Anwar et al v. Fairfield Greenwich Limited et al

Filing 939

ENDORSED LETTER addressed to Magistrate Judge Frank Maas from Richard E. Brodsky dated 9/10/2012 re: For the reasons stated, the Standard Chartered Plaintiffs request that this Court order a resumption of the deposition of Mr. Markopolos on September 21, 2012 in New York or as soon thereafter, in Boston or New York, as may be convenient to the witness. Further, if the Court concludes that Mr. Markopolos should be compensated for his time, the rate should be $500 per hour and his compensation should be split equally among the Standard Chartered Plaintiffs, the Standard Chartered Defendants, and any other defendant that elects to cross-examine. The Committee respectfully requests the Court's prompt consideration of this letter and thanks the Court for its attention to this matter. ENDORSEMENT: Mr. Michael is directed to respond by 9/14; Mr. Brodsky is directed to notify him to day of this directive.(Signed by Magistrate Judge Frank Maas on 9/12/2012) (djc)

From: Richard E. Brodsky

To: Frank Maas

Fax: (BBB) 391·5919

Fo<.1 (212)80'"'24

MfMOTNIIORSED

THEBRODSI(YLAWf~lRl\'l, PL
RICHARD

E. BRODSKY, ArrORNEY AT LAW

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The Hon. Frank J\Iaas
United States Magistrate Judge
Daniel Patrick J\loynihan un.ited States Courthouse
500 Pearl Street
New York, New York 1000 7-1812

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Re:

Dear

Anwar v. Fairfield Greenwich
Ko. 09-cv-llB (S.D.N.Y.)
Standard Chartered Cases
~Judge

Maas:

DOCUMENT
ELECTRONICALLY FILED
DOC#:
DATE FI=-LE=-='
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I am counsel for the ."Maridom Plaintiffs and am writing as Liaison
COlmsel for the Standard Chartered Plaintiffs Steering Committee
("Committee").
This letter has to do with the conclusion of the deposition of Harry
.Markopolos, scheduled for September 21, 2012. Because the Standard
Chartered Defendants have opposed the resumption and conclusion of the
deposition, counsel for ·Mr. Nlarkopolos, who has tried to interpose
unreasonable conditions on the resumption of the deposition, has stated that
his client would not reappear without a court order. Neither Standard
Chartered's position nor Mr. NIarkopolos' should be upheld. We request that
the Court consider this matter by letters or convoke a telephone conference,
and order a resu.mption of the deposition on September 21,2012 in New York
or as soon thereafter, in Boston or New York, as is reasonably convenient.

1\.11'. Markopolos is a securities professional who, starting in 1999,
attempted, over and again, to cunvil1.ce the ::;tuff of tho Dv;;:>\'vn <.u..,..J. N",,,",, 'l~~1..~
Regional Offices of the Securities and Exchange Commission that Benlard L.
Madoff was running a Ponzi scheme with the money provided to him by

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From: Richard E. Brodsky

Fax: (BBB) 391-5819

To: Frank Maas

Fax: [phone]

Page 3 of 6 9/10/2012 3:03

Hon. Frank 1\1aas
September 10, 2012
Page 2

"feeder" hedge ftmds such as Fairfield Sentry Ftmd. Standard Chartered's
clients, including the Plaintiffs, based on Standard Chartered's
recommendations, invested hundreds of millions of dollars in Fairfield
Sentry. 1

lVk Nlarkopolos' deposition was noticed by the Committee cross­
noticed by the Standard Chartered Defendants. The deposition began on
April 26, 2012, and approximately four hours' testimony was taken. At the
end of the first day of testimony, the parties agreed, on the record, that the
deposition could continue after the 1\IIay 4, 2012 deadline for the conclusion of
rhscovery in the Standard Chartered Cases.
The Standard Chartered Plaintiffs have sought to obtain agreement
from 1\1r. 1\IIarkopolos and from the Standard Chartered Defendants, through
their respective cotmsel, to resume the deposition on September 21,2012.
The Standard Chartered Defendants have objected, claiming, in essence, that
the Committee has waited too long to resume the deposition. As a result, .N!:r'.
~larkopolos, through his counsel -- after earlier engaging in lengthy
discussions with the Committee mncmning conditions he sought to impose on
his retulning to the deposition table -- has informed Committee munsel that
he will not appear for the resumption of his deposition without a court order.
Hence, there is a definite need for the Court's intervention in this matter.

Mr.

Markopolos~

Testirno.ny

Despite the attempt by Standard Chartered (and the FGG Defendants)
to characterize :Mr. Markopolos as an expert witness, he was not noticed as
an expert witness and, in fact, is tmquestionably a relevant fact witness. His
testimony will show that, with access to essentially the same information
about Madoff and Fairfield Sentry that was available to banks such as
Standard CharterecL he concluded that Madoff was rtmning a Ponzi scheme.
This testimony will be relevant to whether Standard Chartered fulfilled its
admitted fiduciary duties to its private banking clients -- which duties
included the responsibility to conduct probing due diligence of investment
products before and after recommending them to its private banking clients.
In particular, the Standard Chartered Plaintiffs will contend that Mr.
Markopolos' testimony tends to prove that Standard Chartered, had it
mnducted a modicum of due diligence, would have asked the same questions
Here, the term "Standard Chartered" refers to American Express Bank
Intmnational, and its parent, American Express Bank, which were acquired
by Standard Chartered Bank in February 2008.
1

7

From: Richard E. Brodsky

Fax: [phone]

To: Frank Maas

Fax: [phone]

Page 4 of 6 9/10/20123:03

Hon. Frank lVlaas
September 10, 2012
Page :3

and reached the same conclusion that he (and many others) did, or, at the
least, would have warned its clients of the risks of investing with Fairfield
Sentry. lVIr. lVlarkopolos' testimony will also tend to show that the S.E.C.'s
utter incompetence, not the difficulty of discovering the l\1adoff fraud, was
the reason that the S.E. C. never discovered that fraud, thus weakening what
the Plaintiffs' expect will be one of the Standard Chartered Defendants'
arguments in defense of its own failure to disclose the risks of investing in
Fairfield Sentry to its private banking clients ("Hthe S.E.C. couldn't discover
the Madofffraud, how can you expect us to have'?"). 2

Reasons for Timing of ReslllIlption
There are good and sufficient reasons for the fact that the Standard
Chartered Plaintiffs seek to resume the deposition on September 21, 2012,
which is admittedly five months after the end of the first day of this
deposition.
Through the time of the deposition, an attorney who has a close
professional relationship with lV1r. lViarkopolos, Gaytri Kachroo, Esq., was a
member of the Committee and, as such, was given responsibility for
communicating with Mr. lVIarkopolos for the purposes of scheduling his
deposition. On lVIay 18, 2012, however, Judge Marrero granted the Standard
Chartered Defendants' motion to compel arbitration of the Caso case, in
which lVIs. Kachroo was counsel. (DE 882)
Thereafter, lVIs. Kachroo and other lawyers representing the plaintiff
in Ca-so informed other members of the Committee that they expected that
they would be representing another plaintiff who might be suing Standard
Chartered for having recommended an investment in Fairfield Sentry.
l\tloreover, on May :31,2012, an associate ofl\tls. Kachroo informed all counsel
by email as follows: "Please be advised that the deposition of Mr. Markopolos
currently set for Jtme 5 being rescheduled. vVe will notifY you as soon as
we have a new date."
By the middle of July, it became obvious that Ms. Kachroo was not
going to be representing a new plaintiff in the Standard Chartered Cases,
1-md therefore the Committee attempted to reach agreement with Philip
Michael, Esq., counsel for NIr. Markopolos for this deposition, for a date for
the renewal of the deposition. There were delays in communication,
The relevanc.e of the deposition is the same as to the defendants in the
Fairfield Greenwich cases. One of the Standard Chartered Plaintiffs,
Headway, has also sued some of those defend~mts.
2

i iiI

m: Richard E. Brodsky

Fax: (SSe) 391·5919

To: Frank Maas

Fax: [phone]

Page 5 of 6 911 0/2012 3 :03

Ron. Frank lVIaas
September 10,2012
Page 4

undoubtedly because it was summer, and there was also considerable
disagreement between ~lr. 'Michael and the Committee concerning the
conditions l.mder \vhich lVIr. J\lIarkopolos would appear. Finally, at the end of
August an agreement was reached for the resumption of the deposition on
September 21,2012. 'vvbile there was still disagreement concerning one of the
conditions insisted upon by Mr. Michael on his client's behalf (the amount of
compensation for his time), the Committee concluded that it was appropriate
to notifY all cOlmsel of this date -- even if disagreements about conditions
sought to be imposed by .!\tIl'. l\IIarkopolos would need the attention of the
Court to be resolved. 3
For its part, Standard Chartered takes the position that it is too late to
resume the deposition of .!\tIl'. lVlarkopolos. The Committee disagrees. The
l.U1.ique circumstances described above make it clear that any delay was not
caused by lassitude or neglect on the part of the Committee and was
excusable. l\IIoreover, there is no prejudice to the Defendants. They argue that
they are in the middle of preparing experts' rebuttal to the Standard
Chartered Plaintiffs' expert reports, but this does not show prejudice. By
agreement, the rebuttal expert reports will not be due until October 31, 2012,
five weeks after this deposition can be finished. This is more than ample time
to reflect whatever said in the last three hours of his deposition into their
experts' rebuttal reports. Importantly, dispositive motions have not been filed
and, under the scheduling order will not be filed until well into 2013. The
Standard Chartered Defendants are simply engaging in attempt at reverse
engineering -a way to prevent the direct testimony of Mr.
Markopolos from being admissible against them by trying to avoid having to
cross-examine him.
In the meantime, cOl.U1.sel for the FGG Defendants have informed the
Committee that three hours are not enough to conclude the deposition. While
the Committee has asked the various Defendants to consult among
themselves to attempt to reach agreement to "carve up" that portion of the
remainder of the deposition to be allotted to the defendants, the Committee is
aware of no such discussions or agreement. Importantly, discovery in the
Fairfield Greenwich
still ongoing, and if there not enough time for
all defendants to cross-examine :Mr. Markopolos in the Standard Chartered
3

'rhe Committee

WR!'>

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"\,11" 1\tfj:1l',koDolo-=:

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New York City on September 21 and that he was available for deposition that
morning. The Committee would be content to take his deposition in Boston,
Massachusetts, if, for any reason, the date has to be changed and if that
location would be more convenient for the witness.

,m: Richard E. Brodsky

Fax: [phone]

To: Frank Maas

Fax: [phone]

Page 6 of 6 911 Of2012 3:03

Bon. Frank lVlaas
September 10, 2012
Page 5

Cases, his deposition can be resumed in the Fairfield Greenwich Cases. "Vhat
more, the Court could extend the time limit beyond the normal seven
hours. Regardless, the Committee should not be ptmished if the defendants
cannot agree how to split up their own time.
In sum, there is a presumption that a deposition, once started, be
concluded, and there should be an extraordinarily good reason for preventing
the conclusion of the deposition. None is present here. Standard Chartered's
objections are makeweight. Dispositive motions have not been filed, so no
prejudice will be caused by concluding the deposition on September 21, 2012.
See 1Witchell v. Nat'l R.R. Passenger Corp., 208 F.R.D. 455,462 (D.D.C. 2002)
(permitting Plaintiff to con,dl.lct two additional depositions after close of
discovery, where dispositive motions deadline had been suspended and there
were no trial dates in plaoo). Finally, this Court should not permit a fact
witness like :Mr. IVlarkopolos to impose unreasonable conditions on his
obeying a subpoena and submitting to the conclusion of his deposition.
For the reasons stated, the Standard Chartered Plaintiffs request that
this Court order a resumption of the deposition of Mr. 1-1arkopolos on
September 21, 2012 in New York or as soon thereafter, in Boston or New
York, as may be convenient to the witness. Further, if the Court concludes
that ]vIr. Markopolos should be compensated for his time, the rate should be
$500 per hour and his compensation should be split equally among the
Standard Chartered Plaintiffs, the Standard Chartered Defendants, and any
other defendant that elects to cross-examine.
The Committee respectfully requests the Court's prompt consideration
of this letter and thanks the Court for its attention to this matter.
Sincerely yours,
The Brodsky Law Firm

Richard D. Drodsky

cc:

Counsel of record in 09-cv-118
Philip Michael, Esq.