Michael Kane. Transcripts. Michael Jackson Exe. Branca V Irs

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UNITED STATES TAX COURT - TRIAL

ESTATE (OF MICHAEL J. JACKSON DECEASED) EXECUTORS: JOHN G. BRANCA. AND JOHN MCCLAIN V

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COMMISSIONER OF INTERNAL REVENUE (IRS) February 13th 2017 Presiding Judge Mark V. Holmes

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Jackson’s estate is represented by Avram Salkin, Charles Paul Rettig, Steven Richard Toscher, R obert S. Horwitz, Edward M. Robbins Jr., Sharyn M. Fisk and Lacey E. Strachan of Hochman Sa lkin Rettig Toscher & Perez PC, Paul Gordon Hoffman, Jeryll S. Cohen and Loretta Siciliano of Hoffman Sabban & Watenmaker and Howard L. Weitzman of Kinsella Weitzman Iser Kump & Aldisert LLP.

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The IRS is represented by its attorneys Donna F. Herbert, Malone Camp, Sebastian Voth, Jordan Mus en and Laura Mullin. Ms Larson -------------------------------------------MICHAEL KANE

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Business manager.

Court Clerk: name and address for the record. MR. KANE: Michael Kane, ………………………... .

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Judge Holmes: Go ahead, Mr. Weltzman.

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Mr. Weitzman: Thank you, Your Honor.

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Mr. Weitzman:

DIRECT EXAMINATION

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Q. Mr. Kane, what's your occupation?

A. I'm a business manager.

A. Staten Island, New York.

Q. And after high school, did you go to college?

A. Undergrad, St. Johns University.

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Q. And did you receive a degree at St. Johns?

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Q. Could you tell us where you went to high school? Not the school, the location.

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A. Associates degree in business and a bachelor's degree in accounting.

Q. And after you graduated from St. Johns, what did you do?

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A. Graduate studies at Pace University.

Q. At where? At Pace?

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A. Pace University.

Q. And then after Pace, what did you do?

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A. I went to work for Ernst & Young. They were actually Arthur Young at the time, and they subsequently merged with Ernst & Young.

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Q. Okay. Can you talk a little louder? Is that possible?

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A. Certainly.

A. Is that better?

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Q. Or move the mic closer maybe?

Q. Yes. Thank you. Are you a certified public accountant?

A. I am not.

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Q. So how long did you stay at that position?

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A. Approximately five years.

Q. What did you do after that?

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A. I moved from New York City to Los Angeles to work for Marshall Gelfand.

Q. And was there a reason why you made the transition?

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A. I wanted to get more involved in the entertainment industry.

Q. Any particular area of the entertainment industry?

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A. Mostly entertainment being musicians and their actors and actresses.

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Q. Okay. And why did you select the Gelfand firm?

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A. Marshall's reputation was probably the preeminent business manager at the time, and I wanted to be .... I wanted him to be my mentor.

Q. Can you tell us what a manager .... business manager does?

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A. For the most part, most entertainers don't have a back office. And so if you think of an entertainer as a company, most companies have an accounts payable department, an accounts receivable department, a tax department, a risk management department. Most entertainers don't have the luxury of having that kind of staff. So they hire business managers to act as their accounting office.

Q. And did you, in fact, go to work for Marshall Gelfand .... or with Marshall Gelfand?

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A. I did.

A. Approximately six years.

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Q. And how long did you stay with the Gelfand firm?

A. I did.

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Q. Did you represent why you were with Mr. Gelfand and his work on matters for musicians or musicians that tour?

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Q. Can you give us some of the names of the accounts you worked on?

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A. Michael Jackson, Neil Diamond, Jimmy Buffet, Mariah Carey, Prince.

Q. Okay. All recognizable names?

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A. Yes.

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A. I went to work for Provident Financial Management.

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Q. And after you left Gelfand, what did you do?

Q. And did you represent any additional names we might recognize besides the names you already told us about?

A. Madonna, Metallica, Prince.

Q. Okay. And after Providence, where did you work?

A. Gropstein Horwath.

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Q. And .... what was the name again?

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A. A company called Gropstein Horwath.

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Q. And did that merge with another accounting firm?

A. It did merge with a firm called Crowe Horwath.

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Q. And is Crowe Horwath an international firm?

A. It is.

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Q. How many employees?

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A. I believe ....

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Q. Just a best guess.

A. Approximately 3,300.

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Q. And you continued in your duty as business managers for various talent?

A. That's correct.

Q. What's the difference between a business manager and a manager .... a personal manager?

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A. A business manager .... if you can change the terminology, you could just call it business manager and accountant, whereas a manager guides the career of the artist, be along the lines of this is a good role to take or this is a bad role or we should turn it down or if you want to change from a pop artist to a country music artist. That would be the direction that a manager would guide the artist through.

Q. And did you work with various .... or do you .... did you normally work with managers when you represent a talent as the business manager?

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A. That's correct.

Q. So the performers you told us about already, each of them have an entity or people that were acting as managers or personal managers.

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A. That's correct.

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Q. Were you contacted sometime in 2009 about representing Michael Jackson?

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A. I was.

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Q. Now, let me just back up for a moment. When you worked on Michael Jackson's account when you were with Mr. Gelfand's firm .... Gelfand Rennert, is that the name of the firm?

A. Gelfand, Rennert, and Feldman.

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Q. When you worked at the Gelfand, et al., firm, what were your areas of responsibilities working for Mr. Jackson?

A. I was primarily the manager of the income tax department. So I helped prepare and/or review most of Michael's tax returns.

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Q. And were there other people at the Gelfand firm dealing with the day-to-day business management stuff?

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A. That's correct. Yes.

Q. Who contacted you in 2009 regarding Michael Jackson?

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A. Michael's manager, Frank DiLeo.

Q. And do you remember, if not the exact date, approximately when the contact was made?

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A. It was late March of '09, perhaps early April of '09.

Q. Was that telephone or in-person contact?

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A. It was a phone call.

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Q. Do you remember the gist of the phone call?

A. Michael had .... Frank had asked me that .... had I heard that Michael was going on tour.

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Q. And your response was?

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A. Naturally, yes.

Q. Okay.

A. And he said that Michael was looking to make a change in business managers and would I be interested in meeting with Michael for the purposes of representing him.

A. Barry Siegel.

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Q. Did you know Mr. Siegel?

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Q. And did he indicate to you who the business manager was that Michael wanted to segue from to a new one?

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A. I did.

Q. Had you worked with him before?

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A. I had.

Q. So what did you tell Mr. DiLeo what happened next with respect to Michael Jackson?

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A. I said to Frank that we would be very interested in working with Michael for his tour and that .... how can we best facilitate a transition.

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Q. And did you meet with Mr. DiLeo .... I'm sorry. Let me ask a different question first. Did you ultimately meet with Michael Jackson?

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A. I did.

Q. Between the first phone call and meeting with Michael Jackson, did you speak with Mr. DiLeo before your meeting with Mr. Jackson?

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A. I did.

Q. What was discussed, if you recall, with .... in regards to Michael Jackson?

A. How we can best facilitate a transfer from Barry to my office .... Barry Siegel to my office, what kind of records that we were .... motion records were available for us to take, if need be, and financial position of Michael at the time.

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Q. All right. And what .... can you tell us about the discussions in regards to Michael's financial position at the time you were contacted?

A. The initial inquiries were that, unbeknownst to the public, Michael was having significant financial problems.

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Q. Was there further explanation in significant financial problems in those first conversations.

A. Not in the first conversations, no.

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Q. How about in the subsequent conversations before you met with Mr. Jackson? Did you have additional discussions about Michael's financial situation?

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A. I had had many conversations with Frank DiLeo as ....

Q. Prior to meeting with Mr. Jackson.

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A. Prior to meeting with Mr. Jackson, yes.

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Q. Can you tell us, if possible in summary form, what those discussions involved?

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A. Well, it became quite apparent to me that Michael was in significant debt. The big ticket items, if you will, were that he was approximately $450 million in easily identifiable debt.

Q. Do you recall what the debts were that caused him to be $450 million in debt?

A. $318 million was pledged against Sony/ATV. These are approximate numbers.

A. That's ....

A. That's correct.

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Q. Okay. What else?

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Q. Mr. Jackson's interest in Sony/ATV?

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Q. Frankly, when you say pledged against Sony/ATV, do you mean his interest in Sony/ATV?

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A. $72 million he owed against MIJAC catalog, which is a publishing catalog for Michael's songs and various other songs Michael had acquired.

Q. Anything else besides the Sony/ATV and the MIJAC pledges that Mr. Jackson was in debt on?

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A. He owed .... I was understood at the time he owed AEG approximately $34 million more.

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Q. AEG, the ....

Q. .... company promoting and producing the This Is It tour?

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A. That's correct.

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A. The promoter.

Q. Any other debts that you can recall only at that time?

A. He owed approximately $30 million on the Neverland Valley Ranch home. And then he owed an additional $4 million on the Hayvenhurst Home in Encino for which ....

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Q. Hayvenhurst home, what was the significance of that?

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A. His mother and father were living there. Well, his mother was for sure. And he was .... I understood at the time he was two and a half months behind in his mortgage payments.

A. I did.

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Q. And with that background, did you have meeting .... a meeting scheduled with Mr. Jackson?

Q. Do you recall, again if not the exact date, at least a time of the scheduled first meeting?

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A. The .... he missed several meetings ....

Q. Stay with my question, though, if you could. Do you recall approximately when the first meeting was scheduled?

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A. Scheduled?

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Q. Do you recall approximately when the first meeting with Mr. Jackson was scheduled?

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A. Late April or early .... I'm sorry .... late May or early June of '09.

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Q. So between the time you talked to Mr. DiLeo and the time the first meeting with Mr. Jackson was scheduled, you just had discussions with Mr. DiLeo but had not met ....

Ms. Larson: Objection.

Mr. Weitzman: Q. .... Mr. Jackson ....

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Ms. Larson: Leading.

Mr. Weitzman:

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Q. .... correct?

Judge Holmes: Sustained. Rephrase that, Mr. Weltzman.

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Mr. Weitzman:

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Q. When did you .... did you continue to have discussions with Mr. DiLeo before your first meeting with Mr. Jackson?

A. I did.

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Q. Approximately how long was the period from when Mr. DiLeo first contacted you until you had the first meeting with Mr. Jackson?

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A. Approximately a month and a half.

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Q. Prior to the first meeting with Mr. Jackson, were there other meetings scheduled that didn't take place?

A. Yes.

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Q. Approximately how many meetings were scheduled that did not take place with Mr. Jackson?

A. Approximately three.

Q. Three?

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A. Three.

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Q. And where were these meetings that did not take place scheduled to occur?

A. The Great Western Forum.

A. I did.

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Q. And did you go to the forum in anticipation at each of those meetings?

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Q. Do you know why they were scheduled at the forum?

A. Michael was in rehearsal at the forum.

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Q. Rehearsals for the This Is It tour?

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A. That's correct.

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Q. So tell us what happened when you went down there for the first meeting. By the way, do you remember about when that first meeting was scheduled, approximately?

Q. And how did you learn that?

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A. It was shortly after April 15th because one of the other concerns that we had is that Michael hadn't filed personal tax returns and/or business tax returns for a number of years.

A. There was a .... we talked .... I talked to Barry Siegel.

Q. Okay. The prior business manager?

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A. The prior business manager.

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Q. Okay.

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A. So one of the issues, the timing of it was the April 15 deadline. I wanted to make sure that to the extent an extension needed to be filed or income taxes needed to be paid, that we get in front of Michael and make sure that he gets compliant with his taxes.

Q. So when you went to the forum for the first meeting with Mr. Jackson, at or around April 15, 2009, what happened?

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A. There was a lot of standing around and waiting because Michael didn't show.

Q. And what about the rehearsals?

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A. The backup singers and the dancers were rehearsing, but I was there primarily to meet .... I hadn't been retained yet, so I was there primarily to meet with Michael for purposes of being retained.

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Q. So is it your recollection of that experience that Mr. Jackson did not show up for your meeting and did not show up for the rehearsal?

Q. Do you recall ....

Ms. Larson: Objection. Leading.

Judge Holmes: Sustained.

Mr. Weitzman:

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A. That's correct.

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Q. When you went for the first meeting, did Mr. Jackson appear for his meeting with you?

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A. He did not.

A. No.

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Q. And did Michael Jackson appear any place at the forum even to the best of your knowledge?

Q. When do you recall the next meeting being scheduled?

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A. Approximately a week later.

Q. At the forum?

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A. It was again scheduled for the forum, correct.

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Q. And did you go to the forum in anticipation of the meeting?

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A. I did.

Q. What happened when you got to the forum?

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A. Once again, we stood around and waited for Michael to show, and Michael didn't show.

Q. Were the rehearsals scheduled that meeting .... that .... the rehearsals scheduled that evening?

A. That's correct.

A. He did not on that occasion, no.

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Q. And did Mr. Jackson appear for the rehearsals?

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Q. When was the third meeting scheduled for you to meet Mr. Jackson?

A. Approximately June 2nd, I believe.

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Q. And where did you go to meet with Mr. Jackson for that meeting?

A. Again, the Great Western Forum.

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Q. And did Mr. Jackson appear for that meeting?

A. He did not, no.

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Q. Was there a rehearsal scheduled that night?

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A. There was.

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Q. And did Mr. Jackson appear for the rehearsals to the best of your knowledge?

A. He did not.

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Q. What did you do next about trying to set up a meeting with Mr. Jackson?

A. From the Great .... Frank got in touch .... Frank DiLeo got in touch with Michael, who was at his home in Carolwood, which is in Holmby Hills. And they asked my .... we were advised that Michael was not going to come to rehearsals, but we were to go to Michael's house and meet with him.

Q. And what was the date again, if you recall?

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A. I believe it was June 2nd. It was the first two or three days of June, but I don't remember the exact date.

Q. And you had not been retained up until that date, correct?

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A. That's correct.

Q. And had you done some work in looking at Mr. Jackson's finances, or whatever you all were looking at, in anticipation ....

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Ms. Larson: Objection. Leading.

Judge Holmes: Sustained.

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Mr. Weitzman:

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Q. Did you review any information related to Mr. Jackson prior to you being retained?

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A. In the course of our anticipation of being retained, we started working with the people at AEG that were primarily responsible in handling the bills of the .... and the budgets of the tour .... the upcoming This Is It tour.

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Q. And what did you learn, if anything, about Mr. Jackson's financial stage .... state, sorry .... between the time you were first contacted and prior to your first meeting with him with respect to your looking at information from AEG?

A. The initial inclination I had was that Frank undersold how dire the financial situation was.

Q. Did you say undersold?

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Q. What do .... what does he mean?

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A. Undersold.

A. In other words, I think the financials were much more severe than Frank had led on to .... or was led to believe.

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Ms. Larson: Objection. Calls for speculation.

Judge Holmes: Overruled.

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Mr. Weitzman:

Q. What did you learn during that period that caused you to believe Frank DiLeo had undersold .... your phrase .... had undersold the financial situation?

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A. Well, we were .... Michael was approximately $34 million in debt to AEG for purposes of funding the tour. We were still three or four weeks away from leaving to go to London, and we still had to finance the rest of the tour. So in my mind, I was saying if you're $34 million in the whole in Los Angeles, you still have to ship your gear over to London, you still have to put up all the crew and housing, you still have payroll, you still have per diem, you still have to keep

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people in London for the better part of the summer. And it was quickly apparent to me that there was a runaway train with respect to budgets.

Q. To budgets?

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A. To budgets.

Q. Okay. Did you talk to anybody at AEG before you were retained by Mr. Jackson about the financial situation?

A. I did.

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A. Randy Phillips and Tim Leiweke.

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Q. Who did you talk to?

Q. We know who Mr. Phillips is. Who is the other gentleman?

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A. Tim Leiweke was essentially the tour accountant AEG had designated to work on Michael's tour.

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Q. On that June 2nd date you spoke to us about earlier, did you and Mr. DiLeo go to Mr. Jackson's house?

A. We did.

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Q. Did you have a meeting with Mr. Jackson?

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A. We did.

Q. Can you describe the meeting to us?

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A. Frank had said, Michael, I want you to meet Michael Kane, meaning Mr. Jackson to meet me. And he said this is the accountant that I have been talking to you about. And we were introduced and we said hello and ....

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Q. And did you talk .... do you recall what you talked about, what was said during the meeting?

A. It was the first time we had met him, so it was somewhat .... before we got down to business, it was kind of a get-to-know-each-other session. Are you married? Do you have kids? How old are your children? Just sort of social interaction.

Q. And did you discuss financial issues with Mr. Jackson that evening?

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A. At that point, no.

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Q. Did you give him any documents to sign, or was this merely an introductory meeting?

Q. Okay.

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A. Well, I had brought with me the engagement letter to retain my firm to represent him.

Mr. Weitzman: Can you put Exhibit 4 up on the screen? I mean 24-P. Sorry.

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Mr. Weitzman:

A. Oh, thank you.

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Q. Does that appear to be a copy of the engagement letter that you presented to Mr. Jackson - -

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A. It does.

Q. .... the day of your meeting?

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Q. And if you turn to what is numbered Page 6, please. You there?

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A. It does.

Q. Were you present when Mr. Jackson signed this document?

A. I was.

Q. I notice the date is 6/3/09. Is that your recollection of the date?

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A. That's correct.

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Q. And have you basically described, at least in summary form, the meeting you had with Mr. Jackson at the Carolwood house that evening?

A. I .... that's in summary, that's about

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Q. Okay. What did you do next with respect to your work with Michael Jackson .... that is, after the June 3rd meeting at Carolwood?

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A. Well, it became quickly apparent to us that once we .... Michael had retained us, we started letting everybody know we were the new business managers. And the increase in volume with respect to the bills that were coming into our office were extraordinary.

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Q. All right. Now, just slow down for a minute. What does that mean, and what happened? Kind of describe this.

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A. Well, up until that point, we had not had access to all of the financial information that the prior business managers had in their files. So once Michael retained us, we reached out to the prior business managers and asked for their books and records noting that we had just been

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retained. So as the information became available to us, it crystalized how much of dire financial circumstances he was in.

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Q. And did you prepare a cash flow after your .... that is a cash flow chart after you got the information from the prior business manager?

A. We .... it was an .... yes.

Q. Okay.

Mr. Weitzman: Could you put .... I'm done with that exhibit. Could you put Exhibit 27 before Mr. Kane, please?

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Mr. Weitzman:

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Q. Mr. Kane, do you recognize this document?

A. That appears to be the first cash flow that we prepared.

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Q. Could you explain to us what this document is and what the process was that allowed you to create the document?

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A. To the extent we had information that validated the cash in the bank, i.e., a bank statement or some other document that would allow us to reasonably rely on it, we used .... utilized that as the beginning balances. And then to the extent we had debt .... or bills, rather, that had come in from other people, we prepared this cash flow for the purposes of sitting down with Michael to say look, we're new on this scene. We don't know who these people are. We don't know who can approve the payment of this. So can I sit down with you? And you can tell me if these are valid debts, and should I pay them?

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Q. Okay. So if you look at the first page, there is a bunch of names starting with Janice Smith on the top and Jorge Gama on the bottom. Did you learn who those people are or what the entities are listed on this page?

Q. Okay. And the ending balance of $12,180, what did that signify?

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A. We did over the course of our representation, yes.

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A. That once we validated how much was the beginning balance, less the amount of checks we paid to the people that were authorized to be paid, that left Michael with $12,000 in the bank.

Q. As of June 5th, 2009?

A. Correct.

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Q. Now, can we go to Page 2, please, of that exhibit? You there? Yes?

A. Yeah.

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Q. So it says the beginning balance $12,180. And then next, it had Add Sony Music. What is that?

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A. We had .... there was a receipt of income from Sony for approximately $400,000.

Q. And then at the bottom of the page, there appears to be a total, of $203,483.10. What does that signify?

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A. That as of 6/8, meaning three days later, after the receipt of funds had come in and the payments had been made, there remained 203,000 left as of June 8th.

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Q. Turning to Page 3 because there's a one line on Page 3, what's that?

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A. That's just .... we couldn't fit it all on the same page. So that's just the available cash.

Q. So the available cash was 218,275.04 from the 421,758.14 as of June 8th, 2009?

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A. After the bills had been paid, correct. There was still a number of outstanding bills to be paid.

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Q. Turn to Page 4. And this cash flow chart on Page 4, what is that?

A. That's the next weekly cash flow. So if you see, the beginning balance coincides with the ending balance of the prior week. So this was an ongoing .... what Michael had asked me to do was give him weekly cash flows. So the goal was to sit down with him on a weekly basis to say this is how much we had the last time we met; these are the bills that have come in subsequent to our meeting; and who should we pay; and if so, how much.

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Q. And just to get through this exhibit, can you turn to Page 5 and tell us what that is?

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A. That signifies that the end of the .... that particular period ending June 17th of '09, the remaining cash balance had been reduced to $90,000.

Q. Could you .... did you also create a chart .... hang on a minute .... for payroll?

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A. We did.

Mr. Weitzman: Could you put Exhibit 28 on the screen?

Mr. Weitzman:

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Q. You have that before you?

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A. I do.

Q. What is the first page of Exhibit 8?

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A. We were ....

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Q. 28. Sorry.

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A. That's all right. We were trying to quantify for Michael how many people he had on his payroll and how much it was costing him to have these assistants and staff members around him. And one of the things we were trying to do was to see if we could .... any way we could reduce staff. So in order to do that, I wanted to quantify for Michael to say .... to put a name in front of a number to say is this person needed. If so, is there any way to reduce his salary? If he's not needed, can we get rid of him?

Q. And the five pages of this exhibit are that exercise .... that is, scheduling the payroll for all the recurring employees?

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A. That were not being paid by AEG, correct.

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Q. That were not being paid by AEG. Okay. Did you discuss these cash flows and payroll charts with Mr. Jackson?

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A. I did.

Q. And when did that conversation .... or when did those conversations take place?

A. Primarily on a weekly basis subsequent to his retaining us.

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Q. So how many meetings .... well, let me back up. You met with him. He signed your engagement letter June 3rd, correct?

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A. Correct.

Ms. Larson: Objection.

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Mr. Weitzman:

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Q. Did you have a meeting ....

Judge Holmes: Hold on, please.

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Ms. Larson: Asked and answered.

Judge Holmes: Overruled.

Mr. Weitzman:

Q. Did you have a meeting with him the following week?

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A. I believe it was the following. Correct. I mean, it would coincide with the end of those spreadsheets?

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Q. Yes.

A. So I believe it would be the following week. Correct.

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Q. And do you recall that meeting with Mr. Jackson and your informing him of the expenses he was incurring?

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Ms. Larson: Objection. Leading.

Judge Holmes: Sustained.

Mr. Weitzman:

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A. Well, it became ....

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Q. Time out.

Judge Holmes: Wait. Wait. He has to ask it in a slightly different way.

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Mr. Weitzman:

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A. Okay.

Q. I'm going to rephrase the question. What did you discuss with Mr. Jackson at your next meeting with him regarding payroll and expenses?

A. That my overall concern was that he was in a very precarious financial position. I was a little concerned at that point, the first meeting, that he was facing imminent bankruptcy, whether that be in the form of voluntary or involuntary.

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Q. And how did you arrive at that concern?

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A. Well, there was limited income coming in. There was an unquantifiable amount of tax liabilities due since he hadn't filed any tax returns. There was $450 million of debt that I could easily identify. And there was a series of vendors that were calling our office almost every five minutes asking for money. So we needed to get our arms wrapped around that .... quite ..... that debt yet, and he still had to fund the tour.

Q. And when you say he still had to fund the tour, what did that mean?

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A. Well, we were .... at that point in time, we were the Staples Center, so we were in downtown Los Angeles. We still had to get the entire crew over to London. We still had to get the stage over to London. We had to put up the crew in a hotel. We had to put Michael up and his staff in .... what he .... it was a castle that he was looking to rent. We had to pay the payroll. We had to pay the per diems. We had to pay their hotels. So all of those are going to be ongoing debts that we needed to earn a potential profit of the tour. My concern was that the tour might not have been profitable.

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Q. So who was supposed to pay those expenses as you got ready for the tour?

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A. AEG was funding them up until that point. AEG was primarily funding the production expenses related to the tour and some limited certain personal expenses like the chef they might have been willing to fund, like his rent they might have been willing to fund. But they weren't willing to fund all of his other personal expenses. So we were .... we needed money outside the scope of what AEG was willing to pay for.

Q. And was there any income that you saw coming in for Michael Jackson during that time period of June 2009?

A. No. I was unaware of any at that point other than the money we had just received from Sony.

Q. Did you discuss the lack of income with Mr. Jackson?

ae

A. I did.

ich

Q. Can you tell us about that conversation?

Ms. Larson: Objection. Calls for hearsay.

mM

Judge Holmes: Overruled tentatively. Let's listen to what's being said. Go ahead.

Mr. Weitzman:

Te a

A. It was quite a surprising conversation because I was laying out the facts that we had at that time, the mounting debt. And Michael was just not very recipient of it. He was very cavalier about it.

Q. What .... can you explain what you meant .... mean by that?

w.

A. I ....

ww

Q. I'm sorry. Are you referring to any response Mr. Jackson made to your ....

n.c om

A. I was totally panicked at that point.

lJa ck so

Ms. Larson: Objection. Calls for hearsay.

Judge Holmes: Overruled. So far we have just heard about Mr. Jackson's mental state. That's an important part here. Go ahead.

Mr. Weitzman:

ae

A. I mean, I was in complete panic mode at that point because the debts were just succeeding anything that I could see how to pay. And when I brought it to Michael's attention, I thought I would get his attention and say, okay, we need to revisit this, we need to cut back. And it just didn't seem to alarm Michael that the debts were just going far above any income streams that I could identify.

ich

Q. Did you speak to Mr. Jackson about income tax issues?

A. I did.

mM

Q. What was that conversation?

Te a

A. I alerted him to the fact that he hadn't filed income in some cases three years, and other cases two years. And that did seem to get his attention. He did not want to be in a position where he was delinquent with the IRS.

Q. And what did you suggest to him you would do with respect to the income tax issues?

ww

w.

A. Well, the course of action that was suggested was we contact the .... that we had gotten some notices from the IRS indicating outstanding tax returns. So we had asked Michael to sign a power of attorney to our firm so we could have our tax department reach out to the IRS and come up with a plan for both the preparation of the tax return, perhaps gaining an extension of time before there was any public filings like a lien or a notice of levy. So we needed Michael to sign a power of attorney.

n.c om

Q. And you mentioned earlier with regard to Hayvenhurst that there was an issue. What was that issue again?

Q. And did you have a concern about that for - -

ae

A. I .... oh, I'm sorry.

lJa ck so

A. He was approximately three months behind in the mortgage. So if you can take a step back in time to 2009, you may recall that this was in an immediate aftermath of the financial meltdown and the real estate meltdown. So the banks were not in a very forgiving position at that point in time. So we had received three notices indicating that he hadn't paid his mortgage in three months.

Q. What was your concern?

ich

A. I felt that the .... it was about to be foreclosed upon.

mM

Q. And what did you think the income was .... the impact would be on Mr. Jackson?

Te a

A. Well, the concern I had at that point was we wanted his tour to be about Michael and about Michael's music. What we were trying to .... what I was trying to avoid, anyway, was having the tour get misdirected by any public filings or potentially a tax lien or voluntary or involuntary bankruptcy filing.

Q. Okay. Referring you now to Exhibit 33, please, what is that document?

w.

A. That's the bill we received on a monthly basis from IndyMac, which is Michael's mortgage statement.

ww

Q. And the monthly payment on the mortgage is reflected on that document?

n.c om

A. Correct.

Q. And how much was it?

lJa ck so

A. $31,512.65, assuming it was timely paid. But since he was delinquent, there was accrued penalties and interest which brought the total to the next line of 33,088.

Q. And in June 2009, how many months was the payment in arrears?

A. Three.

ae

Q. So what .... so the bank was approximately how much?

A. Approximately $100,000.

ich

Q. And you explained that to Mr. Jackson as well?

mM

A. I did.

Q. You know Mr. Branca, correct?

Te a

A. I do.

Q. Do you recall when he was retained again to represent Mr. Jackson?

w.

A. Middle of June of '09.

Q. And were you present when that took place?

ww

A. I was.

lJa ck so

A. I did.

n.c om

Q. Did you have a meeting with Mr. Jackson on that date as well?

Q. Did you .... were you in the meeting with Mr. Jackson and Mr. Branca for any period of time?

A. I was.

Q. And what did you do in that meeting?

ich

ae

A. Again, going back to the .... one of the biggest concerns I had was the tax returns being unfiled and the need to reach out to the IRS. I had with me, for the purpose of the meeting with Mr. Jackson that day, the IRS power of attorney we were seeking Michael to sign and give us authorization to deal with the IRS.

A. I did.

mM

Q. So did you go into the meeting with Mr. Jackson and Mr. Branca for a period of time to have that power of attorney signed?

Te a

Q. And were you there when Mr. Branca .... when the meeting between Mr. Branca and Mr. Jackson ended?

A. I was.

w.

Q. And anything that you thought, maybe not unusual, that you noticed when the meeting ended?

ww

A. They had a pretty big hug and embrace.

Q. Okay.

A. .... again.

Ms. Larson: Objection. Calls for hearsay.

ae

Judge Holmes: No. Overruled.

lJa ck so

A. He's looking forward to working with him ....

n.c om

Q. Okay. And did you recall if Mr. Jackson said anything to Mr. Branca?

Mr. Weitzman:

ich

Q. And were there others that were in and out of that meeting besides you?

A. Randy Phillips and Frank DiLeo.

mM

Q. Okay. And that meeting was what date?

A. I believe it was June 15th. It was approximately in the middle of June of '09.

Te a

Q. Okay.

A. Could be off a day or two on that meeting.

w.

Q. Had you met Mr. Branca before that meeting?

ww

A. I had not, no.

A. Probably two or three days later.

n.c om

Q. Okay. So you all left. When did you next see Michael?

lJa ck so

Q. Now, at about that time period .... that is, the .... after your meeting with Mr. Jackson initially at Carolwood and the time you were there when the power of attorney was signed, did you have any discussion with Mr. Jackson about Tohme Tohme, if you recall?

A. I don't recall if it was prior to that period, prior to Mr. Branca being retained, though.

Q. All right.

ich

ae

A. But in the context of the conversation I was having with Michael, we were aware that there were some funds that Tohme had signature authority over and we were trying to get turned over to us.

Q. All right. I'm sorry. When you .... had you had a discussion with Mr. Jackson about money that you'd been informed Tohme had not turned over to you?

mM

Ms. Larson: Objection. Hearsay.

Judge Holmes: You can say whether you had the conversation. Did you have that conversation?

Te a

A. I did, yes.

Mr. Weitzman:

w.

Q. Can you tell us about the conversation?

ww

A. Well, we were desperately seeking money. So I was trying whatever I could do to get money from any source of stream, whether it be a loan or an advance or money that somebody else had access to. So one avenue I approached Michael to is I said you authorizing me to go to AEG and ask for an advance, to which he said yes. And in that same meeting, I said to him I'm under the

n.c om

understanding that Tohme, your former manager, has an access to bank accounts that may or may not have money in it. So are you okay with me going to Tohme to ask for that money?

A. Please do.

lJa ck so

Q. And he said?

Judge Holmes: It's not leading.

Ms. Larson: Hearsay.

Mr. Weitzman:

ich

Judge Holmes: But overruled.

ae

Ms. Larson: Objection. Leading. Hearsay. Excuse me.

mM

Q. Had you had a conversation with Mr. Jackson about his former manager before the conversation you just relayed to us regarding going to AEG for an advance and asking Tohme if there was money that ....

Ms. Larson: Objection. Leading.

Te a

Judge Holmes: Let him finish. Go ahead, Mr. Weltzman.

Mr. Weitzman: Thank you

w.

Judge Holmes: Did you have a conversation with Mr. Tohme .... about Mr. Tohme with Mr. Jackson before that, if you just pull the ....

ww

A. Yes, I'm trying to quantify the .... before what period of time?

n.c om

Mr. Weitzman:

Q. Before the meeting you relayed to us regarding going to AEG about advancing more money and contacting Mr. Tohme.

lJa ck so

A. If I recall correctly, they were the same meeting. It was all about how catastrophic the financial situation was. So any time we got in front of Michael, I tried to maximize my time with him.

Q. And did you have discussion with Mr. Jackson in that meeting .... your description, the same meeting .... about Tohme other than the financial issues?

A. I don't recall specifically what else came up at that meeting other than that.

Judge Holmes: Overruled.

mM

Mr. Weitzman:

ich

Ms. Larson: Objection. Leading.

ae

Q. You called Mr. Tohme a former manager. How did you know he was the former manager?

A. Michael had told me that Frank DiLeo was representing him. And in the context of the meetings I had with Michael, we constantly referred to Tohme as his former manager.

Te a

Q. What did you do next with respect to attempting to get money for Michael?

w.

A. We arranged a meeting with Tohme, me, Michael, Randy Phillips, and Frank DiLeo to meet with Michael Jackson at .... by this point in time, we were down at the Staples Center. This was approximately June 20th. So we organized a meeting for all of us for the express purpose of Michael conveying to Tohme that he should turn over the money to our control.

ww

Q. Did you have that meeting?

Q. And who was present at the meeting?

lJa ck so

A. Myself, Randy Phillips, Frank DiLeo, Tohme, and Mr. Jackson.

n.c om

A. We did have that meeting.

Q. Can you tell us about the meeting? I'm sorry. Let me stop you for a minute. Before the meeting, where you all were in a room together, did you ever have a conversation with Mr. Tohme?

A. I did.

ae

Q. Where did that conversation take place?

Q. Or how did it take place?

ich

A. Outside of ....

mM

A. It took place outside of Michael's dressing room at the Staples Center.

Q. Was that the first time you had spoken to him?

Te a

A. Correct.

Q. And that was prior to the meeting that you told us took place with you and Mr. Phillips and Mr. DiLeo, Mr. Tohme, and Michael Jackson?

w.

A. It was subsequent to that meeting. Oh, wait, wait. With Mr. Jackson?

ww

Q. I'm sorry. My fault. I'm going too fast. Let me just slow down. Before you had the meeting with all of you in Michael's dressing room with the form ....

lJa ck so

Q. .... did you have a conversation with Mr. Tohme?

n.c om

A. Mm-hmm.

A. Yeah, outside of Michael's dressing room while we were waiting for Michael, yes.

Q. Tell us about that conversation.

ae

A. Well, I was concerned about getting .... I hate to harp on the point, but I was so utterly concerned about the finances. I was at least trying to get my head wrapped around what, if anything, Tohme had access to and how much we can expect. And he refused to answer my questions. So entering into the room at the meeting with Michael, I didn't know if we were talking about $50, $5 million, $10 million. He just refused to answer the question.

ich

Q. And when you say refused to answer the question, I'm not sure I understand. What do you mean?

mM

A. I was pretty direct in saying I need the money. Michael's going to tell you to turn it over to us. How much .... first of all, what banks are we dealing with?

Q. Did he tell you what banks?

Te a

A. He .... no, he did not.

Q. What else did you ask for?

w.

A. How much money was in the bank accounts that he had access to.

ww

Q. And did he tell you how much ....

n.c om

Ms. Larson: Objection. Calls for hearsay.

Judge Holmes: I'll hear the answer. Go ahead.

lJa ck so

Mr. Weitzman: Q. Did he tell you how much money was in the accounts?

A. No, he did not.

Judge Holmes: Not hearsay. Objection overruled.

Mr. Weitzman:

ae

Q. What else did you discuss with Mr. Tohme before you went into the meeting?

ich

A. That Michael was behind in his rehearsal schedule. We'd like to make the meeting rather quickly, so let's just stick to the events .... I mean the agenda that was on a list, which was primarily for Michael to authorize Tohme to turn the money over to our control.

mM

Q. And then what happened next?

A. Once we got in the room, Tohme presented Michael with an offer to buy a house in Las Vegas in the $30-to-$40 million range.

Te a

Q. I'm sorry. This is a meeting (inaudible) meeting with you, Mr. Jackson, Mr. Tohme, Mr. Phillips, and Mr. DiLeo?

w.

A. Correct.

ww

Q. Well, could you describe to us what happened? Or are you telling us that was the first thing that happened when you went in the meeting?

n.c om

A. Basically, hello, how are you. I haven't seen you in a long time. Good to see you again. As we settled in to get down to business, Tohme said to Michael I really never tried to stop working for you. I still want to ....

Judge Holmes: That one is. That's sustained.

Mr. Weitzman: Q. What took place in the meeting?

lJa ck so

Ms. Larson: Objection. Hearsay.

A. He presented Michael with a purchase contract to buy a house in Las Vegas.

ich

ae

Q. And what did you say when he presented Michael with a contract to purchase a house in Las Vegas?

Q. Yes.

mM

A. Well, if I can go back to the prior meeting with Mr. Branca, one of the points that we left out of that conversation was when I presented Michael the power of attorney to sign ....

Te a

A. .... he slid the power of attorney over to John Branca and said to me at the time I don't sign anything until John Branca says it's okay. So John reviewed the ....

Ms. Larson: Objection. Hearsay.

w.

Judge Holmes: Sustained.

Ms. Larson: I move to strike.

ww

Mr. Weitzman: And ....

n.c om

Judge Holmes: Yes, that's granted as well.

Mr. Weitzman:

A. He slid it to John Branca.

lJa ck so

Q. Just going back to that meeting, when you gave Mr. Jackson the power of attorney, what did he do with it?

Q. And what did you see Mr. Branca do with respect to power of attorney?

ae

A. Well, he asked me what it was about.

Q. And did you tell him?

mM

ich

A. I did. I explained to him .... at that point, I explained to him that he hadn't filed tax returns. And the only way we were going to be able to file a tax return, to reach out to the IRS, was if we had authorization via power of attorney.

Q. Okay. And what did Mr. Branca do in regards to the power of attorney after you explained to him what it was about?

Te a

A. He reviewed it and gave it to Michael and said I think you should sign it and get your taxes filed.

Q. And Michael .... did Michael sign it?

w.

A. He did.

ww

Q. Fast-forwarding now to June 20th, when Mr. Tohme handed whatever it was, a contract or purchase agreement for a house, what did you say with respect to that document?

n.c om

A. I said this is nothing. I haven't seen this document whatsoever. Michael, as you remember, you told me you don't sign anything unless John Branca says it's okay. And since John's not here, I think we should schedule this conversation for another time.

lJa ck so

Q. And what did ....

A. It was completely out of left field. We weren't expecting that.

Q. And your .... did you discuss .... don't even - - just yes or no, but it's not reading ....., I don't think. I'll find out. Did you discuss that document with anybody at the meeting?

ae

A. No.

ich

Q. Okay. And was that the end of any reference to that document?

A. Yes.

mM

Q. What took place at the meeting next?

A. Michael then said to Tohme that he needed his cooperation ....

Te a

Ms. Larson: Objection. Hearsay.

Judge Holmes: Why are you soliciting this?

w.

Mr. Weitzman: Well, because it deals with getting money returned or not returned from the bank account. I think it goes to Mr. Jackson's state of mind, I think.

ww

Judge Holmes: Okay. All right. Objection overruled. You can answer, Mr. ....

n.c om

A. Michael requested that Tohme be cooperative with me in terms of releasing the funds over to our control so we could pay Michael's bills.

Mr. Weitzman:

lJa ck so

Q. Okay. Was there any other discussion about Mr. Tohme turning money over to a business manager?

A. We had agreed the next morning I was going to call him and we were going to meet for breakfast and go over the steps in terms of .... because he still wouldn't tell me what bank it was. So I needed to organize signature cards.

Q. So was that basically the end of that meeting?

ae

A. That's correct.

ich

Q. And what happened next with respect to Mr. Tohme?

mM

A. I called him approximately four times the next morning between 7:00 a.m. and 9:00 a.m., and he didn't take my phone calls.

Q. What happened next with respect to Mr. Tohme?

Te a

A. I reached out to Randy Phillips, who I understood had his number as well, and said to .... explained Randy the situation that I reached out to Tohme on four occasions. He didn't take my call. And if you don't mind, can you call him and see if we can organize a lunch meeting or something? But I needed .... we needed to get access to that money.

w.

Q. Did you get .... ever get access to money prior to Mr. .... from Mr. Tohme ....

Ms. Larson: Objection. Leading.

ww

Judge Holmes: Overruled.

n.c om

Mr. Weitzman:

Q. Did you ever get access to the money from Mr. Tohme prior to Mr. Jackson's death?

lJa ck so

A. No.

Q. Did you have any conversations with Mr. DiLeo regarding other projects that Michael Jackson was involved in?

A. Well, when I first came on the scene and I realized how dire the consequences were in terms of finances, I had asked him if there was any sponsorship deals, if there was any merchandising deals. And he said given where Michael was in his career ....

ae

Ms. Larson: Objection. Calls for hearsay.

mM

Mr. Weitzman: True.

ich

Judge Holmes: That part you shouldn't .... you should stick to what you said, in other words, or what you perceived.

Mr. Weitzman:

A. There were no sponsorship or merchandising deals in place.

Te a

Q. And did you become aware from any source whether or not Michael Jackson had .... other than the 02 tour, other irons in the fire, so speak?

w.

A. I was unaware of ....

ww

Ms. Larson: Objection. Leading.

n.c om

Judge Holmes: Overruled. You can answer, in other words. Were there other money-making projects ....

Mr. Weitzman:

lJa ck so

A. I was unaware of any revenue streams or irons in the fire at that point.

Q. What was your understanding of the reason that there was no tour sponsor?

Ms. Larson: Objection. Calls for speculation.

Judge Holmes: Lay a foundation for his competence to answer that question, Mr. Weltzman.

ae

Mr. Weitzman: All right.

Mr. Weitzman:

ich

Q. Over the years, you acted as different performers' business managers. Were you involved with the scheduling of or the planning of tours .... that is, performances out on the road?

mM

A. I was involved in tours, yes.

Q. Okay. And were you involved with tour sponsors?

Te a

A. To the extent that somebody required it .... in other words, a lawyer in Asia ..... went out and procured the sponsor? Yeah. Yes.

w.

Q. Well, did you not deal with tour sponsor, but you .... did you deal with the after-effects of tour sponsorship?

ww

A. Correct. Yes.

n.c om

Q. And what was your experience with respect to artists having tour sponsors when they went out on the tour?

Q. Okay. And what was the purpose?

A. Revenue.

lJa ck so

A. High-profile artists tend to have sponsors attached to their tours.

Q. Did you have an understanding why Michael Jackson did not have a tour sponsor for ....

Mr. Weitzman:

ich

Judge Holmes: Overruled now

ae

Ms. Larson: Objection. Calls for speculation.

mM

Q. Did you have an understanding why Michael Jackson did not have a tour sponsor for the This Is It tour ....

A. I mean, there appeared to be reluctance in the commercial industry to identify their product of Michael, given his problems .... high-profile problems.

Te a

Q. And when you say problems, what is it you are referring to?

A. The highly publicized trial and .... where his child molestation allegations.

w.

Q. Did you speak with AEG before Michael passed away about gaining some advance?

ww

A. I did.

Q. Okay. And who's Mr. Leiweke?

A. He was at the time ....

lJa ck so

A. A combination of Shawn Trell and Randy Phillips, Tim Leiweke.

n.c om

Q. Who'd you speak with?

Q. Or who was he in 2009? I know who he is ....

ae

A. At the time, he was the CEO of the company.

A. General counsel.

ich

Q. And Mr. Trell, what was his position at AEG in 2009?

mM

Q. And what was the response from Mr. Leiweke, Mr. Trell, and Mr. Phillips about AEG making further advances?

Te a

A. They were reluctant at that point in time to make any further advances, given Michael's condition.

Q. And what significance did that have to you, as the business manager, that AEG wasn't willing to provide any more advances to Mr. Jackson?

w.

A. Well, business managers are always looking ....

ww

Ms. Larson: Objection. Calls for speculation.

Mr. Weitzman:

A. I want to make sure my clients stay solvent.

lJa ck so

Q. As a business manager, what is the primary function of that position?

n.c om

Judge Holmes: Establish a foundation again, Mr. Weltman.

Q. I actually don't know what that means. What does it mean?

A. I want to make sure their financial capabilities. So in other words, in this particular ....

ae

Q. Can I ask you a question? Are you talking about the ability to pay bills?

ich

A. Correct.

Q. Did you have that concern in regards to Mr. Jackson?

mM

A. Very much so.

Q. So tell us what the concern was in mid-June 2009.

Te a

A. Well, going back to that AEG was willing to finance certain aspects of the tour, I .... I'm .... everybody at AEG was focused myopically on just the tour itself. I was more looking at Michael Jackson taken as a whole. So the tour being one component of Michael's life, there were other components of Michael's life that AEG had nothing to do with like, by way of example, the Hayvenhurst house.

w.

Q. So by the way ....

ww

A. Some ....

n.c om

Q. .... when you say myopically, you're not criticizing AEG for that position, right?

A. No. I'm just saying they're .... I'm certainly not criticizing. I'm just saying their role was limited to the extent they were involved in the tour. That was their role.

lJa ck so

Q. Okay. So what did you do in terms of trying to get money to pay Mr. Jackson's bills during that time period?

A. I felt if I could get about $1 million from AEG, I could reach out to all other creditors and start making .... pay the payment .... partial payments or making payment arrangements. And by having $1 million in a bank account, it would give us credibility to get us on to tour where Michael could start earning some money.

ae

Q. And was that the request that you made of AEG?

ich

A. That's the correct.

Q. And their response was what?

mM

A. Many .... I mean, I asked many, many times, and the response came down. Randy initially said no. Many .... we were concerned about Michael's health. And so he wouldn't give us any money based on that excuse. And then he said ....

Te a

Ms. Larson: Objection. Hearsay.

Judge Holmes: Sustained.

Mr. Weitzman:

w.

A. Then he said I had to make my request ....

ww

Q. No, no, no, no, no.

n.c om

Judge Holmes: Still sustained.

lJa ck so

A. Oh, I'm sorry.

Mr. Weitzman: Sustained means don't say anything else.

Judge Holmes: About what other people told you.

A. Sorry.

ae

Judge Holmes: And the answers are stricken, Ms. Larson.

Judge Holmes: Sure.

ich

Mr. Weitzman: Did .... could I just have a moment to read something, Your Honor ....

mM

Mr. Weitzman: .... which is an exhibit I want to cut down if I can?

Mr. Weitzman: So Your Honor, I would like for the witness .... I think it's 650, Page 0037. And that's next in order. I think it's 650.

Te a

Court Clerk: Exhibit 650-P is marked for identification.

Mr. Weitzman: The sentence that says there .... "This is why it is impossible."

w.

Mr. Weitzman:

Q. Mr. Kane, taking a look at Exhibit 650 ....

ww

Ms. Larson: Objection. Hearsay.

Mr. Weitzman:

lJa ck so

Q. Do you recall receiving this email?

n.c om

Judge Holmes: Let him ask a question first, Ms. Larson.

A. I do.

Q. What is it?

A. It's a rejection of my request for more money.

ae

Q. So looking at the first full email at the top of the page from Randy Phillips to Michael Kane - - and the timestamp is 6:55 a.m. .... do you recall getting that email?

ich

A. I do.

mM

Q. And the email reads, "This is why it is impossible to advance any money. He may, unfortunately, be in anticipatory breach" ....

Ms. Larson: Objection.

Te a

Mr. Weitzman:

Q. .... "at this point."

w.

Ms. Larson: Hearsay.

Mr. Weitzman:

ww

Q. Do you recall ....

n.c om

Judge Holmes: That one's sustained. Let's see why .... why are you trying to get this admitted? To show that the advance request was denied?

Mr. Weitzman: Yes, and that ....

lJa ck so

Judge Holmes: Okay.

Mr. Weitzman: .... there was a thought by AEG that Mr. Jackson might be in anticipatory breach of his agreement with them.

Judge Holmes: Okay. I'll let you explore it a little. But obviously, be careful with the form.

ae

Mr. Weitzman: Yes, Your Honor.

ich

Mr. Weitzman:

A. I did.

mM

Q. Yes, Your Honor. Did you have a conversation with Mr. Phillips about anticipatory breach?

Q. And tell us about that conversation.

Te a

A. Well, again, I was just, as he said, badgering him for more money.

Ms. Larson: Objection. Calls for hearsay.

w.

Judge Holmes: I'll listen carefully, Ms. Larson. Not yet.

Mr. Weitzman:

ww

Q. Yeah. Tell us about the conversation, not the editorial.

n.c om

A. I was in desperate need for money.

lJa ck so

Q. Okay.

A. And I was requesting Randy on many occasions for $1 million. And given that Michael had frequently missed rehearsals and his health was deteriorating, issues that we were aware of that the public was unaware of, Randy expressed reluctance to advance any further funds because it didn't seem clear to any of us that Michael was going to do all 50 shows.

Q. After that email exchange, did you receive any more income between June 20th and the day Michael died?

ae

A. No.

ich

Q. And what did you do with respect to the outstanding creditors and bills between the day you got this email and the day Michael died?

mM

A. Essentially, well, we reached out to all of the creditors and came up with a story along the lines of Michael's in the process of switching business managers, so please bear with us while we gain access to all the documents, allow us time to work on a payment plan.

Q. Did you see Michael Jackson after your meeting on June 20th?

Te a

A. I did.

Q. When did you next see him?

w.

A. June 24th.

ww

Q. And where did you see him?

lJa ck so

Q. And why were you at the Staples Center and not at the forum?

n.c om

A. At Staples Center.

A. Michael had moved rehearsal places from the Great Western Forum to Staples Center.

Q. And did you have any discussion with Mr. Jackson about his financial situation when you met with him on June 24th?

A. I did. It was a very brief conversation, but yes.

ae

Q. And could you tell us about that conversation?

ich

A. That I hadn't received any money from Tohme, AEG, and ....

Ms. Larson: Objection. Calls for hearsay.

mM

Judge Holmes: Overruled. Talk about your own side of the conversation, Mr. Kane.

Mr. Weitzman:

Te a

Q. Tell us what you told Michael Jackson on June 24th ....

A. That AEG ....

w.

Q. .... when you met with him.

ww

A. That Tohme had not released the funds to us and that AEG declined our request for an advance .... a further advance.

n.c om

Q. Okay. And did you have any further conversation regarding finances with Mr. Jackson that evening?

A. No.

A. He died the next morning.

lJa ck so

Q. Did you see Michael Jackson again after that evening?

Q. So as of June 25th, 2009, were you aware of any additional projects that Michael Jackson had ....

ae

Ms. Larson: Objection. Asked and answered.

Mr. Weitzman:

ich

Judge Holmes: Overruled.

mM

Q. .... had waiting for him to be involved in other than the tour?

A. Certainly none that I was aware of, no.

Te a

Q. After Michael died, was there any cash available to be used for paying creditors?

A. Little, if any.

w.

Q. And when you say little, if any, could you define for us ....

ww

A. We had received $100,000 to .... for the extent purpose .... the express purpose of paying down Hayvenhurst debt, or at least catching the Hayvenhurst bills up so Ms. Jackson wasn't forced to leave her house.

n.c om

Q. And where did the $100,000 come from?

A. Tohme.

lJa ck so

Ms. Larson: Objection. Lack of personal knowledge and lack of foundation.

Judge Holmes: See what you can do with that, Mr. Weltzman.

Mr. Weitzman: I will, Your Honor.

Mr. Weitzman:

ae

Q. How were you aware where that money came from?

ich

A. I requested it from Tohme, and then it was routed to our bank. I gave him banking instructions. It arrived the next morning.

Judge Holmes: Objection overruled.

mM

Mr. Weitzman:

Q. Did you have discussions with Tohme after Michael passed away about money?

Te a

A. Correct.

Q. When's the next conversation .... well, let me back up. You had a conversation with Tohme about the $100,000?

w.

A. Correct.

ww

Q. And when was the next conversation you had with Tohme about money?

Q. And was that on the telephone?

lJa ck so

A. It was in John Branca .... I believe it was in John Branca's office.

n.c om

A. It was approximately seven or eight days after Michael passed.

Q. Okay. And what did you say to Tohme on that date about money?

ae

A. There were a lot of lawyers at that point in the room. But my conversation was limited to we understand there was some money and it was transferred from .... that we were able to identify the bank account because we had receipt of the 100,000. So at that point, we said we understand at least there's some money in this bank account, so can you please let us know how much is in the rest of the account.

ich

Q. And who was at that meeting, if you recall?

A. I believe it was John Branca, Joel Katz, I believe Vince Chieffo. And I'm not sure if you were there or not, Howard. But

mM

Q. Well, I'm not going to get personally offended if you forgot. That's okay.

A. It was a long time ago.

Te a

Q. From .... and was there any money turned over after that meeting?

A. Not at that point, no.

w.

Q. When was your next conversation with Tohme, if any, after that meeting?

ww

A. At that point, it was turned over to counsel, and I was removed from the equation.

n.c om

Q. And ultimately, did money arrive in the estate's bank account from Tohme?

A. It did.

lJa ck so

Q. And approximately, when did that money arrive?

A. About three weeks after Michael passed, so sometime mid-July ....

Q. How much money was that?

A. Just over $5 million.

ae

Q. After Michael died, was Crowe retained by the estate .... Crowe Horwath?

Q. And for what purpose?

ich

A. It was, yes.

Te a

mM

A. A combination of reasons .... mostly, the preparation of the estate tax return. There was a fair amount of forensic work that needed to be recreated because, again, there was no tax returns filed for a period of years. There was no contemporaneous books and records that we could rely upon. So there was a fair amount of forensic work. There was also the income tax returns that, once we had the information available, we ultimately had to file the income tax returns for Michael as an individual and all those various entities that hadn't filed tax returns. And then ....

Q. And so ....

w.

A. Oh, sorry.

ww

Q. .... post .... I'm sorry. Go ahead.

Q. And after Michael's death, who prepared past-due income tax returns?

n.c om

A. And I an ongoing business manager.

Q. I didn't mean the person. What company?

A. Oh, Crowe Horwath.

lJa ck so

A. Our individual income tax department was headed by Jim Roberts. So he ....

Q. And the individual that led that task was who?

ich

ae

A. Well, there were .... we tried to put together a team of experts. So essentially, what we did was we identified what returns that we knew were missing. So for example, if we had an S corporation return that was outstanding, we would give that to our S corp. tax department. If we had a 1040 that was outstanding, we relied upon the guys in the individual tax department; if we had a partnership return, on down the line. So whatever entity was needed to be prepared, we gave it to the department that was responsible for preparing those returns.

A. We did.

mM

Q. So in effect, did you put together a forensic team?

Te a

Q. And do you recall some of the tasks the forensic team undertook?

w.

A. Forensic accounting is sort of a strange breed. And essentially, what it does is it's diagnosing problems based on information they have. So ....

Q. So for example, did the team contact prior business manager?

ww

A. They did.

lJa ck so

A. To the extent information was available, we gathered it.

n.c om

Q. And did it gather whatever financial information it could find?

Q. And did the forensic team also include individuals who were working on the estate tax return?

Ms. Larson: Objection. Leading.

Judge Holmes: Sustained.

ae

Mr. Weitzman:

Q. Was the forensic team working on a tax .... estate tax return?

mM

ich

A. Well, it was a very collaborative effort. So each piece overlaps. So essentially, if we needed a piece of information from the guys that were preparing a state tax return, they would tell us what piece of information they needed. And depending on what that information was, it would either go to the forensic team, the business management team. So it .... there's a lot of moving parts associated with recreating motion records that were missing for two or three years. So it was led by the forensic team, yes.

Te a

Q. And in regards to the estate tax return, was it the same team that was working on the recreation process or an additional group of individuals?

A. A completely separate group of individuals.

w.

Q. And where were those individuals located?

ww

A. South Bend, Indiana office.

n.c om

Q. Did you work with them at all?

A. On the preparation and return?

lJa ck so

Q. Yes.

A. Yes.

Q. And what did you do with respect to the preparation of the estate tax return?

mM

ich

ae

A. Essentially, I was very responsive to their needs. So if they told me .... it was a very building- block approach with respect to the compilation of the information necessary to prepare the 706. So the easy items to take off is we knew we would need an appraiser for MIJAC. So we organized an appraiser for MIJAC. We knew we would need an appraiser for Sony/ATV. So we organized an appraiser for Sony/ATV. There was a significant amount of tangible personal property that we were going to have to first secure, find out where they all were, all of the storage units that they were in. Then we were going to have come up with a game plan to inventory it, photograph it, catalog it, and value it. We had to insure it. Then so those are the .... you know, that was as very complicated process and a very time- consuming, expensive process. So depending on which area of the estate tax return we're talking about, it was always headed by our estate tax department, but they would reach out to other individuals in the firm and say we need this piece of information that you might be more easily able to access.

Q. And who .... was there some individual that led that effort in South Bend?

Te a

A. Partner in charge of the estate division was named Marvin Hills.

Q. Did you have any participation in identifying appraisers?

w.

A. Yeah, I did.

ww

Q. And did you talk with any of the lawyers regarding your suggestion or input as to appraisers?

n.c om

A. I did.

lJa ck so

Q. And do you recall who you dealt with?

A. Primarily, Paul Hoffman.

Q. And did you speak with Mr. Branca at all about appraisers?

A. I did.

Mr. Weitzman: Q. .... approved the hiring?

ich

Ms. Larson: Objection. Leading.

ae

Q. And did .... who ultimately signed off on the appraisers .... by signed off, meaning ....

mM

Mr. Weitzman: I'm sorry. Go ahead.

Judge Holmes: No, that's overruled.

Te a

Mr. Weitzman: Okay.

Judge Holmes: Who signed it?

w.

A. John Branca.

ww

Mr. Weitzman: Q. Did you leave Crowe Horwath at some point after Michael died?

n.c om

A. I did.

lJa ck so

Q. And what company are you with now?

A. Miller Kaplan Arase.

Q. Was that the company you went to after you left Crowe?

A. That's correct.

ae

Q. Okay. Did the client .... that is, the estate of Michael Jackson .... move with you from Crowe to Miller Kaplan?

ich

A. They did, yes.

Q. But the .... did the income tax return work and the estate tax work stay with Crowe?

Q. Okay.

mM

A. It came with me to Miller Kaplan.

Te a

Mr. Weitzman: May I have a moment?

Judge Holmes: Certainly.

w.

Mr. Weitzman:

ww

Q. Did you discuss the name and likeness appraisal that was on .... for .... that was going to go on to the estate tax return with Mr. Branca?

n.c om

A. I did.

Q. And do you recall that discussion?

lJa ck so

A. Well, it was a series of discussions, most notably. John was very concerned that we had the proper experts ....

Ms. Larson: Objection.

A. .... appraising ....

ae

Ms. Larson: Hearsay.

Mr. Weitzman:

ich

Judge Holmes: Oh, that one is objectionable. Sustained. Don't tell us about what Mr. Branca said.

A. We did.

mM

Q. Did you have conversations with Mr. Branca about the number or name of the appraiser .... the valuation for name and likeness that was going to go on the state tax return ....

Te a

Q. .... estate tax return.

A. I did have a conversation with John.

w.

Q. And what did you say, if you can recall, about the name and likeness?

ww

A. That the expert followed the IRS-recognized formulas and ....

n.c om

Ms. Larson: Objection. Hearsay.

Mr. Weitzman: Well, no, I'm asking ....

lJa ck so

Judge Holmes: Overruled.

Mr. Weitzman: .... for what he said.

Judge Holmes: Overruled. You win that one, Mr. Weltzman.

Mr. Weitzman:

ich

Q. What did you say to Mr. Branca?

ae

Mr. Weitzman: Thank you, Your Honor. I'm .... you're not keeping score? (Laughter.)

mM

A. I explained to John that the recommendation to retain Moss Adams was because of their expertise in the industry, they're a globally recognized firm that has substantial experience in the music industry and that the formula that they relied upon was accepted methodology for purposes of coming .... arriving at a number and that I fully supported the number.

Q. And was that your response to a concern expressed to you by Mr. Branca?

Te a

A. I think he ....

Ms. Larson: Objection. Calls for hearsay.

w.

Judge Holmes: Overruled.

ww

A. I think his initial inclination was it was a low number.

n.c om

Judge Holmes: Oh, now that's ....

Mr. Weitzman: I don't .... I couldn't hear what he said. So I'm going to just ....

lJa ck so

Judge Holmes: He said in response to something that Mr. Branca told him.

Mr. Weitzman: I don't think that was the question.

Judge Holmes: The last sentence is stricken.

Mr. Weitzman:

ae

Q. Was your .... were your remarks to Mr. Branca in response to something he had said to you, without telling us what it was, about the appraisal of name and likeness?

ich

A. I mean, I don't specifically recall that comment that I made to John whether it was in response to him, a direct question, or it was just ongoing conversation about the preparation and the return.

mM

Q. All right.

Mr. Weitzman: Your Honor, may we take a couple of minutes so we can discuss whether I've completed my examination of Mr. Kane?

Te a

Judge Holmes: Certainly. We're off the record for a little bit.

ww

w.

Mr. Weitzman: Thank you.

RECESS……………..

n.c om

Judge Holmes: Oh, please be seated. Mr. Weltzman, having gathered his thoughts .... oh, wait. He's still gathering. . Do you have an exhibit you'd like to have marked for identification?

Mr. Weitzman: I do, Your Honor. Exhibit 651-P .... P, of course.

lJa ck so

Judge Holmes: Ms. Wood will tell you. Ms. Wood?

Court Clerk: Exhibit 651-P is marked for identification.

Mr. Weitzman: Thank you, Ms. Wood. And the government's been given a copy.

ae

Mr. Weitzman: Your Honor, just for the record, I think .... I would inform this was produced in discovery marked Confidential.

ich

Judge Holmes: Oh.

Mr. Weitzman: Mr. .... may I proceed?

mM

Judge Holmes: You may proceed.

Mr. Weitzman: Thank you.

Te a

Mr. Weitzman:

Q. Mr. Kane, referring you to Exhibit 651, is that something you've seen before?

w.

A. I have.

Q. And do you recall getting a copy of that email from Randy Phillips?

ww

A. I do.

n.c om

Q. And did you speak with anybody .... just yes or no. Don't tell me who. Did you speak with anybody about this email?

Q. Who did you speak with?

lJa ck so

A. I did.

A. I believe it was Randy Phillips and Frank DiLeo.

Q. Do you recall what you said to Mr. Phillips?

ae

A. It was along the lines of if I met with Michael and advised him further that finances were dire, would it .... do we think it would do more help than good.

ich

Q. And did you have a conversation with Mr. DiLeo?

mM

A. I think he was part of that same conversation. If not, I had a similar conversation with Frank.

Mr. Weitzman: I have nothing further.

Te a

Mr. Camp: You going to put it in? You want it in or not?

Mr. Weitzman: Yeah. But we're going to do this all at one time.

w.

Mr. Camp: Oh, you'll .... okay. You're going to wait until .... okay.

Mr. Weitzman: Until the end of the testimony.

ww

Mr. Camp: Okay.

n.c om

Ms. Larson: Can we object to the document, please?

Judge Holmes: Okay. Cross-examination?

Ms. Larson: Thank you, Your Honor.

lJa ck so

Judge Holmes: He hasn't moved for its admission yet, but I think we overheard that they'll be trying that a little bit later.

CROSS-EXAMINATION

ae

Ms. Larson:

A. Good afternoon.

ich

Q. Good afternoon.

mM

Q. So Mr. Kane, you've testified that you were brought onto the team by Frank DiLeo.

A. That's correct.

Te a

Q. That's correct. And this was at the invitation of Mr. DiLeo in late March or early April.

A. That's correct.

w.

Q. Okay. And you didn't meet Michael Jackson for the first time until May of 2009.

A. I believe I said June.

ww

Q. Okay. You never actually met Michael Jackson while you were working at Gelfand, did you?

lJa ck so

Q. Okay. So when you officially joined the team, it was June 2nd of 2009?

n.c om

A. That's correct.

A. I think he signed the engagement letter June 3rd.

Q. Okay. And June 2nd of 2009 was approximately three weeks prior to Michael Jackson's death.

A. That's correct.

ae

Q. And prior to the time that you were officially engaged, you did not have access to Michael Jackson's financial information.

mM

Q. I'm sorry. Could you ....

ich

A. I had access to some financial information.

A. I had access to some financial information.

Te a

Q. But you had not been given official permission to change any of his accounts.

A. That's correct.

w.

Q. When you were brought on, you were brought on, as you testified, as a business manager.

A. That's correct.

ww

Q. And as business manager, your job is to pay the bills. Yes?

A. Correct.

Q. And to take care of tax matters?

A. That's correct.

ae

Q. Now, you're not an attorney.

lJa ck so

Q. And also to receive accounts receivable?

n.c om

A. Oh, I'm sorry. I didn't know there was a question. Yes.

ich

A. I'm not.

Q. And you weren't responsible for any of the tour contracting.

mM

A. That's correct.

Q. You actually never spoke personally with any potential tour sponsors.

Te a

A. That's correct.

Q. And you weren't involved in any meetings regarding obtaining tour sponsors.

w.

A. That's correct.

ww

Q. You were also not involved in any contract discussions regarding any merchandising agreements, were you?

n.c om

A. That's correct.

Q. Were you involved in any meetings regarding merchandising specifically with Bravado?

lJa ck so

A. I was.

Q. Okay. Regarding that meeting, you were involved in a single meeting with Bravado regarding merchandising.

A. That's correct.

ae

Q. And in that meeting, Michael looked at a handful of t-shirt designs?

A. That's correct.

mM

A. That's correct.

ich

Q. And he declined to approve those designs, correct?

Q. But you were not involved in any other meetings regarding Michael's approval or disapproval of any designs.

Te a

A. That's correct.

w.

Q. Now, I'm going to move a little bit to the name and likeness appraisal by Mr. Mark Roesler. Mr. Roesler provided an expert opinion regarding income for the estate for name and likeness. And you spoke with him?

ww

A. I did.

Q. In fact, you had a phone call with him regarding his valuation. Is that right?

n.c om

A. Not with respect to his value .... with respect to his preparation evaluation.

lJa ck so

Q. Okay. I'm sorry. Could you speak up?

Mr. Weitzman: I would just like to object. This is beyond the scope. But I'm fine with this particular examination being part of a direct examination if they were to call him.

Judge Holmes: That would be ....

Ms. Larson: I would ....

ae

Judge Holmes: You can go ahead, Ms. Larson.

Ms. Larson:

mM

A. That sounds about right.

ich

Q. So this phone call that you had was on or about April of 2014?

Q. Okay. And you didn't provide any written information for Mr. Roesler, did you?

Te a

A. Not that I recall.

Q. Okay. You didn't review a draft of his report before it was issued, did you?

w.

A. Not that I recall.

ww

Q. So in his report, Mr. Roesler cites you as authority for the fact that the tour was unable to obtain a sponsor?

n.c om

A. I'm not sure.

Q. Okay. Also in his report, Mr. Roesler cites you as authority for the fact that the estate had no merchandising agreements, correct?

lJa ck so

A. I mean, I'm not sure if you're saying the prime or the sole authority. I haven't seen the report, so you'd have to check with him.

Q. Okay. Thank you. Now, let's move on to the return preparation. And I'm specifically talking about the estate tax return.

A. Okay.

A. That's correct.

ich

ae

Q. You've testified that Marvin Hills of your firm actually was in charge of preparing the estate tax return.

mM

Q. And you are the one that recommended Moss Adams to the estate as the appraisers for MIJAC and name and likeness.

A. That's correct.

Te a

Q. You never spoke with Owen Dahl while he was appraising name and likeness, correct?

A. I don't believe so. I might have had emails, but I don't recall. I don't believe so.

w.

Q. Okay. You didn't get any drafts of the appraisals.

ww

A. I did not, no.

n.c om

Q. And in fact, you received a final electronic copy of the name and likeness appraisal from Owen Dahl on September 24th, 2010.

lJa ck so

A. I don't recall specifically when I received it, but it was right immediately preceding the due date of the return.

Q. Okay. And September 24th, 2010, that's the date that the estate tax return was due. Isn't that correct?

A. I thought it was the 25th, but I could be off a day.

ae

Q. When you received the return .... let me back up and say you received the return from Marvin Hills, correct?

ich

A. I received it from FedEx.

Q. Okay. Once you had all the pieces together, you took the return and the attachments to John Branca's house for signature.

mM

A. That's correct.

Q. And John Branca signed the attach ....

Te a

A. That's correct.

Q. And at that time, Mr. Branca didn't review any of the attachments.

w.

A. Not at that time, no.

ww

Q. Thank you.

n.c om

A. But that isn't to say in .... wasn't aware of it beforehand. But

Q. So thank you. Regarding income, as we've said, you're the person responsible for receiving income for the estate.

lJa ck so

A. Correct.

Q. And you're responsible for depositing it into the correct accounts.

A. I'm responsible for depositing it into the accounts, yes.

ae

Q. Okay. Checks that were .... you received for the estate, they were coded by the payor as to the correct accounts.

ich

A. As to the account, yes.

mM

Mr. Weitzman: I'm just going to object. It's beyond the scope of my direct examination. But if this is to be considered by the Court as question .... if they call him on direct, I'm fine.

Judge Holmes: That's overruled. You were talking about his duties, broadly speaking. So go ahead, Ms. Larson.

Te a

Ms. Larson: Okay.

Ms. Larson:

Q. So the checks that you received were coded by the payors.

w.

A. I believe so, yes.

ww

Q. Okay. You don't determine how various payments are to be coded.

n.c om

A. That's correct.

A. I have no way of knowing that.

lJa ck so

Q. Okay. Now, when you spoke with .... at the meeting that you described with Tohme Tohme where you asked him about various accounts, didn't Tohme Tohme believe that he was the manager?

Q. You also testified that Michael .... that the allegations against Michael Jackson were an issue, and yet you were willing to work with .... on his accounts, correct?

A. Yes.

ich

A. I found that out subsequent to.

ae

Q. Notwithstanding the fact that it was .... appeared to be insufficient cash flow.

A. Correct.

mM

Q. Okay. But you continued to work with him, correct?

Te a

Q. At the end of your conversation .... well, let me back up and say you testified that you spoke with John Branca about the name and likeness appraisal.

A. I'm sorry. About what?

w.

Q. At ....

ww

A. I didn't hear you.

Q. You testified earlier that you spoke with John Branca about the name and likeness appraisal.

n.c om

A. Correct.

A. He did.

Q. Okay.

Ms. Larson: No further questions, Your Honor.

ae

Mr. Weitzman: Briefly, Your Honor.

lJa ck so

Q. At the end of that conversation with him regarding the $2,105 appraisal, he still authorized the use of that appraisal, correct?

Mr. Weitzman:

ich

REDIRECT EXAMINATION

A. No.

mM

Q. Mr. Kane, for the This Is It concert that was to be performed for the 02 Arena, was there a tour sponsor?

Te a

Q. Did you get any money from any merchandisers and, specifically, Bravado?

A. No.

w.

Q. Did you tell the appraisers at any time what numbers to include in their valuation?

ww

A. Absolutely not.

n.c om

Q. Why would you be willing to work with Michael Jackson, given his financial circumstances as you learned about them?

lJa ck so

A. What business managers do is help people turn around their financial affairs. I had hoped I can help.

Q. Did you provide all the .... did you provide the appraisers with all the information they requested?

A. Any information we had in our possession and control we provided. To the extent we didn't have it in our possession or control, we made sure they had access to it.

ae

Q. I have nothing further. Thank you, Mr. Kane.

ich

Judge Holmes: Okay. Anybody going to call him again?

Ms. Larson: Nothing further, Your Honor.

mM

Judge Holmes: You going to call him again?

Mr. Weitzman: No. I didn't hear what Ms. Larson said.

Te a

Judge Holmes: She had no further questions.

Ms. Larson: No, Your Honor.

w.

Judge Holmes: I have no further questions.

ww

Mr. Toscher: We have no .... so the witness is excused, Your Honor?

Judge Holmes: He is excused. Thank you, Mr. Kane.

n.c om

ww

w.

Te a

mM

ich

ae

lJa ck so

Mr. Weitzman: Your Honor, I'm going to call Mr. Modabber. Can I go outside and get him?