Preview
FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013
NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023
EXHIBIT I
FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013
NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023
1 SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF SUFFOLK : PART 48
2 -------------------------------------------x
ALBERT PEREZ, Individually and Derivatively,
3 on behalf of TOTAL COMPUTER SOFTWARE, LLC,
INDEX NO.
4 Plaintiffs, 63193-13
5 -against-
6 VINCENT TEDESCO, TOTAL COMPUTER SYSTEMS,
LTD, d/b/a TOTAL COMPUTER GROUP, TOTAL
7 COMPUTER GROUP, LLC, TOTAL COMPUTERS,
LTD, and JOHN DOE CORPORATION,
8
Defendants.
9 -------------------------------------------x
April 27, 2017
10 Riverhead, New York
11 NON-JURY TRIAL PROCEEDINGS
WITNESSES: ANDREW P. ROSS and JOSEPH CASSANO
12
13 B E F O R E: HON. JERRY GARGIULO,
Supreme Court Justice
14
A P P E A R A N C E S:
15
TIMOTHY McENANEY, ESQ.
16 For the Plaintiffs
14 Vanderventer Avenue, Suite 250
17 Port Washington, New York 11050
BY: TIMOTHY McENANEY, ESQ.
18 BY: CHERYLL L. CORIGLIANO, ESQ.
19 FARRELL FRITZ, P.C.
For the Defendants
20 400 RXR Plaza
Uniondale, New York 11556
21 BY: AARON E. ZERYKIER, ESQ.
22 STEVEN E. LOSQUADRO, P.C.
of Counsel
23 For the Defendants
649 Route 25A
24 Rocky Point, New York 11778
25 RJ RICCOBONO, RPR
OFFICIAL SUPREME COURT REPORTER
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ALBERT PEREZ, ET AL -v- VINCENT TEDESCO, ET AL
2
1 COURT CLERK: In the matter of Albert Perez,
2 individually and derivatively on behalf of Total Computer
3 Software, LLC, against Vincent Tedesco, Total Computer
4 Systems, Ltd., doing business as Total Computer Group,
5 Total Computer Group, LLC, Total Computers, Ltd., and
6 John Doe Corporation, under Index Number 63193 of 2013.
7 Counsels, if you'd note your appearances.
8 MR. McENANEY: Yes.
9 Timothy McEnaney for the plaintiff, Law Office
10 of Tim McEnaney, 14 Vanderventer Avenue, Suite 250,
11 Port Washington, New York 11050.
12 THE COURT: Good morning, Mr. McEnaney.
13 MR. McENANEY: Phone Number is 631 -- I'm sorry.
14 THE COURT: Do we need his phone number too?
15 COURT REPORTER: No.
16 THE COURT: That's okay.
17 MR. McENANEY: Fine.
18 THE COURT: Go ahead.
19 MS. CORIGLIANO: Of counsel to the plaintiffs'
20 attorney, Cheryll Corigliano, the Law Office of
21 Cheryll Corigliano, 200 Broadhollow Road, Suite 207,
22 Melville, New York 11747.
23 THE COURT: Okay.
24 MR. ZERYKIER: Aaron --
25 THE COURT: Good morning.
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1 MS. CORIGLIANO: Good morning.
2 MR. ZERYKIER: Good morning, your Honor.
3 Aaron Zerykier from Farrell Fritz, P.C.,
4 400 RXR Plaza, Uniondale, New York 11556.
5 And I have co-counsel with me as well.
6 THE COURT: Good morning.
7 MR. LOSQUADRO: Yes, your Honor.
8 Steven Losquadro, 649 Route 25A, Rocky Point,
9 New York, also for the defendant.
10 Good morning.
11 THE COURT: Good morning.
12 Before we get going, are there any facts that
13 can be stipulated to?
14 Don't all jump up at once. All right.
15 Let me try this again.
16 Are there any facts that can be stipulated to?
17 For instance, I'm suggesting, we know what
18 the number is that we're looking to trace; correct?
19 The dollar number?
20 {NO RESPONSE}
21 THE COURT: Am I talking about the right case?
22 MR. ZERYKIER: Yes, your Honor.
23 MR. McENANEY: Judge, yes, that's correct.
24 There is an $8 million sale at issue here and
25 what happened to the proceeds for that sale.
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1 There are other causes of action which --
2 THE COURT: Yeah, I know that. But what's the
3 focus of today's hearing?
4 MR. McENANEY: The focus of today's hearing is
5 to find out what happened to the funds, the $8 million
6 that was paid for the software application called Total
7 Enforcement.
8 THE COURT: Bottom line, where did the $8 million
9 go?
10 MR. McENANEY: That's the question, Judge.
11 THE COURT: Mr. Zerykier, you agree?
12 MR. ZERYKIER: Yes, sir.
13 THE COURT: Pronounce your name slowly for me,
14 please.
15 MR. ZERYKIER: {Zer-rik-ker} Zerykier.
16 THE COURT: Say again.
17 MR. ZERYKIER: {Zer-rik-ker} Zerykier.
18 THE COURT: Zerykier.
19 MR. ZERYKIER: If you ignore the "I," it's easy.
20 THE COURT: With a name like Gargiulo,
21 I'm embarrassed to mispronounce anybody's names.
22 MR. ZERYKIER: I appreciate that, your Honor.
23 THE COURT: All right.
24 MR. ZERYKIER: At least it's easier without the
25 "I," if you ignore it.
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1 THE COURT: Okay.
2 So one thing we can stipulate to is that there's
3 an $8 million that was recovered in a sale; correct?
4 Everybody?
5 MR. McENANEY: Yes, Judge.
6 MR. ZERYKIER: Yes, Judge.
7 THE COURT: And we're here today to determine where
8 it went; correct?
9 MR. McENANEY: Yes, your Honor.
10 MR. ZERYKIER: Yes, your Honor.
11 THE COURT: And it shouldn't take all day; right?
12 MR. ZERYKIER: Hopefully not, your Honor.
13 I intend on being quick.
14 THE COURT: And I believe it is somebody in the
15 defendants' end of the case that actually took control of
16 those funds; correct?
17 MR. ZERYKIER: Yes, your Honor.
18 THE COURT: So it does appear logical for the Court
19 to take testimony from the defendant first.
20 MR. ZERYKIER: And that is the intention here,
21 your Honor.
22 THE COURT: Okay. Now, there's people in the
23 courtroom, either parties, witnesses or what?
24 MR. McENANEY: Yes, witnesses, your Honor.
25 One party and two witnesses. Actually, three on
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1 my behalf.
2 THE COURT: All right.
3 You can sit down.
4 {ALL COUNSEL COMPLY}
5 THE COURT: Something else crossed my mind.
6 I'm having a 60's moment. It was a brilliant idea
7 a moment ago.
8 Oh, yeah.
9 We have a caption issue here. All right.
10 MR. ZERYKIER: We just learned of it, your Honor.
11 THE COURT: I beg your pardon?
12 MR. ZERYKIER: I just learned of it, your Honor.
13 THE COURT: Yeah. That's what it was.
14 A document was turned over. A verified answer,
15 counterclaims and third party claims. The Court system
16 as well as the Court has this case captioned Albert Perez
17 individually, et cetera, against Vincent Tedesco, et al.
18 What was submitted to the Court also has a third-party
19 plaintiff and third-party defendant aspect to it.
20 Was in fact a pleading that called itself
21 a third-party complaint filed in the case?
22 MR. ZERYKIER: Your Honor, with respect, I wasn't
23 counsel at that time. I honestly don't know offhand.
24 And I couldn't get on my phone. I believe your clerk
25 did represent that she looked and she couldn't find one.
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1 I do know the Court has issued decisions until
2 now also with a third-party. And I think everybody has
3 been operating under the impression and assumption and
4 understanding that it had been filed, that there needs to
5 be a curative filing. I would be more than happy to do it
6 in the next day or two.
7 THE COURT: Mr. McEnaney?
8 MR. McENANEY: I have no objection to it,
9 your Honor. To the extent that it looks like my client
10 is suing himself...
11 THE COURT: So, in other words, what we're going to
12 do is we're going to fix it.
13 MR. McENANEY: I think so, Judge.
14 THE COURT: A reasonable interpretation might be
15 that since there were counterclaims filed and answers to the
16 counterclaims, those counterclaims and answers and replies
17 to those counterclaims took on a life of their own and
18 somehow snuck into the caption. So whatever curative
19 pleadings we need, we'll get.
20 MR. ZERYKIER: I'll discuss it with Mr. McEnaney.
21 I'll serve a third-party summons and we'll agree
22 that the prior file pleadings were all addressed and
23 accepted as the dates they were originally filed for
24 all matters.
25 We can do that.
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1 THE COURT: All right.
2 There's three rules moving forward.
3 Rule Number 1, no speaking objections. Say
4 objection. If I need help, I'll ask you for grounds.
5 Number 2, please do not argue the Court's rulings.
6 You will simply note exception. Exceptions will be duly
7 noted.
8 Number 3, there will be no colloquy between
9 counsel.
10 Okay?
11 MR. McENANEY: Yes, your Honor.
12 THE COURT: All right.
13 First witness.
14 MR. ZERYKIER: Thank you, your Honor.
15 May I approach the podium?
16 THE COURT: Yes.
17 MR. ZERYKIER: Defendants call as their first
18 witness Andrew Ross.
19 COURT OFFICER: Mr. Ross, please come up to me.
20 COURT CLERK: Would you raise your right hand,
21 please.
22 *****
23 [SWORN IN BY THE COURT CLERK]
24 *****
25 COURT CLERK: Would you please state your name,
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1 professional title and professional address for the record.
2 THE WITNESS: Good morning.
3 My name is Andrew P. Ross, R-O-S-S, CPA.
4 And I'm with the firm Gettry Marcus CPA, P.C.,
5 88 Froehlich Farm Boulevard, Woodbury, New York.
6 THE COURT: Okay.
7 Thank you.
8 Everybody listen up.
9 I give all witnesses three pointers. So in order
10 to avoid repetition, I'll just say it once. If you need me
11 to repeat it when you are up here, just let me know.
12 You know you are going to be asked some questions
13 today; correct?
14 THE WITNESS: Yes.
15 THE COURT: Rule Number 1. Listen carefully to
16 the information sought by the question and limit your answer
17 to the information sought by the question. For example, if
18 I were in that seat and the lawyer asked me on what street
19 do I live, I would simply offer the name of the street. I
20 wouldn't volunteer the number, the town, the state or the
21 zip code because obviously the information sought is simply
22 the identity of the street.
23 Got it?
24 THE WITNESS: Yes.
25 THE COURT: Rule Number 2, it is not impolite in
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1 life outside a courtroom to commence an answer before a
2 question is complete. We save time that way.
3 Do you have kids?
4 THE WITNESS: {No Verbal Response}.
5 THE COURT: Do you have children?
6 THE WITNESS: Yes.
7 THE COURT: So you know what it is to say no before
8 they are done. Right?
9 However, in court we require a complete record
10 of what is said. So even though you are certain where
11 a question is going, hold off on your answer until the
12 question is complete. Then you'll commence your answer.
13 This way we have a complete stenographic record.
14 Okay?
15 THE WITNESS: Okay.
16 THE COURT: Number 3, if somebody says objection,
17 just stop where you are until I give you direction.
18 Understood?
19 THE WITNESS: Understood.
20 THE COURT: Any questions of me?
21 THE WITNESS: None.
22 THE COURT: All of you hear that?
23 MR. McENANEY: Yes, your Honor.
24 THE COURT: You may proceed.
25 *****
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ANDREW P. ROSS - DIRECT - ZERYKIER
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1 DIRECT EXAMINATION
2 BY MR. ZERYKIER:
3 Q. Good morning, Mr. Ross.
4 A. Good morning.
5 Q. What is the business of Gettry Marcus CPA, P.C.?
6 A. We're a full-service CPA firm.
7 Q. What is your position there?
8 A. I'm a partner in the firm's business valuation and
9 litigation services group.
10 Q. What is that group? What do they do?
11 A. We largely handle litigation matters, shareholder
12 disputes, damages and business valuations.
13 THE COURT: Matrimonials too; correct?
14 THE WITNESS: That's correct.
15 THE COURT: Okay.
16 Q. Did you attend college?
17 A. I did.
18 Q. And where?
19 A. Syracuse University.
20 Q. Did you obtain a degree?
21 A. Yes.
22 Q. In what?
23 A. I obtained a Bachelor of Science in accounting.
24 Q. Now, you mentioned before in your professional talents
25 that you're a CPA. By whom are you licensed as a CPA?
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1 A. By the New York State Education Department.
2 Q. And since when?
3 A. Since 1986.
4 Q. Have you continuously been licensed since '86?
5 A. Yes.
6 Q. Have you ever been subject to any sanctions or
7 censures?
8 A. Never.
9 Q. As a CPA, are there any ethical standards you must
10 adhere to?
11 A. Yes, the AICPA issues a code of professional conduct
12 as does the New York State Society of CPAs.
13 Q. And is that the standard applied by New York State to
14 its CPAs?
15 A. Yes.
16 Q. And are there any aspects of that code of professional
17 conduct which will impact your testimony here?
18 A. Well, yes. Objectivity and integrity, certainly.
19 Q. And what are the ramifications as a CPA if you violate
20 those ethical obligations?
21 A. Well, depending on the violation, it can be as extreme
22 as losing your CPA license.
23 Q. Do you also hold any other accreditations?
24 A. Yes, a couple others. I'm a CFE; that's a certified
25 fraud examiner.
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1 Q. Okay. And when did you receive that CFE accreditation?
2 A. In 2011.
3 Q. And what's involved in obtaining that accreditation?
4 A. A rigorous course study followed by a multipart exam.
5 Q. Are there any ethical obligations as a CFE aside from
6 being a CPA?
7 A. Yes, they have a code of professional standards also,
8 not dissimilar from the AICPA Code and the New York State Code
9 requiring integrity and not misrepresenting the facts.
10 Q. And do you have any other certifications?
11 A. I'm also a CVA, that's a certified valuation analyst.
12 And I'm a PFS, a personal financial specialist.
13 Q. And are you a member of any professional societies?
14 A. I'm a member of both the AICPA, that's the American
15 Institute of Certified Public Accountants, and the New York
16 State Society of CPAs.
17 Q. Have you held any positions of these societies aside
18 from being a member?
19 A. I was in the past chairman of the accounting and
20 auditing committee for the Nassau Chapter of the New York State
21 Society of CPAs.
22 Q. When did you become a member of Gettry Marcus?
23 A. In December of 2006.
24 Q. And since 2006, have you been involved in the same type
25 of role at Gettry Marcus?
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1 A. I have.
2 Q. And previous to this assignment, have you been involved
3 in the forensic analysis of any company's books and records?
4 A. Yes, on numerous occasions.
5 Q. Is that primarily what you do?
6 A. It is primarily what I do.
7 Q. And have you written any articles on the topic?
8 A. I've written several. Most recently the last two
9 articles published in the Suffolk Lawyer.
10 MR. ZERYKIER: Your Honor, I'd like to have them
11 marked as Defendants' Exhibit B. And I apologize; they are
12 out of order because I gave them to the court officer.
13 THE COURT: Are they in or are they just for
14 identification?
15 MR. ZERYKIER: Just identification. We haven't
16 agreed to stipulate to anything yet.
17 THE COURT: That's fine. Okay.
18 COURT OFFICER: Defendants' B for identification
19 only is being shown to the witness.
20 THE COURT: B, as in "boy," or D, as in "David"?
21 *****
22 {WHEREUPON THE COURT OFFICER COMPLIES}
23 *****
24 COURT OFFICER: I'm sorry, your Honor.
25 B, as in "boy."
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1 THE COURT: Thank you.
2 Thank you, Nick.
3 COURT OFFICER: Copies also being given to
4 plaintiffs' counsel.
5 Believe it or not, that's a "B."
6 MR. McENANEY: Thank you.
7 Q. Mr. Ross, do you recognize the document put before you?
8 A. I do.
9 Q. And what is it?
10 A. It's my CV.
11 Q. And does it accurately reflect your professional
12 accomplishments?
13 A. It does.
14 Q. You mentioned a few minutes ago that you authored a
15 number of articles. Are those listed there?
16 A. They are.
17 Q. Can you share with the Court the title of the last
18 couple of articles you published and where they were published?
19 A. Yes. "Serving As a Financial Expert in a Wrongful
20 Death Case." That was the Suffolk Lawyer. And "The Role of the
21 Forensic Accountant in Litigation" also published in the Suffolk
22 Lawyer.
23 Q. And have you ever testified as an expert witness in the
24 Supreme Court of the State of New York before?
25 A. I have.
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1 MR. ZERYKIER: Your Honor, I move to have Mr. Ross
2 qualified as an expert in forensic accounting and related
3 domestic issues.
4 THE COURT: You know you don't have to do that
5 anymore, but I understand your doing it.
6 MR. ZERYKIER: Yeah.
7 THE COURT: Any objection?
8 MR. McENANEY: No objection, your Honor.
9 THE COURT: You're an expert.
10 Go ahead.
11 MR. ZERYKIER: Thank you.
12 Q. Did there come a time when you were retained by the law
13 firm of Farrell Fritz?
14 A. Yes.
15 Q. And what were you retained to do?
16 A. I was retained to investigate the $8 million proceeds
17 and how the proceeds were disbursed.
18 Q. Now, are there a number of companies involved in this
19 case?
20 A. Yes. Primarily two companies, Total Computer Software,
21 which was the company whose assets were sold, and this Total
22 Computer Group. I refer to Total Computer Software as
23 "Software" and Total Computer Systems as "Group."
24 Q. And you mentioned a few moments ago there was a sale of
25 an asset. When did that sale close?
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1 A. It closed on June 13, 2012.
2 Q. And how much was the transaction for?
3 A. It was for $8 million.
4 Q. Was there an opportunity for Software to earn more than
5 $8 million?
6 A. There was.
7 Q. Did you see any record of that occurring?
8 A. No.
9 Q. As part of Gettry Marcus' review of doing the
10 assignment you described, what did you review?
11 A. I reviewed many documents. I reviewed the accounting
12 records of the company, including the general ledger. I
13 included tax returns. I included promissory notes, bank
14 statements, canceled checks, the actual asset purchase
15 agreement, among other things.
16 Q. And was there any reports provided by an outside
17 accountant at all?
18 A. Oh, yes. There was a -- reviewed financial statements
19 by a -- Monahan & Company CPA's firm.
20 Q. When were they issued?
21 A. They were issued contemporaneously for, you know, the
22 years 2003, I believe, forward.
23 Q. And you said review level. Can you describe and
24 explain to us here, what does that mean to an accountant?
25 A. Yes. Reviewed financials are at test-level financials.
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1 There are generally three levels of financial reporting. You
2 have audits, which is the highest level of confidence. Then
3 followed closely, followed, excuse me, by reviewed financials
4 and then you have compiled financials. These were reviewed.
5 Q. And after looking at all that information, what
6 conclusion did you reach?
7 A. Well, I reached the conclusion that the financial
8 statements, general ledgers and tax returns were all
9 contemporaneously prepared by the respective parties. The
10 financial statements by the CPA firm and the tax returns in
11 general ledgers by the client, by Systems.
12 MR. ZERYKIER: May I ask that Defendants' Exhibit A
13 be placed before the witness, please?
14 COURT OFFICER: Defendants' A for identification
15 only being shown to the witness. I have a copy of
16 Defendants' A being given to plaintiff.
17 MR. ZERYKIER: Now, your Honor, for ease of
18 reference, we compiled a number of spreadsheets and charts
19 within Defense Exhibit A. So we're referring to tabs within
20 it. I hope that's acceptable to the Court.
21 THE COURT: In other words, you've prepared a
22 compilation.
23 MR. ZERYKIER: Exactly, a number of compilations.
24 THE COURT: Compilations are recognized in
25 Richardson so...
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1 MR. ZERYKIER: Yes. And I do have the underlying
2 documents for this as well, your Honor.
3 THE COURT: Understood.
4 Q. Mr. Ross, you've been handed Defendants' Exhibit A.
5 Have you seen this before today?
6 A. Yes, I have.
7 Q. What are we looking at in general in the entire book?
8 A. We're looking at a reconciliation that my firm
9 performed comparing the general ledgers for the years 2003
10 through 2014 with the respective income tax filings for Total
11 Computer Software, LLC.
12 Q. Is that what we see behind Tab 1 of Defendants' A?
13 A. That's right.
14 Q. You mentioned before that you were reconciling the tax
15 returns. Why is that important?
16 A. Well, it's important because one of the claims of the
17 plaintiffs is that these reportings were not contemporaneous,
18 and here we are comparing the general ledger with income tax
19 returns that were filed with the U.S. Government contemporaneous
20 to the year end, shortly after the year end.
21 Q. And just what's the conclusion you are reaching in
22 Tab 1?
23 A. Well, the last column to the right shows that the
24 items reconciled, to use accounting slang, they tied in with
25 zero difference or, in some instances, rounding differences of
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1 a dollar or two.
2 Q. And you put a note at the bottom of this chart. What
3 were you trying to help us understand there?
4 A. The note at the bottom shows that the cumulative losses
5 up close to the sale. Again, the sale took place June 13th of
6 2012. We have through April 30th, 2012, that there were
7 cumulative losses of almost $5.8 million.
8 THE COURT: What does "cumulative loss" mean?
9 THE WITNESS: "Cumulative" meaning from the
10 beginning of time, which for this company was 2003 through
11 April 30th of 2012. The aggregate losses were
12 5.7/5.8 million.
13 THE COURT: "Loss" means?
14 THE WITNESS: "Loss" means expenses in excess of
15 revenues in a given year.
16 THE COURT: All right. Next question.
17 Q. And why is that an important factor here for us to
18 understand that the company had $5.8 million of losses?
19 A. Well, those losses had to have been financed by someone
20 or something. And in this case it was primarily financed
21 through the affiliated company group.
22 Q. Now, in Tab 2 you did more than just looking at the
23 financial statements with regards to just income. You did more
24 than that, did you not?
25 A. That's correct.
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1 Q. And what are you showing us in Tab 2?
2 A. Tab 2 goes year-by-year where we took on the left side
3 of every page, we listed every general ledger account in order
4 of the general ledger, and then on the right side we reconciled
5 it to the tax return for that year.
6 Q. And why for you as a forensic accountant was this an
7 important additional step?
8 A. Again, the last schedule we spoke about, you could
9 argue, was a view from 100,000 feet. This is much further down
10 where I'm showing account by account how the items reconciled to
11 the contemporaneously filed income tax return for that year.
12 Q. Now, we can look to the middle of this Tab 2 where you
13 have reconciliation for the year 2011, which was the last full
14 year before the transaction.
15 Let me know when you get there, please.
16 A. I'm there.
17 Q. And I was waiting to make sure the Judge gets there as
18 well.
19 THE COURT: Go ahead.
20 Q. Can you just walk us through so we can understand the
21 level of detail you went through? Just go through the first,
22 let's say, A through E where you have those references listed
23 here.
24 A. Sure. Okay. As I mentioned on the left side, my
25 staff and I listed all of the general ledger balances. So for
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1 the first account -- it's a dormant account -- there was a zero
2 balance.
3 The second account is a savings account,
4 Account 101(1), and it shows a $1545 balance. That balance
5 being the only cash account was reconciled to the tax return.
6 And you can see that on the right where the tax return number,
7 the balance sheet number for cash was indeed $1545.
8 Q. Let's go down to D. What are you showing there?
9 A. Okay. D is the member loan. It's from AP, that's
10 Al Perez, and that number, it's an asset. It's a positive
11 number, 70,739. And if you look to the right, the tax return
12 had an entry on its balance sheet of loan to shareholder for
13 the same amount.
14 Q. I actually think you might have misread that number.
15 Did you mean 30,739? I think you might have said 70,000.
16 A. 30,739.
17 Q. And that's money Mr. Perez borrowed from Software?
18 A. That's an asset of the company, so that's correct.
19 Q. And what's right below that? What are we showing?
20 A. Right below that we have member loan, VT. That's
21 Vincent Tedesco. And it's showing a negative number. So that's
22 a liability of the company. That means the individuals owed the
23 money by the company of $341,844.
24 Q. And what are you showing right below there?
25 A. I'm showing a due to from Total Computer Systems -- as
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1 we call it -- Group. And that's showing a liability of
2 $3,491,000. Those two numbers combined add up to 3 million 833,
3 and that's the number that was traced directly to the income tax
4 return as partner loans.
5 Q. So the general ledger and the tax return both showed
6 at the end of 2011 that the company owed
Preview
FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 EXHIBIT I FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 1 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF SUFFOLK : PART 48 2 -------------------------------------------x ALBERT PEREZ, Individually and Derivatively, 3 on behalf of TOTAL COMPUTER SOFTWARE, LLC, INDEX NO. 4 Plaintiffs, 63193-13 5 -against- 6 VINCENT TEDESCO, TOTAL COMPUTER SYSTEMS, LTD, d/b/a TOTAL COMPUTER GROUP, TOTAL 7 COMPUTER GROUP, LLC, TOTAL COMPUTERS, LTD, and JOHN DOE CORPORATION, 8 Defendants. 9 -------------------------------------------x April 27, 2017 10 Riverhead, New York 11 NON-JURY TRIAL PROCEEDINGS WITNESSES: ANDREW P. ROSS and JOSEPH CASSANO 12 13 B E F O R E: HON. JERRY GARGIULO, Supreme Court Justice 14 A P P E A R A N C E S: 15 TIMOTHY McENANEY, ESQ. 16 For the Plaintiffs 14 Vanderventer Avenue, Suite 250 17 Port Washington, New York 11050 BY: TIMOTHY McENANEY, ESQ. 18 BY: CHERYLL L. CORIGLIANO, ESQ. 19 FARRELL FRITZ, P.C. For the Defendants 20 400 RXR Plaza Uniondale, New York 11556 21 BY: AARON E. ZERYKIER, ESQ. 22 STEVEN E. LOSQUADRO, P.C. of Counsel 23 For the Defendants 649 Route 25A 24 Rocky Point, New York 11778 25 RJ RICCOBONO, RPR OFFICIAL SUPREME COURT REPORTER FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 ALBERT PEREZ, ET AL -v- VINCENT TEDESCO, ET AL 2 1 COURT CLERK: In the matter of Albert Perez, 2 individually and derivatively on behalf of Total Computer 3 Software, LLC, against Vincent Tedesco, Total Computer 4 Systems, Ltd., doing business as Total Computer Group, 5 Total Computer Group, LLC, Total Computers, Ltd., and 6 John Doe Corporation, under Index Number 63193 of 2013. 7 Counsels, if you'd note your appearances. 8 MR. McENANEY: Yes. 9 Timothy McEnaney for the plaintiff, Law Office 10 of Tim McEnaney, 14 Vanderventer Avenue, Suite 250, 11 Port Washington, New York 11050. 12 THE COURT: Good morning, Mr. McEnaney. 13 MR. McENANEY: Phone Number is 631 -- I'm sorry. 14 THE COURT: Do we need his phone number too? 15 COURT REPORTER: No. 16 THE COURT: That's okay. 17 MR. McENANEY: Fine. 18 THE COURT: Go ahead. 19 MS. CORIGLIANO: Of counsel to the plaintiffs' 20 attorney, Cheryll Corigliano, the Law Office of 21 Cheryll Corigliano, 200 Broadhollow Road, Suite 207, 22 Melville, New York 11747. 23 THE COURT: Okay. 24 MR. ZERYKIER: Aaron -- 25 THE COURT: Good morning. OFFICIAL COURT REPORTER - RJ RICCOBONO, SCR FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 ALBERT PEREZ, ET AL -v- VINCENT TEDESCO, ET AL 3 1 MS. CORIGLIANO: Good morning. 2 MR. ZERYKIER: Good morning, your Honor. 3 Aaron Zerykier from Farrell Fritz, P.C., 4 400 RXR Plaza, Uniondale, New York 11556. 5 And I have co-counsel with me as well. 6 THE COURT: Good morning. 7 MR. LOSQUADRO: Yes, your Honor. 8 Steven Losquadro, 649 Route 25A, Rocky Point, 9 New York, also for the defendant. 10 Good morning. 11 THE COURT: Good morning. 12 Before we get going, are there any facts that 13 can be stipulated to? 14 Don't all jump up at once. All right. 15 Let me try this again. 16 Are there any facts that can be stipulated to? 17 For instance, I'm suggesting, we know what 18 the number is that we're looking to trace; correct? 19 The dollar number? 20 {NO RESPONSE} 21 THE COURT: Am I talking about the right case? 22 MR. ZERYKIER: Yes, your Honor. 23 MR. McENANEY: Judge, yes, that's correct. 24 There is an $8 million sale at issue here and 25 what happened to the proceeds for that sale. OFFICIAL COURT REPORTER - RJ RICCOBONO, SCR FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 ALBERT PEREZ, ET AL -v- VINCENT TEDESCO, ET AL 4 1 There are other causes of action which -- 2 THE COURT: Yeah, I know that. But what's the 3 focus of today's hearing? 4 MR. McENANEY: The focus of today's hearing is 5 to find out what happened to the funds, the $8 million 6 that was paid for the software application called Total 7 Enforcement. 8 THE COURT: Bottom line, where did the $8 million 9 go? 10 MR. McENANEY: That's the question, Judge. 11 THE COURT: Mr. Zerykier, you agree? 12 MR. ZERYKIER: Yes, sir. 13 THE COURT: Pronounce your name slowly for me, 14 please. 15 MR. ZERYKIER: {Zer-rik-ker} Zerykier. 16 THE COURT: Say again. 17 MR. ZERYKIER: {Zer-rik-ker} Zerykier. 18 THE COURT: Zerykier. 19 MR. ZERYKIER: If you ignore the "I," it's easy. 20 THE COURT: With a name like Gargiulo, 21 I'm embarrassed to mispronounce anybody's names. 22 MR. ZERYKIER: I appreciate that, your Honor. 23 THE COURT: All right. 24 MR. ZERYKIER: At least it's easier without the 25 "I," if you ignore it. OFFICIAL COURT REPORTER - RJ RICCOBONO, SCR FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 ALBERT PEREZ, ET AL -v- VINCENT TEDESCO, ET AL 5 1 THE COURT: Okay. 2 So one thing we can stipulate to is that there's 3 an $8 million that was recovered in a sale; correct? 4 Everybody? 5 MR. McENANEY: Yes, Judge. 6 MR. ZERYKIER: Yes, Judge. 7 THE COURT: And we're here today to determine where 8 it went; correct? 9 MR. McENANEY: Yes, your Honor. 10 MR. ZERYKIER: Yes, your Honor. 11 THE COURT: And it shouldn't take all day; right? 12 MR. ZERYKIER: Hopefully not, your Honor. 13 I intend on being quick. 14 THE COURT: And I believe it is somebody in the 15 defendants' end of the case that actually took control of 16 those funds; correct? 17 MR. ZERYKIER: Yes, your Honor. 18 THE COURT: So it does appear logical for the Court 19 to take testimony from the defendant first. 20 MR. ZERYKIER: And that is the intention here, 21 your Honor. 22 THE COURT: Okay. Now, there's people in the 23 courtroom, either parties, witnesses or what? 24 MR. McENANEY: Yes, witnesses, your Honor. 25 One party and two witnesses. Actually, three on OFFICIAL COURT REPORTER - RJ RICCOBONO, SCR FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 ALBERT PEREZ, ET AL -v- VINCENT TEDESCO, ET AL 6 1 my behalf. 2 THE COURT: All right. 3 You can sit down. 4 {ALL COUNSEL COMPLY} 5 THE COURT: Something else crossed my mind. 6 I'm having a 60's moment. It was a brilliant idea 7 a moment ago. 8 Oh, yeah. 9 We have a caption issue here. All right. 10 MR. ZERYKIER: We just learned of it, your Honor. 11 THE COURT: I beg your pardon? 12 MR. ZERYKIER: I just learned of it, your Honor. 13 THE COURT: Yeah. That's what it was. 14 A document was turned over. A verified answer, 15 counterclaims and third party claims. The Court system 16 as well as the Court has this case captioned Albert Perez 17 individually, et cetera, against Vincent Tedesco, et al. 18 What was submitted to the Court also has a third-party 19 plaintiff and third-party defendant aspect to it. 20 Was in fact a pleading that called itself 21 a third-party complaint filed in the case? 22 MR. ZERYKIER: Your Honor, with respect, I wasn't 23 counsel at that time. I honestly don't know offhand. 24 And I couldn't get on my phone. I believe your clerk 25 did represent that she looked and she couldn't find one. OFFICIAL COURT REPORTER - RJ RICCOBONO, SCR FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 ALBERT PEREZ, ET AL -v- VINCENT TEDESCO, ET AL 7 1 I do know the Court has issued decisions until 2 now also with a third-party. And I think everybody has 3 been operating under the impression and assumption and 4 understanding that it had been filed, that there needs to 5 be a curative filing. I would be more than happy to do it 6 in the next day or two. 7 THE COURT: Mr. McEnaney? 8 MR. McENANEY: I have no objection to it, 9 your Honor. To the extent that it looks like my client 10 is suing himself... 11 THE COURT: So, in other words, what we're going to 12 do is we're going to fix it. 13 MR. McENANEY: I think so, Judge. 14 THE COURT: A reasonable interpretation might be 15 that since there were counterclaims filed and answers to the 16 counterclaims, those counterclaims and answers and replies 17 to those counterclaims took on a life of their own and 18 somehow snuck into the caption. So whatever curative 19 pleadings we need, we'll get. 20 MR. ZERYKIER: I'll discuss it with Mr. McEnaney. 21 I'll serve a third-party summons and we'll agree 22 that the prior file pleadings were all addressed and 23 accepted as the dates they were originally filed for 24 all matters. 25 We can do that. OFFICIAL COURT REPORTER - RJ RICCOBONO, SCR FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 ALBERT PEREZ, ET AL -v- VINCENT TEDESCO, ET AL 8 1 THE COURT: All right. 2 There's three rules moving forward. 3 Rule Number 1, no speaking objections. Say 4 objection. If I need help, I'll ask you for grounds. 5 Number 2, please do not argue the Court's rulings. 6 You will simply note exception. Exceptions will be duly 7 noted. 8 Number 3, there will be no colloquy between 9 counsel. 10 Okay? 11 MR. McENANEY: Yes, your Honor. 12 THE COURT: All right. 13 First witness. 14 MR. ZERYKIER: Thank you, your Honor. 15 May I approach the podium? 16 THE COURT: Yes. 17 MR. ZERYKIER: Defendants call as their first 18 witness Andrew Ross. 19 COURT OFFICER: Mr. Ross, please come up to me. 20 COURT CLERK: Would you raise your right hand, 21 please. 22 ***** 23 [SWORN IN BY THE COURT CLERK] 24 ***** 25 COURT CLERK: Would you please state your name, OFFICIAL COURT REPORTER - RJ RICCOBONO, SCR FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 ALBERT PEREZ, ET AL -v- VINCENT TEDESCO, ET AL 9 1 professional title and professional address for the record. 2 THE WITNESS: Good morning. 3 My name is Andrew P. Ross, R-O-S-S, CPA. 4 And I'm with the firm Gettry Marcus CPA, P.C., 5 88 Froehlich Farm Boulevard, Woodbury, New York. 6 THE COURT: Okay. 7 Thank you. 8 Everybody listen up. 9 I give all witnesses three pointers. So in order 10 to avoid repetition, I'll just say it once. If you need me 11 to repeat it when you are up here, just let me know. 12 You know you are going to be asked some questions 13 today; correct? 14 THE WITNESS: Yes. 15 THE COURT: Rule Number 1. Listen carefully to 16 the information sought by the question and limit your answer 17 to the information sought by the question. For example, if 18 I were in that seat and the lawyer asked me on what street 19 do I live, I would simply offer the name of the street. I 20 wouldn't volunteer the number, the town, the state or the 21 zip code because obviously the information sought is simply 22 the identity of the street. 23 Got it? 24 THE WITNESS: Yes. 25 THE COURT: Rule Number 2, it is not impolite in OFFICIAL COURT REPORTER - RJ RICCOBONO, SCR FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 ALBERT PEREZ, ET AL -v- VINCENT TEDESCO, ET AL 10 1 life outside a courtroom to commence an answer before a 2 question is complete. We save time that way. 3 Do you have kids? 4 THE WITNESS: {No Verbal Response}. 5 THE COURT: Do you have children? 6 THE WITNESS: Yes. 7 THE COURT: So you know what it is to say no before 8 they are done. Right? 9 However, in court we require a complete record 10 of what is said. So even though you are certain where 11 a question is going, hold off on your answer until the 12 question is complete. Then you'll commence your answer. 13 This way we have a complete stenographic record. 14 Okay? 15 THE WITNESS: Okay. 16 THE COURT: Number 3, if somebody says objection, 17 just stop where you are until I give you direction. 18 Understood? 19 THE WITNESS: Understood. 20 THE COURT: Any questions of me? 21 THE WITNESS: None. 22 THE COURT: All of you hear that? 23 MR. McENANEY: Yes, your Honor. 24 THE COURT: You may proceed. 25 ***** OFFICIAL COURT REPORTER - RJ RICCOBONO, SCR FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 ANDREW P. ROSS - DIRECT - ZERYKIER 11 1 DIRECT EXAMINATION 2 BY MR. ZERYKIER: 3 Q. Good morning, Mr. Ross. 4 A. Good morning. 5 Q. What is the business of Gettry Marcus CPA, P.C.? 6 A. We're a full-service CPA firm. 7 Q. What is your position there? 8 A. I'm a partner in the firm's business valuation and 9 litigation services group. 10 Q. What is that group? What do they do? 11 A. We largely handle litigation matters, shareholder 12 disputes, damages and business valuations. 13 THE COURT: Matrimonials too; correct? 14 THE WITNESS: That's correct. 15 THE COURT: Okay. 16 Q. Did you attend college? 17 A. I did. 18 Q. And where? 19 A. Syracuse University. 20 Q. Did you obtain a degree? 21 A. Yes. 22 Q. In what? 23 A. I obtained a Bachelor of Science in accounting. 24 Q. Now, you mentioned before in your professional talents 25 that you're a CPA. By whom are you licensed as a CPA? OFFICIAL COURT REPORTER - RJ RICCOBONO, SCR FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 ANDREW P. ROSS - DIRECT - ZERYKIER 12 1 A. By the New York State Education Department. 2 Q. And since when? 3 A. Since 1986. 4 Q. Have you continuously been licensed since '86? 5 A. Yes. 6 Q. Have you ever been subject to any sanctions or 7 censures? 8 A. Never. 9 Q. As a CPA, are there any ethical standards you must 10 adhere to? 11 A. Yes, the AICPA issues a code of professional conduct 12 as does the New York State Society of CPAs. 13 Q. And is that the standard applied by New York State to 14 its CPAs? 15 A. Yes. 16 Q. And are there any aspects of that code of professional 17 conduct which will impact your testimony here? 18 A. Well, yes. Objectivity and integrity, certainly. 19 Q. And what are the ramifications as a CPA if you violate 20 those ethical obligations? 21 A. Well, depending on the violation, it can be as extreme 22 as losing your CPA license. 23 Q. Do you also hold any other accreditations? 24 A. Yes, a couple others. I'm a CFE; that's a certified 25 fraud examiner. OFFICIAL COURT REPORTER - RJ RICCOBONO, SCR FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 ANDREW P. ROSS - DIRECT - ZERYKIER 13 1 Q. Okay. And when did you receive that CFE accreditation? 2 A. In 2011. 3 Q. And what's involved in obtaining that accreditation? 4 A. A rigorous course study followed by a multipart exam. 5 Q. Are there any ethical obligations as a CFE aside from 6 being a CPA? 7 A. Yes, they have a code of professional standards also, 8 not dissimilar from the AICPA Code and the New York State Code 9 requiring integrity and not misrepresenting the facts. 10 Q. And do you have any other certifications? 11 A. I'm also a CVA, that's a certified valuation analyst. 12 And I'm a PFS, a personal financial specialist. 13 Q. And are you a member of any professional societies? 14 A. I'm a member of both the AICPA, that's the American 15 Institute of Certified Public Accountants, and the New York 16 State Society of CPAs. 17 Q. Have you held any positions of these societies aside 18 from being a member? 19 A. I was in the past chairman of the accounting and 20 auditing committee for the Nassau Chapter of the New York State 21 Society of CPAs. 22 Q. When did you become a member of Gettry Marcus? 23 A. In December of 2006. 24 Q. And since 2006, have you been involved in the same type 25 of role at Gettry Marcus? OFFICIAL COURT REPORTER - RJ RICCOBONO, SCR FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 ANDREW P. ROSS - DIRECT - ZERYKIER 14 1 A. I have. 2 Q. And previous to this assignment, have you been involved 3 in the forensic analysis of any company's books and records? 4 A. Yes, on numerous occasions. 5 Q. Is that primarily what you do? 6 A. It is primarily what I do. 7 Q. And have you written any articles on the topic? 8 A. I've written several. Most recently the last two 9 articles published in the Suffolk Lawyer. 10 MR. ZERYKIER: Your Honor, I'd like to have them 11 marked as Defendants' Exhibit B. And I apologize; they are 12 out of order because I gave them to the court officer. 13 THE COURT: Are they in or are they just for 14 identification? 15 MR. ZERYKIER: Just identification. We haven't 16 agreed to stipulate to anything yet. 17 THE COURT: That's fine. Okay. 18 COURT OFFICER: Defendants' B for identification 19 only is being shown to the witness. 20 THE COURT: B, as in "boy," or D, as in "David"? 21 ***** 22 {WHEREUPON THE COURT OFFICER COMPLIES} 23 ***** 24 COURT OFFICER: I'm sorry, your Honor. 25 B, as in "boy." OFFICIAL COURT REPORTER - RJ RICCOBONO, SCR FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 ANDREW P. ROSS - DIRECT - ZERYKIER 15 1 THE COURT: Thank you. 2 Thank you, Nick. 3 COURT OFFICER: Copies also being given to 4 plaintiffs' counsel. 5 Believe it or not, that's a "B." 6 MR. McENANEY: Thank you. 7 Q. Mr. Ross, do you recognize the document put before you? 8 A. I do. 9 Q. And what is it? 10 A. It's my CV. 11 Q. And does it accurately reflect your professional 12 accomplishments? 13 A. It does. 14 Q. You mentioned a few minutes ago that you authored a 15 number of articles. Are those listed there? 16 A. They are. 17 Q. Can you share with the Court the title of the last 18 couple of articles you published and where they were published? 19 A. Yes. "Serving As a Financial Expert in a Wrongful 20 Death Case." That was the Suffolk Lawyer. And "The Role of the 21 Forensic Accountant in Litigation" also published in the Suffolk 22 Lawyer. 23 Q. And have you ever testified as an expert witness in the 24 Supreme Court of the State of New York before? 25 A. I have. OFFICIAL COURT REPORTER - RJ RICCOBONO, SCR FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 ANDREW P. ROSS - DIRECT - ZERYKIER 16 1 MR. ZERYKIER: Your Honor, I move to have Mr. Ross 2 qualified as an expert in forensic accounting and related 3 domestic issues. 4 THE COURT: You know you don't have to do that 5 anymore, but I understand your doing it. 6 MR. ZERYKIER: Yeah. 7 THE COURT: Any objection? 8 MR. McENANEY: No objection, your Honor. 9 THE COURT: You're an expert. 10 Go ahead. 11 MR. ZERYKIER: Thank you. 12 Q. Did there come a time when you were retained by the law 13 firm of Farrell Fritz? 14 A. Yes. 15 Q. And what were you retained to do? 16 A. I was retained to investigate the $8 million proceeds 17 and how the proceeds were disbursed. 18 Q. Now, are there a number of companies involved in this 19 case? 20 A. Yes. Primarily two companies, Total Computer Software, 21 which was the company whose assets were sold, and this Total 22 Computer Group. I refer to Total Computer Software as 23 "Software" and Total Computer Systems as "Group." 24 Q. And you mentioned a few moments ago there was a sale of 25 an asset. When did that sale close? OFFICIAL COURT REPORTER - RJ RICCOBONO, SCR FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 ANDREW P. ROSS - DIRECT - ZERYKIER 17 1 A. It closed on June 13, 2012. 2 Q. And how much was the transaction for? 3 A. It was for $8 million. 4 Q. Was there an opportunity for Software to earn more than 5 $8 million? 6 A. There was. 7 Q. Did you see any record of that occurring? 8 A. No. 9 Q. As part of Gettry Marcus' review of doing the 10 assignment you described, what did you review? 11 A. I reviewed many documents. I reviewed the accounting 12 records of the company, including the general ledger. I 13 included tax returns. I included promissory notes, bank 14 statements, canceled checks, the actual asset purchase 15 agreement, among other things. 16 Q. And was there any reports provided by an outside 17 accountant at all? 18 A. Oh, yes. There was a -- reviewed financial statements 19 by a -- Monahan & Company CPA's firm. 20 Q. When were they issued? 21 A. They were issued contemporaneously for, you know, the 22 years 2003, I believe, forward. 23 Q. And you said review level. Can you describe and 24 explain to us here, what does that mean to an accountant? 25 A. Yes. Reviewed financials are at test-level financials. OFFICIAL COURT REPORTER - RJ RICCOBONO, SCR FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 ANDREW P. ROSS - DIRECT - ZERYKIER 18 1 There are generally three levels of financial reporting. You 2 have audits, which is the highest level of confidence. Then 3 followed closely, followed, excuse me, by reviewed financials 4 and then you have compiled financials. These were reviewed. 5 Q. And after looking at all that information, what 6 conclusion did you reach? 7 A. Well, I reached the conclusion that the financial 8 statements, general ledgers and tax returns were all 9 contemporaneously prepared by the respective parties. The 10 financial statements by the CPA firm and the tax returns in 11 general ledgers by the client, by Systems. 12 MR. ZERYKIER: May I ask that Defendants' Exhibit A 13 be placed before the witness, please? 14 COURT OFFICER: Defendants' A for identification 15 only being shown to the witness. I have a copy of 16 Defendants' A being given to plaintiff. 17 MR. ZERYKIER: Now, your Honor, for ease of 18 reference, we compiled a number of spreadsheets and charts 19 within Defense Exhibit A. So we're referring to tabs within 20 it. I hope that's acceptable to the Court. 21 THE COURT: In other words, you've prepared a 22 compilation. 23 MR. ZERYKIER: Exactly, a number of compilations. 24 THE COURT: Compilations are recognized in 25 Richardson so... OFFICIAL COURT REPORTER - RJ RICCOBONO, SCR FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 ANDREW P. ROSS - DIRECT - ZERYKIER 19 1 MR. ZERYKIER: Yes. And I do have the underlying 2 documents for this as well, your Honor. 3 THE COURT: Understood. 4 Q. Mr. Ross, you've been handed Defendants' Exhibit A. 5 Have you seen this before today? 6 A. Yes, I have. 7 Q. What are we looking at in general in the entire book? 8 A. We're looking at a reconciliation that my firm 9 performed comparing the general ledgers for the years 2003 10 through 2014 with the respective income tax filings for Total 11 Computer Software, LLC. 12 Q. Is that what we see behind Tab 1 of Defendants' A? 13 A. That's right. 14 Q. You mentioned before that you were reconciling the tax 15 returns. Why is that important? 16 A. Well, it's important because one of the claims of the 17 plaintiffs is that these reportings were not contemporaneous, 18 and here we are comparing the general ledger with income tax 19 returns that were filed with the U.S. Government contemporaneous 20 to the year end, shortly after the year end. 21 Q. And just what's the conclusion you are reaching in 22 Tab 1? 23 A. Well, the last column to the right shows that the 24 items reconciled, to use accounting slang, they tied in with 25 zero difference or, in some instances, rounding differences of OFFICIAL COURT REPORTER - RJ RICCOBONO, SCR FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 ANDREW P. ROSS - DIRECT - ZERYKIER 20 1 a dollar or two. 2 Q. And you put a note at the bottom of this chart. What 3 were you trying to help us understand there? 4 A. The note at the bottom shows that the cumulative losses 5 up close to the sale. Again, the sale took place June 13th of 6 2012. We have through April 30th, 2012, that there were 7 cumulative losses of almost $5.8 million. 8 THE COURT: What does "cumulative loss" mean? 9 THE WITNESS: "Cumulative" meaning from the 10 beginning of time, which for this company was 2003 through 11 April 30th of 2012. The aggregate losses were 12 5.7/5.8 million. 13 THE COURT: "Loss" means? 14 THE WITNESS: "Loss" means expenses in excess of 15 revenues in a given year. 16 THE COURT: All right. Next question. 17 Q. And why is that an important factor here for us to 18 understand that the company had $5.8 million of losses? 19 A. Well, those losses had to have been financed by someone 20 or something. And in this case it was primarily financed 21 through the affiliated company group. 22 Q. Now, in Tab 2 you did more than just looking at the 23 financial statements with regards to just income. You did more 24 than that, did you not? 25 A. That's correct. OFFICIAL COURT REPORTER - RJ RICCOBONO, SCR FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 ANDREW P. ROSS - DIRECT - ZERYKIER 21 1 Q. And what are you showing us in Tab 2? 2 A. Tab 2 goes year-by-year where we took on the left side 3 of every page, we listed every general ledger account in order 4 of the general ledger, and then on the right side we reconciled 5 it to the tax return for that year. 6 Q. And why for you as a forensic accountant was this an 7 important additional step? 8 A. Again, the last schedule we spoke about, you could 9 argue, was a view from 100,000 feet. This is much further down 10 where I'm showing account by account how the items reconciled to 11 the contemporaneously filed income tax return for that year. 12 Q. Now, we can look to the middle of this Tab 2 where you 13 have reconciliation for the year 2011, which was the last full 14 year before the transaction. 15 Let me know when you get there, please. 16 A. I'm there. 17 Q. And I was waiting to make sure the Judge gets there as 18 well. 19 THE COURT: Go ahead. 20 Q. Can you just walk us through so we can understand the 21 level of detail you went through? Just go through the first, 22 let's say, A through E where you have those references listed 23 here. 24 A. Sure. Okay. As I mentioned on the left side, my 25 staff and I listed all of the general ledger balances. So for OFFICIAL COURT REPORTER - RJ RICCOBONO, SCR FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 ANDREW P. ROSS - DIRECT - ZERYKIER 22 1 the first account -- it's a dormant account -- there was a zero 2 balance. 3 The second account is a savings account, 4 Account 101(1), and it shows a $1545 balance. That balance 5 being the only cash account was reconciled to the tax return. 6 And you can see that on the right where the tax return number, 7 the balance sheet number for cash was indeed $1545. 8 Q. Let's go down to D. What are you showing there? 9 A. Okay. D is the member loan. It's from AP, that's 10 Al Perez, and that number, it's an asset. It's a positive 11 number, 70,739. And if you look to the right, the tax return 12 had an entry on its balance sheet of loan to shareholder for 13 the same amount. 14 Q. I actually think you might have misread that number. 15 Did you mean 30,739? I think you might have said 70,000. 16 A. 30,739. 17 Q. And that's money Mr. Perez borrowed from Software? 18 A. That's an asset of the company, so that's correct. 19 Q. And what's right below that? What are we showing? 20 A. Right below that we have member loan, VT. That's 21 Vincent Tedesco. And it's showing a negative number. So that's 22 a liability of the company. That means the individuals owed the 23 money by the company of $341,844. 24 Q. And what are you showing right below there? 25 A. I'm showing a due to from Total Computer Systems -- as OFFICIAL COURT REPORTER - RJ RICCOBONO, SCR FILED: SUFFOLK COUNTY CLERK 02/20/2023 09:51 PM INDEX NO. 063193/2013 NYSCEF DOC. NO. 550 RECEIVED NYSCEF: 02/20/2023 ANDREW P. ROSS - DIRECT - ZERYKIER 23 1 we call it -- Group. And that's showing a liability of 2 $3,491,000. Those two numbers combined add up to 3 million 833, 3 and that's the number that was traced directly to the income tax 4 return as partner loans. 5 Q. So the general ledger and the tax return both showed 6 at the end of 2011 that the company owed