DS9 Document EFTA01069715

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 IN THE FIFTEENTH JUDICIAL CIRCUIT COURT IN AND FOR PALM BEACH COUNTY, FLORIDA CASE NO. 502009CA040800XXXXMBAG JEFFREY EPSTEIN, Plaintiff, vs. SCOTT ROTHSTEIN, individually, BRADLEY J. EDWARDS, individually, and III. individually, Defendants, - - PROCEEDINGS HELD BEFORE THE HONORABLE DAVID F. CROW Palm Beach County Courthouse West Palm Beach, Florida 33401 February 17, 2011 9:13 A.M. - 9:25 A.M. Before Antoinette Garza, R.P.R. Notary Public, State of Florida Appearances on Page 2. ORANGE REPORTING 800.275.7991 EFTA01069715 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 APPEARANCES: SEARCY, DENNEY, SCAROLA, BARNHART & SHIPLEY BY JACK SCAROLA, ESQUIRE 2139 Palm Beach Lakes Blvd. West Palm Beach, Florida 33409 Appearing on behalf of the Plaintiff. FOWLER, WHITE, BURNETT, P.A. BY JOSEPH L. ACKERMAN, JR., ESQUIRE 901 Phillips Point West 777 S. Flagler Drive West Palm Beach, Florida 33401-6170 Appearing on behalf of the Defendant. ORANGE REPORTING 800.275.7991 EFTA01069716 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 BE IT REMEMBERED that the following proceedings were had before the HONORABLE DAVID F. CROW at the Palm Beach County Courthouse, in the City of West Palm Beach, County of Palm Beach, beginning at the hour of 9:13 A.M., on February 17, 2011, with appearances as hereinabove noted, to wit: ** *** ** PROCEEDINGS ** *** ** THE COURT: Yes, sir. Go ahead. MR. SCAROLA: Your Honor, this is the defendant, Bradley Edwards' Motion to Compel Compliance with Your Honor's pretrial order. Attached to the motion is a copy of Mr. Epstein's exhibit list. If you take a look at the exhibit list, I think you will find that it clearly on its face fails to identify documents with sufficient particularity for us to know what the documents are or how we can frame objections to those documents. There are broad categories that don't identify anything, which is further indication of the fact that there isn't anything but... THE COURT: And I guess your position is that you don't have them yet so, therefore, you can't specifically identify them. ORANGE REPORTING 800.275.7991 EFTA01069717 3 8 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. ACKERMAN: Yes, sir. Those are all the documents as framed upon the subpoenas that we sent to the trustee. THE COURT: I will tell you what I did, guys. I went back yesterday and I looked at this file again and I took your motion into consideration and I granted the motion and removed the case from the trial docket, but what I did was I set a pretrial or a conference requiring you to comply with the rule regarding complex litigation. So I want you guys to get together, and the order will say it when you prepare that, and it sets forth what you have to do and when you are going to do it. If you can't agree, I will set up a criteria or a time frame or something. This case, this is like the third time it's been continued, or the second time, at least, it's been continued, and I know the reasons but we have got to get to this case at some point, and I don't want to get held up because of what is happening in the bankruptcy if it can be helped. So we're going to have to, I want something to set out in an order that gets us to the point where we know where we're going to go and when you are going to do things. Okay? Because the way we're going ORANGE REPORTING 800.275.7991 EFTA01069718 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 right now is just haphazard and it's disconcerting. This case needs to get to trial. So I'm going to deny the motion because essentially the trial is off -- no, I'm not. I'm going to grant your motions and I'm not requiring you to do anything at this time because obviously you can't list things like this, that is number one. MR. ACKERMAN: I understand that, Judge. And he is correct, I understand what the rule is, but that is the best that we can describe them until we get the records. And when we do, we will comply with the Court's order requiring specificity. THE COURT: What happened yesterday in the bankruptcy, are we any further along? MR. ACKERMAN: Well, what happened, we had a meeting yesterday, a hearing with a special master. We reached some tentative agreements that we're going to try and work out in terms of, I understand they are going to produce the proper privilege log by next Wednesday. The following Friday we are to make any objections to it. We're working on a proposed deadline of either 10 to 15 days where we will identify the documents that we ORANGE REPORTING 800.275.7991 EFTA01069719 6 2 3 4 5 6 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 claim are not privileged for whatever reason and have a briefing schedule list as to what the standard is. Mr. Scarola's clients will then provide a response. If we can't agree on the process -- THE COURT: These are tentative agreements? MR. ACKERMAN: We are finalizing them today. THE COURT: Not going into the detail of it, is there a time frame this is going to get decided by somebody? MR. SCAROLA: May I make a suggestion, Your Honor? THE COURT: Yes, sir. MR. SCAROLA: That cuts through all of this. The only reason the bankruptcy court has been involved in these production issues is because the bankruptcy trustee had custody of documents. Those documents have now been turned over to Mr. Edwards. THE COURT: So why can't I rule on this then? MR. SCAROLA: That is the point that I tried to make to Your Honor last time. And quite frankly, I think what happened was, because ORANGE REPORTING 800.275.7991 EFTA01069720 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Mr. Ackerman represented that there were other pending discovery issues that the bankruptcy court was dealing with other than this Court's subpoena, Your Honor felt obliged to defer to the bankruptcy judge. The only outstanding discovery request directed to the trustee was the third party subpoena issued in this case. If Your Honor were to direct the plaintiff to file a Request to Produce to Brad Edwards in this case, since Mr. Edwards is the defendant, now has custody of those documents, and were to appoint Judge Carney, who is willing to serve as special master, as special master to deal with the discovery issues before this court, all of the procedural concerns that have been a hang up disappear. And to repeat briefly, and I'm sorry if I'm saying things that Your Honor has heard before or remembers. The primary issues here are attorney/client privilege and work product privilege. In order for the attorney/client privilege to be waived it is the client who must be a participant in the crime or fraud. What that means is the plaintiff has got to show not that Mr. Rothstein was committing a crime or fraud, ORANGE REPORTING 800.275.7991 EFTA01069721 8 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 they must show that the client, Rothstein's child victims were participants in a crime or fraud in order for the privilege that belongs to that child to have been waived. If the child wasn't a participant, the child retains the protection of the attorney/client privilege, the lawyer can't waive it. With regard to the work product privilege, we have agreed we'll turn over every document to the special master to take a look at it. The special master can determine whether there is one shred of evidence that tends to indicate that Brad Edwards was a participant in some kind of wrongdoing and turn it over. We'll waive a right to appeal with regard to those issues if the special master says, I think this could be probative, give it to them. The one thing we don't want to happen is because we have other claims that are being prosecuted against Mr. Epstein is to have everything that has been done in the prior cases, which clearly relate to the subsequent prosecutions as well, turned over to the defendant in those other claims. That clearly would be inappropriate. ORANGE REPORTING 800.275.7991 EFTA01069722 9 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 So I think it's an extremely easy solution. It gives Your Honor the control Your Honor has recognized in prior orders that Your Honor has over the discovery in your case. It relieves Your Honor of the burden of having to do an In camera review of tens of thousands of documents because this subpoena is so broad that it covers every piece of paper that was generated during the period of time that this Ponzi scheme was ongoing. So I don't know that there is any easier way to do it. THE COURT: I'm not going to rule on that this morning, but that is something we will consider and take up at the time of the hearing. MR. ACKERMAN: Your Honor, we have been through this. I don't want to rehash it, but I have to respond to a couple of things. First of all, there was an outstanding subpoena of the bankruptcy trustee from Razor Back. Every time someone sends a subpoena to the bankruptcy trustee, the trustee either enters into a stipulated protective order or we go forward with Judge Rey, every time there is a subpoena. Now there are two, as I said before, there are two other sets of documents that, possibly ORANGE REPORTING 800.275.7991 EFTA01069723 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 three that we have not received from the trustee which still necessitates, the Q-test documents and the Fortress documents, which the trustee has acknowledged they have not been produced. So to that extent Judge Rey needs to be in it. Now yesterday we were talking about, and I believe we reached an outline, we're going to put it in writing in the next day or so to see if we can have Judge Carney produce a recommendation as to how we're going to proceed with the rest of these documents. THE COURT: I understand you all -- MR. ACKERMAN: The other thing is that Mr. Scarola -- I'm sorry, Judge. I don't mean to interrupt. THE COURT: I'm really not interested in the posturing right now. What I'm interested in is you guys putting this together and you are required to give me a pre -- I don't know what they call it -- stipulation or statement or whatever they call it under the rule now. MR. SCAROLA: Case management plan. THE COURT: Case management or statement or something like that. And I have used it in these complex cases to a real benefit because it ORANGE REPORTING 800.275.7991 EFTA01069724 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 requires you guys to sit down and give me ahead of time something that I could look at and really understand this case before you ever walk in here and then be able to set some parameters based on an order entered at that time. So that is the reason I did that, so we could get this flushed out. I still believe that ultimately I have to make the decisions in this case as to what documents are or are not relevant, one, discoverable, two, and whether or not there are or not any privileges associated with any of these documents, and if so, whether there has been a waiver of any privilege. And that not only concerns the bankruptcy documents, the documents of Mr. Edwards, but also your client's testimony. I have to make determinations on that as well. MR. ACKERMAN: I understand. Mr. Scarola, when we sent the original Request to Produce out to his client for documents within his possession, we have had a bunch of objections that are set for hearing in April. So there is more to this than is being presented. THE COURT: I know it's not easy. We're going to have a hearing and hopefully get some of ORANGE REPORTING 800.275.7991 EFTA01069725 a.2 these things in order, at least get a road map of where we could go. Thank you, guys. If you could get that to me, Mr. Scarola, I'd really appreciate it. MR. SCAROLA: I will. (The proceedings were concluded at 9:25 a.m.) 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ORANGE REPORTING 800.275.7991 EFTA01069726 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CERTIFICATE THE STATE OF FLORIDA, ) COUNTY OF PALM BEACH. ) ) I, Antoinette Garza, Court Reporter, certify that I was authorized to and did stenographically report the foregoing proceedings and that the transcript is a true and complete record of my stenographic notes. DATED this 17th day of February 2011. ANTOINETTE GARZA, RPR ORANGE REPORTING 800.275.7991 EFTA01069727 1 WORD INDEX < 1 > 10 5:24 13 1:20 3:5 15 5:24 17 1:20 3:5 17th 13:13 < 2 > 2 1:21 2011 1:20 3:5 13:13 2139 2:5 25 1:20 12:6 < 3 > 33401 1:19 2:13 33409 2:6 < 5 > 502009CA040800XXX XMBAG 1:3 < 6 > 6170 2:13 < 7 > 777 2:12 < 9 > 9 1:20, 20 3:5 12:6 901 2:11 <A> A.M 1:20, 20 3:5 12:7 able 11:4 ACKERMAN 2:10 4:1 5:9, 17 6:7 7:1 9:15 10:13 11:18 acknowledged 10:4 agree 4:14 6:5 agreed 8:9 agreements 5:19 6:6 ahead 3:10 11:1 Antoinette 1:21 13:7, 19 appeal 8:15 Appearances 1:21 2:1 3:6 Appearing 2:7, 14 appoint 7:12 appreciate 12:4 April 11:22 associated 11:12 Attached 3:14 attorney 7:20, 21 8:6 authorized 13:8 < B > back 4:5 9:20 bankruptcy 4:21 5:16 6:16, 18 7:2, 4 9:19, 21 11:15 BARNHART 2:3 based 11:4 BEACH 1:2, 19, 19 2:5, 6, 13 3:3, 4, 4 13:5 beginning 3:4 behalf 2:7, 14 believe 10:7 11:8 belongs 8:3 benefit 10:25 best 5:11 Blvd 2:5 Brad 7:9 8:12 BRADLEY 1:8 3:12 briefing 6:2 briefly 7:17 broad 3:20 9:7 bunch 11:21 burden 9:5 BURNETT 2:9 < C > call 10:20, 21 camera 9:5 Carney 7:12 10:9 CASE 1:3 4:8, 16, 19 5:2 7:7, 10 9:4 10:22, 23 11:3, 9 cases 8:21 10:25 categories 3:20 certify 13:7 child 8:1, 3, 4, 5 CIRCUIT 1:1 City 3:3 claim 6:1 claims 8:19, 24 clearly 3:16 8:22, 24 client 7:20, 21, 22 8:1, 6 11:20 clients 6:4 client's 11:16 committing 7:25 Compel 3:12 complete 13:10 complex 4:10 10:25 Compliance 3:13 comply 4:10 5:13 concerns 7:15 11:15 concluded 12:6 conference 4:9 consider 9:14 consideration 4:7 continued 4:17, 18 control 9:2 copy 3:14 correct 5:10 COUNTY 1:2, 19 3:3, 4 13:5 couple 9:17 COURT 1:1 3:10, 23 4:4 5:15 6:6, 9, 14, 16, 21 7:2, 14 9:12 10:12, 16, 23 11:24 13:7 Courthouse 1:19 3:3 Court's 5:13 7:3 covers 9:7 crime 7:23, 25 8:2 criteria 4:15 CROW 1:16 3:2 custody 6:18 7:11 cuts 6:15 < D > DATED 13:13 DAVID 1:16 3:2 day 10:8 13:13 days 5:25 deadline 5:24 deal 7:13 dealing 7:3 decided 6:11 decisions 11:9 Defendant 2:14 3:12 7:10 8:23 Defendants 1:11 defer 7:4 DENNEY 2:3 deny 5:3 describe 5:11 detail 6:9 determinations 11:17 determine 8:11 direct 7:8 directed 7:6 disappear 7:16 disconcerting 5:2 discoverable 11:11 discovery 7:2, 5, 14 9:4 docket 4:8 document 8:9 documents 3:17, 18, 20 4:2 5:25 6:19, 19 7:11 9:6, 25 10:2, 3, 11 11:10, 13, 15, 15, 20 Drive 2:12 < E > easier 9:10 easy 9:1 11:24 EDWARDS 1:9 3:12 6:20 7:9, 10 8:13 11:16 either 5:24 9:21 entered 11:5 enters 9:21 EPSTEIN 1:5 8:20 Epstein's 3:14 ESQUIRE 2:4, 10 essentially 5:4 evidence 8:12 exhibit 3:15, 15 extent 10:5 extremely 9:1 < F > face 3:17 fact 3:22 fails 3:17 February 1:20 3:5 13:13 felt 7:4 FIFTEENTH 1:1 file 4:6 7:9 finalizing 6:7 find 3:16 First 9:18 Flagler 2:12 FLORIDA 1:2, 19, 21 2:6, 13 13:3 flushed 11:6 following 3:1 5:22 ORANGE REPORTING 800.275.7991 EFTA01069728 2 foregoing 13:9 forth 4:13 Fortress 10:3 forward 9:22 FOWLER 2:9 frame 3:19 4:15 6:10 framed 4:2 frankly 6:25 fraud 7:23, 25 8:2 Friday 5:23 further 3:21 5:16 < G > Garza 1:21 13:7, 19 generated 9:8 give 8:17 10:19 11:1 gives 9:2 Go 3:10 4:24 9:22 12:2 going 4:13, 22, 24, 24, 25 5:3, 5, 20, 21 6:9, 10 9:12 10:7, 10 11:25 grant 5:5 granted 4:7 guess 3:23 guys 4:5, 11 10:18 11:1 12:3 <H> hang 7:15 haphazard 5:1 happen 8:18 happened 5:15, 17 6:25 happening 4:20 heard 7:18 hearing 5:18 9:14 11:22, 25 HELD 1:15 4:20 helped 4:21 hereinabove 3:6 Honor 3:11 6:13, 24 7:4, 8, 18 9:2, 2, 3, 5, 15 HONORABLE 1:16 3:2 Honors 3:13 hopefully 11:25 hour 3:5 < I > identify 3:17, 21, 25 5:25 Inappropriate 8:25 indicate 8:12 indication 3:21 individually 1:8, 9, 10 interested 10:16, 17 interrupt 10:15 Involved 6:17 Issued 7:7 Issues 6:17 7:2, 14, 19 8:15 its 3:16 <.1> JACK 2:4 JEFFREY 1:5 JOSEPH 2:10 JR 2:10 Judge 5:9 7:5, 12 9:23 10:5, 9, 14 JUDICIAL 1:1 < K > kind 8:13 know 3:18 4:18, 23 9:10 10:19 11:24 1:9 Lakes 2:5 lawyer 8:6 list 3:15, 16 5:7 6:2 litigation 4:10 log 5:22 look 3:15 8:10 11:2 looked 4:5 CM> management 10:22, 23 map 12:1 master 5:19 7:13, 13 8:10, 11, 16 mean 10:14 means 7:24 meeting 5:18 morning 9:13 Motion 3:12, 14 4:6, 7 5:3 motions 5:5 <N> necessitates 10:2 needs 5:2 10:5 Notary 1:21 noted 3:6 notes 13:11 number 5:7 < O > objections 3:19 5:23 11:21 obliged 7:4 obviously 5:6 Okay 4:25 ongoing 9:9 order 3:13 4:11,23 5:13 7:21 8:3 9:22 11:5 12:1 orders 9:3 original 11:19 outline 10:7 outstanding 7:5 9:18 < P > P.A 2:9 Page 1:21 PALM 1:2, 19, 19 2:5, 6, 13 3:3, 4, 4 13:5 paper 9:8 parameters 11:4 participant 7:23 8:5, 13 participants 8:2 particularity 3:18 party 7:6 pending 7:2 period 9:9 Phillips 2:11 piece 9:8 Plaintiff 1:6 2:7 7:8, 24 plan 10:22 Point 2:11 4:19, 23 6:23 Ponzl 9:9 position 3:23 possession 11:20 possibly 9:25 posturing 10:17 pre 10:19 prepare 4:12 presented 11:23 pretrial 3:13 4:9 primary 7:19 prior 8:21 9:3 privilege 5:22 7:20, 21, 22 8:3, 6, 8 11:14 privileged 6:1 privileges 11:12 probative 8:17 procedural 7:15 proceed 10:10 PROCEEDINGS 1:15 3:2 12:6 13:9 process 6:5 produce 5:21 7:9 10:9 11:19 produced 10:4 product 7:20 8:8 production 6:17 proper 5:21 proposed 5:24 prosecuted 8:20 prosecutions 8:23 protection 8:5 protective 9:22 provide 6:4 Public 1:21 put 10:7 putting 10:18 < () > quite 6:24 < R > R.P.R 1:21 Razor 9:19 reached 5:19 10:7 real 10:25 really 10:16 11:2 12:4 reason 6:1, 16 11:6 reasons 4:18 received 10:1 recognized 9:3 recommendation 10:9 record 13:10 records 5:12 regard 8:8, 15 regarding 4:10 rehash 9:16 relate 8:22 relevant 11:10 ORANGE REPORTING 800.275.7991 EFTA01069729 3 relieves 9:4 REMEMBERED 3:1 remembers 7:19 removed 4:7 repeat 7:17 report 13:9 Reporter 13:7 represented 7:1 request 7:5, 9 11:19 required 10:19 requires 11:1 requiring 4:9 5:5, 13 respond 9:17 response 6:5 rest 10:10 retains 8:5 review 9:6 Rey 9:23 10:5 right 5:1 8:14 10:17 road 12:1 ROTHSTEIN 1:8 7:25 Rothstein's 8:1 RPR 13:19 rule 4:10 5:10 6:21 9:12 10:21 < S > saying 7:18 says 8:16 SCAROLA 2:3, 4 3:11 6:12, 15, 23 10:14, 22 11:18 12:4, 5 Scarola's 6:4 schedule 6:2 scheme 9:9 SCOTT 1:8 SEARCY 2:3 second 4:17 see 10:8 sends 9:20 sent 4:3 11:19 serve 7:12 set 4:9, 14, 22 11:4, 21 sets 4:12 9:25 SHIPLEY 2:3 show 7:24 8:1 shred 8:12 sir 3:10 4:1 6:14 sit 11:1 solution 9:1 somebody 6:11 sorry 7:17 10:14 special 5:18 7:13, 13 8:10, 11, 16 specifically 3:25 specificity 5:14 standard 6:3 State 1:21 13:3 statement 10:20, 23 stenographic 13:11 stenographically 13:8 stipulated 9:22 stipulation 10:20 subpoena 7:3, 7 9:7, 19, 20, 23 subpoenas 4:2 subsequent 8:22 sufficient 3:17 suggestion 6:12 < T > take 3:15 8:10 9:14 talking 10:6 tell 4:4 tends 8:12 tens 9:6 tentative 5:19 6:6 terms 5:20 test 10:2 testimony 11:16 Thank 12:3 thing 8:18 10:13 things 4:25 5:7 7:18 9:17 12:1 think 3:16 6:25 8:16 9:1 third 4:16 7:6 thousands 9:6 three 10:1 time 4:15, 16, 17 5:6 6:10, 24 9:9, 14, 20, 23 11:2, 5 today 6:8 transcript 13:10 trial 4:8 5:2, 4 tried 6:24 true 13:10 trustee 4:3 6:18 7:6 9:19, 21, 21 10:1, 3 try 5:20 turn 8:9, 14 turned 6:19 8:23 two 9:24, 25 11:11 <U> ultimately 11:8 understand 5:9, 10, 21 10:12 11:3, 18 <V> victims 8:2 vs 1:7 <w> waive 8:7, 14 waived 7:22 8:4 waiver 11:14 walk 11:3 want 4:11, 20, 22 8:18 9:16 way 4:25 9:10 Wednesday 5:22 Well 5:17 8:23 11:17 went 4:5 we're 4:21, 24, 25 5:20, 23 10:7, 10 11:24 West 1:19 2:6, 11, 13 3:4 WHITE 2:9 willing 7:12 wit 3:6 work 5:20 7:20 8:8 working 5:24 writing 10:8 wrongdoing 8:14 <y> yesterday 4:5 5:15, 18 10:6 ORANGE REPORTING 800.275.7991 EFTA01069730