UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WASHINGTON AT SEATTLE No. onl?l??l . Courthouse Seattle, Washington 9:00 a.m. June 25, 2004 UNITED STATES OF AMERICA, Plaintiff, V. ALPHA TECHNOLOGIES, Defendant. VERBATIM REPORTED PROCEEDINGS FOR: SENTENCING BEFORE THE HONORABLE JOHN C, COUGHENOUR UNITED STATES DISTRICT COURT JUDGE APPEARANCES: For the Plaintiff: ROBERT WESTINGHOUSE, ESQ. Assistant United States Attorney 601 Union Street, Suite 5100 Seattle, Washington 98101 For the Defendant: ROBERT MCCALLUM, ESQ. 2401 One Union Square 500 University Street Seattle, Washington 98101?11?5 llI II . Court Reporter: DONNA HUNTER, RPR #301 Washington Building 1019 Pacific Avenue Tacoma, Washington 93402 {253} 527-2952 verncn Associates Court Reporters #801 Building 1019 Pacific Avenue, Tacoma, washington 93402 (253} 62?-2062 THE CLERK: United States of America V. 9.3. Enterprises. Counsel, please step forward and make your appearance. MR. BENTLEY: Morning, Your Honor, Allen Bentley representing the defendant, G.E. Enterprises. With me is Ernest Conrad, who will be representing the corporation. MR. WESTINGHOUSE: Good morning. May it please the Court, Bob Westinghouse on behalf of the United States. THE COURT: Mr. Westinghouse. Is there any reason why we couldn?t do both of these defendants at the same time? MR. WESTINGHOUSE: I was about to propose that, Your Honor. Mr. McCallum is also present I believe. THE COURT: All right. THE CLERK: United State v. Alpha Technologies. Counsel, please make your appearances for the record. MR. MCCALLUM: Good morning, Your Honor, Robert McCallum for Alpha Technologies, and Mr. Johnson the president of Alpha Technologies is also present. THE COURT: Mr. McCallum. Mr. Bentley, you want to he heard? I only have a couple of questions about this, one is, has the back taxes .- or have the back taxes and penalties and interest been paid? MR. WESTINGHOUSE: Your Honor: the Defendant, G.E. Enterprises, Inc., has the cheeks with them today. We have varnon a Associates Court Reporters #801 washington Building ?019 Pacific Avenue, Tacoma, Hashington 98402 (253} 627?2062 seen copies of them. It?s my understanding that if the Court accepts the plea agreement, they're prepared tc hand those checks to a representative of the Internal Revenue Service at the close of this proceeding. THE COURT: And what do they total? MR. WESTINGHOUSE: The total, Your Honor, is the amount set forth in proposed judgment, which is $32,911,999, and that is the difference between the total agreed amount, which is 35,509,567 less amounts that have been prepaid. THE COURT: Okay. And these checks, are they cashier's checks? MR. BENTLEY: They are, Your Honor. THE COURT: Can I take a look at them? MR. BENTLEY: I may add that we also have copies and the originals of the checks to cover the fine that is anticipated as part of the plea agreement for both defendants. MR. WESTINGHOUSE: May I approach, Your Honor? THE COURT: Yes. MR. WESTINGHOUSE: Your Honor, Mr. Bentley has advised me that the bank cannot issue a check for more than $10 million, so they are split into four separate checks. THE COURT: Okay. All right. Let me also say before you start, Mr. Bentley, I'm inclined to accept these plea agreements. The only misgiving I have is that the VErnon a Associates Court Reporters #801 washington Building 1019 Pacific Avenue, Tacoma, washington 98402 (253) 527-2062 individual who is primarily apparently responsible for what went on here is not facing an indictment. However, given the fact that he is not in this country and is probably not subject to extradition, I easily understand how the Government came to the resolution that is proposed here, and I particularly commend the Government for not falling prey to the easy out of in?icting employees who were simply following instructions of somebody who was more culpable. And I am also inclined to accept this agreement because of the fact that this huge amount of money is, in fact, being paid to the Government. Were it not for that, if there was nothing more than a judgment against a shell corporation and the like, I might look at this a lot differently. Having said those things, I'm.going to accept both of the plea agreements. So, do you wish to be heard? MR. BENTLEY: I have nothing to add to the material that has been already been presented to the Court and in the presentence report, and I would like to indicate for the record that we spent several hours yesterday around a conference table with representatives of both corporations and read the presentencs report, which is essentially the same. We read it word for word and explained and answered any questions that they had. THE COURT: Okay. Mr. McCallum, do you wish to say anything? varnon Associates court Reporters #801 washington Building 1019 Pacific Avenue, Tacoma, washington 38402 {253) 62?-2062 MR. MCCALLUM: Thank you, Your Honor. I actually have nothing to add if the Court is inclined to accept the 010. I do want to emphasize that it has been a investigation that has gone on for almost eight years. We have spent a great deal of time with Mr. Westinghouse and Ms. Loits who is not here today hammering out the terms of this, and I think that this compromise is a result of those negotiations, so I have nothing to add, I would also like to put on the record that Mr, Johnson did review the presentence report yesterday word for word, and I don't believe that he has any comments on it. THE COURT: All right. Mr. Westinghouse? MR. WESTINGHOUSE: I have nothing to add to what I have already submitted, Your Honor. THE COURT: All right. In the 0.8. Enterprises case I find the total offense level is 22, the culpability score is ten, and as I'm accepting the presentence report recommendation of probation of three years, a fine of $500,000, a special assessment of $400, restitution in the amount of $35,505,000 and 249 cents (sic). The probation will be subject to standard conditions together with those additional conditions set forth in the presentence, and the justification for the sentence is that set forth in the presentence report. As to Alpha Technologies, Inc., I find the total varnon 0 Associates Court Reporters #801 washington Building 1019 Pacific Avenue, Tacoma, thhington 90402 (253) 02??2062 offense level is 22, the culpability score is nine. I'm imposing a period of probation of one year, a fine of $500,000, a special assessment of $400 for the count of conviction. The probation will be subject to standard conditions together with these additional conditions set forth in the presentence report, and the justification for the sentence is as set forth in the presentence report. And to each of the representatives of each of the defendants, I will state that you may have a right to appeal this sentence. If you wish to file a notice of appeal, it must be filed within ten days of today. If you wish the assistance of an attorney in filing a notice of appeal and cannot afford one, one will be appointed to assist you if you so request. If you wish the assistance of the clerk in filing a notice of appeal, she will assist you if you so request. Do each of you understand? MR. CONRAD: Yes. THE COURT: Mr. Westinghouse? MR. WESTINGHOUSE: Your Honor, with respect to the restitution now for G.B. Enterprises, Inc., there has been a slight change in calculation due to the further computations and penalties and interest, and I believe the appropriate amount is $35,509,567, if I may use that amount? THE COURT: That?s fine. Make that change. MR. WESTINGHOUSE: I have already prepared the vernon a Associates Court Reporters #801 washington Building 1019 Pacific Avenue, Tacoma, WEEhi?th? 95402 (253) 527?2062 judgments and had the opportunity to review them with counsel. If I may approach? THE CDURT: Yes. MR. MCCALLUM: Your'Honor, may I see the judgment. We spoke a while earlier this week, but I have not seen the final version. Thank you. MR. BENTLEY: I have seen it, Your Honor. THE COURT: okay. MR. WESTINGHOUSE: If I may approach? MR. MCCALLUM: Thank you, Your Honor, those are acceptable. THE All right. THE COURT: Counsel, we'll he at recess. {Proceedings concluded 9:35 VErnon Associates Court Reporters #301 washington Building 1019 Pacific Avenue, Tacoma, washingtan 93402 (253) 527?2052 STATE 0F WASHINGTON 15s COUNTY oF KING I, Donna Hunter, Certified Shorthand Reporter and Notary Public duly and qualified in and for the State of Washington do hereby certify that the foregoing transcript is a true and correct transcript of my original stenographic notes. I further certify that I am neither attorney or counsel for, nor related to or employed by any of the parties to the action in which this testimony is taken; and furthermore, that I am not a relative or employee of any attorney or counsel employed by the parties hereto or financially interested in the action. IN WITNESS WHEREDF, I have hereunto set my hand and affixed my Notarial Seal this ?3 I day of .5: J-??phl "funag? I .. ?nial I 459:31 ?Mil-m . 3 I I. l? NOTARY IN AND FOR THE STATE OF WASHINGTON, RESIDING IN SEATTLE VErnon Associates Court Reporters #801 washington Building 1019 Pacific Avenue, Tacoma, Whahington 98402 (253) 627?2052