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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 - MORNING SESSION

    DEPOSITION OF SCOTT W. ROTHSTEIN

    DATE TAKEN: December 13, 2011TIME: 8:30 a.m. - 11:08 a.m.

    PLACE: James Lawrence King Federal

    Justice Building

    99 N.E. Fourth Street

    Courtroom 11-3

    Miami, Florida 33128

    Examination of the witness taken before:Michele L. Savoy, Registered Professional Reporter

    United Reporting, Inc.

    1218 S.E. Third Avenue

    Fort Lauderdale, Florida 33316

    (954) 525-2221

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    1 IN THE CIRCUIT COURT OF THE 17THJUDICIAL CIRCUIT IN AND FOR

    2 BROWARD COUNTY, FLORIDA

    3 ________________________________________________________

    4 Case No. 10-24110 CACE (19)

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

    6Plaintiffs,

    7vs.

    8

    9 SCOTT W. ROTHSTEIN, et al.,

    10 Defendants.

    11 ________________________________________________________

    12 Case No. 11-CV-61688-JIC/LSS

    13 AMY ADAMS, et. al,

    14 Plaintiffs,

    15 vs.

    16 SCOTT W. ROTHSTEIN, TD BANK, N.A. and GIBRALTARPRIVATE BANK AND TRUST COMPANY,

    17Defendants.

    18 _________________________________________________________

    19 10-03767-RBR Stettin v. Gibraltar PrivateBank & Trust Co.

    2011-03802-RBR Stettin v. Fidelity Gift Fund

    2111-02368-RBR Stettin v. TD Bank, N.A.

    22

    23

    24

    25

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    1 APPEARANCE FOR SCOTT ROTHSTEIN:

    2 LAW OFFICE OF MARC S. NURIK1 East Broward Boulevard

    3 Suite 700Fort Lauderdale, Florida 33301

    4 BY: MARC S. NURIK, ESQUIRE

    5 APPEARANCE FOR THE TRUSTEE:

    6 BERGER SINGERMAN350 East Las Olas Boulevard

    7 Suite 1000Fort Lauderdale, Florida 33301

    8 BY: CHARLES H. LICHTMAN,, ESQUIRE

    9 APPEARANCES FOR THE TRUSTEE:

    10 GENOVESE, JOBLOVE & BATTISTA, P.A.100 S.E. 2nd Street

    11 Suite 4400Miami, Florida 33131

    12 By: JOHN. H. GENOVESE, ESQUIREDAVID C. CIMO, ESQUIRE

    13 THERESA M.B. VAN VLIET, ESQUIRE

    14 APPEARANCES FOR RAZORBACK:

    15 CONRAD & SCHERER, LLP633 South Federal Highway

    16 Eighth FloorFort Lauderdale, Florida 33302

    17 By: WILLIAM R. SCHERER, ESQUIREREID A. COCALIS, ESQUIRE

    18 IVAN J. KOPAS, ESQUIRE

    19 KOZYAK, TROPIN & THROCKMORTON, P.A.2525 Ponce de Leon Boulevard

    20 Ninth FloorCoral Gables, Florida 33134

    21 By: ADAM MOSKOWITZ, ESQUIRE

    22

    23

    24

    25

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    1 APPEARANCE FOR PLATINUM PARTNERS VALUE ARBITRAGECENTURION STRUCTURED GROWTH, LLC:

    2GOLDSTEIN, TANEN & TRENCH, P.A.

    3 One Biscayne Tower, Suite 3700Two South Biscayne Boulevard

    4 Miami, Florida 33131By: SUSAN E. TRENCH, ESQUIRE

    5

    6 APPEARANCE FOR LEVINSON'S JEWELERS:

    7 KOPELOWITZ OSTROW FERGUSON WEISELBERG KEECHL200 SW 1st Ave

    8 Suite 1200Fort Lauderdale, Florida 33301-2073

    9 BY: JAN ATLAS, ESQUIRE

    10 APPEARANCE FOR THE COMMITTEE OF UNSECURED:

    11 AKERMAN, SENTERFITTOne Southeast Third Avenue

    12 25th FloorMiami, Florida 33131-1704

    13 By: MICHAEL GOLDBERG, ESQUIRE

    14 APPEARANCE FOR T.D. BANK:

    15 GREENBERG TRAURIG, P.A.401 E Las Olas Blvd Ste 2000

    16 Fort Lauderdale, Florida 33301By: CARAN L. ROTHCHILD, ESQUIRE

    17APPEARANCE FOR RLI ZURICH INSURANCE COMPANY,

    18 COLUMBIA INC. & ZURICH INSURANCE:

    19 CLAUSIN MILLEROne Chase Manhattan Plaza

    20 39th FloorNew York, New York 10005

    21 BY: SCOTT L. SCHMOOKLER, ESQUIRE

    22 APPEARANCE FOR FEDERAL INSURANCE COMPANY:

    23 Alex Hofrichter, P.A1430 South Dixie Highway

    24 Suite 204Coral Gables, Florida 33146-3127

    25 By: Alex Hofrichter, ESQUIRE

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    1 APPEARANCES FOR MORSE:

    2 TRIPP SCOTT, P.A.110 S.E. Sixth Street,15th Floor

    3 Fort Lauderdale, Florida 33301By: GEORGE WALKER, ESQUIRE

    4 JOHN M. MULLIN, ESQUIRE

    5 APPEARANCE FOR ERNESS CAPITAL, LLC:

    6 Kluger Kaplan SilvermanKatzen & Levine PL

    7 201 S Biscayne Blvd Fl 17Miami, Florida 33131

    8 BY: CASEY CUSIK, ESQUIRE

    9 APPEARANCE FOR ST. PAUL FIRE & MARINE:

    10 Mills Paskert Divers P A100 N Tampa St Ste 2010

    11 Tampa, Florida 33602-5145JOHN A. BLACK, JR., ESQUIRE

    12

    13 APPEARANCE FOR ROSEANNE CARETSKY:

    14 Billing Cochran Lyles515 E Las Olas Blvd

    15 Floor SixFort Lauderdale, Florida 33301-2296

    16 By: W. TUCKER CRAIG, ESQUIRE

    17

    18

    19

    20

    21

    22

    23

    24

    25

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    1 INDEX

    2 CONTINUED DEPOSITION OF SCOTT W. ROTHSTEIN

    3DIRECT

    4 MR. SCHERER 177

    5 CERTIFICATE OF OATH 279CETIFICATE OF REPORTER 280

    6

    7

    8 PLAINTIFF'S EXHIBITS INDEX

    9 NO. DESCRIPTION PAGE NO36 Information on US v. Boockvor 204

    10 37 Emails 20938 Email and Money 233

    11 Transfer Detail39 Email 239

    12 40 Email 24341 Video Snapshot 250

    13 42 Emails 25543 Email 267

    14 44 Banyon Presentation 269

    15

    16

    17

    18

    19

    20

    21

    22

    23

    24

    25

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    1 P R O C E E D I N G S

    2 - - - - - - - - - - - - - - - - - - -

    3 MR. SCHERER: Are we ready?

    4 Madam Court Reporter, would you again

    5 swear the witness this morning, please.

    6 Whereupon,

    7 SCOTT W. ROTHSTEIN,

    8 acknowledged having been duly sworn to tell the truth

    9 and testified upon his oath as follows:

    10 THE WITNESS: I do.

    11 DIRECT EXAMINATION

    12 BY BY MR. SCHERER:

    13 Q Good morning.

    14 A Good morning.

    15 Q Mr. Rothstein, I'm going to start this morning

    16 with questions about TD Bank; but before I do, I want to

    17 clear up a couple of points briefly that we discussed

    18 yesterday.

    19 A Sure.

    20 Q I would like to direct your attention to the

    21 testimony concerning the money that went into the Banyon

    22 Income Fund. That was BIF.

    23 A If that was the Ballamor, Barry Bekkedam

    24 money?

    25 Q Yes, sir. $100 million in that fund, and then

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    1 there was -- do you recall there was a BIF II --

    2 A I --

    3 Q -- for that?

    4 A I don't specifically, Mr. Scherer, recall BIF

    5 II, but there were so many multiple accounts, my

    6 recollection is -- specific accounts, I remember BIF.

    7 Q And BIF was supposed to be like Banyon

    8 1030-32, in terms of buying a Ponzi settlement; do you

    9 understand that?

    10 A Yes, it was a another feeder fund, correct.

    11 Q It was a feeder fund, and each Ponzi deal, as

    12 had been with all of your other deals, had -- what we

    13 call Ponzi paperwork in my office, but your deal packets

    14 with --

    15 A They were -- the BIF deals were supposed to

    16 have --

    17 Q Right.

    18 A Every deal was supposed to have paperwork.

    19 Q Right. Signed by a punitive plaintiff and

    20 then redacted and a punitive defendant and on and on and

    21 on and with the account numbers and et cetera, et

    22 cetera.

    23 A Identical to the other paperwork, yes, sir.

    24 Q All right. And would you, again, tell us your

    25 understanding of whether that Ponzi formality, if you

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    1 will, was adhered to with the Banyon Income Fund; and it

    2 began, by the way, in earlier May, late April, with the

    3 Von Allmen $50 million, and then -- I mean, it was fully

    4 funded by -- I mean, I think the record is clear, you

    5 know, in about six weeks or two months it got fully

    6 funded.

    7 A As time went on, throughout the Ponzi scheme,

    8 even before BIF, just so you're clear, paperwork started

    9 lagging. You should see dozens, probably, of emails

    10 from Frank Preve to me, and also to Mrs. Villegas,

    11 saying, we need to get our old paperwork in place, okay,

    12 if we ever get audited -- I remember that email

    13 specifically -- if anyone looks at this, if we ever

    14 have, he used the word, public scrutiny on this, we're

    15 done.

    16 When we finally hit BIF, a tremendous amount

    17 of those deals, to my recollection, were funded without

    18 paperwork being done; and it was to the point where I

    19 remember an email where Mr. Preve wrote to me and said,

    20 we just handed out $25 million without any paperwork,

    21 you know, I've got to be able to answer for this.

    22 One of the problems was that Mr. Rovin, the

    23 quote, unquote, in-house counsel for them, for

    24 Mr. Bekkedam's company, for Ballamor, was supposed to

    25 come in and do, for lack of a better term, an audit;

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    1 and, obviously, no audit could be allowed to be done.

    2 And, actually, as far as I know, no audit was ever done.

    3 Q So that the $100-million of the Ponzi went out

    4 without even Ponzi pretense?

    5 A Ponzi pretense?

    6 Q Yes, how about that?

    7 A Yes. I think that should be in the

    8 dictionary, but yes.

    9 Q So they actually stole the funds before you --

    10 before the Ponzi could be implemented to back up the

    11 theft of the funds; would that be a correct way to state

    12 that?

    13 A I think the best way to state it, Mr. Scherer,

    14 would be that we needed funds to pay off other Ponzi

    15 debts, and so we were taking with both hands and

    16 worrying about the paperwork later.

    17 Q Was that also, in part, because of the greater

    18 velocity of the payments you had to make to keep the

    19 Ponzi going, and, therefore, you had to steal even

    20 greater amounts of money?

    21 A Yes, sir.

    22 Q And your operation at your office, as well as

    23 Frank Preve, just couldn't keep up with it?

    24 A That's correct.

    25 Q Mathematically, I guess, somebody could have

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    1 computed that this thing is going to crash pretty soon

    2 of its own weight. Did you ever think about that during

    3 that time?

    4 A I thought about that all the time.

    5 Q Did you have any conversations with anybody of

    6 your -- any of your co-conspirators that this thing is

    7 growing so fast that on a mathematical basis, we're

    8 going to get caught up in this avalanche of payments

    9 that we have to make?

    10 A My recollection is the only conversations I

    11 had in that regard were with Mr. Preve, and they were

    12 very cursory conversations. I kept most of the pressure

    13 of this -- because everyone was under enough pressure as

    14 it was -- internal, with myself.

    15 Q Let me direct your attention to the Morse

    16 discussion that we had yesterday -- or examination, and

    17 I would like you to think about the email to the Morse

    18 family at -- in early October, I think, after your Judge

    19 Seltzer false order where you made some reference to Ed

    20 and Carol that they made a lot of money on your

    21 settlements but that you could -- you were going to talk

    22 to George about trying to get them all their money back

    23 and have him take their position?

    24 A I recall that.

    25 Q And you said that Ted was not in favor of

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    1 that, of you taking them out and putting George in the

    2 place of -- I presume that would be George Levin and

    3 Banyon?

    4 A My recollection is that he was not in favor of

    5 it.

    6 Q Okay. I believe the email was a March '09

    7 email, not in -- so it was earlier.

    8 Okay. So the -- and why was he not in favor

    9 of it?

    10 A He would have made less money.

    11 Q Now, in your opinion, did TD Bank play an

    12 important role in this Ponzi scheme?

    13 MS. ROTHCHILD: Objection to form.

    14 A Yes. They were critical.

    15 MR. SCHERER: Sure. May I understand

    16 what the objection is?

    17 MS. ROTHCHILD: No foundation --

    18 MR. SCHERER: No foundation.

    19 MS. ROTHCHILD: -- and leading the

    20 witness.

    21 MR. SCHERER: Okay. Thank you.

    22 MS. ROTHCHILD: Are we having a standing

    23 objection to that?

    24 MR. SCHERER: Yeah. You may have a

    25 standing objection, like yesterday, to leading

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    1 questions; and if you want foundation, go

    2 ahead and make that and I'll see if it's valid

    3 or not, in my mind.

    4 MS. ROTHCHILD: Thank you.

    5 BY MR. SCHERER:

    6 Q So let me direct your attention to the role

    7 that TD Bank played in this, in your Ponzi scheme.

    8 A They were critical to it.

    9 Q In terms of the components that you view as

    10 critical, how does TD rate?

    11 A Do you want it on a scale of one to ten --

    12 Q Yeah.

    13 A -- ten being the most important?

    14 Q Yes.

    15 A They were a ten.

    16 Q And why do you say that?

    17 A Because they were assisting me in putting fake

    18 balance statements into the hands of my investors. They

    19 were critical in providing real letters to go on top of

    20 the fake balance statements. They were critical in the

    21 fact that they had TD Bank employees actually handing me

    22 those phony statements in front of the investors; and

    23 Frank Spinosa was a fantastic advocate for our firm's

    24 supposed financial condition, as well as on several

    25 occasions actually verifying phony balances.

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    1 Q Okay. I'm going to get into that in depth a

    2 little bit later.

    3 Did the -- did TD Bank -- is TD Bank's role --

    4 let me back up and ask that better.

    5 You had 300 or so investors. We talked about

    6 that yesterday. You had more investors than you even

    7 knew?

    8 A Yes. That's correct.

    9 Q Do you have a recollection as to whether or

    10 not any of these major investors, and if any major

    11 people who put millions of dollar in your Ponzi, did not

    12 express concern about TD Bank and the only money being

    13 in TD Bank?

    14 A It's --

    15 Q That's a bad question.

    16 A I'm sorry, Mr. Scherer. I don't understand

    17 the question.

    18 Q Yes. It seems that the importance of TD Bank

    19 was not only important to you and your Ponzi but

    20 important to your investors.

    21 A No. I understand.

    22 It was critical. It was -- actually, for lack

    23 of a better term, it was demanded by the larger

    24 investors that we go to a bigger bank. You'll see

    25 emails back and forth between Mr. Preve and I where it's

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    1 being discussed that Gibraltar just does not, at least

    2 on paper, appear to have the financial wherewithal to

    3 withstand any problems that might occur in the event of

    4 a banking crisis.

    5 Banks were doing terribly at that point in

    6 time, as you may recall; and more importantly, we had

    7 investors, including the hedge funds, wanting us to get

    8 into a bigger, more substantial bank.

    9 Q Now, getting into the bigger bank is one

    10 thing, but there's another issue about once you got into

    11 that bank, concerning how the funds would be segregated

    12 or locked up for the benefit of the investor that put

    13 the money in.

    14 A Are you talking about the lock letters?

    15 Q Anything or any other mechanisms to lock up

    16 the funds so that you couldn't steal them from a trust

    17 account, right?

    18 A That's correct.

    19 Q And, so, there was a procedure developed

    20 concerning what you would tell the investors about how

    21 their money was secured or the defendant -- the punitive

    22 defendants' money was secured in your trust account,

    23 correct?

    24 A Correct.

    25 Q And the method of convincing them that the

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    1 money of the punitive defendant that went into your

    2 trust account was secured for them and them only, how

    3 was that accomplished?

    4 A We used a document that came to be known as

    5 "lock letters."

    6 Q We're going into that, and I think I am going

    7 to try to give you a copy of all of them.

    8 How was the lock letter -- the concept

    9 developed and then whether it was refined. That's a

    10 compound question.

    11 But tell me, how did it happen that you

    12 started using lock letters, and how did that evolve?

    13 A Okay. Thank you.

    14 At some point in time -- I don't remember the

    15 time -- an investor -- I do not remember which investor,

    16 but it was one of the large investors -- told, notified

    17 us, as well as other people involved -- and it would

    18 have been either Mr. Szafranski or Mr. Preve or both, as

    19 well as myself -- that they wanted to have a procedure

    20 put in place. They wanted to see if it was possible to

    21 have a procedure put in place whereby, once funds were

    22 deposited into their segregated account at TD, there

    23 would be an instruction on the account, initiated by

    24 this letter, that would, in essence, prevent transfer of

    25 any of those funds to anyplace other than to the

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    1 investor who was to be paid with that money.

    2 So the defendants' money would go into that

    3 account. Okay?

    4 Q Right.

    5 A And then it would be locked in there, and the

    6 only place it would go would be to the investor for whom

    7 it was designated.

    8 Q So was the lock letter then incorporated into

    9 the "shows," as you call them, with TD Bank and the

    10 investors?

    11 MS. ROTHCHILD: Objection to form.

    12 BY MR. SCHERER:

    13 Q How was the lock letter used?

    14 A Okay. It was utilized as part of the package

    15 that we gave. The main purpose of it was to give an

    16 additional false sense of security to our investors.

    17 Q Now --

    18 A And I believe you touched on, there were two

    19 forms of the lock letters.

    20 Q Thank you. I had gotten interrupted by my

    21 paralegal there, bringing -- it's a pretty expensive

    22 paralegal.

    23 And then you say there were two forms. How

    24 did the -- how did that develop?

    25 A The first thing that happened was, when they

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    1 told us that we required they wanted this, I needed, of

    2 course, to see if it was possible. So I got in touch

    3 with Mr. Spinosa, and I told him, specifically, what I

    4 needed.

    5 I said, I need this letter. I said, what I am

    6 going to do -- because I wanted to make it as easy as

    7 possible for him. I'm going to say: I'm going to draft

    8 the letter for you. I'm going to send it to you. It's

    9 going to say that these funds can't be put anywhere.

    10 Okay. All I need you to do is sign the letter.

    11 And he was specifically told at that time by

    12 me, I don't care what actually happens to the account,

    13 but I need the letter signed.

    14 Q Okay. Now, do you have a memory of about how

    15 many lock letters we should be looking for?

    16 A You know, I would say probably more than a

    17 dozen. I mean, once we lock the account, you know, it

    18 shouldn't be more than that.

    19 Q Okay.

    20 A I don't have a specific recollection,

    21 Mr. Scherer.

    22 Q All right. Did Mr. Spinosa sign -- well, let

    23 me ask it differently.

    24 Did you forge his signature on lock letters?

    25 A No, sir.

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    1 Q Okay. So that all of the lock letters that we

    2 can find that appear to be signed by Mr. Spinosa, were,

    3 indeed, signed by Mr. Spinosa?

    4 A Both types: the ones that I prepared for his

    5 signature line, and then we eventually had him preparing

    6 one -- well, I actually prepared it, sent it to him,

    7 told him to place it on his letterhead, to sign it and

    8 send it back to me.

    9 So it eventually became just a single letter,

    10 as opposed to a letter from me being cosigned by him.

    11 Q Okay. Did he ever tell you, or did anybody at

    12 TD ever tell you, that these lock letters don't mean

    13 anything, they can't lock up anything?

    14 A Sure. I had that discussion, actually, with

    15 Roseanne Caretsky and Mr. Spinosa.

    16 Q Okay. Tell us about that.

    17 A The conversation with Ms. Caretsky was the

    18 first conversation which instigated the conversation

    19 with Mr. Spinosa.

    20 Q Okay. Take them one at a time for us, please.

    21 A At some point in time she actually asked me

    22 what that letter was. We were talking about it in one

    23 of my trips to the bank, and she asked me just -- it was

    24 more as matter of fact: Do you know what these are for?

    25 I said, you're going to have to talk to Frank.

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    1 Everything was always, you're going to need to talk to

    2 Frank.

    3 She said, I don't even know how this really

    4 could work because you could move money in and out of

    5 accounts online.

    6 I said, just talk to Frank about it.

    7 My recollection is that she then talked to

    8 Frank about it, and he said something to the effect,

    9 just notate the account and let me worry about it, that

    10 any questions pertaining to it, should come back to me.

    11 Q All right.

    12 A That's basically where we were, and I had a

    13 similar conversation with Mr. Spinosa.

    14 Q Okay. Tell me -- you had a similar

    15 conversation with him, as well?

    16 A Well, I asked him, I said, do we have an

    17 issue -- at some point in time, I asked him, do we have

    18 an issue with these lock letters?

    19 And Frank, being the good soldier that he was,

    20 always said, you don't have any issues. That was

    21 Frank's best line: You do not have any issues with the

    22 lock letters.

    23 Q I want to direct your attention to a meeting

    24 in Mr. Spinosa's office on -- in Cypress Creek, and I'll

    25 get you the date later on when I get the document.

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    1 I believe you were present, along with

    2 Mr. Spinosa, in his office, and Kathleen White, and

    3 Barry Damson of the Coquina Group were there, Barry

    4 coming from New England somewhere and Kathleen White

    5 coming from Corpus Christi, Texas.

    6 A I recall the meeting.

    7 Q And do you recall that the lock letters were

    8 discussed at that meeting?

    9 A I do.

    10 Q And did you know that Coquina's principal

    11 investor was the Hahn family that owned the American

    12 Bank in Corpus Christi?

    13 A I did.

    14 Q So they were bankers?

    15 A I did know that.

    16 Q And do you know whether or not they had any

    17 real questions as to whether the lock letter could

    18 really lock up an account from banking -- from a banking

    19 standpoint?

    20 A I believe they did have that question because

    21 it came up during the meeting, but Frank was extremely

    22 convincing as to the effect of the letter.

    23 Q Now, do you recall that Frank said, we have

    24 procedures at TD Bank that cover these lock letters and

    25 we have a lot of them for customers and we have a

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    1 procedure to make sure they're implemented properly?

    2 ALL PRESENT: Objection to form, lack of

    3 foundation.

    4 MR. SCHERER: Okay.

    5 BY MR. SCHERER:

    6 Q All right. You may answer that.

    7 A Okay. The answer is yes.

    8 Q Okay. Just in case I'm wrong on that lack of

    9 foundation, would you tell us what was discussed

    10 concerning the lock letter and the bankers' concerns

    11 that were raised at that meeting?

    12 A Sure. It was brought up -- it was discussed

    13 by Mr. Damson and by Ms. White with Mr. Spinosa that

    14 they wanted to understand the mechanism behind it.

    15 Frank actually gave a fairly long answer, and it was to

    16 the effect that TD Bank is one of the largest banks in

    17 the country. They have all kinds of the newest computer

    18 equipment and the like, that they are very used to doing

    19 this; they were not the first people to ever request

    20 this, and they can rest assured that their money is

    21 secured.

    22 Q Now, Mr. Spinosa had -- let me ask this, and

    23 then I'll get to Mr. Spinosa's contact with these folks

    24 prior to that.

    25 The meeting at -- on that day was also to

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    1 convince the Coquina people to make a big investment,

    2 their biggest investment up to that point --

    3 A That's correct.

    4 Q -- do you recall that?

    5 A It was what I would say heightened due

    6 diligence.

    7 Q Do you remember the size of investment?

    8 A I do not.

    9 Q If I told you 20 -- $20 million, $22 million,

    10 does that ring a bell in terms of that deal?

    11 A It --

    12 MS. ROTHCHILD: Object to form.

    13 A It doesn't. It doesn't ring a bell. I know

    14 it was tens of millions of dollars. I don't recall the

    15 exact size, but it was a giant investment that we needed

    16 desperately to keep the Ponzi scheme going.

    17 Q Do you recall at the time of the meeting with

    18 Mr. Spinosa whether the punitive defendant had already,

    19 allegedly, put that money in the trust account for the

    20 benefit of the purchasers of that settlement?

    21 A My recollection is that at that time it was

    22 prefunded, but you can check the emails to verify one

    23 way or the other.

    24 Q Okay. And do you remember whether the subject

    25 of that money being locked up came up at that meeting

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    1 with Mr. Spinosa?

    2 A It did.

    3 Q All right. Tell us about what you recall

    4 about that.

    5 A He was direct -- Mr. Spinosa was directly

    6 questioned by Ms. White and Mr. Damson as to the

    7 existence of funds. Mr. Spinosa told them the amount

    8 that was in the account -- it was in excess of whatever

    9 the amount was, because it would have included -- as

    10 Frank knew, it would have included attorney's fees to

    11 me, as well.

    12 So he gave an in-excess-of number, if I recall

    13 correctly, said the money was in the account and it

    14 can't go anywhere.

    15 Q And do you know -- did you know at that time

    16 that he made that representation to Kathleen White and

    17 Barry Damson, how much was actually in the account?

    18 A Yes. I believe it was $100.

    19 Q Now, Mr. Spinosa had a phone call with these

    20 folks, you know, a month or two before --

    21 A Yes.

    22 Q -- do you recall that?

    23 A I certainly do.

    24 Q And the phone call was set up by emails to

    25 have this conference call with Mr. Spinosa and you; do

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    1 you remember who else was on the call?

    2 A I don't remember who else was on the call.

    3 Mel Klein may have been on it, but I don't recall.

    4 Q Mel Klein, Damson and Kathleen White.

    5 A I'm certain that that's correct.

    6 Q And do you recall that anything about that

    7 conversation -- I'm going to get to the gist of it --

    8 but that anybody was instructed not to speak and who

    9 could speak and that sort of thing from Coquina before

    10 the conversation?

    11 A Yes. Barry was going to ask the questions --

    12 Q Yes?

    13 A -- and I specifically notified Mr. Spinosa, I

    14 believe in an email. I told Mr. Spinosa, in the

    15 email -- you should have a copy of it -- specifically:

    16 These are the questions Barry is going to ask, no

    17 others; these are the answers you're to give, nothing

    18 else, and the call will be over.

    19 Q And it was in reference to the lock letters

    20 and their funds being locked up, now that they were

    21 going to ramp up and put more money into the Ponzi?

    22 A It was something to that effect, yes.

    23 Q And do you remember, did Mr. Spinosa follow

    24 the script?

    25 A To the letter.

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    1 Q Who is Bill Brock.

    2 A He's my uncle.

    3 Q And Boockvor is his --

    4 A Boockvor.

    5 Q Boockvor, okay.

    6 A Yes.

    7 Q We can put a K in there.

    8 That's "Uncle Billy" in the email traffic?

    9 A Email traffic, "Uncle Bill," that's how he was

    10 known to almost everybody.

    11 Q And his position at the firm?

    12 A He was -- he had some kind of director's

    13 title. Basically he was Irene Stay's assistant.

    14 Q All right. And did he have a role in the

    15 Ponzi?

    16 A He did.

    17 Q We're going to talk about that.

    18 And was he involved in the -- well, what was

    19 called "shows" at TD Bank?

    20 A He was.

    21 Q I'm going to get into the shows a little bit

    22 in detail, but maybe for the record, what's a "show"?

    23 What did that mean?

    24 A What we came to call the "show" was the event

    25 where we would take investors into the bank. I would

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    1 either be meeting with them in one of the bank's -- in

    2 the bank's main conference room, or I would simply be

    3 walking in for a meet and greet.

    4 The most important part of it was where either

    5 Roseanne Caretsky or Jennifer Kerstetter -- I think

    6 there may have been another time at another bank where

    7 it was someone other than them.

    8 Q Mahaya.

    9 A Mahaya, possibly, yes -- actually, the key

    10 part of this is them handing me a sealed envelope with

    11 the real letter signed by one of them, along with the

    12 fake bank statements that we provide to them.

    13 Q Now, the -- you said "sealed"; that's

    14 interesting. There's -- are you aware of emails between

    15 Mr. --

    16 A You can just call him Mr. Brock.

    17 Q Mr. Brock, yeah, I won't call him Uncle Billy.

    18 -- between Mr. Brock and people at the bank to

    19 not seal the envelope?

    20 A I actually recall one very specific event when

    21 we were doing that and that was because it was one of

    22 the events on the -- let's break it into two different

    23 pieces.

    24 You have what I call a lower level of the

    25 show, which is simply where we send our driver. Usually

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    1 Frankie, who did a lot of running for us at the time,

    2 would go to the bank to simply pick up that cover

    3 letter. In those cases, we had to tell them, please, do

    4 not seal the envelope, because, obviously, we're not

    5 sending the fake bank statements with Frank. The letter

    6 is coming back to us, the real letter, and we're taking

    7 the fake bank statements and inserting them ourselves

    8 and then sealing the letter.

    9 The high-end, the real show that we used for

    10 all the major investors was we would go there -- usually

    11 Bill, he was our primary runner for this event. He

    12 would take -- and it was a very, very specific thing

    13 that needed to be done.

    14 Once these fake bank statements were prepared,

    15 they would be placed in a -- just a regular manila

    16 folder, flat -- and we emphasized it had to be flat

    17 because we did not want folds in the document before it

    18 got to the bank so once Ms. Caretsky or Ms. Kerstetter

    19 folded it in with their original letter, we wanted it to

    20 match. We took all those precautions.

    21 Bill would then take the document down to the

    22 bank. He would meet with Ms. Kerstetter or

    23 Ms. Caretsky. They would have the letter prepared, I

    24 suspect already, because we notified them that we were

    25 coming. Bill would give them the fake bank statements.

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    1 They would take their letter, the fake bank statements,

    2 fold it up, place it in an envelope, and that was that.

    3 Bill would leave.

    4 Q Do you know -- let me ask you this: The

    5 letter from either Kerstetter or Caretsky was like a

    6 cover letter that said something like, enclosed is your

    7 balance from our -- you know, the bank balance for

    8 out -- I think they call it DOS --

    9 A Yeah.

    10 Q -- snapshot or something?

    11 A Early on -- I think it was CKDIAV document was

    12 the name of it.

    13 Q All right.

    14 A We -- but it was from a DOS screen.

    15 Q DOS --

    16 A We asked them -- early on in the conspiracy,

    17 we asked them for DOS screen only because it was the

    18 easiest -- most easily manipulated screen for us and for

    19 our IT people.

    20 Q Okay.

    21 A When we were there, the cover letter that is

    22 being used, if my recollection is correct, is a cover

    23 letter we actually drafted. We sent down a letter to

    24 Mrs. Caretsky saying, we would like to you say something

    25 like this, and that's what they did. And it actually, I

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    1 think, became a form letter for us.

    2 Q Did you ever -- you or your folks at the firm,

    3 ever forge Mrs. Caretsky's signature on these cover

    4 letters?

    5 A On the cover letters, no.

    6 Q Okay. These were all originals?

    7 A To my recollection, they were all originals.

    8 I can't -- she was doing them for us, so there was no

    9 reason to forge the signature.

    10 Q Do you have information that every time you

    11 would ask for a balance, that Ms. Caretsky or

    12 Ms. Kerstetter would actually have the -- what was in

    13 the account printed up for them so that there would be a

    14 record in the computer at TD Bank of them asking for

    15 a --

    16 A Yes.

    17 Q -- balance statement?

    18 A Yes. I didn't mean to cut you off.

    19 Q Yes?

    20 A Yes. Yes. Ms. Caretsky actually told me that

    21 they needed to do that.

    22 Q And did she ever ask you why in the world you

    23 would get a bank statement for an account that had $100

    24 in it --

    25 A No.

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    1 Q -- or some low amount of money?

    2 A No.

    3 Q I mean, if she's asking for the account

    4 statement, repetitively, and -- were there ever monies

    5 in those accounts, other than nominal amounts?

    6 A The only time money was in those accounts, to

    7 the best of my recollection, was on the day of payment.

    8 The process would be: the account would remain with a

    9 minimum balance. I think they all had $100 in those --

    10 excuse me, in each of the locked accounts, just to

    11 maintain the accounts.

    12 On the day that Irene would notify us that

    13 payment was due to a particular investor, we would

    14 transfer money from whatever account, usually the 0923

    15 account, which was our -- the large, I guess you would

    16 call it, Ponzi account. We would transfer money from

    17 there, or wherever else we needed to transfer it from,

    18 into that, quote, unquote, locked account and then write

    19 it out to the investor so that when the investor got the

    20 funds, it was coming from the proper account.

    21 Q And when you would ask for the -- when would

    22 you ask for the account balances so that you could do

    23 the switch? It seems like that would always be before

    24 the investor put the money in. Did you not ask for

    25 the --

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    1 A On, yeah, no, it was way before that, sure.

    2 Q As a part of the show?

    3 A Yeah, because the investor's money was going

    4 into the general account. The investor's money wasn't

    5 going into -- number one, it would never go into a

    6 locked account because that was supposed to be -- if it

    7 was a real deal, it would have been the defendant money

    8 going into the locked account. There was nothing in

    9 there.

    10 Those accounts remained vacant until the day

    11 the payment was due, and only on the date payment was

    12 due or possibly, if we were doing it the day before, but

    13 I doubt it; we were always so strapped for cash to do

    14 this. So it would have been the day of, money goes in

    15 and then right out.

    16 Q But did anybody from the Weston branch ask you

    17 why you were coming all the way to Weston to get an

    18 account statement with a minimal balance in the account

    19 statement when you could look at it on the screen in

    20 your office?

    21 A No.

    22 Q Or you could print it on the screen from your

    23 office and give it to whomever you needed to give it to?

    24 A No. Not only that, but I would -- all banks,

    25 even in the computer age, send out paper statements. We

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    1 got paper statements to be used with our accounts,

    2 though we never used them with our accounts, so we could

    3 have given them a paper statement, but no.

    4 Q Did you provide investors with phony account

    5 balances that didn't have a cover letter from

    6 Ms. Caretsky or Ms. Kerstetter or anybody else on it?

    7 A Over the time, sure. I'm sure we did.

    8 Q Okay.

    9 A I'm sure we did because we provided account --

    10 before we ever got the whole show thing, we were

    11 providing account balances. Frank Preve would call and

    12 say, I need account balances for somebody.

    13 Mr. Szafranski would say, I need account balances.

    14 So I'm sure that there were dozens of times

    15 when we sent account balances without any cover letter

    16 when it was not a part of the show.

    17 Q Okay. Let me get back to Mr. Brock.

    18 Are you aware that Mr. Brock has been charged

    19 by the government with being a co-conspirator in your

    20 Ponzi scheme?

    21 A Yes, sir.

    22 Q Have you had a chance to review that

    23 information?

    24 A I did, yes.

    25 Q Okay. Let me show you a copy of it, and I'm

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    1 going to ask you some questions on it.

    2 MR. KOPAS: It's Plaintiff's 36, the

    3 information, the United States v. William

    4 Boockvor, B-O-O-C-K-V-O-R.

    5 (Thereupon, a document was marked as

    6 Plaintiff's Exhibit No. 36 for Identification.)

    7 MS. ROTHCHILD: Mr. Scherer, could you

    8 tell us whether or not this document was

    9 provided by the December 8th deadline, or was

    10 this something that was presented to us

    11 yesterday?

    12 MR. KOPAS: I don't know remember, to be

    13 honest.

    14 MR. SCHERER: I don't know. It was

    15 either yesterday or when we did it online, one

    16 of the two.

    17 Okay. It was in -- thank you.

    18 It was in yesterday's package.

    19 MS. ROTHCHILD: Thank you.

    20 We maintain our objection from yesterday with

    21 respect to the production of those documents.

    22 MR. SCHERER: Okay. You can have a

    23 standing objection to that.

    24 MS. ROTHCHILD: Thank you.

    25 BY MR. SCHERER:

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    1 Q I've kind of highlighted where I'm going to

    2 talk to you about the -- that information.

    3 A Okay.

    4 Q I think the first one should be Paragraph 3 --

    5 A Yes.

    6 Q -- where it says that, Boockvor performed --

    7 and they say "Brock"; I guess it's Boockvor, so the --

    8 either the information says it incorrectly or I did.

    9 A No, no, it's correct in the information.

    10 Q Okay. Quote, performed various administrative

    11 functions, including bookkeeping for your Ponzi

    12 operation; is that true?

    13 A That's true.

    14 Q And Paragraph 11 says that it was further part

    15 of the conspiracy that investors were told that the

    16 amounts due to plaintiffs were paid into trust accounts

    17 at TD Bank, controlled by Rothstein and RRA, and that

    18 said funds only would be utilized to pay the potential

    19 investors, correct? That's true? We just talked about

    20 that. Is that accurate?

    21 A That's Paragraph 11?

    22 Q Paragraph -- I'm sorry, Paragraph 9.

    23 A Nine. Okay.

    24 Q Yeah, the next one I have highlighted, I'm

    25 sorry. It's eleven on my outline.

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    1 Quote, it was further part of the conspiracy

    2 that, at different times, Rothstein would utilize

    3 co-conspirators to assist him in carrying out various

    4 aspects of the fraudulent investment scheme, including

    5 the following: bank employees, who would provide false

    6 documents and other misleading information to investors

    7 in order to make it appear that the funds purportedly

    8 being held in trust accounts for the plaintiffs had not

    9 been dissipated.

    10 A That's correct.

    11 Q Is that accurate?

    12 A That's accurate.

    13 Q Can you give me a list of all of the bank

    14 employees that fall into that category?

    15 A At TD Bank?

    16 Q Yes, sir.

    17 A Frank Spinosa, Roseanne Caretsky and Jennifer

    18 Kerstetter.

    19 Q Now, we've kind of talked about this in the --

    20 in general, but maybe with respect to the role of

    21 Jennifer Kerstetter, Jennifer, can you describe her

    22 role?

    23 A Only to the extent that it's known to me; and

    24 that is, at some point in time we were doing a show, and

    25 Ms. Caretsky was not going to be there. We were

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    1 obviously concerned because she was the person -- one of

    2 our people, the main person, actually, on the inside at

    3 that branch.

    4 She said not to worry, that she had talked to

    5 Ms. Kerstetter about it and that she was on board, and

    6 Ms. Kerstetter performed flawlessly; but I had never

    7 had, just so you know, independent conversations with

    8 Ms. Kerstetter about what needed to be done. That was

    9 handled, apparently very well, by Ms. Caretsky.

    10 Q Are you aware of any emails where Ms. Caretsky

    11 instructed Ms. Kerstetter how to do a show with you, in

    12 one -- bullet-point or paragraph fashion: one, two,

    13 three, four, five?

    14 A She -- I remember one for when we were doing

    15 the show up in Deerfield, and if you -- if you have

    16 something that can refresh my recollection, I'm sure

    17 there is one like that; but I know that there is one in

    18 existence that I saw bullet-pointing it out step by

    19 step.

    20 MR. CRAIG: Let me go back and interpose

    21 an objection to the form of the last question.

    22 MR. SCHERER: All right. Thank you.

    23 BY MR. SCHERER:

    24 Q Okay. I'd like to show you, while we are on

    25 that subject, a composite here of two emails --

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    1 A Okay. It starts on December 12, 2008, at the

    2 9:38 a.m., with an email from Bill Brock to Roseanne

    3 Caretsky and Jennifer Kerstetter: We need to do the

    4 show again.

    5 Q Okay. And then is that all that's highlighted

    6 in that email?

    7 I'm sorry. I don't have my -- I gave you my

    8 copy.

    9 A That's okay. It says, Hola, I need to -- I

    10 need those DOS reports, again, each account on a

    11 separate page and the use of your conference room, and

    12 then it says, "whoops," which is misspelled, and the

    13 same letter as last time. Big thanks.

    14 Q Okay.

    15 A The next email is from Roseanne Caretsky, back

    16 to Bill Brock, same date, at 9:47 a.m. -- well, that's

    17 showing earlier. Well, that makes no sense because it's

    18 in the email chain, so the clock must be off.

    19 It just says, Bill, when will this take place?

    20 Bill then writes back, same date, 9:59 a.m.,

    21 to Roseanne Caretsky, about 12:01: Is that okay?

    22 Ms. Caretsky writes back to Bill Brock, same

    23 date, December 10th, at 10:04 a.m.: Hey, Bill, I'm not

    24 in the office today. If you can make it 1:00 p.m., it

    25 would be great. Jennifer will be there. What accounts

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    1 do you want printed out?

    2 And then Mr. Brock writes back to Ms. Caretsky

    3 and lists the account and says, I'll tell him 1:00 to

    4 1:30.

    5 Q Okay.

    6 A Then that's that email.

    7 Q The email date on that, again, was?

    8 A December 10th, 2008.

    9 Q All right.

    10 A Then there's another one. This is the one I

    11 was actually referencing in my answer, December 17th,

    12 2008, is when it starts. Ms. Kerstetter is writing to

    13 Jose Garces, with copy to Jamie Alban -- I don't know

    14 who that is -- Ms. Caretsky and Bill Brock.

    15 It says, hello, one of our largest clients,

    16 Scott Rothstein of RRA -- Rothstein, Rosenfeldt & Adler,

    17 sorry, will be coming to your store today to use your

    18 conference room. They will be leaving their office in

    19 Fort Lauderdale at 4:00 p.m. to head over to Deerfield.

    20 Please print out accounts that Bill Brock,

    21 office manager, will send you on CKDIAV. Also, please

    22 print are out -- it is supposed to say "our"; it says

    23 "are" -- this letter on letterhead. See attached file,

    24 rraletter.doc.

    25 This is how it actually goes down. First,

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    1 Bill Brock, your office manager of RRA, will come in and

    2 review the printouts and letter. He will put the

    3 documents in an envelope or ask you to do it. He will

    4 give the envelope to the person coming to meet with

    5 Scott. He may also ask you to hand the envelope. He

    6 will instruct you. He will lead.

    7 The person to meet with Scott Rothstein will

    8 wait in the conference room. Scott will arrive. They

    9 will meet the conference room. Here's the contact

    10 information you need.

    11 And then it gives Bill Brock's email and cell,

    12 and then there's just -- it says, please run the

    13 following. That's not a highlighted portion, so it was

    14 a response back.

    15 Q Now, let me ask you if Mr. Brock would -- to

    16 the sentence that said, please print out accounts that

    17 Bill Brock, paren, office manager, close paren, will

    18 send you on CKDIAV --

    19 A Mhm-mhm.

    20 Q -- when he -- would he send an actual $100

    21 balance, or would he send a phony Ponzi account when he

    22 would send them to the bank to print out?

    23 MS. ROTHCHILD: Objection, form.

    24 A No, no, he is not sending a statement --

    25 MR. CRAIG: Join.

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    1 ALL PRESENT: Form.

    2 MR. SCHERER: Okay.

    3 A He's not sending a statement. He's saying to

    4 them, run on CKDIAV, which is their DOS program, the

    5 following accounts and email them to me.

    6 Q Okay.

    7 A We're not sending --

    8 MR. CRAIG: Object and move to strike

    9 based on the hearsay nature of the previous

    10 response.

    11 MR. SCHERER: Counsel, just object to

    12 form. We don't want to have to call Judge

    13 Streitfeld by making speaking objections,

    14 please. You object to form, and I'll change

    15 the question.

    16 BY MR. SCHERER:

    17 Q Okay.

    18 A Okay. So this is not Mr. Brock sending the

    19 actual statements to them. They prepared the

    20 statements. We -- we brought the fake statements with

    21 us.

    22 Q Okay. Was there ever an occasion where the --

    23 Ms. Kerstetter or Caretsky would have the fake statement

    24 in advance of your meeting?

    25 MR. CRAIG: Objection to the form.

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    1 A That was always the case.

    2 Q Okay. Well, I mean, I'm talking about -- let

    3 me ask the question better.

    4 Did you ever have Debra Villegas take a

    5 statement, a phony statement, the night before because

    6 she lived in Weston?

    7 A I believe I did, yes.

    8 Q Okay. And do you know how that -- what would

    9 happen in that situation?

    10 A Other than what occurred normally when

    11 Mr. Brock would go there, nothing else should have

    12 occurred, except she was dropping it off so that Bill

    13 did not have to go the next morning and the statements

    14 would already be there when I arrived at the bank.

    15 Q Now, if the bank printed a -- an actual

    16 balance statement every time of the visit --

    17 A Yes.

    18 Q -- did they provide you with the original that

    19 showed minimal balances in it?

    20 A I have a recollection, Mr. Scherer, of us

    21 getting the originals and filing them someplace that

    22 Debra kept them; but I don't recall if that was the

    23 circumstance every time.

    24 But, yes, there were certainly occasions where

    25 they would come back with the original bank statements

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    1 showing the $100 or minimal balances in them.

    2 Q All right. Let me catch up.

    3 You may have already covered this, but do you

    4 have personal knowledge that Spinosa -- that any TD Bank

    5 official had actual knowledge that the statements

    6 provided to the investors was false?

    7 MS. ROTHCHILD: Objection to form.

    8 A Yes.

    9 Q And the -- you have already identified them

    10 but who?

    11 A Mr. Spinosa, Ms. Caretsky and Ms. Kerstetter.

    12 Q Now, I might as well get this out while I'm

    13 thinking about it.

    14 Did you ever pay Mr. Spinosa anything for

    15 helping you in the Ponzi?

    16 MS. ROTHCHILD: Object to form.

    17 A Yes, I did.

    18 MR. SCHERER: Okay. What was the

    19 objection?

    20 MS. ROTHCHILD: Lack --

    21 MR. SCHERER: Was there an objection?

    22 MS. ROTHCHILD: Yes, there was an

    23 objection.

    24 MR. SCHERER: What was the objection?

    25 MS. ROTHCHILD: Lack of predicate and

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    1 MS. ROTHCHILD: Object to form.

    2 MR. SCHERER: What was the matter with

    3 that question?

    4 MS. ROTHCHILD: Calls for speculation.

    5 MR. SCHERER: Beg your pardon?

    6 MS. ROTHCHILD: Speculation.

    7 MR. CRAIG: Join.

    8 BY MR. SCHERER:

    9 Q Okay. Mr. Rothstein, did you do anything to

    10 cause Ms. Caretsky to cooperate with you?

    11 A I did.

    12 Q Okay. Would you tell us, and perhaps the

    13 ladies and gentlemen of the jury, what you did?

    14 A I did two things. I had Frank Spinosa tell

    15 her what we were doing, and I paid her approximately

    16 $25,000 in cash.

    17 Q Okay. Let's go back to the cash payment to

    18 Mr. Spinosa; can you tell us the circumstances of that

    19 payment?

    20 A Yes. Mr. Spinosa was already on board with

    21 us. He was already assisting us with the fraud. He and

    22 I were having lunch -- we would lunch fairly regularly

    23 together.

    24 We were having lunch at Bova, in our office

    25 building, downstairs. We were sitting at the table that

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    1 I usually sit at, and I slid a very large envelope, one

    2 of those -- it's one of the envelopes with -- like the

    3 accordion sides. I slid an envelope across the table to

    4 him. It contained approximately 75,000 -- somewhere

    5 between $50- and $75,000 in cash; I don't recall the

    6 exact amount -- across the table to him. And I said,

    7 keep doing the right thing by us, many thanks.

    8 Q And --

    9 A That's all.

    10 Q And what did he say?

    11 A Thank you.

    12 Q Now, do -- other than your memory of the

    13 account, do you have any other way that we could verify

    14 that event?

    15 A I don't know. There are films. I don't know

    16 if they're in existence anymore. We had a camera

    17 surveillance system at Bova. I don't know if you have

    18 checked those films.

    19 But other than that, I -- I do not know, other

    20 than the fact that they did everything I asked him to

    21 do.

    22 Q Did you tell anybody that you were doing that

    23 or share that with anybody?

    24 A I don't recall whether I did or not. You have

    25 got to understand, as you will learn as my deposition

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    1 goes on, I suspect, that we were handing out money like

    2 Santa Clause hands out candy canes to anybody that

    3 needed it for our purposes. So it was certainly not out

    4 of the ordinary for me to give someone cash to further

    5 our purposes.

    6 Q Would it be out of the ordinary for you not to

    7 tell people you were doing that?

    8 A No. I generally would not tell anyone I was

    9 doing it. It was just something I did as a matter of

    10 course.

    11 Q And did the cash -- where did the cash come

    12 from, the stash you talked about yesterday?

    13 A Yes, it was in my credenza.

    14 Q Now, let's talk about the circumstances of the

    15 cash payment to Ms. Caretsky.

    16 Do you recall how that happened?

    17 A Yes. I went to the bank. I asked her to step

    18 outside with me to chat with me. We walked a little bit

    19 away from the bank; I can't remember in which direction,

    20 and I gave her an envelope.

    21 Q And?

    22 A And I said, thanks for taking such good care

    23 of us, and that it was the end of it.

    24 Q Did she ask you what she needed to do to earn

    25 that cash or anything like that?

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    1 knowledge about the bank -- didn't your banking

    2 relationship and activities at TD Bank cause some

    3 concern on behalf of the folks at TD Bank?

    4 A In a very --

    5 MS. ROTHCHILD: Objection.

    6 A To a very limited extent, yes.

    7 Q Okay. Tell us about that.

    8 A Well, earlier on, when I first got Spinosa on

    9 board, I had explained to him the issues that I was

    10 having at Gibraltar Bank. I said, you know, we're

    11 fighting -- constantly fighting with BSA/AML personnel

    12 there. I'm constantly being called on to justify

    13 transactions. I don't want to be bothered with this

    14 nonsense, and I made it perfectly clear to Mr. Spinosa

    15 that if this was going to go on here, then I would find

    16 another large bank to do this.

    17 He said, not to worry about it. He always

    18 told me that he would provide me everything that I

    19 needed and that I did not need to worry about it.

    20 Subsequently, from time to time, I would check

    21 in with him and say, how are we doing, any BSA problems,

    22 any AML problems, are we having problems with your home

    23 office, et cetera?

    24 He would say, don't worry about anything.

    25 Anything that's coming up, I am handling.

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    1 Q Okay. Did he indicate that things were coming

    2 up?

    3 A He led me to believe that, but Mr. Spinosa,

    4 again, was a very good soldier: Don't worry the person

    5 in charge unless you really need to worry them; and he

    6 constantly assured me that he had things under control.

    7 Q Did anybody from TD's compli -- I'm calling it

    8 compliance or BSA, as we talked about yesterday, that

    9 would be bank security, ever contact you directly?

    10 A Not to my knowledge, no.

    11 Q Did -- was there -- do you have a recollection

    12 of having any written communication, email or otherwise,

    13 concerning items that needed to be investigated about

    14 your banking activity at TD Bank?

    15 A I don't recall any such thing. It was always

    16 my opinion that Frank was handling everything perfectly.

    17 Q Well, yesterday afternoon we spent a

    18 considerable amount of time reviewing communications

    19 back and forth with Gibraltar concerning their

    20 compliance people requesting certain kinds of detailed

    21 information.

    22 A No. You're talking about night and day

    23 between the way the banks were conducting their business

    24 with me.

    25 Q Explain that.

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    1 A Well, Gibraltar -- it was clear to me, that

    2 Gibraltar -- it would be clear to anyone reading the

    3 emails, even without my testimony, Gibraltar, through

    4 Ansari and Sanders, was all over me. I mean, they would

    5 not stop, no matter what I provided them -- although I

    6 really wasn't providing them much -- but no matter what

    7 I tried to do to shake them, they would not. I

    8 constantly tried to hide behind the

    9 attorney-client-privilege veil and Ansari kept calling

    10 me out on it.

    11 But if not for the actions of Mr. Harris;

    12 Mrs. Ellis, to a less degree; and Mr. Hayworth, I have

    13 no doubt that my accounts would have been closed long

    14 before this thing exploded.

    15 At TD Bank, I guess hindsight was great for me

    16 because I already knew what I could expect based upon

    17 the velocity of the business I was doing. So I

    18 explained that -- once I knew Frank was on board, I

    19 explained that in greater detail to him and said,

    20 basically, I don't want to be bothered with this.

    21 And, apparently, whatever he did, worked,

    22 because I was never bothered with it at all.

    23 Q All right. Did he -- did you ever have

    24 occasion to see any written evidence of alerts or

    25 suspicious activity reports or loss prevention reports

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    1 Q What did you have her do?

    2 A I had her wire approximately -- it was either

    3 $16 or $19 million -- I don't remember the exact

    4 amount -- to an associate of mine's account in Morocco.

    5 Q And do you recall -- well, do you know where

    6 that money came from?

    7 A Sure.

    8 Q Where?

    9 A Ira Sochet's investment.

    10 Q He had made a $16-million deposit into a --

    11 his locked account some two or three days before?

    12 A No, no, no. Remember, their money doesn't go

    13 into the locked account. Their money goes into the

    14 account -- the general account, 0923, from which we

    15 would have been distributing to the punitive plaintiff.

    16 Q Okay.

    17 A The money that goes into the locked account

    18 was allegedly the money coming from the defendant, just

    19 so we're clear.

    20 Q I'm sorry.

    21 A That's okay.

    22 Q Yeah, I stepped on it there.

    23 Mr. Sochet's 16 million went into your RRA

    24 trust account or I -- was that into a trust account?

    25 A Sure, it went into -- it was wired into

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    1 whatever trust account he normally wired into, which I

    2 believe was 0923, because that's where we had most

    3 people wire.

    4 Q Do you know whether it was wired into an IOTA

    5 account?

    6 A My recollection is it was. I believe we had

    7 all our monies wired into IOTA accounts.

    8 Q We haven't established what an IOTA account

    9 is, and -- but tell us what you believe an IOTA account

    10 was.

    11 A It's an attorney's trust account into which

    12 only clients' funds are supposed to go -- are supposed

    13 to be held.

    14 Q Okay. And do you know whether your name ever

    15 appeared on any alerts at TD Bank from overdrawing

    16 the -- your IOTA account?

    17 A If -- if they did --

    18 MS. ROTHCHILD: Object to form.

    19 A -- I must --

    20 MR. SCHERER: Excuse me, let me make sure

    21 I -- and the form objection is what?

    22 MS. ROTHCHILD: No predicate, calls for

    23 speculation.

    24 MR. SCHERER: Calls for speculation.

    25 BY MR. SCHERER:

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    1 Q Okay. The question is, do you know whether or

    2 not TD ever got any alerts -- let me back up.

    3 Did you overdraw your IOTA trust account at TD

    4 Bank?

    5 A I did.

    6 Q And did you do it often?

    7 A I don't know how many times. It wasn't a

    8 concern to me because Mr. Spinosa was handling it.

    9 Q And do you know whether -- well, let me ask

    10 this: Did anybody from TD Bank ever address you about

    11 an alert of overdrawing your IOTA trust account?

    12 A I didn't -- don't recall one way or the other.

    13 If it did, it doesn't stand out in my mind. It was a

    14 nonevent for me.

    15 Q Do you know whether the IOTA trust accounts

    16 that are maintained by the Florida Bar generate, on a

    17 monthly basis, a list of the law firms that overdraw

    18 their trust account?

    19 A It is -- it is my understanding from early

    20 conversations with Mr. Spinosa about the trust accounts,

    21 when I was giving him his -- for lack of a better term,

    22 what is called his list of things to watch for, judging

    23 from my experience with Gibraltar, I told him,

    24 specifically, that my IOTA accounts needed to be

    25 watched -- I just called them "trust accounts" -- needed

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    1 MR. CRAIG: Objection to form and

    2 predicate.

    3 BY MR. SCHERER:

    4 Q I want you to assume that.

    5 Do you know anything about that?

    6 A No.

    7 MS. ROTHCHILD: Objection.

    8 BY MR. SCHERER:

    9 Q And by not knowing anything about that, I

    10 guess I can assume that nobody from TD ever told you

    11 that?

    12 MS. ROTHCHILD: Objection, form.

    13 MR. CRAIG: Form and predicate.

    14 A The only thing Mr. Spinosa would tell me,

    15 Mr. Scherer, is if there was a serious issue that he

    16 could not handle, and those never came up.

    17 Q And did -- and I guess the answer would be

    18 that nobody from the overdraft department of TD Bank --

    19 and I am probably not calling it the right thing -- ever

    20 contacted you directly as the borrower?

    21 A No, sir.

    22 MS. ROTHCHILD: Objection to form.

    23 BY MR. SCHERER:

    24 Q Do you think that if TD Bank had investigated

    25 you at any stage of your relationship with TD Bank, that

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    1 your Ponzi scheme could have continued in the face of

    2 that investigation?

    3 ALL PRESENT: Objection, form.

    4 BY MR. SCHERER:

    5 Q Go ahead. I'll take that.

    6 A It absolutely would have ended.

    7 Q Okay. And why do you say that?

    8 ALL PRESENT: Same objection.

    9 A Because they were our main banking institution

    10 for literally hundreds of millions of dollars. Had they

    11 notified anybody, cut off our banking, it would have

    12 been impossible, at that time, to recover.

    13 Q The when you say "hundreds of millions," do

    14 you know it's, indeed, billions, not hundreds of

    15 millions?

    16 MS. ROTHCHILD: Object.

    17 A I have to assume, okay, that with the velocity

    18 of transactions, that it would be over a billion in --

    19 when you're counting up all the transactions going back

    20 and forth -- I mean, look at the bank statements; I'm

    21 moving money like lightning: in, out, in, out, back and

    22 forth, from account to account, between banks. So, no,

    23 that wouldn't surprise me in the least.

    24 MR. CRAIG: Motion to strike, based on

    25 the speculative nature of the response.

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    1 MR. SCHERER: You know, you don't have to

    2 do that. You only need to object to form --

    3 and, you know, you keep doing it, and that's

    4 kind of like a little speech, and you really

    5 don't need to do it, Tucker, so I wish you

    6 wouldn't.

    7 Just object to form, and I'll try to

    8 clean up the question as best I can, but you

    9 don't need to make a speech.

    10 BY MR. SCHERER:

    11 Q I'm going to direct your attention to the

    12 Morocco -- do you know -- why did you choose Morocco?

    13 A I got good advice.

    14 It was a nonextradition country. I had been

    15 introduced by one of my -- one of the people in the firm

    16 that I trusted named Sara Coen, who was not involved in

    17 this, to a Mr. Ahnick Kahlid, who had a very, very tight

    18 connection with Morocco, to serve as my, for lack of a

    19 better term, guide in Morocco. I felt comfortable

    20 there, based upon everything I had heard about it; and,

    21 of course, again, most importantly, it was

    22 nonextradition.

    23 Q Did you research or learn in advance about

    24 wiring money to Morocco and any special conditions that

    25 might be attendant to doing that?

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    1 A The only thing that I had learned about from

    2 discussions with Sara --

    3 Q Sara?

    4 A Sara Coen.

    5 Q Okay.

    6 A -- was that she had spoken to Mr. Kahlid and

    7 said that when I wire the money, there should not be an

    8 issue and to let my bank know that we were wiring the

    9 funds.

    10 Q And did you let your bank know that -- that is

    11 TD Bank know, in advance, that you were going to be

    12 wiring money to Morocco.

    13 A I called Mr. Spinosa before the wire went. I

    14 said, I'm going to be wiring a large sum of money from

    15 my account to an account in Morocco and to please make

    16 sure that it went through immediately.

    17 Q Do you have any information about -- well, let

    18 me ask this: What did -- Mr. Spinosa, how did he

    19 respond that?

    20 A No problem.

    21 Q Was there any discussion about them -- you

    22 know, Morocco being a problem place to wire money to

    23 from a bank?

    24 A Not from him, no.

    25 MR. KOPAS: Plaintiff's Exhibit 38, it's

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    1 a composite exhibit. The first email is Bates

    2 stamped Rothstein S 1155 to 1161; then a money

    3 transfer detail, which is Bates stamped

    4 TD/Razor 7886. These were produced by the

    5 deadline.

    6 (Thereupon, documents were marked as

    7 Plaintiff's Composite Exhibit No. 38 for

    8 Identification.)

    9 THE WITNESS: Thank you.

    10 BY MR. SCHERER:

    11 Q I would like you to take a look at that, and

    12 you have my only copy, once again, so you can help me

    13 through with that, if you will.

    14 A Okay.

    15 Q All right. Let me see how to read it. It --

    16 well, let's go -- is this on top?

    17 MR. KOPAS: It is on the back.

    18 BY MR. SCHERER:

    19 Q Go to the last page first. It's Razorback --

    20 TD/Razor O07886.

    21 A I don't think I have --

    22 Q It should be the last page there.

    23 A Not last.

    24 Q It's a form that says money transfer.

    25 MR. KOPAS: I think it's to your left --

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    1 or your right.

    2 A Oh, yes. Now I have it, yes.

    3 Q And that appears to be the form that was

    4 generated -- well, you tell me: What do you -- can you

    5 identify this document?

    6 A It's the wire transfer detail processing

    7 information for my wire to Morocco.

    8 Q Did you initiate -- do you recall how this was

    9 initiated, this wire transfer, in terms of how you did

    10 it?

    11 A My recollection is, is I told Irene to wire

    12 the money.

    13 Q Do you know whether she did it from your

    14 terminal in your office?

    15 A I do not know. I think I saw something on

    16 this other e-mail that says she simply -- let's see.

    17 No. I don't see -- given the information, I don't know

    18 one way or the other how she did it.

    19 Q Okay. And you've got Kahlid on here. Do you

    20 see that halfway down, the credit information?

    21 A I do.

    22 Q And then you've got -- down at the bottom it's

    23 got "Originator to beneficiary information, the purchase

    24 of manufacturing business."

    25 You see that?

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    1 A I do.

    2 Q Now, do you know -- where did that information

    3 come from?

    4 A No idea.

    5 Q Were you attempting to or thinking about

    6 buying a manufacturing business in Morocco?

    7 A No. Actually, I was thinking about opening

    8 nightclubs there.

    9 Q Okay. Anybody from TD ask you any questions

    10 about the purchase of a manufacturing business in

    11 Morocco?

    12 A No.

    13 Q Okay. Let's go to the second page. That

    14 would be the Bates-stamped ending in 56. It's got an

    15 e-mail from you to Irene --

    16 A Yes.

    17 Q -- and the subject is "Hyatt Regency Casa

    18 Blanca Registration."

    19 You see that?

    20 A I do.

    21 Q Kahlid, or however he pronounces his last

    22 name --

    23 A Kahlid, yes. Ahnick Kahlid.

    24 Q Ahnick Kahlid.

    25 And would you read what you wrote there in

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    1 MS. ROTHCHILD: Okay. Well, my question

    2 was, were all of the documents that were in

    3 this composite that you have just shown the

    4 witness, produced by December 8th by the

    5 5:00 p.m. deadline, or were they in the

    6 production yesterday?

    7 MR. SCHERER: I believe both.

    8 BY MR. SCHERER:

    9 Q Of the --

    10 MS. ROTHCHILD: Well, is there something

    11 different about the documents that were

    12 produced yesterday that were -- you're saying

    13 were already produced on the 8th?

    14 MR. SCHERER: Are you asking me a

    15 question?

    16 MS. ROTHCHILD: Yes, I am.

    17 MR. SCHERER: And what's the question?

    18 MS. ROTHCHILD: The question is, is there

    19 something different about the documents that

    20 were, in your words, re-produced yesterday, if

    21 you had already produced them on the 8th? Is

    22 there something different about them? Why

    23 were they re-produced?

    24 MR. SCHERER: I just -- out of an

    25 abundance of caution, so that you wouldn't

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    1 keep objecting, I made sure you got them. I

    2 had them electronically and in paper and --

    3 and that's -- of course it's not as though you

    4 haven't seen these documents in depositions

    5 and in the trial in Coquina, and every place

    6 else. So, you know, you have copies of them.

    7 Thank you.

    8 MS. ROTHCHILD: That doesn't answer my

    9 question, but thank you.

    10 MR. SCHERER: You know, I don't hear very

    11 well, Caran. Did you say -- was there some

    12 other objection?

    13 MS. ROTHCHILD: I said you didn't answer

    14 my question.

    15 MR. SCHERER: Oh, okay.

    16 MR. KOPAS: She said that something was

    17 re-produced. It wasn't re-produced because it

    18 was different. It was just re-produced a

    19 second time, if that answers your question.

    20 MS. ROTHCHILD: Okay. So are you still

    21 contending --

    22 MR. SCHERER: I don't want to argue

    23 anymore because you're taking up my time.

    24 MR. KOPAS: Defendant's --

    25 Plaintiff's 39, it's an email Bates labelled

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    1 Q Yeah. And then do you have a -- there is a --

    2 an e-mail that appears to be from Wendy Tinachio. Do

    3 you know who she is?

    4 A That's Frank's assistant.

    5 Q Okay. And she says -- and then it -- down at

    6 the bottom it's Frank Spinosa: This is the wire.

    7 You see that?

    8 A Yes. It's the same heading from my original

    9 e-mail.

    10 Q And then you have an email from Frank Spinosa

    11 to you, October 27th, '09, "Subject: This is the wire."

    12 Right?

    13 A Actually, first is an email from Wendy to

    14 Frank Spinosa: "This is the wire."

    15 Q Thank you.

    16 You're reading from the bottom. You're again

    17 better than I am at that. Thank you.

    18 And then at the top it's -- it's Frank to

    19 you -- Mr. Spinosa to you?

    20 A Yes, telling me that he'll keep monitoring it

    21 but it should go out at any time.

    22 Q Thank you.

    23 Now, the 27th was an interesting day for you,

    24 wasn't it?

    25 A Are you referring to the day I left?

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    1 A It gets a little complicated, Mr. Scherer.

    2 That is, Boden was a co-conspirator. Pearson became a

    3 co-conspirator through Boden.

    4 Q All right. Now, do you remember Richard

    5 Pearson coming over to your table while you and

    6 Mr. Spinosa was at lunch that day?

    7 A I believe he came by, but I don't recall what

    8 actually happened.

    9 Q All right. Do you -- well, let me see if this

    10 refreshes your recollection. Do you remember that there

    11 was a bit of a scene when Mr. Pearson came to you that

    12 day?

    13 A I was in such a poor frame of mind that day,

    14 I -- I have a great deal of difficulty recollecting what

    15 was going on. I remember reading emails about this,

    16 about him apparently, for lack of a better term,

    17 accosting us about money not being made -- paid; but I

    18 don't have an independent recollection of that moment.

    19 I mean, a lot things I could -- when I gave

    20 him the money, Mr. Scherer, I remember that. I remember

    21 where I was sitting. This is all like -- it's very

    22 foggy, to say the least.

    23 Q Fair enough.

    24 A I don't want to guess.

    25 Q Fair enough.

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    1 I think it's time to take a break for maybe

    2 ten minutes or so.

    3 (Whereupon, a recess was had.)

    4 BY MR. SCHERER:

    5 Q Let me show you a -- what we're going to mark

    6 as Plaintiff's 40, kind of a composite of a couple of

    7 pages.

    8 MR. KOPAS: Plaintiff's 40 is Bates

    9 labelled TD/Razor 1167 and TD/Razor 1065.

    10 (Thereupon, the documents were marked as

    11 Plaintiff's Exhibit No. 40 for Identification.)

    12 BY MR. SCHERER:

    13 Q Mr. Rothstein, I would like you to take a look

    14 at that, and I think we start on the bottom of the first

    15 page there, Bates stamped ending in 67, and it appears

    16 to be an e-mail from you to Mr. Spinosa and dated

    17 9/23/09.

    18 A Yes, I see that.

    19 Q All right. And you've got -- you say, Hey, my

    20 brother. Hope you're having a great week. Can you

    21 please prep another one of the attached letters for me

    22 and restrict the following account, please. This is a

    23 biggie for us, dash, ellipses, 11. Simply change the --

    24 and it says, shall only disburse to as follows, quote,

    25 shall only be disbursed to Banyon Investment Fund, LP,

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    1 account number, and then it's redacted, at TD Bank,

    2 routing number, and change the "re" portion of the

    3 letter as follows: Re: account -- and then the number

    4 and it's got RRA-BIF.

    5 This is really important. We are expecting

    6 250,000 in next week. Thanks, Bro. I need it today, if

    7 possible. Love you, Me.

    8 And Mr. Spinosa returned the email, and can

    9 you read what he said?

    10 A He actually -- what he did was he forwarded it

    11 to his assistant, Wendy Laterio, and said, "Please

    12 prepare a letter as outlined. Thanks."

    13 Q All right. Now, did you ever forge any emails

    14 from Mr. Spinosa? We have emailed communication back

    15 and forth. Is this an original email --

    16 A Let me answer both --

    17 MS. ROTHCHILD: Object to form.

    18 MR. SCHERER: Let me ask it one at a

    19 time. I didn't do a good job on that. Thank

    20 you.

    21 BY MR. SCHERER:

    22 Q Do you recall this email?

    23 A Actually recall it, no, but it's -- it's very,

    24 very like emails that I would write.

    25 Q Do you have a recollection of forging emails

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    1 and that email chain that precedes it, is forged.

    2 Q Okay.

    3 A The -- and the reason behind that was very

    4 simple: I was not sending -- we were already borderline

    5 in what we were doing with email traffic. I was not

    6 about to send an email over TD Bank's email system

    7 telling him to send me a forged balance letter. These

    8 lock letters appeared to pass muster, and we weren't

    9 pushing our luck.

    10 The second circumstance where the forgery may

    11 have occurred would be in an instance where Mr. Spinosa

    12 was unavailable. Although it certainly appeared that I

    13 was his only client, the way he was handling me, he did

    14 have other things to do. And on occasion, I don't

    15 really recall instances, but it's certainly possible

    16 that when Mr. Spinosa was out on vacation doing

    17 something and I needed something from him immediately,

    18 then I might have forged it.

    19 Q Did Mr. Spinosa ever discuss with you any

    20 bonuses or any other advancement he made at TD because

    21 of the amount of deposits or the amount of business you

    22 were doing with TD Bank?

    23 A Only to the extent that he told me he was

    24 doing very well based upon our banking with the bank.

    25 Q Now, can you tell from this exhibit whether

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    1 A There was no need to.

    2 Just understand that Frank could have been

    3 presented with anything related to me and he would have

    4 verified it.

    5 Q So when we look down in the right-hand corner

    6 and see that's a TD/Razor production, that came from TD

    7 Bank, so that probably answers the question as to

    8 whether it's a forgery or not?

    9 MS. ROTHCHILD: Objection to form.

    10 A In looking at this, this appears to be one of

    11 the ones that is not forged.

    12 Understand, this --

    13 Q Yes.

    14 A -- that Frank was clearly signing lock letters

    15 for me, so I have no reason to forge a lock letter,

    16 unless he's not available for some reason: not at his

    17 computer, can't get ahold of Ms. Laterio, on vacation,

    18 whatever it may be.

    19 I mean, this was a system that we had set up.

    20 You have enough of them