Irving H. Picard v. Saul B. Katz et al

Filing 27

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 T, # 2 Exhibit U, # 3 Exhibit V, # 4 Exhibit W, # 5 Exhibit X, # 6 Exhibit Y, # 7 Exhibit Z, # 8 Exhibit AA, # 9 Exhibit BB)(Wagner, Karen)

EXHIBIT Y

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C O N F I D E N T I A L

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UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
ADV. PRO. NO. 08-01789 (BRL)

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SECURITIES INVESTOR PROTECTION
CORPORATION,

Videotaped

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Plaintiff-Applicant,
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v.

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BERNARD L. MADOFF INVESTMENT
SECURITIES, LLC,
Defendant.
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In Re:

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BERNARD L. MADOFF,

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Rule 2004
Examination of:

Debtor.
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FRED WILPON

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TRANSCRIPT of testimony as taken by and before

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NANCY C. BENDISH, Certified Court Reporter, RMR, CRR

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and Notary Public of the States of New York and New

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Jersey, at the offices of Baker & Hostetler, 45

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Rockefeller Plaza, New York, New York on Tuesday,

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July 20, 2010, commencing at 10:04 a.m.

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BENDISH REPORTING, INC.
Litigation Support Services
877.404.2193
www.bendish.com

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A P P E A R A N C E S:

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BAKER & HOSTETLER, LLP
45 Rockefeller Plaza
New York, New York 10111
BY: FERNANDO A. BOHORQUEZ, ESQ.
KATHRYN M. ZUNNO, ESQ.
For Irving Picard, Trustee
BAKER & HOSTETLER, LLP
3200 National City Center
1900 East 9th Street
Cleveland, OH 44114-3485
BY: THOMAS R. LUCCHESI, ESQ.
For Irving Picard, Trustee

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DAVIS POLK & WARDWELL LLP
450 Lexington Avenue
New York, NY 10017
BY: DANA M. SESHENS, ESQ.
KAREN E. WAGNER, ESQ.
For Sterling Equities, certain
affiliated entities, and the Witness

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ALSO PRESENT:
GREGORY P. NERO, ESQ., Sterling Equities
DANIEL McCLUTCHY, Videographer

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Q.

Did Mr. Stamos ever express concern

that Madoff lacked transparency?

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A.

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Q.

Not that I know of.
What do you understand that concept

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to be, the lack of transparency, what's your

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understanding of that?

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A.

That if someone said they were going

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to invest in widgets, and they invested in widgets,

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that was what they were supposed to do.

But then

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all of a sudden they invested in widgets and water,

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or something else, they were going out of their

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strategy, that the people at Sterling Stamos would

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object to that, because they only wanted to invest

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with them if this was their strategy.

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Q.

So your understanding of the lack of

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transparency concept is when a fund diverts from the

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initial strategy?

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A.

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MS. SESHENS:
correct?

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That was a yes,

You nodded.
THE WITNESS:

Do I have to answer

MS. SESHENS:

Yes.

you?

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(Witness nods.)

A.

Yes.
MR. BOHORQUEZ:

All right.

Why don't

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Q.

Was the issue of Madoff's lack of

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transparency ever discussed amongst the Sterling

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partners at any time?

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A.

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transparency.

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Q.

I don't know if he had a lack of

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A.

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Q.

I'm not sure he had a lack of

transparency.

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Pardon me?

That's what I'm asking you.

If it

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was ever discussed that Madoff may have a lack of

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transparency?

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A.
Q.

No.
When Peter Stamos raised the issue of

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Bayou having a lack of transparency, did anyone

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within the Sterling organization decide to

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investigate as to whether Madoff, as well, had a

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lack of transparency?

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A.

I think I testified that what I meant

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by Stamos, in terms of his determination of lack of

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transparency is that he -- if he believed that there

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was a strategy that was going to be successful and

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he invested in that fund of funds, that was

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transparency to him.

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investing in that strategy.

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strategy and veered from that strategy, then he was

He'd be able to see they were
But if they changed the

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not happy about that.

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As far as I know, Bernie never

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changed his strategy one iota from all the time we

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were investors.

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Q.

So to be clear, it's your

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understanding that Madoff's investment strategy was

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consistent for the entire time that you were

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invested with him?

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A.
Q.

That's my understanding.
Have you ever heard of the term

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"front-running"?

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A.

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Q.

Only...
I don't want to get into any

discussions you've had with counsel about that.
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Q.
A.
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Only of late.
Only with what?
Only of late.
In connection with the preparation

for your deposition?
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Q.

Correct.
Prior to preparation for your

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deposition, have you had any discussion -- did you

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have any discussions with the partners concerning

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the general concept of front-running?

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A.

No.

Not that I can recall.