IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLORADO

Criminal Action No. 11-cr-0355-MSK

UNITED STATES OF AMERICA,

Plaintiff,

vs.

WAUNITA WEINGART, 

JOHN PHILLIP GALLEGOS, and

ALOIS CRAIG WEINGART,

Defendants.

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REPORTER'S TRANSCRIPT

Motions Hearing - Volume II

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Proceedings before the HONORABLE MARCIA S. KRIEGER, 

Judge, United States District Court for the District of 

Colorado, commencing at 10:49 a.m., on the 27th day of 

November, 2012, in Courtroom A-901, United States 

Courthouse, Denver, Colorado.

MARY J. GEORGE, FCRR, CRR, RMR 

901 19th Street, Denver, Colorado 80294 

Proceedings Reported by Mechanical Stenography

Transcription Produced via Computer

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 1 of 146
APPEARANCES

 LINDA KAUFMAN and MARTHA ANN PALUCH, Assistant 

U.S. Attorneys, 1225 17th Street, Suite 700, Denver, 

Colorado, 80202, appearing for the plaintiff. 

MARTIN ADAM STUART, Attorney at Law, 955 Bannock 

Street, Suite 200, Denver, Colorado 80204, appearing for the 

defendant Waunita Weingart.

DARLENE ANN BAGLEY, Attorney at Law, 303 16th 

Street, Suite 200, Denver, Colorado, 80202 and WILLIAM LEWIS 

TAYLOR, Attorney at Law, 303 16th Street, Suite 200, Denver, 

Colorado, 80202, appearing for the defendant John Phillip 

Gallegos.

PAULA M. RAY, Attorney at Law, Post Office Box 

12554, Denver, Colorado 80212-0554, appearing for the 

defendant Alois Craig Weingart.

P R O C E E D I N G S

 (Proceedings continued at 10:49 a.m.)

THE COURT: We're convened with the assistance of 

our new court reporter. Ms. Lindblom was not feeling well. 

And I apologize for the delay until we could get restaffed 

for purposes of this hearing. 

We will be recessing about quarter to 12:00, and I 

anticipate that my examination will probably continue until 

about then and then we'll reconvene at 1:30. And if I have 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 2 of 146
finished up, then it will be a good time for the attorneys 

to step in and complete the examination.

EXAMINATION (Continued)

BY THE COURT: 

Q. Ms. Chamberlin, I'd like to back up a step or two here. 

You've identified, in conjunction with my questions about 

the bank records, a number of loans that you examined bank 

records for, and you examined file -- loan files for some of 

these prior to rendering your opinions, and some you've 

acquired loan files since. 

How did you identify these loans as being the ones 

you should look at? 

A. In the beginning, the FBI had a set of loans. I don't 

know how many, and I don't recall which ones that prompted 

them to ask our office to open up an investigation. So we 

started with that universe, which if I had to guess, it 

might have been maybe five loans at the time when we opened 

it.

Then it was kind of a combination of the agent 

looking at the loan files as he received them, while I was 

analyzing the bank records. And I would see deposits which 

appeared to me to be proceeds for potential loans of the 

defendants. So we would go back and forth and he would 

often call me and say, "Do you have a deposit coming in 

around this date from this particular lender?" And I would 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 3 of 146
say yes or no. 

And if it was no, then we wouldn't bother getting 

that loan file. And if it was yes, we would -- we would 

attempt to get that file. 

On my hand, I may see a deposit and I would ask 

him, "Have you -- have you gotten the loan file for this 

loan yet?" And he would say yes or no. 

And if no, then we would attempt to get it. So it 

was kind of a back-and-forth between the two of us in 

identifying the loans. 

And then as I continued to do the analysis on the 

lender files, as I would match up loans to the -- on the 

liability section and the credit reports, we identified a 

few more that way. That's kind of how we brought in the 6th 

Avenue and California loans at that time was based mainly 

upon my work doing the loan application analysis. 

Q. Who was the agent you worked with? 

A. Scott Donner. 

Q. And did you work consistently with him through this 

whole time period? 

A. Yes. 

Q. Was he the person who got the files and then delivered 

them to you? 

A. Yes. 

Q. You didn't deal directly with the lenders? 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 4 of 146
A. No. 

Q. You didn't talk to the lenders to find out if they had 

been paid off or when? 

A. No. 

Q. Did you double-check the completeness or accuracy of 

the information that you got from the FBI agent? 

A. As -- I don't understand what you mean by the 

information that I got from him. 

Q. Well, you got packets of information from him, bank 

records and loan files and whatnot. Did you verify with 

anyone that these were the accurate records from the people 

who prepared them? 

A. I mean, they were obtained via subpoena. And so when 

something comes to me via subpoena, I'm assuming that they 

came from who we subpoenaed. 

Q. Did you prepare the subpoena? 

A. No. Not for the lender records. 

Q. Did you see the subpoenas? 

A. On occasion, yes. 

Q. Did you tell the FBI agent what documents were 

necessary for your review? 

A. The subpoenas would typically ask for the loan file. 

It wouldn't be a specific listing of documents. If -- if 

there was something that I felt should have been in there, I 

don't believe I ever asked to go back to the lender to see 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 5 of 146
if they could provide additional information. I took it as 

we asked for the loan file and the payment history and 

that's what we received. 

Q. Okay. Now, you've identified for me this three-step 

process that you went through, beginning with reviewing -- 

review of the bank account records to look at proceeds from 

various accounts, and then going to the loan records to see 

what was on the HUD-1 and the promissory note and occupancy 

records and other things that were in the lender's file from 

the lender's perspective, and then focusing in on the loan 

application in order to determine whether the information in 

each loan application was accurate and complete. 

Is that the process? Do I correctly understand the 

process that you used? 

A. Yes. 

Q. Okay. Is there anything I've left out? 

A. After -- after the loan analysis, I then concentrated 

more on the payments, which we really haven't discussed in 

its entirety. So it was kind of a process of my analysis of 

the bank records, which led to looking at the proceeds, 

which led to looking at the loans. 

And then once I identified that these loans were 

still outstanding, I then turned towards looking at the 

payments. So it's --

Q. So it circled back, then, to the bank records --

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 6 of 146
A. Correct. 

Q. -- to look at the payments? 

A. Correct. 

Q. How did you come up with this methodology? 

A. The methodology is -- in paper is what the CFE tells me 

that I should do --

Q. It says start with bank records and then it says go to 

the loan files? 

A. No. No, it does not. 

Q. So how did you decide -- how did you come up with this 

methodology for review of records? 

A. Based upon my experience in working all types of fraud, 

but, in particular, mortgage fraud cases. As I said before, 

I usually start with the analysis of the bank records, since 

we're dealing with financial crimes, and the following of 

proceeds. 

Q. So this is one of four cases where you have used this 

same methodology; is that correct? 

A. Yes. 

Q. Okay. 

A. And then based upon what the predication was, which I 

obtained from the FBI, then that would lead me to looking at 

the applications. 

Q. But you didn't look at the applications until after you 

had looked at the bank records --

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 7 of 146
A. Correct. 

Q. Yeah. Now, where in the Fraud Examiner's Manual does 

it say to start with the bank records and then go look at 

the loan applications and the HUD-1 and the occupancy 

records and the payment sheets in order to determine what 

you were asked to determine here? 

A. There is not a standard checklist in the Fraud 

Examiner's Manual, because each fraud, depending on what it 

is, can be conducted differently. So there really isn't a 

checklist to say this is the step you do first, this is the 

step you do second. 

What it does do is give us guidance, as far as bank 

records for a certified fraud examiner, is probably one of 

the most important pieces of documentation that we can look 

at. So that's --

Q. So the fraud examiner's standards apply to bank 

records, correct? 

A. They apply to bank records, they apply to all sorts of 

financial records. 

Q. But they don't have an over-arching methodology for 

looking at all of these different records in a particular 

order. 

A. Correct. 

Q. And yet this is the same order that you have used in 

all four of the cases involving mortgage fraud that you 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 8 of 146
worked on, right? 

A. Correct. 

Q. So why did you use this order? 

A. Typically the bank records are what the agents usually 

get first in a financial case, so it's easier for me to 

start with those. Then the lender files, just because of 

the nature of mortgage fraud, would be the second group of 

documents that I would look at. 

And because this was a case where the borrowers 

may have provided false information to the lenders, in other 

words, to obtain the loans, that's why I started with 

looking at the loan applications. 

Once that was complete, it kind of blossomed from 

there for me to circle back and look at the payments, 

because in my mind, I knew these loans had not been paid 

off -- most of them had not been paid off, so how did they 

keep them current with the lenders and not raise the 

lender's suspicion that this wasn't the only loan on these 

pieces of properties? And that's why I circled back to look 

at the payments.

Q. Have you had any training that directs you to proceed 

in this particular order in what you call a mortgage fraud 

case? 

A. I've had -- I've attended a mortgage fraud seminar 

about a year ago that was sponsored by the Association of 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 9 of 146
Certified Fraud Examiners. And they talked about the 

different types of red flags that you can see when it comes 

to mortgage fraud, whether it's the borrowers committing it 

or the lender committing it or the appraiser committing it. 

It talked about the various things to keep an eye 

on, but there was never a checklist that says: Here's the 

step-by-step process. 

Q. Are you aware of any checklist or protocol that is 

reliably used and consistently used by fraud examiners in 

mortgage fraud cases? 

A. I'm not aware of any checklist that says: If this is 

mortgage fraud, here are the things that you look at. 

It's all based upon certain things of knowing -- 

you need to know what should be expected. And then when you 

see that it doesn't, then that kind of leads you to the 

steps what to look elsewhere for. If that makes sense.

Q. What about the circumstance that you found yourself in 

here, where a significant number of the loan transactions 

you didn't have complete bank records, and some you didn't 

have loan files? What are the -- what do certified fraud 

examiners do when they don't have all the information that 

they think is something they should review? 

A. In those cases, we would look towards things like 

public records. So for some of those loans that I did not 

have a loan file on, I looked at the public records to see 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 10 of 146
if at least I could get a deed of trust to at least tell me 

what date the loan occurred on, the property that was 

secured, who the lender was, the amount of the loan, who the 

borrower was. 

So that would give me some information regarding 

those types of loans. The credit reports for the loans that 

I did have gave me information about the loans for the files 

that I did not have in that there would typically be a line 

on the credit report for a particular borrower that would 

indicate to me, again, the lender, the amount of the 

original loan, the month and year of -- the original loan 

was taken out, and the loan number for that loan, at least 

at that point in time as of the credit report. 

That could help me identify that there was a 

particular loan. It may not help me identify what the 

collateral was. The public record would have to help me 

with that, or eventually getting the loan file. 

Q. Why didn't you go back to the lenders or the banks that 

had the bank records and ask for more complete records? 

A. I know -- I know at the time that we were trying to 

develop how large the scheme was. Some of the early loans, 

like the S-3, S-8, we didn't concentrate a whole bunch of 

information on. We were more concerned about more of the 

current ones. 

In hindsight, we probably should have gone back 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 11 of 146
sooner other than prior to August 2d of this year, so -- the 

bank records -- I would go back to the banks if there was 

something that was incomplete. And, in fact, prior to 

indictment, I attempted to get additional copies of checks, 

but the bank was unable to provide those to us.

Q. That was one bank? 

A. It may have been one or two. 

Q. Because there are a lot here that you didn't have 

complete records on. 

A. There were three banks that were primarily involved and 

there were multiple accounts at each bank. And if I was 

missing something, I did attempt to get it once I realized, 

hey, we don't have a copy of a check that I believed to be a 

mortgage payment. We did try to do that. 

Q. So when you say "we," who are you talking about? 

A. I would -- I would draw up a list as far as what checks 

I would get, and either Agent Donner, or sometimes myself, I 

would call the custodian who provided the original records 

to see if they could supplement, or we would issue a new 

subpoena. 

Q. Well, I'm curious, because in our earlier session this 

morning, I was under the impression that you did not ask for 

any further information from banks. And now I'm 

understanding that you did. Which is accurate? 

A. It -- I did try to get additional information from the 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 12 of 146
banks. It was the lenders that I did not go back and get -- 

ask for additional information on. 

Q. Okay. But then how did you get these loan files that 

came in after August if you didn't ask the lenders for more 

information? 

A. We had a trial subpoena out for those -- those files. 

Q. Okay. And when --

A. Since we had a trial date. 

Q. -- when you say "we," who's "we"? 

A. The U.S. Attorney's Office and the FBI or the IRS would 

have served the trial subpoena. 

Q. Okay. And when you say "we were investigating," and 

"we were developing the scope of this scheme," who is the 

"we" in that statement? 

A. The FBI and my -- and the U.S. Attorney's Office. 

Q. So what did you understand that your opinions would be 

used for? 

A. At the time prior to indictment, I did not know whether 

or not any of my information would be used either as a 

summary witness or as an expert witness. I know that some 

of it was used to prepare the indictment, but at that stage 

I didn't know if I would even testify as a witness. 

Q. Did you present this information to the grand jury? 

A. I did not, no. 

Q. Did the U.S. Attorney's Office present your opinions to 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 13 of 146
the grand jury? 

A. My opinions, no. 

Q. And when I say "your opinions," you have a number of 

factual opinions here as to what occurred. That was not 

presented to the grand jury? 

A. I don't -- I don't know since I did not testify. 

Q. But you turned it over to the U.S. Attorney's Office 

and they did whatever they do with it. 

A. Correct. 

Q. Does the Fraud Examiner's Manual tell you what data you 

should review in assessing whether there has been fraud in a 

mortgage application? 

A. The manual doesn't specifically list what should be 

reviewed. I received more detailed information from the 

class that I attended on mortgage fraud. 

Q. And what documents did you understand that you should 

look at? What data? 

A. Well, in particular, to what was purported here would 

be everything that I did look at: the loan application, the 

credit reports, the payment histories, the bank records, 

servicing letters. Anything that would help me prove the 

falsity of what was on the application. 

Q. Are there any other records that you did not look at 

that the course suggested you should look at? 

A. One set of records that would be helpful, and typically 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 14 of 146
in a mortgage fraud I would have asked for, would have been 

the records of the title company who closed the transaction. 

I did not look at those in this case. 

Q. And you didn't order a title analysis of either of 

these parcels of property to show all of the encumbrances 

and releases and changes of title, right? 

A. No. 

Q. Is there a reason why you didn't do that? 

A. I don't think I've ever done that before. And I know 

that there -- because of the deeds of trust not being 

recorded at around the time the loan was taken out, I think 

there would have been a lot of issues for a title company 

trying to give us a title search, if you will. 

Q. You consistently referred to -- and I think we all sort 

of colloquially referred to mortgage fraud. What do you 

understand that term to mean? 

A. Mortgage fraud is a fraud that can be conducted by any 

people within the loan process, whether it be the lender, 

the borrower, the appraiser, the title company, the 

settlement agent. It can happen in a wide variety of ways 

by a wide variety of people. 

I know from my experience and my training that 

regarding when borrowers commit mortgage fraud, typically 

the way they do it is by misrepresentations on the loan 

application. So that is why I started to look at those with 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 15 of 146
the information that I had. 

I've had other fraud -- mortgage fraud cases where 

the appraisal was falsified and adjusted, and that's one way 

that that case was conducted. 

Q. And when you referred to mortgage fraud in this case, 

you're referring to the statements on the loan applications; 

is that correct? 

A. The statements made on the loan applications as well as 

the title company not paying off the required loan by the 

lender. 

Q. Well, that's part of the scheme. But what is the 

representation or omission that's made with regard to 

failing to pay off something? 

A. Well, the lender had instructed the title company to 

pay off a particular loan. The title company had a 

fiduciary duty to do that and they did not, considering that 

the borrowers in this case were also the title company in 

many of the loans.

Q. Okay. And when you say there's a fiduciary duty, from 

what do you ascertain that fiduciary duty? 

A. The training that I've had regarding the title 

company's role in the loan process. 

Q. Okay. So you just generally assume that it should be 

paid off? 

A. Whatever the lender instructs the proceeds -- to do 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 16 of 146
with the proceeds, that's what the title company is 

obligated to do. 

Q. And if I understand your analysis correctly, you 

ascertained that from the HUD-1, correct? 

A. Correct. 

Q. Could you -- or do you have a copy of the Rule 702 

second amended joint motion? 

A. I do. 

Q. Okay. Would you turn to page 3 of that motion, please, 

and focus in on opinion A1. 

A. Yes. 

Q. Okay. Now, I understand that there are three different 

groupings of opinions here. Those that are identified as an 

A opinion are opinions that you have rendered as to false 

statements or omissions on the loan applications, correct? 

A. Correct. 

Q. Okay. And then the B opinions are opinions as to 

whether loans were paid off as required by the HUD-1; is 

that right? 

A. Correct. 

Q. And the opinions that are C opinions are a statement of 

what you ascertained from the bank records as to what 

payments were made on what loans. Right? 

A. From what account, yes. 

Q. Right. Okay. Let's focus in, then, on the A opinions. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 17 of 146
Opinion A1 concerns a loan of August 27, 2000, made to Craig 

and Waun Weingart. And I'm a little curious because I don't 

have the underlying documentation to refer to. What do you 

mean by G-4 Holdings to Flagstar Bank? 

A. The promissory note for this loan was between Craig and 

Waun Weingart and G-4 Holdings, which was one of their 

companies. Flagstar Bank was the one that funded the loan, 

and on the same day as the closing of this loan there was an 

assignment of deed of trust from G-4 Holdings to Flagstar 

Bank. So --

Q. So what does the promissory note show here? Does it 

show that Craig and Waun Weingart are the makers of the 

note, i.e., the borrowers? 

A. Yes. 

Q. Okay. And this is purportedly secured by some 

property. What property was it to be secured by? 

A. 7766 Saxeborough. 

Q. All right. And in whose name was title held on 7766 

Saxeborough Drive at the time that this loan was made? 

A. Craig and Waun Weingart. 

Q. Okay. So how does G-4 Holdings fit into this 

transaction? We have the borrowers that are Craig and Waun 

Weingart, they own property which is the collateral for this 

loan. So where does G-4 Holdings fit into this transaction? 

A. G-4 Holdings on the note is the lender. They, in turn, 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 18 of 146
on the same day as the closing, assigned their interest to 

Flagstar Bank. And Flagstar Bank was the one that wired the 

proceeds to fund this loan. 

G-4 was -- I forget the name -- they had a special 

relationship with Flagstar Bank as a -- as a mortgage 

broker, and so they were the ones on the promissory note. 

I . . . 

Q. They were the payee on the note? 

A. Yes. 

Q. And so the loan application is by Craig and Waun 

Weingart to G-4 Holdings? 

A. The loan application was signed by Craig and Waun 

Weingart. 

Q. Asking for who to -- whom to make the loan? 

A. I'd have to look at the application. 

Q. Would you like to refresh your recollection? 

A. I would. 

Q. All right. What document would refresh your 

recollection? 

MS. KAUFMAN: I believe it's Exhibit 601. 

THE COURT: Ms. Glover. 

MS. KAUFMAN: In connection with that, 604 and 605. 

THE WITNESS: Could I also have the HUD-1 for this 

loan, please. 

MS. KAUFMAN: That would be Exhibit 603. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 19 of 146
THE WITNESS: So on the HUD-1 settlement statement, 

the lender is listed as Flagstar Bank. That's on 

Exhibit 603. On the promissory note, which is Exhibit 604, 

the lender is listed as G-4 Holding Company. Exhibit 605 is 

the assignment of the deed of trust or mortgage deed that 

assigns the note and the deed from G-4 to Flagstar Bank on 

the date of the closing. 

Q. The application? 

A. The application is signed by Craig and Waun Weingart 

and the name and address, interviewer's employer, is G-4 

Holding, and the interviewer is listed as John Gallegos. 

Q. Is there, on the loan application, a designation at the 

top of the loan application as to who the lender is? 

A. I do not see one. It has a lender case number.

Q. So you don't know who the borrowers made application 

to. 

A. Based upon the application, the borrowers made the 

application to G-4 Holdings. 

Q. Okay. And when you talk about your opinions here in 

A1, you're talking about the application made to G-4 

Holdings, right? 

A. Correct. 

Q. Okay. And G-4 Holdings is owned by whom? 

A. It is a combination of one of our -- a combination of 

our defendants. I don't recall specifically. I believe 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 20 of 146
there may be an exhibit that we may have marked that would 

indicate it. 

Q. Okay. So your belief is that G-4 Holdings is an entity 

owned and controlled by some or all of the defendants; is 

that fair? 

A. Correct. 

Q. Did you analyze the ownership of G-4 Holdings in 

reaching an opinion as to the representations made here? 

A. I did review the documents filed with the Secretary of 

State regarding G-4 Holdings, but it was more in terms of 

the overall investigation, not specifically to form this 

opinion. 

Q. Okay. So, in essence, your opinion is pertinent to an 

application made by Craig and Waun Weingart to G-4 Holdings. 

Fair? 

A. Correct. 

Q. Okay. Apparently G-4 Holdings, regardless of who owns 

it, approved that application and obtained funding from 

Flagstar Bank in order to fund, correct? 

A. Flagstar Bank, yes, funded this loan. 

Q. But you don't have the documents between G-4 Holdings 

and Flagstar Bank, right? 

A. I don't believe so. 

Q. Okay. So you don't know what G-4 Holdings represented 

to Flagstar Bank, correct? 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 21 of 146
A. I know that G-4 Holdings -- the application to G-4 

Holdings was in the Flagstar loan file because that's what 

we received from Flagstar. 

Q. Okay. So you know the application was there, but you 

don't know whatever else might have been transmitted by G-4 

Holdings to Flagstar Bank? 

A. Correct. 

Q. And you didn't talk with Flagstar Bank. 

A. I did not talk with Flagstar Bank. 

Q. Looking at the application, I understand your opinion 

to be actually a couple of opinions. First, that the 

statement on the loan application relating a liability to 

Loan Works, secured by a construction project for 24 units, 

was a false representation; is that correct? 

A. Can you say that again, please? 

Q. I understand your first opinion, in essence, to be that 

the representation on the loan application that the 

liability to Loan Works, secured by the construction project 

for 24 units, was a false representation. 

A. Correct. 

Q. Okay. And your second opinion to be that there was an 

omission that was materially false because the application 

did not reflect a loan that Craig and Waun Weingart had 

obtained from Jefferson Mortgage Group that was outstanding 

as a liability; is that right? 

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A. Correct. 

Q. Okay. So with regard to this application, your opinion 

is that there is a false statement and an omission. 

A. Correct. 

Q. And you reached those conclusions using this 

methodology that you described a few minutes ago. 

A. Yes. 

Q. Now, as to that second opinion, you say that it is -- 

that there is an omission in that the loan should have been 

reflected as a liability on the application and the 

property, 7766 Saxeborough, should have been listed on the 

schedule of real estate owned. Is that correct? Do I 

understand that correctly? 

A. Correct. 

Q. The property, 7766 Saxeborough, was not listed as any 

property owned by the defendants on the application? 

A. No. It was, because it was the loan being refinanced, 

so it was listed as a property with one liability. It did 

not show the other liability that I said was omitted. 

Q. So what really is happening here is it didn't show the 

lien from the loan, the lien that secured the loan to 

Jefferson Mortgage Group, right? 

A. Correct. 

Q. Okay. Now, in formulating this opinion, did you 

determine that there was a deed of trust recorded in the 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 23 of 146
real estate records for 7766 Saxeborough securing the loan 

to Jefferson Mortgage Group? 

A. I don't recall if I reviewed the recorded deed of trust 

for that -- for that loan to Jefferson Mortgage, but I did 

review the Jefferson Mortgage loan file, which had a copy of 

the deed of trust. It may or may not have been recorded. 

So I didn't, as I said before, even though I did 

review the clerk and recorder's documents for the deeds of 

trust, I was like the lender, if you will, to say, We've had 

a deed of trust signed and that property is the collateral 

for this loan. 

The lenders didn't always have a copy of the 

recorded deed of trust in their files; they sometimes only 

had what was signed at closing.

Q. And you didn't make any distinction between whether 

something was recorded or not. 

A. I did not. 

Q. Let's go to opinion A2. This pertains to a loan dated 

October 12th, 2000, obtained by Craig and Waun Weingart, 

from Option One Mortgage. And I understand that you've 

expressed three opinions with regard to that application. 

A. Yes. 

Q. I understand that in opinion A, you again are saying 

what you said with regard to opinion A1a, that there was a 

false representation with regard to the listing of a 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 24 of 146
liability in the liability section of the loan application. 

Correct? 

A. Which was linked to a -- to a false address that was 

not the address pledged as collateral for that liability, 

yes. 

Q. Okay. And that B and C are omissions which you believe 

should have been included on this application; is that 

right? 

A. Correct. 

Q. And if I understand these opinions correctly, both A1 

and A2, your assumption is that on the loan application, 

Craig and Waun Weingart were obligated to disclose all debts 

that they had and all collateral securing those debts; is 

that correct? 

A. All debts that were collateralized by Saxeborough, 

which was the loan -- which was the piece of property that 

they were requesting to be refinanced. 

Q. Okay. So they didn't have to disclose other debts that 

weren't secured by Saxeborough? 

A. There were -- they were required to list their 

financial position to the lender accurately. I did not look 

at what were all the debts that they should have listed. I 

focused on which debts related to the properties that were 

showing on these loan applications. 

So I didn't -- it didn't matter to me if they left 

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off a MasterCard bill, for example, but I would think, as 

the lender, they would -- the lender would want an accurate 

representation of their financial position at the time of 

the loan. 

Q. And that's because you tailored your analysis to the 

mortgage fraud that had been described to you by the FBI 

agent when you began this investigation; is that right? 

A. Yes. 

Q. Could you turn to page 64. These are the B opinions. 

A. Yes. 

Q. And I want to make sure I correctly understand what the 

nature of the opinions is and how you reached these 

opinions. You've described here these opinions as being 

opinions related to whether loan proceeds from each 

refinancing of Saxeborough and Lost Angel were used to 

promptly pay off the prior outstanding mortgage as required 

by the lender. 

Now, I understand from your prior testimony that 

really what we're talking about here are HUD-1 requirements; 

is that right? 

A. Correct. 

Q. And so each of these opinions, B1, et cetera, involve a 

study of your review of the HUD-1 to determine what loans 

were required to be paid off. And then looking to see 

whether, based on the records you had, the loan was paid off 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 26 of 146
from the loan proceeds. Correct? 

A. Right. 

Q. Now, in making the determination as to what's on the 

HUD-1, you just looked at the HUD-1, right? 

A. The HUD-1, in conjunction with any payoff statement 

that was submitted to the lender, and/or the loan 

application that listed which loan was being refinanced. 

Q. Okay. But you made the determine -- if there was 

disagreements among those documents, you went by the HUD-1, 

right? 

A. I went by the HUD-1, but there wasn't ever a time that 

they disagreed. 

Q. Okay. So --

A. So --

Q. So you didn't need to refer to the other documents, you 

could simply look at the HUD-1. 

A. No, I would need to look at the other documents because 

the HUD-1 typically only listed the lender to be paid off. 

It did not indicate the loan -- the actual loan number -- 

Q. Okay. 

A. -- and that information I would have received from 

either the payoff statement or the loan application. 

Q. Okay. For all of the loans that you've expressed 

opinions here, did you have a HUD-1? 

A. I believe so. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 27 of 146
Q. And for all of these opinions that you expressed here 

as B opinions, did you have a payoff statement? 

A. No. 

Q. So if the payoff statement is necessary to form the 

opinion, how could you form the opinion without the payoff 

statement? 

A. Because I could rely on the loan application, because 

the loan application would list only one loan for 

Saxeborough or Lost Angel to be the one to be refinanced; 

and the loan application would list in the liability section 

the account number, the loan identification number of the 

loan. And if for some reason the loan identification number 

was not listed on the liability section of the application, 

I could look at the credit report as well, which would give 

me the loan identification number for the loan requested to 

be paid off. 

Q. Okay. So that told you there was a loan. But it 

doesn't tell you whether that loan was paid off before the 

closing, does it? In other words, if you don't have a 

payoff statement, you don't know what's owed on that loan as 

of the time of the closing, right? 

A. Other than from the HUD-1. The HUD-1 would list the 

amount that the lender is saying, "Please pay off this 

loan." 

Q. Well, I thought I just understood you to say that's why 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 28 of 146
you needed the payoff statement was to quantify the amount. 

A. I didn't quant- -- I didn't need the payoff statement 

to quantify the amount. 

Q. So why did you need the payoff statement? 

A. I needed the payoff statement to identify the loan 

number that was being requested to be paid off. 

Q. Okay. So what I understand, then, is if you don't have 

the payoff statement to tell you the loan number, you can 

guess at what the loan number is by looking at the loan 

application, if it's referred to there, or by looking at the 

credit report that might have the loan number there? 

A. It wouldn't be a guess. It would be listed either in 

the application, but most definitely listed on the credit 

report. 

Q. I understand that most of these loans were funded 

through three or four or five banks; is that right? 

A. You mean are lenders who funded the -- oh, there was 

definitely more than five. 

Q. Okay. Were there more -- were there any lenders who 

funded more than one loan? 

A. There were lenders that funded more than one loan for 

two different pieces of property. So, for example, Chase 

Manhattan Mortgage funded a loan for Saxeborough and they 

funded a loan for Lost Angel. I don't recall -- I could 

possibly look at an exhibit to see if a lender may have 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 29 of 146
funded a Saxeborough loan early in time and then funded 

another Saxeborough loan later in time. I don't recall if 

that happened. 

Q. So going hypothetically to a transaction where you 

don't have a loan payoff statement, so you don't have the 

loan number on the payoff statement, and you're relying on 

whatever loan information is listed on the application, and 

you then want to have certainty as to whether a particular 

loan was paid off or not, without the loan payoff statement 

how did you verify that you had the right loan number? 

A. The loan being requested to be paid off would be the 

loan -- the only loan on the loan application for 

Saxeborough, for example. The credit report would list that 

same liability and that credit report would have that loan 

identification number on there as well. So between the 

application showing one loan to be paid off for Saxeborough 

and linking the liability for that -- for Saxeborough that's 

listed on the loan app, to the credit report debt, that 

would be represented to the lender to be the debt for 

Saxeborough, that would tell me the loan identification 

number.

Then I could tell, based upon getting the lender 

files for that loan that's being requested to be paid off, 

either the payment history that would show that it would be 

paid off, or through my analysis of the bank records showing 

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the proceeds came in, there was no payoff for that loan from 

that account, or from any account, during that time period 

that the refinancing occurred. 

Q. Do you ever check with the lender to see if the lender 

was paid off and on what date the lender was paid off? 

A. Through the payment histories that they provided. 

Q. But you didn't have payment histories for all of these 

loans. So where you didn't have payment histories, did you 

contact the lender and find out if they were paid off and, 

if so, when they were paid off? 

A. No, I did not. 

THE COURT: Okay. I think that's all the questions 

that I have. We're about five minutes short of when I 

thought I was going to be finished so we'll take our recess 

right now. We'll reconvene at 1:30. And because the 

Government has the burden of proof with regard to the 

establishment of the foundational requirements under 702 for 

its witness, we will begin with the examination by the 

Government. 

I ask you not to be repetitive as to the areas that 

I've inquired into but, of course, you're free to further 

explore those areas if I didn't go deep enough.

All right. Thank you very much. I'll see you at 

1:30. 

(Recess taken 11:40 a.m.)

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 31 of 146
AFTERNOON SESSION

(Proceedings continued at 1:42 p.m.)

THE COURT: Ms. Kaufman. 

MS. KAUFMAN: Yes, thank you. 

DIRECT EXAMINATION

BY MS. KAUFMAN:

Q. Good afternoon, Ms. Chamberlin. 

A. Good afternoon. 

THE COURT: Ms. Kaufman, you'll need to pull that 

microphone toward you. You're kind of soft. 

MS. KAUFMAN: Thank you. 

THE COURT: Thank you. 

MS. KAUFMAN: Is that better?

THE COURT: That's better. 

MS. KAUFMAN: Good. Thank you.

BY MS. KAUFMAN:

Q. Ms. Chamberlin, in this case, you've articulated 

numerous opinions, correct? 

A. Yes. 

Q. And those -- have those been set forth in writing in 

the parties' second amendment -- amended joint motion under 

Federal Rule of Evidence 702? 

THE COURT: Ms. Kaufman, I know that they've been 

set forth in that document. We've referred to that 

document. You don't need to lay foundation for that 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 32 of 146
document or those opinions. I understand those to be the 

opinions of this witness. 

MS. KAUFMAN: Very well.

BY MS. KAUFMAN:

Q. Do the opinions, particularly those relating to part A, 

which are those relating to the loan applications, the 

relationships between the various parts of the loan 

applications, do those stated opinions include a conclusion 

on your part, as an expert, that anyone made a false 

statement, or they otherwise phrased? 

A. That a specific person made --

Q. No. That a false statement was made. Do those 

opinions include that as part of your opinion to be offered 

in trial? 

A. No. 

Q. Okay. Do those opinions include an assertion on your 

part that anyone omitted information from any -- anyone in 

particular omitted information? 

A. That anyone omitted information, no. 

Q. Are you simply stating that that information was not 

presented? 

A. That liability was not listed on the loan 

application. 

Q. All right. Is it your understanding that the precise 

opinions that are set forth in document 160 would be the 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 33 of 146
opinions elicited from you at trial, should we be permitted 

to do so after this hearing? 

A. Yes. 

Q. When you -- you said that you work for the United 

States Attorney's Office and that when you got this case, it 

was brought to you by FBI Agent Scott Donner? 

A. Correct. 

Q. And had it at that time already been approved for 

opening as a matter within the United States Attorney's 

Office? 

A. To my knowledge, yes. 

Q. And is it your understanding whether or not a 

supervisor within the economic crimes unit would have to 

approve that opening of the case for further investigation? 

A. Correct. 

Q. Referring you to what has been called document 161, 

this is, in fact, the Government's proffer relating to the 

methodology used by you, are you familiar with that 

document? 

A. I am. 

Q. And does that accurately set forth the methodology that 

you used in this case? 

A. Yes. 

Q. Did you participate in drafting the -- that document, 

and, specifically, pages 1 through 21, which describe 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 34 of 146
methodology? 

A. Yes. 

Q. Did you have an opportunity, if anything in that 

document was inaccurate, to request that it be changed? 

A. Yes. 

Q. And was it changed if it was inaccurate in your view? 

A. Yes. 

Q. And so are you satisfied that that is an accurate 

statement of your -- the methodology used in this case? 

A. It is. 

Q. Okay. That document, as you may recall, discusses the 

fraud theory approach. 

A. Yes. 

Q. What is the fraud theory approach? 

A. The fraud theory approach is the approach endorsed by 

the Association of Certified Fraud Examiners for 

investigating fraud. 

Q. I would have you look at Exhibits, please, 6, 7, and 8. 

A. Yes. 

Q. Can you identify Exhibit 6, please. 

A. Exhibit 6 is the introduction to the 2012 Fraud 

Examiner's Manual. 

MS. KAUFMAN: And, Your Honor, I would ask for some 

guidance here. I've been told one or two things about how 

the Court likes to proceed with exhibits at such hearings. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 35 of 146
Does the Court require a formal offering of this as admitted 

into evidence at this hearing?

THE COURT: You can do whatever you like. 

MS. KAUFMAN: I would move for admission of this 

into evidence. 

THE COURT: I will receive the exhibit. The Rules 

of Evidence do not apply in this hearing. 

MS. KAUFMAN: Very well. 

THE COURT: So we're making only a record as to 

what you want the Court to consider. I'll consider anything 

you submit. 

MS. KAUFMAN: Very well. 

(Plaintiff's Exhibit 6 was received into evidence.)

BY MS. KAUFMAN:

Q. Ms. Chamberlin, does this document, specifically at 

page I-7, I believe, I-6 and 7, refer to the fraud theory 

approach and the methodology that you described in document 

160? 

A. It does. 

Q. This morning you were asked some questions about 

information that Agent Donner gave you as you were newly 

assigned to begin investigating the case. And how, if at 

all, would that presenting to you of information that he had 

at the beginning of the case fit into your application of 

the fraud theory approach? 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 36 of 146
A. Well, the information that Agent Donner gave to me in 

the very beginning would be part of my predication, along 

with the opening of the case by the United States Attorney's 

Office. And what little information as far as names would 

be part of the available data that I knew, at least names of 

companies and individuals as to who I'd be looking for. 

Q. All right. Did you then follow the steps as stated 

here, and as stated in document 160, relating to analyzing 

data, creating hypothesis in this case? 

A. Yes. 

Q. Did you also test the hypothesis and amend and refine 

the hypothesis if necessary? 

A. Yes. 

Q. Who created the -- you -- have you described the 

hypotheses that you came up with the proffer that --

A. Yes. 

Q. Who created those? Was that you or did someone just 

tell you what a -- the hypothesis was? 

A. No, it was me. 

Q. How did you know -- for example, talking about topic A, 

which is the loan application topic -- how did you go about 

coming up with that hypothesis based on this approach? 

A. Well, based upon the available data that I had, which 

included what Agent Donner told me in the beginning, along 

with the bank records that I had -- or was in the process of 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 37 of 146
analyzing, I knew that there were certain loans whereby 

fraud may have been committed in obtaining those loans.

So when -- regarding topic A, I first knew what I 

would expect to see would be the relationship among the 

liabilities on the loan application to the addresses listed 

on the schedule of real estate owned on the application, as 

well as the debts listed on the credit report. 

Q. When you say you "expect to see," from where do you get 

that expectation? 

A. Based upon my training and experience in investigating 

mortgage fraud, as well as my personal experiences in buying 

pieces of property and having to fill out applications and 

credit reports. 

Q. So when you say you would expect to see certain things 

in examining these documents, are you talking about if there 

is no fraud, that this would be -- in the normal course of 

events, you would expect to see those things? 

A. Correct. If it was a normal application and a normal 

loan process, those three things would have a relationship 

and would correspond to one another. 

Q. And so what was your hypothesis to start with for part 

A? 

A. My hypothesis to start with was that the liabilities 

listed on the credit report -- or the liabilities listed in 

the application corresponded to the schedule of real estate 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 38 of 146
owned address and that it was represented that that 

liability was for that piece of property listed on the 

schedule of real estate owned. 

Q. And is that expectation based on what you would expect 

to see were there no fraud? 

A. Correct. 

Q. Okay. Were you aware at the time, at the outset, 

whether or not addresses were listed in the liabilities 

section of the applications? 

A. I would expect to go see addresses listed in the 

schedule of real estate owned. 

Q. The question was: Would you expect to see addresses 

listed in the liabilities section of the application? 

A. In the liabilities, no. 

Q. Okay. Would you expect to see them in the schedule of 

real estate owned? 

A. Yes. 

Q. Would you also expect to see in the schedule of real 

estate owned, not only an approximate valuation of the 

property, but also an amount owed on any debt on that 

property, as well as a monthly payment owed on the debt on 

that property? 

A. Yes. 

Q. Is the -- is, typically, in the -- is the schedule of 

real estate owned typically the only place on a loan 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 39 of 146
application where you would see a specific street address 

related, linked, to a debt? 

A. Other than the first page of the loan application where 

it would list an existing debt and the property being 

refinanced, in the case of a refinance, the only place -- 

the only other place I would expect to see a list of 

properties would be the schedule of real estate owned. 

Q. And so would you expect to see, then, that the numbers, 

that being the total liability on the different liabilities 

listed on the liability section, would correspond to the 

liabilities on particular addresses listed on the schedule 

of real estate owned? 

A. Yes. 

Q. And, similarly, if the liabilities section of the loan 

application gave a monthly payment -- would it give a 

monthly payment? 

A. It typically would. 

Q. Typically would? Would you expect in a nonfraud 

situation, that that monthly payment would also correspond 

to the monthly payment on the schedule of real estate owned? 

A. It would. 

Q. Now, in your analysis, you've said that you also 

examined the credit report. What would you expect, based on 

your experience and training in this area, to see in a 

nonfraud situation on a credit report of the same 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 40 of 146
application? 

A. The credit report would have the -- typically the same 

lender's name that would be listed on the liabilities 

section of the application; it would have the outstanding 

principal balance that would be listed in both the 

liabilities section and the schedule of real estate owned; 

it would list a monthly payment that would correspond to the 

same liability and the same piece of property under the 

schedule of real estate owned; it would also list the 

account number of the loan; and it would also list the 

opening year and month of the loan when it was originally 

taken out; as well as the original balance -- principal 

balance of the loan when it was originally taken out. 

Q. What information would be on the -- would you expect to 

see on the schedule of real estate owned that you would not 

expect to see on the credit report? 

A. The address for the property secured as collateral. 

Q. In your topic A, you said you examined the 

interrelationships among those three things. Did you 

expect, then, in a nonfraud situation to interrelate in that 

they corresponded? And if so, how? 

A. I would expect them to correlate in that the 

liability -- the liability that is listed, the outstanding 

principal balance would match what's listed on the schedule 

of real estate owned and the debt on the credit report. I 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 41 of 146
would expect the monthly payment to correspond to what's 

listed under the schedule of real estate owned and on the 

credit report. I would expect the lender name and account 

number to correspond to what's listed on the debt of the 

credit report. 

Q. And when you examined the applications in this case, 

did you see that they appeared to correspond? 

A. They did appear to correspond, yes. 

Q. Those three areas that you've just described? 

A. Yes. 

Q. And is that what you would expect to see if there were 

no fraud? 

A. Yes. 

Q. Now, what other piece or pieces of information did you 

then bring into this analysis of interrelationships? 

A. I brought in the knowledge that I had regarding my 

universe of loans, as far as looking at the deeds of trust 

and notes and loan files of the other loans that were not 

being refinanced, and knew that particular loans were taken 

out prior to the loan being refinanced, and that either 

Saxeborough or Lost Angel were the properties pledged as 

collateral for those loans. 

And I started to create a list of the loan numbers 

for each of the loans so I could look at each one instead of 

digging through the same lender files over and over again.

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 42 of 146
Q. Okay. Let's stop there. You've said a lot. You said 

you had a universe of loans. Are you talking about -- when 

you say that, you had lenders' files or files you had 

received from lenders? 

A. Correct. 

Q. And what is the process -- what was the process in this 

case through which you at the United States Attorney's 

Office or the United States Attorney's Office, itself, 

obtained the lenders' files? What process did it use to get 

those files? 

A. As I explained earlier, that as I was looking at the 

bank records --

Q. Let me ask the question again.

I'm not asking what you did. I'm asking at the 

United States Attorney's Office in this case, when we wanted 

to get a lender's file delivered to the office, how did we 

go about doing that? 

A. A grand jury subpoena would be drawn up and issued and 

served on the lender. 

Q. Okay. And who typically serves the grand jury 

subpoena? 

A. The FBI agents. 

Q. Okay. 

A. Or the IRS agents, depending on who was involved. 

Q. All right. And where, then, are the documents from the 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 43 of 146
lenders delivered? 

A. They're sent directly to the grand jury clerk in our 

office. 

Q. Who is that? 

A. Charlie Seeton. 

Q. And does she have her own office, just for this 

purpose? 

A. She does. Yes. 

Q. And are you -- are you familiar with what she generally 

does with those documents as soon as she gets them? 

A. She -- I am familiar with it, yes. 

Q. What does she do? 

A. She would log in the return of the documents. And when 

the grand jury sits, she will take all the documents that 

she receives over to the grand jury to be logged in by them. 

And then once they're logged in, they come back and she logs 

in that they've been stamped in by the grand jury and then 

they're distributed to each U.S. Attorney to then pass on to 

their agents. 

Q. All right. And so when you obtained lenders' files in 

this case, or documents from lenders, from -- would you 

receive it through that process? 

A. Yes. 

Q. Okay. And then are -- are -- are those documents kept 

intact throughout this process of the investigation? 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 44 of 146
A. To my understanding, yes. 

Q. Are they logged and filed and kept intact? 

A. Yes. 

Q. And are those the lenders' records that you used, and 

that you relied on, in performing your analysis here? 

A. Yes. 

Q. Similarly, while we're on it, with the bank records, 

what is the process by which United States Attorney's Office 

in this case obtained bank records that you reviewed? 

A. It would be the same process in that someone, either 

the agent on the case -- the agents on the case would write 

up a grand jury subpoena, ask that one be issued. It gets 

served by the agents on the bank. The bank delivers the 

records to Charlie, Charlie logs them in. They go to the 

grand jury when the grand jury meets, same process. 

Q. Okay. Then they come back to the United States 

attorney dealing with the case? 

A. Correct. 

Q. And that person would give them to you or whoever 

needed to work on them? 

A. Yes. 

Q. And is that how you obtained them in this case? 

A. Yes. 

Q. You indicated -- you refer to a universe of loans. So 

when you say you were aware of other loans and you are aware 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 45 of 146
of when they were taken out, you know, when they were 

created, are you looking at those files to determine that 

information? 

A. Yes. Those files or the public records, one of the 

two. 

Q. Okay. And in those files, was there typically a note 

that had a date -- 

A. Yes. 

Q. -- and so on? 

A. Yes. 

Q. And as this investigation proceeded, did you obtain 

more and more files, as you indicated this morning? 

A. Yes. 

Q. Would you obtain clues as to where -- what new -- what 

other loans might be out there by looking at the bank 

records? 

A. Yes. 

Q. How? 

A. I would see -- typically see a deposit come into one of 

the bank accounts that would be in an amount that would be 

fairly significant in the 300-, $400,000 range. And 

oftentimes there would be some type of notation on the wire 

transfer that would indicate to me that it could potentially 

be one of our suspects' loans. 

Q. And so how would that relate to getting a loan file 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 46 of 146
from a lender? 

A. I would then contact Agent Donner to say, "Have we 

received this file for a loan that happened on or about a 

particular date, in this rough dollar range, from this 

lender?" 

If he said no, I said, "Well, there's a potential 

that this could be one of our loans." 

Q. And then what would be requested? 

A. Agent Donner would request the entire loan file from 

the lender. 

Q. Well, would he request it or what process would he go 

through to get it? 

A. He would complete a grand jury subpoena request and 

fill out the information and it would come to you to be 

approved. 

Q. So the same process again. 

A. Correct. 

Q. Back to topic A. When you then compared the three 

areas that you've described in the -- two areas on the loan 

application plus the credit report, you've indicated that 

those three areas appear to correspond. 

A. Right. 

Q. And you then compared that information to information 

from the loan files that you had been gathering, correct? 

A. Correct. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 47 of 146
Q. And absent fraud, what would you have expected to see 

as you indicated in your proffer of a methodology? What 

would you have expected to see? 

A. What I would have expected to see was that those three 

pieces of information would correspond to each other based 

upon the lender name, account number, outstanding principal 

balance, mortgage amount, and that the property listed as 

the address for that liability was actually the property 

that was pledged as collateral on the deed of trust for that 

loan. 

Q. Now, when you say "the property listed with that 

liability," where on the application is that particular 

property address listed again? 

A. Only on the schedule of real estate owned. 

Q. Okay. So now you had -- could you call them known 

loans? 

A. Yes. 

Q. Okay. So you know that loan existed. 

A. Yes. 

Q. When you say that there -- it would -- there was 

property pledged as collateral, were there deeds of trust in 

which our suspects at the time were verbally pledging to 

have collat- -- collateral to the lenders? 

A. The addresses were listed on the deeds of trust, yes. 

Q. And is that the basis on which you concluded that this 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 48 of 146
lender believed that he was going to have this collateral to 

secure the loan? 

A. Yes. 

Q. Did you also observe, within the lender's files, title 

commitment policies -- or title commitments? 

A. Yes. 

Q. And some title policies? 

A. Yes. 

Q. And was it a stated condition on the title commitment 

that a particular loan would be paid off as a condition? 

A. Yes. 

Q. Was the -- did you observe whether or not the name of 

the -- you indicated earlier part of the predication was 

that two of the title companies controlled by one or more of 

the defendants, those being Colorado County Community Title, 

or Real Estate Title, initially, were used in the closing of 

these loans. 

A. Yes. 

Q. And where did you see that? 

A. On the HUD-1 settlement statements, typically. 

Q. And were those entities typically also involved in the 

title commitments within the loans? 

A. Yes. 

Q. Let's look at -- excuse me for skipping around, but we 

looked at Exhibit 6, which I've brought to your attention. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 49 of 146
I would also like to bring to your attention Exhibit 7, 

which is another document. 

Could you describe that for the Court, please. 

A. Exhibit 7 is portions of the 2012 Fraud Examiner's 

Manual. The first page being the table of contents for the 

investigative section of the manual and the subsequent pages 

relating to tracing illicit transactions. 

Q. Is this an example of information that you received 

through the Association of Fraud Examiners that discusses 

what information would be recommended that a certified fraud 

examiner use in an investigation related to mortgage fraud? 

A. Yes. 

Q. And what is -- for example, does it talk about loan 

records, generally at page 3? 

A. Pages 3 and 4. 

Q. Is that consistent with what you were doing, that is, 

obtaining the loan records from the lenders through the 

grand jury process? 

A. Yes. 

Q. And does this also -- for example, also relate -- 

describe something called a liability ledger? 

A. It does. 

Q. And are you also a CPA? 

A. I am. 

Q. How long have you been a CPA? 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 50 of 146
A. Since 1991. 

Q. This describes a liability ledger. What is a liability 

ledger? Is it sometimes called other things? 

A. The liability ledger is described here in the manual, I 

correlate with a payment history that the lender would keep 

and would keep track of any funding of the loan, any 

payments made, any escrow received, taxes paid, that type of 

thing. 

In my terminology, since the majority of the 

information on the liability ledger relates to payment, I 

refer to it as a payment history.

Q. Okay. So that's your own --

A. Yes. 

Q. -- phraseology? 

A. Yes. 

Q. What are lenders in the business of doing, generally? 

A. Lenders are generally in the business of loaning money 

and making their profits by charging interest when they 

collect the payments on the loans. 

Q. And do you, as a certified fraud examiner and a CPA, 

typically rely on a payment history you've received from the 

lender as an accurate record of the payments that they've 

received? 

A. I do. 

Q. And did you do that in this case? 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 51 of 146
A. I did. 

Q. Similarly, are there other portions -- I believe that's 

in Exhibit 6, but are there other portions of information 

you've received from the Association of Certified Fraud 

Examiners that cause you to believe whether or not bank 

records are an important source of the information for a 

Certified Fraud Examiner to rely on in his examination? 

A. Bank records are one of the most important parts, 

especially when we're tracing financial transactions. I 

believe that's -- it's on Exhibit 7, page 2, bottom 

paragraph. 

Q. Okay. And is that consistent with what you testified 

to this morning, that the first thing that you examined 

virtually in all cases of potential financial fraud are bank 

records? 

A. Yes. 

Q. Similarly, in Exhibit 8 -- what is Exhibit 8? 

A. Exhibit 8 is a portion of the course materials I 

received in regards to the mortgage fraud class that I went 

to as described this morning. 

Q. And does this information set forth in Exhibit 8 relate 

to the use of servicing records by certified fraud 

examiners? 

A. Yes. 

Q. And can you tell us generally what the Association of 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 52 of 146
Certified Fraud Examiners, through this court, has led you 

to believe is the importance of servicing records? 

A. The importance of servicing records is that, again, it 

will detail the mortgage payments that were made on a 

particular loan, primarily. 

Q. Since we're talking about servicing, one of the things 

that you've mentioned in your testimony here, and has come 

up in your proffer as well, is the fact that there can be a 

servicer, a lender, successor lender, and so on. 

A. Yes. 

Q. Okay. And can you describe to the Court how, if at 

all, the interrelationships among those entities played into 

your -- the difficulty or ease with which you could find 

answers you were looking for in this investigation. 

A. The difficulty that I had was because many of these 

loans were outstanding over a period of years, I could start 

with the original lender who gave the loan an original 

identification number. If the loan got sold to a successor 

lender, that successor lender may give a new identification 

number to that loan. 

In some cases, the lender may have allowed a 

servicer to collect the loan payments and that servicer may 

refer to that loan under a different identification number. 

So part of my difficulty was knowing that that could happen 

and, two, when it did happen, where could I find the 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 53 of 146
successor information? 

And that's when I started to compile one of the 

exhibits in my disclosure, to try and keep track of all 

these different identification numbers. So when I'm looking 

at a loan application and I can see a loan identification 

number for a loan, I could refer to my summary to see, have 

I matched that identification number to a particular loan, 

or is that a brand-new loan that I didn't know about? Or 

could that be a successor number that I haven't yet 

identified to a particular loan? 

Q. Please look at Exhibit 2. And, I'm sorry, I don't -- I 

think we had that one --

COURTROOM DEPUTY: I think I handed that there in 

the second batch. Let's see. Here. 

THE WITNESS: Yes.

BY MS. KAUFMAN:

Q. Is this -- what is this? 

A. This is my summary of the loan identification numbers 

for my universe of loans. 

Q. Was this done all at once or was this a product of 

ongoing -- your ongoing work in this case? 

A. It was ongoing product. 

Q. Did the amounts also change from time to time, payment 

amounts and so on? 

A. Payment --

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 54 of 146
Q. Payment amounts? 

A. Payment amounts could definitely change over time. 

Q. And would the name of the person collecting the 

amount -- that amount change? 

A. It could. 

Q. And would the identification number change as you said? 

A. It could. 

Q. And sometimes did these identification numbers have 

prefixes and/or suffixes? 

A. Some would, yes. 

Q. Meaning what? Additional numbers at the beginning -- 

A. Additional numbers at the beginning or at the end, but 

there was typically a root identification number, if you 

will. 

Q. What is an escrow number? 

A. The escrow number is typically the number that the 

title company will know the loan under when it's closing the 

loan. And it would typically be shown primarily on the 

HUD-1 settlement statement. 

Q. Is that number sometimes also listed on other 

documents? 

A. It could, yes. 

Q. Is the loan number sometimes listed on, for example, a 

note or some other document without it saying, quote 

unquote, loan number? 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 55 of 146
A. Yes. 

Q. And same thing with the escrow number? 

A. Yes. 

Q. Did you use your training and experience and expertise 

in sifting through all that to be able to help you identify 

the loans that you've identified in your opinions? 

A. Yes. 

Q. Did you obtain deeds of trust for all of the loans in 

this case early on in the investigation? 

A. I don't know if it was early on, but we did obtain the 

deeds of trust that were recorded with the proper county 

clerk. 

Q. All right. Did you find that -- by looking at those, 

that they were recorded at or near the time of the closing? 

A. Typically, they were not. 

Q. And how much later, typically? 

A. Several months to several years. It varied. 

Q. In addition to articulating your opinions in document 

161 in this case, did you also create a number of summary 

charts for this case? 

A. Yes. 

Q. And do you distinguish in your mind the work that you 

did in creating those summary charts with the work that you 

did in articulating the opinions that are set forth in the 

motion in this case? What's the difference, if any? 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 56 of 146
A. The summary -- the summary charts that I created -- the 

summary charts for the bank records, for the bank account 

documents, I consider to be summary charts that I would 

typically prepare in a case, but for the comments' column.

The other summary charts that I have done here are 

more summary charts of the opinions that I've reflected in 

Exhibit 160. 

Q. Okay. How -- let's look at, for example -- and I'm 

sorry, I don't think I mentioned this, Ms. Glover, 6800. 

Exhibit 6800. 

COURTROOM DEPUTY: Six eight zero zero? 

MS. KAUFMAN: Six eight zero zero. 

THE WITNESS: Yes.

BY MS. KAUFMAN:

Q. What is this? 

A. This is my summary chart of the account activity for 

the Colorado County and Community Title escrow trust account 

at First American State Bank, account No. 117523. 

Q. On this particular summary chart, does this state -- or 

does this set forth any of your expert opinions? And if so, 

where do you -- where do you see them? And how can you 

tell? I'm looking at page 35. 

A. Well, there's one example on page -- the statement's in 

the way -- on page 35. And it would be line 1744. 

Q. And how can you tell by looking at this summary of -- 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 57 of 146
is this a summary of activity in this particular account? 

A. It is. 

Q. And in order to -- aside from this particular expert 

opinion that's listed here, where do you get the other 

information and why do you call it a summary? 

A. It's a summary because it's a summary of the bank 

account -- the voluminous bank account records that we 

received from the bank. So the statements, the deposit 

slips, wire transfers, the checks, all that information. 

The majority of that information would come and be placed on 

this -- on this chart. 

Q. Okay. And line 1744, is that the line in which you've 

set forth one of your opinions? 

A. It is. 

Q. In this case, did this case, as you began to become 

involved -- whose idea was it, talking about opinion A, 

group A, whose idea was it for you to perform that analysis 

and compare and contrast the information in those three 

areas from -- two areas from the application, the credit 

report, and the other loans? Was that your idea or were you 

instructed to do that? 

A. It was my idea. 

Q. You testified this morning that it's common for you to 

look at a loan application first, see if there are false 

representations made. And what is the easiest false 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 58 of 146
representation that you can find typically in doing that? 

A. Typically it's the bank account balances that are 

listed on the assets section. Just because I will have -- 

since I've looked at the bank account records first, that is 

something that I would immediately be drawn to. 

Q. You indicated -- did you indicate this morning that you 

looked at all of the records that you obtained from the 

lenders? 

A. That we obtained, yes. 

Q. And did that include documents that would have been 

provided to the lenders by potential borrowers? 

A. Yes. 

Q. If they were in the file? 

A. If they were in the loan file, yes. 

Q. And did that include, in some cases, bank statements? 

A. Yes. 

Q. And in this case, for example, did you see such bank 

statements? 

A. I did. 

Q. And did you compare those bank statements to the actual 

bank statements that you got from the lenders? 

A. I did. 

Q. And did you find discrepancies? 

A. I did. 

Q. Now, you haven't listed any of that as an expert 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 59 of 146
opinion, correct? 

A. Correct. 

Q. How qualitatively did the analysis that you did in part 

A differ from doing that rather routine work that you 

typically do in finding misrepresentations on applications? 

A. The work to form the opinions for topic A was a lot 

more involved, probably the most involved that I've ever 

worked, as compared to comparing a bank statement -- two 

different bank statements and just looking at the numbers, 

and you can -- the bank statements that were submitted to 

the lender were altered pretty significantly, in my opinion, 

that were easy to see. There wasn't any studying of 

individual transactions. It was pretty obvious that they 

were altered. 

Q. And how was the other analysis qualitatively different? 

A. The other analysis on its face, items appeared to match 

up until I started looking at the addresses that were listed 

for the property pledged. And that's why keeping a running 

list of the loans that I was aware of and knew that 

Saxeborough or Lost Angel were the properties that were 

pledged as collateral for particular loans, and then being 

able to match up the identification numbers, it took a lot 

more steps to go through to provide reasonable assurance to 

myself that that was something that was misstated. 

Q. And, again, is your stated opinion that there's a false 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 60 of 146
statement, or is your stated opinion precisely what is 

written in document 160, the motion? 

A. Yes. 

Q. Which is it? Is your opinion that we intend to offer 

into evidence --

A. Not that they're misstated, but that the address listed 

appears to relate to the liability, but in actuality it 

really is a different loan for Saxeborough or Lost Angel or 

whatever is described in the opinion. 

Q. Let's look at -- you have testified, and it's 

abundantly clear from the paperwork file, that there are 

three topics that when we revised our Rule 702 motion, we 

revised it by topic. And what -- for what purpose was that 

reorganized? 

A. For ease of the Court to determine the different topics 

of analysis and types of opinions. 

Q. And within each of those topics, did you look further 

to determine whether, perhaps, there were groups of opinions 

rather than one opinion, one type of opinion, repeated and 

repeated? 

A. Yes. 

Q. And did that happen with topic A? 

A. It did. 

Q. Let's look at Exhibit 1600. 

MS. KAUFMAN: And for counsel's benefit, I can say 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 61 of 146
we're going to look at 1600, 1601, 1602, and 1305. 

Ms. Glover, may we look at this on the screen? 

COURTROOM DEPUTY: I'm sorry? 

MS. KAUFMAN: May we look at this on the screen? 

COURTROOM DEPUTY: Sure. 

MS. KAUFMAN: Thank you. 

THE COURT: I'm not interested in looking at 

documents on a screen. 

MS. KAUFMAN: All right. 

THE COURT: They're not legible that way. 

MS. KAUFMAN: All right.

BY MS. KAUFMAN:

Q. Let's look at Exhibit 1600. Do you have that before 

you, Ms. Chamberlin? 

A. I do. 

Q. What is this? 

A. This is my summary of opinions regarding the topic A 

analysis for loan S-15. 

Q. Okay. Now, what I'd like to focus on is your opinion 

that has been numbered opinion A8a. Capital A8a. 

And just for the purpose of this example --

A. That's related to line 1 on Exhibit 1600. 

Q. Is Exhibit 1600 something that you created at the end 

of this whole process of analysis rather than at the 

beginning? 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 62 of 146
A. Yes. 

Q. Are we looking at it now just to gain bearings as to 

what -- where this goes? 

A. Yes. 

Q. So if we're looking at opinion A8a, to which loan 

application does it apply? 

A. It's the loan application for loan S-15, as I've 

referred to it. 

Q. All right. And did you, for ease of reference, list 

all of these loan numbers in Exhibit No. 1? 

A. Yes. 

Q. Is that your index of loan codes, and so if somebody 

wants to know exactly what S-15 is and so on, they could 

look at that? 

A. Exhibit No. 1, yes. 

Q. Okay. And do you also state that information at the 

top of each of these summaries? 

A. I do. 

Q. Okay. Is this, then, a summary of expert opinions 

relating to this particular property in group A opinions? 

A. Yes. 

Q. For opinion A8a, small A, you directed us to a 

particular line. 

A. It would be line No. 1. 

Q. All right. Would you walk us through this by looking 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 63 of 146
at the exhibits that I've called up, beginning with 1601, 

and explain the process -- first of all, is this -- is the 

process that you used for this one representative of the 

process that you used for all of the opinions in which you 

conclude that particular liability and a particular debt do 

not relate, in fact, on the property of the real estate 

owned, but rather to some other property loan? 

A. Yes. 

Q. Okay. So let's look at Exhibit 1601. And could you 

tell us how you reached this opinion. 

A. 1601 is the loan application that was in the loan file 

for loan S-15 that we got from the lender. On page 2 of 

this loan application, the first section that I would look 

at is listed, which would be the liabilities section. But 

instead of listing each individual loan, it has a notation, 

"see addendum." 

Q. Where's that? 

A. Right underneath the liabilities section, about a third 

of the way down from the top of the page. 

Q. And where is the addendum? 

A. That would be pages 5 and 6. 

Q. All right. 

A. And 7, going on to page 8. So if we look at page 5, 

the first liability listed is a liability to Washington 

Mutual. It lists the account type as a mortgage. It lists 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 64 of 146
an account number, which I would refer to as the loan 

identification number. It lists an outstanding balance of 

$401,761 and a monthly payment of $1,857. 

So the next thing that I would have done was to 

look at the schedule of real estate owned to see which piece 

of property this loan is associated with. And the schedule 

of real estate owned begins on page 3, but, again, it says, 

"see addendum." And the addendum begins on page 8, the 

bottom third of the page. 

The first address listed being 790 Magnolia Street 

in Scottsdale, Arizona, had a mortgage amount of $401,761 

and a mortgage payment of 1,857. So based upon the 

information of the mortgage amount and the mortgage payment 

for Magnolia is the same as the mortgage amount or the 

balance in the payment listed for the Washington Mutual 

liability. I, therefore, concluded that the Washington 

Mutual loan is being represented as the loan for Magnolia 

Street.

So the next piece of information that I would have 

looked at would have been the credit report that was in the 

loan file. 

Q. Exhibit --

A. Which is Exhibit 1602. This is the credit report for 

the borrower, Waunita Weingart. And in this instance, I 

would go through and try and locate the debt listed on the 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 65 of 146
credit report that would correspond to the same liability. 

So it would be a matter of looking at the lender name -- the 

creditor name as it's displayed on the credit report. 

I would also look at the balance owing column to 

see if I could locate the same outstanding balance, the 

401,761. 

Once I identified a potential debt, which would be 

on page 9 of the credit report, and it would be the last 

item on that page, line 50 -- or entry 50, that indicates to 

me that it's a Washington Mutual debt, the balance owing was 

401,061. The monthly payment is listed on the second line 

over on the far right, has terms equals 36, 360-M-1857, the 

1857 would be the monthly payment. 

Q. Do you know that from your experience in studying these 

documents -- 

A. Yes. 

Q. -- and your training? 

A. The second line also on the far left indicates the 

account number, 125 606 759 384 27. That account number is 

the same account number that's listed in the liabilities 

section for the Washington Mutual loan. 

So now that I found those three pieces of 

information correspond, I continue to look at the credit 

report. And what that tells me is this Washington Mutual 

loan, the date opened was 05-2004, which tells me this 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 66 of 146
Washington Mutual loan occurred in May of '04, and the high 

credit amount, which is two columns over from the date 

opened, was $400,000. So I know the Washington Mutual loan 

was the loan that was May of '04 for $400,000. 

I would then go back to my Exhibit 2 where I was 

compiling this information, and to find out if I had 

identified a loan for $400,000 to Waunita Weingart in May of 

'04 that was originally Washington Mutual, or could have 

been a successor loan, a successor lender. 

So when I go back to Exhibit 2 -- and Exhibit 2 is 

in chronological order -- page 2 shows the loans that 

happened in May of 2004. And there were two loans, one done 

on May 6th and one done on May 24th. Both were to Waun 

Weingart, but only one was for $400,000. 

So based upon that information -- and the original 

lender was Washington Mutual, that the loan identification 

number off the note is the root identification number that's 

listed on the credit report and the application and, 

therefore, I concluded, based upon that information, that 

the Washington Mutual loan really is S-12 and it's not a 

loan for 790 Magnolia Street in Scottsdale. 

Q. And did you have the loan file for S-12? 

A. I did. 

Q. And did that loan file have in it a signed document 

whereby the borrowers promised to pledge collateral, that 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 67 of 146
being Saxeborough, for this loan? 

A. It would have had the deed of trust in there. 

Q. In this sub -- section A of opinions -- and, again, 

have you also created a list of all of the opinions by 

opinion number that fall within this group? 

A. Yes. 

Q. And would the same analysis apply to all of those? 

A. Yes. 

Q. Is that set forth at Exhibit 15? 

COURTROOM DEPUTY: Do you have 15? 

MS. KAUFMAN: 14 and 15 should probably be pulled. 

THE WITNESS: Yes.

BY MS. KAUFMAN:

Q. So looking at -- what is the difference between Exhibit 

14 and Exhibit 15? 

A. Exhibit 14 is just the outline of the topics grouped by 

opinion. And Exhibit 15 is that same outline, but with the 

specific opinion reference number. 

Q. So, for example, the opinion we just went through would 

be listed on Exhibit 15, topics A, group 1, A8a -- 

A. Correct. 

Q. -- correct? 

And all of those others in that group, you follow 

the same methodology? 

A. Yes. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 68 of 146
Q. Same analysis? 

A. Yes. 

Q. And you applied the data -- you applied the methodology 

in the same manner to the data? 

A. Yes. 

Q. Just curiously, on this Exhibit 2 where you had the 

root number underlined for the loan, if you did a search by 

the number starting with the prefix, would you be able to 

find that loan number? In other words, did having a prefix 

make it more difficult to find numbers? 

A. Having a prefix or a suffix did make it a little bit 

more difficult. So I would concentrate on trying to find 

that root identification number. 

Q. Within group topic A, you have another group, the 

second group of opinions. The particular outstanding loan 

was not listed in the liabilities section of the loan 

application, correct? 

A. Yes. 

Q. And I just would like to have you look at an example of 

that. Let's look at what is identified as opinion A -- 

excuse me, A4g. Now, can you -- before we get into the 

details, can you --

A. I'm sorry. What was that opinion number again? 

Q. A4g. And the exhibits that we will be looking at are 

1100, 1004, and 1014. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 69 of 146
A. I don't think I have those. 

MS. KAUFMAN: I think that's the next group, Ms. 

Glover, on our list. 

COURTROOM DEPUTY: Well, they're further down, but 

that's fine. You want 1100, 1004, and 1014? 

MS. KAUFMAN: Yes. Yes, please. 

THE WITNESS: 1100?

BY MS. KAUFMAN:

Q. Yes. What is Exhibit 1100? 

A. Exhibit 1100 is my summary chart of my opinions 

regarding the topic A analysis for loan S-10. 

Q. And, again, is this a document that you compiled after 

you completed the analysis and created the summary of your 

opinions? 

A. Yes. 

Q. Can you help us focus on the one that we're going to 

talk about here, opinion A4g? 

A. And that relates to loan S-9. 

Q. I believe -- okay. Can you go through your methodology 

here and how you applied that methodology to the data that 

you had. 

A. So for this loan, S-10, I knew it was taken out 

February 19th of '04. And from my Exhibit 2 where I kept 

compiling a list of all the outstanding loan -- of all the 

loans that I was looking at and when they were taken out, as 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 70 of 146
I identified the loans that were listed on the loan 

application that's in the upper portion of the chart on 

Exhibit 1100, I would then go to my Exhibit 2 and say, what 

else had already been taken out? What other loans had been 

taken out prior to February 19th of '04? And were they 

still outstanding as of February 19th, '04? 

And I knew whether or not they were outstanding 

based in part on the payment histories if I had -- if I had 

them, as well as my work regarding the payments which came 

later, you know, in seeing monthly payments were continuing 

to be made. 

So in this case, I had identified the loans that 

were on the application, but then in looking in my universe 

of loans, I saw that loan S-9, which was taken out 

November 19th, 2003, was still outstanding. And because it 

was -- Saxeborough was pledged as collateral for that loan, 

it should have been listed on the loan application for S-10, 

and it wasn't, because I had not matched up a liability to 

S-9.

Q. Did we pull the application for this particular loan 

S-10? We did not. 

A. No. 

Q. Let's look at that. And that would be Exhibit No. -- 

do you have an exhibit list there, Ms. Chamberlin? 

A. I --

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 71 of 146
Q. Is it --

A. I don't. It would probably be 1101. 

Q. Okay. 1101, please. Do you have that before you? 

A. I do. 

Q. And is there a schedule of real estate owned on this 

application at page 5? 

A. There is. And page 6. 

Q. Okay. Does it list 7766 Saxeborough? 

A. It does. 

Q. Does it list it more than once? 

A. It does not. 

Q. Could you tell from your examination of known loan 

files -- known loans that were outstanding, that, in fact, 

there was more than that debt on it, the 550,000 listed -- 

excuse me, that's the value -- the 389,968 listed? 

A. Say the question again, please. 

Q. My question is: Does this list for Saxeborough 

Drive -- does it list that as a property owned? 

A. It does. 

Q. And does it list the amount of mortgages and liens as 

being 389,968? 

A. It does. 

Q. Could you tell from your examination of known loans -- 

known loans and from the loan files, that there were other 

loans outstanding -- 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 72 of 146
A. Yes. 

Q. -- at this time -- 

A. Yes. 

Q. -- against that property? 

A. Yes. 

Q. And in particular, this opinion -- in this opinion, 

you're saying that a particular loan was not listed at all. 

A. Correct. 

Q. And where does that show up on your summary Exhibit 

1100? 

A. At the very bottom of Exhibit 1100 under the notes 

section. 

Q. Now, this is but one part of the summary for the loan 

details for S-10, correct? I mean, we're --

A. Correct. 

Q. -- one --

A. This is --

Q. -- line? 

A. Topic -- yes. 

Q. For this particular opinion? 

A. Yes. 

Q. I guess my question is: Can you explain all these 

other lines in the chart above, 1 through 7? What is all 

that where you conclude at the end the conclusion that's 

either unknown 1, unknown 2, S-4, and so on? Why is -- how 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 73 of 146
are those different than the one you have in the bottom 

here? 

A. Those were the loans that were listed on the credit 

report that had appeared to correspond to an address listed 

under the schedule of real estate owned and corresponded to 

the debt on the credit report. 

Q. So tell me if this is right or wrong: Are those loan 

codes listed in the second to the last column of the box 

above, where it says conclusion --

A. Yes. 

Q. -- are those conclusions that you drew by applying the 

same methodology you just described a moment ago for opinion 

A8a? 

A. Yes. 

Q. Okay. And this is different in that -- in what way? 

A. That that particular liability was not listed on the 

loan application in the liabilities section, or listed on 

the credit report. 

Q. Okay. So have you basically tediously listed as an 

opinion, your analysis -- your conclusions from analysis for 

each one of these entries? 

A. Yes. 

Q. Okay. And in your Exhibit 15, page 1 --

A. Yes. 

Q. -- there's a topic A, group 2 opinions. And it says 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 74 of 146
the particular outstanding loan was not listed in the 

liabilities section on the loan application. 

A. Yes. 

Q. Are all of the opinions listed there, were all of those 

reached by applying the methodology you've just described 

for this opinion A4g? 

A. Yes. 

Q. Okay. You have also -- we have also pulled in this 

presentation Exhibit 1004, I believe. 

A. Yes. 

Q. How does that relate? 

A. 1004 is the promissory note for loan S-9, the loan that 

was not listed on the application for S-10. 

Q. And what about Exhibit 1014? 

A. 1014 -- 1014 is a payment history for loan S-9; again, 

the loan that was not listed on the application for S-10. 

And this payment history covers the time period of December 

23d, '03, through May 25, '04. So during the time frame 

that con- -- contains the time frame for when S-10 was 

done. 

Q. So what does this show you? 

A. So what this shows me is that loan S-9 was an 

outstanding loan the date that S-10 was applied for. 

THE COURT: Ms. Kaufman, do you intend to go 

through each loan transaction? 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 75 of 146
MS. KAUFMAN: No. 

THE COURT: Okay. 

MS. KAUFMAN: I would hope, Your Honor, to -- and 

consistent with meeting our burden -- of giving examples 

where there are significant differences in the type of 

opinion rendered or the application of the methodology, 

because those are being objected to by the defense. 

THE COURT: Well, I understand the objections to 

pertain to whether there was a methodology, whether the 

methodology was reliable, and whether it was reliably 

applied. I don't understand the objection to be an 

objection as to the conclusion that was reached by the 

witness, and, therefore, the witness' conclusion is not of 

import at this stage. 

MS. KAUFMAN: All right. I'll focus on the 

methodology and leave off the conclusion. Okay. Thank you.

BY MS. KAUFMAN:

Q. Let's look, Ms. Chamberlin, at your second group of 

opinions, those being in topic B. 

A. Okay. 

Q. Now, in this particular group of opinions, you say the 

analysis as to whether loan proceeds for each refinancing of 

Saxeborough and Lost Angel were used to promptly pay off the 

prior outstanding mortgage as required by the lender. You 

apparently limited your stated opinion to one loan that 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 76 of 146
wasn't paid off. 

A. Yes. 

Q. Okay. And was that just something you decided to do as 

opposed to, say, all -- what all loans weren't paid off at 

that time? 

A. Well, it was based upon the HUD-1 and what the lender 

was directing the title company to pay off. 

Q. I guess asking the question another way: Based on your 

universe of loans, were you becoming aware, as this 

investigation proceeded and your analysis proceeded, that 

although there may be one loan paid off, as you've indicated 

in this opinion, that there may also be other loans that 

were not paid off at the time? 

A. Yes. There were other loans that weren't. 

Q. And that's my question. In this group of opinions, 

you're only focusing on the one that you say the lender 

required to be paid off as a condition -- 

A. Correct. 

Q. -- of the loan? 

Okay. Is that a decision you made just in coming 

up with these opinions? 

A. Yes. 

Q. Okay. In your Exhibit 14, you've described a component 

opinion 1, component opinion 2, and then final opinions. 

And what do you mean -- first of all, can you 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 77 of 146
explain to the Court how you came up with the hypothesis in 

this case that you set forth for opinions B. 

A. From doing my work on topic A and knowing that there 

were several loans that were -- that were not paid off, and 

that they were being misrepresented on the loan application 

as to which address they really related to, I wanted to find 

out that if -- when the loan was funded, did the title 

company do with the proceeds what they were asked to do? 

So, in other words, to figure out if a loan had 

been paid off, because that's the goal in the refinancing, I 

first had to determine where did the proceeds go, and what 

loan was supposed to be paid off, to determine was it paid 

off as required by the lender? 

Q. And how did that cause you to articulate what were 

component opinions 1 and 2? 

A. Well, I couldn't determine if the required loan had 

been paid off until I knew, did the title company get the 

proceeds? And what was supposed to be paid off? So I had 

to figure out 1 and 2 before I could get to my final 

opinion. 

Q. Okay. Let's look at an example of the component 

opinion. Now, you've -- under component opinion 1, which is 

the loan proceeds of a particular loan were deposited in a 

particular bank account. Can you -- could you tell by 

looking at the bank account statements what the -- where the 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 78 of 146
deposit was coming from? 

A. From the bank records, I could identify the -- in 

general, we're talking about wires. There were a few cases 

of deposits of checks, but in most cases it was wire 

transfers. So I could identify who the sender of the wire 

was, I could tell an amount, a date, and I could tell, based 

upon my training and experience, that the loan number or 

escrow number sometimes would be within the wire transfer 

detail. So it would give me some indication as to where to 

start to look, but it would not tell me a particular loan 

for this piece of property. 

I had to rely on my compilation of all these loans 

in order to identify the loan number, if it was listed.

Q. Would a wire say this is the loan number? Would it 

identify it, as quote, unquote, loan number? 

A. Typically not. There might be a couple of cases where 

it did, but in general, no. 

Q. Looking at your Exhibit 15 under component opinion 1, 

you've divided this into three types. 

A. Yes. 

Q. And why did you do that and what do those types 

generally represent? 

A. The types generally represent the type of data that I 

used to generate the opinion. So the type of record that I 

was looking at. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 79 of 146
Q. Okay. Let's look at what has been called opinion B6a. 

And for that we will be looking at Exhibits 1312, 1304, 

6110. Those three. 

MR. TAYLOR: Excuse me, Your Honor, could we hear 

those exhibits again? 

THE COURT: 1312, 1304, and 6110. 

MR. TAYLOR: Thank you. 

BY MS. KAUFMAN:

Q. Ms. Chamberlin, does this particular opinion fall 

within your component opinion 1, type B, where the bank 

record contained the loan number or part of it? 

A. It does. 

Q. Tell us first what you looked at in Exhibit 1312. 

A. 1312 is the wire transfer record from the bank. And 

what this indicates to me is that the amount of $405,426 and 

64 cents was wired in; that the originator, which is line 

5100, was Washington Mutual Bank. That the beneficiary was 

Colorado County and Community Title. 

And then this wire transfer record gives me two 

identification numbers: The first one being under line 

6,000, org 2B NF info, shows the escrow number 040015 F.

Q. How do you know that's an escrow number? 

A. It says "escrow." 

Q. Okay. 

A. But the root loan number is also under the line -- 

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third line from the bottom of the wire that says sender ref, 

the 067593842. I know that to be the root identification 

number of the loan from Exhibit 1304. 

Q. And what is 1304? 

A. 1304 is the HUD-1 settlement statement from the lender 

records. And at the top of the HUD-1, kind of the two 

middle boxes, one box that says file number is the escrow 

number, 040015 F, and then the next box over is the loan 

number that has the prefix of five digits but then has the 

root number 067593842. 

So, therefore, I concluded that the wire transfer 

of 405,000 plus were the proceeds for this loan that went to 

Colorado County and Community Title. 

Q. So you were looking at the combination of the bank 

record and the lender's record? 

A. Yes. 

Q. If you would -- what is Exhibit 6110? 

A. 6110 is the bank statement for the Colorado County and 

Community Title bank account that received the wire shown on 

page 1 under deposits and additions, the first wire 

transfer. 

And there the description says wire FM, meaning 

from Denver Wholesale. Which if you look back at Exhibit 

1312, the Denver Wholesale comes from the originator line.

Q. Was that the lender? 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 81 of 146
A. The originator is typically the one that should be the 

lender, but from the HUD-1, the lender was Washington Mutual 

Bank. So Denver Wholesale is somehow connected in with 

Washington Mutual to send the loan. 

Q. So how is it that you were able to conclude that this 

payment relates to the loan identified in the HUD-1, 

Exhibit 1304, as opposed to something else that connects up 

with Denver Wholesale? 

A. Based upon the escrow number and the root loan number 

that's listed on the wire transfer matching to the HUD-1. 

Q. Do you know from your training and experience that if 

the -- that if a root loan number has a prefix or suffix, it 

doesn't change the identity of the loan? 

A. It doesn't. 

Q. Do you know that from your training and experience? 

A. Yes. 

Q. In your Exhibit 15, we're now talking about topic B, 

have you set forth a number of other opinions consistent 

with your application of the methodology just described? 

A. Yes. 

Q. Looking at type A, where the lenders' records identify 

the amount and day of the proceeds from the account in which 

it was deposited, was that easier or harder for you to 

figure out what loan it linked up to? 

A. Those were easier. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 82 of 146
Q. Okay. And you've listed three opinions there. 

A. Yes. 

Q. Easier because they had the linkage as illustrated in 

your type A designation? 

A. Yes. The lender record specifically identified a bank 

account name, number, bank, amount. 

Q. Your type C, how did that differ? 

A. Type C would be where I had a bank record that provided 

little information regarding the identity of the loan, being 

that I could not -- it didn't necessarily have the loan 

number listed on the wire record. 

Q. Is an example of this B14a? 

A. Yes. 

Q. Could we look at the following exhibits: 2110, 2103, 

6924, 6900, 2112? 

THE COURT: Perhaps this would be a convenient time 

to take a mid-afternoon recess. 

MS. KAUFMAN: That's fine. 

THE COURT: Would this be a good juncture? 

MS. KAUFMAN: Yes. 

THE COURT: And the court clock is showing 10 

minutes after 3:00. Could we reconvene, please, at 3:25. 

We'll stand in recess until then. 

(Recess taken 3:11 p.m. to 3:30 p.m.) 

THE COURT: Ms. Kaufman, about how much longer do 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 83 of 146
you have? 

MS. KAUFMAN: Your Honor, I'd like to go through 

about five more examples, I think. Five or six.

THE COURT: Of? 

MS. KAUFMAN: Of opinions relating to -- I have, 

let's see, one opinion relating to topic B where the bank 

record contained -- excuse me, where the bank records 

provided little information, that's type C. I have one 

relating to the lender requiring that a particular loan be 

paid off, how she went about identifying that through an 

example.

THE COURT: And are these examples going to 

illustrate a methodology that is different than what has 

already been described? 

MS. KAUFMAN: I will evaluate that as I get to each 

one, because I understand -- I think perhaps the second one, 

the one I just named, loan identification number, had been 

provided by the lender. That would just be testimony. 

THE COURT: Well, let me see if I can back up just 

a little bit here. What the challenge is here is that 

there's not a clear methodology, that it's not a reliable 

methodology, and that it has not been reliably applied. 

Going through each example is not helpful to me unless we're 

talking about the methodology. And the methodology isn't 

comparing this document to this document. And that's what 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 84 of 146
you've been doing thus far. 

The methodology is the analytical process that the 

witness has used in order to reach the conclusion. And if 

she's doing something different in your examples than what 

she's already described, then I need to hear about it. But 

if you're just going to give me examples of where she has 

done what she's described, I think I understand it. 

MS. KAUFMAN: Okay. 

THE COURT: So it's -- it's up to you what you want 

to present, but we don't need to have lots of examples of 

the same methodology over and over again. 

MS. KAUFMAN: I think part of the reasoning that I 

was coming to this with, was that another of the objections 

is the methodology is not reliably applied. 

THE COURT: Uhm-hum. 

MS. KAUFMAN: And I think that Ms. Chamberlin's 

general methodology is described in her proffer in 

Exhibit -- or, excuse me, document 161, and that these are 

examples of how that methodology is applied to the different 

types of topics and within those different types of topics 

when different information is available. 

I guess I'm relying on -- the way we see the case, 

Your Honor, is that this type of testimony is -- falls 

within 702 under Mejia, in that it is the type of thing that 

Mejia repeatedly said, oh, but if only they had done this, 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 85 of 146
and not what was actually occurred in Mejia and that is 

piece together relatively difficult pieces of information in 

a meaningful way based on her experience in knowing where to 

look for it, knowing what the numbers meant, and so on. 

We're giving examples of that to support that conclusion.

THE COURT: Well, I understand the objection here 

not to be as broad as you have just articulated it. It 

says, objection No. 4: That the proposed expert witness did 

not reliably apply said methodology to the facts of this 

case. For example, the proposed expert did not adequately 

account for obvious alternative explanations. 

I'm understanding that this is not a challenge as 

to whether she -- the witness compared this entry on this 

document to this entry on this document, but, instead, that 

she did not consider how those two entries might not match, 

or why they might match, based on other features than what 

was her ultimate conclusion. 

Let me give you an example: She testified with 

regard to her opinions in the type A opinions with regards 

to particular entries on a financial application. She 

identified a loan. It said it was secured with a mortgage. 

She looked over to the real estate that was listed in the 

real estate loan and she tried to figure out which piece of 

real estate might be the collateral for that particular 

loan. That particular collateral was located in Arizona. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 86 of 146
She looks at the credit report and the credit 

report identifies the lender, the amount of the loan, the 

monthly payment. She knows from her universe of loans that 

based on the date of the loan as reflected in the credit 

report, there is a date -- a similar date that Waunita 

Weingart took out, but it was secured by another property 

and, therefore, she concluded that the property that she 

assumed was listed in the real estate section on the 

financial application -- on the loan application was not the 

correct property. 

I did not hear any testimony as to the possibility 

that there were two loans, two pieces of property. That the 

owner of one property might not be the borrower on the loan 

application. And that's what I understand this objection to 

go to is what is the methodology that the witness is using 

in order to rule out other alternative explanations. What 

other alternative explanations are there? What did she 

consider? And how did she rule it out? 

So that's what I understand the reliable 

application to be. 

Now, let me ask the defense, do I understand the 

objection correctly? 

MR. TAYLOR: For John Gallegos, that is certainly 

part of it, Your Honor. I haven't heard any testimony about 

any other -- any consideration of any other explanations for 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 87 of 146
this. What I've heard is things get matched up by elements 

of information that are common to different records. And 

the rest of the objection is that that simply isn't a 

methodology --

THE COURT: Well, I'm not talking about that. I'm 

talking about reliable application of a methodology at this 

juncture. 

MR. TAYLOR: Right. And there's no consideration 

of the reliability of the document she's looking at. 

THE COURT: Well, I understand that to be something 

else, too. But as to reliable application of the 

methodology, do I understand correctly what your challenge 

is? 

MR. TAYLOR: Yes. 

THE COURT: Okay. So that's what we're looking at 

with regard to the reliable application of the methodology, 

is: What other alternative explanations were there? And 

what was done by the witness to rule out alternative 

explanations? 

More examples of how she tied bits of information 

from one document to another document doesn't address that. 

MS. KAUFMAN: Okay. All right. 

THE COURT: So what would you like to present? 

MS. KAUFMAN: Well, what I would like to do, then, 

is go back to part A and ask a few questions that touch on 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 88 of 146
that topic. 

THE COURT: Okay.

BY MS. KAUFMAN:

Q. Ms. Chamberlin, redirecting your attention to topic A, 

that is the analysis of the comparison of the different 

information on the loan application, the schedule of real 

estate owned. In addition to comparing the information that 

you've described in your testimony today, did you also 

consider the fact that, in fact, one of the borrowers owned 

the other property which appeared to relate to the liability 

in the liability section and the debt on the credit report? 

A. Yes. 

Q. And what did you do to determine whether that was a 

likely possibility or whether that was true? 

A. As I was going through the loan applications for the 

various loans, I noticed, in addition to Saxeborough and 

Lost Angel -- which were the loans of my concentration -- 

that I would also see the address 430 East 6th Avenue and 

7603 California Southwest in Seattle. Those two pieces of 

property I knew that Mr. Gallegos had owned -- or did own at 

the time. So that is why those two pieces of properties got 

drawn into my analysis, in addition to Saxeborough and Lost 

Angel. 

Regarding the other addresses that were listed, 

for example, the 790 Magnolia Street, when -- as my 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 89 of 146
Exhibit 2 hadn't been compiled, my whole universe hadn't 

been identified, I did consider whether or not maybe this is 

an address that one -- one of -- one or more of the 

defendants didn't own. Maybe that really is a loan for that 

piece of property. 

So what I did was I would go on to the county 

records of Scottsdale, Arizona, and attempt to locate that 

particular address in the county records. It didn't exist. 

So to me, that indicated there's a problem there.

In your example, Your Honor, where maybe there were 

two loans at the same time, well, I would expect to see two 

loans on the credit report with the same information. I 

didn't see that. So I did consider alternate explanations 

regarding the addresses that were listed on the 

applications. 

Regarding, say, topics B and the deposits of the 

proceeds, because I was looking at a title company bank 

account, which is in the business of closing loans, I did 

consider, when I'm looking at the deposits, maybe a deposit 

doesn't pertain to one of the loans I'm interested in. 

Maybe it is a legitimate business transaction that they're 

closing on a loan for somebody else. 

But the information in the wire records would give 

me a clue as to whether or not that occurred because the 

wire records would typically indicate the borrower's name. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 90 of 146
So if I saw a deposit that is around a date of a loan that 

I'm interested in, but the wire transfer information 

indicated it was a different borrower, I wouldn't look into 

that deposit further. I would concentrate on those deposits 

that would indicate to me that it was either a Weingart or 

Gallegos loan.

In -- I'm trying to think of alternative 

explanations, again, for payments. The same type of thing 

crossed my mind as I'm looking at all of these mortgage 

payments coming out of various -- both personal and business 

bank accounts, that maybe they are making a mortgage payment 

on a loan that I'm not aware of. That maybe it's a mortgage 

loan for another piece of property that I'm not aware of. 

Maybe it's a loan for a car, not a mortgage. 

But through my analysis of matching up the payments 

and what the monthly payments should have been based upon 

the payment histories that the lender provided it, or based 

upon the promissory note and the repayment schedule, I could 

rule out -- and by matching up the various mortgage 

payments, there weren't any other mortgage payments left 

over for me to investigate as to maybe this is a different 

piece of property. 

So I feel like I did consider alternative 

explanations through each one of my topics. 

Q. Another question, just to follow up on part A, you say 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 91 of 146
that sometimes when you looked up one of these properties, 

like Magnolia or -- was another one Diamond Back? Were they 

in different cities throughout the country? 

A. Different cities, different states. 

Q. Okay. And did you also find some -- that the property 

existed, but it had never been owned, and wasn't owned at 

present, by any of the suspects in this case? 

A. Yes. 

Q. Okay. And then ultimately did others, in working on 

the investigation, get the formal records from each of those 

counties that will establish that? 

A. Yes. 

Q. And so was your work on that the initial part of that 

that led to getting the formal sealed records? 

A. Yes. 

Q. And, again, based on your training and experience, does 

a loan number, whether it be the loan number or a successor 

loan number, identify a particular loan? 

A. The loan -- the loan identification numbers, although 

there may be multiple ID numbers for the same loan, they're 

unique to that loan. So I would not see another Country 

Wide loan with loan number 1234 for another loan by Country 

Wide. It would be a unique number unto that particular 

loan. 

Q. Topic A, did you consider the possibility that as -- I 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 92 of 146
think you stated that one or more of the suspects actually 

did own other properties listed on the schedule of real 

estate owned? 

A. Yes. 

Q. And are those the California property and the 6th 

Avenue property that you learned they did own? 

A. Yes. 

Q. One of them owned? 

A. Yes. 

Q. Did you then consider whether, however -- I guess, did 

you consider whether some of those properties listed on the 

schedule of real estate owned also had more debt than was 

listed on the real estate owned, not just Lost Angel and 

Saxeborough? 

A. As I was compiling the various loans and pulling in 

California and 6th Avenue, I did discover that they had 

similar characteristics to Saxeborough and Lost Angel in 

that there were multiple loans on those properties that were 

not paid off, similar to what I was looking at for 

Saxeborough and Lost Angel. 

And I knew that, because we ended up getting some 

loan files and getting the payment histories, as well as my 

payment analysis, seeing that there were monthly payments 

being made consistently on those loans as well through the 

end of the scheme. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 93 of 146
Q. Did you consider, as to topic B, component opinion 

No. 1, that being loan proceeds from a particular loan were 

deposited into a particular bank account, how many total 

bank accounts did you look at that were controlled by one or 

more of these defendants? 

A. Bank accounts in total, I think there was 26, 28, 

something like that. And then out of those, the ones that 

actually received proceeds, it was smaller than that. I 

don't recall the number off the top of my head, but the bank 

accounts that either received proceeds, made a payoff on a 

loan, or made monthly payments on the loan, there were 

roughly 14 to 15 bank accounts involved. 

Q. And every time that you looked at the receipt of 

proceeds, for example, and you were trying to determine 

whether these proceeds went into this bank account, did you 

look at all the other bank accounts that you had found that 

were controlled by one or more of the suspects? 

A. I did. I would typically concentrate first on -- 

obviously, if Colorado County was the title company that 

closed the loan, I would look -- first look at Colorado 

County Title bank accounts to see if the proceeds came in 

there. 

Q. And if they didn't, what did you do? 

A. I would look at the other bank accounts that I hadn't 

looked at, whether they be personal or RET bank accounts, or 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 94 of 146
other business accounts. 

Q. And in looking at all that universe of accounts, were 

you able to identify -- in other words, did you consider 

that the money went somewhere else altogether? 

A. Yes, by looking at all the bank accounts, if I couldn't 

find it in the one I thought it should have been going to. 

Q. And sometimes did the money go into a different 

account, not the account of the closing agent? Did the 

money ever go to a personal account or a different account? 

A. I don't believe -- I don't recall if they went into any 

personal account. It may have been that the money -- the 

money may have gone into a -- the correct title company 

account -- a title -- the correct title company, but a 

different account that maybe the wire instructions had said 

to send it. If -- did -- does that make sense, Your Honor?

THE COURT: It does. 

THE WITNESS: Okay.

BY MS. KAUFMAN:

Q. So you checked out different accounts. And based on 

the universe of accounts that you had at your disposal, were 

you able to trace all the payments to one of those accounts? 

A. Yes. 

Q. Taking into account, as you say, that there are many 

deposits into title company accounts. 

A. Yes. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 95 of 146
Q. This part of it where the lender required that a 

particular loan be paid off with the proceeds of the new 

loan? 

A. Yes. 

Q. You've testified, I believe, this morning, that you 

were able to tell the lender name and the amount of the loan 

to be paid off from the HUD-1 -- 

A. Correct. 

Q. -- is that correct? 

But that there was information -- some information 

not on the HUD-1 that was necessary to identify which loan 

to a particular lender was to be paid off --

A. Correct. 

Q. -- is that what you're saying? 

And so what alternatives did you consider in 

determining which loan was to be paid off? What were the 

things that could have happened? 

A. Well, since -- since all of these loans that I was 

looking at, except for California one and 6th Avenue one, 

and Lost Angel one were all refinances, I knew that just 

because of the nature of what a refinancing is, it's 

refinancing a loan on that particular property. 

So since there was only one loan listed on the 

application associated with Lost Angel or Saxeborough, then 

I knew whatever that loan was -- so in my mind, there really 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 96 of 146
wasn't an alternative as to what was being required to be 

paid off. I can't think of an alternative --

Q. Well, could -- okay. Could it have been any number of 

loans related to the property being refinanced? 

A. But on the loan application there was only one loan --

Q. Right. 

A. -- associated with the property being refinanced. 

Q. Okay. 

A. So that was the loan required to be paid off. 

Q. And that was your conclusion. 

A. Yes. 

Q. Based on what? 

A. My training and knowledge of what a refinancing is and 

what its purpose is. 

Q. If a lender is only told about one loan, is that why 

you concluded that that was the loan, among many 

possibilities, they required to be paid off? 

A. Yes. 

Q. Now, the final opinion in your topic B is generally the 

proceeds of the loan were not used to pay off the prior 

mortgage designated by the lender to be paid off as a 

conditional approval of that loan. Okay? 

Did you consider what -- by this point, you had 

traced money into a particular account. Right? 

A. Correct. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 97 of 146
Q. And now you were trying to see whether those proceeds 

were used to pay off those loans? 

A. Correct. 

Q. Did you consider the possibility that they used other 

money at their disposal to promptly pay off the loan as 

required by the lender? 

A. I did. 

Q. And was that an alternative explanation possibly? 

A. Yes. 

Q. And did you explore that? 

A. I did. 

Q. And what did you find? 

A. There were no additional payments from another bank 

account or from another set of proceeds or from savings that 

paid off the loan. 

Q. And in addition to that, did you look at it from the 

other end to determine whether money from some account in 

which you were not aware was used to pay off the loan? 

A. I did from reviewing the payment histories that had 

been provided by the lender, as well as my payment work. 

Because if a loan had been paid off from some other source 

that I was not aware of, then monthly payments would not 

have continued to be -- have to be made to the lender on a 

loan. 

Q. So you explored that possibility? 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 98 of 146
A. Yes. 

Q. That they were paid with some money that you weren't 

aware of? 

A. Yes. 

Q. And as a byproduct of this, did you observe that 

certain different loans that you were aware of were being 

paid off with the proceeds of a particular loan rather than 

the loan designated by the lender? 

A. Either through the payment histories or through the 

bank records. And as an example, unknown 1 and 2, which I 

now know to be loans related to Saxeborough, I discovered 

those primarily through the bank account records, because I 

saw the deposit of proceeds at one point in time, and then I 

saw the payoff at a later point in time. 

And the loan numbers I was able to match up, that 

that was, in fact, the proceeds of one and it paid off that 

one. So then I could look at my bank account schedules and 

say when unknown 1, for example, was paid off, the funds 

used to fund that payoff came from a different loan. 

Q. Did you explore the possibility that the proceeds from 

a particular loan were transferred once more -- or even more 

than once, and ultimately used to pay off the loan? 

A. Yes. 

Q. And what did you learn? 

A. As I've stated in my opinions under topic B, those 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 99 of 146
loans were not paid off as required by the lender. 

Q. Were you also aware of the bankruptcy schedule? 

A. Yes. 

Q. And what do you know about that? 

A. I know that the defendants filed for bankruptcy in 

Arizona in July of 2009, and that the loans that were listed 

on their Schedule F of the bankruptcy were all the loans 

that I had identified on my own as being still outstanding 

as of the end of our scheme. 

Q. The opinions in topic C, which has to do with the 

payments being made, were you typically able to tell by 

looking at either only the lender record or the bank record, 

that a payment -- well, from the bank record that a payment 

was for a particular loan, and from the lender record that 

it was to a particular bank? 

A. From just looking at one side of the document -- source 

of documents, no, I could not rely on one type. I had to 

look at the two different and compare typically the loan 

numbers. 

MS. KAUFMAN: May I have a moment, Your Honor? 

May I speak with my cocounsel, please?

THE COURT: I'm sorry? 

MS. KAUFMAN: May I speak with Ms. Paluch for a 

moment?

THE COURT: Sure. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 100 of 146
MS. KAUFMAN: Thank you.

Thank you.

BY MS. KAUFMAN:

Q. I would like to focus on topic C. And I'm trying to 

understand, Ms. Chamberlin, with your assistance, looking at 

trying to link up monthly payments being made on loans that 

were purportedly paid off by refinancing, you ended up 

linking -- did you end up linking most of the payments 

through the nine years that this went on to specific 

payments out of bank accounts controlled by the defendants? 

A. Yes. 

Q. Now, did you consider that -- I'm trying to explore the 

alternatives that you considered in looking at payments -- 

let's look at the payment part from the bank accounts. All 

right? 

Say you saw a payment in a particular amount that 

appeared to be a mortgage payment. First of all, what on 

the bank record would cause you to think that it appeared to 

be a mortgage payment? 

A. Typically there would be a reference as to mortgage, or 

it would be payable to one of the lenders that I'm familiar 

with, like Country Wide, Washington Mutual, those kinds of 

lenders that I'm familiar with based on my experience. 

Q. Did you consider the fact that -- did you explore -- 

did you examine each of those withdrawals? 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 101 of 146
A. Yes. 

Q. And did you consider the fact that those were for other 

things, not loans at all? The withdrawals? 

A. Well, it's hard to not consider a withdrawal when it's 

listed as a mortgage payment. 

Q. All right. Did you consider the fact that they were 

for things other than Saxeborough and Lost Angel? 

A. Yes. 

Q. And, in fact, did you find that, in fact, in some cases 

that was true? 

A. Yes. 

Q. And from the other perspective, you were also looking 

at payment histories, if you had them, on the lender side? 

A. Correct. 

Q. Did you consider the fact that these payments came from 

an account not owned by the account -- not owned by the 

borrower of that loan? 

A. Since the payment history would only detail the amount 

and the date the payment was processed, there was that 

consideration that it could have come from an account that I 

wasn't aware of, or from somebody else, not the borrowers. 

But with my -- with my hypothesis that it's a 

mortgage payment done by the borrowers, the borrowers are 

the ones responsible to make the payment, so if -- if I 

couldn't tie a payment on a payment history to a particular 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 102 of 146
bank account, then that is not considered an expert opinion. 

It -- in my mind, it would be a summary, because it's simply 

looking at the payment history. 

Q. So any time you only had the record from the lender 

that a payment was made, but you could not trace it to a 

particular bank account, fair to say that it's not listed as 

an expert opinion whatsoever? That's what you just said? 

A. Correct. 

Q. It was the linking that you deemed to be an expert 

opinion? 

A. Yes. 

Q. Is it fair to say that in -- well, in our supplement to 

the proffer --

A. Yes. 

Q. -- what did you do to create the attachment to that 

document, which is a chart relating to your opinions in part 

C? 

A. I looked at the documentation that I relied upon for 

each of the opinions and categorized it according to the 

type of documentation that I used. 

So, for example, in column A to the supplement, it 

was -- where part of the records I relied upon were the 

payment histories provided by the lender that the payment 

history was under the original loan identification number 

and it corresponded to a bank record for a particular 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 103 of 146
mortgage payment. 

Q. And in that process when you say, for example, type A 

opinions, were you able to just simply look at one -- one 

document from the lender and identify that it was a match? 

A. I had to look at two documents. One from the lender, 

one from the bank. 

Q. In what way did this exercise in identifying -- linking 

the monthly payments from account to a particular loan, 

require your training and experience? 

A. It would -- when the successor loan identification 

numbers come into play, being able to look at the bank 

record and say, this is not -- the information that I'm 

shown here on the bank record doesn't correlate to any 

original loan information that I'm aware of. And then being 

able to consider that maybe there is a successor lender, in 

which case I would go back to my loan files and try and find 

the successor lender identification number so I could link 

up that particular payment from that account to that 

particular loan. 

I also had to consider, as I said, that maybe 

the -- maybe this lender and ID number that, I'm not 

familiar with at this point, maybe it is another loan I'm 

not aware of. So I did consider those alternatives. 

MS. KAUFMAN: Your Honor, I would just note for the 

record that as -- at this point, the defense has not -- in a 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 104 of 146
way, they have articulated their objections to part C, but 

in another regard, they have not. I don't know whether 

they're going to further clarify their objections to part C 

at this time. 

THE COURT: I have their objections as filed. 

MS. KAUFMAN: Okay.

BY MS. KAUFMAN:

Q. Ms. Chamberlin, this morning you talked about -- in 

answering the Court's questions, about always looking first 

to the bank records and also examining the loan files and 

other documents from the lenders. And then this afternoon 

you've touched on your written proffer of methodology which 

related specifically to the fraud theory. 

Can you explain how it is that -- how you -- how 

you connect the two. In other words, how does your 

examination of the bank records and the lenders' records fit 

into the procedures outlined by the fraud theory, that being 

creating a hypothesis and testing hypothesis? 

When you're looking at the bank records and so on, 

are you creating the hypothesis, testing the hypothesis or 

how does it fit together? 

A. When I'm analyzing the bank records initially and 

putting things in, I haven't formed a hypothesis yet. I am 

gathering information as far as patterns that I might be 

seeing in the bank records. Where -- patterns as to where 

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the money might be going, what the source of the deposits 

are. But I don't -- I don't relate it to a hypothesis at 

that point. 

It really wasn't until I started looking at the 

loan files to think to myself, how could they get loan after 

loan and not pay the previous loans off? And that's when I 

started to form the hypothesis that I did. 

Once the loan application analysis was done, that 

then led me to hypothesize under topic B to say if these 

were not being paid off, then where -- what was -- where -- 

where did the proceeds go? Did they end up getting paid off 

some other way? 

And then that, in turn -- those two combined led 

me to, well, if all these loans were outstanding, how did 

the lenders not know? Were they making monthly mortgage 

payments on all these to keep them current? And that's what 

led me into topic C. 

So as the Court reflected this morning, it was kind 

of a circle effect that brought me to each of the topics. 

Q. Were you aware that Agent Donner was seeking from -- 

information from lenders as to whether they had been paid 

off? 

A. Through -- yes, through obtaining the loan files and, 

in particular, the payment histories. 

Q. So this morning when the Court asked you did you go to 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 106 of 146
the lenders and ask for whether they'd been paid off or not, 

your answer was no. Was somebody else doing that? 

A. Yes. Agent Donner. 

Q. Okay. And was he informing you that they were not paid 

off? Or that they were, as the case may be? Or was he 

getting documents? 

A. I think he was getting documents and passing them on to 

me. 

Q. And, again, when you say he was getting documents, 

through what process did we get documents from lenders in 

this case? 

A. Through the grand jury subpoena. 

Q. Okay. So when you say he was getting them, he was 

requesting a subpoena -- 

A. Yes. 

Q. -- is that what you mean? 

MS. KAUFMAN: Okay. Thank you. No further 

questions. Thank you.

THE COURT: Thank you. Cross-examination. 

MR. TAYLOR: Thank you, Your Honor.

CROSS-EXAMINATION

BY MR. TAYLOR:

Q. Good afternoon, Ms. Chamberlin. 

A. Good afternoon. 

Q. Ms. Chamberlin, I want to focus on the methodology that 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 107 of 146
you applied. 

A. Uhm-hum. 

Q. In document 161, and the attachments, it states that 

the methodology that you applied is the methodology that is 

set forth in the Certified Fraud Examiner's Manual. True? 

A. Correct. 

Q. And you testified today that that is the methodology 

that you applied. 

A. Yes. 

Q. That methodology, if I can sum it up, starts with a 

hypothesis -- or, sorry, with a predication? 

A. Predication. 

Q. And then goes to a hypothesis? 

A. Analyze available data. 

Q. Before or after you put the hypothesis together? 

A. Analyze what you have -- what you have to look at and 

then create a hypothesis, test the hypothesis, and re -- 

refine or amend the hypothesis. 

Q. In attachment 1 to document 161, there are some pages 

from the manual that don't seem to be included in any of the 

exhibits that have been tendered to the Court today. And 

it's the last couple of pages of that attachment. 

Do you have document 161 in front of you? 

A. I think I have 161, but I did not bring the attachments 

with me. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 108 of 146
Q. I'm going to try to do this the most expeditious way 

possible. I'm just going to tell you that I'm looking at 

the last three pages of attachment 1, which bear the 

numbers -- page numbers 3 dot 101, 3 dot 401, and 3 dot 805. 

Have you looked at that attachment when it was submitted to 

the Court? 

A. I did. 

Q. In connection with reviewing the articulated 

methodology; is that correct? 

A. Yes. 

Q. And signed off on the accuracy and completeness of that 

methodology; is that correct? 

A. Yes. 

Q. And in that -- in that methodology -- so those three 

pages aren't outlined, those are part of your methodology; 

is that correct? The last three pages I would talk about. 

A. I would have to look at them. 

MR. TAYLOR: I'm happy to hand them up if she 

doesn't have a copy. If I may. 

COURTROOM DEPUTY: Are you marking this as an 

exhibit? 

MR. TAYLOR: No, I just want to make sure they 

understand what's --

THE COURT: Let's mark it as an exhibit so it's 

clear for the record what's being reviewed. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 109 of 146
COURTROOM DEPUTY: Do you know what the next 

exhibit number is? 

MR. TAYLOR: Probably just mark it Defense 

Exhibit A. 

THE WITNESS: Yes. 

BY MR. TAYLOR: 

Q. Do you recognize those pages? 

A. I do recognize them, yes. 

Q. And you agree that that's part of your methodology? 

A. Yes. 

Q. Okay. And that that was part of attachment 1 that you 

approved as part of the methodology filed with the Court? 

A. Yes. 

Q. So I'm trying to understand whose methodology you were 

actually applying. Let's start with that. 

Who was the case agent on this case? 

A. Scott Donner with the FBI. 

Q. With the FBI. 

A. Uhm-hum. 

Q. That -- what does that mean? What was he doing on the 

case as opposed to what you were doing on the case? 

A. He was the FBI agent who was to investigate the aspect 

of the case and bring the information, gather information, 

and present the information to the United States Attorney's 

Office. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 110 of 146
Q. And the FBI has its own methodology for investigating 

frauds, correct? 

A. I don't know that. 

Q. You don't know. So you -- I take it you also do not 

know that there is a -- an FBI methodology for investigating 

mortgage frauds in particular? 

A. I was not aware of any methodology that the FBI 

requires the agents to go by. 

Q. Okay. Don't know whether there is one or isn't one, 

correct? 

A. Correct. 

Q. Never saw one. 

A. Correct. 

Q. Do you know what methodology Agent Donner was applying? 

A. I don't. 

Q. Did you talk with Agent Donner about the investigative 

methodology he was applying? 

A. No. 

Q. You had previously worked at the FBI, correct? 

A. I did. 

Q. When you worked at the FBI -- and I believe you 

testified this morning you worked on at least one mortgage 

fraud case at the FBI; is that correct? 

A. I can't remember if it was started when I was at the 

FBI and completed by the time I turned over -- it was a case 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 111 of 146
that I began at the FBI and continued to work when I came 

over to the United States Attorney's Office. 

Q. All right. So do you have a specific recollection that 

you began it at the FBI? 

A. I honestly -- I don't remember. I do recall it was 

probably -- I don't remember. 

Q. Okay. So I take it in connection with that, you don't 

remember seeing an FBI methodology for investigating fraud 

or investigating mortgage fraud? 

A. I did not. 

Q. Okay. And just to clear up something from this 

morning, you said that you -- again, there's confusion about 

whether you started that at the FBI and finished at the 

U.S. Attorney's Office when you transferred over in 2000, 

correct? 

A. Correct. 

Q. Is it a total of three mortgage fraud cases you've 

worked on or four? 

A. It would be excluding this one --

Q. Excluding this particular case? 

A. Excluding this particular case. There are four that I 

have worked on. 

Q. Okay. Including the one that may have begun at the 

FBI? 

A. Including that one, yes. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 112 of 146
Q. So four prior cases prior to this one. 

A. Correct. 

Q. And have you testified as an expert in connection with 

those cases? 

A. I have not. 

Q. All right. In either grand jury or trial 

proceedings? 

THE COURT: Counsel, it's not relevant whether 

she's testified in other proceedings or not. 

MR. TAYLOR: Okay. The reason I'm asking, Your 

Honor, is to determine whether there was a methodology that 

she employed in connection with that.

THE COURT: You could ask her that question, but 

whether she testified or not is not relevant. 

BY MR. TAYLOR: 

Q. Did you -- whether you testified or not, did you form 

expert opinions using a methodology on those mortgage fraud 

cases? 

A. I did not form expert opinions on -- in any of those 

cases. 

Q. The only -- the only work that you did on those cases, 

I believe you would -- you would, based on what you said, 

would qualify as summary testimony as opposed to expert 

testimony; is that correct? 

A. I don't know -- I don't know what it -- my testimony 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 113 of 146
would end up -- would end up being. Two of the cases never 

went to trial. 

Q. And are they over? 

A. They are over. 

Q. All right. 

A. Or, actually, three of those cases never went to trial 

and are over or in the process of an appeal. And then the 

last one, one defendant has pled and the other one is still 

a fugitive. 

Q. And on those cases, did you apply the methodology that 

you have testified that you applied here? 

A. Those mortgage fraud cases were -- involved straw 

borrowers, and I would -- I would deem them not to be 

similar as to this case. 

Q. And -- okay. Thank you. 

Did you apply the fraud theory methodology that is 

set forth in the Certified Fraud Examiners Manual in those 

cases? 

A. For that case? 

Q. Uhm-hum. 

A. I would say yes. 

Q. What did you mean you would say yes? 

A. Well, it's been a while since I've looked at the case, 

but my recollection of that case involves misrepresentations 

made on the loan application, and so I -- I don't recall the 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 114 of 146
specific misrepresentations, but I would have created a 

hypothesis to prove it wrong or correct in that case, as I 

did here. 

Q. Okay. But it wasn't the same methodology that you 

applied in this case because the facts were different? 

A. Facts were different, the data was different. 

Q. All right. So the methodology that you applied in this 

case has never been applied by you in any other case that 

you have worked on? 

A. Correct. 

Q. It is a new methodology devised in specific response to 

the data available to you on this case? 

A. It's not a new methodology, as it's part of my CFE 

manual. That's been around. But have I applied that 

methodology to a similar set of circumstances as in this 

case? No, I have not. This would be the first time. 

Q. All right. I'm not sure I understand your answer. 

You've said that you have never before applied the 

methodology in a case that you have applied here, correct? 

A. I have applied the methodology, but it's in a different 

manner because of the different facts in the other cases. 

Q. Okay. I think I understand. We'll get there.

So the methodology prescribed by the Certified 

Fraud Examiner Manual prescribes that you take several 

steps, in an over-arching manner. There's an over-arching 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 115 of 146
methodology, sort of a meta methodology, correct? And then 

there's a micro methodology depending on what specific 

opinions you're trying to come up to. Would you agree with 

that? 

A. No. 

Q. No? 

A. No.

Q. All right. The CFE manual's methodology prescribes 

that you do -- that you take a number of steps during your 

investigation, correct? You interview witnesses, correct? 

A. The methodology -- when you say "methodology" to me, I 

term that to be the fraud theory approach being what I 

described as far as analyzing the available data, creating 

the hypothesis, test it, and refine it or amend it. 

Q. Well, I'll refer to attachment 1 to document 161, which 

says that first you start with the interviews, then you 

start with documents. 

A. Correct. 

Q. All right. You didn't follow that methodology in this 

case, correct? You conducted no interviews of any 

witnesses. 

A. I've conducted one interview of one witness in this 

case, but typically I am not the one doing the interviewing; 

typically it is the case agent that conducts the interview, 

because it's an FBI case. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 116 of 146
Q. And that would be Agent Donner. 

A. Correct. 

Q. And we've already established that you don't know what 

methodology he was following. 

A. Correct. 

Q. You did not speak with him about the methodology you 

were following. 

A. I don't believe I did. 

Q. You didn't ask him to conduct any interviews of any 

witnesses that you otherwise would conduct if you were 

following the Certified Fraud Examiner methodology? 

A. I did not ask him to conduct interviews. 

Q. All right. You interviewed one witness. Who was that? 

A. A Laurie Beck from Speed Pay. 

Q. And when was that? 

A. August of this year. 

Q. Of this year. After you had already provided us the 

opinions that you were going to testify about? 

A. Correct. 

Q. All right. 

A. It was after the disclosure. I don't think it was 

after -- it might have been around the time that we did the 

first joint motion of 702. 

Q. Okay. But after the 702 disclosures were privately 

sent to counsel, without being filed with the Court, 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 117 of 146
correct? 

A. I believe so, yes. 

Q. All right. And was that part of your methodology, the 

Speed Pay -- 

A. No. 

Q. No? You didn't rely on that in forming the opinions 

that you testified about here today? 

A. I used the Speed Pay records to help confirm what I was 

already seeing within the bank records and the loan records; 

in particular, the payment histories. 

Q. And my question is: Did you use the interview that you 

conducted with that person --

A. With the interview, no. 

Q. -- to form the opinions you are testifying about today? 

A. I did not. 

Q. So in forming the opinions that you testified about 

here today, you didn't conduct any interviews? 

A. Correct. 

Q. And you didn't cause any interviews to be conducted by 

anybody else? 

A. Correct. 

Q. All right. You agree, though, that interviewing 

witnesses is specifically called out as one of the tools and 

one of the steps by the fraud manual that you had talked 

about. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 118 of 146
A. I would say interviewing is considered a tool. It's 

not like a checklist to say do this, then this, then this. 

It is a tool offered to the CFE to conduct interviews. 

Q. All right. Another tool is obtaining documents, 

correct? 

A. Correct. 

Q. And in this case, you obtained bank records, correct? 

A. Correct. 

Q. You obtained bank records of -- you said several times 

today, "the suspects" -- 

A. Yes. 

Q. -- correct? 

And by "the suspects," you mean the people who are 

indicted in this case? 

A. Correct. 

Q. And eventually were indicted in this case, correct? 

A. Correct. 

Q. Did you obtain bank records from any of the lenders? 

A. No. 

Q. Why didn't you obtain bank records from the lenders? 

A. I didn't feel that they would have been helpful because 

the lender records, based on previous experience, would show 

a tremendous amount of activity going back and forth. And I 

didn't think that they would provide me the information that 

I needed, that I could -- I could get to from the bank 

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records that I already had. 

Q. All right. So when you testified this morning about 

payment histories, when the Court was asking you questions 

about the records that you had in order to come to the 

conclusions in category C, for example, category C opinions, 

you testified then -- and I think you elaborated on this 

this afternoon -- that you had some payment histories from 

some of the lenders, correct? 

A. Correct. 

Q. That only, I think, in eight -- eight of the loan 

files, or the various loans, did you have full payment 

histories and bank records; is that correct? 

A. In those instances, I had both the payment history and 

a bank record for every single payment for the identified 

loan. 

Q. Okay. 

A. I had other payment histories for other loans, but it 

was not a payment history that covered every payment. 

Q. Right. And so the question is: You had complete 

records, payment histories, plus transactional detail, 

either checks or records of electronic transfers, which 

accounted for every payment for which you had a record in 

the defendant's bank records; is that correct? 

A. For those -- for those eight or so that were listed. 

Q. For those eight of 63 loans; is that correct? 

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A. Yes. 

Q. All right. With respect to the other loans, the other 

55 loans, you only had partial payment histories. 

A. I either had no payment history --

Q. Right. 

A. -- or I had a partial payment history. 

Q. Okay. But no full payment history. 

A. I may have had a full payment history, but I didn't 

lump it in with the other loans because I didn't necessarily 

have a bank record. So for -- if I can explain. I may have 

a payment history that indicates a payment was made on a 

particular date and amount, but from the bank record, all I 

had -- for example, the bank -- the payment was made by a 

check. I didn't have a copy of that check. What I did have 

was a bank statement saying the check number cleared on this 

date for this amount. Okay? 

Q. And that's on the defendant's bank records. 

A. Correct. 

Q. Okay. 

A. On the payment history side, I had that same dollar 

amount being processed at or near the time that the check 

cleared the bank account. 

Q. Okay. 

A. Okay? In most of the cases, the early payments that 

were made on these loans were done by check. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 121 of 146
Q. Okay. 

A. I could do one step more to verify in that the note or 

the payment letter that was signed at closing indicating 

what the original payment amount was, I could verify that, 

yes, it's the same dollar amount that should have been paid; 

I have a payment history that tells me it was paid on this 

date; and then I have a check in that amount clearing on or 

about that same processing date. 

Q. In the defendant's bank accounts? 

A. In the defendant's or in the business accounts. 

Q. Either the personal accounts of the defendants or the 

business accounts where the business is associated with the 

defendant? 

A. Correct. 

Q. I guess my question is this: There seems to be a lot 

of uncertainty that you are having to go to great lengths to 

resolve in order to determine whether or not the lenders 

actually received payment which corresponds to the payments 

that you're seeing being made from the defendant's accounts. 

Why not just get the lenders' bank records to identify -- to 

determine whether or not there is a credit to that account 

on the same -- at or about the same time for the same 

amount? 

A. Because I felt the payment history indicated to me that 

a payment was made in that amount on that date. 

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Q. Okay. But what about situations -- and it sounds like 

the vast majority of situations, 55 of 63 loans, where you 

didn't have either a complete payment history or any payment 

history? 

I mean, isn't it true that the entire exercise 

that you -- that you've gone through with respect to 

category C opinions, would have been completely unnecessary 

if you simply had followed the recommendation in the 

Certified Fraud Examiner's Manual which says, Go get all 

potentially relevant documents? 

Isn't it true you wouldn't have had to do any of 

the category C exercise if you just had gotten the lenders' 

bank records? 

A. I may have had to still go through the same steps 

because some of these loans were -- some of the payments 

that were made that were too old that the bank might not 

have retained the records --

Q. All right. Let me stop you right there. Do you know 

whether any of the banks, any of the lenders, bank account 

records, no longer existed at the time you were conducting 

your investigation --

A. I don't know. 

Q. Your testimony here today has been that only one of the 

loans was paid off in --

A. No. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 123 of 146
Q. How many loans were paid off in full based on your 

review? 

A. My testimony today is that one loan was paid off 

correctly as directed by the lender. 

Q. Okay. 

A. There were other loans that were paid off --

Q. How many? 

A. May I look at -- may I look at something? 

Q. Just give me a ballpark. Is it a big number or small 

number? 

A. Eight. 11. Somewhere around a dozen. 

Q. Okay. 

A. If that. 

Q. So we're talking about the same -- 12, 13 percent of 

the loans that you actually looked at; do you agree with 

that? 

A. Yes. About 10 percent, yeah. 

Q. Okay. Does it make sense that financial institutions 

that have -- that are owed money have gotten rid of bank 

records showing payments on the accounts that they still 

have accounts receivable on? 

A. When we request a loan file and payment history, we 

would typically ask for all records related to the payments. 

What the lenders typically provide us is what they did 

provide us, just the payment history. They do not go and 

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provide us copies of their checks that they received from 

the borrowers. 

Q. Okay. This is what banks typically do when you send 

them a subpoena for a loan file, correct? 

A. We're talking about the lender, not the bank. 

Q. Well, it's the lender's bank that you're subpoenaing, 

right? 

A. If I had subpoenaed the lenders' bank and asked for 

their bank account, I wouldn't know what bank account to ask 

for necessarily. And the amount of payments that would be 

on there would -- I think there was one other case where I 

did receive bank records for a lender's account, and it was 

substantial to try and go through and find those. So I 

didn't consider getting the lenders' bank records because I 

felt the bank records that I had of the defendants, in 

conjunction with the payment histories and the lender 

records, was sufficient enough to form my opinions. 

Q. You said that you did more work on this analysis for 

this case than you've ever done on any other case, correct? 

A. It -- regarding mortgage fraud, yes. 

Q. And the reason that you didn't get bank records from 

the lenders is because it would be easier not to? 

A. No. I felt that I had sufficient information to render 

my opinion with the documents that I did have. 

Q. Okay. Do you disagree with me that bank records from 

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the lenders' accounts would establish more reliably whether 

or not they received payment in connection with the loans 

that they own? 

A. No, I think it would be along the same lines as what I 

was seeing in the defendants' bank account and the payment 

history. If the check --

Q. Well --

A. -- if the check cleared the defendants' bank account, 

and the payment was listed on the payment history. 

Q. That's fine for the category of loans where there is a 

payment history. And I'm referring to what you have 

described as category C -- cat -- subcategory A and B loans, 

right? 

A. Correct. 

Q. Where there was either a payment history that you could 

trace to the original lender because there was a loan 

number, or a successor loan owner that had changed the 

number but allowed you to trace it back? 

A. Correct. 

Q. What about -- and by the way --

A. C and D. 

Q. -- do you know what percentage of the loans that you 

were -- or payments that you looked at in category C fall 

into those categories A and B? 

A. I don't. 

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Q. We have actually attempted to total them up. And it 

looks to us as if that accounts for -- that there were 744 

of your 2,073 opinions that were based on payment histories 

from the original lender; 423 of your opinions are based on 

payment histories from a successor lender; leaving, in 

category C, D, and E, approximately 906 --

A. About half. 

Q. -- opinions under category C where there wasn't a 

payment history. 

A. Correct. 

Q. Is that about right? So less than half of the opinions 

that you render under category C are supported by payment 

histories. 

Wouldn't it have been both more reliable and easier 

to go to the lenders and say, "Send us your bank records 

that show payments credited to these loans"? 

A. And we attempted to do that and they did not provide 

that. 

Q. What did you attempt -- how did you attempt to do that? 

A. In the original request for the loan file, we would ask 

for all payment information regarding these loans. And what 

the bank -- then what the lenders will typically provide us 

are the payment histories. 

Q. What was the specific command on the subpoena duces 

tecum issued to the lenders about what was to be produced? 

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What did it tell them they had to produce under court order? 

A. It -- typically -- and it's been a long time since I've 

looked at one of the grand jury subpoenas -- but we would 

typically ask for the loan file and all payment information 

regarding the loans, in the -- for any loan in the name of 

the defendants. 

Q. So the loan file and payment history? 

A. Payment information, which would --

Q. Payment information? 

A. -- which would include the payment histories. 

Q. Does it specifically say, "including payment 

histories"? 

A. I'd have to go back and check. 

Q. You don't remember? 

A. I don't remember, but I know typically that we would 

ask for payment information. 

Q. Does it specifically include the liability ledgers? 

A. It wouldn't say liability ledgers, it would say payment 

history. 

Q. Because you -- 

A. Or payment ledger, or something -- payment regarding 

all the payments made on the loans. 

Q. Does it -- do the subpoenas actually ask for bank 

records of the lender? 

A. They might. I would have to look at each one, because 

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it may have been phrased in a way that -- to say all 

payments on this loan, to include payment histories, checks, 

of that nature. 

I don't recall if those subpoenas had that 

language.

Q. All right. You certainly didn't ask for that, 

yourself. That was left to Agent Donner to do? 

A. Yes. 

Q. He would draft the subpoena for Ms. Kaufman's approval? 

A. Yes. 

Q. Ms. Kaufman would approve that subpoena? 

A. I assume she did. 

Q. You weren't granted -- you weren't asked to review it 

to see whether you needed anything else? 

A. I would typically -- when Agent Donner and I would have 

communications about loans, it would be typically on the 

phone to say, "Do you -- do you have a loan file for this 

loan?" And he would say no. 

And I said, "Well, here's the information that I'm 

aware of. Here's the approximate date, here's who the 

lender appears to be, here's the loan number." 

Q. So my question was: You were not given the subpoena 

duces tecum in draft to the lenders for their records, for 

your input, for your review for your comments? 

A. I don't recall ever doing that. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 129 of 146
Q. Ever doing that? 

A. No. 

Q. Okay. So you basically had no input into what was 

asked -- what went into the subpoena in terms of the 

request, correct? 

A. Other than saying, "Here's a potential loan," and 

giving the information that I had from the bank records, 

that was it. It was never given to me for a review. 

Q. All right. And you don't know whether the banks 

actually complied with the subpoena and gave you all the 

records in the loan file and all records relating to 

payments made, correct? 

A. I -- I don't know that for certain. I assume they gave 

us what we asked for. 

Q. Based on your training and experience, do you know 

whether or not lenders keep on the books and records of the 

lender company, a record of their assets and liabilities? 

The asset here being the debt that the debtors owe to them. 

A. I -- I don't know what the lender maintains as far as 

their financial records. 

Q. You're a certified public accountant. 

A. Yes. 

Q. You understand that a basic part of accounting --

A. Yes. 

Q. -- is that your books have a record of the assets of 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 130 of 146
the company? 

A. Yes. 

Q. Of which a $400,000 loan would be one. 

A. Yes. 

Q. And there are records of the liabilities of the 

company, correct? 

A. Correct. 

Q. Including accounts receivable -- 

A. Yes. 

Q. -- correct? 

You don't know whether these subpoenas asked those 

lenders for those records. 

A. No, I don't know. 

Q. And you never followed up with the bank, having 

received the records from Ms. Kaufman, is that correct, when 

they came back on the grand jury subpoena? 

A. I would -- I would typically get the lender files 

through Agent Donner. 

Q. All right. When they came back in response to the 

subpoena? 

A. They would go from Charlie to Ms. Kaufman. Ms. Kaufman 

would give them to Mr. Donner. And then once Mr. Donner was 

done with whatever he was doing with them, he would give 

them to me. 

Q. I take it there never was an occasion when you looked 

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at the records that you had for a particular loan and 

concluded that you didn't have a complete payment history 

and, in response to that, either got on the phone with the 

bank -- or, I'm sorry, with the lender, to ask them what 

other records they had concerning payment, like their 

accounts receivable, like their assets, to determine whether 

they made complete production under the subpoena? You never 

did that? 

A. I never did that, but I wouldn't think it would be 

necessary to get the lenders' accounts receivable for all 

their loans. 

Q. I'm not saying for all their loans. I'm saying for 

this loan. 

A. To me, if they provided a payment history, then they 

provided me with what they had for that loan regarding 

payments received. 

Q. And you never did anything to verify that with the 

bank? 

A. With the lender? 

Q. I'm sorry, with the lender. With the lender. I'm 

sorry. 

A. No. 

Q. In spite of the fact that you didn't get complete 

payment histories in the overwhelming majority of these 

cases. 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 132 of 146
A. I don't know that I'd say the overwhelming majority 

that I didn't get a complete payment history. 

Q. Well, you had complete payment histories in only eight 

of the 63 loans, right? 

A. I had a payment -- a complete payment history and a 

bank record that substantiated every payment for those eight 

loans. 

Q. In how many of the loans did you have a complete 

payment history? 

A. I would have to go back and look. I don't know off the 

top of my head. 

Q. But you don't disagree with the numbers which I've 

given you, which is something like a thousand -- or, sorry, 

900 of your category C opinions are rendered without the 

benefit of any payment history. 

A. Correct. 

Q. More than the number of category C opinions where you 

had a payment history. 

A. I don't think it's more. I think there were 2,073 

total opinions -- 

Q. Okay. 

A. -- and if 900 of those did not have a payment 

history. 

Q. Actually, I think you're right. Category C, D, and E, 

according to our figures, account for about 43 percent don't 

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have a complete payment history. Does that sound right? 

A. Without looking at it, I don't know, but I trust what 

you have compiled. 

Q. So with respect to 43 percent of the opinions you're 

rendering on category C, you gave up the opportunity to go 

get the best record of whether or not a payment was received 

from any of the defendant accounts by simply not opting to 

go get the records from the lender. 

A. I felt that the withdrawal from the defendants' bank 

records, other than the canceled check from the defendants' 

bank records, was -- that I could specifically link to a 

loan was sufficient information to render my opinion. 

Q. Is that more reliable than actually just asking the 

lender whether the lender was paid? 

A. Well, whether the lender was paid and from what bank 

account the payment came from are two different things. 

Q. You can -- you can ask the lender for their records of 

payments, right? 

A. In which case, they would give me a payment history, 

which typically would not indicate what bank account the 

money came from. 

Q. And you can ask the lender to tell you where they 

received payments for specific loans, correct? So you can 

send a subpoena to the lenders' bank instead of to the 

lender, correct? 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 134 of 146
A. I potentially could do that if I could identify the 

bank account from which -- to which the payment was being 

made. 

Q. Well, actually, all you have to do is ask the lender 

where they were receiving payments from, correct, or where 

they bank? 

A. I don't know that the lender would -- I don't know. 

Q. You don't know? 

A. I don't know if the lender would provide that 

information in --

Q. If you served a subpoena, they would have to provide 

it, right? 

A. And if -- we may have done that with the subpoena that 

we did issue. But yes, if we --

Q. You don't know whether you did it with a subpoena? 

A. I don't recall on the attachment to the subpoena if we 

specifically requested checks -- copies of their checks or 

if we said, "Provide all payment information." I don't know 

how we broke it down to ask for it. 

Q. You don't know the single instance where there was a 

follow-up subpoena to the lender asking for records of 

payment from their accounting system, not from the loan 

file, but from their accounting system, showing what 

payments have been made on a particular loan? In other 

words, not a single instance where that was done? 

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A. I don't think there was any subpoena like that. 

Q. And you're not aware of a single instance where the 

U.S. Attorney's Office, Agent Donner, you, caused a subpoena 

to go to the lenders' bank asking for all evidence of 

transactions, wire transfers, or checks from any of the 

defendant accounts that you knew about, correct? 

A. We did not subpoena the lenders' bank, no. 

Q. That could have been done? 

A. Potentially. 

Q. Do you agree or not that it would be more -- a more 

reliable method to ask the lender whether they were paid 

than to guess based on partial records from a lender? 

A. I don't think I guessed. I think I had sufficient 

information to render those opinions, that the payments were 

made on each of these loans. 

Q. If you went to the lender and subpoenaed those records, 

you would have actual factual evidence that could be 

introduced at trial instead of your expert opinion, or at 

least your -- what's characterized as your expert opinion; 

do you agree? 

A. Repeat the question, please. 

Q. If you subpoenaed the lenders for that portion of their 

accounting records, which showed payments attributable to 

this account on their books, you would have actual factual 

evidence as opposed to your offered expert opinion. Do you 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 136 of 146
agree? 

A. I believe that we did subpoena the lenders for their 

accounting records regarding payments and we got what they 

gave us. 

THE COURT: Mr. Taylor, would you move on, please? 

MR. TAYLOR: I will. All right.

May I have just a moment, Your Honor? Thank you, 

Your Honor. 

BY MR. TAYLOR: 

Q. The starting point for your category C opinions is all 

the bank records that were presented to you; is that 

correct? 

A. What do you mean by "starting point"? 

Q. That's the first thing you did on this case; you 

analyzed the lender's records? 

A. Correct. 

Q. Those were presented to you by Agent Donner? 

A. Correct. 

Q. That was part of the predication, I think is the word 

you're using, for your analysis, correct? 

A. Correct. 

Q. At the time that Agent Donner spoke to you and asked 

you to review the records, he also told you what his theory 

was about what had been done, that there was fraud in 

connection with mortgages taken out by defendants, correct? 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 137 of 146
A. My recollection of what Agent Donner told me was that 

the three defendants were borrowers on loans on two pieces 

of property that were refinances and were not subsequently 

paid off, and that their title companies were used as the 

settlement agent in the title company for the closing of 

many of the loans that he was aware of at that time. 

Q. So Agent Donner didn't tell you that they suspected 

mortgage fraud in connection with that? 

A. He may have said mortgage fraud, just -- yes, but as 

far as particulars that absolutely fraud was involved, no. 

He wouldn't have said that. 

Q. Would Agent Donner have told you that he was 

investigating violations of federal criminal law? 

A. I don't know if he would have phrased it that way, but 

yes. 

Q. From your training and experience, does the FBI, in a 

case like this, investigate where they don't have -- where 

they don't suspect there have been violations of criminal 

law? 

A. No, they don't. 

Q. Does the U.S. Attorney's Office open a file to conduct 

an investigation absent suspicion that there's been a 

violation of a criminal law? 

A. No. 

Q. Is -- in connection with mortgages obtained by people 

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and alleged violations of criminal law, are there violations 

involving those that don't involve fraud of some kind, that 

you're familiar with? 

A. Not the kind that I've worked in our section, no. 

Q. Okay. So how likely is it that Agent Donner didn't 

tell you that he suspected mortgage fraud in this case? 

A. He probably did, but I'm -- what I'm saying is that I 

don't think he provided me details as to how it might have 

been conducted. 

Q. All right. And at that time, you hadn't formed a 

hypothesis, you had just been given the bank records to look 

at. That's your testimony? 

A. Correct. 

Q. And your hypothesis after you looked at the bank 

records was what? 

A. My hypothesis was that once I had such information on 

the bank records, was to then go and look at the loan 

applications to see what information was in there. And 

that's when I started looking and identifying, as I 

testified today, how I was linking up the liabilities to the 

scheduled real estate owned to the credit report and --

Q. Okay. You have -- let me just interrupt you, because 

I'm not sure that you answered my question. I asked what 

your hypothesis was and you said what you did. 

What was the hypothesis that you had in your head 

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after you looked at the bank records? 

A. Well, my first review of the loan files, in particular 

the loan application, my original hypothesis was I expect to 

see the following: That the liabilities would correspond to 

an address on the schedule of real estate owned, which in 

turn would correspond to a debt on the credit report. 

Q. So --

A. That was my original hypothesis. 

Q. How long did it take you to review the bank records? 

A. I don't recall how long my initial review of the bank 

records took. My recollection is I didn't get -- I didn't 

have all the accounts at one time. It was, again, kind of 

developing the number of loans; that I would analyze one 

account and that may steer me to a different account, in 

which case we'd get a subpoena for that account. So it was 

kind of an ongoing process. 

Q. So your assumption or hypothesis at the time that you 

--- after you reviewed the bank records, your testimony is 

that it was not a hypothesis that mortgage fraud had been 

committed, it was a hypothesis that you would see an absence 

of fraud based on the loan files; is that what you're 

saying? 

A. My original hypothesis for topic A would have been that 

no fraud had been committed; that the liabilities -- I 

shouldn't say that. That the liabilities corresponded to 

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the schedule of real estate owned. 

Q. So at page 3 of document 161, in the paragraph that 

follows the paragraph reciting what you were told about the 

refis and about the title company, it states -- it's the 

second full paragraph on that page -- "Based on this 

predication, Ms. Chamberlin assumed that mortgage fraud may 

have been committed by the subjects in connection with their 

refinancings of their properties on Saxeborough and Lost 

Angel and that they may have used their title companies to 

facilitate the fraud."

The next sentence says that you first acquired 

bank account records. 

That doesn't seem to be consistent with what you 

said. What you just said is that your hypothesis, after you 

reviewed the bank records, was that no fraud was committed. 

This says that based on the predication alone, you assumed 

that mortgage fraud was committed. 

A. Based upon the predication, I -- the predication being 

that fraud may have been committed, I then look at the bank 

accounts to get a sense of what we're dealing with. It 

wasn't until I was looking at the loan applications that I 

applied the methodology -- I don't think I've answered your 

question. 

Q. No, I don't understand it. I don't understand how you 

could have it both ways. You assume that mortgage fraud is 

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committed, but your hypothesis is that it has not been 

committed. How can --

A. Because that was -- that is where the starting point of 

it wasn't committed, was to consider the reverse from what 

the predication indicated. 

Q. So when did you actually start applying the Certified 

Fraud Examiner here? At what point in your efforts on this 

case? 

A. From my original analysis of the data available, being 

the bank records. 

Q. So it wasn't at the time that the predication was given 

to you? 

A. The predication gave me a reason to start working the 

case to begin with. 

Q. Well, it says here that you assumed that mortgage fraud 

may have been committed based on the predication. Is that 

wrong? Is that -- is that statement, that assertion of 

fact, in document 161, wrong? 

A. I wouldn't say that it's wrong, because as a CFE, and 

working for the entity I do, the only cases we're working is 

if there is a -- a suspicion that a federal crime has been 

committed, in this case, wire fraud in connection with 

mortgage fraud. 

Q. So here's what I don't understand, based on that 

answer. 

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A. Okay. 

Q. I don't understand how you can assume that mortgage 

fraud may have been committed and have a hypothesis that it 

wasn't. 

A. I wanted --

Q. As -- as inconsistent with the methodology which is 

spelled out in the CFE manual. 

A. It's not inconsistent with the CFE manual in that they 

require one of the steps to look at is reverse proof that 

mortgage fraud -- and I -- and I can't articulate it without 

reviewing it again, but -- 

Q. Reviewing what again? 

A. Reviewing the introduction to the Fraud Examiners 

Manual, it discusses reverse proof. I was looking at it in 

the beginning of: Maybe mortgage fraud was not committed by 

forming the first hypothesis that I did. 

Q. But having assumed it at the beginning that it was 

committed? Like it says here? 

A. The assumption, based upon the predication. And then 

analyzing what data I had, and then going to the application 

and making the assumption: Maybe it hasn't been committed. 

Let's look at what should have happened in the application, 

absent fraud. 

Q. So that at the time that this case gets assigned to you 

by the U.S. Attorney's Office, right? And I assume that 

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 143 of 146
assignment comes to you from the section chief of the 

economic crimes section --

A. My supervisor. 

Q. Who is your supervisor? 

A. At that time, I believe it would have been Tom 

O'Rourke. 

Q. It's the chief of the economic crime section, the 

Assistant U.S. Attorney, who's the chief of the section, 

correct? That's your supervisor? 

A. At that time, yes.

Q. Not Tom O'Rourke then. It's now Matt Kirsch, correct? 

A. Matt Kirsch is not my supervisor, it's Suneeta Hazra, 

who's the assistant deputy. 

Q. At the time this case started, there wasn't an 

assistant deputy? 

A. There was not.

Q. It was the chief of the economic crime section -- 

A. Yes.

Q. Who at the time -- 

THE COURT: We're right at 5:00, so when you get to 

a convenient spot, we probably ought to recess. 

MR. TAYLOR: I'll ask one more question and then 

we'll probably call it good for a day, Your Honor. 

BY MR. TAYLOR:

Q. Your supervisor at the time is the same supervisor as 

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Ms. Kaufman's supervisor, correct? 

A. I believe so. 

Q. Chief of the section? 

A. Yes. 

MR. TAYLOR: That's enough for today, Your Honor. 

THE COURT: Thank you. We are scheduled to 

continue tomorrow; however, it is unclear as to whether and 

who we will have as a court reporter. At this juncture, I 

can't tell you with any degree of certainty and, therefore, 

because we are at about 5:00, and it's going to take us a 

little effort to make sure that we have a court reporter, 

we'll reconvene at 9:00 and do our best to get a court 

reporter here. 

I thank you very much. You may step down. I'll 

see you tomorrow morning at 9:00. And we'll stand in recess 

until then. 

(Proceedings concluded at 5:01 p.m.)

INDEX

Item PAGE

WITNESSES 

DANA CHAMBERLIN

 Examination by the Court (Continued) 36

 Direct Examination by Ms. Kaufman 65

Cross-Examination by Mr. Taylor 140

GOVERNMENT'S EXHIBITS

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Case No. 1:11-cr-00355-MSK Document 197 filed 12/26/12 USDC Colorado pg 145 of 146
EXHIBITS: Offered Received

6 2012 Intro to 69 69

Fraud Examiner's 

Manual

* * * * *

REPORTER'S CERTIFICATE

I certify that the foregoing is a correct transcript 

from the record of proceedings in the above-entitled matter.

Dated at Denver, Colorado, this 26th day of December, 

2012. 

 _ _

MARY J. GEORGE, FCRR, CRR, RMR

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