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

Filing 31

DECLARATION of Fernando A. Bohorquez, Jr., in Opposition re: 20 MOTION to Dismiss THE AMENDED COMPLAINT OR, IN THE ALTERNATIVE, FOR SUMMARY JUDGMENT.. Document filed by Irving H. Picard. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Errata 12, # 13 Exhibit 13-1, # 14 Exhibit 13-2, # 15 Exhibit 14, # 16 Exhibit 15, # 17 Exhibit 16, # 18 Exhibit 17, # 19 Exhibit 18, # 20 Exhibit 19, # 21 Exhibit 20, # 22 Exhibit 21, # 23 Exhibit 22, # 24 Exhibit 23, # 25 Exhibit 24, # 26 Exhibit 25, # 27 Exhibit 26, # 28 Exhibit 27, # 29 Exhibit 28, # 30 Exhibit 29, # 31 Exhibit 30, # 32 Exhibit 31, # 33 Exhibit 32, # 34 Exhibit 33, # 35 Exhibit 34, # 36 Exhibit 35, # 37 Exhibit 36, # 38 Exhibit 37, # 39 Exhibit 38, # 40 Exhibit 39, # 41 Exhibit 40, # 42 Exhibit 41, # 43 Exhibit 42, # 44 Exhibit 43, # 45 Exhibit 44, # 46 Exhibit 45, # 47 Exhibit 46, # 48 Exhibit 47, # 49 Exhibit 48, # 50 Exhibit 49, # 51 Exhibit 50, # 52 Exhibit 51, # 53 Exhibit 52, # 54 Exhibit 53, # 55 Exhibit 54, # 56 Exhibit 55, # 57 Exhibit 56, # 58 Exhibit 57, # 59 Exhibit 58)(Bohorquez, Fernando)

Exhibit 33

1
1

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

2

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

3
4
5

-------------------------------x
SECURITIES INVESTOR PROTECTION
CORPORATION,

Videotaped

6

Plaintiff-Applicant,
7

v.

10

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

11

BERNARD L. MADOFF,

12

Rule 2004
Examination of:

Debtor.
-------------------------------x

8
9

FRED WILPON

13
14
15

TRANSCRIPT of testimony as taken by and before

16

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

17

and Notary Public of the States of New York and New

18

Jersey, at the offices of Baker & Hostetler, 45

19

Rockefeller Plaza, New York, New York on Tuesday,

20

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

21
22
23
24
25

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

FRED WILPON 7/20/10

CONFIDENTIAL

SIPC v. BLMIS

32
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

talking about the same thing. Do you mean legally
created or the decision is made to form an entity?
MR. BOHORQUEZ: Well, let's back up.
Q.
What do you understand me to be
asking when I'm asking you, when an entity is
created? What is your understanding?
A.
Something that's started.
Q.
Who makes the decision to start an
entity, for whatever purpose?
A.
The group.
Q.
The group, okay.
A.
Partners.
Q.
After the decision is made to start
an entity, for whatever purpose, who is then in
charge of creating the legal entity?
A.
The general counsel.
Q.
Meaning Mr. Tepper, in the past?
A.
When it was Mr. Tepper.
Q.
And then after Mr. Tepper, it would
be Mr. Nero?
A.
Right. And many times they would use
outside counsel. Depending on the complexity of the
acquisition, or entity.
Q.
So backing up to the question I asked
earlier: Did Sterling at some time, some point make

34

10:43:42

1

10:43:44

2

10:43:48

3

10:43:50

4

10:43:52

5

10:43:56

6

10:43:59

7

10:44:04

8

10:44:06

9

10:44:08

10

10:44:09

11

10:44:11

12

10:44:12

13

10:44:15

14

10:44:21

15

10:44:28

16

10:44:30

17

10:44:34

18

10:44:35

19

10:44:38

20

10:44:40

21

10:44:43

22

10:44:50

23

10:44:55

24

10:44:59

25

investment -- I wasn't alone. Several of us made,
or maybe all of us made an investment in, starting
in, you said '85, it could be. And subsequent to
that we had periodic conversations with him about
the investment. The investments grew, obviously,
over the years.
Q.
When did you first meet Mr. Madoff?
A.
I met him -- Jeff must have been
about 15 and Mark Madoff was about 14, something
like that, they were about the same age. Maybe 13
or 14, I'm not sure exactly when, but when they were
kids in school, I met them. We lived in the same
town. So, Jeff is 49. Over 30 years.
Q.
What town did you live in?
A.
Roslyn, Long Island.
Q.
And how far was -- at that time how
far was your home from the Madoff home?
A.
Three, four, five miles. I've never
been to the Madoff home in Long Island. I don't
know exactly where he lived, but I know he lived in
the same town.
Q.
Okay. And tell me about how you
first met him in connection with your son and Mark
Madoff.
A.
Mark and Andy, his younger brother,

33
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

a decision to start entities for the purpose of
investing in Madoff?
A.
I don't think we started an entity.
I think we started a relationship where each of the
partners independently invested with Bernie Madoff,
going way back, obviously.
Q.
Well, why don't we take it from that
end. When do you recall when you first invested in
Madoff? You personally.
A.
Me personally?
Q.
Yes.
A.
More than 20 years ago.
Q.
Our records show that the first
investment was in about October of 1985. Does that
sound right to you?
A.
Yeah, kind of.
Q.
Prior to making that initial
investment in Madoff, did you have any discussions
with Mr. Madoff in connection with making that
investment?
A.
The first investment?
Q.
Yes.
A.
I don't know what you mean,
discussions. He was well known in the industry, was
a well-known money manager. So we made an

10:46:40
10:46:44
10:46:50
10:46:59
10:47:04
10:47:12
10:47:13
10:47:18
10:47:27
10:47:35
10:47:38
10:47:42
10:47:46
10:47:56
10:47:59
10:48:02
10:48:06
10:48:14
10:48:18
10:48:21
10:48:24
10:48:25
10:48:29
10:48:36
10:48:37

35

10:45:08

1

and some other kids that were going to school

10:48:40

10:45:11

2

together met, and from time to time I'd see them at

10:48:43

10:45:15

3

our house. They were always around, playing ball or

10:48:49

10:45:18

4

whatever. Soon thereafter we met their parents.

10:48:53

10:45:22

5

Generally we would meet the parents of our kids'

10:49:02

10:45:30

6

friends.

10:49:09

10:45:33

7

10:45:35

8

them at that time, and then subsequent to that I

10:49:24

10:45:38

9

think they moved to New York when their kids were

10:49:29

10:45:41

10

maybe going to high school. I'm not exactly sure

10:49:35

10:45:43

11

when they moved, but they moved to New York sometime 10:49:38

10:45:46

12

thereafter. Lived in New York most of the time that

10:49:43

10:45:48

13

we knew them. New York City, I'm talking about.

10:49:48

10:45:52

14

10:45:56

15

after you met Mr. Madoff through your children, that

10:49:54

10:45:57

16

you then invested in his business?

10:49:57

10:46:02

17

10:46:04

18

business, investing people's money. We were in the

10:50:10

10:46:12

19

real estate business primarily at that time. And he

10:50:14

10:46:15

20

evidenced an interest to diversify. Said if there's

10:50:19

10:46:16

21

any, if there's a time in the future you would like

10:50:23

10:46:17

22

to invest, I could invest some of your funds and I'd

10:50:28

10:46:19

23

like the opportunity to invest in some real estate.

10:50:36

10:46:21

24

10:46:33

25

And so we knew them, you know, we met

Q.

A.

Right. How did it come to pass that

He, he was in the investment

That didn't happen for a while but he
talked about it once or twice, and then we decided

BENDISH REPORTING, INC.
877.404.2193

10:49:18

10:49:51

10:50:06

10:50:41
10:50:43

11 (Pages 32 to 35)

FRED WILPON 7/20/10

CONFIDENTIAL

SIPC v. BLMIS

36

38

we were going to invest with him. And then sometime 10:50:46
thereafter we were acquiring a property. We asked
10:50:51

1

2
3

him whether he wanted to invest. I don't remember

10:50:56

3

4

which one or exactly when it happened, but he did.

10:51:01

4

5

And then subsequently in numbers of real estate

10:51:06

5

6

investments, and as time went on we kept investing

10:51:12

6

7

with him.

10:51:18

7

8

Q.

10:51:18

8

Mr. Madoff invested with Sterling, was that Sterling

10:51:21

9

Vessels?

10:51:25

10

1

9
10

Was that first property that

2

11

A.

I don't know.

10:51:28

11

12

Q.

If you wanted to know, what records

10:51:31

12

13

would you review to see what was the first

10:51:34

13

14

investment that Mr. Madoff made with Sterling?

10:51:36

14

15

A.

I'd ask Mr. Nero.

10:51:41

15

16

Q.

I don't know if he wants us to do

10:51:44

16

17

that, but we'll get to that if we have to. Okay,

10:51:46

17

18

fair enough.

10:51:50

18

19

When Mr. Madoff approached you to

10:51:52

19

20

invest in your business and for you to invest in

10:51:58

20

21

his, did he provide you with any materials

10:52:02

21

22

concerning his business?

10:52:06

22

23

A.

Not that I can recall.

10:52:08

23

24

Q.

After Mr. Madoff made the initial

10:52:14

24

10:52:18

25

25

approach to you about investing, did you have any

A. Squadron, Ellenoff, something and
something.
Q.
There's always a something and
something.
A. I don't think the something and
something would be very happy with that description.
Q.
All that work getting to become a
name partner and nobody recognizes you.
A. Yours is easy, you've got two names.
Q.
The marketing folks.
Other than Mr. Squadron, you had
mentioned other investors -- other individuals who
had investments with Madoff at that time that you
spoke to. Who were they?
A. I don't really recall.
Q.
Were these discussions with the other
investors, were they over the phone?
A. No.
Q.
Were they in person?
A. They may have been both. I don't
recall.
Q.
And you also had discussions with
your partners at that time concerning the
possibility of investing in Madoff?
A. Correct.

37
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

discussions with any of your partners about
investing with Madoff, at that time?
A. Yes.
Q.
Tell me about those, those initial
discussions.
A. We had heard from a number of people
that he was a very good financial, whatever they
call it, advisor or financial investor. And we knew
some people who invested with him. We discussed
that. One of my -- one of our outside lawyers was,
I believe, his lawyer at one point, and his -- was
an investor and all of his partners or many of his
partners at the law firm were investors.
Q.
You first said that we had heard
from. From whom had you heard that he was a good
financial investor?
A. Just generally in the community, the
New York community, we had heard that. But
specifically, I would say the first time maybe was
through our outside lawyer, who was an investor.
Q.
Can you just tell me, what's the name
of that outside lawyer at that time?
A. Howard Squadron.
Q.
And what firm was he with at that
time?

10:54:22
10:54:25
10:54:26
10:54:29
10:54:32
10:54:33
10:54:35
10:54:39
10:54:42
10:54:45
10:54:48
10:54:52
10:54:55
10:54:57
10:55:08
10:55:09
10:55:12
10:55:17
10:55:17
10:55:20
10:55:23
10:55:27
10:55:30
10:55:33
10:55:36

39

10:52:22

1

10:52:25

2

10:52:28

3

10:52:28

4

10:52:34

5

10:52:36

6

10:52:42

7

10:52:49

8

10:52:57

9

10:53:01

10

10:53:13

11

10:53:19

12

10:53:24

13

10:53:29

14

10:53:35

15

10:53:38

16

10:53:40

17

10:53:49

18

10:53:53

19

10:54:02

20

10:54:08

21

10:54:12

22

10:54:14

23

10:54:19

24

10:54:21

25

Q.
Can you tell me a little more about
those discussions with your partners before, before
actually investing in Madoff?
A. We were already seeking someone to
invest some of our liquidity. It wasn't a very lot
at that time, but we were seeking to do that. And
so there were a number of discussions with different
firms, different individuals at the firms that were
doing that kind of work.
Q.
And by firms you're referring to
investment-type firms?
A. Investment-type firms.
Q.
Okay.
A. My recollection is we did try a
couple and didn't do too well in a couple of them.
Howard Squadron was a close friend of mine, as well
as being an outside lawyer of ours. So he -- I
think there was a conversation with him, and I knew
that he was an investor, or he told me he was an
investor, satisfied investor. I think his firm, his
partners all invested. We subsequently learned
others that were investors. I don't remember who at
the moment, but numbers of other people that were
investors. And we decided to give it a try.
Q.
And what did Mr. Squadron tell you,

BENDISH REPORTING, INC.
877.404.2193

10:55:40
10:55:42
10:55:47
10:55:55
10:56:04
10:56:13
10:56:18
10:56:23
10:56:27
10:56:28
10:56:31
10:56:34
10:56:35
10:56:36
10:56:38
10:56:50
10:56:54
10:57:07
10:57:10
10:57:13
10:57:22
10:57:28
10:57:31
10:57:33
10:57:39

12 (Pages 36 to 39)

FRED WILPON 7/20/10

CONFIDENTIAL

SIPC v. BLMIS

40

42

1

just about -- I want to be careful here, what did

10:57:43

1

2

Mr. Squadron tell you about Madoff, specifically?

10:57:46

2

He knew him, that he represented him,

10:57:52

3

4

he liked him, trusted him. And thought he was --

10:57:56

4

5

had a strategy that was very unique, that he

10:58:08

5

6

understood how to make money without risk, without a 10:58:17
lot of risk.
10:58:21

6

10:58:22

8

10:58:25

9

10:58:28

10

10:58:34

11

10:58:36

12

10:58:38

13

10:58:41

14

3

7
8
9
10
11
12

A.

Q.

Madoff's strategy at that time?
A.

I don't recall. I don't recall. I

wouldn't understand the strategy anyway.
Q.

Fair enough.
Did Mr. Squadron provide you with any

13
14

What did Mr. Squadron tell you about

materials, any documents concerning Madoff?

7

15

A.

Not that I can recall.

10:58:44

15

16

Q.

You had mentioned earlier that you

10:58:48

16

17

were looking at other investment firms for

10:58:53

17

18

investment opportunities; is that right?

10:58:55

18

19

A.

Correct.

10:58:58

19

20

Q.

Do you remember who those were at

10:58:59

20

21

that time?

10:59:00

21

22

A.

No, I don't.

10:59:06

22

23

Q.

Do you remember what you did in

10:59:08

23

24

connection with researching or investigating those

10:59:11

24

25

firms to make the decision whether or not to invest?

10:59:16

25

investment firm before investing?
MS. SESHENS: Objection to the form.
Q.
You can answer.
MS. SESHENS: You can answer.
A.
I think he talked with Mr. Squadron
and perhaps others. I don't know.
Q.
Did Mr. Katz have any discussions
with Mr. Madoff?
MS. SESHENS: Objection to the form.
A.
I don't recall any, but it wouldn't
surprise me.
Q.
And what discussions did you
personally have with Mr. Madoff prior to investing?
MS. SESHENS: Objection to the form.
A.
Just those that I've told you about.
After we invested, Saul and I would go to visit
Bernie approximately once a year, and we'd go to his
office or something and talk about where we -- how
the investments were doing, what was happening.
I had a personal relationship with
the Madoffs that developed over time, and not an
everyday personal relationship, but a friendship.
And so I made it a policy that when I saw him at a
charitable event or celebration of some kind, you
know, we attended his kids' weddings, he attended

41
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

MS. SESHENS: What Mr. Wilpon did
personally or the partnership more broadly?
MR. BOHORQUEZ: You can take it one
at a time. What did you do and then what did the
Sterling organization do?
A. Well, I don't remember doing
anything. Saul may have, you know, investigated,
because over the years we've invested in stocks with
certain brokers and all. It's not an area that
I'm -- it's not an area that I pay any attention to
or that I'm really involved in.
Q.
Is Saul Katz the partner that is in
charge of, for lack of a better word, in charge with
investigating or researching stocks or securities
for Sterling to invest in?
MS. SESHENS: Objection to the form.
THE WITNESS: Pardon me?
MS. SESHENS: You can answer.
Q.
You can answer.
A. You both said I could answer.
Q.
We agreed on something.
A. Yeah, I'd say he has the most
expertise.
Q.
And what did Mr. Katz do with respect
to researching or investigating into Mr. Madoff's

10:59:18
10:59:20
10:59:23
10:59:24
10:59:29
10:59:30
10:59:32
10:59:42
10:59:47
10:59:54
10:59:57
11:00:05
11:00:09
11:00:15
11:00:18
11:00:19
11:00:21
11:00:23
11:00:24
11:00:26
11:00:30
11:00:36
11:00:41
11:00:42
11:00:44

11:00:49
11:00:51
11:00:54
11:00:54
11:00:58
11:01:02
11:01:06
11:01:08
11:01:12
11:01:16
11:01:18
11:01:22
11:01:25
11:01:28
11:01:30
11:01:36
11:01:44
11:01:51
11:01:57
11:02:02
11:02:04
11:02:12
11:02:22
11:02:30
11:02:37

43
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

our kids', you know, we were family friends, I just
didn't discuss business with him. So my
conversations with Bernie Madoff were really of a,
just of a personal nature. Of what was happening in
their lives and what was happening in our lives.
Not in a context of, you know, what's happening in
the business, how are you investing these funds?
Because, frankly, I wouldn't -- that's not my
expertise. I wouldn't really know, and I didn't
want to mix the two.
So, once a year we'd go and have a
conversation, mostly schmoozing. You know what
schmoozing is.
Q.
I've heard.
A.
Can you define that? Can you define
it in Cleveland?
(Comments off the record.)
A.
That's the kind of relationship it
was. Very trusting relationship. There's no person
that you will talk to, none, that is more betrayed
than I am.
Q.
Thank you, Mr. Wilpon.
I want to go back to -- I want to
break that down into a few areas. The first thing
is, and maybe I should have been a little more

BENDISH REPORTING, INC.
877.404.2193

11:02:43
11:02:52
11:02:55
11:02:59
11:03:04
11:03:08
11:03:13
11:03:17
11:03:21
11:03:25
11:03:27
11:03:29
11:03:37
11:03:38
11:03:41
11:03:43
11:03:43
11:03:52
11:03:55
11:04:00
11:04:08
11:04:12
11:04:16
11:04:19
11:04:24

13 (Pages 40 to 43)

FRED WILPON 7/20/10

CONFIDENTIAL

SIPC v. BLMIS

48
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

tell you what stocks he bought or anything like
that. That's not something I pay attention to.
Q.
Okay. Because I thought what you had
said earlier was you had a personal relationship
with Mr. Madoff and you wanted to keep that separate
from the business relationship. So you saw him on a
personal level throughout the 25, 30 years that you
knew him, and you did not -- you made it a practice
not to discuss business with him during those
personal interactions, correct?
A. Correct.
Q.
And then I thought what you were
saying was that you would make an annual trip, once
a year, out to his office, and during that trip at
his office, that visit at his office is when you
would discuss business?
A. It was not just business. I would
accompany Saul, who might have some questions or
some thoughts or some ideas which were shot down,
you know, because Bernie had his strategy and that
was his strategy and, you know, don't, can you take
off the calls, can you take off the puts, whatever.
It was just a part of a collegial conversation among
friends. And that he was invested -- he never asked
me, he never asked me how is the real estate

50

11:09:53

1

gone and six months to go, what do you anticipate.

11:13:03

11:09:57

2

We knew what the six months were because Arthur

11:13:06

11:10:03

3

would keep track of it daily, but what would you

11:13:08

11:10:07

4

think, what would you anticipate.

11:13:15

11:10:10

5

11:10:12

6

11:10:17

7

Q.

1987.

11:13:30

11:10:20

8

A.

Yeah. I think I was away in

11:13:32

11:10:25

9

11:10:27

Depending upon what the events of the
world were like. When was the crash?

investment doing or anything like that. Even at
those meetings, I don't ever remember him asking
about that. Certainly not more -- maybe two or
three times in all those years we went to a movie
together in Florida or whatever, you know. There
was no business conversation.
Q.
Other than -A. Other than, I'd say that...
Q.
That roughly annual meeting?
A. Right.
Q.
Now, you mentioned that you would
accompany Saul. What did you mean by that?
A. The personal relationship -- Saul had
a personal relationship with Bernie as well but mine
was a longer term, you know, the kids knew each
other, it sort of started differently.
Q.
Right.
A. And so he would always ask me to come
with him, let's go see Bernie, you know, see how
everything's doing. Let's go see Bernie. What do
you anticipate -- he might ask him a question like,
Bernie, just for -- Saul would ask this question:
What do you anticipate the returns would be, the
annualized returns? It might have been in the
summer we went to see him and so with six months

11:13:28

California somewhere or something, heard about that.

11:13:36

10

I talked to Saul. Saul said he talked to Bernie and

11:13:41

11:10:30

11

everything was fine. And then maybe we would --

11:13:46

11:10:30

12

11:10:33

13

maybe the next time we saw Bernie, might have been a 11:13:50
month later or whatever, they might have talked
11:13:54

11:10:37

14

about that. It was really not a -- we'd meet for an

11:13:59

11:10:41

15

hour maybe or something like that. Not long

11:14:04

11:10:43

16

meetings. Bernie's attention span was not for long

11:14:07

11:10:46

17

meetings.

11:14:12

11:10:49

18

Q.

11:10:54

19

statements or quarterly reports in connection with

11:14:22

11:11:03

20

your investments?

11:14:26

11:11:07

21

MS. SESHENS: Over time?

11:14:28

11:11:09

22

MR. BOHORQUEZ: Over time.

11:14:29

11:11:16

23

Q.

You.

11:14:34

11:11:22

24

A.

Mine personally or the individuals

11:14:35

11:11:26

25

that were investing? No. That was not my...

11:14:37

And did you review any account

49
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

11:13:26

11:14:17

51

11:11:32

1

11:11:36

2

11:11:40

3

11:11:49

4

11:11:53

5

11:11:58

6

11:12:00

7

11:12:02

8

11:12:07

9

11:12:09

10

11:12:09

11

11:12:12

12

11:12:17

13

11:12:19

14

11:12:22

15

11:12:26

16

11:12:30

17

11:12:31

18

11:12:34

19

11:12:39

20

11:12:42

21

11:12:46

22

11:12:52

23

11:12:55

24

11:12:59

25

Q.
When -- after the initial investment
in 1985, during the early period of investing in
Madoff, did you review any account statements or any
quarterly reports or anything provided by Madoff?
A. No. I had people that were doing
that.
Q.
So who, in the early stages who were
the people who were doing that?
A. Primarily Arthur was really tracking
everything and it was primarily Arthur. Then Arthur
would give that information to the accountants in
the office. They would put together the tax returns
and whatever. Saul would be involved and Michael
would be involved, but that's generally the people.
The people that are in the financial end.
Q.
What is your understanding of Saul
Katz's involvement?
A. In?
MS. SESHENS: Involvement in what?
Q.
Well, you identified Arthur Friedman
reviewed the statements and kept track of the
investments.
A. Um-hum.
Q.
And then he would work with
accountants at Sterling, correct?

BENDISH REPORTING, INC.
877.404.2193

11:14:43
11:14:46
11:14:50
11:14:54
11:14:56
11:14:59
11:15:01
11:15:05
11:15:07
11:15:12
11:15:18
11:15:20
11:15:22
11:15:31
11:15:34
11:15:37
11:15:40
11:15:44
11:15:44
11:15:47
11:15:51
11:15:55
11:15:56
11:15:57
11:16:01

15 (Pages 48 to 51)

FRED WILPON 7/20/10

CONFIDENTIAL

SIPC v. BLMIS

52

54

1

A.

Um-hum.

11:16:03

1

2

Q.

And who were those individuals at

11:16:05

2

11:16:07

3

3

that time, early on?

4

A.

By name?

11:16:08

4

5

Q.

Yes. Do you recall?

11:16:09

5

6

A.

No.

11:16:11

6

7

Q.

And then you mentioned that Saul Katz

11:16:14

7

11:16:17

8

11:16:19

9

8
9

was also involved.
A.

Yeah, because Saul was involved with

10

the overall supervision of all of the finances of

11:16:21

10

11

the company.

11:16:25

11

11:16:26

12

11:16:29

13

11:16:34

14

12
13
14

Q.

Okay. And then you also mentioned

that Michael Katz was involved?
A.

Michael was involved with the overall

15

finance of the company at one point and then when we

11:16:38

15

16

got larger, Mark Peskin came on board and became the

11:16:41

16

17

inner chief financial officer, so that Michael spent

11:16:50

17

18

more time in the real estate.

11:16:54

18

11:16:56

19

11:17:00

20

19
20

Q.

And when Mr. Peskin came on board,

roughly 2003, does that sound about right?

21

A.

Yeah, kind of.

11:17:06

21

22

Q.

What was Mr. Peskin's involvement in

11:17:07

22

11:17:10

23

11:17:15

24

11:17:20

25

23
24
25

the Madoff, Sterling's Madoff investments?
A.

I don't recall any. He may be an

investor but I don't recall him being involved in

MS. SESHENS: That's okay.
MR. BOHORQUEZ: Valid point.
Q.
Saul Katz.
A.
Please repeat the question.
Q.
I'll rephrase the question.
What was your understanding of the
interaction between Mr. Friedman and Mr. Saul Katz
in connection with the managing of the Madoff
accounts?
MS. SESHENS: Objection to the form.
You can answer.
A.
He -- why are you objecting, by the
way?
MS. SESHENS: We'll talk about that
later.
THE WITNESS: Okay.
A.
He might discuss with Saul who, as I
said, was overall in charge of all of the finances
of the company, that Bernie was doing well this
month or wasn't doing well this month or it looked
like it was going to analyze to X or Y, Saul would
need those projections because of the overall. Saul
would then know that this part of the business was
earning X, versus other part of the business was
earning Y, and another part of the business is

53
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

the so-called bookkeeping of that.
Q.
So, was -- did Mr. Friedman's role
over time change in respect to the Madoff
investments?
A.
No. I think it was always, he was
always the point person who was involved with any,
anything that had to be done administratively or if
he had a question or whatever, he was the person.
He would talk to someone in Bernie's office about
that.
Q.
And do you know if Mr. Friedman ever
worked with Mr. Peskin in terms of the accounting
aspects of the investments, the Madoff investments?
A.
I don't understand what that means.
You mean just the reporting, Fernando?
Q.
Yes.
A.
Except maybe to coordinate. You
know, not in any kind of deep sense working with
him.
Q.
What about with respect to Mr. Katz,
how did Mr. Friedman work with Mr. Katz in
connection with the Madoff investments?
MS. SESHENS: Can you specify just
which Mr. Katz.
MR. BOHORQUEZ: Oh, sorry.

11:18:54
11:18:55
11:18:56
11:18:58
11:18:59
11:19:01
11:19:03
11:19:07
11:19:11
11:19:12
11:19:14
11:19:17
11:19:25
11:19:25
11:19:27
11:19:27
11:19:28
11:19:31
11:19:34
11:19:38
11:19:43
11:19:48
11:19:51
11:19:57
11:20:01

55

11:17:22

1

earning Z, if they were earning at all. Saul was

11:20:04

11:17:27

2

the overall person in charge of that.

11:20:10

11:17:33

3

11:17:38

4

11:17:41

5

11:17:45

Was Saul Katz responsible for making

11:20:16

the investment decisions for Sterling in Madoff?

11:20:23

Q.

No. No one was in charge of making

11:20:27

6

the investment decisions. Are you talking about

11:20:31

11:17:53

7

which stocks Bernie bought?

11:20:34

11:17:59

8

11:18:05

9

11:18:08

10

11:18:09

11

A.

11:18:14

12

decisions.

11:18:17

13

Q.

11:18:21

14

entity, how was the decision made to invest on

11:20:59

11:18:22

15

behalf of that entity into Madoff?

11:21:05

11:18:26

16

11:18:29

17

11:18:35

A.

Q.

Let me back up. Was Saul Katz in

11:20:37

charge of making the decision for a Sterling entity

11:20:42

or a Sterling partner to invest in Madoff?

11:20:47

No. The individuals made those

11:20:51
11:20:53

Okay. With respect to a Sterling

11:20:54

MS. SESHENS: Objection to the form.

11:21:06

If an entity had some money and was

11:21:11

18

to invest, it would have been agreed, I guess, in

11:21:14

11:18:38

19

some way that the entity was going to invest, and

11:21:19

11:18:38

20

then the specifics of that, you know, if an entity

11:21:23

11:18:41

21

had money, they may just have invested it in Bernie

11:21:27

11:18:44

22

or wherever. That was just done as normal course.

11:21:34

11:18:50

23

11:18:51

24

11:18:53

25

A.

Q.

Well, when you say it was agreed,

11:21:41

what do you mean by it was agreed? Who made -- who 11:21:43
was involved in that agreement?
11:21:47

BENDISH REPORTING, INC.
877.404.2193

16 (Pages 52 to 55)

FRED WILPON 7/20/10

CONFIDENTIAL

SIPC v. BLMIS

56
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

A. Generally the partners. It wouldn't
be a formal agreement. We all invested in Bernie.
We all -- some of our companies invested in Bernie.
Q.
Right.
A. We had trust and faith in Bernie.
Q.
Right.
A. There was a long, long history. So
it wasn't every time that they invested in Bernie,
they said all right, let's call a meeting, should we
invest in Bernie now. We were investing in Bernie.
It's like people were investing in treasuries or
people were investing in stocks. Bernie was a
significant source of our investments. Just like we
were invested in Sterling Stamos.
Q.
I understand that. What I'm trying
to understand is the mechanics of how it was done.
And when a decision is made for a particular entity
to invest in Madoff, trying to get an understanding
how that decision was made, what was the decision to
invest how much money and so forth.
MS. SESHENS: Asked and answered.
Just note my objection.
You may answer.
A. I don't know the specific answer,
Fernando, to that question. But let me see if I can

58

11:21:50

1

A.

For which company?

11:24:38

11:21:51

2

Q.

Generally and then we can talk about

11:24:40

11:21:58

3

11:22:01

4

11:22:02

5

to know, I probably talked to Mark Peskin or his

11:24:47

11:22:05

6

predecessor or Arthur Friedman.

11:24:54

11:22:06

7

Q.

And who is Mr. Peskin's predecessor?

11:24:58

11:22:08

8

A.

Michael Katz had that role for a

11:25:03

11:22:12

9

11:22:16

10

11:22:20

11

that's a good place to take a break. I hope that

11:25:17

11:22:23

12

was all on tape.

11:25:22

11:22:28

13

THE WITNESS: Tape's out?

11:25:24

11:22:35

14

THE VIDEOGRAPHER: Not yet.

11:25:26

11:22:38

15

Going off the record, the time is

11:25:28

11:22:39

16

11:25. This ends tape 1.

11:25:32

11:22:44

17

(Recess taken.)

11:25:36

11:22:48

18

11:22:55

19

THE VIDEOGRAPHER: We're back on the 11:39:50
record. The time is 11:40. This is tape number 2.
11:40:28

11:22:58

20

BY MR. BOHORQUEZ:

11:23:02

21

11:23:03

22

11:23:05

23

You had mentioned that before

11:40:44

11:23:06

24

investing with Madoff, Sterling had looked at other

11:40:48

11:23:12

25

investment firms. Is that right?

11:40:52

11:24:42

specific businesses.
A.

I probably talked to -- if I wanted

while. Saul, Michael. Saul is really more overall.
MR. BOHORQUEZ: All right. I think

Q.

2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25

go 5,000 feet up.
Bernie Madoff was a source of our
investment funds, as other things were. And we
decided, the group decided, we're going to invest in
these different things and we're going to invest in
Bernie. And so if the Mets have some money, put it
into Bernie. If some other company has some money,
we might have said put it into this, or put it into
Bernie, or put it into something else.
So, the overall decision was made
that way, and then individually I have no idea how
the mechanics worked. So I can't tell you -- if
you're asking me, was I a party to the fact that
this company invested that amount of money in Bernie
on a specific date, not -- I haven't got a clue.
Q.
Fair enough. Last question and we'll
take a break.
A.
No breaks. No breaks, come on.
Q.
We've got to take a break to change
the tape.
MS. SESHENS: I'm going to insist on
a break.
Q.
Who -- if you wanted to know who was
the person who would know the mechanics of the
investments in Madoff, who would that person be?

11:25:08
11:25:16

11:40:33

I just want to go back over one or

two things that we discussed this morning.

57
1

11:24:44

11:40:35
11:40:39

59

11:23:15

1

11:23:17

2

11:23:21

3

11:23:23

4

11:23:30

5

11:23:33

6

11:23:40

7

11:23:45

8

11:23:49

9

11:23:51

10

11:23:55

11

11:23:58

12

11:24:04

13

11:24:07

14

11:24:11

15

11:24:16

16

11:24:18

17

11:24:19

18

11:24:22

19

11:24:24

20

11:24:25

21

11:24:26

22

11:24:27

23

11:24:29

24

11:24:33

25

A.
Yes.
Q.
In connection with deciding whether
or not to invest in these other investment firms,
did those firms provide you any materials concerning
the firms?
A.
Not that I know of.
Q.
Over the years has Sterling invested
with other investment firms other than Madoff?
A.
Yes.
Q.
In connection with those investments,
have those firms provided Sterling with any
materials?
A.
None that I know of.
Q.
If those firms were to have provided
materials, who would they have provided them to
within the Sterling organization?
MS. SESHENS: Objection to the form.
A.
Probably to Saul, Arthur, Mark.
People who would have expertise.
Q.
And by Saul, you mean Saul Katz,
Arthur Friedman and Mark Peskin?
A.
Correct.
Q.
You also mentioned earlier that when
you -- at these meetings you had with Saul Katz and
Mr. Madoff, at Mr. Madoff's offices, roughly about

BENDISH REPORTING, INC.
877.404.2193

11:40:55
11:40:56
11:41:01
11:41:04
11:41:08
11:41:11
11:41:19
11:41:22
11:41:24
11:41:27
11:41:29
11:41:32
11:41:33
11:41:36
11:41:40
11:41:42
11:41:44
11:41:45
11:41:51
11:41:55
11:41:57
11:42:00
11:42:09
11:42:12
11:42:15

17 (Pages 56 to 59)

FRED WILPON 7/20/10

CONFIDENTIAL

SIPC v. BLMIS

60
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

once a year, one of the topics you would discuss
were your investments in Madoff, correct?
A. Correct.
Q.
And you gave an example of one of the
topics concerning the Madoff investments would be
the anticipated returns for that year. Is that
right?
A. Correct.
Q.
Did there ever come a time when the
anticipated returns that Madoff had predicted did
not come to pass, that he did not deliver on those
anticipated returns?
MS. SESHENS: Objection to the form.
Lacks foundation.
You can answer.
A. From time to time they were less, or
more. It wasn't precise.
Q.
Was there ever a time when you were
disappointed in the returns from Madoff?
A. Yes. The returns might have been
less than what we were projecting.
Q.
Do you recall when that happened?
A. No.
Q.
And if the returns -- when the
returns were less than projected, did you raise this

62

11:42:20

1

11:42:23

2

11:42:29

3

11:42:29

4

11:42:33

5

11:42:35

6

11:42:40

7

11:42:40

8

11:42:41

9

11:42:51

10

11:42:56

11

11:42:59

12

11:43:01

13

11:43:03

14

11:43:05

15

11:43:09

16

11:43:13

17

11:43:20

18

11:43:23

19

11:43:33

20

11:43:34

21

11:43:37

22

11:43:42

23

11:43:43

24

11:43:48

25

your initial investment with Madoff, what was your
understanding as to Mr. Friedman's role in
connection with tracking the investments?
A. He was administratively in charge of
that, and would daily or weekly or monthly, I don't
really know, would check the statements, check the
stocks that were bought, et cetera, et cetera.
Q.
Did Mr. Friedman ever report to you
any concerns he had with any of the stock purchases?
A. Not that I could recollect.
Q.
Do you know if Mr. Friedman reverse
engineered Madoff's strategy at one point?
MS. SESHENS: Objection to the form.
Q.
If you understand what I'm asking. I
can rephrase it.
A. I don't even understand what that
means.
Q.
Okay. Let me -- I had a feeling.
Let me back up.
Do you know if Mr. Friedman ever
tried to figure out Madoff's investment strategy?
MS. SESHENS: Objection to the form.
A. I don't really know.
Q.
What's that?
A. I don't really know that.

61
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

issue with Madoff?
A.
No.
Q.
Did Mr. Saul Katz raise that issue
with Madoff?
MS. SESHENS: Objection to the form.
A.
I don't believe so.
Q.
You also testified earlier that,
starting a few years ago, you had bimonthly
partners' meetings. Is that right?
A.
Correct.
Q.
And at those partners' meetings, the
partner in charge with a particular aspect of the
Sterling business would report on generally what was
going on in that particular side of the business,
right?
A.
Correct.
Q.
Prior to December 11, 2008, who was
the partner who reported on Sterling's investments
with Madoff?
A.
Arthur Friedman.
Q.
Did any other partner report at those
meetings what was happening with the Madoff
investments?
A.
Not that I could recall.
Q.
With respect to Mr. Friedman, after

11:43:51
11:43:52
11:43:53
11:43:58
11:43:59
11:44:01
11:44:09
11:44:14
11:44:18
11:44:22
11:44:23
11:44:26
11:44:31
11:44:34
11:44:36
11:44:39
11:44:39
11:44:42
11:44:46
11:44:48
11:44:52
11:44:54
11:44:59
11:45:01
11:45:04

11:45:09
11:45:13
11:45:17
11:45:30
11:45:35
11:45:38
11:45:45
11:45:48
11:45:53
11:45:58
11:46:05
11:46:10
11:46:13
11:46:14
11:46:16
11:46:17
11:46:19
11:46:19
11:46:24
11:46:25
11:46:27
11:46:30
11:46:32
11:46:32
11:46:33

63
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.

Okay.
What is the Gift of Life?
MS. SESHENS: Generally?
MR. BOHORQUEZ: Generally.
Q.
Organization. Very interesting name
for an organization. Were you ever on the board of
an organization called the Gift of Life?
A.
Yes.
Q.
When did you join the board?
A.
When?
Q.
Yes.
A.
Two, three years before Bernie
exploded.
Q.
And by exploded you mean when the
fraud was discovered?
A.
When he was taken to jail.
Q.
So using that as a time, as a guide
post, you joined the board roughly 2005?
A.
That's my recollection.
Q.
Okay. Did you go to a meeting of the
Gift of Life board -- actually, back up.
Did you attend board meetings in
connection with the Gift of Life?
A.
Yes.
Q.
Approximately how many board meetings

BENDISH REPORTING, INC.
877.404.2193

11:46:35
11:46:49
11:46:52
11:46:54
11:46:58
11:46:59
11:47:02
11:47:04
11:47:05
11:47:07
11:47:08
11:47:12
11:47:20
11:47:22
11:47:26
11:47:30
11:47:32
11:47:35
11:47:40
11:47:41
11:47:53
11:47:56
11:47:57
11:47:59
11:48:01

18 (Pages 60 to 63)

FRED WILPON 7/20/10

CONFIDENTIAL

SIPC v. BLMIS

124
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

at the end of '94, approximately -- I've done the
math, I'm not very good at math but I've done the
math -- approximately 90 percent of the Sterling
investments were in Madoff.
A. Um-hum.
Q.
And over $100 million at this point
then in '94?
A. That's what it seems to indicate.
Q.
Right. Was there a conscious
decision or strategic decision amongst the partners
to increase investments in Madoff from a handful of
investments in 1985 of a few million dollars to now
over $100 million less than -- about ten years
later?
MS. SESHENS: Objection. Asked and
answered. You can answer.
A. No. I think the decision was made
that Bernie was doing very well, he was a trusted
advisor or investment advisor, and it was a form of,
a form of investment or sort of like a part of our
business that was advantageous to invest in.
Q.
Was there any discussion at this
point in time, end of '94, that Madoff at this point
made up close to 90 percent of the Sterling
investments?

02:01:56
02:02:02
02:02:06
02:02:09
02:02:11
02:02:13
02:02:18
02:02:21
02:02:23
02:02:26
02:02:29
02:02:33
02:02:36
02:02:43
02:02:43
02:02:44
02:02:47
02:02:51
02:02:59
02:03:09
02:03:15
02:03:21
02:03:22
02:03:30
02:03:35

126
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.
Mr. Wilpon, I've handed you what's
Exhibit 6. This is a document, your attorneys
provided us computer files in native format. And
for ease of review, what we have done is printed out
the native file on the paper. Dana, I can give you
the Bates number if you like of the actual native
file.
MS. SESHENS: I think you provided it
last night.
MR. BOHORQUEZ: Okay.
MS. SESHENS: So I think we're aware
that you were going to use this one.
MR. BOHORQUEZ: I'll just state it
for the record just so we know. It's SE underscore
T605089 is the Bates number for the native file.
Q.
So, Mr. Wilpon, please take a moment
to review and let me know when you're ready to
discuss.
A.
I'm ready.
Q.
If you could please turn to page 2 of
Exhibit 6.
Actually, before we do that, what is
Exhibit 6?
A.
Excuse me. It appears to be a
listing of Sterling Equities investments starting

125
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

A.
I don't recall any conversations.
Q.
You noted earlier as we were going
through some of the earlier pages in this document
that you identified several individuals that fell
within the friends and family category.
A.
Yes.
MS. SESHENS: Objection to the form.
Q.
Was there a general decision to begin
to bring -- to help more friends and family to open
accounts with Madoff over that ten-year period?
MS. SESHENS: Objection.
Q.
You can answer.
MS. SESHENS: You can answer.
A.
Not to my knowledge.
Q.
Why don't we go to 11B. This is
Exhibit 6. Thank you very much.
(Exhibit FW-6 marked for
identification.)
Q.
Mr. Madoff, I've handed you what's -MS. SESHENS: I'm going to object
already. You just called him Mr. Madoff.
Q.
Oh, my gosh, sorry. My apologies,
Mr. Wilpon. I thought you were objecting to the
name of the file.
MS. SESHENS: No. At least not yet.

02:03:35
02:03:42
02:03:45
02:03:47
02:03:50
02:03:53
02:03:53
02:03:57
02:04:03
02:04:06
02:04:09
02:04:11
02:04:12
02:04:13
02:04:29
02:04:52
02:04:52
02:04:55
02:05:01
02:05:04
02:05:05
02:05:08
02:05:11
02:05:14
02:05:16

02:05:18
02:05:20
02:05:24
02:05:28
02:05:33
02:05:40
02:05:43
02:05:44
02:05:45
02:05:46
02:05:46
02:05:49
02:05:52
02:05:53
02:05:57
02:06:13
02:06:16
02:06:19
02:06:20
02:06:26
02:06:30
02:06:42
02:06:51
02:06:57
02:06:59

127
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

with Madoff. I don't know what shows after that,
but...
Q.
Is this similar in format and
information to Exhibit 5 that we just reviewed?
A.
Yes.
Q.
Mr. Wilpon, if you could please turn
to page 2. I just want to ask you a couple of
questions about several of the account holders on
the left-hand side.
If you can go down to KW 116, do you
see that? I mean 162, sorry.
A.
162?
Q.
Correct.
A.
Yes.
Q.
Martin Lifton?
A.
Yes.
Q.
Who is Martin Lifton?
A.
He is a real estate person here in
New York. He's a friend of, primarily of Saul's,
but I know him well. I mean, I know him over the
years.
Q.
So he falls within the friend and
family category?
A.
Yes.
Q.
Little below him, little below

BENDISH REPORTING, INC.
877.404.2193

02:07:03
02:07:07
02:07:08
02:07:12
02:07:16
02:07:23
02:07:25
02:07:28
02:07:30
02:07:34
02:07:40
02:07:44
02:07:44
02:07:46
02:07:46
02:07:48
02:07:48
02:07:53
02:07:56
02:08:01
02:08:04
02:08:06
02:08:09
02:08:11
02:08:13

34 (Pages 124 to 127)

FRED WILPON 7/20/10

CONFIDENTIAL

SIPC v. BLMIS

144
1
3

02:33:03

conversations?
MS. SESHENS: Object to the preamble.

2

A.

Just that there were a lot of people.

02:33:03
02:33:06

4

There were many, many, many more people that

02:33:13

5

approached partners or other people about trying to

02:33:19

6

get into the Madoff investments, that were never --

02:33:22

7

they may not have been family and friends, you know,

02:33:28

8

but we never, we never requested that. But there

02:33:32

9

was a known factor in the community that Bernie was

02:33:41

one of the top hedge fund investors in the world.

02:33:44

10
11
12

Okay, but what discussions did you

02:33:54

have concerning the burden of managing the accounts?

02:34:00

Q.

13

A.

I don't recall.

02:34:02

14

Q.

No specific discussions?

02:34:03

15

A.

(Witness shakes head.)

02:34:09

16

Q.

Do you have any estimate as to how

02:34:11

17

many individuals the partners turned down who were

02:34:13

18

seeking to open an account with Madoff through

02:34:16

19

Sterling?

02:34:20

20

A.

Asking me for a guesstimate, I don't

02:34:29

21

know the specifics, but a guesstimate, I'd have to

02:34:31

22

guess that there were more people than got in --

02:34:34

23

more people were turned down than got in. When I

02:34:41

24

say turned down, never brought to be asked.

02:34:45

25

Q.

02:34:49

Never brought to Mr. Madoff.

146
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.
Right.
A. And we all said no. Because, you
know, that's not why we're -- we're not doing it to
make money. We're not receiving any benefit from
it. We're just doing it for friends and family.
Q.
Do you recall who raised the
possibility of charging an administrative charge?
A. I don't recall that.
Q.
Did there come a time when Sterling
partners decided to diversify their investments?
A. Several years prior to acquiring the
interest in the Mets we talked about
diversification. We had had a little
diversification before that, but we talked about
diversification.
Q.
Just so we're clear on the time line,
the purchase of the Mets, the full ownership
purchase of that was in 2002, right?
A. Yeah, but we, we've had ownership in
the Mets from 1980 or something like that.
Q.
So when you're referring that there
was a discussion of diversification a few years
before full ownership of the Mets, we're talking
like the late 1990s?
A. No. Late 1970s.

145
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

A.
Right.
Q.
And these were individuals that
Sterling did not bring to Madoff to open an account?
A.
Right.
Q.
Now, I understand from your testimony
that at the beginning the idea of opening these
friends and family accounts was really done as a
favor to friends and family, right?
A.
Not only at the beginning.
Throughout.
Q.
But did there come a time when, with
the increased burden of managing these accounts, did
there come a time when there was a discussion that
maybe there should be something given in exchange
for the management of the accounts?
A.
Yeah.
MS. SESHENS: Objection to the form.
A.
The motivation was always to help the
people, from the beginning to the end.
Q.
Right.
A.
Many people were not -- did not get
in because they weren't close friends or family.
And there were discussions, I don't know the
specifics, but about should there be an
administrative charge.

02:36:09
02:36:10
02:36:14
02:36:18
02:36:21
02:36:25
02:36:26
02:36:31
02:36:53
02:36:56
02:37:07
02:37:14
02:37:20
02:37:23
02:37:25
02:37:26
02:37:29
02:37:32
02:37:34
02:37:38
02:37:43
02:37:46
02:37:49
02:37:53
02:37:59

147
02:38:01

02:34:51

1

02:34:52

2

02:34:53

3

02:34:56

4

diversify Sterling's investments in other investment

02:38:12

02:34:59

5

funds in addition to Madoff at some point?

02:38:16

02:35:03

6

02:35:07

7

the time that we contemplated starting Sterling

02:38:29

02:35:12

8

Stamos, we thought that was a good diversification

02:38:34

02:35:14

9

as well. But Sterling Stamos was a fund of funds,

02:38:41

02:35:17

10

so they were going to invest in a lot of different

02:38:47

02:35:19

11

funds, with many different strategies.

02:38:50

02:35:23

12

02:35:29

13

02:35:33

14

02:35:37

15

partnership's idea, but Saul had a friendship with

02:39:08

02:35:39

16

Peter Stamos and that sort of evolved over about a

02:39:12

02:35:39

17

decade.

02:39:16

02:35:42

18

02:35:44

Q.

Oh, okay, so we're back to the -- I'm

sorry. Thank you for clarifying.
Was there a decision at some point to

A.

Q.

We always had some but, yeah, about

And whose idea was it to begin the

02:38:09

02:38:25

02:38:56
02:39:02

fund of funds?
A.

02:38:05

Well, I think it was the

02:39:06

And was the idea of developing this

02:39:20

19

fund of funds as part of a strategy to diversify

02:39:23

02:35:46

20

or -- strike that -- to move money from Madoff and

02:39:30

02:35:50

21

into another investment vehicle?

02:39:34

02:35:52

22

02:35:57

23

02:36:03

24

we -- I don't think we withdrew money from Madoff on 02:39:41
a, any kind of planned basis, and invested that
02:39:48

02:36:08

25

money in Sterling Stamos. I think we had additional

Q.

A.

I don't believe so. I don't think

BENDISH REPORTING, INC.
877.404.2193

02:39:38

02:39:53

39 (Pages 144 to 147)

FRED WILPON 7/20/10

CONFIDENTIAL

SIPC v. BLMIS

156
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.
Was the discussion of Sterling
Stamos' -- strike that.
Was Sterling Stamos' investment in
Bayou ever discussed with the partners at any time?
A. Before he invested in it?
Q.
Why don't we break it down. Before
Sterling Stamos invested in Bayou, was there any
discussion amongst the partners?
A. Not to my knowledge. Or any other
investment he's made. We were not involved in the
investment process.
There you go, number 4.
Q.
I think we can wrap up Sterling
Stamos and Bayou and then we can switch the tape.
Couple more follow-up questions on that.
Do you know why Sterling Stamos
withdrew its funds or its investments from Bayou?
MS. SESHENS: Objection, lacks
foundation. Go ahead.
A. The only thing I remember of that,
after the fact, because there was so much publicity
about it, was he withdrew because they were not
transparent. And that was, one of his prerequisites
was that anything he invested in, the company would
be transparent, that he would know what the

158

02:52:45

1

02:52:49

2

02:52:52

3

02:52:54

4

02:53:01

5

02:53:03

6

02:53:05

7

02:53:08

8

02:53:12

9

02:53:14

10

02:53:17

11

02:53:27

12

02:53:29

13

02:53:31

14

02:53:36

15

02:53:39

16

02:53:44

17

02:53:49

18

02:53:51

19

02:53:58

20

02:54:01

21

02:54:05

22

02:54:10

23

02:54:17

24

02:54:21

25

Q.
Did Mr. Stamos ever express concern
that Madoff lacked transparency?
A.
Not that I know of.
Q.
What do you understand that concept
to be, the lack of transparency, what's your
understanding of that?
A.
That if someone said they were going
to invest in widgets, and they invested in widgets,
that was what they were supposed to do. But then
all of a sudden they invested in widgets and water,
or something else, they were going out of their
strategy, that the people at Sterling Stamos would
object to that, because they only wanted to invest
with them if this was their strategy.
Q.
So your understanding of the lack of
transparency concept is when a fund diverts from the
initial strategy?
A.
(Witness nods.)
MS. SESHENS: That was a yes,
correct? You nodded.
THE WITNESS: Do I have to answer
you?
MS. SESHENS: Yes.
A.
Yes.
MR. BOHORQUEZ: All right. Why don't

157
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

investments were -- not that he would make the
investment decision, Peter Stamos, but he would know
what the strategy was and then he agreed with the
strategy and if they wavered from the strategy, he
didn't want to be an investor. We don't know, I
don't know to this moment what companies Stamos
invests in.
Q.
Did Mr. Stamos express to you his
concerns that Bayou lacks transparency and that's
why he decided to withdraw the investments?
A.
No, I've never had that conversation.
Q.
How did you come to know that
Mr. Stamos had concerns with Bayou's transparency?
A.
I think when the publicity came
out -Q.
What was that?
A.
I think when the publicity came out
he mentioned that to someone. I don't recall whom.
Probably Saul or David or someone.
Q.
Do you recall if Mr. Stamos mentioned
any other reasons, other than Bayou's lack of
transparency -A.
No.
Q.
-- for withdrawing investments?
A.
No.

02:55:50
02:55:53
02:55:56
02:56:03
02:56:05
02:56:09
02:56:10
02:56:15
02:56:23
02:56:25
02:56:31
02:56:34
02:56:41
02:56:43
02:56:46
02:56:50
02:56:55
02:57:03
02:57:05
02:57:06
02:57:08
02:57:10
02:57:10
02:57:12
02:57:14

159
02:57:15

02:54:26

1

02:54:28

2

THE VIDEOGRAPHER: Going off the

02:57:23

02:54:31

3

record, the time is 2:57. This ends tape number 3.

02:57:25

02:54:34

4

(Recess taken.)

02:57:32

02:54:37

5

THE VIDEOGRAPHER: We are back on the

03:11:24

02:54:42

6

record. The time is 3:12. This is tape number 4.

03:11:41

02:54:51

7

BY MR. BOHORQUEZ:

03:11:47

02:54:52

8

02:54:55

9

02:54:59

we take a break for the tape.

Mr. Wilpon, earlier you had testified

03:11:53

to a discussion between you, Mr. Saul Katz and

03:11:56

10

Bernie Madoff where Mr. Katz raised the possibility

03:12:00

02:55:02

11

of Mr. Madoff retiring. Right?

03:12:02

02:55:04

12

A.

Correct.

03:12:05

02:55:07

13

Q.

Did Mr. Madoff explain why, if he

03:12:11

02:55:10

14

were to retire, someone else within his organization

03:12:15

02:55:13

15

could not continue the business?

03:12:17

02:55:13

16

A.

No.

03:12:21

02:55:14

17

Q.

I want to show you --

03:12:27

02:55:17

18

A.

He didn't say he was -- he didn't

03:12:28

02:55:19

19

indicate that someone would not be doing it. He

03:12:31

02:55:28

20

just said if I weren't, if that's what I chose to

03:12:34

02:55:32

21

do, then I'd send your money back. That's what he

03:12:41

02:55:36

22

said.

03:12:46

02:55:37

23

02:55:37

24

02:55:40

25

Q.

Q.

I hand you Exhibit 9, Mr. Wilpon.
(Exhibit FW-9 marked for

identification.)

BENDISH REPORTING, INC.
877.404.2193

03:13:08
03:13:19
03:13:23

42 (Pages 156 to 159)

FRED WILPON 7/20/10

CONFIDENTIAL

SIPC v. BLMIS

196
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.
Was the issue of Madoff's lack of
transparency ever discussed amongst the Sterling
partners at any time?
A.
I don't know if he had a lack of
transparency.
Q.
Pardon me?
A.
I'm not sure he had a lack of
transparency.
Q.
That's what I'm asking you. If it
was ever discussed that Madoff may have a lack of
transparency?
A.
No.
Q.
When Peter Stamos raised the issue of
Bayou having a lack of transparency, did anyone
within the Sterling organization decide to
investigate as to whether Madoff, as well, had a
lack of transparency?
A.
I think I testified that what I meant
by Stamos, in terms of his determination of lack of
transparency is that he -- if he believed that there
was a strategy that was going to be successful and
he invested in that fund of funds, that was
transparency to him. He'd be able to see they were
investing in that strategy. But if they changed the
strategy and veered from that strategy, then he was

198
1

04:04:44

2

amongst the partners concerning front-running and

04:07:16

04:04:49

3

Madoff?

04:07:20

04:04:52

4

A.

Not that I can recall.

04:07:23

04:04:54

5

Q.

You're aware that Madoff was

04:07:37

04:04:54

6

investigated on a few occasions by the SEC, correct?

04:07:41

04:04:55

7

A.

Yes.

04:07:47

04:04:57

8

Q.

Did you ever speak to Mr. Madoff

04:07:48

04:04:58

9

04:05:00

10

A.

No.

04:07:54

04:05:02

11

Q.

Were the Madoff SEC investigations

04:07:57

04:05:04

12

ever a topic of discussion at any of the partners

04:07:59

04:05:05

13

meetings?

04:08:03

04:05:10

14

A.

Yes.

04:08:04

04:05:13

15

Q.

Can you please tell me what were

04:08:11

04:05:16

16

04:05:20

17

04:05:22

Q.

Did you ever have any discussions

concerning those SEC investigations?

not happy about that.
As far as I know, Bernie never
changed his strategy one iota from all the time we
were investors.
Q.
So to be clear, it's your
understanding that Madoff's investment strategy was
consistent for the entire time that you were
invested with him?
A. That's my understanding.
Q.
Have you ever heard of the term
"front-running"?
A. Only...
Q.
I don't want to get into any
discussions you've had with counsel about that.
A. Only of late.
Q.
Only with what?
A. Only of late.
Q.
In connection with the preparation
for your deposition?
A. Correct.
Q.
Prior to preparation for your
deposition, have you had any discussion -- did you
have any discussions with the partners concerning
the general concept of front-running?
A. No. Not that I can recall.

04:07:50

04:08:15

those discussions?
I can't remember the detail of the

04:08:16

18

discussions, but there was one time when someone in

04:08:18

04:05:25

19

Florida had committed some kind of violation, two

04:08:24

04:05:33

20

guys in Florida, that were investors in Bernie, and

04:08:30

04:05:37

21

the SEC came in and admonished them and Bernie sent

04:08:37

04:05:39

22

back $480 million or something, overnight.

04:08:42

04:05:46

23

Q.

Is this Avellino & Bienes?

04:08:49

04:05:50

24

A.

Something like that.

04:08:57

04:05:54

25

Q.

And what specifically did you discuss

04:08:59

A.

197
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

04:07:14

04:04:40

04:05:59
04:06:01
04:06:04
04:06:11
04:06:12
04:06:14
04:06:17
04:06:20
04:06:22
04:06:38
04:06:41
04:06:44
04:06:45
04:06:47
04:06:50
04:06:51
04:06:53
04:06:54
04:06:57
04:06:58
04:06:58
04:07:00
04:07:05
04:07:08
04:07:12

199
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

amongst the partners concerning the Avellino &
Bienes matter?
A. That the SEC had determined that it
was not Bernie who was at fault, or had violated
anything, and in fact it was amazing that he just,
you know, returned the 400 -- I don't remember the
number, but a large amount of money, overnight.
Q.
Did you ever talk to Mr. Madoff about
the Avellino & Bienes investigation?
A. No.
Q.
Did you ever talk to him about the
fact that he was able to return all that money
overnight that you mentioned?
A. No.
Q.
Other than the Avellino & Bienes SEC
investigation, did you have any other discussions
with the partners concerning any other SEC
investigations of Madoff?
A. It's hard to put that in context
after all the publicity. Because after all the
publicity, one learned that there were eight or nine
SEC investigations. Not that we knew about those,
but there were a lot of SEC investigations, and they
always came up that Mr. Madoff was clean as a
whistle. That gave us, you know, that was always

BENDISH REPORTING, INC.
877.404.2193

04:09:03
04:09:08
04:09:09
04:09:10
04:09:15
04:09:21
04:09:25
04:09:30
04:09:33
04:09:36
04:09:36
04:09:38
04:09:41
04:09:42
04:09:51
04:09:54
04:09:56
04:09:58
04:10:03
04:10:05
04:10:09
04:10:14
04:10:19
04:10:23
04:10:28

52 (Pages 196 to 199)

FRED WILPON 7/20/10

CONFIDENTIAL

SIPC v. BLMIS

212
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.
Okay. Please go down to the bottom
of the document, under the signature very truly
yours, the name Fred Wilpon. Is that your
signature?
A. Yes, it is.
Q.
To the right of your signature is
that Saul Katz's signature?
A. I believe so.
Q.
And to the left, under the word
"Agreed," Ruth Madoff, is that Mrs. Madoff's
signature?
A. I don't think I've ever seen her
signature, but it looks like her signature.
Q.
Are you familiar with this document?
A. Yes.
Q.
When did you last review this
document?
A. Two days ago.
Q.
In connection with the preparation of
the deposition?
A. (Witness nods.)
Q.
Can you explain to me the first
sentence of the letter agreement. It says: "Dear
Ruth, this will confirm the conversations with
respect to an investment by you in the network."

04:40:09
04:40:11
04:40:16
04:40:19
04:40:19
04:40:20
04:40:21
04:40:23
04:40:24
04:40:31
04:40:35
04:40:36
04:40:39
04:40:43
04:40:45
04:40:46
04:40:52
04:40:53
04:40:54
04:40:56
04:40:59
04:41:03
04:41:05
04:41:09
04:41:11

214
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

option that lapsed and we didn't want that to
happen.
So we were in my car, driving to our
office in Manhattan, and Marvin Tepper was with us,
Saul and I were in the back seat, Marvin Tepper was
in the front seat. And we decided we didn't want to
take that chance.
So, what were the alternatives. The
alternatives were that we could break accounts that
we had otherwhere, whatever, we could try to find
the money elsewhere, or we could break accounts at
Bernie and just have him send us the money.
So we decided to call Bernie, and we
called Bernie on my car phone, I don't recall, I'm
not sure whether I spoke to him or -- I don't
remember that. Or whether he was on the speaker
phone or not.
We called Bernie and his secretary
said, he's out of town, I'll reach him for you. And
she reached him. At the time I didn't know where he
was, but I saw other documents at prep that told me
he was in Europe somewhere, in France I think. And
we said to Bernie, Bernie, we want to break some
accounts. Even though it was in the middle of the
period. Because he didn't -- if you broke accounts

213
2

A.

We decided to buy out of our

04:41:19

1
2

3

agreement with Cablevision. We had an option to do

04:41:33

3

4

so. So, we arranged for financing from a bank, or

04:41:38

4

5

banks, I don't remember, for the monies that refers

04:41:48

5

6

in here, the $54 million.

04:41:55

6

7

Q.

Right.

04:41:58

7

8

A.

When it came down to the time when

04:42:00

8

the option was going to expire, you know, there was

04:42:01

9

10

a time when we had to do this, for the purpose of

04:42:05

10

11

starting a network, which ultimately became SNY. I

04:42:11

11

12

don't know there was anything ever called Mets

04:42:21

12

13

Network Company. That was out of Marvin Tepper's

04:42:24

13

14

14

15

head. He just made a name up. When it came down to 04:42:26
the time, there was a couple of days left when we
04:42:32

16

had to exercise that option, and what I was told was

04:42:37

16

17

that the bank had accepted everything, but they were

04:42:45

17

18

doing paperwork. Lawyers were making their fees.

04:42:50

18

9

04:43:34
04:43:35
04:43:38
04:43:45
04:43:49
04:43:56
04:43:58
04:44:00
04:44:04
04:44:09
04:44:12
04:44:17
04:44:22
04:44:27
04:44:29
04:44:33
04:44:35
04:44:40
04:44:48
04:44:54
04:45:01
04:45:06
04:45:11
04:45:14

215

04:41:28

What is that sentence referring to?

1

04:43:29

15

19

Q.

Sounds unbelievable.

04:42:57

19

20

A.

That was the first time in history.

04:43:02

20

21

Q.

Right.

04:43:03

21

22

A.

So, I don't remember whether it was

04:43:06

22

23

two days before or five days before, something like

04:43:12

23

24

that, but we were concerned about it because,

04:43:15

24

25

suppose they lawyered a day after, then we'd have an

04:43:20

25

in the middle, you didn't get the value of that
account, in terms of the interest, the return that
was paid.
So, he said, okay. And then he said,
yeah, but why should you break the accounts, you're
going to lose the continuity of the account. I'll
send you the money. Got plenty of collateral in the
accounts, I'll send you the money. He said, how
long do you need it for. We said, well, we don't
know whether we need it, but we might need it for,
you know, a few days. So he said, okay, I'll send
you the money. And so he said he'd send the money.
That was that.
I don't know what happened thereafter
in terms of Marvin Tepper calling Bernie, or Bernie
or someone. I don't really know what happened
there. And I don't know how this letter got written
or why. Bernie didn't ask that of us on the
telephone. So, this letter was written by Marvin.
I had no idea that -- until recalling here -- that
Ruth, was sent to Ruth. Had no idea because he said
he was sending it from his account. Not from Ruth's
account. Sending the money.
So, that afternoon or sometime
thereafter, within the next few hours anyway,

BENDISH REPORTING, INC.
877.404.2193

04:45:17
04:45:20
04:45:25
04:45:30
04:45:35
04:45:38
04:45:44
04:45:51
04:45:53
04:45:57
04:46:02
04:46:06
04:46:14
04:46:19
04:46:20
04:46:31
04:46:34
04:46:40
04:46:45
04:46:53
04:47:02
04:47:06
04:47:09
04:47:19
04:47:21

56 (Pages 212 to 215)

FRED WILPON 7/20/10

CONFIDENTIAL

SIPC v. BLMIS

216

218

1

someone must have told Arthur or one of the

04:47:31

1

of time. We said break the accounts, he said why

04:50:49

2

accountants or someone and we got a call from the

04:47:35

2

break the accounts. The alternative is I'll just

04:50:55

3

bank that there was $104 million in the account. In

04:47:43

3

send you the money. You don't need it for very

04:50:58

4

other words, Bernie's 54 was wired, but the bank

04:47:51

4

long, and you can send it back to me.

04:51:01

5

that we borrowed the money from wired the money as

04:48:00

5

6

well. So someone got a call and said what's going

04:48:03

6

7

on here, you've got money in the account. So

04:48:11

7

A.

No. Not to my knowledge.

04:51:12

8

obviously we realized what happened, the bank had

04:48:13

8

Q.

I can turn now to the letter that's

04:51:18

9

approved the transaction. They funded the money

04:48:16

9

10

into the account, and then that day or the next day

04:48:19

10

11

or whatever, I don't remember -- I don't know who

04:48:23

11

A.

I've told you that.

04:51:33

12

did it or whatever, but they wired the money back to

04:48:26

12

Q.

So at some point in time you reviewed

04:51:35

13

Bernie. So the money may have been in the account

04:48:29

13

14

for a day or half a day or something like that.

04:48:35

14

A.

Correct.

04:51:44

04:48:40

15

Q.

So, when you signed this agreement,

04:51:45

I have no idea why this letter was

15

Q.

Was Ruth Madoff involved in any of

these discussions or this discussion, period?

04:51:04
04:51:09

in front of you, Exhibit 17. That is your signature

04:51:23

at the bottom of the letter, right?

04:51:31

this letter and you signed it, right?

04:51:39

were there any other signatures on the document when 04:51:50
you signed it?
04:51:54

16

written; it wasn't requested. I have no idea. But

04:48:42

16

17

that's what you lawyers do. You write letters. So

04:48:46

17

18

that's my recollection of the whole thing.

04:48:56

18

A.

I don't recall.

04:51:56

04:49:01

19

Q.

Don't remember. When you signed the

04:51:57

20

money was wired from -- you understand the money was 04:49:05

20

21

wired from Madoff accounts to your account without

04:49:09

21

A.

I don't recall that.

04:52:02

22

any paperwork memorializing any agreement of any

04:49:16

22

Q.

How long after the phone call you had

04:52:05

23

sorts?

04:49:20

23

with Mr. Madoff where he agreed to wire you $54

04:52:09

19

Q.

So it's your recollection that the

agreement was there anyone else in the room?

04:52:00

24

A.

Right.

04:49:21

24

million, what was the lag time between that phone

04:52:14

25

Q.

You had also mentioned during your

04:49:24

25

call and when you signed this agreement?

04:52:17

217
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

discussion that there was some documents in
preparation that you reviewed that Mr. Madoff was in
Europe at the time, or something?
A. Something I saw in prep that would
have indicated the transfer or something, that he
was not in -- he was not in New York.
Q.
Is this an email of some sort?
A. No, it wasn't an email. Well, I
don't know whether it was an email. I don't get
email -- I mean, I don't send emails, so...
Q.
So the discussion you had with
Mr. Madoff about this transaction all occurred from
your car phone?
A. Yeah.
Q.
And you were in the car, Mr. Saul
Katz was in the car and Mr. Tepper was in the car?
A. And my driver.
Q.
Your driver, okay. And was the phone
on speaker phone?
A. I don't remember that. I don't
remember whether it was on speaker phone or not. It
was a conversation for about, you know, two minutes.
Q.
The whole discussion only lasted two
minutes?
A. Well, you know, a very short period

04:49:27
04:49:29
04:49:33
04:49:36
04:49:43
04:49:48
04:49:50
04:49:53
04:49:57
04:50:01
04:50:09
04:50:11
04:50:15
04:50:17
04:50:18
04:50:22
04:50:25
04:50:28
04:50:30
04:50:32
04:50:36
04:50:39
04:50:44
04:50:47
04:50:48

219
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

A. I have no idea.
Q.
Do you remember if you signed this
agreement at or around May 25th, 2004?
A. I don't know.
Q.
Go to the first paragraph of the
letter agreement. It says, "This will confirm the
conversations with respect to an investment by you
in the network."
Are you aware of any discussions with
Ruth Madoff concerning any investment in the
network?
A. No.
Q.
So, you read this document before you
signed it, right?
A. (Witness nods.)
Q.
When you read that line, did that
cause you any concern or did you think about the
fact that Ms. Madoff had not had any conversations
with respect to the investment?
A. Only that our general counsel may
have had conversations or -- I don't know who he
even talked to.
Q.
Mr. Tepper drafted this letter,
right?
A. Yes.

BENDISH REPORTING, INC.
877.404.2193

04:52:22
04:52:27
04:52:29
04:52:33
04:52:40
04:52:43
04:52:50
04:52:52
04:52:54
04:52:57
04:53:02
04:53:03
04:53:10
04:53:13
04:53:16
04:53:17
04:53:19
04:53:21
04:53:27
04:53:28
04:53:32
04:53:37
04:53:38
04:53:41
04:53:41

57 (Pages 216 to 219)

FRED WILPON 7/20/10

CONFIDENTIAL

SIPC v. BLMIS

220
1
2

Q.

222

04:53:46

1

04:53:49

So do you know if Mr. Tepper had any

discussions with Ruth Madoff about this?

2

A.

Oh, the third paragraph, I'm sorry.

I was looking at the fourth paragraph.

04:57:12
04:57:13

3

A.

I have no idea.

04:53:51

3

4

Q.

Before you signed it, did you ask

04:53:54

4

That paragraph suggests that the

04:57:26

5

Mr. Tepper about the conversations that are

04:53:56

5

money was sent at or around or before the execution

04:57:27

6

referenced in the first paragraph?

04:54:00

6

of this letter.

04:57:32

04:54:02

7

A.

04:57:36

remember what happened here in terms of why he wrote 04:54:05
the letter. When I saw the letter just recently, I
04:54:10

8

Sterling... so you're saying that he wired the money

04:57:38

9

and then there was going to be a conversation?

04:57:58

7
8
9

A.

I really don't recall. I just don't

Q.

04:57:15

Oh, sorry.

You are simultaneously wiring to

10

would say I never -- I don't know what this was

04:54:19

10

11

about. I mean, I know the issue it was about, but I

04:54:24

11

figure out --

04:58:04

12

don't know what the purpose of the letter was.

04:54:28

12

A.

I don't really know.

04:58:05

13

Because that's not what the conversation was with

04:54:33

13

Q.

-- if anything in this letter is

04:58:06

14

Mr. Madoff.

04:54:35

14

accurate.

04:54:39

15

15

Q.

So the letter, as written, does not

Q.

A.

Well, I'm asking you, I'm trying to

04:58:01

04:58:09

I don't know. He did wire us the

04:58:09

16

reflect the agreement that you had with Mr. Madoff

04:54:43

16

money. There is no question that I was told he

04:58:12

17

concerning the 54 million-dollar transfer?

04:54:46

17

wired us the money. And there is no question that I

04:58:15

04:54:52

18

was told that we wired it right back, because we

04:58:20
04:58:23

18

A.

That's correct. He had no -- he knew

19

he had a lot of our money, he knew we had accounts

04:54:57

19

didn't need it. I don't know anything else about

20

that could make good for $54 million. That was

04:55:00

20

21

satisfactory to him as collateral. He didn't say to

04:55:04

21

that, of what Mr. Tepper spoke to whomever he spoke 04:58:28
to, in terms of any of these conditions.
04:58:32

22

me or Saul or any -- or Marvin either, that I know

04:55:09

22

23

of, well, in exchange for that I want something

04:55:14

23

discussing the termination conditions and written

04:58:41

24

else. He never -- that was not part of the

04:55:19

24

notice, you see that fourth paragraph, do you have

04:58:46

25

conversation.

04:55:21

25

any understanding as to what that fourth paragraph

04:58:50

Q.

So in the fourth paragraph when it's

221
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.
When Mr. Madoff suggested wiring you
the money instead of breaking the accounts to
provide you with the money, did you or Mr. Katz or
Mr. Tepper ask him why he would do that instead of
just breaking the accounts?
A.
He said, he said, why break the
account when you will collect the interest that you
get from it. I'll just wire you the money.
Q.
In response to that proposal, did you
question, raise any questions as to that proposal,
or you just agreed with him?
A.
No. Said thank you.
Q.
Was this letter drafted after the $54
million was transferred?
A.
I cannot tell you. I don't know.
Q.
The third paragraph of the letter
says, "You are simultaneously wiring to Sterling
Equities Associates the sum of $54 million."
When you -- is that, does that not
accurately reflect what happened?
A.
I'm not sure I understand the
question.
Q.
The third paragraph says that you
were simultaneously wiring to Sterling Equities the
sum of --

04:58:36

223

04:55:22

1
2

A.

04:55:32

3

04:55:36

4

04:55:41

04:58:53

means?

04:55:26

No. It means either party could

04:58:53

negate paragraphs 1, 2 and 3 and pay the money back.

04:58:57

Then the last sentence in that

04:59:07

5

paragraph says that, "The undersigned shall pay to

04:59:09

04:55:43

6

you a premium to be mutually agreed." Did Sterling

04:59:14

04:55:49

7

04:55:56

8

ever pay a premium to Mrs. Madoff in connection with 04:59:21
this transaction?
04:59:24

Q.

04:55:59

9

MS. SESHENS: Objection to the form.

04:59:25

04:56:02

10

A.

Was there a premium you're asking?

04:59:26

04:56:06

11

Q.

Did Sterling ever pay a premium as

04:59:29

04:56:09

12

04:56:18

13

A.

Right. What's your question?

04:59:36

04:56:23

14

Q.

My question is, the letter says that

04:59:39

04:56:25

15

the undersigned shall pay to you, Mrs. Madoff, a

04:59:44

04:56:34

16

premium to be mutually agreed, having due regard, et

04:59:48

04:56:41

17

cetera, et cetera. I'm asking you if you know that

04:59:53

04:56:46

18

any premium was ever paid.

04:59:55

04:56:51

19

A.

No.

04:59:58

04:56:54

20

Q.

What was the benefit to Madoff for

04:59:59

04:57:03

21

04:57:04

22

04:57:04

referenced in that sentence?

advancing you the $54 million?

04:59:34

05:00:07

We were a, we were a very good client

05:00:11

23

of his and we were very good friends. I mean, we

05:00:15

04:57:08

24

were trusted friends of his, both ways.

05:00:22

04:57:11

25

A.

Q.

Did he stand to benefit monetarily

BENDISH REPORTING, INC.
877.404.2193

05:00:27

58 (Pages 220 to 223)

FRED WILPON 7/20/10

CONFIDENTIAL

SIPC v. BLMIS

224
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

from this transaction in any way?
A.
Not the deal that we made. If you
read into this, you can say, well, maybe there was
something that could have been construed in the last
paragraph or next-to-the-last paragraph. But that's
not the arrangement as I remember it. Simple issue
of break the accounts, don't break the accounts,
send you the money, we'll send the money back when
the bank loan comes through.
Q.
Was that arrangement as you described
it, was that -- would you classify that as a loan of
sorts or an advance?
A.
I don't know how you'd classify it.
I don't know how you'd classify it. It was a loan,
maybe, against the collateral. He had hundreds of
millions of dollars of collateral. Or it was an
advance. It wasn't intended to stay there. It was
intended to be a back-stop, an insurance policy, so
to speak, to the bank being on time.
Q.
So there was no interest paid or
anything for the day or two that the money was -A.
No. Not that I'm aware of.
Q.
-- loaned, advanced, what have you?
A.
Not that I'm aware of.
Q.
Do you have a signed copy of this

05:00:30
05:00:32
05:00:37
05:00:40
05:00:45
05:00:50
05:00:54
05:00:58
05:01:04
05:01:06
05:01:08
05:01:12
05:01:20
05:01:23
05:01:28
05:01:32
05:01:38
05:01:42
05:01:48
05:01:52
05:01:54
05:01:58
05:02:00
05:02:04
05:02:07

226
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

Madoff concerning the transaction?
A. I doubt whether he had conversations
with Mrs. Madoff.
Q.
Why do you say that?
A. Because there were never any
conversations, any business conversations with
Mrs. Madoff.
Q.
Between Mr. Tepper and Mrs. Madoff or
between anyone in Sterling and Mrs. Madoff?
A. Anyone that I know of at Sterling.
Q.
And do you know if Mr. Tepper had any
discussions with Bernie Madoff concerning
transactions, other than the one you had in the car?
A. Right. Other than that, I don't
know.
Q.
If you can turn to Exhibit 18,
Mr. Wilpon, these two documents were produced
together. I'm not sure if this is how they were
maintained in Sterling's files.
A. Which document are you talking about?
Q.
Exhibit 18. It's two documents.
MS. SESHENS: (Inaudible.)
A. Oh, sorry.
Q.
If you can turn to the second page,
it's an unsigned letter from Marvin Tepper to

225
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

letter within your records?
A.
Do I have it?
Q.
Yes, you personally.
A.
No.
Q.
Prior to your preparation for your
deposition, did you ever see a signed copy of this
document?
A.
No. I didn't even remember the
document.
Q.
Do you know that at any time there
was a direction that -- prior to December 11, 2008,
are you familiar with any direction given to destroy
documents related to Madoff?
A.
No.
(Exhibit FW-18 marked for
identification.)
Q.
Before we get to Exhibit 18,
Mr. Wilpon, you indicated that you believe that
Mr. Tepper may have had some discussions with
Mrs. Madoff.
A.
No, no. I said he had some
discuss -- he had a discussion with someone, but I
don't know who it was with.
Q.
Okay. So you don't know for a fact
whether or not Mr. Tepper had discussions with Ruth

05:02:10
05:02:13
05:02:15
05:02:16
05:02:22
05:02:26
05:02:30
05:02:31
05:02:36
05:02:44
05:02:50
05:02:58
05:03:01
05:03:03
05:03:32
05:03:35
05:03:52
05:03:56
05:04:00
05:04:04
05:04:05
05:04:09
05:04:12
05:04:13
05:04:16

05:04:18
05:04:20
05:04:22
05:04:26
05:04:28
05:04:30
05:04:33
05:04:33
05:04:36
05:04:39
05:04:41
05:04:44
05:04:49
05:04:52
05:04:54
05:05:00
05:05:05
05:05:08
05:05:11
05:05:15
05:05:17
05:05:21
05:05:23
05:05:24
05:05:32

227
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

Mr. Friedman dated June 8th, 2004, and you and
Mr. Katz are cc'd at the bottom there.
A.
Right.
Q.
Do you recall receiving this document
at any point?
A.
No.
Q.
Did you review this document in
connection with your preparation for the deposition?
A.
I think I saw this one, yeah.
Q.
Other than in preparation for your
deposition, have you seen this document before?
A.
Not to my knowledge, no.
Q.
You see that the document is dated
June 8th, 2004?
A.
Yes.
Q.
And the 54 million transaction that
we discussed earlier is dated on or around May 25th,
2004; is that right?
A.
Um-hum.
Q.
That was yes?
A.
Yes.
Q.
This document forwards to
Mr. Friedman the letter agreement that was signed
and agreed to between you and Mrs. Madoff.
MS. SESHENS: Objection to the form.

BENDISH REPORTING, INC.
877.404.2193

05:05:37
05:05:46
05:05:49
05:05:51
05:05:54
05:05:55
05:05:58
05:06:01
05:06:09
05:06:11
05:06:13
05:06:16
05:06:21
05:06:23
05:06:26
05:06:28
05:06:32
05:06:39
05:06:41
05:06:42
05:06:43
05:06:48
05:06:51
05:06:58
05:07:01

59 (Pages 224 to 227)

FRED WILPON 7/20/10

CONFIDENTIAL

SIPC v. BLMIS

228
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.
That's what it says, right?
A. Yeah.
Q.
The signed letter agreement was not
produced in connection with this document. But I
wanted to ask you if you knew if there's any
explanation for the delay between when the document
was signed on May 25th, 2004, and when it was
actually forwarded from Mr. Tepper to Mr. Friedman
on June 8, 2004?
MS. SESHENS: Objection to the form.
A. I don't know.
Q.
After you saw that the $54 million
had actually come through from the bank, I think you
testified that then you immediately returned the
money back to Mr. Madoff; is that right?
A. Yes.
Q.
After the return of the $54 million,
were there ever any discussions concerning that
transaction with any of the Sterling partners?
A. Not that I can recall. Other than
next time I saw Bernie, I thanked him.
Q.
Was the 54 million dollar transaction
ever raised at any of the partners' meetings after
the fact?
A. Raised in what sense?

05:07:04
05:07:09
05:07:11
05:07:14
05:07:19
05:07:24
05:07:26
05:07:31
05:07:36
05:07:41
05:07:54
05:08:01
05:08:03
05:08:07
05:08:10
05:08:12
05:08:19
05:08:22
05:08:25
05:08:29
05:08:38
05:08:44
05:08:48
05:08:52
05:08:53

230
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

approached by Mr. Madoff concerning a special deal
or special investment opportunity?
A.
Yes.
Q.
What was that special investment
opportunity?
A.
I don't know the specifics. I was
not approached.
Q.
Who was?
A.
I don't recall who was approached,
but, I just don't know.
Q.
What is your understanding of the
special deal that was offered by Madoff?
A.
That Bernie had an idea, which would
divert from his normal procedure, and that the
returns might be better. It was a short-term kind
of thing. It wasn't a long-term strategy. It was a
short-term window of opportunity or strategy. I
have no idea what the strategy was. And that would
we want to invest. And I think we did.
Q.
What was your understanding as to how
the special investment opportunity, how did the
strategy divert from Mr. Madoff's typical strategy?
A.
I don't know. I have no, no idea of
what the new strategy was.
(Exhibit FW-19 marked for

229
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.
In other words, at your bimonthly
partners' meetings that people would bring, partners
would raise periodic updates, status reports on the
various arms of the business.
A. I don't have any recollection of it,
but I would think that something was said that
Bernie made this accommodation.
Q.
So you would agree this is the kind
of matter that would have been discussed at one of
these partners' meetings?
A. It would have been mentioned, I would
think.
Q.
And who would have been the partner
to raise that issue?
A. I don't know.
Q.
Do you recall it being, the 54
million dollar transaction actually being discussed
at any of the partner meetings?
A. No, I don't.
Q.
After the fact, did you have any
further discussions with any of your partners
concerning the transaction?
A. Not that I can recall.
Q.
Did there ever come a time,
Mr. Wilpon, when you were, or your partners were

05:10:21
05:10:26
05:10:28
05:10:30
05:10:34
05:10:36
05:10:39
05:10:42
05:10:44
05:10:47
05:10:52
05:10:55
05:10:59
05:11:07
05:11:16
05:11:23
05:11:26
05:11:30
05:11:35
05:11:51
05:11:55
05:12:00
05:12:06
05:12:13
05:12:32

231

05:08:54

1

05:08:59

2

05:09:03

3

05:09:08

4

05:09:10

5

05:09:11

6

05:09:15

7

05:09:20

8

05:09:23

9

05:09:24

10

05:09:28

11

05:09:29

12

05:09:30

13

05:09:31

14

05:09:33

15

05:09:35

16

05:09:40

17

05:09:42

18

05:09:45

19

05:09:46

20

05:09:48

21

05:09:50

22

05:09:52

23

05:10:14

24

05:10:16

25

identification.)
Q.
Handed you what was marked as Exhibit
19, which is a memo from Arthur Friedman to all
partners dated November 28th, 2005. Let me know
when you're ready to discuss.
A. Ready.
Q.
Okay. Do you recall receiving this
memo at or around November 28th, 2005?
A. No.
Q.
Do you have any reason to believe
that you didn't receive it?
A. No.
Q.
Did you review this memo in
preparation for your deposition?
A. I saw it.
Q.
Other than in preparation for your
deposition, do you recall seeing this memo before
then?
A. No.
Q.
The first sentence of the memo says,
"A special determination has been made to invest $22
million in the short-term special Madoff
investment."
Do you recall how that special
determination was made to invest in the special

BENDISH REPORTING, INC.
877.404.2193

05:12:36
05:12:51
05:12:53
05:12:56
05:13:02
05:13:10
05:13:11
05:13:21
05:13:24
05:13:25
05:13:27
05:13:29
05:13:32
05:13:35
05:13:37
05:13:38
05:13:43
05:13:46
05:13:47
05:13:53
05:13:56
05:14:00
05:14:05
05:14:12
05:14:13

60 (Pages 228 to 231)