In re: Rothstein Rosenfeldt Adler, P.A. et al

Filing 100

ORDER granting 79 TD Bank's Cross-Motion for Remedial Relief Related to Unauthorized Disclosure of Information; denying 81 Platinum Partners' Cross- Motion for Discovery and Sanctions. Signed by Judge James I. Cohn on 12/22/2011. (prd)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA
CASE NO. 11-61338-CIV-COHN
In Re: ROTHSTEIN ROSENFELDT ADLER, P.A.,
Debtor.
________________________________________/
ORDER GRANTING TD BANK’S CROSS-MOTION FOR
REMEDIAL RELIEF AND DISCOVERY
ORDER DENYING PLATINUM PARTNERS’ CROSS-MOTION FOR
DISCOVERY AND SANCTIONS
THIS CAUSE is before the Court upon TD Bank, N.A.’s Cross-Motion for
Remedial Relief Related to Unauthorized Disclosure of Information [DE 79], Platinum
Partners Value Arbitrage Fund LP (“Platinum”)’s Cross-Motion for Discovery and
Sanctions regarding RRA Trustee’s Violation of Court Order [DE 81], the Trustee’s
Response to the Cross-Motions [DE 93], TD Bank’s Reply [DE 98], Platinum’s Reply
[DE 97] and the Trustee’s Supplement and Notice of Filing [DE 99]. The Court has
carefully considered all of the filings in this matter, and is otherwise fully advised in the
premises.
I. BACKGROUND
Scott Rothstein (“Rothstein”), the central figure in a criminal action brought by the
United States of America regarding fraudulent activities undertaken by Rothstein while
he controlled the now bankrupt law firm of Rothstein, Rosenfeldt & Adler, P.A. (“RRA”),
was to be the subject of a deposition in the RRA bankruptcy action and various civil
actions by Order of this Court [DE 32], after lengthy negotiations among the parties

involved and upon the recommendation of the Bankruptcy Court.1 TD Bank and
Platinum, two of the private parties involved as defendants in a related civil action filed
against them by defrauded Rothstein investors, filed cross-motions in this action for
remedial relief related to the allegedly unauthorized disclosure of information by the
Bankruptcy Trustee’s counsel and the Trustee. In its July 1, 2011 Order, the Court had
authorized the Trustee to interview Scott Rothstein in advance of his deposition
because of the Trustee’s statutory deadline of November 10, 2011 to file additional
adversary actions. However, the Court only granted the Trustee this special access to
the incarcerated Scott Rothstein after Trustee’s counsel “confirmed in open court that
the Trustee and his counsel will treat their notes of an interview with Rothstein as workproduct, will not obtain an affidavit or declaration from Rothstein to use against the
adversary case defendants, and will not share the information gleaned from Rothstein
with the plaintiffs in the civil cases.” July 1 Order at 7 [DE 32]; In re RRA, 2011 WL
2620187, *4.
II. DISCUSSION
A. TD Bank Cross-Motion
TD Bank alleges that the Trustee’s counsel shared information with counsel for
the Coquina plaintiffs in a civil action presently before Judge Cooke – information that
formed the good faith basis for a line of questioning of a former TD Bank employee in

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For the full background of this action, please see the Court’s prior Orders at
docket entries 32 and 50. In re Rothstein Rosenfeldt Adler, P.A., 2011 WL 2620187
(S.D. Fla. July 1, 2011); In re Rothstein Rosenfeldt Adler, P.A., 2011 WL 3903567 (S.D.
Fla. Sept. 6, 2011). The deposition began on December 12, 2011.
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that case.2 TD Bank argues that the reason given by Trustee’s counsel for disclosure,
the joint interest doctrine, cannot trump the specific conditions set by this Court for the
Trustee’s special access to Rothstein. TD Bank seeks various forms of remedial relief
for the violation, including a Court finding that the Trustee violated the Court’s Order, as
well as discovery from the Trustee and counsel to determine the scope and extent of
the disclosures.
In opposition to this cross-motion, counsel for the Trustee explains that the
disclosure made to counsel for the Coquina plaintiffs was part of the settlement
between the Trustee and Coquina of an adversary action. Counsel states that in the
rush to expedite approval of this settlement by the bankruptcy court, he “forgot” the
pledge he made to the Court not to disclose the information, and while sincerely
apologizing to the Court, further defends the disclosure under the joint interest doctrine.
The Trustee contends that the legal basis for non-disclosure of the interview, the work
product privilege, is subject to the joint interest doctrine exception, in that once the
settlement occurred, the Trustee and Coquina’s interests were aligned against TD
Bank. In addition, the Trustee’s actions were in furtherance of the Trustee’s statutory
obligation to marshal assets for the bankruptcy estate, as the Trustee has a stake in a
successful action by Coquina against TD Bank. Finally, the Trustee also argues that
TD Bank has not been prejudiced because the specific disclosure at issue regarding an

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The information was used at sidebar at trial before Judge Cooke to lay the
foundation for certain questions made by Coquina’s counsel to witness Frank Spinosa,
a former TD Bank employee allegedly paid by Rothstein to help Rothstein obtain
paperwork from TD Bank to legitimize Rothstein’s Ponzi scheme. Spinosa proceeded
to invoke his Fifth Amendment privilege before the jury and did not answer any of the
questions.
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allegation Rothstein made against Frank Spinosa, the Coquina trial witness in question,
had been previously alleged in court papers by a different plaintiff in another action, and
must have already been known to TD Bank. In reply, TD Bank contends that the
admission by counsel for the Trustee of the disclosure is not an excuse that constitutes
a sufficient defense to the limited relief sought by TD Bank, and that TD Bank has
already been prejudiced because the disclosure buttressed Coquina’s evidentiary
presentation at an ongoing trial.3
There is no question that this Court has the power to address the Trustee’s
counsel’s disclosures. “A court retains the authority to enforce its orders and
judgments.” In re Martin, 490 F.3d 1272, 1275 (11th Cir. 2007) (citing Jove Engineering,
Inc. v. I.R.S., 92 F.3d 1539, 1553 (11th Cir. 1996)). There is also no dispute that a
disclosure of information learned from the special access interview of Rothstein
occurred, in violation of this Court’s July 1 Order. Whatever valid strategic reasons
counsel for the Trustee believed he had to share the information under the joint interest
doctrine, the rather simple issue here is that counsel promised this Court he would not
share the information with plaintiffs but he intentionally did so anyway. Most
importantly, this Court granted special access, over objections, based upon the
representation of counsel that he would not share the information. Therefore, while the
Court takes counsel for the Trustee at his word that he “forgot” his promise, the Court

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The Court notes that counsel for the Trustee has supplemented the response
to the cross-motion by noting that Judge Cooke has denied TD Bank’s motion for a
mistrial after TD Bank made similar arguments to Judge Cooke [DE 99]. This Court
takes no position on any issue before Judge Cooke – the issue before this Court is
limited to whether its own order was violated.
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must enforce its orders and grant remedial relief to TD Bank.
B. Platinum Cross-Motion
In its separate cross-motion, Platinum asserts that the Trustee himself violated
this Court’s Order by testifying on November 9, 2011 in a deposition in one of the
bankruptcy adversary proceedings about what Rothstein told him about a person
named Frank Preve. Exhibit A to Cross-Motion [DE 74-1]. The transcript reveals that
after an initial hesitation, the Trustee stated that he did not believe the information was
privileged. Transcript at 74 [DE 74-1 at 3]. The Trustee’s counsel, along with the
plaintiffs’ counsel asking the questions, narrowed the scope of the answers to “the facts
he learned” from Rothstein. Id. at 75. The Trustee proceeded to answer questions
regarding Frank Preve’s involvement with Rothstein’s use of settlement agreements in
the fraud scheme. Id. at 76-80.
The Trustee contends in his response to the cross-motion that the Court’s Order
did not address whether the Trustee could answer questions under oath in a contested
matter before the Bankruptcy Court that was to go to trial several days later. The
Trustee also points out that multiple counsel for Platinum Partners were present at the
deposition and did not object to any questions regarding the Trustee’s interview of Scott
Rothstein. Finally, the Trustee notes that any potential prejudice to Platinum Partners
will be eliminated when it completes their examination of Rothstein at the ongoing
deposition.
This Court concludes that while it has the authority to enforce its order, the
circumstances of the Trustee’s disclosure, under oath in a deposition in which Platinum
Partners’ counsel was present, are sufficiently different from the private disclosure to
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the Coquina plaintiffs so as to not warrant remedial relief with regard to the Trustee’s
deposition testimony on November 9, 2011. The Trustee or his counsel should have
raised an objection to the question based upon the conditions this Court set forth in its
July 1 Order allowing the special access, and sought this Court’s approval before
answering questions about what the Trustee learned from that interview of Rothstein.
However, under the specific circumstances of the disclosure made at the deposition,
the Court denies Platinum Partners’ cross-motion.4
C. Remedial Relief
The Court will award TD Bank’s requested remedial relief. The Court hereby
finds that in sharing the information obtained from the Rothstein interview with counsel
for Coquina, counsel for the Trustee violated both his commitment to the Court and the
terms of the Rothstein Writ Order [DE 32]. The Trustee shall identify in writing, by
name, address and relationship to the Trustee, all persons who participated in the
Rothstein special access interview, and thereafter disclose to TD Bank all of the
information shared with any civil plaintiff or third party, and identify each such party by
name, address and relationship to the case, without limitation and without regard to any
claim of work product, common interest or other privilege. In addition, the Trustee shall
submit each such person participating in the Rothstein interview for deposition under
oath, limited to the scope and extent of the dissemination of information gleaned in the
interview to counsel or any representative of Coquina, or any other actual or potential
plaintiff in any pending or threatened civil action against TD Bank arising out of or
4

The Court notes that the relief sought by Platinum is similar to the relief sought
by TD Bank.
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related to the RRA Ponzi scheme. The Trustee and his counsel shall not communicate,
share or provide to any actual or prospective civil plaintiff or other third party any
information in any form that they obtained in the Rothstein interview. TD Bank shall be
entitled to its attorney’s fees for filing of its cross motion and reply, as well as its
participation at and preparation for the depositions.
III. CONCLUSION
Accordingly, it is hereby ORDERED AND ADJUDGED as follows:
1.

TD Bank, N.A.’s Cross-Motion for Remedial Relief Related to Unauthorized
Disclosure of Information [DE 79] is hereby GRANTED;

2.

Platinum Partners Value Arbitrage Fund LP (“Platinum”)’s Cross-Motion for
Discovery and Sanctions regarding RRA Trustee’s Violation of Court Order [DE
81] is hereby DENIED;

3.

By December 28, 2011, the Trustee shall identify in writing, by name, address
and relationship to the Trustee, all persons who participated in the Rothstein
special access interview;

4.

By January 4, 2012, the Trustee shall disclose to TD Bank all of the information
shared with any civil plaintiff or third party, and identify each such party by name,
address and relationship to the case, without limitation and without regard to any
claim of work product, common interest or other privilege;

5.

By January 20, 2012, in scheduling consultation with counsel for TD Bank, the
Trustee shall submit each such person participating in the Rothstein interview for
deposition under oath, limited to the scope and extent of the dissemination of

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information gleaned in the interview to counsel or any representative of Coquina,
or any other actual or potential plaintiff in any pending or threatened civil action
against TD Bank arising out of or related to the RRA Ponzi scheme;
6.

The Trustee and his counsel shall not communicate, share or provide to any
actual or prospective civil plaintiff or other third party any information in any form
that they obtained in the Rothstein interview;

7.

TD Bank shall be entitled to its reasonable attorney’s fees for filing of its cross
motion and reply, as well as its participation at and preparation for the
depositions;

8.

The Court retains jurisdiction to enforce this Order.
DONE AND ORDERED in Chambers at Fort Lauderdale, Broward County,

Florida, on this 22nd day of December, 2011.

cc: copies to counsel of record on CM/ECF

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