2011-12-23 rothstein scott pm

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(954) 525- 2221United Reporting, Inc.

07

UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF FLORIDA CASE NO: 09-34791-RBR Chapter 11 ________________________________________________________

In Re: ROTHSTEIN ROSENFELDT ADLER, P.A.

Herb Stettin, Chapter 11 Trustee Plaintiff,

vs.

RL Pearson and Associates, Inc., a Florida corporation,

Defendant.________________________________________________________

DEPOSITION OF

SCOTT W. ROTHSTEIN

Volume II of II

Taken on behalf of the Chapter 11 Trustee

DATE TAKEN: Friday, December 23, 2011 TIME: 10:30 a.m. - 12:45 p.m. PLACE: James Lawrence King Federal Justice Building 99 Northeast Fourth Street Courtroom 11-3 Miami, Florida 33128

Examination of the witness taken before:

Terri Wright United Reporting, Inc. 1218 Southeast Third Avenue Fort Lauderdale, Florida 33316 (954)525-2221

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1 APPEARANCES FOR SCOTT ROTHSTEIN:

2 LAW OFFICE OF MARC S. NURIK 1 East Broward Boulevard, Suite 700

3 Fort Lauderdale, Florida 33301 BY: MARC S. NURIK, ESQUIRE

4APPEARANCES FOR THE CHAPTER 11 TRUSTEE,

5 HERBERT STETTIN:

6 BERGER SINGERMAN 350 East Las Olas Boulevard, Suite 1000

7 Fort Lauderdale, Florida 33301 BY: CHARLES H. LICHTMAN, ESQUIRE

8 GENOVESE, JOBLOVE & BATTISTA, P.A.

9 100 Southeast 2nd Street, Suite 4400 Miami, Florida 33131

10 By: JOHN. H. GENOVESE, ESQUIRE DAVID C. CIMO, ESQUIRE

11 THERESA M.B. VAN VLIET, ESQUIRE JESUS SUAREZ, ESQUIRE

12APPEARANCES FOR RAZORBACK:

13 CONRAD & SCHERER, LLP

14 633 South Federal Highway, Eighth Floor Fort Lauderdale, Florida 33302

15 BY: WILLIAM R. SCHERER, ESQUIRE ERIC RAYMAN, ESQUIRE

16 IVAN J. KOPAS, ESQUIRE

17 KOZYAK, TROPIN & THROCKMORTON, P.A. 2525 Ponce de Leon Boulevard, Ninth Floor

18 Coral Gables, Florida 33134 BY: HARLEY S. TROPIN, ESQUIRE

19APPEARANCES FOR THE US GOVERNMENT:

20 500 East Broward Boulevard, Suite 700

21 Fort Lauderdale, Florida 33394 BY: LAWRENCE LAVECCHIO, ESQUIRE

22

23

24

25

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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 CURTIS, MALLET-PREVOST, COLD & MOSLE LLP

6 101 Park Avenue New York, NY 10178-0061

7 BY: ELIOT LAUER, ESQUIRE GABRIEL HERTZBERG, ESQUIRE

8APPEARANCES FOR LEVINSON'S JEWELERS:

9 KOPELOWITZ OSTROW FERGUSON WEISELBERG KEECHL

10 200 Southwest 1st Avenue, Suite 1200 Fort Lauderdale, Florida 333012073

11 BY: JAN ATLAS, ESQUIRE BART A. HOUSTON, ESQUIRE

12APPEARANCES FOR THE COMMITTEE OF

13 UNSECURED CREDITORS:

14 AKERMAN, SENTERFITT One Southeast Third Avenue, 25th Floor

15 Miami, Florida 33131-1704 BY: MICHAEL GOLDBERG, ESQUIRE

16 JONATHAN S. ROBBINS, ESQUIRE

17 APPEARANCES FOR T.D. BANK:

18 GREENBERG TRAURIG, P.A. 401 East Las Olas Blvd, Suite 2000

19 Fort Lauderdale, Florida 33301 BY: HOLLY SKOLNICK, ESQUIRE

20 DONNA EVANS, ESQUIRE MARK P. SCHNAPP, ESQUIE

21APPEARANCES FOR RLI ZURICH INSURANCE COMPANY,

22 COLUMBIA INC. & ZURICH INSURANCE:

23 CLAUSIN MILLER One Chase Manhattan Plaza, 39th Floor

24 New York, New York 10005 BY: SCOTT L. SCHMOOKLER, ESQUIRE

25

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1 APPEARANCES FOR FEDERAL INSURANCE COMPANY:

2 ALEX HOFRICHTER, P.A. 1430 South Dixie Highway, Suite 204

3 Coral Gables, Florida 331463127 BY: ALEX HOFRICHTER, ESQUIRE

4APPEARANCES FOR MORSES:

5 TRIPP SCOTT, P.A.

6 110 Southeast Sixth Street, 15th Floor Fort Lauderdale, Florida 33301

7 By: JOHN M. MULLIN, ESQUIRE GEORGE WALKER, ESQUIRE

8 LAW OFFICES OF ROBERTA DEUTSCH

9 2499 Glades Road, Suite 110 Boca Raton, Floridan 33431

10 BY: ROBERTA M. DEUTSCH, ESQUIRE

11 APPEARANCES FOR EMESS CAPITAL, LLC:

12 KLUGER KAPLAN SILVERMAN, KATZEN & LEVINE, PL 201 South Biscayne Boulevard, 17th Floor

13 Miami, Florida 331314 BY: CASEY H. CUSICK, ESQUIRE

14APPEARANCES FOR ST. PAUL FIRE & MARINE:

15 MILLS PASKERT DIVERS P.A.

16 100 North Tampa Street, Suite 2010 Tampa, Florida 336025145

17 BY: JAMES A. BLACK, JR., ESQUIRE

18 APPEARANCES FOR ROSANNE CARETSKY:

19 BILLING COCHRAN LYLES 515 East Las Olas Blvd, 6th Floor

20 Fort Lauderdale, Florida 333012296 BY: TUCKER CRAIG, ESQUIRE

21 DANIEL S. GELBER, ESQUIRE

22 APPEARANCES FOR FEPICT, MS GROUP:

23 NYSTROM, BECKMAN & PARIS One Marina Park Drive, 15th Floor

24 Boston, MA 02210 BY: JACK SEIGAL, ESQUIRE

25

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1 APPEARANCES FOR MICHAEL SZANFRANKSI:

2 LYDECKER, DIAZ 1221 Brickell Avenue, 19th Floor

3 Miami, Florida 33131 BY: CHRISTOPHER G. BERGA, ESQUIRE

4 MIGUEL J. CHAMORRO, ESQUIRE

5 APPEARANCES FOR GIBRALTAR:

6 STEARNS WEAVER MILLER, et al. 150 West Flagler Street, Suite 2200

7 Miami, Florida 331301545 BY: MARY BARZEE-FLORES, ESQ.

8 MATTHEW DATES, ESQUIRE

9 APPEARANCES FOR FRANK PREVE:

10 PODHURST ORSEK 25 West Flagler Street, Suite 800

11 Miami, Florida 331301720 BY: RAMON A. RASCO, ESQUIRE

12APPEARANCES FOR FRANK SPINOSA:

13 SCHLESINGER AND COTZEN, P.L.

14 799 Brickell Plaza, Suite 700 Miami, Florida 33131

15 BY: MICHAEL J. SCHLESINGER, ESQUIRE and MICHAEL COTZEN, ESQUIRE

16 SAMUEL J. RABIN, JR., P.A.

17 SAMUEL J. RABIN, JR., ESQUIRE 799 Brickell Plaza

18 Suite 606 Miami, Florida 33131

19APPEARANCES FOR MURRAY HUBERFELD AND DAVID BODNER & MARK

20 NORDLICHT:

21 HARVEY WERBLOWSKY, ESQUIRE

22

23

24

25

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1 EXAMINATION INDEX

2 PAGESCOTT W. ROTHSTEIN

3 CONTINUED DIRECT BY MR. LICHTMAN 113

4 CROSS BY MR. FERGUSON 124 CROSS BY MR. HOUSTON 197 197

5

6 EXHIBIT INDEX

7 PAGETRUSTEE'S

8 10 E-mail dated 5/14/09 113

9 11 E-mail dated 10/29/11 116

10 12 E-mail dated 6/19/09 119

11 13 E-mail dated 6/22/09 120

12 14 E-mail dated 6/23/09 122

13 15 E-mail dated 9/15/09 123

14 16 E-mail dated 10/28/09 150

15 17 E-mail dated 8/14/09 169

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20

21

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1 CONTINUED QUESTIONING

2 (Whereupon, Trustee's Exhibit No. 10 was marked

3 for identification.)

4 BY MR. LICHTMAN:

5 Q Back on the record.

6 Mr. Rothstein, I am showing you what's been

7 marked as Exhibit 10. It's an e-mail from Boden to

8 himself and you dated May 14, 2009. Do you see that?

9 A Hold on a second.

10 Q I really need you to just focus on the first

11 page of the e-mail.

12 A Okay.

13 Q If you take a look at the middle section of the

14 page, it's an e-mail from Boden to you of May 13, the

15 day before. You see that?

16 A I've seen this before, yes, sir.

17 Q Now, just read to yourself or you can read out

18 loud, I don't care, the first paragraph.

19 A Of David's e-mail to me?

20 Q Yes. The May 13, in the middle of the page.

21 A Okay. Here we go. Deal is 800k, ROI 400k paid

22 over five months. Deal is papered at 900k to JCVV

23 Investments, LLC, a Delaware liability company. The

24 difference is being paid to R.L. Pearson and Associates.

25 Q What does that tell you?

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1 MR. HOUSTON: Objection.

2 BY MR. LICHTMAN:

3 Q What did you understand from that?

4 MR. HOUSTON: Same objection.

5 THE WITNESS: That he had sold a deal where

6 JCVV Investments were the investor and the R.L.

7 Pearson and Associates was taking $100,000.

8 BY MR. LICHTMAN:

9 Q How do you come to the conclusion that

10 Mr. Pearson was taking a $100,000?


12 THE WITNESS: Because they took - the deal was

13 800, 400. They wanted the paper to reflect 900,000

14 and they wanted that difference paid to R.L.

15 Pearson and Associates.

16 BY MR. LICHTMAN:

17 Q Do you know if that fact was disclosed to JCVV

18 Investments, meaning the $100,000 that Pearson was

19 getting?


21 THE WITNESS: I don't believe it ever was. In

22 reviewing the e-mail traffic, there was what I'll

23 call a CYA letter created from the fake plaintiff

24 that Boden and Pearson created, that was a fake

25 plaintiff letter saying that she agreed to give the

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1 $100,000 to R.L. Pearson.

2 But in reviewing e-mail traffic recently over

3 the last several weeks, it's clear from the traffic

4 that that was just a CYA letter that was put in the

5 file. That was never actually furnished as part of

6 the deal packets to the investors.

7 BY MR. LICHTMAN:

8 Q Of course there was no real investor?

9 A No, there's a real investor.

10 Q Excuse me, I mean a real plaintiff.

11 A No, no real plaintiff.

12 Q At the top of the e-mail it says: Deal needs

13 to be papered at the 910k. I went off the earlier

14 version Richie had sent but it is 910k, not 900k. Do

15 you see that?

16 A Yes.

17 Q What does that tell you?


19 THE WITNESS: They're changing it again.

20 BY MR. LICHTMAN:

21 Q Okay. To do what?

22 A To increase their take by another $10,000 from

23 the investor.


25 BY MR. LICHTMAN:

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1 Q I'm going to jump out of sequence because we're

2 getting short on time and there are some exhibits I

3 really want to get in the record. Forgive me for that.

4 Okay.

5 I would like for you to take a look at

6 Exhibit 11, which is dated October 29, 2009, at the

7 top. It's from David Boden to yourself. Do you see

8 that?

9 A I do.



12 BY MR. LICHTMAN:

13 Q And October 29th was probably your last day

14 before you left for Morocco; is that a fair statement?

15 A No. I was in Morocco.

16 Q You were in Morocco by then?

17 A I was.

18 Q Okay. Are you familiar with this e-mail?

19 A I am.

20 Q Tell me what your understanding of this e-mail

21 was trying to generally relate to.


23 MR. LICHTMAN: Hearsay?

24 MR. HOUSTON: Yes.

25 THE WITNESS: It's more of the insanity that

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7

1 was going on as I was scrambling around in Morocco

2 to decide what to do with myself.

3 BY MR. LICHTMAN:

4 Q Okay. You'll see this pertains to Pearson and

5 Boden and the sub-Ponzi. What was the relationship of

6 this document?


8 BY MR. LICHTMAN:

9 Q Did you understand my question?

10 A Yeah, I had asked, much as I did with other

11 investors, I was trying to figure out how much money I

12 would need to put together to make the investors whole

13 not including their fake interest payments. And David's

14 writing to me and telling me how much is due each of the

15 people.

16 Q At the third entry down you'll see an entry of

17 October 29, 2009, 3:01 p.m. You write this to Boden.

18 It says, Subject, data request. Do you see that?

19 A I do.

20 Q Would you read that for the record.

21 A Thanks, love ya, Scott. Rich better hope I fix

22 this or his little profit scheme will be public, not

23 good.

24 Q Who do you mean by Rich?


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1 THE WITNESS: Richard Pearson.

2 BY MR. LICHTMAN:

3 Q What do you mean by when you said, Rich better

4 hope I fix this or his little profit scheme will be

5 public, not good?


7 THE WITNESS: The additional funds he was

8 stealing from the investors with Boden, and by

9 increasing the deal amounts.

10 BY MR. LICHTMAN:

11 Q And when Boden wrote back to you, it looks

12 like -- Well, 15:02, I don't know because of the time

13 zone change the way it worked on your Blackberry or

14 whatever you were faxing from - Boden wrote back to

15 you: How was the progress? I'm fixing, going.

16 Do you know what Boden meant by that?


18 THE WITNESS: I don't know what he was thinking

19 at the moment, probably very concerned that I was

20 not in the country anymore and wanted to know what

21 I was doing to make everything better.

22 BY MR. LICHTMAN:

23 Q Did you --

24 A I'm guessing what was going on in his head at

25 the time.

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1 Q Did you speak with Boden once you left the

2 country?

3 A I don't have an independent recollection

4 whether I did one way or the other. You have to check

5 my cell phone records.

6 Q You wrote back: Medium to poor.

7 Do you see that?

8 A Yes.

9 Q He wrote, Let me know if I can help?

10 A Yes.

11 Q Did you ever call on him to help you anymore?

12 A I don't know if I ever called him at all to

13 help him. And I don't recall whether I wrote to him or

14 not. You have to look at the traffic.

15 Q Would it be a fair statement that from the time

16 you left Morocco, to the best of your recollection, you

17 had no communications with him even to present day?

18 A From the time that I left for Morocco to right

19 now, to the best of my recollection, I've had -- I can

20 tell you from the time I came back from Morocco I've had

21 absolutely no contact with him other than this e-mail

22 traffic. I don't know if I had any other contact with

23 him while I was actually in Morocco.



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1 BY MR. LICHTMAN:

2 Q Showing what's been marked as Exhibit 12, it's

3 an e-mail dated June 19, 2009. It's actually an e-mail

4 chain from June 18. The bottom are actually other

5 days. I want you to just focus on the first page.

6 A Okay.

7 Q The e-mail that you wrote to Boden of June 19,

8 3:01 p.m., do you see that?

9 A Yes.

10 Q This is backwards, it's fund 250, get back 375

11 in three months. No one is going to fund 125 and make

12 250. Is he high?

13 Do you know what that pertains to?


15 THE WITNESS: I don't remember. It appears to

16 be just a screw up in signals on deals.

17 BY MR. LICHTMAN:

18 Q Take a look at the top portion. Does that

19 refresh your recollection?

20 A He's -- it's just correcting of a deal.

21 (Trustee's Exhibit No. 13 was marked for

22 identification.)

23 BY MR. LICHTMAN:

24 Q Okay. Showing you Exhibit 13, June 22, 2009,

25 is from Boden to you. In the middle portion is the

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1 e-mail from before.

2 A Okay.

3 Q You just saw Exhibit 12, which is that middle

4 section?

5 A Right.

6 Q Exhibit 13, the top portion of the e-mail

7 says: These guys are here at 11, fund 300, get back 375

8 in three months, difference is fee to Pearson.

9 Do you know what that means?


11 THE WITNESS: It's the bump. It's from the 250

12 to 300, they are increasing the deal amount to

13 steal the money from the investor.

14 BY MR. LICHTMAN:

15 Q If you could be more specific what you're

16 saying there.


18 THE WITNESS: Yes. The deal was out there at

19 fund 250, get back 375. On this deal they changed

20 it to fund 300, get back 375. So they increased it

21 by $50,000.

22 BY MR. LICHTMAN:

23 Q What was your understanding of where the

24 $50,000 went?

25 A It was going to Pearson.

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1 Q How do you know that?

2 A Because we sent it to him and they told me to

3 send it to him.

4 (Trustee's Exhibit No. 14 was marked for

5 identification.)

6 BY MR. LICHTMAN:

7 Q Let's do this quick. Take a look at

8 Exhibit 14. You don't have to worry about the second

9 page. It's an e-mail dated June 23 from you to Boden

10 regarding the Houtkin deal.

11 A Yes.

12 Q The paragraph says: David, give me the exact

13 terms of the deal as Rich wants them papered. If he is

14 asking the deal to be funded at 700k over, I need to

15 reduce the ROI by that number; otherwise, I am paying

16 the 700k back twice, once to Rich and once to the

17 funder.

18 Explain what you meant there.


20 THE WITNESS: I don't really recall. It looks

21 like the way that he's trying to restructure the

22 deal to take his money would have ended up costing

23 me money as opposed to making money for the Ponzi

24 scheme.

25 MR. LICHTMAN: Because we're running out of

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1 time, we're going to take time for us to swamp out

2 positions. I'm going to stop after this next

3 exhibit.



6 BY MR. LICHTMAN:

7 Q This is 15. Showing you what's been marked as

8 Exhibit 15, it's an e-mail from Boden to Debra and you

9 regarding new deal. If you would read into the record

10 the e-mail.

11 A Yes. It says: New deal, Platinum Estates

12 Incorporated -- It's from David Boden to Debra and I.

13 Platinum Estates Incorporated, party to P6 documents, is

14 taking another deal. It is the 800k, ROI of 600k in

15 four months. The deal should be papered at 1 million

16 with ROI of 400k and fee to R.L. Pearson to 200k.

17 Q Stop there. What are those two sentences --

18 what do those two sentence tell you?

19 A Tells me that David and Richard have increased

20 the funding amount for their funding source by $200,000

21 so that they can steal the money.

22 Q And then if you would read the last sentence,

23 starting with, "please."

24 A Please use the same documents from P6 except

25 that this is a whistle blower case, not sexual

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1 harassment for purposes of the settlement agreement.

2 Q Doesn't that tell you when you see Boden write

3 to you that this is a whistle blower case, not a sexual

4 harassment case, that he affirmatively knew that that

5 could not be a real case?


7 THE WITNESS: Yes.

8 BY MR. LICHTMAN:

9 Q Okay. Is there --

10 A That's what it says to me.

11 Q Anything else you would like to expand on that

12 answer?

13 MR. HOUSTON: Same objection.

14 THE WITNESS: No. He's changing the kind of

15 case it is. Without seeing the paperwork I can't

16 tell you anything else. Since he's using the same

17 deal as another deal, changing the type of case it

18 is, it seems to scream that he knows that this is

19 fake.

20 MR. LICHTMAN: Okay. I'm done a couple minutes

21 early so we can switch out and keep moving.

22 CROSS EXAMINATION

23 BY MR. FERGUSON:

24 Q Scott, how are you doing?

25 A Good, David.

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1 Q I want to pick up with this Exhibit 15 that we

2 left off with.

3 A Hang on a second.

4 Q Sure.

5 A Got it.

6 Q Is Richard Pearson on that?

7 A No, sir.

8 Q And it's coming from your right-hand guy who

9 helped you work this scam and particularly paper the

10 files; is that right?

11 A Yes. David was integrally involved in the

12 Ponzi and he ran the sub-Ponzi with Mr. Pearson.

13 Q And he was your right-hand guy long before

14 Pearson came along; is that right?

15 A He was.

16 Q In fact, Pearson comes along in April of '09

17 and lasts until you flee to Morocco the end of October;

18 is that right?

19 A Yes.

20 Q So, he literally walked into this the last six

21 months of the scheme imploding?

22 A Yes.

23 Q And when you met him to talk about funding in

24 April, I'm assuming because you said you were lying to

25 him in the beginning, you didn't disclose to him,

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1 Welcome to a Ponzi scheme, We're in full alarm, all -

2 it's melt-down and we need your money. You didn't

3 introduce him to the scheme like that?

4 A No, I didn't introduce anyone to the scheme

5 that way.

6 Q Understood. And that Exhibit 15, that

7 Exhibit 15, Scott, you don't know as you sit here today

8 whether Pearson knew of the contents of that e-mail

9 between you and Boden, do you?

10 A I know he had to have been given the

11 documents. I can't tell you whether he read them.

12 Q I'm talking about the contents of the e-mail

13 itself.

14 A I have no way of knowing one way or the other.

15 Q When Boden, your right-hand guy, who's

16 intimately familiar with the deal flow and the paperwork

17 says, We're going to use the same as the prior deal but

18 this one is whistle blower, not sexual harassment, you

19 don't know if Pearson was aware of that communication to

20 you?

21 A I do not know that, no, sir.

22 Q And also you talked about these plaintiff

23 letters. What I understand is, was there -- was a

24 document generated purporting to authorize fees taken by

25 Pearson and Boden, the plaintiff was authorizing fees in

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1 in certain instances; is that right?

2 A There was no plaintiff. They --

3 Q Purporting to --

4 A They were -- yes. That the plaintiff was

5 purportedly authorizing a fee to R.L. Pearson.

6 Q And that document, to your knowledge, was

7 created by Boden; is that right?

8 A I don't know which one of them created it. I

9 would certainly imagine, David, that it was Mr. Boden.

10 Q Probably in RRA's office on your server?

11 A Yes, I'm certain the records would show that.

12 Q Do you have any knowledge that Pearson, as you

13 sit here today, that Pearson knew that the client

14 authorizations of the fee were false?

15 A Say that again.

16 Q Do you have any knowledge as you sit here today

17 that Pearson knew for a fact there were no plaintiffs?

18 A I never told him there were no real

19 plaintiffs. I never said, Rich, there's no real

20 plaintiffs.

21 Q In fact, I'm going to show you an e-mail in a

22 minute at the end when you're in Morocco where you're

23 still telling him to be cool and talking about

24 plaintiffs, that you don't want to lose plaintiffs.

25 So, to be clear, you never dropped the veil to

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1 Pearson and said there are no plaintiffs?

2 A I never said to Pearson directly, There are no

3 plaintiffs. There were loads of indications there were

4 no plaintiffs.

5 Q But you can't testify --

6 A I never said that -- so we're clear,

7 Mr. Ferguson - the only reason I'm not calling you David

8 back is because we're talking about David Boden, and I

9 don't want you to suddenly get arrested.

10 Q Fair enough. I'll stick with my last name.

11 But it's fine if you call me David. I'm sure

12 the record will be clear. I'm here right now for this

13 purpose only.

14 A I didn't say to very many people who ultimately

15 were involved, There are no plaintiffs. As a matter of

16 fact, the only person I remember using those exact words

17 were was Michael Szafranski.

18 Q Understood. What I'm trying to determine right

19 now, looking at Exhibit 15, as you sit here today,

20 there's no way for you to testify that you were aware

21 that Richard Pearson knew there were no plaintiffs?

22 A That's a different question. I can absolutely

23 testify that he knew there were no real plaintiffs.

24 Q How did he know?

25 A He knew there was no money in the bank

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1 accounts.

2 Q Pearson did?

3 A Pearson knew.

4 Q How did he know that? I have to go with you

5 point by point.

6 A Because Boden was talking to him about the fact

7 that money needed to be transferred at the last minute

8 to fund these deals.

9 Q But, when Boden is telling him that, are you

10 witnessing him telling him that?

11 A Not all the time, no, sir.

12 Q How do you know Pearson doesn't take that to

13 mean that an account needs money moved into it as

14 opposed to this thing is a Ponzi scheme and there are no

15 plaintiffs?

16 A Let me give you some direct examples, it will

17 be easier, instead of talking in generalities.

18 Rich is asking me questions from time to time

19 about wanting to see plaintiffs. I'm saying, You have

20 to talk to Boden. Okay. He says to Boden in front of

21 me at Bova, one time we were just down there hanging

22 out - you certainly don't have the kind of foot traffic

23 in your office - he was joking - have the foot traffic

24 in your office that you would for all these deals. I

25 brushed it off. I tried not to engage in it. Probably

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1 the most telling thing --

2 Q I want to get to the most telling thing. Stop

3 right there at that point.

4 A Sure.

5 Q You're at Bova. He's questioning the foot

6 traffic. Are you taking that to mean that he knows that

7 there are no plaintiffs or is he inquiring, Where are

8 they?

9 A No. It was joking.

10 Q But, are you purporting to know at that moment

11 that that statement was a revelation by him to you that

12 he was aware that there are are no plaintiffs as opposed

13 to questioning?

14 A The revelation was when I was scolding him

15 about the lies he was telling the investors. When he

16 told his investors that we had this Big Four accounting

17 firm checking it out. And I had to yell at him saying,

18 You're running the risk of blowing this whole thing up.

19 Stop lying to bring these people in. We have enough

20 issues. You're just increasing potential increased due

21 diligence. When I found out he was saying that he had

22 access to our banking information --

23 Q 24 hour --

24 A 24 hour access, something along those lines.

25 Q Who did he say that to?

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1 A I don't recall. It's in the e-mail traffic.

2 Q Do you know whether or not he believed that

3 Boden did have access to those accounts 24 hours? Do

4 you know one way or the other?

5 A I have no way of knowing that, no.

6 Q Is it possible that he thought Boden did have

7 access to those balances 24 hours a day?

8 A It is possible.

9 Q Boden was making money off of what you're

10 calling and Chuck is calling the Pearson/Boden

11 sub-Ponzi; is that right?

12 A Yes.

13 Q To be clear, a Ponzi scheme is in broad terms

14 getting new investors, using their money to pay old

15 investors what you promised them, correct?

16 A Yes.

17 Q Without disclosing to any of the investors that

18 that's what you're doing?

19 A Correct.

20 Q When is the first time you ever heard the term

21 sub-Ponzi? Did you hear it prior to any conversation

22 with Chuck Lichtman or reading the Complaint against

23 David Boden, if you read it?

24 A I did.

25 Q When is the first time you heard it?

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1 A In conversations I had with someone else.

2 Q Okay.

3 A Two years ago.

4 Q And to be clear, Pearson and Boden to the

5 extent that any investors came in through them, they did

6 not control those investors' funds, Pearson or Boden,

7 you took control of it?

8 A I had ultimate control. Boden had access.

9 Q Boden had access to all of this information for

10 the entire Ponzi scheme from you, didn't he?

11 A The bulk of it, sure.

12 Q But, it's not as if there was a Ponzi scheme

13 being run by Boden and Pearson by which their investors'

14 money was coming in to pay their old investors' money?

15 A Can you say that again.

16 MR. LICHTMAN: Form.

17 BY MR. FERGUSON:

18 Q It's not as if Pearson and Boden had a pool of

19 money by which they controlled and they could pay their

20 old investors with their new investors' money?

21 A No. Their money, their Ponzi money was

22 commingled with all the other Ponzi money.

23 Q And used just like all other investors in this

24 Ponzi scheme; is that right?

25 A Yes.

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1 Q So, really when you're characterizing their

2 involvement in this as a sub-ponzi and going along with

3 that characterization, it's not based on the payment of

4 old investors with new investors' money, which is the

5 classic definition of a Ponzi, it's based upon your

6 characterization of their front-end work bringing the

7 money in?

8 MR. LICHTMAN: Objection to form.

9 THE WITNESS: It's really -- here's the problem

10 you're going to have. You weren't here for all the

11 testimony.

12 BY MR. FERGUSON:

13 Q Unfortunately, I've read every word of it.

14 I'll do my best to recall.

15 A The way most people who eventually knew this

16 was a scam knew was through continued interaction and

17 seeing the signs. Seeing the things and noticing the

18 things did not exist.

19 One of the most telling things with Pearson

20 was - and this is -- here's the thing, if Pearson was a

21 dummy, which he's not, he's a bright guy, I understand

22 the argument you're making.

23 But think about it this way, this is the big

24 tell, I'm sending him a deal to be papered by some

25 allegedly international or national defendant. They

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1 agree to the deal. Within hours all the paperwork is

2 done, executed by the plaintiff, executed by the

3 defendant, redacted and forwarded to Mr. Pearson for

4 sending to his clients, and it happens over and over

5 again. It's a physical impossibility.

6 You and I both know you can't - it just doesn't

7 happen that way. That documents - especially documents

8 of that nature - all get done. He's redoing the

9 amounts.

10 Let's assume he has a legitimate argument for

11 redoing the funding amount, that he's just going to

12 claim that's just some fee that he was taking and he

13 considered it a commission to himself. Well, anyone

14 with even a quarter of a brain would know that I would

15 have to get the real plaintiff, if one existed, to agree

16 to that. When did that happen?

17 They actually told me to take that money. And

18 then in that one e-mail we saw, they increased it again

19 and they changed it to 900 and then they changed it to

20 910,000 --

21 Q Scott --

22 MR. NURIK: Let him finish.

23 THE WITNESS: That's okay.

24 BY MR. FERGUSON:

25 Q We're going into a narrative.

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1 A Go ahead.

2 Q Again, though, there were times when a sense of

3 urgency would be communicated to Pearson. I'm going to

4 lose plaintiffs. We have plaintiffs here. This deal

5 needs to go through today. That was part of the scheme;

6 is that right?

7 A I talked to everyone, people in the know and

8 people who were completely innocent. I tried to

9 communicate with everyone the same way in my e-mail

10 traffic.

11 Q And since Boden is controlling your documents,

12 not just for Pearson deals, but all of them, you don't

13 expect that Pearson was coming to your office and

14 getting those deal packets ready, do you?

15 MR.LICHTMAN: Objection to the form.

16 THE WITNESS: No. Boden was only controlling

17 the documents for the Boden/Pearson deal. He

18 wasn't controlling all the documents. That was me,

19 Deb, and other people, Preve.

20 BY MR. FERGUSON:

21 Q Let's back up for a second. When you first

22 encounter Pearson, he's in your building totally

23 unrelated to RRA, right?

24 A Yes.

25 Q In fact, you came to do some legal work for

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1 him. You came to his office with a crew of

2 well-respected lawyers to assist him in sending out a

3 letter that he needed to send to the west coast of

4 Florida on an emergency bases to extend a contract.

5 Does that ring a bell?

6 A Yes, Boden had brought him in as a client.

7 Q And at that time you're aware he had what

8 appeared to be some legitimate business deals,

9 refinancing the Las Olas River House for about $6

10 million?

11 A Yes, they appeared to be legitimate to me, yes.

12 Q When he first comes across your radar screen,

13 he appears to be a legitimate businessman with money

14 himself or access to money; fair enough?

15 A Yes.

16 Q A perfect plug-in to your operation?

17 A Yes, sir.

18 Q Fair enough?

19 A Yes, sir.

20 Q In fact, he does come to plug in at the perfect

21 time when you're in an implosion mode in April of '09;

22 correct?

23 A He definitely helped, yes.

24 Q Do you recall how the conversation you had with

25 Boden where we're switching now from Pearson,

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1 businessman in building, client of RRA, to a possible

2 investor or source of funds for this operation; do you

3 know when that occurred?

4 A I do not.

5 Q Sometime though around April '09; is that

6 right?

7 A That sounds about right.

8 Q Now, if Pearson were to say that when he

9 brought this up to Boden, because he heard about the

10 opportunity from a third party, Boden acted like he knew

11 nothing about it. Do you know if that's true or not?

12 A Say that again, please.

13 Q Pearson claims that he became alerted to you as

14 something other than a lawyer with a large large law

15 firm in his building and a possible investment

16 opportunity because a third party asked him if he knew

17 about it and showed him some paperwork. Did you ever

18 hear that?

19 A I did.

20 Q And then he in turn showed it to Boden in his

21 office in your building, Pearson's office, and asked

22 about it?

23 A I do recall that, yes, sir.

24 Q According to Pearson at that moment Boden acted

25 like he knew nothing about it but was going to go check

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1 with you. Do you know if that occurred?

2 A I have no idea whether it occurred.

3 Q When Boden came to you and said Pearson might

4 be a source of money, did he tell you either way how he

5 reacted to Pearson's questioning about the possible

6 opportunity?

7 A He didn't tell me how he had reacted to the

8 questioning. He asked me what I wanted to do. And I

9 said something to the effect that I don't want anymore

10 small investors at this moment. I'm having enough

11 trouble with what I'm dealing with. That's when David

12 first told me that he was a player.

13 Q Pearson's a player?

14 A I already knew Boden was A player; so, yes,

15 Pearson was a player.

16 Q At that time if Boden had feigned to not know

17 anything about these investments, he would have been

18 lying to Richard Pearson?

19 A Yes, sir.

20 Q Because he, in fact, drafted the Brauser

21 settlement months prior, Boden?

22 A He assisted me in drafting it, yes, sir.

23 Q The scheme was up and running and he was

24 already your right-hand man, Boden, April of '09?

25 A He was my right hand -- he was absolutely my

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1 right-hand man. And for the life of me, I can't recall

2 specifically whether he helped me with the Brauser

3 settlement. I seem to remember talking to him about it.

4 Q I did read in your testimony, I know it's been

5 a long 10 days, but you said he had a substantial hand

6 in drafting that document.

7 A My recollection is that he did. I just,

8 without seeing all the e-mail traffic, David, I can't

9 tell you.

10 Q Fair enough. To be clear, as of April, '09,

11 Boden knew full well that there were investments

12 purportedly involving plaintiffs funding?

13 A That's true.

14 Q Earlier you testified when asked how Boden had

15 to know, and I took notes, you said that Boden knows

16 there are no plaintiffs.

17 A Correct.

18 Q He knows there are no defendants.

19 A That's correct.

20 Q The paperwork turned around without appearance

21 of plaintiffs.

22 A Correct.

23 Q No conflict searches?

24 A Correct.

25 Q No files in your office?

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1 A Correct.

2 Q No clients coming out of your office?

3 A Correct.

4 Q And no money from legit big defendants?

5 A That's correct.

6 Q Well, now I'm going to go back down that list

7 in reverse order.

8 No money from legit big defendants. Pearson

9 would never have had any way to know that one way or

10 another unless somebody told him, right?

11 A I don't know what he knew in that regard or

12 whether he had access to that.

13 Q He wouldn't have known that there were no

14 conflict searches because he's not an RRA lawyer, he

15 would never be in those --

16 A Again, I can't tell you if he did or not. I

17 can't tell you if him and Boden had these discussions or

18 not.

19 Q I'm going to grant you that if Boden told him

20 all of this, that he would know that; but you don't know

21 whether Boden told him of all these discrepancies or

22 not?

23 A I don't. But you're asking, "he had no way of

24 knowing," and that's not true because he was, to my

25 knowledge from my observation, in bed with Boden.

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1 Q Fair enough. But to be clear, when conflict

2 searches went out internally at RRA, Boden wouldn't have

3 been in that loop, so he would have no personal

4 knowledge -- I'm sorry. Pearson wouldn't have been in

5 that loop and would have no personal knowledge of the

6 conflict search activity of RRA absent someone telling

7 him?

8 A I didn't tell him. That I can tell you.

9 Q And you don't know if Boden did?

10 A I have no way of knowing one way or the other.

11 Q What's the proximity of Pearson's office to

12 your office? What floor were you on?

13 A 15, 16 and 22. My office was on 16.

14 Q What floor was Pearson on?

15 A I don't remember.

16 Q How much square footage approximately did you

17 have in the building?

18 A We had a lot. Tens of thousands of square

19 feet.

20 Q Is it fair to say that Pearson wouldn't have

21 been in a position to accurately monitor the foot

22 traffic of individuals in and out of your three floors

23 in that building?

24 A Well, here's the thing, at the time that

25 documents were allegedly being executed, Pearson was

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1 frequently in our offices. He was sitting with Boden.

2 So they're sitting in there working a deal, talking to

3 the investor, whatever it is they're doing. I'm seeing

4 him in there. And then documents are coming from

5 Boden's office going to Deb, and shortly thereafter

6 documents going out of Deb's office back into where

7 Pearson and Boden are sitting.

8 So, yes, he would have been in a position to

9 monitor the defendant flying in on a spaceship or the

10 plaintiff suddenly appearing in my office.

11 Q How would he know that they are in another

12 office within one of your three floors and that they are

13 signing? Because this was told to him, that he could

14 never meet or know who the plaintiffs were; is that

15 right? You wouldn't let him meet the plaintiffs, right?

16 MR. LICHTMAN: Object to the form.

17 THE WITNESS: Originally I told him when I was

18 telling him that everything was real, I told him

19 everything is confidential.

20 What Boden told him, again, I wasn't privy to

21 that unless I was sitting in on the conversation.

22 BY MR. FERGUSON:

23 Q But, when he asked to meet the plaintiffs, you

24 flat out told him no and told him to speak to Boden?

25 A Yes.

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1 Q Do you know what --

2 A I didn't say no. I said, "Speak to Boden."

3 Q Well, you didn't say yes; you just said, "Speak

4 to Boden"?

5 A Yes.

6 Q Do you know what Boden told him about the

7 reason why he couldn't meet the plaintiffs if that

8 discussion occurred?

9 A I do not.

10 Q Debra, she never took direction from Richard

11 Pearson, did she?

12 A There was some e-mails from Pearson to Deb or

13 maybe from Pearson to Irene, to one or both. So you'd

14 have to look at the e-mail traffic. But there were

15 definitely e-mails from Mr. Pearson to Deb or Irene or

16 both with instructions to do certain things.

17 Q Could Pearson instruct Irene to effectuate a

18 wire?

19 A He attempted to instruct her to initiate a

20 wire.

21 Q Did he have any control --

22 A But she's not going to do it without speaking

23 to me or Boden first.

24 Q Did Pearson have the ability to generate any

25 documents for this deal without Boden?

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1 A You'd have to look at his computer.

2 Q Do you know if Pearson generated any paperwork

3 as opposed to Boden doing it all?

4 A I don't. You'd have to check his computer.

5 Q Boden certainly had the ability and knowledge

6 to do it all for both of them, didn't he?

7 A He did, and he had Deb to assist him.

8 Q Do you know whether Boden ever disclosed to

9 Pearson that any of these documents were phony, directly

10 told him that?

11 A The normal documents, no. The finders fee

12 letter, yes.

13 Q Again, the finders fee letter, is that the one

14 that's signed by the purported plaintiffs?

15 A Yes.

16 Q And what hand did he have in those? Explain

17 that.

18 A If Pearson wanted to bump the deals, they

19 bumped the deals. That was Pearson's suggestion to bump

20 the deals.

21 Q And were you there when he suggested it?

22 A No. I got e-mails. There were e-mail traffic

23 that he's on saying saying Rich wants this papered at...

24 Q But, how do you know that he was aware, or

25 maybe you don't, that that document, the plaintiff's

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1 letter, was not legitimate?

2 A Very easily. Because if this was legitimate,

3 the e-mails and the instructions from Pearson would have

4 been either to David or to me, Please contact the

5 plaintiff and see if the plaintiff is willing to

6 authorize a finders fee to us in the amount of such and

7 such.

8 They can't just tell me literally, Take a deal

9 and move it from 800 to 900 and expect every single time

10 you do it to have no push back from the plaintiff,

11 plaintiff is just going to agree to it.

12 Q How do you know that he wasn't told by the

13 general counsel of your firm, your right-hand man, your

14 inside guy, Boden, that if they wanted more money Boden

15 was going to handle that and he could get it done and

16 get that document signed?

17 A Because as I testified on direct examination, I

18 directly told Richard Pearson, "Why don't you just

19 increase your finders fee, your internal commission, the

20 thing you're disclosing to them in your PPM? Why are

21 you doing it using this other source? You're adding too

22 many things into the mix."

23 And it was around the same time as the

24 conversations I had with him about the Big Four

25 accounting firm and the access to the on-line banking.

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1 Q But if he was in the know at this point, why

2 would he bother to need a plaintiff's -- why would he

3 care if there was a document in the file, of all things,

4 from a non-existent plaintiff authorizing a fee if he

5 was in the know? Couldn't he just say to you, Scott,

6 change the terms of this deal and bump it up a hundred

7 more K because I want it and I've got to split it with

8 your guy?


10 THE WITNESS: No, because he was doing CYA

11 documents. That's like saying, Why do we need any

12 of these documents? If the parties aren't seeing

13 them, why do we need to create unredacted

14 documents? Why do you need to have deal files?

15 Why do you need to have fake wire documents?

16 BY MR. FERGUSON:

17 Q I thought you said he was a bright guy.

18 MR. LICHTMAN: Are you finished?

19 THE WITNESS: Very bright.

20 BY MR. FERGUSON:

21 Q If he's a bright guy and he wants a CYA letter

22 from a non-existent plaintiff in the file, what good is

23 that going to do? That's like holding a newspaper up in

24 front of a machine gun. What would that document

25 accomplish in this scheme if he was in the know?

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2 THE WITNESS: If you look at the files, his

3 files, you'll see that he never took that document

4 and did anything with it. He stuck it in the

5 file. He was CYA'ing himself.

6 He increased the deal. Do you realize just by

7 the very nature of what he was doing he was lying

8 to his investor. He told his investor that this is

9 the way that deal was being offered, when it was

10 not. He was then instructing us, not asking, paper

11 the deal at this amount.

12 No real investment anywhere on the planet works

13 that way. It just doesn't work that way. You know

14 that and I know that, and Pearson absolutely knew

15 that.

16 BY MR. FERGUSON:

17 Q You're now getting inside of his head and

18 you're saying you know what he is thinking as opposed to

19 if he thought that there were plaintiffs and that Boden,

20 your general counsel, was getting them to authorize

21 money off of their side.


23 THE WITNESS: There's no e-mail traffic asking

24 Boden to get authorization from anyone. There's

25 nothing where he ever talked to Boden ever, or me

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1 for that matter, saying, Do you think we could bump

2 the deals?

3 I mean, if this is a real investment, a bright

4 guy like Pearson is going to know before you change

5 something in some of these deals by $200,000, you

6 might want to clue somebody in.

7 No. He's just automatically doing it. Paper

8 it this amount. Paper it that amount. Reduce the

9 ROI to this. Increase the ROI to that. The same

10 deal over and over and over again, plaintiff after

11 plaintiff. It makes no sense.

12 BY MR. FERGUSON:

13 Q Let me ask you this because I need to focus.

14 You know, if I had all day I could probably go into a

15 lot more than I'm going to be able to. And I understand

16 the "should have known" concept, and there's plenty of

17 us here that understand should have known and if it

18 requires standing up in front of a jury and a judge

19 they're going to make their case.


21 Is that a question?

22 MR. FERGUSON: It's coming. I promise.

23 BY MR. FERGUSON:

24 Q What I really want to focus on, though, is the

25 answers to my question when I'm asking about whether you

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1 know that he knew something or was told something. And

2 if you want to layer in there what he should have known,

3 I understand.

4 A I got you. Now I understand


6 THE WITNESS: Let's just say this, all right.

7 BY MR. FERGUSON:

8 Q Sure.

9 A During the course of this Ponzi scheme over

10 five years and change, I had almost no conversations

11 where I said, Oh, you are now aware of the fraud. I had

12 badges, to use a legal term, badges of fraud. I had

13 people cloaked with the indicia of fraud. It was clear

14 to me that they knew what was going on. That is how I

15 knew that they could be trusted with additional

16 information.

17 That is how I ultimately knew that David and

18 Richard could be trusted to run this, what's now been

19 called a sub-Ponzi.

20 If you match what I did with him to everything

21 I did with every other co-conspirator, you'll see that

22 it matches exactly. If you're going to ask me the

23 question, David, did I tell Richard it was a fraud, the

24 answer is no.

25 MR. FERGUSON: I'd like to mark an e-mail

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1 here. What exhibit are we up to, Chuck?

2 MR. LICHTMAN: I think it's 16.

3 THE WITNESS: The last exhibit was 15.

4 MR. LICHTMAN: 16 is next.

5 (Whereupon, Pearson's Exhibit No. 16 was marked


7 BY MR. FERGUSON:

8 Q Have you seen this before?

9 A Let me read it. Give me one second.

10 Q Sure.

11 A Okay. I recall this.

12 Q And as is typical with all the e-mails, the top

13 e-mail is the last one.

14 A Sure.

15 Q And that's from you to Richard and cc David

16 Boden; is that right?

17 A The top one?

18 Q Yes, sir.

19 A The top one is from me to Rich in response to

20 his e-mail below.

21 Q October 28th you're in Morocco at this point;

22 is that right?

23 A Correct.

24 Q What day did you leave, the 27th, Tuesday?

25 A I think the 27th, yeah.

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1 Q You tell Richard in response to his e-mail

2 below that you've had a major breach in confidentiality

3 and to chill.

4 This e-mail seems a little different than the

5 communication that you had with Boden in which my client

6 wasn't cc'ed where you're communicating with Boden about

7 what it's going to take to pay everybody off.

8 A This is my CYA letter in response to what's

9 below, which is clearly Mr. Pearson's, Uh-oh, what am I

10 going to do. Let me start covering my ass letter. It's

11 the most detailed e-mail he'd ever sent me.

12 Q And you are confident that he didn't mean

13 anything that he wrote in that e-mail to you below?

14 A Say that again.

15 Q You're confident that this is nothing more than

16 a CYA letter and my client didn't legitimately mean

17 everything that he said in that e-mail to you?

18 A The part where he says he's really concerned, I

19 think that that's true.

20 Q Why are you --

21 A He hasn't received payments. That is true.

22 MR. NURIK: Let him finish.

23 BY MR. FERGUSON:

24 Q I'm not asking for you to go through the entire

25 e-mail.

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1 A Oh, okay.

2 Q I'm just asking you if you believe it's true

3 or -- if he believed it's true or not.

4 A I believe that parts of it are true, and I

5 believe that at this point in time he knew he was

6 involved in a fraud and that he was freaking out as many

7 people were.

8 Q What is the purpose of your response basically

9 appearing to reply as if this is still a legitimate

10 operation with a breach of confidentiality? Why did you

11 do that?

12 A This is exactly the same way I responded to a

13 lot of people. I provided e-mails to them that I was

14 deeming to be something that they could use in the

15 future or that comported with the story that I was

16 telling other people that I was corresponding with.

17 Q For what purpose? Why didn't you just tell him

18 it's over?

19 A I didn't tell anyone that, I don't think. I

20 don't recall telling anyone it's over until a day or two

21 after this. I would have to look at the all the e-mail

22 traffic, but I was in no shape to make a judgment one

23 way or the other.

24 I mean, if you look, I mean it's clear from the

25 amount of money and everything else that Szafranski was

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1 involved in it, that Szafranski was involved. I wrote

2 similar e-mails to Szafranski back and forth. I wrote

3 similar e-mails to Preve.

4 Q Are you doing Richard a favor by responding in

5 this vein as opposed to candidly, in your mind, when you

6 sent this back?

7 A I don't know if I'm doing him a favor or not.

8 Q But, according to you, you were playing along

9 with his CYA communication?

10 A Almost everybody that wrote me at this point in

11 time an e-mail where they were purportedly stating that

12 they were innocent when I knew they weren't, I responded

13 in the same vein. Why I did it? I can't tell you.

14 Q Because, frankly, this wouldn't cover anyone's

15 "A" in light of what you knew about the bottom of the

16 operation. An e-mail like this is going to do no good.

17 A Well, it would actually because it did, to a

18 limited extent, for other people I sent it to. They

19 were utilizing what I was sending to tell the innocent

20 investors the story line as to what was occurring.

21 I mean, I think it was clear to all of the

22 people that were involved that this thing had exploded.

23 You find out that I'm outside the country. There's

24 potentially some problems. And you'll see people all of

25 a sudden writing very, very strict business-like

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1 e-mails, people that were never writing me e-mails like

2 this before are all of a sudden writing me these very

3 business-like, very strict, very detailed,

4 detail-oriented e-mails as opposed to Mr. Pearson's

5 other e-mails that were just like, increase this deal by

6 this one much and send the 100 grand or 200 grand to RL

7 Pearson & Company.

8 This draft is different, I think you'd agree,

9 between this e-mail and my normal e-mail traffic with

10 Richard.

11 Q Yes, I'll agree. But, Scott, this is the first

12 time you've hopped a plane to Morocco with a bag of

13 money and you weren't there to answer questions. I

14 mean, candidly at this point in time nothing like this

15 had ever occurred in this investment scheme.


17 BY MR. FERGUSON:

18 Q Correct, this was markedly different? Wouldn't

19 you expect when you jump on a private plane and leave

20 the country that you're now going to get e-mails from

21 people that are markedly different than when the deals

22 were flowing?

23 MR. LICHTMAN: Objection to form, compound.

24 It's like four questions.

25 BY MR. FERGUSON:

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1 Q Go ahead and answer.

2 A I would suspect that with someone like Pearson

3 who probably was having somewhere close to a heart

4 attack when he realized I had left the country, that he

5 was going to do everything humanly possible to avoid

6 going to jail.

7 The way I view these e-mails, having had a lot

8 of time to read them and reflect on them, is that these

9 e-mails by my co-conspirators were nothing more than

10 their equivalent of my getting on a jet and going to

11 Morocco. It was their method of fleeing.

12 Q At this time, the day after you left, it seems

13 from some of the e-mail traffic, even the e-mail to

14 Boden, that you were still hopeful that you could

15 salvage this, correct? The first day after you left you

16 hadn't thrown in the towel yet for sure.

17 A Oh, no. I had actually thrown in the towel. I

18 was scrambling to try to figure out what the heck to

19 do. The only way I really, and it was kind of crazy,

20 the only way I really thought I could be rescued was if

21 George Levin somehow was convinced to do a raise that

22 would have returned the principles at least to these

23 people.

24 But I knew no matter what that if I returned to

25 the United States I was going to prison.

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1 Q But, you still, particularly early after your

2 departure, had the hope that some money could be plugged

3 in and somehow right the ship. And George was one of

4 your potential sources for that; is that correct?

5 A I don't think you can use the word hope with

6 anything related to me from the moment I stepped on that

7 plane and left the country. I was beyond despondent,

8 so...

9 Q You're telling Richard to hang in there, be

10 quiet, chill out. And clearly if he did, then your

11 hopes were that you could get more money from his

12 investors in addition to whatever you could marshal from

13 Levin or anyone else?

14 A No, no. I wasn't expecting to get anymore

15 money from any investors. The only person I would have

16 taken any money from at that point in time was someone I

17 perceived to be in the know, at least to some extent,

18 who was trying to bail out the innocent investors.

19 Q And George isn't in that basket in your mind?

20 A Preve is in that basket.

21 Q But that's a no for George?

22 A I still never made my mind up as to George.

23 Q Fair enough. So in your mind, though, Richard

24 Pearson was a co-conspirator?

25 A In my mind?

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1 Q Yes.

2 A Yes.

3 Q List all the reasons why in your mind he was a

4 co-conspirator.

5 A You have to give me all the e-mail traffic

6 between me and him. I mean, I could take a stab at it.

7 Q Take a stab at what you know without looking at

8 external documents or e-mail traffic.

9 A To the best of my recollection?

10 Q Yes, sir.

11 A He lied to his investors to lure them in. He

12 changed deal amounts to my knowledge without any

13 indication that there really needed to be any approval,

14 conversation with, discussion, consent from a plaintiff

15 that did not exist.

16 He created fake CYA finder fees letters along

17 with David Boden to allow him to steal money from his

18 own investors.

19 He lied to his investors about due diligence

20 that he did. If this was a real investment he would

21 have done real due diligence, would have created an

22 investment packet or an addendum to his PPM using that

23 due diligence and given it to them. That in and of

24 itself was a crime.

25 He lied to his investors about his access to

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1 view account balances.

2 He was in my office often enough when deal

3 documents were being completed that he should have seen

4 that there was nobody doing anything.

5 Moreover, on that same point, he had early on

6 asked to see plaintiffs, and I had told him

7 specifically, "Talk to Dave Boden."

8 If he didn't know that this was a fraud, on the

9 days when he was in David Boden's office and documents

10 were on their way back to him, all he had to do was make

11 some attempt, even sit in the waiting room, to see if

12 anyone ever showed up to do anything, to sign anything.

13 Q You had back doors to your office, though.

14 There were multiple entrances to your office. I've been

15 there before. Could you say that someone could sit with

16 confidence in your lobby and know that they witnessed

17 everyone that came in and out of your three floors,

18 including your own private chamber in the back?

19 A Sure, because clients and defendants only came

20 in through the front door. They couldn't get in any

21 other doors.

22 Q I don't --

23 MR. LICHTMAN: I don't think he finished his

24 answer.

25 MR. FERGUSON: He might not have. But I'm

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1 sorry, Chuck. I've got two hours, and I'm going to

2 have to jump in on a narrative.

3 If he needs to stop me from doing so, I will

4 work with you, Scott. But I normally would never

5 do that.

6 THE WITNESS: Let me --

7 BY MR. FERGUSON:

8 Q Go ahead.

9 A Do you have another question before I

10 continue?

11 Q My question is, if someone legitimately

12 believes that these were sensitive plaintiff

13 confidentiality plaintiff issues, how do you know they

14 wouldn't assume that the plaintiff would come in through

15 the back door that led to your office through the

16 private elevator that no one could see?

17 If he was aware that the office was set up that

18 way, isn't it possible that he reasonably believed they

19 were just being brought in and out through one of the

20 "bat cave" exit or whatever way to get into your office?

21 A Richard spent plenty of time in our office. He

22 knew how the building was set up with the private

23 entrances and the like. There's no way for anyone to

24 get in that office unless he believed that someone came

25 up and did like a secret knock, and then I miraculously

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1 or someone else miraculously heard the secret knock,

2 because that door was kind of far away from everything,

3 came up and then went to that door.

4 So if you want to take it to its most

5 illogical, he could believe anything. He could have

6 believed that there was some kind of transporter beam

7 that I transported all these people into my office. I

8 don't know what he believed.

9 I can tell you what he could have tried to do.

10 Very frequently in this particular fraud you can tell

11 what people know, not only by what they did and didn't

12 do, but what - excuse me - not by what they did do, but

13 by what they didn't do.

14 Q Due diligence?

15 A Not just due diligence. It's just there was a

16 point in time --

17 Q I haven't asked -- you're now responding to a

18 question I didn't ask.

19 A No, no, no. I'm still going through the list

20 of things.

21 Q Let's go through the list.

22 A He asked David Boden at one point in time

23 something that I actually hadn't even thought of

24 covering the bases on. It became a concern to me later,

25 was that he asked David Boden to get copies of either

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1 the driver's license or the Passport of the plaintiff.

2 This was early on.

3 And I actually thought that was a great due

4 diligence question. We couldn't provide it to him

5 obviously because we didn't have it. We never attempted

6 to provide it to him and he never sought to see it

7 again.

8 Q Who did he ask, David Boden?

9 A David Boden and me.

10 Q Do you know if he ever followed up to David

11 about that?

12 A To my knowledge, no. David would have come

13 running to me if he had asked him for something like

14 that. He didn't need to ask. He knew it was all a

15 fraud.

16 Q How do you know David would have come running

17 to you as opposed to just saying, No, we just can't do

18 that because of confidentiality and it's not going to

19 happen?

20 A Think about this. When he said it to me, he

21 said, Just cross out -- he said, cross out the name,

22 cross out the address. Block out -- he even said at one

23 point in time when we were joking around, he said, block

24 out the eyes, you know, like they do on those websites.

25 He said, Block out the eyes. I just want to see that a

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1 real person exists.

2 Q But if he knew that this was false, then why

3 wouldn't he say, Go ahead and make those up just like

4 the, according to you, that he knew the plaintiffs'

5 authorizations and the fees were just a CYA document?

6 If he was aware that this was a scam, why was he asking

7 for those documents? Let me finish.

8 A Go ahead.

9 Q Why was he asking for those documents and why

10 wouldn't he just ask you if he thought he needed them to

11 just cook them up like everything else you did?

12 A You just made my point. He did ask me for

13 those documents early on. That's how the conversation

14 came up.

15 Q But he never got them?

16 A That's right. And then as time went on he

17 stopped. That's normally what people did. Szafranski

18 started doing semi real due diligence in the beginning.

19 Preve and Levin did semi real due diligence in the

20 beginning. And then as they knew it was a fraud -- He's

21 got all the indicators of someone that's cloaked with

22 these badges of fraud, that he knew what was going on,

23 because he goes from doing -- and his due diligence was

24 always weak except that one good question that he

25 asked.

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1 But he went from asking to all of a sudden

2 funding more and more and more, bigger and more frequent

3 deals, and his due diligence is going the other way.

4 Whereas, the Von Allmens, the Coquinas --

5 Q But I --

6 A Let me finish.

7 Q Finish, but I need for get my questions asked.

8 A The Von Allmens, and Coquinas, the more money -

9 the AJ Clockwork people - the more deals, the bigger

10 deals they funded, the more due diligence they did, not

11 the less.

12 Q I want to address this point of due diligence.

13 Are you aware that Richard Pearson was not expected by

14 any of his investors to do due diligence for them, and,

15 in fact, they hired companies to do due diligence, the

16 investors that he brought in, Merrill Lynch?

17 A I don't know if I knew that one way or the

18 other.

19 Q Are you aware of a single investor that came in

20 through what you are referring to as the Boden/Pearson

21 sub-Ponzi that relied upon or expected Richard Pearson

22 to do any due diligence for them as you sit here today?

23 A I don't know one way the other.

24 Q Same question, same investors, are you aware of

25 any not having their own professional lawyers and

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1 accountants to do the due diligence?

2 A I'm not aware of it. And here's the problem

3 with that. All these people you're saying were supposed

4 to do the due diligence, no one did anything.

5 Q Again, that may be the case.

6 A Well, if Pearson --

7 Q I want an answer.

8 A Isn't he going to ask these people, okay, I

9 hired you -- you're saying they hired Merrill Lynch to

10 do due diligence. Okay, Merrill Lynch, what did you

11 find? Nothing, we didn't do anything.

12 Q Scott, in fairness, I'm asking you, Did you

13 understand that the investors that came in through

14 Pearson weren't looking to him to do due diligence?

15 And now you're asking me a question back as to

16 whether he rode over and oversaw the due diligence

17 team.

18 Can you identify a single investor that relied

19 upon Richard Pearson to do due diligence?


21 THE WITNESS: I don't know one way or the

22 other.

23 BY MR. FERGUSON:

24 Q Do you know of a single investor that was not

25 told by Pearson and/or Boden that they would be getting

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1 fees out of this deal?

2 MR. LICHTMAN: Objection, foundation.

3 THE WITNESS: I have to look at the e-mail

4 traffic. I don't recall one way or the other.

5 But, you know what, you can't really make the

6 argument you're making because --

7 BY MR. FERGUSON:

8 Q Well, Scott, I'm not --

9 A Richard --

10 Q No, no. Scott --

11 A Hold on a minute. I want to answer the due

12 diligence question.

13 Richard did do - attempt to do, through David

14 early on, partial due diligence because he was

15 forwarding these questions to David.

16 Q Before he brought investors?

17 A Before, during, after, I don't know.

18 Q But, before he brought investors you were lying

19 to him. You already said in the beginning you lied to

20 him?

21 A Absolutely.

22 Q And David lied to him?

23 A I assume he did, yes.

24 Q So he's asking questions before he brings

25 investors in, and he's being lied to. So at least at

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1 that point in time he's certainly not a co-conspirator.

2 He might be doing an inadequate job of asking questions,

3 but he's not a co-conspirator?

4 A At that point in time, no.

5 Q When did he cross the line?

6 A I don't remember the exact time. It was around

7 the time that David started doing all the deals himself

8 with Deb without my involvement.

9 Q A month or two months into it?

10 A I don't recall. We have to sit and look at all

11 this paperwork to determine exactly.

12 Q And David made a substantial amount of money

13 off the investors that came in through what you're

14 calling the Boden/Pearson sub-Ponzi, correct?

15 A Yes. But not as much as Mr. Pearson.

16 Q But he had a strong financial incentive to make

17 sure that the Pearson deal flow continued?

18 A Yes, but not as much as Mr. Pearson did.

19 Q And you testified that that wing of the Ponzi

20 was sort of up and running without much of your

21 oversight; is that correct?

22 A That is correct.

23 Q In fairness, though, isn't that just a

24 circumstance because you're now focused on the big funds

25 due to the April '09 almost catastrophic implosion and

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1 your attention is diverted elsewhere?


3 THE WITNESS: It was a function of that

4 combined with the fact that they were totally

5 capable of running their portion of the scheme by

6 themselves. It was the first time that it ever

7 happened. They were actually doing the entire

8 thing all by themselves with very little input from

9 me.

10 BY MR. FERGUSON:

11 Q But that has nothing to do with Richard

12 Pearson. It's not like Richard Pearson told you, Go

13 focus on these large hedge finds and David and I are

14 going to run our own operation. You never had that

15 discussion.


17 THE WITNESS: No, I did not.

18 BY MR. FERGUSON:

19 Q In fact, when you first met with Pearson you

20 told him part of the lie. You told him that you were

21 dissatisfied with Banyon and that you were looking for a

22 new reliable funding source and hoped he could fill

23 those shoes?

24 A I think I said I was dissatisfied with the New

25 York hedge funds.

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1 Q Okay. Sorry.

2 A That's okay.

3 Q I did see an e-mail, and you're right, that's

4 what it said. You were welcoming him as your hopeful

5 new reliable source of funds.

6 A Yes.

7 Q The PPM that you showed him from Banyon, that

8 was version 3 with edits from Preve, you testified that

9 they were going to do their own PPM, Pearson and Boden.

10 Did they?

11 A Ultimately I don't recall seeing a final

12 product, so I don't know whether they did or not. They

13 did do some kind of confidential settlement funding

14 packet that I saw.

15 Q When you say "they," you can't testify with any

16 accuracy what percentage of effort between Boden and

17 Pearson was dedicated to that packet, could you?

18 A No. But I did see it for the first time in

19 Mr. Pearson's office.

20 Q But for all you know it was completely

21 generated by Boden?

22 A Could have been completely generated by

23 anybody.

24 Q But most likely Boden at least had a hand in

25 it; is that correct?

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1 A That's my best guess.

2 (Whereupon, Pearson's Exhibit No. 17 was marked


4 BY MR. FERGUSON:

5 Q I'm going to ask you to take a look at one more

6 e-mail. This will be 17. I apologize. It's been

7 highlighted by someone long before I got hold of it.

8 And it's a little difficult to read, but I think if

9 you'll bear with me we can get what I need out of the

10 document.

11 A Okay.

12 Q Whenever you're ready, Scott.

13 A I'm ready.

14 Q This is a pretty short one page e-mail chain.

15 Have you seen this chain before?

16 A I have.

17 Q At the bottom of the document there's an e-mail

18 from you. And, again, I know it's hard to read, but

19 I'll try to drawn your attention to what I'm talking

20 about. It's an e-mail from you to Richard on August 1,

21 2009.

22 So he's been involved -- April he starts to

23 negotiate with you about being a new reliable funding

24 source, correct? By May there's deal flow from him,

25 correct?

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1 A Yes.

2 Q So April, May, June, July, August. He's five

3 months in and we're getting towards the end of the

4 operation; is that fair to say?

5 A Yes.

6 Q And that bottom e-mail says, We need to try to

7 fund 10 million deals this coming week to avoid losing

8 plaintiffs.

9 A Yes.

10 Q If Richard Pearson is your co-conspirator and

11 he knows there's no plaintiffs, why bother to say that?

12 A Okay. Maybe you missed it when you were

13 reading all those transcripts. But that is exactly the

14 Ponzi-speak that once someone was involved that I used

15 with everybody. People who, you sitting here today,

16 clearly know were involved like a Mike Szafranski, a

17 Frank Preve, a David Boden who you're clearly saying was

18 involved and snowed your client, they all got similar

19 e-mails.

20 Q Let me just interrupt to be clear.

21 A They all got similar e-mails.

22 Q Scott, I'm not saying that David Boden knew. I

23 don't know if he knew. I'm just here to find out what

24 you know. That may be the case. It may not be the

25 case. I want it clear I'm not testifying. And I really

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1 am not the one to ask. I've got my own views of

2 everything. But I'm an advocate here. So I just want

3 the record clear that I'm not saying that.

4 A Okay. Regardless, this is nothing more than

5 Ponzi speak. The record is full of e-mails to people

6 who are clearly part of the fraud, clearly

7 co-conspirators, where I used very similar language.

8 This is not exculpatory in any fashion.

9 Q Let's go back up to the middle. There's a

10 highlight section here. And it's from Richard to you.

11 I'm sorry. Again, from you to Richard, same day about

12 40 minutes later. "Just spoke Debra. She will have

13 most of the clients signed up over the weekend."

14 A Yes.

15 Q Why waste precious time this late in the game

16 telling him anything of that nature other than to

17 comfort him and make him believe, because you were lying

18 to him; isn't this still you lying to him?


20 THE WITNESS: No, not at this point in time.

21 This is just more of the same nonsense that we were

22 doing back and forth with all the people that were

23 involved. It never changed.

24 Just because Preve liked to send me e-mails

25 that were inculpatory for him, didn't mean that I

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1 was going to join in the fun with anybody.

2 I tried very hard. And the e-mails will bear

3 me out, to keep the same methodology, the same

4 language, the same Ponzi-speak over and over and

5 over again.

6 I don't think I ever wrote an e-mail to anyone

7 where I said, Hey, I need money for my fraud. It's

8 just not the way I would write.

9 BY MR. FERGUSON:

10 Q Well, you're speculating that Pearson knew

11 there were no clients because of what he should have

12 known, fair enough?

13 A I am making an informed decision based upon

14 every single thing that I know about what was going on.

15 Q And I accept that as opposed to that you've got

16 some document or evidence or a conversation where he

17 looked at you and said, Scott, I am aware there's no

18 plaintiffs. I don't care.

19 A I told you he and I never had a discussion

20 where we said, Hey, how's the fraud going? Or he never

21 said to me, Scott, I know this is a fraud.

22 Q But, if you're wrong about what he knew and

23 maybe he should have sat in your lobby and seen the

24 plaintiffs coming or not coming and going, but if you're

25 wrong about that, then as of August 14th he could

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1 reasonably believe that you have clients that are coming

2 in over the weekend to sign based on this e-mail?

3 A And based upon my knowledge of everything that

4 I knew about Pearson at that point in time, as we've

5 already gone over and over, he knew what was going on.

6 I mean, by August of '09 I had a pretty good feel for

7 who knew and who didn't know.

8 Q Let's talk about your mental state in August

9 of '09. I mean, for the life of me, I can't imagine

10 what you were going through. How are you sure your

11 assessments of everyone around you and who was tainted

12 and who wasn't is accurate based upon your predicament?

13 MR. LICHTMAN: Object to form.

14 THE WITNESS: Unfortunately for me because of

15 the way I was functioning at that point in time, if

16 anything, David, my awareness was heightened. I

17 was on a full alert. Okay?

18 Remember, I was trying to pull literally over

19 $100 million out of Mr. Scherer's clients. I was

20 in full on. Don't do business with anyone who's

21 going to detect. Do business with the people that

22 you can fool in

23 pull-as-much-money-out-as-fast-as-you-can mode. I

24 didn't have time to screw around with someone who

25 may or may not have known.

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1 BY MR. FERGUSON:

2 Q You're still screwing around with people who

3 didn't know and people who may or may not have known and

4 people who did know, according to your testimony.

5 A You have to understand this. When I say "screw

6 around," I mean, I couldn't be bothered with the in

7 betweens. There were the people who knew, the people

8 who didn't know.

9 If Pearson was giving me a hard time, if

10 Pearson gave me any indication that he was going to blow

11 this thing up, I would have bailed on the relationship

12 with him.

13 But he was in the know. He was in David's

14 pocket. They were working together. They were lying to

15 investors. They had every indication of carrying on a

16 major fraud on investors.

17 Q How did they lie to investors exactly?


19 THE WITNESS: Understanding that they knew what

20 was going on and they lied about the existence of

21 plaintiffs. They lied about the existence of

22 defendants. They lied about access to bank

23 accounts. They lied about the amounts of the

24 deals. They changed amounts of the deals without

25 contacting any plaintiffs, without even asking for

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1 plaintiffs to be contacted to agree to these

2 things. They lied about money being in the bank

3 that wasn't there.

4 Richard lied about investing money in deals

5 when he didn't really invest money in any deals.

6 BY MR. FERGUSON:

7 Q How would Richard know if money is in the bank

8 or not? Wasn't it Boden that had access to that

9 information?

10 A You're asking me to use my total field of

11 knowledge. Again, I wasn't in there with David. I can

12 only tell you what I know from what I observed. Those

13 are my observations.

14 Q Did Richard have access to the phony TD Bank

15 website that you could pull up from your office on your

16 computer?

17 A Only if David took him into my office or I took

18 him in.

19 Q Could he get in there himself?

20 A No, sir.

21 Q Do you know if he ever did get in there

22 himself?

23 A No, he didn't. I have no knowledge one way or

24 the other, but I can't imagine he would break into my

25 office.

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1 Q Do you have any knowledge that he knew that

2 that was a bogus website with phony balances?

3 A I don't know for certain. No, sir.

4 Q The Spinosa cover letter, Caretsky cover

5 letter, fake bank statement shows that were put on at

6 branches, according to you, do you know if my client

7 knew that was occurring and that they were false?

8 MR. SCHLESINGER: Objection to form.

9 THE WITNESS: I don't know one way or the

10 other.

11 BY MR. FERGUSON:

12 Q You've alleged that Spinosa was an assistant or

13 assisted you knowingly in this; is that correct?

14 A I have.

15 MR. SCHLESINGER: Objection to the form.

16 BY MR. FERGUSON:

17 Q You testified -- sorry.

18 A I have testified that Spinosa was involved in a

19 very specific portion of it to a very specific extent,

20 not that he knew that it was a Ponzi scheme or anything

21 like that. I did not get into that with Mr. Spinosa

22 ever.

23 Q Understood. Just so we're clear, Richard

24 Pearson didn't know anything about what Spinosa was

25 helping you do; he didn't know that that was happening

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1 or that Spinosa was on board?

2 A I never had that conversation with him, no.

3 Q Okay.

4 A What he knew, you're going to have to talk to

5 him and David Boden.

6 MR. FERGUSON: We're going to need to take a

7 two minute break.

8 (Thereupon, a short break was taken.)

9 BY MR. FERGUSON:

10 Q Scott, we saw some e-mails where it looked like

11 a deal that had been touted months prior gets sold a

12 couple months later, two and-a-half months later?

13 A Yes.

14 Q Do you know whether my client noticed that,

15 whether he was aware of that?

16 A I have no way of knowing that one way or the

17 other except to look at e-mail traffic.

18 Q Fair enough. And to be clear, my client wasn't

19 a lawyer, correct, he was a businessman?

20 A He was not a lawyer. No, sir.

21 Q Is it possible that if he did key in on the

22 fact that there's a deal that was touted two and-a-half

23 months ago that's now being sold, that he just thought

24 it hadn't been picked up?

25 A I don't want to guess as to what he may or may

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1 not be have been thinking.

2 Q I'm going to say you probably think it's

3 unlikely. I'm just asking you, is it possible?


5 THE WITNESS: I would be guessing, but it is

6 certainly possible that he didn't look. It doesn't

7 make any sense to me, but it's possible.

8 BY MR. FERGUSON:

9 Q My question is, is it possible that he did

10 notice that that was a deal that had been touted as

11 available two and-a-half months ago, but that it hadn't

12 been picked up, and it's just now being sold for the

13 first time?


15 THE WITNESS: I'd be guessing. My best guess

16 is I suspect it's possible. He was a bright guy.

17 I don't know how he would have missed that, but

18 anything is possible, I suppose.

19 Q You understand that bright guy argument sort of

20 collides with itself when you're dealing with someone

21 involved in this thing, and according to you knowingly

22 involved in it, how bright could someone really be if

23 that's the case?


25 A It does collide with itself.

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1 Q Are you aware of any illegal activity that my

2 client engaged in other than bringing investors to your

3 Ponzi scheme?

4 A Only what he told me.

5 Q What did he tell you?

6 A He told me that he had hidden a substantial

7 amount of money in a UBS account to avoid paying taxes

8 in the United States.

9 Q Did he tell you how much money?

10 A No.

11 Q Take me back to that conversation to the best

12 you can, where did it occur?

13 A The first time it occurred we were in his

14 office.

15 Q Who was there?

16 A Me and David Boden.

17 Q And just an approximate time frame if you can

18 backdating it from October at the end.

19 A I can't. You would have to look at -- there

20 were letters that he had received or something, some

21 indication or messages he had gotten from the lawyer

22 that he had handling the UBS problem with the IRS or the

23 government.

24 Q Do you know who that lawyer was?

25 A I don't recall.

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1 Q What did he tell you about this situation?

2 A What did Pearson tell me?

3 Q Yes, sir.

4 A He wanted to know if there was anything I could

5 do to help him.

6 Q Did he tell you how much money?

7 A I don't recall.


9 Q Did he tell you --

10 A It was in the millions of dollars.

11 Q Did he tell you over what period of time this

12 occurred?

13 A No, he just told me his name popped up on some

14 disclosures that UBS had made to the United States

15 government and that he needed to settle it or risk going

16 to jail.

17 Q What was your response?

18 A I told him to talk to David about it.

19 Q Did he do so?

20 A I don't know one way or the other. David was

21 there during this conversation the first time we talked

22 about it.

23 Q Did the conversation proceed any further at

24 that juncture or did you move onto other topics?

25 A I don't recall one way or the other.

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1 Q You said that from your testimony it appeared

2 that there was more than one time this was brought up.

3 Was there another time?

4 A There was because there were a few times when

5 Richard, to me, when we were having business

6 conversations not regarding this, not regarding the

7 Ponzi scheme, he was trying to get me involved in some

8 other business deals he wanted me to fund, some deal

9 with the Florida Panthers, that he seemed extremely

10 distracted.

11 And I asked him in a concerned way if he was

12 all right. And he kept telling me, no, he was under

13 tremendous pressure on this UBS thing, he was very

14 concerned about it, and that's the extent of the

15 conversations we had.

16 Q Where was that, that conversation?

17 A One of the conversations occurred in Bova. One

18 of the conversations occurred in my car, we were driving

19 out to the Bank Atlantic Center to go meet with, I

20 forget the guy's name, he was one of the major players

21 in the Florida Panthers.

22 Q Now, this is a time when you need millions of

23 dollars and you have a money source client telling you

24 that he has millions of dollars offshore in a UBS

25 account, did you make a play for that money?

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1 A I had been trying to get him -- not that

2 specific money, no. I had been trying to get Richard to

3 invest from the very beginning.

4 Q But you didn't seize upon this conversation

5 where he revealed multimillions of dollars offshore as

6 an opportunity to try to convince him to maybe move it

7 to you?

8 A No.

9 Q Why not?

10 A That time he and I had this conversation it was

11 clear to me he was only going to use other people's

12 money.

13 Q Other than the conversation with you and Boden

14 present, was there any other time that it was discussed

15 in the presence of others, others being in addition to

16 you or Boden?

17 A I don't recall who else we spoke about it in

18 front of, we may have spoke to Carl Linder, Denis

19 Kleinfeld about it because they were familiar with

20 offshore issues.

21 Q Do you know if you did speak to either one of

22 them about this offshore issue?

23 A I recall speaking to one or both of them. I

24 don't remember whether Pearson was there during the

25 conversation or not.

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1 Q What was discussed with them if you recall?

2 A I wanted to know if they had any familiarity

3 with the UBS issue. That I had a client friend who had

4 an issue with money in one of the offshore accounts that

5 the government was saying that he needed to pay taxes

6 on.

7 Q What was their response?

8 A I don't recall one way or the other.

9 Q Did anyone from your firm endeavor to help him

10 with this problem that he reported to you?

11 A You have to check, the best thing to do would

12 be to check the e-mail traffic of Carl Linder and Denis

13 Kleinfeld, because that's who I would have referred him

14 to. I seem to have a recollection of him meeting with

15 them to discuss the issue.

16 Q Was that after you directed them to -- you

17 directed him to them and you believe they might have

18 met, did you have any other conversations with Pearson

19 about it?

20 A Just give me one second.

21 Q Of course.

22 A Not that I recall.

23 Q Any other illegal activity that my client

24 engaged in that you're aware of, putting aside the Ponzi

25 scheme, putting aside the purported UBS problem that he

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1 related to you, anything else?

2 A Well, this is additional illegal activity but

3 it's kind of tied to the Ponzi scheme, do you want it?

4 Q Yes, sir.

5 A At one point in time there was actually an

6 additional time that I had to, for lack of a better

7 term, yell at him about what he was telling people. He

8 had told one of the investors who then sought to confirm

9 through Mr. Boden and I that he had $11 million invested

10 with us. I can't remember who the hell he told it to

11 but I went through the roof because they wanted me to

12 confirm it. I was like, What are you doing, why are you

13 telling people these things when you don't need to go

14 that far to sell the product?

15 Okay. He just said, It came out when I was

16 talking to them, you know, I told them I had money in,

17 they wanted to make sure I had skin in the game.

18 I told him, You should really knock it off

19 because this thing is going to explode if he keeps

20 making promises and telling people things that are

21 impossible for us to establish. We have to start

22 creating more fake documents, it's not a smart idea when

23 we were in the middle of a fraud to keep adding to the

24 fraud. I was creating enough problems for all of us.

25 Q Do you have any idea which investor that was

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1 that he would have made that representation to?

2 A You can figure it out, yeah, there's e-mail

3 traffic detailing him telling them.

4 Q Your recollection is it was one investor, not

5 more?

6 A Could have been more. Let me tell you there

7 are clear e-mails between Pearson, Boden, investors and

8 from investor to investor, clearly establishing that

9 Pearson told an investor he had 11 million invested in

10 these deals. There are e-mails establishing also both

11 of the other things. There are e-mails between

12 investors where they're talking about the fact that

13 Pearson had said this entire thing has been fully

14 audited, and there are audited financials, it's been

15 audited by a Big Four. That's clearly back and forth

16 between investors about what Pearson told them and also

17 that he had access to the banking.

18 So, there are e-mails clearly establishing all

19 of those what I'll call badges of fraud.

20 Q The access to the banking though, as far as he

21 knew, Boden did have access to the banking through your

22 office?

23 A To the best of my knowledge, that's what he

24 knew, I'm just telling you what he told investors.

25 Q Fair enough. At the time that he made the

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1 statement that he had 11 million in the deal, do you

2 know how much money, investors he had brought to the

3 deal, had put in to the Ponzi scheme?

4 A I have no idea but the e-mail made clear he

5 wasn't talking about other investors' money. He said he

6 had 11 million in the game.

7 Q Do you know if Mr. Pearson had to personally

8 guarantee one of these deals, perhaps the first one?

9 A I don't recall.

10 Q Are you the infamous Goodfella poster from Bob

11 Norman's blog? Did you ever make a post under that name

12 after you returned from Morocco?

13 Let me back up. I think I need to rephrase the

14 question based upon the face you just made at me. You

15 are aware of Bob Norman, correct?

16 A Yes.

17 Q I won't go into the history and all of that, I

18 don't have time.

19 A I don't mind.

20 Q I know you don't, I just can't use my time that

21 way.

22 Did you ever post in there under a pseudonym in

23 the form topics comments section to any of his pieces?

24 MR. LaVECCHIO: One moment.

25 MR. FERGUSON: Certainly.

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1 MR. LaVECCHIO: I'm interposing an objection.

2 Privilege.

3 Q Fair enough.

4 Did you ever make any posts in Bob Norman's

5 blog about Richard Pearson and David Boden? I don't

6 want to know about anybody else in the context of any

7 posts you made after coming back from Morocco.

8 A I don't have a recollection one way or the

9 other.

10 Q Were you angry at David Boden when you left for

11 Morocco?

12 A No, sir.

13 Q Were you angry at Richard Pearson?

14 A I'm still not angry with him today.

15 Q Did Richard Pearson ever cross you or scam you

16 in any way?

17 A To my knowledge?

18 Q Yes, sir.

19 A No.

20 Q I know you were asked before about an

21 encounter, you were having lunch with Pearson, I believe

22 it was Tuesday, I'm sorry, with Spinosa at Bova, that

23 would have been the day you left, did you in fact have

24 lunch with Spinosa at Bova the day you left for

25 Morocco?

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1 A I believe I did, yes.

2 Q When you were having lunch with him had you

3 already planned to leave the country?

4 A Yes.

5 Q What was the purpose of your lunch with Spinosa

6 that day if you recall?

7 A I don't recall.

8 Q Could you describe your condition during that

9 lunch?


11 Q Your mental condition?

12 A Frazzled probably.

13 Q Do you remember what you talked about with

14 Spinosa?

15 A Not a clue.

16 Q Did you in any way let him know that directly

17 or indirectly that you were leaving the country?

18 A I may have told him I was traveling but I

19 certainly didn't him I was fleeing the country.

20 Q Do you recall Richard Pearson walking up to you

21 during that lunch?

22 A I have a vague recollection of it.

23 Q Did he confront you about anything to your

24 recollection?

25 A You know, there are stories saying that he did,

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1 I just don't have a recollection of him confronting me.

2 It wasn't Pearson's way especially in front of someone

3 else for him to do that. And there's e-mail traffic in

4 an e-mail, actually the e-mail you showed me that's

5 actually referring to him meeting him.

6 And it just says, You introduced me to Frank

7 yesterday. That's the October - that's Exhibit 16,

8 October 28th, Wednesday. It says: Also you introduced

9 me to Frank yesterday and I'd like the opportunity once

10 we've set up the locked accounts to visit a branch with

11 him and confirm balances.

12 It certainly doesn't sound like a follow-up

13 e-mail after having confronted me because I have to tell

14 you, I don't have a recollection one way or the other.

15 Q But when you walked away from that lunch where

16 he references that he was introduced to Spinosa, Spinosa

17 didn't know you were fleeing the country, he just

18 thought you were traveling?

19 A I don't even know if he knew I was traveling.

20 Q And there's no way Richard would have known

21 that you had left the country when he sent that e-mail?

22 A I don't know what he knew when he sent the

23 e-mail.

24 Q Do you have any knowledge that my client was

25 aware that you were out of the country in Morocco when

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1 he sent that e-mail to you?

2 A I do not know one way or the other. Best thing

3 to do is to check the e-mail traffic between Boden and

4 him.

5 Q When was the last time you saw Richard

6 Pearson?

7 A It would have had to have been that day in Bova

8 when I was eating lunch with Mr. Spinosa.

9 Q You have mentioned that Boden and Pearson

10 changed deal documents. I know we've talked about the

11 client fee letter. Other than that, what other

12 documents were changed? And you talked about some

13 terms, but I'm talking now about the specific documents,

14 what other documents were changed or different for

15 Pearson and Boden as opposed to the others?

16 A It was just terms in the documents.

17 Q Give me a second.

18 Do you have an understanding of the total

19 amount of money that Pearson's investors, I'll say

20 Pearson and Boden, that the investors that you put under

21 that umbrella, what the total number was?

22 A I don't have a recollection.

23 Q Give me one second.

24 A Sure.

25 Q What's the first date in your mind that you

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1 crossed over into criminality? And if it's not the

2 Ponzi scheme - I remember reading your testimony about

3 you went to law school, never had trouble with law

4 enforcement before this?

5 A That's correct.

6 Q And I've read your testimony about how it

7 began. Is this the first time you were engaged in

8 criminal conduct or was there any criminal conduct as a

9 lawyer prior to the Ponzi scheme starting?

10 A I think that if you go back and examine all my

11 relationships that there were various things at law

12 firms that I worked for, Philips, Eisinger firm is a

13 great example, where there were elements of criminality

14 exhibited by myself and by my partners. Because you

15 have to include in that any lawyer who takes cash from a

16 client and doesn't declare it, it's a criminal act. We

17 know it goes on but it's a criminal act.

18 Even adjusting a bill to include 10 minutes of

19 time that you didn't really spend, that's a crime.

20 Q And putting it in the mail would be mail fraud;

21 is that right?

22 A From the firm, right.

23 Q Sorry, I had to.

24 A I mean seriously, when you examine your life in

25 a manner, you know I've had a tremendous amount of

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1 introspection over the last two years. And when you

2 examine - to me - the legal profession as a whole, and

3 that's not to cast an aspersion on the legal profession

4 as a whole, it's to cast an aspersion on the fact that

5 there are, unfortunately, in what otherwise really I

6 truly believe is a noble profession, there's just so

7 much room for bad.

8 And so many people, unfortunately, for no

9 reason at all than a little bit of greed do some really

10 bad things.

11 When you look back on the scope of my crime and

12 see how many lawyers and ultimately law enforcement,

13 politicians and members of the judiciary were involved

14 with things, it's mind numbing.

15 So, to the extent did I take cash from a client

16 way back when with other partners and lawyers and not

17 declare it, sure.

18 Q How about anything where you took cash from

19 clients or anything like that? Did that start at RRA

20 with the Ponzi scheme getting underway?

21 A I'd have to sit and go back through other

22 firms, like the Philips Eisinger firm, and see what was

23 going on back then.

24 Q Understood.

25 A I mean you just -- there are so many different

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1 levels of potential fraud that, looking back and

2 introspection, lawyers who are otherwise very, very good

3 and decent people did very stupid things.

4 Q I have to, as an advocate for my client, pry

5 into another area.

6 A Pry anywhere you want. I'm an open book in

7 case you couldn't tell.

8 MR. NURIK: I might have some issues with that

9 but....

10 Q Particularly the last six months, which is most

11 important from my perspective for my job here, you had

12 to have been under an extreme amount of pressure. How

13 were you able to keep all of the balls in the air? I

14 mean you individually, I know you've got people helping

15 you, but how were you able to keep track of all of these

16 threads and these stories? How? Were you overwhelmed?


18 A Of course I was overwhelmed.

19 Q Stressed?

20 A Very.

21 Q Were you sleeping well?

22 A Sometimes, sometimes not. I don't think you

23 ever sleep well when you're engaged in anything of this

24 magnitude.

25 Q Did you have to take drugs during that period

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1 of time?

2 A I drank, I ate Xanax.

3 Q You know where I'm going with this, this is no

4 secret, I'm trying to find out how that might have

5 impacted your assessment of people and events. How

6 often did you drink during the last six months?

7 A Every day.

8 Q How much would you consume in a day?

9 A Depended on the day.

10 Q I know you like martinis, what else were you

11 drinking?

12 A That's my basic drink, vodka.

13 Q The Xanax, how often would you use Xanax?

14 A Xanax was in the mornings. I took a quarter of

15 a milligram every morning. Sometimes I'd take a quarter

16 of a milligram at night to go to sleep. I wasn't -- I

17 couldn't function without taking it in the morning

18 because I had been taking it for so many years. Even at

19 that very low dosage if you don't take it it has a

20 withdrawal effect. It's a very addicting drug. But I

21 never - I never took too many of them. I think taking

22 Xanax at all over a long period of time is addictive so

23 it's not a great idea.

24 Q Any other drugs in addition to Xanax or was

25 that it?

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1 A I smoked pot on occasion on a couple of

2 weekends but I wasn't a big pot smoker, I was a drinker.

3 Q I can't imagine a big pot smoker would be

4 successful at this operation.

5 A You'd actually be amazed how many people at my

6 firm could not function without smoking pot.

7 Q I don't want to be the guy to go into that. I

8 don't want an answer or anymore information. I don't

9 want to go down that path.

10 A Okay.

11 Q So, cocaine --

12 A No.

13 Q -- was that ever used?

14 A In college.

15 Q Understood. I'm going to ask that we take a 10

16 minute break so my partner and I can get everything

17 ready to finish it up.

18 (Thereupon, a short break was taken.)

19 BY MR. FERGUSON:

20 Q Are you ready?

21 A I am, sir.

22 Q I don't have much more. My partner has just a

23 couple questions for you.

24 A Okay.

25 Q My client tells me that any money he did

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1 receive from this would have either been in wire or

2 check, that he was never given cash; is that correct?

3 A That's correct.

4 Q Okay.

5 A Not by me.

6 Q There was also in looking at the e-mail traffic

7 April of '09 before his deal flow starts, it looks like

8 there was some discussion about exclusivity where my

9 client at least thought he was going to have an

10 opportunity to be the exclusive provider of investors.

11 Do you recall that?

12 A I have a vague recollection of doing it.

13 Q I saw that there were two checks paid to him

14 for $110,000 during that time before investor one

15 begins. My client tells me that that was payment for

16 exclusivity. Do you recall that?

17 A That I would pay him for exclusivity?

18 Q At the beginning.

19 A That doesn't make any sense.

20 Q At the beginning that he got a retainer

21 agreement cut into two checks and this was before he had

22 any investors come in.

23 A David, to tell you for certain, I'd need to see

24 the e-mail traffic especially between me and Boden right

25 around that time period because I don't recall that.

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1 MR. FERGUSON: Fair enough. I want to thank

2 you for your time, Scott.

3 CROSS EXAMINATION

4 BY MR. HOUSTON:

5 Q Scott, do you recall during the 2004

6 Examination a colloquy between yourself and Mr. Lichtman

7 concerning your motivation for truthfulness?

8 A Do I recall it in detail, no. I recall the

9 conversation, yes.

10 Q Okay. You recall that he asked you if you had

11 a motivation for being truthful during these

12 proceedings. Do you recall that?

13 A I do.

14 Q Do you recall that you answered that something

15 to the effect that if you expect to get out of prison

16 before you're 85 that you would have to be truthful in

17 all respects?

18 A I said if I don't want to die in prison that I

19 must be truthful.

20 Q And can I take that to mean that you expect if

21 you're truthful that there may be some reduction in your

22 sentence?

23 A As I've testified many times I hope to get a

24 reduction, yes.

25 Q Do you know what Rule 35 is?

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1 A I do, yes, I've testified about it extensively

2 over the last two weeks.

3 Q I have read that testimony but appreciate this

4 is a separate transcript, I'm not using those

5 transcripts so --

6 MR. LICHTMAN: I'd be happy to stipulate if you

7 wish to you can.

8 MR. HOUSTON: I would prefer to ask him myself

9 since it's short.

10 BY MR. HOUSTON:

11 Q What do you understand Rule 35 to be?

12 A It is a motion that can be filed only by the

13 government upon their decision that all of my

14 cooperation constitutes substantial assistance in the

15 investigation or prosecution of criminal cases.

16 Q And is it your further understanding that

17 motion has to be filed within one year after your

18 sentencing?

19 A It's two different things, for my cooperation

20 prior to sentencing a motion needed to be filed between

21 the time that I was sentenced and one year. For all my

22 other cooperation, no.

23 Q Are you in fact aware that the government has

24 filed such a motion with the District Court?

25 A I am.

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1 Q And you've read that motion?

2 A I just read it actually the other day. I'm not

3 sure if I ever got a copy of it before that, I did hear

4 it was filed.

5 Q And it's your understanding that that's the

6 sole vehicle available to you today to achieve a

7 downward departure in your sentence; is that correct?

8 A I don't know if they call it a downward

9 departure but, yes, the sole vehicle as I understand it

10 is a Rule 35 reduction for substantial assistance.

11 Q Perhaps I should have used the word downward

12 adjustment. Are you more comfortable with that?

13 A Yes, a reduction in my sentence.

14 Q I assume you're not looking for an upward

15 increase in your sentence, right, so it has to be

16 downward?

17 A Yes.

18 Q Besides Mr. Nurik, have you had discussions

19 with anybody concerning the extent of your cooperation

20 in order to hopefully achieve a downward adjustment?

21 A Other than chatter with the people that I live

22 with, no.

23 Q And by that you mean people that are

24 incarcerated wherever you're incarcerated from time to

25 time?

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1 A Yes.

2 Q So you've not had that conversation with

3 Mr. Stettin in any respect?

4 A No, sir.

5 Q You've not had that conversation with any of

6 Mr. Stettin's professionals?

7 A No, sir.

8 Q Do you have any belief that if your assistance

9 and testimony during these last 10 days brings in more

10 money to the bankruptcy estate, that counts in

11 connection with your Rule 35 proceeding?

12 A I don't know whether it does or not. I would

13 tell you I've tried to look it up and see, but I do not

14 know whether it does or does not. The way I read Rule

15 35 is it is substantial assistance in an investigation

16 or prosecution of criminal matters.

17 Q And when you say you looked it up, does that

18 mean that you have some, in some fashion you have

19 resources, legal research resources available to you

20 wherever you are?

21 A Yes, as I testified previously I have access to

22 Lexis.

23 Q And so you've undertaken some of that research

24 on your own as opposed to asking your Counsel's advice?

25 MR. NURIK: I'm going to interpose an objection

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1 as to attorney/client privilege.

2 MR. HOUSTON: About whether he's done his own

3 research, you consider to be privileged?

4 MR. NURIK: No, but that's not your question.

5 MR. HOUSTON: I'll repeat it again, Marc.

6 BY MR. HOUSTON:

7 Q And your testimony is that you've done your own

8 legal research as opposed to seeking your Counsel's

9 legal advice?

10 MR. NURIK: I have a problem with that. Why

11 don't you just ask him if he's done his own

12 research, period? I don't have a problem with

13 that.

14 Q Have you done your own research, including any

15 research that may have been given to you by your lawyer?

16 A Including research he gave me?

17 MR. HOUSTON: That's what I tried to avoid,

18 Marc.

19 MR. NURIK: No, if you just ask him if

20 separately he's done his own research.

21 BY MR. HOUSTON:

22 Q Got it.

23 A Is that the question now, have I done my own

24 research?

25 Q Yes, sir.

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1 A Yes.

2 Q Have you come to some conclusions on whether

3 assisting the Trustee and bringing more funds into the

4 estate will count in your Rule 35 proceedings for a

5 downward adjustment?

6 A Yes.

7 Q What is your conclusion?

8 A It will not.

9 Q So, in other words, your honest and truthful -

10 at least in your understanding and your conclusion -

11 your honest and truthful testimony during these last 10

12 days of these proceedings will not benefit you by

13 achieving a downward adjustment in your sentence?

14 A It will benefit me, but I have no expectation

15 that it is going to assist me in the downward

16 departure.

17 Q So what's the benefit?

18 A I made a promise when I came back that I would

19 make sure the investors got back as much of their money

20 as possible. I want to see them all made whole, the

21 innocent investors. That's the benefit to me.

22 Q So the promise you're talking about that you

23 made was the promise that was widely publicized in the

24 blogs and the papers when you turned from Morocco?

25 A Well, I made the promise to myself and to my

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1 wife when I got back. And I verbalized the promise I

2 believe on TV when I first got back.

3 Q Okay. So then your testimony is, or your

4 understanding is that your truthfulness is being true to

5 that promise as opposed to thinking this truthful

6 assistance will contribute towards your downward

7 adjustment of your sentence; is that correct?

8 A No. Let me see if I can help you with this.

9 Q Please do.

10 A Because it's all scrambled up.

11 Q Yes.

12 A I made a conscious decision upon my final

13 decision to step back on that plane and come back here

14 and turn myself in, that I was never going to lie

15 again. I have destroyed everything that I hold near and

16 dear. I'm not talking about material things, I'm

17 talking about my family, my children, close friends, I

18 destroyed them. Good people. I destroyed lawyers in my

19 law firm, beautiful people who did not deserve the hell

20 that I brought down on them. And I just won't lie, I

21 just won't, not for any purpose, not for anyone.

22 Q So, is it your belief that the testimony you've

23 given the last 10 days has helped those people that you

24 caused such pain and misery to?

25 A No, I don't think it's helping them at all. I

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1 think just the fact that I am a better person helps

2 them.

3 Q Well, but you said that you're not going to lie

4 anymore because you hurt so many people and you don't

5 want to hurt people by lying again. Is that what you

6 said?

7 A I tried to explain my mind-set to you as to how

8 I'm functioning now as a human being as opposed to the

9 less than likeable person I was before I came back. And

10 I made a decision that I would not lie. Additionally,

11 if I lie here, regardless of whether this goes to my

12 Rule 35 or not, I am certain the government will not

13 give me a Rule 35. I have no motivation to lie at all.

14 None.

15 Q During the course of the Ponzi scheme did you

16 lie to investors?

17 A Oh, yes, make no mistake about it. You have

18 night and day. During the course of that Ponzi scheme I

19 lied to everyone including family.

20 Q Did you lie to bankers?

21 A I did.

22 Q Did you lie to your law partners?

23 A I did.

24 Q Did you lie to associates in your law firm?

25 A I did.

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1 Q Did you lie to your wife?

2 A I did.

3 Q Did you lie to your daughter?

4 A I did.

5 Q Your daughter's mother?

6 A I did.

7 Q Your parents?

8 A I did.

9 Q Judges?

10 A I did.

11 Q Police authorities?

12 A Some, yes.

13 Q And when I say lie I mean omissions to tell

14 them that you were conducting a fraudulent scheme would

15 be included as well, same answer?

16 A Yes. I, understanding that there were a lot of

17 co-conspirators in all of those facets, I lied to a lot

18 of very good, decent, innocent people.

19 Q And did you also lie during the course of your

20 early legal career as you discussed with Mr. Ferguson to

21 clients and others that were involved?

22 A I'm sure I did.

23 Q And it is your understanding that if you lie

24 concerning civil matters that gets held against you in

25 your Rule 35 proceedings?

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1 A I'm under oath.

2 Q Understood.

3 A Yes. I think it would be held against me at

4 every level. It would destroy my credibility. It would

5 destroy my credibility if I'm going to testify in

6 criminal cases.

7 Q So then is your testimony that your motivation

8 for not lying is it will affect your credibility in the

9 criminal cases which will credit against your Rule 35

10 proceeding?

11 A My motivation for not wanting to ever lie again

12 is a decision I made for myself, coupled with the fact

13 that if I lie during the course of any of these

14 proceedings, under oath or not, I will die in prison.

15 Q Now, isn't it more accurate to say that if

16 you're caught lying or proven to be lying during this

17 testimony that you will die in prison?

18 A No.

19 Q In other words, let's take an example

20 hypothetically where you say you had a conversation with

21 one person and you told them something and the only two

22 witnesses to that conversation are you and them. It's

23 unlikely you're going to get caught in that lie, is that

24 a fair enough statement?

25 A I haven't lied so I'm not going to get caught

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1 because there's no lie.


3 MR. SCHERER: Object.

4 Q Well, I'm asking hypothetically right now not

5 factually, so denying that you lied is not appropriate.


7 A I don't even understand the question.

8 Q You don't understand the question if you --

9 A I don't understand what you're trying to get

10 at.

11 MR. LICHTMAN: I don't understand the question.

12 Q I do. Scott, let me ask it a different way so

13 that you can understand.

14 A Sure.

15 Q Hypothetically, if you were to lie about a

16 conversation that you had with one other person or a

17 transaction with one other person, who is going to be

18 able to verify that you're lying?

19 A I have no idea.

20 MR. HOUSTON: Okay. I have nothing further.

21 Thanks.

22 MR. LICHTMAN: I have no further questions.

23 Before the transcript closes I would like to thank

24 the two Court Reporters who have worked very, very

25 diligently for the last two weeks, happy holidays

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1 to you.

2 COURT REPORTER: Thank you.

3 MR. LICHTMAN: Thank you to Mr. LaVecchio and

4 the U.S. Attorney's Office who made sure that we

5 can now spend Christmas with our families, because

6 then we did not have to stay in a flea bag hotel,

7 God knows where.

8 And to especially the marshals who have been

9 extremely accommodating the last two weeks, thank

10 you.

11 To all of you happy holidays. I think we're

12 done.

13 (Thereupon, the deposition was concluded at

14 12:45 p.m.)

15

16

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1 C E R T I F I C A T E

2

3 STATE OF FLORIDA )

4 COUNTY OF BROWARD )

5

6 I hereby certify that I have read the foregoing

7 deposition by me given, and that the statements

8 contained herein are true and correct to the best of my

9 knowledge and belief, with the exception of any

10 corrections or notations made on the errata sheet, if

11 one was executed.

12 Dated this ____ day of ____________ , 2011.

13

14

15 _________________________________ SCOTT W. ROTHSTEIN

16

17

18

19

20

21

22

23

24

25

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1 E R R A T A S H E E T

2 IN RE: HERBERT STETTIN -V- RICHARD L. PEARSON, ETC.

3 DEPOSITION OF: SCOTT W. ROTHSTEIN

4 TAKEN: December 23, 2011

5 DO NOT WRITE ON TRANSCRIPT - ENTER CHANGES HERE

6 PAGE # LINE # CHANGE REASON _____________________________________________________

7 __________________________________________________________________________________________________________

8 __________________________________________________________________________________________________________

9 __________________________________________________________________________________________________________

10 __________________________________________________________________________________________________________

11 __________________________________________________________________________________________________________

12 __________________________________________________________________________________________________________

13 __________________________________________________________________________________________________________

14 __________________________________________________________________________________________________________

15 __________________________________________________________________________________________________________

16 __________________________________________________________________________________________________________

17 __________________________________________________________________________________________________________

18 __________________________________________________________________________________________________________

19 __________________________________________________________________________________________________________

20 _____________________________________________________Please forward the original signed errata sheet to this

21 office so that copies may be distributed to all parties.

22 Under penalty of perjury, I declare that I have read my deposition and that it is true and correct subject to

23 any changes in form or substance entered here.

24 DATE:_______SIGNATURE OF DEPONENT____________________

25

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3

4

5 I, the undersigned authority, certify that the

6 Aforementioned witness personally appeared before me and

7 was duly sworn.

8

9 WITNESS my hand and official seal this 2e day

10 of December, 2011.

11

12

13

14 _________________________________ Terri L. Wright

15 Notary Public - State of Florida Commission No: DD 963327

16 Expiration Date: April 30, 2014

17

18

19

20

21

22

23

24

25

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1 C E R T I F I C A T E

2



5 I, Terri L. Wright, Notary Public in and for the State of Florida at Large, do hereby certify that

6 the aforementioned witness was by me first duly sworn to testify the whole truth; that I was authorized to and

7 did report said deposition in stenotype; and that the foregoing pages are a true and correct transcription of

8 my shorthand notes of said deposition.

9 I further certify that the said deposition was taken at the time and place hereinabove set forth and

10 that the taking of said deposition was commenced and completed as hereinabove set out.

11 I further certify that I am not attorney or

12 counsel of any of the parties, nor am I a relative or employee of any attorney or counsel of any party

13 connected with this action, nor am I interested in the action.

14 The foregoing certification of this transcript

15 does not apply to any reproduction of the same by any means unless under the direct control and/or direction

16 of the certifying reporter.

17 IN WITNESS WHEREOF, I have hereunto set my hand this 23 day of December, 2011.

18

19 ________________________________

20 Terri L. Wright Notary Public - State of Florida

21 Commission No: DD 963327 Expiration Date: April 30, 2014

22

23

24

25

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1 UNITED REPORTING, INC. 1218 East 3rd Avenue

2 Fort Lauderdale, Florida 33316 (954) 525-2221

3

4 MARC S. NURIK, ESQUIREOne East Broward Boulevard, #700

5 Fort Lauderdale, FL 33301

6SCOTT W. ROTHSTEIN

7

8 RE: HERBERT STETTIN -V- RICHARD L. PEARSON

9Dear Mr. Rothstein:

10 Please take notice that on December 23, 2011,

11 you gave your deposition in the above-referred matter. At that time, you did not waive your signature. It is

12 now necessary that you sign your deposition.

13 If you do not read and sign the deposition within thirty (30) days, the original which has already been

14 forwarded to the ordering attorney, may be filed with the Clerk of the Court. If you wish to waive your

15 signature, sign your name in the blank at the bottom of this letter and return it to us.

16 Very truly yours,

17 United Reporting, Inc.

18 TERRI L. WRIGHT

19 Court Reporter - Notary Public

20 I do hereby waive my signature.

21________________________________

22 SCOTT W. ROTHSTEIN

23

24

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198:19,22 199:19copies 160:25

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reading 131:22170:13 191:2

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real 115:8,9,10,11124:5 127:18,19128:23 134:15142:18 147:12148:3 157:20,21162:1,18,19

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reason 128:7 143:7192:9 210:6

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145:9900k 113:22 115:14910 134:20910k 115:13,14954 107:25 213:2963327 211:15

212:2199 107:19

2011-12-23 rothstein scott pm

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