4.Derek Ferguson — Direct/Cross/Redirect/Recross
1,656 linesDIRECT EXAMINATION BY MS. SLAVIK:
MS. SLAVIK: Good morning, Mr. Ferguson.
DEREK FERGUSON: Good morning.
MS. SLAVIK: Mr. Ferguson, why are you testifying here today?
DEREK FERGUSON: I received a subpoena.
MS. SLAVIK: What does that subpoena obligate you to do here today?
DEREK FERGUSON: Testify truthfully and honestly.
MS. SLAVIK: Ms. Gavin, could you publish what's in evidence as Government Exhibit 2A-101.
MS. SLAVIK: Mr. Ferguson, do you recognize the individual in this photo?
DEREK FERGUSON: Yes.
MS. SLAVIK: Who is it?
DEREK FERGUSON: Sean Combs.
MS. SLAVIK: How do you know Mr. Combs?
DEREK FERGUSON: I worked for Mr. Combs and his various companies from 1998 through 2017.
MS. SLAVIK: How many different roles did you hold from 1998 until 2017?
DEREK FERGUSON: Three roles: chief financial officer, chief growth officer and chief operating officer of one of the subsidiaries, Revolt Media and TV.
MS. SLAVIK: Focusing on your CFO role, what company did you work for as CFO?
DEREK FERGUSON: The company was Bad Boy Entertainment.
MS. SLAVIK: And you said that your position was CFO?
DEREK FERGUSON: CFO, yes.
MS. SLAVIK: Can you explain to the jury what CFO stands for?
DEREK FERGUSON: Chief financial officer.
MS. SLAVIK: And at a high level, what does a CFO do?
DEREK FERGUSON: Chief financial officer oversees all of the finances of a company, starting with financial budgeting for that company, understanding the inflows and the outflows of that company, arranges for any financing needs of the company, collects accounts receivable, pays accounts payable, is responsible for the accounting and recordkeeping. In my role I also was responsible for managing some of the joint venture businesses, doing some of the deal making, whether it was joint ventures or partnerships or strategic relationships, divestitures.
MS. SLAVIK: We'll get back to your role as CFO at Bad Boy, but first I just want to ask you a couple of questions about Bad Boy. Can you explain what sort of company Bad Boy was?
DEREK FERGUSON: Well, Bad Boy really was a collection of companies individually, either -- either individually held by Mr. Combs or joint ventures.
MS. SLAVIK: Who owned Bad Boy?
DEREK FERGUSON: Each company would have their own ownership. A number of the companies would be owned by Mr. Combs, and there were a few joint ventures.
MS. SLAVIK: Did Bad Boy have offices?
DEREK FERGUSON: Yes.
MS. SLAVIK: Where were they?
DEREK FERGUSON: During my tenure, New York City.
MS. SLAVIK: Anywhere else during your tenure?
DEREK FERGUSON: I think there may have been -- L.A. may have came about toward the end of my tenure.
MS. SLAVIK: And can you just remind the jury when, what time period you were CFO for?
DEREK FERGUSON: CFO 1998 through 2012.
MS. SLAVIK: And during that time period, you said that there were offices in New York City?
DEREK FERGUSON: Yes.
MS. SLAVIK: Where exactly in New York City?
DEREK FERGUSON: Three locations I remember: 1440 Broadway, 1540 Broadway and 1710 Broadway.
MS. SLAVIK: Where did you work as CFO?
DEREK FERGUSON: I worked in all three of those offices at different points in time.
MS. SLAVIK: All three New York City offices?
DEREK FERGUSON: Yes.
MS. SLAVIK: As the CFO of Bad Boy, did you work within a specific department?
DEREK FERGUSON: Yeah. Our department would be considered the finance department, finance and accounting.
MS. SLAVIK: When you started as CFO, how many other employees were there in the finance department?
DEREK FERGUSON: I would say three or four.
MS. SLAVIK: Did that change over time?
DEREK FERGUSON: It did.
MS. SLAVIK: And how did that change?
DEREK FERGUSON: It grew to about, maybe, ten.
MS. SLAVIK: Were you paid by salary as CFO?
DEREK FERGUSON: Yes.
MS. SLAVIK: Were you also paid in bonuses?
DEREK FERGUSON: Yes.
MS. SLAVIK: How were those bonuses determined?
DEREK FERGUSON: Usually by my immediate boss.
MS. SLAVIK: And what factors went into determining your bonus, if you know?
DEREK FERGUSON: Overall company results and my performance.
MS. SLAVIK: Were you paid by Bad Boy?
DEREK FERGUSON: Yes.
MS. SLAVIK: Now, you described some of the responsibilities of a CFO generally. I'd like to focus on your duties and responsibilities as the CFO of Bad Boy. Can you explain what your duties and responsibilities were?
DEREK FERGUSON: Very similar to the earlier description, really setting the budgets for the companies, managing the actuals versus budget, so what's actually happening versus what we planned; accounts receivable; accounts payable; accounting; recordkeeping. As I mentioned, I was also involved in some of the deal making, whether it be joint ventures, strategic partnerships, buying and selling companies.
MS. SLAVIK: As CFO at Bad Boy, were you responsible for managing Mr. Combs's personal finances?
DEREK FERGUSON: During different periods of time throughout my tenure, his personal finances did fall under my responsibility.
MS. SLAVIK: We'll come back to that. You said that you were responsible for accounts payable and accounts receivable. Do you remember just saying that?
DEREK FERGUSON: Yes.
MS. SLAVIK: Can you explain to the jury what accounts payable are?
DEREK FERGUSON: Accounts payable are if you incur, if you incur a debt or if you secure a service and you have to pay for it within 30, 45 days, it would sit as an accounts payable until you pay it.
MS. SLAVIK: In other words, that's money going out of the company?
DEREK FERGUSON: Money going out of the company, yes.
MS. SLAVIK: What about accounts receivable; what is accounts receivable?
DEREK FERGUSON: Accounts receivable, if you make a sale, if you, if you're engaged for a service and you're collecting the money that you earn from that sale or service.
MS. SLAVIK: In other words, that's money coming in?
DEREK FERGUSON: Money coming in.
MS. SLAVIK: Who was your supervisor when you were CFO?
DEREK FERGUSON: It varied over my tenure.
MS. SLAVIK: Can you explain how that varied?
DEREK FERGUSON: At certain points in time, there was a president role at Bad Boy, and that president would be who I directly reported to. Other times there was no president, and I would report directly to Mr. Combs.
MS. SLAVIK: When you first started as CFO, how often did you interact with Mr. Combs?
DEREK FERGUSON: Pretty regularly. A couple of times a week, I would say.
MS. SLAVIK: Did that change over time?
DEREK FERGUSON: Over time, I think as more professional management was added to run the companies, you know, he -- he really became more of a chairman versus running the companies on a day-to-day basis. So I would say yes, it did change over time.
MS. SLAVIK: In other words, your contact with Mr. Combs decreased over time, is that fair to say?
DEREK FERGUSON: That's fair to say.
MS. SLAVIK: How did you communicate with Mr. Combs?
DEREK FERGUSON: In person. Back then we had two-way pagers. Telephone. Email.
MS. SLAVIK: During your tenure as CFO, did Mr. Combs have staff?
DEREK FERGUSON: Yes.
MS. SLAVIK: Did that include security personnel and personal assistants?
DEREK FERGUSON: Yes.
MS. SLAVIK: How often were personal assistants or members of Mr. Combs's security staff with him in person?
DEREK FERGUSON: Quite often.
MS. SLAVIK: Ms. Gavin, could you please publish what's in evidence as Government Exhibit 2A-204.
MS. SLAVIK: Mr. Ferguson, do you recognize this individual on the screen?
DEREK FERGUSON: Yes.
MS. SLAVIK: Who is that?
DEREK FERGUSON: Paul Offord.
MS. SLAVIK: Do you know him by any other names?
MS. SLAVIK: What was Paul Offord's job?
DEREK FERGUSON: He was basically our chief security officer.
MS. SLAVIK: How frequently did you interact with Mr. Offord?
DEREK FERGUSON: Pretty regularly. I would say every other week or so. He would handle all of the security budgets, and we would correspond regarding that.
MS. SLAVIK: You can take this down, Ms. Gavin. And if you could publish side by side what's in evidence as Government Exhibits 2A-201 and 202.
MS. SLAVIK: Mr. Ferguson, do you recognize the individuals on the screen here?
DEREK FERGUSON: I do.
MS. SLAVIK: Who are they?
DEREK FERGUSON: Bonds, Roger Bonds and D-Roc.
MS. SLAVIK: Looking at the photo on the left, that's Government Exhibit 2A-201, who is that?
DEREK FERGUSON: Bonds.
MS. SLAVIK: And the one on the right; that's Government Exhibit 2A-202?
DEREK FERGUSON: D-Roc.
MS. SLAVIK: Who are Bonds and D-Roc?
DEREK FERGUSON: They were security as well and probably later in my tenure came on board.
MS. SLAVIK: How frequently did you interact with them?
DEREK FERGUSON: Not really frequently. You know, I would see them and greet them, but not -- I didn't have frequent interactions with them.
MS. SLAVIK: Thank you, Ms. Gavin. You can take that down.
MS. SLAVIK: You mentioned that Mr. Combs had assistants on staff as well, is that right?
DEREK FERGUSON: Yes.
MS. SLAVIK: Did you interact with those assistants?
DEREK FERGUSON: Depending. Some of them, on occasion, yes.
MS. SLAVIK: In what contexts?
DEREK FERGUSON: Maybe a scheduling question or they may have a question for me.
MS. SLAVIK: Were these assistants and security staff folks employed by Mr. Combs?
DEREK FERGUSON: Yes.
MS. SLAVIK: Were they paid by Mr. Combs's corporate entities?
DEREK FERGUSON: Depends on who we're referring to, but many of them were.
MS. SLAVIK: Are you aware of anyone who was not?
DEREK FERGUSON: There would -- there could be, in this definition of assistant, people that worked just at the homes or were not related to business, which would not have been in the business entities.
MS. SLAVIK: In other words, household staff?
DEREK FERGUSON: I would say broadly, yes, household staff.
MS. SLAVIK: OK. I want to talk a little bit more about Bad Boy, which you described as a collection of companies. Do you remember that?
DEREK FERGUSON: Yes.
MS. SLAVIK: Was Mr. Combs the sole owner of any of these companies?
DEREK FERGUSON: Yes.
MS. SLAVIK: What does it mean to be the sole owner?
DEREK FERGUSON: That means you own 100 percent of the company.
MS. SLAVIK: Can you name a few of the companies that Mr. Combs solely owned?
DEREK FERGUSON: Bad Boy Productions, Bad Boy Marketing, Bad Boy Films.
MS. SLAVIK: What were those -- what was the purpose of those companies?
DEREK FERGUSON: Pretty much follows the description. So Bad Boy Productions would be a company that furnishes his services as a producer primarily. Bad Boy Films was a television film company, which produced television and film projects. Bad Boy Marketing was a marketing company that engaged with brands and provided marketing services to various brands.
MS. SLAVIK: When you first started, what was Mr. Combs's level of involvement in these companies?
DEREK FERGUSON: Well, he always drove the creative and product development and marketing for -- for all of the companies.
MS. SLAVIK: Did that change over time?
DEREK FERGUSON: That really didn't change.
MS. SLAVIK: Did his day-to-day involvement change over time with respect to these companies?
DEREK FERGUSON: It depends on which company you're referring to, but I would say, in general, as I mentioned, more management was hired, so there were more heads of companies that were engaged to handle the day-to-day business.
MS. SLAVIK: Was Mr. Combs involved in any business ventures that had partners?
DEREK FERGUSON: Yes.
MS. SLAVIK: Just briefly, what sort of partnerships was Mr. Combs involved in?
DEREK FERGUSON: So, the record companies were partnerships in some cases. So the -- Bad Boy Records was a partnership between Bad Boy and Arista Records. Warner Music was a joint venture between Warner and Bad Boy. And those, those would be two of the prominent joint ventures. The clothing company, Sean John clothing, was -- also had a partner as well.
MS. SLAVIK: How was the ownership structure different from the partnerships that you just described versus the solely owned companies that you talked about a second ago?
DEREK FERGUSON: So, the ownership structure would be different in that there would be joint ownership in each case versus 100 percent ownership.
MS. SLAVIK: In other words, Mr. Combs owned the venture with partners as opposed to just himself?
DEREK FERGUSON: Yes.
MS. SLAVIK: Now, you just described a couple of businesses and partnerships that Mr. Combs was involved in. At a high level, what was your role with respect to these businesses and partnerships?
DEREK FERGUSON: So, in some cases, maybe it actually started with, if it was a joint venture deal started with the deal itself and structuring that. But then it would, it would then, then go to the things I described previously, which would be budgeting, annual budgeting, tracking budget versus actual, try to make sure that we hit our numbers, hit our plan. It would be, you know, expense management; financing, if required; managing the financing of the company; and really just managing the results, the financial results of the company and also responsibility for accounting and recordkeeping.
MS. SLAVIK: Were these businesses and partnerships profitable?
DEREK FERGUSON: Majority of these businesses were profitable.
MS. SLAVIK: And in terms of profits, are we talking millions, tens of millions? Give us a sense of the scale.
DEREK FERGUSON: Depends on the company, but --
MS. SLAVIK: Overall, how profitable were Mr. Combs's companies?
DEREK FERGUSON: Overall, very profitable.
MS. SLAVIK: How was Mr. Combs paid?
DEREK FERGUSON: He was either paid -- couple ways. Paid via salaries in some cases and also distributions from his companies.
MS. SLAVIK: Focusing on salaries, from what entities did Mr. Combs draw a salary?
DEREK FERGUSON: I mean I remember them all, but you know, and this is different during the course of my tenure. So at some point through -- excuse me. At some point through the record company, he drew a salary. Through the clothing line, Sean John clothing, he drew a salary at some point. I believe Revolt as well.
MS. SLAVIK: And how was his salary determined by these companies?
DEREK FERGUSON: Well, these companies I just mentioned are -- were all with partners, so they would have to be agreed upon with partners, probably, probably dictated by the operating agreement between the partners.
MS. SLAVIK: And you mentioned that Mr. Combs was paid by distribution as well. What is a distribution?
DEREK FERGUSON: Distribution -- so, when you have a solely owned company or a company that is what I would define as a pass-through entity, like an S corp. or an LLC, you -- your profits sit in that company until you decide to distribute them. So a distribution is taking profits that were earned and distributing them to the owners.
MS. SLAVIK: And the owner in this case was Mr. Combs?
DEREK FERGUSON: Yes.
MS. SLAVIK: Who determined when Mr. Combs would receive a distribution?
DEREK FERGUSON: In joint venture deals, that would be usually dictated by an operating agreement and -- or decided by the partners. And in his wholly owned companies, he could decide that on his own.
MS. SLAVIK: And who determined the amount of the distribution?
DEREK FERGUSON: The amount of the distribution would be based on the profits, so you generally would not distribute more than the profits of the company. So that would be -- the finance department would, would basically determine what numbers were, were the recommended numbers to distribute.
MS. SLAVIK: I want to move to banking and finances. Did the businesses and partnerships that we've just been talking about have bank accounts?
DEREK FERGUSON: Yes.
MS. SLAVIK: Did they all share one bank account?
DEREK FERGUSON: No. They, they all had individual bank accounts.
MS. SLAVIK: What was the purpose of each entity having its own bank account?
DEREK FERGUSON: Pretty standard for each company to have their own account so you can track funds of that company, not have cross-liabilities between the companies. So a standard structure would be for each company, each entity to have their own bank account.
MS. SLAVIK: Who oversaw these bank accounts?
DEREK FERGUSON: The finance team would oversee the bank accounts.
MS. SLAVIK: Who had access to the bank accounts?
DEREK FERGUSON: Myself, Mr. Combs. Several members on the finance team would have certain levels of access as well.
MS. SLAVIK: Who had signature authority?
DEREK FERGUSON: Usually for the wholly owned companies, myself and Mr. Combs.
MS. SLAVIK: And can you just explain what signature authority means?
DEREK FERGUSON: It meant that either of us would be able to sign checks on the account.
MS. SLAVIK: Either of us being you or Mr. Combs?
DEREK FERGUSON: Yes.
MS. SLAVIK: Where did Bad Boy have banking relationships during your tenure?
DEREK FERGUSON: It changed over time as well, but I would say three banks that come to mind are Citibank, HSBC, Signature Bank.
MS. SLAVIK: Focusing on Signature Bank, I want to walk through a couple of documents with you. Ms. Gavin, could you please publish what's in evidence as Government Exhibit 4G-140.
MS. SLAVIK: Mr. Ferguson, do you recognize this document?
DEREK FERGUSON: Yes.
MS. SLAVIK: What type of document is this?
DEREK FERGUSON: This is a bank-opening document, bank application.
MS. SLAVIK: And focusing on the top portion of this document, do you see the account title here?
DEREK FERGUSON: Yes.
MS. SLAVIK: What is it?
DEREK FERGUSON: Janice Combs Music Inc.
MS. SLAVIK: What is Janice Combs Music Inc.?
DEREK FERGUSON: Was an entity, one of Mr. Combs's entities. This entity pretty much furnished his name and likeness, was the primary use of this entity.
MS. SLAVIK: And was this entity a partnership, or was it solely owned by Mr. Combs?
DEREK FERGUSON: This, during my tenure, was 100 percent owned by Mr. Combs.
MS. SLAVIK: What is the mailing address of this account?
DEREK FERGUSON: 1710 Broadway.
MS. SLAVIK: And is that one of the Bad Boy offices that you mentioned a moment ago?
DEREK FERGUSON: Yes.
MS. SLAVIK: Looking at section 1(a), what type of account is this?
DEREK FERGUSON: This is a monogram business checking account.
MS. SLAVIK: And focusing on section 4, towards the bottom of the page here, Mr. Ferguson, are these your initials in section 4?
DEREK FERGUSON: Yes.
MS. SLAVIK: Turning to page 2 in section 4(a), Mr. Ferguson, do you see this authorized signer section?
DEREK FERGUSON: Yes.
MS. SLAVIK: What is an authorized signer?
DEREK FERGUSON: Those -- the signers, authorized signers are those who have signing authority on the bank account.
MS. SLAVIK: In other words, those who have control over the bank account?
DEREK FERGUSON: Signing authority, yes.
MS. SLAVIK: Whose names do you see here?
DEREK FERGUSON: Sean Combs. Derek Ferguson.
MS. SLAVIK: And whose signatures do you see here?
DEREK FERGUSON: Sean Combs and Derek Ferguson.
MS. SLAVIK: What about the dates of those signatures?
DEREK FERGUSON: 9/21/09.
MS. SLAVIK: Thank you. Ms. Gavin, could you focus on section 5.
MS. SLAVIK: Do you see the account number here, Mr. Ferguson?
DEREK FERGUSON: Yes.
MS. SLAVIK: Is that the number ending in 9635?
DEREK FERGUSON: Yes.
MS. SLAVIK: Thank you. You can take this down, Ms. Gavin.
MS. SLAVIK: This Janice Combs Publishing account that we've just been speaking of, do you remember what this account was used for?
DEREK FERGUSON: That was Janice Combs Music.
MS. SLAVIK: So for business -- a business-related account for that company?
DEREK FERGUSON: Sorry. You said Janice Combs Publishing. The account we just looked at was Janice Combs Music.
MS. SLAVIK: I'm sorry.
DEREK FERGUSON: Yes.
MS. SLAVIK: For Janice Combs Music, what was that account that we just looked at, what was that account used for?
DEREK FERGUSON: That account was used, primarily used as a, for providing his name and likeness. So in deals where we provided his name and likeness, that entity would be used as the, as the source of that name and likeness.
MS. SLAVIK: How was this bank account funded?
DEREK FERGUSON: This bank account was self-funded in that the revenues exceeded the expenses so really didn't require funding.
MS. SLAVIK: In other words, this was one of the profitable companies that you just mentioned a moment ago?
DEREK FERGUSON: Yes.
MS. SLAVIK: Ms. Gavin, could you please publish what's in evidence as Government Exhibit 4G-131.
MS. SLAVIK: And looking at section 1, Mr. Ferguson, do you see the account title of this document?
DEREK FERGUSON: Yes.
MS. SLAVIK: And again, this is another application for a bank account?
DEREK FERGUSON: Yes.
MS. SLAVIK: What is the account title for this account?
DEREK FERGUSON: Combs Enterprises LLC.
MS. SLAVIK: What is Combs Enterprises LLC?
DEREK FERGUSON: It's an entity formed to do business -- yeah, just -- this is a business entity, yes.
MS. SLAVIK: The mailing address for this account is also 1710 Broadway?
DEREK FERGUSON: Yes.
MS. SLAVIK: And looking at section 1(a) of this document, is this also a business checking account?
DEREK FERGUSON: Yes.
MS. SLAVIK: Ms. Gavin, could you focus on section 4.
MS. SLAVIK: Mr. Ferguson, are these your initials here in this agreements and acknowledgements box?
DEREK FERGUSON: Yes.
MS. SLAVIK: And moving to section 4(a), on page 2, whose names and signatures are in this authorized signer's box?
DEREK FERGUSON: Sean Combs and Derek Ferguson.
MS. SLAVIK: And the dates of these signatures?
DEREK FERGUSON: 9/21/09.
MS. SLAVIK: So you and Mr. Combs had signature authority over this account as well?
DEREK FERGUSON: Yes.
MS. SLAVIK: In section 5 of this document, do you see the account number?
DEREK FERGUSON: Yes.
MS. SLAVIK: Is that the number ended in 9619?
DEREK FERGUSON: Yes.
MS. SLAVIK: Do you remember what this account was used for?
DEREK FERGUSON: I believe this account was used initially as the account that was the partner or the entity which had the strategic relationship with Diageo regarding the Ciroc brand.
MS. SLAVIK: And did that change over time, the use of this bank account?
DEREK FERGUSON: I'm -- I'm not sure. I think -- I'm not sure.
MS. SLAVIK: How was this bank account funded?
DEREK FERGUSON: This bank account also was -- really didn't require funding, because it had inflows that exceeded the expenses.
MS. SLAVIK: Another profitable company, in other words?
DEREK FERGUSON: Yes.
MS. SLAVIK: Thank you. Ms. Gavin, you can take this down.
MS. SLAVIK: Mr. Ferguson, the two bank accounts that we just looked at, those are bank accounts associated with companies or entities controlled by Mr. Combs?
DEREK FERGUSON: Yes.
MS. SLAVIK: And Mr. Combs had authority over these accounts, is that right?
DEREK FERGUSON: Yes.
MS. SLAVIK: What about credit cards; what financial entity did Bad Boy use for credit card services?
DEREK FERGUSON: Primary entity would be American Express.
MS. SLAVIK: Who at Bad Boy had American Express cards?
DEREK FERGUSON: Mostly senior executives.
MS. SLAVIK: How were those American Express invoices paid for?
DEREK FERGUSON: The American Express invoices for most executives were paid as expense reimbursements.
MS. SLAVIK: In other words, paid by the company?
DEREK FERGUSON: With -- after submitting expense, expense forms. The individuals would receive payments and then be responsible for paying their cards.
MS. SLAVIK: Did Mr. Combs have an American Express card?
DEREK FERGUSON: He did.
MS. SLAVIK: Did Mr. Combs pay for both business and personal expenses with his American Express card?
DEREK FERGUSON: From time to time, yes.
MS. SLAVIK: And were Mr. Combs's American Express invoices paid by the company as well?
DEREK FERGUSON: Yes.
MS. SLAVIK: What methods of payment were used to pay Mr. Combs's American Express invoices?
DEREK FERGUSON: Checks or wires usually.
MS. SLAVIK: From what accounts did those checks or wires come from?
DEREK FERGUSON: So, the process of reconciling the American Express statements would identify which entities any of the charges related to and try to match up the payments with that related entity.
MS. SLAVIK: You described reconciling. Can you explain what you mean by that?
DEREK FERGUSON: Well, reconciling would just be going through the full statement and understanding what, you know, what category you would put every -- every charge in and trying to line that up appropriately.
MS. SLAVIK: And after you lined it up appropriately, what determined which account paid for which expense?
DEREK FERGUSON: If you were able to identify a charge that related to a business, you would line that up with the -- you would line that up with that account to pay for it.
MS. SLAVIK: Who was responsible for this process?
DEREK FERGUSON: I had members of my team, the finance team, would be responsible for that.
MS. SLAVIK: Focusing now on cash, did the finance department handle incoming and outgoing cash?
DEREK FERGUSON: Yes.
MS. SLAVIK: What would be an example of incoming cash?
DEREK FERGUSON: Incoming cash would be in -- in many cases and kind of industry standard, people would pay -- performers, artists were paid in cash, especially going back, you know, 20 years or so, because there just weren't other forms of payment. And at 9 o'clock at night, at night performers needed to get paid and get paid in cash. So that was one way you would see cash as an inflow.
MS. SLAVIK: What about outgoing cash; can you give an example of outgoing cash?
DEREK FERGUSON: Outgoing cash, again, not everybody had American Express cards or CashApp or things like that, so, you know, there was a thing maybe people are familiar with called a per diem. So many, you know, people working on projects or videos, etc., would receive a cash per diem for every day they worked. And that would be one use of cash that you would need to use quite often.
MS. SLAVIK: Were there processes for handling incoming and outgoing cash?
DEREK FERGUSON: Yes.
MS. SLAVIK: What was the process for handling incoming cash?
DEREK FERGUSON: Incoming cash was handled basically through a cash receipts form, which would detail, you know, what was received, if anything was paid out of that money received, and then what the net amount would be. Yeah.
MS. SLAVIK: So who actually handed the cash to someone in the finance department?
DEREK FERGUSON: It varied. Usually it would be the artist, the manager.
MS. SLAVIK: And what did -- once the finance department received the cash, what happened to it?
DEREK FERGUSON: Whatever the net remaining cash that was kind of given to the finance department would be deposited.
MS. SLAVIK: How often did the finance department handle incoming cash in this regard?
DEREK FERGUSON: I would say it varied over the years, so it was no kind of standard pattern. And some years where there was more activity, more, like, touring and more, you know, performances, etc., would be higher and then in some years would be very little because it would be very few performances, etc.
MS. SLAVIK: And what about the process for handling outgoing cash; what was the process for that?
DEREK FERGUSON: Generally, that was handled through -- several ways. One is just through a petty cash account or, you know, reconciliation. So you'd have -- petty cash would be issued and then reconciled once used through the actual receipts of what was spent. So petty cash would be one way. Cash advances were used as well for those traveling that didn't have American Express cards. So those cash advances would, again, be reconciled once the money was spent. So, those are some of the ways that cash was reconciled. So any cash that was outlaid, the finance department would be looking for the receipts and the accounting of how that cash was used.
MS. SLAVIK: So in the case of either incoming or outgoing cash, the finance department kept receipts of these transactions, is that right?
DEREK FERGUSON: Yes.
MS. SLAVIK: Were you aware of Mr. Combs being paid in cash for professional obligations at any point?
DEREK FERGUSON: The -- there were professional obligations that would pay in cash. I don't know that he would have received the money or not, but that -- there would be obligations that would be paid in cash. And usually our process was we really operated wanting to have a contract up front, so that contract would spell out when the payments were going to be made, how they were going to be made, and that's what really governed everything.
MS. SLAVIK: And in those cases where Mr. Combs was paid in cash, what was the process for handling cash in those circumstances?
DEREK FERGUSON: So, same process with the cash receipt form. Whatever was received would be noted. We matched that to make sure, you know, where there was a contract, we'd match that with the contract and make sure it matched up. If there were any expenses or distributions made out of that cash, that would be noted. And then the net amount, if there was any, would be deposited.
MS. SLAVIK: Were you aware of cash transactions being handled outside the procedures that you just described?
DEREK FERGUSON: No. Because if I was aware of it, we would have processed them through the procedures. So -- yeah.
MS. SLAVIK: Were you aware of Mr. Combs's security staff carrying cash for him?
DEREK FERGUSON: Not something I was aware of. Not something I paid any attention to, no.
MS. SLAVIK: Now, you testified, Mr. Ferguson, that at times you managed Mr. Combs's personal finances when you were the CFO. Do you remember that?
DEREK FERGUSON: Yes.
MS. SLAVIK: How, if at all, did that responsibility change over time?
DEREK FERGUSON: Well, there were times when third parties, we would -- third parties were engaged to handle specifically his personal spending. So throughout my tenure, that changed a couple of times.
MS. SLAVIK: So it varied from third party to internal management of Mr. Combs's finances, is that right?
DEREK FERGUSON: Yes.
MS. SLAVIK: When you were responsible for managing Mr. Combs's personal finances, just generally speaking, what did that entail?
DEREK FERGUSON: It really entailed kind of similar, like, what was the plan for the year and managing kind of, like, an overall budget for the year and then managing budget versus actual throughout the year.
MS. SLAVIK: Were you involved in managing Mr. Combs's properties?
DEREK FERGUSON: I didn't manage the properties themselves, but -- but the inflows and outflows of the properties would be handled through the finance department.
MS. SLAVIK: In other words, the financial management of these properties?
DEREK FERGUSON: Yes.
MS. SLAVIK: What properties did Mr. Combs own while you were CFO?
DEREK FERGUSON: I'll do my best. Property, there was a property in the Hamptons; in New York City; Miami. I think -- Hamptons, yep. Those were ones during my tenure as CFO.
MS. SLAVIK: And what was the ownership structure of the properties that Mr. Combs owned?
DEREK FERGUSON: These properties were held in LLCs, corporations.
MS. SLAVIK: What is the purpose of setting up the ownership structure in that way?
DEREK FERGUSON: Well, for high-value properties, with celebrities, it's pretty common to use this type of structure for anonymity, for liability, for reduction and for some tax planning as well.
MS. SLAVIK: So is this sort of ownership structure common, in your experience?
DEREK FERGUSON: Yes.
MS. SLAVIK: Were you involved in the financial management of Mr. Combs's properties?
DEREK FERGUSON: Over, just understanding the ins and outs of the properties' spending, yes.
MS. SLAVIK: What sort of -- what did that entail with respect to financially managing the properties?
DEREK FERGUSON: Generally, it was -- there were kind of expected and known expenses that would be incurred throughout the year. So just, you know, making sure that those expenses were in line with what was expected. And if they got out of line, somebody on the team, you know, would identify that.
MS. SLAVIK: Did you actually make payments for expenses?
DEREK FERGUSON: Me personally, no, but the finance department would, yes.
MS. SLAVIK: And what sort of payments did the finance department make with respect to Mr. Combs's properties?
DEREK FERGUSON: Mortgage payments, where there was mortgages; you know, real estate taxes, maintenance, all of the standard expenses for a home.
MS. SLAVIK: How did the finance department make those payments?
DEREK FERGUSON: Check, wire transfer usually.
MS. SLAVIK: From what bank accounts were those payments made?
DEREK FERGUSON: The LLCs that held the properties would be the source of the payments for, for the related property.
MS. SLAVIK: Did the LLCs that owned the property have their own bank accounts?
DEREK FERGUSON: Yes.
MS. SLAVIK: How were those bank accounts funded?
DEREK FERGUSON: Those bank accounts were generally funded through Mr. Combs's earnings. So either through his salaries or distributions.
MS. SLAVIK: And where did the salaries and distributions come from?
DEREK FERGUSON: Came from his, his businesses, from the businesses that he owned or joint ventures.
MS. SLAVIK: Were the bank accounts that were kept for the LLCs, were those kept at the same banks where business bank accounts were kept?
DEREK FERGUSON: Usually.
MS. SLAVIK: Who oversaw the bank accounts for Mr. Combs's properties?
DEREK FERGUSON: So, when -- when these were being managed internally, that would be me and my department.
MS. SLAVIK: Did Mr. Combs have personal bank accounts separate and apart from the accounts for his properties?
DEREK FERGUSON: I do believe at certain points he did, but I don't -- I don't really recall.
(Continued on next page)
BY MS. SLAVIK:
MS. SLAVIK: And when you were responsible for managing Mr. Combs's finances, did you oversee those other personal accounts held by Mr. Combs?
DEREK FERGUSON: If he had them, yes.
MS. SLAVIK: During your tenure as CFO, were you aware of Mr. Combs providing financial support to friends and family?
DEREK FERGUSON: Yes.
MS. SLAVIK: Where did that money come from?
DEREK FERGUSON: Came from his personal earnings.
MS. SLAVIK: Did you discuss Mr. Combs's personal finances with Mr. Combs?
DEREK FERGUSON: I did.
MS. SLAVIK: How frequently?
DEREK FERGUSON: At least once a year we would kind of review what happened throughout the year, how everything turned out versus what was planned and, you know, discussed the upcoming year.
MS. SLAVIK: Your Honor, this may be a good breaking spot.
THE COURT: Very good. Thank you, members of the jury. We'll take our lunch break at this time. We'll be back at 1:15. All rise for the jury.
(Continued on next page)
(Jury not present)
THE COURT: Thank you, Mr. Ferguson. We'll see you back here at 1:15.
(Witness not present)
THE COURT: Please be seated. Ms. Slavik, how much time do you anticipate you have left on direct?
MS. SLAVIK: I think about 20 minutes, your Honor.
THE COURT: Anything the government would like to raise before we take our lunch break?
MS. SLAVIK: No, your Honor, not at this time.
THE COURT: Anything from the defense?
MR. AGNIFILO: Nothing from us, Judge. Thank you.
THE COURT: I think the only outstanding issue, which I take it we'll pick up when we come back is the issue of the one exhibit. Ms. Geragos, is that right, are you working on potential redactions?
MS. GERAGOS: We discussed potential redactions. They're going to speak internally, we're going to speak internally, and then we'll discuss at the start of the afternoon.
THE COURT: I'll be back here at 1:10 so we can pick up any issues relating to that exhibit, and then we'll proceed at that time.
MS. GERAGOS: At that time, I don't know, but I may have issues with the revised Piazza exhibit --
THE COURT: I'm sorry. I missed that last part.
MS. GERAGOS: At that time, we may bring up the revised Piazza exhibit 114, but I don't think I received it yet. I hope to receive it over the lunch break and be able to review it and be able to bring to the Court any objections I have to it.
THE COURT: Do me a favor, if you receive it and you need a few extra minutes and you need any additional time, let the courtroom deputy know, that way we can give you some extra time, because I know Mr. Piazza is going to be the next witness up.
MS. GERAGOS: Yes, thank you.
MS. COMEY: I'll note, your Honor, the file is uploading right now, so Ms. Geragos will have it over the lunch break. We were wondering given that some of the time when we expect Jane will be on the stand, we're now going to lose a few hours, if it would be okay to stay a little late today. We're very cognizant of making sure she can make that flight next week.
THE COURT: Can you just give me the anticipated length of her testimony so I can have some sense.
MS. COMEY: Yes, your Honor. Her direct will be at least two days, could go as long as three. There is quite a lot to cover with her. I expect her cross would be at least two days and could be longer.
THE COURT: She's coming up after Mr. Piazza?
MS. COMEY: Right after Ms. Bangolan, who traveled in from out of state. Part of what is pushing us back is the unexpected length of the Mia cross, but our expectation is that Jane will get on the stand at the end of the day tomorrow.
THE COURT: So you want to complete Mr. Ferguson's testimony, Mr. Piazza's testimony. That would be today --
MS. COMEY: Oh, no, your Honor. Just Mr. Ferguson's testimony today. If Mr. Agnifilo's cross ends up pushing us past 3:00, we ask to keep going to get him off the stand. If we have to put Mr. Piazza on tomorrow morning, I think we'll still get to Jane tomorrow.
THE COURT: Tomorrow, that would give you a few days then next week, and then her flight is on Thursday?
MS. COMEY: In the evening, so she could be here all day Thursday.
THE COURT: I'll advise the jury that they should expect that on some of these upcoming days, they may need to stay a little bit longer.
MS. COMEY: Thank you, your Honor.
THE COURT: Very good. We'll be back at 1:10.
(Luncheon recess)
AFTERNOON SESSION 1:17 p.m.
THE COURT: Ms. Geragos, have we resolved the issues?
MS. GERAGOS: I'm going to let Mr. Driscoll take on the issue of the exhibit. As I was dealing with the video, he briefed the issue, I want him to have his chance.
THE COURT: Very good. Mr. Driscoll.
MR. DRISCOLL: Yes, Judge. So in case the record wasn't clear, we do maintain a hearsay objection to the entire exhibit as well as hearsay within hearsay. I just point out that the vast majority of the messages in this chain do not actually relate to Ms. Ventura. So we also have relevance objections and objections under Rule 403.
THE COURT: Good. So there were some discussions concerning redactions?
MR. DRISCOLL: Yes. Those were not fruitful.
THE COURT: But do you have redactions to present?
MR. DRISCOLL: I could propose redactions, yes. It wouldn't solve the hearsay issues.
THE COURT: I understand that. But are you able to put those on the screen? While you are doing that, Ms. Foster, what is the purpose of the exhibit? Just so I can understand the objection. I think what Mr. Driscoll is saying is, he's saying that it doesn't fit within these hearsay exceptions, but I'm not hearing a reason why it doesn't fit into one of the pathways that you outlined in your email. So given that, I think he's making the further objection that, as to some of this, it's just not relevant to anything that's at issue in this case. And so it would not survive 403 scrutiny. So just what's the point of this exhibit coming in?
MS. FOSTER: So my understanding is there's not a question about the relevancy of the part of the communication that's about the icing of the face, because that is corroborative and also sort of rounds out the context of testimony that we heard from Ms. Ventura.
THE COURT: Agreed.
MS. FOSTER: My understanding is that, and you can tell this, there is a simultaneous conversation that seems to be going on here. The government is not offering any of that simultaneous conversation for its truth. Part of the reason, my understanding had been maybe that there would be sort of more targeted redactions that the defense had specific objections to. My understanding is that they want to just redact that entire sort of simultaneous conversation. That, I think, is difficult, one, just administratively because you could even tell from this conversation that the other participant doesn't really know what messages are being directed to one conversation versus the other.
And so if we were to redact some of them and not others, it would sort of, like, we would almost be agreeing to a position that certain of these messages relate to one conversation and certain relate to another, when it's really very difficult to tell from this conversation, the vast majority of the messages, what they relate to. I would also say that there's very little, one, it rounds out the context for this conversation. There's very little prejudicial value, if any, or prejudice, if any, from keeping that context in. The jury has heard much testimony, and a lot of that testimony was elicited by the defense about the fact that Mr. Combs has other relationships with other women, and he did so at the same time that he was in a relationship with Ms. Ventura. So that prejudice really doesn't exist here. There's also some probative value towards the other part of that conversation, which is that it shows the relationship and sort of the role that D-Roc had in Mr. Combs's relationships.
And the defense has made the argument, tried to make the argument through cross-examination that D-Roc was sort of a friend to a number of these women, and you can see how Mr. Combs is operating on the backhand and instructing him to sort of say comments to women to make them feel comfortable opening up and really back-channeling through him. So there's little prejudice. It's extremely difficult to figure out which messages should be redacted, and there is some probative value to this. It also I would say sort of gives context to the context in which he is talking about an assault that occurred and having her hide and ice her face, and at the same time he's having a conversation about sort of mundane relationship issues. And so I think it also gives context to the jury about sort of how he views this communication and sort of how casual it is.
THE COURT: Understood. So Mr. Driscoll, where is the hearsay within hearsay, just so I can find this.
MR. DRISCOLL: Sure, Judge. I'm just going to point your Honor to the messages that I think --
THE COURT: Well, I have the exhibit. So if you just point me to a page number. I see the pages on the bottom right.
MR. DRISCOLL: Yes, so 10, in the lower-right corner, page 10, Cassie was eating. She about to ice up. She keep asking for you telling me she wants to go to the studio. I told her to chill out and said your feelings about what happened.
THE COURT: Anything else?
MR. DRISCOLL: On the next page, yeah, she wants to see you, but you not fucking with her. On the next page, she looking for you crazy, blowing everybody up, she killing Faheem. On the next page, Rio and Justin saw her eye and we said a fight broke out last night in the club.
THE COURT: How is that hearsay within hearsay? Which part of that?
MR. DRISCOLL: It's narrating a different statement that was said to other third parties.
THE COURT: Okay.
MR. DRISCOLL: On page 7, Cass is calling studios looking for you. On page 6, the first message, yeah, we in the security room talking now, she wants you to come hug her and lay down, she didn't sleep yet.
THE COURT: I understand. I got the general gist. And Ms. Foster, I take it your response is none of those statements are coming in for the truth of the matter asserted. So, at most, they just provide context for the remaining discussion, which is admissible in one of the two ways that you laid out in your email.
MS. FOSTER: That's correct. Certain of them maybe, but they're all sort of present sense impressions, they go to her state of mind. I mean, Cass was eating, she was about to ice up. There's multiple reasons why this is not excludable hearsay. And a number of these statements, like the ones that they just highlighted where he says a fight broke out in the club, it's clear from the context of the message that that is not a truthful statement, that that is a statement that he is making to cover up the assault.
THE COURT: So it's coming just for the fact of the communication.
MS. FOSTER: Exactly, yes, your Honor.
MR. DRISCOLL: Judge, that's just a second level of hearsay. We haven't resolved the first level of hearsay. I think what Foster said was it's not even clear to the speakers whom they're talking about, what they're talking about. There's been no foundation laid that this is a proper agency statement or a statement of furtherance of any conspiracy. Without that foundation, it's just not clear, and it's not going to be clear to the jury either.
MS. FOSTER: Your Honor, we cited in our email to you --
THE COURT: I'm just looking at -- Mr. Driscoll, I'm looking at the email that Ms. Foster submitted, and as a general matter and not taking into account any of these specific conversations, they say either it's a coconspirator statement or it's an agent statement, and they provide evidence that was previously elicited during the trial, explaining the breadth of D-Roc's job, and the reason why, on a preponderance standard, these types of statements, meaning attending to these various affairs happening on Mr. Combs's behalf would count as, at the very least, agent statements within the scope of the employment of D-Roc. And remember, that's only D-Roc's statements, right, because I think I heard earlier the defense does not object to Mr. Combs's statements.
MR. DRISCOLL: That's correct.
THE COURT: So as to Mr. Combs's statements, there's no objection those coming in. Really, D-Roc's statements on one level could be considered necessary context to provide an understanding of what Mr. Combs was saying. Putting that to the side, they've offered a number of independent bases for overcoming any hearsay objection, and that's why I've been focusing on the hearsay within hearsay. As to that, Ms. Foster says it's not coming in. It either fits in an exception or it's not coming in for the truth of the matter asserted. The principle example given is the statements made to the two other individuals concerning the fact that the injuries occurred in the context of a club fight.
MR. DRISCOLL: Yes, your Honor. So I would just refer the Court back to our May 21st letter concerning Government Exhibit A-629-A. That letter concerned the scope of the agency exception. What Ms. Foster just said is this is a conversation between D-Roc and Mr. Combs interspersing personal musings with things that might tangentally be related to things he observed. That doesn't satisfy the exception. And the Court excluded GX A-629-A for that reason. We don't view this message as any different.
MS. FOSTER: Your Honor, I believe at that time you had based your decision on the fact that there hadn't really been a foundation laid with respect to the participants in that conversation as to the fact that he was acting as an agent at that time and that this was in the scope of his relationship to Mr. Combs as an agent. Here, as we have detailed in this email to your Honor, there has been a number of statements as to D-Roc and his role, and that clearly demonstrate that what he is speaking about in this message falls within that agent relationship.
THE COURT: Very good. How are we doing on the compilation?
MS. GERAGOS: We still object, your Honor.
THE COURT: But is the compilation complete?
MS. SMYSER: Yes.
THE COURT: Very good. As to Government Exhibit 905-A, the objection is overruled. With that, let's bring back --
MS. JOHNSON: Your Honor, if I may put one additional item on the record related to the pseudonym order. The government has learned of an additional media outlet reporting Mia's true identity. We'll send that to the Court. It was reported on X yesterday with reference to the birthday video exhibit that was admitted, containing a link to that exhibit online showing that witness's true identity.
THE COURT: Is there a proposal as to what to do about that? And the reason why I ask this is because this came up when we were discussing the propriety of the pseudonym order itself. At that time, I think it's fair to say the parties understood that while we could prevent a disclosure originating from this courtroom, because of the issues at stake and the public profile of a lot of these individuals, it would be very easy for the media and the public at large to discern who these individuals were. So I don't know that there's further relief that you're seeking, but I'm happy to hear if there is any step that you'd like the Court to take.
MS. JOHNSON: The government would respectfully request that the Court consider directing that outlet to remove the post and consider whether any further additional steps should be taken, such as barring individuals who break the Court's order from attending this trial either in this courtroom or in other courtrooms.
THE COURT: Do you want to put in a submission along those lines? I'll certainly consider it.
MS. JOHNSON: Sure, we can.
THE COURT: I'll do that. Also, given that Jane is going to testify, if there is a proposed instruction that might be fortified that you would like me to provide at the beginning of each trial day, then I'm happy to consider that. I don't imagine that there'll be opposition from the defense, but it might be helpful along those lines.
MS. JOHNSON: Certainly. We'll include that in the submission, your Honor.
THE COURT: Very good. Let's have Mr. Ferguson back.
MS. GERAGOS: I want to let the Court know, I sent the email with an additional individual that has been attending that I believe also disclosed Mia's identity. So I just wanted to make sure that that's clear for the record, as well.
THE COURT: Meaning you disclosed that to the government?
MS. GERAGOS: I disclosed it to the government and I believe your Honor was copied on it.
THE COURT: Okay. We'll take a look at that.
MS. SLAVIK: Your Honor, the parties are ready.
THE COURT: Let's bring Mr. Ferguson back.
(Witness present)
THE COURT: Welcome back.
(Continued on next page)
(Jury present)
THE COURT: Mr. Ferguson, you understand that you are still under oath?
DEREK FERGUSON: Yes.
THE COURT: Ms. Slavik, you may proceed when ready.
BY MS. SLAVIK:
MS. SLAVIK: Mr. Ferguson, before the break, we were looking at bank documents. I want to continue that conversation.
MS. SLAVIK: Ms. Gavin, could you please publish what's in evidence as Government Exhibit 4G-150.
MS. SLAVIK: Mr. Ferguson, is this document the same sort of bank account application that we were looking at previously?
DEREK FERGUSON: Yes.
MS. SLAVIK: Do you see the account title in Section 1?
DEREK FERGUSON: Yes.
MS. SLAVIK: What is it?
DEREK FERGUSON: 207 Anderson LLC.
MS. SLAVIK: What is 207 Anderson LLC?
DEREK FERGUSON: An entity that held property located at 207 Anderson in Alpine, New Jersey.
MS. SLAVIK: And that was a property owned by Mr. Combs?
DEREK FERGUSON: Yes.
MS. SLAVIK: So this bank account was used for a property owned by Mr. Combs; is that right?
DEREK FERGUSON: Yes.
MS. SLAVIK: What is the account mailing address?
DEREK FERGUSON: 1710 Broadway.
MS. SLAVIK: And that was the Bad Boy headquarters at the time?
DEREK FERGUSON: Yes.
MS. SLAVIK: Looking at Section 4, Mr. Ferguson, again, these are your initials at the bottom of the page?
DEREK FERGUSON: Yes.
MS. SLAVIK: And on page 2 in Section 4A, whose names and signatures appear in this agreements and acknowledgements box?
DEREK FERGUSON: Sean Combs and Derek Ferguson.
MS. SLAVIK: And what about the dates of the signatures?
DEREK FERGUSON: 9/21/09.
MS. SLAVIK: So does this mean that you and Mr. Combs were the authorizes signatories of the account?
DEREK FERGUSON: Yes.
MS. SLAVIK: Looking at section 5, what is the account number of this bank account?
DEREK FERGUSON: I'm not sure which one it is, but --
MS. SLAVIK: Looking at the top bank account number, does that end in 9686?
DEREK FERGUSON: Yes.
MS. SLAVIK: Thank you. You can take this down.
MS. SLAVIK: Mr. Ferguson, I want to talk about how this 207 Anderson account was funded.
MS. SLAVIK: Ms. Gavin, could you please publish what's in evidence as Government Exhibit 4G-151.
MS. SLAVIK: Do you recognize this type of document, Mr. Ferguson?
DEREK FERGUSON: It's not a document that I looked at often, but I know what it is.
MS. SLAVIK: What is it?
DEREK FERGUSON: It looks like a bank -- a document from the bank.
MS. SLAVIK: A bank account statement?
DEREK FERGUSON: Yes.
MS. SLAVIK: And looking at the primary account number, do you see that account number?
DEREK FERGUSON: Yes.
MS. SLAVIK: Does that account number end in 9686?
DEREK FERGUSON: Yes.
MS. SLAVIK: Is that the same account number that we just saw with the 207 Anderson account document?
DEREK FERGUSON: Yes.
MS. SLAVIK: And do you see the address box at the top left?
DEREK FERGUSON: Yes.
MS. SLAVIK: Who is it addressed to, who is this statement addressed to?
DEREK FERGUSON: Bad Boy Entertainment Worldwide.
MS. SLAVIK: And in relation to what account name?
DEREK FERGUSON: Oh, sorry. 207 Anderson LLC.
MS. SLAVIK: When you were the CFO at Bad Boy, did the finance department receive statements for the bank accounts that we've just been discussing?
DEREK FERGUSON: Yes.
MS. SLAVIK: Including bank accounts for this 207 Anderson account?
DEREK FERGUSON: Yes.
MS. SLAVIK: Ms. Gavin, could you please turn to page 263 of this document.
MS. SLAVIK: Focusing, Mr. Ferguson, on the top-right portion, do you see what time period this statement is for?
DEREK FERGUSON: Yes.
MS. SLAVIK: What time period?
DEREK FERGUSON: December 1, 2011 to December 31, 2011.
MS. SLAVIK: You were CFO at this time?
DEREK FERGUSON: Yes.
MS. SLAVIK: Ms. Gavin, maybe you could take this -- thank you.
MS. SLAVIK: I want to focus first on the summary portion of this statement.
MS. SLAVIK: Ms. Gavin, could you highlight the summary portion.
MS. SLAVIK: Mr. Ferguson, what does this summary portion show?
DEREK FERGUSON: Shows the beginning balance, credits, debits, and ending balance.
MS. SLAVIK: Can you explain what credits and debits are?
DEREK FERGUSON: Credits are increases to the account and debits are reductions to the account.
MS. SLAVIK: So just roughly, does this summary portion show that a little over $3.4 million came into the account as a little over $3.2 million went out of the account in December of 2011?
DEREK FERGUSON: Yes.
MS. SLAVIK: Looking at the deposits and other credits section right below this summary, what are deposits and credits?
DEREK FERGUSON: Deposits and credits are money coming into the account.
MS. SLAVIK: I want to focus on internal transfers. Do you see a series of internal transfers here?
DEREK FERGUSON: Yes.
MS. SLAVIK: What are internal transfers?
DEREK FERGUSON: Internal transfers are transfers from one of the accounts linked to this overall set of accounts from one account to another.
MS. SLAVIK: Now focusing on the internal transfers on December 1st and December 2nd, do you see those transactions?
DEREK FERGUSON: Yes.
MS. SLAVIK: What accounts were funds transferred from?
DEREK FERGUSON: Last four 9635, 9635, and 7899.
MS. SLAVIK: So focusing on the first two internal transfers in the account ending in 9635. For those first two transfers, how much were those transfers?
DEREK FERGUSON: $200,000 and $50,000.
MS. SLAVIK: And that 9635 account --
MS. SLAVIK: Ms. Gavin, maybe you could pull up side by side with this exhibit page 2 of Government Exhibit 4G-140.
MS. SLAVIK: Looking towards the middle of the page, Mr. Ferguson, you see that account number?
DEREK FERGUSON: Yes.
MS. SLAVIK: Is this the 9635 account?
DEREK FERGUSON: Yes.
MS. SLAVIK: And this 9635 account is an account associated with Janice Combs Music; is that right?
DEREK FERGUSON: Yes.
MS. SLAVIK: In other words, looking at the document on the left, does this show that Janice Combs Music transferred $250,000 into this 207 Anderson account in December 2011?
DEREK FERGUSON: Yes.
MS. SLAVIK: Thank you. You can take the second document down, Ms. Gavin.
MS. SLAVIK: And now looking, Mr. Ferguson, at the internal transfers on December 5th, 6th, and 9th, do you see those transfers, Mr. Ferguson?
DEREK FERGUSON: Yes.
MS. SLAVIK: From what account were funds transferred on those dates?
DEREK FERGUSON: Last four, 9619.
MS. SLAVIK: In what amount?
DEREK FERGUSON: $190,000; $100,000; $575,000.
MS. SLAVIK: In other words, the 9619 account transferred roughly $865,000 into this 207 Anderson account in December 2011?
DEREK FERGUSON: Yes.
MS. SLAVIK: Ms. Gavin, could you publish side by side page 2 of Government Exhibit 4G-131.
MS. SLAVIK: Mr. Ferguson, do you see the account number on this document?
DEREK FERGUSON: Yes.
MS. SLAVIK: That's the 9619 account?
DEREK FERGUSON: Yes.
MS. SLAVIK: And this 9619 account is associated with Combs Enterprises?
DEREK FERGUSON: Yes.
MS. SLAVIK: In other words, an account from Combs Enterprises transferred over $800,000 into the 207 Anderson account in December 2011?
DEREK FERGUSON: Yes.
MS. SLAVIK: Thank you. You can take the second document down.
MS. SLAVIK: Mr. Ferguson, just to be clear, were internal transfers the only way that this 207 Anderson account was funded?
DEREK FERGUSON: Not necessarily, but it would be a primary way.
MS. SLAVIK: Who, generally speaking, who decided whether to initiate an internal transfer?
DEREK FERGUSON: Usually it was based on the controller recognizing need for cash, and then identifying where there were profit distributions available.
MS. SLAVIK: Did the controller decide what amount?
DEREK FERGUSON: Yes.
MS. SLAVIK: And the controller was someone who worked for Bad Boy; is that right?
DEREK FERGUSON: Yes.
MS. SLAVIK: Generally speaking, were all of Mr. Combs's personal accounts funded in this way with internal transfers?
DEREK FERGUSON: Generally speaking, yes.
MS. SLAVIK: Just to be clear, do you remember these particular internal transfers in December 2011?
MS. SLAVIK: Ms. Gavin, could you please turn to page 265 of this document.
MS. SLAVIK: Mr. Ferguson, just looking at the top right of the page, again, what is the statement period here?
DEREK FERGUSON: December 1 through December 31.
MS. SLAVIK: So same time period?
DEREK FERGUSON: Yes.
MS. SLAVIK: Ms. Gavin, could you focus on the wire transfer on December 14th. Excuse me, the outgoing wire transfer on December 14th.
MS. SLAVIK: Mr. Ferguson, looking at that first outgoing wire transfer, what is the date of that transaction?
DEREK FERGUSON: December 14th.
MS. SLAVIK: And what is the description of the transaction?
DEREK FERGUSON: Outgoing wire transfer.
MS. SLAVIK: In other words, money is coming out of the 207 Anderson account and going to a different account?
DEREK FERGUSON: Yes.
MS. SLAVIK: Who is the wire transfer directed to?
DEREK FERGUSON: Casandra Ventura.
MS. SLAVIK: Do you know who Casandra Ventura is?
DEREK FERGUSON: Yes.
MS. SLAVIK: Who is she?
DEREK FERGUSON: An artist also known as Cassie.
MS. SLAVIK: Did you meet Cassie when you worked at Bad Boy?
DEREK FERGUSON: I did.
MS. SLAVIK: What is the amount of the wire transfer?
DEREK FERGUSON: $20,000.
MS. SLAVIK: Do you remember being involved in this payment in any way, Mr. Ferguson?
DEREK FERGUSON: I don't.
MS. SLAVIK: And what was your relationship with Cassie?
DEREK FERGUSON: Really same as anybody else, any other artist that would be on our label.
MS. SLAVIK: Did you interact with her frequently?
MS. SLAVIK: Thank you, Ms. Gavin, you can take this down. And can you turn to page 264 of this document.
MS. SLAVIK: Mr. Ferguson, this is still part of the December 2011 statement?
DEREK FERGUSON: Oh, yes.
MS. SLAVIK: Directing your attention to a transaction on December 23rd towards the top of the page, do you see that?
DEREK FERGUSON: Yes.
MS. SLAVIK: What is the description of this transaction?
DEREK FERGUSON: Incoming wire transfer.
MS. SLAVIK: In other words, this is a payment that's coming into the 207 Anderson account?
DEREK FERGUSON: Yes.
MS. SLAVIK: Who was the payment from?
DEREK FERGUSON: Roderick Ventura.
MS. SLAVIK: In what amount?
DEREK FERGUSON: $20,000.
MS. SLAVIK: Mr. Ferguson, do you remember being involved in this transaction in any way?
MS. SLAVIK: Ms. Gavin, could you please turn to page 267 of this document.
MS. SLAVIK: Again, Mr. Ferguson, this is still part of the December 2011 statement?
DEREK FERGUSON: Yes.
MS. SLAVIK: Directing your attention to a transaction on December 27th, do you see the description of the outgoing wire transaction on December 27th?
DEREK FERGUSON: Outgoing wire transfer.
MS. SLAVIK: So, just again, this is a payment that's going out of the 207 Anderson account?
DEREK FERGUSON: Appears that way.
MS. SLAVIK: Who is the wire transfer directed to?
DEREK FERGUSON: Previous days, returner funds, I don't know if that's a person or an entity. I don't know what that is.
MS. SLAVIK: What bank is this payment being directed to?
DEREK FERGUSON: Charter Oak Groton.
MS. SLAVIK: In what amount?
DEREK FERGUSON: $20,000.
MS. SLAVIK: Do you remember being involved in this payment, Mr. Ferguson?
MS. SLAVIK: Thank you, Ms. Gavin. You can take this down.
MS. SLAVIK: I just want to ask you a couple of questions to wrap up, Mr. Ferguson. When did you leave the CFO position?
DEREK FERGUSON: Sometime end of 2012, if I recall.
MS. SLAVIK: Did you continue working for Mr. Combs?
DEREK FERGUSON: Yes.
MS. SLAVIK: In what capacity?
DEREK FERGUSON: Chief growth officer for the next few years.
MS. SLAVIK: And did you have another position after that?
DEREK FERGUSON: Yes.
MS. SLAVIK: What was that position?
DEREK FERGUSON: Chief operating officer of Revolt Media and TV.
MS. SLAVIK: When did you leave Mr. Combs' employ?
DEREK FERGUSON: 2017, November of 2017.
MS. SLAVIK: How often did you communicate with Mr. Combs after you left?
DEREK FERGUSON: Not that often. Right after maybe a few times, just some odds and ends regarding my departure. But other than that, just holidays, Father's Day, birthdays.
MS. SLAVIK: When was the last time that Mr. Combs reached out to you?
DEREK FERGUSON: I received a text from him in September of '24.
MS. SLAVIK: So September of last year?
DEREK FERGUSON: Yes.
MS. SLAVIK: Do you remember what day specifically?
DEREK FERGUSON: I don't.
MS. SLAVIK: Is there anything that I can show you to refresh your recollection?
DEREK FERGUSON: Sure.
MS. SLAVIK: Ms. Gavin, could you please publish for the witness, the Court, and the parties 3536-10, and I believe it's page 6 of that document.
MS. SLAVIK: Mr. Ferguson, this is rather small, but can you read this?
DEREK FERGUSON: Yeah.
MS. SLAVIK: Take a second and read that, and just look up when you've finished.
DEREK FERGUSON: Okay.
MS. SLAVIK: You can take that down. Thank you, Ms. Gavin.
MS. SLAVIK: Did that refresh your recollection about the date on which Mr. Combs last reached out to you?
DEREK FERGUSON: Yes.
MS. SLAVIK: What date was that?
DEREK FERGUSON: September 16th.
MS. SLAVIK: How did he reach out?
DEREK FERGUSON: Text.
MS. SLAVIK: What did he say initially?
DEREK FERGUSON: I don't remember exactly, but it just came up, it was just like hello or -- yeah, the first message I see there is, hello, maybe give me a call, I think. Something like that.
MS. SLAVIK: Did he send another text after that first text?
DEREK FERGUSON: Yes.
MS. SLAVIK: How soon after?
DEREK FERGUSON: I didn't see the times, but I think they were shortly thereafter.
MS. SLAVIK: What did he say in the second text?
DEREK FERGUSON: He was in New York City, wanted to know if I had some time to get together. Wanted something, wanted to talk, get some advice.
MS. SLAVIK: What was your reaction when he reached out?
DEREK FERGUSON: I actually was on a plane to Charlotte, so didn't really get to focus on that, on the text, until I landed. My first reaction was -- and I wasn't in New York and I wasn't going to be able to see him, and I was thinking about how I was going to respond.
MS. SLAVIK: What were you thinking about when you were thinking about how to respond?
DEREK FERGUSON: One, just making sure this was really him because this was kind of a weird time and lots of different, you know, fake texts and stuff were being sent around. So making sure it was really him. And then, yeah, I was gearing up to respond.
MS. SLAVIK: Did you respond?
DEREK FERGUSON: I did not.
MS. SLAVIK: Nothing further at the moment, your Honor.
THE COURT: Thank you, Ms. Slavik. Mr. Agnifilo.
MR. AGNIFILO: Yes. Thank you, Judge.
CROSS-EXAMINATION BY MR. AGNIFILO:
MR. AGNIFILO: Good afternoon, Mr. Ferguson.
DEREK FERGUSON: Good afternoon.
MR. AGNIFILO: My name is Marc Agnifilo. We've never met, have we?
MR. AGNIFILO: I was scared to death you were going to say you don't remember, but we never did. I'm one of Mr. Combs's lawyers. I'm going to ask you some questions. If I ask you a question that you don't understand or you want me to rephrase it, all you need to do is ask and I'll do that. Okay?
DEREK FERGUSON: Sure.
MR. AGNIFILO: You grew up in the Bronx?
DEREK FERGUSON: Yes.
MR. AGNIFILO: And where did you go to high school?
DEREK FERGUSON: I went to Stuyvesant High School.
MR. AGNIFILO: And then you went to the University of Pennsylvania undergrad?
DEREK FERGUSON: Yes.
MR. AGNIFILO: When did you graduate from the University of Pennsylvania?
DEREK FERGUSON: 1985.
MR. AGNIFILO: And then you worked, you went to an accounting firm?
DEREK FERGUSON: Yes.
MR. AGNIFILO: Which one?
DEREK FERGUSON: Coopers and Lybrand.
MR. AGNIFILO: So you graduate, U-Penn and you work at Coopers and Lybrand, and how long do you work at Coopers?
DEREK FERGUSON: About three years.
MR. AGNIFILO: And then you left Coopers, and tell the jury where you went then.
DEREK FERGUSON: I went to business school, Harvard Business School.
MR. AGNIFILO: You could have said the Harvard part first. Okay. You went to Harvard Business School.
DEREK FERGUSON: Yes.
MR. AGNIFILO: And you took what kind of degree from Harvard Business School?
DEREK FERGUSON: A master's in business administration.
MR. AGNIFILO: When did you leave Harvard Business School with a master's in business administration?
DEREK FERGUSON: 1990.
MR. AGNIFILO: What did you do for work in 1990?
DEREK FERGUSON: 1990, actually, when I left school, I was running a magazine that I spent my full time on for some time after graduating.
MR. AGNIFILO: And where was the magazine?
DEREK FERGUSON: The magazine, we were based out of Baltimore. Originally, it was launched out of New York, but based out of Baltimore.
MR. AGNIFILO: You worked there for how long?
DEREK FERGUSON: That would have been through about '91.
MR. AGNIFILO: And then at some point, were you working at BMG Entertainment?
DEREK FERGUSON: Yes.
MR. AGNIFILO: Is that Bertelsmann Music Group?
DEREK FERGUSON: Yes.
MR. AGNIFILO: Tell the jury, what's Bertelsmann Music Group?
DEREK FERGUSON: Bertelsmann Music Group is a music company that owns probably over 100 music labels worldwide.
MR. AGNIFILO: And do they have a relationship with Bad Boy?
DEREK FERGUSON: Bertelsmann Music Group owned Arista Records, which owned 50 percent of Bad Boy Records.
MR. AGNIFILO: What time period are we talking now?
DEREK FERGUSON: This is now 1996.
MR. AGNIFILO: So you worked for Bertelsmann, and Bertelsmann owns Arista?
DEREK FERGUSON: Yes.
MR. AGNIFILO: Tell the jury, what's Arista Records?
DEREK FERGUSON: Arista Records is a record label known for artists like Whitney Houston, other major artists, Clyde Davis was another CEO, well known CEO.
MR. AGNIFILO: Big, well established, well known, highly regarded record company; am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: Tell us again, what's the relation between Arista and Bad Boy at this point in time?
DEREK FERGUSON: Arista, at a certain point in time, owned 50 percent of Bad Boy Records.
MR. AGNIFILO: How does that work, I mean, we don't need the Harvard Business School answer, but how does that kind of work in summary, if there's 50-percent relationship, what do each of the parties do vis-à-vis each other?
DEREK FERGUSON: Right. So it's governed by an operating agreement essentially, and in this case, Arista funded the record company essentially and handled certain functions such as distribution of the product, some aspects of radio promotion. So each side kind of had the set of responsibilities they were responsible for.
MR. AGNIFILO: This is all governed by an operating agreement, in this case, that would be between Bad Boy on the one hand and Arista Records on the other hand?
DEREK FERGUSON: Yes.
MR. AGNIFILO: And this operating agreement would dictate in writing what each of those parties are empowered to do and what each of those parties are obligated to do?
DEREK FERGUSON: Yes.
MR. AGNIFILO: So if Mr. Combs is the head of Bad Boy, can he do whatever he wants in terms of budgets and money outflows and money inflows when he's a 50-percent partner with Arista?
MR. AGNIFILO: Why would that be?
DEREK FERGUSON: Well, they only -- the funding was predetermined. So therefore they were not funded above a certain amount for certain categories. For each record released, there was an agreement around budgets and spending, and Arista funded that, but also controlled and managed to make sure that those budgets were in line.
MR. AGNIFILO: Understood. And I would imagine that these operating agreements are written by lawyers?
DEREK FERGUSON: Yes.
MR. AGNIFILO: And I would imagine that this financial relationship between Arista and Bad Boy has accountants involved in every step of the way?
DEREK FERGUSON: Yes.
MR. AGNIFILO: Now, at some point, tell me if this is right, you develop an interest in possibly working for Bad Boy and with Bad Boy; am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: And why? Let me ask a broader question. You have a master's in business from Harvard Business School, you're working for a very prominent, Bertelsmann Music is a very prominent company; am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: What was it about Bad Boy that you wanted to work there?
DEREK FERGUSON: Well, first and foremost, for me, coming from the Bronx, we needed more companies that really would hire people from the communities I grew up in that would give people opportunities. And also I was, like, very entrepreneurial. So my father was an entrepreneur. I grew up with a trucking company -- my father had a trucking company in the Bronx. So entrepreneurship was very important to me. So what I observed with Bad Boy at the time and Sean Combs was a company that was really giving a lot of young executives opportunities, especially from areas that I grew up in, and I thought there was a lot of opportunity to have a lot of impact with a company that could focus on helping those in the communities I came from.
MR. AGNIFILO: And what was the interview or on-boarding process to Bad Boy, as far as you can recall, from -- we're almost talking 30 years ago, but --
DEREK FERGUSON: Interview?
MR. AGNIFILO: Whatever you remember.
DEREK FERGUSON: Yeah, I mean, pretty normal, you know, fairly normal I guess for a smaller company. We had an interview, had a number of interviews and got hired, and was on-boarded by multiple members of the team, met with some of the partners at Arista. So I would say normal on-boarding.
MR. AGNIFILO: So comes to a couple of questions. So part of the interview process is you had to interview with people from Arista because they were 50-percent partner?
DEREK FERGUSON: I actually didn't interview with them prior to getting the job.
MR. AGNIFILO: Let me ask you some specific questions. Do you remember someone named Vashta Dunlap?
DEREK FERGUSON: Yes.
MR. AGNIFILO: Tell us who Vashta is.
DEREK FERGUSON: Vashta was leading human resources at the time.
MR. AGNIFILO: Was she at Bad Boy before you or after you, if you remember?
DEREK FERGUSON: I think she was there before I got there.
MR. AGNIFILO: Do you remember if you interviewed with Vashta?
DEREK FERGUSON: I don't think I did.
MR. AGNIFILO: You said there were certain members of the team you interviewed with. Tell us if you remember who they were and what those interviews were like.
DEREK FERGUSON: Yeah, members of the team, there was a president at the time that I interviewed with, general manager --
(Continued on next page)
BY MR. AGNIFILO:
MR. AGNIFILO: Is that Benny Medina?
DEREK FERGUSON: Yeah.
MR. AGNIFILO: OK. I cut you off. I'm sorry. Benny Medina is the president?
DEREK FERGUSON: Yeah.
MR. AGNIFILO: And then there's the general manager?
DEREK FERGUSON: General manager. And I met with other related parties or people that Mr. Combs trusted to, to interview people like myself, his attorney, and other kind of key advisers of his.
MR. AGNIFILO: OK. So it's not as though that you met Mr. Combs and got a job; it was much more involved than that?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. Now, did you know -- did you know Mr. Combs personally? When you decided I want to work with Bad Boy, did you grow up with Mr. Combs, know Mr. Combs? Had you ever set eyes on Mr. Combs in public?
DEREK FERGUSON: I did not know him.
MR. AGNIFILO: OK. And so you wanted to work at Bad Boy because of the reasons you just gave this jury a few minutes ago, about what you believed Bad Boy stood for, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And you were the CFO from, starting about 1998?
DEREK FERGUSON: Yes.
MR. AGNIFILO: All right. And when did you leave the CFO position?
DEREK FERGUSON: Again, end of 2012, roughly.
MR. AGNIFILO: All right. And then you were the chief growth officer?
DEREK FERGUSON: Yes.
MR. AGNIFILO: All right. And this is -- I know it's a big period of time. Between 1998 and 2012, how did Bad Boy change?
DEREK FERGUSON: Well, it changed from being primarily record, a record company to adding other businesses, which ended up growing. As the record industry became more competitive, at that time, there was a big move to, away from physical records to digital music. So there was more pressure on record companies. Other companies in the Combs group of companies started growing and being more the major focus of the enterprise.
MR. AGNIFILO: OK. So tell me if this is right. From what you could see, being on the inside as an executive, part of the thing that caused the change in Bad Boy is the nature of how people listen to music; people don't go to record stores and buy records anymore, they listen to music in other ways?
DEREK FERGUSON: Yes.
MR. AGNIFILO: And what, if anything, from what you could see, what effect did that have on Bad Boy, the record company?
DEREK FERGUSON: The record company shrunk in terms of revenues and profits.
MR. AGNIFILO: OK. So you talked about a number of other companies, and you talked about some of them on direct examination, and I want to go through just a few. I think you talked about a company called Janice Combs Music?
DEREK FERGUSON: Yes.
MR. AGNIFILO: And Janice Combs is who?
DEREK FERGUSON: Sean's mom.
MR. AGNIFILO: OK. And then there was Janice Combs Publishing?
DEREK FERGUSON: Yeah. The -- I didn't mention it, but it was mentioned.
MR. AGNIFILO: OK.
DEREK FERGUSON: Yes.
MR. AGNIFILO: All right. Janice Combs Management -- and I'm not saying you mentioned all these on direct.
DEREK FERGUSON: Right.
MR. AGNIFILO: I'm just going through a list of companies. -- that was another company?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. You mentioned something about Bad Boy Touring?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And what was Bad Boy Touring?
DEREK FERGUSON: A touring company. It was a company that was used for most of the major tours managed by the company.
MR. AGNIFILO: OK. So when shows were on the road, Bad Boy Touring would kind of take the lead with that kind of stuff?
DEREK FERGUSON: Yes.
MR. AGNIFILO: All right. Then there was Sean John clothing at one point, right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And then there was -- do you remember a company called Notorious LLC?
DEREK FERGUSON: Yes.
MR. AGNIFILO: And tell the jury what that is.
DEREK FERGUSON: That was a magazine named Notorious.
MR. AGNIFILO: OK. Blue Flame?
DEREK FERGUSON: Blue Flame's a marketing company.
MR. AGNIFILO: OK. And what things did it market?
DEREK FERGUSON: It varied over time, but generally marketed brands. Brands would engage Blue Flame to do their marketing campaigns for them.
MR. AGNIFILO: All right.
DEREK FERGUSON: But --
MR. AGNIFILO: Now, some of these companies -- I think you named some of them -- were solely owned by Mr. Combs, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: And then some of them had partnerships with other companies, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: And is this -- are these partnerships along the same lines of what you described with Bad Boy and Arista?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. Meaning that there's an operating agreement that governs the activity between the two companies, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: All right. And that this operating agreement basically is sort of the bible about kind of what these companies can do and can't do and how they can do it, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: And these -- so, when there were these companies --
MR. AGNIFILO: And feel free to have some water. Go ahead.
MR. AGNIFILO: All right. So, I want to make sure I understand this right. So let's talk about, in the first instance, about companies that are solely owned by Mr. Combs. So we're not talking about companies that have a partner. All right? I think the government asked you with those types of solely owned companies, what control -- what can Mr. Combs do by way of taking a salary, and so I want to ask you a couple questions about that. Those companies all had finance departments, right?
DEREK FERGUSON: Or they shared a finance department.
MR. AGNIFILO: OK. So that's a great point. Tell us how that worked. So you were always -- when you were the CFO -- just tell us what a CFO is.
DEREK FERGUSON: Chief financial officer.
MR. AGNIFILO: OK. So you're the head of the finance department. OK? Now, I think what you just said is the company shared a finance department, right?
DEREK FERGUSON: Some of the companies.
MR. AGNIFILO: OK. So when you were CFO, which companies shared the financial department that you were the head of?
DEREK FERGUSON: Yeah. I don't know if I can name them all.
MR. AGNIFILO: Whatever you remember.
DEREK FERGUSON: There were a lot of -- a lot of the companies shared the financial office. Then there were some companies that were big enough that had their own kind of finance office.
MR. AGNIFILO: OK. So for these companies that are solely owned by Mr. Combs, if Mr. Combs said hey, I've been working hard, I want to take some of the profits, that's a matter for the finance company, correct?
DEREK FERGUSON: For the finance department.
MR. AGNIFILO: For the finance department. I'm sorry.
DEREK FERGUSON: Right.
MR. AGNIFILO: And how would that work? Would what would the finance department look at? How would it make its decision as to whether Mr. Combs would be able to take some salary?
DEREK FERGUSON: Again -- well, a couple things I'll just say. It wouldn't necessarily have to be salary, because it just would be distributions of his profits so it wasn't necessarily categorized as salary, but as long as the company was profitable, again that's all -- he's entitled to all his profits.
MR. AGNIFILO: OK. But that would be run through the finance department?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. All right. Now, let's talk about Bad Boy Records for a second. Established in 1993, am I right? I know that was before you got there.
DEREK FERGUSON: Right. Bad Boy Records, no, I don't think it was in '93, but --
MR. AGNIFILO: OK. Well, tell me what you remember.
DEREK FERGUSON: Yeah. I think that Bad Boy Records, which is the joint venture between Arista and Bad Boy, was formed, I'm going to say maybe in '96.
MR. AGNIFILO: OK. All right. And basically, it was an R & B and contemporary, contemporary R & B label, right, and hip-hop?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. Now, are you familiar with the artists that Bad Boy had at the time, or is that not your end of the business?
DEREK FERGUSON: I'm familiar with them. Familiar with them. I don't know if I could name them all --
MR. AGNIFILO: That's all right.
DEREK FERGUSON: -- but I'm familiar with them.
MR. AGNIFILO: That's all right. Now, in addition to Arista, did Bad Boy have other relationships with other record companies? And I'll give you a few names, and you tell me if you remember one way or the other. Epic Records?
DEREK FERGUSON: Nothing directly that I remember.
MR. AGNIFILO: OK. Interscope?
DEREK FERGUSON: Interscope, yes, at some point.
MR. AGNIFILO: OK. Was that later?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. Atlantic Records?
DEREK FERGUSON: Yes.
MR. AGNIFILO: Vinyl Records?
DEREK FERGUSON: Don't remember.
MR. AGNIFILO: No problem. Universal. Universal Media?
DEREK FERGUSON: Yes, Universal. Interscope is part of the Universal --
MR. AGNIFILO: OK. And I think you talked about Warner Music?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. So at one point in time, Bad Boy had partnerships or relationships with each of the companies that you, that you remember them having a relationship, right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And each of those relationships would be basically governed the same way; there'd be an agreement, an operating agreement in effect between Bad Boy and the other company, and the business would proceed according to that operating agreement, am I right?
DEREK FERGUSON: Not exactly.
MR. AGNIFILO: Tell me. Tell me. Go ahead.
DEREK FERGUSON: So, the main difference would be whether it's a distribution agreement or a joint venture agreement. So a distribution agreement would be structured differently than a joint venture agreement, but those that were joint venture agreements would be governed by this operating agreement.
MR. AGNIFILO: Got it. OK. So you start in 1998. I think you said that Benny Medina was the president of Bad Boy at the time, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: All right. And from what you can remember and what you saw, what was the role of the president of Bad Boy back then? What did Benny Medina do?
DEREK FERGUSON: He basically oversaw all of the companies and, you know, tried to drive growth within all of the companies and also pursuing other, new ventures and new ideas and new opportunities.
MR. AGNIFILO: So when you started as the CFO, am I right that you actually reported to Benny Medina?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. So, because he was the president, he was your direct superior, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And then there was someone named Jeff Burroughs, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: And he was the general manager?
DEREK FERGUSON: Yes.
MR. AGNIFILO: All right. And tell us what Jeff Burroughs did.
DEREK FERGUSON: Jeff Burroughs was the general manager of the record company itself, so he focused on really all aspects of running the record company.
MR. AGNIFILO: OK. And then there was -- André Harrell was also president? Do you know that name?
DEREK FERGUSON: Yeah. That came later.
MR. AGNIFILO: OK. Who was André Harrell?
DEREK FERGUSON: André Harrell is a legendary music executive that founded Uptown Records and then eventually ran Motown Records and came back to work at Bad Boy Records.
MR. AGNIFILO: And you're familiar with Mr. Combs's background from before he was at Bad Boy, right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And Mr. Combs worked for André Harrell at Uptown, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And then either he was fired or something else happened, but he left. He left Uptown, and then André Harrell -- Mr. Combs took André Harrell back and made him the president of Bad Boy, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And then I think you talked about Vashta Dunlap in this case, and she was human resources, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And what kind of interaction did you have with Vashta?
DEREK FERGUSON: Vashta -- in the early days I had quite a, quite a frequent interaction with her, yep.
MR. AGNIFILO: OK. And what do you remember about the human resources department, you know, from those early years? Talking about, like, '98 to, maybe, I don't know, 2006, 2007. What was human resources like, to the best of your recollection?
DEREK FERGUSON: I just -- I would say it pretty much ran like any company you would think in terms of a human resources department, following all the laws of -- that governed, you know, governed our company, governed, you know, state law, etc., regarding employees.
MR. AGNIFILO: Right. OK. But there was a human resources department headed by Vashta, right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: All right. Now, I think you mentioned briefly that there was a spirits business that Mr. Combs had, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And what was that called?
DEREK FERGUSON: The spirits business eventually was called Combs Wines and Spirits.
MR. AGNIFILO: OK. And tell us about that. What, if any, connection did you have with that?
DEREK FERGUSON: Well, Combs Wines and Spirits -- well, I don't know exactly when that entity was formed, but the -- so, if I go back to the spirits business and the original deal with Diageo, I would have been involved in the completion of the deal and initial execution of the deal and the rollout of how we were going to execute against that deal.
MR. AGNIFILO: OK. And Diageo is partnered with who, with which Combs entity?
DEREK FERGUSON: I think originally it was Combs Enterprises.
MR. AGNIFILO: OK. So it's Combs Enterprises and Diageo. And you said you were familiar with that deal?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. What was your connection to that deal?
DEREK FERGUSON: I was involved in actually -- I was involved in negotiating the deal.
MR. AGNIFILO: All right. What did the deal involve? What did Diageo have to do? What did Combs Enterprises have to do?
DEREK FERGUSON: Well, Diageo really financed the majority of the activity, and Combs was mostly responsible for creative and marketing and product.
MR. AGNIFILO: OK. And did issues develop at some point between Combs and Diageo?
MS. SLAVIK: Objection.
THE COURT: Can you rephrase?
MR. AGNIFILO: Sure.
MR. AGNIFILO: After you put the deal together and were involved in the deal, how did the relationship between Diageo and Combs Enterprises proceed from what you could see?
DEREK FERGUSON: Well, the business very quickly was very successful, and I think there was always a constant conversation around improving the balance of trade, of the deal, and making sure that the deal was fair on both sides.
MR. AGNIFILO: Meaning what?
DEREK FERGUSON: Meaning just making sure that given the incredible success, probably exceeding expectations, that the view of that success would lead to just continuously making sure the economics was, was fair and equitable, equitable to both parties.
MR. AGNIFILO: And did anything -- in addition to the economics, what, if anything, else did you notice about kind of how the relationship between Diageo and Combs Enterprises progressed?
MS. SLAVIK: Objection.
THE COURT: That's overruled.
BY MR. AGNIFILO:
MR. AGNIFILO: Is that question -- was that question too convoluted for you?
DEREK FERGUSON: Yeah.
MR. AGNIFILO: OK. That's fine. Fair enough.
THE COURT: Can you rephrase?
MR. AGNIFILO: I will. I will absolutely. Thank you.
MR. AGNIFILO: As time went on, what, if any, issues did you see between Diageo and Combs Enterprises?
MS. SLAVIK: Objection. Can we get a time frame?
MR. AGNIFILO: Maybe, maybe, you know, four years in, five years in, after you made the deal.
MS. SLAVIK: Objection. Do we know when --
MR. AGNIFILO: Let me ask this. I'm not going to --
THE COURT: There you go.
BY MR. AGNIFILO:
MR. AGNIFILO: OK. All right. Were there issues that you could see about how Diageo was marketing liquor from the Combs business?
MS. SLAVIK: Objection.
THE COURT: That's overruled.
DEREK FERGUSON: Yeah. I think with any successful brand -- the push from our side was always to grow the brand as quickly as possible in as many markets as possible. So I think that was always the tension, you know, driving the execution from Diageo's standpoint -- of growing the brand in as many markets as possible.
MR. AGNIFILO: And did you have a perception that that was not happening on Diageo's end?
DEREK FERGUSON: I think we had -- we wanted a -- we wanted more. We wanted -- you know, we had conversations about how do we drive more and conversations about was the brand everywhere where the competitive brands were.
DEREK FERGUSON: So that was a constant analysis being done, like, is it everywhere it should be?
MR. AGNIFILO: OK. Was there a concern on your part that the Combs brands were only being marketed in certain areas and to certain people?
MS. SLAVIK: Objection. Could we have a sidebar on this, your Honor?
THE COURT: Yes.
(Continued on next page)
(At sidebar)
THE COURT: Relevance.
MR. AGNIFILO: So, Diageo came up on direct, and I'm just trying to understand -- the relationship breaks down. They have a great relationship. They make a lot of money, and it breaks down, and the reason it breaks down is because there's a perception on the part, I think, of this witness and Mr. Combs that Diageo was keeping the Combs brands in, you know, as -- like the urban brands.
THE COURT: I understand that argument. What's the relevance of that to this case?
MR. AGNIFILO: Well, I think it's relevant -- so, one of the things that may come out in the evidence and possibly in our case is at the time of the Ventura lawsuit, there was negotiations going on between Mr. Combs and Diageo, and one of the impetuses to settle quickly, to settle the Cassie lawsuit quickly was because it was going to topple this already somewhat tenuous relationship. So I sort of agree with your Honor that it hasn't been terribly relevant to the evidence to date, but we're only halfway through the trial.
THE COURT: You're saying the relevance will become apparent --
MR. AGNIFILO: Yes.
THE COURT: -- and you're only going to ask one more question on this?
MR. AGNIFILO: That's all I'm going --
MS. SLAVIK: Your Honor, could I just state --
THE COURT: Of course. Of course.
MS. SLAVIK: My understanding is that that breakdown of the relationship between Mr. Combs and Diageo did take place just before the Ventura lawsuit. If you recall, that was November of 2023. We just heard this witness testify that he stopped being CFO in November of 2012. He left Mr. Combs's employ in 2017. This witness is not the appropriate person to get into these matters. Frankly, they shouldn't be gotten into at all, but in particular through this witness, because he has no personal knowledge. He cannot establish anything that happened in November of 2023.
THE COURT: And maybe I misunderstood, but I understood what you were saying is you were just going to ask one question to establish that there were these issues back when --
MR. AGNIFILO: Correct. That's right.
THE COURT: -- when he was CFO.
MR. AGNIFILO: Correct.
THE COURT: And through other evidence or other witnesses --
(Indiscernible overlap)
THE COURT: All right.
MS. SLAVIK: Your Honor, I still object to the relevance.
THE COURT: Understood.
MR. AGNIFILO: One question.
THE COURT: One question.
MR. AGNIFILO: Yes, Judge.
(Continued on next page)
(In open court)
THE COURT: Go ahead.
MR. AGNIFILO: Thank you.
MR. AGNIFILO: In your experience -- and you left Mr. Combs's employ in 2017, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. Were -- did you observe or were you concerned that Diageo was marketing the Combs liquor brands in primarily Black areas?
MS. SLAVIK: Objection.
THE COURT: Overruled.
DEREK FERGUSON: Can you rephrase?
MR. AGNIFILO: Sure. Were you concerned or did you observe that Diageo was marketing the Combs liquor brands -- and I won't use any other -- to certain people and in certain areas? And/or marketing or selling.
DEREK FERGUSON: Yeah. I think, again, if -- what I just am trying to get clear about, like, my opinion, or --
MR. AGNIFILO: What was -- you were in this company?
DEREK FERGUSON: Yeah.
MR. AGNIFILO: You were working with Mr. Combs at the time, in 2017, at least, and so rather than your opinion, what was -- what was discussed? What was -- what was, you know, the discussions within the company that you were privy to on that point?
DEREK FERGUSON: Yep. I think the facts were that the distribution was concentrated and the opportunity was how do you expand that distribution? And that was the push with Diageo. And I think the assessment, which went on, I think, even beyond my time when I was there, was what was --
MS. SLAVIK: Objection, your Honor.
THE COURT: Mr. Ferguson, just speak about the time that you were working at the company.
DEREK FERGUSON: OK. All right.
THE COURT: If that was your answer, then we'll get another question.
BY MR. AGNIFILO:
MR. AGNIFILO: So, I'm only going to ask you based on your personal knowledge.
DEREK FERGUSON: Yeah.
MR. AGNIFILO: Yeah. What's your personal -- answer that last question based on your personal knowledge.
DEREK FERGUSON: My personal knowledge was that, the facts were that, that the distribution was highly concentrated, and I think the open analysis to be done on it was why.
MR. AGNIFILO: And what do you mean by -- concentrated on what? That's what I'm asking --
MS. SLAVIK: Objection.
THE COURT: That's overruled.
BY MR. AGNIFILO:
MR. AGNIFILO: When you say concentrated, what does that mean? Just tell us --
DEREK FERGUSON: When you look at the map of where the product was distributed, it was concentrated in -- more so in urban areas versus broader, broader -- broader distributions.
MR. AGNIFILO: Got it. We're going to move on. Revolt Television, what is Revolt Television?
DEREK FERGUSON: Revolt Television's a cable network nationally distributed.
MR. AGNIFILO: All right. And what was your connection to Revolt?
DEREK FERGUSON: So, Revolt -- I was involved from the beginning, when it was launched through a, through a competitive process held by Comcast to award four networks, and Revolt was one of the four networks they awarded distribution to.
MR. AGNIFILO: And tell me if this is right. Revolt was owned by a number of -- excuse me, of different parties. It was owned by a Combs trust, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. It was owned by Bad Boy Films, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: And it was owned by Highbridge Capital Management, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. Now, Highbridge Capital Management was purchased by J.P. Morgan Chase, am I right? In 2004.
DEREK FERGUSON: Let me back up.
MR. AGNIFILO: Yeah, please. Please.
DEREK FERGUSON: There was -- I don't know that those are the same exact entities but maybe related entities, but --
DEREK FERGUSON: Yeah.
MR. AGNIFILO: OK. So, I just want to make sure the jury understands how this works, because we've heard a lot about Revolt at the trial, but this company called Highbridge Capital Management -- tell me if this is right -- had two seats on the Revolt board. Does that sound right?
DEREK FERGUSON: At least two, yes.
MR. AGNIFILO: OK. At least two.
DEREK FERGUSON: Yeah.
MR. AGNIFILO: OK. And tell the jury what that means, that we have Highbridge Capital Management -- let me take a step back. I'm going too far ahead. What is Highbridge Capital Management?
DEREK FERGUSON: Yeah. And just to be clear, I'm not certain what the entity was, but this is a professional investment firm that invested in Revolt.
MR. AGNIFILO: OK. So -- and to your knowledge, was this company purchased by J.P. Morgan at the time that these board seats were controlled by this company?
DEREK FERGUSON: I'm sorry.
MR. AGNIFILO: Let me ask a different question. What, if any, involvement did J.P. Morgan Chase have in Revolt?
DEREK FERGUSON: No direct involvement.
DEREK FERGUSON: Yeah.
MR. AGNIFILO: So, let's talk about Highbridge Capital Management for a second. You said they had at least two seats on the board?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And so what does that mean? How many board seats were there, if you remember?
DEREK FERGUSON: Yeah. I'm just trying to remember exactly how many board seats, but I think if they had two out of five would be -- they would have had 40 percent of the board seats.
DEREK FERGUSON: Yeah.
MR. AGNIFILO: So 40 percent of the board seats of Revolt were held by this capital management company, right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And so what does that mean in terms of the type of input, the type of say that this management company would have over the business of Revolt?
DEREK FERGUSON: They had -- they had a say in a lot of different areas of the enterprise. So any major actions that would be taken by the -- by Revolt would need approval from them, like Revolt couldn't be sold without their consent, and other kind of major activities would require consent.
MR. AGNIFILO: And I think you said that they were a professional investment company, is that right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And what does that mean? Just tell the jury what that means.
DEREK FERGUSON: It means that, you know, this is what this group or the individuals that make up this group, this is what they do for a living. They invest in companies, and you know, they hold their investment for a certain period of time and they hope to sell that investment for a profit down the road.
MR. AGNIFILO: OK. So, we're going to look at some organization charts.
MR. AGNIFILO: Your connection to Revolt was what exactly, just so we have it clear?
DEREK FERGUSON: I was the chief operating officer from 2015 through 2017.
MR. AGNIFILO: All right. So, we're going to look at some Revolt organization charts from July of 2016, and we're going to show them, for the moment, for the witness, the Court and the parties. And this is Defense Exhibit 1900, and it's a series of charts. And so what I'm going to ask you to do, I'm going to show you a bunch of charts. I don't want you to read from them. I'm just going to ask you generally what they are, and then we'll kind of take things from there. All right. So this is the cover sheet. Let's go to the next page. You know what I'm going to do, Judge? I have them here. I think it's probably quicker to give him the binder.
THE COURT: OK.
MR. AGNIFILO: Can I approach? Here you go. Start with 1900. Mr. Ferguson, I've given you a binder, and there's a tab there that says 1900. Do me a favor and just thumb through those charts, and then look up at me when you've done that. Thank you, sir.
MR. AGNIFILO: Have you had a chance to look through those?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. Those are organization charts for Revolt, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. We offer them as 1900, Judge.
MS. SLAVIK: No objection.
THE COURT: Defense Exhibit 1900 will be admitted.
MR. AGNIFILO: Thank you.
(Defendant's Exhibit 1900 received in evidence)
MR. AGNIFILO: All right. Let's put them up for the jury and the folks in the gallery, Defense Exhibit 1900. All right. So this says Revolt organizational charts for July of 2016. Let's go to the next page. OK. We're going to go down memory lane.
MR. AGNIFILO: Who's the -- the chief executive officer is who?
DEREK FERGUSON: Keith Clinkscales.
MR. AGNIFILO: OK. And then you have -- Christine Higley is executive assistant. See that?
DEREK FERGUSON: Yes.
MR. AGNIFILO: Melissa -- can you say that last name?
DEREK FERGUSON: I think it's a misspelling.
MR. AGNIFILO: OK. Great. All right. Then we see you, Derek Ferguson. There we go.
DEREK FERGUSON: Yes.
MR. AGNIFILO: Mike Roche, James JB Brown, Eugene Caldwell, Jaunice Sills, Kelly Griffin and Rahman Dukes. Do you see all of that there?
DEREK FERGUSON: Yes.
MR. AGNIFILO: And that's the executive bunch for Revolt, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: All right. And as chief operating officer -- I know you talked generally about being the COO. What did you do as the chief operating officer for Revolt?
DEREK FERGUSON: Well, I had several areas reporting in to me, including finance and, I believe, production at that time. And -- yeah, so my role as chief operating officer was really overseeing the operations of the cable network.
MR. AGNIFILO: OK. And then you see that Sean Combs isn't on -- at least in this chart of the executive office, am I right?
DEREK FERGUSON: Correct.
MR. AGNIFILO: And that the CEO is Keith Clinkscales, right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: And so -- just tell the jury, what does a CEO do of any company, including this one?
DEREK FERGUSON: CEO oversees the company, really all aspects of the company.
MR. AGNIFILO: OK. Let's go to the next chart.
MR. AGNIFILO: All right. Now we have operations, and we see you on the top of that because you're the chief operating officer, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: All right. And then you have Emily Gray; that's your assistant?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And then we have a bunch of folks here at the bottom. I guess the person in the middle is to be determined, but the other four are identified people, and they all worked at Revolt in the operations department, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. Let's go to the next chart.
MR. AGNIFILO: OK. Ad -- what's ad sales?
DEREK FERGUSON: Those are the -- that's advertising that we sold on the network.
MR. AGNIFILO: OK. And we see all these people in the ad sales. Would this be a department, a division? What would you have called this?
DEREK FERGUSON: Department.
MR. AGNIFILO: OK. Ad sales department, right? All these people work at Revolt, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. Let's go to the next chart.
MR. AGNIFILO: Then we have pricing/planning/traffic. That's another department?
DEREK FERGUSON: This is a, it's a department, still within the ad sales department.
MR. AGNIFILO: Got it. Got it. OK. Next chart.
MR. AGNIFILO: What's integrated marketing?
DEREK FERGUSON: Integrated marketing -- again, another part of ad sales -- creates programs that would integrate content with, with marketing, another way to drive ad revenue.
MR. AGNIFILO: Next chart.
MR. AGNIFILO: Distribution, affiliate, consumer marketing, just tell us what that is.
DEREK FERGUSON: Distribution is really relationships with all of the cable networks; it distributed the television network. And affiliate and consumer marketing are the joint marketing programs that were coordinated with the cable networks.
MR. AGNIFILO: Understood. Let's go to the next chart.
MR. AGNIFILO: Production. What do the production folks do?
DEREK FERGUSON: Production, this is the organization that actually controlled production of content for the Revolt channel.
MR. AGNIFILO: OK. Let's go to the next chart.
MR. AGNIFILO: Creative production?
DEREK FERGUSON: Yeah. This is also underneath the production banner, and these were just the leaders, the creative heads.
MR. AGNIFILO: Yep. OK. Next chart.
MR. AGNIFILO: Post production.
DEREK FERGUSON: Post production, this is really what happens after, after content is made. This is the editing and formatting, etc., so that you can get the content actually on to the channel.
MR. AGNIFILO: OK. And there are a number of other charts; we don't need to go through them all, but these were all corporate charts that were made and kept in the ordinary course of the business of Revolt, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. Let's go -- so now there's Combs Enterprise. You were affiliated with Combs Enterprise as well, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. Let's look at 1901 for the witness and the parties and the Court. OK? And do me a favor. I think in the book there, the second tab is 1901, and I'd ask you to look through it, and just take a look at those charts and then when you've looked at them, look up at me and I'll know that you're done.
MR. AGNIFILO: OK. Thank you, sir.
MR. AGNIFILO: These are all organization charts for Combs Enterprises?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. We offer them as 1901 under seal, Judge, and the document that we'll offer for all of us to look at is 1901R.
MS. SLAVIK: No objection.
THE COURT: All right. 1901 will be admitted under seal, and 1901R will be admitted.
(Defendant's Exhibit 1901R received in evidence)
MR. AGNIFILO: OK. Can we look at the first chart, and for the jury. There you go.
MR. AGNIFILO: OK. All right. So, here it says who we are, and this is Combs Enterprises, an org chart for Combs Enterprises, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And can you just tell us who everybody is? On top of we see Sean Combs. He's the CEO.
DEREK FERGUSON: Yes.
MR. AGNIFILO: Brian Offord. Tell us about Brian Offord. What did he do?
DEREK FERGUSON: He was the chief operating officer of Combs Enterprises.
MR. AGNIFILO: Then we have -- is it Hal Kravitz?
DEREK FERGUSON: Yes.
MR. AGNIFILO: He's the CEO of AQUAhydrate?
DEREK FERGUSON: Yes.
MR. AGNIFILO: And tell us about AQUAhydrate real quick. What did AQUAhydrate do?
DEREK FERGUSON: Water brand that was launched by Sean and Mark Wahlberg.
MR. AGNIFILO: OK. Then we have Jeff Tweedy, president of Sean John, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. Then we have Keith Clinkscales. We just talked about him as the CEO of Revolt.
DEREK FERGUSON: Yes.
MR. AGNIFILO: See that?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. We have Michelle Williams and Keisha Combs; they don't get photographs. And then at the bottom, we have Tony Abrahams, chief financial officer, right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. Harve Pierre, president of Bad Boy, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: Nat Moore is communications?
DEREK FERGUSON: Yes.
MR. AGNIFILO: Then we have James Cruz, president, artist management and creative partnership. See that?
DEREK FERGUSON: Yes.
MR. AGNIFILO: And Dia Simms?
DEREK FERGUSON: Yes.
MR. AGNIFILO: She's with Combs Wines and Spirits?
DEREK FERGUSON: Yes.
MR. AGNIFILO: Sandy Humphrey, chief human resources officer. See that?
DEREK FERGUSON: Yes.
MR. AGNIFILO: And was that after Vashta was no longer in that position?
DEREK FERGUSON: I don't know --
MR. AGNIFILO: No problem.
DEREK FERGUSON: -- exactly --
MR. AGNIFILO: That's OK.
DEREK FERGUSON: -- when. Yeah.
MR. AGNIFILO: And we have Aubrey Flynn, vice president of digital; Ericka Pittman; André Harrell, who we talked about before, and yourself, Derek Ferguson. And you look every bit as good now as you did then.
MR. AGNIFILO: OK. So, what are we looking at here. You say who we are. What is this assembly of people?
DEREK FERGUSON: This is essentially the legal team -- I mean leadership team. I'm sorry.
MR. AGNIFILO: OK. That's fine. OK. Let's go to the next page.
MR. AGNIFILO: OK. Finance and administration. Now, when you left -- tell me if this is right -- Tony Abrahams came in, correct?
DEREK FERGUSON: Yeah, he came in at some point after I moved to --
MR. AGNIFILO: Right. When you left the CFO position --
DEREK FERGUSON: Yes.
MR. AGNIFILO: -- Tony Abrahams became the CFO, went into the CFO position, is that right?
DEREK FERGUSON: Yeah. I think actually there was somebody there in the interim for --
DEREK FERGUSON: -- maybe 12 months.
MR. AGNIFILO: Now, did you know Tony Abrahams from Harvard Business School?
DEREK FERGUSON: I did.
MR. AGNIFILO: OK. And so he went to Harvard Business School too?
DEREK FERGUSON: Yeah.
MR. AGNIFILO: All right. And did you also work with Tony Abrahams in the accounting firm?
DEREK FERGUSON: At Coopers & Lybrand, yes.
MR. AGNIFILO: OK. So, did you recruit Tony as your, you know, old friend from Harvard Business School?
DEREK FERGUSON: I would say I brought him to the table as a candidate.
MR. AGNIFILO: OK. All right. So what we're seeing is we are seeing two people heading this organization, both of whom went to Harvard Business School, yourself and Tony, right, as the CFO?
DEREK FERGUSON: Yes.
DEREK FERGUSON: Yeah.
MR. AGNIFILO: OK. And so this is -- when it says finance and administration, just tell us briefly. What are all these people doing?
DEREK FERGUSON: Yeah. I mean this was not my organization, but -- so I can tell you what I, what I, what I would -- how I would interpret --
MR. AGNIFILO: If you don't know firsthand --
DEREK FERGUSON: Yes.
MR. AGNIFILO: -- then I'm not going to ask you that question.
MR. AGNIFILO: Let's go to the next chart. OK. This is human resources. OK. Go to the next chart.
MR. AGNIFILO: Now, what's digital?
DEREK FERGUSON: I --
MR. AGNIFILO: That's all right. Your pause says enough.
MR. AGNIFILO: Let's go to the next one. Communications, public relations, right? OK. Next chart.
MR. AGNIFILO: OK. Bad Boy Records, Harve Pierre was the president of Bad Boy Records?
DEREK FERGUSON: Yeah.
MR. AGNIFILO: OK. We don't need to go through all the charts.
MR. AGNIFILO: These are charts of different people who worked for Combs Enterprises, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: All right. Now, I want to talk to you a little bit about personal versus business expenses. You talked about that a little bit when you were on direct examination.
MR. AGNIFILO: Fair to say -- now, what's your accounting background?
DEREK FERGUSON: What's my accounting background?
MR. AGNIFILO: Yeah.
DEREK FERGUSON: I studied accounting, and at one point I held a CPA.
MR. AGNIFILO: OK. So that was my question.
DEREK FERGUSON: Yeah.
MR. AGNIFILO: You were a CPA for a while?
DEREK FERGUSON: Yeah.
MR. AGNIFILO: OK. And just tell the -- I think you're the first CPA we're meeting. Tell the jury what a CPA is.
DEREK FERGUSON: A certified public accountant, means you've worked in public accounting for a number of years and also passed an exam to obtain that certificate.
MR. AGNIFILO: OK. So you studied accounting, and you were a CPA for a while?
DEREK FERGUSON: Yes.
MR. AGNIFILO: All right. OK. So, fair to say personal expenses cannot be taken as business expenses, correct?
DEREK FERGUSON: Correct.
MR. AGNIFILO: The two are totally separate, right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: Now, tell me if this is right. To make sure that the personal expenses were not taken as business expenses, there was line item reconciliation for all business expenses -- for all expenses, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. So, now, what that means -- tell me if this is right. If you have a credit card, a corporate credit card and people using it for business things and for personal things, at some point the credit card statement comes back to the company, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: And someone is going to go through that credit card statement and divide out, OK, this is a valid business expense, this doesn't seem like a valid business expense, this seems like a personal expense to me, right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And that person was not you individually, am I right?
DEREK FERGUSON: Right.
MR. AGNIFILO: OK. That was someone who worked in the finance department, in your department, but it wasn't you, correct?
DEREK FERGUSON: Correct.
MR. AGNIFILO: And it certainly wasn't Mr. Combs?
DEREK FERGUSON: Correct.
MR. AGNIFILO: OK. You never saw Mr. Combs, you know, sitting with the credit card statement, circling what's business and what's personal, am I right?
DEREK FERGUSON: Correct.
MR. AGNIFILO: OK. Those would be people in the finance department whose job that was, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And so if -- tell me -- and this is under your finance department when you were the chief financial officer, if it was a business expense, it was categorized as a business expense, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: Didn't matter who incurred it, correct?
DEREK FERGUSON: Correct.
MR. AGNIFILO: So if it was Mr. Combs incurring it or another, you know, person incurring it, if it was a business expense, it was categorized as a business expense because that's what it was, right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And if it was a personal expense, it was categorized as a personal expense because that's what it was, right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And this is a very important function of the finance department, because you want to make sure you get this right for a host of reasons, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: One of the reasons is taxes, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. Because if it's a business expense, there could be tax ramifications for the business, for it being a business expense, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: And if it's a personal expense, you can't claim it on your taxes as a business expense because it's not a business expense, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: All right. So to your knowledge, did people, every month, go through these credit card statements and determine this is business, this is personal?
DEREK FERGUSON: Yes.
MR. AGNIFILO: Now, you talked about income tax returns. You yourself signed off on which corporate returns, to the best of your recollection -- you signed off on certain corporate return, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. Which corporate returns -- as the CFO, when you were the CFO, which corporate returns do you recall signing off on? I know we're going back a long time.
DEREK FERGUSON: Yeah. I mean I don't have a list, but --
DEREK FERGUSON: Maybe, you know, quite -- a number of the corporate returns.
MR. AGNIFILO: OK. So when -- so the different corporations file tax returns, right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: And if you're the CFO, if you're in the CFO role of those corporations, you're actually the one signing off as the corporate officer on behalf of that corporation, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And for what -- and you did that -- did you do that every year that you were the CFO, if you remember?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. That would be a heartland CFO responsibility, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And on those occasions when the Combs-related business had a partnership with another company, fair to say that both companies would be looking at the books, not just you and your folks at the Combs company; but if you were with Arista, they're going to look at the books as well, correct?
DEREK FERGUSON: Yes. Their -- their -- Arista's, the joint venture books would be really mostly controlled by the partner, the joint venture books.
MR. AGNIFILO: OK. So not by you?
DEREK FERGUSON: In that case, yeah.
MR. AGNIFILO: Right. So if you were in a joint venture with Arista or another record company or, you know, you've talked about some other partners that you guys have been with, those partners would look at the books very closely as well?
DEREK FERGUSON: Yes. They may even maintain the books.
MR. AGNIFILO: Got it.
DEREK FERGUSON: Yeah.
MR. AGNIFILO: And is that sometimes what the operating agreement provides for?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. So one of the things that the operating agreement could provide for in certain circumstances is that the partner actually is in possession of the books, right?
DEREK FERGUSON: For that joint venture, yes.
MR. AGNIFILO: For that joint venture.
DEREK FERGUSON: Right.
MR. AGNIFILO: And what that means is that the partner would see the income and the expenses and all the money outflows and inflows of the joint venture?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. Are you familiar with the role of personal assistants?
DEREK FERGUSON: Generally.
MR. AGNIFILO: OK. In your experience, is it common for people in the entertainment industry to employ personal assistants?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And to your knowledge, did Mr. Combs employ personal assistants?
DEREK FERGUSON: Yeah. I mean I think the assistants and the titles varied, but I think some people categorized it as personal assistant.
MR. AGNIFILO: OK. And tell me, these are people who take care of scheduling and travel arrangements and if, you know, if Mr. Combs had to be in one place or another, would make those arrangements and take care of his needs in those places, correct, if you know?
DEREK FERGUSON: Yeah. I think there's a whole laundry list of things possibly that they could, that they would be involved in. I don't know that that captures it or not, but --
MR. AGNIFILO: OK. Now, you talked about security personnel. And security personnel played an important role in the business, am I right?
DEREK FERGUSON: They were -- yeah, they were part of the business, yes.
MR. AGNIFILO: OK. And their role, and tell me if this is your understanding, is they had to keep Mr. Combs safe, they had to keep his family safe and they had to keep his property safe. That was primarily what they did, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And from what you could see and what you understood, the way they did that is that if he wasn't in the house, they tended to be around him, correct?
DEREK FERGUSON: Restate that, please.
MR. AGNIFILO: Sure. Of course. So, in order to keep him safe, and we'll stick with that for a moment. In order to keep him safe, we're talking physically safe, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: That was their job?
DEREK FERGUSON: Yes.
MR. AGNIFILO: They would be with him, they would physically be in his close proximity, if he went someplace, they would go with him?
DEREK FERGUSON: Personal protection --
MR. AGNIFILO: Yeah, personal protection.
DEREK FERGUSON: Right.
MR. AGNIFILO: OK. And they were paid by the company, correct?
DEREK FERGUSON: Generally, yes.
MR. AGNIFILO: OK. All right. And the service that they provided was to make sure that Mr. Combs wasn't injured or no one did something to him to impair his health and well-being, correct?
MS. SLAVIK: Objection.
MR. AGNIFILO: If you know.
THE COURT: Hold on. That's overruled.
DEREK FERGUSON: Can you restate?
MR. AGNIFILO: Of course I can. And their job, from what you understood, was to be in close proximity with Mr. Combs so that no one would do anything to him of a dangerous nature?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. Now, you said that you had some oversight of Mr. Combs's personal finances, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And I think the prosecutor asked you what homes he had at the time, and you said he had a house in the Hamptons, he had a house in New York City and he had a residence in Miami. Do you remember that?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And I think that the prosecutor also asked you what form he held those properties in, and you said it was an LLC?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And just tell -- first, what's an LLC? Just tell the jury what that is.
DEREK FERGUSON: A limited liability corporation. It's a -- it's incorporated so therefore gives you the protections of a corporation, but could be a single-member corporation, which would mean that it could be owned 100 percent by someone -- like, in this case, of these homes -- or it could be a partnership and have several members and owners.
MR. AGNIFILO: And I think you said, in your experience, it's very common; that's a very common way for certain people to own their houses, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And that's for the sake of anonymity, right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: And -- liability and, you know, individual liability, right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: And also, you said there's some appropriate tax benefits that could come with that, correct?
DEREK FERGUSON: Possibly, yes.
MR. AGNIFILO: OK. All right. And let me just take a step back for a second. Everything that you saw, for your entire time -- 19 years you were working with Mr. Combs, right? OK. Did anyone ever not pay the taxes they were supposed to pay or do something they weren't supposed to do of a financial nature, as far as you ever saw?
MS. SLAVIK: Objection.
THE COURT: You've got to rephrase that.
MR. AGNIFILO: Yes, of course. OK.
MS. SLAVIK: Your Honor, could I confer with defense counsel for a moment?
THE COURT: You may.
BY MR. AGNIFILO:
MR. AGNIFILO: So let's talk about these taxes for a second. Taxes and corporations is a very big, important and complex issue, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And from what you saw, in terms of your hands-on, direct involvement, that was always done correctly at each and every year, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And fair to say you would never let there be financial impropriety on your watch in that company, am I right?
DEREK FERGUSON: I would do everything I could to not have that happen, of course.
MR. AGNIFILO: And that's not why you were there; you were there -- you told the jury why you went there, of all places. You were there to do a good job and to help the company fly right and be utterly legal in your --
MS. SLAVIK: Objection.
THE COURT: That's sustained.
BY MR. AGNIFILO:
MR. AGNIFILO: You were there to do a good job and make sure that the company was financially appropriate, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. Now, you talked about cash on direct examination, and you said that there are times when cash is paid because of performances or things like that. Am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. Tell the jury a little bit more about that.
DEREK FERGUSON: About, like, what?
MR. AGNIFILO: OK. Let me ask a more specific question. OK.
MR. AGNIFILO: So there are times when Mr. Combs would be, would be paid in cash, am I right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And the cash -- how was the cash put into the company?
DEREK FERGUSON: I don't understand the question. Sorry.
MR. AGNIFILO: All right. Incoming cash, you said there was a cash receipt form.
DEREK FERGUSON: Yes.
MR. AGNIFILO: Tell us what a cash receipt form is.
DEREK FERGUSON: Cash receipt form was a form which documented how much cash was received, if any cash payments, for what purposes, if there were any cash payments that flowed out of that in cash and then what was net and what was being submitted for deposit.
MR. AGNIFILO: OK. And so when would a cash receipt form be used?
DEREK FERGUSON: When there was a -- some sort of engagement that involved cash. So, when you -- we -- when you think about touring, especially in those early days, there was a lot of cash involved. And you had to collect cash basically at the venues you toured at. And so it was a very cash-oriented activity when you did touring. So that really required regular reconciliation of cash receipts. That would be handled by the tour managers and the finance managers on the tour.
MR. AGNIFILO: OK. And so that cash, there would be a cash receipt form filled out and that cash would be, would be booked on the company's books, correct?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. And I think you said and deposited?
DEREK FERGUSON: Yes. To -- yeah, whatever net amount came to the company.
DEREK FERGUSON: Yeah.
MR. AGNIFILO: In getting cash out of the company, you said there was petty cash, right?
DEREK FERGUSON: Yes.
MR. AGNIFILO: OK. Just describe to the jury, what's petty cash?
DEREK FERGUSON: Yeah, petty cash is just a rolling amount of cash where you have a certain amount of cash set aside for various things that would need to be or would best be taken care of via cash, and that amount of cash would be replenished as receipts came in documenting what the money was spent on. Then that cash would be replenished and again, once again, used as needed.
MR. AGNIFILO: Your Honor, could we have a quick sidebar on something before I ask a question?
THE COURT: You may.
(Continued on next page)
(At sidebar)
MR. AGNIFILO: The indictment contains a number of factual allegations that I think this witness will say are untrue, and I want to ask him -- I want to put these in the forms of questions and ask him, you know, is it true that in your experience the purpose of these companies was X. And I think he's going to say no. And there are factual allegations. They're in the indictment. I can break them into questions, and he'll give an answer and the answer will be what his answer is.
THE COURT: All right.
MR. AGNIFILO: I didn't want to surprise anybody with that, so I'm bringing it up to you. I'm bringing it up.
MS. SLAVIK: I think I want to look at the language of the indictment. My recollection is that the indictment alleges that the enterprise had certain purposes and means and methods. I don't remember the specific citations. If you can provide those --
MR. AGNIFILO: So the enterprise, the way you guys defined it, is all of the companies and their employees. So I will make that very clear to him, but I want to be able to ask him the question. He was the CFO for all this time, and so I want to -- I've created these questions based on the allegations in the indictment, and I'll try and make it as clear as I can, but --
THE COURT: Well, so let's address -- let's break down the issues. You're not going to be referring to the enterprise when you're asking him questions because he doesn't have any understanding --
MR. AGNIFILO: I'm going to talk about the companies and their employees. That's all.
THE COURT: All right. Ms. Slavik. How many questions are we talking about?
MR. AGNIFILO: Seven or eight.
THE COURT: Is there any objection? I guess --
MS. SLAVIK: No. I would like to look at the indictment to see specifically what Mr. Agnifilo's --
THE COURT: Well, can we get a copy of the indictment?
MS. SLAVIK: Yeah, we have one here.
THE COURT: While we're doing that, how much longer do you have?
MR. AGNIFILO: I could do it in 20 minutes.
THE COURT: Perfect.
MS. SLAVIK: I'll just have five minutes for redirect.
THE COURT: OK. Great.
MS. SLAVIK: You want a break?
THE COURT: No. I said that's great.
MS. SLAVIK: I guess I heard what I wanted to hear.
MR. AGNIFILO: I'll show you guys exactly what I'm going to do.
MS. SLAVIK: I think what we're looking at is paragraph 7 here.
MR. AGNIFILO: Let me see. I know exactly what it is.
MS. SLAVIK: OK.
MR. AGNIFILO: It's really here. It's really the purposes part, and I'm not looking at A and B. OK. C --
MS. SLAVIK: That's the enterprises, so I think you have to look to the definition of what the enterprise is.
MR. AGNIFILO: No. I'm going to say it's the companies and employees.
MS. SLAVIK: I don't think that's the correct --
MR. AGNIFILO: But I don't think it has to parrot the indictment.
MS. SLAVIK: Maybe -- what is your questioning?
MR. AGNIFILO: I'll ask questions.
THE COURT: Here's my understanding of what he's going to ask. Without referring to the enterprise, because this witness would have no understanding of what that is, he's going to ask during the time that you were working at these companies, did the companies have a purpose of -- answer.
MS. SLAVIK: I just don't think that's relevant. I don't think that the companies writ large are alleged to be part of the enterprise. As defined, the enterprise is defined Sean Combs, entities within the Combs business, including, but not limited to, Bad Boy Entertainment, Combs Enterprises and Combs Global. That's the entities within those companies. Individuals employed by and associated and others known and unknown. I don't think there's any allegation that Bad Boy as a corporate entity is part of the enterprise. It's entities within Bad Boy.
MR. AGNIFILO: I'll ask the companies and their employees. What I was going to ask is the companies and their employees.
MS. COMEY: Your Honor, if I may? We have alleged an enterprise in fact and association in fact. What the indictment does not allege is that any actual association, like a corporation or like a company, is itself the enterprise. Instead, it alleges an association in fact. And as Ms. Johnson laid out in her opening statement, the government's theory of that association in fact is that the defendant and certain high-ranking employees, including chiefs of staff and members of the security team, worked together as a unit over a course of many years to fulfill multiple different purposes, some of which included illegal purposes. What it does not allege, the indictment does not allege and our theory has not been at this trial -- is not -- that any specific corporation had the purpose of committing crimes.
MR. AGNIFILO: (inaudible)
THE COURT: Hold on. All right. So, I hear what you're saying. In paragraph 2, the indictment defines as the Combs business Bad Boy Entertainment, Combs Enterprises and Combs Global. And then in paragraph 7, in defining the enterprise, it says the Combs enterprise consisted of entities within the Combs business, including, but not limited to, Bad Boy Entertainment, Combs Enterprises and Combs Global. But that is part of the definition. I think what Mr. Agnifilo is just saying is that since that's defined as part of the enterprise, he is going to establish just the limited point that those entities and the individuals employed by those entities did not have the purposes associated with the enterprise, nothing broader than that.
MS. COMEY: I just want to make clear, your Honor, that that subdivision of paragraph 7 says entities within those businesses. So I think in particular, if you went to the next slide --
THE COURT: No. It says entities within the Combs business, including, but not limited -- maybe it's --
MS. COMEY: It may be poor drafting, your Honor.
THE COURT: Yeah.
MS. COMEY: But our theory has never been that a business's purpose was to commit crimes. Our theory has been that people within and portions within those businesses.
THE COURT: Well, let's say that I -- even if you're right, then wouldn't the defense be able to establish, again, the limited point that the businesses themselves did not have that purpose that you might attribute to --
MS. COMEY: I understand that, but that is not -- so we are not disputing that the businesses themselves only were incorporated for lawful purposes, and my concern is, of course, a concern that it would confuse the jury by suggesting that that is our theory through the questioning. It's fighting a straw man, in essence, through the questions, and it's a straw man that could confuse the jury because it's not an argument or a theory we're articulating.
THE COURT: What is the question?
MS. SHAPIRO: Can I just add one thing? I think one of the issues --
THE COURT: Let me hear the question first.
MS. SHAPIRO: Sorry.
THE COURT: I want to see --
MS. SHAPIRO: It's relevant to this.
MR. AGNIFILO: So, the question would be has it been yourself experience that the purpose of the businesses and its employees would be to enhance the power of Sean Combs through violence? And he's going to say violence, of course not. Or through the use of firearms. You know, and so, and those are the questions, you know, as someone who's been the CFO of all these businesses, is that the purpose of the businesses and their employees?
MS. COMEY: Your Honor, I think -- I'm so sorry.
THE COURT: You don't have a problem asking in a more colloquial sense whether during any time that he was working at these companies he had anything -- any knowledge of any use of firearms or any violence or anything, and you can just list them off.
THE COURT: But I think the problem is parroting the language of the indictment --
MR. AGNIFILO: Fine. I get it. I get it.
THE COURT: OK.
MS. COMEY: We agree, your Honor. Thank you.
(Continued on next page)
(In open court)
THE COURT: Mr. Agnifilo.
MR. AGNIFILO: Yes. Thank you.
MR. AGNIFILO: In your 19 years working with various of the Combs businesses and working alongside the various Combs employees, I'm going to ask you a few questions. Did you see anyone help Sean Combs commit crimes?
MR. AGNIFILO: Did you see anyone commit acts of violence?
MR. AGNIFILO: Did you see anyone make the company stronger through threats of violence?
MR. AGNIFILO: Did you see anyone make the company or Mr. Combs stronger through coercion or threats of coercion?
DEREK FERGUSON: Can you explain that one a little bit more?
MR. AGNIFILO: Sure. Did you see anyone, in your 19 years with Mr. Combs, make Mr. Combs reputation enhanced or the companies more powerful through the use of coercion or threats of coercion?
MS. SLAVIK: Objection.
THE COURT: That's fair. Can you break that down a little bit.
MR. AGNIFILO: Sure.
MR. AGNIFILO: Did you see anyone use coercion either to enhance Mr. Combs' reputation or those of the businesses?
DEREK FERGUSON: I want to understand your definition of the word coercion. It seems like a word that specifically means something to you that it might not mean to me.
MR. AGNIFILO: Fair enough. I'm going to withdraw that question and ask a different question.
MR. AGNIFILO: Did you see anyone enhance Mr. Combs' reputation or the reputation of any business through emotional, physical, or sexual abuse?
DEREK FERGUSON: I did not.
MR. AGNIFILO: Did you see anyone enhance Mr. Combs' reputation or the reputation of the businesses through sex trafficking or forced labor?
MS. SLAVIK: Objection.
THE COURT: That's sustained.
MR. AGNIFILO: Did you see anyone enhance Mr. Combs' reputation or the reputation of the business through acts of prostitution?
MS. SLAVIK: Objection.
THE COURT: That's overruled.
MR. AGNIFILO: So you worked with Mr. Combs for 19 years. Tell us, was it hard work?
DEREK FERGUSON: Yes.
MR. AGNIFILO: Tell us how hard it was.
DEREK FERGUSON: You know, we were -- the company was building businesses from scratch. So probably in business, that's the hardest thing to do. So just long hours, lots of diligent effort, lots of talented people, and, you know, completing difficult tasks of startup businesses and making them successful.
MR. AGNIFILO: Did you feel that you and the company had a mission?
DEREK FERGUSON: We all felt the mission, we all felt that there was a mission to be great, to represent ourselves in a certain way.
MR. AGNIFILO: And did you feel that you and the other colleagues you worked with were part of a family?
DEREK FERGUSON: Very close-knit group, especially at the beginning. I think companies got bigger and that was harder to maintain. It was a small business, so everyone knew each other pretty well.
MR. AGNIFILO: Do you recall sending Mr. Combs a text in November of 2017?
DEREK FERGUSON: I don't.
MR. AGNIFILO: I think it's quicker to do it this way, Judge, and I'm going to show it to the government, too. We're going to mark it just for identification 1908.
MR. AGNIFILO: I'm going to ask you if this refreshes your recollection. Do you recall telling Mr. Combs, on November 29th, 2017, that you learned so much from him in a text?
DEREK FERGUSON: I just don't recall the text, but yeah, I mean, I don't deny I said it, but I just don't recall the text.
MR. AGNIFILO: Did you learn so much from him?
DEREK FERGUSON: I did learn a lot from him.
MR. AGNIFILO: Tell us what you learned.
DEREK FERGUSON: He had a great business mind and I think, you know, he put his mind to something and set a really high, aggressive goal, and was not afraid of that goal. That was something I think that you could learn from, that the goals that I may have set of just being successful versus the goal of being No. 1, and the fact that you could be No. 1 was, you know, that was something to be learned. I think there was some business learnings that I derived from working with him.
MR. AGNIFILO: Do you feel that he pushed you?
DEREK FERGUSON: Yes.
MR. AGNIFILO: Tell us how he pushed you.
DEREK FERGUSON: He just worked constantly. I mean, he was, like, he was always -- he, you know, his passion for what he did was really high. So his work ethic and the number of hours he put in was something that really pushed, you know, the entire team.
MR. AGNIFILO: And do you remember writing to him that the difference between being great and being the greatest is caring more? And do you think that's true?
MS. SLAVIK: Objection.
MR. AGNIFILO: Let me ask a different question.
MR. AGNIFILO: Do you remember writing that in a text, that the difference between being great and being the greatest is caring more?
DEREK FERGUSON: Yeah, I don't remember the text, but one of his mantras was you do your best work if you care about the outcomes.
MR. AGNIFILO: Do you remember discussing with him the fact you were able to bring your faith into the workplace?
DEREK FERGUSON: Again, don't remember it, but I could -- yeah, I can -- I wouldn't -- wouldn't surprise me if I said that.
MR. AGNIFILO: Would it have been true?
DEREK FERGUSON: Yes.
MR. AGNIFILO: Tell us what you meant.
MS. SLAVIK: Objection.
THE COURT: Sustained.
MR. AGNIFILO: Did he allow you to bring your faith into the workplace?
MS. SLAVIK: Objection.
THE COURT: Sustained.
MR. AGNIFILO: And I'm not going to ask a personal question. You're a religious man?
MS. SLAVIK: Objection.
THE COURT: That's sustained.
MR. AGNIFILO: I want to ask you a few questions about Capital Prep Harlem Charter School. You're on the board of directors?
DEREK FERGUSON: Yes.
MR. AGNIFILO: Who started that school?
DEREK FERGUSON: That was started by Steve Perry and Sean Combs.
MR. AGNIFILO: And what is it?
DEREK FERGUSON: It's a charter school, originally started out in the Bronx, ages -- grades 6 through 12. There's now a second school -- I'm sorry. Started out in Harlem. There's a second school in the Bronx, also grades 6 through 12.
MR. AGNIFILO: And Mr. Combs was one of the two people who started that school?
DEREK FERGUSON: Yes.
MR. AGNIFILO: How long have you been on the board of directors at the school?
DEREK FERGUSON: Over 10 years I would say.
MR. AGNIFILO: And the school, tell me if this is right, the school tries to work with at-risk children?
MS. SLAVIK: Objection, your Honor. 403.
THE COURT: That's sustained.
MR. AGNIFILO: Tell us a little bit about the school.
MS. SLAVIK: Objection.
THE COURT: The objection is sustained. Let's move on.
MR. AGNIFILO: You're testifying at his criminal trial today, right? Do you think highly of Mr. Combs as you're sitting in the witness box?
DEREK FERGUSON: I don't know how to respond to that.
MR. AGNIFILO: Talking about your personal experience, that's what I'm talking about, your personal experience, is there anything in your personal experience that causes you not to think highly of Mr. Combs?
MS. SLAVIK: Your Honor, could we have a sidebar, please?
MR. AGNIFILO: I can withdraw the question, Judge.
THE COURT: Anything further, Mr. Agnifilo?
MR. AGNIFILO: No. Thank you, Judge.
THE COURT: Ms. Slavik.
MS. SLAVIK: Very briefly, your Honor.
REDIRECT EXAMINATION BY MS. SLAVIK:
MS. SLAVIK: Mr. Ferguson, Mr. Agnifilo asked you several questions about Revolt during cross-examination. Do you remember that?
DEREK FERGUSON: Yes.
MS. SLAVIK: And you were speaking about Revolt TV; is that correct?
DEREK FERGUSON: Yes.
MS. SLAVIK: Are you familiar with Revolt Films?
DEREK FERGUSON: I have some familiarity with them.
MS. SLAVIK: Is that something that's distinct from Revolt TV?
DEREK FERGUSON: Yes.
MS. SLAVIK: Who is the head of Revolt Films?
DEREK FERGUSON: I don't recall.
MS. SLAVIK: That Revolt Films was a completely separate entity from Revolt TV, though?
DEREK FERGUSON: Yes.
MS. SLAVIK: You were asked about your observations of violence and other conduct when you worked at Bad Boy. Do you remember that?
DEREK FERGUSON: Yes.
MS. SLAVIK: Where did you work physically when you worked at Bad Boy?
DEREK FERGUSON: In the New York office.
MS. SLAVIK: You were based in New York?
DEREK FERGUSON: Yes.
MS. SLAVIK: At any time were you based out of Mr. Combs's homes?
MS. SLAVIK: Did you ever stay in a hotel room with Mr. Combs?
MS. SLAVIK: Do you remember walking through the org chart at Defendant's Exhibit 1901-R?
MS. SLAVIK: And if we could pull that up, that would be helpful, Ms. Gavin. Thank you.
MS. SLAVIK: Do you remember walking through this org chart with Mr. Agnifilo?
DEREK FERGUSON: Yes.
MS. SLAVIK: I want to look at a chart that Mr. Agnifilo did not walk through with you.
MS. SLAVIK: Could you turn to page 8, please, Ms. Gavin. Excuse me. The next page.
MS. SLAVIK: What does this org chart show, Mr. Ferguson?
DEREK FERGUSON: It says chairman's office.
MS. SLAVIK: Who is the chairman?
DEREK FERGUSON: Based on this org chart, it was Sean Combs.
MS. SLAVIK: And I just want to walk through a couple of the folks on this org chart. Do you see the name Kristina Khorram?
DEREK FERGUSON: Yes.
MS. SLAVIK: What was her title?
DEREK FERGUSON: Per this chart, director office of the chairman.
MS. SLAVIK: And below that, Dave Shirley, what was his role?
DEREK FERGUSON: Per this chart, personal assistant.
MS. SLAVIK: What about moving to the right, Derek Roche, what was his title?
DEREK FERGUSON: Stylist.
MS. SLAVIK: And to the right, Paul Offord, what was his title?
DEREK FERGUSON: Head of security.
MS. SLAVIK: Below that, Faheem Muhammad, what was his title?
DEREK FERGUSON: Fleet manager.
MS. SLAVIK: And at the bottom, Damion Butler, what was his title?
DEREK FERGUSON: Security project manager.
MS. SLAVIK: And finally, just to the right, do you see the name Mia?
DEREK FERGUSON: Yes.
MS. SLAVIK: What was her title?
DEREK FERGUSON: Director development and acquisitions.
MS. SLAVIK: Just a moment, your Honor. Nothing further.
MR. AGNIFILO: I have one question.
RECROSS EXAMINATION BY MR. AGNIFILO:
MR. AGNIFILO: You never went to Mr. Combs' house or his hotel room because that's his personal life, right?
MS. SLAVIK: Objection.
THE COURT: You can rephrase the question.
MR. AGNIFILO: The CFO doesn't need to go to the hotel, doesn't need to go to his home because he gets a personal life, right? He's not always at work, correct?
MS. SLAVIK: Objection.
THE COURT: That's sustained.
MR. AGNIFILO: Thank you.
THE COURT: Thank you very much, Mr. Ferguson.