EFTA02726638.pdf

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 9 - MORNING SESSION DEPOSITION OF SCOTT W. ROTHSTEIN DATE TAKEN: December 22, 2011 TIME: 8:37 a.m. - 12:00 p.m. PLACE: James Lawrence King Federal Justice Building 99 N.E. Fourth Street Courtroom 11-3 Miami, Florida 33128 Examination of the witness taken before: Michele L. Savoy, Registered Professional Reporter United Reporting, Inc. 1218 S.E. Third Avenue Fort Lauderdale, Florida 33316 (954) 525-2221 United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726638  Page 2346 1 IN THE CIRCUIT COURT OF THE 17TH JUDICIAL CIRCUIT IN AND FOR 2 BROWARD COUNTY, FLORIDA 3 Case No. 10-24110 CACE(19) 4 EDWARD J. MORSE and CAROL A. MORSE, 5 and MORSE OPERATIONS, INC. 6 Plaintiffs, 7 vs. 8 SCOTT W. ROTHSTEIN, et al., 9 Defendants. 10 Case No. 11-CV-61688-JIC/LSS 11 AMY ADAMS, et. al, 12 Plaintiffs, vs. 13 SCOTT W. ROTHSTEIN, TD BANK, N.A. and GIBRALTAR 14 PRIVATE BANK AND TRUST COMPANY, 15 Defendants. 16 17 10-03767-RBR Stettin v. Gibraltar Private Bank & Trust Co. 18 10-03802-RBR Stettin v. Centurion Structured 19 Growth, LLC, et al 20 11-02368-RBR Stettin v. TD Bank, N.A. 21 11-02288-RBR Stettin v. Fidelity Charitable Gift Fund 22 11-02473-RBR Stettin v. Regent Capital Partners, LLC, et al 23 11-02604-RBR Stettin v. Maple Leaf Drilling 24 Partners, et al 25 11-02605-RBR Stettin v. Don King Productions, Inc. United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726639  Page 2347 1 (Counsel appearing on the foregoing appearance pages reflect counsel that attended at least one day during 2 the deposition. It does not reflect their appearance each and every session.) 3 4 APPEARANCES FOR SCOTT ROTHSTEIN: 5 LAW OFFICE OF MARC S. NURIK 1 East Broward Boulevard 6 Suite 700 Fort Lauderdale, Florida 33301 7 BY: MARC S. NURIK, ESQUIRE 8 APPEARANCES FOR THE CHAPTER 11 TRUSTEE, 9 HERBERT STETTIN: 10 BERGER SINGERMAN 350 East Las Olas Boulevard 11 Suite 1000 Fort Lauderdale, Florida 33301 12 BY: CHARLES H. LICHTMAN, ESQUIRE and 13 GENOVESE, JOBLOVE & BATTISTA, P.A. 100 S.E. 2nd Street 14 Suite 4400 Miami, Florida 33131 15 By: JOHN. H. GENOVESE, ESQUIRE DAVID C. CIMO, ESQUIRE 16 THERESA M.B. VAN VLIET, ESQUIRE JESUS SUAREZ, ESQUIRE 17 18 APPEARANCES FOR RAZORBACK: 19 CONRAD & SCHERER, LLP 633 South Federal Highway 20 Eighth Floor Fort Lauderdale, Florida 33302 21 By: WILLIAM R. SCHERER, ESQUIRE ERIC RAYMAN, ESQUIRE 22 IVAN J. KOPAS, ESQUIRE and 23 KOZYAK, TROPIN & THROCKMORTON, P.A. 2525 Ponce de Leon Boulevard 24 Ninth Floor Coral Gables, Florida 33134 25 By: HARLEY S. TROPIN, ESQUIRE United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726640  Page 2348 1 APPEARANCES FOR PLATINUM PARTNERS VALUE ARBITRAGE CENTURION STRUCTURED GROWTH, LLC: 2 GOLDSTEIN, TANEN & TRENCH, P.A. 3 One Biscayne Tower, Suite 3700 Two South Biscayne Boulevard 4 Miami, Florida 33131 By: SUSAN E. TRENCH, ESQUIRE 5 6 APPEARANCES FOR THE COMMITTEE OF 7 UNSECURED CREDITORS: 8 AKERMAN, SENTERFITT One Southeast Third Avenue 9 25th Floor Miami, Florida 33131-1704 10 By: MICHAEL GOLDBERG, ESQUIRE JONATHAN S. ROBBINS, ESQUIRE 11 12 APPEARANCES FOR TD BANK: 13 GREENBERG TRAURIG, P.A. 401 E Las Olas Blvd Ste 2000 14 Fort Lauderdale, Florida 33301 By: HOLLY SKOLNICK, ESQUIRE 15 DONNA EVANS, ESQUIRE MARK SCHNAPP, ESQUIRE 16 17 APPEARANCES FOR RLI ZURICH INSURANCE COMPANY, COLUMBIA INC. & ZURICH INSURANCE: 18 CLAUSIN MILLER 19 One Chase Manhattan Plaza 39th Floor 20 New York, New York 10005 BY: SCOTT L. SCHMOOKLER, ESQUIRE 21 22 23 24 25 United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726641  Page 2349 1 APPEARANCES FOR FEDERAL INSURANCE COMPANY: 2 ALEX HOFRICHTER, P.A 1430 South Dixie Highway 3 Suite 204 Coral Gables, Florida 331463127 4 By: ALEX HOFRICHTER, ESQUIRE 5 APPEARANCES FOR MORSES: 6 TRIPP SCOTT, P.A. 7 110 S.E. Sixth Street,15th Floor Fort Lauderdale, Florida 33301 8 By: GEORGE WALKER, ESQUIRE JOHN M. MULLIN, ESQUIRE 9 and LAW OFFICES OF ROBERTA DEUTSCH 10 2499 Glades Road Suite 110 11 Boca Raton, Florida 33431 By: ROBERTA M. DEUTSCH, ESQUIRE 12 13 APPEARANCES FOR EMESS CAPITAL, LLC: 14 KLUGER KAPLAN SILVERMAN, KATZEN & LEVINE, PL 201 S Biscayne Blvd Fl 17 15 Miami, Florida 33131 BY: CASEY H. CUSICK, ESQUIRE 16 17 APPEARANCES FOR ST. PAUL FIRE & MARINE: 18 MILLS PASKERT DIVERS P.A. 100 N Tampa St Ste 2010 19 Tampa, Florida 33602 BY: JOHN A. BLACK, JR., ESQUIRE 20 21 APPEARANCES FOR ROSANNE CARETSKY: 22 BILLING COCHRAN LYLES 515 E Las Olas Blvd 23 Floor Six Fort Lauderdale, Florida 333012296 24 By: DAN GELBER, ESQUIRE TUCKER CRAIG, ESQUIRE 25 United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726642  Page 2350 1 APPEARANCES FOR PLATINUM & CENTURION: 2 CURTIS, MALLET-PREVOST, COLT & MOSLE, LLP 101 Park Avenue 3 New York, NY 10178-0061 By: GABRIEL HERTZBERG, ESQUIRE 4 ELIOT LAUER, ESQUIRE 5 APPEARANCES FOR MURRAY HUBERFELD, DAVID BODNER & MARK 6 NORDLICHT: 7 By: HARVEY WERBLOWSKY, ESQUIRE 8 APPEARANCES FOR FEPICT, MS GROUP: 9 NYSTROM, BECKMAN & PARIS 10 One Marina Park Dr., 15th Flr. Boston, MA 02210 11 By: JACK SEIGAL, ESQUIRE 12 APPEARANCES FOR MICHAEL SZAFRANKSI: 13 LYDECKER, DIAZ 14 1221 Brickell Avenue Floor 19 15 Miami, Florida 33131 BY: CHRISTOPHER G. BERGA, ESQUIRE 16 MIGUEL J. CHAMORRO, ESQUIRE 17 APPEARANCES FOR GIBRALTAR: 18 STEARNS WEAVER MILLER, et al. 19 150 W Flagler St Ste 2200 Miami, Florida 331301545 20 BY: MARY BARZEE-FLORES, ESQ. MATTHEW DATES, ESQUIRE 21 22 APPEARANCES FOR FRANK PREVE: 23 PODHURST ORSEK 25 W Flagler St Ste 800 24 Miami, Florida 331301720 BY: RAMON A. RASCO, ESQUIRE 25 United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726643  Page 2351 1 APPEARANCES FOR LEVINSON PEARSON & ASSOCIATES, WATCH U-WANT, INC.: 2 KOPELOWITZ OSTROW 3 200 SW 1st Ave Ste 1200 Fort Lauderdale, Florida 33301 4 By: BART A. HOUSTON, ESQUIRE JAN ATLAS, ESQUIRE 5 6 APPEARANCES FOR THE US GOVERNMENT: 7 U.S. DEPARTMENT OF JUSTICE UNITED STATES ATTORNEY'S OFFICE 8 500 E. Broward Blvd., Ste. 700 Ft. Lauderdale, Florida 33394 9 BY: CYNTHIA STONE, ESQUIRE 10 APPEARANCES FOR FRANK SPINOSA: 11 SCHLESINGER AND COTZEN, P.L. 12 799 Brickell Plz Ste 700 Miami, Florida 33131 13 BY: MICHAEL J. SCHLESINGER, ESQUIRE and MICHAEL COTZEN, ESQUIRE 14 and SAMUEL J. RABIN, ESQUIRE 15 799 Brickell Plaza Suite 606 16 Miami, Florida 33131 17 18 19 20 21 22 23 24 25 United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726644  Page 2352 1 INDEX 2 CONTINUED DEPOSITION OF SCOTT W. ROTHSTEIN 3 DIRECT FURTHER DIRECT 4 Mr. Rasco 2356 Ms. Barzee-Flores 2393 5 Mr. Rabin 2458 6 Mr. Rasco 2510 7 8 CERTIFICATE OF OATH 2516 CERTIFICATE OF REPORTER 2517 9 10 PREVE'S EXHIBIT INDEX 11 NO. DESCRIPTION PAGE NO 272 FP112310-0143388/1 2368 12 273 FP112310-0134610/1 2393 274 FP112310-0145380/1 2393 13 14 15 16 17 18 19 20 21 22 23 24 25 United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726645  Page 2353 1 Thereupon, the following proceedings were had: 2 MR. RASCO: Ready to go? 3 THE WITNESS: I'm ready. 4 You represent who again? 5 MR. RASCO: I represent Frank Preve. 6 MR. CUSICK: Counsel, before you begin, 7 I'm just going to put an objection on the 8 record. 9 On behalf of Emess Capital, as to not 10 being permitted time in this deposition to 11 depose Mr. Rothstein, I object to the counsel 12 for the trustee's violation of the protocol 13 orders, an order permitting Emess to depose 14 Mr. Rothstein at this deposition by trying to 15 shut us out of the deposition. 16 THE COURT REPORTER: I'm having trouble 17 hearing you, sir. Maybe you move closer. 18 MR. CUSICK: We object to counsel for the 19 trustee's violation of the various protocol 20 orders in trying to shut us out of the 21 deposition by refusing us time to depose Mr. 22 Rothstein, by failing to timely send over his 23 exhibits, in accordance with the protocol 24 orders. 25 On the same basis, we move to strike the United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726646  Page 2354 1 testimony taken by the Trustee and also the 2 testimony taken by TD Bank, based upon the 3 inability to cross-examine Mr. Rothstein as to 4 that testimony, also the failure to abide by 5 the court order by sending over exhibits 6 timely. 7 We reserve the right to depose 8 Mr. Rothstein at a future date, and we reserve 9 all rights against the Trustee and TD Bank. 10 We further object on behalf of all other 11 entities which are represented by the Law Firm 12 of Kluger Kaplan to the extent that the 13 Trustee served notices of taking deposition 14 that were filed in those cases prior to those 15 entities being served with the complaint; and 16 we move to strike those notices of taking 17 deposition. 18 Thank you very much. Sorry to eat into 19 your time. 20 MR. LICHTMAN: Let the record reflect in 21 the underlying Rothstein, Rosenfeldt & Adler 22 case pending before Judge Cohn, as well as in 23 the protocol orders, neither of them afforded 24 Emess Capital any entitlement whatsoever to 25 take or participate in the questioning of United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726647  Page 2355 1 Mr. Rothstein. It was a tightly negotiated 2 order; and, indeed, Emess came late to the 3 table, and as we have told Emess, and numerous 4 other parties, we are hopeful that there will 5 be another round of discrete depositions that 6 don't focus on what we call "the big case" or 7 the other two limited depositions that are 8 commencing today. So I think that the 9 objections are all completely frivolous and 10 baseless and in bad faith. 11 MR. CUSICK: Also let the record reflect 12 that prior to the first date of the 13 deposition, the Court entered an order 14 permitting Emess to depose Mr. Rothstein and 15 that we were not privy to any discussions 16 concerning the protocols that the depositions 17 and -- 18 COURT REPORTER: I can't hear you, sir. 19 MR. SCHLESIGNER: Guys, we can do all 20 this during lunch time. 21 MR. LICHTMAN: We can put this on the 22 record later. Let's get going. 23 Whereupon, 24 SCOTT W. ROTHSTEIN, 25 acknowledged having been duly sworn to tell the truth United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726648  Page 2356 1 and testified upon his oath as follows: 2 THE WITNESS: I do. 3 MR. NURIK: Counsel, did you send me the 4 documents? 5 MR. RASCO: No. I only have very limited 6 exhibits. I'll bring them up to you -- well, 7 actually, you know what, I'll bring them to 8 you right now. I only have a few, and I'm 9 probably not going to use them. I apologize, 10 Mr. Nurik. Here you go. 11 MR. NURIK: Thank you. 12 MR. RASCO: And I'm not going to even get 13 into those just yet. 14 FURTHER DIRECT EXAMINATION 15 BY MR. RASCO: 16 Q Mr. Rothstein, my name is Ray Rasco. I 17 represent Frank Preve. 18 I, again, state for the record that we don't 19 feel that this is sufficient time to fully depose you 20 based on the amount of contact between you and Frank 21 Preve by email, 7,000 emails, and the seriousness of the 22 statements you have been making in your testimony 23 regarding Mr. Preve over the past eight days. 24 I just want to try and, with the limited time 25 that I have, clarify some of the issues that we United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726649  Page 2357 1 discussed on Monday when I first spoke with you about 2 Mr. Preve. 3 The first thing that I want to ask is, you 4 said yesterday in your testimony that one of the things 5 that you learned in this massive crime was that you 6 would keep your co-conspirators in the dark as to who 7 the other co-conspirators were. 8 Does that apply to Mr. Preve? 9 A To a certain extent. 10 Q Can you explain that a little bit more? 11 A People on the -- what I'll call "outer 12 circle," people who were doing very specific things, 13 were isolated from other co-conspirators. 14 I'll give you an example. Frank Preve had a 15 very limited purpose for me. I didn't explain to do him 16 what we were doing; I told him what needed to be done. 17 He did it. 18 I did not ever sit down with Frank and tell 19 him Deb knows what's going on. I did not sit down with 20 Frank and tell him David Boden knows what's going on. 21 That's not the way it worked. Okay. 22 With other people, a guy like Mr. Preve, okay, 23 there was need for him to know about certain people; but 24 there was also need, because I knew he was also having 25 conversations with other people and I didn't now -- you United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726650  Page 2358 1 know, it's not like I knew this man for two decade, 2 okay, I tried to limit, as best as I could, given all 3 the vagaries of a crime of this size, people's knowledge 4 to what they needed to know. I didn't always succeed. 5 Q Well, would that apply to Mr. Preve? You 6 tried to limit his knowledge; is that fair to say? 7 A On certain issues, yes; and the unique thing 8 about Mr. Preve is, is his knowledge grew over time. 9 You can tell by his emails. If read his email traffic, 10 you know it's clear that there was a point in time where 11 he really didn't know what was going on; and there's a 12 point in time where he is clearly committing fraud after 13 fraud after fraud. 14 Q And that's based on some of the indicators 15 that you discussed with me on Monday, from his email 16 traffic, as well as certain conversations, for example, 17 that you had with Frank Preve? 18 A You'd have to be more specific with me. I 19 can't remember every word I said on Monday. I'd have to 20 sit and read the transcript. 21 Q Okay. Well, let me ask you this, then: The 22 point at which he began to commit fraud, in your words 23 just this morning, when was that? 24 A You'd have to lay all the email traffic out in 25 front of me, and I would be able to give you an estimate United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726651  Page 2359 1 of the date. 2 Q Would it go back to December of 2008 or would 3 it be later, if you recall? 4 A By December of 2008, he was involved. 5 Q By December of 2008 he was involved in what 6 way? 7 A I don't recall. Again, I'd have to see all 8 the email traffic. 9 Q Okay. What was his role? You said yesterday 10 that you tried to limit each co-conspirator's role in 11 the crime; can you explain what you limited Frank's role 12 to be? 13 A I'll have to look at all the email traffic. 14 Q Okay. Okay. 15 A He was in command of a major feeder fund. 16 Q Okay. Was he aware of any other 17 co-conspirators? 18 A To a limited extent, yes. 19 Would you like me to explain? 20 Q Yes, please. 21 A Okay. Let's use -- let's use Jack Simony, as 22 an example. 23 Okay. Jack's involvement was simply, whether 24 he knew there was a fraud going on or not, to lie to our 25 upcoming investor. Frank knew we needed Jack to lie. I United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726652  Page 2360 1 knew we needed Jack to lie, and Jack knew he had to lie. 2 That's all Jack, to my knowledge, knew. He may have had 3 other conversations with Frank about what was really 4 going on; I don't know. That's what he was limited to. 5 If you read emails about -- between me and 6 Frank about John Harris, you'll see there are multiple 7 emails from Frank telling me to get control of John, 8 that he was creating problems. 9 So Frank knew that John was doing things for 10 me that were illegal. We had discussed it. The extent 11 of it, I didn't get into it anymore than I needed to. 12 The auditor, Tracy Weintraub, is probably one 13 of the best examples. Frank knew that Tracy was in my 14 pocket. Frank, knowing that, prepared phony 15 balance-sheet audit statements for me, instructed me to 16 scribble on them to make them look like they were 17 real -- and this is all documented in email, okay -- and 18 then to forward them to Tracy. 19 There were other times when Tracy sent in 20 questions. Frank would tell me, in email traffic, that 21 we can't answer these questions, that I needed to rein 22 Tracy in, that I needed to get control of him. 23 Those are examples of control of certain 24 people, control of the flow of information. 25 Q Well, just going to John Harris, I don't United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726653  Page 2361 1 recall seeing any emails with respect to Mr. Preve 2 asking to you rein John Harris in; but I do recall the 3 email that we discussed on Monday, which is the email 4 where he discussed where there was a $20-million trust 5 balance in -- for Banyan at Gibraltar Bank. 6 Do you recall that discussion? 7 A Who indicated there was a $20-million trust 8 balance? 9 Q Mr. Preve emailed John Harris stating -- 10 asking for a line of credit requests, enclosing 11 documents, and saying that this was based on a 12 $21-million trust account that they had, trust account, 13 or trust proceeds that they had at Gibraltar that -- 14 A I recall something -- I didn't mean to cut you 15 off. Sorry. 16 Q -- that they were seeking a line of credit? 17 A I remember them seeking a line of credit. I 18 remember there being an issue about the trust balance. 19 I remember Frank being aware, through Mr. Harris, that 20 the money was not there. 21 I don't recall the other specifics of it. 22 You'd have to show me the email traffic around that 23 event. 24 Q Do you recall emailing Mr. Preve and asking 25 him not to further seek a line of credit at Gibraltar United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726654  Page 2362 1 because John Harris was asking you for settlement 2 documentation? 3 A It's certainly possible. I don't have a 4 specific recollection of it, but it sounds like 5 something I would do. 6 Q Okay. Moving to Tracy Weintraub, there is the 7 packet of emails that I just handed Mr. Nurik. There is 8 one that's dated January 15th, 2009, 11:05 a.m., and 9 it's Bate number FP 112310-0143388/1. 10 Your email to him -- it begins with your email 11 to him stating: Why is Tracy Weintraub asking for 12 banking data from me, re: Banyan, for your audit. I 13 cannot give him anything from my records, nada, zero, 14 zippo. My law firm's records have nothing to do Banyan 15 and audited financials, other than causing a massive 16 explosion that might -- et cetera, et cetera. 17 And that is -- 18 A That's not bad. It says "burn my wee-wee." 19 It's -- actually, it's not only funny, but it's also 20 clear that Frank and I know that: Okay, we want to have 21 as little information floating around as possible 22 because the more information that floats, the more 23 information that is passed between parties, the more 24 likely we will have a detection. 25 Q If Frank knew that, then why does he have over United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726655  Page 2363 1 7,000 emails between you and him? I mean, if Frank knew 2 that, there is -- he is -- 3 A Well, I understand what you're asking me. 4 MR. SCHERER: Object to form. 5 THE WITNESS: I'm sorry? 6 MR. SCHERER: I just put an objection to 7 form. 8 A You really have to ask your client, because if 9 you recall my earlier testimony over the last eight 10 days, I was amazed at the level of inculpatory things 11 that Frank would write to me on a regular basis, I mean, 12 right down to the end where he said to me, if he doesn't 13 hear from me, we're going to assume we're on our own. 14 Do you expect us to just sit around and wait to be 15 incarcerated, talking about money missing, talking about 16 the fact that he's given me $25 million without any 17 paper; I mean, one illegal activity after another. 18 You are going to have to ask him why there is 19 so much email traffic. 20 Q Well, I mean, why would he put so much into 21 email and seek so much information from you and seek so 22 much information from third parties, if he was in on the 23 fraud? 24 A You would have to ask him that question; I 25 would be guessing. United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726656  Page 2364 1 Q And if he knew how much money you were making 2 and if he was in on the fraud, why didn't he make so 3 much money? Why didn't he have the same financial 4 results that you had? 5 A I was always -- 6 MR. SCHERER: Object to form. 7 A I was under the impression, and this just my 8 opinion, that he was making plenty of money. 9 BY MR. RASCO: 10 Q Making plenty of money through Banyan, you 11 mean? 12 A Him, George, other deals, yes, he seemed, to 13 me, to be very well financially situated, and he 14 benefited from our crime. 15 Q Okay. Going back to the email that we were 16 just discussing about Tracy Weintraub, the -- Frank 17 responds to that email to January 15th, 2009, at 18 11:00 a.m.: The only thing he should be asking is for 19 you to confirm our outstanding receivables, just like 20 last year. 21 A Yes. 22 Q And is that what you did? 23 A Do you want me to explain that? 24 Q Yes, I would like you to explain that, please. 25 A Okay. The year before, Berenfeld Spritzer, United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726657  Page 2365 1 through Tracy, tried to get a real significant amount of 2 detailed data from us. 3 Frank knew and I knew that that was a big 4 no-no. 5 I went ahead and met with Tracy, explained to 6 him what I needed to explain to him relative to the fact 7 that we're not turning over these documents; that if he 8 wants to be in this game, he needs to go ahead and 9 simply do as little as possible, okay, and get what we 10 needed out; that if he couldn't do the Banyan audit, we 11 would find someone else to do it. He agreed to do it. 12 So when Frank is here saying, "just like last 13 year," okay, he's telling me: Tracy should be adhering 14 to the deal we established previously, which is a simple 15 confirmation, in letter form, just like last year. 16 That's it, nothing more. 17 Q And was that a conversation that you had only 18 with Tracy or that you later indicated to Frank that you 19 had that conversation with Tracy or entered into that 20 deal with Tracy? 21 A I had conversations with both Frank and Tracy 22 about it. 23 Q Separately? 24 A Never together. 25 Q And you indicated that if he did not -- if he United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726658  Page 2366 1 sought too much information, he was not going to have 2 the job next year; is that accurate? 3 A I told him that on more than one occasion: my 4 law firm's business, personal business and the Banyan 5 business, yes. 6 Q Okay. And are you suggesting that Frank at 7 any time submitted false financials to Tracy? 8 A He did. 9 Q Can you explain that? 10 A You'd have to show me all the records. 11 Q Are you saying that they audited -- the -- any 12 of Frank's financial information that he sent to Tracy, 13 some of that was fraudulent? 14 A To my knowledge, yes. 15 Q With Frank's awareness? 16 A To my knowledge, yes. 17 Q And what do you base that knowledge on? 18 A You'd have to show me all the financial data, 19 and I could show it to you. 20 I can give you a good example: He knew there 21 wasn't money in a lot of those accounts, and he was 22 saying that the money existed, and he wanted Tracy to 23 say the money existed. Tracy knew the money didn't 24 exist because he was my accountant. 25 Q He knew in January of 2009 there wasn't money United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726659  Page 2367 1 in the trust accounts? 2 A Certain accounts, correct. 3 Q Based on those emails that we discussed on 4 Monday where there were certain mistakes? 5 A Emails and many conversations with him. 6 Q Okay. If you turn further, there's another 7 email on that subject that I handed you, or to 8 Mr. Nurik. It's dated January 26, 2009, the subject is 9 "Level 3 verification." 10 It's an emailed, on the bottom, from Michael 11 Szafranski to Ari Glass, indicating that he had met with 12 you, and then indicating that trust account 5104 13 contained $178,857. 14 Frank responds to that email saying, Mike, is 15 it 187,000, or 17,000,800 or 178 million. 16 Do you see that? 17 A I do. 18 MR. RABIN: If I could just ask, for the 19 record, are you making these exhibits part of 20 the record and identifying 21 MR. RASCO: Yes. I'm sorry. This will 22 be -- we had one just now. What number are we 23 at? 24 MR. RABIN: The next exhibit is 272. 25 MR. RASCO: Thanks. United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726660  Page 2368 1 (Thereupon, the document was marked as Preve's 2 Exhibit 272 for Identification.) 3 MR. SCHLESIGNER: Sam, just read it out 4 so everybody knows. 5 MR. RABIN: All right. 272 is an email 6 from Preve to Rothstein dated January 15th, 7 2009, at 11:05 a.m. 8 BY MR. RASCO: 9 Q You see the response from Mr. Szafranski 10 stating, I'm sorry, the numbers aren't thousands of 11 dollars, indicating that the proper balance is 12 178 million? 13 A And this will be Exhibit 273. 14 Q Yes. 15 A Okay. I do see that, yes, sir. 16 Q Okay. And are you indicating -- are you 17 saying that that was an indicator that Mr. Preve 18 believed that the money was not in the trust accounts? 19 A Without seeing email traffic on either side of 20 this, I can't tell you for certain. I don't know if 21 Mike wrote that. 22 On occasion Mike would write dollars in 23 thousands, dollars in millions. 24 At this point in time, in January 26, 2009, I 25 don't know what Frank was thinking by reading that. I United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726661  Page 2369 1 would really have to see the email traffic going before 2 that; and for some reason, the email traffic that would 3 have been directed to me right around this time is not 4 here. So without that, I really can't tell you. 5 Q Okay. But you agree that Frank's financial 6 statements, to the extent that he produced financial 7 statements to you, were accurate, generally? 8 A I can't say one way or the other. 9 Q Did you rely on him for accurate financial 10 information? 11 A No. I relied on him to tell me what we were 12 supposed to have in the accounts, minimum. You'll see 13 he sends me a lot of emails, in fact you handed me one, 14 where he's telling me what the minimum balance is. 15 There is no investment that I've ever heard of -- maybe 16 you have and you can tell me what it was -- where the 17 investor tells the person handling all the money how 18 much money he should have. 19 Generally you ask me what the balance is. I 20 tell what the balance is, and if I'm wrong, you pull 21 your investment. That's not how we worked. 22 Q If there are occasions where the trust 23 balances were not reflecting what Mr. Preve thought they 24 were -- well, first of all, he was telling you what he 25 thought they were based on the deals that you were United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726662  Page 2370 1 entering into the bank, correct? 2 A Based on the amount of money he was sending 3 me -- you have got to remember, there came a long period 4 of time where there really was no deal paperwork at all; 5 he was simply relying on that little deal blurb and how 6 much money he was sending me and how much, based upon 7 that little blurb, I was sending him back. So there was 8 a lot of confusion. 9 There was also confusion because he would 10 regularly send me money. I would send him payments, and 11 then he would send me half back. Then he would say, 12 just tell me where you apply. Then he would come back 13 and say, tell me what old deals we're going to apply 14 this to or should I have great example: Should I 15 have Centurion fund this again, or is that just going to 16 create too much of a headache trying to reverify the 17 plaintiff receiving the money? 18 Q Are you referring to a specific email there? 19 A No, not -- that email is in the prior 20 emails 21 • Okay. Not in the ones that I handed you this 22 morning? 23 A No, I didn't see it here. 24 Q Okay. Didn't you indicate to Mr. Preve 25 that -- well, first of all, he was accounting for, on United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726663  Page 2371 1 his end, what he thought the deals were that Banyan had 2 entered into, whether they were funding them 3 specifically or somebody else was funding them? 4 A You'd have to ask him what he was doing. He 5 would send me what he thought needed to be in the 6 accounts, and I would instruct Irene to correct it. 7 On many occasions he would actually write 8 directly to Irene and say these balances are off, fix 9 it. 10 Q If there were instances where there were 11 balances that were less than the minimum requirement, do 12 you recall if you indicated to Mr. Preve that that was 13 as a result of you not having -- that was as a result of 14 you putting the money in the wrong Banyan trust account? 15 A I did that once or twice. I remember that. 16 Q And if the balances sometimes weren't 17 accurate, did you indicate to Mr. Preve that could be 18 because you had not paid experts or you had not taken 19 your attorney's fees out? 20 A On certain occasions I did. You have to look 21 at the timing. You have to look at specific emails, 22 look at the timing, and then look at the emails around 23 it to determine the full extent of Mr. Preve's knowledge 24 at the time because at a point in time when he's fully 25 aware of what's going on. There's a lot of Ponzi-speak United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726664  Page 2372 1 there. 2 We are talking about "transferring money," for 3 example. We're not transferring money; we're just 4 changing balances. Okay. 5 We talk about me "putting money someplace." 6 "Putting money someplace," is simply putting the number 7 someplace. 8 Q I understand. 9 The email that I just showed you regarding the 10 178 million, you testified on Monday about an email that 11 indicated that there was a mistake of a billion dollars 12 or about a billion dollars; do you recall that email? 13 A I recall those emails. 14 Q This is not that email, correct? 15 A No. 16 Q The second email in the packet that I just 17 gave you is dated November 18th, 2008, 11:06 a.m. It's 18 from -- the bottom is from Frank to you, and it's 19 subject matter is "stuff." 20 A Okay. 21 Q The third point on that email, it states: 22 Need Commerce balance numbers. 23 And you respond above: See below. And you 24 indicate the responses to the question is right after. 25 Do you agree that those responses behind the United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726665  Page 2373 1 questions are your writing? 2 A Yes. 3 Q Okay. You indicate that you're going to 4 provide him the balances in Commerce Bank when you get 5 back to the office this afternoon? 6 A Yes, the fake balance numbers, correct. 7 Q And on number four, it says, do I get to sign 8 in, quote, unquote, online like milk toast does? 9 And you respond: Nope, I should not be 10 showing him; but if you want to stand over his shoulder 11 while he and I hold hands -- 12 COURT REPORTER: I need you to slow down: 13 "If you want to stand over his shoulder while 14 he and I hold hands... 15 BY MR. RASCO: 16 Q "-- and sign on, be my guest." 17 Is that your writing there, as well? 18 A Yes. 19 Would you like me to explain that? 20 Q Yes, I would. 21 A Look at the way he writes this: Do I get to 22 sign, and the word "online" is in quotes. 23 The word "online" is in quotes because he 24 knows we're not going online. 25 What Frank was pushing me to do was have United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726666  Page 2374 1 Curtis and Bill sets up a fake website for him so that 2 he could use it with investors over at his office. 3 It's my, also, humorous response to him. 4 Q Well, you're indicating, now, that Frank knew 5 that there was a fake website and that he wanted you to 6 create a fake website for him? 7 A I'll answer that with a question: Can you 8 think of any reason why he would put the word "online" 9 in quotes if we were really going online? 10 Q I'm not sure why he wrote "online" in quotes, 11 but I do know that he was seeking verification of trust 12 balances from you, not just through this email, but 13 through hundreds of emails. 14 My question is: Was he aware that this -- 15 that TD Bank/Commerce Bank website was a fake website? 16 A Yes. 17 Q How do you know? 18 A I told him. 19 Q You told him in a conversation or by email? 20 A In a conversation. 21 Q Was anybody else present? 22 A Never. 23 Q Do you know if he ever discussed that fact 24 with Szafranski? 25 A I have no idea one way or the other. I doubt United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726667  Page 2375 1 it. 2 Q Okay. And you're indicating that by -- 3 certainly by this time, November of 2008, he would have 4 known that the trust balances either were nonexistent or 5 not -- were certainly inaccurate? 6 A Yes. 7 Q And he knew that from this time, through the 8 end of the Ponzi in October of 2009, right? 9 A Yes. 10 Q Okay. And we talked about an email on Monday 11 relating to a $300-million shortage. It was 12 October 30th or 31st. He was asking you exactly the 13 amount that was in the trust balances. You had already 14 left for Morocco. 15 Do you recall that discussion? 16 A I don't. You'd have to show me the email 17 traffic. 18 THE WITNESS: And just -- I don't mean to 19 interrupt you, but just for your own 20 record-keeping and since there is so many days 21 and so many exhibits, you need to mark these. 22 MR. RASCO: Can we mark them on break and 23 in sequential order? 24 UNKNOWN SPEAKER: Yes. 25 THE WITNESS: It's okay with me. I just United Reporting, Inc. (954) 525- 2221 21a897ab-1911-49aa-8308-21d465585ba5 EFTA02726668  Page 2376 1 don't want you to get documents -- because we 2 have a lot of documents floating around here 3 without stickers. 4 MR. LICHTMAN: Does the record clearly 5 indicate what the document is so it can be 6 matched and there's clarity in the record? 7 MR. RASCO: I specifically stated the 8 dates in the emails and the subject each time 9 I've asked about them. 10 COURT REPORTER: Are you going to be 11 marking more documents? 12 MR. RASCO: Maybe one or two. 13 COURT REPORTER: Okay. Because if it 14 gets too far afield, tha