2011-12-20 Rothstein Scott PM

(954) 525- 2221United Reporting, Inc.

Page 1873

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 7 - AFTERNOON SESSION

DEPOSITION OF SCOTT W. ROTHSTEIN

DATE TAKEN: Tuesday, December 20, 2011 TIME: 1:00 p.m. - 5:00 p.m. PLACE: James Lawrence King Federal Justice Building 99 Northeast Fourth Street Miami, Florida 33124

Examination of the witness taken before:

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


Page 1874

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

2 FOR BROWARD COUNTY, FLORIDA

3 CASE NO: 10-2411 CACE (19)

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

5 Plaintiffs,

6vs.

7SCOTT W. ROTHSTEIN, et al,

8 Defendants.

9 ________________________________/

10AMY ADAMS, ET AL, PLAINTIFF VS. SCOTT ROTHSTEIN, ET AL.

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

12Case No: 10-03767 RBR STETTIN VS. GIBRALTAR PRIVATE

13 BANK & TRUST CO.

14Case No: 10-03802-RBR STETTIN VS. CENTURION STRUCTURED

15 GROWTH LLC, ET AL.

16Case No: 11-02288-RBR STETTIN VS. FIDELITY CHARITABLE

17 GIFT FUND

18Case No: 11-02368-RBR STETTIN VS. TD BANK, N.A.

19

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

21Case No: 11-02604-RBR STETTIN VS. MAPLE LEAF DRILLING

22 PARTNERS, ET AL

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

24

25


Page 1875

1 APPEARANCES FOR SCOTT ROTHSTEIN:

2 LAW OFFICE OF MARC S. NURIK 1 East Broward Boulevard

3 Suite 700 Fort Lauderdale, Florida 33301

4 BY: MARC S. NURIK, ESQUIRE

5 APPEARANCES FOR THE CHAPTER 11 TRUSTEE, HERBERT STETTIN:

6 BERGER SINGERMAN

7 350 East Las Olas Boulevard Suite 1000

8 Fort Lauderdale, Florida 33301 BY: CHARLES H. LICHTMAN,, ESQUIRE

9APPEARANCES FOR THE TRUSTEE:

10 GENOVESE, JOBLOVE & BATTISTA, P.A.

11 100 S.E. 2nd Street Suite 4400

12 Miami, Florida 33131 By: JOHN. H. GENOVESE, ESQUIRE

13 DAVID C. CIMO, ESQUIRE THERESA M.B. VAN VLIET, ESQUIRE

14 JESUS SUAREZ, ESQUIRE ROBERT F. ELGIDELY, ESQUIRE

15APPEARANCES FOR RAZORBACK:

16 CONRAD & SCHERER, LLP

17 633 South Federal Highway Eighth Floor

18 Fort Lauderdale, Florida 33302 BY: WILLIAM R. SCHERER, ESQUIRE

19 ERIC RAYMAN, ESQUIRE IVAN J. KOPAS, ESQUIRE

20 and KOZYAK, TROPIN & THROCKMORTON, P.A.

21 2525 Ponce de Leon Boulevard Ninth Floor

22 Coral Gables, Florida 33134 BY: HARLEY S. TROPIN, ESQUIRE

23

24

25


Page 1876

1 APPEARANCES FOR PLATINUM PARTNERS VALUE ARBITRAGE CENTURION STRUCTURED GROWTH, LLC:

2 GOLDSTEIN, TANEN & TRENCH, P.A.

3 One Biscayne Tower, Suite 3700 Two South Biscayne Boulevard

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

5 CURTIS, MALLET-PREVOST, COLD & MOSLE LLP

6 101 Park Avenue New York, NY 10178-0061

7 BY: ELIOT Lauer, ESQUIRE GABRIEL HERTZBERG, ESQUIRE

8APPEARANCES FOR MURRAY HUBERFELD AND DAVID BODNER

9 HARVEY WERBLOWSKY, ESQUIRE

10APPEARANCES FOR LEVINSON'S JEWELERS:

11 KOPELOWITZ OSTROW FERGUSON WEISELBERG KEECHL

12 200 SW 1st Ave Suite 1200

13 Fort Lauderdale, Florida 333012073 BY: JAN ATLAS, ESQUIRE

14 APPEARANCES FOR THE COMMITTEE OF

15 UNSECURED CREDITORS:

16 AKERMAN, SENTERFITT One Southeast Third Avenue

17 25th Floor Miami, Florida 33131-1704

18 BY: MICHAEL GOLDBERG, ESQUIRE

19 APPEARANCES FOR T.D. BANK:

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

21 Fort Lauderdale, Florida 33301 BY: HOLLY SKOLNICK, ESQUIRE

22 DONNA EVANS, ESQUIRE MARK P. SCHNAPP, ESQUIE

23

24

25


Page 1877

1 APPEARANCES FOR RLI ZURICH INSURANCE COMPANY, COLUMBIA INC. & ZURICH INSURANCE:

2 CLAUSIN MILLER

3 One Chase Manhattan Plaza 39th Floor

4 New York, New York 10005 BY: SCOTT L. SCHMOOKLER, ESQUIRE

5APPEARANCES FOR FEDERAL INSURANCE COMPANY:

6 1430 South Dixie Highway

7 Suite 204 Coral Gables, Florida 331463127

8 BY: ALEX HOFRICHTER, ESQUIRE

9 APPEARANCES FOR MORSE:

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

11 Fort Lauderdale, Florida 33301 By: JOHN M. MULLIN, ESQUIRE

12 GEORGE WALKER, ESQUIRE

13 APPEARANCES FOR CAROL MORSE, TED MORSE & MORSE OPERATIONS:

14 LAW OFFICES OF ROBERTA DEUTSCH

15 2499 Glades Road Suite 110

16 Boca Raton, Floridan 33431 BY: ROBERTA M. DEUTSCH, ESQUIRE

17APPEARANCES FOR EMESS CAPITAL, LLC:

18 KLUGER KAPLAN SILVERMAN, KATZEN & LEVINE, PL

19 201 S Biscayne Blvd Fl 17 Miami, Florida 331314

20 BY: CASEY H. CUSICK, ESQUIRE

21 APPEARANCES FOR ST. PAUL FIRE & MARINE:

22 MILLS PASKERT DIVERS P.A. 100 N Tampa St Ste 2010

23 Tampa, Florida 336025145 BY: JOHN A. BLACK, JR., ESQUIRE

24

25


Page 1878

1 APPEARANCES FOR ROSANNE CARETSKY:

2 BILLING COCHRAN LYLES 515 E Las Olas Blvd

3 Floor Six Fort Lauderdale, Florida 333012296

4 BY: TUCKER CRAIG, ESQUIRE DANIEL S. GELBER, ESQUIRE

5APPEARANCES FOR FEPICT, MS GROUP:

6 NYSTROM, BECKMAN & PARIS

7 One Marina Park Dr., 15th Flr. Boston, MA 02210

8 BY: JACK SEIGAL, ESQUIRE

9 APPEARANCES FOR MICHAEL SZANFRANKSI:

10 LYDECKER, DIAZ 1221 Brickell Avenue

11 Floor 19 Miami, Florida 33131

12 BY: CHRISTOPHER G. BERGA, ESQUIRE MIGUEL J. CHAMORRO, ESQUIRE

13APPEARANCES FOR GIBRALTAR:

14 STEARNS WEAVER MILLER, et al.

15 150 W Flagler St Ste 2200 Miami, Florida 331301545

16 BY: MARY BARZEE-FLORES, ESQ. MATTHEW DATES, ESQUIRE

17APPEARANCES FOR FRANK PREVE:

18 PODHURST ORSEK

19 25 W Flagler St Ste 800 Miami, Florida 331301720

20 BY: RAMON A. RASCO, ESQUIRE

21 APPEARANCES FOR LEVINSON PEARSON & ASSOCIATES, WATCH U-WANT, INC.:

22 KOPELOWITZ OSTROW

23 200 SW 1st Ave Ste 1200 Fort Lauderdale, Florida 33301

24 By: BART A. HOUSTON, ESQUIRE

25


Page 1879

1 APPEARANCES FOR THE US GOVERNMENT:

2 99 N.E. 4th Street Miami, Florida 33132

3 BY: LAWRENCE LAVECCHIO, ESQUIRE

4 APPEARANCES FOR FRANK SPINOSA:

5 SCHLESINGER AND COTZEN, P.L. 799 Brickell Plz Ste 700

6 Miami, Florida 33131 BY: MICHAEL J. SCHLESINGER, ESQUIRE and

7 MICHAEL COTZEN, ESQUIRE and

8 SAMUEL J. RABIN, ESQUIRE 799 Brickell Plaza

9 Suite 606 Miami, Florida 33131

10

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Page 1880

1 EXAMINATION INDEX

2 PAGE

3 DIRECT BY MR. SCHNAPP 1881 DIRECT BY MS. EVANS 1906

4

5

6

7 EXHIBIT INDEX

8 PAGE

9 TD BANK'S

10 230 Motion for Reduction of Sentence and for 1882 Stay of Ruling.

11 231 TRUSTEE_TD-000310, 307, 29-32, 27, E-Mail 1887

12 dated 8/14/09.

13 232 Coquina 000001-35, Promissory Note dated 1910 9/25/09.

14 233 Coquina 00679-715, Letter dated 6/1/09 1942

15 234 Coquina 000902-903, E-mail dated 6/22/09 1946

16 235 Coquina 001376-1413, E-mail dated 4/27/09 1949

17 236 TRUSTEE_TD-000290, E-mail dated 8/18/09 1957

18 237 Coquina 000679-715, Letter dated 6/1/2009. 1965

19 238 Coquina 000716-751, Letter dated 4/27/09 1969

20 239 Invitation E-mail 2008

21

22

23

24

25


Page 1881

1 CONTINUED DIRECT EXAMINATION

2 BY MR. SCHNAPP:

3 Q Good afternoon, Mr. Rothstein.

4 A Good afternoon, sir.

5 Q We were talking a little bit before the break

6 about people who had filed letters either for or against

7 you and your expectations as well. Has the government

8 filed a Rule 35 motion already?

9 A I believe they have, yes, sir.

10 Q And what is your understanding of the reason

11 that they would file a Rule 35 motion?

12 A My understanding was to preserve their right to

13 file a -- to move for a Rule 35 substantial assistance

14 reduction for me if they determined that I was entitled

15 to it.

16 Q That would be based upon your providing

17 substantial assistance in the prosecution of other

18 people, correct?

19 A My understanding is in the investigation or

20 prosecution of any criminal.

21 Q Let me show you what has been marked as Exhibit

22 230 and ask if you're familiar with that. I'm sorry to

23 keep throwing this to you.

24 MR. NURIK: You can hand it to me here, it will

25 be easier.


Page 1882

1 (Whereupon, TD Bank's Exhibit No. 230 was marked

2 for identification.)

3 BY MR. SCHNAPP:

4 Q Do you recognize that, sir?

5 A I actually don't think I've ever seen it. I

6 heard about it but I don't recall actually receiving a

7 copy of it.

8 Q You don't recall ever seeing a copy of the

9 document that purports to be a Rule 35 motion concerning

10 your sentence?

11 A No.

12 Q Were you aware that was filed?

13 A Yes, I said I was. I was aware it was filed but

14 I don't get copied on a lot of things.

15 Q Okay. And you were aware that Mr. Scherer filed

16 something with the Court as well, right?

17 A Subsequent to this?

18 Q At the same time, around that time.

19 A I was not.

20 Q Were you aware that Mr. Scherer ever filed

21 anything with the Court?

22 A Only thing that I was aware of is that at the

23 time I was sentenced I understand Mr. Scherer, I think I

24 read from it a little while ago, filed a letter at the

25 time that I was sentenced.


Page 1883

1 Q I might be having the time frame wrong.

2 Mr. Scherer at your sentencing filed a letter and

3 Mr. Mandel at your sentencing filed a pleading saying

4 that you had not cooperated?

5 A I believe that that is correct.

6 Q And the government subsequently filed the Rule

7 35 motion to reduce your sentence; is that right?

8 A Yes, sir.

9 Q Okay. And you have now - you have made efforts

10 to try to help the Trustee as well, have you not?

11 A Yes, sir.

12 Q And you've also made efforts to try to help

13 people, the plaintiffs, for example, who are trying to

14 help the Trustee; is that true?

15 A I'm sorry, say that again. Have I what?

16 Q Have you been trying to help Mr. Mandel's

17 clients as well?

18 A I don't know who Mr. Mandel's clients are.

19 Q The Coquina Group.

20 A Yes, I believe the Coquina Group is made up of

21 innocent investors and I'm trying to help them, yes, sir.

22 Q You actually refused to cooperate with them when

23 they originally -- which is what caused Mr. Mandel to

24 file that pleading?

25 A That is one hundred percent false. I have never


Page 1884

1 since my return from Morocco not one single time ever

2 refused to help anyone.

3 Q So when Mr. Mandel wrote that you were refusing

4 to help his group that was a false statement?

5 A Absolutely false.

6 Q And you filed a pleading with the Court telling

7 the Court, Mr. Mandel had filed a false pleading?

8 MR. LICHTMAN: Objection to form.

9 A I'm sorry?

10 Q Well, let me try again. Do you see the pleading

11 that Mr. Mandel filed on behalf of Coquina?

12 A Hang on. I didn't mean in the transcript I'm

13 sorry for doing something. I meant I don't have any idea

14 what you're talking about.

15 Q Let's try again, okay?

16 A Sure.

17 Q Mr. Mandel on behalf of Coquina filed a

18 pleading at your sentencing that you were not

19 cooperative?

20 A I don't recall ever seeing that until today.

21 Q You were not aware -- is it your testimony that

22 you were not aware that one of the investor groups filed

23 a pleading at your sentencing stating that you were not

24 being cooperative?

25 A I don't recall knowing that, no, sir.


Page 1885

1 Q Okay.

2 A I don't recall.

3 Q Did you recall --

4 A Fortunately you have never been through this,

5 and I brought this on myself. But going though a

6 sentencing of this magnitude is an earth-shattering

7 moment in your life, so you'll have to excuse me if my

8 exact memory of it is a little vague.

9 Q But you do agree with me that you've now seen a

10 document filed by the Coquina plaintiffs stating that you

11 were not cooperative?

12 A That's correct.

13 Q And that position raised by investors would hurt

14 you?

15 A I don't know whether it will help me or hurt me,

16 depends on what the judge does with it, whether the judge

17 believes it or not based upon everything else I have

18 done. I suspect, because I know Judge Cohn to be a very

19 fair man, I believe that he'll weigh everything I've done

20 in accordance with everything he sees and hears and he'll

21 make his own judgment.

22 Q Let's get back to your relationship with some of

23 the plaintiffs. I think you said that your investors

24 were greedy?

25 A Many of them, yes.


Page 1886

1 Q In what way were they greedy?

2 A Certain of the investors placed money ahead of

3 morality.

4 Q I'm sorry?

5 A Certain of the investors placed money ahead of

6 morality.

7 Q Now with respect to the Damson e-mails we had

8 discussed earlier, you had developed a close relationship

9 with him, had you not?

10 A You asked me that, you asked me that a bunch of

11 times actually. I don't think that I was close to

12 Mr. Damson. I think that we were friends or becoming

13 friends. I think most of the conversation I had with him

14 and for that matter most of the conversation he had with

15 me that was - what I'll call familiar conversation, using

16 things like Rocky and Rothschild and the like, it's my

17 belief that we were both working each other. Mr. Damson

18 is a very shrewd businessman to my knowledge.

19 Q You felt he was working you?

20 A To some extent, sure.

21 Q Could you explain?

22 A Just in the way he handled me. There were

23 certain things he wanted, certain things he wanted to

24 make sure that I did like getting letters in place for

25 him and the like, offering him the best deals, that type


Page 1887

1 of stuff. He was working me. He figured if I felt he

2 was my friend I would be more -- if I felt he was my

3 friend I would be more open with him. I was doing the

4 exact same thing with him.

5 Q When Mr. Damson's group came into the picture,

6 that was right around the time you were having problems

7 with the Funds, correct?

8 A It was at the time that we were having problems

9 with the Funds, yes.

10 Q Mr. Damson would have been one of the new

11 investors you were bringing in to take out some of the

12 funding that was being done by the Funds?

13 A Correct.

14 Q Let me show you what I'm going to - what has

15 been marked for identification as Exhibit 231, it's a

16 composite.

17 A Sure.

18 (Whereupon, TD Bank's Exhibit No. 231 was marked

19 for identification.)

20 BY MR. SCHNAPP:

21 Q Let me know when you have had a chance to have

22 read it.

23 A Okay.

24 Q These letters purport to show some fairly

25 friendly chatting between you and Mr. Damson; is that


Page 1888

1 fair to say?

2 A Yes, sir. It is -- they're are e-mails and

3 they show me speaking to Mr. Damson the way I spoke with

4 probably nearly all my investors with the exception of

5 Mr. Von Allmen.

6 Q For example?

7 A I had relationships like this even far more

8 in-depth and far more familiar with many of my

9 investors.

10 Q For example, you were talking about a lobster

11 party on page one of the document.

12 A No, I'm not talking about that, I think Barry

13 is.

14 Q Okay. He's communicating with you about a

15 lobster party. What does that have to do with the

16 investment? What does that have to do with the

17 investment?

18 A Lobster specifically?

19 Q Or that communication.

20 A Do you want to know what it says or do you want

21 to know what I think it says?

22 Q What do you think it says?

23 A I think it's more of Barry trying to work me.

24 I think he's trying to be nice to me. I think he wants

25 to ultimately - I think he believed in the deals. I


Page 1889

1 think he believed that he had a good investment. He was

2 very, very motivated by money, okay, he didn't become

3 wealthy by accident. And I think that he wanted to draw

4 me into his crowd to make me feel like I was part of his

5 crowd so that he could secure as good a position in my

6 investment group as he possibly could.

7 Q He wanted to curry your favor so that you would

8 give him more deals, right?

9 A I think he wanted to be as close to me as he

10 possibly could in order to increase his ability to get

11 deals, yes.

12 Q The next e-mail, the July 15th e-mail purports

13 to be some sort of a joke; is that right?

14 A I don't know what this is.

15 Q You don't recall what the Italian Christmas

16 present was?

17 A No.

18 Q Do you recall sending him a video or, I'm

19 sorry, a voicemail of some sort that you forwarded?

20 A I think this looks like him sending it to me.

21 Q I misspoke. Did Mr. Damson sent to you?

22 A It's certainly possible.

23 Q Do you recall what it was?

24 A I don't recall off the top of my head.

25 Q Now, I'd like you to go towards the back of


Page 1890

1 that document, let's sort of look at some of the other

2 language in there. There's that Rothschild language

3 again; is that right?

4 A Yes, we referred to each other as Rocky and

5 Rothschild, Dr. Rothstein, Dr. Damson, that type of

6 thing, yes.

7 Q Was that to convey that sort of that you were

8 both purportedly very rich and wealthy, well-to-do

9 people?

10 A Yes, I think that was the joke.

11 Q He writes to you that, on Exhibit 000030, that

12 you can see Jerome Avenue from my deck, right?

13 A I wrote that or he wrote that? He wrote that.

14 Q He wrote that?

15 A Yes.

16 Q You used to live on Jerome Avenue in the Bronx?

17 A No, I used to live in the Bronx but I know

18 where Jerome Avenue is.

19 Q What period were you in the Bronx?

20 A Until 1976.

21 Q Now, on the next page, last two pages of the

22 document, that purports to refer to a deal, does it

23 not? Look at the last page.

24 A The last page where I'm getting an e-mail from

25 Pricila saying Barry is going to pick me up?


Page 1891

1 Q The last page where it says -- I'm sorry, one

2 page in.

3 A Okay. Let me take a look.

4 Q The deal is as follows: 15 million, ROI 7

5 million?

6 A Yes, I see all that.

7 Q Can you explain what the deal was here?

8 A I'm explaining what the deal is, yes.

9 Q This is basically - if I can ask you to clarify

10 it - you're offering him a deal to pay $15 million for a

11 $22 million settlement; is that right?

12 A Correct.

13 Q And it would be payable in three payments; is

14 that right?

15 A Yes, sir.

16 Q And within 75 days he would receive a profit of

17 7 million; is that right?

18 A Yes.

19 Q And then you write - could you read out loud

20 the last two sentences?

21 A He and his partners.

22 Q Okay. And then it says: Nicely done. Can you

23 read the next section?

24 A It says: Nicely done, Rockefella with a lot of

25 a's and a smiley face. Nicely done Rothschild as well.


Page 1892

1 Complimenting myself. Always test your liquids before

2 drinking. And it says hehehehehe.

3 Q Why did you write that?

4 A He used to -- He and I used to joke around

5 about the fact that someone might try to poison me.

6 Q Someone might try to poison you?

7 A Yes.

8 Q Who would do that?

9 A That they would want to kill the goose that

10 laid the golden egg. I don't know. It was a joke.

11 Q On the previous page you also write on August

12 17, you say: Money never sleeps?

13 A Yeah, I said that to a lot of people. I used

14 to say that to Szafranski. I said that to a lot of

15 people.

16 Q What did that mean?

17 A It was a referral back to a movie called Wall

18 Street where Gordon Gekko said, Money never sleeps.

19 He's talking to Bud, he said, Money never sleeps. He

20 was speaking to the character Bud.

21 Q You were picking up the language from the

22 character Gordon Gekko, right?

23 A Yes.

24 Q We've heard a little bit about Michael

25 Szafranski and could you explain what Szafranski's job


Page 1893

1 was supposed to be. Let's first focus on the Funds.

2 What was Mr. Szafranski supposed to do with the Funds?

3 A He was supposed to be an independent third

4 party verifier verifying the actual existence of the

5 deals.

6 Q And what right would give Mr. Szafranski under

7 the terms of your deal, the right to look at any of the

8 deal documents?

9 A I don't think I understand your question.

10 Q Well, let's go back. You said he's an

11 independent verifier, what was he supposed to verify?

12 A He was supposed to verify the signatures on the

13 deals, the plaintiff, the defendant, he was supposed to

14 verify the wires in and out, balances in accounts. And

15 as I testified over the last several days, there were

16 other occasions where he was asked to do additional due

17 diligence type things like trying to match plaintiffs

18 and defendants, that type of stuff, listen in on

19 negotiations.

20 Q My question to you is, what right - if you're

21 representing a client, what right did Mr. Szafranski

22 have to be involved in any communication between you and

23 your client?

24 A The way we drafted the agreements we believed

25 we were drafting them in a nebulous enough fashion so as


Page 1894

1 to allow for an independent verifier to verify the

2 existence of the deals. When someone inquired about it

3 we tied it through the financial advisor type role that

4 we placed in the agreements as well as just creating

5 language as we went on saying that the parties involved,

6 excuse me, the plaintiff, which would have been the only

7 party knowing about this particular sale, had no problem

8 with it and that we had the independent third party

9 person locked into confidentiality, that wasn't going to

10 be a problem.

11 No one voiced any objection to it. The only

12 person that ever voiced an objection to an independent

13 third party verifier was me.

14 Q Well, Miss Evans is going to go over the deals

15 in more specificity. But wasn't the financial advisor

16 who was allowed to talk to the plaintiff about the

17 financial terms of the settlement, but they were not

18 allowed to look at the documents; isn't that true?

19 A Without seeing a document I couldn't tell you

20 from the top of my head.

21 Q But it's your testimony that Mr. Szafranski was

22 supposed to see unredacted versions of the documents?

23 A That's what we all agreed to.

24 Q How would that help anybody who was trying to

25 buy one of the settlements?


Page 1895

1 A He was to verify that this was real.

2 Q Did he ever see somebody signing an agreement?

3 A No, sir.

4 Q Did he ever verify any of the companies that

5 were settling were real?

6 A He lied about doing that but he didn't really

7 do it because the only companies that were real were the

8 major companies whose names we used at the very end, the

9 last several months of the Ponzi scheme.

10 Q Would you explain what you meant by

11 Mr. Szafranski lied about the verifications?

12 A No, I said he lied about verifying the

13 existence of the defendants.

14 Q Who did he lie to?

15 A Actually, as I testified earlier, he actually,

16 as the Ponzi scheme went on lied about the entire

17 verification process once he knew there was no real

18 plaintiffs and defendants.

19 Q At what point did he realize there were no

20 plaintiffs and defendants?

21 A I don't know when he actually realized it. I

22 would be guessing, but at the time that he brought his

23 first investor in he knew that it was a fraud.

24 Q Mr. Szafranski was chosen by the Funds; is that

25 right?


Page 1896

1 A Yeah. Again, you're referring to Platinum,

2 Centurion, Level 3?

3 Q Yes.

4 A Yes, sir, he was chosen to my understanding by

5 Gil Kalter and approved by the rest of the people at the

6 Funds.

7 Q Did you approve of Mr. Szafranski?

8 A After I met him, yes.

9 Q How soon into the -- Was Mr. Szafranski falsely

10 verifying information that was provided to the Funds?

11 A You know, I'd have to look at the timing.

12 Eventually he was because there were times when he was

13 saying he was verifying that he wasn't really

14 verifying. And if you look at what he actually did as

15 opposed to what he wrote he did, yes, he was lying to

16 them at a certain point in time. That was one of the

17 things that Mr. Preve and I liked about Mr. Szafranski.

18 Q Sorry, I am not following, what did you like

19 about Mr. Szafranski?

20 A He turned out to be a true player in every

21 sense of the word.

22 Q Player meaning someone that would go along with

23 the lies?

24 A As far as I'm using for him, yes.

25 Q Did you also have the nickname, maybe not to


Page 1897

1 his face, of Milquetoast?

2 A Oh, we used it to his face.

3 Q Why was he milquetoast?

4 A I think I explained this the other day. Mike

5 was very, very ordinary, vanilla, went along with the

6 flow, very emotional, but once -- he was very easy to

7 calm down. If you said, Mike, this is real, so long as

8 Mike was making money Mike said, yeah, that's real. It

9 was a no harm, no foul thing with Mike once he got

10 involved in this.

11 But even early on he was very vanilla. Frank

12 and I wanted a verifier who was not, let's say what some

13 people thought was going on or told what was going on by

14 various people involved in this, he was not of the Big

15 Four ilk. He wasn't like a Big Four CPA or auditor or

16 forensics guy, he was a simple guy who kept things

17 simple.

18 Q Okay.

19 A Didn't ask a lot of questions. Milquetoast.

20 Q So was there a point where Mr. Szafranski was

21 verifying information at your office by looking at the

22 fake TD Bank website?

23 A Yes.

24 Q Did he know it was a fake TD Bank website?

25 A At a certain point in time he did, yes.


Page 1898

1 Q Do you know to what entities Mr. Szafranski

2 falsely verified information?

3 A At various points in time my recollection is he

4 provided false information to all of the Funds, to

5 Coquina, to all the people that he brought in to the

6 deals, that would be the Coquina group and Mr. Sochet

7 and anyone else he brought in, to the Von Allmen people,

8 Mr. Scherer's clients. You would have to show me a list

9 of all the people to make sure my list is complete.

10 But suffice it to say, anyone he verified for

11 at a certain point in time he was lying.

12 Q Mr. Rothstein --

13 A And also - just so my answer is complete, I

14 didn't mean to cut you off. If you look at his e-mail

15 traffic once he's involved in the scheme, once he's

16 bringing in his investors, he's creating all kinds of

17 stories, things I didn't even create and neither did

18 Mr. Preve, things we didn't create, all kinds of stories

19 to bring in investors about him being the one person

20 selected by the Florida bar to be able to review files

21 and about his access to the trust account balances and

22 the like.

23 Q I have a few more questions and I'll turn it

24 over to Miss Evans.

25 A Sure.


Page 1899

1 Q I think I asked you before the break about why

2 the change to whistle blowers. I'm not sure I got an

3 answer that was clear, so maybe you could clarify that.

4 A Sure. It was - as we were getting more

5 sophisticated investors and wanted to be able to do

6 multiple plaintiff settlements, the whistle blowers were

7 more amenable to selling a fictitious class type

8 multiple plaintiff action settlement than were the

9 sexual harassment cases.

10 And we were in dire need of funds and so we

11 wanted to be able to duplicate the same deals over and

12 over again instead of having to come up with 10

13 different deals we were able to say we have 10

14 plaintiffs all at 700 with 300 ROI, how many do you

15 want?

16 You'll see that was going on frequently. We

17 got 10 of these, 15 of these, 20 of these.

18 Q I saw those e-mails. The question to me that I

19 would be asking you is why would all 10 of those people,

20 in a hypothetical settlement, want to sell all of their

21 settlement dollars?


23 A Why would they want to? You want me to answer

24 how I would answer it if someone asked me that?

25 Q Yeah. Like for example, if an investor had


Page 1900

1 asked you, Mr. Rothstein, you have 10 different people

2 wanting to sell 100 percent of their settlements as part

3 of this deal, why is that so? How would you explain it?

4 A One of two answers: One, there are actually 25

5 plaintiffs, only 10 are taking it. That's one potential

6 answer. Two, we've told them and they decided it's one

7 for all, all for one. Either they all take it or they

8 don't take it. We allowed them to meet privately among

9 themselves, invited them to go out and solicit

10 independent counsel if they wanted to, and they needed

11 to decide all for one and one for all or no one was

12 going to get the deal because that's the way the

13 defendant wanted it - excuse me, that's the way one of

14 the plaintiffs wanted it or a group of the plaintiffs

15 wanted it and we'd sell it that way.

16 Q I'm not sure I understand why that explanation

17 would make sense. As far as the defendants in the

18 lawsuit were concerned, they --


20 MR. SCHNAPP: Excuse me?


22 THE DEPONENT: I took the defendant out of that

23 mix, I misspoke.

24 BY MR. SCHNAPP:

25 Q As far as the defendant would go, in your


Page 1901

1 story, the defendants fully funded the settlements,

2 correct?

3 A Yes, and they had no idea that the settlement

4 was for sale.

5 Q And then what I'm not following is how you

6 would be able to sell to a Coquina or anybody else a

7 deal that all these people wanted to sell a hundred

8 percent of their settlements. Why would the fact that

9 one wanted to do that and the impact on anybody else?

10 A No, no, I think we're misunderstanding each

11 other.

12 Q Okay.

13 A Two plausible explanations that we utilized.

14 One was when we would sell the deal to the investor we'd

15 say, for example, we've got 26 plaintiffs. There are

16 nine of them, 10 of them, 12 of them, whatever it is

17 that want to take the deal, the rest they are just going

18 to wait. That's one way to sell it.

19 Q Some of the cases you were selling were

20 plaintiffs and Qui Tam matches; is that right?

21 A I think we had -- I don't know whether we

22 actually ever sold those but, yes, we definitely brought

23 up Qui Tam in that context and we kind of wheeled our

24 way in to that genre of case settlement, again for the

25 possibility to have multiple plaintiff cases so we were


Page 1902

1 able to duplicate settlements as opposed to keep

2 creating new deals.

3 Q Do you know if you could actually settle on a

4 confidential basis a Qui Tam action?

5 A If you could settle on a confidential basis a

6 Qui Tam action. I don't know that I ever looked that up

7 one way or the other.

8 Q And no one questioned you about that either

9 when you talked to them about a Qui Tam?

10 A I don't recall anyone questioning me about it.

11 Q The Qui Tam case you step in the shoes of the

12 federal government, don't you?

13 A Yes.

14 Q And so, if you're the Qui Tam relater, isn't it

15 a fact, sir, that you can't settle without the approval

16 of the government?

17 A Yeah, but I think the way we were selling this,

18 I really have to see all the e-mail traffic to tell you

19 this for certain, but my belief is the way we were

20 selling was that these were offshoots of the Qui Tam

21 actions and that they were basically whistle blowers

22 underlying the action, people that had claims against

23 the company, that the company perhaps wanted to get rid

24 of and they were going to buy them off and buy off their

25 silence, to not to give rise to a Qui Tam action.


Page 1903

1 Q Finishing up with Mr. Szafranski. There were

2 times when you paid Mr. Szafranski's fees; is that

3 right?

4 A When I paid his fees?

5 Q Or you told parties that you were paying his

6 fees?

7 A There were times when he received - there were

8 many times when he received a substantial amount of

9 money from me for his illegal activity. There were also

10 times when as part of the inducement to get an investor

11 to go in, when that investor was obligated to pay

12 Mr. Szafranski's finders fee or third party verification

13 fee, that we would agree to pay that sum to him.

14 Q Was there any concern that that might interfere

15 with his independence if money was coming from you?

16 A Did anyone voice that concern? No, no one. I

17 don't recall anyone voicing that concern.

18 Q Now, just a couple more questions then I'll

19 turn it over.

20 A Sure.

21 Q Have you been charged with any other crimes at

22 the U.S. Attorney's Office?

23 A Not to my knowledge, sir, no.

24 Q Are you going to be?

25 A I certainly hope not.


Page 1904

1 Q So have you been given immunity from other

2 crimes?

3 A No, sir.

4 Q What other crimes have you disclosed to the

5 U.S. Attorney's Office that you have committed?

6 MR. LAVECCHIO: In a general way.

7 A Money laundering; extortion; bribing public

8 officials, law enforcement.

9 Q You said law enforcement, do you mean bribing

10 law enforcement?

11 A Bribing law enforcement; paying law enforcement

12 to do illegal activity.

13 Q Tax?

14 A Interfering with the judiciary; tax evasion.

15 Actually mine wasn't really tax evasion. I actually was

16 inflating my taxes. I don't know what you call that. I

17 wasn't actually evading taxes, I was overpaying my

18 taxes. That's all I recall at this moment, I'm sure

19 there may be more.

20 Q Now, I know I'm going to go through objections,

21 but I just want the record clear. Which judges did you

22 bribe?

23 MR. LAVECCHIO: Objection, privilege.

24 Q Which political officers did you bribe?



Page 1905

1 Q Are you going to follow the U.S. Attorney's

2 Office's instructions not to answer my questions?

3 A Yes, sir.

4 Q Which people did you threaten?


6 Q Were you involved in any other schemes other

7 than the ones that have been disclosed through these

8 proceedings?

9 MR. SCHERER: What was the question?

10 Q Were you involved in any other schemes other

11 than the ones that have been disclosed through these

12 proceedings? I'll include there the Ponzi scheme and

13 the issues with the fake judicial opinion.

14 MR. LAVECCHIO: I'm going to object given the

15 way you've couched that question. Scheme is a very

16 broad term.

17 Q Fair enough. Have you been involved in any

18 other fraudulent act other than the activity that's been

19 discussed during the course of your deposition?

20 A If you're including things I've been asked

21 about that I've not been allowed to answer, then the

22 answer is yes.

23 Q And with respect to your involvement in those

24 activities do you expect to be prosecuted?

25 A I hope not.


Page 1906

1 Q I'm going to turn it over to Miss Evans. I

2 will have some additional questions for you later.

3 Thank you.

4 A Thank you.

5 DIRECT EXAMINATION

6 BY MS. EVANS:

7 Q Can you hear me, Mr. Rothstein?

8 A I can Miss Evans, thank you.

9 Q One of the things that I'd like to turn back to

10 is some of your testimony last week and ask you a couple

11 of questions. At one point you talked about the

12 hallmarks of a Ponzi scheme and I know that in some ways

13 there has been a tutorial on that. But let me go back

14 to some specific questions and ask you some specific

15 things.

16 Last week you gave a list of some things that

17 were hallmarks of the Ponzi scheme. And one of the

18 things that you listed was refusal to give the investors

19 any information about who the parties were.

20 And I wondered if you could just elaborate for

21 me on how that is a hallmark of a Ponzi scheme?

22 A Sure. I think that if you look at the Ponzi

23 scheme that I was involved in and you compare it to the

24 Madoff scheme, the Dreier scheme, you'll see that lack

25 of transparency is a hallmark. When you're running a


Page 1907

1 Ponzi scheme you want to keep people as visually

2 impaired as possible. You want them to see the image

3 and the things you created and not see through that. In

4 this particular case there were red flags that my

5 co-conspirators and I believed existed that people were

6 either choosing not to follow-up on, didn't catch, made

7 a conscious decision to look the other way, and

8 ultimately some people were obviously clearly involved

9 and knew what was going on. I can give you some

10 examples.

11 Q Let me go back to my question for a minute in

12 talking about refusal to give any information about who

13 the parties were; specifically the deal documents that

14 you and your office prepared blacked out the names of

15 both the plaintiffs and the defendants, correct?

16 A Yes.

17 Q By and large?

18 A Yes.

19 Q Did so --

20 A Sometimes accidentally they were there, but by

21 and large we meant to black them out.

22 Q Was it part of your pitch to investors to say

23 that you could not disclose either plaintiffs or

24 defendants?

25 A Yes, that it was a breach of confidentiality.


Page 1908

1 Q And it was a breach of confidentiality because

2 you needed to have the parties not be able to -- let me

3 strike that.

4 Why was it a breach of confidentiality?

5 A Because the entire package was sold as a

6 confidential settlement. That the fact of, amount of,

7 parties to the settlement all wanted confidentiality.

8 Q On the part of the defendant who didn't exist,

9 but assuming the defendant had existed was part of your

10 pitch the defendant wanted this paid out over time to

11 keep the plaintiff from talking?

12 A Yes.

13 Q And there were deals, weren't there, where the

14 payout that you sold to the investor might be as little

15 as two months?

16 A Yes.

17 Q Did any investors ask you why you were selling

18 such a short period of time for a plaintiff to stay

19 quiet?

20 A Yes.

21 Q What investors asked you that question?

22 A I remember Barry Damson asking me.

23 Q Do you know when he asked you, what deals he

24 asked you that question about?

25 A No, I don't. And the deals were getting


Page 1909

1 shorter as time went on so it would have been the later

2 investors asking this question. As we needed more cash

3 I kept putting out more extenders for people to invest.

4 Ultimately, I was shortening the deal so much that it

5 was raising more questions than I really wanted to have

6 raised.

7 Q Did Mr. Damson specifically ask why the deals

8 were getting shorter?

9 A I don't know that he asked me why they were

10 getting shorter, but he did ask me why people were

11 taking and selling these things. And a couple of other

12 investors, I just can't remember who they are right now

13 but it was later investors, asked me why someone would

14 sell the money when they would be getting their money

15 right down the road.

16 Q What was your answer to Mr. Damson?

17 A It was a myriad of things but the basic pitch

18 was this, that these people have been to hell and back,

19 that many are on the verge of losing their homes, that

20 they can't wait any longer for their money. That they

21 don't trust the defendants and then even though I have

22 the money in-house, that these people are so frightened

23 of the defendants that they believed that the defendant

24 will do something to try to block their money, that they

25 don't believe they'll ever get all their money, and they


Page 1910

1 just want to be done with it.

2 Q Did Mr. Damson believe that to your knowledge?

3 A To my knowledge, yes.

4 Q Did he tell you that he believed that?

5 A Did he say I believe you?

6 Q Yes.

7 A No.

8 Q Okay.

9 A That would have been a very odd conversation.

10 The second someone says, don't worry, I believe you,

11 you're generally in trouble.

12 Q His actions indicated he believed you, didn't

13 they?

14 A His actions did, yes.

15 Q I'm going to show you what will be marked as

16 Exhibit 232. This is a deal package, if you will, for

17 S154. And just to give others the Bates numbers, it's

18 numbered in two ways: Coquina 1 through 35, also number

19 at the top SWR/TD 00357 through 1390. And I gave you my

20 marked up copy, of course.

21 (Whereupon, TD Bank's Exhibit No. 232 was

22 marked for identification.)

23 BY MS. EVANS:

24 Q I'm not going to ask you to take a look at

25 every page now, but the page that I'm interested in


Page 1911

1 particular is Coquina 27, which is close to the end of

2 this document. Two pages actually, 15 and 27.

3 I'm going to represent to you that this was a

4 deal package given to the Coquina investors. And my

5 question with respect to Coquina 15, that particular

6 page, that page identifies the defendant in that

7 particular deal; is that correct?

8 A Yes.

9 Q Who is the defendant?

10 A Supreme Manufacturing Company, Inc.

11 Q If you turn to Page 27, that page indicates the

12 Plaintiff?

13 A Yes.

14 Q And that's Steven Caputi?

15 A Yes.

16 Q Was it a breach of the provisions of the

17 agreement to be disclosing Supreme Manufacturing as the

18 defendant - supreme Manufacturing Company, Inc., and

19 Steven Caputi as the Plaintiff?

20 A Yes.

21 Q Do you know why this was disclosed?

22 A Because the Coquina group, to my understanding,

23 if I was not able to allow them to witness a Plaintiff

24 signing, which they agreed to hold strictly in

25 confidence, they would not fund any more deals.


Page 1912

1 Q And so you breached the agreement by disclosing

2 this information?

3 A I breached the fake agreement.

4 Q I know. We're circling back a little.

5 A It gets a little circular.

6 Q Assuming that this is a valid agreement as far

7 as Mr. Damson was concerned, it was breach by this

8 disclosure, correct?

9 A Yes.

10 Q Did Mr. Damson or any investor that you know of

11 that was connected with Coquina express any concerns

12 that the terms of this agreement were being breached?

13 A I had a discussion with Mr. Damson to this

14 extent: When he was pushing to witness a plaintiff

15 signing, I raised the breach issue.

16 I said, Barry I can't show this to you. I

17 can't let you sit in on a plaintiff, it's a breach all

18 the way around.

19 And he said to me, You don't need to worry. I

20 need to see it one time. And he said, Why would I ever

21 tell anyone that there was a breach? We'd be the ones

22 getting hurt on top of everyone else. It's not in our

23 interest to breach, so you don't need to worry about it.

24 Q You would agree Coquina asked you to breach the

25 terms of the agreement, correct?


Page 1913

1 A Barry Damson did. And I would suspect that

2 that's on behalf of all his investors. It was part and

3 parcel of their due diligence.

4 Q Now, didn't Mr. Damson --

5 A He did also try to tell me a story that he's a

6 lawyer so that we could bring him into the privilege. I

7 told him, Look, we'll do it because you don't have an

8 interest in harming anybody. It makes no sense.

9 And I, of course, internally want the funding,

10 so...

11 Q What privilege are you referring to?

12 A Attorney/client privilege.

13 Q Were you his attorney?

14 A No, no, no. Not me. Him. He was saying that

15 he's an attorney. I know what to do. Don't worry. He

16 was trying to sooth me.

17 Q He was an attorney, correct?

18 A Yes.

19 Q And a sophisticated investor as well?

20 A I believe that, yes, ma'am.

21 Q Did you disclose this information to any other

22 investors, this type of information, plaintiff or

23 defendant?

24 A From time to time, yes.

25 Q Who?


Page 1914

1 A I remember telling certain people at the hedge

2 funds about particular defendants we were going after.

3 I utilized it as a technique to garner interests when we

4 were using real defendants' names.

5 I remember telling - we'll call it the

6 Discala/Clockwork, that whole group of people - I

7 remember telling them about certain things that were

8 going on, making up stories about the cases, the Jeff

9 Epstein case, for example.

10 I may have told -- No, I don't recall whether I

11 told Mr. Sochet or not. I don't want to guess. But it

12 was a technique I used from time to time to let people

13 think they were in the know, in the inter circle. It's

14 a way to lure investors in.

15 Q It was an inducement to keep them investing,

16 correct?

17 A Yes. The more people feel they know about an

18 investment -- It was a way for me to take them one step

19 past the non-transparency of the deals. As they were

20 investing more money I might allow them in, into the

21 know, so to speak. Or if they were a big potential

22 investor and they were asking a lot of questions, I

23 might say, Okay, this one time.

24 Q Do you recall ever meeting with Kathleen White

25 who was also an investor through Coquina?


Page 1915

1 A Yes.

2 Q And disclosing any plaintiff or defendant to

3 her?

4 A I think there was an occasion where she was in

5 my office. I think she was in from Texas. And I let

6 her look at part of a phony file, yes.

7 Q You let her look at part of a phony file. What

8 part of a phony file did you show her?

9 A I don't recall which piece of it it was.

10 Q Was this early in Coquina's investing?

11 A I don't recall the time frame.

12 Q Do you recall telling her that one of the

13 defendants in a particular case was Dole?

14 A I do recall that, yes.

15 Q What do you recall about that?

16 A I just recall that we had a case with Dole,

17 some kind of juice case. Something about -- It was

18 actually mirrored after a real case that was in

19 existence, not necessarily one that we were handling,

20 but it was mirrored after a case where it was supposed

21 to be 100 percent juice that was being sold to the

22 military and the schools and the like, and it wasn't.

23 It was a messed up product.

24 Q And you disclosed to her this fake defendant as

25 well?


Page 1916

1 A I don't recall how much I told her, but I

2 recall telling her something, and it's possible it's the

3 Dole case.

4 Q Did she express any concern that you were

5 revealing information to her that contradicted the terms

6 of the agreement she was entering into?

7 A I don't recall whether I had that conversation

8 with her one way or the other.

9 Q She was not an attorney, right?

10 A CPA to my knowledge, not an attorney.

11 Q Do you remember any concerns she expressed in

12 that conversation and meeting?

13 A I don't recall.

14 Q Was that in your office?

15 A Yes.

16 Q Do you know when?

17 A I do not.

18 Q To go back for a minute, you said that you

19 disclosed plaintiffs or defendants or parties to

20 agreements to the hedge funds. Who among the hedge

21 funds did you disclose that information to?

22 A It would have been to Jack Simony and Ari

23 Glass.

24 Q Anyone else?

25 A No.


Page 1917

1 Q Okay.

2 A Not that I recall.

3 Q Did you disclose that type of information to

4 A.J. Discala?

5 A I don't recall doing that, no.

6 Q Going back to the hedge funds for a moment, I

7 hope I didn't ask you this. When --

8 A Wait, wait. As far as A.J., we did talk to

9 A.J. about - because that was his group, the Epstein

10 case. So, yes, I did.

11 Q Okay. Do you know when you did that?

12 A It was early on in the relationship with them.

13 Their relationship with me wasn't that long.

14 Q It was early on in the relationship, but late

15 in the actual scheme itself?

16 A Yes. And it was a way of me attempting to

17 induce them to invest further.

18 Q How about with Clockwork, Chris Podaris, did

19 you disclose any of this information to him?

20 A I don't remember who was present when we were

21 doing the Epstein case information. You'd have to check

22 with them to see who was actually had the meeting. I

23 don't recall who was there. I recall Thane Ritchie or

24 one of his representatives being there. I don't

25 specifically recall Mr. Podaris one way or the other.


Page 1918

1 But certain people from that whole group were

2 allegedly, based upon my representations, in the know

3 about certain case elements that normally I wouldn't be

4 telling people because I wanted them to believe, I was

5 telling them to draw them further into the investment

6 scam.

7 Q To your knowledge the group of people that you

8 listed from Mr. Damson to Ms. White to Simony, Glass,

9 Discala, did any of those individuals express concern to

10 you that you were breaching the agreement by providing

11 this information to them?

12 A Jedwab may have, but I don't have a specific

13 recollection.

14 The overriding theory that we had, meaning we

15 inside the conspiracy, was that people weren't concerned

16 about that breach because breaching it would have only

17 hurt themselves, that they would have been the major --

18 they would have received the brunt of the negative

19 effects of that kind of breach because they were the

20 ones purchasing the settlement and had to wait for the

21 payout. So they had no impetus to ever disclose the

22 fact they knew that.

23 And I believe that they believed in their own

24 heads, based upon the way they spoke to me and the way

25 they acted, was that that portion of their due diligence


Page 1919

1 was key to them, and they were willing to take that

2 risk.

3 Q It wasn't just a risk, it was an actual breach

4 of an agreement, correct?

5 A Yes, but that's a risk that goes with that.

6 In my real practice there were breaches of

7 confidentiality that I recall attorneys on all sides of

8 cases making. You run that risk. People run that risk

9 all the time. I remember hearing lawyers talk about

10 cases at cocktail parties that they shouldn't have been

11 discussing. You run that risk when you run your mouth

12 like that, yes.

13 Q One of the other hallmarks of the Ponzi scheme

14 that you mentioned last week was the level of interest

15 that you were paying?

16 A Yes.

17 Q Can you briefly tell me what you were referring

18 to there?

19 A Our interest rates were always exorbitant. On

20 the low side 60, 70 percent; on the high side in excess

21 of 600 percent.

22 Q Looking back at the exhibit that you have in

23 front of you right now, let's take a look at that for

24 just a moment.

25 A Sure.


Page 1920

1 Q That's a deal that you did with Coquina; is

2 that correct?

3 A Yes.

4 Q And I don't know if you remember this

5 particular deal, but you can see it's set out on the

6 first page. This is a deal where they were going to

7 invest $5 million and in the space of two months they

8 would get $10 million in return. Do you recall that

9 deal?

10 A That's the deal I have in front of me. I don't

11 specifically recall it as a separate deal, but yes.

12 Q And that would be an annualized return of about

13 600 percent, right?

14 A I'm not doing -- It's very high.

15 Q I'll represent to you that that's the

16 annualized return.

17 A My math skills have dwindled over the last two

18 years. I don't have a lot of cause to interact with

19 money.

20 Q Do you have knowledge of any other investments

21 that had a fixed stream of return that was equivalent to

22 this type of deal that you gave to Coquina --

23 A No.

24 Q -- in your experience?

25 A No.


Page 1921

1 Q And this would be yet another inducement that

2 you made to investors to draw them into deals?

3 A Sure. It was a combination of the high

4 interest rate, that this was a low to no risk investment

5 with an extremely high interest rate. You have to

6 remember, unfortunately, most unfortunately, I was an

7 extremely good salesperson. I always had an answer for

8 everything with these people. They asked me a

9 question. I always had an answer.

10 Mr. Preve and I especially were very well

11 prepared. You could tell from Mr. Boden's dealings,

12 Mr. Szafranski's dealings, the people closest to us,

13 very well prepared.

14 You can look what Mr. Adler did. He wasn't the

15 sharpest pencil in the box. But when it came to doing

16 things for the Ponzi scheme like setting up the due

17 diligence people, he did his work well.

18 It was unfortunately a very well coordinated

19 fraud, and that enabled me to fool a lot of very

20 intelligent people.

21 I think more you have to measure things based

22 upon the depth and amount of their questioning as

23 opposed to whether they believed me or not.

24 Q Who questioned you about this particular

25 interest rate at all in Coquina? Anyone?


Page 1922

1 A Early on Barry and I talked about the interest

2 rates. Kathleen White.

3 Q I'm talking about this particular deal. This

4 particular deal, 600 percent annualized return rate.

5 Who at Coquina questioned this?

6 A I don't recall whether it was this deal that

7 they questioned. I don't want to guess.

8 Q Wouldn't a 600 percent annualized return rate

9 be a red flag in your view to any sophisticated

10 investor?

11 A I think that interest rate is absurd.

12 Q Do you recall other investors where you gave a

13 large, not that particular interest rate, but a large

14 annualized return rate?

15 A Regent.

16 Q Any other investors?

17 A Ovadia Levy and his family, Ted Morse and his

18 family, Barry Lipsitz and Domenick Tonacchio. I'm

19 pretty sure I gave some pretty high interest rates to

20 some of Szafranski's people, especially Mely Lifshitz.

21 I have to look through all the deals to tell you with

22 certainty.

23 Fortunately, the papers all speak for

24 themselves with regard to what the interest rates were,

25 so we can map it out if we need to.


Page 1923

1 Q Do you remember an entity by the named OP

2 monies 2?

3 A No.

4 Q Do you remember an entity by the name of

5 Platinum Estates?

6 A No.

7 Q Do you remember an entity by the name of White

8 Oaks?

9 A No.

10 Q Do you know anyone, Mr. Szafranski or anyone

11 else, who dealt with the entities I've just named, those

12 three on your behalf?

13 A To my recollection, no.

14 Q Did you have any conversations at all with a

15 Bruce or Jim Pagano?


17 Q Do those names mean anything to you at all?

18 A The name Pagano is ringing a bell, but I don't

19 know who or if I spoke to him.

20 Q Putting aside whether you spoke to him or not,

21 what bell does it ring, if at all?

22 A As an investor somewhere, but I don't know

23 whether I heard the name before or after October or the

24 end of October 2009. And the problem now is I've heard

25 so many names over the last six days it's getting a


Page 1924

1 little more jumbled. I may have heard the name sitting

2 in here. It's ringing a bell, but a very small bell.

3 Q You don't have any independent recollection of

4 either Jim or Bruce Pagano pre end of October 2009?

5 A I don't have a recollection one way or the

6 other.

7 Q When you pitched these deals - I think you said

8 last week that you tried not to pitch them as no risk.

9 Can you tell me what you meant by that?

10 A Most of -- actually I think every one of our

11 investors at some point in time asked early on, What's

12 the risk? What can go wrong?

13 I explained to them, Well, the real risk is a

14 breach of confidentiality by the plaintiff. And then of

15 course I downplayed that saying that again the plaintiff

16 had no reason to do that and the plaintiffs were

17 terrified of the defendants and they could lose their

18 money.

19 And I made up this whole story about how we

20 gave very long, you know, no breach of confidentiality

21 speeches to our various plaintiffs and sold it that

22 way. But selling it as a no risk investment would have

23 just heightened the scrutiny we were already receiving.

24 Q You represented it as a low risk?

25 A Yes.


Page 1925

1 Q In your experience doesn't the return that you

2 get generally correlate to the risk of an investment?

3 A You mean risk versus reward?

4 Q Correct.

5 A Not in a Ponzi scheme.

6 Q Not in a Ponzi scheme?

7 A No.

8 Q Is it a red flag to a sophisticated investor

9 when you've got a 600 percent annualized return and low

10 risk that a Ponzi scheme is going on?

11 A I think it certainly requires additional

12 investigation, yes, and it is in the category of red

13 flag, yes.

14 Q You also mention that the sheer number of cases

15 as a hallmark to the Ponzi scheme. What did you mean by

16 that?

17 A I'm sorry. Could you say that again?

18 Q You mentioned that a hallmark of a Ponzi

19 scheme, and I don't know if you were saying a Ponzi

20 scheme or this Ponzi scheme, would be the sheer number

21 of cases. Did you have --

22 A I was talking about this Ponzi scheme.

23 Q And you meant by that, the number of cases that

24 you represented to investors you had in the pipeline?

25 A Yes. What had occurred was there were many


Page 1926

1 cases coming in where there was a great need by people

2 in the Ponzi scheme to generate more cash to pay the old

3 investors. So we increased the deal flow. We increased

4 the deal flow so much it started raising all kinds of

5 questions, which from my understanding raised a bunch of

6 red flags with a bunch of the investors. People started

7 asking a lot of questions.

8 Q Who raised questions about as to the sheer

9 number of cases that you were offering that you recall?

10 A The hedge funds, Mr. Scherer's clients,

11 Mr. Sochet, Mr. Lifshitz.

12 Q Barry or Mel. I get the two last names

13 confused. Who did you just refer to?

14 A Mel Lifshitz. Sorry. Barry is Lipsitz.

15 Q Got it. Okay.

16 A Which I'm certain was changed.

17 Q Mel was associated with Emmes Capital; is that

18 correct?

19 A Yes.

20 Q Any other investor entities or investors? Was

21 he associated any other investor entities or

22 individuals?

23 A I think I just realized the other day during

24 questioning that he was also attached to something

25 called El, E-L, I could be mistaken. I don't know who


Page 1927

1 else he was attached to.

2 Q Was he attached at all to an entity called

3 Utica, U-t-i-c-a?

4 A I don't know if that was him or somebody else

5 Szafranski had. He had some association with them, but

6 I don't recall what it was.

7 Q What do you remember about Utica?

8 A I just remember it was someone Szafranski

9 brought to the table.

10 Q Did you ever meet anyone from Utica?

11 A I may have. I don't have a specific

12 recollection.

13 Q Does the name Sandy Lephardt (phonetic) mean

14 anything to you?

15 A No, ma'am.

16 Q Did you tell people there was a particular

17 number of cases that you had in the pipeline?

18 A You mean at any one point in time?

19 Q Yes.

20 A Sure, there were times when I told them I've

21 got 25 of these, 10 of these. Sure.

22 Q Did you ever talk to anyone about how many you

23 had in total?


25 recollection.


Page 1928

1 Q You don't remember any upper number that you

2 represented?

3 A Not specifically.

4 Q Did anyone in the Coquina group express a

5 concern with respect to the number of cases that you

6 had?

7 A At one point in time I remember speaking to

8 Barry Damson about deal flow. He was asking me where I

9 get my cases from. He used to ask me things like, How

10 is this possible? And I would make up necessary stories

11 to keep him in the game.

12 Q What did he ask you about in terms of, How is

13 this possible?

14 A He used to say, calling me generally

15 Rothschild, say, How is this possible? I was a lawyer.

16 I'm not sure I would have done these other things if I

17 knew all this was out there. Things along that line.

18 We tried to keep the conversation light but he was

19 asking probing questions.

20 Q What were some of the probing questions?

21 A He asked me at one point in time with regard to

22 how I was getting the cases from the referral sources.

23 And he asked me to explain how I trained the referral

24 sources to possibly market these cases the way I needed

25 them marketed.


Page 1929

1 Q What did you answer?

2 A I don't recall my exact answer. I had a

3 standard pitch that I used with regard to where the

4 cases were coming from, and that is that we were

5 spending a million dollars a month plus on all kinds of

6 marketing, not directly associated with our name because

7 we didn't want to tie our name to any advertising.

8 I had Caputi at one point in time play, and I

9 don't remember whether it was with Damson or other

10 investors, play a person that owned 800 numbers and

11 websites and the like that were referring us huge

12 amounts of cases. I talked about other law firms, that

13 whole general spiel.

14 I would sometimes introduce people. If you

15 look at Mr. Szafranski's e-mails you can see that

16 Szafranski directly talks about the fact that from time

17 to time Stuart Rosenfeldt came in and we just discussed

18 general labor and employment stuff with people and then

19 also discussed the settlement deals.

20 And we used the fact that Stu was the person

21 who brought board certification to the labor and

22 employment bar of Florida. That's he's the one who

23 argued for it in front of the Florida Supreme Court, the

24 person who created the original exam.

25 All these things added to the picture we were


Page 1930

1 trying to create of this ultra successful law firm that

2 commanded just huge volumes of cases.

3 Q I recall from your testimony that the Funds

4 requested, someone in the funds requested to meet some

5 of the law firms that were feeding you, correct?

6 A Yes. Since this is an area that we've already

7 covered and we're about to get into it, do you think we

8 could take just a few minutes so I could use the

9 restroom?

10 Q Absolutely.

11 A Because it's an easy place to remember where we

12 were.

13 (Thereupon, a short break was taken.)

14 BY MS. EVANS:

15 Q You got my interest in mentioning a 1-800

16 lawyer?

17 A I didn't say 1-800 lawyer, I said 800 numbers.

18 Q Was that part of this particular scheme or

19 something else? Just tell me what you were referring

20 to.

21 A No, it was something that we had created, we

22 made up so we could explain the overwhelming deal flows

23 that we had where the cases were coming from.

24 Q I got it. Did you discuss this with Barry

25 Damson?


Page 1931

1 A I did.

2 Q What did you say to him?

3 A I don't recall specifically. I gave my spiel,

4 for lack of a better word, was basically the same with

5 everyone except where they were asking more in-depth

6 questions then I just add to what I was doing.

7 Q Do you remember investors other than Barry

8 Damson that you gave that particular spiel about your

9 pipeline to?

10 A I don't remember specifically. I remember

11 having discussions with him about the fact that I had a

12 series of basically confidential 800 numbers, not

13 directly linked to the firm, that were assisting me

14 along with other law firms that were giving me business.

15 Q Do you recall any comments that he made to you

16 with respect to that?

17 A Only that he was asking me questions about it.

18 He didn't comment one way or the other.

19 Q When you were speaking with him about this, was

20 anyone else present?

21 A Kathleen White may have been present, but most

22 of the time it was just Barry and I. I always tried to

23 limit my conversations with people to one-on-ones.

24 Q Do you remember any conversations you had with

25 Kathleen White with respect to any concerns she made


Page 1932

1 about the investments?

2 A I don't remember specific conversations, no.

3 Q Do you remember generally any conversations?

4 A I remember her asking me about the interest

5 rate. The reason I remember that is because I joked

6 around with that it just figured that a CPA would point

7 that out to me. And I gave her the same, again, pitch

8 that we used about the interest rates, that this was

9 more money than these people had ever seen in their

10 lives, that they were willing to give you substantial

11 amounts of money in order to secure their futures and be

12 done with the cases.

13 We often talked about the traumatic nature of

14 the cases and the like, how difficult they were for the

15 plaintiffs to deal with and they just wanted it over.

16 Q Do you recall Barry Damson saying to you, I'll

17 make you richer?

18 A Yes.


20 A One of the ways that Barry would try to draw me

21 in was by telling me that being in business with him, so

22 to speak, doing these deals with that him, that as the

23 relationship developed, that so long as things went all

24 right that he could assist me in developing this into an

25 even bigger business because of his access to extremely


Page 1933

1 high-powered, well-known people in the financial world.

2 Q Did he take any actions to assist you in making

3 this a bigger business?

4 A There was one point in time when we were in my

5 office and there was another gentleman associated -

6 can't remember his name - the guy he shared office space

7 with, another very well-known financier. And there was

8 a question that had come up just regarding the financial

9 world in general. I remember him calling him to seek

10 his advise, but other than that I don't remember

11 anything specific.

12 Q Was this gentleman in New York, Connecticut, do

13 you remember where the gentleman was that he called?

14 A I thought the office was in New York.

15 Q Okay.

16 A If you the person's name, I'd probably remember

17 it or his position, it was a fairly high powered

18 position.

19 Q Do you think there's some document that might

20 refer to it or an e-mail?

21 A There might be. I'm really guessing,

22 Ms. Evans.

23 Q Okay. I'm at the Tucker Craig school if you

24 can avoid guessing we're probably both better off.

25 A I agree.


Page 1934

1 Q Do you recall whether anyone among the Coquina

2 investors did any due diligence with respect to where

3 you got your cases from?

4 A Other than asking me, I don't know what they

5 did. I had always - my impression was that the answer

6 is yes.

7 Q But, you don't have any particular fact to back

8 that up?

9 A I do not.

10 Q Let's shift for a moment to Mel Lipsitz. You

11 mentioned him. He's associated with Emmes Capital?

12 A Lifshitz.

13 Q Can we call him Mely?

14 A If you just call him Mely I'll know who you're

15 talking about.

16 Q My question to you is, how did you first meet

17 him?

18 A My recollection is that I met him through Mike

19 Szafranski.

20 Q He was a friend of Mike Szafranski?

21 A I don't know if he was a friend, somewhere

22 along the line Mr. Szafranski brought him into the mix.

23 Q Do you remember when?

24 A I do not.

25 Q Where did he live? Where did Mely live?


Page 1935

1 A I believe he lived in New York.

2 Q Was there an incident at some point in time

3 where someone tried to find out about a balance in an

4 RRA account through a New York TD Bank branch?

5 A Yes.

6 Q Can you tell me about that?

7 A That's what I was told.

8 Q Who told you that?

9 A Mely.

10 Q Mel himself told you?

11 A Mely and Mike Szafranski told me first.

12 Q Let's start with Mike Szafranski then, what did

13 he tell you and when?

14 A I was in New York, I was sitting in the car

15 that was taking us - we had just landed. I received a

16 panicked telephone call from Mr. Szafranski. It was

17 crazy panic in his voice and he was saying Mely knows

18 there's no money, somebody went into the bank, there is

19 all kinds of problems, he's pulling out of all the

20 deals. It was crazy.

21 I told Mike to calm down. I said, I'll handle

22 it. Tell Mel I'll be calling him. I called Mel and I

23 spun it on him.

24 Q You what?

25 A I spun the entire scenario on him.


Page 1936

1 Q What do you mean by that?

2 A I called him up and I asked him what was going

3 on, and to the best of my recollection I asked him if he

4 was out of his mind sending someone into a bank to

5 attempt to access my information. I said, do you know

6 what kind of red flags this will send up, do you know

7 what kind of problems you're causing me at bank, I'm

8 already getting calls from the bank. I spun it on him,

9 turned it around on him.

10 I said, you could blow this whole thing up, a

11 perfectly good investment strategy that a lot of people

12 are making a lot of money on, you single handedly may

13 have destroyed it.

14 And after that I said, I'm sure there's an

15 answer to the information that you received. I'm

16 certain that there's an explanation. My recollection is

17 that I then had someone from TD Bank - and you'll have

18 to check the e-mails to see who - send me an e-mail that

19 basically explained the way how the balance could have

20 been what it was because it was a locked account,

21 something to that effect.

22 But I did turn the thing around on Mel and it

23 went away.

24 I then created a bunch of, subsequent to that,

25 I created a series of fake e-mails from TD Bank saying


Page 1937

1 the people were getting suspicious of us given what

2 occurred at the branch, that kind of stuff, and

3 I forwarded those e-mails ultimately to Mel to back him

4 down and to prevent that from ever happening again.

5 Q Do you recall falsifying an e-mail from Frank

6 Spinosa saying I can't have people marching into the

7 bank like this?

8 A I believe it was Mr. Spinosa. If you show me

9 the e-mail I can tell you for certain, but that's my

10 recollection.

11 Q Now, you said - I don't want to misstate what

12 you said, but you referred to information that Mel had

13 received.

14 MR. SCHERER: Excuse me, can you get that last

15 question and answer read back?

16 MS. EVANS: Yes, please.

17 (The pending question was read back by the

18 court reporter.)

19 MR. SCHERER: Object to the form of that

20 question.

21 MS. EVANS: I'm going to ask you to read it one

22 more time.

23 (The pending question was read back by the

24 court reporter.)

25 BY MS. EVANS:


Page 1938

1 Q I want to make clear what my question was and

2 then you can make clear what your answer was. I was

3 asking you, do you recall you creating a fake e-mail

4 that appeared to be from Mr. Spinosa which you then

5 forwarded to Mel?

6 A There was a fake e-mail that either I created

7 or I created with the help of Deb or one of my I.T.

8 people that I then forwarded. My recollection is that

9 it would have been someone at Mr. Spinosa's level. I

10 don't know whether I used the name of some cash

11 management guy, there was somebody named Palo Costabon

12 (phonetic) or something. I recall seeing his name

13 someplace. So, I'm a little vague as to who -- I did

14 create a fake e-mail containing a very business like

15 rant from someone high up within TD Bank in order to

16 back these people off.

17 There was no, as far as I could tell, there was

18 no real suspicion on behalf of TD Bank, although I did

19 at least learn from Mr. Szafranski and from Mr. Lifshitz

20 that one of his investors did in fact attempt to achieve

21 our account balances by walking into a TD branch

22 somewhere in New York, trying to make a deposit into our

23 account and then asking for the balances, if it was that

24 person's own account.

25 Q Now, what panicked Mel?


Page 1939

1 A No, it didn't panic Mely, it panicked

2 Mr. Szafranski.

3 Q But, prior to Mr. Szafranski was Mel concerned

4 at all? You referred to information that he had

5 received.

6 MR. CUSICK: Objection to the form on behalf of

7 Emmes Capital.

8 THE WITNESS: To me, Mel appeared concerned

9 that there were insufficient funds in the trust

10 account.

11 BY MS. EVANS:

12 Q And how did that concern generate, if you

13 know? Where did he -- how did he develop that concern,

14 if you know?

15 A That's what I just said, put it altogether. It

16 is my understanding that from speaking to Mr. Lifshitz

17 and from speaking to Mr. Szafranski that one of Mel's

18 investors, Mely's - Mely Lifshitz's investors, had gone

19 into a branch of TD Bank in New York, made a small

20 deposit, and at that time requested our balance which

21 was significantly less than what was supposed to be in

22 there. That created the alarm because we were telling

23 him that there were millions of dollars in the account

24 when there was not. He was relying on that statement to

25 invest.


Page 1940

1 Q Did it ever come to your attention that Mel

2 Lifshitz had created - had conducted any kind of fraud

3 prior to you meeting him?

4 MR. CUSICK: Object to the form.

5 A This is the first I'm hearing of it.

6 Q Have you ever been told that he was disbarred?

7 A News to me. That is news to me.

8 Q Okay.

9 A I was never told that.

10 Q Has anyone ever told you that he committed tax

11 fraud?

12 A No one has ever told me that.

13 Q Are you familiar with Sandy Lephardt, I asked

14 you that, correct?

15 A Yes, you asked me that, I don't recall who that

16 is.

17 Q Solomon Eisenberg?

18 A I don't recall that name.

19 Q Is the name Howard Weiss familiar to you?

20 A That's more familiar but I have no idea why.

21 Q Do you recall that you know a Howard Weiss or

22 you met a Howard Weiss?

23 A I don't recall one way or the other.

24 Q Natalie Turetsky, does that same name sound

25 familiar to you?


Page 1941

1 A Yes.

2 Q Tell me what you know about her?

3 A She at the time worked for Mr. Szafranski's

4 company, one of his companies, and was married to a

5 gentleman by the name of Matthew Turetsky.

6 Q Did you have any dealings with her with respect

7 to the investments?

8 A If they were they were minimal.

9 Q Do you remember what company of

10 Mr. Szafranski's she was associated with?

11 A It was either ABS or Onyx, I don't know which

12 one, could have been both.

13 Q Where was she located, to your knowledge?


15 Q I diverged from my path a little bit. I want

16 to get back for a minute to the other hallmarks of the

17 Ponzi scheme.

18 A Okay.

19 Q I don't believe you put in your list, but let

20 me ask you, would errors in deal documents be

21 potentially a hallmark for a Ponzi scheme?

22 UNKNOWN SPEAKER: Objection to form.

23 A In my opinion, yes.

24 Q I do believe you testified last week that deal

25 documents did - some deal documents did have errors in


Page 1942

1 them, correct?

2 A Yes.

3 Q And I don't want to march you through all of

4 those, I just want to talk about a few if we can do so

5 for a minute.

6 Exhibit 233 is numbered SWRTD 000675 through

7 711. This is another deal that you did with Coquina

8 investments, correct. S26, you'll see on the first page

9 there?

10 A Correct.



13 BY MS. EVANS:

14 Q This is a letter that you signed dated June 1,

15 2009?

16 A That's not my signature.

17 Q Who signed it?

18 A One of my co-conspirators.

19 Q Do you know which one signed it?

20 A Could have been any number of people.

21 Q If you will turn to the -- hold on let me get

22 it for you. The page that is labeled 000683 on the top

23 right-hand corner. You'll see the heading,

24 consideration.

25 A Yes.


Page 1943

1 Q What I would like to point your attention to,

2 I'm going to read the first sentence here out loud. I'm

3 going to read the whole thing actually. Let me start

4 with, "Within 24 hours" and it's blacked out, "receipt

5 of this agreement from," redacted "signed by her"

6 redacted "agreed to wire transfer to Rothstein,

7 Rosenfeldt, Adler trust account" paren "in accordance

8 with wire transfer instructions to be provided." End

9 paren, $1,438,500, end paren. Can you read that amount

10 out loud?

11 A 1,438,000 -- no, let's see. $1,438,000,500.

12 Q Is that an error?

13 A Yes.

14 Q Did Coquina ask you about that?

15 A I don't recall that.

16 Q Do you recall if they asked anyone about that

17 particular number?

18 A I don't recall them asking anyone, no, ma'am.

19 Q Did any investment deal that you do involve a

20 return of billions of dollars?

21 A In a single investment, no.

22 Q That could have been a red flag to an investor,

23 would you agree, that error?

24 A The way I looked at errors in documents was,

25 that if they were repeated errors, especially in amounts


Page 1944

1 that were not caught, that would be a red flag. I

2 certainly think it was a red flag from the perspective

3 of believing that a defendant signed off on it and

4 didn't catch it; the Plaintiff signed off on it and

5 didn't catch it; we signed off on it and didn't catch

6 it.

7 Q So --

8 A So from that frame of reference, yes, red flag.

9 Q Going back for just a minute to the first deal

10 that we looked at, the ten million dollar deal?

11 A Exhibit 232?

12 Q Sorry, what?

13 A Exhibit 232?

14 Q Probably.

15 A 1357 across the top, right?

16 Q Perfect. If you look on Page 1363 in the top

17 right-hand corner.

18 A 1363.

19 Q Again, under consideration: Was there another

20 number error in that third line to the right? I noticed

21 that the number is actually crossed out.

22 A Yes, there's a number there and looks like the

23 correction and initials are crossed out.

24 Q And then looking down at the bottom of the page

25 in Section B, where it says: Three, that appears to be


Page 1945

1 crossed out and the word two?

2 A Yes.

3 Q Another error in another Coquina deal document?

4 A Yes.

5 Q And are those initials of someone beside the

6 word two that's written in there?

7 A Yes, the two is my handwriting, so it looks

8 like my initials scribbled off to the left. I don't

9 know what that is off to the right. Either me

10 scribbling some fake initial or me having someone else

11 write a fake initial.

12 Q If you could turn the page for just a minute,

13 under confidentiality, do you know why the words 'for

14 existence' at the top of that page are circled?


16 Q Do you know if that was an error of some sort

17 or a question raised by anyone?


19 Q Give me just a minute, please. I'm going to

20 mark as Exhibit 234 a document that's Bates labeled

21 Coquina 000902. I'll give you a minute to look at

22 that. The e-mail I'm most concerned with --

23 A Give me one second to read this top thing and

24 I'll be right with you.

25 Q Tell me when you're ready.


Page 1946

1 A Okay.



4 BY MS. EVANS:

5 Q At the top the first e-mail appears to be from

6 Kathleen White dated June 22, 2009. And it's to

7 Kathleen White, Al Jones, Barry Damson, Ben Wallace,

8 Christina Hawn, George Hawn, Kathleen White, again,

9 Melvin Klein, Patricia Hawn-Wallace. And it says: "Oh,

10 yes, I forgot to mention one significant item, Michael's

11 original e-mail stated that the 1.4 million deal would

12 pay back two million over five months. The Promissory

13 Note calls for four months of 500,000, rather than five

14 months of 400,000. I made the assumption that Michael's

15 original e-mail was wrong and that the Promissory Note

16 signed by Scott was correct. Oh shucks."

17 This was another Coquina mistake, to your

18 knowledge?

19 A Our mistake, Coquina catching it, yes.

20 Q Do you recall what the resolution of that was,

21 if there was a resolution?

22 A I'm sure we corrected it one way or the other.

23 I have no independent recollection.

24 Q If you turn to the next page it says at the

25 top: "I prepared and attached a schedule" -- actually I


Page 1947

1 should identify it. This is, again, an e-mail from

2 Kathleen White on June 22, 2009. "I prepared and

3 attached a schedule reflecting the payments due as per

4 the agreement, as 31 did not fund today due to

5 documentation issues. I am assuming that will be

6 corrected and funded tomorrow."

7 Does this mean S31 didn't fund on time; is that

8 what she's concerned about?

9 A I've never seen this e-mail before today. It

10 is my opinion that's what it says, that there was a

11 documentation issue so they weren't funding it until it

12 was corrected.

13 Q Do you recall any investor at Coquina raising

14 issues about deals not funding on time?

15 A I have a recollection of about Barry Damson

16 chastising me about getting the documents right; other

17 than that, no.

18 Q This was June 22, 2009, that was pretty early

19 in the relationship?

20 A I don't recall exactly when the relationship

21 started but it sounds like an early period of time.

22 Q Do you recall that they were still investing --

23 A I'm guessing.

24 Q Sorry, I didn't mean to interrupt you.

25 Do you recall that they were still investing as


Page 1948

1 of September 2009?

2 A I don't recall when they started or stopped.

3 Q I wanted to go back for just a minute to deal

4 154, S154 on Page 1363. The 1,300,000 we discussed a

5 minute ago that's crossed out?

6 A Yes.

7 Q Was that supposed to be your attorneys fees?

8 A That's not what is supposed to be there.

9 What's supposed to be in that -- what's supposed to be

10 where that 1,300,000 number is, is supposed to be what

11 we referred to days ago as the magic number that Deb

12 created being the total amount of the deal, total to

13 Plaintiff, plus our attorneys fees and costs. That

14 should have been a much higher number.

15 Q Did you waive attorneys fees with this

16 agreement; do you recall?

17 A It's possible.

18 Q Why would you have done that?

19 A In order to make it appear that I was capable

20 of giving more money over to the defendants or to make

21 it appear that I was giving something up. Excuse me,

22 not to the defendants, to the investors. To make it

23 appear.

24 Q Induce --

25 A Another inducement.


Page 1949

1 Q Exhibit No. 235 is an e-mail from Kathleen

2 White. Actually let me give you the Bates number

3 Coquina 1376 through 1413. I'm really not going to --

4 you have the opportunity, of course, to read as much of

5 this as you want. I'm going to focus on the first

6 page. Let me know when you're prepared.

7 A Let me just take a look at the first page.

8 Okay.



11 BY MS. EVANS:

12 Q I want to refer to the second e-mail on that

13 first page from Michael Szafranski to B. Damson. I

14 assume it's Barry Damson and Kathleen White. It says:

15 As follows, "these are your docs" ellipses "turns out it

16 is 800 for 1.2 million" ellipses "means an extra 75K for

17 each guy. I will fax very shortly."

18 Do you recall what that is referring to?

19 A I do not.

20 Q Does it appear to you from this e-mail that

21 there was some sort of mistake made which permitted

22 Coquina to get an extra 75K in their deal?

23 A I would be speculating but that's what it

24 appears to be.

25 Q Do you recall at any point in time Coquina


Page 1950

1 returning 75K to you or Mr. Szafranski or anyone saying

2 this was a mistake, we got too much money?

3 A No.

4 Q One Coquina investor I wanted to ask you a few

5 questions about is Mel Klein. You had occasion to

6 interact with Mr. Klein?

7 A I did.

8 Q Did he express any concerns about or suspicions

9 about the investments?

10 A He did.

11 Q Can you tell me what he told you?

12 A To the best of my recollection he was actually

13 what I would term the most voracious questioner out of

14 all the Coquina people. He and I had a lunch together

15 at Bova where he questioned me about the investment the

16 entire time we were sitting there. Is was mostly

17 questions I had heard before but he did run through the

18 litany of deal flow, how the deals come about, how we go

19 about settling them, our investigative team, what they

20 do. It was mostly standard fair, but it was wide

21 ranging and it lasted practically the entire lunch.

22 Q When was that?


24 Q Do you recall if it was early in the

25 relationship that you had with Coquina?


Page 1951

1 A You have to check the e-mail chain to see when

2 Mel was introduced to this. My recollection is that it

3 was fairly early on but I don't recall specifically.

4 Q Do you recall how Coquina came to your

5 attention or came to RRA?

6 A They were brought to me through Mr. Szafranski

7 and I believe that was brought to Mr. Szafranski through

8 Ira Sochet.

9 Q Do you know if Mr. Klein and Mr. Sochet were

10 friends?

11 A I believe they were.

12 Q Perhaps long time friends?

13 A Yes, I remember actually that they were sort of

14 competitive about their financial situation.

15 Q How were they competitive?

16 A They seemed to have a, for lack of a better

17 term, a brotherly love-hate relationship when it came to

18 making money. They both wanted to see each other make a

19 lot of money but they always wanted to make more money

20 than the other guy.

21 Q Do you recall if Coquina actually entered its

22 first deal along with Mr. Sochet?


24 Q What else did Mr. Klein ask you about at that

25 lunch; what specific do you remember?


Page 1952

1 A Just what I've already told you. I don't

2 remember anything else at this moment.

3 Q Did he seem satisfied with your answers; do you

4 recall?

5 A I remember me feeling like he wasn't completely

6 buying it. Of all the people -- I met with Barry

7 Damson, I met with Ms. White, I met with Mr. Klein, and

8 for some reason as I'm sitting here today I recall him

9 being the most skeptical.

10 Q Do you recall whether you took any actions to

11 make him less skeptical?

12 A I would be guessing.

13 Q Do you recall at some point in time setting up

14 an arrangement for any of the Coquina investors to

15 witness - I'm sorry, to signing of an agreement, one of

16 the deal docs?

17 A The Coquina people?

18 Q Um-hmm.

19 A Yeah, I did that with Barry Damson, Kathleen

20 White and Steve Caputi.

21 Q Was that arranged due to any skepticism on

22 their part expressed to you?

23 A Barry had told me that he was getting a lot of

24 pressure from his other investors, from the Hawn

25 Brothers, et cetera, about needing increased due


Page 1953

1 diligence. And that getting this whole plaintiffs

2 signing thing in front of him to occur would open the

3 gates to substantial additional investment.

4 Q Did he explain to you how he thought that would

5 happen?

6 A Just that it was a linchpin to him that - let

7 me say it this way. What he explained to me was that

8 him seeing a Plaintiff actually sign the documents,

9 watching me go through it was key to him being able to

10 represent to the other investors in Coquina group that

11 he had a sufficient comfort level with the investment

12 that he could recommend significant future financial

13 investment in the investment strategy.

14 Q Did he tell you anything more specific about

15 the pressure that he was feeling?

16 A The only thing he said to me was that if we

17 weren't able to do it he couldn't guaranty there would

18 be anymore funds from Coquina.

19 Q So you made it happen?

20 A I did.

21 Q Did you ever meet George Hawn?

22 A No.

23 Q Did you ever correspond with him that you

24 recall?

25 A Not to my recollection.


Page 1954

1 Q Do you recall anyone in the Coquina investment

2 group expressing concerns Mr. Hawn may have had with the

3 investments?

4 A Only what I just talked about with Mr. Damson,

5 I don't recall anything else.

6 Q Did you ever meet Ben Wallace?

7 A If I did I don't remember it.

8 Q So Mr. Damson expressed to you that this was

9 another step in his due diligence?

10 A Told me it was a key to continuing the

11 relationship and to increasing the relationship.

12 Q Did that signing of the agreement in front of

13 Mr. Damson and Ms. White occur in your office?

14 A It did.

15 Q Where in your offices?

16 A At my conference room table in my office.

17 Q Who was there?

18 A Me, Barry Damson, Steve Caputi, and I seem to

19 have vague recollection of Ms. White being there but I

20 can't be certain one way or the other.

21 Q How many times did you meet Ms. White?

22 A Once or twice. I don't recall anything more

23 than once or twice.

24 Q In Florida each time?

25 A In Florida.


Page 1955

1 Q Okay.

2 A May have been once.

3 Q Do you recall if she took notes any of the

4 times that you met with her?

5 A I recall her taking notes.

6 Q What do you recall -- when do you recall that

7 happening?

8 A I recall when we were sitting, not at my

9 conference room table, but Mr. Damson and Ms. White were

10 sitting in the guest chairs in front of my desk that

11 Ms. White was writing certain things down.

12 Q I think you mentioned that there was a meeting

13 where Frank Spinosa actually met in your offices with

14 Ms. White and Mr. Damson as well?

15 A No, he met at the Cypress Creek office with me,

16 Mr. Damson and Ms. White.

17 Q Thank you. You're right, I was wrong. I

18 appreciate you correcting me.

19 A That's okay.

20 Q Do you recall if Ms. White took any notes at

21 that meeting?

22 A That's not sticking out in my head. I don't

23 remember one way or the other.

24 Q At that meeting was it you, Ms. White,

25 Mr. Damson and Mr. Spinosa?


Page 1956

1 A Yes.

2 Q And no one else came in or out of the room?

3 A I don't have a recollection of anyone wandering

4 in and out.

5 Q Other than the one lunch that you had with Mel

6 Klein where he expressed concerns, do you recall any

7 other instances where he expressed concerns about the

8 investments?

9 A I seem to recall a telephone conversation that

10 I had with him, I don't remember whether it was prior to

11 meeting with him or subsequent to, where he continued to

12 ask me questions and I continued to get the feeling that

13 he was either suspicious or less than sold on the idea.

14 And I recall Mr. Damson telling me that Mel was being a

15 pain in the ass.

16 As a matter of fact, I seem to recall an

17 instance where Mel had told me he was in a deal, where

18 he was in a deal and then at the last minute wasn't

19 going to be in the deal. I have to check the e-mails to

20 be certain.

21 He was in a deal and bailed on a deal and then

22 I had to run around and get Ira Sochet to jump in for

23 five million of additional investment, something crazy

24 was going on. I have to check the e-mail chain to tell

25 you for certain.


Page 1957

1 Q Do you recall if Mr. Klein came back into that

2 deal again?


4 I seem to recall Ira Sochet attempting to

5 convince him to come back into the deal but I don't know

6 if that actually happened.

7 Q I apologize, I think I only have one copy of

8 this document, but it's a 236 and it's Trustee TD 290.

9 It's an e-mail from Michael Szafranski to Scott

10 Rothstein and it's dated August 18, 2009. And since I

11 don't have the document, do you mind reading out the

12 text of the first e-mail there?

13 A When you say first you mean top?



16 BY MS. EVANS:

17 Q Yes, you're right, it's actually probably not

18 the first.

19 A From Michael Szafranski, Tuesday August 18,

20 2009, 7:07 a.m. Scott Rothstein subject: Can't sleep.

21 "I told you Ira will respond, maybe Klein and Hawn can

22 combine for 5 mil. Let's make Damson guilt Mel and Hawn

23 into doing half. I will be by you as soon as your guy

24 drops me off at Ben's. Love you, Mikey.

25 Q Does that refresh your recollection that


Page 1958

1 Damson -- strike that.

2 To your knowledge did Damson do anything to

3 guilt Mel into investing?

4 A I don't know whether he did or didn't. It's

5 what apparently Mike's idea for our plan was, but I

6 don't know one way or the other.

7 Q Do you know if this was the instance that you

8 were trying to recall?

9 A Yes, this seems like it because I see down

10 below I'm saying less than kind things about Mel.

11 Q What are you saying about Mel there, if you can

12 read it?

13 A Says Mel is an asshole to treat me this way. I

14 have done nothing other than make him money, now he puts

15 my entire life on the line. Not right, live and learn.

16 Q Were you fond of Mel?

17 A No.

18 MR. LaVECCHIO: Which Mel is that?

19 THE WITNESS: We're talking about Mel Klein.

20 All these references to Mel are Mel Klein.

21 MS. EVANS:

22 Q Do you recall what Mel Klein's concern was at

23 that point?

24 A I don't, but as I said, I always felt like he

25 was skeptical.


Page 1959

1 Q But not skeptical enough to stop investing; is

2 that correct?

3 A Sorry, say that again.

4 Q But not so skeptical that he stopped investing;

5 is that correct?

6 A I don't know whether he stopped or not. I'd

7 have to see the deal docs to tell you.

8 Q Can you remind me of the date of that e-mail?

9 A August 18, 2009.

10 Q Okay. You have it in front of you a deal

11 document S514 for Coquina dated September 25, 2009.

12 Does that refresh your recollection that Coquina

13 continued to invest?

14 A Coquina was investing, but here's the thing, it

15 was my understanding from speaking to Mr. Damson that

16 every deal was presented to the entire Coquina group of

17 investors and then the individual investors: Mel Klein,

18 Barry Damson, the Hawns, whoever else was investing had

19 the right to opt in or sit this one out.

20 Q Sometimes you would have a certain group of

21 investors individually who would determine if they

22 wanted to invest and for another investment it might be

23 a different group?

24 A That was my understanding.

25 Q Was it your understanding that Coquina really


Page 1960

1 served as a pass-through the entity itself?

2 A I don't know what that means.

3 Q Okay.

4 A Or how you're using that.

5 Q Well, an entity that simply the money went

6 through as opposed to Coquina having a body of investors

7 that each time invested?

8 A It wasn't set up -- it was my understanding it

9 was wasn't set up like a fund, it was done on a per deal

10 basis. It was presented to all of the members of

11 Coquina and then, again, people either decided yes, I'm

12 in for this one or I'm not in and it could proceed with

13 one of the Coquina investors or all of the Coquina

14 investors or some mixture of that.

15 Q I may have missed you saying this, let me make

16 sure I understand it, was it Mr Damson that explained

17 this to you?

18 A Yes.

19 Q Mr. Damson explained to you was basically that

20 each individual made his or her own investment decision?

21 A The way he explained it to me was it was

22 presented to the entire group, I don't know how they did

23 that, I don't think they had a meeting - but it was

24 presented to the entire group, they discussed it amongst

25 themselves and then different people made their own


Page 1961

1 decision.

2 Q Was Barry Damson part of that investment group

3 or outside of it, to your knowledge?

4 A I always believed he was part of it. I don't

5 know one way or the other for certain.

6 Q Do you recall if Mr. Damson had lost any money

7 as a result of the investments that he made through

8 Coquina that he made with your invest -- with your

9 scheme? I'll strike that and start again.

10 A Okay.

11 Q Do you know whether Mr. Damson lost any money

12 through your scheme personally?

13 A The only thing I know is that Coquina lost

14 money. I can't tell you with any certainty which of the

15 members of Coquina were actually the net losers.

16 Q When you say net losers, how are you using that

17 term?

18 A Meaning that they never even got back their

19 principle, all of their principle.

20 Q Have you been made aware that the Trustee sent

21 a demand letter to Coquina claiming that it had

22 committed criminal usury?

23 A I was not aware of that.

24 Q A lot of the deal packages, I don't know if

25 all, but some of the deal packages included promissory


Page 1962

1 notes?

2 A Yes. We talked about that earlier.

3 Q What was the purpose of the promissory note in

4 the deal packet?

5 A To the best of my recollection it was a

6 remanent of prior deals that just ended up getting stuck

7 there. I always looked at it as an additional form of

8 security for the investor. I don't know what they

9 thought it was.

10 Q "They," being the investors?

11 A Yes.

12 Q Do you recall any investors asking for a

13 promissory note as part of the deal packet?

14 A Yes.

15 Q Which investors?

16 A Preve wanted to leave it in there. The Levy

17 family that was really one of the only documents we used

18 with them. Lipsitz and Tonacchio because that was the

19 only document we used with them. Morse had asked me for

20 a promissory note on a couple occasions, that he needed

21 documentation for his auditors. I don't specifically

22 recall any others. There may have been.

23 Q When you say a remanent, a remanent from what?

24 Earlier structured settlement deals or something else?

25 A There were never structured settlement deals.


Page 1963

1 Earlier when we started this, if you recall,

2 they were all done as bridge loans, some form of that.

3 At least that's what we were calling them. And the only

4 document in existence at that point in time was

5 promissory notes.

6 Then at the time I did the first deals with the

7 Levin family, not through Banyon, but with George and

8 his wife, the first bunch of deals that I did with them,

9 my recollection is there was a promissory note there.

10 Then when Frank Preve and I started putting the

11 comprehensive package together with the settlement

12 agreement and all the purchase to transfer agreements,

13 sale and purchase agreements, for whatever reason we

14 left the promissory note in there. It became part of

15 the package.

16 Q To your knowledge did it give investors yet

17 another piece of security in knowing that they had a

18 promissory note?

19 A That is the way I looked at it. What they were

20 thinking, I would be speculating.

21 Q Did you view it as yet another inducement to

22 the investors to enter into the deals?

23 A I did.

24 Q These promissory notes represented loans to

25 your law firm?


Page 1964

1 A They didn't really. But if you look at the

2 promissory note, that's certainly what it says.

3 Q To your knowledge would it be unethical to loan

4 a law firm money as an investor?

5 A I don't know.

6 Q Would it be illegal to do so?

7 A I don't know. I don't know who I would be

8 precluded from as a law firm. I would think that if a

9 law firm wanted to take out a loan from an individual,

10 it could. Just like it could borrow money from a bank,

11 why not an individual investor.

12 I don't know if I would be precluded from

13 taking out a loan from a client I was doing business

14 with, although that doesn't seem like there would be a

15 preclusion there because if I'm representing TD Bank,

16 for example, I could certainly also do a loan with TD

17 Bank.

18 Q Did any investors to your knowledge raise any

19 questions with you about the promissory notes?

20 A I don't have any specific recall one way the

21 other.

22 Q Do you recall if any investor expressed concern

23 about the provision of the promissory notes?


25 Q I want to return very briefly, and I will do


Page 1965

1 this very briefly, I promise you, back to a document you

2 have in front of you for deal S26. And I don't recall

3 which exhibit it is.

4 A Can you give me a Bates number?

5 Q Maybe I didn't give it to you. It starts off

6 in the lower right-hand corner Coquina 000679. Did I

7 fail to give that one to you?

8 A I don't have that.

9 MS. EVANS: Okay. We'll mark that then as 237,

10 and it is Coquina 679 through 715.



13 BY MS. EVANS:

14 Q I'm going to be referring you to Page 681. And

15 Mr. Schnapp had asked you about this provision earlier,

16 but I wanted you to actually have the opportunity to see

17 it. It's labeled Defense Agreement.

18 A 681? That's not the Defense Agreement.

19 Q Okay.

20 A 677, if we're looking at the same packet.

21 Q Did I give you 679 through 74 --

22 A I'm sorry. I'm looking upper right. You're

23 looking lower left. 681.

24 Q Okay. You're right, it's 677 as well. Okay.

25 Can you just read that paragraph out loud,


Page 1966

1 please?

2 A "By signing below, Scott W. Rothstein as

3 chairman and CEO of RRA hereby agrees and acknowledges

4 that should the plaintiff or defendant in that

5 settlement known by RRA tracking numbers S26 file any

6 action against any of the funding entities participating

7 in these settlement purchases known by RRA tracking

8 number S26, that the law firm of RRA shall provide a

9 defense to those funding entities at no expense to those

10 funding entities named in such lawsuit, whether

11 initially named or named as a party at any time

12 thereafter.

13 For or the law firm: Rothstein, Rosenfeldt,

14 Adler. Scott W. Rothstein, Chairman and CEO."

15 And someone had signed by scribble.

16 Q Were you of the belief that you could do what

17 is described in that paragraph?

18 A I didn't think about it one way or the other.

19 As I testified earlier, if someone asked for it, then we

20 provided it. If it was going to stand in the way of

21 funding, we were going to try to give them everything

22 they asked for.

23 Q Did any investor to your knowledge ever

24 question that paragraph, whether it could actually be

25 implemented?


Page 1967

1 A I don't recall anyone asking me about it one

2 way or the other, other than to include it.

3 Q Do you recall telling any Coquina investor that

4 you were acting on both the interest of the plaintiff

5 and the defendant and including this particular

6 paragraph or provision?

7 A That doesn't sound familiar to me.

8 Q Would this paragraph be a red flag in your

9 view?

10 A As I sit here today looking at it, no. It

11 doesn't really do anything for me one way or the other.

12 Q As you're sitting here today do you think that

13 an attorney could do what is described in this

14 paragraph?

15 A No, I don't think an attorney could have done a

16 lot of the things that were going on in this. But it's

17 not -- I guess the reason I'm saying, no, not red flags,

18 it's just not as glaring to me as some of the other

19 things that were going on. So, perhaps my perception of

20 it is stilted.

21 Q Did any investor ever question how you could

22 adequately represent a plaintiff in these deals and at

23 the same time be negotiating down the amount the

24 Plaintiff would take?

25 A Yes.


Page 1968

1 Q Who?

2 A To my recollection every investor we brought in

3 except for -- I don't recall whether Mr. Preve ever

4 asked me that, but pretty much every investor at one

5 point in time or another.

6 Q And you were able to satisfy each investor?

7 A Sure.

8 Q -- as to that?

9 A I was.

10 Q If you look at the back of this document you'll

11 notice, the very last page, I believe, it's signed by

12 Kathleen White.

13 A Yes.

14 Q If you look at S154, and I believe I also gave

15 you -- Did I give you S13(B)?

16 A I have S13(B).

17 Q Look at the last pages of both of those

18 exhibits. Neither of those are signed by Kathleen

19 White; is that right?

20 A It's not the last page in S13(B). It has to be

21 buried in here somewhere. The copy that I'm looking

22 at -- Maybe it's on another page. Hold on.

23 Q The last page of S13(B) should be Coquina 751.

24 Do you have that?

25 A No. Maybe there's another one. Hold on a


Page 1969

1 second. I have S154 here.

2 Q Let's look at --

3 A I have S26.

4 Q So you don't have S13(B)?

5 A I do, but it's not set up in the same that

6 order you're talking. About I have S13.

7 Q What is the last page on the bottom right?

8 A This is S13(B). And the last pages are

9 Settlement Agreement.

10 Q What is the Bates number? You're looking at it

11 attached to an e-mail, aren't you?

12 A Yes.

13 Q Let me mark the full agreement, I think those

14 are the papers that Michael Szafranski attached to the

15 e-mails. This is going to be 238, and it is S13(B),

16 Bates number Coquina 716 through 751.

17 A Okay.



20 THE WITNESS: Okay.

21 BY MS. EVANS:

22 Q We've established that S26 is signed by

23 Kathleen White. And a lot of effort for a very small

24 question. But in looking at S13(B) and S154, those

25 agreements are not signed by Coquina, are they?


Page 1970

1 A No. This copy has no signature under Coquina

2 Investments.

3 Q Do you know if other than deal S26 Coquina ever

4 signed any other of the deal packages, do you recall?

5 A Any parts of it? I'm looking at another page

6 in here.

7 Q I mean the last page.

8 A No. In this deal, which is S13(B), it looks

9 like George Hawn signed as managing partner on some of

10 the pages, but nobody signed on this last page.

11 Q What Coquina investors are you aware of who

12 reviewed these deal documents, any of the deal

13 documents?

14 A I don't know who was responsible at Coquina for

15 reviewing the documents.

16 Q I want to shift gears for a moment and ask you

17 a few different questions in a different subject

18 matter. You've made clear in your testimony that you

19 believe that Mr. Spinosa was a player, I believe you

20 said. And my question to you is: What other

21 individuals did you inform at the time of the scheme

22 that you thought Mr. Spinosa was a player?

23 A Mr. Rosenfeldt, Mr. Preve, Mr. Boden,

24 Mr. Szafranski. I don't recall anyone else at this

25 time. There may be more.


Page 1971

1 Q Let's start with Mr. Rosenfeldt. Do you recall

2 when you informed him that you thought Mr. Spinosa was a

3 player?

4 A I don't recall the time frame, but I recall the

5 conversations that we had, yes.

6 Q Same question for Mr. Preve, do you recall

7 when?

8 A No, ma'am.

9 Q Same question for Mr. Boden.

10 A I'm sorry?

11 Q Same question for Mr. Boden.

12 A I don't recall when the conversation would have

13 taken place, no.

14 Q How About Mr. Szafranski?

15 A I don't recall when for any of those people.

16 Q So for all of these individual it would have

17 been after they were aware of the Ponzi scheme; is that

18 correct?

19 A Yes.

20 Q I'm sure you testified about this, but I don't

21 recall. When did you say that Mr. Szafranski was aware

22 of the scheme?

23 A I've testified that I don't know specifically

24 when he became aware. I can only tell you when I am 100

25 percent certain he was aware, and that was sometime just


Page 1972

1 prior to his first investment, being S1, when he asked

2 me if he could bring investors in.

3 Q How many times are you aware that

4 Mr. Szafranski went to TD Bank -- And let me just

5 preface this because I want to make clear. When I say

6 TD Bank, can we have an understanding I'm talking about

7 both Commerce and TD Bank --

8 A Sure, absolutely.

9 Q -- back when you started your banking

10 relationship with Commerce?

11 A Yes, ma'am.

12 Q So the question is, How many times are you

13 aware of that Michael Szafranski went to TD Bank?


15 Q Do you have knowledge of him ever going to TD

16 Bank?

17 A Yes.

18 Q When is the first time that you recall he went

19 to TD Bank?

20 A I don't recall the specific time frame for him

21 going.

22 Q How did you become aware that he had gone to TD

23 Bank at any time that he went?

24 A On at least one occasion I took him.

25 Q Did you only take him to TD Bank once?


Page 1973

1 A I don't think so. I think I took him more than

2 once. I seem to recall him saying, We've got to go do a

3 bank visit. And then as he became more aware of what

4 was going on and it was clear that he really didn't feel

5 like going out to the bank and couldn't have cared less

6 whether he went out to the bank, he would say, They want

7 me to do a bank visit. And I would say something to the

8 effect of, Too busy to go out to the bank. I don't want

9 to go. Just send them whatever you need to send them,

10 or tell them you went to the bank, but forget about

11 going out there today.

12 Q Did he ever tell investors that he verified

13 from your office?

14 A Yes.

15 Q How did he verify from your office?

16 A He didn't.

17 Q Did he --

18 A Well, that's not true. At some point in time

19 he did by going on the fake TD Bank website.

20 Q Sort of a fake verification?

21 A Yes. And then at some point in time he knew it

22 was a fake TD Bank website and we stopped looking at

23 it. From time to time we'd actually go on the real TD

24 Bank website and look at that to see what we were really

25 working with.


Page 1974

1 Q Tell me when the fake TD Bank website first

2 came into existence.

3 A I don't remember the time frame.

4 Q Whose idea was it?

5 A Mine.

6 Q Do you remember why you wanted it?

7 A Clients wanted to be able to sign on, and there

8 was no other way for me to do that other than to create

9 a fake TD Bank website. They wanted to be able to get

10 certain screen shots, and the easiest way for my

11 co-conspirators and I to manipulate the screen shot was

12 to create a fake TD Bank website. It added another

13 feature of believability to the scheme.

14 Q Okay.

15 A So that's why we did it.

16 Q Could it only be accessed from your office?

17 A That's the only place.

18 Q Okay.

19 A It only existed on my computer. It may have

20 existed for their own use. And I'm speculating on

21 Mr. Renie's and Mr. Corte's computers as well. But I do

22 recall also there were certain things they could only do

23 from actually mine - there were certain things they

24 could only change by actually coming physically into my

25 office.


Page 1975

1 Q What do you remember about that?

2 A I remember seeing e-mails where either Deb or

3 one of my other staff members are saying, We're set to

4 go. Either Curtis or Bill has already gone into your

5 offers and done the necessary changes.

6 Q Was the computer on your desk? Where was the

7 computer located in your office that had the fake TD

8 Bank website?

9 A On my credenza.

10 Q When you say investors wanted to be able to get

11 screen shots, do you mean to view screen shots, to print

12 screen shots, or a number of things? Tell me what you

13 mean by that.

14 A Both. More for printing screen shots. What we

15 used to do before we had the fake website was we would

16 actually have to cut and paste. We'd take a TD Bank

17 screen shot, pull it up, cut, block it out, cut it,

18 paste it to an e-mail or to a word document, alter it,

19 cut it down to size, and then print it. It was an

20 extremely inefficient method.

21 Q Once you had the TD Bank website did you no

22 longer do the cut and paste of the --

23 A We may have from time to time had to do a cut

24 and paste. We did whatever was necessary to provide the

25 investor, if it was an innocent investor, to provide


Page 1976

1 them with what they required. But my recollection is

2 that it cut down the amount of time and the amount of

3 effort we had to create these screen shots and the

4 like. It was a much more efficient process.

5 Q Do you recall printing screen shots in your

6 office for any investors in front of them?

7 A You want to know if I printed screen shots in

8 front of my investors?

9 Q Yes.


11 recollection one way or the other.

12 Q Did you have a fake Gibraltar Bank website?

13 A No. Didn't need one.

14 Q Why didn't you need one?

15 A I had John Harris.

16 Q What did he do that -- I don't want this to be

17 a very broad question. Let me think about this for a

18 moment?

19 A I'll give you a concise answer.

20 Q My question is along the lines of, What did you

21 rely upon him for that you did not need to use a website

22 for?

23 A To lie about balances.

24 Q What were the functions that you had on the



Page 1977

1 A It gave the appearance of having every

2 function, that it looked like a TD Bank website. My

3 understanding from speaking to Curtis and to Bill, Bill

4 Corte and Curtis Renie, was that the special software

5 that they actually had that enabled them to do this

6 duplication of a website actually created an exact match

7 of the website.

8 When I told them to do this, when I retained

9 them so to speak to do this, I told them it needed to be

10 exact because certain of our investors might very well

11 bank at TD Bank and be very familiar with the site, so

12 we wanted it to match as closely as possible right down

13 to the stock ticker symbol.

14 Q Did you -- Are you finished?

15 A Let me finish the answer. I'll get all your

16 question. You asked me about the functions.

17 All the functions appeared to be available

18 there, but they weren't. The other function keys did

19 not work to stay in the fake website.

20 As a matter of fact, one of the problems with

21 this website was, even on the fake website, if you

22 clicked on a function that was on the fake screen, but

23 was not set up to do one of these fake things, it would

24 actually draw you into the real website. It would link

25 you in. And that of course we couldn't let happen.


Page 1978

1 So there was a glitch that existed. So I had

2 to be very careful who I let operate and make sure that

3 the people I did let operate it like Mr. Szafranski and

4 Boden needed to know exactly what they were doing to do

5 this.

6 As a matter of fact, there wasn't a normal way

7 to get to the wire screens either. We had to do some

8 other machination. I don't recall exactly what it was.

9 Q Can you list for me what fake screens you could

10 access on this fake TD Bank website?

11 A To the best of my recollection we had the

12 initial screen where you enter your passwords, but you

13 didn't need to enter a password, you just needed to

14 click enter. We had the balance screen, which has your

15 account balances, the ticker symbol, the date, the time,

16 all that kind of stuff, other various information. And

17 then we had a phony TreasuryDirect page for incoming and

18 outgoing wires.

19 Q Anything else?

20 A Not that I recall at this moment.

21 Q Which investors to your knowledge viewed the


23 A Not that were sent copies of it, that were in

24 my office and looked?

25 Q Correct. Yes, the latter.


Page 1979

1 A Do I separate out people who were looking at it

2 that knew it was fake or do you just want to know

3 everyone that ever looked at it?

4 Q Let's start with investors who did not know it

5 was fake.

6 A Who to my knowledge did not know?

7 Q Correct.

8 A Okay. Barry Damson, Doug Von Allmen, I

9 believe, A.J. Discala, Mel Lifshitz. I may have shown

10 it to some other of the Clockwork people. I don't

11 recall specifically. I may have shown it to Ira

12 Sochet. That's all I remember at this time. There may

13 be more.

14 Q Would it have always been you who would show

15 the investor the fake TD Bank website?

16 A No. And I'm only listing the people that I

17 showed it to.

18 Q Were there other investors that saw the fake TD

19 Bank website on your computer on your credenza by

20 someone else showing it to them?

21 A Mike Szafranski accessed it, but that was with

22 another investor, one of the people I named, in the room

23 simply to show that he had the ability to access it.

24 Q Was that --

25 A I'm thinking also that I may have shown it to


Page 1980

1 Jack Simony, by the way. David Boden used it for either

2 one or more of the Pearson Boden investors. I can't

3 tell you who they were because I don't know.

4 THE WITNESS: Could we take five minutes?

5 MS. EVANS: Absolutely.

6 (Thereupon, a short break was taken.)

7 BY MS. EVANS:

8 Q You said that Mr. Damson viewed the website,

9 the fake TD Bank website?

10 A I have a recollection of him sitting with me in

11 my office and me showing him the website, yes.

12 Q Was anyone with you?

13 A I don't think anyone was with me, no.

14 Q It was just you and Mr. Damson in your office?

15 A At that moment, yes. I suppose Ms. White may

16 have been there, but I don't have a specific

17 recollection of that.

18 Q You have no recollection of showing Ms. White

19 the website?

20 A I may have. I don't recall one way or the

21 other.

22 Q Do you recall how that came about that you

23 showed Mr. Damson the website, the fake TD Bank website?

24 A I do not.

25 Q Do you recall what you showed him on the


Page 1981

1 website?

2 A The balance page.

3 Q And do you recall when that was?

4 A I do not.

5 Q Do you recall what particular account you were

6 showing him?

7 A Generally when I showed people the website I

8 showed them the page that had all the accounts on it.

9 Q Okay.

10 A And that was for effect.

11 Q What effect was that for?

12 A The fake web page showed a lot of times close

13 to or in excess of a billion dollars on deposit.

14 Q Did any investor ever express concerns when

15 looking at that page that had all of the accounts on it

16 as to the number of accounts on that page?

17 A No.

18 Q Do you recall any conversation that you and

19 Mr. Damson had at that time that he was looking at the


21 A No, I do not.

22 Q Do you recall any balances that were on that

23 page as you looked at it?

24 A I do not.

25 Q Did you show him the full page or did you


Page 1982

1 obstruct any part of the page?

2 A I don't recall.

3 Q Do you recall ever, when you were showing an

4 investor the TD Bank fake website, obstructing any

5 portion of the computer screen?

6 A I seem to recall obstructing the screen, part

7 of it, with Mr. Garces when Mr. Lifshitz was in the

8 office.


10 A He was in my office sometime after the New York

11 event, and there were a series of things as we discussed

12 that were done. Remember, we talked about that?

13 Q Yes.

14 A And I remember him wanting to see the page or

15 see the balances. And I recall obstructing the screen

16 so that he couldn't see other people's balances. And I

17 may have done it with other people. I just don't have a

18 specific recollection.

19 Q Did the website, the fake TD Bank website, at

20 any point in time actually reflect real balances?

21 A No.

22 Q It always reflected fake balances?

23 A Always.

24 Q How were you or anyone else able to edit the

25 balances?


Page 1983

1 A I don't recall the specific mechanism, but I

2 would tell Curtis or Bill this is what I need the

3 balance to be, and they would change it. I don't know

4 how they did it.

5 Q How did you determine what the balance should

6 be?

7 A Most frequently I would contact Mr. Preve and

8 ask him what the balance should be, and he would tell

9 me. In the case of Mr. Szafranski's investors I would

10 ask him what the balance would be and he'd tell me. And

11 if I couldn't get ahold of anybody, we'd take a wild

12 guess. We'd over estimate and put that number in.

13 Q Did you ever have an investor who was concerned

14 about the overestimate when they viewed the fake TD Bank

15 website?

16 A Yes.

17 Q Who?

18 A I specifically remember the hedge funds being

19 concerned about it, asking questions as to why there was

20 so much money in the accounts.

21 Q Does that refresh your recollection as to who

22 among the hedge funds viewed the site?

23 A No, no, because my recollection is they asked

24 the question in response, I believe, to a screen shot

25 that had been e-mailed to them by Mr. Szafranski or


Page 1984

1 Mr. Preve.

2 Q Did you say that you can also see wire transfer

3 screens on the fake TD Bank website?

4 A There was a separate page of wires that was

5 fake.

6 Q Okay.

7 A Incoming and outgoing, two separate pages.

8 Q And did you on occasion e-mail shots from those

9 two pages from either one of those pages to investors?

10 A I did.

11 Q Trying to pinpoint a little bit --

12 A As a matter of fact, I remember specifically

13 sending copies of it for Mr. Lipsitz back at the time

14 that all this was going on when we had that person go

15 into the bank.

16 Q After the event happened?

17 A Yeah. What had happened was, as we discussed,

18 the person goes into the bank, makes his deposit to get

19 the balances, which obviously shows drastically less. I

20 had those conversations I already discussed. Prior to

21 me creating that fake letter I told you about, we had

22 had as a first run before I created the fake letter, I

23 had had Mr. Spinosa create a real letter where he was

24 discussing things such as queues and the like. I don't

25 remember, it was some crazy language he used. I didn't


Page 1985

1 even quite understand the process.

2 But Mr. Spinosa created a real letter that I

3 forwarded to Mr. Lifshitz where it had in there an

4 explanation that when money is in queue it doesn't show

5 up on a balance when you go into that bank, that type of

6 thing. I think that that propelled Mel Lifshitz even

7 more to want to see a screen shot.

8 Q Okay.

9 A So I think it was -- and it's one of the things

10 that sticks out in my mind because it wasn't my fake

11 letter that set him off. It was the prior real letter

12 that Spinosa did for us talking about queues and why the

13 money wouldn't show up there that made him kind of

14 weary.

15 Q Do you recall whether when money is in a queue,

16 as you described, is an accurate statement, that it

17 doesn't show up?

18 A I don't even know what it means for the money

19 to be in a queue.

20 Q You said that you also showed the fake website

21 to Mr. Von Allmen.

22 A I have a recollection of showing him the

23 website at some point in time.

24 Q Do you recall anything about that?

25 A I do not.


Page 1986

1 Q Not the date or anything like that?

2 A I do not.

3 Q Was the fake website in existence before the

4 visits to the bank with the investors that you

5 described?


7 Q You said that you also had a phony Treasury

8 Direct?

9 A That's the wire sheets that I was discussing.

10 Q What is your understanding of what can be

11 accomplished with TreasuryDirect?

12 A That we were able to initiate our own wires.

13 Q Did you initiate any wires yourself through

14 TreasuryDirect?

15 A Not to my recollection, no.

16 Q Who did that in your office?

17 A The bulk of the time Irene Stay, occasionally

18 Bill Boockvor.

19 Q Were those the only people that initiated wires

20 from TreasuryDirect?

21 A To the best of my recollection.

22 Q Did you use TreasuryDirect for any purpose

23 during the time that you had it?

24 A Me personally? I don't have a specific

25 recollection of it. I don't know why I would be looking


Page 1987

1 at it.

2 Q Do you know if TreasuryDirect offered the

3 opportunity to look at account balances?


5 Q Did you also have BusinessDirect in your

6 office?

7 A I don't remember which is which, but I think at

8 one point in time I had BusinessDirect and I had

9 TreasuryDirect and some other system. I may be

10 confusing that were with TreasuryDirect. But I recall a

11 situation where I wanted to have both on and it took a

12 while for the bank to accommodate me.

13 Q With respect to A.J. Discala, you said you

14 recall showing him the fake website?

15 A I believe so, yes.

16 Q And you put him in the group of individuals

17 that at the time they viewed the fake website did not

18 know that any fraud was being perpetrated?

19 A It's my opinion that he did not know that any

20 fraud was being perpetrated.

21 Q Do you recall for what purpose you showed him

22 the fake website?

23 A As to all the investors who I perceived as

24 innocent, the purpose of showing them the website was

25 always the same, to add to the believability of the


Page 1988

1 Ponzi scheme.

2 Q Do you recall what you showed him on the fake

3 website?

4 A I don't.

5 Q Do you recall the occasion that he was in your

6 office?

7 A He was in my office a bunch of times. No, I

8 don't.

9 Q How many times was Mr. Discala in your office?

10 A More than a handful, meaning more than five. I

11 don't know specifically.

12 Q More than a dozen?

13 A I would be guessing. I don't want to guess.

14 Q Did he ever dine with you at Bova?

15 A He did.

16 Q Did he dine with you other places as well?

17 A I don't recall specifically. He may have.

18 Q How many times did he dine with you at Bova?

19 A I don't recall specifically.

20 Q Okay.

21 A I dine there so frequently it's so hard say

22 someone is dining with me. I remember another instance

23 other than dining where we were eating appetizers and

24 sitting and standing at one of the tables closer to the

25 bar. So there were various occasions.


Page 1989

1 As I said, I was there so frequently that you

2 could say that numbers of people dined with me --

3 Q Okay.

4 A -- at various points in time.

5 Q You said you could not recall, but had a belief

6 you may have shown the fake website to Ira Sochet?

7 A I can't recall one way or the other.

8 Q And Jack Simony, do you recall the occasion

9 that you showed the fake website to him or occasions?

10 A Not with any specificity, no.

11 Q Did you show Christopher Podaris the fake

12 website?

13 A I don't recall one way the other.

14 Q Dean Kretschmar?

15 A For some reason it sticks out in my mind that

16 Dean may have been there when I showed A.J. the

17 balances, but I don't have a specific recollection.

18 Q Has Mr. Bekkedam ever been in your office?

19 A I believe he has, yes.

20 Q Do you recall the occasion?

21 A I do not.

22 Q Is there anyone else as you sit there now that

23 you can recall that you showed the fake TD Bank website

24 to that in your view was an innocent investor?

25 A I don't remember anyone else at this time.


Page 1990

1 There may be more. I just don't remember as I sit here

2 right now.

3 Q Turning to individuals who you believed may

4 have known about your fraud during the period of the

5 Ponzi scheme, who did you show the fake TD Bank website

6 to?

7 A Mike Szafranski.

8 UNKNOWN SPEAKER: Objection to the form.

9 THE WITNESS: Frank Preve, David Boden, Richard

10 Pearson. Are we just -- Debra Villegas, Irene

11 Stay, Bill Boockvor, Marybeth Feiss, Russ Adler,

12 Stu Rosenfeldt. Curtis Renie and Bill Corte both

13 saw it because they created it. That's all I

14 recall at this time. There may be more.

15 BY MS. EVANS:

16 Q Does that list everyone at RRA who was aware of

17 the fake TD Bank website?

18 A I don't know. Let's see go around the office,

19 David Boden, Stu Rosenfeldt, Russ Adler, me, Debra

20 Villegas, Marybeth Feiss, Irene Stay. I can't recall

21 whether I ever showed Lippman the site or not.

22 Q All the individuals that you've listed here,

23 they knew the fake TD Bank website was fake?

24 A Those people that I just listed?

25 Q Um-hmm.


Page 1991

1 A Yes.

2 Q Okay. You had an executive committee. I think

3 we touched on this briefly last week.

4 A Yes.

5 Q How often did the executive committee meet?

6 A It what erratic and sporadic.

7 Q Did it meet at least once a month?

8 A Sometimes. We tried to meet once a week

9 sometime. We tried to meet at least for breakfast once

10 a week. Sometimes we wouldn't meet for a month or so,

11 and then we'd meet two weeks in a row.

12 Q How often did the membership on the executive

13 committee change, if it changed, between the period of

14 let's say 2000 -- beginning of 2006 through the end of

15 2009?

16 A I don't even know if there was an executive

17 committee back in 2006.

18 Q When do you remember there first being an

19 executive committee?

20 A You would have to ask Ms. Villegas. She would

21 remember when we created it, I think. I don't remember

22 the membership changing very much once we started it.

23 Other than to add people I don't remember taking anyone

24 off.

25 Q It had two tiers?


Page 1992

1 A The executive committee?

2 Q I'm asking.

3 A No. The law firm had tiers. The executive

4 committee was just people that I trusted to advise me.

5 Q Did you make the appointments to the executive

6 committee yourself?

7 A I did with Mr. Rosenfeldt.

8 Q Who else was on the executive committee in

9 2009?

10 A To the best of my recollection --

11 UNKNOWN SPEAKER: Object to the form.

12 THE WITNESS: -- it was me, Mr. Nurik,

13 Mr. Adler, Mr. Lippman, Mr. Rosenfeldt, Mr. Boden,

14 Mr. Berger, Mr. Stone, Mr. Stracher. Debra

15 Villegas generally came to the meetings. Irene

16 Stay occasionally came to the meetings. That's all

17 I remember at this moment. I'm sure that there

18 were more people.

19 BY MS. EVANS:

20 Q Were notes taken of the meetings?

21 A Deb, to my recollection, took notes. I didn't

22 take any notes.

23 Q What function did the executive committee

24 perform at the firm?

25 A We discussed actual firm business on the


Page 1993

1 legitimate side of the business, and I sought advise and

2 counsel, discussed problems within the firm, that kind

3 of thing.

4 Q When you say you sought advise, did the

5 executive committee have the ability to make any binding

6 decisions on the firm as a committee?

7 A No, they didn't have that kind of authority.

8 It was advisory.

9 Q Advisory only?

10 A There were only two shareholders that had any

11 input, and that was myself and Mr. Rosenfeldt, meaning

12 input that could actually affect - change something at

13 the firm.

14 Q Could you bind the firm with a decision of

15 yours alone?

16 A Could I?

17 Q Yes.

18 A Absolutely, yes.

19 Q Could Mr. Rosenfeldt do the same alone?

20 A He could have. He didn't frequently, but he

21 could have, yes.

22 Q When you met was there any agenda for the

23 executive committee?

24 A Deb would generally try to create an agenda.

25 We tried to put something together. But more often than


Page 1994

1 not my recollection was that we simply met to discuss

2 how the firm was doing, what was going on.

3 Q Did she prepare any information that would be

4 given to the executive committee on occasion?

5 A From time to time.

6 Q Did anyone else other than Deb do that?


8 Q Would you agree that you made the majority of

9 the decisions as to how firm business was conducted?

10 A That is accurate.

11 Q Who at the firm reviewed and paid attention to

12 the legitimate finances of the firm?

13 A You have to restate the question. "Paid

14 attention to" intimates that they did something about it

15 when they were looking at it.

16 Q Let me wipe that one out completely.

17 A Okay.

18 Q Who at the firm exercised the ability to make

19 financial decisions about the firm?

20 A Who exercised the ability to make financial

21 decisions?

22 Q It's getting late, isn't it?


24 MS. EVANS: Strike that one.

25 THE WITNESS: That's really not a good


Page 1995

1 question, exercise the ability.

2 BY MS. EVANS:

3 Q Did you make the financial decisions for the

4 firm?

5 A I made the bulk of them, yes.

6 Q Who else made financial decisions for the firm?

7 A Mr. Rosenfeldt in concert with me. Mr. Lippman

8 from to time in concert with me. Mr. Boden from time to

9 time in concert with me. Even Mr. Stracher from time to

10 time in concert with me.

11 Q Is it fair to say you --

12 A Mr. Grant Smith from time to time in concert

13 with me.

14 Q I didn't mean to interrupt it you.

15 A That's okay. It just popped into my head at

16 the last second.

17 Q Did anyone at the firm have the ability to

18 override your decisions?

19 A No, ma'am.

20 Q Did you ever ask Mr. Spinosa to actually pitch

21 settlement deals to anyone?

22 A No, ma'am.

23 Q How many times to your recollection did you ask

24 Mr. Spinosa to speak with an investor on the phone?

25 A It would have been less than six times, I --


Page 1996

1 the only ones I'm recalling right now is the Damson,

2 Kathleen White telephone call and perhaps a call with

3 Mr. Lifshitz or face-to-face with Mr. Lifshitz. I can't

4 recall if he spoke to Mr. Sochet or not.

5 Q On the phone, right?

6 A On the phone. Mr. Sochet met him.

7 Q Are those the only times that you recall

8 specifically that you asked Frank Spinosa to speak on

9 the phone with an investor, those three times?

10 A That's all I recall at this moment. There may

11 have been more times. That's what I recall right now.

12 Q To your knowledge did Mr. Spinosa ever speak

13 with an investor without you asking him to do so?

14 A After the Ponzi scheme exploded.

15 Q He spoke with an investor?

16 A It's my understanding that he spoke to several

17 of the investors that were contacting him after the

18 Ponzi scheme exploded, but I don't know that for

19 certain.

20 Q Can you tell me who you believe, but do not

21 know for certain, that he spoke with after the Ponzi

22 scheme exploded?

23 A Mr. Preve, Mr. Levin. I don't recall anybody

24 else.

25 Q Before the Ponzi scheme exploded did you know


Page 1997

1 of any investors that Mr. Spinosa called independent of

2 you asking him to do so?

3 A That Mr. Spinosa called or that called

4 Mr. Spinosa?

5 Q Either way. Let's say spoke on the phone.

6 A To my knowledge he never called anyone without

7 my knowledge, and to my knowledge no one ever called him

8 without my knowledge.

9 Q Would you have been concerned if you had

10 learned that Mr. Spinosa spoke to an investor without

11 your knowledge?

12 A I would have been concerned if I didn't -- it

13 would vary on an investor -- You've got to understand

14 the investors. There are some who you just know are

15 just kind of laid back and there are others that are

16 voracious.

17 If Mr. Von Allmen had called Mr. Spinosa and

18 talked to him, I'd be wanting to know what the heck they

19 talked about, and I'd be panicky until I found out that

20 everything was okay.

21 I trusted Frank to do the right thing by us,

22 but I don't know that I would have wanted him to just

23 kind of run free with this whole thing.

24 Q When you answered questions for both

25 Mr. Schlesinger and Mr. Rabin, did you tell them every


Page 1998

1 conversation that you had with Frank Spinosa to your

2 knowledge?

3 A I would need to read the entire transcript, and

4 I doubt that I could sit here and relate every single

5 conversation that I ever had with Mr. Spinosa.

6 I mean, you're including conversations that we

7 may have had off to the side at a sporting event, at a

8 political function. I tried to relay as best as I could

9 the most relevant conversations they were asking about.

10 But without reviewing the entire transcript and going

11 back through them I couldn't tell you one way or the

12 other at this moment.

13 Q Can you remind me what sporting events you went

14 to with Frank Spinosa?

15 A Dolphin games. There may have been a time when

16 he asked me for Heat tickets.

17 Q You would have gone with him?

18 A No, I don't recall going to the Heat game with

19 Mr. Spinosa. I would have given him tickets, either my

20 floor seats or one of the other seats we had bought.

21 Q Sort of focus on the question I have, which is,

22 What supporting events do you recall that you were at

23 with Frank Spinosa?

24 A The one thing that is sticking out in my mind

25 is the Dolphin games.


Page 1999

1 Q A number of Dolphins games or one?

2 A Several.

3 Q Several as in more or less than five?

4 A I can't pin it down for you. I'd be guessing.

5 Q Any other sporting events that you went to with

6 Frank Spinosa?

7 A Not that I recall, no.

8 Q Okay.

9 A I don't recall going to any Heat games with him

10 and I didn't fly to any games anywhere. I didn't go to

11 baseball games, and I don't recall him asking to go to

12 any baseball games. I didn't go to hockey games with

13 him. I think we've pretty much narrowed it down to

14 football games.

15 Q Okay. You said that earlier that you told

16 various individuals that Frank Spinosa was a player. I

17 want to go back to that. I think you gave me a list

18 which I managed to perhaps lose, but my question is,

19 What did you say to Mr. Szafranski with respect to him

20 being a player, Mr. Spinosa being a player?

21 A I can't give you the specifics of the

22 conversations with all the individuals that I listed

23 since they were all dealing with fake bank balances and

24 other banking issues. From time to time it came up.

25 Two people I didn't even mention, and I wouldn't have


Page 2000

1 said, This guy's a player. And I didn't necessarily say

2 to each of those people, This guy's a player, this guy's

3 a player. The term is getting overused.

4 But I expressed to the group of people that I

5 have mentioned, and add to that list Debra Villegas and

6 Irene Stay, the fact that Mr. Spinosa was, for lack of a

7 better phrase, on our team, that we could trust him to

8 do the right thing when it came to protecting our

9 interests. We never said protect our interests in the

10 fraud. It just depended upon the circumstance.

11 I remember Mike Szafranski very -- Mike from

12 time to time got nervous about things. There was an

13 instance, the instance when I was taking Barry and

14 Kathleen to go meet with Frank Spinosa. Mike was a

15 little jumpy about that. He knew Barry could be a bear,

16 but he didn't understand my relationship with Barry and

17 the fact that there was enough mutual respect there that

18 Barry would not have gotten out of control. I think

19 Mike thought Barry might get out of control if Spinosa

20 tried to grill him.

21 I told him that, you know, Frank is on our

22 side. Don't worry about him. He's been briefed. He

23 knows what he can say and what he can't say and not to

24 worry about it.

25 Q When did --


Page 2001

1 A That would have been the same type of

2 conversation that I had with these people. It was more

3 putting them at ease as to their concerns. I didn't

4 have any reason to tell these people anything further

5 than that because I limited their interaction

6 drastically with Mr. Spinosa, as I did with everything

7 else.

8 Remember I testified days ago and several times

9 actually, that I tried to even avoid people internally

10 from speaking to each other about everything that we

11 were involved in because that just leads to people

12 finding out things they don't need to know. The more

13 people that know things the more chance there is that

14 the entire thing was going to blow up.

15 Q So, as to these individuals, Mr. Szafranski,

16 Preve, Boden, Rosenfeldt, Villegas and Stay, you don't

17 recall any specific conversations whatsoever with

18 respect to discussing with any of them whether or not

19 Mr. Spinosa was a player in the --

20 A Let me answer this way because it appears to

21 me - this is not directed to you - it's directed in

22 general.

23 Q Sure.

24 A That people are trying to paint lack of

25 knowledge of specific conversations as not knowing what


Page 2002

1 was going on or perhaps a certain thing didn't even

2 occur. Here's the problem with that. My life was

3 unfortunately extraordinary in an unfortunate series of

4 ways. I probably met with more people in a week than

5 most people in here met with in a month or multiple

6 months. I was constantly shaking hands, having

7 conversations.

8 The size of this Ponzi scheme and all of its

9 tentacles involving all levels of corruption,

10 organization crime, law enforcement, judiciary required

11 me to be on, literally turned on 24 hours a day, seven

12 days a weeks. I didn't sleep very much.

13 I was functioning as some kind of very bizarre

14 level. And so, I could have literally 50, 70, 100

15 conversations related to the Ponzi scheme in a day with

16 various individuals back and forth, on and off. So, I

17 can't tell you an exact date and time that a

18 conversation occurred. But I knew who was conducting

19 illegal activity on my behalf and I knew who wasn't.

20 That I'm certain of.

21 Q I appreciate the answer. I'm going to move to

22 strike as non responsive.

23 A I understand.

24 Q Okay.

25 A I don't agree. I would think everyone in here


Page 2003

1 would want to truly understand the parameters from which

2 I'm answering the questions. I can understand you have

3 clients to represent and you have to do what you have to

4 do.

5 Q The moving to strike was not meant to be

6 disrespectful.

7 A I didn't think it was. You've been nothing but

8 professional.

9 Q All right. Is it your testimony that each time

10 that you spoke with these individuals about Mr. Spinosa

11 being a player in the general sense that you've given

12 us, they understood with respect to your reference that

13 he had knowledge of a fraud?

14 A Yes.

15 Q And that being on our team meant that?

16 A People that I did business with on the level

17 on - with regard to the fraud could tell when I was

18 discussing something that was criminal in nature,

19 fraudulent in nature, or something that was aboveboard.

20 It was the way we spoke to each other. So,

21 yes, when I said he was on our team, you don't need to

22 worry about him, that's what it meant, and they

23 understood that.

24 Q Do you recognize the e-mail address

25 [email protected]?


Page 2004

1 A I do.

2 Q Do you know of any reason why you would send a

3 copy of a letter signed by Mr. Spinosa to that e-mail

4 address?

5 A I do.

6 Q Can you tell me about that?

7 A My recollection is my e-mail address at the

8 home was not working. I needed to print a copy of

9 something. That's my wife's e-mail address. So I sent

10 it to her e-mail address so when I got to the house I

11 could pull it up and print it for myself.

12 Q Did that happen on more than one occasion?


14 Q Do you recall the occasion of that particular

15 e-mail?

16 A You have to show me the e-mail. I don't have a

17 specific recollection but I do have a recollection of

18 doing that.

19 Q When you had the social events at your house,

20 let's limit it right now to campaign events. Did you

21 hire a photographer each time yourself?

22 A I don't know what you mean myself. You mean

23 through the firm or me personally?

24 Q Let's start with you personally.

25 A No.


Page 2005

1 Q Did your firm hire photographers for the

2 campaign events that were held at your home?

3 A Yes.

4 Q Do you recall who any of those photographers

5 were?

6 A 90 percent of the time it was Gerlinde

7 Photography.

8 Q Can you spell that?

9 A G-E-R-L-I-N-D-E.

10 Q The other 10 percent, do you recall who it was?

11 A I do not.

12 Q Do you recall whether any of the campaign

13 events that you held at your house, the campaigns

14 brought their own photographers as well?

15 A They did from time to time.

16 Q Do you recall any of those?

17 A I can't tell you specifically but they

18 definitely brought their own photographers from time to

19 time.

20 Q Sort of asked a sloppy question. I'm going to

21 go back again and make sure I ask it more clearly.

22 Do you remember any candidates who - specific

23 candidates who brought their own photographers?

24 A I don't remember who they were particularly.

25 Q Or political figures, I guess who is not a


Page 2006

1 candidate?

2 A I don't have a specific recollection who was.

3 I do have a recollection of various candidates from time

4 to time bringing their own photography people or

5 photographer.

6 Q You said that the Schwarzenegger event --

7 A You're talking about events at my home; right?

8 Q Correct. Which now that you've asked that

9 question leads me to also ask: Did you have campaign

10 events at your -- did you host campaign events at your

11 law firm?

12 A At my law firm and at other sites.

13 Q Again, with the same photographer taking

14 pictures?

15 A At the law firm we had, for the most part, it

16 would have been Gerlinde. But we also had, later in

17 time, a photographer who was doing sports photography

18 for us for RRA Goal Line and RRA Sports Management.

19 Scott something or other, I think. He was doing that

20 for us.

21 And at the very large events that we did

22 off-site, for example, I hosted Sarah Palin at some

23 event off-site in Boca Raton -- no, no, Palm Beach. And

24 on that kind of thing where it was a very large ticket

25 item that a VIP guest could pay to get a picture, they


Page 2007

1 brought their own photographer. But the person getting

2 their picture taken would have had to give an extremely

3 large contribution.

4 Q Who was the "they" that brought their own

5 photographer?

6 A An event where Sarah Palin, where I hosted for

7 Sarah Palin where they brought their photography team.

8 John McCain, Charlie Crist. There was an event where

9 Arnold Schwarzenegger, Mel Martinez, Charlie Crist, a

10 couple of other politicians brought their own

11 photography team. I wouldn't have brought my team to

12 these events.

13 Q You testified that the Schwarzenegger event was

14 a relatively small event?

15 A That's a different event.

16 Q There was more than one. It was a large --

17 A There was one large event where all those

18 people that I just mentioned were there and a very small

19 luncheon at my home.

20 Q Do you recall if you hosted a Schwarzenegger

21 luncheon at your home?

22 A I don't. You have to check through their

23 people or someplace in my firm to see who the guest list

24 included.

25 Q I'm going to mark this as Exhibit 239. It's an


Page 2008

1 e-mail invitation to the Schwarzenegger event. This is

2 not on the exhibit list. I'm going to hand you copies.



5 BY MS. EVANS:

6 Q Does this look like an e-mail that you sent out

7 inviting individuals to the Schwarzenegger luncheon?

8 A It is.

9 Q Looks like in the first line there

10 [email protected], that would be the Steve Caputi that

11 posed as a Plaintiff when he was not a Plaintiff with

12 respect to the investments; is that correct?

13 A Yes.

14 Q Look at the second line. Tracy Weintraub, is

15 that the accountant that you've mentioned and testified

16 about who said knew of the fraud?

17 A Yes.

18 Q Three people over, [email protected],

19 that's Ted Morse?

20 A No.

21 Q Who is that?

22 A That is Ted Junior's son, Ted the Third.

23 Q Thank you. The only other name I recognize is

24 William Scherer. Is that Mr. Scherer in this room?

25 A It is.


Page 2009

1 Q Is that the list -- Did Mr. Scherer attend the

2 event?

3 A He did not.

4 Q Did Mr. Weintraub?

5 A I don't recall.

6 Q Mr. Caputi, do you know if he attended?

7 A He did not.

8 You're missing a substantial part of this

9 list.

10 Q Well, you mean other names were on it?

11 A Yeah, you could tell it started off at the

12 end. If you look all the way to the right, you could

13 see the little arrow tab is scrolled all the way down.

14 You would have to scroll all the way up to get to where

15 the list started. This is the very end of the list.

16 Q How many people do you recall -- I didn't mean

17 to give you an incomplete document.

18 How many people do you think you invited?

19 A I had a general list I would send these things

20 to. It was over a hundred people.

21 Q You invited over a hundred people to this small

22 luncheon at your house?

23 A I wasn't expecting a hundred people to show

24 up. It was a very expensive event. My recollection is,

25 15, 20, 25,000, maybe more, per person. So, no, I


Page 2010

1 expected very few to show up. And generally when you're

2 doing this, at least we did it at our firm, there are

3 certain people you send it to knowing they're going to

4 come. To an event that is this expensive, you generally

5 have to call them and invite them before this even goes

6 out and you know who's really going to show up.

7 And then you do a mass mailing so you can get

8 the publicity out that this event is occurring.

9 Q What you're saying, these people that are in

10 this particular screen shot are people that you very

11 frequently invited to events at your home?

12 A Yes.

13 Q Would an event like this be part of the

14 rock-star life?

15 A Yes.

16 Q There were people that you invited to

17 participate in the rock-star life that did not assist

18 with the fraud; right?

19 A Yes, I think I made that clear the other day.

20 Q There were people you said you invited to

21 football games who were not part of the fraud; is that

22 correct?

23 A That's correct.

24 Q And there were people who you used pet names

25 with and you were very familiar with in e-mails who were


Page 2011

1 not part of the fraud; is that correct?

2 A That's correct.

3 Q There are people who you bought dinner and

4 lunch for that were not part of the fraud; is that

5 correct?

6 A That's correct.

7 Q You said that -- you said several times that

8 you gave a financial payment to Ms. Caretsky. And one

9 of the questions I have for you is: How did you

10 determine that it was between 25 and $30,000 at this

11 point in time?

12 A It's the best recollection I have of how much

13 money I gave her based upon my memory from two plus

14 years ago.

15 Q Now, you testified that only once you ever

16 counted out money that you gave to someone; did I

17 misunderstood that question?


19 A No, that's not what I said.

20 Q Did you count out the money that you gave

21 Ms. Caretsky?

22 A When I was delivering money to Ms. Caretsky I

23 counted it before it went into the envelope.

24 Q So, now you're remembering what you counted

25 out; is that correct?


Page 2012

1 A No, no, no. Here's the problem. This is the

2 same thing like with the specific conversations. I gave

3 a tremendous amount of money in cash to a lot of

4 people. I always gave what I thought I needed to give

5 to accomplish my goal. That's the way it worked.

6 I didn't keep a ledger. I didn't keep a

7 running balance. If you go back and add it all up, I'm

8 certain I gave more than a million dollars in cash out

9 in bribes and inducements, and for other things my

10 partners were doing.

11 Q Could you be --

12 A I can't -- I can't tell you with any

13 specificity. Ms. Caretsky was not a huge cog in that

14 wheel. She had a very specific purpose. It was

15 extremely limited. And as I testified yesterday, I

16 believe, it is my opinion that she did it when she

17 initially did it, because it was prior to go her getting

18 the money, because she believed what I told her, that I

19 needed these inflated balances to try to lure in bigger

20 clients. I believe she was trying to assist me to get

21 bigger clients in.

22 Q Move to strike that answer as non responsive as

23 well.

24 Could you have been $10,000 off in your

25 guesstimate here today?


Page 2013

1 A No.

2 Q Why not?

3 A It's too far off in that small of an amount.

4 If I had said between 150 and $200,000 I could possibly

5 be $10,000 off. At that small of an amount, no, I

6 wouldn't be that far off.

7 Q What makes you think you wouldn't be that far

8 off? I don't understand the answer.

9 A Because I know how I was with money. I'm

10 telling you, the specificity of it for some reason I

11 can't remember whether it was 25,000 or 30,000 and

12 that's only a function of the fact that I didn't keep

13 track and it wasn't like it was a big event for me. I

14 didn't pay -- it's not a single bribe. You don't know

15 now and as you will come to learn as all of this

16 unfolds, this was a frequent occurrence. I was dealing

17 with a lot of people who would only deal in cash. And

18 as a result I can't tell you specifically what I gave

19 her.

20 Q What happened after you handed Ms. Caretsky the

21 accordion file that you mentioned with the money in it?

22 A I didn't say accordion file.

23 Q A file?

24 A It was an envelope that had accordion sides.

25 Q After you handed her that, what did you do?


Page 2014

1 A I left.

2 Q Did you get in a car? What did you do?

3 A I got in the car, yes.

4 Q And did you have a driver in the car?

5 A I don't know whether I drove or whether my

6 driver drove. It's possible that Mr. Scandiffio drove

7 me.

8 Q Was he your only driver?

9 A He was my driver 90 percent of the time, 95

10 percent of the time.

11 Q When he wasn't driving, who drove for you?

12 A Jose Morales drove from time to time, a guy

13 name Frankie D. drove for me from time to time.

14 Q Do you know what kind of car you were in that

15 day?

16 A I don't.

17 Q Do you remember whether it was sunny outside?

18 It's daytime, right?

19 A It was daytime, but I don't recall.

20 Q What did Ms. Caretsky do when you gave her the

21 envelope?

22 A She said, Thank you.

23 Q Did she open it in front of you?

24 A She did not.

25 Q Did she understand what was in it?


Page 2015

1 A I'd be guessing as to what was in her mind.

2 Q Now, you testified that one of the things you

3 needed to be careful about with the scheme was to make

4 sure that very few people knew about it; is that

5 accurate?

6 A Yes.

7 Q Weren't you taking quite a risk that

8 Ms. Caretsky would walk back into the bank, open the

9 envelope and tell a lot of people?

10 A No.

11 Q Weren't you taking a risk that Ms. Caretsky

12 would walk back into the bank and create quite a scene

13 with the amount of money in the envelope that you say

14 was in it?

15 A Two things; one, I don't know that she walked

16 back into the bank with it; two, I don't believe that

17 was a risk, no.

18 Q Do you know where she went after you handed her

19 the envelope?

20 A I have no idea.

21 Q You didn't look back over your shoulder, did

22 you?

23 A I don't recall what I did. I recall leaving.

24 Q With respect to Mr. Spinosa, you also said that

25 you gave him money; is that correct?


Page 2016

1 A I did.

2 Q Was that an appetizers, lunch, dinner; do you

3 remember?

4 A Lunch.

5 Q You said that was at Bova?

6 A Correct.

7 Q How much could you have been off on that

8 particular guesstimate?

9 A It was between 50 and $75,000. I don't recall

10 which one. And it wouldn't have been 50 or 60, 60 or

11 65. It would have been 50,000 or 75,000. I just don't

12 recall which one it was. Same thing actually with

13 Ms. Caretsky. It would have been 25,000 or 30,000, not

14 25, 25,500, 26. One or the other.

15 Q Could it have been off by 25,000?

16 A No.

17 Q How do you know that?

18 A Because I remember in my own head thinking

19 about what I was going to do and what I was going to

20 give. I also remember considering how much was going to

21 fit in this particular envelope. I remember giving

22 large amounts of money to other people for whatever it

23 was. It was between 50 and $75,000. How did I pick the

24 amount? I can't tell you.

25 Q How did you fit it in the envelope? Was it a


Page 2017

1 bunch of cash that you threw in? Was it bundles?

2 A No, no. I kept the money very organized. It

3 was all either in those bank wrappers or in rubberbands.

4 Q Do you recall as to Mr. Spinosa whether it was

5 bank wrappers or rubberbands?

6 A I don't.

7 Q How about with Ms. Caretsky?

8 A I don't.

9 Q Were these envelopes bulging?

10 A I don't really recall one way or the other.

11 Q Did you use the same size envelope for

12 Ms. Caretsky as you used for Mr. Spinosa?

13 A I doubt it, but I don't recall one way or the

14 other.

15 Q Were Ms. Caretsky's exact words, "Thank you"?

16 A No. As I sit here today I don't know what she

17 said other than, Thank you. I think she said, Thank

18 you.

19 Q So that's a guess too?

20 A It's a guess, yes. It wasn't an extraordinary

21 event in the scheme of what I was doing. It would be

22 for someone who's never paid a bribe before, but

23 unfortunately because of the business I was doing and

24 the people I was doing business with, the regular

25 movement of cash --


Page 2018

1 Q Did you ever --

2 A -- was a frequent occurrence.

3 Q I'm sorry. I didn't mean to interrupt you.

4 A That's okay.

5 Q Did she ever raise the money with you after

6 that day?

7 A Never.

8 Q I'm curious. You said that she came outside

9 the bank and you were in there prior to that; is that

10 correct?

11 A I was in the bank. I asked her to meet me

12 outside. I walked out. Eventually she met me.

13 Q Do you remember what words you used to ask her

14 to meet you outside?

15 A The specific words, no.

16 Q Did you ever provide Ms. Caretsky with any part

17 of the rock-style life?

18 A I did not.

19 Q And Ms. Kerstetter?

20 A I did not.

21 Q Or anyone else other than what you mentioned

22 with respect to Mr. Spinosa?

23 A I didn't understand your last question.

24 Q Other than your testimony about what you

25 provided Mr. Spinosa, did you ever provide anyone else


Page 2019

1 at TD Bank with what you would refer to as the

2 rock-style life?

3 A No, ma'am.

4 Q Do you know if perhaps Ms. Caretsky was already

5 living the rock-style life?

6 A I have no idea one way or the other.

7 Q Same thing for Mr. Spinosa. You don't know?

8 A I have know no idea one way or the other.

9 Frank certainly didn't act like he was living the way I

10 was treating him. He was always extremely appreciative

11 and certainly made it appear to me that he was doing

12 things he would not otherwise be able to do.

13 Q The appreciativeness, you would agree, could be

14 a function of the personality that he has, correct?

15 A The problem is --

16 UNKNOWN SPEAKER: Objection to the form.

17 THE WITNESS: -- you ask me a question that

18 asks me to tell you what I'm thinking. This is

19 what I'm thinking. I don't know for certain what

20 was in his head. It would be a guess.

21 MS. EVANS: Could you read back the last

22 question, please?

23 (The last question was read back by the court

24 reporter.)

25 BY MS. EVANS:


Page 2020

1 Q I ask you to answer that question.

2 MR. LICHTMAN: Same objection.

3 BY MS. EVANS:

4 Q You can still answer.

5 A I'm sorry. Repeat your question.

6 (The last question was read back by the court

7 reporter.)

8 THE WITNESS: It could have been the function

9 of anything, but that's completely speculative. I

10 don't know what it was a function of.

11 BY MS. EVANS:

12 Q Did you ever tell anyone after the Ponzi scheme

13 exploded that Bill Brock handed Ms. Caretsky an envelope

14 with cash in it?

15 A I don't recall saying that, no.

16 Q Are you aware that Coquina's counsel,

17 Mr. Mandel, told a federal judge that he had a good

18 faith belief and had been told by counsel for the

19 bankruptcy trustee that you said Bill Brock had handed

20 money in an envelope to Ms. Caretsky in a parking lot.

21 A Two things: I'm not aware of that, and I'm

22 perplexed as to where Mr. Mandel keeps getting his

23 information because it's my understanding he's also the

24 one that said that he had a good faith belief that I

25 said Mr. Spinosa flew on a plane with me somewhere, and


Page 2021

1 I've never said that either.

2 Q Right. Both of those would be completely

3 incorrect to your knowledge, wouldn't they?

4 A They are incorrect.

5 Q Can you list for me every bank officer you've

6 ever met at TD Bank?

7 A John Tolomer, Frank Spinosa, Rosanne Caretsky,

8 Jennifer Kerstetter. I don't know if Mr. Mejia is a

9 bank officer. That's all I recall at this moment.

10 There may be more.

11 Q Were there any employees, bank employees,

12 outside that list of officers that you just gave me that

13 you've met at TD Bank?

14 A I'm certain I've met other people because the

15 people there were extremely friendly and it was

16 certainly their, I guess their protocol or their nature

17 to introduce me. But I don't have a specific

18 recollection of who they were.

19 Q I wanted to ask two unrelated questions. You

20 had mentioned that there was $150,000 that Bill Brock

21 got out in cash from two different bank branches on a

22 particular day?

23 A Yes.

24 Q Do you have any recollection that you were at

25 one of the branches getting part of that money?


Page 2022

1 A No.

2 Q And you're certain that you weren't?

3 A I don't have an independent recollection of

4 doing that. I was very busy that day doing something

5 else.

6 Q What day was that?

7 A I don't recall.

8 Q What else were you doing?

9 MR. LaVECCHIO: Objection, privilege.

10 BY MS. EVANS:

11 Q And this was before the Ponzi scheme exploded,

12 correct, that this $150,000 came out of the bank, two

13 bank branches?

14 A Yes.

15 Q Would it surprise you to know that on the

16 evidence of those cash transactions coming out of the

17 bank someone with your identification provided that

18 identification to the bank?

19 A It would not surprise me, no.

20 Q Why would it not surprise you?

21 A Because in the scheme of everything that was

22 going on with Bill running one way and me running all

23 over the place and taking care of what I was taking care

24 of, it is certainly plausible that I would have driven

25 over to the 17th Street branch to take care of that part


Page 2023

1 of the transaction.

2 I needed $150,000 cash for a specific purpose.

3 It was urgent. I was going to do whatever I needed to

4 do to get the money.

5 Q Do you know of anyone by the name of Kip

6 Hunter?

7 A I do.

8 Q Who is Kip Hunter?

9 A She was a partner of mine in a company called

10 Kip Hunter Enterprises, and she was a very close friend

11 of mine for a very long period of time. She was also

12 married to another friend of mine.

13 Q Did Kip Hunter do any marketing for you or PR

14 for you?

15 A That's what she did, Kip Hunter Marketing.

16 Q Did she do that for the RRA law firm?

17 A For the RRA law firm, for our Bova businesses,

18 any business enterprise I was involved in she was

19 involved in.

20 Q For what period of time?


22 Q Did Kip Hunter have any knowledge of the scheme

23 or fraud?

24 A To my knowledge, no.

25 Q Did Kip Hunter in any way assist you even


Page 2024

1 unknowingly in the scheme or fraud?

2 A Yes.

3 Q How?

4 A Unknowingly by helping me build my reputation

5 in the community and the reputation of my law firm in

6 the community and the reputation of my other businesses

7 in the community.

8 Q What particular ways did Kip Hunter accomplish

9 this?

10 A All you've got to do is look at all the

11 advertising she did for us, whether it was getting our

12 name at the Bank Atlantic Center or with the Miami Heat

13 or with the Dolphins and everything in between. That

14 all added to it.

15 Q For what period of time?


17 MR. LICHTMAN: It's five to 5:00 so, you know.

18 THE WITNESS: Ms. Evans, probably the easiest

19 way to do it is to look at the day that Kip Hunter

20 Enterprises or Kip Hunter Marketing was

21 incorporated, when we formed that company. That

22 will give you an idea of how long she did that for

23 because prior to that she was actually working for

24 the Levinsons and was not doing advertising for me

25 or any of our companies.


Page 2025

1 BY MS. EVANS:

2 Q Did RRA have Kip Hunter on a retainer?

3 A We were paying her a bunch of money. It may

4 have been in a retainer format. I know we had to pay

5 her and we had to pay advertisers.

6 Q For the year 2009 do you know how much you paid

7 Kip Hunter?

8 A I do not.

9 Q When you say, "we formed the company," what are

10 you referring to?

11 A There was a holding company that held my 50

12 percent interest in Kip Hunter Marketing. And I don't

13 remember -- wait, wait, wait. I do. It was ILK3. ILK3

14 held the ownership interest in Kip Hunter Marketing, my

15 interest.

16 MS. EVANS: Shall we shut down for the day?

17 MR. LaVECCHIO: That's music to my ears.

18 (The proceedings were concluded at 5:00 p.m.)

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Page 2026

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

9 the State of Florida at Large, certify that I was

10 authorized to and did stenographically report the

11 foregoing proceedings and that the transcript is a true

12 and complete record of my stenographic notes.

13

14 Dated this 20th day of December, 2011.

15

16

17

18 ______________________________________ Terri L. Wright

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Documents

2011-12-20 Rothstein Scott PM