2011-12-20 Rothstein Scott PM

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: TIME: PLACE:
Tuesday, December 20, 2011 1:00 p.m. - 5:00 p.m. James Lawrence King Federal Justice Building 99 Northeast Fourth Street Miami, Florida 33124
Examination of the witness taken before:
Terri Wright United Reporting, Inc. 1218 Southeast Third Avenue Fort Lauderdale, Florida 33316 (954)525-2221 United Reporting, Inc. (954) 525- 2221
Page 1874 1 2 3 4 5 Plaintiffs, 6 vs. 7 SCOTT W. ROTHSTEIN, et al, 8 9 10 11 12 Case No: 13 14 Case No: 15 16 Case No: 17 18 Case No: 19 20 21 Case No: 22 23 24 25 United Reporting, Inc. (954) 525- 2221 Case No: 11-02604-RBR STETTIN VS. MAPLE LEAF DRILLING PARTNERS, ET AL 11-02605-RBR STETTIN VS. DON KING PRODUCTIONS Case No: 11-02473-RBR STETTIN VS. REGENT CAPITAL PARTNERS, LLC ET AL 11-02368-RBR STETTIN VS. TD BANK, N.A. 11-02288-RBR STETTIN VS. FIDELITY CHARITABLE GIFT FUND 10-03802-RBR STETTIN VS. CENTURION STRUCTURED GROWTH LLC, ET AL. 10-03767 RBR STETTIN VS. GIBRALTAR PRIVATE BANK & TRUST CO. AMY ADAMS, ET AL, PLAINTIFF VS. SCOTT ROTHSTEIN, ET AL. CASE NO: 11-CV-61688-JIC/LSS Defendants. ________________________________/ IN THE CIRCUIT COURT OF THE 17TH JUDICIAL CIRCUIT IN AND FOR BROWARD COUNTY, FLORIDA CASE NO: EDWARD J. MORSE, CAROL A. MORSE, and MORSE OPERATIONS, INC., 10-2411 CACE (19)
Page 1875 1 2 3 4 5 6 7 8 9 APPEARANCES FOR THE TRUSTEE: 10 11 12 13 14 15 APPEARANCES FOR RAZORBACK: 16 17 18 19 20 21 22 23 24 25 United Reporting, Inc. (954) 525- 2221 CONRAD & SCHERER, LLP 633 South Federal Highway Eighth Floor Fort Lauderdale, Florida 33302 BY: WILLIAM R. SCHERER, ESQUIRE ERIC RAYMAN, ESQUIRE IVAN J. KOPAS, ESQUIRE and KOZYAK, TROPIN & THROCKMORTON, P.A. 2525 Ponce de Leon Boulevard Ninth Floor Coral Gables, Florida 33134 BY: HARLEY S. TROPIN, ESQUIRE GENOVESE, JOBLOVE & BATTISTA, P.A. 100 S.E. 2nd Street Suite 4400 Miami, Florida 33131 By: JOHN. H. GENOVESE, ESQUIRE DAVID C. CIMO, ESQUIRE THERESA M.B. VAN VLIET, ESQUIRE JESUS SUAREZ, ESQUIRE ROBERT F. ELGIDELY, ESQUIRE BERGER SINGERMAN 350 East Las Olas Boulevard Suite 1000 Fort Lauderdale, Florida 33301 BY: CHARLES H. LICHTMAN,, ESQUIRE APPEARANCES FOR SCOTT ROTHSTEIN: LAW OFFICE OF MARC S. NURIK 1 East Broward Boulevard Suite 700 Fort Lauderdale, Florida 33301 BY: MARC S. NURIK, ESQUIRE APPEARANCES FOR THE CHAPTER 11 TRUSTEE, HERBERT STETTIN:
Page 1876 1 2 3 4 5 6 7 8 APPEARANCES FOR MURRAY HUBERFELD AND DAVID BODNER 9 HARVEY WERBLOWSKY, ESQUIRE 10 APPEARANCES FOR LEVINSON'S JEWELERS: 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 United Reporting, Inc. (954) 525- 2221 APPEARANCES FOR THE COMMITTEE OF UNSECURED CREDITORS: AKERMAN, SENTERFITT One Southeast Third Avenue 25th Floor Miami, Florida 33131-1704 BY: MICHAEL GOLDBERG, ESQUIRE APPEARANCES FOR T.D. BANK: GREENBERG TRAURIG, P.A. 401 E Las Olas Blvd Ste 2000 Fort Lauderdale, Florida 33301 BY: HOLLY SKOLNICK, ESQUIRE DONNA EVANS, ESQUIRE MARK P. SCHNAPP, ESQUIE KOPELOWITZ OSTROW FERGUSON WEISELBERG KEECHL 200 SW 1st Ave Suite 1200 Fort Lauderdale, Florida 333012073 BY: JAN ATLAS, ESQUIRE CURTIS, MALLET-PREVOST, COLD & MOSLE LLP 101 Park Avenue New York, NY 10178-0061 BY: ELIOT Lauer, ESQUIRE GABRIEL HERTZBERG, ESQUIRE GOLDSTEIN, TANEN & TRENCH, P.A. One Biscayne Tower, Suite 3700 Two South Biscayne Boulevard Miami, Florida 33131 By: SUSAN E. TRENCH, ESQUIRE APPEARANCES FOR PLATINUM PARTNERS VALUE ARBITRAGE CENTURION STRUCTURED GROWTH, LLC:
Page 1877 1 2 3 4 5 APPEARANCES FOR FEDERAL INSURANCE COMPANY: 6 7 8 9 10 11 12 13 14 15 16 17 APPEARANCES FOR EMESS CAPITAL, LLC: 18 19 20 21 22 23 24 25 United Reporting, Inc. (954) 525- 2221 KLUGER KAPLAN SILVERMAN, KATZEN & LEVINE, PL 201 S Biscayne Blvd Fl 17 Miami, Florida 331314 BY: CASEY H. CUSICK, ESQUIRE APPEARANCES FOR ST. PAUL FIRE & MARINE: MILLS PASKERT DIVERS P.A. 100 N Tampa St Ste 2010 Tampa, Florida 336025145 BY: JOHN A. BLACK, JR., ESQUIRE LAW OFFICES OF ROBERTA DEUTSCH 2499 Glades Road Suite 110 Boca Raton, Floridan 33431 BY: ROBERTA M. DEUTSCH, ESQUIRE 1430 South Dixie Highway Suite 204 Coral Gables, Florida 331463127 BY: ALEX HOFRICHTER, ESQUIRE APPEARANCES FOR MORSE: TRIPP SCOTT, P.A. 110 S.E. Sixth Street,15th Floor Fort Lauderdale, Florida 33301 By: JOHN M. MULLIN, ESQUIRE GEORGE WALKER, ESQUIRE APPEARANCES FOR CAROL MORSE, TED MORSE & MORSE OPERATIONS: CLAUSIN MILLER One Chase Manhattan Plaza 39th Floor New York, New York 10005 BY: SCOTT L. SCHMOOKLER, ESQUIRE APPEARANCES FOR RLI ZURICH INSURANCE COMPANY, COLUMBIA INC. & ZURICH INSURANCE:
Page 1878 1 2 3 4 5 APPEARANCES FOR FEPICT, MS GROUP: 6 7 8 9 10 11 12 13 APPEARANCES FOR GIBRALTAR: 14 15 16 17 APPEARANCES FOR FRANK PREVE: 18 19 20 21 22 23 24 25 KOPELOWITZ OSTROW 200 SW 1st Ave Ste 1200 Fort Lauderdale, Florida 33301 By: BART A. HOUSTON, ESQUIRE PODHURST ORSEK 25 W Flagler St Ste 800 Miami, Florida 331301720 BY: RAMON A. RASCO, ESQUIRE APPEARANCES FOR LEVINSON PEARSON & ASSOCIATES, WATCH U-WANT, INC.: STEARNS WEAVER MILLER, et al. 150 W Flagler St Ste 2200 Miami, Florida 331301545 BY: MARY BARZEE-FLORES, ESQ. MATTHEW DATES, ESQUIRE NYSTROM, BECKMAN & PARIS One Marina Park Dr., 15th Flr. Boston, MA 02210 BY: JACK SEIGAL, ESQUIRE APPEARANCES FOR MICHAEL SZANFRANKSI: LYDECKER, DIAZ 1221 Brickell Avenue Floor 19 Miami, Florida 33131 BY: CHRISTOPHER G. BERGA, ESQUIRE MIGUEL J. CHAMORRO, ESQUIRE APPEARANCES FOR ROSANNE CARETSKY: BILLING COCHRAN LYLES 515 E Las Olas Blvd Floor Six Fort Lauderdale, Florida 333012296 BY: TUCKER CRAIG, ESQUIRE DANIEL S. GELBER, ESQUIRE
United Reporting, Inc. (954) 525- 2221
Page 1879 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 United Reporting, Inc. (954) 525- 2221 APPEARANCES FOR THE US GOVERNMENT: 99 N.E. 4th Street Miami, Florida 33132 BY: LAWRENCE LAVECCHIO, ESQUIRE APPEARANCES FOR FRANK SPINOSA: SCHLESINGER AND COTZEN, P.L. 799 Brickell Plz Ste 700 Miami, Florida 33131 BY: MICHAEL J. SCHLESINGER, ESQUIRE and MICHAEL COTZEN, ESQUIRE and SAMUEL J. RABIN, ESQUIRE 799 Brickell Plaza Suite 606 Miami, Florida 33131
Page 1880 1 2 3 4 5 6 7 EXHIBIT INDEX 8 PAGE 9 10 11 231 12 13 14 233 15 234 16 235 17 236 18 237 19 238 20 239 21 22 23 24 25 United Reporting, Inc. (954) 525- 2221 Invitation E-mail 2008 Coquina 000716-751, Letter dated 4/27/09 1969 Coquina 000679-715, Letter dated 6/1/2009. 1965 TRUSTEE_TD-000290, E-mail dated 8/18/09 1957 Coquina 001376-1413, E-mail dated 4/27/09 1949 Coquina 000902-903, E-mail dated 6/22/09 1946 Coquina 00679-715, Letter dated 6/1/09 1942 232 TRUSTEE_TD-000310, 307, 29-32, 27, E-Mail dated 8/14/09. Coquina 000001-35, Promissory Note dated 9/25/09. 1887 1910 TD BANK'S 230 Motion for Reduction of Sentence and for Stay of Ruling. 1882 DIRECT BY MR. SCHNAPP DIRECT BY MS. EVANS EXAMINATION INDEX PAGE 1881 1906
Page 1881 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CONTINUED DIRECT EXAMINATION BY MR. SCHNAPP: Q A Q Good afternoon, Mr. Rothstein. Good afternoon, sir. We were talking a little bit before the break
about people who had filed letters either for or against you and your expectations as well. filed a Rule 35 motion already? A Q I believe they have, yes, sir. And what is your understanding of the reason Has the government
that they would file a Rule 35 motion? A My understanding was to preserve their right to
file a -- to move for a Rule 35 substantial assistance reduction for me if they determined that I was entitled to it. Q That would be based upon your providing
substantial assistance in the prosecution of other people, correct? A My understanding is in the investigation or
prosecution of any criminal. Q Let me show you what has been marked as Exhibit I'm sorry to
230 and ask if you're familiar with that. keep throwing this to you. MR. NURIK: be easier. United Reporting, Inc. (954) 525- 2221
You can hand it to me here, it will
Page 1882 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (Whereupon, TD Bank's Exhibit No. 230 was marked for identification.) BY MR. SCHNAPP: Q A Do you recognize that, sir? I actually don't think I've ever seen it. I
heard about it but I don't recall actually receiving a copy of it. Q You don't recall ever seeing a copy of the
document that purports to be a Rule 35 motion concerning your sentence? A Q A No. Were you aware that was filed? Yes, I said I was. I was aware it was filed but
I don't get copied on a lot of things. Q Okay. And you were aware that Mr. Scherer filed
something with the Court as well, right? A Q A Q Subsequent to this? At the same time, around that time. I was not. Were you aware that Mr. Scherer ever filed
anything with the Court? A Only thing that I was aware of is that at the
time I was sentenced I understand Mr. Scherer, I think I read from it a little while ago, filed a letter at the time that I was sentenced. United Reporting, Inc. (954) 525- 2221
Page 1883 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q I might be having the time frame wrong.
Mr. Scherer at your sentencing filed a letter and Mr. Mandel at your sentencing filed a pleading saying that you had not cooperated? A Q I believe that that is correct. And the government subsequently filed the Rule
35 motion to reduce your sentence; is that right? A Q Yes, sir. Okay. And you have now - you have made efforts
to try to help the Trustee as well, have you not? A Q Yes, sir. And you've also made efforts to try to help
people, the plaintiffs, for example, who are trying to help the Trustee; is that true? A Q I'm sorry, say that again. Have I what?
Have you been trying to help Mr. Mandel's
clients as well? A Q A I don't know who Mr. Mandel's clients are. The Coquina Group. Yes, I believe the Coquina Group is made up of
innocent investors and I'm trying to help them, yes, sir. Q You actually refused to cooperate with them when
they originally -- which is what caused Mr. Mandel to file that pleading? A That is one hundred percent false. United Reporting, Inc. (954) 525- 2221 I have never
Page 1884 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q since my return from Morocco not one single time ever refused to help anyone. Q So when Mr. Mandel wrote that you were refusing
to help his group that was a false statement? A Q Absolutely false. And you filed a pleading with the Court telling
the Court, Mr. Mandel had filed a false pleading? MR. LICHTMAN: I'm sorry? Well, let me try again. Do you see the pleading Objection to form.
that Mr. Mandel filed on behalf of Coquina? A Hang on. I didn't mean in the transcript I'm I meant I don't have any idea
sorry for doing something. what you're talking about. Q A Q
Let's try again, okay? Sure. Mr. Mandel on behalf of Coquina filed a
pleading at your sentencing that you were not cooperative? A Q I don't recall ever seeing that until today. You were not aware -- is it your testimony that
you were not aware that one of the investor groups filed a pleading at your sentencing stating that you were not being cooperative? A I don't recall knowing that, no, sir. United Reporting, Inc. (954) 525- 2221
Page 1885 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you? A I don't know whether it will help me or hurt me, Q A Q A Okay. I don't recall. Did you recall -Fortunately you have never been through this, But going though a
and I brought this on myself.
sentencing of this magnitude is an earth-shattering moment in your life, so you'll have to excuse me if my exact memory of it is a little vague. Q But you do agree with me that you've now seen a
document filed by the Coquina plaintiffs stating that you were not cooperative? A Q That's correct. And that position raised by investors would hurt
depends on what the judge does with it, whether the judge believes it or not based upon everything else I have done. I suspect, because I know Judge Cohn to be a very
fair man, I believe that he'll weigh everything I've done in accordance with everything he sees and hears and he'll make his own judgment. Q Let's get back to your relationship with some of I think you said that your investors
the plaintiffs. were greedy? A
Many of them, yes. United Reporting, Inc. (954) 525- 2221
Page 1886 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A morality. Q A morality. Q Now with respect to the Damson e-mails we had I'm sorry? Certain of the investors placed money ahead of In what way were they greedy? Certain of the investors placed money ahead of
discussed earlier, you had developed a close relationship with him, had you not? A You asked me that, you asked me that a bunch of I don't think that I was close to
times actually. Mr. Damson. friends.
I think that we were friends or becoming
I think most of the conversation I had with him
and for that matter most of the conversation he had with me that was - what I'll call familiar conversation, using things like Rocky and Rothschild and the like, it's my belief that we were both working each other. is a very shrewd businessman to my knowledge. Q A Q A You felt he was working you? To some extent, sure. Could you explain? Just in the way he handled me. There were Mr. Damson
certain things he wanted, certain things he wanted to make sure that I did like getting letters in place for him and the like, offering him the best deals, that type United Reporting, Inc. (954) 525- 2221
Page 1887 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of stuff. He was working me. He figured if I felt he
was my friend I would be more -- if I felt he was my friend I would be more open with him. exact same thing with him. Q When Mr. Damson's group came into the picture, I was doing the
that was right around the time you were having problems with the Funds, correct? A It was at the time that we were having problems
with the Funds, yes. Q Mr. Damson would have been one of the new
investors you were bringing in to take out some of the funding that was being done by the Funds? A Q Correct. Let me show you what I'm going to - what has
been marked for identification as Exhibit 231, it's a composite. A Sure. (Whereupon, TD Bank's Exhibit No. 231 was marked for identification.) BY MR. SCHNAPP: Q read it. A Q Okay. These letters purport to show some fairly Let me know when you have had a chance to have
friendly chatting between you and Mr. Damson; is that United Reporting, Inc. (954) 525- 2221
Page 1888 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 is. Q Okay. He's communicating with you about a What does that have to do with the fair to say? A Yes, sir. It is -- they're are e-mails and
they show me speaking to Mr. Damson the way I spoke with probably nearly all my investors with the exception of Mr. Von Allmen. Q A For example? I had relationships like this even far more
in-depth and far more familiar with many of my investors. Q For example, you were talking about a lobster
party on page one of the document. A No, I'm not talking about that, I think Barry
lobster party. investment? investment? A Q A
What does that have to do with the
Lobster specifically? Or that communication. Do you want to know what it says or do you want
to know what I think it says? Q A What do you think it says? I think it's more of Barry trying to work me. I think he wants I
I think he's trying to be nice to me.
to ultimately - I think he believed in the deals. United Reporting, Inc. (954) 525- 2221
Page 1889 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 think he believed that he had a good investment. He was
very, very motivated by money, okay, he didn't become wealthy by accident. And I think that he wanted to draw
me into his crowd to make me feel like I was part of his crowd so that he could secure as good a position in my investment group as he possibly could. Q He wanted to curry your favor so that you would
give him more deals, right? A I think he wanted to be as close to me as he
possibly could in order to increase his ability to get deals, yes. Q The next e-mail, the July 15th e-mail purports
to be some sort of a joke; is that right? A Q I don't know what this is. You don't recall what the Italian Christmas
present was? A Q No. Do you recall sending him a video or, I'm
sorry, a voicemail of some sort that you forwarded? A Q A Q A Q I think this looks like him sending it to me. I misspoke. Did Mr. Damson sent to you?
It's certainly possible. Do you recall what it was? I don't recall off the top of my head. Now, I'd like you to go towards the back of United Reporting, Inc. (954) 525- 2221
Page 1890 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that document, let's sort of look at some of the other language in there. There's that Rothschild language
again; is that right? A Yes, we referred to each other as Rocky and
Rothschild, Dr. Rothstein, Dr. Damson, that type of thing, yes. Q Was that to convey that sort of that you were
both purportedly very rich and wealthy, well-to-do people? A Q Yes, I think that was the joke. He writes to you that, on Exhibit 000030, that
you can see Jerome Avenue from my deck, right? A Q A Q A I wrote that or he wrote that? He wrote that? Yes. You used to live on Jerome Avenue in the Bronx? No, I used to live in the Bronx but I know He wrote that.
where Jerome Avenue is. Q A Q What period were you in the Bronx? Until 1976. Now, on the next page, last two pages of the
document, that purports to refer to a deal, does it not? A Look at the last page. The last page where I'm getting an e-mail from
Pricila saying Barry is going to pick me up? United Reporting, Inc. (954) 525- 2221
Page 1891 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q page in. A Q million? A Q A Q Yes, I see all that. Can you explain what the deal was here? I'm explaining what the deal is, yes. This is basically - if I can ask you to clarify Okay. Let me take a look. 15 million, ROI 7 The last page where it says -- I'm sorry, one
The deal is as follows:
it - you're offering him a deal to pay $15 million for a $22 million settlement; is that right? A Q Correct. And it would be payable in three payments; is
that right? A Q Yes, sir. And within 75 days he would receive a profit of
7 million; is that right? A Q Yes. And then you write - could you read out loud
the last two sentences? A Q He and his partners. Okay. And then it says: Nicely done. Can you
read the next section? A It says: Nicely done, Rockefella with a lot of Nicely done Rothschild as well.
a's and a smiley face.
Page 1892 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Complimenting myself. drinking. Q A Always test your liquids before
And it says hehehehehe. Why did you write that? He used to -- He and I used to joke around
about the fact that someone might try to poison me. Q A Q A Someone might try to poison you? Yes. Who would do that? That they would want to kill the goose that I don't know. It was a joke.
laid the golden egg. Q
On the previous page you also write on August Money never sleeps? I used
17, you say: A
Yeah, I said that to a lot of people.
to say that to Szafranski. people. Q A What did that mean?
I said that to a lot of
It was a referral back to a movie called Wall
Street where Gordon Gekko said, Money never sleeps. He's talking to Bud, he said, Money never sleeps. was speaking to the character Bud. Q You were picking up the language from the He
character Gordon Gekko, right? A Q Yes. We've heard a little bit about Michael
Szafranski and could you explain what Szafranski's job United Reporting, Inc. (954) 525- 2221
Page 1893 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 was supposed to be. Let's first focus on the Funds.
What was Mr. Szafranski supposed to do with the Funds? A He was supposed to be an independent third
party verifier verifying the actual existence of the deals. Q And what right would give Mr. Szafranski under
the terms of your deal, the right to look at any of the deal documents? A Q I don't think I understand your question. Well, let's go back. You said he's an
independent verifier, what was he supposed to verify? A He was supposed to verify the signatures on the
deals, the plaintiff, the defendant, he was supposed to verify the wires in and out, balances in accounts. And
as I testified over the last several days, there were other occasions where he was asked to do additional due diligence type things like trying to match plaintiffs and defendants, that type of stuff, listen in on negotiations. Q My question to you is, what right - if you're
representing a client, what right did Mr. Szafranski have to be involved in any communication between you and your client? A The way we drafted the agreements we believed
we were drafting them in a nebulous enough fashion so as United Reporting, Inc. (954) 525- 2221
Page 1894 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 to allow for an independent verifier to verify the existence of the deals. When someone inquired about it
we tied it through the financial advisor type role that we placed in the agreements as well as just creating language as we went on saying that the parties involved, excuse me, the plaintiff, which would have been the only party knowing about this particular sale, had no problem with it and that we had the independent third party person locked into confidentiality, that wasn't going to be a problem. No one voiced any objection to it. The only
person that ever voiced an objection to an independent third party verifier was me. Q Well, Miss Evans is going to go over the deals But wasn't the financial advisor
in more specificity.
who was allowed to talk to the plaintiff about the financial terms of the settlement, but they were not allowed to look at the documents; isn't that true? A Without seeing a document I couldn't tell you
from the top of my head. Q But it's your testimony that Mr. Szafranski was
supposed to see unredacted versions of the documents? A Q That's what we all agreed to. How would that help anybody who was trying to
buy one of the settlements? United Reporting, Inc. (954) 525- 2221
Page 1895 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A Q He was to verify that this was real. Did he ever see somebody signing an agreement? No, sir. Did he ever verify any of the companies that
were settling were real? A He lied about doing that but he didn't really
do it because the only companies that were real were the major companies whose names we used at the very end, the last several months of the Ponzi scheme. Q Would you explain what you meant by
Mr. Szafranski lied about the verifications? A No, I said he lied about verifying the
existence of the defendants. Q A Who did he lie to? Actually, as I testified earlier, he actually,
as the Ponzi scheme went on lied about the entire verification process once he knew there was no real plaintiffs and defendants. Q At what point did he realize there were no
plaintiffs and defendants? A I don't know when he actually realized it. I
would be guessing, but at the time that he brought his first investor in he knew that it was a fraud. Q right? United Reporting, Inc. (954) 525- 2221 Mr. Szafranski was chosen by the Funds; is that
Page 1896 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Yeah. Again, you're referring to Platinum,
Centurion, Level 3? Q A Yes. Yes, sir, he was chosen to my understanding by
Gil Kalter and approved by the rest of the people at the Funds. Q A Q Did you approve of Mr. Szafranski? After I met him, yes. How soon into the -- Was Mr. Szafranski falsely
verifying information that was provided to the Funds? A You know, I'd have to look at the timing.
Eventually he was because there were times when he was saying he was verifying that he wasn't really verifying. And if you look at what he actually did as
opposed to what he wrote he did, yes, he was lying to them at a certain point in time. That was one of the
things that Mr. Preve and I liked about Mr. Szafranski. Q Sorry, I am not following, what did you like
about Mr. Szafranski? A He turned out to be a true player in every
sense of the word. Q the lies? A Q As far as I'm using for him, yes. Did you also have the nickname, maybe not to United Reporting, Inc. (954) 525- 2221 Player meaning someone that would go along with
Page 1897 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 his face, of Milquetoast? A Q A Oh, we used it to his face. Why was he milquetoast? I think I explained this the other day. Mike
was very, very ordinary, vanilla, went along with the flow, very emotional, but once -- he was very easy to calm down. If you said, Mike, this is real, so long as It
Mike was making money Mike said, yeah, that's real. was a no harm, no foul thing with Mike once he got involved in this. But even early on he was very vanilla.
Frank
and I wanted a verifier who was not, let's say what some people thought was going on or told what was going on by various people involved in this, he was not of the Big Four ilk. He wasn't like a Big Four CPA or auditor or
forensics guy, he was a simple guy who kept things simple. Q A Q Okay. Didn't ask a lot of questions. Milquetoast.
So was there a point where Mr. Szafranski was
verifying information at your office by looking at the fake TD Bank website? A Q A Yes. Did he know it was a fake TD Bank website? At a certain point in time he did, yes. United Reporting, Inc. (954) 525- 2221
Page 1898 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Do you know to what entities Mr. Szafranski
falsely verified information? A At various points in time my recollection is he
provided false information to all of the Funds, to Coquina, to all the people that he brought in to the deals, that would be the Coquina group and Mr. Sochet and anyone else he brought in, to the Von Allmen people, Mr. Scherer's clients. You would have to show me a list
of all the people to make sure my list is complete. But suffice it to say, anyone he verified for at a certain point in time he was lying. Q A Mr. Rothstein -And also - just so my answer is complete, I If you look at his e-mail
didn't mean to cut you off.
traffic once he's involved in the scheme, once he's bringing in his investors, he's creating all kinds of stories, things I didn't even create and neither did Mr. Preve, things we didn't create, all kinds of stories to bring in investors about him being the one person selected by the Florida bar to be able to review files and about his access to the trust account balances and the like. Q I have a few more questions and I'll turn it
over to Miss Evans. A Sure. United Reporting, Inc. (954) 525- 2221
Page 1899 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q I think I asked you before the break about why I'm not sure I got an
the change to whistle blowers.
answer that was clear, so maybe you could clarify that. A Sure. It was - as we were getting more
sophisticated investors and wanted to be able to do multiple plaintiff settlements, the whistle blowers were more amenable to selling a fictitious class type multiple plaintiff action settlement than were the sexual harassment cases. And we were in dire need of funds and so we wanted to be able to duplicate the same deals over and over again instead of having to come up with 10 different deals we were able to say we have 10 plaintiffs all at 700 with 300 ROI, how many do you want? You'll see that was going on frequently. got 10 of these, 15 of these, 20 of these. Q I saw those e-mails. The question to me that I We
would be asking you is why would all 10 of those people, in a hypothetical settlement, want to sell all of their settlement dollars? MR. LICHTMAN: Objection to form. You want me to answer
Why would they want to?
how I would answer it if someone asked me that? Q Yeah. Like for example, if an investor had United Reporting, Inc. (954) 525- 2221
Page 1900 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 asked you, Mr. Rothstein, you have 10 different people wanting to sell 100 percent of their settlements as part of this deal, why is that so? A One of two answers: How would you explain it? One, there are actually 25 That's one potential
plaintiffs, only 10 are taking it. answer.
Two, we've told them and they decided it's one Either they all take it or they
for all, all for one. don't take it.
We allowed them to meet privately among
themselves, invited them to go out and solicit independent counsel if they wanted to, and they needed to decide all for one and one for all or no one was going to get the deal because that's the way the defendant wanted it - excuse me, that's the way one of the plaintiffs wanted it or a group of the plaintiffs wanted it and we'd sell it that way. Q I'm not sure I understand why that explanation As far as the defendants in the
would make sense.
lawsuit were concerned, they -MR. LICHTMAN: MR. SCHNAPP: MR. LICHTMAN: THE DEPONENT: mix, I misspoke. BY MR. SCHNAPP: Q As far as the defendant would go, in your United Reporting, Inc. (954) 525- 2221 Objection to form. Excuse me? Objection to form. I took the defendant out of that
Page 1901 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 story, the defendants fully funded the settlements, correct? A Yes, and they had no idea that the settlement
was for sale. Q And then what I'm not following is how you
would be able to sell to a Coquina or anybody else a deal that all these people wanted to sell a hundred percent of their settlements. Why would the fact that
one wanted to do that and the impact on anybody else? A other. Q A Okay. Two plausible explanations that we utilized. No, no, I think we're misunderstanding each
One was when we would sell the deal to the investor we'd say, for example, we've got 26 plaintiffs. There are
nine of them, 10 of them, 12 of them, whatever it is that want to take the deal, the rest they are just going to wait. Q That's one way to sell it. Some of the cases you were selling were
plaintiffs and Qui Tam matches; is that right? A I think we had -- I don't know whether we
actually ever sold those but, yes, we definitely brought up Qui Tam in that context and we kind of wheeled our way in to that genre of case settlement, again for the possibility to have multiple plaintiff cases so we were United Reporting, Inc. (954) 525- 2221
Page 1902 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 able to duplicate settlements as opposed to keep creating new deals. Q Do you know if you could actually settle on a
confidential basis a Qui Tam action? A If you could settle on a confidential basis a I don't know that I ever looked that up
Qui Tam action.
one way or the other. Q And no one questioned you about that either
when you talked to them about a Qui Tam? A Q I don't recall anyone questioning me about it. The Qui Tam case you step in the shoes of the
federal government, don't you? A Q Yes. And so, if you're the Qui Tam relater, isn't it
a fact, sir, that you can't settle without the approval of the government? A Yeah, but I think the way we were selling this,
I really have to see all the e-mail traffic to tell you this for certain, but my belief is the way we were selling was that these were offshoots of the Qui Tam actions and that they were basically whistle blowers underlying the action, people that had claims against the company, that the company perhaps wanted to get rid of and they were going to buy them off and buy off their silence, to not to give rise to a Qui Tam action. United Reporting, Inc. (954) 525- 2221
Page 1903 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Finishing up with Mr. Szafranski. There were
times when you paid Mr. Szafranski's fees; is that right? A Q fees? A There were times when he received - there were When I paid his fees? Or you told parties that you were paying his
many times when he received a substantial amount of money from me for his illegal activity. There were also
times when as part of the inducement to get an investor to go in, when that investor was obligated to pay Mr. Szafranski's finders fee or third party verification fee, that we would agree to pay that sum to him. Q Was there any concern that that might interfere
with his independence if money was coming from you? A Did anyone voice that concern? No, no one. I
don't recall anyone voicing that concern. Q Now, just a couple more questions then I'll
turn it over. A Q Sure. Have you been charged with any other crimes at
the U.S. Attorney's Office? A Q A Not to my knowledge, sir, no. Are you going to be? I certainly hope not. United Reporting, Inc. (954) 525- 2221
Page 1904 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A Q crimes? A Q No, sir. What other crimes have you disclosed to the So have you been given immunity from other
U.S. Attorney's Office that you have committed? MR. LAVECCHIO: In a general way.
Money laundering; extortion; bribing public
officials, law enforcement. Q You said law enforcement, do you mean bribing
law enforcement? A Bribing law enforcement; paying law enforcement
to do illegal activity. Q A Tax? Interfering with the judiciary; tax evasion. I actually was I
Actually mine wasn't really tax evasion. inflating my taxes.
I don't know what you call that.
wasn't actually evading taxes, I was overpaying my taxes. That's all I recall at this moment, I'm sure
there may be more. Q Now, I know I'm going to go through objections, Which judges did you
but I just want the record clear. bribe? MR. LAVECCHIO:
Objection, privilege.
Which political officers did you bribe? MR. LAVECCHIO: Objection, privilege.
Page 1905 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Q Q Are you going to follow the U.S. Attorney's
Office's instructions not to answer my questions? A Q Yes, sir. Which people did you threaten? MR. LAVECCHIO: Objection, privilege.
Were you involved in any other schemes other
than the ones that have been disclosed through these proceedings? MR. SCHERER: What was the question?
Were you involved in any other schemes other
than the ones that have been disclosed through these proceedings? I'll include there the Ponzi scheme and
the issues with the fake judicial opinion. MR. LAVECCHIO: I'm going to object given the Scheme is a very
way you've couched that question. broad term. Q Fair enough.
Have you been involved in any
other fraudulent act other than the activity that's been discussed during the course of your deposition? A If you're including things I've been asked
about that I've not been allowed to answer, then the answer is yes. Q And with respect to your involvement in those
activities do you expect to be prosecuted? A I hope not. United Reporting, Inc. (954) 525- 2221
Page 1906 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BY MS. EVANS: Q A Q Can you hear me, Mr. Rothstein? I can Miss Evans, thank you. One of the things that I'd like to turn back to Q I'm going to turn it over to Miss Evans. I
will have some additional questions for you later. Thank you. A Thank you. DIRECT EXAMINATION
is some of your testimony last week and ask you a couple of questions. At one point you talked about the
hallmarks of a Ponzi scheme and I know that in some ways there has been a tutorial on that. But let me go back
to some specific questions and ask you some specific things. Last week you gave a list of some things that were hallmarks of the Ponzi scheme. And one of the
things that you listed was refusal to give the investors any information about who the parties were. And I wondered if you could just elaborate for me on how that is a hallmark of a Ponzi scheme? A Sure. I think that if you look at the Ponzi
scheme that I was involved in and you compare it to the Madoff scheme, the Dreier scheme, you'll see that lack of transparency is a hallmark. When you're running a
Page 1907 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Ponzi scheme you want to keep people as visually impaired as possible. You want them to see the image In
and the things you created and not see through that. this particular case there were red flags that my
co-conspirators and I believed existed that people were either choosing not to follow-up on, didn't catch, made a conscious decision to look the other way, and ultimately some people were obviously clearly involved and knew what was going on. examples. Q Let me go back to my question for a minute in I can give you some
talking about refusal to give any information about who the parties were; specifically the deal documents that you and your office prepared blacked out the names of both the plaintiffs and the defendants, correct? A Q A Q A Yes. By and large? Yes. Did so -Sometimes accidentally they were there, but by
and large we meant to black them out. Q Was it part of your pitch to investors to say
that you could not disclose either plaintiffs or defendants? A Yes, that it was a breach of confidentiality. United Reporting, Inc. (954) 525- 2221
Page 1908 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q And it was a breach of confidentiality because
you needed to have the parties not be able to -- let me strike that. Why was it a breach of confidentiality? Because the entire package was sold as a That the fact of, amount of,
confidential settlement.
parties to the settlement all wanted confidentiality. Q On the part of the defendant who didn't exist,
but assuming the defendant had existed was part of your pitch the defendant wanted this paid out over time to keep the plaintiff from talking? A Q Yes. And there were deals, weren't there, where the
payout that you sold to the investor might be as little as two months? A Q Yes. Did any investors ask you why you were selling
such a short period of time for a plaintiff to stay quiet? A Q A Q Yes. What investors asked you that question? I remember Barry Damson asking me. Do you know when he asked you, what deals he
asked you that question about? A No, I don't. And the deals were getting
Page 1909 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 shorter as time went on so it would have been the later investors asking this question. As we needed more cash
I kept putting out more extenders for people to invest. Ultimately, I was shortening the deal so much that it was raising more questions than I really wanted to have raised. Q Did Mr. Damson specifically ask why the deals
were getting shorter? A I don't know that he asked me why they were
getting shorter, but he did ask me why people were taking and selling these things. And a couple of other
investors, I just can't remember who they are right now but it was later investors, asked me why someone would sell the money when they would be getting their money right down the road. Q A What was your answer to Mr. Damson? It was a myriad of things but the basic pitch
was this, that these people have been to hell and back, that many are on the verge of losing their homes, that they can't wait any longer for their money. That they
don't trust the defendants and then even though I have the money in-house, that these people are so frightened of the defendants that they believed that the defendant will do something to try to block their money, that they don't believe they'll ever get all their money, and they United Reporting, Inc. (954) 525- 2221
Page 1910 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 just want to be done with it. Q A Q A Q A Q A Did Mr. Damson believe that to your knowledge? To my knowledge, yes. Did he tell you that he believed that? Did he say I believe you? Yes. No. Okay. That would have been a very odd conversation.
The second someone says, don't worry, I believe you, you're generally in trouble. Q they? A Q His actions did, yes. I'm going to show you what will be marked as This is a deal package, if you will, for His actions indicated he believed you, didn't
Exhibit 232. S154.
And just to give others the Bates numbers, it's Coquina 1 through 35, also number And I gave you my
numbered in two ways:
at the top SWR/TD 00357 through 1390. marked up copy, of course.
(Whereupon, TD Bank's Exhibit No. 232 was marked for identification.) BY MS. EVANS: Q I'm not going to ask you to take a look at
every page now, but the page that I'm interested in United Reporting, Inc. (954) 525- 2221
Page 1911 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 particular is Coquina 27, which is close to the end of this document. Two pages actually, 15 and 27.
I'm going to represent to you that this was a deal package given to the Coquina investors. And my
question with respect to Coquina 15, that particular page, that page identifies the defendant in that particular deal; is that correct? A Q A Q Yes. Who is the defendant? Supreme Manufacturing Company, Inc. If you turn to Page 27, that page indicates the
Plaintiff? A Q A Q Yes. And that's Steven Caputi? Yes. Was it a breach of the provisions of the
agreement to be disclosing Supreme Manufacturing as the defendant - supreme Manufacturing Company, Inc., and Steven Caputi as the Plaintiff? A Q A Yes. Do you know why this was disclosed? Because the Coquina group, to my understanding,
if I was not able to allow them to witness a Plaintiff signing, which they agreed to hold strictly in confidence, they would not fund any more deals. United Reporting, Inc. (954) 525- 2221
Page 1912 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q And so you breached the agreement by disclosing
this information? A Q A Q I breached the fake agreement. I know. We're circling back a little.
It gets a little circular. Assuming that this is a valid agreement as far
as Mr. Damson was concerned, it was breach by this disclosure, correct? A Q Yes. Did Mr. Damson or any investor that you know of
that was connected with Coquina express any concerns that the terms of this agreement were being breached? A extent: I had a discussion with Mr. Damson to this When he was pushing to witness a plaintiff
signing, I raised the breach issue. I said, Barry I can't show this to you. I
can't let you sit in on a plaintiff, it's a breach all the way around. And he said to me, You don't need to worry. need to see it one time. I
And he said, Why would I ever We'd be the ones It's not in our
tell anyone that there was a breach? getting hurt on top of everyone else.
interest to breach, so you don't need to worry about it. Q You would agree Coquina asked you to breach the
terms of the agreement, correct? United Reporting, Inc. (954) 525- 2221
Page 1913 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 so... Q A Q A What privilege are you referring to? Attorney/client privilege. Were you his attorney? No, no, no. Not me. Him. He was saying that Don't worry. He A Barry Damson did. And I would suspect that It was part and
that's on behalf of all his investors. parcel of their due diligence. Q A Now, didn't Mr. Damson --
He did also try to tell me a story that he's a I
lawyer so that we could bring him into the privilege. told him, Look, we'll do it because you don't have an interest in harming anybody. It makes no sense.
And I, of course, internally want the funding,
he's an attorney.
I know what to do.
was trying to sooth me. Q A Q A Q He was an attorney, correct? Yes. And a sophisticated investor as well? I believe that, yes, ma'am. Did you disclose this information to any other
investors, this type of information, plaintiff or defendant? A Q From time to time, yes. Who? United Reporting, Inc. (954) 525- 2221
Page 1914 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A I remember telling certain people at the hedge
funds about particular defendants we were going after. I utilized it as a technique to garner interests when we were using real defendants' names. I remember telling - we'll call it the Discala/Clockwork, that whole group of people - I remember telling them about certain things that were going on, making up stories about the cases, the Jeff Epstein case, for example. I may have told -- No, I don't recall whether I told Mr. Sochet or not. I don't want to guess. But it
was a technique I used from time to time to let people think they were in the know, in the inter circle. a way to lure investors in. Q correct? A Yes. The more people feel they know about an It was an inducement to keep them investing, It's
investment -- It was a way for me to take them one step past the non-transparency of the deals. As they were
investing more money I might allow them in, into the know, so to speak. Or if they were a big potential
investor and they were asking a lot of questions, I might say, Okay, this one time. Q Do you recall ever meeting with Kathleen White
who was also an investor through Coquina? United Reporting, Inc. (954) 525- 2221
Page 1915 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q her? A I think there was an occasion where she was in I think she was in from Texas. And I let Yes. And disclosing any plaintiff or defendant to
my office.
her look at part of a phony file, yes. Q You let her look at part of a phony file. What
part of a phony file did you show her? A Q A Q I don't recall which piece of it it was. Was this early in Coquina's investing? I don't recall the time frame. Do you recall telling her that one of the
defendants in a particular case was Dole? A Q A I do recall that, yes. What do you recall about that? I just recall that we had a case with Dole, Something about -- It was
some kind of juice case.
actually mirrored after a real case that was in existence, not necessarily one that we were handling, but it was mirrored after a case where it was supposed to be 100 percent juice that was being sold to the military and the schools and the like, and it wasn't. It was a messed up product. Q well? United Reporting, Inc. (954) 525- 2221 And you disclosed to her this fake defendant as
Page 1916 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A I don't recall how much I told her, but I
recall telling her something, and it's possible it's the Dole case. Q Did she express any concern that you were
revealing information to her that contradicted the terms of the agreement she was entering into? A I don't recall whether I had that conversation
with her one way or the other. Q A Q She was not an attorney, right? CPA to my knowledge, not an attorney. Do you remember any concerns she expressed in
that conversation and meeting? A Q A Q A Q I don't recall. Was that in your office? Yes. Do you know when? I do not. To go back for a minute, you said that you
disclosed plaintiffs or defendants or parties to agreements to the hedge funds. Who among the hedge
funds did you disclose that information to? A Glass. Q A Anyone else? No. United Reporting, Inc. (954) 525- 2221 It would have been to Jack Simony and Ari
Page 1917 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A Q Okay. Not that I recall. Did you disclose that type of information to
A.J. Discala? A Q I don't recall doing that, no. Going back to the hedge funds for a moment, I When --
hope I didn't ask you this. A Wait, wait.
As far as A.J., we did talk to
A.J. about - because that was his group, the Epstein case. Q A So, yes, I did. Okay. Do you know when you did that?
It was early on in the relationship with them.
Their relationship with me wasn't that long. Q It was early on in the relationship, but late
in the actual scheme itself? A Yes. And it was a way of me attempting to
induce them to invest further. Q How about with Clockwork, Chris Podaris, did
you disclose any of this information to him? A I don't remember who was present when we were You'd have to check I
doing the Epstein case information.
with them to see who was actually had the meeting. don't recall who was there.
I recall Thane Ritchie or I don't
one of his representatives being there.
specifically recall Mr. Podaris one way or the other. United Reporting, Inc. (954) 525- 2221
Page 1918 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 But certain people from that whole group were allegedly, based upon my representations, in the know about certain case elements that normally I wouldn't be telling people because I wanted them to believe, I was telling them to draw them further into the investment scam. Q To your knowledge the group of people that you
listed from Mr. Damson to Ms. White to Simony, Glass, Discala, did any of those individuals express concern to you that you were breaching the agreement by providing this information to them? A Jedwab may have, but I don't have a specific
recollection. The overriding theory that we had, meaning we inside the conspiracy, was that people weren't concerned about that breach because breaching it would have only hurt themselves, that they would have been the major -they would have received the brunt of the negative effects of that kind of breach because they were the ones purchasing the settlement and had to wait for the payout. So they had no impetus to ever disclose the
fact they knew that. And I believe that they believed in their own heads, based upon the way they spoke to me and the way they acted, was that that portion of their due diligence United Reporting, Inc. (954) 525- 2221
Page 1919 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 was key to them, and they were willing to take that risk. Q It wasn't just a risk, it was an actual breach
of an agreement, correct? A Yes, but that's a risk that goes with that. In my real practice there were breaches of confidentiality that I recall attorneys on all sides of cases making. all the time. You run that risk. People run that risk
I remember hearing lawyers talk about
cases at cocktail parties that they shouldn't have been discussing. You run that risk when you run your mouth
like that, yes. Q One of the other hallmarks of the Ponzi scheme
that you mentioned last week was the level of interest that you were paying? A Q to there? A Our interest rates were always exorbitant. On Yes. Can you briefly tell me what you were referring
the low side 60, 70 percent; on the high side in excess of 600 percent. Q Looking back at the exhibit that you have in
front of you right now, let's take a look at that for just a moment. A Sure. United Reporting, Inc. (954) 525- 2221
Page 1920 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q That's a deal that you did with Coquina; is
that correct? A Q Yes. And I don't know if you remember this
particular deal, but you can see it's set out on the first page. This is a deal where they were going to
invest $5 million and in the space of two months they would get $10 million in return. deal? A That's the deal I have in front of me. I don't Do you recall that
specifically recall it as a separate deal, but yes. Q And that would be an annualized return of about
600 percent, right? A Q I'm not doing -- It's very high. I'll represent to you that that's the
annualized return. A years. money. Q Do you have knowledge of any other investments My math skills have dwindled over the last two I don't have a lot of cause to interact with
that had a fixed stream of return that was equivalent to this type of deal that you gave to Coquina -A Q A No. -- in your experience? No. United Reporting, Inc. (954) 525- 2221
Page 1921 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 prepared. Q And this would be yet another inducement that
you made to investors to draw them into deals? A Sure. It was a combination of the high
interest rate, that this was a low to no risk investment with an extremely high interest rate. You have to
remember, unfortunately, most unfortunately, I was an extremely good salesperson. everything with these people. question. I always had an answer for They asked me a
I always had an answer.
Mr. Preve and I especially were very well You could tell from Mr. Boden's dealings,
Mr. Szafranski's dealings, the people closest to us, very well prepared. You can look what Mr. Adler did. sharpest pencil in the box. He wasn't the
But when it came to doing
things for the Ponzi scheme like setting up the due diligence people, he did his work well. It was unfortunately a very well coordinated fraud, and that enabled me to fool a lot of very intelligent people. I think more you have to measure things based upon the depth and amount of their questioning as opposed to whether they believed me or not. Q Who questioned you about this particular Anyone?
interest rate at all in Coquina?
Page 1922 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A rates. Q Early on Barry and I talked about the interest Kathleen White. I'm talking about this particular deal. This
particular deal, 600 percent annualized return rate. Who at Coquina questioned this? A I don't recall whether it was this deal that I don't want to guess.
they questioned. Q
Wouldn't a 600 percent annualized return rate
be a red flag in your view to any sophisticated investor? A Q I think that interest rate is absurd. Do you recall other investors where you gave a
large, not that particular interest rate, but a large annualized return rate? A Q A Regent. Any other investors? Ovadia Levy and his family, Ted Morse and his I'm
family, Barry Lipsitz and Domenick Tonacchio.
pretty sure I gave some pretty high interest rates to some of Szafranski's people, especially Mely Lifshitz. I have to look through all the deals to tell you with certainty. Fortunately, the papers all speak for themselves with regard to what the interest rates were, so we can map it out if we need to. United Reporting, Inc. (954) 525- 2221
Page 1923 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q monies 2? A Q No. Do you remember an entity by the name of Do you remember an entity by the named OP
Platinum Estates? A Q Oaks? A Q No. Do you know anyone, Mr. Szafranski or anyone No. Do you remember an entity by the name of White
else, who dealt with the entities I've just named, those three on your behalf? A Q To my recollection, no. Did you have any conversations at all with a
Bruce or Jim Pagano? A Q A I don't recall. Do those names mean anything to you at all? The name Pagano is ringing a bell, but I don't
know who or if I spoke to him. Q Putting aside whether you spoke to him or not,
what bell does it ring, if at all? A As an investor somewhere, but I don't know
whether I heard the name before or after October or the end of October 2009. And the problem now is I've heard
so many names over the last six days it's getting a United Reporting, Inc. (954) 525- 2221
Page 1924 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 little more jumbled. in here. Q I may have heard the name sitting
It's ringing a bell, but a very small bell. You don't have any independent recollection of
either Jim or Bruce Pagano pre end of October 2009? A other. Q When you pitched these deals - I think you said I don't have a recollection one way or the
last week that you tried not to pitch them as no risk. Can you tell me what you meant by that? A Most of -- actually I think every one of our
investors at some point in time asked early on, What's the risk? What can go wrong? I explained to them, Well, the real risk is a breach of confidentiality by the plaintiff. And then of
course I downplayed that saying that again the plaintiff had no reason to do that and the plaintiffs were terrified of the defendants and they could lose their money. And I made up this whole story about how we gave very long, you know, no breach of confidentiality speeches to our various plaintiffs and sold it that way. But selling it as a no risk investment would have
just heightened the scrutiny we were already receiving. Q A You represented it as a low risk? Yes. United Reporting, Inc. (954) 525- 2221
Page 1925 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q In your experience doesn't the return that you
get generally correlate to the risk of an investment? A Q A Q A Q You mean risk versus reward? Correct. Not in a Ponzi scheme. Not in a Ponzi scheme? No. Is it a red flag to a sophisticated investor
when you've got a 600 percent annualized return and low risk that a Ponzi scheme is going on? A I think it certainly requires additional
investigation, yes, and it is in the category of red flag, yes. Q You also mention that the sheer number of cases What did you mean by
as a hallmark to the Ponzi scheme. that? A Q I'm sorry.
Could you say that again?
You mentioned that a hallmark of a Ponzi
scheme, and I don't know if you were saying a Ponzi scheme or this Ponzi scheme, would be the sheer number of cases. A Q Did you have -I was talking about this Ponzi scheme. And you meant by that, the number of cases that
you represented to investors you had in the pipeline? A Yes. What had occurred was there were many United Reporting, Inc. (954) 525- 2221
Page 1926 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 cases coming in where there was a great need by people in the Ponzi scheme to generate more cash to pay the old investors. So we increased the deal flow. We increased
the deal flow so much it started raising all kinds of questions, which from my understanding raised a bunch of red flags with a bunch of the investors. asking a lot of questions. Q Who raised questions about as to the sheer People started
number of cases that you were offering that you recall? A The hedge funds, Mr. Scherer's clients,
Mr. Sochet, Mr. Lifshitz. Q confused. A Q A Q correct? A Q Yes. Any other investor entities or investors? Was Barry or Mel. I get the two last names
Who did you just refer to? Mel Lifshitz. Got it. Okay. Sorry. Barry is Lipsitz.
Which I'm certain was changed. Mel was associated with Emmes Capital; is that
he associated any other investor entities or individuals? A I think I just realized the other day during
questioning that he was also attached to something called El, E-L, I could be mistaken. I don't know who
Page 1927 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 else he was attached to. Q Was he attached at all to an entity called
Utica, U-t-i-c-a? A I don't know if that was him or somebody else He had some association with them, but
Szafranski had.
I don't recall what it was. Q A What do you remember about Utica? I just remember it was someone Szafranski
brought to the table. Q A Did you ever meet anyone from Utica? I may have. I don't have a specific
recollection. Q Does the name Sandy Lephardt (phonetic) mean
anything to you? A Q No, ma'am. Did you tell people there was a particular
number of cases that you had in the pipeline? A Q A You mean at any one point in time? Yes. Sure, there were times when I told them I've Sure.
got 25 of these, 10 of these. Q
Did you ever talk to anyone about how many you
had in total? A I may have. I don't have a specific
recollection. United Reporting, Inc. (954) 525- 2221
Page 1928 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q You don't remember any upper number that you
represented? A Q Not specifically. Did anyone in the Coquina group express a
concern with respect to the number of cases that you had? A At one point in time I remember speaking to He was asking me where I
Barry Damson about deal flow. get my cases from. is this possible?
He used to ask me things like, How And I would make up necessary stories
to keep him in the game. Q What did he ask you about in terms of, How is
this possible? A He used to say, calling me generally I was a lawyer.
Rothschild, say, How is this possible?
I'm not sure I would have done these other things if I knew all this was out there. Things along that line.
We tried to keep the conversation light but he was asking probing questions. Q A What were some of the probing questions? He asked me at one point in time with regard to
how I was getting the cases from the referral sources. And he asked me to explain how I trained the referral sources to possibly market these cases the way I needed them marketed. United Reporting, Inc. (954) 525- 2221
Page 1929 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A What did you answer? I don't recall my exact answer. I had a
standard pitch that I used with regard to where the cases were coming from, and that is that we were spending a million dollars a month plus on all kinds of marketing, not directly associated with our name because we didn't want to tie our name to any advertising. I had Caputi at one point in time play, and I don't remember whether it was with Damson or other investors, play a person that owned 800 numbers and websites and the like that were referring us huge amounts of cases. I talked about other law firms, that
whole general spiel. I would sometimes introduce people. If you
look at Mr. Szafranski's e-mails you can see that Szafranski directly talks about the fact that from time to time Stuart Rosenfeldt came in and we just discussed general labor and employment stuff with people and then also discussed the settlement deals. And we used the fact that Stu was the person who brought board certification to the labor and employment bar of Florida. That's he's the one who
argued for it in front of the Florida Supreme Court, the person who created the original exam. All these things added to the picture we were United Reporting, Inc. (954) 525- 2221
Page 1930 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 trying to create of this ultra successful law firm that commanded just huge volumes of cases. Q I recall from your testimony that the Funds
requested, someone in the funds requested to meet some of the law firms that were feeding you, correct? A Yes. Since this is an area that we've already
covered and we're about to get into it, do you think we could take just a few minutes so I could use the restroom? Q A were. (Thereupon, a short break was taken.) BY MS. EVANS: Q lawyer? A Q I didn't say 1-800 lawyer, I said 800 numbers. Was that part of this particular scheme or Just tell me what you were referring You got my interest in mentioning a 1-800 Absolutely. Because it's an easy place to remember where we
something else? to. A
No, it was something that we had created, we
made up so we could explain the overwhelming deal flows that we had where the cases were coming from. Q Damson? United Reporting, Inc. (954) 525- 2221 I got it. Did you discuss this with Barry
Page 1931 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A I did. What did you say to him? I don't recall specifically. I gave my spiel,
for lack of a better word, was basically the same with everyone except where they were asking more in-depth questions then I just add to what I was doing. Q Do you remember investors other than Barry
Damson that you gave that particular spiel about your pipeline to? A I don't remember specifically. I remember
having discussions with him about the fact that I had a series of basically confidential 800 numbers, not directly linked to the firm, that were assisting me along with other law firms that were giving me business. Q Do you recall any comments that he made to you
with respect to that? A Only that he was asking me questions about it.
He didn't comment one way or the other. Q When you were speaking with him about this, was
anyone else present? A Kathleen White may have been present, but most I always tried to
of the time it was just Barry and I.
limit my conversations with people to one-on-ones. Q Do you remember any conversations you had with
Kathleen White with respect to any concerns she made United Reporting, Inc. (954) 525- 2221
Page 1932 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 about the investments? A Q A rate. I don't remember specific conversations, no. Do you remember generally any conversations? I remember her asking me about the interest The reason I remember that is because I joked
around with that it just figured that a CPA would point that out to me. And I gave her the same, again, pitch
that we used about the interest rates, that this was more money than these people had ever seen in their lives, that they were willing to give you substantial amounts of money in order to secure their futures and be done with the cases. We often talked about the traumatic nature of the cases and the like, how difficult they were for the plaintiffs to deal with and they just wanted it over. Q Do you recall Barry Damson saying to you, I'll
make you richer? A Q A Yes. What do you recall about that? One of the ways that Barry would try to draw me
in was by telling me that being in business with him, so to speak, doing these deals with that him, that as the relationship developed, that so long as things went all right that he could assist me in developing this into an even bigger business because of his access to extremely United Reporting, Inc. (954) 525- 2221
Page 1933 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 high-powered, well-known people in the financial world. Q Did he take any actions to assist you in making
this a bigger business? A There was one point in time when we were in my
office and there was another gentleman associated can't remember his name - the guy he shared office space with, another very well-known financier. And there was
a question that had come up just regarding the financial world in general. I remember him calling him to seek
his advise, but other than that I don't remember anything specific. Q Was this gentleman in New York, Connecticut, do
you remember where the gentleman was that he called? A Q A I thought the office was in New York. Okay. If you the person's name, I'd probably remember
it or his position, it was a fairly high powered position. Q Do you think there's some document that might
refer to it or an e-mail? A There might be. I'm really guessing,
Ms. Evans. Q Okay. I'm at the Tucker Craig school if you
can avoid guessing we're probably both better off. A I agree. United Reporting, Inc. (954) 525- 2221
Page 1934 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 him? A My recollection is that I met him through Mike Q Do you recall whether anyone among the Coquina
investors did any due diligence with respect to where you got your cases from? A did. Other than asking me, I don't know what they I had always - my impression was that the answer
is yes. Q that up? A Q I do not. Let's shift for a moment to Mel Lipsitz. He's associated with Emmes Capital? You But, you don't have any particular fact to back
mentioned him. A Q A
Lifshitz. Can we call him Mely? If you just call him Mely I'll know who you're
talking about. Q My question to you is, how did you first meet
Szafranski. Q A He was a friend of Mike Szafranski? I don't know if he was a friend, somewhere
along the line Mr. Szafranski brought him into the mix. Q A Q Do you remember when? I do not. Where did he live? Where did Mely live?
Page 1935 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 it. A Q I believe he lived in New York. Was there an incident at some point in time
where someone tried to find out about a balance in an RRA account through a New York TD Bank branch? A Q A Q A Q A Q Yes. Can you tell me about that? That's what I was told. Who told you that? Mely. Mel himself told you? Mely and Mike Szafranski told me first. Let's start with Mike Szafranski then, what did
he tell you and when? A I was in New York, I was sitting in the car I received a It was
that was taking us - we had just landed.
panicked telephone call from Mr. Szafranski.
crazy panic in his voice and he was saying Mely knows there's no money, somebody went into the bank, there is all kinds of problems, he's pulling out of all the deals. It was crazy. I told Mike to calm down. Tell Mel I'll be calling him. I said, I'll handle I called Mel and I
spun it on him. Q A You what? I spun the entire scenario on him. United Reporting, Inc. (954) 525- 2221
Page 1936 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A What do you mean by that? I called him up and I asked him what was going
on, and to the best of my recollection I asked him if he was out of his mind sending someone into a bank to attempt to access my information. I said, do you know
what kind of red flags this will send up, do you know what kind of problems you're causing me at bank, I'm already getting calls from the bank. turned it around on him. I said, you could blow this whole thing up, a perfectly good investment strategy that a lot of people are making a lot of money on, you single handedly may have destroyed it. And after that I said, I'm sure there's an answer to the information that you received. certain that there's an explanation. I'm I spun it on him,
My recollection is
that I then had someone from TD Bank - and you'll have to check the e-mails to see who - send me an e-mail that basically explained the way how the balance could have been what it was because it was a locked account, something to that effect. But I did turn the thing around on Mel and it went away. I then created a bunch of, subsequent to that, I created a series of fake e-mails from TD Bank saying United Reporting, Inc. (954) 525- 2221
Page 1937 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the people were getting suspicious of us given what occurred at the branch, that kind of stuff, and I forwarded those e-mails ultimately to Mel to back him down and to prevent that from ever happening again. Q Do you recall falsifying an e-mail from Frank
Spinosa saying I can't have people marching into the bank like this? A I believe it was Mr. Spinosa. If you show me
the e-mail I can tell you for certain, but that's my recollection. Q Now, you said - I don't want to misstate what
you said, but you referred to information that Mel had received. MR. SCHERER: Excuse me, can you get that last
question and answer read back? MS. EVANS: Yes, please.
(The pending question was read back by the court reporter.) MR. SCHERER: question. MS. EVANS: more time. (The pending question was read back by the court reporter.) BY MS. EVANS: United Reporting, Inc. (954) 525- 2221 I'm going to ask you to read it one Object to the form of that
Page 1938 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q I want to make clear what my question was and I was
then you can make clear what your answer was.
asking you, do you recall you creating a fake e-mail that appeared to be from Mr. Spinosa which you then forwarded to Mel? A There was a fake e-mail that either I created
or I created with the help of Deb or one of my I.T. people that I then forwarded. My recollection is that I
it would have been someone at Mr. Spinosa's level. don't know whether I used the name of some cash
management guy, there was somebody named Palo Costabon (phonetic) or something. someplace. I recall seeing his name
So, I'm a little vague as to who -- I did
create a fake e-mail containing a very business like rant from someone high up within TD Bank in order to back these people off. There was no, as far as I could tell, there was no real suspicion on behalf of TD Bank, although I did at least learn from Mr. Szafranski and from Mr. Lifshitz that one of his investors did in fact attempt to achieve our account balances by walking into a TD branch somewhere in New York, trying to make a deposit into our account and then asking for the balances, if it was that person's own account. Q Now, what panicked Mel? United Reporting, Inc. (954) 525- 2221
Page 1939 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A No, it didn't panic Mely, it panicked
Mr. Szafranski. Q at all? received. MR. CUSICK: Emmes Capital. THE WITNESS: To me, Mel appeared concerned Objection to the form on behalf of But, prior to Mr. Szafranski was Mel concerned You referred to information that he had
that there were insufficient funds in the trust account. BY MS. EVANS: Q know? And how did that concern generate, if you Where did he -- how did he develop that concern,
if you know? A That's what I just said, put it altogether. It
is my understanding that from speaking to Mr. Lifshitz and from speaking to Mr. Szafranski that one of Mel's investors, Mely's - Mely Lifshitz's investors, had gone into a branch of TD Bank in New York, made a small deposit, and at that time requested our balance which was significantly less than what was supposed to be in there. That created the alarm because we were telling
him that there were millions of dollars in the account when there was not. invest. United Reporting, Inc. (954) 525- 2221 He was relying on that statement to
Page 1940 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 is. Q A Q A Q Solomon Eisenberg? I don't recall that name. Is the name Howard Weiss familiar to you? That's more familiar but I have no idea why. Do you recall that you know a Howard Weiss or A Q A Q A Q fraud? A Q No one has ever told me that. Are you familiar with Sandy Lephardt, I asked Q Did it ever come to your attention that Mel
Lifshitz had created - had conducted any kind of fraud prior to you meeting him? MR. CUSICK: Object to the form.
This is the first I'm hearing of it. Have you ever been told that he was disbarred? News to me. Okay. I was never told that. Has anyone ever told you that he committed tax That is news to me.
you that, correct? A Yes, you asked me that, I don't recall who that
you met a Howard Weiss? A Q I don't recall one way or the other. Natalie Turetsky, does that same name sound
familiar to you? United Reporting, Inc. (954) 525- 2221
Page 1941 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A Q A Yes. Tell me what you know about her? She at the time worked for Mr. Szafranski's
company, one of his companies, and was married to a gentleman by the name of Matthew Turetsky. Q Did you have any dealings with her with respect
to the investments? A Q If they were they were minimal. Do you remember what company of
Mr. Szafranski's she was associated with? A It was either ABS or Onyx, I don't know which
one, could have been both. Q A Q Where was she located, to your knowledge? I don't recall. I diverged from my path a little bit. I want
to get back for a minute to the other hallmarks of the Ponzi scheme. A Q Okay. I don't believe you put in your list, but let
me ask you, would errors in deal documents be potentially a hallmark for a Ponzi scheme? UNKNOWN SPEAKER: Objection to form.
In my opinion, yes. I do believe you testified last week that deal
documents did - some deal documents did have errors in United Reporting, Inc. (954) 525- 2221
Page 1942 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 711. them, correct? A Q Yes. And I don't want to march you through all of
those, I just want to talk about a few if we can do so for a minute. Exhibit 233 is numbered SWRTD 000675 through This is another deal that you did with Coquina S26, you'll see on the first page
investments, correct. there? A Correct.
(Whereupon, TD Bank's Exhibit No. 233 was marked for identification.) BY MS. EVANS: Q 2009? A Q A Q A Q That's not my signature. Who signed it? One of my co-conspirators. Do you know which one signed it? Could have been any number of people. If you will turn to the -- hold on let me get The page that is labeled 000683 on the top You'll see the heading, This is a letter that you signed dated June 1,
it for you.
right-hand corner. consideration. A Yes.
Page 1943 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q What I would like to point your attention to, I'm
I'm going to read the first sentence here out loud. going to read the whole thing actually. Let me start
with, "Within 24 hours" and it's blacked out, "receipt of this agreement from," redacted "signed by her" redacted "agreed to wire transfer to Rothstein, Rosenfeldt, Adler trust account" paren "in accordance with wire transfer instructions to be provided." paren, $1,438,500, end paren. out loud? A Q A Q A Q 1,438,000 -- no, let's see. Is that an error? Yes. Did Coquina ask you about that? I don't recall that. Do you recall if they asked anyone about that $1,438,000,500. End
Can you read that amount
particular number? A Q I don't recall them asking anyone, no, ma'am. Did any investment deal that you do involve a
return of billions of dollars? A Q In a single investment, no. That could have been a red flag to an investor,
would you agree, that error? A The way I looked at errors in documents was,
that if they were repeated errors, especially in amounts United Reporting, Inc. (954) 525- 2221
Page 1944 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that were not caught, that would be a red flag. I
certainly think it was a red flag from the perspective of believing that a defendant signed off on it and didn't catch it; the Plaintiff signed off on it and didn't catch it; we signed off on it and didn't catch it. Q A Q So -So from that frame of reference, yes, red flag. Going back for just a minute to the first deal
that we looked at, the ten million dollar deal? A Q A Q A Q Exhibit 232? Sorry, what? Exhibit 232? Probably. 1357 across the top, right? Perfect. If you look on Page 1363 in the top
right-hand corner. A Q 1363. Again, under consideration: Was there another I noticed
number error in that third line to the right? that the number is actually crossed out. A
Yes, there's a number there and looks like the
correction and initials are crossed out. Q And then looking down at the bottom of the page Three, that appears to be
in Section B, where it says:
Page 1945 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 crossed out and the word two? A Q A Q Yes. Another error in another Coquina deal document? Yes. And are those initials of someone beside the
word two that's written in there? A Yes, the two is my handwriting, so it looks I don't
like my initials scribbled off to the left. know what that is off to the right.
Either me
scribbling some fake initial or me having someone else write a fake initial. Q If you could turn the page for just a minute,
under confidentiality, do you know why the words 'for existence' at the top of that page are circled? A Q I don't recall. Do you know if that was an error of some sort
or a question raised by anyone? A Q I don't recall. Give me just a minute, please. I'm going to
mark as Exhibit 234 a document that's Bates labeled Coquina 000902. that. A I'll give you a minute to look at
The e-mail I'm most concerned with -Give me one second to read this top thing and
I'll be right with you. Q Tell me when you're ready. United Reporting, Inc. (954) 525- 2221
Page 1946 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 top: A Okay. (Whereupon, TD Bank's Exhibit No. 234 was marked for identification.) BY MS. EVANS: Q At the top the first e-mail appears to be from And it's to
Kathleen White dated June 22, 2009.
Kathleen White, Al Jones, Barry Damson, Ben Wallace, Christina Hawn, George Hawn, Kathleen White, again, And it says: "Oh,
Melvin Klein, Patricia Hawn-Wallace.
yes, I forgot to mention one significant item, Michael's original e-mail stated that the 1.4 million deal would pay back two million over five months. The Promissory
Note calls for four months of 500,000, rather than five months of 400,000. I made the assumption that Michael's
original e-mail was wrong and that the Promissory Note signed by Scott was correct. Oh shucks."
This was another Coquina mistake, to your knowledge? A Q Our mistake, Coquina catching it, yes. Do you recall what the resolution of that was,
if there was a resolution? A I'm sure we corrected it one way or the other.
I have no independent recollection. Q If you turn to the next page it says at the "I prepared and attached a schedule" -- actually I United Reporting, Inc. (954) 525- 2221
Page 1947 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 should identify it. This is, again, an e-mail from "I prepared and
Kathleen White on June 22, 2009.
attached a schedule reflecting the payments due as per the agreement, as 31 did not fund today due to documentation issues. I am assuming that will be
corrected and funded tomorrow." Does this mean S31 didn't fund on time; is that what she's concerned about? A I've never seen this e-mail before today. It
is my opinion that's what it says, that there was a documentation issue so they weren't funding it until it was corrected. Q Do you recall any investor at Coquina raising
issues about deals not funding on time? A I have a recollection of about Barry Damson
chastising me about getting the documents right; other than that, no. Q This was June 22, 2009, that was pretty early
in the relationship? A I don't recall exactly when the relationship
started but it sounds like an early period of time. Q A Q Do you recall that they were still investing -I'm guessing. Sorry, I didn't mean to interrupt you. Do you recall that they were still investing as United Reporting, Inc. (954) 525- 2221
Page 1948 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of September A Q 2009?
I don't recall when they started or stopped. I wanted to go back for just a minute to deal The 1,300,000 we discussed a
154, S154 on Page 1363.
minute ago that's crossed out? A Q A Yes. Was that supposed to be your attorneys fees? That's not what is supposed to be there.
What's supposed to be in that -- what's supposed to be where that 1,300,000 number is, is supposed to be what we referred to days ago as the magic number that Deb created being the total amount of the deal, total to Plaintiff, plus our attorneys fees and costs. should have been a much higher number. Q Did you waive attorneys fees with this That
agreement; do you recall? A Q A It's possible. Why would you have done that? In order to make it appear that I was capable
of giving more money over to the defendants or to make it appear that I was giving something up. not to the defendants, to the investors. appear. Q A Induce -Another inducement. United Reporting, Inc. (954) 525- 2221 Excuse me, To make it
Page 1949 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q White. Exhibit No. 235 is an e-mail from Kathleen Actually let me give you the Bates number I'm really not going to --
Coquina 1376 through 1413.
you have the opportunity, of course, to read as much of this as you want. page. A I'm going to focus on the first
Let me know when you're prepared. Let me just take a look at the first page. Okay. (Whereupon, TD Bank's Exhibit No. 235 was
marked for identification.) BY MS. EVANS: Q I want to refer to the second e-mail on that I
first page from Michael Szafranski to B. Damson. assume it's Barry Damson and Kathleen White.
It says:
As follows, "these are your docs" ellipses "turns out it is 800 for 1.2 million" ellipses "means an extra 75K for each guy. I will fax very shortly."
Do you recall what that is referring to? A Q I do not. Does it appear to you from this e-mail that
there was some sort of mistake made which permitted Coquina to get an extra 75K in their deal? A I would be speculating but that's what it
appears to be. Q Do you recall at any point in time Coquina United Reporting, Inc. (954) 525- 2221
Page 1950 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 returning 75K to you or Mr. Szafranski or anyone saying this was a mistake, we got too much money? A Q No. One Coquina investor I wanted to ask you a few You had occasion to
questions about is Mel Klein. interact with Mr. Klein? A Q I did.
Did he express any concerns about or suspicions
about the investments? A Q A He did. Can you tell me what he told you? To the best of my recollection he was actually
what I would term the most voracious questioner out of all the Coquina people. He and I had a lunch together
at Bova where he questioned me about the investment the entire time we were sitting there. Is was mostly
questions I had heard before but he did run through the litany of deal flow, how the deals come about, how we go about settling them, our investigative team, what they do. It was mostly standard fair, but it was wide
ranging and it lasted practically the entire lunch. Q A Q When was that? I don't recall. Do you recall if it was early in the
relationship that you had with Coquina? United Reporting, Inc. (954) 525- 2221
Page 1951 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A You have to check the e-mail chain to see when My recollection is that it
Mel was introduced to this.
was fairly early on but I don't recall specifically. Q Do you recall how Coquina came to your
attention or came to RRA? A They were brought to me through Mr. Szafranski
and I believe that was brought to Mr. Szafranski through Ira Sochet. Q friends? A Q A I believe they were. Perhaps long time friends? Yes, I remember actually that they were sort of Do you know if Mr. Klein and Mr. Sochet were
competitive about their financial situation. Q A How were they competitive? They seemed to have a, for lack of a better
term, a brotherly love-hate relationship when it came to making money. They both wanted to see each other make a
lot of money but they always wanted to make more money than the other guy. Q Do you recall if Coquina actually entered its
first deal along with Mr. Sochet? A Q I don't recall. What else did Mr. Klein ask you about at that
lunch; what specific do you remember? United Reporting, Inc. (954) 525- 2221
Page 1952 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Just what I've already told you. I don't
remember anything else at this moment. Q recall? A I remember me feeling like he wasn't completely Of all the people -- I met with Barry Did he seem satisfied with your answers; do you
buying it.
Damson, I met with Ms. White, I met with Mr. Klein, and for some reason as I'm sitting here today I recall him being the most skeptical. Q Do you recall whether you took any actions to
make him less skeptical? A Q I would be guessing. Do you recall at some point in time setting up
an arrangement for any of the Coquina investors to witness - I'm sorry, to signing of an agreement, one of the deal docs? A Q A The Coquina people? Um-hmm. Yeah, I did that with Barry Damson, Kathleen
White and Steve Caputi. Q Was that arranged due to any skepticism on
their part expressed to you? A Barry had told me that he was getting a lot of
pressure from his other investors, from the Hawn Brothers, et cetera, about needing increased due United Reporting, Inc. (954) 525- 2221
Page 1953 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 diligence. And that getting this whole plaintiffs
signing thing in front of him to occur would open the gates to substantial additional investment. Q happen? A Just that it was a linchpin to him that - let What he explained to me was that Did he explain to you how he thought that would
me say it this way.
him seeing a Plaintiff actually sign the documents, watching me go through it was key to him being able to represent to the other investors in Coquina group that he had a sufficient comfort level with the investment that he could recommend significant future financial investment in the investment strategy. Q Did he tell you anything more specific about
the pressure that he was feeling? A The only thing he said to me was that if we
weren't able to do it he couldn't guaranty there would be anymore funds from Coquina. Q A Q A Q recall? A Not to my recollection. United Reporting, Inc. (954) 525- 2221 So you made it happen? I did. Did you ever meet George Hawn? No. Did you ever correspond with him that you
Page 1954 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Do you recall anyone in the Coquina investment
group expressing concerns Mr. Hawn may have had with the investments? A Only what I just talked about with Mr. Damson,
I don't recall anything else. Q A Q Did you ever meet Ben Wallace? If I did I don't remember it. So Mr. Damson expressed to you that this was
another step in his due diligence? A Told me it was a key to continuing the
relationship and to increasing the relationship. Q Did that signing of the agreement in front of
Mr. Damson and Ms. White occur in your office? A Q A Q A It did. Where in your offices? At my conference room table in my office. Who was there? Me, Barry Damson, Steve Caputi, and I seem to
have vague recollection of Ms. White being there but I can't be certain one way or the other. Q A How many times did you meet Ms. White? Once or twice. I don't recall anything more
than once or twice. Q A In Florida each time? In Florida. United Reporting, Inc. (954) 525- 2221
Page 1955 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A Q Okay. May have been once. Do you recall if she took notes any of the
times that you met with her? A Q I recall her taking notes. What do you recall -- when do you recall that
happening? A I recall when we were sitting, not at my
conference room table, but Mr. Damson and Ms. White were sitting in the guest chairs in front of my desk that Ms. White was writing certain things down. Q I think you mentioned that there was a meeting
where Frank Spinosa actually met in your offices with Ms. White and Mr. Damson as well? A No, he met at the Cypress Creek office with me,
Mr. Damson and Ms. White. Q Thank you. You're right, I was wrong. I
appreciate you correcting me. A Q That's okay. Do you recall if Ms. White took any notes at
that meeting? A That's not sticking out in my head. I don't
remember one way or the other. Q At that meeting was it you, Ms. White,
Mr. Damson and Mr. Spinosa? United Reporting, Inc. (954) 525- 2221
Page 1956 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A Yes. And no one else came in or out of the room? I don't have a recollection of anyone wandering
in and out. Q Other than the one lunch that you had with Mel
Klein where he expressed concerns, do you recall any other instances where he expressed concerns about the investments? A I seem to recall a telephone conversation that
I had with him, I don't remember whether it was prior to meeting with him or subsequent to, where he continued to ask me questions and I continued to get the feeling that he was either suspicious or less than sold on the idea. And I recall Mr. Damson telling me that Mel was being a pain in the ass. As a matter of fact, I seem to recall an instance where Mel had told me he was in a deal, where he was in a deal and then at the last minute wasn't going to be in the deal. be certain. He was in a deal and bailed on a deal and then I had to run around and get Ira Sochet to jump in for five million of additional investment, something crazy was going on. I have to check the e-mail chain to tell I have to check the e-mails to
you for certain. United Reporting, Inc. (954) 525- 2221
Page 1957 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Do you recall if Mr. Klein came back into that
deal again? A I don't recall one way or the other. I seem to recall Ira Sochet attempting to convince him to come back into the deal but I don't know if that actually happened. Q I apologize, I think I only have one copy of
this document, but it's a 236 and it's Trustee TD 290. It's an e-mail from Michael Szafranski to Scott Rothstein and it's dated August 18, 2009. And since I
don't have the document, do you mind reading out the text of the first e-mail there? A When you say first you mean top? (Whereupon, TD Bank's Exhibit No. 236 was marked for identification.) BY MS. EVANS: Q Yes, you're right, it's actually probably not
the first. A From Michael Szafranski, Tuesday August 18, Can't sleep.
2009, 7:07 a.m. Scott Rothstein subject:
"I told you Ira will respond, maybe Klein and Hawn can combine for 5 mil. into doing half. Let's make Damson guilt Mel and Hawn
I will be by you as soon as your guy Love you, Mikey.
drops me off at Ben's. Q
Does that refresh your recollection that United Reporting, Inc. (954) 525- 2221
Page 1958 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Damson -- strike that. To your knowledge did Damson do anything to guilt Mel into investing? A I don't know whether he did or didn't. It's
what apparently Mike's idea for our plan was, but I don't know one way or the other. Q Do you know if this was the instance that you
were trying to recall? A Yes, this seems like it because I see down
below I'm saying less than kind things about Mel. Q read it? A Says Mel is an asshole to treat me this way. I What are you saying about Mel there, if you can
have done nothing other than make him money, now he puts my entire life on the line. Q A Not right, live and learn.
Were you fond of Mel? No. MR. LaVECCHIO: THE WITNESS: Which Mel is that? We're talking about Mel Klein.
All these references to Mel are Mel Klein. MS. EVANS: Do you recall what Mel Klein's concern was at
that point? A I don't, but as I said, I always felt like he
was skeptical. United Reporting, Inc. (954) 525- 2221
Page 1959 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q But not skeptical enough to stop investing; is
that correct? A Q Sorry, say that again. But not so skeptical that he stopped investing;
is that correct? A I don't know whether he stopped or not. I'd
have to see the deal docs to tell you. Q A Q Can you remind me of the date of that e-mail? August 18, 2009. Okay. You have it in front of you a deal
document S514 for Coquina dated September 25, 2009. Does that refresh your recollection that Coquina continued to invest? A Coquina was investing, but here's the thing, it
was my understanding from speaking to Mr. Damson that every deal was presented to the entire Coquina group of investors and then the individual investors: Mel Klein,
Barry Damson, the Hawns, whoever else was investing had the right to opt in or sit this one out. Q Sometimes you would have a certain group of
investors individually who would determine if they wanted to invest and for another investment it might be a different group? A Q That was my understanding. Was it your understanding that Coquina really United Reporting, Inc. (954) 525- 2221
Page 1960 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 served as a pass-through the entity itself? A Q A Q I don't know what that means. Okay. Or how you're using that. Well, an entity that simply the money went
through as opposed to Coquina having a body of investors that each time invested? A It wasn't set up -- it was my understanding it
was wasn't set up like a fund, it was done on a per deal basis. It was presented to all of the members of
Coquina and then, again, people either decided yes, I'm in for this one or I'm not in and it could proceed with one of the Coquina investors or all of the Coquina investors or some mixture of that. Q I may have missed you saying this, let me make
sure I understand it, was it Mr Damson that explained this to you? A Q Yes. Mr. Damson explained to you was basically that
each individual made his or her own investment decision? A The way he explained it to me was it was
presented to the entire group, I don't know how they did that, I don't think they had a meeting - but it was presented to the entire group, they discussed it amongst themselves and then different people made their own United Reporting, Inc. (954) 525- 2221
Page 1961 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 decision. Q Was Barry Damson part of that investment group
or outside of it, to your knowledge? A I always believed he was part of it. I don't
know one way or the other for certain. Q Do you recall if Mr. Damson had lost any money
as a result of the investments that he made through Coquina that he made with your invest -- with your scheme? A Q I'll strike that and start again. Okay. Do you know whether Mr. Damson lost any money
through your scheme personally? A money. The only thing I know is that Coquina lost I can't tell you with any certainty which of the
members of Coquina were actually the net losers. Q term? A Meaning that they never even got back their When you say net losers, how are you using that
principle, all of their principle. Q Have you been made aware that the Trustee sent
a demand letter to Coquina claiming that it had committed criminal usury? A Q I was not aware of that. A lot of the deal packages, I don't know if
all, but some of the deal packages included promissory United Reporting, Inc. (954) 525- 2221
Page 1962 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 notes? A Q Yes. We talked about that earlier.
What was the purpose of the promissory note in
the deal packet? A To the best of my recollection it was a
remanent of prior deals that just ended up getting stuck there. I always looked at it as an additional form of I don't know what they
security for the investor. thought it was. Q A Q
"They," being the investors? Yes. Do you recall any investors asking for a
promissory note as part of the deal packet? A Q A Yes. Which investors? Preve wanted to leave it in there. The Levy
family that was really one of the only documents we used with them. Lipsitz and Tonacchio because that was the Morse had asked me for
only document we used with them.
a promissory note on a couple occasions, that he needed documentation for his auditors. recall any others. Q I don't specifically
There may have been.
When you say a remanent, a remanent from what?
Earlier structured settlement deals or something else? A There were never structured settlement deals. United Reporting, Inc. (954) 525- 2221
Page 1963 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Earlier when we started this, if you recall, they were all done as bridge loans, some form of that. At least that's what we were calling them. And the only
document in existence at that point in time was promissory notes. Then at the time I did the first deals with the Levin family, not through Banyon, but with George and his wife, the first bunch of deals that I did with them, my recollection is there was a promissory note there. Then when Frank Preve and I started putting the comprehensive package together with the settlement agreement and all the purchase to transfer agreements, sale and purchase agreements, for whatever reason we left the promissory note in there. the package. Q To your knowledge did it give investors yet It became part of
another piece of security in knowing that they had a promissory note? A That is the way I looked at it. What they were
thinking, I would be speculating. Q Did you view it as yet another inducement to
the investors to enter into the deals? A Q I did. These promissory notes represented loans to
your law firm? United Reporting, Inc. (954) 525- 2221
Page 1964 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A They didn't really. But if you look at the
promissory note, that's certainly what it says. Q To your knowledge would it be unethical to loan
a law firm money as an investor? A Q A I don't know. Would it be illegal to do so? I don't know. I don't know who I would be I would think that if a
precluded from as a law firm.
law firm wanted to take out a loan from an individual, it could. Just like it could borrow money from a bank,
why not an individual investor. I don't know if I would be precluded from taking out a loan from a client I was doing business with, although that doesn't seem like there would be a preclusion there because if I'm representing TD Bank, for example, I could certainly also do a loan with TD Bank. Q Did any investors to your knowledge raise any
questions with you about the promissory notes? A other. Q Do you recall if any investor expressed concern I don't have any specific recall one way the
about the provision of the promissory notes? A Q I don't recall. I want to return very briefly, and I will do United Reporting, Inc. (954) 525- 2221
Page 1965 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 this very briefly, I promise you, back to a document you have in front of you for deal S26. which exhibit it is. A Q Can you give me a Bates number? Maybe I didn't give it to you. It starts off Did I And I don't recall
in the lower right-hand corner Coquina 000679. fail to give that one to you? A I don't have that. MS. EVANS: Okay.
We'll mark that then as 237,
and it is Coquina 679 through 715. (Whereupon, TD Bank's Exhibit No. 237 was marked for identification.) BY MS. EVANS: Q I'm going to be referring you to Page 681. And
Mr. Schnapp had asked you about this provision earlier, but I wanted you to actually have the opportunity to see it. It's labeled Defense Agreement. A Q A Q A 681? Okay. 677, if we're looking at the same packet. Did I give you 679 through 74 -I'm sorry. I'm looking upper right. 681. Okay. You're That's not the Defense Agreement.
looking lower left. Q Okay.
You're right, it's 677 as well.
Can you just read that paragraph out loud, United Reporting, Inc. (954) 525- 2221
Page 1966 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Adler. please? A "By signing below, Scott W. Rothstein as
chairman and CEO of RRA hereby agrees and acknowledges that should the plaintiff or defendant in that settlement known by RRA tracking numbers S26 file any action against any of the funding entities participating in these settlement purchases known by RRA tracking number S26, that the law firm of RRA shall provide a defense to those funding entities at no expense to those funding entities named in such lawsuit, whether initially named or named as a party at any time thereafter. For or the law firm: Rothstein, Rosenfeldt,
Scott W. Rothstein, Chairman and CEO." And someone had signed by scribble. Were you of the belief that you could do what
is described in that paragraph? A I didn't think about it one way or the other.
As I testified earlier, if someone asked for it, then we provided it. If it was going to stand in the way of
funding, we were going to try to give them everything they asked for. Q Did any investor to your knowledge ever
question that paragraph, whether it could actually be implemented? United Reporting, Inc. (954) 525- 2221
Page 1967 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A I don't recall anyone asking me about it one
way or the other, other than to include it. Q Do you recall telling any Coquina investor that
you were acting on both the interest of the plaintiff and the defendant and including this particular paragraph or provision? A Q view? A As I sit here today looking at it, no. It That doesn't sound familiar to me. Would this paragraph be a red flag in your
doesn't really do anything for me one way or the other. Q As you're sitting here today do you think that
an attorney could do what is described in this paragraph? A No, I don't think an attorney could have done a But it's
lot of the things that were going on in this.
not -- I guess the reason I'm saying, no, not red flags, it's just not as glaring to me as some of the other things that were going on. it is stilted. Q Did any investor ever question how you could So, perhaps my perception of
adequately represent a plaintiff in these deals and at the same time be negotiating down the amount the Plaintiff would take? A Yes. United Reporting, Inc. (954) 525- 2221
Page 1968 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A Who? To my recollection every investor we brought in
except for -- I don't recall whether Mr. Preve ever asked me that, but pretty much every investor at one point in time or another. Q A Q A Q And you were able to satisfy each investor? Sure. -- as to that? I was. If you look at the back of this document you'll
notice, the very last page, I believe, it's signed by Kathleen White. A Q Yes. If you look at S154, and I believe I also gave
you -- Did I give you S13(B)? A Q exhibits. I have S13(B). Look at the last pages of both of those Neither of those are signed by Kathleen
White; is that right? A It's not the last page in S13(B). It has to be
buried in here somewhere.
The copy that I'm looking Hold on.
at -- Maybe it's on another page. Q
The last page of S13(B) should be Coquina 751.
Do you have that? A No. Maybe there's another one. United Reporting, Inc. (954) 525- 2221 Hold on a
Page 1969 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 second. Q A Q A I have S154 here. Let's look at -I have S26. So you don't have S13(B)? I do, but it's not set up in the same that About I have S13.
order you're talking. Q A
What is the last page on the bottom right? This is S13(B). And the last pages are
Settlement Agreement. Q What is the Bates number? You're looking at it
attached to an e-mail, aren't you? A Q Yes. Let me mark the full agreement, I think those
are the papers that Michael Szafranski attached to the e-mails. This is going to be 238, and it is S13(B),
Bates number Coquina 716 through 751. A Okay. (Whereupon, TD Bank's Exhibit No. 238 was marked for identification.) THE WITNESS: BY MS. EVANS: Q We've established that S26 is signed by And a lot of effort for a very small Okay.
Kathleen White. question.
But in looking at S13(B) and S154, those
agreements are not signed by Coquina, are they? United Reporting, Inc. (954) 525- 2221
Page 1970 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A No. This copy has no signature under Coquina
Investments. Q Do you know if other than deal S26 Coquina ever
signed any other of the deal packages, do you recall? A in here. Q A I mean the last page. No. In this deal, which is S13(B), it looks Any parts of it? I'm looking at another page
like George Hawn signed as managing partner on some of the pages, but nobody signed on this last page. Q What Coquina investors are you aware of who
reviewed these deal documents, any of the deal documents? A I don't know who was responsible at Coquina for
reviewing the documents. Q I want to shift gears for a moment and ask you
a few different questions in a different subject matter. You've made clear in your testimony that you
believe that Mr. Spinosa was a player, I believe you said. And my question to you is: What other
individuals did you inform at the time of the scheme that you thought Mr. Spinosa was a player? A Mr. Rosenfeldt, Mr. Preve, Mr. Boden, I don't recall anyone else at this
Mr. Szafranski. time.
There may be more. United Reporting, Inc. (954) 525- 2221
Page 1971 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Let's start with Mr. Rosenfeldt. Do you recall
when you informed him that you thought Mr. Spinosa was a player? A I don't recall the time frame, but I recall the
conversations that we had, yes. Q when? A Q A Q A No, ma'am. Same question for Mr. Boden. I'm sorry? Same question for Mr. Boden. I don't recall when the conversation would have Same question for Mr. Preve, do you recall
taken place, no. Q A Q How About Mr. Szafranski? I don't recall when for any of those people. So for all of these individual it would have
been after they were aware of the Ponzi scheme; is that correct? A Q recall. Yes. I'm sure you testified about this, but I don't When did you say that Mr. Szafranski was aware
of the scheme? A I've testified that I don't know specifically I can only tell you when I am 100
when he became aware.
percent certain he was aware, and that was sometime just United Reporting, Inc. (954) 525- 2221
Page 1972 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 prior to his first investment, being S1, when he asked me if he could bring investors in. Q How many times are you aware that
Mr. Szafranski went to TD Bank -- And let me just preface this because I want to make clear. When I say
TD Bank, can we have an understanding I'm talking about both Commerce and TD Bank -A Q Sure, absolutely. -- back when you started your banking
relationship with Commerce? A Q Yes, ma'am. So the question is, How many times are you
aware of that Michael Szafranski went to TD Bank? A Q Bank? A Q Yes. When is the first time that you recall he went I don't recall. Do you have knowledge of him ever going to TD
to TD Bank? A going. Q How did you become aware that he had gone to TD I don't recall the specific time frame for him
Bank at any time that he went? A Q On at least one occasion I took him. Did you only take him to TD Bank once? United Reporting, Inc. (954) 525- 2221
Page 1973 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A once. I don't think so. I think I took him more than
I seem to recall him saying, We've got to go do a And then as he became more aware of what
bank visit.
was going on and it was clear that he really didn't feel like going out to the bank and couldn't have cared less whether he went out to the bank, he would say, They want me to do a bank visit. And I would say something to the I don't want
effect of, Too busy to go out to the bank. to go.
Just send them whatever you need to send them,
or tell them you went to the bank, but forget about going out there today. Q Did he ever tell investors that he verified
from your office? A Q A Q A Yes. How did he verify from your office? He didn't. Did he -Well, that's not true. At some point in time
he did by going on the fake TD Bank website. Q A Sort of a fake verification? Yes. And then at some point in time he knew it
was a fake TD Bank website and we stopped looking at it. From time to time we'd actually go on the real TD
Bank website and look at that to see what we were really working with. United Reporting, Inc. (954) 525- 2221
Page 1974 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Tell me when the fake TD Bank website first
came into existence. A Q A Q A I don't remember the time frame. Whose idea was it? Mine. Do you remember why you wanted it? Clients wanted to be able to sign on, and there
was no other way for me to do that other than to create a fake TD Bank website. They wanted to be able to get
certain screen shots, and the easiest way for my co-conspirators and I to manipulate the screen shot was to create a fake TD Bank website. It added another
feature of believability to the scheme. Q A Q A Q A Okay. So that's why we did it. Could it only be accessed from your office? That's the only place. Okay. It only existed on my computer. It may have
existed for their own use.
And I'm speculating on But I do
Mr. Renie's and Mr. Corte's computers as well.
recall also there were certain things they could only do from actually mine - there were certain things they could only change by actually coming physically into my office. United Reporting, Inc. (954) 525- 2221
Page 1975 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A What do you remember about that? I remember seeing e-mails where either Deb or
one of my other staff members are saying, We're set to go. Either Curtis or Bill has already gone into your
offers and done the necessary changes. Q Was the computer on your desk? Where was the
computer located in your office that had the fake TD Bank website? A Q On my credenza. When you say investors wanted to be able to get
screen shots, do you mean to view screen shots, to print screen shots, or a number of things? mean by that. A Both. More for printing screen shots. What we Tell me what you
used to do before we had the fake website was we would actually have to cut and paste. We'd take a TD Bank
screen shot, pull it up, cut, block it out, cut it, paste it to an e-mail or to a word document, alter it, cut it down to size, and then print it. extremely inefficient method. Q Once you had the TD Bank website did you no It was an
longer do the cut and paste of the -A We may have from time to time had to do a cut We did whatever was necessary to provide the
and paste.
investor, if it was an innocent investor, to provide United Reporting, Inc. (954) 525- 2221
Page 1976 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 them with what they required. But my recollection is
that it cut down the amount of time and the amount of effort we had to create these screen shots and the like. Q It was a much more efficient process. Do you recall printing screen shots in your
office for any investors in front of them? A You want to know if I printed screen shots in
front of my investors? Q A Yes. I may have. I don't have a specific
recollection one way or the other. Q A Q A Q Did you have a fake Gibraltar Bank website? No. Didn't need one.
Why didn't you need one? I had John Harris. What did he do that -- I don't want this to be Let me think about this for a
a very broad question. moment? A Q
I'll give you a concise answer. My question is along the lines of, What did you
rely upon him for that you did not need to use a website for? A Q To lie about balances. What were the functions that you had on the
fake TD Bank website? United Reporting, Inc. (954) 525- 2221
Page 1977 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A It gave the appearance of having every My
function, that it looked like a TD Bank website.
understanding from speaking to Curtis and to Bill, Bill Corte and Curtis Renie, was that the special software that they actually had that enabled them to do this duplication of a website actually created an exact match of the website. When I told them to do this, when I retained them so to speak to do this, I told them it needed to be exact because certain of our investors might very well bank at TD Bank and be very familiar with the site, so we wanted it to match as closely as possible right down to the stock ticker symbol. Q A question. Did you -- Are you finished? Let me finish the answer. I'll get all your
You asked me about the functions. All the functions appeared to be available
there, but they weren't.
The other function keys did
not work to stay in the fake website. As a matter of fact, one of the problems with this website was, even on the fake website, if you clicked on a function that was on the fake screen, but was not set up to do one of these fake things, it would actually draw you into the real website. you in. It would link
And that of course we couldn't let happen. United Reporting, Inc. (954) 525- 2221
Page 1978 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 So there was a glitch that existed. So I had
to be very careful who I let operate and make sure that the people I did let operate it like Mr. Szafranski and Boden needed to know exactly what they were doing to do this. As a matter of fact, there wasn't a normal way to get to the wire screens either. other machination. Q We had to do some
I don't recall exactly what it was.
Can you list for me what fake screens you could
access on this fake TD Bank website? A To the best of my recollection we had the
initial screen where you enter your passwords, but you didn't need to enter a password, you just needed to click enter. We had the balance screen, which has your
account balances, the ticker symbol, the date, the time, all that kind of stuff, other various information. And
then we had a phony TreasuryDirect page for incoming and outgoing wires. Q A Q Anything else? Not that I recall at this moment. Which investors to your knowledge viewed the
fake TD Bank website? A Not that were sent copies of it, that were in
my office and looked? Q Correct. Yes, the latter. United Reporting, Inc. (954) 525- 2221
Page 1979 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Do I separate out people who were looking at it
that knew it was fake or do you just want to know everyone that ever looked at it? Q was fake. A Q A Who to my knowledge did not know? Correct. Okay. Barry Damson, Doug Von Allmen, I I may have shown I don't Let's start with investors who did not know it
believe, A.J. Discala, Mel Lifshitz.
it to some other of the Clockwork people. recall specifically. Sochet. be more. Q
I may have shown it to Ira There may
That's all I remember at this time.
Would it have always been you who would show
the investor the fake TD Bank website? A No. And I'm only listing the people that I
showed it to. Q Were there other investors that saw the fake TD
Bank website on your computer on your credenza by someone else showing it to them? A Mike Szafranski accessed it, but that was with
another investor, one of the people I named, in the room simply to show that he had the ability to access it. Q A Was that -I'm thinking also that I may have shown it to United Reporting, Inc. (954) 525- 2221
Page 1980 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Jack Simony, by the way. David Boden used it for either I can't
one or more of the Pearson Boden investors. tell you who they were because I don't know. THE WITNESS: MS. EVANS:
Could we take five minutes? Absolutely.
(Thereupon, a short break was taken.) BY MS. EVANS: Q You said that Mr. Damson viewed the website,
the fake TD Bank website? A I have a recollection of him sitting with me in
my office and me showing him the website, yes. Q A Q A Was anyone with you? I don't think anyone was with me, no. It was just you and Mr. Damson in your office? At that moment, yes. I suppose Ms. White may
have been there, but I don't have a specific recollection of that. Q You have no recollection of showing Ms. White
the website? A other. Q Do you recall how that came about that you I may have. I don't recall one way or the
showed Mr. Damson the website, the fake TD Bank website? A Q I do not. Do you recall what you showed him on the United Reporting, Inc. (954) 525- 2221
Page 1981 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 website? A Q A Q The balance page. And do you recall when that was? I do not. Do you recall what particular account you were
showing him? A Generally when I showed people the website I
showed them the page that had all the accounts on it. Q A Q A Okay. And that was for effect. What effect was that for? The fake web page showed a lot of times close
to or in excess of a billion dollars on deposit. Q Did any investor ever express concerns when
looking at that page that had all of the accounts on it as to the number of accounts on that page? A Q No. Do you recall any conversation that you and
Mr. Damson had at that time that he was looking at the fake TD Bank website? A Q No, I do not. Do you recall any balances that were on that
page as you looked at it? A Q I do not. Did you show him the full page or did you United Reporting, Inc. (954) 525- 2221
Page 1982 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 obstruct any part of the page? A Q I don't recall. Do you recall ever, when you were showing an
investor the TD Bank fake website, obstructing any portion of the computer screen? A I seem to recall obstructing the screen, part
of it, with Mr. Garces when Mr. Lifshitz was in the office. Q A What do you recall about that? He was in my office sometime after the New York
event, and there were a series of things as we discussed that were done. Q A Yes. And I remember him wanting to see the page or And I recall obstructing the screen And I Remember, we talked about that?
see the balances.
so that he couldn't see other people's balances. may have done it with other people. specific recollection. Q
I just don't have a
Did the website, the fake TD Bank website, at
any point in time actually reflect real balances? A Q A Q balances? United Reporting, Inc. (954) 525- 2221 No. It always reflected fake balances? Always. How were you or anyone else able to edit the
Page 1983 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 be? A Most frequently I would contact Mr. Preve and A I don't recall the specific mechanism, but I
would tell Curtis or Bill this is what I need the balance to be, and they would change it. how they did it. Q How did you determine what the balance should I don't know
ask him what the balance should be, and he would tell me. In the case of Mr. Szafranski's investors I would And
ask him what the balance would be and he'd tell me. if I couldn't get ahold of anybody, we'd take a wild guess. Q We'd over estimate and put that number in.
Did you ever have an investor who was concerned
about the overestimate when they viewed the fake TD Bank website? A Q A Yes. Who? I specifically remember the hedge funds being
concerned about it, asking questions as to why there was so much money in the accounts. Q Does that refresh your recollection as to who
among the hedge funds viewed the site? A No, no, because my recollection is they asked
the question in response, I believe, to a screen shot that had been e-mailed to them by Mr. Szafranski or United Reporting, Inc. (954) 525- 2221
Page 1984 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Mr. Preve. Q Did you say that you can also see wire transfer
screens on the fake TD Bank website? A fake. Q A Q Okay. Incoming and outgoing, two separate pages. And did you on occasion e-mail shots from those There was a separate page of wires that was
two pages from either one of those pages to investors? A Q A I did. Trying to pinpoint a little bit -As a matter of fact, I remember specifically
sending copies of it for Mr. Lipsitz back at the time that all this was going on when we had that person go into the bank. Q A After the event happened? Yeah. What had happened was, as we discussed,
the person goes into the bank, makes his deposit to get the balances, which obviously shows drastically less. had those conversations I already discussed. Prior to I
me creating that fake letter I told you about, we had had as a first run before I created the fake letter, I had had Mr. Spinosa create a real letter where he was discussing things such as queues and the like. remember, it was some crazy language he used. United Reporting, Inc. (954) 525- 2221 I don't I didn't
Page 1985 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 even quite understand the process. But Mr. Spinosa created a real letter that I forwarded to Mr. Lifshitz where it had in there an explanation that when money is in queue it doesn't show up on a balance when you go into that bank, that type of thing. I think that that propelled Mel Lifshitz even
more to want to see a screen shot. Q A Okay. So I think it was -- and it's one of the things
that sticks out in my mind because it wasn't my fake letter that set him off. It was the prior real letter
that Spinosa did for us talking about queues and why the money wouldn't show up there that made him kind of weary. Q Do you recall whether when money is in a queue,
as you described, is an accurate statement, that it doesn't show up? A I don't even know what it means for the money
to be in a queue. Q You said that you also showed the fake website
to Mr. Von Allmen. A I have a recollection of showing him the
website at some point in time. Q A Do you recall anything about that? I do not. United Reporting, Inc. (954) 525- 2221
Page 1986 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A Q Not the date or anything like that? I do not. Was the fake website in existence before the
visits to the bank with the investors that you described? A Q Direct? A Q That's the wire sheets that I was discussing. What is your understanding of what can be I don't recall one way or the other. You said that you also had a phony Treasury
accomplished with TreasuryDirect? A Q That we were able to initiate our own wires. Did you initiate any wires yourself through
TreasuryDirect? A Q A Not to my recollection, no. Who did that in your office? The bulk of the time Irene Stay, occasionally
Bill Boockvor. Q Were those the only people that initiated wires
from TreasuryDirect? A Q To the best of my recollection. Did you use TreasuryDirect for any purpose
during the time that you had it? A Me personally? I don't have a specific
recollection of it.
I don't know why I would be looking
Page 1987 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 at it. Q Do you know if TreasuryDirect offered the
opportunity to look at account balances? A Q office? A I don't remember which is which, but I think at I don't recall one way or the other. Did you also have BusinessDirect in your
one point in time I had BusinessDirect and I had TreasuryDirect and some other system. I may be But I recall a
confusing that were with TreasuryDirect.
situation where I wanted to have both on and it took a while for the bank to accommodate me. Q With respect to A.J. Discala, you said you
recall showing him the fake website? A Q I believe so, yes. And you put him in the group of individuals
that at the time they viewed the fake website did not know that any fraud was being perpetrated? A It's my opinion that he did not know that any
fraud was being perpetrated. Q Do you recall for what purpose you showed him
the fake website? A As to all the investors who I perceived as
innocent, the purpose of showing them the website was always the same, to add to the believability of the United Reporting, Inc. (954) 525- 2221
Page 1988 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Ponzi scheme. Q website? A Q office? A don't. Q A How many times was Mr. Discala in your office? More than a handful, meaning more than five. I He was in my office a bunch of times. No, I I don't. Do you recall the occasion that he was in your Do you recall what you showed him on the fake
don't know specifically. Q A Q A Q A Q A Q A More than a dozen? I would be guessing. I don't want to guess.
Did he ever dine with you at Bova? He did. Did he dine with you other places as well? I don't recall specifically. He may have.
How many times did he dine with you at Bova? I don't recall specifically. Okay. I dine there so frequently it's so hard say I remember another instance
someone is dining with me.
other than dining where we were eating appetizers and sitting and standing at one of the tables closer to the bar. So there were various occasions. United Reporting, Inc. (954) 525- 2221
Page 1989 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 As I said, I was there so frequently that you could say that numbers of people dined with me -Q A Q Okay. -- at various points in time. You said you could not recall, but had a belief
you may have shown the fake website to Ira Sochet? A Q I can't recall one way or the other. And Jack Simony, do you recall the occasion
that you showed the fake website to him or occasions? A Q website? A Q A I don't recall one way the other. Dean Kretschmar? For some reason it sticks out in my mind that Not with any specificity, no. Did you show Christopher Podaris the fake
Dean may have been there when I showed A.J. the balances, but I don't have a specific recollection. Q A Q A Q Has Mr. Bekkedam ever been in your office? I believe he has, yes. Do you recall the occasion? I do not. Is there anyone else as you sit there now that
you can recall that you showed the fake TD Bank website to that in your view was an innocent investor? A I don't remember anyone else at this time. United Reporting, Inc. (954) 525- 2221
Page 1990 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 There may be more. right now. Q Turning to individuals who you believed may I just don't remember as I sit here
have known about your fraud during the period of the Ponzi scheme, who did you show the fake TD Bank website to? A Mike Szafranski. UNKNOWN SPEAKER: THE WITNESS: Pearson. Objection to the form.
Frank Preve, David Boden, Richard
Are we just -- Debra Villegas, Irene
Stay, Bill Boockvor, Marybeth Feiss, Russ Adler, Stu Rosenfeldt. Curtis Renie and Bill Corte both That's all I
saw it because they created it. recall at this time. BY MS. EVANS: Q
There may be more.
Does that list everyone at RRA who was aware of
the fake TD Bank website? A I don't know. Let's see go around the office,
David Boden, Stu Rosenfeldt, Russ Adler, me, Debra Villegas, Marybeth Feiss, Irene Stay. I can't recall
whether I ever showed Lippman the site or not. Q All the individuals that you've listed here,
they knew the fake TD Bank website was fake? A Q Those people that I just listed? Um-hmm. United Reporting, Inc. (954) 525- 2221
Page 1991 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q Yes. Okay. You had an executive committee. I think
we touched on this briefly last week. A Q A Q A sometime. a week. Yes. How often did the executive committee meet? It what erratic and sporadic. Did it meet at least once a month? Sometimes. We tried to meet once a week
We tried to meet at least for breakfast once
Sometimes we wouldn't meet for a month or so,
and then we'd meet two weeks in a row. Q How often did the membership on the executive
committee change, if it changed, between the period of let's say 2000 -- beginning of 2006 through the end of 2009? A I don't even know if there was an executive
committee back in 2006. Q When do you remember there first being an
executive committee? A You would have to ask Ms. Villegas. She would
remember when we created it, I think.
I don't remember
the membership changing very much once we started it. Other than to add people I don't remember taking anyone off. Q It had two tiers? United Reporting, Inc. (954) 525- 2221
Page 1992 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A The executive committee? I'm asking. No. The law firm had tiers. The executive
committee was just people that I trusted to advise me. Q Did you make the appointments to the executive
committee yourself? A Q 2009? A To the best of my recollection -UNKNOWN SPEAKER: THE WITNESS: Object to the form. I did with Mr. Rosenfeldt. Who else was on the executive committee in
-- it was me, Mr. Nurik,
Mr. Adler, Mr. Lippman, Mr. Rosenfeldt, Mr. Boden, Mr. Berger, Mr. Stone, Mr. Stracher. Debra Irene That's all
Villegas generally came to the meetings. Stay occasionally came to the meetings. I remember at this moment. were more people. BY MS. EVANS: Q A Were notes taken of the meetings? Deb, to my recollection, took notes.
I'm sure that there
I didn't
take any notes. Q What function did the executive committee
perform at the firm? A We discussed actual firm business on the United Reporting, Inc. (954) 525- 2221
Page 1993 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 legitimate side of the business, and I sought advise and counsel, discussed problems within the firm, that kind of thing. Q When you say you sought advise, did the
executive committee have the ability to make any binding decisions on the firm as a committee? A No, they didn't have that kind of authority.
It was advisory. Q A Advisory only? There were only two shareholders that had any
input, and that was myself and Mr. Rosenfeldt, meaning input that could actually affect - change something at the firm. Q Could you bind the firm with a decision of
yours alone? A Q A Q A Could I? Yes. Absolutely, yes. Could Mr. Rosenfeldt do the same alone? He could have. He didn't frequently, but he
could have, yes. Q When you met was there any agenda for the
executive committee? A Deb would generally try to create an agenda. But more often than
We tried to put something together.
Page 1994 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 not my recollection was that we simply met to discuss how the firm was doing, what was going on. Q Did she prepare any information that would be
given to the executive committee on occasion? A Q A Q From time to time. Did anyone else other than Deb do that? I don't recall one way or the other. Would you agree that you made the majority of
the decisions as to how firm business was conducted? A Q That is accurate. Who at the firm reviewed and paid attention to
the legitimate finances of the firm? A You have to restate the question. "Paid
attention to" intimates that they did something about it when they were looking at it. Q A Q Let me wipe that one out completely. Okay. Who at the firm exercised the ability to make
financial decisions about the firm? A Who exercised the ability to make financial
decisions? Q It's getting late, isn't it? UNKNOWN SPEAKER: MS. EVANS: Objection to form.
Strike that one. That's really not a good
THE WITNESS:
Page 1995 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 question, exercise the ability. BY MS. EVANS: Q firm? A Q A I made the bulk of them, yes. Who else made financial decisions for the firm? Mr. Rosenfeldt in concert with me. Mr. Lippman Did you make the financial decisions for the
from to time in concert with me. time in concert with me. time in concert with me. Q A with me. Q A Is it fair to say you --
Mr. Boden from time to
Even Mr. Stracher from time to
Mr. Grant Smith from time to time in concert
I didn't mean to interrupt it you. That's okay. It just popped into my head at
the last second. Q Did anyone at the firm have the ability to
override your decisions? A Q No, ma'am. Did you ever ask Mr. Spinosa to actually pitch
settlement deals to anyone? A Q No, ma'am. How many times to your recollection did you ask
Mr. Spinosa to speak with an investor on the phone? A It would have been less than six times, I -United Reporting, Inc. (954) 525- 2221
Page 1996 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the only ones I'm recalling right now is the Damson, Kathleen White telephone call and perhaps a call with Mr. Lifshitz or face-to-face with Mr. Lifshitz. recall if he spoke to Mr. Sochet or not. Q A Q On the phone, right? On the phone. Mr. Sochet met him. I can't
Are those the only times that you recall
specifically that you asked Frank Spinosa to speak on the phone with an investor, those three times? A That's all I recall at this moment. There may
have been more times. Q
That's what I recall right now.
To your knowledge did Mr. Spinosa ever speak
with an investor without you asking him to do so? A Q A After the Ponzi scheme exploded. He spoke with an investor? It's my understanding that he spoke to several
of the investors that were contacting him after the Ponzi scheme exploded, but I don't know that for certain. Q Can you tell me who you believe, but do not
know for certain, that he spoke with after the Ponzi scheme exploded? A else. Q Before the Ponzi scheme exploded did you know United Reporting, Inc. (954) 525- 2221 Mr. Preve, Mr. Levin. I don't recall anybody
Page 1997 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of any investors that Mr. Spinosa called independent of you asking him to do so? A That Mr. Spinosa called or that called
Mr. Spinosa? Q A Either way. Let's say spoke on the phone.
To my knowledge he never called anyone without
my knowledge, and to my knowledge no one ever called him without my knowledge. Q Would you have been concerned if you had
learned that Mr. Spinosa spoke to an investor without your knowledge? A I would have been concerned if I didn't -- it
would vary on an investor -- You've got to understand the investors. There are some who you just know are
just kind of laid back and there are others that are voracious. If Mr. Von Allmen had called Mr. Spinosa and talked to him, I'd be wanting to know what the heck they talked about, and I'd be panicky until I found out that everything was okay. I trusted Frank to do the right thing by us, but I don't know that I would have wanted him to just kind of run free with this whole thing. Q When you answered questions for both
Mr. Schlesinger and Mr. Rabin, did you tell them every United Reporting, Inc. (954) 525- 2221
Page 1998 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 conversation that you had with Frank Spinosa to your knowledge? A I would need to read the entire transcript, and
I doubt that I could sit here and relate every single conversation that I ever had with Mr. Spinosa. I mean, you're including conversations that we may have had off to the side at a sporting event, at a political function. I tried to relay as best as I could
the most relevant conversations they were asking about. But without reviewing the entire transcript and going back through them I couldn't tell you one way or the other at this moment. Q Can you remind me what sporting events you went
to with Frank Spinosa? A Dolphin games. There may have been a time when
he asked me for Heat tickets. Q A You would have gone with him? No, I don't recall going to the Heat game with I would have given him tickets, either my
Mr. Spinosa.
floor seats or one of the other seats we had bought. Q Sort of focus on the question I have, which is,
What supporting events do you recall that you were at with Frank Spinosa? A The one thing that is sticking out in my mind
is the Dolphin games. United Reporting, Inc. (954) 525- 2221
Page 1999 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A Q A Q A number of Dolphins games or one? Several. Several as in more or less than five? I can't pin it down for you. I'd be guessing.
Any other sporting events that you went to with
Frank Spinosa? A Q A Not that I recall, no. Okay. I don't recall going to any Heat games with him I didn't go to
and I didn't fly to any games anywhere.
baseball games, and I don't recall him asking to go to any baseball games. him. I didn't go to hockey games with
I think we've pretty much narrowed it down to
football games. Q Okay. You said that earlier that you told I
various individuals that Frank Spinosa was a player. want to go back to that. I think you gave me a list
which I managed to perhaps lose, but my question is, What did you say to Mr. Szafranski with respect to him being a player, Mr. Spinosa being a player? A I can't give you the specifics of the
conversations with all the individuals that I listed since they were all dealing with fake bank balances and other banking issues. From time to time it came up.
Two people I didn't even mention, and I wouldn't have United Reporting, Inc. (954) 525- 2221
Page 2000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 side. said, This guy's a player. And I didn't necessarily say
to each of those people, This guy's a player, this guy's a player. The term is getting overused. But I expressed to the group of people that I have mentioned, and add to that list Debra Villegas and Irene Stay, the fact that Mr. Spinosa was, for lack of a better phrase, on our team, that we could trust him to do the right thing when it came to protecting our interests. fraud. We never said protect our interests in the
It just depended upon the circumstance. I remember Mike Szafranski very -- Mike from
time to time got nervous about things.
There was an
instance, the instance when I was taking Barry and Kathleen to go meet with Frank Spinosa. little jumpy about that. Mike was a
He knew Barry could be a bear,
but he didn't understand my relationship with Barry and the fact that there was enough mutual respect there that Barry would not have gotten out of control. I think
Mike thought Barry might get out of control if Spinosa tried to grill him. I told him that, you know, Frank is on our Don't worry about him. He's been briefed. He
knows what he can say and what he can't say and not to worry about it. Q When did -United Reporting, Inc. (954) 525- 2221
Page 2001 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A That would have been the same type of It was more I didn't
conversation that I had with these people. putting them at ease as to their concerns.
have any reason to tell these people anything further than that because I limited their interaction drastically with Mr. Spinosa, as I did with everything else. Remember I testified days ago and several times actually, that I tried to even avoid people internally from speaking to each other about everything that we were involved in because that just leads to people finding out things they don't need to know. The more
people that know things the more chance there is that the entire thing was going to blow up. Q So, as to these individuals, Mr. Szafranski,
Preve, Boden, Rosenfeldt, Villegas and Stay, you don't recall any specific conversations whatsoever with respect to discussing with any of them whether or not Mr. Spinosa was a player in the -A Let me answer this way because it appears to
me - this is not directed to you - it's directed in general. Q A Sure. That people are trying to paint lack of
knowledge of specific conversations as not knowing what United Reporting, Inc. (954) 525- 2221
Page 2002 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 level. was going on or perhaps a certain thing didn't even occur. Here's the problem with that. My life was
unfortunately extraordinary in an unfortunate series of ways. I probably met with more people in a week than
most people in here met with in a month or multiple months. I was constantly shaking hands, having
conversations. The size of this Ponzi scheme and all of its tentacles involving all levels of corruption, organization crime, law enforcement, judiciary required me to be on, literally turned on 24 hours a day, seven days a weeks. I didn't sleep very much.
I was functioning as some kind of very bizarre And so, I could have literally 50, 70, 100
conversations related to the Ponzi scheme in a day with various individuals back and forth, on and off. can't tell you an exact date and time that a conversation occurred. But I knew who was conducting So, I
illegal activity on my behalf and I knew who wasn't. That I'm certain of. Q I appreciate the answer. I'm going to move to
strike as non responsive. A Q A I understand. Okay. I don't agree. I would think everyone in here
Page 2003 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 would want to truly understand the parameters from which I'm answering the questions. I can understand you have
clients to represent and you have to do what you have to do. Q The moving to strike was not meant to be
disrespectful. A I didn't think it was. You've been nothing but
professional. Q All right. Is it your testimony that each time
that you spoke with these individuals about Mr. Spinosa being a player in the general sense that you've given us, they understood with respect to your reference that he had knowledge of a fraud? A Q A Yes. And that being on our team meant that? People that I did business with on the level
on - with regard to the fraud could tell when I was discussing something that was criminal in nature, fraudulent in nature, or something that was aboveboard. It was the way we spoke to each other. So,
yes, when I said he was on our team, you don't need to worry about him, that's what it meant, and they understood that. Q Do you recognize the e-mail address
ckrealtor07@aol.com? United Reporting, Inc. (954) 525- 2221
Page 2004 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q I do. Do you know of any reason why you would send a
copy of a letter signed by Mr. Spinosa to that e-mail address? A Q A I do. Can you tell me about that? My recollection is my e-mail address at the I needed to print a copy of So I sent
home was not working. something.
That's my wife's e-mail address.
it to her e-mail address so when I got to the house I could pull it up and print it for myself. Q A Q e-mail? A You have to show me the e-mail. I don't have a Did that happen on more than one occasion? I don't recall one way or the other. Do you recall the occasion of that particular
specific recollection but I do have a recollection of doing that. Q When you had the social events at your house, Did you
let's limit it right now to campaign events. hire a photographer each time yourself? A I don't know what you mean myself.
You mean
through the firm or me personally? Q A Let's start with you personally. No. United Reporting, Inc. (954) 525- 2221
Page 2005 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Did your firm hire photographers for the
campaign events that were held at your home? A Q were? A 90 percent of the time it was Gerlinde Yes. Do you recall who any of those photographers
Photography. Q A Q A Q Can you spell that? G-E-R-L-I-N-D-E. The other 10 percent, do you recall who it was? I do not. Do you recall whether any of the campaign
events that you held at your house, the campaigns brought their own photographers as well? A Q A They did from time to time. Do you recall any of those? I can't tell you specifically but they
definitely brought their own photographers from time to time. Q Sort of asked a sloppy question. I'm going to
go back again and make sure I ask it more clearly. Do you remember any candidates who - specific candidates who brought their own photographers? A Q I don't remember who they were particularly. Or political figures, I guess who is not a United Reporting, Inc. (954) 525- 2221
Page 2006 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 candidate? A I don't have a specific recollection who was.
I do have a recollection of various candidates from time to time bringing their own photography people or photographer. Q A Q You said that the Schwarzenegger event -You're talking about events at my home; right? Correct. Which now that you've asked that Did you have campaign
question leads me to also ask:
events at your -- did you host campaign events at your law firm? A Q pictures? A At the law firm we had, for the most part, it But we also had, later in At my law firm and at other sites. Again, with the same photographer taking
would have been Gerlinde.
time, a photographer who was doing sports photography for us for RRA Goal Line and RRA Sports Management. Scott something or other, I think. for us. And at the very large events that we did off-site, for example, I hosted Sarah Palin at some event off-site in Boca Raton -- no, no, Palm Beach. And He was doing that
on that kind of thing where it was a very large ticket item that a VIP guest could pay to get a picture, they United Reporting, Inc. (954) 525- 2221
Page 2007 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 brought their own photographer. But the person getting
their picture taken would have had to give an extremely large contribution. Q Who was the "they" that brought their own
photographer? A An event where Sarah Palin, where I hosted for
Sarah Palin where they brought their photography team. John McCain, Charlie Crist. There was an event where
Arnold Schwarzenegger, Mel Martinez, Charlie Crist, a couple of other politicians brought their own photography team. these events. Q You testified that the Schwarzenegger event was I wouldn't have brought my team to
a relatively small event? A Q A That's a different event. There was more than one. It was a large --
There was one large event where all those
people that I just mentioned were there and a very small luncheon at my home. Q Do you recall if you hosted a Schwarzenegger
luncheon at your home? A I don't. You have to check through their
people or someplace in my firm to see who the guest list included. Q I'm going to mark this as Exhibit 239. United Reporting, Inc. (954) 525- 2221 It's an
Page 2008 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 e-mail invitation to the Schwarzenegger event. not on the exhibit list. This is
I'm going to hand you copies.
(Whereupon, TD Bank's Exhibit No. 239 was marked for identification.) BY MS. EVANS: Q Does this look like an e-mail that you sent out
inviting individuals to the Schwarzenegger luncheon? A Q It is. Looks like in the first line there
SteveCaputi@aol.com, that would be the Steve Caputi that posed as a Plaintiff when he was not a Plaintiff with respect to the investments; is that correct? A Q Yes. Look at the second line. Tracy Weintraub, is
that the accountant that you've mentioned and testified about who said knew of the fraud? A Q Yes. Three people over, teddymorse@hotmail.com,
that's Ted Morse? A Q A Q No. Who is that? That is Ted Junior's son, Ted the Third. Thank you. The only other name I recognize is
William Scherer. A It is.
Is that Mr. Scherer in this room?
Page 2009 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 up. to. A end. list. Q A Well, you mean other names were on it? Yeah, you could tell it started off at the If you look all the way to the right, you could Q event? A Q A Q A He did not. Did Mr. Weintraub? I don't recall. Mr. Caputi, do you know if he attended? He did not. You're missing a substantial part of this Is that the list -- Did Mr. Scherer attend the
see the little arrow tab is scrolled all the way down. You would have to scroll all the way up to get to where the list started. Q This is the very end of the list.
How many people do you recall -- I didn't mean
to give you an incomplete document. How many people do you think you invited? I had a general list I would send these things
It was over a hundred people. Q You invited over a hundred people to this small
luncheon at your house? A I wasn't expecting a hundred people to show My recollection is, So, no, I
It was a very expensive event.
15, 20, 25,000, maybe more, per person. United Reporting, Inc. (954) 525- 2221
Page 2010 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 expected very few to show up. And generally when you're
doing this, at least we did it at our firm, there are certain people you send it to knowing they're going to come. To an event that is this expensive, you generally
have to call them and invite them before this even goes out and you know who's really going to show up. And then you do a mass mailing so you can get the publicity out that this event is occurring. Q What you're saying, these people that are in
this particular screen shot are people that you very frequently invited to events at your home? A Q Yes. Would an event like this be part of the
rock-star life? A Q Yes. There were people that you invited to
participate in the rock-star life that did not assist with the fraud; right? A Q Yes, I think I made that clear the other day. There were people you said you invited to
football games who were not part of the fraud; is that correct? A Q That's correct. And there were people who you used pet names
with and you were very familiar with in e-mails who were United Reporting, Inc. (954) 525- 2221
Page 2011 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q not part of the fraud; is that correct? A Q That's correct. There are people who you bought dinner and
lunch for that were not part of the fraud; is that correct? A Q That's correct. You said that -- you said several times that And one
you gave a financial payment to Ms. Caretsky. of the questions I have for you is:
How did you
determine that it was between 25 and $30,000 at this point in time? A It's the best recollection I have of how much
money I gave her based upon my memory from two plus years ago. Q Now, you testified that only once you ever
counted out money that you gave to someone; did I misunderstood that question? UNKNOWN SPEAKER: Objection to form.
No, that's not what I said. Did you count out the money that you gave
Ms. Caretsky? A When I was delivering money to Ms. Caretsky I
counted it before it went into the envelope. Q So, now you're remembering what you counted
out; is that correct? United Reporting, Inc. (954) 525- 2221
Page 2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A No, no, no. Here's the problem. This is the I gave
same thing like with the specific conversations. a tremendous amount of money in cash to a lot of people.
I always gave what I thought I needed to give That's the way it worked. I didn't keep a
to accomplish my goal.
I didn't keep a ledger. running balance.
If you go back and add it all up, I'm
certain I gave more than a million dollars in cash out in bribes and inducements, and for other things my partners were doing. Q A Could you be -I can't -- I can't tell you with any Ms. Caretsky was not a huge cog in that It was
specificity. wheel.
She had a very specific purpose.
extremely limited.
And as I testified yesterday, I
believe, it is my opinion that she did it when she initially did it, because it was prior to go her getting the money, because she believed what I told her, that I needed these inflated balances to try to lure in bigger clients. I believe she was trying to assist me to get
bigger clients in. Q well. Could you have been $10,000 off in your guesstimate here today? United Reporting, Inc. (954) 525- 2221 Move to strike that answer as non responsive as
Page 2013 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A No. Why not? It's too far off in that small of an amount.
If I had said between 150 and $200,000 I could possibly be $10,000 off. At that small of an amount, no, I
wouldn't be that far off. Q off? A What makes you think you wouldn't be that far I don't understand the answer. Because I know how I was with money. I'm
telling you, the specificity of it for some reason I can't remember whether it was 25,000 or 30,000 and that's only a function of the fact that I didn't keep track and it wasn't like it was a big event for me. didn't pay -- it's not a single bribe. I
You don't know
now and as you will come to learn as all of this unfolds, this was a frequent occurrence. I was dealing And
with a lot of people who would only deal in cash.
as a result I can't tell you specifically what I gave her. Q What happened after you handed Ms. Caretsky the
accordion file that you mentioned with the money in it? A Q A Q I didn't say accordion file. A file? It was an envelope that had accordion sides. After you handed her that, what did you do? United Reporting, Inc. (954) 525- 2221
Page 2014 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 day? A Q I don't. Do you remember whether it was sunny outside? A Q A Q A I left. Did you get in a car? I got in the car, yes. And did you have a driver in the car? I don't know whether I drove or whether my It's possible that Mr. Scandiffio drove What did you do?
driver drove. me. Q A
Was he your only driver? He was my driver 90 percent of the time, 95
percent of the time. Q A When he wasn't driving, who drove for you? Jose Morales drove from time to time, a guy
name Frankie D. drove for me from time to time. Q Do you know what kind of car you were in that
It's daytime, right? A Q envelope? A Q A Q She said, Thank you. Did she open it in front of you? She did not. Did she understand what was in it? United Reporting, Inc. (954) 525- 2221 It was daytime, but I don't recall. What did Ms. Caretsky do when you gave her the
Page 2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you? A Q I don't recall what I did. I recall leaving. A Q I'd be guessing as to what was in her mind. Now, you testified that one of the things you
needed to be careful about with the scheme was to make sure that very few people knew about it; is that accurate? A Q Yes. Weren't you taking quite a risk that
Ms. Caretsky would walk back into the bank, open the envelope and tell a lot of people? A Q No. Weren't you taking a risk that Ms. Caretsky
would walk back into the bank and create quite a scene with the amount of money in the envelope that you say was in it? A Two things; one, I don't know that she walked
back into the bank with it; two, I don't believe that was a risk, no. Q Do you know where she went after you handed her
the envelope? A Q I have no idea. You didn't look back over your shoulder, did
With respect to Mr. Spinosa, you also said that
you gave him money; is that correct? United Reporting, Inc. (954) 525- 2221
Page 2016 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q remember? A Q A Q Lunch. You said that was at Bova? Correct. How much could you have been off on that I did. Was that an appetizers, lunch, dinner; do you
particular guesstimate? A It was between 50 and $75,000. I don't recall
which one. 65.
And it wouldn't have been 50 or 60, 60 or I just don't
It would have been 50,000 or 75,000.
recall which one it was. Ms. Caretsky.
Same thing actually with
It would have been 25,000 or 30,000, not One or the other.
25, 25,500, 26. Q A Q A
Could it have been off by 25,000? No. How do you know that? Because I remember in my own head thinking
about what I was going to do and what I was going to give. I also remember considering how much was going to I remember giving
fit in this particular envelope.
large amounts of money to other people for whatever it was. It was between 50 and $75,000. I can't tell you. How did you fit it in the envelope? United Reporting, Inc. (954) 525- 2221 Was it a How did I pick the
amount? Q
Page 2017 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 bunch of cash that you threw in? A No, no. Was it bundles? It
I kept the money very organized.
was all either in those bank wrappers or in rubberbands. Q Do you recall as to Mr. Spinosa whether it was
bank wrappers or rubberbands? A Q A Q A Q I don't. How about with Ms. Caretsky? I don't. Were these envelopes bulging? I don't really recall one way or the other. Did you use the same size envelope for
Ms. Caretsky as you used for Mr. Spinosa? A other. Q A Were Ms. Caretsky's exact words, "Thank you"? No. As I sit here today I don't know what she I think she said, Thank I doubt it, but I don't recall one way or the
said other than, Thank you. you. Q A
So that's a guess too? It's a guess, yes. It wasn't an extraordinary It would be
event in the scheme of what I was doing.
for someone who's never paid a bribe before, but unfortunately because of the business I was doing and the people I was doing business with, the regular movement of cash -United Reporting, Inc. (954) 525- 2221
Page 2018 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q A Q A Q that day? A Q Never. I'm curious. You said that she came outside Did you ever --- was a frequent occurrence. I'm sorry. That's okay. Did she ever raise the money with you after I didn't mean to interrupt you.
the bank and you were in there prior to that; is that correct? A outside. Q I was in the bank. I walked out. I asked her to meet me
Eventually she met me.
Do you remember what words you used to ask her
to meet you outside? A Q The specific words, no. Did you ever provide Ms. Caretsky with any part
of the rock-style life? A Q A Q I did not. And Ms. Kerstetter? I did not. Or anyone else other than what you mentioned
with respect to Mr. Spinosa? A Q I didn't understand your last question. Other than your testimony about what you
provided Mr. Spinosa, did you ever provide anyone else United Reporting, Inc. (954) 525- 2221
Page 2019 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 at TD Bank with what you would refer to as the rock-style life? A Q No, ma'am. Do you know if perhaps Ms. Caretsky was already
living the rock-style life? A Q A I have no idea one way or the other. Same thing for Mr. Spinosa. You don't know?
I have know no idea one way or the other.
Frank certainly didn't act like he was living the way I was treating him. He was always extremely appreciative
and certainly made it appear to me that he was doing things he would not otherwise be able to do. Q The appreciativeness, you would agree, could be
a function of the personality that he has, correct? A The problem is -UNKNOWN SPEAKER: THE WITNESS: Objection to the form.
-- you ask me a question that This is
asks me to tell you what I'm thinking. what I'm thinking. was in his head. MS. EVANS:
I don't know for certain what It would be a guess.
Could you read back the last
question, please? (The last question was read back by the court reporter.) BY MS. EVANS: United Reporting, Inc. (954) 525- 2221
Page 2020 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q I ask you to answer that question. MR. LICHTMAN: BY MS. EVANS: Q A You can still answer. I'm sorry. Repeat your question. Same objection.
(The last question was read back by the court reporter.) THE WITNESS: It could have been the function I
of anything, but that's completely speculative. don't know what it was a function of. BY MS. EVANS: Q
Did you ever tell anyone after the Ponzi scheme
exploded that Bill Brock handed Ms. Caretsky an envelope with cash in it? A Q I don't recall saying that, no. Are you aware that Coquina's counsel,
Mr. Mandel, told a federal judge that he had a good faith belief and had been told by counsel for the bankruptcy trustee that you said Bill Brock had handed money in an envelope to Ms. Caretsky in a parking lot. A Two things: I'm not aware of that, and I'm
perplexed as to where Mr. Mandel keeps getting his information because it's my understanding he's also the one that said that he had a good faith belief that I said Mr. Spinosa flew on a plane with me somewhere, and United Reporting, Inc. (954) 525- 2221
Page 2021 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I've never said that either. Q Right. Both of those would be completely
incorrect to your knowledge, wouldn't they? A Q They are incorrect. Can you list for me every bank officer you've
ever met at TD Bank? A John Tolomer, Frank Spinosa, Rosanne Caretsky, I don't know if Mr. Mejia is a
Jennifer Kerstetter. bank officer.
That's all I recall at this moment.
There may be more. Q Were there any employees, bank employees,
outside that list of officers that you just gave me that you've met at TD Bank? A I'm certain I've met other people because the
people there were extremely friendly and it was certainly their, I guess their protocol or their nature to introduce me. But I don't have a specific
recollection of who they were. Q I wanted to ask two unrelated questions. You
had mentioned that there was $150,000 that Bill Brock got out in cash from two different bank branches on a particular day? A Q Yes. Do you have any recollection that you were at
one of the branches getting part of that money? United Reporting, Inc. (954) 525- 2221
Page 2022 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q A No. And you're certain that you weren't? I don't have an independent recollection of I was very busy that day doing something
doing that. else. Q A Q
What day was that? I don't recall. What else were you doing? MR. LaVECCHIO: Objection, privilege.
BY MS. EVANS: Q And this was before the Ponzi scheme exploded,
correct, that this $150,000 came out of the bank, two bank branches? A Q Yes. Would it surprise you to know that on the
evidence of those cash transactions coming out of the bank someone with your identification provided that identification to the bank? A Q A It would not surprise me, no. Why would it not surprise you? Because in the scheme of everything that was
going on with Bill running one way and me running all over the place and taking care of what I was taking care of, it is certainly plausible that I would have driven over to the 17th Street branch to take care of that part United Reporting, Inc. (954) 525- 2221
Page 2023 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of the transaction. I needed $150,000 cash for a specific purpose. It was urgent. I was going to do whatever I needed to
do to get the money. Q Hunter? A Q A I do. Who is Kip Hunter? She was a partner of mine in a company called Do you know of anyone by the name of Kip
Kip Hunter Enterprises, and she was a very close friend of mine for a very long period of time. married to another friend of mine. Q for you? A Q A That's what she did, Kip Hunter Marketing. Did she do that for the RRA law firm? For the RRA law firm, for our Bova businesses, Did Kip Hunter do any marketing for you or PR She was also
any business enterprise I was involved in she was involved in. Q A Q or fraud? A Q To my knowledge, no. Did Kip Hunter in any way assist you even United Reporting, Inc. (954) 525- 2221 For what period of time? I don't recall. Did Kip Hunter have any knowledge of the scheme
Page 2024 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 unknowingly in the scheme or fraud? A Q A Yes. How? Unknowingly by helping me build my reputation
in the community and the reputation of my law firm in the community and the reputation of my other businesses in the community. Q this? A All you've got to do is look at all the What particular ways did Kip Hunter accomplish
advertising she did for us, whether it was getting our name at the Bank Atlantic Center or with the Miami Heat or with the Dolphins and everything in between. all added to it. Q A For what period of time? I don't recall. MR. LICHTMAN: THE WITNESS: It's five to 5:00 so, you know. Ms. Evans, probably the easiest That
way to do it is to look at the day that Kip Hunter Enterprises or Kip Hunter Marketing was incorporated, when we formed that company. That
will give you an idea of how long she did that for because prior to that she was actually working for the Levinsons and was not doing advertising for me or any of our companies. United Reporting, Inc. (954) 525- 2221
Page 2025 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 United Reporting, Inc. (954) 525- 2221 BY MS. EVANS: Q A Did RRA have Kip Hunter on a retainer? We were paying her a bunch of money. It may
have been in a retainer format.
I know we had to pay
her and we had to pay advertisers. Q For the year 2009 do you know how much you paid
Kip Hunter? A Q I do not. When you say, "we formed the company," what are
you referring to? A There was a holding company that held my 50 And I don't ILK3
percent interest in Kip Hunter Marketing. remember -- wait, wait, wait. I do.
It was ILK3.
held the ownership interest in Kip Hunter Marketing, my interest. MS. EVANS: Shall we shut down for the day? That's music to my ears.
MR. LaVECCHIO:
(The proceedings were concluded at 5:00 p.m.)
Page 2026 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 United Reporting, Inc. (954) 525- 2221 ______________________________________ Terri L. Wright Dated this 20th day of December, 2011. I, TERRI L. WRIGHT, Notary Public in and for the State of Florida at Large, certify that I was authorized to and did stenographically report the foregoing proceedings and that the transcript is a true and complete record of my stenographic notes. STATE OF FLORIDA ) C E R T I F I C A T E
COUNTY OF BROWARD )

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Page 1873 IN THE CIRCUIT COURT OF THE 17TH JUDICIAL CIRCUIT IN AND FOR BROWARD COUNTY, FLORIDA CASE

DAY 7 - AFTERNOON SESSION DEPOSITION OF SCOTT W. ROTHSTEIN

DATE TAKEN: TIME: PLACE:

Examination of the witness taken before:

United Reporting, Inc. (954) 525- 2221

You can hand it to me here, it will

Page 1883 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q I might be having the time frame wrong.

Have you been trying to help Mr. Mandel's

sorry for doing something. what you're talking about. Q A Q

and I brought this on myself.

the plaintiffs. were greedy? A

Many of them, yes. United Reporting, Inc. (954) 525- 2221

times actually. Mr. Damson. friends.

I think that we were friends or becoming

I think most of the conversation I had with him

Page 1887 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of stuff. He was working me. He figured if I felt he

lobster party. investment? investment? A Q A

What does that have to do with the

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

Page 1889 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 think he believed that he had a good investment. He was

give him more deals, right? A I think he wanted to be as close to me as he

again; is that right? A Yes, we referred to each other as Rocky and

The deal is as follows:

a's and a smiley face.

United Reporting, Inc. (954) 525- 2221

laid the golden egg. Q

17, you say: A

Yeah, I said that to a lot of people.

to say that to Szafranski. people. Q A What did that mean?

I said that to a lot of

It was a referral back to a movie called Wall

plaintiffs and defendants? A I don't know when he actually realized it. I

Page 1896 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Yeah. Again, you're referring to Platinum,

Centurion, Level 3? Q A Yes. Yes, sir, he was chosen to my understanding by

about Mr. Szafranski? A He turned out to be a true player in every

So was there a point where Mr. Szafranski was

Page 1898 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Do you know to what entities Mr. Szafranski

falsely verified information? A At various points in time my recollection is he

didn't mean to cut you off.

the change to whistle blowers.

Why would they want to?

plaintiffs, only 10 are taking it. answer.

for all, all for one. don't take it.

We allowed them to meet privately among

would make sense.

Qui Tam action.

Page 1903 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Finishing up with Mr. Szafranski. There were

Money laundering; extortion; bribing public

law enforcement? A Bribing law enforcement; paying law enforcement

Actually mine wasn't really tax evasion. inflating my taxes.

I don't know what you call that.

but I just want the record clear. bribe? MR. LAVECCHIO:

United Reporting, Inc. (954) 525- 2221

Page 1905 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q Q Q Are you going to follow the U.S. Attorney's

Were you involved in any other schemes other

Were you involved in any other schemes other

way you've couched that question. broad term. Q Fair enough.

Have you been involved in any

United Reporting, Inc. (954) 525- 2221

Page 1908 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A Q And it was a breach of confidentiality because

United Reporting, Inc. (954) 525- 2221

Exhibit 232. S154.

numbered in two ways:

at the top SWR/TD 00357 through 1390. marked up copy, of course.