APRIL 11, 2012: Josh Nassi, Robert Braddock, Paul Rogers, Harry “Ray” Soucy, and John Kelly, the hedgefund manager who is actually an FBI undercover agent, have dinner to talk strategy (Exhibit 40, Clips 1, 2, 3, 5, 9, 10 and 11).
In GX 40 Clip 1, Soucy tells Kelly that Tracey Scalzi wants to contribute, but he says it’s too late for her to get in the game and that she may send checks from RYO people who aren’t straw donors and cause a “red flag.”
TRANSCRIPT GX 40 Clip 1:
HRS: Ah, this is happening today. I called fuckin’ Tracey . . . she’s a bitch down there. I told her, I said, listen . . .
UCE-1: She wants to get in the game now, huh?
HRS: . . .you wanna get in the fucking game, you gotta do this now. So I told them they need to donate to Chris Donovan. I said, no Tracey, you don’t tell him to donate to nobody. There’s a significant investment in this already. I don’t want it fucked up. . .being done the wrong way by the wrong people. I says, you tell them, they wanna get in this game, do it now and it’s gotta be done through me.
PR: Well yeah, if the checks are start getting shipped in from RYO, then it’s a fucking ‘red flag.’
UCE-1: It’s a red flag.
UCE-1: And he’s gonna, he’s gonna retreat.
UCE-1: He’ll be nervous.
HRS: Yeah. I says, I got people to use.
UCE-1: I mean, that’s, that’s the beauty of getting’ the straws the way we’re getting’ them because they didn’t show up on. . .?
HRS: . . .your name- their- no name- the only people they, they know you. . .but your name ain’t on paper.
UCE-1: Yeah, yeah. And no one from roll-your-own is.
PR: Nobody, none.
HRS: . . .right, right. So I, ya know, that’s what I. . .
UCE-1: Does she understand.
HRS: Huh? Yeah, she, she gets it. She says, well, the, the, my rep has b- has been away. Fuckin’ call somebody else.
In GX 40 Clip 2, Soucy tells Rogers and Kelly that Braddock will say “there’s no pro quo” but that it’s his job to say that, and he ads that Nassi is the one who understands the situation and is tracking the bill.
TRANSCRIPT GX 40 Clip 2:
UCE-1: I’m gonna have a conference call. Ahh the checks, ah, checks? Do you have the checks?
UCE-1: Alright, um. So they know? They’re good guys? They. . .
PR: Real good guys.
HRS: Yep. Josh and Rob.
HRS: Rob, Rob will go, you know, there’s no ‘pro quo’. Yes Rob, we know that, that’s your fucking job as the money man to say that…
UCE-1: They have to say that. Yeah, no, I get that.
HRS: . . .but Josh is the one who understands. Got the bill. Tracking it. Knows the gig…
HRS: Cause Joe Aresimowicz said after these guys call him. . .
UCE-1: [Talking at the same time.] After UI they hear from Chris.
HRS: After they call Chris Donovan before they’re out of the parking lot tonight. . .
UCE-1: Then hopefully you’ll get word back from Joe.
PR: [Talking over each other.] But Josh actually, Josh actually works for the national Democratic committee, right? He gets sent around the country for elections, doesn’t he?
HRS: He, ah, when Chris turns him loose, yeah.
PR: That’s what I was. . .Cause you know Josh. . .
UCE-1: When he turn. . .
PR: No Josh.
UCE-1: He needs him now.
HRS: Yeah. No, Josh works for Donovan right now.
PR: Currently, yeah.
PR: But he got sent from nationally. . .
PR: . . .to Connecticut ta help with this particular election. He was like, he was in Utah.
HRS: No, no, no, no, no. That’s John Hale- John Healy used to work in the National Republican.
PR: No, no, no Josh.
HRS: Josh, yeah, he did work but he, he’s been workin’ for. . .
PR: Like he was just in Utah. But he’s been workin’ with Donovan for a year.
HRS: He’s been workin’ for Donovan here at the House and on his Congressional Campaign and he’s gonna end up back in Washington.
PR: [Talking at the same time.] Once he’s UI.
UCE-1: No doubt about that.
HRS: Oh yeah.
UCE-1: Alright, great. I’ll follow this Tahoe.
In GX 40 Clip 3, Braddock and Nassi are introduced to Kelly, and after some small talk about the campaign Nassi says they are trying to raise about $1 million.
TRANSCRIPT GX 40 Clip 3:
JN: Hey, guys UI.
UCE-1: How you doin’, John.
UCE-1: John Kelly. Josh, nice ta meet ya.
PR: Josh, how you doin’, I’m Paul Rogers.
JN: Josh. How are ya? Hi Ray.
HRS: Josh, how we doin’.
JN: Good, how bout you?
UCE-1: John Kelly.
RB: John, nice to meet you. John?
UCE-1: Rob, nice to meet ya.
PR: How ya doin’? Good ta see ya. Good to see ya again.
HRS: Rob . . . what’s goin’ on?
PR: You been busy up there, or what?
JN: Oh, yeah.
UCE-1: Sounds like a a busy day with the uh, what’s on the agenda.
JN: Yeah, yeah, well, UI
UM: Definitely (Laughter)
JN: We’re, we’re not actually at the Capitol. We’re on his campaign side UI.
JN: UI we assist with him . . .
PR: Oh yeah.
JN: But it’s busy there too. I mean, it’s like, we switch back and forth with him. It’s, ya know, I used to be up at the Capitol with him when I was younger. I was an attorney for the caucus, and ah, but I left there to be his campaign manager. And Rob here is his finance director so . . .
UCE-1: It’s a good busy.
JN: Yeah, it is. It’s a good busy. Ah, at times UI, ya know, keepin’ things goin’ forward and ah, ya know its a tough balance now because he’s out there talkin’ to UI
JN: You know, we’re trying to raise ah, ya know, right now, we’re at about a million dollars.
In GX 40 Clip 5, Kelly introduces himself and explains the fictional angle from which his hedgefund is approaching the RYO stores as an investment.
TRANSCRIPT GX 40 Clip 5:
UCE-1: Yeah, so Rob so to answer your question. I work for a hedge fund and we, ya know we, we, what we look to do is, take advantage, I don’t know how much you know about a hedge fund, but we look to take advantage of opportunities, and this is one that kinda snuck up on us . . . that we, you know, our analyst on it for about 18 months or so ago, and . . . .we realized, writing was on the wall, at least nationally [UI] this thing is gonna, this thing is gonna to get addressed on the national level . . .
UCE-1: . . . but we have, we have a, ah, prototype in place that, for the next six months, we can put a package together, do an IPO, a pre-sold IPO, it’s all gonna be pre-sold to, our hedge fund industry pros, and um, with the idea that ultimately right before, if we IPO, that we look to make a deal with like RJ Reynolds or somethin’ like that, and have it picked off that way, so, so ah, that’s . . .
RB: I think, I think I understood everything you just said. I
just . . .
UCE-1: We’re gonna make a lotta money [Laughs] . . . on a loophole that I know ultimately will be closed.
RB: It’s not as [UI]
UCE-1: [UI] and that I, ya know, we, so we’re attacking this from a grass roots effort too. We’re in many states. Out of the 50 states, several of them just, they’ve already, they’ve preemptively have addressed the, the taxing equity issue, um, but they’re still 38 or so states that don’t know what to do. And, ya know, some of them are, are somewhat, um, hedging because they, they don’t, they don’t have roll-your-own representation in the state yet, and some of them are, are more concerned about if they don’t address it, how, how that’s gonna impact the, the tobacco settlement from a decade ago.
UCE-1: And a lot of states, they think [UI] lose a lotta money if they don’t address this. But the reality is, I mean, it’s, it’s [UI]. I’m learning a lot. I, I really didn’t know much about it. I know business, but I don’t, I know balance sheets. It’s actually, so Paul, jump in if I’m screwing it up, but, um, so I don’t have, we don’t have, um, ah, what, what to do you say, ah, boots on the street or, or, on this. We’re just looking to actually, 38 states that will allow us, and ones that get through session without any kinda preemptive [UI] taxing, then we’re going to, um, put several shops or at least purport to fund several shops in those states, package it up, price . . .
UCE-1: . . . and, uh, well we, we, our [UI] look if we’re public, well, if we’re public, it’s gonna be more than a quarter million, a quarter billion. If it doesn’t go public, we’ll go to RJ Reynolds directly without having to incur the cost of bringing it public . . .
UCE-1: . . . then, they probably put 200 million and, ya know, saves us a lot of the – due diligence on the front end, and we think it’s going to attract their attention [UI], I didn’t even tell you this but, we’ve already, they we’re out there now . . . We’re, we’re in Washington, we’re in, in 38 states, and ah, they’ve already had overtures to us to the point where, ya know, this time next year we may be back in the state looking to actually close [UI]. So it’s really a bizarre business that I’m in, Ya know, today I, [UI] we’re lookin’ to make sure that no taxes are imposed [UI] and no manufacturing, ya know, [UI] manufacturing facilities and, needs, um, patents and, um . . .
RB: But once theoretically [UI] you would sell off, your roll-your-own, ya know, the stores that you packaged.
RB: . . . you don’t want anyone else being able to [UI].
UCE-1: We wouldn’t care, cause we’d be completely out of it, we’re cashed out . . . and, and my sense is that big boys would then come in from the, ya know, big tobacco companies lookin’ to pick that piece up. Ya know, much like, ah, what Facebook did the other day when it [UI] . . .
In GX 40 Clip 9, Kelly asked how worried should he be about the progress of the legislation thus far, and Braddock responds “How worried do you have to be? I’m, ya know, you can only control what you can control . . . Just be worried about what you can control and we will relay your concerns to the appropriate individuals.” Nassi then explains how they might approach the argument against the legislation.
TRANSCRIPT GX 40 Clip 9:
UCE-1: I don’t wanna waste too much of your time, I, do appreciate it. You guys . . .
JN: Well we, [UI]
RB: I’ll have a [UI]
UCE-1: Regular coffee.
WAITRESS: Regular [UI]
UCE-1: No, coffee
WAITRESS: Coffee, sorry
PR: I’ll have an espresso too [UI]
UCE-1: Um . . .
JN: So, I mean, we just got caught up at the office, we had a couple of dealines that we had to meet [UI].
UCE-1: Yeah but I know, believe me, I know your schedules are . . . um..
JN: We didn’t eat lunch and it was 3 o’clock, and we go like, [UI] gotta get [UI][Laughter]
UCE-1: No, we know.
RB: Ray’s the man [UI]
UCE-1: Yeah he’s he’s he’s great and, and he hasn’t let me down on anything but, ya know, a couple a things I just wanted [UI] I’m kinda old school like that, so I like to actually meet, meet people but um, I have my marching order as well. Ya know we’re, I’m a sports guy, so I like to [UI] put things in sports vernacular. I consider my issue. The ahh, the non-taxing right now. of the, of the roll-your-own. I consider it that we’ve gotten this far local session. It’s only a few weeks, it’s
my understanding. Right? May 9th or 11th or something like that this is, and I, and I feel as if we’re up a little. I feel like we’re a, we’re a few points up and we’re late into the fourth quarter and, ya know, I can’t afford to misstep at this
point. And I want to make sure that, ya know, the people that we’re dealing with know that, ya know, this is an important issue for us. It’s really the only issue that we care about in Connecticut. ….And, and that it surfaced somewhat unexpectedly. But it surfaced. I mean, we’re prepared for it in other, other states. So we can adjust to that. And, and part of that, part of that surfacing, it’s something that, ya know, where we only have a few minutes left in the game
or a few days left in the session, that we make sure that the right people know that we’re serious . . . and, and that we’re lookin’ to establish a relationship. And we understand what it takes, ya know, going forward. And, ya know, this isn’t just a two or three week, you know, flash in the pan kind of, ah, not that you’ll ever have to meet me again. [Laughter] But at least, at least now you’ll, you’ll, you’ll know, but, um, and I [UI] because, because of the, the amendment that didn’t come up the other day. Um, ya know, by, by all accounts out of nowhere, right? And um, ya know, my marching orders are just to do what I can to make sure that, that thing gets killed. And . . .
UCE-1: . . . whatever I can do to, to, to help that or to convey that message, and- forgive me, I’m a lay- yeah I d- I don’t know the right words for politics on this, but I understand that things can happen when we’re in, ya know, 11th hour, these things can get introduced. But I also know that there are ways that it can never see the floor, or they can filibuster it away and, or that it can die in committee. [Laughter] But not [UI] Um, my main point to impress upon you guys that, um, that we’re serious. The people behind me are serious and, um, the um . . . the amendment that came up last week….um, ya know Ray had, Ray Ray had said all the right things, and I have the utmost faith. And Ray hasn’t let us down on anything yet, in fact, um, ya know when I gamble [UI] I play black and red. [Laughter]
UCE-1: I’ll play more on one than the other, but I, but I do like, but I do like to hedge my bets, so. And, ya know, he, but [UI] to be honest with ya what I’m [UI] about, our, our problem is the tax issue, and obviously Chris is the guy that can, that can help us help us with that. By all accounts I have no doubt about that. You know, I’d also [UI] I, I, I will say that it will be a fun night, I’ve gone to the other side too. Um, ya know, in the interest of full disclosure, ya know, and that’s, that’s the red that I play. I wanna, I can’t afford to lose on somethin’ like this. There’s just too much at stake for us, so, um, with that said [UI] now you guys know that, I’m here. I plan on being here. Ya know, however we can help. Ray, Ya know, I appreciate Ray, um, helping us out with, um, I’m also very sensitive to the fact that, ya know, roll-your-own can’t be out in front on any of this. So, ah, we don’t want any red flags. So Ray helped with that. [UI] Um, but, ya know, I think, ya know, if, if, if you need things done differently I can do them differently too. [UI] Ya know, I didn’t, I’m feeling my way in the dark a little bit on that. I don’t know how..
[Waitress brings coffee-more discussion about coffee]
HRS: [UI] 1800 shares [UI]
RB: We will relay your concerns to the appropriate individuals.
UCE-1: Appreciate it. Ahhmm. How worried do I have to be?
RB: How “hard” do you have to be?
HRS: How worried?
UCE-1: How worried?
RB: How worried do you have to be? I’m, ya know, you can only control what you can control.
RB: Just be worried about what you can control and we will relay your concerns to the appropriate individuals.
UCE-1: Okay. Because, ya know, I, I am a little unsure [UI] based on like, ah, how the vote went down.
UCE-1: Now Ray’s tellin’ me that, ya know..
HRS: Committee votes, the committee don’t mean much.
UCE-1: Yeah, um, so [UI] ya know, unless they, ah, go down party lines. And, ya know, [UI] last week…[UI] about a committee or, and that’s the other thing, I, I guess I’m not totally clear how things can happen from this point going forward. I, yeah I, um, I know Ray has a good handle on it but, admittedly, ya know, um, ya know, if the Speaker stop it from coming to the floor, stupid or a committee can kill it, or if it comes out on the 9th can it can be talked ad nauseum and no vote is ever taken? Or an amendment can be taken off a bill? That, that right? That sound right? That Or does the whole bill have to die?
JN: No the whole bill doesn’t have to die. Here’s how- I’ll just tell you exactly what the situation is [UI] this came out of nowhere and this was successful because it seemed like, ah, the Attorney General [UI] bill and [UI] the process and, and after [UI] the issue of, ya know . . .
JN: . . . there must have been some communication that happened with the Attorney General’s office and the Governor’s office [UI] and the Department of Revenue Services and Kevin Sullivan who, this was, this was his package, alright, so he was like, ya know certain things that are in reserve for like the discretion of the [UI], alright, so like they’ll hold off on the bill to come out of committee, till the last minute. This is gonna, this gonna be a bill [UI] and then the commissioner [UI]. So rather than be up front [UI] the process like, like would happen with any
other bill, the governor [UI] the session, um, the bill will [UI] behind the scenes and so the commissioner of revenue services put it together as a package. It wasn’t just [UI] the commissioner of revenue services proposed, um, [UI] the bill and, um, ya know I think that part of this, the argument now has to be that it’s little too late in the process, ah, we need you to having a hearing on this, um, [UI] see this
issue, ah, what’s the urgency, ah, let’s wait till we can do this the right way, have a hearing on it, do this in the light of day, and wait till next year. What’s the rush? Why do you wanna increase taxes [UI]?
JN: . . . [UI] running for re-election, um, and, we’re gonna increase taxes haphazardly on a, on a [UI] rather than a [UI] process. We have a process [UI] for a reason . . .
JN: . . . and so that’s, ya know, those, those are the arguments that I think are gonna work best at this point.
In GX 40 Clip 10, Kelly hands Braddock a second set of four $2,500 checks. Braddock lets Kelly know that he can’t speak for Chris Donovan, but during the ride home after their first meeting with the smoke shop owners, Donovan had expressed support for their businesses.
TRANSCRIPT GX 40 Clip 10:
UCE-1: And that makes sense, and, as far as I can, I can have a comfort level that, that, that, Chris will buy that argument, too and support that argument. Because, it’s affordable, I mean we, we can come up with what-whatever we need to come up with. I mean . . . on the merits. That’s, that’s really the most important thing . . . ya know if, ya know if it’s not somethin’ that, that he’s gonna pass . . .
RB: I can’t speak for Chris.
RB: I, I was at, I was at the meeting with Chris when, the first meeting we had in the winter. After that, we got in the car and started driving away. Ya know, it was a normal discussion. And Chris said, you guys have [UI] that are gonna be, ya know, they just wanna open more stores. Have more jobs [UI] that’s what he said. I mean, he like, he has already told me he appreciates the small business [UI]. Ya know, I think that’s something that he would, he’s ah, he’s already [UI].
UCE-1: Alright, okay. Well that, that . . . The argument is there for sure….
UCE-1: [UI] [Talking over each other.] Yeah, but that’s, ya know, I worry about . . .
RB: UI okay here what he would do . . . [UI]
UCE-1: Right, exactly. Alright.
JN: Decide what you wanna do . . .
UCE-1: Alright, very good. I appreciate it. Is this for you then?
UCE-1: That’s, that’s um, four checks. And, ya know, and, and I can change that too if- I’m not on any of those, but if, if you think a more o- public, um, showing from roll-your-own then, then that’s fine. I, I was just under the understanding that I thought it might be sensitive if if we’re out there then that might be more of a red flag but I can s- I can switch that, right Ray? I mean,
UCE-1: And there are no duplicates in here from, from last time that would raise a red flag?
UCE-1: Alright so. So if, I’d be happy to . . .
HRS: No, no, no, no. I, I, I know how this works. [Laughs]
UCE-1: Yeah yeah, well…
HRS: Can’t be duplicates..
UCE-1: No, I know . . .
UCE-1: . . . but…
HRS: Yeah, but ah, like I said, it’s, it’s, it’s . . . it’s there, um . . .
UCE-1: I mean, to your point, I think that doesn’t . . .
In GX 40 Clip 11, Kelly says he doesn’t want to spend good money after bad if the bill is definitely going to pass, and Nassi sticks with Kelly’s previous use of a sports analogy to ease his concern, suggesting the contest is more like halftime, they are winning and the other team hasn’t scored. The plan is to make sure they have a plan to stop them – “knock ‘em down” – in the second half. Further, Kelly lets them know the checks he gave them are straw contributions, saying, “And even though . . . my name’s not on there, that it’s clear, it’s me. . .”
TRANSCRIPT GX 40 Clip 11:
JN: Consider what your business interests are. I mean, I’m trying to think of what your best strategy is [UI].
UCE-1: [UI] I mean. Right, I mean the business interest is clear that , you know, it’s just [UI] um, and the money’s not the issue. The issue is more, ya know, I wan- I’d want to use it surgically . . .
UCE-1: . . . right?
UCE-1: You’re a perfect test for us, ah, quite frankly. And . . . and how do I best do that? So . . . I just want to make sure I’m, I’m, I’m understanding clearly as far as . . . Chris will be, Chris will be understanding of our problem and it’ll make it easier for him and right down the line to, to ahh, to prevent it . . .
HRS: Support them.
UCE-1: Yeah support . . . our cause, and, and and to have this thing never see the light of day.
UM: [UI]…do that [UI].
UCE-1: Alright, that makes sense. Actually I just don’t, what I don’t want is to have to put, ah, to make- put good money after bad. I mean, if it’s a foregone conclusion then, then that’s a different story. But if it’s, ya know, we’re still workin’, we’re still workin’ to finish this game up and, and, and then put a w in the column, right? So, um . . .
JN: Yeah, the team sports analogy, I mean I, I, this is more like halftime. We’re just starting the second half.
JN: I mean, as far as timing, because, ya know, again, not many, not much has happened in the first half [UI]. The session started in February, it ends in May.
JN: We’ve got one month left of a three month session…
PR: That’s a long time.
JN: . . . it’s present, it’s two thirds of, in actuality two thirds of the way through, but most of the work is done at the end.
HRS: Last week.
JN: Right, most of the work is done in the last week, so it is more like half time. I mean I, ya know, we are winning, ya know. They haven’t scored yet or anything . . .
JN: . . . as they’re marching down the field, and we want to like make sure we’ve got some good plans and good plays in places to knock ‘em down . . .
UCE-1: Prevent seven
JN: . . . in the second half.
JN: [UI] so.
UCE-1: Alright. Well that, you know that makes it a little clearer perspective too. I won’t be getting caught sleeping heavy. I know you guys won’t either so [UI talking over each other] you’ve really kept me in good company in that regard.
JN: I mean, I don- I don’t want to mislead you and, ya know . . .
UCE-1: No I know.
JN: . . . come on up here and then you think like everything’s gonna be taken care of . . .
JN: . . . I mean, I think there’s a . . .
JN: . . . strategy that, ya know, I can help you with, and we can all work on together, ya know . . .
UCE-1: Okay. I appreciate it.
JN: Um, but ah, I think you got some advice and maybe you could [UI].
UCE-1: The fact that you’re here gives me a comfort level, and the fact that, ya know, I have every confidence that, ya know, Chris will go along. That at least, ya know, we’re willing to contribute, right? And even though . . . my name’s not on there, that it’s clear, it’s me and not ya know, there’s ah issue, there’s an issue that we have a serious interest in. That’s all and then…alright, well let’s- we have our, we have our work cut out for us. That makes sense. I appreciate that, though.
JN: . . . I appreciate, ya know, I appreciate the help you’ve given us and, ya know, we appreciate the way that, that we, we, ya know, as far as keeping lines ta, ya know, work with each other, try to get to the end of the race.
Provided as evidence by federal prosecutors in the trial of Robert Braddock Jr.