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1 UNITED STATES DISTRICT COURT

2 EASTERN DISTRICT OF NEW YORK



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4 UNITED STATES OF AMERICA, 5

10-CR-00515

-against-

United States Courthouse

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10

Brooklyn, New York

DARYL DWORKIN,

Defendant.

July 7, 2010 Ten o'clock a.m.

X

11 TRANSCRIPT OF CRIMINAL CAUSE FOR PLEA BEFORE THE HONORABLE RAYMOND J. DEARIE

12 UNITED STATES DISTRICT JUDGE

13 ATTORNEYS FOR GOVERNMENT:

LORETTA E. LYNCH

14 United States Attorney BY: DANIEL SPECTOR

15 WINSTON CHAN

Assistant United States Attorney

16 271 Cadman Plaza East Brooklyn, New York 11201

17

ATTORNEY FOR DEFENDANT:

1 8 JONATHAN MARKS, ESQ.

19 Probation Officer:

Robert Long present

20 21

Court Reporter: 22 Marsha Diamond

225 Cadman Plaza East 23 Brooklyn, New York TEL: (718) 613-2489 24 FAX: (718) 613-2369

25 Proceedings recorded by mechanical stenography,

transcript produced by CAT.

HARSHA DIAHOND, CSR OFFICIAL COURT REPORTER

1

1

THE DEFENDANT: Yes, I do. THE CLERK: Thank you.

THE CLERK: Criminal cause for pleading: United

2 States versus Daryl Dworkin.

3 Docket No. 10-CR-OOS1S.

4

Counsel, appearances, please.

5 MR. SPECTOR: Good morning, Your Honor, Dan Spector

6 and Winston Chan, for the government.

7

MR. MARKS:

Good morning, Your Honor, Jonathan

8 Marks, for Mr. Dworkin.

9 10 1 1 12

THE COURT: Nice to see you again.

MR. MARKS: Nice to see you, Judge. THE COURT: Mr. Dworkin, good morning. THE DEFENDANT: Good morning.

13 THE COURT: I understand that we have arrived at a

14 disposition.

15 MR. CHAN: That is correct.

THE COURT: Are you ready to proceed? MR. MARKS: Yes.

16 17 18 19 20 21 22 23 24 25

THE COURT: You've filed a notice of appearance? MR. MARKS: Yes, I have.

THE COURT: Swear the defendant.

DAR Y L D W 0 R KIN,

having been first duly sworn/affirmed, was examined and testified as follows:

HARSHA DIAHOND, CSR, RPR OFFICIAL COURT REPORTER

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25 THE COURT: Mr. Dworkin, I have to ask you a number of questions. If there's anything that I say that isn't entirely clear to you, don't hesitate to say so. It is critical that you understand everything that's being said as we proceed, and in that vein, if you wish at any time to speak to Mr. Marks, just ask me and I'll give you whatever time you need to speak privately with him, okay?

THE DEFENDANT: Yes, Your Honor.

THE COURT: You should also bear carefully in mind as we proceed that you are under oath and that means that your answers to my questions must be truthful. If they were not in any material way, you could subject yourself to further charges for the offense of perjury, which is lying under oath; do you understand that?

THE DEFENDANT: Yes, Your Honor.

THE COURT: Let me ask you to state your full name for the record.

THE DEFENDANT: Daryl Frank Dworkin. THE COURT: How old are you?

THE DEFENDANT: Forty-one.

THE COURT: What schooling or formal education have

you had?

THE DEFENDANT: Graduated University of Maryland, University College.

THE COURT: Are you currently or have you recently

HARSHA DIAHOND, CSR, RPR OFFICIAL COURT REPORTER

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3 4 5 6 7 8 9

10 11 12

THE COURT: Is this the prescribed medication you

1 been under the care of a physician, psychiatrist, or any 2 medical professional?

THE DEFENDANT: Yes.

THE COURT: Could you elaborate just briefly. THE DEFENDANT: Psychiatrist.

THE COURT: How often do you see him or her? THE DEFENDANT: Three, to four times a year. THE COURT: Are you taking any medication? THE DEFENDANT: Yes, I am.

THE COURT: Daily medication?

THE DEFENDANT: Yes.

THE COURT: Does it in any way affect your ability

13 to concentrate on what I'm saying to you?

14 THE DEFENDANT: No, Your Honor.

15 THE COURT: Are you comfortable here this morning,

16 able to concentrate now?

17 18

THE DEFENDANT: Yes, Your Honor.

THE COURT: Have you had sufficient time to consider

19 your decision to offer a plea of guilty?

20 21

THE DEFENDANT: Yes, Your Honor.

THE COURT: In the past 24 hours have you had any

22 medication, alcohol, drugs or anything of that sort?

THE DEFENDANT: Yes.

23 24

25 alluded to a moment ago?

HARSHA DIAHOND, CSR, RPR OFFICIAL COURT REPORTER

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1 2 3

or charges I should say --

THE DEFENDANT: Yes, Your Honor. THE COURT: Anything else?

THE DEFENDANT: No, sir.

4 THE COURT: Mr. Marks, in your discussions with

5 Mr. Dworkin have you at any time had difficulty communicating 6 or understanding each other?

MR. MARKS: Never.

7 8

THE COURT: Are you satisfied he understands the

9 rights he will be waiving by waiving indictment and pleading

10 guilty? 1 1

12

MR. MARKS: Yes, I am.

THE COURT: In your judgment is he competent to

13 proceed and capable of understanding the nature of these 14 proceedings?

MR. MARKS: Yes.

15 16

THE COURT: Mr. Dworkin, are you satisfied with

17 Mr. Marks' representation at this point?

18 19

MR. MARKS: Yes, Your Honor.

THE COURT: All right. The first order of business,

20 sir, is what is commonly referred to as waiver of indictment.

21 The charge reflected -- bear with me a second (perusing) in

22 the proposed information which

23 and there are three, each is a felony violation of law. A 24 felony is any crime that carries with it a possible sentence

25 in excess of one year.

HARSHA DIAHOND, CSR, RPR OFFICIAL COURT REPORTER

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8

THE DEFENDANT: Yes, Your Honor.

THE COURT: A grand jury, by the way, is a group of

1 Under our Constitution you have the right to have a

2 grand jury determine whether you are to be charged with any

3 felony. The United States Attorney, absent your waiver of that 4 right, has no power and no authority to charge you or anyone

5 with a felony violation of law.

6 Do you understand that?

7 THE DEFENDANT: Yes, Your Honor.

THE COURT: If you were to waive your right to

9 proceed before the grand jury, as is your prerogative, we

10 would then proceed with the filing of an information, rather 11 than an indictment, just as if you had been indicted for the 12 charges reflected in the information.

13 Do you understand that?

14 15

16 people like any other jury drawn from our community. A grand 17 jury is comprised of a maximum of 23 people. There must be 16 18 grand jurors present to conduct business and 12 of those grand 19 jurors must agree upon the presentation of the government's

20 evidence that there is probable cause to believe that you've 21 committed an offense. The grand jury does not determine

22 whether you're guilty or not guilty, but only whether there is 23 probable cause to justify a formal charge. That said, if given 24 the opportunity in this case, Mr. Dworkin, the grand jury

25 might or might not indict you, and if they did not indict you,

HARSHA DIAHOND, CSR, RPR OFFICIAL COURT REPORTER

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8 9

THE DEFENDANT: Yes, Your Honor.

THE COURT: And are you comfortable with your

1 if they were unable to find probable cause, the U.S. Attorney

2 would be powerless to proceed against you. He can present the 3 matter to the grand jury, he could supplement the evidence

4 presented to the jury, he could present the matter to another 5 grand jury, but he could not on his own charge you with any

6 felony violation of law.

7 Do you understand that?

THE DEFENDANT: Yes, Your Honor.

THE COURT: The grand jury is unlike a trial. It,

10 for all intents and purposes, is a secret proceeding. Only 11 the grand jurors, the prosecutor, the court reporter, and the 12 witness are present. You would have the right to appear

13 before such a body, should you choose to invoke it, but you 14 would not be permitted to have counsel in the grand jury with 15 you, although he would be immediately available to you, and 16 accessible outside the jury room.

17 Have you discussed this with Mr. Marks, your rights

18 to proceed before the grand jury?

19 20

21 decision to waive grand jury presentation?

22 THE DEFENDANT: Yes, Your Honor.

23 THE COURT: Do you have any questions you would like

24 to put to me on the subject?

25 THE DEFENDANT: No, Your Honor.

HARSHA DIAHOND, CSR, RPR OFFICIAL COURT REPORTER

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1

THE COURT: As the presiding judge I will add my

THE COURT: I have before me a copy of a written

2 waiver signed, apparently, by Mr. Dworkin and Mr. Marks. 3 Mr. Marks, did you witness the execution of the waiver?

4 MR. MARKS: I did.

5

6 signature, and find for the record that the defendant has in 7 the presence and with advice of counsel knowingly and

8 voluntarily waived his rights to proceed before the grand

9 jury, and accordingly, the waiver of indictment is accepted by 10 the Court dated today.

1 1 12

THE CLERK: July 7th.

THE COURT: All right. Now, Mr. Dworkin, we now

13 proceed just as if you had been indicted on these three

14 charges. You have an absolute right as you stand there right 15 now to call this all off and to enter a plea of not guilty.

16 Do you understand that?

17 THE DEFENDANT: Yes.

18

THE COURT: If you were to plead not guilty, under

19 our Constitution and laws you'd be entitled to a speedy and 20 public trial by jury with the assistance of counsel on the 21 charges reflected in the information.

22 Do you understand that?

23 THE DEFENDANT: Yes, Your Honor.

24

THE COURT: There's no underlying indictment,

25 correct?

HARSHA DIAHOND, CSR, RPR OFFICIAL COURT REPORTER

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1

MR. SPECTOR:

Correct, Your Honor.

2 THE COURT: At trial you'd be presumed innocent and I

3 would instruct the jury to that effect in no uncertain terms. 4 The government would have to overcome or try to overcome this

5 presumption of innocence and prove you guilty by competent 6 evidence and beyond a reasonable doubt.

7 You, sir, would not be required to prove a thing. 8 You could sit back, do nothing, say nothing. Simply put the

9 government to the burden of attempting to persuade the jury of 10 your guilt, as I said before, beyond a reasonable doubt.

11 Do you understand that?

12

THE DEFENDANT: Yes, Your Honor.

13 THE COURT: That means, of course, if the government 14 were to file for any reason, technical or otherwise, the jury 15 would be required under my instructions to find you not

16 guilty, even if you committed this offense or these offenses.

17 Do you understand?

18

THE DEFENDANT: Yes.

19 THE COURT: In the course of the trial witnesses for

20 the government would have to come to court and testify under

21 oath in your presence, presence of your counsel, of course.

22 You would have the right, therefore, to confront each of these 23 witnesses face-to-face here in the courtroom.

24 You'd have the right to counsel to cross-examine

25 each of the government's witnesses, and when appropriate, to

HARSHA DIAHOND, CSR, RPR OFFICIAL COURT REPORTER

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1 object to evidence offered by the government.

2 You'd have right to offer evidence in your own

3 defense, and you'd have the right to compel the attendance of 4 witnesses, presentation of possible evidence through the use 5 of a court order or subpoena.

6 Do you understand that?

7 8

THE DEFENDANT: Yes, Your Honor.

THE COURT: At trial, Mr. Dworkin, you'd have the

9 right to testify in your own defense, should you choose to

10 exercise that right. You also enjoy an absolute constitutional 11 right to remain silent and not testify, and should you choose 12 to avail yourself of that right and if counsel requested it of 13 me, as he likely would, I would instruct the jury in the

14 strongest possible terms under no circumstances could they,

15 the jury, hold your decision against you.

16 Do you understand that?

17

THE DEFENDANT: Yes, Your Honor.

18 THE COURT: Mr. Dworkin, the right of the decision

19 whether or not to testify, just like the decision whether or 20 not to offer a plea of guilty, is yours to make. Not counsel. 21 Obviously, these are decisions you make in consultation with 22 counsel but ultimately, they are yours to make.

23 Do you understand that?

24 25

THE DEFENDANT:

Yes Your Honor.

THE COURT: All right. Now, having said that, if

HARSHA DIAHOND, CSR, RPR OFFICIAL COURT REPORTER

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THE COURT: There will be no trial, with the

1 you plead guilty and I accept your pleas, you would be giving 2 up these rights forever.

3 Do you understand that?

4 THE DEFENDANT: Yes, Your Honor.

6 possible exception of sentence, which I'll get to. There is 7 no right to an appeal. I will simply enter a judgment of

8 guilty based upon what you tell me -- based upon your plea of 9 guilty.

10 Do you understand that?

11 THE DEFENDANT: Yes, Your Honor.

12

THE COURT: And finally, before I can actually

13 accept your pleas of guilty I am required under the federal 14 rules to satisfy myself that you are, in fact, guilty of the 15 charges reflected in the information.

16 To do that, in a few minutes I will ask you some

17 questions about each in turn. In responding to my questions, 18 obviously, you'll give up your right to remain silent and

19 you'll give up your Constitutional right not to incriminate 20 yourself, and you'll be called upon here in open court to

21 acknowledge your guilt.

22 Do you understand that?

23

THE DEFENDANT: Yes, Your Honor.

24 THE COURT: Are you willing, then, to give up your

25 rights to a trial -- these are rights that I have just

HARSHA DIAHOND, CSR, RPR OFFICIAL COURT REPORTER

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2 3

THE DEFENDANT: Yes, Your Honor.

THE COURT: Do you have any questions before we

1 described?

4 proceed?

5 THE DEFENDANT: No, Your Honor.

6 THE COURT: I have a document before me that's marked

7 Court Exhibit A to this proceeding. Is that A?

8 9

THE CLERK: Yes.

THE COURT: A to this proceeding. It's a plea

10 agreement. It is a typewritten document of 14 pages

11 containing 19 numbered paragraphs. I take it that you have 12 seen this document, Mr. Dworkin?

13 14 15 16

THE DEFENDANT: Yes.

THE COURT: Have you read it carefully? THE DEFENDANT: Yes, Your Honor.

THE COURT: You understand this is an important

17 document in your life at the moment, do you not?

18 19 20 21

THE DEFENDANT: Yes, I do.

THE COURT: Did you read it with that degree of care? THE DEFENDANT: Absolutely.

THE COURT: As far as you understand, are the terms

22 of your agreement with the government fully and accurately set 23 out in Court Exhibit A?

24 25

THE DEFENDANT: It is.

THE COURT: Are there any other promises or

HARSHA DIAHOND, CSR, RPR OFFICIAL COURT REPORTER

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3 4 5

THE COURT: Are you confident you understand every

1 understandings that have contributed to your decision to offer 2 pleas of guilty that are not reflected in the document?

THE DEFENDANT:

No, there aren't.

THE COURT: Counsel, you can confirm that, Mr. Marks?

MR. MARKS:

I can, Your Honor.

6 THE COURT: Let me turn my attention (perusing) --

7 MR. MARKS: Let me say, Judge, that both Mr. Dworkin

8 and I have signed the agreement on page 14.

9

THE COURT: Thank you. I should have asked him

10 about that. Page 14 reflects, apparently, your signature and 11 that of the United States Attorney Attorney. Mr. Dworkin, did 12 you sign that document?

13

THE DEFENDANT: Yes, Your Honor.

14 THE COURT: And did you -- Mr. Marks, you witnessed

15 the execution?

MR. MARKS:

I did.

16

17 THE COURT: And finally, any questions at all about

18 the document itself that you'd like to put to the Court?

19 THE DEFENDANT: No, Your Honor.

20 THE COURT: Has Mr. Marks answered any questions you

21 might have had concerning the document?

THE DEFENDANT: Yes, he did.

22 23

24 term therein?

25 THE DEFENDANT: Yes.

HARSHA DIAHOND, CSR, RPR OFFICIAL COURT REPORTER

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1

THE COURT: You are right and I am wrong.

THE COURT: Now, I will turn my attention to the

2 charges themselves. With the consent of everyone, I will

3 dispense with the reading of the introductory paragraphs which 4 are incorporated specifically into the charging language.

5 Any objection to that?

6 7 8

MR. SPECTOR: No, Your Honor. MR. MARKS: No, Your Honor.

THE COURT: On Count One charges beginning with

9 paragraph eight, page three of the information: In or about 10 and between 2008 and 2009.

MR. MARKS: 2007 and 2009.

1 1 12

13 In or about and between 2007 and 2009, both dates

14 being approximate and inclusive, within the Eastern District 15 of New York and elsewhere, the defendant Daryl Dworkin did

16 knowingly and willfully conspire with others to use and employ 17 manipulative deceptive devices and contrivances, contrary to

18 rule 10b-5 of the Rules and Regulations of the United States

19 Securities and Exchange Commission by employing devices,

20 schemes and artifices to defraud; making untrue statements of 21 material fact and omitting to state material facts necessary 22 in order to make statements made, in light of the

23 circumstances in which they were made not misleading; and 24 engaging in acts, practices and courses of business which 25 would and did operate as a fraud and deceit upon the

HARSHA DIAHOND, CSR, RPR OFFICIAL COURT REPORTER

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1 Investors, in connection with the purchases and sales of 2 securities, directly and indirectly, by use of means and 3 instrumentalities of interstate commerce and the mails,

4 contrary to Title 15, United States Code, Sections 78j sub b

5 78ff.

6 In furtherance of conspiracy and to effect its

7 objectives, within the Eastern District of New York and

8 elsewhere, the Defendant Daryl Dworkin, together with others, 9 committed and caused to be committed, among others, the

10 following overt acts:

11 A. In or about 2007 at NIR's office in Roslyn, New

12 York, Dworkin and other NIR representatives participated in a 13 meeting one of the Investors.

14 B. In or about 2007, at NIR's office in Roslyn, New

15 York Dworkin and other NIR representatives made materially

16 false statements to one of the Investors.

17 Count Two charges paragraph 11:

18 In or about and between 2007 and 2009, both dates

19 being approximate and inclusive, within the Eastern District 20 of New York and elsewhere, the Defendant Daryl Dworkin

21 together with others, did knowingly and willfully use and

22 employ manipulative and deceptive devices and contrivances,

23 contrary to Rule 10b-5 of the Rules and Regulations of the SEC 24 by employing devices, schemes and artifices to defraud; making 25 untrue statements of material fact, and omitting to state

HARSHA DIAHOND, CSR, RPR OFFICIAL COURT REPORTER

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1 material facts necessary in order to make the statements made, 2 in light of the circumstances in which they were made, not

3 misleading; and engaging in acts, practices and courses of

4 business which would and did operate as a fraud and deceit

5 upon the Investors, in connection with the purchases and sales 6 of securities directly and indirectly, by use of the means and 7 instrumentalities of interstate commerce and the mails.

8 And finally, Count Three paragraph 13:

9 Defendant Daryl Dworkin solicited and accepted

10 kickbacks from deal finders who facilitated PIPE investments

11 made by NIR's PIPE funds. One corrupt PIPE DEAL FINDER paid 12 approximately $375,000 in kickback to the defendant Daryl

13 Dworkin, via interstate wire transfer. Kickbacks also were

14 paid to Dworkin in cash. Dworkin took steps to conceal the 15 kickbacks from NIR's senior management.

16 In or about and between 2006 and 2008, both dates

17 being approximate and inclusive, within the Eastern District 18 of New York and elsewhere, the defendant Daryl Dworkin

19 knowingly and intentionally conspired with PIPE Deal Finders

20 and others, to travel in interstate commerce and to use the

21 mail and facilities of interstate commerce, with the intent to

22 promote, manage, establish, carryon and facilitate the 23 promotion, management, establishment and carrying on of

24 unlawful activity, specifically Commercial Bribe Receiving in 25 the Second Degree, contrary to New York Penal Law Sections

HARSHA DIAHOND, CSR, RPR OFFICIAL COURT REPORTER

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1 180.05 and 20.00, and Commercial Bribing in the Second Degree 2 contrary to New York Penal Law Sections 180.00 and 20.00, and 3 thereafter, did perform and attempt to perform acts to

4 promote, manage, establish, carryon and to facilitate the

5 promotion, management, establishment and carrying on of such

6 unlawful activity, contrary to Title 18. US Code Section

7 1952 (a) (3) .

8 In furtherance of the conspiracy and to effect its

9 objectives, within the Eastern District of New York and

10 elsewhere, the Defendant Daryl Dworkin, together with others, 11 committed and caused to be committed among others, the

12 following overt acts:

13 In or about and between 2006, 2008, Dworkin accepted

14 a kickback payment from Coconspirator Number One, a corrupt

15 Pipe Deal Finder whose identified is known to the United

16 States Attorney.

17 In or about and between 2006 and 2008, Dworkin

18 accepted a kickback payment From Coconspirator Number Two, a 19 corrupt PIPE Deal Finder whose identify is known to the United 20 States Attorney and thereafter, there are certain criminal

21 forfeiture allegations relating -- bear with me just a second 22 (perusing) -- that says in substance that the government will 23 seek as a result of your conviction forfeiture of any property 24 constituting or derived from the proceeds obtained directly or 25 indirectly as a result of such offenses.

HARSHA DIAHOND, CSR, RPR OFFICIAL COURT REPORTER

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3

The crimes charged in Counts One and Three are

1 I take it, Mr. Dworkin, you have read the entire

2 information carefully with Mr. Marks; is that correct?

THE DEFENDANT: That is correct, Your Honor.

4 THE COURT: Has he answered any questions that you

5 might have had with respect to the charges or the forfeiture 6 all egation?

7 8

THE DEFENDANT: Yes, he has.

THE COURT: Do you have any questions you would like

9 to put to me?

10 THE DEFENDANT: No, Your Honor.

11

THE COURT: I'd like to focus on two of the charges,

12 I think it's Counts One and Three.

13

Count One and Three charge the offense of

14 conspiracy. What is your understanding, sir, of the general 15 nature of a conspiracy?

16

THE DEFENDANT: A conspiracy is a scheme to work

17 with others to break the law.

MR. MARKS: Good for you.

THE COURT: Okay. You've got the essence of it.

18 19 20

21 illegal agreements. 50 it necessarily involves the

22 participation of at least one other person or persons to do 23 something that violates the law. That something, of course, 24 is laid out specifically in the text of each charge. It is the 25 agreement itself, rather than anything that may happen as a

HARSHA DIAHOND, CSR, RPR OFFICIAL COURT REPORTER

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12 13

THE DEFENDANT: Guilty.

THE COURT: Are you pleading guilty voluntarily?

1 result of the agreement that constitutes the essence of the

2 crimes charged in Counts One and Two. Those counts require an 3 agreement and some act. Could be a perfectly innocent act in 4 and of itself in furtherance of the conspiracy. You and I are 5 pals and we decide to rob a bank and I say, well, before we do 6 that we need masks. Go buy a ski mask. A perfectly legitimate 7 thing to do under ordinary circumstances, but that is an act

8 in furtherance of our criminal agreement, and hence, completes 9 the crime of conspiracy, regardless of whether we go near a

10 bank at all.

11 Do you follow?

THE DEFENDANT: Yes, sir. THE COURT: Any questions?

14 THE DEFENDANT: No, Your Honor.

15 THE COURT: Are we ready to proceed, Mr. Marks, with

16 the plea itself?

MR. MARKS:

Yes, Your Honor.

17 18

THE COURT: All right. Mr. Dworkin, how do you

19 plead to Count One of the information, guilty or not guilty?

20 21 22 23 24 25

THE DEFENDANT: Guilty.

THE COURT: How do you plead to Count Two? THE DEFENDANT: Guilty.

THE COURT: And Count Three?

HARSHA DIAHOND, CSR, RPR OFFICIAL COURT REPORTER

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1

THE DEFENDANT: Between 2007 and 2008 while working

THE DEFENDANT: Yes, Your Honor.

2 THE COURT: This is your decision based upon

3 consultation with counsel, presumably and others, as to what's 4 in your best interest; is that a fair statement?

5

THE DEFENDANT: That is, Your Honor.

6 THE COURT: Has anybody made any promises to you that

7 are not reflected in your agreement with the government?

THE DEFENDANT: No, Your Honor.

8 9

THE COURT: Has anybody given you any assurances as

10 to what I might do when it comes to sentence?

11 THE DEFENDANT: No, Your Honor.

12 THE COURT: All right. Returning briefly to the

13 charges, and finally, Count One alleges a conspiracy to commit 14 securities fraud. You were involved in such a conspiracy

15 between 1007 and 2009?

THE DEFENDANT: Yes.

16 17 18 19 20

THE COURT: With others?

THE DEFENDANT: Yes.

THE COURT: Tell me about it.

21 as an analyst at NIR in Roslyn, New York I agreed with 22 Corey Ribotsky and others, that I and others would make

23 material false statements and omissions to NIR's investors and

24 their representatives. Material false statements and omissions 25 concerned, among other things, the performance of NIR's PIPE.

HARSHA DIAHOND, CSR, RPR OFFICIAL COURT REPORTER

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7

THE COURT: So you not only conspired to engage in

1 The PIPE Funds were involved in the purchase and sale of

2 securities trade on national exchanges.

3 In or about 2007 in a meeting at NIR offices in

4 Roslyn, New York I and other NIR employees made materially 5 false statements and omissions to the representative of NIR

6 investors.

THE COURT: All right. For the purpose of inducing

8 their investment?

9 10

THE DEFENDANT: Inducing?

THE COURT: Getting them to invest?

11 THE DEFENDANT: I believe they were already invested

12 and it was more of a calming, everything is okay kind of

13 thing. 14

15

16

THE COURT: So they'd keep the money in the fund? THE DEFENDANT: Correct.

17 securities fraud based upon what you've said, you actually 18 engaged in securities fraud during that meeting and at other 19 times; fair to say?

20 21

THE DEFENDANT: Yes, Your Honor.

THE COURT: All right. Count Three charges a

22 conspiracy involving kickbacks. Were you involved in such a 23 conspiracy?

24 25

THE DEFENDANT: Yes, I was, Your Honor. THE COURT: Tell me about that.

HARSHA DIAHOND, CSR, RPR OFFICIAL COURT REPORTER

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1

THE DEFENDANT: During the period 2006 through 2008,

2 while employed by NIR in Roslyn, New York, I agreed with

3 others to take and did take kickbacks from Deal Finders who

4 presented investment opportunities to NIR. I influenced NIR's 5 decision to enter into the investments presented to NIR by the 6 Deal Finders. I took steps to conceal the kickbacks from

7 senior management at NIR. I received some of the kickbacks by 8 wire transfer to a bank located in Nassau County, New York.

9 10

THE COURT: Anything further?

MR. SPECTOR: I believe that is sufficient, Your

11 Honor.

12 13 14

THE COURT: Mr. Marks.

MR. MARKS: I think that's fine, Judge.

THE COURT: Based on the information given to, me I

15 find the defendant is acting voluntarily, that he fully 16 understands his rights, the consequences and possible

17 consequences of his plea, and that there are factual bases for 18 the pleas of guilty which I now formally accept, specifically 19 Counts One, Two and Three of information

20 MR. MARKS: Judge, he hasn't allocuted to Count Two

21 yet.

22

MR. SPECTOR: I think the allocution to Count One

23 was sufficient.

24 THE COURT: If you would like to supplement it,

25 Mr. Marks, go ahead.

MARSHA DIAMOND, CSR, RPR OFFICIAL COURT REPORTER

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3 4 5

MR. SPECTOR: Excuse me. I believe we didn't cover

1 Did you engage in securities fraud as alleged in

2 Count Two?

THE DEFENDANT: Yes, Your Honor. THE COURT: Tell me what happened.

THE DEFENDANT: While I was employed by NIR I made

6 material false statements and omissions to NIR investors and

7 helped others do the same for the purpose of influencing the

8 investors' decisions relating to their investments and NIR

9 funds.

10

THE COURT: All right. Based on the information

11 given to me I find the defendant is acting voluntarily, that 12 he fully understands his rights and that there is a factual

13 basis for each plea. I, therefore, accept the pleas of guilty 14 to Counts One, Two and Three of information bearing Docket

15 Numbers 10-CR 515.

16

All right. Mr. Dworkin, cooperate with the

17 probation department consistent, of course, with the advice of 18 counsel in the preparation of their presentence report. The 19 United States Attorney will maintain custody of the original 20 agreement. I have a copy.

21

22 the statutory penalties as to each charge.

23 THE COURT: You are absolutely right. You have a

24 penalty sheet while I have principally what I need.

25 Thank you, for that, Mr. Spector.

MARSHA DIAMOND, CSR, RPR OFFICIAL COURT REPORTER

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1 In any event, I overlooked very important

2 information, and perhaps, the most important information, and 3 that is, the possible penalties that you face as a result of 4 your conviction on each of the these three counts.

5 The information is, of course, reflected in your

6 agreement on pages one, two, three, and four, but let me

7 generally review them now, and I do so with the understanding 8 that the penalties authorized by statute may be imposed

9 consecutively.

10 On Count One you face a maximum term of five years

11 imprisonment without parole. There is no parole in the

12 federal system. If sentenced to a period of incarnation, you 13 face a period of what's called supervised release -- up to

14 three years supervised release.

15 Supervised release is a period of supervision,

16 Mr. Dworkin. It begins to run from the moment you are

17 released from federal custody. If you were to violate the 18 terms or conditions of your supervised release at any time 19 during the period of supervision, you can be returned to

20 prison under the terms of my sentence, in this case for up to 21 two years, without any credit to be given to you for the time 22 you spent at liberty under supervision.

23 Do you understand that?

24 25

THE DEFENDANT: Yes, Your Honor.

THE COURT: The statute also authorizes a fine in

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1 the amount of $250,000 or twice the gross gain or loss, 2 whichever is greater.

3 Restitution is mandatory in an amount to be

4 determined at sentencing, and let me just, by way of segue, 5 you are going to have to resolve that prior to sentence. So

6 just a word to the wise -- Mr. Spector knows from what I speak

7 -- otherwise, it continues as an annoying and lingering issue

8 that doesn't get a lot of attention.

9 I also will impose a special assessment in the

10 amount of $100 with respect to each count. So special 11 assessments totalling $300 will be part of the sentence

12 imposed. Of that, I assure you. And as I alluded to before, 13 you face criminal forfeiture in an amount to be determined at 14 or before sentencing.

15 Count Two, which is the substantive securities fraud

16 case itself, carries with it a maximum of 20 years

17 imprisonment, again three years supervised release, fine of up

18 to five million dollars or twice the gross gain or loss. 19 Restitution is mandatory. Special assessment and criminal 20 forfeiture.

21 And finally, Count Three reflects the same charges, 22 same statutory penalties, as authorized with respect to Count 23 One: A maximum five years of imprisonment, up to three years 24 supervised release, fine of up to 250,000 or twice the gross

25 gain or loss, restitution, special assessment, and criminal

HARSHA DIAHOND, CSR, RPR OFFICIAL COURT REPORTER

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1 forfeiture.

2 Despite my gross oversight, you assured me you have

3 reviewed all of this with Mr. Marks. Do you have any

4 questions you would like to put to me about any of the

5 information so far?

6 THE DEFENDANT: No, Your Honor.

7 THE COURT: There are also what we call sentencing

8 guidelines that are an important aspect of sentencing in the 9 federal system. I am not bound by the so-called sentencing 10 guidelines but I am required to calculate and consider the 11 relevant guidelines range.

12 I can't tell you today, frankly, what that range

13 might be. Perhaps the United States Attorney has some idea as 14 to what

15

MR. SPECTOR: We have not made a specific

16 calculation at this point, Your Honor.

17

THE COURT: I won't be in a position to do that,

18 Mr. Dworkin, until after I have received the presentence

19 report, the submissions of counsel, and only then am I in a 20 position to apply the guidelines as I understand them, and

21 calculate the advisory range which I will then consider as an 22 important first step in the sentencing process.

23 What the law ultimately requires me to do is to

24 impose a reasonable sentence, taking into consideration the

25 guidelines, as I have just alluded to them, and a host of

HARSHA DIAHOND, CSR, RPR OFFICIAL COURT REPORTER

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1

relevant statute and

other factors reflected in the statute

2 any other material that counsel thinks is appropriate for my 3 consideration in determining what the law requires me to do,

4 and that is, to impose a reasonable sentence.

5 At the end of the day, if you feel that I have

6 imposed an unreasonable sentence you may seek review of that

7 sentence in a higher court and should you no longer be able to 8 afford counsel to prosecute such an appeal, counsel will be

9 available to you through the operation of the Criminal Justice

10 Act.

11 The U.S. Attorney enjoys comparable rights, should

12 they feel that I imposed an unreasonably lenient sentence. 13 Should they seek review of the sentence imposed, your

14 interests in that proceeding will be represented either by

15 counsel of your choosing or counsel appointed under the terms 16 of the Criminal Justice Act.

17 Have I left anything else out?

18

MR. SPECTOR: I think that is everything,

19 Your Honor.

20 THE COURT: Now, that you hear all of that, how do

21 you plead to Count One, guilty or not guilty?

22 23 24 25

THE DEFENDANT: Guilty. THE COURT: Count Two?

THE DEFENDANT: Guilty.

THE COURT: And Count Three?

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1 2

MR. SPECTOR: Yes, Your Honor. There's also the

THE DEFENDANT: Guilty.

THE COURT: Once again, I find the defendant is

3 acting voluntarily, he fully understands his rights, the

4 consequences and possible consequences of his pleas and that 5 there are factual bases for the pleas of guilty which I now 6 formally accept.

7 Sorry for that misstep.

8 Anything further?

9

10 issue of bail. We have agreed upon a bond in the amount of 11 $500,000 co-signed by the defendant's wife and secured by the 12 property owned by the defendant and his wife.

13

THE CLERK: And I believe, Mr. Spector, you have

14 other conditions on the bond.

15

MR. SPECTOR: I believe the conditions as set forth

16 in the pretrial service's report, travel is restricted to the 17 continental United States, defendant is to surrender his

18 passport, report to pretrial services as directed, and undergo 19 drug testing treatment and mental health evaluation as

20 directed.

21

THE CLERK: And we do have our pretrial officer in

22 the courtroom.

23 (Probation Officer Robert Long present in the

24 courtroom)

25

THE CLERK: Mr. Marks, I'm going to note on the

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28

3 4 5

Mr. Dworkin, I'm going to give you the probation

1 probation form that you wish to be present at the time your

2 client is interviewed.

MR. MARKS: Please.

THE CLERK: Mr. Spector, do you have anything else? MR. SPECTOR: Yes, Your Honor, we'd ask that the

6 preparation of the presentence investigation report be held in 7 abeyance and the Court set a control date six months from

8 today.

THE COURT: Give us a date.

9 10

THE CLERK: Okay. January 7th, 2011 at 10:00 a.m.

11 Mr. Spector, I'm going to ask you to contact

12 probation and advise them of this.

13 14

MR. SPECTOR: Certainly.

THE CLERK: As Mr. Spector, I'm also going to ask

15 after this proceeding, that your case agent, Agent Ryan, take 16 the defendant downstairs to the marshal. My understanding is 17 he was not processed yet by the Marshal's office.

18

I

MR. SPECTOR: That is correct. We will take care of

19 that.

THE CLERK: The agent has to take him downstairs. THE COURT: Do you have a bond for me to sign? THE CLERK: Yes, Mr. Long is filling it out.

MR. MARKS: January?

THE CLERK: January 7 at 10:00 a.m.

20 21 22 23 24 25

MARSHA DIAMOND, CSR, RPR OFFICIAL COURT REPORTER

29

5 6

THE COURT: Do you use that name? MRS. DORKIN: Yes.

1 form. After you're finished with the Marshal's office

2 downstairs I'm going to ask you to contact with Mr. Marks the 3 probation officer. I'm going to leave that up to you,

4 gentlemen.

MR. MARKS: Yes. Thank you.

THE CLERK: Mr. Marks could you please ask your

7 client's wife to come forward. She needs to sign the bond as

8 well.

9 (Whereupon, Mr. Marks complied)

10 THE COURT: Are you Mrs. Dworkin?

MRS. DORKIN: Yes.

11 12 13

14 THE COURT: Obviously, I understand that you are

15 prepared to co-sign the bond but I need to tell you the

16 significance of it. Your husband has, in effect, undertaken to 17 abide by the conditions of his release. If he fails to do

18 that in any way, including if he fails to return to court when 19 ordered to, he will violate those conditions and you will be 20 liable to the full extent of that bond, regardless of any

21 fault that you may have. So you are really -- it is a vote of 22 complete confidence in your husband's willingness and ability 23 to abide the conditions of his release.

24 Do you understand that?

25

MRS. DWORKIN: Yes.

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1

* * * * * * * *

THE COURT: There's nothing I'll be able to do to

2 prevent, god forbid, everything goes wrong.

MRS. DWORKIN: That's fine.

3 4

THE COURT: So I saw you give him the once over.

5 That tells me in and of itself you understand the significance 6 of the signature that you are about to put on the bond.

MRS. DWORKIN: That's fine.

THE COURT: All right. Thank you.

7 8 9

10 1 1 12 13 14 15 16 17 18 19 20 21 22 23 24 25

Okay, folks. See you next time. (Proceedings adjourned as above set forth)

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31