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

Filing 90

DECLARATION of DANA M. SESHENS in Support re: 79 MOTION for Summary Judgment.. Document filed by Charles 15 Associates, Charles 15 LLC, Charles Sterling LLC, Charles Sterling Sub LLC, College Place Enterprises LLC, Coney Island Baseball Holding Company LLC, Estate of Leonard Schreier, FFB Aviation LLC, FS Company LLC, Fred Wilpon Family Trust, Arthur Friedman, Ruth Friedman, Iris J. Katz and Saul B. Katz Family Foundation, Inc., Judy and Fred Wilpon Family Foundation, Inc., Amy Beth Katz, David Katz, Dayle Katz, Gregory Katz, Howard Katz, Iris Katz, 157 J.E.S. LLC, Air Sterling LLC, BAS Aircraft LLC, Jason Bacher, Bon Mick Family Partners LP, Bon-Mick, Inc., Brooklyn Baseball Company LLC, C.D.S. Corp., Michael Katz, Saul B. Katz, Todd Katz, Katz 2002 Descendants' Trust, Heather Katz Knopf, Natalie Katz O'Brien, Mets II LLC, Mets Limited Partnership, Mets One LLC, Mets Partners, Inc., Minor 1 (REDACTED), Minor 2 (REDACTED), L. Thomas Osterman, Phyllis Rebell Osterman, Realty Associates Madoff II, Red Valley Partners, Robbinsville Park LLC, Ruskin Garden Apartments LLC, Saul B. Katz Family Trust, Michael Schreier, Deyva Schreier Arthur, See Holdco LLC, See Holdings I, See Holdings II, Sterling 10 LLC, Sterling 15C LLC, Sterling 20 LLC, Sterling Acquisitions LLC, Sterling American Advisors II LP, Sterling American Property III LP, Sterling American Property IV LP, Sterling American Property V LP, Sterling Brunswick Corporation, Sterling Brunswick Seven LLC, Sterling Dist Properties LLC, Sterling Equities, Sterling Equities Associates, Sterling Equities Investors, Sterling Heritage LLC, Sterling Internal V LLC, Sterling Jet II Ltd., Sterling Jet Ltd., Sterling Mets Associates, Sterling Mets Associates II, Sterling Mets LP, Sterling Pathogenesis Company, Sterling Third Associates, Sterling Thirty Venture LLC, Sterling Tracing LLC, Sterling Twenty Five LLC, Sterling VC IV LLC, Sterling VC V LLC, Edward M. Tepper, Elise C. Tepper, Jacqueline G. Tepper, Marvin B. Tepper, Valley Harbor Associates, Kimberly Wachtler, Philip Wachtler, Bruce N. Wilpon, Daniel Wilpon, Debra Wilpon, Fred Wilpon, Jeffrey Wilpon, Jessica Wilpon, Judith Wilpon, Richard Wilpon, Scott Wilpon, Valerie Wilpon, Wilpon 2002 Descendants' Trust, Robin Wilpon Wachtler. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C PART 1, # 4 Exhibit C PART 2, # 5 Exhibit D, # 6 Exhibit E, # 7 Exhibit F, # 8 Exhibit G, # 9 Exhibit H, # 10 Exhibit I, # 11 Exhibit J, # 12 Exhibit K, # 13 Exhibit L, # 14 Exhibit M, # 15 Exhibit N, # 16 Exhibit O, # 17 Exhibit P, # 18 Exhibit Q, # 19 Exhibit R, # 20 Exhibit S, # 21 Exhibit T, # 22 Exhibit U, # 23 Exhibit V, # 24 Exhibit W, # 25 Exhibit X, # 26 Exhibit Y, # 27 Exhibit Z, # 28 Exhibit AA)(Seshens, Dana)

EXHIBIT X

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C O N F I D E N T I A L
UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
ADV. PRO. NO. 08-01789 (BRL)

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

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Plaintiff-Applicant,
v.

Rule 2004
Examination of:

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

CHARLES D. KLEIN

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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, 45

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Rockefeller Plaza, New York, New York on, Monday,

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November 8, 2010, commencing at 9:23 a.m.

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BENDISH REPORTING, INC.
Litigation Support Services
877.404.2193
www.bendish.com
MIDT00000205

CHARLES D. KLEIN 11/8/10

CONFIDENTIAL

SIPC v. BLMIS
191

1
2

A.
Q.

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4
5

A.

Q.
A.
Q.

8
9

Olga Dimini.

Who is Olga Dimini?

Olga Dimini was an employee of the

back office.

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7

Olga Dimini.

A.
Q.

What was her job?
I don't know.
Did you work with Olga at all?
Occasionally.
I understand that one of the roles

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that Olga had was sort of dealing with insurance

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issues.

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13
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Do you remember that?
A.
Q.

No.
Do you remember a time back in 2000

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when American Securities or PJ or some combination

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of those companies was considering obtaining

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insurance policies related to their Madoff

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investment?

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MR. LOEWENSON:

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question?

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A.

Do you understand the

I do.

I believe the insurance policy

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that was obtained was obtained on a number of

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fiduciaries.

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25

Q.

So my question was:

Do you remember

that time frame being around the year 2000?
BENDISH REPORTING, INC.
877.404.2193

MIDT00000395

CHARLES D. KLEIN 11/8/10

CONFIDENTIAL

SIPC v. BLMIS
192

1
2
3

A.

I don't remember the time frame, but

I certainly remember the discussion.
Q.

And you remember that an insurance

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policy was being considered for the Madoff

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investment and some other fiduciaries?

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you said?

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A.

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Q.

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For all the fiduciaries, is the way I

understood it.

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Is that what

fiduciaries"?

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A.

What do you mean "for all the

I'm sorry, I misspoke.

Thank you.

I

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mean for the banks and brokerage firms where

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accounts were held for the benefit of some or all of

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the members of the Rosenwald group.

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Q.

Did the family use Frank Crystal &

Company as their insurance broker?
A.
Q.

I don't know.
Do you recall having discussions with

the Frank Crystal company?
A.

I don't believe I ever had any

discussions with Frank Crystal.
Q.

So as far as any conference calls or

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details related to those policies in dealing with

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the broker, that was somebody else, not you?

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A.

Correct.
BENDISH REPORTING, INC.
877.404.2193

MIDT00000396

CHARLES D. KLEIN 11/8/10

CONFIDENTIAL

SIPC v. BLMIS
193

1
2

Q.
the broker?

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A.

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5

You didn't have any discussions with

Q.

That's what I said.
Did you have any discussions with

anybody at Stroock regarding the insurance policies?

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A.

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Q.

I don't think so.
I know that in at least one instance,

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a gentleman named Lawrence Call and another

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gentleman named William Latza were involved in some

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discussions with Frank Crystal on behalf of the

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family.

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discussions?

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A.

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But you weren't involved in those

Q.

And you didn't talk to the lawyers at

all.

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No.

What was your understanding of the
nature of the policy that was being obtained?

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A.

I believe -- it was called a broker's

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bond, I believe, is what it was called.

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protected the insureds against losses in the event

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of loss, destruction, fraud.

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remember what else, but that was the nature of it.

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Q.

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A.

And it

Probably -- I don't

Was obtaining -Loss as a result of fraud, not market

loss.
BENDISH REPORTING, INC.
877.404.2193

MIDT00000397

CHARLES D. KLEIN 11/8/10

CONFIDENTIAL

SIPC v. BLMIS
194

1

Q.

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A.

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Q.

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A.

Whose idea was it to get the policy?
I'm not sure.
It wasn't your idea?
I'm not sure.

I'm sorry.

That's

what I'm not sure about.

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Q.

It may have been your idea, but

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you're not sure?

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A.

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Q.

Well, yes, that's right.
Who made the decision to actually

obtain the policy, to go ahead and buy it?

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A.

There was a discussion among a group

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of people, of which I was one, about obtaining this

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insurance.

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absolutely, we should buy it, because it was the

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cheapest put I ever saw.

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And there was a concurrence at the
end of that discussion that we should go ahead.

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And when asked my opinion, I said

Q.

Who all was involved in that

discussion?

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A.

I think Steinmann and Madoff.

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Madoff, excuse me.

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Not

about having these problems.

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Q.

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25

A.

Now I -- that's what I mean

That's okay.

Are you okay?

It is -- it's just if you play it

out -BENDISH REPORTING, INC.
877.404.2193

MIDT00000398

CHARLES D. KLEIN 11/8/10

CONFIDENTIAL

SIPC v. BLMIS
204

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of your related accounts," and then it has a list of

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accounts here.

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A.

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Right.

Q.

Was there anybody other than yourself

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that you needed to advise with respect to any of

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those accounts?

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A.

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Well, all of them are members of my

family.

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Q.

Did you advise anybody about the --

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anybody related to these accounts about the

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cancellation of the insurance policy?

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A.

I don't believe so.

I take that

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back.

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these accounts.

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of them are the same person over and over again.

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I do recall discussing this with some of

Q.

I can't tell you which ones.

Okay.

Many

You don't recall anyone

specifically that you talked to?
A.
Q.

No.
Following receipt of this notice, did

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you undertake any due diligence to confirm whether

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or not you should adjust your investment strategy

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with Madoff?

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A.
Q.

No, no.
Do you think it was important to

insure American Securities' other third-party
BENDISH REPORTING, INC.
877.404.2193

MIDT00000408

CHARLES D. KLEIN 11/8/10

CONFIDENTIAL

SIPC v. BLMIS
205

1

investments besides Madoff?

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A.

3
4

Q.

A.

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Q.

A.

Q.

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Those were all -- ask your question

Did you think it was important to

insure those investments, as well?

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JPMorgan, Bear Stearns, Credit

again.

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11

You'd have to look at the policy.

Suisse, Morgan Stanley.

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Were those hedge fund investments, as

well?

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Yes.

A.

I thought the insurance was very

cheap.
Q.

Do you know if any of those companies

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were investing in hedge fund-type investments on

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behalf of American Securities or PJ?

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A.

I don't know about PJ.

American

Securities itself didn't invest in anything.
Q.
A.

Didn't invest in any hedge funds?
No, didn't invest in anything,

period, full stop.
Q.

So those investments with Bear

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Stearns, JPMorgan, Credit Suisse, Morgan Stanley,

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which entity held those accounts, if you recall?

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A.

There were a number of individuals
BENDISH REPORTING, INC.
877.404.2193

MIDT00000409