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Case 0:11-cv-61338-JIC Document 85 Entered on FLSD Docket 11/28/2011 Page 1 of 8



UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

CASE NO. 11-61338-CIV-COHN

In Re: ROTHSTEIN ROSENFELDT ADLER, P.A.,

Debtor.


ORDER DENYING TRUSTEE'S MOTION TO CONTINUE DEPOSITION
ORDER DEFERRING RULING ON MOTION TO BIFURCATE PROCEEDING
ORDER DIRECTING RESPONSE BY TRUSTEE TO CROSS-MOTIONS
ORDER DENYING ALL REQUESTS FOR RELIEF NOT RELATED SPECIFICALLY
TO THE DEPOSITION OF SCOTT ROTHSTEIN

THIS CAUSE is before the Court upon the Trustee's Expedited Motion to Amend

Writ of Habeas Corpus Ad Testificandum [DE 53], Gilbraltar Private Bank & Trust

Company's ("Gilbraltar") Response [DE 59] and Cross-Motion to Compel the

Government to Produce Scott Rothstein Under Conditions that are Fair [DE 83],

Levinson & Company's Response [DE 60], SFS Capital Funding and Frank Preve's

Response [DE 61], Ed Morse, Carol Morse and Morse Operations, Inc.'s Response and

Supplemental Response [DE's 57 and 62], Razorback Victims' Response [DE 63],

Counsel for Scott Rothstein's Response [DE 64], TD Bank, N.A.'s Response [DE 65]

and Cross-Motion for Remedial Relief Related to Unauthorized Disclosure of

Information [DE 79], Federal Insurance Company's Response [DE 66], Government's

Response [DE 67] and Ex Parte Memorandum [DE 69], Emess Capital, LLC's Joinder

in Trustee's Motion [DE 70], Brian Levy's Response [DE 71], SPD Group, Inc.'s

Response [DE 72], Platinum Partners Value Arbitrage Fund LP ("Platinum")'s Response

[DE 74] and Cross-Motion for Discovery and Sanctions regarding RRA Trustee's

Violation of Court Order [DE 81], the Regent Defendants' Response [DE 76], and the




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Amended Response of the RLI Insurance Company, et al ("Insurance Companies") [DE

78]. The Court has carefully considered all of the filings in this matter, and is otherwise

fully advised in the premises.'

I. BACKGROUND

Scott Rothstein ("Rothstein"), the central figure in a criminal action brought by the

United States of America regarding fraudulent activities undertaken by Rothstein while

he controlled the now bankrupt law firm of Rothstein, Rosenfeldt & Adler, P.A. ("RRA"),

is set to be deposed in the RRA bankruptcy action and various civil actions pending in

federal and state courts. After lengthy negotiations among the parties involved at the

time, and after rulings by the Bankruptcy Court and this Court, the Court ordered that

the examination/deposition of Scott Rothstein shall take place commencing December

12, 2011, under the protocol described in United States Bankruptcy Judge Raymond

Ray's proposed Writ, except as modified by this Court (e.g. the deposition shall not be

videotaped based upon matters of security).2

On November 10, 2011, the Trustee moved to Amend the Writ because the

Trustee's filing of 46 additional adversary actions has created a group of affected

parties who could not meet the security protocol deadlines to participate in Rothstein's

December deposition. This Court directed all parties, including the Government, to file

expedited responses to the Trustee's motion. Many of those parties have filed such


' Given the December 12, 2011 deposition date and the travel arrangements
required, the Court declines to wait until reply memoranda are filed.

= For the full background of this action, please see the Court's Orders dated July
1, 2011 [DE 32] and September 6, 2011 [DE 50]. The Writ itself is filed at docket entry
52.

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responses. TD Bank and Platinum have also filed cross-motions for remedial relief

related to the allegedly unauthorized disclosure of information by Trustee's counsel and

Trustee.

II. DISCUSSION

The present filings require the Court to once again balance the irreconcilable

rights and duties of various parties: the Government's duty to prosecute alleged

criminal acts, the United States Marshal's Service obligation to protect witnesses, the

Bankruptcy Trustee's duty to marshal assets of a defunct law firm and distribute funds

to RRA's creditors, civil plaintiff victims of Rothstein's fraud schemes, and civil

defendants faced with multi-million dollars of liability.' In its prior orders, the Court has

discussed the legal balancing tests that apply to these types of situations. See In Re

Rothstein Rosenfeldt Adler, P.A., 2011 WL 2620187, *2-3 (S.D. Fla. July 1, 2011); In

Re Rothstein Rosenfeldt Adler, P.A., 2011 WL 3903567 (S.D. Fla. Sept. 6, 2011).

A. Deposition

To summarize the present dispute, the Trustee moved to amend the deposition

protocol by either continuing the deposition or bifurcating the deposition. A bifurcation

would allow a second deposition for those parties who could not meet the security

protocol deadlines for counsel to obtain the appropriate clearance to participate in the

December deposition of Scott Rothstein. These parties, generally defendants in

adversary proceedings brought by the Trustee, could not have had sufficient notice to

submit the information necessary to participate. Many of these parties join in one or


Not all civil defendants are in the same position, as some were only recently
served with adversary actions, while others face trial in the next few months.

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both parts of the Trustee's requested relief of either a continuance of the December

deposition or a bifurcation to allow a second deposition in 2012.

The Government does not oppose a brief continuance based upon the Marshal's

Service concerns regarding accommodation of the number of counsel participating in

the December deposition amidst the crush of December family visits in federal prisons

across the country. The Government opposes bifurcation because it only agreed to the

protocol adopted by Judge Ray because of its belief that only one deposition would

occur. The Government cites the burden on the understaffed Marshal's Service in

having to accommodate a second deposition. Finally, the Government states that

accommodating state court litigants is not required by this Court.

The parties objecting most strenuously to any continuance of the deposition are

those parties facing an early 2012 trial date in state court, the Razorback Victims and

Gilbraltar. These parties argue that in setting its trial schedule, the state court relied

upon this Court's emphatic order that the Rothstein deposition would be held in

December and not delayed further. A delay of the deposition, even until January, would

disrupt the schedule in that case.

Gilbraltar also filed a cross motion contending that the United States Marshal's

security procedures requiring short notice of the location of the deposition and the

inability for counsel to bring a computer are unreasonable. Counsel foresees that it will

be left to question Scott Rothstein just days before Christmas without the ability to

timely return home. This Court finds that under the circumstances and given the

statutory duties of the Marshal's Service with regard to witness protection, its security

procedures are not unreasonable.

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TD Bank, a party presently a defendant in a civil action in trial before another

judge of this Court, joins in the continuance request because "all four of the attorneys

for whom the requisite security information was provided . . . are presently engaged in

trial," and it would be unfair and prejudicial to require that "counsel" turn immediately to

the preparation for, appearance at and active participation in the Rothstein deposition.

This argument is insufficient to support a continuance, as only one attorney is required

to appear and participate in the deposition that has been scheduled five months in

advance. The Court doubts that all four attorneys are required to appear every day in

trial. With four experienced counsel, TD Bank will remain well represented in both the

trial and the deposition on the present schedule.

Counsel for Scott Rothstein responded to the Trustee's Motion by confirming that

he is presently in a criminal trial in federal court in Boston, Massachusetts, in a case

that he expects to go to the jury this week. However, because the presiding judge in

that action is Chair of the United States Sentencing Commission, if not completed, his

trial may resume on December 12, 2011, the date the deposition is scheduled to begin.

Scott Rothstein opposes the motion for bifurcation.

Upon weighing these competing arguments, the Court notes that significant

resources have already been invested in having the deposition go forward on

December 12, following this Court's July Order that the Court would not continue the

deposition later than December. Second, the Government's arguments relating to the

burden on the Bureau of Prisons and the Marshal's Service in having a December

deposition could have been anticipated earlier. Third, a brief delay in the deposition

that would accommodate the Government at the expense of certain parties would not

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afford any relief to many more parties sued by the Trustee whose cases are new and

may not be ready for Rothstein's deposition if held in January. Thus, the request to

continue the deposition is denied.

Turning next to the alternative relief of "bifurcating" the deposition to afford the

additional parties a chance to participate in a deposition of Scott Rothstein, the Court

need not decide this issue at this time. Any party who demonstrates a need to

participate in a deposition of Scott Rothstein who is unable to participate in the

December session because of the security restrictions imposed by the Marshal's

Service, shall be afforded an opportunity to make a separate application for another

deposition in early spring of 2012. Simply being sued by the Trustee in an adversary

action is not by itself sufficient cause. Those parties who believe that they have

sufficient cause to participate in a second deposition of Scott Rothstein shall coordinate

their requests with the Trustee, who shall file a motion for such relief by January 18,

2012.

Finally, to the extent that a party has made requests for relief beyond direct

participation in a deposition of Scott Rothstein, such as the Federal Insurance

Company, those requests are denied, without prejudice, as being outside the scope of

this action, which is limited to the issuance of a writ of habeas corpus ad testificandum.

B. Cross-Motions

Both TD Bank and Platinum have filed cross motions for relief from alleged

violations of this Court's Order allowing the Trustee special access to Scott Rothstein

under assurances from the Trustee's counsel that he will not share the information

gleaned from Rothstein with the plaintiffs in the civil cases. In re RRA, 2011 WL

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2620187, *4. TD Bank alleges that the Trustee's counsel shared information with the

Coquina plaintiffs in the action presently before Judge Cooke — information that

purportedly formed the good faith basis for a line of questioning of a key witness in that

case. See Exhibit C to Gilbratar's Response [DE 59-3]. TD Bank argues that the

reason given by Trustee's counsel, the joint interest doctrine, cannot trump the direct

conditions set by this Court for the Trustee's special access. TD Bank seeks various

forms of remedial relief, listed at pages 11 and 12 of its Response and Cross Motion

[DE 65]. In its cross-motion, Platinum asserts that the Trustee himself violated this

Court's Order in a deposition in one of the bankruptcy adversary proceedings by

testifying about what Rothstein told him about Frank Preve. Platinum seeks this Court

to order that the Trustee and his counsel submit to discovery regarding any disclosures

made to civil plaintiffs and set a date to determine appropriate sanctions.

This Court takes seriously these allegations regarding possible violations of its

order setting conditions upon the Trustee's special access to Scott Rothstein.

Therefore, although such a response is likely forthcoming, the Court will set a date

certain for the Trustee and his counsel to respond to the cross-motions.



III. CONCLUSION

Accordingly, it is hereby ORDERED AND ADJUDGED as follows:

1. The Trustee's Motion to Amend Writ of Habeas Corpus Ad Testificandum [DE

53] is hereby DENIED as to the request for a continuance;

2. A ruling on the alternative relief of bifurcation is hereby DEFERRED;



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3. Those parties who believe that they have sufficient cause to participate in a

second deposition of Scott Rothstein shall meet and confer with the Trustee,

who shall submit a motion for a second deposition by January 18, 2012, with

prior consultation as to scheduling and security protocols with the Government

and counsel for Scott Rothstein;

4. Gilbraltar Private Bank & Trust Company's Cross-Motion to Compel the

Government to Produce Scott Rothstein Under Conditions that are Fair [DE 83]

is hereby DENIED;

5. The Trustee and Trustee's counsel shall respond to TD Bank, N.A.'s Cross-

Motion for Remedial Relief Related to Unauthorized Disclosure of Information

[DE 79] and Platinum Partners Value Arbitrage Fund LP's Cross-Motion for

Discovery and Sanctions regarding RRA Trustee's Violation of Court Order [DE

81] by December 9, 2011;

6. Any requests for relief that pertain to discovery in other cases are denied, without

prejudice, as being outside the scope of this action, which is limited to the

issuance of a writ of habeas corpus ad testificandum.

DONE AND ORDERED in Chambers at Fort Lauderdale, Broward County,

Florida, on this 28th day of November, 2011.



ES I. COHN
d States District Judge


cc: copies to counsel of record on CM/ECF
(Trustee's counsel shall forward this Order to any party
not receiving notice via CM/ECF


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