Petitioner, )
v. ) Docket No.: 7873-01
Respondent. )
Volume: 1
Pages: 1 through 44
Place: Boston, Massachusetts
Date: May 20, 2002

Petitioner, )
v. ) Docket No.: 7873-01
Respondent. )
Thomas P. O'Neil Building
Room 1013
10 Causeway Street
Boston, Massachusetts
May 20, 2002
The above entitled matter came on for trial,
pursuant to notice at 10:55 a.m.
Special Trial Judge
For the Petitioner:
125 West Street
Hyde Park, 02136
(617) 312-4919
For the Respondent:
IRS Office of Chief Counsel
10 Causeway Street
Boston 02222
(617) 565-7868

Alphonse Mourad 16 38

(10:55 a.m.)
THE CLERK: Please be seated.
Recalling from Page 8 of the calendar, Docket No. 7873-01, Alphonse Mourad.
Please state your appearance.
MR. MOURAD: My name is Alphonse Mourad, Your Honor.
MR. CARR: Steven Carr for the respondent, Your Honor.
MS. O'BRIEN: Maureen O'Brien for the respondent.
THE COURT: The parties have lodged a stipulation of facts and a second stipulation of facts. The second stipulation of facts has certain objections by respondent which we'll deal with.
Do the parties wish the stipulations, including the second stipulation of facts, to be filed at this time?
MR. CARR: That's correct, Your Honor.
MR. MOURAD: That's correct.
THE COURT: All right. Both stipulations will be received in the record.
THE COURT: Now, respondent has noted quite a few objections to exhibits in the second stipulation of facts. There are, I think, in every case, there, there, in every objection to an exhibit, without enumerating them, there is a relevancy objection; is that correct?
MR. CARR: Not to every exhibit, Your Honor. There, most, most of these do have a relevancy objection.
THE COURT: Which one doesn't? I--
MR. CARR: Exhibit No. 9(j) has no--
THE COURT: Which paragraph?
MR. CARR: Paragraph 2 of the second stipulation.
MR. CARR: As well as--
THE COURT: Then what is your objection?
MR. CARR: My objection to 9(j)? I have no objection to 9(j).
THE COURT: What I'm saying is--
MR. CARR: I'm sorry.
THE COURT: --in the, in those paragraphs where you listed an objection, you have some that are--
THE COURT: It seemed to me all of the objections included relevance, and then most of them, also, included a hearsay objection.
MR. CARR: That's correct,--
THE COURT: Is that--
MR. CARR: --Your--
THE COURT: --correct?
MR. CARR: --Honor. I'm sorry.
THE COURT: All right. I've looked at the stipulation. I'm going to overrule the relevance objections at this time and allow you, if you wish, to make your position on brief whether those documents are relevant. I'm not going to exclude them on that ground.
So, I'm not going to, again, I'm not going to enumerate each of the paragraph numbers where a relevance objection has been--
MR. CARR: Okay.
THE COURT: --made, but I'm going to overrule them, and I'll, I'll consider an argument on brief.
MR. CARR: Okay. Thank you, Your Honor.
THE COURT: Now, you know, we've got, we've got quite a few documents left with hearsay objections, and it, it would appear that in those documents, collectively, they are documents that were prepared by someone other than Mr. Mourad who is the petitioner--
THE COURT: --here.
MR. MOURAD: Yes, Your Honor.
THE COURT: To the extent that they assert a, a fact or state a fact, and you're introducing that to prove the truth of that fact, it's, generally, going to be hearsay unless you can come up with an exception.
MR. MOURAD: Um-hum.
THE COURT: Now, I don't know whether you're prepared to make that argument at this point. Are you?
MR. MOURAD: I just have to, basically, I'll have to disclose just a second for you regarding, for the record, my personal health in case I have to take a break. My heart condition, this has been in other Courts. I don't want to happen what happened before.
THE COURT: All right.
MR. MOURAD: Because I want to go very slow today, and I don't want to be upset.
THE COURT: All right. Very good.
MR. MOURAD: If you see Exhibit B, I appreciate looking at the medical of my, B and C.
THE COURT: Very good.
MR. MOURAD: Thank you.
THE COURT: Let me, let me put this in another way.
You've got a number of hearsay objections. Do I have to, is there any reason to rule on that at this point, or can we handle that on brief?
I mean, I think, I think petitioner is at somewhat of a disadvantage. He's, he's not an attorney, I assume. I don't even know whether these, respondent is saying they're irrelevant. I'm not sure that, at this point, since I was just handed the stipulation, what the status of that argument is, but do these things, is this something that you need a ruling on now?
MR. CARR: I believe you can, you can rule on that on brief, Your Honor.
THE COURT: Okay. Okay. Just for the, for your benefit, Mr. Mourad, documents that assert the truth of certain facts, again, if they're statements by someone other than yourself, someone not in the Courtroom, they're generally hearsay and don't prove the truth of the statement.
On the other hand, if they're operative documents, the fact that they were just prepared and sent may have relevance on its own regardless of whether or not the statements therein are true.
Some documents just are, are verbal facts, and the fact that they were written may be important whether they're true or not.
MR. MOURAD: May I respond to that, Your Honor?
THE COURT: Well, you don't have to. I'm just trying to tell you what, what--
MR. MOURAD: I know.
THE COURT: --the problem might be.
Yes, you may.
MR. MOURAD: I feel the documents are Court documents. It's not "He say so," or "He say so."
The latest legislation was filed to the Appeal Court to three Judges regarding who is responsible to pay the profit of a million three, Alphonse Mourad, the owner, or the trustee. I have won that appeal in front of the three Judges. It's all documented here. I show that to IRS, and they didn't want it to be part of the exhibit.
So, clearly, that appeal -- that won on the late motion regarding the taxes to the Appeal Court -- they ruled in my favor on two issues. One is the case, "Who is responsible to pay the taxes?"
Is it the trustee, who became the owner, and chief tax credit, and he stepped on my shoes, or is Al Mourad, who is the owner and the tax credit belong to Al Mourad?
That's very well stated on the appeal and the motion, and right now this has been remanded for two week trial in front of Judge Kenner, upstairs in the Bankruptcy Court, for an evidentiary hearing.
They, also, mention the second count of the, negligent of the trustee, Stephen Gray. So, I'm not here to, basically, give an opinion what happened. I'm here to relate, I have a copy of this one, and my appeals on the ruling of the three Judges, 12 pages.
THE COURT: I didn't recall seeing that in the stipulation.
MR. MOURAD: I, I gave him everything, and they said, "That we don't need. That we don't need." I'm not a lawyer, and--
MR. MOURAD: --I was, I wanted to be that part of the exhibit. They say, "That's not relevant."
The way they explain it to me, the late administrative claim is about payroll and not about the capital gain.
Well, this, clearly, states nothing to do with payroll. The confirmation plan, September 26th, 7 -- '97, when Judge Kenner was going to transfer ownership of the property.
I filed a motion forcing the IRS to appear to make sure have no liability because, if I'm not the owner, and the trustee stepped on my shoes, and he becomes the owner to be able to capture the tax credit of 12 million dollars, then he, he's the owner of 1996. I owe no taxes for '96 and '97.
Either I get the tax credit, I'm the owner, and the tax credit illegal, or where is my money? No one has been able to answer that. The trustee was collecting two and a half million dollars from HUD a year, Your Honor, and all the money, he didn't pay the Winter Hill Bank, which I was paying them 37,000 a month, none of the creditors.
He had, in a money market account, over $700,000.00, bearing interest account. I mean, they, this is a very unusual bankruptcy. It's, basically, millions of dollars, and I'm, hey, it's bad enough I loose my property, the tax credit belong to me, 20 years of my life, but he makes some money, he gets the tax credit, everybody cashes in on millions of dollars, and Al Mourad gets thrown out in the street and say "Goodbye, Al. You still owe the IRS a couple of hundred thousand dollars."
THE COURT: I think you're, I think you're stating what you believe is your case here, and that's fine,--
THE COURT: --but I'm dealing with a preliminary matter.
What I'm going to do is, is accepted the stipula -- the second stipulation of facts, and I'm going to reserve ruling on the government's hearsay objection, and--
MR. MOURAD: Thank you.
THE COURT: --you'll have to explain, you know, yourself and what your case is during the, the trial, and then I'll give the parties an opportunity to file something in writing after the trial is over.
MR. MOURAD: Okay. Your Honor, also,--
THE COURT: Now, you just mentioned a Court opinion, I believe, or something that you had in your hand. I did not see anything like that in the--
MR. MOURAD: I showed that to them. They say--
THE COURT: I'm just saying that it is not in the record.
MR. MOURAD: Then I want it in the record. I want it in the--
THE COURT: If you're going to try to get it in the record, you're going to have to, it's not in the stipulation. That's all I'm telling you.
MR. MOURAD: Yeah. That's all they say is irrelevant. I don't know the law on it.
THE COURT: Well,--
MR. MOURAD: I don't want to give anybody a hard time. I really want to learn. I'm, I'm not feeling well. I'm just like, basically, saying, get me out of here.
THE COURT: Well,--
MR. MOURAD: I'm, basically, half dead anyway. Gone.
THE COURT: Are there any other preliminaries we need to deal with?
MR. CARR: I guess the only other thing that I should bring up is that proposed Exhibit 23, Your Honor.
THE COURT: Yes? What is that?
MR. CARR: It appears to be photocopies of, of law. I believe it's sections from various books of law. Now, it appears to be something that would be appropriate to be submitted on brief by the petitioner.
THE COURT: Is that what Exhibit 23 is, Mr. Mourad?
MR. MOURAD: Yes. An attorney friend of mine, he's no longer practicing here, felt bad for me I'm coming in today. So, he went to a library, and he did a couple of hours of research, and he fax'd those to me yesterday, and he sent, fax'd me another letter which I really don't understand, Your Honor. To be honest with you, I don't know anything about these. So,--
THE COURT: If, if you're going to make a legal argument based on the materials, the statutory material, what the normal procedure would be, in your post-trial brief, when you explain your position, if you've got a legal position, what you should do is refer to the statutes or case law that you're relying on.
You don't, you don't have to give it to me as an exhibit because what I'm going to do is go to the statutes--
MR. MOURAD: Right.
THE COURT: --or the case law, myself, and, you know, and look at it rather than through an exhibit.
MR. MOURAD: Before, Your Honor, I had some help, several associates, but for the last six, seven months I'm totally abandoned. No computers. I don't even know how to use it. No writing. I'm not feeling well. I'm taking a lot of medication. So, I'm against the wall.
The only thing I could, I was hoping that the Court will appoint, because I'm indigent by three Courts, a counsel for me to defend my rights on these facts, and I was turned down by the Court.
THE COURT: We don't have that--
MR. MOURAD: They waived the fees.
THE COURT: --ability.
MR. MOURAD: I know. So, I'm looking for somebody who would give me performance or volunteer. I agree with you. I can never do this, and I never will. That's why today I'm just praying to God and leaving it in your hands to say, "I gotta protect this man. I'll apply the law regardless." I know you are, and I thank you--
THE COURT: Well,--
MR. MOURAD: --whatever you suggest.
THE COURT: All right.
MR. MOURAD: I have no choice.
THE COURT: Well, if you're got, you know, you've got the right to offer things into evidence even if the government objects, but I'm telling you that, if you, your Exhibit 23 is as government counsel described it -- simply statutes -- what I'm telling you is that you can refer to that in your brief, and--
THE COURT: --we'll look at the statutes to see if your argument is, is correct based on the statutes. You don't have to put that in as an exhibit if that's what it is.
MR. MOURAD: I'm not going to be able to anymore write a brief, Your Honor. I just don't have, I prefer, if I just get it over today regardless what the issue is. I don't want to really deal with it.
My doctor spoke to me. He says, "It's time to close that chapter; otherwise, within two years, you'll be gone."
THE COURT: Okay. Well--
MR. MOURAD: So, I, I am not going to go through walking out of here today carrying this for further briefs. I have no resources. So, whatever decision you render is fine by me.
THE COURT: What I'm--
MR. MOURAD: I'm going--
THE COURT: --going to do, I'm sure, having looked at this case, and I, I just got the exhibits and, and the stipulations. So, so, I haven't had time, an opportunity to consider everything, and I'm going to want to do that.
I'm going to ask the parties to file briefs, and if you want to be excused from doing that, you can.
MR. MOURAD: I'll try. If I find somebody, trust me, I'll love to file a brief. I just need somebody to help me.
THE COURT: That's fine.
MR. MOURAD: If you appoint somebody--
THE COURT: I need somebody to help me too. You know what I mean? The parties--
MR. MOURAD: Maybe some attorneys in this Court will see me afterward. They'll say, "We'll do a pro bono brief."
THE COURT: Okay. Now, if there are no other preliminary, what I suggest we do, sometimes we give opening statements, but you're here representing yourself, and I think that probably would not be a real good idea. I think you should be sworn in as a witness and just tell your story--
MR. MOURAD: Could I?
THE COURT: --and testify.
You may stay seated at counsel's table--
THE COURT: --to give your testimony.
THE COURT: So, go ahead.
having been first duly sworn, was called as a witness herein, and was examined and testified as follows:
THE CLERK: Please, state your name for the record?
THE WITNESS: My name is Alphonse Mourad. I'm the President of V & M Management, Inc., and the sole shareholder of the corporation and the taxpayer of the corporation.
THE COURT: Now, you may testify. You may be seated if you wish.
THE WITNESS: Yes. I'll feel a little bit more comfortable. Thank you, Your Honor.
THE WITNESS: A little bit of background of the history, Your Honor.
I bought the development from HUD in 1981, and the development was not managed by me, personally, until 1987. It was under the control of HUD.
I'm not going to go into the details of me and HUD. I'll leave that very brief to one statement. HUD committed a fraudulent sale because they were under urban renewal planning, and they cannot transfer property until they have a Public Hearing and bring the property up to code, and HUD bypassed the 121(a) for urban renewal and sold it directly to me and two partners at that time, '81, for the lowest bid of a million, three, and there was a bid for two million, eight.
The reason HUD did that, because there was an associate that came to me as a businessman for the deal. One associate was Hispanic, and the other one was African-American, black, and he was managing for HUD.
HUD said, "We need a minority to become owners and to give them a discount on the sale. We're not looking for the highest bidder."
In the meantime, within a year, HUD certified to do an audit on Greg Inge, my associate, and then my other associate was out. He couldn't gain any salary. I was left alone by 1981. By myself. That's why I become the sole.
So, I ask HUD, "What it will take for me to manage my property?"
They said, "Well, you have to pay us a HUD mortgage. When you go private, we don't care what you do."
So, in 1984, I refinance the property for about two million dollars. I paid off the HUD mortgage, and HUD still did not give me the, the management after they were paid.
In the meantime, I wanted out because I know nothing about Section 8 Housing. I was on -- only helping my two other associate for the future, and I was doing other businesses; so, I said to myself, in '84, "I want to sell the development and go to other enterprises.
I had a gentlemen who was willing to buy it for three million, seven at that year, and then the gentleman asked, "Is this property subject to the 121(a)?"
At that time, my attorney and myself, he says, within the closing, he said, "No," because we didn't go through any process 121(a), and we were receiving taxes for 1981-82 from the City of Boston. That excise tax, which is a state tax. It's a separate type of taxes.
So, therefore, the buyer said, "Could you get me a letter that you're not subject to 121(a)?"
When we went to the BRA, they said, "Yeah, you are subject to 121(a). In fact, HUD owes money under 121(a) from 1970 to '81, about a million, seven, and, therefore, no transfer will take place without our approval."
So, I became a hostage. Now, I can't do anything. I can't manage my property. I can't sell it. Then, to make it short, the BRA, they committed, it's on record by Judge King, a back room deal on the buyer, and they wanted to take some of his real estate about the gentrification of Boston.
They said, "If you give us the apartment building, and you give us this one here, we'll approve Mandela for you." I renamed the place after President Nelson Mandela in '87 because he was in prison and because I subject to a second double standard right here in America.
I have no problem backing African-American blacks and minorities because, clearly, I believe, after 20 years, there is a double standard. There is no question about it.
So, therefore, Judge King, he ruled in my favor on the agreement. The other buyer backed out, and there was condition brought up in the Court, and Judge King pointed out the back room deal was imposed. So, I became a hostage to the city, to the BRA and to the state.
So, now, I went back to refinance, and I started a Mandela Town Hall, in Roxbury, to empower African-American youth and health center, free. I was spending $150,000.00 a year, Your Honor, into the community because I wanted to do something for the inner-city of America on initiative housing proposal.
I even send that to President Clinton and the Vice-President, and I got compliments from them, and they said to me, "We need to learn from you how to reduce crime in inner-city of America, and how can we turn these affordable housing into tenant ownership, and how could we be able to save inner-cities and save the taxpayers money from vandalism and displacement."
So, again, I met, because of Dr. Brown, the health spot. She had family member that deceased, Ron Brown, who was my attorney back in 19 -- somewhere around '97.
Then Ron, the sister of Ron Brown brought me a commitment letter, Your Honor, for seven million, three hundred thousand dollars, from a bank out of Washington, DC, to payoff everybody and take my property back.
HUD declined the loan right in here because HUD had no intention, after I sued them, after everybody is being caught in a back door deal, to let Al Mourad survive. They can't afford it; so, therefore, the loan never went through.
Then the Attorney General here, in 1994, they went in to get a receivership in the State Court, joining together with the Boston Redevelopment Authority for the City of Boston, and then they lost that case when that attorney was helping me. Judge Catherine White, the Judge ruled in my favor and the receivership was not allowed.
After they lost all the exhausted ten years, and it cost me approximately about a million, eight in cash, with several attorneys fighting, finally, they were able to get a junior mortgager who had a, a note, Your Honor, of $50,000.00. The total principal is $150,000.00. He comes up with an inflated figure of one million, three hundred and fifty thousand dollars.
I went before the Judge Catherine White. Judge Catherine White, already familiar with the, with the receivership and familiar how to protect the tenants under the 121(a) because the only time this property, the way urban renewal wants it, is to be foreclosed to go into auction, and then the private developers can take 276 units, Section 8 expires in 1996, get rid of the whole entire area and gentrify it because there's a demand to build on six acres of land, high-rise building, luxury condo, four-star hotel. So, we're talking about gentrification here. This is what I'm a victim for.
So, the junior mortgager was stopped by Judge Catherine White, and she said, "I'm going to remand that back. Then they went back in front of Judge Maria Lopez without even giving me a chance to make the payment. I have plenty of money. Fifty thousand dollars, I was in receiving, Your Honor, over 200,000 from HUD. Do I look like a fool? After 15 years, I let my property, that has millions of dollars in mortgages, I have in excess of two and a half million dollars income. Would I let you take my property to foreclose for $50,000.00?
All I wanted was a payoff. Would you believe this? A payoff, and Judge Maria Lopez didn't even give me a payoff. She said, "Go ahead and foreclose."
Then I had to seek refuge. Then, this is what forced me into Chapter 11. Not because I was bankrupt, not because I didn't have the money for the creditors. My bank, who I owed them three and a half million dollars, did not ask for a Chapter 11 trustee. None of the creditors did.
Who appear in front of Judge Kenner for the trusteeship? The Boston Redevelopment Authority, the Department of Revenue and the City of Boston. The same ones for ten years, and they said, "Your Honor, we want the key today." They did.
The Judge, finally, after this long battle. There has been over 100 article written in the newspaper, TV on this Mandela Developments in Boston.
So, finally, then I find out later on my attorney, now, Judge Kenner ruled the trusteeship on two issue, Your Honor. She said, in 1984, that I mismanaged the property. In 1984, I wasn't the manager. It was a certified HUD manager. I didn't take over the management until 1987.
Then, she said, in 19 -- in 1995, my picture was on the front page, it was an embarrassment to the family, my culture, in The Boston Globe, that Mourad pocketed $960,000.00 for 1995 in his own money. I took the money. I pocket it.
She did not allow the examiner to finish the six weeks and give me the credit for the money that went in and out, and because the BRA wanted the trusteeship before the examiner complete the examination of the figures.
Then the truth comes out later that the IR -- the trustee accountant said the property in 1995 lost $81,000.00. Al Mourad lived on borrowed money for '95. So, where is the million dollars I robbed everybody? Publicly, everybody looks at me and says, "Why you complaining? You pocketed a million dollars. Go home." So, I brought up many motions in front of Judge Kenner and Director.
Then, I find out later, through an attorney, my attorney, Harold Murphy, Hanify & King, from day one, when, they did not disclose to me when the trustee was appointed, that Harold Murphy was representing my trustee and two other cases at the same time.
So, I filed a complaint to a Board of Overseers regarding my attorney, and they came back not making a termination of my attorney, but they said that the trustee, clearly, filed two false documents to the Court.
One of them is, he said that he has no conflict of interest with my attorney at all, and there is no, I forgot the other one. Conflict of interest and no dealing with them basically.
Basically, so, I filed a law suit recently on both malpractice, law suit in a State Court on my attorney and the trustee. That's why the trustee did not file and appear for me when Judge Kenner was wrong on both counts. I would have won that appeal.
If, in '84, I was not the manager and HUD was, and, if in '95, the trustee accountant said that the property lost 81,000, then why do you taking my property away?
You took it because you said that I stole a million dollars to my pocket. That's their own audit, not mine. The trustee audit. So, Judge Kenner refused to rule on that.
Then, when it came to September 26th, the reorganization plan, now, the trustee have to have ten years Section 42 of the IRS Code. I remember that. You have to have ten years of services in order to qualify for credit.
Now, my, my question to the Court, that the Court have to interpret is, I did not sell my assets. V & M did not sell the assets for Stephen Gray to become the owner. Alphonse Mourad, as a taxpayer, did not deed the property to Stephen Gray to become the owner to apply for tax credit.
So, the question, if Stephen Gray stepped on my shoes, and, in the transcript, Judge Kenner said to other lawyers, there was a hearing on this. She said, "What's it going to take to get the tax credit? Ownership? Now, I make Stephen Gray the owner. Is there anymore problem?"
My attorney said, basically, "You answer the question, Your Honor. Stephen Gray is the owner. Now, he gets the tax credit."
Now, how could Stephen Gray, if he becomes the owner, Your Honor, in 1996, and you have to have ten years period behind you, and get twelve million dollar tax credit in '97? He doesn't qualify because to qualify you have to have ten years. The IRS, it started in 19 -- I was told --86. The tax credit of ten years of ownership.
So, the only one who had tax credit for that year, that eleven years was Alphonse Mourad, the owner, the taxpayer, and Victor, the other attorney, that was helping me, he says that it's clearly, it's the taxpayer who applies for that tax credit. It's not the trustee. The trustee applies on my behalf, but not him as an owner.
So, in this case, the IRS, I make sure, I filed a motion to appear, and I want to make sure there is no liability from the confirmation plan to Al Mourad personally, and that's why the attorney of the IRS, at the confirmation plan, it's on those exhibits, Your Honor, he says that he has no problem with the trustee paying him all the taxes with interest and penalty; therefore, he, my attorney couldn't put him on the stand because he waived everything that is going to be taken care of by the owner, the trustee.
So, therefore, the IRS were witness to it, and, now, I hear from the IRS, "Your late claim, it's about payroll taxes." Well, the motion here, clearly, shows the exhibit of K-1 for 1996, the exhibit of K-1 for 1997, which is excess of a million, three.
How could you say this is late claim motion was on taxes? This is the position they're taking. They have not read the motion. That's why the Appeal Court, the three Judges, in the administrative claim, they ruled in my favor on who is the owner to pay the taxes on the million three.
Now, when I went to the IRS, I went to the Criminal Investigation. I have written over 12 letters to Washington, to everywhere for help. I said, "There is a fraud tax credit here."
Even the tenants were suppose to be partners with the trustee. They don't exist today. Beacon Management took over that property outright. They even out in the street. They had a massive eviction.
To have a tax credit you have to have a renewal of Section 8 on the deed, 30 years guaranteed affordable housing. You have to renew the Section 8 -- that much I know -- for 10 to 15 years to qualify for tax credit.
So, who took the beating here? Fifteen hundred black and Hispanic residents out in the street; Alphonse Mourad, who stood for ownership for initiative housing, out in the street. Now, they're spending over a billion dollars, I am, Your Honor, about the gentrification, building a new annex to Boston downtown.
An associate of mine, years ago he did a thesis out of Harvard University on my development, 100 page. He graduated with a master's with it. It's called Maximizing Land Value, and that's very educational Your Honor, because if the government in Washington, hopefully, they will look at that thesis, what happened to me.
We can cure the problem in the inner-city of America because this corruption of a tax credit and HUD working with the Boston Redevelopment Authority to displace valuable land, it's called maximizing land value.
When the land becomes too valuable to keep affordable housing on it -- can put a high Prudential, like the Prudential, 56-story, and Sax Fifth Avenue, they generate over 100 million dollars -- why do they want to keep Al Mourad around?
They couldn't help me with finance because if they help me with the finance, and they give me what I want, that means the place will stay affordable to the year 2008 because there is 40 year 121(a) agreement.
So, the only rule, in order to go private, is foreclosure. So, how could the BRA be protecting the residents and allowing $50,000.00 to foreclose and let the property go into a private auction where they could remove all the tenants in 1996 -- the Section 8 expire, it was a 15 year -- and it becomes the option of the buyer if he wants to extend the Section 8 from year to year.
So, this whole case is a back room deal, Your Honor. It's about a sham. Multi-millions of dollars. Big developments. Lawyers made over two million dollars. I'm looking at the figures. This is a very tragic case of housing in America, not in Boston.
Hopefully, eventually, the national media, and I find out on the internet the management, right now, they are under investigation in Washington, DC, in front of the Senate, and I'm going to send to see if me and the tenants could be witnesses because they're using my development as precedence what they gonna do for the tenants and why they should get more money to a tax credit on the national level.
So, the question is, how much of this money really has gone to ownership of tenants or has it gone as a straw for the tenants, and then they change from nonprofit to profit, and the tenants are out.
Right now, I don't know what Judge Kenner, in the next hearing coming up, she going to do on the negligence of Stephen Gray and what happened to the money.
Now, if I've got a K-1, Your Honor, for 1996, at the end of the year, 400, and I'll say, 50,000 dollars approximately, wouldn't you say that's clear cash? That's my money. Where is my money?
Second, if there was a money variable, why did the trustee pay the creditors to reduce my personal liability because after the bankruptcy, Al Mourad's signature, signed in excess of six million dollars, Your Honor, I owe right now the Winter Hill Bank over three and a half million dollars personally. They took Al Mourad's signature to bring the money to V & M Management; not V & M Management brought the money. This is a unique case.
If there was just a couple of issue, Your Honor, and I wasn't personally liable for the debt and the tax credit and all that, I would have walked way. I wouldn't be in a condition being as sick as I am today, but the problem right now is I'm still liable for in excess of four million dollars to creditors.
He takes the money. He reports the K-1. He takes the tax credit. He says, "Mourad, I'll tell you what I'm going to do for you. I'm going to even let the IRS collect from you for the money that I kept."
I ask IRS, "Where did the money come from?" It didn't come from the sale. The sale was only two million, seven. It was nine cents on a dollar, Your Honor, to the creditors. The property lost over five million dollars.
I said, "What happened to the two and a half million dollars the trustee in '97 on the tax returns? You guys could read. Where is the tax money? What did he do with it?"
"Well, he did report $810,000.00."
"Then how could you say that it came out of the sale?"
The money came out of the subsidies because they didn't pay any of the creditors. None of them. There was eight creditors, Your Honor. He had nothing but money just to pay payrolls, little fixing, and put the money in a money market account, an interest bearing account.
So, I try to get the Criminal Investigation of the IRS. I have written to the Commissioner, "Please, get involved. All I'm looking for is the truth here." I said, "You do an audit on me if I'm a citizen. How powerful is your schedule? Why can't you go in and take a look where did the money come from? Is that originated from the income or the sale?"
Up to now, they say, "We're charging you this money from the sale."
Well, the sale, Your Honor, nine cents on the dollar, the property lost money. I still owe four million dollars.
What happened to 1997, the two and a half million dollars that he received from HUD? They, they can't answer that question.
So, what I need, basically, is someone from the IRS, which they should have done, is to go in and audit the complete books and find out exactly how much money -- in excess of five million dollars -- Stephen Gray received for '96 and '97 and what happened to the money. None of the creditors received a penny out of it. Zero. Zero.
That's why everybody politically is staying away from this case. I have gone to FBI office, to the US Attorney's office, to the IRS office. I got nothing to hide, Your Honor. You can bring everybody down. I'm ready. If I, if I need to be in jail, I'll say, "Put me tomorrow." I have no problem.
I want the truth. That's all I'm asking for. All I'm asking for is justice and the truth, and not the powerful entities who has powerful connection with the lobbyists, with the associate that were able to bury everything.
So, here, you're looking at a man, the reason we are here today, Your Honor, Judge Kenner was going to go ahead and just close the case on confirmation plan without allowing to rule on my motions who is responsible for the taxes.
I had to file a motion to this Court to come over here peacefully and say, "All I'm asking is for a ruling." I will stay in the lobby until five o'clock until I get a ruling.
Would you believe that day the US Marshal came over and said, "Mr. Mourad," it was a motion, and I think this is a free country. I did it in writing. The US Marshal said, "Mr. Mourad, what do you want today?"
I say, "I don't want to bother the Judge. I don't want to go to anybody's session. All I want her, before September 26, I'm going to be liable. Later on without a decision, I can't appeal her. All I'm asking, it's been eight months. There is still a motion in front of her regarding taxation. All I want, her to rule.
I'm familiar enough to be in litigation 15 years. You don't tell the Judge what to do. That's his business. That's why we have an Appeal Court, and I respect that, Your Honor. So, you can rule for me or against me. That's your right, and I have no problem with that, but, at least, give me a ruling so I could go to the Appeal Court.
So, unfortunately, it took me to be disbarred and have a record and be in prison today in order for her to rule on that motion, and the reason I want that appeal on that motion, once I appeal to her and she made the decision, then I was able to take it to the Appeal Court, and, now, they are remanded the case, but, now, Al Mourad, by having a Judge so biased to him, would you believe I have a record? I mean, that, that's what did damage to my physic -- I couldn't believe it.
Was I asking so much after 50 years of my life -- I had done so much public service -- to say, "Please give me a ruling. Don't close the case without giving me a ruling"?
When she ruled, the truth came out. They don't want me to go to the Appeal Court. See, they all want to bury this; including the IRS. I have documentation here, over 15 letters from here to Washington explaining to them, "Please, I want you to take a look and to investigate." Even the tenants, right now they are filing a petition. This is not over by far. They are not part of the partnership when they be approved September 26.
So, the only way this case will make sense, Your Honor, if you could appoint an administrator to really deal with all the facts that has taken place on a fraud, on perjury, the perjury.
Clearly, three lawyers of the creditors, there were six creditors that filed a motion in front of Judge Kenner to discharge the trustee, not to allow the sale to go through and turn the property back to Al Mourad because he had the ability to pay us back 100 percent on a dollar.
Would you believe, Your Honor, when the trustee took it over, he tried to auction the property for $100,000.00. Within three weeks I came up with a five million, five commitment letter -- I have it here -- and I said, "Let me take my property back."
Then they took seven months to get creative how to come back with a plan and to be able now to compete with the five and a half million dollars that Al Mourad forced the trustee to raise the value of. I have another commitment of nine million dollars.
Money was never my problem, Your Honor. It's the government that had an agenda, and they were hoping that no Judge, no one would open this case further in order to take a look at really what happened behind closed doors.
That's why I'm a hostage, I'm a victim, I'm an indigent, and that probably will go in as one of the saddest case in the history of America, and I have put this whole thing in two and a half hours tape from '81 to now, with the deceased Ron Brown on it.
When Nelson Mandela, President, came to Boston, the 70 foot sign, the health club, the Mandela Research Center. I wanted to give something to America. I'm very disappointed today, Your Honor.
I'm very disappointed because it's a big racket. For the last 20 years I witness, I seen it. Affordable housing in HUD, developments we're getting gift, multi-millions of dollars across the nation, and that's why we have homelessness today. That's why we got the money from Washington to consult, and that's why we're reducing affordable housing, and the IRS giving millions of tax credit that's not going to the public.
This is what the tragedy of this case. The IRS has an obligation here to see. They have, they are the final approval. The State, I was told, they could make a, a discretionary recommendation regarding tax credit, but this is a federal subsidies, federal dollars and federal IRS tax credit.
Now, would the IRS take a look to see, even today, did Beacon Management violate the September 26th that they were approved as partnership, limited partnership with the Mandela residents and the trustee. Part of the tax credit, as an owner, because I had an agreement for tax credit, you have to be in limited partner for ten years in order for the tax credit to expire.
None of this exists today. Today Beacon owns this property outright, without Mourad, without the tenants because the BRA and the governmental entities, they gave the green light. They've covered up for him.
So, how could I win? It's not a case of law anymore, Your Honor. It's not a case of facts. It's all documented by the creditors, by the motions by the Appeal Court.
So, it's a question of fraud and perjury, and the IRS have an obligation. Not only to Al Mourad, but does the IRS want to see 1,500 black and Hispanic residents out in the street where they brought the money?
Beacon took pride. Look what we gonna do for the Mandela Developments to turn it into tenant ownership in five years for one dollar. Where is it today? I mean, that would shock the nation.
So, I just wanted to clear that issue for you, Your Honor, because I know there going to be, in the future, media coming up on this case. I have spoken to several. Waiting for the outcome of this case and others.
The tenants are filing petitions -- they're already in Court -- against Beacon Management. Some of the Judges, they could be innocent, but they believed the other side over Al Mourad, and, unfortunately, the media will have to make, and the public, a determination on the Judges, who they believed over what.
That's what my case is. So, the bottom line is two issues. If I am the owner in '97, I have no problem paying the IRS, IRS the money. I could get them $200,000.00 if I take my property like nothing. I have nothing but money if I have that property back. This property worth over 20 million dollars today.
You give me my tax credit back, you give me my ownership, you said this case is all a shame, then I'll shake hands with IRS and I'll say, "Would you like a check within ten days?" I have no problem.
But don't go ahead and give the credit to Beacon Management, and I'm the owner, and take the 20 years away from me, and Stephen Gray pocket the money of HUD checks and everything else, over millions of dollars. This whole thing is fraud and perjury, and then go for Al Mourad after he is indigent. That's not fair. That's not law, Your Honor. Law is not applied anymore. We have to take a look at the facts. I made my statement, my final two words.
I'm hoping the Court will determine 1997 who is the owner. If Stephen Gray is the owner, then Al Mourad is not responsible for the taxes, and then go after Stephen Gray for 1996 and '97 and the sale for taxes.
If Al Mourad is the owner and he's responsible, then he is the one that should be approved for the tax credit and the tax credit belong to Al Mourad, and Al Mourad would pay the IRS.
That's my final statement, Your Honor. Thank you.
THE COURT: Thank you, Mr. Mourad.
Mr. Carr, do you have any questions under cross-examination?
MR. CARR: Yes, Your Honor, I do. Could I take a couple of minutes before I begin, Your Honor, just to confer with my co-counsel.
THE COURT: All right. Let's hurry up. Well, l you can take a minute, but--
MR. CARR: Okay. Yes, just one, just one minute, Your Honor.
(Whereupon, a brief recess was held.)
THE COURT: Back on the record.
MR. CARR: Thank you, Your Honor.
I'll stand here if that's okay?
THE COURT: That's fine.
MR. CARR: Now, Mr. Mourad, I just want to clarify a few things.
Q You were the sole shareholder of V & M Management?
A Yes, I am.
Q Correct, and V & M Management bought the property from HUD in 1981?
A That's correct.
THE COURT: Could you speak up a little bit, Mr. Mourad?
A Yes, I did.
Q Now, V & M Management didn't build that property? It was, it was bought from HUD--
A That's correct.
Q --in 1981?
And, in fact, V & M didn't do any major rehabilitation on the property after buying it from HUD; isn't that correct?
A Yes, we did.
Q You did?
A I have a record of 130 units that were totally rehab'd under my ownership.
Q Do you have that documentation with you?
A I wasn't prepared for it, but I could find it. It's under the HUD reports. We have to make a physical inspection. HUD does a physical inspection under Section 8 every year, and I have a list of all the units that were inspected to the code, and done completely over the development, and I was continued to do that.
Q But you haven't, you haven't presented any of that documentation to the Internal Revenue Service?
A Nobody ask me.
Q Okay. And what year did you say that, that rehabilitation was done?
A I'll say that it started with '87 through '92. I'll have to think about those, those four or five years. We were doing about an average of 20 units a year, 25.
Q Okay. Now, did, V & M Management never applied for an allocation of low-income housing credits from the State; isn't that true?
A No, we didn't because we didn't have it ten years until '97.
MR. CARR: Okay. Thank you.
A I wouldn't have qualified.
MR. CARR: Thank you.
Q And V & M Management never received a certification from the state, a certification entitled, Low-Income Housing Credit Allocation Certification from the state; isn't that correct?
A Not to my knowledge, no.
MR. CARR: Okay. That's a Form 8609.
Q Now, you never attached, you never received it; so, you never attached that Form 8609 to your personal returns or to the corporation's income tax returns; isn't that correct?
A No, I didn't see that relationship.
Q Okay. In fact, you never, you, you owned the property for, you said that you bought the property in 1981 and it was sold in 1997; isn't that correct?
A The bank, the trustee sold it December 31st, '97.
Q Right. So, and in that time, you never claimed low-income housing credits on your tax returns; isn't that correct?
THE WITNESS: How could I claim them? There was no--
A Whatever I did prior to '97, I had a certified public accountant, because those are requirement; that they have to meet the HUD standard, and I had an attorney filed an appearance, and I only followed their instruction from year to year what had to be filed. So, I was very well protected by professional accountant and an attorney. I just signed those taxes. Whatever had to be done, I followed their instruction.
Q And those tax returns that you've referred to have been included in our stipulations of facts; isn't that correct?
THE WITNESS: Repeat that, please?
Q The, the tax returns that you just referred to were included in our stipulations of facts?
A Yes.
MR. CARR: Okay.
MR. CARR: Could I have one second, Your Honor?
MR. CARR: No further questions, Your Honor
THE COURT: Mr. Mourad, do you have any, anything else that--
MR. MOURAD: No, Your Honor.
THE COURT: --you want to say?
MR. MOURAD: I don't.
THE COURT: Do you have any other witnesses, Mr. Mourad?
MR. MOURAD: No, Your Honor, I, the reason I didn't bring any witnesses, I couldn't speak more than an hour or two. I was told medically that, to watch I'm not having a problem.
THE COURT: Mr. Carr, does respondent have any witnesses?
MR. CARR: No, we don't, Your Honor.
THE COURT: The case is submitted.
I'm going to allow the parties to file post-trial briefs. Mr. Mourad, you've indicated that you don't want to. You may reconsider. If you don't want to, I'm not going to force you to. It would be helpful, I think. Certainly, I--
MR. MOURAD: I will try, Your Honor. Trust me. I work very hard. I will love to do it.
THE COURT: All right.
MR. MOURAD: It's not I don't want to. I don't know if I can get some--
THE COURT: I, I am not going to ask. I'm just going to have original briefs no reply briefs.
MR. MOURAD: I'll try.
THE COURT: Briefs should be filed 60 days from today, and the clerk will give you that date.
THE CLERK: Sixty days is July 22nd, 2002.
THE COURT: Okay. As I indicated, respondent has some evidentiary objections. You might, Mr. Carr consider whether those objections are, you know, it's up to you, but if they're, if, if, a lot of times there are technical objections but if the evidence doesn't make any difference to your case, the way you see it, you know, you don't have to use up time and space explaining them.
MR. CARR: Okay.
MR. CARR: Thank you, Your Honor.
THE COURT: All right. I'll look forward to your briefs.
If there is nothing else, we're going to, I think what we'll do is, is recess until, until 12:45, and then we'll start the next trial on the Kersey case. So, 12:45 be ready to go. That should give you time for lunch if you want lunch. Okay. We're in recess.
THE CLERK: All rise.
(Whereupon, on May 20th, 2002, at 11:48 a.m., the above-entitled matter was closed.)

Certificate of Transcriber and Proofreader
Case Name: MOURAD v. IRS
Docket No.: 7873-01
We, the undersigned, do hereby certify that the foregoing pages, numbers 1 through 43 inclusive are the true, accurate and complete transcript prepared from the verbal recording made by electronic recording by Marilyn Franklin on May 20, 2002, before the United States Tax Court at its session in Boston, Massachusetts in accordance with the applicable provision of the current verbatim reporting contract of the Court, and have verified the accuracy of the transcript by comparing the typewritten transcript against the verbal recording.

Donna Brideau 6/6/02

Lorenzo Jones 6/6/02