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

Filing 84

DECLARATION of David J. Sheehan in Support re: 82 MOTION to Strike the Expert Report and Testimony of John Maine.. 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 7-1, # 8 Exhibit 7-2, # 9 Exhibit 8, # 10 Exhibit 9, # 11 Exhibit 10)(Sheehan, David)

Exhibit 6

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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,

DAVID KATZ
(Volume II)

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Rule 2004
Examination of:

Defendant.
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In Re:

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BERNARD L. MADOFF,

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Debtor.
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TRANSCRIPT of testimony as taken by and before

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

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and Notary Public of the States of New York and New

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Jersey, at the offices of Baker & Hostetler, 45

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Rockefeller Plaza, New York, New York on Wednesday,

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September 1, 2010, commencing at 10:08 a.m.

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

DAVID KATZ 9/1/10

CONFIDENTIAL

SIPC v. BLMIS
264

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Q.
A.
Q.

In the few?
Investors.
Mr. Katz, are you familiar with the

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term "double-up" in the context of Sterling's Madoff

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investments?

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A.
Q.
A.

Sure.
What does that term mean to you?
That's when you borrow money on one

of Bernie's investments.
Q.

Can you explain a little bit more to

me what that means.
A.

Sure.

You borrow money at a five

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percent and you'd make 10 percent.

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vig, as my father would say, on the Bernie's

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investment.

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Q.
A.
Q.
A.
Q.
A.
Q.

You'd make a

You'd make a vague?
Vig, vig, vigorous.
Oh, vig as is v-i -Oh, don't even ask.

Sorry.

What does that mean?
You make a profit, you know, a fee.
Is it your understanding the profit

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was the difference between Bernie's returns and the

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interest rate on the loans?

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A.

Correct.
BENDISH REPORTING, INC.
877.404.2193

DAVID KATZ 9/1/10

CONFIDENTIAL

SIPC v. BLMIS
265

1

Q.

Is it your understanding that --

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would you call it a double-up strategy or how would

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you characterize it?

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A.

Yeah, double-up I think was probably

most.
Q.

And with the double-ups did Sterling

use the Madoff accounts as collateral for the loans?
A.
Q.

I believe so.
In general, do you have an

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understanding as to how Sterling would make

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withdrawals from any particular Madoff accounts that

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were double-ups?

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A.

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Q.

I think so.
Okay.

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understanding is?

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A.

Can you tell me what your

Like whenever there was enough money

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to cover the loan, they'd sweep it.

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take that money out.

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others; sometimes they'd leave it in.

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Q.

That means to

Sometimes not as much as

When you say there was enough money

to cover the loan -A.
Q.
A.

Um-hum.
-- what do you mean by that?
For the double-up.

There was enough

money there for the bank.
BENDISH REPORTING, INC.
877.404.2193