Avenue CLO Fund, Ltd. et al v. Bank of America, N.A., et al

Filing 79

CERTIFIED REMAND ORDER. MDL No. 2106. Signed by MDL (FLSD) on 1/14/14. (Attachments: # 1 Transmittal from FLSD, # 2 1 09-md-02106 Designation of Record, # 3 1 09-md-02106 Dkt. Sheet - flsd, # 4 09-MD-2106 DE 1, 2, 4-30, # 5 0 9-MD-2106 DE 32-36, # 6 09-MD-2106 DE 37 part 1 of 3, # 7 09-MD-2106 DE 37 part 2 of 3, # 8 09-MD-2106 DE 37 part 3 of 3, # 9 09-MD-2106 DE 38, 39, 41-47, 49, 50, # 10 09-MD-2106 DE 51, # 11 09-MD-2106 DE 52-59, 61-65, 68, 70, 72-76, # (1 2) 09-MD-2106 DE 78-84, 86-91, # 13 09-MD-2106 DE 93, 95-103, 106-108, # 14 09-MD-2106 DE 110-115, # 15 09-MD-2106 DE 116-125, 127-129, 132-134, # 16 09-MD-2106 DE 136-140, 142-158, # 17 09-MD-2106 DE 160-162, 164-167, 170-175, 177-190, # ( 18) 09-MD-2106 DE 191-199, 201-215, # 19 09-MD-2106 DE 217-229, 232-247, # 20 09-MD-2106 DE 248, # 21 09-MD-2106 DE 249 part 1 of 2, # 22 09-MD-2106 DE 249 part 2 of 2, # 23 09-MD-2106 DE 251-253, 262-266, 284-287, 300, 301, 310, 319, 326-3 31, # 24 09-MD-2106 DE 335, 336, 338-344, 346-349, # 25 09-MD-2106 DE 350, # 26 09-MD-2106 DE 351-358, # 27 09-MD-2106 DE 360-366, 368-374, # 28 09-MD-2106 DE 375 part 1 of 3, # 29 09-MD-2106 DE 375 part 2 of 3, # 30 09-MD-2106 DE 375 p art 3 of 3, # 31 09-MD-2106 DE 376 part 1, # 32 09-MD-2106 DE 376 part 2, # 33 09-MD-2106 DE 376 part 3, # 34 09-MD-2106 DE 376 part 4, # 35 09-MD-2106 DE 376 part 5, # 36 09-MD-2106 DE 376 part 6, # 37 09-MD-2106 DE 376 part 7, # 38 09-MD-2106 DE 376 part 8, # 39 09-MD-2106 DE 376 part 9, # 40 09-MD-2106 DE 377 part 1, # 41 09-MD-2106 DE 377 part 2, # 42 09-MD-2106 DE 378, # 43 09-MD-2106 DE 379, # 44 09-MD-2106 DE 380, # 45 09-MD-2106 DE 381 part 1, # 46 09-MD-2 106 DE 381 part 2, # 47 09-MD-2106 DE 382 part 1, # 48 09-MD-2106 DE 382 part 2, # 49 09-MD-2106 DE 382 part 3, # 50 09-MD-2106 DE 382 part 4, # 51 09-MD-2106 DE 383 part 1, # 52 09-MD-2106 DE 383 part 2, # 53 09-MD-2106 DE 383 part 3, # 54 09-MD-2106 DE 383 part 4, # 55 09-MD-2106 DE 383 part 5, # 56 09-MD-2106 DE 383 part 6, # 57 09-MD-2106 DE 383 part 7, # 58 09-MD-2106 DE 383 part 8, # 59 09-MD-2106 DE 383 part 9, # 60 09-MD-2106 DE 383 part 10, # 61 09-MD-2106 DE 383 part 11, # 62 09-MD-2106 DE 384 part 1, # 63 09-MD-2106 DE 384 part 2, # 64 09-MD-2106 DE 384 part 3, # 65 09-MD-2106 DE 384 part 4, # 66 09-MD-2106 DE 384 part 5, # 67 09-MD-2106 DE 384 part 6, # 68 09-MD-2106 DE 384 part 7, # ( 69) 09-MD-2106 DE 384 part 8, # 70 09-MD-2106 DE 384 part 9, # 71 09-MD-2106 DE 384 part 10, # 72 09-MD-2106 DE 384 part 11, # 73 09-MD-2106 DE 385 part 1, # 74 09-MD-2106 DE 385 part 2, # 75 09-MD-2106 DE 386 part 1, # 76 09-MD-2106 DE 386 part 2, # 77 09-MD-2106 DE 386 part 3, # 78 09-MD-2106 DE 386 part 4, # 79 09-MD-2106 DE 386 part 5, # 80 09-MD-2106 DE 386 part 6, # 81 09-MD-2106 DE 386 part 7, # 82 09-MD-2106 DE 387 part 1, # 83 09-MD-2106 DE 387 part 2, # 84 09-MD-2106 DE 388, # 85 09-MD-2106 DE 389 part 1, # 86 09-MD-2106 DE 389 part 2, # 87 09-MD-2106 DE 389 part 3, # 88 09-MD-2106 DE 389 part 4, # 89 09-MD-2106 DE 390, 392-394, # 90 1 10-cv-20236 Dkt. Sheet - flsd, # 91 10cv20236 DE #1-27, 29-31, 45, 53, 60-65, 67-70, 73, # 92 1 09-cv-23835 Dkt. Sheet - flsd, # 93 09cv23835 DE 112, 115-126, # 94 09cv23835 DE 130, 134, 135 and 145)(Copies have been distributed pursuant to the NEF - MMM)

Case 1:09-md-02106-ASG Document 375-17 Entered on FLSD Docket 12/03/2013 Page 1 of 1

Deposition Transcript Excerpts
of Scott Macklin
Filed Under Seal

Case 1:09-md-02106-ASG Document 375-18 Entered on FLSD Docket 12/03/2013 Page 1 of 1

Deposition Transcript Excerpts
of Todd Miranowski
Filed Under Seal

Case 1:09-md-02106-ASG Document 375-19 Entered on FLSD Docket 12/03/2013 Page 1 of
11
Mule, Philip 4/5/2011 5:47:00 PM

1

** C 0 N F I D E N T I A L **

2

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

3

MIAMI DIVISION
CASE NO.: 09-2106-MD-GOLD/GOODMAN

4

-------------------------------------)
IN RE:

)

5
FONTAINEBLEAU LAS VEGAS
6

7

8

CONTRACT LITIGATION

)

MDL NO. 2106

This document relates to all actions.)

--- --------~--------------····--·----)
9
10

AprilS, 2011

11

9:30a.m.

12
13

14
15

DEPOSITION of PHILIP MULE,
a witness on behalf of Caspian in the

16 .. above-captioned matter, taken by Defendants, held
17

at the offices of O'Melveny & Myers, 7 Times

18

Square, New York, New York, before Eileen

19

Mulvenna, CSRIRMR, Certified Shorthand Reporter,

20

Registered Merit Reporter and Notary Public of

21

the State of New York.

22
23

24
25
Bank of America - Fontainebleau

None

Page 1

Case 1:09-md-02106-ASG Document 375-19 Entered on FLSD Docket 12/03/2013 Page 2 of
11
Mule, Philip 4/5/2011 5:47:00 PM

1

MULE- CONFIDENTIAL

2

A

Yes, I report to the three partners.

3

Q.

Adam Cohen --

4

A

Mark Weissman.

5

Q.

And David--

6

A

David Corleto, correct.

7

Q.

Have you held any other positions

8

while you've been at Caspian?

9

A

Any other position --

10

Q.

Other than an analyst.

11

A

Oh, no.

12

Q.

And what does Caspian do?

13

A

14

We

15

invest in high-yield and distressed corporate

16

credit and equity.

17

Q.

What do you consider high-yield?

18

A

Non-investment-grade corporate

19

credit.

20

Q.

21
22

And then what do you consider

distressed?

A

Companies that are perhaps nearing

23

bankruptcy or reorganizing or coming out of

24

bankruptcy.

25

Q.

When you invested in Fontainebleau,

Bank of America - Fontainebleau

None

Page 21

Case 1:09-md-02106-ASG Document 375-19 Entered on FLSD Docket 12/03/2013 Page 3 of
11
Mule, Philip 4/5/2011 5:47:00 PM

1
2
3
4
5
6
7
8

MULE -CONFIDENTIAL
lodging.
And by "equity research analyst,"

Q.

you mean he's buy side?

A.

He would have been sell side at the

time.
And sell side are the ones who

Q.

publish the --

9

A.

Correct.

10

Q.

Did you speak to any other sell-side

11

analysts about the Fontainebleau Las Vegas

12

project?

13

A.

Yes, I did.

14

Q.

Who did you speak with?

15

A.

I would have spoken with James

16

Kayler, Greg Roselli, Chris Schroeder. I believe

17

John Maxwell. There may be others, but those are

18

the four I can recall.

19
20

Q.

making -- strike that.

21
22
23

You spoke to them prior to

You spoke to them as part of the
initial due diligence you did?
A.

I don't recall if it was part of the

24

initial due diligence, but I have spoken to them

25

about the project.

Bank of America - Fontainebleau

None

Page 50

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11
Mule, Philip 4/5/2011 5:47:00 PM

1
2
3
4
5
6
7

MULE - CONFIDENTIAL

them about the initial due diligence?
A.

10
11

Like I said, I don't remember the

time frame in which I spoke to the four of them.
Q.

Do you recall what you discussed

with any of them -- strike that.
Let's take Mr. Kayler first. Who is

8
9

Do you recall speaking to any of

Q.

Mr. Kayler with?
A.

He is -- I believe he was with Bank

of America at the time.

12

Q.

13

with him?

14

A.

No, I don't.

15

Q.

What about Mr. Roselli?

16

A.

I believe he was an associate

17

Do you recall what you discussed

working under Mr. Kayler.

18

Q.

19

with him?

20

A.

No, I don't.

21

Q.

What about Chris Schroeder?

22

A.

I believe he was an associate

23

Do you recall what you discussed

working with John Maxwell.

24

Q.

Do you recall what you discussed

25

with him?

Bank of America - Fontainebleau

None

Page 51

Case 1:09-md-02106-ASG Document 375-19 Entered on FLSD Docket 12/03/2013 Page 5 of
11
Mule, Philip 4/5/2011 5:47:00 PM
1

MULE -CONFIDENTIAL

2

A.

I do not.

3

Q.

And Mr. Maxwell?

4

A.

He was an analyst working for

5

Merrill Lynch at the time. I believe he also

6

specialized in gaming and lodging.

7

Q.

Do you recall what you discussed

8

with him?

9

A.

No, I do not.

10

Q.

I'm asking generally the topics that

11

you would have discussed beyond just

12

Fontainebleau.

13
14
15

A.

I would be speculating if I -- if I

pointed to anything in particular.
Q.

Okay. And again, I said "spoke."

16

If I said e-mail or communicate, would the list

17

get any broader, or is this your general analysts

18

that you communicated with?

19

A.

It may have, but those are the four

20

I can remember having conversations, whether it

21

was by phone or by e-mail.

22

MR. MOST: Do you need a break?

23

THE WITNESS: I'm okay for now.

24
25

BY MR. RIVNER:
Q.

Other than Mr. Kayler and

Bank of America - Fontainebleau

None

Page 52

Case 1:09-md-02106-ASG Document 375-19 Entered on FLSD Docket 12/03/2013 Page 6 of
11
Mule, Philip 4/5/2011 5:47:00 PM

1

MULE -CONFIDENTIAL

2

Mr. Roselli, did you discuss the investment with

3

anyone from Bank of America as part of your

4

initial due diligence?

5

A.

I don't believe so, no.

6

Q.

What about Fontainebleau?

7

A.

Pardon me?

8

Q.

Did you discuss the project as part

9

of your initial -- strike that.

10
11

As part of your initial due
diligence, did you discuss-- strike that.

12

Did you speak to anyone from

13

Fontainebleau as part of your initial due

14

diligence into the project?
MR. MOST: Other than what's already

15
16

been described?

17
18

MR. RIVNER: That was after he
purchased, he said.
MR. MOST: Excuse me.

19
20
21
22
23
24
25

A.

I don't believe so. I think what I

described was my first communication with them.
Q.

Did you dial in to any management

conference calls as part of your due diligence?
A.

I have dialed in to management-- I

believe there were earnings calls at the time.

Bank of America - Fontainebleau

None

Page 53

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11
Mule, Philip 4/5/2011 5:47:00 PM

1

2

MULE -CONFIDENTIAL

A

I'll take your word for it.

3

MR. MOST: The question -- what's

4

important is does the witness recall the

5

date of this document. And the answer

6

is--·

7

THE WITNESS: My answer is no.

8

MR. MOST: -- the answer is he does

9

10
11
12

not.
BY MR. RIVNER:
Q.

If you go down here to where it says

"Lehman Brothers" --

13

A.

Yes.

14

Q.

-- it says your calenders are

15

picking up slack until another group steps in?

16

A.

Yes.

17

Q.

What was your understanding of that

18
19

when you wrote that?

A

My understanding based on the

20

information that was conveyed on the call was

21

that other lenders under the facility were

22

funding on their behalf.

23
24
25

Q.

Now, did you think -- strike that.
Do you think other lenders funding

constituted an event of default?

Bank of America - Fontainebleau

None

Page 161

Case 1:09-md-02106-ASG Document 375-19 Entered on FLSD Docket 12/03/2013 Page 8 of
11
Mule, Philip 4/5/2011 5:47:00 PM
1
2

MULE - CONFIDENTIAL
were trading at during this time period?

3

A.

I don't know.

4

Q.

Your initial strategy was a

5

defensive long/short. Was there any discussion

6

about whether Caspian should sell its term Joan

7

holdings when it closed out its bond short?

8

9

A.

No, to the contrary, all we did was

increase our term loan.

10

Q.

Why increase the term loans?

11

A.

Because we were buying them at more

12

and more favorable levels, creating the

13

enterprise at a much cheaper valuation and a

14

valuation that we were very comfortable that when

15

the project opened, that the cash was at the

16

project supported -- the cash that the project

17

would be able to generate would support the value

18

of the enterprise through that level where we

19

were purchasing the term loan and delay draw.

20
21
22
23

24
25

Q.

So Caspian continued purchasing term

loans after Lehman's bankruptcy?
A.

Correct. This says we owned

18 million and we own 119 million today, so ...
Q.

Do you recall any pur9hases in 2008

following the Lehman bankruptcy?

Bank of America- Fontainebleau

None

Page 172

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11
I
Mule, Philip 4/5/2011 5:47:00 PM

MULE- HIGHLY CONFIDENTIAL

1
2
3

A.

Specifically, I don't. We have the

sheet here we can refer to.
MR. MOST: Do you want to look back

4
5

at the earlier exhibit?

6

Q.

7

different document.
MR. RIVNER: Can we mark this as an

8
9

Actually, I want to show you a

exhibit, please.
(Exhibit 378, Bates Nos. GASP 061302

10
11

through 311, LSTA dated 9/24/08, marked for

12

identification.)
MR. RIVNER: That document actually

13
14

has it marked so -MR. MOST: Eileen, we'd like to

15
16

designate this portion of the transcript

17

highly confidential.
The witness is looking at

18
19

Exhibit 378, which bears GASP Bates

20

Nos. 61302 to 61311, which is a highly

21

confidential document.

22
23

BY MR. RIVNER:
Q.

If I could refer you to the first

24

page, if that's okay. I'm just going to talk

25

about the first two pages.

Bank of America • Fontainebleau

None

Page 173

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Mule, Philip 4/5/2011 5:47:00 PM

1

MULE- HIGHLY CONFIDENTIAL

2

A.

Okay.

3

Q.

Now, this is a trade confirmation

4
5

for a November 24, 2008, purchase by --

A. · September.

6

MR. RIVNER: What did I --

7

MR. MOST: You said November.

8

Q.

This is a September 24, 2008,

9

purchase from Grand Central Asset Trust MAR

10

series. And the purchase was made by Mariner

11

LDC?

12

A.

Yes.

13

Q.

And Mariner is one of the Caspian

14

funds?

15

A.

Correct, yes.

16

Q.

It looks like you purchased

17.

approximately $1.7 million in term loans?

18

A.

Yes, that's what it says. Yep.

19

Q.

And you made this purchase after the

20

Lehman bankruptcy?

21 ·

A.

22

Lehman--

23

Q.

September 15.

24

A.

This would have been after the

25

Remind me of the date of the

Lehman bankruptcy, yes.

Bank of America- Fontainebleau

None

Page 174

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11
Mule, Philip 4/5/2011 5:47:00 PM

1

MULE -CONFIDENTIAL

2

everybody else on this at the time. And, you

3

know, we didn't want open ourselves up to

4

liabilities with the company, with other lenders,

5

by not funding our draws or allowing-- or

6

requesting that advances not be approved. We

7

didn't think that was our-- our responsibility.

8

Q.

What type of liability do you think

9

you would have opened yourself up to if you had

10

requested that the advance not go forward?

11

A.

For withholding -- potentially

12

withholding sources of liquidity for the project,

13

I'm not sure.

14
15
16

Q.

Who do you think would have sued

you?
A.

Potentially the company, the other

17

lenders. If our decision impacted the value of

18

the project, it would seem that we would

19

potentially be liable to any or a number of-- a

20

number of parties.

21

Q.

22

Did you consider-- strike that.
Did you look at what effect the

23

release of these funds would have on your

24

Fontainebleau Las Vegas investment?

25

A.

Can you clarify?

Bank of America - Fontainebleau

None

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Pardon, Douglas 3/3/2011 5:20:00 PM

1
2
3

DOUGLAS PARDON
Q.

me rephrase.

4
5

Did you know any information -- let

Did you know any information in
September of 2008 -- let me strike that.

6

Did Fontainebleau tell you at any

7

point between September of 2008 and December 2008

8

that Lehman would not be funding the retail

9

facility advance?

10

A.

I believe that one of the quarterly

11

earnings reports, that Fontainebleau reported

12

that -- they stated that at least one advance had

13

been made by another retail lender. I believe

14

that that was in a report that Fontainebleau

15

produced for investors.

16
17
18

Q.

And did you have any reason to

believe that that statement was not true?
A.

It was a document produced by the

19

company and signed by the CFO, so I believed it

20

to be true.

21

Q.

22

Did you ever ask Fontainebleau who

that lender was?

23

MR. HOBART: Objection. Vague.

24

A.

I don't recall asking that specific

25

question.

Bank of America - Fontainebleau

None

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Rafeedie, Mclendon 2/24/2011 5:48:00 PM

1

UNITED STATES DISTRICT COURT

2

SOUTHERN DISTRICT OF FLORIDA

3

4

-----------------------------x

5
6

In Re: FONTAINEBLEAU LAS

7

VEGAS CONTRACT LITIGATION

8

9

Civil Action No.
) 09-MD-02106-CIV-GOLD/

) Goodman
-----------------------------x

10
11
12
13
14

DEPOSITION OF
MCLENDON P. RAFEEDIE
February 24, 2011
9:21 a.m.

15
16
17
18
19

Kilpatrick Townsend & Stockton, LLP
1100 Peachtree Street, NE
Suite 2800
Atlanta, Georgia

20
21

22

23
24
25

Marsi Koehl, CCR, CCR-B-2424

Bank of America - Fontainebleau

None

Page 1

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75
Rafeedie, Mclendon 2/24/2011 5:48:00 PM

1

which we haven't yet been provided which is why I

2

don't have the document to mark as an exhibit, to ask

3

you questions about if And we may or may not be able

4

to obtain a copy of that before your deposition

5

concludes today.

6

So let me ask you: What services or

7

responsibilities were delegated to TriMont by Lehman

8

with respect to the retail facility?

9

A. Well, there's certain services -- it's a
ass~t

1O

servicing and

11

any -- the servicing category I would say that we

12

provide customary services that other service rs --

13

industry standard type loan servicing things. And

14

examples would be cash management. As I mentioned to

15

you previously, that would be like a lock box where we

16

would sweep it monthly, whatever, pay operating

17

expenses to the borrower or fill up buckets for

18

reserves for various things.

19
20

management agreement. And under

Q. Let me interrupt you for a second. You

didn't do that here?

21

A. It's not an operating property.

22

Q. My question though is: What responsibilities

23

and obligations that Lehman had under the retail

24

facility were delegated to TriMont?

25

A. Okay. Well, in this particular instance we

Bank of America - Fontainebleau

None

Page 18

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75
Rafeedie, Mclendon 2/24/2011 5:48:00 PM
did all the accounting. We calculated interest
2

monthly. When there was a funding request on this

3

particular loan, we would review the draw. We would

4

sign off on it. We would ensure compliance. We would

5

go to the co-lenders under this facility; request that

6

they fund a certain balance by a certain day into a

7

certain account. Then we would consolidate those

8

funds; wire them to Bank of Americei.

9

We would also monitor whether the borrower

1O

had insurance like they were required to under the

11

loan agreement; whether they paid their taxes like

12

they are required to under the loan agreement. We

13

would, you know, monitor their reporting; make sure

14

that they were reporti(lg like they were required to.

)

15

Q. Reporting? What reporting?

16

A. Well, for instance, once the thing --

17

property was open and operating, they are required to

18

provide financial statements. And then once a year

19

they are supposed to provide financials and things of

20

that nature. They are spelled out in this agreement.

21

Q. Financial ~eporting?

22

A. Yes. On the asset management side, I would

23

do inspections of the property. I would meet with the

24

borrower; maintain a relationship there. I would stay

25

on top of things that were happening in the

Bank of America - Fontainebleau

None

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75
Rafeedie, Mclendon 2/24/2011 5:48:00 PM

1

marketplace; would do status reports for the lender

2

monthly.

3

We would do, you know, valuation updates for

4

the vendor -- for Lehman's benefit. We would -- you

5

know, occasionally they would want to come down to our

6

offices and we would present, you know, a status

7

meeting.

8

Q. Who's the "they"?

9

A. Lehman.

10
11
12

Let's see. I'm sure I'm leaving something
out here.
Q. If you think -- as we go along, if you think

13

of additional activities and duties that TriMont had

14

under the retail facility, would you let me know?

15

A. Sure.

16

Q. I want to focus on a couple of things that

17

you indicated. You said you dealt with B of A?

18

A. Mm-hmm.

19

Q. Yes?

20

A. Yes.

21

Q. You were dealing with Bank of America as a

22

disbursement agent; were you not?

23

A. Yes.

24

Q. Were you the primary contact with B of A with

25

respect to the obligations and responsibilities that

Bank of America - Fontainebleau

None

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1

Lehman otherwise had under the retail facility?

2

A. Otherwise had? You mean --

3

Q. I think it was a confusing way to put it.

4

Lehman as the agent of the retail facility

5

had certain obligations in connection with interfacing

6

with B of A as the disbursement agent in terms of

7

funds and so forth; correct?

8

A. Correct.

9

Q. You took over all of those responsibilities

10
11
12

as part of your servicing agreement; did you not?
MR. KAEDING: Object to the form. You can
answer.

13

A. Well, in terms of coordination of funds and

14

the reporting that they were required to provide, yes.

15

I don't know if Lehman was having conversations with

16

Bank of America or not, so I don't want to say that I

17

was the only person talking to them.

18

BY MR. DILLMAN:

19
20
21

Q. I'm not suggesting that you were.

In terms of, however, the obligations that
Lehman had under the retail facility --

22

A. On a monthly basis funding, yes, I was.

23

Q. You were the primary --

24

A. Yes.

25

Q. -- contact with Lehman?

Bank of America - Fontainebleau

None

Page 21

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75
Rafeedie, Mclendon 2124/2011 5:48:00 PM

1

A. No. I did not.

2

Q. In general, what sorts of interactions did

3

TriMont have with B of A in the normal course of its

4

servicing?

5
6
7
8

A. Well -MR. KAEDING: Object to the form. You can
answer.
THE WITNESS: I dealt primarily with one

9

individual and that was Jean Brown.

10

BY MR. DILLMAN:

11

Q. Who is Jean Brown?

12

A. Jean Brown, yeah.

13

Q. Who was she as far as you understood?

14

A. She was my lead contact as a disbursement

15

agent of Bank of America. She would -- a lot of phone

16

calls and E-mails about -- in other words, funding is

17

due on a certain date, meaning, Here's wiring

18

introduction instructions; here's our affidavit that

19

we've signed. You know, all the conditions that it

20

was okay to fund, she would coordinate. And I would

21

communicate with her and she was, you know, my primary

22

contact at B of A. So it was generally in regard to

23

the funding of advances.

24

Q. Do you know the name Brandon Bolio?

25

A. No. I don't.

Bank of America - Fontainebleau

None

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Rafeedie, Mclendon 2/24/2011 5:48:00 PM

1

Q. At any time did TriMont intentionally keep

2

information from B of A in its capacity as

3

disbursement agent regarding potential problems --

4

MR. KAEDING: I'm going to object to --

5

MR. CANTOR: Object to the form.

6

MR. DILLMAN: How about I finish my

7

8
9

10

question -(Discussion ensued off the record.)
BY MR. DILLMAN:
Q. At any time, did TriMont intentionally keep

11

information from B of A as disbursement agent

12

regarding potential problems regarding funding of

13

retail advances?

14

MR. CANTOR: Objection.

15

MR. KAEDING: Object to the form. You can

16

17
18
19

answer.
A. No.

BY MR. DILLMAN:
Q. As part of TriMont's duties as a servicer

20

under the retail facility, as the servicer, did

21

TriMont understand that it was obligated to keep B of

22

A as the disbursement agent apprised of potential

23

problems regarding the funding of retail advances?

24
25

MR. KAEDING: Object to the form. You can
answer.

Bank of America - Fontainebleau

None

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75
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1

MR. CANTOR: Join.

2

A. We didn't keep anything from them. We were

3

open in communicating about the status of our funding.

4

Sometimes it was delayed. And I think you have copies

5

of the E-mails that show the interaction where they --

6

everybody in the world understood the situation with

7

Lehman when they filed and their difficulties. So

8

there was -- almost every month people were wondering

9

if the funds came in, who paid them; things of that

10

nature.

11

BY MR. DILLMAN:

12

Q. And you shared with B of A as part of your

13

servicing obligations all of that information in a

14

realtime basis; isn't that right?

15

MR. CANTOR: Objection.

16

MR. KAEDING: Object to the form. You can

17
18
19
20

answer.
A. Yes.

BY MR. DILLMAN:
Q. I want to run through sort of the procedures,

21

the mechanics by which TriMont requested, received and

22

then forwarded funds under the retail facility.

23
24
25

A. Sure.

MR. DILLMAN: I think it might be helpful to
do that with this document here -

Bank of America - Fontainebleau

None

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75
Rafeedie, Mclendon 2/24/2011 5:48:00 PM

1

2

3
4

(Deposition Exhibit-11 was previously marked

5

for identification.)

6

BY MR. DILLMAN:

7

8
9

Q. Mr. Rafeedie, you've seen this document

before; have you not?
A. Yes.

10
11

12
13
14
15

16
17
18

19
20

MR. DILLMAN: Sorry. Go ahead.

21

MR. KAEDING: So we're clear, I know you've

22

seen these documents over and over again and you lived

23

through this. But -- like the agreement, do look

24

through the whole thing and make certain it appears

25

everything is there before you say what it is or

Bank of America - Fontainebleau

None

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1

isn't.

2

THE WITNESS: To the best of my knowledge,

3

this is the full package. You know, I would have to

4

go through my file to make sure that all the

5

attachments would be included. I believe that they

6

are.

7

BY MR. DILLMAN:

8

Q. Yeah. And let's sort of go through this.

9

There was a standard package of information or

10

materials that were sent out to co-lenders for each

11

advance request; correct?

12

A. Yes.

13

Q. It included, first off, TriMont's letter

14

outlining how much of a principal advance had been

15

requested by the borrower?

16

A. There was other reporting, too, on the

17

interest advances that was done separately at the

18

beginning of the month. This was for the shared cost

19

draw.

20

Q. Thank you. Let's focus just on those draws

21

then because that's what we will be focusing on today.

22

A. Okay.

23

Q. There was TriMont's letter?

24

A. Right.

25

Q.

Bank of America - Fontainebleau

None

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1

2

3
4
5
6
7

8

9

10
11

12
13
14
15
16
17
18

19

MR. KAEDING: Object to the form. You can
answer.

20
21
22
23

BY MR. DILLMAN:

24
25
Bank of America - Fontainebleau

None

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1

2

3
4

5
6
7

8
9
10
11

12
13

14
15
16
17
18
19

20
21

22
23
24
25

Q. Is that the -- was there a typical -- strike

that.
Were funds due the same date of the month

Bank of America - Fontainebleau

None

Page 39

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75
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1

under the various documents that governed your

2

servicing?

3
4

A. I believe so, unless it fell on a weekend or
holiday.

5
6

7

8

g
10
11

12
13

14
15

16
17
18
19

20
21
22

Q. Now, assuming that all the funds came in as

23

requested by 10:00 a.m. on the 25th, what did TriMont

24

then do with them?

25

MR. KAEDING: Object to the form. You can

Bank of America - Fontainebleau

None

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75
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1
2

answer.
A. We would -- assuming that there were no

3

issues, we would process the wire to Bank of America.

4

BY MR. DILLMAN:

5

Q. And you would --

6

A. Or the --

7

Q. I'm sorry.

8

A. For the full amount of the advance that was

9

requested.

10
11
12
13

14

MR. KAEDING: Object to the form. You can

15

answer.

16

A.

17

BY MR. DILLMAN:

18

19
20
21
22

MR. KAEDING: Same objection. You can
answer.

23
24

25
Bank of America - Fontainebleau

None

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75
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1
2
3
4
5

BY MR. DILLMAN:

6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Bank of America - Fontainebleau

None

Page 42

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75
1
2

3
4

What was the retail funding account?

5

A. That was Bank of America's account.

6

Q. That's where you sent the funds?

7

A. Yes.

8

Q. Were those funds assessable by the borrower

9
10

at that point in that fund -- in that account?
MR. CANTOR: Objection.

11

A. I don't know.

12

BY MR. DILLMAN:

13

Q. In reviewing the disbursement agreement, did

14

you ever have an understanding as to whether or not

15

the funds that you wired to B of A were directly

16

assessable to the borrower or whether the borrower --

17

or excuse me -- whether B of A would then transfer

18

those funds to a further account that would be

19

assessable directly by the borrower?

20
21
22

MR. KAEDING: Object to the form. You can
answer.

A. The latter of what you described is my

23

understanding.

24

BY MR. DILLMAN:

25

Q. That there would be a two-step process?

Bank of America - Fontainebleau

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1

A. Yes.

2

Q. And that you would wire funds to the retail

3

funding accounts and then as it says here, that I just

4

read, it would be further credited to the resort

5

payment account. And it has a specific number there?

6

A. Correct.

7

Q. It was that account that the borrower had

8

access to, to your understanding?

9

A. I believe so. I'm not positive.

10

Q. Are you familiar with the bank proceeds

11

account?

12

A. No.

13

14

15
16
17
18

19
20
21

22

Q. Did you have an understanding as to when B of

23

A would credit to an account that the borrower could

24

access the funds that were provided by TriMont as

25

servicer under the retail facility?

Bank of America - Fontainebleau

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1

A. No.

2

Q. Did you understand that that would occur

3

simultaneously or at least on the same date,

4

September 25th, or some other date?

5

A. With the other proceeds is my understanding.

6

Q. Did you understand that B of A would disburse

7

all proceeds including the retail facility, assuming

8

that they were received on September 25th on that

9

date, that date being September 25th?

10
11
12
13

MR. KAEDING: Object to the form. You can
answer.
MR. CANTOR: Objection.
A. I was not aware when those funds -- I

14

believed it to be all at once, but I don't know that.

15

BY MR. DILLMAN:

16

Q. You believed it to be a transfer of -- excuse

17

me -- a wiring of funds from TriMont under the retail

18

facility on the 25th assuming that B of A received all

19

the other funds that it was required to receive under

20

the advance confirmation notice. All of those funds

21

as appropriate would be wired to the borrower for

22

access on the 25th; was that your understanding?

23

A. That was my understanding, but that was not

24

my role or I had no backup or anything to support that

25

one way or the other.

Bank of America - Fontainebleau

None

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1

it?

2
3

MR. KAEDING: Object to form.
A. I don't recall when the timing of the funds

4

coming in ...

5

BY MR. DILLMAN:

6
7

8
9

10
11
12
13
14

MR. CANTOR: Objection.
A. I have no reason to --

BY MR. DILLMAN:
Q. Let me ask --

MR. CANTOR: Let him finish his answer. He

15
16

has no reason to what?

17

BY MR. DILLMAN:

18

Q. I'm sorry. I thought you were done.

19

A. I have no reason to dispute Mr. Kotite.

20

However, I'm fairly certain the funds came in from

21

Lehman. And we weren't-- to my knowledge, there was

22

no communication with Lehman that this is money from

23

the borrower to cover our advance or anything of that

24

nature. The funds came in on that date. We did get

25

this.

Bank of America - Fontainebleau

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1
2

Q. The funds came in on the 25th; is that what

you meant by this date or the 26th?

3

A. It would have been one of those two dates.

4

Q. What causes you to believe that they -- the

5
6
7

funds -- strike that.
The funds came in on the 25th and they came
in from Lehman; is that your recollection?

8

A. As per the wire, as I recall.

9

Q. Is that a recollection that you have based

10

upon your involvement at the time or one that you have

11

gained at least in part and refreshed by recent review

12

of documents?

13

MR. CANTOR: Objection.

14

MR. KAEDING: Object to the form. You can

15
16
17
18
19

answer.

A. It was always my understanding.
MR. DILLMAN: Let's mark as 56 ...
BY MR. DILLMAN:
Q. Let me just get on the record, a

20

September 26th, 2008 E-mail from Yetta Nicholson to

21

Amit Rustgi, a copy to yourself. Before I have this

22

marked, sir, who is Yetta Nicholson?

23
24
25

A. I believe she was in our treasury department;
processed the movement of funds.
(Deposition Exhibit-56 was marked for

Bank of America - Fontainebleau

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1

identification.)

2

BY MR. DILLMAN:

3

Q. Mr. Rafeedie, Exhibit 56 reflects the payment

4

by Fontainebleau Resorts, LLC on September 26, 2008,

5

of $2,526, 184 in connection with the September draw

6

under the retail facility; does it not?

7

A. It does.

8

Q. Does this help to refresh your recollection

9

that, in fact, it was Fontainebleau Resorts, LLC and

10

not Lehman that funded that portion of the September

11

draw?

12

A. Yeah. Yeah, you are correct.

13

Q. With that in mind, Mr. Kotite's

14

representations in the E-mail that we just looked at

15

that was Exhibit 14 are indeed correct?

16
17
18
19

A. Correct.

MR. CANTOR: Objection.
BY MR. DILLMAN:
Q. The bottom of this E-mail -- excuse me -- the

20

first E-mail in the chain in Exhibit 56, which occurs

21

at the bottom, is from Mr. Rustgi to ATL Treasury Cash

22

Management with a copy to yourself. And it states,

23

With Lehman not funding their portion of the draw, the

24

borrower has decided to fund Lehman's portion.

25

Do you see that?

Bank of America - Fontainebleau

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1

A Yes.

2

Q. And then up above is the confirmation of that

3

wire; yes?

4

A Correct.

5

Q. Now, consistent with your practice of keeping

6

B of A up to date on issues with respect to the retail

7

facility and payments thereunder, did you have any

8

conversations with B of A on September 25th, or

9

thereafter, concerning the late payment of the retail

10

facility?

11
12
13
14

MR. KAEDING: Object to the form. You may
answer.
MR. CANTOR: Object to the form.
A I don't recall specifically, but I'm certain

15

there were.

16

BY MR. DILLMAN:

17

Q. And consistent with your practices, did you

18

tell B of A, specifically Ms. Brown, that Lehman had

19

not paid its portion of the September advance notice?

20
21
22

MR. KAEDING: Object to the form. You can
answer.
A I don't remember the exact topics of

23

discussion --

24

BY MR. DILLMAN:

25

Q. But consistent with your practice --

Bank of America - Fontainebleau

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1
2

MR. CANTOR: Objection. Let him finish.
BY MR. DILLMAN:

3

Q. Were you not done?

4

A. We probably did discuss who would fund it and

5

who didn't, but I don't recall exactly.

6

Q. The funds were due the 25th?

7

A. Mm-hmm. Yes.

8

Q. They were not paid on the 25th?

9

A. Correct.

10

Q. Because you hadn't received Lehman's portion

11

on the 25th, you wouldn't have sent --

12

A. Partial.

13

Q. -- partial payment; right?

14

A. Correct.

15

Q. So on the 25th, Lehman -- B of A hadn't

16

received any monies that were due under the retail

17

facility in a disbursement --

18
19
20
21
22
23
24
25

MR. KAEDING: Object to form. You can
answer.
A. It doesn't appear that they did. No.

BY MR. DILLMAN:
Q. As we talked about this, this would have been

a cause for some concern with B of A?
MR. KAEDING: Object to the form. You can
answer.

Bank of America - Fontainebleau

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1
2
3
4
5

MR. CANTOR: Objection.

A. Yes.
BY MR. DILLMAN:
Q. Would it have precipitated conversations

between you and Ms. Brown?

6

MR. CANTOR: Objection.

7

MR. KAEDING: Object to the form. You can

8

answer.

9

A. Yes. Yes.

10

BY MR. DILLMAN:

11

Q. You believe those conversations occurred?

12

MR. KAEDING: Object to the form. You can

13
14
15
16

answer.

A. Yes.
BY MR. DILLMAN:
Q. You had a practice of keeping B of A apprised

17

of any issues with respect to payment under the retail

18

facility; did you not?

19

MR. CANTOR: Objection.

20

MR. KAEDING: Object to the form. You can

21
22

answer.

A. Well, I wouldn't -- we wouldn't discuss

23

everything involved in the funding. But if there was

24

an issue of significance, yes.

25

BY MR. DILLMAN:

Bank of America - Fontainebleau

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Q. And Lehman's failure to fund was an issue of

1

2

big significance; wasn't it?

3

MR. KAEDING: Object to form.

4

MR. CANTOR: Objection.

5

A. Yes. But they could have initiated the call.

6

I didn't necessarily call them in a panic or anything,

7

yeah.

8

BY MR. DILLMAN:

9

Q. Understood. But it is the case that Lehman's

10

failure to fund in September following its bankruptcy

11

was an issue in your estimation major significance for

12

this facility?

13

A. Yes.

14

Q. It was an issue of major significance to B of

15
16
17
18
19
20

21
22

A?
MR. CANTOR: Objection. Calls for
speculation.
MR. KAEDING: Object to form. You can
answer.
A. I assume so, but I don't know.

BY MR. DILLMAN:
Q. You had conversations with B of A concerning

23

Lehman's failure to pay in which you were apprised

24

that it was a major -- an issue of major

25

significance to do that; didn't you?

Bank of America - Fontainebleau

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1
2

MR. CANTOR: Objection.
A. Well, the primary concern was whether the

3

full funding would take place and the timing of it.

4

BY MR. DILLMAN:

5

Q. During your conversations with B of A in the

6

September 25/September 26th time frame, consistent

7

with your practice, you would have informed Ms. Brown

8

that Lehman didn't make its payment; correct?

9

MR. CANTOR: Objection.

1O

MR. KAEDING: Object to form. It's been

11

asked and answered. You can answer again.

12

A. Again, I feel like it was covered in our

13

conversation. I don't recall the exact things that

14

were discussed in that call. If the call -- as I

15

recall, there was a conversation, but I don't --

16

beyond that, I can't remember the specific details.

17

BY MR. DILLMAN:

18

Q. I understand sitting here today, what, three

19

years later, something like that, you can't recall the

20

specific words that were used and the details of the

21

conversation. So I'm referring now to your general

22

practice and custom of keeping B of A apprised of

23

significant events with respect to the retail

24

facility.

25

A. Correct.

Bank of America - Fontainebleau

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Q. And consistent with that practice, you would

2

have told Ms. Brown about the fact that Lehman did not

3

fund; isn't that correct?

4
5
6
7

MR. CANTOR: Objection. Calls for
speculation. Asked and answered.
MR. KAEDING: Object to form.
A. That's correct. Or it could have been just

8

that Lehman's dollars were funded, not necessarily who

9

funded what.

10

BY MR. DILLMAN:

11

Q. Well, consistent with your practice of

12

keeping B of A informed about material events -- and I

13

believe you previously testified including who was

14

paying -- you would have told her that Fontainebleau

15

Resorts had paid Lehman's share not Lehman?

16
17
18
19
20
21

MR. CANTOR: Objection. Mischaracterizes his
prior testimony. Calls for speculation.
MR. KAEDING: Object to form. Join.
A. Yeah. I could have.
BY MR. DILLMAN:
Q. As the servicer with the relationship you

22

described with B of A in terms of full disclosure, you

23

said you wouldn't have held anything back. It's your

24

belief sitting here today that in or about the

25

September 25/September 26 time frame you informed

Bank of America - Fontainebleau

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1

Ms. Brown at B of A that Lehman Brothers had not

2

funded its share and that that share had been funded

3

by Fontainebleau Resorts; isn't that correct?

4
5
6
7
8

MR. CANTOR: Objection. He said he could
have told her. He didn't say he did.
MR. KAEDING: Object to form. Join. You can
answer.
A. You say that, but I could have had -- let's

9

see. What time did this E-mail come in? It's almost

10

like six o'clock in the afternoon. I could have

11

gotten funds in before that thinking they were from

12

Lehman and talked to her and then got this afterwards.

13

BY MR. DILLMAN:

14
15
16

Q. Let's go back for a minute. Okay? Because

you're holding Exhibit-- what -- 14? Okay.
Exhibit 56, you knew no later than 11 :39 in

17

the morning on September 26th that Fontainebleau

18

Resorts was paying Lehman's share; didn't you?

19

MR. KAEDING: I'm going to object to the

20

form. I mean, you have an E-mail, whether it was

21

instantaneously read is a whole other question. I

22

think he's gone over this. Go ahead. You can answer.

23

A. Right. I don't recall what time I opened the

24

E-mail and saw that.

25

BY MR. DILLMAN:

Bank of America - Fontainebleau

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1
2

Q. But certainly by 11 :39 in the morning you had

access to that information; didn't you?

3

MR. KAEDING: Object to form.

4

MR. CANTOR: Objection.

5

A. I would have to check my calendar. If I was

6

out of the office or something, I may not have been

7

able to open an attachment on my Blackberry.

8

BY MR. DILLMAN:

9

Q. You were keeping up monitoring this

10

particular facility at this particular time with some

11

interest; weren't you?

12

MR. CANTOR: Objection.

13

MR. KAEDING: Object to form. You can

14
15

answer.
A. Yes. I'm just -- you're asking me to

16

definitively answer something. And I'm just saying

17

that there would be a set of circumstances where your

18

previous comment --

19

BY MR. DILLMAN:

20

Q. There could be. And I understand that you

21

don't recall exactly the conversations and events of

22

that date.

23

But you were indeed -- you do recall being

24

very acutely attuned to what was going on with this

25

particular facility in light of Lehman's bankruptcy

Bank of America - Fontainebleau

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1

and in light of the fact that you didn't have funding

2

on the designated date of September 25th to forward to

3

B of A; isn't that correct?

4
5

MR. KAEDING: Object to the form. You can
answer.

6

A. Well, again, I didn't recall that they had

7

sent these funds in. So I'm telling you. It's three

8

years ago, so my memory isn't ironclad. But,

9

generally speaking, I would have been monitoring this

10

closely. It was right about the bankruptcy time. And

11

as I recall, I was in the office. But I can't

12

remember every phone conversation, the timing of the

13

phone conversation, what I said to Bank of America,

14

when I said it.

15

BY MR. DILLMAN:

16

Q. I understand the exact details may be a bit

17

cloudy. But the significance of this event at that

18

time, that is the nonpayment of these funds by Lehman,

19

that's not -- that's something you recall that it was

20

significant and you were monitoring it?

21

MR. CANTOR: Objection.

22

MR. KAEDING: Object to form. You can

23
24
25

answer.
A. Well, at some point during that day or the

following day I would have seen this and known that it

Bank of America - Fontainebleau

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1

was Fontainebleau's money.

2

BY MR. DILLMAN:

3
4
5
6
7
8
9
10

Q. You were the primary contact with B of A on

this?
A. Yes. Although, Amit would occasionally talk

to Jean Brown, too, in my absence.
Q. But you weren't absent and you were the

primary contact?
MR. CANTOR: Objection.
A. Again, I don't recall that particular day

11

what my itinerary was. But if she would call me and

12

couldn't get me, then she would go to Amit.

13

BY MR. DILLMAN:

14
15
16
17
18
19

Q. You do recall having conversations with B of

A about the September payment issues?
MR. CANTOR: Objection.
A. As I recall, we did.

BY MR. DILLMAN:
Q. Having this information before you, that it

20

was -- that Lehman had not funded and that

21

Fontainebleau Resorts had paid Lehman's portion, that

22

would have been information that you would not have

23

hidden from B of A; would you?

24

MR. CANTOR: Objection.

25

MR. KAEDING: Object to form. You can

Bank of America - Fontainebleau

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1

answer..

2

A. No.

3

BY MR. DILLMAN:

4

Q. And that consistent with your practice of

5

full disclosure to B of A, you would have expected

6

that you would have informed B of A about that?

7

MR. CANTOR: Objection. Asked and answered.

8

MR. KAEDING: Objection. You can answer.

9

A. Yes ..

10

MR. DILLMAN: Let's take a break.

11

(Recess from 10:34 a.m. to 10:44 a.m.)

12

BY MR. DILLMAN:

13

Q. Mr. Rafeedie -- back on the record. Do you

14

have a recollection as to whether or not Lehman paid

15

its share of the retail advances before October?

16

A. As I mentioned to you, I was incorrect

17

initially on this draw'. It was my understanding that

18

they funded up until like December. So I don't recall

19

them -- it seems like ULLICO started paying, based on

20

my memory, effective like December, January, February,

21

March advances.

22

Q. We'll get to those in a minute and I will

23

represent to you that you are correct; that ULLICO

24

and -- pursuant to some guaranty --

25

A. So to answer your question, I believe they

Bank of America - Fontainebleau

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1

funded the October one. But, again, you just showed

2

me --

3

Q. I believe they funded, too, or at least I

4

don't have any information to suggest at this point

5

that they didn't.

6

My question is: Did you have conversations

7

with Lehman during the -- let's start in September and

8

just go through November -- whether or not they were

9

going to pay, what's going on, that sort of --

10

A. Yeah. I had some, an occasional E-mail.

11

You've got to understand what was going on at Lehman

12

during this time. People were leaving. The

13

bankruptcy court was getting involved. The trustee

14

was getting involved. So, I mean, a lot of stuff was

15

verbal. And it was chaotic time.

16

Q. I do -- can appreciate that that must have

17

been the case knowing how Lehman has affected the

18

entire world.

19

Do you recall that during that time period

20

you were, in fact, talking with people at Lehman

21

about -- on the topic of: Are you going to pay and

22

when?

23

A. I'm sure I did.

24

Q. Who was your primary contact at Lehman?

25

A. At that time it was Al Picallo,

Bank of America - Fontainebleau

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1

P-l-C-A-L-L-0. And you should have his name on some

2

of those E-mails.

3

Q. Yeah, I do.

Who else, if anyone, at Lehman?

4
5
6

A. The guy Masato Inagaki that worked with Al.

M-A-S-A-T-0 l-N-A-G-A-K-1, I believe.

7

And then, let's see, I'm trying to think who

8

Al reported to at that time, whether they were still

9

there or they were gone. It might have been Anthony

10

Barsanti.

11

Q. Josh Freeman?

12

A. Josh -- he was there and left, I think,

13

fairly early on. I don't know if he was there at that

14

time or not.

15

Q. Al Battle?

16

A. Al worked with me. He was my boss at the

17

time.

18

Q. What was Josh's role when he was there?

19

A. Josh was more on the origination side and

20

selling the notes to the co-lenders. I'm not familiar

21

enough with Lehman's structure to give you his job

22

description. But, in general, that's what he did.

23

Q. But on a day-in-day-out basis from the time

24

that you took over as servicer, as servicer on the

25

retail facility, Mr. Picallo would have been your

Bank of America - Fontainebleau

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1

primary contact?

2

A. Yes.

3

Q. And during this time period

4

September/October/November of 2008, you recall that

5

you had conversations with Mr. Picallo concerning

6

whether or not Lehman would be funding?

7

A. Yes.

8

0. You recall that the funding in October and

9

the funding in November were sort of touch and go up

1O

to the very last minute?

11
12
13
14

A. Correct. .
MR. CANTOR: Objection.
BY MR. DILLMAN:
Q. And, in fact, you, TriMont, didn't know until

15

the day of, the day funds were due, whether or not

16

they would be coming in from Lehman?

17
18
19
20
21
22
23
24
25

MR. KAEDING: Object to the form. You can
answer.
A. I believe that's correct.
BY MR. DILLMAN:
Q. And then in December, Lehman stopped paying?

MR. CANTOR: Objection.
A. To my recollection, yes.
BY MR. DILLMAN:
Q. Did you have any conversations with

Bank of America - Fontainebleau

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1

Mr. Picallo or anyone else at Lehman concerning their

2

decision to stop paying?

3
4
5

A. I don't recall. It's very understandable

given their situation.
Q. Here's what I haven't been able to figure

6

out. How did they pay during October and November if

7

they were in bankruptcy? Did you ever have any

8

conversations with anybody on that topic?

9

A. You know, we -- communication was difficult,

10

as I mentioned earlier. And, you know, I would get

11

E-mails sometimes like just -- they didn't want things

12

in an E-mail to call or whatever or they'd be out of

13

the office. And I don't know who they had to get

14

things approved by and I don't know the mechanics of

15

how they were operating.

16

They were in New York. I was in Atlanta. It

17

was interesting to me. And I believe that's why I

18

thought -- the first draw that you brought up was paid

19

by them because I just remember ULLICO -- the

20

documentation really flowing in heavily when they

21

started making the advances on Lehman's behalf.

22

Q. In December?

23

A. Yes.

24

Q. But sitting here today, you don't recall any

25

conversations -- let me broaden it -- with anyone on

Bank of America - Fontainebleau

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1

the topic of: How is it that Lehman is paying when

2

it's in bankruptcy?

3
4

A. I don't recall that specific line of

discussion.

5

Q. Generally on that topic?

6

A. Well, yeah. I mean, it's interesting and

7

curiosity -- but, again, we serviced a lot of loans

8

for them and we never knew which ones or if or yes or

9

no. There was no rhyme or reason to us. I'm sure

10

there was to them, but that wasn't shared to us.

11
12

Q. Did Lehman continue to make its payments on

other loans that you were servicing?

13

A. Certain ones.

14

Q. Certain ones it stopped paying on?

15

A. Yes.

16

Q. Or at least earlier than -- it wasn't making

17

payments on other loans in the October/November time

18

frame?

19
20

MR. KAEDING: Object to the form. You may
answer.

21

A. As I recall.

22

BY MR. DILLMAN:

23
24
25

Q. But you never got any explanation of why some

and not others?
MR. KAEDING: Object to the form. You can

Bank of America - Fontainebleau

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1
2

answer.
A. No. I didn't.

3

(Deposition Exhibit-20 was previously marked

4

for identification.)

5

BY MR. DILLMAN:

6

Q. Mr. Rafeedie, I've placed in front of you

7

what's previously been marked as Exhibit 20. Can you

8

identify this for the record?

9

A. That's correct.

10

Q. I know it's correct --

11
12

MR. KAEDING: He asked you to tell him what
it is.

13

THE WITNESS: It is the draw request that

14

went to the co-lenders for the December shared cost

15

funding.

16
17

MR. DILLMAN: Let me put in front of you -strike that.

18

This was the December --

19

MR. KAEDING: Can we go off the record?

20

(Discussion ensued off the record.)

21
22

BY MR. DILLMAN:
Q. Exhibit 20 that I placed in front of you is

23

the December advance request that TriMont sent to each

24

of the lenders; is it not?

25

A. Co-lenders right. Retail, yes.

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1
2
3
4
5
6

Q. This was a request that was not honored by
Lehman?
A. To my -- yeah, as I recall.
MR. DILLMAN: Let me put in front of you
Exhibit -- mark as the next in order -- 57.
(Deposition Exhibit-57 was marked for

7

identification.)

8

BY MR. DILLMAN:

9

Q. Mr. Rafeedie, I place in front of you

10

Exhibit 57. It's an E-mail from yourself to

11

Mr. Picallo copied to others, including Mr. Battle.

12

You say, FYI, I got voicemail from Jean Brown of Bank

13

of America. The shared cost draw is on its way and

14

they want to fund on 12/29. We are working on

15

updating the IRR per your instructions.

16
17

In this context, do you know what you meant
by "IRR"?

18

A. Internal rate of return model.

19

Q. And in this context, what were you working on

20

with respect to the retail facility to provide to

21

Lehman?

22

A. Well, as I mentioned to you, one of the

23

things that we did under our services agreement was

24

valuations and things of that nature. An IRR model is

25

part of that valuation process. And it looks at, I

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1

believe, under the co-lending agreement, if another

2

lender made an advance on behalf of another, that they

3

received a higher interest rate. So I think it was to

4

update and incorporate that, as I recall. I don't --

5

it could have been for that reason or just showing if

6

they resumed payments or if they didn't make any more.

7

I can't recall the purpose of the exercise. But it

8

was not uncommon for us to be tweaking our models

9

constantly on different loan positions.

10
11

Q. Did Mr. Picallo tell you why he wanted an

updated IRR?

12

A. I can't recall. That's what I just said.

13

Q. Did you understand that the valuation issues

14

that you were analyzing for Lehman were important to

15

Mr. Picallo in determining whether or not to continue

16

paying under the retail facility?

17

A. I think it was -- he may have been asked by

18

somebody about him. I don't know. I don't want to

19

speculate why he wanted that. And I don't recall

20

exactly what we were doing to the model to lead you

21

one way or the other.

22

MR. KAEDING: My understanding of the model,

23

it's a valuation model. And TriMont does consider --

24

in that they've kind of spent a lot of time and

25

invested a lot of effort into developing this

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1

valuation model. So the actual way it's done is -- we

2

always treat as highly confidential. So to the extent

3

you're going to ask him about that, I mean, I'll allow

4

him to answer. But anything he says, I would want

5

this designated, this part of the transcript, as

6

highly confidential.

7

MR. DILLMAN: I'm not going to ask him about

8

any process and procedures that would be in any way

9

remotely confidential --

10

THE WITNESS: The IRR -- Lehman's IRR is

11

different than other clients' IRRs.

12

BY MR. DILLMAN:

13

Q. My question was: Was it your understanding

14

that the update that Mr. Picallo had asked you for,

15

however that was done and whatever it yielded, was in

16

conjunction with Lehman's ongoing decision whether or

17

not to fund its portion of retail facility?

18

A. I assume so.

19

Q. In the first E-mail on this chain, the one

20

below, Mr. Rustgi refers to conversations in Atlanta.

21

He says, By the sound of our conversation in Atlanta,

22

it does not sound like Lehman will be funding.

23

Do you recall meeting with Lehman in Atlanta

24

in early December on the topic of whether or not they

25

would be funding?

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1

A. Well, as I mentioned to you previously, one

2

of the things we routinely did with all of our clients

3

is have status meetings. And right after the

4

bankruptcy, I'm sure Lehman, as I recall, was trying

5

to get their arms around all their obligations and

6

loan positions and trying to understand current

7

status, so they could report back to people that were

8

handling the bankruptcy and to prioritize things,

9

things of that nature.

10

So, as I recall, we did have a big meeting in

11

our conference room and details of the loan and the

12

status were discussed. So I think that's what he's

13

referring to.

14

Q. A big meeting here in Atlanta?

15

A. At our offices, yes.

16

Q. Attended, among others, Mr. Picallo --

17

A. Yes.

18

Q. -- who was out in New York?

19

A. Correct.

20

Q. At that meeting among potentially other

21

topics was discussed whether or not Lehman would be

22

funding its December advances under the retail

23

facility?

24
25

A. I don't think we specifically discussed
whether they would or wouldn't.

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1

Lehman's position in its entirety?

2

A. No.

3

Q. Did you ever learn from any source that

4

anyone or any group of people had taken over Lehman's

5

position in its entirety?

6

A. No.

7

Q. At all times prior to Fontainebleau's

8

bankruptcy, you understood that there was no

9

commitment for Lehman's portion of the retail facility

10

in place; isn't that correct?

11
12
13
14
15

MR. KAEDING: Object to the form. You may
answer.

A. It was a month-to-month thing.
BY MR. DILLMAN:
Q. And that there was no commitment by anyone to

16

take over Lehman's entire position other than on a

17

potential month-to-month --

18

A. Not to my knowledge.

19

Q. The funds -- sorry -- with reference to

20

Exhibit 20, the funds for the December advance were

21

due on the 29th of December; correct?

22

A. Correct.

23

Q. They were not received in total as of that

24
25

date; were they?
A. I don't recall. But I assume you've got

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1

something that shows when they were received.

2

MR. DILLMAN: Well, let me just show you

3

Exhibit 58. This might help us out -- mark this as

4

Exhibit 58.

5

(Deposition Exhibit-58 was marked for

6

identification.)

7

BY MR. DILLMAN:

8

Q. This is an E-mail from -- the top one is from

9

Ms. Brown to yourself. The entire content is,

10

"Anything?" It's dated December 30, 2008. It is in

11

response to your E-mail below dated the same date that

12

says, We did get the ULLICO funding. Waiting on SMBC.

13

We'll send immediately thereafter.

14

This helps to refresh your recollection that

15

the monies were not paid to B of A as of December 29;

16

correct?

17
18
19
20

A. Correct.

MR. KAEDING: Object to the form.
BY MR. DILLMAN:
Q. As of December 30, you have gotten ULLICO's

21

payment both on behalf of its -- both for its share of

22

the December advance as well as for Lehman's share of

23

the December advance?

24

A. It appears so.

25

Q. You informed Ms. Brown that ULLICO was paying

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1

Lehman's share for December?

2

A. I believe I did.

3

Q. ULLICO paid Lehman's share as part of an

4

arrangement with the borrower?

5

A. Correct.

6

Q. And that arrangement involved a guaranty?

7

A. Correct.

8

Q. Were you aware in the December time period

9

that that arrangement was in place?

10

A. After the fact.

11

Q. You became aware of it later?

12

A. Correct.

13

Q. When did you first become aware of the fact

14

that this arrangement between ULLICO and the borrower

15

was in place?

16

A. When they provided that documentation.

17

Q. Do you remember when that was?

18

A. No.

19

Q. In connection with the January advance?

20

A. I'm sure you've got -- I do not recall the

21
22
23
24
25

exact -- I can't -- that's three years ago.
Q. You know, I do appreciate that. I'm the last

one to pick on somebody's memory.
A. Also, I had a lot more loans than just this
one.

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1
2

Q. To be fair to you -- let me ask it in a more
general way.
December -- there's an arrangement between

3
4

borrower and ULLICO that you're not aware of in

5

December; correct?

6

A. I don't think so.

7

Q. You think you became aware of that sometime

8

later?

9

A. In January probably.

10

Q. I'm just trying to figure out whether it was

11
12
13

a day, a week, a month, a year--

A. We're talking about a matter of days here.
MR. DILLMAN: The agreement between borrower

14

and ULLICO is what I will -- what's previously marked

15

as Exhibit 24.

16

(Deposition Exhibit-24 was previously marked

17

for identification.)

18

BY MR. DILLMAN:

19

Q. Take whatever time you need to review that,

20

sir. My question to you is: At some point you became

21

aware of the existence of and received a copy of that

22

agreement; isn't that correct?

23

A. Yes.

24

Q. When you became aware of that agreement, did

25

you apprise Ms. Brown of its existence?

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A. I don't know if I told her about every piece

2

of documentation we received. I told her that ULLICO

3

was covering Lehman. But in regards to a guaranty or

4

things of that nature, I don't remember if I did or I

5

didn't.

6
7
8
9
10

Q. Did you tell Ms. Brown that the borrower

was -- strike that.
Let's go to January. I think it'll make it a
little clearer.
A. There was also a letter from ULLICO's counsel

11

that preceded us getting this. It basically just

12

notified all the co-lenders and Lehman that they were

13

going to make that advance.

14

Q. Yes. Right. Right.

15

A. So, actually, I knew about it from that, as I

16

recall, before I saw this.

17

Q. Knew about what?

18

A. I didn't know what the nature of their

19

understanding was between ULLICO and the borrower

20

until I received this.

21

MR. DILLMAN: Right. Let's move to January

22

because at that point I think if you had more

23

information in front of you, it might make it a little

24

clearer. Let me put in front of you what's previously

25

been marked as Exhibit 25.

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1

(Deposition Exhibit-25 was previously marked

2

for identification.)

3

BY MR. DILLMAN:

4

Q. 25, sir, is the --

5

MR. KAEDING: Do you have any extra 25s?

6

MR. DILLMAN: Oh, yeah.

7

MR. KAEDING: Thanks.

8

MR. DILLMAN: Yeah.

9

BY MR. DILLMAN:

10

Q. 25 is the advance request for --

11

A. January.

12

Q. -- January of 2009; correct?

13

A. Correct.

14

Q. This is a document that TriMont sent out?

15

A. Yes.

16

Q. And Lehman did not fund its obligations under

17

this January advance request; did it?

18

A. No.

19

Q. ULLICO did?

20

A. I believe so, yes. I believe they funded

21
22

December, January, February and March.
Q. And ULLICO's funding of this obligation in an

23

amount equal to Lehman's share was reimbursed to it in

24

January by the borrower; correct?

25

A. I believe so. I know they partially

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1

reimbursed certain ones. They fully reimbursed

2

others. I don't have the accounting fully memorized.

3

MR. DILLMAN: Yes, sir. Fair enough.

4

Let's mark as Exhibit 59 an E-mail from

5

yourself to Mr. Picallo copied to Mr. Rustgi dated

6

January 27, 2009.

7

(Deposition Exhibit-59 was marked for

8

identification.)

9

BY MR. DILLMAN:

10
11

Q. Mr. Rafeedie, Exhibit 59 is an E-mail that

you sent to Mr. Picallo?

12

A. Yes.

13

Q. Mr. Picallo asks you, Who funded our short

14

fall? And you respond, ULLICO is, partly because

15

ULLICO hadn't yet done it; right? It hadn't been

16

funded yet?

17

A. Correct.

18

Q. You go on to say, Per paragraph two per doc I

19

just sent you, it appears that Fontainebleau is going

20

to reimburse ULLICO for this advance.

21

Do you see that?

22

A. Yes.

23

Q. So you knew at the end of January that

24

ULLICO -- excuse me -- that Fontainebleau would be

25

reimbursing ULLICO for the monies that ULLICO tendered

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1

for Lehman's share of the January advance?

2
3
4

MR. KAEDING: Object to the form. You can
answer.
A. I guess I did. Yeah.

5

(Deposition Exhibit-30 was previously marked

6

for identification.)

7

BY MR. DILLMAN:

8

9
10
11
12
13
14
15
16
17

18
19
20
21
22
23

BY MR. DILLMAN:
Q.

24
25

Bank of America - Fontainebleau

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1

2
3
4

MR. KAEDING: Object to form. You can
answer.

5

6
7
8

BY MR. DILLMAN:

9
10
11
12
13
14
15

MR. CANTOR: Objection.

16

MR. KAEDING: Object to the form. You can

17

answer.

18
19
20
21
22
23

BY MR. DILLMAN:

24
25

Bank of America - Fontainebleau

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1

MR. CANTOR: Objection.

2

MR. KAEDING: Object to the form. You can

3

answer.

4
5
6
7

8
9
10
11
12
13

BY MR. DILLMAN:

14

15
16
17

MR. CANTOR: Objection.

18

MR. KAEDING: Object to the form.

19
20
21

A.
MR. KAEDING: Give us a second. Object to
the form.

22

THE REPORTER:

23

THE WITNESS:

24
25

MR. CANTOR:

Bank of America - Fontainebleau

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1

2

3
4
5

BY MR. DILLMAN:

6
7

8
9
10
11
12

MR. KAEDING: Object to the form. Sorry.
BY MR. DILLMAN:

13
14

15
16

MR. CANTOR: Objection. Asked and answered.

17

MR. KAEDING: Object to form. Asked and

18

answered and continuing -- mischaracterizes his prior

19

testimony. Go ahead. You can answer.

20
21

22

23
24

25
Bank of America - Fontainebleau

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1
2
3

BY MR. DILLMAN:

4

5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23

BY MR. DILLMAN:

24
25
Bank of America - Fontainebleau

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1
2

Q. My question was, I think, pretty simple.

You knew in January of 2009, as you informed

3

Mr. Picallo in Exhibit 59, that Fontainebleau was

4

going to be reimbursing ULLICO for the amount of the

5

January draw that ULLICO was going to be fronting for

6

the Lehman portion of that draw; correct?

7

MR. KAEDING: Object to the form.

8

MR. CANTOR: Object to the form.

9

A. Well, what I said in the E-mail was that

10

Fontainebleau is going to reimburse ULLICO, but I

11

didn't say in full, in part or --1 mean --

12

BY MR. DILLMAN:

13

Q. You said per paragraph two of the document

14

below, which is the first amendment to guaranty which

15

you have in front of you which says, "In full."

16

Doesn't it?

17

MR. KAEDING: Object to form.

18

MR. CANTOR: Argumentative.

19

MR. KAEDING: It's argumentative. It's been

20
21

asked and answered.

A. It says in here -- you can read it for

22

yourself. There's an outstanding balance here.

23

didn't mean to represent anything other than he needs

24

to read that to understand the situation.

25

BY MR. DILLMAN:

Bank of America - Fontainebleau

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1

Q. And you read that?

2

A. Yeah.

3

Q. You understood it when you read it?

4

A. Obviously, if I pointed it out to him, I read

5
6
7
8
9

it.
Q. You understood it when you read it?

MR. KAEDING: Objection. Go ahead you can
answer.
A. You're just --

10

MR. DILLMAN: Strike the question.

11

MR. KAEDING: I don't know where you're

12

going. I think the only issue he's having is with

13

whether ultimately that written promise was fulfilled.

14

Maybe I'm missing something. I think that's the

15

disconnect--

16

MR. DILLMAN: No. It's not, but that's okay.

17

THE WITNESS: My interpretation, the way he's

18

asking the question, is whether they are going to

19

immediately turn around and pay that. And, I mean, as

20

I mentioned to you, it's my understanding that there

21

are still sums -- because of all of these agreements,

22

there's still -- that Fontainebleau never reimbursed

23

ULLICO. They still have an IOU out there.

24

BY MR. DILLMAN:

25

Q. For some amount?

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1

A. Yeah.

2

Q. So you don't know what exactly happened?

3

A. No. I didn't see the wires.

4

Q. Fair enough.

5

You had the first amendment agreement; right?

6

A. Yes.

7

Q. You read it at the time?

8

A. Yes.

9

Q. You --

10

A. Shared it and forwarded it on.

11

Q. You understood at least what its terms said.

12

Whether it was fulfilled or not, you understood it

13

terms?

14

A. Mm-hmm.

15

Q. Yes?

16

A. Yes. I just thought you were asking

17
18
19
20
21

something different than that.
Q. That's all I was asking. That's all I was

asking.
A. Okay.

(Deposition Exhibit-36 was previously marked

22

for identification.)

23

BY MR. DILLMAN:

24
25

Bank of America - Fontainebleau

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1
2
3
4

A.

5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20

BY MR. DILLMAN:

21
22
23

MR. KAEDING: Object to form.

24
25
Bank of America - Fontainebleau

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1

BY MR DILLMAN:

2

3
4
5
6

(Deposition Exhibit-60 was marked for

7

identification.)

8

BY MR DILLMAN:

9

Q. Exhibit 60 is an E-mail with a document

10

attached -- a series of E-mails. The first one is

11

from Donita Johnson to yourself, dated February 25,

12

2009. Ms. Johnson was with ULLICO; correct?

13

A. Correct.

14

Q. She attaches to this E-mail a copy of the

15

second amendment to guaranty. Do you see that?

16

A. Yes.

17

Q. That's --

18

A. So I -- yeah, I did have it.

19

Q. She explains that ULLICO funded $2,759,598.04

20

today to cover the Lehman portion of the funding

21

request you sent to us. In addition to date, ULLICO

22

has received $2,759,598.04 from the borrower to repay

23

the principal advance made by ULLICO.

24
25

Do you see that?
A. Yes.

Bank of America - Fontainebleau

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1

Q. So you knew that that had occurred?

2

A. Yes.

3

Q. And you did have -- strike that.

4

Did you inform B of A, in or about the late

5

February time period, that ULLICO had funded the

6

$2.75 million amount to cover Lehman's portion of the

7

February draw request?

8

MR. CANTOR: Objection.

9

A. I probably did, I mean, seeing how we were

10

having conversations. I could have just said, We got

11

the money in. You know, I don't know if I went into

12

detail as ULLICO -- I assume I did.

13

BY MR. DILLMAN:

14

Q. Consistent with your practice of telling --

15

A. I may have. Yeah.

16

MR. KAEDING: Object to form.

17

Give us a split second to be able to answer.

18

(Discussion ensued off the record.)

19
20

BY MR. DILLMAN:
Q. Consistent with your practice of informing B

21

of A of who was paying what on the retail facility,

22

you expect that you would have told her that ULLICO,

23

not Lehman, had made the Lehman portion of the

24

February draw?

25

A. I believe I did.

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1

MR. CANTOR: Objection.

2

MR. KAEDING: Object to the form. Just give

3

us a split second. Object to form. You can answer.

4

MR. CANTOR: Objection.

5

THE WITNESS: I believe I did.

6

BY MR. DILLMAN:

7

Q. And consistent with your practice to keep B

8

of A informed about events with respect to the funding

9

of the retail facility, did you also apprise Ms. Brown

10

of the information that Ms. Johnson had given to you

11

in Exhibit 60, specifically that ULLICO had received

12

$2,759,598.04 from the borrower to pay the principal

13

advance made by ULLICO?

14

MR. CANTOR: Objection.

15

MR. KAEDING: Object to the form. You can

16
17

answer.
A. I don't know whether I told her that the

18

borrower was paying it back, ULLICO or not or just

19

ULLICO. But as I mentioned to you, the borrower --

20

you know, was calling everybody at this time period.

21

I don't know what was being communicated.

22

BY MR. DILLMAN:

23

Q. I'm not interested in what anybody else other

24

than what TriMont and you were communicating. So let

25

me -- I think you answered question, but you let on a

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1

bit, so let me just make sure.

2

Consistent with your practice of keeping B of

3

A informed of issues and events related to the payment

4

under the retail facility, did you apprise Ms. Brown

5

that the borrower had repaid to ULLICO the amount that

6

ULLICO had paid as Lehman's portion of the February

7

retail advance?

8

MR. CANTOR: Objection.

9

MR. KAEDING: Object to form, including it's

10
11

been asked and answered.
THE REPORTER: I just want to point out that

12

you said Ms. Brown this time and the first time you

13

said Ms. Johnson.

14
15
16

(Discussion ensued off the record.)
BY MR. DILLMAN:
Q. Did you, consistent with your practice of

17

keeping B of A informed of relevant events concerning

18

funding of the retail facility inform Ms. Brown of the

19

fact as explained to you by Ms. Johnson that the

20

borrower had repaid to ULLICO the $2,759,598.04 that

21

ULLICO had advanced as Lehman's portion of the

22

February retail advance request?

23

MR. CANTOR: Objection.

24

MR. KAEDING: Same objection. You can

25

answer.

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1

A. I don't recall whether she -- whether we

2

discussed whether it was reimbursed to ULLICO or not.

3

BY MR. DILLMAN:

4

Q. Do you recall at any time specifically having

5

any conversations with Ms. Brown concerning borrower

6

reimbursement of ULLICO payments?

7

A. I don't recall any specific conversation to

8

that effect, but it could have been like in one of

9

these funding conversations every month that we had,

10

it could have been mentioned during those. I don't

11

recall any, you know, specific conversation dedicated

12

to whether the borrower was kicking in money or not.

13

Q. Do you recall that coming up in any

14

conversation whether it was dedicated to that or

15

otherwise?

16
17
18
19

A. I don't recall.
MR. KAEDING: Can we go off the record for a
second?
(Deposition Exhibit-39 was previously marked

20

for identification.)

21

BY MR. DILLMAN:

22

Q. Mr. Rafeedie, I placed in front of you

23

previously marked as Exhibit 39. Can you just confirm

24

for us that that is the March draw request on the

25

retail facility that you, being TriMont, provided to

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1
2
3

the co-lenders?

A. Feels a little thinner than the other one.
don't know if everything's in it.

4

Q. Take a look.

5

A. I don't see the construction consultant

6

certificate in there. It appears to be missing, the

7

construction consultant certificate.

8

Q. Other than that?

9

A. It appears to be there.

10

Q. That is your signature on the second page; is

11

it not?

12

A. Correct.

13

Q. With respect to the body of the letter, that

14

is the draw request that was sent out --

15

A. Yes.

16

Q. -- for the March?

17

A. I believe so, yes.

18

Q. Lehman did not make its --

19

A. No.

20

Q. -- advances under that; correct?

21

A. Correct.

22

Q. ULLICO did?

23

A. Yes. My recollection, same as the others.

24

Q. Consistent with your prior testimony, is it

25

the case that you informed Ms. Brown of the fact that

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1

ULLICO, not Lehman, had made the advance for the

2

Lehman portion of the March draw?

3
4
5
6

MR. KAEDING: Object to form. You can
answer.
A. Yeah. I believe that I did inform her that

ULLICO was covering it.

7

MR. CANTOR: Join.

8

(Deposition Exhibit-61 was marked for

9

identification.)

10

BY MR. DILLMAN:

11

Q. Mr. Rafeedie, Exhibit 61 is a series of

12

E-mails. The first one is from Beth Lesher,

13

L-E-S-H-E-R, at National City to Mr. Rustgi in your

14

office, dated March 3, 2009.

15

I want to point you to the E-mail just below

16

that from Mr. Rustgi to Ms. Lesher. And it says, I

17

already sent this information to Elissa on Friday, but

18

here it is again. ULLICO funded Lehman's share on

19

12/30/08 in the amount of $3,391,631.84. The borrower

20

funded Lehman's share on 9/26/08, 1/26/09 and 2/25/09

21

in the amount of -- I've got to say. There's a hole

22

punched right through, but -- can you read that number

23

in for me?

24

A. $7,554,607.43.

25

Q. I thought that was seven. I just -- there's

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1
2
3

a hole punched right through it.
Giving a total between the two of
$10,946,239.27. And it goes on.

4

Does this statement by Mr. Rustgi that the

5

borrower had funded 7.5 million of Lehman's share of

6

the identified draw request comport with your

7

understanding as of this date in early March 2009?

8

A. I didn't compile this accounting. But it

9

appears correct based on our discussions we've just

10

had. And when I get copied on an E-mail like that, I

11

wouldn't question a sum to the penny if it looked

12

reasonable, you know.

13
14
15
16

Q. Mr. Rustgi was the person at TriMont who

would have been compiling that information -A. He would have been one of the people, yes.

MR. DILLMAN: Just to round out this

17

particular circle in terms of your conversations with

18

Ms. Brown, Exhibit 61 -- 62, excuse me, is an E-mail

19

between yourself and Ms. Brown, dated March 25th,

20

2009, which reads, ULLICO will be funding Lehman's

21

share plus their own in the morning. We should have

22

Sumitomo's share shortly thereafter and will get the

23

wire out.

24
25

(Deposition Exhibit-62 was marked for
identification.)

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1

BY MR. DILLMAN:

2

Q. That's an E-mail you sent?

3

A. Yes.

4

Q. Does this help you refresh your recollection

5

that you did, in fact, keep Ms. Brown apprised of the

6

fact that ULLICO was funding Lehman's share --

7
8

MR. KAEDING: Object to the form.
BY MR. DILLMAN:

9

Q. -- in addition to their own?

10

A. Yeah. Like I said a lot of times, ULLICO --

11

that was not ever hidden from them that they were

12

covering it. I think, I was open about that. And,

13

you know, in terms of the borrower paying back X

14

amount of whatever, I'm not sure we ever got into all

15

that. I knew she knew that ULLICO was advancing

16

Lehman's share.

17

Q. It was the fact that the information about

18

the borrower paying those amounts in terms of

19

reimbursing ULLICO was never hidden from B of A--

20
21

MR. KAEDING: Object to the form. You can
answer.

22

A. No. No.

23

BY MR. DILLMAN:

24
25

Q. It's correct that you did not do that?

MR. KAEDING: Object to the form.

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1
2
3
4
5
6

A Correct.
MR. DILLMAN: I just want to make sure that
we didn't have a double negative there.
One more document, I've seen reference in
your records to -- strike that.
(Deposition Exhibit-63 was marked for

7

identification.)

8

BY MR. DILLMAN:

9

Q. Exhibit 63, Mr. Rafeedie, is an E-mail from

10

Donita Johnson to Mr. Rustgi copied to yourself and

11

attaches the third amendment to guaranty between

12

various parties and ULLICO. This is an E-mail that

13

you received?

14

A Yes.

15

Q. TriMont did have in its possession the third

16

amendment to guaranty?

17

A Yes.

18

Q. You understood from Ms. Johnson's E-mail

19

that, in fact, the borrower or the guarantors had

20

repaid one million dollars to ULLICO of the amount

21

that it had funded for Lehman's share of the March

22

draw?

23
24
25

MR. KAEDING: Object to the form. You can
answer.

A Yes.

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1

BY MR. DILLMAN:

2

Q. Did B of A at some point tell you that it was

3

resigning as agent from everything having to do with

4

Fontainebleau?

5
6
7

MR. CANTOR: Object to the form.
A. Yes. They did tell me that.

BY MR. DILLMAN:

8

Q. Who in particular told you that?

9

A. Jean Brown.

10

Q. Did she tell you why?

11

A. They were -- well, it was consistent with --

12

the nonfunding of the revolver facility coincided with

13

that date, I believe, as I recall. And they were

14

resigning and Wilmington was going to take over.

15

Well, that wasn't known immediately, but it was known

16

later that they would be the agent on the loan, the

17

resort piece.

18
19

20
21
22
23
24
25

Q. Wilmington became a trustee?

MR. CANTOR: Objection.
A. It was my understanding they were the agent.

BY MR. DILLMAN:
Q. It was your understanding that Wilmington

became the disbursement agent?
A. They were taking over Bank of America's role.

I don't want to get into exact role and -- you know,

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1

that was later. But, yeah, Bank of America pulled out

2

and nobody knew who would be manning the ship. But

3

all fundings -- IVI, I think, quit publishing reports

4

and the whole thing shut down.

5

I think, as I understand, the borrower funded

6

a couple of draws to keep construction going, partial

7

draws or minimum amount. They cut down on the scope

8

of the project. They just wanted to protect it until

9

they could acquire additional financing, or whatever,

10

and there were lawsuits going back and forth.

11

BY MR. DILLMAN:

12

Q. Based on your conversation with Ms. Brown,

13

you understood that B of A's resignation as agent had

14

something to do with the termination of the revolver

15

facility?

16

MR. KAEDING: Object to the form. Go ahead.

17

MR. CANTOR: Objection. Mischaracterizes his

18

testimony.

19

A. There was a default notice that went to the

20

borrower. Basically, I believe, the loan was out of

21

balance. There was some budget issues and they -- I

22

believe because they -- that was the whole reason they

23

weren't going to fund the revolver. And at that point

24

they quit sending out draw requests and that's when

25

those other events occurred.

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1

MR. DILLMAN: No further questions.

2

(Recess from 11:54 a.m. to 12:33 p.m.)

3

4

EXAMINATION
BY MR. CANTOR:

5

Q. Thank you, Mr. Rafeedie. I just want to

6

thank you for your time today. I know it isn't a lot

7

of fun trying to recall events from several years ago

8

and I appreciate your efforts. I assume you're just

9

trying to be helpful here today; isn't that right?

10
11
12
13

A. Well, I think I'd get in trouble if I didn't

show; right?
Q. Yeah, right. But you have no ax to grind

here one way or the other?

14

A. No.

15

Q. As we get started, I just want to remind you

16

that you're still under oath; do you understand that?

17

A. Yes.

18

Q. Do you understand that this is the same oath

19

that you would take if you were actually in a

20

courtroom?

21

A. Yes.

22

Q. You understand that, in fact, the testimony

23

that you're giving here today can be read in court at

24

the trial of this action; right?

25

A. Yes.

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1

2

Q. So you understand the importance of telling

the truth in your testimony here today; correct?

3

A. Yes.

4

Q. Now, Mr. Dillman asked you a lot of questions

5

about what you might have done based on what he

6

referred to as your practices. But I want to ask you,

7

sir, is can you say under oath that, in fact, you told

8

Jean Brown that the borrower had provided the funds

9

for Lehman's September '08 retail advance

10

contribution?

11

A. Say that again, the last part.

12

Q. Let me start from the beginning. Can you

13

tell us --

14

A. Under oath.

15

Q. -- under oath that you told Jean Brown that

16

the borrower had provided the funds for Lehman's

17

September 2008 retail advance contribution obligation?

18

MR. KAEDING: Object to the form. You can

19

answer.

20

A. I feel like I most likely did, but I can't

21

say with a hundred percent certainly that I did.

22

BY MR. CANTOR:

23
24
25

Q. I take it you don't remember when that

conversation happened?

A. There were several defaults over several

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1

months, defaulted payments, and a lot of conversations

2

had taken place. I can't recall which month what

3

exactly was said. It's been an awful long time and I

4

just can say with a hundred percent certainty that I

5

did.

6

Q. And, similarly, you can't say with a hundred

7

percent certainty that you told anyone else at Bank of

8

America that the borrower had provided funds for

9

Lehman's 2008 retail advance contribution?

10

A. I don't believe I ever spoke with anyone at

11

Bank of America other than Jane Brown and maybe one

12

other person. I don't even recall that person's name

13

that worked within her department when she was on

14

vacation or something.

15

Q. But I take it, therefore, you don't remember

16

having a conversation with that person, whomever that

17

might have been, where you told that person that the

18

borrower had funded Lehman's September '08

19

contribution?

20

A. No. I can't say a hundred percent.

21

Q. I apologize if this repeats a little bit what

22

you already said. You also can't say under oath that

23

you told Jean Brown or anyone else at Bank of America

24

that the borrower was reimbursing ULLICO for the

25

payments that ULLICO was making on behalf of Lehman in

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1

months, defaulted payments, and a lot of conversations

2

had taken place. I can't recall which month what

3

exactly was said. It's been an awful long time and I

4

just can say with a hundred percent certainty that I

5

did.

6

Q. And, similarly, you can't say with a hundred

7

percent certainty that you told anyone else at Bank of

8

America that the borrower had provided funds for

9

Lehman's 2008 retail advance contribution?

10

A. I don't believe I ever spoke with anyone at

11

Bank of America other than Jane Brown and maybe one

12

other person. I don't even recall that person's name

13

that worked within her department when she was on

14

vacation or something.

15

Q. But I take it, therefore, you don't remember

16

having a conversation with that person, whomever that

17

might have been, where you told that person that the

18

borrower had funded Lehman's September '08

19

contribution?

20

A. No. I can't say a hundred percent.

21

Q. I apologize if this repeats a little bit what

22

you already said. You also can't say under oath that

23

you told Jean Brown or anyone else at Bank of America

24

that the borrower was reimbursing ULLICO for the

25

payments that ULLICO was making on behalf of Lehman in

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1

the December '08 through March '09 time frame; isn't

2

that right?

3
4
5
6

A. That's correct.

MR. CANTOR: Can I have these marked together
as 64 and 65?
(Deposition Exhibit-64 and Exhibit-65 were

7

marked for identification.)

8

BY MR. CANTOR:

9

Q. Mr. Rafeedie, I've had marked as Exhibits 64

10

and 65 two letters that bear the date September 25th,

11

2008. Exhibit 64 is a three-page letter that bears

12

production numbers TRIM 014944 through 46 and

13

Exhibit 65 is a three-page document which bears

14

production numbers TRIM 014911through13.

15

Let's start with Exhibit 64 for the moment.

16

Have you ever seen this document before, sir?

17

A. One of them appears to be a draft. One is

18

signed. Obviously, I've seen the one that's signed.

19

Q. Right.

20

A. The other one --

21
22
23

MR. KAEDING: Just so everything is clear,
when you say the one -THE WITNESS: 65 I've signed. 64 -- I don't

24

know if this was just the Word version. I'm trying

25

to -- it's got different parties to it --

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Deposition Transcript Excerpts
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Deposition Transcript Excerpts
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Deposition Transcript Excerpts
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Deposition Transcript Excerpts
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Filed Under Seal

Case 1:09-md-02106-ASG Document 375-29 Entered on FLSD Docket 12/03/2013 Page 1 of
183
Susman, Jeff 4/28/2011 12:00:00 PM

1

IN THE UNITED STATES DISTRICT COURT

2

FOR THE SOUTHERN DISTRICT OF FLORIDA

3
4

IN RE: FONTAINEBLEAU LAS

CASE NO.

09-MD-02106-CIV-GOLD/
5

VEGAS CONTRACT LITIGATION

GOODMAN

MDL NO. 2106

6
7
8

9
10
11
12
13

ORAL AND VIDEOTAPED DEPOSITION OF JEFF SUSMAN,

14

produced as a witness at the instance of the Plaintiffs,

15

and duly sworn, was taken in the above-styled and

16

-numbered cause on Thursday, April 28, 2011 , from 9:23

17

a.m. to 4:56 p.m., before Angela L. Mancuso, CSR in and

18

for the State of Texas, reported by machine shorthand,

19

at the law offices of Hunton & Williams, 1445 Ross Avenue,

20

Suite 3700, City of Dallas, County of Dallas, and State

21

of Texas, pursuant to the Rules of Civil Procedure and

22

the provisions stated on the record or attached hereto.

23

JOB No. 161730

24
25

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183
Susman, Jeff 4/28/2011 12:00:00 PM

1

A. There were a few that -- that I had -- you

2

know, that I hadn't seen in a while, mostly e-mails,

3

that refreshed some memories.

4

5

Q.

Who was your employer when you were at BofA,

the entity that signed your check, so to speak?

6

A. Bank of America, N.A.

7

Q.

8

A. The bank, yes.

9

Q.

10

A. With a "k", yes, not the "c."

11

Q. And when did you join Bank of America?

12

A. I joined one of the predecessors in August

The bank?

With a "k"? With a "k"?

13

of 1988.

14

Q.

15

A. It was NCNB Texas.

16

Q.

17

What was that predecessor?

Oh, yeah, I can't read that.
What -- what was - I was looking over the

18

court reporter's shoulder and I couldn't -- give me

19

those initials again.

20

A. NCNB Texas.

21

Q. And what was NCNB Texas?

22

A. It was -- it was the former First Republic

23

Bank, which NCNB, out of Charlotte, North Carolina,

24

acquired in the summer of 1988.

25

Q.

What was your job at NCNB?

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Susman, Jeff 4/28/2011 12:00:00 PM

1
2

A. I was a analyst and junior banker in the
Corporate Lending group.

3

Q. And after the acquisition? Same?

4

A. It was -- NCNB was the entity that I worked

5

for. It -- it had already been acquired. First

6

Republic had already been acquired when I joined.

7
8
9
1O

Q.

I see. I see. When -- I take it that NCNB at

some point was acquired by Bank of America?

A. NCNB subsequently changed its name to
NationBank -- Nations Bank.

11

Q.

12

A. And then NationsBank acquired Bank of America

13

Got it.

and changed the name.

14

Q.

Thank you. Had that backwards, didn't I?

15

A. Yeah, I guess.

16

Q.

17

A. The acquisition?

18

Q.

19

A. Name change to Bank of America was in 1998.

20

Q.

All right. And when did that occur?

Yes.

Between 1988 when you joined NCNB Texas and

21

1998 when NationsBank acquired BofA and changed the

22

name, did your job duties change at all from the junior

23

analyst position that you previously identified?

24

A. Yes. I was --

25

Q.

How so?

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1
2

A.

-- promoted to a position where I had direct

client responsibility and then --

3

Q.

What was that position?

4

A.

It was assistant vice president and vice

5

president, still in the Corporate Lending group.

6

Q.

7

A. And then in 1997, I moved from that group to

8

Okay.

Loan Syndications.
That was it?

9

Q.

10

A. And then the acquisition of Bank of America

11
12
13
14

occurred.
Q.

Okay. After the acquisition, what were your

positions?
A.

In 2000, I left Syndications to go to our

15

Middle Market group as a client manager. I was there

16

for two years. And after that, I joined Corporate Debt

17

Products, in Large Corporate.

18

Q.

19

A. Large Corporate or Global Corporate Investment

20

Banking, essentially back to the large corporate lending

21

function that I had started in.

22
23
24
25

Q.

In Large what?

What was -- and you were in Corporate Debt

Products, in the Large Corporate group, for -A.

From 2002 to when I departed in February

of 2009.

Bank of America - Fontainebleau

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Susman, Jeff 4/28/2011 12:00:00 PM
Q.

2

Do you remember the day on which you departed?

A. My last day in the office, I believe, was

3

February 13th. I think my official last day was the

4

next Monday, but that was a bank holiday.

5

6
7

8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23

Q.

You indicated that you worked in Corporate

24

Debt Products from 2002 through 2009. What was

25

Corporate Debt Products?

Bank of America - Fontainebleau

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1
2
3
4
5

A.

It is the function that manages the credit

relationships with large corporate clients.
Q. What do you mean by "manages the credit

relationship"?
A.

Responsible for everything from underwriting

6

to monitoring credit exposures, loans, letters of

7

credit, any extensions of credit, derivatives, anytime

8

there is treasury management, credit exposure. So all

9

credit-related matters for the large corporate clients.

10
11
12

Q. And when you say "monitor exposures," what do

you mean?
A.

On -- one of our responsibilities is to

13

monitor the financial condition of borrowers, including

14

review of financial statements, monitoring compliance

15

with covenants and loan agreements, risk ratings.

16

Q. Anything else?

17

A. That's the majority of the responsibilities.

18

Q.

With respect to the monitoring exposures,

19

monitoring financial condition of the borrowers,

20

compliance with covenants and risk ratings?

21

A.

Manage and monitoring risk ratings, making

22

sure they're appropriate, changing them when necessary

23

and appropriate.

24

25
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1

2
3
4

5
6

7

8
9
10
11

12
13

14
15
16

17

18
19

20
21

22

23
24

25
Bank of America - Fontainebleau

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Susman, Jeff 4/28/2011 12:00:00 PM

1
2
3

Q.

What was the involvement that you had with

respect to the Miami project?
A. I don't recall the specifics. It was -- in

4

general, it is complying with the terms and conditions

5

under the disbursement agreement, making sure all the

6

requisite steps occur before draws are permitted.

7

Q. Anything else?

8

A. And then once those steps -- steps have been

9
10

taken, then permitting the advance.
Q.

In general, those were activities that

11

Corporate Debt Products undertook with respect to the

12

Fontainebleau Miami loan?

13

A. Yes.

14

Q. And, in general, those are steps the Corporate

15

Debt Products undertook with respect to the

16

Fontainebleau Las Vegas loan?

17
18

A. Yes. It was -- Corporate Debt Products was
one of the groups involved in the process.

19

Q.

20

role?

21
22

With respect to the Miami loan, what was your

A. I was the senior Corporate Debt Products
officer on that relationship.

23

Q. And Las Vegas, the same?

24

A. Same.

25

Q.

When did the Miami loan commence as far as --

Bank of America - Fontainebleau

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1

strike that.
When did your involvement in the Miami loan

2
3

begin?

4

A.

It goes back to the first loan that Bank of

5

America made on the combined projects. At one time, it

6

was -- it was one loan, subsequently refinanced into two

7

separate loans, and that goes back to -- I can't recall

8

if it was '04 or '05.

9

Q.

From that time that you first became involved,

10

until you left the bank, were you the senior person in

11

Corporate Debt Products responsible for the

12

Fontainebleau Miami loan?

13

A. Yes.

14

Q.

15
16

When did you become involved in the

Fontainebleau Las Vegas loan?
A. Again, both started about the same time, and

17

they evolved together; and then we knew at some point

18

they would be two separate financings, and so I was

19

involved with both of them from the beginning.

20

21

Q. And the senior person on both of them from the

beginning in Corporate Debt --

22

A.

Yes.

23

Q.

-- in Corporate Debt Products?

24

A. Yes.

25

Q.

You need to make sure that you wait for my

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1
2

that?
A.

Reviewing of available financial information,

3

market information, and providing periodic analysis to

4

document the status of the credit and the credit quality

5

of the borrower.

6
7
8
9
10

Q. All of which, at some point, makes its way

into risk ratings?
A. Those are some of the aspects, yes, that help

determine the risk ratings.
Q.

Did you have a particular title or position

11

with respect to risk ratings? I've seen -- I've seen it

12

referred to at some point that -- Chairman of the Risk

13

Rating Score Card Issues Committee.

14

A. There -- Bank of America instituted a number

15

of risk-rating tools, fact-based, objective-based

16

risk-rating tools for various industries. Those were

17

developed internally. And once they were rolled out for

18

use in Corporate Debt Products, issues arose on how to

19

use it. Applying tools developed for a portfolio on an

20

individual name basis, there were questions that arose

21

on how to do certain things.

22

It was determined that there was a group

23

needed to be formed to take in the questions and

24

basically to discuss the issues that arose, to discuss

25

them, to work with the developers to come up with

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1

workaround solutions, and then to disseminate guidance.

2

And I was on that group for -- I don't recall how many

3

years, but at one point I was the leader of the group.

4

Q. All right.

5

A. It was independent of -- it was part of my

6

responsibilities that I volunteered for, but it was not

7

anything directly related to managing, you know, any of

8

the loans.

9
10

Q.

In connection with BofA's status as a

lender --

11

A. Uh-huh.

12

Q.

-- for the Las Vegas facility, did Corporate

13

Debt Products get involved in monitoring the

14

construction of the project?

15

MR. CANTOR: Objection. You can answer.

16

A. Yes.

17

Q.

18

(BY MR. DILLMAN) Get involved in monitoring

the -- whether or not the project was on budget?

19

A. Yes.

20

Q.

21

A. Yes.

22

Q. And who was primarily responsible, in

Whether the project was on schedule?

23

Corporate Debt Products, for monitoring those aspects of

24

the credit?

25

A.

It was me and Brandon Bolio together.

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1

Q.

How would you go about that?

2

A. We would review the information that was

3

provided to us by our construction consultants,

4

reviewing their reports that would come out monthly, and

5

we would also review information we received from the

6

construction monitoring group internally.
What was the construction monitoring group?

7

Q.

8

A. It was Jeanne Brown, her group. I don't

9

recall what her group's name was. The information that

10

she was provided, we would -- we would see some of her

11

information.

12

Q.

When you say "the information that she was

13

provided," you're talking about information provided by

14

others to that group you would see?

15

A. Correct.

16

Q.

17

A. Yes. Correct.

18

Q.

19
20

Correct?

Did that group generate information of their

own that they provided to you?

A. I don't recall if they were generating

21

anything themselves or just reviewing information they

22

had been provided.

23
24
25

Q.

But they acted, in part, as a passthrough of

information to you and Mr. Bolio?
MR. CANTOR: Objection. Go ahead.

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1

A. We received information from them. I don't

2

know if they were -- again, what information, what we

3

were seeing that they had generated. I just don't

4

recall. If they generated anything, it was purely a

5

passthrough. I just don't recall.

6

Q.

(BY MR. DILLMAN) All right. Well, let's

7

break it down. What information do you recall having

8

received from Ms. Brown and her group?

9
10
11
12

A. It was budget-related information, where the
project was with respect to the budget.
Q.

What does that mean, exactly, budget-related

information?

13

A. They would be provided information on purchase

14

orders, invoices. They would review them, compare them

15

to the budget, and then we would see some of that

16

information. Specifically, I don't recall.

17
18
19

Q.

It was your understanding that Ms. Brown's

group was receiving purchase orders and invoices?

A. They were receiving information from

20

Fontainebleau and the general contractor. I don't

21

recall specifically what information they were

22

receiving, but that was -- the purchase orders and

23

contracts were the root documents that -- that -- and

24

the invoices were driving the draw requests, and that's

25

the type of information they would receive and review.

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1

certain reporting by the borrower to the banks. And

2

rather than the borrower sending separate information to

3

each participant lender, it's provided to the

4

administrative agent one time, and the administrative

5

agent then serves the function of distributing

6

information to the participant banks.

7

Q. As you've just described the role as you

8

understood it of the administrative agent -- strike

9

that.

1O

As you've just described BofA's role as the

11

administrative agent with respect to the Fontainebleau

12

Las Vegas facility, what was the involvement of

13

Corporate Debt Products in those functions?

14

A. There is not much role. That's the Agency

15

Management group's role. They are the primary contacts

16

for the funds and for the information. Corporate Debt

17

Products is a recipient of that information as one of

18

the participant banks.

19

20

Q.

Corporate Debt Products received that

information as a lender?

21

A. Yes.

22

Q.

Okay. Did Corporate Debt Products,

23

specifically you, approve, on a monthly basis, draw

24

requests?

25

A. Under the resort credit agreement?

Bank of America - Fontainebleau

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1

2

Q. In any capacity, did you approve draw requests
from the borrowers?

3

A. Yes.

4

Q.

5

Did the other lenders approve draw requests

from the borrowers before those draws would be approved?

6

A. No.

7

Q.

So in doing that -- in approving draw

8

requests, you weren't doing that as a lender. You were

9

doing that in some other capacity, correct?

10

A. Yes.

11

Q. What other capacity were you doing that in?

12

A. As the disbursement agent.

13

Q. Okay. So Corporate Debt Products acted as the

14

disbursement agent, at least in that regard?

15

A. Yes.

16

Q. One of the functions that you described was --

17

for the administrative agent was receiving and

18

disseminating information to the lender group, correct?

19

A. Yes.

20

Q. And that information went out on lntralinks?

21

A. I believe so, yes.

22

Q. Mr. Naval was at least the nominal head of the

23
24
25

Agency group, correct, for this -- for this loan?
A. He was the Agency Management officer on this
loan, yes.

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1

Mr. Naval was the person that had the key to

Q.

2

lntralinks that would allow him to actually load

3

documents onto this particular facility site?

4

A. Yes.

5

Q.

You didn't have that key?

6

A.

I did not.

7

Q.

But Mr. Naval only loaded information to the

8

extent that Corporate Debt Products approved it?

9

A.

No.

10

Q.

If I were to tell you that that's been

11
12

Mr. Naval's testimony, would you disagree with that?
A.

It is not necessarily Corporate Debt Products'

13

role to approve all documents that get posted. We

14

typically say all the information is here; go ahead and

15

post it.

16

Q.

If Mr. Naval testified that he did not place

17

documents on lntralinks without first obtaining the

18

approval of Corporate Debt Products, would you disagree

19

with that?

20

A.

No.

21

Q.

Was there anyone other than Corporate Debt

22

Products that was -- that was required to approve

23

information that was posted on lntralinks?

24
25

A.

I don't know that there is anybody that was

required to give approval, so I don't know who else

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1
2

would have told Agency Management to post information.
Okay. So as far as you're aware, Corporate

Q.

3

Debt Products was the only group within BofA that

4

approved the dissemination of information to the lenders

5

through lntralinks?

6
7
8

A. With respect to the resort facility, in this
particular case, perhaps, yes.
When you say "with respect to the resort

Q.

9

facility," what distinction are you seeking to draw

10

there?

11
12

A. We didn't have any relationship with the
retail lenders.

13

Q.

14

A. Yeah.

15

Q.

16

Fair enough. Okay. All right.

But that was the only distinction you were

seeking?

17

A. Yeah.

18

Q.

When -- was part of the administrative agent's

19

role, as you understood it, to help obtain -- strike

20

that.

21

Was part of the administrative agent's role to

22

field questions from lenders and to seek to obtain

23

answers to those questions from, among others, the

24

borrowers?

25

A. If lenders chose to pose the questions to the

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1
2

administrative agent, yes.
Q. And, typically, with respect to the Las Vegas

3

facility, were the questions from lenders posed to

4

Corporate Debt Products or to Mr. Naval?

5

A. I don't know if he received any -- if

6

Mr. Naval received any inquiries directly. I know

7

Corporate Debt Products received some directly, but I

8

don't know what he received, if he received any

9

directly.

10

Q.

Given your role in the Las Vegas facility,

11

would it -- was it your expectation that if Mr. Naval

12

received inquiries from lenders, that he would forward

13

those inquiries to you in Corporate Debt Products?

14

A. I would have expected for him to do that, yes.

15

Q. And was it Corporate Debt Products that was

16

the group at BofA who would then seek to obtain answers

17

to questions posed by the lenders, or was that some

18

other group?

19
20

A. No. It would typically be Corporate Debt
Products.

21

Q. Again, to put names on it, you and Mr. Bolio?

22

A. Yes.

23

Q.

24

A. Correct.

25

Q.

Depending on the timing?

One of the roles of the administrative agent,

Bank of America - Fontainebleau

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1

as well, was to keep a register --

2

A.

Uh-huh.

3

Q.

-- right?

4

A. Yes. Sorry.

5
6
7

MR. CANTOR: You need to answer verbally.
You can't give uh-huhs and shakes and nods.
Q.

(BY MR. DILLMAN) I'm not going to inquire,

8

but I'm going to assume that you went over some of this

9

with Mr. -- with Mr. Cantor yesterday, so I did not go

10

over sort of the ground rules of what makes this process

11

easier on court reporters and so on. But when we do run

12

across those things, I'll point them out.

13

A.

I understand.

14

Q.

What's a register?

15

A.

It is the official list of the participant

16

lenders.

17

Q.

18

What involvement, if any -- strike that.
Do you know how BofA keeps registers?

19

A.

No.

20

Q.

Did you have any involvement in the register

21

for this facility?

22

A.

Not that I recall.

23

Q.

You understand what information is contained

24
25

on the register?
A.

I don't know specifically.

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1

Q.

Do you understand that -- did you understand

2

that, with respect to the Las Vegas facility, the

3

register was open and available to all lenders?

4

A. I don't recall.

5

Q.

6

Do you recall lenders having asked to see

copies of the register at various times?

7

A. I don't recall specifically.

8

Q.

9

Do you recall having required lenders to come

to Dallas to look at the register?

10

A. I don't remember.

11

Q.

12

Do you recall having refused to give paper

copies of the register to lenders?

13

A. I don't remember that.

14

Q.

Is there any reason you can think of why--

15

why BofA would refuse to give lenders paper copies of --

16

or electronic copies of registers?

17

MR. CANTOR: Objection.

18

A. I don't know.

19

Q.

(BY MR. DILLMAN) Let me hand you what's

20

previously been marked as 661. 661, a document from

21

Mr. Naval. He was in the Agency group. Yes?

22

A. Yes.

23

Q.

24

that is?

25

To Mr. Pinzon, P-i-n-z-o-n. Do you know who

A. No.

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1

Q. With a copy to yourself. And it is entitled

2

or the subject is SigabaSecure, S-i-g-a-b-a, Secure. Do

3

you know what that means?

4

A.

I don't.

5

Q.

Is that a particular security provision that

6

goes -- or protocol that you could have attached to

7

e-mails at Bank of America?

8
9
10

A.

I don't remember or I don't -- I don't know

what that is.
Q.

Okay. And then it goes on to say

11

RE: Fontaine Las Vegas -- Fontainebleau Las Vegas -

12

Register Review.

13

A. Yes.

14

Q.

15
16

Does this help you to recall that in late 2008

Guggenheim had asked to look at the register?
A.

I don't recall this event, but, you know,

17

there's e-mails that I sent, so apparently there was

18

somebody that wanted to view the register.

19
20

Q. And you recall that Highland had asked to look

at the register in approximately September of 2008?

21

A.

I don't remember.

22

Q.

The e-mail from Mr. Naval says, "Don, attached

23

is the register for Fontainebleau Las Vegas. Same

24

drill, no paper copies." Do you see that?

25

A. Yes.

Bank of America - Fontainebleau

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1

Q.

Helps you to recall that, in fact, BofA would

2

not permit the lenders to have paper copies of the

3

register?

4

5
6

A.

I don't recall that, again, but that's --

that's what this says.
Q. And does this help you to recall one way or

7

the other whether there was a policy at BofA to preclude

8

lenders on facilities that it agented from obtaining

9

paper copies of the register of all lenders?

10
11

A. Again, I don't know what Agency Management
policies were. I just -- I don't know. I don't recall.

12

Q.

13

A. Wenmohs.

14

Q.

15

A. Yes.

16

Q.

Who was he?

17

A.

He was the associate that worked on the

Do you know Chip Wenmohs?

Wenmohs?

18

Fontainebleau relationship prior to Brandon Bolio. He's

19

the one that took an assignment in Australia.

20

21

Q. All right. So he was with the Corporate Debt

Products group?

22

A. For a time, yes.

23

Q.

24

A. Correct.

25

Q.

He was the Bolio before Bolio came around?

When did he leave? Do you know?

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1

A. Pardon me?

2

Q. When did he leave?

3

A. I don't recall specifically.

4
5

(Deposition Exhibit 885 marked.)
Q.

I've marked as Exhibit 885 a document that was

6

produced by BofA in this litigation and indicates in the

7

electronic data that identifies the document as one that

8

was created by and in Mr. Wenmohs's file.

9

A. Uh-huh.

10

Q.

11

A. No, I don't.

12

Q.

Do you recognize this?

Let me just draw your attention to the Bates

13

stamp number at the lower right-hand corner that ends in

14

179.

15

A. Okay.

16

Q. About halfway down the page, on the -- there

17

is a section that says "Bank of America." Do you see

18

that?

19

A. Yes.

20

Q. And the first line item is "Bank

21

Agent/Administrative Agent." Do you see that?

22

A. Yes.

23

Q. And it has Mr. Susman, Mr. Wenmohs, and

24
25

Mr. Naval. Do you see that?

A. Yes.

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Q.

Would you agree that that group -- Susman,

2

Wenmohs, and Naval -- at some point in time constituted

3

the administrative agents for Bank of America on this

4

facility?

5

A. Mr. Naval was the administrative agent. As

6

the senior Corporate Debt Products and the primary

7

Corporate -- Corporate Debt Products team working on the

8

agency -- agented relationship, that would have involved

9

me and Mr. Wenmohs.

10

Q.

In terms of a functional group that worked on

11

the matters that were within the ambit of the

12

administrative agent, this would be -- this would

13

accurately reflect --

14

A. Yes.

15

Q.

16

A. Yes.

17

Q. And would it also accurately reflect the

-- that functional group?

18

functional group responsible for the role of BofA as

19

bank agent?

20

A. Well, what do you mean by "bank agent"? Bank

21

agent/administrative agent, in my mind, are

22

interchangeable.

23

Q.

24

A. This -- functionally, yes, the three of us

25

Okay. So your answer would be yes?

would -- would work as the administrative function.

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Q. At any point did you come to understand that

2

actually there was a designated -- capital B,

3

capital A -- Bank Agent and a designated -- capital A,

4

.capital A--Administrative Agent with respect to the

5

Fontainebleau financing?

6
7
8
9

A. I don't think I understand what your question
is.
Q.

You said in your way of thinking bank agent

and administrative agent are the same thing.

10

A. The -- if the reference is administrative

11

agent on the resort facilities, that's -- that's what

12

I -- is that what you're speaking of? That's what I

13

understand it to be.

14

Q. Yes. That's what I understand administrative

15

agent to be here.

16

A. Uh-huh.

17

Q.

Did you have any understanding as to whether

18

or not there was a bank agent on the -- in connection

19

with the Las Vegas financing with respect to the resort

20

loan?

21

MR. CANTOR: Let me just -- so I

22

understand, are you asking was there a defined term or

23

was there a human?

24

Q.

(BY MR. DILLMAN) You can answer.

25

A.

I don't recall a distinction.

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Okay. I will represent to you that in the

Q.

2

disbursement agreement there is a defined term, "bank

3

agent."

4

A. Okay.

5

Q.

That bank agent has certain responsibilities

6

under the -- the -- the disbursement agreement. Let me

7

point you to 2.4.6 of the disbursement agreement, which

8

I think you have in front of you there. I'm sorry; I've

9

confused matters. That is the -- that's the funding

10

agent.

11

Let me ask you to turn to 3.3.2.1. Let's just

12

start at 3.3 -- 3.3 on page 33, and this is Exhibit 72,

13

which is the Master Disbursement Agreement. Are you

14

there?

15

A. Yes, I'm there.

16

Q.

17

These are the Conditions Precedent to Advances

by the Trustee and the Bank Agent. Do you see that?

18

A. Yes.

19

Q.

You understood that these conditions precedent

20

were with respect to disbursements of proceeds to the

21

borrower?

22

A. Yes.

23

Q.

Under both the resort loan and underneath the

24

retail facility?

25

A. Yes.

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Q. And it says here, "The obligations" -- and I'm

2

going to skip down to (b) -- "of the Bank Agent to make

3

Advances from the Bank Proceeds Account are each subject

4

to the prior satisfaction of each of the conditions

5

precedent set forth in this Section 3.3."

6

A. Uh-huh.

7

Q.

8

A. The administrative agent.

9

Q.

10

Who was the bank agent --

-- that made advances from the Bank Proceeds

Account?

11

A. It's the administrative agent for the resort

12

loan is the bank -- that's the reference here, is the

13

bank agent.

14

Q.

Okay. So with respect to the functions set

15

forth in 3.3, the functional group that was responsible

16

for that was yourself, Mr. Wenmohs or Mr. Bolio,

17

depending on the point in time, and Mr. Naval?

18

A. Yes.

19

Q. All right. And if you turn to 3.3.21 of this

20

same Exhibit 72, it's entitled "Adverse Information."

21

And it says, "In the case of each Advance from the Bank

22

Proceeds Account made concurrently with or after

23

Exhaustion of the Second Mortgage Proceeds Account, the

24

Bank Agent shall not have become aware after the date

25

hereof of any information or other matter affecting any

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Loan Party, Turnberry Residential, the Project or the

2

transactions contemplated hereby that taken as a whole

3

is inconsistent in a material and adverse manner with

4

the information or other matter disclosed to them

5

concerning such Persons and the Project, taken as a

6

whole."

7

You understood, when you were involved with

8

this facility, the resort facility, that 3.3.21 was a

9

condition precedent to advancing or disbursing funds to

10

the borrower, did you not?

11

A. Yes.

12

Q. And 3.3.21 refers to a lack of awareness by

13

the bank agent of the things that are described in

14

there. Do you see that?

15

A. Yes.

16

Q. And this would refer, then, to the awareness

17

that you, Mr. Wenmohs or Mr. Bolio, depending on the

18

time period, and Mr. Naval had at any given time of

19

disbursements, correct?

20

MR. CANTOR: Objection; calls for a legal

21

conclusion. You can answer to the best of your

22

understanding.

23

A. Would you repeat the question, please.

24

Q.

25

(BY MR. DILLMAN) Sure. The awareness of the

bank agent referred to herein is the awareness that you,

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Mr. Wenmohs and Mr. Bolio, depending on the time, and

2

Mr. Naval had at any particular point in time, correct?

3
4
5
6

MR. CANTOR: Same objection.
A. Those were the -- yes. Those were the folks

serving as the administrative function.
Q.

(BY MR. DILLMAN) And what procedures were in

7

place at Bank of America to determine whether the bank

8

agent was aware of any of the information specified in

9

3.3.21 prior to the time the disbursements were made?

10

A. The information that we knew was what we knew

11

as part of, you know, ongoing monitoring and diligence

12

as part of our responsibilities.

13

Q.

Okay. And your knowledge at any particular

14

time in connection with any particular disbursement was

15

part of the conditions precedent, as you understood it,

16

that was -- that governed the disbursement of proceeds

17

under the Master Disbursement Agreement, correct?

18
19
20

MR. CANTOR: Objection; calls for a legal
conclusion.
A.

I mean, if there were -- it's information that

21

I had, it was information I knew, I guess. I'm not

22

exactly sure what your question is.

23

Q.

(BY MR. DILLMAN) If you had any information,

24

any awareness of information specified in 3.3.21, you

25

understood that that was part of the analysis as to

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1

whether or not the conditions precedent had been met --

2

A. Yes.

3

Q.

4

A. Yes.

5
6

-- for any particular disbursement?

MR. CANTOR: Objection.
Q.

(BY MR. DILLMAN) What -- and was there any

7

particular procedure or protocol in place to make sure

8

that for each disbursement the bank agent, as we've just

9

discussed it, was not aware of any of the information

10

set forth in 3.3.21?

11

A.

I don't recall specifically any specific

12

protocols other than, again, our normal diligence and

13

monitoring of the situation and of the borrower.

14

Q.

Okay. And all that information would have

15

been reviewed in terms of your awareness of these facts

16

before anything was disbursed?

17

A. Yes.

18

Q.

Other than as it relates to disbursements and

19

the conditions precedent under 3.3 of the disbursement

20

agreement, did Corporate Debt Products have -- undertake

21

any activities in its capacity as bank agent for the

22

Las Vegas facility other than those that you previously

23

testified to about the roles it took with respect to the

24

administrative agent functions?

25

A.

I don't recall anything significantly

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1
2
3

different, no.
Q.

BofA was also the -- a funding agent under the

resort loan, was it not?

4

A.

I don't recall specifically.

5

Q.

Okay. Let's turn to 2.4.6 --

6

A.

Okay.

7

Q.

-- of the disbursement agreement, which I

8

erroneously directed you to previously.

9

A.

2.4.2?

1O

Q.

4.6, which is on page 1O of Exhibit 72.

11

A.

Okay.

12

Q.

Take a minute to read that.

13

A.

Uh-huh. Okay.

14

Q.

The last sentence -- strike that.
Does this help you to recall that there was --

15

16

there were one or more funding agents?

17

A. Yes.

18

Q.

Was BofA a funding agent?

19

A.

I don't recall specifically.

20

Q.

What was the role of the -- of funding agents

21
22
23
24
25

in connection with this facility?
A. To fund proceeds from their respective sources
of capital.
Q.

When you say "respective sources of capital,''

I didn't follow you.

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1

A.

If there were -- if -- if there was bank

2

proceeds being advanced, then BofA would have acted to

3

sort -- to fund the bank proceeds.

4

Q. All right. So you do recall that BofA acted

5

as a funding agent with respect to the proceeds from the

6

credit resort --

7

A. From the resort credit, yes.

8

Q.

9

A. Yes.

10

Q.

11

-- resort loan?

Let me make a complete sentence and if you

could -- or complete question. Wait until I'm done.

12

A. Okay.

13

Q.

It is your recollection that BofA functioned

14

as the funding agent with respect to disbursements from

15

the resort loan; is that right?

16

A. Yes.

17

Q. And who at BofA performed the functions of the

18
19
20
21

funding agent on BofA's behalf?
A.

Is your question specifically who funded the

proceeds?
Q.

There is a defined term, "funding agent." Who

22

were the people at BofA who were involved in the

23

activities of BofA as funding agent?

24

A.

I would have been involved.

25

Q.

Okay. And how were you involved?

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A. In determining if the conditions had been met.

2

Q. The conditions precedent to disbursement --

3

A. Correct.

4

Q.

5

A. Yes.

6

Q.

Were you involved in any other way?

7

A.

I don't recall specifically.

8

Q.

To the best of your knowledge, was anyone else

-- under 3.3?

9

at BofA, other than yourself, involved in the functions

10

of the funding agent?

11
12

A. Mr. Bolio, in conjunction with me, not
independently.

13

Q.

Okay. Under your supervision?

14

A. Yes.

15

Q.

If you look at 2.6.1 (b) of the Master

16

Disbursement Agreement, Exhibit 72, it says, "The Bank

17

Agent shall cause the Bank Lenders to remit any required

18

Loans under the Bank Credit Agreement to the Bank

19

Proceeds Account." Let's stop there.

20

Did you have an understand -- do you have an

21

understanding of what the Bank Proceeds Account was?

22

A. Yes.

23

Q.

24

A. An account where advances under the bank

25

What was it?

facility would be put prior to disbursement to the

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1

borrower.

2

Q. All right. It was a holding account of sorts?

3

A. Yes.

4

Q.

5

The borrower did not have access to that

account?

6

A.

Correct.

7

Q.

The lenders did not have access to that

8

account?

9

A.

I don't recall.

10

Q.

They did have a security interest in that

11

account?

12

A. I don't recall specifically.

13

Q.

14

Okay. Do you recall that that account earned

interest?

15

A. I don't recall.

16

Q.

2.6.1 (b) goes on, "The Bank Agent shall

17

thereafter remit any required Advances under the Bank

18

Credit Agreement from the Bank Proceeds Account to the

19

Bank Funding Account." Do you see that?

20

A. Yes.

21

Q. And what was the -- do you know what the Bank

22

Funding Account was?

23

A. I don't recall.

24

Q.

25

Do you know whether the borrower had access to

the Bank Funding Account?

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1

A. I don't recall.

2

Q.

But the authorization of transfers from the

3

Bank Proceeds Account to the Bank Funding Account was

4

made by you and Corporate Debt Products acting as the

5

bank agent, correct?
MR. CANTOR: Objection.

6
7

A. I don't recall specifically.

8

Q.

(BY MR. DILLMAN) The words of the agreement

9

talk about, "The Bank Agent shall thereafter remit."

1O

guess my question is --

11

A. That would have been the function, yes.

12

Q.

13

The bank agent referred to here was the group

that we talked about: You, Mr. Wenmohs --

14

A. Yes.

15

Q.

16

A. Yes.

17

Q. And to be sure, Mr. Naval's role here was

18

-- Mr. Bolio, and Mr. Naval?

fairly ministerial, was it not?

19

A. Correct.

20

Q.

If there were any decisions to be made,

21

analysis to be undertaken, that was done by you and

22

Mr. Wenmohs and Mr. Bolio?

23

A. Correct.

24

Q.

25

Turn to the disbursement agreement, 2.2.1,

which is at page 4. This has a listing of the accounts.

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Do you see that?

2

A. Yes.

3

Q. And you recall having at least understood how

4

these accounts worked at the time?

5

A. Yes.

6

Q. And if I go one, two, three, four -- five rows

7

down, I see the Bank Proceeds Account, and it appears to

8

me to reflect a movement into the Bank Funding Account

9

by the bank agent. Am I reading that correctly?

10
11
12

MR. CANTOR: I'm sorry. Where are you
reading?
Q.

(BY MR. DILLMAN) It says Bank Proceeds

13

Account, and read across, it says Depository; Bank

14

Agent; Pledgees, Bank Agent. Do you see that?

15

A. Could you repeat your question, please.

16

Q.

Sure. Let me just draw your attention rather

17

than ask a question right now, to draw your attention,

18

because I see you were reading something else, to the

19

fifth row down --

20

A. Uh-huh.

21

Q.

22

-- where it says Proceeds Account, Bank

Proceeds Account.

23

A. Yes.

24

Q. And if we go over to the right, it says

25

Depository, Bank Agent.

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1

A. Uh-huh.

2

Q.

3

A. I don't recall. I don't know.

4

Q.

5
6

7
8

What does that mean, "depository"?

Does that mean that those funds are under the

control of the bank agent?

A. I don't know. I'd have to look and see if
there is a defined term for "depository."
Q.

Well, looking at 2 point -- referring back to

9

2.6.1 (b), which we previously talked about, that says

10

that the Bank Agent shall move funds from the Bank

11

Proceeds Account to the Bank Funding Account, does that

12

help you to perhaps refresh your recollection that

13

"depository" here means that the Bank Proceeds Account

14

is under the control of the bank agent?

15
16

A. That's the conclusion I would reach now, but I
don't know specifically what "depository" means.

17

Q.

18

A. To who the -- who has an interest, security

19
20

Okay. Do you know what "pledgees" mean?

interest, in that account.
Q.

Okay. So according to this chart, the bank

21

agent is both the depository and the pledgee of the Bank

22

Proceeds Account, correct?

23

A. Yes.

24

Q. And if we move down to the next row, it says,

25

Funding Account, Bank Funding Account. The disbursement

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1

A.

2

Q. And provided to the funding -- various funding

3

It is provided to the borrower.

agents?

4

A.

I believe so, yes.

5

Q.

So provided to the retail funding agent as

6

well as the resort funding agent?

7

A.

Specifically, I don't know who it went to.

8

Q.

Okay. At the time that the Advance

9

Confirmation Notice is sent out, had BofA approved the

10

advance --

11

MR. CANTOR: Objection.

12

Q.

13

A. Yes.

14

Q. And while this particular document is signed

-- as proper for disbursement?

15

by Ms. Brown, in Corporate Debt Products, Ms. Brown did

16

not issue any Advance Confirmation Notices without the

17

approval of -- prior approval of Corporate Debt

18

Products; is that right?

19

A. Typically not.

20

Q.

21

May have gotten double negatives there.
Typically -- typically, she did not issue

22

these without the prior approval of Corporate Debt

23

Products, correct?
Correct.

24

A.

25

Q. All right. Now, you became aware at some

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1

point that -- strike that.
First National Bank of Nevada was a lender

2
3

under the resort loan, was it not?

4

A.

I believe it was.

5

Q.

It was both a revolving lender and a term loan

6

lender?

7

A. Yes.

8

Q.

9

You became -- and both an initial and a delay

draw term loan lender?

10

A. Yes.

11

Q.

You became aware at some point that the FDIC

12

had repudiated First National Bank of Nevada's

13

obligation under the credit -- the resort loan, right?

14

A. We were informed that, yes.

15

Q.

16

That the FDIC had taken over First National

Bank of Nevada?

17

A. Yes. And they then had repudiated, yes.

18

Q.

19
20

I just -- I will occasionally prompt you for

a -- for a verbal.
Let me place in front of you what has

21

previously been marked as Exhibit 486. A document

22

you've previously seen?

23

A. Yes.

24

Q. This is a document from Mr. Scott. Mr. Scott

25

was BofA's counsel?

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A. Yes.

2

Q. And it attaches a letter from the FDIC

3

repudiating the First National Bank of Nevada

4

obligations under the resort loan, correct?
MR. CANTOR: Objection. You can answer.

5
6

A. Yes.

7

Q.

(BY MR. DILLMAN) Mr. Scott, in his e-mail,

8

says, in the end of the first paragraph, "FDIC has

9

accordingly elected to disaffirm the commitment."

10

By that he meant they were defaulting on their

11

obligations, they were -- First National Bank of Nevada

12

was defaulting on its obligations; it would no longer

13

make any payments under this loan. Correct?

14
15
16

MR. CANTOR: Objection.

A. That's consistent with the letter from the
FDIC.

17

Q.

(BY MR. DILLMAN) That was your understanding?

18

A. That was my understanding.

19

Q.

The -- below the second -- well, about in the

20

middle of Mr. Scott's e-mail, he summarizes the various

21

positions that First National Bank of Nevada held. Do

22

you see that?

23

A. Yes.

24

Q.

25

A. I did not.

Did you confirm that these were accurate?

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1

Q.

2

not?

3
4
5
6

Do you have any reason to believe that they're

A. I have no reason to believe they're not
accurate.
Q. All right. And this reflects a $10 million

revolving loan commitment?

7

A. Yes.

8

Q. A $1.666 million delay draw commitment?

9

A. It's a Term A commitment. I don't recall what

10
11

was delay draw and what was funded.
Q. You recall that the -- the delay draw was

12

approximately one-half of the funded?

13

A. I don't recall specifically, but --

14

Q.

15

A. But this indicates that the Term A commitment

16
17

Okay.

was $1,666,666, yes.
Q. And assuming that that was delay draw

18

commitment, there was, at this point in time,

19

$11,666,000 of financing for the Las Vegas project that

20

was no longer available?

21

A. That was my understanding, yes.

22

Q.

23

Did anyone step up to take over the First

National Bank of Nevada's commitment?

24

A. Which commitment? The funded or the unfunded?

25

Q.

Well, the funded commitment has already been

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funded, right?
Correct.

2

A.

3

Q. So --

4

A.

5

Q. All right. Did BofA, to your knowledge, seek

Not to my knowledge.

6

to have this -- seek to have anyone -- get anyone to

7

step in to take over the First National Bank of Nevada's

8

unfunded commitment?

9

A.

I don't remember.

10

Q.

Did the other lenders on the revolving

11

facility agree to share the $10 million that was

12

previously committed by First National Bank of Nevada in

13

any pro rata share?

14

A.

Not that I recall.

15

Q.

Did BofA agree to take over any part of the --

16

any part of the revolving loan commitment?

17

A.

Not that I recall, no.

18

Q.

How about the term loan?

19

A.

No.

20

Q.

So as of -- at least as of January 2nd, 2009,

21

there was a $11.6 million hole in the funding for the

22

project, correct?
MR. CANTOR: Objection. Go ahead.

23
24

A. There was 11.6 million less available.

25

Q.

(BY MR. DILLMAN) Yeah. And was there any

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discussion about how that shortfall was going to be made

2

up?

A. I don't recall the specific discussions we had

3
4

around that.

5

Q. Any discussions within BofA as to whether or

6

not -- what the impact of the default of First National

7

Bank of Nevada on its commitment under the resort loan

8

was?

9

MR. CANTOR: Objection.

10
11
12
13

A. I don't recall any specific discussions about
it.
Q.

(BY MR. DILLMAN) Any discussions about

whether or not this was a default?

14

A. I don't recall.

15

Q. Any question in your mind that when a lender

16

says it's not going to pay its loan obligations, that

17

it's defaulted on its obligations under the credit

18

agreement?

19
20
21

MR. CANTOR: Objection; calls for a legal
conclusion.

A. A lender defaulting would typically be -- it

22

wouldn't necessarily default the agreement, but it would

23

cause them to be deemed a defaulting lender. This is a

24

case where their obligation to fund was wiped out by the

25

FDIC. So I'm not -- I'm not sure that was deemed a

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2
3
4
5
6

defaulting lender.
Q.

(BY MR. DILLMAN) Any conversations within

BofA on that topic?

A. I don't recall any specific conversations
about it.
Q. There was no question in your mind that the

7

First National Bank of Nevada's commitment was not going

8

to be met?

9

A. Correct.

10

Q.

11

A. Correct. After receipt of the letter from the

12
13

By the Bank of Nevada or anyone else?

FDIC.
Q. And, therefore, that the -- that the

14

obligations of the First National Bank of Nevada were

15

not going to be met?

16

A. Yes.

17

Q. And that they, therefore, were a defaulting

18

lender?

19

MR. CANTOR: Objection.

20

A. I don't recall if the resort agreement credit

21

agreement had defaulting lender provisions or not.

22

Q.

(BY MR. DILLMAN) Did you make any effort at

23

any time to determine what the impact was, if any, of

24

the notification by the FDIC that payments of First

25

National Bank of Nevada's commitments would not be made?

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Did you have any discussions as to what the impact of

2

that was on the resort loan?

3
4
5
6

A. Again, I don't recall what we talked about at

that point on this matter.
Q. Any discussions on what the impact of that

would be under the Master Disbursement Agreement?

7

A.

8

this.

9
10

Q.

13
14
15

Do you recall having any discussions

whatsoever?

11
12

I don't recall what discussions we had about

MR. CANTOR: Objection; asked and
answered.
A. On this topic, I don't recall any specific

discussions.
Q.

(BY MR. DILLMAN) And did you or anyone, to

16

the best of your knowledge, at BofA make any effort to

17

determine whether the FDIC's notice resulted in the

18

failure of any conditions precedent under the Master

19

Disbursement Agreement?

20

A.

Could you repeat that?

21

Q.

Sure.

22

MR. DILLMAN: Could you read it back,

23

(Requested text was read.)

24
25

A.

I don't recall any -- what, specifically, we

discussed about -- about this.

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Q.

2
3

The whole First Bank of Nevada issue had been
brewing for some time, had it not?

4
5

(BY MR. DILLMAN) This whole FDI -- excuse me.

MR. CANTOR: Objection.

A. I don't recall, other than receiving the

6

letter from the FDIC, for how long it had been brewing

7

or what I recalled about it. I just -- I do remember

8

receiving the letter, though.

9
10

(Deposition Exhibit 886 marked.)
Q.

(BY MR. DILLMAN) I'll place in front of you

11

Exhibit 886. This is a letter from -- an e-mail from

12

yourself to a group of folks dated July 28, 2008. It

13

refers to a Mutual of Omaha takeover. Take some -- take

14

whatever time you need to review this.

15

My question to you is, does this have anything

16

to do, as far as you know, with the First National Bank

17

of Nevada's commitments under the resort loan?

18

A. Okay. I've read this. Can you repeat the

19
20

question, please?
Q.

Sure. Did this have anything to do with the

21

First National Bank of Nevada's commitments under the

22

resort loan?

23

A. Yes.

24

Q.

25

A. It appears we were discussing at what point we

How so?

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would need to be concerned and that we were -- when we

2

had to have a resolution, because their unfunded

3

commitment was not going to be drawn for some time in

4

the future.

5

Q.

What is Bank of -- excuse me.

6

Mutual of Omaha -- of Omaha, what did that

7

have to do with National Bank of Nevada, as far as you

8

understood it?

9

A. I understood from what I -- reading this

10

article, that they were potentially taking over First

11

National Bank of Nevada.

12

Q. And you didn't think that that was an issue at

13

this point because the delay draw term loan and the

14

revolving loan would not be funded, if at all, until at

15

some point later on?

16

A. Well, didn't know if it was -- I wasn't sure

17

if it had -- it was a definite deal and -- and by taking

18

over First National of Nevada, what that actually meant

19

and how it specifically would affect their commitment to

20

the -- to the resort loan.

21

Q.

22
23
24
25

Okay.
(Deposition Exhibit 887 marked.)

Q.

887 is an Exhibit -- excuse me -- is an e-mail

dated July 29, 2008. It's from you to Dana Colee.

A. Uh-huh.

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Q.

Who is Dana Colee?

2

A. I don't recall at this point who she is.

3

Q.

4

A. I don't remember.

5

Q.

Do you know who Michael Mooney is?

Do you know which Nebraska bank she is

6

referring to here?

7

A. I do not.

8

Q.

9

of Nevada, one of those "N" states?

10
11

Do you believe it is the First National Bank

MR. CANTOR: Objection; calls for
speculation.

12

A. I don't know.

13

Q.

14
15

the time, though, right?

A. I would assume so, based on my response.

16
17

(BY MR. DILLMAN) Okay. You apparently did at

(Deposition Exhibit 888 marked.)
Q.

I've placed in front of you Exhibit 888. 888

18

is an e-mail from Mr. Bolio that's copied to you. It's

19

dated August 5th, 2008, and it attaches an e-mail from

20

Mr. Bewley. Who is Bill Bewley?

21
22
23

A. Bill Bewley was the senior vice president and
treasurer at Fontainebleau Resorts.
Q.

Mr. Bewley-- Mr. Bewley's e-mail to Mr. Bolio

24

says, "Attached for your information is a notice from

25

the FDIC concerning First National Bank of Nevada.

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Apparently they have some of our loan? Do you believe

2

that any action needs to be made on this?"

3

And Mr. Bolio responds up above, "Per Jeff's

4

voicemail, attached is the letter from the FDIC," and he

5

goes on.

6
7

Did BofA take any action as a result of this
notice from the FDIC that's attached?

8

A.

I don't recall.

9

Q.

Did it ever take any action with respect to

10

the FD IC's repudiation of Bank of Nevada's commitment

11

under the resort loan?

12

MR. CANTOR: Objection.

13

A.

I'm not sure I understand what "any action"

14

means.

15

Q.

(BY MR. DILLMAN) Did it do anything? Did

16

it-- did it declare a default? Did it seek to get any

17

replacement proceeds? Did it take any action on their

18

schedules? Did it do anything, or did it just ignore

19

it?

20

A.

Did not ignore it. We did exclude the

21

unfunded commitment from an available -- from available

22

sources.

23

Q. Anything else?

24

A. Not that I recall.

25

Q.

So you determined that the funds were not

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available for the project, right?

2

A. The unfunded, yes. That's correct.

3

Q.

4

A. Right.

5

Q. And you excluded on the -- that from the

6

Right. The unfunded, the 11.666?

in-balance test?

7

A. I believe so, yes.

8

Q.

9

A. No.

10

Q.

11
12
13
14
15

Never declared a default?

Never sought to recoup the funds?
MR. CANTOR: Objection.

A. There weren't funds to recoup. They hadn't
been advanced.
Q.

(BY MR. DILLMAN) Did you ever submit a proof

of claim to the -- to the FDIC?

16

MR. CANTOR: Objection. Go ahead.

17

A. I don't know.

18

Q.

(BY MR. DILLMAN) You understand that in

19

Exhibit 486, in the letter that was attached to Bank of

20

America from the FDIC, it states, in bolded letters,

21

"You may determine that the Receiver's decision to

22

disaffirm the Agreement gives you a claim against the

23

receivership estate. If so, you must" -- underline

24

must -- "request a Proof of Claim in writing, together

25

with proof thereof, no later than 30 days from the

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Signature Date of this letter." Did you?

2

A. I don't recall.

3

Q.

Do you recall any discussions around that

4

issue or on that topic?

5

A. I don't recall.

6
7

(Deposition Exhibit 889 marked.)
Q.

Exhibit 889 is an e-mail from Mr. Varnell to,

8

among others, yourself. It's dated October 15, 2008.

9

It attaches a -- strike that. Attaches nothing.

10
11

The second e-mail in the chain is from Mr. -how do you pronounce his name?

12

A. Fuad.

13

Q.

14

A. Correct.

15

Q.

Fuad. In-house counsel at BofA?

Who says, "In case you needed any

16

confirmation, the FDIC is now saying that the First

17

National Bank of Nevada will not fund draws for

18

Fontainebleau." Do you see that?

19

A. Yes.

20

Q.

Help you to recall that, as early as

21

October 15, 2008, you understood that the First National

22

Bank of Nevada commitments under the resort loan would

23

not be met?

24

A. Yes.

25

Q.

Do you recall what the Second Mortgage

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2
3
4
5
6
7

Proceeds Account was?
A. The account where the fundings under the
second mortgage notes resided.
Q. And was there any significance in that account

being exhausted?
A. Once that account's exhausted, then funding
for the project moves to the next set of accounts.

8

Q.

Which would be?

9

A.

I don't recall specifically.

10

Q.

Oka~ Theinffial~rmloan?

11

A. By "initial term loan," the one that was

12

funded at closing?
Yes.

13

Q.

14

A. Yes.
(Deposition Exhibit 890 marked.)

15
16

Q.

Exhibit 890 is an e-mail dated October 1st --

17

excuse me -- October 17, 2008, attaching a letter from

18

Wells Fargo dated October 6, 2008, advising BofA that

19

the Second Mortgage Proceeds Account had been exhausted.

20

A. Uh-huh.

21

Q. Advising BofA, among others.

22

A.

Uh-huh.

23

Q.

You were aware of this at the time?

24

A. Yes.

25

Q.

You were copied on this e-mail?

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A. I am.

2

Q. And is it your understanding that, as of

3

October 6, 2008, the proceeds for funding of the

4

construction of the Las Vegas project would be coming

5

next from the initial term loan funded at the closing of

6

the project?

7

A. Yes.

8

Q.

9

Did you have any involvement, pre-closing, in

reviewing budgets for the construction of the project?

10

A. Not directly, from what I recall.

11

Q.

12

A. No. Perhaps a bank meeting, but I don't

13

Did you attend road shows?

recall the road show, per se.

14

Q.

You understood that there was a budget for the

15

project?

16

A. Yes.

17

Q.

18

You understood that the budget for the -- that

the financing was connected to the budget?

19

A. Yes.

20

Q. A certain amount of financing was raised on

21

the anticipation and expectation of the bank group that

22

the budget would be a certain amount as represented by

23

the borrowers?

24

A. Yes.

25

Q.

That budget changed over time?

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A. Yes.

2

Q.

Specifically, 1n May of 2008, the borrower

3

dumped about $200 million of change orders on Bank of

4

America, correct?

5

A. Yes.

6

Q.

7

Now, were these change orders that you had

been apprised of prior to May/June 2008?

8

A. That I don't recall.

9

Q.

1O

Do you remember being surprised that you were

being provided change orders in that amount?

11

A. I don't remember.

12

Q.

Do you remember doing anything to determine

13

when those change orders were first generated?

14

A. Personally, no. I -- other than requesting

15

IVI to -- the construction consultant to -- to, you

16

know, review them.

17

Q.

To review them in order --

18

A. The change -- the change orders.

19

Q.

Right. To review the change orders to

20

determine when the extra costs that were reported in

21

those change orders had become known to the borrower?

22

MR. CANTOR: Objection.

23

A. No. To when they became known to them.

24

Q.

25

(BY MR. DILLMAN) When they became known to

IVI?

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question was, whether or not there was additional equity

2

to -- that was made available to pay for the

3

$200 million of change orders in May of 2008, that

4

didn't have anything to do with whether or not the

5

borrower had been timely in reporting the change orders,

6

did it?

7
8

MR. CANTOR: Objection.

A. We reviewed the information that we got.

9

Again, when the borrower reported it to us was when they

10

determined those costs were confirmed and known to them.

11

Q.

(BY MR. DILLMAN) And you would agree with me

12

that whether or not there was equity or not had nothing

13

to do with whether those costs were reported timely,

14

correct?
MR. CANTOR: Objection.

15
16

A. Again, the borrower reported it when they

17

deemed it was a reportable event, and all we did was

18

review what we'd received, when we received it. We

19

didn't have knowledge beforehand, that I recall, that

20

there were any costs, that this 200 million was coming,

21

other than when we saw it on the report.

22

Q.

(BY MR. DILLMAN) Right. And so when you saw

23

it for the first time on the report, did you make any

24

efforts at all to determine when the borrower first

25

learned of these costs?

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A. I don't remember.

2

Q.

Would it surprise you to know that, in one

3

instance, $41 million was known to the borrower in June

4

of 2007 and not reported?
MR. CANTOR: Objection.

5
6

A. I don't know that that occurred or not.

7

Q.

8

may be part of the problem here.

9

My question is, if you had known that --

10
11

(BY MR. DILLMAN) I understand you don't know;

MR. CANTOR: Move to strike.
Q.

-- would you -- would that have at all

12

bothered you, that $41 million of the $200 million of

13

change orders reported in May of 2008 were known to the

14

borrower in June of 2007 --

15

MR. CANTOR: Objection.

16

Q.

-- and were unreported?

17

A. If we're speculating, then if the borrower

18

knew it was reportable and didn't, yes. If the borrower

19

wasn't -- had not confirmed whether it met the

20

requirements to report, then -- then perhaps not.

21

Q.

Okay. And the reason that it would have been

22

important is because borrower integrity and honesty is

23

important, right?

24
25

MR. CANTOR: Objection.

A. Yes. That's in any case.

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Q.

(BY MR. DILLMAN) Right. Right. I mean, it's

2

of paramount importance to a financial institution like

3

BofA to ensure that the people that it's doing business

4

with, or particularly that it's loaning money to, are

5

trustworthy people?

6

A. Yes.

7

Q. And if the borrower had not reported, just to

8

use the example that I just provided, $41 million in

9

change orders for over a year, that would be -- if you

10

learned about that, that would be cause for some

11

concern?

12

MR. CANTOR: Objection.

13

A. Again, if -- if, in their opinion, it was

14

reportable and they did not, then yes. But if they had

15

not determined it wasn't reportable or not, then -- then

16

a little bit less of a concern.

17

Q.

(BY MR. DILLMAN) Let me give you Exhibit 216

18

previously marked. We've been talking about

19

$200 million of change orders coming down in May

20

of 2008.

21

This document that was sent to you by

22

Mr. Freeman on May 28, 2006, contains or is the initial

23

notification by the borrower that these 201 million of

24

change orders would be submitted, was it not?

25

A.

Uh-huh. As I recall, yes.

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Q. And from this point forward, you don't recall

2

having undertaken any steps to determine when these

3

change orders were first known to the borrower. Fair?

4

A.

I don't recall. That's fair.

5

Q.

I'm sorry?

6

A.

I don't recall.

7
8

(Deposition Exhibit 891 marked.)
Let me place in front of you Exhibit 891. 891

Q.

9

is a document, the first page of which is entitled

10

"Owner Change Order, Fontainebleau Resorts." It's

11

Change Order Number 13.

12
13

I take it this is not a document that you've
previously seen?

14

A.

Correct.

15

Q. And this change order is for -- you see the

16

description down here that I've highlighted on my copy.

17

It says, "Structural Drawing Drawing Updates from Bid

18

Sef' --

19

A. Yes.

20

Q. -- at the middle of the page, and it has an

21

amount, $41,568,038.

22

A. Yes.

23

Q. And it's signed by Deven Kumar on June 4th,

24
25

2008. Do you see that?
A.

I do.

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2

Q. And if you turn to Exhibit 2A, the Bates stamp

number that ends in 833 --

3
4

MR CANTOR: None of my copy has Bates
numbers.

5

A. Mine doesn't, either.

6

Q.

7

(BY MR DILLMAN) No, no. I'm sorry.

Exhibit -- Exhibit 216.

8

A. 216?

9

Q.

10

Yes, sir. I referred to the tab in my

notebook, Exhibit 2A. It's Exhibit 216.

11

A. Okay.

12

Q. And if you turn to the Bates number ending in

13

833 --

14

A. Okay.

15

Q.

16

-- line 51 refers to podium, structural

drawing revisions, structural steel only --

17

A. Yes.

18

Q.

19

A. Yes.

20

Q.

21

A. Uh-huh.

22

Q. And that's the same -- exact same amount in

23

-- $41,568,038.

Do you see that?

the document that we've marked as 891. Yes?

24

A. Yes.

25

Q. And if you look at the -- the second page in

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the change order package, it's a letter from Leo

2

Estrada, at Turnberry West, to Mr. Kumar. Do you see

3

that?

4

A. Okay. Third page. Yes.

5

Q. And do you see in the first paragraph it says,

6

"Please see attached Change Order Number 13 regarding

7

the update to the Structural Steel costs associated with

8

this project"? It goes on to say, "The costs associated

9

with these added values have been analyzed based on the

10

progress drawings and shop drawings received starting

11

April 20, 2007, through June 21, 2007." Do you see

12

that?

13

A.

14

Q. And if you turn two pages in, you'll see a

15

change order request dated June 21st, 2007, from

16

W&W Steel?

17

A. Yes.

18

Q.

19

ldo.

For the amount that we've been talking about,

$41,568,038. Do you see that?

20

A. Yes, I do.

21

Q.

Would it have been important information for

22

you to know, in May of 2008, that when Mr. Freeman

23

submitted Exhibit 216 to you, that one of the major

24

change orders for $48,568,038 had actually been the

25

result of drawings -- progress drawings and shop

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drawings received between April 20, 2007, and June 21,

2

2007, and was the subject of a joint change order

3

request by the contractor in that exact amount dated

4

June 21st, 2007?

5

MR. CANTOR: Objection. You can answer.

6

A. And your question, again, was?

7

Q.

Need it read back?

8

A.

Please.

9
10

(Requested text was read.)
A. The primary importance is that the change

11

order was reported and accounted for at some point. It

12

would have been seemingly appropriate, based on this, to

13

have reported it earlier.

14

Q. And you would have wanted to know that the

15

borrower understood, less than three weeks after this

16

resort loan closed, that there was a $41 million change

17

order that he knew would be required to build this

18

project?

19

A. Again, it's important to get it reported. It

20

would have been appropriate to report it at the time

21

that something like this was known.

22

Q. And the fact that it wasn't reported at the

23

time that it was known would have given you -- would

24

have been of concern to you --

25

MR. CANTOR: Objection.

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Q.

2

A. I don't know what I would have known at that

3

-- would it not?

point.

4

Q.

5

Wasn't my question.
Had you known that $41 million of change

6

orders were known to the borrower only weeks after this

7

credit facility was entered into, but not reported for

8

nearly a year later, that would have been of concern to

9

you?

10

MR. CANTOR: Objection.

11
12

A.

It would have been information I would have

wanted to know as why it took that long to report it.

13

Q.

(BY MR. DILLMAN) Because timely reporting was

14

important?

15

A. Yes.

16

Q. And the borrower better have a darn good

17

reason as to why he waited a year to provide this

18

information for you -- to you, right?

19

MR. CANTOR: Objection.

20

A.

I would want to know why it would have

21

reported it when it did versus when it became aware of

22

it.

23

Q.

(BY MR. DILLMAN) And you would have

24

undertaken an effort to determine the answer to that

25

question?

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A. I can only presume I would have.

2
3
4

MR. CANTOR: Note an objection to the
last question.
Q.

(BY MR. DILLMAN) But you didn't undertake any

5

investigation when the $200 million was submitted to you

6

by Mr. Freeman to find out when any of those change

7

order requests were actually known to the borrower; is

8

that right?

9
10

MR. CANTOR: Objection; asked and
answered.

11

A. We did not undertake a request as to why.

12

(Deposition Exhibit 892 marked.)

13
14
15
16
17

Q.

You did have discussions with IVI about these

change orders, though, did you not?

A. I don't recall specifically, but I presume I
did. They were significant.
Q.

Exhibit 892 is an e-mail from Brandon Bolio to

18

yourself and others dated June 11, 2008. Do you see

19

that?

20

A. I do see it.

21

Q. You receive this e-mail?

22

A. I'm on the distribution list.

23

Q. And so you assume you received it?

24

A. I'm assuming I received it.

25

Q.

Brandon Bolio says to Paul -- could be either

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Bonvicino -- well, I guess it is Bonvicino.

2

A.

Correct.

3

Q.

"Let's have a call once you've had a chance to

4

digest the supporting information for the 201 million of

5

additional cost -- costs. Please keep us apprised of

6

your progress." Do you see that?

7

A.

I do.

8

Q. And does this help you to recall that, in

9

fact, learning about the $201 million of additional

10

costs was important to BofA at that time?

11

A. Yes.

12

Q.

13

What conclusions, if any, did you receive

post-digesting?

14

A.

Conclusions from IVI?

15

Q.

From anybody.

16

A.

I don't remember.

17

Q.

Further down the page, about the middle, in an

18

e-mail from Mr. Bolio to Mr. Bonvicino and copied to

19

yourself, he says, "As you likely know, the Initial Bank

20

Advance Date for Fontainebleau Las Vegas is

21

approaching."

22
23

What was the initial bank advance date?
A.

I believe that is the date at which the first

24

funds from the bank facilities are going to be spent on

25

the project.

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Q.

In other words, the initial term loan --

2

A. Yes.

3

Q.

-- proceeds?

He goes on to say, "The Initial Bank Advance

4
5

Date would have happened this month if not for the

6

XXX million of additional costs/equity."
Explain that to me.

7
8

A. As I recall, this has to do with the

9

200 million of additional cost and the 200 million of

10

additional equity that came into the project.

11
12
13

Q.

How would that have affected the initial bank

advance date?
A.

Equity proceeds get spent before any debt

14

capital proceeds get spent. So to the extent equity had

15

been received, those proceeds would have been required

16

to be spent prior to any bank proceeds or -- and if the

17

second mortgage proceeds had already been spent, then

18

it's too late. But if they hadn't been exhausted, those

19

would have had to been spent. The equity would have

20

been spent before those would have been spent.

21

Q.

He goes on to say, "And we still haven't

22

reached resolution on this month's draw so I don't know

23

when it will happen."

24
25

What issues were there, in early June of 2008,
that BofA was seeking to reach resolution about

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2
3
4
5

regarding draws for the Fontainebleau Las Vegas project?

A. I don't remember the specifics. I don't
remember what those were.
Q.

Remember it being issues regarding the

propriety of the draws?

6

MR. CANTOR: Objection.

7

A. Not that I recall.

8

Q.

9

draws?

10

A. Again, I don't recall what the specifics were.

11
12
13

(BY MR. DILLMAN) How to account for the

(Deposition Exhibit 893 marked.)
Q.

893 is an e-mail from Mr. Bender to yourself.

Mr. Bender was not part of your group?

14

A. Correct.

15

Q. And to be precise, this is an e-mail to both

16

yourself and Mr. Bolio --

17

A. Correct.

18

Q.

19

-- dated June 9, 2008.

Mr. Bender attaches a document that appears to

20

be a -- well, I'll let you tell me what this is. Why

21

don't you look at the e-mail and the document and tell

22

me what you recall about this -- the document that's

23

attached.

24
25

A. As I recall, this was an attempt to modify
some of the reporting documents that we were going to be

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Q. And you were involved -- "you" being BofA --

2

was involved in determining how they would be reported

3

with the borrower?

4

A.

Yes.

5

Q.

Who, in particular?

6

A. Who, in particular --

7

Q.

8

Who, in particular -- I'm sorry -- at the

borrower? Mr. Freeman?

9

A. Yes.

10

Q.

11
12

You were involved in those conversations along

with Mr. Bolio?
A.

Well, in this case, the contact was Kathy

13

Hernandez, at the borrower, who was one of the people

14

that generates the reports.

15

Q.

I see. Okay. The -- the sheet that's -- or

16

the exhibit that's attached to Mr. Bolio's e-mail

17

includes, in part, some recommended revisions to the

18

Remaining Cost Report?

19

A.

20

Q. And the Detailed Remaining Cost Report by you

21

Correct.

and Mr. Bolio?

22

A.

Correct.

23

Q.

When Mr. Bolio says, "We have found a workable

24
25

solution," do you know what he means by that?
A.

On how to insert information, these additional

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costs and whatnot, into the report, which didn't

2

contemplate that when they were originally constructed.

3

Q.

Did the borrower agree with the manner in

4

which you had changed or recommending that the Remaining

5

Cost Report be changed?

6

A. I don't remember if they agreed or not.

7

Q.

Was it -- was it typical for you to be

8

involved with the manner in which the reports were

9

presented by the borrower? Is that one of the functions

10

that you saw as BofA's role?

11

A. As part of the initial drafting of the

12

documents and what reporting documents would go along,

13

yes. In this case, there was these change orders, and

14

we had to find a way to account for them, in a form

15

which previously really wasn't really equipped to

16

account for them.

17

Q.

18

A. I don't know.

19

Q.

20

Why not?

Well, did you anticipate at the outset that

there might be change orders to a construction project?

21

A. Yes.

22

Q.

So what was there about these change orders

23

that required a rethinking about how they were presented

24

in the Detailed Remaining Cost Reports?

25

A. I don't -- given the -- how extensive these

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reports are, I don't recall what we made provisions to

2

account for and what we didn't and how these costs were

3

able to fit in or not fit in. I just don't remember.

4

Q.

The concerns that IVI had expressed to you in

5

June of '08 that there were additional known cost

6

increases that the borrower wasn't telling you --

7

telling you about, did those same concerns continue

8

through the time that you left?

9

A. I don't recall specifically, but --

10

Q.

You recall that, in late 2008 and early 2009,

11

IVI was quite concerned about costs that they felt were

12

not being fully disclosed by the borrower?

13

A. Yes.

14

Q. And you learned about that from IVI?

15

A. Yes.

16

Q.

17

issues?

You had internal meetings to discuss those

18

A. I don't remember.

19

Q.

20

It was of concern to you, wasn't it?
MR. CANTOR: Objection.

21

A. Yes.

22

Q.

(BY MR. DILLMAN) Here, six months after you

23

get $200 million of change orders, six months after IVI

24

tells you that they're concerned that they don't have

25

everything and the borrower is not disclosing all the

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information, IVl's reporting we still think they're not

2

reporting all of the known cost increases, that was of

3

major concern to you, wasn't it?

4
5

MR. CANTOR: Objection.
A.

I don't know whether I'd characterize it as

6

major. It was something that was -- you know, clearly

7

required our attention.

8

Q.

(BY MR. DILLMAN) Well, at any point did you

9

say enough already to the borrowers, come clean, I'm

10

tired of hearing that you don't -- that you're not

11

providing us everything, give us an audit of all of your

12

costs, anything to that effect?

13

MR. CANTOR: Objection.

14

A.

Not that I recall.

15

Q.

(BY MR. DILLMAN) Okay. Why not?

16

MR. CANTOR: Objection.

17

A.

I don't -- honestly, I don't recall why not.

18

Q.

(BY MR. DILLMAN) 20/20 hindsight would have

19

been a good idea, don't you think?

20

MR. CANTOR: Objection.

21

A.

I don't know. You know, had things come out

22

differently, I don't know. That's -- that's pure

23

speculation. I don't know what -- you know, what

24

hindsight would have been at the time.

25

Q.

(BY MR. DILLMAN) You know today that in April

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A. Yes.

2

Q. -- that you would be leaving?

3
4

I'm assuming that you did not make the
decision with respect to the February draw?

5

A. Correct.

6

Q. What was your involvement after the January

7
8
9
10

draw, if at all, with respect to the Las Vegas loan?
A.

I don't remember anything specific. I mean,

presumably, reading this report, if I did receive it.
Q. Whether you received the report or not, you

11

did make an effort to determine what IVl's thoughts and

12

conclusions are with respect to the draw request that

13

you approved in January 2009, didn't you?

14

A.

In January?

15

Q. Yes.

16

A. Yes.

17

Q. And you learned at that time that IVI had

18

concerns about whether or not all of the information of

19

anticipated costs was being provided by the borrower?

20

A.

I recall reading it in one of their reports.

21

I don't recall which date it was, which -- which report

22

it was, but yes.

23
24
25

Q. And was that new information to you when you
read it, or had you had discussions with IVI?
A. From the previous discussions we had, yeah.

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So -- so while the report that we've marked as

Q.

2

Exhibit 809 is dated January 30, 2009, you had

3

conversations with IVI prior to that date, during which

4

they explained to you their concerns about unreported

5

cost overruns by the borrower?

6

A.

7

Q. And they also reported to you their concerns

8

that the LEED credits, L-E-E-D credits, were being

9

overstated by the borrower?

Yes.

10

A. As I recall, yes.

11

Q. And that the -- in order to meet the scheduled

12

completion date, there would need to be acceleration

13

costs that weren't being reported by the borrower,

14

either?

15

A. That I don't remember specifically, whether it

16

was the schedule -- I mean, there was a schedule open

17

date and then kind of a long stop date which was beyond

18

that. And I don't recall which of those two dates our

19

focus was on or the conversations around it.

20

Q.

But you do recall that general concern by IVI

21

that was expressed to Bank of America in the

22

December/January time frame, correct?

23

A. The general concern?

24

Q. Yes.

25

A.

Yes. And it goes back to the e-mail and the

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2
3
4
5

conversation that we've looked at previously.
Q. And that that concern was -- was refocused in

December of 2008 and January of 2009?

A. I don't recall if it was refocused or just a
continuation.
Okay.

6

Q.

7

A. I don't recall.

8

Q.

9

You did understand that it was a concern?
MR. CANTOR: Objection.

10

A. I understood that IVI had had concerns, yes.

11

Q.

(BY MR. DILLMAN) Before approving the January

12

disbursement, what, if anything, did you do to ensure

13

that all information necessary to answer those concerns

14

was obtained?

15

MR. CANTOR: Objection.

16

A. The approval was based on what was required by

17

the disbursement agreement, and so it would have been

18

review of information and analysis of information done

19

as part of the terms of the disbursement agreement.

20
21
22

Q.

(BY MR. DILLMAN) Okay. That wasn't my

question.
My question was, what did you do, if anything,

23

to ensure that all information necessary to address

24

IVl's concerns, as you understood them, was obtained --

25

MR. CANTOR: Objection; asked and

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2
3
4
5

answered.
-- before authorizing the disbursement in

Q.

January?
A. Followed the terms of the disbursement

agreement.

6

Q. Anything else?

7

A. Not that I recall.

8

Q.

9
10

What do you mean by "follow the terms of the

disbursement agreement"?
A. The terms of the disbursement agreement

11

outlined how disbursements are made. So my

12

determination would have been based on the requirements

13

of the disbursement agreement.

14

Q. And the information that -- excuse me.

15

The concern that IVI was expressing was

16

inconsistent with what you were being told by the

17

borrower, right? Specifically, IVI was concerned that

18

they weren't -- the borrower wasn't providing all

19

information, and the borrower was telling you that they

20

were?

21
22

MR. CANTOR: Objection.
A. The borrower was providing the documentation

23

required to follow the disbursement agreement, and

24

that's what we were reviewing.

25

Q.

(BY MR. DILLMAN) Did you understand that as

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part of the draw package, the reps and warranties and so

2

on that the borrower was making, that they were rep'ing

3

and warranting to the lenders that the Remaining Cost

4

Report contained all -- all anticipated costs to

5

complete the project that the borrower was aware of as

6

of the date it submitted them?

7

A.

I don't remember every single rep and

8

warranty. But if that was one of them, then they -- and

9

they would have had to have rep'ed to all of them before

10

we would have made an advance. So, yes.

11

Q.

You understood that IVI believed that the

12

borrower had not provided all anticipated costs to

13

complete the project in its Remaining Cost Report,

14

correct?

15

MR. CANTOR: Objection. Objection.

16

A. I understood IVI had concerns, yes.

17

Q.

(BY MR. DILLMAN) And that those concerns were

18

inconsistent with the borrower's representations that

19

the Remaining Cost Reports were complete and reflected

20

all anticipated costs to complete the project?

21

MR. CANTOR: Objection.

22

A. We reviewed the information the borrower

23

provided. If it required the information to be provided

24

and they provided it, that's what they were rep'ing to

25

us was the correct information.

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Q.

(BY MR. DILLMAN) I understand that. And you

2

understood that there was an inconsistency between what

3

the borrower was rep'ing and warranting and what IVI was

4

telling you was their belief as to the true facts?

5

MR. CANTOR: Objection.

6

A.

What IVI was expressing was their -- their

7

views, their opinions, yes. It differed from what

8

reporting the company was providing to us.

9

Q.

(BY MR. DILLMAN) And the lenders -- some of

10

the lenders were expressing the same concerns to you,

11

correct?

12

A.

I don't recall specifically.

13

Q.

I'm putting in front of you what I believe is

14

Exhibit 810, although it's not that easy to read the

15

exhibit sticker. It's a letter from J.P. Morgan Chase

16

to Ms. Kimbrough, copied to Brandon Bolio --

17

A.

Uh-huh.

18

Q.

-- dated February 12, 2009. Do you see that?

19

A.

I do.

20

Q.

You recall having seen this letter before you

21

left?

22

A.

No.

23

Q.

Okay. Do you believe that you did see it and

24

don't recall it, or do you believe that you didn't see

25

it?

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A. This was either the last day or my

2

second-to-last day in the office, so I don't -- if I did

3

see it, I may have read it, but I don't believe I was

4

actively contributing to any decisions at that point.

5

So I -- I don't recall seeing it before now.

6

Q.

You recall knowing, prior to leaving, of the

7

concerns expressed in J.P. Morgan's letter, specifically

8

starting at paragraph 1, where they quote from !Vi's

9

report that, "'While the Anticipated Cost Report

10

indicates the Project is expected to stay within budget,

11

IVI is concerned that all the subcontractor claims have

12

not been fully incorporated into the report and

13

potential acceleration impact to meet the schedule has

14

not been included."' You knew that, right?

15

MR. CANTOR: Are you asking whether he

16

knew that IVI had expressed it or he knew that

17

J.P. Morgan is expressing it?

18

MR. DILLMAN: That IVI had.

19

A. I believe that was in !Vi's report.

20

Q.

21

(BY MR. DILLMAN) And had been expressed to

you by IVI prior to their issuance of the report?

22

A. Yes.

23

Q. And you also knew that IVI was concerned, as

24

quoted in this letter, that, "'the Anticipated Summary

25

anticipates a balance contingency of $50,514,000;

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however, IVI is concerned that the anticipated balance

2

may drop substantially in order to meet the aggressive

3

schedule. The concern specifically is that all the

4

subcontractors have not fully incorporated the potential

5

costs to meet the schedule."'

6
7

You were aware of that in January -- !Vi's
concern in January?

8

A.

9

Q. And you were aware of that -- to the extent

If that was in the January report, then yes.

10

that it was in the report, you had been advised of that

11

previously by IVI?

12

A.

13

Q. And you were aware, in January of 2009, that

14

IVI stated that, "'it appears that the LEED credits are

15

tracking behind the projections and the Developer has

16

begun a detailed audit."' And it goes on to say, "'The

17

Developer has provided documentation confirming LEED

18

approval and the associated financial benefits

19

accompanied as detailed in Section 6.10 of this report.

20

However, it appears that the anticipated that the

21

anticipated LEED credits are tracking behind -- behind

22

projections, possibly in excess of $15 million."'

23

I think so.

You were aware of that, right?

24

A. Yes.

25

Q. And you were aware that the developer had

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begun a detailed audit of the -- of the LEED credit

2

issue?

3

A. That's what the developer told us, yes.

4

Q.

Okay. Did you ever consider stopping funding

5

to get to the bottom of these issues that -- that IVI

6

had -- had flagged?

7

A.

I don't recall.

8

Q.

Did you ever consider waiting until the LEED

9
10

audit was completed before agreeing to disburse funds?
A.

I don't recall. And -- and if this has to do

11

with the February report, I would have -- would not have

12

been involved in that decision anyway.

13

Q.

Understood I'm not talking about February

14

because I do understand that you left in February and

15

were leaving in February.

16

A.

Right.

17

Q.

With respect to January and this information

18

that IVI had provided to you --

19

A.

Uh-huh.

20

Q.

-- did you consider putting a hold on funding

21

until the issues IVI had raised were brought to ground?

22

A.

I don't remember.

23

Q.

Do you recall having considered putting a hold

24
25

on funding until the LEED credit audit was completed?
A.

I don't remember that.

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1
2
3

Q.

Do you recall having considered putting this

matter to the vote of the banks, the lenders?
A. I don't remember.
MR. DILLMAN: Let's go ahead and take a

4
5

lunch break.
THE VIDEOGRAPHER: The time is 12:34.

6
7

We're now going off record. This is the end of Tape 2.

8

(Recess from 12:34 p.m. to 1:14 p.m.)

9

THE VIDEOGRAPHER: The time is 1:14 p.m.

10

We're now back on record. This is the beginning of

11

Tape 3.

12

Q.

(BY MR. DILLMAN) Mr. Susman, I've placed in

13

front of you what's previously been marked as

14

Exhibit 851. This is a declaration from Robert Barone.

15

You understand Mr. Barone was with IVI during

16

the -- your tenure with Bank of America and the

17

Fontainebleau project?

18

A. Yes.

19

Q. You spoke to Mr. Barone about issues

20

concerning the project over time, didn't you?

21

A. Yes.

22

Q.

23

A. I have not.

24

Q.

25

Have you ever seen this declaration before?

Okay. I just want to -- there's a couple of

things that are said in there I just want to ask you

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about. At page 5 of his declaration -- and if you -- if

2

you need to read the prior provisions, by all means,

3

please do. But he talks about the concerns expressed in

· 4

the January 30 report, prior to paragraph 14.

5

And at paragraph 14, he says, "I had raised

6

these concerns about the completeness and accuracy of

7

the additional costs being reported no later than the

8

last quarter of 2008, but they remained unresolved as of

9

the date of the January Report."
Mr. Barone raised the concerns to BofA that

1O
11

were set forth in the January 30 report no later than

12

the last quarter of 2008; isn't that right?

13

A. I don't remember specifically when he raised

14

them, whether it was to us at the same time he raised

15

them to the company. So I don't know exactly when he

16

raised them, but -- but it was before the January 30th

17

report.

18

Q.

Right. And it was -- do you have any reason

19

to dispute --

20

A. No.

21

Q.

22
23
24
25

-- the claim that Mr. Barone apprised BofA of

IVl's concern in the last quarter of 2008?
MR. CANTOR: What claim is that? Because
he doesn't say BofA in this paragraph.
A. It doesn't say he raised them to BofA. It

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1

says he raised them.

2

0. (BY MR. DILLMAN) Do you have any reason to

3

believe that Mr. Barone did not raise those concerns to

4

BotA in the last quarter of 2008?

5
6

A. I have no reason to believe that he did nor
that he didn't.

7

0. Well, IVI was your consultant, wasn't it?

8

A. Correct.

9

0. If they're raising concerns, you would expect

1O

them to raise them to the person who hired them,

11

wouldn't you?

12
13
14
15

MR. CANTOR: Objection.
A. They would also raise concerns to -- to the -to the borrower and the -- and the contractor.

0. (BY MR. DILLMAN) Sure. Do you have any

16

reason to believe that Mr. Barone did not raise the

17

concerns set forth in the January report to BofA no

18

later than the last quarter of 2008?

19
20
21
22
23
24
25

A. I have no reason to believe that he did not do
that.

0. And, therefore, you knew about these concerns
no later than the last quarter of 2008?
A. Again, I don't know exactly when I knew about

the concerns, but that would appear to be the case, yes.

0. At paragraph 16 Mr. Barone states, "It is

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important to note that under the Disbursement Agreement,

2

Remaining Costs" -- and he quotes -- "'shall, in all

3

events include the entire amount of any disputed claims

4

with Contractors, except to the extent that the

5

Construction Consultant concurs with the Project

6

Entities that the amount asserted by the relevant

7

Contractor is in excess of the amount which is

8

reasonably likely to be due to that contrary"' -- excuse

9

me -- "'to that Contractor."'

10
11

Was that your understanding of what the
Remaining Cost Report entailed, at least in part?

12

A. Yes.

13

Q.

In paragraph 15, at the bottom, Mr. Barone

14

said, "IVI had been told that this audit" -- referring

15

to the LEED audit --

16

A. Where are you, again? I'm sorry.

17

Q.

18

Paragraph 15. Sorry. I moved up. I skipped

up.

19

A. Oh, okay.

20

Q.

Last sentence. "IVI had been told that this

21

audit" -- referring to the LEED audit -- "was in

22

process, although we were never provided with the

23

results of that audit."

24
25

Did you understand that there was a LEED audit
in process?

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1

A. I don't recall.

2

Q.

Did you at any time after September 11 speak

3

to Mr. Freeman on the topic of the Lehman funding of the

4

retail facility?

5

A. I believe I did, yes.

6

Q.

7

A. I don't know specifically when it was.

8

Q.

9

A. I think so.

1O

Q.

11

When was the first such conversation?

Was it in September?

Prior to the funding? Excuse me. Prior to

the disbursement?

12

A. Prior to the disbursement?

13

Q.

14

A. Yes. That's -- that's likely when that

15
16

For September.

conversation would have been had.
Q.

How many conversations did you have with

17

Mr. Freeman during the month of September on this topic,

18

that being the Lehman funding of the retail?

19

A. I don't know. I don't remember.

20

Q.

21

A. I don't remember. I would assume so, but I do

22

More than one?

not remember.

23

Q. Why would you assume so?

24

A. It was a rather significant issue and not

25

everything can be discussed and asked and answered in

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one conversation, presumably.

2

Q.

3

A. It was a rather large investment bank that was

Why was it a significant issue?

4

potentially going to be insolvent. That in of itself is

5

pretty significant. And the implications it had with

6

the funding of the project, because if the retail

7

lenders weren't able to fund, then the borrower was

8

going -- would have received no funds.
Because?

9

Q.

1O

A. Of the terms of the disbursement agreement

11

requires one of the -- one of the steps is that the

12

retail lenders have to have submitted their funds to the

13

disbursement agent before all the funds are combined and

14

then released to the borrower.

15
16
17
18

Q. And the result of that, if funds had not

been -- if funds had not been provided?
A. If even one step, even that step does not -does not happen, then no funds are released.

19

Q. And if no funds are released?

20

A. The borrower does not get access to the funds.

21

Q. And the result of that?

22
23
24
25

MR. CANTOR: Objection.
A. Well, they have no access to funds in their
account.
Q.

(BY MR. DILLMAN) And likely the project comes

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to a screeching halt?
2
3
4
5

A. They don't have funds to pay their bills.
What happens after that, I don't know.
Q. Okay. And you considered this to be a big
deal at the time?

6

A.

It was significant, yes.

7

Q. Material?

8
9
1O
11
12

MR. CANTOR: Objection.
A.

It was a significant issue to understand if --

if the funding was going to be able to occur or not.
Q. (BY MR. DILLMAN) An issue material to the
success or not of the project?
MR. CANTOR: Objection; calls for a legal

13
14
15

conclusion.
A.

It was material with respect to whether we

16

could make advances so the project could continue to be

17

funded.

18

Q.

19

material to the success -- strike that.

20
21

It was material to whether or not the project
would be completed?

22
23
24
25

(BY MR. DILLMAN) And, therefore, it was

MR. CANTOR: Objection.
A.

It would have an impact if the company was not

able to find alternate financing for the retail piece.
Q.

(BY MR. DILLMAN) And you had no expectation

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that, in this credit market, with Lehman teetering on

2

the brink of -- on the brink of bankruptcy, that

3

Fontainebleau Resorts would have been able to obtain

4

alternative financing to complete the Fontainebleau

5

Las Vegas project, did you?
MR. CANTOR: Objection; assumes facts not

6
7

in evidence, lacks foundation.

8

A. I don't know what funds Fontainebleau would

9

have been able to find to replace the retail lenders.

10

Q.

(BY MR. DILLMAN) You had no expectation at

11

this time that they would be able to replace that -- the

12

existing financing, did you?

13
14

MR. CANTOR: Objection; assumes facts not
in evidence, lacks foundation.

15

A. It was -- it was a relationship separate from

16

the lending relationship that the lenders had. I don't

17

know what conversations they had had with the retail

18

lender, what other access to capital or funding sources

19

they may have had. So I don't know what to expect other

20

than it was an issue that Fontainebleau had to address.

21
22
23

0. (BY MR. DILLMAN) Who is -- who is Marisa
Harney, by the way?
A. She is -- was at the time the head of Risk

24

Management. So I had mentioned Doug Keyston before and

25

his boss Doug Robinson -- not exactly right. At -- at

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the point in time this -- I believe this was going on,

2

certainly during the initial phases of this

3

relationship, Doug Keyston reported to Marisa Harney.

4

That's before he reported to Doug Keyston. Sorry, I

5

messed that up. Doug Keyston reported to Marisa Harney

6

before he subsequently then reported to Doug Keyston.
To Doug Robinson?

7

Q.

8

A. To Doug Robinson. Too many Dougs. Do that

9

one more time?

10

Q.

I gotcha. John Barrett?

11

A. John Barrett was one of Marisa's direct

12

reports that Doug Keyston then reported to. Marisa

13

ultimately ran Credit Risk Management. I believe that

14

was the name of it. I can't remember exactly the name

15

of the department. And Doug reported, through John, to

16

Marisa.

17

Q.

Did Mr. Keyston, Mr. Barrett, or Ms. Harney

18

become involved in any way in the potential impact of

19

the Lehman issues on the Fontainebleau Las Vegas

20

facility?

21

A. I don't remember specifically, but we would

22

have -- I would have informed Doug, and I presume he

23

would have informed his -- his managers.

24
25

Q.

Did you have any conversations with any of

those folks concerning what was going on at the

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1

Las Vegas project during the time of the lead-up to the

2

Lehman bankruptcy?

3

A. I don't recall specifically, but it would not

4

have been out of place for those conversations to have

5

occurred.
What about after Lehman filed for bankruptcy?

6

Q.

7

A. Same answer. I don't recall specifically, but

8

it would not have been uncommon.

9
10
11

(Deposition Exhibit 896 marked.)

0. 896 is an e-mail from yourself to Mr. Keyston
dated September 15th, 2008.

12

A. Uh-huh.

13

0. I will represent to you that that was the date

14

on which at least I believe Lehman filed bankruptcy.

15

Prior to this -- this e-mail, do you recall

16

any conversations with Mr. Keyston on the subject of

17

Lehman bankruptcy and the Fontainebleau Las Vegas

18

project?

19

A. I don't recall specifically, but it would not

20

have been uncommon for me to speak with Doug on -- on

21

matters about the portfolio.

22
23

Q. You indicate at the top that -- well, three

words: "A big issue."

24

A. Yes.

25

Q. You were referring to the potential impact of

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1

Lehman on the Las Vegas project, were you not?

2

A. Yes.

3

Q.

4

For all the reasons that you just previously

testified to?

5

A. Correct.

6

Q.

Did BofA, as far as you know, at any time

7

consider funding any portion of Lehman's obligations

8

under the retail facility?

9

A. Not that I'm aware of.

10

Q.

Did you review the lntercreditor Agreement to

11

determine what BofA's rights may or may not be in that

12

regard?

13

A. I don't recall specifically.

14

Q.

15

Is that likely something that you would have

done or--

16

A. It's likely something I would have done.

17

0. Did you -- strike that.

18

Did BofA make a determination that it did not

19

want to fund all or any portion of the Lehman bank --

20

share of the retail facility?

21

A. I don't know that we considered it in any

22

significant manner, so I don't know there was really a

23

decision to make. It was -- it was a separate facility,

24

and it was not ours, but I don't recall having any

25

discussions that we would consider funding it.

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2

Q.

lntercreditor Agreement you had the ability to do so?

3
4

Okay. You understand that under the

MR. CANTOR: Objection.

A. I don't recall the specific terms of the

5

lntercreditor Agreement, but we did not fund under the

6

retail.

7
8

Q.

(BY MR. DILLMAN) And you don't recall having

made a decision one way or the other; is that right?

9

A. Correct.

10

Q.

11

A. We didn't do it.

12

Q.

Just recall that you didn't do it?

I asked you a minute ago about conversations

13

with Mr. Freeman.

14

A. Uh-huh.

15

Q.

I want to work in time frames here. Do you

16

recall any conversations with Mr. Freeman, after the

17

date that Lehman filed for bankruptcy, on the general

18

topic of Lehman's bankruptcy and its impact on the

19

Las Vegas project?

20

A. I don't recall any specific conversations.

21

Q.

22
23

bankruptcy on the Las Vegas project?

A. I don't recall.

24
25

On the general topic of the impact of Lehman's

(Deposition Exhibit 897 marked.)
Q.

Exhibit 897 is an e-mail from yourself to

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Mr. Freeman.
Uh-huh.

2

A.

3

Q. You say, "When you have a few minutes, I would

4

like to have a discussion on a number of topics. The

5

topics" -- and it goes on to the last one -- "and Lehman

6

as it relates to the Las Vegas retail component." You

7

say, "Let me know when you have time to talk and I will

8

call."

9

Does this help you to recall that you did, in

10

fact, have a conversation with Mr. Susman on or about

11

the date that Lehman filed for bankruptcy regarding, in

12

part, the impact of that bankruptcy on the Las Vegas

13

project?

14

MR. CANTOR: With Mr. Freeman, you mean.

15

MR. DILLMAN: Whose name did I use this

16

time?

17

MR. CANTOR: Susman.

18

MR. DILLMAN: Thank you. Yes. Let me

19
20

restate the question.
Q.

(BY MR. DILLMAN) Does this e-mail,

21

Exhibit 897, help you to recall that you did, in fact,

22

have a conversation with Mr. Freeman on or about the

23

date of the Lehman bankruptcy?

24
25

A.

It indicates I wanted to have a phone call

with him. I don't know whether the -- I don't recall

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1
2
3

whether the call actually took place or not.
Did Mr. Freeman generally return your calls

Q.

when you made them?

4

A. I'd say generally, yes, if I called.

5

Q.

So we know that you called him once on

6

September 11th, and we know that you've asked for a call

7

here on September 15th. Is it your belief that you had

8

at least one call, and perhaps two, with Mr. Freeman

9

in -- leading up to and on the day that Lehman filed for

10

bankruptcy?

11
12

A. I don't recall if we had a phone call as a

result of this e-mail. I just don't remember.

13

Q.

Okay. Lehman was a big deal?

14

A.

I understand.

15

Q.

You wanted to get to the bottom of it?

16

A. We wanted to understand the impact to the --

17
18
19

to the funding, yes.
Q.

Wanted to understand whether the borrower had

had any conversations with Lehman?

20

A. Yes.

21

Q.

22

or not?

Wanted to find out if Lehman was going to pay

23

A. Yes.

24

Q.

25

Because if -- if there was no payment for the

Lehman share, the funding shut down, right?

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1
2
3
4

A. Yes. There would be no disbursement to the -to the borrower.
Q.

Right. And these were all big issues that you

wanted to get answers to as soon as possible?

5

A. Yes.

6

Q.

7

Okay. So would it have been your desire to

speak to Mr. Freeman at this time?

8

A. Yes.

9

Q. And is it your assumption that if you, as the,

10

you know, designated person from BofA to speak to them,

11

had made such a call, that he would have returned it and

12

you would have had such a call?

13
14

MR. CANTOR: Objection.

A. Again, I know I wanted to speak to him, as

15

this e-mail indicates. I just do not recall if the

16

conversation actually took place or not.

17

Q.

(BY MR. DILLMAN) What do you recall of the

18

one conversation that you -- you said I recall having a

19

conversation. What do you recall of that?

20
21
22

MR. CANTOR: Objection. I'm not sure
that's accurate. But go ahead.

A. I recall that -- you know, asking what --

23

what, if anything, he knew about the prospects of

24

continuing -- of Lehman's continuing to fund, and I

25

don't recall what his response was.

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Q.

(BY MR. DILLMAN) Really? For this big deal

2

to this facility, you don't recall what he told you

3

about the prospects for Lehman to fund?

4

MR. CANTOR: Objection; argumentative.

5

A.

I don't remember.

6

Q.

(BY MR. DILLMAN) Did you -- who else was on

7

the call?

8

A. I don't remember that, either.

9

Q.

Do you recall Mr. Freeman at any time telling

1O

you that there were things about the funding of Lehman's

11

portion of the September advance that he couldn't tell

12

you upon advice of counsel?

13

A. I don't recall that.

14

Q.

Pretty startling, isn't it, if a borrower did,

15

in fact, tell you that there were things he couldn't

16

tell you because his counsel told him not to? That

17

would have been surprising, wouldn't it?

18

MR. CANTOR: Objection.

19

A. It would depend on the circumstances.

20

Q.

21
22

(BY MR. DILLMAN) These circumstances.
MR. CANTOR: Objection.

A. I don't know that -- I don't know what my

23

reaction would have been. I don't recall any -- I don't

24

recall if that -- if that statement was made or not.

25

Q.

(BY MR. DILLMAN) Typically, counsel don't

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tell you not to say things to other people because those

2

things would be good for you, right?
MR. CANTOR: Objection.

3
4

A. I don't know that.

5

Q. (BY MR. DILLMAN) Mr. Freeman has testified in

6

this case, under penalty of perjury, under oath, that he

7

informed you that there were things that he could not

8

tell you about the September retail -- Lehman's -- the

9

funding of Lehman's portion of the September retail

1O

advance because he had been advised not to by counsel.

11
12
13
14

MR. CANTOR: Objection. That
mischaracterizes -Q. (BY MR. DILLMAN) Are you disputing that
testimony?

15
16

MR. CANTOR: What testimony? Because it
never came out of Jim Freeman's mouth. Objection.

17

A.

I don't recall him saying that to me.

18

Q. (BY MR. DILLMAN) Okay. Do you recall him

19

telling you anything in terms of his inability to

20

provide information to you regarding Lehman based upon

21

advice of counsel?

22

A.

I do not recall that.

23

Q. Okay. What efforts, if any, did you make with

24

Mr. Freeman to determine who was paying, if anyone,

25

Lehman's portion of the retail advance?

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A.

I don't know that I asked that question.

2

The -- the proof of funding by the retail lenders was

3

when the wire from the retail lenders came in or from

4

the servicer of the retail lenders came in.

5

Q.

And --

6

A. And I don't know where the proceeds came from.

7

Q.

8

A. The requirement was it came from the retail

Had you made --

9

lenders.

10

Q.

Right. So if it came from somebody else, that

11

would have violated that particular requirement of the

12

disbursement agreement, right?

13
14

MR. CANTOR: Objection.
A. That was -- if it did come from somebody else,

15

that would have not conformed with one of the

16

provisions, one of the representations.

17
18

Q.

of the disbursement agreement to fail?

19
20

(BY MR. DILLMAN) And would have caused 3.3.23

MR. CANTOR: Objection; calls for a
hypothetical. Who is the money coming from?

21

Q.

(BY MR. DILLMAN) Correct?

22

A. As part of the process, as part of the

23

requirements, there was a representation by the borrower

24

that all the representations were correct.

25

Q.

Not talking about the representations.

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A.

I understand.

2

Q.

I'm talking about if the monies to pay for the

3

Lehman portion of the retail facility had not come from

4

Lehman, that would have violated one of the conditions

5

precedent to disbursement under the Master Disbursement

6

Agreement; isn't that right?

7
8

MR. CANTOR: Objection.
A. The language in the -- as I recall, the

9

language in the disbursement agreement requires it to

10

come from the retail lenders. And I don't -- I don't

11

know who the retail lenders necessarily are. It doesn't

12

necessarily have to come from Lehman, I don't believe,

13

unless they're a retail lender.

14

Q.

15

(BY MR. DILLMAN) What if it came from me?
MR. CANTOR: Objection; incomplete

16

hypothetical. Under what circumstances is it coming

17

from you?

18
19
20

Q.

(BY MR. DILLMAN) And I'll tell you I wasn't a

retail lender, just to clear up any ambiguity there.
A.

If -- if we knew it didn't come from a retail

21

lender, based on the certifications and representations

22

by the borrower, because they couldn't represent that,

23

then the conditions wouldn't have been met and we

24

wouldn't have made -- we would not have advanced the

25

funds.

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Q. And if the monies had come from the -- from

2

Fontainebleau Resorts, as opposed to Lehman, to pay

3

the -- Lehman's portion of the retail advance, that

4

wouldn't have come from a retail lender, correct?

5
6
7

MR. CANTOR: Objection; incomplete
hypothetical.
A

Is your assumption they were not a retail

8

lender?

9

Q.

(BY MR. DILLMAN) Yes. It's my assumption

10

that Fontainebleau Resorts was not a retail lender. Do

11

you -- do you -- do you share that assumption with me?

12

A

I don't know who, if any, other -- I don't

13

know who was a retail lender and who wasn't. The funds,

14

if they came in the amount requested from the servicer

15

for the retail lenders or the retail agent, in the

16

amount we requested, and there was a representation by

17

the borrower that all the reps and warranties were true

18

and correct, then we would have made an advance.

19

If any of that hadn't occurred, and

20

specifically if the representations hadn't been correct,

21

we wouldn't have made the advance, if they couldn't have

22

certified to them.

23

Q.

And if you knew that Fontainebleau Resorts had

24

made the payment for Lehman for September and you knew

25

that Fontainebleau Resorts was not a retail lender,

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would you have made the disbursement, even if the

2

company had given you a rep and warranty that all

3

conditions precedent had been met?

4
5
6
7

8
9
10

MR. CANTOR: Objection; calls for
speculation.
A.

than through the representations made by the borrower.
Q.

13

(BY MR. DILLMAN) That wasn't my question,

sir. Do you need Jt read back?
A.

11
12

I don't know how we would have known other

No.
MR. CANTOR: Probably needs a better

question.
A.

If we knew for certain that the funds did not

14

come from the retail lenders, then the requirements of

15

the disbursement agreement would not have been met.

16

Q.

(BY MR. DILLMAN) And you would not have

17

disbursed, even if the borrower had provided you a

18

representation and warranty that all the conditions

19

precedent had been met; isn't that right?

20
21
22

MR. CANTOR: Objection; calls for
speculation.
A.

Since one of the conditions was that the funds

23

came from retail lenders and they certified to that, I

24

don't know how we would know otherwise.

25

Q.

(BY MR. DILLMAN) Sir, I'm asking you to

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assume that you knew that Lehman's portion of the

2

September retail advance was paid by Fontainebleau

3

Resorts. I want you to assume that you knew that

4

Fontainebleau Resorts was not a retail lender under the

5

retail facility. And I want you to assume that the

6

borrowers had given you representations and warranties

7

that all conditions precedent in the Master Disbursement

8

Agreement had been met.

9

Under those circumstances, would it have been

10

appropriate, in your estimation, as the senior person at

11

Corporate Debt Products responsible for this facility,

12

to fund disbursements in September?
MR. CANTOR: Objection.

13
14

A. No.

15

Q.

(BY MR. DILLMAN) Now, with that in mind, what

16

did you do, if anything, to determine who the retail

17

lenders were to the retail facility?

18
19
20

A. I don't recall doing anything. It was not a
facility to which we were a party.
Q.

Did you have any information that led you to

21

believe that Fontainebleau Resorts was a lender to the

22

retail facility?

23
24
25

A. I don.'t know who and who was not a lender, so
I did not know.
Q.

Fair enough. But did you have any information

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from any source that caused you to believe that

2

Fontainebleau Resorts was or might be a retail lender

3

under the retail facility?

4

A.

No.

5

Q.

What efforts, if any, did you make to

6

determine whether or not Lehman paid its portion of the

7

September retail draw amount as opposed to someone other

8

than Lehman?

9
10

MR. CANTOR: Objection.
A.

We didn't. As part of the draw process, we

11

requested a certain amount from the retail lenders to be

12

delivered; and that amount that was requested was

13

delivered.

14

Q.

(BY MR. DILLMAN) You did know that one of the

15

options that Fontainebleau was looking at was

16

potentially paying Lehman's share if Lehman didn't pay,

17

right?

18

A.

I knew Fontainebleau was looking for

19

alternatives. I don't know to what extent it included

20

them funding it.

21

Q.

One of the alternatives that it was looking at

22

was the possibility that it would -- "it" being

23

Fontainebleau Resorts -- would fund?

24

A.

I don't recall if I knew that or not.

25

Q.

Okay. Mr. Yunker recalled that.

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A. Okay.

2

Q.

Okay. Is it -- would the fact that Mr. Yunker

3

testified that those conversations occurred help you to

4

refresh your recollection at all on this topic?

5

A.

Fontainebleau, I know, was looking for

6

alternatives. Could that have included them funding it?

7

Yes. I don't recall being told that, but I'm -- but

8

that could have been one of the alternatives they were

9

pursuing.

10

Q.

Did you have any discussions with Mr. Freeman

11

or anyone else at Fontainebleau regarding how payments

12

from Fontainebleau might be structured if Fontainebleau

13

chose to pay Lehman's portion of the retail facility for

14

September?

15

A.

I don't remember.

16

Q.

Let me place in front of you 229, which was

17

previously marked. 229 is a series of e-mails, the top

18

one of which is from you to -- excuse me -- Mr. Yunker,

19

Mr. Howard, and Mr. Varnell, with a copy to Mr. Bolio.

20

Do you recall this e-mail?

21

A. Vaguely.

22

Q.

23
24
25

Did you see it yesterday in preparing for your

deposition?
MR. CANTOR: Objection. Direct the
witness not to answer.

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2

Q.

(BY MR. DILLMAN) In your e-mail, you refer to

FB funding. Do you see that?

3

A. Yes.

4

Q.

You say, "In my opinion there is still one

5

issue that still needs to be resolved. That is, do we

6

as the Bank Agent make the unilateral call to interpret

7

the FB funding as Retail Agent funding (or waive the

8

condition if interpreted differently) or do we seek

9

Required Lender consent."

10

A. Uh-huh.

11

Q.

12
13

Let's parse that out a bit.
FB funding here was funding by Fontainebleau

Resorts?

14

A. Yes.

15

Q.

Of the retail facility -- excuse me -- of

16

Lehman's share of the September draw on the retail

17

facility, correct?

18
19
20
21
22
23

A. Of some portion of the retail facility.
don't know whose share it was or wasn't.
Q.

Well, the only share that was at issue on

September 19, 2008, was Fontaine -- was Lehman's, right?
A. I presume there was a shortfall and that was
what this was meant to cover.
September 15th, Lehman files for bankruptcy.

24

Q.

25

A. Yes.

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The only reason that any of that has any --

Q.

2

that Lehman's bankruptcy has any impact on your life

3

under the Las Vegas project is that Lehman's a retail

4

lender and this may result in them not funding their

5

commitment under the retail facility, right?

6

If the Lehman facility had been syndicated,

A.

7

other lenders in that might have been hesitant to send

8

money to Lehman for fear it never made it to the

9

borrower, and then they would have been deemed to have

10

been a defaulting lender in that agreement, if that

11

agreement had defaulting term -- defaulting lender

12

terms.

13

So I don't know what provisions or who was in

14

that facility or whose funding they were talking about

15

making up, but to the extent there was any shortfall,

16

they were considering, apparently from this, about

17

acting as, in some point, a funding entity for the

18

retail loan.

19
20
21
22

Q.

Monies from the other retail lenders wouldn't

have gone to Lehman, wouldn't it -- would it?
A.

It would have gone to Lehman or its servicer.

I'm not exactly sure how that was structured.

23

Q.

24

A. Yes.

25

Q.

You know that Lehman had a servicer, right?

Trimont?

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A. Yes.

2

Q. And the whole reason that you have a servicer

3

is because that's the third-party entity -- at least one

4

of the reasons is that's the third-party entity to whom

5

you send funds, right?

6

A.

Except I don't know if any of the funds flowed

7

through Lehman before it got to the servicer. It was

8

not a facility we were a party to.

9

Q.

Would you agree with me that one of the

10

potential issues was that Lehman would be a part of the

11

funding deficit?

12

A. Yes.

13

Q. All right. And so when you say "FB funding"

14

here, you're talking about the possibility that

15

Fontainebleau Resorts would fund some or all of the

16

retail draw request for September?

17

A. Yes.

18

Q. And that that funding was an issue that you

19

needed to interpret?

20

A. Yes.

21

Q. And you needed to determine whether that was

22

appropriate under the Master Disbursement Agreement?

23

A. Yes.

24

Q. And you concluded that it would not be?

25

A.

I don't know what my conclusion was.

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Q.

You just told me about five, ten minutes ago

2

that it would have been a violation of the Master

3

Disbursement Agreement if Fontainebleau had paid for

4

Lehman and Fontainebleau wasn't a -- a retail lender.

5

A.

Based on a number of assumptions, yes.

6

Q. And that was the -- those were the assumptions

7

that you were applying at this point in time, and the

8

conclusion that you reached was, if Fontainebleau funded

9

the retail loan, it would be a violation of one of the

10

conditions precedent to the Master Disbursement

11

Agreement, right?
MR. CANTOR: Objection.

12
13

A. The question you asked me earlier was based on

14

several assumptions. This decision would have been made

15

on -- and the ultimate decision would have been made on

16

consulting with counsel and reviewing all of the

17

appropriate documents, including all of the provisions.

18
19

Q.

(BY MR. DILLMAN) There is no counsel on this

e-mail right here.

20

A. There is not, no.

21

Q. At this point -- at this point in time, on

22

September 19, 2008, did you have an understanding as to

23

whether or not funding by the Fontainebleau Resorts of

24

some or all of the retail draw for September was

25

appropriate under the Master Disbursement Agreement?

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MR. CANTOR: Objection.

2

A. I think, as I stated here, there is an issue

3

that still needed to be resolved. It was not clear to

4

me one way or the other, which was why I felt it

5

required further consideration.

6

Q.

(BY MR. DILLMAN) Okay. Well, let's look at

7

3.3.2 of the Master Disbursement Agreement. I

8

previously put that in front of you as Exhibit 72.

9

A. What section?

10

Q.

11

3.3.23. It is at page 39, I believe -- 40.

Excuse me. And it reads "Retail Advances."

12

A. Uh-huh.

13

Q.

This is the provision that you were looking

14

at at this time on September 19, 2008, right?

15

A. It was one of the provisions I was --

16
17

provisions we were looking at, yes.
Q.

The question was, if Fontainebleau Resorts

18

pays the retail advances or any portion of it for

19

September, would that violate 3.3.23, right?

20

A. If they were not a retail lender.

21

Q. And if they were not, you concluded that it

22
23
24
25

would violate this 3.3.23, right?
MR. CANTOR: Objection.

A. It would have been -- any final decision on
that would have been made in conjunction with counsel.

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Q.

(BY MR. DILLMAN) Of course. But your

2

understanding and conclusion at this point in time was

3

that it -- that being September 19, 2008 -- was that it

4

would have violated this provision if Fontainebleau

5

Resorts had paid as opposed to the retail lenders?

6

A.

I don't know, at the point in time I was

7

writing this e-mail, I was looking at this provision at

8

the same time and thinking about this one specifically.

9

It was clearly an unusual issue and one that required

10

further investigation and research and discussion in

11

conjunction with counsel.

12
13

Q.

You eventually came to that conclusion, did

you not?

14

A. What conclusion?

15

Q.

16
17
18
19

That payment by Fontainebleau Resorts would

have violated the 3.3.23.
A.

I don't recall what our eventual outcome was.

I just don't remember.
Q.

Okay. One of the issues that you're talking

20

about here is waive the condition. What condition are

21

you talking about waiving? I'm back to Exhibit 229.

22

A. The condition that the funds come from the

23
24
25

retail agent, presumably.
Q. And how would you go about waiving the

condition?

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A.

It would have to be -- I'd have to look at the

2

terms of the disbursement agreement. But, typically, to

3

alter the agreement, you have to seek consent of

4

requisite lenders.

5
6

Q.

That's the next part. You say, "Or do we seek

Required Lender consent."

7

A.

Right.

8

Q.

What's required lender consent?

9

A.

It's defined as some percentage of the

10

lenders, typically, two-thirds or more than 50 percent.

11

I don't know what -- I don't recall what it was in

12

this -- in this instance, but it's -- it's some form of

13

majority of the lenders.

14

Q.

What happens if the -- describe for me the

15

process of seeking required lender consent. How do you

16

go about that?

17

A. Anytime you're seeking consent to waive a

18

provision, a waiver would be drafted and circulated to

19

the lenders for them to consider, and if they were in

20

agreement, they would sign the consent and return it.

21

And once the requisite number of -- requisite approval

22

had been received, then the modification or the waiver

23

would be deemed to be effective.

24
25

Q.

Did you undertake either a waiver or required

lender consent with respect to the funding issues in

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September?

2

A.

I do not recall.

3

Q.

I'm not aware of any. Are you?

4

A. Again, I don't remember, but --

5

Q. Any reason why you didn't seek required lender

6

consent on the issues regarding the Lehman -- strike

7

that.

8

Any reason why you did not seek lender consent

9

with respect to the disbursement that BofA authorized

10

for September 2009?

11
12

MR. CANTOR: Objection.
A.

Specifically, no, I don't recall why we would

13

or would not have done that. I mean, we would have,

14

clearly, if we believed someone other than a retail

15

lender was going to make an advance and we knew that for

16

sure.

17

Q.

18

(BY MR. DILLMAN) Well, that would have been

one of the options, to seek required lender consent?

19

A. Yes.

20

Q. Another option would be to simply refuse to

21

disburse?

22

A. Yes.

23

Q.

The e-mail that precedes the top one is from

24

Mr. Yunker to yourself and Mr. Howard and Mr. Varnell.

25

And it says -- this is the same day, September 19th.

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"Okay. What time works for you to wrap up the Lehman

2

issue with Jim?".

3

"Jim" here is Jim Freeman?

4

A. Yes.

5

Q. And the Lehman issue is this issue that we've

6
7
8
9

been talking about, who's going to fund Lehman's share?
A. Or do the retail lenders fund, I think, is
probably the way I would recall that.
Q.

Okay. And the issue specifically discussed

1O

with Mr. Freeman relates to whether or not

11

Fontainebleau's going to fund, correct?

12
13
14
15
16
17
18

MR. CANTOR: Objection.
A. No. As I recall, this was a discussion about
were the retail lenders going to be funding or not.
Q. (BY MR. DILLMAN) Well, why didn't you call

Lehman on that rather than Jim?
MR. CANTOR: Objection.
A. There is no relationship .between us and Lehman

19

with respect to their credit agreement. The -- the

20

borrower is the one that wanted -- that requested the

21

second -- a retail facility separate from the resort

22

facility. And -- and -- and our function as

23

disbursement agent was outlined in the disbursement

24

agreement, which was, when the retail funds come in and

25

all the other conditions have been met as well, we would

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release the funds. If -- if there was an issue with

2

Lehman or the other retail lenders or any retail lenders

3

funding, that was the company's issue to ferret out.

4
5

Q.

(BY MR. DILLMAN) You certainly had

relationships with Lehman, right?

6

A.

I did not.

7

Q.

Bank of America did?

8

A. Presumably did.

9 .

a.

10

Lots and lots and lots of relationships,

right?

11

MR. CANTOR: Objection.

12

A. I don't know the extent.

13

Q.

(BY MR. DILLMAN) Two major financial

14

institutions in the -- in the world. You had lots of

15

finance -- lots of relationships with -- with Lehman at

16

thattime, didn't you?

17

MR. CANTOR: Objection.

18

A. I don't know.

19

Q.

(BY MR. DILLMAN) Anything that prevented you

20

from picking up the phone and calling folks at Lehman

21

and saying, are you going to pay on the retail faciiity

22

this month?
MR. CANTOR: Objection.

23
24
25

A.

Nothing prevented me from picking up the phone

and calling, but it would have been to a party to which

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we had no contractual relationship with with respect to

2

their credit facility.

3

Q.

(BY MR. DILLMAN) Down at the bottom is an

4

e-mail from you dated the same day. This is Exhibit

5

229.

6

A.

Uh-huh.

7

Q.

To Mr. Howard and Mr. Yunker and Mr. Varnell,

8

same group. It says -- if you turn to the top of the

9

next page, it says, "I realize that there are more

10

questions than answers right now and that we are

11

formulating a plan to address Lehman and the Retail

12

Facility." Do you see that?

13

A.

Uh-huh.

14

Q.

Yes?

15

A. Yes, I see it.

16

Q.

17

address Lehman and the retail facility?

18
19
20

What -- what plan were you formulating to

MR. CANTOR: Objection.
A.

It's will the retail facility fund or not and

what, if anything, we do if they don't fund --

21

Q.

(BY MR. DILLMAN) Okay.

22

A.

-- which is pretty clear. We don't fund.

23
24
25

mean, we don't disburse funds.
Q.

Okay. That doesn't sound like a difficult

plan to formulate; if they don't fund, we won't fund.

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Was there more -

2
3 .
4

MR. CANTOR: Objection; argumentative.
Q.

(BY MR. DILLMAN) Was there more to it than

that?
MR. CANTOR: Objection.

5
6

A.

I don't recall.

7

Q.

(BY MR. DILLMAN) Okay. You didn't say here,

8

we're formulating a plan to address the possibility that

9

Lehman doesn't fund. It says, "We are formulating a

10

plan to address Lehman and the retail.facility." It

11

seems a little bit broader.

12

Does that help you to recall the plan you were

13

referring to here was something other than, if -- if the

14

retail folks don't fund, we're not going to fund?

15

MR. CANTOR: Objection; argumentative.

16

A. I don't recall what the specifics of the plan

17

to address Lehman and the retail facility were other

18

than the fact that what would happen if the -- if the

19

retail facility did not fund, which we wou.ldn't disburse

20

funds. Beyond that; .l don't recall.

21

Q. (BY MR. DILLMAN) What was your expectation at

22

the time -- this is in mid-September -- as to whether or

23

not Lehman would be funding?

24

A. What was my expectation?

25

Q. Yes, sir.

.

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1

A. As part of my responsibility as industry

2

leader for Gaming, I participated in calls within --

3

with the other industry leaders in Corporate Debt

4

Products about Lehman-related issues; and in September

5

there was no clear -- there was no consistent response

6

to whether they were funding their advance requests or

7

not.
So there was no consistent view, so our view

8
9

was, we didn't know if they would fund or not. It would

10

have to be -- we'd have to wait to see if the retail

11

lenders funded their -- their portion of the advance

12

request on the date requested.

13
14

Q.

The -- prior to the funding -- do you remember

what the funding date was in September?

15

A. (Witness shakes head from side to side.)

16

Q.

17
18
19
20
21
22

Were you refreshed looking through documents

yesterday?

A. It's third week, the 25th, 26th, 27th,
somewhere in that time frame.
Q.

Okay. I'll represent to you that the date

that it was supposed to be funded -- strike that.
It was funded on the 26th.

23

A. Of September?

24

Q. Yes, sir.

25

A. Okay.

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Q.

So prior to that funding, you recall that

2

there were questions raised by other lenders as to

3

whether or not Lehman's bankruptcy was an event of

4

default or otherwise caused conditions to fail,

5

conditions to disbursement to fail?

6
7

8
9
10
11

A.

I don't recall specifically. It would not

surprise me, but I do not recall.
Q.

With all the documents you looked at

yesterday, it doesn't help you to recall?
A.

No. Again, it would not surprise me if -- if

one or more lenders expressed concern.

12

Q.

Like Highland Capital?

13

A.

I do recall seeing e-mails from them. I don't

14

recall what the time frame was, whether it was September

15

or later.

16

Q.

17

The "him" being Kevin Rourke?
MR. CANTOR: I think he said "them."

18

A. Them. I said "them." Sorry.

19

Q.

(BY MR. DILLMAN) I thought you said "him."

20

A.

No, no.

21

Q.

Okay. And those e-mails helped to refresh

22

your recollection that you had conversations, in fact,

23

with Highland --

24

A. Yes.

25

Q.

-- concerning this facility?

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A. Yes.

2

Q. Tell me about those conversations.

3

A.

I don't recall the specifics other than there

4

were questions they had and we would try to facilitate

5

getting responses from the borrower.

6

Well, there weren't just questions they had.

Q.

7

They were making statements as to what the legal

8

implications of certain things were, weren't they? They

9

were saying you have to stop funding?

10
11
12

MR. CANTOR: Objection.
A.

I don't recall telling them -- or them telling

us to stop funding.
(BY MR. DILLMAN) All right. Well, we'll get

13

Q.

14

tothat.

15

A. Okay.

16

Q.

17

But you do recall having conversations with

Highland --

18

A. Yes.

19

Q. -- on more than one occasion?

20

A. Yes.

21

Q.

And who? Who at Highland?

22

A.

I recall the name Kevin Rourke, and I don't

23
24
25

remember -- remember other names at this point.
Q.

How about Andrei Dorenbaum? Does that name

ring a bell?

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A.

It does. I believe I received an e-mail

2

from -- from Andrei. I don't know that I've ever spoken

3

to him or not. I just don't recall.

4

5

Exhibit 455, this is an e-mail from you --

Q.

from Mr. Dorenbaum to yourself --

6

A.

Uh-huh.

7

Q.

-- dated September 26, 2008.

8

Do you recall getting this e-mail?

9

A. Yes.

10

Q.

11

Do you recall doing anything as a result of

receiving this e-mail?

12

A.

I recall providing this to counsel.

13

Q. Anything else?

14

A.

I don't recall specifically anything else.

15

Q.

Did you make any effort to determine whether

16

Highland was correct in its assessment that, as a result

17

of Lehman's bankruptcy, the financing agreements for the

18

Las Vegas project were no longer in full force and

19

effect?

20

A.

I don't recall the exact time frame that it

21

occurred, but I know the full force and effect language

22

is one of the conditions and representations for making

23

distributions, and it was represented to us by the

24

borrower that it was still in full force and effect.

25

Q. And if the borrower had told you it was still

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in full force and effect and you knew it to be

2

otherwise, would you feel compelled to disburse or not

3

to disburse?

4

5
6

MR. CANTOR: Objection; calls for
speculation, incomplete hypothetical.

A. I guess I don't know how we would have known

7

it wasn't unless the borrower represented to us that it

8

wasn't.

9

Q.

(BY MR. DILLMAN) Okay. As a general matter,

1O

if the borrower made representations to you that you

11

knew to be false, would you rely upon those

12

representations and disburse, in the face of facts known

13

to you that contradicted the borrower's representations?
MR. CANTOR: Objection.

14
15

A. No.

16

Q.

(BY MR. DILLMAN) Why not?

17

A.

If we had facts that things -- that it was not

18

true, then the representation would not have been true,

19

so we would not have disbursed.

20

21
22
23
24
25

Q.

I thought you said you just relied on the

representations of the borrowers.
MR. CANTOR: Objection; argumentative.
Come on.
A. That's the information we had in our
possession.

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2
3

Q.

(BY MR. DILLMAN) Okay. So you rely upon the

information in your possession?
A. The facts that -- yes, the facts provided by

4

the borrower in its certifications that the

5

representations were correct.

6

Q.

Well, one fact is there's representations by

7

the borrowers. There may be other facts that you're

8

aware of as well, right?

9

MR. CANTOR: Objection.

1O

A. Perhaps there may be.

11

Q.

(BY MR. DILLMAN) Okay. Under my

12

hypothetical, facts that you're aware of that contradict

13

establish that the borrower's representations are false.

14

Assume that.

15

In making a decision whether to disburse or

16

not, you take into account and understood that as the

17

bank agent you were required to take into account all

18

the facts known to you, not just blindly adhere to

19

representations by the borrower, right?

20
21
22

A. Correct. We adhere to the terms of the
agreement.
Q. The -- I want to stick to the scenario that I

23

just painted. Okay. If the borrower had made

24

representations, you had facts demonstrating that those

25

representations were false, you would not disburse,

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would you?
2

A. Correct.

3

Q. You would not blindly rely upon the

4

representations of the borrower if you knew them to be

5

false?

6

A. If we had evidence to back up our belief,

7

then, yes, we would have -- we would have not.

8

Q. And if you had evidence that contradicted the

9

representations -- strike that -- that was materially

1O

inconsistent with the representations of the borrowers,

11

would you disburse under those circumstances?

12
13
14
15

MR. CANTOR: Objection.
A. It would depend on the degree of
inconsistency.
Q.

(BY MR. DILLMAN) You would have to look into

16

it to figure out how inconsistent and whether or not you

17

could rely upon the borrower's representations in light

18

of the facts that were known to you?

19

MR. CANTOR: Objection.

20

A. Correct.

21

Q. (BY MR. DILLMAN) Exhibit 455 that we had,

22

Mr. Dorenbaum says, as a result of the fact that the --

23

the financing agreements are no longer in full force and

24

effect, one, no disbursements may be made under the loan

25

facility, and, two, the borrower should be sent a notice

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of breach immediately to protect the lenders' rights and

2

to ensure that any cure period commence as soon as

3

possible.

4

Question one, did you stop disbursements?

5

A.

6

Q. Why not?

7

A.

8
9
10

No.

I don't know that we believed the agreements

to be no longer in full force and effect.
Q. And did you send a notice of breach to the
borrower?

11

A.

12

Q. But you did take Mr. Dorenbaum's e-mail

13

I don't recall.

seriously, right?

14

A. Yes.

15

Q. You did the proper investigations to get to

16

the bottom of whether or not he was correct, right?

17
18

MR. CANTOR: Objection.
A. The concerns raised by Mr. Dorenbaum were --

19

we provided this to counsel, and it was part of our

20

ongoing discussions and -- and -- and decision-making

21

with respect to the facility.

22

Q. (BY MR. DILLMAN) Right. And just because the

23

borrower represented that the facility was in full force

24

and effect, that didn't stop you from making sure that

25

you treated this topic seriously and that you got to the

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answer to your question, and he's given it to you at

2

feast twice.

3

A. As disbursement agent, our responsibilities

4

were outlined under the disbursement agreement; and

5

those are the duties that we perform.

6

Q.

(BY MR. DI LL MAN) Did those duties include, as

7

far as you understood, tracking down information where

8

you had facts contrary to representations by the

9

borrower to make sure that you understood what the true

10

state of affairs were before you disbursed funds?

11
12
13

MR. CANTOR: Objection; calls for a legal
conclusion. The document speaks for itself.
A. I don't recall all of the duties outlined in

14

the - at this point, I don't recall all the duties

15

outlined in the disbursement agreement. So I don't

. 16

recall specifically what my -- at this point, what our

17
18
19

duties were.
Q. (BY MR. DILLMAN) Did you undertake -- strike

that.

20

Did you -- in September 2009, did you ask

21

Mr. Freeman or anyone else at Fontainebleau Resorts

22

whether Fontainebleau Resorts had paid any or all of

23

Lehman's share of the September draw under the retail

24

facility?

25

A. I recall participating in a phone call -- and

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I don't exactly remember when it occurred -- when the

2

question was asked, were the funds - the retail funds

3

provided by the retail lenders, and the response from

4

the company was yes.

5

Q.

Who was on this call?

6

A

I know I was, I know Bill Scott was; and I

7

know Jim Freeman was. I presume there were others, but

8·

I don't recall who they were.

9

Q. And when did this occur?.

10

A

Again, it was after the Lehman bankruptcy; but

11

when, in the subsequent period tO that, it occurred, I

12

don't remember.

13

Q.

14

Presumably, it was after disbursement, right?
MR. CANTOR: Objection.

15

A

I don't know.

16

Q.

(BY MR. DILLMAN) Okay. One would think that

17

the fu rids by the retail lenders would be paid on or

18

about the date of disbursement, right? It was in that

19

time period?

20
21

A. Again, I don't recall when the phone call
happened.

22

Q.

Okay. And who initiated the call?

23

A

The best of my recollection, it was either me

· 24
25

or Bill Scoff requesting the phone call.
Q.

Why?

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1
2

A. To have certain questions like that one
specifically to be -- to be answered.

3

Q. And that one was -- say again for me.

4

A. Were the funds provided by the retail -- were

5
6
7
8
9
10

the retail funds provided by the retail lenders.
Q. And was that the sum and substance of the

question that was asked?

A. I don't know exactly how it was worded, but
that was the intent and purpose of the question.
Q. And did you or anyone else on the call from

11

the BofA end say, let me make this very clear; I want to

12

know whether you, Fontainebleau Resorts, paid any

13

portion of the retail draw?

14

A. I don't recall any follow-up questions.

15

Q.

Did you or anyone else on the BofA side say,

16

just to be clear, I don't want to have this ambiguous at

17

all; my question is whether anyone other than the

18

designated lenders under the retail facility made any

19

portion of that payment?

20

A. Again, I don't require - I don't recall the

21

exact wording of the question, but it was something to

22

the effect, did the retail funds come from the retail

23

lenders.

24

Q. And how long did the call last?

25

A. I don't recall.

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Q. And what precipitated the call? Why -- why

2

did you -- why did you -- before I ask that, did you ask

3

any other questions?

4
5
6

A.

I don't recall. Presumably, yes, but I just

don't remember.
Q.

7

call.

8

A.

Why presumably? Maybe that was a one-question

9

Maybe it was. I just -MR. CANTOR: Objection; argumentative.

10

A.

I just don't remember.

11

Q.

(BY MR. DILLMAN) Okay. So you had a call.

12

You don't recall anything else other than this one

13

question was asked, right?

14

A. Yes.

15

Q.

Why were you asking that question?

16

A.

It was one of the conditions to an advance.

17

Q.

So was this before or after the advance?

18

A. Again, I don't recall.

19

Q.

If you were looking at -- if you were looking

20

to get an answer to a question concerning conditions of

21

advance, it would not be unreasonable to assume that

22

that question preceded the advance, because that's your

23

best recollection?

24
25

MR. CANTOR: Objection.
A.

I do not recall when the call happened.

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see that?

A. Yes. I took this to mean the retail funds.

2
3

We were not -- as disbursement agent, we were not

4

receiving individual wires from individual retail

5

lenders because, in fact, we didn't know how many -- at

6

some -- we did at some point, but I'm not sure at this

7

point we knew who the retail lenders are, even if there

8

was more than one of them.

9

We would receive one wire in from the servicer

10

for the retail component, and since we knew Lehman was

11

the lead lender, a reference was to -- the way I

12

interpret this, the reference was that it was from the

13

retail side, not specifically Lehman itself, but that it

14

was retail in general.

0. If you look at 237 -- and you don't have to,

15
16

if you want to take my representation. But the date for

17

funding was September 25, 2008, right, under the Advance

18

Confirmation Notice?

19

A. If you say so.

20

MR. CANTOR: Well, you previously

21

represented to him that it funded on the 26th.
MR. DILLMAN: You're welcome to look at

22
23

it.

24

A. Which exhibit was that?

25

0. (BY MR. DILLMAN) 257 -- 237. I'm sorry.

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A. Not tha~ I recall.

2

Q.

Okay. So can we agree that you don't need to

3

say "or other shortfalls" because you don't have any

4

information to suggest that there were other shortfalls?

5

MR. CANTOR: Objection. That's not a

6

question, and you're not agreeing to anything. He'll

7

give you his answers as they come. Ask a question.

8

Q.

(BY MR. DILLMAN) So when you learned that

9

Ullico was contemplating paying for shortfalls, you

10

understood it was paying for Lehman's shortfall, if it

11

occurred, right?

12
13
14
· 15
16
17
18

MR. CANTOR: Objection; asked and
. answered.

A. If the shortfall was a Lehman shortfall, then,
yes, I understood that they would agree to cover some
part of that shortfall.
Q.

(BY MR. DILLMAN} And you learned that they

had covered that shortfall in December?

19

A. That I don't recall specifically.

20

Q.

21
22
23
24
25

You learned that they had covered that

shortfall in January?

A. I don't recall that. I may have. I just
don't remember.
Q.

Okay. Now, at some point you sent an e-mail

to Mr. Freeman asking him to reaffirm representations

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and warranties made in conjunction with the September

2

advance request. You recall that?

3

A. Yes.

4

Q. Whose idea was that?

5

MR. CANTOR: Objection to the extent that

6

it calls -- requires you to reveal advice that you may

7

have received from counsel. If you can answer it

8

without revealing advice you received from counsel, then

9

go ahead.

10
11

A. I don't think I can answer without revealing
advice received from counsel.

12

Q. (BY MR. DILLMAN) What were the concerns that

13

Bank of America had that caused you to make that request

14

to Mr. Susman?

15

A. To Mr. Freeman?

16

Q. To Mr. Freeman.

17

A. The initial -- or the advance request is

18

submitted in -- earlier in the month, and I forget the

19

exact date the September 1 was submitted. I suspect it

20

was the 10th through the 12th, in that time frame, which

21

would have, as I recall, preceded the Lehman bankruptcy

22

filing.

23

The actual disbursements don't occur until

24

later in the month, around the 26th, as we've already

25

talked about. So there was an intervening period of

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time where there were some significant events occurring.

2

When the initial package is submitted, that's where the

3

reps are made. We just wanted to be clear and to be

4

certain that when we actually released the funds, that

5

those reps were still valid.

6

Q. Which reps?

7

A. All of them.

8

Q. Which ones were you concerned about?

9

A. All of them.

10

Q. About all of them?

11

A. All of them.

12

Q. Okay. That the -- that the Remaining Cost

13

Report still accurately reflected all anticipated costs

14

to complete?

15

A. Again, without looking at all of the reps, if

16

that was one of the reps, then, yes, that was one of --

17

if it's on that list, we wanted to make sure everything

18

was still valid before we released the funds.

19

Q. Did you ever do that previously?

20

A. No.

21

Q. You understood that the Master Disbursement

22

Agreement provided that the reps and warranties would be

23

made as of the date of the disbursement?

24

A. Yes.

25

Q. Okay. So under the Master Disbursement

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Agreement, it already provided that the reps and

2

warranties were as of that time?

3

A. Yes.

4
5

MR. CANTOR: Objection.
Q. (BY MR. DILLMAN) So why did you send out an

6

e-mail saying do something that you already were

7

required to do under the agreement?
MR CANTOR: Objection; asked and

8
9
1O

answered. Go ahead.

A. Because significant events had occurred, you

11

know, more significant than any events that had occurred

12

between the receipt of a previous advance request and

13

previous disbursements, that we felt it appropriate.

14

Q.

(BY MR. DILLMAN) So as of the date that you

15

asked for these renewed vows, so to speak, you -- you

16

considered the Lehman bankruptcy to be a significant

17

event for this particular project?
MR. CANTOR: Objection.

18
19

A. Yes. The -- the documents didn't contemplate

20

a lender of this significance filing bankruptcy and what

21

to do in that case.

22

Q.

(BY MR. DILLMAN) Okay. Let's turn to the

23

Master Disbursement Agreement, 3 point -- specifically,

24

3.3 that has the conditions precedent. Are you there,

25

page 33?

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A. Yes.

2

Q.

Okay. Now, was the 3.3.1 regarding whether

3

each material contract was in full force and effect a

4

factor that led you to request the company to reaffirm

5

its representations and warranties in late September

6

2008?

7

A. Yes.

8

Q. And what was there about the full force and

9

effect of the material contracts? Why did you want that

10

reaffirmed?

11

MR. CANTOR: Objection. He's already

12

testified that they wanted all of them reaffirmed.

13

A. It is a -- you know, the structure and the

14

documents all work, presuming all of the contracts are

15

in effect. And we wanted to, as part of this advance,

16

to just reaffirm that all the contracts were still in

17

full force and effect.

18

Q.

(BY MR. DILLMAN) And were the consultant

19

certificates and reports set forth in 3.3.5 -- did you

20

need those reaffirmed as a result of the Lehman

21

bankruptcy?
MR. CANTOR: Objection; mischaracterizes

22
23

the document.

24

A. These are construction-related --

25

Q.

(BY MR. DILLMAN) Right.

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2

A.

-- documents, so they would not have been

impacted one way or the other by the Lehman bankruptcy.

3

Q.

Right. How about 3.3.6?

4

A.

It's construction related and would not have

5

been impacted one way or the other by the Lehman

6

bankruptcy.
How about 3.3.7?

7

Q.

8

A. Yes. We wanted that reaffirmed as well.

9

Q.

There was project security? What did the

10

Lehman bankruptcy have to do with the security

11

documents?

12

MR. CANTOR: Objection.

13

A.

I don't recall specifically at this point.

14

Q.

(BY MR. DILLMAN) How about the in-balance

15

requirement, 3.3.8?

16

A.

We wanted all of these reaffirmed.

17

Q.

Really? What did the in-balance requirement

18

have to do with -- excuse me.

19
20

What did the Lehman bankruptcy have to do with
the in-balance requirement?

21
22

MR. CANTOR: Objection; argumentative.
A.

I don't recall the specifics of the in-balance

23

test, but, again, we wanted it reaffirmed with all the

24

others.

25

Q.

(BY MR. DILLMAN) How about 3.3.9, order,

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judgment or decree or any court, arbitrator or

2

governmental authority purport to enjoin or restrain the

3

bank lenders of the trustee from making the advances?

4

Is that somehow implicated by Lehman?

5

A. The bank lenders and the trustee, no.

6
7

MR CANTOR: Objection.
Q.

(BY MR DILLMAN) How about 3.3.10, violation

8

of law? Was there something about the Lehman bankruptcy

9

that you were worried about in terms of violating some

10

law?

11
12
13
14
15

MR CANTOR: Objection; calls for a legal
conclusion.

A. Again, our determination was we wanted all of
these reaffirmed.
Q.

(BY MR DILLMAN) Even if they didn't apply?

16

Even if there was no connection between them and the

17

Lehman bankruptcy?

18

A. They all apply. To what extent the Lehman

19

bankruptcy impacted them or not, we wanted them

20

reaffirmed.

21

Q.

Did you ever sit down or state to Mr. Freeman,

22

look, we got this Lehman bankruptcy; we're concerned

23

about these issues with respect to your -- your reps and

24

warranties; we just want to make sure that nothing about

25

Lehman bankruptcy impacts these, and we want to be very

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focused about this so it's not just throwing out a

2

hodgepodge of stuff that may or may not apply? Want to

3

be very focused; here are the one, two, six -- ten

4

conditions precedent that we want you to focus on and

5

reaffirm in your reps and warranties. Anything like

6

that?
MR. CANTOR: Objection.

7
8
9
10

A. Answering that question would reveal

discussions with counsel.
Q.

(BY MR. DILLMAN) No, it wouldn't. I'm

11

talking about discussions you had with Freeman or anyone

12

else at Fontainebleau Resorts, whether your counsel was

13

on the line or not.

14

A.

I don't recall any such discussions, wanting

15

to just focus on this item or that item. We wanted to

16

focus on all of the representations.

17

Q. All right. With Mr. Freeman you never

18

identified any particular representation that you wanted

19

reaffirmed, correct?

20
21

MR. CANTOR: Objection.
A.

I don't recall specifically if we identified

22

each one of them individually or a handful of them or

23

not.

24
25

Q.

(BY MR. DILLMAN) Well, your e-mail on it

doesn't identify anything, so let me put Exhibit 75 in

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front of you. Do you recall having any communications,

2

other than Exhibit 75, with Mr. Freeman on this topic?

3
4

MR. CANTOR: On what topic? I'm sorry.
What's your question again, Kirk?
MR. DILLMAN: Can you read it back,

5
6

please.

7

(Requested text was read.)

8

MR. CANTOR: Objection.

9

A.

I recall in a conversation mentioning that we

10

were going to provide this -- either this or a letter

11

for them to reaffirm.

12
13

Q.

(BY MR. DILLMAN) Conversation with

Mr. Freeman?

14

A.

Uh-huh.

15

Q.

Okay.

16

A.

So that he knew this was coming.

17

Q.

So that was a conversation that predated this

18
19

exhibit, obviously?
A. Yes.

20

MR. CANTOR: Predated? Well --

21

A. Well, I don't know when -- if it was the same

22

day or a day before. I don't know when it was, but,

23

yes.

24
25

Q.

(BY MR. DILLMAN) Typically, I think of

predated as being before. But you're right. There is

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some ambiguity there.
You had the conversation before you sent him

2
3

the e-mail, right?

4

A. I let him know that this would be coming.

5

Q. Okay. Another conversation that you had with

6

Mr. Freeman.
Is that -- anything else that you discussed

7
8

with him there other than keep a look out to your

9

e-mail, something is going to be coming?

10
11

A. The specifics of the conversation I don't
remember.

12

Q. Anybody else on the line?

13

A. I don't know. I don't remember.

14

Q.

15
16

Was that the call where you asked him whether

the funds had come from the retail lenders?

A. I don't remember.
MR. DILLMAN: We have to take a break to

17
18

change the tape.
THE VIDEOGRAPHER: The time is 3:09.

19
20

We're now going off record. This is the end of Tape 3.

21

(Recess from 3:10 p.m. to 3:19 p.m.)

22

THE VIDEOGRAPHER: The time is 3:19 p.m.

23

We're now back on record. This is the beginning of

24

Tape 4.

25

Q.

(BY MR. DILLMAN) In late September of 2008,

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did you consider the Fontainebleau Las Vegas project to

2

involve a deteriorating credit?

3

A. I don't recall exactly how we rephrased it,

4

but clearly it was not the same condition as when we

5

originally underwrote it.

6
7

Q. That term mean anything to you, "deteriorating
credit"?

8

A. It means that -- yeah, it does. It means that

9

it was not -- the prospects and credit quality were not

iO

as strong as they were when we originally underwrote the

11

transaction.
It was on the downhill side?

12

Q.

13

A. Yeah.

14

0. That was a term of art within BofA,

15
16

"deteriorating credit"?
A. It's a common term within BofA, yes.

17

i8

(Deposition Exhibit 899 marked.)

Q. Let me put in front of you Exhibit 899, which

19

is an e-mail at the end of September '08 from

20

Mr. Keyston to yourself, and it has a chain of e-mails

21

on it.

22

My question is, does this help you to refresh

23

your recollection that, in fact, the -- the --

24

Fontainebleau Las Vegas was considered to be a

25

deteriorating credit by BofA in late September 2008?

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A. Yes.

2

Q. And one of the primary -- one of the more

3

material issues that you saw as part of that analysis

4

was that Lehman financing on the retail component was

5

questionable, correct?

6

A. That the financing of the retail component, in

7

general, was questionable, yes. That's a concern.

8

Q. Actually, if we look below, it says -- and I

9

quote -- "The more material issue currently is the

10

Lehman financing of the retail component." Right?

11

A. Where is that?

12

Q.

13

A. Oh, I see. Yes. That was from Doug Keyston.

14

Bottom.

Yes, I do see that.

15

Q. You would agree that that was one of the

16

material issues in late 2008 -- excuse me -- late

17

September 2008?

18

A. Yes.

19

0. Mr. Keyston says, "Did we do well here or were

20

we wide of the mark? Don't forward."

21
22

Do you know what he meant by the first
sentence or the first question?

23

A. I don't.

24

Q.

25

Do you know why he asked you not to forward

the e-mail?

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A. As -- as industry lead, there were a lot of

2

conversations that we would have about things in the

3

portfolio and whatnot, and sometimes we had to do it via

4

e-mail, and we just agreed that certain things we

5

wouldn't forward around.

6

Q.

What industry were you the lead of?

7

A.

Gaming and Leisure.

8

Q.

Okay. And you were the lead -- what did that

9
10

mean? Top dog?
A.

It was -- within Corporate Debt Products there

11

was an industry lead or kind of a group manager for the

12

people that cover that sector. In my role, I was both

13

industry lead and also handling clients directly. Most

14

of my colleagues were not handling clients directly.

15

Q. All right.

16

A. So I did both. I had accounts of my own, and

17

I was the manager of our group.

18

Q.

Industry lead means head of the group?

19

A.

Head of the group.

20

Q.

So you were head of the Corporate Debt --

21

Corporate Debt Products Gaming and Leisure group?

22

A. Yes.

23

Q.

24

A. For administrative matters, reviews of the

25

Is that right?

team members, things like that.

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Q.

Beginning prior to the time of the

2

disbursement -- we talked about this before -- you

3

became aware that lenders were wanting to get more

4

information from -- from the borrower about the Lehman

5

situation.

6

A. Yes.

7

Q.

One of those you recall was Symphony?

8

A.

I don't recall specifically.

9

Q.

Do you recall that Symphony was one of the

10

term lenders?

11

A. I don't recall who the term lenders were.

12

Q.

Does "Symphony" ring a bell at all?

13

A.

No, but-

14
15
16

(Deposition Exhibit 900 marked.)
Q.

Sorry. Looking at Exhibit 902, does this help

you to refresh your recollection?

17

MR. CANTOR: 900?

18

A. 900?

19

Q.

20

A. This says 900.

21

Q.

22

(BY MR. DILLMAN) Did I say 900?

Oh, I'm sorry. You're right. There is a

reason why I confused myself on that. All right.

23

Looking at Exhibit 900, does this refresh your

24

recollection that Symphony was one of the lenders on the

25

Las Vegas facility?

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A. I don't know who all the lenders were.

2

Q.

Help you to refresh your recollection that

3

there were lenders who were very upset about the

4

company's failure to respond to their inquiries --

5

A. Yes.

6

Q.

7

A. I don't recall the timing exactly, but I do

-- in late September 2008?

8

recall there were lenders that were upset they were not

9

getting their calls returned by the -- by the borrower.

10

Q. And you sent a letter to the borrower, right?

11

A. Yes.

12

(Deposition Exhibit 901 marked.)

13

Q.

14

A. It says 901. Yes.

15

Q.

16

A. I believe counsel did.

17

Q.

18

That letter is Exhibit 901, is it not?

Who drafted the letter?

Did you review and approve the letter before

it went out?

19

A. I'm sure I reviewed it.

20

Q.

21

Mr. -- Mr. Naval was not responsible for

approving this letter, was he?

22

A. I don't think so.

23

Q.

24

A. Yeah.

25

Q.

He just signed it?

Okay. Did the company have a -- have a

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2
3

meeting pursuant to this or a conference call?
A.

I don't recall a conference call with

the borrow -- sorry -- with the lenders.

4

Q.

Pursuant to this letter or at any time?

5

A.

Pursuant to this letter, I don't. And I --

6

again, I don't recall even a subsequent conference call

7

with the lenders.

8

Q.

Did you make any efforts beyond this letter to

9

precipitate a call between Fontainebleau and the

10

lenders?

11

A. Yes.

12

Q.

13

A. Phone calls.

14

Q.

15

A. To the company, to Mr. Freeman.

16

Q. Anybody else at the company other than

17
18
19
20
21

What did you do?

To whom?

Mr. Freeman that you talked to on this topic?
A. I don't recall if I spoke with anybody other
than Jim about this.
Q.

Talk to Jim about this before disbursement on

September 26th?

22

A. About a meeting with the lenders?

23

Q. A meeting or a call, yes.

24

A. I don't recall specifically when any of those

25

requests were made, but it would have been, you know, my

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expectation I would have made the request before we sent

2

a letter asking for a meeting.

3

Q. You would have called Mr. Freeman and said,

4

you're going to get a letter asking for a call; let's

5

see if we can't get that together?

6

A. Yes.

7

Q.

Okay. So this is yet another call that you

8

had with Mr. Freeman prior to the disbursement of funds,

9

right?

10

A. Yes.

11

Q.

In that call did you -- do you recall whether

12

you discussed who was going to be funding the Lehman

13

portion of the retail financing?

14

A.

I don't recall.

15

Q.

This was not the call -- it was not a call in

16

connection with Exhibit 901 in which you, Mr. Scott, and

17

Mr. Howard asked Mr. Freeman whether the retail lenders

18

had funded; is that right?

19
20
21
22

A.

I don't know if it was that call or another

call. I don't remember.
Q.

Unlikely it's this call since this is on

September 22nd --

23

A.

Correct.

24

Q.

-- and the disbursement was on September 26th,

25

right?

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A. Yeah.

MR. CANTOR: Objection.

2
3

Q.

(BY MR. DILLMAN) Did the company set up a --

4

the company didn't set up a call as a result of the

5

exhibit?

6

A.

I don't recall, but I don't believe so.

7

Q.

Did you make a call to Mr. Freeman to the

8

effect of, come on, we need a call; we've asked for one;

9

let's get it scheduled?

10

A.

I don't remember exactly.

11

Q.

Would that have been typical?

12

A.

It would have been either from me. It could

13

have come from one of the client managers. It could

14

have come from Mr. Howard. It could have come from any

15

of us.

16
17

Q.

Okay. But it would have been typical for BofA

to follow up on a letter --

18

A. Yes.

19

Q.

-- such as Exhibit 901?

20

A.

I would expect so, yes.

21

Q.

Okay. As the lead on this matter, did you --

22

were you told what the company's response was to the

23

follow-up request?

24
25

MR. CANTOR: Objection.
A.

I don't recall who told me what.

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Q.

(BY MR. DILLMAN) Did you get the sense,

2

towards the end of September 2008, the company was

3

dodging calls?

4

A. They were clearly -- from information we had

5

from other lenders, they were not returning their calls.

6
7

Q.

If you're not returning calls, you're dodging

them, right?

8
9
10
11
12

13

MR. CANTOR: Is that the definition you
want to use?
Q.

(BY MR. DILLMAN) That's how you would

understand it, right?
A. They were not returning lenders' calls.

That's what we understood from lenders.

14

Q. And was that acceptable for BofA, to have a

15

borrower on a loan that it was agenting not returning

16

calls of lenders?

17

A.

No.

18

Q.

What did you do to make sure that a call

19

occurred?

20

A. We sent a subsequent letter asking for a call

21

and had a bit more specifics into it, which was, as I

22

recall, a compilation of questions we had received from

23

lenders.

24
25

Q. And is that Exhibit -- the one I just put in

front of you.

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2
3

information.
Q.

(BY MR. DILLMAN) What call were you referring

to?

4

A.

I don't know. I don't know.

5

Q.

If you look at Exhibit 225, you see that the

6

call there is set for October 3, 2008, at 11 :00 a.m.

7

A.

8

Q. And you see that your e-mail to Mr. Varnell is

9

Uh-huh.

October 3, 2008, at 11 :03 a.m.

10

A.

Uh-huh.

11

Q.

You're referencing here a call relating to

12

Fontainebleau and Turnberry, right, in your e-mail?

13

MR. CANTOR: Which one? I'm sorry.

14

MR. DILLMAN: The e-mail.

15

A. 224?

16

Q.

17

A. Yes.

18

Q. And the call that is -- the subject of the

19

call that's in 225 is "Discuss Fontainebleau and

20

Turnberry." Do you see that?

(BY MR. DILLMAN) 224, yeah.

21

A. Yes.

22

Q.

Seems like the same call, doesn't it?
MR. CANTOR: Objection.

23
24

A. Again, I don't recall.

25

Q.

(BY MR. DILLMAN) Do you recall in this time

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2
3
4

period having had a call with Mr. Tria on any topic?
A.

I don't recall specifically, but that doesn't

mean it didn't occur.
Q.

Let me show you Exhibit 205. This is an

5

e-mail dated October 3, same day, from Mr. Howard to

6

Mr. Blanton, Charles Blanton, and Robyn Roof, R-o-o-f,

7

with a copy to you.

8

A.

Uh-huh.

9

Q.

Mr. Blanton is who?

10

A.

I don't know.

11

Q.

How about Ms. Roof?

12

A.

She was in Syndications, in the Loan

13

Syndications group, on the Syndicate desk. Her function

14

was kind of that bridge between the market and the

15

structuring side.

16
17

Q.

The subject line is "Reminder Fontainebleau

Lender Update Call Today." Do you see that?

18

A. Yes, I do.

19

Q. And did you participate in lender update calls

20

with respect to Fontainebleau or a call internally at

21

Fontaine -- at Bank of America around this time period?

22
23
24
25

MR. CANTOR: Objection.
A.

I think this is in reference to the call that

never occurred, that I recall never occurred.
Q.

(BY MR. DILLMAN) The call that never

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2
3
4

occurred. This is the call with the borrower?

A. The call with the lenders and the borrower,
yes.
Q.

Okay. And Charles Blanton sends an e-mail

5

that says, "Is today's Fontainebleau call for both

6

public and private side accounts?" Do you see that down

7

at the bottom?

8

A. I do.

9

Q.

10

This was the call that was to be scheduled at

the end of the week?

11

A. I believe so, yes.

12

Q.

Mr. Howard says, in response, "Call notice was

13

never posted to lntralinks and will be postponed.

14

Company is not ready to have the call."

15

Was it your understanding, on October 3, 2008,

16

the company wasn't ready to have the call with the

17

lender group?

18

A. That's the information David provided.

19

Q.

20

Was that your understanding separate and apart

from this e-mail?

21

A. No. I learned it from David, where it says

22

the company was not ready to have the call and is

23

working on a solution.

24
25

Q.

What did Mr. Howard tell you as to why the

company was not ready to have the call?

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A.

I don't recall the specifics of that

2

conversation. I don't know why -- I don't know what the

3

rationale was for not having the call.

4

Q. The call was to get questions answered, right?

5

A. Yes.

6

Q.

7

Do you know what solution the company was

working on?

8

A.

I do not.

9

Q.

Did you ask Mr. Howard?

10

A.

I don't recall if I asked him or not.

11

Q.

He goes on to say, ''They may choose to

12

communicate in written form versus a call."

13
14

Did you think that was a good idea?
A. Again, it would have been my desire to have a

15

call; but if the borrower chose to, you know, provide a

16

written response, then assuming it was a complete

17

response and answered all the questions, I'm assuming I

18

would have been fine with it.

19
20

Q.

Mr. Freeman ever express any concern about

being on a lender call with sort of a wide-open forum?

21

A.

I don't remember.

22

Q.

Help you to recall that Mr. Freeman told you

23

there were things he couldn't say about the Lehman

24

funding based upon the advice of counsel?

25

A.

I don't remember him saying that.

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2

MR. CANTOR: Objection.
(BY MR. DILLMAN) Exhibit 230. Exhibit 230 is

Q.

3

an e-mail from Mr. Howard to yourself and others dated

4

October 6, 2008.

5

A.

Uh-huh.

6

Q.

Mr. Howard says, "Understand from Jim that

7

will be receiving something in writing today."
You understand that to refer to the response

8
9

to the September 30 letter, do you not?

10

A

ldo.

11

Q.

You did receive something in writing

12

eventually, correct?

13

A

Correct.

14

Q.

Did you talk to Mr. Freeman before you

15

received that written memo?

16

A.

I don't -- I don't remember.

17

Q.

Did you expect the company to -- strike that.

18
19

The writing that Mr. Howard was referring to
was in lieu of a -- of a call, right?

20

A. That's what I took this to mean.

21

Q. And did you expect that the company would

22

address the issues in their writing that you had

23

raised -- that BofA had raised in the September 30

24

letter?

25

A.

I was hopeful that the response they provided

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to the compilation of questions that Bank of America

2

provided would have all been addressed.

3
4

Q.

One of those questions was who funded for

Lehman, right?

5

A.

I recall that being one of the questions, yes.

6

Q.

And this e-mail chain to which Mr. Howard

7

appends his top e-mail concerns claims by Highland that

8

the September retail facility draw was funded by the

9

equity sponsors. Do you see that?

10

A.

11

Q. And Highland points to public reports where

12

I do see it.

this information was contained. Do you see that?

13

A.

Repeat that.

14

Q.

Highland refers to public reports in which

15

this information was contained.

16

A. Yes.

17

Q.

Had, in fact, Fontainebleau paid the Lehman

18

retail draw for September, that would have been of

19

concern to you at this time, correct?

20

MR. CANTOR: Objection.

21

A. Can you repeat the question.

22

Q.

(BY MR. DILLMAN) Had Fontainebleau paid

23

Lehman's portion of the retail draw for September, that

24

would have been of concern to you at this time, correct?

25

MR. CANTOR: Objection.

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A. If they were not a retail lender.

2

Q.

(BY MR. DILLMAN) And if they were not a

3

retail lender, it would have meant that the -- that

4

Fontainebleau had violated conditions precedent to

5

disbursement, correct?

6

MR. CANTOR: Objection.

7

A. They would have not met them.

8

Q.

(BY MR. DILLMAN) Would not have met them.

9

And would have provided you false representations and

10

warranties, correct?

11

12
13

A. If that -- all those assumptions had fallen
into place, yes.
Q. And, in fact, had provided you false

14

representations and warranties in a reaffirmation of

15

those on September 26, 2008, right?

16

A. Yes.

17

Q. All of that would have been extremely bad news

18

for this project if that had been the case, right?

19

MR. CANTOR: Objection.

20

A. Funds would -- would have not been disbursed.

21

Q.

(BY MR. DILLMAN) Right. So before disbursing

22

funds in October of 2008, what did you do, if anything,

23

to get to the bottom of whether or not Fontainebleau

24

Resorts had funded for Lehman on the September -- for

25

the September retail facility draw?

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A. I don't remember.

2

Q.

Shortly after -- in fact, the day after this

3

e-mail from Mr. Howard saying that a written -- a

4

writing might be forthcoming, you received Exhibit 77

5

from Fontainebleau Resorts. Yes?

6

A. Yes.

7

Q. This did not indicate who paid the Lehman

8
9
10
11

portion of the September retail advance, did it?
A. It does not indicate where the specific funds

came from.
Q. And your question in the September 30, 2008,

12

letter, Exhibit 76, specifically asked, if Lehman did

13

not fund its portion, what were the other sources,

14

didn't it?

15
16
17
18
19
20

A. That was one of the questions we had received
from lenders, yes.
Q. And you asked, did Lehman fund its portion,

right?

A. That was questions we received from lenders.
That's what we provided to the borrower, yes.

21

Q. And so when the borrower said the retail

22

portion was funded, that was nonresponsive to the

23

question that you had asked in Exhibit 76, wasn't it?

24

A. The retail funds -- they say the retail was

25

funded, and we received the funds from the retail

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servicer in the amount requested and -- and don't know

2

who it came from. Presumably, it came from the retail

3

lenders per the terms of the disbursement agreement.

4

Q. Maybe. But isn't that why you asked the

5

question? You didn't ask whether it was funded. You

6

knew it was funded.

7
8

MR. CANTOR: Objection.
A.

Let's be clear. I did not ask the question.

9

These were questions in a letter we provided to the

10

borrower which was a compilation of questions we had

11

received from lenders.

12

Q. (BY MR. DILLMAN) And it was part of BofA's

13

duties as administrative agent, bank agent and/or

14

disbursement agent to provide such questions to the

15

borrower, correct?

16

A. Yes, to the extent the lenders have the

17

ability and the right to pose the questions directly, or

18

if we receive them, we will pass them on to the

19

borrower.

20
21
22

Q. And you were the person at BofA who was in
charge of this, right?
A. Questions coming from investors can be fielded

23

either by Corporate Debt Products or Syndications.

24

Q. And these questions were fielded, and this

25

letter was approved by you?

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A. Yes.

2

Q.

Okay. So your question to the borrowers on

3

September 30, 2008, "Did Lehman fund its portion of the

4

requested $3,789,276 of shared costs funded last Friday

5

or was this made up from other sources?" assumed that it

6

was funded, did it not?

7

A. The questions we received from the lenders

8

which we provided to the company, at least one of the

9

lenders was asking from what source did the funds come.

10
11
12
13
14
15
16
17

Q.

Because everybody knew that it had been

funded, right?

A. Yes. We had received the funds from the
retail -- the retail server.
Q.

If it hadn't been funded, then there would

have been no disbursement, right?

A. If we had not received funds from the retail
servicer, no, the disbursement would not have been made.

18

Q. And disbursement was made?

19

A. Disbursement was made.

20

Q. And the lenders knew that?

21

A. And the lenders knew that.

22

Q.

23

A. Yes. Yeah.

24

Q.

25

Because you told them, BofA told them?

So there was no question in anybody's mind

that retail draw for September had been paid in full,

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right? That was not a question, on September 30, that

2

anyone had on their mind?

3

A. The retail funds had come in, and the other

4

conditions had been met, and we disbursed the funds,

5

yes.

6

Q. The question that people had on their minds,

7

as embodied in your September 30 letter, was, did Lehman

8

fund its portion of the requested amounts or was it made

9

from other sources, right?

10

A. That's the question, yes.

11

Q. And so when the borrower comes back and says,

12

in August and September, the retail portion of such

13

shared costs were funded, that doesn't answer the

14

question that you asked, does it?

15
16
17

A. It does not answer the question in the letter
that we provided. Does not.
Q. So I assume that you got on the phone or wrote

18

a letter or an e-mail to Mr. Freeman and said, you

19

didn't answer the question; please provide a responsive

20

answer to the Question Number 2 set forth in Exhibit 76.

21

MR. CANTOR: Objection; argumentative.

22

Q. (BY MR. DILLMAN) Something like that, right?

23

A. I don't recall what follow-up conversations I

24

had nor do I recall if any of the other lenders, in

25

response to this posting, reasked any of those

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2
3

questions.
Q. Okay. Let's focus on what you did. Did you
do anything that you recall?

4

A.

5

Q. To follow up on answer to the Question

I don't remember.

6

Number 2 posed in Exhibit 76, did Lehman fund its

7

portion of the September retail draw?

8

A.

I don't remember what, if anything, I did.

9

Q.

Did anyone else at BofA, to the best of your

10
11

12

13
14

knowledge, do anything to follow up on that question?
A.

not have done.
Q. Not all the lenders were satisfied with this
memo, were they?

15
16
17

I don't know what anybody else would or would

MR. CANTOR: Objection.
A.

I don't know if they were or were not.

don't recall.

18

Q.

19

A. Again, my preference was to address the

(BY MR. DILLMAN) Were you satisfied with it?

20

questions directly with the lenders so follow-up

21

questions could be asked. If this is what they chose to

22

do, this is what -- you know, this is what they chose to

23

do.

24

Q. Well, BofA was a lender, right?

25

A. Yes.

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2

Q. And one of your jobs was to monitor this

credit on behalf of BofA as a lender, not just --

3

A. Yes.

4

Q.

5

-- on behalf of the other lenders for whom you

were an agent, right?

6

A.

Correct.

7

Q.

Okay. So in the process of your effort to

8

monitor this loan on behalf of BofA, you understood that

9

you were basically overseeing and protecting the

10

company's finances, BofA's finances?

11

A.

Correct.

12

Q. You took that job seriously?

13

A. Absolutely.

14

Q. And so when the lenders, including BofA, asked

15

the question in Exhibit 76, "Did Lehman fund its share

16

of the retail facility in September?" and you get back

17

the answer, "The September retail portions were paid,"

18

did that satisfy you as the person at BofA responsible

19

for monitoring this credit?

20
21
22
23
24
25

A.

I don't recall my question being who funded

for Lehman or did Lehman fund at all.
Q.

Of course it was. It was in the letter that

you sent out.
A.

It was a -MR. CANTOR: Objection.

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A. I believe as I've stated previously, that

2

letter was a compilation of questions we had received

3

from lenders and were providing that to the company so

4

they could be prepared to answer the various questions

5

received from the lenders. I don't recall that being a

6

specific question of Bank of America.

7
8

Q.

(BY MR. DILLMAN) If Lehman -- if Lehman had

not paid -- strike that.

9

If someone other than a retail lender had paid

10

Lehman's portion, you understood that that would prevent

11

satisfaction of conditions precedent to disbursement and

12

would have prevented the September disbursement, right?

13
14
15
16
17

MR. CANTOR: Asked and answered for the
tenth or fifteenth time.

A. The requirement is the funds come from a
retail lender.
Q.

(BY MR. DILLMAN) So why was the answer to

18

this question not important to you? Did Lehman fund its

19

portion? Why wasn't that important?

20
21

MR. CANTOR: Objection; argumentative,
asked and answered.

22

A. I don't know that Lehman funded or didn't

23

fund. I don't know if there were other retail lenders

24

in their facility or not. I didn't know if those

25

lenders funded or didn't fund to make up any shortfalls

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2

that might have occurred because of Lehman not funding.
Q.

(BY MR. DILLMAN) Precisely. And because you

3

didn't know that, it was important to you, the person

4

that was monitoring this piece of BofA's balance sheet,

5

it was important to you to get an answer to that

6

question so that you could know, on behalf of BofA as a

7

lender, whether or not there was any improper

8

disbursements, right?

9
10

MR. CANTOR: Objection; argumentative.

A. There was the requirement that the retail

11

lenders fund. They did. As far as we knew, they did.

12

The funds came in in the exact amount we asked for, from

13

the source we had received it from in the past, being

14

the servicer, again, in the amount that we asked for.

15

There had been no reason to believe Lehman had

16

or had not funded. We got the funds we asked for. Had

17

we not received funds or received short funds, that

18

would have been a cause for questions because we

19

wouldn't have made the -- the disbursement.

20

Q.

(BY MR. DILLMAN) Then why did you have a call

21

with Jim Freeman asking him if the retail lenders had

22

funded?
MR. CANTOR: Objection. He just told

23
24
25

you.

A. To confirm that the retail lenders did fund --

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2
3

did indeed fund.
Q. (BY MR DILLMAN) Right. As opposed to
somebody else, right?

4

A. As opposed to non-retail lenders, yes.

5

Q. Right. So the issue of whether or not retail

6

lenders versus non-retail lenders funding, that was

7

important to you?

8

A. And we asked the question, and he answered it.

9

Q. Did you tell the other lenders that you had

10

asked him the question and what the answer was?

11

A.

I don't recall.

12

Q. If it was important information to you, it

13

would have been important information to them, don't you

14

think?

15

A.

16

Q. They were asking the question, apparently, in

17

Exhibit 76. You said that Question 2 was born, at least

18

in part, of other lenders' questions, right?

I don't know.

19

A. Yes.

20

Q. So other lenders wanted to know who funded

21

Lehman's portion, right?

22

A. Yes.

23

Q. Did you share with them the fact that you had

24

had a conversation with the company in which they had

25

given you information in this regard?

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A.

I don't recall.

2

Q.

Is there any reason why you wouldn't?

3

A. Any reason why I wouldn't what?

4

Q.

5
6

fact, had it.

A. Not that I can think of.

7
8

Share that information, if you -- if you, in

(Deposition Exhibit 903 marked.)
Q.

Exhibit 903 is an e-mail from Kevin Rourke to

9

yourself and others at BofA, copied to others at

10

Highland. It's dated October 9, 2008. He says, "The

11

memo posted by the Company doesn't address our concerns,

12

and Highland requests that a lender call be scheduled

13

for as soon as possible."

14

You understood that the memo he was referring

15

to here was the October 7 memo from Fontainebleau

16

Resorts that is Exhibit 77?

17

A. Yes. That's my assumption.

18

Q.

All right. Did you make any effort to get a

19

call with the bank between the lenders after this --

20

receiving this e-mail from Mr. Rourke?

21

A. I don't remember.

22
23

(Deposition Exhibit 904 marked.)
Q.

Exhibit 904 is an e-mail from Mr. Howard to

24

yourself dated October 10, 2008, the next day. He

25

forwards you an e-mail from Andrei Dorenbaum that -- and

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prefaces it with the following: "Just was making sure

2

we had all of Highland's issues." And you see, if you

3

turn the page, Mr. Rourke's e-mail has three points, the

4

first two of which relate to 3.3.23 that we've

5

discussed. Do you see that?

6

A.

7

Q. And he says, "3.3.23 of the financing

Uh-huh. I do.

8

agreement requires confirmation the retail lenders

9

funded (the remaining -- the remaining lenders need

10

proof -- wire confirmations, et cetera). Two, if equity

11

funds for the retail lenders, then this does not satisfy

12

3.3.23." And he goes on to say, three, "Under

13

circumstances (Lehman bankruptcy, et cetera) agent must

14

play a more active role when it has reason to know that

15

reps/covenants are not satisfied by borrower and retail

16

lenders."

17

Mr. Dorenbaum's internal e-mail to Kevin

18

Rourke, who I will represent to you is also at Highland,

19

Mr. Dorenbaum and Mr. Rourke were both at Highland at

20

the time --

21

A.

Okay.

22

Q.

-- is dated October 9, and Mr. Howard forwards

23

this to you on October 10.

24

A.

Uh-huh.

25

Q.

This is the first time that you learned that

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Highland, like Bank of America, was concerned about the

2

potential issues of the Lehman bankruptcy regarding the

3

condition precedent 3.3.23, correct?
MR. CANTOR: Objection; lacks foundation.

4
5

A. I don't know if this is the first time, but

6

clearly they are expressing that concern in this

7

message.

8

Q.

(BY MR. DILLMAN) Do you recall having learned

9

from any source prior to October 10, 2008, that Highland

10

had expressed a concern with respect to 3.3.23?

11

MR. CANTOR: Objection. Just don't --

12

restrict your answers to -- to people other than

13

counsel.

14
15
16

A. I don't remember if people other than counsel
informed me of that or not.
Q.

(BY MR. DILLMAN) Exhibit 80 is an e-mail from

17

Mr. Scott to yourself and others. It attaches an e-mail

18

from Highland. The e-mail is from Mr. Dorenbaum to

19

Mr. Scott. Take whatever time you need to read the

20

e-mail, but my question will focus on the last Item

21

Number 5. Tell me when you're ready.

22

A. Okay.

23

Q.

Mr. Dorenbaum, in the last sentence, says,

24

"Our position is that Lehman is in breach of the

25

agreement because it failed to fund and thus the

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agreement is not in full force and effect."
With Mr. Dorenbaum's notification to you of

2
3

Highland's position with respect to 3.3.23 as set forth

4

in this e-mail, what, if any, efforts did you do to

5

determine whether or not Lehman had, in fact, failed to

6

fund?
MR. CANTOR: Objection.

7
8
9
10
11
12
13
14
15

A.

receiving this.
Q.

18

(BY MR. DILLMAN) You're aware now that Lehman

failed to fund in September, aren't you?
A.

I don't recall that they did or they didn't.

I just don't know.
Q. You're aware of that. You've been told that,

haven't you?

16
17

I don't recall what -- what we did after

MR. CANTOR: Objection.
A.

I don't remember. I don't know at what point

that information became known to me.

19

Q.

Okay.

20

A.

If it did, I don't know what point it did.

21

Q.

(BY MR. DILLMAN) Well, I'm not asking you

22

whether you knew it at the time. We've talked about

23

that; we'll continue to talk about that.

24
25

But sitting here today, you know that
Fontainebleau Resorts wired funds to Trimont for the

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Lehman portion of the September retail advance, right?

2

You know that?

3

A. Today I do, yes.

4

Q.

Right. Following Mr. Dorenbaum's notification

5

in an e-mail which is attached to Exhibit 80, what did

6

you do, if anything, to learn the true facts? Those

7

were that Fontainebleau Resorts did, in fact, pay

8

Lehman's portion of the September retail advance.

9
10
11
12
13

MR. CANTOR: Objection.
A.

I don't recall what actions we did or didn't

take to -- to look into that.
Q.

(BY MR. DILLMAN) Exhibit 254, an e-mail from

yourself to Mr. Howard.

14

A. This is from -- 254?

15

Q.

16

A. Yes.

17

Q.

18

Excuse me. From Mr. Freeman --

-- to Mr. Howard, to yourself, and copy to

others at -- at or associated with Bank of America.

19

A.

Uh-huh. Okay.

20

Q.

You see this refers to a call with Highland?

21

A. Yes.

22

Q.

Help you refresh your recollection that you

23

knew sometime in October of 2008 that Highland had

24

actually spoken to Mr. Freeman?

25

A. Yes.

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Q.

Mr. Freeman says, "I thought it went fine.

2

Let me know what you hear from them. The call was not

3

contentious. They asked a fair amount about Lehman at

4

the start, and I told them what I could." You see that?
I do.

5

A.

6

Q. Did you follow up with Mr. Freeman after

7

receiving this e-mail, to ask him what he meant by, "I

8

told them what I could"?

9

A.

10

know --

11

Q.

12

MR. CANTOR: Objection; argumentative.
Q.

(BY MR. DILLMAN) Wouldn't you agree?
MR. CANTOR: Foundation.

15
16

Suggest that there were things that he

couldn't tell them?

13
14

I don't recall following up with him. I don't

A. To be honest, when I first read this, I took

17

it to mean he told them what he could based on what he

18

knew. There -- there might have been questions that

19

Highland asked that he didn't know the answer to and,

20

therefore, couldn't answer them. That's the way I

21

interpreted that when I first read it.

22

Q.

(BY MR. DILLMAN) This help you refresh your

23

recollection that Mr. Freeman told you that there were

24

things about the September retail advance that he

25

couldn't tell you or others because he had been advised

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1

not to by counsel?

2

MR. CANTOR: Objection.

3

A. I don't remember that conversation.

4

Q.

(BY MR. DILLMAN) Exhibit 277 is an e-mail

5

from yourself to Mr. Freeman, and it forwards a message

6

or an e-mail from Sven -- Sven Schlolaut. I don't know

7

if I pronounced that correctly, but it was kind of fun.

8

MR. CANTOR: But it was with great

9

feeling.

10

Q.

11

A. I do not.

12

Q.

13
14
15
16

(BY MR. DILLMAN) Do you know Mr. Schlolaut?

HSH Nordbank, you understand, was a lender

under the credit -- the resort loan?

A. My assumption is they were a lender under the
resort credit facility.
Q. And Mr. Schlolaut asks you certain

17

questions -- excuse me -- asks Mr. Naval certain

18

questions in his e-mail at the bottom, which include --

19

includes, "What happens if Lehman Brothers fails to

20

fund? Do we have the right to withhold funding if

21

Lehman is in default as -- as lender or if completion of

22

the retail component is questioned?" Do you see that?

23

A. Yes.

24

Q.

25

Basically asking Mr. Naval what are our rights

if -- against the borrower if certain things happen with

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1

respect to Lehman?

2

A. Yes.

3

Q. You then forward this to Mr. Susman, asking

4

him to respond to --

5

A.

Mr. Freeman.

6

Q.

Mr. Freeman. Good Lord. Sorry. I apologize.

7
8

You forward this to Mr. Freeman, asking him to
respond to the questions, right?

9

A. Yes.

10

Q.

Now, why would you send a lender to the

11

borrower and ask the borrower to respond to questions

12

about rights against the borrower? Seems a little bit

13

like the fox and the chicken coop, doesn't it?

14
15
16

MR. CANTOR: Objection; motion to strike,
argumentative.
A.

I sent it to the borrower because they would

17

know what is funded and unfunded under the Lehman

18

facility or the retail facility, what are the

19

participants --

20

Q.

(BY MR. DILLMAN) Sure.

21

A. -- information we didn't have.

22

Q.

How about what happens if Lehman Brothers

23

fails to fund? Was that something that was more

24

appropriately responded to by BofA?

25

A.

Not necessarily.

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1

Q.

How about do we have the right to withhold

2

fun.ding if Lehman is in default as a lender or if

3

completion of the retail component is questionable?

4

Think that that was something that might have been more

5

appropriately addressed to BofA as opposed to the

6

borrower?

7

A. Yes.

8
9
10
11

MR. CANTOR: Objection; assumes facts not
in evidence.
Q.

(BY MR. DILLMAN) Did you make any effort to

answer Sven's questions?

12

A. I don't remember. The only question that --

13

as I'm looking at this, the only question that would

14

have been appropriate for BofA or counsel to answer

15

would have been the one about withholding funds. The

16

rest of them are appropriate for the company to respond

17

to, which is why I sent it to them.

18
19

Q.

Exhibit 239, we're fast-forwarding here a bit

to December of 2008.

20

A. Okay.

21

Q. You were still at the helm at Corporate Debt

22

Products with respect to this facility, right?

23.

A. In December 2008, yes.

24

Q.

25

Exhibit 239 is an e-mail from Ms. Brown to

yourself dated December 30. She says, "Jeff, Mac at

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1
2

·Trimont expects Ullico to fund the Lehman piece, but he
has not seen the funds yet."

3
4
5

Mac was Mclendon Rafeedie?
A. I presume that's who -- who her contact at
Trimont was, yes.

6

Q.

Do you know that name, Mclendon Rafeedie?

7

A.

I don't think I've ever spoken to him, but if

8

that's the name -- it does ring a bell, but I don't know

9

from exactlywhere.

10
11

Q.

the Lehman piece."

12
13

Says, "Mac at Trimont expects Ullico to fund

When you received this, you understood s.he was
talking about Lehman's portion of the retail facility --

14

A.

Correct.

15

Q.

-- for December? Okay.

16

And you subsequently learned that Ullico did,

17 ·

in fact, fund the Lehman portion of the retail facility

18

for December, correct?

19
20

· 21
22
23
24
25

A.

I believe that's correct.
THE WITNESS: Any chance we can take a

quick break?

MR. DILLMAN: Yes, by all means.
apologize. I've been running late.
THE VIDEOGRAPHER: The time is 4:27.
We're now going off record.

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(Recess from 4:27 p.m. to 4:33 p.m.)

2

THE VIDEOGRAPHER: The time is 4:33.

3

We're now back on record.

4
5
6

(Deposition Exhibit 905 marked.)
Q.

(BY MR. DILLMAN) Exhibit 905 is an e-mail

from yourself to Phillip Lynch and Douglas Keyston.

7

A. Yes.

8

Q.

Keyston I know. Who is Lynch?

9

A.

Phillip Lynch is in Bank of America's

10

credit -- at the time was in Bank of America's credit

11

review department.

12

Q.

Do you recall -- take whatever time you need

13

to look at this. Do you recall why you were writing

14

this e-mail on December 30, 2008, to these gentlemen?

15

A.

There was a question by Mr. Lynch, as it

16

appears below, to both Doug and myself about Lehman's

17

funding of the retail component of the Las Vegas

18

project. And so I was responding with what our

19

experience had been to date.

20

Q.

Why was this question being discussed,

21

apparently, now, or according to Mr. Lynch, earlier in

22

the month, between you, Mr. Lynch, and Mr. Keyston?

23

A.

I don't know.

24

Q.

Do you understand why it was relevant at all

25

to Mr. Lynch's work?

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1

A. As part of credit review -- this is only

2

speculation. It could have been part of a larger effort

3

to assess exposure, the bank's exposure to Lehman.

4

don't know. There was -- that's just a guess. But I

5

don't know what drove Phillip Lynch to send this message

6

in the first place.

7

Q.

Okay. In response, you -- in your e-mail, in

8

the second paragraph, you say, "As we understand, each

9

month Lehman has funded its share of the advance." Do

10

you see that?

11

A. Uh-huh.

12

Q.

Did you have an understanding one way or the

13

other as to whether Lehman funded its share of the

14

September advance?

15

A. As I stated, as we understand, which means we

16

had -- I didn't have any knowledge to the contrary that

17

Lehman hadn't funded the retail funds, the retail

18

advances. And then in December it goes on to say that

19

that's -- that they're not going to fund.

20

Q.

Let's stay with the first part. What

21

information did you have -- and I appreciate your

22

statement that you said that this was intended to be --

23

you don't have any information that it didn't fund.

24

A. Uh-huh.

25

Q.

But did you have any information as of

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December 30, 2008, that Lehman had, in fact, funded its
2

share of the September advance under the retail

3

facility?

4

A.

I don't recall what information I had that

5

confirmed that it did, if I even had information that it

6

confirmed that it had funded.

7

Q. All right. Now, with -- going on to the next

8

portion, which you've pointed to, in December your

9

information was that Lehman was not going to fund and

1O

that Ullico was, right?

11

A. That's what I said here, yes.

12

Q. And did you have any understanding that the

13

other retail lenders, Ullico and perhaps others, had

14

assumed Lehman's obligations under the retail facility?

15

A. No.

16

Q.

Did you at any time come to believe that

17

anyone had assumed Lehman's obligations under the retail

18

facility at any time?
MR. CANTOR: Objection.

19
20

A. I don't recall knowing that any lender -- any

21

of the retail lenders assumed their -- Lehman's

22

commitments under the facility.

23
24
25

Q.

(BY MR. DILLMAN) You knew that Ullico was a

short-term deal, right?
MR. CANTOR: Objection.

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A. As it was initially presented to us, yes.
2
3

Q. (BY MR. DILLMAN) Okay. And how did you learn

that?

4

A. Again, I don't recall who told us who the

5

other lenders in the facility were or that Ullico was

6

even one or that Ullico was going to fund. I don't know

7

if it came from -- from the borrower or not. I just --

8

I don't recall.

9

Q. What did you mean by a "permanent solution"?

10

A. Pardon me?

11

Q. What did you mean by a "permanent solution"?

12

You say -- and I'll read into the record -- "Ullico had

13

previously told the company that it would fund for

14

Lehman for a short time until a permanent solution could

15

be found."

16

A. And your question again?

17

Q. What did you mean by "permanent solution"?

18

A. Oh, I think this was reporting what Ullico had

19
20
21
22
23

said.
Q. What did you understand Ullico to mean when it

said "permanent solution"?
MR. CANTOR: Objection.
A. That a solution other than its short-term

24

commitment or to fund on a short-term basis could be

25

arranged.

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0. (BY MR. DILLMAN) In other words, that the
2

funding gap for the Lehman share would be filled on a

3

permanent basis in some way other than Ullico?

4
5
6

MR. CANTOR: Objection. That's not what
he said.
A. Until it could be resolved. One of the --

7

Ullico could decide to fund it on a long-term basis. It

8

was just until Ullico said they would do it on a

9

short-term basis until a permanent solution could be

10

found.

11

0. (BY MR. DILLMAN) What's a focus credit?

12

A. That was some -- I don't recall exactly what

13

the criteria was, but my recollection was there were

14

some credits that were deemed a focus credit. And what

15

criteria they were to meet that, I don't know, but those

16

are the ones where, typically, Credit Review would look

17

at on a more frequent basis. That's the best of my

18

recollection. I don't recall specifically at this

19

point.

20

(Deposition Exhibit 906 marked.)

21

0. Exhibit 906 is an e-mail from Mr. Lynch to

22

yourself --

23

A. Uh-huh.

24

0. -- and Mr. Keyston. It is Re: OAR

25

Discussion. OAR means?

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1
2

A.

I don't remember. I may have at one time, but

I don't remember.

3

Q. Quarterly Assessment Report.

4

A.

5

Q. I'm just looking at the first page of the

Okay.

6

attachment. If you look at the top -- stay on that page

7

which is Bates-stamped number 827 at the bottom.
827, yes.

8

A.

9

Q. See at the top, it says "Credit Review -

10

Quarterly Assessment Report."

11

A.

12

Q. Were Quarterly Assessment Reports done on all

13
14

Okay. Yes, I see that.

credits?
A.

This is a Credit Review function. I don't

15

know what the criteria was. Credit Review is a separate

16

department.

17

Q. Different from Risk Management?

18

A.

19
20

Different from Corporate Debt Products and

different from Risk Management, yes.
Q. All right. So your efforts on the committee

21

didn't overlap into the corporate -- excuse me --

22

Quarterly Assessment Reports; is that right?

23
24
25

A.

I don't recall having any input or

participation in generating that report.
Q. Can you tell me whether or not the -- strike

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that.
(Deposition Exhibit 907 marked.)

2
3
4

Exhibit 907 is an e-mail from yourself to

Q.

Mr. Howard dated January 14, 2009.

5

A. Uh-huh.

6

Q.

He says, in the e-mail that precedes the top
11

7

e-mail, Hey, I'm speaking with Vinnie in about ten

8

minutes. Soffer is trying to get them to possibly 'help

9

out' the Lehman/retail situation in LV. Want me to loop

10

you in?"

11

First of all, you recall the -- the e-mail?

12

A. When I see it, yes, I do recall the e-mail.

13

Q.

14

A. I don't know that I participated in this call

15

or not.

16

Q.

You recall the conversation with Mr. Howard?

17

Do you recall having discussed the call with

Mr. Howard, whether you participated in it or not?

18

A. I don't recall.

19

Q.

Did you at any point come to an understanding

20

as to what Mr. Howard meant when he said, "Soffer is

21

trying to get them to possibly help out the

22

Lehman/retail situation in LV"?

23

A. Yes.

24

Q.

25

A. That Vinnie, in the Bank of America Commercial

What did he mean?

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1

Real Estate group, which had initially had an interest

2

and proposed a financing -- ultimately, the Lehman

3

financing was selected -- but based on that previous

4

interest, to see if Bank of America's real estate --

5

Commercial Real Estate group would be interested in

6

joining the retail credit facility.

7
8

Q.

Stepping in for Lehman, for lack of a more

precise banking term?

9

A. Presumably, yes.

1O

Q.

11

A. I don't know.

12

Q.

13

Was BofA prepared to do that?

Okay. Did you have any further communications

with respect to that possibility?

14

A. Not that I recall.

15

Q.

16

Do you know why -- was BofA unwilling to

become involved in the retail facility? Do you know?

17

A. I don't know what they decided to do.

18

Q.

Exhibit 480 is an e-mail from Ms. Brown that's

19

copied to yourself, and it says, "Claudia, Brandon has

20

requested that we hold off on sending the request to

21

Trimont/Lehman until either he or Jeff Susman gives us

22

the go ahead."

23

The document that is awaiting, apparently,

24

your go-ahead is a notice from BofA of approval of

25

the -- of the January draw request.

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1

A. Uh-huh.

2

Q.

Do you know why they were awaiting your

3

approval in January before sending this off to Lehman?

4

Just standard operating procedure?

5

A. The draw request -- there must have been some

6

reason the draw request was not -- was ready to go. It

7

could have had some errors in it. I don't know what the

8

specific reason was. But, yeah, they would have -- if

9

there was a defect in any of the documents, we wouldn't

10

have provided it to the -- to the retail lenders.

11

Q.

You recall that it had -- that you were

12

concerned about sending off the draw request until the

13

issues that IVI had raised concerning undisclosed change

14

orders and so on had been resolved?

15

A. I haven't reread this, but there is an IVI

16

certification as part of this package. I don't know

17

what this is in reference to, but I don't know if

18

specifically IVI raised those concerns and that was the

19

specific reason why we were holding off sending this

20

draw request. I just don't remember.

21

Q.

22
23

Okay.
(Deposition Exhibit 908 marked.)

Q.

Exhibit 908 is an e-mail from yourself to

24

Mr. Freeman dated October 23, 2008. And you say, "We

25

have historically posted the monthly draw package to

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1

lntralinks on the same day that we move the funds from

2

the respective funding accounts to your account. We

3

would like to begin the post -- to post that information

4

earlier than the actual draw date." And you asked

5

whether he has a significant objection to this.

6

A.

Uh-huh.

7

Q.

Did he have a significant objection?

8

A.

I don't recall.

9

Q.

Why did you want to begin posting that

10
11

information earlier?
A.

We had -- as I recall, we had been receiving

12

more questions about the draw information, and in order

13

to give all the lenders more time with it, we saw no

14

reason why not -- we couldn't post it earlier than the

15

date of the transfer of the funds, so just to give the

16

lenders more time to have a chance to review it.

17
18

Q.

Were there lenders that were complaining that

they didn't have enough time?

19

A. That I don't recall.

20

Q.

21
22

Was this related in some way to the Lehman

issues that cropped up in September?
A.

I think, in general, everybody -- all the

23

lenders were paying closer attention to this and perhaps

24

having to answer more questions by their management and

25

credit people, and so the effort was made to provide

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