3  IN RE:           )
 4                   )
 5                   )
             Lawyer, )
 6                   )
 8             Tuesday, November 30, 1999

11 For the Claimant:   CHRISTINE GRAY
                       Disciplinary Counsel
12                     Washington State Bar Association
                       2101 Fourth Avenue, Fourth Floor
13                     Seattle, Washington 98121-2330

14 For the Respondent: DOUGLAS A. SCHAFER
                       Attorney at Law
15                     950 Pacific Avenue, Suite 1050
                       Tacoma, Washington 98402
                       SHAWN NEWMAN
17                     Attorney at Law
                       2507 Crestline Drive Northwest
18                     Olympia, Washington 98502
24 Reported by: Sandra Knipschield, CCR
   License No. KNIPSSD464ON
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[page 2 (Table of Contents) cut from this website edition]

 1         BE IT REMEMBERED that the deposition upon oral
 2 examination of JERRY WILLIAMS, M.D., was taken on Tuesday,
 3 November 30, 1999, at 7411 27th Avenue West, University
 4 Place, Washington, before Sandra Knipschield, Notary
 5 Public in and for the State of Washington.
 7         JERRY WILLIAMS, M.D., having been first duly
 8 sworn upon oath by the notary, testified as follows:
12 Q Doctor, my name is Shawn Newman, and I introduced myself
13 earlier. I am an attorney in Olympia. I am co-counseling
14 with Mr. Schafer on this case and appreciate your being
15 here today. And I wanted to, for the record, confirm that
16 you were compelled to attend this deposition based on a
17 subpoena, correct?
18 A Correct.
19 Q Doctor, let me begin with some background questions. Have
20 you ever been deposed before?
21 A Many times.
22 Q All right. And I'm sure you understand that if I ask you
23 a question or if Ms. Gray asks you a question and you
24 don't understand the question, just say so. We'll try to
25 rephrase it.
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 1 A Yes.
 2 Q And as you've just indicated, the court reporter can only
 3 record verbal responses, not nods, et cetera.
 4 A Yes.
 5 Q Okay. As I indicated preliminary to the deposition,
 6 Mr. Schafer is going to chime in, perhaps, and ask some
 7 questions, and I'm just going to do the introduction.
 8 Dr. Williams, can you explain your history with
 9 respect to bowling alleys in general.
10 A I grew up in a bowling family. My father was one of the
11 best bowlers in the Midwest. We grew up in Iowa, and I
12 bowled since I was probably 11 or 12. I used to bowl
13 tournaments all over the Midwest with my father. And then
14 I went to medical school and stopped bowling for a while,
15 and then I came back here in 1966 and opened my practice.
16 And then I started bowling around '68, '69, and then
17 bowled tournaments all over the Northwest.
18 Belonged to professional bowling organizations, and
19 eventually joined the professional bowlers tour, which I
20 used to bowl probably ten to fifteen tournaments a year
21 throughout the country, along with the local tournaments.
22 Then I purchased a fifty -- well, the largest bowling
23 center in the Northwest, Kenmore Lanes, which is a
24 fifty-lane center. I purchased that in '84.
25 Q Do you own any other bowling alleys?
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 1 A No, and I sold that one in '94. I had a very good offer,
 2 so I sold it. I have attempted -- I've negotiated with
 3 people to buy other bowling centers because people knew I
 4 was interested.
 5 Q Okay. One of those lanes that you expressed an interest
 6 in, was that Pacific Lanes?
 7 A I did not express an interest in it. Dave Tuell at that
 8 time was my attorney. I had owned a restaurant on the
 9 waterfront called The Bay Company, which I bought in '89.
10 And I sold it in '91 because, again, I got a good offer.
11 They started having troubles, the person that bought
12 it. Jerry Kingen, the gentleman that owns Red Robin,
13 bought it. And they started having trouble, and they
14 ceased paying their mortgage. And I had known Dave for
15 since I started bowling in the late '60s, because he used
16 to do a lot of bowling. And I got him as my attorney to
17 resolve the problem with collecting the mortgage.
18 And, of course, he knew I owned Kenmore, and we
19 bowled tournaments together and all things like that. We
20 bowled pot games, city tournaments, and all that stuff.
21 One day he called me and asked to meet me over at one of
22 my restaurants over there in University Place called
23 Krickett's West. And he came to me and stated that
24 Pacific Lanes was for sale, and would I be interested. He
25 stated that he had a partner, Grant Anderson, who was the
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 1 executor -- this is as I remember it -- he had a partner
 2 who was an executor. And he, because he was a partner,
 3 could not get involved in making an offer or purchasing
 4 the lane because of the entanglement. That's my
 5 interpretation of what he was saying.
 6 MR. SCHAFER: Now, "he," being Dave Tuell, could
 7 not be a buyer?
 8 THE WITNESS: Yes. That's what he told me.
 9 However, he wanted me to purchase it, and then subsequent
10 to Mr. Anderson going to the bench or dissolving their
11 partnership, one of the two, he would then like to buy
12 into it and be a partner with me.
13 Q This meeting at Krickett's West occurred approximately
14 when?
15 A Golly. Sometime in '92, I imagine; in that framework.
16 Q Was it before the election?
17 A To me, none of this was significant, so I don't remember.
18 It was in that time frame. And I said, yes, I would be
19 interested. The figure that was quoted to me at that time
20 was around a million two, million three.
21 He gave me some paperwork to look at, and I said I
22 would review it and I would look at the place. I used to
23 bowl -- we bowled city tournaments there; some Northwest
24 professional tournaments, et cetera. I hadn't been to the
25 place for a few years.
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 1 So my wife and I went over and looked at it. We were
 2 there probably for an hour. Place was doing a reasonable
 3 amount of business. It looked in good shape. We talked
 4 about it. At that time, we owned Kenmore. I had made
 5 offers on other ones, and I can get into that if you want.
 6 I was interested in maybe buying two or three more,
 7 depending on where they were, et cetera.
 8 And so, again, I was going over the paperwork,
 9 the superficial paperwork that I was given, and it was
10 quite a bit of paperwork. And I don't remember how many
11 days, what it was after that, because I don't remember the
12 exact night that my wife and I went over there. But they
13 had leagues, so I think it was during the week that we
14 went. The bar was reasonably busy. The restaurant was
15 reasonably busy.
16 Q Can you infer what season; that it would not have been,
17 for example, summer?
18 A No, this was not summer. This was probably -- could have
19 been -- it was maybe when the leagues were starting. It
20 could have been early September.
21 MR. SCHAFER: Okay.
22 A But the place was on the market. There was no ifs, ands,
23 or buts about it. A few days later, I got a call from
24 Mr. Tuell. He needed to see me. And I had known Dave for
25 a long time. He came into the restaurant and we sat at
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 1 the same place. He was as white as a sheet. White as the
 2 sheet that you're writing on, shaking like a leaf. Very
 3 tense, very upset. And I had never seen Dave like this.
 4 And to make a long story short, he stated that he had
 5 gotten in a knock-down, drag-out verbal argument with his
 6 partner. His partner had -- again, this is to my
 7 recollection, not verbatim -- that he was reamed up one
 8 side and down the other for bringing the bowling alley to
 9 my attention.
10 Q The partner being Grant Anderson?
11 A Yes. He had no business doing that. It was going to be
12 sold to whoever. I don't remember the name at that time.
13 I don't know. He wasn't interested in any other offers.
14 And Dave intimated and said to me that he knew this
15 was wrong. He had never been in a argument with his
16 partner before. He didn't quite know what he was going to
17 do, but it wasn't right. And he wanted the paperwork
18 back. I gave it to him.
19 Q Now, the paperwork, was this some sort of contract?
20 A No, no, no. This was like last year's business. You have
21 to go through the leagues. See, there's some things --
22 and I can get into this later, if you want -- some things
23 this superficial paperwork will give you in a bowling
24 center.
25 Q Is it like buying any other business; the profit and loss,
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 1 income statement, that kind of things?
 2 A No. Well, somewhat. See, a bowling alley is very
 3 cyclical. You make it in eight to nine months. In other
 4 words, the leagues run from September to -- some,
 5 depending on what the place is, September through April;
 6 sometimes early May, sometimes the end of March, depending
 7 on the center. You make a lot of money then, and you lose
 8 the three or four months the rest of the year.
 9 So you have to decide what your summer leagues are,
10 because there are some summer leagues and winter leagues.
11 And you have to look at what you can do as an owner. And
12 it takes a while to really discern whether you want to get
13 into it, and whether that center is profitable, losing
14 money, or whatever.
15 MR. SCHAFER: Can I interject here for a minute.
16 I want to focus on the meeting that you had with David
17 Tuell. Was this --
18 THE WITNESS: First or second?
19 MR. SCHAFER: The second one where you say he
20 expressed -- well, he related to you his encounter. And
21 you said, "to make a long story short," you summed it up.
22 Could you make it a longer story and tell us in as much
23 detail as you recall --
24 THE WITNESS: I was very surprised, and not
25 surprised, because I had seen this type of thing happen
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 1 once before. And, again, I can go into that, if you want.
 2 I thought I knew what as going on. But far be it from me
 3 to get involved in a fight between lawyers. And what I
 4 felt, again, not being a lawyer, what I felt was going on,
 5 and that was that the bowling alley wasn't being shopped.
 6 By "shopped," I mean put out on the market to see what it
 7 was worth.
 8 MR. SCHAFER: To get the best price?
 9 THE WITNESS: Yes. Like I said, I attempted to
10 buy New Frontier in the late '70s. The owners came to me.
11 They didn't just come to me; they came to several people.
12 AMF came to me, golly, probably mid '80s. You want me to
13 get into that?
14 MR. SCHAFER: Well, for the moment I would kind
15 of like to stick to --
16 THE WITNESS: I can tell you that these things
17 were shopped around.
18 MR. SCHAFER: And I'm definitely interested in
19 getting into that background about how somebody seeking
20 the best price for a bowling alley would go about doing
21 it. But for the moment, I'm asking you to recall as best
22 you can the conversation with David Tuell.
23 THE WITNESS: It wasn't a very long
24 conversation.
25 MR. SCHAFER: Or what he might have said, or
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 1 what impressions he gave you from his comments about his
 2 differences with Grant Anderson.
 3 THE WITNESS: Well, like I say, his physical
 4 demeanor was marked. I mean, I've been a physician for 34
 5 years. It wasn't hard for me to tell he was clinically,
 6 medically very upset. Almost in a state of shock. I
 7 mean, I've seen people in physical fights treated in the
 8 emergency room who weren't as upset as he was.
 9 MR. SCHAFER: And you say he indicated that he
10 had had a --
11 THE WITNESS: A verbal argument that he'd never
12 had before with his partner, Grant Anderson, triggered by
13 his coming to me with the offer of the bowling alley.
14 Q (By Mr. Newman) Let me ask, do you know if Mr. Tuell had
15 gone to anyone else with this?
16 A No, I do not know. He never said that he did; he never
17 said that he didn't. I do know around the bowling
18 community, and it is a very tight-knit community, there
19 was no talk of Pacific Lanes being up for sale. In other
20 words, it wasn't around to, you know, who is -- I mean,
21 you know who is available to buy a bowling center.
22 I mean, you have bowlers who have the ability, and
23 you have companies who have the ability, and you have
24 investors who have the ability. And we know most of each
25 other. Not everybody, but you know how to talk. And this
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 1 was not overtly available to people. It was not known
 2 that this was on the market. I was surprised when he came
 3 to me --
 4 MR. SCHAFER: Did you get the impression --
 5 THE WITNESS: -- that it was for sale.
 6 MR. SCHAFER: Did you get the impression from
 7 David Tuell that the reason his partner had been upset was
 8 that simply the deal had already effectively closed with
 9 another buyer?
10 THE WITNESS: No, not at all.
11 MR. SCHAFER: Well, what was your impression
12 from the comments and his demeanor as to why his partner
13 had been upset about him looking for other buyers?
14 MS. GRAY: I object to the form of the question,
15 being his impression as opposed to what he's told.
16 MR. SCHAFER: Well --
17 MR. NEWMAN: Rephrase the question.
18 MR. SCHAFER: Rules of evidence don't apply in
19 these proceedings. And I'm just trying to, as an
20 ordinary, reasonable person, invite his best recollection.
21 MR. NEWMAN: Objection is noted. Go ahead.
22 THE WITNESS: At that time, there was no
23 question in my mind that whoever was in charge was not
24 seeking the best offer.
25 Q (By Mr. Newman) And it's your impression the person in
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 1 charge was Grant Anderson?
 2 A I had been told when I had been dealing with Mr. Tuell at
 3 his office regarding this other, that because Dave and I
 4 had talked bowling a lot, that his partner was the
 5 executor of the estate since Mr. Hoffman had died. And I
 6 recollect that he was getting three grand a month as the
 7 executor. And that was even before I knew that it was on
 8 -- that Mr. Tuell came to me with the marketability or the
 9 potential of buying the bowling center.
10 Q And you --
11 A And am I making myself straight there?
12 Q I think so. You initially said that the reason -- because
13 Anderson was the executor and was a partner to Tuell, that
14 Tuell could not buy it directly; that he wanted to
15 basically have you buy it, and then buy an interest in it
16 afterwards?
17 A Correct.
18 Q When he felt that he could legally do it?
19 A Yes. And would I entertain that. Two things: Would I
20 look at buying it? And if I did buy it, would he then
21 subsequently be able to buy in a partner part of the
22 business from me?
23 Q Did you, from his comments, perceive that your
24 receptiveness to letting him buy in later was an implied
25 condition of --
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 1 A No.
 2 MR. SCHAFER: That's a problem.
 3 A I don't know that I would have. My wife and I had a
 4 policy basically of not having partners. I am not saying
 5 I wouldn't have. When I first bought one of my complexes,
 6 we offered her boss, who was an attorney -- at that time,
 7 she was a secretary -- in fact, Mr. Turco, we offered him
 8 a percentage and he turned it down, which I'm glad he did.
 9 But I've had a policy of not doing that.
10 Again, you know, you have to have loyalty in
11 business. And his bringing this to me, you have to have
12 consideration there. And, you know, had the transaction
13 transpired, I probably would have lived up to that
14 agreement. It was nothing written, but there was no -- I
15 would not have known about it had he not brought it to me.
16 MR. SCHAFER: Right, because it was not, as you
17 say, publicly known that it was up for sale?
18 THE WITNESS: No, there were no realtors
19 calling. There was no -- I mean, I was bowling back then
20 in tournaments, and I was -- I owned Kenmore, and I knew
21 the bowlers, et cetera. And there was no gossip about
22 Pacific Lanes being for sale.
23 MR. SCHAFER: Interesting. Did any comments
24 that Dave Tuell make give you the impression that possibly
25 his partner, Grant Anderson, was going to have some
Foot of page 14

 1 partnership arrangement with the buyer that he was selling
 2 it to, Mr. Hamilton?
 3 THE WITNESS: I don't even know that
 4 Mr. Hamilton's name came up. I can't say that. This was
 5 not a long discussion, that second meeting. He wanted the
 6 papers and he wanted out of there.
 7 MR. SCHAFER: I see.
 8 Q (By Mr. Newman) Was there anything on the papers that
 9 would have been out of the ordinary, based on your
10 experience in buying and selling bowling alleys?
11 A No, not at all. I mean, it was -- what I saw, had I have
12 not felt that it was in the million two to million three
13 range, I would not have let my wife take an evening out
14 and go look at the place. I'm not saying it was worth a
15 million two or million three. What I saw made it in that
16 ballpark. Again, I say, then you have to go a step
17 further and do a little more diligence. But from what I
18 saw and knowing about the value, million two, million
19 three was not out of the ballpark.
20 Q Did you take any efforts to ascertain the appraised value,
21 or were you told --
22 A No. We never got that far. But I would not be surprised
23 if it was in that ballpark, or even more.
24 Q Did you subsequently learn the sale price for the bowling
25 alley?
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 1 A Not -- I've heard rumors, but I haven't seen anything, nor
 2 do I know a concrete figure. Seven-fifty or a million
 3 seven, I have no idea. But, see, when you get into --
 4 when you get in a sale of a bowling alley, you have two
 5 other factors. You have inventory, which can range
 6 from -- when I bought Kenmore, the inventory was about
 7 twenty thousand; and when I sold it, it was twenty-six
 8 thousand, which is over and above the price.
 9 And then you get into sales tax, which you have to
10 consider when you buy. Like when I bought Kenmore, the
11 personal property was $400,000, so I ended up paying the
12 state thirty-two grand. So all this you have to look
13 into, and it also adds up. So whenever it was sold, you
14 have to pay -- Pacific Lanes, you would have to probably
15 put -- let me backtrack here.
16 In the bowling center, it's a little different
17 because the bowling lanes themselves are considered
18 personal property. They are not considered building and
19 land. Even though they're built in -- and this has been
20 adjudicated, and this cost me quite a bit of money in
21 Kenmore and I investigated it -- so you're looking at a
22 lane, depending how many, and the machines, you're looking
23 at anywhere from $8,000 to $15,000 each, depending on age,
24 et cetera. So I think Pacific is either 20 or 32 lanes.
25 I don't remember anymore.
Foot of page 16

 1 MR. SCHAFER: It's 36.
 2 A 36? Then you're looking at two to three hundred grand
 3 just in personal property there. And eight percent,
 4 that's what, twenty-four? That's not counting cleaning
 5 equipment, restaurant equipment, which can get to be -- so
 6 you're looking at, over and above his price, he would have
 7 to pay or I would have had to pay thirty grand plus on
 8 sales tax, and twenty grand on inventory. So you're
 9 looking at fifty grand over and above, and that would have
10 to be reported somewhere. And that's what you factor in
11 also when you're looking to buy a bowling center.
12 MR. NEWMAN: Um-hmm.
13 MR. SCHAFER: Can you give more background about
14 the number of bowling center purchase or sales
15 transactions that you had been involved in.
16 THE WITNESS: In the late '70s, Rose McGrinney
17 and Ted Tadich owned New Frontier Lanes. It's a 32-lane
18 center up next to the freeway here. And I used to do a
19 lot of bowling there, and I got to be friends with them.
20 And they knew I was interested, and so they came to Earl
21 Anthony to see if he was interested, and they came to me.
22 And I had, with my wife, had a long meeting with her
23 attorney, Mr. McGavick, the older. I think there was a
24 son, but this was the older McGavick at that time.
25 MR. SCHAFER: Don McGavick? John McGavick?
Foot of page 17

 1 THE WITNESS: Leo, I think, was the dad. And I
 2 looked at the paperwork, and I think they were asking a
 3 million four. After looking at it and talking to my bank,
 4 I said I will give you a million two cash, or a million
 5 three on contract, two hundred down. And Earl Anthony I
 6 think had offered him one-one. So, I mean, it was
 7 shopped. Everybody knew it was for sale.
 8 I decided not to, and they sold the business to AMF.
 9 They asked if I wanted to by the business, and I said, no,
10 I won't do that. I don't do that. I will not be
11 subjected to hostage from a landlord. Subsequent to that,
12 AMF ran it into the ground.
13 So AMF, I get a call one day from a guy out of New
14 York, a vice president of AMF. He came out here and we
15 met. This was probably in the mid '80s, I think. It was
16 shortly after I bought Kenmore, I think. I'll get to that
17 in a minute. And they would sell the business to me for
18 $175,000. I said no. I looked at the books and they
19 weren't losing money. I said, you talk to McGrinney. I
20 will buy the whole ball of wax for one-two. Well, they
21 ended up selling just the business to Ron Ditmore for
22 $300,000, I think. So that went by.
23 At the end of '83, '84, I got a call from a realtor
24 that I had done business with, and Kenmore Lanes was for
25 sale up north in Seattle. Fifty-lane center, largest
Foot of page 18

 1 bowling center in the Northwest; back then, west of the
 2 Mississippi. And I had bowled there a lot of tournaments,
 3 et cetera. To make a long story short, they wanted four,
 4 and I ended up giving them about three million four for
 5 it. Sold that ten years later for three-seven. If it had
 6 been down here, I wouldn't have sold it. But 70 miles, I
 7 learned a lesson there. 70 miles is a long way to do
 8 business when it's mostly cash. I think in '88, I
 9 think -- now, maybe it's later than that -- '90, the owner
10 and general manager of Narrows Plaza, a bowling center,
11 40-lane center, brand-new Brunswick that was owned by
12 Comfort --
13 MR. SCHAFER: Comfort, the attorney?
14 A Yes. And there was four people involved. An oral
15 surgeon, but I don't remember what his name was. Hersey
16 was the gentleman that owns Superior Linen was the major
17 stockholder, major owner. And they wanted three-five or
18 three something, and went through and looked at it. And
19 we came to an agreement at three-oh-five-oh, subsequent to
20 a little more due diligence, et cetera. To make a long
21 story short, they had just had the state tournament there,
22 state bowling tournament, which generates, golly, 150, 200
23 grand extra. So after going through that, finding out
24 that it was losing money. Of course, you get the state
25 tournament every ten, fifteen years if you're lucky.
Foot of page 19

 1 MR. SCHAFER: Doesn't come back next year.
 2 THE WITNESS: So it was worth around two-five.
 3 MR. SCHAFER: Two and a half million?
 4 THE WITNESS: Two and a half million. And Mr.
 5 Hersey called me, and he and I got to dealing outside the
 6 realtor. And I told him, Gordy, it's not really worth
 7 three. I will tell you what I think it's worth on paper,
 8 and I will tell you why. So we had a long meeting at his
 9 house. And it was worth two-five. And I said, I will
10 give you two-five. I said, I will break even at two-five,
11 but I think I can build the business up. And he kind of
12 laughed at me and said no.
13 He then got a manager in there. For three years,
14 they put 180 grand into new approaches and they lost
15 business, and ended up selling it to Brunswick for
16 two-four, hundred grand less than I offered to him after
17 three years of losing business, plus 180 grand for new
18 approaches. He won't talk to me now.
19 MR. SCHAFER: What is his name?
20 THE WITNESS: Gordy Hersey. That was the major
21 stockholder. And that's basically my involvement in
22 buying and selling bowling centers.
23 MR. SCHAFER: Can I ask how they -- well, let
24 me --
25 THE WITNESS: One other thing. Paradise was
Foot of page 20

 1 sold probably four or five years ago, and that was
 2 shopped. I mean, when bowling centers are up for sale,
 3 everybody knows about it in the bowling community.
 4 Q (By Mr. Newman) While you're looking that up, let me ask,
 5 have you had any subsequent conversations with Mr. Tuell?
 6 A Not regarding this.
 7 Q Not regarding this?
 8 A No. And I subsequently stopped doing business with him.
 9 Q Are you aware that he severed his partnership relationship
10 with Mr. Anderson?
11 A No. Subsequent to that, our dealings had to do with the
12 reestablishing of making sure these guys paid their back
13 mortgages, their accrued interest, et cetera, on The Bay
14 Company. And that's the only dealings I've had with him.
15 Q Okay. So you didn't talk -- you don't know about his
16 separation from Anderson or anything?
17 A No.
18 MR. SCHAFER: What I was going to ask you about,
19 and I don't know what process to use. What I brought are
20 just a few exhibits from the Commission's proceedings.
21 They are just the three-page purchase agreement, and then
22 two pages are just the amortization schedules that someone
23 understands the numbers. And these are numbered exhibits
24 from the Commission on Judicial Proceeding hearing in
25 January of '98.
Foot of page 21

 1 And I just wanted to ask him if, essentially, this
 2 kind of a three-page agreement is the type of legal
 3 documentation that you're accustomed to seeing.
 4 MS. GRAY: Sorry. Are you handing the witness
 5 what has been marked as Exhibit 21? It's three pages, and
 6 it was Exhibit 21 at the Judicial Conduct Commission
 7 proceedings?
 8 MR. SCHAFER: Yes.
 9 MS. GRAY: And do you wish to use that number
10 for reference in these proceedings?
11 MR. SCHAFER: What I hope to do is have that
12 entire exhibit book made a part of this proceeding,
13 because most everything in there is --
14 MS. GRAY: I meant this deposition.
15 MR. SCHAFER: Oh, okay.
16 MR. NEWMAN: The answer to your question is yes.
17 We are asking that this exhibit, which is marked as
18 Exhibit 21, be made an exhibit to this deposition and
19 remain marked as Exhibit 21 to avoid confusion.
20 MS. GRAY: That's fine.
21 THE WITNESS: Excuse me for a second. Off the
22 record a minute.
23 (Exhibit 21 marked for identification.)
24 MR. NEWMAN: Why don't you take few minutes,
25 Doctor, and look at that.
Foot of page 22

 1 (Discussion off the record.)
 2 MR. NEWMAN: Go back on the record.
 3 Q Doctor, you had asked a question about whether or not this
 4 was a -- you want to ask your question again?
 5 MR. SCHAFER: I just wanted to explain, because
 6 I've lived with this case for four years now, that this
 7 three-page agreement reflects the transaction between
 8 Grant Anderson and Bill Hamilton. Namely, that Bill
 9 Hamilton was paying $300,000 for the business assets to
10 Pacific Lanes, Inc., fifty grand down, 250 over
11 installment terms reflected by a promissory note that I
12 think was ten years.
13 THE WITNESS: Let me ask you, is there anything
14 in here regarding goodwill, personal property, et cetera?
15 MR. SCHAFER: No. Well --
16 MS. GRAY: I --
17 MR. NEWMAN: The document speaks for itself.
18 MS. GRAY: I think I need to object to
19 Mr. Schafer testifying and the witness asking questions
20 here. If you have a question for the witness, you should
21 pose it. If not, you can make your statements at the
22 hearing. There's no need for you to testify here.
23 MR. SCHAFER: I'm just giving him the background
24 because this is an unusual document, and making him aware
25 that the terms of the purchase of the land and building
Foot of page 23

 1 was that it was fifty thousand -- to them, what they've
 2 testified is $700,000 land and building transaction, fifty
 3 down, and the balance documented as a lease, $6,000 a
 4 month. That the purchase price on the land and building
 5 was documented as a purchase lease, where at any various
 6 stages, two-year intervals, the tenant could pay what is
 7 the financed balance and take title. That's the
 8 background.
 9 THE WITNESS: Well, as I look at this, if you
10 look on Page 2, 9A: "Enterprises shall purchase from
11 Pacific Lanes all of the operating assets of that business
12 known as Pacific Lanes, including inventory, equipment,
13 and goodwill."
14 When I bought Kenmore and I sold Kenmore, I had a
15 stack of stuff, one copy, that thick.
16 MR. SCHAFER: How thick is "that thick," for the
17 record?
18 THE WITNESS: A good half of an inch. And
19 goodwill was broken down, inventory was broken down. If
20 he didn't pay the inventory, what happened.
21 MR. SCHAFER: Are those issues normally part of
22 the negotiation process because the buyer and seller might
23 have different objectives?
24 THE WITNESS: Oh, absolutely. I'm having my
25 secretary -- I own some apartments, and we're talking
Foot of page 24

 1 about leasing an apartment, just an apartment which has a
 2 value of, you know, they're valued for tax purposes at
 3 twenty to forty grand apiece, depending on where you are.
 4 And I will show you, for the record, what a tenant has to
 5 sign just to lease an apartment. Not leasing a property
 6 that's worth a million two.
 7 MR. SCHAFER: Had you ever been aware of bowling
 8 centers changing ownership under an arrangement where the
 9 new party comes in and buys the business, but leases the
10 building and land under terms where they can take title by
11 paying what is really a diminishing balance if the lease
12 were a loan?
13 A I would have no way to comment on that. People do buy
14 businesses. AMF bought Narrows, and Hersey the New
15 Frontier. People have just bought the business, and under
16 what terms, it's beyond my expertise. I personally
17 wouldn't get involved in that, but I do know people who
18 have done that.
19 MR. SCHAFER: What --
20 THE WITNESS: And I'm not able to comment on
21 what kind of paperwork that would entail.
22 MR. SCHAFER: If this is viewed, as they've
23 testified, as a million dollar purchase, in the deals
24 you've seen, what is the down payment normally associated
25 with a financed purchase of a bowling center expressed as
Foot of page 25

 1 a percentage of the purchase price?
 2 THE WITNESS: Well, I bought Kenmore at
 3 three-four. The down payment was $600,000. And,
 4 basically, $660,000. That's what it cost me with
 5 inventory and sales tax. When I sold Kenmore, there was
 6 731 exchanged for the buyer, and he gave me 800 down.
 7 Inventory was almost $30,000 and then sales tax. And
 8 then --
 9 MR. SCHAFER: So it's a substantial down
10 payment.
11 THE WITNESS: So when I offered to buy Narrows,
12 500 down or all, depending on what he wanted. And when I
13 offered to buy --
14 MR. SCHAFER: You when say 500, you mean
15 $500,000?
16 THE WITNESS: $500,000 on contract. Or I
17 arranged with the bank, they would give me the two-five if
18 I needed it. When I was going to buy New Frontier, it was
19 a million two, all cash, or either two or three hundred
20 down. I think two hundred down, and a million three on
21 the contract. In other words, it would be a million-one
22 contract with $200,000 down. I think that answers your
23 question.
24 MR. SCHAFER: Yes, I think it does.
25 (Secretary handing papers to witness.)
Foot of page 26

 1 (Discussion off the record.)
 2 THE WITNESS: I just wanted to show you, for the
 3 record, this is what a tenant has to sign when they lease
 4 a $24,500 apartment.
 5 MR. SCHAFER: You're looking at how many pieces
 6 of paper?
 7 THE WITNESS: One, two, three, four, five, six,
 8 seven, eight, nine -- eleven pages. That's just a lease
 9 of twenty-four. Some of our apartments are valued at
10 fifty, but that's the standard lease that they have to
11 sign.
12 MR. SCHAFER: That's quite a contrast.
13 THE WITNESS: That's not a million two, million
14 three.
15 MR. SCHAFER: Do you recall in your
16 conversations with David Tuell or from your knowledge as a
17 bowler in the community if there were such grave problems
18 with the facility that --
19 THE WITNESS: The only problem that was
20 knowledge around, because people used to bowl moonlight
21 bowling. Are you familiar with moonlight bowling? They
22 turn the lights off at night, its on a weekend. And this
23 was back in the late '80s, I think, if I remember
24 correctly. People were kind of laughing that they could
25 see little like light sparkles coming -- falling from the
Foot of page 27

 1 ceiling, and everybody thought it was asbestos.
 2 MR. SCHAFER: In the spotlights, you mean?
 3 THE WITNESS: Yeah. And this was knowledge
 4 around the community. Everybody kind of laughed about it.
 5 And that's the only thing that was out of the ordinary
 6 regarding --
 7 MR. SCHAFER: Do you recall that or other
 8 problems being identified as factors when David Tuell
 9 invited your consideration of the purchase?
10 THE WITNESS: No. No. He never got that far.
11 In other words, had things transpired normally, I would
12 have come back and said, Okay, this looks reasonable. We
13 need to sit down. I need to know how many league bowlers
14 there are, how many summer league bowlers there are. I
15 need a monthly breakdown income, et cetera. Whether they
16 are interested in a contract or all cash. When it would
17 transpire, because leagues were going. Because you have
18 to factor in how many months you're going to be making
19 money, how many you are going to be losing money.
20 And it would have gotten down into some serious due
21 diligence. And it would have taken a good two to four
22 weeks to make a sensible -- like when I was buying
23 Kenmore, we were negotiating back and forth for several
24 months. You know, and this was 70 miles, so Kenmore is 70
25 miles, so I had to go back and forth and it took a while.
Foot of page 28

 1 It could have been done quicker here being local, but it
 2 would have taken some serious negotiation. But I didn't
 3 shut it off. It was shut off.
 4 MR. SCHAFER: Okay. It was withdrawn. Were you
 5 aware from Mr. Tuell's comments that any other parties had
 6 expressed interest or any other potential buyers out
 7 there?
 8 THE WITNESS: No. Never came up, and I never
 9 asked.
10 MR. SCHAFER: In the period of years from Chuck
11 Hoffman's death in March of 1989 through what I think
12 we've identified as September of '92 that you were talking
13 with Dave Tuell, were you aware that any parties had
14 attempted to --
16 MR. SCHAFER: -- buy Pacific Lanes?
18 MR. SCHAFER: I just mentioned that I believe
19 the conversations that you had with David Tuell were in
20 September of '92, and I'd like to -- basically, the time
21 records that are public documents, I just want to read two
22 entries for purposes of the record here, one being --
23 MS. GRAY: I again object to you testifying in
24 reading material into the record. I have no objection to
25 your asking the witness a question about an entry on a
Foot of page 29

 1 document.
 2 MR. SCHAFER: Okay.
 3 MS. GRAY: But I do object to your testifying in
 4 this proceeding.
 5 MR. SCHAFER: Can I read this to him and the
 6 date and whose time is entered and the time amount, and
 7 see if that sounds accurate to him?
 8 MS. GRAY: You can read him anything you wish
 9 and ask a question based on it.
10 MR. SCHAFER: Okay. Based on public documents
11 I've seen that are time records of the law firm where
12 David Tuell worked, he made an entry on September 15th,
13 1992, showing that he spent one hour. And the narrative
14 says, "Office conference with Dr. Williams regarding sale
15 of Pacific Lanes." I guess my question is --
16 THE WITNESS: And I got billed for that?
17 MR. SCHAFER: No. It was billed to the estate.
18 Does that -- I will read the other one, because it was one
19 week later, September 22, 1992. Again, David Tuell, he
20 recorded one and a half hours, and the narrative for the
21 time entry says, "Conference with Jerry Williams regarding
22 purchase of bowling lanes; annualized dollars; office
23 conference with Grant Anderson."
24 Do those dates sound like the time frame that you're
25 referring to, or close to that?
Foot of page 30

 1 THE WITNESS: What were the dates, again?
 2 MR. SCHAFER: September 15th of 1992, which was
 3 the date of the primary election when Grant Anderson won.
 4 And September 22, 1992.
 5 THE WITNESS: And they were office conferences.
 6 MR. SCHAFER: It doesn't -- the first one says,
 7 "Office conference with Dr. Williams regarding sale of
 8 Pacific Lanes." The second one says, "Conference with
 9 Jerry Williams regarding purchase of bowling lanes."
10 THE WITNESS: How long were each of these?
11 MR. SCHAFER: The first one says one hour. The
12 second one says one and a half hours.
13 THE WITNESS: Okay. Number one, I do not
14 specifically remember any office conference with Mr. Tuell
15 regarding Pacific Lanes. I am not saying it wasn't
16 mentioned. I do know that it was mentioned that
17 Mr. Hoffman was his partner and that he was the executor.
18 MR. SCHAFER: Mr. Anderson you're referring to?
19 THE WITNESS: Yes. I've never met Mr. Anderson.
20 I wouldn't know him if he was sitting right here. The two
21 incidences that I recall vividly occurred at Krickett's
22 Restaurant up in a table sitting by the office, and these
23 were instigated by Mr. Tuell. I do not remember talking
24 about it on a formal basis, and I consider these two
25 meetings a formal basis. They were serious meetings.
Foot of page 31

 1 Because the times that I was at Mr. Tuell's office
 2 was talking about the problems with the rent or the
 3 mortgage payments from The Bay Restaurant. We talked
 4 bowling. And I do not remember any -- I cannot say that I
 5 talked to him about anything at his office regarding
 6 Pacific Lanes, that I remember.
 7 MR. SCHAFER: Okay.
 8 Q (By Mr. Newman) Could there have been a teleconference
 9 with him, by chance?
10 A I had a lot of teleconferences, but not regarding the two
11 incidences that stick out in my mind like a sore thumb.
12 MR. SCHAFER: Do you have any recollection of
13 the time span, the span of time roughly, of those two
14 meetings? Are we talking about a period of a few days
15 going by, or a few weeks, or a few months?
16 THE WITNESS: Oh, it's possible that the second
17 meeting was a week after. It could have been ten days, it
18 could have been -- it wasn't a long time. I mean, this
19 was, "Here's the paperwork. Are you interested?"
20 We talked for a little while about what he was
21 interested in, wanting to come in to meet with me. And
22 then I took the paperwork home, studied it. My wife and I
23 went out to the center. And then I get this call, and
24 boom ban. That meeting was not long at all. That wasn't
25 even meeting long enough to have a cup of coffee.
Foot of page 32

 1 Q (By Mr. Newman) It wasn't an hour and a half, was it?
 2 A No way.
 3 MR. SCHAFER: Were you aware of any efforts by
 4 Ron Ditmore to buy Pacific Lanes?
 5 THE WITNESS: No. The the only -- I knew Ron
 6 Ditmore. He died a short while ago. He had been a
 7 patient of mine for quite a while, and I knew him because
 8 he owned Daffodil Lanes. And then he ended up buying the
 9 business at New Frontier along with Mr. Rowland. And they
10 got into some problems, and whether there was something
11 illegal going on, I don't know, but he got kicked out of
12 there. But it was cooking the books or something.
13 But I do not know of -- well, he also got involved in
14 the business at Daffodil -- or excuse me -- Paradise. And
15 he got kicked out of there. Mr. Islam and his wife,
16 Dr. Islam and his wife owned that.
17 And I got a call from Ron one day wanting to know if
18 I was interested in buying Paradise. He had a bunch of
19 paperwork. I had forgotten that. And the Islams wanted
20 out, but they wanted four million cash. And I looked at
21 it, and I said no. If they get realistic, let me know.
22 And then he ended up getting kicked out, and they
23 almost got into litigation because -- I talked to Dr. and
24 Mrs. Islam one day. They called me and wanted me out
25 there, and they wanted to explain to me why they were
Foot of page 33

 1 kicking him out, Mr. Ditmore. And they felt that he was
 2 tapping the till, and they weren't going to get into
 3 litigation if he left quietly.
 4 MR. SCHAFER: Do you recall someone named Mike
 5 Moore?
 6 THE WITNESS: Oh, yeah.
 7 MR. SCHAFER: There are, I'll just tell you,
 8 many references to meetings with him and Grant Anderson
 9 that refer to possible sale of Pacific Lanes. Can you
10 tell us about Mike Moore.
11 THE WITNESS: I knew Mike very well. We used to
12 bowl together. In fact, we bowled doubles in tournaments
13 together. He called me one day, wanted to meet me at a
14 restaurant. And, in fact, he came to me with the offer on
15 New Frontier. I didn't know what he wanted to talk about.
16 I said, "I'm sorry, Mike. I've already talked to AMF
17 regarding the sale of New Frontier."
18 And that kind of -- "Okay. I'm sorry." And I do not
19 know whether -- I have a feeling, though, knowing Mike and
20 his knowing that I owned Kenmore, et cetera, had he have
21 known that Pacific Lanes was for sale, he would have come
22 to me or called me.
23 MR. SCHAFER: Do you know --
24 THE WITNESS: So I don't know, but knowing Mike
25 and knowing his knowing that I owned the center and had
Foot of page 34

 1 made -- because he knew I made offers on the centers, that
 2 he would have called me.
 3 MR. SCHAFER: If you had been charged with --
 4 THE WITNESS: Unless he was trying to buy it
 5 himself. I don't know.
 6 MR. SCHAFER: Would you say that within the
 7 local community, and I guess the larger bowling community,
 8 if you were seeking the best price for Pacific Lanes, how
 9 would you go about doing it?
11 MR. SCHAFER: Yes. Back in 1992.
12 THE WITNESS: Well, it was an AMF house, so you
13 have to consider Brunswick would not be interested. I
14 think it's AMF. I haven't been there in a long time.
15 That's a factor to consider. Like Narrows, to give you an
16 example; Narrows Plaza is a Brunswick house. They call
17 Brunswick. And Brunswick, I think they own 120 or 30
18 centers, so they bought it. Brunswick would not buy an
19 AMF house, and vice versa. Bowlero is an AMF house, so
20 Bowlero is the one that leases Bowlero from -- I don't
21 remember the owner at this time. So number one, you do
22 that. You call. If they are not, fine.
23 Then you would call the people, because you don't
24 want to pay a realtor if you don't have to. Give you an
25 example. Realtor's commission on Kenmore, I think, was
Foot of page 35

 1 $80,000 on a three-something sale. So that would entail
 2 about four or five phone calls. Understand? Like, give
 3 you an example, Dave Tuell coming to me. He knew I was
 4 interested. Mike Moore may be going to some other -- he
 5 would have called me. Otherwise, you take the realtor.
 6 Now, I sold Kenmore because I got a call from the
 7 gentleman that used to manage and own Daffodil subsequent
 8 to Ron Ditmore selling it to him. His name was Ron
 9 Katowski. He got involved with a gentlemen that had a lot
10 of assets named Frank Evans. They called me and said
11 would I be interested in selling Kenmore Lanes. I said,
12 "Well, everything is for sale." He made me an offer that
13 was very good. No realtor commission. But that's how
14 centers are generally sold.
15 MR. SCHAFER: And you say in many cases it's
16 someone familiar with the industry who has a well-heeled
17 investor?
18 THE WITNESS: But before I sold it, I knew what
19 it was worth, because I knew what it was making. And
20 submitting that to a realtor, I couldn't have gotten a
21 better price. And I know a realtor would have charged me
22 fifty to a hundred grand to sell it. So that's why no
23 realtor was involved there, and I knew what I was getting.
24 In fact, they probably paid a little more than it was
25 really worth.
Foot of page 36

 1 MR. SCHAFER: Okay. Do you recognize the name
 2 Harold LeMay?
 3 THE WITNESS: Harold LeMay, as I understand,
 4 owns -- the garbage people?
 5 MR. SCHAFER: Yes.
 6 THE WITNESS: He collects from one of my
 7 restaurants.
 8 MR. SCHAFER: I asked the question because I've
 9 seen his name in the time sheets as somebody with whom
10 they discussed sale of the bowling alley.
11 MS. GRAY: I object again to Mr. Schafer
12 testifying, rather than asking a question of the witness.
13 THE WITNESS: I have never heard of bowling
14 business being associated with Mr. LeMay. I'm not saying
15 it doesn't, but I've never heard of that.
16 MR. SCHAFER: I'm just asking. I'm curious.
17 Q (By Mr. Newman) Is there anything that we haven't
18 covered, Doctor, that you'd like to say for the record?
19 A No.
20 MR. SCHAFER: I think we asked, and I think you
21 indicated that you have no documents, no records of the
22 meeting with Dave Tuell? You didn't keep copies of
23 financial statements?
24 THE WITNESS: No. He requested that I give them
25 back to him, and I did not want to get involved in the
Foot of page 37

 1 partnership hassle.
 2 MR. SCHAFER: Um-hmm. How serious --
 3 THE WITNESS: Which I interpreted it as being a
 4 little more than that.
 5 MR. SCHAFER: How serious did you perceive it as
 6 being between Dave Tuell and his partner?
 7 THE WITNESS: What I perceived of Mr. Tuell that
 8 morning was very serious. Now, it could have been
 9 anything. But from what he said, what was going on was
10 very serious. He was very troubled.
11 MR. SCHAFER: Hmm. Okay.
12 THE WITNESS: This was from a man I knew very
13 well.
14 MR. SCHAFER: I see.
15 MR. NEWMAN: Do you have any questions?
19 Q Mr. Williams, when did you first speak to Mr. Schafer
20 about any of the facts that you've testified to here
21 today?
22 A Ten days ago, two weeks ago. He called me up.
23 Q Had you ever spoken to Mr. Schafer before this month or
24 last month?
25 A No. I asked him how he found out about me.
Foot of page 38

 1 MS. GRAY: For the record, in light of the fact
 2 that Mr. Williams had not spoken to Mr. Schafer prior to
 3 this year, I am just noting for the record my objection to
 4 the relevance of his testimony.
 5 A May I comment that I had called my attorney,
 6 Mr. Christnacht, and asked him if I should come forward
 7 with this, because all of this was in the paper and I felt
 8 that I could contribute something. And my attorney
 9 advised me not to.
10 MR. NEWMAN: Let me just respond to your
11 objection. I want to make it clear for the record that
12 Dr. Williams is here based on subpoena. His name did come
13 up in the billing records as someone what was approached.
14 It happened in '92. I think that is the time frame that
15 is germane for this disciplinary hearing, regardless of
16 when Mr. Schafer contacted Mr. Williams. So your
17 objection is noted, and so is my response.
18 MS. GRAY: Nothing further.
19 MR. SCHAFER: I don't think so.
20 MR. NEWMAN: Okay. That's it.
21 (Deposition concluded.)
22 (Signature reserved.)

Foot of page 39