2011-12-14 Rothstein Scott PM

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IN THE CIRCUIT COURT OF THE 17TH JUDICIAL CIRCUIT IN AND FOR BROWARD COUNTY, FLORIDA CASE NO: 09-062943 07
RAZORBACK FUNDING, LLC, et al, Plaintiffs, vs. SCOTT W. ROTHSTEIN, et al, Defendants. ________________________________/
DAY 3 - AFTERNOON SESSION DEPOSITION OF SCOTT W. ROTHSTEIN
DATE TAKEN: TIME: PLACE:
Wednesday, December 14, 2011 1:00 p.m. - 5:00 p.m. 99 N.E. Fourth Street, Miami, FL
Examination of the witness taken before:
Terri Wright United Reporting, Inc. 1218 Southeast Third Avenue Fort Lauderdale, Florida 33316 (954)525-2221
United Reporting, Inc. (954) 525- 2221
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Plaintiffs, EDWARD J. MORSE, CAROL A. MORSE, and MORSE OPERATIONS, INC., IN THE CIRCUIT COURT OF THE 17TH JUDICIAL CIRCUIT IN AND FOR BROWARD COUNTY, FLORIDA CASE NO:
6
vs.
7
SCOTT W. ROTHSTEIN, et al,
8 9 10 11 12 13 14 15 16 17 18 19 20 21 22
Case No: 11-02473-RBR Case No: 11-02368-RBR STETTIN VS. TD BANK, N.A. Case No: 11-02288-RBR STETTIN VS. FIDELITY CHARITABLE GIFT FUND Case No: 10-03802-RBR STETTIN VS. CENTURION STRUCTURED GROWTH LLC, ET AL. Case No: 10-03767 RBR STETTIN VS. GIBRALTAR PRIVATE BANK & TRUST CO. AMY ADAMS, ET AL, PLAINTIFF VS. SCOTT ROTHSTEIN, ET AL. CASE NO: 0:11-CV-61688-JIC/LSS UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA FORT LAUDERDALE DIVISION Defendants. ________________________________/ CASE NO: 10-24110 CACE (19)
23 24 25
Case No: 11-02604-RBR
STETTIN VS. REGENT CAPITAL PARTNERS, LLC ET AL STETTIN VS. MAPLE LEAF DRILLING PARTNERS, ET AL
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MARY BARZEE FLORES, ESQUIRE MATTHEW DATES, ESQUIRE STEARNS WEAVER CARAN L. ROTHCHILD, ESQUIRE GREENBERG TRAURIG Appearing on behalf of TD Bank, N.A. THERESA M.B. VAN VLIET, ESQUIRE JOHN H. GENOVESE, ESQUIRE Appearing on behalf of the Trustee. MICHAEL GOLDBERG, ESQUIRE AKERMAN SENTERFITT Appearing on behalf of Official Committee of Unsecured Creditors. HARVEY SERBLOWSKY, ESQUIRE Appearing on behalf of Platinum & Centurion Funds. CHARLES L. LICHTMAN, ESQUIRE BERGER SINGERMAN Appearing on behalf of the Chapter 11 Trustee, Herbert Stettin. ************ MARC S. NURIK, ESQUIRE Appearing on behalf of SCOTT ROTHSTEIN. ADAM MOSKOWITZ, ESQUIRE KOZYAK, TROPIN & THROCKMORTON, P.A. APPEARANCES FOR RAZORBACK: WILLIAM R. SCHERER, ESQUIRE REID COCALIS, ESQUIRE IVAN KOPAS, ESQUIRE CONRAD & SCHERER, LLP
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CASEY CUSICK, ESQUIRE Appearing on behalf of Emess Capital, LLC. SCOTT SCHMOOKLER, ESQUIRE Appearing on behalf of RLI Insurance, Columbia Insurance and Zurich Insurance. JESUS SUAREZ, ESQUIRE Appearing on behalf of the Trustee. JOHN MULLIN, ESQUIRE GEORGE WALKER, ESQUIRE TRIPP SCOTT Appearing on behalf of Morses. ALEX HOFRICHTER, ESQUIRE LAW OFFICES OF ALEX HOFRICHTER, P.A. Appearing on behalf of Federal Insurance Company. DAVID C. CIMO, ESQUIRE GENOVESE JOBLOVE & BATTISTA Appearing on behalf of the Trustee. TUCKER CRAIG, ESQUIRE BILLING, COCHRAN, LYLES, MAURO & RAMSEY, P.A. Appearing on behalf of Rosanne Caretsky. RAMON A. RASCO, ESQUIRE PODHURST ORSECK Appearing on behalf of Frank Preve. CHRISTOPHER G. BERGA, ESQUIRE LYDECKER DIAZ, LLC Appearing on behalf of Szafranski. MICHAEL SCHLESINGER, ESQUIRE SCHLESINGER & COTZEN Appearing on behalf of Frank Spinosa.
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JACK SIEGAL, ESQUIRE Appearing on behalf of Fepict, MS Group. LAWRENCE LAVECCHIO, ESQUIRE Appearing on behalf of the U.S. Government. BART HOUSTON, ESQUIRE Appearing on behalf of Levinson, Pearson & Associates, Roger Stone and Watch U-Want, Inc. JAMES A. BLACK, JR., ESQUIRE Appearing on behalf of St. Paul Fire & Marine.
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SCOTT W. ROTHSTEIN EXAMINATION INDEX PAGE I N D E X
5
DIRECT BY MS. VAN VLIET 620
6 7 8 9
TRUSTEE'S EXHIBIT INDEX PAGE
10
91 GB 2, ELLIS0001 - E-mail dated 5/4/06. GB 2, ELLIS0006 - E-mail dated 5/4/06. GB 18, ELLIS0010 - E-mail dated 5/22/06. GB 11, ELLIS0015 - E-mail dated 6/19/06. GB 19, ELLIS15 - E-mail dated 9/8/06. ROTHSTEINS000830 - E-mail dated 10/10/06. GB 12, GIB014122 - Letter dated 7/13/07. GB 20, ELLIS0027 - E-mail dated 7/13/07. GB 21, ELLIS0031 - E-mail dated 8/6/07. GB 22, ELLIS0032 - Confidential Memo. RAFFALSKI0161 - E-mail dated 9/11/07. GB 23, ELLIS0033 - E-mail dated 10/30/07. ROTHSTEINS000833 - E-mail dated 12/19/07. GB 34, SAUNDERS0282 - E-mail dated 1/9/08. GB 24, ELLIS0046 - E-mail dated 3/24/08. 664 672 673 677 678 685 689 692 697 701 705 706 706 712 714
11
92
12
93
13
94
14
95
15
96
16
97
17
98
18
99
19
100
20
101
21
102
22
103
23
104
24
105
25
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Page 621 1
107 GB 26, GIB029055 - Document dated 8/6/08. GB 38, Confidential, SANDERS0010 - E-mail dated 10/29/08. ROTHSTEINS000835 - E-mail dated 12/26/08. GB 42, GIB003423 - E-mail dated 1/7/09. GB 43, Confidential, SANDERS - 1/13/09. ROTHSTEINS001095 - E-mail dated 3/10/09. GIB003417 - E-mail dated 3/17/09. ROTHSTEINS000967 - E-mail dated 3/30/09. GIB003415 - E-mail dated 3/30/09. GB 50, Confidential, SANDERS - E-mail dated 3/31/09. FP112310-0160031/1 - E-mail dated 3/31/09. GB 8, GIB012430 - Letter dated 4/24/09. GB 49, Confidential, SANDERS - E-mail dated 3/31/09. GB 62, GIB011523 - E-mail dated 7/21/09. GIB012205 - Letter dated 7/21/09. GG 64 - E-mail dated 2/7/11. 717 719
2
108
3 4 5 6 7 8 9 10 11 12
117 109 110 111 112 113 114 115 116
728 730 734 739 740 742 742 744
746 750 751
13
118
14
119
15 16 17 18 19 20 21 22 23 24 25
120 121 122
757 758 760
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BY MS. VAN VLIET: Q Good afternoon, Mr. Rothstein. I'm Theresa Van DIRECT EXAMINATION
Vliet and while we know each other, let me get some things on the record. I, along with Mr. Cimo, And
Mr. Genovese and Mr. Suarez represent the Trustee.
today I'm going to be going into some matters related to Gibraltar Bank. A Q Okay. But before I do, I want to just get into some
general matters, if I can and follow-up on a couple of things you testified about today in response to some of Mr. Lichtman's questions about T.D. Bank. A Q Sure. If I recall your testimony from this morning
correctly, you testified in response to one of Mr. Lichtman's questions at one point that everything you did with T.D. Bank was smooth, everything with Gibraltar was crazy. A Q A Do I recall your testimony correctly? You do. What did you mean by that? When I was with Gibraltar from the very
beginning of their involvement in trying to protect me while I was running the Ponzi scheme, meaning protect me from BSA/AML and ultimately some other federal agencies
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that would have gotten involved, it was constant, for lack of a better term, constant harassment. Not that
they weren't right in harassing me but it was constant and not the way I wanted or envisioned this elicit banking relationship to go. I was taking very good care of John Harris. expected in return for that banking relationship to be smooth, that I would not get e-mails and telephone calls constantly about overdrafts, about alerts on AML stuff, on BSA stuff or questioning to know every single detail about every wire I was sending, all kinds of craziness and it was non-stop. And if you look at the e-mail traffic, again, it's one of those things that you don't need to rely on my testimony solely to do - you can see it from the traffic. I'm frantic and extremely annoyed and certainly I
not shy about expressing my disappointment with the way things are being handled by Gibraltar and I expect it to be cleared up. Q A Okay. In contrast with T.D. I had none of that. I
explained to Mr. Spinosa early on what I expected and he lived up to that completely. Q You also testified, I believe, in response to
some of Mr. Lichtman's questions on Monday that - of
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course, you were involved in illegal activity that constituted the Ponzi scheme itself, but that there were other illegal activities you were involved with during this operative time period. correctly? A Yes, as part of the Ponzi scheme all kinds of Do I recall your testimony
what I'll call tentacles, other arms of the illegal activity; correct. Q Okay. Without going into who you may have been
involved with those other tentacles of illegal activity with, if anyone, can you tell me what kinds of other illegal activity existed? A Yeah. What I'll do is I'll give you general
statements and then you can -Q A I'm looking for kinds, not specifics. We were involved in public corruption with
politicians, we were involved in public corruption with law enforcement, we were involved in activities with mob related individuals, we were involved in activities involving the physical threats of other individuals. We
were involved in the public corruption side of purchasing of political positions, we were involved in the manipulation of the judiciary. Q Okay. Those very broad areas that you've just
described, again without detailing specifically any
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instances. A And those are I'm just saying, arms related to
the Ponzi. Q A The tentacles that you described? I consider, for example, the check kiting and
money laundering part of the actual Ponzi scheme different from what I just described to you. Q A Q Okay. Yes. Did any of those illegal activities generate any The tentacles that you just described --
proceeds to you apart from the Ponzi? A Q A answer. Q Directly? Yes or no? I'm just thinking, I want to give you a complete Directly, no. Okay. Were any of those illegal activities of
those tentacles that you just described done by you or others at your direction and in furtherance of the Ponzi scheme? A Almost all of them, almost all of them were done
in furtherance of the Ponzi scheme. Q A Q Okay. In one way or another. Okay. Now, you testified I believe this
morning, and again I'm trying to do some follow-ups on
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some notes from this morning, that if T.D. had shut down your banking relationship that the Ponzi would have ended; do I recall your testimony correctly? A Q Yes. I believe also in answers to Mr. Scherer's
questions on Monday you testified much to the same regard with Gibraltar Bank; do I recall your testimony correctly? A Q Yes. Why is it that you needed a bank, a financial
institution, whether it was consistent with you or not, to complete your Ponzi scheme? A Because the Ponzi scheme was based upon the Without
extremely quick movement of huge sums of money.
having a banking institution to effectuate the transfers and the movement and flow of money, we couldn't have done what we were doing. Q It would have been impossible.
Did any of your investors ever discuss the fact
that they wanted their investments to flow through the banking system as a means of security? A Q Yes. And who of your investors said that and
specifically what did they say; if you recall? A Practically all of them wanted their -- I don't
recall anyone saying you can keep the money in like a
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box. Q A Or in your credenza? Yes, in my credenza. And some of them actually
tried to get me to utilize other banks, some said listen we have a banking relationship with XYZ bank, we want you to bank here and I would obviously create a scenario where that was not going to happen because the banking relationships were important to me, so everyone wanted me to be involved with a bank. Q And you didn't want to switch banks from
Gibraltar for example; why? A Two reasons. Simple one, they were on board in
the Ponzi scheme.
Two, changing a banking institution
makes investors, unless they are requesting the change, makes investors hitch. Q Now, in addition to running the Ponzi scheme
through the law firm and perhaps some of these other tentacles you described, the law firm did have legitimate legal business; did it not? A Q It absolutely did, yes. In terms of the percentage of monies flowing
through R.R.A. accounts at Gibraltar Bank, could you estimate what the percentage of those monies were attributable to legitimate legal work of the law firm? A Taking into account the total sum of money
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flowing? Q A Q Yes, sir. Less than five percent. Now, you've talked about a couple of terms
during the course of your testimony over the past couple of days, one which was rock star lifestyle? A Q Yes. Now, what I may think of a rock star lifestyle
and what you think of a rock star lifestyle may be different things. Tell me what you mean when you say
rock star lifestyle. A In its simplest terms it is the ability to do
whatever you want whenever you want, wherever you want by whatever means you can think of. Chartering jets, not
waiting in lines at any restaurant or any club, wearing the most expensive clothes, having access to the best clothiers, the best shoemakers, having access to the finest jewelry. Being able to shut down a store and
bring your friends in and jewelry shop. And at concerts having backstage passes, being in the first row, first three rows of concerts, being on the floor at Heat games, box on the 50 yard line at Dolphin Stadium. If you just run the gamut of things like that, it's being close to famous people, being close to
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politicians, being close to the White House, being close to senators, it's this whole association with it that people could literally walk into a restaurant, into a facility a place like Capital Grill, for example, or the Versache Mansion, even before we had purchased it, purchased the interest in it, being able to walk in and say we're friends of Mr. Rothstein, he called ahead for us and getting a table and not waiting. thing. Q Let's separate those - some of those sub areas That kind of
of the rock star lifestyle, if you will, for a moment. Let's talk first about the association with politicians, prominent politicians, state, federal, local, national, whatever. A Q Okay. Was that trapping? Was this part of the rock
star lifestyle where you would gain access to those politicians, was that important in furthering your Ponzi scheme? A Q A Absolutely. Can you explain why to me? Sure, because the perception of power yields It's the closeness to these individuals, Not to have your
actual power.
the ability to actually call them. picture taken with them.
It was the ability, for
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example, to be sitting in my office and contact the governor with a potential investor sitting in the office, just to chat or be able to have the governor call you when an important investor was in the room just to chat. That led to an extreme sensation for the investor and for us of a significant amount of power. It added, most
importantly, an air of legitimacy to our entire operation to R.R.A., to the investment strategy, and to all the other businesses we were doing for whatever reason, the public's general perception. Even bright people's general perception is that if you're associating with politicians and associating with close to law enforcement, if you're associating with judges and the like, you must be legitimate. Q And you just testified in response to that
question about an example of a time where an investor might have been in and the governor or politician called you or vice versa. regularity? A Q Yes. Did you take steps when ordering your investors Would that happen with some
to set up those kinds of communications? A It's hard to answer that way. I didn't say
okay, I have someone coming to a meeting so let me have so-and-so call, but I did have those people attend
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political functions with me and the like, whether it be a smoker or a boys' dinner where some prominent politicians were going to be there. A martini and smoker at my home I
where prominent politicians were going to be there.
did set those up for the purpose of increasing the level of our power and legitimizing us. Q And was this air of legitimacy or patina as I
recall the phrase you used as legitimacy? A Q I used air, but patina is a nice word. I'll use your -- was that air of legitimacy that
you got from the political access, was that something that your investors commented to you about? A Q Yes. And without going into specific detail about
what each may have said, give me a general gist of their comments in that regard. A I was asked from time to time by certain
investors if I could contact people on their behalf, on behalf of them or their children. I got one request to
have an unnamed politician record a birthday message for somebody. It ran the gamut. I mean, yes, there was
regular chatter about how close we were to the political hierarchy. Q You also talked about in terms of another area
of the rock star lifestyle your access to back stage
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passes and sky boxes and you know, courtside, whatever they call it down on the floor? A Q A Q Right. At the Heat games? Right. In terms of adding that air of power to you,
were those events important to you in terms of furthering your Ponzi scheme? A Q A Absolutely. Explain that; why? Several ways. One was it was a method of
actually providing a reward to the people actually involved in the Ponzi, taking the bankers, the lawyers, the business people who were involved in the Ponzi to enjoy the finer things in life as part of the reward. Q Talking about the reward program, we'll talk
about the Scott Rothstein reward program in a minute. Focusing on the investors. A Q Okay. Was it important to you in furtherance of the
Ponzi to provide that kind of an access to more entertainment related? A Yes. You find that people do business with People do business with people they So, it's very -- it's much
people they like.
like spending time with.
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easier to sell an investment when you are in a relaxed atmosphere much like you would with a legitimate investment. That was important and it certainly
legitimizes it, being at a football game, socializing and not even talking about the business at that point in time and letting the investor get to know you and the people that are around you makes in much easier to ultimately sell the investment without the intrusion of too many questions and too deep of due diligence. Q Now, you also talked about some of the more
material things that you were able to afford yourself and perhaps others -A Q A Q Yes. -- as a result of the Ponzi scheme? Yes. I believe you mentioned fine clothing, fine Were things like
shoes, food, the finest restaurants.
cars and watches that you previously described also included in there? A Sure. Cars, watches, other jewelry, cufflinks,
expensive pens. Q Those types of things, the more material
possessions, can you give me a ballpark of how much over the life of the Ponzi, you in terms of yourself, not anybody else, but that you purchased for yourself,
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ballpark for me? A I would think somewhere in the neighborhood of
100 or 150 million dollar. Q That 100 and 150 million dollars, did you obtain
the money by which you bought these material things out of bank accounts, at least in part at Gibraltar Bank? A Q Yes. Did those trapping material wealth, the cars,
the watches, the pens, the cufflinks, the clothes and the shoes and et cetera, did those personal items to you provide any benefit to the legitimate business of a law firm? A Q No. Similarly, did your political access provide any
benefit to the legitimate practice of the law firm? A It was intended to, you know, I suppose the
trappings, all the other things you described in the first question were intended to to some extent also because the ability to show the appearance of extreme wealth in a manner that appears to be legitimate and making you legitimate also would lead to the ability to achieve legitimate clients. But the bulk of it was
illegitimate, so properly qualifying my first answer and the question you just asked me, it would be both, but obviously much more to a greater extent the illegitimate
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business. Q In terms of -- Let's go over some basic Ponzi In terms of securing an investor's money --
101 for me. A Q Yes.
-- and getting them into the investment, did you
take steps to convince an investor that his or her monies were going to be secure with you? A Q that. A First thing was having a solid banking Sure. Tell me what kind of steps you would take to do
relationship with a good, well-known bank, where the people in the bank would assist you in legitimizing you and making the investor feel safe. The appearance of extreme wealth coupled with personal guarantees, the appearance of an extremely wealthy and profitable law firm coupled with law firm guarantees made investors feel extremely secure because the theory - and I actually had conversations with some of my co-conspirators about this was that all in all when people may have been squimish about a particular investment, they would look at us as a second source of recovery because we appeared to be extremely wealthy. When I say we, I mean me and my partners and the firm, in general. So, all of that melded into the entire
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picture we were painting for people. Q You said you had conversations with other of
your co-conspirators with regard to the need to portray to investors that their money was secure? A Q Sure. Tell me who you spoke to and the substance of
those discussions. A Q A Boden. I'll give you to the best of my recollection. Of course. There were several conversations with David When David was looking, I was moving out of 2308,
which was Ricky Williams' house into 30 Isle of Bahia and David was talking about moving into the house and renting it from me. Q A Into the one on Castilla -Into 2308. We had discussions about it. I said
listen, you go in there, I said, it's important for a lot of reasons. It would be great for you and your family,
it's close to the office, I said, and I mean it's going to give you the air of just fantastic wealth and that's good for all of us. That's a place you can entertain Mr. Pearson's, you know, investors, you know, as well as legitimate entertainment. Q That is the type of conversation we had.
And again, the Pearson you're referring to is
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the sub Ponzi, if you will, that you were referring to a couple days ago? A Right. The Richard Pearson sub Ponzi. I had
conversations all the time with Stu.
I mean, Stu would
comment to me -- I remember him, I had purchased a Ferrari for him for his birthday and one of the comments after he had it for a short period of time was that he felt it was easier in business because he all of a sudden had for whatever reason an increased level of respect because of the car he drove. And we used to joke around about that, so that was another conversation I had with Mr.Rosenfeldt. I probably had more conversations about the trappings of wealth and how it added to both legitimate and illegitimate business with Russ Adler because Russ was -- Russ chased the money, although he didn't achieve it in nearly as much of someone like a Rosenfeldt or a Lippman, but he chased the money as hard as anyone I had involved at any level. Even before he knew there was a
Ponzi scheme, he would - how the hell are you guys making all this money, how the hell are you guys making all this money. That was a question Stu and I must have fielded
that question a hundred times if we fielded it once. I remember David Boden telling me, Russ won't leave me alone, he wants to know about your investments,
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he wore. and he wants to know where you're getting the money from. I said, go slow, you'll get there, piece by piece,
and then as things started to come together and he started to learn what we were actually doing, we had deeper conversations. I used to joke around with him and
tell him you need to get rid of that piece of shit car, you need to go buy a new car. If you want to get
investors, you need a better car. What are you dressed as? to tease him. Wonka. Rosenfeldt and I used
I mean, I dress kind of like that Willie You know, on
Don't say anything, Bill Scherer.
occasion I would dress nicely at the bank, but on occasion I would, as my wife said, I looked like Willie Wonka in a very expensive suit. Rosenfeldt and I used to tease Adler about what We used to say listen, you want to bring
investors in, you're wearing that smuck -- I didn't say smuck, I said smocka. You know that rag, that's the type of conversations I had with Mr. Adler, you got to carry yourself better. Q Right down to the pen that he used.
As a matter of fact, did you ever give him a
more personal shopping kind of him a more personal shopping experience? A I gave Adler, Rosenfeldt, Boden, Lippman on
occasion, I gave them all personal shopping experiences.
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Q Now, let's go back to your investors. We kind
of detoured off into the haberdashery word. The investors, in addition to thinking their investments were going to be secure, was it also important for them to have some sense that they were really going to get a return on their profits? A Q Absolutely. How did you convince them that that was in fact
going to happen? A there. I had to convince them that the money was really We utilized fake bank statements, we used on-line
fake bank statements, we used meetings with actual bankers like Mr. Harris and Mr. Spinosa and used past performance, past history with other investors and even when there was no past history we always had George Levin and Mr. Preve to pretend there was a past history to make sure people believed that it was a safe investment. Q Now, in addition to the political contributions,
I'll call the entertainment kind of things, sports and the concerts and whatnot and the clothing and the personal trappings of wealth, did you also use philanthropic contributions to raise that air of legitimacy, that patina of legitimacy? A That's an interesting question. I've had this
discussion with other people and initially and actually,
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personally, I didn't. I wanted to help these people, I It turned out that I was
wanted to give the money.
adding an air of legitimacy without really intentionally doing it. So, even when I first started, when I first
came back from Morocco, without getting into too much detail, and discussing with certain people, I never looked at the charities that way. I looked at the restaurants and the other businesses and all the other things and the politicians and the athletes and the like that way. the charities that way. Q Now, did -- maybe an obvious question, but in I didn't look at
order to further your Ponzi scheme and keep it alive, was it important to avoid, as you discussed before, BSA/AML questions and any other scrutiny by law enforcement? A Q Absolutely. We'll get into it in much more later, but what
general steps did you take other than those we're going to discuss in terms of the bank, what other steps did you take to avoid law enforcement scrutiny; if any? A Q that. I utilized law enforcement itself. Without going into detail with regard -- strike Let me think about that one. I'll come back to They
that unless I draw an objection from Miss Stone. were quiet through that entire time.
I'm going to try to
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get them through that process without an objection. A Q Okay. Now, did any of your investors ever question the
high rate of return that you were offering on the investments? A Q Yes. And when I'm talking about the investments, in
this regard, I'm talking about the settlement scam. A Q A Yes. What kind of questions did they ask? They were all around too good to be true genre How is this possible, how could you
of questions.
possibly return this amount of money, why would people want to give up that much money, that type of question. Q You talked about rewards that you gave to people
that were assisting you in furthering the Ponzi scheme? A Q Yes. We've talked about cash payments that you made
to certain individuals at T.D. Bank; correct? A Q Yes, that's correct. With regard specifically to anyone involved with
Gibraltar Bank, did you ever make a cash payment to anyone at Gibraltar Bank? A Q Not that I recall. Did you ever provide anyone at Gibraltar Bank
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with any form of compensation, non-monetary compensation, any reward, any perk? A Yeah, I gave John Harris either one or two And then there
watches, couple of pairs of cufflinks.
was the rock star lifestyle as we're describing it, especially where John Harris was concerned, that was his main form of payment along with the promise of a high-paying job when he was ready to leave the bank. Q Let's talk specifically about what kind of
things you gave Harris and then we'll get into what he did for you afterwards. A Q Sure. First of all, you mentioned that you gave him
one or two watches; is that correct? A Q Yes. Are we talking a Timex here or are we talking a
Rolex; what are we talking? A One that I know I gave him was a Rolex. I
believe it was -- I believe it was the Yacht-Master stainless bracelet, platinum bezel. watch. I believe that's the
He had seen me wearing one - and actually I
recall buying more than one, I bought one for Steve Lippman also. I recall giving Mr. Harris a Rolex and
there was another watch that he wanted to have and it was a vintage piece and I just don't remember what it was.
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Q What are we talking about in terms of the cost
of this Yacht-Master? A Probably somewhere in the neighborhood of
$20,000, maybe a little less. Q A Q How about the vintage watch? It probably was in excess of $20,000. Now, the cufflinks, I mean, what are we talking
about there? A Those were expensive. I purchased most of my
cufflinks at Bergdorf Goodman in New York, they have a section in the men's department that sells very unique, very expensive cufflinks, and it was not unusual to spend 2,500 to six or $7,000 for a single pair of cufflinks. Q A How many pairs of cufflinks did you -My recollection is it was two, three. I either
gave him two and Tracy Weintraub three, or Tracy Weintraub two and him three. Q Okay. And just so the record is clear who is Tracy Weintraub? A He was a senior partner with Berenfeld Spritzer,
our accountants, our CPAs. Q Any other kind of tangible personal items that
you gave to Mr. Harris that you can recall? A I may have -- I have a vague recollection of
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purchasing him an expensive bottle of Louis XIII. Q For those of us who are not spirits aficionados,
what is that? A Just a lovely spirit. Very expensive spirit, a
bottle in one of the crystal decanters could be $10,000, $15,000, just depends upon the decanter and the size. Q You testified previously that Harris enjoyed the
rock star lifestyle with you; is that right? A Almost more than anyone I was doing business
with, yes. Q And in terms of, for example, sporting events,
how often would John Harris accompany you to sporting events at the level you have described in terms of the boxes and things like that? A John was on our permanent list of guests for the So he was invited to - he may have
Dolphins stadium.
missed a game or two, but he was invited to every single Dolphin game that while I had those tickets he was always invited and he came to most of them. Q A That's tickets or a box? No, I had a suite. You get him a ticket though He came to a
to get upstairs, but, yes, I had a suite. lot of Heat games with me.
He took -- he never went with
me to hockey games, I didn't like to go to hockey games, but we used to give him our hockey tickets.
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And he's one of the people that traveled more extensively with me. He flew to New York with me and a
bunch of the hedge fund guys for a Dolphins, I believe it was a Dolphins Jets game that we all flew up for. think he flew on that, I think he was on that one. He flew on so many, honestly, it's very difficult to remember which ones he was on. I seem to I
remember him going to New York with us on a trip so there was a big lunch at Harry Cipriani's before and I remember him being there. Then there was a couple of the big college games, like the BCS game or the national championship game, and he either came to one or both of those. traveled extensively with us. Q When you are talking about he would travel He
extensively with you on airplane flights, would these be commercial or private flights? A No, you are talking about the charter of -So you're
usually I chartered medium to heavy jets.
talking about a charter that costs, I mean you can look it up, I'm sure it's on the American Express bills or on checks, but you're talking about a charter that might cost 40, 50, 60,000 dollars with let's say 10 passengers. So, you're talking about a ticket that could
run anywhere from 4,000 to 6,000 dollars a person plus
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food and drink. Q Now, how often do you recall Mr. Harris taking
one of these private jet flights with you to sporting events; more than 10? A I don't think it's more than 10, it certainly
could be, the fortunate thing for you there are records that will show all that, there's all the flight manifests. It was a lot. It was more frequent than the
other banking people. Q You mentioned at one point in time you recall
Harris being on a flight with you to New York with some of the hedge fund guys, correct? A I'm almost a hundred percent certain. I don't
want to guess, Ms. Van Vliet, and I'm fairly certain he was with us on that trip, seems like a trip he would have gone with us on. to do it. But there was one -- just so I can clarify for you, if he was on that trip, there were a bunch of hedge fund guys on the trip, meaning the Centurion, Platinum, Level 3 guys. Q A jumbled. Okay. You know what, I may be getting this all Here's the problem you're going to have with me I did so I have to see the manifest or pictures
questioning me about the particulars of this.
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much of this rock star lifestyle thing with so many people involved in the Ponzi scheme that it's hard to piece who was where when, because now I just remembered that I took a bunch of guys to the Super Bowl. I think
that hedge fund trip -- actually they may have been on both, the hedge fund guys may have been at the Super Bowl and the -Q A Well, in any event -And the Dolphins Jets game, I really have to see
the manifest to tell you. Q In any event, did you ever take Mr. Spinosa to
the Super Bowl? A Q I don't believe I did, no. In any event, the manifest, the flight logs
would show who the passengers were? A Q company? A Other than the couple times that I actually Absolutely, that's the best way to do it. Did you always charter your jets from the same
chartered Ted Morse's plane, I always chartered through I think 95, 99 percent of the time I chartered through a guy named Mark Lasic (phonetic) with, I think it was Blue Star. Q Now, in addition to sporting events, the private
plane trips and things of that nature, did Harris also
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receive rewards in the way of free meals and things of that nature? A Yes. John and I -- John spent a significant He was invited to almost all of On Wednesday nights my
amount of time with me.
our what I'll call boys' nights.
friends and I would go out, we used to go out for an expensive dinner and then out drinking or to a gentleman's club or both. He was invited to most of He may have tried
those, he never had to pick up a tab.
to or actually did pick up a tab maybe for all of us on one or two occasions, but I would venture to say he ate dinner with me with them 70 times, a hundred times, very frequently. Q What kind of time period are we talking about
here knowing that the Ponzi blows up on or about August 31, 2009; how far back? A I started entertaining John right from the
beginning even before we had a banking relationship because before I went to Gibraltar I was already leaving a crappy relationship, just in general a crappy relationship with Colonial. And both on the legitimate
and illegitimate side I wanted to have a good banking relationship where I was going. I remember at the time I
started banking with Gibraltar it was the very earliest stage, pre settlement documents, pre anything in the
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him? A Generally, when we had boys' night or we had one Ponzi. So, I started entertaining John right from the get-go and so it would be the entire span of the time, figure out when I started banking with Gibraltar, 2006, so it would have run '06 to '09. Q We'll get to that in a second in the documents.
Any other kind of large ticket items that you would have supplied Mr. Harris with in return for his -A Q Large ticket items, escorts, expensive escorts. When we're talking escorts we're talking in the
common parlance, prostitutes? A Q Yes. And how often would that service be rendered to
of our boys' outings and myself or myself and Mr. Morris would supply escorts for the people that were going out with us, he would be included. Q And would these -- would this happen on this
every Wednesday night boys' night out? A Not every Wednesday night. No, no, no. Not
every Wednesday night. Q A All right. But I mean just so you have the whole picture of
what was going on in this rock star lifestyle, there were
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him? Q A Q many nights where after the boys, after we went out to dinner, a group of us might go to Solid Gold and John would enjoy the company of a lady there on our dime as well, on our tab. the couple years. Q A Anything else you can think of? I bought him a couple suits from Otto Mario. I can't think of anything else. If Escorts probably 15, 20 escorts over
Let's see what else.
anything else pops into my head I'll let you know. Q A Okay. In addition to Mr. Harris at Gibraltar --
I'm sorry, did we cover concert tickets with He went to concerts. We talked sporting events. And sporting events, yeah. In terms of other individuals that you may have
worked with at Gibraltar, were there any other individuals that were co-conspirators with you working at Gibraltar Bank to further your Ponzi scheme? A Q The way you're asking me that question, no. Were there other individuals that furthered your
Ponzi scheme at Gibraltar Bank apart from Harris? A Q A Q Yes. Who were those individuals? Lisa Ellis and Steven Hayworth. Starting first with Ellis, did Ms. Ellis know
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Q from you directly about the conduct of your Ponzi scheme? A Q No. Do you know whether Ms. Ellis knew about the
conduct of your Ponzi scheme? A Q Specifically, no. Did you ever discuss with Mr. Harris whether
Ms. Ellis specifically knew about the conduct of your Ponzi scheme? A You see, I never discussed with Mr. Harris
directly that we're running a fraudulent investment scheme. He just knew we were committing fraud. So I
can't imagine under any circumstance I would have talked to him - as I sit here today, that I have would have talked to him about whether Ms. Ellis knew anything. I might have asked from time to time -Actually, I recall a few occasions where I asked him, is Lisa having any troubling with the movement of money in and around the bank, in and out of and around the bank? He said, no, she's on our team. Now, with regard to Ms. Ellis, did Ms. Ellis
ever receive anything from the rewards program? A Q anything? A I understood from him that he was taking very Not through me, no. Do you know whether Harris ever gave her
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good care of her, but I don't know what that means. Q A Q Did he provide any details in this regard? He did not. Let's go back and kind of go through some of the
historical perspective of Gibraltar Bank and your relationship. You testified a few minutes ago that you were leaving a crappy, I believe were the words you used, relationship with Colonial Bank; is that right? A Q Yes. At that point in time in 2006 when you made the
switch from Colonial to Gibraltar had you already begun the Ponzi scheme? A In the form of the bridge loans, yeah, right
around that point in time, maybe a little bit before. Q A years. Q And the bridge loans again -Yes, I was. Yes. And the bridge loans again, can you describe I was just counting the number of
very briefly to me what a scheme entailed? A Sure. We borrowed money from somebody, Domenick
Tonacchio, Barry Lipsitz, Ted Morse, whoever it might be, and pay them back over a period months at an extremely high interest rate. If it was evidenced by anything, it
would have been evidenced by a promissory note, nothing
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else. Q Those are some of the transactions that
Mr. Scherer discussed with you the first day when he was talking about the promissory notes with Mr. Morse? A Q Yes. Now, what caused you to want to switch your
banking relationship from Colonial Bank to Gibraltar? A In the scheme of just general business combined
with the illegal things we were doing, because back then we were kiting checks, that kind of thing, Colonial was making it very hard to do business in general, legitimately and criminally. They were just a very bad bank to try to do business with. The scrutiny level was extremely high,
and their general customer service, even on a legitimate level stunk. So when you have customer service at a legitimate level that stinks, you can use your imagination and understand what it would be like when you're doing anything that appears criminal. all over you. Q I don't want to use my imagination, so let's go Colonial, you said that the They were
into it a little bit.
scrutiny was very high; am I correct? A Very high.
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was? A I don't know that it was -- No, it wasn't higher Q Was it any higher than Julia Ansari's scrutiny
than Julia Ansari now that I'm looking at it going backwards. But at the time it was the greatest banking
scrutiny I had ever encountered. Q Did you have a corollary of John Harris at
Colonial Bank? A Q I did not. Now, when you moved from Colonial Bank to Were you courted by
Gibraltar, how did that happen? them? A Q A Q A Were you out looking? Both.
Tell me.
I was out looking and we were courted.
Who courted you? John Harris. Tell me about how that happened initially. Actually, I think one of the first times I met That is a little bar and
him we were at the Samba Room.
restaurant across the street from our offices. Q A On Las Olas Boulevard in Fort Lauderdale? Yeah. And at some point in time I was
introduced to him and learned that he was a banker and we started discussing banking business. And I pretty much
had the same spiel anytime I met a banker to determine whether or not I would do business with them at all.
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Q A What was that? That was when they'd ask, are you happy with
your current banking relationship, I'd tell them, no, I'm not. And they'd ask, why. I tell them, listen, we are a younger law firm. We overdraw accounts from time to time. for lines of credit and things like that. left alone to do my business. into my private business. We have the need I need to be
I don't like intrusion
And if you can provide us
banking services along those lines, really customized private banking, I would be interested. Q spiel? A Q That's what we specialize in, private banking. Did you specifically tell him you needed to be What did Harris say when you gave him that
left alone to do your business? A Yeah. I told the TD Bank the same thing. I
told Gibraltar Bank through Harris that, and I told both Mr. Tolomer and Spinosa that. I was not bashful about
stressing the fact that I didn't like to get calls from bankers multiple times a day asking questions about my business. They needed to understand that being an entrepreneur, so to speak, meant being left alone to run
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it? A Q No. You said that Irene Stay took care of the Did she consult you in any regard your business. Q When you decided to go with Gibraltar Bank who
was it that opened up your accounts for you? A I don't recall because Irene Stay would have
taken care of that for me. Q Did you maintain both firm accounts and personal
accounts at Gibraltar? A Q I did. When the firm as well as yourself personally
opened up the accounts, were you required to execute any documents? A Q I'm certain that I was. Do you have any independent recollection now of
opening documentation.
with regard to answering the questions about what the accounts were for and things of that nature? A Q No. Did you know that certain of the accounts that
were being opened at Gibraltar Bank were law firm trust accounts? A Q Sure. And did you instruct Irene on how many trust
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did. accounts to open? A I believe that I did, yes. I believe that I
told her to open up -- Well, at some point in time we opened up a personal injury trust account. that was down the road. I believe
But I did tell her -- I believe
we started with one or two trust accounts and then maybe it grew a little bit, but not by much. Q Did you in your initial conversations with
Harris, did you discuss with him that you were in businesses other than the business of practicing law? A Q Yes. What did you tell him the other businesses,
apart from practicing law, were? A You'd have to tell me or show me something that You can rest
says when I opened specific businesses.
assured as part of my sales pitch in just pitching RRA and Scott Rothstein as an entity, that anything I was involved in at that time or even thinking about being involved in at that time would have come up. Q A Okay. Actually, I would have to say would have, it I'm certain of it. I just don't know what I was
involved with during that time frame. Q In the 2006 time frame when you started your
relationship at Gibraltar Bank, you had obviously met
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Harris at that point in time; correct? A Q A Yes. When did you meet Ellis? I have would have met Ellis right as soon as we
started our banking relationship. Q A How about -Whatever day we opened it, that's likely the
first time I met her, although she might have wandered in -- she didn't usually, but she might have been wandering out and John may have introduced me to her, but I don't have an independent recollection. Q How about anybody else at Gibraltar Bank during
that initial time frame, did you meet any other banking officials from the bank? A Yes. I met a gentleman named Mike Bondinoff
(phonetic). Q A Do you recall what his position was at the bank? He was some senior bank officer. He was under
John Harris, but he was introduced to me as someone who, I don't remember his title, but some who was senior. Q A Okay. I met a guy named Frank Fernandez at some point And I
in time who was a step above a teller, I think. met some wealth management officer. name either.
I don't remember his
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Q Were all of these meetings at the branch in Fort
Lauderdale? A Q Yes. How about anybody from the bank's Coral Gables
headquarters, at that initial time period when you're first opening up the accounts, did you meet anybody from the Coral Gables headquarters at that time? A Within a short period of time after opening I
met Mr. Hayworth. Q Approximate, are we talking months? Are we
talking a couple of weeks? A It would have been a couple weeks to a month, It wasn't that long after I remember
month-and-a-half.
discussing with Stu that I was impressed that Hayworth had taken the time to introduce himself to us so early on in our relationship. Q meeting. A Tell me about the circumstances of that Was it in person or was it on the telephone? No, no, it was in person. I'm pretty sure it
was at the Gibraltar Bank office that Mr. Harris told me that Steve Hayworth was there and would like to meet me, and I went over. Q greet? A Was it a long meeting? Tell me about it. It wasn't a long meeting. It couldn't have been Was it a quick meet and
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too long because I don't have an independent recollection of what went on in the meeting. And I don't recall
anything sticking out in my mind about the meeting. Q Nothing in depth discussed at the meeting with
Mr. Hayworth at that time? A Q bank? A The founder and CEO. There was something that came up in that meeting that actually does stick out in my mind because I remember talking to Mr. Rosenfeldt about this. Q A Tell me. And that was that Mr. Hayworth told me that, if No. Was he introduced to you as the CEO of the
you need anything, just let John know. He gave me his telephone number also, his private telephone number. But he said, John reports
directly to me, so if you need anything -And I remember talking -- I remember the conversation because I remember talking to Rosenfeldt about it because it was unusual to me that someone that just headed up a market, that his direct report was the CEO of the bank. Q In terms of your discussion with Mr. Rosenfeldt
about the banking relationship with Gibraltar Bank, at
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that point in time was Rosenfeldt aware of the conduct of the Ponzi scheme? A I don't think he was aware at the time that
opened because the Ponzi scheme wasn't in say its full bloom at that point in time. Q A Okay. So you have to understand the nature of my Once the illegal activity even
relationship with Stu.
began and Mr. Rosenfeldt was making what would be described as an inordinate amount of money compared to what the firm was generating, and more specifically what he was generating, he would say, how the hell are we affording this? I mean, this is a conversation that I can tell you we had -- if we had it once, we had it 300 times over the period of our partnership. affording this. I would say, Stu Boy, because that's what I called him, I said, Stu Boy, you do not want to know, do you? And he'd say, no, I don't want to know. keep the money coming. Q Was he a signator on the Gibraltar Bank accounts Just How the hell are we
along with you? A All of them, every account, both banks.
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A Q Q At some point in time in the relationship with
Gibraltar Bank your bank accounts began to become overdrawn; is that right? A Yeah. I believe it was a couple of weeks into
the relationship. Q Was that a problem that you had experienced at
Colonial Bank as well? A Q Yes. What caused the overdraft situation to come up
once you were at Gibraltar Bank? A there. Q At that point in time were you operating the -Thanks for that one. You asked me. I know. That was a good direct answer to a We were writing checks when the money wasn't
really bad question. At that point in time were you taking any money from Peter and paying it out to Paul? A Q Yes. Was that the main source of the issues in terms
of the overdraft situation? A Q Yes. Did that overdraft situation at Gibraltar Bank
continue throughout the conduct of the Ponzi scheme up
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did. Q You testified this morning that if -- or this until October 2009 when it finally blew up? A Yes. To the best of my recollection, yes, it
afternoon, I can't remember - well, it had to be this morning, that if TD bank had pulled the plug on your accounts that the Ponzi scheme would have blown up; is that right? A Q That's correct. Would the same hold true if Gibraltar Bank had
pulled the plug on your accounts back in 2006 -A Q A Yes. -- when you first started going overdrawn? Yes. MS. VAN VLIET: marked as 91. I'm going to hand you what I've
91, for the record, was previously It's Bates stamped Ellis
marked as Exhibit GB 2. 0001 through 0005.
(Whereupon, Trustee's Exhibit No. 91 was marked for identification.) BY MS. VAN VLIET: Q Take a moment to look through that if you would,
Mr. Rothstein, and just look up when you're ready. A Q Okay. Now, first of all, do you recognize these
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e-mails going back and forth? A Q e-mails. I do. And we've all been talking about a lot of But the first one in time sequence, which would
start on the next to the last page on the bottom, is from a Scott Rothstein at rra-law.com. address in 2006? A Q Yes. Was that your e-mail address through and Was that your e-mail
including the end of October 2009? A Q A Q Yes. Now, were you a prolific e-mailer? Yes. And did you regularly read your e-mails when you
received them? A Q Yes. Now, this e-mail that you initiate on May 4,
2006, is to John Harris and Lisa Ellis; is that correct? A Q A Q Yes. And it's an update; is that correct? That's correct. You say in the e-mail, Good morning, kids. We will have
Already checked the accounts this morning. more than enough to cover today.
So, John, when the
crazies from Miami call, tell them to shut up.
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Then there's a colon, a hyphen, and a parentheses, indicating a smiley face. A Q Yes. Have a great day. Chao, chao, chao. Your
humble servant, a temporary king overdrafts, me. A Q Yes. Did you often refer to yourself at the temporary
king of overdrafts? A in time. temporary. Q A Q It didn't turn out that way; did it? Certainly did not. Now, when you are referring to "the crazies in No. That just seemed appropriate at this point
I think I was hoping it was going to be
Miami," who are you talking about? A Talking about the folks from the Coral Gables
office, the compliance people. Q At this point in time only, you know, a couple
weeks into the relationship had you already started receiving inquires from the compliance people as you've described them in Miami? A Not to me directly, as I recall, but through
Mr. Harris, yes. Q And was Harris filling you in on these inquires
from the compliance people in Miami regarding the conduct
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of your financial business at the bank? A Q He was, yes. He did it as early as a couple of weeks into the
relationship? A Yeah. You have to remember something, you have
to differentiate between my relationship with Harris, which I started to grow pre my banking relationship with him and then into the banking relationship. already being groomed. community. And you have to know John to understand this. There are certain people that it takes a significant amount of grooming before you can be certain that they will be engaged in your criminal enterprise. Q A Q A Have you ever used the term "player"? Yes. What is your understanding of the word player? I use the word player to describe someone who So, he was
He knew my reputation in the
will conduct illegal activity. Q grooming? A Yes. If someone is a player, they don't require Is that somebody that doesn't require a lot of
a lot of grooming. Q A Was John Harris a player? Absolutely.
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Q You say that you had begun the grooming process
on John Harris prior to the point in time that you opened up your banking relationship; is that correct? A Q A Yes. What did that grooming process entail? Taking him out with us, all the general
entertainment stuff, letting him hang around with our friends so he could get a feel for the type of group that we were, listen to the kinds of conversations we had. Q before? A Q Absolutely. So once you start into your banking relationship The kind of rock star lifestyle you described
with Gibraltar, have you already decided that Mr. Harris is a player? A Do you know the expression "all in" in poker?
Are you a card player? Q Only on my i-Pad. I'm too conservative to
actually risk any of my actual money. A that. Q Be careful because the government is looking at John Harris was "all in" very early. In terms of this overdraft situation, it
presented itself early on in your relationship at Gibraltar Bank. A I'm sorry. Say it again. Mr. Nurik was yelling
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at me. Q I truly only do play poker on my i-Pad, so what
do you mean by the term "all in"? A In poker "all in" is when you take all the chips
in front of you, everything that is your for that hand, wordily possession, and you risk it all. all -Q A Willing to risk it all? He absolutely was. He was all in. He was a John Harris was
player by every stretch of the imagination. Q Okay. So, back in May of 2006 you had already
begun to receive reports that there were inquiries being made about your conduct of the banking relationship at Gibraltar Bank; correct? A Q Absolutely yes. Can you recall during these very initial phases
what you were being told were the questions that were coming up regarding your banking relationship? A It had to do with the amount of money moving
around in the account, but more than anything the overdrafts. The overdrafts were driving people crazy
because we started overdrawing the account right away. We were having trouble making payroll and the like. So
that would have been the initial, excuse me, the initial issue.
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yes. Q And we'll get to this in a minute. But at some Q Is the overdraft situation what you were
referring to when you testified in response to one of Mr. Scherer's questions on Monday that you basically had a running line of credit with the bank without having a credit line? A Yes, I did, at Gibraltar more than any place,
point in time you were required to actually open a line of credit at Gibraltar Bank; is that correct? A Yes. I to took an MMA and secured a line of
credit with it. Q Now, on the first page of Exhibit 91 where
Mr. Harris is responding to your update, temporary king of overdraft e-mail -A Q Yes. -- he says: Scott, appreciate the update. That would be He Are
you covering the overdrafts today? perfect.
The timing would be perfect -- I'm sorry. The timing would be
said, that would be fantastic. perfect.
The bank would love to see no overdrafts, no OD
in any of the accounts today. The fact of the matter is these are the largest ODs in the bank, and the fact that they are ongoing/revolving, paren, never cleared completely,
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closed paren, is posing a real problem in terms of setting off red flags and appearing on senior management and regulatory type reports. Do you recall receiving that bit of information from Mr. Harris? A Q I do recall receiving it. When you found out that the fact that your ODs
were causing an ongoing problem in terms of setting off red flags and hitting you on management and regulatory type reports, what was your reaction? A Two things - actually several things. One, I
spoke to -- before I called Mr. Harris I spoke to Debra Villegas about it very quickly. going on. I let her know what was I don't
And I spoke to Stu Rosenfeldt.
remember if he was there and I went into his office or I called him. to them. But my point was several fold when I spoke
It's we've got to be careful what we're doing
because we're already setting off red flags. And I also pointed out to Deb and to Mr. Rosenfeldt that it appeared that we had a solid banker on our team at this point in time because it was so early in the relationship and Mr. Harris was already saying, you're setting off red flags. this. We need to avoid As you can see
So, it was an aggravating e-mail.
from my response I didn't get crazy.
It was also an
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e-mail to let me know that we had made the right decision by going to Gibraltar Bank. Q Was it important for you in furtherance of the
Ponzi scheme to receive these kinds of heads-up -A Q A Q Yes. -- from Harris? Yes. Forewarned us, absolutely.
Did these kind of warnings from Mr. Harris of
scrutiny at the bank continue throughout your relationship with Gibraltar Bank? A They did. (Whereupon, Trustee's Exhibit No. 92 was marked for identification.) BY MS. VAN VLIET: Q Turning to Exhibit 92, which was previously
identified as GB 17, Ellis 0006 and 7, take a look at that. A Q Okay. I've reviewed it.
Do you recall sending this e-mail to Lisa Ellis
and John Harris on May 4, 2006, at 4:22 p.m. in the afternoon? A Q I do. And in this e-mail you're discussing the
overdraft situation; is that correct? A Yes.
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A Q Q Rather than reading through the whole thing, in
the third paragraph you say, if I'm putting you in a bad position, please let me know. want to remain friends. You're a great guy. I
If you need me to pull the
accounts, please let me know so that I can make appropriate arrangements. Do you see that? I do. Did you have any intention of pulling your
accounts at Gibraltar Bank at that point in time? A Q Absolutely not. Would you characterize that statement on your
part as a threat? A Q Yes, it was a threat. And why did you threaten to pull your accounts
from Gibraltar Bank to Harris? A Because I knew John was all in and would do
anything to stop us from pulling our accounts. Q And is that a tactic that you commonly used
throughout the conduct of your Ponzi scheme to keep your bankers in line, if you will? A I did. (Whereupon, Trustee's Exhibit No. 93 was marked for identification.) BY MS. VAN VLIET:
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them? FBI. Q I hand you 93. Unlike Scherer I'm actually
doing this myself because I need the exercise. 93 was previously identified as GB 18, Bates stamped Ellis 0010 through 12. Take a moment and look
through that and let me know when you're done. Do you need a pair of cheater glasses? THE WITNESS: I have them. I'll steal yours. Do I have
I'm going to steal them from the
Don't put that on the record.
BY MS. VAN VLIET: Q e-mails? A Q I do. All right. Now, on the first page of 93 is Do you recall sending and receiving these
actually where the actual -(A discussion was had off the record.) BY MS. VAN VLIET: Q Now, Mr. Harris sends you an e-mail on Monday,
May 22, 2006, at 11:52 in the morning, copy to Lisa Ellis. And he says to you: Hey, Scott, I know you
reviewed this a.m. and have deposits to cover, but just as FYI, total ODs are about 200 million. A 200,000 Q Sorry. 200M. The payroll hit an internal 30 That says 200,000. That's his way of writing
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day report, which is a no-no. this one cleared. Is this statement by Mr. Harris one that you recall receiving in terms of a heads-up? A Q Yes. And had he ever spoken to you prior to May 22, We definitely want to get
2006, about these internal reports that they have, the 30 day reports? A Q A He did. Tell me what he said to you. He told me that above all - when we were
discussing what I could do after the first round of overdrafts -- Again, John and I were drinking every night together and socializing already. And I spoke to him
about what I could do to make his job as easy as possible protecting us. And he said the key is, he said anything
internal that he has to do, that's fairly easy to do. He said, we want to keep things off the desks, off the radar down in Coral Gables. He said, that kind
of stuff poses a more difficult problem for him, but in the event he needed to solve it he could go directly to Mr. Hayworth, his direct report. Q You responded to Mr. Harris a few hours later in If you ever see
the afternoon in the second paragraph:
something about to hit a report and you need my help with
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A Q that, let me know, and I will do whatever it takes to keep it from happening. Do you see that? I do. And what did you mean by that? What were you
prepared to do to keep things from hitting the reports? A Whatever I needed to do; move money, kite a
check, whatever needed to be done. Q A Q Did Harris know you were kiting checks? Yes. Did he know at that point in time when this If you
e-mail exchange is going on in May of 2006? recall. A If you don't, you don't. No, no.
I just have to look at the date and I don't recall one way or
think about it for a second. the other. Q Okay.
Now, you testified that at some point in How do you know
time Harris knew you were check kiting. that he knew? A
We had a discussion about it following him
writing a very -Q A That letter? Yeah, a letter that actually had the words
"check kiting" in it. Q We'll get to that in a minute.
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A Q A Okay. (Whereupon, Trustee's Exhibit No. 94 was marked for identification.) BY MS. VAN VLIET: Q Let me hand you 94, which for the record was
previously marked as GB 11, and it's Bates stamped Ellis 00013. It's an e-mail chain. It starts from you to
Harris on Monday, June 19, 2006. I think I said 93. Okay. Exhibit 94 is a set of e-mails that deals with I meant 94.
this MMA and the letter of credit that you've previously testified about; is that correct? A Actually this is a different MMA. The MMA we
were talking about earlier was the 4 or $5 million MMA. This is an initial one that I'm going to utilize funds from Colonial bank to secure. Q Okay. Tell me about this one. Why were you
having to get this MMA? A Mr. Harris had told me that we needed to do
something to securitize a line so that people in Coral Gables would stop barking. We had money as he knew. We
had money waiting to come to us from Colonial Bank that we had used the Colonial Bank to securitize something. We were waiting for the release of those funds. We were
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going to move it over to Gibraltar to securitize something with them. Q In June of 2006 had you graduated from the
bridge loan scam into the settlement scam yet? A G-1 is. You'd have to look and tell me what date deal It is the date of G-1 that is the first Actually that's not
full-blown settlement Ponzi deal. true.
The first G-1 deal, but that still would be with
George Levin and maybe even pre the entire settlement packet. You need to look at the G numbers and see what deal -- I believe it's like 10 or 15 deals in. You
should see a deal where we finally have the full packet in place. Q Now, Mr. Harris' e-mail to you on the 19th
again, he talks about a trip to the Bahamas that you had just taken. A Q It's in the last line of his e-mail.
Yeah, I see that. Did you ever take him on any foreign trips,
"him" being Harris? A have. (Whereupon, Trustee's Exhibit No. 95 was marked for identification.) BY MS. VAN VLIET: I don't recall one way or the other. I may
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A Q A Q Q I'm handing you Exhibit 95, which was previously
identified at GB 19, Ellis 15 and 16. Tell me when you're ready. Okay. First of all, do you recall receiving and
sending these e-mails in or about September 8, 2006, to Mr. Harris? A Q I do. The initial e-mail is one which Mr. Harris on
that date about 9:49 in the morning gives you a heads-up on an OD; is that correct? A Q Yes. And you respond -- Well, actually he tells you
at the end of that e-mail that he, quote, doesn't want credit/ops to pull any triggers. Do you see that? I do. When you saw that, when you first read it, what
did you understand Mr. Harris to be telling you? A Q A Q A Q They were about to file a BSA/AML report on me. Are you familiar with the term SAR? Suspicious Activity Report? Yes. Yes. That would have been in my BSA/AML.
Is that what you're worried about?
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yet? A That's what he told me. I didn't know that to A Q Yes. By the way, did Harris ever tell you during the
entire course of the relationship, did he ever confirm to you one way or the other whether a SAR was being filed on you? A He never confirmed one way or the other. He
discussed it with me, but never confirmed to me that something was actually filed. Q When you say he discussed with you, when did
that discussion take place? A When everything was hitting the fan with Ansari
and Sander Sanders, the -Q A Further down the road? Yeah, it was further down the road. The term
suspicious activity report came up regularly because I would bring it up. I would say, Just whatever you do,
make sure there's no suspicious activity report filed. He goes, I know they're talking about filing one, but they haven't filed anything yet. directly to Mr. Hayworth about it. nature. Q I'm talking
Things of that
So it was a general topic of conversation. So he did tell you that they hadn't filed any
be true one way or the other.
He told me that they were
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talking about it, but that nothing had been filed. Q Okay. Now, you respond to Mr. Harris' "pull the
trigger" e-mail in one of your more colorful e-mails, as you've described them. A Q Yes. And, again, you talk about that you'll not be
pushed around or pressured by the idiot in credit ever again. Further down, I'm running a law firm and I have too much on my plate each day to worry about the morons in credits who think I am evil incarnate and who have know how this business is actually done. In your response you also talk about perhaps moving accounts, do you not? A Q Yes. Was this another instance where you were
threatening to move your account in order to keep Harris in line? A Q Yes. In addition to threatening to move your
accounts, did you make additional threats with regard to other individuals' accounts at Gibraltar bank? A Yes. I had made a number of introductions for
John Harris with another other potential account holders, and I threatened to pull all of those and to prevent any
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A Q further accounts from being opened. Q In response to your e-mail, you're more colorful
e-mail, Mr. Harris says in the second line, I'll clear it up at the office. wrong. Sounds like they got the numbers Take it
I'm pushing back on the other side.
easy, Brother. Do you see that? Yes. When you read that portions of Mr. Harris'
e-mail on September 8, were you somewhat reassured that the problem had been contained? A Harris. Yes. That's generally the way it worked with I would blow up.
He would tell me something.
He would handle it and tell me to calm down, and I would calm down. Q Even as late as when you had the meetings much
later on, which we'll talk about, with Mr. Sanders when all these issues were coming up with Ansari, even as of then he was telling you that know SAR had been filed, correct? A Q That's correct. In your response to Harris you said on the third
line down, They are benefiting whether they know it or not. Do you see that? First page, top, the most
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A Q recent e-mail, third line down.? A Q A Q A Yes. You see that? Yes. What did you mean by that? I meant based upon the things that we were doing
with the bank as far as moving money in and out of it. Q A They were making money off of it? Sure. They were making huge amounts of money
just in fees from us. Q A fees. MS. VAN VLIET: The gentlemen in the room have Okay. We were paying tens of thousands of dollars of
requested a short break. THE WITNESS: MS. VAN VLIET: Okay. Let's take 10.
I'm going to hand you Exhibit 96, which was
previously Bates stamped at Rothsteins 000830, but before I get into that -- is there anything significant that you want to tell me or change in terms of -MR. NURIK: He wanted to amend. I want to add
I don't want to amend it.
something.
When you were asking about flights that
Mr. Harris took with us, if I can remember who was there,
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what flights and with all the people. Q A Yes. There's one specific flight and it was sticking
out in my head and I now know what it was. Q A Okay. There was -- I had been invited by President
Bush to the White House. Q A This would be 43 W? W, correct. I was invited by him to attend his
receipt of an autographed basketball by Shaquille O'Neal after Miami Heat won the basketball championship. with me with were a number of people including John Harris. I took him with me as my guest. He does appear I stopped in Going
on the actual manifest flying with me.
Tallahassee to pick some people up and then I went to D.C. and Mr. Harris went with me and attended this event at the White House. Q A Q That would be February 27 of what year? 2007. 2007 was the presentation of the ball.
Turning to Exhibit 96, this is an e-mail that
you haven't had a chance to review, let me give you a moment. MS. EVANS: number? Q Rothsteins 000830. It would have been in the Can you give me the Bates stamp
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production that Mr. Scherer made on Monday. A Okay. (Whereupon, Plaintiff's Exhibit No. 96 was marked for identification.) BY MS. VAN VLIET: Q First of all, do you recall sending this e-mail
to Mr. Harris on October 10, 2006? A Q I do. In the e-mail you actually say: Hey, John, hey
Lisa, although she's not copied - please make sure you watch our accounts closely this week. A Q Yes. Do you have any recollection why you were Is this correct?
specifically concerned about Harris and Ellis keeping a watchful eye over the R.R.A. accounts that particular week? A accounts. Yes, because there was a lot going through the I was traveling out of town. And at this
early stage in the Ponzi scheme, much of the movement of money required my direct involvement. Irene hadn't
gotten it down to a science yet, neither had Miss Villegas. I needed to be there to monitor, assist with
the movement of dollars. Q In terms of the manner in which you moved money
into and out of the Gibraltar Bank accounts, was it the
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same kind of a computer situation that it was with T.D. Bank or did you have to go through additional steps? A Q No, there were a lot of additional steps. Tell me what additional steps you had to go
through in terms of your banking relationship with Gibraltar to effect the transfers that would help the Ponzi scheme? A With Gibraltar Bank, the only on-line banking I
recall us having was actually just being able to view what our accounts were doing and account information, the actual movement of money wasn't facilitated at this point in time by the computer. Every time we wanted to move money, wire money, move money from account to account, that type of stuff, it had to be done by e-mail from me e-mailing either John or Lisa directly, copying one or the other, depending who I was e-mailing or e-mailing Irene Stay and asking her to take care of it with the bank. But it had to be done
either by telephone call or mostly by e-mail. Q Did you ever discuss whether the practice of
instructing or verifying - or instructing, rather, wire transfers to be made just on an e-mail was in and of itself an accommodation that they were making, that the bank was making especially for you as opposed to having a written signed instruction?
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A Q A Q I was told it was accommodation for me. And who told you that? John Harris. Did he tell you why the bank was willing to make
that accommodation for you? A Q A Q A Q Because I was a large customer of the bank. I believe you referred to a specific kind of -Center of influence. That's it. Yes. You were a center of influence in -- was that
parlance that Gibraltar used to describe you? A Actually the first time I ever heard the term
was from John Harris and then later from Steve Hayworth, they called them COIs. Q A Q When were you given the badge of COI? I don't know when I got this badge. Did Harris tell you what it was about your
banking relationship with Gibraltar or Hayworth for that matter that caused them to believe you were a center of influence for the bank? A Q He never described it to me, no. Did he ever - he being Harris - ever discuss
with you in terms of the Broward branch's overall business, how much R.R.A. and Scott Rothstein personally
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were in terms of the bank's overall business? A Yeah, Mr. Harris and Hayworth told me that the
R.R.A. slash Rothstein accounts represented the largest customer base of all the accounts in the Fort Lauderdale area. Q Now, you described earlier a meeting that you
had with Mr. Harris at the Fort Lauderdale branch very early on into your relationship; is that right? A Q A Q Harris or Hayworth? I'm sorry, Hayworth. Yes. Did you have - putting aside the occurrence when
you actually became an investor of the bank? A Q Yes. Between that first meeting with Mr. Hayworth and
when you become and investor in the bank, did you have regular contact with Mr. Hayworth? A Q You would have to define regular for me. How often did you have contact with
Mr. Hayworth? A Pretty much any time he came up to the Fort
Lauderdale branch, John would let me know he was there. I'd drop over or he would come by the law firm. There
were several times when I saw him in the restaurants and the like, but it wasn't frequent, but then again, he
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wasn't up in Broward frequently. Q Even during the times when the overdraft
situations were transpiring, did you have occasion to -I mean, in this early stage, did you have occasion to see Mr. Hayworth and did he make the kinds of statements you've described about you being one of the largest customers at the bank? A Q Yes. Now, you testified before - I think both during
with Mr. Scherer and earlier today - about a letter that was sent to you mentioning check kiting; do you recall that? A Q Yes. I'm handing you Exhibit No. 97, which for the
record was previously identified GB12, it's Bates numbered GIB014122. copy. A Yes. (Whereupon, Plaintiff's Exhibit No. 97 was marked for identification.) BY MS. VAN VLIET: Q A Q A Have you had a chance to review this? I have. What is Exhibit 97? A letter that I received from John Harris. I apologize for the quality of the
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Q Is this the check kiting letter that you
referred to earlier? A Q correct? A Q It is. That's approximately a year and change after you It is. This letter is dated July 13, 2007; is this
began your relationship with Gibraltar Bank? A Q coming? A I believe that Mr. Harris told me that I was That's correct. Did you have any warning that this letter was
getting a letter from the bank, that he had been instructed to send me a letter but he never said anything about check kiting to me. Q In this letter, the bank or Mr. Harris indicates
that the bank has shown considerable flexibility in the management of the above-referenced accounts in the names of all the related parties referenced above; is this right? A Yes. That's the part that John Harris discussed
with me prior to my receiving the letter. Q And in the second paragraph of the letter they -
the bank through Mr. Harris gives you two - for lack of a better term - drop-dead dates; is that right?
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A Q A Q Yes. The first date is on July 30; is this correct? Where is this? Read the first sentence: Regarding your
account, effective July 16 for a two week period ending July 30? A Q Yes. The bank agrees to extend overdrafts in related
accounts to a maximum net aggregate amount of $100,000? A Q sentence: Yes. Thereafter, they go on to state in the next For an additional three week period ending
August 20, the maximum net aggregate overdraft will be reduced to $50,000? A Q I see that, that's correct. After that the bank will no longer allow
overdrafts that are not covered the same day by deposits or incoming wire transfers. Checks presented against any
overdrawn accounts exceeding the aggregate limits indicated herein may be returned at the bank's sole discretion; is this correct? A Q That's correct. So, was it your understanding that you could
present any further wire transfers or requests after August 20, 2007 on any overdrawn accounts?
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A Based upon this letter or based upon what
Mr. Harris told you? Q A Q Based on what Mr. Harris told you. I was able to continue to do anything I wanted. Did he tell you that this letter constituted an
empty threat by the bank? A Q A Q A Q Not like that, but -What did he say? I wrote him a very, very strong letter back. Let me show you Exhibit 98. Sure. Exhibit 98 was previously identified as GB20, Take a look at
Bates stamped Ellis 0027 through 0030.
this and tell me whether you recognize it. A I do. (Whereupon, Plaintiff's Exhibit No. 98 was marked for identification.) BY MS. VAN VLIET: Q Is this the letter that you were referring to
that you sent back to Mr. Harris? A Q Yes. As a matter of fact, you copied Miss Ellis as
well; is that right? A Q I did. This e-mail where you forward the letter is
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dated August 3, 2007; is that right? A Q That's correct. And the letter, the check kiting letter, which
is Exhibit 97, was dated July 13; is that right? A Q That's correct. In this e-mail letter to Mr. Harris you indicate
that he had hand delivered the check kiting letter to you; is that right? A Q That's correct. Did you have a discussion with him that day
about the contents of the letter? A Yes, he came over to my office and he handed me I was sitting at my desk. And he said, this I
the letter.
is this overdraft letter I was telling you about. said, okay.
And I threw it on my desk because we had
already discussed the fact this is what we were just talking about, or discussed the fact, to use your words, it was an empty threat. Basically, he just told me,
listen, go about doing your business, I've got you covered, you're good to go, you know, do the best you can covering overdrafts. Q That's it.
So, you knew ahead of the time that you actually
received the letter that was the check kiting letter that you were going to be fine after August 20 even if you did have overdrafts?
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A Sure, that's why I didn't read the letter. He I
said, this is this overdraft letter we talked about. said, okay and just took it and threw it on my desk. Q You didn't read the letter until immediately
prior to sending this e-mail, which is Exhibit 98? A From reading my e-mail it appears that I read it
on Friday, August 3. Q In the second to the last page of the exhibit,
but the last page of your letter - the last page of the exhibit just being your signature page. A Q All right. In the third full paragraph you say: I would
like to meet with you on Monday to arrange the orderly transfer of my accounts to another bank. that? A Q Monday? A Q I met with him before that actually. And this comment about the orderly transfer of I do. In fact, did you meet with him that following Do you see
your accounts to another bank, was that another one of the threats that you making to keep the bank in line? A Q Yes. And you said that you met with him before the
Monday; is that right?
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A Yes, he got in touch with me the second that he
received my e-mail. Q Did he get in touch with you on the telephone or
via e-mail? A It was both. And I don't remember -- I remember And I remember seeing him
talking to him on the phone. actually.
I don't know if he wrote back to me, probably But I was going fairly berserk
wrote back to me as well.
because the word check kiting was actually in the letter. Q It may seem obvious, but why did it bother you
that the word check kiting was in the letter? A Because check kiting is a crime. And so you
understand the history, this is actually - I don't want to say it's funny, but it's an interesting twist - the actual event, this particular check event -Q You're referring to the check kiting letter,
Exhibit 97? A Q A Yes. Okay. This particular check where it's says checks
against was actually instigated by a mistake that Debra made. We had been kiting checks all along, but the thing
they were writing the letter about actually was an honest mistake made by Debra where she had all my checks in the drawer, she grabbed a check from the wrong account and
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wrote the check. Because it was a silly check kiting.
It was within the same bank, which made no sense; account to account, from one overdrawn account to cover something in another account. That's what instigated the letter.
So, they were correct that I was check indicating, they missed all the other kites or ignored all the other kites and decided to talk about the one that was a mistake by Debra. Q You testified previously in response to your
August 3 e-mail to Mr. Harris, he contacted you very shortly thereafter; is this right? A Q Yes. Tell me about that conversations. What did he
say to you, what did you say to him? A He tried to tell me to relax, in my inimical What Hell
fashion, I told him not to F'n tell me to relax.
the hell is going on putting check kiting in there. would have been the calmest word I used in the conversation. Q I gather it was probably a colorful
conversation. A Very colorful conversation. And he told me he
would handle it. of that letter. e-mail to him.
I told him, listen, you need to get rid And then I followed that up with another I don't think it's in this e-mail. You
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should have -- I may be remembering this wrong, there's an e-mail after this. Q A letter. letter. There is. Where I'm telling him, you need to destroy that We talked about it, he's going to write me a new And I tell him, you need to get kid of any
mention of that letter - of the word check kiting from the letter. He was going to write me a new letter and
make sure this letter is not in my file. Q When Mr. Harris told you he would take care of
things, did he elaborate on what he was prepared to do to take care of this issue for you? A Yeah, he told me that he would in fact write me
a new letter and remove the word check kiting from it. Q A Q Did he make any mention -- Let me show you -Are you talking about with Coral Gables? Hold on. Let me show you 99 since you just Exhibit 99 was previously identified as
referred to it.
GB21, it is Bates stamps Ellis 0031. (Whereupon, Plaintiff's Exhibit No. 99 was marked for identification.) BY MS. VAN VLIET: Q Take a look at that and tell me whether or not
that's the subsequent e-mail that you're referring to that you sent to Mr. Harris about destroying the check
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A Q kiting letter? A Q Yes. Now, in this e-mail you sent an e-mail to Harris
and Ellis copying Irene Shannon and Debra Villegas on August 6, 2007, and say that, quote, if you could get me a corrected letter today as per our e-mail, it would be most helpful. Please make certain that the prior letter It is inaccurate and could
and all copies are destroyed.
be most damaging to me, my current business, and future business. Also please advise this the status of the line Thanks, Scott.
increased to four million.
Do you recall sending that e-mail? I do. Now, previous to sending the e-mail had you had
any discussions with Lisa Ellis with regard to the check kiting letter? A Q I don't recall one way or the other. And in your discussions with Mr. Harris he had -
you testified that he had indicated that he would get you another letter and that you had requested of him that all copies of the previous letter be destroyed. remember your testimony correctly? A Q You do, that's correct. What did he say with regard to your request that Do I
all copies of the prior letter be destroyed?
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A Q A Q Don't worry, it will be handled. Did he explain how he was going to handle it? No. Did you ask any questions about how he was going
to effect purging Gibraltar Bank's files of that letter accusing you of check kiting? A Q No. Did you ever follow-up with Harris to see if he
accomplished his mission of purging the file? A Q A After this, on -Yes, sir. After this letter, after the August 8 -- excuse
me, August 6, 2000 e-mail to him -- 2007 e-mail to him -Q A Yes, sir. We had multiple conversations about it so that I
could make sure it was taken care of and there should actually be another e-mail where he did in fact formally tell me he took care of it as opposed to all the times we met and he told me he took care of it. Q Tell me about the times that he met and told you
about taking care of it. A My recollection is every time that he saw me for
the next several days to a week, I would say, are you sure that letter is gone? You understand the magnitude
of what occurred when you put that into circulation.
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Yes, it's gone, it's taken care of. And that went on. Q Are you sure? Yes.
I asked him repeatedly.
At that time in point when this check kiting
letter is going on and Harris is making assurances to you, did Harris know you were conducting illegal activities or moving the proceeds of illegal activities through the Gibraltar Bank account? A Q A Q He did. How did he know that? We discussed it. He had seen it.
Now, did you ever ask Harris and Ellis to write
a memo to the file describing your firm's relationship or your firm's business to kind of paper the file at Gibraltar Bank? A If my recollection is serving me correctly, at
some point in time, John was discussing with me how to try to supplement the bank's general files with positive information. And I suggested if there was something he
could do tallying the firm or something, maybe put that into circulation; and my recollection is that he did. Q A Q Let me show you Exhibit 100. Thank you. Which was previously marked GB22, Bates stamped Have you ever seen a copy of this document
Ellis 0032. before?
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A I did. (Whereupon, Plaintiff's Exhibit No. 100 was marked for identification.) BY MS. VAN VLIET: Q A Q A prepared. Q By the way, there are two signatures at the Did you see it prior to October 31, 2009? I did. When did you see first see this document? My recollection is it was right after it was
bottom of the documents, do you recognize either or both of those signatures? A Q A Q A Q Yeah, I recognize both of them actually. Who is the signature on the left-hand side? Lisa Ellis. On the right-hand side? John Harris. There's some printing up in the middle of the
document in the second full paragraph; do you see that? A Q A Q A Q Yes. Do you recognize that printing? Yes. Whose is that? It looks like Lisa's handwriting. Now, this is a memo to the file to Gibraltar
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Bank's file signed by Lisa Ellis and John Harris, basically explaining R.R.A.; is that correct? A Q Yes. The information that's contained in this memo to
the file, do you know where they obtained the information to put in here? A Q From me. Was it true that at the time it was a -
referring to the second paragraph - there were over 30 attorneys in the high energy firm and with a wide variety of practice areas and it was not unusual for us to witness 20 to 30 wires incoming and outgoing as well as at least 200 to 300 checks posted to the account each month; was that true? A Q Yes. That volume of wires and checks, was that volume
of wires and checks attributable to legitimate proceeds of a legitimate law practice? A No. It's true about the amount of wires and
checks, but not attributable to legitimate business. Q In addition, the next paragraph talks about the
office, referring to R.R.A's. office has been visited numerous times by John Harris, Lisa Ellis, and other members of the staff. A I do. Do you see that?
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Q Did any other member of the Gibraltar staff as
of August 9, 2007, had any other member of the Gibraltar staff visited the office and toured it? A Other than Steve Hayworth, I don't recall any,
but it's possible as we were on multiple floors by then. It's possible that they came over, sure. Q Now, the last sentence provides Mr. Ellis --
Miss Ellis and Mr. Harris's opinion that because of the number of attorneys at the firm and the practice areas diversification as well as the high profile list of clients which R.R.A. serves, the activity into and out of R.R.A's account is reasonable and justified. that? A Q I do. Did you give any information to either Harris or Do you see
Ellis prior to August 9, 2007 to support their opinion that the velocity and volume of the wire transfers into and out of Gibraltar Bank accounts was either reasonable or justified? A No, I couldn't have. It didn't exist. And as
clarification for you -Q A Sure. In reading that last paragraph, when I was
discussing the preparation of this with John, you should see in an inquiry from BSA asking Harris and/or Ellis for
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information about our firm. Because I remember John, in reading this, when it says - this last sentence - the activity into and out of R.R.A's. account is reasonable and justified, that all along BSA had been asking him for information justifying the crazy activities in our accounts, that's one of the reasons this was prepared. Q Okay. Let's segway into this for a second. Did
Harris ever actually show you internal e-mails or Ellis -- Did anyone from Gibraltar Bank ever show you an internal Gibraltar Bank e-mail or communication or report questioning your activities in your account relationship there? A He did from time to time. As a matter of fact,
I recall one instance where he actually e-mailed me something he wasn't supposed to and there was e-mail cross traffic he showed me afterwards, that I don't think he was supposed to show me, where he was being criticized for having done this by Miss Ansari or Mr. Sanders. Q Did that occasion relate to this later meeting
further on down the road when things, as you described it earlier, started to blow up? A Q A Yes. Or hit the fan, was your actual terms. Yes, prior to that he had shown me e-mails, I
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just don't recall what they were. Q And was that in the nature of what you've
testified about earlier today in him giving you a heads-up on certain things? A Yes. When I was confused about what they were
looking for, I would go to his office, he would show me e-mails, on-line, on his e-mail and we would decide how best to handle it. Q I'm going to show you Exhibit 101 now, which is
Bates stamped Raffalski 0161. (Whereupon, Plaintiff's Exhibit No. 101 was marked for identification.) BY MS. VAN VLIET: Q Now, you're not copied on this e-mail. I want
to -- Do you see the -- Turning to the first e-mail in the chain. Emilio Lamazares is sending an e-mail to First of all,
Peter Raffalski dated September 11, 2007.
have you ever seen this e-mail chain before, before October 31, 2009? A Before October 31, 2009? No, I don't recall
seeing it. Q Did you ever have a meeting with a gentleman
named Emilio Lamazares regarding the fact that still in September of 2007, after this drop-dead date in the kite check letter, you were still back on the overdraft
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report? A I don't recall meeting with Mr. Lamazares. It
doesn't mean I didn't, I don't have an independent recollection of it. Q Now, at some point in time did you begin to -
I'm showing you 102 -- did you begin to try to make an arrangement where there could be a sweep of monies among the R.R.A. and your personal accounts on a daily basis to cover various overdrafts? A Q Yes. And Exhibit 103, which was previously identified
as GB23 Bates stamped Ellis 0033 through Ellis 0035, is an e-mail chain between you and Lisa Ellis and others; is this correct? A It is. (Whereupon, Plaintiff's Exhibit Nos. 102 and 103 were marked for identification.) BY MS. VAN VLIET: Q Was the bank able to accommodate your wish
immediately, that sweeps go between trust accounts or personal -- the firm's trust accounts, personal administrative accounts? A I don't think it was actually set up by the
bank, when you say like a mechanical fashion where Gables would have gotten involved. Basically what ended up
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of? A Q No. Did you express the fact that you didn't care happening, I was giving permission to Ellis and Harris to move whatever money they needed to move, ultimately. Q Did you care what account it went into and out
whether it went from trust to operating to Ellis, that you didn't care where the movement happened from? A Yes. I expressed that verbally and in writing. You should see a bunch of
I told them just take it.
e-mails where it just got to the point where I said just take it from wherever you can or wherever you need to and then just let me know. Q I believe you testified Monday in response to
Mr. Scherer's question that originally you or one of your subordinates, Miss Stay, Shannon, Villegas was instructing them move X from trust into operating or Y from operating to payroll, giving them specific instructions. A Q Do I remember your testimony correctly?
You do. At some point in time did that change and at
some point in time did that instructional process change? A Q A Yes. Tell me what the change was. It got to the point once they learned our system
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that the money had to come out of what was our Gibraltar -- excuse me, our R.R.A. Banyon account into operating and then from operating into whatever account they needed it, once they got that down and everybody was comfortable with everyone else, we would tell them to do what you need to do. Q Go ahead and move the money.
Now, the check kiting issue came up again in
terms of a conversation that you had with Mr. Harris; did it not in December of 2007? I ask you to take a look at
Exhibit 103 for the record, is Rothsteins 000833. (Whereupon, Plaintiff's Exhibit No. 103 was marked for identification.) BY MS. VAN VLIET: Q Let me clarify my question. I mean, the same
check kiting incident discussion came up again. A Q Okay. Now, in -- this e-mail is from you to Harris on Subject: Follow-up to today's
December 19, 2007.
meeting; is that right? A Q Yes. You say in the first line - you say in the
e-mail in the first sentence that you were distressed by the subject matter of the conversation that you had with Mr. Harris. matter? What were you -- what was the subject
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A Q Irregularities in our banking. And in the second full paragraph, pretty much at 75 million dollars,
the middle, you say, where is says: right below that.
The bank thought we might be kiting
checks but they found our banking activity to be suspicious. A Q Do you see this?
I do. Did Harris elaborate what it was that other
individuals at Gibraltar Bank found to be specifically suspicious about your banking activity? A I don't recall one way or the other. I simply
recall the meeting occurred and then afterwards George and I had a chat about the meeting. Q And what did you and Mr. Levin -- George being
Mr. Levin? A Q Yes. What did you and Mr. Levin discuss at that time
with regard to your previous conversation with Mr. Harris? A There was a problem with regard to what he
perceived - Mr. Levin perceived and Mr. Preve, that this would not be a good banking relationship for a business as they seem to be giving undue scrutiny to our accounts. Q By this time point in time you're involved full
force in the actual settlement --
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A Q A Q Yes. -- scheme; is that right? That's correct. And did you take any steps to reassure Mr. Levin
and Mr. Preve about the wisdom of sticking with Gibraltar Bank? A At this point in time, I mean, Preve and Levin -
more Preve than anything, he knows what's going on. Okay. You can look at the e-mail traffic and tell what's
going on. What I assured him was with the John Harris was the best guardian of our accounts at this stage and I wanted to leave the accounts there because he was the guy watching. Q Well, at that point in time - we're talking
about January 9, 2008 -- excuse me, December 19, 2007 that this conversation took place? A Q Right. At that point in time, other than getting
frequent inquires from the folks in Coral Gables about overdrafts and BSA things, other than getting inquiries, were you ever suffering any adverse consequence of what you were doing? A Q No, no. Turning to --
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A Just so you understand so you can understand the During this meeting they were
context of the letter.
talking to us about incorrect accounts descriptions, that was more the boiling point. The way he was addressing
the issues just seemed to me to be less than professional, it just was not the way I expected him to address it when I was in there with Preve and Levin. And I spoke to George, we eventually changed the account descriptions and the like. Q Is this the situation you were describing in
your testimony with Mr. Scherer on Monday when you took the R.R.A. Banyon account, which had originally been a trust account, I believe according to your testimony, and reduced it and took the fact that it was a trust account off? A Q It may have been around that point in time. Could you refresh my recollection on what it is
you testified why you did that, why you took it from being a trust account to a regular account? A There was so much strange activity with that
account because that was the main clearing account for all the money we were getting from Banyon 1030-32 account that we got rid of the whole trust designation. There
should be e-mails between Preve and I discussing that designation.
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Q Showing you Exhibit 104, which was previously
identified as GB32, Sanders 0282 and 0283. (Whereupon, Plaintiff's Exhibit No. 104 was marked for identification.) BY MS. VAN VLIET: Q Did Harris occasionally advise you of
confidential inquires that had been made by other banking institutions about your banking relationship with Gibraltar Bank? A Q Yes. And is the e-mail that is before you now, this
exhibit, is that an example of one of those inquires, Exhibit 104? A This actually looks like - if you look at it -
Miss Van Vliet, you'll see there's the e-mail at 12:28 p.m.; and you see me writing, it looks like I rewrote his e-mail and -Q A Can you tell me what's going on here? Yeah, it looks like one of the e-mails -- this
was at a point in time, if I'm not mistaken, this is at a point in time where John had gotten an inquiry from someone he knew at Bank United behind the scenes. Q A Right. I had some reason to believe that I had some
idea who might be trying to do the inquiry - I don't
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remember who, off the top of my head now, but it was someone that Levin and Preve and I were doing business with. Q In terms of a potential investor in one of the
settlements? A A potential investor and the fact that, if I'm
not mistaken, there was something very strange going on with people that we were -- potential investors or investors that were asking questions which triggered Bank United asking questions. But let's call it gray market
asking questions, behind the scenes, interbank questions that you're really not supposed to ask. Q A Okay. I told John, I said, I need a letter that we can
then send out to whichever investors it might be to let them know that we know that people are poking around inappropriately -Q A Q All right. -- at our accounts. What was the purpose of showing these potential
investors that you knew that they were poking around where they shouldn't be about your -A Q To scare them off. To scare them off as investors or scare them off
trying to find out what was really going on with your
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accounts? A Try to stop them from trying to find out what's
going on with our accounts. Q Did that ever happen with Harris apart from this
one instance that you just told me about with Bank United? A I recall him bringing a couple of instances
where people in the community and the like were asking questions, and he told me that he had handled it appropriately. Q You've testified previously about when he would
give you a heads-up on the fact that people BSA officers internally were asking questions or these other outside-the-bank people. Did he ever indicate to you that any other individuals outside of the bank, specifically any governmental authority, was asking questions about you -A Q A No. -- your relationship? No. (Whereupon, Trustee's Exhibit No. 105 was marked for identification.) BY MS. VAN VLIET: Q I'm handing you 104. This was previously It's an e-mail between
identified as GB 24, Ellis 0046.
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Lisa Ellis and you, copied to John Harris, March 24, 2008. Is this an example of when RRA had ceded discretion over where to move money back and forth from Villegas and Shannon to Ellis and Harris or Ellis specifically? A Q Yes. And specifically Ms. Ellis is now telling you in
her e-mail that, quote, Scott, I need to show your payroll account as being positive for at least one day, one entire day out of this quarter so it does not go on the 90 O/D list which goes in front of the powers that be. What did you understand her to be referring to when she mentioned the powers that be? A Well, we were about to go from a red flag list
to one of the red flag lists, and she needed to do a bunch of different banking machinations to get us where the accounts would avoid that list. Q Did you understand the 30 day list that you
previously testified about and the 90 day list to be different in some fashion? A Q A Yes. The flag was more red.
On which list? The 90 day list.
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Q Had they ever prior to this point in time
notified you, "they" being Mr. Harris or Ms. Ellis, that you were about to hit the 90 day list? A I don't recall them ever doing so, no. (Whereupon, Trustee's Exhibit No. 106 was marked for identification.) BY MS. VAN VLIET: Q as GB 32. I'm handing you 106, which was previously marked This is just a quick question. It's an e-mail
chain between you and Mr. Harris, copied to Rafael Hernandez, Irene Shannon, Lisa Ellis. And in it you
actually instruct Mr. Hernandez to make certain transfers noting that Banyon had sent you a big profit on a deal? A Q Yes. Did you regularly deal with Mr. Hernandez in
terms of making instructions? A I don't believe so. Ms. Shannon may have, but I
don't recall me do doing that. Q Do you recall why in this particular instance
you were the one giving the directions as opposed to previously Ms. Shannon or even more recently as we just saw with 104 having ceded authority and discretion over to Ms. Ellis and Harris? A Yes, because John Harris, as you can see in the
initial e-mail down at the bottom, Mr. Harris is telling
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me that Lisa is out. And when he's telling me that Lisa
is out and that we're waiting for instructions and he's reminding me there's a Department of Revenue check coming through, I wanted to leave nothing to chance. Q The largest check being a Department of Revenue
check from R.R.A.; correct? A Yes, um-hmm. That's correct.
(Whereupon, Trustee's Exhibit No. 107 was marked for identification.) BY MS. VAN VLIET: Q Now, let me show you Exhibit 107, which was
previously marked as GB 26, and it's Bates stamped GIB 029055 through 29069. A Q Yes. I don't need you to read every page of this
because we'll be here until 5:00 in the morning to do that. A Q Okay. But have you prior to October 31, 2009, when the
Ponzi scheme blew up, had you ever seen any documents like this from Gibraltar Private Bank & Trust? A John Harris had shown me - I'm not sure if it's
this document, but Mr. Harris had showed me similar documents. Q For the record, what is this document?
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A It's a BSA/AML evaluation where they're looking
at your account activity and giving you your risk rating. Q And how often would Harris share with you the
confidential BSA/AML reports regarding your account relationship at Gibraltar? A I can't pinpoint for you. I suspect it was
whenever he felt I needed to see it. Q Did he ever share with you the one that dealt
with -- this particular one that happens to deal with the R.R.A. Banyon account and the transfers into and out of Banyon 1030-32? A You know, I don't recall off the top of my head
because he had -- You have to remember something with regard to this. He had difficulty getting these. I
don't believe that he had access to this.
I believe that
he had to use one of his, let's call it friendly contacts down in Coral Gables to feed gray market documents to him, so he could get it to me. My understanding was that he was not entitled to see documents of this nature unless the bank specifically wanted to involve him in it. me to believe. Q Did he ever tell you who his source was in Coral At least that's what he led
Gables that was, as you said, giving him these gray market --
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A No. He was actually extremely protective
because at one point in time when we had gotten a heads-up on one of the BSA issues, I had offered to do something nice for whoever it was and I wanted to know who it was. I really wasn't interested in doing I was more interested in
something nice, you know. knowing who it was. the information.
But that was my methodology to get
And he said, no, no, no. you not get involved at this level. share them with you. every day.
This is just best that As I get them I'll
But it wasn't like he had them But when he did
It was very infrequently.
get it, he would share it with me. (Whereupon, Trustee's Exhibit No. 108 was marked for identification.) BY MS. VAN VLIET: Q Okay. Turning your attention to Exhibit 108,
which for the record, is GB 38, previously identified as GB 38. It is marked Sanders 0010 through 0016. Do you recall in connection -- Let me direct your attention to your previous testimony about having to change the R.R.A. Banyon account from a trust account to a regular account and change the description of the business. A Do you recall that testimony? I do.
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Q In connection with doing that, did you have to
send some letters to the bank to effect that change? A Yes. I had to send a letter and Mr. Levin had
to send a letter. Q Turning your attention to the page that's marked It's a letter on R.R.A.
Sanders 0014 of that exhibit. letterhead -A Q A Q A Q correct? A Q A It is. Yes. -- do you have that? I do.
First of all, is that your signature? It is. The letter is dated December 20, 2007; is that
And what was the purpose of this letter? It was to change the account information to
clarify it. Q In addition to changing it from a trust account,
do you also change the purpose of the account? A Q A We did. And why did you do that? Mr. Harris told us this is the way it should be
done to avoid scrutiny. Q The manner in which you have it changed to --
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A Q I'm reading from the second sentence of your December 20, 2007, letter. This account is a loan
repayment/investment/general business and operations account for confidential business which our law firm does with George Levin and his various businesses. Did I read that correctly? Yes. Previous to this change request had the account,
the Banyon, the R.R.A. Banyon account, been listed as an account that held client funds? A I don't remember what we listed it as. I'm not
even sure I was involved in listing it. Q Do me a favor, turn to the second page of the
exhibit, Sanders 2011, and look -- Turning your attention to the paragraph that begins "again"? A Q A Okay. Can you read that paragraph for me? Sure. Again, the bank needs clarification
regarding the business activities transacted through this account. The bank has a profile that describes the This
purpose for the account as "hold client funds." description is insufficient.
It does not explain why The source of future
they need to hold client funds.
deposits indicate "client and third-party trust funds." This explanation is too general and we need to identify
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the third persons. customer -Q A Q You don't have to read all that. Okay. They're talking about the account, the R.R.A. Therefore, kindly request from the
Banyon account; correct? A Q Yes. So, previous to your request of December 20,
2007, the description of the account had been to hold client funds; correct? A Q Yes. And you want to change it over to basically a
general business purpose account; albeit, for confidential business; is that correct? A Q A Yes. Okay. John Harris along with myself and Mr. Preve came
up with the language for our matching letters. Q In the last two pages of this exhibit,
Sanders 15 and 16, there's a letter that's attached from Mr. Rosenfeldt to Mr. Harris. A Q Yes. Were you aware of this letter dated February 7,
2008, being submitted to the bank prior to the point in time it was sent?
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it. Q What was the reason that Mr. Rosenfeldt was A Q A Yes, sure. Did you assist in drafting this letter? I sat with Stu and told him what needed to be in
writing this letter as opposed to you or somebody else at R.R.A.? A The BSA people had notified Mr. Harris that they
wanted to understand why I was their primary banking contact. They wanted to understand what our banking They wanted contact from the other 50
business was.
percent shareholder relative to our firm business and his understanding of it. me by Mr. Harris. I sat down with Mr. Rosenfeldt. we're getting a lot of BSA scrutiny. not a good thing. letter. I said, listen, That's the way it was explained to
This is obviously
I need you to write a detailed He had his secretary
I outlined it for him.
Atalitha (phonetic) write the letter and signed it and sent it over to the bank. Q In the last paragraph of the letter
Mr. Rosenfeldt -- in the last paragraph of Mr. Rosenfeldt's letter it says: However - third full
sentence - however, you must understand that the constant issues created by others at Gibraltar cannot continue if
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we are to continue our business relationship. growing by leaps and bounds. We are
We are involved in many
projects in addition to our law firm, and we need to be able to continue to count on you and Gibraltar so we can concentrate on what we do best. We are being courted by
a number of other banks, and up until now we have simply told them we are happy with Gibraltar and Credit and you and Lisa and your team. Did you have any input in that language that appears in Mr. Rosenfeldt's letter? A Q I did. Was this among another one of the threats that
you described earlier to pull your business from the bank if they didn't? A It was. It was actually a funny conversation.
It was funny at the time between Stu and I because I told him, listen, you need to threaten to pull our business from the bank. threat. And he said, well, we don't want to pull our business from the bank. And I said, I know we don't want to pull our business from the bank, but you need to threaten to pull the business from the bank so they leave us alone. Q Did Harris ever tell you what effect, if any, I said, you need to make it a very direct
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A that statement or the other threats were having on people in the main office? A Yes. He told me it was calming them down, which
is why I continued to do it. Q A Did he ever -It was calming everybody down, except it was not
calming down Mr. Sanders or Ms. Ansari. Q Did he specifically address what, if anything,
Ms. Ansari or Mr. Sanders had told you about their feelings about these threats with you? That was a bad question. Did you understand it?
Let me break Ansari and Sanders into two
different groups. Q A Okay. Ansari is strict BSA/AML. She wasn't the
brightest bulb on the tree, but she was a Pit Bull and she knew what she wanted. She smelled -- we didn't pass
the smell test with her, and she was going to get at the bottom of this no matter what. Chuck Sanders was more of a businessman. BSA oriented, compliance oriented. He was
But I had met with
him on several occasions and had multiple talks with him over the phone, and he was more on Hayworth's team than just on, if they're committing a crime we need to make sure that they go to jail right now this second. So, it
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was a different relationship. Q A Okay. Sanders would regularly calm down. I had
telephone conversations over the phone where Sanders actually told me that he calmed Ansari down, that she's just going sideways. And I remember him telling me that
she was on the wrong track once and he was trying to get her on the right track. Q was on? A Just that she was trying to justify Did he tell you what wrong track he thought she
decision-making process with things that he didn't feel were sufficient yet. Q He was just trying to calm me down.
Did he ever tell you, "he" being Mr. Sanders,
did Mr. Sanders during these many conversations you had with him ever tell you that Ansari was recommending any specific action be taken with regard to your accounts? A No. Harris told me that. Harris told me she
wanted to close the accounts. Q When did Harris tell you that she, Ms. Ansari,
wanted to close the accounts? A That happened multiple occasions. I don't
remember the exact dates. I want to make sure I've finished answering your other question, by the way.
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My threats, Ansari couldn't have given a crap about my threats. As far as I believe she was concerned
from speaking to Mr. Harris and Sanders she couldn't care less whether I pulled the accounts. Mr. Sanders, again, was more of a businessman. I think he took the threats more seriously and tried to massage the relationship while still getting at the information. So he was targeted in trying to get the
information, but also trying to keep the accounts. Q Did you ever from the first point in time when
you started getting questions from BSA/AML, Ansari in particular, to the last day, did you ever give her complete answers? A Q No. Putting aside truthful answers, did you ever
give truthful answers? A line. Some semi-truthful I suppose somewhere along the But, look, I was lying to her to protect the Ponzi
scheme and to protect the law firm. Q In addition to outright lying, were you also
trying to take any other tactics to forestall her or delay her in terms of her investigations? A Q Yeah. I came up with every excuse in the book.
You weren't dealing at this early stage of the
game, you weren't dealing directly with Ansari, were you?
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A involved. Q We'll get to that in a second, but when you Early on, no. I don't remember when she got
would come up with these excuses to delay Ms. Ansari, who would you relay those excuses to? A Again, you're going to have to look at the
e-mails and see who I was writing to, but generally John Harris to have him pass it on. Q Were you under the impression when you were
discussing it, particularly with Harris giving him these excuses, were you under the impression he believed your excuses? A Mr. Harris, no. No. There were times I told
him to tell her I was in court when I was standing there with him, unless he thought he was in court with me. Q You talked about the difference between a 30 day
report and a 90 day report in terms of the -- I'm handing you 109 which is Rothsteins 000835. You testified
earlier about the difference between a 30 day report and a 90 day report in terms of the urgency of the red flags being on those reports would generate. that testimony? A I do. (Whereupon, Trustee's Exhibit No. 109 was marked for identification.) Do you recall
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to? A Q The Office of Thrift Supervision. At the time that was the governmental entity A Q BY MS. VAN VLIET: Q This e-mail from you to Mr. Harris dated
December 26, 2008, responds to an earlier e-mail that day from Mr. Harris to you wherein -- and it's the third line from the bottom of the e-mail. Just want to get cleaned
up prior to year end and avoid any undue attention. Do you see that? I certainly do. Was there something even more significant about
being on a year-end report at the bank? A Q A There was. How do you know that? Because one of the conversations I had with
Mr. Harris either right around this time or a month or so prior was that when OTS came in and did their inspections, that they focused on the larger more complete reports first. So they would look at a year-end
report before they started looked at 90 day reports, 30 day reports. possible. Q When you refer to OTS, what are you referring You want to try to be on as few reports as
that was the regulator for Gibraltar Private Bank &
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Trust? A Q That's correct. Did Harris or any other individual at Gibraltar
Private Bank & Trust ever warn you or -- Excuse me. Did Harris or any other individual at Gibraltar Bank ever give you a heads-up, as you've described them, regarding any specific OTS inquires about your accounts? A Q A Q A Yes. Tell me first of all who gave you that heads up? Mr. Harris. And when did Mr. Harris do that? He would have done it before OTS came in for
inspections. Q Do you recall what was the nature of the
heads-up that he was giving you? A He just said, if you're going to clean up your OTS is
accounts, now is the time to clean things up. coming in. possible.
We want to have as few problems with them as
(Whereupon, Trustee Exhibit No. 110 was marked for identification.) BY MS. VAN VLIET: Q I'm going to hand you 110, which is previously You've testified previously about the
marked as GB 42.
kind of repetitive nature of Julia Ansari's questions to
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you and the stalling tactics that you would use to keep her at bay. A Q Yes. This e-mail chain, the last of which is an
e-mail from Julia Ansari to Chuck Harris and Sanders dated January 7, 2009 -A Q Yes. -- forwarding questions which began at GIB
003427 that were originally propounded in October of 2008. Were these written questions from Julia Ansari among the ones that were provided to you by Mr. Harris? A Q number -A Q Yes. -- did he provide those to you in October of Yes. If you look to GIB 003427, the Bates stamp
2008 when they were originally propounded to you? A Q A Q To the best of my recollection, yes. When he gave them to you what did you do? Nothing. Did you ask or direct him to do anything with
regard to using any of these kind of delaying tactics you previously testified about? A I don't have a specific recollection of it,
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A Q but -Q A I don't want you to assume. I'm not going to assume anything. I don't have I know
any specific recollection one way or another. that I basically did nothing. Q
Now, turn to the third page in on the exhibit
since the Bates stamp numbers are impossibly small. There's an e-mail from Julia Ansari to John Harris, Chuck Sanders, copied to Lisa Ellis. October 29, 2008, at 5:08 p.m.? A Q Yes. The second paragraph of that e-mail, the second Do you have that dated
to the last sentence says, Going forward, I strongly recommend that we document the activity by asking the purpose of all outgoing large wire transfers over $1 million dollars. You can explain that this is a BSA
requirement based on the financial third-party nature of the activity. Do you see that? I do. Is this what you were referring to the other day
in your testimony with Mr. Scherer, about a time when Gibraltar Bank imposed a requirement on you that you explain any wire transfer in excess of $1 million or more?
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A Q reaction? A Q A I had a conversation -At least colorful as -Yes. I had a conversation with Mr. Harris where Yes. When you got that request what was your
I told him, have you ever looked at our wire traffic? Have you ever seen me send multiple wires less than $100,000 - excuse me - less than $1 million? this is practically ever wire we send. I said, we're not doing this. I'll start out I said,
doing it, but you need to take care of this because this is not happening. wire we send. Q A Q A Q Are you familiar with the term structuring? And I did that very politely. Are you familiar with the term structuring? I am. Did Harris ever discuss structuring with you in I can't start explaining every single
terms of your wire transfers? A I remember him bringing up the word structuring
when he was having a BSA conversation with me, but I don't remember whether he said we were structuring or BSA people were saying it looks like we may be structuring or they're trying to make sure we're not structuring. I
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one. don't remember the context. Q A I'll get back to that. Okay. To make sure we're on the same page,
you're talking about structuring to avoid certain reporting things; right? Q Well, what is your understanding of the term
"structuring"? A That you're moving money around in a very
specific way and in very specific amounts to avoid reporting, like cash transaction reports, CTRs. Q Let me get a little predicate for this so we can
go through this rather large e-mail quickly. In terms of your -- Do you need a break? THE WITNESS: Yeah. Why don't we take a quick
I just need to stretch my legs a little bit. (Thereupon, a short break was taken.) (Whereupon, Trustee's Exhibit No. 111 was marked
for identification.) BY MS. VAN VLIET: Q Prior to the break we were beginning to kind of
focus you on some of the inquires you were getting from the BSA folks. I'm going to hand you what I've marked as Exhibit 111, which was previously marked as GB 43. bother to read through the whole thing yet. Don't
I want to
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focus your attention on one particular part of it. First, let me lay out a little bit of a predicate. the e-mail is dated January 13, 2009. So we're now about nine months and change before the Ponzi explodes; correct? A Q Yes. So at this point in time the settlement scheme And
is well underway; is that right? A Q That's correct. Explain to me very briefly what the scam was in
the settlement scheme. A We were selling pre-funded employment related
settlements. Q And there were fictitious plaintiffs and
fictitious defendants? A Q Completely. Was there ever any real settlement money from
these fictitious defendants? A Q No. In your pitch where was the fictitious
settlement money supposed to be held? A Q In our trust account. In this e-mail that Harris sends to Julia
Ansari, copied to Chuck Sanders, he sets forth a 4 page, 5 page, the fifth page just being the address, discussion
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that purports to include answers from you with regard to Ms. Ansari's questions; is that correct? A Q Yes. The first line of the e-mail says on 12/9/08
that he, Mr. Harris, spoke with Scott Rothstein and went over a list of questions I prepared an order to address issues presented in late October in an e-mail provided by BSA; correct? A Q Correct. Did you in fact have a meeting Mr. Harris on or
about December 9, 2008, when you answered Ansari's questions posed in that late October e-mail that we just saw? A My recollection is actually that we met on
several occasions to discuss this prior to him writing this letter. Q At that point in time do you know whether Ansari
and the bank was aware that you were involved in this sale of pre-funded settlements? A I'm pretty sure that they did know that by that
time, but I don't know for certain what they knew. Q Well, in fact, on one of those BSA reports that
we just reviewed, do you recall that it showed that some of the business that you were doing were pre-settlements and pre-judgment funding?
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A Q A I didn't particularly notice that, but I'm
certain that's right. Q Turn to the page 3 of 5 of Mr. Harris' e-mail.
The page numbers are up on the top right-hand side. A Q Right. Actually, I apologize. Go to the bottom of the
page before that leads into it. A Q Okay. In this paragraph he says: It is also my
understanding that settlement fundings are still being done. However, the above type of investment is far more Settlement funding a case has
prevalent at this time.
been settled for a dollar amount, but will not be paid out for a period of time. The funds are provided to the
underlying client immediately at a fee/interest rate, and the firm awaits receipt of the settlement funds, provides the equivalent of a high rate. Do you see that? I do. Now, is that part where it says, "the firm
awaits receipt of the settlement funds," is that an accurate description of what your pitch was to your investors? A Q No. Why did you revise the description of what your
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settlement pitch was in your description of the settlement funding to Ms. Ansari? A I don't know that I actually did that. Actually, I think John did that. John may I
have done that.
don't remember doing that. Q A Q Do you know why he did that? I actually do not. But, nonetheless, that's not an accurate
description of the pitch? A Q No. Well, as a practical matter, these fictitious
settlement funds weren't really in any Gibraltar trust account, were they? A No, no. Actually, it looks like an excellent
description by him because then people are not expecting to see in BSA huge sums of money sitting in accounts. it's a good job by Mr. Harris. Q And you didn't have anything to do with putting So
that one in; right? A Q I did not. Turning your attention to Exhibit 112 -- By the
way, you and I -- Mr. Lichtman has asked you this and Mr. Scherer, I didn't. While you and I knew each other
because we both practiced in the same town, you and I have never had an opportunity to discuss this case ever;
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have we? A Never, no. This is the first time we're
speaking since my fleeing to Morocco. (Whereupon, Trustee Exhibit No. 112 was marked for identification.) BY MS. VAN VLIET: Q This exhibit for the record is 112, it's Bates Turn to the
stamped Rothsteins 001095 through 1103. second page of the exhibit, if you will. A Q Yes.
This is an e-mail to Mr. Jose Suarez.
If you
look at the bottom of the first page, it indicates it's from Ms. Ansari and she indicates that she's directing him to perform an investigation of the Rothstein Rosenfeldt relationship; is that correct? A Q Yes. She specifically in the second paragraphs Do not send the questions to the officer Do you see that?
indicates:
before discussing with me. A Q I do.
Were you aware of this particular investigation
that was being done in March of 2009? A Q I was. How is it that you became aware of that
investigation?
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A Mr. Harris' mole on the inside of the BSA office
alerted him about what was going on and Mr. Harris told me. Q This is the same person you could never find out
who he was getting the reports from and information from inside BSA? A Yes, it was rather serious. It was more one of
the more serious things that came up because Mr. Harris was extremely agitated because he felt like he was now under the microscope himself personally because BSA wasn't trusting sending him the questions right off the bat. (Whereupon, Trustees Exhibit No. 113 was marked for identification.) BY MS. VAN VLIET: Q Now, you testified before looking at 113 - you
testified -- which for the record, is GB 003417. You testified before that Mr. Harris had mentioned to you in the context of a BSA conversation the concept of structure, do you recall that testimony? A Q I do. Look at this e-mail from Julia Ansari dated And tell
Tuesday, March 27, 2009 to Mauricio Carrillo.
me whether that refreshes your recollection about your discussion with Mr. Harris in that regard.
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A I do not recall seeing this e-mail until after
returning to the United States. Q My question though is, looking at last line do
you recall Harris -- does this refresh your recollection of whether Harris, the last line being: let me know if this is not complied with or if they are structuring the wires to avoid going over the one million threshold. Does this refresh your recollection about the context of the conversation you had with John Harris regarding structuring? A It refreshes it as to one of the conversations.
There were multiple conversations with Harris regarding structure. Q In addition to discussing structuring as it
pertained to the million dollar wire so you wouldn't have to comply with that internal Gibraltar request, what other kinds of discussions did you have with Harris about structuring? A I told him that I had no idea what he was My understanding of
talking about with structuring.
structuring dealt more with the cash transaction reports, with the $10,000 limits and the like. He addressed this
one million dollar issue with me and I said, I have to send out wires to all these people. worry about it. Just handle it. I'm not going to
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Q Okay. At some point in time did you become
aware that a - for lack of a better term - all hands-on deck of the upper management meeting at Gibraltar had been called to discuss your banking relationship? A Q Yes. I'm handing you -- I have handed you 114. How did you find out that there was this upper management meeting that had been called to discuss your banking relationship? A Mr. Harris' mole told him and he told me. (Whereupon, Trustee's Exhibit No. 114 was marked for identification.) BY MS. VAN VLIET: Q happened? A Q No, I believe it was after. Do you know whether Harris participated in that Did you know about the meeting before it
meeting via phone? A Q I don't know one way or the other. As a result of the meeting did you have
conversations with Harris in which there was a follow-up from the meeting? A Yes. (Whereupon, Trustee's Exhibit No. 115 was marked for identification.)
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BY MS. VAN VLIET: Q Handing you 115. 115 is Bates stamped GIB
003415 and 3416, it's an e-mail from Julia Ansari to John Harris, Steve Hayward, Chuck Sanders and Emilio Lamazares, dated March 30, 2009 at 6:49 p.m. that? A Q Yes. Did you ever receive a copy of this e-mail from Do you see
Ms. Ansari to Mr. Harris in its direct form? A Q A Q A Q Yes. How did you obtain that e-mail? Mr. Harris gave it to me. When did he give it to you? It would have been right around this time. Now, did he Harris have any discussion with you
on or about March 30 in the evening about what had transpired during that meeting in Hayworth's office? A I don't recall when the discussion was, but it
was pretty quick because it was one of those that this is the kind of thing I want to hear right away when stuff like this is going on. Q What did he tell you about what transpired in
the meeting? A He told me that Ansari was racing holy hell over
our accounts and over our relationship and she was trying
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to steam roll us. Q Did he mention anything in his conversation with
you about an individual named Laura Craker during that meeting? A You know, he told me that two people were giving
him a hard time other than Ansari. Q A Did he specify who? Yeah, there was a guy named Hewlict or Hullick Craker I understood was the CFO of the
and Ms. Craker. bank. Q A Q
All right.
Now, but --
But I don't know the time frame of that. When these other individuals were giving him a
hard time? A Q A That's correct. Okay. When you say John you mean Mr. Hughlich? I
Is this his name Jonathan something or other?
thought it was, Hughlich? Q All right. Let me show you 116, now 116 was
previously marked as GB 150, Sanders 0057 to 59. A All right. (Whereupon, Trustee's Exhibit No. 116 was marked for identification.) BY MS. VAN VLIET: Q The second e-mail in this -- well, the first
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e-mail or the latest in time e-mail is an e-mail from Harris dated March 31, the day of after this meeting, to Sanders, Ansari, and Emilio Lamazares copied to Steve Hayworth; correct? A Q Up at the top, yes. And Mr. Harris is forwarding your response to
certain questions; correct? A Q Yes. Now, you received the original e-mail in this
chain from John Harris on March 31, at 11:38 in the -well, it was sent at 11:38 in the morning; correct? A That's not the first time I received it, that's
when he sent it to me in a format that I was going to add to it. Q You had already had a discussion with him about
the contents of the questions as you just testified? A Q That's correct. Is this March 31, 2009, 11:38 a.m. the first
time he actually e-mails you the question? A other. I don't have a recollection one way or the Likely, there's little time between the 30th and
this time for him to send it to me. Q A Q And then you responded at 12:41:38; correct? Yes. In between the point in time where you received
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Harris's e-mail at 11:38 and you responded at 12:44, did you send an e-mail to Frank Preve? A I did. (Whereupon, Trustee's Exhibit No. 117 was marked for identification.) BY MS. VAN VLIET: Q Exhibit 117 is Bates stamped FP 112310-0160031,
it is an e-mail from you to Frank Preve dated March 31, 2009 at 12:44 p.m.; correct? A I'm sorry. You have to repeat the question. I
have to apologize. Q I can't repeat this Bates number, but the e-mail So, again, the day after
is from you to Preve March 31.
the meeting at 12:44 p.m.; correct? A Q A Yes. What do you say to Mr. Preve in this e-mail? I'm telling him in the never-ending banking saga
we need to speak privately about Gibraltar, hate banks, love you, hoooodsie. Q A This is -I was called by Mr. Levin and Mr. Preve, Robin
Hood, R.H. Hood as it appears in the e-mails. Q And did you in fact speak to Mr. Preve about
Gibraltar privately? A Yes.
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Q Did you speak to him at 12:44 before you made
your response to John Harris at 12:48 as indicated in Exhibit 116? A I think the time is off because I'm writing my
response, according to this, if the clock on the computer is right at 12:41 then I write -Q A Excuse me, 12:41. I write to Preve at 12:44 that can be simply a I would have spoke to Mr. Preve before I
timing issue. wrote this. Q A
Before you wrote your response, are you sure? No, I'm a not a hundred percent sure, it just
seems like something I would have done. Q A Do you know -Makes no difference one way or the other. I had
the conversation with him. Q A What did you discuss with Preve? That Gibraltar seemed to me to be getting very
close, that Mr. Harris had come to me and told me that Ms. Ansari was trying to steamroll us and they were going to be BSA/AML issues and we really need to make sure all our ducks are in the row with regard to information and we need to provide information to the bank consistently and together and avoid scrutiny. Q When you say that you told Preve that the bank
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was getting very close, what did you mean? A Close to either shutting down our accounts or
figuring out what we were doing. Q And if the bank had shut down your accounts even
at that point in time March 31, 2009, what effect, if any, would that have had on the conduct of your Ponzi scheme? A Q A It would have exploded. Why? Because in order to affect an orderly transfer
of that type of investment business when you're dealing with that level of money, you need to be the one initiating movement of the funds so you have time to explain to your investors what's going on, you need all the time to find a bank that's going to be cooperative with you. It's not like just moving a personal checking You're
account that you used to buy groceries with.
talking about moving a massive banking relationship and it would have -- it likely would have been number one, all over town, that Gibraltar had kicked us out because information like that flows like wild fire from tellers and the like. Q In addition to Gibraltar Bank you had banking
relationships through which you were operating your Ponzi at other banks; correct?
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A I understand that, but you're dealing with a
local bank that is deeply intertwined with the Fort Lauderdale community. You know, that relationship was
very important to us for a whole host of reasons. Q As a result of the e-mail traffic and the
meeting that you found out that it occurred with Hayworth on the 30th, did you -- did Harris tell you that he needed to have a meeting with you with other banking representatives from Gibraltar Bank? A Q A I don't know, does it say that in here? No, I'm asking you a question. Did he tell me that he needs to meet with me
with other banking representatives? Q A Yeah. Sometime around this point in time I wanted to
meet with other banking representatives. Q A Why? Because I wanted to have a face-to-face with As a
Sanders and Ansari or Sanders at the very least.
matter of fact, I think it was just Sanders because I really didn't want to meet with Ansari. Q A pitbull? Why didn't you want to meet with Ansari? What is it, raw meat does want to meet with a Is that an accurate description? That's -- I
mean seriously, she was a problem.
I considered myself
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an excellent salesman, too good for my own good. And I
was confident that in meeting face-to-face with whoever I needed to meet with that I could massage the situation back to quiet. Q Did you think you could massage Julia Ansari
back to quiet? A No. (Whereupon, Trustee's Exhibit No. 118 was marked for identification.) BY MS. VAN VLIET: Q Turning your attention to 118. I mean out of
the all the Gibraltar Bank people, was she the only one that was asking the right questions? A Pretty much, yeah. I mean, I think Chuck was
assisting, I think he had a pretty good idea where to go but again he was more towards the business banking side of BSA. If you divided BSA in half you have the strictly
BSA/AML and we have the, we're BSA/AML, but we're also interested in maintaining relationships. Q As a matter of fact, let me have that exhibit --
Let me skip to 119 first and ask you to just very quickly take a look at that one. Take a look at that quickly, it's an e-mail from Hayworth to Chuck Sanders - well, forwarding in the e-mail earlier from Sanders to Hayworth, Ansari dated March 31, previously identified as
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GB 49 Confidential Sanders 0060. A Okay. (Whereupon, Trustee's Exhibit No. 119 was marked for identification.) BY MS. VAN VLIET: Q Did he ever, did he, Mr. Sanders, in the bottom John
of his e-mail, in Mr. Sanders' e-mail he says:
feels -- "Steve, John Harris called and asked that I meet with Scott on Monday, apparently he wants to talk to someone to better understand why he has to provide all this info. I would like to meet with him and put his
mind at rest and if he does leave then at least this meeting will be a step to insure he departs on good terms. John feels he could still be influential in the
Broward market so we need to try to preserve our reputation. Your thoughts are appreciated. Chuck."
Mr. Hayworth's response to Mr. Sanders, "Completely agree with the strategy, do it." A Q Is this correct?
Yes, that's correct. This mindset that Mr. Sanders displays in the
e-mail, is that what you're talking about when you say he's more business oriented? A Q A Yes. Okay. He was concerned about my influence in the
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community, so yes. Q Turning your attention back to 118, the one I
just provided you before we got off on that little detour. A Q All right. Did you ever receive a copy, the original copy, GB
of 118 which for the record, was previously marked as 8, GIB 012430. A I'm certain that I did. I don't have any I know Mr. Harris told
independent recollection of it.
me he delivered the corrected letter to us but I don't have any independent recollection of it. Q Take a look at this letter, does this letter
dated April 24, 2007 -A Q 2009. Excuse me 2009. The previous letter was 2007,
this is -A Q A Q Just give me a second to read it. Yeah, sure, go ahead and read it. Okay. I remember this now.
The reason it may look familiar to you is that
he actually uses the same first opening line. A That's what threw me off. I thought it was just
a corrected version of the letter but as I recall they were coming back around at us to try to stop us from over
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drawing the accounts again. Q And he again used the language bank in 2007
about the bank having extended you considerable flexibility; right? A Q Yes. That's where the similarities in the letter end;
is that correct? A ends. Q Now, in the second paragraph of the letter, you That's correct, that is where the similarity
were informed that as - the second sentence, "Please be informed that as a the general policy effective May 4, 2009, the bank will no longer pay checks against over drawn funds." A Q I do. Did you discuss that May 4 deadline that's set Do you see that?
forth in Exhibit 118 with Mr. Harris after you received this letter? A Q Yes. Did you discuss it with anybody else at
Gibraltar Bank after you received this letter? A I don't recall discussing it with anyone other I may have but I don't remember.
than Mr. Harris. Q
Tell me what the conversation is as you recall
between you and Mr. Harris about the May 4 deadline?
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A I told Mr. Harris that our business is too big,
that I can't stop what's already going on and that he is just going to have to handle it. Q Now, at this point, you know, you're months away
from the Ponzi scheme imploding; correct? A Q Yes. Can you describe for me and tell me what was
going on in terms of the velocity and the turning of the money from the various investors that you were trying to deal with? A Yes. We are constantly trying to keep up with Trying to get
paying the investors in a timely fashion.
new money in, pay the old investors; we are literally moving tens of millions of dollars through all through 22 accounts at T.D. and all our accounts at Gibraltar back and forth every day and it was beyond what I would describe as frantic. Q At some point in time, before the thing crashes
in October of 2009, do you, Scott Rothstein, begin to get the feeling that this is a boat you're not going to be able to bail out? A Q Yes. What point in time did you begin to figure out
for yourself that you were not going to be able to keep these balls up in the air?
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A It was in 2009 sometime that it was -- I think I
had convinced myself prior that I would still be able to bail it out. It was sometime towards the beginning to
middle of 2009 I knew we were sinking. Q At the time you received this letter from
Gibraltar Bank on April in or about April 24, 2009 did you already have that feeling? A I had the feeling but remember, around that time
I'm also still bringing in some potentially very large new investors. We've got the whole Von Allmen, BIF, Szafranski is still bringing
Clockwork thing going on. in
Sochet and some other big guys. So, there was still the potential that we could
continue to float the entire thing.
So, it was, yes, an
overwhelming feeling of it was going to explode but the light at the end of the tunnel, I couldn't tell whether it was a train or actually light. Q In reality did the banks, did Gibraltar Bank
stop honoring your transfers and checks after May 4, 2009 on accounts that were overdrawn? A No, I recall them jerking me around with a
couple of checks, returning a couple of checks, but no, overall, no. They did not. Overall they did not. We
just kept doing what we were doing. Q Had they done so at that time, would you have
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been able to continue the life of your Ponzi scheme beyond May 4, 2009? A No, no, no. If you bounce one check going out
to an investor or at that time the money going from Gibraltar, on anything going from Gibraltar is going to Commerce to be funneled into another account, that would have been irreparable harm to the Ponzi scheme at that point in time it would have exploded. Q At some point in time was money going between
Gibraltar, Commerce then coming back or vice versa any kind of like a circular pattern? A Q A Q Yes. Why was that? It was a form of the check kiting. Now, at some point in time you testified that
you actually had a meeting with Sanders, correct? A Q A I did. Okay. I had more meetings with him, but yes, I
remember a meeting pertaining to these documents, yes. Q At the point in time where things are starting
to unravel at the bank and you're getting more questions, did Sanders -- did you and Sanders meet up in Fort Lauderdale? A Yes.
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Q I'm going to hand you what I've marked as 120,
which was previously marked has GB 62. (Whereupon, Trustee's Exhibit No. 120 was marked for identification.) BY MS. VAN VLIET: Q Do you remember testifying about, earlier today,
about Sanders -- excuse me, Harris getting in trouble for forwarding you some questions in a letter -A Q A Q Yes. -- from Ansari ahead of time? Yes. Is this the request for additional information? If you
If you know, I don't know whether it is or not.
know, is this the thing that he forwarded to you that he got in trouble over? A I don't know. The only way to tell is to see -
there's actually an e-mail from either Ansari or Chuck slapping John's hand for that particular e-mail, for sending me that information, so I don't know if this is the one or not. Q Let me show you 121, open the previous Exhibit Are they
122, look at the actual document that's there. the same draft letters?
And 122 is previously marked GB 63, and is a letter from --
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THE WITNESS: MS. VAN VLIET: wrong. THE WITNESS: I just wanted to make sure. This is, I have 120 and 121. I'm sorry. You're right, I'm
Yes, they look identical to me except for my handwriting out to the side in 121. (Whereupon, Trustee's Exhibit No. 121 was marked for identification.) BY MS. VAN VLIET: Q There's a received on 9/25/09 notation on the Whose are those? Is that
top of 121 and some initials. your initials? A Q
No, I don't know whose that is. But, all the printed notation throughout 121, is
that your handwriting? A Q It is. When you prepared those notations on this letter
answering questions, was Harris - were Harris and Sanders with you? A Q A Q When I wrote these? Yes. No. Did you write those notations in advance of your
meeting with Harris and Sanders to prepare for it? A I don't remember whether I wrote -- No, no, no,
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it wasn't to prepare for the meeting because I wrote these answers and then had this delivered to Ms. Ansari and/or Mr. Sanders. Q A Q Now -And they flipped out. When you say they flipped out, how do you know
they flipped out? A Q A Mr. Harris told me. What did he say with regard to that? He told me that Ms. Ansari was, according to his
mole, was recommending that they shut my account that she found my answers to be absurd, the phrase 'the straw that broke the camel's back' kept coming up. And I told
Mr. Harris I didn't give a shit, just fix it. Q Did you ever hear from anyone else inside the
bank that Ansari was recommending that your accounts be closed? A Q correct? A Q Yes. At some point in time were you approached by No. Now, this all transpired in or about July 2009,
Steve Hayworth to make an investment in the bank? A I was, I was approached by Mr. Hayworth and
Mr. Harris.
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Escoto. A Q A When did those approaches first take place? There should be an e-mail to me indicating, when
right around the time that the discussions got serious, so it would have been a month or two prior to that e-mail, I don't want to guess as to the date. Q Would it have been about the time that they sent
you the non-binding commitment letter? A Yes, it would have been shortly before that
because I forwarded that non-binding commitment letter over to Boden. Q Showing you 122, which for the record, was
previously identified as GB 64 with no Bates stamp. (Whereupon, Trustee's Exhibit No. 122 was marked for identification.) BY MS. VAN VLIET: Q Now, with regard to this exhibit, forget the top So focus on the
two e-mails, those are from our staff. third e-mail on the page. A Q Yes.
Just so you know we can hear you talking with
Mr. Nurik, if it's confidential you might want to hit the mic. The third e-mail on the page is from Patti Do you know who she is? I think she's one of Hayworth's assistants, if I
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recall correctly. Q A Had you ever met her? I may have, I don't remember. I went to a bunch
of Gibraltar private parties so she might have been at one. Q It's dated August 25th, 2009, it's to you and it
attaches the non-binding commitment letter for your signature; is this correct? A Q A Q That's correct. Do you recall receiving this e-mail? I do. And approximately how long prior to your receipt
of the non-binding commitment letter had you begun discussions with Mr. Harris and Mr. Hayworth with regard to investing in the buy-back of Gibraltar Bank? A It wouldn't have -- it would have been about a
month or so before. Q How were you first approached or who first
approached you rather, regarding investing in a buy-back of the bank? A Q A Mr. Harris. What did he say? He told me that he talked to Steve Hayworth,
that the bank - based upon information that Mr. Harris was reading, I suspected he received from Mr. Hayworth,
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him? was that the bank was prepared to buy-back the bank itself from Boston Private people to Mr. Hayworth and the other investors that sold the bank. That they were
looking for investors, they were short on cash. Q Did Harris tell you where he had gotten that
information? A He told me he got the information from
Mr. Hayworth and also from reading, I guess, interbank information. Q time? A He told me, I asked him what he thought about I told him, you know, I'm really looking It didn't all come from Hayworth.
What else did he tell you, if anything, at that
the investment.
at investments where I can be the primary shareholder, that was my history in investing. He told me this is
critical to my relationship with Gibraltar because they don't investigate shareholders. Q What was your reaction when you heard that, or
that statement? A Q Who do I send the check to. Did you ever have any direct conversations with
Hayworth regarding potential investment in the bank? A Q I did. Did you have more than one conversation with
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check in? A No, I actually didn't send -- I was gathering up A Q I did. When was your first conversation with him and
tell me what he said to you and what you said to him. A The conversation was shortly after my
conversation with Harris and I told him, why don't you let me get on board, I don't want to miss the boat, it's critical. He put Mr. Hayworth in touch with me, I don't Our first
remember whether I called him or he called me.
chat about it was over the phone and we had a very specific conversation. I said look, I said, I'm being I'm
investigated, you're asking me to invest money.
prepared to invest five million dollars in the bank but, I'm getting my chops broken on a daily basis now by Julia Ansari. Q A What did he say? He said that once you invest, he said it is not
in our interest at all to investigate shareholders of our bank. Q Did you have any additional conversations with
either Mr. Hayworth or -- strike that. Did you immediately send the five million dollar
the funds from the Ponzi scheme in order to make the investment.
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Q A Were you a little short on cash at the time? Yes, when you're in a Ponzi scheme you're always
short on cash. Q A And what were you -What happened was we were in the process, when I David was doing the documents
say we, David Boden and I.
and doing the stall for me and I was soliciting the appropriate investors, making the appropriate adjustments and payments, and the like to make sure I had the money. And I lucked out, I got the money together literally on the last day at the last minute. Q Let's back up for a second. You testified a
moment ago that in your initial conversation with Mr. Hayworth regarding the investment you had mentioned to him that you were, that Ansari was busting your chops I think that was the term you used, and I can't remember what else? A That's not what I would have said, I would have
said breaking my F-in, yes. Q Did Mr. Hayworth make any specific comment in
response back to that, other than that it wasn't in his best interest to have a further investigation? A Q No. Did you have any subsequent conversations
between that conversation with Mr. Hayworth and your
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actual, the day this you actually sent the money, with anyone at the bank with regard to the investment? A Q With John Harris. What were your conversations with Mr. Harris
throughout that time period regarding the investment? A From time to time we would talk about the fact
we were looking forward to getting all this craziness with BSA behind us. Q Did you have of any conversation -- you
testified a moment ago that you actually got the money together on the last day for the investment, correct? A Literally. This I remember where I was standing
when I was on my cell phone talking to Mr. Hayworth telling him I have already wired the money. Q Tell me about that conversation, when it
happened, where it happened, what you said to him and what he said to you. A Hayworth had either left a voicemail or e-mail
or combination saying that everything was already closed out, he was going to have to go to some secondary level or something of investors, other people that wanted to get in. I was frantic. I called Irene, said make sure
that wire got out.
I called Boden, make sure the wire
got out to Gibraltar, I don't want to lose this. I contacted Mr. Hayworth. I was standing
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actually in that locked garage that we had in the Bank of America building getting ready to go where the private elevator was, I was on the phone with Mr. Hayworth and I said, the money has already been sent and he said great. Q Did you have of any comments or any interaction
with Hayworth after that regarding the investment? A Q I may have, I don't really recall. And the investment took place on, I believe, you
sent the check on September 19th of 2009; is that correct? A Or the wire? Should have been a wire, if that's what the wire I don't have an independent recollection
documents show.
of when I sent it other than to tell you is was the last day. Q All right. You got the non-binding commitment
letter on August 25th, 2009, after the point in time you send that wire transfer, whenever it was, from that point in time until the time the Ponzi scheme crashes on October 31, 2009, did you have anymore issues from Julia Ansari? A Q A I don't recall any. Okay. I may have but I don't have an independent
recollection of it. Q Some of these things were covered before, I just
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want to follow-up on them briefly. In terms of your cash
management if you will, of your accounts -A Q Yes. -- at Gibraltar Bank. Was there any hesitation
on your part either when you were directing where the wires would go back and forth from, for example, using funds, legitimate client funds in trust accounts and switching them around to cover overdrafts or did you care at all where the monies came from to rotate around the accounts? A At different points in time the answer would be Early on in the Ponzi scheme and towards the
different.
middle of it, yes, I tried to avoid - not that I didn't do it, but I tried to avoid taking money from client trust accounts. I had no real interest in taking money
from clients when I had first really embarked on the Ponzi scheme as shown by the fact that I really thought I had a small amount of investors. I had specifically
targeted extremely wealthy individuals who could withstand a loss if in fact the Ponzi exploded. I had no intention of taking client funds. did eventually take client funds. I
And as we're heading
into early '09 and mid '09, I'd take the money from anywhere in the firm I could get ahold of it, and my staff was instructed to take it from wherever they could
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get it and the people at Gibraltar were instructed to take it from anywhere they could get it. Q Were the people at Gibraltar instructed that
among those potential forces at the end, as you've described it, were lawyer trust accounts? A Yeah, they knew they were trust accounts. The
thing about Gibraltar was our accounts, they were labeled. I would say Lisa, move money from here to real
estate trust account, move money from here from personal injury trust account, move from this trust account, yes. MS. VAN VLIET: May I have a moment? We may
actually end 10 minutes early. MR. LICHTMAN: While Theresa is looking at her
notes, I've been advised by the Marshal, starting tomorrow there will be no phones allowed in the courtroom period. BY MS. VAN VLIET: Q Did the folks at Gibraltar Bank Private Wealth So, act accordingly, I guess.
and Management or anybody at Gibraltar Bank ever recommend an investor to you? A recall. I don't recall, they may have but I don't I don't recall if they did I don't recall
accepting one from them. Q A How about the folks at Boston Private Financial? I don't recall.
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Q Okay. Now, I just want to make sure I
understand your testimony about this telephone conversation at the end with Steve Hayworth when you're in the locked parking garage. A Q Okay. Did you specifically mention - during the course
of that conversation, did you specifically mention anything about Julia Ansari to Hayworth, during that conversation? A During that conversation, no, because the last
conversation is the conversation where I'm telling him the wire is coming. Q Was there anything in that last conversation
regarding BSA and any of the investigations or anything else? A No, because in that last conversation it had
already been told to me by Harris and by Mr. Hayworth that once I had invested I would no longer have these issues. I was just simply clarifying to Hayworth the
money was already on its way and wired. I was locking in my position and locking in my protection. MS. VAN VLIET: no further questions. THE DEPONENT: Thank you. Thank you very much, sir. I have
(The proceedings were adjourned at 4:55 p.m.)
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______________________________________ Terri L. Wright Dated this 14th day of December, 2011. I, TERRI L. WRIGHT, Notary Public in and for the State of Florida at Large, certify that I was authorized to and did stenographically report the foregoing proceedings and that the transcript is a true and complete record of my stenographic notes. STATE OF FLORIDA ) C E R T I F I C A T E
COUNTY OF BROWARD )
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Page 615

DAY 3 - AFTERNOON SESSION DEPOSITION OF SCOTT W. ROTHSTEIN

DATE TAKEN: TIME: PLACE:

Examination of the witness taken before:

United Reporting, Inc. (954) 525- 2221

United Reporting, Inc. (954) 525- 2221

United Reporting, Inc. (954) 525- 2221

United Reporting, Inc. (954) 525- 2221

United Reporting, Inc. (954) 525- 2221

United Reporting, Inc. (954) 525- 2221

728 730 734 739 740 742 742 744

746 750 751

757 758 760

United Reporting, Inc. (954) 525- 2221

Mr. Genovese and Mr. Suarez represent the Trustee.

United Reporting, Inc. (954) 525- 2221

some of Mr. Lichtman's questions on Monday that - of

United Reporting, Inc. (954) 525- 2221

described, again without detailing specifically any

United Reporting, Inc. (954) 525- 2221

morning, and again I'm trying to do some follow-ups on

United Reporting, Inc. (954) 525- 2221

extremely quick movement of huge sums of money.

Did any of your investors ever discuss the fact

recall anyone saying you can keep the money in like a

United Reporting, Inc. (954) 525- 2221

the Ponzi scheme.

Two, changing a banking institution

United Reporting, Inc. (954) 525- 2221

rock star lifestyle. A In its simplest terms it is the ability to do

United Reporting, Inc. (954) 525- 2221

the ability to actually call them. picture taken with them.

It was the ability, for

United Reporting, Inc. (954) 525- 2221

United Reporting, Inc. (954) 525- 2221

where prominent politicians were going to be there.

of the rock star lifestyle your access to back stage

United Reporting, Inc. (954) 525- 2221

people they like.

like spending time with.

United Reporting, Inc. (954) 525- 2221

shoes, food, the finest restaurants.

expensive pens. Q Those types of things, the more material

United Reporting, Inc. (954) 525- 2221

United Reporting, Inc. (954) 525- 2221

101 for me. A Q Yes.

-- and getting them into the investment, did you

United Reporting, Inc. (954) 525- 2221

And again, the Pearson you're referring to is

United Reporting, Inc. (954) 525- 2221

conversations all the time with Stu.

I mean, Stu would

United Reporting, Inc. (954) 525- 2221

I mean, I dress kind of like that Willie You know, on

Don't say anything, Bill Scherer.

As a matter of fact, did you ever give him a

occasion, I gave them all personal shopping experiences.

United Reporting, Inc. (954) 525- 2221

discussion with other people and initially and actually,

United Reporting, Inc. (954) 525- 2221

wanted to give the money.

I'm going to try to

United Reporting, Inc. (954) 525- 2221

United Reporting, Inc. (954) 525- 2221