 I, Shauna Foreman, the undersigned 5 Certified Shorthand Reporter in and for the 6 State of Texas, certify that the facts stated 7 in the foregoing pages are true and correct 8 to the best of my ability. 9 I further certify that I am neither 10 attorney nor counsel for, related to nor employed 11 by, any of the parties to the action in which this 12 testimony was taken and, further, I am not a 13 relative or employee of any counsel employed by 14 the parties hereto, or financially interested in 15 the action. 16 SUBSCRIBED AND SWORN TO under my hand 17 and seal of office on this the 8th day of 18 December, 1997. 19 _____________________________ SHAUNA FOREMAN, CSR 20 Certified Shorthand Reporter In and for the State of Texas 21 Certification No. 3786 Expiration Date: 12-31-98 22