(V5,P143,L1-19)
SMITH: "Mr. Rea, would you please state your full name for the jury, please?"
REA: "Robert W. Rea, Jr."
SMITH: "And where do you reside, please?"
REA: ". . West Monroe, Louisiana."
SMITH: "And when did you arrive here in Tyler?"
REA: "We arrived here last Monday."
SMITH: "And how did you get here?"
REA: "We drove."
SMITH: ". . Were you subpoenaed by Al Petty or TeleCom USA - - TeleCom 2000?"
COMMENT: Wow!
REA: "Not subpoenaed, I was just asked to be a witness."
SMITH: "And you're here voluntarily, is that correct?"
REA: "Yes."
SMITH: "Picking up your own tab for your lodging, food, et cetera."
REA: "Yes, sir."
(V5,P145,L6-25,P146,excerpts L1-15)
SMITH: "Have you been involved in good investments in the past that didn't turn out so good?"
REA: "Oh, I have yes, sir, quite a few."
SMITH: ". . were you diligent in researching TeleCom 2000 and/or Al Petty before you decided to get involved?"
REA: "Yes, sir. I knew about the company starting in March of last year. My feeling was that if any company would last a couple years, that it had a good opportunity of making it. So I watched it up until the first part of this year and a friend of mine called me again about it, so I went and met with him, told him that I wanted copies of all the paper work. I wanted to look at all the paperwork and documentation. I reviewed all of that.
During that interim time - - that was probably about the middle of January. During that time I went to - - I CALLED THE SECRETARY OF STATE OF TEXAS AND ASKED THEM IF THERE WERE ANY INVESTIGATIONS GOING ON, IF IT WAS A LEGITIMATE COMPANY, IF IT WAS REGISTERED WITH THE STATE, PROPERLY INCORPORATED, IF THEY HAD HAD ANY COMPLAINTS. THEY SAID NO.I CALLED THE ATTORNEY GENERAL'S OFFICE, ASKED THE SAME questions, IF THEY HAD HAD ANY COMPLAINTS OR IF THEY WERE DOING ANY ONGOING INVESTIGATIONS. THEY SAID NO. I CALLED THE SEC AND ASKED THE SAME QUESTIONS. THEY SAID NO.. . About the first of February 2002 I started listening to some of the 14 minute introduction tapes. I listened to that about three times before I finally sent a fax in to get in it, and I got in somewhere around February the 22nd or something like that."SMITH: ". . after this investigation you decided that it was a good, sound investment?"
REA: "Yes, sir. I couldn't find ANYTHING wrong with it, to be honest with you."
(V5,P147,excerpts L2-24)
SMITH: "When you were investigating TeleCom 2000, did you look into the rates that were being charged for long distance services?"
REA: "Yes, sir, I did. That was kind of what was attractive. I had the opportunity back in around '85 I think it was, '84, '85, whenever the deregulation was, there was a stockbroker in Mississippi, with Merrill Lynch had contacted me about World Com was fixing to start up and sent me a lot of information that was - - I used to look at that. I just remembered some of it. I couldn't remember all of it because it had been so long, but just a lot of the things were paralleling as to how that company started up and how they were doing it and the cost of the long distance service was - - "
SMITH: ". . did you choose the program where you got the long distance and the cell phone or any of the other services or products of TeleCom 2000?"
REA: "Yes, we took the long distance and the cell."
SMITH: "And was that part of the consideration in joining World Com 2000?"
REA: "Yes."
(V5,P148,excerpts L6-24)
SMITH: . . "HOW MUCH MONEY DO YOU HAVE THAT IS FROZEN AT THE PRESENT TIME?"
REA: "WE'VE GOT CLOSE TO $72,000."
SMITH: ". . DID YOU HAVE ANY REASON TO BELIEVE AT ANY TIME PRIOR TO YOUR JOINING TELECOM 2000 AND MEETING WITH AL PETTY UP UNTIL THE TIME THAT THE FUNDS WERE FROZEN THAT TELECOM 2000 WAS ANYTHING BUT A LEGITIMATE, ONGOING BUSINESS?"
REA: "NO, SIR."
SMITH: "DID YOU EVER CONSIDER IT AN UNLAWFUL SCHEME?"
REA: "NO, SIR."
SMITH: "AND IS THAT THE WAY YOU STILL FEEL?"
REA: "THAT'S EXACTLY THE WAY I FEEL."
SMITH: "AND DO YOU INTEND TO CONTINUE IN YOUR ASSOCIATION WITH TELECOM 2000 AND AL PETTY?"
REA: "YES, SIR."
CROSS EXAMINATION OF REA BY MS. KENNER
(V5,P149-P151,L14-25,L1-25,excerpts L1-14)
KENNER: ". . you stated that you contacted the Secretary of the State of Texas and the State Attorney General's Office and the SEC before investing in TeleCom 2000?"
REA: "Yes, ma'am."
KENNER: "Do you do that with every business opportunity that is presented to you?"
REA: "Yes, ma'am, I do now."
KENNER: "You do now?"
REA: "Yes, ma'am, I've been around a long time."
KENNER: "Well, have you invested in - - "
REA: "That's the reason I didn't spend - - that's the reason I waited a year before I - - you know, approximately a year before I got into it."
KENNER: "Have you invested in multi level marketing programs before?
REA: "No, ma'am."
KENNER: "WHAT ABOUT THIS PARTICULAR PROGRAM MADE YOU WANT TO INVESTIGATE WHETHER THEY WERE BEING - - WHETHER THEY WERE ON THE UP AND UP?"
REA: "BECAUSE OF THE FACT THAT THEY WERE OFFERING A SERVICE OF TWO CENTS A MINUTE ON LONG DISTANCE AND I REALIZED THAT THAT WAS A GOOD DEAL. THE PRICE ON THE CELL PHONES WAS A GOOD DEAL, PLUS YOU GOT AN OPPORTUNITY TO MAKE A GOOD RETURN ON YOUR MONEY."
KENNER: "IN FACT, YOU WERE OFFERED AN OPPORTUNITY TO RECEIVE 500 TO 1300 PERCENT ON YOUR MONEY."
REA: "THAT'S CORRECT."
KENNER: "AND THAT SOUNDS A LITTLE BIT TOO GOOD TO BE TRUE, DOESN'T IT?"
REA: "NO, MA'AM, NOT TO ME IT DOESN'T."
KENNER: "WELL, YOU'RE A VERY OPTIMISTIC PERSON THEN."
REA: "NO, MA'AM, I'M REALLY NOT AND I'LL BE GLAD TO EXPLAIN WHY I THINK THAT WAY."
KENNER: "Okay. Let's hear it."
REA: "HAVE YOU HEARD OF THESE HIGH RISK INVESTMENTS THAT USED TO FLOAT AROUND THE COUNTRY AND, YOU KNOW, THERE'S A LOT OF HIGH RISK - -, LET ME BACK UP. WHEN I WAS IN GUATEMALA I GOT A REAL GOOD LESSON DOWN THERE."
KENNER: "ARE YOU TALKING ABOUT THE PRIME BANK NOTE?"
REA: "YOU BET. SO IF YOU'RE FAMILIAR WITH THAT, THEN THAT'S THE REASON I'M - - "
KENNER: "So once you heard the rate of return that was promised by TeleCom 2000 you decided to do a little bit of research, is that correct?"
REA: "That's right."
KENNER: " . . did you listen to the conference calls before you invested?"
REA: "Yes, ma'am."
(V5,P152,L3-11,L20-25,P153,L1-10)
KENNER: ". . You didn't hear how Mr. Petty was generating the cash flow to pay them the checks that they were receiving?"
REA: "NO, MA'AM, BUT I DON'T FEEL LIKE THAT WAS MY - - TO BE HONEST WITH YOU, I DIDN'T REALIZE THAT WAS MY BUSINESS. YOU KNOW, I'M SITTING HERE - - HE'S A PRIVATE CORPORATION AND HOW HE GENERATED THE FUNDS AND WHAT HE WAS DOING WAS TECHNICALLY, YOU KNOW, HIS BUSINESS IS THE WAY I LOOKED AT THAT. ALL I KNOW IS THAT HE WAS HONORING THE CONTRACTS."
KENNER: ". . You didn't hear how Mr. Petty was generating the cash flow with which to pay the checks the people were receiving?"
REA: "That's correct. I realized he was a private corporation, so therefore, you know, IT WAS NOT MY RIGHT TO SEE HIS BOOKS and HE WAS HONORING HIS CONTRACTS. I DID LOOK AT THE PAY schedules. I did look at the checks that were received by the people that - - or the person that put me in or told me about it, and they matched up."
KENNER: ". . you were engaging in a contractual relationship."
REA: "Yes, ma'am."
KENNER: "And you weren't interested in how - - where he was obtaining the funds with which to pay you this return?"
REA: "Well, I did the best I could. I'm sitting here looking at long distance service and cell services, so I didn't have any idea whether he had five people on or 5,000 or 500."
(V5,P156,L16-25,P157,L1-9)
KENNER: "Mr. Rea, did you understand that you were making an investment or were you purchasing a business?"
REA: "I was purchasing businesses."
KENNER: "And you've been a businessman for most of your adult life, is that correct?"
REA: "Yes, ma'am."
KENNER: "And you run businesses it sounds like."
REA: "Yes, ma'am."
KENNER: "Now, what were you expecting to do with your purchase of a TeleCom 2000 business?"
REA: "I didn't really have to do anything."
KENNER: "Okay. And you knew that going in?"
REA: "I knew that going in."
KENNER: "But you were going to be able to receive the money?"
REA: "Yes, ma'am."
COMMENT: Just like his purchase of a Chrysler dealership. He had no "Job Description"!
KENNER: "Well, as a business man, did this seem somewhat aberrational to you?"
REA: "No, ma'am, it really just seemed like a real good deal to me."
REDIRECT EXAMINATION BY J.R. SMITH
(V5,P160,L11-19)
SMITH: ". . AS A BUSINESS MAN, YOU'VE BEEN INVOLVED IN OTHER CONTRACTS, IS THAT CORRECT?"
REA: "That's correct."
SMITH: "And not all contracts work out, do they?"
REA: "No, sir, they don't."
SMITH: "But you don't sue somebody - - you don't bring charges in a federal court system just because somebody breached a contract, do you?"
REA: "I wouldn't think so."
RECROSS EXAMINATION BY MS. KENNER
(V5,P160-161,L24-25,1-2)
KENNER: "Mr. Rea, when you were doing your due diligence before you invested your around $30,000 in TeleCom 2000, did you know that Mr. Petty was planning to move the business (COMMENT: "OPERATIONAL FUNCTIONS OF") to Canada?"
REA: "No, ma'am."
REDIRECT EXAMINATION BY MR. SMITH
(V5,P161,L6-7)
SMITH: "WOULD IT HAVE MADE ANY DIFFERENCE/"
REA: "DOESN'T MAKE ANY DIFFERENCE TO ME."
