EFTA00787704.pdf

Page I Page 3 I UNITED STATES BANKRUPTCY COURT 1 ECRO: All rise. SOUTHERN DISTRICT OF FLORIDA 2 THE COURT: Good afternoon. Please be 2 3 seated. 3 4 IN RE: CASE NO. 09-3479I-RBR 4 MR. SCAROLA: Good afternoon. 5 5 MR. EDWARDS: Good afternoon, your Honor. ROTHSTEIN ROSENFELDT ADLER, PA, 6 THE COURT: All right. Court calls the 6 7 matter of Rothstein Rosenfeldt & Adler. May I have 7 Debtor. 8 appearances for the record? / 9 MR. SCAROLA: Good afternoon, your Honor. 8 9 ECF # 6325, 6326, 6344. 6345, 10 My name -- excuse me. 10 April 13, 2018 11 THE COURT: We have an antiquated sound 11 12 system in this courtroom. 12 The above-entitled cause came on for hearing 13 MR. SCAROLA: And I have a booming voice, 13 before the Honorable RAYMOND B. RAY. one of the Judges in 14 sir, so I don't think it will be a problem, but my name is 14 the UNITED STATES BANKRUPTCY COURT, in and for the 15 Jack Scarola. I am counsel on behalf of Bradley Edwards. 15 SOUTHERN DISTRICT OF FLORIDA, at 299 E. Broward Blvd. 16 Mr. Edwards is here in a dual capacity. He has joined in 16 Fort Lauderdale, Broward County. Florida on April 13. 17 2018. commencing at or about 1:30 p.m., and the following 17 the motion on behalf of his law firm, Farmer Jaffe, and is 18 proceedings were had. 18 also representing Farmer Jaffe. With us also at counsel 19 19 table is Brittany Henderson, and we are the moving parties 20 20 in this matter, your Honor. 21 21 THE COURT: All right. 22 22 MR. SCAROLA: And I'm just reminded by the 23 Transcribed from a digital recording by: Cheryl L. Jenkins. RPR, RMR 23 sign that I'm supposed to -- I don't need to spell my 24 24 first and last name. 25 25 Okay. Thank you. Page 2 Page 4 I 1 THE COURT: Step aside so the other parties 2 APPEARANCES: 3 2 can come up to the mic. 4 SEARCY DENNY SCAROLA BARNHART & SHIPLEY. by 3 MR. SCAROLA: Yes, excuse me. JACK SCAROLA. Esquire S On behalf of Bradley J. Edwards 4 MR. EDWARDS: I was just introduced by 6 5 Mr. Scarola. Brad Edwards on behalf of Farmer Jaffe. EDWARDS PaITINGER. by 7 BRADLEY J. EDWARDS. Esquire 6 MR. McLAUCHLAN: Good afternoon, your Honor. BRITTANY N. HENDERSON. Esquire 8 On behalf of FarmerJaffe 7 Niall McLauchlan on behalf of Fowler White. I'm here with 9 8 my partner. Joseph lanna, at the table, and Ed Brisco, who SCOTT LINK. Esquire 10 and 9 is a managing partner of Fowler White. He's here because RICE PUGATCH ROBINSON STORFER & COHEN. by 10 of his obvious concern about the allegations in the II CHAD P. PUGATCH. Esquire On behalf of Jeffrey Epstein 11 motion. 12 12 MR. PUGATCH: Good afternoon, your Honor. 13 CARLTON FIELDS. BY NIALL SKLAUCHLAN. Esquire 13 Chad Pugatch, P-u-g-a-t-c-h, here as co-counsel for II JOSEPH IANNO. Esquire 14 Jeffrey Epstein, along with Mr. Scott Link, who will On behalf of Fowler White IS 15 introduce himself. 16 AKERMAN. LLP. by 16 MR. LINK: Good morning, Judge. Do you need JOAN LEVET. Esquire 17 On behalf of Mich Michael Goldberg me to spell Pe -- L-i-n-k, first name is Scott, S.c-o-t-t. 18 18 Thank you, ma'am. Thank you, Judge. PAUL G. CASSELL. Bytom (via telephone) 19 19 On behalf of 1.51. EW and Jane Doe MS. LEV1T: Good afternoon, your Honor. 20 20 Joan Levit for the liquidating trustee, Michael Goldberg. 21 ALSO PRESENT 71 We are not participating in this EDWARD BRISCO 22 disagreement. However, we just wanted -- the liquidating 22 ECRO:. Electronic Coon Reporting Operator 23 trustee just wanted to state on the record that there is 23 24 no longer a bankruptcy case, as your Honor is aware. The 24 25 25 case has been confirmed, and there is a liquidating trust, I (Pages I to 4) OUELLETTE & MA LDINCOURT REPORTERS, INC. EFTA00787704  Page 5 Page 7 I which we are resolving, and that this Court is aware that I Paul Cassell. 2 its authority is based on what powers were granted in the 2 THE COURT: Spell your last name for the 3 liquidating plan. 3 court reporter. 4 So, we're just monitoring the hearing, and 4 MR. CASSELL: Cassell is C-a-s-s-e-I-1. 5 unless your Honor needs us, we're going to be quiet for 5 THE COURT: And who are you representing in 6 the rest of the case. 6 this matter? 7 THE COURT: Thank you. Thank you. 7 MR. CASSELL: I represent putative 8 All right. We have three matters on the 8 intervenors L.M., E.W. and Jane Doc, who have a pending 9 Court's calendar today, motion for order to show cause and 9 motion for leave to intervene. 10 the responses thereto, joinder, filed by interested party 10 THE COURT: All right. Let me ask, is there II Bradley Edwards, motion to intervene, motion for joinder. 11 any opposition to the motion to intervene? 12 Turning to the motion to intervene, is 12 MR. SCAROLA: Not on behalf of the moving 13 Peter Shapiro present in the courtroom? 13 party, your Honor. 14 MR. EDWARDS: Your Honor, I was informed 14 MR. McLAUCHLAN: Judge, we do have some 15 that Mr. Paul Cassell was to call into this hearing on 15 opposition. 16 behalf of L.M., E.W. and S.R. 16 It appears that E.W. and Jane Doe weren't 17 THE COURT: I don't --- 17 even clients, weren't even part of the litigation for 18 MR. EDWARDS: I don't know what arrangements 18 which the subpoena was issued. So I think the motion to 19 he made. 19 intervene as to those two parties should be denied. The 20 THE COURT: No such arrangements were made. 20 only one, even according to the victim's reply, they say 21 So, well just -- on the motion to intervene, that will be 21 the client refers to L.M. So that's only one of the three 22 continued. It won't be heard. 22 putative intervenors. For that reason I think the motion 23 MR. EDWARDS: Thank you, your Honor. 23 should be denied as to E.W. and Jane Doe. 24 ECRO: (Inaudible) -- an e-mail. He was 24 MR. PUGATCH: Your Honor, on behalf of 25 right. Let's call CourtCall. 25 Mr. Epstein, we would join in that objection, that limited Page 6 Page 8 THE CLERK: Okay. I objection. 2 ECRO: Do you want me to print you a 2 THE COURT: Mr. Cassell. 3 calendar that shows his name? 3 MR. CASSELL: Yes. L.M., it appears. has 4 THE COURT: Can you print it here? 4 not been contested. With regard to E.W. and Jane Doc. the 5 ECRO: I can. 5 e-mails in question pertain to all three victims. 6 (Thereupon, CourtCall was connected.) 6 Therefore, all three victims should be allowed to 7 RECORDING: Thank you for making a 7 intervene. 8 telephonic court appearance. Your CourtCall or Court 8 Mr. Epstein had an opportunity to file a 9 Conference operator will be with you momentarily. 9 written response where we could have provided a reply in 10 OPERATOR: Thank you for standing by. May I 10 more detail. He did not do so. Fowler White filed a 11 have the name of your Court, please? 11 response, and only dropped a footnote raising a different 12 ECRO: U.S. Bankruptcy Court, 12 kind of argument in opposition. So these are new 13 Judge Raymond B. Ray. 13 arguments that are being advanced. 14 OPERATOR: Thank you. One moment and your 14 I think it's quite clear that the victims IS operator will be right with you. 15 have significant and compelling interest at stake, and 16 ECRO: Thank you. 16 they should be allowed to intervene. 17 OPERATOR: Good afternoon. My name is 17 THE COURT: Is there any dispute that the 18 Karina with CourtCall. I'll be assisting you today. 18 e-mails in question refer to L.M. and E.W.? 19 ECRO: Thank you. We are ready for the 19 MR. SCAROLA: Your Honor, our position is 20 call. 20 that the e-mails refer to all three of the putative 21 OPERATOR: Thank you, ma'am. I'll go ahead 21 intervenors. 22 and join counsel through. 22 MR. McLAUCHLAN: And, Judge, just for the 23 THE COURT: Mr. Cassell, are you on the 23 record, Fowler White, we haven't seen the CD, so we don't 24 phone? 24 know who is on there, but I do note that Mr. Cassell is 25 MR. CASSELL: Yes. Hi, this is 25 technically wrong, because Mr. Epstein, in his response, 2 (Pages 5 to 8) OUELLETTE & MA LDINCOURT REPORTERS, INC. EFTA00787705  Page 9 Page II specifically said on Page 3 of his response, that two of 1 the single CD that was supposedly in Fowler White's files, the three intervenors, E.W. and Jane Doe, were not panics 2 that's correct. There was originally, my understanding 3 during the litigation and the 2010 order. 3 is, two CDs that were delivered to Fowler White for 4 MR. LINK: Your Honor, may I be heard? 4 printing. Those documents were then put onto one CD, with 5 THE COURT: Yes. 5 Bates numbers, and the documents were printed. So we now 6 MR. LINK: (Inaudible) -- objection. The 6 have a single CD, that's correct. 7 three -- oh, sorry. 7 THE COURT: And is the information contained 8 Those three intervenors who arc seeking to 8 on this disputed CD anywhere else in the state court file? 9 intervene in this Court have been allowed to intervene 9 MR. McLAUCHLAN: I'm not aware of the state 10 without objection in the state court proceeding, so that 10 court file. I they can protect their attorney/client privileges if such 1I MR. SCAROLA: Your Honor, the information 12 exist. 12 contained on the compact disk included both privileged and 13 So as far as their being able to protect the 13 non-privileged information. 14 c-mails, and whether they're going to be admissible, and 14 THE COURT: But it wasn't subject to IS whether they're confidential, the state court judge has 15 disclosure, so it didn't go to the special master and 16 that issue, and they arc participating in that proceeding, 16 privilege log? 17 Judge. 17 MR. SCAROLA: If I could, perhaps it would I8 THE COURT: So I'll grant that motion. 18 be helpful if I briefly trace the history for the Court. 19 Mr. Cassell, see to the order. 19 THE COURT: Okay. 20 MR. CASSELL: Thank you. 20 MR. SCAROLA: Your Honor may recall that the 21 THE COURT: All right. Let's describe, /I law firm of Rothstein Rosenfeldt & Adler imploded as a 22 before we get started, just what we're talking about. Is 22 consequence of Scott Rothstein's involvement in a massive 23 it one disk, two disks? Is it boxes of goods? 23 Ponzi scheme. 24 MR. SCAROLA: Your Honor, the --- 24 That firm became the subject of bankruptcy 25 THE COURT: I just want the record to be 25 proceedings. A special master was appointed. The special Page 10 Page t2 I clear. I master took control of the records of the law firm, 2 MR. SCAROLA: Yes, sir. 2 including the law firm's electronic records. At the time 3 The origin of the information in dispute, we 3 that that occurred, litigation was pending between 4 understand is a single compact disk that contains a very 4 Mr. Epstein and Bradley Edwards. 5 large number of e-mails. 5 Mr. Epstein issued a subpoena in that state 6 THE COURT: And is that the disk that was 6 court proceeding seeking information from the electronic 7 referred to as -- it was in one of the pleadings, was 7 files of the bankrupt law firm, and the determination was 8 found in a box? 8 made that in order to deal with privilege assertions of 9 MR. SCAROLA: That's what we have been told, 9 all of the e-mail records of the law firm, that, over 10 your Honor. We don't have, obviously, direct information 10 Mr. Edwards objection, and the objection of the law firm, II of that, but we have been informed that that disk was 1I the electronic documents were to be turned over to Fowler 12 included in one of 36 boxes that were reviewed by the law 12 White so that Fowler White could print out a hard copy of 13 firm of Link & Savory, obtained from the Fowler White law 13 Bates stamped, numbered e-mails extracted from those 14 firm, who were predecessor counsel to Mr. Epstein, and 14 multiple compact disks. 15 were the direct object of this Court's order prohibiting 15 This Court entered an order on November 30, 16 retention of that specific information. 16 2010, recognizing the fact that Fowler White was at that 17 MR. LINK: So the record is clear, it's Link 17 time representing Mr. Epstein, an adversary of Mr. Edwards 18 & Rockenbach. 18 in the state court proceeding, and that order expressly 19 MR. SCAROLA: Link & Rockenbach. not Link & 19 prohibited Fowler White from retaining any copy, 20 Savory, excuse me, old firm name. 20 electronic or otherwise, of the information that was 21 MR. McLAUCHLAN: Judge, yes, the motion 21 turned over to them solely for purposes of performing the 22 alleges that there was a single -- I'm sorry? 22 administrative task of Bates stamping and printing out 23 ECRO: If you're going to speak from 23 copies, one to be delivered to Judge Carney, serving as 24 there --- 24 Special Master on behalf of the bankruptcy trustee, and a 25 MR. McLAUCHLAN: Judge, the motion refers to 25 second copy to go to the Farmer Jaffe law firm, so that a 3 (Pages 9 to 12) OUELLETTE & MA LDINCOURT REPORTERS, INC. EFTA00787706  Page 13 Page 15 1 privilege log could be prepared. All of that related to 1 knowledge with regard to those matters, but that's what 2 the subpoena that was issued in the state court 2 the representation is that has been made. 3 proceedings. 3 One thing that is absolutely clear, no one, 4 Your Honor's order reads, in relevant part, 4 other than Judge Carney and Farmer Jaffe is supposed to 5 Fowler White will not retain any copies of the documents 5 have any copy of that privileged material. It was 6 contained on the disks provided to it, nor shall any 6 specifically prohibited from being retained by the Fowler 7 imagines or copies of said documents be retained in the 7 White law firm. It contains both attorney work product 8 memory of Fowler White's copiers. 8 and attorney/client privileged information, and we are 9 Should it be determined that Fowler White or 9 here today to ask your Honor to do five things. 10 Epstein retained images or copies of the subject documents 10 We would like a rule to show cause issued so 11 on its computer or otherwise, the Court retains 11 that a determination can be made as to the full 12 jurisdiction to award sanctions in favor of Farmer, 12 circumstances under which this Court's clear and 13 Brad Edwards, or his client. That order was entered in 13 unambiguous order has most obviously been violated. 14 November of 2010. 14 We would like a direction from this Court IS As far as any of the interested, protected 15 that Fowler White, Jeffrey Epstein, and Link & Rockenbach 16 parties, that is Farmer Jaffe, Brad Edwards and his 16 will submit to deposition so that sworn testimony with 17 clients were concerned, that order was complied with. 17 regard to the clear violation of the Court's order can be 18 We did not learn otherwise until on the eve 18 taken. 19 of the trial of the circuit court case that has been 19 We would like a final hearing scheduled on 20 pending since before 2010, just a matter of a few weeks 20 the order to show cause. 21 ago. A supplemental exhibit list was filed by the law 21 We would like this Court, in the interim, to 22 firm of Link & Rockenbach listing documents on the 22 prohibit any further dissemination of any information 23 privilege log that was constructed by the Farmer Jaffe law 23 derived from that improperly possessed privileged 24 firm in accordance with this Court's order, listing 24 information, and we would like Link & Rockenbach directed 25 documents and identifying them by the same Bates stamp 25 to withdraw all filings that have been made in any court Page 14 Page 16 1 numbers that had been placed on those documents by Fowler 1 referencing the contents of these documents. White. 2 So those are the five things that we would 3 THE COURT: And submitted to the Special 3 hope to accomplish. 4 Master -- 4 I recognize the fact that at least on the 5 MR. SCAROLA: And sub --- 5 Court's calendar, we were informed this was to be a 6 THE COURT: -- and to Farmer Jaffe. 6 10-minute hearing. We thank your Honor for allowing us 7 MR. SCAROLA: That's correct, sir. One copy 7 any time on short notice, and we need some guidance from 8 went to Farmer Jaffe, one copy went to the Special Master. 8 your Honor as to the extent to which you want us to get 9 The --- 9 into any further detail beyond that which I have presented 10 THE COURT: And apparently one copy was 10 to the Court, and we're fully prepared to do that, but 11 retained. 11 those are the five things we hope to see accomplished, and 12 MR. SCAROLA: The electronic records were 12 we hope to see accomplished expeditiously, issuance of the 13 supposed to have been destroyed. All that was to remain 13 order to show cause, a direction with regard to 14 were the hard copies, with the electronic disks having 14 pre-hearing discovery, the scheduling of a final hearing, 15 been returned to Farmer Jaffe. 15 a prohibition against further dissemination in violation 16 So, there should have been no retention of 16 of this Court's order, and the withdrawal of all 17 anything by Fowler White. Mr. Link, in representations to 17 references in previously filed documents to this 18 the state trial court, after issues were raised with 18 unlawfully possessed information. 19 regard to how he came to be in possession of documents 19 THE COURT: All right. 20 that he clearly was not supposed to have, represented to 20 MR. SCAROLA: And I'm happy to answer any 21 the trial court that he had obtained the disk containing 21 other questions your Honor may have. I hope I have, 22 the information that was listed as potential trial 22 although I've probably taken more time than you've wanted 23 exhibits from the Fowler White law firm inside one of 23 me to, responded to the inquiry the Court had. 24 36 boxes that he has told the Court he recently obtained 24 THE COURT: No, so Farmer Jaffe and 25 possession of from Fowler White. We have no direct 25 Bradley Edwards want to take the deposition of Fowler 4 (Pages 13 to 16) OUELLETTE & MA LDINCOURT REPORTERS, INC. EFTA00787707  Page 17 Page 19 I White, Epstein and Link? I had access to the privileged information contained with-on 2 MR. SCAROLA: That's correct, your Honor. 2 the disk -- on the disk, and that simply is a distinction 3 MR. LINK: Yes, your Honor. 3 without a difference. Whether he received printed copies, 4 MR. SCAROLA: And with regard -- with regard 4 whether he received information without getting printed 5 to Fowler White, it would be the corporate representative 5 copies really makes no difference. The point of 6 with the most knowledge with regard to these matters, the 6 your Honor's order was to prohibit access to privileged 7 same with regard to Link & Rockenbach, and as far as 7 information. 8 Jeffrey Epstein is concerned, obviously he was personally 8 And I'm sorry to have interrupted, but I 9 prohibited by the express language of the Court's order 9 think it's important to clarify that point. 10 from possessing or accessing any of this information, and 10 THE COURT: Proceed, Mr. Link. 11 we would certainly want to take Mr. Epstein's deposition. 11 MR. LINK: Thank you, Judge. 12 While representations have been made with 12 So we now all understand that Mr. Epstein 13 regard to the extent that Mr. Epstein has been in 13 never had the disk. 14 possession of, or had access to this privileged 14 The only information Mr. Epstein ever IS information, the record is completely devoid of any sworn 15 received was from my law firm when I provided him selcc 16 representation by Mr. Epstein, and clearly that is 16 e-mails when we reviewed the disk, my law firm, in 2018. 17 essential in terms of this Court fashioning, or first of 17 So Mr. Epstein has not had one piece of 18 all determining who is responsible for these very serious 18 paper that they're claiming he shouldn't have, and I want 19 violations, and in fashioning an appropriate response. 19 to make sure the Court understands what this disk is. 20 Thank you, sir. 20 This is not a disk of privileged information. It's a disk 21 THE COURT: All right. Response? 21 of 27,000 pages of which they claim some of them are 22 MR. LINK: Thank you. 22 privileged. They submitted a privilege log, Mr. Scarola 23 MR. CASSELL: This is Mr. Cassell, and the 23 said it was for this Court. It wasn't. The privilege log 24 intervenors join in all those motions as well. 24 is in Judge Hafele's court, in the 15th Judicial Circuit 25 THE COURT: Thank you. 25 in Palm Beach County. Page 18 Page 20 1 MR. LINK: Judge, if I can just respond 1 Judge Hafele had •-• 2 briefly on behalf of Mr. Epstein. 2 THE COURT: Filled with these 27.000 pages? 3 First, notwithstanding what Mr. Scarola 3 MR. LINK: Pardon me? 4 said, there is no factual issue. There has never been an 4 THE COURT: And that privilege list deals 5 allegation that Mr. Epstein has ever had the disk. He's 5 with these 27,000 pages? 6 never said it, Fowler White has never said it. He never 6 MR. LINK: It does, sir, and Judge Hafele 7 had the disk. 7 has before him, as he should, since the privilege list, 8 THE COURT: Well, they're going to ask him 8 and the privileged documents, if they are privileged, are 9 that question. 9 going to be presented to him hopefully in camera, that's 10 MR. LINK: I can make that representation to 10 the motion we have filed. I've asked for it in camera. 11 the Court. I can provide a sworn affidavit that he's 11 Mr. Scarola has asked for it in camera in front of the 12 never had it. He's never had the disk, plain and simple. 12 state court judge. 13 So, if that's what the Court is interested 13 Why? Because the only thing that your Honor 14 in, I can represent that to this Court, and I believe 14 was involved with related to the cancellation of a 15 Fowler White will stipulate to that, and I don't believe 15 hearing, and an agreed order, and I'm going to let Fowler 16 Mr. Scarola has any information or evidence that would 16 White talk about Fowler White's issues from 2010, but I 17 suggest Mr. Epstein ever held this disk. So that's point 17 want to be very clear, so there is no mistake, I never had 18 one. 18 the disk, my law firm, Link & Rockenbach, until 2018. 19 Two --- 19 When we received the disk, which was part of 20 MR. SCAROLA: May I respond? 20 a box delivered by Fowler White, we looked at it. It was 21 MR. LINK: I did not interrupt you, 21 sequentially numbered from 1 through 27,000. We looked at 22 Mr. Scarola. 22 about 5.000 of those e-mails, Judge, before we were 23 MR. SCAROLA: I'm sorry. It's not our 23 notified that there was a problem with our having the 24 contention Mr. Epstein has the disk, your Honor. 24 disk, and then we stopped looking. 25 It is our contention that Mr. Epstein has 25 Of the 5,000 we looked at, your Honor, the 5 (Pages 17 to 20) OUELLETTE & MA LDIN RT REPORTERS, INC. EFTA00787708  Page 21 Page 23 I vast majority of them had to do with things like, what are I box. Only Fowler White can answer that question, if it 2 you going to do Friday night? Are you going to this 2 can be answered. I don't know that they can tell you. It 3 concert at the Broward Civic Center? Are you going down 3 was 2010. Maybe somebody will be able to figure that out 4 to the Marlins game? Where should we go for lunch today? 4 and they can address that, but the only issue, the only 5 There were 47 documents, 47 that I listed on 5 fact that we all don't know is, why is that disk in a box 6 a supplemental exhibit list and put those in front of 6 at Fowler White? 7 Judge Hafele. Those documents are now sealed, the disk is 7 Was it inadvertently kept? Was it given to 8 scaled pursuant to Judge Hafele's order. I have had my 8 them by the Special Master? I have no idea. I wasn't 9 client and his general counsel remove all reference to the 9 around here in 2010 doing this work, but I know this, 10 documents that I've e-mailed to them. I have wiped my 10 without any hesitation, the 47 c-mails that are sealed and 11 computers clean of all of the documents. This issue is 11 waiting for Judge Hafele to look at are not being 12 sitting before Judge Hafele. 12 disseminated anywhere. The disk that they're concerned 13 Mr. Scarola and Mr. Edwards asked the 13 about is sealed. There are no copies. It's not going 14 appellate court, we have two appeals pending in the 14 anywhere. The appellate court has told them, no, we're 15 4th DCA, one a writ of mandamus, and one a petition for 15 not striking references to it, and they've asked 16 cert. They asked the appellate court to strike every 16 Judge Hafele to do the same thing. He hasn't ruled on it. 17 reference to -- generally that we've made to these 17 So, to ask this Court to instruct 18 documents. Without even requiring us to respond. the 18 Judge Hafele what to do in his Chambers, and the 4th DCA 19 appellate court denied their motion. They've asked the 19 what to do in their Chambers, I don't think makes sense, 20 appellate court to do what they're asking you to do. 20 but I do think your Honor has the jurisdiction to look at 21 And with all due respect, I'm not sum how 21 your order and determine if the simple retention by Fowler 22 this Court can tell the 4th DCA what to do with its 22 White somehow is a violation of that order, and what's the 23 pleadings, but -- I honestly don't know how that would 23 consequence, if any. 24 work. 24 But to ask my law firm where it got the 25 So, Judge what I want to make sure is clear 25 disk, when they know where we get the disk, I've Page 22 Page 24 I as it relates to Mr. Epstein is this, that this Court I represented to Mr. Scarola. Mr. Scarola told Judge Hafele 2 understands, he's never had the disk, never. He has never 2 he accepted my representation. Maybe he's changed his 3 had any of the documents, the 47 that they claim are 3 mind, and he thinks I've teleported back to 2010, but we 4 privileged, that no one has looked at, no in camera yet, 4 did not have the disk, your Honor. We've submitted an 5 we're working on that, I sent him those materials, not 5 affidavit, we did not receive the disk until 2018. 6 Fowler White. He did not get them in 2010. He received 6 So what information through discovery I 7 them in 2018, and he no longer has them. 7 could provide, or my client could provide, who they've 8 So, every single thing they're asking for 8 admitted didn't have the disk, is beyond me, Judge. 9 has happened by agreement. We did an agreed order to seal 9 THE COURT: Thank you. 10 the disk. We did an agreed order to take the disk that we 10 MR. LINK: Thank you. 11 had from Fowler White and it's in a sealed envelope. 11 MR. McLACHLAN: Thank you, Judge. 12 We've taken that disk and put it with the Clerk of the 12 Niall McLachlan for Fowler White. 13 Court in state court. We have taken all of the exhibits, 13 A couple of just points of clarification 14 sealed them, numbered them, pursuant to Judge Hafele's 14 from Mr. Scarola's presentation, and I think it's -- one IS order, and placed them in the Clerk's file. There has 15 of them is probably very obvious to the Court. 16 been no further dissemination. 16 Mr. Scarola suggested that upon the bankruptcy the Special 17 Until Judge Hafele removes the seal, if he 17 Master took possession of all of the records of Rothstein. 18 does, those documents are going nowhere. The e-mails are 18 Of course what he meant by that was the bankruptcy 19 going nowhere. The exhibits are going nowhere. Nobody 19 trustee. 20 has them. 20 MR. SCAROLA: Yes, I'm sorry, the Special 21 So, what is the one issue that I think is 21 Master had them as an agent of the bankruptcy trustee. 22 outstanding for this Court? I think there is only one 22 THE COURT: Well, the chain of pleadings in 23 issue, and I don't know, your Honor, that any discovery 23 the Rothstein main case starts with Docket Entry 617, 672, 24 from my firm can tell you, or from Mr. Epstein can tell 24 807, 888, 1068, 1120 and 1194, which is the order . 25 where the disk came from that ended up in Fowler White's 25 MR. McLACHLAN: That's correct, Judge, and 6 (Pages 21 to 24) OUELLETTE & MA LDIN RT REPORTERS, INC. EFTA00787709  Page 25 Page 27 I so here is the way it came about, there was litigation I by Fowler White, I'm going to return it to Fowler White, 2 pending in the state circuit court in Palm Beach County. 2 and someone at the firm opened it and said, oh, this is 3 Mr. Epstein filed a subpoena from the state court to get 3 Epstein, and just threw it in the box. 4 copies of the Rothstein records. 4 The other possibility is that Farmer Jaffe, 5 THE COURT: From Judge Stettin? 5 when they printed five boxes of allegedly non-privileged 6 MR. McLAUCHLAN: No, they filed it -- yes, 6 documents and sent them back to us, one of their 7 from Judge Stettin as the trustee, that's correct. 7 paralegals may have dropped the box (sic) in the file. 8 THE COURT: The trustee. 8 What's very, very clear is that from 9 MR. McLACHLAN: Yes, that's correct. 9 whenever it was received, in 2010, '1I, maybe '12, through 10 There was a dispute about how that would be 10 March of 2018, no one made any reference to the CD, the 11 done. That's when those orders started to be entered. I 11 privileged materials, no one tried to use the CD. It sort 12 think the first one is probably the subpoena, and then the 12 of defies belief that Fowler White would have some sort of 13 orders, which ended up with the order that we're talking 13 conspiracy to get a CD, according to the motion at least, 14 about today. 14 to have retained a CD, have just thrown it in the box and IS Another point of clarification, Mr. Scarola 15 then done nothing with it, of course, for eight years, and 16 says that the order was entered over Fanner Jaffe's 16 then all of a sudden when we turn over 36 bankers boxes to 17 objection. He may have had some — the law firm may have 17 the new lawyer, when the client asks for his files, which 18 had some concerns, but it's very clear it's an agreed 18 he was entitled to, they asked, just send all the boxes, 19 order. I don't know that that makes a lot of difference 19 and that's what we did. 20 to the analysis, but I just want to be very clear, that 20 Now, if the disk somehow got back into our 21 was an agreed order, that's at 1194. 21 file, which apparently it did, we don't know how, assuming 22 So, that's why the state court is so 22 it is the disk, but I have no reason to controvert that at 23 involved here, because it was a subpoena from that court. 23 this point, it's clear now that we don't have the disk. 24 That court was ruling on the objections. The only 24 If it was in our files, we turned over 36 boxes, which 25 involvement of this Court was you set the protocol by 25 included the disk, according to the affidavits filed. Page 26 Page 28 I which the documents would be produced by the trustee, and Okay. So, the facts as they exist now don't 2 then you entered the order, 1194, that's at issue here 2 justify sanctions, and they don't justify discovery for 3 today, and that order said Fowler White shall not retain 3 the following reasons: I've already indicated what our 4 copies. We didn't, we sent them all to Farmer Jaffe in 4 investigation shows happened with the disks, and the 5 seven banker's boxes on November 10, 2010, and that e-mail 5 e-mails are attached to our response. 6 is attached to our response. 6 It's not entirely clear, and of course for a 7 We sent a CD to Farmer Jaffe. We also sent 7 sanctions motion the order needs to be completely 8 a CD with the Bates numbers to Special Master Carney, who 8 unambiguous, it's not entirely clear to me when I read 9 was to review the documents and go over the privilege log. 9 that order that it's -- it certainly doesn't direct us 10 When your Honor indicated -- Mr. Scarola 10 what to do with the CD. It says you don't retain copies, II indicated that one copy went to Farmer Jaffe, one copy 11 all the copies were sent to Farmer Jaffe. We don't retain 12 went to Special Master Carney, and your Honor stated, and 12 images on our copy machine, clearly didn't do that. 13 one copy was retained. We don't know that. We don't know 13 If we later obtained a CD back, whether 14 how the CD was in our files. 14 that's -- whether that's in violation of the order, I'm 15 What's very possible, because our records IS not sure. I don't think the order is that particularly 16 indicate we didn't keep it. Our records indicate -- well, 16 clear, but that's not really the main point as to our 17 I told you, that they went to Farmer Jaffe and to Special 17 response. 18 Master Carney. We have no idea. What's quite possible, 18 The movants are asking for a finding of 19 and the only way we could ever determine this would be to 19 civil contempt, criminal contempt, and extensive 20 get access to the CD and have it evaluated by an IT 20 discovery. 21 specialist, which I don't think will be necessary for the 21 Civil concept -- as your Honor probably 22 reasons I'll discuss in a minute. We think it's quite 22 knows, there are two sources of contempt powers, one is 23 possible either that Special Master Carney, when he 23 the Court's inherent power to enforce its orders. The 24 finished his work on the case a couple of years later, 24 other is, where applicable, Section 105(a) of the Code, 25 said, oh, there is a CD, here is a CD that was sent to me 25 where necessary to -- necessary and appropriate to enforce 7 (Pages 25 to 28) OUELLETTE & MA LDIN RT REPORTERS, INC. EFTA00787710  Page 29 Page 31 1 provisions of Title 11. I order. That is by definition in the In Re: McClean case, 2 Courts have held, and we've cited them in 2 and countless other 11th Circuit cases, and lower court 3 our motion, that Bankruptcy Courts don't have the inherent 3 cases, that's seeking criminal contempt sanctions, which 4 power to find criminal contempt. 4 I've already discussed I don't believe are before the 5 Now based on the facts that I just laid out, 5 Court. 6 I don't think there could ever be a basis for it, but this 6 So, I don't believe, Fowler White does not 7 also gets to the discovery point, and even though the 7 believe that discovery is appropriate here. If your Honor 8 11th Circuit in In Re: McClean, they affirm a finding of 8 finds there is some limited discovery, we've cited the 9 punitive damages, which are by definition criminal, 9 pertinent 11th Circuit cases, and I noticed Mr. Scarola 10 because it's punishment, as opposed to purely compensatory 10 didn't ask for access to Fowler White's computer records, 11 damages, they did so specifically under Section 105(a), 11 but I want to be very clear, there is no basis for that 12 and that Court actually said the powers -- the court's 12 under Ilth Circuit precedent, we've cited in our case, so 13 power to find contempt comes under 105(a). 13 I don't want, if your Honor says the motion is granted, I 14 I think that was possibly a little 14 don't want Mr. Scarola to say, oh, well, then we get IS over-broad, because other courts have found inherent power 15 access to Fowler White's computer records. 16 to enforce courts' orders, but what's very clear here is 16 In order to justify that, you would have to 17 that 105(a) can have no application in this case. The 17 -- they would have to show that they've served discovery 18 movants are not seeking to enforce any provision or rights 18 on Fowler White, and that they believe Fowler White is 19 under Title 1I. All of the cases that I found where 19 destroying the evidence, or hasn't produced evidence. 20 they're talking about putative sanctions, they're all for 20 We're certainly nowhere near that point yet. 21 violations of the automatic stay, willful violations, for 21 Which gets us to another issue on the 22 violations of discharge orders, as in In Re: McClean. 22 requested discovery, if your Honor is inclined to grant 23 So, there is that issue. 23 any, and that is discovery should be in the normal course. 24 Now, civil contempt, there arc two purposes. 24 send out a request for production, there is an opportunity 25 One, purely compensatory, a flat amount is by definition 25 to respond, object where necessary, and have the Court Page 30 Page 32 1 punitive, and that's criminal contempt. Civil contempt, 1 ru