2011-12-21 Rothstein Scott PM

Page 2201 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 8 - AFTERNOON SESSION DEPOSITION OF SCOTT W. ROTHSTEIN
DATE TAKEN: TIME: PLACE:
Wednesday, December 21, 2011 1:00 p.m. - 5:00 p.m. James Lawrence King Federal Justice Building 99 Northeast Fourth Street Miami, Florida 33124
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
Page 2202 1 2 3 4 5 Plaintiffs, 6 vs. 7 SCOTT W. ROTHSTEIN, et al, 8 9 10 11 12 13 14 15 16 17 Case No: 18 19 20 Case No: 21 22 23 Case No: 24 25 Case No: 11-02604-RBR STETTIN VS. MAPLE LEAF DRILLING PARTNERS, ET AL 11-02605-RBR STETTIN VS. DON KING PRODUCTIONS Case No: 11-02473-RBR STETTIN VS. REGENT CAPITAL PARTNERS, LLC ET AL 11-02368-RBR STETTIN VS. TD BANK, N.A. Case No: 10-03802-RBR STETTIN VS. CENTURION STRUCTURED GROWTH LLC, ET AL. 11-02288-RBR STETTIN VS. FIDELITY CHARITABLE GIFT FUND AMY ADAMS, ET AL, PLAINTIFF VS. SCOTT ROTHSTEIN, ET AL. CASE NO: 11-CV-61688-JIC/LSS Case No: 10-03767 RBR STETTIN VS. GIBRALTAR PRIVATE BANK & TRUST CO. UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA FORT LAUDERDALE DIVISION Defendants. ________________________________/ IN THE CIRCUIT COURT OF THE 17TH JUDICIAL CIRCUIT IN AND FOR BROWARD COUNTY, FLORIDA CASE NO: EDWARD J. MORSE, CAROL A. MORSE, and MORSE OPERATIONS, INC., 10-2411 CACE (19)
Page 2203 1 2 3 4 5 6 7 8 9 APPEARANCES FOR THE TRUSTEE: 10 11 12 13 14 15 APPEARANCES FOR RAZORBACK: 16 17 18 19 20 21 22 23 24 25 United Reporting, Inc. (954) 525- 2221 CONRAD & SCHERER, LLP 633 South Federal Highway Eighth Floor Fort Lauderdale, Florida 33302 BY: WILLIAM R. SCHERER, ESQUIRE ERIC RAYMAN, ESQUIRE IVAN J. KOPAS, ESQUIRE and KOZYAK, TROPIN & THROCKMORTON, P.A. 2525 Ponce de Leon Boulevard Ninth Floor Coral Gables, Florida 33134 BY: HARLEY S. TROPIN, ESQUIRE GENOVESE, JOBLOVE & BATTISTA, P.A. 100 S.E. 2nd Street Suite 4400 Miami, Florida 33131 By: JOHN. H. GENOVESE, ESQUIRE DAVID C. CIMO, ESQUIRE THERESA M.B. VAN VLIET, ESQUIRE JESUS SUAREZ, ESQUIRE ROBERT F. ELGIDELY, ESQUIRE BERGER SINGERMAN 350 East Las Olas Boulevard Suite 1000 Fort Lauderdale, Florida 33301 BY: CHARLES H. LICHTMAN,, ESQUIRE APPEARANCES FOR SCOTT ROTHSTEIN: LAW OFFICE OF MARC S. NURIK 1 East Broward Boulevard Suite 700 Fort Lauderdale, Florida 33301 BY: MARC S. NURIK, ESQUIRE APPEARANCES FOR THE CHAPTER 11 TRUSTEE, HERBERT STETTIN:
Page 2204 1 2 3 4 5 6 7 8 APPEARANCES FOR MURRAY HUBERFELD AND DAVID BODNER 9 HARVEY WERBLOWSKY, ESQUIRE 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 United Reporting, Inc. (954) 525- 2221 CLAUSIN MILLER One Chase Manhattan Plaza 39th Floor New York, New York 10005 BY: SCOTT L. SCHMOOKLER, ESQUIRE APPEARANCES FOR THE COMMITTEE OF UNSECURED CREDITORS: AKERMAN, SENTERFITT One Southeast Third Avenue 25th Floor Miami, Florida 33131-1704 BY: MICHAEL GOLDBERG, ESQUIRE APPEARANCES FOR T.D. BANK: GREENBERG TRAURIG, P.A. 401 E Las Olas Blvd Ste 2000 Fort Lauderdale, Florida 33301 BY: MARK P. SCHNAPP, ESQUIRE DONNA EVANS, ESQUIRE APPEARANCES FOR RLI ZURICH INSURANCE COMPANY, COLUMBIA INC. & ZURICH INSURANCE: CURTIS, MALLET-PREVOST, COLD & MOSLE LLP 101 Park Avenue New York, NY 10178-0061 BY: ELIOT LAUER, ESQUIRE GABRIEL HERTZBERG, ESQUIRE GOLDSTEIN, TANEN & TRENCH, P.A. One Biscayne Tower, Suite 3700 Two South Biscayne Boulevard Miami, Florida 33131 By: SUSAN E. TRENCH, ESQUIRE APPEARANCES FOR PLATINUM PARTNERS VALUE ARBITRAGE CENTURION STRUCTURED GROWTH, LLC:
Page 2205 1 2 3 4
APPEARANCES FOR THE MORSES: APPEARANCES FOR FEDERAL INSURANCE COMPANY: 1430 South Dixie Highway Suite 204 Coral Gables, Florida 331463127 BY: ALEX HOFRICHTER, ESQUIRE
5 6 7 8 9 10 11
APPEARANCES FOR EMESS CAPITAL, LLC: LAW OFFICES OF ROBERTA DEUTSCH 2499 Glades Road Suite 110 Boca Raton, Florida 33431 BY: ROBERTA M. DEUTSCH, ESQUIRE TRIPP SCOTT, P.A. 110 S.E. Sixth Street,15th Floor Fort Lauderdale, Florida 33301 By: JOHN M. MULLIN, ESQUIRE GEORGE WALKER, ESQUIRE
12 13 14 15 16 17 18
APPEARANCES FOR ROSANNE CARETSKY: KLUGER KAPLAN SILVERMAN, KATZEN & LEVINE, PL 201 S Biscayne Blvd Fl 17 Miami, Florida 331314 BY: CASEY H. CUSICK, ESQUIRE APPEARANCES FOR ST. PAUL FIRE & MARINE: MILLS PASKERT DIVERS P.A. 100 N Tampa St Ste 2010 Tampa, Florida 336025145 BY: JOHN A. BLACK, JR., ESQUIRE
19 20 21 22
APPEARANCES FOR FEPICT, MS GROUP: BILLING COCHRAN LYLES 515 E Las Olas Blvd Floor Six Fort Lauderdale, Florida 333012296 BY: DANIEL S. GELBER, ESQUIRE
23 24 25
NYSTROM, BECKMAN & PARIS One Marina Park Dr., 15th Flr. Boston, MA 02210 BY: JACK SIEGAL, ESQUIRE
Page 2206 1 2 3 4 5 APPEARANCES FOR GIBRALTAR: 6 7 8 9 APPEARANCES FOR FRANK PREVE: 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 United Reporting, Inc. (954) 525- 2221 PODHURST ORSEK 25 W Flagler St Ste 800 Miami, Florida 331301720 BY: RAMON A. RASCO, ESQUIRE APPEARANCES FOR THE US GOVERNMENT: 500 East Broward Boulevard, Suite 700 Fort Lauderdale, Florida 33394 BY: JEFFREY KAPLAN, ESQUIRE APPEARANCES FOR FRANK SPINOSA: SCHLESINGER AND COTZEN, P.L. 799 Brickell Plz Ste 700 Miami, Florida 33131 BY: MICHAEL J. SCHLESINGER, ESQUIRE and MICHAEL COTZEN, ESQUIRE and SAMUEL J. RABIN, ESQUIRE 799 Brickell Plaza Suite 606 Miami, Florida 33131 STEARNS WEAVER MILLER, et al. 150 W Flagler St Ste 2200 Miami, Florida 331301545 BY: MARY BARZEE-FLORES, ESQ. MATTHEW DATES, ESQUIRE APPEARANCES FOR MICHAEL SZANFRANKSI: LYDECKER, DIAZ 1221 Brickell Avenue Floor 19 Miami, Florida 33131 BY: CHRISTOPHER G. BERGA, ESQUIRE MIGUEL J. CHAMORRO, ESQUIRE
Page 2207 1 EXAMINATION INDEX 2 PAGE 3 4 5 6 7 THE FUNDS' 8 259 9 260 10 261 11 261 12 13 14 15 263 16 264 17 265 18 266 19 267 20 268 21 269 22 270 23 271 24 25 United Reporting, Inc. (954) 525- 2221 E-mail dated 12/25/08 2336 FP112310-0162455/1, E-mail dated 4/14/09 2322 PCL59129, E-mail dated 4/13/09 2320 FP112310-0086198, E-mail dated 1/22/08 2308 Analysis dated 3/10/11 2292 Elite Delivery Systems Website Printout 2286 PRODA 048648, E-mail dated 10/23/09 2265 PRODA 045671, Letter dated 10/15/09 2264 PRODA 046167, E-mail dated10/16/2009 2263 262 262 Confidential Settlement Agreement and General Release PRODA 021218, Letter dated 10/14/09 Confidential Settlement Agreement and General Release 2261 2262 2262 FP112310-0196804/1, E-mail dated 10/29/09 2261 FP112310-0196804/1, E-mail dated 10/29/09 2342 Affidavit of Richard S. Fechter 2236 SCOTT W. ROTHSTEIN DIRECT BY MR. LAUER 2208
EXHIBIT INDEX PAGE
Page 2208 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MR. LAUER: Q A Q Good afternoon, Mr. Rothstein. Good afternoon, sir. You've been asked a number of questions over DIRECT EXAMINATION
the past several days about your relationship with George Levin. A Q A Q Levins? A Q We did. Can you describe the nature of both in terms of Did you ever meet Mrs. Levin?
I did. Could you state her name for the record? Gayla Sue Levin. And did you and your wife socialize with the
frequency and the nature of the socializations? A For one series of months I remember we used to
go to breakfast together and we used to meet for breakfast, I don't remember whether it was Saturday morning or Sunday morning, we used to meet at a deli out towards their home. And there were a lot of occasions
that we'd get to spent time together at political functions. George and I would do the politics thing and
Sue and Kim would do whatever the women were doing at those functions to avoid being bored out of their minds, I suspect. United Reporting, Inc. (954) 525- 2221
Page 2209 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 They were at my wedding. There were some other George and
family functions that they attended with us. I would go to lunch frequently.
I don't know if Kim and That's about the
Sue met outside but they did talk. extent of it. Q
Did you have a business relationship with
Mrs. Levin? A Well, in the beginning of this it was my
understanding from speaking to Mr. Preve and to Mr. Levin that Mrs. Levin was one of the investors when I was just doing deals with George, the initial set of deals. Q A This is 2007? 2006, 2007, it's the pre -- look at the
earliest deals, it's when we were only using Gibraltar Bank and we were not using what I referred to over the last bunch of days as complete deal packets. Q This is before any contact to the hedge funds
that I represent? A Any contact that I had with the hedge funds. I
can't tell you when they began contact with them. Q Following that did you ever have any direct
business dealings with Mrs. Levin, just you and Mrs. Levin? A No. United Reporting, Inc. (954) 525- 2221
Page 2210 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A Q A Q Q Did she have any interaction with these
fictitious settlements? A Q going on? A I'd be guessing. MR. LICHTMAN: I have no idea. Have you ever been to their home? Yes. Has she been to yours? Yes. This morning you were shown what was marked, I Objection to form. No. Did she have any idea that there was a fraud
believe as Plaintiff's -- sorry, as Exhibit 250, which apparently the TD Bank people took with them, but if you recall -A Q Better watch those bankers. Exactly. They are e-mails of June 24, June 25,
2009; do you recall that? A If you could refresh my recollection as to the I saw
contents I'd probably be able to help you better. a lot of pieces of paper over the last seven days. Q
I don't have the e-mails in front of me but the
context of the questions and the context in which I want to ask you some questions was in June of 2009, this is United Reporting, Inc. (954) 525- 2221
Page 2211 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 several months after Banyon missed its payment to the hedge funds in April, you described one or more conversations that you had with Mark Nordlicht and the need to deal with the situation. A I recall the two e-mails on the same page. I
recall the contents of them.
They weren't to me or from
me but they certainly involve me so I understand, yes. Q Putting the e-mails aside -MR. LICHTMAN: something. Let me see if I can clarify
Did you say TD Bank took exhibits that were I want to make sure if they
of record with them?
did then I want to call them -MS. TRENCH: that took them. MR. LAUER: To be witness-like, I have no The Court I think it was the Court Reporter
personal knowledge of what TD did.
Reporter believes that they may have taken them. MR. LICHTMAN: MS. TRENCH: That TD did? No, no, the Court Reporter said she
thought the morning Reporter took them. MR. LICHTMAN: Sorry to interrupt your flow. If
TD has them I want to e-mail them and say get them back. MR. LAUER: BY MR. LAUER: United Reporting, Inc. (954) 525- 2221 No personal knowledge.
Page 2212 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q So putting aside the e-mail, but in context, you
testified that in your discussion with Mark, you said what you needed And I guess what the Banyon entities needed was a good credit rating? A Q Yes. And that if prospective new investors were to
reach out and contact Mark or his colleagues, you're expecting and asking that they would give a good credit rating to these prospective new investors? A Q Correct. Now I recognize that you're sort of summarizing
conversations that took place perhaps over hours and events that took place over days or weeks and you're putting into capsular form, so you said that basically Mark and Jack, quote, agreed to lie to new investors. And what I'd like to ask you is in terms of your recollection of what they may actually have said, did Mark actually say, quote, unquote, Scott, I, Mark Nordlicht, will lie to prospective new investors? Or is
it more likely that he said something in substance, if investors contact us we will not give a bad rating or we will not give a negative rating? A I can give you a pretty close approximation of
what the conversation actually was with Mark. Q Just on that context. United Reporting, Inc. (954) 525- 2221
Page 2213 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A On that topic, I made it clear to Mark that if
and when the investors called him if they found out that we were in default, if they found out that any payments were late or that we were not making payments, if they found out that they had any questions about our investment strategy, that we would never be able to get any new investors and they would not be able to get their money back. And that it was critical that he give
us a good credit rating, that we paid on time, and that he believed in the investment strategy. Q Okay. And that's what you said to Mark and you
impressed upon Mark -A Q Correct. -- according to your recollection, the
importance of this to you? A Q Yes. I'm asking you for your best recollection of
Mark's response. A Q Sure. And I'm suggesting, if you will, that he didn't
quote say, I will lie to people; is it more likely that he said in substance, if new investors contact us we won't give it a bad rating or we will give it a good rating or something like that? MR. CIMO: Objection to the form.
Page 2214 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A he said. Q A That's what I'm asking you for. He said to me, You don't need to worry about me, I can tell you pretty closely near exactly what
something to the effect of - I think I mentioned this the other day - that it wasn't his first time at the dance. I mentioned last time he didn't say it wasn't my first time at the rodeo, because he wasn't a rodeo guy. he said is this wasn't my first time at the dance. What It
was at that time that he went on to explain to me about the Optionable litigation and also that his father had had some serious criminal legal issues. And that I could
count on him to do the right thing because they wanted their money out. MR. CIMO: Objection withdrawn.
By the way, did Mark tell you that the
securities class action in Optionable was dismissed with prejudice? A I don't think it had been at the time we were
discussing it, but I don't think we were actually discussing whether the litigation was successful or not. My best recollection is he was trying to impart to me that he was not new to this, that he understood how business needed to be done in order to get things accomplished. United Reporting, Inc. (954) 525- 2221
Page 2215 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q But then in terms of his actual words, he said
what you've described, which is, he understands what needs to get done and he communicated to you, your best recollection is that if prospective investors or new investors would contact him he would not give it a bad rating? A Q A Q No, he said he would do the right thing. He would do the right thing? Yes. Okay. Now, I think we've been through this
before but it seems every day or two you get asked the same questions. A Q A Yes. Okay. Groundhog Day is coming to mind. MR. NURIK: That's a preliminary statement to
an objection or an invitation to an objection. Q I take it though that you have no personal
knowledge, that is, you were not present at an occasion if or when a prospective investor would have contacted or spoken to Mark? A Q I was not present. You were not on the phone if a prospective
investor would have a conversation with Mark or anyone else of the Funds following the April missed payment? United Reporting, Inc. (954) 525- 2221
Page 2216 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A sides. That's correct. I only got the opposite
I got the beginning when I asked and when Frank I
asked for them to lie for us and then the result. don't have the middle. Q A Q I wasn't there.
You only have what people told you? For that particular issue, yes. And again, as you've acknowledged, just as you
were telling people often what they wanted to hear although what you were telling them was not accurate, you recognize now that some people on some occasions may have told you things that they wanted you to hear that may not have been accurate? MR. CIMO: Objection to the form.
That certainly seems to be the case, yes, sir. Okay. I covered this with you a bit on Tuesday Have you come
but you've had the time to reflect.
across any e-mail in the trove of e-mails or text messages or transcribed voicemails in which someone from one of the hedge funds after the April missed payment told you, in words or substance, that they had specifically met with a particular -- an identified new investor? A The only person that told me that they took
care of that for us was Jack Simony. Q And did Jack identify for you a human being United Reporting, Inc. (954) 525- 2221
Page 2217 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that he said he had spoken to about the investments after April 13, 2009? A No. There was a specific conversation that I
had with Jack that was unfortunately fairly heated while all this was going on, while the Discala, Von Allmen, Balamore, Bekkedam people were doing their due diligence, and Jack simply told me that it had been handled and that I needed to calm down. Q Other than A.J. Discala who had one meeting
with Simony, can you point to an e-mail from any other human being who was connected to an investor after April 13, 2009 who said in the e-mail that he spoke to Mark Nordlicht? A As of today I have not seen any such e-mail. I
still have thousands to read but as of today, no. Q Okay. I don't know how it works in terms of
your homework availability but if you do find any such e-mail will you let us know? A I will. I'll notify my lawyer and he can take
appropriate steps. Q Thank you. You have testified a bit about the
lock letter, right? A Q right? United Reporting, Inc. (954) 525- 2221 Yes, sir. And my clients never had any lock letters,
Page 2218 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 yes. Q That's because you have a working -- a fair A I know at the end, towards the end meaning from
June, July '09 on, Mr. Preve was asking me for lock letters for other accounts. I don't recall whether it
was for any of the New York hedge funds. Q No one has shown you any lock letters, whether
drafted by you, drafted by Spinosa or anyone else, purporting to be a lock letter for the purpose of showing the hedge funds; is that correct? A Q A Q That's correct. All right. That's correct. In fact you've commented that when you think
about it a lock letter is a silly document, right? A From my perspective it was extremely silly,
working knowledge of how a bank operates in 2009? A At that time I did learn that it was a near
impossibility to accomplish what they were trying to accomplish with the type of accounts that we had. Q And in part that's because, notwithstanding a
letter along the lines of the so-called lock letter that some of Mr. Scherer's clients obtained, you or anyone else could have wired all the money out of the account in accordance with the bank/client relationship? United Reporting, Inc. (954) 525- 2221
Page 2219 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A That and the fact that we were locking accounts
that had no money in them. Q A They didn't know that? You're talking about the perception of the
person receiving the lock letter then? Q A Q A Q A Q Correct. Yes. So -The person -Here you have a lock letter, correct? Yes. With respect to what Mr. Scherer's clients were
told are law firm escrow accounts, correct? A Q Correct. And Mr. Scherer's clients are told that
Szafranski and/or others are verifying that the money is going into the account, right? A Q Correct. All right. And the money then from their
perspective would be in a law firm escrow account, right? A Q Correct. So, I take it the purpose of the lock letter
was to alleviate some concern on the recipient's part that perhaps you or someone else within your law firm United Reporting, Inc. (954) 525- 2221
Page 2220 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 would invade the escrow? A sir. Q You described A.J. Discala's group as pretty It was to prevent theft from - yes, sir, yes,
sophisticated, right? A sir. Q You met a number of them, you met Podaras you They appeared to be sophisticated to me, yes,
met Ritchie, right? A Ritchie. Q A Q A Yes, I met A.J., Ritchie Thane - I mean Thane I met Mr. Legamaro, I met Dean Kretschmar. You met Von Allmen? I met Von Allmen. You thought he was pretty sophisticated, right? Yes, from my perspective he was very
sophisticated. Q right? A Q He asked a lot of questions, yes. And at any point in time did any one of these You described him as a voracious interrogator,
sophisticated people suggest to you, Scott, this lock letter stuff is baloney? A No, sir. What they did was they asked that I
have someone from the bank confirm to them how it works. Which to me, my perception was when they were United Reporting, Inc. (954) 525- 2221
Page 2221 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A A Q asking me, and this is only my opinion and why I reacted the way I did, that they had a concern over the process, which is why I had Mr. Spinosa on board to explain the lock procedure which in fact of course was fake, there was no real lock procedure. Q Correct. But it was apparent to you at the
time that Mr. Von Allmen understood how banks work, he was a sophisticated private equity guy, wasn't he? MR. SCHERER: Objection, form.
I believed he was. He made hundreds and hundreds and millions of
dollars in complicated M&A transactions, correct? MR. SCHERER: Objection, form.
I don't know what the actual transactions were
but to me he was a sophisticated investor, and he asked what I deemed based upon all the questions I've been asked by all the investors, sophisticated questions, including to speak to someone at TD Bank about the lock letters. Q Correct. And if they're asking for the lock
letters because they have a concern that lawyers might invade the escrow account, that is steal money from the escrow account, did it occur to you at the time that they might also have a concern that one of these modestly paid bankers had been corrupted by you? United Reporting, Inc. (954) 525- 2221
Page 2222 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A A A Q I never thought about that. Now that you think about it, and I'd like you
to go back to your interaction and your conversations with them, is it possible that when they were asking for a lock letter and asking to talk to Spinosa that they realized that the lock letter is ridiculous and the purpose of the lock letter is, if and when this thing blows up they will have a claim against the bank? MR. SCHERER: Objection to form. But I can't
I never felt that way, no, sir.
tell you what they were specifically thinking, I would be speculating. Q And it's not an illogical thought, is it? MR. SCHERER: Objection to form.
Again, I can't say - from my perspective, I can
tell what you my perspective was, but I can't tell you what was logical and illogical to them. They were -- I
was unfortunately, from my perspective, very good at selling this product and that ended up hurting a lot of innocent people. I caught them in the moment. So I
can't tell you with any particularity or specificity what these people's actual thought processes were. He seemed to me out of all the people, he seemed to be one of the people that was asking the right questions, asking the right follow-up. United Reporting, Inc. (954) 525- 2221 What he was
Page 2223 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A A Q were you? A Q No, sir. And yet you figured out that the lock letter actually thinking you to have talk to him. Q And yet they are relying on a lock letter --
let me withdraw that. You were not a banking lawyer, were you? No, sir. You were not an expert in banking regulations,
was an illusion? MR. SCHERER: Objection, form.
Here's what happened, the investor whether it
was Mel or the Coquina group, Mel Lifshitz or the Coquina Group, one of them as I testified earlier, said we want to get something protecting where this money is disbursed from. I don't know who came up with the name
lock letter, but basically locking the account to where the money could go and who could touch it. To me when they first said it to me that sounded perfectly reasonable to me, that sounded like the bank should be able to do that. When I called
Mr. Preve and asked him about that, he told me he never heard of any such thing unless you use a very specialized account that basically has no mechanism for sending money anywhere. It's a very specific type of
Page 2224 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A instrument they use to remove the money from the account, et cetera. sense. Q Let me turn the tables. If you -- if Doug Von Then I knew that it didn't make any
Allmen and his group had come to you in a different context to ask you to rely on their sophistication, to rely on their sophistication to invest with them or to do a transaction involving banking, and you knew that they had allowed this lock letter to be created and were reporting, at least from your perspective to be relying on the lock letter, would that have been a little bit of an alert to you that maybe these guys aren't so sophisticated? MR. SCHERER: Objection, form.
Asking me that question really isn't -- it's --
I'm not the right person to ask because at this point in time I consider myself probably to be the best person to do due diligence on any kind of investment. Had Mr. Von Allmen, prior to me engaging in the crimes that I engaged in, had someone sophisticated like Mr. Von Allmen come to me with a similar thing and any type of investment and we discussed this lock letter, I believe I would have done what he did and asked to speak - because I wouldn't have understood what that meant - and I would have asked to speak to the banker, United Reporting, Inc. (954) 525- 2221
Page 2225 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A which is what that whole group did and I would have wanted to be in touch with someone like they were, in this case Mr. Spinosa who could explain how the lock procedure worked. But you're asking me to -- it's such wild speculation, especially given the extent of my knowledge now, it's a little difficult. Q That's fair. But given your expertise, if you
were in that situation and you had 60 or 70 million dollars of your family money invested, would you have relied exclusively on what some low level banker in Florida tells you or would you have at least called a money center bank or an expert in banking or an expert in banking law to make sure that you had the kind of, quote, lock letter that really works? MR. SCHERER: Objection to form.
It would depend upon what I thought of You need to understand, he carried the
Mr. Spinosa.
title of regional vice-president of one of the largest banks in the country. So, while I might not have relied
on what a teller or a simple bank officer told me, again, you're asking me to speculate. But speculating,
I may very well have relied on Mr. Spinosa depending upon how he came across to me, which I always thought was very professional, but however he came across to United Reporting, Inc. (954) 525- 2221
Page 2226 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 this person. And then if I was dissatisfied with that explanation I would, if I were investing that kind of money, likely contacted some other type of expert in the field to get additional clarification. Q that? A We created -- one of the companies that we had You mentioned RRA Sports Marketing, what was
purchased was a company from Brian Levy which was a sports agency representing mostly football players and some other athletes. Q A Q A Who is we? Me and Stuart Rosenfeldt. Individually or through the law firm? Everything was paid for by the law firm. It
actually was paid for by the people investing in the fraudulent schemes, but the money flows through the law firm out to these other places. Q A Who had the title ownership of this entity? In almost all those businesses I recall it
being exclusively titled in my name or a corporation which I controlled. Q A What was the business? So that was - we established RRA Goal Line with And then as an offshoot to that,
Brian Levy running it.
Page 2227 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 he introduced us to some people who were doing sports marketing, photographs, memorabilia, that type of stuff, and we created RRA Sports Marketing Management, something along those lines. I don't recall the exact
name, and its business was to supplement what RRA Goal Line was doing and to also mesh in with what Kip Hunter Epstein of Kip Hunter Marketing was doing on the other side. Q You've been asked some questions about these
various Banyon entities and Banyon accounts, do you remember that? A Q A Q I do. And these were George Levin's accounts? Yes, sir. And the Banyon entities were entities that
George set up and created, you didn't set up the Banyon entities? A Q entities? A Q A Q A No, sir. You weren't controlling the Banyon entities? No, sir. George was? George and Frank and then there was the one United Reporting, Inc. (954) 525- 2221 No, sir. Your law firm didn't set up the Banyon
Page 2228 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Banyon entity that was Banyon Income Fund and I understood that some other people had some input into that like Mr. Bekkedam. Q Basically that was on the investor side, it
wasn't part of you or your law firm? A Q Correct. You testified -- You were asked on several
occasions how much money you estimated that you personally spent on what you have informally described as the so-called rock star lifestyle. And at one point,
Page 40 in the transcript, you said you thought you might have spent 200 million dollars, at pages 633 to 34 you estimated 100 to 150 million dollars. And I
recognize that you weren't using Excel to keep track of all your expenses. A That would have been a nice piece of evidence.
No, I was not. Q But is it fair to say that over the course of
the peak years of your Ponzi scheme, let's say 2008, 2009, that you spent on personal things for yourself, that is Scott Rothstein and people you wanted to spend money on, somewhere between 100 and 200 million dollars? A Q Yes. And without trying to create an exhaustive
list, can you sort of give us, I am not asking you to United Reporting, Inc. (954) 525- 2221
Page 2229 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 list every car, but can you describe if you can some of the principal businesses that you personally bought using the Ponzi money or some of the principal personal acquisitions that you acquired for yourself or people that you wanted to give gifts to? A I can take a run at it if you'd like. Is that
what you were looking for? Q A Yes. Okay. I purchased real estate, homes for
myself, homes for investment purposes, homes for others. I purchased vacant real estate. I purchased
business real estate.
I invested in buildings in I purchased
Brooklyn, South Florida, Manhattan.
restaurants, I purchased nightclubs, I purchased the vodka company, part of a watch company. part of a large Internet company. cars. I purchased
I bought a lot of
I bought hundreds of watches, both for myself and I actually bought cars for other people
for others. also.
I bought very expensive, meaning the 2,500 to
$5,000 range pens for myself and for others. I bought an extensive array of cufflinks, very expensive, some one-of-a-kind cufflinks for myself and others. I bought a limited amount of artwork. I bought
very expensive cigars. wine.
I bought extremely expensive
I bought a lot of other people very expensive United Reporting, Inc. (954) 525- 2221
Page 2230 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 wine and cigars. I spent a huge sum of money on In decorating
clothing, shoes, suits, casual clothing.
my homes I bought extremely expensive furniture, a lot of it custom-made. I spent a lot of money on very I spent a tremendous amount of
high-end electronics.
money on personal travel. Q A Private jets? From the time that I began the Ponzi scheme
until the time that it exploded I flew dozens of times and I don't recall one where I was on a commercial airline. I bought firearms. shoes, boots, tons of boots. for a lot of different people. I bought, in addition to I bought a lot of jewelry I spent a huge sum of I spent a huge
money purchasing escorts for people.
amount of money in what we called previously gentlemen's clubs. I spent huge sums of money on meals. I spent
huge sums of money having friends, co-conspirators and non co-conspirators traveling with me. dollars on very expensive hotels. at this moment. Q I spent big
That's all I recall
I'm certain that there's more.
I appreciate that. Now, the source of these funds were the
investments that people were making in what they thought were settlements by your clients, correct? United Reporting, Inc. (954) 525- 2221
Page 2231 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q Yes, sir, it was money I was stealing. And you were stealing this money from a variety
of RRA accounts that you controlled? A Q Correct. And basically you were, is it fair to say that
you were running these accounts and running this scheme for your personal benefit? A I was running the scheme for the benefit of
myself, my co-conspirators and the law firm. Q And the law firm was -- there were elements of
this law firm that was a legitimate law firm, right? A The bulk of the law firm was legitimate,
meaning the bulk of the people working there, not the bulk of the income, but the bulk of the people working there were legitimate good people, honest lawyers and other personnel. Q You testified that in 2009 you thought the
approximate gross revenue of the law firm was something like eight or nine million dollars, do you remember that? A Q A From legitimate business? Correct. I recall somewhere it being in the eight or
nine million dollars realm, yes. Q And so it was running at an annualized level of United Reporting, Inc. (954) 525- 2221
Page 2232 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 about 11 million dollars a year? A I can't give you that figure but it was
substantially less than the billions I had run through the accounts. Q Substantially less, you mean eight or nine
million compared to the billions you were running through the accounts is not even close, it's not in the same ballpark, is it? A Q It's a tiny percentage. Correct. And how did running a criminal Ponzi
scheme that invariably would lead to collapse and ruin, how did that help the legitimate lawyers who were legitimately practicing law in your law firm? A Oh, no, I didn't say it did help them. At the
end of the day, sir, I hurt a lot of very decent good people by what I did. Q So, would it be fair to say even though you
gave money and compensation to a number of the people in the law firm as proceeds of the Ponzi scheme, that basically what you were doing in running this Ponzi scheme was not in the interest of this legitimate law firm? A Q That's correct. Mr. Rosenfeldt was listed on a number of these
law firm escrow accounts, right? United Reporting, Inc. (954) 525- 2221
Page 2233 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q Correct. Did he ever go to these accounts and remove
Ponzi money? A Q A Yes. By himself? I don't know what you mean by himself. You're
talking about all the accounts that had Ponzi money in them from operating all the way down, correct? Q No. Okay. You had law firm operating accounts
and then you had what you would describe as the law firm escrow accounts, right? A Q Yes. And the law firm escrow accounts were the
accounts into which the investor money was placed, right? A There was a very specific way that, I'd say 90
to 95 percent of the time the money always flowed before we used it. Q A No. You looked like you were waiting, I was going Would you like to me to explain that?
to finish. Q A Q You finished, right? I am, sir. You testified that you had a stash of cash in
your office, do you remember that? United Reporting, Inc. (954) 525- 2221
Page 2234 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A Q I did. And you said you controlled the cash? I did. You did not allow any of your partners, even
partners who were complicit in criminal activity, to have direct access to the cash? A To my cash, no. Some of them had their own
access to their own cash. Q right? A No. Mr. Rosenfeldt used to write out checks to Any cash that they had they got from you,
cash and to himself and he would cash them and create his own little cash stash in his office. Q A Q Did he need to clear that with you? No, sir. Did he have levels at which he needed to clear
it with you? A We pretended to have them but you could see,
for example, there's an e-mail where I said, Stu, you can now start spending between, I think, 30 and 35,000 a month on the American Express bill and I believe he decided that 35,000 meant 70,000 or 80,000 a month. There was no real controls as long as we had the money I didn't care what Stu spent. he spent. United Reporting, Inc. (954) 525- 2221 I don't think he cared what
Page 2235 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q You said at Page 1419 of the transcript that
Rosenfeldt asked you about how much money -- the amount of money that Mike Szafranski was making, do you remember that? A Yes. He had looked in the accounts, saw how
much we were paying Szafranski and questioned it. Q Right. And in fact you said basically none of
your business, you said, you're happy with the money you're making, right? A I laughed it off and said to him much like I
would in any other circumstance, Mike's helping us make a lot of money, he's worth every penny we're paying him. Q A Q A Q Who owned the RRA law firm? Mr. Rosenfeldt and I. You were 50 percent owners each? Correct. During the years that you ran your Ponzi scheme
and you spent on yourself or people you wanted to give gifts to 150 or 200 million dollars, do you recall Mr. Rosenfeldt's total take from the operation of both the legitimate law firm and the Ponzi scheme? A Q A What he spent in total cash and otherwise? What he got. Tens of millions of dollars. I never stopped
to add it up, not nearly as much as I did. United Reporting, Inc. (954) 525- 2221
Page 2236 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Did you see the Trustee's Complaint against
Mr. Rosenfeldt? A I don't know if I did or not. If I did it was
a very long time ago. Q Would it refresh your recollection that in the
Trustee's Complaint he submitted an affidavit, which I'll show you in a moment, an affidavit of Richard S. Fechter, does that ring a bell? A Q I don't know who that is, no, sir. In the affidavit of Mr. Fechter, Mr. Fechter
goes through all the compensation including expense reimbursements for Stuart Rosenfeldt in 2006, 2007, 2008 and 2009. A said. Q I'll hand it to you in one second but I will Are you familiar with that? I recall seeing it, I don't remember what it
ask you to take a look and confirm that according to this document, that is the affidavit by the Trustee, during these four years Rosenfeldt's total take was in the neighborhood of 8.8 or 8.9 million dollars which would work out to a little bit more than two million dollars a year. is it? A 259. Okay. I'm handing you exhibit, what exhibit
Take a look at it. I've looked at it.
(Whereupon, The Funds' Exhibit No. 259 was United Reporting, Inc. (954) 525- 2221
Page 2237 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 marked for identification.) BY MR. LAUER: Q And have I correctly summarized the affidavit
submitted on behalf of the Trustee which says in essence that his total take in the four-year period was approximately 8.8 million dollars? A Q A That's what this says but it's way off. Have you told that to the Trustee? This is about to be the first time we're
discussing this particular issue to my recollection, it may have come up but there is -- if you want me to explain I can explain. Q A Q Explain what? Why this is off. Well, is it off because Rosenfeldt spent more
money on himself and wine, women and song and his rock star lifestyle? A I don't know -- if you're asking me that's
what's wrong with it, what's wrong with it, it does not account for a substantial amount of other monies that Mr. Rosenfeldt spent, yes. Q A Q On himself? On himself and others. And "others" would be people who were either
providing a service to him personally or people he United Reporting, Inc. (954) 525- 2221
Page 2238 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 wanted to give personal gifts to? A Correct. And it doesn't account for the money
that I spent on him. Q Same thing, as part of your collective, to take
your phrase, your collective personal rock-star lifestyles? A Yes. In order to figure out specifically what
he spent or what the total amount of reward he received from his participation in this scheme, you'd have to take into account the cash that I spent on him, the cash that I gave him, the gifts that I purchased for him and the multitude of things that were paid for through the firm that not necessarily would be reflected, for example, on and American Express bill where a check might go out to someone for a home or for a car or for a boat, that type of thing. Q A It was not real law firm business? Correct. But this takes into account what you
would have seen in looking at the financial records of the firm. Q And it does not reflect the fact that these RRA
escrow accounts were being used by you, and I guess as you're describing it also by Rosenfeldt, for your personal use? A We tried very hard. As a matter of fact, I
Page 2239 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 yes. Q This morning you mentioned that you had this When did that go into can't think of an instance where Stu raided a trust account by him actually going in and taking the money. The raid was done, the money was taken from the trust accounts, it went from the investor into a specific trust account, usually 0923, and then from that account out to various accounts where then it was spent. Q Okay. But putting mechanics aside, and I
recognize the mechanics may have been somewhat involved, the money in these accounts that came from investors was being used by you and also by Stu for your personal benefit? A Q Correct. You weren't spending millions of dollars to send
Stu to Bar association conventions where he would give speeches, were you? A Give speeches, no. We did spend some money on
Bar conventions where he did other things, but not give speeches. Q By other things you mean things of a personal
servicing nature, to be indelicate? A Actually it would be indelicate at this time,
automatic transcribing system. effect in your law firm?
Page 2240 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q I don't recall the date. Approximately -- was it in effect starting in,
let's say, January of 2009? A The first person that had it was Russ Adler. He had it prior He
was the one who introduced us to it. to '09. Q A When did you get it?
I'm trying to remember because he had it and I have to say probably sometime
then Stu and I had it. after '07.
But, again, without seeing -- the easiest
thing to do would be to look at the e-mail traffic, and all of a sudden you'll start to see e-mails that are from SimulScribe. It will either say SimulScribe and then
later I believe it said Phone Tag, company name change. Q So your understanding is the existing record of
those phone calls to the extent they were transcribed would now look like e-mails because they became e-mails, and in fact they would be searchable like e-mails? A My recollection is that they are actually not.
My recollection, I could be wrong, my recollection is they were not searchable like e-mails except to the extent that I think you could use the words Phone Tag or SimulScribe to find them or you could enter the phone number. But I'm not sure. For some reason I think that
Page 2241 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the body of it may have been in some sort of strange format, a PDF or otherwise where that couldn't be searched, but I could be wrong. But you could definitely tell which ones are not e-mails because they'll say it's coming from or to a telephone number, not a person's name or e-mail address. And it will also have either SimulScribe or the Phone Tag label somewhere on it. Q Since the time that you've been in custody,
could you describe the different ways that you have obtained information that relates to the case, putting aside any information that agents of the government might have provided you? A Excluding anything having to do with the
government, I receive all of my information through my attorney. Q But physically or electronically, how does your
attorney communicate information to you? A I don't think I'm permitted to give -MR. KAPLAN: MR. LAUER: privilege? MR. KAPLAN: It's a government privilege. How Objection, that's privileged. The government privilege or a lawyer
he is handled in custody is privileged. BY MR. LAUER: United Reporting, Inc. (954) 525- 2221
Page 2242 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Does Mr. Nurik have other lawyers working with
him on your matter? MR. LAUER: THE WITNESS: That's privileged, too? No, they're joking around.
No, he does not. BY MR. LAUER: Q prison? MR. KAPLAN: MR. LAUER: don't mean to -MR. KAPLAN: MR. LAUER: I appreciate that. I don't mean to take on the United Again, object, privilege. My job is to ask the questions. I Are you permitted to call Mr. Nurik from
States Government, not in this case. BY MR. LAUER: Q You testified that you thought A.J. Discala did
a reasonably good job in his due diligence. A Through his people, yes. He was more of like
the salesman type, but he was surrounded by good people that seemed quite diligent. Q Yes, sir.
So A.J. came on the scene and he was going to
create sort of this new feeder fund under the Clockwork umbrella, right? A Q Correct. And he ended up doing two transactions, one United Reporting, Inc. (954) 525- 2221
Page 2243 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 known now as Razorback, right? A Q A Q I recall that. Yes, sir.
And the other one was D-3 Capital? I recall that as well. Do you recall that Razorback was sort of a next
generation version of the Banyon Income Fund that Bekkedam had brought Von Allmen into? A Q I don't recall. That basically Razorback was lending -- that
A.J.'s group lent money to a Banyon entity for a fixed rate of interest plus a small percentage of the equity piece. A Now I understand what you're asking me. My
understanding of Razorback was indeed that, that money was put in by various investors into the Razorback fund, so to speak. Those people were then paid a specific interest rate by that Fund, and then the Fund made the investment with me and kept the difference between what they paid out and the total proceeds. Q You're talking in the past tense, but would it
be fair to correct you to say this is what was intended? A I can only tell what you actually happened. I
didn't -- What was going on in the setup and what they intended to do, I can't tell you. That wasn't something
Page 2244 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I was involved in. I was only concerned about how much
money we'd be getting and what day we're getting it on. Q What I meant is the so-called Razorback group Do you
invested in an entity called Banyon USV1. remember that? A Q 2009? A correct. Q Yes.
And that investment was made in early October
I don't recall the date, but that sounds about
And the D-3 Capital investment was a direct
investment by Discala's group; do you remember that? A Q I do remember that. Yes, sir.
So here instead of lending money to a Banyon
entity for a fixed rate of interest plus, the D-3 Capital group was dealing directly through you with one of your clients? A That's correct. But I learned that information I learned that
secondhand as to the Banyon USV1, II. secondhand.
And sometime later when I wasn't involved in
the particulars of negotiating interest rates and that type of stuff. Q A When you say -I mean interest rates between, for example, the
Banyon entities and the Razorback investors. United Reporting, Inc. (954) 525- 2221
Page 2245 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 in. Q Just to clarify, learning secondhand, you mean
you didn't know the exact terms of what the Banyon USV1 was agreeing to with the Razorback investors, but you had firsthand knowledge of the money that was coming in that has been known as the Razorback investment, right? A I had firsthand knowledge of the money coming
The behind the scenes things, what was going on
between the investors, who was being paid what interest rate, what the terms were, that was not something I was involved in. Q But in that first investment, that is, the
so-called Razorback Banyon USV1 investment, the settlement that was purchased from one of your Plaintiff clients was purchased by Banyon USV1 and not by an entity called Razorback? A The paperwork was done in the name of Banyon
USV1, correct. Q D-3 Capital was the first direct investment by
Discala's group with one of your Plaintiff clients, correct? A I don't recall which came first, but it was a
direct investment. Q Do you recall that the direct investment was
originally to be an $18 million purchase of a $30 million settlement of an underage woman who had settled the claim United Reporting, Inc. (954) 525- 2221
Page 2246 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 against Mr. Epstein? A I don't recall specifically. But if you show me I just
the paperwork, it will refresh my recollection. don't recall the terms of that particular deal. Q A Q I'll get to that in a minute. Sure.
The second deal, though, the direct deal, do you
recall that that came up in mid October, around October 14, 15, 2009? A That sounds approximately correct, but the
paperwork would say exactly when it came up. Q Okay. Now, in connection with the so-called due
diligence by Mr. Discala and his advisors and colleagues and investors, other than looking at the 13 boxes that somebody brought down to your office, can you tell me what specifically all these guys did that you refer to as their due diligence on the D-3 Capital or Razorback investments? A To the best of my recollection, and this is in
no particular order, several members of what I'll call the Discala team sat and met with me in my office for several hours. That was at one time when Thane Ritchie They asked me
was there and one of his partners.
questions about the transactions, how they worked, a lot of information about me and the law firm, background. United Reporting, Inc. (954) 525- 2221
Page 2247 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 lawyers. There were at least two or three other meetings that I recall where I met both with Mr. Discala and members of his team, various members, sometimes on the phone, sometimes in person, sometimes some were in person and on the phone, where they asked what I considered to be good questions, good due diligence questions of me for a longer period of time than what I was used to dealing with with some of the other investors. I received e-mails from a number of the different people and remember Mr. Legamaro writing to me. I remember Mr. Podaras writing to me. I remember
Mr. Von Allmen writing to me.
I remember meeting with
Mr. Von Allmen on various occasions where he asked me a lot of questions. I remember actually having dinner with Mr. Von Allmen out at some private club that he had where he actually pulled me aside and we went to the bar and shared a glass of wine, and he was asking me questions about the investment. They had me speak to two different groups of I remember speaking to people from two firms.
I seem to remember Morgan Lewis at one point in time. Q A Clifford Chance? Clifford Chance. I don't remember who Gersten Different groups of lawyers, I'd
Savage was attached to.
Page 2248 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 get questions and have to answer things. Then on top of that there was questions being asked of me through Mr. Preve. Somebody would contact And then Preve
him from the group, one of these people.
would say, the Clockwork group wants to know this, the whatever he's calling it, the Von Allmen group, whatever he was referring to. So, there was a -- you know, compared to what I was used to dealing with in the years prior, to me it was fairly significant due diligence, and they kept prodding and pushing. certain. Q Could you specify the subject matter of any of You've testified that they asked They kept us on our toes, that's for
the specific questions?
questions, they e-mailed questions, other people asked questions, you had conversations. And I recognize it's
two years and you may not be able to do this with any specificity and may not be able to connect questions with the people. But to the extent that you can, if you can,
I would ask you to tell me what exactly it is these Discala, Von Allmen people were asking you in connection with the Razorback and D-3 Capital investments, that is, in October of 2009? A right? Sure. To the best of my recollection, all
The first place you want to go, obviously, you United Reporting, Inc. (954) 525- 2221
Page 2249 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 don't need me for this, is to look at the e-mail questions that were e-mailed to me. Q A That's right. You can look at that. There were lengthy
questionnaires sent to me. Q A Um-hmm. Other than that, I remember discussing how, they I remember Thane
were asking me how I got my cases.
Ritchie in that meeting with Mr. Discala, that was one of the areas he seemed most interested to me. this possible pipeline of cases? possibly get this? I recall being asked by several of them to explain the banking relationship. That was more How did I get
How did a local firm
Mr. Podaras and Mr. Legamaro, actually more Mr. Podaras than anyone. He was very interested in the banking,
wanted to know how the money flowed, how I set up the accounts, who my contacts were at the bank. They spent time asking me about the lock letters at the point in time we were utilizing them and the mechanics, and I had to refer them to Mr. Spinosa to answer that question. They asked me about my history with other investors, Thane Ritchie. I don't remember, again,
whether it was Legamaro or Podaras, one or both of them United Reporting, Inc. (954) 525- 2221
Page 2250 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 owned. asked me about prior investor experience. Mr. Von Allmen asked me fairly extensively about how I came up with the idea to do this, how it was created, what made me think of doing this, which is one of the things that most people never really got into with me. It was usually a very brief conversation in that
regard. I remember it was either Podaras or Legamaro inquired of me as to how long my employees had been with me and whether I trusted them, specifically my CFO, Irene Stay. Many of them asked questions of Ms. Villegas because she was represented to have been with me for over two decades and my COO and worked her way up from secretary, and they inquired about my relationship with her. They inquired about other businesses that I Mr. Von Allmen asked me about my other business And, again, I get Legamaro and Podaras
interests.
confused, one of them asked about my business interests and successes and failures. I was asked at one point in time to provide a client list of the law firm. I don't remember who asked
me that, one of those gentlemen. We talked about transparency. United Reporting, Inc. (954) 525- 2221 And this was - to
Page 2251 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 my recollection, this was not a Discala question. It
would have been again, Legamaro and Podaras and perhaps one of the firms from outside. But we were talking about
transparency because they were pushing the issue of getting comfortable with the banking and the lack of transparency, people not being able to see things, not looking on things. They were pushing a little bit more
as to whether or not what I was saying they couldn't see was truly a breach of confidentiality. There were usury questions asked. That was And
Mr. Podaras who asked me about the usury questions.
you should be able to find some of what I consider to be rather amusing e-mails in that regard that go back and forth between Mr. Podaras and I. To the best of my recollection that's a pretty good overview of what we discussed. Q There may be more.
Now, Mr. Von Allmen, and I think we've been over
this a bit, Mr. Von Allmen put in around $47 million of his family money and his own money in May and June of 2009 in connection with the Banyon Income Fund that Preve had put together and in part was promoted by Bekkedam. Do you remember that? A Q I believe that's correct, sir. And in the private placement memorandum for the
Banyon Income Fund that was shown to Mr. Von Allmen, the United Reporting, Inc. (954) 525- 2221
Page 2252 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Banyon Income Fund represents that it has invested over $600 million in these discounted settlements. recall that number? A I recall seeing that. I'm not sure if I saw it Do you
in the document you're talking about, but I certainly remember that number. Q And given the discounts that were being used to
buy settlements, I may be off a bit, but if the income fund was representing to Von Allmen and others that they had invested $600-plus million in the these settlements, that would have meant a settlement figure in the aggregate of about a billion dollars; right? A Q Give or take, yes, sir. So, when you met with Von Allmen and Discala in
connection with the Razorback and D-3 transactions, did Von Allmen raise the billion dollar settlement number with you? A I don't remember whether it was Von Allmen or
one of the other people, but they were most curious about the relationship between the Banyon entities and my law firm. Q But did they say, My goodness, where did you get
a billion dollars worth of settlements in such a short period of time? A Yes. Yes, they did. United Reporting, Inc. (954) 525- 2221
Page 2253 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q And yet I gather nobody from Discala or
Von Allmen's group ever asked to be introduced to referring attorneys? A I don't recall them asking to be introduced to I substantiated things in other
referring attorneys.
ways this them as best as I could. If you read the e-mails -- this just goes to your question. If you read through the e-mails you'll
get a pretty good idea of the type of follow-up and the like they were doing. They would ask questions. I would
give answers, and then there was follow-up to it. Q A look. Q Since time is limited I'm trying to avoid having We'll get to some e-mails I understand. I just want to be helpful so you know where to
you read too many e-mails. A Q Understood.
I just need to clarify what's not in the e-mails
and what never happened, which is, I think you've said this, none of the Von Allmen, Discala people ever asked to be introduced to referring attorneys? A Q I don't recall them ever asking that, sir. By the way, while they did some independent
verification by looking at the 13 boxes in connection with D-3 Capital, before that who were they relying on in United Reporting, Inc. (954) 525- 2221
Page 2254 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the Razorback deal or the earlier deals for verification that the settlements were real? A Q Me, Mr. Szafranski, and Mr. Preve. And who were they relying on for verification
that the defendants were actually wiring the settlement money into the escrow accounts? A Me, Mr. Szafranski, and Mr. Preve, and to a
limited extent the bankers. Q Had they known Mr. Szafranski prior to being
introduced to you and the investments? A Q To my knowledge, no. So for all they knew Szafranski was on your
payroll, right? MR. SCHERER: THE WITNESS: Objection, form. I'd be guessing what they knew,
but they -- they did their own research from what Mr. Preve and Mr. Szafranski told me. As a matter of fact, as part of their due diligence, I remember because this took place in the conference room on our other floor, on 15 -- this goes to the question you asked me before. BY MR. LAUER: Q But I'm asking you now -MR. SCHERER: Counsel. United Reporting, Inc. (954) 525- 2221 Let him answer the question,
Page 2255 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. LAUER: Mr. Scherer, with all due respect
because time is limited I'm focusing on Szafranski. THE WITNESS: BY MR. LAUER: Q A All right. They had a very specific lengthy meeting and did It took This is Szafranski dead on.
separate due diligence with Mr. Szafranski. place on our next floor down.
I believe it was our 15th
floor conference room, maybe up on 22, but not on my floor. They met. They had a bunch of their attorneys
and some other people, and they met actually for several hours with Mr. Szafranski, took him through the whole thing. Q A sure. Q Clifford Chance, that was the law firm that Do you They met him through you? Yes, through me and through the Banyon group,
Discala brought down prior to Morgan Lewis. remember that? A Q people? A I don't recall specifically. I do.
What is it that you told the Clifford Chance
You'd have to take
a look at the e-mails. the standard questions.
They asked what I'll refer to as I answered them. The rest you
Page 2256 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 have to look in the e-mails or speak to Clifford Chance. Q You came to learn that after Clifford Chance met
with you they resigned from doing further work for Discala, Clockwork, or Ritchie or whomever it was, the one that hired them, right? A Yes. There was some point in time when they got
what we refer to in the e-mails as the spooked event, where they got spooked and we had to go elsewhere for due diligence. Q And what spooked the Clifford Chance people that
they made the decision as a law firm that they did not want to have a further relationship with Discala and his group? A What was explained to me was that they felt,
after listening to everything, that the issues involved regarding this type of funding was outside their areas of expertise, that they were being asked to offer opinions on stuff that they were not comfortable offering opinions on. And they thought by going to somebody who had a more
boutique practicing in dealing with the settlement funding issues more similar to this, perhaps labor and employment issues and the like. I was given. Q That was the reason that
Anything more than that, no.
That's the reason that you were given, but did
you have an opinion as to what might have spooked them? United Reporting, Inc. (954) 525- 2221
Page 2257 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q I didn't, no. At the time did you know the approximate size of
the Clifford Chance law firm? A Q A Q A sir. Gigantic, thousands of lawyers, to my knowledge. All over the world, right? Yes. And every area of expertise, right? Yes. You didn't ask me if I believed them, This is what I was told
I know where you're going.
was their reason. Q Okay. You mean I didn't ask you if you believed
what you were told about Clifford Chance leaving? A Yes. It might save all these other questions
and save your time. Q Okay. I think one thing I've learned in two
days or three days is if you want to get something out, you're going to get it out, so you might as well get it out. A That's an excellent point. The answer is I did
not believe them. Q A Why not? The explanation that I was given varied too much They didn't
from what I knew to be real problem areas.
appear to be focused on -- this firm did not appear to be focused on the real problem areas that could have arisen United Reporting, Inc. (954) 525- 2221
Page 2258 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 such as something as simple as why can't we give them copies of real bank statements as opposed to screen shots, things like that. So I didn't think that they
were -- I just think that they were spooked by the entire, having to issue an opinion on this entire investment strategy, in my opinion. Q Did Doug Von Allmen know that Clifford Chance
had basically resigned and created this spooked situation? A Q tell him? A I don't recall. You would have to check the I do not know. Was that something that A.J. asked you not to
e-mail traffic. personally. Q
I don't recall him saying it to me
Did Doug ever say to you, Scott, I'm a little Clifford Chance resigned.
concerned with these kids. That's spooks me, too? A Q A
I don't recall that. That's not a trick question. I know. I'm just trying to remember because I
do remember Mr. Von Allmen asking questions about things that were troubling him. were. I don't really recall what they
More towards the volume of cases and that type of And I think if he
stuff and the lack of transparency.
Page 2259 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 would have said that to me, that's something that would be reflected by an e-mail or something that I would remember. Q A though. Q Who told you that Clifford Chance resigned? I don't recall. I think it was Mr. Preve,
I got most of my bad news from Mr. Preve first. Do you remember getting an e-mail from Mr. Preve
October 29, 2009, basically saying, "Very skittish. Von Allmen not fully convinced of legitimacy of the play. A Q A More on this when we talk"? Yes. And did you speak with Von Allmen? I spoke to Preve first. It was my job then to
sooth Mr. Von Allmen. Q What was Von Allmen's concern about the
legitimacy? A He just questioned the entire strategy. I met
with Mr. Preve following that e-mail and we discussed the fact that without the Von Allmen money everything was going to blow up, that we were without other sources for funds. We discussed at length the fact that Mr. Bekkedam and his group didn't seem to be able to produce anything near what they said they were going to and that Von Allmen was our final pitch to take us over United Reporting, Inc. (954) 525- 2221
Page 2260 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 or explode this thing. So we talked about various ways as to how we were going to try to get Von Allmen on board. going to try to create more transparency. him more things in the office. We were
I would show
I would invite him to the
office to look at more things, perhaps give him unredacted copies of things, anything I could do to try to make him more comfortable. Q A More comfortable this was not a fraud? Correct. I also offered him the opportunity, I
was asked to offer him the opportunity to speak to other people in my law firm. And I believe he spoke to,
although I'm not certain, you'd have to ask these people, but I believe he spoke to Mr. Boden and to Mr. Rosenfeldt. Q And, again, that was to allay concerns he had
that he was a victim of fraud? A Yes. As a matter of fact, and you're going to
have to ask the Von Allmen folks this, but if you look at Szafranski's e-mail traffic back and forth, there's a point in time when he's discussing with Mr. Lifshitz the fact that Mr. Rosenfeldt has in fact attended certain investor meetings that Mr. Szafranski was at and has in fact given information on the deals and how this works. And Mr. Lifshitz had then asked of me whether he United Reporting, Inc. (954) 525- 2221
Page 2261 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 could meet with Mr. Rosenfeldt as did other investors, and my recollection is he was referring to Mr. Scherer's clients. I don't know if that ever - if I actually let But I'm pretty sure
Mr. Lifshitz meet with him or not.
it's someone from the Von Allmen group. MR. LAUER: fine with me. Any time you want to take a break is
If you don't want to take a break -That's great. Let's take a quick
THE WITNESS: one, sure.
(Thereupon, a short break was taken.) (Whereupon, The Funds' Exhibit No. 261 was marked for identification.) BY MR. LAUER: Q Okay. I am handing you, Mr. Rothstein,
Exhibit 261, which is a photostatic copy of Confidential Settlement Agreement and Release. PRODA 21183 through 21212. MR. SCHERER: exhibit? MR. LAUER: 261. Thank you. What is the number of that It bears production
THE WITNESS: BY MR. LAUER: Q
Do you recognize this as the Confidential
Settlement Agreement and Release covering the settlement that was sold to the D-3 Capital Club Group in mid to United Reporting, Inc. (954) 525- 2221
Page 2262 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 late October 2009? A Q A Give me one second. Take your time. Yes. (Whereupon, The Funds' Exhibit No. 262 was marked for identification.) BY MR. LAUER: Q Now I'm handing you Exhibit 262, which is a
letter from Scott W. Rothstein to D-3 Capital Club, LLC, dated October 14, 2009, bearing counsel's stamp 21218 through 21222. Is that a letter that you authored and provided the D-3 Capital Club in or about October 14, 2009, concerning the settlement that is reflected in Exhibit 261? A I am one of the authors of the letter. It has
my name at the bottom.
It's a forged signature, but I
authorized this to be transmitted to D-3 Capital. Q So just to be precise, if you authorize someone
to sign your name, it's not a forged signature, is it; it's an authorized signature that someone else is signing? A Q You're correct. So this was an authorized signing by someone
else of your name? United Reporting, Inc. (954) 525- 2221
Page 2263 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 sir. Q And just to start at the beginning of the Do you see that A Yes. They were authorized -- the language seems
strange to me because they were signing fake documents in a fraud. So say it was authorized during the course of
the fraud, yes. Q And they were genuinely signing documents with
your approval; albeit, the documents they were signing were part of a fraudulent transaction? A Correct. (Whereupon, The Funds' Exhibit No. 263 was marked for identification.) BY MR. LAUER: Q Now I am handing you what we have marked as
Exhibit 263, which consists of two pages of e-mails bearing counsel's stamp 46167 and 46168 and what appears to be a photostat of an account summary balance bearing counsel's stamp 46169. I would ask if you can identify Exhibit 263. Are those e-mails that were sent in connection with the D-3 Capital investment? A This all pertains to the D-3 investment. Yes,
e-mail, first it's from Frank Spinosa. at bottom of the second page, 46168? A I do. United Reporting, Inc. (954) 525- 2221
Page 2264 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Okay. From TD Bank.
Is this e-mail purporting to send what purports to be a $64 million balance in an account at Rosenstein (sic,) Rosenfeldt, Adler escrow account? A sorry. (The pending question was read back by the court reporter.) BY MR. LAUER: Q A Q A I meant Rothstein. No. What is it? The exhibit is put together incorrectly. The Can you ask the question again, please? I'm
attachment is one of our phoney balance statements. What should be attached to this is the D-3 lock letter which is being forwarded by Mr. Spinosa to me and then forwarded by me to Mr. Podaras. (Whereupon, The Funds' Exhibit No. 264 was marked for identification.) BY MR. LAUER: Q I'm handing you Exhibit 264. This is a
document dated October 15, 2009, bearing a signature of Frank Spinosa on what purports to be TD Bank letterhead. Is this what you have described as the lock United Reporting, Inc. (954) 525- 2221
Page 2265 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 letter for the fraudulent account? A Q Yes. I think you mischaracterized it. It's not a
phony lock letter.
It's a genuine lock letter with
respect to a phony account? A Actually I said phony bank statement. It's a
lock letter purporting to lock something that's not there that can't be locked. (Whereupon, The Funds' Exhibit No. 265 was marked for identification.) BY MR. LAUER: Q Finally, I am handing you Exhibit 265, which
appears to be an e-mail from you dated October 23, 2009, to A.J. at Clockwork and Dean K-r-e-t-s-c with a cc to Frank Preve. A Could you identify that e-mail? It's an e-mail that I sent out
I recognize it.
to A.J. and to Dean with a copy to Frank trying to force their hand on funding the rest of the deal. Q Now, this deal was one in which A.J. and Dean
and Doug Von Allmen had agreed to put in $18 million? A I don't recall specifically who the money was
coming from, but it appears to be Von Allmen because Dean is involved. Q The deal was they put up 18 million to buy a
$30 million settlement? United Reporting, Inc. (954) 525- 2221
Page 2266 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q That sounds correct, sir. And the e-mail is telling them that as of
October 23rd they have not come up with the 18 million; is that correct? A It says, "We're $8 million away from the first
18 million and the 5 million I've been promising her for days has not yet appeared. Q Could you explain the numbers? 8 million from
18 million means you would have had 10 million? A I would have already had 10 million in-house.
That's what it appears to say. Q A What does that have to do with the 5 million? It appears that I was -- as these were being And so part of
funded I was getting funded piecemeal.
the fraud that we were utilizing was to tell them that I've promised her this amount of money. And if you look
in our accounts, that would reflect exactly the amount or close to it that I needed at that moment for the Ponzi scheme to keep it alive. Q So as of October 23rd they had only come up with
10 million of the 18 million that they were supposed to come up with? A You'd have to check the bank ledgers to be
certain, but that's my recollection. Q And that's what you were telling them in this United Reporting, Inc. (954) 525- 2221
Page 2267 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 e-mail on October 23rd? A Q Yes, sir. That's what it appears to be.
Now, if you turn back to Exhibit 264, the lock
letter, you have that? A Q I do, sir. Okay. So from their perspective, at least what
they were telling you is they thought the lock letter was important, right? A Q Yes, sir. They thought that that was a necessary extra
precaution for their investment? A My understanding from speaking to them was it
was one of the key elements in their funding the deal. Q And this lock letter would from their
perspective protect them because it says that the money can only be distributed to them, right? Capital Club, LLC? A Q A Q Correct. Now, if you turn to 263 -Yes, sir. -- the top page, Frank Preve to Chris Podaras, And they are D-3
was Podaras part of A.J. and Doug's group? A Q He was. Preve says to Chris, "Did you pick up a balance If
report from TD Bank yesterday for Razorback and D-3? United Reporting, Inc. (954) 525- 2221
Page 2268 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q so, I need a copy. one up on Monday." Do you see that? I do, sir. Is the account balance bearing counsel's stamp If not, I will have Szafranski pick
46169, is that what was purported to be the account containing the Razorback and D-3 funds? A Q Yes. Is it these funds, this $64 million represented
amount, that is locked in by the lock letter, Exhibit 264? A Q Yes. Now, let's go to 261. This is the Confidential
Settlement Agreement and General Release, right? A Q A Q Yes. Okay. And some other papers. Right. If you go to the page bearing counsel's
stamp 21191, the settlement agreement between the plaintiff and the defendant bears the date October 14, 2009, right? A Q Correct. So that's what A.J., Doug and their group were
being told was the date that the settlement had been signed? United Reporting, Inc. (954) 525- 2221
Page 2269 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A Q Correct. And at the same time they are being told that
the money for this settlement is already in the account? A Q A That it arrived on the 14th. Go to the next page, the next document. I'm sorry. The next page in which one of these
documents? Q A What? I have a lot of documents. I don't know which
page to turn. Q A Q Within Exhibit 261 -Right. -- the next separate document which is part of
the exhibit bears counsel's stamp 21193 and it has a caption, Acknowledgment of Assignment/Purchase of Settlement Proceeds. Do you see that? I do. And this is an acknowledgment where your law
firm acknowledges that -- Well, why don't you explain it. LLC? A It's acknowledging all of the things covered in There's a lot of things. The What is this acknowledging to D-3 Capital Club,
all these paragraphs.
purpose is to say that we've got the money and this is United Reporting, Inc. (954) 525- 2221
Page 2270 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the way we're going to handle it. Q D-3 Capital in this case is the transferee; that
is, the entity that will receive the settlement money at the appropriate time? A Q Yes, sir. And in Paragraph 8 you are confirming to D-3
Capital that upon receipt of $18 million you will disburse the plaintiff's wire to plaintiff. What does that mean? Does that mean that as
soon as you get the 18 million from D-3 Capital you will send the plaintiff the money that is being used to purchase her rights to this settlement? A It says that once two things occur, one of which
is receipt of the $18 million, that we will disburse the plaintiff's wire to the plaintiff. Q Okay. So the way this was supposed to work is It goes into an And when
$18 million comes from D-3 Capital.
attorney escrow account that you manage.
appropriate you will then wire the plaintiff this 18 million? A Q Correct. And then down the road the way this deal was
supposed to work is the 30 million that's in the account will get distributed to D-3 Capital? A Over time, correct. United Reporting, Inc. (954) 525- 2221
Page 2271 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Now go to Paragraph 13. Paragraph 13, am I
correct, is acknowledging by the law firm, by you on behalf of the law firm, that the $30 million that is sitting in that account from the defendant will be held exclusively for the beneficiary - I guess it means for the benefit of the transferee and the transferee is that assignee; is that correct? A That the money held in the locked account will
be held for their benefit, correct. Q Now, do you agree with me that "beneficiary" is
not the correct word, that what this sentence, if written in English would read, Will be held exclusively for the benefit of the transferee? A Q Yes. And was this -- it's informing D-3 Capital that
you're acknowledging that the $30 million will be held for their exclusive benefit? A Q Correct. And it's also acknowledging a letter from the And I
regional VP has been provided to the transferee.
take it that is a reference to the lock letter to D-3 Capital? A Q A Correct. Exhibit 264. Correct. United Reporting, Inc. (954) 525- 2221
Page 2272 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Now, the next document bearing counsel's stamp
or starting with counsel's stamp 2119A is a Sale and Transfer Agreement. A Q I do, sir. All right. And is this the document by which Do you see that?
your purported client is selling and in fact did sell to D-3 Capital Club, LLC her rights to the $30 million that she is receiving from the defendant? A Q Correct. In paragraph 1 after the whereas clause is in
the middle of that paragraph it reflects the transferor, meaning the plaintiff client, agrees to accept payment in the sum of $18 million from D-3 Capital, right? A Q A Q I'm sorry. Which paragraph are you looking at?
It's paragraph numbered 1 on page 21199. That's correct. In the second paragraph of paragraph numbered 1
it says that transferee, meaning D-3 Capital, has been informed by RRA that pursuant to the transferor instruments, transferor - meaning the Plaintiff client has irrevocably named transferee, meaning D-3 Capital, as transferor's designated payee of the settlement proceeds? A Q Correct. That's a further way of confirming what's stated
several times here, that $18 million comes from D-3 United Reporting, Inc. (954) 525- 2221
Page 2273 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 sir. Q In the end all they could come up with was Capital to the Plaintiff and the rights to the 30 million are sold to D-3 Capital? A Q Correct. Now, it turned out that D-3 Capital was not able Do you remember that?
to raise the full $18 million. A Q
That is my recollection, sir. And in fact as you saw as late as October 23rd
they had only raised 10 million? A To the best of my recollection you're correct,
$13-and-a-half million? A It was something of that nature. Yes, sir. It
was not the full amount. Q Right. And yet they were told that the deal was
done, right, that in fact the transaction had been completed, that they had satisfied the transaction with your plaintiff? A Q I don't recall telling them that. Did you tell them that this deal has been
breached, that they have not met their obligations? A I think that's what this e-mail is telling them,
the other one we looked at, where I'm telling them they haven't funded -- Yes. I'm telling them they haven't
done what they said they were going to do, and my client United Reporting, Inc. (954) 525- 2221
Page 2274 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 is going crazy over it. they are in breach. Q And did they say, Well, we can't get the So, yes, I'm telling them that
18 million, so return all the money to us? A I don't recall what they said. I don't recall. I have to see
the e-mail traffic. Q
Now, isn't what happened that you or someone
told them that someone else had come up with the extra 5-and-a-half million and in fact this deal was funded? A I don't have a specific recollection of that,
but that is certainly something I may have told them. I'd have to see the e-mail traffic. probable. Q Have you seen any e-mails describing the fact It seems more than
that on this deal where they supposedly are putting $18 million in, but they only put in 13-and-a-half million, that describes the fact that somebody else or some other entity put in the other 5-and-a-half million? A I don't specifically recall, sir. I'm four or
five days away from leaving for Morocco at this moment. And it was probably on the back burner as far as I was concerned. I don't know. I don't recall seeing the You'd have to show
e-mail traffic as I sit here today. it to me to know. Q
But since you went to Morocco and have come back United Reporting, Inc. (954) 525- 2221
Page 2275 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 and have poured over countless documents and interacted with Trustee's counsel and with Mr. Nurik and the like, have you seen any e-mail from anyone to anyone else that reflects that somebody came up with 5-and-a-half million to meet the 18 million that was required for this transaction? A Q I don't recall, sir. Did anyone tell Von Allmen or Discala that
Banyon or some Banyon entity had come up with the 5-and-a-half million? A I seem to recall someone telling them that they
came up with the money, but I don't recall who told them. Q Now, when they were told that someone else had
come up with 5-and-a-half million, did they say, Hey, wait a minute. We have an exclusive lock letter. We
have an exclusive agreement. to D-3 Capital.
The money can only be sent
How could anybody in his right mind put
in $5-and-a-half million of real money in this transaction without even contacting us to get a letter agreement that requires us to share our rights under these agreements with them? A Q I don't recall one way or the other, sir. In fact, there is no communication whatsoever to
you or anyone else saying, This sounds really fishy that some mysterious donor has come up with 5-and-a-half United Reporting, Inc. (954) 525- 2221
Page 2276 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 million bucks when we have lock letters that we think are essential. essential. We have contracts that we think are We are the exclusive transferee. And
somebody out there is really coming up with $5-and-a-half million, and you expect us to believe that? A I don't recall receiving any e-mail from them or What I
having any conversation with them in that vein.
would need to see what was going on is the e-mail traffic probably more particularly between myself and A.J. and myself and Mr. Preve to see exactly what was going on at that time; as to me and Mr. Preve, what story we were concocting to cover ourselves me and as to me and A.J. or Mr. Preve and A.J. to determine how the sale of the fake story was going and how best to handle it. Q So you would need to work out the fake story
with A.J.? A I would need to work out the fake story with
Preve and then Mr. Preve and I would be selling it to A.J., Dean, and anyone else involved in that group. Q Putting aside hypothetical, in the two years
since you came back from Morocco I take it you have not seen - or certainly as you're sit here today you have no recollection of seeing any documentation from A.J., from Doug Von Allmen, from Podaras, from Ritchie, from any of the people in the A.J. Clockwork group, from anyone United Reporting, Inc. (954) 525- 2221
Page 2277 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 associated with D-3 Capital basically questioning how the heck could this be that someone is putting in $5-and-a-half million and they don't ask us to share in the lock letter? A correct. Q And there's nothing that you can point to where I don't recall that ever happening, sir, you are
any of those individuals that supposedly thought this was a legitimate investment in D-3 Capital, where they are saying to you or to Preve or anyone else, How could this be? We need to have some kind of letter agreement with
the transferee so that we are included contractually in the rights that the transferee has with the transferor? A As I sit here today I don't have any specific I would need to see the e-mail
recollection of that. traffic to be certain. Q
Now, A.J. and one of his wizards came to your
office to look at boxes, right? A Yes MR. SCHERER: BY MR. LAUER: Q And you had 13 boxes of a real case against Object to the form.
Epstein brought down to your office, right? A My recollection is I had some of them already
there and that I had some brought in afterwards. United Reporting, Inc. (954) 525- 2221
Page 2278 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q And you've testified that among the more
interesting items were doctored flight manifests where you had inserted prominent people who purportedly would have been on the flight where Epstein supposedly did what he was accused of doing? A Q A That's not correct. Go ahead and correct me. The flight manifests that I showed them were I told them a story about other
real flight manifests.
flight manifests that I have never showed them. Q A Q How thick were the flight manifests? I don't recall. I'm trying to understand. I'm not going to have
you go through all 13 boxes, but I'm trying to get a frame of reference. You're talking about a flight
manifest or flight manifests for a private jets, right? A Yes. This is a very small document. It may
have been one or two pages. set aside.
And I had it specifically
I'd either ask Mr. Adler or Mr. Edwards to
isolate the flight manifest. Q So other than looking at the flight manifest for
Epstein's private jet, what exactly is it that they were looking at in these 13 boxes? A I have no idea. I left them alone to look at
the boxes for 20, 30 minutes. United Reporting, Inc. (954) 525- 2221
Page 2279 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q boxes? And how did your office come to have these 13 Did someone in your office actually play a role
in representing a real plaintiff against Epstein? A Q that. A To the best of my recollection Mr. Edwards and Yes. And could you in summary fashion tell us about
some other individuals from our mass tort group were representing either one or several young ladies who had been molested allegedly by Mr. Epstein. Q A Q And this was an active filed Court litigation? It was, sir. And do you remember the stage at which the case
or cases were at the time that Legamaro was left with the 13 boxes? A First, I'm not sure it's 13 boxes. I don't know It
how many boxes it was. could have been less. the case was at. Q
It could have been more.
I don't recall at all what stage
After Legamaro looked at all these boxes what
questions did he ask you? A I don't recall specifically. They questioned me
a little bit about the case, but I don't recall specifically what they asked me. Q Did he talk to the lawyer in your firm who was United Reporting, Inc. (954) 525- 2221
Page 2280 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 suing Epstein to get a feel for the potential recovery that that lawyer was looking for in that case? A I do not believe so, but I don't have a specific
recollection of having him do that one way or the other. Q Did he talk to the lawyer to get a feel from the
lawyer as to the nature of the claim in the real case? MR. SCHERER: THE WITNESS: Object to form. I don't have a specific
recollection one way or the other, sir. BY MR. LAUER: Q I take it that you recall that the essence of
the case against Epstein in the fictitious settlement was this was an underage female? A Q Correct. Other than the allegation that Epstein had
violated federal and state law in transporting this underage female for improper purposes, were there any aggravating factors that you represented were included in the case? A I may have, but I don't recall specifically what
they were. Q How about the real case? Other than the fact
that Epstein was being sued for having sexual relations with an underage female, were there any allegations of a truly aggravating nature beyond the fact that she was United Reporting, Inc. (954) 525- 2221
Page 2281 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 underage? A Beyond the fact that he was allegedly molesting
underaged girls, I don't know of any other aggravating factors. Q No, sir. What I mean is, were there allegations that he
had physically harmed them beyond -- I don't mean to trivialize it, far from it, beyond the fact that he had factually consensual, but legally non-consensual relations with an underage person, were there allegations that he had beaten them or physically harmed them? A Q I don't remember allegations like that. And did anyone from your office who is
associated with the real case provide a sense of parameters of what they thought the real case was worth? A Q I don't recall anyone doing that other than me. Did anyone from the real case, so to speak,
provide examples of judgments or reported settlements in similar cases involving wealthy individuals who had had sexual relations with underage people? A I don't recall -MR. SCHERER: THE WITNESS: BY MR. LAUER: Q Did Legamaro ask your colleagues for any of that Object to the form. -- one way or the other.
information? United Reporting, Inc. (954) 525- 2221
Page 2282 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A I don't recall him speaking to my colleagues. I don't recall him asking me for that I recall him asking me questions about the
He may have. information.
case, but I don't remember specifics. Q You weren't handling the case, right? Did
Legamaro know that the case whose boxes he was examining was not being handled by you as the trial lawyer, but that it was being handled by other trial lawyers in your office? A I led Mr. Legamaro and the others to believe
that I had other lawyers in the firm doing all the leg work, but at the end of the day that I would be the one negotiating the settlement. Q A Q Did you appear as counsel in the real cases? No, sir. At any time did Legamaro or anyone with A.J.'s
group comment on the fact that you were not listed in the pleadings in that case? A You know, they may have. And the reason I'm
saying this is because someone brought it up from that group related to something else. whether it was this case or not. I don't remember And I simply said,
Well, everything is in the name of Rothstein Rosenfeldt Adler. That's my name. I'm certain any judge would not
have any problem with me showing up at anything given the United Reporting, Inc. (954) 525- 2221
Page 2283 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 fact this is my law firm. Q But you're not listed on the top of the other
counsel in any of the papers? A Q A Q I don't recall being, no, sir. Now, again, this was a confidential settlement? It was set up to be, yes. And that was the reason Discala and his people
were told that the payments were coming over time? A Q Correct. They were told that this was a big ticket
because Epstein was the defendant and he's a very wealthy guy, correct? A Correct. And he was associated with other
public figures who did not want their names dragged through the mud. Q That's the way we sold it.
Now, I'm sure you've noticed this before, but
when you turn to the front of Exhibit 261 it actually lists both the plaintiff and the defendant, right? A Q A Q A Q Yes. The plaintiff is Marsha Foreman, correct? Correct. And the defendant is Elite Delivery Systems LLC? Correct. So right off the bat, this is a breach of the
confidentiality agreement? United Reporting, Inc. (954) 525- 2221
Page 2284 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Correct. Assuming that they actually - they I don't recall
actually got this particular document. specifically.
I do recall them asking me who Elite
Delivery Systems were and how that was tied to Mr. Epstein. Q If they asked you that, they must have gotten
this documents, don't you think? A name. Either that or we discussed the defendant's I just want the record to be clear. I don't
recall whether they actually received this document or a redacted one and then brought the names up. As I've testified over the last many days, there were circumstances where as part of the due diligence to continue to lure investors in and to increase the level of transparency, we would, quote, unquote, disclose certain otherwise confidential information understanding that it would be to no one's benefit to disclose it because then everything they were investing in would explode. Q I understand that. But still you will agree
that whether there was a low risk of disclosure by providing the names of the plaintiff and the defendant, you were breaching the confidentiality agreement? A Q Correct. And Von Allmen and Discala and their colleagues United Reporting, Inc. (954) 525- 2221
Page 2285 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 were then aware of the fact that you were breaching the confidentiality agreement? A Q Correct. And not only were you breaching an agreement,
you as an attorney were breaching your fiduciary obligations to your client by doing so? A Correct. MR. SCHERER: BY MR. LAUER: Q And they, Von Allmen, Discala, and their Object to the form.
colleagues, were clearly well aware of the fact that you as attorney in providing them with this information, the names of the plaintiff and the defendant, were breaching your fiduciary duties to your client? MR. SCHERER: THE WITNESS: Object to the form. I would be guessing what was But I can tell
actually going on inside their head.
you what I was doing, assuming this was real, which is what I've just testified to. BY MR. LAUER: Q It would be a breach of your fiduciary duty? MR. SCHERER: THE WITNESS: Object to form. It would be a breach of the
confidentiality agreement. BY MR. LAUER: United Reporting, Inc. (954) 525- 2221
Page 2286 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q And since you were acting as counsel and that's
how you came to this information, putting aside the fact that you're running a massive fraudulent criminal Ponzi scheme, you also, at least in addition, would have been breaching your fiduciary duty to your client? A Q Correct. Now, Elite Delivery System, did they tell you
that they had Googled Elite Delivery system and looked them up? A Q A Q A They did not. Have you ever Googled Elite Delivery System? No, sir. Have you contacted Elite Delivery System? I don't know if they even really exist. It's a
name we created. Q Maybe someone created it for you before you. (Whereupon, The Funds' Exhibit No. 266 was marked for identification.) BY MR. LAUER: Q I'm showing you Exhibit 266, which is what you
get when you Google the defendant's name on Exhibit 261. A Q A Q Okay. Do you see that? I do. Have you seen this before? United Reporting, Inc. (954) 525- 2221
Page 2287 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 no. Q How about Marsha Foreman, did they -- did one of A A Q I have not. Did A.J. or Doug Von Allmen or any of the people
that were part of this D-3 Capital Club tell you that they had Googled Elite Delivery Systems? MR. SCHERER: Object to form.
No, but they did ask me what Elite Delivery
Systems were if I'm settling a case with Jeff Epstein. Q And presumably you told them it was an Epstein
front or something like that? A Q Correct. We've got the idea, but did they tell you they
had Googled Elite Delivery Systems? MR. SCHERER: times, Counsel. Q Withdrawn. Did Discala or Doug Von Allmen or any of the D-3 Capital Club people tell you that they had looked up Elite Delivery Systems? A Q No. Did they say they had done diligence concerning Objection, form. You asked three
Elite Delivery Systems? A They didn't say that one way or the other, sir,
their many participants do any investigative work to United Reporting, Inc. (954) 525- 2221
Page 2288 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q determine whether Marsha Foreman, in fact, existed; and if so, did she exist at this address? MR. SCHERER: Object to form.
I don't know whether they did or did not. Did they do due diligence to determine whether
the Marsha Foreman living at this address was, in fact, a minor? A I do not know what they did with regard to the
name Marsha Foreman. Q You testified -- You're free to take a few
seconds if you want to look at it. A No, no, I was just flipping through it while you
were getting your next question ready. Q A Q We're shifting topics. Okay. You testified at Page 354 -- let me withdraw. You testified at 354 of the transcript that through the period of January '09 - that is from April 2008 when my client started to lend money to the Banyon entities who in turn were then buying discounted settlements through you, that from April through January '09 basically no one else was investing in this program, do your remember that testimony? MR. SCHERER: MR. LAUER: Objection to form.
What's the objection?
Page 2289 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. SCHERER: That is not his testimony. It
assumes facts not in evidence and you misrepresent the evidence. Other than that I have no objection. Okay. Go ahead.
MR. LAUER: MR. SCHERER: MR. CIMO:
Like half your other questions.
I join in the objection. I would have to see the testimony
THE WITNESS: to know. BY MR. LAUER: Q A
This is my eighth day testifying and --
I'm not trying to challenge your testimony. No, no, I didn't say you were. But I've been
speaking about this case for two years now, now I've been testifying seven full hours a day for, well, I'm on my eighth day. It's all starting to kind of gel together.
If I could just take a look it I can tell you what it is. Q question: Okay. At Page 354 you were asked this You took Mr. Simony to the bank at
"Question:
various times to give him a show about how much money was in your Ponzi trust account; correct? Answer: Correct. So that Mr. Simony would have had
Question:
what was the Ponzi amount that accurately reflected all of their investments because nobody else was investing in the Ponzi at this time. Answer: Correct?
Basically, correct." United Reporting, Inc. (954) 525- 2221
Page 2290 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A A Now, is it not basically correct - and again at 388 just to bring this home, at 388 you testified in response to the following questions at Line 15: "Question: that point; right? Answer: Right. Nobody else was in these deals at
Now, there may have been very limited exceptions, but essentially between April '08 and January '09, am I correct that virtually all the money that went into your Ponzi scheme originated with the three hedge funds that I represent? MR. SCHERER: Objection, form of the question.
To the best of my recollection, the bulk of the
money at the time the hedge funds were investing was from the hedge funds with others dribbling in and out, and then Levin was doing whatever else he was doing to raise money at that point in time unbeknownst to me. Q And therefore, it is not correct that the vast
majority of the money that was repaid to the Banyon collection accounts and through the Banyon collection accounts to the lenders was in effect recycling to the hedge funds their own money? MR. SCHERER: Objection to form. That would only be
No, that would not be true.
true for a limited period of time as I was paying them -United Reporting, Inc. (954) 525- 2221
Page 2291 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A Q Q Let me stop you. MR. CIMO: Let him finish.
I'll give you the chance. MR. CIMO: Let him finish the answer.
Focus on the period April '08 to January '09. From -- this is very easy, you don't need my From April of '08 to January of '09
testimony for this.
all you have to do is look at the ledgers, look at all the bank accounts, you'll see how much money came in and then you'll see how much money went out, you can tell who's getting what money. The bulk of the money during the time when they were investing lots of money with us they were basically just getting their money back plus probably some from some other less lower level investors, perhaps the Tonacchios, Lifshitz, Morse, Levy groups, certainly smaller than your clients. Q A But -But as they were getting paid once I brought in
the bigger groups - let me finish - then the money that they were getting belonged to those people because they were no longer investing. From when they cut me off, I
stopped really doing much at the end of '08, but when they officially cut me off in April of '09, April 13, '09 I think I cut them off - we were basically at a dead United Reporting, Inc. (954) 525- 2221
Page 2292 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A heat, all the money they received from that point on would have been someone else's money. Q in Court. Court. Am I not correct -- Am I correct that the vast majority of the money that was returned to the Funds through the Banyon entities during the period April '08 to January '09 was, in fact, recycling to the Fund their own money? MR. CIMO: Objection to the form. We're just taking this in stages because we're We have different issues to deal with in
As a general statement you are correct, sir. Without looking at the ledgers for the
particularities of who else's money I was stealing. (Whereupon, The Funds' Exhibit No. 267 was marked for identification.) BY MR. LAUER: Q I'm handing you Exhibit 267, which is a report
by the Berkowitz, Dick, Pollack and Brant CPA consultants firm dated March 10, 2011. A Q I see it. Are you aware that Mr. Glick of this firm did Do you see it?
analysis of the various accounts and transfers to prepare this report? A I have no idea what he did. This is the first
Page 2293 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A time I'm seeing this. Q Putting aside whether you've seen this before,
were you aware that an accountant, whether you knew his name was Glick or not, was working with the Trustee to try to organize the transfers in and out of the various accounts? MR. CIMO: Objection to form.
I was not specifically aware of that, no, sir. Were you generally aware? That's a very broad question. Let me answer it
this way, I knew that all the people trying to get money from other people in clawback lawsuits and the like had hired forensics people. for me. As far as that specific issue is concerned, I don't know who was doing what and who hired who to do what. Q Well, take a look at the first two paragraphs so Beyond that it's all guess work
you'll see who hired the Berkowitz firm. A Q Okay. You can see that this report was prepared by a
firm that was hired by Herbert Stettin, the Trustee of the law firm Debtor's Estate? A Q That is what this document says. If you'll see -- if you want to take a minute to United Reporting, Inc. (954) 525- 2221
Page 2294 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 read the report or read the caption -- you don't have to read the report. it. Read the caption to get to feel for
I'm going to ask you some questions about the chart
on Page 5 and the chart on Page 7. A Why don't we look at the charts, I'll try to I'm not familiar with
answer your questions that way. any of this. Q Okay.
This report purports to have gone back
into some but not all of the accounts, but at least have gone back to all of the accounts that received money from the Banyon entities and sent money from RRA to the Banyon entities during the period of your scheme. you -- do you see the chart on Page 5? A I see two charts. Are you talking about the big Now, can
chart or the little chart? Q A Q The big chart. I see it. Okay. Now, see if we can -- Do you see that
Mr. Glick has, if you look at the column all the way on the left where it says lender slash funding, paren, funding entity; do you see that? A Q A Are you okay?
My back is killing me, but I'm good. Do you want to stand up? Not right this second. I see it, yes. United Reporting, Inc. (954) 525- 2221 I'm all right.
Page 2295 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A other. Q The next is January 3, '09 to April, '09 after Q So, he's broken this up into different periods
of time, the first period of time is April 3, '08 to January 2, '09; do you see that? A Q I do. The second period of time is January 3, '09 to
April 9, '09; do you see that? A Q I see that. And then April 10, '09 to October 2, '09, the
three periods. A Q I see that. Now, roughly those three periods correspond.
The first period is the period where the amount of money on a net basis that the Funds had exposed to this strategy peaked on or about January 2, 2009; does that generally comport with your recollection? A I don't have a recollection. MR. CIMO: Objection to form.
I don't have a recollection one way or the
which the Banyon entities missed payments in or about that period of time in April; do you recall that? A Q I do. And the period from that is until October 27
which precedes your trip to more Morocco? United Reporting, Inc. (954) 525- 2221
Page 2296 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A A Q Correct. If we'll take Centurion, the first entry is
inflow 107 million; do you see that? A Q I do. And that is saying that between April 3, '08 and
January 2, '09 Centurion paid in 107 million dollars through two of the Banyon entities. A You are asking me to assume that these records
are correct, right, for the purpose of these questions, but hypothetically -Q A Correct. -- I must assume that everything in here is
correct and complete? Q A Q report? MR. CIMO: Objection to the form. Correct. Okay. Assuming that, I see it. And these are -- this is the Trustee's
Correct.
I don't doubt the veracity of the Trustee at And unless
all, but this case has a lot of moving parts.
I specifically check something with my lawyer, I'm just going to take it as an assumption. correct, it could be wrong. Q Assume that with possible di minimus exception I'm assuming it's
that everything here, in this chart, is correct. United Reporting, Inc. (954) 525- 2221
Page 2297 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to -MR. NURIK: Yes, you do. No, that's 17. It's 17. page? THE WITNESS: No, I do not. It goes from 11 A Q A MR. CIMO: Objection to form.
I'm going to assume that it is correct -Fine. -- for purposes of our conversations, but I
can't say that it is correct because without sitting down and really looking at the bank accounts I can't tell you. Q A That's fine. Can I -- I don't mean to cut you off. I have to stand up. Can I
take a five minute break? Q A
You can also do, if there -I don't want to testify standing. (Thereupon, a short break was taken.) (A discussion was had off the record regarding
an exhibit.) THE WITNESS: What happens is it jumps, it goes
one, two, three, four, five, six, seven, eight, nine, ten, 11, and then after 11 it goes to 17. MR. LAUER: You don't have 12, the signature
THE WITNESS:
I'm looking at the top. MR. LAUER: Don't look at the top. Look at
Page 2298 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q minute. the -(A discussion was had off the record.) MR. LAUER: document. THE WITNESS: document. away. MR. LAUER: The most important part is one Okay, to me that was part of the We're all good. Fire Don't look at the top, look at the
I get you now.
through 12 which bears Joel's signature. THE WITNESS: BY MR. LAUER: Q Back on the record or we're on the record? MR. CIMO: Thank you. I see that.
Let's just try to walk-through this chart for a According to this chart April 3, '08 to January
2, '09 Centurion sent in 107 million and change and got back 72 million? A Q Correct, according to this chart. During that period they were net out 35
million, which means they had 35 million on a net basis still invested in this strategy? A Q Again, assuming the chart is correct, yes. Correct. And we'll jump down to Platinum to cover the same time period April 3, '08 to January 2, '09; United Reporting, Inc. (954) 525- 2221
Page 2299 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Platinum lent the Banyons 218 million and got back 83 million, so they had invested in this strategy on a net cash basis as of January 2, '09, a 134,800,000. see that according to the chart? A Q I see that according to the chart. The third fund, Level 3, between April 3, '08 Do you
and January 2, '09 loaned the Banyons 18 million, received back 5 million and they had invested in this strategy 12,700,000. A Q I see that. And if you add 35 and 134 and 12 you basically You see that?
see that as of January 2, 2009 you had - or had spent, but you had received on a net basis from them over 182 million dollars. MR. CIMO: Objection to form.
Again, assuming the chart is correct, then that
is correct. Q Going further with this chart, what this chart
also indicates is that during this same time period that is January -- that is April 3, '08 through January 2, '09 if you add up the totals of the inflow that is the 107 and the 218 and the 18, the Funds - or the scheme that you were running and the accounts that you controlled received about 343 million. And during that
same time period you sent back 72 million, 83 million, United Reporting, Inc. (954) 525- 2221
Page 2300 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A Q and 5 million. A Q According to -About a 160 million. MR. CIMO: Object to the form.
According to the chart, that's correct. So according to this chart, they sent in about
340, they got back out 160, and you were still sitting with 180 of theirs so you had used that 180 for your own purposes? MR. CIMO: Objection to form.
Assuming the chart is correct, sir. Right. Now, I would ask you to turn to Page 7
the bottom chart. A Q Okay. I'm sorry. Before we go to Page 7, I have a few You will see on Page 5 in the
more questions on Page 5.
period April 10 to October 27, '09, for Centurion under inflows? A Q A Q Yes, sir. The box is blank? Yes, sir. That's because after the missed payment you
received no further money and they made no further loans in connection with your activity? MR. CIMO: Objection to form.
Page 2301 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 back? MR. LAUER: MR. SCHERER: MR. LAUER: I can ask it again. I lost the date. The date is between April 10, '09 MR. SCHERER: Can we get that question read
and October 27, '09. MR. SCHERER: MR. HERTZBERG: MR. SCHERER: MR. LAUER: You said the payment was missed? Inflows after that date. After April what?
April 10th. Object to form.
MR. SCHERER: BY MR. LAUER: Q
That doesn't mean to imply they made a payment According to this chart, am I correct, that
on April 9.
during this period early April to the end of your scheme Centurion did not do any more deals? MR. SCHERER: MR. CIMO: MR. LAUER: Objection to form.
Object to the form. What is the objection? It assumes facts not in evidence.
MR. SCHERER: It's wrong. of April. April on.
He didn't make any payments in the month
No money came from any of your clients in I believe to be the facts. So, I object
to the form.
You can straighten out your question. My objection is based upon the fact
MR. CIMO:
Page 2302 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the witness never saw this document before and has no knowledge of any of its contents. MR. LAUER: MR. CIMO: BY MR. LAUER: Q Does the chart comport generally with your Anything else? That's it.
recollection that at least from the time of the missed payment until the end of your scheme, none of the Funds made any further loans to Banyon for the purpose of buying settlements? A We're accepting Regent and Intercoastal, any I was
side deals, I don't remember the timing of those.
saying those are not included in Centurion, Platinum, Level 3; right? Q A Q Yes. Okay. Let's put aside Intercoastal and Regent, which We're accepting that?
we've discussed. A Assuming that the chart is correct, then that is
what it reflects. Q Well, does that reflection comport with your
recollection that the Funds no longer invested directly or indirectly either by lending or otherwise in connection with the Banyon activities or your activity? A To the best of my recollection you are correct. United Reporting, Inc. (954) 525- 2221
Page 2303 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Okay. Now, go to Page 7. Do you see the second
column 4/3/08 to 4/9/09; do you see that? A Q I do. That's covering the period roughly from when the
first of the three hedge funds began lending money to the Banyons to roughly the period when the Funds no longer put any money into a Banyon entity; do you see that? A Q Yes. And what Glick reports on this chart is during
this same period other RRA investor inflows, meaning individuals or entities not associated with the Funds caused your accounts to receive $309 million during that period; do you see that? MR. CIMO: word your. Q A RRA investor inflows; do you see that? I do see that. I'm just trying to figure out Objection to the form, use of the
what the difference between RRA investors inflows and funding entities inflows are. Q Other RRA investor inflows and other RRA
investor outflows, is everyone dealing directly or indirectly with you other than the three funds? A Q A Okay. Okay. Now I understand. Thank you.
Page 2304 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A Q A Q Q And according to this chart prepared for the
Trustee during this period April 3, '08 to April 9, '09, the accounts received from others, 309 million, but sent out to these same others, that is everyone but the Funds, 334 million. A Q Okay. So, other investors received $25 million more
during this time period than they had actually paid in in the aggregate; do you see that? MR. CIMO: Object to the form.
Assuming this chart is correct. Assuming this chart is correct, this chart is
showing that during this period of time when the Funds were putting in money, other investors received $25 million more than they actually put in? MR. CIMO: Objection to form.
According to this chart, correct? Assuming this is correct, you are correct. All right. And then if you go to the funding
entities inflows and outflows during this period, that is referring to the three hedge funds and the Banyon entities that they were lending to, the escrow accounts received 497 million but only paid out 373 million during that period. Do you see that? Objection to form.
MR. CIMO:
Page 2305 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A A Q So that on a net basis, the Banyon entities and
the three hedge funds that were funding the Banyon entities had put more money in than they had taken out during this time period? MR. CIMO: Objection to the form.
Correct me if I'm wrong, but that number should
also include any other of the extraneous investors like Morse and -- doesn't include that? Q If Morse put money in he's included in other RRA If anyone else put money in, that
investor inflows.
person is included in other RRA investor inflows. A Q Assuming this is correct? Assuming this is correct. MR. CIMO: Same objection.
Where would -- I'm going to only answer assuming
that this is a 100 percent correct. Q A Assuming this is correct. Because my concern is to who composed what I'll continue to go.
groups, but that's okay. Q
It's very simple, the three hedge funds each
funded a separate Banyon account; do you recall that? A Q I do. So you've got three hedge funds and you have an
individual Banyon account that was funded by loans from a particular hedge fund; do you remember that? United Reporting, Inc. (954) 525- 2221
Page 2306 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A A Q I do. That constitutes the sum and substance of You can accept that representation,
funding entities. okay?
Everything else, individual entities, people you
knew, people you didn't know that put money in or took money out from what you were doing is listed in other; do you have that? A Q Okay. I understand.
So, this chart is saying that other, which is
everyone but the three hedge funds and the Banyon entities they financed, took out $25 million more during this period of time than they put in. MR. CIMO: Objection to form. Assuming this is Do you see that?
We just talked about that.
correct, you're correct. Q At the same time the three hedge funds and the
Banyon entities that they financed had exposed - were exposed and had invested in this strategy approximately $124 million, that is they had put in $124 million more than they had taken out. MR. CIMO: Objection to the form.
If this chart is a correct, yes. Now, does that comport generally with your
recollection then that during the period April to April, the majority of the money that the Funds received back United Reporting, Inc. (954) 525- 2221
Page 2307 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A from the Banyon entities, in fact, was a recycling of the Funds' own money? MR. CIMO: Objection to the form.
I have -- without seeing all the financials I There
can't testify to whether that's accurate or not.
was so much money going in and out and so much money moving around in the accounts, I don't want to testify to something that's so speculative from my perspective. you'll have to rely on this chart for your needs. So,
And if
you want to provide me with all the other financials and do that kind of analysis, we can do that. Q I'm going to show you a packet of e-mails, I'll
try to move this along, concerning the Bar Association grievance committee. By the way, were you once on the grievance committee? A Q I was. How did you get appointed to the grievance
committee? A Q attorney? A The fact that I don't remember or the fact that I don't remember. Is that a sign of your prominence as an
I got appointed? Q Okay. I'll grant you that. United Reporting, Inc. (954) 525- 2221
Page 2308 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (Whereupon, The Funds' Exhibit No. 268 was marked for identification.) BY MR. LAUER: Q I've handed you Exhibit 268, which is a And I'll take you through You've
composite exhibit of e-mails.
the e-mails in a minute just to put this context. testified, Mr. Rothstein, that you sent a number of
e-mails to Frank Preve where the purpose of constructing the e-mail and the detail in the e-mail often was so that he could send on that piece of information to someone else such as an investor? A The bulk of the times that these e-mails were
being sent to Mr. Preve, they were for the purpose of having him have culpable deniability as to why we were not able to pay certain things, yes, sir. Q One of the story lines that you developed was
that you were having lingering but ever-increasing problems with the bar grievance committee? A Q Correct. And as this story developed you developed a
story line that in part, at least the problem with the grievance committee was being exacerbated by the fact that the Funds had reduced the level of loans that they were making to the Banyon entities? MR. SCHERER: Object to the form.
Page 2309 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A We were using the grievance committee story to
try to force our funders, at this point in time the hedge funds, to fund faster and in greater numbers. Q And the grievance story in part was that as a
result of the hedge funds not making more loans at the level that you wished to the Banyon entities, you were having problems with clients who were complaining to the grievance committee? A More specifically the story that was told to
them by me and Mr. Preve was that they're telling us they were going to actually fund and then not funding created the problem with the Bar. Q And part of the problem with the Bar is the Bar
was making noises about your ability to practice? A It ran the gamut from grievances to potential
suspensions, freezing trust accounts, making my life a nightmare, whatever we needed to do in order to create some sort of fire, some impetus to get funds out of them. Q A And in fact -And also -- let me finish the answer. And also
to explain why we were not paying. Q This was not something that you developed in one
e-mail, it was something that you developed over time to build on the story to give it credibility? A The story grew as it was needed to create the United Reporting, Inc. (954) 525- 2221
Page 2310 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A impetus and the excuse. Q Turning to Exhibit 268, the first is an e-mail
January 22, 2008 from you to FPreve, "Hey G, just waiting for Adria to arrive." Is Adria the woman from the bar association? A Q Adria, yes. "We'll call as soon as I wrap and head over to Ciao, ciao Bar Hood."
the office.
Now, this was January 2008, it was several months before my clients ever did any financing with Banyon. e-mail? A The part you did not ask me about. Early on, What was the background of this particular
the bar story was created by me to fool both Mr. Preve and Mr. Levin. Q A Okay, so -I didn't let Mr. Preve in on it until it was Until he figured out that there was no way
necessary.
this was really happening. Q This is, as they say in show business, in medias
res, in the middle, just waiting for Adria to arrive. What had you been telling Frank Preve? I don't -- here's the problem. We're back to I
where we were all these other days - not with you.
need to see the e-mail traffic days before, days after, United Reporting, Inc. (954) 525- 2221
Page 2311 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 in order to tell you what this is about. To take a
single several line e-mail out of context when you're dealing with a case that has over a million e-mails in it I can't tell you one way or the other. Q Without getting specific then, is it your best
recollection that in some manner, shape, or form you were telling Frank that you had some kind of problem, however unspecific with this woman at the Bar Association? A Q Correct. And judging from the fact that you don't
describe who she is or use her last name, it's fair to assume from this e-mail that you must have had previous communication either in writing or in person with Mr. Preve to explain to him that you were having some type of problem with the grievance committee? A Yes. You recall as you read the e-mails you'll
see that Mr. Preve was let in on the entire scheme piecemeal, so yes. Q Go to the next e-mail, April 7, 2009. A lot of
expletives here where you seem to be - this is from you to Preve - where you seem to be unhappy about needing someone to step up and fund about $20 million and another 30 million next week. just can't do it. What was the nature of this e-mail? United Reporting, Inc. (954) 525- 2221 What were Centurion is a joke and Platinum
Page 2312 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you trying to communicate through Preve to the Funds? A That their failure to fund as promised was going
to be endangering my business and my career and the strategy. Q And then the next e-mail on that page, which We
actually had been eight minutes earlier, you say:
will have to convince them to use those monies to fund the grieving parties. By grieving parties you are
referring to plaintiffs or clients who had filed a grievance with the bar association? A Q A Q A You talking about the second e-mail? Yeah. That's to me from Frank. Okay. So I'm -- it's -- you want me to guess what I
think he was talking about? Q When he's referring to grieving parties, is he
referring to people who filed grievances with the grievance committee? A Q Yes. And then the bottom e-mail from you to gents, I was grieved by
just received my mail for the day. three of my clients.
Does that mean that you were
telling Frank that three of your clients filed grievances with of the grievance committee? United Reporting, Inc. (954) 525- 2221
Page 2313 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 lawyer? A Q Preve. Yes. You go to the next e-mail, April 8 from you to Talk about two more grievances were delivered A chain. Q Yes, that is actually the first e-mail in the That's what starts this. Basically you're saying, you're connecting the
grievances to the absence of funding from my client? A Q Correct. Then the next document, an e-mail from you to I just received a call from Mayer,
Preve where you say:
that's referring to Mark Nordlicht; correct? A Q counsel. Again, are you referring to your advocate or are you referring to the lawyer that represents the grievance committee and is basically investigating you and challenging your activities? A I have no idea. I just wanted to provide him Yes, sir. But, did not take it as I am in with bar
with something to utilize. Q Well, the next e-mail: Okey dokey, I will call
him as soon as Adria leaves. Again, you're referring to the bar grievance
today to the bar office in Fort Lauderdale. United Reporting, Inc. (954) 525- 2221
Page 2314 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A clear. One second, I want to make sure the record is These e-mails that we've read so far, except for
the very first one, are both you -- I know you're not doing it intentionally but you're saying to Mr. Preve when they are really to Mr. Preve and Mr. Levin. to make sure the record is clear. Q I was not doing that intentionally. I don't I want
have a lot of time. A Q A Q I know you weren't. Okay. The record is clear. We're good to go.
Whoever was getting these e-mails was getting
the story line -A Q Correct. -- for them to believe or for them to pass on
that more grievances were filed and they were in large measure connected to the fact that funding had not come as promised? A Q Correct. And you're referring to the fact that there's a
possibility of you being suspended from practice; correct? A Q Correct. And obviously if that happened that might
prevent you from operating law firm escrow accounts? United Reporting, Inc. (954) 525- 2221
Page 2315 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A Q Correct. So, you're building the story that would give a
plausible basis for your holding back the return of money? A Holding back -- yes, holding back the return of
money and trying to squeeze additional monies out of them, correct. Q April 9 goes: Just spoke to Adria, she's 100
percent certain that they are not making a request to have an emergency suspension leveled against me today. They want to see what I do today so I'm trying to do stuff. Do you see that? I do. So, again, you're connecting the potential
freeze or the potential problem with a solution which could come from new funds? A Yes. You can see from the date that we're
building towards the April 13, 2009 date when I cut them officially. Q part: Right. Next one is April 10, and you say in We're going through my
I'm with Adria right now.
current exposure. advises.
I will report back as soon as she
Monday morning the bar committee handling my Right?
current grievances is meeting.
Page 2316 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A Q Right. You're building up? Yes, sir. And then what happened was the Banyon missed
payments on or about April 13 and the Funds were told that the reason the payments were missed was because of this increasing problem that they had been hearing about between you and the grievance committee; right? A Q Yes. And in part - and the Funds were also told by
you, somewhat aggressively, that either by you directly or by you aggressively through Preve and Levin that it was their fault because they supposedly had promised funding to the Banyons which had not come through? A Q That's correct. Any in any event, payments were missed and then
there were series of meetings between the Fund, their representatives and Preve and Levin and the Fund representatives and you as well; correct? A Q Correct. At some point you set up a call between - with And on
the grievance committee in the form of Adria.
that call you must have had a call-in number, was Mr. Ari Glass, if you remember that? A I know there was a representative of the Fund on United Reporting, Inc. (954) 525- 2221
Page 2317 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the call and I had someone from my office playing the Bar representative. Q Do you remember that Mr. Glass called in from
Mr. Goldberg's law firm? A Q A Q No, I don't recall that. Believe he is -There he is. I believe he's a lawyer in the box. And on that call did you brief this woman from your law firm on what to expect? A Q A I did. What did you tell her? I had given her a script to refer to about what I told Who is Mr. Goldberg.
was going on, what questions she should answer.
her specifically that when they ask something that she couldn't think up an answer for to just say that pursuant to the Bar rules she couldn't answer that type of question, that was her escape vow, so to speak. a very bright woman from my firm. it was before but I remember now. Q A Cabello. Q And did you explain to her -- Withdrawn. What did you explain to Ari was the purpose for United Reporting, Inc. (954) 525- 2221 Who was it? It was Stuart Rosenfeldt's paralegal, Adelita She was
I actually forgot who
Page 2318 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 him being on this call? A purpose. Q And in the course of the Bar call was part of They wanted to talk to the Bar. That was the
the script to basically suggest to Ari and the Funds that they could help solve this problem? A Q A Yes. By doing more funding? That's correct, by living up to -- the way I had
her address it was, that they needed to live up to any agreements that they had made with our law firm. Q Did Ari ask -- Were there any occasions in this
conversation when Ari asked questions where the woman posing as Adria, said that she could not answer those questions because it was a Bar Association issue? A To the best of my recollection, yes, but I don't
have a specific recollection one way or the other. Q And you'll see in this packet - time does not
permit me to go through them with you - April 20, April 21, April 21, April 22, additional e-mails back and forth dealing with this supposed bar association problem. you see that? A Q Yes. On May 13 you say to Preve: Are you in a Do
position to send funds today?
Bar folks are getting
Page 2319 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ready to leave for the day. and Kevin my next step. Again, you're trying to put pressure on the Funds to actually send money again; correct? A Q Correct. By the way, on the May 13 e-mail, you said: I I would like to tell Adria
would like to tell Adria and Kevin my next step. Kevin? A
Who is
That was Kevin Tynan, it was a person that we
had actually consulted with regard to bar issues in the past. Q life? A Q Not regarding this but other things, sure. And then on May 26, you say to Preve: You're Did you actually consult with Kevin in real
e-mail was great with Adria. Bar's -A Q issue. Yes.
Kevin shoved it up the
On June 25 you're continuing to rely on the Bar You say -- this is to Preve -- all along you're
expecting Preve in some fashion to be passing this on either by e-mail or phone conversations or meetings to my clients; right? A Q Correct. Priority after a lovely breakfast meeting with United Reporting, Inc. (954) 525- 2221
Page 2320 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q the New York attorney about to send us cases, I came back to my office to find two new Bar orders here with Adria; right? A Q Yes, sir. This was continuing. And then you go on to
say - or I should say the preceding e-mail from Preve to Scott Rothstein, subject: saying: Priorities is basically
Here's what we need to do, we need to pay the
May and June payments, need three-and-a-half million in Banyon. I need two million tomorrow. George needs about
10 million in spending money. specifics with him. dirty laundry.
Try to stay away from
He doesn't want you knowing our
That's between you and Preve? Yes. Now, notwithstanding all of the story lines and
the SOSs regarding the Bar Association and the grievance committee, the fact is the Funds never put in any new money? A Q They never caved into this; did they? That's correct. I'm handing you Exhibit 269, it's a composite. (Whereupon, The Funds' Exhibit No. 269 was marked for identification.) BY MR. LAUER: Q First, is from Irene Stay, which is the Monday, United Reporting, Inc. (954) 525- 2221
Page 2321 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 April 13, 2009 wire instructions for T2. that? A Q Yes. And then on the other document bearing counsel's The next Do you see
stamp 20453, this is in chronological order.
event is from FundTransfer@yesbank.com to Scott Rothstein. A Q A Q Do you see that?
Yes. On the second page? Yes. At 12:43, a payment of $3,666,000 went out to
Regent Capital Partners? A Q A Q Correct. On April 13; correct? Correct. The next event after that at 12:51, it's from I will be
you to Jack Simony where you say to Jack:
awaiting receipt of the one-half back today. I take it you are telling Jack you're expecting to receive back in sum reinvesting form, half of the three million six? A Q Right? A Yes, sir. United Reporting, Inc. (954) 525- 2221 Correct. Jack says: Please send me wire instructions.
Page 2322 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 16. Ari? A Q A Yes. Because the payments had stopped; right? Yes. This was around the time that we were Q A Q And then you send him wire instructions; right? I do. And in fact, you never received any money back
from Jack Simony on Regent? A Q A Q I believe that's correct, sir. He said he would do it but he didn't? Yes, sir. Next document, 270. (Whereupon, The Funds' Exhibit No. 270 was marked for identification.) BY MR. LAUER: Q to Preve. Subject: wires. First page is an April 14, 2009 e-mail from you You tell him - it's from Jack Simony. Ari on April 14th: Please start sending Ari
It's important the process begin as soon as Need to calm him down a bit. What's he saying here, you should send money to
possible.
making the single payments, a million here, two million there to the various hedge funds. Q Go to the next -- the next document is April I
You say in the middle of that big paragraph: United Reporting, Inc. (954) 525- 2221
Page 2323 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A A stuff. Q A Q Nine lines down. Hang on. I believe he has his own money in the company. believe he has his own money in the company despite prohibitions to the contrary. What do you mean by that? Sorry. Where are you looking? There's a lot of
By that I take it you're saying you believe Ari has his own money invested in one or more of the hedge funds; right? A I don't remember which fund that was. It was a
point in time where Jack Simony told us some kind of story, we were talking about investing. And we said, if
the Funds can't get other money, tell these guys to put their own money in the deals. And Jack told us this,
which apparently I now know is a story they couldn't put their own money into this particular company. throwing that back at them. Q The reality is not only is there no prohibition So I was
against fund manager investing in their own funds and other people's funds, these fund managers were all investing? MR. SCHERER: Objection to form.
I don't know one way or the other but it's United Reporting, Inc. (954) 525- 2221
Page 2324 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A Q A Q Q assuming what you're telling me is correct, that would be the fact. I have heard information about that since we
started this deposition. Q So, this was sort of their version of your Bar
Association story? MR. CIMO: Objection, form. This is an e-mail from
Go to the next document.
George Levin on April 16. Do you see that? What is the date?
Dear Ari.
April 16, at the bottom. Got it. And after the payments -- After Banyon missed
its payments and there was a period of several days or a week or two before the schedule of payments resumed. There were a series of demands being made from you through Levin and Preve to the Funds. that? A Correct. MR. SCHERER: Object to form. Do you remember
And included in those demands were demands that
if you arranged to release funds or if the Banyons were able to begin repaying the Funds, the repayments would only occur on condition that the Funds agree to return a significant percentage of what they received. United Reporting, Inc. (954) 525- 2221 Do you
Page 2325 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q remember that? A Q That is what we were trying to achieve, yes. All right. And you pushed this directly and you
pushed this through Preve; right? A Q A Q Yes. And you pushed this through George Levin? To a more limited extent, yes. They were insisting that if the Funds expect to
get their loans repaid they would have to agree to do new investments? A Q they? A They did not. MR. SCHERER: Object to form. Yes. And yet again, they never agreed to that; did
Not to my recollection. Thank you. MR. SCHERER: MR. LAUER: You would agree? In
I'm happy to call you, Bill.
fact -MR. SCHERER: was going to say. MR. LAUER: When you're under oath and I'm Oh, no, you wouldn't like what I
examining you, I will like it. MR. SCHERER: I bet. Maybe, maybe not. We'll
Page 2326 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A Q bring in Adrianna. BY MR. LAUER: Q Have you ever seen the loan modification
agreement that was ultimately signed between Platinum and the Banyon entity that owed Platinum money? A Q I don't recall seeing that, no, sir. Also one of the items that Levin was insisting
on, if you recall, in addition to the Funds agreeing to make new loans, he was insisting that the Funds agree to give good credit ratings to any prospective new investor. A Q Do you remember that? I remember that, yes, sir. And in fact, do you know that when the -- when
Platinum and Levin finally signed off on the loan modification, the only thing that Platinum agreed to do was if they made -- if they gave information to a prospective investor in writing they would share the writing with Levin. MR. CIMO: Do you remember that? Object to the form.
I don't remember that. But, that -No, I don't remember that. They rejected Levin's demand that they agree to
give a good report to prospective investors? MR. CIMO: Objection to form.
Page 2327 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A Q A A Q A They may have rejected it in writing but in At least
reality they did what Levin, Preve and I asked. according to Jack Simony and A.J. Discala. Q A Q right? MR. SCHERER: Object to form. We've been through that; right? We've been through a lot of this.
Discala had one unannounced meeting with Simony;
I don't know how many times they met. He and Jack have testified they had one Are you aware
unannounced, unplanned 25 minute meeting. of anything else? MR. CIMO: Objection to form.
I'm not even aware of that. MR. SCHERER: Are we going to swear you,
Elliot? MR. LAUER: I'm ready.
Let me come back to Kip Hunter for a moment? Sure. Did Hunter arrange for the law firm to contract
with Don King Productions? A Q She did. And did she do the negotiating with Don King
Productions? A Some of it. United Reporting, Inc. (954) 525- 2221
Page 2328 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q Q A And what was the purpose of that transaction? David Boden and I had set aside approximately a Kip came
million dollars to do large scale promotions. up with this particular idea.
That was the purpose, we
were going to try to promote all our different brands including law firm, restaurants, other businesses, all at the same time through one giant media outlet. Q A Q A Q A Q Kip negotiated the transaction for you? Most of it. And did you think it was a fair deal? I actually didn't care. Did she think it was a fair deal? I have no idea what she thought. Was she a professional? MR. CIMO: Objection to form.
Sometimes yes, sometimes no. Did you get branding rights on -- Did you meet
with Don King? A Q A Q A Q On multiple occasions. And why did you meet with Don King? To discuss the business deal and for fun. And -He's a lot of fun. Whose name was on the center of the Ring at the
fight that took place Valentine's Day 2009? United Reporting, Inc. (954) 525- 2221
Page 2329 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A Q A Q A Q A Q A MR. LICHTMAN: Objections.
I don't remember what we put in the middle. If you show me a
Probably RRA would be in the middle. Ring shot we can tell. Q
And in the center, that is center of the Ring,
was RRA; that's the law firm? MR. CIMO: Object to the form.
The RRA law firm, yes. This was televised? It was. Got a lot of publicity? MR. CIMO: Object to the form.
To my recollection it did, yes, sir. Don King invited you into the Ring with him? He did. He gave a shout-out to you and the RRA law firm? Yes, he was most gracious. And you had the opportunity of representing the
RRA law firm to provide a gift to the winning boxer? A Q A Q program? A Yes, sir. United Reporting, Inc. (954) 525- 2221 Correct. All of this is on television? Yes, sir. You were listed as -- RRA was listed in the
Page 2330 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A Q Did you have a complimentary tickets to give out
to the fight? A Q A We did. Did you invite clients of the law firm? I don't remember who I invited. I invited a lot
of people. Q A Clients, prospective clients, people of means? I really have no specific recollection as I sit
here today as to who I invited. Q yourself? A I believe they did. I don't have a specific Did other people from the law firm come besides
recollection. Q firm? A There were a lot of people there in general, but Did a large number of people come from the law
I don't recall who came from the law firm and who didn't. Q There was an after party which had RRA with
naming rights? MR. CIMO: Objection to form. Yes, sir. What was the nature of the after party? I don't recall actually. I remember it being at
the Bank Atlantic Center. it.
I don't recall the nature of
Page 2331 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 universe. A A Q Remember the Ring post said RRA? MR. CIMO: Object to the form.
I remember the RRA name and many of our other That was the
companies' names being all over everything. purpose of the event. Q Was there a lot of buzz from this? MR. CIMO: Sorry?
I didn't hear the question.
Can you read it back for me? (The pending question was read back by the Court reporter.) MR. CIMO: Objection, form. When was this?
MR. SCHERER: BY MR. LAUER: Q A know.
Valentine's Day, 2009; right? There was a fair amount of buzz. I don't
I don't think it was at the end of the day
exactly what we expected but it was - all the people that were involved had a lot of fun with it. Q You got a lot of publicity out of it? MR. CIMO: Object to the form.
I can't define a lot for me because we were
getting a lot of publicity doing a lot of things. As you know, we were plastered all over the So, yeah, we got a fair amount -- it was good
for the businesses, it was good for our visibility, and United Reporting, Inc. (954) 525- 2221
Page 2332 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A A it was a lot of fun. Q Okay. Did Kip feel that it was a good use of
your law firm funds? MR. CIMO: Object to form. What she actually
She told me she thought that.
knew, I don't know. Q But, Kip Hunter told you that she thought this
was a good use of law firm funds? MR. CIMO: Object to the form.
She told me that and David Boden told me that.
But what they thought, I do not know. Q You never know what someone thinks. You can
only testify as to what they told you.
So, Kip Hunter
told you that she thought this was a good use of law firm funds to pay $700,000 for this kind of publicity and marketing with Don King Productions; correct? MR. CIMO: Object to the form. Go ahead.
Here's the way you have to look at it -I think if you can't answer yes or no, we will
try another question. A Q She didn't say that specifically, no. In substance, did she tell you that she thought
this was an appropriate and good use of law firm funds to spend $700,000 for this marketing program? MR. CIMO: Objection to the form.
Page 2333 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A know. Q A today? Q A Yeah, I want to know what you know now. Subsequent to the event I sat David Boden and Did Kip Hunter commit fraud? You want to know what I know now sitting here Not really. I can tell you why if you want to
Kip Hunter down and I told them I thought it was a great event, that I had lot of fun, that I had lot of money so I didn't mind spending the money. But that I didn't want
to ever do anything like that again because I didn't think we achieved $700,000 worth of marketing or anything near it. I told them we spent next to nothing doing public service adds with the Dan Marino Foundation, the Alonzo Mourning Foundation, the Wade's World Foundation and got far more exposure in the relative - excuse me, in the relevant markets for a lot less infusion of capital. I told them, I didn't mind blowing it this one time because it was fun for me. As far as a marketing
thing - and then I joke around with them and said, I'm not going to ask either one of you if you got kickbacks from Mr. King or his company. We'll leave it alone. We
won't do this kind of thing again, but I did have a good time. United Reporting, Inc. (954) 525- 2221
Page 2334 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q Since you don't know - putting aside whether you
had buyer's remorse after you paid that money for the marketing, when you were going into the program and she was telling you this is what it cost and this is what you get; was it clear in that process that she was communicating to you that she believed this was a reasonable use of your law firm money for this kind of marketing value? MR. CIMO: Objection, form.
My recollection is that she was attempting to I also recall - and you to have
convince me to do this.
ask them about this - there was some tiff between David Boden and her as to the amount of money we were spending and what we were expecting to get. about that. Q Okay. Did she ever tell you that she thought You have to ask them
this could be done for less? A Q Yes. Did you tell her if you think it could be done
for less why don't you do it for less? A No, I said just get it done. I didn't want to
hear about it anymore.
Unfortunately, during the periods
of my life where I was spending other people's money, as I told you days ago, I spent it like I hate it. money like I hated the money. I didn't care. Spent I spent it
Page 2335 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q the -A My recollection is that it happened in stages. and said, let's get this done. Let's get this done. I
have other things to worry about. Q Did she negotiate with Don King Productions is
over the fee? A Q A I don't believe she did, no. Do you know how the number was fixed? My recollection was we got several different
drafts of contracts or several different e-mails of variety of amounts and ultimately at the end of the day Mr. Boden and I and her picked whatever it is we were going to do. Q Did she work out what marketing items you were
getting for the $700,000 -MR. CIMO: Objection to the form.
-- in terms of the center Ring and the posts and
We originally were going in for a much lesser amount, which is one of the reasons I thought there was a kickback scheme going on because we were originally going in for a few 100 grand and by the time I got done getting sold this, hook, line and sinker, I was in up to my nose. As a matter of fact, I'm not sure I even knew it was costing me 700,000 at the end of the day. I knew it
was very expensive but it was one of those things, like I United Reporting, Inc. (954) 525- 2221
Page 2336 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 got taken by Albert Peter, they put the hook in my mouth and they just kept pulling. MR. SCHERER: your Don King case. Elliot, taking our time to develop Shameful, shameful. I wondered
what the heck you were doing. MR. LAUER: I was not the first one to mention
Don King in this deposition. BY MR. LAUER: Q I'm showing you Exhibit 271. This is an e-mail
from you to Preve dated December 25, 2008. A Yes. (Whereupon, The Funds' Exhibit No. 271 was marked for identification.) BY MR. LAUER: Q that? A Q A Q Yes. This is Brian Jedwab? Yes. This is in connection with him wanting to do You start out by saying F Brian. Do you see
more due diligence? A Q A Q Yes. You say I do not trust him? Correct. And you're complaining that he keeps changing United Reporting, Inc. (954) 525- 2221
Page 2337 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 yours? A Q He was. He's since passed away. the kind of diligence and questions that he wants to engage in; right? A Q to you: Correct. Do you see at the bottom of the page Preve says Jack wants you to drop your pants for Brian, but
I didn't still don't hear anything about funding in December. A Q Do you see that? Yes. Go onto the next document, March 19, 2009. Do you see that? This
is from you to Preve. A Q I do.
And it's coming after an e-mail from Brian Do you see that?
Jedwab to you. A Q Yes.
And you say to Preve:
Can you give this A-hole
what he needs, actually what he needs is a solid beating from Bobby. I want to kill him.
I take it Bobby is some kind of body guard of
And again, you're incensed at Brian's insistence
for further information? A Yes, I'm incensed by this whole thing. And I'm
livid with Brian and having to deal with him, yes. Q March 25, 2009 from you to Preve. United Reporting, Inc. (954) 525- 2221 Funding. Hey
Page 2338 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A insiders? A No. Remember I described Brian as the guy who triple GGG: Did that little F Brian ever say anything
about releasing your money? I take it that Brian was not one of your
if he figured out we were running a Ponzi scheme would have gone running down the hall calling the police all the way. Q Let me ask you this. If you go to the last
document in this packet, there's an e-mail dated October 5 from you to Jack Simony and Mark Nordlicht with a copy to Preve: Somebody F'd you. Somebody F'd me, according
to your e-mail? A Q I see that. Then you say: I was told that Platinum needed
to have the two, $3 million checks in their hands while you awaited the TD wires so you could deal with the valuation team? A Q Yes. Instead the two, $3 million checks were
deposited. What's going on here? There was a point in time where we were trying
to make it a funding deal with them and we were trying to make a little bit of peace, keep them in the mix as much United Reporting, Inc. (954) 525- 2221
Page 2339 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 say: as possible. I gave them two checks to hold while they
were dealing with people that they needed to deal with. They weren't supposed to deposit them without notifying us. We were going to wire funds, at least that's the They went ahead and deposited
story we were utilizing. them anyway. Q
You were going to wire money to Banyon which in
turn would then -- you would wire money to a collection account? A it to. Q And the checks were given to them in connection Yeah, to whichever account they told me to wire
with the Banyon repayments? A I suspect so. I don't know. I wasn't part of
that portion of the deals. Q In fact, on the next side of this document you We now need to explain to the Florida Bar. So, right up to October you were still working on the story that you've got these continuing problems with the Florida Bar? A In this particular case it's because I was
saying my trust account is now out of balance because they deposited checks they shouldn't have deposited. Q Got it. At Page 366 of the deposition, I say -This is talking about
it starts at the bottom of 365.
Page 2340 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A.J. saying that he had been given a good report from the hedge fund. The bottom Line 24 says: The conversation with
Mr. Discala I remember more clearly because we were in my restaurant at Bova having cocktails and we were drinking to the fact that he had gotten an excellent rating from the Funds. Now, Discala was supposedly representing a group of serious investors who were supposedly genuinely investing tens of millions of dollars with these investments; right? A Q Correct. And he is responsible for this Clockwork group
and he's responsible for supervising the diligence and making sure that everything is on the up and up; right? A Q He was one of the people responsible, yes, sir. And did you think it strange that he's
celebrating, if you will, with you that you got excellent credit rating? A Q Not at all. You don't think that's strange that a guy that's
doing due diligence about investing with you is celebrating with you like haha; isn't that great? A That's not what was going on. MR. SCHERER: Object to form.
Page 2341 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A A We were celebrating the fact that we had passed A.J. believed it was
another hurdle of due diligence. legitimate due diligence.
He worked very hard to get to
that point and he very excited as were the other members of his team that what we had told them would occur, which was that we would get an excellent credit rating from the hedge funds did in fact occur. It was one more notch on
our belt so to speak in passing due diligence. It was a very exciting time for him. You could I
tell he was excited about having reached that goal.
will tell you that in many legitimate business deals that I had, well beyond any of this Ponzi scheme stuff I ever got started in, I can remember celebrating with clients over all kinds of deals. I remember celebrating with the Morse family on some very, very large deals, things hundreds of millions of dollars being used for car dealerships and the floor plans and the like and going out and celebrating, having a cigar and cocktails over the fact that we had just done something fantastic. Q Did it occur to you at the time that maybe A.J.
instead of celebrating should have spent more time reading the D-3 Capital documents? MR. SCHERER: No, sir. Objection to form.
As I've testified, I thought they did United Reporting, Inc. (954) 525- 2221
Page 2342 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to -MR. SCHERER: Elliot. BY MR. LAUER: Q Do you want to identify that for the benefit of United Reporting, Inc. (954) 525- 2221 That's all right. We got it, a good solid job doing due diligence, far superior to that done by a lot of other people that invested with us. MR. LAUER: Mr. Hertzberg wants me to put on the
record Exhibit 260, which is the October 29, 2009 e-mail. (Whereupon, The Funds' Exhibit No. 260 was marked for identification.) MR. SCHERER: Elliot won't do it. MR. LAUER: MR. CIMO: a question? MR. LAUER: from it. MR. SCHERER: MR. LAUER: What was the Exhibit? I referred to it earlier and quoted All right. 260 is something you referred to in Gabe, it must be really bad if
260. And it is what? We quoted from it so we're
MR. SCHERER: MR. HERTZBERG: putting it in. MR. LAUER:
I'll show it to the witness just
Page 2343 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 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 United Reporting, Inc. (954) 525- 2221 STATE OF FLORIDA ) C E R T I F I C A T E THE WITNESS: Thank you, sir. the lawyers who haven't seen it in about three hours? A Yes. It's a bunch of e-mails between me, Frank
Preve and George Levin on October 29 as the Ponzi scheme was unraveling. MR. LAUER: Okay. I think we've reached 5:00.
I would like to say that on behalf of our clients, we certainly don't feel that this was the appropriate amount of time to deal with this phenomenon but we will have to move on. Thank you very much.
(The proceedings were adjourned at 5:00 p.m.)
COUNTY OF BROWARD )
Page 2344 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 United Reporting, Inc. (954) 525- 2221 ______________________________________ Terri L. Wright Dated this 21st day of December, 2011. proceedings and that the transcript is a true and complete record of my stenographic notes.

2011-12-21 Rothstein Scott PM

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Page 2201 IN THE CIRCUIT COURT OF THE 17TH JUDICIAL CIRCUIT IN AND FOR BROWARD COUNTY, FLORIDA CASE

DAY 8 - 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

EXHIBIT INDEX PAGE

I don't know if Kim and That's about the

Sue met outside but they did talk. extent of it. Q

Did you have a business relationship with

Mrs. Levin? A Well, in the beginning of this it was my

Page 2210 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A Q A Q Q Did she have any interaction with these

I don't have the e-mails in front of me but the

recall the contents of them.

They weren't to me or from

of record with them?

personal knowledge of what TD did.

Page 2212 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q So putting aside the e-mail, but in context, you

Page 2213 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A On that topic, I made it clear to Mark that if

impressed upon Mark -A Q Correct. -- according to your recollection, the

United Reporting, Inc. (954) 525- 2221

By the way, did Mark tell you that the

Page 2215 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q But then in terms of his actual words, he said

an objection or an invitation to an objection. Q I take it though that you have no personal

Page 2216 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A sides. That's correct. I only got the opposite

I got the beginning when I asked and when Frank I

but you've had the time to reflect.

I believed he was. He made hundreds and hundreds and millions of

dollars in complicated M&A transactions, correct? MR. SCHERER: Objection, form.

I don't know what the actual transactions were

I never felt that way, no, sir.

Again, I can't say - from my perspective, I can

was an illusion? MR. SCHERER: Objection, form.

Here's what happened, the investor whether it

United Reporting, Inc. (954) 525- 2221

Asking me that question really isn't -- it's --

Brian Levy running it.

United Reporting, Inc. (954) 525- 2221

business real estate.

I invested in buildings in I purchased

Brooklyn, South Florida, Manhattan.

for others. also.

I bought very expensive, meaning the 2,500 to

very expensive cigars. wine.

I bought extremely expensive

clothing, shoes, suits, casual clothing.

money purchasing escorts for people.

That's all I recall

I'm certain that there's more.

I appreciate that. Now, the source of these funds were the

Page 2233 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q Correct. Did he ever go to these accounts and remove

it with you? A We pretended to have them but you could see,

Page 2235 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q You said at Page 1419 of the transcript that

Page 2236 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Did you see the Trustee's Complaint against

Mr. Rosenfeldt? A I don't know if I did or not. If I did it was

Take a look at it. I've looked at it.

that I spent on him. Q Same thing, as part of your collective, to take

United Reporting, Inc. (954) 525- 2221

servicing nature, to be indelicate? A Actually it would be indelicate at this time,

automatic transcribing system. effect in your law firm?

United Reporting, Inc. (954) 525- 2221

then Stu and I had it. after '07.