FRED ACEVEDO










                                      Mesa, Arizona


                                      May 10th, 2002


                                    9:37 o'clock a.m.










                         MR. PETER C. LOWN                  


                                               MaryJo Schumacher


                                               Certified Court Reporter


                                               No. 50134






                                        PAGE 2




          1                             I_N_D_E_X






          4     WITNESS                             








          8              Acevedo, Fred








         12     EXAMINATION                                         PAGE






         15              By Mr. Lown, Mr. Stone, Mr. Combs         4-123








         19                        E_X_H_I_B_I_T_S


         20     No.                                                 PAGE




         22     1          (General Tool Company letter.)            42












                                        PAGE 3




          1                     AFFIDAVIT OF FRED ACEVEDO






          4     Taken at 9:37 o'clock a.m., May 10th, 2002, in the law


          5     offices of Lown, Stone & Hilleman, 2659 East Guadalupe


          6     Road, Mesa, Arizona, before MaryJo Schumacher, a


          7     Certified Court Reporter, No. 50134, pursuant to the


          8     Rules of Civil Procedure.










         13              Present at the affidavit under oath were:  Mr.


         14     Peter C. Lown, Mr. C. Randall Stone, telephonically, and


         15     Mr. P. Douglas Combs.










         20              BE IT REMEMBERED that the witness does waive the


         21     right to read and sign the affidavit. 














                                        PAGE 4




          1                                             Mesa, Arizona


          2                                             May 10th, 2002


          3                                             9:37 o'clock a.m.




          5              MR. LOWN:  Okay.  Present today are C. Randall


          6     Stone, who's present by speaker phone, and he is the


          7     Arizona attorney representing the foundation in the


          8     arbitration litigation; myself, Peter C. Lown, and I'm


          9     the Georgia attorney representing the foundation in the


         10     Georgia litigation; and P. Douglas Combs, who is the


         11     president of the Don Luscombe Aviation History


         12     Foundation; and also, Fred Acevedo. 




         14                            FRED ACEVEDO




         16     called as a witness herein, having been first duly sworn,


         17     was examined and testified as follows:




         19                            EXAMINATION


         20     BY MR. LOWN:


         21         Q    And I'll ask Fred to give us his name and


         22     address.  Would you spell your name, Fred.


         23         A    Sure.  Fred Acevedo, A-C-E-V-E-D-O, and I live


         24     at 220 Fullerton Road, Swansea, Illinois 62226.


         25         Q    Fred, what is your present employment?






                                        PAGE 5




          1         A    I'm currently unemployed.


          2         Q    And, just as a preliminary matter, could you


          3     tell  us or reiterate how you came in contact with the


          4     Luscombe Foundation.


          5         A    My first contact with the foundation was through


          6     John Dearden. I read several excerpts from litigation


          7     that was currently in progress.  Later on, after I became


          8     a member of Renaissance Aircraft, I was asked to testify


          9     at the Arizona litigation.


         10         Q    Just recently, you contacted the foundation


         11     directly.  How did that come about?


         12         A    Right.  Recently, I contacted Doug.  I had a


         13     contract with Renaissance Aircraft giving me one percent


         14     of the company, and I wasn't sure of its validity, and I


         15     thought Doug might know.


         16                  Plus, I was aware of the judgment that


         17     Renaissance Aircraft had won against the foundation, and


         18     I wanted to know the status of that for potential


         19     litigation on my behalf.


         20         Q    The thing I want to make clear is that you


         21     actually called Doug.


         22         A    Yes, I did.


         23         Q    No one from the foundation contacted you.


         24         A    Yes.  I initiated the contact.


         25         Q    And you've come here today to Phoenix to give






                                        PAGE 6




          1     this affidavit of your own free will, without any


          2     promise, coercion, threat or promise of reward.


          3         A    That's correct.


          4         Q    I guess the first thing we would like to ask,


          5     we'll start from the most recent thing, and then go back


          6     and look at some historical events.


          7                  Would you, in your own words, give a little


          8     update on what the situation is at Renaissance today. 


          9     How is their business going?


         10         A    Renaissance has lost, I believe, seven of its 11


         11     back orders.  Customers were tired of waiting.  This


         12     caused some concern for John, of course, so he wanted to


         13     rapidly produce enough aircraft to have a media event so


         14     he could generate some new customers.


         15                  Not having all the materials, tools and


         16     equipment to produce aircraft caused a lot of shortcuts


         17     to be taken.  In particular, we used used parts on new


         18     airplanes.  The parts that we have in stock from the


         19     purchase of the Luscombe inventory, although it was


         20     claimed to be new, most of it was severely corroded,


         21     unusable or used parts.


         22                  Examples of used parts they currently use


         23     are oleo springs for the landing gear, several structural


         24     bulkheads on the aircraft that were from other airframes,


         25     and, you know, various small detail assemblies, landing,






                                        PAGE 7




          1     light assemblies, things like that.


          2                  John, I would say, for the last four months


          3     prior to my departure became irrational.  He wanted total


          4     control over all aspects of manufacturing.  He would not


          5     allow Tomas or I to reject parts that we knew were not


          6     airworthy.


          7         Q    Could I interrupt you for a minute.


          8                  While you were employed by Renaissance, what


          9     was your position there?


         10         A    I was director of quality, and I was also, at


         11     that time, in charge of production.


         12              MR. COMBS:  Can we back up for a second for his


         13     qualifications, because I would like to get that on the


         14     record.


         15              MR. LOWN:  I was going to come back to that.


         16         Q    BY MR. COMBS:  You came to Renaissance from


         17     McDonald Douglas/Boeing.


         18         A    McDonald Douglas/Boeing.


         19         Q    BY MR. LOWN:  John, why don't you give us a


         20     synopsis of your background, starting with education and


         21     work experience.


         22         A    I have a bachelor's degree in mechanical


         23     engineering from Embry-Riddle.  I have an airframe and


         24     power plant A&P license.  I have been in IA for 16 years.


         25                  I worked for Lockheed Corporation as a






                                        PAGE 8




          1     design engineer, working on programs such as the C130,


          2     C9, various European aircraft.


          3                  I went to work for McDonald Douglas


          4     Corporation as a design engineer on the F4 program and


          5     later moved to the F15 and F18.  I was project engineer


          6     for the harpoon missile.


          7                  I was laid off from McDonald Douglas in


          8     1999.  I became self-employed as an engineering


          9     consultant, and later went to work for an aircraft parts


         10     company.


         11                  And I answered a newspaper ad for


         12     Renaissance for quality manager, and that's where I met


         13     John Dearden.


         14         Q     BY MR. COMBS:  The length of time you were with


         15     McDonald Douglas/Boeing, did we get that?


         16         A    I was with McDonald Douglas/Boeing for 17 years.


         17         Q    BY MR. LOWN:  And you primarily worked as an


         18     engineer during that time?


         19         A    As an engineer.


         20         Q    BY MR. COMBS:  What production processes?


         21         A    I worked as liaison.  My job was to ensure all


         22     the parts manufactured met drawing requirements.  And,


         23     generally, drawings are not perfect, so factory people


         24     need help interpreting drawings, redesigning parts, and


         25     that was my primary position.






                                        PAGE 9




          1                  I liked what John had to say about the


          2     future of Renaissance Aircraft, and I accepted a position


          3     with him as the director of quality.


          4                  It was John's intent to hire a separate


          5     director of production, but the money was not available,


          6     so I filled both slots until my termination from


          7     Renaissance on January fourth of 2002.


          8         Q    Why did you leave?


          9         A    John and I had several disagreements, and Linda. 


         10     Linda was HR vice president.  And John was not


         11     comfortable -- we had disagreements over quality issues. 


         12     The quality manual was delayed on my behalf, because I


         13     didn't have enough information to support the data in the


         14     quality manual.


         15                  I was also performing the function of


         16     production manager, and that consumed my time from doing


         17     the quality job at the time.


         18         Q    BY MR. LOWN:  Just a few minutes ago, when you


         19     first mentioned the quality issue before we interrupted


         20     you and went back and got your qualifications, you


         21     mentioned someone else who was involved in some concerns


         22     about that.  Who was that?


         23         A    Tomas Straka.  He was director of engineering,


         24     and he is currently employed at Renaissance. 


         25         Q    Okay.  What was Mr. Straka's job?






                                        PAGE 10




          1         A    He's director of engineering, but he also has a


          2     production role.  We worked together to make sure that we


          3     can produce the parts that were required.


          4         Q    And you started to tell us about that both you


          5     and, I'll just say, Tomas had problems with some of the


          6     parts, and that you took this problem to John Dearden,


          7     and you did not get a satisfactory result.


          8                  Can you be more specific?


          9         A    Right.  As an example, the flaps.  We don't have


         10     a flap drawing, so we had to reverse engineer the flaps. 


         11     John wanted 40 degrees of travel in the flaps.  The


         12     design calls for, I believe it's 35.


         13              MR. COMBS:  Thirty, I think.


         14              THE WITNESS:  Thirty.


         15                  And that would require an STC.  And we


         16     fought with John, because we didn't have the time or the


         17     money to produce that STC, but John had it his way.  It


         18     was designed 40 in there, and to this day, it stands that


         19     way.


         20                  Another one is the chrome plating on several


         21     components on the aircraft that were not originally


         22     chrome-plated.  It could be a dangerous process.  It


         23     actually embrittled parts.  But John liked shiny parts,


         24     and John had it his way, against my objection.


         25         Q    BY MR. LOWN:  What were some of the parts that






                                        PAGE 11




          1     we're talking about?


          2         A    Control stick, fuel filler caps, flap handle


          3     mechanism.  That's a very critical part.  If that breaks


          4     in flight or during the landing, that could be a serious


          5     condition.


          6                  We had fire wall, the steel fire wall, and


          7     the company had only one available to use.  I had to


          8     produce another one from a tool that I made, but before I


          9     can prove the tool or certify the new fire wall, it was


         10     already installed on the aircraft.


         11         Q    Which aircraft?


         12         A    I believe it would be Ship No. 2.  There's


         13     Serial Nos. 1 and 2.


         14         Q    Okay.  So, you actually manufactured this fire


         15     wall, but before it could be proved -- and what do you


         16     mean by proved?


         17         A    It has to be conformed to the drawing.


         18         Q    Okay.


         19         A    And the fire wall was never conformed.


         20         Q    And John had it chromed and installed on the


         21     airplane?


         22         A    It wasn't chromed, but had it installed.


         23         Q    So it can't be conformed while it's in the


         24     airplane?


         25         A    Not anymore, no.






                                        PAGE 12




          1         Q    You mentioned these other parts were also


          2     installed in the airplanes.


          3         A    I don't know if they're installed yet.  I know


          4     they are in the process of and the parts have been


          5     chromed and will be installed in Ships 1 and 2.


          6                  Other items, we have a No. 6 bulkhead.  I


          7     believe that's the next to last bulkhead.


          8         Q    BY MR. COMBS:  I missed the number.  It's called


          9     No. 7, but it is No. 6.


         10         A    Yeah.  We manufactured those bulkheads, but the


         11     heat treatment on those bulkheads has never been


         12     certified.


         13                  The landing gear, we manufactured.  Again,


         14     the heat treatment has not been certified.


         15         Q    BY MR. LOWN:  Are these parts that have already


         16     been installed?


         17         A    Yes, these parts have been installed.


         18         Q    Which airplanes?


         19         A    Ships 1 and 2.


         20         Q    What is the extent of FAA involvement in the


         21     assembly of these airplanes?


         22         A    Well, there's two processes.  One, if you are


         23     going through the process of obtaining the production


         24     certificate, the FAA should, and most likely would, come


         25     in and do a conformity check on all the parts that you're






                                        PAGE 13




          1     doing.  And if, you know, you have a production


          2     certificate, then the company itself will certify those


          3     parts.


          4                  The other process is that the FAA could come


          5     in and certify each aircraft individually.  And that's


          6     the way the original Luscombe factory did a lot of


          7     aircraft.  But Renaissance has not done that yet.  The


          8     FAA has not come in and done the conformity check.


          9         Q    Do they have a production certificate?


         10         A    No.


         11         Q    Have they applied for a production certificate?


         12         A    Not to my knowledge.  That was my


         13     responsibility.  I turned in the quality manual to the


         14     FAA, but the application for production certificate had


         15     not been turned in.  John assumed that responsibility


         16     himself.


         17         Q    So the Q & A manual has been submitted to FAA?


         18         A    Yes.


         19         Q    Has it been returned approved?


         20         A    No.


         21         Q    So they're still reviewing it?


         22         A    Yes, that's correct.


         23         Q    And John assumed responsibility for the


         24     production certificate, but, as far as you know, there's


         25     been no such application.






                                        PAGE 14




          1         A    That's correct.


          2         Q    Did John give you any indication when that might


          3     take place?


          4         A    That was supposed to have happened in January. 


          5     But talking to several of my friends left back there,


          6     that has not happened yet, and no feedback has been


          7     obtained from the FAA.


          8         Q    My question is:  Do you know why it hasn't


          9     happened?


         10         A    John is not prepared.  One, they are in a


         11     temporary facility in Saint Charles.  The FAA will not


         12     issue a production certificate to a temporary facility. 


         13     It has to be a permanent address.  The building to be


         14     occupied is still under construction.


         15         Q    I'm kind of jumping ahead a little bit, but


         16     since we're on the subject, it was my understanding that


         17     at the arbitration hearing, there was testimony by a


         18     number of people, most particularly Kurt Jeschky, that


         19     there were actually going to be airplanes produced by


         20     December of last year?


         21         A    Yes.  I also testified to that effect.


         22                  We were -- John was trying to, I guess, use


         23     mirrors.  I believe it was in September that we commenced


         24     production on ten airframes, but what we actually did is


         25     reproduced ten details subassemblies.






                                        PAGE 15




          1                  Examples would be the horizontal stabilizer


          2     hinge assembly.  We had ten in production, so John


          3     defined that as ten aircraft in production, one per


          4     aircraft.


          5         Q    So, in September, he, or Renaissance, started


          6     production of these ten, as you described, detail


          7     assemblies.


          8         A    Yeah, details.


          9         Q    And, therefore, John defined that as ten


         10     airplanes in production.


         11                  How big are these parts we're talking about?


         12         A    They are very small.


         13         Q    What was the name of the part again?


         14         A    Horizontal stabilizer hinge assembly.


         15         Q    Just a hinge?


         16         A    A hinge, exactly.


         17         Q    So, they have ten hinges, and they represented


         18     those were the beginning of ten airplanes?


         19         A    That is correct.


         20         Q    BY MR. COMBS:  Would you consider that a


         21     misrepresentation?


         22         A    Initially, we had this magic number that was


         23     ten, and that's because we had 11 potential depositors. 


         24     But Kurt Jeschky and I and Tomas knew we could not


         25     produce ten airplanes.  We told John, and John insisted






                                        PAGE 16




          1     on ten.  So it remained ten until late December, and then


          2     that number was changed to five.


          3         Q    BY MR. LOWN:  You said that you, Jeschky


          4     and who?


          5         A    And Tomas.


          6         Q    You knew that you couldn't do ten, and you told


          7     John that.  About when did that conversation take place?


          8         A    That happened prior to our deposition in


          9     Arizona.


         10         Q    So --


         11         A    That would have been August, was it?  I can't


         12     remember the date.


         13              MR. COMBS:  It was August 15th.


         14              THE WITNESS:  Yeah, because that issue had been


         15     under discussion.


         16         Q    BY MR. LOWN:  But was it long before the August


         17     date or about the time of the August date?


         18         A    It was about the time.


         19                  If you'll recall, I only spent one day here,


         20     and the reason was, I had to get back because we had to


         21     try to get these production units going.  And we were


         22     trying to employ people, so I had people to interview to


         23     get a work force established.


         24         Q    So, to reiterate, you, Kurt and Tomas agreed you


         25     couldn't build ten airplanes.






                                        PAGE 17




          1         A    Yes.


          2         Q    And you made that known to John.


          3         A    Absolutely.


          4         Q    BY MR. STONE:  But that was known prior to the


          5     arbitration hearing?


          6         A    Yes, sir.


          7         Q    BY MR. LOWN:  And yet, everybody testified that


          8     they were going to build ten airplanes.


          9         A    Right.  That was the boss', you know, that was


         10     the word.  We're going to build ten airplanes.  And I did


         11     start producing ten subassemblies.


         12         Q    In fact, there was no realistic expectation that


         13     you could build ten airplanes.


         14         A    No, not on my part; not on Kurt's part; and not


         15     on Tomas' part.


         16         Q    So, that testimony by all of the individuals,


         17     any of those individuals that made those statements at


         18     the arbitration proceeding would be false.


         19         A    Yes.


         20         Q    Or, at the very least, grossly misleading.


         21         A    Yes, sir.  I do attest to that.


         22         Q    If I might draw an analogy.  It's sort of like


         23     me saying that I'm going to build a house because I have


         24     a door frame.


         25         A    Exactly.  Or, you know, you have ten door frames






                                        PAGE 18




          1     and ten houses.


          2         Q    And the impression that all these people gave at


          3     the arbitration was that they were going on ten airplanes


          4     with wings, motors, propellers on them, and everybody 


          5     knew that was not a realistic expectation.


          6         A    That is correct.


          7                  And, in fact, at that time, we only had one


          8     engine.  Actually, we didn't have it.  It was held by the


          9     Bank of Georgia in a vault, because they owned the


         10     engine.


         11         Q    And was this in August when the engine was in


         12     the Bank of Georgia?


         13         A    Yeah.  That engine has been at the bank for four


         14     our five years.  Well, since they started the process,


         15     the bank has owned that engine.


         16         Q    Where is the engine today?


         17         A    Renaissance has it.


         18         Q    How did Renaissance get the engine from the Bank


         19     of Georgia?


         20         A    They had to pay off the Bank of Georgia loan for


         21     the engine.


         22              MR. LOWN:  Okay.


         23         Q    BY MR. COMBS:  Well, if I can paraphrase what


         24     you just went through.


         25                  Would you be under the impression that they






                                        PAGE 19




          1     were trying to create an image of Renaissance as an


          2     ongoing operating facility that's producing airplanes? 


          3     That was the intent of the testimony in the arbitration.


          4         A    Yes, that was.


          5         Q    Was that a discussed strategy by their attorney


          6     at all?


          7         A    I am not aware of that.  I had several meetings


          8     with Eric Rowe, but they were primarily on my quality


          9     issues that I had internally.


         10         Q    BY MR. LOWN:  Explain that.  You said you were


         11     meeting with Eric Rowe regarding quality issues.


         12         A    As far as testimony, because I testified


         13     primarily about quality issues at the hearing, so he


         14     wanted to go over my background, things of that nature.


         15         Q    Did you discuss with him the problem of corroded


         16     parts?


         17         A    No.


         18         Q    And the chrome parts?


         19         A    No.  The chrome parts, this happened later on. 


         20     As I said, John, he, I think around November, December,


         21     started getting very irrational, difficult to deal with.


         22         Q    Now, you said in December, the plan or the


         23     expectation of producing airplanes was reduced from ten


         24     to five.


         25         A    Well, actually, yeah.  Officially, it was






                                        PAGE 20




          1     reduced to five.  We wanted three.  Tomas and I wanted


          2     three, because we thought we could produce three.  We had


          3     enough parts on hand; although we didn't have three


          4     engines.  We only had one engine.  Later on, a second


          5     engine was ordered from Lycoming Aircraft.


          6         Q    BY MR. COMBS:  Mr. Jeschky testified that he was


          7     ordering like eight or ten engines at the arbitration.


          8         A    Well, he discussed ordering that many engines


          9     from Lycoming to get a price break.


         10              MR. LOWN:  Can we raise our voices.


         11              THE WITNESS:  Yeah.  It was discussed to obtain


         12     ten engines from Lycoming, except they don't give price


         13     breaks.  Their price is their price.  It's retail,


         14     basically.  It's not retail.  We get about an $8,000.00 


         15     discount, but there are no further discounts from there.


         16              MR. LOWN:  What was the testimony that he gave?


         17              MR. COMBS:  He testified, from what I


         18     remember --


         19              MR. LOWN:  Do you have that?


         20              MR. COMBS:  I think I can find it quick here.


         21         Q    BY MR. LOWN:  Now, you said that the estimate


         22     was reduced to five, but when was the expected date that


         23     those five would be produced?


         24         A    That would be by December 31st.


         25         Q    And this was done in December?






                                        PAGE 21




          1         A    Yes.


          2         Q    But, in December, there were not sufficient


          3     parts.


          4         A    Right.  Early December, I knew that we couldn't


          5     do that, and Tomas knew it, but we couldn't discuss it


          6     with John because of his irrational behavior.


          7         Q    When did you actually leave?


          8         A    I left January fourth.


          9         Q    On January fourth, what was the status of the


         10     plan to produce airplanes?  How many were still being


         11     planned short term?


         12         A    Two.


         13         Q    Now, when did it get reduced to two?


         14         A    After the first of the year, John realized that


         15     we didn't have enough parts, enough parts or equipment or


         16     expertise, to produce any more, so it was reduced to two.


         17         Q    What would be the expected completion date of


         18     those two airplanes?  What was it at the time when you


         19     left?


         20         A    At that time, it would have been around March,


         21     to deliver one ship to a gentleman in Phoenix, and I


         22     can't recall his name right now.  He is a local


         23     television --


         24              MR. COMBS:  Jay Bretlinger.


         25              THE WITNESS:  Right.  He was the owner of






                                        PAGE 22




          1     Ship 1.


          2              MR. COMBS:  I've got the reference, page 851.


          3              MR. LOWN:  Why don't you read it to us.


          4              MR. COMBS:  Okay.  It's the cross-examination of


          5     Kurt Jeschky.


          6                  The question is:  "So, there's no way you're


          7     going to have ten airplanes flying by the end of the


          8     year, right?


          9                  "Answer:  That's not true.


         10                  "Question:  How are you going to get engines


         11     for the other eight?


         12                  "Answer:  I'm going to order more engines.


         13                  "Question:  Soon?


         14                  "Answer:  Yes.


         15                  "Question:  You expect to be able to get


         16     them in time?


         17                  "Answer:  I'm going to order them before the


         18     end of September, I'm mean, before the end of August,


         19     because if I don't, the price changes.


         20                  "Question:  Okay.  Thank you.


         21                  "Answer:  I've ordered two.  I'm ordering


         22     more."


         23         Q    BY MR. LOWN:  So, that was either an inaccurate


         24     statement or it was a statement that didn't come to pass.


         25         A    That was an inaccurate statement.  We discussed






                                        PAGE 23




          1     ordering ten engines, but that was a


          2     quarter-of-a-million-dollar expense, and we didn't have


          3     that kind of money.


          4                  We had an engine that we could not get out


          5     of jail, basically.  The bank had it.  Later, the money


          6     came through.  We paid the Bank of Georgia, and the


          7     engine came in.  And then, a second engine was ordered


          8     from Lycoming.


          9         Q    Then, I guess what you're saying is that, when


         10     Kurt Jeschky made that statement in August, he had to


         11     know that that was not a true statement.


         12         A    Well, he knew we didn't have money to order


         13     those parts.


         14         Q    Okay.


         15         A    Like I said, with Lycoming, it's cash.  They


         16     don't give you any terms, other than it's 30 percent down


         17     when you order, and the balance is due on delivery.


         18         Q    BY MR. COMBS:  Hold on a second.  That's


         19     interesting.


         20                  He indicated that Lycoming changed the terms


         21     because you hadn't accepted an engine previously.


         22         A    No.  Kurt had a problem with Lycoming when they


         23     were in Georgia.  They had ordered five engines, and they


         24     only accepted one, and Lycoming, of course, produced the


         25     engines.  When you order, they produce them.  So they got






                                        PAGE 24




          1     stuck holding four engines but no customer.  So Lycoming


          2     was not about to extend credit to Renaissance.


          3         Q    BY MR. LOWN:  When did that occur in Georgia?


          4         A    It was prior to my time there, but it would have


          5     been, I would say, maybe '96 or '97.


          6                  I remember reading the data tags on the


          7     engine that I received in Cape Girardeau, and the engine


          8     was approximately four years old, so it had been stored


          9     for four years.


         10         Q    So, that would have been around '98, actually.


         11         A    Yeah.


         12         Q    So, somewhere around '98, the story is that they


         13     ordered five engines but only accepted one.  And what was


         14     the reason they only took the one engine?


         15         A    They didn't have money.


         16         Q    They didn't have the money.  And that was back


         17     in '98.


         18         A    Correct.


         19         Q    Now, earlier, we were talking about your role as


         20     quality assurance and in production, and you talked about


         21     the chrome parts problem and the fire wall.  But you also


         22     had made mention about some parts that were used, part or


         23     parts, from the inventory in Michigan, the quality of


         24     which was not up to speed.


         25                  Could you tell us more about that?






                                        PAGE 25




          1         A    Right, most of the parts from Michigan.


          2         Q    Let's talk about, you said, used parts first.


          3         A    Right.  This is all tied together.  The


          4     inventory from Michigan included used parts, and what


          5     they called new parts, parts that had been in storage for


          6     several decades, I have to assume.


          7                  When we tried to use the new parts, we found


          8     they were mostly corroded and unusable.  The only parts


          9     that we did wind up using were several used parts that


         10     had already been installed in the airframe or


         11     subassembly, and we didn't have any new parts to use.  We


         12     didn't have the tools to produce new ones, so we used the


         13     old ones.


         14         Q    What you're saying is the inventory that came


         15     from Michigan, as to what you saw, did include use parts


         16     that were not part of the original new parts production?


         17         A    That is correct.


         18         Q    Do you know the origins of those used parts?


         19         A    I don't know.  I remember having a tail cone


         20     assembly, an upper cabin structure assembly, a lower


         21     cabin structure assembly, several landing gear oleo


         22     spring assemblies.  These must have been acquired by


         23     Mr. Larsen somewhere during that period of time.  It was


         24     included in the inventory that Renaissance got.


         25         Q    Have these parts been actually installed in any






                                        PAGE 26




          1     airplanes to date?


          2         A    I cannot tell you which airplane or -- as far as


          3     now?


          4         Q    Yes.


          5         A    They have been installed in Ships 1 and 2.


          6         Q    These used parts have been installed in these


          7     two new production airplanes?


          8         A    Yes.


          9         Q    Were there any questions regarding the


         10     serviceability of these parts that were unresolved?


         11         A    Well, I was not part of that production, because


         12     I left the production effort.


         13         Q    So, that was done after you left?


         14         A    Right.


         15         Q    How do you know it was done?


         16         A    Because I still maintain contact with some of


         17     the people at Renaissance.


         18         Q    So, you were told by people who were still


         19     employees that used parts were put into the new


         20     production airplanes.


         21         A    Uh-huh.


         22         Q    Do you know if they were identified as new used


         23     parts, or were they identified as new parts?


         24         A    They were identified as new parts.


         25         Q    How come the FAA isn't aware of this?






                                        PAGE 27




          1         A    The FAA has not performed a conformity


          2     inspection of Renaissance yet.


          3         Q    How is the FAA going to establish that?  You


          4     mentioned earlier your extensive experience.  I'm not


          5     that knowledgeable.


          6                  How does the FAA do the conformity


          7     inspection of these when they're already installed?


          8         A    In theory, FAA can still have access to the


          9     parts.  They are supposed to go in and check all the


         10     details, check all the records.  They can check


         11     subassemblies currently in production and verify they


         12     meet drawing requirements, but it is very easy to get


         13     that past an inspector.


         14         Q    So, when the FAA goes to look at these two


         15     airplanes, these used parts, they're going to be told


         16     they're new parts.


         17         A    They're not going to be told that they're new.  


         18     They're going to be led to assume that.


         19         Q    They are not going to be identified as used


         20     parts?


         21         A    Correct.


         22         Q    What kind of audit trail for acquisition of


         23     those parts is going to exist?


         24         A    They are going to show they are part of the


         25     previous inventory from Larsen, and no used parts are






                                        PAGE 28




          1     identified on the Larsen inventory.


          2         Q    There are holding out the Larsen inventory as


          3     all new/old stock, and they are not going to tell the FAA


          4     that there were, in fact, used parts in that inventory?


          5         A    Correct.


          6                  The way I was going to certify the parts, I


          7     had a two-tier system.  One, I was going to produce new


          8     parts, and those would be 100 percent conformity check. 


          9     Then I had the Larsen inventory, which I was to provide


         10     the FAA with a complete inventory list of those parts,


         11     and they would evaluate that to see if they needed to be


         12     recertified or not, because they were supposed to be done


         13     previous.


         14         Q    BY MR. STONE:  The direction to handle it in


         15     that manner, did that come from John Dearden?


         16         A    No.  That came from Jane Dorsey.  She was MIDO


         17     in Kansas City.


         18         Q    BY MR. LOWN:  We are talking about two different


         19     things.


         20                  The procedure to provide that information to


         21     the FAA was an instruction from the FAA.


         22         A    Correct.


         23         Q    But, when you're talking about allowing the FAA


         24     to think that the used parts were actually old/new stock,


         25     that didn't come from the FAA.






                                        PAGE 29




          1         A    No, absolutely not.


          2         Q    Who gave that instruction?


          3         A    That was not verbally given.  That was implied


          4     by John, because John was directing the production effort


          5     by this time.


          6         Q    So, he had taken over the production effort, and


          7     that's what he directed.


          8         A    Yes.


          9         Q    So, in essence, these airplanes, if they are


         10     completed and certified by the FAA, it would be done,


         11     really, on a fraudulent basis.


         12         A    Right.  Now, the FAA does not necessarily have


         13     problems with used parts, as long as they're airworthy.  


         14     As a customer, your aircraft should have all new parts.


         15         Q    Anybody who invested in Renaissance or provided


         16     financing for the production of new airplanes, are they


         17     going to know that used parts are being used in some of


         18     these airplanes?


         19         A    There's no document that I know of that has


         20     that.


         21         Q    You said a lot of Larsen's parts were


         22     unserviceable.


         23         A    Yes.


         24         Q    Is it your impression that those unserviceable


         25     parts are clearly not going to be used?






                                        PAGE 30




          1         A    I separated them from the inventory.  They were


          2     so badly corroded that they were obviously defective, and


          3     you couldn't use them.  They should have been thrown


          4     away, but they were separated.


          5         Q    Why weren't they thrown away?


          6         A    There was historical value to some of them, and


          7     some of them were marginal, so they could have been


          8     repaired and used on aircraft that was either painted or


          9     appearance was not an issue.


         10              MR. LOWN:  Randall, do you have anything in this


         11     area?


         12         Q    BY MR. STONE:  You said John Dearden implied 


         13     the conduct you're talking about.  How did he do that?


         14         A    Well, he was directing the production effort, so


         15     he would tell the production people which parts to use. 


         16     Example, if we didn't have a bulkhead, we don't have a


         17     bulkhead tool, like a No. 4 ring, which was probably the


         18     largest bulkhead on the airframe, if the only one


         19     available was a used bulkhead, that's what they used.


         20         Q    BY MR. LOWN:  Correct me if I'm wrong, Fred, but


         21     what you're saying is that's at the point at which John


         22     simply took over production and gave these instructions


         23     directly to employees.


         24         A    That's correct.


         25         Q    When did that occur?






                                        PAGE 31




          1         A    It must have been, I would say, early December. 


          2     John realized that I was very busy.  My job became more


          3     producability.  I had to figure out how to get parts


          4     made, because we had no parts.  So John placed Kurt


          5     Jeschky in charge of production.  Kurt became vice


          6     president/general manager of production.  I can't recall


          7     the exact title, but however, John was directing the


          8     effort.  Kurt is still busy doing financing.


          9         Q    BY MR. COMBS:  Let me back up here.  I've got


         10     something.


         11                  For the Larsen parts that you were talking


         12     about, you testified that you were going to have the FAA


         13     review them in order to conform.  There was never an FAA


         14     review of those parts.


         15         A    No, FAA never reviewed them.  They are still


         16     waiting for the list of all the parts to be conformed.


         17         Q    Did you ever send it to them?


         18         A    No.  That was part of the last package for the


         19     quality manual.


         20         Q    BY MR. LOWN:  If I may interrupt.


         21                  We're talking about preparing the list of


         22     these parts for the conformity inspection by FAA, and


         23     you're saying at the time you left in early January of


         24     this year, that list had not even been sent to FAA.


         25         A    The list was prepared, the parts were






                                        PAGE 32




          1     identified.  The Larsen parts, of course, had the


          2     standard Luscombe part number, the Renaissance parts had


          3     an "R" in front to distinguish one from the other.


          4         Q    But when was that list prepared?


          5         A    I started the process in early November to


          6     produce the list.


          7         Q    Now, did you and the other principal people,


          8     Tomas, John Dearden and Kurt Jeschky, know back in


          9     August, at the time of the arbitration proceeding, that


         10     you would have to prepare that list and send it to FAA?


         11         A    Yes.


         12         Q    At the time of the testimony, that hadn't even


         13     been prepared.


         14         A    Well, John was aware we had to conform those


         15     parts.


         16         Q    But no steps had been taken to complete that


         17     process.


         18         A    Correct.


         19         Q    BY MR. COMBS:  At the time of the arbitration,


         20     you didn't know whether those parts would be usable or


         21     not usable for production.


         22         A    That's right.  And that's what actually gave us


         23     a surprise, because we thought that there were a lot of


         24     parts available.  John had quoted to me that he had over


         25     80 percent of all the new parts needed to produce






                                        PAGE 33




          1     aircraft.  Based on that, I generated a production


          2     schedule.  They had 80 percent of the parts, and to make


          3     20 percent more, that was no big deal.


          4                  We went back and started doing inventory,


          5     and I found most of the parts were junk.


          6         Q    And that inventory was after the arbitration.


          7         A    Yes.


          8         Q    BY MR. LOWN:  Prior to the arbitration, John


          9     represented that he had the parts.


         10         A    Yes.


         11         Q    How did he indicate to you he came to that


         12     conclusion?


         13         A    Well, from the discussions with Kurt Jeschky,


         14     Kurt was aware that the parts, a lot of the parts, were


         15     unusable, and he recommended to John that the parts be


         16     either thrown away or sent back to Larsen.  However, John


         17     decided to keep the parts anyway.  He kept them in the


         18     inventory.  I believe that was for the purpose of


         19     obtaining financing.


         20         Q    Okay.  So, Kurt Jeschky informing John that


         21     those parts could not be used in production, that took


         22     place prior to August?


         23         A    That took place prior to my employment at


         24     Renaissance.


         25         Q    What was your start date again?






                                        PAGE 34




          1         A    I started August -- I'm sorry, April first of


          2     2001.


          3              MR. COMBS:  Should have been a clue.


          4              THE WITNESS:  This took place back in Georgia,


          5     and Kurt had remarked to me how he was unhappy that he


          6     carted all these parts from Georgia to Missouri, and we


          7     shouldn't have.  It was a great effort to pack them and


          8     reinventory them.


          9         Q    BY MR. LOWN:  So, you believe that the reason


         10     John kept them in the inventory was for the purposes of


         11     representing to potential lenders or investors that these


         12     were valuable items?


         13         A    That we had inventory.


         14         Q    Did Kurt tell you that?


         15         A    No.  But that's an assumption that I have to


         16     make, because there was no other value for those parts.


         17         Q    Do you know if John ever made any


         18     representations to potential lenders, potential investors


         19     or to state authorities who were involved in development


         20     funds regarding those inventories?


         21         A    I don't know if he made any representations, but


         22     I do know that Kurt put a value on the inventory.


         23         Q    When was that done?


         24         A    That was done the middle of 2001.


         25         Q    Do you know if that appraisal was provided to






                                        PAGE 35




          1     any of these finance forces?


          2         A    I don't know, because I wasn't involved in the


          3     banking and financing discussions.


          4         Q    How about the State of Missouri?


          5         A    I am not sure of that.  I do have some


          6     information pertaining to the proposal from the state


          7     and, of course, the bond issue.


          8         Q    Getting back to current airplanes that are in


          9     production, you mentioned they didn't have the money to


         10     buy all the components.  What about the radios and


         11     instruments and all of these parts that are going into


         12     these airplanes?  Where are they coming from?


         13         A    They didn't have money for radios.  The first


         14     set of radios for Bretlinger, he purchased and he


         15     delivered to Renaissance himself.


         16         Q    And where are those radios now?


         17         A    I believe they are installed on aircraft


         18     9912 Charlie, which is John Dearden's airplane.


         19         Q    So, Bretlinger's radios are in John Dearden's


         20     airplane?


         21         A    That is correct.


         22         Q    And the first airplane is going to Bretlinger,


         23     so I presume they will take them out of John's.


         24         A    I have to make that assumption.


         25         Q    Right now, it's installed in John's airplane.






                                        PAGE 36




          1         A    Right.


          2         Q    What's the status of John's airplane?


          3         A    John's airplane, which is 12 Charlie, was


          4     completely torn apart.  It was going to be used to test


          5     the brake STC.  It was going to be used for testing the


          6     seat belt shoulder harness STC and the new instrument


          7     panel installation.


          8                  They were going to do a pull test on it. 


          9     They did a pull test on it.  I don't know how much


         10     structural damage was performed.  A pull test was done on


         11     12 Charlie, and I have to assume it was prepared after


         12     the pull test, and 12 Charlie was basically completely


         13     torn apart, and it had to be put together again to make


         14     it flyable.


         15         Q    Why was it disassembled?


         16         A    It was a lot of issues.  Every time John needed


         17     to see how something was put together, 12 Charlie was


         18     pulled apart as a show-me type of example.


         19         Q    BY MR. COMBS:  That was the factory example?


         20         A    Yeah.  We called that one our pig.


         21                  Like I said, the landing gear or the brake


         22     installation STC has not yet been approved, so it will be


         23     tested on 12 Charlie.


         24                  (Whereupon a short recess took place.)


         25         Q    BY MR. LOWN:  Fred, when you came to work in






                                        PAGE 37




          1     April of 2001, what were you told about the tools, dies


          2     and the parts as far as where they came from?


          3         A    Well, John initially told me that the company


          4     owned the tools, all the tools, and approximately 80


          5     percent of all the parts required to produce airframes. 


          6     And, based on that, you know, I was elated, because it


          7     made my job so much easier.


          8                  However, later on, I found out that more


          9     than 50 percent of the parts were totally unusable, the


         10     rest were questionable, and the tools were in dire need


         11     of repair.  We have very few tools that were actually


         12     usable.


         13         Q    BY MR. COMBS:  Had they not spent a ton of money


         14     in Georgia to repair them?


         15         A    They spent a ton of money to arrest further


         16     corrosion, but there was no effort to repair the tools. 


         17     I wound up doing a lot of repairs myself.


         18         Q    BY MR. LOWN:  We're talking about the tools and


         19     dies as separate or all together?


         20         A    All together.


         21                  And by tools, I mean fixtures, blanking


         22     dies, forming dies, templates, that kind of thing.


         23         Q    But you said that John told you that he owned


         24     the tools.


         25         A    Well, he told me the company owned the tools. 






                                        PAGE 38




          1     Not till later on did I found out that the tools were


          2     leased from Larsen.


          3         Q    When was it that John told you that?


          4         A    It must have been prior to my hire date.  We had


          5     an interview about two months before I hired, and we


          6     discussed the future of the company and what my role in


          7     the company was going to be.


          8         Q    Okay.


          9         A    And, you know, what I was expected to do.  And,


         10     of course, I asked what did he have for me that would


         11     allow me to do the job.


         12         Q    Was there anyone else present during these


         13     conversations?


         14         A    No.  I did meet separately with Linda Dearden,


         15     mainly to discuss HR issues.  As far as technical issues,


         16     I discussed them just with John.


         17         Q    Did he tell you where the tools came from at the


         18     time?


         19         A    No.


         20         Q    He didn't tell you any information about the


         21     source?


         22         A    No, I had no source information.  I learned more


         23     about the source of the tools from Kurt.


         24         Q    When did that occur?


         25         A    It was after April.  I came in and the company






                                        PAGE 39




          1     was still officially in Georgia.  All I had was that list


          2     in Cape Girardeau.  Kurt gave me a bunch of information


          3     to read, the history of the Luscombe, technical


          4     literature  on the Luscombe, that kind of thing.  I did


          5     get a list of tools, and that's when I found out the


          6     tools were a purchase/lease agreement.


          7         Q    How did you find out that it was a


          8     lease/purchase agreement?


          9         A    I was reading some documents.  In fact, it's on


         10     a business plan that was given to me.


         11         Q    And in there it indicated that they were leased?


         12         A    It indicates that they have a lease, a 12-year


         13     lease, from John Larsen at $2,000.00 a quarter, with an


         14     option to purchase the tools at the end of the lease.


         15         Q    Did you discuss the lease or the status of these


         16     parts with anyone?


         17         A    No.


         18         Q    You just learned it from documents you were


         19     reviewing?


         20         A    That is correct.


         21         Q    And this was never actually discussed with John


         22     Dearden or Kurt?


         23         A    No, I never raised the issue.  I read the


         24     document, and the tools were available to me.  That was


         25     my interest.  I had the tools, and they were leased, so






                                        PAGE 40




          1     the company had full use of the tools.


          2         Q    Do you know, of your own knowledge, whether John


          3     Dearden or Kurt Jeschky ever represented to anyone else


          4     that the status of these tools were leased versus owned?


          5         A    No.  But frequently, when a customer would come


          6     around or a potential investor, John would assert that we


          7     owned all the tools to produce the aircraft.  He didn't


          8     say lease; he said we owned.


          9         Q    Can you remember any specific occasions?


         10         A    I can't remember names, but we've had potential


         11     customers that would, you know, come in and have a tour


         12     of the plant, and I would take them through our tool


         13     inventory area, and it would be portrayed as ours, our


         14     tools.


         15         Q    When you say portrayed, John would be present?


         16         A    Oh, yeah, he was always present.


         17         Q    And he would tell this person in your presence


         18     that those tools belonged to Renaissance?


         19         A    Yes.


         20         Q    Do you remember any investors?


         21         A    I do, but not names, because I was briefly


         22     introduced to someone as director of quality, and I would


         23     give them a quick overview of our quality program.


         24         Q    How about any representatives from the State of


         25     Missouri?






                                        PAGE 41




          1         A    I have met with Mr. Sean Hagner.


          2         Q    Can you spell that?


          3              MR. COMBS:  H-A-G-N-E-R.


          4         Q    BY MR. LOWN:  You were present during a meeting


          5     with Mr. Hagner?


          6         A    I was present during several meetings with


          7     Mr. Hagner, primarily when we were discussing the


          8     building project, since the state had a vested interest


          9     in it.


         10         Q    Was there discussion regarding the status of the


         11     tools and parts during any of those meetings?


         12         A    To the extent that we were asserting that we


         13     needed a building to store our parts, to protect our


         14     tools, never to protect our leased equipment as such.


         15         Q    So, he at least referred to the equipment in a


         16     way that would cause Mr. Hagner to believe they were


         17     owned.


         18         A    Yes, I believe so.  I believe everyone in the


         19     city, as far as the city management that dealt with us,


         20     assumed that we owned all the property that's located


         21     currently at the airport.


         22              MR. LOWN:  Okay.  I would like you to take a


         23     look at a letter from General Tool, which we're going to


         24     mark as Exhibit 1.        


         25                  (Whereupon Exhibit No. 1 was marked for






                                        PAGE 42




          1     identification.)


          2         Q    MR. LOWN:  And that is a letter from General


          3     Tool dated June 7th, 2000, which appears to be an


          4     appraisal of tooling and dies.


          5                  Are you familiar with this letter?


          6         A    Yes.  That letter was presented to me by Kurt


          7     Jeschky.


          8         Q    In what manner or what purpose was it presented


          9     to you?


         10         A    It was presented to me to give me an overview of


         11     my resources within the company.


         12         Q    Okay.  Would you take a look at the values


         13     placed on the equipment.


         14         A    (Witness complies.)


         15         Q    Let's first take a look at the tooling.  And, if


         16     you've had a chance to inspect those, would you give me


         17     your thoughts about whether or not those values are


         18     realistic.


         19         A    I've looked at this letter several times, and I


         20     felt that the values are highly inflated.


         21         Q    Okay.  As far as the tooling is concerned, it


         22     lists the estimated current value at 200,000 to


         23     $250,000.00.


         24                  What do you think that equipment might be


         25     worth?  And that's separated from the dies.






                                        PAGE 43




          1         A    Right.  The tools, if I had to go out and


          2     purchase -- I would say they're probably worth around


          3     $50,000.00.  They are highly corroded.  They are not


          4     reparable.  The replacement value would be high, what you


          5     would have to pay today.  But the current value is highly


          6     inflated.  I would say about $50,000.00 is what we have.


          7         Q    The dies estimate the current value at seven to


          8     ten million dollars.


          9                  What would be your observation there as to


         10     what the true value would be?


         11         A    Well, without being a die engineer but knowing


         12     what I have, most of the tools are unusable, and we're


         13     talking tools and dies.  I use the words interchangeably.


         14                  Most of the dies are unusable.  Every one of


         15     them requires repair prior to use.  I would not value


         16     that entire inventory at more than a half a million


         17     dollars.


         18         Q    Now, if you're going to build large numbers of


         19     airplanes, given some of the projections that Mr. Dearden


         20     had made, in excess of a hundred units per year, how are


         21     you going to do that with these dies if they are not


         22     serviceable?


         23         A    Well, I've read the projection from John of as


         24     many as 1500 airplanes per year, and I know that is


         25     impossible.






                                        PAGE 44




          1                  John's assertion comes from the original


          2     Luscombe factory, and I'm sure they had multiple tools in


          3     use.  We have one tool.  It can only be used by one team


          4     of employees at a time.  So, I seriously doubt that we


          5     could have built more than one airplane a week.


          6         Q    Your estimate would be about 52 airplanes a year


          7     would be the most.


          8         A    Yeah, with the current tools.


          9         Q    Many of these tools in their current state, are


         10     they usable?


         11         A    They are not usable.  The tools that I did use,


         12     I had to repair.


         13                  Examples are some of the cutting dies are no


         14     longer usable because they are not sharp.  They are


         15     pitted, and they have to be reground.  That requires


         16     specialized machinery to regrind them.  So we have to


         17     hand route parts to create blanks.  That's time


         18     consuming.  The forming dies are not usable.  We hand


         19     form a lot of parts.


         20                  Some of the tools are missing, such as the


         21     fire wall forming tool is missing, the No. 4 bulkhead


         22     forming tool is missing.  They're very large tools.  All


         23     the tools for forming the skin, the compound curvature


         24     tools are missing. 


         25         Q    You mentioned the compound curvature tools for






                                        PAGE 45




          1     the skin, you said they are all missing.


          2         A    All missing.


          3         Q    Do you know how Renaissance intends to produce


          4     those parts?


          5         A    They are currently purchasing those parts from


          6     Univair.


          7         Q    Do you know how Univair is producing those


          8     parts?


          9         A    Yes, I do.  Univair has their own tools, some of


         10     them.  They have a hammer forge they have to stretch


         11     form.  They apparently, at one time, obtained duplicate


         12     copies of the tools, or they created their own tools.


         13         Q    Are the cost estimates that Mr. Dearden used in


         14     his marketing, and various other proposals, based on the


         15     cost of acquiring those parts from Univair or based on


         16     producing them yourself?


         17         A    They were based on in-house production.


         18         Q    So, you're saying that the cost estimates


         19     pertaining to these skin areas, production of these


         20     skins, is based on in-house production, but you don't


         21     have the tools.  They don't exist.


         22         A    That is correct.


         23         Q    Did John Dearden know that in August of last


         24     year?


         25         A    Yes.






                                        PAGE 46




          1         Q    I mean, they don't exist.  He's known it all


          2     along.


          3         A    I take that back.  John Dearden knew he didn't


          4     have the tools, but he thought he had parts.


          5         Q    I see.


          6         A    He had the Larsen inventory.


          7         Q    But that inventory at best was still limited.


          8         A    Well, that inventory was all corroded.  We


          9     couldn't use any Larsen parts for those particular tools.


         10         Q    Were these skin-forming tools simply corroded,


         11     or they simply didn't exist at all?


         12         A    They don't exist at all.


         13         Q    Do you know what happened to the original ones?


         14         A    No.  Our best guess is they are probably buried


         15     somewhere in Michigan.


         16         Q    But, as far as you know, Renaissance has never


         17     had any critical skin-forming tools.


         18         A    No.


         19         Q    Is the cost of procuring these parts from


         20     Univair significantly higher than in-house production?


         21         A    Absolutely.  A typical part that we can make for


         22     $50.00 would cost about $400.00 from Univair.


         23         Q    We're talking eight times as expensive.


         24         A    Yes.


         25         Q    And the projections of the costs that






                                        PAGE 47




          1     Mr. Dearden and Mr. Jeschky presented at the hearing,


          2     then, were totally unrealistic.


          3         A    They were very fictitious.  I had made my own


          4     estimate of what it cost to build the airplane.


          5         Q    I'm going to save that for later.


          6                  Do you know if these parts, the former


          7     Larsen inventory and the tools and dies, are currently


          8     pledged as collateral or security for any loans or


          9     financing of any type?


         10         A    I don't know.  I don't know that for a fact, you


         11     know.  I've heard that.


         12         Q    What have you heard?


         13         A    They were pledged as collateral for loans.


         14         Q    Which loans?


         15         A    I believe the DED loan, which is the development


         16     loan with the State of Missouri.


         17         Q    Any other loans that you know about?


         18         Q    BY MR. COMBS:  What about the action-fund loan?


         19         A    The action-fund loan, yes.  And also, I believe


         20     they were pledged as collateral to the Bank of Eastman.


         21         Q    BY MR. LOWN:  Have you seen any of the proposal


         22     guidelines from the State of Missouri before?


         23         A    No, I never have.


         24         Q    At the meeting that you had with these people in


         25     Missouri, did you discuss any of this stuff?






                                        PAGE 48




          1         A    We discussed the purpose of the money.  The bond


          2     issue was a very trying time, because it took so long to


          3     issue the bond.  So, I participated in some of the


          4     meetings for release of the bond.


          5         Q    The question about the bond issue, if I may go


          6     there.


          7                  There was an allegation that there were some


          8     packages sent to Missouri, with regards to that, that had


          9     delayed the bonding or funding in Missouri.


         10                  Were you familiar with that?  Was that


         11     discussed in any of those meetings?


         12         A    Yes.


         13         Q    What was the discussion with the people about


         14     that property?


         15         A    What I remember, from either the meetings or


         16     some side discussion with John, was the state was


         17     concerned over the status of the litigation with the


         18     tools.


         19         Q    Was the state aware of the litigation involving


         20     tool title?


         21         A    I am not certain of that, but I knew the state


         22     was aware of the litigation, and there were


         23     communications between Mr. Rowe and the state concerning


         24     that.  At some point, it was cleared, and the state


         25     released the bond issue.






                                        PAGE 49




          1         Q    You're saying they had significant discussions


          2     with Mr. Rowe?


          3         A    Eric Rowe.


          4         Q    Do you know whether any documents transpired out


          5     of that?


          6         A    None that I'm aware of.


          7         Q    Okay.  But he appeared to be able to smooth over


          8     the questions with this thing?


          9         A    Yeah.  The issue was resolved, and the state


         10     released the bond issue.  The bonds were sold.


         11         Q    The bonds were sold to build the building?


         12         A    Yes.  The building is currently under


         13     construction.


         14         Q    Do you have any impression as to -- I mean, I'll


         15     give you a little background.


         16                  We're under the impression that various


         17     people, specifically, probably, Mr. Dearden and their


         18     attorneys, as long as a year ago, represented to the


         19     State of Missouri that the Georgia litigation was going


         20     to be over and done with.


         21                  Did you ever have any conversations with


         22     anybody regarding that?


         23         A    Well, I've always heard John discussing it, and,


         24     of course, my impression was that the Georgia litigation


         25     was a done deal.  It was going to be dismissed, and it






                                        PAGE 50




          1     just kept dragging on.


          2         Q    And you heard that from John himself, that it


          3     was going to be dismissed?


          4         A    Yes.


          5         Q    From your meetings with John and various people


          6     with the State of Missouri, what do you think their


          7     impression of the situation in Georgia was?


          8         A    They were concerned initially, and, of course,


          9     they held back the money until they got a warm fuzzy.  At


         10     some point, the issue was resolved as far as the state


         11     was concerned, because they released the bond.


         12         Q    BY MR. COMBS:  Do you know when that was?


         13         A    I would have to guess around November, because I


         14     was also project manager for the building, another one of


         15     my little hats.


         16         Q    You had a lot of hats.


         17         A    So I would attend meetings with the city as far


         18     as building construction, and I would meet with the


         19     architects, and I couldn't get anything done because the


         20     bond had not been released, and not until late November,


         21     the issue was released and would release bids for the


         22     building.


         23         Q    BY MR. LOWN:  You don't know what the triggering


         24     event was, though?


         25         A    The triggering event was the state received






                                        PAGE 51




          1     documentation from John's lawyer that the Georgia issue


          2     had been resolved.


          3         Q    How do you know that?


          4         A    Because those were the preconditions from the


          5     state.  They would not release the bond.  The state


          6     attorney would not release the bond until that issue was


          7     resolved.


          8         Q    The state received documentation from John's


          9     attorneys?


         10         A    Yes.


         11         Q    And that happened sometime in November?


         12         A    Sometime in November.


         13         Q    Have you any idea what that documentation was?


         14         A    I don't know.  I would assume it was a letter


         15     from John's attorneys that would appease what the


         16     concerns were from the state.


         17         Q    And which state agency was it?


         18         A    That was the Missouri Development --


         19         Q    DED?


         20         A    Yes.


         21         Q    There was an article a couple of months ago in


         22     the "Southeast Missourian" saying that the Georgia


         23     litigation had been resolved.  Do you know anything about


         24     the origins of that article?


         25         A    Well, John had an interview with a reporter from






                                        PAGE 52




          1     the "Missourian" which I know didn't go well, because he


          2     demonized several of the city officials and, you know,


          3     that didn't help.


          4         Q    This was actually a later article.  Do remember


          5     that article?


          6         A    Yeah.  Even I caught hell on that.  I was very


          7     close to the airport manager.


          8         Q    But, getting back to this triggering event in


          9     November, who led you to believe that it was something


         10     from John's attorneys that led to that?


         11         A    Well --


         12         Q    Do you have a name?  Was there someone you


         13     talked to?


         14         A    Those issues were discussed informally, almost


         15     on a daily basis, you know, at meetings.  And John, of


         16     course, had all the data.  John and Kurt were the primary


         17     custodians for the company.  But we would hear bits and


         18     pieces of what was going on.  Tomas and I were never key


         19     players in the financial side of the house.


         20         Q    This, I think, is a little off the area of the


         21     Georgia litigation, but I just kind of have to ask you.


         22                  You talked a little bit about the current


         23     status of the company.  Now they've got this building


         24     that is in a state of completion.  At this point, where


         25     does the building stand?






                                        PAGE 53




          1         A    The shell is erected, and I believe the roof is


          2     installed, so now they are working on the infrastructure.


          3         Q    When is Renaissance projected to move into that?


          4         A    I don't know the exact date, but initially, we


          5     were supposed to have moved in there in October of 2001,


          6     and that date got rolled because the construction didn't


          7     start until March, I believe.


          8         Q    Now, you told me earlier that the FAA would not


          9     issue a production certificate to an entity that was not


         10     in a permanent structure.


         11         A    That is correct.


         12         Q    So, moving into a permanent building was a 


         13     prerequisite for getting the production certificate.


         14         A    Yes.


         15         Q    And, in August, at the time of the hearing, the


         16     building hadn't even begun.


         17         A    That is correct.


         18                  However, the FAA can still provide a


         19     certificate of airworthiness through a different


         20     technique on a temporary basis, and that's what we were


         21     counting on.


         22         Q    But that didn't happen, either.


         23         A    No, that didn't happen.


         24         Q    And the reason it didn't happen was because


         25     there were no airplanes.






                                        PAGE 54




          1         A    There were no airplanes.


          2         Q    So, where does Renaissance stand today?  Their


          3     projection is they are now going to move into the


          4     building when?


          5         A    I think sometime in early summer.


          6         Q    And how are their finances?  Are they going to


          7     be able to move in and set up production?


          8         A    I don't believe they have the money to do that. 


          9     They can certainly move in, but they don't have enough


         10     money to purchase equipment and hire new people.


         11         Q    How do you know that?


         12         A    Well, they stopped paying salaries last week,


         13     and, of course, when I was there, they cut all the staff,


         14     all the management staff, salary because they couldn't


         15     meet the rest of payroll.


         16         Q    So, you're talking about in December.  When did


         17     they cut?


         18         A    Actually, salaries started being cut back even


         19     before the August litigation.


         20         Q    Was your salary cut prior to August?


         21         A    Yes.


         22         Q    And what was that percentage-wise?


         23         A    Fifty percent, initially.


         24         Q    And they did that because they were running


         25     short of money, even back in the pre-August time frame?






                                        PAGE 55




          1         A    Running short or had no money.


          2                  Tomas worked without salary for nine months,


          3     I believe.


          4         Q    What's the date of your information?  When did


          5     you last talk to him?


          6         A    Last week.


          7         Q    And is he still not getting paid?


          8         A    Oh, yeah, he's not getting paid.


          9         Q    So, we're talking really around the middle of


         10     last year, they stopped paying him.


         11                  How is he living?


         12         A    He's been living on plastic all this time.  But


         13     Renaissance owes him probably 80,000 or $90,000.00 in


         14     back pay, and several other gentlemen, too.  And a


         15     gentleman that worked for me, he was kind of like an


         16     all-around mechanic, they owe him 800 hours of salary.


         17         Q    Are these hourly wages?


         18         A    He is hourly, yes.


         19         Q    BY MR. STONE:  What's his name?


         20         A    His name is John Ellis.


         21                  I talked to him yesterday, and he is owed


         22     800 hours of back pay.


         23         Q    BY MR. LOWN:  Are there any other employees who


         24     are hourly paid that are owed money?


         25         A    Myself.






                                        PAGE 56




          1         Q    How much do they owe you?


          2         A    They owe me about $8,000.00 from prior months.


          3         Q    How about other hourly employees?


          4         A    As far as I know, hourly wages, they were not


          5     paid last week.  This is as of yesterday.


          6         Q    Were they paid every week or every two weeks?


          7         A    Every two weeks.


          8         Q    So the last payday --


          9         A    -- was two weeks ago.


         10         Q    For the preceding two weeks, they didn't pay the


         11     payroll?


         12         A    Didn't pay it.


         13         Q    Is payroll done on Friday at the end of a


         14     two-week period, or is it delayed one week?


         15         A    Delayed one week.  It's usually on Thursday.


         16         Q    Payroll ends on Friday, and the next Thursday,


         17     they get paid for those.


         18         A    Yeah.


         19         Q    So, actually, at this point, there's another


         20     week under the boards.


         21         A    Yes.


         22         Q    When did you learn that that was the case?  Was


         23     that yesterday?


         24         A    Well, I learned about it probably Monday, and


         25     then, yesterday, I called John Ellis, and he verified






                                        PAGE 57




          1     that they had not been paid.


          2         Q    So, this information is as of yesterday in


          3     reference to John Ellis.


          4         A    Yeah, very current.


          5         Q    How many employees do they have at the present


          6     time?


          7         A    I think it's ten.


          8                  They had about 12 workers from the Czech


          9     Republic, and they were not being paid, so they went back


         10     home.  John was only paying them about $2.00 an hour, and


         11     that caused some problems.


         12         Q    There's currently ten employees, and your


         13     understanding is there was no payroll at all.


         14         A    There was no payroll for them.


         15         Q    What's their reaction?


         16         A    I don't know personally, but I know the people


         17     that worked for me, they are not happy, and I think if


         18     they don't get paid next week, they will be gone.


         19         Q    Do you know what the law is in Missouri


         20     regarding hourly paid workers?


         21         A    They have to be paid, and I believe, if they are


         22     not paid within a certain period of time, the state will


         23     triple what is owed to the workers.


         24         Q    Pretty standard.


         25         A    Yeah.






                                        PAGE 58




          1         Q    Has Mr. Jeschky or Mr. Dearden said anything to


          2     the employees about what they are going to do about this


          3     situation?


          4         A    Not that I'm aware of.


          5         Q    Now, you said that 12 workers were from the


          6     Czech Republic.


          7         A    Yes.


          8         Q    And they were only being paid $2.00 an hour.


          9         A    Right.  John imported these workers on the


         10     premise  that they were here to be trained.  In reality,


         11     they were here to train others.


         12         Q    Does that mean they came on student visas?


         13         A    They came on student visas.  They were highly


         14     skilled sheet-metal people.


         15         Q    BY MR. COMBS:  Did they come with credentials,


         16     or you just observed that?


         17         A    Oh, they were skilled.  These guys worked in the


         18     sheet-metal industry in the Czech Republic.  Well, they


         19     came in, and John was paying them $2.00 an hour, and that


         20     was not directed to them.  It was being paid to a third


         21     party in the Czech Republic, Chip Irwin.  He is president


         22     of Czech Airworks.


         23         Q    Okay.  So, the $2.00 an hour that they got, they


         24     didn't even get that.


         25         A    They didn't get that.






                                        PAGE 59




          1         Q    What did they get?


          2         A    Room and board and food.  John housed 12 people


          3     in a four-bedroom house with one bathroom, and I can't


          4     believe they did that.


          5         Q    You have to have a number to go to the bathroom.


          6         A    Yeah.  They were doing shift work.


          7         Q    BY MR. LOWN:  What was their attitude about


          8     that?


          9         A    Initially, I guess they were okay.  Two dollars


         10     an hour is a lot of money in the Czech Republic, but you


         11     can't live on $2.00 an hour here.  They were unhappy. 


         12     They wanted living cash, and John refused to give it to


         13     them, and eventually, they left.


         14         Q    Now, you mentioned Tomas.  What's his status? 


         15     Because, I mean, you said he's owed 80 or $90,000.00.


         16         A    Right.  He was brought in as director of


         17     engineering.  He was given three percent of the company


         18     and a salary, which he hasn't been paid yet.  Initially,


         19     he was given just enough money to support his family and


         20     that's it.  And, just last month, he had to move out of


         21     the house he was renting because he couldn't afford it


         22     anymore.


         23         Q    Now, he's from the Czech Republic, too?


         24         A    Yeah, he is a Czech citizen.


         25         Q    What kind of visa is he on?






                                        PAGE 60




          1         A    He's on a working visa tied to Renaissance, so


          2     he's kind of backed up against the wall until he finds


          3     another job visa.


          4         Q    When was the last time you talked to Tomas?


          5         A    Monday.


          6         Q    What were his feelings at that time?


          7         A    He feels that he'll probably be fired any day


          8     now.


          9         Q    Fired for what reason?


         10         A    Well, Linda is very hard to get along with, and


         11     she and Tomas don't get along, and the work is not going


         12     as fast as she likes, meaning STC work, and he has no


         13     control over that.  That's up to FAA.  And, of course,


         14     there's no money, so he'll be let go just like the other


         15     people.


         16                  Peter was the other one.  I can't remember


         17     his last name.  You may have it somewhere.  He was


         18     another Czech worker there.


         19         Q    BY MR. COMBS:  Peter Raddock or something?


         20         A    Don't ask me to spell it.  It's Russian.


         21                  Peter left.  Peter was never paid, and, you


         22     know, he could no longer live within Renaissance's


         23     guidelines.


         24         Q    BY MR. STONE:  How long ago did the Czech


         25     workers leave?






                                        PAGE 61




          1         A    I believe they left two months ago.


          2         Q    And nobody took their place?


          3         A    No.


          4         Q    Who does that type of work now?


          5         A    Well, we had these workers that we hired


          6     locally.  They are not skilled enough.  These people were


          7     primarily repair technicians from some of the local


          8     aviation facilities.  Two of them are straight out of the


          9     Navy or Marines.  They've never had any aircraft building


         10     experience.


         11                  So, the Czech workers were there to train


         12     other people in addition to any training that I provided


         13     or Tomas provided.


         14                  The Czech workers developed some of the


         15     techniques for producing the parts, but they held it


         16     until John paid them.  John refused to pay them, so they


         17     never turned the documentation over to John.  As a


         18     consequence, John had to buy additional parts from


         19     Univair, one of them being the wing lift struts, which


         20     are about a thousand dollars apiece.


         21         Q    BY MR. COMBS:  What paperwork was that?


         22         A    Their job was to develop the technique to


         23     produce parts.  They would do a trial run, they write it


         24     down, develop the technique and give it to John to


         25     incorporate into the production work orders.  But they






                                        PAGE 62




          1     caught on fast, and they wanted money, and John wouldn't


          2     give them money, so they left, and they took the data


          3     with them.


          4         Q    How long had they been there?


          5         A    About six months.


          6         Q    BY MR. LOWN:  Well, if they're not able to pay


          7     their workers and they don't have money to buy parts, how


          8     are they going to move forward and move into this


          9     building?  What is your impression?


         10         A    Well, Renaissance is technically and legally


         11     bankrupt, so I don't know how they are going to continue.


         12         Q    BY MR. COMBS:  You had commented, at one point,


         13     that you thought he was technically bankrupt over a year


         14     ago.


         15         A    Yes.  At the point where our salaries were cut


         16     back and we had to, you know, shuffle creditors around, 


         17     I knew we were bankrupt.  Kurt Jeschky was playing phone


         18     tag with creditors.


         19         Q    BY MR. COMBS:  So, that was June or July of last


         20     year.


         21         A    Actually, that started in April, when I


         22     initially employed, because Linda would get telephone


         23     calls from creditors in Georgia.  And I didn't know what


         24     the game was, but they were just chasing someone around.


         25         Q    BY MR. LOWN:  Do you know what creditors?  Do






                                        PAGE 63




          1     you know the names of any of these creditors?


          2         A    I know the Bank of Georgia was calling.


          3         Q    We're talking about the Bank of Georgia. 


          4     There's several banks.  Are we talking about the Bank of


          5     Dodge?


          6         A    I don't know for sure.


          7                  The people producing brochures were calling,


          8     because they weren't being paid.  The people we leased


          9     equipment from were calling, because they weren't being


         10     paid.  Between Linda and Kurt, they shuffled these people


         11     around.


         12         Q    So, basically, in April, well before the


         13     arbitration hearing anyway, they were already in serious


         14     financial trouble.


         15         A    Yes.


         16         Q    BY MR. COMBS:  And they came to the arbitration


         17     hearing and presented the face that they had just


         18     received seven million dollars worth of funding, and they


         19     were in good financial health, and they were going to


         20     produce ten airplanes by the end of the year.


         21         A    We never had that kind of money in the company. 


         22                  (Whereupon a short recess took place.)


         23         Q    BY MR. LOWN:  Fred, it seems like for the past


         24     year until you were terminated, that you were fairly


         25     intimately involved in the operations there.






                                        PAGE 64




          1                  In the course of your conversations with


          2     John Dearden and Kurt Jeschky, or anyone else, how much


          3     discussion did you hear regarding the various litigation


          4     that was going on, meaning both in Georgia and here?


          5         A    Well, most of the data that I came across were


          6     faxes concerning the foundation litigation from Arizona. 


          7     You know, Tomas and I would usually skim through the


          8     faxes that would come through.


          9                  As far as the Georgia litigation, I didn't


         10     have a lot of contact with that, because that was all


         11     prior to my employment, and when John discussed it, it


         12     was superficial.


         13         Q    What impression did John convey regarding the


         14     Georgia litigation?


         15         A    Well, the Georgia litigation, he felt that it


         16     was an unmerited case.


         17         Q    Sure.


         18         A    And that's why he was striving to get it thrown


         19     out.


         20         Q    Did John, or anyone else, ever mention the


         21     Maryland litigation to you?


         22         A    No.


         23         Q    So, no one ever mentioned that.


         24                  Did John, or anyone else, ever discuss the


         25     cost of all this litigation?






                                        PAGE 65




          1         A    Absolutely not.


          2         Q    You don't have any information regarding the


          3     amount of their legal fees?


          4         A    The only thing that I heard was that the firm


          5     that Eric Rowe worked for was unhappy that they were not


          6     getting paid.


          7         Q    BY MR. COMBS:  When was that?


          8         A    That would have been, in fact, that happened the


          9     week before we came to Arizona for testimony.  I believe


         10     John had to make a payment to that firm to ensure that


         11     Eric Rowe would come down here.


         12         Q    BY MR. LOWN:  Do you have any idea how much he


         13     paid?


         14         A    Ten thousand seems to stick in my mind.


         15         Q    Do you know what the bill was for that ligation?


         16         A    I don't know.


         17         Q    If I told you it was $320,000.00, what effect do


         18     you think that would have on the viability of the


         19     operation down there?


         20         A    I don't know how they would collect, but it


         21     would shut it down.


         22         Q    Did John ever talk about the arbitration award?


         23         A    Yes.  I had a copy of one of the last issues of


         24     the arbitration award.  He didn't personally discuss it


         25     with me, but I had a copy of it.






                                        PAGE 66




          1         Q    But you never actually had a conversation with


          2     anybody regarding that?


          3         A    No, other than he stressed that all the legal


          4     fees would be paid for by the foundation.


          5         Q    Did he give you any idea what the probability of


          6     collecting that award was?


          7         A    He felt pretty high.


          8         Q    Was he relying on that?


          9         A    I think they were counting on that money,


         10     particularly Linda Dearden.  She was very proactive in


         11     the company as far as the financial side goes, and she


         12     was counting on that money.


         13         Q    Do you know if Eric Rowe or his firm ever made


         14     any representations -- you mentioned the letter they


         15     wrote or something happened.


         16                  Do you know of any other representations


         17     they might have made regarding the status of this in the


         18     state of Missouri?


         19         A    None that I'm aware of.


         20              MR. LOWN:  That's all I have for you.


         21                  It's all yours.


         22              MR. STONE:  Are you talking to me?


         23              MR. LOWN:  Yeah.


         24         Q    BY MR. STONE:  Fred, at the arbitration hearing


         25     that took place in August 2001, Renaissance presented






                                        PAGE 67




          1     certain projections as to the sales price of aircraft,


          2     the cost of the production and the profit margin that


          3     they projected.  Are you familiar with those?


          4         A    Yes, I am.


          5         Q    Were those projections that were presented at


          6     the arbitration hearing realistic?


          7         A    No, absolutely not.


          8         Q    Why not?


          9         A    Because I had made my own estimates of what the


         10     price of aircraft should be.  I had discussions with Kurt


         11     in the past that $74,500.00 was unrealistically low for


         12     that aircraft.  And I did a projection based on the first


         13     delivery of ten ships per year, and then another one for


         14     100 aircraft per year.  Exclusive of executive salaries


         15     and labor, the price for each aircraft is a minimum of


         16     $47,350.00.  That's the cost of raw materials, engine


         17     purchase, parts, that kind of thing.


         18         Q    BY MR. COMBS:  There's no labor in that?


         19         A    No, there's no labor in that.  When you add


         20     labor and executive salaries in, and the executive


         21     salaries I have, because I was part of the team, and that


         22     came out to $373,000.00 a year for executive salaries.


         23                  Labor I had to guesstimate.  We had


         24     approximately 20 workers, and the average wage, including


         25     benefits, Social Security, about $20.00 an hour, and that






                                        PAGE 68




          1     comes out to roughly $800,000.00 per year.


          2                  When you amortize these over ten aircraft,


          3     that adds an additional $117,300.00 per aircraft, and if


          4     you amortize it over a hundred aircraft, it's $11,730.00. 


          5     And, bear in mind, this does not include any profit,


          6     overhead expenses, like for building, property, equipment


          7     or office expenses.


          8         Q    BY MR. STONE:  What about insurance?


          9         A    No insurance.


         10                  So, I mean, the minimum that I can see the


         11     aircraft costing, ten ships, would be $264,650.00 apiece. 


         12     For a hundred aircraft, $59,800.00 each.


         13         Q    BY MR. LOWN:  That's without all the fixed


         14     costs?


         15         A    That's without all the additional fixed costs


         16     that I previously outlined or profit.


         17         Q    Or insurance.


         18         A    Or insurance.


         19                  And these are not unrealistic numbers,


         20     because they actually bode very well with the rest of the


         21     aircraft industry.  The reason a Cessna 172 is


         22     $174,000.00 is because of all the overhead they carry.


         23         Q    BY MR. COMBS:  Was Mr. Jeschky familiar with


         24     these kind of numbers when he went to the arbitration, do


         25     you think?






                                        PAGE 69




          1         A    I don't know if he used these numbers, as I did,


          2     but I know that he knew that $74,500.00 was an


          3     unrealistic number.


          4         Q    BY MR. LOWN:  How do you know that?


          5         A    Because Jeschky is a very smart man, and he


          6     purchased every single part that was put on the 99 Romeo


          7     Alpha, so he knows the cost of parts.


          8         Q    Did you ever have discussions about this with


          9     either he or John Dearden?


         10         A    Not with John, but I have talked to Kurt.


         11                  The price had to go up, and he did inform me


         12     at one time that after Oshkosh the price would go up, but


         13     he didn't tell me how much, but it would go up.  But I


         14     would have thought it would be a marginal amount, not to


         15     discourage buyers.


         16         Q    But your estimate of the costs, you made that


         17     known to Kurt prior to the August arbitration.


         18         A    No.  I discussed that with Kurt right after


         19     Oshkosh.


         20         Q    Which was?


         21              MR. COMBS:  Last year.  It was just before the


         22     arbitration.


         23              THE WITNESS:  Yeah.  I was there for one day,


         24     also.


         25         Q    BY MR. LOWN:  So, at the time of the






                                        PAGE 70




          1     arbitration, though, they either knew that your opinion


          2     was that the cost was unrealistic, or they should have


          3     known.


          4         A    Right, right.  I think we all knew, within the


          5     management circle, that that cost was too low.


          6         Q    BY MR. COMBS:  So, if they were testifying to a


          7     $30,000.00 profit margin on an $75,000.00 airplane, that


          8     would have been incorrect.


          9         A    Kurt definitely should have known that that is


         10     not a feasible number for any manufacturer, that kind of


         11     profit margin.


         12         Q    BY MR. STONE:  Was there any reasonable


         13     expectation of selling a hundred aircraft per year?


         14         A    I think there was on my part.  I felt that if I


         15     had produced the aircraft per the drawing without any


         16     changes, I could have gotten to that point with three


         17     shifts and enough people.


         18         Q    BY MR. COMBS:  Can we backtrack to that.


         19                  By per the drawing, you mean without


         20     reengineering things like the instrument panel, and the


         21     flaps, and the landing gear, and brakes?


         22         A    Correct, an original aircraft with none of the


         23     things that John wanted.


         24         Q    BY MR. LOWN:  So, STC changes that John


         25     incorporated in the airplane substantially increased the






                                        PAGE 71




          1     price to produce the airplane.


          2         A    Well, not only that.  That is actually one of


          3     the prime reasons for delay in production.


          4         Q    BY MR. COMBS:  So, incorporating the STCs is the


          5     reason for the delay.


          6         A    Yes.  It's getting the FAA to certify them.


          7         Q    And that process had nothing to do with the


          8     dispute.


          9         A    No.  That process is beyond Renaissance's


         10     control, or beyond the foundation's control. 


         11         Q    If it had been started five years earlier, 


         12     things might have happened by now.


         13         A    Yeah.


         14         Q    So that would be a management decision at


         15     Renaissance, not something from the outside.


         16         A    Right.  Five years ago, had they started doing


         17     STCs, they would have been done, and it would have been a


         18     very simple process to incorporate into new production


         19     aircraft.


         20         Q    When did John tell you about incorporating all


         21     these changes by STC?


         22         A    It would have been the summer of 2001 when we


         23     really got involved in discussing production.


         24         Q    Before or after the arbitration?


         25         A    Before the arbitration.






                                        PAGE 72




          1                  We already had a pretty lengthy list of STCs 


          2     to do, and John's philosophy is if we cannot get data


          3     from the foundation, we would just produce our own STCs


          4     to get the changes we needed.


          5                  And, in fact, items like the fuel system,


          6     Renaissance does not have a drawing for.  It's going to


          7     be part of an STC to certify the aircraft.  The flaps,


          8     John doesn't have a drawing, so that is also an STC. 


          9         Q    Were you aware that he had access to all of


         10     those?


         11         A    Yes, I was.  But it always puzzled us why he


         12     didn't obtain access to them.


         13                  I mean, the flaps were a very chaotic


         14     exercise, because we have no way to produce the flaps, so


         15     Tomas had to reverse engineer them.  Of course, the


         16     changes in the travel of the flaps made it a mandatory


         17     STC.


         18         Q    BY MR. LOWN:  So, changes were dictated by John


         19     that made a mandatory STC.  Do you know when John


         20     dictated those changes?


         21         A    I don't recall the exact time line.  This has


         22     been a continuing process.


         23                  All the STCs were dictated by John.  I did


         24     not initiate any, and Tomas did not initiate any, except


         25     possibly -- well, John initiated the toe-brakes, but






                                        PAGE 73




          1     Tomas felt that was a good change, and he did take full


          2     ownership of that process.  But to this day, it has not


          3     yet been approved.


          4         Q    The thing I want to make sure of, for the


          5     record, is that all of these STCs involved production


          6     issues that are not involved in access to the original


          7     drawings.


          8         A    Absolutely.


          9         Q    So, there are no toe-brakes in the original


         10     drawings?.


         11         A    That is correct.


         12         Q    So, John Dearden's decision to include


         13     toe-brakes requiring the STC was a major cause of delay


         14     in producing the airplane.


         15         A    Yes.


         16         Q    And the same thing would be true of the decision


         17     to go to flaps 40 rather than flaps 35.


         18         A    Right.  Essentially, you can produce almost a


         19     complete aircraft without the drawings that we were


         20     missing.  The only thing is, like the fuel system, it


         21     would have been nice to have that drawing, but that


         22     drawing is still missing.


         23                  John decided to go to the rubber bladder


         24     tanks, and we have no drawing for that.


         25         Q    BY MR. COMBS:  You're talking about effective






                                        PAGE 74




          1     your leaving in January, right?


          2         A    Right.


          3         Q    Those drawings have been provided in late


          4     January.


          5         A    Okay.


          6              MR. LOWN:  Randall? 


          7              MR. STONE:  I can't think of anything else on


          8     that.


          9              MR. LOWN:  Did you cover all of those questions?


         10         Q    BY MR. STONE:  Fred, different subject.


         11                  At the arbitration hearing, again in August


         12     of 2001, Renaissance alleged that the foundation had


         13     failed to provide all the drawings they were required to


         14     provide under the license agreement, and that that caused


         15     Renaissance delay in producing these aircraft.


         16                  How would you assess that allegation?


         17         A    I think that was basically incorrect.  Although,


         18     it would have been nice to have the drawings, I did not


         19     absolutely need them to commence production.


         20         Q    So, in other words, you had all the drawings


         21     that you needed to produce the aircraft.


         22         A    I would say 99 percent of the drawings.  Except


         23     for those drawings that we already discussed that were


         24     missing, we had all the other drawings.


         25                  Now, what John is probably discussing, or






                                        PAGE 75




          1     talking about, is he wanted historical manufacturing work


          2     orders so that he can duplicate the original


          3     manufacturing process.  But that was not essential to


          4     producing the airplane, because we could have developed


          5     our own process.


          6         Q    Okay.


          7         A    And that issue we did discuss several times.


          8         Q    So, in other words, you don't believe that the


          9     foundation not providing some drawings, if that's true,


         10     caused any delay in the production of the aircraft.


         11         A    That's correct.


         12         Q    And do you remember your testimony in the


         13     arbitration hearing in August of 2001?


         14         A    I don't recall specifically any of my testimony.


         15         Q    Do you recall testifying?


         16         A    Yes, I did testify during that period of time.


         17         Q    Looking back on that testimony, from what you


         18     know today, what's transpired since, was there anything


         19     in your testimony in the arbitration hearing that you now


         20     believe to be false or misleading?


         21         A    Yes.  My testimony to the fact that we were


         22     going to build ten aircraft by the end of the year was


         23     misleading and incorrect.


         24         Q    Anything else?


         25         A    Well, I knew at the time that we could not build






                                        PAGE 76




          1     those ten aircraft, and Mr. Jeschky knew it, and Tomas


          2     Straka knew it.  We had argued the issue with John, but


          3     he was very adamant, and word came out that we would


          4     build ten aircraft, at which point I had ten details


          5     subassemblies in work, and that was considered to be ten


          6     aircraft in progress.


          7              MR. COMBS:  If you want to go off the record, I


          8     can let him review his testimony.


          9                  (Whereupon an off-the-record discussion took


         10     place.)


         11         Q    BY MR. STONE:  Fred, are you knowledgeable with


         12     the information that was presented by Renaissance to the


         13     State of Missouri as part of the financial package that


         14     was coming from Missouri?


         15         A    I am knowledgeable from a casual standpoint.


         16         Q    Did you ever see any of the documents that were


         17     presented to Missouri?


         18         A    I seen some of the documents, financial


         19     statement for the company.


         20         Q    From the things you have seen that were


         21     presented to Missouri, is there anything in there that


         22     you consider to be false our misleading?


         23         A    Yes.  I felt the company's sales projections


         24     were false.


         25         Q    How so?






                                        PAGE 77




          1         A    They were way too optimistic.  John claimed that


          2     we would be, I think, producing as many as 162 aircraft


          3     on the second year of production.  That was unrealistic. 


          4     Also, the projections for local employment was


          5     unrealistic.


          6         Q    Tell me about those.


          7         A    We had a schedule to employ locals that took us


          8     up to 200 employees on the third year of production.


          9         Q    Okay.


         10         A    And we did not have local talent to even hire


         11     that many people if we had the money.  But the facilities


         12     that we were building, it was a 48,000-square-foot


         13     building, could not house that many people even with


         14     three shifts involved.  Further, we didn't have enough


         15     tools to keep 200 people employed full time.


         16         Q    Okay.  Was there a representation as to the


         17     assets of the company?


         18         A    I don't know whether it was exact, but I think


         19     the State of Missouri may have been led to believe that


         20     the company owned all the assets that were located in the


         21     Cape Girardeau facility.


         22         Q    I think you discussed before about some of those


         23     assets were assets that came from Georgia.


         24         A    Correct.  There was tooling and dies, inventory,


         25     office equipment, that kind of thing.






                                        PAGE 78




          1         Q    Anything else concerning the information


          2     presented to Missouri that you consider to be false or


          3     misleading?


          4         A    I don't recall anything at this time.


          5         Q    Have you ever seen a private placement


          6     memorandum that was prepared by Renaissance?


          7         A    No, I never have.


          8         Q    Were you aware that Renaissance, Mr. Dearden and


          9     Mr. Vanhorn were involved in a lawsuit in Maryland?


         10         A    No, I was not, until just a few days ago.


         11         Q    Are you aware of any other lawsuits in Maryland,


         12     Georgia and Arizona, which we talked about, that they are


         13     involved in?


         14         A    The only lawsuits that I was aware of at that


         15     time were the lawsuits in Georgia and, of course, with


         16     the foundation in Arizona.


         17         Q    And you haven't heard about any others in


         18     Maryland?


         19         A    No.


         20         Q    When you left Renaissance, what were the reasons


         21     that you left?


         22         A    I was fired by John.  We had a disagreement over


         23     performance, and prior to that, we had a disagreement


         24     over quality issues, and he felt we were not of the same


         25     mind.






                                        PAGE 79




          1         Q    And I think you already said that the company


          2     Renaissance owes you money for past due salary.


          3         A    Yes.


          4         Q    Who took your place at Renaissance?


          5         A    A gentleman named Richard Gill.  He was an


          6     employee of mine.


          7         Q    And how long had he been with Renaissance?


          8         A    Just a few months.  Technically, he's not


          9     qualified for the job, so I don't know how they're going


         10     to sell that to the government.


         11         Q    And your position was production manager.


         12         A    I was director of quality, and I also, prior to


         13     December, had responsibility for production, also.


         14         Q    Okay.  And the man you just talked about, he


         15     took all of your responsibilities?


         16         A    No, he just has the quality side.


         17         Q    Okay.  Who took your place otherwise?


         18         A    For production, we had a gentleman named Dan. 


         19     I'm sorry.  I can't recall his last name now, but he also


         20     has been fired recently.


         21         Q    Okay.


         22         A    Now we have one of the production employees 


         23     fulfilling the role of production manager.  Although, for


         24     a time, Linda Dearden was production manager, and so was


         25     Kurt Jeschky.






                                        PAGE 80




          1         Q    And Linda Dearden, does she have any


          2     qualifications to be production manager that you know of?


          3         A    No.


          4         Q    What about Mr. Jeschky?


          5         A    Kurt does not have any production experience,


          6     either.


          7         Q    And you just mentioned a gentleman's name.  I


          8     forgotten that name you said.  You did not believe he was


          9     qualified.


         10         A    That's correct.


         11         Q    What's his name again?


         12         A    On the production side.  That was on the quality


         13     side.  It's Richard Gill.  He was a gentleman I hired who


         14     had just gotten out of the Marines, I believe.  He


         15     doesn't have any quality background.  And the gentleman


         16     fulfilling the production side is Jack Leighton.


         17         Q    Okay.


         18         A    He's a very good technician, but he doesn't have


         19     any management experience.


         20         Q    Okay.  And what about Mr. Gill?


         21         A    Mr. Gill is a very young man, doesn't really


         22     have any industrial experience.


         23         Q    Is he qualified to do the job at Renaissance?


         24         A    No.


         25         Q    Has there been any -- you talked about the






                                        PAGE 81




          1     employees that are leaving, employees are not being paid.


          2                  Are any new employees coming in?


          3         A    Well, the employees that left were the Czech


          4     workers.  They were not being paid, and John refused to


          5     remunerate them in any way, so they left and went back to


          6     the Czech Republic.  There are no new employees coming


          7     in, and I suspect if they don't get paid next week, that


          8     the rest of the employees might also leave.


          9         Q    Okay.


         10         A    There's also a gentleman named John Ellis, and


         11     he is owed 800 hours of back pay.


         12         Q    BY MR. COMBS:  What's his pay rate?


         13         A    I think's about $18.00 an hour.


         14         Q    BY MR. STONE:  What was his position?


         15         A    He was my lead man.  He's a very experienced


         16     gentleman.  He would do a lot of troubleshooting for me.


         17         Q    Okay.  And, as part of your employment contract


         18     there, were you to receive an ownership interest in the


         19     company Renaissance?


         20         A    Yes, I was granted a one-percent ownership with


         21     the company if I stayed with the company for one year,


         22     but I was vested at one half percent after six months of


         23     employment.


         24         Q    So, how much, to your understanding, is it that


         25     you're entitled to ownership at this point?






                                        PAGE 82




          1         A    At this point, I believe I'm entitled to a half


          2     percent ownership.


          3         Q    When you entered into that agreement, did


          4     Renaissance tell you who the other owners of Renaissance


          5     were?


          6         A    No.  Other than John and Kurt, I had no


          7     knowledge of any other owners.  I'm sorry, and Tomas.


          8         Q    As of today, do you know any additional owners


          9     of Renaissance?


         10         A    No.


         11              MR. STONE:  Okay.  Pete, I will turn it back


         12     over to you right now.


         13         Q    BY MR. LOWN:  I just found some testimony I want


         14     to cover briefly.


         15                  Earlier, you talked about engines they


         16     ordered when they were in Georgia.


         17         A    Yes.


         18         Q    How many engines did you say were ordered?


         19         A    Originally, five engines were ordered.  I was


         20     told that by Kurt.


         21         Q    Okay.  In his August testimony, Kurt Jeschky


         22     talked about these engines.  He says that they ordered


         23     four, and then returned three of them.  Absent the


         24     discrepancy in total numbers, Mr. Jeschky says, and I'll


         25     quote, when asked why the engines were postponed, he






                                        PAGE 83




          1     says, "Because of the -- why we're here, because of the


          2     delay, things that were filed with the FAA."


          3                  Is that a true statement?


          4         A    No.


          5         Q    What was the real cause of the cancellation of


          6     those orders?


          7         A    Renaissance could not pay for those engines.


          8              MR. LOWN:  Doug, do you want to pick up?


          9              MR. COMBS:  Well, if you've got something


         10     marked, go ahead and take care of it.


         11              MR. LOWN:  Go ahead.  It's all yours.


         12         Q    BY MR. COMBS:  You commented to me in a


         13     conversation the other day that you wished you had known


         14     more about John Dearden when you started all this.  And


         15     then you said something, I think this is right, but


         16     restate it if isn't, "It's his way or no way."


         17                  Can you explain what that meant.


         18         A    Well, when John has an idea, there's no room for


         19     negotiation.


         20                  A good example is the issue of the


         21     additional flap travel.  We argued with him vehemently


         22     about leaving it alone, but since his own personal


         23     aircraft, Romeo Alpha, has 40 degrees of travel, he


         24     demands that the production aircraft also have 40 degrees


         25     of travel.  And so, Tomas was forced to pursue the






                                        PAGE 84




          1     process of obtaining that travel, which involves a lot of


          2     structural changes to the aircraft.


          3         Q    Will it not always involve flight test and stall


          4     test?


          5         A    Yes, it will involve flight and stall tests.


          6         Q    And spin certification?


          7         A    And spin certification.


          8         Q    Do you have any guesstimate as to what that kind


          9     of change might cost the company to take to


         10     certification?


         11         A    Spin certification might wind up costing about


         12     $50,000.00, because you do have to pay a certified test


         13     pilot, and the FAA has to provide their own test pilot. 


         14     Plus, you have to provide the dynamic analysis for the


         15     spin test.


         16         Q    I know you weren't in Georgia, but you came on


         17     after they moved everything from Georgia.  I was


         18     wondering if you can tell us anything generally about


         19     that move, that you might have heard or understood from


         20     talking with people, as far as prior business, or the


         21     reasons they made the move, or anything like that?


         22         A    Well, what I had heard was that the county that


         23     they were located in, I guess Eastman, had reneged on a


         24     promise for a facility and other financial incentives, so


         25     they were shopping for a better deal.






                                        PAGE 85




          1                  And, apparently, the City of Cape Girardeau,


          2     which also happens to be where Matt Heinz had proposed to


          3     build a facility, made a proposal to John Dearden.  Matt


          4     Heinz apparently was going to move his operation to Cape


          5     Girardeau, and the city had promised him a lot of tax


          6     incentives and new building, and Matt Heinz reneged on


          7     the deal.  So the city was left without an employer, and


          8     so they made the offer to Renaissance Aircraft.


          9         Q    BY MR. COMBS:  So, you didn't know anything at


         10     all of their prior business back in Georgia.


         11         A    They had not produced any parts whatsoever,


         12     other than aircraft 99 Romeo Alpha.  That was the only


         13     aircraft they ever made.  And although John asserts that


         14     that is a first-production aircraft, it is not a


         15     production aircraft.  It never has been.


         16         Q    That was actually, I think, produced up in


         17     Michigan.


         18         A    Right.  And that was produced as a home-built


         19     aircraft, amateur-built aircraft, and it is certified as


         20     such.


         21         Q    I'm going to read you some testimony here.  This


         22     is from John Dearden on day one.  It's page 148 at line


         23     two.  Let me back up here a second to page 147, line 15.


         24                  "Our business plan carries an estimate of


         25     about 2,400 man-hours for the first 50 aircraft or 20






                                        PAGE 86




          1     aircraft.  I don't remember exactly.  And we built that 


          2     airplane between, because of some imprecision, it was not


          3     less than 1500 man-hours, but not more than 1800


          4     man-hours."


          5                  This is talking about 999 Romeo Alpha.


          6                  I believe the question was:  "What was your


          7     original projection for getting into production?  After 


          8     you paid the 125,000, what was your original plan as far


          9     as the time period --


         10                  "Answer:  One year.


         11                  "Question:  -- to get into production?


         12                  "Answer:  Setting everything up.  At that


         13     time, we were going to use Zenaire to probably tool up


         14     for parts production, setting up things in the Czech


         15     Republic.  And we anticipated, actually anticipated


         16     production with probable first delivery one year from the 


         17     point that we paid the license fee.


         18                  "Question:  So, that would have been 1998;


         19     is that right?


         20                  "Answer:  Right.


         21                  I'm going to stop there for a second and ask


         22     you, does that sound like a reasonable projection to you,


         23     given what you have in the way of production materials


         24     available to date?


         25         A    Well, first off, Romeo Alpha was put together






                                        PAGE 87




          1     with highly skilled people.  As I understand it, the


          2     people who participated in that project were engineers, 


          3     people with many, many years of experience in the


          4     sheet-metal industry.  So, that could not realistically


          5     reflect a real-world production environment.


          6                  Secondly, Zenaire has never had the


          7     capability to produce the parts that John needs, either


          8     in the states, in the United States, or in the Czech


          9     Republic.  They would have had to produce tools from


         10     scratch, which is a very lengthy and expensive process in


         11     the Czech Republic.


         12         Q    So, his estimate of delivering aircraft a year


         13     after starting was unrealistic.


         14         A    It would never happen.


         15         Q    Okay.  Let me continue on here at page 149, line


         16     six.


         17                  "Question:  Did there come a time later in


         18     the year 1999 when you were prepared to commence


         19     production?


         20                  "Answer:  Yes.


         21                  "Question:  When was that?


         22                  "Answer:  That was the end of November 1999. 


         23     We had pretty much gotten our documentation into what we


         24     felt was sufficient order to initial production.  We had


         25     contacted the FAA.  We had the forms we needed.  We






                                        PAGE 88




          1     brought in a team of Czech aircraft workers from the


          2     Czech Republic.


          3                  "We had people we hired in Georgia.  We had


          4     arranged for a half a million dollar financing from the


          5     Bank of Dodge County, and we were ready to go the end of


          6     October."


          7                  That was, again, in Georgia in 1999.  That's


          8     the same stuff that they brought to Missouri a year


          9     later.


         10                  Were they prepared to go to production at


         11     that point in time in your opinion?


         12         A    There's no way.  I know for a fact that the only


         13     thing ever produced in Georgia was a rudder assembly,


         14     which I had available to me in Cape Girardeau.


         15         Q    Okay.


         16         A    Which is a very simple structure.  Not much


         17     tooling is required.  Other than that, Renaissance did


         18     not produce anything in Georgia, nor did they have the


         19     capabilities to do it.


         20         Q    The other question I wanted to ask is, he was


         21     talking about financing being available, and they had 


         22     arranged for a $500,000.00 credit line.


         23                  Would a $500,000.00 credit line have been


         24     enough to start their aircraft production operation with


         25     an aircraft like this?






                                        PAGE 89




          1         A    No.  First of all, salaries would have eaten


          2     most of that money very quickly.  And secondly,


          3     production tooling is very expensive.


          4                  By production tooling, I mean machines to


          5     load and make parts on.  A typical hydraulic forming


          6     press costs about $80,000.00.   That's just one press. 


          7     He would need shears, drill presses.  Easily, $300,000.00


          8     would have been consumed very quickly.


          9         Q    What would be your guess that it would have


         10     taken to set up operations at a minimum?


         11         A    Minimal operation, there's no way you could have


         12     done it with less than about two million dollars.


         13         Q    Okay.  Were there any comments about how the


         14     foundation engaged in the process in Georgia that you


         15     were ever privy to?


         16         A    Well, I mean, as a member of the team, there was


         17     always villainizing of the foundation and, of course, I


         18     was only privy to one side of this argument.  But the


         19     general line was that the foundation was always at fault.


         20         Q    For everything?


         21         A    Well, for the delays involved in the production,


         22     for John's failure to obtain financing.


         23         Q    The foundation was responsible for that?


         24         A    Well, I guess it was the litigation process that


         25     was tying up John's hands.






                                        PAGE 90




          1                  (Whereupon a short recess took place.)


          2         Q    BY MR. STONE:  Fred, what is a production


          3     aircraft?


          4         A    I'm sorry.  State the question again.


          5         Q    What is a production aircraft?


          6         A    A production aircraft is essentially any


          7     aircraft that's built in a series of more than one.  If


          8     you have two, you have a production of two.


          9                  Help me along here.  What else would you


         10     want? 


         11         Q    BY MR. COMBS:  Did you know the difference


         12     between certified and production?


         13              MR. STONE:  I'm sorry.  I got distracted.


         14              MR. LOWN:  What's the next question, Randall?


         15         Q    BY MR. STONE:  Which steps do you have to go


         16     through as far as FAA to have a production aircraft?


         17         A    To have a certified production aircraft, you


         18     have to prove to FAA that you have a quality system


         19     in-house that's capable of producing an aircraft per the


         20     drawings and specifications as approved by the FAA.


         21         Q    Okay.  As of the date that you left Renaissance,


         22     had Renaissance ever produced a production aircraft?


         23         A    No.  The only aircraft that is claimed to be a


         24     production aircraft is 99 Romeo Alpha.  It is actually a


         25     home-built aircraft and in no way represents a production






                                        PAGE 91




          1     aircraft.


          2         Q    Has Renaissance ever represented that that


          3     aircraft was a production aircraft?


          4         A    Yes, and it still does.  In its literature, it


          5     lists it as the first production aircraft.


          6         Q    But it's your testimony that it is not a


          7     production aircraft.


          8         A    Absolutely not.  That is an amateur-built


          9     aircraft.  It was built by amateurs, and the FAA


         10     considers it as such.


         11         Q    How long, if ever, before Renaissance will be


         12     able to produce a production aircraft?


         13         A    I don't believe they'll ever be able to get to


         14     that point.  They don't have the resources or the skills


         15     to do that.


         16         Q    Okay.  Did you ever have any safety concerns


         17     while you were employed with Renaissance as far as the


         18     safety of aircraft?


         19         A    Yes.  I still have several concerns,


         20     particularly about the two aircraft that are now in


         21     production.  There are many items installed in the


         22     current airframes that are not approved.


         23                  Processes that are not approved, examples


         24     are heat treatment of structural bulkheads is an


         25     unapproved process.  The heat treatment of the landing






                                        PAGE 92




          1     gear has been unapproved.  The welding is being done by


          2     uncertified welders with an unapproved process.


          3         Q    And did you express those concerns to John


          4     Dearden?


          5         A    Yes, I have discussed those concerns.  And prior


          6     to my termination at Renaissance, it was my intention to


          7     get all these processes approved and to certify the


          8     welders, but John circumvented that process, and the


          9     engine mount, landing gear and bulkheads were installed


         10     on the aircraft.


         11         Q    BY MR. LOWN:  If I may interject.


         12                  On the engine mount, landing gear and what


         13     was the third item?


         14         A    Bulkheads.


         15         Q    You mentioned three components, the landing


         16     gear, I think, the bulkheads and what else?


         17         A    And engine mount.


         18         Q    And engine mount.


         19                  Was the issue with those three items


         20     uncertified welding?


         21         A    Well, the issue with the engine mount is


         22     uncertified welding.  Both the welder itself, which his


         23     certification has not yet been completed, and the 


         24     welding process is not certified.


         25         Q    So, that's the landing gear?






                                        PAGE 93




          1         A    That's the engine mount.


          2         Q    What about the landing gear?


          3         A    The landing gear heat treatment process was not


          4     certified.


          5         Q    How about the bulkhead?


          6         A    Again, the heat treatment process was not


          7     certified.


          8         Q    Which bulkhead was that?


          9         A    The No. 6 bulkhead.


         10         Q    Does this apply to both aircraft?


         11         A    Yes.


         12         Q    How do you imagine that Renaissance was going to


         13     get these aircraft certified by the FAA without having


         14     those processes certified?


         15         A    Well, there should be a paper trail for all of 


         16     these parts.  So, I mean, it's very possible that they'll


         17     slip through the system.  However, I feel strongly about


         18     it, and I will make written recommendations to the FAA.


         19         Q    You think they are going to try to get this by 


         20     without the FAA's knowledge?


         21         A    I believe so, yes.


         22         Q    Now, you mentioned parts in these airplanes are


         23     uncertified.


         24         A    Well, they were used.


         25         Q    Used parts?






                                        PAGE 94




          1         A    Yeah.


          2         Q    Were there any parts you felt were unsafe?


          3         A    No, not unsafe.  I felt that it was fraudulent


          4     to provide a customer with used parts on a new airplane.


          5         Q    The fraud would be to the customer.


          6         A    To the customer, yes.


          7                  The used parts are certified parts by their


          8     very nature, but as far as the customer goes, he's not


          9     getting what he's paying for.


         10         Q    But the misrepresentation of these airplanes as


         11     new production when, in fact, they contained used parts,


         12     that misrepresentation would also apply to investors.


         13         A    Yes.


         14         Q    To financiers --


         15         A    Yes.


         16         Q    -- in providing financing.


         17         A    Yes.


         18         Q    As well as the customers.  In fact, to the FAA.


         19         A    Yes, the FAA.  You should tell the FAA that


         20     you're using used parts.


         21         Q    What did they do to these parts to make them


         22     appear new?


         23         A    They were either painted, sandblasted or they


         24     are inside a structure where you can't tell, you know,


         25     from a new part.






                                        PAGE 95




          1         Q    And, again, forgive my ignorance, Fred, but


          2     doesn't there have to be some procurement audit trail as


          3     to where the parts came from?


          4         A    Yes.  The internal work-order system should


          5     reflect a used part, but John has never acknowledged that


          6     he has used parts.


          7         Q    I think you told us earlier what you think they


          8     are going to do is show these as old/new stock.


          9         A    Right, Larsen stock.


         10         Q    As part of the Larsen stock.


         11                  So, what they're going to do is intermingle


         12     these used parts which they got from Larsen with new


         13     parts they got from Larsen and hope that nobody notices


         14     this.


         15         A    That's correct.


         16         Q    And how do you come to this impression?  Are


         17     these things that someone told you?


         18         A    No.  I have firsthand knowledge of that.


         19         Q    How did you get that firsthand knowledge?


         20         A    Well, I knew what I had in stock.  I had


         21     inventoried all of our parts at one time, several times. 


         22     Actually, we had done several inventories, so I was


         23     keenly aware of what parts were used versus new, which


         24     were usable and which were not usable that came from the


         25     original Larsen inventory.






                                        PAGE 96




          1         Q    So, you knew that those used parts were distinct


          2     from the new parts.


          3         A    Right.


          4         Q    And the new parts were, in many cases,


          5     unserviceable because of corrosion.


          6         A    Yes.


          7         Q    BY MR. COMBS:  I can't find the citation in


          8     here, but the foundation was criticized in John Dearden's


          9     testimony under direct, because we had written a letter


         10     to Jane Dorsey of the FAA indicating that we did not


         11     believe that Renaissance had as its first priority the


         12     safety of the consumer in the production of these


         13     aircraft.  And we were roundly criticized for having


         14     advised the FAA that that was our concern, having


         15     interrupted Renaissance business.


         16                  Is it your opinion that those concerns were


         17     justified?


         18         A    Yes, in retrospect.  Being that the managers at


         19     Renaissance do not have absolute authority to run their


         20     departments, that is a serious safety concern, because


         21     John basically runs everything.  John's idea of quality


         22     is not a totally safe product.  His idea of quality is


         23     something shiny that looks good to the customer.


         24         Q    When it's finished.


         25         A    When it's finished.  So, if the airplane looks






                                        PAGE 97




          1     shiny, it's a quality product.  He doesn't make the


          2     connection that it starts with a basic piece of paper.  


          3     My idea of quality is to build a part to conform to the


          4     drawing.  It doesn't have to be perfect, but it has to


          5     meet its original intent.


          6         Q    BY MR. LOWN:  I want to add one potential victim


          7     to the litany of people who are going to think these two


          8     airplanes are brand new.


          9                  Would that also include the State of


         10     Missouri, the various departments in the State of


         11     Missouri that are providing them with economic support? 


         12     They are going to lead them to believe these are, in


         13     fact, two brand new manufactured airplanes.


         14         A    Absolutely.  The State of Missouri has been told


         15     many times that we are building new aircraft from


         16     scratch.


         17         Q    And these two particular airplanes are new


         18     scratch airplanes.


         19         A    Yes.  And I believe there has been several photo


         20     ops, where the State of Missouri has sent photographers


         21     in for progress reports.


         22                  (Whereupon the lunch recess took place.)


         23         Q    BY MR. LOWN:  We're back from the lunch break.


         24                  Referring to the testimony in the August


         25     arbitration hearing, we've talked about your testimony






                                        PAGE 98




          1     and a little bit about some of the other employees'


          2     testimony.


          3                  Are you generally familiar with the


          4     testimony regarding their ability to produce airplanes


          5     and the cost of production that was given by the other