1
STATE OF WISCONSIN CIRCUIT
COURT DANE COUNTY
_____________________________________________________________
2
ELLEN GERONDALE,
Case No. 97-CV-534
3
ROBERT A. MERTZ and
Code No. 30703
JEANETTE MERTZ, and
4
LARRY KRUEL,
5
Plaintiffs,
DEPOSITION OF
6
vs.
JEROME E. LISS
December 13, 1999
7
J. E. LISS & COMPANY, INC.,
JERRY E. LISS, KENNETH E.
8
SCHIMPF, JR. and TOM BUTENHOFF,
9
Defendants.
______________________________________________________________
10
DEPOSITION OF JEROME E. LISS, otherwise than as a
11
witness upon the trial, before LAURA L. KOLNIK, Registered
Professional Reporter and Notary Public in and for the State
12
of Wisconsin, under and pursuant to Section 804 of the
Wisconsin Statues, and the acts amended, at Quarles & Brady,
13
411 East Wisconsin Avenue, Milwaukee, Wisconsin, 53202, on
the 13th day of December, 1999, commencing at 9:45 a.m. and
14
concluding at 3:30 p.m.
15
A P P E A R A N C E S
16
LAW OFFICES OF JOHN C. CABANISS, by
JOHN C. CABANISS, ATTORNEY AT LAW
17
250 East Wisconsin Avenue, Suite 725
Milwaukee, Wisconsin 53202
18
appeared on behalf of the Plaintiffs.
19
HALLING & CAYO, S.C., by
MARK E. SANDERS and JAMES RODGERS
20
839 North Jefferson Street, Suite 200
Milwaukee, Wisconsin 53202
21
appeared on behalf of the Plaintiffs.
22
QUARLES & BRADY, by
MICHAEL H. SCHAALMAN, ATTORNEY AT LAW
23
411 East Wisconsin Avenue
Milwaukee, Wisconsin 53202
24
appeared on behalf of the Defendants.
25
COLLEEN REED REPORTING (414) 453-4777
2
Deposition of Jerome E. Liss, 12/13/99
1
I N D E X
2
EXAMINATION BY:
PAGE
3
Mr. Cabaniss
3
Mr. Schaalman
161
4
Mr. Cabaniss
165
5
EXHIBITS DESCRIPTION
MARKED IDEN
6
No. 1 Notice of Deposition of Jerry E. Liss
3 3
7
No. 2 Notice of Deposition of Tom Butenhoff
3 3
No. 3 Notice of Deposition, Kenneth Schimpf, Jr.
3 3
8
No. 4 Information forms regarding Mertzes
131 131
9
10
11
QUESTIONS FOLLOWED BY INSTRUCTION NOT TO ANSWER
12
Page 48, Line 7
13
14
15
(Original transcript supplied to Attorney Cabaniss.)
16
(Original exhibits attached to original transcript.)
17
18
19
20
21
22
23
24
25
COLLEEN REED REPORTING (414) 453-4777
3
Deposition of Jerome E. Liss, 12/13/99
1
P R O C E E D I N G S
2
(Exhibit No. 1 through 3 marked for
3
identification.)
4
JEROME E. LISS, called as a witness herein,
5
after having been first duly sworn, was examined and
6
testified as follows:
7
EXAMINATION
8
BY MR. CABANISS:
9
Q What is your name, please, sir?
10
A Jerome E. Liss.
11
Q I will indicate for the record that we've marked as
12
Exhibit No. 1 to this deposition a Notice of Deposition
13
for you, which was for today at 1:30 p.m. It's now
14
about 9:45 in the morning. I will also indicate that
15
I've marked as Exhibit No. 2 a Notice of Deposition that
16
was served for Tom Butenhoff which was for at 9:00 a.m.
17
It's my understanding there's some problem with
18
Mr. Butenhoff. What is that?
19
MR. SCHAALMAN: Yeah. There's two problems. One
20
is I did not communicate clearly enough to Mr. Butenhoff
21
about today and so that he was not available. And
22
Mr. Schimpf is hospitalized today with gallbladder
23
surgery, and since I wanted to really work with both of
24
them, I called your office on Friday with new dates, and
25
your secretary or assistant indicated that these dates
COLLEEN REED REPORTING (414) 453-4777
4
Deposition of Jerome E. Liss, 12/13/99
1
were available on your calendar.
2
MR. CABANISS: What was Mr. Butenhoff's
3
conflict?
4
MR. SCHAALMAN: He had a business conflict today,
5
and I had not sufficiently informed him clearly enough
6
apparently of the deposition, and, therefore, he was not
7
available. I think it was principally my error, not
8
his.
9
MR. CABANISS: Fair enough. And Exhibit No. 3 is
10
the Notice of Deposition of Mr. Schimpf, which was
11
noticed for Friday, December 17th, 1:30, and it's my
12
understanding he will not be appearing on that date.
13
MR. SCHAALMAN: He is -- yes, he is going in for
14
surgery. I don't think the surgery was scheduled long
15
in advance. I think this is a late occurring problem.
16
I think it's gallstones.
17
BY MR. CABANISS:
18
Q Mr. Liss, when and how did you meet Bob Chlebowski?
19
A Bob Chlebowski came into my office in March of 1990,
20
explained his background. He had grown up in
21
Milwaukee. In fact, he grew up about five blocks away
22
from St. Josaphat where I grew up on 5th and Lincoln.
23
He explained his program, he explained the type of
24
business he was in, and we talked a little bit about my
25
company and what we did to see if there was any common
COLLEEN REED REPORTING (414) 453-4777
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Deposition of Jerome E. Liss, 12/13/99
1
grounds that we could perform a business venture
2
together. His background id -- identical to mine,
3
growing up on the south side of Milwaukee, Polish
4
heritage, we had a lot in common.
5
Nothing was decided on the first meeting. He
6
came back -- Well, actually he made a couple of phone
7
calls after that and told me he had a leasing product he
8
wanted me to take a look at. So he came up to the
9
office and brought it in, and we started to discuss it.
10
Q Did you -- and I should make sure I'm pronouncing this
11
properly. How do you pronounce his name?
12
A Club-ow-ski.
13
Q Chlebowski. I'll do my best.
14
A That's close enough.
15
Q Okay. As I understand what you've told me, he
came into
16
your office on March -- in March of 1990, correct?
17
A Yes. How he found me, his parents grew up in
Milwaukee,
18
his dad worked for General Electric and got killed at a
19
crossing -- railroad crossing by train. He still had a
20
lot of relatives in Milwaukee, and his biggest account
21
was General Electric. So he thought he'd stop in and
22
meet me just -- just like that.
23
Q What did he -- Well, what did he tell you about what
his
24
program was initially?
25
A In the second meeting he explained to me that the St.
COLLEEN REED REPORTING (414) 453-4777
6
Deposition of Jerome E. Liss, 12/13/99
1
Louis Leasing program was a fully specified program. It
2
had some of the top companies in the United States as
3
the lessees that would be -- their top lessees were
4
General Electric, J. C. Penney, Marshall & Ilsley Bank,
5
Caterpillar Tractor, all high-quality companies. He had
6
it structured so that it would make a -- be able to make
7
a monthly payout to the investor. It -- To add
8
credibility to the program, he would have the residual
9
value of the computers evaluated by Marshall & Stevens.
10
He explained to me that the people who would be
11
running the Arch Funds -- and the reason it has the name
12
Arch Funds because I asked him is because of the St.
13
Louis Arch -- had 42 years of experience in the leasing
14
business. He brought those -- Bill Patton, Lynette
15
Fronfelter and himself came over from a leasing
16
operation, which was mainframe leasing. He felt that
17
the future of computers were in the desktop area, and I
18
agreed with him. We didn't agree to do the program on
19
the second meeting. Fortunately I had some background
20
in the leasing business, and I spent three days at
21
Hackensack, New Jersey for Computing Leasing,
22
Incorporated, a company in May of 1987, which spelled
23
out -- spelled out the risks and rewards of leasing, not
24
only computers, but all -- all equipment.
25
Q When was that again, May of?
COLLEEN REED REPORTING (414) 453-4777
7
Deposition of Jerome E. Liss, 12/13/99
1
A May 13, 14 and 15 of 1987.
2
Q Do you have any materials from that particular program?
3
A Yes, I turned them over to Ron Birch.
4
Q To whom?
5
A Ron Birch.
6
Q Who is that?
7
A Ron Birch is --
8
MR. SCHAALMAN: My legal assistant.
9
BY MR. CABANISS:
10
Q You mentioned 42 years of experience. Who had
42 years
11
of experience?
12
A The combination of Bob Chlebowski, Bill Patton and
13
Lynette Fronfelter. Those are the three people who were
14
the officers of St. Louis Lease.
15
Q What did they tell you at that point about who owned
the
16
company?
17
A Bob Chlebowski owned it.
18
Q What did Mr. Chlebowski tell you about his experience?
19
A That he had been in the area of computers since 1978,
20
worked for McDonnell Douglas, helped put the computer
21
program together for Blue Shield/Blue -- Blue Shield I
22
guess it was -- Blue Cross/Blue Shield, had his own
23
company with two other partners that did mainframes, and
24
he did out on lease 500 million dollars worth of
25
mainframe computers. He had been very successful, felt
COLLEEN REED REPORTING (414) 453-4777
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Deposition of Jerome E. Liss, 12/13/99
1
that the future was not in mainframe but in small
2
computers, and that's why he took his two top people
3
from his major -- the mainframe leasing company to start
4
his own company, and he started in 19 I think '82.
5
Q St. Louis Leasing?
6
A St. Louis Leasing.
7
Q Did you ever talk to anyone from any of Mr. Chlebowski's
8
prior companies?
9
A Yes.
10
Q Who did you talk to from what company?
11
A I talked to Bill Patton and Lynette Fronfelter who
he
12
had brought over with him from this former leasing
13
company.
14
Q I'm sorry?
15
A They were from his other former leasing company.
16
Q At the time Mr. Chlebowski approached you in 1990,
was
17
the prior company still in existence, the mainframe
18
leasing?
19
A I don't know.
20
Q Did you make any efforts to talk to anybody, well,
first
21
of all, to find out whether that company was still in
22
existence?
23
A Well, it -- it -- I don't know if it was still in
24
existence in 1982, but it had been in existence up to
25
the time that he left the company.
COLLEEN REED REPORTING (414) 453-4777
9
Deposition of Jerome E. Liss, 12/13/99
1
Q Do you know whether it was in existence after he left?
2
A I had no reason to do that.
3
Q Other than Mr. Patton and Ms. Fronfelter --
4
A Fronfelter.
5
Q -- is there anyone else you talked to about
6
Mr. Chlebowski's prior management, business, computer
7
experience?
8
A No.
9
Q Had you been involved in computer leasing before?
10
A The only introduction I had was when I went out to
11
Hackensack, New Jersey to a computer leasing program,
12
and that was my introduction to leasing in general.
13
Q During -- You talked about the second meeting with
14
Mr. Chlebowski where you really it sounds like talked a
15
little bit more about the program. What about the first
16
meeting when he came into your office, and what did he
17
say that time?
18
A Introduced himself, told me we grew up close to one
19
another, after I introduced myself, and was purely a
20
get-to-know-one-another meeting.
21
Q Did he say anything about any potential ways you could
22
do business together that first time?
23
A No. No.
24
Q Did you know of him?
25
A No.
COLLEEN REED REPORTING (414) 453-4777
10
Deposition of Jerome E. Liss, 12/13/99
1
Q Did you know of his parents?
2
A I knew after he talked to me a little bit about them,
3
that he was out at General Electric and his parent --
4
his dad worked at General Electric. He told me a little
5
bit about his background. I didn't have any knowledge
6
up to the day he walked into my office.
7
Q He -- If I understand what you're saying, when he talked
8
to you, he indicated that his company, St. Louis
9
Leasing, had under lease at that time 500 million
10
dollars worth of --
11
A No. He came --
12
Q Okay.
13
A -- from the mainframe company where he had put 500
14
million dollars of computer, mainframe computers on
15
lease.
16
Q Did you ever take any steps to learn whether or not
that
17
was true or not?
18
MR. SCHAALMAN: Object to the form of the
19
question.
20
THE WITNESS: I didn't call the company.
21
BY MR. CABANISS:
22
Q And as you sit here today, do you know whether that
was
23
a true or untrue statement?
24
A I believe it was. I asked Bob -- I asked Bill
Patton
25
and Lynette Fronfelter, and they said yes, that's --
COLLEEN REED REPORTING (414) 453-4777
11
Deposition of Jerome E. Liss, 12/13/99
1
they had a total of 900 million dollars on lease, that
2
Bob had been responsible for 500,000 -- 500 million of
3
that.
4
Q What did you understand Mr. Patton's position was with
5
St. Louis Leasing?
6
A Mr. Patton was the one who put the final leases all
7
together, called a master lease.
8
Q And Lynette?
9
A She was the gal that was in charge of the sales.
She
10
was his right-hand gal.
11
Q Mr. Patton's?
12
A No, Mr. Bob Chlebowski's.
13
Q In the second meeting, did Mr. Chlebowski indicate
to
14
you that he wanted to raise capital?
15
A No, he just told me the kind of business he was in
and
16
that it had been very successful up to that point, he
17
had -- I can't remember the exact amount of millions of
18
dollars of leases he had out at that point. He did it
19
-- most of those leases were done with individuals,
20
high-quality -- high-net-worth individuals in the St.
21
Louis area. The congressman was one of them and couple
22
people that worked in a bank. He had a -- investors
23
that had put up the money or invested the money into his
24
company under lease programs. And those programs he did
25
show to me.
COLLEEN REED REPORTING (414) 453-4777
12
Deposition of Jerome E. Liss, 12/13/99
1
Q Did you ever talk to any of those investors?
2
A Yes.
3
Q Okay. Which ones?
4
A The congressman. I can't remember his name now.
Bill
5
Glazier. I'd have to remove -- go back in my notes.
6
But I must have talked to five or six of the investors.
7
Q When Mr. Chlebowski came to see you, did you understand
8
from him he wanted to do business with you in some
9
form? I mean was he making a pitch for something? And
10
if so, what was it?
11
A Everybody that comes to see me is coming to see me
to
12
raise money for something so I knew he wanted --
13
Q So what did he tell you he wanted?
14
A He didn't tell me he wanted anything till the third
15
meeting where he showed me his program called 490. That
16
was in March -- April of 1990 that he started that
17
program, and he said, "Would you please take a look at
18
it and review it and see if you have any interest in
19
it?"
20
Q What was that 490 program, or what did he tell you
it
21
was?
22
A It was his first public program that he had put together
23
to make available to his investors.
24
Q What did he tell you the program was?
25
A Well, it was a leasing -- it was a participation in
the
COLLEEN REED REPORTING (414) 453-4777
13
Deposition of Jerome E. Liss, 12/13/99
1
residual value of the lease program.
2
Q What did he tell you that in this program would be
sold,
3
if anything?
4
A He couldn't tell me what would be sold because, like
I
5
stated before, it was a fully-specified program with
6
every piece of equipment that was out on lease was in
7
place and drawing lease payments at the time the program
8
was sold to the public.
9
Q What do you mean by fully specified?
10
A In the program, if you have a document here, it tells
11
every piece of equipment that my investor was investing
12
in. It wasn't an elephant hunt or somebody coming to me
13
-- and that's why I didn't sell the first program. But
14
if they said raise us 5 million dollars, and we'll go
15
out and find some leases, yeah, you bet. This program
16
was fully specified. Every piece of equipment and who
17
was the lessee, the list of the lessees, everything was
18
in there.
19
Q Were the actual leases provided to you?
20
A Yes. Copy of leases, the master leases in every
21
program.
22
Q Did you participate in that first program?
23
A Not right away.
24
Q Tell me how and under what circumstances, if any, you
25
did.
COLLEEN REED REPORTING (414) 453-4777
14
Deposition of Jerome E. Liss, 12/13/99
1
A After I reviewed it, I looked it over and evaluated
the
2
risks versus the rewards. First we looked at who the
3
lessees were going to be. They were American Telephone,
4
General Electric, Caterpillar Tractor, J. C. Penney, all
5
top-rated companies, Chrysler. I figured they're not
6
going to miss their lease payments. The second thing I
7
looked over is how does anybody know that this residual
8
value is going to be there at the end of the program? I
9
evaluated that by the credibility that Marshall &
10
Stevens, who's been around since 1932, one of the top in
11
the country and did the appraisals for over 100 leasing
12
companies at that time and had never missed by any major
13
amount the residual value of the -- the computers that
14
they appraised. Those were the two things. I looked
15
over the management, the lessee, the lessees and made my
16
decision to participate.
17
Q How did you participate?
18
A We sold about 125,000 of the $500,000 program.
19
Q In what capacity? As a broker? Or what
was your deal
20
at that point, if any, with St. Louis Leasing?
21
A Just to participate --
22
MR. SCHAALMAN: Excuse me, Mr. Liss, I have a
23
limited function here, but I function, so take a breath
24
before you answer so if I need to make an objection, I
25
can. Object to the question. Object to the foundation
COLLEEN REED REPORTING (414) 453-4777
15
Deposition of Jerome E. Liss, 12/13/99
1
of the question.
2
MR. CABANISS: Go ahead.
3
MR. SCHAALMAN: And its form. Those are the kind
4
of objections that you give your answers subject to.
5
Okay?
6
THE WITNESS: Okay.
7
MR. SCHAALMAN: Understand what I'm saying?
8
THE WITNESS: Sure. St. Louis Leasing was the
9
issuer, and we sold some of it.
10
BY MR. CABANISS:
11
Q What if any relationship did you have with St. Louis
12
Leasing at that point?
13
A At that point none.
14
MR. SCHAALMAN: Object to the form of the
15
question.
16
BY MR. CABANISS:
17
Q Had you heard of Marshall & Stevens before you
looked at
18
the St. Louis Leasing program?
19
A We used them at Shearson, we used them at Reynolds.
I
20
was familiar with that company for at least 35 years.
21
Q What had you used them for before?
22
A I was a syndicate manager of Reynolds for 18 years,
and
23
every private placement we participated in, if it was in
24
leasing, Marshall Stevens' name appeared on.
25
Q Did you consult with anyone that was not involved with
COLLEEN REED REPORTING (414) 453-4777
16
Deposition of Jerome E. Liss, 12/13/99
1
St. Louis Leasing about this proposed program, who was
2
knowledgeable regarding computers?
3
MR. SCHAALMAN: Object to the form.
4
THE WITNESS: I don't understand your question.
5
BY MR. CABANISS:
6
Q Other than Mr. Chlebowski, Mr. Patton, and Lynette
--
7
MR. SCHAALMAN: Fronfelter.
8
BY MR. CABANISS:
9
Q -- Fronfelter, did you talk to anybody else before
you
10
decided to participate in this deal who had any
11
knowledge or experience regarding computers?
12
A I can't remember the names, but I would say at least
13
five or six leasing companies came in to see me to do
14
their program and return -- I turned all of them down.
15
Q Why did you turn those other companies down?
16
A None of them were fully specified.
17
Q What was the importance to you of the fully specified
18
nature of this proposal?
19
A Well, you have to know where the investor's money is
20
going, and if it's not going into computers, going into
21
automobiles, or where is it going? I have to know my
22
investor puts in $10,000, what did he buy? That's what
23
a fully specified program means. I knew exactly where
24
the dollars were going.
25
Q And with the St. Louis program, where did you understand
COLLEEN REED REPORTING (414) 453-4777
17
Deposition of Jerome E. Liss, 12/13/99
1
the dollars that were being invested were going?
2
A I didn't have to understand it. It's right in
the
3
prospectus. Every piece of equipment is listed in
4
there.
5
Q Well, was it your understanding this money was going
to
6
be used to pay for the equipment that was listed in the
7
prospectus?
8
A Right. St. Louis Leasing would buy the equipment
and
9
lease it to Caterpillar Tractor or American Telephone,
10
whoever.
11
Q Well, if I understand it, this first program, the 490,
12
when you looked at it, the equipment was already
13
purchased and actually in place?
14
A That's right.
15
Q So the money that was being raised, investors were
16
putting in their $10,000, their 5,000, and your clients
17
put in $125,000. What did you understand that $125,000
18
was going to be used to pay for?
19
A That $125,000 was going to be used to pay for some
of
20
the new equipment that St. Louis Leasing already had
21
purchased.
22
Q And I guess I'm just a little confused. If it
had
23
already been purchased, what was your understanding as
24
to how it was purchased initially?
25
A Well, it was purchased from Dell or one of the major
COLLEEN REED REPORTING (414) 453-4777
18
Deposition of Jerome E. Liss, 12/13/99
1
computer manufacturers.
2
Q I mean was it purchased with cash, was it financed?
And
3
if so, to what extent was it financed?
4
A The -- The structure of the program, $500,000 of equity
5
was raised on each program, 2 million dollars was
6
borrowed from the bank non-recourse lending, 2 1/2
7
million dollars worth of computers were purchased for
8
each program. The leases would be paid off by the
9
lessee. At the end of the 3-year program, the second
10
lien against the equipment was the investor's
11
participation. When those computers were sold, the
12
residual value came back to pay off the investor.
13
Q Okay. Again going back to the 490 program, you
14
understood that the subject of that program was 2 1/2
15
million dollars of computer equipment, correct?
16
A Right.
17
Q And I'm just doing this to make sure I understand it.
18
A No. No.
19
Q So if it seems like I'm yelling at you or anything
--
20
A Okay.
21
MR. SCHAALMAN: Object to the form of the
22
question.
23
BY MR. CABANISS:
24
Q Okay. But that was 2 1/2 million dollars.
And you
25
understood that was the list -- list not Liss price for
COLLEEN REED REPORTING (414) 453-4777
19
Deposition of Jerome E. Liss, 12/13/99
1
the equipment?
2
A Well, he purchased that equipment at a 15 percent
3
discount from list.
4
Q All right. But you understand when -- for example,
5
going back to the program 490, that the 2 1/2 million
6
actually represented the list price, correct?
7
A Oh, yes.
8
Q He actually paid 15 percent less than that?
9
A Right. Which that money went to St. Louis Leasing.
10
Q What money went to St. Louis Leasing?
11
A The difference.
12
Q The difference between?
13
A The list and the wholesale price.
14
Q I mean just in round numbers, St. Louis Leasing was
15
paying a little over 2.1 million dollars for the
16
equipment, correct?
17
A Closer to 2.2.
18
Q 2.2. Whatever it is.
19
A Sure. Okay.
20
Q That number. Okay. Let's say 2.2 is what
they're
21
paying. They're financing 2 million of it, correct?
22
A Uh-huh. Right.
23
Q Then you're taking a half million dollars from
24
investors?
25
A Correct.
COLLEEN REED REPORTING (414) 453-4777
20
Deposition of Jerome E. Liss, 12/13/99
1
Q Correct?
2
A Right.
3
Q And what's that half million used for by St. Louis
4
Leasing?
5
A To pay for some of the -- pay part of the equipment.
6
Q And then what's the other? I mean, you know,
basically
7
they're borrowing 2 million, they're raising a half
8
million, correct?
9
A Right.
10
Q And they're only paying for this equipment about 2.2.
11
So what's St. Louis Leasing doing with that $300,000?
12
A No, you're off.
13
Q Okay.
14
A If the -- If the program was raising $500,000 and he
15
borrowed at the bank 2 million, the difference would be
16
2.8 percent, which would go back into his pocket. Maybe
17
that's what it comes up to, but I always work on
18
percentages.
19
Q Why did you understand that St. Louis Leasing wanted
to
20
raise this half million dollars? I mean why did they
21
need it?
22
A Because under the -- because under the program part
of
23
that investment had to be equity, otherwise the bank
24
wouldn't come up with their 2 million dollars.
25
Q Well, what was your understanding of the situation
at
COLLEEN REED REPORTING (414) 453-4777
21
Deposition of Jerome E. Liss, 12/13/99
1
St. Louis Leasing in 1990 in terms of how much cash it
2
had available to finance deals on its own, or to put
3
into deals?
4
A I can't remember the exact amount free cash they had
at
5
that time, but they had -- they were a very successful
6
company and had plenty of money.
7
Q Was St. Louis Leasing able to conduct business without
8
raising money from investors?
9
A Yes.
10
MR. SCHAALMAN: Object to the -- Mr. Liss.
11
Object to the form.
12
BY MR. CABANISS:
13
Q Your understanding was that they could do these computer
14
deals profitably in 1990 when they came to you without
15
raising this half million dollars per program -- I mean
16
if it had chose to do so?
17
A No. You're missing something. Up to this
point --
18
Q Okay.
19
A -- they had only done straight leases with individuals,
20
they didn't have any programs at that point. The 490
21
was the first private placement, and they needed that
22
because they were growing so fast, they needed more
23
money to purchase equipment. The orders -- like
24
Jefferson Smurfit, that's right down in St. Louis, they
25
were asking for a large amount of computers, and Bob
COLLEEN REED REPORTING (414) 453-4777
22
Deposition of Jerome E. Liss, 12/13/99
1
Chlebowski didn't have enough individuals to rent it
2
from -- I mean to borrow it from.
3
Q What did you understand, if you had an understanding
in
4
1990, as to what St. Louis Leasing was?
5
A I object to that. I had a damn good understanding
in
6
1990. Okay?
7
MR. SCHAALMAN: Jerry.
8
BY MR. CABANISS:
9
Q No, that's just the way -- I don't want to imply you
did
10
have to understand or did not. I just want to know what
11
you know. So I didn't mean any offense.
12
A Okay.
13
Q We lawyers just do that so they don't object saying
that
14
I say you have to understand. So I'm just trying to --
15
A Okay. I'm sorry.
16
Q That's okay.
17
A I understand.
18
Q I just want you to understand. I'm just trying
to get
19
your best recollection. I'm not trying to put words in
20
your mouth. I'm not trying to tell you you should or
21
you shouldn't. I'm not trying to imply you do or you
22
don't. I'm just trying to ask the questions in a
23
neutral way so you can give me your -- your answers --
24
A Okay.
25
Q -- as you see fit. And I certainly don't mean
any
COLLEEN REED REPORTING (414) 453-4777
23
Deposition of Jerome E. Liss, 12/13/99
1
disrespect.
2
A Okay. I'm sorry.
3
Q Fair enough?
4
A Fair enough.
5
Q So now I forgot my question. Did you understand
back in
6
1990 what St. Louis Leasing was worth as a company?
7
A Yes. I had financials.
8
Q What financials did you have of St. Louis Leasing back
9
in 1990?
10
A The financials also -- appeared right in the document,
11
every document, every offering had financials.
12
Q So we can look at the private placement memo for the
490
13
program, and it will include the financials that you
14
reviewed?
15
A I don't remember if 490 had the financials or not,
but I
16
was supplied with the financials from Bob Chlebowski.
17
Q Do you still have those?
18
A Yes.
19
Q In general, what do you recall was the financial
20
situation at St. Louis Leasing in 1990?
21
MR. SCHAALMAN: Object to the form.
22
THE WITNESS: I can't remember the exact numbers,
23
but it was in good financial condition.
24
BY MR. CABANISS:
25
Q With the program 490, you indicated that you evaluated
COLLEEN REED REPORTING (414) 453-4777
24
Deposition of Jerome E. Liss, 12/13/99
1
the risk and benefit?
2
A Yes.
3
Q Or risk and rewards I think is what you said.
At that
4
point what did you assess the risk of that program as
5
being?
6
A That the residual value at the end of the program would
7
not be enough to pay back the investor.
8
Q How did you assess the potential rewards at that point?
9
A That the top companies in the United States were going
10
to make their lease payments, and my investor was going
11
to get 10 to 10 1/2 percent return on his investment.
12
Actually those were 12 percents at that time.
13
Q You mention that at that point when Mr. Chlebowski
came
14
to you, his company, St. Louis Leasing, prior to that
15
point had only been engaged in I believe you said
16
straight leases with individuals?
17
A Yes.
18
Q Would you explain what those straight leases with
19
individuals were?
20
A Well, like the --
21
MR. SCHAALMAN: Object to the form.
22
THE WITNESS: His office was in a suburb of St.
23
Louis, and a lot of his friends from the church and his
24
personal friends wanted to participate in his success
25
and asked them -- asked him if he would set up leases
COLLEEN REED REPORTING (414) 453-4777
25
Deposition of Jerome E. Liss, 12/13/99
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