Gary Friedmann - Page 35




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             In response to questions from the Court about the fact                   
             that petitioner's payments exceeded the fees received,                   
             petitioner gave the following explanation:                               

                  They were paid out more in aggregate than I                         
                  received in fees, yes, and these had to do                          
                  with old matters existing prior to 1989 that                        
                  were ultimately paid or resolved in 1989.                           
                  It's not that I intended to lose money on this                      
                  proposition.  It's just that old matters were                       
                  resolved.                                                           
                       Now, people say, Gary, you could have not                      
                  paid these matters, had the clients either pay                      
                  them or whatever, and let them sue you, and then                    
                  these would have been deductible at some time                       
                  down the road, you would have incurred legal                        
                  fees and the amounts may have been larger due to                    
                  interest and penalties and you would have been                      
                  caught up in court.  But I decided to resolve                       
                  older matters probably pertaining to years '82                      
                  to '84, particularly in the-–well, these matters                    
                  were resolved-–well, problems arising from                          
                  earlier years were resolved and negotiated with                     
                  the clients in '89 and these were paid.                             
                       There is no real relationship to the $2,815                    
                  in fees received in 1989 and the amounts paid.                      
                  Obviously, in the case of Dr. Chang, which is                       
                  items 13, 14, and 15, which aggregate $400, and                     
                  item 21, which is a refund of $3,500–-well, those                   
                  three amounts are minuscule in comparison to the                    
                  1990 collections of $25,830.                                        
                       So there is no correlation between the two.                    
                  The reason I mentioned the fees is to show that                     
                  they were, one, current clients, that I retained                    
                  them, not obviously to show that this agreement                     
                  had been reached and to show some perspective                       
                  that, by and large, for most of the clients, the                    
                  fees taken in and the retention of the relation-                    
                  ship exceeded the amounts that were paid out in                     
                  what would have been a divisive matter.                             







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