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 9

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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.
BERNARD L. MADOFF INVESTMENT
SECURITIES, LLC,

Rule 2004
Examination of:
MARK PESKIN
(Vol. I)

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Defendant.
-------------------------------x
In Re:

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BERNARD L. MADOFF,
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Debtor.
-------------------------------x

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TRANSCRIPT of testimony as taken by and before

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MONIQUE VOUTHOURIS, Certified Court Reporter, RPR,

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CRR and Notary Public of the States of New York and

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New Jersey, at the offices of Baker & Hostetler,

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LLP, 45 Rockefeller Plaza, New York, New York on

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Thursday, July 29, 2010, commencing at 10:15 a.m.

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

MARK PESKIN 7/29/10

CONFIDENTIAL

SIPC v. BLMIS

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results at these meetings?
A. No. No. That's not discussed at the
meetings.
Q.
Okay. What type of general matters
are discussed at these meetings?
A. Matters, status of Sterling American
Property, SAP, Sterling American Property funds, the
marketing of the funds, properties being bought and
sold, the status of our Sterling Stamos Partners
investments, status of taxes, Madoff status, other
open items.
What else is there? We have a number
of investments that are discussed.
Q.
Okay. So you just listed a -- a long
list of issues -A. Sure.
Q.
-- that are discussed at these
meetings. Who presents on the SAP funds?
A. Michael and -- Michael Katz and
Richard Wilpon.
Q.
And who presents on the -- would
present, past tense, on the Madoff investments?
A. Arthur Friedman.
Q.
Would anyone else, other than Arthur?
A. Arthur would report on the results

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25 percent at some point?
A. A 50 percent interest in the -- in
the firm was sold to Merrill Lynch.
Q.
Why was it sold to Merrill Lynch?
A. It was a liquidity event. It was -it made sense at the time to sell it.
Q.
And when was that? Do you recall?
A. I can't recall the date.
Q.
What's the difference between -well, let me back up.
There's a Sterling Stamos LP. Is -A. Right.
Q.
-- that right?
And there's a Sterling Stamos GP?
A. Correct.
Q.
What is Sterling Stamos GP?
A. We own Sterling Stamos through our GP
interest.
Q.
Okay. And then what is the Sterling
Stamos LP?
A. We invest in Sterling Stamos as
individuals as a group, and it shows up as an LP.
Q.
And are all -- are all the Sterling
partners invested in Sterling Stamos?
A. Yeah, yeah.

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for the prior two weeks if he knew them.
Q.
And what kind of results would
Mr. Friedman report?
A. A yield to -- for the month and a
yield to date.
Q.
Anything else?
A. That was basically what it was
limited to.
Q.
Okay.
A. There may have been exceptions. I
don't -- I don't recall any, though.
Q.
Now, you mentioned Sterling Stamos.
A. Um-hmm.
Q.
What is Sterling Stamos?
A. Sterling Stamos is a fund of funds.
The S in Sterling is a -- was a part -- is still a
part owner of Sterling Stamos.
Q.
You say -- let me back up.
When Sterling -- Sterling Stamos
started in June of '02. Is that right?
A. Approximately.
Q.
Okay. When Sterling Stamos started,
how much interest did Sterling have?
A. 50 percent.
Q.
Okay. And then it changed to

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Q.
And what is your -A. Yes. Excuse me.
Q.
Thank you. Are you invested in
Sterling Stamos?
A. I am. But I'm not a partner, just
for -Q.
I know. Let's ask the follow-up
question. And are there various -- are there
Sterling entities that are invested in Sterling
Stamos?
A. Are there Sterling entities? Yes.
Or Sterling-related entities, yeah.
Q.
Do you know who they are -- or what
they are, rather?
A. I can't -- off the top of my head, I
remember one. See HoldCo is an entity that is owned
by the partners eventually, and it's an investor in
Sterling Stamos.
Q.
Does See HoldCo have a relationship
to SNY?
A. Correct.
Q.
What's the relationship?
A. It holds our interest in SNY.
Q.
If you wanted to know what Sterling
entities were invested in Sterling Stamos, what

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How the fund was growing, investors

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in the fund. The limited partnership investments

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were growing. The assets under management is

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another way of putting that. And that's what they'd

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talk about.

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Did they ever report on Sterling

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Stamos's -- actually, let me back up. Withdrawn.

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Do you know if Sterling Stamos

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withdrew investments from a fund called Bayou? Are 10:49:32
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I heard about it.

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Okay. How did you hear about that?

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I probably first read about it in the

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When you say you read about it in the

paper, what do you recall reading?
A.

That there was a Bayou suit, and that

we had been investors.
So prior to the suit being filed

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against Sterling Stamos in the Bayou case, did you

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have any knowledge of Sterling Stamos being invested 10:50:12
in Bayou?
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Q.

A.

Specifically, I don't know any of the

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20 to 30 investments.
And then those funds invest
themselves in various investments. So I -- I can't
tell you who would have such knowledge.
Q.
Do you know what transparency
Sterling had at any level in Sterling Stamos's
investments or investment strategy?
A. They would publish what funds they
were invested in, but I don't recall what they were.
I know on a yearly basis, I believe
they published a book of investments and where those
investments were. But I can't tell you who saw
that.
Q.
But you received these, these yearly
reports?
A. I would receive a yearly compendium
of returns for the various funds.
Q.
Okay. And did the -A. All the investors did.
Q.
Okay.
A. Yeah.
Q.
And that yearly compendium included
the funds in which Sterling Stamos was invested?
A. Um-hmm. I believe so, yeah.
Q.
A while back in this line of

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investments. Specifically no. And I'm not familiar
with any of the investments of any of the funds
with -- that Sterling Stamos invests in.
Q.
Who at Sterling would know what funds
Sterling Stamos was invested in?
MS. SESHENS: Objection to the form.
You can answer.
Q.
You can answer.
A. Thank you. I -- I just -- I don't
know. I don't know the answer to that.
Q.
Would it be Saul Katz?
MS. SESHENS: Objection to the form.
Q.
You can answer.
A. It could be Saul Katz, a logical
choice, but I would have no idea whether he knew
each of the individual investments. I doubt it.
Q.
Okay. Who else would be a logical
choice to know what the individual investments were?
MS. SESHENS: Objection to the form.
A. When you're dealing with a fund of
funds, it's -- you're giving your dollar to the XYZ
fund, and they go out and could invest in 20 or 30
other funds.
So it would be pretty hard, unless
you were intimately involved, to know exactly those

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questioning, you mentioned David Katz -A. Yeah.
Q.
-- in connection with Sterling
Stamos. What was David or what is David Katz's role
with respect to Sterling Stamos?
A. He -- David is Saul's son. And the
two of them were the people that helped formulate
Sterling Stamos Partners; "formulate," bring
together the concept.
Q.
So was it Saul's idea to form
Sterling Stamos, or was it David's idea?
A. I don't know. That was before my
time.
Q.
Did you have -- ever have -- did you
ever come to know whose idea it was to form Sterling
Stamos?
A. No, I don't know who had the original
thought.
Q.
Okay. And who reported Sterling
Stamos matters at the -- at the management meetings?
A. As I mentioned before, it was Saul
Katz and/or David Katz.
Q.
And/or David, right. Okay. Do you
know if Sterling ever compared the rate of returns
from Sterling Stamos to its Madoff rate of returns?

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A. Specifically, they were discussed at
the same time, you know, in the same time, within
the same meeting.
So comparisons were made by virtue of
the fact that Arthur would report the Madoff
returns, and David and Saul would report -- would
report the SSP returns. So there was comparison at
all times.
Q.
Okay. And generally speaking,
what -- what were the results of those comparisons?
A. There were many, many different funds
in Sterling Stamos, from very liquid to -- to very
long-term. So there was a whole range of potential
yields.
Q.
And were those yields then compared
to the Madoff yields?
A. It wasn't compared. It was just you
have a discussion about Madoff, and then three or
four issues later, you have a discussion about SSP.
So if people made comparisons in
their mind, I can't tell you if they did or didn't.
But they were -- they weren't necessarily
discussions, oh, Madoff did this and SSP did that.
Q.
That's what I'm asking.
A. Right. There weren't -- you know, if

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Did anyone at Sterling Stamos ever do
any due diligence of Madoff?
A. I have no idea. Due diligence? Can
you explain that?
Q.
Well, did anyone at -- at Stamos
undertake any analysis of Madoff's investment
strategy?
A. I wouldn't know what they did on a
daily basis at Stamos.
Q.
Pardon?
A. I wouldn't know what they did on any
basis at Stamos, what they did.
Q.
Okay. But I'm just asking you if you
know if Stamos ever did any analysis of Madoff's
investment strategy.
A. I have no idea. I do not know.
Q.
You do not know, okay. And you
certainly did not -- strike that.
So you did not have any discussions
with anyone at Stamos concerning any analysis of
Madoff's investment strategy?
A. No analysis, no.
Q.
Okay. Any discussions concerning
any -- any due diligence of Madoff at all with
Stamos?

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there were, I can't recall any. But people probably
thought about it in their minds.
Q.
And what was your recollection of how
the Madoff returns compared to the Sterling Stamos
returns?
A. Madoff returns were slightly higher,
not much, than the funds of a similar nature that -that we were invested in in SSP, Sterling Stamos.
Q.
So Madoff was invested in similar -A. No.
Q.
-- funds as Sterling Stamos?
A. No, no, no, no, no.
Q.
I'm confused.
A. There were funds in Sterling Stamos
that -- you know, high liquidity, what you would
think -- same type of -- no, I shouldn't say same
type of investment.
It was a higher liquidity fund. So
you can -- you might compare in your minds the
results from one against the results of the other.
I wouldn't compare Sterling Madoff to
the long-term SSP funds at a much longer-term
horizon, a five-year horizon.
Q.
Did anyone at Stamos ever provide or
do -- strike that.

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A. No.
Q.
Okay. Was the topic of Stamos's
analysis or due diligence of Madoff ever raised at a
management meeting?
MS. SESHENS: Objection to the form.
A. Not that I ever recall, no.
Q.
If you wanted to -- if you wanted to
see if any of those issues were raised, what records
would you review?
A. If I wanted to see what analysis SSP
made of Madoff?
Q.
Yeah. Let me back up. If you wanted
to know if Stamos had ever done any analysis or due
diligence of Madoff, what records would you review?
MS. SESHENS: Objection to the form.
A. I have no idea what records they
have. I would call up somebody at Stamos and say
have you ever done it? I don't have access to any
of their records.
Q.
Putting aside Sterling Stamos's
records -A. Right.
Q.
-- what Sterling records would you
review to see if Stamos had provided Sterling with
an analysis or due diligence of Madoff investments?

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MS. SESHENS: Objection to the form.
A. There were several changes in the
document, the plan document. So I don't know what
the original one said versus the one today says.
So it's -- it's difficult for me to
remember which one said what. But over -- over
time, it discussed the strategy of investing.
But I don't know if that was the
first document I ever saw or the second document or
third document.
Q.
Okay. We'll probably be getting to
that -A. Okay.
Q.
-- later today.
Did you have any job responsibilities
with respect to Madoff investments in any way?
A. Only on a tangential basis when I did
my financings that involved a Madoff account. But
the firm's relationship with Madoff was something I
never went near. It was always Arthur, Saul and
Fred who had that relationship.
Q.
Okay. Now, explain to me how the
financing that you -- that you were involved in, how
the Madoff investments played a role in the
financing that you undertook.

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believe it was the bank who called me and said, you

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get a better understanding of the loans?

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know, you put a dollar in, you borrow a dollar, you

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leverage up the yield.

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Q.

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Q.

And after the bank called you to tell

A.

It's a pretty simple concept. You

Okay. And did there come a time when

A. There was the concept -- as an
example, there was a concept where if you had a
dollar in Madoff, and you borrowed a dollar from a
bank and put it in Madoff, the doubled-up dollar
would act as collateral for the borrowing. So you
would be leveraging up your investment.
That's how I first got involved with
a Madoff concept.
Q.
That's the -- the double-up loans?
Is that how it's -A. Um-hmm.
Q.
-- referred to in shorthand?
A. Right.
Q.
Who first came up with the idea of
the double-up loans?
A. Who originated the thought of
leveraging?
Q.
Yeah.
A. They were doing it well before I got
there. I don't know who had the original original
idea.
Q.
And when did you become involved with
the Madoff double-up loans?
A. When the first loan came up, you
know, matured and was coming up for extension, I

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A.

Yes.

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Q.

Okay. When did that happen?

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A.

I can't be specific, but there were a

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number of new double-up loans that would come from 11:07:04
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sufficient funds were accumulated to do it, that

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made sense to do it.

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accumulating, are you referencing funds accumulating 11:07:22
within the Madoff accounts or some other source of
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liquidity?

you created new double-up loans?

Q.

And when you're referring to funds

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A.
It could have come from anywhere. It
could have been from a redemption from the SSP
account. It could have been excess funds in the
Madoff account. It could have been from the sale of
a property.
Excess funds in general were
accumulated, and then a decision would have been
made, you know, let's double it up.
Q.
And who played a role in that
decision to double it up?
A.
It would have been the partners who
made that decision.
Q.
All of them together?
A.
All decisions are made by all the
partners. It's a very unique organization.
Q.
It sounds like it. I'm just trying
to get a better understanding of the decision-making
process of the double-ups.
So who determined when there was an
excess of funds?
A.
The individual partners knew their
own personal accounts. When there was -- people
wouldn't realize there were excesses.
Arthur would be in charge to call up
the capital accounts. He would know, and he would

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say, hey, everybody has a little bit more money than
expected. What do you want to do with it?
And this would be usually done either
at a management meeting or over a lunch or just
walking around the office.
I'd say it's a very unique office.
It's small enough that you can still talk to your
partners one-on-one either by walking down the hall
or making a quick phone call.
And decisions are made by the
partners. So you want to come in, great. You don't
want to come in, that's okay, also. And they would
form a pool of money to be doubled up.
Q.
And did there come a time when
non-partners were invested in these double-up
accounts?
A. Yes.
Q.
So who solicited or who spoke with
the non-partner investors to see if they wanted to
get -- to invest in a double-up?
MS. SESHENS: Objection to the form.
You can answer.
Q.
You can answer.
A. The -- that was -- non-partners could
be children of the partners. It could be their

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executives?
A.
Yeah.
Q.
Were you offered an opportunity to
invest in the double-ups?
A.
Yes.
Q.
And who -- who approached you to
invest in the double-up account?
A.
I can't remember who, but at some
point in time they said, Mark, do you want to invest
in XYZ? And I said yeah, sure. Why not?
Q.
And after the decision is made to
pool the -- pool funds, excuse me, to invest in the
double-up account, who is involved in the formation
of the entity that is actually going to be doing the
taking out the loan?
A.
General counsel would form the
entity.
Q.
Okay. And by general counsel, you're
referring to Mr. Nero?
A.
Correct.
Q.
Anyone else?
A.
No. It was Greg that would form it.
Q.
Okay. And how is it determined -strike that.
Did each investor have -- in the

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trusts. It could be senior employees.
Obviously, the partners can talk for
their own children. Or if they had internal -family discussions, I wouldn't know about it.
The trustees would say yes if the
trust had extra cash.
And then there was a conscious effort
on, you know, the partners to either invite an
employee or not invite an employee in or offer it to
them, offer to invite. It was never a you have to.
Q.
What did you mean by a conscious
effort to reach out to employees?
A.
Well, it was part of a -- a -- it was
part of a -- a perk to an employee as an -- as an -not an alternative, but as a means of increasing, in
a sense, your compensation. I shouldn't say
compensation; an investment vehicle that you can
invest some money that would otherwise not be
available to you, as an employee or as an
individual.
Q.
Was this offered to all Sterling
employees?
A.
No. I said certain executives,
senior executives.
Q.
You said it was limited to senior

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double-up entity, have different levels of
investment?
A.
Yes.
Q.
Okay. And how was that determined?
A.
It's whatever that individual thought
they could afford to lock away, to lock up for a
period of time.
Q.
And that was based on -- on the
excess analysis?
A.
It was -- I don't know what the
excess analysis is, but it was based upon that
person's understanding of what their needs were,
short-term, long-term.
And based upon that, you can say I
can put away X dollars for a longer period of time.
Q.
Well, what I mean by the excess
analysis is what you were referring to earlier, that
you said that there were excess funds that were then
pooled.
A.
Right, okay. I don't know if it was
a formal analysis versus a thought process that went
through each person's mind.
Q.
So Mr. Friedman would notify the
partners and executives that they had excess funds,
and those funds could or could not have been used to

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depending upon if they had an excess or a need for
cash.
So it's a constant back-and-forth
depending upon time of the month or time of the year
or time of the quarter, whether they needed a -funds to pay a mortgage with.
If they didn't have excess funds
to -- for their personal expenses, they would borrow
money from SEF until which time they would have
excess funds and they would pay SEF back. Call it a
clearing account.
Q.
And what were the terms of the loan
from SEF to a partner?
A.
I'm not a lawyer; I don't know
whether you would formally call it a loan. But it
was a payable and a receivable.
Q.
Well, let me back up, just so we're
not confused.
How would you describe the transfer
of money from SEF to the partner?
A.
It was a payable receivable. It
was -- could be for a day, could be for a month.
But on a quarterly basis, SEF partners would have to
come down to a certain balance.
And they would come down to that --

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have excesses that you deposit into SEF. And if you

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owed it, you had interest the other way.

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partners decided that. Not on an individual basis;

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as a group, that they said okay, if you borrow it,

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you know, you can borrow it at X percent, and -- and

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we can lend it to you at Y -- excuse me.

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determined the interest. What -- what did you mean

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by that?

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A.

Q.

Both ways. You paid interest if you

And who determined the interest that
It was a partnership matter. The

There's a difference between

Q.

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organization. The partners make decisions as a

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group. Individually, they come together and they

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make decisions as a group.

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regular basis, that we'll charge -- I'm making up

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numbers -- 6 percent if you want to borrow, if you

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want to borrow money, but we'll pay out 5 percent if

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you are lending the firm money.

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to that balance by using their funds that have come

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in from various investments to true up that account,

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true up their balance within the SEF account.

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Okay. So on a quarterly basis,

who -- who performed the analysis of determining how 11:34:02
much the partner owed to SEF?
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7

A.

Arthur Friedman.

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8

Q.

What role did you play in that

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analysis?

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I would look at it from time to time,

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but it really wasn't my responsibility to handle

11:34:20

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that, like a capital account. Arthur did that.

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A.

Q.

And when you say look at it, what are

A.

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you referring to? What records?
He would -- he would have a capital

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account statement summary -- call, a capital call

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summary that he would present to the partners. I

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would always be cc'd on it. I would normally be

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cc'd on it.

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And it would be discussed at the --

20

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I said it was a very unique

1

Q.

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it is, you either got interest or you paid interest.
11:35:32

A.

So the decision was made, made on a

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would be charged?
A.

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the next partnership meeting -- or management

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meeting, excuse me.

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Q.

Was there interest charged on --

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A.

Yeah.

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Q.

Okay.

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Q.
And I know you're using hypothetical
numbers.
A.
Examples.
Q.
Examples. Were those, then, rates
applied across the board for all SEF transactions
with the partners for a period of time?
A.
Yeah, yes.
Q.
Okay. And that rate was used until
the next time that the partners decided to change
the rates?
A.
It was usually in conjunction with a
rate change that the SEF was borrowing from the
bank.
Q.
And what records maintain the -- what
are the records that maintain the -- the payables
and the receivables related to SEF?
A.
It's part of our Navigator system,
our accounting system. We keep detailed records of
every transaction. And part of those transactions
are what you owe SEF or what SEF owes you.
Q.
Okay. And was that -- would that -is that information contained in the blue book, as
well?
A.
Yes.
Q.
Now, you said on a quarterly basis,

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Q.
Elaine Solomon?
A. No.
Q.
Robert Cardile?
A. No.
Q.
And Eric Lipkind?
A. I have not heard of those people's
names.
Q.
Okay. So not only have you never
spoken to them, you've never heard the names before
today?
A. Best of my belief, I've never -- I
don't know who they are and I've never spoken to
them.
Q.
Okay. Fair enough.
With respect to the -- the referral
accounts that we discussed this morning, the friends
and family, non-Sterling -A. Okay.
Q.
-- accounts.
MS. SESHENS: Objection to the form.
Q.
But you understand what I'm
referencing. Right?
A. Yes.
Q.
Okay. What benefit, if any, did
Sterling gain from referring these accounts to

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it's catalogued.
Partnership accounting is in charge
of the catalog, is in charge of the books and
records of the firm.
Q.
And what documents or records did
partners accounting generate in its ordinary course
of business to monitor or track the Sterling
partners' investments in Madoff?
MS. SESHENS: Objection to the form.
A.
We've talked about the Navigator
system, the accounting system. It's a brand name,
that's all it is.
Q.
Right.
A.
We would use the Navigator system to
record investments in Madoff.
You talked about previously the hell
sheet produced by Helene Kravitz. That was a
summary of that information.
So we would track it -- we would
track it month by month on the summary sheet and
record the balances, activity during the month in
the books and records, you know, the Navigator
system.
Q.
And when you're saying "tracking,"
what -- what data was partners accounting reviewing

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Madoff?

01:36:28

MS. SESHENS: Objection to the form,
and asked and answered.
A.
I can answer?
MS. SESHENS: You can answer.
Q.
You can answer.
MS. SESHENS: Yes.
Q.
I don't think you answered that
specific question. But go ahead.
A.
No benefit to the firm, other than in
a sense helping people, providing an opportunity to
make some additional dollars.
Q.
And did Sterling receive any benefit
for administering these accounts?
A.
No.
Q.
Okay. I want to go back to partners
accounting for -- for a few minutes.
What was partners accounting's role
with respect to the Madoff investments?
A.
Everything the firm does of a
monetary nature on behalf of the firm, versus the
real estate funds, is catalogued by partnership
accounting.
Madoff investments were part of the
firm's dealings with its money; and so, therefore,

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in order to track the investments?
A.
They would take the -- I'm sorry.
Q.
Go ahead.
A.
They would take the monthly
statements, or somebody would take the monthly
statements and, say, start with $100. It ended with
$300 in it, hypothetically speaking. We made $100
deposit. So, therefore, you had $100 earnings.
And it would track that information.
Or we had $100 deposit, a $50 withdrawal and 150
earnings. It would track all that type of
information.
Q.
And someone in partners accounting,
after reviewing the monthly statement for each
particular account, would have to manually input the
data into the system?
A.
Yeah, that's the only way you can get
into it.
Q.
And there were hundreds of these
accounts. Right?
A.
Correct. And -- and it was recorded
by partnership accounting, but if I'm not
mistaken -- again, it wasn't what I did -- Cindy -Cynthia Bernstein actually tracked the ins and the
outs and then presented that to partnership

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307
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
8

v.
BERNARD L. MADOFF INVESTMENT
SECURITIES, LLC,

Rule 2004
Examination of:
MARK PESKIN
(Vol. II)

9
10

Defendant.
-------------------------------x
In Re:

11

BERNARD L. MADOFF,
12
13

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

14
15

TRANSCRIPT of testimony as taken by and before

16

MONIQUE VOUTHOURIS, Certified Court Reporter, RPR,

17

CRR and Notary Public of the States of New York and

18

New Jersey, at the offices of Baker & Hostetler,

19

LLP, 45 Rockefeller Plaza, New York, New York on

20

Friday, July 30, 2010, commencing at 10:13 a.m.

21
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BENDISH REPORTING, INC.
Litigation Support Services
877.404.2193
www.bendish.com

MARK PESKIN 7/30/10

CONFIDENTIAL
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A. I don't recall that. I don't recall
such a conversation. Two different sides of the
banks, two different kinds of loan exposure.
Q.
Is there anything you would -- would
review to -- that you think may have that
information?
MS. SESHENS: Objection to the form.
Q.
Any documents or anything?
A. Whether he wrote me an e-mail or a
message that said you're too heavily -- we've loaned
too much money to you on Madoff because of our
increasing -- your exposure to SSP?
Q.
No. We loaned too much money on
Madoff, and now since we're loaning money on
Sterling Stamos, we want to cut back on Madoff.
A. I -- I don't know of any such letter,
and you have all of my e-mails, so I would only go
back to my e-mail chain.
Q.
But you don't recall having a
discussion -A. No.
Q.
-- of that issue with Mr. Kenny?
A. I mean, there is always an issue as
to how much capacity the bank has -Q.
Right.

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whether it was 2005.
Q.
And you invested in that opportunity?
A. Yes.
Q.
Okay. What did -- what did you know
about the special investment opportunity before you
invested?
A. Other than the fact that it was
brought up at a management meeting, Saul Katz -- I
don't know how the opportunity came to Saul, but he
said there was a special investment opportunity, a
change of formula, a change of thought process. He
said the firm -- you know, he thought it was a
reasonable opportunity. It turned out to be no
better, I think, than any other opportunity, than
any other normal account. Supposed to be for a
short duration of time. We tried it. We needed the
money at a later date so we withdrew it. I can't
remember how long the account -- the opportunity was
invested in, but it turned out to be not so much of
a great opportunity.
Q.
Do you remember anything else that
Mr. Saul Katz said about the type of strategy that
was being used for the special investment?
A. No. It was just a different kind of
strategy that was being tested.

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A. -- for the -- you know, under the
Sterling umbrella, how much they would make
available. That's an ongoing discussion that I have
with all banks at all times, do you look at this as
different silos or do you look at it as just one.
Q.
So you would have general -- general
discussions with the bank about the whole -A. That's not unusual.
Q.
Okay. And within those discussions,
obviously, the Madoff exposure would -- would come
up?
A. Total bank exposure would come up and
how much they are willing to lend us in total under
the Sterling umbrella.
Q.
And in discussions with -- sorry.
In discussions with concerning the
total amount that the -- that the bank would loan to
you, did any of the banks ever raise the issue of
the Madoff exposure?
A. Not that I can remember it.
Q.
Are you aware of a special investment
opportunity that was offered by Madoff in and around
November 2005? Do you recall that?
A. The answer is -- yes, there was one
special opportunity that I was -- I don't know

SIPC v. BLMIS

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Q.
Did he say anything about the special
strategy using like a non-hedge option investment
strategy?
A. Oh, no, he didn't talk about it. It
was just a different strategy.
Q.
Okay. As part of the special
investment, was -- was part of the terms of the
special investment that the Sterling investors could
not use existing money from other Madoff accounts?
Do you remember that?
A. I was not aware of that.
Q.
How did you -A. Are you asking me that?
Q.
Yeah, I'm asking.
A. I was not aware of that.
Q.
Okay. How did you fund your
investment in the special account?
A. I mean, well, either from another
account, Madoff account, which I don't think I
did -- no, I did not do that. No, I didn't do that.
Either -- so I wrote a check from my -- from my
personal checking account to put the money in. I
personally only made one transfer and it wasn't into
that account.
Q.
It wasn't into what?

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28 (Pages 406 to 409)