Michael Gunn — Direct/Cross
224 linesMR. WATERS: Yes, sir. The State calls Michael Gunn for the in-camera hearing.
IN-CAMERA HEARING
The witness, MICHAEL GUNN, was first duly sworn and testified as follows:
COURT CLERK: Speak loudly and take a seat in the witness stand. State your whole name. Spell your last name for the record.
MICHAEL GUNN: Yes, ma'am. Michael Gunn, last name is G-u-n-n.
DIRECT EXAMINATION
BY MR. WATERS:
MR. WATERS: All right, Mr. Gunn, this is obviously an in-camera hearing to determine the admissibility of some of the testimony. Do you understand that?
MICHAEL GUNN: Yes, sir.
MR. WATERS: All right, and so I'm not going to go into all of the background and everything for purposes of this hearing, but just very quickly, where do you work?
MICHAEL GUNN: I'm a principal at Forge Consulting, and also do some lobbying work for the South Carolina Association for Justice.
MR. WATERS: Okay, and just very quickly, tell us what Forge Consulting is and what services they provide.
MICHAEL GUNN: Forge Consulting, we are a general insurance agency but also offer financial services such as structured settlements, regular annuities, deferral of attorney's fees, trusts, we do lien resolution, back office trust account reconciliation, all sorts of things for plaintiffs primarily and the families.
MR. WATERS: And then if you could just very quickly, just for the record, explain what a structure is and how that interfaces with plaintiffs' lawyers.
MICHAEL GUNN: Sure. So, a traditional structured settlement is between the parties, and that normally means between the plaintiff and the defendant or their insurer. And so usually -- it was set up in the 80's. it was can designed to help plaintiffs protect their money and to keep their money, and it can be earned tax free. Interest grows on that tax free and it's a very good tool, especially for minor children, for those that are incapacitated, disabled. Because of that growth, it can provide a steady stream of income hopefully for the rest of their lives.
MICHAEL GUNN: Yes, ma'am.
MR. WATERS: You're talking faster than I do and --
MICHAEL GUNN: I've been accused of that before.
MR. WATERS: I know you just ran over here, so --
MICHAEL GUNN: That's -- no worries, no worries.
MR. WATERS: All right. Good deal. Okay. Just pick it up from there, if you will.
MICHAEL GUNN: All right. So, essentially the structured settlement that would come primarily usually, except in very different -- very small circumstances, would come from the defendant and/or its insured to fund the annuity for the client.
MR. WATERS: Okay, and so the idea is instead of giving a settlement in a lump sum, it's in an annuity so they get regular payments over the course of the term of that annuity.
MICHAEL GUNN: That's correct, yes, sir.
MR. WATERS: And so explain to me just very quickly, again for the record, the concept of constructive receipt and how that affects structures that you may do for a plaintiff's attorney and their clients.
MICHAEL GUNN: Sure. So, constructive receipt by the IRS is deemed when the money arrives in the plaintiff's trust account, that would be considered they have received the funds and, therefore, the ability to do a structure has been taken off the table. The only way that you can do a structure after that would be to return the funds to the defendant and/or its insurer, and then therefore let the -- they would have to agree to play ball and redo all of the documents because there's so much language that's included in the documents that specifies this.
MR. WATERS: All right. So, the settlement can't go to the law firm and then to the annuity company. That will ruin the constructive receipt and ruin the tax advantages of that.
MICHAEL GUNN: It is in very rare cases that we're able to do that.
MR. WATERS: But generally.
MICHAEL GUNN: But generally speaking, correct.
MR. WATERS: So, generally your services that you provide are consulting to sort of match up the client with an annuity company, and then that money is going to -- and the settlement or whatever it is, verdict is going to go from the defendant or the insurer that's paying whatever that is, that verdict or settlement, directly to that annuity company for the benefit of that client.
MICHAEL GUNN: That is correct.
MR. WATERS: It can't go to the law firm generally.
MICHAEL GUNN: Generally speaking.
MR. WATERS: All right. How long have you been with Forge Consulting doing this work?
MICHAEL GUNN: It will be eighteen years this summer.
MR. WATERS: What is the actual full legal name of the entity that you are a part of?
MICHAEL GUNN: Forge Consulting, LLC.
MR. WATERS: Okay. Over the course of your involvement with this business, have you gotten to know the defendant, Alex Murdaugh?
MICHAEL GUNN: I have.
MR. WATERS: All right, and just very quickly, tell me the capacity in which you got to know him.
MICHAEL GUNN: It was born from a professional relationship doing work with the trials lawyers, conventions, CLEs, things of that nature, which ultimately turned into, you know, a friendship from born out of business.
MR. WATERS: Okay, and when you say friendship, was it a close friendship or more like a business relationship type of friendship?
MICHAEL GUNN: I would say a business relationship type of friendship, but one that, you know, you would text with and call on occasion and things.
MR. WATERS: Okay. Did you ever do any structures for any clients that were represented by Alex Murdaugh as a plaintiff's lawyer?
MICHAEL GUNN: Yes, we did.
MR. WATERS: And just roughly, do you remember how many?
MICHAEL GUNN: I would probably say around five.
MR. WATERS: Okay. Is -- did you ever -- what's the last one you remember at least having some discussion with him about doing a structure?
MICHAEL GUNN: The last one that I remember having a discussion with, I believe, was the Deon Martin case.
MR. WATERS: Okay, and tell me about that. Did that ever come to fruition or not?
MICHAEL GUNN: It did not.
MR. WATERS: All right, and tell me what you mean.
MICHAEL GUNN: We sent over some quotes. We got some information back from the defendant. He sent us information, a signed option, which I would assume was Mr. Martin's, sent some information back and -- annuities, you have to understand, are priced on a daily market. Sometimes that rate is good for a week or two. I sent several emails back saying hey, this rate is going to expire. We need to move forward; we need to move forward. And ultimately we ended up closing the case because we never got a response.
MR. WATERS: All right, and when you say you sent emails asking for a response, who were you sending those to?
MICHAEL GUNN: I was sending those to Mr. Murdaugh as well as his paralegal, Annette Griswold.
MR. WATERS: Okay, and so -- provided by Forge Consulting?
MICHAEL GUNN: That is correct, yes, sir.
MR. WATERS: I'm going to show you very quickly what's been marked as Exhibit 321 for this in-camera hearing and specifically direct your attention to the fifth page of this exhibit and just see if you recognize that, and then you can flip to the next number of pages, please.
MICHAEL GUNN: Yes, sir, I do.
MR. WATERS: All right, and tell us what that is. Just kind of flip through first.
MICHAEL GUNN: That's just an annuity -- it's just an annuitized payment stream showing you when the payments will be made and what the amount is.
MR. WATERS: Okay, and that's kind of the market rate thing you were talking about?
MICHAEL GUNN: Yes, sir.
MR. WATERS: All right, and what are the next documents just --
MICHAEL GUNN: The next page is a disclosure page where we list all of our disclosures, and it appears to have been signed by Dean Martin.
MR. WATERS: Okay. Keep going.
MICHAEL GUNN: Okay.
MR. WATERS: That's the only Forge related documents you see?
MICHAEL GUNN: Well, I see this. That's the only Forge related documents I see, yes, sir.
MR. WATERS: All right. Let me take that back.
MICHAEL GUNN: Yeah.
MR. WATERS: All right. I'll put these up on the screen real quick. So, that's sort of the annuity schedule. Is that correct?
MICHAEL GUNN: Yes, sir.
MR. WATERS: And this is the disclosure page you're talking about?
MICHAEL GUNN: Yes, sir.
MR. WATERS: And that is Forge generated paperwork typically?
MICHAEL GUNN: That's correct, yes.
MR. WATERS: But this particular structure was never done because you never got a response from Alex --
MICHAEL GUNN: No, sir.
MR. WATERS: -- from his office. Is that correct?
MICHAEL GUNN: That is correct.
MR. WATERS: All right. Let those sirens pass. Are you aware generally of what people call the boat wreck case, or the boat case, as it relates to the defendant, Alex Murdaugh?
MICHAEL GUNN: Generally, yes.
MR. WATERS: All right, and just, without going into specific facts, generally what was your understanding of that?
MICHAEL GUNN: There was a terrible accident that happened somewhere in the Lowcountry involving Mr. Murdaugh's son and several others, and a young girl passed away.
MR. WATERS: Were you aware that his son had been charged in that particular case?
MICHAEL GUNN: I was.
MR. WATERS: And were you aware that Alex Murdaugh had been sued in a civil matter relating to that case?
MICHAEL GUNN: I believe I was made aware through the news, yes.
MR. WATERS: Did you ever have any conversation -- well, let me ask you this first. Is it possible for lawyers to structure fees, not the client but the lawyer, if they're going to get a big fee from a large recovery and they decide they want the protection of an annuity? Can they do that?
MICHAEL GUNN: Yes, they can.
MR. WATERS: All right, and how does that work? Kind of the same thing?
MICHAEL GUNN: It's the exact same manner as if the client were doing it. The check would have to come from the insurance carrier and/or the defendant to fund the structured settlement annuity for the lawyer for their fee.
MR. WATERS: Did you ever have any discussion with Alex Murdaugh, either before or after the boat case, about structuring any fees that he had received in a case?
MICHAEL GUNN: We had general conversations about structuring fees, but it would be the same conversation I would have with any attorney like how you would do it, how you would go about doing it, and how checks would be made payable, et cetera.
MR. WATERS: Did you ever have any specific discussion after the boat case about the boat case and wanting to structure any fees?
MICHAEL GUNN: Not that I recall.
MR. WATERS: I want to take you to September 2021. Did you around that time receive a call from Lee Cope?
MICHAEL GUNN: I did.
MR. WATERS: All right. What did Mr. Cope ask you?
MICHAEL GUNN: He called and asked me if he could in confidence give me a list of cases and see if we had any files on them, and I told them that would be fine. I was standing in my driveway. I wrote them down, got back with him later that evening, and let him know that we did not have any of those cases open.
MR. WATERS: Okay. He gave you a list of clients and asked if you had any structures open for those -- or potential structures --
MICHAEL GUNN: He had asked me if we had any files at all. Generally what we will do is if an attorney calls, we will open the case immediately just so we have a name associated with the attorney.
MR. WATERS: And so he gave you a list of names. Did any of those names have any files?
MICHAEL GUNN: No.
MR. WATERS: Did he ask you about any banking that Forge Consulting, LLC, did?
MICHAEL GUNN: He did.
MR. WATERS: And what was his question to you?
MICHAEL GUNN: He asked me if we banked with Bank of America.
MR. WATERS: And what was your response?
MICHAEL GUNN: I told him that we had banked with Bank of America but had not for the last three or four years.
MR. WATERS: So, you did not have an active account with Bank of America --
MICHAEL GUNN: We did not, no.
MR. WATERS: -- in September of 2021?
MICHAEL GUNN: No, sir.
MR. WATERS: Did you have any subsequent conversations with Mr. Cope about the issues that he had raised with you?
MICHAEL GUNN: I did. He called me the following day as well, which I believe was a Thursday, with another list of cases.
MR. WATERS: All right, and what was his inquiry to you?
MICHAEL GUNN: Same inquiry. This time, the only one that popped up was the one I mentioned earlier, which was the Deon Martin case.
MR. WATERS: All right, and your response was there was a file but it was never --
MICHAEL GUNN: There was a file but it was never completed and we closed it out.
MR. WATERS: Did you ask him at this point or did -- what was going on, or why these inquiries were being made?
MICHAEL GUNN: I did not.
MR. WATERS: Did you ultimately find out what was going on and why these inquiries were being made?
MICHAEL GUNN: I found out on the Tuesday after Labor Day.
MR. WATERS: All right, and what did you find out?
MICHAEL GUNN: I spoke with Lee Cope, and he told me that Alex had been using an account called Forge to process the checks.
MR. WATERS: Is that account that he had been using, is that a legitimate Forge Consulting account?
MICHAEL GUNN: Absolutely not.
MR. WATERS: Did any of that money that went into that account go to legitimate Forge?
MICHAEL GUNN: No, sir.
MR. WATERS: Did Forge Consulting have anything to do with that particular account?
MICHAEL GUNN: No, sir.
MR. WATERS: All right. Let me show you a couple of things real quick. I show you what's been marked as Exhibit 335 to your testimony in this in-camera hearing and just have you look at that. And look at that -- particular, look at the name on that particular account.
MICHAEL GUNN: Yes, sir.
MR. WATERS: All right. What does that say?
MICHAEL GUNN: Richard A. Murdaugh, sole proprietor, DBA Forge.
MR. WATERS: All right. Is that account a legitimate Forge account?
MICHAEL GUNN: It's not a legitimate Forge Consulting account, no, sir.
MR. WATERS: Any money that went into that account, did it have any legitimate relationships with services and business that y'all provided plaintiffs' attorneys?
MICHAEL GUNN: No, sir, not at all.
MR. WATERS: I show you Exhibit 328. Do you see that check right there?
MICHAEL GUNN: I do.
MR. WATERS: It's made out to Forge?
MICHAEL GUNN: Yes, sir.
MR. WATERS: Did that come through any legitimate Forge account?
MICHAEL GUNN: It did not.
MR. WATERS: Stand by for me one second.
(Break in proceedings.)
MR. WATERS: Your Honor, to save a little time, I believe the defense is willing to concede that if we went through all of these exhibits that we introduced through Ms. Seckinger with all of those checks made out to Forge from the PMPED trust account, they, for purposes of this hearing only, they will stipulate that none of those went to a legitimate Forge account and instead went to the Bank of America DBA Richard Murdaugh DBA Forge account that he just testified is not a legitimate Forge account.
JUDGE NEWMAN: Is that right?
MR. GRIFFIN: I want to be more careful with the words. We are not contesting that issue for purposes of this hearing, that's correct. I don't want anything coming back --
JUDGE NEWMAN: Do you accept that stipulation as well?
MR. WATERS: They are not contesting that these checks all went to this particular account and did not go to a legitimate Forge for purposes of this hearing alone. I think that's acceptable to the State, Your Honor.
JUDGE NEWMAN: Yes, sir. All right. It's so stipulated.
MR. GRIFFIN: Yeah. We're not contesting this.
JUDGE NEWMAN: Yes, sir.
MR. WATERS: Not contesting it.
MR. WATERS: I just want to be real quick. 327. Is that legit?
MICHAEL GUNN: No, sir.
MR. WATERS: 326. Is that legit?
MICHAEL GUNN: No, sir.
MR. WATERS: 325. Is that legit?
MICHAEL GUNN: No, sir.
MR. WATERS: 324. Is that legit?
MICHAEL GUNN: No, sir.
MR. WATERS: 323. Is that legit?
MICHAEL GUNN: No, sir.
MR. WATERS: 322. Is that legit?
MICHAEL GUNN: No, sir.
MR. WATERS: 321. Is that legit?
MICHAEL GUNN: No, sir.
MR. WATERS: 320. Is that legit?
MICHAEL GUNN: No, sir.
MR. WATERS: 319. Is that legit?
MICHAEL GUNN: No, sir.
MR. WATERS: 318. Is that legit?
MICHAEL GUNN: No, sir.
MR. WATERS: 317. Is that legit?
MICHAEL GUNN: No, sir.
MR. WATERS: 315. Is that legit?
MICHAEL GUNN: No, sir.
MR. WATERS: And finally, 311. Is that legit?
MICHAEL GUNN: No, sir.
MR. WATERS: And by asking you not legit, did you just look at the checks in those various exhibits?
MICHAEL GUNN: I did.
MR. WATERS: And all of the ones that had Forge on them from client trust accounts, those are not checks that went to any legitimate Forge account. Is that correct?
MICHAEL GUNN: No, sir.
MR. WATERS: Is that correct?
MICHAEL GUNN: That is correct, yes.
MR. WATERS: Your Honor, I believe that's all of the questions -- I'm sorry, excuse me.
(Break in proceedings.)
MR. WATERS: Thank you.
MR. WATERS: Just really quick. At any time did you ever hand deliver any checks to Alex Murdaugh for Forge related business?
MICHAEL GUNN: No, sir.
MR. WATERS: Would that work?
MICHAEL GUNN: I would never -- I would not be delivering any checks. The only time that I would ever deliver a check would be made out to someone other than Forge who would never make a check payable to us.
MR. WATERS: But you never had any legitimate business where Alex was like hey, I'm going to be in town. I'll come by and pick up the annuity -- the check for the annuity, right?
MICHAEL GUNN: No.
MR. WATERS: Okay.
MR. WATERS: Nothing further for purposes of this hearing at this time, Your Honor.
JUDGE NEWMAN: By the defense?
MR. GRIFFIN: Just very briefly, Your Honor.
CROSS-EXAMINATION
BY MR. GRIFFIN:
MR. GRIFFIN: Good afternoon, Mr. Gunn.
MICHAEL GUNN: Good afternoon.
MR. GRIFFIN: I am sure that your Forge Consulting, LLC, has done a full investigation into this matter?
MICHAEL GUNN: Yes, sir, we have.
MR. GRIFFIN: And in that investigation, did you find in any record of this account that Bank of America and Alex Murdaugh doing business as Forge, did you see the name Maggie Murdaugh or Paul Murdaugh as cosignatories to that account?
MICHAEL GUNN: No, sir.
MR. GRIFFIN: Did you see any record, any document that Maggie Murdaugh or Paul Murdaugh had anything to do with this account?
MICHAEL GUNN: No, sir.
MR. GRIFFIN: Your company is an insurance agent. Did you ever sell any life insurance to Alex Murdaugh on the life of Maggie Murdaugh?
MICHAEL GUNN: No, sir.
MR. GRIFFIN: Did you ever sell any life insurance to Alex Murdaugh on the life of Paul Murdaugh?
MICHAEL GUNN: No, sir.
MR. GRIFFIN: All right. That's all I have, Your Honor.
JUDGE NEWMAN: Anything further?
MR. WATERS: Nothing from the State, Your Honor.
JUDGE NEWMAN: Thank you.
(The witness exited the stand.)
JUDGE NEWMAN: Call your next witness.