You are on page 1of 6

FILED: NEW YORK COUNTY CLERK 01/28/2019 06:08 PM INDEX NO.

655887/2018
NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 01/28/2019

EXHIBIT A
FILED: NEW YORK COUNTY CLERK 01/28/2019 06:08 PM INDEX NO. 655887/2018
NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 01/28/2019

AM Aronson & Sloan,-


Mayefsky
&S

January 9, 2017

By E-mail and First Class Mail

Laurie J. McPherson, Esq.


The McPherson Firm, PC
45th 28th
120 W. Street, FlOOr
New York, NY 10036

Re: Aufi·ichtig v. Bernstein

Dear Laurie:

I am writing in response to your letter of December 16, 2016. We have been unable to
respond until now because of an ongoing trial before Justice Cooper in which Adam Turbowitz
and I were followed
engaged, by Christmas weekend, followed by the early arrival of Adam's
baby son (heahby and happy).

In your letter, you persist in pushing Sheryl's claims that she was deceived Bruce
(1) by
in the divorce action (the interest"
"Action") by his allegedly not having disclosed an "ownership
in a Senior Secured XpresSpa Note (the "Note"), (2) Bruce committed fraud certain
by making
representations in a November 17, 2015 affidavit (the "Affidavit") and on his sworn statement of
net worth dated as of January 21, 2016 (the "NWS"), and (3) we participated in the fraud as his
counsel. Sheryl's allegations are false.

In this letter, in the hope of putting these allegations to rest, we walk you through the
relevant disclosure, and explain that, in any event, Bruce does not even have an interest in the
Note.

Disclosure of the Note

We first heard the allegation that the Note was not disclosed in Jad Greifer's November
8th
3, 2016 letter, to which we responded by letter dated November 8, 2016. In our November
letter we referred Jad to documents produced during the Action that refer to that exact Note.
Based on your December 16 letter, it seems you have conceded that the existence of the Note
was disclosed in the Action. Thus, we move on to addressing your claims of fraud.

The Genesis of the Note

Here is what we understand from Bruce and Brian Daly about the Note:

Pamela M.Sloan I 212.521.3512 j sloan@amsllp.com


12 EAST +9TH STREET | NEW YOR K, NY I0017 r [ 212.521.3500 F g212.838.5505 | www.amsllp.com
WITll O FFICE S nN CONNECTICUT
00467569
I AMSLLP
FILED: NEW YORK COUNTY CLERK 01/28/2019 06:08 PM INDEX NO. 655887/2018
NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 01/28/2019

Laurie McPherson, Esq.


January 9, 2016
Page 2

- In March 2015, XpresSpa required a capital infusion of $6MM. The board of


XpresSpa looked to Bruce (through Rockmore as an investor in XpresSpa) to assist in
raising the money.

- Rockmore was able to raise the money by April 2015: $4,380,000 was raised from
persons who were not investors in Rockmore at the time (the "Non-Rockmore
Investors") and $1,620,000 was raised from Brian and one of the remaining
Daly
investors in Rockmore at the time, American Capital LLC
Management, ("AMC").
Thus, although the transaction was accomplished through it was not
Rockmore,
technically an asset of Rockmore. Bruce did not have participation in the
any funding
of the $6 MM; as was made clear the Action, Bruce did not have
abundantly during
the liquidity to participate in this transaction, even if he wanted to.

- Because of the way the Note was structured (i.e., with a portion raised from the Non-
Rockmore Investors and a portion raised from Rockmore investors), the Note was
divided on Rockmore's books and records (i.e., the Investment Position Appraisals as
of July 31, 2015 and as of August 31, 2015, both prepared and produced
by MUFG,
in the Action) into two components: a $1,620,000 line and a $4,380,000
(1) item, (2)
line item. The $1,620,000 line item reflected the amount contributed by Mr. and
Daly
AMC, and the $4,380,000 line item reflected the amount contributed Non-
by the
Rockmore Investors.

- Because the Non-Rockmore Investors were owed $4,380,000 by Rockmore (via


XpresSpa), that amount was reflected as a liability of Rockmore.
Contrary to your
statement, the Note is reflected on Rockmore's Statement of Net Assets as of August
"Payable-Other"
31, 2015, specifically as part of the balance of ($5,913,188.61). We
enclose a more detailed balance sheet of Rockmore as of August 3, 2015 which
shows that the $4,380,000 was listed as an Account Payable. The $1,620,000 is listed
as part of Mr. Daly's and AMC's capital accounts on Exhibit 5 to Bruce's November

17, 2015 Affidavit.

- The repwsentations made in the Affidavit and Bruce's NWS as to the assets and
liabilities of Rockmore, as well as to Bruce's and Sheryl's interest in Rockmore, were
accurate and were supported by documents produced in the Action.

There was no fraud.

Parties'
The Agreement and Stipulation of Settlement dated April 23, 2016 (the

"Agreement") expressly provides at Article XVII, paragraph 2 that Bruce and Sheryl had the
right to discovery in the Action and that by entering into the Agreement, each party waived the
right to further discovery. Bruce has authorized us to review the discovery and produce the more
detailed balance sheet without waiving any of his rights under the Agreement to claim that

discovery was completed, and Sheryl's rights thereto have been terminated.

-ss Aronson
Mayefiky & Sloan,m
FILED: NEW YORK COUNTY CLERK 01/28/2019 06:08 PM INDEX NO. 655887/2018
NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 01/28/2019

Laurie McPherson, Esq.

January 9, 2016
Page 3

If Sheryl decides to pursue these claims against Bruce he will exercise his rights under,
the provisions of Article XVI, paragraph 3 of the Agreement:

If either Party brings a proceeding to set aside this Agreement, or

any provision thereof or to increase or decrease the payments


called for under this Agreement, and such Party shall fail to secure

substantially all of the relief sought in such proceeding, that Party


shall be liable for the reasonable counsel fees and expenses
incurred by the other Party.

I hope this puts the matter to rest.

V truly yours,

amela M. Sloan

PMS:ac

Enclosure

cc: Bruce Bernstein (by e-mail)

Aronson Mayefsky & Sloan,


I AMSLLP
00467569
FILED: NEW YORK COUNTY CLERK 01/28/2019 06:08 PM INDEX NO. 655887/2018
NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 01/28/2019

Balance Sheet

Section Account Manager Activity Amount

Prime Broker Accounts

Assets Capital One Cash Balance $478,761.93


Assets Cash Balance
Fidelity $197,484.26
Assets Fidelity Lilac Cash Balance $144.00
Assets Iroquois Cash Balance $71,737.13
Assets Nomura Cash Balance ($459.96)
Assets Nomura Cash Balance $385,946.28
Swap
Assets Xspa Cash Balance ($50,000.00)
................................................................................................................................................................................................................................................................
$1,083,613.64

Portfolio - twéslm:2

Assets Common Stock Total Value $2,805,937.48


Assets Private Placements Total Value $10,583,633.72
Assets Warrants Hedged Value $37,525.93
................................................................................................................................................................................................................................................................
$13,427,097.13

TOTAL ASSETS $14,510,710.77

Portfolio

Uabilities Insct-.cab Total Short Market Value $280,969.67


................................................................................................................................................................................................................................................................
$280,969.67

Other ilabilities

Liabilities Accounts Payable Collateral - Mandhana $1,405 ,864.55

Liabilities Accounts Payable Corporate Fees $3,000.00

Liabilities Accounts Payable Director Fees $9,000.00

Uabilities Accounts Payable Financial Statement Prep by Admin $10,000.00

Liabilities Accounts Payable Investor Payable $59,465.10

Liabilities Accounts Payable Nomura Swap $479,089.00

Liabilities Accounts Payable Participation Out $127,324.00

Uabilities Accounts Payable Reserve Videocon $5,006.56

Liabilities Accounts Payable XSPA Participation Out 54,380,000.00


.................................................................................................... ...........................................................................................................................................................
$6,478,749.21

Accrued Expense

Llabilities Accrued Expense Audit Fees $80,000.00

Liabilities Accrued Expense Due DIligence $60,000.00

Uabilities Accrued Expense Fund Legal Expense $100,000.00

Liabilities Accrued Expense K1 Prep Fees $30,000.00

Uabilities Accrued Expense Research Expense $33,335.36

Llabilities Accrued Expense Stock Loan Fee $20,000.00


................................................................................................................................................................................................................................................................
$323,335.35

Accrued Fees

Uabilities Accrued Fees Adm|±t±en Fees $12,794.28

Liabilities Accrued Fees Management Fees $5,392.42


................................................................................................................................................................................................................................................................
$18,186.70

TOTAL LIABILITIES $7,101,240.93

Opita/ Account

Retained Eamings Rockmore AUM Balance $7,738,493.83


................................................................................................................... ............................................. ... ............. .......-................. . ...........................................

Opital Account

Retained Eamings Rockmore Net Before Performance $7,738,493.83

Retained Eamings Rockmore AUM Change before Performance Fees ($329,023.89)

AUM Beg of Month $7,738,493.83

Re±mptiaiis/Subscriptions $0.00

Net Opening AUM $7 ,738,493.83

MTD Income ($329,023.89)

PF Current Month $0.00

Net Income for Month ($329,023.89)

03 August 2015 5:35 PM Rockmore Page 1 of 2


Monday,
FILED: NEW YORK COUNTY CLERK 01/28/2019 06:08 PM INDEX NO. 655887/2018
NYSCEF DOC. NO. 27 RECEIVED NYSCEF: 01/28/2019
SJction Account Manager Activity Amount

End of Month AUM $7,409,469.94


MTD Return: -4.25 %

Page 2 of 2
Rockmore
Monday, D3AugustlB15 5:35 PM

Related Interests