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

Filing 129

ORDER granting 104 Trustee's Motion for Writ of Habeas Corpus ad testificandum; denying without prejudice 107 Brian Levy's Motion to Take Deposition from Scott Rothstein; granting 120 Jeffrey Epstein's Motion for Writ of Habeas Corpus ad testificandum. Signed by Judge James I. Cohn on 2/13/2012. (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 THE MOTIONS OF THE TRUSTEE AND JEFFREY EPSTEIN TO
ISSUE A WRIT OF HABEAS CORPUS AD TESTIFICANDUM
THIS CAUSE is before the Court upon Trustee Herbert Stettin’s Motion for Writ of
Habeas Corpus Ad Testificandum for Second Deposition of Scott Rothstein [DE 104],
Brian Levy’s Motion to Take the Deposition of Scott Rothstein [DE 107], Jeffrey Epstein’s
Motion for a Writ of Habeas Corpus Ad Testificandum to Depose Scott Rothstein and to
be included in the Next Session of Rothstein’s deposition [DE 120], the responses to the
Trustee’s Motion of the Brauser Adversary Defendants [DE 108], the Insurance
Companies [DE 109],1 Emess Capital, LLC [DE 110], Ballamor Capital Management, Inc.
(and LLC) and Barry Bekkedam [DE 111], National Union Insurance Company of
Pittsburgh [DE 112], SFS Funding, LLC, Frank Preve, and Preve and Associates, LLC
[DE 113], SPD Group, Inc. [DE 114], Michael Kent and Mikent, Inc. [DE 115], the Regent
Defendants [DE 116],2 H&N Associates, Jacob Mussry, Nassim Mussry, Scott Morgan,
Harvey Wolinetz, Viceroy Global Investments, Inc., and Concorde Capital, Inc. [DE 118]

1

These companies are RLI Insurance Company, Columbia Casualty Company,
Zurich American Insurance Company, Ironshore Indemnity Co., Westchester Insurance
Company, and St. Paul Fire and Marine Insurance Company.
2

The Regent Defendants are Regent Capital Partners, LLC, Laura Huberfeld,
Murry Huberfeld, Naomi Bodner, David Bodner, the Bodner Family Foundation, Dahlia
Kalter and Mark Nordlicht.

and Razorback Funding, LLC (“Razorback Victims”) [DE 119], along with the
Government’s Reply [DE 124] and the Trustee’s Reply [DE 125]. The Court has
carefully considered all of these filings and the entire record in this action, has heard the
argument of counsel at today’s hearing, and is otherwise fully advised in the premises.

I. BACKGROUND3
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 examined in the RRA bankruptcy proceeding and deposed by various parties in
some of the related civil actions pending in federal and state courts from December 12
through December 22, 2011, by Order of this Court. These parties previously had filed
motions to depose Rothstein in the RRA bankruptcy proceeding, resulting in the
Bankruptcy Court Order certifying the Order to this Court for its approval, as Rothstein is
currently serving a sentence imposed by this Court in Case No. 09-60331-CR.
Just prior to the deposition, in conjunction with its statutory duties and deadlines,
the Trustee filed additional adversary actions against numerous parties. Some of those
parties sought to be included in the December deposition of Scott Rothstein, but due to
the time needed to complete security protocols, those parties were not able to be
accommodated. On November 28, 2011, this Court denied the Trustee’s motion to
3

For additional background, the Court refers the parties to its Orders entered at
docket entries 32, 50, and 85, available at In re RRA, 2011 WL 2620187 (S.D. Fla. July
1, 2011); In re RRA, 2011 WL 3903567 (S.D. Fla. Sept. 6, 2011); In re RRA, 2011 WL
5914242 (S.D. Fla. Nov. 28, 2011), respectively.
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continue the December deposition and deferred ruling on the motion to bifurcate the
deposition, stating:
Any party who demonstrates a need to participate in a deposition of Scott
Rothstein who is unable to participate in the December session because of
the security restrictions imposed by the Marshal’s Service, shall be afforded
an opportunity to make a separate application for another deposition in
early spring of 2012. Simply being sued by the Trustee in an adversary
action is not by itself sufficient cause. Those parties who believe that they
have sufficient cause to participate in a second deposition of Scott
Rothstein shall coordinate their requests with the Trustee, who shall file a
motion for such relief by January 18, 2012.
The Trustee, along with two other parties, have now moved the Court to issue a writ for a
second deposition of Scott Rothstein.
II. DISCUSSION
The Trustee proposes a ten day deposition of Scott Rothstein, broken up into
smaller depositions pertaining to 29 of the 122 bankruptcy adversary actions. Upon
agreement with the Government, the second deposition would take place from June 4
through June 15, 2012, will be taken by video-conference and will not be videotaped.
No party opposes the deposition taking place. As the Court stated in today’s hearing,
before addressing the objections to the manner in which the Trustee and Government
propose to take the deposition (by video-conferencing without videotaping), the time
limits to be placed upon the parties’ time to question Rothstein, and whether particular
parties will be part of this deposition, the Court first concludes that it will grant the
Trustee’s motion and will set the deposition of Scott Rothstein for the ten business day
period from June 4 through June 15, 2012.

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A. No Video-taping
Various parties filed responses and presented oral argument objecting to the lack
of videotaping of the depositions. These objections focused on the importance of a jury
seeing critical non-verbal credibility information about Rothstein’s demeanor in answering
questions. While the Court recognizes the validity of this argument, as previously stated
in its September 6 Order, the Government has shown good cause and specifically
identified a serious harm to justify elimination of videotaping of Rothstein’s deposition.
The Court incorporates its prior analysis and conclusion on this issue. In re RRA, 2011
WL 3903567, *2 (S.D. Fla. Sept. 6, 2011).
B. Use of Video-Conference
Although some parties raised an objection to the use of video-conference in their
responses to the Trustee’s motion, no further argument was made on this point at the
hearing. The logistics of allowing an in-person deposition, such as took place in
December at the first deposition of Scott Rothstein, are significant and create a
substantial financial and resource burden on the United States Marshal’s Service. The
Court finds that no party will be prejudiced by using video-conferencing, which allows the
witness to remain in an undisclosed location. As for the issue regarding how to get
documents to the witness ahead of the deposition, the Government states that it will
facilitate counsel’s sending of documents to Rothstein for use in questioning him during
the deposition.4 This Court leaves the logistics of any deadline for identification of such
4

One party raised an issue not addressed by the Trustee or the Government or
brought up at the hearing, which is who else is going to be with Rothstein at his end of
the video-conference. The Court assumes that the only person who could possibly be
there would be Rothstein’s counsel. The Court will leave that decision up to Rothstein’s
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documents to the parties to negotiate and for Judge Ray to include in a protocol
governing the deposition.
C. Time Limits
The Insurers, National Union, the Ballamor Defendants, Frank Preve and SFS
Funding, the Brauser Adversary Defendants, and the Regent Defendants all object to the
time limits placed upon their questioning of Rothstein as violations of Fed. R. Civ. P. 30
or infringements on their due process rights. The Trustee proposes that the ten days be
broken up into 29 separate depositions – one for each adversary case, although some of
those cases can be consolidated. The Trustee proposed that the questioning attorneys
rotate into the video-conference room, so that each deposition is separate from the
others.
The Insurers argue that their opponents in a separate coverage action involving
their insured, Banyon,5 had the opportunity to question Rothstein in person and at length
in December and therefore the Insurers should have the same opportunity. They seek a
total of 11.5 hours among the eight insurance companies. They contend that Judge
Ray, in denying without prejudice their motion to depose Rothstein, signaled that he
believed that no court would deny due process to such defendants. See DE 109 at pp.
2-3. The Trustee notes that counsel for the Insurers were present in December at the
first deposition, but agrees they were not able to ask questions. If they are able to

counsel. The Court does not expect either the Government’s counsel or the
stenographer to be at Rothstein’s location.
5

There are two actions pending between these parties before other courts, both
of which are stayed because Banyon is in involuntary bankruptcy.
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participate, the Trustee contends that their time should be limited further by having one
counsel ask questions for all the insurance companies, and be directed not to repeat
areas already covered in the first deposition. The Trustee contends that a full transcript
of the first deposition should be deemed admissible for use in their litigation.
At the hearing, the Insurers contended that they are each entitled to question
Rothstein, as conflict among the insurers is possible. They note that collectively there is
$80 million of exposure at stake. As the Court made clear, it does not have the authority
to make evidentiary rulings that extend to other cases before other courts.
The Government’s Reply addresses the time limit issue by stating that the first
deposition resulted in 2,900 pages of testimony, and that repetitive testimony should not
be allowed if the litigants all agree that the deposition can be utilized in all proceedings.
The Government cites to In re Katrina Canal Breaches Consolidated Litigation, 2008 WL
4936734 (E.D. La. 2008), in which the district court cited Fed. R. Civ. P. 26(b)(2) as
giving it the authority to impose limitations on the length of depositions allowed under
Rule 30. That case involved a 50 year history of alleged Army Corps negligence leading
up to the catastrophic loss of life and property after Hurricane Katrina. That court limited
the depositions to 8 business days.
Given that Rothstein has already sat for ten days of deposition, albeit with regard
to other litigation beyond the scope of the parties presently before the Court on this
motion, an additional ten day period is more than sufficient for questioning of Rothstein
on all of the adversary actions and non-bankruptcy actions involving the parties before
the Court. While this Court will not rule on how to parcel out the hours included in the
ten day period, the Court is confident that the parties can either work together to divide
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the time in a fair manner, or the matter is referred to Judge Ray to impose a schedule
within any protocol adopted to govern the second deposition.
D. Who Can Participate
The remaining issue involves who can participate in this second deposition. The
Trustee states in his reply that he has no objection to the inclusion of SFS, Frank Preve
and the Regent Defendants (Reply at 9); SPD Group (Reply at § VI, p.11); and, the
Brauser Defendants, Ballamore Defendants, and Michael Kent (Reply at § VII, p.11).
Therefore, those parties shall be included in the second deposition.6
The Trustee opposes the participation of the Insurer Defendants, stating that their
action involving claims against Banyon has nothing to do with the Trustee’s bankruptcy
adversary actions. The Trustee contends that he should not have to give up his
deposition time to these private litigants in his efforts to obtain assets to benefit the
creditors and victims of RRA . However, as noted above, the insurers’ opponents were
able to question Rothstein in the first action. This Court concludes that under these
circumstances, the insurers have demonstrated a need to depose Scott Rothstein.
However, as stated in the prior section, their participation is subject to time limitations
imposed by Judge Ray in the protocols to be worked out by the parties and Judge Ray.
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The Court notes that the Trustee did not file any objection to Brian Levy’s
motion to be included in the second deposition. Mr. Levy asserts that he sold his
business to RRA and has been sued by the Trustee to return the proceeds of that
transaction. He alleges that the Trustee asked Rothstein questions about this
transaction at the first deposition. Mr. Levy also references February discovery
deadlines in his adversary action before Judge Ray. This Court concludes that it is best
to defer a decision on Mr. Levy’s motion to Judge Ray, who is in a better position to
manage his docket. The Court has no objection to Mr. Levy’s participation in the
second deposition if Judge Ray and/or the Trustee finds it necessary based upon due
process grounds.
7

As to Emess Capital [DE 110] and certain Razorback Defendants [DE 118], the
Trustee states in his reply that he “may be open to a very limited, collective deposition
involving these parties.” Reply at 10. This Court believes that these adversary
defendants have demonstrated a need to participate, although that participation is
subject to significant limitation in conjunction with this Court’s referral to Judge Ray of the
need for a scheduling protocol to divide the ten day period among the parties.
As for parties who participated in the first deposition, such as the Razorback
victims [DE 119], the Trustee contends that further participation would open the door to
several other parties who participated in the first deposition to seek additional
involvement. The Razorback victims only seek further participation if their opponents in
their private actions, the Insurers, are allowed to participate. However, because the
Razorback victims already participated, the Court will grant them access to the
deposition to observe the Insurers’ questioning of Rothstein, but absent a demonstration
of specific need, the Razorback victims will not be allowed to further question Rothstein.
Finally, the Trustee opposes the participation of Jeffrey Epstein on the grounds
that his action has nothing to do with the bankruptcy actions and will open the floodgates
to request by private parties to depose Rothstein. Mr. Epstein filed his own motion for
writ of habeas corpus ad testificandum to question Rothstein regarding his separate
state court action in Palm Beach County Circuit Court against Rothstein and former RRA
partner Bradley Edwards for abuse of process. Epstein was the defendant in the cases
that Rothstein used to create structured settlements that were used to perpetuate his
Ponzi scheme. Epstein reports that he attempted to secure a deposition through his
state court action, but the state court judge concluded he did not have the authority to
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issue a writ. The Government confirmed that while a state court judge can issue a writ,
compliance with such a writ by the federal Bureau of Prisons is discretionary under
federal regulations. Epstein recognizes that absent this ongoing bankruptcy proceeding,
his chances of obtaining access to depose Rothstein are small.
Upon a review of the record, Epstein’s motion is supported by specific evidence
that Rothstein had personal involvement in the civil actions filed against Epstein, which
supported the Ponzi scheme. Epstein has also undertaken all the steps he could take to
secure Rothstein’s deposition. While it is somewhat fortuitous for him that the Trustee is
seeking a second deposition for Rothstein at this time, the Court concludes that Epstein
has met his burden to be included in this second deposition of Scott Rothstein.
Epstein’s participation shall be subject to time limits set by the parties and Judge Ray.

III. CONCLUSION
Accordingly, it is hereby ORDERED AND ADJUDGED as follows:
1.

Trustee Herbert Stettin’s Motion for Writ of Habeas Corpus Ad Testificandum for
Second Deposition of Scott Rothstein [DE 104] is hereby GRANTED;

2.

Brian Levy’s Motion to Take the Deposition of Scott Rothstein [DE 107] is hereby
DENIED without prejudice, and to be decided by United States Bankruptcy
Judge Raymond B. Ray;

3.

Jeffrey Epstein’s Motion for a Writ of Habeas Corpus Ad Testificandum to Depose
Scott Rothstein and to be included in the Next Session of Rothstein’s deposition
[DE 120] is hereby GRANTED;

4.

The Trustee shall prepare and forward to the Court a form of a Writ for Habeas
Corpus Ad Testificandum;
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5.

The deposition of Scott Rothstein shall proceed for ten business days by video
conference commencing June 4, 2012;

6.

The deposition of Scott Rothstein shall NOT be videotaped;

7.

The Trustee shall be responsible for coordinating the establishment of acceptable
and appropriate protocols for the procedures and scheduling of the deposition
subject to approval by United States Bankruptcy Judge Raymond B. Ray.
DONE AND ORDERED in Chambers at Fort Lauderdale, Broward County,

Florida, on this 13th day of February, 2011.

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

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