Irving H. Picard v. Saul B. Katz et al
Filing
23
DECLARATION of DANA M. SESHENS in Support re: 20 MOTION to Dismiss THE AMENDED COMPLAINT OR, IN THE ALTERNATIVE, FOR SUMMARY JUDGMENT.. 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, # 17 Exhibit Q, # 18 Exhibit R, # 19 Exhibit S)(Wagner, Karen)
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EXHIBIT S
1
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
DOCKET NO. 10-2378
-------------------------------x
In Re:
BERNARD L. MADOFF INVESTMENT
SECURITIES LLC.
ORAL ARGUMENT
-------------------------------x
March 3, 2011, 11:06 a.m.
Moynihan U.S. Courthouse
Ceremonial Courtroom
500 Pearl Street
New York, New York 10007
B E F O R E:
HON. DENNIS JACOBS, Chief Judge
HON. PIERRE N. LEVAL
HON. REENA RAGGI
Reported by:
NANCY C. BENDISH, CCR, RMR, CRR
BENDISH REPORTING, INC.
Litigation Support Services
877.404.2193
www.bendish.com
BENDISH REPORTING, INC.
973.244.1911
U.S. COURT OF APPEALS - SECOND CIRCUIT - March 3, 2011
1
settled the Picowers and got $5 billion and put it
2
into the fund, that wasn't profits, that wasn't
3
stock.
4
customer's money, and he gave it back.
5
get that?
6
Those people who did not get their money out.
7
54
as simple as that.
Mr. Picower had $5 billion of other
Who should get that out of that fund?
8
9
Who should
It's
Now, once all of those people, we
estimate that to be around $20 billion, give or
10
take.
It may be less, may be a little bit more.
11
We'll see.
12
Give us an opportunity to go get the rest and it's a
13
great aspiration that we'll get there, that this
14
Trustee is seeking to obtain $20 billion.
We're halfway home, we've collected 10.
15
He then pays the $20 billion.
Now
16
the two customers are on equal footing.
Those who
17
got their money out and got some on top of that are
18
now equal to those who got their money out of the
19
fund of customer property.
20
priority of the statute.
21
all about, is that these who did not get their money
22
out get the opportunity, through the customer fund,
23
that priority.
24
then all of them are on equal footing and they all
25
have a fraud claim.
That's the goal, the
That's what the statute is
Once that priority is satisfied,
You're absolutely right, Your
BENDISH REPORTING, INC.
973.244.1911
U.S. COURT OF APPEALS - SECOND CIRCUIT - March 3, 2011
1
some concern among some of the appellants and that
2
is that who in their right mind would rely upon
3
these statements.
60
4
That caused some concern.
JUDGE LEVAL:
But you don't dispute
5
that those statements represent the obligation of
6
the debtor?
7
MR. SHEEHAN:
No, I do dispute that.
8
I think they are one piece of evidence that
9
evidences the obligation of the debtor.
That's it,
10
one piece, one of many, all of which we have to look
11
at.
12
records.
We have to look at the entire books and
13
This Trustee is mandated by this
14
statute to do a complete and thorough investigation.
15
That's what he's done.
16
thorough investigation yielded the truth that what
17
we have here is no trades, no profits.
18
And that complete and
JUDGE JACOBS:
I'm not sure I
19
understand how the statement doesn't represent the
20
obligation of the debtor assuming, under the facts
21
that we have here, that people were permitted to
22
rely upon this and a defrauder undertook to pay them
23
that and in reliance they left their money in his
24
hands.
25
MR. SHEEHAN:
I didn't say it didn't
BENDISH REPORTING, INC.
973.244.1911
U.S. COURT OF APPEALS - SECOND CIRCUIT - March 3, 2011
1
represent it.
2
determinative.
3
61
said earlier --
4
5
Standing alone it
would work fine at a fraud trial, it seems to me.
MR. SHEEHAN:
At a fraud trial that's
true.
8
9
You cannot just take, as Your Honor
JUDGE JACOBS:
6
7
I said standing alone it's not
JUDGE JACOBS:
Well, that's -- the
debtor would be Madoff Securities and at a fraud
10
trial they would be a defendant and they would owe
11
that.
12
MR. SHEEHAN:
And they sure as heck
13
would and they wouldn't get any of it, because
14
Bernie would have spent it all.
15
16
JUDGE RAGGI:
No, no, but that's a
separate question.
17
MR. SHEEHAN:
I know that.
18
JUDGE RAGGI:
And avoids or doesn't
19
address our concern, that you are asking us to
20
conclude that the obligation for SIPA purposes is
21
different from the debtor's obligation.
22
only for myself, I'm having some trouble
23
understanding why you think that that is a different
24
obligation.
25
MR. SHEEHAN:
And I speak
I'm not suggesting
BENDISH REPORTING, INC.
973.244.1911
U.S. COURT OF APPEALS - SECOND CIRCUIT - March 3, 2011
1
that -- if you look at Article 8 that my adversary
2
relies upon, from which I think this question is
3
emanating, it says that once you have a SIPA
4
proceeding, these rules go by the board, and the
5
reason is because the SIPA rules dominate that.
6
They have to.
7
provide certain relief under certain dire
8
circumstances.
9
dealing with your broker on a daily basis.
62
It's a salutary statute designed to
It isn't business as usual, it isn't
This is
10
a catastrophe and it's only in that catastrophe that
11
the Trustee can operate the way he does, by not
12
being bound by simply the statement itself, but by
13
what the statute suggests, you look beyond that to
14
the books and the records.
15
JUDGE JACOBS:
16
MR. SHEEHAN:
17
MR. CONLEY:
Thank you.
Thank you.
Good morning.
18
please the Court -- it's still morning?
19
afternoon, actually.
20
May it
It's
Michael Conley for the SEC.
I would like to address this morning
21
briefly why the Bankruptcy Court's ruling in this
22
case is entirely consistent with what SIPA provides
23
about how net equity claims are to be determined.
24
25
JUDGE JACOBS:
It would help me at
least if you started out distinguishing your
BENDISH REPORTING, INC.
973.244.1911
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