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756652a1-e898-4679-b5c9-c7c6c9c502ca (954) 525- 2221 United Reporting, Inc. Page 281 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 2 - AFTERNOON SESSION DEPOSITION OF SCOTT W. ROTHSTEIN DATE TAKEN: Tuesday, December 13, 2011 TIME: 12:30 p.m. - 5:00 p.m. PLACE: 99 N.E. Fourth Street, Miami, FL Taken on Behalf of Razorback Examination of the witness taken before: Terri Wright United Reporting, Inc. 1218 Southeast Third Avenue Fort Lauderdale, Florida 33316 (954)525-2221

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Page 1: 2011-12-13 Rothstein Scott PM

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IN THE CIRCUIT COURT OF THE 17TH JUDICIAL CIRCUIT IN AND FOR BROWARD COUNTY, FLORIDA CASE NO: 09-062943 07

RAZORBACK FUNDING, LLC, et al,

Plaintiffs,

vs.

SCOTT W. ROTHSTEIN, et al,

Defendants. ________________________________/

DAY 2 - AFTERNOON SESSION

DEPOSITION OF SCOTT W. ROTHSTEIN

DATE TAKEN: Tuesday, December 13, 2011 TIME: 12:30 p.m. - 5:00 p.m. PLACE: 99 N.E. Fourth Street, Miami, FL

Taken on Behalf of Razorback

Examination of the witness taken before:

Terri Wright United Reporting, Inc. 1218 Southeast Third Avenue Fort Lauderdale, Florida 33316 (954)525-2221

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1 IN THE CIRCUIT COURT OF THE 17TH JUDICIAL CIRCUIT IN AND

2 FOR BROWARD COUNTY, FLORIDA CASE NO: 09-062943 07

3

4 EDWARD J. MORSE, CAROL A. MORSE, and MORSE OPERATIONS, INC.,

5 Plaintiffs,

6vs.

7SCOTT W. ROTHSTEIN, et al,

8 Defendants.

9 ________________________________/

10 UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

11 FORT LAUDERDALE DIVISION

12AMY ADAMS, ET AL, PLAINTIFF VS. SCOTT ROTHSTEIN, ET AL.

13 CASE NO: 0:11-CV-61688-JIC/LSS

14Case No: 10-03767 RBR STETTIN VS. GIBRALTAR PRIVATE

15 BANK & TRUST CO.

16Case No: 10-03802-RBR STETTIN VS. CENTURION STRUCTURED

17 GROWTH LLC, ET AL.

18Case No: 11-02288-RBR STETTIN VS. FIDELITY CHARITABLE

19 GIFT FUND

20Case No: 11-02368-RBR STETTIN VS. TD BANK, N.A.

21

22 Case No: 11-02473-RBR STETTIN VS. REGENT CAPITAL PARTNERS, LLC ET AL

23Case No: 11-02604-RBR STETTIN VS. MAPLE LEAF DRILLING

24 PARTNERS, ET AL

25 Case No: 11-02605-RBR STETTIN VS. DON KING PRODUCTIONS,

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1 APPEARANCES FOR RAZORBACK:

2 WILLIAM R. SCHERER, ESQUIRE REID COCALIS, ESQUIRE

3 IVAN KOPAS, ESQUIRE CONRAD & SCHERER, LLP

4

5 ADAM MOSKOWITZ, ESQUIRE KOZYAK, TROPIN & THROCKMORTON, P.A.

6

7 ************

8 MARC S. NURIK, ESQUIRE Appearing on behalf of SCOTT ROTHSTEIN.

9

10 CHARLES L. LICHTMAN, ESQUIRE BERGER SINGERMAN

11 Appearing on behalf of the Chapter 11 Trustee, Herbert Stettin.

12

13 HARVEY SERBLOWSKY, ESQUIRE Appearing on behalf of Platinum & Centurion Funds.

14

15 SUSAN E. TRENCH, ESQUIRE GOLDSTEIN, TANEN & TRENCH, P.A.

16 Appearing on behalf of Platinum and Centurion.

17 MICHAEL GOLDBERG, ESQUIRE

18 AKERMAN SENTERFITT Appearing on behalf of Official Committee of

19 Unsecured Creditors.

20 THERESA M.B. VAN VLIET, ESQUIRE

21 JOHN H. GENOVESE, ESQUIRE Appearing on behalf of the Trustee.

22

23 CARAN L. ROTHCHILD, ESQUIRE GREENBERG TRAURIG

24 Appearing on behalf of TD Bank, N.A.

25

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1 MARY BARZEE FLORES, ESQUIRE MATTHEW DATES, ESQUIRE

2 STEARNS WEAVER Appearing on behalf of Gibraltar Bank.

3

4 MICHAEL SCHLESINGER, ESQUIRE SCHLESINGER & COTZEN

5 Appearing on behalf of Frank Spinosa.

6 CHRISTOPHER G. BERGA, ESQUIRE

7 LYDECKER DIAZ, LLC Appearing on behalf of Szfranski.

8

9 RAMON A. RASCO, ESQUIRE PODHURST ORSECK

10 Appearing on behalf of Frank Preve.

11 TUCKER CRAIG, ESQUIRE

12 BILLING, COCHRAN, LYLES, MAURO & RAMSEY, P.A. Appearing on behalf of Rosanne Caretsky.

13

14 DAVID C. CIMO, ESQUIRE GENOVESE JOBLOVE & BATTISTA

15 Appearing on behalf of the Trustee.

16 ALEX HOFRICHTER, ESQUIRE

17 LAW OFFICES OF ALEX HOFRICHTER, P.A. Appearing on behalf of Federal Insurance Company.

18

19 JOHN MULLIN, ESQUIRE GEORGE WALKER, ESQUIRE

20 TRIPP SCOTT Appearing on behalf of Morses.

21

22 JESUS SUAREZ, ESQUIRE Appearing on behalf of the Trustee.

23

24 SCOTT SCHMOOKLER, ESQUIRE Appearing on behalf of RLI Insurance, Columbia

25 Insurance and Zurich Insurance.

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1 CASEY CUSICK, ESQUIRE Appearing on behalf of Emess Capital, LLC.

2 JAMES A. BLACK, JR., ESQUIRE

3 Appearing on behalf of St. Paul Fire & Marine.

4 BART HOUSTON, ESQUIRE Appearing on behalf of Levinson, Pearson &

5 Associates, Roger Stone and Watch U-Want, Inc.

6 LAWRENCE LAVECCHIO, ESQUIRE

7 Appearing on behalf of the U.S. government.

8 JACK SIEGAL, ESQUIRE

9 Appearing on behalf of Fepict, MS Group.

10 ROBERTA M. DEUTSCH, ESQUIRE

11 THE LAW OFFICE OF ROBERTA M. DEUTSCH Appearing on behalf of Carol Morse.

12

13

14

15

16

17

18

19

20

21

22

23

24

25

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1 I N D E X

2

3

4 EXAMINATION INDEX

5 PAGESCOTT W. ROTHSTEIN

6 CONTINUED DIRECT BY MR. SCHERER 287

7 DIRECT BY MR. MR. LICHTMAN 411

8

9

10 EXHIBIT INDEX

11 PAGEEXHIBITS

12 Exhibit No. 46. 325

13 Exhibit No. 47. 337 Exhibit No. 48 350

14 Exhibit No. 49. 358 Exhibit No. 50. 366

15 Exhibit No. 51. 372 Exhibit No. 52. 375

16 Exhibit No. 53. 377 Exhibit No. 54. 381

17 Exhibit No. 55. 385 Exhibit No. 56. 387

18 Exhibit No. 57. 392 Exhibit No. 58. 393

19 Exhibit No. 59. 394 Exhibit No. 60. 398

20 Exhibit No. 61. 400 Exhibit No. 62. 406

21 Exhibit No. 63. 408

22

23

24

25

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1 CONTINUED DIRECT EXAMINATION

2 BY MR. SCHERER:

3 Q Good afternoon, Mr. Rothstein.

4 A Good afternoon.

5 Q You know you're still under oath, right?

6 A I do, sir.

7 Q Okay. I know that one of the charities that you

8 supported with other people's money as you mentioned was

9 the Boys and Girls Club of Fort Lauderdale.

10 A That's correct.

11 Q And you were pretty active there at auctions and

12 things like that?

13 A Yes.

14 Q And do you know who was on the board of

15 directors kind of running that thing, that couple of

16 fellows that were involved in this Ponzi as investors?

17 MR. SCHLESINGER: Object to form; lack of

18 foundation.

19 MR. SCHERER: I'm just laying a foundation,

20 Counsel. I'll do that.

21 BY MR. SCHERER:

22 Q Any of the board involved in this Ponzi scheme

23 at all?

24 A I believe that they were. I was actually on the

25 board with them. Ted Morse was on the board, Doug

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1 Von Allmen sat on the board, Linda Von Allmen sat on the

2 board. If I saw a list of the Board I could tell you who

3 was and who wasn't.

4 Q Did Ted know that Mr. Von Allmen was investing

5 in the Ponzi?

6 A Yes.

7 Q Now, did Mr. Von Allmen know that Ted was

8 investing in the Ponzi?

9 A I don't actually know. I believe that he did

10 based upon conversations that we all had, but I'm not

11 certain.

12 Q Do you have any memory of any conversations

13 where they were together and talked about it?

14 A Actually, yes. There was a Boys and Girls Club

15 function that we were at. And I can't remember -- I

16 don't remember which function it was, but Ted was bidding

17 for something and Doug and I were kind of just standing

18 off to the side watching.

19 I think there may actually be a picture from

20 this event of us kind of standing there watching Ted. It

21 may be in all the photos that we have. And Ted was going

22 crazy, as he and I tended to do when we were bidding.

23 And Doug made a comment to me about how much he was

24 bidding on this particular item. And my response was,

25 well, he's making a lot of money with us on the

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1 investments, so he's got it to spend.

2 Q Do you know whether -- did Ted ever mention to

3 you any conversations that he might have had with Doug

4 about investment in the Ponzi scheme?

5 A No, he did not.

6 Q Let me show you what we already marked. Let me

7 go ahead and remark it as our next one. It's an

8 e-mail --

9 MR. KOPAS: Plaintiff's 45, TD/Razor 1848, 1849.

10 BY MR. SCHERER:

11 Q I think we talked about that e-mail this

12 morning, and it's an e-mail about a show on December

13 17th, '08; correct?

14 A Yes.

15 Q We were trying to analyze that on the basis of

16 your testimony this morning about how to detect an e-mail

17 that may have been forged as opposed to a real one.

18 A Sure.

19 Q Can you analyze that for us and tell us whether

20 you think that's a real one or a forged one? We were

21 having a little difficulty with that one.

22 A No, this is a real e-mail.

23 Q Okay. And that's an e-mail where the show and

24 how to do it was laid out between Caretsky and

25 Kerstetter?

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1 A In the beginning of this, I'm not even involved

2 in this. Until after the fact I don't have no way of

3 knowing this was even going on. And they had to have,

4 this is not an assumption, they had to have told the

5 people in Deerfield Beach what to do because when I got

6 there, they did it.

7 Q Do you remember how come you went to Deerfield

8 instead of Weston?

9 A Yes. It was a last minute change of plans. I

10 believe that the person I was taking up there was Jack

11 Simony, one of the people that worked for the New York

12 hedge funds. And he had gotten a call while we were

13 together to him telling him that instead of going to the

14 branch we normally go to, to ask me to take him to a

15 different branch.

16 Q As a precaution to make sure you weren't --

17 A Yes. Was not doing what I was doing, yes.

18 Q Okay. As a part of a due diligence security

19 investigation, I guess; right?

20 A Yes.

21 Q How many shows did you take Mr. Simony or

22 anybody at the fund that would be Platinum and Centurion

23 Level 3 to; do you recall?

24 A I don't recall the specific number.

25 Q Multiple numbers?

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1 A Sure.

2 Q They filed a lawsuit against TD and have set out

3 in that lawsuit a number of times that you provided them

4 false balances. Have you ever seen that, that lawsuit?

5 A The actual lawsuit, I don't think I actually

6 did.

7 Q There was from memory, several, five, six

8 maybe. Does that sound about right?

9 A Five, six visits?

10 Q Yes.

11 A Yeah, I would think there would be at least that

12 many.

13 Q There was one that they did in the beginning

14 that caused you some trouble, according to the e-mails.

15 Do you recall that, where they apparently went to TD

16 unannounced or something and you got upset on the e-mail

17 chain about, don't go there anymore, you caused me

18 problems with TD; does that ring a bell?

19 A Yeah. You'd have to show me the e-mail. There

20 were two different circumstances: One was someone poking

21 around at TD Bank elsewhere attempting to obtain account

22 balances. That was one situation.

23 Q That would be Chris Bedaris; right?

24 A I don't remember whether it was Chris Bedaris or

25 not. Also --

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1 Q Go ahead. Sorry.

2 A I just want to make sure I'm answering

3 accurately.

4 Q Right.

5 A I don't know who that was. I do know that

6 either Mel Lifshitz or one of his investors also

7 attempted to obtain my account balances through another

8 TD branch I believe up north someplace.

9 Q Okay. Do you have a memory of Chris Bedaris

10 going into the TD branch in New York, Long Island, I

11 think, and trying to verify the lock letter that

12 Mr. Spinosa had signed that day for Razorback?

13 MS. ROTHCHILD: Object to the form.

14 BY MR. SCHERER:

15 Q Does that refresh your recollection?

16 A Yes. I heard about that after the fact.

17 Q Meaning after he did it or after the crash of

18 the Ponzi scheme?

19 A No, no, after he had done it.

20 Q Do you know that Wendy Laterio testified at the

21 Coquina trial that she answered Mr. Bedaris' call and

22 told him, yes, that Frank had signed the lock letter?

23 MS. ROTHCHILD: Object to the form.

24 THE WITNESS: I did not know that until you just

25 told me.

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1 BY MR. SCHERER:

2 Q And that Frank said that was okay, according to

3 her testimony in the Coquina trial that's going on as we

4 speak?

5 MS. ROTHCHILD: Object to the form.

6 THE WITNESS: I did not know that until you just

7 told me. It doesn't surprise me.

8 BY MR. SCHERER:

9 Q Did Frank tell you that Wendy had mentioned to

10 him that she had told Chris Bedaris over the telephone

11 that Frank Spinosa had signed the lock letter?

12 MS. ROTHCHILD: Object to the form.

13 THE WITNESS: Can you repeat that, Mr. Scherer?

14 BY MR. SCHERER:

15 Q Sure. I mean, the question is not great, but

16 did Frank ever discuss with you that his secretary had

17 advised an investor, Bedaris, that in fact Frank had

18 signed a lock letter for Razorback?

19 A I understand what you're asking me. Frank

20 generally had told me at one point in time based on a

21 question I asked him when I first saw him involving

22 Ms. Laterio in what we were doing, I asked him over the

23 phone if she could be trusted.

24 His response was yes, and she's already had to

25 answer questions on your accounts and she's, you know,

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1 part of the team so to speak. She's answered the

2 questions appropriately. But other than that, no

3 specifics.

4 Q You know, I neglected to ask you this morning

5 about Mr. Caputi's involvement in the shows.

6 A Yes.

7 Q And I'd like to discuss that a little bit. Let

8 me ask you this: Do you know how many "shows," and by

9 shows we mean the charade at TD Bank, how many of those

10 you asked Mr. Caputi to be involved in?

11 A Yes. I asked him to play the role of a --

12 You're talking about the shows specifically, right?

13 Q Yeah. Start with the shows, and then I'm going

14 to talk to you about the time he played like a Plaintiff,

15 and we'll go into Mr. Caputi a little bit.

16 A Okay. I asked him to play the role of a banker

17 at TD Bank.

18 Q How many times did you do that; do you recall?

19 A I would say it was less than half a dozen, but I

20 don't recall the specific number.

21 Q If Mr. Caputi testified in a deposition that we

22 took that you asked him to do it on three occasions,

23 would you quarrel with that?

24 A No, I wouldn't quarrel with that. I don't have

25 a specific recollection.

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1 MS. ROTHCHILD: Object to the form.

2 BY MR. SCHERER:

3 Q Can you recall the instances, tell us about the

4 instances you recall, why you asked Caputi to do it if

5 you can recall --

6 A Sure.

7 Q -- and the circumstances surrounding Mr. Caputi

8 playing like a banker.

9 A Due diligence was heating up from various

10 investors. They wanted to do the bank trip. I needed

11 someone at the bank that was at a stage where they wanted

12 to speak directly to a banker, rather than just go in and

13 get an envelope. And I asked Caputi, I needed someone to

14 do this. So I asked Caputi to come on in and get dressed

15 up and play banker.

16 Q Do you recall that Mr. Spinosa was on vacation

17 on one of those times? Does that ring a bell for you?

18 MS. ROTHCHILD: Object to the form.

19 THE WITNESS: No, it doesn't ring a bell one way

20 or the other.

21 BY MR. SCHERER:

22 Q Do you recall where Mr. Caputi played the role

23 of the TD Banker on the shows? Was it in Weston on all

24 three times?

25 A I think he was -- He played one person, I think

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1 Mr. Maha (phonetic) he played at the Weston branch. And

2 I believe he played Mr. Garsis or someone working with

3 Mr. Garsis at the Deerfield branch.

4 Q There's an e-mail of a special way that

5 Mr. Spinosa referred to the Weston branch. Do you recall

6 that?

7 A No, I don't actually.

8 Q If I can find it, I'll show you.

9 When Mr. Caputi played like the bank officer, I

10 guess that would be sort of an enhanced show? I mean,

11 ordinarily your shows didn't have, other than the

12 hand-off from Caretsky, but didn't have the sit down with

13 the bank officer.

14 A It was at a specific --

15 (Whereupon, an objection to form was made.)

16 THE WITNESS: It was at a specific time when

17 whichever investors I was taking there wanted

18 specifically to meet with a bank officer.

19 BY MR. SCHERER:

20 Q Do you by any chance remember who the investors

21 were?

22 A I do not at this moment.

23 Q Mr. Caputi remembered that on two occasions

24 there was the same woman, blond -- couldn't remember the

25 hair. I think dark hair, kind of heavyset. Would you

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1 know who that might be?

2 A The only person that has dark hair and heavyset

3 is someone that actually works at the bank. I think

4 that's Rosanne Caretsky.

5 Q Did you take Kathleen White to a bank show.

6 Kathleen White, she's Coquina?

7 A I believe I did.

8 Q She kind of fits that description; doesn't she?

9 A Yeah, she does actually.

10 Q Then Mr. Caputi said at the other time it was a

11 man that he couldn't identify?

12 A As I sit here today, Mr. Scherer, I know I took

13 Caputi. I remember taking him. I remember my uncle

14 driving him there to get him to the bank to make sure he

15 was there on time.

16 Q That was Uncle Bill?

17 A Uncle Bill Brock, yes. I don't have an

18 independent recollection at this moment of actually going

19 through the process with him.

20 Q Okay. Now, Mr. Caputi also did some other

21 things for you in terms of helping to perpetuate the

22 fraud of the Ponzi scheme; correct?

23 A He did.

24 Q Let's kind of talk about that. And I direct

25 your attention to the meeting in your office with Barry

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1 Damson, Kathleen White. And that was when Coquina was

2 making their investments. And we know when that

3 started. I don't have that date to memory, but it would

4 be in the summer of '09, I believe, summer and fall of

5 '09.

6 A Okay.

7 Q Okay. Do you recall what you asked Mr. Caputi

8 to do in your office in front of Kathleen White and Barry

9 Damson?

10 A Yes. I remember asking him to play a Plaintiff.

11 I told him that I needed to have someone come in and see

12 Plaintiff sign the settlement documents and the like. I

13 gave him very specific instructions as to things he

14 needed to say about how much money he was getting and

15 that he wanted his money, to ask when he was getting his

16 money, to make it appear urgent. Other than that, to

17 just go through the steps as I read off the documents to

18 him and signed, and that's what he did for us.

19 Q And Kathleen White was there to observe that and

20 Barry Damson as well?

21 A They were both there, yes.

22 Q Do you recall if that's the same day that you

23 then went from there to see Mr. Spinosa at the home

24 branch headquarters on Cypress Creek?

25 A My best recollection is that it was, yes.

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1 Q Did you ask Mr. Caputi to do anything else in

2 terms of the Ponzi fraud?

3 A I did actually.

4 Q Would you tell us about that.

5 A He played the Plaintiff. He played the banker.

6 Yeah. It was a subtext of everything, Mr. Scherer. He

7 also pretended to be a reporter interested in Manfredi

8 LeFebure and what was going on with Silversea and

9 assisted in harassing Mr. LeFebure for Mr. Peters' and my

10 benefit.

11 Q And you categorize all of that as a part of your

12 Ponzi, if you will?

13 A I categorize anything that yielded funds into

14 the law firm as far as illegal activity, yielding funds

15 into the law firm, perpetrating a facade of real

16 investments existing, increasing the power and prestige

17 of the law firm and its partners. All of that is part of

18 the Ponzi one way or the other.

19 Q Would you use the money that you got from

20 Silversea and other illegal activities to pay off Ponzi

21 investors?

22 A Sure.

23 Q So it all went into one big pot and you paid off

24 the folks that needed to be paid off --

25 A That's correct.

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1 Q -- based on their expected returns?

2 A That's correct.

3 Q I want to speak to you a little bit. I want to

4 examine you a little bit about the Platinum and Centurion

5 hedge funds, what we call the funds. I guess that was

6 Platinum and Centurion and Level 3. And I'd like to get

7 some basics in to start with.

8 A Okay.

9 Q First of all, do you know how this relationship

10 with the funds and Banyon came about?

11 A To my knowledge it was achieved through some

12 broker that Mr. Levin and Mr. Preve had enlisted the

13 assistance of in raising money.

14 Q And were you involved in that process at all

15 with them in terms of the negotiations and the structure

16 and any of the details in setting up that relationship?

17 A I was not.

18 Q Did they consult with you with respect to what

19 they could do and couldn't do in setting up this

20 structure?

21 A They involved me to the extent that it was

22 necessary to explain to the funds what was going to be

23 occurring with the investment. Other than that, all what

24 I'll refer to as the back office work, their financing

25 agreements, guarantees, percentages, equity positions as

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1 opposed to how they were going to borrow the money,

2 whether it was going to be an AB or asset based loan or

3 the like, that was all done between Mr. Preve, Levin and

4 the funds.

5 Q Did you have a concern that by bringing in some

6 institutional type financier that your Ponzi could be

7 exposed?

8 A Yes.

9 Q How did you handle those fears with respect to

10 the involvement of the funds?

11 A I spoke to Banyon, meaning Mr. Preve. Again,

12 most of my communication regarding day-to-day Banyon

13 activity was with Mr. Preve. Not to say that I didn't

14 speak with Mr. Levin because I did frequently. But the

15 day-to-day operations were done with Mr. Preve.

16 Any time they were introducing a new entity or

17 new people into the Ponzi at any level, I expressed

18 concern. Are we sure these people can be trusted? Are

19 these people going to be a headache? Make sure they're

20 not going to create problems for us. Make sure we take

21 it step-by-step with these people. Conversations like

22 that.

23 Frank and I were, we communicated frequently.

24 If you would check my office phone records and my cell

25 phone records, you'll see there must be literally

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1 hundreds of calls between the two of us and thousands of

2 e-mails, I would imagine.

3 Q You just engaged in Ponzi speak there a little

4 bit.

5 A Ponzi speak.

6 Q Yeah, Ponzi speak. Problems, go slow. What you

7 meant by that Ponzi speak was, Let's make sure we don't

8 get detected because if we do the fraud will blow up?

9 A Yes. I think that one of the misnomers about

10 people who are engaged in fraud is that we actually talk

11 about the fraud, and generally we do not. And we

12 certainly did not. We talked about it in fraudulent

13 terms I suppose as little as possible. Although it does

14 come quite clear in the e-mail traffic what was going

15 on. But you don't sit down and say, okay, we don't want

16 our fraud to blow up. We say, usually with many

17 expletives, make sure these people don't F it up for us.

18 We've got a good thing going. Is what they're going to

19 contribute, does it outweigh the risks that they're going

20 to bring to the table. That type of conversation.

21 Q And what would that be? Explain that to a

22 jury.

23 A That we don't want them to discover we're

24 committing criminal acts.

25 Q Would that also apply to when lawyers were doing

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1 diligence for some of the investors?

2 A Of course.

3 Q And the law firms that were writing pre-purchase

4 memoranda and things like that?

5 A Absolutely.

6 Q Now, what is your understanding of -- Let me

7 back up.

8 Yesterday you testified that initially you

9 thought Platinum and Centurion and Level 3 were different

10 funds and different organizations, but you later learned

11 something different. Do you recall that testimony?

12 A I do.

13 Q And so for the purpose of this record, what did

14 you learn about the ownership of Platinum, Centurion and

15 Level 3?

16 A Let me explain it this way: It was initially

17 presented to me that we were speaking to several

18 different hedge funds. I later learned that it was

19 really one big, call it a mish-mash of funds. It was all

20 being run out of the same building. The only separation

21 that existed was I believe Platinum was on a different

22 floor, but that it was all being ultimately controlled,

23 overseen, and all the major decisions were being made by

24 a gentleman by the named of Murray Huberfeld.

25 Q How did you become aware of that?

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1 A Jack Simony told me. Mark Nordlicht told me.

2 Frank Preve told me.

3 Q Now, did Nordlicht tell you he had an ownership

4 interest in all three of those funds?

5 A That Maurry Huberfeld had an interest?

6 Q No, that Mark Nordlicht had a --

7 A Mark Nordlicht originally did not tell me that.

8 Originally Mark told me he was only involved with

9 Platinum. But ultimately during subsequent conversations

10 I learned that he had an ownership interest, at least a

11 financial -- let's differentiate between legal ownership

12 and financial interest. I later came to learn both

13 through Mr. Nordlicht, Jack Simony, and Ari Glass that

14 Mr. Nordlicht was receiving compensation from all three

15 of the entities. In addition to some side entities that

16 came up such as Regent and the like, side deals that were

17 going on. So he had his hands in everything.

18 Q We're going to talk about that a little bit

19 later. How about David Bodner, did you ever hear that

20 name?

21 A David Bodner?

22 Q Uh-huh

23 A I heard the name, but I don't recall who that

24 is.

25 Q You didn't know that he was a co-equal owner

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1 with Murray Huberfeld in these funds?

2 MS. ROTHCHILD: Object to the form.

3 THE WITNESS: No. I don't recollect hearing

4 that. You've got to understand, what I was hearing

5 constantly on the phone was, on the phone and in

6 person, well, Murray said do this. It would be the

7 same thing as my lawyers saying, well, Scott said you

8 could do this, Scott said you can't do this. It was

9 always, Murray said we're doing this. Murray said it

10 needs to be done this way. And the key to doing that

11 was keeping all of us isolated from Murray. Neither

12 I, nor Preve, nor Mr. Levin to my knowledge have ever

13 met or spoke to Mr. Huberfeld.

14 BY MR. SCHERER:

15 Q I guess we've talked about that. Let's talk

16 about who is Mark Nordlicht and how did you come to know

17 about him?

18 A I met all of -- obviously I was told about all

19 these people before our first meeting. But I was told by

20 Mr. Levin and Mr. Preve that Mr. Preve and I were going

21 to fly up -- I don't remember if George came with us to

22 this or not. I think just Mr. Preve and I did. But we

23 were going to do a dog and pony show for the funds at

24 their offices in New York.

25 Q And did you do a dog and pony show? I mean,

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1 that's a presentation, I assume?

2 A Yeah. I did a presentation about the

3 investments, Frank did some of his stuff regarding the

4 financials. It was more of a meet and greet with all the

5 various people involved. People came in and out of the

6 meeting. I remember Gil Colter, Gillad Colter came in

7 and then left, came in and then left. Other people

8 wondered in and out of the meeting. And it was an

9 opportunity to get to know us and ask us questions.

10 Q Jack Simony, who is Jack Simony?

11 A Jack Simony was I guess the -- I guess you'd

12 call him the account manager for us. He was the guy who

13 handled all of the day-to-day handling of the

14 relationship with Banyon.

15 Q Did you understand that Simony had some

16 experience with financing law firms and settlements and

17 things like that --

18 A Yes.

19 Q -- prior to being involved with Platinum and

20 Centurion?

21 A It was my understanding from speaking to

22 Mr. Simony and from speaking to Mr. Preve as well was

23 Mr. Glass that Mr. Simony had been involved in a company

24 called Whitehaven that did the financing in a different

25 methodology, did the financing of litigation. And it was

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1 explained to me that it was more during the course of

2 litigation funding where they buy a piece of the action

3 before there was any result.

4 Q I notice that you frequently communicated to

5 Mr. Simony with Whitehaven e-mail. Do you recall that?

6 A Sure. As a matter of fact, I remember Mr. Preve

7 several times telling me, send it to Jack or Whitehaven.

8 Q Did you say, why Whitehaven, why not Platinum?

9 A I said that to Jack once.

10 Q What did he tell you?

11 A He told me that's where his offices still were.

12 He had offices in both places. He had offices in the

13 Empire State Building for Whitehaven and he had offices

14 in that building right by Carnegie Hall for Platinum,

15 Centurion and Level 3.

16 Q Did you ever have any contact with the

17 Whitehaven people, and that would be the people that were

18 involved with Mr. Simony at Whitehaven?

19 A I may have, Mr. Scherer, but I don't have an

20 independent recollection of it as I sit here today.

21 Q Do you recall in late fall of '09 that you were

22 going to rent an office, a spare office at Whitehaven's

23 office and sent Whitehaven a check for $25,000 as a

24 deposit?

25 A Yes.

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1 Q What was that all about? Why did you do that?

2 A We had originally been using an apartment that

3 Roger Stone was renting in Manhattan off Central Park

4 South as our New York office address.

5 Mr. Stone subsequently lost the lease on that

6 apartment, and we wanted to have a New York presence. So

7 we spoke to Mr. Simony about it, and he offered to lease

8 us space.

9 Q Do you know anything about efforts to acquire

10 Whitehaven, the company, either by Banyon or Mr. Levin or

11 Mr. Preve or you?

12 A No, sir.

13 Q Just as a background, did you come to understand

14 that some of the Platinum, Centurion, Level 3 business

15 was offshore and that the investments had to be made

16 offshore for some tax reason or some reason?

17 MS. ROTHCHILD: Object to the form.

18 MR. SCHERER: What's the form? Who's making

19 that objection?

20 MS. TRENCH: I am.

21 MR. SCHERER: Okay, Susan. What's the

22 objection?

23 MS. TRENCH: Leading.

24 MR. SCHERER: I know that. He's adverse. I'm

25 suing him for $180 million.

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1 MS. TRENCH: That and it's a compound question.

2 MR. SCHERER: Okay. What else?

3 MS. TRENCH: Assumes facts. Lack of

4 foundation.

5 MR. SCHERER: Oh, come on.

6 MS. TRENCH: I'll give you all of them.

7 MR. SCHERER: All right. Well, let me just go

8 back.

9 BY MR. SCHERER:

10 Q What was your understanding of the structure of

11 Platinum, Centurion, and Level 3?

12 A At some point in time during my relationship

13 with them it was told to me by Mr. Simony, Mr. Glass,

14 Mr. Nordlicht, and Frank Preve that certain of the

15 transactions, and I don't remember which of the hedge

16 funds it was had to actually handle the entire

17 transaction, meaning approve it and give instructions to

18 fund offshore. And I actually got to take one of those

19 trips with Mr. Glass.

20 Q Did he evaluate the investment, the Ponzi

21 investment that they were about to make in this trip

22 offshore?

23 MS. TRENCH: Object to the form.

24 THE WITNESS: No.

25 MR. SCHERER: Wait a minute. I like to see

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1 who's objecting.

2 What's wrong with that?

3 MS. TRENCH: Well, you implied that they said

4 they were investing in a Ponzi investment, which

5 there's no foundation for that.

6 BY MR. SCHERER:

7 Q Okay. Why did you go to the Bahamas with

8 Mr. Glass?

9 A What had occurred was we were getting ready to

10 fund a bunch of the Ponzi settlements. It was going

11 through whichever entity. I don't know why Platinum is

12 sticking out in my head as the offshore entity. I don't

13 know which of the entities it was.

14 But in any event, Mr. Glass was going to be the

15 person who went to the Bahamas. My understanding from

16 speaking to him and Mr. Nordlicht and Mr. Preve was that

17 it was usually either Mr. Nordlicht or Mr. Glass that

18 went offshore to handle this.

19 Ari asked me if I'd like to go with him and I

20 said, not only will I go with you, I said, but I'll

21 charter the jet. I'll take us over there. And I'll

22 arrange, quote, unquote, entertainment for us for the

23 trip.

24 We went over there. When we arrived in the

25 Bahamas we checked into a hotel. We got two rooms. We

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1 had a guest with us. And I said, okay, what do we need

2 to do? His response was, we don't need to do anything.

3 We just need to wait until a certain time, and then

4 they'll send us a packet, and I'll send back an e-mail

5 saying it's been approved.

6 Q Now, did you --

7 A Let me just add this --

8 Q Sure.

9 A -- just so I can complete the story.

10 Q Have you completed your discussion of that?

11 A No. One of the key elements was when I said to

12 Mr. Glass when I was discussing, what do we have to do,

13 and we decided we were going to go down to the pool and

14 drink, was that the deals that we had gone over for had

15 already been approved in New York by Murray and

16 Mr. Nordlicht and anyone else that needed to play a role

17 in it.

18 So the going actually to the Bahamas was just

19 simply to have, I guess, all the different receipts and

20 things that we needed to have in case they were ever

21 challenged from a tax prospective.

22 Q What was your understanding about how Platinum

23 and Centurion would approve the deals? And by "deals,"

24 you're talking about the Ponzi settlements; correct?

25 A This particular offshore transaction?

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1 Q No, generally. You said New York would be

2 approving the deal and I'd like you to explain your

3 understanding of how that worked.

4 A My understanding was that Frank would -- I'd

5 send the deal selection to Frank. Frank would decide

6 what needed to be papered. He would then tell me to

7 paper a certain selection of deals.

8 Deb and I and whoever else was involved at that

9 moment would paper the deals. We'd send the paperwork

10 over in the proper redacted format to Frank.

11 My understanding from that point is Frank then

12 repackaged it with all of the paperwork that was

13 pertinent to their relationship with the hedge funds and

14 ship that off to New York.

15 Frank would then get a response back from New

16 York saying, we're taking this deal, this deal, this

17 deal, we're not taking this deal, this deal, this deal.

18 Frank would notify me and we'd wait for the funding.

19 Q And the deals would be in packaged form like the

20 rest of the settlement papers, the payout terms, the

21 terms of the lump sum, that sort of thing; right?

22 A My understanding is all of my paperwork went

23 over there along with additional paperwork that I didn't

24 see until much later.

25 Q Were you ever advised that -- Well, let me back

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1 up.

2 How often did you get the paperwork wrong? And

3 that is, that the terms didn't quite match the money

4 coming in and the payments going out and that sort of

5 thing. What I would call the math of everything.

6 A There were frequent errors attributable to the

7 vast amount of paperwork that I had Ms. Villegas

8 attempting to put together. She frequently got the

9 numbers wrong and paperwork was sent with wrong numbers

10 on it, with wrong names on it, with improper case numbers

11 and the like over to Mr. Preve.

12 Q Did you ever get word that Mr. Preve would be

13 forwarding that defective paperwork on to Platinum and

14 Centurion or the funds. Let me call it that way.

15 A Two different scenarios arose. Sometimes, and

16 this should be in all of your e-mails, sometimes

17 Mr. Preve would catch the error and send it to me,

18 telling me this needed to be corrected, that needed to be

19 corrected. Once he got comfortable with Deborah Villegas

20 he would send it directly to her and copy me and tell her

21 to fix it.

22 Q Okay.

23 A On occasions, more than several, he would

24 actually send the paperwork. He did not catch the error

25 and it went over to Platinum and Centurion and Level 3,

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1 et cetera. They sent it back for correction to Frank,

2 and then sent it to me. Deb would correct it and it would

3 go back.

4 Q How would you correct it?

5 A We just changed the pages out. Sometimes we

6 made changes and did fraudulent initials on it. But we

7 changed whatever they needed to change.

8 Q You put fraudulent initials on it as though you

9 went back to the punitive Defendant or Plaintiffs and had

10 them initial the corrections?

11 A Sure, if you think that was going on because it

12 happened instantaneously. There's no way I could really

13 possibly pull the Defendant and the Plaintiff in there

14 unless they were sitting in my drawer. I'm being

15 facetious, of course.

16 Q I understand. In terms of some appreciation of

17 the fact that money wasn't in hand from a Defendant and

18 the money wasn't paid out to a Plaintiff in a lump sum,

19 if this happened after the fact, what would that

20 demonstrate?

21 A Can you restate the question?

22 Q Yeah. Lousy question.

23 A I didn't say it was lousy. I just need you to

24 restate it.

25 Q It was. It was a lousy question. I'll rephrase

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1 it.

2 If the deal was a legitimate purchase of a

3 settlement stream of payments and it had already happened

4 and the money was in hand at trust at the bank, the

5 Plaintiff had already gotten his or her, and it's usually

6 her money, and then the deal had to be completely

7 corrected, of course that would undermine the entire

8 Ponzi scheme, at least as to that investment; correct?

9 A Yes. There were frequent conversations, in

10 answer to your question, there were frequent

11 conversations between Mr. Preve and I, Debra and I, from

12 time to time about the fact that it was almost like a

13 barometer as to whether we could tell what level of due

14 diligence we were going to get from people, what level of

15 scrutiny we were going to get when mistakes occurred.

16 Because things were occurring that could not reasonably

17 occur in any legitimate investment scenario such as these

18 type of corrections.

19 You would think that a Defendant maybe one time

20 could perhaps miss the fact that the amount they're

21 settling for is off by hundreds of thousands of dollars,

22 which you would not think that that would happen with

23 multiple Defendants, multiple defense counsel on a

24 regular basis, which it did.

25 Q That would tell you and Mr. Preve what, when

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1 that happened repeatedly without the investors catching

2 it?

3 A What it told us was we could rest a little bit

4 easier with regard to the scrutiny that we would be

5 getting from the other side.

6 There are clear indicators, skipping my

7 testimony, there are clear indicators in the documents

8 when you go through them, I believe, that indicate people

9 who were in the know, meaning knew that there was some

10 type of fraud going on, and people who did not, and you

11 could tell by their level of due diligence, I believe.

12 But more than that, you could tell by what they let pass.

13 Q If there were mistakes made and investors would

14 come back to you for an explanation, and then you offered

15 an explanation that they accepted, you would put those

16 investors in one category as opposed to investors that

17 never asked?

18 A Of course. There's a difference between an

19 investor who is asking the proper questions and takes my

20 explanation and an investor who asks no questions; sure.

21 Q Let me refer back to Morse a little bit while

22 we're in the middle of Platinum and Centurion, but there

23 were two deals to Morse Operations for payment of 700,000

24 with a return of 300 on top of the seven, so a million

25 back.

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1 A Yes, sir.

2 Q And do you recall that? And then immediately

3 thereafter you would e-mail and say, I hit this again. I

4 got another seven and three. Are you in? And the e-mail

5 back, yeah, we're in, and the money would be wired to

6 you. Do you recall that scenario that you did four times

7 with Morse Operations?

8 A I don't know how many times I did it, but I

9 recall several scenarios where we did that.

10 Q Let me see that if you recall that on the first

11 one that you did two million deals based on the e-mails

12 which I didn't ask you about this morning, but I could

13 get them out if I had to, when you returned the paperwork

14 you did one $2 million deal --

15 A Okay.

16 Q -- rather than two, $1 million deals.

17 A That rings a bell.

18 Q And then you repeated it again sometime later, a

19 short time later with the Morse Operations where you did

20 two $1 million deals based on e-mails back and forth, and

21 the paperwork was a $2 million deal.

22 A Sure. I understand that.

23 Q Those were the only two Ponzi settled papered

24 deals that you ever did with the Morse family, Morse

25 Operations, Ted and --

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1 A They were the only deals where we actually

2 provided them with full settlement packets.

3 Q Those two?

4 A Right. Well, nobody did.

5 Q That put me off track.

6 A Did you want to ask me another question?

7 Q I've forgotten where we were.

8 A We were talking about the Morse, the only two

9 packets that we did.

10 Q Yeah. Only two packets. And then do you recall

11 whether or not those two papered deals became promissory

12 notes a year later?

13 A I don't recall one way or the other, but I do

14 remember that whenever Ted got inquires from his auditors

15 or from his father for that matter requiring that he

16 wanted to see some paperwork, generally it was the

17 auditors, that we provided whatever he needed. So if he

18 needed a deal packet, we gave him the deal packet. Later

19 if he needed a Promissory Note, we'd give him that.

20 Q Your testimony yesterday was that when you got

21 that threatening e-mail from Carol Morse that you

22 suspected was written by a lawyer because it didn't use

23 normal English, it had lawyer speak in it; you recall

24 that e-mail?

25 MS. DEUTSCH: Objection to form.

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1 THE WITNESS: I do.

2 BY MR. SCHERER:

3 Q What do you recall that e-mail where Carol

4 threatened you to look like?

5 MS. DEUTSCH: Object to the form.

6 MR. SCHERER: What's the matter with it?

7 MS. DEUTSCH: Use of the term threatened. Can

8 you rephrase?

9 MR. SCHERER: Well, I think that was his

10 testimony.

11 BY MR. SCHERER:

12 Q Do you recall how you phrased your testimony

13 yesterday about that e-mail from Carol that precipitated

14 the Judge Seltzer meeting?

15 A Prior to --

16 MR. DEUTSCH: Objection to form.

17 THE WITNESS: Prior to receiving, actually prior

18 to the Judge Seltzer meeting, I received an e-mail

19 from Carol Morse that we discussed yesterday that --

20 I mean, it doesn't take a rocket scientist to read it

21 and understand that she is very close to figuring out

22 what we're doing. It was clear to me that it was

23 written by someone other than her, at least in part.

24 And it did at the end of the e-mail threaten me. It

25 said, either you get me this stuff or I will take

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1 alternative means. It said, if you have acted

2 ethically this shouldn't be a problem.

3 BY MR. SCHERER:

4 Q I think you testified yesterday that you had the

5 impression when you received that that it was written by

6 a lawyer or she had a lawyer help her write that. Do you

7 recall that testimony?

8 A I do.

9 Q Now, from that point on, did you believe that

10 Carol Morse had a lawyer that was advising her from that

11 point to the -- that being September through the crash of

12 the Ponzi?

13 A Yes.

14 Q Do you remember whether you and Ted talked about

15 that at all?

16 A We did extensively. We talked about Carol

17 extensively frequently.

18 Q Do you have a recollection of discussing with

19 Ted that Carol may have her own counsel involved?

20 MR. MULLIN: John Mullin. I'm going to restate

21 the objections I made yesterday. All of the

22 questioning about Carol Morse and Ed Morse related

23 not to the Razorback 2,100 page complaint for which

24 Mr. Scherer got permission to take this depo, but to

25 a separate action that to date we've not been served

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1 with.

2 So, I think that this violates protocol order

3 and we object to this entire line of questioning and

4 move to strike.

5 MR. SCHERER: You did that yesterday. I think

6 this is a continuing deposition, as I understand it.

7 MR. MULLIN: I wanted to make sure you knew it

8 was a continuing deposition. I thought you were done

9 with that topic.

10 MR. SCHERER: Sorry, Mr. Mullin, what did you

11 say last? I got interrupted.

12 MR. MULLIN: I said I wanted to make sure you

13 knew it was a continuing objection since I thought

14 you were done with that topic.

15 MR. SCHERER: Okay. Thank you very much.

16 MR. MULLIN: You're welcome.

17 MR. SCHERER: Madam Reporter, can you read back

18 my question?

19 (The pending question was read back by the court

20 reporter.)

21 BY MR. SCHERER:

22 Q And the answer is?

23 A Here's the way it would work with Ted. Any time

24 that Carol was bothering me, making inquires that were

25 problematic for me, create problems for his dad, for Ed,

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1 driving him crazy, Ted and I would speak about it. I

2 frequently said to Ted on receipt of all the various

3 e-mails I got from Carol that he needed to figure out, by

4 talking to his dad, what the heck was going on, that

5 she's making ridiculous inquires, that she's not letting

6 me do what I need to do.

7 If she's going to create a real problem between

8 me, him, and Ed, a real problem for us, if she continues,

9 we don't need this kind of headache.

10 He would agree with me. He would generally talk

11 to Ed. And when this first occurred he came back to me

12 and said, she's got her - I believe it's either her

13 sister or sister-in-law, I don't remember whether it was

14 sister or sister-in-law that she was speaking to, and

15 that when she's up in Maine this is all she has to do, so

16 she's focused on it. But basically just try to appease

17 her as best as I could.

18 As I told you yesterday, Ted had a very poor

19 relationship with her. I wouldn't even qualify it as a

20 relationship.

21 It then escalated with this e-mail. I called

22 Ted and I remember it being a very heated conversation on

23 my side basically saying what is the F is going on, this

24 is isn't coming from the sister-in-law or whatever it

25 was, or some lay person she's talking to this, is coming

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1 from a lawyer, which means I have a level of scrutiny on

2 me and I can't get past. This is a real problem and you

3 need to do something about it. Don't worry, I'll talk to

4 Ed.

5 Q And did you attempt to accelerate the payments

6 that you owed of this bond money and the investments that

7 they had made because of this lawyer scrutiny?

8 A Yes.

9 Q Now, you used the word real problem and we don't

10 need this kind of problem; is that Ponzi speak again?

11 A Yes. That is, we don't need people looking at

12 what I'm doing or not doing. You have to understand, Ted

13 is very pragmatic. He is result-oriented; with regard to

14 the investments, is he making money, the answer - if it's

15 yes, fine, everything is good with him. Okay. Doesn't

16 really care how, just wants to make sure that everything

17 is going according to the way he wants it to go.

18 With regard to his father, he simply wanted his

19 father happy, and whatever steps we needed to take to

20 make his father happy, that's what needed to be done.

21 Q While we're on that subject, do you have any

22 recollection of Mr. Ted Morse making some affectionate

23 reference to you and your business in relation to a

24 Cadillac store or Cadillac dealership?

25 A Yes. It was frequently the joke around our

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1 friends, it was actually also repeated to another friend

2 of ours, mutual friends, the Meldow, Margaret and Michael

3 Meldow, that time by Patti. The statement was always

4 that one, we were their most profitable car dealership,

5 meaning R.R.A. slash Scott was our most profitable car

6 dealership. They used to say that all the time in

7 public.

8 I later came to find out pre-explosion of the

9 Ponzi, pre the crash, that Patti had actually - during a

10 conversation with Margaret Meldow, had actually told her

11 if it wasn't for the investments and all the things that

12 I was doing for them financially that they wouldn't have

13 been able to sustain the growth of the dealerships nor do

14 all the things they were able to do for the family just

15 as buying homes and the like for the children.

16 MR. MULLIN: Objection, move to strike as non

17 responsive and hearsay.

18 Q Do you have a memory of any construction that

19 was going on at the Cadillac - one of the Morse Cadillac

20 agencies during this period of time on Federal Highway

21 there?

22 A Yes, sure.

23 Q What do you recall about this?

24 A Ted telling me that it was the investment money

25 that was basically assisting the family in all of the car

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1 dealership expansion - they were doing an expansion, a

2 large expansion at the Bayview dealership on Federal

3 Highway. They were in the process of building a brand

4 new Toyota dealership in Delray and they were doing

5 expansions of the dealerships up on the west coast of

6 Florida, if I'm not mistaken, or the Tampa area.

7 Ted and I -- and this was discussed amongst our

8 group of friends, I used to joke around with Ted and say,

9 you are the only car dealer -- this was during the

10 automotive downturn, I used to say every time we saw Mike

11 Jackson from AutoNation and he would say hello to us and

12 I would joke around with Ted and say, he's pissed at you,

13 he's pissed. Everyone else is having problems and you

14 keep expanding. You're the only car dealership family

15 that continues to expand during a major automotive

16 contraction, he would say, that's because I have a very,

17 very fine performing car dealership that doesn't require

18 a floor plan, and that was me.

19 Q Let me show you an e-mail on December the 12,

20 2008.

21 MR. KOPAS: Plaintiff's 46, Bates labeled

22 Rothstein S 117 to 118.

23 (Whereupon, Plaintiff's Exhibit No. 46 was

24 marked for identification.)

25 BY MR. SCHERER:

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1 Q This is from Mr. Preve to you. And I have

2 highlighted down at the bottom there for you - it says in

3 this e-mail: Also need to discuss the three million

4 dollar -- 3m, which I presume is million dollar licensing

5 fee, paren, Jack, closed paren, and the 11 million

6 pending transaction. When you available. Question

7 mark.

8 Do you recall what that was all about?

9 A Which part of it?

10 Q Well, the three million dollar licensing fee and

11 the 11 million dollar pending transaction?

12 A Yes.

13 Q The date is 12/12/08. Excuse me, I can't read.

14 It's December 1, '08.

15 A Yes, I do.

16 Q Take them one at a time. The licensing fee,

17 what licensing fee was involved with Jack? First of all,

18 who is Jack?

19 A Jack Simony.

20 Q What is the licensing fee that was involved with

21 Jack?

22 A There's no such thing.

23 Q Okay. Did you have a discussion with either

24 Jack or Frank or both about the three million dollar

25 licensing fee?

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1 A It was a methodology created by Mr. Preve and

2 Mr. Simony to get additional funds into Mr. Simony's

3 personal hands.

4 Q Do you know whether they were to be to

5 Mr. Simony or ultimately go to Murray Huberfeld?

6 A I don't have a clue. I just knew in order to

7 keep Jack on board we needed to get him money.

8 Q This licensing fee, was there any kind of

9 legitimate reason to grant a three million dollar

10 licensing fee, to your knowledge?

11 A To my knowledge, no.

12 Q Now, are you aware that there was testimony from

13 David Ring in this case to the affect that Jack Simony

14 had tried to rent the 1-800 retired judge website for a

15 three million dollar fee?

16 A No, sir. I don't know anything about that

17 testimony nor do I know anything about that agreement.

18 Q Do you have any knowledge about Banyon, Preve,

19 or you trying to buy or rent a 1-800 retired judges

20 number?

21 A We had discussed it, but I was really not

22 interested. You understand there's no real business

23 going on. I have no real reason to buy an 800 number.

24 Q Are you aware of e-mail traffic between Preve

25 and Mr. Simony concerning that this would provide some

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1 form of cover or some such Ponzi words like that?

2 A I haven't seen that, no.

3 Q Okay. You are not aware of Mr. Simony's

4 testimony that this three million dollar 1-800 ex-judge

5 deal was a way to try to get three million dollars to

6 Murray?

7 MS. TRENCH: Object to the form.

8 A My answer to the question is no, I was not aware

9 of it. I knew that the licensing fee thing that is in

10 here is not real because we weren't trying to license

11 anything.

12 What they were doing behind the scenes, all I

13 knew is that Frank wanted me to get money as much as

14 possible to Jack as quickly as possible. The way they

15 were going to do that, that was between them.

16 Q Are you aware that Mr. Simony testified that the

17 folks that owned 1-800 ex-judge accused him of trying to

18 involve them in a scam and that Mr. Simony agreed that he

19 was indeed trying to scam them with respect to this three

20 million dollar payment back to Mr. Huberfeld?

21 MS. TRENCH: Object to the form.

22 A I was unaware of that.

23 MS. TRENCH: I didn't hear the answer.

24 THE DEPONENT: I said I was unaware of that.

25 MS. TRENCH: Thank you.

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1 THE DEPONENT: You're welcome.

2 BY MR. SCHERER:

3 Q You have used the term - they tell me I missed

4 it - that something about this three million dollar fee

5 was to get Jack on board?

6 A Yes, I did use the words on board.

7 Q What did you mean by that?

8 A If you look at the date that this was all going

9 on, we were having problems with the hedge funds by

10 December of '08 with the amount of funding and the like,

11 and it was constantly reiterated to me by Mr. Preve that

12 in order to keep Jack happy we needed to make sure he

13 made as much money as possible, and anything we could do

14 in that regard would benefit us because I was told by

15 Mr. Preve that he was our best advocate at the three

16 hedge funds.

17 Q Do you know how much the line of credit or the

18 facility - I'll use those words because those are the

19 words I think that have been used in this case - that

20 Platinum and Centurion and Level 3 had devoted or had

21 agreed with Banyon to provide to Banyon to buy these

22 settlements?

23 A I only know what Mr. Preve told me.

24 Q What was that?

25 A That there was a 50 million dollar line and 150

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1 million dollar line.

2 Q Do you know if there was an additional 50

3 million dollars for Level 3?

4 A My recollection is that there was at a

5 subsequent date.

6 Q Okay. So, it started out 50 and 150 with

7 Platinum and Centurion. I don't know which is which; do

8 you?

9 A I do not.

10 Q And then at a later date another 50 with Level

11 3?

12 A That's correct.

13 Q Were you ever aware of how much money Platinum

14 had out at the highest level of their funding of Banyon

15 settlements?

16 A I do not know.

17 Q From December through, April during that

18 time-frame - and so we're talking about December '08

19 through April of '09?

20 A Yes, sir.

21 Q Is it your understanding that the Funds in New

22 York started ramping down, if you will, or decreasing

23 their level of funding?

24 A That's correct.

25 Q Did that cause a problem for you and Banyon and

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1 your investment scheme?

2 A Yes, it did.

3 Q What kind of problems?

4 A It choked off our funding. We were strangled to

5 make payments to investors, including to them.

6 Q Now, I think I represented to you yesterday that

7 the accounting records show that they stopped funding

8 altogether in April?

9 A Yes. I think my recollection was that they shut

10 us down pre-April 13, 2009 was my recollection, if I'm

11 correct, April 13, 2009 is when we choked them off,

12 stopped paying them.

13 Q I'd like to spend a little time developing the

14 facts that transpired between December and April 13, and

15 then we'll take it from April 13 to the Halloween crash.

16 A Okay.

17 Q Now, let me show you an e-mail. Let me ask you

18 this, if the Funds had stopped funding in April

19 altogether, and I believe the record supports that, how

20 did you carry on your Ponzi scheme from April through the

21 crash?

22 A I believe that the records, the financial

23 records should establish that we had other sources. I

24 had solicited -- he came to me to do it, Mr. Szafranski,

25 his group - let's call them the Von Allmen, Clockwork,

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1 Discala group, the BIF.

2 Q Banyon Income Fund?

3 A Bekkedam, Banyon funds. We had replaced them as

4 we had previously when things like this occurred with new

5 feeder funds.

6 Q And Pearson?

7 A And Pearson Boden, yes.

8 Q And the Coquina?

9 A Yes, Coquina.

10 Q Emess?

11 A That's also through Szafranski. Coquina, Emess

12 is also through Szafranski.

13 Q And Sochet?

14 A Sochet is also through Szafranski.

15 Q Did I leave anybody out?

16 A If I think of anybody I'll let you know.

17 Q Didn't Balamore Bekkedam put some people

18 directly into 1030-32?

19 A I believe, based upon what Mr. Preve told me,

20 that that's correct. But I was always grouping some of

21 these people, Mr. Scherer, this may help you in phrasing

22 your questions to me. I grouped everybody based upon who

23 originated them. I had people that Szafranski was

24 originating. I had people that Banyon was originating.

25 We had a very large - as you can tell from the financial

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1 records - influx of capital at that point in time from

2 new sources. Balamore, Bekkedam, all fall under, in my

3 mind, the way I associated it, under the Levin chain,

4 although there's a cross-over into the Von Allmen chain.

5 Q Were these new feeders doing due diligence all

6 during this time-frame that we're talking about here from

7 April through the crash?

8 A At different levels, yes.

9 Q You were still paying off, were you not, the

10 Funds, the New York Funds, Platinum Centurion and Level 3

11 from April through the crash?

12 A At a minimal level, yes.

13 Q Minimal relative to what you were doing before?

14 A Minimal based upon what they were actually owed

15 in payments, yes.

16 Q Do you know how much they were owed in April of

17 '09, approximately?

18 A I'm sorry, at this time I don't recall.

19 Q All right. If I told you about 100,000 -- a a

20 hundred million, excuse me, would you have a quarrel with

21 that?

22 A I would not.

23 MS. TRENCH: Object to the form.

24 Q And for the purposes of my examination, I want

25 you to assume that the forensic show that in December

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1 they had about 108 million outstanding?

2 A Okay.

3 Q Ramped down to a hundred by April and then it

4 ramped down to 18 million at the crash --

5 MS. TRENCH: Object to the form.

6 A Okay. I will assume that.

7 Q I'm going to ask you to assume that based on our

8 forensic examination.

9 A Okay.

10 Q I'm going to talk to you generally and then I'll

11 get specific. When these new investors were coming on or

12 these new feeders and new investors that we talked about

13 were coming on, do you have any knowledge about their

14 contact with the Funds to determine how the Funds - how

15 you had performed or how Banyon had performed prior to

16 April of '09?

17 A Yes.

18 Q What do you know about that?

19 A At the time that Preve was basically leading the

20 charge in that direction to bring on - I'll call them the

21 BIF funders, the Clockwork, Von Allmen people, that

22 particular group, part of that - an integral part of that

23 according to what Mr. Preve was telling me was that we

24 needed to get an A plus credit rating from the hedge

25 funds. That without that we were dead in the water.

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1 Mr. Preve and I discussed that at length over

2 many days. And we put into action a plan, the purpose of

3 which would be to make sure that the hedge funds,

4 Centurion, Platinum, and Level 3 said that we were an

5 excellent investment strategy and that they had had no

6 problems with us and there were no defaults.

7 Q You said you put a plan together. What was that

8 plan?

9 A We were going to do several things. We were

10 going to choke them off, stop paying them. We were going

11 to -- no polite way to put this - we were going to

12 threaten them that if they did not give us a positive

13 credit rating that the entire investment would come

14 crashing down, that everyone would be exposed at all

15 their various levels of knowledge, and that it would be

16 apocalyptic for all of us.

17 Q Let me go back and see if we can establish kind

18 of the order of funding with these new feeders that you

19 got to replace Platinum and Centurion and Level 3. Do

20 you recall which one was the first of the feeders?

21 A I do not.

22 Q Let me see if I can help you refresh your

23 recollection. The Banyon Income Fund was made operative

24 in April - at the end of April and began funding in May

25 of '09?

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1 MS. TRENCH: Objection, form.

2 Q I want you to assume that.

3 A I will assume that.

4 Q At a hundred million dollar level.

5 A Okay.

6 Q And then Clockwork came in after that with

7 Razorback and D-3 from May - didn't start up until

8 October. I want you to assume that.

9 MS. TRENCH: Object to form.

10 A That makes sense to me.

11 Q Now, I think Mr. Sochet and through Szafranski

12 jumped into the breach prior to October, so somewhere

13 between May and October Szafranski, Sochet, Emess and

14 those folks got involved.

15 MS. TRENCH: Object to form and move to strike

16 Mr. Scherer's testimony.

17 A That's correct.

18 Q I'm asking you to assume that for the purpose of

19 getting in your mind how this may have happened.

20 A Okay. I understand.

21 Q All right. Great.

22 Now, I'd like to show you an e-mail from Jack

23 Simony to Brian Jedwab, April 24, '09.

24 MR. KOPAS: Plaintiff's 47, Bates labeled

25 PCL59353.

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1 (Whereupon, Plaintiff's Exhibit No. 47 was

2 marked for identification.)

3 BY MR. SCHERER:

4 Q Now, I've highlighted the top of that. I'm

5 going to read this whole e-mail and then ask you some

6 questions about it. All right?

7 A Okay.

8 Q Have you ever seen this before?

9 A I have not.

10 Q It's from Jack Simony and I'm reading from the

11 bottom to the top, I can do it because there's only three

12 entries and I can do this.

13 Friday April 24, '09 to -- I don't know if

14 that's a Mr. Manella, I think. Gillad Colter and Brian

15 Jedwab and Murray Huberfeld, subject: Banyon. Tally, I

16 guess that's the guy's first name.

17 Please send 35,000 to Curtis Mallet, attention

18 Elliot Laur. And then it has -- jack Simony is

19 underneath there, I think he signed it above and below.

20 Do you see that?

21 A I do.

22 Q Elliot Laur and Curtis Mallet are the lawyers

23 that are representing Platinum and Centurion Level 3 in

24 our case here.

25 MS. TRENCH: Object to the form.

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1 A Up until you told me that, I had no idea.

2 Q Not Susan but Susan's co-counsel, not Miss

3 Trench, excuse me.

4 MS. TRENCH: That's okay.

5 Q And then above there you see there's an e-mail

6 from Brian Jedwab to Jack Simony, same day, re: Banyon.

7 How you doing, Jack?

8 A I see that.

9 Q Jack says, what does he say there?

10 A Just trying to focus on the job at hand and

11 protect our investors. Thank you for being a friend,

12 it's just hard.

13 Q Well, what protection do you believe that Mr --

14 let me back up.

15 Do you believe that Jack Simony was trying to

16 protect Banyon -- I mean Platinum and Centurion and Level

17 3's investors at that time?

18 MS. TRENCH: Object to form.

19 A Do I believe he was trying to protect the

20 investors, to some extent, yes; and to some extent, no.

21 Q Okay.

22 A It varied.

23 Q To the extent that he was trying to protect the

24 investors, do you read that as him trying to get their

25 money back?

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1 A Yes.

2 MS. TRENCH: Object to the form.

3 Q And it's just hard. What do you think -- what

4 does this e-mail mean to you, given the context of what

5 was going on there on April 24, '09?

6 MS. TRENCH: Object to form.

7 A I have to answer this way, it is consistent with

8 what I considered to be Jack's dual roles during most of

9 what was going on. I think he was torn between two

10 factions. I think he felt a certain amount of loyalty -

11 I'm certain of this because we had discussions with

12 Mr. Preve about it. He felt some amount of loyalty to

13 the people at the three hedge funds and he was also

14 extremely attached and close to Frank Preve and he felt a

15 certain amount of loyalty to him.

16 So, as far as if you track his e-mails, what I

17 believe you will find is that in writing to the people

18 internally, like Mr. Jedwab, he is trying to state his

19 objective of protecting the Funds.

20 I think you'll see on the opposite end of the

21 spectrum in e-mails to Mr. Preve and on occasion to me,

22 he is trying to advocate his loyalty to us and his

23 attempts to protect us. So, I think he's the one of the

24 people that fell on both sides of the track.

25 Q Let me see if you still feel that way after I

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1 tell you what he said in his deposition.

2 MS. TRENCH: Object, move to strike.

3 Q I want you to assume that he said in his

4 deposition that all of those good-boy trying to help

5 Preve and the Fund were his efforts to cause you,

6 pressure you to pay back money, and that he was

7 essentially lying to you guys about doing any further

8 deals, that they never had any intention of doing any

9 further deals and it was all an effort to get you to be

10 pressured to get their money back. He testified

11 something along those lines.

12 I want you to assume that what he testified is,

13 of course, in our case in deposition testimony.

14 A Okay.

15 MS. TRENCH: Object to form. Mischaracterizes

16 testimony.

17 Q All right. I want you to also assume that we

18 took the deposition of David Ring, who said he was Jack

19 Simony's childhood friend and he was his partner in

20 Whitehaven. David Ring, have you ever heard that name

21 before?

22 A Not until you mentioned it.

23 Q I mentioned it yesterday but you didn't know

24 about him; did you?

25 A I had no recollection of ever hearing the name

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1 before.

2 Q He testified that in April of 2009 at Passover,

3 which I believe was April the 4th, that Jack told him it

4 was the worse Passover he had ever had because the Funds

5 were in trouble and that he was going to have to try to

6 quote, save the fund, closed quote.

7 A Okay.

8 MS. TRENCH: Object to form.

9 Q Now, what do you think saving the Fund meant?

10 MS. TRENCH: Object to form.

11 A To me it sounds like he's trying to save us,

12 save us - save the three Funds from the Ponzi scheme.

13 That's what it sounds like to me.

14 Q And trying to get their money back?

15 A Well, that's the only way to save them, correct,

16 to get their money back.

17 Q They had a hundred million dollars in April,

18 they had a hundred million out, 98 million and they got

19 it down to 18 million.

20 A Okay.

21 MS. TRENCH: Object to form.

22 Q Seems like that was pretty good, seems like he

23 did a pretty good job of getting most of their money

24 out. Let me ask this --

25 A We did a good job of getting the money to him,

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1 yes, with his assistance.

2 Q Whose money did you get?

3 A Other investors' money.

4 Q My clients put 190 million dollars in it between

5 that time and now.

6 Did you use any of that money to pay them back?

7 MS. TRENCH: Object to the form.

8 A Knowing the way the Ponzi scheme was operating,

9 I would have had to, yes, there was no other funds coming

10 in.

11 Q I want you to further assume that Mr. Ring, the

12 childhood friend of Jack Simony, testified that at the

13 end of 2009 that he was disappointed - or some words like

14 that, because he had, quote, saved the Fund, and he

15 didn't get recognized with bonuses from his bosses at

16 Platinum and Centurion and Level 3.

17 A Now you're --

18 MS. TRENCH: Object to form.

19 A Now you're crossing into something that I do

20 know about.

21 Q Okay. Are you asking us to assume that you

22 don't know anything about what you have been testifying

23 to for two days?

24 A No, not for two days but for the last several

25 minutes all the things you're telling me are new to me.

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1 Q The guys over here are laughing but you were

2 great until now. They thought you were perfectly candid

3 until now. They think now you're lying your fanny off.

4 MS. TRENCH: Object to form, and move to strike

5 that from the record.

6 MR. SCHERER: I agree to strike that.

7 UNKNOWN SPEAKER: Is that a stipulation?

8 MR. SCHERER: I'll stipulate that that was

9 terrible. I won't do that anymore.

10 a Just so I'm clear --

11 Q Yes, sir.

12 A The information that you just gave me for the

13 last several minutes, this Ring and Jack Simony saving

14 the day and all this other information that you were

15 providing to me, I'm hearing this for the first time from

16 you.

17 Q I know.

18 A That's what I meant from the statement.

19 As far as Jack Simony not being properly

20 compensated by the Funds, that is something that I do

21 know about because Mr. Preve and Mr. Simony both told me

22 that he felt he was working too hard for too little

23 amount of recognition from the Funds.

24 Now, he didn't say for not saving the day, but

25 he did say he was not being properly compensated.

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1 Q Mr. Ring also testified that in the golf season

2 of '09, which I presume living in New York has got to be

3 in the spring?

4 A Golf season?

5 Q Playing golf.

6 A I don't play golf, I don't know what the golf

7 season is.

8 Q I'm telling you what he testified to.

9 A Okay.

10 Q He testified that during the golf season of '09,

11 that Mr. Simony offered to split a one million dollar

12 settlement deal of your Ponzi scheme.

13 MS. TRENCH: Object to form.

14 A At the time period that the Funds had basically

15 cut us off, were no longer funding with us, Jack on more

16 than several occasions -- one I can think of exactly, we

17 were sitting at the - I don't remember if it was the Ritz

18 or the Saint Regis on the beach? Which came first, the

19 Saint Regis or the Ritz, it changed hands?

20 Q Regis first, Ritz second.

21 A It was one or the other. We were sitting having

22 breakfast and we were talking about various ways that he

23 was attempting to get us new money because all through

24 this time period, you realize there should be e-mails

25 where Simony is telling Preve and me he's out attempting

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1 to sell this investment strategy. And during this period

2 of time he is actually trying to invest with us.

3 Q He's telling you he's trying to invest with you?

4 A He is telling us that he wants to invest. As a

5 matter of fact, he once told me that he wanted to put his

6 father or mother or both into this.

7 Q And this was during this time from April through

8 the crash or before?

9 A The mother father thing, before; the other

10 people, after.

11 Q While we're talking about these folks who have

12 claimed in deposition that they were lying to you guys

13 just in order to pressure you so you would pay them

14 back --

15 MS. TRENCH: Object to form, and move to strike

16 the testimony.

17 Q I'm asking you that. I want you to assume they

18 testified to that, I'm talking about Simony and Ari Glass

19 and maybe some others, but for sure those two.

20 A Okay.

21 Q Do you have any recollection of a threatened SEC

22 action where Ari Glass -- where Jack Simony told you that

23 Ari had gone to the SEC?

24 A Yes.

25 Q What do you recall about that?

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1 A He didn't tell me he went to the SEC, he told he

2 was threatening to go to the SEC, that he contacted SEC

3 lawyers. There were a series of see e-mails to us as

4 well as telephone calls -- when I say us, I mean to me

5 and Mr. Preve from Jack Simony and also from

6 Mr. Nordlicht that Ari was becoming completely

7 uncontrollable, and he was threatening to bring the

8 entire set of Funds down, that he was threatening them

9 profusely with regard to going to the SEC to reporting

10 Mark and the like.

11 Q Do you know that that was a complete

12 fabrication --

13 MS. TRENCH: Object to the form.

14 Q -- among Simony, Ari Glass and Preve?

15 A Are you asking me whether I know it or believe

16 it?

17 Q No, no. I want you to -- I'm asking you, have

18 subsequently learned that that was a complete lie?

19 A No.

20 Q Mr. Glass testified in his deposition that he

21 did no such thing that they did this to pressure you and

22 Mr. Preve to pay them back more rapidly?

23 A Okay.

24 Q Did you pay them back more rapidly after this

25 threat about going to the SEC?

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1 A I'm sure the financial records would say that we

2 did, yes.

3 Q Do you remember how you restructured that the

4 100 million dollars that was owed - approximately 100

5 million dollars that was owed to them on the Ponzi

6 structured -- or Ponzi settlements?

7 A What we ultimately did was we agreed to give

8 them a certain amount of money each week. It was

9 originally - I think going to be 15 million dollars, but

10 there was no way initially we could sustain that kind of

11 pay-out, so we just started basically sending money on a

12 daily or other every other day basis, whatever we could

13 put together, that's what we were sending. We would send

14 a million -- there should be a ton of e-mails in this

15 regard where Jack Simony is saying send a million to

16 Platinum, send 500 to each of the little ones, he called

17 it, Centurion and Level 3.

18 By little ones, I believe he was referring to

19 the size of the amount of money that was actually owed at

20 that stage. I believe we owed the most to Platinum and

21 then Centurion and then Level 3.

22 So, we would regularly get e-mails like that and

23 occasionally we'd say, okay, we're sending two million

24 over and Jack would either send Mr. Preve or myself an

25 e-mail saying send a million here, send 500, 500, and

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1 then he would send a later e-mail saying no, send the

2 whole two million to Platinum or break it up some other

3 way.

4 Q Did you at that point abandon any pretext of

5 following the payment streams that were due under the

6 papered Ponzi settlements?

7 A Yeah, that was out the window. As of April 13,

8 2009 it was gone.

9 Q Now, can you think of any reason why an investor

10 who thought he had cash locked up in TD Bank secured by

11 security interests would not foreclose on that but take

12 the money from you in dribs and drabs as you just

13 expressed?

14 A I can tell you why Mr. Simony told me they would

15 accept it.

16 Q Why?

17 A Because they were afraid if they declared us in

18 default it would be a run on the Funds in the form of

19 what the called redemptions and it would level the Funds.

20 Q Do you know that the Funds advised their

21 investors - and they had about a billion dollars worth of

22 them -- Let me back up. Hold on. I need help here.

23 That Platinum advised its investors in April

24 that you had defaulted on -- although it didn't say you,

25 it had reference there, investment in Florida in

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1 settlements that had been defaulting on payments and that

2 they were taking a write down of the funds in April of

3 about 20 percent. Were you aware of that?

4 MS. TRENCH: Object to the form.

5 A I only became aware of that after the fact,

6 meaning after the crash.

7 Q Okay. And then they went on to tell the

8 investors that although you defaulted that you had

9 started to make payments again or something like that and

10 that they had every hope that they would be able to

11 salvage the investment.

12 A I did not know that portion until you just told

13 me that.

14 MS. TRENCH: Object to the form.

15 Q Do you know that at the end of the year or --

16 no, no, excuse me, in November, after the crash, that

17 they advised their investors that because of their

18 excellent risk management that they were able to salvage

19 the losses attributable to the Rothstein Ponzi?

20 MS. TRENCH: Object to form.

21 Q Are you aware of that?

22 A I am aware of it right now that you're telling

23 me, not before.

24 Q All right. Let me show you an e-mail from Mike

25 Szafranski to Brian Jedwab, balance verification, on

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1 January 25, '09.

2 MR. KOPAS: Plaintiff's 48, PLATCENT0017952.

3 (Whereupon, Plaintiff's Exhibit No. 48 was

4 marked for identification.)

5 BY MR. SCHERER:

6 Q Let me ask you a few questions first and then

7 we'll talk about that exhibit.

8 Mr. Szafranski's job was to do what relative to

9 balances?

10 A He was what they referred to as the third party

11 verifier verifying the actual existence of funds, wires

12 in, wires out, and also identification of plaintiffs and

13 defendants.

14 Q How did you come to engage Mr. Szafranski in

15 this -- Back up.

16 Who did Mr. Szafranski work for or who engaged

17 him and paid him for this independent verification?

18 MS. TRENCH: Object to the form.

19 Q That's a bunch of questions. What was

20 Mr. Szafranski's job?

21 A He was a third party verifier for the purpose of

22 providing independent verification for the hedge funds,

23 that's where he first came from, for the purposes of

24 verifying both funds and parties.

25 Q Did you --

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1 A And paperwork.

2 Q Did you know Mr. Szafranski prior to being

3 introduced to him?

4 A I did not.

5 Q And he was introduced to you by whom?

6 A By the hedge funds.

7 Q Do you know he had some relationship with one of

8 them, I think?

9 A He was a childhood friend of Gill Colter's.

10 Q Okay. How was he paid?

11 A You got to give me a time-frame. His pay scale

12 changed drastically when he became involved.

13 Q I know. His pay scale really changed when he

14 started into the Ponzi; right?

15 A Yes.

16 Q That was a bad question.

17 In the beginning how was he compensated for this

18 independent verification?

19 A To the best of my recollection he was paid on a

20 per deal reviewed basis and the payments were to be made

21 by Banyon.

22 Q Now, I want you to check out these verifications

23 and let's talk about that. I'm a little confused in

24 reading this exhibit.

25 It shows ending amounts that I have highlighted

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1 there; you see that?

2 A Yes.

3 Q Let me back up. It says from Michael

4 Szafranski: I met with Mr. Rothstein on January 23, at

5 the time we signed on-line and verified the following

6 balances in the five accounts as follows. And then

7 there's these numbers there. And these numbers appear to

8 be 500 -- on the first one, 500,000 and change, 590,

9 almost 600,000; 100, 933, and 178,000. Do you see those

10 numbers?

11 A I see those numbers.

12 Q And then it says up above, amounts in thousands,

13 so I'm trying to figure out how to read that. If it's

14 amount in thousands then in the first account it would be

15 501 million, and in the next account it would be 593

16 million and 107 million and then 933 million, and then

17 178 million?

18 A Correct.

19 Q If you read it without the zeros there's 500,000

20 down to a low of 100,000?

21 A Right.

22 Q Either way -- let me ask this. Can you explain

23 this exhibit to me?

24 A I can't explain it to you one way or the other.

25 If it's my perception of it, is that what you want to

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1 know?.

2 Q Let me ask you this. I mean, if in the

3 thousands means you add those three zeros like I just

4 did, that's way more than you ever represented that you

5 had in your phony trust accounts; isn't it?

6 A Those balances changed. If you look at the

7 e-mails, Mr. Scherer, and I'm sure you know this by now,

8 those amounts changed like the wind, depending upon what

9 I was being - what I believed I needed to show in the

10 accounts and also there are dozens of e-mails where

11 Mr. Preve is telling me what amounts need to be in the

12 accounts. So, it varies.

13 This particular e-mail, I remember seeing this

14 prior, and when I read it, amounts in thousands, I read

15 it as being incorrect, $501,000, $593,000, that kind of

16 thing.

17 I suspect that the reader of it had to have

18 interpreted it to be more as opposed to less. Because if

19 we only had half a million, half a million, a hundred,

20 900,000, 178,000, for lack of a better way to put it, I

21 should have been in handcuffs way before I was.

22 Q Mr. Rothstein, let me ask you this: If you add

23 in the thousands, even you didn't have the chutzpah to

24 say you had 2.5 billion in your Ponzi account; did you?

25 A I don't -- I know that we had balance statements

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1 where we showed in the billion, I don't recall ever doing

2 one where we said two billion.

3 Q This would be two and a half billion.

4 A Right. The problem with this e-mail was, as

5 said to me by Mr. Preve was these balances are going to

6 create a problem one way or the other because it's either

7 showing way, way too much money or it's showing basically

8 what amounts to no money.

9 Q Let's talk about the shows that we talked about

10 this morning.

11 A Okay.

12 Q You took Mr. Simony to the bank at various times

13 to give him a show about how much money was in your Ponzi

14 trust account; correct?

15 A Correct.

16 Q So, that Mr. Simony would have had what was the

17 Ponzi amount that accurately reflected all of their

18 investments because nobody else was investing in the

19 Ponzi at this time.

20 MS. TRENCH: Object to form.

21 Q Correct?

22 A Basically correct.

23 Q So, all we have to do is we have to go back to

24 January and see what the phony balances that you were

25 projecting the phony balance was and then compare it to

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1 this either 2.5 billion 2.5 million schedule?

2 A If I'm understanding your question correctly,

3 yes, that is accurate. That would tell you whether or

4 not this is crazy one way or the other.

5 Q Well, we're in January of '09. And do you ever

6 recall anybody from Platinum, Centurion, Level 3, Simony

7 or Nordlicht or any of those guys coming back to you and

8 saying these verifications are crazy?

9 A I don't recall that, no. I recall Mr. Preve on

10 several occasions when he got balance statements, not

11 necessarily this one, sending me an e-mail saying this is

12 crazy, we're supposed to have at least a billion in this

13 account, make sure you adjust your numbers, telling me

14 what to do.

15 But I don't recall the people from the hedge

16 funds speaking to me directly telling me what the hell is

17 going on with these verifications.

18 Q Okay. They tell me it's time for an afternoon

19 break. Is that already with everybody?

20 (Thereupon, a short break was taken.)

21 MR. SCHERER: Now we're back on the record, and

22 it's finally working.

23 BY MR. SCHERER:

24 Q Mr. Rothstein, I'd like to show you an exhibit

25 we've already spoken about. And I neglected to ask you

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1 about the second half of that e-mail. That's exhibit --

2 Would you read the number for us, please.

3 A It's Exhibit 46. Down at the bottom it says

4 Rothstein S 000117.

5 Q All right. And the second part of that e-mail

6 that's highlighted there is a reference to $11 million,

7 right? And you gave an answer that says there's two

8 parts. And you talked about the first part, I didn't

9 talk about the second.

10 A Okay.

11 Q Do you know what that $11 million reference is

12 about?

13 A Yes. My recollection is that's what I refer to

14 and they referred to as the Regent transaction. If you

15 examine all the e-mails you'll see that during the course

16 of the Ponzi different factions of the hedge funds were

17 investing in side deals with us.

18 In this particular deal what was occurring was

19 there was an investment in a deal while we were fighting

20 with the hedge funds by Mr. Huberfeld. I believe

21 Mr. Nordlicht was involved in it. Jack Simony was

22 involved at least in orchestrating the deal and Frank

23 Preve was involved in it.

24 Q Was that a particularly lucrative transaction in

25 terms of the return?

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1 A Yes. I don't remember the exact terms, but it

2 was one of the most lucrative deals I believe we ever

3 offered.

4 Q Do you know whether Frank Preve was involved in

5 Regent also on the side?

6 A I believe that the Regent deal involved all the

7 people that I just mentioned, including Mr. Preve. I

8 just don't know which level each of them participated.

9 Q We may get into that in a few minutes.

10 A As a matter of fact, now that I'm thinking about

11 it -- I don't mean to interrupt you, but there is an

12 e-mail. You should have one, where Preve is trying to

13 tell the people involved in the Regent deal that he's not

14 sticking with this particular format because other people

15 involved other than him are not entitled to as much

16 interest as they would be achieving based upon certain

17 things that they did during the course of the transaction

18 that changed the funding dates and the payback dates.

19 Q Was there some change retroactive again after

20 the deal was supposedly consummated with the punitive

21 plaintiff and the punitive defendant?

22 A I believe that they agreed to something, but I

23 don't remember what it was. I do remember that we paid

24 off.

25 Q If we have time I'll go back to the nuts and

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1 bolts of that. We have it here. We're going to try to

2 get through this and get out of here at 5:00, maybe even

3 a little bit before.

4 Let me show you an e-mail that is from you to

5 Mr. Preve dated April 8, 2009. You CCed George Levin.

6 MR. KOPAS: Plaintiff's 49, Bates labeled FC

7 112310-0161648/1.

8 (Whereupon, Plaintiff's Exhibit No. 49 was

9 marked for identification.)

10 BY MR. SCHERER:

11 Q Actually it starts out at the bottom there with

12 an e-mail from Mr. Preve to you and then from you back to

13 Mr. Preve. And its subject is a PPM. Mr. Preve says, I

14 know your plate is full, but assuming we have a business

15 going forward, I need to get the PPM back to them today.

16 I really don't think it impacts your side of the business

17 at all in terms of revelations.

18 A Yes.

19 Q All right. What did you take that to mean?

20 A I'm going to have --

21 Q Let me ask you this: First of all, the PPM

22 they're referring to, do you know what PPM that would be

23 in April?

24 A It was the private placement memorandum that

25 they were putting together I believe with your clients.

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1 Q That would be the Banyon Income Fund placement?

2 A Yes.

3 Q Now, do you know that Mr. Von Allmen and his

4 family were about 50 to 60 million of the 100 million in

5 the Banyon Income Fund?

6 A I knew that it was something to that effect,

7 yes.

8 Q And then he also was involved in the Razorback

9 and D-3 with his family in addition?

10 A Yes.

11 Q Clockwork wasn't involved in the Banyon Income

12 Fund that Balamore put together, but they were involved

13 in the later transactions?

14 A Yes. They became sort of warring factions over

15 the deal, yes.

16 Q So you think the reference there is to that

17 pre-purchase memorandum of the Banyon Income Fund that

18 Balamore was putting together?

19 A Yes.

20 Q The thing that says, I don't think it impacts

21 your side of the business at all in terms of revelations,

22 do you see that?

23 A Yes.

24 Q What did you take him to mean by "in terms of

25 revelations"?

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1 A I read it as it's not revealing anything that

2 will create any issues for me, so they're going to go

3 ahead and move it along. What he was telling me was to

4 just go through it quickly. They needed to get it out.

5 There's not a lot in there that concerns me.

6 Q In terms of revelations, is that Ponzi speak for

7 you to be worried about that they would discover that you

8 guys were involved in a fraud?

9 (Objection to the form was made.)

10 THE WITNESS: Yes. It's that there's nothing in

11 there that I needed to be concerned about being

12 revealed to anybody.

13 BY MR. SCHERER:

14 Q Isn't revelations a Ponzi speak?

15 (Objection to the form was made.)

16 THE WITNESS: Yes. Based upon the way you're

17 using the term, yes, it is Ponzi speak.

18 BY MR. SCHERER:

19 Q Okay. Because we established yesterday you

20 didn't say to each other, They'll discover our Ponzi.

21 You would use little terms like "business at all in terms

22 of revelations"?

23 A Yes. What you'll see frequently in e-mails from

24 Mr. Preve to me where he's trying to keep me calm where

25 he uses, to use your term, Ponzi speak to let me know

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1 that he doesn't feel that there's any risk of being found

2 out.

3 Q Okay. Let's go up to your e-mail back to him.

4 And then you say, Make sure you do exact same default

5 letter to Platinum?

6 A Yes.

7 Q They are really the same company and we must

8 treat them as such?

9 A Yes.

10 Q Time to let them in on the fact that we know the

11 secret?

12 A Correct.

13 Q It is a serious pressure point for them. Murray

14 illegally cannot be involved in both?

15 A Yes.

16 Q All right. Would you explain what you meant by

17 that e-mail?

18 A Yes. As I understood it, all of the three funds

19 Centurion, Platinum, and Level 3 had to have a certain

20 wall, if you will, between them with regard to decision

21 making, how certain business financial transactions were

22 run through, separation of investors and the like.

23 It was important as told to me by Jack Simony on

24 multiple occasions and on several occasions by

25 Mr. Nordlicht, that Murray be seen as the head of

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1 Centurion, that that was his fund, and not involved with

2 Platinum or Level 3 when in fact we had been repeatedly

3 told by Mr. Glass, Mr. Nordlicht and Mr. Simony that

4 Murray was calling the shots with regard to all of them,

5 and that based upon each one of them telling us at

6 different points in time the same thing, it was time to

7 let them know that we knew Murray was involved.

8 It became more clear once that 11 million deal

9 was going through because despite the fact that other

10 funds were cutting us off, Murray was still investing

11 with us through other means.

12 Q Do you know whether that was a part of the

13 scheme to fund your Ponzi enough to keep it going rather

14 than crashing at that time?

15 A It was --

16 MS. TRENCH: Object to form.

17 THE WITNESS: The purpose of that, of what we

18 were doing to the funds was to apply pressure to them

19 so that they would give us an A plus rating when our

20 potential new investors contacted them.

21 The key to securing new investment dollars to

22 keep the Ponzi alive was a positive reference, a no

23 default reference, from the people that we were doing

24 business with up until that point. Without that we

25 would not have been able to secure new money.

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1 BY MR. SCHERER:

2 Q Do you have information that they in fact were

3 giving positive credit references to potential investors?

4 A I know that from multiple sources, yes.

5 Q Would you tell us what those multiple sources

6 are, please.

7 A Yes. I was told by Frank Preve and by George

8 Levin that it's a great strategy, they've had no problems

9 with us, from the people at Platinum, at Level 3, at

10 Centurion, or a representative of each or all.

11 I was told by Ari Glass that we got, again, a

12 perfect representation from whoever they were speaking

13 to. I believe the funds were speaking to either Jack

14 Simony or Mark Nordlicht if my recollection serves me

15 correctly.

16 I heard this from Preve, from Levin, from Glass,

17 from Simony, and I heard it in person actually in my

18 office from Mr. Nordlicht that they had taken care of it

19 and they expected that when we got new money in that I

20 would be making sure that they were getting paid.

21 Q Do you have any knowledge of whether or not any

22 of the people that you mentioned had any contact with the

23 new feeder funds that you mentioned, including Discala,

24 Von Allmen, or Clockwork, or any of those people?

25 A I was told by Mr. Discala and separately by

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1 Mr. Von Allmen that they had spoken to people at the fund

2 or funds and were told that it was what they believed to

3 be an excellent investment strategy and they've had no

4 problems with us.

5 Q How about Mr. Simony, did he ever tell you the

6 same thing?

7 A Yes. Mr. Simony was -- I should have included

8 him in that group. Mr. Simony was part of the Glass,

9 Preve, Nordlicht, Simony group of people who said that

10 they had done what they were supposed to of done.

11 Q When they said they had done what they were

12 supposed to have done, I would like to get you to be

13 specific relative to the Clockwork, any of the Clockwork

14 representatives. And let's start with AJ Discala and

15 whether you had any communication with Simony or

16 Nordlicht regarding conversations with Mr. Discala or any

17 of those due diligence people.

18 A The conversations --

19 MS. TRENCH: Before you continue I move to

20 strike the testimony that's being given to the extent

21 that it relies on hearsay from non-fund individuals.

22 MR. SCHERER: Well, let's start with fund

23 individuals.

24 Was that Miss Trench? Thank you.

25 BY MR. SCHERER:

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1 Q I would like you to first of all limit your

2 testimony to the fund individuals that you identified,

3 that being Nordlicht, Simony, Ari Glass and communication

4 with potential investors or feeder funds that were doing

5 due diligence during that time.

6 A Okay. Let me see if I can do this in an order

7 that's easy to follow. Ari Glass, Jack Simony, Mark

8 Nordlicht all told me on separate occasions when

9 questioned and pressed by me, that they had done, quote,

10 unquote, what they were supposed to do, that they had

11 given us a positive credit rating, a thumbs up to our

12 future potential investors.

13 Subsequent to that I spoke to AJ Discala and to

14 Mr. Von Allmen. I don't remember where I was when I was

15 speaking to Doug, but I have a recollection of it

16 actually being in front of my home because I lived down

17 the street from him at that time and he was out doing his

18 walk.

19 And I asked if he had spoken to anyone from the

20 funds yet, and he told me yes, and that everything was

21 looking great; that he had spoke to people from the

22 funds; and that they thought it was an excellent strategy

23 and they'd be looking forward to doing business with us.

24 The conversation with Mr. Discala I remember

25 more clearly because we were in my restaurant in Bova

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1 having cocktails and we were drinking to the fact that he

2 had gotten an excellent rating from the funds. At that

3 time you probably can pinpoint when this occurred if you

4 get my cell phone records because there should be

5 immediate calls to Mr. Preve. I stepped aside and called

6 Mr. Preve and said, We're good to go.

7 Q Do you have a recollection of whether this was

8 before, or when was this relative to this April to the

9 end of October time-frame we're talking about?

10 A It was prior to the funds investing with us in

11 significant dollars, but prior to the crash.

12 Q By "the funds," you mean the new feeder funds?

13 A Sorry. I garbled that. Prior to the new feeder

14 funds investing with us and prior to the crash. It was

15 in between that time period.

16 Q Let me show you our next exhibit. It's a letter

17 from Frank Preve. Well, first of all, it's a letter from

18 you to Frank Preve and then his back to you. Go ahead.

19 MR. KOPAS: Plaintiff's 50, Bates labeled FP

20 112310-0161400/1

21 MS. TRENCH: What's the date on that?

22 MR. SCHERER: April 8, 2009.

23 MS. TRENCH: Thank you.

24 (Whereupon, Plaintiff's Exhibit No. 50 was

25 marked for identification.)

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1 BY MR. SCHERER:

2 Q And you state, Hey, Triple G. Do not forget to

3 let Jack know that we know that they are all in this

4 together, i.e., Mira knowing about the secret deal with

5 Murray. What the fuck? Who the hell does he think he is

6 fucking with?

7 Did I read that correctly?

8 A Yes.

9 Q Now --

10 A Colorful, I think we said.

11 Q Mr. Preve writes you back, quote, He was shocked

12 when I brought it up. We will have the little one-on-one

13 with you, me, and he later. The grand question is what

14 is going to make all of this right. And then a bunch of

15 question marks.

16 A Okay.

17 Q Okay. So the "he was shocked," who did you

18 think he was referring to?

19 A Jack.

20 Q All right. And the "little one-on-one with

21 you," did you have that little one-on-one with Frank

22 Preve?

23 A It was with Frank Preve and Jack Simony.

24 Q Both?

25 A Yes. That's why it says you, me, and he.

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1 Q And then "the grand question is what is going to

2 make of all of this," what do you think he meant by that?

3 MS. TRENCH: Object to form.

4 BY MR. SCHERER:

5 Q What do you think he meant by that?

6 A What he meant by it was that, What are we going

7 to all do together to avoid the Ponzi from exploding in

8 all of our faces.

9 Q Did you talk to Jack about that as well?

10 A About what?

11 Q About this being shocked about Murray being in

12 the Regent deal?

13 A That Jack was shocked?

14 Q Yeah. It says, He was shocked when I brought it

15 up. That would be Jack.

16 A Perhaps if I just explain to you what was going

17 on.

18 Q Okay.

19 A At this stage we are very close to the Ponzi

20 imploding. I as you can tell from my, quote, unquote,

21 colorful language am more than a little bit perturbed.

22 If you track my e-mails, I'm consistent. When I'm upset

23 I am extremely vulgar.

24 At this stage we were having to pressure the

25 funds to make sure that they lied to our new investors

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1 and gave us a positive credit rating. I mean, let's face

2 it. We were in default. We weren't paying them

3 anymore. We wanted them to say we were continually

4 paying them and they thought we were an excellent

5 investment strategy regardless of what they thought.

6 Q But you were in default?

7 A I understand that, but that didn't mean I did

8 not want them to lie. They were going to blow up along

9 with us, Mr. Scherer, so they had every reason to lie.

10 Q While we're talking about lying, do you know

11 that indeed Mr. Simony feigned like he was shocked,

12 because not only did he know about it, he was a profit

13 participating partner in the Regent deal?

14 MS. TRENCH: Object to form.

15 THE WITNESS: Yes.

16 BY MR. SCHERER:

17 Q What did you come to learn about the Regent deal

18 and about whether Mr. Simony was shocked or not?

19 A I came to learn that he was not shocked about

20 anything because him and Frank were in this together,

21 that portion of it. There was no reason for him to be

22 shocked. If he was going to be shocked at anything, it

23 was that I was ready to explode.

24 Q All right.

25 A Let me make sure I finish this.

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1 Q Go ahead. Have you finished your answer,

2 Mr. Rothstein?

3 A No, sir.

4 Q Thank you. Would you finish your answer for us,

5 please.

6 A Yes. The whole purpose behind this series of

7 e-mails is -- and there are other e-mails that are far

8 more concise than this in existence between all the

9 players where Preve and I are talking about the fact that

10 we must do whatever is necessary to secure a positive

11 rating both in terms of excellent investment strategy and

12 no default from the funds.

13 There are also e-mails that I directly recall

14 between Mr. Preve, Simony, and Nordlicht and more to

15 Nordlicht where he is actually saying to Mr. Nordlicht in

16 basically no uncertain times, Listen, you're going to be

17 contacted by BIF's other investors - at this particular

18 e-mail I think it was Balamore directly - and you're

19 going to be contacted, and it's critical that you give

20 them a, quote, unquote, proper, accurate, whatever words

21 he used, rating about us because it will help you get out

22 of this, get you out of this quicker. It will be good

23 for all involved. It's fairly clear, actually I think

24 it's 100 percent clear, as to what was going on at the

25 time.

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1 The funds were going to give us a positive

2 credit rating. We were going to use as much of the new

3 money coming in to pay them off, and in fact that's what

4 we did.

5 Q But weren't you in default every single month

6 from April all through the crash in terms of the

7 agreement to repay them at a certain level?

8 A Yeah. The minute I changed payments we were in

9 default, yes.

10 Q Well, then are you aware that there was some

11 kind of paperwork that Banyon and the funds did that you

12 would pay a minimum of 15 million a month, plus another

13 million-and-a-half of the others, so that you'd pay

14 $16-and-a-half million a month every month thereafter to

15 stay in compliance with their new documents; are you

16 aware of that?

17 MS. TRENCH: Object to the form.

18 THE WITNESS: I remember discussing it with

19 certain parties. I do not remember actually seeing

20 the paperwork.

21 BY MR. SCHERER:

22 Q Are you aware that the forensic audit shows that

23 you never hit those numbers ever once from that point on?

24 MS. TRENCH: Object to form.

25 BY MR. SCHERER:

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1 Q Almost, but not quite.

2 A I could have told you we didn't hit it. You

3 didn't need to spend the money on a forensic. I could

4 tell you that.

5 Q You were close, though, because you got them

6 back everything except 18 million.

7 A But we were doing it based upon our ability to

8 pay. At this stage, Mr. Scherer, you have to understand

9 we're frantic. We are just trying to get whatever money

10 we can get to them as quickly as possible to keep them

11 quiet. They have every reason to do that because

12 otherwise they're not going to get their money back. And

13 on top of that we are also having to pay off other

14 investors that are due. As Sochet and Von Allmen and the

15 like come in they're going to be due money also, so we

16 have to structure this in a way that allowed us to pay

17 everybody what we were supposed to pay. And obviously

18 you know the end result, we weren't able to pay anybody

19 and it exploded.

20 Q Let me show you an e-mail from Mr. Szafranski to

21 Ari Glass CC Will Slota and Jack Simony of Whitehaven.

22 MR. KOPAS: Plaintiff's 51, bates labeled

23 PLATCENT001805710.

24 MS. TRENCH: And the date if you would.

25 MR. SCHERER: January 30, 2009.

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1 (Whereupon, Plaintiff's Exhibit No. 51 was

2 marked for identification.)

3 BY MR. SCHERER:

4 Q And Mr. Szafranski said that he had signed on to

5 your TD on-line and verified that account 5104 contained

6 $178,847?

7 A Yes.

8 Q Now, do you know what account 5104 is from

9 memory?

10 A From memory, no.

11 Q Okay. If I told you it was an account that was

12 supposed to have held the Platinum and Centurion funds, I

13 would like you to assume that. And I'd ask you, did you

14 ever have a Ponzi balance, and that would be a balance in

15 any of their trust accounts that reflected only $178,000

16 in it?

17 MS. TRENCH: Object to form.

18 THE WITNESS: No. If you'd like I can explain

19 what occurred here.

20 BY MR. SCHERER:

21 Q I'd like. So let me ask again since there's an

22 objection to the question.

23 Can you explain what occurred here?

24 A Yes. What occurred was, on occasion, this

25 happened unfortunately more than once, when

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1 Mr. Szafranski was in my office from time to time once he

2 became aware of the Ponzi scheme, we would sign on to the

3 real bank to look to see what monies we had and how much

4 money we needed to bring in.

5 It was more of me just kind of going on and

6 trying to see where we were at and who I could pay when

7 and what was going on.

8 On several occasions Mr. Szafranski for whatever

9 reason when we're looking at the real screen is writing

10 down some semblance of what he's seeing at that time and

11 sending it out, which of course generally resulted in

12 someone having a conniption.

13 Q Because they expected it to be 178 million, not

14 178,000, right?

15 A Something to that effect, yes.

16 Q Did anybody, Mr. Glass or Mr. Simony or anybody

17 ever come back to you following this January e-mail and

18 ask you what in the world is going on with this account

19 having only $178,000 in it?

20 A They never addressed it to me, no.

21 Q Well, did Mr. Preve ever address to you that

22 they had come to him and said, you know, Szafranski has

23 verified numbers that are off by 10 times?

24 A I recall a series of e-mails where Mr. Preve

25 wrote to me -- well, actually he was writing to Mike and

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1 copied me or sent it to me saying, What the hell is going

2 on? This can't be. These accounts are supposed to have

3 X dollars in it or whatever he was saying, and then a

4 corrected balance sheet was eventually sent out.

5 Q Let me show you the next exhibit. It's an

6 e-mail from Szafranski. It's more of the same, Platinum

7 verifications in January of '09.

8 MR. KOPAS: Plaintiff's 52 under Bates label cut

9 in half, looks PLATCENT001783.

10 MR. SCHERER: It looks like 82. They'll know

11 what it is.

12 MR. KOPAS: The date of that is January 30,

13 2009.

14 (Whereupon, Plaintiff's Exhibit No. 52 was

15 marked for identification.)

16 BY MR. SCHERER:

17 Q This appears to be another Mr. Szafranski

18 verification of trust account balances, in addition

19 verification on deals that are referenced there as G and

20 a bunch of numbers, right?

21 A Yes, sir.

22 Q And he verified the cases and that the

23 appropriate forms were signed by the plaintiffs and

24 defendant and they signed on-line and then he verified

25 that your trust account contained a balance of 598,000.

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1 Do you see that?

2 A Yeah. I think he's trying to say because it

3 says, all amounts in 000 dollars. He's trying to say

4 598 million.

5 Q Okay. Well, if that's so how does he reconcile

6 that with the former balance that we talked about a few

7 minutes ago that had 2.5 billion? Did you spend that

8 much between January, the middle of January, and the end

9 of January?

10 A No. If you look at our balance statements, and

11 it was a point I was trying to make with the last

12 e-mail. I'm not sure I made it completely. That is

13 there were times when Mr. Szafranski wrote down balances

14 that I couldn't tell you whether they were there. I

15 don't know whether he was looking at the screen and saw

16 perhaps in that that one of our accounts had $178,000 in

17 it or he combined accounts or looked at totals or just

18 wrote down whatever the heck he was thinking of at the

19 time. But there were occasions where his balances did

20 not match the balances that he was supposed to be

21 furnishing.

22 Q I want to know whether or not anybody on that

23 e-mail chain you have there in front of you, that's

24 Mr. Simony and Glass and -- Who else do they send that

25 to?

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1 A Will Sloter.

2 Q Whether any of those folks got back to you or

3 got back to Frank Preve who got back to you to say, How

4 do you reconcile 590 million in the account at the end of

5 January when you had billions in the account, you know,

6 just a few days before?

7 A I have no recollection of them coming back to me

8 about that particular issue.

9 Q You would agree that that's more than a rounding

10 error?

11 A Even in my math, yes.

12 Q Let me show you the next exhibit. It's an

13 e-mail from George Levin to Ari Glass, Nordlicht, Jack

14 Simony, you, and it's dated April 16, '09.

15 MR. KOPAS: Plaintiff's 53 FP0163402/1 FP, Frank

16 Preve.

17 (Whereupon, Plaintiff's No. 53 was marked for

18 identification.)

19 BY MR. SCHERER:

20 Q I would like you to pay attention to the

21 highlighted, you can read the whole thing, of course.

22 Dear Ari. This is George writing it, although I'm not

23 sure he wrote it. But it said from George. Therefore,

24 the following are our requirements for getting our

25 businesses back on track, I hope you can support me in

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1 this effort because it will be to the benefit of everyone

2 if we can move forward rather than spend all night

3 gnashing our teeth. Do you see that?

4 A Yes.

5 Q And then he goes on to say, On April the 20th

6 funding is done. All impounded funds will be released.

7 A Yes.

8 Q These terms will be memorialized in writing and

9 such writing will eliminate the current ROFR, which I

10 believe to be right of first refusal, and then all credit

11 inquiries will be responded to, quote, as agreed, closed

12 quote. Do you see that?

13 A Yes, I do.

14 Q Are those the credit inquiries you were making

15 reference to previously?

16 MS. TRENCH: Object to form.

17 THE WITNESS: Yes. This is the polite version

18 of the same request.

19 BY MR. SCHERER:

20 Q What do you understand paragraph 7 and 8 to

21 represent, 6, 7, and 8 to represent?

22 I had an objection there, so I want you to tell

23 me what you believe this to have meant.

24 A I don't know what 6 means, all impounded funds

25 will be released. Number 7 and number 8, number 7 is

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1 talking about the fact that the funds had a right of

2 first refusal on all our settlement deals. We would have

3 to send them to them for either acceptance or rejection

4 before they went anywhere else and we wanted to be

5 released from that. The bottom line was what I'll refer

6 to as the survival term, how both they and our group

7 would survive this.

8 Q I thought, Mr. Rothstein, you testified that as

9 of April 13th you had frozen all of the payments to the

10 New York funds. And so I presume all impounded funds

11 will be released, all underlined, might make reference to

12 the stopping of those payments.

13 MS. TRENCH: Form.

14 THE WITNESS: It might, but I don't know for

15 certain that it does. You are correct. I did

16 testify that as the 13th we stopped paying them. But

17 I wasn't part of actually drafting this. I don't

18 believe I was. So I don't know exactly what he means

19 by -- I don't recall it ever being referred to as

20 impounded funds. But that's certainly possible that

21 that's what he meant.

22 BY MR. SCHERER:

23 Q Let me ask this: During this period of time

24 were you in discussions with Mr. Preve and Levin and

25 anybody from the funds or relative to what it was going

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1 to take to get the Ponzi payments to be made to them that

2 had been stopped as of April the 13th?

3 A Yes.

4 MR. KOPAS: Object to form.

5 THE WITNESS: Mr. Preve and I were negotiating

6 with them. Actually Preve was. We were talking

7 about it. You'll see above in the non-highlighted

8 portions of this letter that we were demanding of

9 them, and this is a part that I was involved in, that

10 they will agree to fund no less than $20 million

11 through cases, NLT meaning no later than April 20th.

12 We felt that when we did our math if they had

13 funded $20 million, we would then just simply turn

14 those funds around, bring them up to speed as to

15 payments. So that was the methodology we were going

16 to utilize to quote, unquote, release impounded

17 funds.

18 BY MR. SCHERER:

19 Q It says that they agreed to buy an additional

20 $5.5 million cases in paragraph 3. And, you know, it

21 talked about, We will release 5 million and so on. You

22 see that?

23 A I do.

24 Q And that they will agree to put 20 million back

25 into new cases in April, right?

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1 MR. KOPAS: Object to form; mischaracterizes

2 what the e-mail says.

3 MR. SCHERER: What's wrong with the form?

4 MS. TRENCH: You said they will agree to fund

5 20.

6 MR. SCHERER: Well, let's see what it says.

7 BY MR. SCHERER:

8 Q Centurion will agree to buy an additional 5.5 m

9 in cases NLT, April 20th and Plat Centurion will release

10 up to 5 million in collection account funds owed to

11 Banyon Funding/Banyon Investments.

12 Do you see that?

13 A I do.

14 Q Did I read that correctly?

15 A You did.

16 Q Now, do you know whether any of that ever

17 happened?

18 A No, it didn't. Part of it did, but I don't

19 recall it ever happening.

20 Q Let me show you an April 18th e-mail, April 18,

21 '09. And it's an e-mail that starts out down at the

22 bottom, George Levin, and then -- Go ahead. I'm sorry.

23 MR. KOPAS: This is Plaintiff's 54. It's Bates

24 number that begins FP and ends in 163961/1. From

25 (Whereupon, Plaintiff's Exhibit No. 54 was

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1 marked for identification.)

2 BY MR. SCHERER:

3 Q Reading from the bottom to the top, it's from

4 George Levin, 19th of April, '09, subject, Re: Still not

5 heard back. And actually down below it's Ari to George.

6 He still hasn't heard back. Do you see that down at the

7 bottom?

8 A Yes. I recall this.

9 Q You recall the e-mail? And then George writes,

10 to Ari, Frank goes to church on Sunday.

11 Do you see that?

12 A Yes.

13 Q And then you got from Ari to George saying, I

14 certainly respect that. When is that done? Should I

15 have our lawyer call you instead? I'm afraid of having

16 it all left for one day. Are you available to talk for a

17 couple of minutes? Ari Glass.

18 A I see all that.

19 Q Then up at the top it's from George to Frank,

20 Still not heard back. And the e-mail says, Frank have

21 you touched bases with this crazy man? If so, then what

22 does he want to inject a lawyer into this? I had a

23 meeting with Barry after his luncheon with Doug Von

24 Allmen. Doug is ready to invest 25 million along with

25 another 25 million from Barry's clients. Barry still

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1 believes he will have 10 million to 20 million by the end

2 of the month. He also told me that Larry is going to New

3 York to finalize the PPM on Tuesday. Did Scott ever give

4 Rick what he needed, a signed representative agreement?

5 Now, let me break that up. Do you know about

6 the reference to Doug Von Allmen and Barry's lunch with

7 Doug Von Allmen? What do you know about that?

8 A I do know about it. I know about the entire

9 thing. I just want to make sure that the record is

10 clear. Before when I said, I know about this, you said,

11 you've seen this e-mail. And that's incorrect. I had

12 not seen this e-mail until today, but I do remember what

13 was going on.

14 Q Tell us what was going on at this time.

15 A There were frantic negotiations going on between

16 the Banyon folks, meaning Preve and Levin, and the Fund

17 people, meaning Ari Glass, Nordlicht, and Simony, to try

18 to get us to release funds, try to figure out what they

19 were going to do. I believe they were trying to get

20 Banyon to sign a bunch of new paperwork according to what

21 Frank was telling me. And they were also trying to make

22 sure obviously that they gave us the credit reference

23 that we were requesting.

24 What happened was Ari was, although now you're

25 telling me that it was all a sham, Ari was crazy. I

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1 mean, he was literally off kilter during this time

2 period. He had a couple of times -- and Ari and I always

3 had a very, very good rapport. I had conversations with

4 him during this time period where I had to hold the phone

5 away from my head because he was screaming into the phone

6 so loud.

7 So what was occurring was Ari was frantic

8 waiting to hear back from George -- excuse me, from

9 Frank. Ari had a reporting deadline coming up,

10 Mr. Scherer, that he had to let his shareholders know

11 something, his investors, one way or the other regarding

12 something.

13 Q You know that because he told you that?

14 A I know that because Ari, Jack Simony, and Frank

15 all told me that.

16 Q Do you know whether that was true or not?

17 A No, I have no idea. I'm just telling you what I

18 know to have been going on as far as what they were

19 telling me.

20 Q All right.

21 A Obviously George responded, he goes to church.

22 And Ari throws this line in about having the lawyer

23 call. And then George gets involved, really gets

24 involved obviously, and is trying to make sure that Frank

25 is aware that we're going to be getting money from other

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1 people. What do we basically need to do with Ari to keep

2 him calm. That's basically what's going on.

3 Q Do you have a recollection of whether or not

4 this is the first time you heard that Mr. Von Allmen was

5 contemplating an investment into the Banyon income fund?

6 A I actually heard that from Mr. Preve before

7 this, before Ari was going crazy.

8 Q Do you know whether the fact that Mr. Von Allmen

9 was about to invest 25 million as it says in this e-mail

10 was communicated to the people at Platinum and Centurion?

11 A I don't know whether it was communicated to them

12 or not. It was communicated to me.

13 Q Okay. And at any time there in April did you

14 ever communicate that to any of the Platinum people?

15 A At various points in time before we secured new

16 investors I had told Ari on separate occasions, Jack

17 Simony and Mark Nordlicht that they should just take a

18 deep breath that we were getting new investors and we'd

19 get this all worked out. I was trying to keep everything

20 calm.

21 Q Okay. Let me show you another document that's a

22 chain of e-mails on April the 30th through May the 2nd.

23 MR. KOPAS: Plaintiff's 55, E228396 to 97.

24 (Whereupon, Plaintiff's Exhibit No. 55 was

25 marked for identification.)

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1 BY MR. SCHERER:

2 Q I would like you to refer to the first page of

3 the e-mail from George Levin to you and Mr. Preve dated

4 Saturday, the 2nd of May '09. You see that, the part I

5 have highlighted? However, at this late date we need to

6 get Doug's funds, paren, which are sitting in cash

7 waiting for these documents, closed parens, in the game.

8 You see that?

9 A Yes.

10 Q And then you write back, I completely agree as

11 to getting Doug's money in right away.

12 Do you recall that e-mail chain?

13 A I recall this going on. I was copied on it. I

14 don't have a specific recollection as to this.

15 Q All right. I'm going to ask you to concentrated

16 on efforts to get Doug's money in. And, you know, who

17 knew about Doug's money coming in and whether there were

18 any meetings involving you and the people at Banyon and

19 the people at Platinum and Centurion regarding Doug's

20 impending investment. But I'm going to show you some

21 e-mails to help that along a little bit.

22 A Okay.

23 Q I'm going to show you an e-mail on April 27,

24 '09.

25 MR. KOPAS: Plaintiff's 56, Bates labeled

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1 beginning FP ending 165897/1 and /2.

2 (Whereupon, Plaintiff's Exhibit No. 56 was

3 marked for identification.)

4 BY MR. SCHERER:

5 Q I'm going to direct your attention to the second

6 page down at the bottom. There's an e-mail from Barry --

7 well BRB, which is -- Do you recognize that at Ballamor?

8 A Do you I recognize that?

9 Q Do you know who BRB is?

10 A Sure.

11 Q Who is that?

12 A Barry Bekkedam.

13 Q To George Lavin. It says, FYI, Von Allmen -

14 30 million between now and early next week. Von Allmen

15 kids, five to 10 million between now and 5/15 proposed

16 now exact.

17 And then up at the top there's an e-mail from

18 George to you, Re: Cash. And it says, okay, guys. We

19 now need to sit down, paren, Frank, closed paren, and see

20 what is coming in from all sources. Barry's is enclosed,

21 ours from all sources. The way I see it, we should have

22 Scott cleaned up totally in the next 10 days. 50 million

23 from Barry plus 40 million from us, some reinvestment

24 from the 40 thieves. Frank, please verify my thoughts.

25 First of all, who is the 40 thieves?

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1 A It's the hedge funds.

2 Q And the Von Allmen money is again referenced

3 there?

4 A It is.

5 Q Now, I'd like to go to the first page, and it's

6 an e-mail from you to Frank Preve. You see that? And

7 you see you start talking about, If negotiations with the

8 idiot goes well today we should be cleared up. Are who

9 are you referring to there on the first -- I don't have

10 it highlighted.

11 A That's okay. We should be cleared up this week

12 and use the additional funds -- we should be cleared up.

13 I believe I'm referring to paying off the people we still

14 owe money to, which would have been the hedge funds.

15 Q Nobody else was in these deals at that point;

16 right?

17 A Right.

18 Q Because the hedge funds had an exclusive with

19 Banyon?

20 A No, that exclusive was never exclusive.

21 Q Well, I mean, wasn't the Ponzi funds through

22 Banyon just hedge -- I'm not talking about what you were

23 doing, but I was talking about what Banyon was doing

24 exclusively through the hedge funds up through April?

25 A Almost exclusively except for side deals.

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1 Q The Regent side deal?

2 A Yeah. And I think -- I don't know the timing.

3 You have to look at the LMB transactions also. I don't

4 remember the timing of those, Mr. Scherer.

5 Q I think that was in February of '09. So the LMB

6 would be a side deal as well?

7 A Yes.

8 Q Let me see if I can get back to this e-mail. He

9 says down there, and I have it highlighted, I pay off all

10 outstanding clients. Frank, you have the list. I then

11 bring Platinum, Centurion and Level 3 current.

12 See that?

13 A Yes.

14 Q Now, do you recall that there was a meeting in

15 your office with the Platinum and Centurion people. That

16 would be Nordlicht, maybe Simony, you, regarding Mr. Von

17 Allman's proposed investment into the Ponzi scheme?

18 A Can you give me a time frame?

19 Q Yes, sir. On April 27th, about the end of

20 April. And I'm going to show you an e-mail about when

21 that meeting might have occurred, but I want to get it

22 generally speaking.

23 A There was absolutely what I would call an

24 important meeting that involved at one point in time all

25 those people you referenced and immediately subsequent to

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1 that a private meeting between Mr. Nordlicht and I, yes.

2 Q Was there a discussion with him about

3 Mr. Von Allmen and his investment and what that might

4 mean to you and the Ponzi scheme as far as going forward?

5 A There was a discussion to the best of my

6 recollection between all the parties as to what the new

7 infusion of cash coming from Mr. Von Allmen and others

8 would mean to getting everybody paid down, yes.

9 Q Well, I'm referring specifically to

10 Mr. Von Allmen and what his investment might mean. Do

11 you remember any discussion with the funds concerning

12 Mr. Von Allman's proposed involvement?

13 A Mr. Preve told the group as assembled we had a

14 local billionaire, Mr. Von Allmen, who was going to be

15 taking over what he called the lead in investing,

16 basically replacing the hedge funds and that everything

17 should be fine once he came in.

18 Q Was there something about it would mean some

19 kind of a rating for the funds or give your Ponzi scheme

20 some kind of a rating?

21 A Well, there were --

22 MS. TRENCH: Object to form.

23 MR. SCHERER: What's the objection?

24 MS. TRENCH: I think that you were leading him,

25 putting words -- compound.

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1 MR. SCHERER: We're going to start over. Where

2 were we?

3 (The pending question was read back by the court

4 reporter.)

5 BY MR. SCHERER:

6 Q Do you recall specifically the discussion about

7 what it would mean as far as giving some validity to or

8 recognition to the Ponzi scheme if Mr. Von Allmen got

9 involved?

10 A Yes. It was several fold. But one of the main

11 things that Mr. Levin and Preve wanted to try to do was

12 take us to several credit rating agencies. I remember

13 specific conversations about Standard & Poor's to attempt

14 to get an actual rating for them on an investment

15 strategy, and having Mr. Von Allmen involved along with

16 his family members would be of significant impetus for us

17 to achieve that positive rating.

18 (Thereupon, a short break was taken.)

19 BY MR. SCHERER:

20 Q We're going to finish this on time, hopefully.

21 Let me show you an e-mail from Jack Simony to

22 Mark Nordlicht, Ari Glass, subject, hi, April 27, 2009.

23 MR. KOPAS: Plaintiff's 57, Bates labeled

24 PLATCENT21098.

25 THE WITNESS: Okay.

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1 (Whereupon, Plaintiff's Exhibit No. 57 was

2 marked for identification.)

3 BY MR. SCHERER:

4 Q And the chain starts on Sunday, April 26th. And

5 do you see down at the bottom it says it's from Simony to

6 Frank Preve. Hey, Frank, sorry to bug you on Sunday.

7 Mira wants to come down to FL, paren, this evening,

8 closed paren, to work out a way forward. Are you guys

9 available tomorrow and is the timing right? Best sent

10 via Blackberry.

11 And Frank to Simony, We need to bring it to a

12 head, so I'm all for this visit.

13 Jack up at the top on the 27th, Mark, Ari, I

14 was -- it says, I was trying to set up a meeting with

15 Banyon all day. Frank's e-mail response is enclosed

16 below.

17 Does that e-mail refresh your recollection about

18 a meeting among all of these folks on the 27th and --

19 A I don't know that the meeting actually occurred

20 on the 27th, but I do know that the meeting was set up

21 and sometime around there the meeting occurred.

22 Q Let me see if I can help with that. Let me move

23 on and then I'll try to come back to that. I believe

24 there's an e-mail Mr. Nordlictht's waiting in the waiting

25 room, you've left him hanging there and he e-mails you,

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1 come and get me, Scott, on the 27th. I'll find that

2 e-mail.

3 A I know that the meeting occurred right around

4 this date. I just don't remember off the top of my head

5 the exact date. I do remember the meeting occurring.

6 Q Let me show you another e-mail, April 22nd,

7 we're going back a little bit, try to keep these in

8 order. Go ahead.

9 MR. KOPAS: Plaintiff's 58, begins FP165165/1.

10 (Whereupon, Plaintiff's Exhibit No. 58 was

11 marked for identification.)

12 BY MR. SCHERER:

13 Q Mr. Rothstein, this is an e-mail from Mr. Preve

14 to you on April 22 regarding Jack Simony. Says he's

15 presenting to three major outside investors tomorrow and

16 we're welcome to be there. There is no cash available

17 without outside help and that's why he is presenting.

18 You remember this e-mail?

19 A Yes, I do.

20 Q What can you tell us about it?

21 A I can tell you that I know that at that point in

22 time Jack was still talking to both Frank and I about

23 raising outside capital outside of the hedge funds.

24 Q Do you know who the three majors that he was

25 speaking with?

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1 A I do not remember.

2 Q I want to show you an e-mail chain - no, it's

3 not a chain, it's on one page, which means I can follow

4 it.

5 It's from Mr. Preve to Mr. Nordlicht on June 24,

6 '09, and then some back and forth. Go ahead.

7 MR. KOPAS: Plaintiff's 59 ends in 599359994.

8 (Whereupon, Plaintiff's Exhibit No. 59 was

9 marked for identification.)

10 BY MR. SCHERER:

11 Q It starts out from Preve to Nordlicht on June

12 24, '09. Re: contact. And I want to - let's get it in

13 the record and I'll ask you some questions about it.

14 A Okay.

15 Q Down at the bottom it's Preve to Nordlicht

16 contact, Hi, Mark, hope you're hanging in there, I need a

17 favor. One of the big Funds paren, I will get you their

18 names, is getting ready to buy into our PPM, but they

19 want a contact at our lenders. I'm giving them your name

20 and Jack's, paren, for both Centurion and Level 3, closed

21 paren. I need you to handle this personally because it

22 is a way to make you whole in a very short period of

23 time. What number do you want me to give them?

24 Did I read that correctly?

25 A Yes, sir.

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1 Q All right. And what do you -- during this

2 period of time in June of '09, were you trying to make -

3 you and Mr. Preve trying to make Platinum and Centurion

4 whole in a short period of time?

5 A Yes.

6 Q And what do you think that means, make whole in

7 a short period of time?

8 A It means that we have found a way - we are

9 trying to put together a way through new investors to

10 bring in money into the Ponzi scheme to get it paid out

11 to the old investors, in this case the hedge funds.

12 Q And then the next e-mail is from Preve to

13 Mr. Nordlicht, cc this time to Jack Simony. Contact, Hi,

14 Mark, I have haven't heard you from you but I understand

15 you're traveling. In any case let reiterate that the

16 registered investment advisors, paren, Ballamor Capital,

17 closed paren, who handles on income fund -- I think

18 that's a misstatement. But on income fund. Will be

19 touching base with you in the near future. He's raising

20 funds to purchase the, quote, old, closed quote R.R.A.

21 deals which in turn will provide for the free flow of

22 funds from the R.R.A. trust accounts to the appropriate

23 collection accounts. In essence we anticipate a

24 normalization of business flows once this happens. We

25 appreciate your cooperation with this RIA. RIA being

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1 Registered Investment Advisor, I think.

2 And then up at the top you have Mr. Nordlicht to

3 Mr. Preve on June 25. Thanks. Just landed. Have him

4 call Jack first in the interim and then I will be happy

5 to talk to him as well.

6 Now, at this time, do you have a recollection of

7 the efforts in June to have Platinum and Centurion give

8 positive references to Ballamor?

9 A Yes, I do. We were frantic to make sure we got

10 positive references.

11 Q And raising funds to purchase old R.R.A. deals,

12 what do you think that refers to?

13 A The old R.R.A. deals would have been to purchase

14 the money involved in the hedge funds deals.

15 Q But those deals by June were already in default;

16 weren't they?

17 A That's correct.

18 Q And a free flow of funds from R.R.A. trust

19 accounts to the appropriate collection accounts; what

20 does that mean to you?

21 A It means so that we can pay back the hedge

22 funds, Centurion, Platinum, Level 3 using new investor

23 money.

24 Q But again, the free flow of funds from your

25 trust accounts to the appropriate collection accounts, do

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1 you agree that's Ponzi talk because there weren't any

2 funds to free flow from these trust accounts; correct?

3 A That's correct.

4 Q Now, do you know whether Mark Nordlicht or

5 Simony indeed had conversations with Ballamor Bekkedam or

6 any registered investment advisor from that group

7 relative to this at this time?

8 A I was told by Mr. Preve that he spoke with

9 them. I was told by Mr. Simony that both he and Mark

10 spoke to them. I did not speak to Mr. Nordlicht about

11 this particular group.

12 Q How about Barry Bekkedam, did you have any

13 conversations with him concerning his fund or his fund

14 being available to purchase old, quotes around old,

15 R.R.A. deals during this time?

16 A I don't recall talking about buying old R.R.A.

17 deals. I recall talking about buying new deals with

18 Barry. I don't recall talking to him specifically about

19 purchasing old deals. That's not to say it didn't

20 happen, I just don't have an independent recollection of

21 it.

22 Q Let me show you a June 23, '09 e-mail from Frank

23 Preve to you.

24 MR. KOPAS: Plaintiff's 60, the Bates labeled

25 number is unreadable on this copy.

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1 (Whereupon, Plaintiff's Exhibit No. 60 was

2 marked for identification.)

3 BY MR. SCHERER:

4 Q It's unreadable, also. It's a Frank Preve

5 e-mail, June 23, '09 to Rothstein. Update. And it has

6 Bates stamp but our copy doesn't show it.

7 Now, you'll see I have highlighted there on the

8 middle part of the page: Also the RIA now wants to talk

9 to Platinum and Centurion about our credit rating.

10 Great. Having Jack lay the ground work. You see that?

11 What did you think -- First of all, do you recall this?

12 A Yes, I do.

13 Q And tell us what you recall and what was going

14 on with that RIA now wanting to talk to Platinum and

15 Centurion about the credit rating?

16 A It's the same thing we referenced it the other

17 e-mails talking about - it's having the people from

18 Ballamor from Bekkedam's group speak to Jack Simony

19 and/or Mark Nordlicht about the fact that we are a solid

20 investment and we pay on time.

21 Q Let me ask this, I had forgotten to ask you

22 this. Around the time back in April, at the end of April

23 and about a month before this or month and a half, when

24 you were identifying - or when Mr. Von Allmen was

25 identified to you through Barry Bekkedam; do you recall

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1 ever setting up a dinner at Bova in which Mr. Von Allmen

2 had dinner with you and Ari Glass at Bova, your

3 restaurant?

4 A I really don't have a specific recollection of

5 the dinner, it's possible it happened but I don't have a

6 specific recollection of it.

7 Q Do you have a recollection of Mr. Von Allmen

8 having dinner with anybody from Platinum and Centurion at

9 all? I think it's Ari Glass, but the question is

10 anybody; maybe Jack Simony or anybody?

11 A I don't have that independent recollection,

12 Mr. Scherer.

13 Q Okay. Thank you. I should have asked you this

14 this morning when I was questioning you concerning David

15 Ring's testimony in his deposition concerning a statement

16 made to him by Jack Simony of having a bad Passover in

17 '09, which is I looked it up, I think it's April the 4

18 '09, Passover, April 4 to April 8th, I think. Do you

19 recall that question? You recall my question and your

20 responses to that question?

21 A I recall you discussing it. I don't recall you

22 asking me specific questions about the bad Passover, no.

23 Q Well, let me show you April 8, e-mail from Jack

24 Simony to you. And I'm sorry we don't have a Bates stamp

25 on it. I know it was Bates -- Let me tell everybody

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1 where it came from. It came from the Trustee's

2 production of the deleted e-mails, which were recently

3 produced.

4 MR. KOPAS: Plaintiff's 61.

5 (Whereupon, Plaintiff's Exhibit No. 61 was

6 marked for identification.)

7 MR. LICHTMAN: To be clear, the restored deleted

8 e-mails.

9 Q Restored deleted e-mails, yes. And since that's

10 my only copy, I'd ask you to read it. Tell us from you

11 to Jack kind of hard to read.

12 A Okay.

13 Q And would you read it for us? Read the date and

14 go ahead and publish that for me, please.

15 A Sure. It's from Jack Simony, Whitehaven Group

16 dot com to Scott Rothstein, Wednesday, April 8, 2009 at

17 7:27:22 p.m. Hey buddy, this won't be the first Passover

18 we Jews got through when things look bleak. We will find

19 a way through this one. I'm committed to helping any way

20 I can. Have a good chag, Jack. Sent via Blackberry

21 A.T.T.

22 Q Do you recall receiving that e-mail from Jack -

23 and now that I've put it in front of you, concerning his

24 bad Passover?

25 A Yes.

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1 Q Do you understand that he meant by having a bad

2 Passover that you folks were going to get through?

3 A Everything was potentially crashing. The hedge

4 funds - we cut off our dealings basically with the hedge

5 funds. We were at a standstill. They were not funding,

6 we weren't going to pay, they knew it. We were insisting

7 on certain things and they were insisting on certain

8 things. So, it looked like the entire strategy was

9 blowing up from both sides.

10 Q David Ring's memory concerning Jack's statements

11 to him is pretty consistent with that e-mail to you?

12 A It is.

13 Q And his statement about saving the funds during

14 that time is consistent with your understanding of what

15 was happening to your relationship and Banyon's

16 relationship with the hedge funds?

17 A Absolutely.

18 Q Now, yesterday you described Simony as a

19 confidant?

20 A Yes, sir.

21 Q Would you explain that for us, please?

22 A Based upon all of the dealings that I had

23 witnessed between Mr. Simony and Mr. Preve, and based

24 upon numerous conversations that I had with Mr. Simony

25 over the phone and face-to-face and based upon trips we

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1 had taken and the like, hanging out together, I felt that

2 Mr. Simony was one of the people that I could truly trust

3 in the process to do the right thing for all parties

4 concerned, not just for his particular group. And that's

5 the way I treated him for the most part.

6 Q And if I went back to your letter to the Judge

7 about investors that knew and some investors that didn't

8 know about the Ponzi scheme, where would you place

9 Mr. Simony?

10 A Simony was conflicted. I believe that he knew

11 there was a fraud going on, but I do not necessarily know

12 whether he knew what type of fraud was going on. All of

13 the different people, Mr. Scherer, that were involved in

14 the hedge fund - at the hedge funds all had different

15 levels as far as I was concerned of knowledge, people

16 who --

17 Q Take them through the most knowledge through the

18 least knowledge. Let me do it this way.

19 A Sure.

20 Q Do you think that Mr. Nordlicht had knowledge

21 that what you were doing was an illegal Ponzi scheme?

22 A Following my April meeting at the end of April

23 with him?

24 Q Yes.

25 A I was confident that he knew that there was

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1 illegal activity going on, yes.

2 Q And what do you base that on?

3 A A conversation that I had with him.

4 Q And would you tell us about that conversation?

5 A We were discussing the fact that the explosion

6 of this entire ordeal, meaning the hedge funds not

7 getting paid, us not having money, this was not good for

8 anybody, them declaring us in default and potentially

9 suing us, George potentially lighting up and suing them

10 would only serve to harm all of us.

11 I opened the meeting. I can remember vividly

12 sitting on the couch in my office, we were both sitting

13 on the same piece of couch facing each other. And I laid

14 it out for him in no uncertain terms in my colorful

15 fashion, that something has to be done, that we are not

16 going to simply sit back and have this explode in our

17 faces. If we go down -- and I said this on more than one

18 occasion. If we go down, you go down. We're in this

19 together.

20 It's sink or swim, all for one, one for all, or

21 nobody is going anywhere. He then went into this whole

22 thing and started describing to me some events that

23 involved his father Julius and how he had been through a

24 fraud thing with his father and how difficult it was and

25 that he didn't want to go through it again. And then he

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1 started talking to me about this optionable litigation.

2 And I got out of it from the conversation, clearly, that

3 he was trying to explain to me without using the words

4 that he was a player, that he got it. That this is not

5 his first time at the dance. And he used words pretty

6 close at that. I don't know if he said first time at the

7 dance. I know it wasn't the first time at a rodeo, he is

8 not a rodeo guy.

9 He said first time at the dance, not my first

10 trip down this lane. He kept saying whatever the issues

11 are, we'll get through it together. We need to stick

12 together. He said these things only blow up when the

13 parties start fighting. We can't let that happen. I'm

14 here to support you, you have to support me.

15 And we decided at that moment that we would. I

16 told him that the most important thing that he could do

17 was make sure that any future investors that contacted

18 him were told we were a good investment strategy and that

19 they had only positive experience with us with regard to

20 payment and all the other details of the strategy, and he

21 assured me that they would do that.

22 Q You believe he did do that?

23 A I know that he did at least with Von Allmen and

24 Bekkedam, sure.

25 Q And so essentially, what you asked him to do was

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1 lie about the your performance with his funds?

2 A Not essentially, I did ask him to lie.

3 Q And he agreed to lie?

4 A Yes, sir.

5 Q I think we're done, but let us have five minutes

6 to look and see if I have left anything on the table

7 here.

8 (Thereupon, a short break was taken.)

9 BY MR. SCHERER:

10 Q Mr. Rothstein, did you or Mr. Preve ever discuss

11 paying Jack Simony for all of the positive efforts that

12 he had made to help to house your Ponzi scheme to the new

13 investors?

14 (An objection to form was made.)

15 Q What was the objection about that?

16 UNKNOWN SPEAKER: Ponzi scheme.

17 MR. SCHERER: I'll call it whatever you would

18 like me to call.

19 UNKNOWN SPEAKER: Investment strategy.

20 Q Did you ever discuss paying Mr. Simony for

21 assisting you and Mr. Preve in your investment

22 strategies? That's Ponzi speak for Ponzi.

23 A Yes.

24 Q Okay.

25 A With that understanding, yes.

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1 Q He objected to that. Let me ask the question

2 without -- Did you ever discuss with Mr. Preve

3 compensating Mr. Simony for giving positive references to

4 your investment program?

5 A Yes.

6 Q Would you tell us about that, please?

7 A Yes. Mr. Preve spoke to me over the phone and

8 by e-mail; it was the e-mail first, then we had a

9 telephone conversation, telling me that if we expected

10 Jack to risk his credibility, which was later described

11 to me when we talked about it, which was giving us the

12 positive credit reference; if we expected him to risk his

13 credibility he had to be paid.

14 Q We're looking for that e-mail and we'll find it

15 probably next week. I'll show you - and then we'll end

16 it today, an e-mail from you to -- We found it.

17 MR. KOPAS: Plaintiff's 62 begins FP ends

18 192479/1.

19 (Whereupon, Plaintiff's Exhibit No. 62 was

20 marked for identification.)

21 BY MR. SCHERER:

22 Q Go ahead I don't have a copy of it. I would

23 like you to take a look at this e-mail. I don't have a

24 copy of it, but I would like you to publish it for us.

25 A It's an e-mail from Mr. Frank Preve to me dated

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1 Thursday, October 15, 2009, 3:06 p.m. Subject: help. I

2 can't solve problems because lack of cash is tying my

3 hands. Need the following: One, Banyon 1030 need to pay

4 Bob Mazzseo so he will get back on the bandwagon with

5 A.J. plus regular bills.

6 Two, S.F.S. Need to send something so I can send

7 something to Jack. He's a key figure now and acting as a

8 go-between for the new hedge fund investors and

9 Centurion Platinum. They are deeply suspicious that no

10 one from Plat is calling them back. If Jack is going to

11 risk his credibility he needs to be compensated.

12 Three, LMB, please pay this today. I'm trying

13 to get him to step up for 15 million here shortly, but

14 these late payments send the wrong message. Call me when

15 you get a chance. Frank Preve.

16 Q What was the date of that e-mail?

17 A Thursday, October 15, 2009 at 3:06 p.m.

18 Q Do you know whether Mr. Simony got paid for

19 risking his credibility?

20 A My understanding is that he did, yes.

21 Q Tell me what you know about that.

22 A There were payments made on the S.F.S. deal,

23 which was a side deal between Frank and Jack that Jack

24 Simony was involved in, that we made payments on and

25 those payments were forwarded to Jack.

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1 Q Now, I will show you the -- Thank you. That's

2 the e-mail you were making reference to in your testimony

3 just before; correct?

4 A Yes, sir.

5 Q Let me show you another e-mail from you -

6 actually it starts out from George Levin to you -- Well,

7 it does start out from George Levin to you, but I don't

8 know what's in the George Levin one. I'm only interested

9 in the, to you part, so from you to George Levin: Still

10 not heard from Frank.

11 MS. TRENCH: What was the date?

12 MR. SCHERER: April 19, '09

13 MR. KOPAS: Plaintiff's 63, starts FP ends

14 163968/1.

15 (Whereupon, Plaintiff's Exhibit No. 63 was

16 marked for identification.)

17 BY MR. SCHERER:

18 Q I think this is that Sunday they hadn't heard

19 from Frank because he was in church, according to

20 George. I think that's the same e-mail we talked about.

21 A Okay, let me take a look.

22 Q But I mean, that was the chain, but it led up to

23 this response from you on that Sunday, April 19, where it

24 says Ari is a raving sociopath.

25 A Psychopath.

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1 Q I can't even read that, yes. And he's driving

2 his own attorney crazy. That's the one; right?

3 A Okay. You want me to read the whole e-mail?

4 Q No, no. Read it to yourself and then I'm going

5 to talk to you about the part I highlighted.

6 A Give me half a minute. Okay.

7 Q I'm going to talk to you about the two

8 highlighted portions that I have there.

9 A Okay.

10 Q You state that in that middle part of that

11 sentence, if there's any type of problem for me at all we

12 will work around it. He also understands that the

13 re-investment of what we pay each week is a part of the

14 deal and that absent that we have no deal, and you are

15 referring to Mira on that?

16 A Yeah.

17 Q Okay.

18 A Mr. Nordlicht.

19 Q That's Nordlicht; right?

20 A Yes.

21 Q We've been referring to as Mark Nordlicht?

22 A Yes.

23 Q And then down below you say, I discussed with

24 Jack and Mira the fact that anyone going ballistic would

25 serve no one well and I was quite specific as to Murray's

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1 weakness and to Mira's weakness as it relates to an

2 explosion. Would you tell us what you meant?

3 A Yes, I explained to Jack Simony and

4 Mr. Nordlicht the doctrine of dough mad, the doctrine of

5 mutually assured destruction.

6 Q Was that Ponzi speak for --

7 A That was my way. I explained to them that this

8 all fell under now, what I referred to in e-mails and the

9 like, as dough mad, the doctrine of mutually assured

10 destruction, you fire, we fire, everybody goes down in a

11 fiery ball of flames.

12 I explained to them that we knew about Murray's

13 cross involvement in all this stuff and other shinanigans

14 that he was pulling, according to Mr. Preve. And that if

15 they put us in a position where we were going to explode

16 that we would make sure they went down with us and it

17 would serve nobody's purpose.

18 Q Isn't that like telling him you're involved in

19 illegal activity and that you'll bring them down if they

20 bring you down?

21 MS. TRENCH: Object to form.

22 A That is what I was telling them.

23 Q You weren't talking about just losing your

24 credit rating?

25 A There is no way anyone speaking to me at this

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1 point in time misinterpreted what I was saying and the

2 way I was saying it as some general polite business

3 discussion about having a bad business day.

4 MR. SCHERER: Okay. Thanks. I have no further

5 questions.

6 MR. LICHTMAN: I would like to start. I'll do

7 this about 20 minutes to get out because I'm

8 concerned about timing making sure everybody gets

9 their time.

10 DIRECT EXAMINATION

11 BY MR. MR. LICHTMAN:

12 Q Mr. Rothstein, as you know, I'm Counsel to Mr.

13 Stettin, the Trustee of R.R.A.

14 A Yes, sir.

15 Q I'm going to be asking you some questions about

16 T.D. Bank and I'll follow-up on some things that prior

17 Counsel has gotten into.

18 A Okay.

19 Q One thing I want to start off with was a line of

20 inquiry I asked you about yesterday in the 2004 Exam

21 where I spoke to you at the beginning of that examination

22 about your truthfulness. Do you remember that?

23 A Okay.

24 Q I think we obtained a stipulation that the

25 comments you made in the 2004 would carry over and extend

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1 to this transcript?

2 A Yes, sir.

3 Q And I listened to what you had to say and

4 something dawned on me. You said that you went to

5 Morocco and one of the reasons you went there was because

6 there was no extradition treaty with the United States;

7 correct?

8 A That's correct.

9 Q And you weren't extradited when you came back to

10 the United States; correct?

11 A No, I returned voluntarily, sir.

12 Q When you say that you came home voluntarily,

13 what do you mean by that?

14 A While I was in Morroco, I contacted Mr. Nurik

15 and I told him that I was in very big trouble. I did not

16 get into specifics. I told him I was in very big

17 trouble. I discussed issues of representation, which I'm

18 not going to be specific about. But I did tell him, once

19 he told me that he would represent me, I asked him to

20 please contact the U.S. Attorney's Office, tell them that

21 I want to come in, that I'm going to completely de-brief

22 as to everything I know both about my crimes and the

23 crimes of many others and that I'm going to voluntarily

24 return to the United States. And I gave them the date of

25 the return.

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1 Q Is it a fair statement that you turned yourself

2 in?

3 A That is what happened, I did turn myself in.

4 Q You did that in conjunction with what you said

5 yesterday because you wanted to be truthful and basically

6 tell your story now?

7 A I turned myself in --

8 Q Did you do that because you wanted to be

9 truthful, as you mentioned yesterday and tell your story?

10 A That was certainly one of the reasons. I did

11 not want my family to have to have this raining down upon

12 them without me here. I created the mess, it should rain

13 down on me, not on them. They didn't do anything wrong.

14 I was concerned about my children, not about

15 their safety but about their mental well-being and it was

16 time for me to be a man and step up and actually do the

17 right thing, probably for the first time in my life.

18 Q I noticed that you've been talking about

19 potentially illegal conduct of many people that you were

20 very close to or at least if they had knowledge of some

21 of your activities, you mentioned as an example Ron

22 Picou, who you said was in your very narrow circle of

23 friends; Stu who has been your partner for years; Ted

24 Morse who was like your brother; Uncle Bill, as an

25 example?

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1 A Yes, sir.

2 Q I note that you seem very open about talking

3 about these items. Is there anything in your state of

4 mind as to, seems almost like this is freeing you up as

5 you go through this process?

6 A In a lot of ways it's a combination. It's

7 extremely difficult because there's a lot of people I'm

8 talking about that I care about tremendously and still

9 care about.

10 But at the same time when you have been living

11 the type of lie that I lived for that many years and when

12 you have hurt that many people you get to the point where

13 something has to give, you're either going to remain on

14 the run for your entire life or you're going to kill

15 yourself; or you're going to do what I did and that is

16 come back and -- I made my bed, I'm going to sleep in it,

17 Chuck, that's what I decided to do.

18 Q When I came back from lunch today one of my

19 colleagues that's in the room asked me how much time

20 either I or the Trustee had promised you in connection

21 with any testimony. And I think that it pertained to the

22 fact it's common knowledge and been talked about at

23 length that the Trustee, including myself and my

24 co-counsel, interviewed you for three days?

25 A That's correct.

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1 Q Did the Trustee offer you anything or make any

2 promise to you whatsoever about your testimony?

3 A No, sir.

4 Q Have I?

5 A No, sir.

6 Q Or Mr. Genovese?

7 A No, sir.

8 Q By chance, has Mr. Scherer made any such

9 promises to you?

10 A No, sir.

11 Q Okay.

12 A This is the first time, by the way, I'm speaking

13 to Mr. Scherer since I left the country. I haven't

14 spoken to him the entire time.

15 Q Let me then start just for a few minutes so we

16 can be efficient with time and talk about how the

17 relationship with T.D. Bank began. Do you recall how it

18 was that you actually got to T.D. Bank?

19 A We got to T.D. Bank through my partner Steve

20 Lippman and a relationship he had with a gentleman who

21 was heading up either Florida or this whole part of the

22 country, a guy named John Tolimar (phonetic). Steve and

23 I were discussing the fact that we needed a new banking

24 relationship for a number of reasons and he called Mr.

25 Tolimar and we actually set up a meeting and I remember

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1 going to dinner with Mr. Tolimar and Mr. Rosenfeldt came

2 with us. Myself, Mr. Lippman, Mr. Tolimar and Mr.

3 Rosenfeldt had dinner up in Boca Raton some place and

4 discussed a banking relationship.

5 Q At that point in time the bank was known as

6 Commerce Bank; right?

7 A That's correct.

8 Q You said there were reasons you were going

9 there. Yesterday you mentioned some reasons as it

10 pertained, for instance, to matters related to Ponzi

11 scheme. Were there other reasons as well?

12 A No, the main instigating reason was the fact

13 that one of our investors or a group of our investors

14 were telling us that we needed to be with a bigger bank.

15 I suspect that as I'm sitting here thinking

16 about it, the sub reason of course is I'm getting a real

17 headache from Gibraltar and even though Mr. Harris and

18 Mr. Hayworth are doing a good job protecting me, it's

19 still a headache and it's taking up a lot of time, both

20 mentally and actually physically. So as long as we could

21 have a good relationship it was a welcome change for us.

22 Q Is it a fair statement that the partners at

23 R.R.A. that you mentioned that went to the dinner with

24 Mr. Tolimar up in Boca knew the reason for you wanting to

25 move to a bigger and different bank?

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1 A They knew that we needed to go to a bigger bank,

2 I don't believe that Mr. Lippman - that it was discussed

3 with Lippman, specifically about needing to go because of

4 the hedge funds. It was discussed with Mr. Rosenfeldt

5 briefly.

6 MR. LICHTMAN: Let me ask the Court Reporter

7 what your next exhibit number is.

8 (Whereupon, Trustee's Exhibit No. 64 was marked

9 for identification.)

10 BY MR. LICHTMAN:

11 Q For the record, Exhibit 64 is the Adversary

12 Complaint that the trustee, Mr. Stettin filed in this

13 action.

14 A Okay.

15 Q And I want to start with the issue of accounts.

16 We began --

17 A Did you say counts or accounts?

18 Q Bank accounts.

19 A Thank you.

20 Q If you would take a look at Paragraph 14.

21 A Yes, sir.

22 Q One of the allegations that we make is that

23 numerous accounts were opened in R.R.A.'s name. Do you

24 know ultimately how many accounts were opened at the

25 bank?

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1 A Well, over a dozen. I don't remember how many

2 we ultimately had. There was a lot of accounts. Every

3 time a new investor wanted to come in we opened up a

4 separate account for them.

5 Q Paragraph 26 of the Adversary Complaint we

6 alleged that there were 26 accounts, 22 of which were

7 titled as trust accounts. Does that refresh your

8 recollection?

9 A That sounds approximately correct, yes, sir.

10 Q Okay. At the time that you opened up these 22

11 trust accounts, did the bank ever ask you why you would

12 open 22 separate trust accounts?

13 A No, sir.

14 Q To the best of your recollection, was the

15 paperwork filled out appropriately so each of those 22

16 accounts could qualify as Florida Bar iolta accounts?

17 A I didn't handle that paperwork. It would have

18 been handled by Irene Stay, possibly Bill Brock and Debra

19 Villegas assisting. But I assume it was because they

20 were all opened up as authorized trust accounts.

21 Q You know that from your personal knowledge

22 because you saw the accounts and you worked with --

23 A I know it actually because I had conversations

24 with Tracy Weintraub about the accounts and the fact that

25 they were unlimited accounts.

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1 Q Was there ever a point in time that Mr. Spinosa

2 asked you why you had 22 trust accounts?

3 A No.

4 Q Did Ms. Kerstetter ever ask you that?

5 A No, sir.

6 Q Ms. Caretsky?

7 A No, sir.

8 Q In any of the prior firms that you were

9 affiliated with, did you ever have 22 trust accounts?

10 A No, sir.

11 Q Did you have more than one?

12 A We may have had more than one. We sometimes

13 broke it down into -- I remember at Phillip, Eisinger we

14 had a trust account for certain condo work that

15 Mr. Eisinger was doing and possibly one for other types

16 of business, but never more than a small handful.

17 Q Paragraph 14 of the Complaint our second

18 sentence says: One of his co-conspirators - and his

19 refers to you - was T.D. Bank, which acting through its

20 authorized agents enabled and allowed Rothstein to use

21 its name, facilities, and accounts to deceive investors

22 and lenders. I want to break that down for you.

23 With respect to the authorized agents, you've

24 mentioned three names so far, that would be Mr. Spinosa,

25 Ms. Caretsky and Ms. Kerstetter.

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1 A Yes, sir.

2 Q Would it be a fair statement that those three

3 people assisted you directly or indirectly in the course

4 of your banking relationship at T.D.?

5 MS. ROTHCHILD: Objection to form

6 A Those three people assisted me directly.

7 Q Was there anybody else that assisted you?

8 A That I knew that knew we were committing some

9 type of fraud? No. Those were the three people that

10 were in the know that we were doing something illegal.

11 MR. CRAIG: Move to strike, non responsive.

12 Let me put my objection on the record.

13 MR. LICHTMAN: I'm sorry.

14 MR. CRAIG: I move to strike, it's non

15 responsive.

16 BY MR. LICHTMAN:

17 Q That's actually not what I was asking you.

18 A Okay.

19 Q I want to first focus on is who assisted you at

20 the bank?

21 A Generally assisted with day-to-day business?

22 Q Yes, if you needed something done, whether it

23 was a wire transfer or lock letter or whatever it was?

24 A If it was me specifically requesting, I always

25 went directly to Frank Spinosa. If I couldn't reach

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1 Mr. Spinosa I went to Ms. Caretsky. I suspect - I don't

2 know that this ever occurred - but if I couldn't reach

3 Ms. Caretsky I have would have gone to Ms. Kerstetter.

4 The general rule however was, unless I was doing

5 something pertaining to business that I specifically was

6 doing, that Irene Stay or Bill Brock would have contacted

7 whoever it is that they deemed necessary to contact and

8 I'm certain that their main contacts were not Frank

9 Spinosa, were Ms. Caretsky and Ms. Kerstetter and

10 probably a whole host of other individuals for our

11 general banking business depending upon what they were

12 doing.

13 Q Within R.R.A. what was the difference in

14 responsibility between what Mr. Brock had to do and what

15 Ms. Stay to had to do as it pertained to T.D. Bank?

16 A Ms. Stay's primary responsible was one

17 overseeing all the financial work that was going on with

18 T.D. but, let's call it sub-primarily she was trust

19 accounting. Bill Brock was more towards the operating

20 side, though when Irene was unavailable he would fill in

21 and handle trust items, especially if she was on vacation

22 or out of the office.

23 Q Forgive me, but if you would explain the

24 difference between when you say Ms. Stay was doing trust

25 accounting and Uncle Bill was doing operating, I don't

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1 understand from a functional standpoint what the

2 difference is. If you could clarify that.

3 A Okay. Operating account, though it was used to

4 launder money through, once it came out of other accounts

5 sometimes we put it in there to move it. Although that

6 occurred more at Gibraltar than T.D.

7 Q Was that the 0923 account?

8 A No, 0923 was the main trust account.

9 The operating account at T.D. Bank, to the best

10 of my memory, was basically a legitimate account.

11 Meaning that legitimate bills and the like were paid

12 through it. I'm sure some illegitimate things were paid

13 through it also, but the bulk of it was costs and that

14 kind of stuff. And Bill's responsibility was cut all the

15 cost checks, make sure the process servers are paid, make

16 sure court filing fees are paid, that type of stuff.

17 You'll see the series of checks in that regard.

18 On the other side, you have trust accounting.

19 In a firm that's running a massive Ponzi scheme where you

20 have 22 trust accounts, there's a significant amount of

21 movement in and out of those accounts at extremely high

22 velocity. Irene was my right-hand confidant on the

23 financial side of the Ponzi scheme. And her job was,

24 when I say trust accounting, her main focus was the

25 illegal trust accounting, moving money around in all the

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1 accounts, making sure investors got paid on time, making

2 sure I knew how much money we would need on a daily,

3 weekly, monthly basis to pay the Ponzi investors and the

4 like.

5 Q Can you tell me what the difference was between

6 the operating account that you had at Gibraltar Bank and

7 the operating account at T.D. Bank?

8 A There's actually a drastic difference. My best

9 recollection is that the operating account at T.D. Bank

10 as I just expressed was used more for just general

11 business. We were paying a lot of our legitimate bills

12 through that account, but of course using Ponzi money. I

13 mean Ponzi money was going in there to pay most of the

14 bills from the law firm.

15 In Gibraltar it was completely different because

16 what we were doing, if you look at all the e-mails, and

17 this is probably 99 percent true with almost out

18 exception, if you look at all the e-mails between Ms.

19 Ellis, Mr. Harris, me, Irene, Bill, regarding the

20 movement of money, when it came, when it's Ponzi funds

21 and it's coming from George Levin's, Banyon 1030-32

22 account into our Banyon, the R.R.A. Banyon account, it

23 always went as a matter of course into that account, out

24 of that account; before it went anywhere else we always

25 put it in operating for the purposes that we saw as

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1 washing the money, in other words --

2 Q The Gibraltar operating account?

3 A Yes, for the purpose of having it look like it

4 was legitimate income to the law firm. At that point we

5 could do with it as we wish and we would instruct the

6 people at Gibraltar through me, through Bill, through

7 Irene, to move the money at that point in time through

8 various accounts, whether it would be to my personal

9 account. You saw e-mails yesterday with the real estate

10 trust account, all types of various accounts.

11 And then ultimately when we had our accounts at

12 Commerce T.D. we would move the money from on occasion

13 from our Gibraltar operating account over to T.D. and

14 then use the money there, and likewise back the other

15 way.

16 Q So, if I understood your testimony a few minutes

17 ago, you said that you principally work directly with

18 Mr. Spinosa when it came to T.D. Bank issues; correct?

19 A That's correct.

20 Q As to Ms. Stay when she was dealing with trust

21 account issues and the activity that you described she

22 was engaged in, who did she work with at T.D. Bank?

23 A Her main contact was Ms. Caretsky.

24 Q And do you know what type of things she did with

25 Ms. Caretsky under your direction?

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1 A You know, I don't recall off the top of my

2 head. If you have e-mails it will help refresh my

3 recollection. But you also have to remember, Mr.

4 Lichtman, fortunately for us in the scheme of a Ponzi

5 scheme it was much more limited, the need for contact,

6 because we had Treasury Direct in our office, which

7 allowed us to send out our own wires. So, we really only

8 needed contact them when we were doing what everyone has

9 now come to call the show, and we made contact with them

10 when we needed wires processed quicker, if things were

11 getting hung up, overdrafts covered, that type of stuff.

12 I believe that you'd find, in looking at the

13 e-mails, that the contact was significantly less than we

14 had to have with Gibraltar Bank.

15 Q If there were wires that you needed to have

16 expedited that would be the type of thing Ms. Stay would

17 have handled with Ms. Caretsky?

18 A Yes, Ms. Stay or Mr. Brock with Ms. Caretsky or

19 perhaps even going directly to the wire department.

20 Q If you were transferring money from one of the

21 accounts to another account, did you do that through

22 Treasury Direct or would you have done that through

23 conversation, meaning you at R.R.A. with someone at

24 T.D.?

25 A I don't recall off the top of my head, but I

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1 know we didn't do it through Treasury Direct because that

2 was wires. I seem to have some recollection that we had

3 the ability to transfer money internally also, but I may

4 be mistaken. The e-mails should show that if you have

5 e-mails from Irene or Bill to somebody else telling them

6 to move money internally.

7 Q Do you recall what Mr. Spinosa's title was at

8 the bank?

9 A He was the regional vice-president.

10 Q Did he describe for you what his duties were?

11 A He told me that he had control over the

12 southeast region of T.D. Bank.

13 Q Did you believe that there was anyone more

14 senior in the southeast region of T.D. Bank than

15 Mr. Spinosa?

16 A In that region, no. Only Mr. Tolimar who was

17 his direct report while he was at the bank.

18 Q Mr. Tolimar knew who you were because he passed

19 you off to Mr. Spinosa; right?

20 A Yes. Mr. Tolimar and I actually became

21 friendly, yes.

22 Q Was Mr. Tolimar at the bank throughout the

23 course of, we'll say October 2009, to the best of your

24 knowledge?

25 A No. My understanding is he got a better

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1 opportunity with another banking establishment and left.

2 Q Do you know who Mr. Spinosa's senior officer

3 was over him, if any?

4 A After Mr. Tolimar left?

5 Q Yes.

6 A It was my understanding that he reported to

7 someone up in the main office at Cherry Hill, New

8 Jersey. That once Mr. Tolimar left they actually didn't

9 replace Mr. Tolimar with regard to him. The way

10 Mr. Spinosa explained it to me is that once Mr. Tolimar

11 left he was give a lot more power and a lot more

12 authority.

13 Q So he moved up?

14 A Yes.

15 Q As to Ms. Caretsky, did she report to

16 Mr. Spinosa; do you know?

17 A I don't know for certain. It always appeared

18 that she did because I saw e-mails back and forth, but I

19 can't be certain.

20 Q Do you know what her title was?

21 A I don't remember whether she was the branch

22 manager, I don't recall off the top of my head.

23 Q How about Ms. Kerstetter?

24 A She eventually became one of the managers at the

25 17th Street branch. I think she was Ms. Caretsky's

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1 assistant, if I'm not mistaken at the Weston branch.

2 Q At Weston?

3 A At Weston. She was originally - ms. Kerstetter

4 was originally at Weston and moved to 17th Street.

5 Q Now, the second sentence in Paragraph 14 of our

6 complaint, it says one of his co-conspirators from T.D.

7 Bank, which acting through its authorized agents, enabled

8 and allowed Rothstein to use its name, facilities,

9 accounts to deceive investors and lenders. Do you see

10 that?

11 A Yes.

12 Q From a factual standpoint do you believe that

13 statement to be true?

14 A It is true.

15 Q What facts do you know of that would support the

16 contention that I raised - and we're going to break this

17 down, that T.D. Bank allowed you to use its name to

18 deceive investors and lenders?

19 A One of the great things from a Ponzi perspective

20 about moving our accounts to T.D. Bank and then finding

21 an ally and co-conspirator in Mr. Spinosa was the fact

22 that T.D. Bank was one of the largest and recognized as

23 one of the largest, most powerful banks in the country

24 and continued to grow at an extremely rapid pace.

25 The fact that we were able to put their name all

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1 over everything we were doing when we were selling the

2 investments lend a tremendous credibility. I no longer

3 had to answer any questions such as I've never heard of

4 Gibraltar Bank. There were people from outside the region

5 that really weren't familiar with Gibraltar Private.

6 Q Did Mr. Spinosa know you were doing this?

7 A He helped me do that, sure.

8 Q Give me examples how he helped you do it.

9 A Of the best example is when I had Barry Damson

10 and Kathleen White in his office up on Cypress Creek over

11 and over again, when Mr. Spinosa was selling he would say

12 you don't need to worry, we're as big as they get.

13 There's a lot of money behind this, there's a lot of

14 power, and there's very little we can't do to help our

15 customers. If your money is safe, it's safe anywhere.

16 You know, it's touting the power of being an extremely

17 large bank.

18 Q How about issuing lock letters that came on T.D.

19 letterhead, would you view that as being consistent with

20 that statement?

21 (Objection was made to form.)

22 Q Would you view the issuance of the lock letters

23 to be consistent with T.D. Bank lending its name to what

24 you were doing?

25 MS. ROTHCHILD: Object to form.

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1 A That's one of the main things they did for us.

2 It turned out that those lock letters were instrumental

3 to us continuing our business because we had investors

4 that would not have invested with us but for our ability

5 to pseudo faith, clock the accounts.

6 Q The second component of the sentence in the

7 complaint discusses facilities. Would it be a fair

8 statement that the use of the T.D. Bank office was for

9 your show, would qualify in your mind as the use of the

10 facilities?

11 MS. ROTHCHILD: Object to the form.

12 A Sure. I mean, it clearly gave the investors the

13 impression that we were extremely tightly tied to the

14 bank and a powerful client. We would walk in and we were

15 able to use their facilities. I had very close

16 relationships with the people in there, as you can see

17 from the one picture that makes it look like I was

18 dancing with Ms. Kerstetter in the middle of the bank

19 floor.

20 So, yes, the use of their facility certainly

21 helped and our ability to come and go as we pleased help

22 as well.

23 Q The last item would have been accounts, that's

24 self explanatory.

25 MR. LICHTMAN: What I would like to do, it's 10

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1 to 5, if we stop right now that would give people

2 enough time to possibly beat rush hour by a couple

3 minutes.

4 MR. NURIK: Before we go I want to put on the

5 record, I've explained this to certain of the Counsel

6 that tomorrow morning I have another thing that I

7 have to attend to in Broward County. But my client,

8 Mr. Rothstein, has agreed to proceed in my absence

9 and continue answering the questions of Mr.

10 Lichtman. I will probably be here around 11:00 or

11 so.

12 MR. LICHTMAN: So, it's on the record,

13 Mr. Rothstein, would you acknowledge that?

14 THE WITNESS: Yes, that's accurate.

15 MR. LICHTMAN: Okay.

16 (The proceedings were adjourned at 4:55 p.m.)

17

18

19

20

21

22

23

24

25

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1 C E R T I F I C A T E

2

3

4 STATE OF FLORIDA )

5 COUNTY OF BROWARD )

6

7

8 I, TERRI L. WRIGHT, Notary Public in and for the

9 State of Florida at Large, certify that I was authorized

10 to and did stenographically reported the foregoing

11 proceedings and that the transcript is a true and

12 complete record of my stenographic notes.

13

14 Dated this 13TH day of DECEMBER, 2011.

15

16

17

18 ______________________________________ Terri L. Wright

19

20

21

22

23

24

25

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Aab 301:2abandon 348:4ability 372:7 426:3

430:4,21able 324:13,14

349:10,18 362:25372:18 428:25430:15

absence 431:8absent 409:14absolutely 303:5

389:23 401:17accelerate 323:5accept 348:15acceptance 379:3accepted 316:15account 291:21

292:7 306:12352:14,15 353:24354:14 355:13373:5,8,11 374:18375:18,25 377:4,5381:10 418:4419:14 422:3,7,8422:9,10 423:6,7423:9,12,22,22,23423:24 424:2,9,10424:13,21 425:21

accounting 331:7421:19,25 422:18422:24,25

accounts 293:25352:6 353:5,10,12373:15 375:2376:16,17 395:22395:23 396:19,19396:25,25 397:2417:15,17,18,23417:24 418:2,6,7418:11,12,16,16418:20,22,24,25419:2,9,21 422:4422:20,21 423:1424:8,10,11425:21 428:9,20430:5,23

accurate 355:3370:20 431:14

accurately 292:3354:17

accused 328:17achieve 391:17achieved 300:11achieving 357:16acknowledge

431:13acquire 308:9acted 320:1acting 407:7

419:19 428:7action 307:2

320:25 335:2345:22 417:13

active 287:11activities 299:20

413:21activity 299:14

301:13 403:1410:19 424:21

acts 302:24actual 291:5

350:11 391:14adam 283:5adams 282:12add 311:7 353:3,22addition 304:15

359:9 375:18additional 312:23

327:2 330:2380:19 381:8388:12

address 308:4374:21

addressed 374:20adjourned 431:16adjust 355:13adversary 417:11

418:5adverse 308:24advised 293:17

312:25 348:20,23349:17

advising 320:10

advisor 396:1397:6

advisors 395:16advocate 329:15

339:22affect 327:13affectionate 323:22affiliated 419:9afraid 348:17

382:15afternoon 281:11

287:3,4 355:18agencies 324:20

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agreements 300:25ahead 289:7 292:1

360:3 366:18370:1 381:22393:8 394:6400:14 406:22

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282:12,17,22,24alex 284:16,17alive 362:22allegations 417:22alleged 418:6allmans 389:17

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363:24 364:1365:14 372:14382:24 383:6,7385:4,8 387:13,14388:2 390:3,7,10390:14 391:8,15398:24 399:1,7404:23

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ally 428:21alternative 320:1altogether 331:8,19amount 313:7

315:20 329:10339:10,12,15343:23 347:8,19352:14 354:17422:20

amounts 351:25352:12 353:8,11353:14 354:8376:3

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315:10 321:22323:14 328:8,23339:7 356:7 370:1370:4 429:3

answered 292:21294:1

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332:15,16 355:6360:12 372:18374:16,16 376:22379:25 399:8,10399:10 403:8420:7

anymore 291:17343:9 369:3

apartment 308:2,6apocalyptic 335:16

apparently 291:15appear 298:16

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283:13,16,18,21283:24 284:2,5,7284:10,12,15,17284:20,22,24285:1,3,4,7,9,11

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362:18appreciate 395:25appreciation

314:16appropriate 375:23

395:22 396:19,25appropriately

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311:23approved 311:5,15approving 312:2approximately

333:17 347:4418:9

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399:18,23 400:16402:22,22 408:12408:23

area 325:6ari 304:13 310:19

345:18,22,23346:6,14 363:11365:3,7 372:21377:13,22 382:5382:10,13,17383:17,24,25384:2,7,9,14,22385:1,7,16 391:22392:13 399:2,9408:24

arose 313:15arrange 310:22arrived 310:24aside 366:5asked 293:21,22

294:10,11,16,22295:4,13,14 298:7310:19 316:17365:19 399:13404:25 411:20412:19 414:19419:2

asking 293:19298:10 316:19336:18 342:21345:17 346:15,17399:22 411:15420:17

asks 316:20assembled 390:13asset 301:2assistance 300:13

342:1assistant 428:1assisted 299:9

420:3,6,7,19,21assisting 324:25

405:21 418:19associated 333:3associates 285:5assume 306:1

333:25 334:6,7

336:2,3,8,18340:3,12,17342:11,21 345:17373:13 418:19

assumes 309:3assuming 358:14assumption 290:4assured 404:21

410:5,9attached 339:14attempt 323:5

391:13attempted 292:7attempting 291:21

313:8 344:23,25attempts 339:23attend 431:7attention 297:25

337:17 377:20387:5

attorney 409:2attorneys 412:20attributable 313:6

349:19auctions 287:11audit 371:22auditors 318:14,17authority 427:12authorized 418:20

419:20,23 428:7432:9

automotive 325:10325:15

autonation 325:11available 326:6

382:16 392:9393:16 397:14

avenue 281:24avoid 368:7aware 303:25

327:12,24 328:3,8328:16 330:13349:3,5,21,22371:10,16,22374:2 384:25

B

b 283:20back 300:24 303:7

309:8 311:4312:15,25 314:1,3314:9 316:14,21316:25 317:5,20321:17,19 322:11328:20 335:17338:14,25 340:6340:10 341:14,16342:6 345:14346:22,24 348:22350:15 352:3354:23 355:7,21357:25 358:12,15361:3 366:18367:11 372:6,12374:17 377:2,3,3377:7,25 380:24382:5,6,20 384:8386:10 389:8391:3 392:23393:7 394:6396:21 398:22402:6 403:16407:4,10 412:9414:16,18 424:14427:18

background308:13

bad 351:16 399:16399:22 400:24401:1 411:3

bahamas 310:7,15310:25 311:18

balamore 332:17333:2 359:12,18370:18

balance 349:25353:25 354:25355:10 373:14,14375:4,25 376:6,10

balances 291:4,22292:7 350:9 352:6353:6 354:5,24375:18 376:13,19376:20

ball 410:11ballamor 387:7

395:16 396:8397:5 398:18

ballistic 409:24bandwagon 407:4bank 282:15,20

283:24 284:2291:21 294:9,17295:10,11 296:9296:13,18 297:3,5297:14 315:4348:10 354:12374:3 411:16415:17,18,19416:5,6,14,25417:1,18,25418:11 419:19420:20 421:15422:9 423:6,7,9424:18,22 425:14426:8,12,14,17,22428:7,17,20,22429:4,17,23 430:8430:14,18

banker 294:16295:8,12,15,23299:5

banking 415:23416:4 420:4421:11 427:1

banks 428:23banyon 300:10

301:11,12 306:14308:10 327:18329:21,21 330:14330:25 332:2,3,24334:15 335:23337:15 338:6,16351:21 359:1,5,11359:17 371:11381:11,11 383:16383:20 385:5386:18 388:19,22388:23 392:15407:3 423:21,22423:22

banyons 401:15bar 418:16barometer 315:13barry 297:25 298:8

298:20 382:23,25387:6,12,23397:12,18 398:25429:9

barrys 382:25383:6 387:20

bart 285:4barzee 284:1base 395:19 403:2based 288:10

293:20 300:1301:2 317:11,20332:19,22 333:14334:7 357:16360:16 362:5372:7 401:22,23401:25

bases 382:21basically 322:16,23

324:25 334:19344:14 347:11354:7,22 370:16385:1,2 390:16401:4 413:5422:10

basics 300:7basis 289:15

315:24 347:12351:20 423:3

bates 325:21336:24 358:6366:19 372:22375:8 381:23386:25 391:23397:24 398:6399:24,25

battista 284:14bayview 325:2beach 290:5 344:18beat 431:2becoming 346:6bed 414:16bedaris 291:23,24

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292:9,21 293:10293:17

began 335:24415:17 417:16

beginning 290:1291:13 351:17387:1 411:21

begins 381:24393:9 406:17

behalf 281:17283:8,11,13,16,18283:21,24 284:2,5284:7,10,12,15,17284:20,22,24285:1,3,4,7,9,11

bekkedam 332:3332:17 333:2387:12 397:5,12398:25 404:24

bekkedams 398:18believe 287:24

288:9 290:10292:8 296:2 297:7298:4 303:21316:8,11 320:9322:12 331:19,22332:19 338:13,15338:19 339:17341:3 346:15347:18,20 356:20357:2,6,22 358:25363:13 378:10,23379:18 383:19388:13 392:23402:10 404:22417:2 425:12426:13 428:12

believed 353:9364:2

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295:19 317:17benefit 299:10

329:14 378:1berga 284:6berger 283:10best 298:25 322:17

329:15 351:19390:5 392:9418:14 422:9423:8 426:23429:9

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bidding 288:16,22288:24

bif 332:1 334:21bifs 370:17big 299:23 303:19

394:17 412:15,16429:12

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bill 297:16,17413:24 418:18421:6,19,25423:19 424:6426:5

billing 284:12billion 348:21

353:24 354:1,2,3355:1,12 376:7

billionaire 390:14billions 377:5bills 407:5 422:11

422:14 423:11,14bit 294:7,15 300:3

300:4 302:4304:18 316:3,21358:3 368:21386:21 393:7

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400:20bleak 400:18blond 296:24blow 302:8,16

369:8 404:12blowing 401:9board 287:14,22,25

287:25 288:1,2,2327:7 329:5,6

bob 407:4boca 416:3,24

boden 332:7bodner 304:19,21bolts 358:1bond 323:6bonuses 342:15borrow 301:1bosses 342:15bothering 321:24bottom 326:2

337:11 356:3358:11 379:5381:22 382:3,7387:6 392:5394:15

bova 365:25 399:1399:2

boys 287:9 288:14branch 290:14,15

292:8,10 296:1,3296:5 298:24427:21,25 428:1

brand 325:3brb 387:7,9breach 336:12break 348:2 355:19

355:20 383:5391:18 405:8419:22 428:16

breakfast 344:22breath 385:18brian 336:23

337:14 338:6349:25

briefly 417:5bring 302:20

334:20 346:7374:4 380:14389:11 392:11395:10 410:19,20

bringing 301:5brock 297:17

418:18 421:6,14421:19 425:18

broke 419:13broker 300:12brother 413:24brought 367:12

368:14broward 281:2

282:2 431:7 432:5buddy 400:17bug 392:6building 303:20

307:13,14 325:3bulk 422:13bunch 310:10

350:19 367:14375:20 383:20

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businesses 377:25buy 307:2 327:19

327:23 329:21380:19 381:8394:18

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Cc 284:14 432:1,1cadillac 323:24,24

324:19,19call 290:12 292:21

300:5 303:19306:12 313:5,14331:25 334:20382:15 384:23389:23 396:4405:17,18 407:14421:18 425:9

called 306:24322:21 347:16348:19 366:5390:15 415:24

calling 362:4407:10

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366:5calm 360:24 385:2

385:20candid 343:2cant 288:15 305:8

323:2 326:13352:24 375:2404:13 407:2409:1 427:19429:14

capital 282:22285:1 333:1393:23 395:16

caputi 294:10,15294:21 295:4,7,13295:14,22 296:9296:23 297:10,13297:20 298:7299:1

caputis 294:5car 324:4,5,25

325:9,14,17caran 283:23care 323:16 363:18

414:8,9caretsky 284:12

289:24 296:12297:4 419:6,25421:1,3,9 424:23424:25 425:17,18427:15

caretskys 427:25carnegie 307:14carol 282:4 285:11

318:21 319:3,13319:19 320:10,16320:19,22 321:24322:3

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case 281:3 282:2,13282:14,16,18,20282:22,23,25311:20 313:10327:13 329:19337:24 340:13395:11,15

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cases 375:22380:11,20,25381:9

casey 285:1cash 348:10 386:6

387:18 390:7393:16 407:2

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299:13category 316:16cause 330:25 340:5caused 291:14,17cc 372:21 395:13cced 358:5cell 301:24 366:4central 308:3centurion 282:16

283:13,16 290:22300:4,6 303:9,14306:20 307:15308:14 309:11311:23 313:14,25316:22 329:20330:7 333:10335:4,19 337:23338:16 342:16347:17,21 355:6361:19 362:1363:10 373:12381:8,9 385:10386:19 389:11,15394:20 395:3396:7,22 398:9,15399:8 407:9

certain 288:11309:14 311:3312:7 339:10,11339:15 347:8357:16 361:19,21371:7,19 379:15401:7,7 419:14421:8 427:17,19431:5

certainly 302:12379:20 382:14

413:10 430:20certify 432:9cetera 314:1chag 400:20chain 291:17 333:3

333:4 376:23385:22 386:12392:4 394:2,3408:22

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407:15 415:8change 290:9 314:7

352:8 357:19416:21

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changes 314:6chapter 283:11charade 294:9charge 334:20charitable 282:18charities 287:7charles 283:10charter 310:21check 301:24

307:23 351:22checked 310:25checks 422:15,17cherry 427:7childhood 340:19

342:12 351:9children 324:15

413:14choke 335:10choked 331:4,11chris 291:23,24

292:9 293:10christopher 284:6chuck 414:17church 382:10

384:21 408:19chutzpah 353:23cimo 284:14circle 413:22

circuit 281:1,2282:1,1

circumstances291:20 295:7

claimed 345:12clarify 422:2cleaned 387:22clear 302:14 316:6

316:7 319:22343:10 362:8370:23,24 383:10400:7

cleared 388:8,11,12clearly 365:25

404:2 430:12client 430:14 431:7clients 342:4

358:25 382:25389:10

clock 430:5clockwork 331:25

334:21 336:6359:11 363:24364:13,13

close 319:21 339:14368:19 372:5404:6 413:20430:15

closed 326:5 341:6378:11 386:7387:19 392:8394:20 395:17,20

club 287:9 288:14clue 327:6coast 325:5cocalis 283:2cochran 284:12cocktails 366:1coconspirator

428:21coconspirators

419:18 428:6cocounsel 338:2

414:24coequal 304:25colleagues 414:19collection 381:10

395:23 396:19,25colorful 367:10

368:21 403:14colter 306:6,6

337:14colters 351:9columbia 284:24com 400:16combination 414:6combined 376:17come 290:7 295:14

298:11 302:14305:16 308:13309:5 316:14335:13 350:14369:17 372:15374:17,22 392:7392:23 393:1412:21 414:16418:3 425:9430:21

comfortable313:19

coming 313:4322:24,25 334:11334:13 342:9355:7 371:3 377:7384:9 386:17387:20 390:7423:21

comment 288:23comments 411:25commerce 416:6

424:12committed 400:19committee 283:18committing 302:24

420:8common 414:22communicate

385:14communicated

301:23 307:4385:10,11,12

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company 284:17306:23 308:10361:7

compare 354:25compensated

343:20,25 351:17407:11

compensating406:3

compensation304:14

complaint 320:23417:12 418:5419:17 428:6430:7

complete 311:9346:11,18 432:12

completed 311:10completely 315:6

346:6 376:12386:10 412:21423:15

compliance 371:15component 430:6compound 309:1

390:25concentrated

386:15concern 301:5,18concerned 360:11

402:4,15 411:8413:14

concerning 327:25390:11 397:13399:14,15 400:23401:10

concerns 360:5concise 370:8condo 419:14conduct 413:19confidant 401:19

422:22confident 402:25conflicted 402:10confused 351:23conjunction 413:4connection 414:20

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conniption 374:12conrad 283:3considered 339:8consistent 339:7

368:22 401:11,14429:19,23

constantly 305:5329:11

construction324:18

consult 300:18consummated

357:20contact 307:16

334:14 363:22394:12,16,19395:13 412:20421:7 424:23425:5,8,9,13

contacted 346:2362:20 370:17,19404:17 412:14421:6

contacts 421:8contained 373:5

375:25contemplating

385:5contention 428:16context 339:4continually 369:3continue 364:19

431:9continued 286:6

287:1 428:24continues 322:8

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marks 367:15mary 284:1massive 422:19

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math 313:5 377:11380:12

matter 307:6318:15 319:6345:5 357:10423:23

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monies 374:3month 371:5,12,14

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moved 427:13428:4

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mullin 284:19320:20,20 321:7321:10,12,16324:16

multiple 290:25315:23,23 361:24363:4,5

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named 303:24

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nordlicthts 392:24normal 318:23normalization

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380:4 381:1390:22 410:21429:25 430:11

objected 406:1objecting 310:1objection 296:15

308:19,22 318:25319:16 321:13324:16 336:1360:9,15 373:22378:22 390:23405:14,15 420:5420:12 429:21

objections 320:21objective 339:19observe 298:19obtain 291:21

292:7obtained 411:24obviously 305:18

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referenced 375:19388:2 389:25398:16

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referred 296:5350:10 356:14379:19 410:8

referring 347:18358:22 367:18388:9,13 390:9409:15,21

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regardless 369:5regent 282:22

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region 426:12,14426:16 429:4

regional 426:9regis 344:18,19,20registered 395:16

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released 378:6,25

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288:16 290:7291:24 296:20,24297:13,13 298:10305:21 306:6307:6 309:15318:14 320:14322:13,22 344:17347:3 353:13357:1,23,23365:14,24 371:18371:19 383:12389:4 390:11391:12 393:4,5,18394:1 403:11411:22 415:25418:1 419:13425:3 427:21

remembered296:23

rent 307:22 327:14327:19

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420:24require 325:17requirements

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safe 429:15,15safety 413:15saint 344:18,19salvage 349:11,18sat 288:1,1saturday 386:4save 341:6,11,12,12

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325:10 376:15418:22 423:25424:9 427:18

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says 326:2 338:9352:3,12 356:3,7358:13 359:20367:25 368:14376:3 380:19381:2,6 382:20385:9 387:13,18389:9 392:5,14393:14 408:24419:18 428:6

scale 351:11,13scam 328:18,19scenario 315:17

317:6scenarios 313:15

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289:4 292:18297:22 315:8331:1,20 341:12342:8 344:12362:13 374:2

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scherers 336:16schlesinger 284:4,4

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282:7,12 283:8284:20,24 286:5

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