EFTA00235301.pdf

Case 9:08-cv-80893-KAM Document 214-3 Entered on FLSD Docket 09'02,2010 Page 1 of 10 ban I Page 3 I UNITED STATES BANKRUPTCY 0OURT I THE COURT: Rothstein Rosenfeldt & Adler. SOUTHERN DISTRICT OP FLORIDA 2 MI right May I have appearances, please? 3 2 3 MR. LICHTMAN: Good morning, Judge. 4 4 Chuck Lichtman, Berger Singerrnan, for the trustee. S CASE NO.: 09-34791731CCREM 5 MIL NEIV/IRTH: Good morning, your Honor. 6 In Re. 6 Ronald Neivrinh, Fowler White Burnett, on behalf of 7 ROTHSTEIN ROSENFELDT ADLfl. P.A.., 7 the movant, Epstein, and with me today are two of my s Debtor 8 partners, Chris Knight and Lilly Ann Sanchez - 9 9 MS. SANCHEZ: Good morning, Your Honor. 10 ti 10 II MR. 1O41O111: Good morning, your Honor, MR. NESVEZTH: — both of whom are MOTE MOTION TO COMP ILPRODUCTTON OF DOCUMENT'S FROM TRUSIta, 12 familiar with the State Court angle on this than 1 12 PURSUANT TO COMMENT PRCOUCTION PROTOCOL BSTABLISHED 13 am, so they came along to be able to elucidate that BY DB0672 (S07), AMENDED MOTION FOR PROTL'CTIVE ORDER 14 end of It. 13 (SIR) 15 MR. FARMER: Good morning, your HOME 14 15 August 4,2010 16 Gary Fanner on behalf of LM, Brad Edwards, and I6 17 the Fanner Jaffe Wasting law firm. We are an 17 The ahow-cndaal ass mit on for 18 interested party and have filed a motion for 111 Menne MAN as HONORABLE RA1040761B. RAY 19 protective order as to the subpoena that is at 19 once:: de Naga oft UNITED STATES BANKRUPTCY 20 issue here today. 20 COURT, m end fel the SOUTHRRN DIST/UCT OF FLORIDA. 21 THE COURT: All right Insofar as the 21 el 799 Ear! Browsed Bad , Fr LatelerdaM/3704444 21 Carney, TIMM on Tondo, Mom 4, 2010, 22 TD Bank motion, Docket Entry 780, that has been the 21 omemendng Mei Mos 9130 ant, se4 the knave% 23 subject matter of en agreed order that was submitted 14 proccedino were had: 24 to me. 25 Repotted By: Mutant Franz= 25 MR. LICHTMAN: Correct, Judge. Page 2 Page 4 1 APPEARANOIS 1 THE COURT: Mr. Scherer. 7 3 BERGER 8/910BILMAN. try 2 MR. SCHERER: Yes, sir, your Honor. CHARLES H. WHOA" ESQUIRE 3 I'm William Scherer and I'm here on behalf of a 4 s on WINIIM Ea Emote 4 number of victims in the State Court action, as 6 CONRAD & SCHEItElt, by $ Wen aS the chairman of the creditors' committee WILLIAM R. SCNEKO, ESQUIRE 6 In the banIcruptiry. 7 s on beloiltofeictkret 7 THE COURT: All right. That leaves us with 9 FOWLER MITE. BIJRN6TT, by 8 Docket Entry 807 and 819. 807 is Jeffrey Epstein's RONALD 0. M3TWIRTIL ESQUIRE 9 motion. 10 LILLY ANN SANCHEZ, ATIORNEY•AT.LAW 10 MR. NEIWIRTH: Thank you, your Honor, and CHRISTOPHER E. KNIGHT, ESQUIRE 11 JOSIEN L ACKERMAN, ESQUIRE 11 again, good morning. We represent Jeffrey Epstein. on beluntotkahy Epstein 12 He has a civil claim pending in State Court in 12 3 13 Palm Beach County. He had served a subpoena on FARMER JANE WEISSINO EDWARDS P1STOS & LEHRMAN. by 14 Mr. Stettin requesting documents from the RRA estate. Ye GARY FARMER. ESQUIRE 15 That was back in April. BRAD EDWARDS, ESQUIRE 15 on. MINN of LEL Brad Edon and 16 While this was still in process, in Fumy Rae Wtimag Edwin% Fatal & ',Orman 17 May, tinder Docket Entry 672, your Honor entered 16 18 an order standardizing procedures for obtaining 17 19 discovery from Mr. Stettin and the RRA estate, IS 20 and at /cast on the face of it, it takes 19 70 21 jurisdiction ova all discovery efforts against 21 22 the trustee. That left us in a quandary. n 23 We had a subpoena pending in State 73 24 24 Court. We had correspondence from Berger 75 25 Singerman on behalf of the trustee dist they had OUELLETTE & MAULDIN COURT REPORTERS, EFTA00235301 Case 9:08-cv-80893-KAM Document 214-3 Entered on FLSD Docket 09'02,2010 Page 2 of 10 Pegs 5 Pies? 1 identified information and they were processing I taken jurisdiction over these discovery matters 2 it, including vetting for attorney/client 2 and attempted to standardize discovery efforts 3 privilege issues, but then In the meantime carne 3 for the trustee. There's a lot of people that 4 your Honor's order on May 18th, so we had to go 4 want things from the trustee. 5 back and reinvent the wheel and go through the 5 The trustee is overseeing an estate 6 necessary hoops in order to comply with that 6 which involved somewhere in excess of 70 lawyers 7 In the meantime, as we sit here now, we 7 and lots of cases and lots of problems, and 8 still have no production. We have a trial date 8 literally millions of documents, and we have 9 coming up in October, and we have a motion for 9 absolutely no problem with the standardized 10 protective order coming from a party who's 10 order, but that means that somehow or other wo 11 already settled out, the LM party. They DO 11 have to be able to deal with it in a standardized 12 longer have anything directly to do with this. 12 manner, instead of Mr. Flumes suggestion, which 13 Further, we are advised by the I3 is go back to Slate Court and deal with it over 14 creditors' committee that in addition to what was 14 there. 15 proffered to us, that at some point In time there 15 THE COURT: What is the status of the State 16 had been something like ten boxes of records 16 Court proceeding? 17 pertaining to these particular issues and someone 17 MR. NEUWIRTH: May 1 defer to my partner, 18 on behalf of the victims had been given, or 18 who is more familiar with that? 19 several someones, had been given access to those 19 MR. KNIGHT: Your Honor, Christopher 20 ten boxes and had viewed them, which would 20 Knight, if I may? While we were waiting for the 21 vitiate any attorney/client privilege in any 21 documenu from the Stettin office, we obviously 22 event 22 wanted to go down two tracks because we had an 23 So what we are trying to do is fashion 23 October trial date. The status of it is we could not 24 a mechanism so we can comply with your order, 24 come to an agreement with the other side. 25 Docket 672, about standardized means of getting 25 Mr. Ackerman was at the last beating, in which the Page6 h&c 8 I production from the trustee, allow for the 1 judge said, one, !need a representative of the 2 appropriate vetting of the materials for 2 mines here and two, shouldn't this be back before 3 attorney/client privilege, and we must bear in 3 you, Judge Ray. 4 mind that this is one objector, there's a lot 4 THE COURT: You can't proceed against 5 more documents than that 5 Rothstein in the State Court, they're here. 6 To the best of our knowledge, the 6 MR. KNIGHT: And that Is the same thing I 7 documents that pertain to the LM party, who is 7 think Judge Crow recognized, and that's why we're 8 settled anyway, may be 15 percent of those which 8 back here, and that's why we had to file the motion. 9 are responsive to the Inquiry that we made of the 9 MR. ACKERMAN: The claim against 10 trustee, but in any event, someone has to vet 10 Rothstein is against him Individually, and it's II them for attorney/client privilege and do a 11 against Brad Edwards individually, and it was 12 privilege log. 12 against one of the claimants, 12A individually. 13 Now, Mr. Farmer's office on behalf of 13 '11W COURT: So It's not against the debtor 14 LM wants to do that We don't think Mars 14 estate. 15 appropriate. We third* the privilege at this 15 MR. ACKERMAN: That's correct. 16 point, since the case is settled, lies with RRA 16 MR. KNIGHT: Just to go a little further on 17 and, therefore, the trustee, rather than 17 what Mr. Neiwinh was saying. Out of these documents 18 Mr. Farmer and his client, because as to them the 18 we've been asking for fora long time, very few of 19 case is ova. 19 them would even have privilege on their face because 20 Furthermore, we don't think them is 20 they have nothing to do with the clients that were 21 any privilege because the boxes have been vetted 21 represented, what's bees called as LM. 22 before and we'll hear more about that from 22 If there's going to be a log, if 23 Mr. Scherer, I assume, because he was the one 23 there's any need, which I don't think there is 24 that was aware of that. 24 because I think privilege has been waived, it 25 And last, but not least, your Honor has 25 needs to be a log put together by the trustee, 2 (Poses 5 to 8 OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00235302 Case 9:08-cv-80893-KAM Document 214-3 Entered on FLSD Docket 09/02/2010 Page 3 of 10 Page 9 Pupil I not anybody else that has some sort of interest 1 everybody first 2 in it. 2 MR. KNIGHT: Okay. 3 If there's a problem with payment for 3 MR. FARMER: Thank you, your Honor, may it 4 those, et cetera, our client has already offered 4 please the Court Again, Gary Fanner on behalfof 5 to the trustee, to Mr. Lichtman, we will pay for 5 the interested party, LM, also on behalf of 6 it, whether ifs a special master or whether it's 6 Brad Edwards and I'm sorry, your Honor, Mr. Edwards 7 a contract attorney, if they need to do that, but 7 is here with me. I neglected to Introduce him to S 8 1 don't think wo even need to reach that. 8 Court earlier. 9 Idris& these documents are long 9 MR. EDWARDS: Good morning, your Honor. 10 overdue. They have been produced to others, they 10 MR. FARMER: There has been a lot of 11 have been used in depositions for others, they 11 discussion here about your Honor's standardized 12 are out there, and ! think the privilege Issue is 12 production order and I think that you need to 13 just being used as a smoke screen to keep our 13 understand that this particular matter, which is 14 client from being able to get the documents he 14 before you today, is anything but standard or common 15 needs to be able to prove his case. 15 to the matters before this Court 16 Thank you. 16 You need to understand the nature of 17 MR. ACKEMAN: Your Honor, one other 17 the ease. Jeffrey Epstein is an admitted 18 matter. Judge Crow expressed a concern about 18 convicted pedophile. He sexually assaulted 19 entering any order against the trustee or his 19 dozens and dozens of young girls under the age of 20 counsel without them being present 20 15. He pled guilty to this and he has settled 21 Initially we had filed a motion to 21 every civil lawsuit filed against him on this 22 compel in the State Court, but we didn't realize 22 issue. 23 at the time or It was unclear, because we had 23 Despite all of this, Mr. Epstein has 24 just taken over the case from another law firm, 24 seen fit to file a lawsuit against LM, who is one 25 that the Court had entered its order. 25 of the plaintiffs against him; against Paz: lo Page 12 1 There was some discussion prior to the 1 Brad Edwards, LM's attorney; and against 2 hearing and when we went to the hearing, it was 2 Mr. Rothstein. 3 clear that there was no agreement that had 3 Now, Edwards, myself and all the 4 existed and Judge Crow said, I'm not entering en 4 members of our firm were RRA attorneys when 5 order, I'm not doing anything on this motion 5 Mr. Rothstein took his ill-fated trip to Morocco 6 undl the bankruptcy trustee is represented. 6 and did the things which are now so well known, 7 Ho was concerned because this Court's 7 but the fact of the matter is that this discovery 8 order had set up the standardized procedure for 8 request ls a blatant attempt to obtain clearly 9 dealing with these arguments and had reserved 9 privileged documents related to the 10 jurisdiction relating to any subpoena or request 10 representation of LM and many other victims, by 11 for documents from the trustee. so that's why 11 the way. 12 we're here now. 12 And if 1 can show your Honor a copy of 13 THE COURT: All right. 13 the subpoena itself, I don't think that the 14 MR KNIGHT: Your Honor, just one other 14 breadth of the subpoena has been adequately 15 point. We tried to work, and we've been working with IS represented to the Court. If you peruse this, 16 Mr. Lichtman, tried to work out a protective order 16 you will see they are asking for communications 17 between the trustee and Epstein regarding the 17 with private investigators, they're asking for 18 subpoena. Mr. Lichtman and Ms. Sanchez agreed to 18 contingency fee contracts, they're asking for 19 language on it I have a copy of it. 19 every comnamicadon between any member of the 20 Mr. Farmer, with his motion for 20 firm, and they throw Rothstein in just to make it 21 protective order, would not agree to that, but if 21 sexy, about these cases. 22 the Court would like to have a copy of what the 22 Now, your Honor. clearly communication 23 draft was, I will approach your clerk, but if you 23 about the representation of a client falls under 24 do not want that, I also — 24 not only the work product, but if the client is 25 THE COURT: Well, let me hear from 25 involved in the communication, also the 3 (Pages 9 to 12) OUELLETTE & MAULDTN COURT REPORTERS, INC. EFTA00235303 Case 9:08-cv-80893-KAM Document 214-3 Entered on FLSD Docket 09'02,2010 Page 4 of 10 Pagel) PRIM 1 attorney/client privilege. 1 Mr. Scherer's clients, who have claims before 2 Now, most of this stuff we've already 2 this Court, and hopefully they will get some form 3 responded and said none, nono, none, but for many 3 of relief from the Bankruptcy Court Epstein is 4 of these items, we have asserted the privilege 4 not seeking any bankruptcy assets. He's suing 5 and we continue to assert the privilege. 5 Brad Edwards and LM personally, and Scott 6 Now, the only reason the trustee is 6 Rothstein, and ifs ratan estate claim, it's 7 here — 7 against Scott Rothstein personally. 8 THE COURT: Walt, there's been a privilege 8 So my suggestion, your Honor, is that 9 asserted in the State Court proceeding? 9 you instruct the trustee to turn this electronic 10 MR.. FARMER: Yes, air. 10 documentation information over to us. We will 11 THE COURT: And there is a privilege log 11 file the appropriate privilege log with the 12 and the judge has made a ruling? 12 Circuit Court judge who is presiding over the 13 MR. FARMER: No. The dispute now really is 13 case, who is most familiar with the case, who 14 over who's going to file the privilege log and 14 will be considering the upcoming motion for 15 respectfully, Judge, what we suggest is that the 15 summary judgment, and possibly trying the case, 16 trustee has been thrust into this matter simply 16 and that way your Honor is not burdened with this 17 because the trustee stands in the shoes of all the 17 matter, the trustee does not incur fees and 18 former attorneys at RRA, and the trustee is likewise 18 expenses of having to go through all of these 19 bound by the privileges that attach to the eases and 19 document, prepare a privilege log and our 20 to the lawyers that were at the firm. 20 client and Mr. Edwards — Mr. Edwards is also a 21 The trustee has repeatedly acknowledged 21 party of that lawsuit He enjoys his own 22 the fact that it Is bound by those privileges 22 privilege, your Honor, over and above, or in 23 and, of course, as your Honor knows, the 23 addition to, I should say, the privilege 24 privilege belongs to the client, not to any 24 possessed by our former client and, of course, I 25 lawyer or any law firm. 25 know couasel knows that the privilege extends Pop 14 rats it. 1 So the trustee is really kind of stuck 1 beyond the litigation. 2 in the middle here. You've got the pedophile who 2 So although Mr. Epstein paid a ton of 3 wants documents related to the cases he's already 3 money for this claim that is supposedly 4 settled and pled guilty for. Those documents, 4 frivolous, it has been settled, but the privilege 5 the electronic documents, at least, the e-mails, 5 still extends and it remains in place. So we 6 electronically stored Information is how ifs 6 simply want to make sure that our investigative 7 referred to in the discovery request, your Honor, 7 materials, our reports, other documentation 8 are not In ow possession, they are in the 8 relating to the claims we have and have had 9 possession of the trustee because the trustee 9 against Jeffrey Epstein are not put into the 10 took the computer system. 10 hands of Jeffrey Epstein's attorneys. II So the trustee doesn't want to incur I I Now, we just want the chance to review 12 the cost and expense of filing a privilege log 12 these documents and prepare the privilege log and 13 and, frankly, I don't know that the trustee has a 13 the trustee is kind of stuck In the middle here, 14 full appreciation of the nature and specific 14 Judge. Remove the trustee from the equation, let 15 facts of the cases that would enable it to 15 us get the documents, we'll file the privilege 16 conduct a complete privilege log. 16 log, and then Mr. Epstein and us can go before 17 So my suggestion, your Honor, and it's 17 Judge Crow. He can review the privilege log, 18 been rejected — I believe ifs acceptable to the 18 review the documents in camera. 19 trustee, but ifs been rejected by Mr. Epstein's 19 All that is going to be pretty time 20 counsel, is the trustee be removed from this 20 consuming, but he's much more suited, a better 21 equation. There's no need that we come back 21 suited judge because he's more familiar with the 22 before you. 22 facts to engage in that inquiry. 23 This case, this Epstein case, is not a 23 THE COURT: Thank you. 24 matter which would involve bankruptcy estate 24 MR. FARMER: Thank you, your Honor. 25 assets going to Mr. Epstein. Unlike 25 THE COURT: Mr. Lichtman, Mr. Scherer, your 4 (Pages 13 to 16 OUELLETFE & MAULDIN COURT REPORTERS, INC. EFTA00235304 Case 9:08-cv-80893-KAM Document 214-3 Entered on FLSD Docket 09'02,2010 Page 5 of 10 Posen I input, please. 2 MR. LICHTMAN: I'm going to let Mr. Scherer 3 go first. 4 MR. SCHERER: I think he wants me to go 5 first. 6 THE COURT: All right. 7 MR.. SCHERER: Your Honor, in November 8 we filed a lawsuit in State Court and we alleged 9 that as a part of Mr. Rothstein and the firm, and 10 the firm's employees, and maybe some of the 11 firm's attorneys, conspired to use the Epstein/LM 12 litigation In order to lure $13.5 million worth 13 of my victims, my clients, into making 14 investments in these phoney settlements. 15 And as we alleged in that State Court 16 proceeding, and we've sharpened the allegations 17 as we've amended a few times, we allege that 18 sometime in late October, that my clients were 19 invited into the Rothstein finn with 20 Mr. Rothstein, and he explained that he bad a 21 litigation going in State Court with Mr. Edwards 22 representing LM, a victim of Mr. Epstein, and 23 these are kind of sensational allegations and 24 it's been printed widely. 25 And my clients, a number of them and Page 19 1 allegations in the LM case that they knew were 2 not true, in order to entice my clients into 3 believing that Bill Clinton was on the airplane 4 with Mr. Epstein and these young woman and other 5 personages, I can't remember who they are, and 6 all sorts of other allegations that really were 7 not even related to the LM case. 8 And to the extent that any lawyers from 9 the RRA finn, former lawyers, made a ton of money 10 or however Mr. Farmer talked about it, we're 11 interested in that ton of money because if they 12 were involved In this scheme, this fraud, there's 13 a crime fraud exception, and in addition, I want 14 to see the ten boxes that they brought down. 15 The trustee does not have those ten 16 boxes. Those ten boxes were taken by Mr. Edwards 17 when he left the law firm, I presume. So we want 18 the ten boxes, we want all the communications and 19 we want to look through everything on behalf of 20 my State Court ease, but also on behalf of the 21 creditors' committee because the creditors' 22 committee is looking to see if anybody else in 23 the firm, other than Rothstein, was Involved in 24 this massive fraud that used the Epstein case. 25 The model of using an existing case and Page IS 1 their lawyer, went into the Rothstein conference 2 room and Mr. Rothstein brought down — summoned 3 the investigators, two of than, two or three of 4 them, to bring down the Epstein file. And the 5 lawyer that my clients brought from a national 6 finn, went through the LM boxes, ten of them that 7 the investigators brought down, and concluded 8 that the Epstein case was a real case. 9 And what Mr. Rothstein did with that 10 real ease, of course, is he told everybody that 1 not only did he have the LM client of 12 Mr. Edwards, that that were a number of other 13 young ladies, that was widely published in the 14 newspaper, that the fists was representing and 15 that wanted to settle with Mr. Epstein on a 16 confidential basis. 17 So he used the real case in order to 18 defraud my clients into investing into these 19 phoney settlements and paid 13 and a half million 20 dollars. I believe that Mr. Rothstein and others 21 in the firm also told that story to a lot of 22 other people, and let a lot of other people 23 examine those ten boxes of the real case. 24 In addition, as we have alleged, that 25 Mr. Edwards and the firm put sensational 2 3 4 5 6 7 8 9 10 1 t 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Fate 20 then spinning off a fraud from it is the same that was perpetrated on the Morse — in the Morse situation, as has been alleged and widely produced. I can't conceive that Mr. Edwards and the predecessor law firm would have any standir.g to prepare privilege logs or anything else, given what 1 just told the Court. That would be like having the fox guard the hen house. That Epstein case is settled, and to the extent it's the ten boxes of stuff that we looked through, and I'll have to get the boxes to see if the attorney who looked through them, and how much time he spent looking through than — THE COURT: Where are the ten boxes? MR. SOBERER: That's a good question. The trustee does not have the ten boxes. I presume the ten boxes are residing with the lawyers who took the case, Mr. Edwards and the successor law firm. The trustee does not have them. And then in addition, there's about 6,000 e-mails that the trustee has, and I bet you when we look at Qtask, there's going to be a boatload more. My clients were also advised during 4 5 (Pages 17 to 20) OUELLETTE & MA DIN COURT REPORTERS, INC. EFTA00235305 Case 9:08-cv-80893-KAM Document 214-3 Entered on FLSD Docket 09:02,2010 Page 6 of 10 Pars?! I their due diligence, short due diligence to 2 settle these cases with these young ladies — 3 these putative young ladies who had to get the 4 money and leave town because of whatever the 5 stories were, that there were other members of 6 the firm that told my clients that they, indeed, 7 had even identified more of these victims that 8 Mr. Rothstein didn't even know about at that 9 time. So we know it wasn't just Mr. Rothstein 10 spinning the talc, there were a lot of people in 11 the firm. 12 We've alleged almost all of this in ow 13 State Court action that we filed in November, up 14 to where we are right now, but, your Honor, 1 15 think your Honor is going to have to deal with 16 these issues in this court and I would urge you 17 to have the trustee get involved and let the 18 trustee do its job with respect to whether there 19 are privileges that need to be protected, work 20 product or attorneyklient privileges, given 21 what's going on, and I believe the trustee will 22 be investigating whether the trustee wants to 23 bring any claims on behalf of the estate by 24 virtue of what I've just laid out for you. 25 Thank you. 1 2 3 4 5 6 7 8 10 11 12 13 14 Is 16 17 18 19 20 21 22 21 24 25 Pie 23 to take those ten boxes to start with. THE COURT: All right Mr. Licluman. MR. LICHTMAN: Good morning, Judge. Inn going to try to walk you through sort of chronologically the trustee's perspective of what has happened here. I think that what Tve heard from all the parties are comments that aro correct, and not necessarily correct, and Pm not suggesting falsehoods. We Just have kind of a different perspective of some things and there arc some points that ought to be corrected. Mr. Stettin received a subpoena in a Palm Beach State Court action for production of documents, and as we had done In virtually every subpoena, we went to ow forensic accountants, the Berkowitz Dick Pollack & Brant firm, and said, okay, we need to produce c•mails and we need to also then, with the staff that we have at Berger Singennan and elsewhere, and look to see if there an any hard documents that we can find, notwithstanding what we'll call the issues as to the RRA bard drive that contain client files. We quickly realized that this Is a claim different than all of the other subpoenas. The subpoenas that we had been receiving from 1 2 3 4 5 6 7 9 10 II 12 13 14 15 16 17 18 l9 20 21 22 23 24 25 Page 22 THE COURT: So your lawsuit in State Court names these people as defendants? MR. SCHERER: It names Rothstein. It does not name Mr. Edwards. It just names Rothstein, not the finn, and lays out the facts and says other people in the firm. We did not name them because we want to see the documents and see whether they had involvement. But the facts that I have alleged for you, your Honor, is pretty much what I've alleged in my first through third amended complaint in State Cowl. THE COURT: So, in essence, your position in this matter would be to support the motion to compel and deny the motion for protective order? MR. SCHERER: Yes, sir, notwithstanding that Ms. Epstein is a convicted pedophile. I want to put that on the record. You know, he's served his time and whatever, but I support the same position that he that he has asked the Cowl, and that is to have the trustee deal with this, get these documents and deal with it with you, rather than allow the successor law firm to have them. I don't know where they had the right Piss, 24 1 virtually every other party in the case were 2 requests for production of documents related to 3 claims that those moving parties or requesting 4 pasties would have as it pertains to them trying 5 to recover some aspect of money as pertained to 6 the Portal scheme. 7 Okay. Lie Mr. Scherer, who said 1 8 need a bunch of documents, cm you help us? So 9 we would enter into, on a one by one basis, a 10 protective order that was very, very tightly II negotiated. There is no standard form protective 12 order in this case, contrary to what everybody 13 has told you. We have a form that we use, and 14 everybody that has come to us, we said, we need 15 to have a protective order in place -- 16 THE COURT. We have Docket Fatty 672, which 17 apparently is the document production protocol. 18 MR. LICHTMAN: We have that, yes, but then 19 we also, as an example, Document 685, have a 20 protective ceder that was entered with Mr. Scherer's 21 clients. We have, as an example, Document 715 that 22 pertains to MS Capital, and on and on 23 So, in any event, what we realized is 24 the cue with respect to the Epstein vs. Scott 25 Rothstein, Bradley Edwards case, is this is 6 (Pages 21 10 24 OUELLETTE & MAULDIN COURT REPORTERS, MC. EFTA00235306 Case 9:08-cv-80893-KAM Document 214-3 Entered on FLSD Docket 09/02'2010 Page 7 of 10 Pare 23 Pies n I different. This Is not an asset either to the 1 MR. LICHTMAN: Qtask is not part of this 2 RRA estate, nor is it really an asset to any 2 equation as of right now. Now, it may be, and were 3 potential creditor of the RRA estate that is 3 still trying to got that. I'm just talking about 4 investigating claims that can bring a recovery 4 internal e-mails where we would put in search, 5 that can help in terms of the overall dollars 5 give it to the Berkowitz Sun and say, run an e-mall 6 into either RRA or to a particular creditor on 6 search on the following names. 7 their individual lawsuits. 7 And when we realized the volume of 8 The Epstein case, rather, is a lawsuit 8 work, and you can imagine, you know, hire from a 9 between a third party that was being sued by the 9 ream of paper, 500 sheets of paper, and you 10 Rothstein ann against Rothstein lawyers, and we 10 multiply that out and you get to 12 reams of that 11 had a different privilege issue than we had 11 paper, it takes up a lot of paper, it takes up a 12 focused on with all these other document 12 tremendous amount of time. This is not an asset 13 productions. 13 of the estate that we can, if we have to, warrant 14 So we get the 6,000 e-mails, and on the 14 doing the work. the hard work, as we've done on 15 eve of one of my colleagues getting ready to 15 many of the other claims, some of which already 16 enter into — either enter into one of these 16 are before you for settlement purposes. This is 17 protective orders or say, here, take them, like 17 a liability to the estate and an expensive one. 18 we've done with everybody else, we looked up and 18 So we really didn't want to go through 19 Mr. Stettin and I said, time out. We have a 19 the undertaking of having to protect the 20 legitimate privilege issue here. 20 privilege, though we would, and candidly, 21 And I want to be clear, we don't want 21 Epstein's counsel has said well pay you to do 22 to come anywhere close to stepping in the mess of 22 it, but then there's also the manpower issue 23 waiving attorney/cheat privilege, unless and 23 because we are pressed very hard to get certain 24 until the Court tells us to, and I want to also 24 adversaries moving as quickly as we can and were 25 be clear, we wish we weren't hen. We would 25 fighting a lot of battles on a lot of different Pate 26 Paten I prefer not to have a fight on any of this stuff I grounds, we still really don't want to do that, 2 and on one hand, we don't ewe who does the 2 and also because we don't know the Epstein case 3 privilege log and who gets the documents, and on 3 well enough to be able to assess what is 4 the other hand, because of some things that 4 privileged, what Is not, and preparing a 5 Mr. Scherer just commented on, that I learned 5 privilege log the proper way is really a time 6 literally today, and because of the common 6 consuming mess. 7 interest agreement that everybody knows wo have 7 So I teed it up for both sides and 8 with Mr. Scherer and the committee, in some 8 said, here's what I'm willing to do. Putting 9 respects, 1 don't think it prudent for me to 9 aside the issue as to really whether or not the 10 discuss why I would want to look at some of those 10 Court does have jurisdiction on a State Court 11 documents. 11 subpoena, which ultimately I leave to you, we 12 But be that as it may, we found that 12 said, we're still willing to enter into a 13 there were 6,000 e-mails and this was the one 13 modified version of the protective order that we 14 time that rather than go through the usual 14 gave to you, which effectively provides the 15 protocol of preparing the stipulated protective 15 additional language of no claims can be brought 16 order that is effectively a mirror imago of that 16 against Mr. Stettin or the estate if we produce 17 which is provided by Federal Rule of Evidence 17 these documents. 18 502, we sold there is a need for privilege 18 We don't really have a bone to pick in 19 log hem 19 this mess, we just want to make sure that we 20 There are 6,000 e-malls, give or take, 20 follow all of the ethical boundaries required by 21 and we quickly assessed that the time to review 21 Florida law, by rules of professional conduct 22 6,000 e-mails, this could not be done by a 22 We don't wish to necessarily waive somebody 23 paralegal, it would have to be done by a lawyer. 23 else's privilege. We don't think that's 24 THE COURT: Does this include Qtask or is 24 necessarily prudent, but we really don't want to 25 this in addition to? 25 have a fight in this battle, and we wanted the 7 (Pagcs 25 to 28) OUELLETTE & MAULDIN COURT REPORTERS, INC. EFTA00235307 ' Case 9:08-cv-80893-KAM Document 214-3 Entered on FLSD Docket 09/02/2010 Page 8 of 10 Pisa 29 I Court to approve — whatever it is you want us to 2 do, to tell you the truth, we're happy to do. We 3 just want to make sure that Mr. Stettin is 4 personally insulated and that the estate is 5 insulated In whatever it Is — 6 THE COURT: Alit see is — 7 MR. LICHTMAN: — you direct. S THE COURT: -- the potential of a claim 9 against Stettin and the estate for breach of the 10 anomey/client privilege. 11 MR. LICHTMAN: correct. 12 THE COURT: So the basis — 13 MR. LICHTMAN: And hence the dilemma. 14 THE COURT: — for the claim Is there. 15 MR. LICHTMAN: Yeah, right, hence the 16 dilemma. 17 Now wo come to the ;Snit of hard 18 documents because the e-mails are one thing, and 19 1 had a number of conversations candidly with 20 Ms. Sanchez, where I think that we had told her 21 originally we had heard there were, as an 22 example, sonic loan files or transaction files 23 related to Ponzl deals related to Mr. Epstein, 24 because I remember myself even hearing that going 25 back many, many, many months ago. Pitt 31 1 they had been counsel for LM and others in 2 litigation respecting Epstein, and that we 3 assumed that they would have been files they 4 would wait and B, because at the time that this 5 matter on the subpoena came before the State 6 Court judge, we stood outside the courtroom and 7 here's what happened. I was effectively going to 8 tell the State Court judge basically the same 9 story I've told you in complete detail and say, 10 we don't really care. We just want to make sure II Mr. Stettin Is protected and the estate is 12 protected. 13 And we had reached an agreement that 14 day, which was we were going to turn over the 15 boxes to Mr. Fantasia firm and we were going to 16 give e-malls to them, and they were going to do 17 the privilege log because that would save us a 18 ton of time, important time, and as important, a 19 lot of money to the estate, and we did not wish 20 to burden the creditors of the estate with legal 21 fees for putting together the privilege log, so 22 it was agreed that we would do that. 23 I, personally, reiterated the terms to 24 all the lawyers that were standing outside the 25 courtroom, as to what was to be reflected in a 1 2 3 4 6 7 8 9 10 11 12 I3 14 15 16 17 18 19 20 21 22 23 24 25 Pit 10 Suffice it to say, that I have conducted a very thorough discussion, without waiving our internal privileges or work product, and we can't fund those, and it appears as if they really did not exist, that what had occurred is that somehow Epstein was lined on a shat for a potential deal that never closed. In terms of the ten boxes of documents, one of the functions the trustee served early on in the case was to facilitate transfers of files — THE COURT: 1 remember that. MR. L1CHTMAN: — from two attorneys that were handling cases. All right. I had a general understanding that most of the files wen picked up by the Farmer fin because they were continuing on with that litigation, and that would have made some sense, but then wo had also heard that there were some boxes that were left behind. I believe there are two boxes, I'm not positive of that, two boxes I think that we may still have, and I'm pretty sure we've sent a-mails a couple of times to the Farmer firm saying, come get your documents. Now, why would we do that? A, because Pago32 I written order because I didn't want to leave it 2 to thane as to what was agreed on. 3 Suffice it to say, when the lawyers for 4 Mr. Epstein and the lawyers for Mr. Edwards went 5 back to try to reduce to writing that which was 6 in part agreed upon outside the courtroom, they 1 were unable to do so, and that teed up the filing 8 of the motion before you to compel us to produce 9 the c-mails and the documents. 10 I wish to reiterate, I think that I I Mr. Scherer has shared something with me that we 12 need to investigate and will, and! was unaware 13 of that literally until I rode up the elevator 14 with him this morning. And I don't wish to spend 15 more time on h than that right now, but I take 16 him at his word because an awful lot of what I've 17 seen him work on so far has borne fruit. 18 I don't care what you want us to do. 19 All I want to know is that at the end I can walk 20 out of court with an order that protects the 21 estate and protects Mr. Stettin. So I have told 22 you the story and leave it to you to fashion what 23 remedy you think appropriate. If 1 can answer any questions, I'm 25 happy to. 8 (Pages 29 to 32 OUELLETTE & stnr n nnr cyst rR r REPORTERS, INC. EFTA00235308 Case 9:08-cv-80893-KAM Document 214-3 Entered on FLSD Docket 09/02/2010 Page 9 of 10 Pest 33 I THE COURT: Well, the trustee knows what 2 the trustee has, obviously. 3 MR. L1CHTMAN: Yes. 4 THE COURT: So the trustee is capable of 5 preparing a log of what he has. 6 MR. L1CHTMAN: Meaning we have the 7 following data. 8 THE COURT: Yes. 9 MR. L1CHTMAN: Yes, we can do that. 10 THE COURT: Then the parties can then argue 11 whether or not that is subject to privilege. The 12 plaintiff can still get from Mr. Farmer and his 13 clients in the State Court discovery. The discovery 14 being sought here Is from the trustee 15 MR. L1CHTMAN: Correct. 16 THE COURT: and would be subject to the 17 trustee's responsibility for the privilege log 18 because of his potential liability. 19 MR. LICHTMAN: Yes, and 1 think you 20 understand, though, why if we can somehow deflect 21 that responsibility, because of the extreme amount of 22 cost and time to do that, we would be happy to do 23 that because, you know, otherwise, we submit fee 24 petitions that show a tremendous amount of time on 25 something that doesn't produce an asset to the Page 35 MR. FARMER: Yes, your Honor. Just very 2 briefly. I thank you for the opportunity to address 3 the Court again. !just wanted to clear something 4 up, your Honor. Understand that when this all 5 happened, there were six of us now who are partners, 6 who had dozens and dozens of ongoing cases. 7 l'HE COURT: I remember we held hearings and 8 I authorized the trustee — 9 MR. FARMER: And you authorized, yes. 10 THE COURT: — to deliver the information 11 so the lawyers could continue to represent the 12 clients. 13 MR. FARMER: RPM seemed to be maybe 14 suggested hero today that something untoward occulted 15 as far as the removal of these boxes. These were 16 litigation files, pleadings, investigative reports, 17 all of these things. 18 So we needed to get on with those 19 cases, but I think you've heard now from the 20 trustee that this is not an asset and it is an 21 expense. I still think that we arc the party who 22 should prepare this privilege log. We arc most 23 familiar — 24 THE COURT: Well, no, if I appoint a 25 special master, you will have an input into that Pete 34 I estate, just a liability. 2 THE COURT: Right. This is not an asset of 3 the estate. 4 MR. L1CHTMAN: No, its just a liability. 5 THE COURT: But could be a substantial 6 liability. 7 MR. LICHTMAN: Hence the dilemma. 8 THE COURT: Welt, I can appoint a special 9 master to do it at the expense of the movant and not 10 release the information until the special master 11 reports back to me and I authorize the release. 12 What I propose to do by my authorizing 13 the release — I'm sorry, Stettin, as atatet, to 14 release the information, I would, therefore, be 15 protecting the estate from any claim for the 16 release of that information. 17 MR. LICHTM.AN: We would be happy to do 18 that, your Honor, and I note, 1 don't wish to speak 19 for the Epstein lawyers, they actually offered to pay 20 time for us doing that, and 1 said, well, you know, 21 that's pert of the equation, the other part is — 22 THE COURT: No, no, no, I can appoint a 23 special master. 24 MR. LICHTM.AN: Yes. 25 THE COURT: All right Mr. Fanner. ►ate 36 I special master and you'll have an opportunity to be 2 heard before me before I authorize the release of the 3 information, because ultimately the order that's 4 going to authorize the release of the information is 5 going to provide protection to the trustee and the 6 estate. 7 MR. FARMER: And, thank you, Judge, l jug 8 wanted to make sure, and I was going to request, that 9 we have an opportunity to review whatever the master 10 does and if we think they've missal a privilege or I I are wrong in an assertion, that we have an 12 opportunity to address that. 13 THE COURT: There is going to be a hearing 14 before the information gets released. IS MR. FARMER: Understood. Thank you, your 16 Honor. 17 THE COURT: All right. Mr. Lichtrnan — 18 MR. L1CHTMAN: Yes. 19 THE COURT: — I want you to prepare the 20 order. I'm going to continue the hearing on the two 21 motions, Docket Entry 807 and 819, and I'm going to 22 have you draft an order appointing a special master, 23 the expense of which will be borne by the Epstein 24 movants. The special master will meet with both 25 sides, Epstein and Edwards, and then with the 9 (Pages 33 to 36 OUELLETIE & MAULDIN COURT REPORTERS, INC. EFTA00235309 Case 9:08-cv-80893-KAM Document 214-3 Entered on FLSD Docket 09102/2010 Page 10 of 10 Pin 37 No 39 J 1 trustee, and will prepare a privilege log, the 1 2 release of which will be noticed for hearing in front 2 3 of me. 3 CERTIFICATION 4 MR. LICHTMAN: Do I pick the special master 4 5 or do you? 5 STATE OF FLORIDA.. 6 THE COURT: You can -- 6 if you all can —1 7 COUNTY OF DADE: 7 hate to use the word agree, but if you all can agree, 8 tryMag t Franzaa, Shorthand Reporter 8 that's fine. If you can% agree, give no three names 9 and Nota Public in and for the State of Florida 9 to choose from. 10 at cargo, hereby certify that the foregoing 10 MR. LICHTMAN: Okay. 11 proceedings were taken before me at the date and 11 THE COURT: You're going to have to check 12 place as stated in the caption hereto on Pagel; 12 with this, quote, "special truster" to make sure they 13 that the foregoing computer-aided transcription is 13 have the time to review the privilege log. 14 a tort record of my stenographic notes taken at said 14 MR. LICHTMAN: The documents. I5 proceedings. 15 THE COURT: And it has to be somebody that 16 WITNESS my hand this 5th day of 16 doesn't have a conflict of interest. 17 August, 2010. 17 IS MR. LICHTMAN: Right Okay. THE COURT: All right. Run the order by 18 19 20 19 Mr. Neiwirth and Mr. Fanner. Margaret Franzen 20 MR. LICHTMAN: Thank you. 21 Court Reporter and Notary Public 21 MR. FARMER: Thank you, your Honor. In and for the State of Florida at Lap 22 MR. NEIWIRTH: Your Honor, may it please 22 My Commission Expires: April 14,2014 23 the Court? 23 24 THE COURT: Yes. 24 25 MR. NE1W1RTH: Can we say something about 25 Pne 18 1 the time frame because as we sit here right now we 2 still have a trial coming in October. 3 THE COURT: Well, 1 understand that, but 1 4 probably have between five and 6,000 active cases 5 right now and within the Rothstein case, I don't even 6 know how many adversaries and contested matters are 7 pending. III get to it as soon as 1 can. 8 But you can proceed to obtain the 9 information from Edwards and LM in the State 10 Court proceeding. AU I'm governing Is what the II trustee Is going to release from the debtor 12 estate. 13 All right. Mr. LIchtman, see to the 14 order. 15 la. EDWARDS: Thank you, your Honor. 16 NM. FARMER: Thank you for your time, your 17 Honor. 18 MR. NEIWIRTH: Thank you, Judge. 19 (Thereupon, the hearing was concluded.) 20 21 22 23 24 25 10 (Pages 37 lo 39) OUELLETTE & MAULDIN COURT REPORTERS, LNC. EFTA00235310