Deposition of Scott Rothstein re - Trustee Services

1 UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF FLORIDA
2 FORT LAUDERDALE DIVISION
3
CASE NO. 09-34791-RBR
4 Adv. Pro No. 10-3776-BKC-RBR-A
5
IN RE:
6
ROTHSTEIN ROSENFELDT ADLER, P.A.,
7
Debtor.
8 ___________________________________/
HERBERT STETTIN, Chapter 11 Trustee,
9
Plaintiff,
10 v.
11 DOMENICK TONACCHIO, JOSEPHINE
TONACCHIO, BARRY LIPSITZ, HARRIET
12 LIPSITZ, TONA DEVELOPMENT AND
CONSTRUCTION, L.L.C., AND T & L
13 INVESTORS CORP.,
14 Defendants.
/
15
16
500 East Broward Boulevard,
17 Ft. Lauderdale, Florida
Monday, June 11, 2012
18 9:08 a.m. - 2:58 p.m.
19
20 D E P O S I T I O N
21 Of
22 SCOTT ROTHSTEIN
(Via Video Conference)
23
Taken on behalf of the Trustee
24 pursuant to a notice of taking deposition
25 - - -
Page 1

1 APPEARANCES:
2 BERGER, SINGERMAN, P.A., by
David Gay, Esq.
3 and
Charles Lichtman, Esq.
4 Attorneys for Trustee.
5
U.S. ATTORNEY'S OFFICE, by
6 Laurence LaVecchio, Esq.
and
7 Jeffrey Kaplan, Esq.
Attorneys for the Department of Justice.
8
9 MARC NURIK, P.A., by
Marc Nurik, Esq.
10 Attorney for Scott Rothstein.
(Appearing via Video Conference.)
11
12 PHILLIPS CANTOR & SHALEK, P.A., by
Gary Phillips, Esq.
13 and
Laura Varela, Esq.
14 Attorneys for Barry and Harriet Lipsitz.
15
MOSKOWITZ, MANDELL,
16 SALIM & SIMOWITZ, P.A., by
William Salim, Esq.
17 Attorney for Domenick and
Josephine Tonacchio.
18
19 ZANE AND RUDOFSKY, by
Edward Rudofsky, Esq.
20 Attorney for T & L Investors.
21
AKERMAN SENTERFITT, by
22 Michael Goldberg, Esq.
Attorney for Official Committee of Unsecured
23 Creditors.
24
25
Page 2

1 ALSO PRESENT:
2 Domenick Tonacchio
Barry Lipsitz
3 Special Agent Taryn Guariglia
(Appearing via video conference.)
4
5
I N D E X
6
7 WITNESS DIRECT CROSS REDIRECT RECROSS
8 SCOTT ROTHSTEIN
9 (By Mr. Gay) 4
(By Mr. Salim) 108
10 (By Mr. Phillips) 157
11
EXHIBITS
12
DEFENDANT'S
FOR IDENTIFICATION
13
14 1 132
2 133
15 5 133
6 134
16 7 136
8 140
17 9 142
10 143
18 11 143
12 145
19
20
21
22
23
24
25
Page 3

1 Thereupon:
Page 4
2 SCOTT ROTHSTEIN
3 was called as a witness and, having been duly sworn,
4 was examined and testified as follows:
5 THE WITNESS: I do.
6 MR. GAY: Can we just get appearances on the
7 record?
8 Scott, good morning again. We've met a few
9 times, at least over the wire here. I'm David Gay
10 with Berger Singerman representing Herbert Stettin,
11 Chapter 11 Trustee of RRA.
12 MR. LICHTMAN: You know me by now.
13 THE WITNESS: Good morning.
14 MR. SALIM: Bill Salim, Moskowitz, Mandell,
15 Salim & Simowitz on behalf of Domenick Tonacchio,
16 Josephine Tonacchio, T & L, and Tona.
17 MR. RUDOFSKY: Ed Rudofsky --
18 THE WITNESS: Good morning.
19 MR. RUDOFSKY: Good morning.
20 Ed Rudofsky, co-counsel for T & L.
21 MR. PHILLIPS: Gary Phillips on behalf of
22 Barry Lipsitz and Harriet Lipsitz.
23 MS. VARELA: Laura Varela on behalf of
24 Barry Lipsitz and Harriet Lipsitz.
25 MR. TONACCHIO: Domenick Tonacchio.

1 MR. LIPSITZ: Barry Lipsitz.
Page 5
2 MR. LAVECCHIO: And Laurence LaVecchio on
3 behalf of the government.
4 MR. GAY: And for the record, Chuck
5 Lichtman with Berger Singerman.
6 DIRECT EXAMINATION
7 BY MR. GAY:
8 Q. Mr. Rothstein, I know you are familiar with
9 the procedure for deposition so I'll dispense with all
10 the introductory type comments and just get straight
11 to a few substantive questions.
12 Do you know Domenick Tonacchio?
13 A. I do.
14 Q. And what about Barry Lipsitz?
15 A. I do.
16 Q. If you could just tell me a little bit about
17 how you came to know both of those gentlemen.
18 A. To the best of my recollection, I met them
19 through Ron Picou. I actually met Barry first and
20 then I met Domenick through Barry.
21 Q. Do you remember when you met Mr. Lipsitz?
22 A. I do not.
23 Q. Approximate year?
24 A. I do not.
25 Q. If I were to tell you that Mr. Lipsitz, to

1 the best of his recollection, surmised that you
Page 6
2 probably met in 2006. Does that sound plausible to
3 you?
4 A. It's plausible, but specifically I'd be
5 guessing if I told you the date. But that certainly
6 seems realistic to me.
7 Q. And you, based on your recollection, believe
8 that Mr. -- a gentleman, Ron Picou, introduced you to
9 Mr. Lipsitz?
10 A. Yes.
11 Q. Do you remember how that introduction took
12 place?
13 A. I do not, sir.
14 Q. Do you remember if you met, for instance, in
15 a professional capacity, for instance maybe at your
16 law firm or more of a social setting?
17 A. To the best of my recollection, we met in a
18 social setting. Ron was part of a group of friends of
19 mine and it was not unusual for additional people to
20 be brought into the group by various people.
21 Eventually I came to know Barry and Domenick and
22 became friends with them.
23 Q. Okay. Regarding Mr. Picou, had you been
24 friends with him for some time before you met
25 Mr. Lipsitz?

1 A. That's correct.
Page 7
2 Q. Maybe you can just tell me a little bit of
3 background, what your relationship with Mr. Picou
4 involved.
5 A. Mr. Picou and I had been friends for well
6 over 10 years and I was also his general counsel.
7 Q. And when you mentioned a circle of friends,
8 who else would that involve other than Mr. Picou?
9 A. Ed Morse, John Bria, Crocket Heard, Jack
10 Hardy, Marty Hines, Barry and Domenick eventually.
11 There are others. That's all I recall at this moment,
12 there may be more.
13 Q. In this group, did you typically socialize
14 together as a group?
15 A. Frequently, yes.
16 Q. And where did you do that?
17 A. Various places.
18 (Thereupon, Mr. Goldberg entered the room.)
19 BY MR. GAY:
20 Q. Restaurants, bars, clubs?
21 A. All of the above.
22 Q. Sounds like, based on what you just said,
23 that eventually Mr. Tonacchio and Mr. Lipsitz became
24 part of that circle of friends; is that correct?
25 A. Yes, sir.

1 Q. Could you expound on that a little bit.
Page 8
2 Tell me how that occurred.
3 A. They are both good guys. They eventually
4 became part of our group. They started socializing
5 with us. They went to dinner with us, went out to
6 clubs with us. It got to the point where when I would
7 go to New York, I'd see them; when they were down
8 here, they would see me. We became friends, I don't
9 know how else to explain it.
10 Q. Where did Mr. Tonacchio and Mr. Lipsitz
11 live, to your knowledge?
12 A. Mr. Lipsitz lived in Manhattan and
13 Mr. Tonacchio lived in New Jersey.
14 Q. That was during the entire time that you
15 knew them?
16 A. Yes, sir.
17 Q. But you met both of them in South Florida?
18 A. Yes, sir. Both of them eventually came to
19 maintain residences in South Florida.
20 Q. Do you know where those residences were
21 located? I don't mean street address.
22 A. To the best of my recollection --
23 Q. Go ahead.
24 A. I understand.
25 To the best of my recollection, Mr. Lipsitz

1 first had a home just off of A1A up towards the
Page 9
2 Commercial Boulevard area. I don't remember exactly
3 what streets it was between.
4 Mr. Tonacchio had a townhome. I can't
5 remember -- in Lauderdale by the Sea.
6 Q. So, in the time period in which you met
7 Mr. Tonacchio and Mr. Lipsitz, do you know how often
8 they were in South Florida, how much time they spent
9 in South Florida?
10 A. I don't know specifically, no, sir.
11 Q. Well, based on how often you saw them, did
12 you have any idea how much time they spent in South
13 Florida?
14 A. At different points in time they were here
15 more frequently. Sometimes they'd be down for
16 extended periods of time, for a week or two, maybe
17 longer. Sometimes they'd just be down for a weekend,
18 for a couple of days. It varied.
19 Q. Do you understand when they were in South
20 Florida, were they typically here on business or just
21 for pleasure?
22 A. Both.
23 Q. What type of business were they here for?
24 A. The business that I knew of was real estate
25 related.

1 Q. That answer suggests there may be a business
2 that you didn't know of. Was that your intention in
3 your answer?
4 A. No, because if I didn't know of it, I
5 wouldn't know of it.
6 Q. Well, I just don't know if you came to know
7 of it at some point after the time period which you
8 actually got to know them.
9 A. No. To the best of my knowledge, the
10 business that they related that they were involved in
11 in South Florida were real estate related.
12 Q. Do you know what Mr. Tonacchio did for a
13 living, let's say in the 2006/2007 time period?
14 A. He was the owner of Tona Development, a
15 large construction company.
16 Q. Tona Development and a large construction
17 company?
18 A. No, a large construction company.
19 Q. Okay. Tona itself was a large
20 construction --
21 A. Tona Development Construction.
22 Q. What about T & L Construction?
23 A. It was a development and construction
24 company.
25 Q. Sorry. What about T & L Investors?
Page 10

1 A. It was an investment vehicle. I don't
Page 11
2 recall specifically what it did.
3 Q. Did you know how long Mr. Tonacchio had been
4 in that line of work, that business?
5 MR. SALIM: Form, which one?
6 THE WITNESS: I don't recall. He seemed
7 pretty well established, clearly knew what he was
8 doing.
9 BY MR. GAY:
10 Q. What about Mr. Lipsitz, did you know what he
11 did for a living?
12 A. He invested in real estate and was a partner
13 in Flash Dancers in Manhattan, a gentlemen's club.
14 Q. Do you know if he was involved in any other
15 similar type clubs either in New York or anywhere
16 else?
17 A. I seem to recall conversation about -- no,
18 you know what, I don't remember whether it was him or
19 not that was talking about investment in other clubs.
20 To the best of my recollection, that was his
21 main business.
22 Q. Does the name New York Dolls mean anything
23 to you?
24 A. It may have come up in passing, sir, but I
25 don't have a specific recollection one way or the

1 other.
Page 12
2 Q. Same question regarding a club called
3 Private Eyes?
4 A. My answer would be the same.
5 Q. Going back to the time when you met
6 Mr. Lipsitz and Mr. Tonacchio. If I understood you
7 correctly, I think you said based on your recollection
8 you met Mr. Lipsitz first?
9 A. To the best of my recollection, yes, sir.
10 Q. But you don't recall specifically the time
11 that you met him. That's correct?
12 A. I do not.
13 Q. If you could then, just tell me what you do
14 recall about how you formed a friendship with him. In
15 other words, expand a little bit about the types of
16 social interactions you had with Mr. Lipsitz.
17 A. We hung out together.
18 I'm not sure I really understand what
19 questions you are asking. When men socialize together
20 and start to do things together in a, you know, in a
21 congenial setting, you go out drinking, you go to
22 dinner, you go to clubs, you become friends.
23 Q. Did you ever attend any kind of, for
24 instance, sporting events with Mr. Lipsitz?
25 A. I believe we went to some Dolphins games

1 where Mr. Lipsitz was there. Other than that, I don't
2 recall him being at other sporting events with us.
3 Q. What about Mr. Tonacchio?
4 A. It would be the same answer. I recall him
5 being at several Dolphins games, but I don't have a
6 recollection of other sporting events that he went to
7 with us.
8 Q. Do you know how Mr. Tonacchio and
9 Mr. Lipsitz knew one another?
10 A. I don't remember. At some point in time one
11 of them told me the story of how they met, but I don't
12 recall it as I sit here today. They were very close
13 friends.
14 Q. Do you recall whether or not you ever had a
15 professional relationship with either Mr. Lipsitz or
16 Mr. Tonacchio? In other words, did your firm
17 represent them in any capacity?
18 A. At this point in time we did legal work for
19 both of them.
20 Q. And tell me about the kind of legal work you
21 did for them.
22 A. To the best of my recollection, there was
23 some business work that we did, corporate type stuff,
24 and real estate work.
25 Q. Is that for both Mr. Lipsitz and
Page 13

1 Mr. Tonacchio?
Page 14
2 A. Yes, sir.
3 Q. Do you remember any specifics about those
4 deals, whatever they were?
5 A. They were purchases of real estate. I don't
6 recall whether we actually did closings for them. We
7 may have. As a matter of fact, I think perhaps Harold
8 Bofshever in my office did some personal closings for
9 them, potentially some business closings. And then
10 there was, of course, real estate we invested in
11 together that our office handled the legal work for.
12 Q. We've spoken to Mr. Tonacchio earlier, and
13 based on his recollection, he recalls having met you
14 in your office when he was there, I believe to meet
15 with Mr. Bofshever, simply met you in the hallway. Is
16 that consistent with your recollection?
17 A. Unfortunately I probably met over 1,000
18 people in the hallways of my office over the years. I
19 can't tell you if I met Mr. Tonacchio on the side
20 meeting in my office. It's certainly possible. I
21 became an acquaintance of his and then friends of his
22 through our friends.
23 Q. So even though you got to know him through
24 joint acquaintances, you may have actually first met
25 him in your office?

1 A. Yes, it's certainly possible. If he was
Page 15
2 there visiting with another lawyer and I was walking
3 by, it would have been common for the other lawyer to
4 introduce him to me.
5 Q. You mentioned Mr. Bofshever in your office.
6 Do you know if Mr. Lipsitz and Mr. Tonacchio ever
7 worked with anyone else in your office?
8 A. Arthur Neiwirth and David Boden. There may
9 be others, I don't recall at this moment.
10 Q. Do you know what kind of work Mr. Neiwirth
11 did for them?
12 A. It would have been real estate, perhaps some
13 business stuff.
14 Q. When you say, "perhaps some business stuff,"
15 do you remember anything specific?
16 A. I do not.
17 Q. What about Mr. Boden?
18 A. It would have been business, corporate
19 related, set up of company or perhaps negotiations of
20 something.
21 Q. Do you know if Grant Smith ever did any work
22 for either one of them?
23 A. He may have. I don't have an independent
24 recollection. If they had a zoning issue or something
25 of that nature, Grant Smith probably would have gotten

1 involved. But I don't have a specific recollection
Page 16
2 one way or the other.
3 Q. In between, let's say, 2006 and 2009, you
4 used to travel to New York City fairly frequently; is
5 that correct?
6 A. I did.
7 Q. And when you travelled to New York, did you
8 meet with Mr. Lipsitz and Mr. Tonacchio on occasion?
9 A. After we became friends I did when I could,
10 yes, sir.
11 Q. Was that mostly just in a social setting?
12 A. For the most part, yes, sir.
13 Q. When you say "for the most part," what other
14 part?
15 A. I remember going to New York once and
16 visiting the construction site of Mr. Tonacchio. I'm
17 sure we discussed business when I was there, but I
18 don't have a specific recollection of going to New
19 York to do business with them.
20 Q. Did you ever visit Mr. Lipsitz at his place
21 of business?
22 A. I did.
23 Q. And where was that specifically?
24 A. Flash Dancers.
25 Q. How many times did you go to that

1 establishment?
Page 17
2 A. A handful, not many.
3 Q. Did you go with Mr. Lipsitz on each
4 occasion?
5 A. I met him there.
6 Q. What about Mr. Tonacchio?
7 A. What about him?
8 Q. Did you also go to Flash Dancers with
9 Mr. Tonacchio?
10 A. To the best of my recollection, no.
11 Q. Did you go to any other clubs in New York
12 with Mr. Lipsitz?
13 A. I believe we went once to the Penthouse
14 Club, but other than that I don't recall.
15 Q. So over the course of a number of years,
16 between 2006 and say 2009, you got to be pretty close
17 friends with Mr. Lipsitz and Mr. Tonacchio; is that
18 correct?
19 A. That's a fair statement.
20 Q. Would you consider them to have been in your
21 "inner circle" during that time?
22 A. They were very close friends of mine, yes.
23 Q. And you had some sort of birthday
24 celebration in New York during one of those years; is
25 that correct?

1 A. I did.
Page 18
2 Q. You flew up to New York. Do you remember
3 how you got there?
4 A. I chartered a plane. I flew a bunch of our
5 friends up to New York and we met them up there and
6 had dinner together.
7 Q. You say you met them, is that Mr. Tonacchio
8 and Mr. Lipsitz?
9 A. Yes, sir.
10 Q. Do you remember where you went to dinner?
11 A. D'Gratcia (phonetic).
12 Q. How long were you in New York during that
13 visit?
14 A. I don't recall.
15 Q. And how did you return to South Florida?
16 A. Wait a second.
17 Actually, on that visit I think I went up
18 and then after dinner and going out a little bit I
19 went right back.
20 Q. Okay. How did you get back to South
21 Florida?
22 A. Same way, on the same plane.
23 Q. Did Mr. Tonacchio and Mr. Lipsitz come with
24 you?
25 A. I don't recall one way or the other.

1 Q. Who else would have accompanied you to New
2 York on that trip, do you recall?
3 A. Let me see if I can remember. I know Ted
4 Morse was there. John Bria was there. John's wife.
5 George was there. My wife was there. You know, the
6 easiest thing for you to do, sir, is to just look at
7 flight manifest. It will tell you exactly who was on
8 that trip. I don't remember specifically who I took.
9 I'm also certain that there are pictures in existence
10 that will show who was there.
11 Q. Do you know where those pictures would be?
12 A. I'm pretty sure Mr. Morse has some of them,
13 fairly certain my wife has some of them.
14 Q. Do you know a gentleman named Mel Lifshitz?
15 A. Yes.
16 Q. You may refer to him as Melly. Does that
17 sound familiar?
18 A. Yes.
19 Q. I think his name might actually be Menachem
20 Lifshitz, same gentleman?
21 A. That's correct.
22 Q. How do you know Mr. Lifshitz?
23 A. I met him through one of the Ponzi feeder
24 funds.
25 Q. Do you know where Mr. Lifshitz lives?
Page 19

1 A. I'm not sure if he lives in New York or
Page 20
2 Jersey. His business is in Manhattan.
3 Q. Were you friends with Mr. Lifshitz?
4 A. I eventually became friends with him, yes,
5 sir.
6 Q. At the time we were just talking about, when
7 you went to New York to celebrate your birthday, did
8 Mr. Lifshitz attend any of those celebrations?
9 A. I don't recall him being there. He
10 certainly may have been, but I don't have a specific
11 recollection one way or the other.
12 Q. Do you recall if perhaps he flew back on the
13 private jet with you to South Florida?
14 A. Again, rather than have me guess, the
15 easiest thing to do would be to check the flight
16 manifest.
17 Q. I'm just asking if you recall. If you
18 don't, obviously, that's fine. I'm just trying to
19 figure out what you can remember.
20 Do you know if Mr. Tonacchio and/or
21 Mr. Tonacchio knew Mel Lifshitz?
22 A. I don't recall one way or the other.
23 Q. Would it refresh your recollection at all to
24 represent that Mr. Tonacchio and/or Mr. Lipsitz may
25 have flown back with you to South Florida on that

1 private jet with Mr. Lipsitz?
Page 21
2 MR. SALIM: Objection to form, predicate.
3 THE WITNESS: The problem is that I flew
4 private 99 percent of the time and I regularly took
5 people to and from whatever location I was flying to,
6 especially New York. And I regularly took people
7 back that didn't go up with me and brought people up
8 that I left there. So, the flight manifest could be
9 the easiest way to do this. I'm trying to get my
10 specific recollection. There were too many flights,
11 and too many various people for me to remember
12 specifically but I'll do the best that I can for you.
13 I don't have a specific recollection of
14 Mr. Lifshitz or Mr. Tonacchio being on that plane
15 with me, but they certainly may have.
16 BY MR. GAY:
17 Q. Do you recall on, say, around the time of
18 Yom Kippur sending out e-mails to certain individuals
19 sort of as an atonement?
20 MR. PHILLIPS: Objection.
21 THE WITNESS: I did that on a regularly --
22 MR. GAY: I'm sorry, go ahead.
23 THE WITNESS: Go ahead.
24 BY MR. GAY:
25 Q. Do you recall typically to whom you would

1 have sent those e-mails?
Page 22
2 A. Friends and family.
3 Q. Would it be fair to say that you would send
4 them to close friends and family?
5 A. I'd have to see the list of people that I
6 sent it to to tell you whether they were all close
7 friends, but yes, I think that's a fair assumption.
8 Q. I believe you have access to documents that
9 we've marked for use at this deposition.
10 A. I do.
11 Q. Do you have that in front of you? And what
12 I'm specifically referring to is the file that's
13 marked T-TL.
14 A. Bear with me one second. What exhibit?
15 Q. T-TL 00254.
16 A. I see that.
17 Q. Can you look at the "from" line. Tell me if
18 you recognize that address.
19 A. I do.
20 Q. What address is that?
21 A. It's the e-mail address of one of
22 Mr. Tonacchio's assistants at Tona Development.
23 Q. That's typically how you would communicate
24 with Mr. Tonacchio, via e-mail through that address?
25 A. Yes.

1 Q. And this is an e-mail in June of 2008 from
Page 23
2 that address to you. Do you see that?
3 A. Yes, sir.
4 Q. And it references Mr. Tonacchio wanting to
5 get your home address in order to invite you to his
6 daughter's graduation party. Do you see that?
7 A. I do.
8 Q. Did he actually invite you to his daughter's
9 graduation party?
10 A. I believe he did, sir.
11 Q. Did you attend?
12 A. I did not.
13 Q. Did you send a gift?
14 A. I don't know whether we did or not, one way
15 or the other.
16 Q. If you'd look at I believe it's the next
17 document, it's 255. It's an e-mail in June of 2008
18 from the same e-mail address to you. It's just
19 referencing what time you are going to meet
20 Mr. Tonacchio for dinner in the city. Do you see
21 that?
22 A. I do.
23 MR. SALIM: Form.
24 BY MR. GAY:
25 Q. Do you recall specifically why you were

1 meeting Mr. Tonacchio at that time?
Page 24
2 A. Well, given the date of the e-mail, it looks
3 like I was meeting him there for my birthday.
4 Q. If you'd look at 00257, please. You see
5 that document?
6 A. I do.
7 Q. That's an e-mail, it says from
8 mailbox@my.simulscribe.com. Do you see that?
9 MR. SALIM: Form.
10 THE WITNESS: I do.
11 BY MR. GAY:
12 Q. Are you familiar with that "from" address?
13 A. I am.
14 Q. Could you explain to me what that is?
15 A. Many of the attorneys at my firm had a
16 service called simulscribe where when you called our
17 cell phone it would transcribe the message onto your
18 e-mail and then send you an e-mail so you didn't have
19 to listen to the call, you can read them.
20 Q. Do you believe the next -- this e-mail to be
21 a transcript of that phone message?
22 A. Yes, sir.
23 Q. And would that have been a message likely
24 received on the date of this e-mail, June 11, 2008?
25 A. Yes, sir.

1 Q. Okay. If you see the text of the e-mail it
2 says, "Scottie, happy birthday. Happy birthday, my
3 best buddy." It goes on in the second line to say,
4 right in the middle, "I wanna thank you again." Do
5 you see that?
6 A. Yes.
7 Q. Do you know what that's in reference to?
8 A. The "I want to thank you again," no.
9 We must have done something the night
10 before, but I'd be guessing.
11 Q. If you'd look at Document 259, please. You
12 have that in front of you?
13 A. Yes, I have it.
14 Q. I believe that's a June 12, 2008 e-mail from
15 that same christinaztona@aol.com address?
16 A. Yes.
17 Q. And it references the flying in for my
18 daughter's party. Do you see that?
19 A. I do.
20 Q. Do you think that's in reference to
21 Mr. Tonacchio's daughter's graduation party we
22 mentioned earlier?
23 A. It appears to be, yes, sir.
24 Q. And the second line it says, "If you have
25 any room, Scott, Pichinini" -- I might be pronouncing
Page 25

1 that incorrectly but it's P-i-c-h-i-n-i-n-i. Do you
Page 26
2 see that?
3 A. Pichinini.
4 Q. -- "Pichinini and Dan can come with you."
5 You see where it says that?
6 A. I do.
7 Q. Can you tell me who those individuals are?
8 A. The Dan is Dan Scarmalino and Scott
9 Pichinini. They were two, let's call them, low level
10 real estate investors in South Florida that were doing
11 business with Domenick and Barry and ultimately with
12 me.
13 Q. Did you understand those two individuals
14 lived in South Florida?
15 A. Yes.
16 Q. And based on this e-mail, it seems as though
17 Mr. Tonacchio had an expectation those gentlemen may
18 actually travel with you to New York for
19 Mr. Tonacchio's daughter's graduation party; is that
20 correct?
21 MR. SALIM: Form.
22 THE WITNESS: That's what it appears to be,
23 yes, sir.
24 BY MR. GAY:
25 Q. But again, you don't recall if you actually

1 went to that graduation party?
Page 27
2 A. No, I don't.
3 Q. Did you ever socialize with either of those
4 two gentlemen, again, Scott, and I'll mispronounce his
5 last name so I won't try, and Dan, did you socialize
6 with those individuals either in South Florida or in
7 New York?
8 A. When I was out with other people there were
9 times when they were out with us, but I did not
10 socialize alone with them.
11 Q. Were you ever joined by them and Mr. Lipsitz
12 and/or Mr. Tonacchio?
13 A. Yes.
14 Q. Do you remember at any specific setting?
15 A. A variety of settings, including Blue
16 Martini and Solid Gold.
17 Q. Did you ever meet either those individuals
18 and/or Mr. Lipsitz or Mr. Tonacchio at a restaurant
19 called Runway 84?
20 A. I'm fairly certain that I went -- actually,
21 I went to Runway 84 with Mr. Tonacchio and
22 Mr. Lipsitz. I don't recall. I have a vague
23 recollection of Pichinini and Scarmalino being there
24 at several points in time, but I don't have a specific
25 recollection of them.

1 Q. Did you go to Runway 84 with Mr. Lipsitz
Page 28
2 and/or Mr. Tonacchio on more than one occasion?
3 A. To the best of my recollection, yes.
4 Q. How often did you go there with those
5 gentlemen?
6 A. I can't tell you specifically. I ate dinner
7 there almost every Thursday night for extended periods
8 of time. And then there were other nights that I was
9 there, so I can't tell you how many times specifically
10 with each of those gentlemen.
11 Q. When you say you ate there almost every
12 Thursday night, what period of time was that?
13 A. I'd be guessing. It was over a very long
14 period of time, years and years.
15 Q. 2006 through 2009?
16 MR. PHILLIPS: Objection, form.
17 THE WITNESS: At least.
18 BY MR. GAY:
19 Q. When you went to Runway 84 on Thursday
20 nights, did you always go with someone or did you show
21 up by yourself?
22 A. Both.
23 Q. Who did you typically meet with when you had
24 dinner there on Thursday nights?
25 THE WITNESS: Mr. LaVecchio, do you want me

1 to name the people?
Page 29
2 MR. LAVECCHIO: To the extent that you've
3 already testified about these matters, I think you
4 may continue to do so. To the extent you have not,
5 then I may interpose an objection.
6 MR. GAY: I don't know if this helps, but
7 perhaps if you can just tell me who the usual
8 attendees were --
9 SPECIAL AGENT GUARIGLIA: Larry, I think
10 you'll need to interpose.
11 MR. LAVECCHIO: In that case I'll object at
12 this point on privilege grounds.
13 MR. LICHTMAN: For the record, it's clear
14 it's investigatory privilege and the trustee will
15 honor that.
16 MR. SALIM: Just so I'm clear, the question
17 was who did you meet with for dinner on Thursday
18 nights at Runway 84, and that's privileged?
19 MR. LICHTMAN: Investigatory prejudice by
20 the government.
21 SPECIAL AGENT GUARIGLIA: Can you get
22 that --
23 MR. PHILLIPS: I just want to understand
24 what --
25 THE WITNESS: Mr. LaVecchio, if you can

1 give us one second.
Page 30
2 MR. LAVECCHIO: Sure.
3 [Discussion off the record.]
4 THE WITNESS: Mr. LaVecchio, I can answer
5 the question generally and discuss people that I
6 think are outside that investigatory privilege.
7 MR. LAVECCHIO: That's fine.
8 MR. GAY: I don't want to invade, obviously,
9 upon the investigatory privilege. So, Mr. Rothstein,
10 if you are aware of facts that you can share with us
11 today that would not run afoul of that privilege,
12 please do so. But obviously, I'm not asking you today
13 to divulge anything that would violate that privilege.
14 So with that in mind, go ahead.
15 THE WITNESS: At certain times during
16 dinners out there, I was asked to specifically to
17 meet with members of organized crime. On other
18 occasions I was there with Ted Morse and other
19 friends of ours.
20 BY MR. GAY:
21 Q. Just to get an idea, did you always go or
22 always meet with Mr. Lipsitz and/or Mr. Tonacchio, or
23 were there times when you went to Runway 84 on
24 Thursday nights and neither one of them was there?
25 A. No, the great bulk of the time neither one

1 of them was there.
Page 31
2 Q. What about Mr. Pichinini and Dan Scarmalino?
3 A. They were not there frequently when I was
4 there.
5 Q. If you could just give me -- I want to ask
6 you a few questions about sort of what your -- the
7 nature of your sort of interaction with Mr. Tonacchio
8 and Mr. Lipsitz was in South Florida.
9 I know that at some point you had an
10 interest in what was previously the Versace mansion on
11 Miami Beach; is that correct?
12 A. I did.
13 Q. Did you ever go to the Versace mansion with
14 Mr. Lipsitz and/or Mr. Tonacchio?
15 A. I believe I did.
16 Q. Do you know how often you did that?
17 A. It was not frequently.
18 Q. But it was more than once or twice?
19 A. No. Could have been once or twice.
20 Q. In fact, your wedding was at the, what I'll
21 refer to, as the Versace mansion; is that correct?
22 A. That's correct.
23 Q. Did Mr. Tonacchio and/or Mr. Lipsitz attend
24 your wedding?
25 A. To the best of my recollection, yes.

1 Q. And that's yes regarding both?
Page 32
2 A. Yes.
3 Q. When they were in town for your wedding, do
4 you know, did they stay at the Versace mansion?
5 A. I don't believe that they did, no, sir.
6 Q. If you'd look at document it's TL 00277.
7 Let me know when you have that in front of you.
8 A. I have it.
9 Q. And again, that's an e-mail from
10 mailbox@my.simulscribe.com. Do you see that?
11 A. It is.
12 Q. Dated May 1, 2009. And it says, "Hey,
13 Scottie boy. Barry" ... Do you see that?
14 A. I do.
15 Q. Do you recognize that as a transcription of
16 a phone message that you received from Mr. Lipsitz?
17 A. I don't have a specific recollection one way
18 or the other of receiving this, but since it is to my
19 mailbox directed to me, I'm certain that I did receive
20 it. It's right around the time of my wife's birthday
21 and it's very likely that I was traveling to New York
22 at that time.
23 Q. You see on the subject line it says, "phone
24 tag from," and then there's a phone number listed. Do
25 you see that?

1 A. I do.
Page 33
2 Q. Is that phone number familiar to you?
3 A. It looks like one of Barry's telephone
4 numbers.
5 Q. Okay. If you could read what's -- well, the
6 sentence that begins in the first line, "I don't know
7 if you're in the city or not" -- Do you see that?
8 A. Yes.
9 Q. It goes on to say -- "but Saturday" -- go
10 ahead.
11 A. "I don't know if you are in the city or not
12 but Saturday night I was just going to have a little
13 dinner with Mel and his girlfriend and Judy. If you
14 and Kimmy would like to join us on the east side we
15 are going to have a little Chinese restaurant that's
16 pretty good."
17 Q. Yes, sir. What it refers to --
18 A. "I think Kimmy's birthday" --
19 Q. Okay. Actually, yeah, you've already passed
20 the part I was interested in. Just curious, going
21 back to the part where it says, "a little dinner with
22 Mel and his girlfriend." Do you see that?
23 A. Yes.
24 Q. Do you know who that's referring to?
25 A. Mel Thaler.

1 Q. I'm sorry, who was that?
Page 34
2 A. Mel Thaler.
3 Q. Could you spell that last name?
4 A. Mel T-h something. I don't remember his
5 last name exactly. It's something like Taylor. It
6 was Barry's partner, one of Barry's partners.
7 Q. It sounds like Taylor but it's actually
8 Thaler; is that correct?
9 A. Yes, it's not Taylor, I think it's Thaler or
10 something like that.
11 Q. T-h-a-l-e-r maybe?
12 A. I'd be guessing.
13 Q. Primarily to help the court reporter.
14 Strike that question.
15 Who is Mr. Thaler?
16 A. A business man who was partners with
17 Mr. Lifshitz -- excuse me, with Mr. Lipsitz in Flash
18 Dancers.
19 Q. And did you know Mr. Thaler?
20 A. I had met him on a number of occasions.
21 Q. Through Mr. Lipsitz?
22 A. Yes, sir.
23 Q. Did you know whether he had any business
24 interests other than Flash Dancers?
25 A. I believe that he did, but I don't know what

1 they are.
Page 35
2 Q. You never discussed that with Mr. Lipsitz?
3 A. I may have. I don't have a specific
4 recollection of it, though.
5 Q. Did Mr. Thaler ever participate in what
6 we'll discuss later being the Ponzi scheme?
7 A. Unless he participated through someone else,
8 the answer is no.
9 Q. Did you ever discuss any of the "deals"
10 regarding the Ponzi scheme with Mr. Thaler?
11 A. I don't have a specific recollection of that
12 one way or the other.
13 Q. You don't recall if you ever solicited him
14 to invest in the Ponzi scheme?
15 A. I don't recall one way or the other.
16 Q. Going back to that sentence where it says,
17 "a little dinner with Mel and his girlfriend and
18 Judy." Who is Judy?
19 A. Barry's girlfriend.
20 Q. If you'd look at 00296. Let me know when
21 you have that in front of you.
22 A. I have it.
23 Q. Looks like that's a September 8, 2009 dated
24 e-mail from TonaConstruction@aol.com to you. Do you
25 see that?

1 A. Yes, sir.
Page 36
2 Q. Do you recognize the Tona Construction
3 address?
4 A. I do.
5 Q. Is that another e-mail address that
6 Mr. Tonacchio used to communicate with you?
7 A. Yes, sir.
8 Q. Basically the third line down, third sort of
9 paragraph says, "I'm going to Levinson tomorrow just
10 call them for me" -- Do you see that?
11 A. Yes.
12 Q. -- "I know you are too busy to go." It goes
13 on. Can you tell me what that was in reference to?
14 A. Mr. Tonacchio was looking to buy a piece of
15 jewelry or a watch, and I was making sure that he got
16 treated properly at Levinson.
17 Q. Do you know if he wound up purchasing a
18 watch?
19 MR. SALIM: Form.
20 THE WITNESS: I do not know one way or the
21 other.
22 BY MR. GAY:
23 Q. Did you ever purchase a watch for him?
24 A. I don't recall one way or the other.
25 Q. Did you ever purchase any gifts other than a

1 watch for Mr. Tonacchio?
Page 37
2 A. Not that I recall, no, sir.
3 Q. What about Mr. Lipsitz?
4 A. I don't recall ever purchasing either of
5 them any significant gifts.
6 Q. When you would, for instance, go to dinner,
7 go out for drinks, go to a club with either
8 Mr. Tonacchio or Mr. Lipsitz, did you ever pick up the
9 check?
10 A. I did.
11 Q. Did your entertaining with either
12 Mr. Tonacchio or Mr. Lipsitz ever involve escorts?
13 A. It did.
14 Q. With one or both of them?
15 A. Yes, sir.
16 Q. And did it ever come to pass that you would
17 pay for those escorts?
18 A. Yes, sir.
19 Q. Do you have an idea of what time frame that
20 was?
21 A. I do not, sir.
22 Q. Now I'd like to shift gears and talk about
23 the fraud or one of the fraud schemes that was
24 perpetrated.
25 If you could tell me how Mr. Lipsitz and

1 Mr. Tonacchio came to be involved in sort of that
Page 38
2 fraud.
3 A. I pitched them the deals and they eventually
4 invested.
5 Q. Do you remember the first deal that you
6 pitched to them?
7 A. I do not.
8 Q. Would it refresh your recollection if I were
9 to suggest to you that it involved Mr. Picou?
10 A. The Picou's transaction involved helping Ron
11 with money that he needed. It did not involve a
12 "Ponzi deal."
13 Q. Well, just explain to me what the Picou deal
14 involved, if you could.
15 A. It was one of the circumstances just like we
16 discussed it other day when I was talking about
17 Mr. Picou. It was one of the situations where
18 Mr. Picou actually had a real need for a certain
19 amount of money. I don't remember whether it was
20 gambling related or other related.
21 Q. Do you recall if that "deal" that you
22 entered into with Mr. Tonacchio and Mr. Lipsitz, was
23 that the first one of those types of deals that you
24 did with them?
25 A. I don't recall.

1 Q. So if Mr. Lipsitz previously testified that
2 you and Mr. Lipsitz and Mr. Tonacchio were out for
3 dinner at the Capital Grille in Fort Lauderdale, along
4 with Mr. Picou and that you approached Mr. Lipsitz
5 regarding helping Mr. Picou with the money situation,
6 would that comport with your recollection?
7 A. Yes.
8 Q. Does that help refresh your recollection at
9 all?
10 A. I recall Mr. Picou needing cash. I recall
11 that we did not have cash in the firm or in the Ponzi
12 scheme sufficient to assist him. I pitched it to
13 Mr. Lipsitz and ultimately to Mr. Tonacchio as a
14 friendly loan. They did not know the real reason that
15 Mr. Picou needed the money.
16 Q. Earlier I think you've testified about
17 before there was a settlement agreement related Ponzi
18 scheme going on, there was a sort of I think what
19 we've referred to generally as a bridge loan scheme;
20 is that correct?
21 A. Yes, sir.
22 Q. Was this initial deal regarding Mr. Picou,
23 was that part of that bridge loan scheme?
24 A. No, because the bridge loan that you are
25 referring to was a methodology that I created to
Page 39

1 inject money into the Ponzi scheme. You are talking
Page 40
2 about something -- it's like a one all. It was a
3 very -- relative to the Ponzi scheme. It was a very
4 slow interest deal. And the purpose was to actually,
5 really assist somebody, though they didn't know the
6 real reason that he needed the money. They were
7 really -- that wasn't the same thing as the
8 investments I pitched them. This was them really
9 trying to help a friend.
10 Q. But then there came a time to pass after
11 this deal where Mr. Tonacchio and/or Mr. Lipsitz were
12 involved in the bridge loan scheme?
13 MR. SALIM: Form.
14 MR. PHILLIPS: Objection to form.
15 THE WITNESS: They were involved in
16 investments in the Ponzi scheme that I pitched them,
17 yes.
18 BY MR. GAY:
19 Q. I just want to go back to that. Do you know
20 whether or not this Picou related deal was the first,
21 and I don't want to say similar deal because you've
22 already said it was unique. But do you know if this
23 deal regarding Mr. Picou predated any of the bridge
24 loan deals?
25 MR. SALIM: Form.

1 THE WITNESS: If you could show me the
Page 41
2 Lipsitz/Tonacchio portion of the RRA ledgers, I can
3 tell you if it's the first one or not. But without
4 that financial data, I can't tell you whether they
5 invested previously or not.
6 BY MR. GAY:
7 Q. If you'd look at TL 00203, please. Let me
8 know when you have that in front of you.
9 A. I have it.
10 Q. Okay. It looks like to me it's a March 19,
11 2007 e-mail from you to the same
12 Christinaztona@aol.com, the e-mail address we
13 discussed earlier. Do you see that?
14 A. I do.
15 Q. It's also to an e-mail address
16 Barryflash@aol.com. Do you see that?
17 A. I do.
18 Q. Was that Mr. Lipsitz's e-mail address?
19 A. Yes.
20 Q. It's also to TLinvestors@aol.com. That's
21 Mr. Tonacchio's e-mail address at that time?
22 A. Correct.
23 Q. And the subject, the Picou loan. Do you see
24 that?
25 A. I do.

1 Q. Do you know if this e-mail is in reference
Page 42
2 to that Picou deal we were discussing previously?
3 A. It appears to be.
4 Q. If you can review that for just a minute and
5 let me know if that refreshes your recollection as to
6 the specifics of that deal.
7 A. It does.
8 Q. How does that -- I mean, what recollection
9 does that refresh?
10 A. To ways I crafted this particular deal was
11 to enable a certain amount of money to be given to
12 Mr. Picou and certain amount of money to be infused
13 into the Ponzi scheme. I pitched it as a deal
14 specifically to help our friend, Mr. Picou. That's
15 about it.
16 Q. Do you remember why Mr. Picou needed the
17 money at that time?
18 A. I don't recall specifically.
19 Q. Mr. Lipsitz has previously discussed that
20 you represented to him, Mr. Lipsitz, that Mr. Picou,
21 through his company, Southern Grouts and Mortars, that
22 he had an employee who was electrocuted on the job.
23 Does that sound familiar?
24 A. That may have been what I told them, but
25 that would not have been true, that would have been a

1 lie.
Page 43
2 Q. It would have been a lie that Mr. Picou had
3 an employee who was electrocuted?
4 A. No, he did have an employee who was
5 electrocuted, but the way I pitched it to them was not
6 the real reason. As I testified earlier, either would
7 have been pertaining to one of Mr. Picou's gambling
8 debts or for money that he needed that either he
9 didn't want his daughter to see or his ex-wife or soon
10 to be ex-wife to see.
11 Q. Do you remember what you specifically told
12 Mr. Tonacchio and/or Mr. Lipsitz regarding Mr. Picou's
13 employee and how that gave rise to a need for funds?
14 A. I don't recall specifically, no. But
15 whatever it was, it was nonsense.
16 Q. Mr. Lipsitz I think has testified that what
17 you represented to him was that Mr. Picou had this
18 employee who had been killed, that this employee's
19 family had sued Mr. Picou and/or his business, and
20 that he, Mr. Picou, was interested in settling with
21 the family but did not have the funds to do so. Does
22 that comply with your recollection?
23 A. I don't have a specific recollection one way
24 or the other, but that certainly sounds plausible as
25 to how I would have pitched it. Because that was a

1 part of an actual scenario Mr. Picou was going
Page 44
2 through.
3 Q. Okay. If you go back to the e-mail --
4 A. But the actual need for the capital, the
5 actual need for the capital to that was false, it was
6 a lie by me.
7 Q. If you go back to the e-mail which is 00203.
8 It looks like at number one, it says 400, excuse me, K
9 total amount of loan as follows. Do you see that?
10 A. Yes.
11 Q. So in reference to this e-mail, could you
12 tell me what the terms of this deal were?
13 MR. SALIM: Form.
14 THE WITNESS: Mr. Lipsitz and Mr. Tonacchio
15 originally put up $200,000 for a total of $400,000.
16 They were going to each make an additional $50,000 on
17 their $200,000 within 90 days.
18 BY MR. GAY:
19 Q. You see number two, it says, "repayment of
20 loan with interest" -- Do you see that?
21 A. I do.
22 Q. It says -- "and points." What is that in
23 reference to when it says points?
24 A. I don't recall how that was structured or
25 why I put interest and points. I usually used point

1 to mean additional money over and above the interest,
2 like a kicker.
3 Q. Is that typically paid upfront?
4 A. In some instances that was and in some
5 instances it wasn't. In this it does not appear that
6 I was paying anything upfront.
7 Q. Okay. If you'd look at number five, it
8 says, "security, and then it references, "a shelf
9 mortgage on Ron Picou's main reference." Do you see
10 that?
11 A. Yes.
12 Q. Did part of this deal actually involved
13 taking out a mortgage on Mr. Picou's residence?
14 A. An actual mortgage, no. It appears that I
15 structured a shell mortgage for the very purpose of
16 deceiving Mr. Lipsitz and Mr. Tonacchio.
17 Q. Was Mr. Picou aware of any of this at the
18 time?
19 A. Mr. Picou knew I was going to get him the
20 money. I do not believe that he knew I was getting it
21 from Barry and Domenick.
22 Q. According to Mr. Lipsitz's testimony, the
23 first time that you discussed this deal with either
24 Mr. Tonacchio and/or Mr. Lipsitz was at Capital Grille
25 in Fort Lauderdale and he testified that Mr. Picou was
Page 45

1 actually there with you. Do you recall if that's the
2 case?
3 MR. PHILLIPS: Objection to the form.
4 THE WITNESS: You know, sir, to the best of
5 my recollection, I can't recall. I don't recall
6 Mr. Picou actually being part of that conversation.
7 My recollection, as I sit here today, was that
8 Mr. Picou -- that I was trying to keep where I was
9 actually getting these funds that Mr. Picou needed
10 secret from him.
11 MR. GAY: Well, that's why I ask.
12 THE WITNESS: I could be -- I just don't
13 have a specific recollection one way or the other.
14 But it doesn't seem to me that I would have let
15 Mr. Picou know that I didn't have the capital to give
16 to him and that I needed to go get it from another
17 source.
18 BY MR. GAY:
19 Q. Well, that's part of the reason I ask,
20 because it seems like if you were trying to keep those
21 two parties apart, as far as Mr. Picou and
22 Mr. Tonacchio and/or Mr. Lipsitz, as far as what they
23 knew about this deal, then discussing it for the first
24 time with Mr. Tonacchio and Mr. Lipsitz with Mr. Picou
25 not far away would be sort of running an unnecessary
Page 46

1 risk.
Page 47
2 MR. PHILLIPS: Objection to the form.
3 THE WITNESS: Well, you have to know
4 Mr. Picou. I mean, Mr. Picou could have been five
5 feet from us and had been paying no attention to us
6 at all. I mean, we could have been having a
7 conversation about the world was about to explode and
8 Ron would have been looking for another drink.
9 So, you don't understand the dynamics, so
10 you wouldn't understand what I'm talking about. But
11 my recollection is that we were trying to keep it, me
12 specifically, I wanted to keep it secret from
13 Mr. Picou because I didn't want Mr. Picou to know
14 where I was getting money from to give it to him.
15 BY MR. GAY:
16 Q. Okay. I'm also just trying to figure out,
17 for instance, if you told Mr. Lipsitz and/or
18 Mr. Tonacchio that Mr. Picou needed money for whatever
19 it was, what your understanding was as to why
20 Mr. Tonacchio and Mr. Lipsitz wouldn't have just gone
21 to Mr. Picou and said, "I understand you need a little
22 bit of help, what can we do?"
23 MR. PHILLIPS: Objection to the form.
24 BY MR. GAY:
25 Q. You understand the question?

1 A. I do. All of us at -- you have to
Page 48
2 understand the dynamics at this point in time. We are
3 all close friends. We like -- it was as if we had
4 grown up together, that's how close we were.
5 Mr. Tonacchio and Mr. Lipsitz liked Mr. Picou, and I
6 think that they wanted to legitimately help him.
7 I pitched the deal to them. They were going
8 to make a little bit of money on top of it and they
9 were helping a friend. And I don't think that they
10 would have gone to him because I think they would have
11 thought it would have been embarrassing to him to go
12 to him.
13 Q. So Mr. Tonacchio and Mr. Lipsitz were also
14 friends with Mr. Picou at this time?
15 A. Yes.
16 Q. Close friends?
17 MR. PHILLIPS: Objection to the form.
18 THE WITNESS: As far as I could see, yes.
19 BY MR. GAY:
20 Q. Well, I think you just mentioned that it was
21 like you all grew up together, and that seems like
22 that would be pretty close friends?
23 A. Well, if you had been around our group, when
24 we all hung out together, that is certainly the way it
25 seemed most of the time that we had been friends for a

1 very long period of time.
Page 49
2 Q. So going back to this deal, which is
3 referenced in the e-mail which is 00203 with the
4 subject line Picou loan. Was it your understanding
5 that this was structured as a loan?
6 A. Yes.
7 Q. Do you know whether or not Mr. Tonacchio
8 and/or Mr. Lipsitz understood that it was structured
9 as a loan?
10 MR. SALIM: Form.
11 THE WITNESS: That's the way I pitched it,
12 as a loan.
13 BY MR. GAY:
14 Q. If you'd look at Document 00178. Let me
15 know when you have that in front of you.
16 MR. SALIM: What number?
17 MR. GAY: 178.
18 THE WITNESS: I have that.
19 BY MR. GAY:
20 Q. Do you recognize that document?
21 A. I do.
22 Q. Can you tell me what it is, please.
23 A. It's a promissory note that I created
24 relative to the Picou loan.
25 Q. And that promissory note set forth the same

1 terms that are generally referenced in the e-mail that
2 we were just discussing?
3 A. It does.
4 Q. Other than this promissory note, do you know
5 if there were any other documents that evidence this
6 deal?
7 MR. SALIM: Form.
8 THE WITNESS: I don't know one way or the
9 other. Obviously, other than the e-mail we just
10 looked at.
11 BY MR. GAY:
12 Q. So subsequent to this deal that's
13 represented by the promissory note dated March 19,
14 2007, did you then enter into subsequent deals with
15 Mr. Tonacchio and/or Mr. Lipsitz?
16 A. I did.
17 Q. Tell me a little bit about how that
18 happened.
19 A. I pitched them the Ponzi scheme using the
20 settlement pitch.
21 Q. What did that pitch involve?
22 A. It was an abbreviated version of my
23 full-blown pitch. I don't remember exactly the words
24 I said. I simply explained that was -- the funding of
25 prepaid, meaning money in-house settlement deals where
Page 50

1 they could make a lot of money with very little to no
2 risk.
3 Q. Earlier we talked about that there was a
4 difference between the bridge loan scheme and what
5 we've talked about being the settlement agreement
6 related Ponzi scheme, correct?
7 A. Are you saying that all of the promissory
8 notes, the loan deals, that that's what you are
9 referring to as bridge loan notes, bridge loan deals?
10 Q. Well, I'm not actually trying to refer to
11 one group or another, I'm just trying to ask you if
12 there was a scheme regarding bridge loans that was
13 separate and apart from the settlement agreement
14 related Ponzi to sort of differentiate what that
15 involved.
16 MR. SALIM: Form.
17 THE WITNESS: There were some deals that
18 were pitched to a variety of investors as bridge
19 loans, to clients and other business people. There
20 were some deals that were pitched as the settlement
21 deals, but that were what I call minimal paper.
22 There were promissory notes alone or
23 promissory notes in an e-mail alone and then there
24 was the full-blown packets. To the best of my
25 recollection, the deals that were pitched and
Page 51

1 ultimately sold to Mr. Lipsitz and Mr. Tonacchio were
2 the bridge loan deals and the promissory note/e-mail
3 settlement funding.
4 BY MR. GAY:
5 Q. But those two things in your mind were
6 separate; is that right? Maybe you don't --
7 A. In my mind it was all just a way to get
8 money for the Ponzi scheme. It was just a different
9 fraudulent stitch.
10 Q. Were Mr. Tonacchio and/or Mr. Lipsitz
11 involved in both types of deals?
12 A. If you have paper I will refresh my
13 recollection. I need to look at their e-mails.
14 Q. If you'd look at --
15 A. You can tell by the e-mail what kind of deal
16 was pitched.
17 Q. If you'd look at TL 00204. Let me know when
18 you that in front of you.
19 A. I have it.
20 Q. It's a March 21, 2007 e-mail from you to
21 Barryflash@aol.com and TLinvestors@aol.com. You see
22 that?
23 A. Yes, sir, I have it.
24 Q. It says first, "Thank so much for your
25 assistance in this matter." Do you recall if that's
Page 52

1 in reference to the Picou loan?
Page 53
2 A. That's what it appears to be.
3 Q. Okay. And then in what's effectively the
4 third paragraph, it says, "I am in the process of
5 working on a second loan." Do you see that?
6 A. Yes.
7 Q. It goes on to say, "Looks like the interest
8 rate will be 36 percent."
9 A. Yes.
10 Q. Do you think this e-mail is in reference to
11 the second "deal" that you entered into with
12 Mr. Tonacchio and/or Mr. Lipsitz?
13 MR. SALIM: Form.
14 THE WITNESS: Certainly could be. I'd need
15 to see the next series of e-mails or documents, then
16 I can tell you for certain.
17 BY MR. GAY:
18 Q. Well, part of the reason I ask is because
19 the promissory note that we looked at a little while
20 ago, which was referencing the Picou loan, was dated
21 March 19, 2007 and this e-mail is dated March 21,
22 2007. That's, I think, two days later. Does that
23 sound about right?
24 A. Yes, it is. It's referencing the Picou loan
25 and it looks like I'm pitching them a second deal.

1 But without seeing the paper, I can't tell you for
Page 54
2 certain.
3 Q. When you say "the paper," do you mean the
4 promissory note?
5 A. Promissory note and/or the e-mail or both.
6 Can we take a couple of minutes?
7 Q. Yes, sir.
8 [Short recess taken.]
9 BY MR. GAY:
10 Q. We are back on the record.
11 Before we broke we were talking about an
12 e-mail that referenced the second loan deal that you
13 entered into with Mr. Tonacchio and Mr. Lipsitz. And
14 I'd like you now to look at Document TL 00067.
15 Let me know when you have that in front of
16 you.
17 A. I have that.
18 Q. Okay. Tell me what that document is.
19 A. Promissory note.
20 Q. It's dated March 22, 2007.
21 A. That's correct.
22 Q. Do you know if maybe that promissory note is
23 the deal that's referenced in the e-mail we were
24 looking at earlier which is 00204?
25 A. I can't tell from that. I need to see the

1 e-mail that goes with this specific promissory note.
Page 55
2 Q. When you say the e-mail that goes with the
3 promissory note, you mean an e-mail sending them this
4 promissory note as an attachment?
5 A. No. You should have an e-mail laying out
6 this deal.
7 Q. Well, if you could just review the document
8 that's 00067 and tell me basically what the terms of
9 that deal were.
10 A. I can't tell you from this. I can only tell
11 you what the payout is. I can't tell you how much
12 money they were putting up.
13 Q. Okay. There's a number of numbered
14 paragraphs in the promissory note that talk about the
15 payments that are to be made pursuant to the note. Do
16 you see that?
17 A. I do.
18 Q. And the first paragraph it says, "Interest
19 in the amount of $31,500." Do you see that?
20 A. I do.
21 Q. It says, "Interest shall be paid over six
22 consecutive months beginning 30 days from the date of
23 this note." Do you see that?
24 A. I do.
25 Q. It says, "Thus, each check shall be in the

1 amount of $5,250." Do you see that?
Page 56
2 A. Yes.
3 Q. Explain to me what that involved just
4 because I'm a little confused by the two payments, the
5 31.5 and the 5,250.
6 A. The 5,250 is the breakdown on a monthly
7 basis of the 31,500.
8 Q. Okay. This is fairly complicated terms as
9 compared to the Picou loan. In other words, there's
10 much more specifics as to amounts paid out and
11 breakdowns and things of that nature. Can you explain
12 to me how you arrived at the terms of this deal?
13 A. Well, actually it's not a lot more
14 complicated. I mean, now looking at it and studying
15 it, I can tell you what the deal was. They were each
16 putting up $175,000. They were getting back their
17 principal of $175,000, each of them, six months from
18 the date of the note. They were each getting a kicker
19 of $8,750 on the date of the note. And they were
20 getting checks of $5,250 over a six-month period, so
21 that would be the terms.
22 The way it was created was I figured out
23 that I needed a total of $350,000 into the Ponzi
24 scheme and then I structured a deal accordingly.
25 Q. You mentioned a kicker of 8,750. Could you

1 explain that to me?
Page 57
2 A. It was an enticement.
3 Q. Is that something you just offered on your
4 own or is that something that was requested?
5 A. I think initially -- well, at various points
6 in time I offered it on my own and at other points in
7 time, after I had offered it on my own, they
8 specifically asked me for deals that had a kicker in
9 it.
10 Q. Okay. And the idea with the kicker is that
11 on the day that either Mr. Tonacchio and/or
12 Mr. Lipsitz effectively funded this deal, the same day
13 that they transfer money to RRA, they would get back
14 each 8,750?
15 A. Correct.
16 Q. You mentioned that you arrived at the terms
17 of this deal by deciding what type of inflow you
18 needed for the Ponzi scheme. So tell me about the
19 nature of --
20 A. Correct.
21 Q. Tell me about the nature of the Ponzi scheme
22 in March of 2007.
23 A. That question is vague. I am not sure what
24 you mean by "the nature of the Ponzi scheme in 2007."
25 Q. Agreed. Agreed.

1 Earlier we talked about somewhat of a
Page 58
2 distinction between a bridge loan scheme and the
3 settlement agreement related Ponzi scheme. Was the
4 settlement agreement related Ponzi scheme going on in
5 March of 2007?
6 A. I have to look at the paperwork for the
7 G deals. If they were full-blown settlement deals at
8 that point in time, then yes, it was in full swing.
9 Q. Did the bridge loan scheme that we talked
10 about earlier predate the settlement agreement scheme?
11 A. Predated it and continued during it.
12 Q. In fact, you came up with the settlement
13 agreement related scheme when the bridge loan scheme
14 sort of ran out of steam a little bit; is that
15 correct?
16 MR. PHILLIPS: Objection to the form.
17 THE WITNESS: That's partially correct,
18 because we needed larger inflows of money to the
19 Ponzi scheme that we weren't going to be able to get
20 with the bridge loans. It was also a function of --
21 creation of additional documentation along with
22 co-conspirators that created more elaborate,
23 fraudulent documents that enabled us to increase the
24 amount of money into the Ponzi scheme.
25

1 BY MR. GAY:
Page 59
2 Q. And looking at the promissory note, which is
3 Document 00067, can you tell me, is this one of the
4 bridge loan related deals?
5 A. I can't tell you one way or the other. I
6 need to see the e-mail. My recollection is that with
7 every deal that I sent to Mr. Tonacchio and
8 Mr. Lipsitz, an e-mail was sent first outlining the
9 terms of the deal. They either accepted or rejected
10 the deal.
11 Q. But if this promissory note was earlier in
12 time than the G deals that you referred to earlier,
13 does that necessarily mean that this promissory note
14 was related to the bridge loan scheme?
15 MR. SALIM: Form.
16 MR. PHILLIPS: Objection to the form.
17 THE WITNESS: No, not necessarily. If you
18 just would show me the e-mail I'd be able to tell you
19 what kind of loan it was rather than sitting around
20 here guessing.
21 BY MR. GAY:
22 Q. If you'd look at Document TL 00205, please.
23 Let me know when you have that in front of you.
24 It looks like it's an April 3, 2007 e-mail
25 from you. You are actually also the recipient. Do

1 you see that?
Page 60
2 A. I do.
3 Q. Do you know if this is an e-mail that you
4 sent to yourself, effectively?
5 A. That's certainly what it appears to be.
6 Q. And then in the body of the e-mail it says,
7 "Barry, attached please find my firm's check" -- and
8 then it goes on -- "representing payment in full of
9 your loan dated 1/8/07."
10 A. Yes.
11 Q. That's obviously January 8, 2007?
12 A. Yes.
13 Q. That actually predates by several months the
14 Picou loan that we were speaking about earlier.
15 (Thereupon, Mr. Lichtman exited the room.)
16 BY MR. GAY:
17 Q. Do you know what this 1/8/07 --
18 A. Correct.
19 Q. Do you know what this 1/8/07 loan is in
20 reference to?
21 A. Without seeing the e-mail that predates
22 this, I can't tell you for certain. And I do not want
23 to guess.
24 Q. Okay. If you go down to what's effectively
25 the fourth paragraph, it says, late penalty -- or

1 excuse me. "Late payment penalty and interest." Do
Page 61
2 you see that?
3 A. Yes.
4 Q. Do you know what that's in reference to?
5 A. I do. From time to time I incorporated into
6 various deals as an inducement a late payment penalty.
7 Q. This specifically references, "Late payment
8 penalty and interest is an additional 10K and thus, an
9 additional 10K is included." Do you see that?
10 A. I do.
11 Q. Does that mean that you were paying
12 Mr. Tonacchio and/or Mr. Lipsitz an additional $10,000
13 as a late payment penalty?
14 MR. SALIM: Form.
15 THE WITNESS: Yes.
16 BY MR. GAY:
17 Q. Does that mean that you had failed to make a
18 payment on a prior deal timely?
19 MR. SALIM: Form.
20 THE WITNESS: Yes.
21 BY MR. GAY:
22 Q. Do you know why you didn't make that payment
23 timely?
24 A. My best guess is that we didn't have the
25 money in-house.

1 Q. You don't remember specifically this
Page 62
2 instance?
3 A. I do not.
4 Q. Do you remember if they specifically
5 requested a late payment penalty --
6 MR. SALIM: Form.
7 BY MR. GAY:
8 Q. -- or did you just offer it?
9 A. I'd be guessing. Most of the time I just
10 offered that as an inducement.
11 Q. If you'd look at Document TL 00207, please.
12 A. I have that.
13 Q. That's an e-mail from Scott Rothstein dated
14 April 16, 2007 to TL Investors and Barryflash@aol.com,
15 subject the new loan. Do you see that?
16 A. I do.
17 Q. And then it goes on to say, "The following
18 are the terms of new the loan." Do you see that?
19 A. Yes, I do.
20 Q. Now, when you are referring to a loan in
21 this e-mail, do you know if this is in reference to
22 one of the bridge loans that we spoke about earlier or
23 one of the settlement agreement related deals that we
24 spoke about earlier?
25 A. I do not know. I cannot tell from this.

1 Q. But you would refer to each of these
Page 63
2 interchangeably as loans?
3 A. I may have. I need to see some of the
4 e-mails from the settlement deals to see if I used the
5 words interchangeably, but it's certainly possible
6 that I did.
7 Q. Do you have any idea how many of these types
8 of deals you entered into with Mr. Lipsitz,
9 Mr. Tonacchio and/or their related entities and/or
10 wives?
11 A. You mean ones where I called them loans?
12 Q. The total amount of these deals, whether
13 they be bridge loan deals or settlement agreement
14 related deals.
15 A. I don't remember the total number of deals.
16 I recall the number being in the multiple tens of
17 millions of dollars in total between what they paid in
18 and what I paid out.
19 Q. If I were to say somewhere in between 30 and
20 40 deals, does that sound about right?
21 MR. SALIM: Form.
22 THE WITNESS: It does.
23 BY MR. GAY:
24 Q. Were there any other "investors" in the
25 Ponzi scheme deal that had that number of deals?

1 A. Yes.
Page 64
2 Q. How many other "investors" had that volume
3 of deals, best you can recall?
4 A. Banyon, Ted Morse, Levys. And then it
5 depends upon how you are grouping them. If you group
6 it under an umbrella there may be other people.
7 Szafranski may have had close to that if you group all
8 his people together in all the deals, but I have to
9 review the paperwork to tell you for certain.
10 (Thereupon, Mr. Lichtman entered the room.)
11 BY MR. GAY:
12 Q. But as individual investors, were
13 Mr. Lipsitz and Mr. Tonacchio some of the major
14 investors in the Ponzi scheme?
15 MR. SALIM: Form.
16 THE WITNESS: Major by deal number or major
17 by money?
18 MR. GAY: Both.
19 THE WITNESS: They were on the higher end
20 of total number of deals, except as compared to
21 perhaps Morse and Banyon and the Levins. Monetarily,
22 when the Ponzi was in full swing, no, they were
23 toward the lower end of monetary investors.
24 BY MR. GAY:
25 Q. Okay. You mentioned earlier in order to

1 determine whether or not a specific deal, as
Page 65
2 represented by a promissory note, was related to the
3 bridge loan scheme as opposed to the settlement
4 agreement related scheme, you would want to look at an
5 e-mail to determine which it was. What in the e-mail
6 would you be looking for that would help you identify
7 which type of deal it was?
8 A. I'd be looking for things such as money
9 in-house, whether or not I used the term loan, whether
10 or not I'm referencing a client needing the money and
11 how I'm referencing it. It would be the overall
12 review of the document by me to tell you for certain.
13 Q. Okay. Do the number of deals, since there
14 were 30 or 40 of them, instead of kind of walking you
15 through it, each one, I'm trying to get an idea if you
16 understand at some point if you transitioned from
17 doing bridge loan type deals with Mr. Tonacchio and/or
18 Mr. Lipsitz into doing settlement agreement related
19 deals or if it was all bridge loan related deals
20 throughout?
21 MR. PHILLIPS: Object to the form.
22 MR. SALIM: Form, predicate.
23 THE WITNESS: I recall both. I recall
24 both. In looking at this document, this April 16,
25 2007 e-mail this appears to be a bridge loan, but I

1 can't be certain. It certainly appears to be the way
2 I set it up because it doesn't talk about the money
3 being in-house or the like. But I need to compare it
4 to other e-mails to be certain.
5 BY MR. GAY:
6 Q. So when you typically referred in an e-mail
7 to the money being in-house, that would be indicative
8 of what type of deal?
9 A. Settlement funding.
10 Q. And typically, and I just know based on
11 prior discussions, the settlement agreement related
12 deals typically came along with a sort of package of
13 documents.
14 MR. SALIM: Form.
15 BY MR. GAY:
16 Q. Can you describe what those documents
17 typically included?
18 A. No, that's not a true statement.
19 Q. Tell me where I got it wrong.
20 A. There were a group of investors, like the
21 Morses and Levys, Levins early on, who did settlement
22 funding with me without those extravagant detailed
23 deal packets.
24 Q. You mentioned the folks who were doing the
25 deals without those extravagant deal packages was Ted
Page 66

1 Morse and the Levys. Was there anyone else?
Page 67
2 MR. SALIM: Form.
3 THE WITNESS: The Levins early on.
4 BY MR. GAY:
5 Q. And I think all those individuals --
6 A. I believe Mr. Lipsitz and Mr. Tonacchio did
7 so. But again, I have to look at the e-mails. Mike
8 Kent may have, I don't recall specifically.
9 Q. And all those individuals that you just --
10 A. And the e-mails would be our best --
11 Q. I'm sorry, say that again?
12 A. Our e-mails -- the e-mails would be the best
13 guide.
14 Q. All the individuals that you just mentioned,
15 I think, are also in what you've called earlier your
16 inner circle; is that right?
17 A. In it or close to it, yes.
18 Q. Okay. So if you were engaged in these
19 settlement agreement related deals with some of these
20 individuals and they only got promissory notes, why
21 did other individuals who were involved in similar
22 deals get more documentation?
23 A. That depended on who the individual was.
24 Certain people, because of their level of trust of me,
25 didn't require additional documents. Certain people,

1 because they couldn't have given a crap one way or the
2 other where the money was coming from so long as they
3 made money, they required documents. It varied.
4 Q. Were Mr. Tonacchio and Mr. Lipsitz in that
5 latter group that you are talking about, not giving a
6 crap where the money came from?
7 MR. SALIM: Form.
8 MR. PHILLIPS: Objection to form.
9 THE WITNESS: In the beginning I believe
10 that they trusted me so that they didn't require any
11 additional documentation. After we got into full
12 swing and they were making millions of dollars, I
13 always got the impression that as long as everything
14 was going fine, they were fine.
15 BY MR. GAY:
16 Q. Do you recall typically how the funding
17 would work on the deals that you entered into with
18 Mr. Tonacchio and Mr. Lipsitz, or did you have a sort
19 of routine?
20 A. They would wire the money -- I'd send them
21 an e-mail, they'd accept or reject the deals. They
22 would then wire, and I would overnight them a
23 promissory note with the postdated checks.
24 Q. Why postdated checks as opposed to wiring
25 money back to them?
Page 68

1 A. You know, I don't recall specifically why we
2 did it that way. They may have wanted it that way and
3 I may have wanted it that way because it gave me an
4 extra day or two on the payment.
5 Q. If you'd look at Document 00216, please.
6 Let me know when you have that in front of you.
7 A. I have it.
8 Q. And that's an e-mail, subject line, new
9 deal. It looks like it's from S. Rothstein --
10 A. Yes.
11 Q. -- @RRA-law.com, that's your e-mail address
12 at RRA?
13 A. Yes.
14 Q. It's to TLinvestors@aol.com and
15 Barryflash@aol.com. Do you see that?
16 A. I do.
17 Q. It says, "Good morning, kids. New one for
18 ya, extremely lucrative." Then it goes on to refer to
19 a total loan in the amount of 262K. Do you see that?
20 A. I do.
21 Q. And then if you go down a little bit
22 further, it says, "Interest is not six percent." Do
23 you see that?
24 A. Yeah.
25 Q. Can you explain to me what you meant by that
Page 69

1 "Interest is not six percent," and then "hehehehehe."
2 A. It appears to be a joke about something with
3 low interest rates, but I don't have a specific
4 recollection as to what I was referring to.
5 Q. Was the point of that statement that this
6 deal involved interest that was much, much higher than
7 six percent?
8 A. Yes.
9 Q. If you go on, the second line from the
10 bottom, it says, "Also I have your TVs." Do you see
11 that?
12 A. Yes.
13 Q. Can you tell me what that was about?
14 A. That related to a prior loan deal where the
15 way I pitched it was that the gentleman that they were
16 loaning the money to had decided to give them TVs from
17 someplace as an additional thank you for what they had
18 done for him. So that's referring definitely to a
19 loan deal, a private loan deal.
20 Q. But you were just making that up about the
21 TVs?
22 A. Yes.
23 Q. Did you ever actually buy them TVs?
24 A. My recollection is ultimately I did send
25 them, but it was a ways down the road.
Page 70

1 Q. If you'd look at Document 00226, please.
Page 71
2 A. Okay.
3 Q. It's again an e-mail from you to, and this
4 time it just say Domenick Tonacchio in the "to" line
5 dated November 21, 2007. Do you see that?
6 A. Yes, I do.
7 Q. Subject is new deal, and then it lays out
8 some terms in the e-mail?
9 A. Yes, I have it.
10 Q. You see on the fifth line where it says,
11 "Interest is well in excess of 100 percent."
12 A. Yes.
13 Q. Would this e-mail be indicative of one of
14 the bridge loan schemes -- scheme related deals?
15 A. This looks more like a settlement funding
16 deal, but I can't tell one way or the other.
17 Q. If you'd look at TL 00210, please.
18 A. I see that.
19 Q. It's an e-mail from you on March 27, 2007 to
20 Kathy Brown. Who's Kathy Brown?
21 A. She was Stuart Rosenfeldt's secretary at the
22 time.
23 Q. The subject of the firm is Barry Lipsitz.
24 Can you review that e-mail and tell me what that's in
25 reference to?

1 A. We were late on a payment to Barry and I was
2 having -- instructing Kathy to lie to him about the
3 reason we were late.
4 Q. What was the reason that you were telling
5 her to provide him as to why you were late?
6 A. I couldn't tell him that I -- I couldn't
7 say, tell Barry the Ponzi scheme doesn't have money in
8 it, so we can't send it.
9 Q. Understood. So instead you told her to tell
10 him what?
11 A. Exactly what's on this page.
12 Q. That there was some mixup with Fed-Ex and
13 that Mr. Lipsitz's package was delivered to London?
14 A. Yes.
15 Q. To your cousin in London?
16 A. Yes.
17 Q. Do you have any cousins?
18 A. Yes.
19 Q. Do any of them live in London?
20 A. I actually had a cousin that was in London
21 around this point in time, but for the life of me I
22 don't know why that's the lie I came up with. It just
23 must have come to my head and I wrote it.
24 Q. If you'd look at the next document, which is
25 TL 00211.
Page 72

1 A. Yes.
Page 73
2 Q. That's an e-mail from TL Investors to you
3 date May 31, 2007. You see that?
4 A. I do.
5 Q. Fourth line down it says, we realized we
6 never received checks due on a note for June 20th,
7 2007 for 400 -- I think it's supposed to be $400,000.
8 Do you see that?
9 A. I do.
10 Q. Do you remember what this e-mail was in
11 reference to?
12 A. I don't have a specific recollection. We
13 must not have sent checks out that they were owed.
14 Q. How often did that happen?
15 A. It happened from time to time.
16 Q. And what was the reaction from Mr. Lipsitz
17 and/or Mr. Tonacchio when that happened?
18 A. It varied from, "okay, just take care of
19 it," to "what the hell are you doing, get us our
20 checks."
21 Q. If you'd look at the next document, it's
22 00212. I think it's a June 4th --
23 A. I have it.
24 Q. June 4th, 2007 e-mail from you to TL
25 Investors. You see that?

1 A. Yes.
Page 74
2 Q. First line is, "May be getting a large
3 insurance check from Picou's insurer next week." Do
4 you see that?
5 A. Yes.
6 Q. Can you tell me what that's in reference to?
7 A. It appears to be me just making up an excuse
8 as to why a payment is going to be made at a specific
9 period of time.
10 Q. Do you remember what either the real or
11 alleged involvement of an insurance company was, or an
12 insurance payment in the Picou loan deal?
13 A. I do not.
14 Q. If you'd look at 00214, please.
15 A. Okay.
16 Q. It's a June 14, 2007 e-mail from you to TL
17 Investors. You see that?
18 A. I do.
19 Q. It says, "Can you check on the 286K wire.
20 It has not arrived and I have another hour or so to
21 fund or this guy gets crushed." Do you see that?
22 MR. SALIM: Form.
23 THE WITNESS: I do.
24 MR. GAY: What was the problem?
25 MR. SALIM: I think you read an hour or so

1 and it says an hour or less.
Page 75
2 MR. GAY: Bill is keeping me honest.
3 BY MR. GAY:
4 Q. Where it says, "or this guy gets crushed,"
5 do you know what this is in reference to?
6 A. Yes, this appears to be a bridge loan deal
7 and I was telling them that this guy needed this money
8 by a specific period of time.
9 Q. If you'd look at 00217, please.
10 A. I have it.
11 Q. It's a June 28th, 2007 dated e-mail from
12 Scott Rothstein to TL Investors. You see in the first
13 line it says, "The last of the three deals on the
14 exact same terms as the last two hit just now." Do
15 you see that?
16 A. Yes.
17 Q. This goes on to say, "Same exact terms as
18 the last one." What were you referring to?
19 A. Yes.
20 Q. What were you referring to there with, "The
21 last three deals on the exact same terms as the last
22 two"?
23 A. Just referencing two prior deals as if there
24 were three deals that were identical.
25 Q. Why would there be three deals that would be

1 identical?
Page 76
2 A. As I sit here today, I don't have a specific
3 recollection. I did that frequently with deals.
4 Q. Do you remember what your reputation was to
5 the "investors" as to why there would be multiple
6 deals that would be structured exactly the same way?
7 A. Well, when they were settlement funding
8 deals, I told the investors that it was multiple
9 plaintiffs. So this could be one of those, but I
10 don't recall specifically. The e-mail is not detailed
11 enough.
12 Q. Then the fourth line of the e-mail it says,
13 "And again, an extra 10 points in fees for funding
14 today." Do you see that?
15 A. Yes.
16 Q. Do you remember why or what the
17 representation was as to why there would be this sort
18 of kicker for funding that day?
19 A. I know the actual reason. I don't know what
20 the lie was that I told them.
21 Q. And when it refers to extra 10 points, what
22 does that equate to dollar wise?
23 A. The way I wrote it, it looks like one
24 percent of the total loan amount in fees. One percent
25 for each point.

1 Q. So when you generally refer to points, it's
2 the same general connotation as when people talk about
3 mortgage loan paying down points, same idea?
4 A. Yes.
5 Q. As far as the percentage of the overall deal
6 total?
7 A. Yes.
8 Q. Okay. If you'd look at Document 00218,
9 please.
10 A. Okay.
11 Q. It's July 9, 2007-e-mail from you, Scott
12 Rothstein, to christinaztona@aol.com. Do you see
13 that?
14 A. Yes, I do.
15 Q. You said, "I spoke to him this morning... I
16 told him I was sending him an interest check for 15K."
17 Do you know who you were referring to when you say
18 "him"?
19 A. Looks like Domenick.
20 Q. It goes on to say, and that he should still
21 hold the check. Please tell him to hold the check --
22 or excuse me, please tell him to hold it until I tell
23 him to deposit it. Do you see that?
24 A. I do.
25 Q. Tell me what that was in reference to.
Page 77

1 A. To the best of my recollection, we were
Page 78
2 short on cash. I couldn't make the check good, so I
3 was telling him to hold it.
4 Q. Was it your understanding that in
5 representing to Mr. Tonacchio that he needed to hold
6 the check, you were in effect telling him, I don't
7 have the funds to make good on this check?
8 A. No, that's -- no, no, that's not what I
9 said. That's what -- that's the reason I was doing
10 it. I don't know why I told him to hold it.
11 Q. Well, what would you possibly represent to
12 him as to why you would need to hold the check?
13 MR. SALIM: Form.
14 THE WITNESS: Could have been a myriad of
15 reasons. I don't want to guess. Unless I see an
16 e-mail related to this, sir, I can't tell you with
17 any certainty.
18 BY MR. GAY:
19 Q. If it was in relation to one of the
20 settlement agreement related deals, I understand from
21 prior testimony that what was represented was that you
22 had settled pre suit litigation on behalf of a client.
23 Defendant in that underlying litigation had funded a
24 settlement payment that your law firm was holding in
25 an account; is that correct?

1 A. Yes, sir.
Page 79
2 Q. So according to what you represented
3 regarding the settlement agreement related deals,
4 there would be no reason for you to ever miss a
5 payment; is that correct?
6 MR. SALIM: Form.
7 THE WITNESS: If it was a settlement
8 funding deal, that's correct.
9 BY MR. GAY:
10 Q. But if it were a bridge loan related deal
11 that would be something different?
12 A. If we were waiting -- if it was a bridge
13 loan deal, yes, because that would have been waiting
14 for the putative client to repay the loan. A big
15 difference.
16 Q. If you'd look at Document 00219, please.
17 A. I have it.
18 Q. It's a July 12, 2007 e-mail from Scott
19 Rothstein to TL Investors. You see that?
20 A. I do.
21 Q. It says, "Any news on the wire... just got
22 an agitated call from my bank." You see that?
23 A. I do.
24 Q. Do you know what this e-mail was in
25 reference to?

1 A. No, sir.
Page 80
2 Q. Do you remember representing to
3 Mr. Tonacchio that you had gotten an agitated call
4 from your bank?
5 A. I mean, I understand why I wrote the e-mail,
6 but I don't remember the specific set of facts that go
7 along with this.
8 Q. Why did you write the e-mail?
9 A. This is one of the methodologies that was
10 used with the various investors to try to get them to
11 fund as quickly as possible.
12 Q. The second line, it says, "They let me fund
13 fast based upon my assurance of incoming wires." Do
14 you see that?
15 A. Yes.
16 Q. Do you remember representing to either
17 Mr. Lipsitz or Mr. Tonacchio that you had some sort of
18 special relationship with your bank?
19 A. Yes.
20 Q. What was that relationship?
21 A. I don't recall specifically.
22 Q. If you'd look at Document 00220, please.
23 A. Okay.
24 Q. It's a July 30, 2007 e-mail from Scott
25 Rothstein to TL Investors. You see on the fourth line

1 it says, "It was great getting to spend time with you
2 here and briefly in New York." Do you see that?
3 A. I do.
4 Q. And the next line, the end, it says, "Sorry
5 we missed the picnic at Frankie's." Do you see that?
6 A. Yes.
7 Q. Who's the Frankie that's referred to?
8 A. Friend of Domenick and Barry's that was
9 having a picnic in New York that they invited us to.
10 Q. Do you remember that individual's name?
11 A. I only remember Frankie. I don't remember
12 his last name.
13 Q. If you go down a couple of lines and
14 sentences, it says, "I have the stop payments and
15 trust accounting issues all resolved with my bank."
16 Do you see that?
17 A. Yeah.
18 Q. Do you know what that was --
19 A. I do.
20 Q. Do you know what that was in reference to?
21 A. Yes.
22 Q. Could you tell me, please?
23 A. We were having funding difficulties within
24 the Ponzi scheme. I needed to delay payments back to
25 Mr. Tonacchio and Mr. Lipsitz. I used various schemes
Page 81

1 to accomplish that, including stop payments on checks,
2 refer to maker returns, that type of thing, and this
3 is referencing me fixing one of those issues.
4 Q. So you had represented to Mr. Tonacchio
5 and/or Mr. Lipsitz that at some point in time you had
6 put stop payments on some of the checks that you had
7 issued them?
8 MR. PHILLIPS: Objection to form.
9 THE WITNESS: I don't recall exactly what
10 occurred, but I was making up some excuse to explain
11 why something had occurred.
12 BY MR. GAY:
13 Q. At the end of that line it says, "So I can
14 send the 310K in the morning." Do you see that?
15 A. Yes.
16 Q. Do you know why you would be attempting to
17 send them $310,000?
18 MR. PHILLIPS: Objection to form.
19 THE WITNESS: I owed them the money.
20 BY MR. GAY:
21 Q. But that's a much larger payment than was
22 typically structured on any of these deals, so I was
23 just curious, if you know, what that $310,000
24 specifically was in reference to?
25 MR. SALIM: Form.
Page 82

1 THE WITNESS: I don't. I don't have a
Page 83
2 specific recollection.
3 BY MR. GAY:
4 Q. If you'd look at TL 00224, please.
5 A. Okay.
6 Q. Right about the middle it says, "There is an
7 additional 10K in the package with the 310K checks and
8 note that can be deposited additionally as penalty for
9 the delay caused by me, my bank or whoever actually
10 caused it." Do you see that?
11 A. I do.
12 Q. Can you tell me what that's in reference to?
13 A. This was a situation where I had not paid
14 Domenick timely and he was angry with me. I was
15 attempting to make amends by sending additional money.
16 Q. Do you know how late -- do you recall how
17 late the payments were?
18 A. I do not.
19 Q. Did there come a time where Mr. Tonacchio
20 and/or Mr. Lipsitz asked you to paper one of these
21 deals in the name of their wives as opposed to them
22 individually?
23 MR. PHILLIPS: Objection to the form.
24 THE WITNESS: Yes, sir.
25

1 BY MR. GAY:
Page 84
2 Q. Do you know why they did that?
3 MR. PHILLIPS: Same objection.
4 THE WITNESS: I do not.
5 BY MR. GAY:
6 Q. Did you ever discuss that with them?
7 A. I may have, but I don't have a specific
8 recollection one way or the other.
9 Q. Look at TL 00229, please. It's a
10 January 31, 2008 e-mail.
11 A. Yes, sir.
12 Q. Just look at the e-mail and tell me what you
13 were discussing here.
14 A. This is me attempting to add legitimacy and
15 an explanation regarding a scam that I had going on
16 with Gibraltar back in order to slow down deposited
17 checks.
18 Q. Okay. It says towards the end, "This has
19 made a mess of my accounts. They are now looking at
20 hundreds of checks for fraud." Do you see that?
21 A. Yes.
22 Q. Did that actually happen, that your bank was
23 looking at your checks for fraud?
24 A. No. Gibraltar Bank was always looking at me
25 for fraud, but that's not relative to this particular

1 e-mail, no, sir.
Page 85
2 Q. Look at 00231, please.
3 A. Yes.
4 Q. It's a February 4, 2008 e-mail from Scott
5 Rothstein to TL Investors. Do you see that?
6 A. Yes.
7 Q. First line, it says, "No checks bounced."
8 Then all capitals, "NONE." And a couple of lines down
9 it says, "NO ONE said they bounced." Again, in capital
10 letters, "NO ONE." Can you tell me what that's in
11 reference to?
12 A. Yes. I had received word from Domenick that
13 someone at my bank, at Gibraltar, had said -- or
14 someone at his bank had said that checks that he had
15 deposited had bounced, when, in fact, they had been
16 returned under a scam I had running with Gibraltar
17 Bank, refer to maker or for lack of endorsement.
18 Q. The scam with Gibraltar was that they would
19 return the checks even though they were sufficient?
20 A. Yes, when I couldn't fund a specific check,
21 Gibraltar would, from time to time, mark the check for
22 me refer to maker and return it instead of bouncing it
23 to give me time to get the funds in to fund it.
24 Q. Was it your understanding at that time that
25 Mr. Tonacchio believed that you had bounced a check to

1 him?
Page 86
2 MR. SALIM: Form.
3 THE WITNESS: Yes.
4 BY MR. GAY:
5 Q. If you'd look at 00233, please.
6 A. Yes.
7 Q. It's a February 5, 2008 e-mail from Scott
8 Rothstein to TL Investors, and about midway in the
9 e-mail it says, "I am sending the additional million
10 on Tuesday." Do you see that?
11 A. Yes.
12 Q. What was that in reference to?
13 A. An investment deal that I was doing with
14 Domenick relative to a piece of property.
15 Q. It goes on to say, "Put it in a separate
16 account and use it as you require so we do not have to
17 deal with this." Do you see that?
18 A. Yes.
19 Q. What are you talking about, "so we do not
20 have to deal with this," what does that mean?
21 A. This was one of those situations where I was
22 investing in some property or construction deal with
23 Mr. Tonacchio and I didn't have access to all the
24 funds immediately so I came up with a series of
25 excuses to delay me having to ultimately fund. And

1 then when I finally did have the money, I set it up so
2 that it appeared that it wasn't my fault that I
3 couldn't fund. And that I was going to send him the
4 money to go ahead and do whatever he needed to do for
5 our deal.
6 Q. And if you'd look at 00234, please.
7 A. Okay.
8 Q. It's a February 19, 2008 e-mail from Scott
9 Rothstein to TL Investors again.
10 A. Yes.
11 Q. You'll see on the second line it says, "I
12 have an off the charts place for the funds you are
13 holding." You see that?
14 A. I do.
15 Q. Two lines down it says, "Please wire the
16 funds you are holding of mine. It's either a million
17 or a million one hundred thousand, don't remember off
18 the top of my head." Do you see that?
19 A. Yes.
20 Q. Explain to me what this e-mail was in
21 reference to.
22 A. I had sent him money to hold for one of our
23 deals and I needed it back for something, so I was
24 coming up with a situation where we'd be earning money
25 off that money so I can get back use of it into the
Page 87

1 Ponzi scheme.
Page 88
2 Q. Do you think that's in reference to the same
3 million dollars you were just talking about for
4 investment in some real estate deal?
5 A. It looks like it, yeah.
6 Q. So is the point of this e-mail that you had
7 transferred approximately a million dollars to
8 Mr. Tonacchio to invest in a real estate deal, but now
9 you were asking for it back because you had somewhere
10 you can make a lot of money off of those funds?
11 A. Well, that's what I was telling him.
12 Q. I understand, but was that the
13 representation, that you just wanted to undo your deal
14 with him or you just wanted the money back
15 temporarily?
16 A. No, no, I didn't want to undo the deal. I
17 wanted to hold the money elsewhere, quote, unquote, so
18 we can earn significant interest on it.
19 Q. So you understood the nature of the real
20 estate deal that you were entering into with
21 Mr. Tonacchio, was that despite the fact that you had
22 transferred him a million dollars you could get it
23 back to use it when you needed it?
24 MR. SALIM: Form.
25 THE WITNESS: It may have been for a

1 construction loan or something of that sort, I don't
Page 89
2 remember. So, to the best of my recollection from
3 reading this, it appears that it was being held
4 someplace where we can get it back, yes.
5 BY MR. GAY:
6 Q. If you'd look at Document 00237, please.
7 And you'll see it's actually two e-mails. I'd like
8 you to concentrate on the one on the bottom, the
9 second one.
10 A. Okay, got it.
11 Q. February 25, 2008, e-mail from TL Investors
12 to S. Rothstein@RRA. Do you see that?
13 A. Yes, sir.
14 Q. The second line, it says, "But he wants a
15 note and checks to be overnighted to our office." You
16 see that?
17 A. Yes, sir.
18 Q. You talked about earlier that was kind of
19 your standard operating procedure with them, was if
20 they entered into a deal, they would wire the money
21 and you would overnight them checks and a promissory
22 note; is that right?
23 MR. PHILLIPS: Objection to form.
24 THE WITNESS: Yes.
25

1 BY MR. GAY:
Page 90
2 Q. So then why is he specifically asking for
3 that in reference to this deal?
4 A. If you continue to read --
5 MR. SALIM: Form.
6 THE WITNESS: If you continue to read on,
7 you can see that there must have been, on the last
8 deal prior to this, that he didn't get his note for
9 several weeks.
10 BY MR. GAY:
11 Q. Because in the next line it says, "Because
12 last time he didn't get a note for several weeks"?
13 A. Yes.
14 Q. Do you recall that instance?
15 A. I don't, but I recall there being instances
16 like that.
17 Q. Look at 00241, please.
18 A. Okay.
19 Q. It's actually the second e-mail again.
20 That's an e-mail string with two e-mails. I'm looking
21 at the one at the bottom of the page, it's Friday,
22 April 18, 2008. Do you see that?
23 A. Yes.
24 Q. E-mail from Barryflash to S. Rothstein. You
25 see that?

1 A. I do.
Page 91
2 Q. About the middle of the first line it says,
3 "I would appreciate the complete package when we do a
4 deal." You see that?
5 A. Yes.
6 Q. What was the complete package?
7 A. I do.
8 Q. Do you understand what he meant when he
9 referred to the complete package?
10 A. Yes.
11 Q. What was that complete package?
12 A. He sent me the money, he wanted the checks
13 and the note.
14 Q. So the complete package consisted of the
15 checks and a promissory note?
16 A. Yes.
17 Q. And the second line towards the end of it,
18 it says, "I try to take care of it right away. I
19 still have not received the note." You see that?
20 A. Yes.
21 Q. Is this representative of another instance
22 in which Mr. Lipsitz didn't receive a promissory note
23 as he expected?
24 A. Yes.
25 Q. Do you recall any specifics regarding that

1 instance?
Page 92
2 A. I do not.
3 Q. If you'd look at 00253, please. It's a
4 June 2nd, 2008 e-mail. It's actually from that
5 mailbox@my.simulscribe.com again. You see that?
6 A. Yes.
7 Q. June 2nd, 2008?
8 A. I have it.
9 Q. The second line -- well, I should go back to
10 the first. It says, "Hey, Scottie, Barry." In
11 reviewing the e-mail, do you know if this is from
12 Barry Lipsitz?
13 A. Yes.
14 Q. Okay. In the middle of the second line it
15 says, "I think it's horrible down here with that
16 stuff. Just horrible." Do you see that?
17 A. Yes.
18 Q. Do you know what that's in reference to?
19 A. I don't recall.
20 Q. The next sentence it says, "I don't know for
21 some reason Domenick, and there's a couple of question
22 marks, then it says chase everything, and a couple of
23 question marks. Do you know what that's in reference
24 to?
25 A. No. And that's what the system did when it

1 couldn't decipher what was being said on the voice
Page 93
2 message.
3 Q. Based on what's there, do you know what
4 Barry was referring to regarding Domenick?
5 A. No, sir.
6 Q. If you'd look at 00260, please. It's a
7 June 13, 2008 e-mail from christinaztona@aol.com to
8 Scott Rothstein. Do you see that?
9 A. Yes.
10 Q. It says, "Scott, Domenick wants to know when
11 he can come by and pick up the cut checks." Do you
12 see that?
13 A. Yes, I do.
14 Q. Is that in reference to Mr. Tonacchio
15 actually physically stopping by your office to pick up
16 checks regarding a deal?
17 A. Yes.
18 Q. Did he do that frequently?
19 A. From time to time if he was in town.
20 Q. Next sentence it says, "Also, he needs you
21 to make out a check for 260,000 for the 12H unit."
22 Can you tell me what that's in reference to?
23 A. I was buying a condo in one of the buildings
24 he built and that was the check for it.
25 Q. If you'd look at 00263, please. It's a

1 December 15, 2008 e-mail from Scott Rothstein to Tona
2 Construction. Do you see that?
3 A. Yes.
4 Q. It says, "I was in a bad car accident...
5 injured my heart... bruised the heart muscle..." Do
6 you see that?
7 A. I do.
8 Q. Okay. Tell me what that was in reference
9 to.
10 A. I was coming up Commercial Boulevard and I
11 drove my Carrera GT into a tree.
12 Q. So it actually happened that you had a heart
13 related injury?
14 A. Yes.
15 Q. Why were you conveying that to, I assume,
16 Domenick Tonacchio at that time?
17 A. Probably needed something from me and I was
18 telling him where I was.
19 Q. If you'd look at 00274, please. It's an
20 April 23rd, 2009 e-mail from Scott Rothstein to
21 Barryflash. Do you see that?
22 A. Yes.
23 Q. Subject line is new deal. And the first
24 line, it says, "Of course you can do half... George
25 will take other half." Do you see that?
Page 94

1 A. I do.
Page 95
2 Q. George who?
3 A. Levin.
4 Q. So you were representing in this e-mail to
5 Mr. Lipsitz that he can fund half the deal and George
6 Levin would fund the other half?
7 A. That was the representation I made.
8 Q. Okay. Was that not true?
9 A. When I offered a deal such as this and the
10 person could only take a percent of it, we needed
11 money for the Ponzi scheme, I was not going to turn
12 town the money so I always said that someone else
13 could take the other half.
14 Q. Did Mr. Lipsitz know George Levin?
15 A. He had met him.
16 Q. How had he met him, do you know?
17 A. Through me.
18 Q. Do you know if he ever entered into any of
19 these deals with you along with Mr. Levin?
20 A. I don't believe he did.
21 Q. If you'd look at 00276, please. It's a May
22 1, 2009 dated e-mail from Scott Rothstein to Domenick
23 Tonacchio. Do you see that?
24 A. I do.
25 Q. Third line down, the end of the sentence it

1 says, "I MUST" -- in all capitals -- "put that back
Page 96
2 now that I sent all checks to you." Do you see that?
3 A. Yes.
4 Q. What's that referring to?
5 A. My best recollection is that I had sent
6 $500,000 to Domenick for something and I needed it
7 back.
8 Q. Do you know why you would have sent
9 $500,000?
10 A. Without seeing other e-mail traffic, I can't
11 tell you.
12 Q. So when you say, "I must put that back now,"
13 what did you mean by that? Put it back where?
14 A. Put it back in the bank.
15 Q. Why would you be representing to
16 Mr. Tonacchio that you needed to put money back in the
17 bank?
18 A. Because as I just testified to you, it
19 appears that I sent him $500,000 for something that he
20 needed the money for and that I needed to put it back.
21 Q. Okay. If you'd look at 00281, please.
22 A. Can we take two minutes, please. I need to
23 use the restroom.
24 Q. Yeah.
25 [Short recess taken.]

1 BY MR. GAY:
Page 97
2 Q. A few more e-mails to ask you about. If
3 you'd look at 00281.
4 A. I have that.
5 Q. It's a May 13, 2009 e-mail from Scott
6 Rothstein to TL Investors. Subject is before you meet
7 with the bank. You see that?
8 A. Yes.
9 Q. It says, "Make sure to call me again to
10 review what you should or should not say." Do you see
11 that?
12 A. Yes.
13 Q. Tell me what that was in reference to.
14 A. To the best of my recollection, as a result
15 of all the money going in and out of Domenick's bank
16 accounts, to and from my law firm in the amounts and
17 with the regularity, the bank approached Domenick
18 concerned about what all these transactions were about
19 and what was actually going on.
20 Q. Mr. Tonacchio's bank approached him?
21 A. Yes.
22 Q. Do you recall what bank it was?
23 A. I do not. I don't recall because he was in
24 the process around this time or because of this he had
25 made a decision to change banks. I don't recall

1 specifically.
Page 98
2 Q. So I was just going to ask you if you knew
3 what the resolution of that sort of incident with his
4 bank was, but it sounds like he may have resolved it
5 by simply switching banks.
6 A. He may have. I don't recall one way or the
7 other.
8 Q. Okay. 00289. If you'd look at that
9 document. It's a July 10th --
10 A. Okay.
11 Q. -- 2009 e-mail. Actually, there's two
12 e-mails. I'd like to start with the one -- the second
13 e-mail from Scott Rothstein to Barryflash. Can you
14 tell me what that e-mail was about?
15 A. Yes. There was a delay in getting documents
16 and checks to Barry. I was taking my nephew up to
17 Gainesville for college. Actually, to get an
18 apartment. That's all.
19 Q. The response from --
20 A. I was using it as an excuse as to why
21 something got delayed.
22 Q. Okay. To the best of your knowledge, did
23 Mr. Tonacchio and/or Mr. Lipsitz know they were
24 investing in a fraud scheme?
25 MR. SALIM: Form.

1 MR. PHILLIPS: Same.
Page 99
2 THE WITNESS: I can't answer that one way
3 or the other.
4 BY MR. GAY:
5 Q. Why is that?
6 A. Because the way that this was done, it
7 appeared to me to be, on a good day, shady. But you
8 have to also balance that out with the fact that these
9 guys trusted me. They were my friends. So for the
10 life of me, I can't tell you for certain one way or
11 the other. We certainly had conversations where it
12 appeared that I was involved in a lot of shady
13 activity and they were both aware of it. But I can't
14 say for certain and I'm not going to render a guess.
15 Q. Do you know what time period they became
16 aware that you were involved in shady activity?
17 MR. SALIM: Form.
18 MR. PHILLIPS: Objection to the form.
19 THE WITNESS: It was fairly early on in our
20 actual friendship. There were things that we
21 discussed that were not aboveboard. I think we all
22 realized that we all qualified as "players" in each
23 other's eyes on a variety of different levels. So I
24 spoke more freely with them than I might have
25 otherwise.

1 BY MR. GAY:
Page 100
2 Q. Do you remember that you were previously
3 deposed in a number of adversary proceedings and
4 actually the main bankruptcy case, in the RRA
5 bankruptcy case --
6 A. I do.
7 Q. -- back in December of last year?
8 A. I do.
9 Q. Specifically on December 16th, in a
10 deposition noticed in the Morse V. Rothstein action
11 you were asked the question about whether Ted Morse
12 ever talked to any of the Ponzi investors. Do you
13 remember that testimony?
14 A. I do.
15 Q. And in part you answered, in addition to a
16 number of other investors, there were two other
17 investors, and then you named Mr. Lipsitz and
18 Mr. Tonacchio. Do you remember that?
19 MR. SALIM: What page?
20 THE WITNESS: I do.
21 MR. GAY: 1162 through 1163.
22 MR. SALIM: Thank you.
23 BY MR. GAY:
24 Q. You went on to say, "When I say we never
25 talked about the Ponzi scheme, I mean that when we

1 were sitting around in a group, like a meeting with
Page 101
2 me, Domenick and Barry, we didn't say, 'How is the
3 Ponzi going?'" And then you --
4 A. That's correct.
5 Q. -- went on and said, "Okay. We certainly,
6 individually, frequently talked about the fraud and
7 things that were going on; but that out-loud group
8 thing, that did not occur." Do you remember that
9 testimony?
10 A. Yes. You are not -- I don't think you are
11 understanding my prior testimony correctly.
12 Q. You think I'm not understanding it
13 correctly?
14 A. I'm certain you are not understanding it
15 correctly.
16 Q. Tell me what the understanding should be.
17 A. The bulk of the conversation I'm talking
18 about has to do with my conversations with Ted Morse,
19 because I discussed, as you know from prior deposition
20 testimony, significant fraudulent activity with Ted
21 that we did not discuss in person. There were other
22 fraudulent things that Domenick and Barry and I
23 discussed separately, but you'll see nowhere in my
24 testimony am I saying that I told Domenick or Barry
25 that this was a Ponzi scheme.

1 Q. Well, despite not referring to it as a Ponzi
2 scheme, did you ever have a conversation with
3 Mr. Tonacchio and/or Mr. Lipsitz in which it was
4 understood that you were running a fraud scheme?
5 MR. SALIM: Form.
6 THE WITNESS: As I just testified, and
7 again, you are asking me for my belief, I believed
8 that based upon conversations that I had with
9 Mr. Tonacchio and Mr. Lipsitz, that they were aware
10 that there was something illegal going on. The
11 extent of it, I did not discuss with them.
12 BY MR. GAY:
13 Q. Something illegal going on specifically
14 regarding the deals in which they were investing?
15 MR. SALIM: Form.
16 THE WITNESS: Yes.
17 BY MR. GAY:
18 Q. Okay. I'd just like to ask you about a
19 couple of entities --
20 A. But we never had -- hang on. Hang on. I'm
21 not done with my answer.
22 Q. Okay, sorry.
23 A. When you are reading my prior testimony and
24 listening to my current testimony, you need to
25 differentiate between the -- what was going on at the
Page 102

1 time between myself and these people, and what I was
2 led to believe as opposed to specific conversations.
3 Because as you know, because you read all my
4 deposition testimony, there were very few
5 conversations even with the deepest ingrained
6 co-conspirator, where we said anything specifically
7 about -- such as how is the fraud going.
8 Q. Understood. Just to be clear, I understand
9 your testimony to be that you didn't necessarily have
10 a conversation with Mr. Tonacchio and/or Mr. Lipsitz
11 when you identified either the bridge loan deals or
12 the structured settlement related deals to be a Ponzi
13 scheme. My question is, did you ever have --
14 A. That's correct.
15 Q. My question is, to the best of your
16 knowledge, did either one of them or both understand
17 that even if it wasn't a Ponzi scheme, what they were
18 investing in was not legitimate?
19 MR. SALIM: Form.
20 MR. PHILLIPS: Objection to form.
21 THE WITNESS: That there was illegality
22 attached to it, yes.
23 MR. GAY: What was the objection?
24 MR. SALIM: What was the objection? How
25 would he know what they know unless he tells them.
Page 103

1 Ask him what he told them.
Page 104
2 MR. PHILLIPS: Speculation.
3 MR. GAY: Can you actually read back the
4 last question I asked him.
5 (The question was thereupon read by the
6 reporter as above recorded.)
7 BY MR. GAY:
8 Q. Okay. I said to the best of your
9 understanding and then you answered the question.
10 What was that understanding based upon?
11 A. Multiple conversations I had with both
12 Mr. Lipsitz and Mr. Tonacchio about various business
13 dealings, mine, theirs, their knowledge of other
14 illegal things that I was involved in, my knowledge of
15 things that they were doing. So when you are talking
16 to people -- listen, people are either players or they
17 are not. These guys were, to some extent, in my mind
18 players. They were not completely aboveboard and they
19 certainly knew that I was not completely aboveboard.
20 Q. I'd like to ask you about 114, 4th Avenue in
21 Brooklyn. Do you know that address?
22 A. Yes.
23 Q. Can you tell me about it, please?
24 A. I think it was one of the projects that we
25 were looking at.

1 Q. Did you, in fact, invest money with
Page 105
2 Mr. Tonacchio or one of his companies regarding the
3 property located at that address?
4 A. I have to see the e-mails and the documents
5 that tell you for certain, because we looked at a lot
6 of things that we didn't invest in.
7 Q. Okay. You don't recall if you invested a
8 million and a half dollars with Mr. Tonacchio and his
9 companies to purchase some portion of a development at
10 114, 4th Avenue in Brooklyn?
11 A. Can you reference in something other than
12 the address? Is that the gas station project or is
13 that the project with the eight story, 16-unit
14 condominium?
15 Q. I believe that's what you referred to as the
16 gas station.
17 A. Yes, I invested in that. We were going to
18 buy the property that a gas station used to be on. It
19 was a very -- what's the word I'm looking for -- it
20 was an excellent piece of property for development
21 based upon its size and its location. We were going
22 to build a condominium building on it and we were
23 going to purchase it. Actually, I think we were going
24 to buy out other investors that were already in the
25 deal with Mr. Tonacchio.

1 Q. And what did you get in return for your
Page 106
2 investment in that deal?
3 A. I should have gotten a percentage of the
4 deal ultimately. I mean, I never actually received
5 anything from it, the deal never went through before I
6 turned myself in.
7 Q. What money did you use to invest in that
8 deal? Where did the money come from?
9 A. Money that I had stolen in the Ponzi scheme.
10 Q. Okay. What about a vacant land in
11 Cumberland County, New York? Does that sound familiar
12 to you?
13 A. No. There were so many deals that we looked
14 at over the years, I don't recall a vacant lot in
15 Cumberland.
16 Q. You don't remember --
17 A. I'm not saying it didn't happen.
18 Q. You don't remember investing a million and a
19 half dollars sometime in 2008 in a property near the
20 Delaware Water Gap?
21 A. I don't have a specific recollection of
22 that, no. I need to see documents to refresh my
23 recollection.
24 Q. Last question. 343, LLC, does that entity
25 sound familiar to you?

1 A. Specifically, no. Sounds like one of the
Page 107
2 LLCs we set up for buildings that we were purchasing.
3 Q. You mentioned earlier that you purchased, I
4 believe, a condo 12H from one of Mr. Tonacchio's
5 companies?
6 A. Yes.
7 Q. Could that have been the 343 address that's
8 referenced in the LLC?
9 A. Is that the address of the condominium?
10 Q. I believe that it is.
11 A. Then that would be the company that I set up
12 to purchase the condominium.
13 Q. Okay.
14 MR. GAY: I don't think I have any other
15 questions.
16 MR. SALIM: I guess we go next. We should
17 take our lunch break for 30 minutes.
18 MR. LICHTMAN: We normally leave it up to
19 Scott in terms of what he wants to do.
20 MR. SALIM: Scott, with your permission,
21 we'd like to take a quick break, take the 30 minutes
22 and proceed with one of two of us on cross. Is that
23 okay?
24 THE WITNESS: We don't need a full 30
25 minutes, we only need 15 minutes. So however long

1 you guys want to take, that's fine.
Page 108
2 MR. SALIM: That's fine.
3 [Short recess taken.]
4 CROSS EXAMINATION
5 BY MR. SALIM:
6 Q. Mr. Rothstein, this is Bill Salim. I
7 represent what we call the Tonacchio defendants. I
8 assume you can see me and Mr. Tonacchio seated to my
9 right.
10 A. I can.
11 Q. Can I refer to you as Scott?
12 A. Yes, sir, absolutely.
13 Q. All right. Scott, we left David Gay's
14 examination with your suggestion that Mr. Tonacchio
15 was somehow aware of illegal activity being conducted
16 by you. You recall that?
17 A. I do.
18 Q. What specific illegal activities was
19 Mr. Tonacchio aware of that you were engaged in?
20 A. I had specifically discussed with
21 Mr. Tonacchio items regarding my corruption of law
22 enforcement personnel within the State of Florida,
23 specifically within South Florida. I had discussed
24 with him cash transactions that both he and
25 Mr. Lipsitz had engaged in. I discussed with him

1 illegal activity that I did with law enforcement on
Page 109
2 behalf of Ted Morse.
3 I discussed with him that I was doing
4 business with members of organized crime. We had
5 discussions regarding I guess avoidance of taxes.
6 This goes all the way back to him discussing with me
7 things he was doing back when he had his plumbing
8 business.
9 Q. Anything else?
10 A. That's all I recall at this moment. There
11 may be more.
12 Q. All right. Do you have any documentation
13 that reflects your communication of these various
14 alleged illegal activities to him?
15 A. No, sir.
16 Q. All right. So this is basically your word
17 versus his word as to whether or not these
18 conversations took place.
19 (Thereupon, Mr. Gay entered the room.)
20 THE WITNESS: It would be my word and the
21 word of anyone else who may have been there when we
22 were discussing it.
23 MR. SALIM: All right.
24 THE WITNESS: I don't recall whether Ted
25 Morse was present during any of the conversations. I

1 don't recall whether I had specific conversations
Page 110
2 with both him and Mr. Lipsitz together. We may have.
3 But I do not want to guess. I have no documentation
4 in that regard.
5 BY MR. SALIM:
6 Q. All right. As a former lawyer you are aware
7 that the avoidance of taxes is not necessarily illegal
8 versus tax evasion, correct?
9 A. That's correct.
10 Q. All right. So if theoretically you had this
11 conversation regarding mechanisms to avoid or minimize
12 taxes with Mr. Tonacchio, theoretically there's
13 nothing illegal about that, is there?
14 A. What I was talking about was the pulling of
15 cash from a business and hiding it, not declaring it.
16 I wasn't talking about legitimate taxes avoidance
17 mechanism.
18 Q. Is it your testimony that he told you he was
19 taking cash out of his business in order to avoid
20 taxes?
21 A. He told me that he had taken a substantial
22 amount of cash out of his business back when he had
23 the plumbing business and that him and certain other
24 partners had been, from time to time, able to get
25 their hands on substantial amounts of cash through

1 other business deals. More than that, I do not know.
2 Q. When did this conversation occur?
3 A. During the course of our friendship. I
4 don't recall the date or time.
5 Q. All right. And during the course of this
6 friendship you were also his attorney, correct?
7 A. I was.
8 Q. And I think you testified earlier that both
9 of these gentlemen came to trust you. You recall
10 that?
11 A. They did.
12 Q. Did you at any point in time tell them that
13 the investment transactions that they were engaged in,
14 whether they be characterized as bridge loans or
15 settlement based agreements, were illegal?
16 A. In those specific words, sir, no.
17 Q. Did you ever at any point in time tell them
18 that any aspect of what you were doing with their
19 money was illegal?
20 A. Using those specific words, no, sir.
21 Q. Okay. And when you told him that you were
22 involved in, quote, "corruption of law enforcement
23 with or on behalf of Ted Morse," was there anyone else
24 that was privy to this conversation?
25 A. Ted may have been there and Ron Picou may
Page 111

1 have been there, and that's an addition. I also
Page 112
2 discussed a couple of situations where I had utilized
3 my law enforcement connections to assist Mr. Picou.
4 Q. Okay. Did you tell him that using your
5 connections to assist Mr. Picou was illegal?
6 A. I didn't use the word "illegal," but it was
7 certainly intimated in the conversation based upon
8 what I had heard.
9 Q. When you told him you were doing business
10 with members of organized crime, did you tell him what
11 that business was?
12 A. I told him that I had sources, that if he
13 had cash, that I could turn it into legitimate
14 laundered dollars, not using those specific words.
15 Q. Okay. By the way, did you ever think that
16 Mr. Tonacchio was a member of organized crime?
17 A. A member, no, sir.
18 Q. Did you ever tell the FBI that he was a
19 member of organized crime?
20 MR. KAPLAN: Objection to what he's talking
21 to the FBI about.
22 MR. SALIM: So he can't answer?
23 MR. KAPLAN: What the relevance of his
24 telling something to the FBI? It's part of our
25 investigation.

1 MR. SALIM: Because he's a liar, period.
Page 113
2 MR. LICHTMAN: Objection, move to strike.
3 BY MR. SALIM:
4 Q. Did you ever tell the FBI that Mr. Tonacchio
5 was connected with organized crime?
6 MR. KAPLAN: Well, that's a different
7 question. You asked whether or not he's a member of
8 organized crime.
9 MR. SALIM: Member or connected, I'm sorry.
10 MR. KAPLAN: Are you asking him if he's
11 associated with organized crime or are you asking him
12 whether he's a member? A member is a term that has a
13 meaning, it means that you have been initiated into
14 organized crime. You are a soldier, that's the
15 meaning. Are you saying is he an associate or has
16 some association with organized crime, is that what
17 you are asking?
18 MR. SALIM: Let's go with both. I
19 appreciate that distinction, which I was not aware
20 of.
21 MR. KAPLAN: Okay.
22 BY MR. SALIM:
23 Q. First question, that he was a member?
24 A. I never told anybody that.
25 Q. Did you ever tell anyone that he was

1 associated with organized crime?
Page 114
2 A. Anyone, yes.
3 Q. Who did you tell?
4 MR. NURIK: Jeff, do you want to assert the
5 privilege?
6 MR. KAPLAN: Yes, I object to any
7 conversations with law enforcement.
8 BY MR. SALIM:
9 Q. Do you have any evidence that Mr. Tonacchio
10 was associated with organized crime?
11 A. Only what he told me.
12 Q. And what did he tell you?
13 MR. NURIK: Hold on a second.
14 Jeff, do you want to assert a privilege or
15 not?
16 MR. KAPLAN: No, not to what he told --
17 what Mr. Tonacchio told him.
18 MR. NURIK: Okay.
19 THE WITNESS: On a number of different
20 occasions, when I was discussing with Mr. Tonacchio
21 our development projects in Brooklyn and the
22 potential that we might have zoning issues and other
23 issues, he told me that he had friends within the
24 unions that were associated with organized crime. He
25 didn't say "associated with organized crime," but

1 that were associated with organized crime that could
Page 115
2 assist us with any problems so long as we took care
3 of them.
4 BY MR. GAY:
5 Q. And who other than yourself would have been
6 privy to this conversation?
7 A. No one.
8 Q. You also mentioned during your testimony
9 that Mr. Lipsitz and Mr. Tonacchio were "players." Do
10 you recall that?
11 A. Yes.
12 Q. All right. If I consider a player to be
13 someone who's active outside of work, perhaps going
14 out at night, etcetera, that's what I have in mind.
15 What was your definition of a "player"?
16 A. Someone who is susceptible on any variety of
17 levels to engage in illegal activity.
18 Q. Okay. Other than the alleged activity that
19 you just described, of which you have no documentary
20 evidence other than your conversations, what illegal
21 activities did Mr. Tonacchio engage in, period?
22 MR. GAY: Objection --
23 MR. KAPLAN: Let me just clarify.
24 MR. GAY: Objection to form for the record.
25 MR. KAPLAN: Is this before he went to

1 Morocco or including what happened after he went to
Page 116
2 Morocco?
3 MR. SALIM: Before or after.
4 MR. KAPLAN: We object to things that
5 happened after he came back from Morocco, but we have
6 no objection to him saying whatever he talked about
7 before he went to Morocco.
8 MR. SALIM: Here is my concern. He's
9 accusing him of stuff that's bad, showing illegal
10 conduct, etcetera. I don't care about your universe
11 of people, I only care about my client.
12 MR. KAPLAN: No, no, I don't -- and I
13 appreciate that. And I care about any ongoing law
14 enforcement investigations that we may have. That's
15 my concern. So, I certainly have no objection to
16 anything that took place before he went to Morocco.
17 You can ask him about it, then let's parse it that
18 way and we'll see what else.
19 BY MR. SALIM:
20 Q. Fine, pre Morocco.
21 A. The only illegal activity that I discussed
22 with Mr. Tonacchio was taking cash for the purpose of
23 avoiding taxes, the potential for laundering money if
24 he had large amounts of cash that needed to be moved,
25 and the potential to have to pay members of organized

1 crime or associates of organized crime to assist us
Page 117
2 with problems in getting things pushed through in our
3 developments in Brooklyn.
4 Q. Okay. Any other aspects of --
5 A. One of the very first things -- hold on, I'm
6 not done.
7 One of the very first conversations I ever
8 had with Mr. Tonacchio when we were discussing me
9 investing millions of dollars in developments in
10 Brooklyn, was the fact that I was well aware that
11 Brooklyn was an extremely union dominated, corrupt
12 area and I wanted to know if we were going to have
13 problems, if I was going to be exposing all this money
14 to potential loss.
15 Q. So just that --
16 A. He assured me that he had the right
17 connections to make sure that nothing happened.
18 Q. And just so we are clear, you and
19 Mr. Tonacchio never actually undertook any actual
20 development work in Brooklyn, did you?
21 A. Actually undertook? You are going to have
22 to define "undertook." I invested in projects in
23 Brooklyn but I was not involved in the actual
24 development of a project. Mr. Tonacchio handled that.
25 Q. All right. We know you bought 12H, which

1 was a completed unit, correct?
Page 118
2 A. Correct.
3 Q. All right. Did you ever assist in the
4 actual demolition or construction of any other project
5 with Mr. Tonacchio?
6 A. I invested in projects; he handled all the
7 work.
8 Q. Okay. Did any of those projects actually
9 ever proceed?
10 A. One that I was buying into, and I don't know
11 if it culminated or not, you'd have to check the
12 paperwork, was the existing condominium project that I
13 actually walked through with him on one of my visits
14 to New York. So that one was in progress, but I don't
15 recall whether or not that investment ever culminated.
16 The only other one that I specifically
17 remember in New York was the project where we were
18 purchasing the gas station property, which we were
19 going to develop into a condominium. The rest of our
20 development conversations and development occurred in
21 the State of Florida.
22 Q. And, in fact, you and RRA served as his
23 counsel in connection with various developments here
24 in South Florida which you were not an investor in,
25 correct?

1 A. Both ones that I was an investor in and ones
2 that I was not.
3 Q. All right. What projects did you invest in
4 in South Florida?
5 A. I think it was in 950 Federal Highway. It's
6 the one that was being run by D & D. It was the one
7 that Pichinini and Scarmalino are involved in. I
8 invested in that with Mr. Lipsitz and Mr. Tonacchio.
9 Q. All right. And that's a project where your
10 interest was forfeited to the United States and the
11 building itself was ultimately foreclosed by Wells
12 Fargo, Wachovia, correct?
13 A. The only thing I have personal knowledge of
14 is that I forfeited it to the government. What
15 happened with it after that is unknown to me.
16 Q. All right. Any other projects here in South
17 Florida with Mr. Tonacchio?
18 A. Not that I recall.
19 Q. All right. And in terms of being a player,
20 you testified that you went out to dinner with him on
21 occasion, correct?
22 A. Yes, sir.
23 Q. Did he drink a lot?
24 A. Yes, sir.
25 Q. All right. Did he drink like Ron Picou?
Page 119

1 A. I don't think any living human being could
Page 120
2 drink like Ron Picou other than Ron.
3 Q. You mentioned "escorts" in a conversation
4 which I think involved both Mr. Lipsitz and
5 Mr. Tonacchio. For now, with respect to Mr. Tonacchio
6 solely, did you ever pay for escorts for
7 Mr. Tonacchio?
8 A. Yes.
9 Q. All right. When?
10 A. When we were at Solid Gold -- the escorts
11 I'm referring to are simply girls at Solid Gold that
12 were providing sexual services to me and my friends.
13 And yes, I did pay on occasion for Mr. Tonacchio's
14 visits with those girls.
15 Q. Okay. Let me ask you so that we are clear.
16 You never paid for an escort to escort him anywhere
17 about town or back to a private hotel or condo for
18 sexual acts, correct?
19 A. I may have. I don't have a specific
20 recollection at this moment whether or not I actually
21 sent him an escort. From time to time I did do that
22 for friends, but I don't recall specifically.
23 Q. All right. Now, you go to Solid Gold, you
24 say that you paid some of the girls that work at Solid
25 Gold to take him in the back room. Is that what you

1 are saying?
Page 121
2 A. It's not really the back, it's actually off
3 to the side, but yes.
4 Q. All right. Have you ever -- is it your
5 testimony that you physically witnessed women
6 performing sexual acts on Mr. Tonacchio?
7 A. No, I didn't watch the sexual acts.
8 Q. Okay. Thank you.
9 A. Actually, wait a second. No, no, hold on.
10 Actually, there was an occasion where he and I were
11 together in what they call like a tent area, which
12 surrounds the dance floor. The rooms I'm talking
13 about are these little private cubbies that are kind
14 of behind one of the bars. You go back there and you
15 pay a guy to go back in the rooms with the girl and
16 it's just a little bench and a curtain.
17 The tent area, there was an occasion when I
18 was there with Mr. Tonacchio, where it didn't get hot
19 and heavy, but yes, the girls were taking our shirts
20 off and kissing us and that type of thing. So to that
21 extent, yes.
22 Q. All right. So the bottom line is, other
23 than doing what women do at a strip club in order to
24 make a little money and get higher tips, you never saw
25 Mr. Tonacchio engage in any illicit or illegal sexual

1 activity with any woman at this strip club?
Page 122
2 A. Actually witnessed it, no.
3 Q. All right. David spent a lot of time today
4 talking about the difference between bridge loans and
5 settlement investments. And the first deal that you
6 did with Mr. Tonacchio was the Ron Picou deal and he
7 showed you a couple of exhibits on that, which I can
8 show you again.
9 Other than that deal, how would we know
10 whether any particular investment was a "bridge loan"
11 or a "settlement based" deal?
12 A. Other than reading the e-mails and either of
13 our recollections, there's no way to tell.
14 Q. All right. Did you ever tell Mr. Tonacchio
15 that he was involved in a "bridge loan deal"?
16 A. I don't think I used the word -- I might
17 have used the word "bridge loan," but I don't have a
18 specific recollection, Mr. Salim, one way or the
19 other. I discussed loans to clients, loans to
20 individuals, using the word "loan," but I didn't
21 necessarily use the word "bridge loan," although I may
22 have.
23 Q. All right. And other than telling him
24 various stories as to why you needed money for
25 settlement purposes, did you ever tell him that there

1 was a distinction between a "settlement based"
Page 123
2 investment or a "bridge loan" investment?
3 A. I did.
4 Q. When did you explain that distinction to
5 him?
6 A. I don't remember the exact point in time,
7 but at the point in time that I explained to him the
8 deals, he was confused about whether these settlement
9 deals were structured settlements. And I remember him
10 repeatedly asking me about structured settlements.
11 And I was trying to explain to him the difference
12 between structured settlements and these settlement
13 deals, which were completely different than what you
14 are referring to as bridge loan deals.
15 Q. All right. Would it be fair to state that
16 he understood most of these transactions to be
17 structured settlement deals?
18 A. You know, as I sit here today, Mr. Salim, I
19 can't help you with that one way or the other. I
20 don't know what he specifically understood other than
21 some were bridge loan type deals and some were
22 settlement deals, which he kept referring to as
23 structured settlement deals.
24 Q. All right. Now, in terms of either form of
25 deal, you would prepare a promissory note, correct?

1 A. Yes, sir.
Page 124
2 Q. And all of those notes were, in fact,
3 prepared by you or someone in your office?
4 A. Yes, sir.
5 Q. And the terms of those notes, were those
6 something that were negotiated between you and
7 Mr. Tonacchio, or would you just propose them in your
8 e-mail, he would accept or reject, and then you would
9 do the note?
10 A. To the best of my recollection, I proposed
11 it and he would accept or reject.
12 Q. And, in fact, there were a number of deals
13 where, for whatever reason, he didn't have the money
14 at the time, whatever, he didn't undertake the deal,
15 correct?
16 A. That's correct.
17 Q. By the way, on any of these deals, did he
18 ever pay you in cash or was it all by wire transfer?
19 A. All by wire.
20 Q. All right. Now, when you sent the
21 promissory note to him and -- do you have what is
22 referred to as the defendant's exhibits? There's
23 about 14 pages in front of you.
24 MR. GAY: Just tell him what the prefix is.
25 THE WITNESS: Yes, sir.

1 BY MR. SALIM:
Page 125
2 Q. If you'd look at Page TL 04.
3 A. I have it, sir.
4 Q. This is the first deal that we talked about
5 with Mr. Gay. And it goes back to the Ron Picou
6 electrocution story that he went through a number of
7 questions with you.
8 With respect to this particular note, you
9 created it?
10 A. I don't know that I necessarily typed it,
11 but I certainly provided the instruction for someone
12 to prepare it.
13 Q. Is this the standard form of note, other
14 than the payment terms, dates and amounts, that you
15 utilized on all of the deals with Mr. Tonacchio and
16 Mr. Lipsitz?
17 A. With certain variances I'm certain, yes.
18 Q. All right. And at the time you transmitted
19 these notes to them as of -- for instance, on this
20 one, March of 2007, you were also serving as counsel
21 for Mr. Tonacchio, correct?
22 A. You mean actually representing him in
23 ongoing matters at that moment or -- I was his
24 attorney.
25 Q. On a regular basis, whether you were

1 actually representing him on that particular day, in
2 March 19th of 2007, you were, in fact, his counsel
3 here in South Florida, correct?
4 A. Yes.
5 Q. All right.
6 A. Myself and my firm represented him.
7 Q. And, in fact, I think you testified that
8 Harold Bofshever and/or Arthur Neiwirth would, on
9 occasion, provide legal services to them on real
10 estate or general corporate matters, correct?
11 A. That's correct.
12 Q. At the time that you --
13 A. And David Boden.
14 Q. -- were gaining their trust, both as a
15 friend and as an attorney, did you ever tell them,
16 hey, this is a usurious note?
17 MR. GAY: Objection to the form.
18 THE WITNESS: Did I say it was usurious or
19 did we discuss the fact that it was usurious?
20 BY MR. SALIM:
21 Q. Did you ever tell them that this
22 transaction, this promissory note, 04, was a usurious
23 note?
24 A. No.
25 Q. Did you ever tell them that any particular
Page 126

1 note was usurious?
Page 127
2 A. No, he told me that.
3 Q. All right. When did Mr. Tonacchio tell you
4 that?
5 A. From time to time, when I offered him a
6 deal, he would say something to me such as, "Where the
7 F are you getting these particular kinds of deals?
8 How the heck are you charging these people all this
9 interest?"
10 Now, I had a standard response when people
11 asked me that question if they were close to me. I
12 say, "What do you care, you are making a lot of money.
13 Just invest the money. You are making your money back
14 and then some."
15 Q. All right. I noticed in that explanation
16 that you never used the word "usurious" as coming out
17 of his mouth.
18 When did he tell you that he knew the notes
19 were "usurious"?
20 A. He never used the word "usurious."
21 Q. Thank you, sir.
22 By the way, again, just by reference to the
23 typical note, the first one, 04, nowhere in there do
24 you actually specify what the interest rate is, do
25 you?

1 A. No, sir. Since this is a deal for a friend,
2 allegedly, I mean, we kept the interest rate,
3 relatively speaking, low. It's not like the two, 300
4 percent deals I was offering.
5 Q. Okay. And as a former lawyer, you are
6 generally aware of the fact that a promissory note
7 under Florida law requires doc stamps to be
8 enforceable. Are you aware of that?
9 A. Yes, sir.
10 Q. Did you ever pay any?
11 A. I'm aware of something to that effect, yes,
12 sir.
13 Q. Did you ever pay any doc stamps or other
14 taxes on any of the promissory notes delivered to
15 Mr. Lipsitz or Mr. Tonacchio?
16 A. No, sir.
17 Q. Do you know whether the notes, ergo, would
18 be enforceable under Florida law without the fixation
19 of doc stamps?
20 MR. GAY: Objection to form.
21 THE WITNESS: I don't know one way or the
22 other.
23 BY MR. SALIM:
24 Q. And at the time that RRA was engaging in
25 these note transactions, whether they be bridge loan
Page 128

1 deals or structured settlement deals, was RRA
Page 129
2 registered as a broker/dealer with any regulatory
3 body?
4 A. Let me just clarify the question. They were
5 never pitched as structured settlement deals, they
6 were always pitched as funding of confidential
7 pre-funded settlements. And in answer to your
8 question, we -- I'm sorry, ask your question again.
9 Q. During the time when you were doing these
10 deals, however they were structured, however they are
11 titled, was RRA registered as a broker/dealer with the
12 NASD, New York Stock Exchange, or any other regulatory
13 authority?
14 A. No, sir.
15 Q. Were the promissory notes themselves ever
16 registered as a security under the laws of any state?
17 A. No, sir.
18 Q. Were the promissory notes ever exempted from
19 registration under the laws of any state?
20 A. No, sir.
21 Q. Was RRA licensed as a lender under the laws
22 of the State of Florida or the United States?
23 A. You mean did we have a specific designation
24 as a lender? No, sir.
25 Q. Or any license to transact business as a

1 mortgage broker, bank, credit union, or other
Page 130
2 financial institution?
3 A. I do not know if any of my lawyers had any
4 of the mortgage brokerage licenses that we were
5 utilizing, but it did not pertain to these deals.
6 Q. You indicated that the Tonacchio and Lipsitz
7 defendants invested millions and tens of millions of
8 dollars. Do you recall that?
9 A. I indicated that the entire deals, including
10 inflows and outflows, amounted to tens of millions of
11 dollars.
12 Q. Okay. And aside from the total in and outs,
13 as we sit here today, do you know specifically how
14 much money they won or they lost out of that inflow?
15 A. To my recollection it was at least several
16 million dollars each, but I don't have a specific
17 recollection as I sit here today.
18 Q. All right. So taking them each in order,
19 you can't tell me how much Mr. Tonacchio, for
20 instance, would be ahead, assuming he was a winner?
21 A. I cannot, not without seeing the records,
22 sir.
23 Q. And do you agree that when you fled to
24 Morocco and the Ponzi imploded, that at that point in
25 time he was still an investor and still would have

1 been owed money from RRA?
Page 131
2 A. I don't recall whether or not he was one of
3 the people that had outstanding monies due him. It is
4 certainly possible, but I don't have a specific
5 recollection one way or the other.
6 Q. Certainly -- do you know whether he had any
7 postdated checks in his possession at the time that
8 the Ponzi exploded?
9 A. I don't have a specific recollection one way
10 or the other.
11 Q. Do you know whether any of the checks that
12 had been paid to him prior to your departure to
13 Morocco were returned unpaid for any reason?
14 A. I don't have a specific recollection one way
15 or the other.
16 Q. Now, just so I'm clear, they would wire you
17 the money. What account would they wire the funds
18 into?
19 A. I don't recall what account I was using at
20 that time. You have to show me the records.
21 Q. All right. Would it be fair to state that
22 every single wire that was sent by Mr. Tonacchio was
23 sent to an RRA trust account?
24 MR. GAY: Objection to form.
25 THE WITNESS: I believe so, yes, sir. But

1 the records would bear that out one way or the other.
2 BY MR. SALIM:
3 Q. All right. If you would look at TL 1 and we
4 only have 14 pages, so I'm not going to separately
5 mark them as Defendant's Exhibit 1, 2, 3, etcetera,
6 we'll just refer to Bates Stamp numbers.
7 MR. LICHTMAN: They are probably supposed
8 to be marked.
9 MR. SALIM: I'll mark it.
10 For our purposes we'll call it Defendant's
11 Exhibit 1, but when you look at it it's TL 001.
12 [The E-mail referred to was marked for
13 identification as Defendant's Exhibit 1.]
14 THE WITNESS: Okay. I have it.
15 BY MR. SALIM:
16 Q. All right. If you look down to the middle
17 of that exhibit, there's a circle around our wire
18 instructions. Do you see that?
19 A. I do.
20 Q. All right. And I believe this is a
21 different printout of an e-mail that David went
22 through with you in his examination, but it's just in
23 a different font, etcetera. Would you agree that your
24 instructions to Barry on this particular one was for
25 the money to be wired to an IOTA account?
Page 132

1 A. Yes, sir.
Page 133
2 Q. All right. Look at what's been marked as
3 TL-0002, which for the record we have marked as
4 Exhibit Number 2.
5 [The E-mail referred to was marked for
6 identification as Defendant's Exhibit 2.]
7 THE WITNESS: I have it, sir.
8 BY MR. SALIM:
9 Q. This one goes to both Mr. Tonacchio and
10 Mr. Lipsitz, correct?
11 A. Yes, sir.
12 Q. And pursuant to Paragraph Number 6, you
13 again indicate that the funds are to be wired to the
14 firm's trust account, correct?
15 A. Correct.
16 Q. Take a look at TL 006, which for purposes of
17 today I'll mark as Defendant's Exhibit 6.
18 MR. LICHTMAN: You said six, this is five.
19 MR. SALIM: Five. I'm sorry, 5.
20 Thank you, Chuck, for once.
21 THE WITNESS: Which one am I looking at, 5
22 or 6?
23 [The Fax Transmittal referred to was marked for
24 identification as Defendant's Exhibit 5.]
25

1 BY MR. SALIM:
Page 134
2 Q. 006. You got 006 in front of you, sir?
3 A. I do, sir.
4 Q. And again, this is a fax transmittal from
5 Mr. Tonacchio to his bank showing payment of this
6 particular transaction into your trust account as
7 well, correct?
8 MR. GAY: Objection to form.
9 THE WITNESS: Correct.
10 BY MR. GAY:
11 Q. All right. And the next page is 07, TL
12 00007, which for the record we've marked as
13 Defendant's Exhibit 6.
14 [The Fax Transmittal referred to was marked for
15 identification as Defendant's Exhibit 6.]
16 BY MR. SALIM:
17 Q. And here is another one where it goes into
18 the RRA trust account, correct?
19 MR. GAY: Objection to form.
20 THE WITNESS: Correct.
21 BY MR. SALIM:
22 Q. All right. Without going through literally
23 every transactions, do you have any knowledge that
24 Mr. Tonacchio or Mr. Lipsitz ever wired you monies
25 into any account other than an RRA trust account?

1 MR. GAY: Objection to form.
Page 135
2 THE WITNESS: Sitting here today, I don't
3 have a specific recollection one way or the other. I
4 need to see all the documents, but to the best of my
5 recollection we always tried to use the trust
6 accounts.
7 BY MR. SALIM:
8 Q. All right. Now, with respect to those
9 settlement transactions which you've described that
10 you engaged in with both of them, wasn't it part of
11 your pitch that all of these settlement funds were in
12 your trust account as of the time that they funded the
13 transaction?
14 A. Correct.
15 Q. And, in fact, you didn't maintain a separate
16 account or trust account for those funds, correct?
17 A. As relates to these two individuals?
18 Q. Correct.
19 A. That's correct.
20 Q. And the reason for that is because the
21 settlements simply didn't exist, did they?
22 A. That's correct.
23 Q. If you would take a look at TL 0038, which
24 we have marked as Defendant's Exhibit Number 7.
25 [The E-mail referred to was marked for

1 identification as Defendant's Exhibit 7.]
Page 136
2 BY MR. SALIM:
3 Q. This appears to be an e-mail --
4 A. I have it.
5 Q. -- July 31st, from you to Mr. Tonacchio,
6 correct?
7 A. Correct.
8 Q. All right. And obviously he was pissed at
9 you. Can you tell me why?
10 A. Looks like two reasons. One, I didn't get
11 him something on time, looks like the checks, checks
12 and the note.
13 And two, Harold wasn't handling something in
14 the manner that he wanted it handled, and I needed to
15 get another lawyer involved on it.
16 Q. Okay. So this is evidence that as of July
17 31, 2007, RRA was, in fact, still performing legal
18 services for Mr. Tonacchio, correct?
19 A. Correct.
20 Q. And do you have any specific recollection as
21 to why Mr. Tonacchio was pissed off at Harold
22 versus -- no, strike that.
23 Why was he pissed off with Harold?
24 A. He did not feel that Harold was handling his
25 business appropriately.

1 Q. And did you have an opinion as to whether
Page 137
2 that was an accurate statement or not?
3 A. Yes.
4 Q. What was your opinion?
5 A. I didn't like the way Harold was handling
6 his business.
7 Q. By the way, at this point in time was the
8 actual practice of law something that you paid much
9 attention to, or was your focus in the operation of
10 RRA as of the summer of 2007 primarily on the Ponzi
11 scheme?
12 A. By 2007 it was primarily the Ponzi scheme.
13 Q. All right. Do you recall what the gross
14 revenues of the firm were in 2007?
15 A. Legitimate gross revenues?
16 Q. All right. I'll rephrase it.
17 Do you recall what the attorney's fees
18 generated revenues were for RRA in 2007?
19 A. I do not, sir.
20 Q. Did you have a specific number of hours or
21 dollars in the door that you required for a lawyer in
22 2007?
23 A. From time to time we did.
24 Q. And what was the number of hours or dollar
25 volume?

1 A. I don't have a specific recollection, but
Page 138
2 very few people were hitting the number.
3 Q. All right. What about in 2008, do you
4 recall what the revenues were for RRA from attorney's
5 fees?
6 A. Between eight and $9 million.
7 Q. And at that point in time the firm had how
8 many lawyers?
9 A. 2008, more than 50 I would guess, more than
10 40, 50, 60.
11 Q. So at 50 lawyers, that's less than $200,000
12 a lawyer. Was that the goal for each lawyer in the
13 firm?
14 A. No, sir.
15 Q. All right. So it would be fair to say that
16 basically this firm wasn't really performing any legal
17 services, it was used more or less as a charade to
18 give your Ponzi scheme the ability to operate and/or
19 have some legitimacy?
20 MR. GAY: Objection to form.
21 THE WITNESS: That's not true.
22 BY MR. SALIM:
23 Q. All right. Tell me where I'm wrong, Scott.
24 A. You have to differentiate between their
25 ability to collect money and bill money and get

1 clients and what was going on on the fraud side. Yes,
2 there were a number of people who worked at the firm
3 who were my co-conspirators and who were involved in
4 the Ponzi scheme, but the bulk of the firm was made up
5 of good, honest, hardworking lawyers and support staff
6 that had nothing to do with the Ponzi scheme.
7 And the fact that a lot of money wasn't
8 generated was more as a result of our lack of
9 direction and our business doing illegal business and
10 not paying attention to the law firm, than it
11 reflected on those good lawyers.
12 Q. I understand the fact that RRA was not
13 created for purposes of operating a Ponzi scheme, but
14 by 2007, obviously, at $8 million in revenue, could it
15 even pay the salaries that you were paying the lawyers
16 and staff based on its legitimate --
17 A. No, sir.
18 Q. All right. And in 2008, could it pay its
19 lawyers and staff salaries based on legitimate law
20 firm revenues?
21 A. To my knowledge, no, sir.
22 Q. Did you utilize Ponzi funds to pay the
23 operating expenses of the firm?
24 A. I did.
25 Q. Did you use Ponzi funds to pay the salaries
Page 139

1 of your attorneys and staff?
Page 140
2 A. I did.
3 Q. And I believe you also testified that you
4 also used those Ponzi funds to pay what appeared to be
5 exorbitant salaries to the three main partners,
6 yourself, Stuart and Russell, correct?
7 A. And others, yes, sir.
8 Q. All right. If you would turn to TL 00010,
9 which we have marked as Defendant's Exhibit Number 8.
10 [The E-mail referred to was marked for
11 identification as Defendant's Exhibit 8.]
12 BY MR. SALIM:
13 Q. You got this one?
14 A. Got it.
15 Q. What is this?
16 A. It's an e-mail from me to George Levin and
17 Frank Preve regarding a deal I was doing with them.
18 Q. And for those who are uninformed and/or have
19 lived under a rock, who are George Levin and Frank
20 Preve?
21 A. George Levin was the principal of Banyon,
22 the Banyon entity, and Frank Preve was his right-hand
23 man that ran the Banyon entities.
24 Q. And this appears to me to be an e-mail
25 describing a mediation settlement that had apparently

1 broken down?
Page 141
2 A. That is what it's purporting to describe.
3 Q. All right. So are you saying that that was
4 a misrepresentation or did this actually occur?
5 A. No, it was not occurring.
6 Q. So you were basically attempting to defraud
7 Mr. Levin by this e-mail?
8 A. At this point in time I'm not sure whether
9 or not I was attempting to defraud Mr. Levin. I don't
10 recall what was going on in August of 2007. I
11 definitely wasn't attempting to defraud Mr. Preve at
12 this point in time. But this may be what we've come
13 to call a Ponzi speak e-mail that we were utilizing
14 for somebody else or another investor. I don't know
15 without seeing all the e-mails surrounding it, I have
16 no way to know for certain.
17 Q. The second to last sentence of this e-mail
18 ends, "Calling Tonacchio at Tona Development so I can
19 say we presented alternatives." What does that mean?
20 A. That's a fraud. I was not really calling
21 Domenick to present alternatives on this. This was --
22 that leads me to believe that we were utilizing this
23 as a Ponzi speak e-mail to avoid a problem with the
24 potential investor where we got a question that the
25 investor wanted to know how we can possibly do this

1 without presenting alternatives in funding.
Page 142
2 Q. Okay. And just so we are clear, there's no
3 suggestion in that statement of yours that
4 Mr. Tonacchio was at all aware of the fraud or
5 participated in it, correct?
6 A. That's correct.
7 Q. If you would turn to what we have marked as
8 Defendant's Exhibit Number 9, which is TL 0011.
9 A. Got it.
10 [The Check referred to was marked for
11 identification as Defendant's Exhibit 9.]
12 BY MR. SALIM:
13 Q. You see that account at Gibraltar is titled
14 Rothstein Rosenfeldt Adler Banyon Account. You see
15 that?
16 A. I do.
17 Q. What was that?
18 A. The Banyon account?
19 Q. Yes, sir.
20 A. Was my -- that was the account at Gibraltar
21 that we were utilizing for the Ponzi scheme and the
22 movement of money.
23 Q. Did you ever tell Mr. Tonacchio that that
24 account was separately set up to hold just settlement
25 funds that would be used to pay back their investments

1 on these "settlement deals"?
Page 143
2 A. I may have. I don't have a specific
3 recollection one way or the other about this
4 particular account --
5 Q. All right.
6 A. -- as far as Mr. Tonacchio is concerned.
7 Q. Next, take a look at Number 12, TL 00012,
8 which we have marked as Defendant's Exhibit Number 10.
9 [The E-mail referred to was marked for
10 identification as Defendant's Exhibit 10.]
11 BY MR. SALIM:
12 Q. What is this one, sir?
13 A. This is an e-mail that I used to try to get
14 Domenick to fund faster, trying to make them believe
15 that we were going to lose the deal if he didn't get
16 the wire to me.
17 Q. And what type of deal were you about to
18 lose, a settlement transaction?
19 A. Yes.
20 Q. Now, again, the TL 0013, marked as
21 Defendant's Exhibit 11.
22 [The E-mail referred to was marked for
23 identification as Defendant's Exhibit 11.]
24 BY MR. SALIM:
25 Q. This is an e-mail a year and a couple of

1 months later in April of 2009. And the subject says
Page 144
2 "update."
3 MR. GAY: Bill, what was the date on that
4 e-mail again?
5 MR. SALIM: April 20, 2009.
6 MR. GAY: Talking about 00013.
7 MR. SALIM: Marked as Defendant's Exhibit
8 Number 11.
9 MR. GAY: Which document?
10 MR. SALIM: 13.
11 BY MR. GAY:
12 Q. Do you have that one in front of you, sir?
13 A. I do.
14 Q. All right. What is this e-mail?
15 A. Same type of e-mail, trying to get payment.
16 Q. And again, this would have been in
17 connection with a settlement transaction deal,
18 correct?
19 A. Yes.
20 Q. So here we are, basically five months before
21 the Ponzi imploded, and you are still lying to
22 Mr. Tonacchio about the settlement transactions in
23 order to keep him funding the deals, correct?
24 MR. GAY: Objection to form.
25 THE WITNESS: In order to get the wire,

1 yes, sir.
Page 145
2 MR. SALIM: All right. Next, TL 14, which
3 we have marked as Exhibit Number 12 --
4 [The E-mail referred to was marked for
5 identification as Defendant's Exhibit 12.]
6 BY MR. SALIM:
7 Q. -- is an e-mail dated August 31, 2009, but
8 less than two months prior to your flight to Morocco.
9 And what's this one about?
10 A. Just looking for money that was supposed to
11 be wired.
12 Q. And again, it would have been in connection
13 with a settlement structured deal?
14 A. I can't tell one way or the other because it
15 doesn't have the other language in it. It just says,
16 "My client is coming in." But by this point in time I
17 think the bulk of the deals we were doing were
18 settlement type deals.
19 Q. You would agree --
20 A. But I can't tell one way or the other.
21 Q. Would you agree that at this point in time,
22 RRA as a law firm could only have clients who were
23 plaintiffs or defendants and/or business clients?
24 MR. GAY: Objection to form.
25 THE WITNESS: It could have been any myriad

1 of things.
Page 146
2 BY MR. SALIM:
3 Q. But RRA was not a bank, so it wouldn't have
4 a client coming in for a loan, theoretically. RRA was
5 not a securities dealer, so it couldn't have come in
6 for someone to buy or sell a security. Correct?
7 A. Well, we weren't licensed in that way, but I
8 was certainly leading people to believe that we were
9 loaning clients money.
10 Q. All right. But you were loaning them in
11 order to advance their payoff on a settlement that was
12 structured as payable over time, correct?
13 A. On most of the deals that I did overall with
14 most investors. It certainly appears from looking at
15 the paperwork that a substantial number of the deals
16 that I did with Mr. Tonacchio and Mr. Lipsitz were
17 also of the bridge loan category.
18 Q. Okay. And that's what I would like to see,
19 where, in any of the exhibits, because we only have 14
20 pages, you can refer to David's, where in all of his
21 pages of documents do the words "bridge loan" even
22 come in or come up other than perhaps with respect to
23 the Ron Picou first loan?
24 A. I don't think I ever used the term "bridge
25 loan" in any of those e-mails. I just used the word

1 "loan."
Page 147
2 I think you can separate it out by looking
3 at loan as opposed to the ones where I'm saying my
4 client is coming in and is giving us a tremendous
5 amount of money. I think that's probably the best
6 indicators.
7 Q. By the way, other than Mr. Nurick and the
8 special agent with the IRS, is there anyone else in
9 that room with you?
10 A. No.
11 Q. All right. In preparation for this
12 deposition, did you review any documents?
13 A. Yes.
14 Q. What did you review?
15 A. The exhibits.
16 Q. The ones that we had both delivered for
17 purposes of today or any others?
18 A. I've reviewed the bulk of the exhibits for
19 all of the depositions, but I reviewed these in
20 connection with this deposition.
21 Q. Did you review any other documents, memos
22 that are not exhibits that were produced by either
23 Mr. Gay or the defendants in this case?
24 A. Relevant to this deposition?
25 Q. Yes, sir.

1 A. No.
Page 148
2 Q. Other than speaking with Mr. Nurick, which I
3 respect to be privilege, did you speak to any other
4 person in preparation for this deposition?
5 A. Yes.
6 Q. Who?
7 A. My -- the IRS agent and the AUSAs.
8 Q. And what was the general subject matter of
9 those conversations?
10 SPECIAL AGENT GUARIGLIA: Jeff?
11 MR. NURIK: Jeff, do you want to assert a
12 privilege?
13 MR. KAPLAN: Yeah, we'll object to that.
14 MR. SALIM: So the ordinary preparation for
15 this deposition is potentially privileged, is that
16 what you are saying, Mr. Kaplan?
17 MR. KAPLAN: What in particular?
18 MR. SALIM: Well, I'm asking him
19 strictly --
20 BY MR. SALIM:
21 Q. All right. Let's put it this way, in
22 connection with your preparation for this deposition,
23 what conversations did you have with anyone other than
24 your attorney regarding Domenick Tonacchio?
25 MR. KAPLAN: What questions -- what are you

1 asking? I mean, just generally asking, he's saying
Page 149
2 he had some conversations. Is there certain
3 information you are trying to garner from that?
4 MR. SALIM: No, but I'm trying -- you know,
5 typically we ask to see what a person did to prepare
6 for a deposition and/or what seeds may have been sown
7 in their head to potentially influence their
8 testimony. I mean, it's I guess a standard line of
9 inquiry.
10 MR. KAPLAN: Okay. He said he went over
11 the documents. I don't think there are any specific
12 questions.
13 MR. SALIM: Okay.
14 SPECIAL AGENT GUARIGLIA: I will say, the
15 only conversation that we had was not in preparation
16 for this but to determine if there was any
17 investigatory privileges that we needed to address,
18 and that's what was discussed.
19 MR. SALIM: Okay, thank you. I'll move on.
20 BY MR. SALIM:
21 Q. All right. You met with the trustee and his
22 counsel in August of 2011. Do you recall that?
23 A. Yes.
24 Q. During the course of that conversation, did
25 you discuss Tonacchio and Lipsitz being --

1 MR. LICHTMAN: I'd like to interpose an
Page 150
2 objection at this point. We have pursuant to court
3 order a determination by Judge Kohn this was supposed
4 to be work product and --
5 MR. SALIM: Your notes are work product, I
6 agree with that, Chuck. But I can't ask him what he
7 would have shared with a non-privileged,
8 non-investigator.
9 MR. LICHTMAN: If I have to seek to adjourn
10 this deposition to have Judge Kohn rule on it, I
11 will. It's already been -- it's a really, really
12 sensitive area with Judge Kohn once before and I will
13 seek leave of Court to get a protective order on that
14 point. If Judge Kohn says you can open it all up,
15 that's fine. But it became a really hot topic
16 earlier in the case.
17 MR. SALIM: Obviously, since we only have
18 Mr. Rothstein's time for a limited period I'm not
19 going to ask you to adjourn, but I just want to
20 understand.
21 I respect the fact that his order suggests
22 that your meeting notes, etcetera, are privilege and
23 work product, but he's not your client, you are not
24 the U.S. and you don't have an investigatory
25 privilege. You are not married to him, so there's no

1 husband/wife privilege. You are not a priest,
Page 151
2 etcetera. So I'm thinking the actual conversations
3 themselves versus your notes and memos, etcetera, I
4 simply want to ask him what conversations did you
5 have regarding Mr. Tonacchio. That's the limited
6 scope of the question.
7 MR. LICHTMAN: We had -- I have a very
8 clear understanding from coming out of that court
9 that what transpired in the meeting with Scott was
10 deemed work product and I state a very strong
11 objection on that issue.
12 MR. SALIM: Okay. The record is clear.
13 Someday we may have to address it because you are not
14 going to let me ask the questions and he's not even
15 there anyway. Are we off the record?
16 SPECIAL AGENT GUARIGLIA: He went to the
17 restroom.
18 MR. NURIK: He used the time you guys were
19 discussing to go to the restroom. He's coming out
20 now.
21 MR. GAY: Marc, did you have an
22 understanding also that the subject matter of those
23 discussion was supposed to be not -- are you there?
24 MR. NURIK: Yes.
25 MR. LICHTMAN: -- not for how application.

1 MR. NURIK: I believe so, but I defer to
Page 152
2 your recollection since you've been involved in the
3 litigation concerning this matter. But I believe you
4 are right.
5 MR. PHILLIPS: So I don't have to go
6 through the same questions, I'm going to assume if we
7 ask the same questions, Chuck, you'll have the same
8 objections on behalf of Mr. Lipsitz?
9 MR. LICHTMAN: Yes. And if you are
10 switching off, can we just take two minutes --
11 MR. PHILLIPS: I don't think we are
12 switching yet, I just wanted to --
13 MR. LICHTMAN: Okay.
14 MR. SALIM: All right. Scott, are you
15 ready?
16 THE WITNESS: I am, thank you.
17 BY MR. SALIM:
18 Q. Going back to the August 2011 meeting with
19 Mr. Lichtman, et al. Other than yourself, Mr. Nurick,
20 Mr. LaVecchio, Richard Stout. Who is Richard Stout?
21 A. An FBI agent.
22 Q. The next person is Aaron. By the way, for
23 the record I'm reading Page 110 of your examination on
24 June 4, 2012. Who is Aaron?
25 A. I think they meant Taryn.

1 Q. It could be a mistake, could be Karyn?
Page 153
2 A. Taryn.
3 Q. Mr. Lichtman, who we know; Mr. Stettin, who
4 we know; Mr. Singerman, who we know; Mr. Cimo, who we
5 know; some really boring forensics guy. Do you know
6 whether that person was affiliated with the trustee's
7 financial advisor, Berkowitz Dick?
8 A. To best of my recollection, yes.
9 Q. And Mr. Genovese. Were there any other
10 persons other than those that I've just identified in
11 that meeting?
12 A. To the best of my recollection, no. I don't
13 remember anybody else being there.
14 Q. By the way, was there a court reporter
15 there?
16 A. No.
17 Q. Throughout your testimony both on June 4th
18 and previously, you've indicated that the United
19 States has made you no promises vis-a-vis any possible
20 sentence reduction and that you have no purpose in
21 life right now or reason other than to simply tell the
22 truth. You recall that?
23 MR. GAY: Objection to form.
24 THE WITNESS: Yes, sir.
25 BY MR. SALIM:

1 Q. And you've also similarly testified that you
2 have no deal, vis-a-vis sentence cooperation
3 reduction, with the trustee or his counsel, correct?
4 A. That's correct.
5 Q. Has the trustee made any commitments of a
6 civil nature whereby they have agreed that they will
7 not, for instance, pursue you on any civil basis,
8 although I assume you don't have any assets other than
9 those that have been forfeited?
10 MR. GAY: Objection to form.
11 THE WITNESS: They have not made any such
12 deal with me.
13 BY MR. SALIM:
14 Q. Have they made any deal with you whereby
15 they would refrain from going after Kim, your wife, or
16 any other family members?
17 A. No, sir.
18 Q. Do you know why it is that the trustee
19 hasn't sued any of your family members?
20 MR. GAY: Objection to form.
21 THE WITNESS: That's not true, they tore my
22 wife's lungs out of her body. They destroyed her.
23 BY MR. SALIM:
24 Q. Okay. Other than your wife, do you know why
25 they haven't sued your mother, your father, your
Page 154

1 uncle, or any other person that took any money or
Page 155
2 gifts or gratuity from RRA?
3 MR. GAY: Objection to form.
4 THE WITNESS: My father is dead. My mother
5 has nothing. My sister has nothing. My uncle is
6 going to prison. My grandmother is dead.
7 BY MR. SALIM:
8 Q. So bottom line, it's your testimony that
9 there is no deal either with respect to the criminal
10 proceedings or the civil proceedings?
11 MR. GAY: Objection to form.
12 THE WITNESS: There isn't any. There's no
13 deal.
14 BY MR. SALIM:
15 Q. When you met in August, did you sign any
16 statement or affidavit that day or subsequently?
17 A. No, sir.
18 Q. When you met with the trustee in August, did
19 you provide them any notes or memos or other
20 documents?
21 A. No, sir.
22 Q. Have you subsequently supplied to the
23 trustee, since August of 2011, in that meeting, any
24 notes, memoranda, meeting minutes, or anything like
25 that?

1 A. No, sir.
Page 156
2 Q. Do you communicate with the trustee on a
3 regular basis, other than communications between your
4 attorney and yourself, that might then be relayed,
5 which I respect could be privileged?
6 MR. GAY: Objection to form.
7 THE WITNESS: No, sir.
8 BY MR. SALIM:
9 Q. So you don't have any direct communications
10 yourself, for instance, with Mr. Lichtman?
11 A. No, sir.
12 Q. And you certainly haven't sent him any
13 e-mails or correspondence in the last year, have you?
14 A. No, sir.
15 Q. Are you and Kim still married?
16 A. Yes, sir.
17 Q. And there's no pending divorce proceeding?
18 A. Not to my knowledge.
19 Q. On that Picou transaction which we've
20 identified as the first deal that involved
21 Mr. Tonacchio, did Ron Picou actually pay back that
22 money to you or RRA, or did that just come out of the
23 Ponzi?
24 A. He paid it in a manner of speaking, but not
25 necessarily at that time.

1 Q. What do you mean by that, Scott?
Page 157
2 A. It was other business I was conducting with
3 Mr. Picou of an illegal nature, and monies that he was
4 making sure got to my firm ultimately, I believe,
5 replaced the money that I laid out to pay Mr. Lipsitz
6 and Mr. Tonacchio back.
7 Q. You indicated that Dom had a problem with
8 his bank and that he may or may not have changed
9 banks. Do you have any specific recollection that, in
10 fact, he changed banks as a result of an issue arising
11 out of the volume of checks between him and RRA?
12 A. I don't recall specifically as I sit here
13 one way or the other.
14 MR. SALIM: I'm done. Thank you, sir.
15 MR. PHILLIPS: Mr. Rothstein.
16 THE WITNESS: Thank you.
17 MR. LICHTMAN: Can we take two minutes to
18 use the facilities?
19 MR. PHILLIPS: Sure.
20 CROSS EXAMINATION
21 BY MR. PHILLIPS:
22 Q. I believe when Mr. Gay was asking you
23 questions, you said that by 2007 your focus was on the
24 Ponzi scheme, correct?
25 A. For the most part, yes, sir.

1 Q. And that when it came to the settlements
Page 158
2 that you discussed, they were confidential pre-funded
3 settlements, correct?
4 MR. GAY: Objection to form.
5 THE WITNESS: Correct.
6 BY MR. PHILLIPS:
7 Q. Were they confidential because no suit had
8 been filed and you didn't want people to have access
9 to the public records to be able to look up to see if
10 there were any lawsuits? Was that why you came up
11 with the confidential nature of the settlements?
12 A. Came up with the confidentiality because,
13 number one, we didn't want people poking around. And
14 number two, it was the maintenances of the
15 confidentiality that led the credence to the
16 exorbitant interest rates and the amount of money
17 Plaintiff's were giving up, allegedly.
18 Q. When you said you went to Runway 84 every
19 Thursday night for years and years, was that the night
20 that people knew that organized crime figures or
21 people related to organized crime went to Runway 84?
22 A. Yes.
23 Q. Did you enjoy the reputation that you had of
24 hanging out with these organized crime figures for all
25 those years on Thursday nights?

1 A. Yes.
Page 159
2 MR. GAY: Objection to form.
3 BY MR. PHILLIPS:
4 Q. Did you tell Barry Lipsitz and Domenick
5 Tonacchio that you hung out with these organized crime
6 figures for many, many years and that you had their
7 ear if you needed it?
8 A. I not only told them that, they knew it,
9 they were there.
10 Q. Are you sure Mr. Lipsitz ever went to Runway
11 84 with you?
12 A. No. I think I testified earlier that I
13 wasn't certain. I recollect Domenick being there.
14 It's certainly possible that Mr. Lipsitz never went to
15 Runway 84 specifically with me.
16 Q. Now, Mr. Rothstein, do you consider yourself
17 a charismatic guy?
18 A. I used to.
19 Q. And people liked you, they liked being
20 around you?
21 A. Yes.
22 Q. The people that hung out with you, they
23 trusted you, right?
24 MR. GAY: Objection to the form.
25 THE WITNESS: Some did and some did not.

1 BY MR. PHILLIPS:
Page 160
2 Q. Did you think that Mr. Lipsitz trusted you?
3 A. Yes.
4 Q. And he trusted you so much that he had you
5 handle his legal work for him as well, correct?
6 MR. GAY: Objection to form.
7 THE WITNESS: Certain of it, yes, sir.
8 BY MR. PHILLIPS:
9 Q. And you would call him things like King
10 Barry or my brother from another mother or other
11 endearing terms, right?
12 A. That's right.
13 Q. And you did that because you wanted people
14 to feel close to you and trust you so that they would
15 put up money when you asked them to, correct?
16 MR. GAY: Objection to form.
17 THE WITNESS: It's a combination, Gary.
18 Certain people I referred to that just because,
19 because they were friends. That was the way -- it
20 was the terminology I used when I spoke to people.
21 So it wasn't always geared towards the Ponzi scheme.
22 But certainly your point is well taken, that in
23 certain circumstances I wanted people close to me
24 because I wanted them to invest in the Ponzi scheme.
25 BY MR. PHILLIPS:

1 Q. With respect to the Picou deal, you
Page 161
2 acknowledged that you made up a story, a lie about why
3 Picou needed to borrow money from Barry Lipsitz,
4 correct?
5 A. That's correct.
6 Q. So you didn't trust Mr. Lipsitz enough to
7 tell him the truth about Picou having gambling debts
8 or wanting to keep money from his daughter or whatever
9 other reason he needed the money, correct?
10 MR. GAY: Objection the form.
11 THE WITNESS: It's not that I didn't trust
12 him enough, it's just that Ron -- you have to
13 understand Ron. I know you met him before, but you
14 really need to understand him. And he was very
15 sensitive about financial issues and his gambling and
16 the like, and I think it was more to protect Ron. It
17 wasn't necessarily that I didn't trust Barry.
18 BY MR. PHILLIPS:
19 Q. But for whatever reason you didn't tell
20 Barry the truth, did you?
21 A. I did not.
22 Q. Now, Exhibit 205, T-TL 205, which is part of
23 the trustee's exhibits, the second to last line you
24 wrote, "Not a bad return on investment." Do you see
25 that?

1 A. One second. Yeah, got it, Gary.
Page 162
2 Q. And this says, Lipsitz loan repayment,
3 correct?
4 A. Yes, sir.
5 Q. When you say, "not a bad return on
6 investment," what do you mean by "investment"?
7 A. I always called all the money guys were
8 making off these things ROI, return on investment. I
9 didn't mean anything specific by investments one way
10 or the other. I was joking around about the fact that
11 the interest rate was exorbitant.
12 Q. Well, do you acknowledge that there's a
13 difference if you are giving them a return on an
14 investment as opposed to interest rate on a loan?
15 A. From a technical legal standpoint, yes. In
16 the way I was speaking, no, I wasn't being particular.
17 Q. Well, when you told them that they were
18 investing in a settlement, they believed that they
19 were investing to pay somebody who had settled a
20 lawsuit and they were going to get paid back from your
21 trust account, correct?
22 MR. GAY: Objection to the form.
23 THE WITNESS: That's correct. I would
24 absolutely term the settlement deals as investing in
25 a settlement funding deal.

1 BY MR. PHILLIPS:
Page 163
2 Q. Did you ever tell -- by the way, do you
3 recall what the ethical rules are with respect to an
4 attorney going into business or investment deals with
5 his own clients?
6 A. Yeah. There has to be a significant amount
7 of disclosure to get past the Bar rules.
8 Q. Did you ever provide any written disclosures
9 or documentation to or receive from Barry Lipsitz or
10 Domenick Tonacchio any disclosure about going into
11 business with you about these investment deals?
12 A. That's not the way that Domenick and Barry
13 and I did business.
14 Q. Well, did you ever tell them -- strike that.
15 Well, as an attorney -- at the time you were
16 still a practicing lawyer, weren't you?
17 A. Practicing is an interesting word for what I
18 was doing, so it was sort of practicing, yes.
19 Q. Okay. Well, you knew that's what you should
20 have done. Whether that's not the way you did
21 business, that would have been the right thing to do
22 as the attorney, correct?
23 MR. GAY: Objection to form.
24 THE WITNESS: Yes, had I been adhering to
25 all the ethical rules set forth by the Florida Bar, I

1 should have made certain disclosures to them
Page 164
2 pertinent to the investment and/or the loans which
3 were really also investments.
4 BY MR. PHILLIPS:
5 Q. Okay. And did you ever tell them that they
6 should obtain separate counsel to review the notes or
7 the deals that you were providing to them?
8 A. That's not the way Domenick and Barry and I
9 did business.
10 Q. That's not the question, though,
11 Mr. Rothstein.
12 Did you tell them that they should seek out
13 separate counsel?
14 A. No, sir.
15 Q. Now, if you look at T-TL 00241, and before I
16 ask you a question about that, when you say that's not
17 the way you and Domenick and Barry did business, is
18 that because Barry trusted you as a friend and
19 counselor?
20 MR. GAY: Objection to form.
21 THE WITNESS: I'd be guessing. It's just
22 not the way we did business. I mean, money moved
23 back and forth between us as it needed to for
24 business. There's clearly been -- there were clearly
25 occasions when I just sent Domenick money and told

1 him, use it as he needed to for deals without any
Page 165
2 paper documentation or very little paper
3 documentation. So it's just not the way we did
4 business.
5 BY MR. PHILLIPS:
6 Q. Well, let's talk about that for a minute.
7 You did deals with Mr. Tinachi (sic) in
8 which Mr. Lipsitz --
9 A. Tonacchio.
10 Q. I apologize. In which Mr. Lipsitz was not
11 involved, correct?
12 A. That's correct.
13 Q. And are you aware that TL Investors has
14 nothing to do with Mr. Lipsitz, that's Mr. Tonacchio's
15 company?
16 MR. GAY: Objection to form.
17 THE WITNESS: To the best of my
18 recollection, Gary, that's correct.
19 BY MR. PHILLIPS:
20 Q. Did you know that the L did not stand for
21 Lipsitz, he was not a partner of Mr. Tonacchio's?
22 A. I don't think I ever thought it stood for
23 Mr. Lipsitz. I didn't care what it stood for,
24 honestly.
25 Q. Okay. In fact, you only did one real estate

1 transaction in which Mr. Lipsitz was involved and it
Page 166
2 was the 950 property down here in Fort Lauderdale,
3 correct?
4 A. To the best of my recollection, that's
5 correct. I don't remember whether Barry invested in
6 any of the projects with us. I don't have a specific
7 recollection that he did.
8 Q. Now, with respect to 241 that I asked you to
9 look at, at the bottom it says, ROI, and that's an
10 e-mail from you to Barryflash, among others, on
11 April 15th, 2008. Do you see that?
12 A. Yes.
13 Q. And there the ROI means return on
14 investment?
15 A. Correct.
16 Q. And you basically just say, "Fund 750, the
17 ROI is 250 and it's paid as follows," correct?
18 A. Correct.
19 Q. So that would be an investment deal as part
20 of the Ponzi scheme that you didn't fully paper,
21 correct?
22 MR. GAY: Objection to form.
23 THE WITNESS: When you say "fully paper,"
24 Gary, you are talking about what I call our full
25 document deals, right?

1 BY MR. PHILLIPS:
Page 167
2 Q. Right. I mean, with these guys you --
3 A. Yes.
4 Q. -- did it with promissory notes, not full
5 document deals?
6 MR. GAY: Objection to form.
7 THE WITNESS: Correct.
8 BY MR. PHILLIPS:
9 Q. But it was the same purpose, the same type
10 of investment?
11 A. Correct.
12 Q. By the way, with respect to that 950 deal,
13 did you buy it first and then ask Barry Lipsitz if he
14 wanted to participate for 25 percent?
15 A. There were all kinds of -- there was all
16 kind of chatter going back and forth between Domenick
17 and I, and Domenick and Barry and I, and Domenick and
18 Barry regarding who was investing in that. People
19 were coming into the deal, out of the deal, into the
20 deal, out of the deal. There was all kinds of stuff
21 going on with Pichinini and Scarmalino as well. And
22 ultimately, I believe that we needed to get the
23 investment done, so I went ahead and did it, and then
24 ultimately Barry came into the deal.
25 Q. Okay. Mr. Rothstein, you signed a plea

1 agreement with the United States of America, correct?
2 A. I did.
3 Q. And in that you pled guilty to racketeering
4 and conspiracy, correct?
5 A. Correct.
6 Q. You pled guilty to conspiracy to commit
7 money laundering, correct?
8 A. Correct.
9 Q. You pled guilty to conspiracy to commit mail
10 fraud and wire fraud, right?
11 A. Correct.
12 Q. And finally you pled guilty to wire fraud,
13 correct?
14 A. Correct.
15 Q. Do you recall in that plea agreement there
16 was a statement of facts that you were required sign?
17 A. Yes, sir.
18 Q. Do you recall that the statement of facts
19 stated that you stipulate and agree that the aforesaid
20 facts are true and correct and they encompass all of
21 the necessary elements to establish the guilt under
22 the five counts we just discussed.
23 Do you recall that?
24 A. Yes, sir, I do.
25 Q. Now, in your deposition on last Monday,
Page 168

1 June 4th, Mr. Lichtman asked you a question about when
2 the bridge loans started, and you said you really
3 couldn't recall. And he said was it 2004 or perhaps
4 earlier, and you said yes, but you couldn't put a
5 precise date on when that portion of the Ponzi scheme
6 began. Do you recall that?
7 A. I don't know what day he said, but if that's
8 what the transcript says, I'll take your word for it
9 at this moment.
10 Q. Well, as you sit here, do you recall whether
11 the Ponzi scheme and bridge loans started in 2004?
12 A. I don't recall. There were points in time
13 before any of this started, Gary, that we were, in
14 essence, borrowing money from clients to fund the law
15 firm. It wasn't a full-blown Ponzi scheme at the
16 time, it was simply borrowing money and paying it back
17 at exorbitant interest rates to try to keep the law
18 firm afloat. So the exact start date of the Ponzi
19 scheme, I can't tell you the exact start date of when
20 it went from a bridge loan, from just a couple of
21 loans from assorted clients and friends, to a scheme
22 where money was going in and out on a rapid regular
23 basis. I can't tell you for certain, I'd be guessing.
24 Q. Well, today we've seen that Mr. Lipsitz and
25 Mr. Tonacchio did not provide you any funds until you
Page 169

1 asked them for the Picou loan, and that was in 2007,
Page 170
2 correct?
3 A. Yes, sir.
4 Q. So they were not investing with you or
5 providing you bridge loans in 2004, 2005, or 2006,
6 correct?
7 A. To the best of my recollection, you are
8 correct.
9 Q. Now, do you recall stating in your statement
10 of facts, which you signed as part of the plea
11 agreement, that on or about -- in or about 2005
12 through in or about November 2009, Defendant Rothstein
13 conspired with persons unknown to United States
14 attorney to the use -- to use the law firm, Rothstein,
15 Rosenfeldt and Adler, as a criminal enterprise in
16 order to conduct the pattern of racketeering activity?
17 A. Yes, sir.
18 Q. So that was from 2005 to 2009. And we have
19 established now that you said the bridge loans were
20 really in the initial part of the scheme, and it later
21 morphed into these confidential settlement agreements,
22 correct?
23 MR. GAY: Objection to form.
24 THE WITNESS: Started out as loans, then it
25 morphed into non-papered deals. Bridge loans still

1 going on. Then it morphed into fully documented
Page 171
2 deals, with some people having no document or very
3 few document deals. Probably still a few bridge
4 loans here and there.
5 BY MR. PHILLIPS:
6 Q. Would you agree that Mr. Lipsitz and
7 Mr. Tonacchio didn't participate in the bridge loan
8 part but got there when you were into the
9 non-documenting deal phase in 2007?
10 MR. GAY: Objection to form.
11 THE WITNESS: I can't say that for certain,
12 Gary, because the bridge loans were still going on,
13 at least to a limited extent, and I certainly may
14 have introduced Mr. Tonacchio and Mr. Lipsitz into
15 the whole thing utilizing the bridge loans. I'd have
16 to see all the e-mails on either side of our
17 documents, the documents I've shown, to tell you for
18 certain. I can't tell you one way or the other.
19 BY MR. PHILLIPS:
20 Q. I want to get back to when this started
21 because in your statement of facts that you signed as
22 part of your plea agreement, you said was in 2005 but
23 last week in your deposition you thought it may have
24 started in 2004. Do you think you might have been
25 referring just to bridge loans in 2004 when

1 Mr. Lichtman asked you that question?
Page 172
2 MR. GAY: Objection to form.
3 THE WITNESS: I can't tell you one way or
4 the other. That is certainly a possibility. The
5 easiest thing to do would be to check the documents,
6 see when I did my first bridge loan.
7 BY MR. PHILLIPS:
8 Q. Do you recall when you signed the statement
9 of facts?
10 A. I was sentenced on June 9th, so just prior
11 to that I would imagine.
12 Q. In 2010?
13 A. No. Actually, it may have been
14 substantially before that. Do you have the date in
15 front of you?
16 Q. I can tell you. I wanted to know whether
17 you have any independent recollection.
18 A. No, I don't have an independent recollection
19 of when I signed it.
20 Q. Okay. Are you taking any medications that
21 might affect your memory?
22 A. No, sir.
23 Q. Are you still being prescribed Xanax while
24 incarcerated?
25 A. No, sir.

1 Q. Now, in the plea agreement you specifically
2 said that you relied upon the purported success of RRA
3 and your standing in the community to lure potential
4 investors in order to convince them to make
5 investments with you, correct?
6 A. Yes, sir.
7 Q. And that you used the funds derived from
8 that Ponzi scheme to maintain the appearance of
9 affluence and wealth by purchasing expensive real and
10 personal property in order to convince potential
11 investors of the legitimacy of RRA and the purported
12 investment opportunities, correct?
13 A. You are reading from what document, Gary?
14 Q. Your statement of facts in the plea
15 agreement.
16 A. Yeah, if that's what it says, I agree with
17 you.
18 Q. Well, is it not true?
19 A. No, no, no, of course it is. Anything that
20 I signed that's in there is true. I'm taking your
21 word for the fact that you are reading it to me
22 accurately. If that's what it says, that's what I
23 said.
24 Q. How do we know that anything you signed or
25 that's in there is true since you just testified you
Page 173

1 just made up story after story after story for every
Page 174
2 deal you ever entered into with these gentlemen? We
3 have to take your word for it, right?
4 A. No. Actually, 90 percent of what I told the
5 government is bolstered by documentation.
6 Q. Okay. So where is the documentation that is
7 bolstering everything you told the government?
8 MR. GAY: Objection to form.
9 THE WITNESS: In the million plus documents
10 in existence in this case. It's there.
11 BY MR. PHILLIPS:
12 Q. Do you recall --
13 A. 90 percent of everything that I've had to
14 tell the government is in those documents. It's over
15 a million of them. It's all laid out nicely in there.
16 Q. So we have 90 percent covered but there's 10
17 percent that's not, is that what you are telling us?
18 A. Well, the way I look at it, you have about
19 90 percent completely bolstered by the documents and
20 the checks and the registers. You have some of that
21 and another percentage of it covered by seven or eight
22 people who have already taken pleas and corroborated
23 what I told the government. And the remainder can be
24 backed up simply by comparing what I told the
25 government and seeing if it fits within what all the

1 documents establish.
Page 175
2 Q. But I was asking you about the things you
3 did in order to convince potential investors of the
4 legitimacy of RRA. Are there documents --
5 A. And that's in the documents.
6 Q. Okay. So you are saying there are
7 documents --
8 A. Oh, yeah, that's it.
9 Q. -- about how you went about convincing
10 investor?
11 A. Yes. There's documents, pictures, all kinds
12 of things, yes, sir.
13 Q. Okay. When you first started requesting
14 funds from Mr. Tonacchio and Mr. Lipsitz, do you
15 recall explaining to them about how your firm did a
16 lot of discrimination and whistleblower actions?
17 A. Yes.
18 Q. Do you recall the boast, "Our firm does the
19 most on the East Coast"?
20 MR. GAY: Objection to form.
21 THE WITNESS: I don't specifically recall
22 it, but it sounds like something I might say.
23 BY MR. PHILLIPS:
24 Q. And were you explaining to them that that's
25 how you came up with these confidential settlement

1 agreements as a result of all of the discrimination
Page 176
2 and whistleblower actions your firm handled?
3 A. Yes, sir.
4 Q. Now, before you ever entered into any deal
5 with Mr. Lipsitz, you were socializing with him,
6 correct?
7 A. Yes, sir.
8 Q. You invited him to your wedding?
9 A. I did.
10 Q. Do you recall what year that wedding was?
11 A. 2008.
12 Q. Did you take him to parties where the
13 governor was in attendance?
14 A. Yes.
15 Q. And he had been to your office, correct?
16 A. Yes, sir.
17 Q. Are you aware of Mr. Lipsitz's educational
18 background?
19 A. I believe I am, sir.
20 Q. What is it?
21 A. I believe he dropped out of high school.
22 Q. Do you know what grade?
23 A. It was very early on. I believe that his
24 life story and the success that he achieved was a
25 fairly significant story when he told me about it.

1 That he had actually been living in the streets and
Page 177
2 had worked his way up to the where he was now. I
3 don't remember. I have a recollection that it was a
4 very, very difficult upbringing and that he had made a
5 lot out of himself out of very difficult
6 circumstances.
7 Q. Do you recall him telling you that he didn't
8 complete the eighth grade and that's why he needed
9 attorneys like you to read documents for him?
10 MR. GAY: Objection to form.
11 THE WITNESS: That sounds like something he
12 would have said to me, yes, sir.
13 BY MR. PHILLIPS:
14 Q. Do you recall Barry Lipsitz asking you why a
15 wealthy attorney and businessman did not fund deals
16 yourself?
17 A. Yes.
18 Q. And do you recall telling him it was a
19 conflict of interest for you to get involved?
20 A. Yes, sir.
21 Q. Did you also tell him you were not allowed
22 to put money into a settlement when you were acting as
23 an attorney on the case?
24 A. Yes, sir.
25 Q. And is it a fair statement that Mr. Lipsitz

1 never negotiated any terms of any deals with you, he
Page 178
2 just accepted whatever you said?
3 A. That's a fair statement.
4 Q. To your knowledge, did Mr. Lipsitz first
5 find out about the Ponzi scheme when the news broke in
6 the press about the time you fled to Morocco?
7 A. I don't have any idea.
8 Q. Now, do you recall testifying that you were
9 also investing in legitimate businesses so that you
10 could use those businesses to pay back the investors
11 of the Ponzi scheme?
12 A. That was part of the ultimate exit strategy,
13 yes, sir.
14 Q. And one of those legitimate businesses was
15 Cafe Iguana in Pembroke Pines, correct?
16 A. Yes, sir.
17 Q. Did you receive distribution or salary or
18 cash or other remuneration from that business?
19 A. For a period of time, yes, sir.
20 Q. What did you receive, distribution, salary,
21 cash or all of the above?
22 A. Distributions. I may have received some
23 cash from time to time when we needed cash, but the
24 bulk of the money came through checks, through
25 distributions.

1 Q. In fact, didn't Mr. Caputi continue to pay
Page 179
2 distributions or salary to your wife after you were
3 arrested?
4 A. I believe he paid one to my wife and then
5 kept the remainder of the money for himself.
6 Q. Now, when you received the distributions and
7 the salary that -- from Cafe Iguana, you deposited
8 that into your personal account?
9 A. It wasn't salary, it was a distribution.
10 Q. So you put it in your personal account?
11 A. I don't recall what account I deposited it
12 into.
13 Q. So as you sit here today, do you recall if
14 you used any of that money to pay back RRA investors?
15 A. I don't recall one way or the other. It's
16 certainly possible, but I don't have a specific
17 recollection one way or the other.
18 Q. So you think it's possible if we get all the
19 bank records from Cafe Iguana that some of those might
20 have gone into the RRA accounts to pay back investors
21 as opposed to all of them going into your personal
22 accounts for your personal use?
23 A. I think you are misunderstanding what my
24 exit strategy was. I was not utilizing -- my plan was
25 not to utilize funds as I made them to pay back the

1 investors. My plan was to, as stupid as the plan
Page 180
2 ultimately turned out to be, but my plan was to build
3 the businesses up, sell them and take the money and
4 pay off the investors.
5 Q. Did you ever attempt to sell Cafe Iguana?
6 A. I had discussed with Mr. Caputi one time
7 when he had told me that there was a large -- he came
8 to me, and I don't know whether the story is true or
9 not, but he came to me and told me a large nightclub
10 business looking to potentially expand into South
11 Florida. He was going to talk to them and see what
12 they had to offer. Other than that, no.
13 Q. Now, you said the reason you came back from
14 Morocco was you were afraid for your family, correct?
15 A. I did not want the government to rain the
16 hell that should have been rained down on me down on
17 my family. That was one of the reasons I came back.
18 Q. So did you enter into an agreement with the
19 government or the trustee that they would not go after
20 your family members because you came back and you were
21 going to cooperate with them?
22 A. No, sir.
23 Q. Did you buy your mother a house?
24 A. No, sir.
25 Q. Did you ever pay off her mortgage?

1 A. I don't know whether I did or not, the bank
2 records would pan that out one way or the other. I
3 certainly gave my parents money from time to time, but
4 I don't recall whether or not I paid off their
5 mortgage.
6 Q. Did you disclose to the U.S. Attorney's
7 Office and the trustee how much money you gave to your
8 mother and parents?
9 MR. GAY: Objection to form.
10 THE WITNESS: I disclosed to the U.S.
11 government every cent --
12 Somebody objected?
13 MR. GAY: I object to the form.
14 THE WITNESS: Thank you.
15 I disclosed, when they inquired about my
16 family, about my mom and my dad, I disclosed to them
17 everything that I had done to help my parents, and
18 it's all in the bank records. I did not give them
19 cash.
20 BY MR. PHILLIPS:
21 Q. Do you know why the trustee then hasn't gone
22 after your mother for returning that money?
23 MR. GAY: Objection to form.
24 THE WITNESS: To my recollection, there's
25 actually been several tolling agreements signed with
Page 181

1 my parents.
Page 182
2 BY MR. PHILLIPS:
3 Q. Do you know why those tolling agreements
4 were signed?
5 A. You'd have to ask Mr. Lichtman or
6 Mr. Stettin.
7 Q. How about your sister, did you also give
8 your sister money?
9 A. I did.
10 Q. Do you know why they haven't gone after your
11 sister?
12 MR. GAY: Objection to form.
13 THE WITNESS: She is broke and she also
14 signed a tolling agreement, I believe. But she's
15 broke. She's losing her house. She doesn't have
16 anything they can get.
17 BY MR. PHILLIPS:
18 Q. Your mother worked for you at RRA during the
19 time of this Ponzi scheme, correct?
20 A. Certain periods of time, yes, sir.
21 Q. How much was she paid?
22 A. I don't recall. You can check the bank
23 records, it would be right in there.
24 Q. I want to discuss a few things in your
25 background because you testified last Monday on

1 Page 38 of that transcript that you had a great
Page 183
2 upbringing surrounded by people who loved you and you
3 had a great family. Do you recall that?
4 A. Yes.
5 Q. Do you recall telling people that as a
6 teenager you remember seeing your uncle throw somebody
7 off the top of a building in the Bronx?
8 A. No, sir.
9 Q. So you never saw your uncle throw anybody
10 off a building?
11 A. I actually told somebody a story about when
12 they threw Paul Riner, I think that was his name, off
13 the roof of the building, but I never said it was my
14 uncle who threw him off the roof of the building.
15 Q. Did you tell people that your Uncle Bill was
16 somehow connected to the mob?
17 A. I told people that my uncle hung around with
18 people associated with organized crime, yes, sir.
19 Q. And this was the great upbringing you were
20 referring to?
21 A. My mom, my dad, my grandparents, my sister,
22 they were a great family. My uncle was great to me.
23 The fact he hung around with some unscrupulous
24 characters had nothing to do with my upbringing.
25 Q. Okay. They also said you felt bad for your

1 children. Do you recall that?
Page 184
2 A. In what context I felt bad for my children.
3 Q. When you came back you felt bad for what
4 your children would have to go through, Page 42 of the
5 transcript.
6 A. Yes.
7 Q. How many children do you have?
8 A. I have a daughter and I have a young man
9 that I've been taking care of since he was young that
10 I consider my son, although I never formally adopted
11 him.
12 Q. Mr. Rothstein, you've been married two
13 times?
14 A. Yes, sir.
15 Q. The first was to Kim Hill, correct?
16 A. That's correct.
17 Q. Then the second was Kim Number 2, correct?
18 A. Kim Wendell.
19 Q. Kim Wendell, thank you.
20 Did you have any children while you were
21 married to Kim Hill?
22 A. I conceived a child prior to marrying Kim
23 Hill. That child was born while I was married to Kim
24 Hill, I believe.
25 Q. And the child was born --

1 A. I mean, hang on, court records would say --
2 I mean, the birth certificate and the date of my
3 marriage would say and we'd be able to tell
4 specifically.
5 Q. But the child was born to a different woman,
6 correct, not Kim Hill?
7 A. Yes.
8 Q. And while --
9 A. I never had children with Kim. Hang on,
10 I've never had children with Kim Hill or with
11 Ms. Wendell.
12 Q. And while you were engaged to Kim Hill,
13 didn't you give up your parental rights to the child
14 so that she would never find out that you had a child
15 with another woman?
16 MR. GAY: Objection to form.
17 THE WITNESS: No, no, no, you got that all
18 wrong.
19 BY MR. PHILLIPS:
20 Q. Clear it up for me.
21 A. Sure. When I found out that I had gotten
22 my -- the mother of my now daughter pregnant, I told
23 Kim Hill. As a matter of fact, I told her before we
24 got married. We had a major blowup. As a matter of
25 fact, I think I was working for you at the time. I
Page 185

1 told you about it.
Page 186
2 Q. Didn't you give up your parental rights?
3 A. I gave up my parental rights way down the
4 road. The mother of my child was seriously seeing and
5 considering -- she may have actually married him. She
6 was dating someone named Brian, I believe, who had
7 basically raised my daughter from the time that she
8 was very young. And I was asked specifically by my
9 child's mother and by Brian to give up the parental
10 rights so that he could adopt her.
11 Q. And did he?
12 A. It wasn't to hide it from anybody.
13 Q. Did he adopt her?
14 A. I believe he did, yes.
15 Q. And did there come a time when that child
16 wanted to get to know you?
17 A. Yes.
18 Q. And even though you gave up your parental
19 rights, and there was another father who raised this
20 young lady, you went to battle with him over your
21 rights to get back into this woman's -- this
22 daughter's life, correct?
23 A. Now you got that wrong also.
24 Q. I only know what you told me. So why don't
25 you clear it up.

1 A. I'll be polite and not discuss what you told
2 me.
3 Q. You know what, you can say anything you
4 want. I have nothing to hide, Scott. But let's
5 answer the question first.
6 MR. GAY: Objection to whatever --
7 MR. LICHTMAN: Guys.
8 MR. GAY: -- form that was.
9 THE WITNESS: Brian actually, initially
10 wanted me to come because Rachel was very curious
11 about me. The first time that I went up to see
12 Rachel in Winter Park, Florida, Brian was actually
13 there and I met him and that's when I met Rachel. He
14 was part of that whole thing.
15 BY MR. PHILLIPS:
16 Q. You don't recall telling Mr. --
17 A. The blowup did not occur between -- the
18 blowup did not occur between me and Brian until much
19 later.
20 Q. But you understood he was telling you, look,
21 I adopted this girl. I'm legally her father. You
22 have no legal rights. I don't want you to see her
23 anymore, correct?
24 MR. GAY: Objection to form.
25 THE WITNESS: Later on down the road, yes,
Page 187

1 sir.
Page 188
2 BY MR. PHILLIPS:
3 Q. And you decided that you weren't going to
4 honor your waiver of the parental rights and you were
5 going to fight him over that, right?
6 MR. GAY: Objection to form.
7 THE WITNESS: Yes, after a certain period
8 of time and a lot of soul searching, I made the
9 decision that I wanted to have a relationship with my
10 daughter.
11 BY MR. PHILLIPS:
12 Q. So after you committed a bad act, you
13 decided to reach within yourself and soul search, you
14 wanted to correct your evil ways, correct?
15 MR. GAY: Objection to form.
16 MR. PHILLIPS: I'll withdraw the question.
17 THE WITNESS: What?
18 MR. PHILLIPS: I'll withdraw the question.
19 BY MR. PHILLIPS:
20 Q. Now, on Page 60 of the deposition transcript
21 from last Monday, on June 4th, Mr. Lichtman asked you
22 about certain ethical responsibilities that attorneys
23 at RRA had with respect to the maintenance of trust
24 accounts. Do you recall that?
25 A. I do.

1 Q. And do you recall saying that if the
Page 189
2 attorneys knew that you were utilizing the trust
3 accounts for illegal purposes, they would have turned
4 you into the Florida Bar. Do you recall that?
5 A. Certain of them, yes, sir.
6 Q. Do you also recall back when you were a
7 member of the Florida Bar that every year you had to
8 check off a box and acknowledge that you as an
9 attorney reviewed the trust accounts within the law
10 firm and they were properly maintained?
11 A. I don't remember what the form specifically
12 says, but yes, I remember there being something on the
13 form saying that either I or my firm that I worked for
14 was in compliance with the Florida Trust Accounting
15 Rules.
16 Q. Did any of those attorneys ever ask you if
17 you were in compliance with the trust accounting
18 rules?
19 A. No, sir.
20 Q. And you agree that if any of those attorneys
21 you were talking about checked off the box stating you
22 were in compliance, that would have been a
23 misrepresentation and a lie to the Florida Bar,
24 correct?
25 MR. GAY: Objection to form.

1 THE WITNESS: No, because we led most of
Page 190
2 the lawyers to believe that those accounts were all
3 in compliance. It's like working in my large firm, I
4 don't think that everyone in a large firm with 1,000
5 lawyers calls up the trust accounting department and
6 says, "Hey, are we in compliance with our trust
7 accounting" before they check that box. I think if
8 you work for a large firm and things seem to be in
9 order you assume it.
10 BY MR. PHILLIPS:
11 Q. So you are saying then that in your opinion
12 it's okay for lawyers just to assume you are in
13 compliance and check it off, whether they are in
14 knowledge or not where they really are?
15 MR. GAY: Objection to form.
16 THE WITNESS: Actually, no. After what I
17 did, I think that a greater burden actually should be
18 placed on lawyers. I think it would help law firms
19 prevent things like what I did from happening. So I
20 don't think the rules are strict enough, no, sir.
21 BY MR. PHILLIPS:
22 Q. Did you set up any trusts for your daughter?
23 A. No, sir.
24 Q. Have you ever spoken to Harriet Lipsitz?
25 A. You are talking about Barry's wife, Harriet?

1 Q. Yes.
Page 191
2 A. Yes.
3 Q. Did you ever discuss any of those
4 transactions with Harriet?
5 A. I don't have a specific recollection one way
6 or the other.
7 Q. By the way, in your background, weren't you
8 also a law professor at Nova University Law School?
9 A. Yes, I was adjunct.
10 Q. While you were adjunct there, did you have
11 sexual relations with one or more of your students?
12 A. I did.
13 Q. By the way, just for the jury, because we
14 are trying our case to a jury, do you have a job in
15 prison?
16 MR. GAY: Objection to form.
17 MR. PHILLIPS: What's wrong with the form?
18 MR. NURIK: Jeff.
19 MR. GAY: That assumes a lot. That's not
20 before any of us today.
21 MR. PHILLIPS: Well, we demanded a jury
22 trial, correct?
23 MR. GAY: I understand that, but you are
24 not trying anything to anyone.
25 MR. KAPLAN: We object to what goes on --

1 MR. PHILLIPS: In prison, okay.
Page 192
2 So you don't want the jury to know whether
3 he's working or not working.
4 MR. KAPLAN: I don't want them to know -- I
5 don't want them to know what's going on within the
6 institution.
7 BY MR. PHILLIPS:
8 Q. Did you check the in compliance box under
9 oath while you were an attorney knowing that your
10 trust accounts were not in compliance?
11 A. Yes.
12 Q. And when you filed tax returns, when it
13 says, "I acknowledge under penalty of perjury that the
14 information set forth in the returns are true and
15 correct to the best of your knowledge and belief," did
16 you also sign those knowing that they were false?
17 A. Yes.
18 Q. I'm trying to wind down now.
19 (Thereupon, Mr. LaVecchio entered the room and
20 Mr. Kaplan exited the room.)
21 BY MR. PHILLIPS:
22 Q. I just want make it clear for the record,
23 you never openly discussed the Ponzi scheme with
24 anybody, not even your subPonzi people, correct?
25 MR. GAY: Objection to the form.

1 MR. PHILLIPS: What's wrong with the form?
Page 193
2 THE WITNESS: That's not correct.
3 MR. PHILLIPS: Wait one second, I want to
4 see what's wrong with the form.
5 MR. GAY: It's vague, subPonzi people, I'm
6 not sure who that is. Two, I think it
7 mischaracterizes his prior testimony.
8 BY MR. PHILLIPS:
9 Q. Well, let me back up for a second then.
10 You certainly never discussed your Ponzi
11 scheme with Mr. Lipsitz, correct?
12 A. I never discussed the fact that I was
13 running a Ponzi scheme with Mr. Lipsitz.
14 Q. Okay. Could you count how many different
15 times you lied to the Florida Bar?
16 A. No, sir.
17 Q. Can you count how many different times you
18 lied to banks?
19 A. No, sir.
20 Q. Can you tell us how many different times you
21 lied on your tax returns?
22 A. No, sir.
23 Q. Can you tell us how many different times you
24 lied to clients?
25 A. No, sir, I'd be guessing.

1 Q. Can you tell us how many times you lied to
Page 194
2 investors?
3 A. No, sir.
4 Q. Can you tell us how many different times you
5 lied to your friends?
6 A. I can't give you a specific number, no, sir.
7 Q. Can you tell us how many different times you
8 lied to family members?
9 A. No, sir.
10 Q. Would you agree that if you total all of
11 those lies, it would be hundreds, if not thousands of
12 times?
13 A. I don't know how many, but far too many.
14 Q. By the way, did you ever refer to your
15 scheme as a Ponzi while it was ongoing?
16 A. No, sir.
17 Q. And I believe you testified on -- this was
18 December 12th, 2011. You said you literally looked at
19 hundreds of thousands of pieces of paper in the last
20 two years, and hundreds, if not thousands of hours of
21 conversations. Do you recall saying that?
22 A. It sounds correct.
23 Q. And that was in response to a question by
24 Mr. Scherer. Do you recall telling him, so that you
25 may not have recollection of something because you had

1 looked at so many documents and had so many
Page 195
2 conversations?
3 A. I have had a lot of conversations and I have
4 looked at a lot of documents.
5 Q. Now, you also said that you went around and
6 did a dog and pony show, correct?
7 A. Yes, me and my co-conspirator at various
8 points in time, yes, sir.
9 Q. By "dog and pony show" you mean you were
10 putting on a show to convince investors to come up
11 with money, right?
12 A. Yes, sir.
13 Q. And your role was the dog and pony show,
14 wasn't it?
15 A. It was one of the roles, yes, sir.
16 Q. You were good at getting people to like you
17 and trust you and come up with money, correct?
18 A. I was, sir.
19 Q. You were good at telling a story, correct?
20 A. I was.
21 Q. Now, you were asked about e-mails that you
22 sent when you returned from Morocco. And you said, "I
23 was in a -- to say that I was in a bad state of mind
24 would be the understatement of the millennium." Do
25 you recall saying that?

1 A. I recall testimony to that effect, yes, sir.
2 Q. And you said it was your intention at that
3 point, when you sent out those e-mails, to kill
4 yourself, that you wanted to try to bail out as many
5 people as possible, correct?
6 A. Yes, sir.
7 Q. You thought you were going to die by your
8 own hand when you sent out those e-mails, didn't you
9 4?
10 MR. GAY: Objection to form.
11 THE WITNESS: At various points in time, I
12 did, yes, sir. I flipped back and forth between
13 thinking of killing myself, thinking about coming
14 back, thinking about continuing to run.
15 BY MR. PHILLIPS:
16 Q. I'm talking specifically now about when you
17 sent e-mails to exculpate people such as Stuart
18 Rosenfeldt?
19 MR. GAY: Objection to form.
20 THE WITNESS: What I'm trying to explain to
21 you, Gary, is that while I was away, I had moments
22 where I actively thought about killing myself, and I
23 had moments where I thought about turning myself in.
24 I had moments where I thought about continuing to
25 run, and it varied from moment to moment depending
Page 196

1 upon what my thought process was at that time. It
Page 197
2 wasn't one continuous stream while I was gone.
3 BY MR. PHILLIPS:
4 Q. Well, Page 49 of the transcript of December
5 12, 2011, you said I want -- there was a question, "I
6 want to know who did you send e-mails to to falsely
7 exculpate?"
8 And your answer is, "George Levin, Frank
9 Preve, possibly some of the other guys, maybe Stu. I
10 don't remember. I was in a -- to say that I was in a
11 bad state of mind would be the understatement of the
12 millennium. It was my intention, at that point in
13 time, to kill myself. So I was going try to bail as
14 many people out as possible." Do you recall that
15 answer?
16 A. Yes, at the time that I was sending
17 exculpatory e-mails I was doing that while I was
18 thinking about killing myself, yes.
19 Q. And are you familiar with the concept of a
20 dying declaration?
21 You are frozen, can you hear me?
22 MR. LICHTMAN: Sometimes the screen -- this
23 happened one other time.
24 MR. LAVECCHIO: Last time it meant that we
25 were off line. So I'm going to have to make a call.

1 [Short recess taken.]
Page 198
2 BY MR. PHILLIPS:
3 Q. The last question I believe was, are you
4 familiar with the concept of a dying declaration?
5 A. I am.
6 Q. What is that?
7 MR. GAY: Objection to form.
8 THE WITNESS: It's where someone is
9 literally on their death bed and they make a
10 statement that follows certain predicates set out by
11 the evidence code, and it's taken as a statement that
12 could be admissible in evidence.
13 BY MR. PHILLIPS:
14 Q. Meaning people who are about to die
15 generally tell the truth because they are on their
16 death bed, correct?
17 MR. GAY: Objection to form.
18 THE WITNESS: Well, that's the presumption
19 that the drafters of the evidence code utilized in
20 creating that rule, and then it's given to the jury
21 to decide whether or not it's truthful or not, to
22 weigh it, and they weigh other things like whether or
23 not the person was mentally stable at the time, on
24 medication, taking drugs, that type of thing.
25 BY MR. PHILLIPS:

1 Q. So your position was, when you were sending
2 out e-mails bailing people out, you were not mentally
3 stable and they were false?
4 MR. GAY: Objection to form.
5 MR. PHILLIPS: Correct?
6 MR. GAY: Objection to form.
7 THE WITNESS: Gary, you have to define for
8 me "mentally stable." I mean, I was suicidal. I was
9 on the run. I was trying to figure out what to do.
10 So I don't know that anyone would be completely
11 mentally stable at that point in time.
12 BY MR. PHILLIPS:
13 Q. You would agree that you may not have --
14 A. I had moments of mental stability and I had
15 moments of mental instability.
16 Q. And you would agree you were that way
17 throughout the whole Ponzi scheme, correct?
18 MR. GAY: Objection to form.
19 THE WITNESS: From time to time. Not
20 nearly as much. It teetered tottered a lot more
21 while I was in Morocco, just because of the sheer
22 enormity of the pressure. But certainly from time to
23 time when I was in the states. I teetered back and
24 forth.
25
Page 199

1 BY MR. PHILLIPS:
Page 200
2 Q. Do you recall telling people when you gave
3 them promissory notes from your law firm, that it was
4 really more like a guarantee that they would get paid
5 from your firm than a promissory note?
6 MR. GAY: Objection to form.
7 THE WITNESS: Certain people inquired as to
8 why in a funding of a pre-funded settlement would I
9 include a promissory note. The truth of the matter
10 is, it was a relic from the pre-heavy document deals.
11 Other people just wanted them in there I guess as an
12 additional guarantee. So I told them what I needed
13 to tell them in order to get them to buy the deal,
14 including statements that it's just an additional
15 guarantee.
16 BY MR. PHILLIPS:
17 Q. Did you tell Barry Lipsitz, "Your money is
18 always going to be good because you are getting a
19 promissory note from my firm"?
20 A. I believe I did, yes, sir.
21 Q. And did you tell him, "You'll never have
22 anything to worry about because we are giving you
23 postdated checks from our trust account for you to
24 deposit"?
25 A. That sounds correct, sir.

1 Q. Do you recall telling him that this was an
Page 201
2 exclusive investment opportunity that you were opening
3 only to a limited group of investors and clients?
4 A. I don't ever recall addressing it like that,
5 like it was some kind of television exclusive offer,
6 the way you are saying it. That's not the way I would
7 have discussed it with anybody.
8 Q. And speaking of television, did you ever --
9 well, let's start with, did you ever play guitar in a
10 band and perform?
11 A. Yes.
12 Q. Did you ever take any acting lessons?
13 A. No.
14 Q. Did you ever perform professionally?
15 A. You mean get paid?
16 Q. Yes.
17 A. I got paid when I was in high school and had
18 my band and in college for some fraternity parties,
19 but I think we got paid mostly in beer in college.
20 Q. That's because it was UF, I guess.
21 A. That's right.
22 Q. And I'm proud of that, that's okay.
23 Mr. Rothstein, do you recall telling people
24 that you would wrap tefillin every morning?
25 MR. GAY: Objection to form.

1 THE WITNESS: Excuse me?
Page 202
2 BY MR. PHILLIPS:
3 Q. Do you know what wrapping tefillin is,
4 putting tefillin on?
5 A. Oh, tefillin, the connection wasn't good,
6 yes. I wrapped tefillin every morning.
7 Q. Do you still do that?
8 MR. NURIK: You can answer.
9 BY MR. PHILLIPS:
10 Q. I'll withdraw that.
11 Were you doing that during the time of this
12 Ponzi scheme?
13 A. Yes.
14 Q. Can you explain what it means to wrap
15 tefillin?
16 A. It's a method of increasing your awareness
17 and your connection to God while you are praying.
18 Q. And there's a little box on the tefillin
19 that you put on the forehead and on your right arm,
20 correct, or is it your left arm? You can tell me.
21 A. Your left arm.
22 Q. Your left arm and your forehead.
23 What's in that box?
24 A. The Shema and a prayer from Deuteronomy.
25 Q. So these are prayers acknowledging your

1 relationship with God, right?
Page 203
2 A. Yes.
3 Q. And every day you would acknowledge your
4 relationship with God and wrap tefillin and then go
5 off to work and perpetrate a scam to the tune of one
6 to $2 billion over a period of five years, correct?
7 A. Without getting into too much detail of my
8 conversations with God, I begged God to help me find
9 the way to make things right, even when I was
10 stealing.
11 Q. So that's what you were praying for?
12 A. Among other things.
13 Q. And you didn't have the personal fortitude
14 or ability to correct that on your own, did you?
15 A. I was weak and greedy.
16 Q. And the only way it was going to be
17 corrected is if you got caught and was threatened with
18 50 years in prison, correct?
19 MR. GAY: Objection to form.
20 THE WITNESS: I don't think that's correct.
21 BY MR. PHILLIPS:
22 Q. Well, the first thing you did when you
23 realized that the floor was about to fall out from
24 under you was flea the country on a private jet,
25 correct?

1 A. That's correct.
Page 204
2 Q. And by the way, didn't you used to send
3 Steve Caputi with money to go fill up foreign accounts
4 in cash on a private jet during the course of this
5 Ponzi scheme?
6 A. Never.
7 Q. So Mr. Caputi was never involved in any
8 banking in foreign countries, hiding money for you?
9 A. When Mr. Caputi met me in Morocco, I gave
10 Mr. Caputi a million dollars in a Moroccan bank
11 account to utilize for investments we were going to
12 make there, but he was not running around trying to
13 hide money for me, no, sir.
14 Q. Is that money still in the Moroccan account?
15 A. To the best of my understanding, everything
16 has been turned over to the government.
17 Q. How would they know about that Moroccan
18 account, did you give them the account number?
19 A. Yes, I gave them all the information on all
20 account numbers.
21 Q. And you had the account number information
22 on that Moroccan account?
23 A. For Mr. Caputi's, I may have. All they
24 needed to do was take the bank account that I had
25 there and trace it to whatever account I transferred

1 the money into.
Page 205
2 Q. Well, as you sit here today --
3 A. I told them about the money.
4 Q. -- do you know whether Mr. Caputi still has
5 a million dollars of Ponzi scheme money in a Moroccan
6 account?
7 A. It is my understanding that all of that
8 money has been returned to the government, less some
9 kind of penalties or something.
10 MR. GAY: You have about three minutes.
11 MR. PHILLIPS: Okay.
12 BY MR. PHILLIPS:
13 Q. Mr. Rothstein, you were sentenced to
14 50 years, correct?
15 A. That's correct.
16 Q. You've been in jail two years?
17 A. This December it will be three.
18 Q. You are 50 years old, correct?
19 A. That's correct.
20 Q. How many years do you think you need to have
21 your sentence reduced in order for you to walk out of
22 prison alive?
23 A. I'd be guessing. Depends on how healthy I
24 stay.
25 Q. Well, you agree that you probably won't see

1 the light of day until your eighties?
2 A. That's certainly a possibility.
3 Q. So you agree that regardless of what you say
4 or what you do with the government, or the nature of
5 your cooperation, there's a good chance that even if
6 15 years was reduced off you wouldn't get out of
7 prison until sometime in your eighties, correct?
8 MR. GAY: Objection to form.
9 THE WITNESS: That's a possibility.
10 MR. PHILLIPS: No further questions.
11 MR. LICHTMAN: Okay.
12 [Thereupon, the taking of the deposition was
13 concluded at 2:58 p.m.]
14
15
16 SCOTT ROTHSTEIN
Sworn to and subscribed
17 before me this day
of , 2012.
18 Notary Public, State
of Florida at Large.
19
20
21
22
23
24
25
Page 206

1 CERTIFICATE
2 STATE OF FLORIDA )
COUNTY OF MIAMI-DADE )
3
I, Pearlyck Martin, a Notary Public in and
4 for the State of Florida at Large, do hereby certify
that, pursuant to a Notice of Taking Deposition in the
5 above-entitled cause, SCOTT ROTHSTEIN was by me first
duly cautioned and sworn to testify the whole truth,
6 and upon being carefully examined testified as is
hereinabove shown, and the testimony of said witness
7 was reduced to typewriting under my personal
supervision and that the said Video Conference
8 deposition constitutes a true record of the testimony
given by the witness.
9
I further certify that the said Video
10 Conference deposition was taken at the time and place
specified hereinabove and that I am neither of counsel
11 nor solicitor to either of the parties in said suit
nor interested in the event of the cause.
12
WITNESS my hand and official seal in the
13 City of Miami, County of Dade, State of Florida, this
day of June 12, 2012.
14
15
16
____________________________
17 Pearlyck Martin
18
19
20
21
22
23
24
25
Page 207

1
FRIEDMAN, LOMBARDI & OLSON
2 Suite 924, Biscayne Building
19 West Flagler Street
3 Miami, Florida 33130
Telephone (305) 371-6677
4
June 13, 2012
5
RE: ROTHSTEIN ROSENFELDT ADLER, P.A.
6
SCOTT ROTHSTEIN C/O MARC NURIK
7 One East Broward Boulevard, Seventh Floor
Ft. Lauderdale, Florida 33301
8
Dear SCOTT ROTHSTEIN:
9
With reference to the deposition of yourself
10 taken on June 6, 2012, in connection with the
above-captioned case, please be advised that the
11 transcript of the deposition has been completed and is
awaiting signature.
12
Please arrange to stop by our office for the purpose
13 of reading and signing the deposition. Our office
hours are 9:00 a.m. to 4:00 p.m., Monday through
14 Friday. Please telephone in advance.
15 You may, however, read a copy of the
transcript, provided by any of the attorneys connected
16 with the case, denoting any corrections by page and
line number on a separate sheet of paper. This
17 correction page must be signed by you and notarized
and returned to us for filing with the original.
18
If this has not been taken care of, however,
19 within the next 30 days, or by the time of trial,
whichever comes first, I shall then conclude that the
20 reading, subscribing and notice of filing have been
waived and shall then proceed to deliver the original
21 of the transcript to ordering attorney without further
notice.
22
23
24 _______________________________
Pearlyck Martin
25
Page 208