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This is a modified version of the transcript of the Northwest Territorial Mint 341 meeting of May 11, 2016.

This is not an official transcript. You can get a copy of the full transcript or the condensed version (4 transcript pages per PDF page).

If you want, you can instead listen to the audio (you can right-click the link and choose 'Save Target As' to download it). It is large, about 175MB.

NameStatement
MR. SMITH
Good afternoon. My name is Martin
Smith. I'm a trial attorney with the Office of the United
States Trustee. This is the meeting of creditors being held
in the Chapter 11 case of Northwest Territorial Mint, LLC,
Case Number 16-11767. It's approximately 2:00 p.m. on
May 11th, 2016. The meeting is being recorded. I will be
conducting the meeting.
This is the opportunity for the United States
Trustee and creditors or their representatives to ask
questions, in this case, of Mr. Hansen, the debtor's
representative, as well as -- after Mr. Hansen completes his
testimony, you'll be given an opportunity to ask questions of
Mr. Hansen under oath. Mr. Mark Calvert, the Chapter 11
trustee, will be available to answer questions, as well, as to
the status of the case and what he is doing at this point in
time.
UNIDENTIFIED
MALE SPEAKER
 Mr. Lovejoy? Just
one moment, sir.
MR. SMITH
Usually when there's technical
difficulties, it's operator error, but --
All right. Mr. Hansen, would you remain
standing and please raise your right hand?
Do you swear the testimony you're about to give
is the truth, the whole truth, and nothing but the truth?
MR. HANSEN
I do.
MR. SMITH
Thank you. Please be seated.
Please state your name.
MR. HANSEN
It's Ross Hansen.
MR. McMEEL
I object.
MR. SMITH
Mr. McMeel, what's your objection?
MR. McMEEL
That's my witness.
Can I have your name, please?
MR. SMITH
I've already given you my name.
It's Martin Smith. I'm a trial attorney with the Office of
the United States Trustee. You're welcome to stay today. But
if you end up being disruptive, just know that we will need to
have you escorted out. Do you understand that?
MR. McMEEL
The objection was --
MR. SMITH
Okay. Your objection is noted.
MR. McMEEL
Thank you.
MR. SMITH
You're welcome.
Mr. Hansen, what was your position -- or what is
your position with the debtor in possession -- or the debtor,
Northwest Territorial Mint?
MR. HANSEN
My position was -- I was the
managing member and the CEO of Northwest Territorial Mint.
MR. SMITH
And you caused the mint -- I'll
shorthand it to "the mint" -- to file Chapter 11; is that
right?
MR. HANSEN
The Mint did Chapter -- filed
Chapter 11, yes.
MR. SMITH
Can you give me a brief summary of
the mint's operations before it filed Chapter 11 and what led
up to the need for filing Chapter 11?
MR. HANSEN
Sure. The mint is comprised of a
number of different entities. One of the entities is -- we
are a bullion mint, which I think most of you are here for,
where we both buy, sell, and manufacture different forms of
precious metals. Those precious metals are gold, silver,
platinum, and palladium.
We also have a custom minting division. The
custom minting division makes coins and medallions for
corporate, private, and governmental entities.
We also have an in-house product, where we
design a product that usually I, myself, or one of my staff
has designed. And we take -- we take that, and we sell it on
the web and also through other wholesalers.
We have another division, called Graco
Industries, which is a division of Northwest Territorial Mint,
where we manufacture the medals and ribbons for the U.S.
military and other government agencies, including everything
from the medal of honor to the purple heart.
MR. SMITH
And what were the events that led up
to the need for filing Chapter 11?
MR. HANSEN
The events that led up to the
filing of Chapter 11 were mainly the actions caused by a
Bradley S. Cohen. Mr. Cohen is an investor. He leads a group
of investors that have bought the building that we were
leasing in down at 1307 West Valley Highway. And that's been
the subject of about an eight-year-long series of lawsuits
that Mr. Cohen and his team of lawyers -- and I'm trying to be
nice here -- have filed against us.
And over time, between the judgments that they
have entered and the different things that they have done,
they have either judgments or have collected -- or damaged the
company in the tune of over $50 million.
MR. SMITH
Let me back up for a second.
Something I should've mentioned before we actually got
started. But for today's meeting, there's to be no
photographer, no recording of today's meeting. There will be
a recording. It is being recorded, and you can request a copy
of the recording at a later date. But no individual recording
is allowed today.
Mr. Hansen, have you seen the bankruptcy
schedules that have been filed recently?
MR. HANSEN
No.
MR. SMITH
You haven't reviewed those at all?
MR. HANSEN
No. And I'd like to address that,
if I could, and why that was. Before Mr. Calvert forced Diane
Erdmann and myself out of the company, the -- we were working
diligently, literally 16 hours a day, trying to get the
schedules put together and accurate. The schedules were very
inaccurate, and we were having to go through them
individually, one by one, and -- but from -- my understanding
is, is that after I was forced out of the company, Mr. Calvert
attempted to do those with staff. And I understand most of
the staff that was working on that has left, as one person
said, in disgust with Mr. Calvert.
But so the schedules -- what I have been told,
and I don't know how accurate this was -- is that they were
filed late yesterday afternoon. No copies of the schedules
have been sent to me or made available to me for my review.
Nor do I have access to the records of the company to make
sure that the schedules are accurate and true.
MR. SMITH
And just as an overview for
everybody here --
UNIDENTIFIED
FEMALE SPEAKER
 Can you speak into
your mic? I can't hear you very well.
MR. SMITH
Of course.
Just as an overview for --
MR. HANSEN
I apologize. Was that for me or
the trustee?
UNIDENTIFIED
FEMALE SPEAKER
 The trustee. Both
of you, actually.
MR. HANSEN
Okay.
MR. SMITH
All right. And just to clarify, I
am not the trustee. I'm the attorney for the U.S. Trustee in
this case. Mr. Calvert is the trustee, and he's represented
by Mr. Gearin, who is sitting next to him.
But to put things in context, for those of you
who have not seen the schedules, which is probably most of you
since they were just recently filed and there are some
voluminous aspects to the schedules, as I understand them,
they list total assets for the company of $6,476,000 and
change, liabilities of almost $56,000,000, and that includes
about be 73,000 in secured claims and almost 56 million in
unsecured claims.
The assets consist primarily of inventory, at
about $5 million, accounts receivable at about $1.4 million,
cash of just over $4,000, and deposits and prepayments of just
over $57,000. So according to the schedules filed by the
Chapter 11 trustee, as you can tell, there's quite a shortfall
between the $56 million in liabilities and the $6.5 million in
assets.
Something else, before we open up the floor --
informationwise, before we open up the floor for questions
with Mr. Hansen, is there are three matters that are currently
pending in front of the Bankruptcy Court that you may or may
not have an interest in.
The first of those is an evidentiary hearing
scheduled for June 22nd at 9:30 on the seventh floor in front
of Judge Alston. That relates to whether the retainer that
was paid to the debtor's bankruptcy counsel should be property
of the estate or not -- the source of the money.
There's a hearing on a proposed sale. The
Chapter 11 trustee has -- and I'm sure he'll tell about you
this -- but has proposed a sale of the Texas facility. And
that sale hearing is scheduled for May 26th at 1:30 p.m. And,
again, like everything in this case, it will be in front of
Judge Alston on the seventh floor of this building.
And the third pending matter that I'm aware of
is, Judge Alston has what we affectionately call the Section
105 conference. It's kind of a status conference that, as a
judge, he holds early on -- fairly early on in a case to get a
sense of what's happening and to look at deadlines in the
case. It is in his courtroom. It is open for your attendance
if you want to go. And that is set for June 3rd at 1:30 p.m.
So at this time, since I don't have schedules to
ask Mr. Hansen about --
MR. HANSEN
Can I make a short comment, please?
MR. SMITH
Sure.
MR. HANSEN
If the schedules show that there's
only $6 million of assets, then a fraud has been perpetrated
upon this court.
In my discussions with Mr. Calvert, Mr. Calvert
wanted -- before the employment of Mr. Calvert, Mr. Calvert
had specifically instructed me to take any asset and
substantially discount it and try to make the value of that
asset look, quote, as small as possible.
We had determined, in the company, that the
assets -- and maybe Mr. Calvert has some funny math -- but
that the assets of the company were somewhere between 20 and
$25 million.
Now, where Mr. Calvert comes up with that
number, I have no idea. But I have to tell you, when I hear
things like this, it makes my blood boil. Because I think
Mr. Calvert is perpetrating -- if that's what Mr. Calvert has
sworn to, then Mr. Calvert needs some help with his math.
MR. SMITH
Well, with that, let me put
something in context for all of you here. This was filed at
the instruction -- the Chapter 11 case was filed at the
instruction of Mr. Hansen. The Court concluded that
Mr. Hansen should no longer be in charge of the assets and the
operations of the company and appointed Mr. Calvert, who is
now in charge of those operations and those assets. The Court
found cause to do that. And that is the context in which
everybody's testimony should be considered today.
I will open up the floor for questions. I'm
going to start with Mr. Gearin, if he has any. There's a
lectern over there, if you wouldn't mind. There's also a
microphone at the lectern -- or there was.
Is that our second mic?
MR. HANSEN
I'd also like to note for the
audience here, I'm not lawyered-up here. You're not seeing me
with a battery of attorneys. I'm here as Ross Hansen. I'm
not shielding or protecting myself as -- most people have
said, Oh, my God, you've got to need a wall of attorneys.
And what I've done is I've shown up in front of
all of you to answer your questions and help you recover as
much money as possible. So I want that noted.
Mr. Gearin?
MR. GEARIN
Sure. Mr. Hansen --
MR. SMITH
Mr. Gearin, for the recording, would
you just state your name and who you represent?
MR. GEARIN
This is Michael Gearin, K&L Gates;
and I represent the Chapter 11 trustee, Mr. Calvert.
Let's start out with this. We'll start out with
the $25 million in assets that the company owns, according to
you. What are those assets and where are they?
MR. HANSEN
Mr. Gearin, your client and I put
together a spreadsheet, before he was appointed as the Chapter
11 trustee, listing all the assets. All of those -- those
spreadsheets, all of those assets, you have -- are in your
possession. And despite repeated requests from me to get
documents from you, I can't get the simplest questions
answered from you. So it's a little -- it's disingenuous of
you to be asking me for documents --
MR. SMITH
I'm going to --
MR. HANSEN
-- when you won't provide them.
MR. SMITH
Wait, wait, wait. I'm --
MR. GEARIN
He's not answering my question.
MR. SMITH
We're going to keep the waters as
calm as possible today. I know there's a lot of emotion. I
know there's a lot of financial pain and distress that's
occurred because of this filing and the actions leading up to
it. So with that understanding, let's try and keep things
down.
Mr. Gearin asked you a question, and he didn't
ask you for an infomercial. So please answer the question if
you have personal knowledge to answer it with.
MR. GEARIN
Do you remember the question?
MR. HANSEN
Why don't you go ahead and
answer -- ask it again.
MR. GEARIN
Right. The question is -- you just
stated that there's $25 million of assets in the company. I
want to know what those assets are. Let's start with that.
What are those assets?
MR. HANSEN
Okay. If you'd like me to go by
memory --
MR. GEARIN
Yes. I want --
MR. HANSEN
You bet ya. We can start out by --
the bullion business. We have approximately a quarter million
bullion names. Each of those names and each of those
addresses have value to the company. Typically, those are
sold between 15 and $20 a name.
You have a website that --
MR. GEARIN
Let me stop you. So you're talking
about customer lists? Is that what you're talking about?
MR. HANSEN
Correct.
MR. GEARIN
You're saying the customer list --
with how many names on it?
MR. HANSEN
Approximately a quarter million.
MR. GEARIN
And you think that has value of how
much, again?
MR. HANSEN
Well, when Mr. Calvert and I looked
at it, we figured out that that had a value of somewhere
between 3 and $6 million.
MR. GEARIN
Okay. The customer list. Now what
else?
MR. HANSEN
We have a very robust website that
we've put together. We estimate that that website has a
value -- that somebody else would buy -- you know, a website
is a tool. A website has a tremendous amount -- I mean, if
you remember, the Clinton -- I mean the Obama administration
spent billions putting together a website. Well, we
have spent --
MR. GEARIN
Mr. Hansen, I'm going to interrupt
you. We're going to -- this is going to be a long course of
discussion if you --
MR. HANSEN
And it will be if you keep
interrupting me. If you want me to explain, I'm happy to
explain.
MR. GEARIN
I asked you -- you told me about
the website. How much is the website worth?
MR. HANSEN
Okay. I believe the website -- the
bullion website is worth about $3 million. And that's
according to your own people.
MR. GEARIN
Okay. So a customer list, a
website. What else?
MR. HANSEN
Okay. Then you have the equipment
of Northwest Territorial Mint. The equipment of Northwest
Territorial Mint -- I don't have the equipment list in front
of me. But you have everything from coining presses to laser
machines to some very sophisticated equipment. And that --
and, again, I don't have my schedules in front of me -- is
somewhere between 3 and $6 million.
MR. GEARIN
Where is that equipment? Is it in
Texas, Nevada, Washington? Where is it?
MR. HANSEN
You have equipment in Texas, Green
Bay, and Washington. And some of the -- some of the equipment
is in Nevada and Hawaii.
MR. GEARIN
Is all the equipment in the Nevada
facility property of the debtor?
MR. HANSEN
I'm not understanding that
question.
MR. GEARIN
You told me there's equipment in
Nevada.
MR. HANSEN
There's Medallic Art equipment in
Nevada, and there's Northwest Territorial Mint equipment in
Nevada. And we gave you schedules of which is which.
MR. GEARIN
Well, I think what I received from
you, Mr. Hansen, was one schedule.
And for the record, let's ask this question:
Did Mr. Wenokur, your prior counsel who withdrew, did he pass
along to you a request for information that I transferred to
him?
MR. SMITH
Could you be more specific,
Mr. Gearin, as to what the nature of the information requested
was?
MR. GEARIN
I will.
Did Mr. Wenokur pass along a request for
information about the location of assets belonging to the
debtor? Did he pass along my request for that information?
MR. HANSEN
No. But if you need that
information, most of that information is in your possession.
And I have asked you for that information, and you've refused
to give it to me.
MR. GEARIN
Well, your counsel and I have
engaged in a discussion about an exchange of discovery. I
have never received anything from your counsel -- from your
personal counsel about --
MR. HANSEN
I'm sorry. Are you testifying now,
sir?
MR. GEARIN
I'm responding to some of the
statements you just made. Let's move on.
MR. HANSEN
Okay.
MR. GEARIN
We've got the equipment. What
other assets? We've got a customer list, a website, and
equipment.
MR. HANSEN
Then you have the inventory of
Northwest Territorial Mint. And that inventory consists of a
number of things. We have bullion, which is pretty
substantial. You have finished product. And then you have
raw goods. And when I talk about raw goods, I'm talking about
boxes that we package our product in. We have brass. We have
nickel. We have gold, silver, platinum that we use for custom
products. We have gold, silver, platinum, and palladium that
we sell individually.
So those inventories, which are in your control,
are worth more than what you just told to the court that
the -- the value of the whole estate is worth.
MR. GEARIN
Well, let's break it down. How
much bullion is there? When you left control of the business,
how much bullion was owned by the mint?
MR. HANSEN
Well, we don't -- I don't have that
schedule in front of me. But I'll tell you what. You just
did a complete inventory. How many ounces of gold were in the
company when you took it over?
MR. GEARIN
Well, I think those --
MR. HANSEN
How many ounces of gold --
MR. SMITH
Wait, wait --
MR. HANSEN
-- were in the inventory when you
took it over?
MR. SMITH
Wait, wait, wait. These are for
questions of you.
MR. HANSEN
Okay.
MR. SMITH
These are not for your questions of
Mr. Gearin. So --
MR. HANSEN
He can't --
MR. SMITH
-- to the degree he has questions --
MR. HANSEN
He can't answer that question.
MR. SMITH
He doesn't have to answer that
question.
MR. GEARIN
Mr. Hansen, I'm not here to answer
questions. The purpose of this meeting is for you to answer
questions for the benefit of the creditors.
MR. HANSEN
Well, you know, earlier you made a
statement that the value was this. And so I'm asking you for
the breakdown of that.
MR. SMITH
You're not asking him, because he's
not going to answer. So --
MR. HANSEN
Well, I tell you what. I don't
know because it was located in a number of different
ways{sic}. And we were still working on the schedules when I
was forced to leave the company.
MR. GEARIN
Where was the bullion located?
MR. HANSEN
Which bullion?
MR. GEARIN
The bullion of the company. You
just told me that the company had significant value -- bullion
with significant value. Where was it stored?
MR. HANSEN
Okay. The bullion was stored at
our location in Federal Way in a number of different vaults.
We had bullion in two vaults down in Federal Way -- I mean --
I'm sorry -- in Auburn, Washington. And we had bullion down
in Tomball -- I'm sorry -- not Tomball, Texas, but in Dayton,
Nevada.
MR. GEARIN
So those three locations? Vaults
in Federal Way, vaults in Auburn, and vaults in Dayton,
Nevada?
MR. HANSEN
Yeah. There would've been some
smattering of some small amounts of precious metals at some of
the other locations and also out on -- in some of the retail
locations that we do business with that hadn't been paid for
yet.
MR. GEARIN
And you don't have a -- you did not
have a -- let me ask this question: How did you keep track of
the value of what was in those vaults, the identity of what
was in the vaults and the value of those items?
MR. HANSEN
Well, there are -- again, there's
different baskets of metal, and you were -- Mr. Calvert was
given lists of what those metals were and where those metals
were at. And we were happy to assist in any of that.
MR. GEARIN
Did you keep a log of what was
taken into the vault and what was brought out of the vault?
MR. HANSEN
This is something that -- there are
inventory logs, and that is something that the inventory
people would be responsible for.
MR. GEARIN
Who are the inventory people?
MR. HANSEN
Well, we had different people at
different locations. So why don't you be more specific?
MR. GEARIN
All right. Who was responsible for
the vault in Federal Way?
MR. HANSEN
Diane Erdmann was the responsible
person for the vault. She was the vault manager in Federal
Way.
MR. GEARIN
And Diane Erdmann is your
girlfriend; is that correct?
MR. HANSEN
That's true.
MR. GEARIN
How long have -- have you and
Ms. Erdmann been living together for some period of time?
MR. HANSEN
Yes, we have.
MR. GEARIN
How long?
MR. HANSEN
About 17 years.
MR. GEARIN
All right. So Ms. Erdmann was
responsible for managing the vault in Federal Way. Did she
keep a log of all the activities in that vault?
MR. HANSEN
She kept an inventory of what was
brought in and what was shipped out on a daily basis. Yes.
MR. GEARIN
Did she keep track of the
materials -- well, let me start with this: Did you take
materials out of that vault? Did you remove materials from
the vault in Federal Way?
MR. HANSEN
Yes, on a daily basis.
MR. GEARIN
All right. And did Ms. Erdmann
keep track of all of those withdrawals?
MR. HANSEN
No. When -- how that would work
is, when a customer would come in and want to look at precious
metals, they would come in and they'd sit in our office. We
would go in, and we -- either myself or a salesman would walk
in there and would ask: We need to see Krugerrands, Maple
Leafs, American Eagles.
And those were passed over, and we'd show the
customers, and we would come back and then either return it or
bring the cash back. And all of those sales were logged.
Yes.
MR. GEARIN
So all the transactions? Your
testimony is that Ms. Erdmann or somebody under her control
logged all of the transactions whenever you took something
from the vault or put something back in the vault?
MR. HANSEN
I believe that any -- any sales
transaction or any movement of the metals, you know, were
accounted for. Now, what those records -- and how that was
all done is something that's coordinated between our facility
in -- at different locations. And I -- I specifically don't
have all the details on that. That's something I entrusted
other people with.
MR. GEARIN
Did you ever instruct Ms. Erdmann
or anyone else to stop keeping records of vault transactions?
MR. HANSEN
Not to my knowledge.
MR. GEARIN
So back to -- to recapture, your
testimony is you don't recall that the value of the bullion
inventory is or was on, say, April 1st, the date --
MR. HANSEN
That value would be on a --
changing on a daily basis. It would change on the sales. It
would change on what came in. And it would change on, also,
the spot price of the metal on a daily basis. So that number
is a moving number.
MR. GEARIN
Can you give me an order of
magnitude? Is it a million dollars? Is it $20 million? Is
there any -- I'm talking about April 1st, the day the petition
was filed.
MR. HANSEN
You know, I don't have that number
because my schedules are not in front of me.
MR. GEARIN
Who's the vault manager in Auburn?
MR. HANSEN
I just testified to that. Oh,
in -- I apologize. In Building B? There's people down there
who -- who aren't really -- there's not really a vault down
there. There's two safes down there that metal is kept in.
And then there is a secured room down there. And I'll be
honest with you; the lady's name escapes me. But I could get
that for you. And she's the one that was responsible for, not
only the precious metals, but the high value coins. Because
we keep quite a bit of precious metals in there that get
inventoried that also are engraved.
MR. GEARIN
But you don't recall her name?
MR. HANSEN
Well, if you give me just a
minute -- I've got 250 employees, and I can't think of her
name right now. But I'll be happy to supplement that shortly.
MR. GEARIN
Okay. Did you, likewise -- did
she, that employee, keep a record of all the transactions in
and out of that vault?
MR. HANSEN
I believe she did. Yes.
MR. GEARIN
Same thing in Dayton. Do you
remember who the vault manager is there?
MR. HANSEN
The vault manager down there -- I
believe who was ultimately responsible was Jeff Goodfellow,
who -- but he had one of his employees who would give me a
weekly update. And also Don Ruth, who is the manager down
there, would give me a metals need on a weekly basis.
MR. GEARIN
And was that a written report?
MR. HANSEN
Yes.
MR. GEARIN
And that would be a report of the
contents of the vaults in Dayton?
MR. HANSEN
Yes.
MR. GEARIN
Mr. Hansen, did you come to the
Federal Way facility and remove precious metals or coins from
the vault on Easter Sunday of this year?
MR. HANSEN
I -- I honestly don't recall.
MR. GEARIN
You don't recall whether you
visited -- did you visit the office in Federal Way on Easter
Sunday in 2016?
MR. HANSEN
I'm in the offices every day.
Diane and I work every day.
MR. GEARIN
So you don't recall whether you
came into the premises on Easter Sunday of this year, and you
don't recall whether you went into that vault?
MR. HANSEN
You know, if you have something
that you would like me to review -- we have security tape.
You keep referencing security tape. But we take -- we take --
we're in the office, literally, every day. Diane and I work
seven days a week.
MR. SMITH
Let me clarify. I assume that's
past tense, that you're no longer in the office?
MR. HANSEN
That's past tense. Correct.
MR. SMITH
And to follow up on Mr. Gearin's
question, when is the last time that you recall removing coins
or precious metals from the vault?
MR. HANSEN
The metals were -- Diane was
shipping product to our customers, and still would be, up
until the day that Mr. Calvert took over and told us to quit
shipping metals.
MR. SMITH
When's the last time that you
personally took coins or bullion from the vault, not for a
sale, but for your own personal needs?
MR. HANSEN
Well, I've never taken metal out of
the vault for personal needs.
MR. SMITH
Okay. Thank you.
MR. GEARIN
So you've never taken anything
out -- any metal out of the vault for personal use; is that
correct?
MR. HANSEN
Not to my knowledge.
MR. GEARIN
What did you -- did you take
anything out of the vault for personal purposes?
MR. HANSEN
For what purposes? I mean, when
you say, "personal purposes," what are you talking about?
MR. GEARIN
Well, you just used that term. I'm
using --
MR. HANSEN
No. You used that term.
MR. GEARIN
All right. Did you take anything
out of the vault -- anything out of the vault and consume it
for your personal use? Cash --
MR. HANSEN
Oh, yes.
MR. GEARIN
-- gold, silver, whatever?
MR. HANSEN
Of course. We -- how we pay
ourselves is -- is -- you know, I can take an owner's draw.
MR. GEARIN
And you took those draws in cash
from the vault?
MR. HANSEN
Normally, yes.
MR. GEARIN
Did you take precious metals as
owner's draws as well?
MR. HANSEN
Not that I recall.
MR. GEARIN
So you always took cash? That was
the way you took an owner's draw?
MR. HANSEN
Well, you know, when you say this,
in what type of time? I've owned this company for 35 years.
And so when you say, have you always done this or always done
that, you know, I want to be as accurate as possible. Give me
specific dates and times, and I'll be happy to answer it. But
I feel like I'm getting trapped here. Okay?
MR. GEARIN
I think I asked you a broad
question about --
MR. HANSEN
Well, I want you to ask a specific
question.
MR. GEARIN
Well, Mr. Hansen, I'll control the
questions that I ask, please. You just be kind enough and
polite enough to answer the questions, and I'll frame them the
way I'd like to frame them.
MR. HANSEN
You got it.
MR. GEARIN
So I want to go back to -- did you
get any salary from the company?
MR. HANSEN
I took my compensation as owner's
draws. I did not take a salary.
MR. GEARIN
All right. And when you took an
owner's draw, did you -- were you paid in the form of a check
at any time during the time you controlled the company?
MR. HANSEN
You know, I don't recall.
MR. GEARIN
Okay.
MR. HANSEN
I know there was times when they
were writing me checks. And I know there was times when we
just took cash as a -- as owner's draws.
MR. GEARIN
Was it your common practice to take
cash from the vault as an owner's draw?
MR. HANSEN
Yes.
MR. GEARIN
And were all of those owner's draws
recorded and tracked through the company business records?
MR. HANSEN
I believe they would've been. They
would've been in the cash log.
MR. GEARIN
Were they reflected in your
personal tax returns? Were those draws reflected in your
personal tax returns?
MR. HANSEN
Again, I believe that they were.
But I would -- I'd want to refer to my CPA counsel on that.
MR. GEARIN
Have you filed personal tax
returns?
MR. HANSEN
I have not for the last three
years.
MR. GEARIN
For the last three years. Prior to
-- so the last year you filed was in 2000 and --
MR. HANSEN
I don't recall. And you know this
even better than I do. You've beat me over the head with it a
number of times.
MR. SMITH
Just answer his questions, please.
MR. GEARIN
Mr. Hansen, for the record I've
never spoken to you before, other than a 30-second
conversation in court about two weeks ago.
MR. SMITH
Let's get back to the questions.
MR. GEARIN
I think you just testified that the
last tax return was about three years ago. Did you file tax
returns every year prior to that time?
MR. HANSEN
I believe we have.
MR. GEARIN
All right. I want to go back to
the question I asked you before about Easter Sunday.
MR. SMITH
Mr. Gearin, you've got a very deep
voice that I know I have trouble hearing at times. So if you
could just speak up, that would be appreciated.
MR. GEARIN
All right. I will.
MR. SMITH
Thank you.
MR. GEARIN
Easter Sunday -- again, I want to
be very specific. I'm asking you: Did you take any
quantities of gold, silver, or precious metals out of the
vault at Federal Way on Easter Sunday 2016?
MR. HANSEN
I don't recall.
MR. GEARIN
So you could have taken precious
metals on that day; is that your -- is it possible?
MR. HANSEN
It's -- well, when you say, "take,"
tell me in what context. Did we move metal? Or did we take
metal and go bury it in the yard? What are you asking,
Mr. Gearin?
MR. SMITH
That's a simple -- it's a simple
question.
MR. HANSEN
That's not a simple question.
MR. SMITH
Did you take possession of and
remove metal from the vault on Easter Sunday?
MR. HANSEN
During that period of time, we were
moving metal between different locations, as we always do.
And could we have moved metal from one location to another? I
think it's very possible. Did I remove it for my personal
use? The answer is no.
MR. SMITH
Did you remove any metal and take it
to your residence?
MR. HANSEN
Not that I'm aware of.
MR. SMITH
Well, who else would be aware?
MR. HANSEN
Diane Erdmann. But I don't believe
we would've ever taken any metal out of the vault and taken it
to my personal residence. You know what? That is not true.
And I'm going to -- I'm going to modify my -- I'm going to
modify my -- my comment about that.
Diane Erdmann and I work many, many hours. And
it is not uncommon for us, when we leave at the end of the
day, for us to take work home, which includes grading coins,
which includes pulling stones that are in jewelry, and also
going through and writing down dates and things. So we do
take metals home, and we take metals back.
So you know what? You're correct. We do take
stuff home. It's taking it home so we can work on it, and we
bring it back.
MR. SMITH
And when you take things home, where
does that get logged?
MR. HANSEN
We don't log it.
MR. SMITH
So how does anybody know whether you
brought it back?
MR. HANSEN
Well, as the owners of the company,
I don't think that we're, you know, concerned about Diane and
I, you know, making sure that we bring it back.
MR. SMITH
Well, I think the creditors are
concerned, so I'm just asking if --
MR. HANSEN
Well, of course they are.
MR. SMITH
You had said there was a log, and
I'm trying to understand the parameters of the log.
MR. HANSEN
Every --
MR. SMITH
Let me finish. It sounds like, when
you and Diane take things, that doesn't -- whether it comes
back or not, that doesn't make the log. Is that a fair
statement?
MR. HANSEN
Usually not. No.
MR. SMITH
Okay.
MR. HANSEN
What happens at the end of the day
depends on how much time we have and what we're intending to
do.
Diane -- if you get on her computer, you'll find
that she'll often be working until one, two, or three o'clock
in the morning, trying to get orders processed so that when
the shippers come in at 6:00 a.m. in the morning, they have
their shipping instructions so they can jump on things and get
them done right away.
MR. SMITH
Mr. Gearin, do you have further
questions?
MR. GEARIN
I do. I want to follow up with
some of the -- you say there may be some materials that were
moved from the vaults at the mint to your personal residence?
MR. HANSEN
Yes. And they're always brought
back.
MR. GEARIN
I understand there was some --
there was personal property seized at your residence recently;
is that right, under a levy from a judgment creditor?
MR. HANSEN
Correct.
MR. GEARIN
Was any of the property that was
seized -- was that property that had come from the mint? Was
there mint property stored at your house?
MR. HANSEN
No.
MR. GEARIN
How do you know that?
MR. HANSEN
No. Because what happens is -- and
this is -- I want to explain this, because this is an
important issue.
MR. SMITH
As long as it's in response to the
question --
MR. HANSEN
It is in response to the question.
MR. SMITH
-- and not just a narrative.
MR. HANSEN
How I met Diane Erdmann is -- Diane
Erdmann lost her husband. He was in the service. And she got
approximately $140,000 worth of insurance money when her
husband passed away. And she, like the rest of you, likes
precious metals. And back -- and I still remember the day --
on Valentine's Day in 1997, Diane came in to buy some precious
metals from me.
UNIDENTIFIED
FEMALE SPEAKER
 And she's still
got them.
MR. HANSEN
And we --
MR. SMITH
Please, no comments.
MR. HANSEN
And we met, and she bought precious
metals. Over the next couple of months, she came back a
couple of other times and bought precious metals from me. And
those precious -- the money that she got back in '97 and '98
are her property, and she's always maintained her property.
And to keep it separate, Diane went and bought her own safe,
which I do not have access to. And she keeps her records in
her safe separate from me and the mint. And it was that safe
that got opened under a court order, and her precious metals
were taken from the vault.
MR. SMITH
Where was the location of her safe
that was opened?
MR. HANSEN
It was in the den of our house.
MR. SMITH
Were precious metals and coins also
found in your attic?
MR. HANSEN
Not that I recall. But there
could've been something there that, you know --
MR. SMITH
Where would those come from?
MR. HANSEN
There could've been some coins left
over from a coin collection I had a long time ago. I -- I
honestly don't know. I was not allowed to look at what was
taken, so I have no idea what was taken. And despite
requests, we haven't found anything.
MR. GEARIN
But your --
MR. HANSEN
Oh, you know what? I -- I want to
modify so I'm accurate. Yes, there was coins taken from my
attic. And what they were -- they were jars of change.
MR. SMITH
Okay.
MR. GEARIN
But your testimony is that
there's -- everything that was taken from your house, you're
saying belonged to Ms. Erdmann?
MR. HANSEN
No. That's not true. I didn't
testify to that.
MR. GEARIN
Okay. But you did tell me that
none of it belonged to the mint.
MR. HANSEN
None of the precious metals in the
house belonged to the mint.
There was also some medallions and some -- some
books that belonged to Medallic Art Company, which is the
other entity that's not in bankruptcy. And they were clearly
marked with identifiers and with their inventory numbers in
the front.
MR. GEARIN
Did you instruct Ms. Erdmann to go
and remove materials from the vault in Auburn in March of
2016?
MR. HANSEN
For what purpose?
MR. GEARIN
I don't know. I'm asking you. Did
you ever do that? In March of 2016, did you ever instruct her
to go down and take materials out of the vault in Auburn?
MR. HANSEN
I would have to know the context.
You know, we talk every day. Are you talking about shipping
to customers? Delivering to customers? Under what form?
MR. GEARIN
All right. What about this: Did
you ask her to go after hours -- after business hours and go
down and remove materials out of the vault in Auburn in March
of 2016, for any purpose?
MR. HANSEN
I -- I have no idea what you're
talking about, so --
MR. GEARIN
I'm asking. It's a simple
question. Did you or did you not ask her to go down and take
materials out of those vaults in Auburn?
MR. HANSEN
For which purpose?
MR. SMITH
Well, he's making it easy. He's
saying, "for any purpose."
MR. HANSEN
I have no idea. I have no idea
what you're talking about, and I -- I -- you know, I don't
know what you're referring to and/or what context. You're
asking me, over a 30-day period of time, did I ever instruct
Diane Erdmann to take material to what? Building B? To ship
to a customer? To deliver to a customer?
MR. GEARIN
That wasn't my question. Listen to
the question, if you would. It's a simple yes or no. It's a
yes-or-no question.
MR. HANSEN
I would have to say I don't know,
because I don't know what you're referring to.
MR. GEARIN
Have you ever -- I don't want to
interrupt you. Go ahead and finish.
MR. HANSEN
I simply don't know, because I
don't know what you're referring to.
MR. GEARIN
So you don't know whether you ever
told her to go down and take materials out of the vault after
hours in March of 2016?
MR. HANSEN
Well, first of all, there's no
after hours with us. Okay? We work all the time. So I
object to your question.
MR. GEARIN
After 5:00 p.m. After 5:00 p.m.,
normal business hours, did you ask Ms. Erdmann to go and
remove materials from the vault at --
MR. HANSEN
Diane and I work usually until 7:00
every night, so --
MR. SMITH
So what's the answer to the
question?
MR. HANSEN
I have no idea what he's referring
to, so --
MR. SMITH
He's referring --
MR. HANSEN
I'm just --
MR. SMITH
It can't be -- Mr. Hansen, it can't
-- I mean, you may not remember. But the question can't be
any simpler. Did you instruct your girlfriend to go take
precious metals out of the vault outside of business hours on
that day -- or in that month?
MR. HANSEN
I -- I don't recall.
Easy on that, because I don't know what you're
referring to.
MR. SMITH
Can we move on, Mr. Gearin?
MR. GEARIN
Yeah. Let's move on.
I want to go -- move forward to the time frame
of about April 10th, April 11th, when Mr. Calvert was
appointed. And I want to ask about -- did you instruct
Ms. Erdmann to ship materials from Federal Way to Dayton,
Nevada?
MR. HANSEN
After Mr. Gearin[sic} was
appointed?
MR. GEARIN
Mr. Calvert.
MR. HANSEN
Or Mr. Calvert was appointed?
MR. GEARIN
Let's say April -- let's go from
April 10 forward. Did you instruct Ms. Erdmann to make a
shipment of materials from Federal Way to Dayton, Nevada?
MR. HANSEN
Anything after Mr. Calvert was
appointed would've been shipped with the consent of
Mr. Calvert.
MR. GEARIN
All right. Well, let's go back.
Let's take it a little farther back. After the bankruptcy
petition was filed, after April 1st, did you instruct
Ms. Erdmann to pack up some materials and ship them to Dayton,
Nevada?
MR. HANSEN
Yes.
MR. GEARIN
And did you instruct her to have --
to tell the employees of Dayton not to open those materials
up?
MR. HANSEN
No, I don't -- I don't -- I
don't -- didn't speak to anybody down at Dayton.
MR. GEARIN
All right. What did you have her
ship to Dayton, Nevada?
MR. HANSEN
I don't specifically -- I think
what you're referring to -- and you keep asking these vague
questions -- in the -- well, you are. Don't laugh, because
these are --
MR. SMITH
Stop the commentary and just answer
the question.
MR. HANSEN
Okay. Well, I want to answer the
questions in the most accurate way, because I feel like he's
trying to set me up for some type of entrapment here.
So what happened was, when we were going through
the vault and inventorying the vault product -- in the vault,
we have product that belongs to customers. We have products
that are finished -- unfinished product that needs to go to
various locations for finishing. There was also some product
in there that had recently come up for photographing, to be
used on the web, that were Medallic Art products. We did
take -- so it wouldn't be confused in the overall count, we
took some boxes of material of Medallic Art, stuff that's all
listed and hallmarked with Medallic Art, and we shipped it
down to Medallic Art Company -- or to the location down there,
to be put into the Medallic Art inventory.
MR. SMITH
For people here who may not be
aware, what's your relationship to Medallic Art company?
MR. HANSEN
I am 50 percent owner of Medallic
Art, and I'm the managing member.
MR. SMITH
And who's the other 50 percent
owner?
MR. HANSEN
It's Dick Bressler.
MR. SMITH
Thank you.
MR. GEARIN
I want to circle back to what was
shipped. But while we're on this subject, did you purchase
your 50 percent interest in Medallic Art Company with money
that came from the mint?
MR. HANSEN
We're talking a transaction that
happened back in 2009. And I believe, right now, that
question of that is subject to some legal litigation that has
yet to be determined. So I'm not going to answer that until
the lawyers can be through with that.
MR. GEARIN
Well, I don't think that's your
prerogative here. You're here under oath today, and you're
supposed to answer questions --
MR. HANSEN
Well, I don't -- I -- I can't
answer that question because I don't have a legal opinion on
that yet, sir.
MR. GEARIN
It's not a legal -- it's a factual
issue. The question is --
MR. HANSEN
It's --
MR. GEARIN
-- where did you get the money to
buy your 50 percent interest in Medallic Art Company?
MR. HANSEN
Again, sir, I'm not going to answer
that question until we have a legal opinion on that.
MR. SMITH
Are you asserting your Fifth
Amendment?
MR. HANSEN
I'm not saying it's a Fifth
Amendment. What I'm saying is, is that I don't know --
under -- how to answer that question.
MR. SMITH
You don't know what the source of
your money was? Or you don't want to state what the source of
your money was?
MR. HANSEN
Well, what there is -- there's a
bunch of legal nuances here. I took that money as my monies
because I own Northwest Territorial Mint. And I have my own
sources of money, and I purchased my interest in -- not only
used my monies, but also used other assets that I owned to
purchase that company.
MR. SMITH
Were any of the assets that were
used to purchase Medallic Art precious metals owned by the
mint?
MR. HANSEN
I don't recall. I think we
actually bought precious metals from Medallic Art, instead of
the other way around.
MR. SMITH
Who is "we"?
MR. HANSEN
I think Northwest Territorial
Mint -- there was inventories of metals that were at Medallic
Art, that were separate from the sale, that became property of
Medallic -- or that were property of Medallic Art that became
property of Northwest Territorial Mint in the sale.
MR. SMITH
Did you use any of the cash that was
in the possession of the mint to purchase some or all of your
interest in Medallic Art?
MR. HANSEN
Again --
MR. SMITH
Cash is cash. Did you use the
mint's cash?
MR. HANSEN
I didn't use -- I did not use any
cash. When you say -- there was no green cash exchanged in
this transaction. This was all wired funds. This was all
monies that were sent through lawyers and different accounts.
MR. SMITH
So did any of the funds that were
wired come out of any accounts owned by the mint?
MR. HANSEN
I don't recall.
MR. GEARIN
So you don't remember where you got
the money to buy your interest in Medallic Art; is that your
testimony today?
MR. HANSEN
It's not that I don't remember. I
just don't remember all the -- the legal nuances that we did
to make that transaction happen. And I don't -- I want to
make sure -- I know where you're going with this, and I want
to make sure that I'm technically accurate.
MR. GEARIN
Mr. Hansen, I'm not going anywhere.
I'm asking you some very straightforward and specific
questions.
MR. HANSEN
Move on, Mr. Calvert{sic}, because
I'm through with that question.
MR. SMITH
You don't have the right or the
ability to tell Mr. Gearin to move on. So tone it down.
Mr. Gearin, would you ask your next question,
please?
MR. GEARIN
Let's go back to what you shipped,
that you say was Medallic Art's property. What was shipped?
Specifically, what goods, that you assert belonged to Medallic
Art Company, did you --
MR. HANSEN
There was medallions. Most of them
were hallmarked. They were -- they're a product of -- that
had come out of the archives.
Northwest Territorial Mint -- just to clarify,
Northwest Territorial Mint leases the assets of Medallic Art
and leases the facility that it operates in from Medallic Art.
Medallic Art is a -- has equipment, has a trade name, and it
also has coining dies; and it has a very extensive archive.
And those items are leased to Northwest Territorial Mint. And
Northwest Territorial Mint was allowed to move in some of
their equipment, into the facility in Nevada, so this could
all be facilitated.
And often, Northwest Territorial Mint and
Medallic Art will take assets back and forth so that -- in
this purpose, these assets were -- were sent up as samples for
the art department to copy. We often take medallions that
have interesting designs or unique designs, and we give them
to the art department -- or we give them to the die
department, for them to copy all or part of the images so that
we can develop new product.
MR. GEARIN
All interesting. But you still
haven't answered the specific question, or the direct
question. That was: What did you ship? What was shipped
from Federal Way to Dayton?
MR. HANSEN
Well, I don't recall exactly what
was shipped. My specific instructions were to clean up the
estate so that we could avoid some of these issues that I know
you want to make hay out of. If there's any product that has
come out of the Medallic Art inventory, ship it back down to
the inventory so that it can be in the proper place. We do
this on a daily basis.
MR. GEARIN
So you're talking about Medallic
Art inventory. How did you identify it? How did you
determine what inventory was Medallic Art inventory?
MR. HANSEN
Well, in most cases, it's -- it's
got inventory numbers on it and also is hallmarked "Medallic
Art Company" on the side of the product.
MR. GEARIN
And was that product produced or
manufactured within the -- since 2009?
MR. HANSEN
Some of it. But most of it, not.
Most of it's very old, old inventory.
MR. GEARIN
But it was kept in Federal Way?
MR. HANSEN
No. It had been sent to Federal
Way. It had been acquired through a number of different
sources. But mainly it had been shipped up for the purposes
of the art department.
MR. GEARIN
Do you have a list of that
equipment -- of what you directed Ms. Erdmann to ship to
Dayton?
MR. HANSEN
I -- I -- I told her to ship it.
And I'm assuming she would've put together a packing slip, but
I don't know how she did that. My instructions to her were:
If there is any clearly identifiable Medallic Art material
that is here, let's clean it up, you know, for the trustee and
make sure that it goes in the proper pile.
MR. GEARIN
Who's the landlord in Dayton?
MR. HANSEN
The landlord is a gentleman by the
name of Bob Hoff. He's the former owner of Medallic Art
Company.
MR. GEARIN
Who's the tenant?
MR. HANSEN
I am.
MR. GEARIN
You personally?
MR. HANSEN
Yes.
MR. GEARIN
You, Mr. Hansen. Who has been
paying the rent on the Dayton facility since 2009?
MR. HANSEN
Northwest Territorial Mint, under
an agreement that I have with them, pays the rent for the
facility.
MR. GEARIN
All of it? All the rent?
MR. HANSEN
All the rent.
MR. GEARIN
Since 2009?
MR. HANSEN
Yeah. And your --
MR. GEARIN
Is there a written agreement
between you, Mr. Hansen, and the mint with respect to that
lease?
MR. HANSEN
Again, I have asked you for all the
documents that exist, and you've refused to turn them over.
MR. GEARIN
Well, that doesn't go to the
question of, is there a written -- are you telling me there is
a written agreement, and we should go look for it?
MR. HANSEN
I believe there is. But, again, I
want to review the records. And your unwillingness to turn
them over is suspect.
MR. GEARIN
Well, thank you for that. What I
want to get to, though, is -- I'm asking you if you know that
there is a written agreement. And if there is, where is it?
MR. HANSEN
Well, it's in your possession.
MR. GEARIN
Where? It wouldn't be in my
personal possession. It would be in the company's possession.
MR. HANSEN
It would be in the company's
possession. And that would either be in the legal department,
or it would be in the -- in the department of -- in the
accounting department.
MR. SMITH
Let me ask that a little
differently. Do you have a copy of that?
MR. HANSEN
I have some of the agreements, but
I don't have that particular document. No.
MR. SMITH
Does the landlord have a copy of it?
MR. HANSEN
No. That would be an agreement
between Northwest Territorial Mint and Medallic Art Company.
MR. SMITH
Does your accountant have a copy of
it?
MR. HANSEN
Not to my knowledge. I have not
asked him, to be honest with you. I haven't thought of that.
MR. GEARIN
Let's circle back to finishing up
this asset list.
MR. HANSEN
It's kind of a mute{sic} point
because you're about ready to get kicked out of it.
MR. SMITH
I'm sorry. What's that?
MR. HANSEN
Well, Medallic Art is -- is about
ready to evict Northwest Territorial Mint because they --
they're not paying the rent.
MR. GEARIN
Let's go back to the asset issue,
because I think we kind of (inaudible). I do have one
question on the equipment. Is there equipment in China?
MR. HANSEN
There's coining dies in China.
Yes.
MR. GEARIN
Coining dies in China. Where in
China, and -- where in China?
MR. HANSEN
They're at a company that we use
over there as a manufacturer. There's actually two main
companies. One is called Yong Tuo, and the other one is a
company called Top Tree. And there's probably between 2 and
$4 million worth of coining dies there. Some of our lesser
product is made in China. About 30 percent of our product is
made in China.
MR. SMITH
And are the coining dies owned by
the mint?
MR. HANSEN
Yes, they are.
MR. SMITH
Is there any secured obligation
against the coining dies?
MR. HANSEN
There is a security interest on our
coining dies by one of the creditors.
MR. SMITH
Do you know what the total amount of
debt against the coining dies is?
MR. HANSEN
I do not. No.
MR. GEARIN
Who's the creditor that has the
security interest?
MR. HANSEN
It was a gentleman by the name of
John Demakowicz{phonetic}. And Mr. Demakowicz was
Dr. Demakowicz, and he passed away. And I believe he assigned
his rights to his wife, Shirley Demakowicz.
MR. GEARIN
Could you spell that for me?
MR. HANSEN
I can't. I -- but I could get that
to you. I believe that's in the -- in the bankruptcy filing.
MR. GEARIN
Okay. You're saying that the mint
pledged the dies that are in China in support of obligations
owed to Mr. Demakowicz; is that right?
MR. HANSEN
No. What happened is, is that
during a critical period of time, when the mint was expanding,
Mr. Demakowicz loaned a substantial amount of money to the
company. And as a security interest, I gave him an interest
in my coining dies.
MR. GEARIN
When did that happen?
MR. HANSEN
I don't recall.
MR. GEARIN
More than five years ago?
MR. HANSEN
Again -- yes. I don't recall. But
there's documents that will show all of that.
MR. GEARIN
So we started a conversation about
inventory, and we went down the path of discussing
{inaudible}.
Do you have an idea of what the total value of
the inventory is?
MR. HANSEN
Of which inventory?
MR. GEARIN
Well, all of it. I want to talk
about it globally. You said there were a number of different
kinds of inventory. I understand that. There's bullion.
There's precious -- there's coins. There's --
MR. HANSEN
Okay. Well --
MR. GEARIN
-- packaging materials --
MR. HANSEN
-- if you would like, I can go down
that list. Let's start -- let's start in China. You just
brought up China. There are tens of thousands of coining dies
located at both Top Tree and Yong Tuo. There's also certain
packaging material. There's also other printing dies, and
there's other -- other materials that are located in China.
Estimate, at least a couple million dollars.
Let's move to Auburn. Auburn is our Building B
location. Auburn is -- I think it's a 13,000-square-foot
facility. There's approximately, I'm guessing, a million and
a half dollars -- I mean, not dollars -- but about a million
and a half coins. There's inventory of header cards. There's
inventory of boxes. There's inventory of metals, finished
coins. And that's not including the equipment that's located
there. There is -- it's an extensive facility. And we ship
approximately $6 million worth of product out of that building
ever year.
Then in --
MR. GEARIN
So we're talking about values,
right? You told me that there's header cards, and you just
described those. How much is it worth -- in Auburn?
MR. HANSEN
Not knowing what you've done with
it since -- but at the time, I figured there was probably
north of $2 million worth of inventory in that building.
MR. GEARIN
Now let's talk -- for future
reference, let's talk about April 1, which is the bankruptcy
petition date. You were still in control on that date. We'll
use that as a reference point. All right?
Okay. So now you've talked about Auburn and
China. How about Federal Way --
MR. HANSEN
Well, let me finish. Would you
like me to finish your questions? Or do you want to just
interrupt?
MR. SMITH
Don't be snarky and just answer the
question.
MR. HANSEN
Well, I'm being snarky because he
keeps interrupting.
MR. SMITH
No. You're --
MR. HANSEN
Would you like --
MR. SMITH
-- being obstreperous.
MR. HANSEN
Would you like -- what would you
like me to answer?
MR. GEARIN
I think I've asked you a question
about the value of the inventory --
MR. HANSEN
Of which inventory?
MR. GEARIN
-- on April 1st.
MR. HANSEN
Where?
MR. GEARIN
You started to tell me about China.
Now you've told me about Auburn.
MR. HANSEN
Well, let me finish about Auburn.
MR. GEARIN
Okay.
MR. HANSEN
You have finished product in China.
You have packaging in China. You have header cards in
China -- I'm sorry -- in Auburn. I'm speaking about Auburn.
I -- substitute "Auburn" for "China."
MR. GEARIN
Okay.
MR. HANSEN
You have finished goods -- rows and
rows and rows of finished goods, partially finished goods, and
goods that are to be shipped out. There's also coins. There
are tens of thousands of proof sets, mint sets, U.S.
government coins and other foreign -- other coins in there.
That value there, I estimate probably in the neighborhood of
three-quarters of a million dollars' worth of liquid value --
and I'm -- and that's a -- that's a WAG, that's a guess -- of
mint sets, proof sets of both the United States and other
foreign government product.
There's also two vaults down there, mainly, that
has customer product that we're storing. It's not our
inventory. It's actually customers' inventory. There are
some goods that are ours, but mainly that's where customer
goods -- some of where the customer goods were stored.
That's -- that's Auburn.
Let's go to Federal Way.
MR. SMITH
Before we go -- oh, go ahead,
Mr. Gearin.
MR. GEARIN
You said two different things
about --
MR. HANSEN
Okay.
MR. GEARIN
I want to correct the record.
MR. HANSEN
Okay. Go ahead.
MR. GEARIN
It may be just an honest mistake.
Because you started talking about China, and then you started
talking about Auburn. And I think you started to go back and
talk about China again. So you told me there's about
$2 million of value in China in inventory. Then you gave me a
number of categories: about a million and a half in coins,
header cards, boxes, finished coins, and finished materials,
et cetera. What's the total value of all of the inventory in
Auburn?
MR. HANSEN
I don't know what the precious
metal value is of the inventory because I didn't handle that.
That was -- that would rotate, depending on customers -- you
know, what was in there, what was not.
MR. GEARIN
You're talking about stored goods
now?
MR. HANSEN
Stored goods. I don't know what
the stored goods was.
MR. GEARIN
How do you keep track of that?
MR. HANSEN
That would've been mainly done by
the people who handled the storage agreements, which was
Amelia Swan. And I -- I hate to ask this question, but --
right in the middle of all this -- but normally, when you go
to testify or something, there's a jug of water or something
on the table. Is there -- I'm getting parched. Is there a --
MR. SMITH
We will get you some.
MR. HANSEN
I appreciate that.
MR. SMITH
We normally don't go this long
either, so we don't typically have that.
MR. HANSEN
You know, this is important stuff,
and I'm here to answer the questions.
MR. GEARIN
Okay. So let's finish that.
MR. HANSEN
Okay.
MR. GEARIN
What's the total value? Set aside
the stored goods.
MR. HANSEN
Okay. Set aside the precious
metals that's in -- in there. It's --
MR. GEARIN
That would be stored goods, right?
MR. HANSEN
The stored goods. Probably
somewhere between a million and a half and $3 million.
MR. GEARIN
Now, you've given me some pretty
big ranges here, right?
MR. HANSEN
Correct.
MR. GEARIN
You've given me a million and a
half to 3. You gave me 1 to 3 earlier, in terms of equipment
values. When's the last time -- does the mint keep
ordinary-course-of-business records? Do you keep financial
statements?
MR. HANSEN
Do you want to talk about financial
statements, or do you want me to continue with inventory?
MR. GEARIN
I tell you what. I think it's a
pretty straightforward --
MR. HANSEN
Because you keep jumping around.
MR. GEARIN
Why don't you answer the question
about the financial statements very briefly. And then we'll
come back to the inventory.
MR. HANSEN
Okay.
MR. GEARIN
Do you keep financial statements?
MR. HANSEN
To the best of our ability, yes.
MR. SMITH
Has the company produced financial
statements in the last two years?
MR. HANSEN
No.
MR. SMITH
In the last five years?
MR. HANSEN
Yes.
MR. SMITH
So let's break it down, then. In
the last three years?
MR. HANSEN
Okay. Again, I want to -- I would
refer to the documents.
But, Mr. Gearin, you're asking these questions.
You know the answers to these, but I'm --
MR. SMITH
No, no, no. This is my -- this is
my question.
MR. HANSEN
Okay.
MR. SMITH
If you have a problem with my
question, you direct it to me, not Mr. Gearin.
MR. HANSEN
I thought Mr. Gearin was asking the
questions.
MR. SMITH
Right now, I'm asking --
MR. HANSEN
Okay. Go ahead.
MR. SMITH
-- this question. Have you kept --
has the company produced financial statements in the last
three years?
MR. HANSEN
Not complete financial statements,
no.
MR. SMITH
Why not?
MR. HANSEN
Because a few years ago -- and I'll
tell you what. This is another point of contention. Back in
2008, when the -- everything exploded -- our business
exploded. We went from a $50 million a year company to over a
$300 million a year company. And we were operating under an
operating system called E2. That's an E2 Shop System. It's
an Enterprise system that ties in our shipping, our inventory,
and our customer management.
Right in the middle of that crazy time, when the
business was melting down, all of a sudden our computer system
went on the fritz. And we were trying to figure out what was
going on.
MR. SMITH
Do you know what year that was?
MR. HANSEN
That was 2008.
And what we found out was, the computer had a
limitation that it would only allow 30,000 customer names.
And when we put in a customer name, more than 30,000, it would
kick one out or it would overwrite or it would have a problem.
And it took us a little bit to discover what the problem was.
So we immediately launched in and said, Oh, my God, we need a
better computer system.
At the same time, the business was expanding
rapidly. And I don't know if any of you have ever tried to
manage a computer system, especially a robust Enterprise
Resource System. It's incredibly complicated. It's
incredibly expensive. So what we did is, we looked around.
We needed an immediate fix. This was something very, very
serious. Customers were calling us, looking up their customer
number, and finding different information.
So what we did was -- is we immediately sought a
source. And we went to SAP, which is the largest computer
system in the world for -- and we contracted with them. We
spent a bunch of money, a bunch of time, trying to put a
system together and it failed. They just couldn't get it
right.
MR. SMITH
Now what year are we?
MR. HANSEN
That was 2009 into 2010.
So we switched gears, and we went into -- and we
realized SAP was not going to work. It's not an uncommon
thing for Enterprise systems. And what we were trying to do,
as the company was expanding -- we were trying to get a system
that could tie in all of our different operations so that, you
know, Auburn could look at what the inventory in Texas was and
vice versa, and we had have these efficiencies.
And the system that we chose after the SAP
failure was a system called Epicor. And Epicor -- I signed a
multimillion-dollar deal with Epicor for them to come in and
install a system. It's about a three-year process. During
that process, of which we spent over $2 million putting the
system together -- and that's just on direct cost, and not our
labor costs -- we were being sued by Mr. Cohen. And
Mr. Cohen was bleeding the company dry. And during that
period of time, as we were migrating information over -- and
it was extremely complicated, extremely expensive -- we ran
out of money. We ran out of money for that. And what we did
is, we said, Instead of spending the millions of dollars to
get the ERP system operating functionally -- we had to stop
doing that. And we said, Let's focus on our core business.
And so what we've been doing is -- we had to
slow down the migration of all this information and tying all
these different groups together and said, Let's focus on the
day-to-day operation, instead of trying to do the forensic
accounting from the past. And that's why that hadn't got
done. We were simply out of money for that purpose.
MR. GEARIN
But you stopped doing financial
statements at least three years ago, correct? Is that what I
heard you say?
MR. HANSEN
What we did was, we were doing the
financial statements that would keep us in business on a daily
basis. But for an overall system, you're correct. We -- we
stopped doing that. Yes.
MR. GEARIN
All right. Let's go -- let's move
back to the inventory. I think you've told me about China and
Auburn. And I think you were just about to start talking
about Federal Way.
MR. HANSEN
Okay. In Federal Way, besides just
having the desk, the chairs, and the things that support the
50-some employees that we have there, we have websites.
Northwest Territorial Mint controls approximately 35 -- 38
different websites. These websites -- you know, a lot of
people don't think websites are a value, but they have a
tremendous value. We have literally spent millions of dollars
putting together our websites.
We've also spent a significant amount of money
developing new products. Currently, right now, we have over
18,000 skews. That's individual stock products. And so --
and I would call it -- Federal Way, we have -- not only do we
have our inventory of machines, of computers, but we have the
websites that we control from there. We have the servers.
And then we have the precious metals that are in the vault.
The most valuable asset is going to be the
websites. Because tens of thousands -- hundreds of thousands
of hours and, literally, millions of dollars was spent
promoting those websites and developing those websites.
MR. GEARIN
You're getting distracted, because
you already told me about the websites earlier. And what I'm
focusing on right now is the inventory. So we're talking
about inventory in Federal Way.
MR. HANSEN
I thought you were talking about
the assets. I apologize. I'm talking about all the assets of
the company.
MR. GEARIN
And I'm trying to focus you on --
we're talking about specifics now. We've walked through some
very specific line items --
MR. HANSEN
Okay.
MR. GEARIN
-- and different kinds of assets,
and now we're focusing on inventory. And I want to talk about
inventory in Federal Way and how much that is worth.
MR. HANSEN
Okay. Which type of inventory,
sir?
MR. GEARIN
Tell me about what's there.
MR. HANSEN
Okay.
MR. GEARIN
Tell me what inventory is there.
MR. HANSEN
Well --
MR. GEARIN
You said there's some bullion
there. You said there's some stored goods there.
MR. HANSEN
Yes, there is. There's stored
goods that are in the vault, and then there's a -- there's a
room in the vault, and the -- that has safes. There's four
safes in that vault -- actually, five. I apologize. There's
five safes in that vault. And then there's multiple drawers
and the -- it was built as a strong room, where if -- you
know, that -- it would take a little bit to break in. And if
they did break in, then there would be vaults that had metal
in it, that would be tough to get into. But there was --
there's dozens of drawers. There's, literally, millions of
items in that vault.
MR. GEARIN
How much is the inventory that's
there? How much is in there?
MR. HANSEN
I don't know.
MR. SMITH
I think your question, Mr. Gearin,
was: How much does he believe it was worth on April 1st; is
that right?
MR. GEARIN
April 1st is the reference date
we've used for all purposes for these questions; that's right.
MR. HANSEN
We had not -- on April 1st --
understand, we filed the bankruptcy at 1:00 in the morning on
April 1st. And if I can, because I think you have a right to
know, what happened was, because of Mr. Cohen's judgment of
$38 million and his aggressive tactics of trying to collect
that --
MR. GEARIN
Mr. Hansen, I'm sorry. That's not
responsive. That's not --
MR. SMITH
Let's go back to the question. This
isn't your opportunity to just give blanket narratives to
people about the history of the company and what your reality
is with respect to Mr. Cohen. Right now, it's for questions
of the creditors and counsel for the trustee. So let's just
get back to narrow questions.
MR. HANSEN
Okay. I filed a Chapter 11
bankruptcy at 1:00 in the morning on April 1st. We did not do
an inventory on April 1st.
MR. GEARIN
And do you have any idea, order of
magnitude, how much the inventory was worth at Federal Way on
April 1st?
MR. HANSEN
No. We were focused on getting the
bankruptcy schedules put together, not counting coins.
MR. GEARIN
Okay. Was there inventory in
Dayton, Nevada?
MR. HANSEN
Yes, there is.
MR. GEARIN
Do you have any idea what that's
worth?
MR. HANSEN
What type of inventory, sir?
MR. GEARIN
All inventory.
MR. HANSEN
Okay. We have coining dies. We
have about 400,000 coining dies in Dayton. We have many, many
tons -- and I don't know what the exact number is -- probably,
you know, a couple hundred tons of brass, copper, nickel. We
also have finished goods. We have inventory of customers,
that we have either finished or partially finished, that we
hold for the customer, such as the Peabody Awards, or somebody
like that, where we'll strike the coin. And we put it up on
the shelf, and then they take it as inventory.
For precious metals, which I think seems to be
your main focus here --
MR. GEARIN
My focus is everything.
MR. HANSEN
Okay.
MR. GEARIN
I'm going to broaden it now. I'm
asking you, again, very precise --
MR. HANSEN
Okay. Then we have boxes. We have
tens of thousands of boxes, probably -- I'm guessing the
packaging down in Dayton alone is probably worth in excess of
a million dollars. And that -- that includes paper packaging,
boxes, metal boxes, inserts, all kinds of different products.
A few of you have had the opportunity to view
that facility. It's 120,000 square feet, and it's filled.
It's not a small little room.
MR. GEARIN
Again --
MR. SMITH
Do you want a global value? Or are
you trying to get --
MR. GEARIN
I'm trying to get --
MR. SMITH
-- line item --
MR. GEARIN
I'm trying to get a global value.
I'm asking you for the value of all of the
inventory that's in Dayton.
MR. HANSEN
Okay. To answer your question,
if -- to do a complete system-wide inventory --
MR. GEARIN
I'm talking about Dayton.
MR. HANSEN
Even in Dayton, it would've taken
probably 20 people a week to do that complete inventory.
MR. GEARIN
Because you don't -- you were
not -- you did not keep a current record of what was on hand;
is that right?
MR. HANSEN
That's not correct. Many products,
we do have. In fact, Dayton probably has the best records of
all of the facilities. So if you go down there, and you say,
Okay, how many of this product do we have, we can normally
tell you -- look it up on the computer.
That's not a number I focus on. I'm concerned
about making sure that we have enough product to fill customer
orders. Its actual value is something we would do if we were
doing an accounting on it.
MR. GEARIN
Do you know the value of inventory
in any other location, other than China and Auburn? I think
you've given me some numbers on them. Do you know the value
of inventory in any of those other locations?
MR. HANSEN
Well, for example, last summer, I
bought out the Honolulu mint. That has -- it's the smallest
facility. It's got three --
MR. GEARIN
Mr. Hansen, again, a narrative is
not what I'm after. It's a very precise question. Do you
know the value of inventory in Hawaii?
MR. HANSEN
From when?
MR. GEARIN
April 1st. As of April 1st.
MR. HANSEN
Approximately $100,000.
MR. GEARIN
Okay. Thank you.
MR. SMITH
Is that in Hawaii?
MR. HANSEN
That's in -- that's our smallest
facility, and it's located in Hawaii.
MR. GEARIN
Okay. Any other locations? Do you
know the value of the inventory in any other location?
MR. HANSEN
Precisely, no.
MR. GEARIN
Okay. Can you give me an order of
magnitude for any of the other locations?
MR. HANSEN
Well, for example, in our facility
that you're trying to sell down in Texas, there's about
$2.3 million worth of inventory.
MR. GEARIN
I'm going to walk back through some
of the categories we've talked about, and I'm looking for -- I
think I've got a pretty good idea on inventory, equipment,
customer lists, and websites. You've talked to us about
that -- those four categories. Is there any other asset
that's of significant value that the mint owns? Are there
other assets out there that have, let's say, a value of more
than $100,000?
MR. HANSEN
Yes.
MR. GEARIN
Tell me what those are.
MR. HANSEN
Those would be intellectual
property.
MR. GEARIN
Okay. Other than websites. You
told me about websites. What other intellectual property?
MR. HANSEN
Well, we own designs of products.
We -- every year, we create thousands of different products.
And those become intellectual property that's owned by the
mint.
MR. GEARIN
Have you had that valued?
MR. HANSEN
No.
MR. GEARIN
All right. What other assets?
MR. HANSEN
I apologize. I can't think right
now, off the top of my head. I'm sure I'm missing something,
but I can't think of what it might be.
MR. GEARIN
Okay.
MR. SMITH
Does the company have any patents?
MR. HANSEN
It has some trademark and patents,
yes.
MR. SMITH
So it does have patents?
MR. HANSEN
Yes.
MR. SMITH
Okay.
MR. GEARIN
What patents? Do you know,
specifically, what patents you might have?
MR. HANSEN
Yeah. I believe it was some -- for
example, the Silver Bullet bullion.
MR. GEARIN
I'm sorry. I missed the answer to
the question. Please repeat it.
MR. HANSEN
We trademarked the Silver Bullet
bullion. That was my design. Anything that I create in the
company, you know, we -- we both -- and, again, I'm not a
lawyer. I employee both a trademark and patent attorney. And
in some cases, we patent it. And in some cases, we trademark
it. And in other places, we hallmark it. And I don't know
all the nuances of that. But I believe that we have
significant assets in both the hallmark, the trademark, and
the patent categories.
MR. GEARIN
Tell me who the intellectual
property -- who's the patent attorney that you've used?
MR. HANSEN
You know, his name escapes me.
It's Mike. I could get that for you. He's a local Seattle
attorney.
MR. GEARIN
Do you know the firm?
MR. HANSEN
I don't. But I can get that
information for you.
MR. GEARIN
On the inventory in Tomball, Texas,
do you know the last time the inventory was done in Tomball,
Texas?
MR. HANSEN
I believe it was done at the end of
last year.
MR. GEARIN
At the end of 2015?
MR. HANSEN
Yes.
MR. GEARIN
And those are the numbers you're
relying on when you tell me there's -- I think you said
$2.3 million in --
MR. HANSEN
You know, again, I -- I believe
that number is correct. But, you know, I would -- I don't
have that document in front of me. So I'm going to have to
say based on memory, which could be wrong.
MR. GEARIN
Did you ever instruct employees of
the mint not to conduct inventories?
MR. HANSEN
For what purpose?
MR. GEARIN
For any purpose.
MR. HANSEN
Yes.
MR. GEARIN
Well, give me an example. Who did
you instruct and why?
MR. HANSEN
Well, for example, let's say a
great big coin collection comes in, and it's filled with a lot
of lesser coins, pennies, nickels, things like that. There's
no reason to sit down and write every coin and every dime down
because it -- it would cost more to do that inventory. So
what you do is, you just pull them out. And you throw them in
the different buckets and different categories. To try to
write down everything that you buy or everything that you --
that comes in over the counter would cost more than the value
of the item.
MR. GEARIN
Did you instruct any employees not
to do a global inventory of all of the inventory in Texas, for
example? Have you ever done that?
MR. HANSEN
No.
MR. GEARIN
Have you ever instructed employees
not to do an inventory in any other location on a global
basis?
MR. HANSEN
I -- I can't imagine that I would
ever do that.
MR. GEARIN
Okay. Mr. Hansen, are you holding
any property that belongs to the mint personally? Do you have
possession or control over any property that belongs to the
company?
MR. HANSEN
No significant property. I've got
some business cards and a few other things like that I suppose
we could argue over. But, no, I'm not holding any precious
metals or any -- any significant assets.
MR. GEARIN
Are you aware of any assets of the
company that are stored someplace else, other than the
premises that are presently under the control of the trustee?
MR. HANSEN
Not that I'm aware of. Do you --
if you have something and you want to ask me a specific
question, I'm happy to do -- to answer that.
MR. GEARIN
I understand. I'm asking you a --
MR. HANSEN
Okay.
MR. GEARIN
-- global question as to what you
know, whether there are other assets that are out there that
we don't know about. And to be very clear, what I'm asking
you to do is to disclose any asset that the trustee would not
be aware of and that is not under his present control and
total control. If you think there is such an asset, I would
hope that you would be forthcoming.
MR. HANSEN
Well, of course I would. And that
would be an asset of -- of the estate, and I'd be happy to do
it. But, you know, did I -- did I give somebody a coin at one
time as a gift, and it might be considered something? I don't
know. But there's no significant asset that's sitting out
there that belongs to the estate that I have not disclosed.
MR. SMITH
Have you had a safe-deposit box or a
storage unit in the last year?
MR. HANSEN
I -- I have not.
MR. SMITH
Has Diane?
MR. HANSEN
I believe she does.
MR. SMITH
Which? Storage unit? Or
safe-deposit box? Or both?
MR. HANSEN
You would have to ask Diane that.
She keeps her separate -- her deals separate from myself.
MR. GEARIN
Do you know where Ms. Erdmann
stores her {inaudible}?
MR. HANSEN
No, I do not. I've never been
there.
MR. GEARIN
Have you given Ms. Erdmann property
{inaudible}? Have you transferred anything to her?
MR. HANSEN
Yes.
MR. GEARIN
Have you transferred anything from
the mint to her?
MR. HANSEN
No.
MR. GEARIN
Has she received transfers of money
or other valuable assets from the mint?
MR. HANSEN
Well, Diane and I live together.
And the small amount of wages that we take, I give to Diane,
and she pays our household expenses.
MR. GEARIN
Does Ms. Erdmann draw a salary?
MR. HANSEN
No.
MR. GEARIN
Does Ms. Erdmann take owner's
draws?
MR. HANSEN
No. But I do, and I give the money
to her.
MR. GEARIN
All right. But Ms. Erdmann doesn't
directly take an owner's draw out of the vault in the
business?
MR. HANSEN
That's correct. But she -- she has
done that under my instruction.
MR. GEARIN
Does Ms. Erdmann receive benefits
from the company?
MR. HANSEN
I believe she gets medical
benefits.
MR. GEARIN
Is that the only benefit she
receives?
MR. HANSEN
I think so.
MR. GEARIN
Have you transferred any assets to
anyone else, from the company, to hold for you? Let's go
back, let's say, six months prior to the bankruptcy filing.
Have you transferred anything from the company to any party
with a value of more than $50,000?
MR. HANSEN
No.
MR. SMITH
Are you about done, Mr. Gearin?
MR. GEARIN
I think I should let some other
creditors have an opportunity to ask questions. We reserve
our right to conduct a 2004 examination of Mr. Hansen. And to
the extent other questions come up, I might ask a few more
questions. Thank you.
MR. SMITH
Okay. What we're going to do is --
I know some of you -- hopefully not all of you -- but some of
you have questions. So you can go up to the lectern where
Mr. Gearin has been speaking. You can ask one initial
question and one follow-up question, just in order to keep
some limitation on where this goes. Then we'll see how many
people have questions and what the timing is looking like.
So if you want to, identify who you are. And if
you represent somebody -- if you're an attorney representing a
creditor, for example, who you represent. And then you can
ask Mr. Hansen your question.
MR. MITCHELL
Good afternoon. Robert Mitchell
on behalf of creditor Bradley Cohen. I take it, from the U.S.
Trustee counsel, that we have one question and one follow-up;
is that right?
MR. SMITH
That's what I'd like to start with
and see where that goes.
MR. MITCHELL
In response to Mr. Gearin's
question, Mr. Hansen, you mentioned that you had various
sources of other money. Will you follow up and explain what
those sources of other money consist of, please?
MR. HANSEN
No.
MR. MITCHELL
Did you, at any time, advise the
customers, investors in gold and bullion -- gold and silver
bullion of Northwest Territorial Mint that you were not filing
tax returns since the year 2011?
MR. HANSEN
What?
MR. SMITH
I didn't follow the question. Could
you ask that again, please?
MR. MITCHELL
Did you ever disclose to your
clients, customers, that you hadn't filed tax returns?
MR. HANSEN
I'm sure I've told some customers.
Yeah.
MR. MITCHELL
Okay. Did you disclose that on
your website?
MR. HANSEN
How many questions are you going to
ask here?
MR. SMITH
Just -- hey, I'm in control of the
meeting, Mr. Hansen, not you.
MR. HANSEN
No. I did not disclose that on my
website.
MR. SMITH
All right.
MR. MITCHELL
Can I just ask one follow-up
question about that?
With respect to W-2s, did you issue yourself and
Ms. Erdmann W-2s at the end of the year?
MR. HANSEN
You know, just so that you know,
this is Mr. Robert Mitchell.
MR. MITCHELL
That's not an answer to my
question.
MR. HANSEN
And Mr. Robert Mitchell is --
MR. SMITH
Actually, you've had --
MR. HANSEN
-- is --
MR. SMITH
No, no. Stop.
MR. HANSEN
-- is the reason that we're all
here today.
MR. SMITH
Stop, Mr. Hansen.
MR. MITCHELL
That's not the question.
MR. HANSEN
Yes.
MR. SMITH
Answer his question and quit the
commentary.
MR. MITCHELL
Did you provide W-2s to yourself
and Ms. Erdmann?
MR. HANSEN
I -- I don't know what my CPA did.
MR. MITCHELL
Would you be able to provide
those to the trustee?
MR. HANSEN
How many questions does he get to
answer{sic}?
MR. MITCHELL
Would you be able to provide
those to the trustee?
MR. SMITH
Answer his question.
MR. HANSEN
I'll provide whatever document
there is.
MR. MITCHELL
I'll reserve.
MR. OVERSON
My name is Rodger Overson. I live
in Federal Way, Washington. And Ross and I have been friends
for many, many years, and we've visited many times. On one
occasion, I mentioned that I needed some warehouse space. And
I didn't want to rent a mini storage or a self-storage or one
of the commercial ones on the street.
And you mentioned that you had a warehouse in
Auburn and that you could probably find a little space that I
could use. So we entered into an agreement, a handshake. You
didn't charge me anything. I didn't pay you anything.
There's no paperwork, no lease. And as a friend, you let me
put some personal property in the warehouse in Auburn.
The company now is holding that, subject to a
court order from the judge. Could you explain, for the
record, our relationship on my personal property in your
warehouse?
MR. HANSEN
Mr. Overson, I apologize that
Mr. Gearin has taken that position. You and I go way back,
and I consider you a good friend. And you've been good
counsel for me over the years. You bought a substantial
amount of metal from me, and it was very bulky, and you wanted
to keep it separate. And because we had extra space in the
room -- in the Building B, you went and bought some safes. I
believe you bought them from Northwest Safe Company. They
installed them. And you put your precious metals in those
safes and -- and locked it up. I did not have access to your
metal in those safes, and that's your property.
Mr. Gearin, unfortunately, is a very aggressive
guy and he's going after --
MR. SMITH
Stop the --
MR. HANSEN
-- every penny.
MR. SMITH
Stop the commentary. Stop the
commentary.
MR. OVERSON
The contents --
MR. HANSEN
Okay.
MR. OVERSON
-- of what I stored is undisclosed
to everybody else until now, and --
MR. HANSEN
Well, I apologize for that.
MR. SMITH
Is there paperwork for any of those
transactions?
MR. OVERSON
It is very personal, and it's
private.
But did you have a combination to the safe?
MR. HANSEN
No.
MR. OVERSON
Did you have any legal agreement
with me on storage or rental or lease, or you did it as a
friend to friend?
MR. HANSEN
I did it as a friend and a
handshake deal, and I never anticipated that. And --
MR. OVERSON
Do you think you or your company
has any claim on my personal property?
MR. HANSEN
No, sir.
MR. SMITH
And it's not his to decide that at
this point. But let me ask a couple of questions.
Is the safe still at the location?
MR. HANSEN
I don't know.
MR. SMITH
When you left the company, was the
safe still at that location?
MR. HANSEN
Yes. And Mr. Gearin told me, at
the time, that he would turn it over to you. And I'm
surprised he hasn't.
MR. SMITH
And how is this -- how can you
identify the safe?
MR. HANSEN
Well, how do I identify the safe?
MR. SMITH
Yeah.
MR. HANSEN
They're his safes, and they were in
a special location. In fact, he even --
MR. SMITH
Does it have his name on it?
MR. HANSEN
He even built a box around it.
MR. SMITH
Does it have -- is there any
identifier that identifies it as his safe?
MR. HANSEN
I don't know. I've never been in
his safe.
MR. SMITH
You've seen his safe?
MR. HANSEN
I actually did not see his safe.
He put them in, and he built a box around them, and --
MR. SMITH
He came into your facility, without
you there, built a box in there, put in his own personal safe,
and walked out? You've never seen it, and you've never opened
it?
MR. HANSEN
That's correct.
MR. SMITH
Okay. We need to --
MR. OVERSON
I don't have any other questions.
I just -- pending a court -- a judge's decision to release my
personal property and --
MR. HANSEN
I'll be happy to --
MR. OVERSON
I want you to testify that there's
no claim against it.
MR. HANSEN
I'll be happy to give you any
declaration you would like, Mr. Overson.
MR. OVERSON
Thank you very much.
MR. SMITH
Thank you, Mr. Overson.
MR. MICHAEL
My name is Robert Michael. No
relation to attorney Robert Mitchell. This is the second time
I'll speak to Mr. Hansen. The first time was on the phone. I
do have a couple of questions. I understand that time is
limited with the number of people.
MR. SMITH
I'm trying to be flexible. But let
me be clear. This is the time for you to ask specific
questions of Mr. Hansen about transactions or assets. It's
not -- and I know there are some heartbreaking stories out
there, but it's not a time for those. This is just a time --
you may not have Mr. Hansen under oath again for a long time.
This is your opportunity to ask your questions.
MR. MICHAEL
Okay. Mr. Hansen, you got a,
approximately, $38 million judgment against you from -- from
Mr. Cohen. When were you ordered not to -- what date -- sell
any of your assets?
MR. HANSEN
In -- in the Chapter 11, or from
another state court?
MR. MICHAEL
You got a $38 million judgment
against you that the Court -- your person, Erin Robinson, told
me there was an order and you couldn't pay me -- from a
Court -- due to a $38 million judgment.
What date did the Court tell you that you could
not sell assets?
MR. HANSEN
Sir, I don't have that document in
front of me. But Mr. Cohen's attorneys did seek and got a
state court order that said I couldn't disburse any of my
judgment. And I don't know what date that was, but I'll be
happy to provide that document to you.
MR. MICHAEL
Yes. On March 25th, I called your
office. And they told me they could not give me money that
you owed me -- that the Northwest Territorial Mint owed me,
which I had a sell-back document for.
I came in on the 28th and met with Erin. You
called me two days later, very angry at me. Erin told me that
they had an order that they could not sell assets or give
money back to people that the mint owed to, except they could
sell what was in the vault. This was on the 28th, the day
after Easter. They could sell to people walking in on the
street -- from the street.
MR. SMITH
I need you to focus on what the
question is.
MR. MICHAEL
Okay. The question is: Did you
sell assets out of the vault for cash? How much? And where
is it?
MR. SMITH
Are we talking in March of 2016?
MR. MICHAEL
March 28th.
MR. HANSEN
On March 28th, I -- sir, I don't
know the dates, and I don't know what -- what assets were
sold. What I had been -- what I believe I had been instructed
was, is that -- that we were not to disburse any assets
without any remuneration. And, you know, which date that
happened and what, chronologically, happened, I would have to
refer to my documents, which I don't have in front of me.
MR. MICHAEL
Okay. I guess what I'm getting at
is this: I think assets were sold and cash was taken, and
that's -- I'm going to leave it there. But I would like to
talk to the FBI or anybody who's involved. I have some
information I'd like to give them.
MR. SMITH
Well, and for those who don't quite
understand, it's Mr. Calvert's job now to find out what
happened leading up to the bankruptcy and during the
bankruptcy, in terms of asset sales and the appropriateness of
those sales and asset transfers. So he's investigating that.
UNIDENTIFIED
MALE SPEAKER
 Thank you.
Mr. Hansen, thank you for coming. I'm sure this
is not the way you wanted to spend your Wednesday afternoon.
And thank you, Trustee, for giving us an
opportunity here. I'll be brief.
I have a very large portion of my net worth in
storage, which I believe to be allocated storage, that I
{inaudible} back in '09. I have a signed agreement with your
name on it and my name on it, that alludes to the fact that it
will be there, it will be insured --
MR. HANSEN
Okay.
UNIDENTIFIED
MALE SPEAKER
 -- it will be
inspectable, and all those things. I believe that's my
property. It may be similar to his safe.
Was the silver I purchased ever put in storage,
and is it there? And when can I get my hands on it? And
who's the insurance company listed in this document? Because
it doesn't list who the insurer is that's supposed to insure
due to internal or external {inaudible}.
MR. SMITH
Well, let me just jump in. He can't
tell you when you can get it because Mr. Calvert is in charge
of the bankruptcy estate.
UNIDENTIFIED
MALE SPEAKER
 So it's not my
property. It's {inaudible}?
MR. SMITH
But Mr. Hansen -- well, those are
legal determinations. But Mr. Hansen may be able to tell you
whether it was ever put in a safe.
UNIDENTIFIED
MALE SPEAKER
 Okay. And is it
still there?
MR. HANSEN
Well, to be honest with you, I
don't -- you know, I recognize you, but I don't remember our
transaction. And so what was it?
UNIDENTIFIED
MALE SPEAKER
 It was 10,000 ounces
of silver. My children's education fund.
MR. HANSEN
Okay. And --
UNIDENTIFIED
MALE SPEAKER
 And it was to be
held in storage pursuant to a storage agreement that you
signed in February of 2009.
MR. HANSEN
Okay.
UNIDENTIFIED
MALE SPEAKER
 It was to be
guarded, insured, inspectable, and it could be turned over to
me at my will.
MR. HANSEN
Okay. Again, there are substantial
amounts of inventories down at the -- down at the different
locations. Whether it's on your specific material -- I don't
know where it was stored. I don't know who's in control of
that now. And I think that's a question you need to direct to
Mr. Calvert because I've not been allowed to go look at
anything.
MR. SMITH
Let me ask this follow-up for you.
Mr. Hansen, when you entered into agreements
like the one being referenced, was the product always
segregated and put in a safe?
MR. HANSEN
Well, when we put metals for
storage in a safe, the metals were -- are put in a variety of
different safes, and they usually -- sometimes they have names
on them. Sometimes we lease metal from people.
MR. SMITH
I'm not talking about the leased
metals. I'm talking about the storage of metals. Did you
separately segregate and maintain that property? Or did you
use it in the mint's business operations?
MR. HANSEN
I believe that -- and I could be
wrong -- but I believe that most -- all metals that were --
that were put into storage are in storage.
MR. SMITH
And how is it identified as
belonging to any particular individual?
MR. HANSEN
Well, normally, if it's -- if
it's -- if it -- what type of product was it?
UNIDENTIFIED
MALE SPEAKER
 10,000 ounces of
silver.
MR. HANSEN
No. I mean, what -- what brand?
UNIDENTIFIED
MALE SPEAKER
 I don't think we
have it listed here. It was bars. I think it was -- I think
they're 100-ounce bars. I think they were 100-ounce
{inaudible} bars, I believe.
MR. HANSEN
Okay. And normally those types of
products would've been put into boxes of probably six bars to
a box, and a name would've been written down on the box.
MR. SMITH
So it's your testimony that you
never invaded those bundles of assets for other uses?
MR. HANSEN
I -- I specifically can't
answer his specific --
MR. SMITH
I'm not asking about his. I'm
asking about your general business operations.
MR. HANSEN
To my knowledge, no.
UNIDENTIFIED
MALE SPEAKER
 Do you have the
insurance company's name that is alluded to in here that is
supposed to cover me for theft or confiscation or any of those
things?
MR. HANSEN
I don't have that here. But who
would have that information -- it was jewelers block
insurance.
UNIDENTIFIED
MALE SPEAKER
 I'm sorry. What?
MR. HANSEN
I believe it was called jewelers
block. Jewelers block.
UNIDENTIFIED
MALE SPEAKER
 And you've been
paying them?
MR. HANSEN
I believe so. Yeah.
MR. SMITH
Is there an agent that you recall?
MR. HANSEN
I don't recall. But that's all
handled through the accounting department, and they -- you
know, that would be a record that would be in Mr. Calvert's
custody.
UNIDENTIFIED
MALE SPEAKER
 Okay. That would be
great.
Last comment. If there's any lawyers here that
are working on this from this particular standpoint, come see
me. I'm looking for counsel.
Thank you for your time.
MR. SMITH
Yes, sir?
MR. McFADDEN
My name is Gordy McFadden --
Gordon McFadden. I have basically a similar situation. I
purchased 4,000 ounces through Erin Robinson on -- it was
three years ago, on March 13th.
My question was: It was to be put in storage.
Where is it, and how can I get it? The second question is:
Is that considered a Northwest Territorial asset, or is it my
asset?
MR. SMITH
Well, I think I would tell you that
you need to discuss that with legal counsel because it may
very well turn on the documentation and the way that it was
stored. There are many issues surrounding that. And so you
can talk to Mr. Gearin about your situation specifically and
see if they have any records that would help with that. But
it's a legal determination, at this point, as to who owns what
at the company.
MR. HANSEN
If I can make a comment, the only
thing I can address on that is, when Mr. Gearin took over,
Mr. Gearin made a comment to me that if it's in metal, I'm
taking it.
MR. GEARIN
Well, for the record, Mr. Gearin
didn't do anything because I wasn't there.
MR. HANSEN
Oh, I'm sorry. Not Mr. Gearin.
Mr. Calvert. My apologies. Mr. Calvert told me, If it's --
MR. SMITH
This isn't here for you to give
hearsay testimony about what people did or didn't tell you
along the way. It's to try and help these people get some
closure on what happened to their millions of dollars of
bullion that was in your possession and control and which
appears to be, in some form, missing. And so to the degree --
that just goes back to my question before about what the
business operations were for segregating, safeguarding, and
maintaining people's property, like this gentleman right here.
So, again, you say that you would've taken it,
you would've put a name on it, you would've maintained it, and
you would not have used it?
MR. HANSEN
That's --
MR. SMITH
Is that a summary of your testimony?
MR. HANSEN
That's what I believe. Yes.
MR. McFADDEN
So I made a claim -- a formal
claim. I assume that that suffices.
MR. SMITH
You filed a proof of claim?
MR. McFADDEN
Yes.
MR. SMITH
Yes. It's a placeholder for you.
And I will say, also, in case folks here don't
know it, there has been a creditors committee formed in this
case, and the creditors -- an unsecured creditors committee.
And I think that's probably most of you, if not all of you,
that are kind of in that boat. Counsel for the committee is
Geoff Groshong and Mark Northrup. They are both here, up in
front of the room here.
If you gentlemen would stand up.
MR. HANSEN
And --
MR. NORTHRUP
Just for the record, in a Chapter
11 case, the bankruptcy laws provide that the Office of the
U.S. Trustee can create an unsecured creditors committee.
Mr. Smith's office has done that. There are seven of you who
are on the committee. The two co-chairs are here, David James
and Bill Hanson, if you'd like to talk to them.
But the job of the committee is to represent the
best interests of unsecured creditors, as a whole, during the
course of the bankruptcy. We're authorized to take legal
positions, to file motions, to seek various forms of relief
directly from the court. We also work very closely with
Mr. Calvert, the court-appointed Chapter 11 trustee, whose
existence in this case is, frankly, going to make this case
easier, I believe, than it would be if we were butting heads
at every turn with the debtor in possession.
But Geoff and I -- my law partner -- are with
the Seattle office of Miller Nash Graham & Dunn. And we're
available for questions, except we can't give you individual
legal advice on your own legal problems. But we can certainly
give you broad-brush help on understanding what the committee
does, what's happening to the case, and things of that nature.
UNIDENTIFIED
MALE SPEAKER
 Could you give us
the names again? Is there a communication page set up of some
sort?
MR. NORTHRUP
That is a topic that's under
discussion right now. We're trying to figure out the best and
most efficient way, for example, to create a website, to make
a website available to all of you so that you'll be able to
keep up-to-date on what's happening in the case. We've only
been appointed for about the last 15 days, so this is an issue
that we're working with Mr. Calvert on.
MR. SMITH
Mr. Northrup, can you give people
your phone number?
MR. NORTHRUP
Sure.
(Multiple speakers; unintelligible.)
MR. NORTHRUP
This is like the old watching the
numbers turn on the McDonald's sign. You know, when you give
out your phone number, sometimes it disables your phone,
depending on how many hundreds of people call. My phone
number is area code 206, 777-7356.
UNIDENTIFIED
MALE SPEAKER
 Perhaps it would
cause less to give the phone numbers of the two co-chairs.
UNIDENTIFIED
FEMALE SPEAKER
 Yeah.
MR. NORTHRUP
These gentlemen should stand up
as well, Mr. James and Mr. Hanson.
UNIDENTIFIED
MALE SPEAKER
 Email? Phone
number?
MR. JAMES
I'm Dave James. And my email is
david.leal.james@gmail.com.
Would you like me to repeat that?
UNIDENTIFIED
FEMALE SPEAKER
 Yes, please.
UNIDENTIFIED
MALE SPEAKER
 Could you write it
on the board?
MR. JAMES
Well, you're asking a lot.
MR. SMITH
I don't think we --
MR. JAMES
I'll write my phone number. We'll
put them up here. Okay?
UNIDENTIFIED
MALE SPEAKER
 That would be great.
MR. JAMES
We'll do that.
(Multiple speakers; unintelligible.)
MR. NORTHRUP
And, again, my number was
(206) 777-7536.
UNIDENTIFIED
FEMALE SPEAKER
 And your name,
sir?
(Multiple speakers; unintelligible.)
MR. NORTHRUP
My first name is Mark. The last
name is Northrup, N-O-R-T-H-R-U-P.
MR. SMITH
If those of you -- if anybody has
access to the bankruptcy court's electronic website, through a
request for special notice or otherwise, there was an
appointment of the creditors committee that was filed. So
it's on the docket. It has all the members of the committee.
It has the contact information for members of the committee,
including the co-chairs, on there.
So while we're doing this, let's get back to
questions.
MR. PETERSON
Hi. I'm John Peterson. We've
had a storage agreement with Northwest Territorial Mint since
2008. And I have 33 Krugerrands, 25 gold Maples, and 29
spots, one-ouncers. So it's about $120,000, roughly. I've
been paying on the storage there since 2008. And the other
day, I was led to believe, by the trustee, that my stuff is
not in the vault that Ross and I went down and put the stuff
in when I actually purchased it from him.
So my question is: How is that possible, that
there wouldn't be my stuff in the vault?
MR. SMITH
Mr. Hansen, could you address how
that could occur?
MR. PETERSON
Is it possible that stuff gets
moved around to different places, and then it's not
inventoried after the first time? Even if I were trying to
make a demand on a bailment -- breach of bailment, apparently,
the goods are not there. So I'm concerned that that's not the
case.
MR. HANSEN
Well, first of all, who told you
your goods are not there?
MR. PETERSON
I spoke with Mr. Calvert. He
didn't tell me exactly how much stuff was anywhere yet. I
thought that was going to come out at this hearing. But it
was clear that there's significantly less of the metals that
we've been ordering and putting in the vault.
MR. SMITH
Let me say this. As soon as we get
done with the questions, Mr. Calvert is going to talk for 20
or 30 minutes to let you know what he's found and what he's
doing. But we need to get through the questions first.
MR. PETERSON
Great. And I presume that he
made that statement because he had done a physical inventory.
MR. SMITH
He has.
MR. PETERSON
The other thing is, is that --
it's true that my contract was like the other fellow's. I had
a third-party insurance paragraph in there saying that if it
disappeared, then this insurance company would pay for it.
And then thereafter, there was a guarantee from the guarantor,
Northwest Territorial Mint, that if the insurance company
didn't pay for all of it, the guarantee would. Are those
still in effect?
MR. SMITH
Those are legal questions that you
would have to get an answer to. But if your question is, how
is it that your property could disappear, Mr. Hansen may be
able to opine on that.
MR. HANSEN
Well, first of all, we don't know
if your product has disappeared. No accounting of inventory
has been given. And Mr. Calvert, first of all, I don't think
is capable of doing an inventory, but --
MR. SMITH
I don't want your opinions on
people's capability. Just either answer the question or say
you don't have an answer.
MR. PETERSON
Well, if that's the way he feels
like answering it, I can take that.
MR. SMITH
Well, I'm not going to have him sit
up here and opine on people's character and reputation and
expertise. This is not the forum for that.
MR. HANSEN
Okay.
MR. SMITH
So why don't -- I think you've
probably gotten all you're going to get on that front.
MR. PETERSON
So what you're saying, in
summary, is that it's possible that the stuff is still there.
It just hasn't been found, or it just hasn't been properly
inventoried? Is that what you're saying?
MR. HANSEN
Well --
MR. PETERSON
Again, it's speculation, but --
MR. HANSEN
You know, I'm out of the company,
and I have no way of knowing what has been done. But I --
what I have -- the only information I've been told is -- is
they grabbed boxes, and it didn't matter whether it was gold,
silver, or platinum, and they threw them on a scale. But I
don't know what has been done.
MR. PETERSON
Okay. Thank you.
MR. DASHIELL
For the record, I'm Thomas
Dashiell here on behalf of the Robert A. Austin Family Living
Trust.
UNIDENTIFIED
MALE SPEAKER
 Name again?
MR. DASHIELL
My name is Thomas Dashiell. I'm
here on behalf of the Robert A. Austin Family Living Trust.
I want to touch back on the topic of inventory
as it relates to somebody leasing bullion to you. My client
leased silver to you -- to your company. What was the
procedure, if any, for segregating and identifying leased
bullion to your company?
MR. HANSEN
Leased bullion would've been used
in the normal ordinary course of business. And there was no
requirement that we keep any kind of a segregated metal -- the
leased metals were to be used at our discretion within the
company. And so there's no box of leased metal because it
wouldn't make sense for us to lease the metal and then not use
it.
MR. SMITH
Was it accounted for at year end?
MR. HANSEN
Yes. Well, not accounted for,
because we kept the leases. They were updated, I believe, on
a monthly basis.
MR. SMITH
How was -- what was the process for
replenishing the bullion that was being leased?
MR. HANSEN
There was no process of
replenishing the business. There's -- if a customer asked for
his metal back, which a number did, we would return their
metal. If not, we would use it in the normal ordinary course.
That was the purpose of a lease.
MR. DASHIELL
Could the metals be used for
business expenses?
MR. HANSEN
The metals could be used on --
however we deemed necessary.
UNIDENTIFIED
MALE SPEAKER
 That's ugly.
MR. DASHIELL
Okay. Thank you.
MR. FAIR
My name is Ralph Fair, and I bought
some gold coins from your salesman, Jim Rogers, in 2008. I've
been paying storage on them every year. I've been given a
statement every three months. Can you tell me, are those
coins actually physically in the vault with my name on them?
MR. HANSEN
You know, again, you keep -- people
ask me these questions. And how am I to know?
MR. SMITH
You need to frame it as, when he was
last at the company, were the -- was he aware of your coins
being there.
MR. HANSEN
Which coins were they?
MR. FAIR
They were 20-dollar Saint Gaudens
1-ounce gold coins.
MR. HANSEN
And how many of them?
MR. FAIR
26. I sold four of them. There
should be 22 left.
MR. HANSEN
Okay. Again, we have tens of
thousands of coins in the vault. Your particular coins, I'm
assuming, were in the vault. And that's a question that
Mr. Calvert would've -- would've done. On the day that I
walked out, I did not have an inventory of what was in the
vault and what was not. But if you were -- if you had 22 gold
coins in the vault, Saint Gaudens, they should still be there.
MR. SMITH
Assuming somebody didn't use them
prior to that.
MR. FAIR
Another funny thing --
MR. HANSEN
Let's -- you know what. I'm going
to tell you what. Let's -- let's quit with the snarky
attitude with you. What you're implying is some type of
malfeasance on my part, and I take exception to that.
MR. SMITH
Exception noted.
MR. FAIR
Also, this January, I didn't get an
invoice for the $105 for the annual storage. When I was doing
my books, I noticed that. And then I also looked back, and I
missed -- every three months, I was getting a statement
saying, You have 22 Saint Gaudens coins. You can pick them up
anytime you want. You can cash them in anytime you want. You
can inspect them anytime you want.
And for 2015, I did not receive a statement
every three months. I never received any statements. Why
would that be?
MR. HANSEN
The person that was handling the
statements was the legal department. We had two people in the
legal department. We had Amelia Swan, and we had Greg
Fullington.
For approximately three years, Amelia Swan was
responsible for filling out and maintaining the lease
accounts -- both the lease and the storage accounts. And what
that required was -- as you just mentioned, when people have
money -- or monies -- when I say, "monies," I'm talking
precious metals or cash or whatever on account -- people have
interest that is drawn upon that. There's also -- people buy
and sell. People will sell some of their metal, or they will
add to it. That is a function of both the accounting
department and the legal department. That's why that came out
of the legal department.
Amelia Swan and Greg Fullington left the company
at the end of October, and we found out it was a mess. And we
were attempting to clean it up at that time. And so that's
why you didn't get it.
MR. FAIR
Okay. The second question is:
Myself and other people that have property stored, that
belongs to them, how is that even involved in your personal
bankruptcy?
MR. SMITH
Well, let me answer that. This is
not Mr. Hansen's personal bankruptcy. This is the bankruptcy
of Northwest Territorial Mint, LLC, the company. And so to
the degree you had metal at -- stored, leased, used by, not
used by -- the company, it is involved in the bankruptcy case
and part of what Mr. Calvert is charged with as determining
who has rights in which coins, which bundle of assets.
MR. FAIR
Thank you.
MR. SMITH
You're welcome.
MR. RICE
Good afternoon. My name is Matthew
Rice. I represent Steven Fox.
Mr. Hansen, Mr. Fox entered into a like-kind
metals exchange with the mint, I believe negotiated with you
personally. The mint's side of that exchange was
approximately 1,400 fine gold 1-ounce Canadian Maple Leaf
coins that Mr. Fox was under the impression, from you, were
segregated in a fashion on the mint's property, such that it
could be identified as his. Do you know where Mr. Fox's coins
are? And do you know whether or not they have been segregated
for him?
MR. HANSEN
Again, I'm not privy to any of the
inventory, so I can't answer that question.
MR. RICE
Let me, if it's all right, ask: As
of the last time that you were in control of the business,
prior to the filing of the bankruptcy, do you know where
Mr. Fox's coins were kept and if they were kept in a
segregated fashion?
MR. HANSEN
I don't believe they were
segregated, no. But they were -- a number of -- I personally
saw a number of Mr. Cohen's{sic} boxes because they came in,
and they were in the -- in the -- I believe a big chunk of
them were in the -- in the vault in the Federal Way office.
MR. RICE
Just to be clear, you just mentioned
Mr. Cohen. Are you referring to Mr. Fox?
MR. HANSEN
Mr. Fox. I apologize.
MR. RICE
So you're familiar with boxes with
Mr. Fox's name on them?
MR. HANSEN
I don't know if they had -- I
apologize. I didn't say that they had boxes on{sic} his name.
But I know that there was coins in there that were -- that
were -- that were reserved for Mr. Fox.
MR. RICE
And that was at the Federal Way
facility?
MR. HANSEN
Yes.
MR. RICE
Thank you.
MR. SMITHBURG
My name is David Smithburg, and
I'm an unsecured creditor. So I just want to understand this
a little better. I purchased bullion on February 9th, and it
was scheduled for delivery between May 2nd and 6th. Based on
your previous experience in the business, about what time
would that be minted? Or at what point in that process would
the coins exist?
MR. HANSEN
What type of bullion was it, sir?
MR. SMITHBURG
It was silver coins.
MR. HANSEN
Well, I -- I need to ask a couple
more questions on that. What type of silver coins were there
and how many?
MR. SMITHBURG
Okay. So my memory may fail me.
But I believe it was just 200 1-ounce silver coins, a small
amount.
MR. HANSEN
When you say -- coins at our
manufacturer?
MR. SMITHBURG
To the best of my knowledge, it
was the -- it was the -- yeah. It was the ones that you
manufacture. It was the Northwest Territorial Mint coins. I
think it was Stagecoach.
MR. HANSEN
Okay. Stagecoach. Thank you for
buying those. Those were my design. If I can --
(Multiple speakers; unintelligible.)
MR. HANSEN
We sold millions of those. You
know, if I can, this -- you know, and I know you don't want
me --
MR. SMITH
I don't want you to -- I want you to
answer his question.
MR. HANSEN
I'll answer your question the
best --
(Multiple speakers; unintelligible.)
MR. SMITH
We have to finish up so Mr. Calvert
can have time.
MR. HANSEN
I will do my best. But how we do
it is this -- because you're all going to want to know this.
How Northwest Territorial Mint -- the business model of
Northwest Territorial Mint is -- we make thousands of
products, and most of these products we make in our own
factory. We're not buying from somebody else. In some cases,
we do. But most of the products that we buy --
MR. SMITHBURG
And if I may, considering a
purchase on February 9th, for a delivery on May 2nd to 6th,
what would be the rough expectation for the production of the
coins? At what point in the process -- let's say everything
being equal, they -- you know, they were sent out. Let's say
they -- so it's a hypothetical. So I'm curious. At what
point were they being produced?
MR. HANSEN
I'll make it as brief as I can
for brevity.
MR. SMITH
We don't need a history. We just
need to know the timeline that is typical for an order
placed --
MR. SMITHBURG
Based on your experience.
MR. SMITH
-- on the minting of the coins.
MR. HANSEN
What we do is, we gather up all the
orders that we can on a particular product. To get the best
price and to have the lowest cost to produce an item, we try
to make it in the largest batch that we can.
So let's say that you ordered 200 coins, and
somebody else orders 200,000 coins. Then we'll try to produce
those all together so that we have an economical run. If we
get 50 here or 100 here or 200 here, we might wait to produce
those coins until we have a large enough batch to make an
economical batch to do it.
So what we do is, we have -- we operate under a
consent decree with the State of Washington. And what we do
is, when we tell people that you're going to get your coins in
a certain period of time, we try to do our best to live up to
that time. If not, there's a bunch of series of steps that we
have to take afterwards. So, typically, on something like
that, ten to 12 weeks.
MR. SMITHBURG
Typically, if it was to be
delivered on -- it would be manufactured and available, like,
about 10 to 12 weeks before the delivery date? Is that what
I'm understanding?
MR. HANSEN
No.
MR. SMITHBURG
Or are you saying it would take
ten to 12 weeks to --
MR. SMITH
After the order.
MR. HANSEN
Yeah.
MR. SMITHBURG
Okay. After the order. All
right. Sounds good.
MR. PETTEYS
Good afternoon. David Petteys on
behalf of Creditor Donald Wright. I'd like to just revisit
something you testified to earlier, just to get some
clarification on that. I believe you testified that from time
to time, you would remove materials from the vault, take them
home, and that you would not log those items?
MR. HANSEN
That's correct.
MR. PETTEYS
Okay. And the reason why you
wouldn't log those items was what?
MR. HANSEN
Well, you have to understand. At
the end of the day, Diane and I have just worked a 10- or
12-hour day. And depending on what we're going to do,
we'll -- we might have paperwork. It was typically paperwork.
We're taking mountains of paperwork home so that Diane can get
orders sent down to the Dayton office so they can get filled.
We might also have items that needed to be
graded. Let's -- for example, Jim, our numismatic man, will
buy batches of coins, and --
MR. SMITH
Why wouldn't you log the stuff out
when you took it?
MR. HANSEN
Because, Jesus Christ, it would
take forever to do it. I mean, when you're talking about a
big box of coins, are you going to sit down and write every
coin? We're the owner of those products. We take a box of
coins home. I sort them. I put them in individual bags. I
write on them, and I bring them back. If I had to sit there
and write down, on every little coin, every penny or nickel or
dime, I would just never take anything home.
MR. SMITH
Okay. Well, that's an answer.
MR. HANSEN
Yeah.
MR. PETTEYS
Okay. And just one follow-up
question. Did you -- from -- and I know you want a specific
time period, so I'm going to give you one.
MR. HANSEN
Uh-huh.
MR. PETTEYS
From January 1, 2016, to the time
that you were forced out of the company, did you ever remove
any precious metals from any of the vaults and not replace
them? Did you ever -- did you remove any precious metals in
the vaults -- any of the vaults controlled by the
company and -- remove them from those vaults and not replace
them, either in that vault or another vault controlled by the
company? And if so, where are those metals?
MR. HANSEN
Well, are you talking about -- we'd
take metals, and we'd go deliver them to customers. We would
sell them to dealers and things like that. Because what would
happen is --
MR. PETTEYS
No, that's not what I'm talking
about.
MR. HANSEN
Okay.
MR. PETTEYS
What I'm talking about is metal
that is either owned by customers or that's owned by the
company that was in storage in the vaults.
MR. HANSEN
Okay.
MR. PETTEYS
Was it ever removed and not
replaced and not transferred for some sort of valuable
consideration? In other words, inventory that you didn't
sell --
MR. HANSEN
Did I ever take it home and bury it
in my backyard, is what you're asking?
MR. PETTEYS
If that's what you want your
testimony to be, that's fine.
UNIDENTIFIED
MALE SPEAKER
 Or anywhere else.
MR. HANSEN
No, I did not.
MR. PETTEYS
Never? Never during that time
period? Not once?
MR. HANSEN
Not that -- you know, no.
MR. PETTEYS
Okay. Thanks.
MS. WEAVER
Sarah Weaver on behalf of the R&K
Hudson Family Limited and Ron Hudson. They're both from --
they're from Texas. They have 5,000 ounces of silver bullion
under a storage contract with Northwest Territorial Mint. And
my question is: Where is that silver, as of April 1st?
MR. HANSEN
This is about the fourth time I've
answered that question.
MS. WEAVER
My apologies. Could you please
answer it again?
MR. HANSEN
Okay. Sure. Again, as of April
1st, I did not do an inventory. Okay? We didn't do it. We
filed the bankruptcy there. So on April 1st, I couldn't tell
you where your silver was. I don't know what kind of silver
it is. I don't know the particulars of your client's
situation.
MS. WEAVER
Where would, normally, silver
bullion be stored?
MR. HANSEN
Silver bullion would've been stored
in Auburn. It would've been stored down at Building B. It
would've been stored down at our plant in Dayton, Nevada.
MS. WEAVER
Okay. Thank you. And then just to
follow up, apparently --
MR. HANSEN
Or it could be -- and I apologize.
It could be stored at Brinks, which we do put -- would keep
metal at Brinks until we picked it up.
MS. WEAVER
Did you tell Mr. Gearin about the
property stored at Brinks?
MR. HANSEN
I haven't spoken to Mr. Gearin.
MS. WEAVER
Mr. Gearin, the lawyer for the
trustee.
MR. HANSEN
I haven't spoken to him, ma'am.
MS. WEAVER
Okay. I don't recall your prior
testimony about --
MR. HANSEN
Oh, until just now, I hadn't, so --
MS. WEAVER
Did you discuss Brinks earlier this
afternoon?
MR. HANSEN
No, I did not.
MS. WEAVER
Okay. Thank you.
MR. HANSEN
But there's -- to my knowledge,
there's no metal being stored there currently.
MS. WEAVER
How about on April 1?
MR. HANSEN
Again, I don't recall.
MS. WEAVER
Okay. And then just one follow-up
question. Apparently, Ron Hudson, or the R&K Hudson Family
Limited, sent $14,700 to Northwest Territorial Mint in
November of 2015; and you acknowledged receipt of that in
December.
MR. HANSEN
I personally acknowledged receipt?
MS. WEAVER
Apparently so.
MR. HANSEN
Okay.
MS. WEAVER
Do you know what -- where that
money is or what happened to it?
MR. HANSEN
Ma'am, that would, again, be in the
bankruptcy filings and the bankruptcy papers. I don't have
that specific paperwork in front of me.
MS. WEAVER
I'm talking about back in
December -- November and December. Do you recall receiving
those funds?
MR. HANSEN
No, ma'am. I do not.
MS. WEAVER
And you don't recall acknowledging
receipt of those funds?
MR. HANSEN
And I personally acknowledged this?
This transaction was done with me personally or within the
company, ma'am?
MS. WEAVER
I don't know. If you wouldn't have
acknowledged it, who would have, within the company?
MR. HANSEN
Well, it would've been handled
through the bullion department, ma'am.
MS. WEAVER
And who would that person be, sir?
MR. HANSEN
Well, there's a number of people in
the bullion department. But the head of the bullion
department was a lady named Erin Robinson.
MS. WEAVER
And where is Erin Robinson -- where
did she work?
MR. HANSEN
At the Federal Way office.
MS. WEAVER
And do you know if she's still
employed there?
MR. HANSEN
I don't know.
MS. WEAVER
All right. Thank you.
MR. SMITH
We really need to try and wrap up
the questions. I know you've been waiting. But if we don't
wrap it up, the Chapter 11 trustee is not going to have an
opportunity to update all of you sufficiently. So if you
think your question has been answered, or it's a question that
you can ask counsel for the creditors committee or Mr. Gearin
later, you might want to do that.
MS. DeLEON
My name is Sally Mary DeLeon, and I
have a POA for David Lehnartz as well. He's my partner. And
we had purchased Pacific Northwest Territorial Mint bullion,
as well as coins, back in February of 2015. And ongoing, we
kept getting emails that said that due to high demand, they
could not meet our order. And so since February, the price of
silver has gone dramatically down, so we did a buyback
repurchase.
But, anyways, what I -- before that, I guess
what I would like to know is, when -- when people like myself
purchase silver, where does the money actually sit? Where --
where does it sit? Does it -- did it actually purchase the
silver for us to have it? Since you have this binding
contract, that's actually very scary -- it scared me -- you
might not want the color commentary. But $8,700 is my whole
life savings, and that was taken away from me.
And so with that said -- sorry -- and David --
his wife passed. That was his wife's insurance money. We
both were trying to find our freedom. We were both -- well,
I'm not active duty anymore. He still is. Where did that
money go?
I mean, we -- we -- I have papers here that
prove that we -- you've taken our money. So where did -- so
we'll stick to that point. This item was purchased in
February, and here comes July. And every month, you said --
you made a statement already, earlier, that said ten to 12
weeks. And at that time, we were told that it would take that
long. But that's March, April, May, June, July. That's five
months. Where did you put that money? Or did that money
actually get slotted -- or did it get put in a trustee --
where did it go?
MR. SMITH
Let me just answer it this way. And
Mr. Hansen can weigh in if he has personal knowledge about
your money. But everybody's money would've went into the
accounts or various places. And it's the Chapter 11 trustee's
job to look at those more recent transactions and try and
track, to the degree it's possible, money in, product ordered,
product manufactured, product stored, product leased, and
used. That's what he's trying to do. He's done some of that,
which is in the bankruptcy schedules. And I'd like to get to
him so he can address that.
But in terms of a specific transaction, unless
Mr. Hansen tells me I'm wrong, he would not be able to tell
you where your specific dollars went.
MS. DeLEON
Okay. So, then, what about this?
People who make purchases, the monies -- the process in --
MR. SMITH
It's okay.
UNIDENTIFIED
MALE SPEAKER
 Does it go into
trust, I think is what she's trying to say.
MS. DeLEON
Yeah. Where did -- where did that
money go? I mean --
MR. SMITH
And hopefully Mr. Calvert --
MS. DeLEON
I'm not talking about just my
money. I'm talking about --
MR. SMITH
Right. And that's what Mr. Calvert
is charged with, is looking and trying to figure those things
out. But there's not going to be an answer today as to what
bank account your money went into or where it went or if it
purchased product or didn't purchase product or where it
streamed. That's just not something that can be answered
today.
MS. DeLEON
Okay. Final question, since I get
a second one -- or a follow-up, whatever. How is our purchase
of a tangible item considered nonsecured?
MR. SMITH
That's a legal question. I cannot
give you -- I cannot opine on the legal question.
MS. DeLEON
That sucks.
MR. PACKER
Steve Packer. I purchased a
thousand -- well, I brought in a 1,000-ounce bar, so -- and
wanted to convert it over to coin. And so I paid about
another thousand dollars to have that conversion done. I did
this in October of last year. I'm just kind of wondering what
the process with the bar -- how that's handled. Is that bar
still around somewhere?
MR. SMITH
Well, he can answer whether he knows
if it was still around on April 1st. But after that, he has
no knowledge, he's testified.
MR. PACKER
Well, it was supposed to -- I was
supposed to get coins in exchange in January.
MR. SMITH
Do you know anything about this
transaction, Mr. Hansen?
MR. PACKER
Because I view that as my bar. And
I just paid a little extra to get it -- which is a little
different than just buying coins.
MR. HANSEN
Yes, sir. I apologize. I don't
know the specifics on your transaction.
MR. PACKER
Well, I'm not asking about that.
I'm asking how you handle a bar when you bring it in to have
it melted down into coin. That's what I'm asking.
MR. HANSEN
How that would work is -- two
things. If you brought us a bar that was resellable -- let's
say that you brought us a bar that was a Johnson Matthey bar
or something. We would take that bar, and we wouldn't melt
that particular bar. We would buy a bar of silver, maybe that
was closer to our mint; and then we would take something that
was maybe not a branded bar and melt that down and return --
MR. PACKER
This wasn't branded. It was just a
solid piece of silver.
MR. HANSEN
Okay. But it was a 1,000-ounce bar
of silver, right?
MR. PACKER
Right.
MR. HANSEN
Okay.
MR. PACKER
It was stamped with 984, I think.
MR. HANSEN
Who was the maker of the bar, sir?
MR. PACKER
I thought it was from you guys. I
bought it probably four or five years ago, and I just got
tired of lugging it around.
MR. HANSEN
Okay. Well, what we would do --
and it's a legitimate question here. Two things. If it's a
bar that we sold to you, it would probably be a branded bar.
We would -- we wouldn't melt that particular bar down. We'd
sell that bar, and we'd buy silver that was not a branded bar,
maybe silver that's in a different form. And then what we
would do is, we would buy a large batch of silver, probably
from, like, Johnson Matthey in Salt Lake, and then take that
silver, which is closer to our facility, and melt it down.
Because all silver is fungible, and it -- you know, it's a
matter of which is more convenient and more economical for us.
MR. SMITH
And then what happens to the branded
bar?
MR. HANSEN
The branded bar would be sold in
the normal course. And then the silver would come in and be
turned into whatever product that he bought.
MR. PACKER
And that usually takes how long?
MR. HANSEN
I'm sorry, sir?
MR. PACKER
How long does that normally take?
MR. HANSEN
Again, it depends on the type of
product that you're buying. We're going to -- we're going to
pool the orders of the product so we can make it in the most
economical form.
MR. WOODCOCK
My name is Roy Woodcock, and I
purchased 16 British gold Sovereigns in February. I paid cash
to one of your local people, Mr. Dennis Tallman. I was told
that it would take a little while to find the Sovereigns and
they would be available at the end of April. And I'm
wondering how far along we got with that discovery of
Sovereigns before the company declared bankruptcy. Are any of
them available?
MR. SMITH
Do you have any knowledge of
Sovereigns as of April 1st?
MR. HANSEN
You know, sir, I apologize. I
don't know the particulars of your goods. Normally, on 16
Sovereigns, those would've been in inventory. And it would be
rare that we wouldn't have Sovereigns in inventory. But if we
didn't on that particular day, it was just a matter of when
they would come in over the -- over the course.
Mr. Cohen, who, by the way, is in the back of
the courtroom today -- his judgment came out of left field.
And I have to tell you something. That was such a surprise to
us, and I -- you know, I feel for you. But I don't have any
specifics on your case, sir.
MR. SMITH
In terms of whether or not there are
any Sovereigns within the company that have been discovered,
Mr. Calvert or his attorney could tell you that after the
meeting because they did do an inventory. And it may or may
not have those types of coins on there.
MR. WOODCOCK
Okay. Thank you very much.
MR. SMITH
You're welcome.
MR. BAGOCIUS
My name is James Bagocius. So
the question is on time frames. So after the judgment and the
freezing of assets, and before you actually declared
bankruptcy, I purchased coins in that particular time period.
So I was wondering if that is -- if you knew the assets were
frozen, was there some kind of a notice sent out to all the
branches to say, Hey, stop selling because there's a judgment
against us, and we don't have enough to cover? You know, that
kind of thing.
So it sounds like if you knew that you had a
judgment against you, that assets were frozen, and you didn't
have enough to cover it, and you were going to declare
bankruptcy, then anything in between that time -- excuse me --
would be -- I'd consider it to be fraud, knowing you don't
have -- knowing you don't have product or refund money to give
back to people, knowing you have to have this huge payout.
Does that make sense?
MR. HANSEN
No, it doesn't. But let me -- what
date?
MR. SMITH
Let me ask a bigger question. Once
the judgment was entered, why did you continue -- why did the
mint continue to sell product all the way up to the day of the
bankruptcy?
(Multiple speakers; unintelligible.)
MR. BAGOCIUS
Yeah, exactly. Knowing --
knowing your -- especially if your assets are frozen. I don't
know exactly what that means in this case. But if your assets
are frozen, and I come in and want to purchase product, you
know you can't even deliver it, it's not going to be
{inaudible} --
MR. SMITH
Let's just see what Mr. Hansen's
response is.
MR. HANSEN
Well, what we did was, when the --
when the judgment was entered, we immediately filed a motion
for reconsideration with the -- with the judge down in Nevada.
And we had a number of motions pending in front of the court.
We also were hoping to file a state receivership. And whether
it's a state receivership or a Chapter 11, you're allowed to
continue to operate in the normal course of business.
Now, Mr. Cohen went out and got a very ambiguous
judgment that different lawyers interpreted different ways,
and -- but it was our opinion -- and it was basically also on
the advice of Mr. Calvert, before he was appointed as the
Chapter 11 trustee, that cash is king. Sell your inventories
that are not being secured so that you have cash to operate.
And we didn't know if we were going to -- you
know, we assumed that the business would continue as normal
and that either a state receivership or a Chapter 11 would
protect us against that judgment. So it wasn't like we said,
Okay, well, on this day, we're done.
We're going to continue to operate. We're just
going to hold off, you know, our creditor on that, you know,
with the protection of the bankruptcy. It's not that we're
going to stop business.
Does that answer your question?
MR. SMITH
I think that's about as good as
you're going to get.
MR. HANSEN
And I'll tell you, when it became
apparent -- when it became a question of whether we could
fulfill orders or not, we took orders but we didn't cash
checks. We returned or destroyed a number of checks, hundreds
of thousands of dollars' worth of checks were not cashed
because we weren't sure of the legality of that -- of whether
we could do that or not. So there's many people out there
that ordered metal, and we never cashed their checks. We
either returned their checks or destroyed them.
MR. BAGOCIUS
But the people who paid in
cash --
MR. SMITH
It went into the system.
MR. BAGOCIUS
SOL?
MR. HANSEN
Well, I don't know the particulars
of your case.
MR. BAGOCIUS
Well, again -- well, right.
That's for everybody who purchased after that judgment was
awarded. That's my -- that was my question.
MR. SMITH
I think it's fair to say it went
into the system, whatever that means.
MR. BAGOCIUS
Right.
MR. McMEEL
Hello. This is Jeffrey McMeel. I
have some real quick questions. And if the agent for the
government wants to answer, he can, instead of him.
MR. SMITH
I'm sorry. Can you speak up,
please?
MR. McMEEL
I'm sorry?
MR. SMITH
Can you speak up, please?
MR. McMEEL
Oh, I have some questions for
the -- for both of you.
MR. SMITH
You don't get to ask me any
questions, Mr. McMeel.
MR. McMEEL
It will be real quick. Okay.
Ross Hansen, do you have a 1099 that covers your
liability to me -- yes or no?
MR. HANSEN
I'm sorry? A 1099 that covers your
liability to you?
MR. McMEEL
That covers your liability to me?
That's IRS Form 1099.
MR. HANSEN
I'm confused. I don't know what a
1099 that would cover your liability -- I --
MR. McMEEL
Do you know what a 1099 is? An IRS
Form 1099; do you know what that is?
MR. HANSEN
You know, sir, I don't know what
you're -- what you're talking about, sir.
MR. McMEEL
Okay. You have no 1099. Okay.
Thank you.
Do you have a claim against me, Ross?
MR. HANSEN
Do I have a claim against you?
MR. SMITH
Are you talking about the company or
Mr. Hansen personally?
MR. McMEEL
Either one.
MR. SMITH
Because this is only about the
company.
MR. McMEEL
Yeah, the company.
MR. SMITH
Do you have a claim against
Mr. McMeel? Does the company have a claim, that you're aware
of, against Mr. McMeel?
MR. HANSEN
I don't -- you know, again, I don't
know the specifics. I don't recall.
MR. McMEEL
Thank you.
MR. HANSEN
You know, I --
MR. McMEEL
Do you know anyone who has a claim
against me?
MR. HANSEN
Mr. McMeel, I apologize. There's a
lot of water under the bridge since that. And I honestly
don't know even the particulars of our deal.
MR. McMEEL
No. I'm just asking you: Do you
know anybody who was a claim against me?
MR. HANSEN
Against you?
MR. McMEEL
Yes.
MR. HANSEN
Not that I -- sir, I don't know any
particulars about anything that you're doing.
MR. McMEEL
Okay. Thank you. Could you ask --
you know, Mr. --
MR. SMITH
This is your last one, Mr. McMeel.
MR. McMEEL
Agent Smith was -- took your --
MR. SMITH
I'm not an agent. I'm an attorney
for the U.S. Trustee.
MR. McMEEL
All right. Attorney Smith took
your oath, Mr. Hansen. Could you ask Mr. Smith if he would
like to impose --
MR. SMITH
No, he can't.
MR. McMEEL
-- if he would like to give an oath
for this hearing?
MR. SMITH
Mr. McMeel, we're done. Please sit
down.
MR. McMEEL
Are you on a sit-down strike?
MR. SMITH
You can be on one, or you can leave.
MR. McMEEL
You're on a sit-down strike. Thank
you.
MR. SMITH
Can you please make it --
MR. GEARIN
I know we have a really late --
MR. SMITH
-- quick?
MR. GEARIN
We've gone really late. I have
about three follow-up questions I'd like to address.
I do understand that you want to hear from the
trustee, and you'll certainly have an opportunity to do that.
UNIDENTIFIED
MALE SPEAKER
 Speak up.
MR. GEARIN
So I'd like to wrap up.
Mr. Hansen, I have three follow-up questions. I
want to talk about the storage inventory. And I want to know
when the last time was that you did a physical inventory of
storage -- of stored goods. When's the last time that
happened at the company?
MR. HANSEN
Again, under what department?
Where? And what all -- this is --
MR. GEARIN
I'm talking about storage.
MR. HANSEN
As a matter of fact, you know what?
I've got to tell you something.
MR. SMITH
No, you don't. You can answer his
questions.
(Multiple speakers; unintelligible.)
MR. HANSEN
No. I tell you what. I'm not
going to answer his questions.
Mr. Gearin, you're the attorney for the trustee.
I believe we have an examination in a couple of days. If you
want to ask me questions at that time --
MR. GEARIN
Mr. Hansen, you don't get to do
this. You do not get to do this. You are here, under oath,
to answer questions.
MR. HANSEN
I'm not going to answer any more of
your questions, Mr. Gearin.
MR. GEARIN
I have three very distinct
follow-up questions, and I want them answered. And if they're
not answered, we will go talk to the Court about it.
MR. HANSEN
Good.
MR. GEARIN
I will assure you of that.
MR. SMITH
He's refused to answer that one.
How about the next one?
MR. GEARIN
All right. Tell me about the -- I
want to know if you've given any money to attorneys for
retainers that would come out of money that came from this
company?
MR. HANSEN
When?
MR. GEARIN
In the last two years.
MR. HANSEN
Yes.
MR. GEARIN
All right. Any personal attorneys
of yours, have they received funds from the company?
MR. HANSEN
In the last two years?
MR. GEARIN
In the last two years?
MR. HANSEN
Yes, of course.
MR. GEARIN
Okay. Which ones?
MR. HANSEN
I have a big long list of
attorneys.
MR. GEARIN
Of your personal attorneys?
MR. HANSEN
Of different attorneys for
different things. Yes.
MR. GEARIN
Okay. Well, tell me which ones --
MR. HANSEN
I don't have that information in
front of me, Mr. Gearin.
MR. GEARIN
All right. Did you give a retainer
to anyone since February of 2016?
MR. SMITH
A retainer for personal services?
MR. GEARIN
Let's talk about your personal --
personal lawyers.
MR. HANSEN
Why don't you name the attorney?
MR. SMITH
He's asking you to do that,
Mr. Hansen.
MR. GEARIN
I'm asking you. You're telling me
you can't remember since February of 2016, sir?
MR. HANSEN
You bet ya. I've got a -- there's
a lot of water under the bridge. And, you know, I know that
you're a clever and tricky guy, and you're also a dishonest
man. So my thing is, this --
MR. GEARIN
Mr. Hansen --
(Multiple speakers; unintelligible.)
MR. HANSEN
I don't want to be entrapped by
you. So I'm going to tell you what. If you have a specific
question -- I'm not going to answer a bunch of open-ended
questions.
MR. GEARIN
Did you give a retainer to the
Montgomery Purdue firm?
MR. HANSEN
Montgomery Purdue?
MR. SMITH
That's a specific question that you
should be able to answer.
MR. HANSEN
Okay. Which --
MR. GEARIN
I'm sorry. Excuse me. Mr. Jim
Frush's firm?
MR. HANSEN
Did I give a retainer to Jim Frush?
MR. GEARIN
Yes.
MR. HANSEN
I personally did not.
MR. GEARIN
Who did?
MR. HANSEN
None of your business.
MR. SMITH
Let's identify Mr. Frush.
MR. GEARIN
Did the money come from the
company?
MR. HANSEN
It did not.
MR. GEARIN
Mr. Frush is your personal
attorney?
MR. HANSEN
He's one of my personal attorneys.
MR. GEARIN
Did you give a retainer to
Mr. Jerry Stehlik?
MR. HANSEN
Yes.
MR. GEARIN
Did that money come from the
company?
MR. HANSEN
No.
MR. GEARIN
Where did that money come from?
MR. HANSEN
None of your business.
MR. GEARIN
You're not going to tell me?
All right. Let's talk about Brinks. I think
you testified -- you didn't tell me about Brinks before, when
I asked the earlier questions. Did Brinks ever hold assets
that belonged to the mint?
MR. HANSEN
Yes.
MR. GEARIN
Do they hold anything presently?
MR. HANSEN
I think I testified that they
don't.
MR. GEARIN
All right. When's the last time
they did hold assets and property of the company?
MR. HANSEN
I don't recall.
MR. GEARIN
Did they hold assets of the company
this year?
MR. HANSEN
Yes.
MR. GEARIN
And for what purposes, and what
property did they hold?
MR. HANSEN
Brinks and I have a relationship
where I will buy metal from both customers and vendors.
Probably the largest one would be somebody like Johnson
Matthey or A-Mark Precious Metals. Brinks is -- also stores
metal for a number of people. And what happens is, is
Brinks -- if I buy metal or I ship metal, Brinks will take
custody of that and deliver it, either on my behalf or my
customer's behalf, to me. And so, example: If I buy --
MR. SMITH
And when you say, "I," are you
speaking of the company?
MR. HANSEN
I'm sorry. Yes.
If Northwest Territorial Mint buys 30,000 ounces
of silver from Johnson Matthey, for example, we will pay
Johnson Matthey, usually through a bank wire. And Johnson
Matthey can take that metal and transfer it to Brinks or
transfer it to one of our delivery vehicles. And if Brinks
takes delivery of it, then Brinks will hold that metal until
it's convenient for Brinks to deliver it to whatever location
I so designate.
MR. GEARIN
Did you -- have you ever
designated -- directed Brinks to deliver property that
belonged to the mint to you for your personal purposes?
MR. HANSEN
No.
MR. GEARIN
I'll reserve any other questions
for the 2004 exam. Thank you.
MR. SMITH
We're going to take a two-, three-,
four-minute break so that people can use the restroom.
There's one around the corner here. And then I'll ask
Mr. Calvert to come up and give you some information.
Thank you, Mr. Hansen. You're excused.
(Recess taken.)
MR. SMITH
All right. Mr. Calvert, who, as you
now know, is the Chapter 11 trustee in charge of all of the
company's business operations and assets, and is in charge of
charting a course in the Chapter 11 bankruptcy case. He's
going to give you some information. I've asked Mr. Calvert
to, to the degree he needs the time -- and I believe he
probably does -- to go until five. And then we're going to
conclude today's meeting at that point.
If you have follow-up questions, which I imagine
a lot of you will, you should contact Mr. Gearin,
Mr. Calvert's attorney, or Mr. Calvert; or possibly the
creditors committee and their counsel may be able to answer
some of your questions as well. But in the interest of
concluding, we're going to finish with Mr. Calvert today.
MR. CALVERT
Great. Thank you.
So there's been a lot of FUD put out here:
fear, uncertainty, and doubt. I'm going to try to rectify
that in less than 20 minutes, compared to the two and a half
hours that we went the other way.
We're just getting up to speed. And we're
getting up to speed in a situation where I did go in and look
at this company to be the chief restructuring officer. I made
the decision not to do that. Because of the knowledge I
gained, it became clear I shouldn't work for Ross and I should
work for the court. And as a result, I told Ross I would not.
And as a result, I was appointed as the trustee.
So as the trustee, I have been in there since
April 11th. Since April 11th, I have found out a number of
things that you need to know.
First, financial statements have not been
completed since 2011. There's no financial statements.
There's no tax returns. The last tax return was 2010. The
company's accounting records are not poor; they're piss-poor.
There's nothing there. The information we're presenting today
is based upon us digging in and trying to find some stuff.
The situation is very complicated. There's
basically five different currencies. You have cash. You have
gold. You have silver. You have platinum. You have
palladium. And you have coins. And all of them trade at
different values on each day. And as a result, it's a very
difficult situation to analyze. And from our preliminary
analysis, the company has been losing money since 2007.
My goal is to share as much information as
possible. My goal is to make sure that you have information
but don't draw conclusions yet because we don't have enough
information to draw conclusions. The presentation I'm giving
today -- or the information I'm giving today is going to vary
from what Ross has to say, and it's going to vary from what
Ross' attorneys have to say. But it's strictly my point of
view based upon my review of the information. And I'm
confident there will be alternative points of view, as already
heard this morning.
I need to do a quick disclaimer. The disclaimer
is: The information shared today remains a work in process
and will require additional procedures to be completed. Thus,
the information is preliminary and draft and will need to
be -- revisions will need to be made based upon additional
discovery.
The whole reason I'm here today is because of a
book called The Club You Don't Want to Join, which was
Madoff's investors. And in that book, it said, the trustee,
you know, didn't have all the information. The trustee didn't
share the information on a timely basis to everybody. The
trustee couldn't tell us what the timeline of the case would
be. The trustee couldn't tell us what the potential recovery
would be.
So in a previous case -- I have jumped on these
situations to get to you guys, creditors, as quickly as
possible, to alleviate those types of issues.
Now, it's really premature. 30 days into a case
of this nature, that has gone on for five or six years, to
have reasonable answers or put bookends on this type of
information, is very, very difficult. But you deserve it, and
you deserve the information. So that's what I'm trying to do
today, is trying to share as much as I can.
Understand, there is a criminal investigation
going on, so there's certain things I really don't even want
to share. But I'm going to share as much as I can, not
adversely affect any criminal investigation, and at the same
time give you as much information as possible. Okay?
So, first, with that disclaimer done, we have
identified irregularities. We have identified amounts that
are material in total and to each of you. We have identified
the need for a forensic investigation of all the cash in and
cash out.
Your question was: Where did the money go? It
went into the general operating account. That's where it
went. I even have a picture drawn by Ross on the board that
says: All the money came in this queue -- or in the general
operating account. And then we paid for wages, we paid for
materials, we paid for this, and we paid for legal fees. So I
have a drawing that he drew on the board, and I took a picture
of it. So I have it. I know exactly what transpired.
We are aware -- all of us should be aware the
FBI is conducting an investigation. Additional analysis is
needed and required.
So who's speaking to you? I am a CPA. I am a
certified turnaround professional. I am a certified
insolvency accountant. I'm a certified fraud examiner. And
I'm a private investigator. And I have been through previous
other cases that have Ponzies or have fraud associated with
them. So I'm a forensic auditor, basically, that goes back
and figures out what transpired. That's what we're doing
here. That's what we're trying to do. When you don't have
financial records since 2011, or five years basically, it's
not easy to do.
Mr. Mark has already stood up and told you about
the committee and what the committee's responsibilities are
and walked through that. So I'm going to skip that, given my
short time. 15 minutes left. I'm going to go right to what
my responsibilities are.
The trustee's responsibilities are for all the
property that I took control over on April 11th. April 11th,
11 days after the bankruptcy was filed. I'm responsible to
complete the bankruptcy schedules. When you see the
bankruptcy schedules, you'll see things that we said, "unknown
value." For example, he talked about websites. I don't know
what the values of those are. I put "unknown." So just be
careful when you look at the bankruptcy schedules. There's a
certain number of items that I say I don't know the value of.
I'm not trying to dodge it. I'm just saying, I just don't
know yet -- and what you can sell them for and the like.
My job is to also, after filing the bankruptcy,
is to review the proofs of claim. Now, on a website I put
out, Please send me the back of your checks and redact the
information and so on. The reason I did that is Ross, his
girlfriend, and one other person had the post office box. And
when we found out that some checks were missing, I started to
wonder, well, did all the checks that you guys paid actually
go into the company's account? So I'm trying to do some
forensic work around that area.
My job is to communicate with you. My job is to
maximize your recovery. Okay? My job is also, in accordance
with the federal bankruptcy rules, to investigate anything
pertaining to fraud, dishonesty, incompetency, misconduct,
mismanagement, irregularities. I've got all six. Okay?
Northwest Territorial Mint. Ross talked about
it being around 14 years. It hasn't been around -- pardon
me -- 35 years. It's been around 14 years. It was founded in
2003 while he was still in jail.
Northwest Territorial Mint's business lines. He
talked about the retail. He talked about the sales of gold.
He talked about the manufacturing. I think we've covered
that, other than there were 237 employees when I took over.
Within four days, there was 42 less.
Locations. The company is headquartered in
Federal Way, Auburn, Dayton, Green Bay, Tomball, and Hawaii,
so six different locations. I've been to three, the three
biggest, the three where there should be gold or silver or
precious metals.
So Ross is talking to you about what he thinks
is going on and what's transpired. I can tell you he was
indicted and defended himself accordingly. The grand jury
vested on unregistered firearms. He filed Chapter 11
bankruptcy on December 4th. He was charged with federal tax
avoidance in 1990. I can tell you he filed a bankruptcy in
Chapter 13 in 1994, and I can tell you he filed one in 1995.
I can tell you, also, he pled guilty to unregistered machine
guns.
MR. SMITH
I don't want any more information
about Mr. Hansen that's not relevant to what your current acts
are, in my opinion.
MR. CALVERT
Okay. So let's talk about the
bankruptcy structure. The bankruptcy --
MR. HANSEN
Let me tell you something. I've
got to speak up. That is a crock of crap. First of all --
MR. CALVERT
My time is limited.
MR. HANSEN
-- I'm not in bankruptcy --
MR. SMITH
I --
(Multiple speakers; unintelligible.)
MR. HANSEN
-- {inaudible} this company in
2003. I wasn't in prison in 2003. This company hasn't been
around for 13 years.
Mr. Calvert, if you're going to make claims
against me --
MR. CALVERT
I want my time.
(Multiple speakers; unintelligible.)
MR. SMITH
You'll get it.
MR. HANSEN
I tell you what --
MR. SMITH
That's enough, Mr. Hansen.
MR. HANSEN
This is so outrageous that he can't
even get his dates or his facts right. I have never been
accused of tax avoidance, ever. I have never been to prison
for tax avoidance.
And I've got to tell you something, Mr. Calvert.
You're full of you-know-what. And if you're going to make
allegations against me --
MR. GEARIN
Mr. Hansen, that's enough. That's
enough.
MR. HANSEN
-- make them correct.
MR. GEARIN
That's enough. This is not your
forum.
MR. SMITH
No. Mr. Hansen had a right to say.
Mr. Calvert was just up here --
MR. HANSEN
And I've got to tell you
something --
MR. SMITH
-- giving a litany of his criminal
history.
(Multiple speakers; unintelligible.)
MR. SMITH
So let's just -- Mr. Hansen --
MR. HANSEN
If he can't get those facts
straight, then you need to question whether he should be
running things.
MR. SMITH
-- you can leave now. Thank you.
MR. CALVERT
Okay. Let's talk about the
bankruptcy structure. The judge is up above. That's who I
report to. I report to a bankruptcy judge. Martin is part of
the Office of the U.S. Trustee. I report to him on day-to-day
operations, filing monthly operating reports, and related
stuff. The committee, I report to. So in substance, I have
three parties I report to and will on a regular basis.
So what actions did I take? From the day I took
it, on April 11th, I immediately did a digital backup of all
computer systems, all emails, all security tapes, because the
security tapes record over themselves over a period of time.
So I immediately took those and locked them down, so I have
those. You heard some questioning along those lines. We have
those.
In addition to doing that, I changed all the
bank accounts. I immediately changed the signature
authorities, immediately changed depositories. I also changed
the locks on the building. I also changed the locks on all
the safes, all within the first week. I removed Ross from any
chain of authority. So be careful here. I removed him from
chain of authority. Once he was removed from chain of
authority, he decided to leave. I'm fine with that.
We started a physical inventory. We have done a
complete physical inventory. That physical inventory has
identified customer-owned and customer-stored product. So it
does exist, but it doesn't exist to the level of what the
accounting records seem to indicate should exist. So there is
a variance there. We're still trying to reconcile it. And
we'll be in touch with each of you.
Our goal is to file a motion to release all the
customer-owned inventory at one point in time. We've just got
to reconcile it and make sure that yours is yours and so on.
So as long as it was segregated, as long as it was identified,
as long as it was perfectly set aside that it was yours and
your name was associated, we did that.
We took in excess of 2,000 pictures of the
inventory, exactly where it stood, exactly how it was, exactly
the way it was on the day we walked in. So we took a ton of
pictures.
In addition, because of the limited amount of
inventory, we asked the FBI to come in and inspect our
inventory. So they knew that they -- from the time we did the
inventory, they saw it until the day they walked in. So we
had a complete chain of command of the inventory and what's
gone on. Okay? So we're actually doing a very detailed job
here.
In addition, in the first two weeks, we
completed a physical -- we terminated the bullion site. On
Day 2, I terminated the bullion site, and we received in
excess of $575,000 in checks we returned. We determined
accounting records did not exist to back up -- to show the
accounting, so we quickly set up QuickBooks to track the data.
We also set up a day-by-day cash flow. Day-by-day? Why? We
started with $4,000 in the bank account. Okay? So we're
still alive, and we're still pushing forward.
I took tours of Federal Way, Dayton, and
Tomball. I immediately started working on the sale of
Tomball. Why? There wasn't enough cash to fix Tomball. I
didn't have enough cash flow to resolve some of the issues
there, so I needed to sell it as quickly as possible and focus
on the Dayton operations.
I responded to over 700 emails. I filed for
discovery, a 2004, against Ross, against Diane, against
Medallic. Those 2004 hearings are -- what, Mike? Friday?
MR. GEARIN
The documents are actually due
Monday.
MR. SMITH
They're not -- clarification.
They're not hearings. In the bankruptcy system, you request
an order that allows you to take an exam or allows you to
request a production of documents. And so you go, and you get
an order for that. And that's what Mr. Calvert is referring
to.
MR. CALVERT
Thank you.
I also started a database, a database of every
check in and every check out. But the problem is, most of the
money that went out went out through silver, gold, and
related. So I've really got data of checks in and then the
purchase of silver and gold. And then that purchase resulted
in a shipment at some point. So I'm trying to track that
down -- cash in, cash out; or cash in, and silver, gold, and
others out.
So how are we doing that? We grabbed all the
bank statements back to 2007. We've put them up in a dropbox.
We've shipped them to India. And at $5 an hour, they're
re-keypunching that for me. So I will have a database of
everything that's going on here.
In addition, we've had various discussions with
the FBI. In addition, we've started research on the ownership
of Medallic. We believe -- and we have owner draws that were
taken out of the company when the company was insolvent, per
the tax returns. Now, maybe the tax returns are wrong. Maybe
there's something. So I've got to be careful here. We
believe the company was insolvent when the money was taken out
in an owner's draw to buy Medallic; therefore, we believe it's
a fraudulent transfer. But that is up to a court to decide.
That's not for us to decide. A court has to decide that. If
that's the case, we'll pull those assets back in.
We're working on solving the cash flow and
improving profitability. We met with the landlords of Dayton.
We met with the EPA that had a $25,000-a-day fine going on
down in Dayton. We got that resolved.
Summary of findings. Summary of findings in six
minutes or less. Okay. First, as a certified fraud examiner,
I can't say there's fraud. I'm not allowed to say that. As a
certified fraud examiner, in accordance with my ethics, I can
say there's irregularities. I can say there's things that are
not right. But I can't say there's fraud. Because with
fraud, you have to have intent. And the only people that can
determine intent is a court of law. So I can't say there's
fraud. I can just say there's irregularities, improper
transactions, improper documentation, improper recordkeeping,
no inventories done for the last few years. But I can't say
there's fraud. That is for a court to determine, and that is
because you have to prove intent to have fraud.
But what have I found? The company was more --
ran more like a personal hobby. It lacked discipline of a
corporation. That was not present. So the normal discipline
in a corporation was just not present.
The company's accounting records -- I already
mentioned -- are poor. The company did not complete physical
inventory. The general counsel of the company resigned
because he started to try to push an inventory through, and
Ross wouldn't let him, so he resigned. We have in excess of
seven or eight different accounting people. Look at the
bankruptcy schedules. A number of them resigned. When
accountants resign from a company, you know there's some
issues behind the detail.
The company did not complete physical
inventories. The company did not completely hedge all the
market changes. It appears that customer deposits were used
to fund litigation and the payment of litigation settlements.
It also appears that the company was -- deposits were used to
acquire companies, both Medallic and Graco and Hawaii. So the
company's deposits were used for that.
The company's cash position is poor. They
pushed out delivery dates. So what did we do? We took the
actual order system and married the two systems together, the
earlier one and the later one. So from 2007 until now --
until 2016, we have every order number, every order date,
every date a check was paid, and every date the inventory was
delivered. And we calculated how much money was actually
received by the company but had not bought or repaid back. We
have schedules. We have an analysis. It's not ready for
prime time. It's not completely backed out, guys. But we
have more than enough.
The company did not complete hedging. I
mentioned that.
The company deposits -- I mentioned that.
It appears -- it appears that when he was short
of cash, he would drop the price, close to the spot price, to
increase orders. But the reputation of the long delivery
resulted in less people buying. And as a result, there wasn't
enough money to keep going.
The company didn't use any cost accounting to
{inaudible}. As a delay in product, compared to its
competitors, spanned from normally ten days to almost 100 days
before stuff was delivered, it caused that significant delay,
which caused the lowering of sales.
I've got to qualify my next comment. It has
attributes -- be careful -- it has attributes of a Ponzi.
Okay?
So, first, you have investors. Well, we're not
investors. We're customers. So we don't meet the careful
definition of a Ponzi, as defined by the SEC or generally
defined. But I can tell you that later customers' money was
used to pay off earlier customers' amounts. And I can tell
you I have it in fairly good detail.
The Securities and Exchange Commission defines a
Ponzi as a scheme -- as an investment fraud that involves
payments of purported returns to existing investors from funds
contributed by new investors. That's the definition. You're
customers. You're not investors. All right? So it doesn't
exactly fit, but it has the attributes because future money
was used to pay earlier customers. Okay?
Facts to establish in a Ponzi scheme: You must
prove -- courts want, need, require deposits made by
investors -- well, you're customers; the debtor's conducted
little or no legitimate business operation, as represented to
the investors. They had some great businesses. I'm really
excited about Dayton and the potential of Dayton. I really
believe that there's a huge value there. And I think it can
be sold for a nice number that will help the recovery for
creditors.
But the bullion operation, by itself, really
clearly had some attributes of a Ponzi. The purported
business operations of the debtor produced no or little
profits or earnings. Well, is it a legitimate business if not
producing earnings? Guess what? It's not for me to decide.
This is all a factual issue that will have to be determined by
the Court.
MR. SMITH
Mr. Calvert?
MR. CALVERT
Yeah.
MR. SMITH
I know you have the ground you
wanted to cover. But given the shortness of time, I'm
anticipating that most people out there don't necessarily want
to hear about all the bad stuff that led up to this. They'd
like to know your view now of where the case is going, how
it's going to get there, the sale of the Texas assets --
UNIDENTIFIED
MALE SPEAKER
 If he could touch
base on --
(Multiple speakers; unintelligible.)
MR. SMITH
Some of the more pragmatic aspects
of what you're doing or not doing as a Chapter 11 trustee, I
think might help them a little.
UNIDENTIFIED
MALE SPEAKER
 Like the storage.
MR. CALVERT
Okay. So let me --
MR. SMITH
The process for figuring out stored
materials and contacting the people whose name you find on
storage units, for example.
MR. CALVERT
So we had a physical inventory
done at each location. It is a detailed physical inventory.
Ross said we couldn't do it. Well, guess what? It's not
perfect. I can tell you there may be a coin in there that
could be worth $2,000, and we only have it in there for its
face value. Who knows? But we had the people in the company
help, opened all the drawers, took pictures of every single
one. We identified customer-owned inventory. And we
identified it based on a picture we took, that it was sitting
here, that it had a customer name on it, that it had this --
so guess what? All of the customer inventory that we've
identified, we have in a specific list, by location. Here it
is.
Now, we haven't been able to reconcile that to
the physical inventories, per the storage contracts yet. But
we know the number for the storage contracts is higher than
the physical inventory. But I can't tell you whether it's
yours or yours or yours that's missing yet. I've got to get
in and reconcile that. The plan is to take all that in one
order -- one court order and release it all back to the owners
that have been identified. Okay?
MR. SMITH
Do you have a general time frame for
that happening?
MR. CALVERT
We're having problems rolling
forward the physical storage records. That's one of our
bigger issues. And as Ross testified, it was done way back
when, and there was an issue. Well, it hasn't been caught up.
And therein lies the issue. We have to roll that forward
somehow. A lot of forensic work in that. But as a result, we
think we'll be giving back stored inventory to the respective
customers, as we saw it in the safe, identified with a name,
and not commingled.
MR. SMITH
Is it fair to say within six months?
MR. CALVERT
Oh, gosh. I would try to -- I'm
moving a lot faster than that. So my guess -- my guess --
Mike, here I go. It's just a day -- a number. It's just a
number. I'm going to say 60 days. I'm going to say 60 days.
MR. GEARIN
I mean, there is a process. We do
have to file a motion with the court. And what we're going to
do is, we'll list out everything that we found. We'll
identify which customer we think it belongs to. And that will
go out to everybody. So if anybody thinks they've got an
interest in the assets that we're proposing to give back to
people because we think it's their stored inventory, somebody
could come in and say, We think that's wrong.
So that's why we need to do it with the court
process. But I think, you know, if we could get the data
pulled together in the next 30 days, there would be a hearing
within 60 days to resolve that issue.
UNIDENTIFIED
MALE SPEAKER
 Is there something
we need to do to ensure that we're --
MR. CALVERT
You're going to be contacted. So
whoever has inventory on the inventory storage sheet that has
your name associated, we're going to call you and say -- or
email you and say, This is what we have for you. What do you
have for you? Does this equal what you think?
And we're going to try to reconcile it and make
sure.
UNIDENTIFIED
MALE SPEAKER
 Just to clarify,
when you use the term "customer-owned" or "stored," are you
including lease agreements as well -- the bullion lease
agreements? I'm assuming not, but I just want to make sure I
understand {inaudible} --
MR. CALVERT
I think that's a fair assumption,
but that's a legal conclusion. And, again, I can't draw legal
conclusions.
MR. GEARIN
I can answer that. No, we're not.
We're not. There's definitely a distinction between leased
assets and stored inventory. Stored inventory is: Somebody
brought it in there or bought it, it was identified, and it
was put into a storage unit. That's what that is.
UNIDENTIFIED
MALE SPEAKER
 Well, with the
lease -- in a lot of instances, it was physical gold, or
whatever, was brought in, delivered --
MR. GEARIN
Yeah. But the lease agreement --
UNIDENTIFIED
MALE SPEAKER
 Understood.
MR. GEARIN
So we -- I can talk to you offline
about that.
UNIDENTIFIED
MALE SPEAKER
 Fine. I just wanted
to --
MR. GEARIN
I do want to say this: I think
that -- maybe you want to cover this -- but there is a lot of
missing stored inventory. Right? Big numbers. We're talking
enough -- a lot of this that had been stored, that you think
is there, it's not there. There's --
MR. CALVERT
We're just trying to be open on
that. And to say -- you know, there were some comments made
as to what was there and whatever. So I have a videotape of
everything that was there from before the bankruptcy, on the
bankruptcy date, during the physical inventories. And I even
have the situation until the FBI came in and looked all copied
and all locked down. Okay?
You want to go more on the case? Or do you want
me to answer questions?
UNIDENTIFIED
MALE SPEAKER
 Yeah. For people
that have not had any money allocated to any metals or
anything, but they have a signed contract -- so in other
words, they just have dollars out at this point, what are
their chances of -- the percentage that they might get
refunded, and at what time frame, possibly?
MR. CALVERT
Those are two questions that are
later in my slides, but let me see if I can jump to that
question fairly quickly. It does not appear to be positive at
this point. It does not appear to me that there's significant
assets. The biggest thing that we can do is clean up and
reorganize Dayton and sell it for a nice number. That, plus
the inventory, gives me the total amount of recovery. Which,
right now, depending upon some legal issues with Medallic --
that you heard Ross thinks he owns privately -- that's a legal
question that's going to have to be resolved. We're going to
spend money fighting over that. So there's a lot of variables
in there that I don't have a good answer to. But it's not
looking positive. If you force me to a percentage, I'm going
to say less than 10 percent.
MR. SMITH
Recovery, not chance of recovery.
MR. CALVERT
Recovery, yeah.
MR. SMITH
And could you address that you're
actually -- do you have a motion to sell the Texas assets?
MR. CALVERT
I do have a motion to sell the
Texas assets. I mentioned to you early on, after my tour down
there and after review of the contracts that were in
process -- that we had a deposit on but we hadn't done the
work on -- and the obligation to some of those contracts, we
made a decision to move forward with the sale. Okay?
That sale is subject to higher and better
offers. So we teed something up fairly quickly, and it's
moving forward to be heard on the 26th. There are three other
possible buyers that might outbid the current buyer, but I'm
not too positive on that. I think the current one may be the
final one.
UNIDENTIFIED
MALE SPEAKER
 I understand that if
your product is there being stored, it's marked, and you get
all that stuff -- but as far as the people that have
unsecured -- you have a piece of paper -- what is the actual
pecking order, was my question before. Because we bought
stuff that was after the judgment, that they knew they
couldn't deliver on, versus people who were before, that --
you can't see the future. But since we were in that time
frame --
MR. CALVERT
Great question. Again, you've got
a lot of legal issues in that question that I can't answer. I
can answer that this is the amount of total assets that I
think I'm going to get, or a liquidation value of these
assets. And I can answer what the total claims are. But as
for the priority of any of those claims and so on, I'm not in
a position to answer today.
MR. SMITH
I'd like Mr. Calvert to go ahead and
finish in the next few minutes on what he thinks is really
important for you to know. And then, again --
UNIDENTIFIED
MALE SPEAKER
 {Unintelligible}
about a clawback? The period you guys can go back and take
money that's been paid out?
MR. CALVERT
The period is 90 days that we can
go back for unrelated parties. One year for related parties.
UNIDENTIFIED
MALE SPEAKER
 What do you consider
a related party? A supplier?
MR. CALVERT
No. A related party is somebody
that's an insider, as defined in the Bankruptcy Code. And
that's a legal question, also. But, generally, it's 90 days
for traditional fulfillment of orders.
MR. SMITH
And so if he can go ahead and
finish --
(Multiple speakers; unintelligible.)
MR. SMITH
-- finish the information he's
giving, that he thinks is valuable to everybody. And then if
you have individual questions after, maybe you can talk to him
downstairs or contact his counsel and get those questions in.
Because we really do have to wrap up.
UNIDENTIFIED
MALE SPEAKER
 Okay.
MR. CALVERT
What I will say --
MR. HANSEN
Mr. Calvert, how much are you
charging for the --
MR. SMITH
Mr. Hansen --
(Multiple speakers; unintelligible.)
MR. SMITH
Mr. Hansen, you're not asking
questions right now. Mr. Calvert is finishing his
presentation.
MR. HANSEN
Are you afraid to answer that?
MR. CALVERT
What's going on right now, at this
point in time, is we're trying to get our hands around the
whole situation. We're trying to do a forensic analysis of
what happened, since there was no financial statements. We're
trying to get you guys information on a timely basis. So
that's what we're trying to do.
I do believe wholeheartedly in Dayton. I do
believe in the potential of Dayton. I do believe in the value
proposition of Dayton. The issues of the irregularities
really relate to the bullion operations, not the custom over
here, not the Houston operation. It's only the
bullion-related area. Okay?
So what are we trying to do? We're trying to
complete enough analysis to get an understanding. So the next
thing that's really important is the database of checks in and
checks out so we see where the cash went. So if cash came in,
how much cash came in, and how much inventory was actually
purchased? Not how much went to you guys, but just how much
was purchased. Then we can start reconciling how much to
each. But it's going to take time. It's not an easy process.
Okay?
UNIDENTIFIED
MALE SPEAKER
 So for the
unsecured, it's a lot longer time frame than the people who
just have their --
MR. CALVERT
Stored inventory, we just gave a
time frame.
UNIDENTIFIED
MALE SPEAKER
 Right.
MR. CALVERT
60 days. And we hope to have a
court order in and start to release it. General unsecured
creditors, you are in for at least a year, if not longer.
MR. SMITH
Okay. Let's get back to the
presentation.
UNIDENTIFIED
FEMALE SPEAKER
 Do you have a
dollar amount?
MR. CALVERT
Pardon me?
UNIDENTIFIED
FEMALE SPEAKER
 Do you have a
dollar amount on the unsecureds?
UNIDENTIFIED
MALE SPEAKER
 He said {inaudible}.
UNIDENTIFIED
FEMALE SPEAKER
 Yeah. But what's
the total dollar amount?
MR. CALVERT
The total dollar amount of
unsecured claims is approximately $56 million.
UNIDENTIFIED
MALE SPEAKER
 Stored?
MR. CALVERT
No. That's total unsecured.
UNIDENTIFIED
MALE SPEAKER
 How about stored?
MR. CALVERT
Stored is part of that if your
inventory doesn't exist.
MR. HANSEN
38 million of that is the judgment.
MR. CALVERT
No, that's not true. Please don't
answer my questions. The total that is in there for judgment
is 12,500,000.
And let me make something else clear. Cohen is
not a bad man. Cohen is not the problem. If you take the
12,500,000 out, the 56 goes down to 44, right? A 44-million
shortfall. So don't get sidetracked on that.
Yes, company money was used to defend a lawsuit.
But when it came down to it, push came to shove, the company
went into bankruptcy. Cohen had seized approximately $200,000
right before the bankruptcy filing. I called him and I said I
needed it back to make payroll. He released it back --
(Multiple speakers; unintelligible.)
MR. SMITH
I'm going to interrupt again. This
isn't about individuals. And I want you to finish up with
what you think they need to know about what you're going to do
in the near term to maximize the recovery or in the
administration of the case.
MR. CALVERT
Near term, I'm focused on trying
to make sure Dayton can remain a viable going concern so I
don't have to sell it as a fire sale. I have adequate cash
flow to make Dayton successful. I will run it probably for a
year to get the value up and get some accounting records, to
get something that I can give to a potential buyer, and sell
it in the ordinary course in more of an auction to maximize
its value. But short of that -- that is what I'm doing to
maximize the value.
As for the other legal issues, we still have to
figure out clawbacks, as this gentleman asks. That's the
things we need to figure out. But that's the reality. Most
of the value is going to come out of the sale of Dayton.
Questions?
MR. SMITH
No. I don't want any more
questions. Do you have anything else in your presentation?
MR. CALVERT
I have another 12 pages, but
nothing that -- nothing that I have to --
MR. SMITH
Okay. So we're going to wrap up the
meeting at this point. I'll remind you that there is an
unsecured creditors committee. They have a fiduciary duty to
act in the best interest of all unsecured creditors, not just
themselves. They have legal counsel. You can contact them.
And, again, they can't give you personal legal advice about
your exact situation. But they can certainly talk to you
globally about an issue, in terms of how it affects the
creditor body and those kinds of things. And that's
Mr. Groshong and Mr. Northrup, who you heard from earlier.
And you have the names and contact information for the
co-chair of the committee.
You're also free to contact Mr. Gearin, who,
again, represents Mr. Calvert, going forward with your
questions. And hopefully, through those processes -- this is
going to be a process, and it is going to take time. There's
no magic silver bullet here. And so some people may get their
stuff back sooner, if it's identified and available to give
back. The rest of you are going to be in the boat for a
while. But you'll get notice of things from the bankruptcy
court.
If you have your own -- if you're owed enough
money, you may -- I encourage you to get your own legal
counsel to at least give you some advice about your interest
in the bankruptcy case. And we'll just have to -- it will be
an evolving process. These always are. They're complicated.
And there's no telling now what the recovery will be at the
end of the day. And that's just the unfortunate truth of the
matter in these kinds of cases.
It's going to be somewhere between 100 and less
than -- between zero and less than 100 percent. I can tell
you that, and that's the best I can tell you.
So with that --
MR. CALVERT
I have one last comment. In Ross'
defense, he didn't take money for personal use -- items for
personal -- I didn't find --
(Multiple speakers; unintelligible.)
MR. SMITH
That's enough. You don't know what
he took money for, if he took money, and what he used it for,
if he used money. So at this point, we're -- the meeting is
adjourned.
Thank you, everybody, for coming.
(The meeting was adjourned.)


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