Irving H. Picard v. Saul B. Katz et al
Filing
153
DECLARATION of DANA M. SESHENS in Support re: 143 MOTION in Limine TO BAR USE OF PREJUDICIAL PHRASE., 145 MOTION in Limine TO EXCLUDE STERLING STAMOS DOCUMENTS.. Document filed by Charles 15 Associates, Charles 15 LLC, Charles Sterling LLC, Charles Sterling Sub LLC, College Place Enterprises LLC, Coney Island Baseball Holding Company LLC, Estate of Leonard Schreier, FFB Aviation LLC, FS Company LLC, Fred Wilpon Family Trust, Arthur Friedman, Ruth Friedman, Iris J. Katz and Saul B. Katz Family Foundation, Inc., Judy and Fred Wilpon Family Foundation, Inc., Amy Beth Katz, David Katz, Dayle Katz, Gregory Katz, Howard Katz, Iris Katz, 157 J.E.S. LLC, Air Sterling LLC, BAS Aircraft LLC, Jason Bacher, Bon Mick Family Partners LP, Bon-Mick, Inc., Brooklyn Baseball Company LLC, C.D.S. Corp., Michael Katz, Saul B. Katz, Todd Katz, Katz 2002 Descendants' Trust, Heather Katz Knopf, Natalie Katz O'Brien, Mets II LLC, Mets Limited Partnership, Mets One LLC, Mets Partners, Inc., Minor 1 (REDACTED), Minor 2 (REDACTED), L. Thomas Osterman, Phyllis Rebell Osterman, Realty Associates Madoff II, Red Valley Partners, Robbinsville Park LLC, Ruskin Garden Apartments LLC, Saul B. Katz Family Trust, Michael Schreier, Deyva Schreier Arthur, See Holdco LLC, See Holdings I, See Holdings II, Sterling 10 LLC, Sterling 15C LLC, Sterling 20 LLC, Sterling Acquisitions LLC, Sterling American Advisors II LP, Sterling American Property III LP, Sterling American Property IV LP, Sterling American Property V LP, Sterling Brunswick Corporation, Sterling Brunswick Seven LLC, Sterling Dist Properties LLC, Sterling Equities, Sterling Equities Associates, Sterling Equities Investors, Sterling Heritage LLC, Sterling Internal V LLC, Sterling Jet II Ltd., Sterling Jet Ltd., Sterling Mets Associates, Sterling Mets Associates II, Sterling Mets LP, Sterling Pathogenesis Company, Sterling Third Associates, Sterling Thirty Venture LLC, Sterling Tracing LLC, Sterling Twenty Five LLC, Sterling VC IV LLC, Sterling VC V LLC, Edward M. Tepper, Elise C. Tepper, Jacqueline G. Tepper, Marvin B. Tepper, Valley Harbor Associates, Kimberly Wachtler, Philip Wachtler, Bruce N. Wilpon, Daniel Wilpon, Debra Wilpon, Fred Wilpon, Jeffrey Wilpon, Jessica Wilpon, Judith Wilpon, Richard Wilpon, Scott Wilpon, Valerie Wilpon, Wilpon 2002 Descendants' Trust, Robin Wilpon Wachtler. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G, # 8 Exhibit H, # 9 Exhibit I, # 10 Exhibit J, # 11 Exhibit K, # 12 Exhibit L, # 13 Exhibit M, # 14 Exhibit N, # 15 Exhibit O, # 16 Exhibit P)(Seshens, Dana)
EXHIBIT J
1
CONFIDENTIAL
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
ADV. PRO. NO. 08-01789 (BRL)
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2
3
4
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5
SECURITIES INVESTOR PROTECTION
CORPORATION,
Plaintiff-Applicant,
6
v.
Rule 2004
Examination of:
7
8
BERNARD L. MADOFF INVESTMENT
SECURITIES, LLC,
Defendant.
9
ASHOK CHACHRA
-------------------------------x
In Re:
10
BERNARD L. MADOFF,
11
Debtor.
12
-------------------------------x
13
14
15
TRANSCRIPT of testimony as taken by and before
16
MONIQUE VOUTHOURIS, Certified Court Reporter, RPR,
17
CRR and Notary Public of the States of New York and
18
New Jersey, at the offices of Baker & Hostetler,
19
Rockefeller Plaza, New York, New York, on Friday,
20
October 8, 2010, commencing at 10:16 a.m.
45
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compliance was whatever you share with one investor,
2
you have to be willing to share it with everyone.
3
4
Q.
A.
Whether they are a GP or LP?
Yeah, exactly, and also because every
5
GP was an LP and it could be misinterpreted, so we
6
pretty much tried not to share anything.
7
8
9
Q.
A.
Other than what's in this document?
Yeah.
But whatever we sent out,
especially after registration, was don't try -- try
10
not to share a lot of details unless you want to
11
share with every single limited partner.
12
Q.
So that,
just so I understand, that
13
rule, if you call it, that was implemented
14
post-registration as an investment advisor?
15
16
17
18
19
A.
I think it became more explicit
post-registration.
Q.
A.
Q.
Because of compliance reasons?
Because of compliance reasons.
Okay.
If you can turn to page 23,
20
which ends in Bates number 050, this page identifies
21
the senior investment team, and at that time in
22
February 2005 who did you understand to be the
23
senior investment team for Sterling Stamos?
24
25
A.
I mean, day-to-day it was --
day-to-day was Peter and myself.
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2
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I see that you both are listed here
Q.
and then Ellen Horing is listed as well.
Yeah.
A.
What was her role?
Q.
We wanted her to be full-time.
A.
She
6
was a -- you know, she was very experienced in the
7
business.
8
three children, and so she would spend like a day a
9
week, with me more than with Peter.
10
11
12
She just couldn't do it because she had
Q.
In terms of dealing with making
investment decisions for the funds or -A.
Yeah.
We just talked through what's
13
going on in the portfolio, what's happening in
14
markets.
15
Q.
16
17
18
19
20
And then I see that Saul Katz is
listed there as part of the senior investment team.
A.
Q.
Yeah.
What was Saul Katz's role at that
time prior to registration in February of 2005?
A.
His role was really to work with
21
Peter on the business, like helping introduce Peter
22
to potential clients.
23
24
25
Q.
A.
understanding.
In terms of -- so getting funding -That was principally my
I mean, that's where I -- whenever,
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you know -- you know,
2
introduced me to, you know, whoever, and that person
3
became a limited partner.
4
Q.
Okay.
Peter would say Saul
In addition to introducing
5
Peter Stamos to potential investors and limited
6
partners, did Mr. Katz play any role in selecting
7
fund managers do you recall?
8
9
A.
Q.
No.
Not to your recollection or you know
10
that he did not?
11
A.
12
Q.
I don't believe he played a role.
Okay.
So, to your recollection, he
13
didn't play any role in deciding which funds to
14
invest in?
15
16
17
A.
No.
He didn't actually know many of
the fund managers.
Q.
Okay.
With respect to David Katz,
18
he's listed here as a senior investment team member.
19
What was his role at that time prior to
20
registration?
21
A.
Saul's son.
There was no role.
He
22
attended one -- after Noreen left, he attended one
23
fund manager interview with me.
24
25
Q.
A.
Okay.
He happened to be in the city that
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day and I was going to a meeting, and he said can I
2
corne along and I said sure.
3
4
Q.
meeting, you don't recall any other --
A.
5
6
7
Q.
No.
-- investment-related meetings that
Mr. David Katz attended?
A.
8
9
So other than that one fund manager
Q.
He attended, no.
Why -- you didn't draft this, but why
10
would Saul Katz and David Katz be identified as part
11
of the senior investment team if to your
12
recollection they didn't play much of a role in the
13
investment portion of the business?
14
confused by the document, that's all.
15
A.
16
Q.
17
managed a fund,
18
19
20
21
22
23
24
25
I'm just
I'm confused as well.
NOw, David Katz you mentioned had
an account.
MS. BIEBER:
Object.
But you can
answer.
A.
Q.
I don't think I -Not a fund.
You identified it as
some sort of an account.
A.
Q.
It was like a brokerage account.
So other than that management of that
account and the one meeting with the fund manager,
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those are the only two instances that you know that
2
David Katz was involved in any way with the
3
investments of Sterling Stamos?
4
5
6
MS. BIEBER:
Q.
A.
Q.
A.
9
10
11
You can
answer.
7
8
I object.
You can answer.
I said he was not involved -Well, he managed an account.
Right?
He was like -- he managed -- it was
like his broker -- it was his brokerage account.
Q.
12
A.
It wasn't for the -I don't know who it was for.
It was
13
a brokerage account.
14
manager meeting with me, that was it.
15
only involvement with me on this topic.
16
talk about the Mets and the World Series in '86.
17
But on investing that was the only interaction that
18
we had.
19
20
21
Q.
A.
Q.
And he attended this one fund
That was his
We would
That you had?
That I can remember.
If you turn to page 25, it lists --
22
ends at Bates 52, it has other investment
23
professionals, and it lists Fred Wilpon.
24
it mean -- what does other investment professionals
25
mean to you?
What does
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A.
1
2
3
I don't know.
Do you know why Fred Wilpon would be
Q.
listed as another investment professional?
No.
A.
4
Q.
5
Do you know what role, if any, Fred
6
Wilpon had in any of the Sterling Stamos'
7
investments?
A.
8
9
10
I don't believe Fred Wilpon or Saul
Katz or David Katz had anything to do with the
investments of Sterling Stamos.
11
Q.
So with respect to Saul Katz,
the
12
only thing that you recall was helping Peter bring
13
in clients?
14
A.
15
Yes.
MR. BOHORQUEZ:
16
7.
Okay.
17
Okay.
Can I get tab
please.
18
19
20
21
22
23
If you can mark that as Exhibit 4,
(Exhibit Chachra-4 marked for
identification.)
Q.
I've handed you, Mr. Chachra, a short
two-page document.
A.
Q.
And why are you laughing?
I've never seen this document.
That was going to be my first
24
question.
So you've never seen this document.
25
Is
this document another marketing document?
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Q.
A.
2
3
4
5
6
Q.
Okay.
Who is DeMarche Associates?
I don't know.
Have you ever seen this document
before?
A.
Q.
No.
Have you ever seen a document -- this
7
is a hedge fund manager questionnaire.
8
ever seen documents similar to Exhibit 5?
9
10
11
A.
Have you
I've seen a hedge fund due diligence
questionnaire before, yes.
Q.
And in connection with completing
12
hedge fund due diligence questionnaires, are you
13
have you been consulted in completion of those
14
questionnaires in the past?
15
A.
During my time at Sterling Stamos, I
16
mean, if there was a question that someone was
17
having trouble answering as it relates to the
18
investments or the portfolio, they may have asked me
19
a question.
20
Q.
21
referring to?
22
23
24
25
A.
Q.
When you say "they," who are you
Whoever was preparing.
And was there a particular team at
Sterling Stamos who prepared
A.
It was the team that worked for Kevin
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Okimoto.
2
Q.
3
So Kevin Okimoto was the head of the
team that completed hedge fund questionnaires?
A.
4
Q.
5
Yes.
If you can turn to page 2 of the
6
document, which ends in Bates 408, item number 9,
7
among other things, asks who are the key people in
8
your organization, and if you turn to the next page,
9
page 3 ending in 409, you see it has listed
10
Mr. Stamos, yourself, and then Saul Katz and then
11
the next page David Katz.
12
Would you have considered Saul Katz
13
and David Katz as key people in Sterling Stamos at
14
that time in February of '05?
15
16
A.
person?
17
18
What would you define as a key
Q.
Well, let me ask you what is your
understanding of who a key person would be?
19
A.
If a key person is defined as someone
20
who had a significant amount of capital at risk,
21
Saul Katz had a significant amount of capital at
22
risk.
23
Q.
Why don't we look at -- go to -- back
24
to number 9, item number 9, that's on page 2, after
25
it asks who are the key people in your organization,
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the next paragraph, the last sentence says,
2
below are the names and backgrounds of the primary
3
portfolio decision-makers for Sterling Stamos," and
4
then listed there, again, are you, Mr. Stamos and
5
Saul Katz and David Katz.
6
"Shown
Is that an accurate statement, that
7
at that time Saul Katz and David Katz were the
8
primary portfolio decision-makers for Sterling
9
Stamos?
10
11
12
13
14
15
16
A.
There was only one decision-maker.
It's an inaccurate statement.
Q.
A.
Q.
So it's an inaccurate statement?
Yes.
So at that time who was the primary
portfolio decision-maker?
A.
There was only ever one
17
decision-maker and it was Peter Stamos.
18
mean in the entire time that I was at Sterling
19
Stamos it was only Peter.
20
21
22
23
24
25
Q.
Ever,
I
So your understanding is that this
document is inaccurate then?
A.
My understanding this document is
inaccurate.
Q.
And do you know who drafted this
document or filled it out?
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A.
2
No.
Based on the fact that it's a hedge
Q.
3
fund manager questionnaire, do you think it was
4
Kevin Okimoto or part of his team?
I don't know who drafted it.
A.
5
Q.
6
On page 3 where it has listed Saul
7
Katz, it says, "Mr. Katz is a general partner of
8
Sterling Stamos and is actively involved in the
9
investment decisions as well as the management of
10
Sterling Stamos."
11
Do you think that is an accurate
statement?
12
A.
13
accurate.
14
partnership, but from my -- I'm not attesting to be
15
a lawyer to understand how the corporate structure
16
worked.
17
understanding, but he was not -- he didn't interact
18
with me on the investment decisions, so I view that
19
as an inaccurate statement.
20
with Peter, and that he may have talked to Peter
21
about.
22
23
24
25
He was a member -- it's half
He was a member of the general
He owned half the company was my
Q.
He may have interacted
To your understanding he was not
actively involved in the investment decisions?
A.
My understanding he was not involved
at all in the investment decision-making.
As it
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relates to introducing clients and/or the revenue
2
and profits of the business, my understanding he was
3
involved.
4
Q.
And with respect to -- we talked
5
about introducing clients to the business.
6
respect to the revenue and profits of the business,
7
what was his role in that
A.
8
9
With
I think he advised Peter on when
Peter wanted to open up an office in California and
10
we were going to spend money, my understanding he
11
consulted Saul.
12
know, we were going to open up our own office when
13
we moved from 575 Fifth to 455 Park, he consulted
14
Saul.
We were spending the firm's money.
Q.
15
If we were going to make -- you
Anything else that you recall?
If
16
you can go to the next page which ends in 410, you
17
see under David Katz it says the same thing, David
18
Katz "is actively involved in the investment
19
decisions, as well as the management of Sterling
20
Stamos."
21
well?
22
23
A.
Do you consider that to be inaccurate as
Yes.
MR. BOHORQUEZ:
Why don't we take a
24
break there because it's pushing 1:30, and to try to
25
accommodate you, Mr. Chachra, let's take a 15-minute
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