Pickle's Cherry Picking

[Cynthia]

Definition:
Cherry-Picking is an expression used to describe the behavior of selecting only the data that confirm the preferred conclusion, ignoring data that contradict it. Cherry-Picking refers to the deliberate exclusion of contrary cases; unconscious exclusion is referred to as Confirmation Bias. Both are forms of Selection Bias.

One variant of Cherry-Picking is "Quote Mining", the habit of selecting quotes, usually out of context, to make it appear that the quote´s author holds an opinion that is different (often diametrically opposed) to the one that he actually holds.


Joy and Pickle cherry picking on Advent Talk... in the middle/end of a thread called Questions I would like to ask Danny Shelton..

Hey, Bob, what judge was it that saw through them like the glass wall they were? He summed it up just beautifully, much to their chagrin, and they dismissed the very next day!!!

The Honorable Magistrate Judge Philip Frazier.

And I don't know how much money you guys, Mr. Joy and Mr. Pickle -- my goodness, you know, somebody is helping you out with this financially because, you know, this is, I mean this is like David and Goliath only David doesn't even have a rock for his sling in terms of fighting this thing out.

You know, I kind of think Three Angels probably should have thought this through a little bit. My guess is that Three Angels probably thought that these guys had probably backed down pretty quick when this defamation lawsuit was filed. And that I understand that organizations like Three Angels operate a lot of their fiscal viability -- not physical, Jane. It's fiscal, F-I-S-C-A-L -- depends upon regular contributions from people who are frequent listeners and watchers, and these kinds of little nasty bits such as of the revelation involving Mr. Shelton's brother tend to or any impropriety on behalf of Mr. Shelton himself would probably tend to erode some of those. And so a nice public way of refuting those statements is by filing a defamation action, and, you know, saying it ain't so, Joe.

But the problem is, is now Three Angels has opened up a very large can of worms here. And it's a very large can of worms. And there are a lot of different ways that financial impropriety could be disguised by clever bookkeeping. There are a lot of -- I'm not saying that that's happened here. Don't anybody get all flustered. I'm just saying that, you know, at this stage of the proceedings, we have to presume that anything is possible. Anything is provable. And there are a number of other transactions, changes in accounting methods, any number of these that might be relevant to prove that on a particular day that something happened.

THE COURT: Let me ask you a question here. Would it be relevant or at least interesting to you if you were on the other side of this case, Mr. Simpson, if it turns out that the documents that the accountant has are different from the documents that actually exist or maintained by Three Angels Broadcasting, that perhaps if Three Angels Broadcasting was selective about the documents they turn over to their accountants?

MR. SIMPSON: If it related -- well, how is that -- I would certainly want the information for the reasons that you said. I'd be hoping that there was some discrepancies, in particular, that I didn't know about. I would like to find some more ammunition to justify the wholesale assault on 3ABN that we've seen. That would make it -- it doesn't make it relevant to the issues of -- that the defamatory statements that they have made, they have something in mind. They had some information about certain transactions, and he's told you about some of them. And they're entitled to discovery on those issues, but they're not entitled to get every scrap of paper to see if there's something else they are looking for.

THE COURT: Mr. Shelton, though -- here's the problem. Mr. Shelton is not some disgruntled clerk who is stealing out of the small, you know, cubby that may be relegated to a particular file clerk or something. You know, Mr. Shelton has access to the whole piggy bank. And I'm not saying, obviously, that he is or was doing anything, but what I'm saying is that if a person who has access to everything were to be using it for private gain, then it is not unreasonable to believe that perhaps other instances might exist where the corporate entity was used improperly for private gain, and that would tend to, even if it had nothing to do.

Let's just say for argument sake that further investigation into this were to disclose that on a different date in a different year that Mr. Shelton stole a hundred thousand dollars from Three Angels Broadcasting using a completely different means than -- that would be relevant to the defamation action now, wouldn't it?

MR. SIMPSON: Let me say first there's been no allegation that anything --

THE COURT: No. No. No. No. You don't need to go into. We don't need a spin on this. I'm just saying and I would have no idea. Hopefully, it doesn't exist, but if it did, wouldn't that be some relevant information to put out in front of a fact finder at a trial?

Here's some more select quotes Pickle didn't choose to use...

MR. SIMPSON: Let me go back to where you were
originally going. What's going to happen now is that these
defendants are going to get a subset of the financial
records, and what subset they get is going to be determined
based on how they craft these second set of document
requests, and which and how Judge Hillman narrows them if we
can't agree how they should be interpreted. And what they're
asking you to do is to, basically, circumvent that by giving
them everything, but in the guise of giving them the account
file.

THE COURT: Which is what I'm not going to do right
now for the simple reason I'm not going to undermine Judge
Hillman's efforts on this. We may turn out to be going
exactly the same direction. However, Judge Hillman already
has his hands on this. He has an idea where he wants this to
go, and I'm not going to start doing things on this end that
might be messing that up.

THE COURT: In that case here's what I'm going to
do then. I can see where this is going now because this is
just --

MR. PICKLE: Your Honor, can I speak to the issue
of complete production?

THE COURT: No. No, we don't need to get there
right now. All we're dealing with here, because the
production issue is clearly not before me.

MR. PICKLE: Could I --

THE COURT: No. No. No. We're done here. I have
one of two options here. And I could either go ahead and
quash this subpoena and with the understanding that the
defendants could reserve the subpoena on Gray Hunter Stenn at
a later date when this scope of discovery has been narrowed
by Judge Hillman in Massachusetts. That would --

MR. PICKLE: Your Honor --

THE COURT: No. No. No. You have had your time
to talk. Now is mine.

THE COURT: ...I'm going to then order right now that any further litigation
concerning the subpoena which has been issued to Gray Hunter
Stenn be transferred to the district of Massachusetts and
Judge Hillman because it is so closely and completely
intertwined with matters before him at this time. And I fear
that anything which might be done here might lead to
inconsistent rulings, and that will be that.

So the subpoena is open. Gray Hunter Stenn and
Three Angels are ordered to preserve any records of any kind,
electronic or otherwise, which might satisfy the subpoena.
The matter then will be transferred to Judge Hillman for any
further action. And waiting until the scope of discovery is
resolved is going to be a good way to do that...

[Cynthia]

And now for the context, and in the words of Paul Harvey "the rest of the story"

THE COURT: Hello. This is Judge Frazier.

MR. SIMPSON: Hello. This is Greg Simpson, the
lawyer for the plaintiffs.

THE COURT: All right.

MS. LITZENBURG: Morning, Judge. This is Deanna
Litzenburg for Gray Hunter Stenn.

THE COURT: All right.

MS. WHITE: Jennifer White, local counsel for the
plaintiff.

THE COURT: All right.

MR. JOY: Good morning, Your Honor. This is Gailon
Arthur Joy, defendant.

THE COURT: Okay.

MR. PICKLE: Good morning, Your Honor. This is Bob
Pickle, defendant.

THE COURT: Now, we have some subpoenas at issue
here, correct?

MR. SIMPSON: That's correct, Judge.

THE COURT: We have a court reporter taking this
down so when you speak, please, if you haven't been otherwise identified, let me know or let us know, and we can have you recognized on the record. So the subpoena was served on March the 17th, 2008,and because we're making a record here and this is plaintiff's motion, Mr. Simpson, do you want to go ahead. Lay out the background. And I guess, too, as long as we're making a record here, just give us a short tutorial on the nature of the case, the litigation and then what brought us here and then what your motion is. All right?

MR. SIMPSON: Very well. This is a case that's --
the underlying case is pending in the United States District
Court for the District of Massachusetts, and it's basically a
case alleging the defendants violated federal trademark laws
and also common law torts of defamation, and it interferes
with prospective economic relations.

And the substance of the case is that the defendants are alleged
to have started and operated a website that uses the Three Angels
Broadcasting Network moniker 3ABN as their logo to attract visitors
to their website and then disseminating disparaging information,
some of which we say is defamatory and otherwise false.

That is kind of the guts of the case. The lawsuit that was pending,
percolating along in Massachusetts, the defendants have served some third-party subpoenas, and that's where this action, miscellaneous
action in the Southern District of Illinois comes in. One of the -- some
of the allegations in the underlying case in Massachusetts involve
allegations by the defendants that the plaintiffs, Three Angel
Broadcasting Network and Danny Lee Shelton, who was the
cofounder and past president, engaged in basically, tax fraud
and financial misdealings and improper accounting for certain
transactions. And there's a lot of other stuff in there, too, but that's
where the accounting records that are sought in the third party subpoena relate.

THE COURT: And what would that have to do with the
lawsuit that Three Angels has brought?

MR. SIMPSON: Three Angels, the plaintiffs, are
alleging that the statements made by these defendants are
defamatory. In other words, they did not commit any tax law
violations, did not commit any financial improprieties, and
that the allegations, to the contrary, by these defendants
are defamatory. So the defendants would like to obtain
access to the third-party records of Three Angels
Broadcasting Network's accountants, which is the Gray Hunter
Stenn accountancy firm here in Illinois.

THE COURT: Truth being a perfect defense to a
defamation action.

MR. SIMPSON: Exactly. What we are saying, they
are entitled to the actual tax returns because that's what
they say is fraudulent, but if they want to determine the
underlying merits of the returns and whether they properly
account for transactions, they need to get the information
from my client, which is a matter that's pending in the
Massachusetts District Court, and that's what -- that's --
they can get that information, but the Massachusetts judge
should be there to referee on that issue and determine what
they're entitled to or what they are not.

So they made these sweeping allegations, but the
core of them are a few specific allegations that they say are
properly accounted for. And what we're saying is they
shouldn't get the accountant's work product because it's not
like it will lead to discovery of admissible evidence. And
we paid the accountants for that, and the accountants have
their own independent privilege under Illinois law, which is
a subject Ms. Litzenburg may wish to address. They are not
entitled to have us do the work for them. If they want to
prove these tax returns are fraudulent, they need to get
their underlying records and prove it themselves.

THE COURT: Is there a key question here? And I
understand that that is the entire purpose of work product is
to avoid the situation where one party does all the work and
the other party swoops in at the last second and gets the
work product. The problem is whether or not the parties
seeking the information can get the same information without
undue burden, and that will be the question.
How specifically identified is this work product
information that you seek to shield?

MR. SIMPSON: They want everything. And that is
the ultimate issue. If they could identify the -- there's 24
allegations that we say are defamatory, and some of them are
broader than others, but they have made these allegations,
sweeping allegations, of financial mismanagement, but the
core of it seems to be a couple transactions that they
suspect or know or believe to be suspicious. And they have
identified those or are willing to give them records about
those court transactions, but what they are asking for here
in the subpoena --

THE COURT: Hang on a second. One of the
defendants has been dropped from the conference call.

MR. SIMPSON: Which one?

THE COURT: Joy. All right.

MR. PICKLE: Your Honor, Bob Pickle. I could give
a different number that wouldn't get dropped.

MR. SIMPSON: What's that?

MR. PICKLE: 508-281-7250. It will be a land line
rather than a --

MR. SIMPSON: 508-281 --

MR. PICKLE: 6250 (sic).

MR. SIMPSON: I am going to put you on hold and go
over and track down the conference coordinator. I will be
right back.

THE COURT: We will go back on the record while
Mr. Pickle is coming back on.

MR. SIMPSON: This is Greg Simpson, again. In
answer to your question which I think I was in the process of
answering it before I got too long-winded about it, the
answer is they've asked for everything without any
exceptions. They want every scrap of paper that the law
firm, that the accountancy firm has for the entire history.
I'm not sure. Is there a date restricter in there,
Mr. Pickle? I don't think there is.

MR. PICKLE: Yes, there is.

MS. LITZENBURG: Anything after January 1, 1998.
This is Deanna Litzenburg. I am reading from their Exhibit 8
of the subpoena.

MR. SIMPSON: That's my main problem with it is
that there are specific transactions that they're alleging is
the basis for their statements that we say are defamatory,
but -- and they've tried to tell us what they are, and they
could have records if it's tailored to that specific issue,
but they want everything.

THE COURT: Well, of course, they want everything.
I mean, I would. Wouldn't you want everything? Who knows
what else they might be able to find. You know, if they're
looking around, they may -- if you're going to go try to get
records, get records. But, Mr. Pickle, what exactly is it
that you're getting sued for? What statements do they say
that you have made? I'm not going to ask you whether you've
made those statements or not, necessarily.

I mean this isn't a criminal action, so somebody's
going to ask you eventually under oath on the record. But
what is it that they are pointing at that you and Mr. Joy
have supposedly done which has defamed them?

MR. PICKLE: This lawsuit -- I'll make this really
brief. This lawsuit was conceived as we believe as
retaliation for us blowing the whistle on Dan Shelton's
coverup on child molestation allegations. By the time they
filed this suit, there was too much evidence regarding that
so they tried to stay away from that, and they did spend a
bit of time talking about the dealing with the financial
allegations.

You know, one thing that the complaint says is that
we have lied by saying that the officers and directors of
3ABN have privately enriched themselves in violation of the
Internal Revenue Code.

THE COURT: Did you make those statements?

MR. PICKLE: I would be hard pressed, Your Honor,
to find anything that said, that stated that way.

THE COURT: Well, let me ask you this: Those are
pretty broad. Are the allegations -- let me go back here to
Mr. Simpson. Does your complaint state it that broadly, that
there were just general allegations of financial impropriety?

MR. SIMPSON: I'm looking for the one that says
that. They say Dashawn (phonetic) purchase. I'm reading
from the complaint. It's the paragraphs 46 and 48 of the
complaint are where the specific allegations are of
defamation. I think that that should be an attachment to
something that you've received.

There are some that are broad, and there are some
that are narrow, Judge. And they've made these allegations
broadly, and then we've asked them for what exactly are they
talking about. You know, personally enrich themselves as
officers and directors. That is an allegation, the one he
just quoted. Violation of the Internal Revenue Code, and
they had something in mind when they said that, and it's
probably like in subparagraph (d). That Danny Shelton
purchased a three-year old van using 3ABN funds. Then sold
the van to a member of his family for just $10. Things like
that. Specifically, allegations that they then make sweeping
allegations based on a specific allegation.

And so what they're hoping for -- I don't think I'm
guessing at this -- is, I mean it's a fishing expedition, and
you know the old fashioned sense of the word, that they want
to find something they didn't know about. If they made these
allegations, these sweeping allegations, made on matters that
are trivial and are not accurate and have been investigated
by the IRS, even, and have all been determined to be proper.
And they want to, and what they want is to find something
else, something that can justify the DMD, the defamatory
statements that they made that they didn't previously know
about.

THE COURT: I don't doubt that there is something
to that, but that seems to happen in a lot of lawsuits. You
know, I don't blame them for trying to do that either. I
would in their position. But it seems to me that if you are
going to be successful in proving these, in proving
defamation, you are going to have to narrow it down to some
specific statements. Instead, you just can't go in at a
trial, for example, and say, "Well, they generally implied
that we were benefiting personally in violation of IRS
rules." That's not going to get to a jury. You're going to
have to come up with specifics. Mr. Pickle.

MR. PICKLE: Yes, sir.

THE COURT: Have you consulted a lawyer on any of
this?

MR. PICKLE: A little bit. I was represented by
counsel for --

THE COURT: Why don't you have a lawyer now?

MR. PICKLE: Well, Your Honor, frankly, I don't
have the millions at my disposal that the plaintiffs do.

THE COURT: That's true. They got you there.
That's true.

MR. PICKLE: And I'm trying not to end up at the
end of this bankrupt.

THE COURT: But the thing of it is that you might.
And let me suggest something to you here. All right? You
need to concentrate your resources, time, and monetary. And
the way you need to do this, instead of sending out one of
these blanket kind of subpoenas for all this information,
which you understand they're going to resist because, number
one, they have lawyers and that's what lawyers do. All
right? And number two is that they don't want you to have
all this information.

I don't know what's in there. Maybe there's
nothing. Maybe there's something, but, I mean, but that's
the way that this game is played, is that people ask for
information and those who are, from whom it is requested,
resist it as much as possible. Whether it contains anything
that's harmful or not, they'll resist it unless the cost of
producing it is less than the cost of resisting it. It's
just that simple.

What you need to do is force them to narrow exactly what
statements and when they were made and how they were
made that they believe to be defamatory. They cannot be
successful in their case just by generally alleging that you
and Mr. Joy made some generalized statements or implications
about the folks at Three Angels Broadcasting in retaliation
for you supposedly blowing the whistle on some family
problems that Mr. Shelton had that this was defamatory.
All right. Just because they -- I mean I can say,
well, generally speaking, I believe that so and so cheats on
his taxes. Well, there's going to have to be a little bit
more than that. Okay?

Now, obviously, they're trying to back you down for some reason.
I don't know to whom these statements were made or how wide.
How widely are these statements circulated?

MR. SIMPSON: Judge, may I interrupt? Is Mr. Joy
back on the line?

MR. JOY: I am.

THE COURT: How widely were these statements
circulated?

MR. JOY: Whatever statements we have made are on
our website and all the world can read. And --

THE COURT: What statements, exactly, have you
made? This might narrow things down considerably.

MR. JOY: Yeah, one series of statements we made
regarding the 1998 house deal whereby Danny Shelton
bought a house from Three Angels for $139,000 and then
turned around and sold it one week later for 135,000. And he's
the one who signed in 1998 Form 990. And the question that
was asked was there any Section 4958 excess benefit
transactions? He checked that. That says, no, there were none.
And yet the -- and this would, in my opinion, qualify for a
Section 4958 transaction.

Then in the attachment to that 990, they list a house having
been sold for $6,129. They had a book value that says over 50,000,
and so it was over a $40,000 loss.

So, basically, that attachment is admitting that there was a
house sold below fair market value. We know from the deeds
from the Franklin County courthouse that Danny Shelton was
the one who bought the house.

THE COURT: Now and those are the basis of the
statements you've made?

MR. JOY: That would be one of the statements we
made about that particular issue. There have been so many
allegations of wrongdoing about Shelton it would take a long
time to go through all of them, and it would take a bit of
preparation to go through and catalog all of them.

THE COURT: Does Mr. Shelton qualify as a public
figure?

MR. SIMPSON: Yes, Your Honor, he is the face of
Adventism of 3ABN.

THE COURT: The what?

MR. SIMPSON: He is considered to be the face of
Adventism, Seventh-Day Adventism, on Three Angels
Broadcasting Network. Three Angels Broadcasting Network is
the conservative broadcaster of the unique message to the
Seventh-Day Adventist Church, and he's been the founder. He
is a constant programmer, interviewer, and has been the
president of 3ABN since its inception back in the 1980s.

THE COURT: So he probably is -- I know right where
it is. I used to live in Marion, but --

MR. SIMPSON: They were such a big public figures
they were concerned enough to move their divorce to Guam.

THE COURT: But it's going to make a difference,
obviously, down the road if he is considered a public figure
or not for defamation purposes.

MR. SIMPSON: I understand that.

THE COURT: You know -- who is speaking here?

MR. JOY: Gailon Arthur Joy. The important thing
for the Court to consider is that we need very specific
allegations based on very specific documentation that we had
at the time that indicated that this man was actually, if you
will, putting his finger in the offering plate. And the
bottom line is that has been demonstrated by the process of
documentation as we've gone forward here. That's come from
a combination of third parties who, frankly, offered additional
documentation as well as some that's been discovered, a
limited amount that's been discovered.

To defeat the defamation claim, we have a very
simple strategy and that is to use a combination of auditors
and forensic accountants to review the documentation related
to the transactions that have occurred between Three Angels
Broadcasting system, its publishing unit and PPPI, Pacific
Press Publishing or publishing -- I'm sorry -- publishing
contract with the Pacific Press Publishing Association, PPPA,
and Renner (phonetic) Publications.

And they had an interesting little three-way deal
going there where PPPA pays to 3ABN not only book royalties
to the authors, but also a separate residual by contract that
amounted to a combination of 15 percent.

Mr. Shelton came up with a unique way to put his finger in
the pie by having 3ABN actually process invoices through
Renner Publications, who would allow for a drop ship from
PPPA to 3ABN. And then he would pick up a very sizeable portion, approximately 70 percent, of the additional overcharges being
made by Renner Publications as his own personal income.

This was never disclosed to the board of directors.
We had that from directors. They told us that was never
disclosed. And, in fact, he personally inured himself as
early as 19 -- pardon me -- 2006 and 2007 to the tune of
about $1,000,000 that's never been disclosed on any 990.
Now, you know, I don't know. We don't have the tax
returns from Mr. Shelton for those years. We did have tax
returns from prior years, and we could tell what he was and
was not disclosing, but the fact is that what we feel is that
he can put together a combination of data showing the
contracting inurement from the Renner Publications in
concert with the bank statements that demonstrate the
amounts of money coming into his personal account.

In addition to that, obviously, the auditors' statements
regarding the audits, which the auditor covers
both Danny Lee Shelton's personal returns as well as Three
Angels Broadcasting Network. And we believe that that
together, in concert, would represent enough of a picture so
that between the two auditors and -- the two auditors, the
forensic accountant that we're using, that we can demonstrate
beyond a reasonable doubt that it was clearly private inurement,
and that it clearly violated the Internal Revenue Code.

THE COURT: Well, you're not going to have to show beyond a
reasonable doubt or anything.

MR. JOY: I understand that, but I think we could
meet that test.

MR. SIMPSON: I can speak to that.

THE COURT: All right.

MR. SIMPSON: I would just say that you have heard,
in answer to your original question of did the defendants
make these statements, I think you just heard a whole bunch
of them. And what I would say, without getting into the
merits of the allegations that you just heard, that it's an
explanation as to why these defendants would be entitled to
some information about specific transactions that they think
are illegal or improper.

But what the subpoena is, is a wholesale request for everything.
And they need to narrow it. This is exactly what's happened in
the Massachusetts district court where we brought a similar
motion for a discovery that had been served on us where they
asked for everything, and the judge there said -- struck, basically
struck the docket request. Said research them with, you know,
more narrowly crafted to the defamatory issues, with regard to
defamatory issues in the case.

It can't be wholesale, you know, asking for everything. You need
to craft them so they relate to issues in the case. So that's one issue,
only one reason why we are resisting the subpoenas, is because if
it's not crafted to the issues in the case.

Another issue -- let's have Ms. Litzenburg address
this -- is that there's an accountancy privilege in Illinois.
The accountant doesn't have to give up work product, and it's
privileged that belongs to the accountant.

THE COURT: Well, the accountant is going to be
objecting in this case for two reasons or three, maybe if
they feel it's the right thing to do, but that would be one.
And then I'm certain that Three Angels Broadcasting does a
substantial amount of business with Gray Hunter Stenn so they
would have some business reasons for wanting to -- let's just
say they have a rooting interest in this. And they probably
don't want to get sued themselves for giving up information
they shouldn't be giving up.

But in any event --

MS. LITZENBURG: It's a privilege issue, Your
Honor. This is Deanna Litzenburg for Gray Hunter Stenn. We
have invoked the accountant-client privilege that exists
under Illinois law. We believe the defendants take issue
with the privilege and say that it doesn't apply. It is our
position in a diversity case and that when the subpoenas are
issued from the Southern District of Illinois court, that the
Illinois privilege law applies.

THE COURT: Well, probably in a case like this, to
the extent such a privilege would exist, it's probably been
waived, at least partially, by the fact of these allegations.
I mean when Three Angels made the decision to bring this
lawsuit over these allegations, then, you know, they have
very smart lawyers who know that the truth of the
statements -- I mean if the statements are on their websites,
I'm sure that there's no doubt as to what the statements are,
so that places the defendants in the position of having to
demonstrate the truth of what they're saying. And the only
way they are going to do that is, well, by getting into these
records.

MS. LITZENBURG: But, Your Honor, I think the
privilege belongs to the accountants, and in this case we are
claiming that it's the work papers that the accountant has
performed that are privileged, not the financial statements,
not the tax returns. Those are different issues. But the
work papers that were actually produced and prepared by
Gray Hunter Stenn in performing the audit, do we claim that
that privilege still attaches to those documents.

THE COURT: For what purpose, though? This isn't like, I mean
they exist. That means they can be discovered with a subpoena.

MR. JOY: Your Honor, this is Mr. Joy again.

THE COURT: Yes.

MR. JOY: I would point out that in our rebuttal,
we gave specific case law both in Illinois as well as at the
federal level clearly demonstrating that no such privilege
attached here. And that they are out of line in either
raising the accountancy privilege given the federal questions
in the federal district court, and so that was the first
thing.

The other thing that they allege, of course, is the
cost of producing and, frankly, we went to great pains to
reduce that cost of producing down to just simply them
making space available for a team of accountants who had
come in with us and reviewed those documents, let us know
what was specifically required for them to give their expertise.
And at the same time, we would have a team that would go
through the process of taking those documents and then,
obviously, digitally saving them, saving the accountant any cost
whatsoever with regard to reproduction of the documents.

MS. LITZENBURG: I take issue with that, Your
Honor. We had not worked out that issue. We were still
arguing how the documents were going to be copied and
reproduced because Mr. Joy and Mr. Pickle were adamant
they did not want to incur any copy costs.

THE COURT: Well, I tell you what. Maybe this will
give you some incentive, I guess. What is the rule on
subpoenas, complying with subpoenas? I've got to say I'm not
really sure. Where was this subpoena to be produced? I mean
where were the results of the subpoena? Where was it to be
produced?

MS. LITZENBURG: Here in Southern Illinois, Your
Honor.

THE COURT: But was there a demand on it as to
where the information was to be delivered?

MS. LITZENBURG: Yes. They had a law office in
West Frankfort, I believe, Sam Mitchell's office.

THE COURT: Okay.

MR. PICKLE: Your Honor, this is Bob Pickle. We
had worked it out on June 24th we would, Gray Hunter Stenn
was going to make a room available at their office, and we
bring our own equipment. And Deanna Litzenburg, the way we
worked it out, they would provide somebody to physically
operate our copier so we would not receive the copy until
after the watermark had already been put on. She and I went
back and forth and worked out a procedure.

MS. LITZENBURG: And the cost of that person was
never resolved either, Bob. So to represent to the Court we
had resolved that is unfair.

THE COURT: Well, resolutions are frequently in the
eye of the beholder so we don't need to get into that.

MR. PICKLE: I would like --

THE COURT: Who is this?

MR. PICKLE: This is Bob Pickle.

THE COURT: You have to remember to say who you
are.

MR. PICKLE: The plaintiffs have represented that
they intend to use the financial statements and 990s and the
auditor at trial. And we need to be able to challenge the
figures that are in those financial statements and 990s as
well as the information that the auditor would disclose at
trial.

THE COURT: I have no doubt that you are entitled
to a large amount of the financial information that pertains
to Three Angels Broadcasting, and it's -- anything concerning
these transactions that were referred to surrounding the
supposed defamatory statements. And, you know, there's just
no easy or cheap way to do this.

You know, I kind of think Three Angels probably should have
thought this through a little bit. My guess is that Three Angels
probably thought that these guys had probably backed down
pretty quick when this defamation lawsuit was filed. And that
I understand that organizations like Three Angels operate a lot
of their fiscal viability -- not physical, Jane. It's fiscal, F-I-S-C-A-L
-- depends upon regular contributions from people who are frequent
listeners and watchers, and these kinds of little nasty bits such as
of the revelation involving Mr. Shelton's brother tend to or any
impropriety on behalf of Mr. Shelton himself would probably tend
to erode some of those. And so a nice public way of refuting those
statements is by filing a defamation action, and, you know, saying
it ain't so, Joe.

But the problem is, is now Three Angels has opened
up a very large can of worms here. And it's a very large can
of worms. And there are a lot of different ways that
financial impropriety could be disguised by clever
bookkeeping. There are a lot of -- I'm not saying that
that's happened here. Don't anybody get all flustered. I'm
just saying that, you know, at this stage of the proceedings,
we have to presume that anything is possible. Anything is
provable. And there are a number of other transactions,
changes in accounting methods, any number of these that
might be relevant to prove that on a particular day that
something happened.

Let me get off track one second and ask this
question. On these particular allegations that concern like
these house transactions, those are just straightforward
deals, right? There's no doubt about the accounting on
those?

MR. PICKLE: I'm not sure of that because we don't
know how they were accounted for on the other side. In fact
the representation has been made by the chairman of the
board of the Three Angels Broadcasting Network that they had
cleared those through counsel from a fellow who came out of
the state of Oregon. I believe in the northwest. And at the
time it was obviously the accounting firm was, as we
understand it, based on the representation of the chairman,
we do not believe that the accounting firm before the fact
addressed these issues, although we're not sure.

THE COURT: Has Three Angels designated its
forensic expert on these accounting matters yet for the
Massachusetts proceeding?

MR. SIMPSON: This is Greg Simpson. The time to do
that has not yet occurred under the scheduling order so, no.

THE COURT: And what is your experience, Greg, with
this Massachusetts court, the judge in particular? I know,
for instance, in our district we have some judges who are in
more of a hurry than others to get these to trial. How much
time do we have on this?

MR. SIMPSON: They don't appear to be in any
over -- we're not on a fast track, and the parties have
recently submitted a stipulated order to extend the discovery
and unexpired deadlines out another 90 days to permit
discovery to occur. There were some delays in the case
including a three or four-month delay when we were waiting
for the confidentiality order before the discovery issue
could take place and Mr. Joy filed for bankruptcy which
caused a temporary stay in the proceedings until the
automatic stay was lifted.

And for other reasons the cases, in the discovery phrase and
the document exchange phase. So there has been an exchange
of written requests for documents and exchange of documents,
as well.

We got an order back from Magistrate Judge Hillman
recently, basically, ordering Mr. Pickle to reserve document
requests that were more narrowly tailored to issues in the
case, and that would then permit the issues to become more
narrowly defined with the idea if Mr. Pickle and Mr. Joy and
I cannot work out our differences about what's discoverable,
that it would definitely write for submission to the Court.

THE COURT: Well, let me do this: Have you even
made your Rule 26 disclosure concerning your accounting
expert?

MR. SIMPSON: Well, we've made the Rule 26, the
mandatory disclosures.

THE COURT: Have you filed a report yet concerning
your expert?

MR. SIMPSON: No.

THE COURT: Because, Mr. Joy and Mr. Pickle, here's
what we're going to do. All right? I'm trying to figure out
what is going to be the best way to permit you folks to
examine the information you need to examine, but doing so in
a way that is going to be efficient for all concerned. All
right? Gray Hunter Stenn has a business to operate, and
they -- you know, forcing them to just open up a wing of
their office for you guys to come in and go through
mountains -- I'm sure there are literally mountains of
paperwork on this. Is that correct, Ms. Litzenburg?

MS. LITZENBURG: Yes, there are quite a few, Your
Honor.

THE COURT: And so 95 percent of it is going to be
useless in terms of even leading to the discovery of relevant
information. That doesn't mean that you probably aren't
going to have a right to look at a lot of it. And my
practice is always to err on the side of disclosure in these
things. But we do have, we do have a big, big undertaking
here. And I don't know how much money you guys, Mr. Joy
and Mr. Pickle -- my goodness, you know, somebody is helping
you out with this financially because, you know, this is, I mean
this is like David and Goliath only David doesn't even have a rock
for his sling in terms of fighting this thing out.

Here's what I want to do. For right now I want to
continue the subpoena. Not going to do anything with it.
Okay? And what we need to do is wait until there has been a
disclosure in Massachusetts of their expert on exactly what
is the nature of this defamatory statement.

Now they don't have to disprove the fact. They
don't have to come in and disprove that Mr. Shelton was a
crook, for example. Okay? You guys have to prove that he
was a crook or that, at least, you had some information along
those lines.

And I think after that's been a little bit more -- and I'm trying
to work this out in conjunction with what Judge Hillman is doing,
as well, because you just don't want two people stirring this thing
from different directions.

2 b cont next post

[Cynthia]

MR. JOY: Your Honor --

THE COURT: Yes.

MR. JOY: -- this is Gailon Arthur Joy, again. One
of the things that you need to understand is that the judge
has already ruled on their motion for scope and relevance
essentially denying everything they asked for. The only
issue outstanding was that he wanted the actual request to
produce to be narrowly covered so they would fit into the
specifics about the allegations.

THE COURT: And this is in your Rule 34 request?

MR. JOY: I'm sorry. What was that again?

THE COURT: Is this regarding your Rule 34 request
to produce?

MR. JOY: The plaintiffs, after the confidentiality
order was finally ruled on and we started moving back toward
the discovery files, they promptly moved and brought forward
a new motion to limit scope and relevance. And the bottom
line is that issue was heard and the Court in Massachusetts
via the judge magistrate simply struck all of their requests,
and, in fact, ironically imposed a rather unusual request on
counsel.

They had wanted the -- our subpoenas to be reviewed
by the Court before they would be issued, and we really
didn't impose that. We didn't have any problem with it. And
frankly and ironically, the magistrate ordered that even
counsel for the other side would have to have their subpoenas
reviewed prior to issuing them.

So we've already struck out or carved out a very
clear statement from this Court on the issue of scope and
relevance. The bottom line is, you know, the plaintiffs here
just continue to dodge the production of documentation that
we need that's essential for the preparation of the trial,
particularly for the, you know, particularly for the experts.
Because you're right. There are mountains of
information to go through. That's why, one of the reasons
why the system that we had picked out for bringing them there
and having them review the documents and determine what
wasn't relevant and what they wanted copied seemed to make
sense and is the least expensive situation for Gray Hunter
Stenn as well as for ourselves since we were bringing our own
copy equipment.

THE COURT: When is it that you are to have
narrowed your requests out in Massachusetts?

MR. JOY: Those are already done, Your Honor.

THE COURT: Those are done. And has Three Angels
received those?

MR. SIMPSON: This is Greg Simpson.

MR. JOY: They have.

MR. SIMPSON: This is Greg Simpson. Yes, Your
Honor. Let me clarify what Mr. Joy has said. The order from
Judge Hillman, unfortunately, is in the record so you can
look for yourself and see what he did, but he basically
struck the document request that they had issued previously
and ordered them to produce, to serve more narrowly crafted
ones, which they did. And Mr. Pickle and I have been in
negotiations talking at kind of a pre -- before we respond to
it formally and then our response is due in the very near
future to their document requests. At which point if we
can't reach an agreement, we are going to go through the meet
and confer process which was really part of the problem the
first time around. That we hadn't gone through it because
the motion was filed before, to compel was filed before this
process was undergone.

THE COURT: You know what I'm thinking of doing
here, just -- I don't know. I may want to talk to Judge
Hillman. One of the options I have is to transfer this
dispute to Massachusetts, as well.

MR. SIMPSON: I would be in favor of that. I think
Judge Hillman understands. And I don't mean to disparage the
Court in any way. It's just that he understands first hand
what the issues in the case are because he's had his head
into it for a longer period of time and I think --

THE COURT: These are not really exotic issues.
The difficulty that I foresee or would like to head off is
that I'm very reluctant to start issuing orders that may be
at odds with Judge Hillman's work up-to-date that may be
absolutely consistent. I don't know, but I don't want to
start -- I don't want to even invite the possibility of
inconsistent rulings.

MR. PICKLE: Your Honor, this is Bob Pickle. The
Western District of Michigan ordered that -- we filed a
motion to compel Renner Publications, and we won that mostly,
and they asked for reconsideration. They lost that. They
appealed from the magistrate to the judge and they lost that,
and then they decided they would comply. And the documents
we have gotten from there have been quite helpful. That was
ordered even before Magistrate Judge Hillman ruled on the
motion to limit the scope of discovery.

THE COURT: I'm just saying that Judge Hillman is
going to have the -- he has the laboring more on this in
terms of how discovery is going to proceed and what is going
to be fair game.

Now, the Western District of Michigan, yes, they
were operating fully within their rights. I don't know what
was at issue. It sounds to me, though, that the information
which is requested here in this subpoena is at the core of
what is presently being wrangled out in front of Judge
Hillman in Massachusetts. This is all of the financial
information that matters, isn't it?

MR. SIMPSON: This is Greg Simpson. Some of it is.
And I would say, also, that it exists in two places because
the accountants didn't create the information. The
information came from 3ABN through a short cut to get the
accountants' work product so they don't have to go through
that process themselves. They could ask for the source
documents that the accountants used to compile their reports
and their schedules and whatever they used to create their
tax return, the final product, that goes out with the filing.
This is what they are looking for is a short cut. They could
go back and ask for the underlying documents. And, in fact,
they've done that, and that's what's pending before Judge
Hillman. They asked for the core documents that relate to
all these transactions, and Judge Hillman is saying, okay,
you can have them if you can narrowly tailor it to the issues
in the case.

THE COURT: Let me ask you a question here. Would
it be relevant or at least interesting to you if you were on
the other side of this case, Mr. Simpson, if it turns out
that the documents that the accountant has are different from
the documents that actually exist or maintained by Three
Angels Broadcasting, that perhaps if Three Angels
Broadcasting was selective about the documents they turn over
to their accountants?

MR. SIMPSON: If it related -- well, how is that --
I would certainly want the information for the reasons that
you said. I'd be hoping that there was some discrepancies,
in particular, that I didn't know about. I would like to
find some more ammunition to justify the wholesale assault on
3ABN that we've seen. That would make it -- it doesn't make
it relevant to the issues of -- that the defamatory
statements that they have made, they have something in mind.
They had some information about certain transactions, and
he's told you about some of them. And they're entitled to
discovery on those issues, but they're not entitled to get
every scrap of paper to see if there's something else they
are looking for.

THE COURT: Mr. Shelton, though -- here's the
problem. Mr. Shelton is not some disgruntled clerk who is
stealing out of the small, you know, cubby that may be
relegated to a particular file clerk or something. You know,
Mr. Shelton has access to the whole piggy bank. And I'm not
saying, obviously, that he is or was doing anything, but what
I'm saying is that if a person who has access to everything
were to be using it for private gain, then it is not
unreasonable to believe that perhaps other instances might
exist where the corporate entity was used improperly for
private gain, and that would tend to, even if it had nothing
to do.

Let's just say for argument sake that further
investigation into this were to disclose that on a different
date in a different year that Mr. Shelton stole a hundred
thousand dollars from Three Angels Broadcasting using a
completely different means than -- that would be relevant to
the defamation action now, wouldn't it?

MR. SIMPSON: Let me say first there's been no
allegation that anything --

THE COURT: No. No. No. No. You don't need to
go into. We don't need a spin on this. I'm just saying and
I would have no idea. Hopefully, it doesn't exist, but if it
did, wouldn't that be some relevant information to put out in
front of a fact finder at a trial?

MR. SIMPSON: Let me go back to where you were
originally going. What's going to happen now is that these
defendants are going to get a subset of the financial
records, and what subset they get is going to be determined
based on how they craft these second set of document
requests, and which and how Judge Hillman narrows them if we
can't agree how they should be interpreted. And what they're
asking you to do is to, basically, circumvent that by giving
them everything, but in the guise of giving them the account
file.

THE COURT: Which is what I'm not going to do right
now for the simple reason I'm not going to undermine Judge
Hillman's efforts on this. We may turn out to be going
exactly the same direction. However, Judge Hillman already
has his hands on this. He has an idea where he wants this to
go, and I'm not going to start doing things on this end that
might be messing that up.

However, you know, I will say this: Has Three
Angels and Gray Hunter Stenn, have you provided the
defendants any and all accounting records that would pertain
to the transactions that are detailed in the complaint and
for the time periods? I would think at a minimum you're
going to need to start off with that.

MS. LITZENBURG: This is Deanna Litzenburg. Gray
Hunter Stenn hasn't produced anything.

THE COURT: Well, that's right. You wouldn't have.

MS. LITZENBURG: They reviewed this blanket
subpoena asking for everything.

THE COURT: I hear you. Gray Hunter wouldn't. Has
Three Angels provided that information?

MR. SIMPSON: We've provided them with thousands of
pages of documents. And we are not yet, the time to respond
to their narrow document request has not yet expired, but in
the next --

THE COURT: In that case --

MR. SIMPSON: -- in the next production we will
either identify where we've already produced it or produce
additional records that pertain to the specific transactions
that they identified.

THE COURT: In that case here's what I'm going to
do then. I can see where this is going now because this is
just --

MR. PICKLE: Your Honor, can I speak to the issue
of complete production?

THE COURT: No. No, we don't need to get there
right now. All we're dealing with here, because the
production issue is clearly not before me.

MR. PICKLE: Could I --

THE COURT: No. No. No. We're done here. I have
one of two options here. And I could either go ahead and
quash this subpoena and with the understanding that the
defendants could reserve the subpoena on Gray Hunter Stenn at
a later date when this scope of discovery has been narrowed
by Judge Hillman in Massachusetts. That would --

MR. PICKLE: Your Honor --

THE COURT: No. No. No. You have had your time
to talk. Now is mine.

MR. PICKLE: Okay.

THE COURT: I don't know what that would really
accomplish, so what I'm going to do is this: We're going to
do nothing on this. We're just going to leave this subpoena
open for right now. And I will direct that Gray Hunter Stenn
and Three Angels take every effort to preserve any documents
of any kind, documents or records of any kind, electronic or
otherwise, which might be produced under the subpoena. And
I'm going to then order right now that any further litigation
concerning the subpoena which has been issued to Gray Hunter
Stenn be transferred to the district of Massachusetts and
Judge Hillman because it is so closely and completely
intertwined with matters before him at this time. And I fear
that anything which might be done here might lead to
inconsistent rulings, and that will be that.

So the subpoena is open. Gray Hunter Stenn and
Three Angels are ordered to preserve any records of any kind,
electronic or otherwise, which might satisfy the subpoena.
The matter then will be transferred to Judge Hillman for any
further action. And waiting until the scope of discovery is
resolved is going to be a good way to do that.

And we have made a transcript of these proceedings.
Anybody who desires to have a transcript may contact Jane
McCorkle and arrange for the transcript. And that will be
that. Actually, you're going to have this electronically so
I guess Judge Hillman could pull this up if he wanted to if
somebody orders it. Right. And that will be that.

MR. SIMPSON: Thank you, Judge Frazier.

THE COURT: All right. Thanks, everybody.

(End of hearing.)

REPORTER'S CERTIFICATE
I, Jane McCorkle, Official Court Reporter for the
United States District Court for the Southern District of
Illinois, do hereby certify that the above and foregoing is a
true and correct transcript of the proceedings of Telephonic
Motion Hearing had in this cause as same appears from my
stenotype notes made personally during the progress of said
proceedings.

DATE: 11/17/08
s/s Jane McCorkle
JANE McCORKLE

Source: Exhibit attached to Document 152 in the Massachusetts lawsuit. --see our Pacer forum to view it as well as the other related documents. http://www.3atalk.com/viewtopic.php?f=9 ... 1021#p1021

[proffaberf451]

RP certainly doesn't like not being able to get in the last word does he?

[Breezy]

Over on AT Robert only included a couple of paragraphs which made 3abn look bad--or that Judge Frazier said things to make 3abn look bad. But looking at the picture as a whole sure put a totally different tone on things!! Thanks Synthian for posting this. The truth never needs to hide.

[Hyacinth Andrews]

Thanks for sharing that information Synthian. It was interesting reading. One could be convinced that Joy and Pickle are just on a fishing expedition. What will happen next I wonder.

[Daryl Fawcett]

Yes, what I read so far is very interesting reading that I will eventually also be posting over at the Maritime forums.