Transcript of TOm Lawler First Hearing

Case 1:14-cv-02468-AT Document 23 Filed 08/20/14 Page 1 of 53
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UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
SECURITIES AND EXCHANGE

COMMISSION,
PLAINTIFF,
-VSTHOMAS J. LAWLER, ET AL.,
DEFENDANTS.
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) DOCKET NO. 1:14-CV-2468-AT
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TRANSCRIPT OF TELEPHONE CONFERENCE PROCEEDINGS

BEFORE THE HONORABLE AMY TOTENBERG
UNITED STATES DISTRICT COURT JUDGE
THURSDAY, JULY 31, 2014
APPEARANCES:
ON BEHALF OF THE PLAINTIFF:
PAT HUDDLESTON, II, ESQ.
ON BEHALF OF THE DEFENDANTS:
THOMAS J. LAWLER, PRO SE
ELISE SMITH EVANS, RMR, CRR

OFFICIAL COURT REPORTER
ATLANTA, GEORGIA

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(Thursday, July 31, 2014; Atlanta, Georgia.)
THE COURTROOM DEPUTY CLERK:
Good afternoon, counsel.
This is Amy McConochie, Judge Totenberg's Courtroom Deputy Clerk.
The Court is joining the conference call in Civil Action
1:14-cv-2468.
identify themselves for the Judge and then you will be on the
line with Judge Totenberg.
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If we can have everyone who is on the line please
MR. HUDDLESTON:
SEC.
Sure.
This is Pat Huddleston from the
I represent the plaintiff here in this case.
With me here
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in my office Jerry Parisi, who is a summer Honors intern, and
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Nana Jorgoladze, who is my paralegal.
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MR. LAWLER:
the Freedom Foundation USA.

THE COURT:
Mr. Lawler, this is Judge Totenberg.
MR. LAWLER:
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THE COURT:
I'm representing myself.

Okay.
All right.
Freedom Foundation a corporation?
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MR. LAWLER:
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THE COURT:
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MR. LAWLER:
Uh-huh.
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THE COURT:
All right.
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Are
you basically representing yourself or are you an attorney?
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And I am here, Tom Lawler, representing
And does Freedom -- is
Is it incorporated?
It's an LLC.
It's an LLC.
All right.
All right.
And is there anyone
else on the telephone?
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MR. HUDDLESTON:
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THE COURT:
Nobody else, Judge.
All right.
This is Pat.
Mr. Huddleston, would you go

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ahead and tell me what efforts you have made to notify any other
named parties here of this hearing?
MR. HUDDLESTON:
Certainly.
Judge, Mr. Lawler who's on
the call covers all but one of the named parties.
obviously he is the founder and operator of Freedom Foundation.
There's nobody else to call with regard to them.
THE COURT:
MR. HUDDLESTON:
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He --
All right.
Order Processing, LLC, is an LLC he
set up and he's the sole person with authority there.
Divine
Spirit, LLC, is in the same category.
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Order Processing is the company they've used to receive
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money from investors.
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pay their bills, they transfer investor money to Divine Spirit.
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Divine Spirit is the company they use to
Violet Blessings is an LLC that I believe Mr. Lawler
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set up for his wife's benefit.
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about the conference call and asked him, if he could, to get his
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wife on the line since I believe she has an interest in that
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business.
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I spoke to him when I told him
And, so, the one left open there is Prosperity
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Solutions, LLC.
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company to which Mr. Lawler paid commissions to salespeople and
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paid other payroll obligations.
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believe, is Judith Harris is her name.
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employ, again, two months ago, roughly.
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Up until six weeks, two months ago, it was the
The person who set that up, I

She left Mr. Lawler's
I found a phone number for her.

I have called and I

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left her a message as quickly as I had dialing information,
telling her what it was and what the matter was regarding, but
apparently I struck out there.
for her.
left the information.
That was the only number I called
She answered, identified herself as Judy Harris, and I
THE COURT:
All right.
And, Mr. Huddleston, have you
provided copies of the complaint and TRO motion and proposed
order in this case to Mr. Lawler?
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MR. HUDDLESTON:
e-mail address he gave me, achiever@mindspring.com.
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THE COURT:
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MR. HUDDLESTON:
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I have e-mailed them to his -- the
All right.
I can't tell if he's been able to open
them up.
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THE COURT:
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MR. LAWLER:
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THE COURT:
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MR. LAWLER:
All right.
And I have not yet seen those, by the way.
All right.
And would like time to address that
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certainly before I could fully comment on them.
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notice just like five minutes before this call that this meeting
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was to happen, so I have had zero time to prepare any -- at all,
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but I'm here on your request and --
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THE COURT:
I appreciate that.
I received
And obviously this
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is -- the SEC here proceeded on an emergency basis, and I
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responded as soon as I could in terms of my own availability.
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Well, first of all, Mr. Huddleston, at the conclusion


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of this hearing, would you go ahead and file a -- immediately
file some -- a document where you verify that you -- your efforts
to provide notice of the hearing and what exactly you provided
and sign it.
MR. HUDDLESTON:
THE COURT:
Certainly will, Judge.
All right.
All right.
It appears to me
from the motion that this is something that the SEC has been
investigating for a while and has interviewed Mr. Lawler and
perhaps other witnesses as well.
Mr. Huddleston, tell me what
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type of investigation has been conducted to date and also what
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you have pre -- what information has previously been shared about
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the concerns of the SEC with Mr. Lawler.
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MR. HUDDLESTON:
Well, we -- the investigation has
actually not been going on very long --
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THE COURT:
Okay.
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MR. HUDDLESTON:
-- despite the fact that the conduct
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has been going on very long.
We got it as a referral from
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another law enforcement agency, I would guess, three or four
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months ago maybe and began gathering bank records, which is our
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first order of business.
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it looked to us from the bank records that something was going on
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and then it might have to be an emergency.
I had to do it fairly quickly because
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After we gathered the certain bank records, we did
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decide that the smart thing to do was call Mr. Lawler in for
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testimony so that he could have a chance to explain what we


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thought that we were seeing.
here in our office late June, I believe it was.
month ago.
our concerns, and he gave his sworn testimony, excerpts of which
are attached to our memorandum in support of our application.
And, so, he came in and testified

So, roughly a
We showed him documents, we asked him questions about
We also at that time took Mrs. Lawler's testimony,
because the bank records show transfer of investor funds to her,
and we wanted to satisfy ourselves as to whether she was -- she
was an equal partner in this thing or whether she was ancillary.
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So, those are the two folks that we've taken sworn testimony
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from.
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In addition to that, we have spoken to, you know, a
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couple of investors here or there.
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awful lot.
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believe that they are more inclined to believe Mr. Lawler.
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those are the efforts we've made to try to get our arms around
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this thing.
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Folks don't seem to know an
A lot of folks are reluctant to talk to us.
THE COURT:
All right.
I
But
Do you contend that the
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transcripts of the interview and the one affidavit attached as
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Attachment 2 from Ms. Zaki factually supports the allegations in
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the complaint?
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MR. HUDDLESTON:
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THE COURT:
Yes, Judge.
All right.
Because Mr. Lawler hasn't had
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the benefit yet of reviewing these, would you go ahead and
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summarize what the contentions are of the SEC and what violations

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of law you are contending exist, what the emergency is, and what
relief you are seeking at this moment.
MR. HUDDLESTON:
Sure.
Yeah, I'll do that.
Mr. Lawler, the evidence we put before the Judge, as
she referenced, is -- in terms of the number of pages, mostly
transcript -- excerpts from the transcript of your sworn
testimony, a couple of pages from your wife's testimony.
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In addition to that, we have a Declaration of Matthew

McNamara who's an Assistant Director of Enforcement here, who has
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spent some time reviewing the Freedom Foundation web site and
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certain YouTube videos, so he has brought himself up to speed on
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what Freedom Foundation is representing to the world.
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We also have the Declaration of Karaz Zaki, who is an
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Enforcement Accountant here, who has poured over the bank records
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and gave a declaration about the movement of funds, mostly from
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the Freedom Foundation or Order Processing to the other relief
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defendants.
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And, so, our allegations are that you and Freedom
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Foundation, those are the two named defendants accused of
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wrongdoing, have violated certain provisions of the federal
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securities laws, specifically to begin with the registration
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provisions; that is, that securities have to be registered before
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they're sold unless there's an exemption from registration.
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argument is that the -- the administrative remedies, the ARs that
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you sell to people, are under the securities laws investment

Our

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contracts, that they meet the legal definition of an investment
contract and they are, therefore, securities under the federal
securities laws and may not be sold without registration unless
an exemption applies.
We believe there is no exemption and, therefore, that
you and Freedom Foundation have violated Section 5(a) and 5(c) of
the Securities Act of 1933.
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Now we move onto what we call the anti-fraud

violations.
That's Section 17(a) of the Securities Act, Section
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10(b) of the Exchange Act of 1934.
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violations really center around misrepresentations.
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theories there, one we call scheme liability, one is misstatement
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liability.
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Now, the anti-fraud

We have two
The one that's sort of easier to get your mind around
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is misstatement liability; that is, that you're selling the
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securities by telling people things that are untrue, materially
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untrue, or withholding key facts from them.
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violations of securities laws if you do it with culpable mental
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state, if you intend to defraud or if you're severely reckless;
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that is, you just know or should know that what you're saying is
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not factual.
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That constitutes
And, so, what we allege that you're telling people is
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the whole story behind -- that's currently up on the Freedom
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Foundation web site.
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Americans are really trust fund babies and that when we borrow
That is, this whole story that all

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money, we're -- we need not borrow anything because we've -- you
know, we've got this trust fund in all our names.
banks are, you know, ripping us off and that the courts are
complicit.
telling people.
And we don't believe that's true.
And that the
That's what you're
You're telling them that the administrative remedies
are to some extent a solution to that problem, and that you can
help them paying judgments that can eliminate the debt.
they will also be eligible for these massive payouts on their
And that
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investment when the AR funding supposedly happens, which we
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understand is going to be brought about by a series of
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international events.
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the web site describes a few of them.
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Pope, Vatican.
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referenced having written letters to the IMF and the UN and
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President Obama trying to make all this happen.
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I'm not sure I know all of them.
That --
Some of them involves the
Some of it is -- you, in your testimony, you
So, we believe what you're telling people is untrue and
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that you're selling these ARs to them through those
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misrepresentations.
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anti-fraud provisions of the federal securities laws, so those
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are the violations.
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That constitutes a violation of the
Now, with regard to why this is an emergency, you
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remember in your testimony we asked you when the last time you
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sold one of these was, and I believe you told us that it might
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have been as early as two days before your testimony.

And, then,

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you also said that sales would continue.
have a situation where we believe there are violations and that
they're continuing, we don't have time, in the investors'
interests, to file a lawsuit and wait so many days and go through
the discovery process while people continue to be ripped off, in
our estimation.
that's the reason for this emergency hearing and sort of the
nature of the emergency relief that we're asking for.
And, so, any time we
We have to do something quickly.
And, so,
And, so, the details about what we're asking for.
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We're asking Judge Totenberg to issue a temporary restraining
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order that prohibits you from continuing the conduct that I just
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described.
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signs the order that we've proposed.
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asking for an asset freeze against you, Freedom Foundation, that
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would lock down those assets.
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spend money.
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were separated from it in violation of the law, and so we don't
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believe it's yours rightfully to spend.
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we're asking for the asset freeze.
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The order will be more specific if Judge Totenberg

And in addition, we're
You would be unable to move money,
We believe that that money belongs to investors who
And, so, that's why
In addition to you and Freedom Foundation, we have
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asked the same -- those two things, that is, an asset freeze,
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more particularly, and disgorgement, that is, to give up the
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wrongfully obtained proceeds from those relief defendants I
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mentioned, you know, Divine Spirits and Order Processing and
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Prosperity Solutions and Violet Blessings.

So, there is no

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wrongful conduct alleged against those four entities, but it is
alleged that those entities received that money without giving
consideration, that they've been unjustly enriched by the amount
that they received, that the money is in fact investors' money,
defrauded from investors, and that it ought to be repaid.
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So, Judge, I think that covers all of the matters you

asked me to cover.
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THE COURT:
All right.
So, the proceeding we're having
right now, Mr. Lawler, is on the Motion for Temporary Restraining
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Order.
It is an emergency order with minimal notice, as you well
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know.
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which point -- by that point I would basically have to have
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another hearing and either renew the order or else have a longer
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hearing.
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only time I would hear from you by any means.
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motion -- order that would expire with -- ten days hence.
Any order issued would not last more than ten days, at
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But it wouldn't be -- in other words, this is not the

It is an emergency
Assuming that I were to hear this again in ten days or
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less, I would obviously schedule -- have scheduled a hearing well
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enough in advance for you to have counsel present.
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I will tell you that under the rules of the Court, that
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an LLC must be represented by counsel.
So, while you're
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appearing here today on behalf of all of the various entities
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that the SEC alleges you have control over or are affiliated
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with, technically under the rules you can only represent
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yourself.
But because of the emergency nature of the proceeding,


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I'm going to simply -- basically consider that you are here on
behalf of anyone you've indicated that you are representing.
If there's any entities that the defendant -- the
Government has identified that you don't feel like you are --
sort of part of your operation, then you should probably tell me
that now.
you're going to need to get an attorney.
allowed to represent yourself as an individual, though.
But assuming we have another hearing about this,

You would always be
So, the concerns I have in looking at this is that it
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sounds from the submissions provided that there is in fact a
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legitimate basis for the Government's concern about continued
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solicitation of investors and potential also movement of the
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assets here so that they would -- the Government would not be
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able to recover the assets in any event if it proves its case
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altogether and would not therefore be able to protect the
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investors who've already deposited funds with you.
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Government has asked for a freeze of the assets, among other
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things.
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that there might be some money that has been moved out of this
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country.
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The
And I wanted -- and as part of that, I also understand
I'm not sure of that or not.

Mr. Huddleston, can you clarify what the contention of
the Commission is in that regard?

MR. HUDDLESTON:
Yes.
Yes, ma'am.
During the
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testimony, Mr. Lawler testified that he and Ms. Harris at one
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point had opened an account in New Zealand and had deposited some

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money there.
his testimony, and I'm quoting here, was five grand or so.
have no idea what the correct balance is, but we have it from Mr.
Lawler that he opened the account there.
basis of what we allege in our papers.
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MR. LAWLER:
THE COURT:
And, so, that's the
Would it be appropriate for me to speak
Yes.
I want to ask one other question of
the Government so that you can respond to everything at once.
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I believe
now?
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And we asked him what the balance was.
Does the Government have knowledge about where the

assets are right now of the defendant?
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MR. HUDDLESTON:
Judge, we know about the bank accounts
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that we've been able to subpoena.
Because these organizations
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are frequently closed down by the banks, they have to open
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accounts at lots of different places in succession, and so
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there's still quite a bit that we have to gather.
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some account numbers, and we are in a position to serve any order
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on those banks very quickly, this afternoon, to lock that money
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down.
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we'll be able to identify other things.
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order far and wide to try to capture everything that we have.
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But aside from the bank accounts and the account in New
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Zealand -- by the way, we don't know the name of that entity.
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That's why we've asked for a repatriation order.
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of any other hard assets.
But we do have
And, of course, once we're able to get additional records,

And we will spread the
We're not aware

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THE COURT:
MR. LAWLER:
All right.
Okay.
Mr. Lawler, go ahead.
And actually listening to Pat's
summary here, if what he said was true and accurate, I would be
leaning in his direction.
those issues, the same path he has taken.
I would probably be taking, about
It's all based on some presumptions that are not
correct, the first one being that we're selling a security.
security would be a promise of some particular outcome.
not guarantee any outcome.
We do
We do not make any promise at all.
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In fact, we do not sell anything.
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educational program, period.
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an educational program.
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Okay?
What we do is provide a
That's what they're called,
If I sold a book on how to win in the stock market, I
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guess that -- it could be construed maybe as security to some
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people, but I don't think in your mind or mine it would.
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we gave an education on the web site that showed people how to
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take information, discuss it, discern if it's true or not.
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don't ask anybody ever -- that's a key point.
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anybody in our ten year history to ever do any process.
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We
We've never asked
We have multiple processes we provide, by the way.
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administrative remedy is just one -- just as it sounds,
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administrative remedy.
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chooses to go forward with an educational program.
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Or, if
The
We provide the administration if somebody
We have another one that's called GSA, which is on the

site.
You can, you know, look that up on your own.

It's another

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methodology.
Pope, so I'll bring it up here.
"Pay-pal" decree back in September 1st of last year -- you can
look it up on the web site on your own if you like.
Actually, it comes from -- and he mentioned the

There was a "Pap-al" -- a
And you may wonder what the "Pap-al" decree or
"Pay-pal" decree has to do with anything in our world, but indeed
there is a trust account that the Vatican does control.
And you can verify that yourself.
can do your homework.
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It's a factual evidence.
You
And, now, it does take a little digging,
and I do a lot of that.
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Okay?
And that's what we do is research.
The Papal decree is out there and it says basically
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that the officials -- all government officials such as yourself
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and Pat and any -- anyone of this nature within the Government,
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their immunities are no longer in place.
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piece, but it is very important.
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they can be arrested as anyone else can.
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It's an informational
And, in fact, if they violate,

Okay?
So, the protections that the police, the Government
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officials, attorneys have had, judges, banks who are lending --
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who are doing, if you will, fraudulent or anything that is
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contrary to law -- can indeed be prosecuted just as anyone else
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can.
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process, which is not in question here, but it is valuable from
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one standpoint.
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corporations.
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the Vatican is now the keeper of that in trust as well.
So, the Papal decree is the core element behind the GSA
The Roman empire created the -- the concept of

If you do your history, you'll discover that.
And

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And, yes, there is a world trust.
If you go back and
do world history, in 1933, FDR declared Joint House Resolution
192 -- this is all factual stuff, you can look it up on your
own -- that there was a bankruptcy of the United States.
still in it.
Okay?
We're
It's the third one, actually.
Well, in place of money, when you're bankrupt, that
means the country has no money.
You might recall all the
coins -- gold and silver was collected -- okay -- from the people
and replaced by paper, a promise that one day you'll be able to
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redeem your gold certificates for gold and silver once again.
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Later it became silver certificates.
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the sixties those were available.
13
If you remember, back in
In 1971, Nixon nixed it all by removing us from the
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Bretton Woods agreement and no longer backed our money by gold.
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If you're around in that time period, you might recall inflation
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went through the roof.
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trust account.
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money if you will.
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silver was taken out of circulation -- it's illegal today to
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trade in gold and silver, as you know, as money.
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a substitute was created.
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excuse me, the substitute.
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So what backed money was in fact this
They had to come up with a substitute, pretend

The substitute money, when all gold and
So, therefore,
Well, something had to back the -Well, that is the birth certificate.
I'm sure I'm not telling you anything new here, Judge
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Totenberg.
I'm certain in your travels and in your education
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you've learned about these various things, so I'm just repeating


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a little bit what we do share on our calls.
education we provide people.
anything other than education.
Now, this is the
So far here we're not selling
Now, if people want to buy this education and indeed do
a process to reclaim, that's their business.
to do anything.
money -- the basis of money is not gold and silver any longer.
Now, one day that will return.
distant future.
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Federal Reserve.
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no reserves.
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association with them, but they are private.
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1913.
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other mechanism than what we think.
Okay?
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It's totally voluntary.
We never ask them
Okay?
But the basis of
I suspect not too far in the
But for today, those dollars are backed by the

As you know it's not federal and that there's
It's a private banking cartel.
The Treasury has an

And that came in
So, all money made today is controlled by a whole
So where does money come from when you borrow money?
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You and I have mortgages; right?
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perhaps.
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from the trust account.
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and said, okay, that's the basis of all our money.
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full faith and credit of the United States, the sum of you, me
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and everybody else in this country.
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from.
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Credit cards, student loans
Where did that money come from?
All right.
It came
They just put digits in upon your birth

That is the
That's where money comes
Now, this information was never asked for, even though
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I -- I had wished to share it with Pat and his other friend at
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the time.
They had no interest in finding the real truth.

They

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were more interested in looking at -- all they looked at, by the
way, were bank accounts.
basis of what we do.
they presumed these were securities, which is not the case.
do not provide any instrument or guarantee or anything of the
kind.
They made no inquiry at all as to the
All they looked at is we took in money and

We
We say if indeed the money that you allegedly borrow
from a bank did not come from the bank's vault or their resources
or assets, but in fact came from your own trust account at your
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birth -- okay?
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that is true, then that means each individual, when they sign
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that promissory note, was really funding their own loan.
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about it, the bank --
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That is true and prove me wrong, if you like.
THE COURT:
Well, Mr. -- let me ask you this, Mr.
Lawler --
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MR. LAWLER:
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THE COURT:
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Think
If
Yeah.
-- is that there's a declaration attached
to the motion of the Government --
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MR. LAWLER:
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THE COURT:
Uh-huh.
-- that specifies that you have told
21
investors that Freedom Foundation pays the investors 70 percent
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of the recovery obtained and retains the remaining 30 percent.
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MR. LAWLER:
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investors.
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That's foreign to us.
Well, first of all, there are no
We don't use that term.
We don't have investors.
What we have are folks who buy an

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educational program.
THE COURT:
If they wish to -All right.
Tell me, your people who bought
the -- the people who have bought an educational program, have
they been told that there will be a 70 percent rate of return?
MR. LAWLER:
Okay.
What you're referring to are the
early Gold members.
Then we have Silver members, and then later and currently we have
what we call the early Bronze members.
different terms and conditions.
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We have Gold members that came in early.
Each program has
However, none are investors.
They are simply buying different educational programs.

The folks who came in early, whatever awards would
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come -- okay -- and right in their contract which everyone signs
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and agrees to, it's right on the web site, and you can go out and
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read it if you're -- if Pat wants to do that, you can go out
15
right now and we'll look at it on the site or I can provide it to
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you, no problem.
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that there are no guarantee of results.
This is a best efforts
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process to -- that you are engaging in.
We are simply providing
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the administration of it.
20
It says, as it did from the very first day,
Now, back to your 70 percent, the early folks we call
21
the Gold members -- okay -- came in under the premise that
22
whatever proceeds would come forth, if any, on the basis of best
23
efforts from the methodologies that were put in place that would
24
be paid, 70 percent of that would come to them.
25
be coming to the club, which would be distributed to the various

30 percent would

20
1
folks -- we called them consultants back then, I believe it was.
And they would get their share and a portion of that would
come -- the remaining part would come back to the club for
benevolent purposes.
I am a Reverend.
I started this club because I had a
deep passion to help people.
where this country was going, and it's gotten absolutely exactly
what I expected, it would be worse.
Foreclosures are outrageous today.
10
I saw the plight ten years ago of
It's horrendous.
Now, if the presumption is correct that banks never
11
loaned you that money, then indeed the Supreme Court has ruled
12
that if you collect money from somebody that you never loaned
13
money to, that's called conversion.
14
your -- I'm sure in your teachings, Judge Totenberg.
15
somebody extracts money from you, such as a bank, every time they
16
demand a payment every month and then never loaned you that
17
money -- okay?
18
the time of the loan, that is treated as a check.
19
a promissory note is the same as money.
20
That if
Keep in mind, if you signed a promissory note at
So, what does the bank do?
21
the promissory note.
22
have any money.
23
account.
24
all --
25
And you would know that in
They stamp it for deposit,
It goes to the Federal Reserve.
What do they do?
They don't
They dip into the trust
That's where the money extracts from.
THE COURT:
In bankruptcy,
That's where
What is the web site which has this

21
1
information on it that you're talking about?
MR. LAWLER:
THE COURT:
MR. LAWLER:
Freedomclubusa.com.
Thank you.
And we are simply educating people on what
if.
Now, at that point, if they want to do the process, that's
up to them.
for the free education, we're here to share.
something in question or don't want to do it or have better
information, we're more than willing to listen.
If they don't, that's perfectly fine.
They've come
If indeed they see
And we've
10
learned a lot from our members over the years.
11
trust account is the basis in a bankruptcy -- and this is not
12
just the U. S., it's Canada and virtually every country in the
13
world is doing the same thing.
14
than others.
15
However, the
We just are a little better at it
I'm not here to discredit anyone or harm anyone in this
16
process.
17
harm the system.
18
their -- their portion of the proceeds that are due them.
19
20
We're not here to harm the banks, we're not here to

What we are here to do is to help members claim
Now, you might wonder where do we get the money?
And
if you will give me a moment here, I'd like to explain.
21
THE COURT:
22
MR. LAWLER:
All right.
The source of money, as I said, is from
23
the birth trust account.
24
was born, the account was created; the idea that is your Social
25
Security Number.
Okay?
You were born, I was born, everybody
And that's identified as your particular

22
1
account in the trust.
your birth, they said, well, they think you'll make this much, an
average person, in your lifetime, let's show them that amount.
It's just digits.
They just threw in at
So when you signed the promissory note, I said it goes
through the process.
The Federal Reserve simply dips into the
trust account, but what they do is they replace, they exchange.
See, a promissory note is money, so they exchange.
promissory note into the trust and take out, oh, say, 100,000
loan in digits.
They put the
So, therefore, the account stays equal, doesn't
10
it?
You take out what you put in, so therefore the account is
11
perpetual, it never runs out of money.
12
hundred thousands down to your local bank and it looks like the
13
bank loaned you that money.
14
And they then wire those
Now, you can get a bank charter today for $50,000, by
15
the way.
16
Reserve and have a bank.
17
same bank may have a billion dollars of loans outstanding.
18
you tell me, how does 50,000 turn into 1,000,000,000?
19
they loan out a billion if they only started with 50,000?
20
of course, the math says you can't.
21
bank is doing something other than what we presumed they did.
22
Okay?
You can become a franchise of the Federal

Guess what?
In a year from now that

So
How can
And,
So, it's pretty obvious the
They did say they loaned money, and they're right, they
23
do.
But they don't loan you the bank's money because that's
24
actually illegal in their own charter.
25
charter, it will tell you you cannot loan your own money or your
If you read a bank's

23
1
credit or your depositors' money.
the only source of money is the borrower, you and I.
THE COURT:
All right.
So, the only thing left is --
Let me ask you this.
How many
participants do you right now have in your -- what you regard as
an educational program?
MR. LAWLER:
We have over the history about 10,000
folks who've become members.
have remedies.
called quantum energetics.
Now, I don't know how many of those
We do a number of things.
We also offer what's
We offer prosperity calls which are
10
informational calls, and those are -- some are free, some are
11
modest costs, so we do a lot of things.
12
in, one of the choices and only one is an administrative remedy.
13
Some might do a GSA process, some may do QE we call it, or
14
prosperity.
15
do educational calls.
16
year to make up their mind what to do, some do nothing.
17
So when a member comes
You know, it's -- it's a smorgasbord of choices.
THE COURT:
Some just come for the calls, some take a
All right.
All right.
Let me hear from
18
the Government's counsel if you want to respond to any of that
19
and then let's go on from here.
20
We
MR. HUDDLESTON:
Sure, Judge.
Very briefly, I would
21
say Mr. Lawler testified that people paid $300 for the membership
22
that he's referring to, and that's -- I believe that's the 10,000
23
folks he's talking about.
24
$300 gets you that education he's talking about.
25
And what he testified to is that the
Now, I want you to remember you have the option to buy


24
1
these administrative remedies.
securities are.
gets you the education is a security.
folks who bought these administrative remedies for prices ranging
from 1,000 to 10,000 promising payouts from over 300,000 to a
million dollar are the folks who bought the securities.
That's what we say these
We're not claiming just the $300 membership that

We're claiming only those
And as regard to his -- his statement that he's not
selling them, they don't sell anything, it's quite plain that,
you know, the more you put down on the AR, you more you're
10
supposed to get at payout.
11
25 percent commission to go out and sell these ARs if it's a
12
purely voluntary process.
13
THE COURT:
And it's curious that they pay people
That's all.
And, of course, any type of investment
14
process is voluntary, so I'm not sure that -- the distinction
15
voluntary or involuntary.
16
that you cited in your brief, do they deal with clubs of this
17
type?
But do you have -- any of the cases
18
MR. HUDDLESTON:
Well, I can't say which ones might be
19
closest factually, Judge.
20
these offering frauds is to have a level like the membership
21
level so that when you come to the Court you can argue under
22
Howie that this isn't really a security.
23
allows you to make the argument and then also to say -- also to
24
get a mailing list of people who are willing to listen to what
25
you have to say.
I do know that sort of the trend in
It's sort of -- it
So, you start with the club level and then you

25
1
go on from there to sell other things.
mobile billboards cases, we've had different people buy kiosks.
I mean, everybody is trying to look like Amway, but not quite
getting there.
at the beginning by which they qualify people who later wind up
buying the securities.
It's -- there's always this sort of weird element
THE COURT:
MR. LAWLER:
THE COURT:
10
briefly.
11
I mean, we've had the
Okay?
All right.
Well, let me -- let me -- may I respond?
Yes, you may respond, but this time
Go ahead.
MR. LAWLER:
Well, yes.
And in respect for Pat, he has
12
bits and pieces of information, but they're not cohesive.
13
mentioned the 70 percent and so forth.
14
ago.
15
Program had a different payout, and that was a straight 90 -- or,
16
excuse me, straight million dollar payout.
17
He
Well, that was what years
We haven't done that for many, many years.
The Silver
What he's referencing on today is on the early Bronze.
18
Yes, we do have a tiered program.
19
we found that at $2,700 to buy an educational program was under
20
the reach of most people, so we dropped the price to a letter --
21
a lesser amount.
22
But here's the key.
As the economy has worsened,
Where do we get paid?
And I think
23
this is the critical piece that you -- we're not addressing.
24
offered that information, but -- and the folks were not
25
interested during the hearing.
We have since last June been in

26
1
contact with President Obama, at least mailing to him, one-way
communication so far, and to Treasury Secretary -- oh, boy.
dropped -- forgot his name right now.
Secretary?
THE COURT:
MR. LAWLER:
I'm sorry.
Who's our Treasury
Go head.
Well, anyway, he has been contacted.
However, due to the bureaucracy that we have discovered in the
White House, the information got waylaid and never got there.
And I have probably a dozen different communications that I had
10
offered to give to Pat if he has an interest in them to sup -- to
11
validate this.
12
Jack Lew -- there we go -- exactly what we're doing.
13
We're not hiding anything.
14
15
THE COURT:
answer?
16
17
And, basically, I'm telling the President and
Well, what I'm -- will you just try and
Where do you get your money from, then?

MR. LAWLER:
Okay?
That's exactly what it is.
What are you -It's going to
be coming from the U. S. Treasury.
18
THE COURT:
19
MR. LAWLER:
All right.
Why?
Because the U. S. Treasury is
20
responsible for all debts in the bankruptcy.
So, as we
21
present -- in other words, here's the violation.
22
loaned you $100,000.
23
money.
24
again, check the Supreme Court ruling.
25
Haskowitz versus some insurance company.
Let's say bank
And, yet, you thought they loaned you their
They actually loaned you your own money.
Therefore --
It was Cleopatra
And they ruled that,

27
1
yes, that's called conversion.
money, as the banks do every month from somebody where they
didn't even loan them the money --
THE COURT:
MR. LAWLER:
THE COURT:
All right.
-- that's conversion.
But we're not -- we're not talking about
the Treasury at this point.
MR. LAWLER:
THE COURT:
If in fact you're collecting
At this point, though --
Well --- you and the Foundation and the various
10
organizations affiliated with you, are you -- you are the
11
beneficiaries, though, of the -- whatever amount of money that
12
people are either -- are sending your way, whether we call it an
13
investment or we call it an educational program.
14
correct?
15
MR. LAWLER:
Is that
What we are doing is we're collecting on
16
behalf of our members what is due for them in this conversion.
17
This is an illegal process banks do.
18
banks, but we are here to give retribution to the member without
19
harming the bank.
20
We're not here to harm the
And here's the key.
When we have a judgment, which we acquire in 90 days --
21
or, excuse me, 30 days -- and if you're familiar with the
22
administrative process or administrative remedy, it goes back to
23
ancient times.
24
foreclose, they're sending you a notice one, a notice two, and a
25
notice three.
And that's what the banks are doing when they
At that point they take you to court in a judicial


28
1
state or they take you to the sheriff and steal your home in the
third -- in the remaining states.
All right.
That same process is governed under the
Uniform Commercial Code, the UCC.
is governed, as you well know, are aware.
same process the --
7
8
THE COURT:
Okay?
That's how all commerce

All we do is use the
Mr. Lawler, have you been able to obtain
funds that you have in fact returned to --
MR. LAWLER:
10
THE COURT:
11
MR. LAWLER:
Well --- any of the participants in your program?

That's what I'm getting to, Your Honor.
12
We reversed the process, send notice one, notice two on behalf of
13
our member to the bank.
14
If they don't, in 30 days they have a judgment.
15
judgment to, in this case, Secretary Jack Lew and President Obama
16
for distribution, for payment.
17
bankruptcy to pay all debts.
18
They have an opportunity to be heard.

We take the
They have an obligation under the
And as a result, those have gotten waylaid, so
19
therefore we took -- came in the back door, went to Christine
20
Lagarde of the IMF.
21
this.
22
name now, the president, and also some --
23
And I have supporting documents for all of
We also went to the UN, Konowitz and Ki -- I forget his
THE COURT:
All right.
All right.
I understand your
24
theory of how you're proceeding.
Let me hear from the Government
25
about, tell me what -- the core relief you're seeking at this


29
1
point just for the TRO and -- because there's a lot of different
relief that you've asked for in your -- in the TRO, which
included, for instance, extremely abbreviated discovery.
trying to find out, given the emergency nature of this
proceeding, what is the -- what are the -- what's the most
fundamental thing that -- elements here that you are looking for
that -- for the next ten days?
8
9
MR. HUDDLESTON:
discovery is important.
And I'm
Well, Judge, we think the expedited
We've got the former employee out there
10
who I believe was in charge of the QuickBooks program.
11
have some more detailed information about just how much money
12
they collected and where it went.
13
get to that information quickly might lead us to other assets
14
that we don't yet know about and help us to serve whatever order
15
you enter on those -- those assets so that they get wrapped up.
16
We will
We suspect that being able to
So, we've got the asset freeze, the TRO.
We've got the
17
expedited discovery.
We also have asked for the repatriation
18
order so that -- so that Mr. Lawler is required to go get that
19
money back from New Zealand.
20
at the QuickBooks account, we find other overseas account.
21
they could be ordered to re --
22
THE COURT:
And it could be that once we look
All right.
And
Well, it seems to me
23
repatriation within three days is a pretty difficult thing to
24
achieve.
25
basis, and --
It may be something that is realistic on a longer range

30
1
MR. HUDDLESTON:
THE COURT:
Yes.
-- if there's more -- other funds out that
you identify elsewhere, then we can deal with that.
are you considering the repatriation within three days really, A,
feasible and, B, essential?
6
7
MR. HUDDLESTON:
THE COURT:
MR. HUDDLESTON:
but it's not feasible.
All right.
We think it's eventually essential,
I take your point.
11
THE COURT:
12
MR. HUDDLESTON:
13
It's not -- it's not
feasible.
10
No, ma'am.
But, I mean,
All right.
So the asset freeze and the TRO and
the expedited discovery are the three most important things.
14
THE COURT:
15
MR. LAWLER:
All right.
First of all, there's been no securities
16
involved in any way, shape, or form.
17
on how to do what I'm doing, would that be a security?
18
not.
19
verbal form, it's no different.
20
other than educating people.
21
they have, would you like a hundred or 500 testimonials -- I have
22
them -- of people who are elated with the education they've
23
gotten.
24
25
If I sold books to people

Of course
If it's presented on an electronic form on our web site or

We are doing nothing at all
If they want to come forward and
Now, you asked if we paid anyone.
That's in the hands
of the Secretary and President Obama and with the help of


31
1
Christine Lagarde at this moment.
those folks or at least verify with them that this is in process,
I think that would be most appropriate.
sharp attorneys looking this over and also the balance of the
international world court to get their opinion, and thus far
everything looks thumbs up.
THE COURT:
MR. LAWLER:
9
10
11
Now, if you want to discredit
They have their very
All right.
Now, they're a little busy with the world
revaluation right now, but as soon as that happens, we will be in

line for our payouts.
Now, that was your question.
Have we paid anybody out?
12
It's in their hands.
13
you take any actions against anybody, why don't you find out
14
here's the very high source who says we like what we hear.
15
Christine Lagarde, head of the International Monetary Fund,
16
President Obama, Jack Lew, check with them.
17
their two cents.
18
So, why don't you check with them?
Before
Get their -- get
Now, if they say this is absolutely nonsense or
19
whatever, then they'll tell you that.
20
absolutely incredible and it's bringing billions and trillions of
21
dollars to the families of America who are hurting, which is our
22
mission, wow.
23
If they say this is
Now, you want to stop that?
THE COURT:
Mr. Lawler, thank you for your comments.
24
Obviously you disagree on the most fundamental issue here as to
25
whether or not the interest being conveyed here is a security or


32
1
not, and that is ultimately a mixed question of fact and law.
Based on what currently is available to me, I think that there is
substantial evidence and likelihood that it may be viewed as a
security.
full-fledged hearing, but right now I think the evidence would
point to it -- under the Court's current definition of security,
that it would constitute that.
You may convince me otherwise when we have a
MR. LAWLER:
THE COURT:
10
MR. LAWLER:
11
THE COURT:
I understand --
Well --- your argument.
Let me just continue.
Sure.
I understand what your argument is, and you
12
can certainly present it more fully and hopefully with the
13
benefit of an attorney next week.
14
case for a TRO at 2:30 on -- I need -- for 3 p.m. on Friday,
15
August 8th, in my court --
16
MR. LAWLER:
17
THE COURT:
18
MR. LAWLER:
19
THE COURT:
20
MR. LAWLER:
21
THE COURT:
23
MR. LAWLER:
25
But I have to -What?
Excuse me?
Might I ask this?

Yes.
Since I have had an entire three minutes
for this call to prepare --
22
24
I'm going to schedule this
Yes.
-- or, you know, this kind of short -- I
haven't seen the documents.

THE COURT:
Right.

33
1
MR. LAWLER:
I've had absolutely no opportunity.
So to
do -- take any action against us, could we not postpone this for
at least a week or whatever you suggest, and longer if need be,
so I can prepare and get to you, you know, the various documents
I spoke of?
President Obama, Jack Lew and so forth, Christine Lagarde, to
support what we're doing.
what I told you here.
I can provide you every document I've sent to
It spells out in plain terms exactly
I know this is new to most people.
You've been taught
10
statutory law and I understand that.
11
common law is what the basis of this country came from and this
12
is what we're going back to.
13
THE COURT:
14
MR. LAWLER:
15
lower superior law.
16
that's --
17
THE COURT:
I respect that.
However,
All right.
Under opinions of statutory law and the
That's what this is based on.
All right.
Now,
I certainly understand your
18
concern and this -- it has proceeded on an emergency basis, but I
19
also understand the emergency basis that -- and why the
20
Government considers it an emergency.
21
having a hearing within eight days of the -- of this, I don't --
22
I do not see that you're going to be impacted in such a way that
23
it will cause you significant harm.
24
interest here will be served by getting some transparency here as
25
to what is going on.
Because I'm going to be
And I think the public
The --

34
1
MR. LAWLER:
Why don't we use ten days or eight --
THE COURT:
Well, the eight days -- I'm using eight
days because otherwise we would be here on a Sunday, and so we --
if we were talking about a -- ten days.
it as late as possible on Friday to give you the maximum amount
of time possible.
supported and by substantial evidence, and there is a substantial
showing here --
9
10
That's why I scheduled
But I think that the request for relief is
MR. LAWLER:
It's not evidence.
I'm failing to hear
it, one piece of evidence.
11
THE COURT:
12
MR. LAWLER:
13
do that.
14
claim.
Well, all right.
The evidence --
You mentioned we eliminate debt.
Never do that.
We never say that.
We don't
That was a false
We don't sell --
15
THE COURT:
Well, this is obviously something that's
16
contested.
And, you know, I perfectly well respect the fact that
17
you may in fact present substantial other evidence.
18
just say, I don't think evidence as to whether you transmitted a
19
letter to the President one way or the other is the really
20
relevant issue.
21
your finger on right from the start, which is really what is the
22
nature of this interest, is it a security or not, and are the
23
representations false.
But let me
The most relevant issue here is the one you put
24
MR. LAWLER:
25
THE COURT:
So -What representation?
-- and that's what I would expect to hear

35
1
from --
MR. LAWLER:
What representations have we made?
haven't heard anything that we've said that it's false.
the truth.
as they choose.
information.
and we don't ask them.
will ask anyone to do a process.
from the call.
People can buy a book, read it.
We speak
You can process it
That's what they do with us.
They take the
They can do something with it or nothing with it,

In fact, it's forbidden that our folks
If they do, they're removed
You know, I mean, we're that strict.
10
ever ask anyone to do anything.
11
What they do with it is --
12
THE COURT:
All right.
We don't
We freely give the information.
Well, the contention as
13
described by the Government and as supported in their -- the
14
materials they've submitted, including the affidavits and the
15
reference to the web site, is that -- and the YouTube videos is
16
that in fact that you are --
17
MR. LAWLER:
18
THE COURT:
Well, what --- in fact making representations as to
19
individuals' likely recovery based on their having made an
20
investment and you -- or a transmission of funds to you.
21
that -- that the basis upon their investment -- the investment in
22
the common enterprise is one of a promise of return that is --
23
that is --
24
MR. LAWLER:
25
THE COURT:
And
There are no --- that is not supported by the facts.

36
1
MR. LAWLER:
There is no promise.
very -- look at our contract.
business basis --
THE COURT:
In fact, it's
It's very specific.
This is on a
Well, I am happy to look at it further, but
I am proceeding here to enter the relief requested on a emergency
basis.
Friday at 3 p.m.
you -- I would urge you to get an attorney so that the entities
that are represented here beyond yourself, the Freedom
And we will revisit this, of course, on Friday -- next

The Court will send you a notice.
Obviously if
10
Foundation, et cetera, can be properly represented, because as I
11
started this out by saying is that while you can represent
12
yourself in court, the -- all the entities that are LLC would
13
require legal representation.
14
And I will hear from you again on this.
But for now, I
15
think for the very reason that this poses some very significant
16
legal issues and risks, I want to be able to in fact preserve the
17
status quo and be able to be provided with the information
18
concretely that will allow us to move forward one way or the
19
other next Friday.
20
MR. LAWLER:
21
proven guilty?
22
strong defense that --
23
Well, what happened to innocent till
There is accusations.
THE COURT:
I've given you a very
And you have been very articulate.
24
we're not in a criminal proceeding, and the criminal
25
proceeding -ELISE SMITH EVANS, RMR, CRR
But

37
1
MR. LAWLER:
THE COURT:
Well, whether it's criminal or civil -Yes.
This is a civil proceeding, and I
think that the Government has borne its burden.
Mr. -- I well understand that you have not read yet the
materials, from what you've said, that Mr. Huddleston has sent to
you.
you by e-mail and will ask Mr. Huddleston to -- when I issue the
order, to immediately transmit it to you, because I don't have
your address at this juncture on the record and I don't want to
10
I will make sure that the order entered here is provided to
have you have to wait until you get something by mail.
11
12
I know that
MR. HUDDLESTON:
Judge, if I might on the record.
This
is Pat.
13
I might ask for an alternative, an e-mail address,
14
because I've just looked and there's a bounce-back from the one I
15
sent that requires me to click on something and be on an approved
16
list from Mr. Lawler before he'll accept my e-mails.
17
sure my IT person is going to be too excited about that, so --
18
19
MR. LAWLER:
accept.
THE COURT:
21
MR. LAWLER:
23
A spam blocker, which I will find and
There's no problem with that.
20
22
And I'm not
All right.
You can use anyone I have.
It's out
there.
Since you said this is an emergency matter, yet for ten
24
years we've had success after success of testimonials from
25
people, which you have not accounted for, and were extremely

38
1
happy and pleased at the education they've gotten and are very
pleased, without having received one cent.
any of this into account.
it's -- what about the ten years of successes that people have
shared with us?
very little AR business, by the way.
is in other areas.
THE COURT:
MR. LAWLER:
11
You said it's an emergency.
Well,
Why is this suddenly an emergency now?
10
And you haven't taken
A tiny bit.
We do
The bulk of it
Well, this is -The economy is such.
So, I mean, it's not
like -THE COURT:
This order is principally directed to the
12
AR business, and whatever you do on -- on other items may be well
13
your business.
14
seeking any type of relief as to the parts of the entity's
15
business that do not relate to ARs?
16
MR. HUDDLESTON:
17
THE COURT:
18
19
But, Mr. Huddleston, to what extent are you
None at all, Judge.
And what about the accounting?
Are you
looking for an accounting of the non-AR business or not?

MR. HUDDLESTON:
No.
We need an accounting of the
20
security sales, and that would involve the ARs.
21
discovery of third parties or discovery with Mr. Lawler, we would
22
expect to have access to the QuickBooks at this point.
23
allow us to segregate out things.
24
securities here and those are the ARs.
25
MR. LAWLER:
Now, in our
They may
But we're focused on the
Well, let me bring up another point.
You

39
1
mentioned Judith Harris was to be a party on this call.
Harris left our group.
We don't have employees, by the way.
Judith
Everybody is a
contractor and everybody is contracted under certain terms,
including Ms. Harris, who has left voluntarily about two months
ago.
destructive, let's say, and has misused money.
in control of the office and its staff and what we did.
misused monies quite extensively and then left -- and the records
And following her path, we have found she has been very
10
of which you speak are in a mess.
11
through right now trying to discover them.
12
computer was hacked recently and wiped out.
13
are not available either.
14
She was totally

She
And that's what we're sorting

In fact, my own
So, we've been through a lot here.
So, all my records
Whatever the
15
precipitating energies are behind that, I don't know.
16
we've done absolutely nothing improper.
17
done a number on us and she was -- became vindictive for whatever
18
reasons, and she can explain that for herself, and throwing
19
accusations left and right.
20
opened that foreign account and it was -- just opened an office
21
in New Zealand, period, of which we've since closed.
22
are being billed for it, so we're picking up her mess.
23
However,
Ms. Harris has, well,
However, she is the only one who
So, we also
So, what we have here is a total destruction of our
24
attempt to destroy our club by one person who -- and then, yes,
25
we always have grumblers, some people who expected their monies


40
1
and lost their home.
It wasn't our doing.
them.
hindered or handcuffed to help people, that's a gross injustice.
And we're doing our very best.
MR. HUDDLESTON:
THE COURT:
MR. HUDDLESTON:
We're here to help
But if we are being
Judge, might I?
Yes.
We -- if you're inclined to sign the
order, I would just ask if there is a chance we could get it
tonight, we'd love to get it out there today.
THE COURT:
All right.
I will get it out.
I think,
10
you know, there are many short timelines on this and hopeful that
11
there can be complete cooperation.
12
particular one, there needs to be a little bit of flexibility --
13
MR. HUDDLESTON:
14
THE COURT:
If some time -- on any
Of course.
-- that's another matter.
I'm going to
15
modify it a little bit.
16
next half hour.
17
you to, if you're going to be representing yourself in this
18
proceeding, you need to provide all contact information to the
19
Court as to how to reach you.
20
21
We will get you out the order in the
You can serve it, Mr. -- Mr. Lawler, I encourage
MR. LAWLER:
What is the way we reach you and the
court?
22
THE COURT:
All right.
You're going to reach us
23
through the Clerk of the Court.
24
McConochie who is a deputy clerk here provide you the information
25
as to how to reach -- basically filing information with the
And I'm going to have Ms.

41
1
court.
MR. LAWLER:
THE COURT:
Okay.
In order --
The -Mr. Lawler, I'm just going to have -- Ms.
McConochie is going to speak to you about your question.
Mr. Lawler, in order to
file documents in your case, you have to send them to the Clerk's
Office.
and 6 p.m., Mondays through Fridays.
You can do that in person between the hours of 8 a.m.

From 8 a.m. to 4:45 p.m.,
10
the Clerk's Office is staffed so you can leave your pleading with
11
the staff person who will file stamp it immediately in front of
12
you.
13
dropbox that's available and it is stamped for the date that you
14
drop it in the dropbox.
15
Between the hours of 4:45 and 6 p.m., you place it in a
You can also remit the filing via mail to the Clerk's
16
Office and I'm going to give you an address to which you can mail
17
them.
Are you ready to take down that address?
18
MR. LAWLER:
19
20
Go ahead.
MR. LAWLER:
22
23
MR. LAWLER:
25
It is Office of the
Clerk, Room 22 --
21
24
Okay.
Hold on.
Okay.
By the way, is Judge Totenberg still with
us?
THE COURT:
Yes.

42
1
2
She is.
I'm just
going to finish giving you that address, Mr. Lawler.
3
4
She is.
MR. LAWLER:
All right.
Because I do have a final
word.
Okay.
It is -- the
address is Office of the Clerk, Room 2211, 75 Spring -- that's
S-p-r-i-n-g -- Street, Southwest, Atlanta, Georgia, 30303.
MR. LAWLER:
10
11
MR. LAWLER:
All right.
Thank you for that.
You're welcome.
Is there a phone number, by the way, a
direct number?
12
13
Okay.

numbers.
Well, there are two
I can give you my telephone number.
14
MR. LAWLER:
15
It's 404-215-1437.
Okay.
And if you want to check
16
on the status of any of your filings, the Clerk's Office
17
maintains a help line from the hours of 8 a.m. to 4:45 p.m.,
18
Monday through Friday.
19
404-215-1655.
20
MR. LAWLER:
21
THE COURT:
And that telephone number is
Okay.
And you can simply advise them of your
22
address so that you get all mailings in the case by writing them
23
a letter.
24
actually submit a letter and they will file that.
25
You can't do it by phone, though.
MR. LAWLER:
Okay.
You have to

43
1
THE COURT:
Have you provided at this juncture
information to the SEC that will help them identify your --
the -- your account and what might be accounts associated with
the administrative --
MR. LAWLER:
THE COURT:
What are you referring to?
-- bank accounts, because that's what
they're seeking to freeze.
8
9
My accounts?
MR. LAWLER:
Oh, I've been asked for nothing.
I was
pretty much railroaded in the meeting and was given no idea of
10
the nature of the call.
What I was expecting, quite frankly,
11
was -- is we'll be coming forth and a notice from our Treasury
12
Secretary setting up our relationship to fund these accounts.
13
Okay?
14
I -- you folks rather scoffed at when I brought that up, because
15
they had knowledge of this.
16
any knowledge of this, but -- so it was kind of -- kind of
17
strange here.
That's what I was expecting from the SEC meeting, which
18
THE COURT:
19
MR. LAWLER:
And I do understand they didn't have
All right.
I spent ten years of my life working to
20
bring relief to the American public and bring monies to them,
21
proper monies that is owed to them, without harming anyone and --
22
MR. HUDDLESTON:
23
THE COURT:
24
MR. LAWLER:
25
Judge --
Yes.
-- it's an interesting reflection that you
would take this action.


44
1
2
MR. HUDDLESTON:
Judge, this is Pat.
If I might just
very briefly.
We got -- we chose not to serve this right away and got
information directly from the banks.
analyze those things, it appears to us that the monies from the
ARs were commingled with other sources of income, so we're going
to need at least the eight days, if you're willing, to have the
asset freeze apply to all assets.
THE COURT:
10
To the extent that we can
All right.
MR. HUDDLESTON:
So, we'll do our best to sort out
11
what's what, but we are quite certain there is not a discrete
12
account for the ARs and everything else is unrelated.
13
mingled together.
14
THE COURT:
15
MR. LAWLER:
16
THE COURT:
All right.
It's all
Well, how would you propose --
Have you discovered -Let me just ask you this, counsel.
How
17
would you propose to leave Mr. Lawler himself individually with
18
sufficient funds so he can take care of any personal needs or
19
obligations in the next eight days?
20
MR. HUDDLESTON:
Judge, I hadn't considered it.
21
mean, whatever he's spending, I guess, would be investor money
22
since -- or I would assume so.
23
from other sources, if the Court is inclined to -- and I don't
24
know what's due for him in the next eight days.
25
tell us.
I don't know what he's taken in
Maybe he could

45
1
Well, here's the thing that concerns me.
His wife has
a retirement from the Ohio Teachers Pension Plan and she draws
Social Security.
say --
5
6
THE COURT:
9
10
11
To
But I don't know that that's not being
invested in these other bank accounts that you seek to freeze.
7
8
So, they do have other sources of income.
MR. HUDDLESTON:
you mean.
Oh, I see what you mean.
I see what
To the extent they're in Violet Blessings?

MR. LAWLER:
Yes.
That is exactly what is happening.
That's where her money goes.

THE COURT:
Okay.
Well, here's a suggestion.
The
12
testimony we have on Violet Blessings is that from the ARs
13
$55,000 was transferred to Violet Blessings.
14
MR. LAWLER:
I believe it was 50.
15
MR. HUDDLESTON:
The transcript shows 55.
One of 50,
16
one of one and then one of four, three separate transfers
17
totaling $55,000.
18
MR. LAWLER:
Okay.
19
MR. HUDDLESTON:
Mrs. Lawler testified that she did not
20
spend that money, she didn't consider it hers.
To the extent the
21
Court wants to limit the freeze to Violet Blessings, at least in
22
the interim while we gather more discovery, to $55,000, perhaps
23
that's a way to free up some --
24
THE COURT:
25
MR. HUDDLESTON:
All right.
-- so that there's no -- no freeze

46
1
over and above that on her pension or on her Social Security.
THE COURT:
So you would just be seeking a freeze of
the assets of Violet -- in any bank accounts held by Violet
Blessings; is that what you're saying?
MR. HUDDLESTON:
THE COURT:
MR. LAWLER:
Yes, that's right.
All right.
All right.
Okay.
In regards to -- we do many other
activities, as I said, within the club.
The AR business.
I'm
try -- in the last couple of weeks, I think we've had at most
10
three or four and those are very small ones, thousand dollar ARs
11
that have come in.
12
from other contributions for other purposes, like the other
13
educational assets, so they are, yes, in one account because that
14
is how we do business.
15
extraordinarily disruptive --
In fact, the vast majority of our funds come
16
THE COURT:
17
MR. LAWLER:
18
So, to freeze them would be extremely and
Well --- to all of our operations that are even
outside of the AR venue.
19
MR. HUDDLESTON:
We recognize that, but there's --
20
there's no other practical way to protect the investors here.
21
Mr. Lawler just told the
22
MR. LAWLER:
23
MR. HUDDLESTON:
24
25
--
I don't think that --- things in the last couple of days,
so -MR. LAWLER:
There's no such thing as an investor.
We

47
1
don't use that term.
THE COURT:
MR. LAWLER:
THE COURT:
MR. LAWLER:
We never have.
All right.
We don't have investors.
All right.
Well --
We sell an educational program, gentlemen
or lady.
THE COURT:
-- it sounds to me that limiting this to
Violet Blessings so that we're not freezing the individual
account of Mr. Lawler or the Freedom Foundation is a --
10
MR. HUDDLESTON:
Oh, no, ma'am.
11
misunderstood.
12
Lawler and Freedom Foundation.
13
THE COURT:
14
MR. HUDDLESTON:
15
THE COURT:
I'm sorry.
We absolutely have to have the freeze on Mr.
All right.
All right.
What I'm suggesting --
What are you suggesting, that I just
16
repeated to you what you had -- what do you want to do about --
17
then to --
18
MR. HUDDLESTON:
What I would say is Violet Blessings
19
is on -- you know, this -- according to Mr. Lawler's testimony
20
and according to the bank records, there's been 1.1 million
21
dollars raised in last eight months.
22
do it.
23
to hide it from other -- other prying eyes.
Right?
50,000 bucks won't
That's what Mr. Lawler sent to his wife's LLC, we believe
24
MR. LAWLER:
25
THE COURT:
Okay?
Well, let's back up -No.
I need to hear precisely --

48
1
MR. LAWLER:
The $50,000 --
MR. HUDDLESTON:
THE COURT:
MR. HUDDLESTON:
MR. LAWLER:
MR. HUDDLESTON:
All right.
Here we go.
All right.
Here's what we need.
(Unintelligible).
Yeah.
I was trying to help out Mr.
Lawler.
I believe what the evidence calls for, Judge, what we
need in order to protect investors, is a complete freeze on all
Mr. Lawler's accounts, all Freedom Foundation accounts, all the
10
accounts of the LLCs that are named as the relief defendants.
11
believe that anything not frozen is going to get gone between now
12
and Friday.
13
ten years now.
And Mr. Lawler has been spending investor money for

I think he
14
THE COURT:
15
MR. HUDDLESTON:
16
17
We
--
All right.
All right.
-- can figure a way to make do for the
next -THE COURT:
What are you saying will be exempted?
18
That's all I'm asking.
19
that he has some source, so we're not taking his wife's pension
20
fund money or that there's some money for them to live on and pay
21
any obligations personally they have in the next eight days.
22
just being very clear.
23
What that you're seeking to exempt so
MR. HUDDLESTON:
I'm
We would feel comfortable exempting
24
any deposits from her pension or from Social Security to the
25
extent she wants to arrange -- you know, any amounts that come in

49
1
from those two sources could be exempt from the freeze.
THE COURT:
effective right now?
account, how will -- how will --
Well, how would that be practically

If you put a freeze tonight on their
MR. HUDDLESTON:
The way we've done this -- it wouldn't
help tonight or maybe this week, but on Monday -- usually what
happens is I get a -- I've done this before -- the bank will call
me and confirm that Mr. Lawler and Mrs. Lawler will be in there
and they will be asking to open a separate account in order to
10
receive those funds into a separate account.
11
the order.
12
under the order.
13
them call me, I will get on the phone with the bank officials,
14
and we'll make it -- we'll make it happen.
They'll be uncertain about whether that's allowable

I will tell Mr. Lawler and Mrs. Lawler have
15
THE COURT:
16
MR. HUDDLESTON:
17
THE COURT:
18
The bank will have
All right.
Well --
To the extent --
-- how many funds -- how much funds right
now are in the Violet Blessings, LLC, account to your knowledge?
19
MR. HUDDLESTON:
20
MR. LAWLER:
I do not know, Judge.
You know --
Most of those monies are my wife's.
21
are her earnings over the years from her retirement -- or
22
pre-retirement work.
23
MR. HUDDLESTON:
24
MR. LAWLER:
25
Those
Yes.
50,000 or perhaps the 55, whatever it is,
was what was paid to her as a cumulative for ten years of work.

50
1
That's peanuts.
2
3
MR. HUDDLESTON:
That's not what she said.
So, if we
want to just be --
MR. LAWLER:
THE COURT:
Well, the intentions were -I don't desire to get -- I'm just trying to
figure out a practical solution, because I'd like to at least
preserve $5,000 for these folks to have access to in the next
week.
which is going to be to everyone's benefit here, he has to have
And the thing is if they're going to hire an attorney,
10
probably even more than that in order to hire an attorney, and
11
it's more like $10,000, between his personal expenses and needing
12
to hire an attorney.
13
accomplish that?
14
So, tell me what you would propose to
MR. HUDDLESTON:
Well, I would -- I guess I would
15
propose that anything like that come from the Violet Blessings
16
account.
17
$10,000, Judge.
I don't know that any other accounts currently have
18
THE COURT:
All right.
19
MR. HUDDLESTON:
All right.
And, so, that way we could keep the
20
others frozen.
And we could just know that anything that's being
21
unfrozen is coming out of Violet Blessings, because at least we
22
know that that is funded in part by nonpayment sources.
23
THE COURT:
24
MR. LAWLER:
25
All right.
Let me make a thought here.
We have
multiple web sites that are being supported by all over the

51
1
place.
We have future -- there's a back-in system that's $1,700
a month that we have to pay, which is the automated process, once
the funds come in, that will be available.
amounts of those member fees, but they've paid into that.
for that to go way or not to be paid on a monthly basis is going
to be horrendous, because then to restart that up would cost our
members, the very folks we're trying to help, additional money.
So by shutting down or freezing for even eight days -- again, why
am I guilty of something that, you know, is -- let's prove.
10
Let's just prove this first and then you decide what to do.
11
We've invested huge

And
As you said, there's modest amounts in those accounts.
12
Well, those modest amounts are being utilized.
13
deposits.
14
club encounters.
15
directly from the club in commissions or salary in ten years.
16
do this from the goodness of my heart.
17
paid out are either commissions or are expenses to get the word
18
out to people, period.
19
people, the members, the ones you're trying to protect.
20
only --
21
They're automatic
They cover all kinds of expenses that the -- that the

These aren't -- I have never received one dime
THE COURT:
Okay?
Everything that is
So, to harm the club is to harm the

The
Well, I'm going to make sure that -- I will
22
craft this order so that $10,000 is absolutely accessible to you,
23
as well as any deposits from the pension fund or from Social
24
Security.
25
promptly as possible, and if there's a -- at that juncture, we
And we are going to have this hearing, obviously as

52
1
have the hearing, I would ask the Government to attempt to more
narrowly define what has to be frozen.
One of the ways that this is going to be least invasive
to you, Mr. Lawler, is if in fact if you cooperate in terms of
identifying what is actually -- what accounts are being fed by
the AR money versus anything else, because then this can be much
more narrowly crafted.
8
9
All right.
That's the plan.
I'm going to require the Government to immediately serve you at
10
the e-mail account.
11
you very much.
And I will see everyone on Friday.
12
MR. HUDDLESTON:
13
MR. LAWLER:
14
I will issue the order.
All right.
Thank
Thank you.
Friday -- you're talking about tomorrow
Friday?
15
THE COURT:
No.
I'm talking about Friday at 3 p.m.
16
August 8, at the courthouse, at 75 Spring Street on the 23rd
17
floor.
18
MR. LAWLER:
Now, Your Honor, I totally respect your
19
position and I can see why you would be leaning toward being
20
conservative, but who's being harmed here?
21
our --
22
23
THE COURT:
address.
By freezing all
And these are all arguments you can
I've listened to you very carefully and considered --
24
MR. LAWLER:
25
THE COURT:
But we're harming others --- and I -- you know, I'm prepared to

53
1
listen to all of this again on Friday.
MR. LAWLER:
THE COURT:
I hope that you secure --
Well, why don't you -- Your Honor -All right.
That's -- I am -- I am -- this
is the ruling at this time and I will issue it.
everyone for your making yourself available.
Lawler, for making yourself available on quick notice.
evening.
Thank you
Thank you, Mr.

And good
(End of proceedings.)
*****
10
11
NORTHERN DISTRICT OF GEORGIA
12
CERTIFICATE OF REPORTER
13
14
15
I do hereby certify that the foregoing pages are a true
16
and correct transcript of the proceedings taken down by me in the
17
case aforesaid.
18
This the 13th day of August, 2014.
19
20
21
22
23
____________________________
OFFICIAL COURT REPORTER
24
25
Case 1:14-cv-02468-AT Document 23-1 Filed 08/20/14 Page 1 of 1
IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF GEORGIA
Securities and Exchange Commission
______________________________,
Plaintiff(s)
V.
Thomas J. Lawler, et al.
______________________________,
Defendant(s)
)
)
)
)
)
)
)
)
Case No. 1:14cv2468-AT
NOTICE OF FILING OF OFFICIAL TRANSCRIPT

Notice is hereby given that an official transcript of a proceeding has been filed by the
court reporter/transcriber in the above-captioned matter. Counsel/Parties have twenty-one (21)
days from the date of delivery of the transcript to the Clerk to file with the Court a Request for
Redaction of this transcript. If no Request for Redaction is filed, the transcript may be made
remotely electronically available to the public without redaction after 90 calendar days.
Any counsel or party needing a copy of the transcript to review for redaction purposes
may purchase a copy from the court reporter/transcriber or view the document at the Clerks
Office public terminal.
8/20/2014
______________
Date
Elise Evans
__________________________________
Court Reporter
VERIFICATION OF FINANCIAL ARRANGEMENTS

Proceeding Type:
Proceeding Date:
Volume Number:
Telephone Conference, Temporary Restraining Order hearing

______________________________________________
______________________________________________
7/31/2014, 8/8/2014
______________________________________________
______________________________________________
______________________________________________
______________________________________________
Notice is hereby given that financial arrangements for a copy of the transcript have been
made with the following individual(s): Pat Huddleston, II
_____________________________________________________________________________
as counsel/party in this case. He/She is to be provided with remote access to the transcript via
CM/ECF and PACER.
8/20/2014
______________
Date
Elise Evans
__________________________________
Court Reporter

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Case 1:14-cv-02468-AT Document 23 Filed 08/20/14 Page 1 of 53

SECURITIES AND EXCHANGE

TRANSCRIPT OF TELEPHONE CONFERENCE PROCEEDINGS

ELISE SMITH EVANS, RMR, CRR

Case 1:14-cv-02468-AT Document 23 Filed 08/20/14 Page 2 of 53

(Thursday, July 31, 2014; Atlanta, Georgia.)

THE COURTROOM DEPUTY CLERK:

Good afternoon, counsel.

This is Amy McConochie, Judge Totenberg's Courtroom Deputy Clerk.

The Court is joining the conference call in Civil Action

line with Judge Totenberg.

If we can have everyone who is on the line please

This is Pat Huddleston from the

I represent the plaintiff here in this case.

in my office Jerry Parisi, who is a summer Honors intern, and

Nana Jorgoladze, who is my paralegal.

the Freedom Foundation USA.

Mr. Lawler, this is Judge Totenberg.

I'm representing myself.

Freedom Foundation a corporation?

you basically representing yourself or are you an attorney?

And I am here, Tom Lawler, representing

And does Freedom -- is

And is there anyone

else on the telephone?

Nobody else, Judge.

Mr. Huddleston, would you go

ELISE SMITH EVANS, RMR, CRR

Case 1:14-cv-02468-AT Document 23 Filed 08/20/14 Page 3 of 53

named parties here of this hearing?

Judge, Mr. Lawler who's on

the call covers all but one of the named parties.

obviously he is the founder and operator of Freedom Foundation.

There's nobody else to call with regard to them.

set up and he's the sole person with authority there.

Spirit, LLC, is in the same category.

Order Processing is the company they've used to receive

money from investors.

pay their bills, they transfer investor money to Divine Spirit.

Divine Spirit is the company they use to

Violet Blessings is an LLC that I believe Mr. Lawler

set up for his wife's benefit.

wife on the line since I believe she has an interest in that

I spoke to him when I told him

And, so, the one left open there is Prosperity

company to which Mr. Lawler paid commissions to salespeople and

paid other payroll obligations.

believe, is Judith Harris is her name.

employ, again, two months ago, roughly.

Up until six weeks, two months ago, it was the

The person who set that up, I

I found a phone number for her.

I have called and I

Case 1:14-cv-02468-AT Document 23 Filed 08/20/14 Page 4 of 53

left her a message as quickly as I had dialing information,

apparently I struck out there.

left the information.

That was the only number I called

She answered, identified herself as Judy Harris, and I

And, Mr. Huddleston, have you

provided copies of the complaint and TRO motion and proposed

order in this case to Mr. Lawler?

e-mail address he gave me, achiever@mindspring.com.

I have e-mailed them to his -- the