1
00:00:00,080 --> 00:00:05,870
That he had not articulated any remedy as
against the for-profit entity,

2
00:00:07,060 --> 00:00:09,420
that there was zero evidence in the
record.

3
00:00:11,020 --> 00:00:15,320
Well, Your Honor, we did not realize that
they were going to pivot away from this

4
00:00:15,320 --> 00:00:19,060
argument until after the deadline for
summary judgment. This was a late change,

5
00:00:19,060 --> 00:00:22,270
-as Your Honor knows.
-I understand that. What was,

6
00:00:23,840 --> 00:00:28,180
uh, it, it's my understanding that this is
the only expert they have on damages.

7
00:00:28,800 --> 00:00:33,280
-That is correct, Your Honor.
-And that this expert was identified for

8
00:00:33,280 --> 00:00:35,260
all damages for all defendants.

9
00:00:36,840 --> 00:00:40,440
That, that's correct. Uh, and we did not
understand, and I, I frankly still don't

10
00:00:40,440 --> 00:00:41,680
understand exactly

11
00:00:42,360 --> 00:00:46,580
how this works. I've, I'm not aware of a
principle of law where an expert's report

12
00:00:46,580 --> 00:00:49,380
can be agnostic as to who benefited and
who was harmed.

13
00:00:50,130 --> 00:00:53,020
That seems to be what Dr. Wazzan is
planning to testify to today.

14
00:00:53,960 --> 00:00:54,280
But

15
00:00:55,620 --> 00:00:59,220
we asked the questions that we asked at
the deposition because we wanted to be

16
00:00:59,220 --> 00:01:03,600
clear, at least about the economics of the
way he was proposing to present this

17
00:01:03,600 --> 00:01:07,940
testimony. He made clear that it was all
coming from the nonprofit. The testimony

18
00:01:07,940 --> 00:01:08,640
was

19
00:01:08,700 --> 00:01:13,120
not ambiguous on that subject, and he gave
it repeatedly. And, and I know this may

20
00:01:13,120 --> 00:01:17,020
be a little unorthodox, but I'd, I'd like
to, if I could, Your Honor, show you a

21
00:01:17,020 --> 00:01:19,760
slide that Dr. Wazzan is going to present
to the court today

22
00:01:20,620 --> 00:01:23,920
from this morning's presentation. Mr. Krye
sent this to me last night. I, I think

23
00:01:23,920 --> 00:01:25,300
it's a very nice visualization

24
00:01:26,140 --> 00:01:27,860
-of what we're saying. And so-
-So

25
00:01:29,020 --> 00:01:29,180
it's...

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00:01:30,020 --> 00:01:32,660
Well, let's just get on with the
evidentiary hearing.

27
00:01:32,660 --> 00:01:34,000
-Understood.
-And, um,

28
00:01:36,580 --> 00:01:39,200
I, I, I can deal with it. I mean, this all
b- may be moot.

29
00:01:39,880 --> 00:01:41,930
-Understood.
-And I can deal with it,

30
00:01:42,740 --> 00:01:42,940
uh,

31
00:01:44,580 --> 00:01:49,840
in the context of dealing with something
if I have to get there. So let's just,

32
00:01:49,840 --> 00:01:51,140
I'll take it under submission,

33
00:01:52,800 --> 00:01:53,160
and

34
00:01:54,460 --> 00:01:56,160
let's just get on with the evidence.

35
00:01:57,420 --> 00:01:59,060
Very, very happy to do that, Your Honor.
Thank you.

36
00:01:59,060 --> 00:01:59,280
All right.

37
00:02:00,240 --> 00:02:02,900
-Thank you, Your Honor.
-Now, the, um, are all the experts gonna

38
00:02:02,900 --> 00:02:05,680
sit and listen to the testimony of the
other experts?

39
00:02:07,280 --> 00:02:10,560
Uh, Dr. Strebelov is in the, in the, uh,
courtroom today, yes.

40
00:02:10,560 --> 00:02:11,940
Okay. And Dr. Arnold?

41
00:02:12,580 --> 00:02:15,140
-Dr. Arnold is here as well, Your Honor.
-In the courtroom?

42
00:02:15,140 --> 00:02:18,180
-Yes, Your Honor.
-Okay. All right. Dr. Wazzan, Wazzan?

43
00:02:18,180 --> 00:02:20,320
Yes, Dr. Wazzan is also in the courtroom,
Your Honor.

44
00:02:20,320 --> 00:02:22,079
All right. We should pr- Come on up.

45
00:02:27,460 --> 00:02:31,260
Your Honor, one, one last question. Before
we get, dive into Dr. Wazzan's testimony,

46
00:02:31,260 --> 00:02:36,180
I do have, um, some very brief remarks
just to situated by way of, I mean, a

47
00:02:36,180 --> 00:02:39,780
short opening for remedies. D- would Your
Honor entertain that or, or do you want-

48
00:02:39,780 --> 00:02:40,420
Mr. Wazzan,

49
00:02:41,160 --> 00:02:43,380
-have a seat.
-Okay.

50
00:02:44,900 --> 00:02:45,740
-No.
-Thank you.

51
00:02:47,520 --> 00:02:49,940
Uh, may I give a witness binder to the
witness?

52
00:02:49,940 --> 00:02:52,800
-You may. You need to remain standing.
-Please remain standing and ra-

53
00:02:53,480 --> 00:02:54,840
raise your right hand to be sworn.

54
00:02:56,640 --> 00:02:57,400
Do you solemnly

55
00:02:58,100 --> 00:03:02,360
swear and affirm that the testimony you're
about to give before this court shall be

56
00:03:02,360 --> 00:03:06,440
the truth, the whole truth, and nothing
but the truth, so help you God, or so you

57
00:03:06,440 --> 00:03:08,940
affirm? Please say, "I do," or, "I
affirm."

58
00:03:09,620 --> 00:03:09,840
I do.

59
00:03:10,880 --> 00:03:14,320
Thank you, sir. Please be seated. Speak
clearly into the microphone.

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00:03:15,900 --> 00:03:19,340
Please state your full name and spell your
last name for the record.

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00:03:19,960 --> 00:03:24,080
Christopher Paul Wazzan, W-A-Z-Z-A-N.

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00:03:24,800 --> 00:03:26,320
-Good morning.
-Morning, Your Honor.

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00:03:27,140 --> 00:03:29,240
-You may proceed.
-May I hand up a binder, Your Honor?

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00:03:29,240 --> 00:03:29,500
You may.

65
00:03:32,020 --> 00:03:49,760
Dr.

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00:03:49,760 --> 00:03:52,120
Wazzan, could you please introduce
yourself to the court?

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00:03:53,520 --> 00:03:54,900
Uh, Christopher Paul Wazzan.

68
00:03:55,880 --> 00:03:57,570
What opinions are you here to provide
today?

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00:03:58,740 --> 00:04:00,000
I'm essentially here to

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00:04:01,560 --> 00:04:03,420
determine the

71
00:04:04,360 --> 00:04:10,780
value unlawfully captured by Microsoft and
the OpenAI for-profit entity that are

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00:04:10,780 --> 00:04:15,900
-properly attributable to Mr. Musk.
-And are you prepared to do that as to each

73
00:04:15,900 --> 00:04:19,360
particular entity? I'm sure you just
heard the discussion we had.

74
00:04:20,440 --> 00:04:25,400
I did. I don't follow all the legal
intricacies of that. As I see it, it's the

75
00:04:25,400 --> 00:04:29,270
wrongful gains occur in the for-profit
entity,

76
00:04:29,880 --> 00:04:34,330
but the nonprofit owns a piece of that
for-profit. So sort of by transitivity,

77
00:04:34,940 --> 00:04:36,770
it doesn't really matter to my analysis

78
00:04:37,600 --> 00:04:41,500
-where it comes from.
-But your analysis seems to be devoid

79
00:04:41,560 --> 00:04:43,650
of connection to the underlying facts.

80
00:04:44,720 --> 00:04:48,870
That is, you don't seem to connect any of
the particular conduct,

81
00:04:49,820 --> 00:04:50,880
you lump it all together.

82
00:04:51,910 --> 00:04:53,500
-I-
-D- do I understand your report right in

83
00:04:53,500 --> 00:04:57,840
that sense, that you don't make any
distinctions between the conduct that's

84
00:04:57,840 --> 00:05:00,050
actually engaged in by the various
players?

85
00:05:02,140 --> 00:05:06,140
I'm not sure I follow. As I understand it,
the conduct occurs, the, the wrongful

86
00:05:06,140 --> 00:05:08,500
conduct occurs by the creation of the
for-profit-

87
00:05:08,500 --> 00:05:10,180
You did no analysis

88
00:05:11,020 --> 00:05:16,960
of the individual conduct of the
individual, uh, defendants and assess

89
00:05:17,600 --> 00:05:18,260
wrongful,

90
00:05:18,880 --> 00:05:22,040
uh, gains depending on what that, those
individuals

91
00:05:23,320 --> 00:05:26,620
did, right? You didn't do that. I didn't
read that in your report.

92
00:05:27,800 --> 00:05:31,840
I was asked to assume liability, and that
the creation of the for-profit entity was

93
00:05:31,840 --> 00:05:33,500
-the wrongful act.
-And, and

94
00:05:35,560 --> 00:05:42,480
you were, you were also, um, told to
assume that every single defendant's

95
00:05:42,480 --> 00:05:45,780
conduct was equal, right, in terms of,

96
00:05:47,060 --> 00:05:48,260
of their wrongful conduct.

97
00:05:50,140 --> 00:05:53,100
So let's say someone's wrongful conduct
attributed to 5%,

98
00:05:54,020 --> 00:05:55,080
and the other is

99
00:05:56,280 --> 00:05:57,700
20%, 20%, whatever.

100
00:05:58,600 --> 00:06:02,790
You, you weren't asked to do any analysis
of their individual conduct, right?

101
00:06:03,220 --> 00:06:04,460
-That's correct.
-You just said

102
00:06:05,080 --> 00:06:09,920
they're all bad guys. They're all
wrongfully a- uh, acting inappropriately.

103
00:06:09,920 --> 00:06:14,220
And so here's the number, and it should be
equally assessed to all of them, except

104
00:06:14,220 --> 00:06:15,060
for maybe Microsoft.

105
00:06:15,840 --> 00:06:19,040
Well, they're not equally assessed.
They're e- they're assessed predicated on

106
00:06:19,040 --> 00:06:23,780
the percentages that they hold in the
for-profit.

107
00:06:25,800 --> 00:06:27,660
-But n-
-So there's different percentages that each

108
00:06:27,660 --> 00:06:29,900
-party holds
-... but on the backside, not on the front

109
00:06:29,900 --> 00:06:30,110
side.

110
00:06:34,500 --> 00:06:38,900
You're just assessing it based upon their
interest, not on their conduct.

111
00:06:41,380 --> 00:06:43,719
U- unless I'm misunderstanding your
report.

112
00:06:43,720 --> 00:06:46,660
Y- Your Honor, could I ask, ask some
questions that might help clarify this?

113
00:06:46,660 --> 00:06:46,840
No,

114
00:06:47,620 --> 00:06:50,280
after he has asked this, answers this
question.

115
00:06:51,680 --> 00:06:54,140
I, I thought I was fairly clear in the
deposition, in the report I've-

116
00:06:54,140 --> 00:06:57,620
-I haven't read your deposition.
-I'm sorry, Your Honor. I, I, I assume

117
00:06:57,620 --> 00:06:58,310
liability

118
00:06:59,660 --> 00:07:03,600
for the wrongful acts, and the wrongful
act was all the parties that

119
00:07:04,700 --> 00:07:05,820
created the

120
00:07:06,480 --> 00:07:08,800
for-profit, and so I'm treating them all
equally.

121
00:07:08,800 --> 00:07:11,400
Yeah. So that's what I said. So the answer
to my question is yes, right?

122
00:07:12,860 --> 00:07:14,070
-Yes.
-Okay. Now-

123
00:07:15,260 --> 00:07:19,520
Just to be clear, Dr. Wasan, y- you didn't
do any assessment of wrongful gains

124
00:07:19,520 --> 00:07:21,630
specifically with respect to Sam Altman,
right?

125
00:07:21,630 --> 00:07:24,500
-No, I didn't.
-And you did not do any, uh, assessment of

126
00:07:24,500 --> 00:07:27,559
wrongful gains specifically with respect
to Greg Brockman, right?

127
00:07:27,560 --> 00:07:30,400
-Correct.
-You did an assessment for OpenAI's

128
00:07:30,400 --> 00:07:32,150
-wrongful gains?
-Yes.

129
00:07:32,150 --> 00:07:34,760
And you did an assessment for Microsoft's
wrongful gains?

130
00:07:34,760 --> 00:07:37,520
-Yes.
-And for OpenAI's wrongful gains, is it

131
00:07:37,520 --> 00:07:41,620
your opinion that the amount of wrongful
gains is the same, whether you look at it

132
00:07:41,620 --> 00:07:44,660
from the perspective of the for-profit or
the nonprofit?

133
00:07:44,660 --> 00:07:45,780
-Yes.
-Objection. Leading.

134
00:07:45,780 --> 00:07:46,360
Sustained.

135
00:07:47,340 --> 00:07:49,700
Dr. Wasan, in your opinion, what's the
relationship,

136
00:07:50,340 --> 00:07:54,520
uh, between the wrongful gains of the
OpenAI for-profit and the OpenAI

137
00:07:54,520 --> 00:07:55,100
nonprofit?

138
00:07:55,780 --> 00:07:58,940
Like I said, the wrongful gains occur in
the for-profit-

139
00:07:58,940 --> 00:08:02,780
Move closer to that mic so people can hear
you.

140
00:08:04,040 --> 00:08:09,820
The wrongful gains occur in the for-profit
entity, but the nonprofit owns a stake of

141
00:08:09,820 --> 00:08:10,100
that

142
00:08:11,260 --> 00:08:12,140
for-profit entity.

143
00:08:12,940 --> 00:08:16,580
When you say that the wrongful gains occur
in the for-profit entity, what do you

144
00:08:16,580 --> 00:08:17,020
mean by that?

145
00:08:18,480 --> 00:08:22,220
Well, all the wrongful gains occur in the,
in the for-profit. There's no, there's no

146
00:08:22,220 --> 00:08:23,560
gains in the nonprofit.

147
00:08:24,260 --> 00:08:28,540
Um, but to the extent that the nonprofit
holds an equity stake of the for-profit,

148
00:08:28,540 --> 00:08:30,500
they, they have gained in that fashion.

149
00:08:31,220 --> 00:08:33,480
-And so-
-I don't understand what you mean by that

150
00:08:33,480 --> 00:08:35,880
-statement.
-Uh, okay.

151
00:08:35,880 --> 00:08:38,400
[clears throat] That is, did you look at
the Hemming Morris

152
00:08:39,000 --> 00:08:41,100
analysis of the value of the nonprofit?

153
00:08:43,540 --> 00:08:44,140
Uh, yes.

154
00:08:44,760 --> 00:08:45,000
Okay.

155
00:08:45,740 --> 00:08:49,420
And what was the value of the nonprofit at
the time the report was done?

156
00:08:49,420 --> 00:08:51,920
-It was very low.
-What was it, do you recall?

157
00:08:51,920 --> 00:08:52,780
Uh, not from memory.

158
00:08:54,020 --> 00:08:56,220
And there was no gain from that position?

159
00:09:00,800 --> 00:09:06,319
Well, the value of OpenAI for-profit is
increasing over time, so if you go back

160
00:09:06,320 --> 00:09:08,300
-far enough, it's-
-You just-- I'm trying to understand your

161
00:09:08,300 --> 00:09:11,979
statement. You said there was no gain in
the nonprofit.

162
00:09:12,860 --> 00:09:15,760
No, no, no. No, I'm sorry. That's... Uh,
you're misunderstanding me.

163
00:09:18,200 --> 00:09:23,940
All the profits, all the value is created
or is captured in the for-profit.

164
00:09:25,030 --> 00:09:29,440
The charity doesn't generate profits. The
for-profit generates profits, but the

165
00:09:29,440 --> 00:09:30,200
charity piece,

166
00:09:30,990 --> 00:09:34,870
the charity parent owns a piece of that
for-profit entity.

167
00:09:35,880 --> 00:09:38,770
So as the value of the for-profit
increases,

168
00:09:39,660 --> 00:09:43,040
the value of the piece held by the
nonprofit also increases.

169
00:09:46,180 --> 00:09:46,560
Proceed.

170
00:09:47,540 --> 00:09:52,860
Dr. Wasan, based on that analysis, what,
in your opinion, are the wrongful gains

171
00:09:52,860 --> 00:09:56,100
that OpenAI derived from Elon's
contributions?

172
00:09:56,100 --> 00:09:58,599
Which OpenAI? You've gotta be very clear.

173
00:09:59,420 --> 00:10:03,460
What are the amount of the wrongful gains
that the OpenAI for-profit derived from

174
00:10:03,460 --> 00:10:04,430
Elon's contributions?

175
00:10:05,180 --> 00:10:10,240
Somewhere between sixty-five billion and a
hundred and nine billion. Sixty-five

176
00:10:10,240 --> 00:10:12,480
billion to one hundred and nine billion,

177
00:10:13,540 --> 00:10:16,600
predicated on the October twenty
twenty-five value.

178
00:10:17,340 --> 00:10:21,120
And what is the amount of wrongful gains
that the OpenAI nonprofit derived from

179
00:10:21,120 --> 00:10:24,140
-Elon's contributions?
-The same figure.

180
00:10:24,140 --> 00:10:27,760
What is the amount of wrongful gains that
Microsoft derived from Elon's

181
00:10:27,760 --> 00:10:28,460
contributions?

182
00:10:29,090 --> 00:10:31,360
Between thirteen and twenty-five billion.

183
00:10:33,260 --> 00:10:36,060
How much did Elon originally donate to
OpenAI?

184
00:10:37,420 --> 00:10:38,700
Around thirty-eight million.

185
00:10:40,680 --> 00:10:46,340
What do OpenAI and Microsoft's wrongful
gains represent as a multiple of that

186
00:10:46,340 --> 00:10:47,340
initial contribution?

187
00:10:48,120 --> 00:10:48,360
It's a,

188
00:10:49,280 --> 00:10:51,320
a very large number, like two thousand
percent.

189
00:10:52,240 --> 00:10:56,380
Do you consider a two thousand times
return on initial contribution to be

190
00:10:56,380 --> 00:10:59,180
extraordinary by Silicon Valley standards?

191
00:10:59,180 --> 00:10:59,280
No.

192
00:11:00,600 --> 00:11:04,720
Are there examples of Silicon Valley
entrepreneurs who have achieved two

193
00:11:04,720 --> 00:11:07,240
thousand times returns on their initial
investments?

194
00:11:08,180 --> 00:11:10,220
There are many, uh, going back all the way
to,

195
00:11:11,900 --> 00:11:16,340
uh, Hewlett-Packard or Apple or any
company founded in Silicon Valley that

196
00:11:16,340 --> 00:11:17,590
became very successful,

197
00:11:18,560 --> 00:11:22,000
-all the way up through, um-
-What is the rate of failure of the

198
00:11:22,000 --> 00:11:25,220
-startups in Silicon Valley?
-Quite high.

199
00:11:25,220 --> 00:11:26,100
What is the number?

200
00:11:27,340 --> 00:11:29,150
I'd have to look at the literature. I
don't-

201
00:11:29,150 --> 00:11:31,020
And you're an expert. You can't give me a
ballpark?

202
00:11:32,440 --> 00:11:33,260
What's the ballpark?

203
00:11:33,880 --> 00:11:37,320
More than half. More than probably around
eighty percent.

204
00:11:37,980 --> 00:11:39,340
-More than eighty percent?
-Yes.

205
00:11:40,840 --> 00:11:45,840
And in that case, the, um, gain, had it
failed, would have been zero.

206
00:11:45,840 --> 00:11:46,040
Yes.

207
00:11:47,000 --> 00:11:47,420
Proceed.

208
00:11:48,540 --> 00:11:52,860
Uh, do you consider a two thousand times
return on initial contribution

209
00:11:52,860 --> 00:11:58,420
extraordinary for a venture founded by
Elon Musk in particular?

210
00:11:58,420 --> 00:12:03,650
He has a really successful track record
through Tesla, through SpaceX.

211
00:12:03,650 --> 00:12:08,480
Have you analyzed every single contr-- or
every single, uh, startup that he's

212
00:12:08,480 --> 00:12:09,460
-funded?
-No.

213
00:12:10,396 --> 00:12:15,115
So then how can you make that... I mean,
yeah, we all know about the big ones, but

214
00:12:15,116 --> 00:12:18,966
you did no analysis of your client's, um,

215
00:12:21,136 --> 00:12:25,296
all of his ventures? All of the monies
that he's given all these startups?

216
00:12:25,956 --> 00:12:28,636
-No.
-So you don't know what the failure rate is

217
00:12:28,636 --> 00:12:28,876
then?

218
00:12:29,476 --> 00:12:31,976
For Mr. Musk's particular investments, I
do not.

219
00:12:31,976 --> 00:12:34,836
All right. Then next question. He doesn't
have foundation for that statement.

220
00:12:35,756 --> 00:12:38,416
-I-
-The record can reflect, we know the big

221
00:12:38,416 --> 00:12:38,676
ones.

222
00:12:40,096 --> 00:12:43,256
-Next question.
-With respect to the big ones, Dr. Wasan,

223
00:12:43,256 --> 00:12:43,836
how did they fare?

224
00:12:44,556 --> 00:12:45,276
Extremely well.

225
00:12:46,356 --> 00:12:51,096
And was that a, was that fact commonly
known among, uh, Silicon Valley investors?

226
00:12:51,096 --> 00:12:52,276
How would he know that?

227
00:12:53,156 --> 00:12:54,876
In the industry? Reframe your question.

228
00:12:55,656 --> 00:12:55,796
Uh,

229
00:12:56,436 --> 00:12:56,556
well,

230
00:12:57,596 --> 00:13:01,516
we'll return to that after I, after we
discuss your background in venture capital

231
00:13:01,516 --> 00:13:01,996
investing.

232
00:13:04,556 --> 00:13:05,236
On that topic,

233
00:13:05,836 --> 00:13:06,036
um,

234
00:13:07,736 --> 00:13:08,916
what's your educational background?

235
00:13:09,576 --> 00:13:13,396
I have an undergraduate degree in
economics from Berkeley, and a PhD in

236
00:13:13,396 --> 00:13:16,796
-finance from UCLA.
-You're currently a managing director at

237
00:13:16,796 --> 00:13:18,316
-Berkeley Research Group?
-Yes, I am.

238
00:13:18,916 --> 00:13:19,936
What do you do in that role?

239
00:13:20,996 --> 00:13:23,036
It's a variety of things. I manage the LA
office,

240
00:13:24,036 --> 00:13:24,296
um,

241
00:13:25,076 --> 00:13:30,796
and I engage in consulting projects like
this. I do valuation work. I do a fair

242
00:13:30,796 --> 00:13:32,116
amount of public policy work.

243
00:13:33,176 --> 00:13:33,436
Um,

244
00:13:34,576 --> 00:13:36,175
kind of general things like that.

245
00:13:36,176 --> 00:13:39,816
Do you also have real-world experience as
an investor?

246
00:13:39,816 --> 00:13:42,996
-Yes, I do.
-Uh, could you tell the court about that?

247
00:13:42,996 --> 00:13:48,136
Yes, I'm the president and CEO of Wasan
and Company Investment LLC,

248
00:13:48,956 --> 00:13:54,616
a company that provides, uh, seed-level
financing to startups primarily out of the

249
00:13:54,616 --> 00:13:55,936
UCLA School of Engineering.

250
00:13:57,216 --> 00:14:00,396
How many startups has Wasan and Company
invested in?

251
00:14:00,396 --> 00:14:00,696
Seven.

252
00:14:01,576 --> 00:14:04,756
What types of tech startups have those
been?

253
00:14:04,756 --> 00:14:10,016
They're basically semiconductor and
biomedical, biomechanical firms.

254
00:14:10,016 --> 00:14:13,916
Well, what are the big players in Silicon
Valley? What is the number of startups

255
00:14:13,916 --> 00:14:16,276
that they typically are known to have
funded

256
00:14:17,336 --> 00:14:20,236
in any given year or any given time period
that you know of?

257
00:14:20,895 --> 00:14:22,296
For example, like Sequoia?

258
00:14:22,916 --> 00:14:25,625
Like, like Musk and others. Yeah, Sequoia.
How many?

259
00:14:25,625 --> 00:14:25,816
Sequoia,

260
00:14:27,676 --> 00:14:28,036
dozens.

261
00:14:29,056 --> 00:14:32,296
-Dozens over what period of time?
-Dozens per year.

262
00:14:32,296 --> 00:14:37,116
And of those dozens per year, we're still
getting 80% failure rates?

263
00:14:39,416 --> 00:14:39,936
You know, I,

264
00:14:41,936 --> 00:14:45,936
I couldn't speak specifically to Sequoia
or some of the biggers, but overall in the

265
00:14:45,936 --> 00:14:48,296
industry, most startups fail.

266
00:14:48,956 --> 00:14:51,996
Some firms have much higher success rates
than others.

267
00:14:51,996 --> 00:14:55,756
Do you have any idea whatsoever how many
Musk has funded

268
00:14:56,376 --> 00:14:58,016
-over his career?
-I do not.

269
00:14:59,276 --> 00:15:00,536
Seven's a pretty small number,

270
00:15:01,576 --> 00:15:06,496
isn't it, given how Silicon Valley
operates in terms of the big venture

271
00:15:07,276 --> 00:15:08,316
-funders?
-Yes.

272
00:15:09,156 --> 00:15:09,536
Proceed.

273
00:15:10,496 --> 00:15:11,116
Dr. Wasan,

274
00:15:11,956 --> 00:15:13,856
of those seven investments, have some of
them

275
00:15:14,476 --> 00:15:16,516
-yielded successful results?
-Yes.

276
00:15:16,516 --> 00:15:17,736
Could you describe those for the court?

277
00:15:18,456 --> 00:15:20,836
-Sure, um-
-First of all, how many of the seven?

278
00:15:22,256 --> 00:15:27,096
-Uh, four of the seven were successful.
-So just over 50%.

279
00:15:27,096 --> 00:15:27,276
Yes.

280
00:15:28,596 --> 00:15:31,236
-Go ahead.
-For the record, what, what was the amount

281
00:15:31,236 --> 00:15:35,056
that Wasan and Company invested in total
in those startups?

282
00:15:35,056 --> 00:15:36,136
In total, it was around

283
00:15:36,876 --> 00:15:37,776
40 to 50 million.

284
00:15:39,016 --> 00:15:42,716
And among the four successful ventures,
what was the nature of the success?

285
00:15:44,316 --> 00:15:44,586
Um,

286
00:15:45,636 --> 00:15:47,416
Cognet was acquired by Intel.

287
00:15:48,156 --> 00:15:50,056
G+ was acquired by SST.

288
00:15:50,996 --> 00:15:52,176
Mankind went public.

289
00:15:53,636 --> 00:15:53,916
Um...

290
00:16:00,465 --> 00:16:00,526
Hmm.

291
00:16:01,216 --> 00:16:02,616
There's one more I'm forgetting.

292
00:16:03,516 --> 00:16:06,396
Was the last of the fourth also acquired
by another company?

293
00:16:06,396 --> 00:16:06,596
Yes.

294
00:16:07,376 --> 00:16:09,736
Oh, I'm sorry, Nomads. Nomads was also
acquired.

295
00:16:11,116 --> 00:16:15,616
What was your role personally in
connection with the investments that Wasan

296
00:16:15,616 --> 00:16:16,256
and Company made?

297
00:16:17,876 --> 00:16:21,286
So my job was to do the financial
forecasting for firms that we're,

298
00:16:22,416 --> 00:16:23,596
we were considering investing in,

299
00:16:24,456 --> 00:16:28,806
and then to raise money from the limited
partners, and then to place the money with

300
00:16:28,806 --> 00:16:29,506
the firms, and then-

301
00:16:30,176 --> 00:16:33,116
And of the three that failed, how much
money did you put into those?

302
00:16:35,256 --> 00:16:35,696
Um,

303
00:16:40,476 --> 00:16:40,976
let me think.

304
00:16:48,856 --> 00:16:52,916
I'd say combined it was about 5 million
for those three.

305
00:16:54,296 --> 00:16:56,116
The 40 to 50 million was yours?

306
00:16:57,186 --> 00:16:58,816
-It was-
-I'm looking for apples to apples

307
00:16:58,816 --> 00:16:59,436
comparison.

308
00:17:00,076 --> 00:17:03,896
The 40 to 50 million was some of my money
plus money contributed by limited

309
00:17:03,896 --> 00:17:06,896
-partners.
-Okay. And the same then, using that

310
00:17:06,896 --> 00:17:09,416
metric, how much was invested in the
three?

311
00:17:10,696 --> 00:17:15,855
So I think it was around 5 million
combined for those three, and then about

312
00:17:15,856 --> 00:17:17,476
40 million went into the other

313
00:17:18,136 --> 00:17:18,396
four.

314
00:17:20,056 --> 00:17:20,336
Go ahead.

315
00:17:21,356 --> 00:17:22,636
Of those three, um,

316
00:17:23,436 --> 00:17:26,936
you said they hadn't succeeded yet, but is
one of those still existing?

317
00:17:27,536 --> 00:17:32,076
One of them is still kind of on its last
legs, Gene Fluidics. Um, I, it's about to

318
00:17:32,076 --> 00:17:32,576
go under.

319
00:17:34,096 --> 00:17:34,746
Uh, now-

320
00:17:35,516 --> 00:17:37,176
Did you c- consider that,

321
00:17:38,396 --> 00:17:38,656
um,

322
00:17:40,036 --> 00:17:42,136
the OpenAI

323
00:17:43,256 --> 00:17:48,896
nonprofit was on its last legs about to go
under when it was valued by Hemingway?

324
00:17:55,116 --> 00:17:58,536
Well, it had a very low value. That
doesn't necessarily mean it was about to

325
00:17:58,536 --> 00:18:01,795
-go under.
-So you did or did not consider that fact?

326
00:18:01,796 --> 00:18:06,086
Not explicitly, but I did review those,
those documents, and I did consider them

327
00:18:06,856 --> 00:18:08,936
when I did the parsing of where the gains
occurred.

328
00:18:12,216 --> 00:18:19,148
Would it have changed your opinion if you
had found that it had, in fact-Been

329
00:18:19,148 --> 00:18:22,728
on its last legs, and that there was no
way it was going to succeed without

330
00:18:22,728 --> 00:18:23,488
further investment

331
00:18:28,708 --> 00:18:32,888
I don't think so, and I can give you an
example as to why. Um,

332
00:18:34,348 --> 00:18:38,648
for example, Amazon did not generate a
profit for the first 15 years of its

333
00:18:38,648 --> 00:18:39,228
existence.

334
00:18:40,188 --> 00:18:40,368
-Mm.
-So

335
00:18:41,368 --> 00:18:42,528
it raised money initially,

336
00:18:43,788 --> 00:18:43,988
um,

337
00:18:44,708 --> 00:18:47,468
and it's trying to build something, and
then in subsequent years it had to raise

338
00:18:47,468 --> 00:18:50,888
more money, and it had to raise more money
in round three and round four and round

339
00:18:50,888 --> 00:18:53,228
five. Eventually it became very
profitable.

340
00:18:53,228 --> 00:18:54,618
-If it had raised-
-But the original-

341
00:18:54,618 --> 00:18:57,308
... no more money, though,

342
00:18:58,608 --> 00:19:02,368
-that wouldn't have changed your opinion?
-If it had raised no further money, then it

343
00:19:02,368 --> 00:19:04,288
probably would have gone under at some
point.

344
00:19:06,228 --> 00:19:06,688
Proceed.

345
00:19:08,488 --> 00:19:09,588
Dr. Wason, um,

346
00:19:10,308 --> 00:19:12,668
with respect to the questions a few
moments ago about Mr.

347
00:19:13,448 --> 00:19:14,608
Musk's other companies,

348
00:19:15,768 --> 00:19:20,408
for a company like SpaceX, was Musk an
outside venture capital investor or was he

349
00:19:20,408 --> 00:19:22,428
-a founder?
-He was a founder.

350
00:19:22,428 --> 00:19:27,288
And for a company like Tesla, was Mr. Musk
an outside venture capital or investor,

351
00:19:27,288 --> 00:19:28,908
or was he a founder or near founder?

352
00:19:29,968 --> 00:19:31,688
He was a near founder. He, he,

353
00:19:32,448 --> 00:19:33,288
he acquired it.

354
00:19:34,028 --> 00:19:39,508
And, and so do you even know that Mr. Musk
ever invests in companies as an outside

355
00:19:39,508 --> 00:19:42,988
venture capital investor where he has no,
no control over the company?

356
00:19:42,988 --> 00:19:43,728
Object to the form.

357
00:19:44,648 --> 00:19:46,868
I don't have any visibility into what he
does with his-

358
00:19:46,868 --> 00:19:48,788
Overruled. He says he doesn't know.

359
00:19:50,088 --> 00:19:53,467
Uh, apart from your professional
experience, do you teach courses in

360
00:19:53,468 --> 00:19:56,908
-economics and finance?
-I have previously taught at USC and at Cal

361
00:19:56,908 --> 00:19:58,168
-State LA.
-What topics?

362
00:19:59,128 --> 00:20:02,588
-Corporate finance and valuation.
-Have you published research in economics

363
00:20:02,588 --> 00:20:05,988
-and finance?
-I've published about 25 papers in econ

364
00:20:05,988 --> 00:20:06,968
journals and law reviews.

365
00:20:07,788 --> 00:20:08,128
You test-

366
00:20:09,508 --> 00:20:10,628
Econ journals and law,

367
00:20:11,328 --> 00:20:12,068
about 25.

368
00:20:13,308 --> 00:20:15,888
Have you testified before legislative
bodies?

369
00:20:15,888 --> 00:20:18,268
-Yes, I have.
-On what topics?

370
00:20:18,268 --> 00:20:19,658
Typically public policy,

371
00:20:20,328 --> 00:20:21,678
um, economic impact studies.

372
00:20:22,488 --> 00:20:25,128
And have you testified before as an expert
witness?

373
00:20:25,128 --> 00:20:26,897
-Yes, I have.
-Approximately how many times?

374
00:20:28,088 --> 00:20:31,328
I think at trial around 15 or 16. Um...

375
00:20:35,328 --> 00:20:39,748
Returning to your methodology, can you
just provide an overview for the court of

376
00:20:39,748 --> 00:20:46,548
the methodology you use to determine the
portion of the for-profit's wrongful

377
00:20:46,548 --> 00:20:48,557
gains that were attributable to Mr. Musk?

378
00:20:50,728 --> 00:20:55,668
Yes, there's a three-step process. I start
with the value of the for-profit.

379
00:20:56,648 --> 00:21:00,228
I then apply a percentage, which is the,
um,

380
00:21:02,568 --> 00:21:02,728
the,

381
00:21:03,528 --> 00:21:06,708
the nonprofit's ownership stake of the
for-profit,

382
00:21:07,648 --> 00:21:10,328
and then I apply Mr. Musk's percentage,

383
00:21:11,908 --> 00:21:13,367
um, to the

384
00:21:14,568 --> 00:21:15,788
nonprofit's piece.

385
00:21:16,448 --> 00:21:21,308
And in your view, is that an appropriate
method to apply to determine the portion

386
00:21:21,308 --> 00:21:25,367
of the for-profit's gains that are
attributable to Mr. Musk's investments?

387
00:21:25,968 --> 00:21:27,228
-Absolutely.
-Why is that?

388
00:21:28,868 --> 00:21:33,768
Well, it's a way to clearly get at the
value of his contributions relative to the

389
00:21:33,768 --> 00:21:37,488
-whole. Um-
-So I'm, I'm s- still thinking about your

390
00:21:37,488 --> 00:21:43,048
Amazon, uh, analogy. I take it, though,
that the Amazon analogy is different

391
00:21:43,048 --> 00:21:43,638
because

392
00:21:45,128 --> 00:21:49,848
Mr. Bezos stayed with Amazon as opposed to
Mr. Musk, who

393
00:21:50,588 --> 00:21:52,108
abandoned OpenAI, right?

394
00:21:54,228 --> 00:21:57,708
He did stay, but he has, you know, he has
since stepped down, and the value

395
00:21:57,708 --> 00:22:01,908
-continues to increase. It's, it's-
-Yeah, but it had already been successful

396
00:22:01,908 --> 00:22:02,768
once he stepped down.

397
00:22:03,528 --> 00:22:06,088
He didn't step down when it was on its
last legs, did he?

398
00:22:07,128 --> 00:22:07,228
No.

399
00:22:07,968 --> 00:22:11,308
In fact, how long did he stay with it
before, between the time

400
00:22:11,968 --> 00:22:16,268
it was on its last legs and the time that
he stepped down? How long was that?

401
00:22:16,268 --> 00:22:17,528
Oh, a long time.

402
00:22:19,288 --> 00:22:20,168
-Do you know?
-Many years.

403
00:22:21,108 --> 00:22:22,868
-Over a decade?
-Yes.

404
00:22:22,868 --> 00:22:23,708
Over two decades?

405
00:22:27,088 --> 00:22:28,208
Probably, yes.

406
00:22:29,908 --> 00:22:30,288
Continue.

407
00:22:31,008 --> 00:22:31,628
Dr. Wason,

408
00:22:33,048 --> 00:22:34,488
do you have an opinion about whether

409
00:22:35,428 --> 00:22:38,658
OpenAI would have been able to launch its
for-profit at all

410
00:22:39,307 --> 00:22:43,838
but for Mr. Musk's, uh, contributions
between 2015 and 2020?

411
00:22:44,448 --> 00:22:49,128
That's not my reading of, of the record,
that he was instrumental and foundational

412
00:22:49,128 --> 00:22:53,388
-to the launch of OpenAI.
-So I, I thought you were told to assume

413
00:22:55,188 --> 00:22:56,448
the factual basis.

414
00:22:57,848 --> 00:22:59,228
For the wrongful acts, yes.

415
00:23:00,288 --> 00:23:02,328
But you were not told to assume,

416
00:23:03,448 --> 00:23:04,728
uh, this issue?

417
00:23:08,208 --> 00:23:09,228
Did, did you go in

418
00:23:10,408 --> 00:23:14,888
depth into the factual record to make that
opinion, or were you told to assume that?

419
00:23:14,888 --> 00:23:19,028
Um, honestly, I don't recall. It's

420
00:23:19,028 --> 00:23:21,368
-probably both.
-Did you do the work or not?

421
00:23:21,368 --> 00:23:24,828
I, I did. I looked into it. He, he did all
the primary recruiting. He made all the

422
00:23:24,828 --> 00:23:27,098
-original contributions.
-So did you then-

423
00:23:27,098 --> 00:23:28,588
-It was his-
-... listen to the trial testimony?

424
00:23:29,988 --> 00:23:32,568
-I listened to some of it.
-What did you listen to?

425
00:23:33,228 --> 00:23:36,188
Well, there was an audio feed that I had
that I was listening to.

426
00:23:36,188 --> 00:23:37,808
Did you listen to particular,

427
00:23:38,848 --> 00:23:39,048
um,

428
00:23:40,128 --> 00:23:44,068
to any particular examinations relative to
your opinion today?

429
00:23:47,968 --> 00:23:48,388
Um,

430
00:23:49,088 --> 00:23:53,028
no, but, but they provided me with the,
with the transcripts from the trial.

431
00:23:53,028 --> 00:23:55,448
-Okay, so-
-So I had those, and I did review those.

432
00:23:55,448 --> 00:23:57,288
-Did you read them all?
-I, I, I did.

433
00:23:57,928 --> 00:23:58,068
Okay.

434
00:24:00,608 --> 00:24:04,688
So I'd like to know what the factual basis
is for any opinion that is factual

435
00:24:05,308 --> 00:24:08,588
because I was under the impression that he
was told to assume liability.

436
00:24:09,548 --> 00:24:14,548
That impression was correct, Your Honor,
but Dr. Wason, in c- computing or forming

437
00:24:14,548 --> 00:24:18,948
an opinion about wrongful gains, did you
consider the non-monetary contributions

438
00:24:18,948 --> 00:24:22,088
that Mr. Musk made to the nonprofit in its
early years?

439
00:24:22,088 --> 00:24:24,688
-Yes, I did. I mean-
-But did you feed those to him, or did he

440
00:24:24,688 --> 00:24:28,388
come up with those on his own? That's the
distinction I'm trying to make, Mr. Kryj.

441
00:24:28,388 --> 00:24:33,268
So you need to make sure that those
questions clearly

442
00:24:33,268 --> 00:24:39,412
delineate-His review of the evidence
versus what you, the lawyers, are telling

443
00:24:39,412 --> 00:24:40,312
him to assume

444
00:24:42,352 --> 00:24:42,712
Did we,

445
00:24:43,332 --> 00:24:46,172
Dr. Wason, did your lawyers tell you to
assume that

446
00:24:46,832 --> 00:24:52,252
Elon Musk made important non-monetary
contributions to OpenAI, or did you come

447
00:24:52,252 --> 00:24:55,171
to that conclusion based on your own
analysis?

448
00:24:55,172 --> 00:25:00,132
I, I came to that conclusion on my own.
You guys asked me to determine the value

449
00:25:00,132 --> 00:25:01,212
of his contributions.

450
00:25:02,112 --> 00:25:06,432
And as I read the record, and I was doing
my work, th- his contributions are

451
00:25:06,432 --> 00:25:11,992
monetary and non-monetary. And so I
pursued both of those avenues of analysis.

452
00:25:11,992 --> 00:25:14,232
And so in, in performing that analysis,

453
00:25:14,232 --> 00:25:18,952
you made your own determinations about the
importance of those contributions to

454
00:25:18,952 --> 00:25:20,432
-OpenAI's success?
-Yes.

455
00:25:22,792 --> 00:25:22,952
Um,

456
00:25:23,592 --> 00:25:24,552
turning to the first step

457
00:25:25,232 --> 00:25:30,472
of your three-step analysis, what is your
opinion of the value of the OpenAI

458
00:25:30,472 --> 00:25:31,072
for-profit?

459
00:25:31,802 --> 00:25:35,012
Well, at the time of the report, October
twenty twenty-five, it was five hundred

460
00:25:35,012 --> 00:25:35,312
billion.

461
00:25:36,832 --> 00:25:39,372
What did you principally rely on to
estimate that figure?

462
00:25:41,812 --> 00:25:42,072
Um,

463
00:25:43,172 --> 00:25:48,251
Microsoft and OpenAI had entered into a
agreement whereby the firm would be,

464
00:25:49,052 --> 00:25:49,272
um,

465
00:25:51,272 --> 00:25:53,212
sort of reconstituted as a for-profit
entity,

466
00:25:54,012 --> 00:25:57,272
as a public benefit corporation. And as
part of that

467
00:25:58,972 --> 00:25:59,592
agreement,

468
00:26:00,292 --> 00:26:04,872
a value, a market price was, was arrived
at of five hundred billion.

469
00:26:04,872 --> 00:26:08,352
Uh, I will show you plaintiff's exhibit
two eighty-six, which was introduced into

470
00:26:08,352 --> 00:26:12,872
evidence earlier this morning, and in
particular, the panel on the right. What

471
00:26:12,872 --> 00:26:14,832
does that portion of the document show?

472
00:26:17,872 --> 00:26:22,292
Uh, it just came up. At the top it says
the entire value is five hundred billion.

473
00:26:22,292 --> 00:26:24,212
You can put... You can display it.

474
00:26:30,292 --> 00:26:34,092
Uh, in addition to the, this figure from
the public benefit

475
00:26:34,712 --> 00:26:38,972
corporation conversion transaction, did
you also look at other data sources to

476
00:26:38,972 --> 00:26:42,332
help you evaluate the value of OpenAI
for-profit?

477
00:26:42,951 --> 00:26:47,782
Yes, I did a number of things. Um, one, I
created my own discounted cash flow model.

478
00:26:47,782 --> 00:26:54,622
Two, uh, some of the employee shares had
been tendered for sale, um,

479
00:26:55,872 --> 00:26:57,372
to third parties like SoftBank.

480
00:26:57,992 --> 00:27:00,792
Those had also set a market price of
around five hundred billion.

481
00:27:01,632 --> 00:27:04,332
Um, in addition, some of those shares are
traded on,

482
00:27:05,352 --> 00:27:09,382
um, they're not exactly exchanges, but
Notice and Forge. Um,

483
00:27:10,552 --> 00:27:12,422
Notice and Forge, uh, they're companies,

484
00:27:13,592 --> 00:27:18,272
um, where, where you can sort of buy
non-trading shares,

485
00:27:18,972 --> 00:27:20,752
also with values around five hundred
billion.

486
00:27:22,272 --> 00:27:23,772
Uh, we can take this exhibit down.

487
00:27:24,772 --> 00:27:29,332
S- since October twenty twenty-five, have
other developments impacted the value of

488
00:27:29,332 --> 00:27:33,392
-the OpenAI for-profit?
-Yes. The for-profit has since had a round

489
00:27:33,392 --> 00:27:34,192
of financing

490
00:27:35,052 --> 00:27:38,832
that set a value at eight hundred and
forty to eight hundred and fifty billion,

491
00:27:39,552 --> 00:27:40,992
depending on various reports.

492
00:27:42,432 --> 00:27:46,042
To your knowledge, does OpenAI have any
other plans that may affect its valuation?

493
00:27:46,042 --> 00:27:49,092
There have been press articles indicating

494
00:27:49,092 --> 00:27:53,332
they're trending to an IPO, where the
value, um, is expected to be even higher.

495
00:27:54,892 --> 00:28:00,352
W- what impact would those developments
have on your opinion about OpenAI's

496
00:28:00,352 --> 00:28:01,021
wrongful gains?

497
00:28:02,112 --> 00:28:04,712
They would increase the value of those
holdings dramatically.

498
00:28:06,552 --> 00:28:11,512
Dr. Wason, let's turn to step two of your
three-step analysis. You testified earlier

499
00:28:11,512 --> 00:28:16,172
that you estimated the portion of the
OpenAI for-profit's value that's

500
00:28:16,172 --> 00:28:18,752
attributable to OpenAI nonprofit.

501
00:28:20,192 --> 00:28:24,272
What different entities hold interests in
OpenAI for-profit?

502
00:28:26,112 --> 00:28:27,612
So Microsoft holds a stake.

503
00:28:28,232 --> 00:28:31,152
Uh, the OpenAI nonprofit holds a stake.

504
00:28:32,112 --> 00:28:35,232
There are, um, first closed limited
partners that hold a stake.

505
00:28:35,992 --> 00:28:40,912
There are employees that hold stakes and
employee vehicles that also hold stakes.

506
00:28:40,912 --> 00:28:45,852
Did those other investors and employees
also contribute value to OpenAI

507
00:28:45,852 --> 00:28:46,992
-for-profit?
-Yes.

508
00:28:47,912 --> 00:28:54,511
So w- when you a- allocated, um, that
value between OpenAI nonprofit and those

509
00:28:54,512 --> 00:28:58,212
other stakeholders, why did you do that at
step two of your analysis?

510
00:28:59,072 --> 00:29:04,131
Because those other entities that created
value, um, I'm letting them keep their

511
00:29:04,132 --> 00:29:07,772
value. I'm not assuming any wrongful acts
on their behalf in my analysis.

512
00:29:09,312 --> 00:29:14,052
What did you conclude about the portion of
OpenAI for-profit's value that's

513
00:29:14,052 --> 00:29:18,432
attributable to the nonprofit as opposed
to the other investors and employees?

514
00:29:19,472 --> 00:29:22,012
It's somewhere between twenty-six and
twenty-nine percent.

515
00:29:22,632 --> 00:29:26,112
What information did you rely on to reach
that conclusion?

516
00:29:26,112 --> 00:29:30,772
Primarily a cap table that the parties
themselves, Microsoft and OpenAI, had, had

517
00:29:30,772 --> 00:29:33,232
-made public.
-Your Honor, may I show the witness

518
00:29:33,232 --> 00:29:36,432
plaintiff's exhibit two eighty-six that
was introduced this morning?

519
00:29:36,432 --> 00:29:36,872
You may.

520
00:29:37,472 --> 00:29:39,982
And if I can focus you on the table in the
upper left.

521
00:29:39,982 --> 00:29:40,832
And if it can be published,

522
00:29:43,612 --> 00:29:43,842
-um-
-Um,

523
00:29:44,552 --> 00:29:48,632
this is labeled "OpenAI Summary Post
Recapitalization Cap Table."

524
00:29:49,632 --> 00:29:51,732
Dr. Wason, what is this chart?

525
00:29:52,712 --> 00:29:55,672
It's the capitalization table that shows
the

526
00:29:56,652 --> 00:29:58,632
ownership percentages for the various
parties.

527
00:29:59,732 --> 00:30:05,892
At the top, there's a row labeled NFP,
including NFP FCLP. What does that

528
00:30:05,892 --> 00:30:09,032
-represent?
-That's the nonprofit plus the first closed

529
00:30:09,032 --> 00:30:14,712
-limited partners.
-Um, the... Well, well, does the nonprofit

530
00:30:14,712 --> 00:30:19,032
have a stake of the for-profit in its
capacity as one of the first closed

531
00:30:19,032 --> 00:30:19,852
-holders?
-No.

532
00:30:20,532 --> 00:30:24,692
And so that, um, what does the first row,

533
00:30:25,612 --> 00:30:25,622
uh,

534
00:30:26,232 --> 00:30:29,912
show you about the size of the nonprofit
stake in the for-profit?

535
00:30:30,992 --> 00:30:34,292
Well, if you look at the middle column,
the diluted for warrant present value

536
00:30:35,212 --> 00:30:40,240
percentage, you get twenty-four point
seven percentTo which you would add the

537
00:30:40,240 --> 00:30:44,160
4.5% to get 29.2%.

538
00:30:45,200 --> 00:30:49,860
And you referenced the second row there,
the 4.5%, which is labeled NFP warrant

539
00:30:49,860 --> 00:30:51,740
shares. W- what does that represent?

540
00:30:52,400 --> 00:30:57,480
Warrants are just options that the NFP
holds that they could exercise. Um,

541
00:31:00,560 --> 00:31:05,420
there are options. The warrants are
options that the nonprofit holds.

542
00:31:06,660 --> 00:31:07,420
And where did the,

543
00:31:08,040 --> 00:31:09,960
or how did the nonprofit acquire those
warrants?

544
00:31:10,740 --> 00:31:11,220
By grant.

545
00:31:11,860 --> 00:31:14,400
In connection with the, the public benefit
company

546
00:31:15,320 --> 00:31:16,660
-recapitalization?
-Yes.

547
00:31:17,820 --> 00:31:21,480
Uh, and I think you just mentioned this,
but the sum of those, those first two rows

548
00:31:21,480 --> 00:31:21,740
is,

549
00:31:22,360 --> 00:31:25,539
-uh, 29.2%, is that correct?
-Yes.

550
00:31:25,540 --> 00:31:25,680
Um,

551
00:31:27,920 --> 00:31:32,440
w- what does the third column, the one
labeled fully diluted percent for warrant

552
00:31:32,440 --> 00:31:32,880
PV,

553
00:31:33,500 --> 00:31:35,720
EV sponsored pool, and EIP

554
00:31:36,920 --> 00:31:37,300
reflect?

555
00:31:38,000 --> 00:31:39,480
So some additional shares,

556
00:31:40,120 --> 00:31:43,380
-if you look down towards the bottom-
-Hold on, let me get a hard copy.

557
00:31:54,180 --> 00:31:57,700
I apologize in advance, Your Honor, but
the hard copy's gonna be very small

558
00:31:57,700 --> 00:32:01,680
because this document had a lot of
information on it, and so we zoomed in on

559
00:32:01,680 --> 00:32:04,760
it for the screen, but it may be
challenging to read in hard copy.

560
00:32:10,780 --> 00:32:13,640
Uh, and I'm afraid I don't think we did in
the witness binders, Your Honor.

561
00:32:19,180 --> 00:32:19,340
Um,

562
00:32:19,940 --> 00:32:21,640
you referenced additional, um,

563
00:32:22,340 --> 00:32:26,660
pools and incentive plans in the third
column. To your knowledge, had those plans

564
00:32:26,660 --> 00:32:31,110
actually been, uh, funded with equity
grants at the time of this cap table?

565
00:32:31,110 --> 00:32:35,160
Not at the time, but, but they could be
potentially, which is why there would be

566
00:32:35,160 --> 00:32:36,130
additional dilution.

567
00:32:36,940 --> 00:32:40,740
And I, uh, you may have mentioned already,
but what is the sum of the first two rows

568
00:32:40,740 --> 00:32:43,520
-for that third column?
-26.2%.

569
00:32:44,200 --> 00:32:49,279
So based on those two columns, what is
your opinion about the portion of the

570
00:32:49,279 --> 00:32:50,080
for-profit

571
00:32:50,780 --> 00:32:53,600
that is attributable to the nonprofit?

572
00:32:54,240 --> 00:33:00,600
-It's between 26.2% and 29.2%.
-And I take it this is not in his written

573
00:33:00,600 --> 00:33:03,260
-testimony either.
-It is, Your Honor. I can, I'm happy to

574
00:33:03,260 --> 00:33:03,820
direct you to that.

575
00:33:04,820 --> 00:33:05,100
I see it.

576
00:33:06,280 --> 00:33:07,340
Paragraph 54.

577
00:33:18,980 --> 00:33:19,220
Um,

578
00:33:19,920 --> 00:33:23,160
that's exactly right, Your Honor. In, in
effect, the whole, the whole section from

579
00:33:23,160 --> 00:33:24,380
paragraph 49 to

580
00:33:25,260 --> 00:33:27,640
paragraph 71 covers this material.

581
00:33:28,740 --> 00:33:29,120
The, um...

582
00:33:30,880 --> 00:33:36,120
Does this table also indicate Microsoft's
share of the for-profit?

583
00:33:36,120 --> 00:33:38,660
-Yes, it does.
-What does it indicate that share as?

584
00:33:39,720 --> 00:33:42,380
It's 25.5%,

585
00:33:43,300 --> 00:33:46,240
um, to 22.9% diluted.

586
00:33:46,880 --> 00:33:50,920
And does this table also reflect the share
that the employees have through the

587
00:33:50,920 --> 00:33:54,480
-existing employee vehicle, ESTES?
-Yes, it does.

588
00:33:54,480 --> 00:33:55,100
What is that share?

589
00:33:56,840 --> 00:34:03,500
Uh, the employee vehicle outstanding
amount is 25.3% to 22.7%.

590
00:34:03,500 --> 00:34:08,300
And so conducting this second step of your
analysis, were you basically allocating

591
00:34:08,300 --> 00:34:12,500
between the nonprofit's share and the
share of these other investors and

592
00:34:12,500 --> 00:34:13,380
-employees?
-Yes.

593
00:34:16,020 --> 00:34:17,740
Uh, do you have a graphic that would,

594
00:34:18,400 --> 00:34:18,560
uh,

595
00:34:19,200 --> 00:34:20,400
-illustrate that?
-Yes.

596
00:34:22,620 --> 00:34:25,840
Uh, Your Honor, may I show the witness
this demonstrative from his written

597
00:34:25,840 --> 00:34:26,240
testimony?

598
00:34:28,069 --> 00:34:28,069
I,

599
00:34:29,160 --> 00:34:31,740
I don't understand the question. You're
showing it to him. Yes.

600
00:34:31,740 --> 00:34:33,680
Uh, this is a different exhibit. This
one's a demonstrative.

601
00:34:34,660 --> 00:34:35,780
Okay, go ahead.

602
00:34:36,640 --> 00:34:38,440
Um, and may, may also publish it to the
public.

603
00:34:41,340 --> 00:34:42,900
What does this graphic show, Dr. Wason?

604
00:34:43,740 --> 00:34:48,560
So this pie chart shows the different
holdings of the total amount, which is

605
00:34:48,560 --> 00:34:51,220
five hundred billion. So the whole pie is
five hundred billion.

606
00:34:52,040 --> 00:34:56,999
Microsoft's piece is twenty-three to
twenty-six percent.

607
00:34:57,000 --> 00:34:58,680
Isn't this paragraph 71?

608
00:34:59,720 --> 00:35:00,220
It is, Your Honor.

609
00:35:01,920 --> 00:35:05,100
-Okay. That, that's what I asked.
-I misunderstood. I apologize.

610
00:35:07,340 --> 00:35:07,680
Go ahead.

611
00:35:08,560 --> 00:35:10,560
The, the OpenAI nonprofit

612
00:35:11,220 --> 00:35:14,120
piece in blue is the twenty-six to
twenty-nine percent.

613
00:35:17,400 --> 00:35:20,660
Dr. Wason, turning to the third step of
your three-step analysis,

614
00:35:21,920 --> 00:35:26,840
uh, you mentioned that you determined the
portion of OpenAI nonprofit's value that's

615
00:35:26,840 --> 00:35:29,220
attributable to Elon's contributions.

616
00:35:29,860 --> 00:35:33,860
What types of contributions did Elon make
to the nonprofit?

617
00:35:33,860 --> 00:35:37,380
He made both monetary and non-monetary
contributions.

618
00:35:37,380 --> 00:35:39,600
Who else contributed value to the
nonprofit?

619
00:35:41,300 --> 00:35:42,180
Um, other

620
00:35:43,020 --> 00:35:48,220
charitable donations were made. Um, other
employees made contributions.

621
00:35:49,700 --> 00:35:55,080
In your opinion, what portion of OpenAI
nonprofit's value is attributable to

622
00:35:55,080 --> 00:35:56,180
Elon's contributions?

623
00:35:56,980 --> 00:35:59,130
Somewhere between 50 and 75%.

624
00:35:59,800 --> 00:36:05,840
Does that mean that Elon is responsible
for 50 to 75% of OpenAI's entire five

625
00:36:05,840 --> 00:36:11,050
-hundred billion dollar valuation?
-No, he would capture 50 to 75% just of the

626
00:36:11,050 --> 00:36:12,600
blue piece of the pie.

627
00:36:13,600 --> 00:36:17,700
So for the financial contributions, how
did you get information about the amounts

628
00:36:17,700 --> 00:36:18,840
that Elon contributed?

629
00:36:20,440 --> 00:36:25,920
Uh, I was provided with tax forms, Form
990s, basically, that indicate,

630
00:36:26,900 --> 00:36:28,920
um, all the charitable contributions into
the firm.

631
00:36:29,740 --> 00:36:34,540
What did those tax forms il- uh,
illustrate to you about the share of

632
00:36:34,540 --> 00:36:35,660
OpenAI's funding

633
00:36:36,340 --> 00:36:41,300
in 2016 and 2017 that came from Elon as
opposed to other donors?

634
00:36:42,532 --> 00:36:45,192
That Mr. Musk had contributed sixty
percent

635
00:36:45,932 --> 00:36:47,921
of all the contributions in the first two
years

636
00:36:49,092 --> 00:36:49,692
W-what did those-

637
00:36:50,512 --> 00:36:50,972
Two years

638
00:36:51,952 --> 00:36:56,532
What did those firms indicate to you about
the percentage of OpenAI's funding that

639
00:36:56,532 --> 00:36:59,762
came from Elon during the entire history
of the charity?

640
00:37:00,372 --> 00:37:01,912
He was just under thirty percent.

641
00:37:02,732 --> 00:37:08,692
As between those two numbers, which one do
you consider more relevant to, uh, th-

642
00:37:08,692 --> 00:37:10,612
the value that was contributed to OpenAI?

643
00:37:12,992 --> 00:37:16,172
Well, I think they're both relevant
figures. They're both, you know, actual

644
00:37:16,172 --> 00:37:21,152
hard numbers. Um, but if you have to land
somewhere, I would tend towards the sixty

645
00:37:21,152 --> 00:37:22,652
-percent figure.
-Why is that?

646
00:37:23,292 --> 00:37:27,812
For a variety of reasons, um, which we'll
get into, but for one thing, the early

647
00:37:27,812 --> 00:37:30,232
money is more valuable than the later
money typically.

648
00:37:31,092 --> 00:37:32,812
-Um, and that's really-
-But if it all runs out?

649
00:37:34,992 --> 00:37:36,912
-If it all runs out-
-If it almost did here.

650
00:37:39,892 --> 00:37:42,952
Like I said, last legs, all runs out, then
what?

651
00:37:44,252 --> 00:37:47,492
If it all ran out, and then it folded,
then there would be nothing left.

652
00:37:49,012 --> 00:37:51,502
So how did you figure that into the
analysis? [laughs]

653
00:37:52,392 --> 00:37:57,712
I didn't. It's like y- it's like if you're
building a fire, and, um, the first

654
00:37:57,712 --> 00:38:02,812
person who builds the little twigs and
strikes a match and lights it has created

655
00:38:02,812 --> 00:38:07,312
the fire. Now, if others come in later and
add logs and cut down trees and make a

656
00:38:07,312 --> 00:38:11,472
huge bonfire out of it, without the
original match strike, you have no fire.

657
00:38:12,292 --> 00:38:15,532
And even if it's very small, and it's very
small, and it's very small for a period

658
00:38:15,532 --> 00:38:15,952
of time,

659
00:38:17,232 --> 00:38:19,742
it's still the predicate act which creates
the big bonfire.

660
00:38:22,312 --> 00:38:23,612
Dr. Wason, at the time,

661
00:38:24,312 --> 00:38:24,552
um,

662
00:38:25,672 --> 00:38:28,392
the judge referenced that there was
evidence that OpenAI

663
00:38:29,092 --> 00:38:32,932
would start to need more money around
twenty nineteen. Had OpenAI already

664
00:38:32,932 --> 00:38:34,872
achieved a number of milestones by that
point?

665
00:38:36,892 --> 00:38:42,052
-Like technical milestones? Yes. Yes.
-Um, and how does that compare to the

666
00:38:42,052 --> 00:38:46,332
situation OpenAI was in when it was
initially set up in December twenty

667
00:38:46,332 --> 00:38:47,532
-fifteen?
-Well,

668
00:38:49,452 --> 00:38:52,652
I mean, there was nothing when it was
originally set up. It was just an idea.

669
00:38:52,652 --> 00:38:54,732
So if you were looking for future
investors-

670
00:38:54,732 --> 00:38:58,332
But, but you've heard Dr. Sutskever's
testimony, right?

671
00:38:59,412 --> 00:39:01,452
-I, I believe I-
-Listened to it or you read it-

672
00:39:01,452 --> 00:39:02,872
-Yes
-... because e- it's gotten lots of

673
00:39:02,872 --> 00:39:03,612
publication.

674
00:39:04,352 --> 00:39:07,232
-Yes. Yes, Your Honor.
-That it was an ant,

675
00:39:09,012 --> 00:39:14,552
that the technology, the value of the
technology at that time was effectively

676
00:39:14,552 --> 00:39:15,432
the size of an ant.

677
00:39:16,992 --> 00:39:18,591
-Did you read that?
-I did.

678
00:39:18,592 --> 00:39:21,272
-And how does it affect your testimony?
-It does not.

679
00:39:23,212 --> 00:39:27,012
-Proceed.
-Dr. Wason, would the cat have existed if

680
00:39:27,012 --> 00:39:28,132
the ants didn't come first?

681
00:39:30,812 --> 00:39:33,012
-Objection, beyond the scope.
-Sustained.

682
00:39:34,372 --> 00:39:35,032
Dr. Wason,

683
00:39:35,852 --> 00:39:36,112
when

684
00:39:37,092 --> 00:39:42,012
was OpenAI a riskier proposition to
investors? Back in twenty fifteen where it

685
00:39:42,012 --> 00:39:44,632
-was-
-Investors, is that what you're asking, or

686
00:39:44,632 --> 00:39:46,012
charitable donors?

687
00:39:46,752 --> 00:39:50,872
Thank you, Your Honor. When was-- when
would OpenAI have appeared to be a riskier

688
00:39:50,872 --> 00:39:55,712
proposition for people contributing
money, twenty sixteen or twenty nineteen?

689
00:39:57,292 --> 00:39:57,552
Well,

690
00:39:58,552 --> 00:40:00,631
actually, can, can you explain that to me?

691
00:40:01,472 --> 00:40:02,012
That is,

692
00:40:03,432 --> 00:40:08,452
how you leap from the fact that he made
investments in a charity

693
00:40:10,072 --> 00:40:10,432
to

694
00:40:11,472 --> 00:40:13,052
a later entity that was

695
00:40:13,932 --> 00:40:14,652
not a charity.

696
00:40:17,692 --> 00:40:18,092
W-was he--

697
00:40:18,712 --> 00:40:23,592
y-you seem to assume that his
contributions to a charity

698
00:40:24,752 --> 00:40:28,312
should be treated like his contributions
to a startup.

699
00:40:32,172 --> 00:40:35,612
-Not explicitly. I-
-Well, implicitly, that's what you-- that's

700
00:40:35,612 --> 00:40:36,712
why I used the word assume.

701
00:40:39,512 --> 00:40:40,592
Well, I'm trying to value--

702
00:40:41,572 --> 00:40:42,612
I'm trying to capture the,

703
00:40:43,392 --> 00:40:47,712
-the value of his contributions.
-But they were, they were contributions to

704
00:40:47,712 --> 00:40:51,892
-a charity.
-Yes. But those contributions have value-

705
00:40:51,892 --> 00:40:52,752
In a case where he got no return

706
00:40:53,732 --> 00:40:53,732
...

707
00:40:54,812 --> 00:40:58,771
as originally set up, right. But then when
it converts to a for-profit, I, my

708
00:40:58,772 --> 00:41:01,651
understanding is that he has an
expectation now of capturing-

709
00:41:01,652 --> 00:41:04,872
Well, who told you that his current
expectation

710
00:41:05,612 --> 00:41:07,412
should have any value based upon

711
00:41:09,052 --> 00:41:11,372
a a- as compared to his original
expectation?

712
00:41:12,292 --> 00:41:15,092
Well, that's, that's, that's the
assignment I was given by counsel.

713
00:41:15,092 --> 00:41:15,892
I see. All right.

714
00:41:16,582 --> 00:41:16,952
Proceed.

715
00:41:17,732 --> 00:41:21,312
Dr. Wason, just to be clear, did counsel
instruct you that you should base your

716
00:41:21,312 --> 00:41:25,412
analysis on Mr. Musk's current
expectations about what he would have

717
00:41:25,412 --> 00:41:28,232
received had this been a for-profit
venture?

718
00:41:28,232 --> 00:41:28,262
No.

719
00:41:29,252 --> 00:41:35,312
Did, did counsel instruct you to determine
the portion of the nonprofit's value that

720
00:41:35,312 --> 00:41:38,832
can be attributed to Mr. Musk's
contributions as opposed to contributions

721
00:41:38,832 --> 00:41:39,912
-by other parties?
-Yes.

722
00:41:43,832 --> 00:41:47,852
Was another factor that you considered in
your analysis a pro forma cap table?

723
00:41:48,552 --> 00:41:49,952
-Yes.
-What was that?

724
00:41:51,352 --> 00:41:54,032
Um, that was a document that I was
provided,

725
00:41:54,792 --> 00:41:55,052
um,

726
00:41:57,532 --> 00:42:01,142
that, that showed relative, um, stakes.

727
00:42:01,852 --> 00:42:04,832
To your knowledge, what were the
circumstances in which that document was

728
00:42:04,832 --> 00:42:05,212
created?

729
00:42:06,072 --> 00:42:07,792
So my understanding is that, um,

730
00:42:09,152 --> 00:42:11,432
Mr. Musk and, and the OpenAI parties

731
00:42:12,132 --> 00:42:16,182
were contemplating converting the firm to
a f- for-profit entity,

732
00:42:17,012 --> 00:42:20,292
and they were trying to determine who
would own what, um,

733
00:42:22,652 --> 00:42:24,052
share, what percentage of shares.

734
00:42:24,992 --> 00:42:25,872
And Mr.,

735
00:42:26,852 --> 00:42:28,212
I believe, Brockman and,

736
00:42:28,832 --> 00:42:34,472
and Sutskever presented an option to Mr.
Musk. My understanding, the parties agreed

737
00:42:34,472 --> 00:42:35,912
as to the division of,

738
00:42:36,632 --> 00:42:37,352
of shares,

739
00:42:38,032 --> 00:42:41,432
but the deal ultimately fell apart over a
disagreement on board seats.

740
00:42:43,552 --> 00:42:47,716
On board seats?Your Honor, I'd like to
show, um,

741
00:42:48,576 --> 00:42:53,476
the witness what we marked as exhibit 373,
but this is a, a table that's included in

742
00:42:53,476 --> 00:42:54,786
his written testimony,

743
00:42:55,776 --> 00:42:57,556
uh, which Your Honor can find at,

744
00:42:58,636 --> 00:43:02,236
uh, paragraph 108 of the written
testimony. Is it okay if I put that on the

745
00:43:02,236 --> 00:43:02,956
-screen?
-You may.

746
00:43:04,656 --> 00:43:06,396
Dr. Wason, what does this table represent?

747
00:43:08,656 --> 00:43:08,716
Uh,

748
00:43:10,696 --> 00:43:10,856
yeah.

749
00:43:13,076 --> 00:43:14,296
This is the,

750
00:43:15,196 --> 00:43:19,456
as I understand it, the agreement between
the parties where they discussed who would

751
00:43:19,456 --> 00:43:20,076
own what

752
00:43:21,036 --> 00:43:26,376
-percentage of a for-profit entity. What-
-How did you factor into the, um, into your

753
00:43:26,376 --> 00:43:30,806
analysis that he, uh, that all of this
assumed he was going to give,

754
00:43:31,976 --> 00:43:33,656
what's that top number, 100 billion?

755
00:43:35,516 --> 00:43:37,576
-That's, those are shares.
-Shares.

756
00:43:38,316 --> 00:43:42,976
You, you understood that he was going to
contribute a, a billion dollars.

757
00:43:44,616 --> 00:43:45,756
-Did you understand that?
-I-

758
00:43:45,756 --> 00:43:46,676
To make the venture

759
00:43:47,956 --> 00:43:49,736
-succeed?
-Yes, I believe all... Well,

760
00:43:50,376 --> 00:43:52,536
I thought it was 100 million, but I think
all the parties

761
00:43:53,216 --> 00:43:55,336
had agreed to contribute additional funds.

762
00:43:56,016 --> 00:43:59,236
He, Mr. Musk, agreed to give a billion
dollars.

763
00:43:59,236 --> 00:43:59,436
Okay.

764
00:44:00,216 --> 00:44:02,156
Do you have that understanding or not?

765
00:44:02,796 --> 00:44:05,616
Y- Y- Your, Your Honor, may I interject
here, because I think we're crossing wires

766
00:44:05,616 --> 00:44:07,536
-on two different time periods.
-All right, go ahead.

767
00:44:08,336 --> 00:44:12,456
Dr. Wason, do you know whether in 2015
when OpenAI was

768
00:44:13,896 --> 00:44:18,776
first launched and put up a public blog
post, whether that blog post included an

769
00:44:18,776 --> 00:44:22,016
aspirational number of, that, that OpenAI
planned to raise?

770
00:44:22,856 --> 00:44:24,995
-Yes.
-Uh, and does that number have anything to

771
00:44:24,996 --> 00:44:28,896
do with the numbers that are shown on this
2017 pro forma cap table?

772
00:44:28,896 --> 00:44:29,076
No.

773
00:44:30,056 --> 00:44:36,215
Uh, and so, um, as you noted, uh, this cap
table listed a $100 million investment

774
00:44:36,216 --> 00:44:38,336
for Musk. What did it list for the other
founders?

775
00:44:39,616 --> 00:44:39,776
Um,

776
00:44:41,176 --> 00:44:42,436
10 million for Altman,

777
00:44:43,496 --> 00:44:46,536
uh, 12 million for Sutskever, 10 million
for Brockman.

778
00:44:47,156 --> 00:44:48,976
-And-
-And did it, did it also list equity grants

779
00:44:48,976 --> 00:44:50,396
-for those co-founders?
-Yes.

780
00:44:51,276 --> 00:44:55,995
And based on, uh, this contemplated
structure, what would Musk's ownership

781
00:44:56,696 --> 00:44:58,376
interest have been in this,

782
00:44:59,056 --> 00:45:03,356
-uh, contemplated entity?
-He would've held 52.4%.

783
00:45:05,416 --> 00:45:08,996
-Uh, in addition to this-
-What did he agree at this time then

784
00:45:10,296 --> 00:45:13,836
-to, what did he commit to fund?
-100 million.

785
00:45:16,396 --> 00:45:18,436
-Million.
-But all the parties agreed at this time to

786
00:45:18,436 --> 00:45:20,736
contribute the funds that are shown here,

787
00:45:21,356 --> 00:45:23,496
and those contributions were sort of in,

788
00:45:24,416 --> 00:45:28,116
were proportional to the amounts that had
alr- already been contributed.

789
00:45:29,516 --> 00:45:31,616
So he was sort of gonna maintain his, his

790
00:45:32,316 --> 00:45:37,576
30 to 60% level of monetary contributions.
This deal never went forward,

791
00:45:38,256 --> 00:45:41,036
but it's still a really critical piece of
information because

792
00:45:42,136 --> 00:45:46,196
since the monetary contributions were
envisioned to be in the same proportion,

793
00:45:46,196 --> 00:45:49,636
you can ignore them and focus in on the
52.4%.

794
00:45:49,636 --> 00:45:52,736
Well, assuming that you've got an
operating entity.

795
00:45:55,936 --> 00:45:57,056
Which they did at the time.

796
00:45:57,696 --> 00:46:01,856
Your Honor, I, I move to strike Dr.
Wason's prior answer as lacking in

797
00:46:01,856 --> 00:46:05,456
foundation and inconsistent with ex-
inconsistent with the evidence presented

798
00:46:05,456 --> 00:46:06,536
at the liability trial.

799
00:46:09,756 --> 00:46:11,336
Wh- which particular, um,

800
00:46:12,016 --> 00:46:15,056
-statement, Mr. Wilson?
-Most notably the fact that he testified

801
00:46:15,056 --> 00:46:18,436
that all the parties agreed to these
terms. There's no evidence that that's

802
00:46:18,436 --> 00:46:18,616
true.

803
00:46:21,736 --> 00:46:22,686
May I inquire about that, Your Honor?

804
00:46:25,096 --> 00:46:25,866
Like, didn't I lay foundation for the
witness?

805
00:46:25,866 --> 00:46:28,056
Well, did he, is, do we have a, do...

806
00:46:30,936 --> 00:46:35,035
I h- I would have to go back and check the
record, um, about whether or not there

807
00:46:35,036 --> 00:46:39,116
was an agreement when the parties
testified. Did they testify? You should

808
00:46:39,116 --> 00:46:40,596
-know.
-I do know, Your Honor.

809
00:46:40,596 --> 00:46:43,266
And did they testify that this was the
agreement?

810
00:46:43,876 --> 00:46:48,746
Your Honor, the, the evidence showed, and
Dr. Wason will confirm, that Su- Sutskever

811
00:46:48,746 --> 00:46:52,276
and Brockman proposed these equity terms
to Mr. Musk,

812
00:46:53,056 --> 00:46:57,396
that there was a agreement in principle
between them over that, but there was no

813
00:46:57,396 --> 00:46:59,716
final agreement and that it fell apart
because

814
00:47:00,496 --> 00:47:03,776
Sutskever and Brockman walked back their
position on, uh-

815
00:47:03,776 --> 00:47:04,975
-It wasn't
-... Elon Musk's control rights.

816
00:47:05,896 --> 00:47:06,056
Well,

817
00:47:07,056 --> 00:47:11,386
that's true that there was no final
agreement. I agree with that. Uh, Mr. Kri

818
00:47:11,386 --> 00:47:16,336
did not mention that Mr. Altman did not
even agree in principle, to use his

819
00:47:16,336 --> 00:47:19,416
phrase. There's no evidence that Mr.
Altman was amenable to what Mr.

820
00:47:20,226 --> 00:47:24,176
Brockman and Dr. Sutskever were proposing,
and I think there's a dispute between the

821
00:47:24,176 --> 00:47:27,176
parties as to the reason why this deal
fell apart. The, the one thing that's

822
00:47:27,176 --> 00:47:29,096
clear is that it, it did not actually come
together.

823
00:47:29,796 --> 00:47:31,425
So if there was no agreement,

824
00:47:32,456 --> 00:47:33,596
then that would,

825
00:47:35,576 --> 00:47:37,456
um, then how would your testimony change?

826
00:47:41,296 --> 00:47:44,896
So it would not change there, there, and
because of, for several reasons.

827
00:47:44,896 --> 00:47:45,626
-So, so-
-For several reasons

828
00:47:45,626 --> 00:47:48,596
... it doesn't matter that they agreed?
Does it matter or not?

829
00:47:48,596 --> 00:47:49,746
No, because i- in,

830
00:47:51,116 --> 00:47:51,676
for example,

831
00:47:52,356 --> 00:47:56,516
two firms wanna merge, and the investment
bankers on both sides pr- prepare

832
00:47:56,516 --> 00:48:00,935
documents that include valuations and
who's gonna hold what shares and how it's

833
00:48:00,936 --> 00:48:03,896
gonna go forward. And all those things go
into the record.

834
00:48:04,736 --> 00:48:08,836
If the deal ultimately doesn't go through,
that's still valuable information that

835
00:48:08,836 --> 00:48:12,256
somebody like me can rely upon. This is
what the parties were thinking at the

836
00:48:12,256 --> 00:48:15,836
-time. So it's-
-They were thinking a lot of things, and

837
00:48:15,836 --> 00:48:17,626
some of the things you, um,

838
00:48:19,016 --> 00:48:21,956
you have in your report and some you
ignore,

839
00:48:23,076 --> 00:48:26,296
which goes to the weight of your
testimony. So I'm asking you,

840
00:48:27,216 --> 00:48:31,276
does it matter to your opinion whether or
not they agreed, yes or no?

841
00:48:31,276 --> 00:48:31,416
No.

842
00:48:32,556 --> 00:48:32,736
Okay.

843
00:48:33,756 --> 00:48:36,976
-Go ahead.
-Just to be clear, Dr. Wason, who proposed

844
00:48:36,976 --> 00:48:39,495
the equity figures reflected on this
table?

845
00:48:39,496 --> 00:48:44,216
-Mr. Brockman and Mr. Sutskever.
-And during these negotiations, were they

846
00:48:44,216 --> 00:48:44,816
aligned with

847
00:48:45,496 --> 00:48:49,386
Elon, or were they basically on the other
side of the negotiating table from Elon?

848
00:48:50,536 --> 00:48:50,786
No, they were-

849
00:48:52,056 --> 00:48:52,756
Okay, go ahead.

850
00:48:53,756 --> 00:48:56,376
Well, I, I would assume they were aligned.

851
00:48:56,376 --> 00:48:57,516
Well, it's ... Sorry, they were ...

852
00:48:58,556 --> 00:49:02,836
To the extent they were negotiating equity
stakes, did Brockman and Sutskever have a

853
00:49:02,836 --> 00:49:06,586
financial incentive to inflate the amount
that Elon Musk would receive?

854
00:49:06,586 --> 00:49:07,936
-No.
-Objection. No foundation.

855
00:49:07,936 --> 00:49:08,396
Sustained.

856
00:49:09,156 --> 00:49:10,156
-Then-
-That's an argument.

857
00:49:10,156 --> 00:49:11,296
-Would the-
-It's sustained.

858
00:49:11,296 --> 00:49:11,706
Yes, Your Honor.

859
00:49:12,816 --> 00:49:18,396
What, uh, do you consider the proposal
made by the counterparties to this, or

860
00:49:18,396 --> 00:49:18,456
Mr....

861
00:49:19,996 --> 00:49:24,976
Strike that. Do you consider the proposal
made by Elon's counterparties in this

862
00:49:24,976 --> 00:49:27,856
discussion to be relevant evidence of the,

863
00:49:28,856 --> 00:49:35,236
uh, share of value they ascribed to Elon's
contributions to OpenAI at this point in

864
00:49:35,236 --> 00:49:36,176
-time?
-Hold on one moment.

865
00:49:36,176 --> 00:49:36,976
Objection. Leading.

866
00:49:37,876 --> 00:49:38,276
Sustained.

867
00:49:39,636 --> 00:49:41,196
-You can-
-Uh, can you hold on a moment?

868
00:50:06,356 --> 00:50:07,556
Sir, come forward.

869
00:50:13,896 --> 00:50:16,216
-Good morning, Your Honor.
-Good morning. What is your name?

870
00:50:17,276 --> 00:50:20,396
-Sir, what is your name?
-Uh, Martin Ng.

871
00:50:21,296 --> 00:50:23,976
Okay. Are you a member of the public, or
are you a member of the press?

872
00:50:26,036 --> 00:50:27,216
Um, I'm

873
00:50:28,116 --> 00:50:29,576
considered a private party.

874
00:50:30,296 --> 00:50:32,156
I was in the press a long time ago,

875
00:50:33,056 --> 00:50:36,376
-and I was a tax auditor.
-You can read English, right?

876
00:50:37,456 --> 00:50:39,796
-Uh-
-You understand that there is no recording

877
00:50:39,796 --> 00:50:43,056
-in this courthouse?
-Yes, I agree with you, uh, Your Honor.

878
00:50:43,056 --> 00:50:46,296
Then why do I have a report from the
marshals that you're recording?

879
00:50:47,296 --> 00:50:47,696
Okay.

880
00:50:48,416 --> 00:50:49,836
Are you recording, yes or no?

881
00:50:50,936 --> 00:50:52,076
Did you record anything?

882
00:50:53,416 --> 00:50:56,416
Well, I don't know. I did not take any
photos,

883
00:50:57,116 --> 00:51:01,356
and I, I, I listen to the stream on
YouTube as always.

884
00:51:02,096 --> 00:51:03,056
And then, um,

885
00:51:03,776 --> 00:51:07,926
and then, uh, I thought it's probably is
okay to record because it-

886
00:51:07,926 --> 00:51:13,096
It says all over this courthouse you
cannot record. You're ordered to go down

887
00:51:13,096 --> 00:51:16,956
into the marshal's office. They can-- are
authorized to look at all of your

888
00:51:16,956 --> 00:51:18,406
-electronic devices-
-Yes

889
00:51:18,406 --> 00:51:21,236
-... and delete everything.
-Yes, I agree.

890
00:51:21,236 --> 00:51:22,275
-Okay?
-If there's-

891
00:51:22,276 --> 00:51:22,656
Do not rec-

892
00:51:23,296 --> 00:51:25,576
-We are in the middle of a hearing.
-I understand.

893
00:51:26,616 --> 00:51:30,596
I a- I apologize if I did it wrong, but I,
I did not read it,

894
00:51:31,276 --> 00:51:34,816
-and, uh, uh, uh-
-So you ... Then, then you're blind to have

895
00:51:34,816 --> 00:51:40,656
ignored all of the notices all over this
courthouse, all of the warnings that we

896
00:51:40,656 --> 00:51:44,756
repeatedly give. You cannot record in a
federal courthouse.

897
00:51:44,756 --> 00:51:45,036
Yes.

898
00:51:46,996 --> 00:51:49,036
If the marshal please take him downstairs.
Thank you.

899
00:51:49,036 --> 00:51:49,275
Your Honor.

900
00:51:50,416 --> 00:51:51,136
All right, proceed.

901
00:51:52,176 --> 00:51:57,176
Dr. Wason, why did you consider it
relevant what Mr. Brockman and Mr.

902
00:51:57,176 --> 00:52:00,696
Sutskever proposed to Mr. Musk about what

903
00:52:01,536 --> 00:52:02,956
his equity share should be?

904
00:52:06,776 --> 00:52:10,856
So look, I'm looking at, at a variety of
evidence as I'm doing my analysis.

905
00:52:11,516 --> 00:52:15,426
I had his original monetary contributions
between 30 and 60%.

906
00:52:16,116 --> 00:52:16,896
Now I have a,

907
00:52:18,256 --> 00:52:22,336
a, a, a document that shows the parties
were contemplating 52.4%.

908
00:52:22,936 --> 00:52:24,616
That's right in the middle range.

909
00:52:25,256 --> 00:52:28,816
I would've shaded higher because the
earlier money, i- in my opinion, is more

910
00:52:28,816 --> 00:52:31,736
valuable, but these, all these figures are
consistent.

911
00:52:33,696 --> 00:52:36,396
And to your understanding, w- was the
reason that

912
00:52:37,116 --> 00:52:41,896
no, or well, to your understanding and
review of the record, was the reason that

913
00:52:41,896 --> 00:52:44,786
this transaction was never consummated
because-

914
00:52:44,786 --> 00:52:46,056
Don't lead, Mr. Cry.

915
00:52:46,876 --> 00:52:47,336
Thank you, Your Honor.

916
00:52:48,456 --> 00:52:51,486
To your understanding, why was this
agreement never consummated?

917
00:52:52,316 --> 00:52:56,436
My understanding is that the deal fell
apart because they couldn't agree on

918
00:52:56,436 --> 00:52:57,816
control, on board seats.

919
00:53:00,076 --> 00:53:00,756
Let's talk about the

920
00:53:01,836 --> 00:53:05,556
last factor you mentioned. That's the
non-monetary contributions.

921
00:53:05,556 --> 00:53:08,376
-Yes.
-What sorts of non-monetary contributions

922
00:53:08,376 --> 00:53:10,136
did Elon provide to OpenAI?

923
00:53:11,556 --> 00:53:14,156
So the non-monetary contributions consist
of,

924
00:53:15,076 --> 00:53:15,296
um,

925
00:53:16,336 --> 00:53:17,876
leadership, know-how,

926
00:53:18,836 --> 00:53:19,636
reputation,

927
00:53:20,716 --> 00:53:26,116
um, ability to, to call in favors from
other industrialists. All those things

928
00:53:26,116 --> 00:53:31,276
blend together to create value. Um, and
Your Honor, I can, I can sort of give you

929
00:53:31,276 --> 00:53:33,056
an analogy if it would be helpful.

930
00:53:36,996 --> 00:53:38,836
-I understand the basic premise.
-Okay.

931
00:53:40,136 --> 00:53:43,516
Dr. Wason, what does the finance
literature say about the role of

932
00:53:43,516 --> 00:53:47,376
-reputation in this context?
-That it's absolutely valuable and

933
00:53:47,376 --> 00:53:53,096
important. If you have a luminary investor
who contributes to something,

934
00:53:54,156 --> 00:53:58,216
um, that signal, that sends a signal to
the market and to others who are less

935
00:53:58,216 --> 00:54:00,566
informed that, oh, this, this very
successful

936
00:54:01,176 --> 00:54:01,846
bright person,

937
00:54:02,716 --> 00:54:04,956
uh, thinks this is a, an exciting
opportunity.

938
00:54:05,796 --> 00:54:06,036
Their,

939
00:54:07,476 --> 00:54:11,056
the asymmetric information is reduced, and
they will also then be more willing to

940
00:54:11,056 --> 00:54:11,576
contribute.

941
00:54:12,446 --> 00:54:18,436
Does that finance literature include
empirical studies that a- analyze the, uh,

942
00:54:18,436 --> 00:54:20,696
-the role of high-profile investors?
-Yes, it does.

943
00:54:21,736 --> 00:54:26,076
-And what do those empirical studies show?
-It, it shows that prestige investments

944
00:54:26,076 --> 00:54:27,536
drag other investments along.

945
00:54:29,556 --> 00:54:35,076
Dr. Wason, what was Elon's reputation and
public profile when he helped found OpenAI

946
00:54:35,076 --> 00:54:35,866
in 2015?

947
00:54:36,736 --> 00:54:39,576
-Sky-high.
-Why is that?

948
00:54:39,576 --> 00:54:42,036
Well, he had already ... You know, Tesla
was a huge success.

949
00:54:42,996 --> 00:54:44,616
Uh, SpaceX was up and running.

950
00:54:45,416 --> 00:54:47,066
He had already demonstrated his

951
00:54:48,036 --> 00:54:50,396
... He, he, I think he was already the
richest man in the world at that time

952
00:54:51,796 --> 00:54:56,335
Did your review of the evidentiary record
in this case reveal any documents that

953
00:54:56,336 --> 00:54:57,556
were relevant to that subject?

954
00:54:58,376 --> 00:54:59,316
-Yes.
-What were they?

955
00:55:01,436 --> 00:55:01,796
Um,

956
00:55:03,496 --> 00:55:05,176
there's, there's discussions between,

957
00:55:05,876 --> 00:55:07,956
um, the parties here that his,

958
00:55:08,796 --> 00:55:13,096
his participation in OpenAI was
invaluable.

959
00:55:13,096 --> 00:55:18,236
How did Elon's public profile compare to
Sam Altman or Greg Brockman's public

960
00:55:18,236 --> 00:55:20,666
-profile during this timeframe?
-He was,

961
00:55:22,026 --> 00:55:26,836
-it was much higher. Much, much higher.
-You also mentioned strategic guidance and

962
00:55:26,836 --> 00:55:31,236
know-how. What does the finance literature
say about those topics?

963
00:55:32,036 --> 00:55:36,416
It says that savvy in- investors and savvy
builders, people who have done it before,

964
00:55:37,416 --> 00:55:40,496
um, can help guide new fledgling companies
with their...

965
00:55:42,036 --> 00:55:43,926
Guide fledgling companies with their,

966
00:55:45,116 --> 00:55:46,636
their wisdom, their knowledge.

967
00:55:47,436 --> 00:55:51,996
Was Elon's background up to that point
relevant to this topic?

968
00:55:51,996 --> 00:55:54,676
Yes, very much. He'd already built
successful companies.

969
00:55:57,196 --> 00:55:59,896
Did the evidence that you reviewed in the
case

970
00:56:01,836 --> 00:56:03,176
inform your opinions about

971
00:56:04,496 --> 00:56:07,475
any strategic guidance or know-how that
was provided?

972
00:56:09,496 --> 00:56:09,776
Um,

973
00:56:11,456 --> 00:56:15,136
yeah, I mean, the, again, there's, there's
emails and there's documents between the

974
00:56:15,136 --> 00:56:16,296
parties indicating that his,

975
00:56:16,956 --> 00:56:20,136
his knowledge, his contributions, his
guidance were invaluable.

976
00:56:21,476 --> 00:56:25,416
Your Honor, may I show the witness exhibit
98, which is already in evidence?

977
00:56:25,416 --> 00:56:27,396
-You may.
-And may I publish that?

978
00:56:27,396 --> 00:56:27,616
You may.

979
00:56:28,456 --> 00:56:30,036
Dr. Wason, what is this document?

980
00:56:32,576 --> 00:56:37,916
Uh, this is an email from Mr. Sutskever to
Mr. Musk.

981
00:56:39,936 --> 00:56:40,936
Uh, what's the date?

982
00:56:42,576 --> 00:56:45,416
Uh, the date is January 2018.

983
00:56:47,276 --> 00:56:52,416
Uh, is, did this email inform your opinion
about whether Elon contributed guidance

984
00:56:52,416 --> 00:56:53,616
and know-how to OpenAI?

985
00:56:54,556 --> 00:56:54,756
Yes.

986
00:56:55,596 --> 00:56:56,076
In what way?

987
00:56:56,896 --> 00:57:01,736
Well, it shows that, um, Mr. Sutskever,
well, I'll just read it. "It helps that we

988
00:57:01,736 --> 00:57:02,076
have

989
00:57:02,736 --> 00:57:05,876
the most overwhelmingly competent person
in the world helping us."

990
00:57:07,356 --> 00:57:10,276
Um, and it's addressed to Mr. Musk at
SpaceX.

991
00:57:11,036 --> 00:57:11,316
He,

992
00:57:12,616 --> 00:57:15,476
it, to me, I re- it speaks for itself. He-

993
00:57:16,476 --> 00:57:20,196
Let, let me, uh, Your Honor, may I also
put on the screen exhibit 99, which is

994
00:57:20,196 --> 00:57:20,996
already in evidence?

995
00:57:21,796 --> 00:57:23,016
-You may.
-May I publish that?

996
00:57:23,016 --> 00:57:23,196
You may.

997
00:57:24,296 --> 00:57:25,896
What is this document, Dr. Wason?

998
00:57:27,336 --> 00:57:30,396
It's an email from Mr. Brockman to Mr.
Musk

999
00:57:31,576 --> 00:57:32,976
at the same, same date.

1000
00:57:34,016 --> 00:57:39,036
Did this email inform your opinion about
whether Elon contributed strategic

1001
00:57:39,036 --> 00:57:40,556
guidance and know-how to OpenAI?

1002
00:57:41,376 --> 00:57:45,336
Yes. It says, "In every meeting with you,
I continue to learn, grow, and see the

1003
00:57:45,336 --> 00:57:46,116
world in a new way."

1004
00:57:48,436 --> 00:57:51,696
Can high-profile founders or investors
also help with recruiting?

1005
00:57:52,396 --> 00:57:52,876
Absolutely.

1006
00:57:53,636 --> 00:57:55,036
What did the evidence you review

1007
00:57:55,916 --> 00:57:57,696
show about Elon's role in recruiting?

1008
00:57:58,636 --> 00:58:02,036
My understanding is that Mr. Musk was
instrumental in, in recruiting all the

1009
00:58:02,036 --> 00:58:02,616
primary,

1010
00:58:03,296 --> 00:58:03,516
um,

1011
00:58:04,816 --> 00:58:05,465
participants,

1012
00:58:06,116 --> 00:58:07,576
in r- in particular

1013
00:58:08,196 --> 00:58:10,836
recruiting the scientists, Mr. Sutskever
and Mr. Dingma.

1014
00:58:11,936 --> 00:58:13,996
And what, what did the record show about
Elon's-

1015
00:58:14,816 --> 00:58:15,976
Ding- Dingma

1016
00:58:17,696 --> 00:58:19,736
Is that, is that Dirk Kingma you're
referring to?

1017
00:58:19,736 --> 00:58:20,736
Dingma. I'm sorry.

1018
00:58:21,656 --> 00:58:21,836
Uh,

1019
00:58:22,576 --> 00:58:26,616
what, what did the, your review, um, show
you about the

1020
00:58:27,336 --> 00:58:31,716
impact of Elon's role in connection with
the recruiting of those two individuals?

1021
00:58:31,716 --> 00:58:34,356
That he was critical in attracting them to
OpenAI.

1022
00:58:34,356 --> 00:58:37,096
That's not what Mr. Sutskever testified
to.

1023
00:58:39,216 --> 00:58:42,636
-That's what the documents that I read-
-That's not what he testified to under

1024
00:58:42,636 --> 00:58:42,936
oath.

1025
00:58:44,096 --> 00:58:44,486
Yes, Your Honor.

1026
00:58:45,176 --> 00:58:47,696
So does that have any impact on your
analysis?

1027
00:58:49,376 --> 00:58:52,276
-Well, the recruiting is, is-
-It, it's just yes or no. Does it have an

1028
00:58:52,276 --> 00:58:53,576
impact or yes? Yes or no?

1029
00:58:54,456 --> 00:58:55,956
-Small impact, yes.
-Okay.

1030
00:58:56,956 --> 00:58:58,836
But there's no way to quantify that,
right?

1031
00:59:00,696 --> 00:59:03,376
So the non-monetary contributions cannot
be,

1032
00:59:04,536 --> 00:59:07,036
I, I can't give you a point estimate that
says

1033
00:59:07,776 --> 00:59:14,316
it's a 20% premium over the non, over the
monetary because the academic literature,

1034
00:59:14,316 --> 00:59:16,236
it doesn't give you a point estimate.

1035
00:59:18,096 --> 00:59:18,496
-Excuse me, your Honor.
-The jury.

1036
00:59:18,496 --> 00:59:19,076
Go ahead, Evan.

1037
00:59:19,736 --> 00:59:19,906
All right,

1038
00:59:20,616 --> 00:59:20,996
proceed.

1039
00:59:21,616 --> 00:59:26,176
So doesn't give you a point estimate. What
it does is it, it highlights that it's a

1040
00:59:26,176 --> 00:59:29,156
-very valuable thing.
-E- except he testified

1041
00:59:29,976 --> 00:59:32,346
differently than what the document showed.

1042
00:59:32,346 --> 00:59:35,276
-I'm-
-And did you not listen to that testimony?

1043
00:59:35,276 --> 00:59:37,936
I did, but I'm talking about the
non-monetary as a, as a whole,

1044
00:59:38,896 --> 00:59:42,835
which includes recruiting, but it includes
sort of being the-

1045
00:59:42,836 --> 00:59:44,376
So if you heard that testimony,

1046
00:59:45,316 --> 00:59:46,636
why w-

1047
00:59:47,016 --> 00:59:48,156
why wouldn't you say in your

1048
00:59:48,896 --> 00:59:50,476
under-oath testimony here that

1049
00:59:52,496 --> 00:59:56,955
if, that, that that, or why would you
credit that document when you heard him

1050
00:59:56,956 --> 01:00:00,396
testify under oath that that wasn't, um,

1051
01:00:02,136 --> 01:00:04,616
that Mr. Musk was not a big factor in
recruiting him?

1052
01:00:05,756 --> 01:00:08,916
Your Honor, may I refresh the witness'
recollection with the references in his

1053
01:00:08,916 --> 01:00:09,526
written testimony?

1054
01:00:17,096 --> 01:00:17,736
We have a verdict.

1055
01:00:18,676 --> 01:00:19,476
You may stand down.

1056
01:00:21,796 --> 01:00:26,236
You can, um, leave the stand for a moment.
You're not excused. Let's call the jury

1057
01:00:26,236 --> 01:00:26,376
in.

1058
01:00:27,416 --> 01:00:27,856
Yes, Your Honor.

1059
01:01:12,106 --> 01:03:21,726
The

1060
01:03:21,726 --> 01:03:22,546
prize went under-

1061
01:03:44,206 --> 01:03:45,286
Ma'am, be seated.

1062
01:03:51,546 --> 01:03:53,186
Um, I just was handed

1063
01:03:53,846 --> 01:03:58,926
a-- We're, we're all here because I was
conducting. We're here. But I was just

1064
01:03:58,926 --> 01:04:02,686
handed, uh, this folder, which is the
verdict folder.

1065
01:04:03,566 --> 01:04:04,366
You have a verdict?

1066
01:04:05,066 --> 01:04:05,386
Yes.

1067
01:04:06,726 --> 01:04:08,606
It's unanimous? Yes. Okay.

1068
01:04:09,666 --> 01:04:10,285
Mr. Klinke.

1069
01:04:41,126 --> 01:04:42,766
Ladies and gentlemen of the jury,

1070
01:04:43,506 --> 01:04:46,366
listen to your verdict as it will stand
recorded.

1071
01:04:48,666 --> 01:04:53,046
United States District Court, Northern
District of California, Oakland division.

1072
01:04:55,946 --> 01:05:01,726
Case number twenty-four dash CV dash four
seven two two dash YGR.

1073
01:05:02,926 --> 01:05:06,506
Elon Musk et al. versus Samuel Altman et
al.

1074
01:05:07,866 --> 01:05:08,306
Verdict.

1075
01:05:11,246 --> 01:05:15,886
We, the jury in the above entitled case,
unanimously find as follows.

1076
01:05:16,626 --> 01:05:17,166
Number one,

1077
01:05:18,366 --> 01:05:20,846
on the claim for breach of charitable
trust,

1078
01:05:21,866 --> 01:05:24,646
is the claim barred by the statute of
limitations?

1079
01:05:25,666 --> 01:05:26,086
Yes.

1080
01:05:27,546 --> 01:05:27,746
Two,

1081
01:05:29,226 --> 01:05:33,126
on the claim for aiding and abetting
breach of charitable trust,

1082
01:05:34,106 --> 01:05:36,996
is the claim barred by statute of
limitations?

1083
01:05:39,506 --> 01:05:44,826
On the claim for restitution based on
unjust enrichment, is the claim barred by

1084
01:05:44,826 --> 01:05:46,266
statute of limitations?

1085
01:05:47,546 --> 01:05:47,926
Yes.

1086
01:05:52,266 --> 01:05:54,806
Is the sign, uh, the verdict form signed?

1087
01:05:55,426 --> 01:05:56,846
-It is, Your Honor.
-And dated?

1088
01:05:57,546 --> 01:05:58,766
-It is, Your Honor.
-Okay.

1089
01:05:59,526 --> 01:06:01,956
-Would counsel like the jury polled?
-Poll the jury.

1090
01:06:02,786 --> 01:06:03,906
We will poll the jury.

1091
01:06:10,826 --> 01:06:12,806
Juror number one, is this your verdict?

1092
01:06:14,666 --> 01:06:16,606
Juror number two, is this your verdict?

1093
01:06:18,006 --> 01:06:20,386
Juror number three, is this your verdict?

1094
01:06:21,726 --> 01:06:23,636
Juror number four, is this your verdict?

1095
01:06:24,986 --> 01:06:27,146
Juror number five, is this your verdict?

1096
01:06:28,166 --> 01:06:30,166
Juror number six, is this your verdict?

1097
01:06:31,586 --> 01:06:34,226
-Juror number seven, is this your verdict?
-Yeah.

1098
01:06:35,086 --> 01:06:37,066
Juror number eight, is this your verdict?

1099
01:06:38,386 --> 01:06:40,346
Juror number nine, is this your verdict?

1100
01:06:41,686 --> 01:06:45,486
-Your Honor, the verdict is unanimous.
-All right. The verdict can be recorded.

1101
01:06:46,806 --> 01:06:51,226
-So recorded, Your Honor.
-Uh, I assume people do not want it reread

1102
01:06:51,286 --> 01:06:51,866
as recorded.

1103
01:06:56,846 --> 01:06:57,806
-No.
-Okay.

1104
01:07:01,286 --> 01:07:02,738
Uh-Then

1105
01:07:03,378 --> 01:07:07,518
the jury having found that the defendants
proved the statute of limitations defense,

1106
01:07:08,178 --> 01:07:11,958
the court now confirms its prior
indication that it would accept the jury's

1107
01:07:11,958 --> 01:07:17,178
findings as its own. Accordingly, the
claims of breach of charitable trust and

1108
01:07:17,178 --> 01:07:22,108
unjust enrichment are dismissed as
untimely. The claim for aiding and

1109
01:07:22,108 --> 01:07:28,028
abetting is dismissed as a matter of law,
given that it is dependent on a finding of

1110
01:07:28,028 --> 01:07:31,858
charitable trust. It too is, uh,
dismissed.

1111
01:07:33,718 --> 01:07:34,938
So members of the jury,

1112
01:07:37,698 --> 01:07:39,298
I cannot thank you enough

1113
01:07:40,138 --> 01:07:40,498
for,

1114
01:07:41,278 --> 01:07:44,858
uh, deliberating in this, um, difficult
case.

1115
01:07:46,058 --> 01:07:48,638
I wanna leave you with, uh, a few
thoughts.

1116
01:07:50,078 --> 01:07:52,818
First of all, now that the case is over,

1117
01:07:54,458 --> 01:07:56,058
you may talk to anyone

1118
01:07:57,058 --> 01:08:00,618
about anything [laughs]

1119
01:08:01,418 --> 01:08:02,718
dealing with this case,

1120
01:08:03,718 --> 01:08:06,998
and that includes the lawyers, the
parties, their representatives.

1121
01:08:07,758 --> 01:08:10,278
Everybody and anybody can talk to you.
However,

1122
01:08:12,318 --> 01:08:13,098
I order

1123
01:08:14,038 --> 01:08:18,258
that those discussions must occur at a
reasonable time

1124
01:08:19,098 --> 01:08:23,898
and in a reasonable place and only with
your consent.

1125
01:08:25,378 --> 01:08:28,998
I've taken some measures, um, that I'm
gonna explain to you.

1126
01:08:30,058 --> 01:08:31,018
Um, but

1127
01:08:33,598 --> 01:08:37,698
if anybody ever approaches you and asks
you if you wanna talk,

1128
01:08:38,878 --> 01:08:41,038
all you have to do is shake your head no,

1129
01:08:42,118 --> 01:08:42,918
and they are ordered

1130
01:08:43,698 --> 01:08:45,058
that they cannot speak to you.

1131
01:08:46,378 --> 01:08:50,918
You get their name, their phone number,
their email, and I will deal with them if

1132
01:08:50,918 --> 01:08:53,318
they bug you in any way, shape, or form.

1133
01:08:54,298 --> 01:08:54,538
All right?

1134
01:08:55,518 --> 01:08:57,678
You will not be harassed.

1135
01:08:59,678 --> 01:09:00,878
All you have to do is say no.

1136
01:09:02,138 --> 01:09:04,598
And you have Mr. Clenko's email,

1137
01:09:05,598 --> 01:09:10,268
uh, and, and I will handle it. Okay? You
have my assurance.

1138
01:09:11,377 --> 01:09:13,758
We have big cases like this in our
district,

1139
01:09:14,758 --> 01:09:19,178
and we will deal with people if they do
not follow that order.

1140
01:09:20,818 --> 01:09:27,158
Y- you are not here to be in any way made
uncomfortable. You have done a great

1141
01:09:27,158 --> 01:09:28,918
service to your country

1142
01:09:30,238 --> 01:09:35,098
and to this community and certainly to
this court and the Court General.

1143
01:09:36,698 --> 01:09:37,878
As I said to you at one point,

1144
01:09:38,818 --> 01:09:40,298
really important that we have jurors,

1145
01:09:41,118 --> 01:09:46,667
right? So that we resolve our disputes in
courtrooms with reasonable people

1146
01:09:47,438 --> 01:09:50,718
who have no- nothing to gain.

1147
01:09:52,398 --> 01:09:52,638
Um,

1148
01:09:53,858 --> 01:09:57,958
you've done a service. And like I said, if
you wanna talk to them, you're welcome

1149
01:09:57,958 --> 01:09:58,138
to.

1150
01:09:58,878 --> 01:10:02,258
Sometimes lawyers, for instance, will
wanna talk to you 'cause they wanna learn

1151
01:10:02,258 --> 01:10:06,738
how to do their job better. They may ask
you about w- what you thought of how they

1152
01:10:06,738 --> 01:10:08,218
presented their case or their evidence.

1153
01:10:09,478 --> 01:10:12,498
So it's up to you. It's entirely up to
you.

1154
01:10:13,458 --> 01:10:13,798
Okay?

1155
01:10:15,458 --> 01:10:15,618
Um,

1156
01:10:18,158 --> 01:10:19,378
I have a small,

1157
01:10:20,478 --> 01:10:20,618
uh,

1158
01:10:21,598 --> 01:10:25,878
a small token of my personal appreciation
for you. Federal funds have not been used

1159
01:10:25,878 --> 01:10:27,887
-to pay for this, but Mr. Clenko-
-[laughs]

1160
01:10:28,538 --> 01:10:33,118
Uh, Mr. Clenko, uh, will give you
something from me, uh, and Mr. Clenko,

1161
01:10:33,118 --> 01:10:35,918
-it's on my side table by my chair-
-Yes

1162
01:10:35,918 --> 01:10:36,278
... um,

1163
01:10:37,918 --> 01:10:39,898
when, when he takes you into the back
room.

1164
01:10:40,838 --> 01:10:41,038
Um,

1165
01:10:42,198 --> 01:10:47,258
I'm also, uh, happy to chat with you
myself. If you'd like, just let him know,

1166
01:10:47,258 --> 01:10:50,278
and I will go back there, um, to chat with
you.

1167
01:10:52,038 --> 01:10:52,158
Uh,

1168
01:10:53,838 --> 01:10:54,378
I, um,

1169
01:10:55,618 --> 01:10:58,618
I am not a very poetic person, never was
as a kid,

1170
01:10:59,278 --> 01:11:01,078
um, but I do like to leave

1171
01:11:01,898 --> 01:11:02,438
jurors,

1172
01:11:03,258 --> 01:11:04,818
um, with a reflection

1173
01:11:05,798 --> 01:11:10,078
on jury service. And so I'm borrowing, um,
this

1174
01:11:10,978 --> 01:11:11,298
quote

1175
01:11:11,998 --> 01:11:16,098
from one of our former United States
Supreme Court justices,

1176
01:11:16,698 --> 01:11:16,998
William,

1177
01:11:17,738 --> 01:11:18,638
uh, O. Douglas,

1178
01:11:19,838 --> 01:11:26,398
uh, who-- he had a pretty poetic comment
on the jury system, which I think is, um,

1179
01:11:26,398 --> 01:11:27,278
apt here

1180
01:11:27,958 --> 01:11:29,938
and important for us to all remember.

1181
01:11:31,378 --> 01:11:35,078
And, uh, I've modified it, um, a little
bit for this group,

1182
01:11:36,018 --> 01:11:38,538
but, uh, he said as follows:

1183
01:11:40,578 --> 01:11:41,258
"A jury

1184
01:11:41,918 --> 01:11:46,918
reflects the attitudes and mores of the
community from which it is drawn.

1185
01:11:48,418 --> 01:11:50,198
It lives only for the day

1186
01:11:50,898 --> 01:11:52,058
and does justice

1187
01:11:52,738 --> 01:11:54,138
according to its limits.

1188
01:11:56,278 --> 01:11:59,438
The group of jurors who are drawn to hear
a case

1189
01:12:00,238 --> 01:12:01,078
make a decision

1190
01:12:01,818 --> 01:12:02,958
and then melt away.

1191
01:12:04,538 --> 01:12:10,958
It is not present the next day to be
criticized. It is the one governmental

1192
01:12:10,958 --> 01:12:14,138
agency that has no ambition.

1193
01:12:16,118 --> 01:12:17,338
It is as human

1194
01:12:18,558 --> 01:12:20,038
as the people who make it up.

1195
01:12:21,918 --> 01:12:25,238
And while it is sometimes persuaded by
emotion,

1196
01:12:25,958 --> 01:12:30,698
the effects are that at times it takes the
sharp edges off the law and uses

1197
01:12:30,698 --> 01:12:33,818
conscience to soften some hardships within
the law.

1198
01:12:35,378 --> 01:12:35,758
Also,

1199
01:12:37,038 --> 01:12:40,598
since it is of and from the community,

1200
01:12:41,998 --> 01:12:44,738
the jury gives the law an acceptance

1201
01:12:45,818 --> 01:12:50,838
in a way that verdicts by judges such as
myself cannot."

1202
01:12:52,478 --> 01:12:53,948
So with that, members of the jury,

1203
01:12:54,938 --> 01:12:57,578
you are excused with my gratitude.

1204
01:12:59,438 --> 01:12:59,958
Mr. Clenko.

1205
01:13:01,298 --> 01:13:03,638
These rights for the jury.

1206
01:13:04,698 --> 01:13:06,328
[clears throat]

1207
01:13:12,268 --> 01:13:15,778
Thank

1208
01:13:15,778 --> 01:13:20,488
you.

1209
01:13:23,918 --> 01:13:24,528
Thank you,

1210
01:13:24,528 --> 01:13:34,828
Susan.

1211
01:13:42,858 --> 01:13:43,328
Mr. Mullow.

1212
01:13:46,828 --> 01:13:47,688
Uh, counsel.

1213
01:13:51,828 --> 01:13:52,988
This is, um,

1214
01:13:54,688 --> 01:13:57,637
I guess what we can do, uh, you let me
know,

1215
01:13:58,948 --> 01:13:59,498
Mr. Mullow,

1216
01:14:00,108 --> 01:14:05,768
whether you still want me to, um, do a
writing.

1217
01:14:06,908 --> 01:14:11,728
Um, I've always said that I was going to
accept the jury's verdict on this issue.

1218
01:14:12,688 --> 01:14:16,408
Uh, I thought it was an important issue to
be tried. I think it's important for us

1219
01:14:16,408 --> 01:14:17,048
to have a trial

1220
01:14:17,928 --> 01:14:18,748
to bring clarity.

1221
01:14:19,668 --> 01:14:19,908
Um,

1222
01:14:21,388 --> 01:14:22,428
and, uh,

1223
01:14:24,868 --> 01:14:27,468
I can write it up, but it's not as if this
case

1224
01:14:28,808 --> 01:14:29,608
hasn't been,

1225
01:14:30,348 --> 01:14:31,648
uh, publicly,

1226
01:14:32,528 --> 01:14:32,728
uh,

1227
01:14:35,448 --> 01:14:36,728
litigated in a sense.

1228
01:14:37,948 --> 01:14:44,188
So to the extent that you want to appeal
what is a quintessential, quintessential

1229
01:14:44,908 --> 01:14:47,888
factual finding on statute of limitations,

1230
01:14:49,168 --> 01:14:49,448
um,

1231
01:14:50,468 --> 01:14:53,628
like I said, I can write it up, or you all
can just argue it the way you would

1232
01:14:53,628 --> 01:14:55,048
always argue a jury verdict.

1233
01:14:56,088 --> 01:14:56,868
Uh, and I've--

1234
01:14:58,348 --> 01:15:00,808
Mr. Cry just gave you a note. I don't know
if you,

1235
01:15:01,968 --> 01:15:04,628
uh, can waive, uh, the writing

1236
01:15:06,588 --> 01:15:07,888
or what your plan

1237
01:15:08,928 --> 01:15:09,208
is.

1238
01:15:10,268 --> 01:15:13,988
Um, well, certainly I want to preserve my
right to appeal, but can I have--

1239
01:15:14,698 --> 01:15:17,188
get back to the court tomorrow, or let me
consult with my client.

1240
01:15:18,548 --> 01:15:20,887
I think that that's fine. If you can, um,

1241
01:15:21,748 --> 01:15:23,608
put something on the docket by nine.

1242
01:15:24,468 --> 01:15:29,128
If you are not going to require or if you
waive, um, the filing of

1243
01:15:29,928 --> 01:15:32,988
a statement of facts, I can tell you that
what I will do,

1244
01:15:34,088 --> 01:15:35,388
um, it, it will be short,

1245
01:15:36,448 --> 01:15:37,088
and it will

1246
01:15:38,488 --> 01:15:41,808
basically reference a lot of documents. I
don't know that it's going to,

1247
01:15:42,808 --> 01:15:48,268
uh-- Well, it, it, it's up to you. Um, but
I do think that, that things like statute

1248
01:15:48,268 --> 01:15:52,708
of limitations and whether someone knew
or should have known or did sufficient

1249
01:15:52,708 --> 01:15:55,948
diligence to know, those are, those are
factual issues.

1250
01:15:56,708 --> 01:15:56,868
Uh,

1251
01:15:57,708 --> 01:16:02,478
and, um, I think that there's a
substantial amount of evidence to support

1252
01:16:02,478 --> 01:16:03,398
the jury's finding,

1253
01:16:04,028 --> 01:16:07,568
which is why I was prepared, um, to
dismiss on the spot.

1254
01:16:08,608 --> 01:16:08,748
So

1255
01:16:09,428 --> 01:16:12,248
I know I still have an obligation to write
it up if I have to,

1256
01:16:12,988 --> 01:16:18,148
uh, but my preference would be to start
preparing for my next trial.

1257
01:16:18,148 --> 01:16:18,628
Understood.

1258
01:16:19,308 --> 01:16:19,448
So,

1259
01:16:20,448 --> 01:16:22,328
um, is there an objection?

1260
01:16:22,948 --> 01:16:26,268
I mean, are, are the defendants going to
ask that I write this up?

1261
01:16:27,198 --> 01:16:30,908
No, Your Honor. We're, we're pleased to
have this proceed at the convenience of

1262
01:16:30,908 --> 01:16:32,468
the court.

1263
01:16:43,208 --> 01:16:48,648
Uh, the jury's asked to meet, um, and so I
will meet with them. I never talk to them

1264
01:16:48,648 --> 01:16:52,898
specifics about the case. I just talk to
them about process and everything else.

1265
01:16:53,628 --> 01:16:55,488
So I'm gonna go do that.

1266
01:16:56,488 --> 01:16:59,768
Why don't you all also talk about-- I
mean, we've got lots of claims left,

1267
01:16:59,768 --> 01:17:03,488
whether we're gonna have a status
conference or what we're gonna do on the

1268
01:17:03,488 --> 01:17:03,928
balance,

1269
01:17:04,648 --> 01:17:05,957
um, of the, uh,

1270
01:17:06,628 --> 01:17:07,208
of the case.

1271
01:17:07,948 --> 01:17:09,148
All right. So why don't I

1272
01:17:09,888 --> 01:17:12,128
plan on at least meeting with lead counsel
in

1273
01:17:13,288 --> 01:17:15,148
an hour or so? I'll be around. I'm not
going in.

1274
01:17:15,928 --> 01:17:16,788
-All right.
-Great. Thank you.

1275
01:17:16,788 --> 01:17:17,808
-Stand-
-Thank you, Your Honor.

1276
01:17:17,808 --> 01:17:19,608
-Thank you, Your Honor.
-Court is in recess.

1277
01:17:22,088 --> 01:17:49,408
[laughing]

1278
01:17:57,148 --> 01:17:57,728
I understand.

1279
01:17:59,848 --> 01:18:09,148
Hello.

1280
01:18:09,148 --> 01:18:13,468
It was cool to watch how you've already
gotten it. Well, amazing. Congrats.

1281
01:18:14,608 --> 01:18:17,918
Yeah. [laughing]

1282
01:18:18,588 --> 01:18:18,728
Yeah.

1283
01:18:19,548 --> 01:18:26,308
No, no, I'm with you. I'm so happy.
[laughing] No, we good. That's so

1284
01:18:26,308 --> 01:18:29,078
beautiful. I'm so happy for you. Next

1285
01:18:29,078 --> 01:18:33,868
step.

1286
01:18:34,908 --> 01:18:36,788
Thank you. I was ready.

1287
01:18:37,468 --> 01:18:39,608
Very good. Thank you. I think we're
getting

1288
01:18:40,388 --> 01:18:41,358
better.

1289
01:18:41,358 --> 01:19:08,908
[laughing]