Deposition of David J Stern

Case 0:10-cv-62302-RNS Document 115-1 Entered on FLSD Docket 12/21/2011 Page 1 of 277
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Case 0:10-cv-62302-RNS Document 115-1 Entered on FLSD Docket 12/21/2011 Page 2 of 277 1
Plaintiffs,
v.
CASE NO. 10-62302-CIV-UNGARO
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Defendants.
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TAKEN ON BEHALF OF THE PLAINTIFFS APRIL 25, 2011 10:00 A.M. - 5:13 P.M.
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REIF KING WELCH LEGAL SERVICES 888 EAST LAS OLAS BLVD., SUITE 508, FORT LAUDERDALE, FLORIDA 33301
SAMANTHA HANSTEIN, Court Reporter
REIF KING WELCH LEGAL SERVICES www.reifkingwelch.com (877) 291-DEPO (3376)
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DJSP ENTERPRISES, INC., a Florida Corporation, DJSP ENTERPRISES, INC., a British Virgin Islands Company, LAW OFFICES OF DAVID J. STERN, P.A., DAVID J. STERN, individually, DAL GROUP, LLC, a Delaware LLC, DJS PROCESSING, LLC, a Delaware LLC, PROFESSIONAL TITLE AND ABSTRACT COMPANY OF FLORIDA, a Delaware LLC, and DEFAULT SERVTCTNG, LLC, a Delaware LLC,
VOLUME I
DEPOSITION OF DAVID J. STERN
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RENAE MOWAT, NIKKI MACK, ~O ARKLYNN RAHMING, and QUENNA ~~ HUMPHREY individually and on behalf of all other similarly situated individuals,
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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA
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APPEARANCES OF COUNSEL On behalf of the Plaintiffs:
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On behalf of the Defendants: TEW CARDENAS, LLP JEFFREY TEW, ESQ. FOUR SEASONS TOWER 15TH FLOOR, 1441 BRICKELL AVE., MIAMI, FLORIDA 33131 (305) 536-1112 jt@tewlaw.com DJSP ENTERPRISES, INC. STEPHEN J. BERNSTEIN, ESQ. 900 SOUTH PINE ISLAND RD., SUITE 400,
or
REAL ESTATE & INVESTMENT LAW CHANDRA PARKER DOUCETTE, ESQ. 621 NORTHWEST 53RD ST., SUITE 240, BOCA RATON, FLORIDA 33487 (561)995-1490 chandra@chandralaw.net
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RAPOPORT LAW GROUP DAWN M. RAPOPORT, ESQ. 1314 EAST LAS OLAS BLVD., SUITE 121, FORT LAUDERDALE, FLORIDA 33301 (954)712-7457 dawn@rapoprtlawgroup.com
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FARMER, JAFFE, WEISSING, EDWARDS, FISTOS & LEHRMAN, PL STEVE JAFFE, ESQ. 425 NORTH ANDREWS AVE., SUITE 2, FORT LAUDERDALE, FLORIDA 33301 (954)524-2820 steve@pathtojustice.com
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BERGER SINGERMAN FRANK SCRUGGS, ESQ. 350 EAST LAS OLAS BLVD., SUITE 1000, FORT LAUDERDALE, FLORIDA 33301 (954)525-9900 fscruggs@bergersingerman.com
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(954)233-8000 ext. 1001 sbernstein@djsenterprises.com
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WITNESS:
INDEX OF EXAMINATION
DIRECT EXAMINATION By Steve Jaffe, Esq.
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David J. Stern
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1 INDEX TO EXHIBITS
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Description Press release dated July 27th
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Press release that announces new investigations against Law Offices of Marshall Watson, Shapiro & Fishman, Law Office of David J. Stern
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Letter dated October 21st
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Press release sent out September 7th
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November 4th, 2010 mass e-mail Three-page letter
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APRIL 25, 2011 COURT REPORTER: video record. Okay. We are now on the
Today's date is April 25th, 2011.
The time is 10:06 a.m.
This is the video deposition
of David Stern taken in the matter of Mowat, Mack, Rahming & Humphrey v. DSJP Enterprises, case number is 10-62302-CIV-UNGARO. at Reif King Welch Legal Services, Inc. The
Olas Boulevard, Fort Lauderdale, Florida 33301. The digital reporter is Samantha Hanstein with the firm of Reif King Welch.
Would counsel please introduce themselves for the record.
MR. JAFFE: plaintiffs.
MS. DOUCETTE:
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behalf of the plaintiffs. MS. RAPOPORT: Dawn Michelle Rapoport on behalf
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of the plaintiffs. MR. SCRUGGS: Frank Scruggs of Berger Inc. and other
Singerman for DJSP Enterprises, corporate defendants. MR. TEW:
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Law Offices of David Stern, P.A.
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Steven Jaffe on behalf of the
Chandra Parker Doucette on
Jeff Tew for David Stern from the
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We're located
888 East Las
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MR. STERN: MR. JAFFE: Steven Jaffe.
I'm David Stern for David Stern. Good morning. My name is
We met briefly this morning. coming in this morning.
Thank you for
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BY MR. JAFFE: DAVID J. STERN,
having been first duly sworn, testified as follows: DIRECT EXAMINATION
Mr. Stern, thanks for coming in this morning. I'll be Has your
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Like I just said, my name is Steven Jaffe.
taking your deposition probably most of today. deposition ever been taken before? A Yes, sir.
Q
attorney? A
All right.
Q
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and there's really no need for me to go over right now;
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is that correct? A I officially waive. Okay. And if you need a break, just tell me.
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I am.
And you've taken depositions before?

I am.
So, you know all the deposition admonitions,
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And now, you are a practicing
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I'll be happy to break anytime. just going over your background. Where are you from? I'd like to start off, We could, you know.
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Born in Chicago,
Illinois.
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When I was 30 years old.
Q
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Carolina.
Where did you go to undergrad?
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Appalachian State University in North
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Q
up there.
A
I couldn't decide if my daughter's finishing
Great school.
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Q
A
What year did you graduate?

From?
Q
A
Appalachian State University.
1982.
And then did you go into the workforce or did
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I graduated 1986.
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to begin your career as a lawyer?
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you go into the law school?
And where?
South Texas College of Law in Houston, Texas.
And where did you go -- did you stay in Texas
That's how Texas -- being that three-tier
REIF KING WELCH LEGAL SERVICES

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I went straight into law school.
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And when did you come to South Florida?
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these articles, but that one came across my desk. That was good.
Q
Where did you begin your practice of law?
I actually began my practice of law with the
Law Offices of Gerald Shapiro with the acronym of LOGS.

Q
What year?
I went to work for them right out of law
school before becoming a member of the bar; ultimately became a member of the bar in 1991; didn't necessarily practice with them. I was a national operations
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manager, so I officially started practicing January 1st, 1994.

Q
If I heard you correctly, you graduated from
South Texas College of Law in 1986; is that correct?
A
Q
Yes, sir.
When did you first sit for any bar exam?
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1990.
Which bar exam was that?
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Scratch that.
Bar right after graduation from law school while working for my then-previous employer.
Q
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Okay.
And then I sat for the Florida Bar while
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working for my previous employer, which is LOGS.
REIF KING WELCH LEGAL SERVICES www.reifkingwelch.com (877) 291-DEPO
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I sat for the Texas
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I'm sorry.
school -- four-tier school.
Not that I read any of
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1990?
Let's go back to Texas.
So, you sat for the
I believe that's Maybe 1987?
Q
A
I believe the next one after I graduated and
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was eligible.
Q
A
Okay.
And did you pass that bar?
I did not.
Q A
Q
Did you ever take the Texas Bar again?
No.
I believe you say you moved to Florida
thereafter. A
I don't recall saying that. Fair enough.
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did you move next?
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apologize, but let's just go with it, with -- where was
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your first employment in 1986 in Tampa?
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Graduated from law school, sitting for the bar?
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Where did you move after Texas? Where
I moved to Tampa, Florida.
Approximately in 1986, 1987?
1986.
And if I repeat myself which I'm about to, I
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Texas Bar in 1986; is that correct?
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1990.
What year did you sit for the Florida Bar?
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LOGS group.
Q And what type of practice did you have?
A
Q initially?
Mortgage and lender representation.
In what capacity were you employed there
An intern/law clerk.
Q
1990?
Why did you not sit for the Florida Bar until
A And
Because I worked my tail off 24/7 for LOGS.
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Q
A
Just so the record is clear, LOGS, spell that.
LOGS, L-O-G-S, the acronym for the Law Offices
of Gerald Shapiro.
Q Okay.
LOGS.
I worked for them in their Tampa office for three months.
to the national office in Chicago, Illinois.
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After working for them for three months, I've recruited And I was
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made the quality control representative. with them, I had 13 offices.
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When I first started working for LOGS,
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As I made a name for myself,
I ultimately was responsible for opening or restructuring As a result, I was on the road pretty Literally, every day. I still have my
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some 33 offices.
much every day.
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platinum lifetime marquis for Marriott and my

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When I started
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The Law Offices of Gerald Shapiro or, say, the
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Explain to me your job responsibilities as
When there was a distressed office, initially,
I would go in and make a determination of what the
issues were, make recommendations, report back to the national office together with the guy who's from the national office and the managing attorneys, implemented a plan to turn the office around.
grew from dealing with distressed offices to opening up brand new offices. So, during the eight years I was
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with LOGS, I either opened or dealt with some 33 offices in, like, 27, 28 different states.
Q so, obviously, during that time, too busy to
sit down take the Florida Bar, other things were happening that were of interest to you?
A
Q
Correct, yes.
The three months that you were in Tampa before
being promoted to the Chicago quality control rep, is it
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fair to say that you learned as much as you could regarding mortgage lender representation in the Tampa
office?
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distressed office unbeknownst to me, and my first day there, the senior management from Chicago came in and
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The day I started in Tampa, it was a
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The duties then
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what you just termed the quality control rep for LOGS.
Continental elite for lifetime, so it was worth it.
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know much of anything.
Certainly, I didn't know
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broke and asked them for the opportunity to dive right in it. And long story short, they laughed at me, but
at the end of the day, they gave me the opportunity. And during those three months, I worked 24/7, had this neat little SkyPager, because cellphones were so big. Dare I say my age. can publish it.
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1-800 SkyPage and No. 20632.
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That's on there.
How old are you?
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I'm 50.
What's your date of birth?
Did you tell him to ask that? May 6th, 1960. But don't ask me where the
time went.
So, after three months in the Tampa office, I
demonstrated, I would assume, qualities that were unique
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and valued in the eyes of upper management.

Were there lawyers in their office?
Yes, sir.
Approximately.
How many?
I got -- that's like 1986.
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And non-legal staff, approximately, how many?
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60, 70, I guess.

And you say you worked 24/7, can we be
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mortgage lender representation, but I kind of went for
read everyone the riot act.
My first day, I didn't
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week?
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24/7.
I slept for three to four hours.
Sometimes, I
went to bed at 1:00; sometimes I went to bed at 9:00 and woke up at 1:00. Pretty much the same work ethic I've I went to law school at
kept when I went to law school. night, can't afford Tier 4.

Q
Tier 4?
Tier 4.
Thank you.
during the day.
I went to law school from 5:30 to
10:30, got home, study for a couple of hours and just kind of develop a sleep pattern of three hours.
Q school? industry? What type of work did you do during law Does it have anything to do with the mortgage
City of Houston, so between clerking and studying law
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and going to law school.
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No, no, sir.
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looking for soccer coaches, and I had soccer background.
So, I took a job as a soccer coach, which in order to
coach, you had to teach and -Q Of course.
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and I didn't have teaching credentials, so

www.reifkingwelch.com (877) 291-DEPO (3376)
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Originally, I clerked for the
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And I worked two jobs
The local high schools were
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So, you worked 24 hours a day, seven days a
literal?
What hours did you keep?
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they gave me emergency teaching permit based on some online courses. So, I taught senior government and I
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Where did you go to high school?
Miami Edison Senior High School.

Did you play soccer?
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I did.
Back then?
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Q
A
Back then, yeah.
Q
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Did you play soccer at Appalachian State?
I did.
All four years.
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Two years.
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Were you at Appalachian State all four years?
Yes, sir.
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obtain?
At Appalachian State, what degree did you
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Criminal Justice minor in Sociology.
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Bachelor of Science in Political Science and
Double major?
Yes, sir.
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tuition.
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Were you on scholarship?
Financial aid.
So, not under a scholarship?
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REIF KING WELCH LEGAL SERVICES www.reifkingwelch.com (877) 29l-DEPO (3376)
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I wanted to get most from my
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coached soccer and cross-country.
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A
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No.
When you went to work at LOGS, I assume, just
learn the mortgage lender business.
I was there for eight years, and that's where I
learned it.
Q
Both the non-legal elements of the business
and I assume, just correct me, the legal elements of

business?
A
Q
Yes, sir.
And what was LOGS -- or what was your
understanding of what a distressed office was?
In my mind, a distressed office was an office
where there was dissatisfaction from clients or failure on behalf of the office to meet milestones for the full time frames that are essential to the industry. course, if you want to find that you're missing And, of
relationship ending.
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things you learned at LOGS were?
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this secretary.
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milestones before the client does because that could be
What would you say the three most important
Well, I was single at that time, so there was I would say understanding the process
from an operations standpoint, understanding the process from the legal standpoint and probably most importantly,
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correct me if I'm wrong, you learned -- you began to
Case 0:10-cv-62302-RNS Document 115-1 Entered on FLSD Docket 12/21/2011 Page 18 of 277 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 establishing relationships with clients. All three, I
believe, I have mastered and perhaps the basis for my success.

Q
How long did it take you to learn or belief
industry to be a success?
I got to tell you, I probably didn't realize
it until the first year into my own practice.

Q
Okay.
Well, then, so, you're saying that in
retrospect, that's what you learned at LOGS?
I loved my job at LOGS.
responsibility.
I loved the challenge.
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something that was getting ready to be kicked under the rug and stopped it from being kicked under the rug. Took something that was a failure and made into a success or started something that was just soil and built it into a successful, profitable learning, if you
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generally successfully business at the time you went into it?
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offices.
were my responsibility.
Q Could you list some of your clients?
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will.
Would you agree with me that LOGS was a
They were a up-and-coming firm -- they had 13 When I left, they had 54 offices, of which 33
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I loved the I loved
those were the three most critical things in the
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Countrywide, pretty much -- they were national firms and they represented pretty much everyone. still around. Some of that are
Some of that have car wrecked
Once in a while,
I see these names, and I said -- I
remember that -- National Mortgage in Memphis, but pretty much everyone.

Q
When you say that you learned the process from
an operations standpoint, can you explain that?
From an operations standpoint, I became
familiar with the movement of a particular action through a process when that required efficiency, yet needed to be done economically.
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standpoint, I had to move things from the title, area where it starts, to the complaint, which is essential, and a time-driven milestone, milestone being the key component of the foreclosure; how to most efficiently
with process servers; how to get judgment centered; how
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to take property to sale and move things efficiently.
My responsibilities were not also limited to judicial foreclosures, but we have power sales states, which are
simply -- know this requirements, which are the majority So, I learned that. And then I learned
of the states.
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the bankruptcy processes and the closing processes and
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and effectively move through service process, to deal

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So, from a foreclosure
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Gold Dome.
Sure.
Bank of America, Chase, Wells Fargo,
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the eviction process.

Q
That's the operations standpoint.
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When you went into LOGS, they already had
A
Q
They did.
manuals?
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Very few.
I wrote some of them.
because it goes back to the old computers, to the big, old screens. And when I started my practice eight years
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later, I hired a computers' consultant and we were designing and had the mouse. I had never seen a mouse.
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So, I picked it up and I started playing with the ball. And I looked at it, he said, what are you doing? what the hell is this?
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And did they have policy and procedure
I chuckle
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And he knew he was in trouble.
So, I was not the most technological and hopeful that my testimony hasn't led you to believe that I was technologically advanced.
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Because right now, my
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house.
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understood quickly how to maximize operations?
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14-year-old daughter handles all the technology in the
But from a practical standpoint, you
Back then, I thought I did.
Back then, I When I started my I thought And--
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thought, you know, I had it going on.
own practice, I thought I had it going on.
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people that I had trained, we had it going on.
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I go,
system, operation systems, correct?
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LOGS from an operations, non-legal operations, standpoint?
A
Q
Yes, sir.
So, you developed some of the policy and
procedure manuals from an operations standpoint at LOGS?
A Q
Yes, sir.
And then you actually implemented those policy
and procedures that you had refined or established?
Refined in some offices, those offices that I
created, certainly established, bringing over ideas from other offices that were successful ideas and certainly eliminating or actually those that were disastrous.
Q
Did you study other competitors' model?
A
Q
I did.
Who were some of the other competitors that
you studied?
pleadings or recommended forms of pleadings, I would go
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to courthouses and I would gather up copies of, say, the judicial state, complaints from the five largest guys
and, you know, kind of piece them together and worked
with the senior attorney to make sure that we were in compliance with that particular jurisdictions, laws.
Q
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I don't recall.
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At LOGS, did you have the same job title the
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I -- I know as I created
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Were you involved in training staff members at
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A to me.
Q
I don't remember. Job titles mean nothing
So, if I would ask you what your job titles
were at LOGS, you would not remember them?
A
Q
I wouldn't.
Did your job responsibilities increase over
the eight years you were at LOGS?
A
Q
Yes, sir.
When you first went to Chicago -- and I
believe you told me that was within three months of being employed with LOGS?
A
Q
Yes, sir.
Your job title was quality control rep or is
that just an acronym?
A
Q
Quality control manager.

Okay.
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And the California operation became distressed and there was a falling out between the partners. in San Diego that handled foreclosures. One office was The other
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office was in Westwood, California, right down the
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that point?
When I went to Chicago?

Yeah.
I was in Chicago, as I recall, about two days.
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What were your job responsibilities at
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entire eight years you were there?
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out from the Westlake office.
So, I was asked to go in
staff was going, review the procedures, see why he
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walked out, make recommendations to the national office. And ultimately, that project entailed consolidating the San Diego office and the Westwood office to Costa Mesa.
Q
So, it sounds like that you have a forte for
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evaluating people within the mortgage industry, employees, deciding who was maybe dead weight, who was a keeper and how to best create a better functioning environment?
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MR. TEW:
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MR. SCRUGGS: MR. TEW: A
Back at that time, I probably felt that I did,
keeping what I've learned and who has come into -- at
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very little.
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your world," what do you mean?
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The amount of knowledge that he instilled into me in the brief time that I was privileged enough to be with him is just amazing. And I looked back and I say,
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one time came into our world,
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(By Mr. Jaffe) When you say "who's come into
Rick Powers, chief operational officer.

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Objection.
Objection to form.
Same objection.
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I realized that I knew
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make an evaluation, see what staff was staying, what
street from UCLA and the partner that walked out walked
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Criminal Justice degree, minor in sociology and a law degree. But certainly, no degree from an operational
standpoint, managing by matrix and developing charts and

Q
amazing.
So, you had a gut.
You went with your gut,
and at that time frame, at least, it was successful?
A
Q
I think it was.
And you were rewarded appropriately from law,
just stayed with them eight years, you elevated, they opened more offices?
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Since we're on the record, I would say, I
don't believe that they rewarded me adequately.
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I understand.
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Hence, my departure from them.
to make someone wealthy and profitable. I might as well do it for myself.
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So, I
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Listen, I don't regret it and it was an invaluable eight years.
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would have known?
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Okay.
Since my counsel didn't object, I object.
Sure.
If I would have left after six years, who If I were to stay for nine or 10
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years, someone else may have pioneered the industry.
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I worked 24/7 I decided that
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yeah, I have a Political Science degree; I have a
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legal standpoint within the foreclosure business while at LOGS as well?
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I learned not as a practicing attorney.

Right.
Or be an authorized practicing one.
learn that as well.
I didn't say you cannot -- I'm certainly not
representing to you that you practiced at that time, but you certainly absorbed and understood the process, learn the process, and from an intellectual standpoint, you believe you were able to create your own systems that would be more efficient for the client?
A
Q
Correct, yes.
And talk to me a little bit about the third
element, that is, that you believe that relationships were one of the three most important things that you
pF
learned there?
Perhaps the most important.
or
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quality control guy, any time that a file had gone awry, our office had gone awry, it was my watch. captain of the ship. I was the
And clients would reach out to me And
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and they would voice their frustrations or concern.
while I don't have the answers to everything, I have always had the will to find those answers. And I
25
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In my role as the
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But I did
So, you also learned the processes from a
25
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
majority of the industry which LOGS represented allowed me to be of instant credibility the day I hung my
shingle out on January 1st, 1994 where I could reach out to the clients with the results that were beyond my wildest dreams.
Q
You just mentioned earlier that one of the
important elements that you learned was using or creating milestones in the foreclosure process.
ur eF
(877)
that is a very important element to the industry and certainly to the client; is that correct?
A
Q
Yes, sir.
Please--
Not using or creating the milestones that were
existent already, a measuring tool that the industry had established. How long does it take you to get the service completed, judgment entered, So, using them or So, I did
complaint filed,
establishing them, they were used as a tool.
.S to
adopt that methodology.

Q
you just laid out?
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sale held and sold for you.
What milestones were in place at that time as
Same.
What dates? What's the time frames?
25
It varies, depending upon the state.
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And
You've
believe that my ability to demonstrate that to the vast
Case 0:10-cv-62302-RNS Document 115-1 Entered on FLSD Docket 12/21/2011 Page 27 of 277 26 1 2 3 4 5 6 7 8 9 10 got judicial foreclosures, you've got power sale foreclosures. In Texas and Georgia, you can get a
Maine, New York, different processes, different
procedures, superior court versus circuit court. states, you can file in Federal court.
Q
Back in that time frame in Florida?
I can answer that.
That time frame back then
was about 270 days

Q From?
11
12 13 14 15 16 17 18 19 20 21 22 23 24 yes.
A
Q
File received.
Is that -- I've read that you've used the term
"cradle to the grave."
Well, don't believe everything you read, but,
Is that a term you've used?
A
Q
We do use "cradle to grave."

All right. Is "cradle to grave" a reference
to something like this, 270 days?
.S to
pF
Yes, sir.
Then we'll get to that later. 270
All right.
days from time a file was received into the office --
ww w
Yes, sir.
-- to judgment?
25
Sale held.

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Some
foreclosure done in 26 days -- Tuesday.
States like
27
2 3 4 5 6 7 8 9 10
11
Florida milestones -- back then, who sets it? set them? standard? Does the client set them? Please explain it.
Do you
Thank you.
Are they hard milestones?
dates or goals?
A
Q
They are hard dates.
And what happens if you don't meet them?
If you have a excusable delay, like the
borrower's debt is problematic to post to tombstone, so you have to -- that that would be an uncontrollable delay. Or if you've got a special in today's
12 13 14 15 16 17 18 19 20 21 22 23 24
environment where everything is litigious and class action attorneys suing people, foreclosure attorneys wiping people out. would -Q
pF
Back then, it was --
It wasn't as litigious.
or
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Those are controllable delays, so we
.S to
of how people did things.
someone like me came on the scene and said, you don't
need 270 days you can do within.

Q
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And so, did you create policy and procedure
manuals to reduce those milestones?
25
When I was at LOGS?

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It was just a matter
If there was a push and then
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Fannie Mae and Freddie Mac.
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Hard
Is the industry
Okay.
And so, my question, with regard to the
28
2 3 4 5 6 7 8 9 10
11
If the milestone was reduced by the investor,
to be consistent in that.
Q
So, the investor would attempt to control
milestones?
A
Q
Yes, sir.
Were there times where you, on behalf of LOGS,
would control the milestones?
A
Q
No.
Were there incentives for meeting or exceeding
12 13 14 15 16 17 18 19 20 21 22 23 24
milestones at that time?
I'm not sure I understand your question.
Incentives paid by whom?

Q
Were there bonuses to LOGS?
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bonuses to LOGS if you met or exceeded milestones?
A
Q
Not to the best of my knowledge.

Were employees of LOGS given bonuses for
meeting or exceeding milestones?
.S to
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Not to the best of my knowledge.
Were there quotas, monthly quotas at LOGS?
Monthly quotas?
or
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question.
Q
If you would be kind enough, could you explain
25
to me the process while at LOGS, in a general sense,
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I'm not sure I understand the
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Were there
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then we would have to adjust the policies and procedures
I'm sorry, yes.
29
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
processes through the office.
(By Mr. Jaffe) Fair enough.
Florida.
A by stages.
Florida?
Back in the LOGS days, it was set up
So, if I would come in through the -- given
to the type of department, they would have certain period of time to move it to the next stage, which would have been complaint stage.
over a certain period of time I don't recall what those time frames were. of paralegals. That was one of the separate set
The file would then move, once the
complaint was filed to service, a different set of paralegals because its stage concept. you will. Assembly line, if
Then it'd move to the next stage, judgment. And then it moved to
Then it moved to the sale stage. the post sale stage.
in?
Only at the judgment stage?
.S to
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Reviewing those stages, where would legal come
Yes, sir.
Because you mentioned paralegal on two
Okay.
occasions. involved?
ww w
Well, they all involve lawyers because lawyers The
25
have the obligation to supervise paralegals.

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I didn't hear the mention of lawyers
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Complaints that needed to go
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MR. TEW:
You're talking about in --
client sends in a file to be foreclosed upon and how it
30
1 2 3 4 5 6
7
paralegals can't sign the complaint or review the complaint, of course.

Q Okay.
A attorney.
Q
The service process is reviewed by an
Let's go back it up.
How about the title
department?
8 9 10
11
A
Q
Back at LOGS?
Yes, sir.
John Stupprich.
S-T-U-P-P-R-I-C-H, was the title mastermind esquire. Title in the State of Florida is not the functionality of attorneys
Q
12 13 14 15 16
17
Absolutely.
-- practicing law, so it just depends how it's
set up and what resources you have.

Q Okay.
19 20 21 22 23 24
examiners, I don't recall who's examiner.
.S to
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18
John Stupprich was an attorney, but the
And so, maybe I misunderstood.
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At LOGS, was there title department?
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John Stupprich,
located?
Tampa, Florida.
All right. The complaints, those were
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automated at this stage in the chronology --
25
Yes.
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Where was John
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1 Q
-- of computers? Yes. All right.
2
3
A
Q
4
5
input i t into their computer, complaint would be split out for the review of a lawyer?
6
7
8
A
Q A
Yes,
sir.
Lawyer signs the complaint? Or makes corrections.
9
10 11
12
Makes corrections, complaints finalized, then
lawyer signs complaint?
A
Q
Yes. All right.
And that's time to get service, so
13
14 15 16 17 18 19
paralegal drafts the necessary service papers?
Summons complaint unless picked and they'll
draft it together. Q Okay.
Trained, trailed -- Trained, trailed and
21 22
.S to
20
Florida, how many departments there within a given office? A Foreclosure, bankruptcy, eviction, deed and litigation, it just depends that the top of loss I don't
lieu, title,
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23
24
it the industry like today or a while back,
mitigation research, back in the LOGS days, recall the loss mitigation.
25
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packaged and then filed together. Explain to me, if you will, if at LOGS, in

(877) 291-DEPO (3376)
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Packaged?
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Paralegal would take certain data,
32
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
mitigation means.
some sort of remedy.
The remedy could either be whole
retention, modification, repayment, forbearance or amount of retention, deed and lieu and short sale.
Q
Have those departments with the exception of
loss mitigation stayed consistent in the industry until today?
A
Q
In the State of Florida?

Yes, I'm sorry.
Well, it depends.
that do things other than just foreclosures.

Q
In foreclosure only offices, do you -- to the
best of your knowledge.
A
Q
Yes, sir.
And while at LOGS, you supervised and reviewed
standpoint?
.S to
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each of those departments from a processes and systems
I had assistance.
I'm certainly not But although
Of course, anyone.
recommending that you did that alone. 24/7, you might have been able to.
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deficiencies, you were in a position to attempt to remedy via creating new systems and policies and
25

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There are firms out there
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And where you found
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A review of a file to mitigate the loss with
Just for the record, kindly define what loss
1 2 3
procedures and then implementing?
In conjunction with the managing attorney
4
5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
So, it's fair to say at the end of eight
years, working 24/7 for somewhere else, making them lots of money throughout this country, you knew the mortgage foreclosure business at that point? In your mind.
If it's based on where I am today or perhaps
where I was six months ago, I would say that I certainly did.
Q
You sat for the bar while -- excuse me -- you
sat for the Florida Bar while employed at LOGS?
A
Q
Yes, sir.
Why?
Because when they hired me, they promised me
that 70 times, that I take Florida Bar, because I went to Miami Edison, grew up in Florida, loved Florida, had
of the day that I wanted to get licensed and I wanted it
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to be in Florida.
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a condo on South Beach and I knew ultimately at the end
sending me off on projects and me prioritizing projects,
we finally decided that I would no longer blow it off.

Q
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And so, in 1990, you sat for the bar; in 1991,
passed the bar?
25
There are good memories in that post.
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So, after a combination of them
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(877)

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They
license in that state as well as the national office.
34
2 3 4 5 6 7 8 9 10
11
signed up for BARBRI, dare I say. things came up.
And various And I
said, I'm going to quit unless you give me something in
writing that next time, you'll pay for three months, and I would have to look in or see. Since I was already
signed up for the bar, during this time period, they said, why didn't you sit for it? lose. course. So, I sat for it. You've got nothing to
Out of the essay questions, I eliminated the
ones I had test on the previous months, crammed the other four essays in, sat for the multi-state, sat for the essay. early. I remember I finished the multi-state up
12 13 14 15 16 17 18 19 20 21 22 23
And as I was sitting there, I drew A, B, C, D. The examiner
In an hour early, I'm spinning my pen. says, What are you doing?" my answers.
Q
or
And I passed.
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Luck or genius?
They didn't know that part.
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MR. TEW:
Put that in your online. But we haven't
Yeah, yeah, my best-selling.
closed the chapter yet.
There's still a lot to be
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written.
24
MR. TEW: MR. JAFFE:
That's true. That's true.
25

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That's it.
I took the two-day cram
I said I'm double-checking
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And they said, we need you.
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have promised me I could take it.
I signed up for it,
1
Q
2
3 4 5
6
7
Yes, sir. Worked for LOGS for a few years? Through 1993.
At that point, now, you're a licensed attorney
in Florida, did you actually go to court?

A
Yes.
8
9
The day you opened your office on January 1st,
1994, had you been in a courtroom as a lawyer?

A
10
11
I don't believe I had.
business cards.
Q
A
12
13
Are you married?
Yes, sir, 17 years in June 19. Congratulations.
14
15 16
17
Any kids?
A
Two.
Q
A
That's a beautiful thing. The best.
19
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20 21 22 23
24
LOGS?
pF
18
When you resigned from -- did you resign from
I did, yes, sir. Okay. You weren't fired?
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No, sir, I wasn't fired. When was that? I submitted in resignation July of 1993.
My
Q
A
25
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Logan, 10.
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Brianna, 14.
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(By Mr. Jaffe) So, you passed in 1991?
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 wife.
Q office.
And January 1st, 1994, you opened your own
A
Q
Literally, on New Year's Day.

Where?
2627 Northeast 203rd Street, North Miami Kind of like this,
Beach, Florida, 800 square feet.
pink walls, blue carpet, 2386 computers, roller stamps, copier we had to move by hand and an old-fashioned checkbook with very little money in it. days.
Q
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(877)
Single at that point?
Single.
I think we got married -- I know we got married.
I know we got married six months after that -- six months after that, June 19.
Q
At LOGS, would you agree with me that LOGS at
certainly the top 10 lenders in the United States?
.S to
single state.
Q And certainly --
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25
actually in the country as well?
pF
that time in 1980s or in 1990s was representing
In one state or another, but not in every
I knew them all, sir.

-- a vast majority of the top 20 lenders

291-DEPO (3376)
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Janine, who was my girlfriend, now my
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last day was December 31st, 1993.
1
2
3
Yes.
And since customer relations is one, if not
4
5
6
general, I assume that they knew you were going to
I don't think they did.
I don't think they At that point in
7
8 9
really thought that I would leave. time, I was the third man --
My mistake and I'm sorry for interrupting you.
10
11
But I don't like to waste your time.
Okay.
Thank you.
12 13 14 15 16 17 18 19
20
I was speaking about the clients, the lenders.
Did you contact them?
conversations with them, saying, fellas, it's time?
Before I left?
Yes, sir.
A
Q
No, sir.
any what was to be a hopeful client down the road before
.S to
you left, telling that you were going to leave?
21
22
23
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24
in Orlando.
25
And it's my trip down to turnpike where I got my first
pF
All right.
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Did you have some quiet
So, we're clear.
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(877)
None at that or in the top 20.

Okay.
A friend of a friend said, go visit somebody They may have some foreclosures for you.

291-DEPO (3376)
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leave?
No contact with
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the most important elements to a successful business, in
1
business, it's hard to make, at the turnpike card machine back then.
2
3
4
5
Florida, David Stern -- David J. Stern, PA is born?
Okay.
7
8
A anything.
But didn't pay no shingle, didn't have
But I had already given my notice and decided Because I wasn't sure what I was going to
9 10
11
to move on. do.
All right.
So, you gave notice in July,
12 13
14 15 16 17 18
19
incorporated in October-ish, and in January, pulled the trigger, so to speak?
A Yes.
Yes, sir.
Q
or false?
January 1st, 1994, you had no employees.
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Yes, I like it, pull the trigger.
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(877)
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I believe we incorporated in October of 1993.
21 22
23
24
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20
Q
A
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baseball hat but wasn't paid.
Q
A
25
pF
False.
Who did you have as employee?
Cheryl Sammons.
Anybody else?
Janine, but she painted her nails and wore a
Careful, this is on.
I still have that picture of her.

291-DEPO (3376)
or
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True
All right.
So, in January of 1994 in South
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Cheryl Sammons?
offices, probably 1989. Q
What was her job at that time in LOGS office
in Charlotte, North Carolina?
A Q
She's a legal assistant.

How was it that you met?
that office?
A
Q
to LOGS. staff?
Advertisement.
Okay.
Let's go back there for a second.
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Just by you being in
Were you responsible in any way in hiring
Every time I got to -- this is -- this is Hiring staff and --
pretty good. Q A Q A
At the office?
Yes, I was.
Your office?
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Hiring, firing.
And so, obviously, there came a time
Okay.
when you were at the Charlotte area and you were interviewing staff members and you met Cheryl Sammons?
ww w
Yes, sir.
Okay. And I assume she was a fine-tuned act?
Q A
25
Yes, sir.

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Back
Charlotte, North Carolina, with the LOGS
Good.
Where did you first meet
1 2 3 4 5 6 7 8 9 10
11
All right.
And at that time, was the You were staffing it or you just
Charlotte office open?
I'll save us all some time.
There was a
Shapiro and Davis law firm. falling out. the files. the files.
Shapiro and Ron Davis had a
Ron Davis wrote the clients saying, I want And Gerry wrote the clients saying I want And David Stern's job was to go in and find
office space, find a managing attorney, hire staff and get the clients comfortable that Gerry's lack of physical presence would not be detrimental to the client -- to the client's files. That's where I put the
12 13 14 15 16 17 18 19 20 21 22 23 24
ad in the paper, and amongst others, I met Cheryl.

Q How many offices did you establish like that?
A
Q
20.
So, obviously, you were already comfortable in
the basics of how to open a foreclosure law office?
I was challenged each and every time.
pF
I wouldn't say I was comfortable.
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(877)
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hyper-energetic and fearful of defeat or failure, so I was anything but comfortable.

Q
But you knew how to do it?
ww w
I felt I did.
Yes, sir.
And you did it repeatedly.
25
I did, yes, sir.

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And neurotic ego,
.co
have to getting staff to then open the office?
I would say
1 2 3
Q
became profitable for the LOGS?
4
5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Q your own.
It's a good thing, though, that started you on
A
Q
It did.
It did, no regrets.
So, on December 31st, 1993, you knew what you You knew how to open your own office?
were in for.
A
Q
Yes, sir.
Obviously, there was a time in 1993, you spoke
to Cheryl Sammons and told her what you were going to do?
A
Q
I did, yes, sir.
And can I assume that you encouraged her to
come and be part of it?
She looked at me like I was crazy.
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(877)
you're the heir
or
~pparent
of all these.
her and said, I'm not joking.
pF
ever leave?
And she goes, stop joking.
Come down to Florida,
.S to
you, Robbie, her husband, guys, in a nice, quiet office. We would have clients
There won't be anymore 24/7. yelling and screaming.
We'll get your house, we'll get
ww w
your little picket fence and live in a nice, new regular law office practice, which lasted about four days.
Q You didn't tell her you wanted to go big and
25

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Why would you And I looked at
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She said,
Yes, sir, they did.
And the offices that you opened and staffed
2 3 4 5 6 7 8
A thought.
Q
I didn't have that idea. I didn't have that I never ever imagined.
When you hired her in 1989 in Charlotte in
this to be new office, how many people were staffed in that office in 1989?
A
Q
Well, I started the office from scratch.

Right.
9
10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
And there were three attorneys, probably a
staff of six.
Q
Can I assume she left in 1993?
She did leave in -- at the end of 1993, the
same time I left.

Q
Okay.
in the Charlotte office?
A
Q
It's a pretty big office, about 20.

Okay.
.S to
you have with Cheryl Sammons?
pF
A
Q
45, 50 power sales, I would say.
Between 1989 and 1993, how much contact did
or
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At that time, how many attorneys were
And how many staff?
I spoke to Cheryl
Cheryl on a
Q
almost daily basis.
ww w
Why?
Because she left the Charlotte office,
25
probably six months after, her starting there, she was
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Cheryl -- I spoke with
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have these big dreams and all that?
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
was great with clients.
So, I asked her if she wanted to
offices that I had and she accepted.

Q Let me make sure I understood you.
regard to Cheryl Sammons' employment at LOGS, that lasted six months at the Charlotte office that you had just opened?
A
Q
That is correct.
She resigned?
She went to the National Payroll and became a
national employee.
Q
So, you pulled her, so to speak, from the You obviously saw something in her and
single office.
said she could be of asset to me clarity with the powers to be, assuming, and you put her on to the national seat.
organization, and first and foremost, to allow me to
.S to
continue doing what I do.

Q All right. But during this entire time, 1989
to 1993, she stayed in Charlotte?
ww w
best of my knowledge.
pF
She'd be an asset to the national
She maintained her residence there, to the I think so her husband lived
25
there, and she would be on the road either with me or

or
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Yes, sir.
ra ud
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With
be on the national level and help me manage all the
great at implementing.
She was good with people.
She
2 3 4 5 6
7
What did she do?
review of reports.
She was key to me in reviewing
reports in terms of achieving milestones, how were these offices moving. Can't rely on the offices to
self-report, so we go in and do a spot check.

Q
8 9 10
11
National Auditors?
A
Q
A
National Auditors.
Since you --
But that was -- that wasn't her name.

But--
ur eF
12
13
repeat that.
Q
Since you established the policies and
14 15 16
17
procedures, by this time implemented them, you obviously -- I'll use the word "taught" her your systems, and she was sharp enough to understand that and then follow up LOGS' policies.
19 20 21 22 23 24
components and accountability would be done through
.S to
reports, as basic as they were back then, vis-a-vis what
we're able to establish today, especially someone like Rick Powers. That was exactly what was assumed. Can we take a break? Sure. (Thereupon, a short break was
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25
pF
18
Accountability and visibility mean two key
MR. SCRUGGS: MR. JAFFE:
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I can't
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She would go in and do some interviewing, some
helping me do what needed to be done.
1
taken. ) (Deposition resumed.)
Q
2
3
4 5
6
Ms. Sammons left LOGS, how many attorneys were employed
I don't know.
Ballpark?
7
8
Q
A
I have no idea.
More than a thousand?
Q
A
10
11
I don't know.
More than 500?
Q
A
12
13
I'm sorry.
Okay.
I don't know.
14 15 16 17 18 19
20
point, correct?
A
Q
There were, yes, sir.

Okay. Do you have a recollection of the
average number of lawyers per office?
.S to
office?
A
21 22
pF
Yes, sir.
How about the average number of staff per
I don't recall.
Okay. So, is it fair to say that there were
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23
24
at least a thousand staff members nationwide for LOGS at that time?

A
25
For LOGS,
or
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We do know at least 33 offices at that
I would -- I would say at least,
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I don't recall.
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with LOGS around the country?
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(By Mr. Jaffe) At time that you left LOGS and
1
yes, sir.
Q
2
3
4
5
6
7
Okay.
At the time you left LOGS, what was
At the time I left LOGS, my job responsibility
was to oversee the offices that I had either restructured or
or in the process of restructuring.
The intent lies for me to have offices up and running efficiently without my day-to-day interaction.
Q
8
9
Okay.
And what was Ms. Sammons' job
10
11
responsibility at that time?

A
To review reports, ensure that time frames
12 13
were being met, that operational guidelines, policies and procedures were being followed.
Q
14
15 16
17
Both of you, at that time, "that time" being
1991, 1992, understood and had business in the state of Florida on behalf of LOGS?
A
Yes, sir.
pF
18 19 20
21 22 23 24
Q
A
The Tampa office had closed?
Yes, sir.
or
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Okay.
Ms. Sammons coming to South Florida to work with you, did she have any training or experience in dealing with state of Florida foreclosure process?
A
Not while -- not a while, working with me.

At LOGS?
25

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But that was not one of my offices.
Did Ms. Sammons -- prior to,
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your job responsibility?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
A At LOGS.
Okay.
Do you know if she had any prior
A
Q
I don't know.
All right.
earlier that you were in daily contact with Ms. Sammons at that time? "That time," again, being late or early
1990s up until the time you guys left LOGS. A Pretty much in that. Okay. All right.
drove up to Orlando to get your first client in 1994. Did I hear you accurately? A
I believe it was either towards the end of
1993 or the beginning of 1994 after I had given my notice to LOGS, but was uncertain what type of law I was going to practice. Q A
Who is your first client? My first client was three of them:
CitiMortgage, Chase and Bank of America, which was
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Nation's Bank or NCMB, actually.
to Orlando? A No, sir. All right. So, you opened in January of 1994.
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I believe you said within four months, that things
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And did you get retained during that trip up

(877) 291-DEPO (3376)
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So, your referenced you
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And I believe you testified
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experience, in other words?
2 3 4 5 6 7 8 9 10
11
A quickly.
Q
Certainly, things started moving fairly
At what point did you decide that you were
going to operate a foreclosure business, legal business?
I guess I always knew at some point that I
would do foreclosures, but I wanted to do other types of law

Q
Like what?
-- as well.
I like criminal law.
ur eF
contract law.
When you become a solo practitioner, you So, I didn't
12 13 14 15 16 17 18 19 20 21 22 23 24
do whatever you need to do, as you know.
have my sight set on anything, and I really was uncertain, at the end of the day, how successful or how -- how successful, I guess, I would be in taking work for LOGS because we always have long-standing relationships. going to be.
Q
pF
Okay.
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four months, things changed?
Almost from Day 1 when I reached out to those So,
three clients, they all agreed to give me work. things changed certainly before four months.
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So, I really wasn't sure where I was
What did you mean when you said within
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apologize,
I don't remember alluding to four months.
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But if I go back through the history, to the best of my
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I like the And I
started moving, paraphrasing of course.
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2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
not be on a weekly basis. grow and grow.
And we continue to grow and
So, you quickly learned that relationships you
had established over the last eight years at LOGS were now paying off as it relates to your own personal law office?
A correct.
The relationships were paying off, that is
Q
A
They obviously recognized talent.
Or they appreciated me on my knees with no
direct deposit knee pads on.
Q
A
So, you begged for business?
I did, yes, sir.
Q
A
And they gave you the business?
They gave me an opportunity to earn it.

Now, Ms. Sammons was your first employee; is
Q
that fair?
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Law Offices of David J. Stern, P.A.?
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She was.
How quickly did you begin adding staff to the
Probably two weeks.

Okay. And what type of staff: Staff or
lawyers or both?
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Yes, both.
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recollection, there was something happening positive and
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was?
Q
A
Yes.
I'm sorry.
There was an attorney by the name of
Michael Chase that was across the hall and he was
looking for extra work, so I hired him as a counsel and paid him on a case-by-case basis. As court appearance His
were needed, telephonic hearings were needed.
wife, Barbara Chase, also an attorney, was my first lawyer hire.

Q
Did you ever actively go to court as a lawyer
in Florida?
A
Q
Yes, sir.
Okay.
practice did you appear in court? at January 1st, 1994.
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And how quickly into your own personal Or was -- you opened
or
Do you have a recollection of how
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quickly you were in
I believe 30 days on the motion to dismiss.
Okay.
This is why it's totally different.
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LOGS', because I wasn't an attorney.
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an attorney -- or I became an attorney going in, arguing
cases, familiarity with case law, familiarity with the rules of civil procedure. Everything was done
25
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Now, I've become
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They are
Legal as in law -- lawyer?
Do you recollect who your first legal hire
1
differently from the LOGS.
Q
A
Because now, you're a practicing attorney?
4 5
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remember, everything I did at LOGS had to come with the scrutiny of the national office. In that one day when
Gerry didn't want me to do what I needed to be done or felt needed to be done, it was a series of on-going denials. No, you can't do it this way; no, you can't do
8
9
it this way; no, you can't do it this way. day, he said, "No, you can't do it this way.
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think you can do it better, then go out and do it." that's exactly right.
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And then one If you And
12 13 14 15 16 17 18 19
I said goodbye and created things
that I wanted to do my way.

Q
Right.
institute the David J. Stern systems into your now new law office?
MR. SCRUGGS:
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Okay.
So, how quickly did you
Objection to form.
Vagueness.
21 22 23
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things?
Q
you're with LOGS, you've established policies and
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procedures on how you believe to best run a foreclosure
practice, and you've instituted those policies and procedures. Did you take what you learned there and
25
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Undefined terms. What do you mean David J. Stern way of doing
(By Mr. Jaffe) Well, during the eight years
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Well, because I'm a practicing attorney and
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January of 1994?
states that I established policies and procedures were states different than Florida.
Q
Okay.
There were things that were the LOGS -- in way
of the LOGS' philosophy, LOGS' budget constraints and lots of things that I wanted to do that I couldn't do. And, of course, Florida was a -- a totally different sort of state. So, I was able to come up with different
12
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ideas, different technology, different reports, and I didn't have the accountability to the national office. My accountability became direct to the client. So,
14 15 16 17 18 19 20 21 22 23 24
processes -- the collar was taken off me, the rains were gone and I was free to run as I felt, yes.
Q
Explain this to me though.
or
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at the Tampa office which you turned into a distressed
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office where you were with for three months.
pF
is when you first came into the LOGS Group, you were out
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thought your job responsibility when you went nationally
was to clean up, for lack of a better word, distressed offices.
When I started in Tampa, it was a distressed My primary focus there was -- it was distressed
25
office.

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My only confusion
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And I
No, sir.
Not for the most part because the
established at LOGS and instituted in your law office in
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So, I was able to go in, and in my mind, create systems.
was like David, you need to sit down. breath.
Take a deep
You need to understand that, A, you have no
experience; B, you're not a lawyer and C, there are established guidelines that are uniform. That's why
clients used the LOGS Group because they have uniformity and guidelines were appropriate within the given states.
Q So, when you opened up your Florida office in
January of 1994, did you put into place your idea of how you wanted to run David J. Stern, P.A.?
A
Q
I did, yes, sir.

Okay.
a daily basis to establish those guidelines and protocols?
A
Q
Yes, sir.
policy and procedure manual for your law office?
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office, what title company did you use?
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fund.
Q By the end of 1994, how many attorneys did you
25
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And when was the first time you created a
I would say almost from Day 1.
And was it -- when you first opened your
Attorney's title, abstract, attorney, the
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And Ms. Sammons and yourself worked on
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It wasn't, here's what I want to do and it's blast.
m
It
because there were issues in post-sale and evictions.
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I don't recall.
Two?
Counting myself?
Sure.
Who will be part of the team?
In late -- end of 1994, how much staff did you
have, non-legal staff, approximately?
A
Q
Thirty.
Had you moved locations already?
Don't hold me to the time frame, but we
12
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quickly moved from North Miami Beach to Hollywood.

Q
Where in Hollywood?
14 15 16 17 18 19 20 21 22 23 24
A
Q
4600 Sheridan Street, Hollywood, Florida.

From 800 square feet in North Miami to how
much in Hollywood?
A
Q
North Miami, went from 800 to 1,600 -Okay.
A space.
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-- to 2,400 to 3,200.
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We were hated because we took all the parking.
So, we moved to Hollywood where we took 6,000 square feet.
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Was that in 1994?
1995-ish
25
If I'm guessing, we moved into early 1995-ish.
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We then outgrew the
Right when you moved into
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have working on, ballpark?
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I've -- I'm thinking about a year, and then we
Drive, Plantation, Florida 33324.

Q I'm sorry.
We
When was that?
A
Q
That was 1990- -- I want to say 1995, 1996.

Oh, so, you only stayed in Hollywood a very
short time?
A
Q
We outgrew the space.

Okay.
How much square feet did you take at
your first Plantation office, the 801 space?
Either -- I think it's 32,000 square feet.
More than we needed, but space was like $7 per square foot or it's $5 per square foot plus cam charge of $7. It was owned by a Trust and the Trust wanted us to take the whole thing. It used to be a Stein Mart. So, at
the end of the day, they ended up probably paying me
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rent.
Timing is everything.
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Plantation, approximately how many lawyers did you have
work for you?
When I first moved there?

Yes.
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A
Q
10, 12.
I -- I can't remember.
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And approximate staff?

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When you moved to
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moved to Plantation, Florida, 801 South University
Okay.
How long did you stay in Hollywood?
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What was Ms. Sammons'
job title at that point?
A you know.
Q
No, she had one.
Everybody has to have one,
She was the office manager.
More importantly, what were her job
responsibilities?
A
Q
When we moved to Plantation?

Yes, sir.
Oh, actually, did they change from
at the time you moved in North Miami to Plantation?
Well, when we were in North Miami, she did She did proofs of claims in bankruptcy, she
everything.
wrote checks, she helped me do closings. all.
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When we moved to Plantation, she was the office
manager in charge of hiring and firing in all areas. She -- we developed a whole new set of tracking, processes.
with clients, which, in the past, would never have
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happened.
Q
she could effectively do every aspect of the business
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except appearing to court?
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So, she would assist me as a liaison with -- speaking
At this stage in her career, it sounds like
MR. SCRUGGS: MR. TEW:
or
Everything had changed from the LOGS' days.
And she did interviews
Objection to form.
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Yeah, same objection.
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She did it
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I know you don't like job titles but just
A hundred.
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(By Mr. Jaffe) Okay.
What couldn't she do
She didn't have relationships with client, she She could speak to them
couldn't do client development.
to answer a status question but she couldn't go out and draw up a business.
Q
Fair enough.
Let's carve out business
development.
A
Q
Okay.
In-house back office stuff, she could
effectively run each element of the business of David J. stern, P.A.?
No, she couldn't do the accounting, she
couldn't do the evictions, she couldn't do the bankruptcies, she couldn't do the contested cases, she couldn't do the title, the searches or the exams, she
claim.
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electronic-based or -- so, that wasn't her -- her job description.

Q
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at that point?
A
Q
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could, certainly, if I needed her to do a proof of But at that point in time, things became
Did you have somebody that would review titles
I did, yes, sir.

Who -- or how many? Who? Excuse me.
or
So, I have to disagree.
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effectively at this point in 1996?
I disagree.
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4
Fair enough.
Early 1996, if you remember.
the beginning.
In my opinion, he's one of the leading
5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
authorities with title and helped established our title operation and maintained the relationship with attorney's title.
Q P.A.?
When did he become employed by David J. Stern,
A
Q
1994, early.
Okay.
And Sam later headed up what was then
to be known as Professional Title & Abstract?
A
Q
That is correct, yes, sir.

And so, is it fair to say that you had daily
contact with Sam -- 1994 to, certainly, 1996, you had daily contact with Sam?
A
Q
No.
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involved or anything.
Q
time frame?
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And why is that?
Title -- title, there's no reason for me to be
Was he on your physical plant, Sam, at that
In our facility?
Yeah.
In our office?
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Yes, sir.
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Sam Silverglate, attorney with me almost from
What period of time.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Okay.
Sam was employed by you and paid by you
at that time.
A offices. I'm not sure if he was paid by the law I -- I -- I don't recall.
He was -- he was
obviously paid, not by me individually or personally.
He was either paid by the Law Offices of David J. Stern or Professional Title & Abstract.
When was Professional Title & Abstract
incorporated?
A 1994.
Q
A
And who incorporated it?

I don't know.
Q
A
Who were its officers?

Myself.
Q
A
Who were its directors?

Myself.
Q
board?
Was there anybody besides yourself on the
pF
I don't believe so.
.S to
Okay.
that David J. Stern was opening on a monthly basis in
1996 once you've moved to Plantation?

A 1996 -- I -- I can't. I'm sorry.
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In 1996, when you moved into Plantation, can When I say "you,"
25
you tell me what departments you had?
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Can you give me an idea of the volume
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Well, there was Professional Title & Abstract,
department, there was an eviction department.
provide full capacity record, mortgage lend direct presentation.

Q
And at this point, you had instituted the
systems with no-collar on your ability to create systems, like you had a lot, you would get instituted those systems within to -- into your law office.
10
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12 13 14 15
16 17 18 19
With any practice, there is going to be
systems, processes and procedures.
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way of LOGS, their methodology, their technology. liked a very little from there.
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would be essential departments that were necessary to
I did not like the I
So, as I've said, if
you said my reigns were removed and I was free to do things consistent with my dream.
21 22 23
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adjunct to you?
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And you did that?
And I did that, yes, sir.

And Ms. Sammons instituted those systems as
What time period?

1996.
She would not have instituted all of them.
or
25
would have been -- with LOGS, they've -- LOGS had

.co
There
there was foreclosure department, there was a bankruptcy
m
It
I'm taking about David, the law office.
1
central accounting, central HR. accounting. We have our own HR, Cheryl
2
3
Cheryl couldn't do that.
couldn't do any of that. totally different world.
Totally different, totally Cheryl didn't have the
6 7
8
expertise to implement requirements under the bankruptcy code or in litigation department, just things that she couldn't do. They were more in the foreclosure area and
9
10 11 12 13 14 15 16 17 18 19
20
perhaps working with HR, assisting in some hiring, second interviews, whatever the case may be.
With regard to the foreclosure department, she
was able to institute your systems in a foreclosure department?
Correct.
And that had been her specialty with you
previously?
Well, it -- it had, but that was with the So, I had to say,
no, no, we're not going to do it that way.
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that road more than not.
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Shapiro vision, not with my vision.
Right.
And she learned quickly before she went down We actually went the opposite
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24
direction.
Q
A
Were you working 24/7 at this point?
25
Yes, sir.
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Correct.
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couldn't do that.
Insurance, workman's comp, Cheryl
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A old.
I've been working 24/7 since I was 10 years
I assume Cheryl Sammons worked similar hours
No, sir.
I don't require sleep or food.
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as you did?
requires sleep and food.

Q
Okay.
With respect to when she do work, there
was a plenty of time for you to explain and express your vision to her?
A
Q
Yes, sir.
Okay.
12 13 14 15 16 17 18 19 20 21 22 23 24
And now that the collar is off, you did
that and you established the systems that you wanted to place within your law office?
Better procedures than LOGS had, more
effective, more efficient, all the way around.

Q And taught into her or she'd learned and --
two cents.
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her two cents and sometimes her two cents.

Q
pF
Taught into her, she learned, she threw in her
And then carried them out through staff?
The policies and procedures, sometimes without
ww w
Okay.
for the better?
25
My business took a turn for the better every

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In 1998, did your business take a turn
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She
You can't change.
And
1 2 3 4 5 6 7 8 9 10
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Fannie Mae named you to the attorney network
A
Q
I'm not sure which year.
Was that of any significance to your ability
to grow your business?
A
Q
For Fannie Mae?

Yes.
Certainly nice to have on your resume but when
we were selected as Fannie Mae attorney, there was no requirement that the services use Fannie Mae attorney network. I believe at that point in time, we had
12 13 14 15 16 17 18 19 20
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established very solid client base.
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selected under the -- the structure of the program back then, we didn't feel that it would really hurt us because relationships had been established. It could
certainly help us as new services or potential new
Attorney Weston said, "Hey, if you're good enough
22 23 24
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for Fannie, we'd use you."
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clients go into the Fannie Mae service or approve.
or
of 1998 is correct in that, and I don't recall if it is, if we have just starting off that year, it would But had we already
ww w
have probably been a great thing.
been established, again, under your timeline, four years earlier, I don't think it made no difference.
25

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So, if -- if your year
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And had we not been
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in 1998?
year.
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year in 1998 and 1999 by Fannie Mae, did that have any positive impact on your business?
I'm not certain if -- if it was those years,
but it was certainly something I believe that the industry recognized. on my resume.
It's something that I, again, put
I unfortunately, while in attendance at
the Mortgage Banker conferences, didn't have clients, you know, like poodle on my legs saying, oh, my God, you are the attorney of the year. files. Come and get my
But from a personal achievement and the
12
13
achievement of my folks and a part of success is sharing it with the people that have gotten where they are. I felt, I think, more proud for them in their
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accomplishments necessarily than for me.

Q When is the last time you handled a
foreclosure in a courthouse in person?
mean "handle"?
.S to
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have maintained an active courtroom presence in the South Florida market handling foreclosures on behalf of
25
clients?
pF
You guys are supposed to object.
or
What do you
Went to the courthouse on behalf of a client.
Six, seven months ago.

So, would you agree with me that you yourself

291-DEPO (3376)
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And
The fact that you were named attorney of the
65
thousands and thousands and thousands and tens of
4 5 6 7 8 9 10
11
ago, I would not say that I personally maintain activity or really any hands -- just take hand -- hands-on
activity from an operations standpoint in -- in several years.

Q
Let's see if I can put some brackets on these.
You went to court when you opened your own office in 1994?
A
Q
Yes, sir.
12 13 14 15 16 17 18 19 20 21 22 23 24
Did you maintain an active courtroom practice
for any period of time when you had your own office?
I'm going back, obviously, further than I care But in the beginning where it was
to say, 17 years.
just myself and my chains of counsel, I did go to court for a few months.
clients in the client relations?
pF
quite clear.
or
Do I go to court or do I take care of the I can hire people all
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day long to go to court.
desire to try to hire any marketing folks. always been my forte.
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My focus at that point in time became
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I could not nor did I have any That has
So, it was very quickly that I It's nice to go
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relinquished my court functionality.
every once in a while.
It's actually or it was quite
25
flattering to go to court.
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thousands of cases and the fact that I went seven months
I wouldn't --
Given the fact that we have
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Approximately what year?
It was in the 1994?
court with some frequency.
Maybe -- I went to court at
some point that maybe or it's just once every month, once every three months. In 1994, I was doing
telephonic hearings and I was appearing in the tri-county.
If I go back, you know, two or three times
a week, certainly, in 1995, that was not what I -- I did.

Q
How about 1996?
12 13 14 15 16 17 18 19 20 21 22 23
is the time frame in which you became, like you said, less involved in the court system operations of your business and more involved in client development and overall running of the operation.
A
Q
Certainly, 1996, 1997 -Okay.
law, trying to find time -- David, you're visiting a
.S to
city in St. Louis, you need to sign this pleadings. the training, that is necessary -- necessary. rules change, judge requirements change.
pF
-- simply because trying to keep up with case
or
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All I'm trying to get through
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So, it got to
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a point where it was quite clear in my mind and the
24
minds of the trusted attorneys from the senior level that I better not be the cook in the kitchen anymore.
25

www.reifkingwe1ch.com 291-DEPO (3376)
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At As local
From 1994 till seven months ago, I went to the
When did you think you relinquished?
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
me.
More so sooner than later.
I -- I would say
Q
A
Okay.
Who was your first managing attorney?
Well, when it was just Cheryl and I, it was
It was Mary Mendieta. Mary was hired in 1994.
Okay.
So, Cheryl Sammons and Mary Mendieta
where with you since 1994. A
On full circle, I haven't.
that's correct.
So, keeping good staff is an important part of
your business? A
Keeping good, educated, hard working staff is It doesn't matter if it's the
key to any business.
7-Eleven or Walmart or AutoNation.
1998, your office was sued in a class action
.S to
the Bryant class action as where two other big competitor law firms, the Codilis Law Firm and the
Shebria Law Firm.
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pF
and that class action resolved; is that correct? In 1998, our offices -- my office was sued in
And that case was resolved? That case was resolved, yes, sir. Do you recollect, as you sit here today, what

(877) 291-DEPO (3376)
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I guess you just said that. Well, yes, sir,
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1996, 1997.
What was your best guess what year that was?
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allegation.
Fair enough.
Overcharging for title, which in Codilis case, Because that's what Fannie They alleged that we
the Judge said 325 is fine.
and Freddie said could be charged.
needed to keep time records, which in the Codilis -Beck v. Codilis the court said they will need to do. The only issues that we had unresolved that never went to hearing because they were settled or they did not like the way that Professional Title & Abstract was structured, they felt who was a shelf corporation because it wasn't formalized. agreed to formalize it.
Q mean?
12
13
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We also --
When you say "formalized," what does that
payroll was set up or the lack of payroll was set up.
.S to
They didn't like the way -- that it need the appearance of a shelf corporation. What they did conceive was the
amount that Professional Title and the law firm charged for Title was reasonable and customary.
Q
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case?
pF
They didn't like the way that it -- that
You ultimately paid 2.2 million to settle that

(877) 291-DEPO (3376)
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Period of settlement, we
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Allegations?
the allegation was in that case?
And I say the
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Unfortunately, in 2002, there was a bar
A
Q
Yes, sir.
In 2002, were you publicly reprimanded?
A
Q
Yes, sir.
And what was the basis of that, if you
recollect?
It was Professional Title & Abstract, the fact
that the court felt we were misleading by providing invoices from Professional Title & Abstract when Professional Title & Abstract appeared to be a shelf corporation. And again, the Florida bar, in terms of my
public reprimand, did recognize that the charges were customary and reasonable. They just didn't like the
fact that we said Professional Title bill the law firm 325 when they were an area of Professional Title but no
.S to
a centralized computer system?
pF
true Professional Title & Abstract employees.

At what point did your law office begin using It seems like a stupid
question, but please answer it.
Well, Cheryl and I had two 386s hooked So, I would say January 1st, 1994.
Okay. And did your law office and each of its
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together.
Q
25
developing departments over the years continue to use a

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grievance filed against you?
Insurance company, yes, sir.
2
3 A
MR. SCRUGGS:
Objection to form.
4
5
"centralized" is, if one cord goes to the other cord. Yeah, but that's a -- a techie question. need Norman Gottschalk to help me.
And you would
6 7
8
(By Mr. Jaffe) All right.
get that out of the way.
Who would be the person with
the most knowledge to answer IT-type questions of mine?

A
10
11
The chief information officer, Norman.

Full name, please.
Q
A
12 13
(
14 15 16 17
Norman Gottschalk.
Q
A
Spell the last name for the court reporter.
G-O-T-T-C-H -MR. BERNSTEIN:
-- A-L-K.
piece of technology I do know.
19
20
pF
18
MR. BERNSTEIN:
or
21
22
23
24
.S to
the chief information officer at DJSP Enterprises. It's not a law firm.
(By Mr. Jaffe) How long was he been employed
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in your world?
25

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I'm lost without my Blackberry, the
Objection to form.
Same objection.
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S-C-H-A-L-K.
Just for clarification, he is
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I'm not sure what your definition of
centralized computer system?
1
A He went public in January of 2010. Created
2
3
the back office 13 months, 12 months, something like that.
4
5
(By Mr. Jaffe) So, in the 2000 areas, 2001,
2002, 2005, in that time frame, who ran your computer system?
6
7
8
Vince Petrov.
Okay.
Q
office?
And what years did he work for the law
9
10
11
Vince worked for the law office, I'm guessing, 1996. And then he became an
somewhere in 1986 -- 1996.
12 13
employee of DJSP on October -- on January 15th. MS. DOUCETTE: A
14
15 16
January 15th -- I'm sorry MS. DOUCETTE: MR. JAFFE:
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January 15th? 2010.
I'm sorry, I didn't hear him.
It's okay.
17
18 19 20 21 22 23
24
(By Mr. Jaffe) And you don't like job titles,
computers up until January 15th, 2010, your computer
.S to
systems?
pF
so I'm going to just ask it this way, he ran your
Yes, yes.
or
I don't -- I don't know what his
title.
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That's why I didn't ask.
knowledge, is he still employed with DJSP?
25
He is not.
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To the best of your
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2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
A
Q
I do not.
what type of caseload your law office maintained in the
A
Q
As I sit here today, no.

Okay.
If I were to say to you that I've read
somewhere -- and again, that's why I'm asking, I've read somewhere that you've handled approximately 15,000 foreclosures, you, your office in 2006 throughout the State of Florida, does that sound accurate?
A
Q
I'm sorry, all the years all run together.

Okay.
your business took a dramatic increase?
A
Q
Yes.
And when would that have occurred?
We've been in our existing space, 900 South
four years.
.S to
growth.
Q
pF
Pine Island Road, Plantation, Florida 33324 for three or So, that's when the business had dramatic
So, doing some math, I would say 2007, 2008.

All right. Let me back up a little bit. You moved into, I I'm
sorry for not doing that earlier.
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believe, 801 space in Plantation in 1996, correct?
Well, let's see, we have a 10-year lease Simply, we stayed there until 1996, 2006 but
25
there.
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Did there come a time after 2006 where
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mid-2000s, for example, 2005, 2006?
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Are you able to tell me on an annual basis
Do you know where he is?
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2 3 4 5 6 7 8 9 10
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couple of years.
Q
the 900 South Pine Island Road space?
A
Q
Yes, sir.
Okay.
In approximately 2006, 2007?
A
Q
2007, 2008.
Okay.
Did you vacate the 801 space completely
at that point?
A
Q
Yes, sir.
Did you have any other space in Plantation at
12 13 14 15 16 17 18 19 20 21 22 23 24
that point other than the 900 space?

A
For what?
Anything.
Q
A
Yes, sir.
Q
A
What would that have been?

I
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.S to
pF
Kentucky.
Okay.
This is when I moved in, 2008.
or
had defaul"t servicing in Louisville,
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storage areas, that's all Arena Default Servicing. Professional Title and the law offices -- Professional
Title was with the law offices at that time.

Q Okay. Default servicing, what was that? 2007? In
25
this time frame?
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A couple of
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Okay.
All right.
Now, then you moved into
then we had somewhere near about that years -- or a
1
A
It was a company that I created that
2
3
4
specialized in real estate owned liquidation on behalf of lenders.

Q
A
You created it when? 1999 -- 1998, 1999.
6
7
8
Who were the officers and directors?
Myself.
Q
A
And were you the managing member?
I believe, yeah.
In --
10
11
MR. SCRUGGS:
Okay.
12
13
default services of the corporation. MR. JAFFE:
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Right.
14 15 16 17
18 19
MR. SCRUGGS: managing
All right.
MR. JAFFE:
Correct.
follow up on it.
between 2006 and 2009, your staff triples from
.S to
20
21 22
23
24
approximately 400 to approximately 1200?
pF
(By Mr. Jaffe) Would you agree with me that
MR. SCRUGGS:
or
Object to the form of the
question. What were the dates again?

(By Mr. Jaffe) 2006 to 2009.
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Q
A
25
There's huge increase.

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Managing member, I think
That's what I know. So, it wouldn't be
That's why I didn't
I don't -- I don't
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8
Let's talk about HR for a second.
Who was
A
Q
Or me.
Or you?
Gosh.
There were a couple of people.
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cannot remember their names.

Q reporter.
And then Shameeza Ishahak.
Please try to spell that for the court
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
I should know how to spell all these names, I don't want
but Shameeza's been gone for a while. to -- I don't want to butcher it.
S-H-A-M-E-E-Z-A then I-S-H-A-H-A-K. MR. JAFFE: Ladies and gentlemen, it's 12:05. At this point,
I think we should break for lunch.
certainly, I have lots more to cover, but I think we should probably grab some lunch.
or
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Okay.
And I'd like
pF
to be back 1:00. MR. SCRUGGS: MR. JAFFE:
Is that doable? Yeah. All right.
.S to
(Thereupon, a short break was taken.) (Deposition resumed.)

(By Mr. Jaffe) All right. We're back on the I'm going to pick up
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25
record for our afternoon session.
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I -- I
your first director of HR?
Cheryl Sammons, 1994?
know if it tripled.
I have to check with HR on that.
1
with your move into the 900 South Pine Island Road location. A
Q
2
3
Okay? Yes, sir. All right.
4
5
6 7
And just for time frame purposes,
that's some time between 2007, 2008, correct?

A
Yes, sir. All right.
At that time -- and that is the
8
9
space that up to about recently or maybe even now is currently occupied with the Stern operations; is that correct? MR. SCRUGGS:
A
10
11
Objection to form.
12 13 14 15 16 17 18 19 20 21 22
When you say "Stern operations," what
operations?
Q
alone.
(By Mr. Jaffe) You know what, let's leave that We'll get through to that in its natural course.
When you moved into the 900 space, the law office and Professional Title and Abstract moved into that space,
.S to
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23
24
more than one floor in the 900 space?

A
25
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correct?
Yes, sir.
And how many floors did you occupy initially? Initially, one floor. And did there come a time where you occupied
Yes, sir. And how many floors ultimately did you occupy

(877) 291-DEPO (3376)
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2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
When you say "floors," you're talking about
Fair enough.
Let's just keep it globally and Any portion of any floor.
then I'll narrow it down.
A
Q
Five.
Okay.
So, any reports that you occupied eight
floors or any portion of eight floors is grossly exaggerated?
We -- we did not occupy, in any way, shape or
form, eight full floors.

Q
How about eight partial floors?
I'm sorry.
is -- is grossly magnified and outstretched.
ec los
Everything to do with this is -But having
said that, we occupied all of four, all of five, all of six and all of seven and just a very small portion of two.
Q
A
Q
pF
All right.
or
Floor two?
Yes, sir.
So, all of four, all of five, all
.S to
All right.
of six, all of seven, eight, to use your word, small
portion of Floor No.2?
ww w
Yeah.
But, you know what, I think ultimately
we did make it to floor number eight. MR. TEW: Now we're talking Pine Island in
25
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four floors or portion of it?
at its height?
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1 2 3 4 5 6 7 8 9 10
11
2006? A Pine Island, uh-huh, 900. No, he said at any
MR. TEW: MR. JAFFE: MR. TEW: MR. JAFFE: A
Well, then let's differentiate -At its height. All right. We're okay?
All right.
At its height, we would have occupied a small
portion of -MR. TEW: firm, not the A
And you're talking about the law
12
13
14
I was saying Stern -MR. JAFFE: MR. TEW:
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-- operations. There is no
Well, I object to that.
15 16 17 18 19 20 21 22 23 24
such thing as Stern operations. MR. JAFFE: MR. TEW: All right. was a law firm until 2010, then
there was a law firm.
pF
there was DJSP Enterprises and subsidiaries and
.S to
MR. JAFFE:
or
It
I'll rephrase.
(By Mr. Jaffe) Up until December 31st, 2009,
how many floors did the Stern Law Office and Professional Title and Abstract occupy?
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MR. BERNSTEIN:
25
asking in the 900 South Pine Island Road address

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Can I just clarify that you're
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point in time.
1 2 3 4 5 6
7
only? MR. JAFFE: A been 10. Sure.
To the best of my recollection, we occupied
four, five, part of six and all of seven.

Q
(By Mr. Jaffe) And nothing on floor number two
at that point?
8 9 10
11
A
Q
I do not believe so.

Okay.
As of December 31st, 2009, did you have
leases on any other space other than the 900 space, in different building?
A
12
13
The Law Offices of David J. Stern?

Yes.
Q
A
14 15 16
17
We may have had some month-to-month leases in
the building next door on a small scale.

Q
What would that have been?
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that have been?
19 20 21 22 23
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was still in Kentucky?
pF
18
1000 Pine Island.
As of December 31st, 2009, Default Servicing
Yes, sir, I believe.

Okay. How many employees did the law office
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have in December 31st, 2009 to the best of your recollection?
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25
I don't recall.
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What address would
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In December 31st, 2009, so that would have
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2 3 4
5
2009
A
Q
I don't recall.
December 2009?
A
Q
Miriam Mendieta and Beverly McComas.
6 7 8 9 10
11
When did Ms. McComas become employed by you,
approximately?
A
Q
2000.
How often would you meet with Cheryl Sammons
in the Year 2009?

A
For what purpose?

Any.
12
13
Q
A
Which can typify any of the agreements in a
14 15 16 17 18 19 20 21 22 23 24
while, once a month maybe.

Q
At that point in 2009 -- during the period of
2009, did she have the authority to hire and fire?
A yes.
She did have the authority to hire and fire,
.S to
A
Q
lawyers?
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Both lawyers and non-lawyers?
Not lawyers.
Who had the authority to hire and fire
Miriam Mendieta and Beverly McComas.

Okay. Is it your testimony that you did not
25
meet with Cheryl Sammons on a daily basis in 2009?
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Who is your managing attorney or attorneys in
How many lawyers?
(
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1 2 3 4 5 6 7 8 9 10
11
A
Q
Absolutely, 100 percent, my testimony.

Let me clarify my question a little bit.
office you would at least have a meeting with Cheryl Sammons?
A
Q
Inaccurate statement.
All right.
Did you, as part of Cheryl
Sammons' compensation, buy her a new BMW on an annual basis?
A
Q
I did not.
Did you buy her -- did you lease her a BMW on
12 13 14 15 16 17 18 19 20 21 22 23 24
an annual basis?
Short term.
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Short term.
After she got it, she didn't want it.

Q
Okay.
Have you ever leased Cheryl Sammons a
car?
Yes.
or
pF
MR. TEW:
"You" meaning who, the law firm?

"You" being you, personally?
(By Mr. Jaffe)
.S to
No, I did not.

"You" being the law office?
Yes, sir.
How many times?
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A
Q
Three times, four times.

Approximate years?
25
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She didn't want it.
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it a fair statement to say that any day you were in the
m
Is
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1 2 3 4 5 6 7 8 9 10
11
A
Q
I don't recall.
Late 2000s?
Did you commonly pay her bills including her
mortgage?
MR. TEW:
Q
When you say "you" --
(By Mr. Jaffe) You, personally.
MR. TEW: A
Q
Okay.
No, sir.
(By Mr. Jaffe) The law office?
A
Q
Pay which -- what bills?

Any of her bills.
12
13
A
Q
No, sir.
14 15 16 17 18 19 20 21 22 23 24
Did you, on a regular basis, take her on
business trips with you?
A
Q
How do you define regular basis?

At least twice a year.
.S to
Cheryl Sammons in 2009 as one wherein that you would often be found yelling at each other within your office or her office?
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A
Q
25
within your law office?
pF
Twice a year, yes, sir.
Would you describe your relationship with
No, sir.
In 2009, how would you describe her role
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Sure.
1 2 3 4 5 6
A
have responsibility for the foreclosure side in
with Miriam and Bev to run the firm. Miriam's and Bev's watch.
Q
It was her watch,
You were no longer the captain of the ship at
7
8 9 10 11 12 13 14 15 16
l7
that point, in your mind?
I would like to say I'm the admiral and then
turned the command over.

Q
You earlier said that ultimately you are the Were
captain of ship with regard to the logs operation.
you always the captain of the ship with regard to your law office?
A
Q
Based on what I just said, no.

And you gave up being the captain of the ship
in your mind when?
MR. TEW:
pF
18 19 20 21 22 23 24
of the ship."
MR. JAFFE:
or
.S to
(By Mr. Jaffe) What is your definition of
"captain of the ship" when you used it referencing the
logs operations?
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Who -- who's on watch, who's got the
day-to-day control, who makes the business decisions.

Q
25
Okay.

ec los
Let me get a definition of "captain
It's his term.
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conjunction with HR and worked on a day-to-day basis
In 2009, she was the operations manager.
She
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 A When we moved into the 900 South Pine Island,
when volumes increased dramatically -- you said three times and I said dramatically, I don't know what
amount -- at that point in time, if not, prior, but certainly at that point in time, the day-to-day
operations were turned over to Miriam and Bev, under their structure of supervision, there are other attorneys.
And the operations, non-legal side, were
turned over to Cheryl and her host of assistant managers.

Q
In anyone time in 2009, Ms. Sammons would Does that sound
have up to 60 people reporting to her? correct?
A
Q
How do you define "reporting to her"?

Supervisors, managers.
I don't -- I
involvement at that point in time, so I have no idea.
testimony that as far as your day-to-day involvement
.S to
with the running of your law office, you had turned that over to Ms. McComas and Ms. Mendiendez at the time
you
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25
900 South Pine Island space?
pF
All right.
or
Mendieta.
-- Mendieta at the time you moved into your

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And so I'm clear, it's your
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I -- it wasn't my day-to-day
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know exactly when, but it was about that time.

Q
Because I was busy drumming up the business,
in your words, that huge increase, again, not three times.
And that's a full-time role, going out, wining,
dining, clients, putting on the seminars, speaking, taking care of the clients, being there, being present, accountable.
Q
And that's what I do.
And from the operation side of the business,
Ms. Sammons is running the office; is that correct?
A
Q
The non-legal -- non-legal matters.

From the legal operation standpoint of the
business, your two managing attorneys whose names are
A
Q
Miriam Mendieta and Beverly McComas -were running the operation at that point?
A
Q
The legal side?

Yes.
A
Q
.S to
you're responsible for all three of those people's actions and behaviors?
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there's adequate supervision.
pF
Yes, sir.
And you would agree with me that, ultimately,
Ultimately, I am responsible to ensure that If they go out and kill
25
somebody, I'm not responsible for that.

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Why did you do that?
I believe it was some time prior.
I don't
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2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
your law office?
Calls for a legal conclusion. A

Q
Yeah.
You lost me on that one.
I'm sorry.
(By Mr. Jaffe) Who was your -- who was the
manager or person in charge of Professional Title and Abstract when you moved into the 900 South Pine Island Road?
From the attorney standpoint, Sam Silverglate.
From the non-attorney standpoint, Carol Whitlow.

Q
And that stayed consistent up until 2009
late 2009?
A
Q
It did stay consistent.

Okay. Who supervised them?
They were supervisors, they were managers,
they were over their own department, they were over
foreclosure overlapped or meshed with or had to work
.S to
with, Cheryl Sammons work with Carol Whitlow to smooth -- to ensure smooth transition of the work, Sam
Silverglate work with Miriam Mendieta and Beverly So, if there were problems, Sam would go to It
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McComas.
Miriam or Bev, or if things weren't getting done.
25
was a combination then of Sam, Carol, Cheryl Sammons,
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Professional Title and Abstract.
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To the degree that
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MR. TEW:
Object to the form of the question.
Within the context of running your office --
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
With regard to your meetings with your two
you meet with them in person or by telephone to discuss
Once a month, with certainty and as needed If a client called and said, "I'm
with any manager.
going to pull the work if this doesn't happen," blah, blah, blah, blah, they had to come to me with that.
Q
And how often do that happen, approximately?
Maybe once a month, twice a month, where they It may have happened
felt the need to bring it to me.
more, but where it got elevated to me, thankfully, we have very solid relationships with the clients. And if
the clients had issues, they would reach out to me really at the end of the day because I'm the one that cultivated and maintained the relationships.
in properly staffing the law office once you move to 900
.S to
Pine Island?
continue to bring in additional volumes it would require And with additional staff comes
ww w
additional staff.
additional space, hence, the growth that we outlined and eight, nine, 10.
25
pF
Did Ms. Sammons expressed to you difficulties
Cheryl stressed to me that if I was going to
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the operations of your law office?
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managing -- co-managing attorneys in 2009, how often did
Miriam and Bev.
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Did she express to you the inability to find
staff with any experience?
Or said another way, was she complaining to
you that the staff that she was hiring was inexperienced?
A
Q
don't recall.
Did she express to you that it was just too
much work for the staff to properly be able to manage?

A
No
ah, let me take that back.
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She did.
2008, I want to say, she did come to me and said -- it was October, I believe, October 2008, maybe on October 2007 -- and said, "David, the paralegals have too much work." And I go, "Which paralegals?" She told me what And that was
12
13
14 15 16 17 18 19 20 21 22 23
teams, because we were broken in by teams.
the result of -- in -- in January, I think it's 2008, I brought on three new clients that were supposed to be
.S to
pF
relatively small in numbers.

Who?
Who?
Yes.
The three clients, Saxon, Wachovia and Homac.
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Each month, so what she did was she assigned those clients to an existing team that handled other clients' files. In October, she came to me and said the
24
25

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Who, the clients?
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In
I don't recall.
1 2 3 4 5 6 7
8
blank and blank, the three I just told you, Wachovia, Homac and Saxon.
I'm like -- I'm not surprised.
Where they started off
giving us 100, ultimately, it turned into 500 or 600 a month. So, the paralegals were overwhelmed.
up the phone and I contacted all three of the clients and asked them to stop sending us referrals. At this
9 10
11
point in time, we cannot handle and I did not want to disappoint or fail them. They were originally taken
back, because I'm the guy that comes in with knee pads and begs for more. At the end of the day, they praised
12 13
me and said, "When you're ready to take the work back, let me know." We assured them that we would finish of And the volumes just continue
14
15 16 17 18 19 20 21 22 23 24
what we had and did so. to grow.
With Fannie Mae and Freddie Mac, we wanted to
make sure that we kept those teams solid.
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So, when Cheryl brought to me attention that her group
.S to
of paralegals were overwhelmed, I did the right thing and contacted the client and told them we can't do it anymore.
Q
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staff was receiving little to no training?
25
pF
teams were the beneficiaries of those three new clients.
Did Cheryl ever express to you that the new
No, she did not.
As a matter of fact, we had

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And those
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I picked
And I pulled up my volume report and
paralegals are flipping out, the clients are blank,
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2 3 4 5 6 7 8 9 10
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were -- on -- on both the attorney side and on the
sole purpose was to do training.

Q
And that training was established -- those
protocols for training were established both at the lawyer and the non-lawyer levels by you?
When you say "protocol," we wanted to make
certain that we maintained our reputation as best in class and the best in the industry. And as bodies were
brought on, we wanted to make certain that there was nothing lost in the -- in translation. So, I instructed
12 13 14 15 16 17 18 19 20 21 22 23
Cheryl to designate three or four people of her choosing -- as I sit here today, I -- I -- I'm not sure who it is. I told Miriam Mendieta and Beverly McComas
on the attorney side that based on the volumes, based on the number of attorneys, based on the case load, we
training of the new attorneys, just like I did with
.S to
Cheryl.
side, as I understand it, selected their trainers.
pF
needed attorneys to -- experienced attorneys to handle
Both the attorney side and the non-attorney And
the attorneys, for a fact, before they were released to I believe, a 60 or 90-day
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go to court, went through,
24
training period with Billi Pollack and Maria Solomon, two most senior attorneys being used to train.
25

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non-attorney side, there were groups of trainers whose
groups of people that were in to do training.
There
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A
Q
Miriam and Bev.
And they have been --
Trained
who trained Miriam and Bev?
they kind of learned it on their own. beginning, there's foreclosures.

Q
I mean, in the
Well, Miriam started with you in 1994, so I
assume that you would have been the one to train her since she -- since you were the one who was establishing the protocols since your collar was unleashed to do things the way David J. stern wanted them done within his law office?
MR. BERNSTEIN: A
I
Miriam role
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I -- I agree.
Miriam's role is to go to court.
ur eF
(877)
Argumentative. Miriam role versus My
collar was never on in terms of court because I wasn't a practicing attorney.
or
Miriam was a practicing attorney.
realize two things, that my opportunity for success
.S to
would be greater if I focused on client relations and the other thing that went off is I'm not an attorney. I'm not into case law. I'm not into sitting down and
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reading briefs.
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And while I did it in its infancy I was smart enough to
So, in the infancy, Miriam got a very And as
solid handle on the way practice should be done.
25
the industry evolved and case law became greater and

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Gosh,
And who trained them?
And who trained them?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 done.
Q
beginning.
Q
she ever did as a practicing lawyer under your watch?
A
Q
I don't recall.
You don't recall objection?
A I
I don't recall if there's nothing that she's I don't recall anything.

Oh, okay. So, no?
A
Q
Well--
Nothing to your recollection?
A
Q
At what point in time?

Sure.
The answer would be "no."
ec los
Up until -- from 1994 up until 2008.
the case, she would have been gone.

Q Were your clients requiring foreclosures to be
complete within six months for sending you the file?
.S to
Mac lowered the foreclosure processing -- processing time for uncontested/controllable foreclosures from 180 So, based on the custom and practice,
ww w
days to 150 days.
it was necessary for the law office to complete the foreclosure within the insurer/investor time frame
25
pF
No, sir.
or
At what point?
Between the period of 2006 and 2009.
At some point in time, Fannie Mae and Freddie
ur eF
Because if that was Let me ask you that.
(3376)
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(By Mr. Jaffe) Did you ever object to anything
circumstances changed, Miriam got that really from the
1
absent any uncontrollable matter, which would include litigation or delays that are beyond the law firm's control.
Q
2
3 4 5
Between the time you moved into the 900 South
Pine Island Road location in December of 2009, would you agree with me that the only entities -- the only David J. Stern entities was the law office and the Title and Abstract company?
6
7 8
9
MR. TEW:
A
Objection to form.
10
11
Would I agree with you that those were the
only entities?
Q
12 13
14 15 16 17 18 19
20
21
(By Mr. Jaffe) Yes.
ur eF
I'll rephrase.
first moved into 900 Pine Island Road, the two entities that went with you, "you" being the Law Offices of David J. Stern, were this office and Professional Title and Abstract; is that correct?
A
No, sir.
Okay.
that point?
.S to
A
Q
pF
Stern and McSurdy.

What is that?
Okay.
22
23
24
That's another law firm that I have for
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commercial foreclosures.
Q
A
Spell the last name, please.
25
M-C-S-U-R-O-Y.
or
ec los
What other entities went with you at
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.co
When you
94
2 3 4 5 6 7 8 9 10
11
A
Q
Commercial foreclosures and appellate work.

Okay.
Default Servicing had a couple of employees
located in Plantation as an extension to Louisville for check processing, accounting.

Q
A
What address?
900.
Okay. All right.
Q
A
That's
Okay.
that's it.
As of December 31st, 2009, those four
12
13
entities still occupy the space that you originally moved into except maybe expanded; is that fair?
14 15 16 17 18 19 20 21 22 23 24
A
Q
Yes, sir.
Okay.
there, okay, believe it or not, I've seen pictures. many entrances and exits are there in the building?
ec los
And I apologize, I have not been out How I
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don't mean emergency exits.
Just one.
or
One with four elevators -- no, wait You got two emergency
.S to
a minute, no.
I take that back.
exits and you got a delivery.

Q
Let me help.
Excluding emergency, excluding
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delivery, just for common -- for the workers and clients.

A
25
Yeah.
One -- one entrance, four elevators,
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Their role was what?
95
2 3 4 5 6 7 8 9 10
11
be the next class action.

Q
I just wanted to get frank to laugh.

we're
I'm finished,
Q
we're done.
Okay.
Was the -- was Professional Title and Abstract
on a particular floor in 2009?

A
Q
Yes,
sir.
What floor?
I believe five.
Don't hold me to it, but I -And
I think that was it.
Again, I was not day to day.
12 13 14 15 16 17 18 19 20 21 22 23 24
when I was in the office, I usually stay put, but I think they're on five.
Q
What floor are you on?
A
Q
Four.
Was the entire law office on four?
Well, prior to December 30th, there was the
had.
.S to
because of growth got spread to a second floor. and McSurdy were on -- on one floor. And Default
pF
law office and it would have been on whatever floors we Professional Title, I can't tell you if they -Stern
Servicing, he was on one floor, they -- I think there's a couple of people.

Q
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Is that as clear as you can be?
or
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(877)
25
is, what floor was Default Servicing even if there's

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That's all,
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slow elevators, junky, people always get stuck, should
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
I -- I -- I don't remember.
I -- that just
Sure.
Who would know that, Cheryl Sammons?
I would go -- I would have gone to Cheryl to
ask her where are the Default Servicing people, but that was granular. So, as, you know, the owner of a 14,000
or 12,000-person law firm, I didn't deal with the two Default Servicing people that were on to deal with checks.
I know and I appreciate that.
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definitely understand how busy you are and how big the company you got.
ask, the right person, to get the right answer.
Well, I guess you could ask them.
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If -- I just want to know who I would
ask the Default Servicing people.

Q
Name them, please?
.S to
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David Obata.
Spell his last name.
O-B-A-T-A.
or
And I don't even know who the And you may want to know that David
second person was.
Obata is deceased.
Q
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It's tough to ask him.
A Q
You guys are good at what you do, so -I appreciate that. Who did they report to?
25
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And I
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wasn't what I did.
only two officers?
1
They would have reported to Jenny Johnson,
2
3
who is the Default Servicing manager in Louisville, Kentucky.
4
5
Q
A
And who did she report to? She would report to me.
6 7
8
So, ultimately, you were responsible for the
actions of Default Servicing? MR. TEW:
9 10
11
Calls for a legal conclusion. A
I would be responsible for putting procedures If Jenny
in place and expect that they be implemented.
12 13 14
15
didn't get her tickets to Kentucky Derby and killed someone, I would not be responsible.
(By Mr. Jaffe) Fair enough.
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responsible for putting policies and procedures in place for Professional Title and Abstract? A That would have been Carol and Sam. And who would they report to? Sam reported to Miriam. And Carol reported to
16 17
18
19 20 21 22 23
24
.S to
Cheryl.
all of the floor number four as of 2009? A Yes, sir. All of floor number four and all of floor
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25
number six; is that correct?
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The law office appears to have had space on
or
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Were you also
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2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
So, I think all the four, all the five, half of six, maybe half of seven.
Q
And the other half of seven would have been
Default Servicing only have two people, so
they were stuck God knows where but they wouldn't have had a floor.
Q All right.
Now, you just said that the law How much of five was
office had all the five.
Professional Title and Abstract?
I don't know.
I just believe that
professional Title and Abstract was located on the fifth floor. To what degree it was split between the two, I
don't know.
Q
Are you able to tell me how many employees
were employed by Professional Title and Abstract in
pF
2009, approximately?
60, 80.
Would you agree with me that the law
.S to
Okay.
office and Professional Title and Abstract shared the same file system in 2006 to 2009?
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I'm not sure what you mean, "file system."

The actual file itself.
25
Okay.
or
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They did to some degree but not fully
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Default Servicing?
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I -- I can't recall.
There was one floor that they had only half.
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
first to become paperless.
So, there would not have
Would the law firm be able to access
Professional Title and Abstract electronically?
A
Q
Access what?
Their file.
A
Q
Yes, sir.
As of December 31st, 2009, there was one
e-mail system being used; is that correct?
A
Q
For which entities?

All.
A
Q
No, sir.
Okay.
used, to the best of your knowledge, in December of 2009?
A
Q
I believe two.
Okay. One would have been the person's
name@sternlaw.com?
.S to
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Dstern
Okay.
It was a separate e-mail for Default Servicing
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and I don't recall.

Q Okay.
25
the law office use the same e-mail system as of December

or
ec los
How many e-mail systems were being
dstern.com.
What would the other have been?
So, Professional Title and Abstract and
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been a file to a large degree.
because Professional Title and Abstract had been the
100
2 3 4 5
6
A
Q
Actually, I don't know.

To the best of your recollection.
Yeah.
To the best of my recollection, yes,
but I -- I don't know.
When I -- I don't look at e-mail
addresses because I'm sure none of us really do. it's in our Blackberry, it's in our Blackberry.
Q
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Fair enough.
7 8 9 10
11
Who did the HR department report to?
MR. TEW: MR. JAFFE: enough.

Q
You're talking about up to 2009? Fair enough. Fair
12 13 14 15 16 17 18 19 20 21 22 23 24
(By Mr. Jaffe) As of December -- from 2009
going backwards, who did the HR department director report to?
They would have reported to Cheryl and to
Miriam and Beverly.

Q
Depending if it was a lawyer or a non-lawyer;
pF
is that fair?
It depends what the issue was.
or
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(877)
They perhaps
.S to
would go to everybody and say, "What do you think about this?"
Okay.
As of December 2009, there was one HR
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department for the law office, and Professional Title and Abstract, and Default Services; is that correct?
25
Yes, sir, that is correct.

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If
So--
of 2009?
1 2
3
And there were common policies and procedures
that the HR department used and applied to those three entities as of December 2009?
4
5
Where the law would provide it.
There may
have been some differences because Default Servicing
6 7
8
was -- was in Kentucky and we would have to go by what Kentucky required.
Q
A
But executed out of that one HR department?
9
10 11 12 13 14 15 16 17 18 19
20
Yes, sir.
One HR department for hiring and firing,
again, of those three entities; the law office, Professional Title and Abstract, and Default Services?
No, sir.
Same question.
and firing for law offices and Professional Title and Abstract?
No, sir.
.S to
done the firing.
pF
All right.
or
Going by your question, HR may not have always They may have processed the paperwork the firing may have been
21 22
to do the firing, but the
done by Miriam or Beverly or Jenny Johnson or Cheryl Sammons.
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23
24
Same HR department would have processed the
25
paperwork for those three entities?

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Explain that, please.
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Same HR department for hiring
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102
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
could have processed the paperwork amongst other responsibilities.

Q
Who did your IT department report to?
ask a predicate question. as of 2009?
Did you have an IT department
Yes, sir.
As we indicated, Vince Petrov head
up -- headed up that department.

Q
How many people were employed in that
department working with him?
A
Q
I don't know.
Ballpark, more than two?
A
Q
Yes, sir.
Okay.
reported to?
A
Q
Miriam, Beverly McComas and Cheryl Sammons.

HR department that we have previously
department as well?
ww w
.S to
pF
discussed would have been responsible for that
Yes, sir.
or
they would have made sure they're paid, they would have
given adjustments, they would have taken care of insurance, workmans' comp, et cetera.
Q
And if there were terminations, they would
25
have either handled the termination and/or handled the

ec los
Who would have the IT department have
Well, when you say "responsible,"
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Let me
They could have done the termination or they
103
2 3 4 5 6 7 8 9 10
11
A
Q
Yes, sir.
Did stern, P.A. have a 401(k)?
A
Q
Yes, sir.
talked about allowed to participate in the Stern, P.A. 401(k)?
Departments, like foreclosure, bankruptcy and
IT, yes, sir.

Q
Who would not -- what department would not
have been able to?
12
13
I'm not sure I understand --
ur eF
believe that any department within the Law Offices of David J. Stern would not have been allowed to participate.
Q
14 15 16 17 18 19 20 21 22 23 24
And would Professional Title and Abstract be
allowed to participate?
or not.
Q
pF
I don't know if they had their separate plan Sorry.
I -- I don't -- don't know.
.S to
Would Default Services been able to
participate?
I don't know.
IT would have been able to participate,
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correct?
25
Right.
or
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ra ud
I --
Was -- were all the departments we previously
.co
I don't
paperwork associated with termination?
104
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
what you just testified to.
Who would?
2009?
Q
A
Correct.
The HR director.
Q
A
And at that point, who would that have been?
Ali Rhonda, R -- R-H-Q-N-D-A.

Okay.
Let me ask you a couple of more
questions about the HR department as it relates to excuse me -- the 401(k).
A
Q
I don't know what floor they were on.

Okay.
A
Q
Sorry.
I don't think the 401(k) had a floor.
ec los
Fair enough.
ur eF
was the HR department located?
I -- I don't know, no, seriously.
or
.S to
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thing is never got called to HR for -You were never recommended by HR?
Well, that's not true.
I did see a sexual
harassment videotape in the fourth floor conference room.
ww w
You actually were sued for sexual harassment,
right?
25
Years ago.
We won.
ra ud
(3376)
.co
Where
Don't ask me about the 401(k).
Back in
The good
You don't know about the 401(k) with regard to
105
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
2009
okay?
Time frame-wise, are okay with that?
DJSP, P.A. existed, correct?
A existed.
Q
The Law Offices of David J. Stern, P.A.
Okay.
Did DJS Processing, LLC exist?
A
Q
No, it did not.
When did that -- when did DJSP Processing, DJS Processing, LLC, when was that born?
LLC
A
Q
I believe January 15th, 2010.

All right.
So, if I found some documents that
appeared to register DJS Processing, LLC on September 15th, 2009 in Delaware, would that refresh your recollection?
I -- you know what, when it comes to that, Tom
Vaughn of Dykema handled pretty much everything, so I
close a transaction on January 15th and all the
.S to
paperwork be done on January 15th.
pF
would defer to Tom.
or
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Logic would have it that you don't
that the work was done, I have no idea, recollection, knowledge.

Q
ww w
All right.
I agree that the documents speak
for themselves.
I'm just trying to understand your And you've clearly expressed --
25
understanding.
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As far as the dates
.co
Go ahead.
Good.
Congratulations.
As of September
1
2 3 4
5
Vaughn.
Dykema out of Detroit, Michigan --
Dykema Gossett, what's the name of the law firm?

A rate. Dykema Gossett.
7
8
I can give you its hourly
9
10 11 12 13
Okay.
I'm sure you're -- are you aware that
you are the managing member of DJS Processing, LLC as of September 2009?
I would have to defer to Tom.
Are you aware that you are the registered
14 15 16 17 18 19
agent of DJS Processing, LLC as of September 2009?
A
Q
I am not.
Are you aware that DJS Processing, LLC's
principal place of business as of 2009 in September was
21 22
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20
formed?
A
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23
24
pF
900 South Pine Island Road, Plantation, Florida?

I was not aware.
Why -- do you know why DJS Processing, LLC was
DJSP Processing --
Let me rephrase.
or
know why it was formed?

A It was formed because I was interested in
25
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ur eF
DJS Processing, LLC, do you
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suggest that -- Dykema Law Office or
.co
Just so the record is clear, Tom Vaughn of --
Yeah, yeah, yeah.
That's -- that's Tom
1
doing the transaction. And under our Florida Code of
2
3
Ethics, a transaction which involve the law firm,
4
5
firm cannot be sold to non-attorneys.
So, the way
6
7
8
of a back office dealing with the non-legal aspect of the particular business. So, DJS Processing was created
in order to allow for a transaction to occur consisting with the Florida Ethics guidelines, rules and regulations.
9
10 11 12 13
Please define what the transaction that you
wanted to accomplish was.
I wanted an opportunity to expand beyond the
14 15 16 17 18 19
20
borders of Florida and get into additional businesses, both typical and, perhaps, unrelated. And probably
three years before the transaction, I was approached by some financial advisors from a whole host of companies.
said, "No, I don't want to do it,"
pF
They came in by the rushes.
or
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21
22
23 24
.S to
going.
Then, reached out to a gentleman by the name of
David Trott, the law firm of Trott & Trott out of
Detroit, Michigan, who I'm fairly good friends with. David, you've done a
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And I said, "All right. transaction. Why?
What's the ups, what's the downs,
25
where are the land mines and, you know, who should I

www.reifkingwelch.com (877) 29l-DEPO (3376)
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Before I -- originally, I like what I've got
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similar transactions were able to occur was the creation
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vis-a-vis Default Servicing or Professional Title, a law
108
2 3 4 5 6
7
at least for exploration purposes.
So, he told me the
it.
And he said, "David, you should go with my deal
makers, my financial advisors because they've already
done the deal, they've already done the documents, they know where the lands mines are," et cetera. So, I
8 9 10
11
contacted Plante Moran out of Detroit.
although they had called me a few times. "Look, I'm interested in meeting with you. it works. Tell me what it's about.
ur eF
12 13 14 15 16
17
dollar-wise.
How do we structure the deal?
don't structure the deal?"
imagine, very labor-intensive in terms of picking the right partner. Do you go public? Do you go hedge? Do you go private? What is the lesser
Do you go equity?
of the two evils?
19 20 21 22 23 24
there would be a requirement as was the case with the
.S to
previous six or seven law firms that have done what I did, that a back office specializing in or creating a non-legal entity. And that would be the entity that In my case, we
ww w
would be subject to the transaction.
created DJS Processing and, of course, Professional
25
Title and Abstract to Default Servicing were stand-alone
pF
18
At the end of the day, no matter what sector we went,
or
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And it became, as you can
What are the greater of everything?
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I contacted them And I said, Tell me how
Give me some idea How we
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pluses, he told me the minuses, he told me why he did
use?
Because I'm getting phone calls from everybody,"
109
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
the law firm.
stands for David J. Stern Processing, LLC? A Sure. Yes.
Professional Title and Abstract Company of
Florida, LLC was formed in September of 2009 in Delaware. A Are you aware of that? I am not.
Are you aware that it was registered in
Florida on September 2009? A I am not.
Just like Processing and the same
thing for Default Servicing.
Are you aware that you were the sole director
of Professional Title and Abstract Company of Florida, LLC in September of 2009? A I am not.
member of Professional Title and Abstract Company of
.S to
Florida, LLC in September of 2009? A I am not. What is the Stern Holding Company? I have to get the specifics from Tom Vaughn. Have you ever heard of the Stern Holding
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25
Company?
pF
Are you aware that you were the managing
or
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So, the record is clear, DJS Processing, LLC
companies where we didn't have to do any split-off from
2 3 4 5 6 7
8
What is your understanding of it?
the
what used to be the previous Default Servicing
and Professional Title, Inc. into that holding company for purpose of -- of wind down is what I understand.
Q
Default Servicing, LLC was formed in 2009 in Are you
Delaware -- or reformed in 2009 in Delaware. aware of that?
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
A
Q
No, I'm not.
And registered in September 2009 in Florida.
Are you aware of that?
A
Q
I'm not.
With DAL, D-A-L, as a managing member, are you
aware of that?
A
Q
No, I'm not.
As long as we're here.
or
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.S to
familiar with what that is?
ww w
holding company that holds the newly formed operating subsidiaries; Professional Title and Abstract, DJS Processing, Default Servicing. Professional and
25
pF
DAL, D-A-L?
I don't recall.
Just so I'm clear, DAL, D-A-L, Group, are you
In the structure of the transaction, it is a
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Let's ask -- what is
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It's a company that was established to put
Yes, I have.
2 3 4 5 6
7
I'll ask it.
If you don't know or you know Why was DAL the
managing member of Default Servicing in September of 2009?
A
Q
I don't know.
Who would know?
8 9 10 11 12
13
A
Q
Thomas Vaughn.
Up to 2009 -- December 2009, just so I
understand this, your two managing attorneys could hire and fire attorneys without consulting you?
A
Yes, sir.
Q
A
Did they have salary parameters on hiring?
14 15 16
17
They did not have salary parameters unless i t Because in
was going to cost some astronomical amount. my day-to-day functionality,
associates made really at any level.
19 20 21 22 23 24
Ms. Sammons have the ability to hire staff
.S to
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operation.
Q
25
co-managing attorneys any limitation on staffing?
pF
18
The same question with regard to non-lawyer,
Yes, sir, she did.

-- without consulting you?
That is correct, part of her day-to-day
Did you place upon Ms. Sammons or the
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the answer, I'll ask it anyway.
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Default, yeah.
2 3 4 5 6
7
Certainly, the inherent limitation would have
I didn't put that limitation.
That was an
Okay.
Did they ever come to you and ask
permission to hire a particular lawyer or a particular staff member?
8 9 10 11 12 13 14 15 16
17
A
Q
Not that I recall.
Did you have a management team?
A
Q
How do you define "management team"?

Key employees that have been with you more
than a decade.
That would be Miriam and Cheryl and Beverly.
And depending upon what they were looking to do, it may include Sam. Solomon. It could -- it could have included Maria It If it
It could have included Billi Pollack.
19 20 21 22 23 24
was something general, then they would bring all the
.S to
managers in.
Q
pF
18
would depend upon what they were looking to do.
And how often do that happen?
A
Q
I don't know.
or
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And who established your budget prior to
December 2009?
25
We never had a budget.

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You have to ask them.
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obvious one.
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been space available; is that fair?
No.
1 2 3 4 5 6 7 8 9 10
Q
you never had budget meetings with any of your key staff?
That's correct.
Whatever it took to get the That presumes that
job done, they have carte blanche. question is December 31st, 2009.
Q
Absolutely.
Mr. Stern, I apologize in advance I believe I asked it but I want
for the next question.
to make sure that I covered it.
your law office to take a foreclosed -- foreclosure case from cradle to grave was created by you?
11
12 13 14 15 16 17 18 19 20 21 22 23 24
I specifically said in my answer that cradle
to grave concept was not a word that was used to take the foreclosure from the beginning to the end. answer to your question is "no."
Q
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The system in place in
Define "cradle to grave" in the context you
said it -- meant it when you said it.
that we provide services that may become necessary on a
.S to
default of loan on behalf of the client, so it generally come in as a foreclosure. If the foreclosure is
interrupted by a bankruptcy, we will handle that Once the bankruptcy has been concluded and
ww w
bankruptcy.
we're free -- sorry -- from the automatic stay, we would then continue on with the foreclosure. Once the
25
pF
When I speak of cradle to grave, that would be
or
ra ud
.co
So, the
So, as we sit here today, you're telling me
114
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
servicer, we would then handle any evictions where necessary.
a real estate-owned property, we would then open the title work and handle the closing on behalf of the grantor, the bank as the seller, to the grantee.
Q
And those systems that were used by the Law
Offices of David J. Stern, P.A., you developed?
I -- the day one, I developed them; day two,
they continued to be expanded and improved upon by people that were smarter than I was in those particular areas.
Q
Okay.
until 2006, you were the captain of the ship with regard to your office and how it ran and the systems that were to be used?
A ship.
I would agree that I was the captain of the I would strongly disagree that processes were put The
in -- that were put in were put in by me.
ww w
.S to
development, better practices, things like that, Miriam, Sam, Beverly, when she joined, and Cheryl, did a lot of So, there was -- in 2000 -- even in 2000, there
that.
were procedures and policies put in place that they were comfortable in doing and realized that I would have no objection. If I had to deal with every granular change
pF
or
ec los
But would you agree with me certainly
ur eF
ra ud
.co
Once the eviction is complete and it becomes
foreclosure is complete and title invest in the
115
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
local rule or a judge making some sort of requirement, that by definition would be an impossibility. Hence,
development expanding processes and procedures very quickly fell on Miriam, Beverly and -- and -- and Cheryl.
I was there for the day-to-day probably up He had my nose and things, but it didn't Sometimes you can't be the
until 2006.
take long to realize that.
rainmaker and be involved in procedure because very quickly, I did not know or have knowledge as to the capabilities of the staff that was in place.
Q Did you ever object to any of the policies or
procedures that were put in place by others beside yourself.
I don't
ec los
I don't recall.
very long or hard or I'll stay with them in there.

Q Effective January 15th, 2010, you went public;
pF
is that correct?
MR. SCRUGGS: MR. TEW: Yes.
or
Objection.
.S to
We created a processing company, new
Professional Title, new Default Servicing that was part DJSP Enterprises went public.
In January actually, let's
ww w
of DJSP Enterprises.
24
(By Mr. Jaffe)
25
backup, okay?
Tell me what Chardan 2008 China

ur eF
Same objection.
ra ud
Form.
Apparently, not
.co
that results from Fannie or Freddie guidelines or a
116
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
2010?
A
It's true. sorry.
It's traced in the NASDAQ as CACAo It's true.
I'm sorry.
I -- I love that part.
Anyway, Chardan Capital I guess, went public.
was a -- a -- a company that,
Through Chardan, it was their sixth or seventh spec where they raised money looking for opportunities. understanding, the previous facts all went to China-based opportunities. My
known to the Chardan folks, they fell in love with the opportunity. And we ended up getting together and Chardan then changed its name to
negotiating a deal. DJSP Enterprises.

Q
Personal place of business as of January 15th,
No.
ec los
I -- I believe Enterprises is a
ur eF
(877)
When my transaction was made
ra ud
Objection.
Bridge, Virgin Islands company.
or
DAL would be, I think,
and all the other companies.
pF
Florida-based.
And then you've got Default Servicing I think they're Delaware
.S to
corporations but we obviously do business in Louisville,
Kentucky and Plantation, Florida.

Q
You also have an operation in Puerto Rico or
ww w
did?
MR. SCRUGGS: you
Excuse me.
25

.co
is a You said
For the record, it's true.
m
I'm
Acquisition Corporation is or was?
2 3 4 5 6 7 8 9 10 11 12
13
your knowledge, was there any operation of any kind in dealing with DJSP Enterprises in Puerto Rico?
Can you read that back, please?
(Thereupon, the record was played back. ) A
I didn't know you were playing that back.
ra ud
Yes, sir.
thought he was like -- that's pretty good, you know.
(By Mr. Jaffe) Well, that's the technology of
today.
A
Q
And I lost you over there.
As of January 15th, 2010, you were the sole
14 15 16 17 18 19 20 21 22 23 24
owner of David J. Stern, P.A. -- Law Offices of David J. Stern, P.A.?
A
Q
Yes, sir.
And its registered agent?
.S to
Processing managing member?
Enterprises, the Processing, the -- I -- I -- I have to ask Tom before we get to the total chart and what to I can't keep up with my role as officer or
ww w
what.
25
director or just -- way too much.
pF
I believe that is the case.
As of January 15th, 2010, you were DJS
I -- between all of that, DJSP, the

(877) 291-DEPO (3376)
or
ec los
ur eF
didn't seem --
.co
I It
(By Mr. Jaffe) Was there any -- to the best of
118
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
you gave that same answer then.
As of January 15th, 2010, you were the
president, registered agent and managing member of DJS Processing Enterprises, Florida?
MR. SCRUGGS: A I'm sorry.
Objection.
With everything that there is out
there between DJSP, Default Servicing, Professional Title, Enterprises, it's more than I know. I'd have to
defer to Tom Vaughn and look to some sort of chart for guidance because I can't keep up -Q
(By Mr. Jaffe) Do you know if the chart
exists?
A
Q
No.
As of January 15th, 2010, you are aware that
DJS Processing Enterprises BBI was created?
pF
or
ec los
Objection.
Same objection. I'd have to defer to Tom Vaughn
.S to
I'm not sure.
because
Q
ww w
at that point; is that fair?
24
A
Q
Yes.
And are you aware that you were the president
25
ur eF
But you know it existed
ra ud
Form. Form.
.co
Okay.
Indulge me then while I go through them and
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
January 15th, 2010 until approximately November of 2010?
MR. TEW: A
Q
Same objection.
I'm not sure about the dates.
(By Mr. Jaffe) As of January 15th, 2010, are
you aware you were the managing member of Professional Title and Abstract?
A
Q
I'm sorry.
I'd have to defer to Tom Vaughn.
As of January 15th, 2010, are you aware you
were the chairman of the board and president of the DAL group?
MR. TEW: A sir.

Q
I'm not sure of the dates but I think so, yes,
(By Mr. Jaffe) Are you aware whether or not
you were the registered agent for the following
pF
companies, DJSP Enterprises, Florida?
I do not know.
or
.S to
Tom Vaughn.
Q
DJSP Enterprises BBI?
I do not know.
ww w
Tom Vaughn. Q A
DJSP DJS, P.A.?
25
The Law Offices of David J. Stern?
REIF KING WELCH LEGAL SERVICES www.reifkingwelch.com (877) 291-DEFO
ec los
Form.
ur eF
I'd have to defer to
I'd have to defer to
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(3376)
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MR. SCRUGGS:
Form.
and CEO of DJS Processing Enterprises BBI from
120
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
guy.
A
Q
As of what time period?

January 15th, 2010.
A
Q
I was.
The DAL Group, LLC?
A
Q

DJS Processing?
A
Q
Professional Title and Abstract?
Registered agent.
ur eF
And I'm -- I'm sorry.
ra ud
I'm sorry.
have to defer to Tom Vaughn.

Q
Default Servicing?
ec los
I was a busy
Who has possession of the corporate books and
records for the entities I've just asked you about?
The Law Offices of David J. Stern, they've Everything else,
I'd have to ask Tom Vaughn.
.S to
books and records are for DJSP Enterprises BBI?
ww w
acquired 71 percent of the DAL Group on January 15th, 2010?
25
pF
been in our office in Plantation 900.
So, you are not aware where the corporate
No, sir, I'm not.

Are you aware that DJSP Enterprises BBI
or
.co
I'd
Yes.
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
A
Q
I'm sorry, I'm not.

Do you know whether or not you were a member
I believe I was a member of the board and
chairman of the board.

Q Until when?
A
Q
I don't recall.
Why were -- were you removed?
At the advice of legal counsel, we felt
they felt it would be better for me to step down. Inconsistent with counsel's direction, I voluntarily stepped down.
Q
I was not removed.
Would you agree with me that as of July 1st,
2010, The Law Offices of David J. Stern, P.A. was the sole client of DJSP Enterprises BBI?
MR. SCRUGGS: A
DJS, with the Law of Offices of David J.
.S to
that time?
pF
Stern, the sole client of Enterprises, I would disagree.

(By Mr. Jaffe) Who were the other clients at
Part of DJSP Enterprises would include And it would include
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at someday Timeos and it would include Default Servicing. Each of those entities had their own For example, Default Servicing on its
25
separate clients.
or
ec los
Objection.
ur eF
ra ud
(3376)
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of the board of directors of DJSP Enterprises BBI?
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
represented PNC Mortgage and two or three other smaller companies. clients.
Q
When did -- when was Timeos acquired?
A
Q
I don't recall the close date.
Would it refresh your recollection if I told
you August of 2010?
Sounds about right.
certain because there's some variables before the actual transaction closed.
Q
So, let's go back to my question.
ur eF
There's -- I'm not
agree with me that as of July 1st, 2010, The Law Offices of David J. Stern, P.A., Professional Title and Abstract and Default Services were the sole clients of DJSP Enterprises BBI?
MR. SCRUGGS:
or
ec los
Objection.
.S to
what other clients did DJSP Enterprises BBI have besides those I just named?
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Servicing were not clients of DJSP Enterprises.
pF
MR. TEW:
Same objection.
No, I would not.

(By Mr. Jaffe) At that time, July 1st, 2010,
Professional Title and Timeos and Default They
25
were dropping down through DAL and were holding on the
ra ud
Form.
(3376)
.co
Would you
Timeos represented a significant number of
own, independent of The Law Offices of David J. Stern,
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
they had their own client base.
For example, Default
with PNC and -- and a few others. different relationships.
Timeos had 20, 30
So, I would disagree that the
sole clients of DJSP Enterprises were Professional Title, DJS Processing and Default Servicing because they -- they are not, in any way, shape or form, clients.
Q
Would you agree with me that as of
January 2010, you owned 33.15 percent of DJSP Enterprises BBI?
A
Q
When in January?
After the 15th.
A
Q
I don't know.
How about February of 2010, did you own
33.15 percent?
percentage is or what my ownership was, if it dropped
.S to
through to another company.

Q
pF
I'm not sure.
or
DAL was a holding company for DJSP, Florida;
DJS Processing; Professional Title and Abstract and
ww w
Default Services; is that correct?
A
Q
At what point?
After January 15th, 2010.
25
ec los
You'd have to ask Tom Vaughn.
I'm not sure what the
ur eF
I'd have to ask Tom Vaughn.
ra ud
(3376)
.co
Servicing had relationships for our real liquidation
subsidiaries.
Within those holding on subsidiaries,
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
that you mentioned?

Q
Title and Abstract and Default Services.
I'm not familiar with DJSP, Florida.
course, it's DJSP Processing, because I don't know what DJSP, Florida is.
Q
All right.
How about the others?
DJSP Processing, Default Servicing and As of January 15th,
DAL was a holding company for those three entities, yes.

Q
You received $58.5 million in cash and another
$88 million in notes in exchange for the DAL Group obtaining the Stern businesses that we just referenced; is that correct?
A
Q
Can you repeat that, please?

The DAL Group became the holding company for
Default Servicing in January 15th, 2010; is that
.S to
correct?
ww w
$58.5 million in cash?
A
Q
25
pF
DJS Processing, Professional Title and Abstract and
Yes.
And in exchange for that, you received
I'd have to double check on that amount.

What do you believe the amount to be?
or
ec los
ur eF
ra ud
.co
Of
DJSP Florida, DJS Processing, Professional
What were the -- the operating subsidiaries
1
A I don't recall.
2
3
Q
A
In excess of $55 million?

Yes, sir.
4
5
Q
A
And in addition, an $88 million in notes?
6
7
8
that translates out in terms of notes.
Q
that?
A
Greater than $80 million, would you agree with
I guess we could say there weren't a note and Yes,
10
11 12 13 14 15 16
then the note that I took back, that's correct. sir.
Q
point.
I would like to take a bathroom break at this
17 18
(By Mr. Jaffe) Explain to me please what DJS
19
20
21
of 2010 did?
pF
Processing once it was established and born in January What was its role? What did it do?
22
23
24
.S to
It did non-legal services on behalf of the Law
Offices of David J. Stern.
How did those services differ on January 16th,
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2010 than December 31st, 2009?

A How did they differ?
25
Uh-huh.
or
ec los
(Thereupon, a short break was
taken.)
(Deposition resumed.)
Differ.
ur eF
How the services differ?
ra ud
I'd have to look back in paperwork and see how
.co
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 A On December 30th, 19- -- or 2010, the services
were rendered by
Q
2009, thank you.
by employees of the Law
Offices of David J. Stern, the attorneys.

Q
And they would do what, for example?
They would do the non-legal work.
prepare complaints.
They would do proofs of claims.
They would do eviction pleadings.
occurred, DJS Processing was governed by a services agreement. Services agreement, of course, was a
negotiated document that defines services, compensation, facility agreement amongst other things.
ec los
ur eF
(877)
Once the transaction
indicated that the way it used to be done by a single entity was no longer the case, there was no longer one entity. There were -- it was not a one entity
enterprise.
to do.
.S to
with the vendor being DJS Processing and the client, of course, being the Law Offices of David J. Stern.
Q
pF
of what Processing was to do and what the law firm was In essence, became a vendor/client relationship
Fine.
ww w
actual day-to-day physical work that the employees did
was the same?
or
There were two entities with a definition
Now, would you agree with me that the
25
It cannot do that.
It was not --

ra ud
And it clearly
.co
They would
2009.
127
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Because when Processing was born, a whole new
Powers was brought in.

Q
The process
Rick Powers was brought in on July of 2010.
Well, there was interim CEOs or interim COOs
that came in, a gentleman by the name of Phil Cobb. So, Phil began to guide Processing to do things that were, in essence, fabulous, unprecedented, in terms of measuring by the matrix, better training, those sort of things.
Q
They still drafted complaints?
A
Q
Yes, sir.
They still dealt with service process?
A
Q
With greater efficiency.

They still dealt with obtaining judgment?
A four-fold.
Q
With tremendously greater efficiency.
or
ec los
But with greater efficiency.
ur eF
ra ud
.S to
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employed by the law office?
25
pF
Still dealt with sales?

And post sales?
A
Q

And the same people that were previously
And some others.
.co
Up
concept was brought it.
Norman was brought in, Rick
Why?
2 3 4 5 6 7 8 9 10
11
A
Q
And some others were too.

And on the same floors?
A
Q
Correct.
And using the same phones?
A yes, sir.
Q
Pursuant to a facilities management agreement,
And using the same e-mail?
A
Q
Pursuant to a facilities services agreement.

And directed by the same HR department?
HR was a functionality of DJS Processing.
ur eF
ra ud
12
13
pursuant to the terms in the services agreement, the HR functionality was outsourced from the law firm to DJS Processing, correct, yes.
Q
14 15 16 17 18 19 20 21 22 23 24
Same people?
A
Q
Absolutely.
Same director?
.S to
January 15th.
Q
ww w
pF
No, sir.
Chris Simmons?
Chris Simmons was not there prior to
Okay.
So, not the same people.
or
ec los
Different people.
A vast majority of the same people?
25
MR. SCRUGGS:
Objection to form.
.co
And
And, in fact, they worked the same desks?
2 3 4 5 6
7
bad question.
A
I
Q
A
Okay.
I
totally disagree.
Q
A
All right.
Okay.
8 9 10
11
Same people employed in a leadership role. He was employed before January 15th, 2010
Sam, right?
with Professional Abstract and Title.
A
Q
Sam Si1verglate, correct.
12 13 14 15 16
17
And was employed with them in the same
capacity after January 15th, 2010?
Sam was employed with the law firm, not DJS
Processing.
Q
Okay.
A
Q
You've lost me on that one.

It's okay.
19 20 21 22 23 24
A
Q
pF
18
So, I disagree.
I've tried to lose you a couple of Was there a finance
.S to
Okay.
times, not intentionally.
department in the law office prior to January of 2010?
ww w
A
Q
How would you define finance?

Right. An accounting department, same
25
difference.
or
I'm trying to --
ec los
ur eF
ra ud
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disagree.
(By Mr. Jaffe) With regard to HR?
That was a
130
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Okay.
Did that include finance?
didn't finance anything.

Q It's a bad question.
A
Q
The law firm
What did the accounting department do?
The accounting department had mUltiple
functionality.
Q
Accounts payable?
A
Q
Accounts payable.
Accounts receivable?
Accounts receivable, collections.
ec los
ur eF
Statement It was for both the law
(3376)
balancing in all the accounts.
firm and for Processing and for Professional Title and for Default Servicing.
Q Okay.
ww w
.S to
the law firm in December of 2009 were still employed in the same building and in the same space at their same
desks in January of 20l0?
24
A
Q
25
pF
out sourced , right, to -- was payroll outsourced?
Payroll was outsourced to ADP.
The people in accounting who were employed by
Some were, some weren't.

Do you know where the IT department physically
or
And those payrolls -- payroll was
ra ud
.co
I don't know what finance means.
I mean, we
There was an accounting department.
Case 0:10-cv-62302-RNS Document 115-1 Entered on FLSD Docket 12/21/2011 Page 132 of 277 131 1
was within the building?
2
3
The servers were on the fourth floor and some
4
5
But for efficiency, my understanding was that there were a couple of technicians on each floor for quick response.
7
8
The employees of the IT department remained
employees of the IT department after January 15th, 2010?
9
10
11
MR. SCRUGGS: A
Object to the form.
Some did, some didn't.
Norman, a CIO, highly compensated employee was brought in. Several people were let go, just like the
12 13
accounding department, a CFO, Kumar Gushani, was brought in. Esther was brought in to replace Shameeza. So,
14
15
there were lots of changes.
16
17 18 19
20
Q
A
(By Mr. Jaffe) How about a guy named Vince?
Vince Petrov is or was the head of the IT,
.S to
after --
21
22
23
24
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25
pF
without a title, prior to the January 15th, 2010 date.
And he remained employed in the IT capacity
Reporting to Norman Gottschalk.

Did he change desks?
Q
A
I don't know.
Changed phones?
Q
A
No -- I have no idea.

(877) 291-DEPO (3376)
or
ec los
ur eF
ra ud
.co
of the people, the IT folks, were on the fourth floor.
132
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
well?
A
Q
I'm sure he came into the same door.

How about Jack Brookshaw?
Jack Brookshaw was a member of the IT team.
Vince did more programming and Jack did more hardware.

Q And Jack was employed in 2009 and 2010 as
Prior to January 15th, 2010, Jack Brookshaw
was employed by the Law Offices of David J. Stern as senior person that did soft -- that did the hardware. On or about January 15th, he became an employee of DJS Processing in a non-managerial, non-supervisory role. And given the changes, reported to Norman and Norman's group.
Q
After January 15th, 2010, who supervised DJS
Processing?
MR. SCRUGGS:
or
ec los
Objection.
ww w
.S to
of areas, or a whole host of individuals depending upon the nature of the department, certainly consisted with the services agreement that existed between the Law
Offices of David J. Stern and DJS Processing.

Q
25
on January 16th, 2010?
pF
MR. TEW:
Same objection.
DJSP Processing was supervised by a whole host
(By Mr. Jaffe) What was Cheryl Sammons' title
ur eF
ra ud
Form.
.co
Came in the same door downstairs?
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 A January 16th, 2010, as the transaction
evolved, it was originally my plan for Cheryl to be the operations manager over enterprise, over everything.
And as time evolved and more and more developed, and I
became educated into new matters or new -- new ways to manage, greater technology, measuring by the matrix, stronger stronger management skills that Phil Cobb,
who came in as an initial COO, certainly as Rick Powers came in as the C -- as a subsequent COO.
ur eF
abundantly clear that neither Cheryl or even me on my best day could ever be an operations manager over all of those entities, quite simply because Cheryl didn't have the pay grade, expertise, knowledge, education, I'm not saying she couldn't learn it. So, while originally she
was the operations manager over enterprises, she subsequently became the operations manager over DJS Processing.
the services agreement.
pF
was Processing by its definition and for the purposes of I don't know what date the
ww w
.S to
enterprise was taken off the table for her and the Processing placed as her pretty much sole responsibility
with no oversight or intervention into Professional
Title, Default Servicing or at the right date for Timeos.

Q
25
After January 15th, 2010, how often would you
or
For the non-legal side, obviously, which
ec los
ra ud
It became
.co
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 meet with Cheryl Sammons on property unplanned?
A
Scheduled meetings, once a month.
If she
obviously I would meet with her.
But for the most part,
Cheryl worked with the heads of the other departments within DJS Processing and together they managed the day-to-day operation.
And where there is overlap with
the Law Offices of David J. Stern pursuant to that services agreement, Miriam Mendieta and Beverly McComas would come in. Without violating the terms in the
services agreement, they work together to orchestrate the initially smooth running operation.
I asked you how often you would meet with Now, I'm going to ask you how often you
Cheryl Sammons.
would speak to Cheryl Sammons after January 15th, 2010? A If I spoke with her, it would have been a
meeting with her.
that, you know, these circumstances took place, I just
.S to
want to let you know in case you get a call from ABC The rules were that if there
Bank, that was our forte.
was a problem, a severe problem, I want to get to the client before the client got to me. on that did not happen all that much. Fortunately, early So, there were
ww w
25
times where I didn't speak to Cheryl for two weeks,
pF
question, what about this client or David are you aware

(877) 291-DEPO (3376)
or
ec los
She came in and if she had a
ur eF
ra ud
.co
needed something in which she popped her head in, then
1 2 3 4 5 three weeks because I was on the road, she had a different schedule, I had a different schedule, I had meetings.
of investor presentations, so I was gone pretty much
6
7 8 9 10
11
Would you talk to her on the cell?
A
Q
If there's a problem, yes, sir.

How frequently?
A
Q
Infrequently.
With regard -- I'm jumping back for a second.
With regard to the 401(k) issue and contributions, after January 15th, 2010, are you aware whether or not the DJS Processing employees were able to participate in the Law Offices of David J. Stern, P.A. 401(k)?
12 13 14 15 16 17 18 19 20 21 22 23 24
A
Q
I have absolutely no idea how that worked out.

Are you aware whether or not there was shared
administrative costs between the DJS Processing,
with regard to their participation in the 401(k)?
pF
Professional Title and Abstract and Default Services
.S to
A
Q
I'm sorry.
or
In 2009 prior to going public, obviously --
prior to going public -- going public in January 2010, would you agree with me that the volume of new business continued to rise?
ww w
25
I would -- I would not agree with you.
ec los
I have no idea.
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ra ud
(3376)
non
nonstop or I was visiting my clients.
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Of course, after January 15th, we did a lot
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
volume of new business began to drop?
expectations in 2010.
Q
I said 2009.
A 2010.
Q
A
Business was greater in 2009 than it was in
Did business increase in 2009?
Over 2008?
Yes.
Q
A
Yes, sir.
Do you remember being told that there were
hundreds of phone calls from people that your law office was foreclosing upon complaining that they had never been served their foreclosure notice?
A
Q
Told by whom?
Cheryl Sammons.
pF
No.
MR. TEW: Okay.
.S to
A
Q
(By Mr. Jaffe) Who is Tammy -- and I'll spell
it instead of butchering the pronunciation of them after the K-A-P-U-S-T-A?
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I believe that's Tammy Kapusta who I do not
25
know.

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I remember that There's no pending question.
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Business began to drop despite our
So, you would agree then that in 2009, the
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a paralegal?
don't know her functionality.

Q
she was there?
I only know that she was escorted out by the
police and she lost her only child to her blind husband.
Q
So, it's your inference that she wouldn't tell
the truth?
My inference is that she has no credibility As
based on what I understand or understood her to say. I sit here today, my testimony is that I did not read her deposition.
a blog because it was such garbage.
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As I glanced at it, to me, it was just I went to Cheryl
because I knew clients would call, and Cheryl said David, she's a fruitcake, she got fired, she got
she, in a custody, lost her child to her blind husband.
.S to
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pF
escorted out by the police and to say how bad she is,
Did you read Cheryl Sammons' deposition?
Which deposition?
How about the one in May of 2009?
You have to tell me what it was.
or
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was.
Q
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No, I don't -- it could be any of her
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Nor any of her responsibilities, roles while
What case it
(3376)
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I'm aware that she worked at my office.
You are aware though that she worked at -- as
1
depositions.
2
3
No.
4
5
Yes, sir.
6
7
8
with Shapiro or with my office?
Q
A
Good question.
Your office.
With my office, we created a case summary,
9
10
"we" being Cheryl and I, that listed from the referral

any bits of information that would be necessary to create a merged document. Client, client address,
11 12 13
borrower, borrower's address, loan number, UPB, anything that would merge into any pleading.
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14 15 16 17
document saved us a lot of time, tremendously efficient. From the time that Cheryl and I created it, probably was two months, three months as Miriam started that I never really looked at a case sum again, and I'm sure that it
19
because I don't need to sign off on the cases.
21 22
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20
balance. sports.
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23
24
Q
A
25
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18
got expanded a hundred times over without my sign-off
What is UPB?
Well, in my profession, it's unpaid principal I guess, if you're playing basketball or
Unpaid principal balance.
Well, I know what it means in sports.

Yeah. I mean, it's true it's out there for

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Did you, in any way, developed it?
That case sum
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Are you familiar with what case on this?
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2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
work.
Would you agree with me that there was
entered so that the reports in the bank showed completed
MR. TEW: A
Object to the form.
No, I wouldn't.
If Cheryl had issues, she
would come to me as she had done in the past and I would rectify the situation by getting rid of clients or calling clients to tell them you can turn off the volume. Cheryl knew if there was a problem, she could And that's why they had pretty much carte
come to me.
blanche, no restrictions on salary, no restrictions on hiring, take whatever space you need to take, no budget. They had -- they had the best of all worlds.
Q
(By Mr. Jaffe)
During 2008, 2009, would Fannie Mae auditors come
.S to
counsel program or network.
pF
on property?
In 2008, Fannie Mae created a new designated They came on property to
interview each of the firms and to review our operation, kick the tires if you will. I am not aware of any other
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Fannie Mae visit or on site, until probably June or July
of 2010 when -MR. TEW: Wait a minute. You've answered the
25

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It sounds like a great place to
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transactions?
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pressure put on Cheryl Sammons by you to get judgments
something.
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2 3 4 5 6 7
8
A
Q
-- when Fannie Mae came in to visit law firms.
in 2008, Fannie Mae auditors?
not believe Fannie Mae auditors came on property. believe their audit was a mail away audit.
Q Okay.
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Fannie Mae auditors did not come out.
Did Fannie Mae auditors come on
9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
property in 2009?
I'm not -- let me
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(877)
let me go back.
think they came on in 2008. they -- I'm sorry. my knowledge.
I think they came
They never came on, to the best of
property or mail away in 2008.
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I am not aware of an audit of any sort on I believe it was 2009
that they did an audit but it was a mail away audit.

Q
When Fannie Mae -- and I'm sorry, I was
interrupted so I lost the answer to the question that I
on property?
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coming on property that they were coming?
25
pF
wanted to hear the answer to.
or
2009, did Fannie Mae come
For what purpose?
Any.
Yes, sir.
And did they let you know before they were
They came on property they let us know for

291-DEPO (3376)
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I
(By Mr. Jaffe) Did Fannie Mae come on property
do I
I don't
question.
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Q
A Q
Okay.
So, you knew they were coming?
Okay.
Did you instruct Cheryl or any staff
staff to extend hours in anticipation of their meeting?
That -- that's not what I did.
a day-to-day operation or decision.
knowledge, I wouldn't have any reason to do that and I would not do that. That would be Cheryl.
Q
A I did not.
Okay.
So, if it happened
I'm not saying it didn't, but I'm telling you
Sure.
in fact, it happened, that would have -- Cheryl would have been the person at the top that would have authorized that behavior?
Processing --
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entities.
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A Q
25
pF
It depends if you're talking about
Yes.
-- or you're talking about one of the other
Processing.
It would have been Cheryl.

Do you have any knowledge with regard to the

(877) 291-DEPO (3376)
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But I'm acknowledging that and say, if,
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members to extend hours in order to -- did you instruct
That would be
To the best of my
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Yes, sir.
training and loss mitigation initiatives.
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codes off the Fannie Mae files replacing them with those
A
Q
I do not.
Have you ever heard that accusation?
Ripping the sticker off and replace it with a The files are $3 and
different client, no, I haven't.
SO-some odd cents, I -- it's been so long I know the price of them. But once the files were done because
they're so expensive, the items would be documented, it would be put into a manila folder and we would re-use the folder again for a brand new case.
Q
So, that's no?
A
Q
That's -- the answer to your question is no.

Are you aware that staff was instructed to
remove the Fannie Mae files and put them into a remote back room?
A
Q
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property, what was your role?
pF
MR. TEW:
No, I'm not.

(By Mr. Jaffe) When Fannie Mae did come on Did you meet with them?
When Fannie came for loss mitigation, they
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asked that I be there simply to share best practices on
what I see in other states with other law firms and give them benefit of my knowledge of what I understand to
25

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Object to the form.
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of a different lender?
instruction of staff members to rip stickers and client
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standpoint, I would have been in attendance at that meeting, but that, again, was not an audit meeting.
There was a meeting where the higher ups at Fannie Mae came in and ask me to be in attendance as they were going by to see all of their large Florida firms. wanted to impress upon us the need to stay fully
ra ud
staffed, anticipations of huge, huge shadow inventory. Inventory that was in default but had not yet been referred for various reasons. And also to get my take
on what the issues may be for backup, if any, of files; HEF, HOFA, all Obama initiatives that slowed down the process.
Q
So--
Why did they want you there?

Because I'm the guy that knows what's going on I'm the guy that goes to these
with other states. seminars.
and they were picking my brain to say hey, do you know
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25
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of any problems that the servicers are having, David, do you know if they are, you know, getting you what you need. Well, I can't tell you if they're getting us what
we need unless, you know, Cheryl would say Client ABC
would sent 10 affidavits and we haven't gotten them back.
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is in touch with the largest 10 lenders in the country,
or
I'm the guy that probably more so than anyone
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And
work or not work.
So, from a loss mitigation
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5
Cheryl would be in those meetings, yes.
As
positive meetings, all exciting meetings for growth and anticipation of volume. inventory.
Q
Huge numbers of shadow
6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
On site, on the physical plant, 900 South Pine
Island
A room.
Q
900 South Island, fourth floor conference
Big conference room?
A
Q
Big conference room.
You're aware that, periodically, Cheryl
Sammons was deposed?
A
Q
I am, yes, sir.
Again, you've already testified that you never
read her depositions, is that accurate?
.S to
November 2010.
Q
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under her watch and based on my testimony it's very
25
apparent that I had tremendous trust and confidence in
pF
That is accurate, yes.
When was the last time you spoke to Cheryl?
Latter part of -- probably, the latter part of
Why?
Because as the wheels came off, it came off

(877) 291-DEPO (3376)
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would Miriam, as would Beth.
All good meetings, all
would Cheryl be in those meetings?
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2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
was wrong, came up,
I watched my world unravel.
And as items
or may not have been the reason for Fannie and Freddie pulling the plug at the end of the day. major reaction and political. time, I terminated her.
Q
I think it's a
But at that point in
When was that?
Ballpark, November?
A
Q
End of November, yes.
Did you ever discuss with Cheryl her
deposition testimony in about the time in which they were occurring?
I would deal with Jeff too and in-house
counsel for Forest MCSurdy -Q
Don't tell me anything you've talked to those
guys about.
No, I'm not.
or
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I'm not.
there's going to be any surprises.
pF
there were any issues or what needed to be taken if And Jeff, if And they
.S to
anything needed to be fixed, he fixed it. educated me on the fix.

Q
And that was that.
So, that's a yes?
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Did I talk to Cheryl about her depo? How did it go. That's about it.
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(877)
And Miriam as well.
specifics.
Q
25
Well, was it about how was it kind of go?

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to determine if
.co
Not
I was not aware of certain things and they may
her and let her run the show.
Not knowing that anything
2
3
big deal for me because Jeff would have been present in those depos. And Jeff would have come if there were
4
5 6 7 8
problems and said these are the problems, or these are going forward with would be our best practices.
had it from him, I didn't need to go see Cheryl.

Q
So, whatever occurred during the Sammons
depositions, you were made aware of?

A
If they were problematic, I would be made
10
11
aware of them and what measures to take to -- to fix the issue, I would be made aware of. Nothing that I sat
12 13
down and said oh, my God, I'm going to read this deposition myself because I have Jeff.
Q
14 15 16 17 18 19 20 21 22 23
24
Just for the record, Jeff is Jeffery Tew --
A
Q
Jeffrey Tew.
-- sitting next to you?
Jeffrey Tew, Tew Cardenas, attorney And from those depositions and
depositions of others, Jeff would come and say
.S to
everything good but I have some recommendations for best practices due to changing environments. And for the
most part, we always win.

Q
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the Sammons depo in Deutsche Bank v. B-E-L-O-U-R-D-E-S,
25
P-I-E-R-A that Sammons testified that there were at
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extraordinaire.
Would you -- were you told that with regard to

(877) 291-DEPO (3376)
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So, I
Yeah, how did it go.
But again, it wasn't a
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MR. TEW:
If any of your lawyers told you
I don't know even know which case you're
(By Mr. Jaffe)
Is it your testimony that at
Cheryl Sammons' depositions, Jeffrey Tew of Tew Cardenas was her lawyer?
I don't think in every single one.
ur eF
(877)
have been Forest McSurdy from our firm or Michelle Mason or Donna Glaick, I'm not sure. That wasn't a I would
day-to-day thing that I was involved in.
venture to say that Jeff was brought in at the request of Forest -- Jeff Tew was brought in at the request of Forest McSurdy depending upon the nature of the -- of the deposition or the nature of the case.
Q
Do you know whether or not Jeff Tew was in
2009?
.S to
the Sammons deposition that was taken on April 29th,
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2010?
A
Q
25
pF
attendance at the Sammons deposition taken on May 20th,
I don't.
Do you know if Jeff Tew was in attendance in
I do not.
Were you made aware from Ms. Sammons that she

291-DEPO (3376)
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talking about.
I'm sorry.
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There may
that, you shouldn't answer.
That's privileged.
times the wrong party of interest in certain documents?
1 2 3 4 5 6 7
8
testified in April of 2010 that her signature does not mean the contents of the document she signed was accurate and truthful?
I'm sorry?
Would you read that back.
back. )
(Deposition resumed.) A
Q
I don't even understand the question.
9 10
(By Mr. Jaffe) Was one of Ms. Sammons' roles
in 2008, 2009 to sign certain documents?
11
12 13 14 15 16 17 18 19 20 21 22 23 24
Certain types of documents, yes.
ur eF
(877)
2009 and only for certain clients.

Q
What type of documents?
Assignments of mortgage for MERS, mortgage
electronic registration, and -- and that, of course, was executed pursuant to a MERS corporate resolution empowering Cheryl and others to sign.
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power of attorneys from various clients, would have executed affidavits of indebtedness after their review of the contents of the affidavits pursuant to power of
attorney that were, of course, set out under the signature line.
Q
pF
Okay.
Cheryl also -- Cheryl and others, pursuant to
25
Okay.

or
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And are you aware -- did Ms. Sammons
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(Thereupon, the record was played
Not all of
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2 3 4
5
certain documents doesn't mean that the contents of the documents are either accurate or truthful?
MR. TEW:
6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
I -- she actually never told me that.

(By Mr. Jaffe) Okay. When the stock
ra ud
Misstates the testimony.
you went public and the stock was issued, what was the trade price, approximate trade price?
A
Q
$8.81.
10 -- $10?
I think it was $8.81.
ur eF
(877)
I don't recall.
mean, it went to $10, it went to $12.50, it went to $15.

Q All right. Would you agree with me that by
February of 2010 it was trading at half that?
A
Q
February of 2010?
Yes.
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percent?
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25
class action security suit?
pF
It was trading at --
$5-ish.
I don't -- I don't believe so.
By April 15th, 2010, it was down by almost 88
I don't recall that, no.

July 20th, 2010, you were sued in an investor

291-DEPO (3376)
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when
ever tell you that she testified that my signature on
150
2 3 4 5 6 7 8 9 10
11
Fair enough. Question?
Stern -- Law Offices of David J.
No.
A
Q
I have to look back and sign up a complaint.

But you are aware that there was a securities
case filed?
A
Q
I am, yes, sir.
Also in July 2010, there was a RICO class
action filed against you?
12
13
A
Q
Who's you?
Fair enough.
14 15 16 17 18 19 20 21 22 23 24
filed against certain -- Stern, P.A., DJSP and others?
So, not me.
Which the court dismissed.

Q
Are you aware that July 27th, 2010 DJSP
new referrals had decreased?
.S to
I understand there was a press release made, but I don't If you say there's one done,
know if it's July 27th.
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then we can stipulate to that.

Q I'll get it if you want to.
25
pF
Enterprises, BBI announced through a press release that
I'd have to see the press release of the time.
Okay.
or
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There was a RICO class action
The 23 MERS members, yes, sir.
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DJSP Enterprise, BBI?
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Stern, P.A.
When you say "you," who's you?
(
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1 2 3 4 5
6 Q
MR. JAFFE: MR. SCRUGGS:
Frank, you want a copy? Yes, please. Thank you.
through without it because it looks
Plaintiff's 1.
7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
A there.
(Thereupon, Exhibit 1 was entered into the record.)
I don't mind.
You said guys, I'm good, in
MR. BERNSTEIN:
so might as well hand them out.

Q
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what's been marked as Plaintiff's Exhibit 1 for identification purposes. will ask a question. Take a look at it and then I
I would direct your attention to oh, the first paragraph where it
the second paragraph
pF
has a date and then the second paragraph.
Okay.
.S to
dated July 27th. Q

All right. So, back to my question. Let's
just be clear on the record.
or
Yes, we did send out that press release
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DJSP Enterprises, BBI announced that new referral business had decreased?
24
25
Yes.

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You already made the copies,
As of July 27th, 2010,
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No.
No.
We -- we --
I just handed you
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(By Mr. Jaffe) Thought we're going to get
2 3 4 5 6 7 8 9 10
11
the attorney general of the State of Florida began investigating your law office?
I'm sorry.
into the record.)
(By Mr. Jaffe) I'm going to show you what's
now been marked as Plaintiff's 2 for identification purposes. And ask you if you recognize that.
This is a press release that announces
investigate -- new investigations against Law Offices of Marshall Watson, Shapiro & Fishman, Law Office of David
J. Stern.
12 13 14 15 16 17 18 19 20 21 22 23 24
So, does that refresh your recollection that
on August 10th, 2010 the attorney general of the State of Florida began an investigation?
A Q A
No, sir, it does not.

Okay.
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they started it, I just know when the release came out. Q
Okay. In August of 2010, were you made aware
by anybody that the AG was investing you, "you" being the law office?
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or the 13th.
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I don't know if I have personal knowledge when
I don't know if it was on the 11th or the 12th

(877) 29l-DEPO (3376)
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(Thereupon, Exhibit 2 was entered
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Okay.
Are you aware that August 10th, 2010
I
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1 2 3 4 5 6 7 8 9 10
11
So, you were made aware?
I was made aware but I don't know if it was
Okay.
All right.
So, sometime in August you
were made aware that the attorney general's office had begun an investigation of your law office?
Based on this press release that would -- I
would know, somewhere around there, yes, definitely in the month of August.
Q
So, then you had a conference call with
investors on September 8th, 2010, correct?
12
13
A
Q
Sorry?
Okay.
14 15 16 17 18 19 20 21 22 23 24
Specifically referring to paragraph five that begins with "Rick Powers". Let me know when you're ready.
A
Q
Okay.
Would you agree with me that in a July 27th,
there would be no immediate plans for significant
.S to
staffing changes?
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2010 press release, DJSP Enterprises announced that
or
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Rick was quoted to saying, "We have no
immediate plan for significant staffing changes that
25
would reduce our response time or our ability to handle
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If we could go back to Plaintiff's 1.
Object to the form.
Object to the form.
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August 10th.
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(By Mr. Jaffe) Do you understand what he means
population"?
MR. TEW:
Q
Object to the form.
(By Mr. Jaffe) You can answer.
A
Q
Yes.
What does he mean?
He means that there are files that had been in
the office that our legacy files, meaning they've been around for a while. and HOFA. Generally, on -- on hold for HEF
13 14 15 16 17 18 19 20 21 22 23 24
And Fannie and Freddie were pushing servicers So, we're seeing huge
to get these files off hold.
numbers of files by the -- by the thousands coming off hold with proceeds. Hence, he saying that while we have
no immediate plans for staff changes, we're going to use
off of hold from HEF and HOFA and get those moving
.S to
through the system.

Q
previously.
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25
of David J. Stern, P.A. was the principal customer of
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that existing staff to handle those files that had come
And let's move back to a question I asked you And I'll ask a better question.
Okay.
Would you agree with me that the Law Offices
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Yes.
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when he says, "We must also focus on our legacy
, (
the volume."
155
2 3 4 5 6
7
A

No.
Object to the form. Form.
(By Mr. Jaffe) No?
All right.
Let me direct
your attention down to the bottom of this press release, last paragraph.
8 9 10
11
A
Q
Okay.
And if you could read to me, beginning with
the word "the company's principal customer is."
"The company's principal customer is the Law
12
13
Office of David J. Stern whose clients include all of the top 10 and 17th of the top 20 mortgage servicers in the United States many which have been" -- I'm sorry "customers of the law firm for more than 10 years. The
14 15 16
17
company has approximately a thousand employees and is headquartered in."
19 20 21 22 23 24
Law Office of David J. Stern, P.A. was a principal
.S to
customer of DJSP Enterprises?
Processing.
Q So, this is inaccurate?
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18
Does that refresh your recollection that the
It is the principal customer of DJS
It's not inaccurate.
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25
then part of DJSP Enterprises.

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It's DJS Processing is But DJSP Enterprises has
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Same objection.
DJSP Enterprises, BBl?
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Q
A
So, it's less than complete? I think it's complete. Okay. With investors? I understand it.
Q
A
Investors in the stock? MR. TEW:
Object to the form.
A investors.
I'm sorry.
One, I can't speak for the
become made aware of the attorney general of the State of Florida's investigation into your law firm as to what they're investigating? A I have.
Are you aware that one of the things their
investigating is the creation of false legal documents? A document? False legal documents.
or
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Q
A
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Documents containing false information. I -- I'm -- I'm not aware of that. And they
.S to
may be investigating it but I'm not aware if -- if that's one of their obligations in the business.
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Right.
That's all I'm asking you, of what
24
you're aware of, whether or not they're investigating your law firm regarding inflated fees.
25
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What's a false legal
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Have you ever been
Other clients.
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other clients.
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2 3 4 5 6 7 8 9 10
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of the items, that's correct.

Q
referring business to companies that the law firm owns
A
Q
I haven't heard that one.
Filing foreclosures without proving the bank
owns the loan?
I've heard that they're investigate -- they
were investigating that.

Q
Investigating the allegations that there were
12 13 14 15 16 17 18 19 20 21 22 23 24
false mortgage assignments?
A that.
False mortgage assignments, I have not heard I don't know what a false mortgage assignment is.
A mortgage assignment containing false
information.
I -- they're maybe investigating.
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notarizations in the notary's presence while the party is signing it.

Q
25
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aware of that.
Investigating false or fraudulent signatures?
I'm aware of that.
Falsifying notarizations?
I wouldn't say falsifying but questioning
Are you aware that the attorney general's
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I'm not
The AG is investigating your law office for
I had heard that on -- on -- on a list of one
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verifying their identities?
that.
Q
But the AG wouldn't surprise me.
investigating the law office for foreclosing on people without verifying the amount that is owed?
I guess that would be part of the review of So, yes.
the affidavits.
Q
Are you aware that the attorney general's
investigating the law office or you, individually, for paying kickbacks to banks?
A
Q
I did hear that one.
Let's move on to September 8th, 2010.
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(877)
have a recollection of having a conference call with investors?
MR. SCRUGGS:
or
Asked and answered.
press release.
pF
I'm not sure what day but let's look at the
.S to
(By Mr. Jaffe) Let me show you what has now
ww w
been marked as Plaintiff's Exhibit 3 for identification purposes. Take a look at that.
25
Do you want me to read the whole thing?

ra ud
Are you aware that the attorney general is
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Do you
I don't know how you do that, I'm not aware of
office is investigating foreclosures on people without
2 3 4 5 6 7 8 9 10
11
A
Q
Okay.
this document, entitled "conference call information."
A
Q
Okay.
Does that refresh your recollection that there
was an investor conference calIon September 8th, 2010?
A
Q
It does.
Do you recollect where you were, when you
participated in that conference call?

A
12
13
I don't.
I don't.
Can I refresh your recollection by suggesting
14
to you that you're on your boat?
15 16 17 18 19 20 21 22 23 24
A
Q
Absolutely not.
Do you have a recollection of being live on
the premises or on the plant facility at 900 South Pine
pF
Island Road?
A
I don't know if we were on the road.
or
ec los
ur eF
.S to
think, given the sensitivity can say I was not on my boat.

Q
I don't recall, but I
Let me ask you some questions.
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independent recollection of the content of that call,
what you said?
25
I believe I said very little.
ra ud
Please read that paragraph to yourself.
Do you have an
Rick Powers
(3376)
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I would
Let me direct your attention to page four of
No .
No.
No.
No.
160
2 3 4 5 6 7 8 9 10
11
Okay.
And certainly, the tape recording of
regard to who spoke and how much they spoke, correct?
Okay.
Do you have a recollection of saying
that DJSP Enterprises had 20 percent of the market share in Florida?
MR. TEW: A
Object to the form.
I don't recall saying that ever, or at what
point in time -- are you saying I said that on this call?

Q
12 13 14 15 16 17 18 19 20 21 22 23
(By Mr. Jaffe) I'm asking you if you did.
A
Q
I don't believe I -- I don't recall.

Do you recall saying that there was 1,200
employees in DJSP Enterprises?
A call.
I don't recall what I said on that particular
.S to
of whether or not you said that DJSP Enterprises was the largest provider of processed services to the mortgage lending industry in the state of Florida?
pF
Do you believe -- do you have a recollection
ww w
MR. TEW:
I
24
25
(By Mr. Jaffe) Do you have a recollection
or
don't recall what I said.
ec los
Object to the form.
ur eF
ra ud
Correct.
(3376)
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the contents of that call speak for themselves and with
handled that call to the best of my recollection.
161
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
be the largest in the country in terms of judicial foreclosures?
MR. TEW: A
Q
Object to the form.
I don't recall what I said on that call.
Wells Fargo, GMAC and Goldman Sachs were some of your top clients as of September 20l0?
A
Q
No.
Would you agree with me that BOA, Citigroup
and HSBC were some of your top clients as of September 20l0?
A
Q
No.
Would you agree with me that PNC, Freddie Mac
and Fannie Mae were some of your top clients as of September 20l0?
A
Q
How -- define "some of your top clients."

Were you doing work for any of those lenders?
A for
pF
Okay.
.S to
well, the answer to your question is no.

As of September of 2010, you weren't doing any
work for any of those lenders?
ww w
Fannie Mae and Freddie Mac are not lenders.
And you put the three of them together, therefore the answer is no.
25
or
ec los
That doesn't -- yes, I was doing work
ur eF
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(3376)
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whether or not you said DJSP Enterprises is believed to
162
2 3 4
5
A
Q
Yes, sir.
Were you doing any work for GMAC?
A
Q
Yes, sir.
6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
A
Q
Not that I know of.

Bank of America?
Yes, sir. MR. TEW:
These are referring to the law firm
of David Stern, right? MR. JAFFE: MR. TEW:
This--
Then I'm going to object to all
these questions you -- unless it means the Law Offices of David Stern. MR. JAFFE: MR. TEW:
could be rendering services.
or
ec los
I didn't mean him, individually.
Well, there's no other law firm that I'll object to all of
David J. Stern.
pF
those questions, unless you mean the Law Office of
.S to
MR. SCRUGGS:
You know, I'll join.
ur eF
(877)
to strike the answers on the basis that -- of the questions.

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the following clients had been your clients, yours being the Law Office of David J. Stern since 1994, Bank of
25

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Were you doing any work for Goldman Sachs?
.co
I'll move
Were you doing any work for Wells Fargo?
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
firm?
A
Q
No, sir.
came on the scene. NationsBank. they existed.

Q
There's NCNB and there's
In 1994, Bank of America, I don't think They certainly weren't our client.
Citigroup?
Okay.
A
Q
Citigroup?
When did they come out
A Stern?
Q
As a client of the Law Offices of David J.
Yes, sir.
A
Q
1994.
HSBC?
There may be referrals that come from clients
with HSBC, I don't recall.
pF
where HSBC is a plaintiff, but a direct relationship Not in 1994 though.
.S to
Is it fair to say though on that conference
call of September 2010, you held yourself out to represent all of the top 10 lenders?
ww w
I don't recall what I said on that call. MR. TEW: Yeah. Same objection as you.
25
or
(By Mr. Jaffe) You, as it relates to a
ec los
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I'd have to look and see when Bank of America
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When did they become a client of your law
America?
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
is to you, that you said that the law office or DJSP enterprises represents all the top 10 lenders?
MR. TEW: A that call.
Same objection.
Do you recollect saying
on that call that you expected growth to be at historical heights between 2012 and 2017?
I, David J. Stern, do not recall anything that I may have said hi, this is David
I said or that call. Stern.
Q
that.
I think you might have said a little more than
or
about the conference call on September 8th, 2010, do you
.S to
recollect if you were reading from script?
ww w
you were referring to and looking at while you were speaking?
25
pF
(By Mr. Jaffe) Now that we have been speaking
I do not.
Do you recollect if what documents, if any,
I don't.

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(Thereupon, a short discussion was
had off record.) (Deposition resumed.)
I'm sorry.
ur eF
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I don't recall what I, David J. Stern, said on
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conference call, were you speaking is what my reference
165
{
\
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Is there anything that would refresh your
recollection as to what you were looking at and referencing during that call?
I assume that if we read off the script, then
we could find the script.

Q
Is that something that was done on
investor-cost, that is, reading off the script at times?
A
Q
At times.
Assuming you said we have direct source for
Wells Fargo and for GMAC, what does that mean?
Assuming I said it?
relationship whereby services have retained law firms to handle both law firm functionality as well as servicer functionality. It results in increased volume, better
control over the files, closer relationships with the clients and it avoids payment of any outsourcing fees.
Q
What does GSE mean to you?
Freddie Mac.
.S to
end of the phone call, the conference call, that one of the GSEs that was with us the other day in our office, they actually were there to kick the tires. Do you
ww w
remember making that statement?
25
pF
Government-sponsored entity, Fannie Mae,
Do you recollect telling people on the other
I don't remember anything I said on that call.
or
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ur eF
Direct source is a
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2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
days prior to September 8th, 2010?
see which GSE and what it was. all.

Q
As I -- yeah, that's
What are lien searches?
Lien searches are searches that people may
have against themselves, generally attaches to the property. So, if you want to give somebody a credit
card, you're going to want to do a lien search to see if these people have any judgments or liens against them.
Q
Is that a business that DJSP Enterprises was
looking to get into?
A
Q
Yes, sir.
Do you remember telling the investors that
that would create a $100 to $150 a pop?
I don't recall.
or
and
.S to
pF
would be my first question, "What investors were?"
The September --
I can't tell you.
on that call.
Q I'm still -- I'm only talking about the
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September 2000 --
25
I don't have any recollection of what was said
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ur eF
"At what point in time,"
I don't recall what I said
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(3376)
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I would have to look back at my calendar and
Do you remember GSE being in your office a few
167
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Generally speaking, do you believe you gave a
that September 8, 2010 phone call?
day in terms of anything.

Q
On September 8th, 2010, the date of that
conference call, were you aware that two weeks later, approximately, Ms. Kapusta's deposition was being taken by the attorney general?
Was I aware at that time of this call, that
two weeks after, they were going to take her deposition?

Q
Sure.
A
Q
Sorry.
But generally, there's some notice given?
No, there's not.
ec los
My crystal ball was broken that day.
ur eF
There's no notice.
no right for us to cross-examine.
or
There's no right for So, the answer is
no.
.S to
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Exhibit No. 3 for identification purposes.
pF
us to be there.
There's no nothing.
I appreciate you clearing that up.
Keep asking your questions.

Do you recollect -- referring to Plaintiff's A press
release sent out, September 7th, a day before the investor conference call by DJSP Enterprises. I'm
25
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I don't recall what I said on that particular
.co
There's
positive forecast for the future of DJSP Enterprises on
on that particular call.
168
2 3 4 5 6 7 8 9 10
11
Discussions".
A
Q
A
Q
I haven't asked you yet.
Okay.
All right.
Is it fair to say that you were telling your
investors by this press release that DJSP Enterprises believed file volume would increase over the third quarter?
MR. TEW:
That's an incomplete sentence or part of a sentence.

Q
12 13 14 15 16 17 18 19 20 21 22 23 24
ec los
objection, I'll torture you, and then ask you to read, please, for the record, beginning with "As of" -- or "As a. "
"As a result of management's discussion with -- "client, the law office of
David J. Stern PA, and with the major lenders and
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25
.S to
servicers for whom DJSP process foreclosure files, we
believed file volume would increase in the third quarter and we previously decided to maintain current staffing levels; however, file volumes continued to be delayed and existing staffing levels are not sustainable indefinitely."
pF
our largest clients"
or
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Based on the
(3376)
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Okay.
I'm sorry.
What was your question?
directing your attention to page three under "Operation
169
2
3
purpose of that paragraph.
4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
in the third quarter.
And DJS Processing had decided to
volume hasn't come back or they continued to be delayed. And as such, the existing staff levels are not sustainable indefinitely.
Q
Were you involved in any way in disseminating
any of that information to anyone?
A call.
I don't recall what I said on the conference I didn't put these in envelopes and mail them out
to anybody.
Q
What I mean by this is, this is obviously
produced on September 7th and sent out, okay?
A
Q
Yes.
Right?
pF
Yes, sir.
Okay.
.S to
this press release was obviously obtained before Could have been the day before?
September 7th.
Yes, sir.
Okay. My question was, did -- were you part
ww w
of creating the data in any way that is contained in this September 7th press release?
25

or
ec los
And the information contained within
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maintain current levels.
At this point in time, the
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It was the belief that volume would increase
( ,
So, here, explain to me, if you can, the
170
2 3 4 5 6 7 8 9 10
11
Is it fair to say, paraphrasing, that the
indefinitely, is what part of this message is?
A
Q
That is correct.
Is it also fair to say, looking at the next
paragraph, Mr. Powers is commenting and saying,
"We're prepared to create efficiencies and make
cuts where appropriate over the next three to six months"?
A
Q
That's what he said, yes, sir.

Okay.
12 13 14 15 16 17 18 19 20 21 22 23 24
When you say, "make cuts", what does
that mean to you?
Reduce staff.
ec los
Cut expenses.
ur eF
(877)
include staff or could include office space or could include copiers or could include lack of efficiency.
Q In September -- as of September 7th, 2010, did
pF
you inform any of your staff of impending cuts?

A
I did not.
or
I, David J. Stern, did not advise
.S to
my staff of any impending cuts.

Q Did HR?
I have to ask HR.
I'm not aware of it.
ww w
You're not aware of whether HR did or didn't?
A
Q
Correct.
Everybody?
Everybody got this press release.

What's that mean?
25

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Overhead would
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existing staffing levels may not be sustainable
"
\
I don't recall.
2 3 4 5
6
would have gotten knowledge, but I didn't send the press
Where was it sent?
You said everyone got this press release. I didn't get it.
ra ud
I'm sorry?
7 8 9 10
11
not sure what that means.

A
Whoever wanted it could get it.
I guess,
they'd go on the SEC website where press releases are released too, and it's there.
Q
Do you know if any of your staff who -- even
12
13
knew the existence of an SEC site -- website?
You have to ask folks that or the I know at the time Chris Simmons
14 15 16 17 18 19 20 21 22 23
informational officer.
kept everybody abreast of where to go and what was going on and commonly-asked-questions. a Chris Simmons, not a David Stern. So, that was
would send out either e-mail or post HR disseminating
.S to
notes that, "A new press release has been made available
and here's a copy of it, if you want"?
ww w
mechanics work.
pF
And is it your testimony that Chris Simmons
I do not know if that was the way the But I do know that Chris made himself
24
available to all staff if they had questions through a
25
particular e-mail box.
or
ec los
ur eF
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I'm
release out.
Whoever wanted to go look at the press release
172
2 3 4 5 6 7 8 9 10
11
this type of a press release?
to the SEC. everything. for.

Q
You've got to make the world aware of
Including investors?
A Bernstein.
Q
They're for everybody, including Hugh
Would you agree with me that on
September 29th, Chase suspended referrals to the Law Office of Javid Day Stern. Javid?
12 13 14 15 16 17 18 19 20 21 22 23 24
A
Q
I got you.
David J. Stern.
A
Q
On September 29th?
Yes, sir.
I am not aware of any client suspending As I sit here today, I have no
idea.
.S to
25 percent of Professional Title and Abstract employees
were fired?
pF
referrals in September.
Are you aware that on October 8th, 2010,
ww w
MR. TEW:
I am aware of somewhere during that time
25
period, given the acquisition of Timeos for efficiency
or
ec los
Object to the form.
ur eF
ra ud
So, anyone in this world, it's intended
(3376)
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No idea.
Investors.
Disclosure to the world,
This press release, who is it intended for,
173
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Abstract work was sent to the Timeos folks out in
technologies, et cetera.
Q
October 8th, 2010, Freddie Mac told Morgan Services to stop sending work to Stern PA?
A of that.
Q
Not aware of that.
On October 8th?
Are you aware that on October 11th, 2010,
Fannie Mae and Citigroup suspended new referrals to Stern PA?
A
Q
I'm not aware of that.

Are you aware that on October 14th, 2010, DJSP
Enterprises announced a 10 percent reduction in file volume?
Via what?
pF
A press release.
I'd have to see that, you know.
or
ec los
ur eF
(877)
.S to
in time, everything, you know, cuts coming every which
way.
So, you're not saying it didn't happen, you're You don't recollect?
ww w
just not aware of it?
I mean, I don't recollect. (Thereupon, a short discussion was
25

ra ud
(By Mr. Jaffe) Would you agree with me that on
At that point
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California to gain efficiencies, better training, better
Not aware
purposes, a lot of the previous Professional Title and
174
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
Q
(Deposition resumed.)
(By Mr. Jaffe) Let me rephrase.
on October 14th, 2010, staffing levels had been reduced
I certainly don't know the dates specific.
ra ud
by 10 percent?
can tell you that that's before, at least to my
knowledge, that Fannie and Freddie pulled the files. And I can tell you that staff reductions were contemplated due to a whole host of things, from uncontrollable events, government intervention, robo-signing on behalf of pretty much every major bank out there.
MR. TEW:
aware of that?" A
I was not aware of the date, but I was aware
of the imminent staff reduction.
the first time staff reduction issues were brought up in
.S to
a meeting?
pF
I don't.
Cheryl Sammons and Chris Simmons.

Q
or
(By Mr. Jaffe) Do you have a recollection when
ec los
David, he just asked, "Were you
That would have been Rick Powers and I do not.
ww w
You were not in any of those meetings?
To discuss staff reductions or to decide who
stays?

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I
Are you aware
had off record.)
2 3 4 5 6 7 8 9 10
11
A
Q
At what point in time?

Any.
I've been at meeting where they discuss staff
2010?
A
Q
Yes.
How early?
A
Q
First, second week of November 2010.

That's -- so, your best recollection is that
would be the first time you were animating where a discussion was had regarding staff reductions?
12
13
14 15 16 17 18 19 20 21 22 23 24
No.
reductions -- given the key words "staff reductions" -from the day Phil Cobb came on to the day Rick Powers succeeded him.
Q
Phil Cobb came on when?
the transaction kicked off on January 2010.
.S to
January 15th, 2010 that based on industry events, you
might want to consider reducing staff?
ww w
January 15th, 2010 that I might want to consider Anytime after January 10th? Yes.
25
reducing staff?
pF
I don't recall.
or
ec los
I would say I was in meetings for staff
ur eF
Sometime, I think,
Were you ever made aware by anyone after
Was I made aware at any time after
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just as
reductions, absolutely.
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To discuss the issue of staff reductions.
176
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
A
Q
Yes.
would have been and by who?
A September
Q
It would have been by Rick Powers in August, September.
Under what circumstances was that discussion?
He presented me with updates on management
tools; better training, measuring by the metrics and tremendous technology where efficiency's increased tremendously. And we would continue with staff to
handle legacy problems, issues, "volumes" being the keyword. But on a positive, given the technology and
the better training and holding people accountable, he was confident that we could reduce staff at some point in time.
Q
Was it Rick Powers' idea to outsource
ww w
.S to
keys to success on an ongoing basis would be to outsource labor for backoffice to the Philippines at
one-half the salary of full-time Plantation employees?
25
substantial savings from a Plantation or US-based
pF
backoffice labor to the Philippines?
No.
Do you recollect espousing that one of the
I don't know if I said one-half, but at
or
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ur eF
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What's your first recollection of when that
And before November 2010?
177
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
And when is your recollection of the first
A
Q
I have no idea.
2009?
No, I think it would have to have been after
the transaction, January 15th, 2010.

Q
It was in the first half of 2010?
A
Q
I don't recall.
Did you, in fact, outsource labor to the
Philippines?
A
Q
We were doing that in 2008, 2007.

Did you increase outsourcing of staff,
backoffice staff, in the first quarter of 2010?
Sure.
increase volume there.

Q
Did you increase your staff in the Philippines
to reduce expenses?
.S to
necessary. role.
pF
because -- or in a reaction to increased file volume or
I only know that additional bodies were That would be Cheryl Sammons, that was her So, I can't tell you.
I
That wasn't my role.
ww w
don't know.
involved in, and I can't even tell you who works in the Philippines or who's who or what's what. I can only
25
or
That's a day-to-day process that she was
ec los
As volumes increased, we had to
ur eF
ra ud
(3376)
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time you would have espoused that type of process?
employee, absolutely.
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
You also said at some point that Professional
A Q A Q
I did, yes, sir. Okay.
No, sir.
And did you also recollect saying in reaction
to going paperless, We won't need -- there'll be no need for the 90-or-so file clerks running around. A Q A Q A Did I say that in my testimony today? No.
Oh, because if I say, "no" No.
I don't recall saying that.
ec los
Are you aware in October 21st and October 22nd
of 2010, DJSP Enterprises terminated 190 employees? MR. TEW:
I don't know exactly what dates or how many.
ww w
25
.S to
pF
I know DJSP Enterprises terminated employees.
(By Mr. Jaffe) Were you involved?
or
Object to the form.
ur eF
--
already told me your first recollection of being in a
meeting with regard to terminations was in November. So, obviously, my question's dealing with an October Is it fair to say you have no recollection being
date.
in a meeting to discuss the terminations I've just

ra ud
Do you remember when that was?
Yeah, I don't.
.co
You've
Title and Abstract was the first entity to go paperless?
tell you from a dollar-and-cents, it's been efficient.
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
A
Q
In October?
Yes, sir. Or earlier for that matter.
You know, I may have been in a meeting, but
Cheryl would have headed up that meeting or worked hand-in-hand with Chris Simmons and Rick Powers, quite simply because I would not know who's who, who needs to stay, who needs to go. know.
Q
Was I in the meeting? Absolutely not.
ur eF
Do I know the people?
Would you agree with me that even as late as
November 2010, the HR department was still operating off of one e-mail assistant?
MR. TEW: A
I wouldn't know that. (Thereupon, a short discussion was
or
ww w
.S to
terminations I just referenced -- the 198 that were
conducted or carried out in October 21st, October 22nd, 2010 -- were just carried out by group meetings and
employees being given a letter?
pF
(By Mr. Jaffe) Are you aware that the
MR. TEW: A
25
I remember knowing that cuts that took place
ec los
Objection.
had off record.) (Deposition resumed.)
Object to the form.
ra ud
Cheryl would have been there at that point in time.
(3376)
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I don't
m
So,
mentioned?
180
2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
gained in the day-to-day operation.
I remember
whatever number it was.
I don't know what the number
say, "Look, I'm sorry, blah, blah, blah".
remember Rick Powers or Chris Simmons reaching out to an outside firm for some guidance on how to best terminate a number of people, a number of people where you can't bring them all in one room and say, "I'm sorry, but the firm's gained efficiencies. It's time to have some So, how it
cuts, and unfortunately, you're the cuts". ultimately got done, I understand. was letter of notification. that I know.
Q
ec los
(By Mr. Jaffe) Did you sign that letter?
MR. SCRUGGS:
or
Objection to form.
.S to
the list?
pF
MR. TEW:
Same objection.
I don't recall.
(By Mr. Jaffe) But your name's on the bottom of
Show me the letter.
ur eF
That's really about all
I can let you know.
ra ud
And I
was, but it wasn't feasible to bring a person in and
I do remember there
ww w
don't recall.
I show what's been marked Plaintiff's Exhibit
25
No.4 for identification purposes.
REIF KING WELCH LEGAL SERVICES (877) 291-DEPO (3376)
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I
expressing concern as to how do you go about terminating
on or about that time or as a result of efficiencies
2
3
4
5
Actually, after you're done looking at it, if you recognize it?
6 7
8
A signature.
I do recollect the letter and that is my
Okay.
And you signed this letter dated
October 21st, yes?
10
11
I did sign it, yes, sir.
Q
A
And you signed i t as CEO of DJSP Enterprises?
13
14
And what was the reason that you gave the
affected employees for their termination?
15 16
17 18
What was the reason?
Q
A
Yes, please read paragraph number one.
"The referral of new businesses decreased by While we're
19
20
doing everything possible to guide the company
21 22
23
24
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successfully through these difficult times, it's unclear
what the business will look like in the near future. So, due to loss of business, we regret to inform you
that we are laying off a substantial amount".
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September 8th, 2010, which is the conference call date
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over 75 percent in the last six months.
Now, is i t your testimony that between

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Yes, sir.
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(By Mr. Jaffe) Actually, take a look.
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your referral business have gone away already?
If that's what's in the letter, then that's
days before and 5 percent went away June, July, August.

Q
(By Mr. Jaffe) Right.
Because you actually
referenced six months earlier.
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A
Q
Right.
So, business had apparently begun to take a
downturn six months prior to October 21st, 2010?
changed, volume began to drop off.
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Correct.
When Bank of America had technology We, of course, were
hopeful that given the promises from clients that volumes would pick up, Fannie Mae coming in the office and saying, "Be prepared for the shadow inventory", that that volume would come back.
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files.
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we could use the existing staff to work on the legacy Then
And the BOA business dropped off?
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And we were confident that
when?
They had a technology change when Bank of
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America and Countrywide merged or Bank of America acquired Countrywide, they changed their system. a result of that system conversion, half of our And as
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I don't know if 70 percent went away two
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This began
MR. TEW:
with investors, to October 21st, 2010, the 75 percent of
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When?
I got to look at the volume. quarter.

Q
I'm thinking second
Define that for us, not in your world.
Oh, no, I'm not in that world neither.
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see, January, February, March -- so, April, May, June.

Q Okay. Are you aware that on october 22nd,
2010, DJSP Enterprises sends out a press release announcing that as of October 22nd, the total number of layoffs were now approximately 300?
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MR. TEW:
Q
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(By Mr. Jaffe) Are you aware of that?
A
Q
I don't recall.
Any reason to question?
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don't agree" or are you saying "I have no knowledge."
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number was.
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I have no knowledge.
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I don't know the date.
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great efficiencies were realized and volume hadn't
bounced back.
Q On October 25th, 2010, Mark Harmon resigns off I mean, is that
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the board of directors, is that true?
your recollection?
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I don't know the date, but Mark Harmon did
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Are you saying, "I
I don't know what the I simply know that
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Let's
I'm thinking -- I got to look at the volume.
referrals from them.
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Do you know why?
How many people did you place on the board of
A
Q
Four.
Who were they?
Mark Harmon, Matthew Katon, myself and
Kumar Gushani.
Q
Was there a reason, other than yourself, why
you named those other people to the board?
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that trust.
about the only one -- I'm sorry, Jeff -- that I Mark does what I do or did in Massachusetts,
Rhode Island, New Hampshire, so he has tremendous inside expertise. He kind of gets it, he understands. Kumar
was a natural fit at the time because we didn't have a
Q
A
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so we brought the CFO in to be a director.

How long have you known him?
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Kumar?
How'd you meet him?
He took the job as the COO.

Did you interview him?
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I did.
Two days later, October 27th, 2010, the
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Well, Matthew's a longtime trusted friend
Six months.
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directors?
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I don't.
resign off the board of directors.
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Not aware of the date, but I do know that
Do you know why?
A
Q
I do not.
Four days later, November 1st, 2010, DJSP
Enterprise and your law office default on the lease at 900 Southpine Island Road; is that correct?
A
Q
Yes, sir.
Did either of those entities default on the
lease on November 1st, 2010?
I don't know at what point in time Processing,
who held the list, was in default.

Q So, it's possible that DAL Group may have held
that lease; is that true?
MR. TEW: about a document.
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Anything is possible.
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Processing defaulted on the list on November 1st, 2010?
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or Enterprise.
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(By Mr. Jaffe) Are you aware that DJS
I'm not sure if the list was with Processing I know at some point in time, there was
a default on the lease through one of the entities of the public company.
Q You're just not sure what date it was?
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I'm not sure what date it was.
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I object to the form of the question.
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McGladrey resigned.
accounting firm resigned.
Are you aware of that?
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A
Q
It doesn't.
Does not?
A
Q
It does not.
being November 1st time frame, do you have a
recollection of having any other meetings regarding further staff reductions and the necessity for that?
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I don't recall the time frames.
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the unexpected catastrophic event occurred, there was a need to have a meeting, but I don't recall at what point in time that was.
Q
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What "unexpected catastrophic event" did you
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just reference?
Fannie Mae, Freddie Mac coming in and And then the rest of
terminating the relationships.
substantial portion of the remainder of the industry
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Fannie and Freddie pulled?
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following suit.
What's your recollection of the date that
I want to say November 4th, November 5th.

Okay. What's your recollection of the other
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entities that pulled following Fannie and Freddie?
Within two weeks, everything was pretty much
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gone.

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At this point, have you had -- at this point,
Obviously, as
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Does November 1st sound accurate?
,
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back to that question.
Just had a flashback regarding
there were scripts that were used to have that type of
scripts?
Chris Simmons, director of investor relations, In many
together with input from Kumar, Rick Powers.
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instances, myself, if they didn't know what was going or if they needed a question answered.
Q
So, at this time frame, when you're giving
investor calls, you still know what's happening with the business?
A
Q
I don't understand your question.

You're aware of -- you're reading reports. You're seeing new file intakes. And you're
You're seeing volume.
You're seeing how fast they're closing.
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on what's happening with the business?
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earning calls and the investors or the world, whoever elects to participate in that call is made aware of the
25
day-to-day happenings.
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seeing the cash flow in and out of the company.
Okay.
And so, you have -- in 2010, you have a handle
As the numbers are reported in the quarterly

(877) 291-DEPO (3376)
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conference call.
My question there is, who drafted the
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the conference call with investors, where periodically
Do you have a recollection of -- I'll come
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institutional knowledge of your own business far in advance of those calls and reports for that matter.
A and says,
Sure.
When Fannie Mae comes in and sits down
loans", we say, "You mean, We mean, 600,000".
60,000"?
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And they go,
"David, we have 600,000 shadow inventory
And I say, "Oh, that's nationwide"?
And they go, "No, 600,000 shadow inventory in the State of Florida".
Q
Sure, I know.
November 4th, 2010, do you recollect being
involved in a mass layoff via e-mail?
A
Q
Do I recall being involved?

Yes, sir.
I do not recall what particular date.
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Yeah, it's exciting.
know, as a result of this unforeseeable catastrophic event, that there obviously had to be significant lay offs because there's nothing left.
or
It's all gone.
didn't.
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Pulled.
Whoever thought?
Certainly, the industry Six months later,
If you look at where we are.
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files are still sitting in boxes. MR. SUGGS: Could you read back the prior
question? (Thereupon, a short discussion was had off record.) (End of Volume I)
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"No. I do
Right.
But you have that information, that
1 DATE: TO: April 29, 2011 David J. Stern C/O Tew Cardenas, LLP Jeffrey Tew, Esq. Four Seasons Tower 15th Floor, 1441 Brickell Ave., Miami, Florida 33131
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5 6 7 8 9 10 11 12 IN RE:
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Please take notice that on April 25, 2011, you gave your deposition in the above-referred matter. At that time, you did not waive signature. It is now necessary that you sign your deposition. You may do so by contacting your own attorney or the attorney who took your deposition and make an appointment to do so at their office. You may also contact our office at the below number, Monday - Friday, 9:00 AM - 5:00 PM, for further information and assistance. If you do not read and sign the deposition within thirty (30) days, the original, which has already been forwarded to the ordering attorney, may be filed with the Clerk of the Court. If you wish to waive your signature, sign your name in the blank at the bottom of this letter and return it to us.
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I do hereby waive my signature.
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Very truly yours, SAMANTHA HANSTEIN Reif King Welch Legal Services 954-712-2600
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Dear Mr. Stern,
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Renae Mowat, Nikki Mack, Ark1ynn Rahming, and Quenna Humphrey individually and on behalf of all other similarly situated individuals v. DJSP Enterprises, Inc., a Florida Corporation, DJSP Enterprises, Inc., a British Virgin Islands Company, Law Offices of David J. Stern, P.A., David J. Stern, individually, DAL Group, LLC, a Delaware LLC, DJS Processing, LLC, a Delaware LLC, Professional Title and Abstract Company of Florida, a Delaware LLC, and Default Servicing, LLC, a Delaware LLC 10-62302-CIV-UNGARO
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1 -------------------David J. Stern
Cc: via transcript:

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steve Jaffe, Esq. Jeffrey Tew, Esq. Frank Scruggs, Esq.
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SIGNATURE
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ERRATA SHEET PAGE NO. LINE NO.
CERTIFICATE OF REPORTER
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I, SAMANTHA HANSTEIN, do hereby certify that the foregoing testimony was taken before me; that the witness was duly sworn by me; and that the foregoing
pages constitute a true record of the testimony given by
I further certify that I am not a relative or employee or attorney or counsel of any of the parties, or a relative or employee of such attorney or counsel, nor financially interested in the action. Under penalties of perjury, I declare that I have read the foregoing certificate and that the facts stated herein are true.
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Signed this 25th day of April, 2011.
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said witness.
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STATE OF FLORIDA SOUTHERN DISTRICT
CERTIFICATE OF OATH
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I, the undersigned authority, certify that DAVID J. STERN personally appeared before me and was duly sworn.
Witness my hand and official seal this 25th day of April, 2011.
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Samantha ein, Court Notary Public, State of Florida Commission No.: EE 070089 Commission Expiration: 03/03/2015
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UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA RENAE MOWAT, NIKKI MACK, (;::> ARKLYNN RAHMING, and QUENNA HUMPHREY individually and on behalf of all other similarly situated individuals, Plaintiffs,
v.
CASE NO. 10-62302-CIV-UNGARO
Defendants.
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TAKEN ON BEHALF OF THE PLAINTIFFS APRIL 25, 2011 10:00 A.M. - 5:13 P.M.
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REIF KING WELCH LEGAL SERVICES 888 EAST LAS OLAS BLVD., SUITE 508, FORT LAUDERDALE, FLORIDA 33301 SAMANTHA HANSTEIN, Court Reporter
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DJSP ENTERPRISES, INC., a Florida Corporation, DJSP ENTERPRISES, INC., a British Virgin Islands Company, LAW OFFICES OF DAVID J. STERN, P.A., DAVID J. STERN, individually, DAL GROUP, LLC, a Delaware LLC, DJS PROCESSING, LLC, a Delaware LLC, PROFESSIONAL TITLE AND ABSTRACT COMPANY OF FLORIDA, a Delaware LLC, and DEFAULT SERVICING, LLC, a Delaware LLC,
VOLUME II
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APPEARANCES OF COUNSEL On behalf of the Plaintiffs:
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On behalf of the Defendants: TEW CARDENAS, LLP JEFFREY TEW, ESQ. FOUR SEASONS TOWER 15TH FLOOR, 1441 BRICKELL AVE., MIAMI, FLORIDA 33131 (305) 536-1112 jt@tewlaw.com DJSP ENTERPRISES, INC. STEPHEN J. BERNSTEIN, ESQ. 900 SOUTH PINE ISLAND RD., SUITE 400,
or
REAL ESTATE & INVESTMENT LAW CHANDRA PARKER DOUCETTE, ESQ. 621 NORTHWEST 53RD ST., SUITE 240, BOCA RATON, FLORIDA 33487 (561)995-1490 chandra@chandralaw.net
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RAPOPORT LAW GROUP DAWN M. RAPOPORT, ESQ. 1314 EAST LAS OLAS BLVD., SUITE 121, FORT LAUDERDALE, FLORIDA 33301 (954) 712-7457 dawn@rapoprtlawgroup.com
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FARMER, JAFFE, WEISSING, EDWARDS, FISTOS & LEHRMAN, PL STEVE JAFFE, ESQ. 425 NORTH ANDREWS AVE., SUITE 2, FORT LAUDERDALE, FLORIDA 33301 (954)524-2820 steve@pathtojustice.com
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BERGER SINGERMAN FRANK SCRUGGS, ESQ. 350 EAST LAS OLAS BLVD., SUITE 1000, FORT LAUDERDALE, FLORIDA 33301 (954)525-9900 fscruggs@bergersingerman.com
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(954)233-8000 ext. 1001 sbernstein@djsenterprises.com
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INDEX OF EXAMINATION
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3 WITNESS: David J. Stern
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5 6 DIRECT EXAMINATION By Steve Jaffe, Esq.
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INDEX TO EXHIBITS
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Exhibit Description Press release dated July 27th
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Press release that announces new investigations against Law Offices of Marshall Watson, Shapiro & Fishman, Law Office of David J. Stern
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Letter dated October 21st
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Press release sent out September 7th
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November 4th, 2010 mass e-mail Three-page letter
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families, most of us have homes.
You've given us good
would normally give us specially in law firms".
remember Steven Bernstein got two seats down saying,
David, I think I'm going to cry as I was wiping tears away. Anytime someone wanted to see me, I made myself As far as giving termination notice,
accessible.
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however, it went for me. impossible.

Q
And there was others --
I'm sure.
A accolades.
Q
that have come in and gave those sort of
I'm sure.
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You seem like a very nice guy.
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Doing it personally is
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the time of these mass layoffs, is it fair to say that DJSP Enterprises had accounts receivable in excess of $50 million?
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that hasn't been paid yet.
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money to come.
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I don't recall.
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How do you define "accounts receivable"?
Money that's owed to them to DJSP Enterprises
But not yet billed?

Billed and out on the street waiting for the
I don't -- I don't know if it was $50 million.

291-DEPO (3376)
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And I
At
paychecks and you've given us insurance more than anyone
did before you gave us the job.
Today, most of us have
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receivable out at that time?

A
And obviously, there was the unbilled yet to
go out earned, but the bill yet to be sent, accounts receivable also?
A
That is correct.
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And those numbers combined were in the
millions?
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Those numbers combined were in the millions,
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And the law firm also had accounts receivable?
MR. TEW:
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I'm going to object.
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going to get into financials. that's relevant. MR. JAFFE: MR. TEW:
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I wasn't going any further than --
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catastrophic event that you had talked about occurred,
you gave a couple of examples when I asked you what you What do you mean by
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meant and you said robo-signings. that?

A
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It's not appropriate at this stage, the law firms
finances.
(By Mr. Jaffe) When the unforeseen
Robo-signings in July, August, September

291-DEPO (3376)
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You're asking financial discoveries.
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We're not I don't see how
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Yes, of course.
There was a certain amount of accounts
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gist of what kicked off robo-signing was a GMAC case in Maine, the State of Maine, where the GMAC employee that
was responsible for executing affidavits was deposed by borrower's attorney. And the gist of the depo that
created this robo-signing concept was borrower's counsel asked Jeff Stephens -- well, according to your
affidavit, you say you have actual knowledge you
reviewed it, and he came back and said, well, no, I didn't. The attorney was a little bit dumbfounded while And then
you, under oath, said that you did review it.
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a whole new line of questioning ensued, how many of these do you do?
Hence, in my mind, the term "robo" was the notary there at the time and the answer was no, no, no, no. Then
Bank of America had the issue and then PNC had the issue and a whole host.
there was no robo-signing.
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the referral process until the clients made certain that Now, keep in mind that
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Florida is a verified complaints state, which would
require that the client review the complaint and execute
it; and if it needs to be notarized, notarize it in the So, it caused every lender to
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presence of a notary. stop the wheels.

Q
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And you are aware that robo-signing occurred
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How could you possibly do them?
And as a result, they put a freeze on
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depositions of clients began to get released.
And the
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It depends which element of robo-signing
But nonetheless, it occurred?
MR. TEW:
Form of the question.
It -- there's a -- robo-signing encompasses a
variety of things, not every variety of the occurrence occurred in my office.

Q
(By Mr. Jaffe) Which variety occurred in your
office?
My understanding is that notaries were not
present in front of the attorney as the attorney's pen hit the paper.
Q
Is that the only element of robo-signing
you're aware of to have occurred in your office?
The same robo-signing concept also, not just
affidavits, but assignments.
Cheryl Sammons?
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a notary or not.
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And those were -- some were executed by
I don't know if Cheryl was present in front of I only know that there are allegations
that that occurred.

Q
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Are you aware that there are allegations that
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other paralegals were signing Cheryl Sammons' name?
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I am aware of that.
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But according to Cheryl,
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you're speaking of.
in your office?
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knowledge.
So, I guess, you'd have to ask those other
Are you aware of any paralegals that alleged Cheryl Sammons' name? I'm
to have signed her name sorry.
A
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Of course not.
Are you aware also that there's been
allegations that Cheryl Sammons was signing between 400 and 1,000 affidavits a day at certain times?
MR. TEW: A
Q
Object to the form.
I'm not aware of that number.
(By Mr. Jaffe) Are you aware that she would
designate two hours a day to sign affidavits?
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I don't reach her in the office.
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Object to the form. I find your
blogs to be false.
sworn testimony that files would be piled up on given
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floors and given conference rooms and she would
periodically stop in to make the signatures at that point?
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(By Mr. Jaffe) Are you aware that there's been
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MR. TEW:
I am not aware that it actually occurred, I I was
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was not involved in the day-to-day operations.

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paralegals that may have signed her name.
she said that's absolutely false or without her
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allegations are made, I look at them as allegations; and
(By Mr. Jaffe) And you're telling us under
oath that Cheryl never came to you to express
frustration about these acts if in fact they were occurring?
MR. TEW: A
Q
Which acts?
(By Mr. Jaffe) Signing 400 to 1,000 affidavits
a day, working unbelievable hours and so busy that she had other people sign her name.
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MR. TEW: A
Q
I'm not -- I'm not aware of that.

Of course not.
never came to me and said, I've had these people signing
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the names or my name.
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Did she ever complain to you that there was so
MR. TEW: No.
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Absolutely not.
Object to the form of the question. Cheryl
There was more than one signer.
wasn't just the only signer.

Q (By Mr. Jaffe) I agree. I'm just talking
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Cheryl would not come to me or
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as I sit here today, they are unproven.
not present in those particular areas.
So, whatever
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Okay.
No?
No.
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All right.
Let's go back to the November 4,
2010 mass e-mail.
Have you ever seen it in print?
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I have to see it.
I don't -- I don't know.
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So, as you sit here, you have no recollection
of seeing that?
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I don't have any recollection of seeing it. if I see it, then I will recognize it or I
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won't recognize it.

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Sure.
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A mine.
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And again, that was done at that level below
That was my next question.
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And
the content of that e-mail?
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giving any of my input.
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I'd have to look at it and see if I recall
Okay.
I don't recall and I don't know if it's -It's okay. I think we're at 5.
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Yes, sir. (Thereupon, Exhibit 5 was entered into the record.)
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marked as Plaintiffs' Exhibit 5 for identification purposes.
recognize it.
(Looking through papers/files.)

Ready?
Q
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Ready. MR. JAFFE: Mr. Scruggs.
(By Mr. Jaffe) You've had an opportunity to
look at Plaintiffs' Exhibit 5, which I represent to you to be a November 4th, 2010 mass e-mail. recognize it? Do you
I do.
This e-mail came from an e-mail address of HR
department mailbox, correct, that's from?
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Yes, sir.
Okay.
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sent to many, many people at one time?
Yes, sir.
I had the pleasure of counting them. I'm
representing to you it's over 430 people.
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with anyone to create a list of people that was subject to this termination?
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Did I work with anyone?
Again, I'm up here
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trying to save the business and I've got Steven, I've

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Did you work
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Ask you take a look at that and see i f you
(By Mr. Jaffe) Let me show you what's now
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familiar with these people, and of them, I would not be familiar with. As this unfortunate unforeseeable
catastrophic event occurred, given the ramifications, Cheryl was unable to help make selections.
Q
Because?
A in
Because from a physical standpoint, she was She just didn't think it was
she was in denial.
going to happen.
Q
In fact, she's on the list.
She is on the list, but she went from So,
Processing, she also was employed by the law firm.
she was terminated from Processing with the intent that she be terminated from the law firm shortly thereafter once we had the benefit of her knowledge on who should stay.
Q
So, Cheryl Sammons was employed both by the
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I needed, she assisted Miriam, she assisted Bev.
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law firm and by DJSP Enterprises?
Yes, sir.
What was her role with the law firm?
With the law firm, she assisted me in whatever So, at
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the time, we contemplated the transaction and put together the services agreement. We decided that we
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would make her an employee of both the law firm and

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got Rick, I've got Chris, I've got Cheryl who are
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She received two checks?
How did you distinguish her roles and
responsibilities?
She did that, Miriam did that.
involved in distinguishing her roles between the two.

Q Would you agree with me that prior to going
public, you're more involved in the day-to-day operations of your law firm than you were the day after you went public?
Objection to form.
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No.
(By Mr. Jaffe) Because your day-to-day
involvement ceased a number of years earlier?
A
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Correct.
Ms. Sammons and Ms. Mendieta.
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10:30 a.m.
Q Tell me what time the employees', all 435 of
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them, security badges were deactivated.
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It seems like you put a lot of trust in
Blind faith, blind trust.
Tell me what time this e-mail was sent.
Well, it says sent Thursday, November 4th at

(877) 291-DEPO (3376)
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Same objection.
I went --
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Yes, sir.
Processing.
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If it's not in the letter, I don't know. You will. Keep looking. Page -- the last
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Security badges will be deactivated at
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11:30 a.m.
Q
So, is i t fair to say that you have now
terminated 435 people -A
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Who is "you"? All right.
Let's back up.
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e-mail?
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I did. Okay.
Q
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That is you.
Well, that's me as whatever capacity I was in. Does i t say that? No, it doesn't. Okay.
Q
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people via e-mail at 10:30 and told them that your
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badges were deactivated in an hour?

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HR did.
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So, my question is, you fired 435
HR sent that.
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line, from?
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From HR -From HR. from you, the CEO of DJSP Enterprises and
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president of the law firm.

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I'm sorry.
Say that again.
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Who signed the
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time?
You were the CEO of DJSP Enterprises at the
Q
the time?
President and sole owner of the law firm at
A firm.
Q e-mail
Correct.
But this doesn't involve the law
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Okay.
But the point is, you signed an
A
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Okay.
-- that HR sent.
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Okay.
So, my question
So, HR and DJSP Enterprises terminated
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whatever number of people due to a catastrophic unforeseeable event, that's correct.

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building?
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And you gave them an hour to get out of the
According to what's here, yes. I don't know.
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happen in reality?
MR. BERNSTEIN:
clarifying note that MR. JAFFE: Yeah, you're not being deposed
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Correct.
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first sentence that -- actually, why don't you read the second sentence. A
"It is with heavy heart that I must announce --
that due to the lawsuit"
Q
paragraph. A
I'm sorry.
Second sentence, not second
In
Q
A
Paragraph one, "The referral".
"The referral of new business has decreased by
over 90 percent in the last six months".
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13
Okay.
So, my question is this, this is an
e-mail sent November 4th.
14 15 16 17 18 19 20 21 22 23 24
75 percent of referral business has been reduced over the last six months. And now by November 4th, it's up
to 90 percent; is that accurate? A I have to go back and look at the volume
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contents of the e-mail, did you have any input in creating the content? A I asked to see the letter once it was drafted,
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and I recall making a couple of changes in particular. I don't remember what I changed, but I did see it and I Once I gave those
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did give a couple of comments.
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reports to confirm that. Based upon your review of the e-mail, the

(877) 291-DEPO (3376)
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In October 22nd letter,
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(By Mr. Jaffe) In the e-mail, i t says in the
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and Steve and Chris and I essentially was done.

Q
with any of the law office employees. that correctly?
Did I understand
I'd have to look through.
understanding, but let me look and see.
today, I don't know if this included the law firm, DJSP, DJS Processing or DJSP, what would have been DJSP, or other DJSP Enterprises such as Default Servicing and Professional Title and Timeos.
Q
Right. So--
A
Q
So, the different way, the e-mail doesn't
distinguish employee by what department they worked in?
A
Q
That is correct.
Or what corporation they worked in or what LLC
A
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every floor collecting all employees' paperwork, company computers -- excuse me -- cell phones, firm files, law firm records?
A
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they worked in or whether it was a law firm employee?
That's correct.
Whose idea was it to have an HR person on
It was not mine.

Whose idea was it to have them all out of the
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That was my
As I sit here
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You said to me that this e-mail did not deal
comments, it circulated back to Rick Powers, I assume,
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Q
It was not mine.
I don't know.
4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Miriam Mendieta.
A
Q
Okay.
So, she was terminated in mass with
Ms. Sammons on this November 4th, 2010 e-mail?
I don't recall if that -- if the fact that if
she is in there, if that actually meant she was terminated, she may have been also Processing as well as the law firm.
Q
So, as you sit here today, Miriam Mendieta may
have been receiving two checks as well, one from the law firm and one from DJS Processing?
A
Q
That is correct.
What role did she have in Processing?
She would work with certain staff, be there to We felt that her salary -- and
I'm not sure if it panned out that way, but the original
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process was that part of her process should be bourn by Processing if she is going to be working with Processing, giving them direct oversight or whatever the
case may be.

Q
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answer any questions.
So, she supervised Processing?
Well--

(877) 291-DEFO (3376)
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The e-mail also contains the name of
building within an hour?
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A
Q
She did, yes.
Of course.
aspects of Processing?
A
Q
Right.
Sammons also supervised certain aspects of the
law firm?
A
Q
As to non-legal work.
And obviously, Ms. Mendieta supervised aspects
of the law firm?
A
Q
Yes.
All aspects of the law firm actually.
A
Q
Absolutely.
Who else was dual employed by DJS Processing
and the law firm at this time?
Well, certainly, Cheryl was.
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(877)
Miriam was, but I'm not positive.
or
I was.
worked with Professional Title.
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sure if Sam because Sam did law firm, and of course, he Beyond that, I think Tom from Dykema.
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that would be -- that would be a

Q
Was Sam employed -- based on what you just
said, I think I heard you say Sam was employed both by the law firm and by Professional Title and Abstract at the same time.
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I'm not sure.

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And Sammons served -- supervised certain
Certain aspects of Processing?
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A
Q
It's possible.
And that's what you think?
I don't know -- I don't recall.
At the end of
the day, given the magnitude of the transaction, if Sam at -- ultimately came over or not, that's -- you know, certainly, he sent over an interrogatory and Jeff can get it answered.
Q
What is your understanding on the basis of our
lawsuit?
My understanding on the basis of this lawsuit
is that you feel that Processing, DJSP Enterprises wrongfully terminated its employees in violation of WARN and that I'm the mastermind that created it, and I said at this public company to defraud the world and you want to get into my deep pockets as well as the law firm. That's my understanding of this lawsuit.
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Okay.
Is it one of the -You answered the question.
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MR. TEW:
Well -- but it's too good, Jeff. MR. TEW: Okay. No. I can make it
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another two hours.

Q
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(By Mr. Jaffe) Now, you are aware that on

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I did get this long.
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But it's possible?
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Gene Rhodes at the REACT Program in Tallahassee?
A
Q
I am not aware of that.

then.
Are you telling me that you're not aware of
whether or not anybody on behalf of DJSP Enterprises sent a WARN notice to Tallahassee in November?
I don't know what date it was sent.
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recall what date it was sent. MR. JAFFE:

Q
All right.
Please.
(By Mr. Jaffe) Let's -- while she looks for
the copies -- you are aware a letter was sent, you're just not aware what date it was; is that correct?
A
Q
That's correct.
Okay.
the contents of the letter prior to it being sent?
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Okay.
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marked Plaintiffs' Exhibit 6 for identification purposes.
or
I'd have to look at it to refresh my memory.

Now, Let me show you what we've now
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(By Mr. Jaffe) I would represent to you one, two -- three pages. Tell me if you
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it's
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Were you privy to the development of
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I don't
MR. TEW:
Object to the form.
November 3rd, 2010, Chris Simmons authored a letter to
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A
Q
Yes, sir, I do.
content of these three pages?
A
Q
No, sir, I was not.
Did you review this letter -- one-page letter
and two-page memo, I'm going to call it, before it was sent out to Tallahassee?
A
Q
I did not.
When is the first time you saw this Excuse me.
Exhibit 3 -- or Exhibit 6?
A few days after it had gone out, just in my
stack of my monstrosity of reading.

Q Do you have any knowledge as to how the laying
off of 38 law office employees was decided, which 38?
A
Q
I'm sorry.
Bad question.
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this letter, there was law office layoffs?
A
Q
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least that's what the reporting is about.
A
Q
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Yeah.
Will you agree with me that contained within
Yes, sir.
And specifically, 38 people were laid off, at
Okay.
Do you know how that 38 people were selected?

(877) 291-DEPO (3376)
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Can you repeat the question?
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Were you involved in the development of the
recognize it.
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A Miriam and Beverly would have selected those
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3
individuals independent of me.

Q
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anyway.
Without consulting with you, correct?
A
Q
Correct.
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With regard to the 356 employees that were
terminated by DJS Processing, who would have selected those people?
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Well, Cheryl and Rick were supposed to select
them, and then we had some issues with Cheryl making those selections. So, they brought it, really, to me And I said, it's not what I I know very few
and asked how I could help. do.
I don't know any of these people.
of these people, and the people that I do know may not be the people that need to be kept. So, I suggested
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that perhaps they go to Cheryl's managers and have Cheryl's managers help make the decisions because at the
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be the managers that would have to -- Cheryl's managers
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that would have to choose the right people. how the DJS Processing selections were made.
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end of the day, Cheryl was going to be gone and it would
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So, back to the law office, though, Miriam
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fired herself?
No.
I terminated Miriam, but Miriam or
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and/or Beverly -- because Beverly stayed through

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So, that's
You saved the next question, but I get to ask
1 2 3 4 5 6 7 8 9 10 whatever, March, I have something like that, and they I didn't know any of the attorneys or very few of the attorneys, so I wouldn't have the -- where at all to know who should stay or who shouldn't stay.
sort of what Miriam's last day was, but the need to cut was not pushed back with Miriam or -- and/or Bev as it was with Cheryl.
Q
At its height, how many lawyers did you have
employed at the law office?
A
Q
I believe 150, give or take.
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How many of them did you know?
Maybe 20.
I wasn't there day to day, so I
didn't know.
I knew the ones that were there in 2005, it
2006, but anyone that came after that, I just wasn't what I did.
Q
Is it fair to say that after 2005, 2006, the
number of staff -- I think your word was "dramatically
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Pine Island.
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Cheryl as well, was -- I thought that I understood you
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used to say that she stayed on on behalf of the law firm.
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increased" ?
2007 when we moved to Plantation, to 900 South
When the mass e-mail went out terminating
The decision was that Cheryl and Miriam needed

(877) 291-DEPO (3376)
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And that's
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to go and they needed to go immediately. reality was that with would fall back on me.
The -- the
at the end of the day, all that
in the day-to-day, I couldn't possibly under any circumstances do it.
As I recall, the intent was to get
them off Processing of the public company ASAP, make them aware of that. They would then be -- continue to And after a week, they need
receive law firm payroll. to be totally out.
And that's kind of how it went down But
and I -- yeah, couldn't get them out fast enough.
unfortunately, they have the knowledge that -- a lot of them we didn't get, as Steven said, but you're able to do it without them.
12 13
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under her and Bev was a godsend.

Q
Do you know if it was income-based, the cuts,
or was it you start with these most expensive people and work down?
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No, we definitely did not.
The first in, first out?
No.
the best job given the relatively small staff that would
be left for an uncertain period of time.

Q
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You would agree with me that the Exhibit 6
does not identify whether it was sent on behalf of DJSP
25
Enterprises, Florida or DJSP Enterprises, BVI; is that
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David and Cheryl had some managers
It just who what we needed that could do
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And because I was not involved
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correct?
A
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Well, the employees that were being laid off
Offices of David J. Stern and they worked for Timeos because Professional Title had been pushed over to Timeos.
Q
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Sure.
But my question wasn't that.
8
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question was, the letter does not identify that it's being sent by either DJSP Enterprises, Florida or DJSP Enterprises, BVI, correct?
A
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It simply shows that it's being sent by DJSP
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Enterprises, notifying the administrator that three entities

Q
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I understand.
elementary.
A
I'm sorry.
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Let's go back up.
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Enterprises"?
A
I do.
I understand there to be a DJSP
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Okay.
Enterprises, BVI.
A
Okay.
And I understand there to be a DJSP
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Enterprises, Florida.
A
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I'm not aware of the DJSP Enterprises of
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I'm missing that.

See the title, "DJSP
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But my question is very
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My
worked for DJS Processing, they worked for the Law
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You already testified to that.
So, my
identify DJSP Enterprises, Florida or DJSP Enterprises, BVI?
MR. SCRUGGS: itself. A
Objection.
I would say that -- first off, who in the heck
is DJSP Enterprises, Florida? what's their address?

Q
(By Mr. Jaffe) Ask your counsel.
Because clearly, DJSP Enterprises does -- does
exist at 900 South Pine Island.

Q
Okay.
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I'll take that as a yes.
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And if it does exist,
agree with me that Chris Simmons, the director of HR, signed this letter?
A
Q
I believe that's his signature.

Okay. Are you aware that Chris Simmons was a
director -- at this time, a director of HR of DJSP
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Enterprises, BVI?
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entity that you owned 33 percent of?
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percentage of it that I owned.
REIF KING WELCH LEGAL SERVICES www.reifkingwe1ch.com (877) 291-DEPO
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Yes.
And at this time in November, that's the -- an
I'm not sure, as I previously testified, what
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Form.
Speaks for
You would
(3376)
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question was, would you agree with me that it does not
Florida.
I only know BVI.
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Was the November 4th, 2010 the last mass
layoff?
More than 50.
I don't know recall.
I don't know.
Chris Simmons, Stephen or Steve, two people down to my right.

Q
And you removed of stepped down shortly after
that e-mail, right?
A
Q
Stepped down from?
Chairman of DJSP Enterprises.
12 13 14 15 16 17 18 19 20 21 22 23 24
A
Q
Somewhere thereabout, yes, sir.

November 19th, I think.
I don't recall.
It's not a date you want to remember.

Q
I thought just the opposite. This is your
baby that you created, I would expect you to remember
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the date that it ended.

A
No.
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It's okay.
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I do.
How often?
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Maybe twice a week for two or three hours.

Is there any business left?
Q
A
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There is.
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Sorry.
Do you still go to the office?
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It's not like an anniversary.
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Maybe
I don't recall.
How do you define "mass"?
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I'm shutting it down. How soon? Not soon enough. Why do you say it like that? It's done, it's over.
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Q
A
6
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I have no desire to do A guy
this anymore.
It's a backstabbing business.
finds a way to make success and people get thrills of seeing them come crashing down, not the American dream, not the way I am. June 30th is a -- is a -- is it
9
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existing files we have, we're substituting out or getting clients to get new counsel to substitute out. So, June 30th, we're done.
14 15 16 17
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as of March 31st that we'd no longer be working with them, and then that's it.
Q
A
Are you still employed by DJSP Enterprises? No.
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didn't take a salary since. MR. TEW: It's going beyond the question. No.
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Q
A
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When did that stop? I want to say while I was employed by them, I
Am I still employed by DJSP?
I don't recall. About the same time you stepped down as --
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(By Mr. Jaffe) When did that stop?
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We had advised the clients
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What are your plans with the office?
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Are there any employees at DJSP Enterprises
A are.
Q
Are there any employees at D- -- yes, there
Have you had contact with any of them?
I see them every day that I'm in the office. MR. JAFFE: I believe that we're done, but I
do want to take a break and make sure that we're done before I officially say that. Thanks for your
time, but give me a couple of seconds. A Okay.
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MR. JAFFE:
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(Thereupon, a short break was
taken.)
(Deposition resumed.) We're done. No further questions.
Thank you for your time.
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day.
MS. DOUCETTE: MR. JAFFE: Thank you.
No problem.
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Good luck to you in the future.
THE COURT REPORTER:
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order? MR. TEW: We'll read. You'll read?
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THE COURT REPORTER:

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Sorry for taking your
Are you all going to
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today?
I don't recall.
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my copy.
I'll give it to the witness.
Then
THE COURT REPORTER: MR. JAFFE:
Okay.
THE COURT REPORTER: MR. JAFFE: want paper. THE COURT REPORTER:
Bye-trans?
Yeah, that's all I want.
And standard delivery, would that be all right? MR. JAFFE: Yeah.
THE COURT REPORTER: MR. JAFFE: Yes.
MR. SCRUGGS: e-trans as well?
THE COURT REPORTER:
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Can you send mine that way,
The text only. Sure.
or
(Deposition concluded at 5:13 p.m.) (Reading and signing of the deposition by the witness has been reserved.)
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You don't want paper.
Seven days?
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I don't
we'll read it, and then we'll sign.
MR. TEW:
But I do want a copy.
Send me
1 DATE: TO: April 29, 2011 David J. Stern C/O Tew Cardenas, LLP Jeffrey Tew, Esq. Four Seasons Tower 15th Floor, 1441 Brickell Ave., Miami, Florida 33131
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10 11 12
IN RE:
Dear Mr. stern, 13 14 15 16 17 18 19 20 21 22 23 24
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Please take notice Lhat on April 25, 2011, you gave your deposition in the above-referred matter. At that time, you did not waive signature. It is now necessary that you sign your deposition. You may do so by contacting your own attorney or the attorney who took your deposition and make an appointment to do so at their office. You may also contact our office at the below number, Monday - Friday, 9:00 AM - 5:00 PM, for further information and assistance. If you do not read and sign the deposition within thirty (30) days, the original, which has already been forwarded to the ordering attorney, may be filed with the Clerk of the Court. If you wish to waive your signature, sign your name in the blank at the bottom of this letter and return it to us.
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I do hereby waive my signature.
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or
Very truly yours, SAMANTHA HANSTEIN Reif King Welch Legal Services 954-712-2600
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Renae Mowat, Nikki Mack, Arklynn Rahming, and Quenna Humphrey individually and on behalf of all other similarly situated individuals v. DJSP Enterprises, Inc., a Florida Corporation, DJSP Enterprises, Inc., a British Virgin Islands Company, Law Offices of David J. Stern, P.A., David J. Stern, individually, DAL Group, LLC, a Delaware LLC, DJS Processing, LLC, a Delaware LLC, Professional Title and Abstract Company of Florida, a Delaware LLC, and Default Servicing, LLC, a Delaware LLC 10-62302-CIV-UNGARO
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1 2 Cc: via transcript:

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Steve Jaffe, Esq. Jeffrey Tew, Esq. Frank Scruggs, Esq.
David J. Stern
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SIGNATURE
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1 2
ERRATA SHEET PAGE NO. LINE NO.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 STATE OF FLORIDA SOUTHERN DISTRICT CERTIFICATE OF REPORTER
the foregoing testimony was taken before me; that the witness was duly sworn by me; and that the foregoing pages constitute a true record of the testimony given by said witness.
I further certify that I am not a relative or employee or attorney or counsel of any of the parties, or a relative or employee of such attorney or counsel, nor financially interested in the action. Under penalties of perjury, I declare that I have read the foregoing certificate and that the facts stated herein are true.
r. . ..,~~~ .. . ..
SAMANTHA ANSTEIN
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Signed this 25th day of April, 2011.

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I, SAMANTHA HANSTEIN, do hereby certify that
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1
CERTIFICATE OF OATH
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I, the undersigned authority, certify that DAVID J. STERN personally appeared before me and was duly sworn.
Witness my hand and official seal this 25th day of April, 2011.
Samantha Han ein, Court Notary Public, State of Florida Commission No.: EE 070089 Commission Expiration: 03/03/2015
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A able 212:12 above-referred 219:14 absolutely 195:1 196:18206:13 Abstract 33323:12 206:23219:10 accessible 191:8 accolades 191:13 accounts 191:16 191:18192:1,5 192:12 accurate 203: 16 action 222: 13 acts 196:6,9 actual 193:8 add 202:21 address 198:14 214:10 administrator 213:12 advised 216: 13 affidavit 193:8 affidavits 193:4 194:17195:10 195:14196:10 agree 196:25 198:17200:8 209:19212:23 214:3,15 agreement 199:24 allegations 194:21,23 195:9196:2,2 alleged 195:4 America 193:16 American 216:9 amount 192:1 ANDREWS 33324:5 and/or210:25 211:6 anniversary 215:14 announce 203:4 announces 33327:6 answer 193:15 205:18 answered 207: 8 207:20 anybody 208:7 anymore 216:7 Anytime 191:7 anyway 210:4 APPEARANC ... 33324:1 appeared 223:7 appointment 219:16 appropriate 192:18 April 33323 :20 219:1,13 222:17223:11 areas 196:1 Arklynn 33323:3219:6 ASAP212:6 asked 192:22 193:7203:22 210:12 asking 192: 17 aspects 206: 1,4 206:6,9,12 assignments 194:17 assistance 219:18 assisted 199:21 199:22,22 assume 204: 1 attorney 193:5 193:10194:12 219:15,16,19 222:11,12 attorneys 211:2 211:3 attorney's 194:12 August 192:25 author 197:16 authored 208:1 authority 223:6 Ave 33324:5,20 219:4 aware 193:25 194: 15,23,25 195:4,8,12,13 195:18,24 196:14207:25 208:4,6,13,14 212:7213:25 214:18 a.m33323:20 200:23 201:5 B baby215:17 back 193:9 197:5201 :9 203:17204:1 210:22 211:6 212:3213:17 backstabbing 216:7 Bad209:17 badges 200:25 201:4,18 Bank 193:16 based 203: 19 206:21 basis 207:9,11 began 193:1 behalf33323:4 33323:19 33324:3,18 208:7211 :23 212:24219:6 believe 211 :10 214:17217:8 benefit 199:15 BERGER 33325:3 Bernstein 33324:24 191:5202:21 202:25 best212:21 Bev 199:22 211:6212:14 Beverly 21 0: 1 210:25,25 beyond 206: 19 216:21 bill 192:5 billed 191 :21,22 bit 193:10 blank219:20 blind 200:20,20 blogs 195:17 BLVD 33323:22 33324:10 33325:4 BOCA33324:15 borrower's 193:5,6 bottom 219:20 bourn 205:20 break217:9,13 Brickell 33324:20 219:4 British 33323: 10 219:8 brought 210:11 building 202: 18 205:1 business 198:25 203:10,14 215:24216:7 busy 196:11 BVI212:25 213:10,21 214:1,5,20 C call 209:7 capacity 201:13 Cardenas 33324:19 219:3 case 33323:8 193:2205:23 catastrophic 192:21 199:4 202:15 caused 193:23 Cc220:2 ceased 200:16 cell 204:22 CE0201:23 202:1 certain 192: 1 193:18195:10 205:17206:1,3 206:6 certainly 206: 16 207:7 certificate 222: 1 222:15223:1 certify 222:5,10 223:6 Chairman 215:11 CHANDRA 33324:14 chandra@cha ... 33324:16 changed 203 :24 changes 203:23 checks 200:2 205:13 Cheryl 194:19 194:20,24,25 195:5,9196:5 196:16,23 197:1 199:1,5 199:17206:16 210:9,10,18 211 :7,22,25 212:13 Cheryl's 210:16 210:17,19 choose 210:20 Chris 199:1 204:2208:1 214:15,18 215:6 circulated 204: 1 circumstances
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Deposition of David J Stern

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Case 0:10-cv-62302-RNS Document 115-1 Entered on FLSD Docket 12/21/2011 Page 1 of 277

CASE NO. 10-62302-CIV-UNGARO

SAMANTHA HANSTEIN, Court Reporter

REIF KING WELCH LEGAL SERVICES www.reifkingwelch.com (877) 291-DEPO (3376)