Semmes Timeline

TIME LINE or SOME EVENTS IN HISTORY OF 821 1989 Beckett Chapter 13 Bankruptcy #89?53934?18 2/ 1/90 ?The Washington Executive Group, Inc.? in operation. Ken Lines' is a registered agent. Lines later became the company?s insurance agent and much later claimed thatBeckett had taken him for $95,000. in this venture. Lines claimed that Beckett wrote this off in a bankruptcy. Kerr?s office is shown as the address. I 1991 Beckett Chapter 7 Bankruptcy #91-5-7123?18 5/ 10/94Letter to Dan D?aniello of Carlyle Group from Richard Beckett looking for start up funds for new security company. I, 3 5/11/94 Fax from Financial Crimes Division/Forgery to Beckett re credit report on Richard Werner and March 15 th invoice to same. This is almost certainly from Rakowski. 94- <75 671 5/ 94 Letter to Dan D?aniello ?om Richard Beckett discussing joint venture with General Bloomer of American Protective Services. - Q1 1/ 7 6/15/94 Fax from USS Technical Security Division to Richard Beckett at the White House. This is a credit report on American Protective Services If Mid 1994 Dodd is believed to have met Beckett 9/16/94 ax from Dan D?aniel1o to BDM to discuss BDM BB1 security venture. ff 9/20/94 Letter to Dan D?aniello from BDM concerning BB1 venture. - 9/21/94 ax to Richard Beckett from Dan D?aniello concerning BDM response. 0] . Late 1994 Dodd. brie?y meets Paul Rakowski, just retired from Secret. "Service, who was introduced by Beckett in an Easton restaurant. {1303535921} 1 Late 1994 Dodd ?rst approached by Beckett about a new start up security company and shoWn business plan. Dodd was hand delivered a business plan with an 11/02/94 Financial Crimes Division/Forgery fax date. A ?Partial Listing of Contacts? of about 70 firms ??among them corporate giants included owdrey, Thompson and Karsten, the ?rm representing two of the defendants - 0 12/9/94 Dodd offered Special private White House tour. Dodd went on several special private White House tours. Dodd was told to invite anyone along on any of these tours. Anytime he wanted to go just let Beckett know. The tours were quite impressive and very personalized. 12/20/94 Letter to Paul Rakowski from Steve Forbes concerning meeting with D?aniello, Beckett, Rakowski and Masonis. Dodd was later given a copy of this letter. Dodd was told that Steve Forbes and Rakowski became buddies in Army National Guard basic training when Rakowski allegedly befriended him. According to Rakowski some of the troops were giving Steve Forbes a hard time. t( 12/3 0/94 D?aniello letter to Steve Forbes concerning Paul Rakowski?s security venture start up. The letter states that the Carlyle investment charter precludes them from investing in start up companies. D?aniello praises Rakowski, Masonis, Russ Miller and Richard Beckett. 4 I Early 1995 Dodd receives special behind the scene tour of Secret Service Technical Security Center where Masonis is Deputy Special Agent in Charge. Dodd is shown a leading edge security system under development. Early 1995 Dodd visits the Carlyle Group and later goes there a couple more times. Dodd is told that the Carlyle Group is a huge operation headed up by some of the world?s most powerful people. Early 1995 Dodd is told that D?aniello is planning on investing personally in the company. Dodd is asked by Beckett and Rakowski if he would be . interested in being-a 50% investor with D?aniello providing the other 5 0% personally. Dodd said he?d think about it. Beckett is Dodd?s primary contact during this period because Beckett is living in Easton. Dodd is told that, though Rakowski was retired ?om the Secret Service, he was providing protection for Donna Shalala, HHS Secretary, and Rakowski is living at 368 Rambling Ridge Court, Pasadena MD. Masonis was still in Secret Service. {1303535921 }2 1 . 5 Dodd is told that Russ Miller, one of the proposed principals, was, at that time, Special Agent in Charge of the San Francisco field office. Early l995Dodd is looking at the individual quali?cations of the secret service people. Dodd is given Paul Rakowski?s resume 6 Dodd is given Joe Masonis? resume 6; 3 Dodd is given Russ Miller?s resume Dodd is not given Beckett?s resume. Dodd is told by Rakowski and Beckett that Beckett is an Accountant, with a capital and an Auditor with a capital and that he was a member of the prestigious Naval Security Group'and that upon completion of his military_ obligation he was recruited by NSA (National Security Agency). 5 Dodd meets numerous current secret service agents including Rick Riskie and Phil Leadroot. Dodd was told that Riskie was trained by Rakowski when Riskie first entered the Secret Service. 3/10/95 Letters to 3 different individuals in the Easton area. One is signed by Richard Beckett and 2 are signed by David Prossner trying to find investors. Danielle and Malcolm Forbes are mentioned in some of these letters. One letter mentions a local investor, unnamed, who had committed about 30%. 3/22/95 Letter to Robert Zuehlke ?om David Prossner scheduling a one hour briefing in Easton where Secret Service Agents and other principals would be available to answer any questions. The letter also says that they are about 30% funded. 46;. 3/24/95 A bill to Richard Beckett from the Talbot Executive Centre for $4406.32. Current billing is finance charge on past due balance $86.40: 1- 30 days past due $1221.13, 31-60 days past due $1216.64, 61-90 days past due $1882.15. 5/ 17/95 A letter to Mr. rank Adams of Timoniurn, MD from David Prossner looking for investors and once again this letter mentions having in about 30% of the start up funds committed. Also talks about negotiating a long?term con/tractwith a Fortune 50 company which would begin in the early fall. 0E 5 7/ 1/95 Dodd is invited to a party at Richard Beckett?s water?ont home. As Dodd recalls, Paul Rakowski, Joe Masonis, Jim Kerr, Rick Riskie, Phil Leadroot, and possibly other current Secret Service agents were there. Dodd met for the first time Tim Ward and George Ferris. Dodd had been told by Rakowski and Beckett that both Ward and Ferris were going to be key components of the new start up security company. Dodd was told that Ward was a ten year veteran of the MD State Police, had been directly responsible for the security of the governor of MD, and had worked extensively with. the US. Secret Service during the Bush and Clinton administrations, as well as with presidential candidates. Dodd was also told that Ward was a graduate of the US. Secret Service Protective Operations School and had served six years in the. US Marine Corp. Dodd was told that Ward was the youngest MD State trooper ever to obtain the rank of sergeant. Dodd met Ward?s wife and kids all of whom were living in Talbot County. Dodd was told that Ferris was a graduate of the US Naval Academy and had served as a Naval Special Operations Officer specializing in explosives ordinance disposal (BOD), hazardous material response and counter terrorism. Dodd was told that he had also been responsible for the physical security of major military installations, including a seaport and airport located in terrorist threat environments. Dodd was told that Ferris had worked extensively with the US Secret Service in the protection of several US Presidents, Vice Presidents, and numerous foreign Heads of State. Beckett asked Dodd what he thought of his house; Dodd was impressed with the house. Dodd found out much later that this house was rented and now believes that this may have been an effort to seal the deal in their minds and make Beckett look prosperous. Spring/Summer 1995: Rakowski, Beckett and Dodd with business plans. The last plan describes BB1 and its management in glowing terms and guarantees investors a return of 18% on their money with 2 years. Summer 1995: Asnegotiations became more serious Dodd was told that D?aniello?s wife did not like Beckett because of Beckett?s involvement with either a relative or friend of D?aniello?s wife (Dodd can?t remember which) and that D?aniello?s personal investment into the BB1 startup company would cause D?aniello too much grief at home. However, Dodd was told {8035359211}4 that D?aniello would be behind BBI in every way possible to help get plenty of business. Beckett said that D?aniello considered him (Beckett) to be D?aniello?s very best friend. During one of Dodd?s visits to Carlyle Group, Dodd saw Frank Carlucci, former Secretary of Defense. Dodd was told that other prominent members of the firm at that time included, James A. Baker, Former Secretary of State, David Rubenstein and Richard Darman, all certainly heavy hitters. Dodd was told that, when Beckett left the company, he went to a Carlyle subsidiary, GTS Duratek. Dodd is also told around this time that Russ Miller had gotten tired of waiting and had- taken a job with and Gallo as their Security Chief. Dodd continues to hear from with Rakowski, Masonis, and Beckett and talks specifically with them about making personal guarantees of repayment on any loans Dodd might make to the Company. Doddaneets with very strong opposition on their part and is told that if they were going to personally guarantee the loan they could all go to the bank and borrow the money themselves at a lower interest rate and each of them would get more stock in the company. Beckett stated that Chuck Selby at Talbot Bank would lend him large sums of money without even requiring him to sign anything 7/ 14/ 95 Beckett Brown lntemational, lnc. check to the Talbot Lacrosse Association for $232.00 signed by Melanie Beckett for 4 players? membership (R. Beckett, JB Beckett, D. Prossner and ed Prossner). Beckett later put extensive mileage on company vehicles transporting lacrosse players to different states using company vehicles and the company paid for the fuel. 0{ 6: 7/21/95 Dodd is unsure about Beckett Dodd tells Rakowski that he would like additional background information on Beckett. Rakowski states that any delay in starting the company would result in losing the Steve Forbes Presidential Primary Protection job which BBI is almost certain to get because of Rakowski?s close personal ties to Forbes. Rakowski states that BBI would also probably lose another big potential security job?CSX - Railroad and Rakowski says Masonis may be getting cold feet. Rakowski tells Dodd and Dodd?s accountant, Joe Anthony, that he has checked Beckett out in ways that others could not. Rakowski said that his position as Regional Supervisor for the Financial Crimes Division at Secret Service gave him an ?extraordinary capability? to investigate individuals and Beckett was solid as a rock, had been very successful and was just what the company needed to market BB1 services. Dodd relied totally on Rakowski?s ?extraordinary capability?. Rakowski failed to mention Beckett?s multiple {30353592;1}5 bankruptcies, federal liens, state liens, civil judgments, business failures, etc. The company never did get the Forbes Presidential Campaign protection job or the big CSX security ob. Dodd was told by Rakowski that Forbes? security chief was old and ailing, could not walk up a ?ight of stairs and that BBI was going to get involved in orbes? security in the future for sure. Rakowski continued to boast of his strong friendship with Forbes and talked about taking Beckett, Masonis and Danielle to meet Forbes. lf Dodd had known the true nature of Beckett?s past Dodd would never ever have invested one penny in this company. Dodd relied ?illy and completely on Rakowski?s ?extraordinary capabilities? to investigate individuals. With Rakowski?s secret service background specializing in ?nancial institution fraud, identifying millions of dollars in government fraud, managing, coordinating and reviewing major crimes and investigations conducted by 30 US and overseas field of?ces, Dodd thought he had the best possible potential partner to prevent any theft or hand within this company. of 5 9\ 7/21/95: Two meetings, morning and afternoon, take place among Masonis, Rakowski, Beckett, Kerr, Dodd and Anthony. An agreement in principal is reached. Masonis and Rakowski are to handle Operations and Beckett is to handle marketing. .Dodd?s role is to provide financing. Dodd will pay $10,000 for stock and also make one or more loans to the Company. Dodd is to have the right to repayment of his loans with interest and to require purchase of his stock in five years based on a set formula. 7/31/95 Thermal paper fax which is difficult to read from James Kerr, PA laying out the basics of the potential agreement as he sees it. 9 /3 8/ 14/95 Letter to Richard Beckett-from Sam Brown of Hillman, Brown and Darrow. understand that you want Mr. Dodd to feel 100% assured that he will have the security that he needs and that he will have the accountability from the company.? [8 51/ by 8/16/95 BBI is incorporated in Maryland with Masonis, Rakowski, Dodd 4 and Beckett as the initial directors. 8/23/95 Stockholder?s Agreement and Stock PledgeAgreement are signed. Richard is President; John is Vice President, Paul is Treasurer; and Joe is Secretary. Corporate Organization section of stockholder?s agreement states ?Joe and Paul will be in charge of operations and will provide valuable contacts both for potential clients and support personnel through their vast experience in the security field. Richard shall serve as the marketing arm of {B0353592:l}6 the business due to his experience and contacts in the executive search business. John brings the ?nances to the table in his ability to lend the appropriate funds to the corporation in order for it to continue with his [sic] endeavors.? Because of Rakowski?s Financial Crimes background with areas of specialization in ?nancial institution fraud, he was named Treasurer. The Bylaws provide: ?He shall have charge and custody of and be responsible for all funds and securities of the corporation.? Dodd was told Beckett was being made President because he already had a client base he was bringing to the table. Dodd was told that Beckett had been President of the company I those clients had been dealing with. In the absence of any employment agreements other than Restrictive Covenant, Dodd looked upon the Stockholders Agreement and the Bylaws as being important with respect to Masonis?s, Beckett?s and Rakowski?s duties. Dodd meets with Rakowski, Masonis, Beckett and Sam Brown in the of?ces of Hillman, Brown and Darrow. Rakowski and Masonis both appeared to be armed, with weapons in their briefcases. Each of the four stockholders was supposed to present a check for $10,000 for the purchase of stock. To everyone?s apparent surprise, including Sam Brown?s, Beckett did not have a check with him. Sam Brown hastily drew up a promissory note. The note had a due date of November 24, 1995 and if not paid when due then 24% interest per annum on the unpaid principle balance from the date of this note. It was later learned that note was not paid off by November 24th, 1 995. Dodd presented an additional check for $120,000 as a loan to the company. Paragraph 7 of the Stockholders? Agreement provides: 7. Buy/Sell Agreement. the parties agree to enter into a Buy/Sell Agreement and acknowledge that no stock can be sold to any third parties or to any other members without ?rst offering the stock to all members of the Corporation on an equal basis. The Agreement will speci?cally show that John shall have a right to require the Corporation to purchase his stock at the initial ?ve year period based upon the following formula. a. The parties determine the average adjusted net income b. The average adjusted net income shall be the sum of the entities? adjusted net income for each of the two years prior to sale divided by two and multiplied by ?ve. c. That ?gure shall then be multiplied by ?ve. d. Adjusted income shall be de?ned as the net income of the entity from the Financial Statements using generally {B0353592zl}.7 accepted accounting principles (GAAP), consistently applied, plus compensation to principals in excess of the $90,000.00 base and excluding extraordinary items as defined by GAAP. . e. In lieu of the formula price, the parties can agree to a different price. f. Whatever price is agreed upon, the Corporation shall pay unto John 25% down with 25%. principal in each of the next. three years with interest at New York prime plus 1. 8/23/95 George Ferris hired. Jim Kerr was the accountant. Robert Blanchfield is the landlord. Ken Lines is the insurance agent. Hillrnan, Brown and Darrow is the law firm. Dodd has nothing to do with picking any of these. It appears that each of these had prior connections with Beckett and lost money with Beckett. After Beckett left the company in 1999 Dodd learned that Ken Lines, the insurance man, claimed to have been victimized for $95,000 in one of Beckett?s bankruptcies. Beckett had told Dodd that the company could get out of the lease with his Uncle, Blanchfield, at any time. As the company was trying to re?negotiate the lease terms in late 2000, Robert Blanch?eld told Dodd that he had never said any such thing and that Beckett had screwed him before. Joe Masonis told Dodd in 2001 that if Dodd checked Dodd would find that BB1 was paying more to vendors than the normal going rate. (Z) 8/25/95 Check for $376.18 to American Medical Security for Melanie Beckett. There were no agreements to pay for anyone?s health insurance at 4 this time. 9/ 7 8/3 1/ 95 Check to the Talbot Bank for $442.70 for a payment on a Beckett note that was past due. There was no agreement to pay off any Beckett loan. Other checks in August included 3 1050 paid to the Talbot Executive Centre 2 and $1500 paid to Richard Beckett for ?an expense advanceLetter to Beckett Brown International from Nations Bank stating the number of ,withdrawals and transfers exceeded the limit set by federal regulations. 9 5: 9/ 1995 Check register from Nations Bank showing checks 91 through 100. Many records for the company during its existence are missing. 95 0 8/27/95 Beckett Brown International expense reimbursement sheet of Richard Beckett?s that shows Rakowski and Masonis signing off as to the validity of expenses. Dodd is told that internal controls are air tight as shown by these types of checks and balances. On the back is a travel log. Rather than having a check made out from the company to James Kerr for $1200, Beckett has the check written to him. ?51 9/3/95 Carlissa Tucker hired as Of?ce Manager. 1995 Federal tax lien filed against David Prossner, a former business associate of Beckett?s just before BB1 was formed. It is found out many years later from Pikus after Beckett departs that the company was paying for David Prossner?s health insurance even though he was never employed by BBI. 0, 5302 10/18/95 Check #136 $7500 made out to Richard Beckett signed by Joe Masonis. 6: g. 2/6/95 Check #205 to the TSD Charity Fund, a Secret Service charity, for $648. In later gears checks of over $2000 were found to be donated to this same fund. 1 0/131 1/1/96 Check 237 written to Richard Beckett for $2596 for payroll, signed by Beckett, endorsed by him, and following his endorsement paid to the order of Beckett and Brown International, Beckett?s former company. All of the other Beckett companies were thought to have been out of business at this time. 5/ 1 1/5/96 Check 243 written to Richard Beckett for $600. Signed by Richard Beckett, memo section left blank, endorsed by Richard Beckett and Pay to the order of Beckett and Brown International. (All bank routing numbers are clearly legible on the back of the check, and none of the numbers correspond to Beckett Brown International?s account.) [f 52. 1/ 10/96 Dodd is looking at financial statements for the four months ending 12/31/95. He is discouraged by lack of progress to this point. He is looking for solid indications of future business and considers suspension of salary payments to of?cers until cash flow permits reinstatement of those payments before considering advancing additional money. However, Beckett, Rakowski and Masonis assure Dodd that the business is about to break wide open. Based on this representation, Dodd loaned BB1 another $30,000. 1/10/96 Dodd lends B131 $30,000. 11/17/96 Check 259 paid to the order of The Talbot Bank for $450.34. In the memo section it states ?Note #000068 Account #0211957968? which is a personal loan of Melanie and Richard Beckett?s. There. was no agreement in place for BB1 to pay Beckett?s personal loan. Dodd knew absolutely nothing about this note at that time. It was Rakowski?s responsibility to make sure these kind of payments were not made. 9 7/ <7 1/25/96 Check #271 for Timothy Ward for $865.78., signed by Richard Beckett. However, Ward didn?t start working for the company until June 21, 1996. Ward was thought to have been employed fulltime at the MD State Police during this time period. (a 2/8/96 Letter to Rakowski from Ty Richmond concerning tax bene?ts associated with an independent study to address the business oriented security concern? of a corporation. - Q1, f7 3/7/96 Kerr?s ?nancial statements for an 1996 show another $14,741.01 loss for the month of January. ?5 3/ 13/96 BBI'billed BFI $10,000. Recorded as an ?Advance?. This appears to be the start date of work with BFI. 5? 3/28/96 Certi?cate of Authority to Deposit of a Corporation ?Ta1bot Bank Checking Account, etc. established 0 1996 Found in Beckett?s ?le labeled ?Payroll 1996? Statement of Operations for the 3 month period ending March 31, 1996 showing a loss of $8515.00 . Also have a Statement of Cash Flows for the 3?rnonth period - ending March 31, 1996. Attached to this are worksheets showing George Ferris received a raise that was backdated to August 15 which is prior to the start ofthe company b.)Typed compensation schedule showing the current staff of 6 people and the projected staff of 6 additional people {30353592:1}10 c).A 33% pay increase to $120,000. for each of the of?cers d) other miscellaneous items. With the company losing money the of?cers are already looking at a huge pay increases. The calculations for the payroll taxes, federal and state withholding, etc. were calculated manually. . . 4/3/96 Dodd is told that sales are picking up. Dodd lends BB1 $7000. 4/17/96. Dodd is told that outlook becoming brighter and brighter. Dodd lends BB1 $3000 5/7/ 96 Document to Joe Anthony from BB1 stating that BB1 revenues had continued to increase every month since December 1995. Some assignments have required the use of subcontractors,which reduces the pro?t. They say that they continue to aggressively market both search and security with a great deal of success. The of?cers reduced their salaries in the ?rst quarter by deferring approximately 33 12000 per of?cer annually. To further realize savings they reduced the amount of taxable compensation and offset it with an automobile allowance to avoid certain payroll added costs. Their business usage of personal automobiles has been approximately 3- 4000 miles per month. They tell Dodd that the business revenues continue to grow but they continue to experience situations where they are forced to approach clients to obtain early payment for payroll and bills. They tell Dodd that it is necessary for Dodd to establish a $130,000, credit line to cover these Open periods. 5] 5/ 8/96 Check #1049 to Melanie Beckett for $150. with the notation of 5/3/96? - a /3 5/10/96 Check #1050 to Melanie Beckett for $250. The memo section ofthe check has Paul Rakowski?s initials in it and circled. The check is endorsed by Melanie Beckett and then Paid to the Order of Paul Rakowski and then Paul?s signature follows. 9? (a 5/ 16/96 They tell Dodd that the business is taking off. Dodd is told BB1 needs more manpower to handle the increasing load of work . Rakowski and Beckett say the man for BB1 is Tim Ward. The only negative comment Dodd hears is that a number of clients are slow to pay. Dodd lends BB1 $50,000. 5/ 17/96 Check #1063 to James Kerr for $2200 for accounting fees. (7) {BO35359221}-ll 5/ 17/96 Letter to Tim Ward from Beckett Brown International offering him a position as ?Director, Investigative Services? for $50,000. ?Since our company is young we do not offer any type of pension plan, 401K Plan, etc. however, as we grow so will the benefits we have to offer.? 4 (j 5/29/96 A handmitten letter to John Dodd signed by Richard Beckett. Beckett says that everything is going great. 7 6/21/96 Ward hired as ?Director, Investigative Services? with an annual salary of $50,000 7/ 1/96 Letter to the Clerk of Court Lubbock County, Texas signed by George Cody. For some reason unknown to us George Ferris was using this alias. ?George Cody? was also involved with some ?207 AssOciates? activities. George Ferris is Rey Cowdrey?s brother-in?law. 5/ 7/9/96 Beckett Brown International expense reimbursement sheet signed by Richard Beckett, initialed by Paul Rakowski and Joe Masonis for $359.76. Almost every time Dodd visits the Severna Park of?ce, Rakowski and Beckett tell Dodd that they are following numerous and proper checks and balances to ensure everything is being done in the right way. 9,020 7/ 14/96 Phone call between Dodd and BBI. He is told the business is doing well and the company has $254,000 in receivables. 7/23/96 Phone call between BBI and Dodd. A new guy, Eric Pikus, is starting 9/3/96. Dodd is told that Joe Masonis is going to Italy and they are projecting to do $200,000 worth of business in August. Dodd is told that a number of big contracts are coming in. (ya; 7/16/96 This is an invoice to 207 Associates from CDB Infotek for $1298 with a handwritten note dated 7/22/96 that Richard is getting his wife to pick up money order and mailCheck to Postal Suites Plus signed by Richard Beckett, notation #163 M. Beckett. According to the check stub this is for a post box rental in Easton. .5 {1303535921} 12 8/12/96 Invoice to Mary Kay for $69,957.12 . Dodd is impressed to see work coming in from a big company like Mary Kay, Inc. wee/<1 8/16/96 Dodd receives check #1281 for a 55 10,000 principal payment 8/27/96 Dodd receives check #1304 for a $30,000. principal payment 8/3 0/96 Fax addressed to Ward from Browning Ferris Industries (BFI) signed by Dana D. Love, Corporate Counsel, indicating Ward?s direct involvement with them. BF I was involved in the Sunshine Canyon work, a job which became a major issue with Ward. There are indications that this work may have been diverted to Chesapeake Strategies Group. 9 1725/ 8/30/96 Check #1318 from BB1 to Paul Rakowski for $8900 signed by Richard Beckett with no explanation in the memo section of the check. The check stub says ?Loan?. The Board of Directors had not approved a Company loan to Rakowski. 6 9/3/96: Pikus hired as ?Senior Consultant? Sometime in 1996 ?Pikus promoted to ?Director of Recruiting? 9/ 3/96 Letter to George Cody from Information Services Group Inc. concerning background investigations. 52(0 he? 5/ 9/9/96 Meeting of the Board of Directors of Beckett Brown International, Inc. at Ocean City, MD ?We discussed a need to get retainers from clients before beginning work ?everyone agreed.? Everyone there appeared to be extremely upbeat to Dodd. Of 2,2 9/9/ 96 Check to Blanchfield Landscape and General Contractors for $12103upposedly for work done to the of?ces. is Beckett?s uncle. Blanchfield told Dodd in 2000 that Beckett had screwed him before BBI was formed If Dodd had known about Beckett?s past, he certainly would not have wanted to be dealing with any of Beckett?s past creditors. ?3 9/ 18/96 Check ?om BF I to Beckett Brown International for $50,000. 9 9/23/96 Phone call between BB1 and Dodd. Eric Pikus is doing well. They want to bring in another retired Secret Service agent, Bob Windish, who was {1303535921} 13 a computer expert. The lack of computer expertise within the company was a possible shortcoming according to Will Daisy, who was a security expert. They also talked about Eric and Nick Dezenhall of Nichols Dezenhall and told Dodd that Nick Dezenhall lived near St. Michaels. Despite millions of dollars of business over the years and with him living so close, there was never an attempt to introduce Dodd to this important client. 6, Fall 1996: BBI is awarded Presidential Inaugural contract. 11/2/96 Check from BBI to Richard Beckett for $20,000. No loan agreement has ever been found. Plus no interest was being charged. Beckett had money until October 31, 1997 when it was recorded as a cormnission payment. That dollar amount exceeds the maximum commission amount allowed in any one month (53 15000). Plus, the information being used to calculate the commissions was often inaccurate. 11/7/96 Phone call between BBI and Dodd This call concerned bringing on Vince Cannistraro, who is an advisor to ABC News and the former Chief of Operations of the CIA Counter Terrorism Center and Dave Bresett, former chief of the Secret Service Foreign Intelligence Branch credited with solving the Pan Am 103 bombing. Dodd is extremely interested in exploring bringing these two highly credentialed guys on board. ?37 15?" 11/ 14/96 Fax from'Tim Ward to Virginia concerning hunting trip itinerary. Dodd never heard about this hunting trip until it was over. 9 (of 3 11/25/96 Check 1533 from BBI to Melanie Beckett for $920. signed by Richard Beckett, memo 96?0001a Apt. The check is endorsed by Melanie Beckett but the check stub states that the check was made. out to Talbot Bank for ?900 money order for 96?0001aInvoice to Presidential Inaugural Committee from BBI for $100,000. which is the second of three installments for security services for the 1997 Presidential Inaugural. 9 Cr)" 3 12/18/96 Paul and travel fromiBoston: $405 .50 paid for by BBI. (J 5 6 12/23/96 BBI Employee Christmas Party at McGarvey?s in Annapolis 3:00pm 12/27/96 BBI party at Richard Beckett?s house . 12/31/96 After a slow start, 1996 appears to have been a good year. Dodd is told about high pro?le companies sending business way and writing big checks to BBI. 1/ 1/97 Bob Windish, Vincent Cannistraro and Dave Bresett all came in to company. 1997 Windish bio 0ft! 1997 Cannistraro bio 01 ?1 1997 Bresett bio ?l 79 1/3/97 Invoice to Presidential Inaugural Committee from BBI $76,000, balance due on $276,000 job a 1/9/97 Invoice to Philip Morris Company for inaugural tickets $25,400. There is no indication as to why BBI is selling inaugural tickets? 1/15/97 Fax ?'om Dave Bresett to Cigna concerning a due diligence report . Corporate name used is ?Beckett and?Brown Associates?. Bresett has supposedly just been hired by Beckett Brown International, Inc. Why is ?Beckett and Brown Associates? being addressed? '7 1/20/97 Invoice to Mr. Ted Lieverman for $112,950. This is for services rendered from Dec 20, 1996 through January 17, 1997. 5/ 7L 3 2/24/97 BOard of Directors Meeting. Under the heading ?General and Administrative? see item Finances We are in good shape except the lag time in collecting money is increasing. We need to examine ways to 2 reduce our outstanding receivables.? and item Time sheets Everyone needs to fill out time sheets and turn them in on time.? Under the heading ?Recruiting? see item Eric?promoted to Manager?OK? . Under the section without a heading see item Angelo Bizzarro, Director attended the meeting #2 Revenue targets a discussion of revenue targets was discussed for 1998 and it was agreed that our target would be $3.5 million. Our pro?t target would be $800,000. 0/ 7 (a 1} 15 2/28/ 97 Invoice from BB1 to Ted Lieverman for $101,400 for services - rendered from 2/1/97 through 2/2 8/97. Cover letter states this is for payment for Security Services at the National 4-H Center. These invoices do not match up to a ?Completed Assignments? spreadsheet that was recently discovered in the company records. 0 3/31/97 Invoice from BB1 to Ted Lieverman for $130,190. for services rendered from 3/1/97-3/31/97 7/ Handwritten notes found after company shut down indicating that Paul Rakowski and Gene Gibson were directly involved in these Lieverman invoices. q) 7 (9V April 1997: BB1 is producing a number of travel security related publications among them BB1 Security News, Early Warning Service, Travel Secure SerVice, and Customized Reports. April 1997: Dodd calls BB1 because he had not heard from them in a couple of months. Dodd is told everything is going great. Dodd is told about the Early Warning Service, the Pirelli Job, Pharmaceuticals, Korean and G7 Summit protection Opportunities. Discussion about Vince Cannistraro.? 7? May 1997 Phone conversation between Dodd BB1. BB1 has been talking to John Vezeris who is Currently employed by Oracle Systems. Vezeris is a retired Secret Service with an expertise in strategic planning. BBI says he is a very aggressive marketer. His wife is the Assistant Director in the US Secret Service and Dodd is told she is the highest ranking female in the US Secret Service. BB1 talks of hiring Vezeris for $85,000. a year plus 10% of what he brings in or $90,000. plus 5% of what he brings in. Dodd is told that the business is doing well: investigations are carrying BB1 and the search guys are paying for themselves. Dodd is told there is a need for more technical security expertise. 5/ 5/7/97 Meeting topics for 5/7/97. This sheet is discovered after 2001 review of company documents. Item #5 Communication Among Employees very poor, counterproductive, core company knowledge not sought #6 Communication from upper management very poor frustration poor morale lack of incentives ?no focus or short term goals shared with employees long term goals not shared with employees ?-quick to judge 7 without new ideas given proper consideration ??commitments not realized. {130353592:1}16 Dodd was just told 5 days earlier that everything was great, that everybody was happy and everything was going ?ne. It?s believed that George Ferris wrote this document. Dodd never Got a satisfactory answer as to why George Ferris left the company. 5] 7~ 6 5/ 12/97 Fax to Dave Bresett from Marian Leighton. It is believed that Leighton received signi?cant money from BB1. 6? 7, . 5/21/97 ax to Dodd from BB1 of draft business plan done by Strategic Management Services (the division within BB1 run by Masonis). Dodd is told that, because of rapid expansion and sophistication in all ?elds of security, a business plan was being put together to gain signi?cant market share by providing total, enterprise?wide security services and solutions which add sustainable value to their customers? businesses. [7 3/ 5/3 0/97 Invoice from 207 and Associates at 218 North Washington Street, Easton dated 5/3 0/97 for services rendered to United Payors United Providers, Inc. 19,700. attention Michael Miller. At the bottom of the invoice it states ?Please remit to the attention of Ms. Mellony Beckett and include copy of invoice with remittance.? 218 N. Washington Street was the company?s. drop box in Easton. 9 7? 5/ 5/31/97 Bill from Hillman, Brown and Darrow for a conference with Beckett and Rakowski regarding general issues and of?ce meeting and of?ce policy. 7 0 6/2/97 Vezeris hired 6/ 17/97 Mark Prossner hired Late June 1997: phone call between 13131 and Dodd: Dodd was told that Pirelli could be a million dollar job and is close to a done deal; Dodd was told that Rakowski? is working hard on Mary Kay; Dodd was told that there are opportunities with the Baltimore Ravens; Dodd was told that Rakowski had been in contact with Frank Hyland, formerly of Dodd was also told about a lot of other ?rms being marketed including PriceWaterhouse, big law ?rms, and others. Dodd was assured that everything is going great. 777*9/ 7/6/97 Bill from Cellular One to BB1 threatening to terminate service for failure to make payment. Total amount due $4,339.23 Past due amount of {13035359221} 17 $3,348.25 due immediately. It appears that Dodd was not being told the true story. 7 7/7/97 Paul Rakowski, Ir. hired. 7/23/97 A fax from Ty Richmond to Beckett and Rakowski conCeming Rakowski?s materials provided to him the day before. 7/03 3 7/25/97 Fax to Tim Ward concerning Sunshine Canyon activities. 7/015! 7/26/97 BBI Party at Beckett?s house. Big turn out. Thginvitation reads ?14th Annual Conference and Crab east? ?7 {7 2(7 5 . 8/6/97 Letter from BBI to Dave Baldelli talking about a previous agreement with BBI providing Baldelli International a referral fee representing 7 of the net proceeds relating to Darling International Inc. Technical Consulting. Dodd did not have any knowledge of such agreements. ?7 - 526/ 8/8/97 Phone call from BBI to Dodd stating the following: BFI to pay $240,000. in the next 2?3 weeks; other business prospects included a crisis management plan for Pirelli of 100,000., a possible big Covance job and more talk about the Ravens. 7/47 8/1 1/97 Fax .?om BBI to John Dodd concerning Ty Richmond?s resume. 8/ 12/97 ax to John Dodd from BBI concerning the first BBI strategic business analysis session being Scheduled for Aug.l4,l997 . t7) 9 8/22/97 Fax from BBI to John Dodd concerning the private investigator business. 7 7 3 0 8/27/ 97 Fax from BBI to Dodd concerning meetings and meetings protocol. a? 7157 August -- Dodd sees financial statements for the ?rst 6 months of 1997. Financials Show a $273,743.18 pro?t. Profit numbers shown by Kerr?s statements are extremely impressive. At that pace there should be over a half million dollars in pro?t by the end of 1997. 9/3/97 Call between Dodd and BBI . Dodd is told: Joe Masonis flying to Italy next week; Everything going great; Samsung is a possibility for major .. {30353592:1}18 workg. Teamsters providing BB1 with a lot of work; going after a big casino company. 7, 7959\? 9/4/97 Phone call between Dodd and BB1. Dodd was told: Paul Rakowski back today, two guys were checked out for Dan D?aniello; two jobs for Roy Cowdrey; Jim Kerr should be providing ?nancial information soon. 3 September? BB1 News Dodd receives a cepy of the BB1 in-house publication that states for a 2 year period sales have grown over 700% and are on track for another good year. The document states that, beginning in Januaryl998, BB1 will have new office procedures for everything from vacations to sick leave tolreirnbursement for expenses. The document also talks about setting up a new accounting system based on profit centers, .1 ohn Vezeris joining the company and in the absence of Beckett, Rakowski or Masonis, John Vezeris is responsible for managing the company. BB1 newsletter makes it look like BB1 is a happy and rapidly growing company. 6/ 7/ 9/10/97 Check from BFI to BB1 for $198,881.05. if 7/ 3 5/ 9/24/97 Letter to Mr. Arye Avitan from BB1 concerning protecting an individual in Israel. 7 10/ 14/97 Phone call between Dodd and BB1. Dodd is told: there are $100,000 in total sales so far this month; Cannistraro and Bresett are hot; met with the #2 guy at CSX, which-BB1 says is a $17 billion company. Also Dodd is told that BB1 is getting more work from TSCM and BB1 should do of TSCM (Technical Security Counter Measures) this year alone. 10/18/97 Phone call between BB1 and Dodd. - Dodd is told that there will 9 be $200,000 in sales this month; two overseas deals; Dick Solan doing. great. 7/ - 11/6/97 Invoice ?om BB1 to Mr. Robert L. Rubenstein of Sidley Austin discovered 2001; no amount. 7 6 9 October Dodd has repeatedly been asking for ?nancials. Dodd was told that Kerr was out ?ying helicopters in National Guard training or he was sick. Dodd hasn?t been overly concerned because of very glowing reports from Rakowski and Beckett regarding company sales. 7 {1303535921} 19 10/20/97 Phone call between BB1 and Dodd. Dodd is told: Pirelli has expanded their contract; doing work for Mary Kay at $5000 a day for three weeks; three contracts with Hewlett Packard at $1250 a day; talking to and Gallo concerning strategic planning. All news given to Dodd is positive. l/ 0 10/22/97 Ward borrowed $4000. from the company (ck#32446). The company has now loaned money to two different employees totaling $9000 without Dodd?s knowledge. According to Kerr?s 1997 Review, these were non?interest bearing notes. ?7 wk/ 10/23/97 Phone call between BB1 and Dodd. Dodd is told: The projections I for October $250,000 $300,000; mention Rolling Stones tour protection and opportunities in Russia and Romania; Black and Decker job searches; Riggs Bank. 10/3 0/97 Phone call between BB1 and Dodd ?Pire11i, Gallo, Samsung, Ravens and others are talked about as ongoing or potential contracts. Dodd is told that BB1 is doing work for the 10th largest law firm in the country at $4,000. a day. 7 443 11/11/97 ax from BB1 to Louise at Jim Kerr?s office. Message ??Louise, please charge to overhead (per RB.) a check in the amount of 1992. payable to: TSD Charity? Letter is attached to Robert Baer, Security Engineer, Technical Security Division, US Secret Service ?(please find) enclosed check 3369 in the amount of $1992 for order of White House Christmas ornaments? signed by Joe Masonis. Handwritten notes are attached and a fourth sheet which is the check stub. 5P 7 a (71/ purchase Baldelli International. Dodd had no knowledge that this activity X, 11/18/97 BB1 expansion office (Dallas,TX) . BB1 makes a proposal to was being contemplated. 7 Dallas surveillance case relating to Mary Kay Cosmetics ??Rakowski later *v 1 1/ 18/97 Invoice to Paul Rakowski at BB1 from Baldelli International - married former President and CEO of Mary Kay Cosmetics. 7/ 9 11/25/97 Phone call between BB1 and Dodd. Dodd told: $250,000 to $260,000 projected for November; Pirelli could be a long term 3 year contract at $400,000 to $600,000 a year; Mary Kay could be a 1 to 3 year contract at $10,000. a month; Teamsters deal is $1250 per day per person (4- {B0353392z1}20 8 people); now projected that BB1 will have $23 million in sales at the end of November; John Spinelli is now on BB1 payroll; and more. . .. Cl 04/ 7 12/1/97 Dodd was told by Kerr, Rakowski and Beckett that everything was going exceptionally well except that BB1 had a cash?ow problem resulting from slow paying customers. They suggested that BB1 borrow $90,000 from Talbot Bank. Dodd signs as one of the guarantors on $90,000 Note Payable to Talbot Bank. 0{ . 12/1/97 According to Note 4 Line?of?Credit of Kerr?s Review of 1997 ?At December 1, 1997 the Company established a line?of?credit with the bank for $100,000 with interest being 2% above prime and is secured by receivables, furniture, equipment and shareholders. As of December 31, 1997 the Company had not utilized the This line?of-credit was apparently established with Talbot Bank on the same day that the $90,000 note was signed. When L. Andrew requested a copy of that Line?of- Credit Agreement the bank could not find any paper work on it. Another item in the Review is Note 2a and b. It is not believed that the ?Allowance for Doubtful Accounts? was being used as stated in the review and if it were being used it should have ?allowed? for more than 1000. In item 2b Kerr states Employee ReceiVable consists of non?interest bearing loans made to two employees? . This totaled $9000. Tim Ward received a loan for $4000 and the other appears to be Mark Prossner for $5000 (?Note Receivable Prossner?s loan is more dif?cult to trace because it was apparently made with ?Cash?. There does not appear to be a written note. Also, there is no ?due date? listed for these loans by Kerr. Ward also received 2 - $1000 electronic fund transfers during 1997 and they were recorded as I ?Project Expense?. Again, highly questionable because of the ?even . amount? and the fact that they were These are also believed to be loans to Ward from BB1. Plus, Kerr himself received regular checks during 1997. And numerous checks were written to various individuals (Ferris, Solan, Ward, Windish and Vezeris) in even dollar amounts all recorded as ?Auto Expense?. Almost every time Dodd went to the of?ce, Rakowski and Beckett showed Dodd how Rakowski was signing off on every payment being made by the company. How is Rakowski signing off on electronic funds transferred to Tim Ward (the 2 $1000. transfers) and the cash payment to Mark Prossner? It appears that simple basic internal controls were bypassed and Kerr should have noted that on his review. {30353592:1}21 12/2/97 Journal entry in Peachtree with the account description ?repayment of loan Paul Rakowski?. The cash account is debited for $16,793.88 and Travel Advances is credited for the same. If this were a loan, why wasn?t a Note Receivable set up on the books? Dodd had no knowledge of this transaction whatsoever. 0 12/6/97 Phone call between BB1 and Dodd ?Dodd is told: Pirelli has paid; Mary Kay is per month; the crisis management job for Gallo is big money; BBI is talking to another company in the same ?eld as Nichols Dezenhall; there are 300 events a year at the MCI Arena; BBI is hitting crisis management and law ?rms hard; BBI had a quarter of a million dollars in sales in November. Christmas Bonuses-$6000 for John Vezeris - $1000. for Ward, Ferris, Windish. Dodd was told that bonuses and pay increases for of?cers were needed and justi?ed according to Rakowski and Beckett. 53 7r- 12/15/97 Angelo Bizarre business plan. Bizarre becoming more involved with the company. 12/18/97 2.0.7 and Associates InvOice to United Payors and United Providers, Inc. for 9,3 25. The payment was to be remitted to Mellony Beckett and a copy of the invoice was to be included. There is an invoice and another sheet attached with some handwritten numbers. 51/ 3 12/ 19/97 Strategic Management Services business plan. Now the company has two different business plans. 0} 7/ 70 12/26/97 The. Company Christmas party was held at Beckett?s house. There were many attendees including current Secret Service, former Secret Service, former CIA, former US Attorney working for BB1, State Attorneys, current and former cops, etc. Dodd was told these expensive parties, which occurred in the summer and at Christmas almost every year during the company?s existence, much more than paid for themselves in additional business opportunities, recruiting, and goodwill. Rakowski later told Dodd that these parties also helped keep Beckett from being arrested on more than one occasion for DWI and greatly bene?ted Beckett ?nancially ?free left over liquor, beer, wine, food, Christmas decorations, etc. 12/31/97 A letter from Bob Chapman to Beckett, Masonis and Rakowski concerning his requirement to formalize a position with BBI 12/31/97 Dodd receives principal payment of $60,000. (This money came from the $90,000 note that Dodd, along with Beckett, Rakowski and Masonis guaranteed at the beginning of the month.) The December 1997 Financial Statement ?-The month of December showed a 8 1 86,5 58.56 loss bringing the pro?t for the year, projected to be over half a million dollars, down to only $31,807.76 Dodd was stunned when he eventually saw this statement which wasn?t until late Winter in 1998. No ?nancials were presented after the ?rst 6 months of 1997 until well in to 1998. Dodd?s agreement to bonuses and to the loan guarantee were based on prior ?nancials and assurances. 7 l/ l/ 98 Mike Mika hired l/9/98 ax from BBI to Dodd ?Report of Findings, Brazil wWork product for Pirelli. At this point in time, Dodd still has not seen ?nancials for 1997. BBI is now showing Dodd much more of the international work product being produced by Cannistraro and Bresett. 0/ (ii l/25/98 Phone call between Dodd and BB1 ?Dodd told: there will be ?nancials next week for the end of 1997; Pirelli job looks huge; Nichols Dezenhall giving us a lot of business; Executive Search should be EB l00,000for January; close. to getting the Black Alumni Association job; we did a TSCM for Louis Dreyfuss (Julia?s father) and other job information discussed. January or February 1998 Masonis is demoted at the strong urging of Rakowski, Beckett, Kerr and Bizarro. 2/6/98 Phone call between Dodd and BBI. Dodd is told: around $200,000. in sales for January;. Pirelli?s a done deal; Dave Queen on an hourly basis. a 2/ 10/98 A memo to John Vezeris from Dave Bresett concerning the Black Water Lodge and Training Center. 9 <67 February 1998 - Finally have several meetings to discuss strategic direction of BB1. A 1998 Plan is presented with a revenue target of $3.5 million to $4 million a year with pro?ts of between $800,000. and $1.2 million. i3? 7 I }23 2/25/98 Letter to Richard Beckett ?om Talbot. Bank concerning 2 automatic transfer authorization forms to make payments automatically from - his checking account for his loans. If there are any questions don?t hesitate to call Chuck Selby ?-signed Stephanie Miller. a 2/27/98 A form letter concerning reports for the joint venture investigation in Vietnam (Pirelli). Signature block has Dave Bresett?s name. (If 3/3/98 BB1 meeting for all employees. Approximately 22-23 employees are now working for the firm in 5 different divisions. An organizational chart was handed out to employees at the meeting and the chart shows Masonis under John Vezeris. 32- ?g 3/4/98 Sarah Slenker hired. 3/4/ 98 Lisa Berry hired (Beckett?s sister) 3/11/98 ax from Vezeris to Mr. Giuliano Tavaroli, Manager of Group Security, Pirelli Cavi concerning the Vietnam joint venture ?As noted in our previous facsimile, BB1 is requesting a 2% ?nders fee for our efforts. The fee would be 2% of Pirelli?s initial legal capital investment in the joint venture which is $7 million Letter is signed by Vezeris. There is no evidence of this money coming into BB1. '9 3/ 1 1/98 Memo to John Vezeris from John Spinelli at G1 bal Security I Services concerning Spinelli?s cut of the Pirelli deal. 5% 0 3/11/98 $250,000 line of credit set up at Talbot Bank with Dodd as a guarantor. Rakowski and Beckett and Kerr are saying BB1 has a problem with receivables. They said that BB1 needed a line of credit to cover those outstanding receivables. Dodd had been told on 2/6/98 that the Pirelli job was a done deal. Had Dodd known all of what was going on, he would not a have signed on as a guarantor. 3/31/98 Phone call between Dodd and BB1?They are $7000. short to making payroll. They are cutting officer pay back to $70,000. They said they did $220,000 in sales during March and they specifically mentioned the Pirelli job and other job information was discussed. Dodd advances the money to make payroll. {30353592:1}24 4/1/98 Emily Welpott hired 4/ l/ 98 Interoffice Memo ?To All Associates and Management from Beckett and Rakowski Until further notice all purchases, including business lunches and dinners, must be pre-approved by Richard or Paul Business meetings should be arranged mid-morning or mid?afternoon to avoid paying for lunch and/or dinner (0) Business mileage will only be reimbursed when charged to a project, unless pre~approved by Richard or Paul. Non~ reimbursed business mileage may be deducted on IRS Form 2106 for Business Mileage. Consult your accountant for details.? It appears that these policies were not followed. (gr 4/2/98 Memo from David Queen to Paul Rakowski concerning materials Tim Ward found regarding ?dumpster diving?. Queen is working for BBI and was a former US Attorney as well as Deputy Assistant Secretary of the Treasury for Enforcement, responsible for the Treasury?s oversight of the US Secret Service, US Customs Service, BATE, IRS Enforcement, and the Office of Financial Enforcement. Queen basically states ?dumpster diving? could result in seriOus litigation against BBI. Violation of the economic espionage statute carries a 15 year prison term and a 10 million fine. Dodd was never told about any of this. I If; 4/5/98 Waiver of BBI sponsored health plan by Rakowski. The company hasfound numerous cheeks written to Rakowski for $200 recorded in Peachtree as ?Insurance expense?. The check stubs also state ?Insurance Expense?. 01 4d- ?1 4/7/98 Inter office memo to ?All Associates Management? from Richard Beckett - ?Unless it is critical, please do not use express mail.? Express mailings before and after this memo were extraordinarily frequent. Q4 4/8/98 Phone call between Dodd and BBI. Dodd is told: the company has $45 0,000 in receivables; there were $240,000 in sales for March; Mary Kay investigations are generating $25,000 a week. Also mentioned are Gallo, Union Texas, and a report prepared by Cannistraro and Bresett as being published for the Chemical Manufacturers Association ?The Terrorist Threat in Amen-Gag Other job information discussed. 01 [07 {130353592195 4/21/98 Memo to Beckett ?om Bresett concerning the Travel Secure Service (TSS) project. This relates to the foreign security advisory services being handled by Cannistraro, Bresett and Marian Leighton 4/22/98 ax from FBI Domestic Terrorism -Bob Blitzer to BBI. Cover letter states Dave Bresett recommending Bob Blitzer fax his resume to BBI. Blitzer, at this time, is Chief of Domestic Terrorism/ Counter?Terrorism Planning Section for theNational Security Division of the FBI. He is develOping and implementing complex interagency policy, procedures, training and exercises relating to the US Government?s weapons of mass destruction (NBC) Program. Blitzer states he is available for interview and looks forward to hearing from BBI. 8 4/23/98 Board of Directors Meeting. Minutes include 1. Sales Update. 2.Marketing Efforts ?Beckett suggested that BBI push more responsibility for Investigations to Ward so Rakowski can spend more time Marketing. 3.Pirelli update Unavailable 4.Divisional Operations Review needs to commit more resources to marketing International Strategic Management Services. Rakowski is talking to Jim Grassman about joining the company in a marketing ?mctiom Rakowski will keep BBI informed. 5 .Personnel Issues ?-None at this time. 6.Computer Systems ~Windish is developing a list of things BBI needs to do to be prepared for Y2K 7.Pinancial Status ?Our receivables remain strong however, our clients are not paying on time. We discussed the fact that we can not begin work on a project before we receive initial retainers. In most cases projects are completed, subcontractors are paid and BBI does not receive payment for another 2 months. Everyone agreed.? 8.General Discussion 9. The meeting was adjourned at 6PM i 4/27/98 BBI Meeting concerning a merger with Post Associates. Over the coming months much time, money and effort was spent concerning this deal. Post Associates specialized in providing business information, security management consulting and investigative services to law ?rms, multinational corporations, ?nancial institutions and government and industry decision makers. They were established in Hong Kong in 1989 and then relocated their corporate headquarters to Phoenix, Arizona. Dodd met Richard and Penny Post initially at Carlyle Group headquarters in . Washington, DC. Angelo Bizarre took a lead role in handling this matter. [7 <5 {30353592:1}26 4/29/98 Letter to Ms. Julie Mi gnatti, World Youth Festival Coordinator, US Lacrosse. This concerns a check from the Eastern Shore Youth Lacrosse Association of $2,990. which represents the initial deposit required for the World Youth Festival. The check is an Eastern Shore Youth Lacrosse Association check from the Talbot Bank signed by Richard Beckett, Vice President. Subsequently, the company discovers that the mileage overage costs are huge for the Navigator and Dodd is told by Rakowski and Ward that Beckett was transporting Youth Lacrosse Players and parents and friends all over the mid-Atlantic region to numerous tournaments, games, etc. This was thousands of dollars in mileage overage costs and thousands more in gasoline costs, all at company expense. The Navigator was being used as an Eastern Shore Youth Lacrosse Association bus unknown to Dodd at the time. if Spring 1998 Dodd sees tensions rising between Beckett and SMS (Masonis and Vezeris) open hostility. 5/6/98 Fax to Dodd from BB1. This is a letter to BB1 ?orn Angelo Bizarro concerning discussion with Richard and Penny Post. Bizarro states that BB1 and Post Associates compliment each other nicely. Some questions remain about strategic direction but he believed those can be worked out. The advantages to be gained appear to far out weigh the disadvantages at this point in the process. The letter goes on to detail the development of further information. Bizarro estimates it would take 60?80 hours work to get, to a ?nished product and that his costs would be between $9,000. and $12,000 plus expenses based on an hourly billing rate of $150. per hour. May 1998 BBI is involved with MC emergency evacuation ?om Indonesia. Post Associates were involved in this activity and a press release was issued. 9} 3 5/13/98 Fax to Dodd from BB1 ofletter (letter dated 5/12/98) to BOD a Shareholders concerning discussion of a proposal by Bizarro relative to possible buyout merger with Post Associates, Ltd. They will meet 5/14/98. No record ofthis meeting. @151 i/ 5/14/98 Fax from BB1 to Dodd -?Early Warning/Service Subject 9/14/98 Spot Report #1 and #2 ?Indonesia 1; 5/26/98 Fax from BB1 to Dodd ?Early Warning Service Spot Report Pakistani Nuclear Detonation is Imminent. 0i ?77 5/26/98 Phone call between Dodd and BB1. Dodd is told: $535,000 in sales thus far in 1998 for Investigations Division; $83,000 pro?t in the ?rst four months; $130,000 loss for Strategic Management Division; Dave Bresett has a goal of l00 Early Warning Subscriptions and discussed other jobs. 31. 7 6/5/98 Fax to Tim Ward from Cannistraro concerning a BB1 proposal to collect intelligence for Walmart Canada on plans and intentions of labor unions in Ontario to unionize all Walmart Canada retail outlets. The principle intelligence source will be a former law enforcement of?cial with direct access to union decision making in the area. 5] 0 6/8/98 Letter and invoice from BB1 to Angelo Bizarre, Chairman and CEO of Food Service Partners for 12,000 for placement of Samantha Lau in the Of?ce Manager position. Attached to the letter and invoice is a handwritten page. In a circle it says ?Putin book. Do not bill yet.? It appears that BB1 may have been recording the transaction in the accounting system and yet not billing the customer. 5 1 June Telephone call between BB1 and Dodd. BB1 has decided to turn down a $1 million job fromthe Church of Scientology. BB1 tells Dodd that BB1 does not want to work for a fringe organization and BB1 wants to keep their high moral and ethical standards. BB1 does not want to do any work that may re?ect negatively on reputation. BB1 operates at the highest ethical level. The management supposedly made this decision on the advice of Cannistraro and'Bresett. Dodd was also told that BB1 was working on Korean Opportunities worth millions of dollars. EL, 6/24/98 BB1 check stub payable to BB1, Denver Of?ce for $2500 (This check was supposedly given to Paul Rakowski Jr. for Petty Cash.) 0) {y 6/26/98 Fax from BB1 to Dodd "Strategic Intelligence Services offered by BB1 including 1. Early Warning Service 2.Travel Secure Service 3 .Customized Intelligence Report - Business Information Services includes Competitive Intelligence - Other Services Provided by BB1 includes 1. Disaster Planning and Crisis Management ,2.Corporate Compliance 3. Special Event Planning and Management 4. Executive Protection 5. Technical Security Services. Dodd is being told by Rakowski and Beckett that the company is becoming increasingly sophisticated in the services it offers. For instance, BBI is offering Corporate Compliance: compliance services and the corporate compliance plans we provide are intended to prevent and detect violations of law and corporate policy which, if not addressed, could lead to corporate liability and possibly organizational crisis. Our staff atto/rney is available to assist you in this highly specialized area.? 5 7/3/98 Fax from Phil Giraldi to BBI concerning suggestions for possible areas of business development. 1. International (Due Diligence) 2. A daily version of EWS on the Internet 3. Crisis Management linked with risk assessment for international clients. 4. Capitalize on our regional strength I Texas and North Eastern United States 5.Marketing of additional services 7/6/98 Check #1835 from BBI to Richard Beckett for $4838.91 with the word ?Expenses? written in the memo section. No support for this check is found in the records. of 9/ 7/22/ 98 Memo to John Vezeris from Ron Johnston regarding pending products and a status report. 9 $15 7/24/98 Fax to Dodd from BBI ?This is the July 29th edition of Early Warning Service. a 7/28/98 Invoice to Robert Blanch?eld for information collection $3,027.61 Blanchfield tells Dodd in 2001 that Blanchfield was the one who got into, the dumpster diving business and this may be the job. (gal?if 7/28/98 Special Meeting of the Board of Directors and Stockholders - The main focus was on Strategic Management Services which has a loss of almost $170,000 YTD according to Kerr?s financials. There is a need for a permanent marketing person. John Vezeris?s pay is reduced to $70,000 with - no car allowance. Windish reduced to $50,000 with no car allowance and Masonis is reduced temporarily to $90,000 which would be re-instated to $118,000 and back?pay made up if SMS returns to pro?tability and the losses are made up. Masonis would retain the use of a company owned vehicle. It was further resolved that if by September I, 1998, SMS failed to show a profit, further salary cuts or dismissals might be required. Angelo Bizarre voted for the changes with prejudice feeling the cuts were not enough. Beckett stated the Post merger had been put on temporary hold 9 {B0353592z1}29 until BBl?s ?nances had been stabilized. Presentation of Financial position including Accounts Receivable $3 94,000. Cash in Talbot Bank {$49,000} Credit Line {$95000} Accounts Payable {$73,000} Current Cash Position $177,000 . 8/ 7/31/98 Meeting with Dodd, Rakowski, Masonis and Beckett. The purpose of this meeting was to discuss steps necessary to get the company back on track. and the issues relating to Bob Blitzer. 1. Rakowski is best suited to market for the company. 2. Blitzer would be hired to manage investigations if he accepts the offer. 3. Jim Grassman would be approached about joining the company to assist with marketing 4. Beckett would remain President reporting to the Board of Directors 5. Weekly meetings would be held to discuss progress and weekly marketing meetings would also be conducted. 6. Post and Associates were discussed brie?y and that they would be reporting to the Investigations Division of the company if that deal was ever worked out. 1t 3 7/31/98 Meeting with Dodd, Kerr, and Beckett. Topics discussed at this meeting were the ?nancial position of the company, proper allocation of expenses to product lines, changes in job functions, and potentially hiring Grassman and Blitzer. 1. BB1 must be more aggressive in collecting outstanding receivables including charging the 1.5% late fee in contracts. 2. Contracts must be required for every assignment with a minimum of 1/3 of estimated fees. 3. Kerr would provide a breakdown of ?xed and variable expenses and salaries of each division. 4. Kerr and Beckett would resolve issues regarding cost allocations. 5. Dodd agreed that at this time Rakowski should be point marketing person and that he would sit in on the interview with Grassman. Dodd is asked to guarantee Grassman?s salary for 3 months. 6. Dodd stated he thought BB1 should aggressively pursue Blitzer and make him an offer that week to run Domestic Security and once again Dodd was asked to guarantee Blitzer?s salary for 3 months. 5/ 1/ k/ 2 7/31/98 Fax to Ward from Reed, Smith, Shaw and McClay, LLP stating the draft agreement does not seem relevant to the services they had requested. 9 <5 ?3 August 1998 Presentation to Rakowski, Beckett and Dodd by Grassman (who hasn?t been hired yet) about a potential 12 month revenue stream. ?Grassman?s ideas for a pot of gold.? Grassman feels that his entrepreneurship personality is still untapped after retiring from Secret - Service and going into private industry with NBC. He also says that he 1. would consider possible employment and possible future ownership. He felt the only way he could prove to be bene?cial to BB1 was to share some of his ideas with BB1 to increase its product. Grassrnan said he was giving BB1 these ideas in ?good faith.? (y Grassman was Rakowski?s friend. 8/4/98 Fax from BB1 to Dodd ?Early Warning Service is going on?line beginning August 17, 1998 and will be converted to a daily service Cl t/ 8/6/98 Fax from BB1 to Dodd - Aug 5tlrl edition of Early Warning Service 8/7/98 Fax from BB1 to Dodd ?Early Warning Service Spot Report concerning Usama Bin Laden. This spot report refers to an ABC News interview with Bin Laden. Dodd is told that Cannistraro set up this ABC News interview. That interview has been shown over and overagain since the Sept, 1 l, 2001 terrorist attack. Cannistraro appearing on ABC News with increasing frequency. Dodd also sees Bresett on McNeil Lehrer Report. At some point prior to his demotion Masonis appeared on one of the major network news broadcasts. 0] 64 8/ 12/98 Ward promoted to Vice President Business Information Services. 8/ 12/98 Fax to Dan D?aniello from Beckett telling D?aniello how to write an introduction letter for Beckett. ?1 would like to introduce to you my long time friend and con?dant, Richard Beckett. Richard is the President of Beckett Brown International, 1nc., an international consulting firm that provides strategic intelligence and business information services to corporations, law firms, governments and individuals. While you may be aware of other firms that provide similar services, such as Kroll-O?Gara and Control Risk Group, I believe that Richard has assembled an organization, consisting of seasoned intelligence and investigative professionals, that stands out above the rest.? The letter goes on to praise BB1 and gives two example letters for a company already operating in Turkey and the other for a company thinking of operating in Turkey. 9 8/ 13/98 ax from BB1 to Dodd Aug 12th Early Warning Service 8% {130353592151 8/17/98 Fax ?om BBI to Dodd Early Warning Service Spot Report ?wMore about Bin Laden and State Department sending home all non-essential personnel from Pakistan. 9 7) 9/3/98 Telephone call between BB1 and Dodd Dodd told: a $170,000 credit is available; Rakowski and Bresett are going to ASIS Conference week of September 13th; the Overseas Security Advisory Council is coming up in October; the company is marketing to Texaco, World Bank and others; Forbes is sponsoring a conference for 2000 top level corporate executives in early September and other items were discussed. 9/8/98 Telephone call between BBI and Dodd. Dodd is told: there was a $268,000 loss for Strategic Management Services ASIS Conference was this weekend; .Blitzer may be a consultant for us; he may be going to work for Sandia National Labs; Rich Palmer is doing something with the ?Russian Predicament?; Pikus is marketing to Carlyle group; Grassman hiring is looking positive. Other items discussed Financials faxed by Kerr on 9/1 1/98 show a $288,632.12 loss for Strategic Management Services with a company loss ?2 September 1998 Phone call between Dodd and BB1. Dodd is told: there is a $273,000 loss YTD for Strategic Management Services; Grassman could start in approximately three weeks; there is an invoice to for $55,000; there is an $8000 protection assignment protecting Norman Schwarzkopf; Denver got an $8500 placement and other items discussed. 9 8 9/ 1 0/98 Proposal A Russian business seminar in the WDC area presented by Cachet International Inc., President Richard L. Palmer and Beckett Brown International Inc, Vice President?International, David Bresett. 5/7 3?0 5 9/1 1/98 Letter to BB1 from Harold J. Grassman. Grassman willing to accept BB1 offer under a number of conditions with an intended start date of 7 September 28, 1998 (595/3 9/16/98 Interof?ce memo to Masonis, Mika, Rakowski, Lisa Tucker, Vezeris, Ward and Windish concerning a September 23rd meeting with Dan Mellin, BB1 legal advisor, to discuss contract and engagement letters. Dodd never heard anything about this memo until 2003. ?37] 9/16/98 Letter to BB1 from John 1. Carroll, CP Commercial Specialist, a National Auditing Firm concerning conducting an audit of ?nancial records for the company insurance policy on 9/24/98. Attached is a fax from Lisa Tucker to Jim Kerr ?Jim, 1 spoke with Mr. Carroll and advised him that 9/24/98 would not be possible and that you have our files and that you would have to arrange a date and time with him. Also, please be sure to speak with Richard before speaking with Mr. Carroll. Thank you! Lisa? The audit period was ?om 9/1/97 to 9/1/98 (Nationwide Mutual Insurance, Agent Ken Lines). SDQO 9/23/98 Phone call between Dodd and BB1?Dodd told: Grassman starts 9/28/98 or a week later; there is $5 6,000 in billings; Dodd is told: the company?s talking to Vance regarding E.1.S. and other items discussed 6/ 9/25/98 Phone call between Dodd and BB1?Dodd is told: Mika and Giraldi are in India doing work at 1750 per day each; BB1 is working on a protection job for Jody Powell?s firm; more about the. Schwarzkopf and Milken protection job and other items discussed. rig 9/25/98 Insufficient funds notice from Talbot Bank to BB1, care of James Kerr at 9030 Red Branch Road, Suite 240, Columbia, For account #0215285101 in the amount of$5113.60. {9 4m 5 9/25/98 Fax to Ward from Reed Smith Shaw McClay, LLP concerning the August statement breakdown claiming they see a number of things on Mike Mika?s report that they were not aware of and did not receive reports on. Also they. had not heard from George Ferris. if" [0 10/9/98 Letter from Paul Rakowski to Mr. Thomas 1. Collamore, Philip Morris International ?Rakowski is trying to get Amy DiGeso a job at Philip Morris. Rakowski states he will be in NY City throughout October and 3 November in hopes to arrange a lunch date with Collamore. Rakowski is 7 spending a lot of company time and money in NY City in 1998 and 1999. wt 9 (y 7 10/1/98 Mindy hired ?Mindy worked for Kerr prior to being hired by BB1 and returned to work for Kerr after leaving BB1. . 10/12/98 Fax fromDave BresettofBBI to Richard Post $58,108.48 invoice for the India project - {a g/ {130353592193 10/ 14/98 ax from Richard Post to BB1 ?We may have to come up with a common response to why we have not ?nalized our arrangement as both of us have told people that we were close to concluding our arrangement. It would be confusing to the market place to not have some veri?cations in place as 17am sure we will be asked!? $5 l0/22/98 Letter from Ken Lines to BB1 attention Jim Kerr concerning cancellation notice for non?payment of premium. 0} 0 10/27/98 Fax from Jim Kerr to BB1 attention Mindy concerning EFTPS the enrollment has been accepted (letter dated June 1998) and they are sending a con?rmation/update package and instructions. Dodd later had to pay penalties for failure to use EFTPS when it was required to do so. 62 10/28/98 Check stub #5260 to Paul Rakowski from BB1 for $660.92 in payment for 10/ 12/98. $289.04 (hand written it says) ?No Receipt? on the stub and $25.00 for parking ?No Receipt? 3L 707\ 10/28/98 Overseas Security Advisory Counsel 13th Annual Brie?ng Dodd is told throughout BBl?s existence the company is keeping abreast of all security related events. BB1 personnel are attending conferences, seminars and meetings all across the country at great expense. Dodd is constantly assured that this investment will pay 'off in spades. 8C 3 10/29/ 98 Letter from Reed, Smith, Shaw and McClay to Tim Ward complaining about leaving them in the position of rendering a large and? unexplained?bill to their client. <92" 7 ll/2/98 Letter to Ward from David P. Robinson- Robinson, a former Easton' Police of?cer whom Dodd knows, is sending a resume and cover letter applying for a position as Project Manager with the ?rm. Dodd had told L-.. Rakowski,Beckett and Ward that he felt Robinson would make a great addition to BB1. Dodd would ask BBI from time to time if they had ever talked to Robinson about a position and Dodd was told that Robinson had never sent a resume to them and that they had tried to get in contact with him and that they were unsuccessful. Robinson clearly sent a resume to BB1. The cover letter addressed to Ward is initialed by Beckett and Rakowski. 7 {1303535921 }34 11/3/98 ?lter-office memo to all Associates ?effective immediately, employees calling the office should use our toll free number. This number is for employees only. Under no circumstances is this number to be given out I I. to clients, spouses, children, etc. 0/57 11/5/98 Check request payable to Gianpaolo Spinelli, Global Security Services, Inc. for $1862.88. This is Spinelli?s cut of 5% ofthe net from Pirelli?s invoices. Attached to the request is a spreadsheet detailing 1997 and 1998 invoices to Pirelli from BB1 totaling over $23 0,000. Also, Spinelli?s company?s name, Global Security Services Inc, is very close in name to the company Beckett formed 11/01/2001, Global Security Services, LLC, which lists James W. Kerr as the resident agent. 0? 7 1 1/5/ 98 ax from BB1 to Dodd ?Travel Secure Service Moscow-Russia 11/10/98 Invoice from Galaxy Computer ServiCes to BB1 attention John Vezeris for $7935.94 for consulting services Engarde Systems. This invoice was not paid until 1/11/99. 9 g? 11/24/98 A BB1 work log showing business development expenses for Rakowski and Amy DiGesoin NY City of$140.00. 6] 8 5/0 11/25/98 BB1 check stub #5437 to TSD Charity for $2401. ??Christmas Ornaments The company is struggling but BB1 charity donations are increasing. Dodd was never told the company was paying for Secret Service Charity Christmas ornaments. Dodd was told that these were given to BB1 in small quantities at no charge. 3/ Late Nov. 1998 Dodd and Rakowski have discussions concerning the animosity between Beckett and SMS (Masonis Vezeris). Rakowski promises to tell Masonis that Beckett will be taken out of any SMS supervision and place that solely with Rakowski. Rakowski did call Masonis, but never mentioned that very important change to Masonis. 12/1/98 Joe Masonis resigned citing dysfunction within the company, lack of access to financial information and too little discussion between shareholders as to the conduct and operation of the business. Vezeris also resigned citing recent conversations with Beckett and events that had occurred during the past month as well as different perceptions of how BB1 should operate. Dodd had strongly urged Rakowski to remedy these {130353592:1}35 problems prior to 12/ l, which he promised to. do. Dodd later discovered Rakowski had done absolutely nothing. Beckett, Rakowski, Kerr, and Bizarro had done everything possible to force Masonis and John Vezeris out of the company including pay reductions and demotions. Beckett would also get into shouting matches with Masonis and Vezeris that were witnessed by other employees of the company. Masonis told Dodd in 2001 he had told Rakowski and Beckett that he strongly opposed implementation of the Talbot Bank Business Manager Program (unknown to Dodd at that time). a December 1998 Contentious, and very costly negotiations take place with Masonis. 12/2/98 or 12/3/98 Dodd called Masonis and Vezeris individually. Dodd told both that he was extremely disappointed they were leaving the company, that from what Dodd was being told they had turned things around, and that Dodd had talked to Rakowski just the prior week (the last week in November) about Rakowski and Beckett making operational changes beginning Monday, Nov. 30th. Rakowski told Dodd that Rakowski would run all Security related activities and that Beckett would be running all Search related activities. To Dodd, that appeared to be a plus for BBI in a number of ways: clearer lines of authority; reducing tensions; and allowing Beckett to spend more time on the Search Side. Masonis told Dodd that Rakowski had never said one word about any of this to him. Masonis told Dodd he wished that it had been done but it was too late now ?he had already put in his resignation. Vezeris told Dodd that he had been promised company ownership, the title of C00, and a 401K Plan when he joined the company. Dodd was not aware of anyof these promises. Vezeris also told Dodd that SMS did not feel they had any signi?cant support from the company, that he was told Dodd was going to attend a number of SMS meetings but Dodd never showed up and had heard rumors that Bresett was going to become a Managing Director. Once again all news to Dodd. questioned Beckett and Rakowski about all this and was told by both the company needed to get rid of Masonis and Vezeris immediately and that it was a good thing that they had left and that Bizarre and Kerr fully concurred. Rakowski stated he had called Masonis but did not have enough time to talk to him about reorganizing the company. Rakowski and Beckett denied all the other allegations. 5? 52,. 55 {30353592:1}36 12/ 3/98 Email from Cannistraro to Bresett concerning Fete Palmer ~Palmer agrees to be an associated Mexican of?ce for BB1 0! (is r? December 1998 Proposal regarding l999-lnternational Operations. This is norm Dave Bresett ?Our focus in 1999 should be the marketing?f programs that identify risk and minimize corporate liability.? 4d '3 12/7/98 BB1 Board of Director?s Meeting ?The main focus of the meeting was the resignations of Vezeris and Masonis. Masonis was removed as an officer of company and it is further resolved to wait to hear from attorneys before proceeding further. (g - 3 1; 12/7/98 Financial Position Current Cash Position of $160,759.00 For some reason these are being made up every week and the ?nancial position, according to these sheets, is deteriorating. 12/11/98 ax to Grassrnan from Lockheed Martin Tactical Aircraft Systems regarding a request for price quotation for TS CM. - 12/11/98 Memo to Board of Director?s of BB1 from Rakowski and Beckett International Marketing ~Attendees Beckett, Rakowski, Bresett, Grassman and Giraldi ?Meeting was held to develop a plan to increase revenues of international products. Dodd told Rakowski and Beckett that he wanted to attend this meeting but that he could not attend on the date scheduled, Dec. 1 1, because Dodd?s father was leaving for Florida the next day and his Christmas celebration would be that Friday. Dodd requested that the meeting be held on any other date and considering the company?s situation at that time, Dodd wanted to see for himself what was going on in the International Division of the company. Dodd was told the meeting had to be held that day. Dodd never got a satisfactory explanation of why, especially considering the fact that Cannistraro did not attend the meeting. 9 I 12/ 13/98 Kerr?s November financial statement shows a loss of $75,291.60 for the year. 12/ 14/98 Financial Position showing current cash position of 147,730. 52 12/ 17/98 Fax from BB1 to Dodd showing Summary of Changes in Operating Costs Reduction of operating expenses $26,400. Reduction of 1130353592: 1 }37 compensation $565,107.01 Addition of personnel Salary increase $33,600.00 Net changes for 1999 $433,828.01 6] gm 12/ 17/98 Special Shareholder?s Meeting Minutes ?Attended by Dodd, Beckett, Rakowski and Kerr (Masonis was absent). ?Paul Rakowski made a motion to remove Joe as a director and the motion was unanimous. A review of BB1 ?s cash position was reviewed. We discussed ways to accelerate our receivables and ways to prevent the problems in the future such as requiring a company with a slow pay record to pay a larger retainer amount up front. A presentation was made regarding the factoring of BBl?s receivables through Talbot Bank. After careful consideration, Richard Beckett made a motion and the vote was unanimous. Discussion was made regarding a letter from BBl?s attorney?s outlining our options in dealing with the Masonis Vezeris issue. We agreed to wait for a letter from their attorney detailing their demand. .A recommendation was made for key peeple in the company to receive year end bonus including Paul and Rich. A vote was unanimous.? Total losses for the first 11 months according to Kerr?s ?nancials dated 12/13/98 showed a $75,291.60 loss. The Masonis/Vezeris Division showed a $254,925.93 loss for those 11 months according to Kerr?s ?gures. Masonis had repeatedly questioned accounting. Rakowski, Beckett, and Kerr blamed Masonis and Vezeris exclusively for the company?s financial losses. Dodd was given a ?Summary of Changes in Operating Cost? for 1999, which showed a $433,828.01 reduction vs. 1998. Masonis was still a stockholder but at Rakowski?s and Beckett?s urging was voted off as a director. Rakowski, Beckett and Keir told Dodd that with Masonis and Vezeris gone, big profits would immediately roll in. The only problem was the slow pays. Rakowski, Beckett and Kerr strongly recommended the Business Manager Program which was voted in. Kerr was well aware of Beckett?s past problems but never told Dodd. Rakowski, Beckett and Kerr told Dodd that the company should ?and could- now give year-end bonuses to key people including Rakowski and Beckett. 4 6/ 3 12/19/98 Christmas party at Beckett?s house 20th Annual Holiday Party Conference? 9 12/21/98 Final Notice from the IRS ?-To Richard Melanie Beckett, Three Church Circle, Apt. 207, Annapolis,MD ?Current balance due $18,407.15 for tax period of 12/31/97. 5? {130353592 1 }38 12/21/98 Financial Position Current Cash Position $143,011.00. 12/21/98 Letter to Mindy Jenkins from Jodi Zucker ?She?s in receipt of a letter from BBI requesting a TIN. She explains in the letter that she should not receive a 1099 Misc and that the company withheld $700 of a retainer she paid. Ci 7 l2/29/98 Fax to Chuck Selby at Talbot Bank from Beckett 1 ?Chuck as we discussed I have attached the invoices I would like to submit under the factoring agreement.? Some of these invoices date back to February 5, 1998. These were almost a year over due. Total invoices submitted were $267,578.45. Ci 5' 12/31/98 Financial Statements. 1998 Beckett Issue ?Beckett wasn?t having taxes taken out of his commission payments. This issue came to light in 2000 after Brad Andrew joined the company . There were ?reworks when Andrew brought this to light and this is detailed in the 2000 timeline. Dodd had no knowledge of this going on. 1/6/99 Letter of agreement between Nichols Dezenhall and BBI regarding splitting the costs for a Y2K marketing effort. A costly brochure was develOped, much time, effort and money was spent, and Dodd was told zero business resulted. 5f 521/ U1 1/99 ax to Julio Cirino from BBI Independent Contractor Agreement 9- 1/ 12/99 BBI entered into an agreement with Talbot Bank to factor their receivables ?The Business Manager Agreement with Businesses and Professionals? and ?The Initial Funding Checklist? were both signed by Richard Beckett and Chuck Selby. The OF was signed by Richard Beckett. It was Dodd?s understanding that ?The bank will send a statement to all Customers itemizing their account activity during the preceding billing However, this was not done. BBI actually did ?blind billing?. According to The Talbot Bank, ?blind billing? is for customers to whom the Bank does not send out statements for (see letter dated March 17, 1999) and (Nov 2, 1999 letter) to customers for whom the bank does not send statements to verify balances. On July 2, 2000 Lisa Andrew discovered that the bank was not sending statements. On {130353592:1}39 August 15, 2000 after discussion with Dodd, Brad Andrew and Ward, Lisa Andrew contacted Talbot Bank to begin the process of having the bank do the billing. It wasn?t until July 3, 2002 that Lisa Andrew discovered that supposedly an oral agreement had been ?otherwise agreed by the parties? per Dawn at Talbot Bank. The whole process was a well?kept secret by all the defendants. Instead of BBI sending the invoices to the Bank and the Bank billing the client, BBI was sending the invoices to the Bank, and the Bank did pg bill the client. Apparently, BBI at times billed the client immediately, at other times billed the client after months had passed, and at still other times, never did bill the client. In many cases the work had not been performed until months after the invoice was sold to the bank. In some cases the work was never done. The BMA enabled BBI to receive cash from the Bank immediately and thus provided Rakowski, Beckett, Ward, and Pikus with instant cash that they could spend. Had Dodd known that the Bank was not billing the clients, Dodd would never had agreed to the Talbot Bank Business Manager Program. 1/20/99 Memo from Windish to/Rakowski and Beckett concerning projects and prOposals status. gal Early 1999 BBI Anti-Terrorism Training Seminar for business personnel is produced. RakoWski and Beckett tell Dodd that the international division of the company is taking off and this brochure will help BBI marketing efforts in penetrating this huge and lucrative market-Bios for Bresett, Cannistraro, and Julio Cirino are all part of the brochure. 52 (i (a 1/22/99 Letter from Talbot Bank to Richard Beckett approving him with a Talbot Bank'Visa Business Card with a credit line of $30,000. Rakowski signed the credit form application as ?Authorizing Signature? and ?Treasurer?. For references, Beckett listed two: Robert Blanchfield, Landlord (Uncle) and James Kerr, CPA.(who knew Beckett?s credit history better than anybody). Had Dodd known about Beckett?s credit history Dodd certainly (jould have objected to Beckett being issued a company credit card. 51/ 7 1/26/99 Fax from Bizarre to BBI concerning his resume. A handwritten note instructs Pikus to write a one and half page biography using this resume. Beckett is the one who wants him to do this and Lisa signs it. 4} xg/ {B0353592z1}40 Early 1999 - Netsafe an IT security firm - is a company Rakowski and Beckett would like to acquire. Joe Patanella and Netsafe are discussed from time to time by Rakowski and Beckett. Oi i 0 2/1/99 Rakowski and Beckett told Dodd that after talking to Dan D?aniello and Angelo Bizarre, Dodd should be provided with a new leased vehicle to 1. partially offset Talbot Bank loans made to the company and guaranteed by Dodd; 2. numerous trips to Board of Directors Meetings and other meetings that Dodd had attended since the company?s inception 3. Legal and accounting expenses Dodd had personally incurred for the company start?up 4. Fax machine purchase and operating expenses 5. Telephone and cell phone expenses relating to the company. 6. Meals and drinks Dodd has personally paid for on numerous occasions for company employees and Secret Service personnel -7.Miscellaneous expenses incurred on behalf of the company 8. Fuel, bridge tolls, wear and tear, etc. Dodd questioned whether the company could afford this and was assured by Rakowski and Beckett that it was not a problem at all with a $434,000 reduction in Operating expenses and all kinds of business now coming in. When the company ran out of money in 2000, Dodd was stuck making payments on a vehicle that he- really hadn?t needed in the first place. Dodd personal-1y paid for drive-off expenses for the vehicle of $3497.38. Dodd was told at that time that the maximum allowance for vehicle expense was $700 per month. The difference in the lease cost and the $700 a month was to be offset against Dodd?s interest income . In fact there was no $700 limit and Beckett?s Navigator was well in excess of that amount OZ 9 2/5/99 Letter from Hillman Brown and Darrow to Ward dated February 8th that talks of a meeting with Ward on Feb 5th to discuss the circumstances regarding his divorce. Hillman, Brown and Darrow needs a 15 00 retainer immediately in order to proceed signed by Sam Brown (the ?Brown? in Beckett Brown.) 4 A 2/5/99 BB1 Employment Agreement for Ward ?Pay increase to $80,000. annually retroactive to 1/ 1/99. Ward goes to company lawyer to discuss personal divorce, gets a pay increase that very same day and BB1 pays the legal fees. Check 5827 for $1500. dated Feb. 8, 1999 to Hillman Brown I Darrow for ?Legal Expense? ?ref. Tim Ward?. Ward later denied that any of his personal legal expenses were paid by the company. 01 3 {303535921 }41 2/ 9/ 99 Personal reimbursement expense report from Richard Beckett approved by Paul Rakowski for $956.97. Almost every time Dodd visited BBl?s office in Sevema. Park, Dodd was shown these types of internal controls and told they were numerous and across the board . Dodd is told that Rakowski is watching every penny going through the company and Dodd can sleep well at night. 01/ 2/ 12/99 Health Insurance Election Form from Ward to Kelly and Associates (Blue Cross and Blue Shield). This letter lists Helene Hogan as the beneficiary (Ward?s mother) and that this policy is being added to the BB1 insurance policy. 1/ 2/12/99 BB1 check stub #5865 to Richard Beckett for $11,000. recorded as Of?ce Expense, with no supporting documentation. CZ 2/ 12/99 BB1 check stub #5869 to Paul Rakowski for $200 recorded as 0 Insurance Expense. There were approximately 20 payments of this type. 2/16/99 Fax ?om Blackwater Lodge Training Center wAmerica?s largest and most comprehensive private ?rearms and tactical training facility announcing a new business af?liation with BB1. a 9 5/ 2/ 16/99 Website update ??Dodd is told that BBl?s Website is continuously being updated and that significant expenses spent on setting up the Website are more than paying for themselves. 9 2/16/99 Email from Richard Post to BB1 concerning a bio for Rich Post that Bresett asked him to send. Rich Post is working on one for his wife that should arrive by the end of the day. Best Regards, Kris Kubsch?Analyst 2/ 17/99 Letter from Ward to Robert Rubenstein of Sidley Austin preposal for services to conduct background checks. 5/102 2/ 18/99 Letter from Hillman Brown and Darrow to Ward concerning ?Production of Documents and Interrogatories? being received from Ward?s wife?s counsel ?For some reason, they are pushing this case extremely hard. AS you know, I am ?ling a Motion to Dismiss based on the fact that there is no cause of action since they decided not to sue you for adultery. The purpose of this is to try and extend this for a long period of time so they can have more use and possession of the home and hopefully you can build up {13035359221 }42 some assets. It may also give her time to clear some money out of her retirement account. Any information you can get on her retirement account would be appreciated. Please get back to me at your convenience.? signed by Sam Brown. 2/18/99 Fax from BB1 to Mr. Robert Stone, Kelly Associates ?Per your conversation today with my Of?ce Manager, Lisa Tucker, we would like to add Tim Ward to our health insurance policy effective 3/1/99. As of 2/1/99, due to a recent divorce, Mr. Ward is no longer covered under his spouse?s insurance policy.? The letter purports to be signed by Richard Beckett but this does not appear to be his signature. Ward never got divorced. 9 $23 2/18/99 Letter from BB1 to Thomas R. Donnelly, Ketchurn Public Relations~?Invoice for $4030. ?Circled at the top of letter ?Con?dential has not been mailed yet? 67 {'02 2/23/99 BB1 check stub #5 6,1 to Anne Arundel $483.80 ??Levy for 1998 tax period. it 2/24/99 Letter to Ward from Sidley Austin ?Agreement for BB1 to provide pre?employment/background checks to the Washington, New York and Dallas of?ces of Sidley Austin. BB1 did a lot of business with Sidley Austin. When Ward discovered that the company had removed ?les from his of?ce in January 2001, he immediately called Saudi Arabia and Sidley Austin. c? 9/62 7 . 2/26/99 Board of Directors Meeting #2 Review information of 401K Plan and sign corporate documents required for approval #4 Review cash position and factoring plan #6 Review procedures manual #9 Review and approve 1999 Budget. When Rakowski and Beckett got to #9 about reviewing and approving the 1999 budget, Dodd asked where were the 1998 year end ?nancial statements. He had not seen them nor had he seen the 9 January 1999 ?nancial statements. Rakowski and Beckett blamed Kerr. Dodd stated it was very dif?cult to accurately review and approve a 1999 budget at this time considering that the 1998 December year end ?nancials had not been revealed two months into the new year. Dodd speci?cally asked about a projection of February revenues; business outlook projections; controls, checks and balances; organizational and operational changes now that Masonis and Vezeris are gone; better utilization of Cannistraro and Bresett; current and future marketing efforts, and the need for a meeting among other things. Now Rakowski and Beckett?s response was - that Kerr had been ?ying helicopters, Kerr was sick, or would you rather have meetings or have us out making money? A corporate resolution was approved and Beckett was appointed the 401K Plan trustee . With Masonis and Vezeris gone, it was agreed that Windish would now report directly to Rakowski and that Rakowski would oversee Windish?s projects and work more closely with Windish and Grassman to get more technical security projects. The minutes state ?The company?s ?nancial position was discussed. After careful consideration a motion was made by Richard Beckett to ove ahead with a factoring plan for receivables with Talbot Bank.? a aria 2/26/99 Letter to Board of Directors from Kerr stating ?the commission . arrangement made with Richard Beckett has been ful?lled by Beckett Brown International Inc. as of February 12, 1999.? 0/ I 30 3/10/99 A press release was prepared at BB1 by Rakowski and Beckett. Dodd was given the original draft, which read in part a company directed by Easton'residents Richard Beckett and Paul Rakowski, has conducted sensitive security and intelligence investigations around the world for a number of American companies.? Dodd had two additional drafts faxed to him on March 8th which read pretty much the same except Easton was changed to Talbot County. On March 10?:h the final version was faxed to Dodd and now read ?Directed by Talbot County residents Richard Beckett (President) and Paul Rakowski (Managing Director), thecompany has conducted sensitive security and intelligence investigations around the world for a number of American companies.? When Rakowski learned that the ?nal version had been changed without his knowledge he was very angry. Rakowski said this press release made'it look like he was working for Richard Beckett. The reaction from Rakowski was so strong that Dodd called Beckett and asked him why he changed this press release at the last possible minute. Beckett?s reply was ?Because I felt like it.? Immediately a thereafter Dodd began getting calls from both Beckett and Rakowski criticizing the other. 9 ?3 3/ 12/ 99 Memo to Richard Beckett from Bresett status report international jobs 659,6; 3/11/99 The Line ofCredit for $250,000 at Talbot Bank is signed. 5? 9 33 {130353592:1}44 3/ 12/99 Agreement between Mike Mika and Tim Ward related to the development of a paint brush and a tarp. q/ 3/29/99 BBI prOposal to Marriott International for Executive Recruiting Services. Proposal states that Rakowski is responsible with Richard Beckett for the day to day management of Executive Recruiting Business. 0; Ci 3/31/99 Time Life, Inc. invoice #990059 for $21,250. An audit conducted in 2001 states Time Life, Inc. did not incur this fee because this candidate was not placed at Time Life and that comes from Time Life?s accounting manager. The subsequent independent audit note states ?trace invoice to bank document noting that monies had been borrowed against this invoice. This appears to be a situation of submitting an invoice for which no services were provided.? *5 Spring 1999 Job Costing Sheet showing losses on Sidley Austin jobs. 5 7 4/ 5/99 Fax to Beckett from Grassman concerning Faces Software and Interquest. BB1 will receive 20% of gross sales of the Faces product. Interquest has requested that Jim Grassman sit on the Board of Directors for Interquest. A11 expenses will be incurred by Interquest including a Board fee of $1500. USD for each Board Meeting attended. BBI will have the rights to market the Faces products to all markets including the financial community and the law enforcement and security services within North America and International. BB1 will work with Interquest to establish an accredited training program that can be marketed throughout the world. 4/ 6/99 ax from Ron Johnston of BB1 to the Argentina PrOposal Manager This had been a big job proposal often talked about which subsequently vanished/disappeared. a? 5 (I 4/14/99 Handwritten sheet dated 4/14/99 and 9/7/99. On the 4/ 14/99 section ?per Tim Ward Hold bills for mailing to client ?However send bill to bank beginning of each month.? Then it shows some sample invoice numbers. In the 9/7/99 part it says ?Change to (per TW) 99?0149 Ketchum 867?001-98 $10,000.. 99?0151 125-004?98 $17000, 99?0152 Condea Vista 860-001?99 $5000.? The bers on the handwritten sheet do not match the Peachtree records. 5? 51?- {B0353592:l}45 4/23/99 BB1 check stub #6234 to Paul Rakowski for ?Operating Supplies? $1000. Richard Beckett received check #6233 for $1000 on the same date recorded in accounting records as ?Operating Supplies?. There is no document backup for either check. Rakowski is repeatedly telling Dodd during this period that he and Beckett are equal. Rakowski later draws an organizational chart showing both he and Beckett as co?managers. Rakowski said that whatever Beckett gets, he gets the same thing. They are equals. 4/ 4/23/99 BB1 outline of Proposed Services for Corporation @49? 4/26/99 BB1 Proposal for Services for Corporation ?The scope and content of this outline of prOposed services is the result of an April 22, 1999 meeting between Chairman and CEO Noah Samara, Executive Vice President, James R. Laramie and the BB1 Management Team. Based on sensitive and confidential information provided by CEO Samara, it appears that person or person(s) unknown have organized a crisis catalyst attack on Corporation in general and CEO Samara in particular for the purpose of blemishing his reputation and ultimately undermining his leadership.? BB1 recommends TS CM Surveys conducted in all work places used by the CEO and his staff as well as residential work areas, Intrusion Detection Tracking Software being installed on the corporate network, analyzing computer hard drives of recently terminated employees, providing an interim security director, compiling dossiers on all individuals suspected of being linked to the attackers, collecting intelligence on all potential targets of this investigation to include those over seas, and the distillation of all intelligence information collected in an attemptto establish links between individuals, patterns of activities and the existence of both internal and external networks used to target Once the attackers have been identified BB1 recommends retaining a professional firm that manages situations that threaten corporate bottom line and integrity. The proposal states that BB1 is allied with a 1 Washington based communications group that has significant experience handling organized attacks that threaten market place survival and can bring those resources to bear on this problem (that firm is almost certain to be Nichols Dezenhall although the proposal doesn?t specify that). This was submitted by Beckett and approved by James R. Laramie. Rakowski and Beckett told Dodd was going to be the Goose that lays the Golden Egg. This was a hush?hush job and encompassed asset protection, access control, facilities management, background/reputation checks, . .. executive protection, internal and external investigations, protection of proprietary information and computer and information security. In 2002, invoice #990104 for $100,000. to was discovered in the computer and hard c0pies were found in a red unmarked file folder. The Customer Ledger shows that invoice #99-0104 was posted to Sodexo Marriott Services fer $10,000 and that invoice was paid. On 10/23/99, in a meeting with Beckett concerning his stock buyout, Beckett told Dodd that - BB1 was fired by because Ward sent them a memo after Ward had been told did not want anything in writing that could be subpoenaed. Ward totally denied this allegation when asked by Dodd. 02 l/ 3 4/27/ 99 BB1 Proposal for Services for Gore 2000. Grassman, Windish and Joseph Patanella had met with Gore 2000 peOple and this Proposal for Services resulted from that meeting. Later, questions arise about Patanella and his company Netsafe. Dodd is told that BB1 has a great shot at getting this job thanks to their success with the Clinton Inaugural. at 514/ 5/6/99 BB1 check #6299 (check stub #6300) a check to Kerr with insurance and car payment being deducted. There is no explanation whatsoever for BB1 making Kerr?s insurance and car payments. 4 5/13/99 Identical invoice number 99-0077 ?one for $7,000 to 'ott International and one for $15,000 to Marriott International 5/18/99 Invoice from BB1 to NRA $33,310.94 for protective services from April 7th through May 4th. In the December 11, 2000 Board of Directors Meeting Minutes, item 4b states the job would occur in an 01 for between gross.? Cf a 5/28/99 A fax from BB1 in Denver to BB1 in Severna Park ?Denver Weekly Update Report. Dodd was told by Beckett, Rakowski and Pikus, that since the inception, the Denver office is showing great potential. t/g June: Rakowski gives Dodd a handwritten Organizational Chart showing Dodd that he has equal power with Beckett. 5/ 5/ 7 6/1/99 Memo to Rakowski and Beckett from Windish on Projects and Proposals Status 6/17/99 Identical invoice number #99-0096 ?one for $10,000 to Marriott Human Resources Staf?ng dated 6/17/99 and one for $10,000 to Marriott Marketing Procurement Services dated 7/6/99. 5f a (62/ 6/ 19/ 99 The?Netsafe? invoice was created on BBl?s computer. Netsafe was supposedly a vendor used for the job specializing in IT Security. 6/4/ 99 BB1 Executive Search Mid Atlantic Status Report for Week Ending June 4,1999 0? 9] Tl/ 6/4/ 99 BB1 Daily Work Log 3 Placements all with question marks from Lisa Tucker 5?77? 6/9/99 bill to Rakowski over due notice qt. 1,9 6/ 10/99 Fax from Post to BB1 concerning Bizarro clarifying ?nancial questions about PostDodd meets Blitzer and Beckett at Beckett?s house, goes to The Crab Claw and has a fascinating discussion with Blitzer about terrorism and Rakowski and Ward strongly Oppose Blitzer coming into the company. No agreement was ever reached with Blitzer. Summer 1999 Beckett and Rakowski throw another company into the BB1 acquisition sweepstakes Duratek - one of the Carlyle Group companies. 9 A) 3/ 6/17/99 3131 check stub#6514 to Richard Beckett for $1849. Memo-Auto Expenses 02 I 6" 0/ - 6/ 17/99 BB1 check stub#6515 to Rakowski for $1761. ?Auto Expenses. Much later, Dodd heard Pikus talking about these being bogus expense checks and Rakowski being upset that Beckett got $88 more than Rakowski. When Dodd later asked Rakowski about his check, Rakowski said it was a mistake and that he was repaying it. There is no evidence of this being repaid. 5% 8 6/19/99 Letter to Dan Mellin at Hillman Brown and Darrow from BB1 enclosing Of?ce Procedures Draft. 6/30/99 BBI invoice #99?0104 . This is the $100,000 invoice to that never made it to the books (this is the identical invoice used for a $10,000 invoice to Marriott that did make the book). The $100,000 invoice hard-copy was found in a red file folder, unmarked with no label. Other identical invoicing situations were found but this one involved the greatest amount of money. BB1 at this time employed Jay Bly whose bio states ?His investigative efforts centered on RTC sub?contractor fraud investigations. Investigations typically concerned duplicate invoicing. . i 7/2/99 BBI invoice #990092 for $27500. to US Office Products with notation ?Sent to Bank? Not to Client? HOLDING FOR VERIFICATION and question marks on the placement name. This invoice was sent to Talbot Bank, BBI received the cash, the client never paid, the invoice was charged- back and eventually written off. 55 0 (7 3 7/6/99 BB1 invoice #99-0117 to Carolyn Mintusp} for $90488. The sales journal states that invoice was for $7344. 5/ t? 7/8/99 Stirling Silver Inc.: SZi?s computers contain a description of Stirling Silver, Inc. being operated by Stirling Ward, Tim Ward?s wife. he initials SSI match up to the new company name acquired in 2000. 5/ 7/31/99 ?Beginning, balance difference $47,198.62? account'#26103 Talbot Bank NR. 9 C: . a ?t 8/5/99 Letter to Steve Welpott, Marriott International ?om Beckett concerning prOperty for sale in Florida just before Beckett?s departure. 7 8/ 6/99 BBI Marketing Plan with hand-written notes possibly made up by Grassrnan. 6? 8/9/99 ax ?om Paige Associates to BBI concerning subcontractor fees not being paid by BB1. /67 8/ 12/99 BB1 Domestic Operations Status Report 70 8/ 12/99 A meeting is held with Dodd, Rakowski and Beckett to ?clear the air?. Dodd asks Beckett questions about the company accounting system. 5g Beckett states he is an accountant. Dodd asked him if he had an accounting degree. Beckett asked Dodd what was his point. Rakowski is virtually silent . for the entire meeting 8/ 13/99 BB1 letter to NRA General terms and Conditions of Engagement for security protective services OZ 9 t? 7 8/16/99 Letter to Board Of Directors of BB1 from Richard Beckett. Beckett resigns stating he has accepted a position as Managing Director, GTS Duratek Computer Services Division reporting to the President of GTS Duratek. 1n the prior months, Beckett and Rakowski had talked to Dodd about some type of business combination with GTS Duratek. Contentious, and very costly negotiations commence with Beckett, which last four months. Dodd tells Rakowski and Ward that the company needs to have the books audited immediately. Rakowski and Ward vehemently oppose an independent audit, stating that BB1 would lose all of its business if there is an audit because its work is con?dential. Ward threatens to quit if an audit is conducted. Rakowski and Ward tell Dodd that with Beckett gone, BB1 will make a huge amount of money. Rakowski assures he is not going anywhere and will be at BB1 for the long term. 7 8/16/99 Beckett?s VISA credit card statement ?om Talbot Bank indicates a $55.50 purchase from Arundel Florists on this day, the day he quit. 6/ 75 8/ 17/99 Beckett?s VISA credit card statement from Talbot Bank indicates a $488.91 purchase at Chance?s AMOCO. Note?Beckett resigned and he?s still spending BB1 money. Beckett bought new tires for the Navigator, apparently thinking that vehicle belong to him and that BB1 would continue to pay all his expenses. f? 7 8/17/99 BB1 check #6884 to Netsafe for $11,891.25 signed Richard Beckett. This check is dated after Beckett?s resignation. I ?7 '3 8/17/99 Company meeting called by Rakowski for all personnel. Before the meeting started, Dodd, with Mindy, Rakowski, Ward and Pikus present pulled out a copy of the August 2, 1999 Fortune Magazine which had just come out a few weeks earlier. The cover story is ?Recipe for Jail? showing a' single entry ledger in a pot of boiling water. ?Wall Street loves managed earnings but the feds think companies are cooking the books. Cross the line, and you may do time.??by Carol J. Loomis. Dodd made the comment to this {130353592:1}50 group he certainly hoped cooking the books wasn?t going on at BB1. Mind referred to this in her exit interview with Brad Andrew on July 17, 2000. 9/7 8/ 17/ 99 Dodd calls Angelo Bizarre concerning Beckett?s resignation. Bizarro tells Dodd he has been meaning to call Dodd and that his busy business schedule requires him to resign from the BB1 Board of Directors immediately. 'Severna Park Executive Search business. I 6f 477 On or about 8/ 18/99, Kerr?s financials for July are given to Dodd, which is an unusually short period of time considering the long delays experienced in the past. The financials showed a- $77,092.71 pro?t for July and a seven month pro?t of $1 1,802.05.At this time Kerr prepared a BB1 Estimated Fair Market Value at July 31, 1999 Sheet showing the company Fair Market Value between $295,433.97 and $443,150.95. The Severna Park Search Operations is valued at between $110,233.06 and $165,349.59. From this point on, Rakowski and Ward continually pressure Dodd to agree to release Beckett from guarantees despite Dodd?s deep concerns about the E1 position of the company. Rakowski tells'Dodd that BB1 should give Beckett whatever he wants to get rid of him. 5/ 7 7 8/18/99 Letter from Beckett to Dodd and Rakowski detailing offer to buy 8/25/99 Meeting w' Dodd, Dan Mellin of Hillman Brown and Darrow and Rakowski. a . 8/25/ 99 Identical invoice #99-015 8 ?one to Whiteford, Taylor Preston, LLC for $2,440.40 dated 8/25/99 and one to Cowdrey, Thompson Karsten, PA. for $1,220.20 dated 1/17/00 9/ 5?0 8/3 0/99 Letter from Beckett to Dodd withdrawing the August 18th offer and submitting a new one. CZ 0] 8/3 1/ 99 Dodd meets with Beckett and Rakowski. Beckett states that he no longer wants Executive Search, that it would be gone in 6 months and that BB1 was getting ready to lose clients Sodexo Marriott and Marriott A because they deal with whom they want to deal with. Beckett said that if Dodd and Rakowski did not accept his August 30th offer immediately, be was leaving. Beckett starting making threats of company improprieties which he would not elaborate on and then left stating he was going to contact his attorney. 6?1 9 9/1/99 Letter from Beckett to Rakowski con eming vehicle turn-in and . . retummg the computer on Friday ?1 9/10/99 Letter to Beckett from BB1 drafted by Dan Mellin 9/ 10/99 Inter of?ce memo to Dodd and Rakowski canceling Aaron Rents, Inc. furniture. Cf 9/15/99 Fax from Kerr to BBI now showing a July pro?t with a seven month loss of $1 17,419.28 . Yet another July statement issued on November 5th, 1999 showed a $20,100.63 loss for July with a 167,103.28 loss for the seven months. 9/ 1 5/99 Identical invoice #99-0171 ??one to Whiteford, Taylor Preston, LLC for $3 98.46 dated 9/ 15/99 and one to owdrey, Thompson Karsten, PA. for $199.23 dated 1/17/00. 52 (in? Sometime after September 14th, Kerr issued a reconciliation of the $11,802.05 pro?t to a loss for the seven months ending July 31,1999. if Late September- Rakowski and Ward blame the losses totally on Beckett. Rakowski and Ward say Beckett was robbing the company blind and Rakowski assures Dodd that he has found what Beckett was doing and was cleaning everything up. Rakowski' repeatedly states that an audit would be disastrous for the company. Dodd repeatedly told Rakowski and Ward that BBI needed to call Beckett?s note and Beckett would give up his stock. Dodd c'ontacted Brad Andrew about coming into the company. IT Security appeared to be booming. That was Andrew?s specialty in the military. Dodd had wanted Andrew in the company but was told by Rakowski and Beckett they would try to work him in when the company could afford it. That time never came. 9/20/99 A Risk Based Security Plan for US Embassies to Prepare Against Chemical and Biological Terrorism Threats ?ThiS iS a Proposal Prepared in part by BBI. w? - billing which did not happen?per 9/23/99 Letter from BB1 to Richard Beckett drafted by Dan Mellin. Cl? 9/23/99 Interoffice memo from Rakowski and Ward concerning Annual J, Leave. 9/27/99 9/30/99 Annual Seminar and Exhibits. BB1 personnel attended this show. [i 7?93 9/29/99 BB1 Daily Work Log of Lisa Tucker ?Deleted any invoices from a e/ October Rakowski begins reciting three mantras to Dodd which he repeats over and over again during the next couple of months. ?We?re knocking the cover right off the ball? ?Grassman?s on fire.? ?There?s no to this? about how easy it is to runBBI by himself. 10/1 1/99 Letter from Beckett to Dodd and Rakowski. 10/ 14/99 Fax ?om Dan Mellin to Dodd and Rakowski stating Rakowski and Dodd needed a new independent attorney to sort out the matter. He is recommending Chip Obrecht, a former Secret Service Agent. Dodd agrees but Rakowski does not. 9 - 10/ 14/99 Fax from BB1 to Federal Bankruptcies Archive ?With Rakowski and Ward blaming everything on Beckett, Dodd tells them he wants to see everything there is to see on Beckett?s past before he will sign any new agreements. 5? 5? 7 10/21/99 Fax- to Talbot Bank, Nancy from Mi d?l 'ns. This combines Talbot Bank, wire transfers and 10/23/99 Beckett asks Dodd for a private meeting. Dodd tells Rakowski and I Rakowski says to go ahead and meet with him. Beckett tells Dodd: that GTS Duratek will buy BB1 and assume all debts- give them a price, otherwise BB1 will be out of business in 6 months; a client is calling Beckett about BB1 over billing them; that BB1 was fired by because. BB1 sent them a memo and there was supposed to be nothing in writing that could be subpoenaed; that Rakowski was kicked off the Secret Service Counter Assault Team because of lying and he was beaten up because of this; that BB1 was paying Pikus way too much and should not have given Pikus a $30,000 raise and that Beckett?s lawyer is very concerned that BB1 is conspiring against him. Rakowski denied all of Beckett?s charges that Beckett made against BB1 and him personally saying that Beckett is a pathological liar and that Beckett has a dau%hter who hasn?t spoken to him for many years because of all his lying. {/51 a? 10/25/99 Fax fromPaul Rakowski to Ken Goodnight at IRG concerning BIS going to IRG. No payments were ever discovered from IRG to BB1 and IRG later sued BB1 for non-payment of invoices. Rakowski and Ward teamed up to force Cannistraro and Bresett out of the company and numerous resignations soon followed. 01 67) 10/28/99 Bank Reassi ent Sheet ?Shows 4 deletions and 2 ?Kerr to Adjust entries? 01 0 1 10/29/99 Fax to Dodd and Rakowski ??Lisa Tucker resignation 016i r/o 51/ 10/29/99 Beckett approached Dodd in Easton. Beckett said that legal action against BB1 would be initiated the following week. Dodd suggested a mediator a Dan Mellin, Jim Kerr, or Rick Riskie . Beckett said that each was unacceptable and that Rakowski was a liar. Beckett said he had hired Lisa Tucker and that she, Mark Prossner and Mindy Jenkins would all testify for him; he said that the Denver Office was a scam to put money in the Rakowski family pocket; he stated that was a client that BB1 had been over charging; he said that Kerr stated the bad invoices were all . Pikus?s fault; he said that BBl?s new lawyer had a terrible reputation (Dodd didn?t know BB1 had a new lawyer); he wanted Dodd to meet the guy who fired Rakowski and beat him up; he said that Kerr was going to resign as accountant; he said that he mayfile for a 3rd bankruptcy and other items were discussed. 0/ C7 ?1 11/01/99 Letter from BB1 to Beckett drafted by Dan Mellin. C2 9? /0 11/02/99 Letter to Richard Palmer from Rakowski ?severance pay of $2333.34 to Cachet International supposedly for E13. Cachet International was contacted concerning a request to verify invoices and would not cooperate. 0 67? 1 1/4/ 99 Fax to Dodd from Lisa Tucker ?revised numbers in YTD Sales (July Adjustment) Lisa Tucker had already quiz/7071 0 (a {130353592:1}54 Lia/F 1 1/4/ 99 Fax to Dodd from Mindy ?Divisional Financial Statements for October 01 pl 40 11/5/99 Delinquent bill notice for Beckett Brown Company, Inc., Three Church Circle, #175 for $2327.94 {Personal Property Tax Bill 1990) 01 41 mg 1 1/5/ 99 Delinquent bill notice for Beckett Brown Company, Inc, Three Church Circle, #175 for $4635.83 {Personal PrOperty Tax Bill 1991) Of [03 11/9/99 Check #7272 and #7273 to Dan Booze for $1484 for ?Operating Supplies? and Scott Butterfield for $638.14 for ?Operating Supplies?, respectively. (DID ll/ 1 l/ 99 Meeting at BB1 ~Dodd, Rakowski Ward, Grassman Windish and Brad Andrew Rakowski presides over meeting. Rakowski states there have been some problems in the past for the most part resulting from Beckett?s activities. Those problems have been rectified. Rakowski made a presentation that BB1 had lots of IT Security business in the past that had been subcontracted out. Rakowski said that BBI ?5 clients were asking for more IT Security work all the time and the firm believed it should establish an in?house IT Security Division. Ahuge Monsanto IT job was portrayed by Rakowski as a ?done deal?. Andrew gave a brief presentation regarding his ideas on forming an IT Division. Dodd called Andrew that evening with an offer and Brad Andrew in mid December 1999 called Dodd to accept a counteroffer. ?51 11/12/99 Outstanding Invoices Sheets 62 0/ 07-4 11/142/99 Carlissa Tucker last day. Early November BB1 cost reductions calculations showing a reduction in costs of $986,035.58. Dodd questioned Rakowski about this calculation. Rakowski said that no muscle was being cut out of BB1 ??only fat. Rakowski said that he had cleaned everything up, there was no to this, BB1 was knocking the cover off the ball and Grassrnan was on fire. 4 3 11/15/99 Board of Directors Meeting ?Rakowski announces he is reducing his administrative role in the company and will take on a marketing role speci?cally targeting the New York City Market. Pikus appointed to Board . ?of Directors ?Paul has agreed to transfer his stock in BB1 to Tim {1303535921 }55 W1 Ward. Tim has agreed that in return for the stock, he will release Paul from liability in BB1 and compensate Paul as discussed. Tim will then assume the liability and debt from Paul,? Dodd refused to initial these meeting minutes and objected to the reorganization and release of Rakowski. Just 4 days after the extremely rosy scenario meeting with Brad Andrew present, Rakowski is leaving. 1 1/ 19/99 Fax to Paul Rakowski from Ken Goodnight concerning IT Security work. Rakowski shows this to Dodd with his own handwritten notes ?This is the beginning! Aetna, etc. signed Paul? Rakowski faxed this to Dodd and speci?cally mentioned it numerous times along with Monsanto and all the other IT Security work that BBI had coming its way. A 11/19/99 Stirling Silver, Inc. -~An order and Ward needed to know the status on the Pintail Point Pin. Later a number of BB1 expenditures relating to Pintail Point were found. if 57 12/3/99 Resolution in the form of a memo to Board of Directors ?RakowSki resigning as President of BB1 9 r/ ?7 12/ 3/99 ward promoted to ?President? of Beckett Brown International, Inc. 12/ 6/99 Memo to Dodd and Rakowski from Windish ?resignation 5'2 2/ %7 12/6/99 ax from Kerr to Dodd concerning loan balances. Dodd asked for Schedule ofDodd Loans to BBI. 5i 4/ 12/ 1 5/99 Fax. to Paul Rakowski Jr. and Gant Newsom signed by Pikus and Ward. Dodd never saw this until June 2001. 12/16/99 Resolution ofDirectors 5? e/ 62/" 2 12/16/99 Stock Purchase Agreement with release of Beckett becomes of?cial. Dodd was induced to sign this agreement by representations from Rakowski, Ward, Pikus and Kerr. Rakowski, Ward and Pikus told Dodd that Beckett had been stealing from the Company. Rakowski and Ward told Dodd that all of Beckett?s transgressions had been uncovered and they had ?xed everything. Rakowski, Ward and Pikus told Dodd that there would be nothing but smooth sailing and big profits ahead if BBI got this one behind it now. Rakowski and Ward had already shown Dodd proposed dramatic {30353592:1}56 reductions in costs. Pikus assured Dodd that Pikus was committed to the company and would stay with the company long term to preserve and increase the executive recruiting business. Further, Kerr?s ?nancials appeared to show BB1 turning around, just like Rakowski and Ward had said: Jan-Sept ?99 $304,097.53 Loss YTD Oct ?99 4,966.09 Pro?t Nov ?99 13,622.39 Pro?t Dec ?99 (Projected at mid?month) 25,000.00. Pro?t Dec ?99 (Actual) - 23,416.79 Pro-?t 12/ 16/99 ax to Dan Mellin from Ward ?attachment to Polices and Procedures, Executive Recruiting. This fax went to Dan Mellin the same day the agreements were signed. A legal action revolving around Search commissions later ensued. 309/ 12/16/99 Letter to Pikus from Prossner ?Prossner resigns Same daygthe agreement signed and the fax to Mellgn about Commissions Policies, Prossner resigns 4 J3 12/23/99 Fax to Rakowski and Ward ?Grassrnan?s resignation with an I, . incorrect resignation date of January 31, 1999 (should be January 31, 2000). 5] 12/29/99 Letter from Hillma own ?c Barrow to BB1 stating that BB1 is behind in their payments. ii A @715) 12/3 0/99 Emily Welpott received her ?nal payroll checks on 12/30/99. (Ck 7437 for $1006.16 ?gross of$1500 and ck# 7453 for $865.30 ?gross of $1150). Dodd was not informed of Emily Welpott?s departure from the ?rm- and no letter of resignation has been discovered. Dodd was ?rst told by Beckett that Welpott was working for him. 6521:?) 1/1/00 BB1 check #7457 to Hillrnan Brown Darrow for $6300. The company was closed January 1, 2000. - {1303535921 }57 January, 2000: Rakowski repeatedly pressures Dodd for a release from his personal guarantee. 1/4/00 Rakowski, Ward and Pikus presented to Dodd a resolution of the Board of Directors, prepared by the company?s attorneys, which would have provided no bene?t to the company but would have released Ward from his non-compete and allowed him to leave and take the business with him. Dodd refused to sign this Resolution. {0 1/7/00 BB1 Executive Search Mid Atlantic Of?ce Status Report i 5 1/10/00 Denver Weekly Update Report 1/10/00 Board of Directors Meeting ?-Sarah Slenker got a 20% pay increase. Dodd brought up the need to resolve all Stock Redistribution issues quickly and to launch an all out sales marketing and operations campaign to make the company debt free by year end 2000. Dodd speci?cally asked if all bills were being paid-the answer was yes. Security Projects on-going and pending were presented. Stock transfer and personal guarantees were discussed and a name change. Brad Andrew who was unable to attend due to Army commitments suggested the name of Wisdom Security and Executive Services with Wisdom broken down as ?Worldwide Intelligence Security Defensive Operational Measures?. Dodd passed that information to Ward and Pikus. Ward insisted on the name of SZI. Dodd much preferred the Wisdom name. 0'0 15_ 1/20/00 Dodd left a message on Ward?s voice mail stating ?Hey Tim, This is John. Brad will be back down here tomorrow and I?ll get him to read over the legal documents this weekend. The proposal to limit Paul?s liability on the personal guarantees to only 25% was based on some of that long and extensive list of IT business coming in now. Brad and I have both left messages with Grassman on the 703-930-9639 number which have not been returned. I don?t know what that?s all about but I definitely need to find out what?s going on there. Anyway, I?parents are surviving the big snow storm and I?ll be talking to you shortly.? 0 ?7 1/20/00 Rakowski leaves a message on Dodd?s answering machine stating the Monsanto job was a ?done deal?. Rakowski was calling trying to allay Dodd?s concerns and thus get Rakowski?s liability limited. 07} {B0353592z1}58 1/21/00 Phone conversation with Rakowski. Rakowski states that the company needs to move a lot quicker with IT Security. 0 1/26/00 Fax from Hillman Brown Darrow to BB1, Dodd, Rakowski and 1 Jeff Markowitz r? Revised Stockholder Agreement and Resolutions on Stock 0/0 0 l/ 3 1/ 00 Fax from Miles Stockbridge to Rakowski concerning review of proposed Stockholder Agreement and Resolutions for Beckett Brown International, Inc. 1/31/00 Phone message left on Dodd?s answering machine from Rakowski ?It is important for you to know we?re not changing anything in the original agreement.? Rakowski says that they only ?made some clari?cations to protect both ofus?O?O/ 1 JV 1/31/00 The fax memorandum from Miles and Stockbridge with Dodd?s written comments he made at that time. 3 2/2/00 Fax from Rakowski to Dodd ?1 have shared my attorney?s memo with Tim and Eric, and they have no issues.? 073 i 2/5/00 Stockholder Agreement and Resolutions on Stock become of?cial with Dodd signing that day. Why would Dodd sign this agreement limiting Rakowski to 25% of the bank debt and releasing Ward from his personal guarantee of the bank debt? 1. Dodd and Andrew had been told in no uncertain terms by Rakowski and ward that B131 had a huge at least several hundred thousand dollar- IT security job with Monsanto. Rakowski had stated it was ?a done deal? to Dodd and Andrew at the 1/ l/ 99 meeting and numerous times to Dodd from 1 l/l 1/99 through 2/5/00. On 1/20/00 Rakowski left a message on Dodd?s answering machine that Monsanto was a ?done deal?. 2. Dodd and Andrew were also told by Rakowski and Ward at the 11/11/99 meeting and thereafter that the IT Security business for BBI was rapidly growing off an already large base. Dodd had seen for himself plenty of evidence of that in his encounters with Joe Patanella over the prior months. Netsafe was doing more and more work for BB1. 3. On 1/27/00 Dodd, Ward, Films and Andrew met at the very impressive looking Washington, DC Office. Ward and Pikus were very upbeat concerning both current and projected BB1 business. Both Ward and Pikus were also very positive about the potential for a new start-up IT Division and {130353592159 Pikus predicted it would quickly become the largest Division in the Company. Pikus assured Dodd that Pikus was committed to the'cornpany and would stay on for the long term to run the executive search business. All of this was certainly encouraging to Dodd. 4. Dodd knew that Brad Andrew would not sign personal guarantees and could not very well ask Ward to do so under those circumstances. Rakowski had earlier told Dodd he should enter into secret deal with Andrew where Andrew would sign on to personal guarantees but that Dodd would reimburse him. Ward would have been required to stay on the personal guarantees. Dodd told Rakowski that Dodd would never do something of that nature. 5. Dodd did not know of the imprOper activities as delineated throughout this report. 6. Dodd had already been shown a supposedly dramatic reduction in costs in early November of almost $1 million 7. Finally and, this is extremely important, once again just like the 12/16/99 Agreement, Kerr?s ?nancials to Dodd continued to show BBI was rebounding with a +$5050.29 pro?t in January 2000 and Rakowski and Ward said that plenty of work was underway in February when Dodd signed. Kerr?s ?nancials later showed a $53,608.93 profit for February 2000 and including a 17,035.20 pro?t for March 2000, Kerr?s fmancials showed 6 consecutive months of pro?ts. Dodd later learned that these ?nancial statements were inaccurate. Q?b 2/ 6/00 Phone message Dodd leaves on Ward?s voice mail. B. Andrew was trying to set a meeting with Jim Grassman. Ward had earlier said that he couldn?t be there on a scheduled day and Brad was trying to reschedule for February 15,'l6,or 17th. 0?0 - 2/ 8/00 Ward received letter ?om Weston, Benshoof, Rochefort, Rubalcava MacCuish a law ?rm representing Sunshine Canyon, stating that they wished to retain Beckett Brown. V7 2/9/00 Letter from Baker Botts to Pikus concerning Prossner?s claim for $10,637.50 in unpaid commissions. 679' 5? 2/11/00 Board of Directors Meeting ?Projections of Business Operations for February Recruiting over $60,000 and $25,000 to $30,000 per month; for Security, over $80,000 for February and $60,000 to $90,000 per month. Kurt Booth from Cowdrey, Thompson and Karsten is working on the Prossner issue. The Security Project List has NRA, National Mediation Board, Monsanto? and as pending projects. .v 0 2/15/00 Fax ?om Nichols Dezenhall to Ward instructing Ward per their telephone conversation today to cease all activity on the ?Colorado Project? internal BB1 invoice ref#125-004-98 effective Feb 29th, 2000. signed F. Ryan Knoll, copy to Maya Shockley. Ward told the Board of Directors on March 7th that the Colorado Project had been reduced to $7000 a month. Neither Dodd nor the Board of Directors was told about this letter terminating BB1 activity. See 10/11/00 for follow-up on the Nichols Dezenhall problem. 151 1 2/16/00 Dodd left a message on Ward?s voice mail ?Dodd had taped ABC and CBS News and Business Report the night before which said that IT Security is a red hot tOpic. It was also the cover story of Todays USA Today and a segment on that nights News Hour with Jim Lehrer .. Dodd suggested it could be very bene?cial to BB1 to get a letter off to all clients that week along the lines of Brad?s suggestions possibly adding that BB1 would be contacting them in the very near future with additional information. Also Dodd had had a discussion with Lisa Andrew about possibly doing BB1 Accounting. 2/17/00 Ward left Dodd a message objecting to Dodd?s proposal to send a letter to clients promoting the IT Security business. Ward said that he was worried about Patanella and Netsafe not being able to handle the volume of the IT business BB1 may get if BB1 puts out the letter Dodd and Andrew are suggesting, to put out immediately. <72 3 2/21/00 Peter Charles issue 579171 2/21/00 USA Today cover story about computer crime out pacing cyber cop Brad tells Dodd to take advantage of the free advertisement and Patanella is the key to intermediate steps at this time. <57 2/2 8/00 Eric Pikus, Ward?s brother?in?law who was running the Executive Search Division, submitted his resignation letter. The Company refused to release Pikus from his non~compete agreement. Pikus eventually stayed until 6/6/00 when he wrote another resignation letter. Dodd told Pikus that negotiations with Beckett were based on Pikus staying with the company. It took 6 months of effort and tens of thousands of dollars to first acquire {B0353592:l}6l Beckett?s stock and then to redistribute it all in good faith on Dodd?s part. For Pikus to resign after 3 short weeks raises a lot of questions. Although Pikus stated that he would not be competing against Pikus asked Dodd for a release from the non-compete which Dodd refused to agree to. Pikus withdrew his resignation and stayed on for 3 additional months. 0/3 3/ 1/00 Memo to Dodd and Rakowski from Ward ?Business Proposal?. Ward takeOver attempt just three and a half weeks after the 2/5/00 Stockholder Agreement and Resolutions on Stock and one month prior to Andrew?s start date. Ward writes letter stating he wants to take over the company taking all of Sunshine Canyon with him. Had Dodd known that Ward and Pikus were going to take these actions just a couple of weeks after all of the and costly legal negotiations, he would have found some other partners. 6?0? at 6/ Early March, 2000 Several telecons with Dodd and Ward ?Ward told Dodd it?s not about greed it?s about him (Ward), he is doing all the digging to get the company out of debt and the company is going the wrong way by getting into IT Security, said the company could not afford to get into IT Security. Ward said that he would stay on for 120,000 per year, and said it wasn?t about power but he had to have more stock. Ward said that Brad?s . achievements weren?t worth the paper they were printed on. 0?0 3/l/00 Letter ?om Weston, Benshoof, Rochefort, Rubalcava, MacCuish A 10,000 retainer check an engagement letter and agreement were enclosed. 50" f) 0 3/6/00 Letter to Three Church Circle, Suite 175, Annapolis, MD from Hewlett. Packard concerning a strategic realignment of its businesses Ward?s signature is inside. The 175 address is an old address which goes back to the early Beckett companies. 9?73 23 3/7/00 Board of Directors Meeting Since Dodd had been blind sided on the Prossner issue, Dodd asked were there any other legal actions pending on the horizon orany talk of or rumors whatsoever. The answer was no. 079 33? notification of my resignation from BB1. My last day of employment is 3/ 8/00 Memo to Board of Directors from Tim Ward ?This letter serves as 3/31/00. 37) $3 {30353592:1}62 3/10/00 Negotiations with Ward resulted in Ward?s staying with 821 and getting a 10% commission on the investigation division net profit. 6/0? 3/ 14/00 Identical invoice number #00-0027 ?one to Mentor Corporation for $10,332.00 dated 3/14/00 and one to Hill Knowlton for $10,332.00 dated 3/14/00 09. 3Q, 3/27/00 Letter to Pikus from Richard Onsager of Onsager and Werner PLC complaining about not finding a replacement candidate in a timely manner. 0?0 3/28/00 BB1 invoiced Sitel Corporation for $13,000. For this invoice, BB1 received cash from the Talbot Bank Business Manager Program. The invoice was never paid to Talbot Bank. Talbot Bank charged it back to BB1 and in August, BB1 wrote off the invoice. 0/0 a 3/29/ 00 Meeting ?Division Manager Compensation Enhancement Package discussed . Dodd made a presentation on Cyber Security Symposium 0?0? 0 3/30/00 Lisa Berry fired. 3/3 0/00 Receipt from the Narrows Restaurant for $260.50 written on the back of the receipt - Tim and wife, Becky Ward (sister), Grayson Ward (brother) Smith Wesson i if 4/1/00 Brad Andrew hired 4/6/00 Email ?om? US Chamber of Commerce to Brad Andrew about serving on the Technology Policy Committee 0? 0" 4/10/00 BB1 name changed to S21 Corporation. Early April - Dodd receives a call from Jim Kerr. Kerr tells Dodd that he is calling in regards to Beckett?s corrected W-2 issue for 1996. Kerr told Dodd that Richard Beckett had committed massive tax fraud but said that Dodd would not want to open up that can of worms because others in the company had done the same thing. Dodd, the Chairman of the Board, asked for specific names and specific information and Kerr, the Company?s accountant, re?ised to provide the information. {1303535922 1}63 4/11/00 Meeting ?Dodd tells Ward, Pikus and Andrew of the conversation with Kerr. Ward and Pikus deny any involvement in any illegal activity. Other items were discussed. 0?0 - l/ k/ 4/ 13/00 Fax from Cowdrey?s office to Ward concerning Prossner issue. 07/? 11/ 4/13/00 BB1 check #7712 to Prossner for $5,741.63 4/ 18/00 Letter from Baker Botts to Curtis Booth of Cowdrey?s office. 4/19/00 ax cover sheet to Ward from Booth and the other name is blacked cut. 5/0 4/ 19/00 Beckett leaves a message on Dodd?s answering machine stating if company sends in a he is going to turn Ward and Rakowski in to the IRS for bogus expenses. He elaborates on some of this and says he is not going to be the only one who suffers. Rakowski and Ward deny any wrongdoing. 4/24/00 Memo to Ward and Pikus ?'om Andrew concerning some of the things the company needs to do Sf/ 4/24/00 ax to Brad Andgew from Dodd for May 2000 Board of Directors Meeting .5 . 4/25/00 ax from BB1 ~Eric Pikus bio for S21 Executive Recruiting brochure 5?3) 4/27/00 To BB1 from Paychex ?invoice for payroll services 516 6?5- 5/ 9/00 Fax to Rakowski from Dodd?Beckett accusations of an expense check 6% ?57/ made out to Rakowski for $8,000 with no substantiation whatsoever. 4 5/12/00 Letter to Ward from IRG - Joint Marketing Agreement ?821 never received any money from IRG from BIS split later sued S21 for unpaid invoices. 6/0 - ?53 5/12/00 Fax cover sheet from Agilent Technologies to Ward 7 5/ 16/00 Note ?om Rakowski to Ward and B. Andrew my ?00 {1303535921 }.64 May 2000 At some point Ward was apparently contacted by Robert Blanch?eld (the landlord and Beckett?s Uncle) about providing access control time and attendance security systems for Saudi Arabia. 5/ 19/00 Non?disclosure Agreement between Resource USA LLC and S21, Incorporated and Timothy S. Ward, Individually, Together, Jointly and Severally 6L 5/23/00 Memo to Ward and Pikus from B.Andrew ?follow up to his April 24th note. 93 5/2 8/00 Letter from Kerr to Board of Directors responding to May 5th letter from Dan Riley of Baker Botts. Hand- written notes appear to be Ward?s. J7) 'Ct 6/ 1/00 ax to Dodd from Pikus requesting a release statement, Dodd refused to sign. It is later discovered that Pikus is working at Heidrick and Struggles. 0?1) ?3 6/ 6/ 00 Pikus resignation letter to Board of Directors. 9 6/6/00 In a telecon between Pikus and Dodd, things are not working out, search blanked again in May, his work ethic is being questioned, his hours putting in are being questioned, Ward has told him to micro manage Ron Mal? and Chase Scott, he felt unwelcomed at the job fair, said he puts in more hours than anyone, Rakowski says his leads are sure things, Rakowski?s leads are no good -that they are basically cold ?calls, said Ward is looking for the long ball, that Ward doesn?t get there until 9:30 or 10:00 in the morning, that Ward leaves the of?ce at 3 pm. Pikus said that Ward is insecure because B. Andrew is ?nding de?ciencies. Talked about operational and organizational de?ciencies blaming those on Ward. Said that Beckett?s actions since he left the company, have had a very negative effect on Pikus? reputation. Said the IT Security business will blast off beginning in July and other things were discussed. ?0 7 6/ 9/00 Follow-up to April 24th note on same topic. 57? (p 6/9/00 Meeting 8:30 am at Restaurant 67 {130353592:1}65 6/ 9/00 Beckett approached Dodd in Baston. Beckett stated that he knew Pikus was leaving and that Pikus was trying to hire Mark Prossner and Emily Welpott away from him; that Dan D?aniello was going to call Pikus?s new firm and put the screws to him; that Angelo Bizarro?s child was working for him (Beckett); that he was hiring Bob Blitzer; said he had 40 some people at the Easton Police Chiefs golf tournament. (j 6/13/00 Letter from Ronald Jarashow to Ward 0/21? 7 . 6/13/00 L. Andrew and Dodd discussed the disappearance of prior year?s tax returns and Forms 941. Mindy, when asked by L. Andrew for cepies of these documents, told L. Andrew that she could not find them. J7) 6/14/00 Letter to Chuck Selby at Talbot Bank from Ward requesting a 3 release of Ward from the personal guarantees he had signed on to. 0/0 6/ 14/00 Non?disclosure agreement between BBI and Logicon DPC Technologies 0?0 ?7 6/ 16/00 Beckett approaches Dodd again. Beckett says he is getting a raise to $3 00,000. He is buying a GTS company along with his father and someone else~each will have one?third ownership; Blitzer and Leadroot are going to work for him; said Amy DiGeso was recently fired; that Dan D?aniello had asked President Bush if he had ever heard of Paul Rakowski and the answer was no; that he would like to help 821 in Executive Search. - 7 8/ 6/16/00 Letter from Brad Andrew to James Kerr 76; I 6/ 16/00 Ward sent a proposal for services to ARAMCO containing cost numbers. Ward repeatedly denied ever sending cost numbers to ARAMCO. This proposal was found in a stack of materials in Robert Blanchfield?s office on 7/18/01. 00/097 6/20/00 June 20, 2000 ?Pikus resigned as Vice President and Treasurer and from the Board of Directors. 6/27/00 Brad Andrew?s rewrite of the S21 Business Plan 757 6/28/00 Letter from Ron Massingill, PC to Bly enclosing a check for $1,200 and requesting a preliminary level 1 investigation. {1303535921} 66 6/29/00 Letter to Selby from Brad Andrew enclosing Business Plan and requesting a $100,000. increase in line of credit. 6/30/00 Letter to Kerr from Brad Andrew 74 7/7/00 Board of Directors Meeting - Numerous accOunting issues involving Mindy discussed ?identify to Mrs. Andrew relationship between Mindy and Paychex regarding the federal withholding tax payments.? 6% 7 39/ 7/ 1 0/00? Letter to Kerr from Brad Andrew 07/ 3 7/ 12/00 ?At the request of William W. McAllister, In, Miles Stockbridge, PC, the $21 Corporation was retained to reconstruct an accident which occurred on US RT 50 .5 miles west of Almshouse Road, Talbot County, Ward did not show up for work on July 12th, 13th and 14th. There is no evidence that 821 received a penny for this work. 07) 0? 7/13/00 Letter to Kerr from Brad Andrew an A 7/ 13/00 Carouge trial begins. 0/0 7/ 14/00 Letter to Ken from Brad Andrew 07) ?37 7/ 14/00 Carouge trial ends. 7/ 14/00 Mindy makes journal entry con?guring Maryland Withholding calling it a February adjustment. I 7/14/00 Rakowski BOD resignation. [f7] 7 3 7/ 17/ 00 Mindy resignation Andrew had earlier told Mindy Hart to - reconcile the Accounts Payable Detail to the General Ledger and the Accounts Receivable Detail to the General Ledger because nothing matched. This may be the ?policy changes? that she writes about in her resignation letter. Also, during the July 7, 2000 Board Meeting, L. Andrew asked Ward about how payroll taxes were being recorded. The accounts showed money due and Paychex was doing the payroll and all taxes were paid immediately to Paychex who in turn submitted them to the IRS, etc. Ward said something to the effect that he and Mindy had been looking into it and were working on it then. L. Andrew was not greatly concerned because Ward assured L.Andrew that Paychex was handling everything. At this point L.Andrew, Dodd, and B. Andrew had no knowledge of the Prossner issue, the EFTPS issue (not using it when required to do so), and the failure to deposit federal taxes. Mindy also tells Brad Andrew during her exit interview that she is ?not going to be the fall guy?. Mindy was referencing the Fortune Magazine cover story that Dodd had brought up on Aug 17, 1999 before the general meeting with employees. She specifically mentioned Beckett, Rakowski, Ward and Kerr. I Summer Ward states that a slow down in the investigations division is a seasonal phenomenon and happens every summer. 7/ 17/00 Ward took a weeks vacation without giving any prior notification and there is information that that vacation was spent with Carouge following his conviction. 5W 7/24/00 S2I Expense-Known Constants prepared by Brad Andrewl-JZJ??ol 7/25/00 Letter from Ward to- the IRS ?Disa0reement with proposed change in his mortgage interest deduction. [77? 7/ 27/ 00 Letter to Ward from Chuck Selby following up their conversation of that morning rejecting a release of Ward?s personal guarantees and rejecting an increase in a Credit Line extension for 7/27/00 Invoice to USX Corporation from BBI for $10,000that was sent to Talbot Bank Business Manager Program. S21 received the cash. The client never paid, the invoice was charged back and eventually written?off . Dodd, B. Andrew and L. Andrew do not know this is going on until months later when it was written off. my (7) {7 . 7/31/00 Letter to Ward from Dodd requesting a formal Stockholders Meeting to be held on September M7 7 7/31/00 Another letter to Kerr from Brad Andrew. ?3 7 .7/31/00 Mindy Jenkins leaves {30353592:1}68 7/ 3 1/00 Memo to Andy concerning information developed in Dallas and a . . . 0 mention of Jury tampering. - (i 15 7/31/00 Telecommunications Expense Summary produced by Brad and Brenda Lurie showing a dramatic reduction in telephone expenses. 07/ 8/4/00 Lisa Andrew letter to Buck Duncan at St. Michaels Bank requesting a $100,000. Line of Credit Note for 8/7/00 Dodd leaves Rakowski a voice mail concerning moneys coming due and what is being found at 821 (7/0 8/8/00 Notice to Stockholders from Tim Ward of a Friday September 1st meeting at his home (Ward later changed his mind about having the meeting at his home.) 002/ 8/ 10/00 Confidentiality and Non-Disclosure Agreement between A1~Lahth, Mubarak Rana and S21 Corporation signed by Ward and Ran-a 0 3 8/ 10/00 Memorandum of Understanding between Al?Lahth, Mubarak Rana- and 821 Corporation signed by Rana and Mansour A1 Ahmed and Ward. Ward was questioned repeatedly to produce this document and he said he couldn?t find it. Wen/0 p, 8/10/00 Letter to Fawaz A1 Ahmed signed by Ward that was found torn in A half in the trash can on January 20,2001 52/0 .r 8/10/00 Dodd borrows 100,000 from St. Michael?s Bank. 0e 0 (a 8/11/00 Dodd signs note loaning 321 $100,000 at) eel/07 8/11/00 Board of Directors Meeting Minutes 0 8/15/00 Letter to Keir from B. Andrew C7 9 8/23/00 Email to Becky Ward ?'om Tim Ward will gladly pitch your product in Saudi Arabia.? 07) 0 8/24/00 Letter to Stockholders from Brad Andrer announcing meeting to be held on September 15t at Ward?s home 072 {130353592 1}69' 8/26/00 Email to Jay Bly from Gus Gary expressing concern about overcharging on an invoice and using the term ?exploitive? a, 8/28/00 13111 eom Chance?s Service Center for $910.08. e/ /5 8/31/00 Tim Ward commission calculation schedule. 9/6/00 Emails exchanged between Lisa Andrew and Ward concerning commissions 9/8/00 ors Infotek, Inc. was established Mr/ 7 x/9/ 6/00 Invoice from Ultra Scan to 821 for Equipment, attention Ward [/9/11/00 Letter to Fawaz from Ward 9/11/00 From All?rst Bank to Ward concerning overdraft $618.47 on his account. /02 9 9/11/00 Statement sent to Marriott ?om Talbot Bank for $5,000. Brad Andrew and Lisa Andrew set this up with the bank on or around September 1, 2000. Prior to this the bank was not sending out Statements because the system had been circumvented. These statements truly created chaos. As far as Lisa Andrew knew, these clients were slow paying but in actuality they weren?t. They said didn?t owe the money. This particular invoice was eventually written off as were many others. /c2- 9/15/00 Ward and Rana depart for Saudi Arabia. 9/15/00 Letter to Brian Burk of Westheimer Transfer and Storage Company authorizing Allied Van Lines to move Jay Bly ?om Sugarland, I TX to Severna Park During a previous BOD meeting, Mr. Ward as both the President of and the Director of the Security and Investigations Division (for which Mr. Bly worked) had made the case for andreceived a $10,000 a year pay raise for Mr. Bly. Mr. Ward?s rationale was that Mr.- Bly had been with the firm for a year, that he was selling his house in Texas and was moving to Maryland, and that he would then manage the Security and Investigations Division while Mr. Ward was in Saudi Arabia. Speci?cally, in reSponse to a question from Mr. Dodd about whether Mr. {130353592:1}70 Bly could manage the Security and Investigations Division ensuring that the Division?s revenue stream would continue and that the forecasted work would be obtained and completed, Mr. Ward assured the BOD that Mr. Bly could manage the Security and Investigations Division ?no problem.? At no time during his negotiations for and championing of Mr. Bly?s pay raise did Mr. Ward mention paying for Mr. Bly?s move from Texas. Yet, he did mention Mr. Bly?s move from Texas as part Of his rationale supporting why Mr. Bly required the pay raise. Speci?c Circumstances Regarding the Moving Expense Authorization Letter. On the morning of 20 Sept 00, Mr. Bly came to Mr. Andrew in his of?ce at and said that Mr. Ward was on the phone from Saudi Arabia and wanted to speak with Mr. Andrew. Mr. Ward had departed for Saudi Arabia on 9/ 15/00, and this was the ?rst phone call from him Mr. Andrew went to Mr. Bly?s of?ce to Speak with Mr. Ward, since Mr. Ward had called Mr. Bly rather than Mr. Andrew. After a brief discussion concerning his trip and the general situation, Mr. Ward told Mr. Andrew that Mr. Andrew needed to sign a moving expense authorization letter that Mr. Bly had prepared, indicating that SZI would pay for Mr. Bly?s moving expenses from Texas. Mr. Ward said that he had meant to sign it prior to his departure for Saudi Arabia, but that he had forgotten or not gotten to it with all that was going on with his business trip. Mr. Andrew indicated that this was the ?rst that he had heard that the company was responsible for paying Mr. Bly?s moving expenses. Mr.Ward stated that this had always been the case. He elaborated that Mr. Beckett and Mr. Rakowski had promised Mr. Bly that the company would pay Mr. Bly?s moving expenses during the original contract negotiations when Mr. Bly had been hired. Since Mr. Andrew had not been with the company at that time and since Mr. Bly worked for Mr. Ward not Mr. Andrew, Mr. Andrew was not familiar with the speci?cs of Mr. Bly?s employment contract. Mr. Andrew asked Mr. Ward how much this was going to cost and he said about $8,000. Mr. Ward further offered that this document would allow Mr. Bly to proceed with his moving arrangements, but that the actual payment would not be due until after his move, which would be some time in the future. He basically indicated that all of the projected Security and Investigations Division?s work between that time and the completion of the move would provide the funds required to - pay for the move. After the phone call with Mr. Ward was completed, Mr. Bly brought Mr. Andrew the moving expense authorization document to sign, which he did. 9/2 0/00 Letter to Brian Burk of westheimer Transfer and Storage signed by Brad Andrew. 07? t" cl Lf 9/25/ 00 L. Andrew letter to Bu Duncan at St. Michaels Bank requesting additional funds. 0'3 #9 A 6/ 9/26/00 Email exchange between Ward and B.Andrew. /9 9/26/00 Dodd from St. Michaels Bank. We /9/27/ 00 From Ward t5? Jay Bly ?Jay, also keep an on my email just in case.? ?71 9/28/00 Dodd loans s21 $75,000. 0?9? 30 9/ 28/00 Letter to Board of Directors from B. Andrew concernin0 minutes of Annual Stockholders Meeting held on Sept 1, 2000 (/9/29/00 Letter to Dodd, Ward and B. Andrew from Andrew stating a -, Special Meeting of the Board of Directors is scheduled for October 2, 2000 to discuss the current critical ?nancial situation which threatens the existence of the corporation. 502/ 9/29/00 Fax to Ward in Saudi Arabia from B._Andrew concerning the Colorado Project. Now the biggest customer that 821 has, Nichols Deze?nhall, is questioning its bill. J7) 0/00 Exchange of emails between Ward and L. Andrew concerning documents. 079? <3 9/3 0/00 Bill from Choicepoint (database for back ground checks) to S21 Corporation showing items ??ee of charge? to ?Cowdrey? and to ?Entremed?. 57)? [?37 (/10/2/00 Email to B.Andrew ?'orn Ward. 6?0 39? 10/2/00 Meeting uTeleconference between Ward in Saudi Arabia and Dodd, B.Andrew and L.Andrew. Ward stated that the probability of success with - Aramco was at least 80-90% and acontract should be signed within 30?60 {130353592:1}72 days. There was an official meeting to be held at the end of that week, meaning Saturday or Sunday. Loan agreements were discussed and a number of other items were discussed. The call lasted 7 hours. (33? 7 Email to B.Andrew from Ward wUpset with loan agreement 1 10/5/00 L.Andrew Speaks with Kerr out Richard Beckett?s W?2?s and IRS issue regarding payroll. r/ 3 Fax date on a non?competition agreement between Resource USA LLC and Ward, which among other things? states ?Timothy S. Ward owns or controls 821, Inc.?6m?/ 10/9/00 USX calls about statements coming from Talbot Bank We? 10/10/00 Email ?om Ward to B.Andrew ?More problems getting Ward to Sign loan agreements. States that if Dodd won?t make concessions he is prepared to leave Saudi Arabia the next day. a1) 4/ 10/11/00 L. Andrew fax to Dodd regarding Nichols Dezenhall and USX. With the Talbot Bank Business Manager now sending statements out, clients are consistently calling questioning the billing. L.Andrew and 13. Andrew don?t understand what?s going on. And later more information was found regarding Nichols Dezenhall ?See 2/ 1 5/00? Ward was instructed to cease all activity on this account and yet he was still billing them. The net result was $25,000 in charge backs and eventually written?off causing a huge cash ?ow I problem which Dodd had no knowledge was coming and was totally blind? sided by. . 6% . 10/ 1 1/00 Fax from L.Andrew with email traffic between Ward and S21, Severna Park. (j 0/ 12/00 More emails between Ward in SA. and 821. (f 10/ 13/00 Fax from L. Andrew to Dodd ?Credit card charges for air ?ights 2' 10/2 6/00 Letter written to Mr. Joe Willenpart (Lippizaner Horses of Austria) with a hand written note on it that states it?s a sample sales letter from S21 to an individual.. Information developed later that this was a real client looking for a Security Company in regards to a ?Safe Room? being built in 1 73 his house. Willenpart talked to the Annapolis Group, following the Alliance with S21 and Dodd, and appeared to be very interested. Then someone else apparently got the job. The initial contact with Willenpart was through Mike Ford, a contact of B. Andrew?s. B. Andrew relayed the information to Jay Bly. The original copy of this letter was found in Bly?s file. ,4 r? 10/26/00 Letter from Sarah Slenker -resignation. 0 0" 3?1 10/27/00 Indemnity Deed of Trust to Richard and Melanie Beckett 01/0 53 1 1/2/00 Letter from Talbot Bank attention Lisa Andrew ?-The rate of 1.95% will remain the same for the business manager program and reiterating that 821 must find ?nancing elsewhere and that the loans. will not be extended or renewed. 751/ 11/6/00 Express mail letter to Ali F. Bonder, of Klausner, Dubinsky and Associates from Jay Bly This is an engagement letter to render security consulting services. Project fees are $2,475. Plus reasonable expenses (mileage .325 per mile, parking, state and local taxes). No payments have been discovered for this job. 07) 11/9/00 Email to Ward from Brad Andrew canceling non?critical services r/ 60' 11/16/00 Letter Ms. Kathleen Jeavons from Bly ?we discovered that the billing for the month of April of 2000 was somehow overlooked? [a 11/20/00 More emails asking what Dodd?s doing about the Dec. 2nd balloon it. payment. Ca 1/21/00 11:31am Dodd refused to lend the company additional money beginning August 11, 2000 unless he received 1% of the net profits for every ten thousand dollars loaned. The high risk demanded a significant rate of return. This demand by Dodd infuriated Ward. Ward eXpected Dodd to lend the company money for little or no return despite the high risk involved. When Dodd demanded the same terms for the balloon pay off, Ward became enraged. Just moments later, Ward sent the email to Bly stating he was too hot under the collar for discussion with Bly and that Bly should sterilize the office as they had discussed before Ward left for Saudi Arabia. -.- 11/2 1/00 L. Andrew letter to William Duncan of St. Michaels Bank requesting $50,000 loan. 12/1/00 Dodd borrows $50,000. from St. Michaels Bank. 12/1/00 Dodd borrows $100,000. from St. Michaels Bank. ?/tl/OO Email to Brad Andrew from Ward ?He has had a budget for 2 years on this project and has not found a suitable system, yet. He is under pressure to use or lose the money and needs to move on this in the next three months.? ?So, at this point, 1 have 6 RFP and 3 additional requests for demos, 2 of the 3 have current access control issues.? [/12/5/00 Ward returns from Saudi Arabia and takes the rest of the week off . 12/5/00 Letter to B. Andrew from Markowitz at Miles Stockbridge. 0724a 7 Balloon payment fiasco. .. 12/ 8/00 Letter to Mullen, Sondberg, Wimbish and Stone PA from Roy .Cowdrey concerning the audit ?It is not possible for me to tell from the information submitted by Mr. Andrew who the underlying carriers were. That would be the first step necessary and then forwarding this request to the respective carriers who would have to con?rm payment? 70 /2/11/00 Dodd considered Ward?s Saudi Arabia ?projected proposal ?gures? to be critically flawed and Ward?s behavior and responses to questions alarming. Dodd was later told in 2001 by Mubarak Rana that Ward had a private deal in writing for him to get personally 15% of the gross revenues for all Saudi Projects awarded There was a new client using S21 for background checks. Ward stated the company would be invoicing Allied Waste (Sunshine Canyon) for for work already completed. The company never got a penny. Ward stated the company a would perform a job for the NRA in January for between The company never got a penny. The company also did not get awarded the inaugural job although a 75% probability factor had been stated. 7/ 12/ 12/00 Corporate Resolution A letter to Board of Directors from Dodd stating that a new Chief Operating Officer with total and absolute authority will lead the company subject to the Board of Directors and must be named 1 immediately. [97) 701. 12/ 13/00 Dodd loans S2i $50,000 to pay off the balloon note and to pay off some miscellaneous bills. 072/ 7 3 12/13/00 Dodd loans 321 $100,000. 072 79/ 12/13/00 Corporation Resolution naming Brad Andrew as Chief Operating Of?cer with total and absolute authority to lead the company and to delegate both authority and responsibility at the discretion of the Board of Directors. 0/0 7 12/ 13/00 Letter to Mullen Sondberg, Wimbish and Stone PA from Dan Mellin stating that S21 are believed to be current in its obligations to Hillman Brown Darrow as of Dec 31, 1999. A letter dated 12/29/99 to Tim Ward, President marked personal and confidential stated that BB1 was - more than $8,000. in arrears and had been behind in payments since ?a while ago? A check from S21 dated January 1, 2000 in the amount of$6,300 was paid to Hillman Brown Darrow . January 1st the company was closed. 7' 7 l2/ 15/00 Email to L. Andrew from B. Andrew showing paid payables 7 12/ 15/00 A letter to Ms. Karen Burris, Sales Coordinator, Pintail Point ?orn Tim Ward of Stirling Silver LLC concerning a copy of Stirling Silver?s invoice for silver pins. The phone number for Stirling Silver LLC is listed on the letter as 443-324-1097 which is 821?s company cell phone. @171" /7 7 12/18/00 Fax to L. Andrew from Ward we AM 12/18/00 Independent auditors report from Mullen, Sondberg, Wimbish Stone, P.A ?As more fully described in note 10 to the ?nancial statements, management applied fraudulent practices to borrow from a bank, overstated their sales and did not provide apprOpriate documentation for certain expenses. In our Opinion, because of the transactions discussed in the preceding paragraph, the financial statements referred to in the first paragraph do not present fairly, in conformity with accounting principles generally accepted in the United States of America, the financial position of 821 Corporation as of December 31, 1999, or the results of its operation or its cash ?ows for the year then ended.? ?Note 10 Financial Statement Misstatement For the year ended December 31, 1999 management, which included several of the shareholders, created fraudulent sales in order to borrow additional funds from a bank. This overstated sales {30353592:1}76 and overstated expenses by allowing funds to be acquired to ?nance excessive expenses for of?cer salaries, meals and entertainment, and commission expenses. Furthermore, there was insuf?cient documentation for several categories of expenses such as commissions, telephones and payments to the shareholders. The cumulative effect on the financial statements could not be determined.? ?5 12/19/00 ax from. Charte Towne Partnership concerning release terms with handwritten note from Brad Andrew attached are rental properties in the Kent Island area that Dodd, 13. Andrew and L. Andrew are evaluating thinking at this time the company still has a viable shot with business in the pipeline and awaiting payment for. One of the properties looked at is the very one that Ward and Bly are operating out of, to the best of Dodd?s knowledge, today as Chesapeake Strategies Group. 07? (AW 19/ 00 ax from L. Andrew to Dodd that states Ward says there is no ?nancial information included in this pr0posal. Ward had stated since June that he has not presented any pricing information to the Saudis. Dodd later discovered that Ward had actually quoted prices to the Saudi?s back on June 16, 2000. A June 16, 2000 PrOposal with price information was discovered in Blanch?eld?s of?ce on July 18, 2001 in a meeting at Blanch?eld?s of?ce with Dodd, Masonis, Vezeris, Blanch?eld and Blanch?eld?s son. 12/20/00 ax from L.Andrew to Ward ?Letting the auditor and lawyer handle Ward?s assertions. 32/ 12/21/00 Meeting at Pat Hantske?s of?ce -Dodd, B. Andrew and L. Andrew Brad Andrew got a message that Ward had sent all employees home at lunch time. The company had already committed to closing the following day, Friday, and Tuesday, the 26th, following Christmas. In light of the company?s horrible ?nancial position coupled with the statement Ward made on 12/11/00 that he didn?t have time to perform domestic investigation duties and work on the Saudi Arabian proposals at the same time, the decision he made was totally unacceptable. Ward did not show up at the of?ce on Wednesday, Dec. 27th-said he was sick. He missed Thursday, Dec. 28th and said he was taking a comp day on Friday, the 29?. 1/28/00 Email to Ward from 13. Andrew ?T0pics for discussion for the upcoming year 7 1/2/01 Exchange of Email between Aramco Representative, Adil A1~Ma1ik and Ward 0 i, 1 1/2/01 Board Meeting Ward makes a statement on January 2?d in response to Dodd?s question about what happened to the investigations business that Ward had previously projected would range from $60,000 to $90,000. Ward indicated that there was only so much one person could do and he had been in Saudi Arabia. During the July 7th Board of Directors meeting, Mr. Ward as both the President of and the Director of the Security and Investigations Division (for which Mr. Bly worked) had made the case for and received a $10,000 a year pay raise for Mr. Bly. Mr. Ward?s rationale was that Mr. Bly had been with the ?rm for a year, that he was selling his house in Texas and was moving to Maryland, and that he would then manage the Security and Investigations Division while Mr. Ward was in Saudi Arabia. Speci?cally, in response to a question from Mr. Dodd about whether Mr. Bly could manage the Security and Investigations Division ensuring that the Division?s revenue stream would continue and that the forecasted work would be obtained and completed, Mr. Ward assured the BOD that Mr. Bly could manage the Security and Investigations Division ?no problem.? At no time during his negotiations for and championing of Mr. Bly?s pay raise did Mr. Ward mention S2i paying for Mr. Bly?s move from Texas. Yet, he did mention Mr. Bly?s move from Texas as part of his rationale supporting why Mr. Bly required the pay raise. Dodd and B. Andrew are stunned by Ward?s comment that there was only so much one person could do and that person?s been in Saudi Arabia. What?s Bly been doing? 0? G1 1/3/01 A fax from Ward to Mr. Bill Jasien. Bill?s name is crossed out and Paul Rakowski?s name is written in. It is a letter to Mr. Brian B. Montgomery, Director of Operations of the Presidential Inaugural Committee. This appears to be a hastily written letter to get the security job for the Inaugural similar to the one the company got 4 years earlier. ?One of our investors, Mr. Paul Rakowski, retired United States Secret Service Agent, whom I understand is a former associate of yours and Mr. Bill Jasien, former President George Bush,Sr. staff member, offered to provide a reference for our company.? Beckett later told Dodd that Phil Leadroot is the individual who received this letter from SZI and immediately threw it in the trash can. Though Ward told Dodd that there was a 75% probability of getting the Inaugural job, in hindsight, it appears that 821 had no chance. .23 {130353592:1}78 1/4/01Email from Paul Rohde, Industrial Security Representative of Lockheed Martin Corp?, to concerning travel advisory information for overseas areas 0 I 1/5/0 lWard told Brad Andrew that he had spoken with Sunshine Canyon representative who said the job had been canceled in October 2000 during a phone conversation with Sarah Slenker, a former employee. Ward said that Slenker did not tell him the job had been called off. 1/6/01 Meeting at Brad?s house between B. Andrew, Dodd and Jack Glessner concerning possibility of teaming up with Glessner in the future. Glessner was quali?ed to install security systems in Saudi Arabia. 5 1/8/01 B. Andrew called Slenker who said she had no recollection of the call to cancel the job. Slenker had worked extensively with Sunshine Canyon. /9/01 37.3 minute call by Ward to Fawaz Al-Ahmed (A1~Lahth general manager). a 1/ 10/01 Ward arrived at 11:20 am. Ward ?nally gives Andrew a list of A, Saudi contact numbers almost 1 month late (and 1 day after calling Saudi Arabia). 0 - 7 1/11/01 Fax from Tri-West investigative Services, Inc. to Ward concerning call backs ?i 3/ 1/ l/ 01 Meeting with Dodd, Ward, and B. Andrew ?2?d part is a . teleconference between Dodd, Ward, B. Andrew and L. Andrew 6 1 /1/15/01 3.7 minute call by Ward to Fawaz Al?Ahmed. 4.8 minute call by Ward to Fawaz Al?Ahrned. 3.7 minute call by Ward to awaz A1~Ahrned. 01- /0 '1 1/20/01- Corporate ?les are removed from of?ce. 1/21/01 More ?les removed from the of?ce. 1/22/01 Ward comes in late that morning, appears to be very surprised, asks B. Andrew why he didn?t call Ward because he could have helped move the stuff out of the of?ce. Bly arrives later and asks Dodd if he can get his personal items back. Dodd responds that as far as he knows none of Bly?s personal items were removed from the offices but Bly could give Dodd a list of items that were missing. Ward called Saudi Arabia twice and Sidley Austin once almost immediately after he discovered the files had been removed. 18.0 minute call by Ward to Fawaz Al?Ahrned 2.7 minute call by Ward to Fawaz Al-Ahrned I 2) 1/23/01 ax from Ferrurn College stating Tim Ward attended with a major field in study of Administrative Support and Fashion Merchandising but no degree was earned. Ward?s resume states ?Ferrurn College Liberal Arts Degree 1982?1985? 0 . 1/24/01 Letter to Rakowski?from Dodd stating the Corporation has defaulted? 1/24/01 Letter to Ward from Dodd stating the Corporation has defaulted 0 "/61 1/24/01 Letter to Board of Directors Andrew and Dodd are calling for a Special Meeting of the Board of Directors on Friday, January 26th 2001 at 3:00 pm at Severna Park. /7 7_ 1/25/01 The rescue ship (Saudi Arabia), the lifeboat (Presidential Inaugural), and the life preservers (Sunshine Canyon, NRA and others) all failed to materialize despite repeated assurances from Ward that some of the work had already been completed and other was almost certain to be coming 821?s way. 1/26/ 01 Letter to Rakowski from Dodd stating the Codifporation has defaulted sent via certified mail to his home in St, Michaels. r- 1/26/01 Board of Director?s Meeting 1.Ward arrives 43 minutes late. a 2.Ward has no feedback concerning Saudi projects. 3.Ward said he had called Saudi Arabia but had been unable to speak with anyone. 4.Ward said he had never found the signed agreements he had made with Blanchfield, which we had repeatedly requested since 9/1/00. On 9/ 1/00 Ward stated he had searched the of?ce for those agreements and they must be at his house. Ward now says the signed agreements were in his files in the office thatlhad been removed. {30353592:1}80 i 5 .Ward said he did not know of any projected security business for the corporation. 6.Ward made a motion to file for bankruptcy. Motion denied. 0 0 conversations and fax transmissions between Ward and Paul Rakowski/Amy (Before, during and after Ward?s trip to Saudi Arabia, numerous phone DiGeso are evidenced by phone bills.) /26/01 Andrew wrote a letter to Ward terminating his employment which, among other things, addresses the fact that Ward had ?assured the Board of Directors during 11 Dec 2000 and 2 Jan 2001 BOD meetings that the Sunshine Canyon project was completed and that the client could be invoiced for On 5 Jan 2001, {Ward} informed the Corporation that the client had just told {him} that they (the client) had actually canceled- the project in Oct 00.? Andrew also addressed the facts that after much time and money, no Saudi Arabia projects materialized even though they were on a ?use it or lose it? time frame and supposedly had immediate security concerns. Andrew also stated that Nichols/DeZenhall, another major client, had disappeared. He also stated that the NRA job never materialized as Ward had assured it would during the 12/11/00 Board meeting. 0 1/2 6/01 Letter to Ron Jarashow from Mike Kopen responding to Jarashow?s request for documents he has requested on behalf of Ward. 5; 1/31/01 Letter to Ward from Brad Andrew formally following up on two previous verbal requests to return all S21 property. 0 2. 3 2/6/01 Dodd meets with Blanchfield and Blanchfield?s son following a phone call from Blanchfield. Blanchfield states he has information that Ward and Bly have left the company, taking all company business with them including the Saudi projects. Blanchfield states that he would like to join forces with the company to prevent Ward from capitalizing on the Saudi Arabian deal and cutting Blanchfield out from his percentage (which he did not quantify). He said they had recently found a human ?bug? in their office who immediately resigned. They showed Dodd that they had a large stack of documents relating to the company and Saudi Arabia but they wanted a letter ?om company lawyers requesting those documents so as to avoid collusion charges. .J Vi {130353592:1}81 2/8/01 Letter to Blanch?eld from Mike Kopen requesting all documents relating to S21 Saudi Arabian business efforts 0/ ?3 2/8/01 Beckett ?nds Dodd in Easton stating he wants to help Dodd get his money back. Beckett said the following: Leadroots? company did the 7 VA Inaugural and Leadroot threw S21?s proposal in the trash because Rakowski and Ward prevented him from joining Said he never even talked to Bly about helping to pay his moving expenses ?he plans to get into the security business in August with Blitzer, Cannistraro, Bresett and others? Rakowski, Ward, Bly and Sarah and possibly Mika are about to or already running a security business.- Bresett despises Rakowski and would like to investigate this entire matter - Rakowski and Ward had illegally bugged a company and that Beckett had proof on that bugging ?he was talking to Dan Riley he was leaving his wife ?Beckett talked about other items. M271 1/01 Verizon bill showing telecons between Ward and Saudi Arabia 0 ?3 2/ 12/01 Letter to Ward from Bene?t National Companies concerning ?3 S, 2/ 12/01 S21 Talbot Bank Business Account a 3Q 2/13/01 S21 Resolution terminating 401K Plan 0/ ?3 2/ 14/01 ax from Pat Hantske to Dodd regarding audit report 2/22/01 Fax to L. Andrew from?Entremed concerning a signed release for background checks 2/23/01 MD Dept. of Assessments and Taxation ?Entity Detail? on Chesapeake Strategies/Group ?Tim Ward is resident agent formed 2/23/01. 0 7 /6 a 2001? Chesapeake Strategies Group Website ?Almost identical in most places to 821?s website and brochure 6} 2/27/01 Fax Saudi Arabia contacts to The Annapolis Group 0 r? *2/28/01 Alliance Agreement between 821 and The Annapolis Group. 0 {1303535921 }82 3/1/01 ax to Mubarak Rana that Ward is out and Annapolis Group is authorized to act on behalf of company 0 43?) 3/5/01 Letter to 821 attention Dodd from Talbot Bank ?orn Chuck Selby concerning new corporate resolution and delinquent status of credit cards issued to with outstanding balances of$15415.48 0 P437 3/ 9/01 Fax from L. Andrew to Dodd concerning Mary Sundeen from Entremed Conversation about Entrerned unpaid invoice. Sundeen mentioned that Ward was providing security for Entremed?s annual meeting which S21 had done in the past. 0 79L 3/9/01 Telecon with Eric Pikus and Dodd -Pikus had called revarding trying to get Ward to earlier sign off on 401K papers. 0 3 2 3/14/01 Ultra Scan letter 0 - 5? 3/30/01 Certi?ed Letter to 821 from Talbot Bank concerning loan number 1 02-152851-61 maturing Apt-1'1 14, 2001 payoffas of3/30/01 $251005.15 7 4/1/01 Dodd'signs note loaning s21s350,000 0 be?? 4/2/ 01 Rana talking to Al-Lahth and they have talked directly to Ultra Scan. Rana wants to use another agent. 0 My 01 Rana says Ward is pushing the pasSport project and had called him a last week saying Rana would'get his cut. 5 4/13/01 Letter to Marilou Nuru from 821 stating The Annapolis Group is 821?s Alliance partner. 0 2 40 4/ 17/01 Whit Turner at Ultra Scan requests a copy of the letter we sent to his company. 5 4/24/ 01 ward and Bly ?le for P. 1. License under Chesapeake Strategies (Group). F2 4/27/01 Annapolis Grou thinks Ward may be interfering with our releases by Al?Lahth. (a 6 5/1/01 Telecon between Dodd and The Annapolis Group ?Dodd is told about the Willenpart safe room issue, discussion about a release from the Trading Company, and Whit Turner at Ultra Scan is discussed. (j/1 70 /5/2/01 Mubarak Rana telecon with Dodd ?Dodd tells Rana there is a lot of con?ision, that a letter had been faxed and emailed back on 3/3 0/01, that Rana promised a release would be mailed a couple of weeks ago and nothing has been received. 0 5/8/01 Dodd calls Fawaz Al?Ahmed who states the release will be sent in a few days (Release never was given. Rana later said it was best to retain. Al?Lahth). In response to Dodd?s question of was Ward continuing to work with him, Fawaz Al-Ahrned said Rana would get back to Dodd concerning that. 5/8/01Letter to 821 Corporation from Miles Stockbridge concerning 821 loan 5/ 14/01 L. Andrew called Mary Sundeen. She was no longer with the company. Jeanine said she would check with Neil Campbell who she thought would be handling the security. Everyone was at a meeting in San Francisco and so she would be in touch with L. Andrew later in the week (Thursday/Friday). 5/14/01Whit Turner of Ultra Scan ?nally returns Dodd?s call of 5/8/01 saying he has been on the road and is anxious to do business with us in Saudi Arabia. 0 7b 5/15/01Dodd again calls Fawaz Al?Ahmed. States again the immediate need for release from all agreements signed by Ward and that new agreements could possibly be signed if mutually agreeable. Fawaz Al-Ahmed then said it was mandatory to have an Ultra Scan representative there on 5/23/ 01 for a . 5/26/01 ?critical meeting?. Dodd and Annapolis Group had never heard about any such meeting. awaz Al?Ahmed then said Ward had told him he ?was not ready to work with them?. Fawaz Al-Ahmed stated that Al-Lahth would be willing to reduce their commission from 35% to 20% under a new contract. Rana told Dodd that Ward had a secret deal to get 15% personally . of the gross amount of all contracts of 5/ 17/01 Lisa Andrew left message for Jeanine of Entremed regarding the annual meeting. 0 77 5/ 8/ 01 Jeanine said that they already had another company that would be handling the security. She did not know the name of the company. Lisa Andrew told her if S21 could be of any further assistance to please call. 5/24/ 01 Dodd signs new con?dentiality and non?disclosure agreement. Annapolis. Group advises moving forward with sending a team to Saudi Arabia as detailed in their letter to Dodd. 5 . 5/30/01 Another letter sent to Blanch?eld. 0 #06 5/ 3 0/01 Whit Turner email received by Annapolis Group with personal resume. a? 5/31/01 Writ of Summons to S21 from IRG (Investigative Resources Global, Inc.) eventually got Summary Judgment "537/ 5/31/01 John Vezeris, Whit Turner of Ultra Scan and Mubarak Rana travel to Saudi Arabia. Whit Turner tells Vezeris that Ward said he was tired so ?they could keep all the Saudi business for themselves?. 07 k/6/6/0'l All return except Rana. 0/ 1/ 6/7/01 Fax to Dodd from The Annapolis Group detailing Saudi visit. 0 5/ Summer At some point Dodd has a telecon with Whit Turner of Ultra Scan regarding Saudi viSit 0 Fr?? 6/7/01 Fax to Don Gattie of API Investigations, Inc. concerning the Entremed corporate meeting and related information 0 A $77 6/ 14/01 Letter from Annapolis Group to Ultra Scan with signed copies by Dodd of Ultra Sean?s confidentiality agreement. Ultra Scan never sent the agreement back with their signatures. Everything appeared extremely positive (see Whit Turner?s visit report). Requests for pr0posals were said to be imminent with the initial one supposedly coming out 6/ 19/01. {30353592:1}85 Planned meetings at Ultra Scan headquarters with Annapolis Group and Dodd never materialized. Calls by Annapolis Group to Ultra Scan were not returned. Another planned trip to Saudi Arabia never happened. - June Mubarak Rana tells Dodd that Ward is still pursuing the Saudi deals and Rana is considering taking legal action against Ward himself. 6/15/01 Ward performed security work at Entremed annual meeting (which the company had done in years prior). See API Investigations, Inc. letter. 0/ ?$57 6/ 16/01 Fax to L. Andrew from The Annapolis Group concerning answering service 5/ 0 6/19/01 Financial report for period ended April 30, 2001 0 44 1 7/3/01 Invoice from The Annapolis] G?oup to for the Saudi visit and related activities for $2576090 0! i 10/01 Joe Masonis telecon with Doddponcerning" Saudi Arabia activities and Blanch?eld myolvement 0 7/13/01 Lisa Andrew appointed President of S2i. 7 3/01 elecon with Joe Masonis concerning upcoming meeting with Blanch?eld on July 18th and Masonis states that Maya Shockley knows plenty at Nichols Dezenhall, that Ward worked hard when he ?rst came into the company and then got greedy, that Willenpart? had called them and was interested inputting in a safe room, Willenpart went on a trip and said that he would call The Annapolis Group when he got back, he never called, The Annapolis Group called him and someone else had gotten the job. Masonis also mentioned questionable activities at the company involving violati ns of the Economic Espionage Act and the Banking Privacy Act 0 7/ 14/0 1. Telecon with John Vezeris and Dodd ?The Memorandum of f1 . Understanding is still unsigned after a month. From prior conversations with Mubarak Rana indications are that Ward is still pursuing Saudi opportunities that Dodd has funded at great expense. Other problems were discussed. x- 6?73 16/01 Telecon with Vezeris 022 {1303535923 86 7/18/01 Masonis, Vezeris, Blanch?eld, Blanch?eld?s son and Dodd met at Blanch?eld?s of?ce. At this meeting, Blanch?eld stated that very early on in the process in the summer of 2000 Aramco told Ward the prOposal numbers were too high. Ward had told Dodd, B.An.drew and L. Andrew that no proposals number had been given out up to and including December 18, 2000. The 6/16/2000 Proposal for Services was copied. /0 01 Telecon with Mubarak Rana and Dodd . Rana said the proposal a dated 6/ 16/2000 was too high according to Aramco. Dodd told Rana that he was supposed to be facilitating all the ?nancing issues that were supposed to be resolved already. Rana states that S21 will be able to make a good return? Telecon withJohn Vezeris ??Vezeris states that Ultra Scan won?t sign a Con?dentiality Agreement. Vezeris is calling Ultra Scan. axe/0e 8/3/01 Certi?ed letter from Ultra Scan sent to Dodd terminating system re? seller agreement dated 8/30/00 alleging ?no plan of action had been forthcoming on a marketing program to develop this business.? Letter was a total surprise?/V? 7 8/6/01 Fax from L.Andrew to Pat Hantske concerning ?delinquency - failure to pay tax penalty?. IRS denies Hantske?s penalty and interest abatement request. 0 1/ 8/10/01 Rana tells Dodd that Ward had promised Al-Lahth that the company would handle all ?nancing of Saudi projects, that Ward had stated all the company equipment there had a total value of only 1,500.00 and that Ward did not pay a number of bills while he was in Saudi Arabia. A11 this was news to Dodd. Rana said he had other opportunities for the company involving women?s lingerie and plumbing and $500-$600 in phone expenses he thought the company should pay. Also Rana mentioned again that Ward - personally was supposed to get 15% of all gross revenues coming into O/r 8/17/01 Letter to Bank of America from 821 requesting copies of checks? 9/13/01 Telecon with Masonis Miscellaneous items discussed 67/" 9/20/01 Letter to Mr. Joseph Patanella of Netsafe requesting veri?cation of receipt of payments made by $21 4/ 9/20/01 Letter to Cachet International requesting veri?cation of receipt of payments made byrS2I Corporation 1 1/01/01 GTS Global Security Services, LLC was formed in 2001. The principal address was 201 Forbes Street, 2?(1 Floor, Annapolis, MD 21401. The resident agent is James W. Kerr, Suite 240, 9030 Red Branch Road, Columbia, MD 21045. Beckett is President of GTS Global Security Services, LLC. This company is not in ?Good Standing? with the State. (J 7 and Blanch?eld found in red folder in storage site. Red folder had been 11/9/01 Signed non?disclosure and non?compete agreement between Ward rumored to be for quick destruction. i 11/25/01 A collection letter from Tri West Investigative Services for $11,878.67 m?r/M 12/21/01 Fax from The Annapolis Group to Dodd of the Saudi Project Timeline 0 61/ 4/4/02 SDAT for Global Technology Services showing Beckett as the resident address with the address of #240, 9030 Red Branch Road, Columbia, MD (This is Kerr?s business address.) The principal of?ce is listed as the 21ch Floor, 201 Forbes Street, Annapolis, MD 21401 Osl"/ 5/02 Brad Andrew runs into Whit Turner . Whit is very sheepish. States that Ultra Sean has gone through some management changes and didn?t seem to wantto talk. 09 ?01 9/25/02 A letter ?om Protas, Spivok and Collins to 821 Corporation ~?nal request to remit $7,5 75 directly payable to Jordan M. Spivok as attorney for Allied Van Lines. 00% A *7 ,2 10/1/02 Dodd signs note loaning szi $350,000. Xii Beckett Nete Payments were made to Talbot Bank by 821 through January 2002. Dodd provided all the funds necessary to pay off this note. 0 ?'67 %Dodd provided all funds necessary to close the 401K Plan. {303533921} 88 a