737 DCDBKURT1 Trial 1 UNITED STATES DISTRICT COURT 1 SOUTHERN DISTRICT OF NEW YORK 2 ------------------------------x 2 3 UNITED STATES OF AMERICA, 3 4 v. S1 12 Cr. 376(RMB) 4 5 RUDY KURNIAWAN, a/k/a "Dr. Conti," 5 a/k/a "Mr. 47," 6 6 Defendant. 7 7 ------------------------------x 8 December 13, 2013 8 9:07 a.m. 9 9 Before: 10 10 HON. RICHARD M. BERMAN, 11 11 District Judge 12 13 APPEARANCES 13 14 PREET BHARARA, 14 United States Attorney for the 15 Southern District of New York 15 JASON HERNANDEZ, 16 JOSEPH FACCIPONTI, 16 Assistant United States Attorneys 17 17 WESTON, GARROU & MOONEY 18 Attorneys for defendant 18 BY: JEROME MOONEY 19 19 VERDIRAMO & VERDIRAMO, P.A. 20 Attorneys for defendant 20 BY: VINCENT S. VERDIRAMO 21 21 - also present - 22 22 Ariel Platt, Government paralegal 23 Bibi Hayakawa, Government paralegal 23 24 SA James Wynne, FBI 24 SA Adam Roeser, FBI 25 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 738 DCDBKURT1 Trial 1 (Trial resumed) 2 (In open court; jury present). 3 THE COURT: Okay, everybody. Nice to see you. Please 4 be seated and we'll start. 5 We'll have the next government witness. 6 MR. HERNANDEZ: Government calls William Koch. 7 THE COURT: Okay. 8 THE DEPUTY CLERK: Sir, please remain standing. 9 WILLIAM KOCH, 10 called as a witness by the Government, 11 having been duly sworn, testified as follows: 12 THE DEPUTY CLERK: Can you state your name for the 13 record, please? 14 THE WITNESS: William Koch, spelled K-O-C-H. 15 THE DEPUTY CLERK: Thank you. 16 THE COURT: Please be seated. 17 THE WITNESS: Thank you. 18 THE COURT: All right, Counsel. 19 DIRECT EXAMINATION 20 BY MR. HERNANDEZ: 21 Q. Good morning, Mr. Koch. 22 A. Good morning. 23 Q. Mr. Koch, can you please tell the jury what you do for a 24 living? 25 A. I'm president and chief executive officer of a company SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 739 DCDBKURT1 Koch - direct 1 called Oxbow Carbon, although I know "carbon" is a four-letter 2 word now. But what we do is we buy a product from oil 3 refineries, two products, called petroleum coke and sulphur. 4 Petroleum coke is about 95 percent carbon and with some other 5 impurities in it, and then we dispose of that. It's a waste 6 product for the oil refinery, as is sulphur. And we sell those 7 to power plants, steel plants, aluminum plants, cement plants, 8 et cetera, all around the world. We, I think, sell to a 9 hundred different countries. 10 And then we process the aluminum-- or we process the 11 petroleum coke to make it into a product that is used to make 12 aluminum. 13 Q. And what's your educational background, Mr. Koch? 14 A. I'm sorry, I missed one other thing. We're also in the 15 gas-drilling business. So I'm in the politically incorrect 16 businesses, unfortunately, but we call ourselves waste disposal 17 people for the refineries. 18 My educational background? I grew up in Wichita, 19 Kansas. So you can say I'm a hick. I went to public school 20 there. Then I went to Culver Military Academy because I was a 21 bit undisciplined when I was a teenager. Then I went to MIT. 22 And I got three degrees from MIT over a long period of time: 23 The first was a BS, Bachelor of Science; next was an MS, Master 24 of Science; and the last was an ScD, which is a doctor of 25 science. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 740 DCDBKURT1 Koch - direct 1 I had a professor once who actually taught my father, 2 who went to MIT as well. He said, "Why in the world do you 3 want to get a doctorate?" 4 I naturally said, "Well, because I think it's 5 prestigious and I love science." 6 He said, "Well, you know what BS is, don't you?" 7 I said, "Yes, a Bachelor of Science." 8 He said, "No, the real BS." And then he said to me, 9 "Well, you know what MS is, don't you?" 10 I said "No." 11 He said, "More of the same." And then he said, "You 12 know what a Ph.D. is, don't you?" 13 I said "No." 14 He said, "Piled higher and deeper." He was trying to 15 discourage me from spending all that time at MIT. 16 Q. It didn't work. 17 Your company, Oxbow, could you tell us where it's 18 located? 19 A. Well, the headquarters are in West Palm Beach, but we have 20 facilities in quite a number of states in the United States and 21 then we have offices in about 30 different countries. 22 Q. Do you live in West Palm Beach where the headquarters of 23 Oxbow are located? 24 A. I live on an island called Palm Beach, which is a Fantasy 25 Island, the good and the bad of it. And my office is only 20 SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 741 DCDBKURT1 Koch - direct 1 minutes from my house. 2 Q. Mr. Koch, are you a collector of any kind? 3 A. My wife calls me a horder, but I am a collector of numerous 4 things. 5 Q. Can you give us an example of the types of things you like 6 to collect? 7 A. Well, I like to collect art, paintings, sculpture. I 8 collect some antiquities. I have collected a lot of Western 9 items. I'm a Western fanatic. I have Western photographs, I 10 have Western guns, Western paintings, Western clothes for men 11 and women and babies, Western saddles, et cetera. Even have 12 the one and only picture of Billy the Kid. But, anyway, that's 13 one of my fascinations, is the West. 14 Q. How about wine? 15 A. I have-- yes, unfortunately I have a lot of wine. I have a 16 cellar of 43,000 bottles. You see why my wife calls me a 17 horder. And I try to collect wines that I think are the very 18 best, that I enjoy, that I love drinking. 19 Then I have four types of wines that I try to collect 20 every year just to satisfy my obsession with collecting. And 21 I've tried to have every year of, say, Chateau Lafite, which I 22 believe I have about 150 years or so; I collect Mouton, which I 23 have about 120; Latour, which I have about 100, 100 years; and 24 then Petrus, which I have about 90 years. Unfortunately, about 25 half of all of those years are fake. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 742 DCDBKURT1 Koch - direct 1 Q. Now, when did you first start collecting wine? 2 A. Well, I'll ramble a little bit. I'm sorry. When I was at 3 MIT, we'd have parties once a month and we'd do binge drinking 4 to break up all the hard monotony-- not the monotony, the 5 pressure of hard work. I found I got hepatitis and couldn't 6 drink for a number of years, which is great. Saved me from 7 being an alcoholic. 8 And then I found out I could drink wine, so I started 9 off with Mogen David, and then went to Lancers because it had a 10 nice bottle that you put corks in on your dinner table. Then I 11 started after that gradually trying to get better and better 12 wines. 13 So I got where I could afford it. In the late '70s 14 and early '80s I became a voracious collector. 15 Q. You weren't binge drinking at MIT on Chateau Petrus, were 16 you? 17 A. I certainly wasn't. It was on-- no. 18 Q. Now, what do you do with the wines you collect? 19 A. Well, I put them in a-- well, I mean, I have two 20 definitions. I have wines that are drinking wines and then I 21 have wines that are collection wines that I just want to brag 22 about that I've got them. For example, Thomas Jefferson wines. 23 I bought those because they were very historical. Then I found 24 out they were fake. Now I brag and show people the fake Thomas 25 Jefferson bottles rather than the real ones. SOUTHERN DISTRICT REPORTERS, P.C. (212) 805-0300 743 DCDBKURT1 Koch - direct 1 So I have these collection wines, and I've described 2 the four types of wines that I do collect and try to get 3 every year. But then 99 percent of my collection is drinking 4 wines. I do that because I love to drink fine wines with my 5 friends, with new people that I meet that love-- that also 6 appreciate outstanding wines and historical wines. And, also, 7 I entertain. Sometimes we sell a wine dinner at my house for 8 auction for the Police Foundation to put their kids through 9 school or, you know, underprivileged kids, charities and 10 things. 11 But I generally like drinking with other people. I 12 don't have a good time drinking by myself. But one of the 13 great things for me is that if I could have good friends, good 14 music, beautiful paintings on the wall and great food and great 15 wine, then you can look and see the love the artist had for his 16 paintings, the love that the musician had in playing or making 17 the music, and you could taste the love in the wine.