Irving H. Picard v. Saul B. Katz et al
Filing
89
DECLARATION of David J. Sheehan in Support re: 81 MOTION for Partial 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)(Sheehan, David)
Exhibit 8
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
------------------------------x
UNITED STATES OF AMERICA,
New York, N.Y.
v.
S5 Cr. 0228 (LTS)
ENRICA COTELLESSA-PITZ,
Defendant.
------------------------------x
December 19, 2011
2:55 p.m.
Before:
HON. LAURA TAYLOR SWAIN,
District Judge
APPEARANCES
PREET BHARARA
United States Attorney for the
Southern District of New York
BY: LISA A. BARONI
JULIAN J. MOORE
MATHEW SCHWARTZ
Assistant United States Attorneys
TIMOTHY J. TREANOR
DAVID M. RODY
Attorneys for Defendant
- also present SA Jared Thompson, FBI
SA Paul Takla, FBI
P.O. Jeffrey Steimel
SOUTHERN DISTRICT REPORTERS, P.C.
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THE COURT: Good afternoon. Would everyone other than
the lawyers please be seated.
THE CLERK: This case is United States of America
versus Enrica Cotellessa-Pitz.
MS. BARONI: Good afternoon, your Honor. Lisa Baroni
for the government. With me is Julian Moore and Matthew
Schwartz from the U.S. Attorney's office and Special Agents
Jared Thompson and Paul Takla from the FBI.
THE COURT: Good afternoon, Ms. Baroni, Mr. Moore, Mr.
Schwartz, Agents Thompson and Takla.
MR. MOORE: Good afternoon, your Honor.
MR. TREANOR: Tim Treanor and David Rody for Enrica
Cotellessa-Pitz. Good afternoon, your Honor.
THE COURT: Good afternoon, Mr. Treanor, Mr. Rody, and
good afternoon, Ms. Cotellessa-Pitz.
This is Ms. Cotellessa-Pitz's first appearance, is
that correct?
MR. TREANOR: Yes, your Honor.
THE DEFENDANT: Yes.
MR. TREANOR: Yes, your Honor.
THE COURT: So let's address the advice of rights
first.
And good afternoon everyone. Thank you all for coming
to court.
Would you please stand, Ms. Cotellessa-Pitz.
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Please state your full name.
THE DEFENDANT: Enrica Cotellessa-Pitz.
THE COURT: And how old are you, ma'am?
THE DEFENDANT: 53.
THE COURT: I will now explain certain rights that you
have under the Constitution of the United States.
You have the right to remain silent. You need not
make any statement. Even if you have already made statement to
the authorities, you need not make any additional statements.
Any statements that you do make can be used against you.
Do you understand these rights?
THE DEFENDANT: Yes, your Honor.
THE COURT: You have the right to be released either
conditionally or unconditionally pending trial unless I find
that there are no conditions that would reasonably assure your
presence at future court hearings and the safety of the
community. If the government were to ask me to detain you
pending trial, you are entitled to a prompt hearing on whether
such conditions exist.
Do you understand this right?
THE DEFENDANT: Yes.
THE COURT: You have the right to be represented by an
attorney today and at all future proceedings in this case, and
if you are unable to afford an attorney, I will appoint an
attorney to represent you.
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Do you understand these rights?
THE DEFENDANT: Yes, your Honor.
THE COURT: Do you wish to have and are you able to
obtain and afford counsel on your own?
THE DEFENDANT: Yes, your Honor.
THE COURT: Have you retained Messrs. Treanor and Rody
to represent you?
THE DEFENDANT: Yes, your Honor.
THE COURT: Are you a citizen of the United States?
THE DEFENDANT: Yes.
THE COURT: The document that contains the charges
against you is called an information. It has been issued by
the United States Attorney. You have a constitutional right to
be charged by an indictment rather than by an information. An
indictment would be a charge issued from a grand jury.
Do you understand that?
THE DEFENDANT: Yes.
THE COURT: Mr. Treanor, do you have the Waiver of
Indictment form there, and would you show it to
Ms. Cotellessa-Pitz?
MR. TREANOR: Yes, your Honor.
THE COURT: Thank you.
Ms. Cotellessa-Pitz, have you signed this waiver of
indictment?
THE DEFENDANT: Yes, your Honor.
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THE COURT: Did you read it before you signed it?
THE DEFENDANT: Yes.
THE COURT: Did you understand it before you signed
it?
THE DEFENDANT: Yes.
THE COURT: And did you discuss it with your attorneys
before you signed it?
THE DEFENDANT: Yes.
THE COURT: Do you understand that if you did not
waive indictment, if the government wanted to prosecute you on
the charges that are in the Information, it would have to
present those charges to a grand jury, which might or might not
indict you on them?
THE DEFENDANT: Yes.
THE COURT: Do you understand that you are under no
obligation to waive indictment?
THE DEFENDANT: Yes.
THE COURT: Do you understand that by waiving
indictment you are giving up your right to have these charges
presented to a grand jury?
THE DEFENDANT: Yes.
THE COURT: Do you understand what a grand jury is?
THE DEFENDANT: Yes.
THE COURT: Did anyone give you anything or make any
threat or promises to get you to waive indictment?
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THE DEFENDANT: No.
THE COURT: Have you seen a copy of the Fifth
Superseding Information that has number S5 10 Criminal 228 at
the top?
THE DEFENDANT: Yes.
THE COURT: Have you read it?
THE DEFENDANT: Yes.
THE COURT: Have you discussed it with your attorneys?
THE DEFENDANT: Yes.
THE COURT: Do you understand the charges against you
that are detailed in the Information?
THE DEFENDANT: Yes.
THE COURT: If you want me to, I can read the
Information out loud for you here in court.
Do you want me to read it to you?
THE DEFENDANT: No, your Honor.
THE COURT: Are you taking any medication or suffering
from any condition that affects your ability to think clearly?
THE DEFENDANT: No.
THE COURT: Is your mind clear today?
THE DEFENDANT: Yes.
THE COURT: Are you feeling well physically today?
THE DEFENDANT: Yes.
THE COURT: Do you feel comfortable making important
decisions for yourself today?
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THE DEFENDANT: Yes.
THE COURT: In the past 24 hours, have you taken any
drugs, medicine or pills or drunk any alcohol?
THE DEFENDANT: Just my prescription medications.
THE COURT: And did you take those medications on
schedule?
THE DEFENDANT: Yes.
THE COURT: Does any of those medications affect your
ability to think clearly?
THE DEFENDANT: No.
THE COURT: I find that Ms. Cotellessa-Pitz's Waiver
of Indictment is knowing and voluntary, and I accept it and I
so order it.
How do you intend to plead to the charges against you
that are in that Information, not guilty or guilty?
THE DEFENDANT: Guilty.
THE COURT: Now, Ms. Cotellessa-Pitz, you can have a
seat for a moment. I have a couple of questions for counsel.
Mr. Treanor, this plea is pursuant to the agreement
that has been marked as Government Exhibit 1, is that correct?
MR. TREANOR: That is correct, your Honor.
THE COURT: And it is a letter addressed to you and
Mr. Rody dated today -- the printed date, I'm sorry, not today,
December 15th, last Thursday, at the top, is that correct?
MR. TREANOR: That is correct.
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THE COURT: And the advice of rights form has also
been executed and marked as Court Exhibit 1, is that correct?
MR. TREANOR: Yes, your Honor.
THE COURT: Thank you. Ms. Baroni or Mr. Moore, would
you make a statement regarding victim notification in
connection with this proceeding?
MS. BARONI: Yes, your Honor.
Last Thursday, on December 15th, we sent a letter to
your Honor outlining the proposed charges against
Ms. Cotellessa-Pitz, and advising your Honor that she would
plead guilty pursuant to a cooperation agreement with the
government. On that date we posted that letter on the
government's website on a page dedicated to Madoff-related
cases for victim notification.
THE COURT: Thank you.
Ms. Cotellessa-Pitz, before I accept your guilty plea,
there are a number of questions that I must ask you while you
are under oath to assure that it is a valid plea. At times I
may cover a point more than once, and I may cover matters that
were also addressed in the advice of rights form that you have
seen, but if I do that will be because it is very important
that you understand what is happening here today.
If you don't understand something that I ask you,
please say so and I will reword the question or you may speak
with your attorneys.
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Do you understand that?
THE DEFENDANT: Yes, your Honor.
THE COURT: Please stand now to take the oath.
Ms. Ng, would you administer the oath, please.
THE CLERK: Please raise your right hand.
(The defendant was sworn)
THE COURT: Would you please state your full name for
the record.
THE DEFENDANT: Enrica Cotellessa-Pitz.
THE COURT: Do you understand that you have solemnly
promised to tell the truth, and that if you answer any of my
questions falsely, your false or untrue answers may later be
used against you in another prosecution for perjury or making a
false statement?
THE DEFENDANT: Yes, your Honor.
THE COURT: You can be seated for the next portion of
the proceeding.
Was the information that you gave me about your age
and your mental condition a little while ago completely true?
THE DEFENDANT: Yes.
THE COURT: How far did you go in school?
THE DEFENDANT: An undergraduate degree from college.
THE COURT: In what field.
THE DEFENDANT: Economics.
THE COURT: And what types of work have you done since
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finishing your final education?
THE DEFENDANT: I worked in the financial industry.
THE COURT: Are you able to speak, read and understand
the English language well?
THE DEFENDANT: Yes.
THE COURT: Counsel, does any of you have any doubt as
to Ms. Cotellessa-Pitz's competence to enter a guilty plea at
this time?
MR. TREANOR: No, your Honor.
MS. BARONI: No, your Honor.
THE COURT: Ms. Cotellessa-Pitz, your attorneys have
informed me that you -- and you actually have informed me
yourself that you wish to enter a guilty plea to the
Information. Do you wish to enter a plea of guilty?
THE DEFENDANT: Yes, your Honor.
THE COURT: Have you fully discussed your case with
your attorneys, including the charges to which you intend to
plead guilty and any defenses that you may have to those
charges?
THE DEFENDANT: Yes, your Honor.
THE COURT: Have you and your attorneys also discussed
the consequences of entering a guilty plea?
THE DEFENDANT: Yes.
THE COURT: Are you satisfied with your attorneys and
their representation of you?
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THE DEFENDANT: Yes.
THE COURT: On the basis of Ms. Cotellessa-Pitz's
responses to my questions and my observations of her demeanor,
I find that she is fully competent to enter an informed plea at
this time.
Before I accept your plea, ma'am, I am going to ask
you some more questions. Thee questions are intended to
satisfy the Court that you wish to plead guilty because you are
in fact guilty and that you fully understand your rights and
the consequences of your plea.
Now I will describe certain right that you have under
the Constitution and laws of the United States. You will be
giving up these rights if you enter a guilty plea. Please
listen carefully. If you do not understand something that I am
saying or describing, stop me and I or your attorney will
explain it more fully.
Under the Constitution and laws of the United States,
you have the right to a speedy and public trial by a jury on
the charges against you that are in the Information. Do you
understand that?
THE DEFENDANT: Yes.
THE COURT: Do you understand that you have the right
to plead not guilty and to continue to plead not guilty?
THE DEFENDANT: Yes.
THE COURT: If there were a trial, you would be
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presumed innocent and the government would be required to prove
you guilty by competent evidence and beyond a reasonable doubt.
You would not have to prove that you were innocent at a trial.
Do you understand that?
THE DEFENDANT: Yes.
THE COURT: If there were a trial, a jury composed of
twelve people selected from this district would have to agree
unanimously in order to find you guilty. Do you understand
that?
THE DEFENDANT: Yes.
THE COURT: If there were a trial, and at all stages
leading up to it, you would have the right to be represented by
an attorney, and if you could not afford one, an attorney would
be provided to you free of cost. Do you understand that?
THE DEFENDANT: Yes.
THE COURT: If there were a trial, you would have the
right to see and hear all of the witnesses against you and your
attorney could cross-examine them. You would also have the
right to have your attorney object to the government's evidence
and offer evidence on your behalf, if you so desired. In
addition, you would have the right to have witnesses required
to come to court to testify in your defense. And you would
have the right to testify yourself but you would not be
required to testify.
Do you understand all of that?
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THE DEFENDANT: Yes, your Honor.
THE COURT: Do you understand that if there were a
trial and you decided not to testify, no adverse inference
could be drawn against you based on your decision not to
testify?
THE DEFENDANT: Yes.
THE COURT: Do you understand that if you were
convicted at a trial, you would have the right to appeal that
verdict?
THE DEFENDANT: Yes.
THE COURT: Do you understand each and every one of
the rights that I've asked you about?
THE DEFENDANT: Yes, I do.
THE COURT: Do you have any questions about any of
these rights?
THE DEFENDANT: No.
THE COURT: Do you understand that by entering a
guilty plea today, you will be giving up each and every one of
these rights?
THE DEFENDANT: Yes.
THE COURT: Do you also understand that you will be
giving up any possible claim that your constitutional rights
may have been violated?
THE DEFENDANT: Yes.
THE COURT: And do you understand that if you plead
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guilty you will have no trial?
THE DEFENDANT: Yes.
THE COURT: Do you understand that by pleading guilty
you will also have to give up your right not to incriminate
yourself, because I will ask you questions about what you did
in order to satisfy myself that you are guilty as charged and
you will have to admit and acknowledge your guilt?
THE DEFENDANT: Yes.
THE COURT: Do you understand that you can change your
mind right now and refuse to enter a plea of guilty? You do
not have to enter this plea if you do not want to for any
reason. Do you understand this fully?
THE DEFENDANT: Yes.
THE COURT: Do you still wish to plead guilty?
THE DEFENDANT: Yes, I do.
THE COURT: Do you understand that Count One of the
Superseding Information charges you participating in a
conspiracy to, one, obstruct or impede the lawful government
functions of the Internal Revenue Service in the ascertainment,
assessment, computation and collection of income taxes; two,
falsified books and records of a broker-dealer; three,
falsified books and records of an investment advisor; and,
four, make false filings with the United States Securities and
Exchange Commission, all in violation of Title 18 of the United
States Code, Section 371?
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THE DEFENDANT: Yes.
THE COURT: Do you understand that Count Two of the
Superseding Information charges you with falsifying books and
records of a broker-dealer, in violation of Title 15 of the
United States Code, Section 78qa and 78ff; Title 17 of the Code
of Federal Regulations, Section 240.17a-3, and Title 18 of the
United States Code, Section 2?
THE DEFENDANT: Yes.
THE COURT: Do you understand that Count Three of the
Superseding Information charges you with falsifying books and
records of an investment advisor, in violation of Title 15 of
the United States Code, Sections 80b-4 and 80b-17; Title 17 of
the Code of Federal Regulations, Section 275.204-2, and Title
18 of the United States Code, Section 2?
THE DEFENDANT: Yes.
THE COURT: Do you understand that Count Four of the
Superseding Information charges you making false filings with
the Securities and Exchange Commission, in violation of Title
15 of the United States Code, Sections 78q and 78ff; Title 17
of the Code of Federal Regulations, Sections 240.17a-5,
240.17a-13, and 210.2-01; as well as Title 18 of the United
States Code Section 2?
THE DEFENDANT: Yes.
THE COURT: Do you understand that the government
would have to prove each and every part, or element, of each of
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these charges beyond a reasonable doubt at a trial if you did
not plead guilty?
THE DEFENDANT: Yes.
THE COURT: Ms. Baroni or Mr. Moore, would you please
state for the record the elements that the government would
have to prove if we were to go to trial on these charges?
MS. BARONI: Yes, your Honor.
With respect to Count One, the conspiracy count, the
government would have to prove the following elements beyond a
reasonable doubt: First, that the conspiracy charged in the
Information existed, in other words, that there was in fact an
agreement or understanding to either violate the laws of the
United States or to defraud the United States; second, that the
defendant knowingly, willingly and voluntarily became a member
of the conspiracy; third, that any one of the conspirators, not
necessarily the defendant, knowingly committed at least one
overt act in the Southern District of New York in furtherance
of the conspiracy and during the life of the conspiracy.
With respect to Count Two, falsifying books and
records of a broker-dealer, in order to prove this crime the
government would have to prove beyond a reasonable doubt the
following elements: First, that at the time of the alleged
offense Bernard L. Madoff Investment Securities was a
registered broker-dealer; second, that BLMIS failed to make and
keep certain accurate records as required under the SEC's rules
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and regulations; third, that the defendant aided and abetted
BLMIS's failure to make and keep accurate records; and, fourth,
that the defendant acted knowingly and willfully.
With respect to Count Three, falsifying books and
records of an investment advisor, the government would have to
prove, first, that at the time of the alleged offense BLMIS was
an investment advisor; second, that BLMIS failed to make and
keep certain accurate records as required under the SEC's rules
and regulations; third, that the defendant aided and abetted
BLMIS's failure to make and keep accurate records; fourth, that
the defendant acted knowingly and willfully; and, fifth, that
the offense involved the use of mails and the means and
instrumentalities of interstate commerce.
And, finally, with respect to Count Four, making false
filings with the SEC, the government would have to prove,
first, that the defendant was required to file an application,
report or document with the SEC under the Securities Exchange
Act of 1934 and the rules and regulations thereunder; second -THE COURT: The defendant personally or BLMIS?
MS. BARONI: The defendant or the BLMIS, actually,
your Honor.
That the application or report or document filed with
the SEC contained false or misleading statements; third, that
the false or misleading statements were material; and, fourth,
that the defendant acted knowingly and willfully.
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THE COURT: Thank you.
Ms. Cotellessa-Pitz, do you understand the matters
that the government would have to prove if you did not plead
guilty?
THE DEFENDANT: Yes, I do.
THE COURT: Do you understand that the maximum
possible penalty for the crime with which you are charged in
Count One is five years of imprisonment, plus a fine of the
greatest of $250,000, twice the gain resulting from the offense
or twice the loss to other people resulting from the offense,
plus a $100 special assessment, plus full restitution to all
persons injured as a result of your criminal conduct, plus
three years of supervised release after your term of
imprisonment?
THE DEFENDANT: Yes.
THE COURT: Do you understand that the maximum
possible penalty for the crime with which you are charged in
Count Two is 20 years of imprisonment, plus a fine of the
greatest of $5 million, twice the gain resulting from the
offense or twice the loss to other people resulting from the
offense, plus a $100 special assessment, plus full restitution
to all persons injured as a result of your criminal conduct,
plus three years of supervised release after your term of
imprisonment?
THE DEFENDANT: Yes.
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THE COURT: Do you understand that the maximum
possible penalty for the crime with which you are charged in
Count Three is five years of imprisonment, plus a fine of the
greatest of $250,000, twice the gain resulting from the offense
or twice the loss to other people resulting from the offense,
plus a $100 special assessment, plus full restitution to all
persons injured as a result of your criminal conduct, plus
three years of supervised release after your term of
imprisonment?
THE DEFENDANT: Yes.
THE COURT: And do you understand that the maximum
possible penalty for the crime with which you are charged in
Count Four is 20 years of imprisonment, plus a fine of the
greatest of $5 million, twice the gain resulting from the
offense or twice the loss to other people resulting from the
offense, plus a $100 special assessment, plus full restitution
to all persons injured as a result of your criminal conduct,
plus three years of supervised release after your term of
imprisonment?
THE DEFENDANT: Yes.
THE COURT: Do you understand that the maximum
possible combined penalty for the four crimes with which you
are charged is 50 years of imprisonment, plus a fine of the
greatest of -- plus a fine of $10,500,000 or, if greater, the
sums of the relevant gains, losses and statutory amounts
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relating to your offenses, plus full restitution to all persons
injured by your criminal conduct, plus $400 total mandatory
special assessment, plus supervised release for three years
after your term of imprisonment?
THE DEFENDANT: Yes.
THE COURT: I will now give you some information and
verify your understanding of the supervised release aspect of
the potential penalty.
Supervised release means that you will be subject to
monitoring when you are released from prison. Terms and
conditions will be imposed. If you violate any of the set
terms and conditions you can be reimprisoned without a jury
trial.
If you are on supervised release and you do not comply
with any of the set terms or conditions, you can be returned to
prison for the remainder of the term of supervised release, you
will be given no credit for the time that you served in prison
as a result of your sentence, and no credit for any time spent
on post-release supervision.
So, for example, if you received a prison term and
then a three-year term of supervised release and after you left
prison you lived up to the terms of supervised release for two
years but then you violated some term of the supervised
release, you could be returned to prison for three full years.
Do you understand that?
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THE DEFENDANT: Yes.
THE COURT: Do you also understand that if I accept
your guilty plea and adjudge you guilty, that adjudication may
deprive you of valuable civil rights such as the right to vote,
the right to hold public office, the right to serve on a jury,
and the right to possess any kind of firearm?
THE DEFENDANT: Yes.
THE COURT: Do you understand that there are
Sentencing Guidelines that the Court must consider in
determining your sentence?
THE DEFENDANT: Yes.
THE COURT: Has your attorney discussed the Sentencing
Guidelines with you?
THE DEFENDANT: Yes.
THE COURT: Do you understand that in determining your
sentence, the Court must calculate the applicable Sentencing
Guidelines' range and consider that range, possible departures
under the Sentencing Guidelines, and other sentencing factors
under Title 18 of the United States Code, Section 3553(a)?
THE DEFENDANT: Yes.
THE COURT: Do you understand that if your attorney or
anyone else has attempted to estimate or predict what your
sentence will be, their estimate or prediction could be wrong?
THE DEFENDANT: Yes.
THE COURT: Do you also fully understand that even if
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your sentence is different from what your attorney or anyone
else told you it might be, or if it is different from what you
expect, you will still be bound to your guilty plea and you
will not be allowed to withdraw your guilty plea?
THE DEFENDANT: Yes.
THE COURT: Do you understand that the sentence to be
imposed will be determined solely by the Court, and that I can
only determine the sentence to be imposed after the Probation
Department prepares a presentence report?
THE DEFENDANT: Yes.
THE COURT: Do you understand that the Court has
discretion, while taking into account the specific provisions
and policy statements in the guidelines, to sentence you to any
number of years of imprisonment between zero and the combined
statutory maximums of 50 years?
THE DEFENDANT: Yes.
THE COURT: Are you now serving any state or federal
sentence, or are you being prosecuted for any other crime?
THE DEFENDANT: No.
THE COURT: Do you understand that the Superseding
Information also includes a forfeiture allegation in which the
government asserts that you are required to forfeit to the
United States all property, real and personal, that constitutes
or is derived from proceeds traceable to the commission of the
offenses charged in Counts One and Two of the Information
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including, but not limited to, a sum of money equal to
$97.3 billion, representing the amount of proceeds obtained as
a result of those offenses?
THE DEFENDANT: Yes.
THE COURT: Mr. Treanor, would you please show
Ms. Cotellessa-Pitz Government Exhibit 1, the agreement.
Ms. Cotellessa-Pitz, have you signed this agreement?
THE DEFENDANT: Yes, your Honor.
THE COURT: Did you read it before you signed it?
THE DEFENDANT: Yes.
THE COURT: Did you discuss it with your attorneys
before you signed it?
THE DEFENDANT: Yes.
THE COURT: Did you fully understand the agreement
before you signed it?
THE DEFENDANT: Yes.
THE COURT: Does the agreement reflect accurately your
complete and total understanding of the entire agreement
between the government, your attorney and you?
THE DEFENDANT: Yes.
THE COURT: Is everything that you understand about
your plea, cooperation and sentence covered in this agreement?
THE DEFENDANT: Yes.
THE COURT: Has anything been left out?
THE DEFENDANT: No.
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THE COURT: Has anyone made any promises to you other
than what's set forth in that agreement, or given you anything
or threatened you or forced you to plead guilty or to enter
into the cooperation agreement?
THE DEFENDANT: No.
THE COURT: Do you understand that even if the
government does not oppose or take a position on what your
attorney will ask as a sentence, I am free to impose whatever
sentence I believe is appropriate under the circumstances and
the applicable law and you will have no right to withdraw your
plea?
THE DEFENDANT: Yes.
THE COURT: Do you understand that the agreement
provides that you must cooperate fully with the Office of the
United States Attorney, the Federal Bureau of Investigation,
the United States Department of Labor, the Internal Revenue
Service, and any other law enforcement agency designated by the
United States Attorney?
THE DEFENDANT: Yes.
THE COURT: Do you understand that the agreement does
not bind any federal, state or local prosecuting authority
other than the United States Attorney?
THE DEFENDANT: Yes.
THE COURT: Do you understand that the agreement
provides that if the United States Attorney determines that you
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have provided substantial assistance in an investigation or
prosecution, and if you have fully complied with the
understandings specified in the agreement, the United States
Attorney will file a motion pursuant to Section 5K1.1 of the
Sentencing Guidelines requesting that the court sentence you in
light of the factors set forth in that section?
THE DEFENDANT: Yes.
THE COURT: Do you understand that the factors that
the Court may consider under Section 5K1.1 include the
significance and usefulness of your assistance, the
truthfulness, completeness and reliability of any information
or testimony you provide, the nature and extent of your
assistance, any injuries suffered or any danger or risk of
injury to you or your family as a result of your assistance,
and the timeliness of your assistance?
THE DEFENDANT: Yes.
THE COURT: Do you understand that even if the United
States Attorney files such a motion, the sentence to be imposed
on you remains within the sole discretion of the Court?
THE DEFENDANT: Yes.
THE COURT: Do you understand that you will not be
entitled to withdraw your plea even if the Court denies the
motion?
THE DEFENDANT: Yes.
THE COURT: Do you understand that if the United
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States Attorney determines that you have not provided
substantial assistance, or that you violated any provision of
the agreement, the United States Attorney is not obligated to
file a motion under Section 5K1.1?
THE DEFENDANT: Yes.
THE COURT: Do you understand that you will not be
entitled to withdraw your guilty plea even if the United States
Attorney does not file a motion?
THE DEFENDANT: Yes.
THE COURT: Do you understand that the agreement
provides that if you commit any further crimes or if it is
determined that you gave false, incomplete or misleading
testimony or information, or that you otherwise violated any
provision of the agreement, you will be subject to prosecution
for any federal violations of which the United States Attorney
has knowledge, including perjury and obstruction of justice?
THE DEFENDANT: Yes.
THE COURT: Do you also understand that your agreement
provides that if you commit any further crimes, or if it is
determined that you gave false, incomplete or misleading
testimony or information, or otherwise violated any provision
of the agreement, all statements made by you to the United
States Attorney or other designated law enforcement agents and
any testimony you have given before a grand jury or other
tribunal may be admissible in evidence in any criminal
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proceedings against you?
THE DEFENDANT: Yes.
THE COURT: Do you understand that your agreement also
provides that you may not assert a claim that such statements
should be suppressed from evidence and that you have waived
your right to claim that such statements should be suppressed
from evidence?
THE DEFENDANT: Yes.
THE COURT: Do you understand that on page 2, your
agreement, which is Government Exhibit 1, provides that you are
admitting the forfeiture allegation in the Information and that
you are agreeing to forfeit to the United States all property,
real and personal, that constitutes or is derived from proceeds
traceable to the commission of those offenses, including, but
not limited to, a sum of money equal to $97.3 billion,
representing the amount of proceeds obtained as a result of the
offenses charged in Counts One and Two of the Information?
THE DEFENDANT: Yes.
THE COURT: Do you understand that you are not
obligated to admit the forfeiture obligation?
THE DEFENDANT: Yes.
THE COURT: Do you understand that on page 5 -- just
one moment.
(Pause)
Sorry for the delay.
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Ms. Baroni, is there a factual basis or other reason
for my specifically querying the immigration-related agreement
that is on page 5?
MS. BARONI: No, your Honor.
THE COURT: Ms. Cotellessa-Pitz, do you understand
that any amount that you do forfeit will not be credited toward
any fines, restitution, costs of imprisonment, or any other
additional penalty that the Court may impose on you?
THE DEFENDANT: Yes.
THE COURT: Do you still wish to plead guilty pursuant
to this plea agreement?
THE DEFENDANT: Yes, your Honor.
THE COURT: Messrs. Treanor and Rody, does either of
you know of any valid reason why Ms. Cotellessa-Pitz would
prevail at trial?
MR. TREANOR: No, your Honor.
MR. RODY: No, your Honor.
THE COURT: Does either of you know of any reason why
she should not be permitted to plead guilty?
MR. TREANOR: No, your Honor.
MR. RODY: No, your Honor.
THE COURT: Ms. Cotellessa-Pitz, would you please
stand now and tell me what you did that makes you guilty of the
crimes to which you are pleading guilty.
Your counsel may stand with you, if that will make you
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more comfortable.
THE DEFENDANT: I have a statement here.
I am here to plead guilty to the counts in the
Information filed against me and to accept responsibility for
what I have done.
From approximately 1999 through December 2008, while
working for Bernard Madoff, I made accounting entries in the
books and records of his business that I knew were false and
inaccurate, and I filed document with regulatory authorities
and others that I knew repeated these falsehoods and
inaccuracies. I now know that these acts helped Bernard Madoff
and others perpetuate a fraud that harmed thousands of people,
and I am terribly sorry that I contributed to the harm done to
so many.
I would like to explain my role further.
I began working at Bernard L. Madoff Investment
Securities, LLC, which I will refer to as "BLMIS," in 1978 as a
part-time employee while I was still in college. For the next
30 years, I continued to work at BLMIS primarily performing
functions in the operations department associated with BLMIS's
Proprietary Trading and Market Making businesses.
During the entire time I worked at BLMIS, I reported
to Daniel Bonventre, who was the director of operations at the
firm.
In late 1998, I was promoted to comptroller of BLMIS.
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In that capacity, I assisted Bonventre in maintaining the books
and records of BLMIS, which included the General Ledger and
stock records. I also regularly prepared the Financial and
Operational Combined Uniform Single Reports, also know as
"FOCUS Reports," that were filed with the Securities and
Exchange Commission. In addition, I occasionally assisted
Annette Bongiorno, Joann Crupi and others in maintaining books
and records relating to Investment Advisory accounts and
signing redemption checks issued to investors.
During the period when I was comptroller of BLMIS, I
agreed with and worked together with other BLMIS employees to
violate the laws of the United States, and I took a number of
actions over the years at BLMIS's offices in Manhattan that
constituted violations of U.S. laws. I did so knowingly and
willfully, and knew that what I was doing was wrong and
unlawful.
My conduct included a number of acts that I would like
to describe.
From about 1999 through December 2008, I worked with
others to make false entries in the books and records of BLMIS
and to cause the filing of false documents with the SEC. As a
registered broker-dealer and as an investment advisor, BLMIS
was required to make and keep accurate books and records under
the SEC's rules. At the direction of Madoff, Bonventre and
others, I caused inaccurate ledgers and other books and records
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to be created and kept by BLMIS, including inaccurate general
ledgers and stock records. I then transferred the same
inaccurate record entries into FOCUS Reports and annual
financial statements that I knew would be sent to the SEC.
The false documents were prepared at the BLMIS offices
in Manhattan, and some of these documents were submitted
through the U.S. Mail.
While undertaking these actions, I knew that what I
was doing was wrong.
The following are a few examples of the types of false
records I created and maintained.
From about 1999 through December 2008, I made false
and inaccurate entries in the books and records of BLMIS
relating to transfers of funds from BLMIS's Investment Advisory
business. At various times, I believed these transfers to be
the interest or commissions from securities trading in the
personal accounts of Bernard Madoff or the accounts of
customers of the Investment Advisory business. Nevertheless,
at the direction of Madoff, Bonventre and others, I booked
these transfers improperly to the accounts of BLMIS's
Proprietary Trading and Market Making businesses, and recorded
these false entries in BLMIS's Trading Ledgers, General
Ledgers, and other supporting books and records of BLMIS's
Proprietary Trading and Market Making businesses.
In addition, at the direction of Bonventre and others,
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I booked the transfers of funds at times into specific
securities or trading positions and accounts that were part of
the firm's Proprietary Trading and Market Making businesses. I
knew that the transfers bore no relation to these securities or
positions, and that the funds did not result from trading in
these securities through the firm's Proprietary Trading and
Market Making businesses and, therefore, that my entries were
false. I understood that my entries falsely inflated the
revenue, increased the profits, and hid the losses of the
Proprietary Trading and Market Making businesses and at the
same time did not accurately report the financial condition of
BLMIS as a whole.
In addition, in 2005, the SEC conducted an audit of
BLMIS's businesses. At Madoff's direction and in response to
this audit, I, together with others, created false books and
records to be shown to the auditors.
For example, the SEC requested a list and description
of all BLMIS trading accounts as well as a report reflecting
the monthly profit and loss for each of the trading accounts
for a three-month period in 2005. In response, I, together
with Bonventre, O'Hara and others, created several false
trading account reports that were given to the SEC. In those
reports, among other things, we intentionally omitted an
account affiliated with the Investment Advisory business.
I knew that my actions in creating these false reports
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and omitting this account were wrong and would have the effect
of misleading the SEC and concealing the account from the SEC.
Separately, I assisted Madoff and other BLMIS
employees in defrauding the United States by preventing the
Internal Revenue Service from collecting the proper amount of
income taxes from Madoff. I did this in 2007, when the IRS
audited Madoff's 2004 and 2005 federal tax returns, as well as
on other occasions.
In 2007, at the direction of Madoff and his
accountant, David Friehling, I, together with Bonventre, O'Hara
and others, created a false backdated General Ledger and
Trading Ledger and created false reports derived from the
Trading Ledger in order to support Madoff's false tax returns.
In addition, I, together with Bonventre and others, fabricated
backdated positions in certain stocks in a backdated trading
ledger. I knew that the backdated stock positions were not
real and that the false General Ledger and Trading Ledger were
being created in order to deceive IRS tax auditors in
connection with Madoff's tax returns.
The altered backdated documents that I helped to
create were shown to an IRS auditor.
I believe that the actions I have described above make
me guilty of the crimes charged in Counts One, Two, Three and
Four of the Information, and I plead guilty to those charges
because I am responsible for committing those crimes.
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Although I now know that the crimes I committed helped
to cover up and perpetuate Bernard Madoff's fraudulent Ponzi
scheme, at the time I committed these crimes I did not know
that Madoff and others were stealing investors' money instead
of actually investing the money through securities trading.
Nonetheless, the consequences of my actions are clear to me
now, and for that I am, again, terribly sorry.
I would like to apologize to the victims of the fraud,
and I would like the Court and the public to know that I am
cooperating fully with the government in this matter.
Thank you, your Honor.
THE COURT: Thank you.
Now, I notice that you were reading from notes as you
made that factual recitation. Do those notes reflect
accurately and truthfully your own actions and knowledge as of
the time of the relevant events?
THE DEFENDANT: Yes, they do.
THE COURT: And to confirm, you knew at the time that
you made these false records and false submissions that you
have described that the information in them was false?
THE DEFENDANT: Yes, your Honor.
THE COURT: And you nonetheless made them and
submitted them willfully?
THE DEFENDANT: Yes, your Honor.
THE COURT: Ms. Baroni, does the government wish
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anything further as a factual matter to be addressed in the
plea allocution?
MS. BARONI: No, your Honor.
THE COURT: Thank you.
Ms. Baroni, would you please summarize the
government's evidence against Ms. Cotellessa-Pitz.
MS. BARONI: Yes, your Honor.
If this case had proceeded to trial, the government
would have proven, through witness testimony, documents and
other evidence, beyond a reasonable doubt all the facts set
forth in the Superseding Information.
Specifically, the government would have proven that
Ms. Cotellessa-Pitz was employed at BLMIS from 1978 until at
least December 2008; that beginning in 1998 she became a
comptroller.
The evidence would show that Ms. Cotellessa-Pitz,
along with Daniel Bonventre, Annette Bongiorno, Joann Crupi,
Jerome O'Hara, George Perez, Eric Lipkin, David Kugel and Frank
DiPascali, and other co-conspirators, engaged in a scheme to
create many false and misleading entries in the books and
records of BLMIS that lasted for decades.
Ms. Cotellessa-Pitz, the evidence would show, worked
under the supervision of Mr. Bonventre, and that she engaged in
an accounting fraud that covered up Mr. Madoff's Ponzi scheme.
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she, Mr. Bonventre and others took proceeds from the Ponzi
scheme, which was a fraud run through the Investment Advisory
business, and made it appear that the money belonged in other
parts of Madoff's businesses. This allowed Madoff to avoid
scrutiny by hiding the fact that the money came from the
fraudulent IA business, and it also allowed Madoff to prop up
BLMIS's market making and prop trading businesses that were
losing money and that served as a front for the Ponzi scheme.
The government would also prove, if this case had gone
to trial, that Ms. Cotellessa-Pitz, Mr. Bonventre and others
made similar false and misleading statements in reports that
were required to be filed with the SEC.
In addition, the government would prove that
Ms. Cotellessa-Pitz, along with Daniel Bonventre, Jerome
O'Hara, George Perez, Joann Crupi, Eric Lipkin, Frank DiPascali
and other co-conspirators, created false and fraudulent
documents for the purpose of deceiving the Securities and
Exchange Commission. For example, the government would prove
that in connection with an audit of BLMIS conducted by the SEC
in 2005, Ms. Cotellessa-Pitz, Bonventre, O'Hara and others
created numerous false and altered documents that were given to
the SEC relating to BLMIS's trading accounts, bank accounts,
and relating to its profitability and loss.
Further, and separately, the government would also
prove that Ms. Cotellessa-Pitz, Daniel Bonventre, Jerome O'Hara
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and Madoff's accountant David Friehling, along with other
co-conspirators, created false and fraudulent documents in
connection with tax audits of Bernard L. Madoff. For example,
in 2004, when New York State Department of Taxation and Finance
conducted an audit of Madoff, Ms. Cotellessa-Pitz, Bonventre,
O'Hara, Friehling and others covered up the fact that
Mr. Madoff had underreported BLMIS's profits by tens of
millions of dollars in each of those years and in that cover-up
Ms. Cotellessa-Pitz, Bonventre, O'Hara and others created fake
general ledgers and stock records and other documents to
deceive the tax auditors.
The government would further prove that
Ms. Cotellessa-Pitz and her co-conspirators did the same in
connection with a 2007 audit conducted by the Internal Revenue
Service.
THE COURT: Thank you.
Ms. Cotellessa-Pitz, would you please stand again.
How do you now plead to the charge against you in
Count One of the Fifth Superseding Information, not guilty or
guilty?
THE DEFENDANT: Guilty.
THE COURT: How do you now plead to the charge against
you in Count Two of the Fifth Superseding Information, not
guilty or guilty?
THE DEFENDANT: Guilty.
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THE COURT: How do you now plead to the charge against
you in Count Three of the Fifth Superseding Information, not
guilty or guilty?
THE DEFENDANT: Guilty.
THE COURT: And how do you now plead to the charge
against you in Count Four of the Fifth Superseding Information,
not guilty or guilty?
THE DEFENDANT: Guilty.
THE COURT: Are you pleading guilty to each of these
charges because you are in fact guilty of the illegal conduct
charged?
THE DEFENDANT: Yes, your Honor.
THE COURT: Are you pleading guilty voluntarily and of
your own free will?
THE DEFENDANT: Yes, your Honor.
THE COURT: Mr. Treanor, would you please show
Ms. Cotellessa-Pitz Court Exhibit 1, the advice of rights form.
Ms. Cotellessa-Pitz, have you signed this form?
THE DEFENDANT: Yes, your Honor.
THE COURT: Did you read it before you signed it?
THE DEFENDANT: Yes.
THE COURT: Did you discuss it with your attorney
before you signed it?
THE DEFENDANT: Yes, your Honor.
THE COURT: Did you fully understand it before you
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signed it?
THE DEFENDANT: Yes.
THE COURT: Mr. Treanor, did you also review and sign
Court Exhibit 1?
MR. TREANOR: Yes, I did, your Honor.
THE COURT: Mr. Treanor, are there any other questions
that you believe I should ask Ms. Cotellessa-Pitz in connection
with this plea?
MR. TREANOR: No, your Honor.
THE COURT: Ms. Baroni, are there any other questions
that you believe I should ask Ms. Cotellessa-Pitz in connection
with this plea?
MS. BARONI: No, your Honor.
THE COURT: Ms. Cotellessa-Pitz, you have acknowledged
that you are guilty as charged in the Information. I find that
you know your rights and that you are waiving them voluntarily.
Because your plea is entered knowingly and voluntarily
and is supported by an independent basis in fact containing
each of the essential elements of each of the offenses, I
accept your guilty plea, and I adjudge you guilty of the
offenses charged in Counts One, Two, Three and Four of the
Fifth Superseding Information.
Mr. Treanor, do you wish to be present for any
interview of Ms. Cotellessa-Pitz in connection with the
preparation of the presentence report?
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MR. TREANOR: Yes, your Honor.
THE COURT: I will make that direction.
Counsel, what is the desire of the parties with
respect to setting a sentencing date?
MS. BARONI: Your Honor, the government would ask that
your Honor set a sentencing control date for approximately six
months into the future and that we would not ask that a
presentence report be prepared at this time.
THE COURT: And you will inform the Court whether that
date would need to be extended further or, alternatively, when
it is an appropriate time to have the presentence report
prepared?
MS. BARONI: We will.
THE COURT: Thank you.
Ms. Ng, may I have a control date six months out?
THE CLERK: Friday, June 22, 2012, at 11 a.m.
THE COURT: The sentencing control date is set for
June 22, 2012, at 11 in the morning.
Counsel, when it is time for preparation for
sentencing, please make sure that you make and file your
submissions in accordance with the sentencing submission policy
that I have posted on the court's website.
Ms. Cotellessa-Pitz, at some point in the future the
Probation Office will be preparing a presentence report to
assist me in sentencing you. You will be interviewed by the
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Probation Office. It is important that the information that
you give to the probation officer be truthful and accurate.
The report is important in my decision as to what your sentence
will be. You and your attorneys have a right and will have an
opportunity to examine the report, to challenge or comment on
it, and to speak on your behalf before sentencing.
Failing to be truthful with the Probation Office and
the Court may have an adverse effect on your sentence and may
subject you to prosecution.
Do you understand that?
THE DEFENDANT: Yes, your Honor.
THE COURT: Thank you.
Is there an application with respect to bail pending
sentencing?
MS. BARONI: Yes, your Honor. The parties have a
proposal for your Honor's consideration with respect to a bail
package.
It would be a $2.5 million personal recognizance bond
to be secured by eight financially-responsible people and to be
also secured by at least $800,000 in cash or property. None of
the cash or property could come from proceeds of the fraud or
from any forfeitable funds.
Further, the proposal would subject the defendant to
strict pretrial supervision. Her travel would be restricted to
the Southern and Eastern District of New York. She would
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surrender all travel documents and would not make any new
travel applications.
Further, Judge, the government has interviewed eight
of the defendant's proposed suriters already, and we are
satisfied with respect to their qualifications. We think that
they are financially responsible. They are very close family
members and friends of the defendant, and we believe that they
would have moral suasion over her.
Further, your Honor, the defendant has been working
with the U.S. Attorney's Office and the FBI as well as the IRS
for quite a long time now. She has met every appointment. She
has been completely reliable, and the government believes that
she has an overwhelming incentive to continue to cooperate and
will not flee.
Further, as part of the cooperation process, she has
filled out financial affidavits and submitted them to our
office detailing all of her assets, the amounts and the
location of those assets. She has also entered into a
voluntary restraint agreement with the government relating to
her assets.
And in light, your Honor, of her cooperation, which,
as I said, has been ongoing for a long time, her full
disclosure of her conduct while she was an employee at BLMIS,
as well as full disclosure of her financial situation and all
of her assets, the government believes that she will be
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compliant with the proposed bail package and with any rules set
forth by Pretrial Services.
THE COURT: Does the government believe, on the basis
of its factual investigation, that the evidence is clear and
convincing that Ms. Cotellessa-Pitz will not pose a risk of
flight or danger to the community?
MS. BARONI: Yes, your Honor.
THE COURT: And has the government investigated the
proposed sources of the security?
MS. BARONI: Yes, we have.
THE COURT: And is the government satisfied that the
sources are indeed unrelated to the particular forfeitable
funds?
MS. BARONI: Yes, your Honor. They are not related to
BLMIS in any way.
THE COURT: And what would be the government's
proposal as to the deadline for satisfaction of these
conditions?
MS. BARONI: Given the upcoming holidays, your Honor,
we would be amenable to ten days to post the property and for
the cosigners to sign the bond.
THE COURT: And so today being the 19th, that would be
the 29th of December?
MR. TREANOR: Your Honor, if we could ask for
January 3rd, just to get us past the holidays. It is a
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difficult time to get people focused on this. The courthouses
aren't open all of the days between now an then. And so we
have a number of cosigners ready to go, and we expect that that
will be a pretty quick process getting the signatures. It is
the property that may take a little bit longer. So we would
ask for that additional time.
MS. BARONI: We have no objection to that, your Honor.
THE COURT: I will allow until January 3rd for
satisfaction of the conditions.
And having reviewed the Pretrial Services' report and
considered carefully the government's proffers regarding the
proposed terms and its investigations in relation to those
proposed terms, I find that they are sufficient and compliant
with the relevant legal standards regarding bail pending
sentencing, and I will grant release on those conditions, with
the requirement that they be fully satisfied by why don't I
call it 4 in the afternoon on January 3rd.
And I am going to now prepare a bail disposition sheet
and I will show it to everyone to -- I'll show it to counsel to
confirm that I have all of the conditions written properly.
(Pause)
Ms. Ng, would you hand a copy to each table and one to
the court reporter, please.
The draft that I have handed out summarizes the bail
conditions as follows: $2.5 million PRB with 8 FRPs and
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$800,000 cash or property security (such security must be
unrelated to fraud proceeds and unrelated to forfeitable
funds); strict pretrial supervision; travel restricted to
S.D.N.Y./E.D.N.Y.; surrender travel documents and no new
applications. All conditions must be satisfied by 4 p.m. on
January 3, 2012.
Does that accurately cover the agreed conditions?
MS. BARONI: Yes, it does, your Honor.
If your Honor could add that she could be released
today on a certain subset of cosigner signatures, either on her
own signature or on a couple of other signatures, depending on
how many people are here to sign?
THE COURT: How many do we have to sign?
MR. TREANOR: We have two here. I believe we have a
third that will be here. We may have as many as five today.
Of course, we have Ms. Pitz also.
THE COURT: I will permit release today on the
signature of Ms. Pitz and three financially-responsible
persons.
MR. TREANOR: Thank you, your Honor.
THE COURT: I will add that.
So I've added a sentence at the end that says:
"Defendant may be released today on own signature and those of
three FRPs."
So I will save and print those.
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How many copies to we need, Ms. Ng?
THE CLERK: Five.
(Pause)
THE COURT: Ms. Cotellessa-Pitz, did you hear the bail
conditions as I have outlined them?
THE DEFENDANT: Yes, your Honor.
THE COURT: Do you understand them?
THE DEFENDANT: Yes.
THE COURT: Do you understand that you are legally
obligated to comply with these conditions, and that the
consequences of noncompliance can be severe?
THE DEFENDANT: Yes, I do.
THE COURT: Do you understand that if you fail to
comply with the conditions, you are subject to remand and
potentially subject to further penalty?
THE DEFENDANT: Yes.
THE COURT: Do you understand that if you do not
return to my courtroom on the time and date that is ultimately
set for sentencing, that you will be guilty of a crime
separate, apart from -- separate and apart from the crimes to
which you have just pled guilty?
THE DEFENDANT: Yes.
THE COURT: And do you understand that under such
circumstances, you will be subject to penalties separate, apart
from, and over and above any that may be imposed in connection
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with the crimes to which you have pled guilty?
THE DEFENDANT: Yes, your Honor.
THE COURT: Then I will fully expect you to comply
with these conditions and to appear as scheduled for
sentencing.
I will now sign the bail disposition sheet.
(Pause)
Is there a consent forfeiture order at this time, or
is that something the parties contemplate to prepare later?
MS. BARONI: We will prepare it later, your Honor,
prior to sentencing.
THE COURT: All right. I will enter my usual order
regarding the preparation of a preliminary order of forfeiture.
Is there anything else that we need to take up
together this afternoon?
MS. BARONI: Not from the government. Thank you, your
Honor.
MR. TREANOR: No, your Honor.
THE COURT: Thank you.
Ms. Baroni, Mr. Moore, you will shepherd the process
through the Magistrate Clerk's office in relation to the
signing of the necessary documents?
MS. BARONI: Yes, Judge.
THE COURT: Thank you.
MR. MOORE: Thank you very much.
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THE COURT: I wish you all a safe and healthy
holidays. Thank you all for being here today.
We are adjourned.
MR. MOORE: Thank you, your Honor. You, too.
THE CLERK: All rise.
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