CONFIDENTIAL

CONFIDENTIAL Page 1 r 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 ** CONFIDENTIAL ** CONFIDENTIAL UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK Civil Action No. 09 Civ 6441 (DC) * * PERRY A. GRUSS, Plaintiff, -against- DANIEL B. ZWIRN, D.B. ZWIRN & CO., LP, and D.B. ZWIRN PARTNERS, LLC., Defendants. June 28, 2010 9:30 a.m. ***CONFIDENTIAL*** x DEPOSITION of PERRY GRUSS, the Plaintiff in the above-captioned action, taken by Defendants, held at the offices of Cooley, LLP, 1114 Avenue of the Americas, New York, New York, before Eileen Mulvenna, CSR/RMR, Certified Shorthand Reporter, Registered Merit Reporter and Notary Public of the State of New York. 212-267-6868 VERITEXT REPORTING COMPANY www.veritext.com 516-608-2400 EFTA01124872 JAIT EFTA01124873 I 2 3 4 5 6 Page 2 " CONFIDENTIAL " CONFIDENTIAL " APPEARANCES: LIDDLE & ROBINSON, LIE Ammer for Phimiff 800 Third Avenue Nc-*Yoek, New York 10022 BY: ETHAN A. BUCHER, ILSQ. JENNIFER ROD 1 2 3 4 5 6 7 Page Gross - CONFIDENTIAL PERRY GROSS, having been duly sworn by Eileen Mulvenna, a Notary Public of the State of New York, was examined and testified as follows: EXAMINATION BY MR. LEVINE: a 9 8 Q. State your name and address for the 10 9 record, please. 11 LANKIER SIFFERTA WOK, LIP Mwmcpe for Defendant Daniel& 2onen 10 Perry A. Gruss, 500 Fifth Meese 11 12 New Pod/. New York 10110 BY: DANIEL& REYNOLDS, ESQ. 12 THE REPORTER: Usual stipulations? 13 JOHN SIEFERT. ESQ. 13 MR. SIFFERT: It will be done by the 14 14 Federal Rules of Civil Procedure. IS ANDREW S. LEE. ESQ. 15 MR. LEVINE: Nothing other than what 16 16 the Federal Rules of Civil provides. 17 COOLEY, LIE 17 THE ' • RTF-R: Okay. IS Af10111L)S for Defendant D.B. Rutin! & co., LP and O.B. ZwImPattnen.11C 18 MR. BRECHER: Are there stipulations 19 1114 Averse of Os Americas 19 or are there not? 20 New Yak, New York 10036 BY. ALAN LEVINE ESQ. 20 MR SIFFERT: Federal Rules of Civil 21 MILAN H. O'BRIEN, ESQ. 21 Procedure controls. 22 MR. LEVINE: Don't need speaking 22 MAXINE SLEEPER. ESQ. 23 objections. I won't argue with you. If I 23 24 sense your objection is a good one, I may 24 25 25 rephrase the question. You'll get an Page 3 Pege5 1 **CONFIDENTIAL **CONFIDENTIAL ** 1 QV.% - CONFIDENTIAL 2 IT IS HEREBY STIPULATED AND AGREED, 2 opportunity to review the transcript and 3 by and between the attorneys for the respective 3 sign it and do an errata sheet. 4 parties herein, that filing and sealing be and 4 BY MR. LEVINE: 5 the same are hereby waived. 5 Q. Mr. Gross, my name is Alan Levine, 6 6 and I represent D.B. Zwim & Co. L.P. and 7 IT IS FURTHER STIPULATED AND AGREED 7 D.B. Zwim Partners, LLC, defending them in a 8 that all objections, except as to the form of the 8 lawsuit which you filed in the Federal Court, 9 question, shall be reserved to the time 9 Southern District of New York, July 20, 2009, 10 of the trial. 10 Civ. No. 096441. 11 11 Is that a lawsuit that you Sled? 12 IT IS FURTHER STIPULATED AND AGREED 12 A. Yes. 13 that the within deposition may be signed and 13 Q. Have you ever been deposed before? 14 sworn to before any officer authorized to 14 A. Yes. 15 administer an oath, with the same force and 15 Q. How many times? 16 effect as if signed and sworn to before the 16 A. I believe four. 17 officer before whom the within deposition was 17 Q. In what matters? 18 taken. 18 A. By the SEC in the matter of D.B. 19 19 Zwirn & Co. — Fm not exactly sure of the rest. 20 20 Q. Have you given any other sworn 21 21 testimony in your career 22 22 A. No. 23 23 Q. — of any kind? 24 24 A. No, I don't believe so. 25 25 Q. Never been in a lawsuit personally? 212-267-686R 2 (Pages 2 - 5) VERITEXT REPORTING COMPANY www.veritext.emm 516-60R-74M EFTA01124874 Page 6 1 Gruss - CONFIDENTIAL 2 A. No. 3 Q. Other than this matter. 4 A. No. 5 Q. lust a couple of ground rules. I 6 ask the questions, you answer them. Pm going to 7 try very hard not to interrupt you in the middle 8 of an answer. Please don't guess what my 9 answer -- my question's going to be because there 10 could be a word at the end that surprises you. 11 So let me get it all out of my mouth. And 12 nodding -- understand all of this; correct? 13 A. Yes. 14 Q. Also, your lawyer has a right to 15 object, as you just heard, so don't jump on my 16 questions because then you deprive him of an 17 opportunity to work. Okay? 18 And if you don't understand any 19 question that I ask, tell me you don't understand 20 it and I'll rephrase it. 21 And subject, of course, to what your 22 lawyer says, I'm entitled to an answer on the 23 record for every question that i ask unless he 24 directs you otherwise. 25 Understand all of this? Page 1 Grass - CONFIDENTIAL 2 Q. What did you do at Nomura 3 Securities? 4 A. I was a product controller for their S real estate group. 6 Q. What did that job entail? 7 A. I was the one who calculated the P&L 8 for the front office. 9 Q. What skill-set did you need to do 10 that? 11 A. Brains. 12 Q. Did you have a math background? 13 A. No. 14 Q. So give me more of an idea what you 15 did even, day. 16 A. Reports would — the front office 17 would trade. Reports would come out. I would 18 calculate the reports, produce a P&L, and then it 19 would be verified against the front office P&L 20 that they produced. 21 Q. What kind of trades? 22 A. CMBS trades. 23 Q. What are CMBS trades? 24 A. Collateralized mortgage-backed 25 securities. 9$8* 7 1 Gruss - CONFIDENTIAL 2 A. Yes. 3 Q. Where did you graduate from college? 4 A. Oneonta State University New York. 5 Q. What year? 6 A. 1989. 7 Q. What did you do after you graduated? 8 A. I was employed by American 9 International Group. 10 Q. Doing what? II A. I was a — 'would say I was a 12 systems accountant. 13 Q. Did you take accounting in college? 14 A. No. 15 Q. Did you take any accounting courses 16 in college? 17 A. Not one. 18 Q. What did you do at AIG? 19 A. i worked in the systems group. 20 Q. For how long did you work in the 21 systems group? 22 A. From 1989 through — I don't want to 23 guess -- 1994. 24 Q. What did you do after that? 25 A. Worked at Nomura Securities. Page 9 1 Grass - CONFIDENTIAL 2 Q. When did you first learn about 3 collateralized mortgage-backed securities? 4 A. Around 1994. 5 Q. Where did you learn about that? 6 A. Nomura. 7 Q. Who taught you about that? 8 A. The controller at the time. 9 Q. Who was that? 10 A. Bob Rottman. 11 Q. What did Nomura Securities do with 12 respect to collateralized mortgage-backed 13 securities? 14 A. They packaged, securitized and sold. 15 Q. Did they also trade in the secondary 16 market? 17 A. Yes. 18 Q. So they were an originator and 19 trader? 20 A. Exactly. 21 Q. Did all of those functions come 22 within the group that you were working in? 23 A. Yes. 24 Q. What were the entities that you were 25 calculating the P&L for? 3 (Pages 6 - 9) "111 ICI 4040 VERITEXT REPORTING COMPANY .............«0....1 a"... C C 4110 41A AA EFTA01124875 Page 10 1 Gruss - CONFIDENTIAL 2 A. I don't recall. 3 Q. I take it P&L stands for profit and 4 loss? 5 A. Correct. 6 Q. Were the transactions that you were 7 calculating the profit and loss trades in the 8 secondary market for the collateralized 9 mortgage-backed securities? 10 A. Some were. Some weren't. 11 Q. What were the ones that were not? I2 A. The ones that were originated. 13 Q. Were these proprietary trades for 14 Nomura or were these trades on behalf of funds? 15 A. Proprietary. 16 Q. How long did you stay at Nomura? 17 A. Through 2002. 18 Q. Some eight years? 19 A. Yes. In different capacities. 20 Q. What was the second capacity that 21 you functioned in at Nomura? 22 A. I worked for the production side of 23 the business securitizing and structuring CMBS. 24 Q. What did that job involve? 25 A. More -- more detail and analysis. Page 12 Onuss - CONFIDENTIAL 2 you sell them. 3 Q. Package into what? 4 A. CMBS, commercial mortgage-backed 5 securities. 6 Q. Are you saying that you take, in 7 your example, ten commercial loans and aggregate 8 them into one security which is then sold as a 9 security? 10 A. It wouldn't be one security. It II would be several securities spreading the risk 12 across individual trenches. 13 Q. What is a tranche? 14 A. The single A, triple A, double A. 15 My example earlier. 16 Q. And those are rating agency credit 17 ratings? 18 A. Correct. 19 Q. How do the rating agencies decide 20 what rating to give each of these trenches? 21 A. I don't know. 22 Q. Were you involved in that process at 23 all? 24 A. No. 25 Q. Were you involved in selecting the Page II 1 Grass - CONFIDENTIAL 2 Q. What kind of detail and what kind of 3 analysis? 4 A. Just packaging of the real estate 5 loans, the commercial real estate loans, and then 6 assisting with the rating agencies in 7 structuring. 8 Q. Could you explain what you mean by 9 packaging a loan or just give us as freshman in 10 high school an explanation of what a CMS [sic] 11 is? 12 MR. BRECHER: Objection. 13 Q. You may answer. 14 A. For instancy, you have ten 15 commercial mortgages, you pool them together and 16 they you securitize them and you tranche them 17 out. There could be triple A securities, double 18 A, single A. 19 Q. What is the -- 20 A. Then you sell them through a 21 broker/dealer. 22 Q. What do you mean by securitize them 23 out? 24 A. Like I said, ten loans, you package 25 them, get a rating agency to rate them and then Page 13 Gruss - CONFIDENTIAL 2 commercial loans for the diffacat trenches? 3 A. No. 4 Q. What was your job? 5 A. I was a -- just an analyst. 6 Q. What were the nature of your duties 7 as an analyst? 8 A. I would say once you received all 9 the loans, the ten loans — let's go back to 10 that — the ten loans, I would be helping the 11 head of structuring accumulating investment memos 12 on the real estate loans, et cetera. 13 Q. Were you participating in the 14 decision which tranche the different commercial 15 loans applied? 16 A. No. 17 Q. Was this assignment within the same 18 group as the group that you joined in '94? 19 A. No. 20 Q. The P&L work that you were doing 21 before was for a different group? 22 A. No, the P&L work was for the same 23 group. 24 Q. Right. 25 A. Yes. I thought you asked if it was VERITEXT REPORTING COMPANY 4 (Pages 10 - 13) a ••••••• EFTA01124876 Page 14 1 Gruss - CONFIDENTIAL 2 the same group. It was not the same group. 3 Q. You just described two different 4 jobs that you had — 5 A. Exactly. 6 Q. -- at Nomura? 7 A. That's correct. 8 MR.. BRECHER: Let him finish the 9 question. 10 THE WITNESS: Pm sorry. 11 Q. What did you do next at Nomura after 12 you worked on the production of these securitized 13 loans? 14 A. I went back to the back office where 15 I had started with the P&Ls and just — and just 16 took on more responsibility. 17 Q. What was your title at that time? 18 A. Director. 19 Q. What was your area of 20 responsibility? 21 A. The same -- it was the same 22 responsibility, but now for the real estate 23 group, the fixed income group, and I believe 24 emerging markets; but can be — can't be sure 25 about the latter. Page t6 1 Gruss - CONFIDENTIAL 2 You described a proprietary business 3 at Nomura; correct? 4 A. Correct. 5 Q. How large a business was it? 6 A. I don't know. 7 Q. How many people were employed in the 8 proprietary trading business at Nomura at the 9 time, late '90s? 10 A. Over 50, below a thousand. 11 Q. So you went back to the back office, 12 were promoted to the title of director — 13 A. Uh-huh. 14 Q. — and who did you report to? 15 A. Bob Rottman. 16 Q. Who was Bob Rottman? 17 A. He was the CFO at the time. 18 Q. And how many people reported to Bob 19 Rottman? 20 A. I don't recall. 21 Q. How long did you stay as a director 22 in the back office? 23 A. About 2002. 24 Q. So when you left Nomura, you left in 25 that position? Page 15 1 .Gruss - CONFIDENTIAL 2 Q. What was that responsibility? 3 A. I was now managing those individuals 4 that did the P&I, not unlike the P&L I did for 5 real estate. 6 Q. What were the nature of the 7 businesses that you were analyzing the Pa for? 8 A. The fixed income division traded 9 corporate bonds. They traded residential 10 mortgage-backed securities -- not commercial 11 mortgage-backed securities -- and treasuries, 12 repos, reverse repos. 13 Q. And you calculated the P&L for all 14 of these different proprietary trading accounts? 15 A. At that point, the people who worked 16 for me did. 17 Q. And how many people at that point 18 were working on your team? 19 A. I don't recall. 20 Q. Approximately. 21 A. Ten. 22 Q. How large a business was this — 23 MR. BRECHER: Objection. 24 Q. — with Nomura. 25 Withdrawn. Page 17 1 Omss - CONFIDENTIAL 2 A. Correct. 3 Q. Had you been promoted again before 4 you left Nomura? 5 A. I don't recall. 6 Q. Did you -- withdrawn. 7 Where did you go next to work? a A. At D.B. Zwirn & Co. 9 Q. How did it come about that you left 10 Nomura to go D. B. Zwim in 2002? 11 A. I got a call from a recruiter that 12 D.B. Zwim & Co. — HighbridgetZwim — 13 Higbbridge at the time was looking for a CFO to 14 run the distressed special opportunities group. 15 Q. Who did you meet with at D.B. Zwim 16 and Co.? 17 A. I met with Dan Zwim, Glenn Dubin, 18 and possibly one or two other people. 19 Q. When did those initial meetings take 20 place? 21 A. Summer of 2002. 22 Q. When were you actually hired? 23 A. Summer of 2002. 24 Q. Am I correct, then, that you left 25 Nomura Securities on good terms? 5 (Pages 14 -17) VERITEXT REPORTING COMPANY EFTA01124877 Par IS I Gruss - CONFIDENTIAL 2 A. Oh, yes, very good. 3 Q. Did Mr. Rottman or anybody else at 4 Nomura make any effort to keep you there? 5 A. Mr. Rottman moved on to Wachovia 6 Securities in Charlotte. His replacement 7 absolutely tried to retain me. 8 Q. When you joined D.B. Zwim, who was 9 your actual employer? 10 A. I believe Highbridge Capital 11 Management. 12 Q. Let me show you what we marked -- 13 we'll mark as Gruss 1. 14 (Gruss Exhibit 1, Complain and Jury 15 Demand, marked for identification.) 16 Q. Are you familiar with that? 17 A. Yes. 18 Q. Is this a copy of the complaint that 19 you filed in this action? 20 A. Yes, but it's not the original. 21 Yes. 22 Q. Did you review it before it was 23 filed? 24 A. Yes. 25 Q. Did you make corrections to it Page20 1 Gruss - CONFIDENTIAL 2 recites what someone other than yourself said, 3 that you are not verifying the accuracy of that 4 statement? 5 A. Do you — 6 MR. BRECHER: Objection. 7 A. Can you drum that down for me, what 8 you're trying to say? 9 Q. There are a lot of allegations in 10 here about yourself; correct? 11 A. Yes. 12 Q. And allegations that you've made 13 about what other people did; correct? 14 A. Correct. 15 Q. To the best of your knowledge, these 16 are accurate? 17 A. Yes. 18 Q. And are you prepared to take an oath 19 that they're accurate? 20 A. Yes. 21 Q. And do you so swear that they're 22 accurate? 23 MR. BRECHER: Objection. 24 A. Yes. 25 Q. Do I understand you to be saying Page 19 1 (buss - CONFIDENTIAL 2 before it was filed? 3 A. I don't recall. 4 Q. Does this represent your statement 5 of what happened for the matters that are 6 asserted in it? 7 MR BRECHER: Objection. 8 You can answer. 9 A. Oh, I'm sorry. I apologize. 10 Generally. 11 Q. Well, is there any statement in this 12 complaint that you don't believe is accurate? 13 A. All the statements that were made on 14 my behalf are accurate. 15 Q. Is there -- did you make any 16 corrections to any of the statements that you saw 17 in it before it was filed? 18 A. I don't -- I don't recall. 19 Q. Do I understand you correctly that 20 to the extent that this complaint quotes what 21 other people or institutions purport to have 22 said, you're not attesting to that accuracy? 23 A. Can you repeat that 24 Q. Do I understand you correctly that 25 to the extent that the complaint repeats or Page 21 1 Gruss - CONFIDENTIAL 2 that you believe that statements that were made 3 about you were inaccurate? 4 A. Correct. 5 Q. And it's those statements that 6 you're not verifying are accurate? 7 A. Correct. Thank you. 8 MR. LEVINE: Let's mark this 9 Gruss 2. 10 (Gruss Exhibit 2, Bates Nos. DBZ 11 0000038 through 39, 6/7/02 Letter to Gruss 12 from Zwim, marked for identification.) 13 Q. Do you recognize the document? 14 A. Yes. 15 Q. What is it? 16 A. It appears to be my offer letter 17 from Highbridge Capital. 18 Q. Is that your signature? 19 A. Yes, it appears to be. 20 Q. Was there any other employment 21 agreement in June of 2002 that applied to you? 22 A. I don't recall. 23 Q. In 2002, in June, what was the 24 structure of the different investment vehicles at 25 Highbridgc Capital Management? 6 (Pages 18 - 21) VERITEXT REPORTING COMPANY EFTA01124878 Page 22 Gruss - CONFIDENTIAL 2 A. This — just to be clear, this says 3 !joined in July of 2002. I think you said June. 4 Q. Now please answer my question. 5 A. I'm sorry, can you repeat it. fm 6 sorry. 7 MR. LEVINE: Eileen, you want to 8 read it back to him. 9 (Record read.) 10 A. There were several. I can't recall. 11 Q. What was Highbridge Capital 12 Management? 13 A. The hedge fund. Highbridge Capital 14 Management was the management company that 15 managed hedge fluids, to be clear. 16 Q. What was your understanding in 17 July 2002 of what a hedge fund was? 18 A. A pool of capital that would make 19 investments on behalf of investors. 20 Q. What did you understand your job was 21 supposed to be in July of 2002 at Higbbridge 22 Capital Management? 23 A. I was going to be the CFO of the 24 Ffighbridge/Zwim Special Opportunities Funds as 25 well as the managed account that Dan Zwirn ran on I 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 24 Gruss - CONFIDENTIAL Q. Did you read, for instance -- withdrawn. Was there offering memoranda for investors for sure each of those two funds? A. Yes. Q. Did you read the offering materials, including the offering memoranda, for each of those two funds? A. I'm sure I did. Q. Were you generally familiar with the terms of those offering memoranda as it applied to the investors for each of those funds? A. Generally. Q. Did you have copies of those materials in your office to refer to as you were doing your job in 2002? A. At one time of another, yes. Q. And did you always have those materials available to you if you had any questions about what the terms were for any of those funds? A. Yes. Q. Did you understand, in July 2002, that — withdrawn. Page 23 1 Gruss - CONFIDENTIAL 2 behalf of Highbridge Capital Management. 3 Q. And what were the different funds 4 that made up the Highbridge/Zwim Special 5 Opportunity Funds as of July 2002? 6 A. I believe at the time there were 7 two. Highbridge/Zwirn Special Opportunities 8 Fund, L.P. And Highbridge/Zwim Special 9 Opportunity Funds, Ltd. 10 Q. What was the difference between the II Special Opportunities Fund identified by L.P. 12 with the fund identified by Ltd.? 13 A. The L.P. was onshore investors. 14 Domestic investors could invest in it. And Ltd. 15 was offshore. Foreign investors invested through 16 it. 17 Q. Was July of 2002 the first time that 18 you ever confronted an investment structure of 19 that kind? 20 A. Yes. 21 Q. How did you learn what that 22 structure was made up of? 23 MR. BRECHER: Objection. 24 A. By way of reading the material that 25 existed. 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 Page 25 Gruss - CONFIDENTIAL Who did you understand were the investors in L.P. and Ltd.? MR. BRECHER: Objection. A. I don't recall. Q. Were they — I don't mean by name. A. Right. Q. I mean by type. Were they individuals? A. At that time? Q. Yes. A. I don't recall. Q. Do you recall the nature of any of the investors at that time? A. The nature, can you -- Q. Were they individuals? Were they partnerships? Were they LLCs? A. It could have been individuals, but I don't — I don't recall. MR. BRECHER: Don't guess. If you -- Q. Do you recall how many investors there were in each? A. Na Q. Did you understand, in July of 2002 7 (Pages 22 - 25) VER1TEXT REPORTING COMPANY ^Orb seem /nen MO • •• /SS OD • II Ib EFTA01124879 Page 26 1 Gruss - CONFIDENTIAL 2 or shortly thereafter, that if an investor were 3 invested in the limited, the L.P., the onshore 4 entity, that that investor was called a limited 5 partner? 6 A. Yes. 7 Q. Did you understand that an investor 8 in Ltd., the offshore fund, was also called a 9 limited partner? 10 A. No, I don't believe so. 11 Q. What did you understand they were 12 called? 13 A I don't know. 14 Q. Who do you understand was the 15 manager of each of these funds? 16 A. I don't recall. At that time, I 17 don't recall. 18 Q. You don't recall the specific name 19 of the management company or you don't recall 20 generally who was the manager? 21 A. I dont recall generally. 22 Q. Who did you report to? 23 A. I reported to Dan Zwim. 24 Q. Did you understand you were working 25 for the investment adviser to the funds or to the Page 28 1 Gruss - CONFIDENTIAL 2 the onshore, it would have to be expensed by the 3 onshore fund. And the same goes for if there was 4 an expense of the offshore fund, it would be 5 expensed on the offshore fund. 6 Q. Did you understand that investors of 7 the onshore could not pay — should not pay for 8 expenses of the offshore fund? 9 MR. BRECHER: Objection. 10 A. If the onshore did not incur the 11 expenses, they should not have incurred the 12 expenses. 13 Q. And did you understand that it would 14 not be proper if investors of the onshore fund IS were charged for expenses of the offshore fund? 16 MR. BRECHER: Objection. 17 A. 1 don't know. 18 Q. Well, did you think that maintaining 19 separate expenses was convenience or something 20 required by the agreements? 21 A. As I said earlier, if there was an 22 onshore expense, it should have been expensed to 23 the onshore. If there was an offshore expense, 24 it could have been expensed to the offshore. 25 Q. When you say "should have been Page 27 1 Gruss - CONFIDENTIAL 2 administrative manager for the funds? 3 A. The management company. 4 Q. And what did you understand the job 5 was of the management company withdrawn. 6 What did you understand the duties 7 were of the management company? 8 A. To manage the assets on behalf of 9 the investors. 10 Q. Did you understand that the 11 investors of the limited partnership were 12 separate and distinct from the investors of Ltd.? 13 A. Yes. 14 Q. Did you understand that L.P.'s funds 15 were to be segregated and kept separate from 16 Ltd.'s funds? 17 A. The investor investments, yes. 18 Q. Did you understand that expenses 19 attributable to the offshore fund could not be 20 paid by the onshore? 21 A. What type of expenses? 22 Q. Any kind of expenses. Did you 23 understand that the expenses of each of the funds 24 had to be kept separately? 25 A. If there was an expense incurred by Page 29 1 thuss - CONFIDENTIAL 2 expensed," is that because that's what was 3 required by the legal agreements? 4 A. I believe so. 5 Q. Did you understand that as CFO, you 6 have a fiduciary duty to investors to maintain 7 separate records of their investments and the 8 expenses attributable to the investments? 9 MR. BRECHER: Objection. 10 A. Oh, Pm sorry. Yes. 11 Q. There's no question about that; 12 correct? 13 A. No, there would be a question. 14 Q. What would the question be? 15 A. 1 would need to see all of the 16 expenses attributable to all of the expenses that 17 tan through the funds on the management company. 18 Q. Am I correct that as CFO, it was 19 your job to set up a system so that all of the 20 expenses got attributed correctly as between the 21 onshore and the offshore fund? 22 A. It was my job to manage the 23 individuals whose responsibility it was. 24 Q. Was it ultimately, as CFO, your 25 responsibility to make sure that they did the 8 (Pages 26 - 29) VERITEXT REPORTING COMPANY EFTA01124880 Page 30 1 Gruss - CONFIDENTIAL 2 correct job? 3 A. It was my responsibility to manage 4 them. 5 Q. Did managing them involve making 6 sure they did a correct job? 7 A. Part of the responsibility, yes. 8 Q. There's no question about that; 9 right? 10 MR. BRECHER: Objection. 11 A. No, there is a question about that. 12 I just went through it. 13 Q. The question is that it's a 14 challenge, but there's no question it was part of 15 your job? 16 A. To manage the individuals, no 17 question. 18 Q. And there's no question that it was 19 part of your job of managing the individuals to 20 make sure that the allocation of expenses was 21 done correctly? 22 A. It was my responsibility to manage 23 these individuals insofar as what exactly they 24 did on a day-to-day basis. I couldn't 25 micromanage exactly what they did. Page 32 1 Cress - CONFIDENTIAL 2 A. [don't recall. It would be the 3 same entity that employed myself. 4 Q. Did you understand that there were 5 investments that were made that were invested — 6 withdrawn. 7 Did you understand that there were 8 assets that were invested in by both L.P. and 9 Ltd.? 10 A. Yes. 11 Q. Was part of your job making mire 12 that the people that worked for you kept track of 13 that apportionment of investment where there was 14 each -. where it was a situation each of the 15 funds was investing in the same asset? 16 A. Insofar as it was appropriate for an 17 asset to be invested in by both the onshore and 18 the offshore fund, yes. 19 Q. And sometimes a separate entity was 20 created so that the onshore could invest in a 21 particular asset and the offshore fund 22 essentially invests in the same asset, but 23 through a different entity? 24 A. Pm sorry, can you repeat that. 25 (Record read.) Page 31 1 Gnus - CONFIDENTIAL 2 Q. Did you give all of the people that 3 were responsible for doing this work on a 4 day-today basis the rules that we just recited a 5 few minutes ago? 6 MR. BRECHF.R: Objection. 7 A. They — they knew the rules. They 8 had access to the offering memorandums, as did L 9 Q. Did you make sure that they knew the 10 rules? 11 A. I don't recall. 12 Q. Did you take steps to make sure that 13 they complied with the rules? 14 A. I believe I did. 15 Q. Am I correct that Highbridge Capital 16 Management controlled -- withdrawn. 17 (Discussion off the record.) 18 Q. Who — who did you understand was 19 making investment advisory decisions on behalf of 20 the fimds? 21 A. Dan Zwim. 22 Q. And who did you understand - 23 withdrawn. 24 What did you understand was the 25 entity that employed Dan Zwim for that purpose? Page 33 1 Gruss - CONFIDENTIAL 2 A. I don't recall. 3 Q. Did you understand that part of the 4 fiduciary duty to keep the investments in the 5 fund separately was because you were — you were 6 keeping track of investments made by individuals 7 or entities that had every right not to have to 8 pay for investments made by people or entities in 9 a different fund? 10 MR. BRECHER: Objection. 11 THE WITNESS: That was a long one. 12 Could you ... 13 (Record read.) 14 A. I don't know. 15 Q. Well, wasn't that the essence of 16 keeping the funds separate? 17 MR. BRECHER: Objection. 18 A. I would just ask if you can ask the 19 question a little simpler. 20 Q. Well, people in the onshore — 21 withdrawn. Did you understand that there are 23 rules -- actual investment rules as applied to 24 who can invest in an onshore and who can invest 25 in an offshore fund? 22 9 (Pages 30 - 33) VERITEXT REPORTING COMPANY EFTA01124881 Page14 1 Gruss - CONFIDENTIAL 2 A Yes. 3 Q. There are tax rules that apply; 4 correct? 5 A. In some Stances. 6 Q. These are rules and laws that are in 7 force in the United States; correct? 8 MR. BRECHER: Objection. 9 A In some instances. 10 Q. Keeping them separate — keeping 11 investors in these funds separate is part of 12 complying with Federal tax laws; isn't that 13 right? 14 MR. BRECHER: Objection. 15 A. I don't know. I'm not a tax expert. '16 Q. Just generally, in July of 2002 — 17 withdrawn. 18 In July of 2002, was that the first 19 time ever that you had learned about what an 20 onshore fund was and what an offshore fund was? 21 A. Yes. 22 Q. Do you understand that there were 23 federal tax laws that applied to what an onshore 24 fund was and what an offshore fund was? 25 A. I don't believe at the time of my 1 2 3 4 5 6 7 Page 36 Oruss - CONFIDENTIAL he or she would invest in the onshore fund. If there was an offshore investor, he or she would invest on the offshore fund. Based on what criteria, I don't know. Q. Did you understand that it was simply convenience or did you understand laws 8 actually applied to it? 9 A. There is clearly a reason beyond 10 convenience. 11 Q. Did you understand that a person 12 living domestically could not as a matter of law 13 invest in the offshore fund and vice versa? 14 A. I didn't know. I don't know. 15 Q. What would be the reason for keeping 16 them separate? 17 MR. BRECHER: Objection. 18 A. I'm not — rm not a tax accountant 19 or lawyer, but I would assume it's tax based. 20 MR. BRECHER: Don't assume anything. 21 Q. Didn't you know that it was tax 22 based? 23 A. I don't recall whether or not I 24 knew. 25 Q. What did you think was possibly the Page 35 Gruss - CONFIDENTIAL 2 hiring. 3 Q. What did you understand was the 4 reason that they were separate? 5 A. The -- I don't recall 6 Q. What was it based on? 7 A. Whether or not an investor was an 8 domestic investor or an offshore investor. 9 Q. What did you — how was it 10 determined -- how was it determined whether an 11 investor was an onshore investor or an offshore 12 investor? 13 A. I don't know. 14 Q. Did you know there were laws that 15 applied? 16 MR. BRECHER Objection. 17 A. I don't recall if I knew there were 18 laws. 19 Q. What did you think there was? 20 A. I wasn't the general counsel. 21 Q. I'm not asking you your 22 understanding as a lawyer. I'm asking you your 23 understanding as what became the chief financial 24 officer of the entities. 25 A. If there were an onshore investor, Page 37 1 Gruss - CONFIDENTIAL 2 reason for the separation? 3 MR. BRECHER: Objection. 4 Q. Was it just to keep addresses 5 separate or convenient — 6 MR. BRECHER: Objection. 7 Q. — or was it a law that applied to 8 the people? 9 MR. BRECHER: Objection. 10 A. I don't recall at the time what I 11 thought. 12 Q. Did you think it mattered to keep 13 them separate or just a matter of convenience? 14 A. Clearly at the time, I did not 15 recall. 16 Are you asking me today? 17 Q. No, I'm asking you did you read the 18 offering memorandum at the time? 19 A. Yes. 20 Q. So that did you understand what the 21 offering memorandum said as to how one qualified 22 to be an investor in either one of the funds? 23 A. I don't recall if I read that 24 specific ... 25 Q. Did you ever tell anybody when you PI 4 P. ••• tem VERITEXT REPORTING COMPANY • • • 10 (Pages 34 - 37) P e end, n.nn EFTA01124882 Page 38 1 Gluts - CONFIDENTIAL 2 started work there that you didn't understand the 3 rules that apply? 4 A. No, I never told anyone that. 5 Q. Did you have confidence when you 6 started there that you understood the rules as 7 they applied to the extent you had to do your 8 job? 9 A. Not when I first started there. 10 Q. After a few months? 11 A. As time went by, I became more and 12 more knowledgeable. 13 Q. Did you ever tell anybody in the 14 first couple of months that you really didn't 15 understand what you were doing? 16 A. I don't recall. 17 Q. It's something that somebody might 18 recall. Did you feel competent to do your job in 19 the beginning? 20 A. Yep. 21 Q. Did you ever tell anybody that you 22 were not competent to do your job in the 23 beginning? 24 A. No. 25 Q. Did you at any time during the time Page40 1 °MSS - CONFIDENTIAL 2 A. Yes. The entities and the 3 individuals. 4 Q. Please take a look at page 20, 5 paragraph 131. 6 (Witness peruses the exhibit.) 7 Q. So 'just would like to go through 8 paragraph 131 with you. 9 A. Sure. 10 Q. Did your job as CFO of 11 Highbridge/Zwirn Capital Management, LLC, include 12 determining the logistics of how specific 13 investments were to bo funded? 14 A. Yes. In addition to others. 15 Q. Did it include determining how 16 investments would be allocated among the managed IT funds? 18 A. Yes, in concert with others, Dan 19 Zwim. 20 Q. And what wore the managed funds at 21 the time? 22 A. At the time, it was only the 23 Highbridge managed account. 24 MR. ERECHER: Can we just have a 25 clarification. When you say "at the time: Page 39 1 Gruss - CONFIDENTIAL 2 that you were at Zwim feel incompetent to do 3 your job? 4 A. Never. 5 MR. LEVINE: Let's mark this 6 Gruss 3. 7 (Gruss Exhibit 3, Answer and 8 Counterclaims of Defendants D.B. Zwim & 9 Co., L.P. and D.B. Zwirn Partners, LLC, 10 marked for identification.) 11 BY MR. LEVINE: 12 Q. Marked before you (buss Exhibit 3, 13 which is the answer and counterclaims of the 14 defendants, D.B. Zwim & Co., L.P. and D.B. Zwirn 15 Partners, LLC. 16 Do you see that? 17 A. Yes. 18 Q. Have you ever looked at that 19 document? 20 A. Yes. 21 Q. Would you please go — withdrawn. 22 Do you understand that this is the 23 formal legal document that is prepared and filed 24 by the entities to respond to the complaint that 25 was filed on your behalf? Page 41 1 Gruss - CONFIDENTIAL 2 is that when he first started or — 3 Q. Did your job include those two 4 functions when you started to work in July of 5 2002? 6 A. I don't recall. 7 Q. Do you recall when it came about 8 that those were included as your 9 responsibilities? 10 A. No. 11 Q. Did it become part of your 12 responsibility at some point during your 13 employment? 14 A. It was neither my sole 15 responsibility or was 1 responsible solely. 16 Q. Next sentence reads, "It was also 17 Grass's responsibility to inform Zwim of funding 18 limitations on all of the investments that the 19 company had identified as otherwise satisfying 20 the company's risk adjusted return criteria in 21 which it was necessary to explore the options 22 identified in paragraph 122." 23 Do you — 24 A. Can I just read it? 25 Q. Sure. 11 (Pages 38 - 41) VERITEXT REPORTING COMPANY EFTA01124883 Page 42 1 Gruss - CONFIDENTIAL 2 A. Thanks. 3 (Witness peruses the exhibit.) 4 A. Is the question whether or not I 5 agree with C? 6 Q. Not C. The sentence after C. 7 A. Oh. 8 Q. It's right there, Mr. Gruss. It's 9 right — C has a period. 10 A. Oh, I see. 11 Q. Let me — I'm sorry, you clearly 12 don't -- we have a miscommunication. 13 A. Yes. 14 Q. Did part of your responsibility 15 include identifying new sources from which to 16 finance investments, for example, by arranging 17 nonrecourse fording lines? 18 A. That's part of my responsibilities, 19 yes. 20 Q. And the next sentence reads, "It was 21 also Gruss' responsibility to inform Zwirn of 22 funding limitations." 23 As that sentence is written, do you 24 agree with that? 25 A. No. Page 44 1 Own - CONFIDENTIAL 2 Did Dan Zwirn delegate to you 3 responsibilities as CFO to, among other things, 4 determine the logistics of how specific 5 investments would be funded? 6 A. At times. 7 Q. Did you understand that you were 8 generally responsible as CFO for determining how 9 the logistics — determining -- withdrawn. 10 Did you understand that you were 11 generally responsible as CFO for determining the 12 logistics of how specific investments would be 13 funded? 14 A. Generally it was part of my 15 responsibilities. Part. In concert with Dan. 16 Q. Go to paragraph 260 on page 37. 17 A. Got it. 18 Q. Why dont you just take a moment to 19 read that paiagraph to yourself. 20 (Witness peruses the exhibit.) 21 Q. You got it? 22 A. (Witness nods head in the 23 affirmative.) 24 Q. You're nodding. 25 A. Yes. Page 43 1 ' Gross - CONFIDENTIAL 2 Q. Who was — whose responsibility was 3 it to inform Dan Zwim of funding limitations on 4 all investments? 5 A. It was collectively Dan, myself and 6 the other individuals that sat in on what's 7 called a pipeline meeting. 8 Q. Did you have separate and 9 independent responsibilities from Dan Zwim in 10 doing the job that's described in paragraph 131? 11 A. I don't know the question. 12 Q. Was Dan the CFO also? 13 A. No. 14 Q. What was Dan Zwirn? 15 MR. BRECHER: Objection. 16 A. The managing partner, the CEO. 17 Q. Did you understand -- 18 A. The individual responsible for the 19 fund, the firm, the management company. 20 Q. Did you understand that as CFO, you 21 had separate and independent responsibilities 22 from Dan Zwim? 23 A. Yes. 24 Q. Do you understand that Dan Zwirn -- 25 withdrawn. 1 2 Q. 3 4 5 6 A. Q. Page 45 Gruss - CONFIDENTIAL I need you to utter the words. Yes. Did you read it? Yes, I read it. During — withdrawn. You were the CFO from in or about 7 July 2002 until in or about October of 2006; 8 correct? 9 A. Correct. 10 Q. During that time, did anybody else 11 assume CFO responsibilities above you? 12 A. No. 13 Q. Did you hire a lot of people below 14 you? 15 A. Yes, scores. 16 Q. And all of those people came into 17 the finance and operations side of the business 18 reporting to you? 19 A. Yes. Toward -- caveat. Towards the 20 end, several of them also reported to Hal Kahn, 21 who was the COO. 22 Q. Did your duties and responsibilities 23 as CFO include managing the company's finance, 24 accounting and treasury operations? 25 A. Yes. VERITEXT REPORTING COMPANY ••• mt. ••• •••• 12 (Pages 42 - 45) EFTA01124884 Page 46 1 Gnus - CONFIDENTIAL 2 Q. And using the word *company there, 3 Fm referring to D.B. Zwim & Co. L.P. 4 Do you understand that? 5 A. Yes. 6 Q. And D.B. Zwim Co. -- withdrawn. 7 D.B. Zwim & Co. L.P. is the 8 management company; correct? 9 A. Correct. 10 Q. Was it also part of your 11 responsibilities as CFO to supervise the 12 company's back office? 13 A. Yes. 14 Q. Was it also part of your 15 responsibility as CFO to assure that the 16 financial relations between the company and the 17 managed funds were proper and in accordance with 18 the agreements and other documents relating to 19 those relations? 20 A. I believe so. 21 Q. So apart from the general counsel, 22 you were — you understood that you needed to 23 know and understand what the legal agreements 24 provided for as respect to the financial 25 relations between the funds? Page 48 Gruss - CONFIDENTIAL 2 Q. There's no question you had a 3 fiduciary duty to the investors in the funds; 4 isn't that right? 5 MR. BRECHER: Objection. 6 A. Yes. 7 Q. So am I correct that you understood 8 that as part of your fiduciary duty to the 9 investors of the funds, that you needed to assure 10 that the financial relations between the company 11 and the funds was proper and in accordance with 12 the agreements? 13 A. I assured to the extent that I was 14 capable of assuring. 15 Q. Was it also part of your 16 responsibility to assure that investments made by 17 the managed funds were financed in a proper 18 manner? 19 A. Yes, that was part of my 20 responsibilities. 21 Q. Was it also part of - 22 A. But not my sole responsibility or 23 solely responsible for. 24 Q. There's no one in the financial side 25 of the business more senior than the CFO; Page 47 Crniss - CONFIDENTIAL 2 A. I didn't need that to do my job, but 3 I generally did understand that. 4 Q. If part of your job required you to 5 assure that the financial relations between the 6 company and the managed funds were proper and in 7 accordance with the agreements, didn't you need 8 to be familiar with the agreements to do that 9 part of your job? 10 A. 1 was responsible for the 11 management — managing of the scores of people. 12 Q. And didn't the management of the 13 scores of people include assuring that the 14 financial relations as between the funds was in 15 accordance with what the agreements provided? 16 A. At times, yes. 17 Q. And am I correct that you 18 tmderstood, because of the fiduciary duty that 19 you admitted earlier that you owed, that it was 20 important to keep the financial relations clear, 21 separate and in accordance with the agreements? 22 MR. BRECHER: Objection. 23 A. 1 don't know if I admitted that I 24 had fiduciary responsibilities earlier. I'd have 25 to see the transcript Page 49 1 Gruss - CONFIDENTIAL 2 correct? 3 A. The CEO. 4 Q. In the financial side of the 5 business, you had ultimate responsibility for the 6 financial matters of the business as reporting to 7 the CEO; correct? 8 MR. ERECHER: Objection. Note my 9 objection. 10 MR. LEVINE: Ill rephrase it. 11 Q. Dan Zwirn didn't have the title of 12 CFO, did he? 13 A. Correct, he did not. 14 Q. So am I correct that -- was it fair 15 for Dan Zwirn to rely on you to perform the job 16 and assume the responsibilities of CFO? 17 MR. BRECHER: Objection. 18 A. In certain matters. 19 Q. Including all of the matters that we 20 just testified to that are in paragraph 260; 21 correct? 22 MR. BRECHER: Objection. 23 A. Those that I testified to. 24 Q. And was it also part of your 25 responsibility as CFO to assure that the 13 (Pages 46 - 49) VER1TEXT REPORTING COMPANY EFTA01124885 Page 50 1 Gross - CONFIDENTIAL 2 financial transactions between the company and 3 the managed funds and between the managed funds 4 were properly documented? 5 A. Yes. 6 Q. Is it also part of your 7 responsibility to assure that the financial 8 affairs and rates of return of the managed funds 9 were accurately and properly reported? to A. It was not my responsibility to 11 assure that the rates of return were met. 12 Is that your question. 13 Q. No. 14 I asked you whether it was part of 15 your responsibility to assure that the financial 16 affairs and rates of return of the managed funds 17 were accurately and properly reported? 18 A. Oh, it was my responsibility to make 19 sure that those individuals responsible did their 20 job. I did not do the math is my point. 21 Q. But in relying on somebody else to 22 do the math, did you then have ultimate 23 responsibility for assuring that the financial 24 affairs and rates of return of the managed funds 25 were accurately and properly reported? Page 52 1 Gruss CONFIDENTIAL 2 Q. And you understood that to the 3 extent that you knew and understood how they were 4 calculating the math withdrawn. 5 You understood that to the extent 6 that you knew how they were calculating the rates 7 of return, that you agree that it was part of 8 your responsibility to assure that the rates of 9 return were accurately and properly reported? 10 MR. BRECHER; Objection. 11 A. Yes. 12 Q. For instance, if you knew that a 13 mistake was made in doing the calculation, you 14 had an obligation to correct the mistake; 15 correct? 16 A. If I was aware of the mistake? 17 Q. Yes. 18 A. Yes. 19 MR. LEVINE: Mark this Gruss 4. 20 (Gruss Exhibit 4, Plaintiffs Reply 21 to Defendants' Counterclaims, marked for 22 identification.) 23 BY MR. LEVINE: 24 Q. Take a look at Gruss 4, which is a 25 legal document entitled Plaintiffs Reply to Page 51 Gruss - CONFIDENTIAL 2 MR. BRECHER: Objection. 3 A. In much the same way, the CEO had 4 the responsibility to make sure that I did the 5 same. 6 Q. Mr. Gruss, please listen to the 7 question and answer the question. 8 A. Sure. 9 Q. So apart from relying on somebody 10 reporting to you to do the math, did you 11 understand that it was part of your 12 responsibility to assure that the financial 13 affairs and rates of return of the managed funds 14 were accurately and properly reported? 15 MR. BRECHER: Objection. 16 A. Apart from relying on those 17 individuals, yes. 18 Q. Your testimony is, I take it, that 19 you relied on the individuals to do the math; but 20 you assume responsibility for making sure that 21 the financial affairs and rates of return were 22 accurately and properly reported. 23 A. I relied on the individuals to do 24 their. jobs, part of which was calculating the 25 math correctly. Page 53 1 Gruss - CONFIDENTIAL 2 Defendants' Counterclaims. 3 Do you see that? 4 A. Yes. 5 Q. And you recognize that as a document 6 that was filed on your behalf by your lawyers? 7 A. Yes. 8 Q. Did you review that with your 9 lawyers before it was — before it was filed? 10 A. I don't recall. II Q. Take a look at page 12 of the 12 document 13 (Witness peruses the exhibit) 14 Q. You have it in front of you? 15 A. Yes. 16 Q. Go down to Paragraph No. 161 Do 17 you see that? 18 A. Yes. 19 Q. And do you see that that states, 20 "Admits the allegations contained in 21 paragraph 26011 22 A. Yes. 23 Q. And do you understand that sentence 24 to refer to paragraph 260 in the answer and 25 counterclaims of the defendants that we have just VERITEXT REPORTING COMPANY Olio /Po /OW ••••• 14 (Pages 50 - 53) EFTA01124886 Page 54 1 Gruss - CONFIDENTIAL 2 reviewed? 3 A. Yes. 4 Q. So do you see that on your behalf, 5 your lawyers admitted that all of the items in 6 paragraph 360 [sic] were part of your 7 responsibility? 8 A. Yes. 9 MR. BRECHER: You mean 260. 10 THE WITNESS: I see it shows that. 11 MR. LEVINE: 260, not 360, Eileen. 12 THE WITNESS: 260. 13 BY MR. LEVINE: 14 Q. Now, who were the principal people 15 that reported to you starting in 2002? 16 A. Matt Husar and Bob Racusin. 17 (Discussion off the record.) 18 Q. What was Matt Husar's area of 19 responsibility? 20 A. He was on the finance side, so he 21 was an accountant. 22 Q. What did his job involve on the 23 finance side? 24 A. Re would reconcile the P&L. He 25 would calculate the month end NAV. And other Page 56 1 Gruss-CONFIDENTIAL 2 A. Yes. 3 Q. Did they understand that they 4 reported to you? 5 MR. BRECHER: Objection. 6 A. I don't know. 7 Q. Did you make it clear to them that 8 they reported to you? 9 A. I don't recall. 10 Q. Did they report to you? 11 A. Yes. 12 Q. No question about that? 13 A. No question. 14 Q. Did there come a time when you hired 15 anybody of similar senior position after you 16 joined? 17 A. Yes. 18 Q. Who did you hire? 19 A. Scores of people. 20 Q. Give me the principal people. 21 A. Oh -- 22 Q. Identify the principal people that 23 you hired. 24 A. Sylvia Wu. 25 Q. When did you hire Miss Wu? Page 55 1 Gruss - CONFIDENTIAL 2 financial accounting responsibilities. 3 Q. And what entities was he reconciling 4 the P&L and NAV for? 5 A. At least Highbridge/Zwim Special 6 Opportunity Fund, the same Ltd., the Ifighbridge 7 managed account 8 Q. What does "NAV" stand for? 9 A. Net asset value. 10 Q. What does that mean? 11 A. It's calculating the investment plus 12 or minus any returns on the investments. By 13 "investment, I mean investor investment in the 14 fund. 15 Q. What did Mr. Racusin's job involve? 16 A. He was on the operations side. 17 Q. What did that job involve? 18 A. He would clear trades. He would 19 book trades into the system. He would set up not 20 only trades, but also private originated assets. 21 Direct lending. 22 Q. Did you hire Messrs Husar and 23 Racusin? 24 A. No. 25 Q. Were they there when you got there? Page 57 1 Gruss - CONFIDENTIAL 2 A. I don't recall specific dates. 3 Q. Do you know approximately when? 4 A. No later than mid to end 2003. 5 Q. What was Miss Wu's area of 6 responsibility? 7 A. She replaced Matt Husar. 8 Q. What was her area of responsibility? 9 A. Oh — 10 Q. Exactly what Mr. Husar's was? 11 A. Yes, exactly. 12 Q. She was responsible for the finance 13 side, which included all of the funds? 14 A. Correct. 15 Q. And who else did you hire? 16 A. I hired — you want me to rattle off 17 names? 18 Q. Did you hire a woman by the name of 19 Li Anne Law? 20 A. Yes. 21 Q. L-I, A-N-N-E, L-A-W. 22 A. Yes. 23 Q. What was her area of 24 responsibilities? 25 A. She was also responsible for the 15 (Pages 54 - 57) VERITEXT REPORTING COMPANY EFTA01124887 Page 58 Gruss - CONFIDENTIAL 2 accounting and finance of the funds and the 3 management company. 4 Q. Did one of the people in your -- 5 withdrawn. 6 Did you separate the jobs as CFO of 7 people -- of people who were in charge of the 8 onshore fund from thosc responsible for the 9 offshore fund? 10 A. No. That would have been -- if that 11 occurred, that would not have been me. That 12 would have been either Sylvia Wu or the 13 controller. 14 Q. Did that happen? 15 A. I don't know. 16 Q. How was Miss Law's job different 17 from Miss Wu's job? 18 A. Miss Law came in side by side with 19 Sylvia. So she was employed by Sylvia. 20 Q. So you didn't pay her salary? 21 A. No. Of course, not. 22 Q. You don't mean — 23 A. Oh, no, I don't mean personally 24 employed by. 25 Q. Did Miss Wu hire Miss Law or did you Page60 1 Gruss - CONFIDENTIAL 2 management company, did she report to you? 3 A. She reported to Sylvia Wu. 4 Q. Who were the other people that 5 reported directly to you in '03 and '04? 6 A. Bob Racusin. I don't recall if 7 there were any. 8 Q. During the period from '02 to '06, 9 when you were employed as CFO, who were all of 10 the people reporting to you? 11 A. Directly to me at — Sylvia was at 12 one time. Bob Racusin at one time. Jim Wilk at 13 one time. Jason Pecora at one time. And then 14 Li Anne Law at one time once she took on the 15 responsibility of controller. 16 Q. What was Mr. Wilk's 17 responsibilities? 18 A. He was the head of operations. 19 Q. What was Mr. Pecora's 20 responsibility? 21 A. He was the treasurer. 22 Q. What was the job of treasurer? 23 A. He was responsible for financing of 24 the firm's assets. His direct responsibility was 25 financing of the firm's assets. Page 59 1 Gruss - CONFIDENTIAL 2 hire Miss Law? 3 A. I don't recall. 4 Q. Go back to my original question. 5 How was Miss Law's job different from Miss Wits 6 job? 7 A. It wasn't that large of a 8 distinction, to my knowledge. 9 Q. Was one of them responsible for 10 financial controls of one area of the business 11 and the other responsible for the other -- for 12 another? 13 A. No, I don't think so. 14 Q. Who else was — were they both CEO 15 right below you? 16 A. At times. You have to lay out time 17 frame. 18 Q. When Miss Wu came on, at least in 19 '03, was she reporting directly to you? 20 A. Yes. 21 Q. Was there anyone between her and you 22 in terms of hierarchy of the department? 23 A. No. 24 Q. And was there anybody — withdrawn. 25 When Miss Law came to work for the 1 2 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 61 Q. A. Q. What was -- what did Li Anne Law's responsibilities become? A. She was the controller. Responsible for the same responsibilities as Sylvia Wu and Man Husar before her. Q. So Li Anne Law was the third controller at the management company during the time that you were there? A. Essentially, yes. Not — to be clear, not just the management company. Q. What else? A. The funds and the managed accounts. MR. LEVINE: Mark this as Gruss 5. (Gruss Exhibit 5, Bates Nos. DBZ 0000173 through 206, Limited Partnership Agreement, marked for identification.) Q. Before I go to Gruss 5, was there also a person reporting to you by the name of O'Hara? A. Directly to me, no. Q. Who was O'Hara? A. Michelle O'Hara, she was someone Gruss - CONFIDENTIAL He reported to you as treasurer? Yes. 16 (Pages 58 - 61) VERITEXT REPORTING COMPANY EFTA01124888 Page 62 1 Gress - CONFIDENTIAL 2 brought in upon Sylvia's advice -- Sylvia Wu' 3 advice to be in charge of accounts payable. Her 4 job later morphed into or grew into she was 5 responsible for the management company, solely 6 the management company, not the hedge funds or 7 the managed accounts. 8 Q. Just explain that distinction. 9 A. The management company wasn't the 10 hedge fund. So the hedge fund dealt with the 11 investments and the — to be as simple as 12 possible, the hedge funds managed the 13 investments. The management company managed the 14 management company. 15 Q. So it was Michelle O'Hara's job to 16 maintain the books reporting to the CFO of the 17 management company? 18 A. It was — it was her responsibility 19 to maintain the books reporting to the controller 20 who reported to myself. 21 Q. And if you were — 22 A. Michelle O'Hara did not have a 23 direct line into myself. 24 Q. Do I take it that it was very clear 25 distinction that her job only involved the Page 64 1 Gruss - CONFIDENTIAL 2 A. Yes. 3 Q. What is it? 4 A. The limited partnership agreement of 5 D.B. Zwim & Co., L.P. 6 Q. When was the first time 7 withdrawn. 8 Have you seen that document before? 9 A. I believe so, yes. 10 Q. When was the first time you ever saw 11 that document? 12 A. I don't know. 13 Q. Was this the limited partnership 14 agreement for the management company? 15 A. Yes. 16 Q. Did you become a partner of the 17 management company? 18 A. Yes. 19 Q. When did you become a partner of the 20 management company? 21 A. Sometime in 2006 effective 22 January 1, 2006. 23 Q. How did you learn that you would 24 become a partner of the management company? 25 A. Dan Zwim and Chris Suan told me. Page 63 I °MSS - CONFIDENTIAL 2 management company and not the hedge funds that 3 you identified? 4 A. Correct, yes. 5 Q. So that if— withdrawn. 6 Did you understand when you were 7 dealing with Michelle O'Hara that you were 8 dealing with the management company and not the 9 hedge funds? 10 A. Yes. 11 Q. Who had the Michelle O'Hara job for 12 the hedge funds? 13 A. Either Sylvia — at different times, 14 Sylvia Wu, Li Anne Law. But to be clear, they 15 also had responsibility for the management 16 company. 17 Q. But as part of that responsibility, 18 they were supervising Michelle O'Hara? 19 A. Exactly. 20 Q. Whose sole and exclusive 21 responsibility was the management company? 22 A. Exactly. 23 Q. Please take a look at Gnus 5. 24 (Witness peruses the exhibit.) 25 Q Can you identify it? Page 65 Gnus - CONFIDENTIAL 2 Q. Who is Chris Suan? 3 A. Chris Suan is one of the —one of 4 the original partners of the management company. Q. What was Chris Suan's job when you 6 were there? 7 A. He was a partner and he was also 8 what I would consider a deal guy. 9 Q. Were you -- withdrawn. 10 Do you recall when you learned that 11 you were becoming a partner of the management 12 company? 13 A. No, I don't recall exactly. 14 Q. Was that a matter of celebration, 15 when you became a partner of the management 16 company? 17 A. Yes. It wasn't a bad thing. 18 Q. Did you expect to be made a partner 19 of the management company before you learned you 20 were becoming a partner? 21 A. I felt that rd earned it. 22 Q. Did you tell Dan Zwim that you had 23 earned it before a decision was announced to you? 24 A. I don't recall. 25 Q. Did you lobby Dan Zwim to become a 5 17 (Pages 62 - 65) 'VERITEXT REPORTING COMPANY EFTA01124889 Page 66 1 Grass - CONFIDENTIAL 2 partner of the management company -- 3 A. Not really. 4 Q. — at all? 5 A. Not really. 6 Q. Did you ever say to Dan Zwim, Pm 7 entitled to be a member or a partner of the 8 management company? 9 A. Not like that 10 Q. How did you say it in your words? 11 A. No, IM saying I don't — I don't 12 recall whether or not I did. 13 Q. Did you ever tell Chris Suan that 14 you deserved to be a partner of the management 15 company? 16 A. When Chris Suan brought it up to me, 17 yes. 18 Q. When he brought it up to you, had a 19 decision been made that you were becoming a 20 partner or was it before you learned that a 21 decision had been made? 22 A. No, it was before a final decision 23 had been made. 24 Q. What was the conversation with Chris 25 Suan about that? Page 68 1 Gruss - CONFIDENTIAL 2 believe that. You don't make someone a partner 3 if you believe that they're not competent. 4 Q. It would be — withdrawn. 5 Competency isn't the standard for 6 making partner iSn't that right? 7 MR. BRECHER: Objection. 8 A. I don't know what the standard would 9 be. 10 Q. You understand what the word 11 "competent" means, don't you? 12 A. Sure. 13 Q. So am I comet that you understood 14 that you had to be more than just competent to be 15 made a partner of the management company? 16 A. Oh, yes, yes. 17 Q. Yes, you understood that? 18 A. Yes. 19 Q. Yes, you understood that you had to 20 be doing -- performing your job at the highest 21 level in order to be made a partner? 22 A. No, not necessarily. 23 Q. What did you understand — were 24 there any other criteria for the CFO to be made a 2S partner of the management company other than they Page 67 1 Gruss - CONFIDENTIAL 2 A. Oh, I don't recall. 3 Q. Generally what, do you recall being 4 said? 5 A. Him telling me that Dan and himself 6 and Glean Dubin were contemplating making me a 7 partner. 8 Q. What did you say? 9 A. "Great." 10 Q. Did you understand at that point in 11 time, that Dan Zwim, Chris Suan and Glenn Dubin 12 had confidence in your ability? 13 A. Yes. 14 Q. Did you understand at that time that 15 all three of them trusted and had faith in you? 16 A. I would hope so. 17 Q. Did you believe that to be the fact? 18 A. Yes. 19 Q. Did you understand at that time that 20 there was any reason in the world why any of the 21 three of them would think or know that you 22 weren't doing your job correctly? 23 MR BRECHER: Objection. 24 Q. Answer. 25 A. Oh, no, there's no reason for me to Page 69 1 Oruss - CONFIDENTIAL 2 were doing a superb job as CFO? 3 A. Adding value. 4 Q. CFO was adding value by virtue of S doing the job well; isn't that right? 6 A. Yes, I would think so. 7 Q. And did you have any reason to 8 believe that Dan or Glenn Dubin or Chris Suan 9 knew that you were — that you were not doing the 10 job well? 11 A. h was doing the job well. 12 MR. LEVINE: Let's mark this 13 Gruss 6. 14 (Gross Exhibit 6, Bates Nos. PG00388 15 through 401, Supplementary Agreement, 16 marked for identification.) 17 Q. Mr. Gross, apart from doing the job 18 well up until the day you made partner, was there 19 ever a circumstance or event where Mr. Zwirn or 20 Mr. Dubin or Mr. Suan gave you criticisms for 21 doing the job poorly? 22 A. I don't believe so. 23 Q. Looking at what I've marked as 24 Gruss 6, can you identify it? 25 (Witness peruses the exhibit) 18 (Pages 66 - 69) VERITEXT REPORTING COMPANY EFTA01124890 Page 72. 1 Gruss - CONFIDENTIAL 2 A. Yes. 3 Q. What is it? 4 A This is my partnership agreement 5 Q. And did you understand — 6 A. My partnership agreement in the 7 management company, not an L.P. in the fund. 8 Q. Did you understand that this 9 agreement was to be taken together with the 10 limited partnership agreement, Grins 5? 11 A i believe it is referenced. 12 MR. LEVINE: Mark this Gruss 7. 13 (Grins Exhibit 7, Bates Nos. PO0402 14 through 420, Confidentiality, Noncompete 15 and Nonsolicit Agreement, marked for 16 identification.) 17 BY MR. LEVINE: 18 Q. Can you identify Gruss 7? 19 (Witness penises the exhibit) 20 A. Yes. 21 Q. What is Grins 7? 22 A. This is the partnership confi- — a 23 noncompete, nonsolicit. 24 Q. Did you understand that this 25 agreement, Gruss 7, also was part of the 1 Gruss - CONFIDENTIAL 2 Q. Take a look for Gruss 7, at 3 paragraph — page 16. 4 (Witness penises the exhibit.) 5 Q. Do you see that Schedule 1? 6 A. Yes. 7 Q. Did you understand that schedule 8 applied to Gruss 7? 9 A. I don't — I don't recall. 10 Q. Did you understand that the schedule 11 attached to Gruss 7 was incorporated into 12 Gruss 7? 13 A. I don't recall. 14 Q. Is there any -- do you see that 15 Schedule 1 includes definition of terms that are 16 used in the agreements? 17 A. I see that now, yes. 18 Q. Do you see, under the bottom of 19 page 16, the words "forfeiting event"? 20 A. Yes. 21 Q. Did you understand what forfeiting 22 event meant? 23 A. 'don't recall if I read it. 24 Q. Do you recall what forfeiting event 25 meant? Page 71 71 1 Gruss - CONFIDENTIAL 2 agreements that applied to your partnership in 3 the management company? 4 A. Yes, I believe I did. 5 Q. Did you understand that the limited 6 partnership agreement, Gruss 5, together with the 7 supplementary agreement, Gruss 6, together with 8 the partner confidentiality noncompcte and 9 nonsolicit agreement, Gruss 7, arc all together 10 the agreements that applied to you when you II became a partner? 12 A. I believe that was it. 13 Q Did you have — did you review these 14 agreements when you became a partner? 15 A Yes, generally I did. 16 Q. Did you hire any lawyer to look at 17 them for you? 18 A. I did not 19 Q b there any part of the agreements 20 that you did not understand when you became a 21 partner? 22 A. I don't — I don't recall. 23 Q. You understood that these applied to 24 you? 25 A. Yes. Page 73 1 Gruss - CONFIDENTIAL 2 MR. BRECHER: At what time? 3 Objection. 4 Q. While you became a partner. 5 A. I don't recall. 6 Q. Did you understand -- if you go back 7 to Gruss 5, page 21 — 8 A. Yes. 9 Q. -- Fm sony, page 20. 10 A. Yes. 11 Q. Do you understand Section 6.01 of 12 the partnership agreement provided for the 13 withdrawal or termination of a partner? 14 A. Yes. 15 Q. Did you understand under 16 Section 6.01(c), that there were such things 17 called forfeiting events? 18 A. I don't know. 19 Q. Well, did you understand when you 20 became a partner that actually you could be 21 terminated from being a partner? 22 A. Yes. 23 Q. Did you understand in effect that 24 you could be fired? 25 A. Yes. 19 (Pages 70 - 73) VERITEXT REPORTING COMPANY EFTA01124891 Page74 1 Gnus - CONFIDENTIAL 2 Q. And did you understand that you 3 could be fired if you willfully failed to do your 4 job? 5 A. I don't recall the legal definition 6 of -- 7 Q. But you understood that if you — if 8 you consciously didn't do your job well, you 9 could be fired? 10 MR. BRECHER Objection. 11 A. I do not recall whether or not I 12 knew that. 13 Q. Did you understand that you could be 14 rued if you didn't do your job well? 15 A. Yes. 16 Q. What did you understand it would 17 take? 18 A. I didn't — I didn't think about it. 19 I was doing my job well. 20 Q. Did You understand that the 21 agreement provided the terms or the circumstances 22 under which you could be terminated? 23 A. Yes. That's standard language in 24 employment or partnership agreement 25 Q. Did you understand that this Page 76 1 Grass - CONFIDENTIAL 2 partnership agreements before you became a 3 partner? 4 A. I don't know. 5 Q. You testified a few minutes ago that 6 this language was customary. 7 A. Yes. 8 Q. How did you know it was customary? 9 A. I believe I said employment 10 contracts. 11 Q. Did you understand that a standard 12 employment contract was different than a 13 partnership agreement? 14 A. Yes. 15 Q. And did you understand that 16 partnership agreement? provisions could be 17 different as to termination and withdrawal than a 18 standard employment agreement? 19 A. Yes. 20 Can I maybe clarify something? 21 Q. Sure. 22 A. At the time I was made partner, 23 there was another partner being made, Vasan 24 Kesavan. He negotiated this contract. Not mine, 25 the blanket partnership contract. Vasan is an Page 75 1 Gross - CONFIDENTIAL 2 partnership agreement included language that 3 would apply to the circumstances under which you 4 could be terminated? 5 A. Yes. 6 Q. Did you understand that — whether 7 you read them or didn't read them - that the 8 provisions of 6.01 applied to you when you became 9 a partner? 10 A. They applied to everyone that was a 11 partner. So yes. 12 Q. Did they apply to you? 13 A. Yes. 14 Q. And did you understand that a 15 forfeiting event as described in this agreement 16 applied to you? 17 A. I don't know. 18 Q. But there's no question in your mind 19 that it did apply to you; correct? 20 A. Correct. 21 Q. As you sit here, you just do not 22 recall at what level of understanding or 23 knowledge you bad in 2006 about that document? 24 A. Correct. 25 Q. Had you ever read or seen any other Page 77 1 Gruss - CONFIDENTIAL 2 M.B.A. and a lawyer. Rightly or wrongly, I 3 relied on his expertise. 4 Q. You do affirm under oath that the 5 partnership agreement applied to you from the day 6 that you became a partner? 7 A. Yes. 8 Q. What day was that? 9 A. I don't recall the date that it was 10 made official, but it was as of January 2006. 11 January 1st, 2006. Right? Yes. 12 Q. And do you understand, going to 13 Gruss 7, the confidentiality agreement -- 14 A. Got it. 15 Q. — page 16, that the definition of 16 forfeiting event was modified for purposes of the 17 partnership agreement as it applied to you? 18 A. No. 19 Q. Did you ever review the document to 20 know or understand that? 21 A. I don't recall. 22 Q. Am I correct that you don't dispute 23 that arm 7 applies to you? 24 A. I don't dispute that, yes. I don't 25 dispute that. VERITEXT REPORTING COMPANY Mb Alb " •••• • efley, 20 (Pages 74 - 77) EFTA01124892 Page 78 Gruss - CONFIDENTIAL 2 Q. Whatever the legal provisions are of 3 Gruss 7, including the schedule, it applies to 4 you? 5 A. Yes. 6 Q. Take a look at Gress 6, the 7 supplementary agreement. 8 A. Got it. 9 Q. Take a look at page 4. Do you 10 understand that the supplementary agreement, 11 Gruss 6, also has language modifying Section 6 of 12 the withdrawal and termination provisions? 13 (Witness peruses the exhibit.) 14 A. Just by way of it saying that on 15 here. 16 Q. It's your testimony that you don't 17 recall reading it at the time, but do you not 18 dispute that it applies to you? 19 A. Correct. 20 Q. And did you understand -- turn back 21 to pap — go back to Gruss 5, which is the 22 limited partnership agreement, and turn to page 3 23 and 4 and 5. Does this set forth — 24 A. Hold on. Okay. 25 Q. Does this set out in Section 2.02 Page 80 1 • Gruss - CONFIDENTIAL 2 whom you reported to was Dan? 3 A. I'm sorry, say that again. 4 Q. Did you understand basically that 5 the general partner for purposes of the person to 6 whom you reported to was Dan? 7 A. Yes. 8 Q. Did you understand that basically, 9 the person or the entity through a person who was 10 the general partner with the authority under 11 Section 2.02 of the partnership agreement was Dan 12 Zwim? 13 A. Yes. 14 Q. Referring to page 5, little — (p), 15 did you understand that Dan had the authority to 16 determine when a Forfeiting Event — capped F, 17 capped E — as &Scribed in Section 6.01(c)) has 18 occurred with respect to a partner? 19 A. No. 20 Q. Who did you understand, in 21 January — or as of January 2006 had the 22 authority to determine when a forfeiting event 23 took place? 24 A. I don't believe I ever thought about 25 it. Page 79 1 Gruss - CONFIDENTIAL 2 the authority of the general partner? 3 (Witness peruses the exhibit.) 4 A. Yes, as defined here. 5 Q. Who else did you understand -- as of 6 January 2006, who the — withdrawn. 7 Who did you understand, as of 8 January 2006, was the general partner of the 9 partnership represented by Gruss 5? 10 (Witness penises the exhibit.) 11 A. I believe at the time, I would have 12 thought it was Dan. 13 Q. And was there any confusion or doubt 14 in your mind about that? 15 A. Yes, clearly. Only because 1 said 16 "I believe it was Dan." 17 Q. Who else would it have been? 18 A. The distinction would be an entity 19 as opposed to personally, some entity. 20 Q. The entity would have been an entity 21 owned or controlled by Dan? 22 A. I would have thought so, but I don't 23 want to guess. 24 Q. Did you understand basically that 25 the general partner for purposes of the person to Page 81 1 Gruss - CONFIDENTIAL 2 Q. Ts there any doubt in your mind as 3 you sit here today that Section 2.02 (p) 4 authority applied to you as a partner in 5 D.B Zwim & Co. L.P.? 6 A. If this document is the executed 7 version, I don't dispute that at all. 8 Q. What do you mean "executed version"? 9 A. I just mean if this is the official 10 version of the L.P. agreement, I don't dispute it 11 one bit. 12 Q. Did you ever sip the agreement? 13 A. !don't recall if it was ever 14 signed. It was dispute about if it was signed — 15 I don't recall. 16 Q. Is there any doubt in your mind that 17 you operated under it? 18 A. No doubt. 19 Q. Is there any doubt in your mind that 20 it applied to you? 21 A. No doubt. 22 Q. Is them any doubt in your mind that 23 it applied to the general partner in dealing with 24 you? 25 A. I don't believe there's any doubt. 21 (Pages 78 - 81) VERTU-XI REPORTING COMPANY EFTA01124893 Page 82 1 Gruss - CONFIDENTIAL 2 Q. Dan Zwim was obligated to follow 3 this agreement as much as you were; isn't that 4 right? 5 A. Exactly. 6 Q. He had whatever authority and 7 limitations were provided in the agreement just 8 like you did; right? 9 A. Exactly. 10 Q. So if this agreement says that the 11 general partner had the authority to determine 12 when a forfeiting event as described in Section 13 6.01(c) has occurred with respect to a partner, 14 then you don't dispute that? 15 A. Correct. 16 MR. LEVINE: Let's take a break. 17 (Recess from the record.) 18 BY MR. LEVINE: 19 Q. Mr. Gruss, please go to Exhibit I. 20 A. Got it. 21 Q. Take a look at page 8 and 9, and 22 just please review for yourself paragraphs 30 to 23 33. 24 (Witness peruses the exhibit.) 25 A. Okay. Page 84 1 Gruss - CONFIDENTIAL 2 A. Sometime in 2006. 3 Q. Can you give me a month? 4 A. I would be guessing. 5 Q. Is it September of 2006 or earlier? 6 A. No, earlier. Earlier. 7 Q. Is it sometime over the summer in 8 2006? 9 A. rd be guessing, but I think it was 10 more the spring, the late spring. 11 MR. BRECHER: Don't guess. 12 THE WITNESS: Yes. 13 Q. How did you learn that Shulte 14 Roth -- withdrawn. 15 Who is Shulte Roth? 16 A. The law firm brought in to look at 17 two issues. 18 Q. Was Shulte Roth the law firm for the 19 management company and the entities? 20 A. Yes. 21 Q. So Shulte Roth was outside counsel 22 to the management company and the funds? 23 A. Correct. 24 Q. And am I correct that you knew that 25 sometime before this so-called investigation Page 83 1 Gruss - CONFIDENTIAL 2 Q. You've read paragraphs 30 to 33? 3 A. Correct. 4 Q. Now, you allege in paragraph 32 the S following sentence: "Once Zwim decided that 6 Gruss would be blamed for the two issues, Gruss 7 was forced to leave the company." 8 Do you see that? 9 A. Yes. 10 Q. What were the circumstances by which II you were, quote, forced to leave this company -- 12 Withdrawn. 13 How did you learn that you were 14 "forced to leave the company," close quote? 15 A. Ultimately Lawrence Cutler, the 16 chief compliance officer, told me. 17 Q. Where did that conversation take 18 place? 19 A. The final conversation? 20 Q. The first conversation. 21 A. Oh, the first. I don't recall. It 22 was sometime after the Shulte Roth investigation 23 started. 24 Q. When did you learn the Shulte Roth 25 investigation started? Page 85 1 Gruss - CONFIDENTIAL 2 started? 3 A. Yes. 4 Q. Had you dealt with lawyers at Shulte 5 Roth before the spring of 2006 in your job? 6 A. Yes. 7 Q. What partners at Shulte Roth, prior 8 to the spring of 2006, had you dealt with? 9 A. Dan Oshinsky, Phillipe Benedict and 10 others I can't recall. II Q. Were they capable lawyers as far as 12 you understood? 13 MR. BRECHER: Objection. 14 A. I thought so. 15 Q. In fact, isn't Shulte Roth known as 16 one of the go-to firms for hedge funds at that 17 time? 18 MIL BRECHER: Objection. 19 A. I'm sure as well as others, so 20 I don't — 21 Q. Did you know that? 22 23 24 25 Q. A. Yea, yes. Q. A. You knew that they were? Yeah, they're very good. You knew that Dan Zwim and the 22 (Pages 82 - 85) VERITEXT REPORTING COMPANY EFTA01124894 Page 86 1 Grass - CONFIDENTIAL 2 other partners had hired one of the best law 3 firms in town to represent them for these 4 entities; correct? 5 MR. BRECHER: Objection. 6 A. For the fund and management company 7 work, yes. 8 Q. And how — in your dealings with the 9 partners that you just identified, had you found 10 them to be capable — II A. Yes. 12 Q. — and straight shooters and honest? 13 MR. BRECHER: Objection. 14 A. Yes. 15 Q. And what did you learn in mid-2006 16 about what Shulte Roth was investigating? 17 A. The early collection of management 18 fees and the use of investor funds to purchase 19 Dan's airplane and other expenses associated with 20 Dan's airplane. 21 Q. How did you learn that Shulte Roth 22 bad been asked to do those two things? 23 A. I don't recall who told me 24 specifically. 25 Q. What did you understand Shulte Roth 1 Grass CONFIDENTIAL 2 don't know if he was the first person that told 3 me. He was definitely one of the first people 4 that told me. 5 Q. Is there anybody else that you can 6 recall as you sit here today who you discussed 7 the Shulte Roth investigation with in mid-2006? A. Originally? 9 Q. Yes. 10 A. Possibly David Proshan. 11 Q. Who is David Proshan in mid-2006? 12 A. The general counsel of the firm. 13 Q. Do you recall your conversation with 14 Lawrence Cutler or David Proshan about the Shulte 15 Roth investigation when you first learned about 16 it? 17 18 19 20 21 22 23 24 25 Page 88 MR. BRECIIER: Objection. A. I don't recall the specific conversations or any conversations with David Proshan. Q. Did Lawrence Cutler — withdrawn. How many conversations with Lawrence Cutler did you have about this subject before the circumstances in paragraph 32 came about? A. Several. Page 87 1 Gniss - CONFIDENTIAL 2 was doing in investigating those two things? 3 A. I believe just looking into the 4 circumstances. 5 Q. What did you understand would be the 6 consequences of what Shulte Roth learned in doing 7 the investigation of those two circumstances? 8 A. I had no idea. I was kept out of 9 the -- the decisions to do anything. 10 Q. It's your testimony that you were 11 not part of management that asked Shulte Roth to 12 investigate these two circumstances; is that 13 correct? 14 A. That's correct. 15 Q. What I'm asking you is what did you 16 team about what they were asked to do? 17 A. I thought I just answered this. 18 They — they were asked to look into those two 19 issues that I previously mentioned. 20 Q. Did you learn that from Lawrence 21 cutler? 22 A. Yes. 23 Q. Is Lawrence Cutler the one who told 24 you about this in the first instance? 2.5 A. No, that's what I was saying. I Page 89 1 Grass - CONFIDENTIAL How many is "several"? More than three to five, less than 2 3 4 5 Q. 6 place? 7 A. My office, possibly the hallways, 8 definitely the gym. 9 Q. Was anyone else present for any of 10 those conversations? I1 A. 'don't — I don't recall. 12 Q. What's the gist of what you remember 13 from your conversation with Lawrence Cutler at 14 that time? 15 A. He kept saying that there was — 16 there was nothing to worry about, and if there 17 was ever a time, then he would tell me. 18 Q. What was the "worry about" applying 19 to? 20 A. The early collection of the 21 management fee the two issues that I had 22 mentioned earlier. 23 Q. What do you mean "worry about"? 24 A. That — that they would ultimately 25 blame it on me. A. 20. Where did those conversations take 23 (Pages 86 - 89) • VERITEXT REPORTING COMPANY EFTA01124895 Pate 90 1 Gruss - CONFIDENTIAL 2 Q. That's what you were worried about? 3 A. No, that's what he said: If that 4 occurred, then I should worry and he would tell 5 me. 6 Q. Were you worried -- when you learned 7 of the circumstances of the two matters under 8 investigation, did you have concern for the fact 9 of whether you had done your job well? 10 k No. 11 Q. Did you know anything -- when you 12 heard the two things under investigation by 13 Shulte Roth, what was your reaction? 14 A. I didn't really pay it much mind. IS Q. Did you remember that you had 16 knowledge of both of these circumstances? 17 MR. SPECIES.: Objection. 18 A. No, I don't remember what my 19 knowledge was. 20 Q. Did you ask Lawrence Cutler if you 21 should be worrying, during those conversations? 22 A. I don't -- I don't recall. 23 Q. Had you at that time already become 24 a partner in the firm? 25 A. Yes. Page 92 On= - CONFIDENTIAL 2 Q. Did there come a time in mid-2006 3 when Lawrence Cutler told you, in words or 4 substance, that you should worry? 5 A. Yes. 6 Q. When did that take place? 7 A. Sometime in September. 8 Q. Where did that conversation take 9 place? 10 A. I believe the final conversations 11 took place in the gym. 12 Q. How many final-type conversations 13 were there? 14 A. Not many. 15 Q. More than one? 16 A. I don't recall. 17 Q. So is it your testimony that 18 sometime in September 2006, you understood that 19 for purposes of that Shulte Roth investigation, 20 you had something to worry about? 21 A. No. He told me that 1 have 22 something to worry about, and that was that I was 23 going to be let go. 24 Q. Did he say anything else about that? 25 A. He just said — he went on about how Page 91 1 Oruss - CONFIDENTIAL 2 Q. Were there partnership meetings in 3 early 2006? 4 A. Yes. 5 Q. Did you learn in one of those early 6 partnership meetings that Shulte Roth was 7 investigating these two circumstances? 8 A. I don't believe so. 9 Q. Did there come a time when you had a 10 conversation with Lawrence Cutler — withdrawn. 11 Did you tell Lawrence Cutler that 12 you were happy or you were willing to be 13 interviewed about those two circumstances? 14 A. Yes, I'm sure I did. 15 Q. Do you have a recollection of doing 16 so? 17 A. No. 18 Q. Did you understand that the two 19 matters under investigation related to work done 20 under the CFO's area of responsibility? 21 A. Yes. 22 Q. Did you pick up the phone and call 23 any of the partners at Shulte Roth to offer to be 24 interviewed about either of the circumstances? 25 A. I don't believe so. Page 93 Gnus - CONFIDENTIAL 2 ridiculous it was, the whole airplane and -- and 3 I was so against the airplane and ... 4 Q. What do you recall Lawrence Cutler 5 said to you and you said to him in the 6 conversation at the gym in September 2006? 7 A. I don't -- I don't recall exactly. 8 Q. What's the best that you recall? 9 A. That I was going to be — that -- 10 I'm sorry. That it was too late. II Q. What was "too late"? 12 A. For me to -- for me to go in to him 13 and to Dan and just say, you know, what the — 14 pardon — what the heck is going on. 15 Q. In one of the conversations 16 immediately before that, had you asked for the 17 opportunity to do that? 18 A. No. 19 Q. Why then would he be saying it's too 20 late for you? 21 Mt BRECHER: Objection. 22 A. I don't know. 23 Q. Did you understand before that 24 conversation in the gym that a decision had been 25 made that you were responsible for the 24 (Pages 90 - 93) VERITEXT REPORTING COMPANY EFTA01124896 Page 94 1 Grass - CONFIDENTIAL 2 circumstances that led to these two events? 3 A. No, I don't believe so. 4 Q. Did you learn at any time before 5 from Mr. Cutler himself that Shulte Roth was 6 taking the position that you were responsible for 7 those problems? 8 A. I don't -- I don't remember. 9 Q. Did you understand that either one 10 of or both of those circumstances would or could 11 be -- withdrawn. 12 Did you understand, when you first 13 learned of what Shulte Roth was investigating, 14 that the early collection of management fees 15 would be a violation of the agreement between the 16 funds and the management company? 17 A. Yes. IS Q. Did you understand — when you first 19 learned of what Shulte Roth was investigating, 20 that the use of investor hinds to purchase an 21 airplane for Dan, would also be a violation of 22 the agreement between the funds and the 23 management company? 24 A. Ycs. 25 Q. So did there come a time when you Page 96 1 Grass - CONFIDENTIAL 2 Q. Who did you talk to at Shulte Roth? 3 A. Gentleman named Harry Davis. And I 4 don't recall who else was in the room. 5 Q. Just lawyers? 6 A. I believe so. 7 Q. Did you understand that they were 8 conducting the investigation on behalf of the 9 entity? 10 A. Yes. 11 Q. And did you understand that you had 12 an obligation to tell the truth? 13 A. Yes. 14 Q. Did they show you documents during 15 that interview? 16 A. I don't believe so. 17 Q. After you were — withdrawn. 18 How many times were you interviewed 19 by Shulte Roth regarding the conversation with 20 Lawrence Cutler? 21 A. I want to say a couple. 22 Q. Then there comes a point in time 23 when you talk to Mr. Cutler about what Shulte 24 Roth was doing? 25 A. Yep. Page 95 Grass - CONFIDENTIAL 2 learned from Mr. Cutler that Shulte Roth was 3 holding you responsible for each of those two 4 circumstances? 5 A. Yes. 6 Q. And was that the last couple of 7 conversations before the conversation in the gym? 8 A. Yes. 9 Q. When you learned that Shulte Roth 10 was — when you learned from Mr. Cutler that 11 Shulte Roth was holding you responsible, did you 12 suggest or ask Mr. Cutler for an opportunity to 13 talk to Shulte Roth? 14 A. No, I don't believe I did. 15 Q. Did you ask Dan Zwim — after you 16 learned from Mr. Cutler, did you ask Dan Zwirn 17 for an opportunity to talk to Shulte Roth? 18 A. I don't believe I did. I did talk 19 to Shulte Roth. 20 Q. Did you talk to Shulte Roth before 21 the conversation with Lawrence Cutler? 22 A. Yes, yes. 23 Q. When did you talk to Shulte Roth? 24 A. Sometime throughout the time that 25 they were on the premises. Page 97 1 truss - CONFIDENTIAL 2 Q. And Mr. Cutler tells you, according 3 to your testimony, that Shulte Roth has decided 4 that you're responsible for these two 5 circumstances? 6 A. I don't recall if that's how he put 7 it. 8 Q. How did he put it? 9 A. Ile just — lilts I said, he just said 10 airs too late." 11 Q. But what would have been too late if 12 you had already talked to Shulte Roth? That's 13 what I don't get. 14 MR. BREMER: Objection. 15 A. You'd have to ask them. 16 Q. Well, Mr. Cutler is telling you, 17 according to your testimony, that it's too late 18 for you to go in and talk to Shulte Roth; is that 19 your testimony? 20 A. No. 21 Q. What did he tell you was too late? 22 A. It's too late. I'm already going to 23 be let go. 24 Q. Did you say -- was Mr. Cutler a 25 partner? 25 (Pages 94 - 97) VERITEXT REPORTING COMPANY EFTA01124897 Page 98 Gross - CONFIDENTIAL 2 A. No. 3 Q. Did you say there are certain rules 4 that apply to me as a partner? 5 A. No. 6 Q. Did you have any discussion with 7 Mr. Cutler about what he understood by "let go"? 8 A. No. 9 Q. Did you ask him when it was going to 10 happen? 11 A. No. 12 Q. Did you ask him how it was going to 13 happen? 14 A. No. 15 Q. Is there anything else about the 16 conversations with Mr. Cutler before the gym or 17 in the gym about what Shulte Roth learned and 18 about what was going to happen that you haven't 19 testified to? 20 A. I don't recall. 21 Q. Did Mr. Cutler give you any advice 22 as to what you should do? 23 A. I don't recall. 24 Q. Did you take advice from Mr. Cutler 25 as to what you should do? Page too Gruss - CONFIDENTIAL 2 A. Uh-huh. 3 Q. — is that correct? 4 A. Yes. 5 Q. Did Mr. Cutler give you any advice 6 as to what you should do when he was telling you 7 that? 8 A. I don't recall if he did. 9 Q. Is there anything that he possibly 10 told you to do that you are relying on in this 11 case? 12 A. I don't remember. 13 Q. Well, read your complaint -- 14 A Yes. 15 Q. — paragraphs 30 to 33. Is there 16 anything in there that you're relying on that 17 Mr. Cutler recommended to you that you do in 18 connection with what he was telling you? 19 A. Let me read it. 20 (Witness peruses the exhibit) 21 A. What was the last question? 22 Q. Is there anything, in the complaint, 23 paragraphs 30 to 33, that you're relying on that 24 Mr. Cutler recommended to you that you do in 25 connection with what he was telling you? Page 99 Gruss - CONFIDENTIAL 2 A. I don't know. 3 Q. Did Mr. Cutler tell you that -- 4 before you were let go, that you should quit? 5 A. I don't recall. 6 Q. Did Mr. Cutler tell you that before 7 any steps were taken to fire you, that you should 8 do anything about it? 9 A. I don't recall the specifies. 10 Q. As you sit here today, do you recall 11 anything that Mr. Cutler told you by way of 12 advice to you about what you should do before you 13 were fired? 14 A. I don't recall. 15 Q. Is there anything that you're 16 relying on in this case that Mr. Cutler said to 17 you before you took actions based on what he told 18 you? 19 MR. BRECHER: Objection. 20 Q. Do you understand my question? 21 A. I don't actually. 22 Q. You testified in the last 23 conversation — the last couple of conversations 24 with Mr. Cutler, that Mr. Cutler told you that 25 you were going to be let go — Page 101 1 Grusa - CONFIDENTIAL 2 A. I don't recall. 3 MR. LEVINE: Lefs mark this 4 Gruss 8. 5 (Gruss Exhibit 8, Bates Not 790 6 through 791, E-mail Chain, marked for 7 identification.) 8 (Witness peruses the exhibit.) 9 BY MR. LEVINE: 10 Q. I'm showing you a copy — I'm II showing you Gross 8, which is e-mail exchange on 12 or about March 3, 2007. 13 A. Ult-huh. 14 Q. You see that? 15 A. Uh-huh. 16 Q. Who is David Brooks? 17 A. He's the general counsel at Fortress 18 Investments. 19 Q. And at the time, were you tenting to 20 Fortress Investments about working there? 21 A. At this time, yes. 22 Q. In March of '07? 23 A. Correct. 24 Q. Do you see an e-mail from you to 25 David Brooks on or about Saturday, March 3rd, 26 (Pages 98 -101) VERITEXT REPORTING COMPANY EFTA01124898 Page 102 1 Gruss - CONFIDENTIAL 2 which says, in part, "I resigned. I walked in to 3 him and said 'it's best for all if I resign'." 4 Do you see that? 5 A. Yep. 6 Q. Is that what happened between you 7 and Dan Zwim? 8 A. 'walked in to Dan Zwim and the 9 words were "separated," if I recall. 10 Q. What did you say to Dan Zwim? 11 A. I don't recall exactly what I said 12 to Dan Zwim. 13 Q. Did you say, among other words, as 14 you said here, "it's best for all if I resign"? 15 A. No. How would it be best for all? 16 Q. These are your words in this e-mail; 17 correct? You said in this e-mail, "I walked in 18 to him and said it's best for all if I 19 resive."; correct? 20 A. Okay. 21 Q. And is that what you told Mr. Broolca 22 in March of '07? 23 A. That's what the e-mail says. 24 Q. And is it your testimony that that's 25 not what you said to Mr. Zwim? 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 Page 104 A. Q. right? A. Yes. Q. Without disclosing any of the conversations with your lawyer, you've also spent some time talking to your lawyer about that; correct? A. Yes. Q. And the complaint says what it says about being, quote, forced to leave the company close quote; right? A. (Witness nods head in the affirmative.) Q. Am I correct that there's nothing that Mr. Cutler said — withdrawn. Am I correct that Mr. Cutler never recommended to you that you resign? A. I don't recall what Mr. Cutler said. Q. Is there anything that Mr. Cutler told you you should do that led you to do what you did with Mr. Zwim? A. I don't know. Q. As you sit here today, can you think Gruss - CONFIDENTIAL Yes. Thought about it a fair amount•, Page 103 1 Gruss - CONFIDENTIAL 2 A. Correct. 3 Q. Did you ask Mr. Zwim if you should 4 resign? 5 A. No. 6 Q. Or did you tell Mr. Zwim you would 7 resign? 8 A. I did neither. 9 Q. Did you get any advice from 10 Mr. Cutler about what you should tell or say to 11 Mr. Zwim? 12 A. I cloth believe so. 13 Q. Is it your testimony that whatever 14 you said and did with Zwim after the 15 conversation with Mr. Cutler was what you 16 decided, not based on anything that Mr. Cutler 17 told you to do? 18 A. No, I said I don't recalL 19 Q. Well, I mean, this is a center piece 20 of your case; right? 21 A. Yes. 22 Q. So I take it you thought a fair 23 amount about what those circumstances were at the 24 end of September, beginning of October 2006, 25 before that; right? Page 105 1 Gruss - CONFIDENTIAL 2 of anything? 3 A. I don't recall what went on. 4 Q. You do recall that Mr. Cutler told 5 you that Shulte Roth was holding you responsible 6 for these two circumstances; correct? 7 A. No, I don't recall if he said that 8 in the gym. 9 Q. Well, you testified that Mr. Cutler 10 told you that you would be let go as a result of 11 the Shulte Roth investigation; right? 12 A. Yes. 13 Q. So did you understand that to mean 14 that Shulte Roth had concluded you were 15 responsible for these two circumstances? 16 A. Yes. 17 Q. Now — 18 A. No disrespect. That wasn't your 19 question before that. 20 Q. I try not to ask the identical 21 question. 22 A. All right. 23 Q. Pm trying to get at the facts, 24 Mr. Gruss. 25 A. I understand. I understand. 27 (Pages 102 -105) VERITEXT REPORTING COMPANY EFTA01124899 Page 106 1 Gruss CONFIDENTIAL 2 Q. If you don't disrespect me, you'll 3 be the first person in a deposition that is 4 not for the record. 5 Now, tell me everything that you 6 remember of your conversation with Mr. Zwim 7 following the conversation with Mr. Cutler. 8 A. When I went in, he said, "This is 9 the hardest thing that I ever have to do." 10 Q. The first words out of his mouth? 11 A. 'don't know what the first words 12 out of his mouth were. 13 Q. Well, did you go in and say to him I 14 just had a conversation with Cutler and I IS understand that Shulte Roth is blaming me for 16 this? 17 A. I don't recall if l said that. IS Q. Did you say anything that let 19 Mr. Zwim know that you had had a conversation 20 with Mr. Cutler in which you learned what you had 21 learned? 22 A. I do not recall what the setup of 23 the conversation was. I just recall what the — 24 in my opinion, the important aspects of it were. 25 Q. So you're testifying here that there Page 108 1 Gross - CONFIDENTIAL 2 about the conversation. 3 A. Once I was in there, Dan said this 4 is extremely difficult, because, you know, not 5 only was I a partner, but I grew to be a friend 6 and — and it was difficult. And he said I'm — 7 Shulte Roth has put me in a box about the 8 decision that needs to be made, that I have to go 9 through with this, and it's the only way to 10 remain bullet proof and pearly white and ... 11 Q. What else did he say? Anything 12 else? 13 A. Yes, he said that he believes that 14 he owes me, I believe the number was 15 $2.6 million. I said I believe it's higher than 16 that. And he said something to the effect of 17 Lawrence Cutler will go through all the numbers 18 and get you, you know, whatever you're really 19 owed, or something like that. Something to the 20 effect of Lawrence is on your side or something. 21 Q. So you understand -- 22 A. There's no dispute he let me go. 23 Q. There's — do I tinder,- — what did 24 you say in your response? 25 A. Not a hell of a lot I kind of said Page 107 1 Gross - CONFIDENTIAL 2 are parts of that conversation that you don't 3 remember as you sit here today? 4 A. That's correct. 5 Q. And so you are not testifying to the 6 entire conversation because you don't remember 7 it? 8 A. Correct. 9 Q. And when you filed the complaint — 10 withdrawn. 11 And when the complaint was filed on 12 your behalf by your lawyers, you had no better 13 memory of this conversation than you're 14 testifying here today, is that right? 15 MR. BRECHER: Objection. 16 A. That's probably accurate. 17 Q. So by definition, Mr. Zwim is going 18 to have a different memory of that conversation 19 than you do; isn't that right? 20 MR. BRECHER: Objection. 21 A. I don't know what Mr. Zwim's memory 22 is. 23 24 A. Q. 25 But yours is incomplete? Yes. Tell us everything you remember Page 109 1 Gross - CONFIDENTIAL 2 !understand and that you have a lot to — Pm 3 paraphrasing — to protect here. I don't re- 4 I don't recall exactly what I said. 5 Q. Going back to this e-mail from 6 March 2007, did you say to him is it best if I 7 resign? 8 A. No. 9 Q. Did you say to him it is best for 10 all if I resign? 11 A. No, I don't believe I would have. 12 Q. Why did you write — what is the 13 gist, then, of what Dan said to you about, in 14 your words, no dispute he let me go? 15 A. Say again. I'm sorry. 16 Q. What is it that Dan Zwirn said to 17 you from which you understood, as you testified a 18 few minutes ago, quote, "there's no dispute he 19 let me go"? 20 A. He said that having me leave the 21 fum is one of the most difficult things he's 22 ever been through. 23 Q. Did you 24 A. There was no resignation. There was 25 no letter of resignation. 28 (Pages 106 - 109) VERITEXT REPORTING COMPANY EFTA01124900 Page 110 1 Gross - CONFIDENTIAL 2 Q. Were you telling Fortress something 3 that didn't happen when you said to him — when 4 you said to Mr. Brooks, "I walked in to him and 5 said it's best for all if I resign'."? 6 A. I don't recall what I was telling 7 Brooks. 8 Q. There's no question you told that to 9 Brooks; right? 10 A. In an e-mail, yes. II Q. There's no question that 12 withdrawn. 13 You were talking to Fortress about 14 going to work for Fortress; right? 15 A. Correct. 16 Q. Fortress was -- 17 A. Correct. 18 Q. — asking you through Mr. Brooks how 19 did it come about that you left Zwim? 20 A. Correct. 21 Q. Fortress was looking for information 22 or corroboration whether you were fired or 23 whether you simply resigned? 24 A. Correct. 25 Q. You told Fortress no, it's best for Page 112 1 Gruss - CONFIDENTIAL 2 paragraph 32, that you were, quote, forced -- 3 withdrawn. 4 When you wrote allege in 5 paragraph 32 that you were, quote, "forced to 6 leave the company," am I correct that you did not 7 mean to imply that you resigned before being 8 fired? 9 A. That's correct. 10 Q. Did you understand that if in fact 11 Mr. Zwim was terminating you, that the 12 partnership agreement, the supplementary 13 agreement and the confidentiality agreement 14 applied? 15 A. Say dist again, please. 16 Q. Did you understand that if in fact 17 Mr. Zwim was terminating you, that the 18 partnership agreement, Oruss Exhibit 5; the 19 supplementary agreement, Gruss Exhibit 6; and the 20 confidentiality agreement, Gruss Exhibit 7, would 21 apply? 22 A. Yes. 23 Q. Did you understand that your rights 24 to any — withdrawn. 25 Did you understand that whatever Page III 1 Gruss - CONFIDENTIAL 2 all if I resigned? 3 A. That's correct 4 Q. You told Fortress that you told 5 Zwim that you were resigning, not being fired? 6 A. I did not say that I was not being 7 fired. 8 Q. Well, you can't be fired and resign 9 at the same time; right? It's one or the other, 10 isn't it? 11 A. 'don't 'mow. 12 Q. Well, what did you say in words or 13 substance to Dan Zwim before you fire me, I am 14 going to resign? 15 A. I don't recall what — no. 16 Q. Did you intend to do that? 17 A. No. 18 Q. So am I correct, then, that Dan 19 Zwim told you that letting you go was the most 20 difficult dung that he had ever done? 21 A. Yes. 22 Q. So isn't it a fact that Dan Zwim 23 basically terminated you? 24 A. I believe that's the case, yes. 25 Q. So ifs not the fact, in Page 113 1 Gruss - CONFIDENTIAL 2 your rights are as a partner in the company, in 3 the partnership, upon termination, are set forth 4 in those agreements? 5 A. If it was a forfeiting event, yes. 6 Q. And do you understand that if Shulte 7 Roth concluded that you were responsible for the 8 two circumstances that you testified about, that 9 the general partner could conclude that you had 10 willfully failed to perform your duties? 11 MR. BRECHER: Objection. 12 A. I don't know what that means. 13 Q. Well, you understood that Shulte 14 Roth was investigating the early collection of 15 management fees and the use of investor funds to 16 purchase Dan's airplane; correct? 17 A. Correct. 18 Q. And you testified earlier that you 19 understood that if either of those circumstances 20 took place, that that would be a violation of die 21 agreements between the funds and the management 22 company, correct? 23 A. Correct. 24 Q. And you also testified that you 25 understood that the responsibility for the early 29 (Pages 110 -113) VERITEXT REPORTING COMPANY EFTA01124901 Page 114 1 . Grass - CONFIDENTIAL 2 collection of management fees and the use of 3 investor funds to purchase the airplane came 4 within the responsibility of the CFO; correct? 5 A. No, I don't believe I did. 6 Q. You did. 7 Isn't it a fact that the early 8 collection of management fees -- withdrawn. 9 Isn't it a fact that if there were 10 an early collection of management fees that I I violated the agreements between the funds and the 12 management company, that that was something 13 within the responsibility of the CFO? 14 MR. BRECHER: Objection. 15 A. It would have been in violation of 16 the documents. 17 Q. And wasn't adhering to the documents 18 as between — wasn't it assuring compliance and 19 financial relations between the funds and the 20 management committee part of your responsibility 21 as CFO? 22 A. To the best of my abilities. 23 Q. And so if the law firm concluded 24 that there was a violation of the agreements — 25 withdrawn. Page 116 1 Crust - CONFIDENTIAL 2 observe, chief administrative officer, partner in 3 the company, and/or member of DBZ, LLC, Gnus is 4 assigned and had the duty and responsibility to 5 supervise and control, among other things, the 6 financial affairs of the company and the managed 7 funds which the company managed. These duties 8 and responsibilities included, among other 9 things," and then go down a couple of lines, 10 "assuring that the financial relations between 11 the company and the managed funds were proper and 12 in accordance with the agreements and other 13 documents regulating those relations, assuring 14 that the financial relations between or among the 15 funds and managed accounts were proper and in 16 accordance with the agreements and other 17 documents relating to those relations," and then 18 there are other words. 19 Do you see that? 20 A. Yes 21 Q. And that's an allegation of the 22 defendants in response to your complaint; 23 correct? 24 A. Yes. 25 Q. And you testifiedthat those Page 11S 1 Gruss - CONFIDENTIAL 2 If the — if the law firm concluded 3 that there was a violation of the agreements 4 between the funds and the management company in 5 the early collection of management fees, it could 6 conclude that you have failed in your job as CFO; 7 isn't that correct? 8 MR. BRECHEFt: Objection. 9 A. No. 10 Q. Well, assuring compliance with the 11 agreements and the financial relations between 12 the management company and the funds was part of 13 your responsibility — ultimate responsibility as 14 CFO; isn't that right? 15 A. No, I thinlcyou just said 16 compliance. 17 Q. It's your testimony that -- take a 18 look at Gross 2. Referring to Gnus 3, Gross 3, 19 which is the answer and counterclaims — 20 A. Hold, hold, hold. 21 (Witness penises the exhibit) 22 A. Yes. 23 Q. Go to paragraph 260. 24 A. Got it. 25 Q. 260 reads, "As chief financial Page 117 Gross - CONFIDENTIAL 2 responsibilities were accurately described; 3 correct? 4 A. Yes. 5 Q. And you filed a pleading, Gros 4, 6 on page 12? 7 A. Of the seine -- 8 Q. Of the next document. 9 A. Which is 4? 10 Q. 5. 11 A. 5. 12 Q. It's entitled Plaintiffs Reply to 13 Defendants' Counterclaim. Its before there. 14 A. 4. I thought you said 5. 15 Q. Maybe I misspoke. 16 Please refer to the plaintiffs 17 reply to the defendants' counterclaim, Paragraph 18 No. 162 on page 12, in which your lawyers filed 19 for you a legal statement, quote, 'Admits the 20 allegations contained in paragraph 260"; correct? 21 A. Correct. 22 Q. Do you agree that matters relating 23 to the collection of management fees as between 24 the fluids and the management company come within 25 the areas of responsibility in paragraph 260 that 30 (Pages 114 - 117) VERITEXT REPORTING COMPANY EFTA01124902 Page 118 1 Gross - CONFIDENTIAL 2 I've just read? 3 A. Yes. 4 Q. And do you agree that the use of 5 investor funds to purchase an airplane for Dan 6 Zwim would come within the areas of 7 responsibility in paragraph 260? 8 A. Yes. 9 Q. So isn't it a fact that if lawyers 10 for the funds and the management company I I recommended to the general partner that the CFO 12 must be held responsible for failing to do his 13 duties as described in paragraph 260, that the 14 lawyer would be giving advice that you could not 15 disagree with? 16 MR. BRECHER: Objection. 17 THE WITNESS: Can you read that back 18 tome. 19 (Record read.) 20 A. I have no idea. 21 Q. Do you agree that the general 22 partner had the legal authority to conclude that 23 failing -- that one's failure to do one's job 24 under paragraph 260 was a forfeiting event under 25 the terms of the partnership agreement? 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 120 Grins - CONFIDENTIAL THE WITNESS: Say that again. Q. Is there anything -- is there anything that you would view as a legal excuse not to hold you legally responsible? MR. BRECHER: Objection. A. You just said the general partner could in his own discretion do what they want. Q. I didn't say that. A. Oh. MR. BRECHER: Don't -- just answer his questions. A. I don't know. MR. BRECHER: Just answer his questions. Don't get into a discussion. Q. Take a look at Gross 5. Take a look at page 5. A. Got it. Q. And take a look — starts with Section 2.02, beginning on page 3. It says, 'Except as otherwise expressly provided for in this agreement, the general partner shall have the authority on behalf of the partnership to take any action or make any decisions on behalf of the partnership hereunder to eery out any and Page 119 1 Gruss - CONFIDENTIAL 2 MR BRECHER: Objection. 3 A. I don't I don't know. 4 Q. I take it you don't like the fact 5 that you were forced to leave the company? 6 A. That's probably accurate. 7 Q. And you were disappointed that that 8 happened? 9 A. Yes. 10 Q. You felt you were unfairly being 11 held responsible? 12 A. Enormously. 13 Q. But is them anything I ask you 14 under oath, is there anything about the 15 circumstances from which you contend that the 16 general partner wasn't legally entitled to do 17 what he did? 18 MR. BRECHER: Objection. 19 A. That's — that's up for you all to 20 decide. 21 Q. Have you thought of anything that 22 would be an excuse for the general partner not to 23 conclude once the law firm for the general 24 partner recommended it? 25 MR. BRECHER: Objection. 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 Page 121 Gross -CONFIDENTIAL all purposes of the partnership set forth in Section 1.03 and to perform all acts and enter into and perform all contracts and undertakings which it may dean necessary or advisable or incidental hereto, including, without limitation, the power to" — and then refer to (p) on page 95 — "to determine when a forfeiting event as described in Section 6.01(c) has occurred with respect to a partner"; correct? A. Yes. Q. And you testified before that that set out what Mr. Zwim individually or Mr. Zwim through an entity's responsibilities were as general partner; correct? A. Ycs, yes. Q. Mr. Zwim had the legal authority to decide in conformity with this agreement when a forfeiting event has occurred with respect to a partner? MR. BRECHER: Objection. A. No. Q. Isn't that what it says? A. It's not up for him to decide whether or not a forfeiting event bas occurred. 31 (Pages 118 -121) VERITEXT REPORTING COMPANY EFTA01124903 Page 122 Gruss - CONFIDENTIAL 2 Q. Who is it up to? 3 A. It's going to be up to counsel. 4 Q. Isn't it up to the general partner 5 to decide when a forfeiting event has taken 6 place? 7 A. That's what (p) says. 8 Q. So you understood that the general 9 partner could get legal advice about that if he 10 wanted to; correct? 11 A. 1 didn't think about it. 12 Q. Well, did you understand -- 13 A. Are you asking me — 14 MR. BRECHER: Don't — 15 THE WITNESS: Pm sorry. 16 Q. Did you understand, in late 17 September, early October 2006, that Dan Zwim had 18 the legal authority under the partnership 19 agreement to decide when a forfeiting event has 20 occurred with respect to a partner? 21 MR.. BRECHER: Objection. 22 A. No, I did not. 23 Q. Is there anything about anything 24 that you've learned since then that has led you 25 to believe that anybody else other than the Page 124 1 Gruss - CONFIDENTIAL 2 under the partnership agreement were different 3 than the general partner's rights; correct? 4 A. Yes. 5 Q. You understood, in layman's terms, 6 that the general partner was in charge of the 7 partnership? 8 A. Yet 9 Q. So you understood that the general 10 partner could terminate a partner so long as it II was done legally in conformity with the 12 partnership agreement; correct? 13 MR. BRECHER: Objection. 14 A. Generally. 15 Q. What you're complaining about is 16 that Mr. Zwim actually went ahead and exercised 17 that right as to you? 18 A. Wrong. It's not what I'm 19 complaining about. 20 Q. And being asked and being forced 21 to leave the partnership, that's what you're 22 complaining about? 23 A. Fm complaining about the decision 24 that was made to force me to leave the 25 partnership. Page 123 GUSS - CONFIDENTIAL 2 general partner had the authority to decide when 3 a forfeiting event took place? 4 MR. BRECHER: Objection. 5 A. As I'm staring at it now, no. 6 Q. Is there anything that anyone has 7 said to you before October 4, 2006, that has led 8 you to believe that somebody other than the 9 general partner had the authority to decide when 10 a forfeiting event took place? 11 A. I don't recall. 12 Q. Isn't it a fact that what upset you 13 was that Dan Zwim was making the decision, not 14 that Dan Zwim didn't have the legal authority to 15 make the decision? 16 A. No, what upset me was that the 17 decision was made. 18 Q. But the general partner had the 19 authority to make the decision; right? 20 MR.. BRECHER: Objection. 21 A. I didn't connect the two. 22 Q. You weren't the general counsel; 23 right? 24 A. Correct. 25 Q. You understood that your rights Page 123 1 Gruss - CONFIDENTIAL 2 Q. Because in your mind — 3 A. I'm not connecting the dots between 4 Dan Zwim doing it or some other entity doing it. 5 Q. In your mind, somebody else should 6 have been fund for doing it -- withdrawn. 7 In your mind, somebody else should 8 have been held [sic] for the two circumstances 9 that Shulte Roth investigated, hot you; is that 10 right? I 1 A. That's not necessarily right. 12 Q. In your mind, is it your testimony 13 that nobody should have been held responsible for 14 the violation of the agreements? 15 A. That's not what I'm saying. 16 Q. What are you saying? 17 MR. BRECHER: Objection. 18 Do you have a question? There's no 19 question. 20 MR. LEVINE: I want to know what his 21 explanation is. 22 MR. BRECHER: Explanation for what? 23 MR. LEVINE: For — if it's not — 24 I'll ask another question. 25 THE WITNESS: Please. 32 (Pages 122 - 125) VERITEXT REPORTING COMPANY EFTA01124904 Page 126 1 Grass - CONFIDENTIAL 2 BY MR. LEVINE: 3 Q. Did you have in mind somebody else 4 that should have been held responsible for 5 violating the agreements in these two respects? 6 MR. BRECHER: Objection. 7 A. Never crossed my mind. 8 Q. You understand, do you not, that 9 taking money of investors' funds in ways not 10 permit [sic] by the legal agreements, it's a 11 serious matter? 12 k Yes. 13 Q. Would you agree that causing 14 investor funds to be used for management expenses 15 in violation of the agreements constitutes a 16 breach of the fiduciary duty to the investors and 17 their funds? 18 MR. BRECHER: Objection. 19 A. I don't know. 20 Q. I've asked you now several times 21 earlier today, and you testified affirmatively, 22 that your job included a fiduciary duty to the 23 investors to use their funds in accordance with 24 the agreements; correct? 25 A. Yes. Page 128 1 Gruss - CONFIDENTIAL 2 general partner saw the violation of the 3 agreements in these two respects, corrected the 4 problem in terms of paying the funds back, and 5 did not hold anybody personally responsible with 6 their job for doing that or letting that happen; 7 correct? 8 MR. BRECHER: Objection. 9 A. I -- I never thought about it. 10 Q. Well, you just testified that you 11 take issue with the decision that was made. 12 You're nodding yes? 13 A. Correct. 14 Q. The decision that was made was to 15 hold someone responsible with their job for the 16 violation of the agreements; correct? 17 MR. BRECHER: Objection. 18 A. Not someone. 19 Q. You. 20 A. Correct. 21 Q. Your disagreement is the decision by 22 the general partner to hold you responsible? 23 A. Say again. 24 (Record read.) 25 MR. BRECHER: Objection. Page 127 1 Gnzss - CONFIDENTIAL 2 Q. And so if investor funds were used 3 inappropriately, not in accordance with the 4 agreements, that could be considered a violation 5 of the fiduciary duty to the funds; correct? 6 A. Yes. 7 Q. And isn't it a fact that it was and 8 is appropriate for the general partner to hold 9 persons responsible who violated the agreement in 10 that respect? 11 MR. BRECHER: Objection. 12 A. Not necessarily. 13 Q. Was it at least within the 14 discretion of the general partner to do that -- 15 MR. BRECHER: Objection. 16 Q. — even if not necessarily to do it? 17 MR. BRECHER: Objection. 18 A. If we're pointing again to (p), yes. 19 Q. So what you actually would have 20 preferred if Mr. Zwirn recognized the violation 21 of the agreements, but decided not to terminate 22 anyone in respect of it? 23 MIL BRECHER: Objection. 24 A. I haven't even thought about that. 25 Q. You would have preferred if the Page 129 1 Grass - CONFIDENTIAL 2 Q. ra rephrase it. 3 Your disagreement is the decision by 4 the general partner to hold you responsible for 5 the failure to abide by the agreements in these 6 two respects? 7 MR. BRECHER: Objection. 8 A. Yes. 9 Q. But you agree, do you not, that the 10 general partner had the authority to do that? 11 A. Yes. 12 Q. And when Dan Zwim said to you 13 letting you go was the only way for for him to 14 remain bullet proof and pearly white, did you 15 understand Dan's word to be saying that in his 16 job as general partner of the management company, 17 his conduct needed to be bullet proof and pearly 18 white? 19 A. I took that to mean he needed to, in 20 the eyes of the investors, the investor community 21 and anyone who he did business with, to be pearly 22 white and bullet proof. 23 Q. So he was actually -- withdrawn. 24 Am I correct that he was telling you 25 that because he felt the obligation to conduct 33 (Pages 126 -129) VERITEXT REPORTING COMPANY EFTA01124905 Page 130 1 Gruss - CONFIDENTIAL 2 himself in a way as general partner that was 3 bullet proof and pearly white, he needed to 4 terminate you? 5 A. That is not the way I took it. 6 Q. But am I correct that you wouldn't 7 disagree that someone could have taken it that 8 way? 9 MR. BRECHER: Objection. 10 A. That's not the way I took it. 11 Q. But you — 12 A. He was acting as an individual, Dan 13 Zwim being pearly white and bullet proof. I 14 took it as he was not acting on behalf of the GP. 15 Q. But he was only there in the room as 16 the general partner, right? 17 MR. BRECHER: Objection. 18 A. No. 19 Q. Only the general partner had the 20 authority to have that conversation with you; 21 isn't that right? 22 A. No, that's not right. 23 Q. If Lawrence Cutler had that 24 conversation with you, would you have been — 25 would that have been an event that was a Page 132 Gruss - CONFIDENTIAL 2 general partner. isn't that right? 3 A. That's not the way I took it. 4 Q. Isn't it a fact that what he was 5 telling you was that the investors and all the 6 other people that you identified in his mind had 7 to look at him personally as conducting himself S in a bullet proof, pearly white way on behalf of 9 the partnership? 10 MR. BRECHER: Objection. 11 A. That's probably accurate. 12 Q. And when he told you there was a lot 13 to protect here, quote-unquote, wasn't he 14 referring to the fact that there were substantial 15 funds with lots of investors with serious 16 obligations that he needed to live up to on 17 behalf of the general partner? 18 A. No, l took it to mean he personally 19 needed to make sure that people looked at him 20 personally as pearly white and bullet proof. 21 Q. And the lot to protect was — 22 withdrawn. 23 As of the beginning of October 2006, 24 what were the size of the funds — the dollar 25 amount of the funds under management in the L.P.? Pasc 131 1 Gruss - CONFIDENTIAL 2 terminating event? 3 A. I don't believe so. 4 Q. The only person that could have that 5 conversation with you was somebody acting on 6 behalf of the general partner? 7 A. My distinction is Dan is an 8 individual, he's the CEO, he's the managing 9 partner and he's the general partner. 10 Q. And when he spoke to you on that 11 day, he was all of those things; correct? 12 A. Yes, one could take it that way. 13 That's correct. 14 Q. And so when Dan spoke to you on that 15 day, he was speaking to you wearing all of those 16 hats? 17 MIL BRECHER: Objection. 18 A. I don't know. I wasn't — he's the 19 one who was speaking, not me. 20 Q. Did you understand him to be acting 21 in any way other than wearing those four hats 22 that you just described? 23 A. In his self-interest is the way I 24 interpreted him acting. 25 Q. But his self-interest was as the Page 133 1 Gruss - CONFIDENTIAL 2 A. I don't recall. 3 Q. Me we talking hundreds of millions 4 of dollars? 5 A. I believe it was over a billion. 6 Q. And in fact -- 7 A. rd say over a billion, less than 8 5 billion. 9 Q. In fact, the aggregate funds under 10 investment in the onshore fund and the offshore 11 fund and the managed accounts as of October 2006 12 was over SI billion; isn't that right? 13 A. Say that again. 14 Q. In fact, the aggregate funds under 15 investment in the onshore fund, the offshore fund 16 and the managed accounts as of October 2006 was 17 well over SI billion -- 18 A. Correct. 19 Q. — isn't that right? 20 A. Correct. 21 Q. And Dan Zwim individually and 22 through entities was general partner responsible 23 for those funds; correct? 24 A. That's correct. 25 Q. And when he said to you -- 34 (Pages 130 - 133) VERITEXT REPORTING COMPANY EFTA01124906 Page 134 Gruss - CONFIDENTIAL 2 A. And all the activities of those 3 funds. 4 Q. When he said to you there was, 5 quote, a lot to protect here, that's what he was 6 referring to; isn't that right? 7 MR. BRECHER; Objection. 8 A. No. As I stated earlier, that's not 9 the way I took it. 10 Q. How did the conversation end with 11 Dan Zwim on that day? 12 A. It ended where he was — I don't 13 know exactly how it ended. I don't want to 14 speculate — 15 Q. Do you remember — 16 A. or guess. 17 Pardon me. 18 Q. — anything else that he said? 19 A. Other than that -- other than the 20 discussion about the money, not really. 21 Q. But you understood that the 22 discussion about the money was contingent on what 23 the legal agreement said; right? 24 A. No. 25 Q. You — Page 136 Grass - CONFIDENTIAL 2 A. Yes. 3 Q. And didn't you understand that if 4 there were going to be any waiver of that 5 partnership agreement, that it would have to be 6 in writing and agreed to by the parties? 7 A. Say again. 8 Q. Didn't you understand that if there 9 was going to be any waiver of the provisions of 10 the partnership agreement as to money, that it 11 would have to be in writing and agreed to by the 12 parties? 13 A. Yes. 14 Q. And you are not contending, am I 15 correct, that by telling — by saying the 16 conversation -- withdrawn. 17 And you are not contending, am I 18 correct, by reciting the conversation that 19 Mr. Zwim had with you, that that had the legal 20 effect of waiving the agreements? 21 A. I'm not going to be the one to do 22 this, but this exhibit (indicating). 23 Q. Gross 6? 24 A. Yes. This is the separation 25 agreement. This shows — is it — Page 135 Gruss - CONFIDENTIAL 2 A. Tin sony, which legal agreement? 3 Maybe Pm confused. 4 Q. The partnership agreement, the S supplementary agreement, the confidentiality 6 agreement all applied to what your rights were as 7 a partner; isn't that right? 8 A. No. He discussed money with me, 9 2.63, which obviously would lead anyone to 10 believe that he's already assumed that everything 11 in that agreement has been followed. And I took 12 it to mean he waived his rights as OP. 13 Q. Did he say that, I waive my rights 14 as GP? 15 A. No, but he said this is how much 16 money you're owed and Lawrence will get you as 17 much money as possible. 18 Q. You've been around Wall Street -- 19 you had been around Wall Street from 1989 20 until -- 21 A. If you consider MG Wall Street, 22 yes. I get your point. 23 Q. And in all of those years, you 24 understood that legal agreements apply to what 25 people owed; isn't that right? Page 137 1 Gruss - CONFIDENTIAL 2 (Witness penises the exhibit.) 3 A. No, fm sorry. The separation 4 agreement which we negotiated, which we began 5 negotiating from the day I left, obviously set 6 forth some sort of waiver. Now, I'm not counsel. 7 But there was numbers in there that clearly 8 showed that after the conversation, they had 9 waived that right. 10 As you're saying you need a 11 document, that's the document. I don't have the 12 document. But somewhere the document exists. We 13 can get you that document. 14 Q. Was that document signed? 15 A. No, it wasn't signed. 16 Q. Why wasn't it signed? 17 A. You'd have to ask the company. 18 Q. Do you understand that the company 19 ultimately was unwilling to sign the document? 20 A. Yes. 21 Q. So am I correct that you understand 22 the company, the partnership, by the general 23 partner ultimately concluded not to waive the 24 provisions of the partnership agreement as it 25 applied to you? 35 (Pages 134 -137) VERITEXT REPORTING COMPANY EFTA01124907 Page 138 1 Gruss • CONFIDENTIAL 2 A. I don't know that. 3 Q. You understand -- 4 A. You are referring — 5 Q. You understand, do you not, that if 6 the general partner concluded that you were to be 7 terminated as a forfeiting event, that you had 8 certain rights to funds as provided for in the 9 partnership agreement? 10 A. I'm sorry, one more time. I 11 apologize. 12 Q. Now, after after you had the 13 discussion with Dan Zwim, you left the offices? 14 A. I believe so. 15 Q. Did you ever return to the offices? 16 A. I don't recall. 17 Q. Did you ever — withdrawn. 18 After the conversation with Dan 19 Zwim, did you ever perform any of the duties as 20 CFO again? 21 A. I don't know. 22 Q. Is there anything that stands out in 23 your mind? 24 A. I don't know. 25 Q. Isn't it a fact that the Page 140 I Gruss - CONFIDENTIAL 2 a job? 3 A. 1 don't remember. 4 MR. LEVINE: Let's mark this 5 Cause 9. 6 (Gruss Exhibit 9, Bates No. JSB0158, 7 E-mail Chain, marked for identification.) 8 (Discussion off the record.) 9 BY MR. LEVINE: 10 Q. Showing you what's been marked 11 Gruss 9, is this an e-mail from you to Mr. Barr 12 on or about October 10th, 2006? 13 A. Uh-huh. 14 Q. And did you say to -- IS MR. BRECIIER: You have to answer 16 with ayes or no. 17 THE WITNESS: Oh, yes. 18 Q. Did you say to Mr. Barr, quote -- on 19 the subject news, quote, "Yo, I'm sure by now 20 you've heard the news that I've resigned'? 21 A. Yes. 22 Q. "You'll probably start receiving 23 calls from the entire back office. They're 24 completely free. A big TKT just hit the market.' 25 A. Yes. Page 139 1 Gruss - CONFIDENTIAL 2 conversation with Dan Zwim took place on or 3 about October 4th? 4 A. Yes, I do. 5 Q. You remember that date because it's 6 been the subject of testimony at the SEC and 7 other places? 8 A. Yes. But actually, there was 9 confusion in my mind as to what the date was, but 10 yes. 11 Q. Ant I correct that that confusion has 12 now been cleared up by virtue of your testimony 13 at the SEC? 14 A. I believe it has been. 15 Q. And you now recall that the 16 conversation with Lawrence Cutler and then the 17 conversation with Dan Zwim that you testified 18 about this morning took place on or about 19 October 4th? 20 A. I believe it did. 21 Q. And who is Joseph Barr? 22 A. He is a recruiter, an executive 23 recruiter. 24 Q. Did you turn to him shortly after 25 the conversation with Dan Zwim to help you find Page 141 1 Gruss - CONFIDENTIAL 2 Q. Did you tell Mr. Barr that you 3 resigned? 4 A. It looks like I did. 5 Q. That wasn't true? 6 A. No. 7 Q. You had decided that you were going 8 to tell Mr. Barr and all of the people that were 9 potential employers that you resigned and not 10 that you were forced out? 11 A. No. 12 Q. But did you tell him here I 13 resigned? 14 A. Yes, but you said him and any 15 potential employers that I resigned. 16 Q. Well, you told Fortress — 17 A. I told him. 18 Q. And you told Fortress -- 19 A. Yep. 20 Q. — that you walked in and resigned? 21 A. tJh-huh. 22 Q. Is that true? 23 A. That's what the e-mail said. 24 Q. So that's at least your headhunter 25 and one of the potential employers; correct? 36 (Pages 138 - 141) VERITEXT REPORTING COMPANY EFTA01124908 Page 142 Gross - CONFIDENTIAL 2 A. In an e-mail, yes. 3 Q. Well, why do you add "in an e-mail"? 4 A. Because -- 5 Q. People are allowed to lie in e-mails 6 or say things that aren't true in c-mails that 7 they wouldn't say face to face? 8 MR. BRECHER: Objection. 9 A. Possibly. 10 Q. Did you have a habit of not 11 necessarily telling the truth when you wrote 12 e-mails? 13 A. No. 14 Q. But this wasn't the truth according 15 to your testimony today? 16 A. That's not the truth. 17 Q. And it's inconsistent with what 18 you've alleged in your complaint; correct? 19 A. Cornet. 20 Q. It's consistent with what you told 21 Fortress? 22 A. Up front, yes. 23 Q. So you were -- 24 A. I had several conversations with 25 Fortress. Page 144 Gruss - CONFIDENTIAL 2 conversation that he agreed legally never to tell 3 investors that you had violated — you were being 4 held responsible for violating the agreements 5 between the funds and the management company? 6 MR. BRECHER: Objection. 7 A. He does not say all those things. 8 Q. In fact, he said none of those 9 things; isn't that right? 10 A. Repeat exactly what you said. 11 Q. Did Dan Zwim — did Dan Zwirn ever 12 tell you in that conversation, in the last 13 conversation, that he agreed legally never to 14 tell investors that you were being held 15 responsible for violating the agreements between 16 the funds and the management company? 17 A. I don't believe he said that. 18 Q. So Mr. Barr then helped you find a 19 job? 20 A. No, Mr. Barr couldn't fmd me a job. 21 Q. My question was so Mr. Barr then 22 helped you find a job? 23 MR. BRECHER: Objection. 24 A. incorrect. 25 Q. Mr. Barr helped you try to find a Page 143 1 Gruss-CONFIDENTIAL 2 Q. You were prepared — you were 3 prepared to have your headhunter tell potential 4 employers that you were available on the market S having resigned from your CFO position at Zwirn; 6 correct? 7 A. Incorrect. 8 Q. But that's the effect of telling him 9 that you resigned; isn't that right? 10 A. Dan and 1 had an agreement that what 11 we would be discussing, he would be telling 12 investors, that we separated, we decided to part 13 ways. Me telling a headhunter I resigned, this 14 is — this is pride. 15 Q. I'm talking truth. You told the 16 headhunter something that was not true; correct? 17 A. In this e-mail. I'm sure P had 18 subsequent discussions with Joe. 19 Q. Did Dan Zwim ever tell you that he 20 would agree forever not to tell an investor that 21 you had violated the agreements between the funds 22 and the management company? 23 A. I don't know. Forever's a long 24 time. 25 Q. Did Dan Zwim ever tell you in that Page 143 Gruss - CONFIDENTIAL 2 job? 3 A. I hope he tried to help me find a 4 job, though unsuccessful. 5 Q. You are working now at Babcock & 6 Brown? 7 A. Correct. 8 Q. What is Babcock & Brown? 9 A. It's an Australian firm -- it's an 10 Australian infrastructure firm. 11 Q. What's its business? 12 A. It invests in infrastructure. It 13 invests in other areas -- it's all over the 14 board. It's actually in receivership and 15 bankrupt currently. 16 Q. Are you still employed? 17 A. Yes. 18 Q. When did it file for bankruptcy 19 protection? 20 A. I don't recall exactly. It's a 21 public company, so you can look it up. 22 Q. What year? 23 A. 2008, I believe. I'm guessing. 24 Q. When did you go to work for them? 25 A. I — the middle of 2007. 37 (Pages 142 -145) VERITEXT REPORTING COMPANY EFTA01124909 Page 146 1 truss CONFIDENTIAL 2 Q. So about six, eight months after you 3 left Zwim? 4 A. Correct. 5 Q. And did Mr. Barr have anything to do 6 with your getting that job? 7 A. Zero. Nor did any other executive 8 recruiter. 9 Q. You got that job on your own? 10 A. No, I got that job through .a 11 friend -- 12 Q. On your own? 13 A. — in Australia. 14 Q. On your own? 15 A. Without the help of executive 16 recruiters, is that your point? Yes, yes. 17 Q. And you talked to Fortress about a 18 job? 19 A. Uh-huh. 20 MR. BRECHER: You have to answer 21 with a — 22 A. I'm sorry. Yes. 23 Q. And you talked to Fortress about a 24 job in the spring of '07? 25 A. Yes. Page 148 Gruss-CONFIDENTIAL 2 AFTERNOON SESSION 3 (1:13 p.m.). 4 (Gross Exhibit to, Bates Nos. PG 5 00595 through 600, 11/26/07 Letter to Grass 6 from Cambia, marked for identification.) 7 PERRY GAUSS, 8 having been previously sworn, resumed the 9 stand and testified further as follows: 10 EXAMINATION (Contd.) II BY MR. LEVINE: 12 Q. Back on the record after lunch. 13 Mr. Cross, rm handing what was 14 marked as Gnus Exhibit 10, which is a letter 15 dated November 26, 2007, between you and Babcock 16 & Brown; is that correct? 17 A. Yes. 18 Q. And is that your signature on the 19 last page? Was this the employment agreement -- 20 A. Yes. 21 Q. — that you entered into with 22 Babcock & Brown? 23 A. Yes. 24 Q. Have you been acting within the 25 scope of this agreement since November of 'On Page 147 Gross - CONFIDENTIAL 2 Q. Was Mr. Barr responsible for getting 3 you into Fortress? 4 A. No. 5 Q. Did you do that on your own? 6 A. Yes. 7 Q. Did you talk to a company called 8 Strategic Value Partners? 9 A. I don't believe so. 10 Q. Have you heard of Strategic Value 11 Partners? 12 A. I don't I don't know. It's such 13 a generic name. 14 Q. Do you remember that Mr. Barr 15 offered you an introduction to Strategic Value 16 Partners sometime in February 2007? 17 A. I don't. I8 MR. LEVINE: Let's take a break for 19 20 21 22 23 24 25 lunch. It's 20 of one. Well take one half hour off and start at ten after one and go to the breaking time. (Luncheon recess from the record.) 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 Page 149 Crust - CONFIDENTIAL A. Yes. Q. When did you start -- did you start on November 26, '07, as this letter sets forth? A. Permanently I started. I actually was consulting for about five months before this. So I believe July '07 or so. Q. And does this accurately state what your salaries and benefits were? A. Yes, except for the on page 2, the 975, it wasn't 975. It was less than that -- Q. Okay. A. - because the company went into banlauptcy. Q. Showing you what we we'll mark as Ovum 11. (Gruss Exhibit 11, Bates No. PG 00585 through 604, 2007 Form 1040, marked for identification.) MR. LEVINE: And we can put a confidentiality stip on the next three exhibits if you desire. BY MR. LEVINE: Q. Is Gross 11 pages from your Form 1040 for 2007? 38 (Pages 146 - 149) VISRITEXT REPORTING COMPANY EFTA01124910 Page 150 1 Gross - CONFIDENTIAL 2 A. Yes. 3 Q. Does the $50,000 gross receipts on 4 Schedule C represent consulting fees for the part 5 of 2007 before November 26, 2007? 6 A- I believe it must. 7 Q. So is the income from Babcock & 8 Brown for 2007, that portion of the year, 9 approximately 475,000? 10 A. Yes. 11 Q. And was that an appropriate — was 12 that consistent with the November 26, 2007, 13 arrangement? 14 A. Yes. 15 Q. And showing you Gruss 12. 16 (Gruss Exhibit 12, Bates Nos. 17 PG00605 through 612, 2008 Form 1040, marked 18 for identification.) 19 (Witness penises the exhibit.) 20 BY MR. LEVINE: 21 Q. Is this your and your wife's Form 22 1040s for 2008? 23 A. Yes. 24 Q. Is the wages and salaries line of 25 4287,000 the base salary component of the Babcock Page 152 1 Gross - CONFIDENTIAL 2 guarantee of $975,000 that was in the employment 3 agreement? 4 A. Correct. 5 MR. LEVINE: And let's mark this 6 Grass 14. 7 (taus* Exhibit 14, Bates No. O60622, 8 Earnings Statement, marked for 9 identification.) 10 Q. Is Gross 14 a pay stub for you from 11 Babcock & Brown through the first quarter of 12 2010? 13 A. Correct. 14 Q. You made approximately 4100,000 in 15 the first quarter of 2010? 16 A. Yes. 17 Q. Which amount includes a portion of 18 the bonus that you would have earned for calendar 19 year 2009 that was made in the first quarter of 20 2010? 21 A. Yet 22 Q. Do you have any employment agreement 23 currently in place with Babcock & Brown that's 24 different from the 2007 original agreement? 25 k Yes. Page 151 1 Gruss - CONFIDENTIAL 2 & Brown employment arrangement? 3 A. Yes. 4 Q. Was there any bonus consistent with 5 the November 2007 agreement paid to you in 2008? 6 A. I don't believe so. 7 Q. Just take a look at Gruss 13. 8 (thugs Exhibit 13, Bates Nos. PG0613 9 through 621, 2009 Form 1040, marked for 10 identification.) 11 Q. Marking Gross 13, which is the Form 12 1040 for you and your wife for 2009, can you 13 identify that? 14 A. Yes. 15 Q. So now, taking a look at Gruss 12 16 and 13 for 2008-2009, could you please explain, 17 is the 2009 income of some $900,000 include a 18 portion of the 2008 bonus- 19 A Exactly. 20 Q. — that was guaranteed in November 21 of 2007? 22 A. Exactly. 23 Q. So it's your testimony that bonus 24 was paid, but because of the bankruptcy of the 25 entity, it was some amount less than the Page 153 1 Gross - CONFIDENTIAL 2 Q. And what does it provide? 3 A. I don't — I don't -- 4 Q. What does it provide in terms of 5 salary and bonus? 6 A. The salary I believe is 375. And I 7 want to say there's — I thought you had this 8 actually. And I want to say that there's a 9 250,000 bonus payable in April of next year if 10 I'm there. 11 Q. So notwithstanding — 12 A. If the entity survives. 13 Q. -- notwithstanding that pendency of 14 the Chapter 11, you are still employed as the CFO 15 at a base salary of 375? 16 A. I'm not the CFO. 17 Q. What is your position? 18 A Marketer. Ifs an Australian term. 19 I'm not the CFO. 20 MR. LEVINE: Letts mark this 21 Cruse 15. 22 (Gruss Exhibit 15, Bates No. 729, 23 Wage and Income Transcript, marked for 24 identification.) 25 39 (Pages 150 -153) VERITEXT REPORTING COMPANY EFTA01124911 Page 154 1 Grass - CONFIDENTIAL 2 Q. Is this your W-2 statement for 2006? 3 A. Yes. 4 Q. And what's your recollection of how 5 much of the 2006 income of approximately 6 1.6 million was base and how much was bonus? 7 A. I want to say — hold on. 8 (Witness peruses the exhibit) 9 A. 2006 — in 2006, there would have 10 been some portion of my partnership payment, • I I 225,000 maybe, which was a front against my 12 eventual money that I never received, and the 13 delta would be for a bonus payable in 2006, 14 earned in 2005. 15 Q. So the 1.6 somewhat million dollars 16 of the compensation on your W-2 statement for 17 2006 has basically three components. It has your 18 base compensation for 2006. It has partners, in 19 the nature of a partner distribution for 2006. 20 And it has bonus for 2004 before you were a 21 partner - 22 A. '5. 23 Q. '5. 24 A. Yes, but I think you just said base 25 salary and distributions -- Page156 I Gruss - CONFIDENTIAL 2 Q. What was your expectation? 3 A. There are spreadsheets that we went 4 over and reviewed at least monthly showing on an 5 accrual and actual basis there were terms on the 6 fund, but plus NAV on the fund with the AUM of 7 the fund which calculated the management fee and 8 the incentive fee payable. 9 Q. Do you have any recollection of what 10 your 2004 income was? 11 A. It was four it was either it 12 was either 8 or 1.2. 13 MR. LEVINE: Let's mark this as 14 Gauss 16 — 15 Q. By "8," you mean 800,000, one 16 point — 17 A. — 2 nillion, yes. 18 MR. LEVINE: Marking Gruss 16. 19 Puss Exhibit 16, Bates Nos. 20 ISB0126 through 128, E-mail Chain, marked 21 for identification.) 22 Q. Is Grass Exhibit 16 a series of 23 e-mails between you and Joseph Barr from October 24 of 2006? 25 (Witness peruses the exhibit.) 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 A. Q. A. Page 155 Grass - CONFIDENTIAL And that's one and the same? Yes, exactly. I believe so. 1 stand corrected. There was no concept of base because I was a partner. Q. Right. Okay. So die bulk then of withdrawn. So the 1.6 semimillion includes your compensation as a partner for the first nine months of the year and your 2005 bonus before you became a partner? A. Exactly. Q. What was your compensation, if you recall, in 2005? A. I want to say it was either 1.2 million or 1.8 million. I think it was 1.8 million. Q. What did you expect to make as a partner in 2006? A. That was the dispute. I expected it to be around 3 million or, as Dan said, it was more like two-six. The computation was nine — the computation was the entire year up until the that left. Page 137 Gruss - CONFIDENTIAL 2 A. Got it 3 Q. I'm going to the second page, the 4 top e-mail from you to Mr. Barr from October 24, 5 2006. 6 Do you see that? 7 A. Yes. 8 Q. You say, quote -- he's giving you an 9 idea of a particular entity that he wants to talk 10 to on your behalf — 11 A. Uh-huh. 12 Q. — correct? 13 A. Yes. 14 Q. And you say, quote, "Assume Fm the 15 candidate? What's the range? rm not being a 16 prick, but I'm going to be real selective. Small 17 world, Igo for a cup of coffee, words going to 18 get out." 19 Correct? 20 A. Yes. 21 Q. What instructions did you give 22 Mr. Barr off line away from e-mails — 23 A. Right 24 Q. -- as to the kind of position you 25 were looking for? 40 (Pages 154 - 157) VERITEXT REPORTING COMPANY EFTA01124912 Page 158 1 Gress - CONFIDENTIAL 2 A. It would have been either -- it 3 probably would have been a COO position. Maybe 4 CFO of a hedge fund. Of a hedge fund. 5 Q. Did you give him any particular 6 minimal size for the hedge fund? 7 A. No. 8 Q. Were you willing to relocate? 9 A. Yes, yes. 10 Q. Did you tell him that? 11 A. I don't recall. 12 Q. Isn't it a fact you told him you 13 were unwilling to relocate? 14 A. No, that's not a fact. 15 Q. Did you give him salary range? 16 A. I don't recall. 17 Q. Did you have, as you recall as you 18 sit here today, any reference to salary range? 19 (Witness pauses the exhibit.) 20 A. I don't recall. 21 Q. What did you mean when you said you 22 were going to be selective? 23 A. I don't — I don't remember. I 24 don't want to guess. 25 Q. I take it it was important that job Page la 1 °suss - CONFIDENTIAL 2 an answer on that one. 3 MR. BRECHER: You have to answer yes 4 or no. 5 THE WITNESS: Oh, no. 6 Q. Did you tell him that it had to be 7 at least a million eight? 8 A. No, I don't believe so. 9 Q. Look at page 1. Do you see at the 10 bottom that Mr. Barr in response, "Got you 1M 11 plus plus is no problem"? 12 A. Uh-huh. 13 Q. "M you know, a large degree will 14 depend on how they perform, but I think we can 15 get a SI million guarantee"? 16 A. Uh-huh. 17 Q. Is that in effect what you told him, 18 1 million? 19 A. No, I don't know. 20 Q. That's basically what the deal was 21 with Babcock & Brown; isn't that right? 22 A. Yes. 23 Q. Between bonus and compensation, you 24 were a little over a million? 25 A. Yes. Page 159 1 Gruss - CONFIDENTIAL 2 title and responsibility was something you were 3 going to be selective about; correct? 4 A. Yes. 5 Q. And were you also going to be 6 selective about income level? 7 A. Yes. 8 Q. And what did you understand or what 9 did you tell Barr was your requirement on income 10 level? 11 A. Comparable to what I was making at 12 Zwim. 13 Q. And did comparable to what you were 14 making at Zwirn what you were just starting to 15 make as a partner or what you had made in the 16 year before as CFO/nonpartner? 17 A. I -- I don't — I don't recall. I 18 mean a million eight under the right 19 circumstances, I think would have been fine 20 knowing who I am. 21 Q. And did you tell him that it needed 22 to be above a million? 23 A. Un-un. 24 Q. Did he understand that it had to be? 25 MR. SIFFERT: I don't think we have 8 9 10 11 12 13 14 15 16 17 18 19 20 21 Page 161 1 Gruss - CONFIDENTIAL 2 Q. It's your testimony you were a 3 little over a million in 2005 at Zwim before you 4 became a partner? S A. Yes. 6 MR. LEVINE: Let's mark this 17. 7 (Gruss Exhibit 17, Bates Nos. ISB0101 through 103,1E-mail Chain, marked for identification.) (Witness peruses the exhibit.) BY MR. LEVINE: Q. This is e-mails from February 2007 -- A. Uh-huh. Q. — between you and Mr. Barr? A. Yes. Q. Now, take a look at page 2 and Page 3. (Witness peruses the exhibit) A. Yes. Q. Do you see at the bottom of page 3, 22 he's proposing another idea to you? 23 A. The bottom -- 24 Q. He's talked to you about Strategic 25 partners; do you see that? 41 (Pages 158 -161) VERITEXT REPORTING COMPANY EFTA01124913 Page 162 1 Gruss - CONFIDENTIAL 2 A. Oh, the top of page 3. 3 Q. Yes. 4 A. Hold on. 5 (Witness peruses the exhibit) 6 A. Yes. 7 Q. Does that refresh your recollection 8 that he offered you an interview with Strategic 9 Value Partners in Greenwich? 10 A. It doesn't 11 MR. LEVINE: Let's mark this as the 12 next exhibit. 13 THE WITNESS: Doesn't mean it didn't 14 happen, but I'll — IS MR. LEVINE: Exhibit 18. 16 (Gruss Exhibit 18, Bates No. 17 JSB0112, E-mail Chain, marked for 18 identification.) 19 BY MR. LEVINE: 20 Q. Showing you what we marked Gruss 18, 21 it's an e-mail from February 19th, 2007. 22 Does this refresh your recollection 23 that he proposed you to an entity Strategic Value 24 Partners in Greenwich for CFO role? 25 A. It doesn't. Page 164 1 Gruss - CONFIDENTIAL 2 Strategic Value Partners in Greenwich that you 3 passed on? 4 A. Pm sorry, where? 5 Q. The last two exhibits, Gross 17 and 6 18, refresh your recollection now that there was 7 an entity called Strategic Value Partners in 8 Greenwich that you passed on? 9 A. It doesn't 10 (Gruss Exhibit 19, E-mail Chain, 11 marked for identification.) 12 Q. Take a look at Gruss 19, which is a 13 group of e-mails from August of'07. You see 14 them? 15 (Witness peruses the exhibit.) 16 A. Yes. 17 Q. By August of'07, you're working at 18 Babcock on a consulting basis and haven't been 19 hired yet? 20 A. Exactly. 21 Q. And so you're still working and 22 hoping Mr. Barr might help you find something? 23 A. Yes. 24 Q. And am I correct that you and 25 Mr. Barr acknowledged that the general economy, Page 163 I Gruss - CONFIDENTIAL 2 Q. Do you see at the bottom of page 2 3 on Gruss 17 where you say, "London is a long way 4 from New York"? 5 A. Yes. 6 Q. You were referring to London, 7 England? 8 A. Yes. 9 Q. You were unwilling to go to England? 10 A. Absolutely not. 11 Q. You were in fact -- 12 A. I was absolutely — I would 13 absolutely have gone to London. In fact, when I 14 was hired by Babcock & Brown, I almost went to 15 London. 16 Q. I'll show you what's been -- 17 A. Also, London is a long way from 18 Great Neck. That's not me he's talking about. 19 That's Bob Racusin he's talking about, not me. 20 Q. Take a look at this next exhibit. 21 (Gruss Exhibit 18, Bates No. 22 JSB0112, E-mail Chain, marked for 23 identification.) 24 Q. The last two e-mails now refresh 25 your recollection there was an entity called Page 165 Gruss - CONFIDENTIAL 2 particularly that in the financial industry, in 3 the hedge fund world, had substantially slowed 4 down? 5 (Witness peruses the exhibit) 6 A. I would say that's tight. 7 Q. And do you agree that your ability 8 to have gotten a job in the summer of 2007 would 9 have been much different if the economy generally 10 and the economy in the financial institution II world had been more like it wee in 2006 end 2005? 12 A. I think that's accurate. 13 Q. And is it a fact that there's really 14 no way of knowing what your job prospects would 15 have been in the robust economic world of the 16 hedge fund that took place in the mid-2000 17 period? 18 A. You're saying is it a fact I have 19 no idea. 20 MR. BRECHER: I object. 21 Q. That there's clearly a difference in 22 the world that you went out to look for ajob in 23 the summer of'07 or during '07 than the world 24 that you would have been in in '05 or '06? 25 MR. BRECHER Objection. 42 (Pages 162 - 165) VERITEXT REPORTING COMPANY EFTA01124914 Page 166 Gruss - CONFIDENTIAL 2 A. Ill say the market conditions 3 certainly made it tough for people in the finance 4 industry to get jobs easily as they did in the 5 bull market, yes. 6 Q. Now -- and so you expressed some 7 frustration earlier before lunch with Joseph 8 Barr's assistance. Is it fair to say that he was 9 some -- he was hampered somewhat for you and 10 every other client that he would have had at the 11 time tying to place people in the hedge fund 12 industry - 13 MR. BRECHER: Objection. 14 Q. — at that time? 15 MR. BRECHER: Objection. 16 A. Far more for me than anybody else in 17 the industry. 18 Q. For everybody in the industry he had 19 difficulty moving around; isn't that right? 20 MR. BRECHER: Objection. 21 A. I don't know. 22 Q. Well, hedge funds were literally 23 shutting down in '07; right? 24 A. Uh-huh. 25 Q. You're nodding yes? Page 168 1 Gnus - CONFIDENTIAL 2 came out with not existed. 3 Q. You're referring to the March '07 4 memo to investors? 5 A. Yes. 6 Q. You understood that the memo to 7 investors in March of '07 was the product of an 8 investigation by Gibson Dunn and Deloitte and 9 Touche; right? 10 A. Yes. II Q. You understood that once Gibson Dunn 12 and Deloitte & Touche conducted an investigation, 13 that the general partner had an obligation to 14 provide the results of that investigation to the 15 investors? 16 A. I don't know that 17 Q. Do you believe that as you sit here 18 today? 19 A. I don't know. 20 Q. Has anyone ever told you that the 21 management company could have kept from the 22 investors of the onshore and offshore funds the 23 results of the Gibson Dunn investigation? 24 A. No, no one ever told me that 25 Q. And isn't it a fact that you don't Page 167 Gnus - CONFIDENTIAL 2 A. Yes. 3 Q. Hedge fund administrative jobs, 4 including CFO jobs and COO jobs, were literally 5 drying up because hedge funds were literally 6 going out of business and redeeming for their 7 investors? 8 MR. BRECHER: Objection. 9 Q. You're nodding yes. 10 A. Fm agreeing, yes. 11 Q. And so you're competing with all of 12 those senior management people on the street 13 without regard to why they were on the street in 14 2007? 15 A. Yes, but I was confident that if 16 there was one COO job, I would have gotten it. 17 Q. And you did at Babcock & Brown? 18 A. No, not a COO or CFO job. 19 Q. So the fact is there wasn't one then 20 in the market in 2007? 21 A. No, that's not what I said. 22 Q. You just said you were confident 23 that if there was one in the market in 2007, you 24 would have gotten it? 25 A. Had — had the Zwim memo that he Page 169 1 Gnus - CONFIDENTIAL 2 believe — withdrawn. 3 Isn't it a fact that as you sit here 4 today, you understand that disclosing the results 5 of the Gibson Dunn investigation to the investors 6 of the L.P. fund and the Ltd. fund was something 7 that the general partner was obligated to do? 8 A. As I said, I don't know that. 9 Q. Well, was it any part of your case 10 that the general partner acted without authority 11 in making the results of that investigation 12 public to the investors of the two funds? 13 MR. BRECHER: Objection. 14 A. Ideal — I don't understand the 15 question. 16 Q. You're not arc you quibbling -- 17 are you taking issue with the fact that the 18 general partner issued the March 2007 report to 19 the investors or are you taking issue with what 20 that report said? 21 A. The latter, yes. 22 Q. So you recognize, do you not — 23 mean, you became a partner of the management 24 company; right? 25 A. Right. 43 (Pages 166 -169) VERITEXT REPORTING COMPANY EFTA01124915 Page 170 1 Gnats - CONFIDENTIAL 2 Q. You testified earlier you had some 3 understanding of what the fiduciary duties were 4 that officers of the management company had to S investors; correct? 6 A. Correct 7 Q. Telling investors material events of 8 the management company responsible for managing 9 their funds is part of the fiduciary duty that 10 the general partner had; isn't that right? 11 MR. BRECHER: Objection. 12 A. Yes. 13 Q. And you don't dispute that at all, 14 do you? 15 A. I am in no way disputing that they 16 shouldn't have issued an investment memorandum 17 saying that Gibson Dunn and Deloitte & Touche had 18 done an internal review, not at all. 19 Q. Or what the material results were of 20 that investigation? 21 A. That's not for me to opine. 22 Q. Whether or not somebody else wants 23 Perry Gross' opinion, or Perry Gruss' point of 24 view, is these any dispute in your mind that you 25 do not take issue with the legal responsibility 2 3 4 S 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page l72 Cnuss - CONFIDENTIAL that there was any ill motive of the general partner in reporting the results of the Gibson Dunn investigation to the investors? MR. BRECHER: Objection. A. I don't know. Q. Well, the report caused the management company itself enormous damage, didn't it? MIL BRECHER: Objection. A. Yes. Q. And in fact, in some respects, it virtually wiped them out; isn't that right? MR.. BRECHER: Objection. A. 1 don't know. Q. Well, they got an enormous percentage of redemption requests; correct? MR.. BRECHER: Objection. A. I don't know. Q. They ultimately were sold -- the assets were transferred to Fortress; correct? MR. BRECHER: Objection. A. Correct. Q. The results of the Gibson and Dunn report caused enormous damage to the management Page 171 1 Gruss - CONFIDENTIAL 2 of the management committee, particularly the 3 general partner, to report to the investors of 4 the funds of the results of the Gibson Dunn 5 investigation? 6 MR. BRECHER: Objection. 7 A. I don't think -- I don't know if 8 they have a legal obligation to report it to 9 investors. I don't have an issue whatsoever that 10 they did report it to investors. 11 Q. Well, you don't believe that they -- 12 that the report to the investors was gratuitous 13 on their part, do you? 14 MR. BRECHER Objection. 15 A. Can you explain that? 16 Q. Well, do you contend that the report 17 to the investors was — had a bad motive as to 18 Petty Gruss? 19 A. Yes. 20 Q. So is it your view that reporting it 21 to the investors was to screw Peny Gruss or what 22 the report said screwed Peny Gruss? 23 A. I think what they said screwed Perry 24 Grins. Not that they issued the report 25 Q. So you are not taking the position Page 173 1 Gruss - CONFIDENTIAL 2 company; isn't that right? 3 MR. BRECHER: Objection. 4 A. I don't know if that's what caused 5 it. 6 Q. You can't testify as you sit here 7 today that the publication of the March 2007 8 investor report caused the management company 9 substantial injury? 10 MR. BRECHER: Objection. 11 A. No, I can't 12 Q. But you agree that issuing that 13 report wasn't the product of some bad motive 14 vis-a-vis Perry Gruss? 15 A. I think that's correct. Correct 16 meaning it was not 17 Q. So take a look at page 2 of 19, of 18 Gruss 19. You say in the middle, quote, "Things 19 are okay. Frustrating. Very close to coming out 20 and clearing my name with the truth. I'm toxic 21 until people bear that Zwim was the one who 22 ordered the code red. It blows." 23 What did you mean by that? 24 A. There are — Pm sure we'll get into 25 this -- there are several exceptions I take to 44 (Pages 170 - 173) VERITEXT REPORTING COMPANY EFTA01124916 Page 174 1 Gnus - CONFIDENTIAL 2 the March 26th or -7th investor memo. What 3 I'm saying here is I would have liked someone to 4 come out and just state the facts. 5 Q And what's code red mean? 6 (Witness peruses the exhibit) 7 A. I don't knoW what I'm referring -- 8 it's — code red is clearly the Jack Nicholson 9 movie reference. I don't know what I meant by 10 that, but that's clearly what code red is. 11 Q. What happens in the lack 12 Nicholson -- 13 A. I forget the name of the movie. Few 14 Good Men. Thank you. 15 Q. And is it Zwim -- what did you mean 16 by Zwim ordering code red? 17 A. I don't know. 18 Q. Did you mean ordering your firing? 19 A. I don't 'mow. I don't think so. 20 Q. Did it mean Zwim ordering some of 21 the events described in the March memo? 22 A. Possibly. I don't know. 23 Q Why were you close to coming out — 24 withdrawn. 25 How — how were you close to coming Page 176 1 Gnus - CONFIDENTIAL 2 whatever -- I don't recall what's in there about 3 the defamation. 4 Q. What are the damages from the 5 defamation that you're seeking? 6 A. That's what I mean. I don't recall. 7 Q. What are you seeking? 8 A. What do you mean? 9 Q. You just testified that you're not 10 seeking to get back any money for your 11 reputation? 12 MR. BEECHER: Objection. 13 A. That's not what I said. 14 Q. What did you -- 15 A. That's not what I said. 16 Q. What did you say? 17 A I said I don't expect that to clear 18 my reputation. I did not link it financially at 19 all. 20 Q. Do you expect to get damages for the 21 damage to your reputation? 22 A. I would like to. 23 Q. Take a look at the complaint, 24 Exhibit 1. 25 A. Got it. Page 175 1 Grass - CONFIDENTIAL 2 out and clearing your name with the truth as of 3 August of 2007? 4 A. I - I don't know. 'don't want to 5 guess. 6 Q. What do you think it was? 7 A. It's very possible by that time, I'd 8 been contemplating filing a suit not unlike this 9 one. 10 Q. Is it your intention by this lawsuit 11 to clear your name? 12 A. No. Hopefully that will be a 13 derivative o4 but no. 14 Q. What's the intention on your part in 15 filing this lawsuit? 16 A. To get what I'm owed. 17 Q. And what do you see that to be? 18 A. The numbers we discussed and the 19 numbers that are in the complaint. 20 Q. What arc the numbers -- 21 A. I don't — I don't intend on trying 22 to get my reputation back. 23 Q. What are the numbers that we 24 discussed? 25 A. The 3 million that I think, and Page 177 1 Chins - CONFIDENTIAL 2 Q. Take a look at paragraph 34 on 3 page 9. 4 (Witness peruses the exhibit) 5 Q. Up until October 2006, what did you 6 understand was your public reputation? 7 • A. Up until 2006? 8 Q. October. 9 A. Stellar. 10 Q. With whom? 11 A. I would say anybody that knew me. 12 Q. Let's talk about the financial 13 industry. 14 A. Uh-huh. 15 Q. In what areas of the financial 16 industry did you believe you had a stellar 17 reputation? 18 A. That's incredibly broad. I believe 19 it was the opinion of bankers I've dealt with, of 20 service providers I've dealt with, of advisers 21 I've dealt with, of colleagues I've dealt with, 22 of people I reported to, people who repotted to 23 me. 24 Q. So it's your testimony, then, that 25 until late October 2006, you had a stellar 45 (Pages 174 -177) VERITEXT REPORTING COMPANY EFTA01124917 Page 178 1 Grvss - CONFIDENTIAL 2 reputation? 3 A. That would be my opinion, yes. 4 Q. And is there anything that you have 5 learned that the management company would have 6 done anything to damage that reputation before 7 the period of late October 2006 as referenced in 8 paragraph 34 of your complaint? 9 (Witness penises the exhibit.) 10 MR. BRECHEL Objection. 11 A. As specifically referencing 34? 12 Q. Yes. 13 (Witness peruses the exhibit) 14 A. I don't understand the specific 15 question. 16 Q. Well, what I'd like to try to just 17 understand is a starting point for when you 18 believe damage to your reputation began. 19 A. I don't — I don't know. You can't 20 put a date on it 21 Q. We can put a time period on it, 22 can't we? 23 A. I'll certainly say after I left D.B. 24 Zwint 25 Q. And what is it that you understand Page 180 1 Gross - CONFIDENTIAL 2 took place? 3 A. I believe they were ongoing from 4 when I left straight through to at least — 5 because your time frame period is October to 6 March, the entire period. 7 Q. What's — 8 MR. SIFFERT: You were asking till 9 November. 10 Q. I was asking you first for the 11 October/November time period. 12 A. Right. 13 Q. What is it that Mr. Zwim did that 14 you blow fusthand or secondhand to damage — to 15 defame you during October and November 2006? 16 A. I believe he had phone calls with a 17 bunch of his investors. 18 Q. Did you — 19 A. And employees. 20 Q. Do you understand that anybody other 21 than Mr. Zwim made those phone calls? 22 A. Yes. 23 Q. Who? 24 A. David Lee made those phone calls. I 25 believe Harold Kahn made those phone calls. I 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 Page 179 GIUSB - CONFIDENTIAL in October when you left D.B. Zwim that damaged your reputation? A. Things that were said by Dan Zwirn and others at the amt to a host of people. Q. Now, I'm separating out — Pm not asking you about anything relating to the March 2007 investor report. You understand? A. I do now, yes. Q. So focusing on, the period of October 2006 and November 2006, what do you contend as you sit here today were acts of defamation by Dan Zwim or others associated with the management company? A. I'm not sure I use the words in relation to 34, but I believe there was an — I believe there was a reference to Dan making a series of calls to investors alleging certain things that bad gone on. That's the basis. Q. And when did you understand that series of calls took place? A. After I left. I don't know the date. I wasn't — Q. And for what period of time after you left do you understand these conversations Page 181 1 Gruss - CONFIDENTIAL 2 believe Elise Hugshirc [sic) or Hugs- — made 3 those phone calls. She was the — she was in IR. 4 And there may have been -- maybe Lawrence Cutler, 5 but — 6 Q. And bow do you know those phone 7 calls were made? 8 A. I was told at the time just through 9 the grapevine that they were made. And then I 10 believe it was in a — in an article in one of I I the publications. And rve subsequently, through 12 discovery — I don't know if I'm allowed to — 13 there's clearly documentation that these calls 14 were made. 15 Q. But what I'm asking is you as of 16 July 2009, when you filed the complaint — 17 A. Yes. 18 Q. — what did you know about who the 19 calls were made to? 20 A. It was all — it was all of those 21 circumstances that I just explained to you, 22 except for the discovery. Because I didn't have 23 that information. 24 Q. What employees of the company told 25 you that those calls were being made? 46 (Pages 178 - 181) VERITEXT REPORTING COMPANY EFTA01124918 Page 182 1 Gruss - CONFIDENTIAL 2 A. Jim Wilk, Bob Racusin, and there may 3 have been others. 4 Q. So your testimony — 5 A. In addition to third-party, but you 6 said employees. 7 Q. Right. 8 Your testimony is that after 9 October 4, 2006, after you had left, and after 10 the so-called telephone calls from management 11 were being made to investors, that you had 12 conversations with Jim Wilk and Bob Racusin, who 13 are still at the management company, who told you 14 of the fact of those calls? IS A. I believe so. I don't know when I 16 spoke to Wilk. I don't 'mow if it was between 17 October and November. So I take that back. I'm 18 not sure. Not sure. 19 Q. Is it the fact that sometime before 20 October and the March 2007 letter that Wilk and 21 Racusin told you to whom calls were being made? 22 A. No, not specifically to whom calls 23 were being made. 24 Q. Just the fact that calls were being 25 made to investors? Page 184 1 Gruss - CONFIDENTIAL 2 Q. Eric Felton is somebody you 3 identify who you spoke to at the request of Dan? 4 A. No, I don't think Felton was the 5 request of Dan. I don't recall who. 6 Q. You earlier testified before lunch, 7 but just so I'm clear, you recognize and agree 8 that the general partner has an obligation to 9 tell investors of its funds about material events 10 in the conduct of the funds? II A. I don't know if that's the case. 12 Q. You don't agree that that's a fact? 13 A. No, I don't know if that's a fact -- 14 Q. rm asking you -- 15 A. — that they have the legal 16 obligation. 17 Q. I'm asking you whether you 18 understand and believe that the general partner 19 of a management company running onshore and 20 offshore funds has a legal obligation to 21 investors to notify investors of material events 22 in the business of the management company that 23 would affect the investors' funds? 24 A. I don't know if they have a legal 25 obligation. Page 183 Gross - CONFIDENTIAL 2 A. Yes. But more so I found out 3 through the community. The hedge fund world 4 is -- you know, ifs a small world. 5 Q. And are you referring to the hedge 6 fund community of investors or management company 7 people? 8 A. Both. 9 Q. What were you told and by whom? 10 A. That they were — that they were II having a series of calls with investors. 12 Q. Did you talk to any investors? 13 A. I spoke to —1 definitely spoke 14 to -- but I don't know when, the time. I spoke 15 to Erie Felton at Grosvenor Capital. I believe I 16 spoke to possibly two others as well on Dan's 17 behalf. Dan wanted me to speak to an investor. 18 1 believe so. 19 Q. After October 4th? 20 A. 1 believe so. yes. 21 Q. Who was that? 22 A. I don't recall. I also ran in to 23 someone on the street, literally, Staling 24 Starnes. Ashok, A-S-H-O-K, I think his last name 25 is C-H-A-C-R-A. Staling Starnes. Page 185 1 Gruss - CONFIDENTIAL 2 Q. Would you understand if the law 3 imposed such an obligation? 4 MR. BRECHER: Objection. 5 A. I don't know. 6 Q. Is that something that sounds 7 ridiculous to you or something that sounds like 8 it makes sense? 9 MR. BEECHER: Objection. 10 A. It doesn't sound ridiculous. 11 Q. You just testified earlier that you 12 considered it within the legal obligation of the 13 general partner of a management company to notify 14 the investors of the onshore and offshore fund of 15 the results of the investigation by Gibson Dunn 16 and Deloitte; correct? 17 MR. BRECHER: Objection. 18 A. I don't I don't believe I said 19 that they have a legal obligation. I think you 20 asked the question do I take exception to it. 21 thought that's what you said. 22 Q. Okay. 23 A. I absolutely don't take exception to 24 that. If they have a legal obligation, they 25 absolutely should disclose it. 47 (Pages 182 -185) VERITEXT REPORTING COMPANY EFTA01124919 Page 186 Gruss - CONFIDENTIAL 2 Q. Do you think that it was good 3 business judgment for the general partner of a 4 management entity to notify the investors of the 5 fund of material events affecting the funds that 6 take place at the management company responsible 7 for running the funds? 8 MR. BRECHER: Objection. 9 A. Yes. 10 Q. And you were in fact the CFO; 11 correct? 12 A. Of -- yes, correct. 13 Q. The management company. 14 A. Correct IS Q. And like it or not, you were being 16 forced to leave the company because of the misuse 17 of funds, allocation of expenses as between the 18 management company and the funds; isn't that 19 right? 20 MR. BRECHER: Objection. 21 A. I don't know if that's right. 22 Q. Well, you testified earlier that you 23 understood that Shulte Roth investigated two 24 circumstances, both of which related to expenses 25 attributable to the management company in Page 188 Gnus - CONFIDENTIAL 2 that there were violations of the relevant 3 agreements in respect of the financial relations 4 between the management company and the funds? 5 A. Shulte Roth never told me that. 6 Q. But you learned that; not from 7 Shulte Roth, but you learned that? 8 A. That it was Dyes -- 9 Q. Decision. 10 A. That it was — yes. 11 Q. His decision based on what be had 12 teamed from Shulte Roth? 13 A. That's what he told me, yes. 14 Q. So you knew that the general partner 15 was taking a position based on what he learned 16 front his lawyers that there was a violation of 17 the provisions of the agreements between the 18 management company and the funds that related to 19 the financial relations between those two 20 entities; right? 21 A. That is what Dan told me. 22 Q. And assuming that that were true, 23 would you take exception to Dan Zwim believing 24 that he had an obligation to tell investors of 25 that fact — Page 167 1 Gnus - CONFIDENTIAL 2 relation to the onshore fund and the offshore 3 fund; correct? 4 A. Yes. 5 Q. And the results of that Shulte Roth 6 investigation led you to leave being forced to 7 leave the company; correct? 8 A. Yes. 9 Q. There isn't any other reason that 10 you left the company? 11 A. That's correct. 12 Q. It's a fact, is it not, that Shulte 13 Roth concluded that there were violations of the 14 relevant agreements dealing with the financial 15 relations between the funds and the management 16 company? That's what the Shulte Roth 17 investigation had concluded, isn't that right, as 18 a first step? 19 A. I don't know. 20 Q. But -- 21 A. I don't lotow. Tve never seen any 22 conclusion. Pve never seen any documents. 23 Q. But didn't you learn that the reason 24 why Dan Zwirn had the conversation with you that 25 he had on October 4th was because he learned Page 189 1 Gruss - CONFIDENTIAL 2 MIL BRECIIER: Objection. 3 Q. -- given the seniority of your 4 position and the nature of the conduct? 5 MR. BRECHER: Objection. 6 Q. You can answer. 7 A. Oh, no. 8 Q. It wouldn't have been appropriate 9 for Dan to have kept that secret, in other words; 10 isn't that tight? 11 A. It wouldn't have been appropriate. 12 Q. For him to keep it secret? 13 A. Yes, that's right 14 Q. So there was nothing in your mind 15 wrong, if you will, with Dan Zwirn, David Lee and 16 others picking up the phone and telling investors 17 of those basic facts after October 4, 2006? 18 A. That's not what they said. 19 Q. Just, first of all, was there 20 anything wrong in your mind with Dan Zwim, David 21 Lee, and others picking up the phone and telling 22 investors of those basic facts after October 4, 23 2006? 24 A. There was not. 25 Q. If the facts ended up to be that Dan 48 (Pages 186 - 189) VERITEXT REPORTING COMPANY EFTA01124920 Page 190 1 Gruss - CONFIDENTIAL 2 Zwirn, David Lee and others' conversations with 3 investors after October 4, 2006, followed a 4 script written for them by their law firms which 5 very particularly said only what I have just 6 said, would you have a problem with that? 7 MR. BRECHER: Objection. 8 A. If they — if they said that there 9 were two issues that occurred by and between the 10 management company and the funds related to fund II expenses -- management company expenses being 12 used with fund money to pay, no. 13 Q. But if it was —if they said, in 14 addition, that you as CFO were being held 15 responsible for that because of what you did and 16 didn't do, l take it that wouldn't change your 17 answer in any respect? 18 MR. BRECHERI Objection. 19 A. That's not what they said. 20 Q. Did you sit in on any of those 21 calls? 22 23 24 25 A. A. No, I didn't. Do you have a tape recording -- No. — of any of toes calls? Page 192 1 Gruss - CONFIDENTIAL 2 A I don't 'mow. If I did, l did. 3 Q. What did you understand Mr. Zwim, 4 David Lee or others said to investors other than 5 the fact of the conduct Perry Gruss' involvement? 6 A. I was lead to believe they said that 7 I directed, authorized all of these activities. 8 Q. Anything else? 9 A. Probably, but I don't know. 10 Q. Is there anything else that provides 11 the basis for this lawsuit in which you claim you 12 were defamed by those conversations? 13 A. Are we still within October and 14 November? 15 Q. Yes 16 A. I don't know. 17 Q. I want you to take the entire period 18 from October 4, 2006, up to and before the 19 publication of the March 2007 report. 20 A. Uh-huh. 21 Q. limit you to tell me all of the 22 kinds of things that you understand Dan Zwirn, 23 people agenting at his direction said to 24 investors that defamed you. 25 A. From October till today? Page 191 1 Gruss - CONFIDENTIAL 2 A. No. 3 Q. Whatever you know about those calls 4 you know third hand; correct? 5 A. Correct. 6 Q. Or secondhand? 7 A. Correct. 8 Q. Well go through who you learned 9 that from, but I'm asking you a hypothetical. If 10 the record reflected that what the investors were 11 told were simply the facts of the investigation, 12 that you were responsible, that it was what you 13 did and didn't do, do you have any quibble with 14 that act by the general partner? 15 MR. BRECBER: Objection. 16 Q. Or people acting on his behalf? 17 MR. BRECHER: Objection. 18 A If they viewed in their opinion that 19 the responsibilities fell underneath the CFO, no, 20 I do not have an objection. 21 Q. But you testified earlier that this 22 conduct did fall within the CFO's responsibility, 23 didn't you? 24 A. f don't know. 25 Q. The record will speak for itself. Page 193 1 Gruss - CONFIDENTIAL 2 Q. No, from October until before the 3 March '07 report was issued. 4 A. I was told that he said that I bad 5 committed fraud; I was going to be criminally 6 prosecuted; I was dishonest. And there are 7 several other things that may or may not rise to 8 that level. 9 Q. All of those things said between 10 October of '06 and before March of '07? 11 A. I believe so. 12 Q. And who do you know that from? 13 A. In- — industry -- industry people 14 reaching out and contacting me. And there's -- 15 Q. Fraud - 16 A. One clear e-mail. 17 Q. Hold on. 18 A. Sure. 19 Q. Fraud, criminally prosecuted, 20 dishonest. What did you learn -- withdrawn. 21 Going back to the period of 22 October 4th until November 7, it's your 23 testimony that you learned from people in the 24 industry that during those five months, you were 25 told that Dan Zwim or others acting on behalf of 49 (Pages 190 -193) VERITEXT REPORTING COMPANY EFTA01124921 Page 194 1 Gruss - CONFIDENTIAL 2 the partnership told people that you engaged in 3 fraud, that you would be criminally prosecuted, 4 and that you were dishonest? 5 A. You're pinning me down to dates -- 6 Q. Yes, I am. That's what the 7 discovery is about. 8 A. I understand. 9 — that occurred six years ago or 10 five years ago or four years ago. I can't be 11 absolutely certain what period it is. 12 Q. You mean it's possible that these 13 comments were made after March of '07? 14 A. Yes, certainly possible. 15 Q. It's not possible they were made 16 before October of '06? 17 A. Correct. 18 Q. Because you had a stellar reputation 19 up until then? 20 A. Correct. 21 MR. LEVINE: Let's mark Exhibit 20. 22 (Gruss Bxhibit 20, Plaintiffs 23 Initial Disclosures, marked for 24 identification.) 25 Page 196 1 Gruss - CONFIDENTIAL 2 if anything you learned from them and then to 3 see, at the end of this, whether there are any 4 people that maybe are not on this list that 5 forever whatever reason you now realize ought to 6 be on this list 7 A. Okay. 8 Q. I'm not going to ask about all of 9 them because some of them I understand the 10 situation. 11 Go to number 6, David Proshan. 12 After you left in October of 2006, did you have 13 any conversation with David Proshan in which he 14 told you anything that Dan Zwim was telling 15 investors or anybody on behalf of the management 16 company was telling the investors? 17 A. I have never spoken David Proshan 18 since the day I leR 19 Q. Number 7, Patricia Peters, do you 20 know Patricia Peters? 21 A. Sure. She used to be Dan's 22 assistant 23 Q. After you left, did you talk to 24 Patricia Peters? 25 A. I believe there may have been a Page 195 1 Gruss - CONFIDENTIAL 2 BY MR. LEVINE: 3 Q. Have you ever seen this document 4 before? 5 A. I don't believe so. 6 Q. Plaintiff's Gruss 20 is what's 7 called plaintiffs initial disclosures. Id's 8 dated and signed December 9, 2009, by your 9 lawyer. It's a document required to be filed 10 under the federal rules. Okay, Mr. Gruss? 11 A. Yes. 12 Q. If you see the second sentence, it 13 says, "The following are the names, addresses, 14 phone numbers of individuals likely to have 15 discoverable information along with the subjects 16 of that information that plaintiff may use to 17 support his claims and defenses." 18 So this is a document, Mr. Gress, by 19 which we're given notice of all of the people 20 that you can identify to answer — in answer to 21 the question that I just asked you. 22 A. Right. 23 Q. Okay. 24 So what I'd like to do is go through 25 some of the names here with you to fad out what Page 197 I Gruss - CONFIDENTIAL 2 completely random hi, how's things e-mail flying 3 around; but no, I have not spoken to Trish 4 Peters. 5 Q. Did Patricia Peters ever give you 6 about information of the alleged defamatory 7 statements made by Mr. Zwim? 8 A. No, no. 9 Q. Do you have of information of what 10 she knows Mr. Zwim said or did or anybody acting 11 on his behalf said or did after October 4, 2006? 12 A. Via Trish? No. 13 Q. Number 11, Tim Wong, did you talk to 14 Timothy would know after October 4, 2006? IS A. I don't —1 don't believe i did. I 16 think I may have run into him at it a restaurant 17 once, but having nothing to do — we did not — I 18 think I see your point. We did not discuss 19 anything to do with any of this defamation, 20 et cetera, nothing. 21 Q. Did you learn from Mr. Wong anything 22 that Dan Zwim said about you after October 4, 23 2006, or that anyone on behalf of the partnership 24 said about you? 25 A. No. 50 (Pages 194 -197) VERITEXT REPORTING COMPANY EFTA01124922 Page 19$ 1 Gross - CONFIDENTIAL 2 Q. Chris Suan, S-U-A-N, have you talked 3 to Chris Suan since October 4, 2006? 4 A. I don't believe I've spoken to him 5 since the day I left. 6 Q. Vasan Kesavan, have you spoken to 7 him since October 4, 2006? 8 A. I have not. 9 Q. Susan Chen, an employee of Zwim, 10 did you talk to her since October 4th? 11 A. Yes, I have. 12 Q. How many times? 13 A. A handful. 14 Q. Is she somebody that you maintained 15 a relationship with? 16 A. She's someone who, if she called, 17 I'd pick up the phone. Put that it way. She's 18 just such a nice woman. 19 Q. Did she share with you any 20 information about what Dan Zwim or people acting 21 on behalf of the partnership were saying to 22 investors after October 4, 2006? 23 A. After October 4, 2006, yes. I don't 24 know what the cap on that date is. I don't know. 25 Q. What did she say to you? Page 200 I Grass - CONFIDENTIAL 2 (Record read.) 3 A. Oh, of course. Of course, yes. 4 Q. So if Dan Zwim were telling 5 somebody that you would be personally 6 prosecuted — criminally prosecuted, you 7 appreciate that he would be expressing his own 8 opinion? 9 MR. BRECHER: Objection. 10 A. Unless he's implying that he was 11 told that by someone else. 12 Q. Well, is it your understanding that 13 a prosecutor's office could or would actually 14 tell somebody like Dan Zwim what a grand jury 15 was going to do before it did it? 16 MR. BRECHER: Objection. 17 A. I have no idea. I have no idea. 18 Q. Have you ever heard that? 19 A. That he -- 20 Q. Do you actually believe that Dan 21 Zwim — that in what you're relying on what Dan 22 Zwim said, that he was doing anything other than 23 expressing an opinion if in fact it happened? 24 A. Oh, no, Put not. Yeah, yeah, yeah, 25 Pm not saying he had the inside track. No, not Page 199 1 Gruss - CONFIDENTIAL 2 A. She said also that that he said 1 3 was going to be criminally prosecuted. 4 Q. She said that? 5 A. Yes. 6 Q. What else did she say? 7 A. Sort of the same — it centers 8 around the same issues. 9 Q. What are the kinds of things she 10 said? 11 A. She said that — she may have just 12 said criminally prosecuted. I don't know. I was 13 responsible for everything and, you know, he had 14 no idea what was going on, et cetera. And Pm 15 not saying she heard it only from Dan or only 16 from David. I don't know. 17 Q. Well, do you have any idea who she 18 heard it from? 19 A. I don't recall if she told me 20 specifically. 2I Q. Do you understand that the decision 22 about criminal prosecution is not one that Dan 23 Zwim controls? 24 A. Say again. 25 MR. LEVINE: Read it back. Page 201 1 Grass - CONFIDENTIAL 2 at all. 3 Q. You agree — 4 A. Not at all. 5 Q. — you agree that to the extent you 6 are complaining about those comments, that Dan 7 Zwim would have only been expressing his 8 opinion? 9 A. And the opinion of the company. 10 Q. Which is -- 11 A. And the GP. 12 Q. — what? 13 A. And acting in his capacity as GP. 14 Q. Right. 15 A. I don't know if you're making a 16 distinction. Fm just - 17 Q. I'm not — 18 (Discussion off the record.) 19 Q. But am I correct that wearing all 20 four hats — 21 A. Yes. 22 Q. -- that you alluded to earlier, that 23 if Dan Zwim did use the exact words that you're 24 talking about, that you would agree that he was 25 only expressing an opinion? 51 (Pages 198 - 201) VERITEXT REPORTING COMPANY EFTA01124923 Page 202 1 Caws - CONFIDENTIAL 1 2 MR. BRECHER: Objection. 2 3 A. I don't — !don't know what else he 3 4 would be expressing because, like youYe 4 5 saying -- 5 6 Q. I was going to ask 6 7 A. Yeah, I — 7 8 Q. - frankly, did you identify a 9 anything else that he would be expressing if he 9 10 said that other than his opinion? 10 11 A. He's not — he is not a district 11 12 attorney. 12 13 Q. And if in fact Mr. Zwim actually 13 14 said to somebody that you committed fraud, 14 15 wouldn't that be the same kind of opinion as 15 16 being the one that would say that you would be 16 17 criminally prosecuted? 17 18 MR. BRECHER: Objection. 18 19 A. It would my opinion, it would 19 20 certainly be in the same family, yes. 20 21 Q. And would a third party in that 21 22 family be the words if he said that you were 22 23 dishonest? 23 24 A. No, I think that's diffcvsnt. 24 25 Q. How is that different? •age 204 Gruss - CONFIDENTIAL investigation determined. I may be splitting hairs. Can you — Q. Well, I'll ask the large question and then you'll have the large question. Do I understand correctly that there are basically two different kinds of defamatory statements that you complain about in this case. One are statements about your conduct that are the product of the investigations, and two are statements of opinion by Dan Zwirn, in particular, and maybe others, that you were going to be criminally prosecuted and you had engaged in fraud? MR. BRECHER: Objection. A. I don't think that's inaccurate. Q. In other words, that is what you're relying on here? MR. BRECHER: Objection. A. I believe so. Q. Is there any other kind of statement that you are relying on in your claim of defamation? A. Is there any -- Fyn going — Q. Let's break it down. Page 203 1 Gruss - CONFIDENTIAL 2 A. Well, I don't think you need — I 3 don't think you need a district attorney to say 4 someone's dishonest or not. But it may or may 5 not have been his opinion, if that's where you're 6 going. 7 Q. If -- what I'm trying to identify 8 for purposes of this case is for you to separate 9 the kinds of statements that you consider 10 defamatory. 11 A. Okay. 12 Q. And there are certain statements I 13 take it that you consider defamatory that related 14 to what the investigation determined; correct? 15 A. Yes. 16 MR. BRECHEIL Objection. 17 Q. And — 18 MR. BRECHER: Please note my 19 objection. 20 Q. And — yes? Do I have an answer? 21 A. Can you repeat the question? 22 Q. There are certain statements that 23 you consider defamatory that related to what the 24 investigation determined; correct? 25 A. Not necessarily what the Page 205 1 Gruss - CONFIDENTIAL 2 A. I'm actually confused about the 3 whole last time — 4 Q. Mr. Gruss, Let's break this down. 5 The claim for defamation relies on -- withdrawn. 6 The claim for defamation is based on 7 statements made by Dan Zwim and others about you 8 after October 4, 2006; correct? 9 A. Yes. 10 Q. And you contend it was defamatory 11 for Mr. Zwim and others to report what you did 12 with respect to the matters that Gibson and Dunn 13 investigated and Shulte investigated and — 14 A. Incorrect. 15 Q. You don't consider that to be 16 defamatory? 17 A. That's not what you asked. 18 Q. Do you contend that to the extent 19 Mr. Zwim and others acting on behalf of the 20 management committee reported the results of 21 either Shulte Roth's investigation or Gibson and 22 Dunn's investigation to the investors and the 23 investing community, that to the extent their 24 report was confined to what was found in the 25 investigation, that that report will not be 52 (Pages 202 - 205) VERITEXT REPORTING COMPANY EFTA01124924 ►sae 206 1 Gruss - CONFIDENTIAL 2 defamatory as to you? 3 MR. B1tECHER: Objection. 4 A. If it was handled prudently, the 5 investigation, I would not have an issue with it. 6 Q. Are you the judge of whether it's 7 handled prudently? 8 MR. BEECHER: Objection. 9 A. I don't know. 10 Q. Are you — is it you agree, do II you not, that Dan Zwim and others acting on 12 behalf of the management company properly 13 reported the results of the investigation to the 14 investors and the investing public? 15 A. If the results of the investigation 16 were what was reported in that investor letter, 17 no, I don't disagree. 18 Q. You don't disagree? 19 A. No, I don't 20 Q. So they're entitled to do that? 21 A. If the results were exactly what 22 they — and they thought those results were 23 accurate, they do not have an obligation to do 24 it, like I said earlier, but if they did it ... 25 Q. What does the shrug mean? Shrug Page 208 1 Grass - CONFIDENTIAL 2 Q. Well, are you claiming here injury 3 by virtue of what was in the report about what 4 the report found -- 5 A. There are aspects of that. 6 Q. — and the aspects of the report 7 that are defamatory of you because you don't 8 agree with the conclusions of the report? 9 A. Exactly. 10 Q. Is there any other position other II than you disagree with the conclusions of the 12 report for which you claim is defamatory in the 13 March letter? 14 A. If the conclusions of the report I 15 disagree with, then the way the investor letter 16 was delivered I certainly disagree with. 17 Q. What you disagree with is ultimately 18 that they held you responsible and not somebody 19 else? 20 A. No, I did not say that 21 Q. What you disagree with is the fact 22 that they held you responsible; isn't that right? 23 A. Yes. 24 Q. What you're complaining about in the 25 investor report was that the law firm and the P&P 202 1 Gruss - CONFIDENTIAL 2 means it's acceptable and you understand 3 A. Yes. 4 Q. — they had an obligation to do it? 5 A. No. Earlier I said I can't opine 6 whether or not they had a legal obligation to do 7 it. Right? I said that they -- they didn't have 8 a legal obligation to do it. 9 Q. You also said, then, that you didn't 10 consider it inappropriate for them to do it? II A. Correct, correct. 12 Q. And if they did it, you didn't 13 believe it was being made with an intent to harm 14 you? 15 A. The statements in the investor 16 letter? 17 Q. Right. 18 A. Correct. 19 Q. If they did it and it was based on 20 what the report actually found, then the 21 statements themselves wouldn't have even been 22 false, isn't that right, because it would have 23 been the product of their investigation? 24 MR. BRECHER: Objection. 25 A. I - I don't know. !don't know. Page 209 1 Gruss-CONFIDENTIAL 2 accounting fmn ultimately concluded that you 3 were responsible for some of the conduct 4 described there and not somebody else? 5 A. I hadn't thought about it that 6 deeply. 7 Q. Even if you thought about it 8 casually, what you're complaining about is that 9 they blamed this on you and not somebody else? 10 A. Who's "they"? 11 Q. The people that issued the report. 12 A. Well, the people that issued the 13 investor letter, which is the company. 14 Q. I guess what I'm getting — I want 15 to understand, Mr. Gruss, what your defamatory 16 case is based on. 17 A. Right. 18 Q. Just going to where I started here, 19 apart from the investor report, apart from the 20 facts that are tcyorted in the investor report 21 and the positions that are taken in the investor 22 report, are you also complaining that statements 23 were made about you to the effect that you were 24 going to be criminally prosecuted and you were 25 dishonest? 53 (Pages 206 - 209) VERITEXT REPORTING COMPANY EFTA01124925 Page 210 Gruss - CONFIDENTIAL 2 A. Uh-huh. 3 Q. Yes? 4 A. Yes. 5 Q. And those are statements which you 6 understand and recognize are statements of 7 opinion of the people that made them; correct? 8 MR. BRFCHER: Objection. 9 A. No. 10 Q. What else are they? II A I don't know. 12 Q. Well, how would you describe them if 13 you wouldn't agree that they're opinions? 14 A I believe earlier I had said that 15 one of the -- one of the ways is of course 16 opinion. I also said that he is not a district 17 attorney and neither is anybody else, to my 18 knowledge, at the firm. That doesn't mean there 19 aren't any other ways to go about it and ways to 20 look at it in between those two. I don't know. 21 Q. Well, as you sit here today, can you 22 think of any other way that you would describe 23 it? 24 A No, no. 25 Q. Is there any other kind of statement Page212 1 Grass CONFIDENTIAL 2 thought that they were owed more money than they 3 were under their contract. 4 Q. During any of the conversations that 5 you had with Susan Chen after you left, did she 6 tell you anything about what Dan Zwim or others 7 said to investors about why you left? 8 A. Not to investors. She didn't have 9 knowledge of - I0 Q. What did she tell you about what Dan II Zwim or others said about you and why you left, 12 anybody other than investors? 13 A. It was the same —it was the same 14 sort of issues that we discussed earlier. 15 Q. Fraud -- 16 A. Fraud, criminally prosecuted, yes. 17 Q. Dishonest? 18 A. Dishonest, yes. 19 Q. And to whom did she tell you that 20 they had said that? 2l A. I don't remember if she specifically 22 said anybody, whether it was Dan or — it was the 23 always the same 24 Q. Well, tell me the gist of the 25 conversation with Susan Chen. What did she say Page 211 1 GAMS - CONFIDENTIAL 2 that you're complaining of besides those two 3 kinds of statements? By "kinds of statement,• I 4 mean the whole world of statements based on the 5 investigation report and the two comments that 6 you were going to be criminally prosecuted and 7 dishonest — criminally prosecuted and engaged in 8 fraud. 9 A. There would I don't believe 10 there's anything else, if that helps. 11 MR. LEVINE: Let's take a break. 12 (Recess from the record.) 13 BY MR. LEVINE: 14 Q. So after October 4,2006, how many 15 conversations did you have with Susan Chen? 16 A. I had a few conversations with her 17 about how she's doing. She was at Zwirn for a 18 long time after 1 left. And then 1 received a 19 call out of the blue from an attorney in Houston 20 who is representing her and another individual in 21 a lawsuit against the company. 22 Q. Who was the other individual? 23 A Todd Dittman. 24 Q. And what was that lawsuit about? 25 A. It was about wages. Somehow they Page 213 1 Gross - CONFIDENTIAL 2 to you; what did you say to her? 3 A. That kind of was the gist of what I 4 just said. It was -- she just brought it up -- 5 she just brought up, you know, the fact that she 6 was being shorted and blah, blab, blah. And I 7 said that's okay. 8 You have to understand something, 9 pride got in the way of me going around to 10 everyone and saying Hey, did you say X, Y and Z. 11 They came to me. I'm sorry. 12 She said to me that — 13 Q. Pride is the reason you brought this 14 lawsuit? 15 A. No, financial — financial — and he 16 they owe me money. That's the reason I brought 17 the lawsuit. 18 So what she said to me was that she 19 was suing them. So she went through why she was 20 suing them, and would I be willing to testify for 21 her in her lawsuit. 22 Q. And what did you say about that? 23 A. I said I don't believe so, Cauley 24 (Ph]. 25 Q. Was it in that conversation or 54 (Pages 210 - 213) VERITEXT REPORTING COMPANY EFTA01124926 Page 214 Gross - CONFIDENTIAL 2 conversations that you asked her what he had been 3 saying about you? 4 A. No. She — she brought it up. 5 Q In that — 6 A. That these are the kind of things 7 that she heard around the office and that she 8 would be willing to testify to those things if I 9 call her. 10 Q. So this was a conversation she 11 initiated — 12 A. Yes. 13 Q. — in which you had told her you 14 were thinking of suing him, of Dan and the 15 company? 16 A. I don't recall — I don't recall if 17 I told her. 18 Q. Well, one of your earlier 19 conversations — 20 A. It depends on the time. 21 Q. In one of your earlier 22 conversations, had you told Susan Chen that you 23 were contemplating a lawsuit against Zwim? 24 A. Prior to the — when she called me 25 about her lawsuit? Page 216 1 Gruss - CONFIDENTIAL 2 stating a fact. 3 Q. Stating a fact that you won't call 4 her because of the circumstance that I just asked 5 you? 6 A. That's not — that's not inaccurate, 7 yes. 8 Q. You love -- lawyers love double 9 negatives. Tve never had a witness that loved 10 them. 11 Todd Dittman, same kind of 12 conversation as Susan Chen? 13 A. I don't recall if I ever had a 14 conversation with Todd Dittman]; yeah. 15 Q. Ray Chan? 16 A. Yes. 17 Q. Who is Ray Chan.? 18 A. Ray Chan was in -- Ray was a deal 19 guy working in the special assets group. Smart 20 guy. Good guy. Very good guy. 21 Q. Did you talk to him after you left? 22 A. Yes, I've spoken to him casually. 23 Tye had lunch with him. Tye had a drink with 24 him, definitely. 25 Q. Has he been introduced to your Page215 1 GrusS - CONFIDENTIAL 2 Q. Yes. 3 A. No, I don't believe so. 4 Q. So it's then in connection with her 5 lawsuit conversation that you asked her what he 6 was saying about you or she offered it? 7 A. I said I didn't ask her, I don't 8 think. It would be she offered. 9 Q. So it's not a conversation that took 10 place before she started to talk to you about the 11 lawsuit that she wanted to bring? 12 A. That's correct. 13 Q. And she told you that if you helped 14 her, she would help you? 15 A. Pretty much. 16 I won't be calling Susan Chen. 17 Q. Todd Dittman — 18 MR. SIFFERT: Let's just pin that 19 down. 20 Q. You won't be calling Sunni Chen as a 21 witness; is that what you're saying? 22 A. Yes. 23 Q. Because you consider her inherently 24 unreliable? 25 A. No, that's your words. I'm just Page 217 1 Goss - CONFIDENTIAL 2 lawyers? 3 A. No. 4 Q. Have you given your lawyers his 5 name? 6 A. Yes. He phoned me. I believe the 7 eompanys lawyers contacted him. He phoned me 8 thinking that I contacted him and I said it 9 wasn't me; it must have been their lawyers. This 10 was recently. 11 Q. But this was filed in December 2009. 12 A. Yes. 13 Q. What has Mr. Chan said to you about 14 statements that Mr. Zwim made pertaining to you? 15 A. Same issues -- 16 Q. And -- 17 A. Dan said that Pm going to be 18 criminally prosecuted. 19 Q. Anything else? 20 A. I don't know. 21 Q. At the time the statements were 22 made, was Mr. Chan an employee of Zwim? 23 A. In the beginning, yes. 24 Q. At the time that the statements were 25 made that he heard, was Mr. Chan employed at the 55 (Pages 214 - 217) VER1TEXT REPORTING COMPANY EFTA01124927 Page 218 I Gruss - CONFIDENTIAL 2 management company? 3 A. The first time he told me, yes. 4 Q. And every time that he told you? 5 A. No, no. 6 Q. Did he tell you that he had 7 conversations with Dan Zwim after he left the 8 management company? 9 A. No, no. 10 Q. That's what I'm asking. 11 A. Oh. 12 Q. Was Mr. Chan telling you of 13 conversations that he had with Dan Zwim while he 14 was employed at the management company? 15 A. Yes. 16 Q. But your testimony is that after Ray 17 Chan left the employ, he met with you and 18 repeated telling you what had been said at an 19 earlier time? 20 A. Yes. He told me these things more 21 than once. 22 Q. What he told you was basically the 23 same thing? 24 A. Yes. 25 Q. And did he tell you that — what did 1 Gruss - CONFIDENTIAL 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 220 2006? A. Yes. Q. And have you met with Glenn Dubin? A. Yes. Q. Where did you meet with Glenn Dubin? A. At the restaurant 8 1/2 at Nine West 57th. Q. Did you have lunch with Glenn Dubin? A. No. It turned into dinner. Q. Who was present? A. Myself and Glenn. Q. When did it take place? A. Through two months ago, three months ago. Q. After December 9, 2009? A. What's the distinction? I believe so. Q. When this was filed. A. Yes, definitely after. Q. What did you and Mr. Dubin talk about? A. He called me out of the blue -- he just consulted me out of the blue asking how I was and if NI like to get together fora drink. Page 219 1 Onns - CONFIDENTIAL 2 he tell you Mr. Zwim said at the management 3 company about you? 4 A. That I was going to be criminally 5 prosecuted, that I had committed fraud, I was 6 dishonest And I don't know what ... 7 Q. What about Rob Flowers? 8 A. He was Ray's partner. 9 Q. Was he also employed at the 10 management company? 11 A. Yes. 12 Q. Did you have separate conversations 13 with him? 14 A. Yes. Also a very good guy. 15 Q. What did Mr. Flowers tell you about 16 what Dan Zwim said pertaining to you? 17 A. Really echoing the same — it's the 18 same theme. 19 Q. Do you recall if all of these 20 conversations that you learned about were 21 conversations and statements made by Dan Zwim 22 before March of '07 or after March of '07? 23 A. I have no idea. I don't know. 24 Q. Glenn Dubin, have you ever had a 25 conversation with Glenn Dubin since October 4, Page 721 Gruss - CONFIDENTIAL 2 Q. Before that -- 3 A. And I said to him you obviously want 4 something from me, sure, when did you want to 5 meet. 6 Q. Before that, had Glenn Dubin ever 7 had a conversation with you? 8 A. After my departure? 9 Q. Yes. 10 A. I don't believe so. I don't believe 11 lever met with him or spoken to him. 12 Q. What was the nature of your contact 13 with him in 2006? Did you have any contact with 14 him? 15 A. Prior to my leaving? Yes, oh. 16 Sure. 17 Q. What — 18 A. Walt - 19 Q. What was the nature -- 20 A. What's the date -- 21 Q. Before October 4, 2006. 22 A. Yes. 23 Q. Was Mr. Budin someone that you had 24 regular contact with? 25 A. Yes. 56 (Pages 218 - 221) VERITEXT REPORTING COMPANY EFTA01124928 Pay an Gruss - CONFIDENTIAL 2 Q. And what was the nature of that 3 contact? 4 A. From the time I was employed 5 originally till the time I left, I had a lot of 6 contact with Glenn. 7 Q. And did you understand during that 8 time that Mr. Budin and Mr. Zwirn had a good 9 relationship? 10 A. At one point they had a good 11 relationship. 12 Q. And when did that relationship 13 change? 14 A. It changed -- it changed around the 15 time where Dan started to forget everything that 16 Glenn had done for him over the years. So 2004. 17 Q. And is what you just said what 18 Mr. Budin has said to you — 19 A. No. 20 Q. — as to why he stopped — 21 A. No, that's what Fm saying to you. 22 Q Is that something that Mr. Zwim has 23 said to you? 24 A. No, but it's something that Dan and 25 I have discussed. 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 224 Gruss - CONFIDENTIAL at dinner a few months ago? A. I believe it was. Q. And did you tell Mr. Budin that you had filed this complaint? A. He knew. Q. Did you talk to him about the complaint? A. In — in — sort of in passing. Q. Did you give him a copy of it? A. No. Did you — No. Did you tell him who your lawyers A. Q. were? A. Q. Dan? A. Dan? A. I don't — I don't Mini( I did. Q. Did you tell him what you were suing Dan about? A. I think he blew, but we didn't I don't think so. Did you tell him why you were suing He knew why I was suing Dan. Did you tell him why you were suing Page 223 1 Gruss - CONFIDENTIAL 2 Q. And in what way did the relationship 3 change? 4 A. Dan — Dan began to begrudge, I 5 think is the word, Glenn for still owning a piece 6 of the management company even though Glenn had 7 been the one responsible for raising essentially 8 the first S3 billion for the guy. 9 Q. And who told you that? 10 A. What? 11 Q. That he begrudged — 12 A. I'm telling you, yeah. And Dan and 13 I discussed it. 14 Q. So go to — 15 A. I often told Dan I don't understand 16 why you don't show this guy a little bit more 17 deference, he raised you all this money. 18 Q. You actually said that to Dan Zwirn 19 before October 4, 2006? 20 A. Absolutely. 21 Q. And what did Dan say? 22 A. He always used to say I'm making him 23 so much money. 24 Q. Now, after October 4, 2006, is the 25 only conversation that you had with Glenn Dubin Page 225 Gruss - CONFIDENTIAL 2 have — we did not have discussions about the 3 lawsuit, et cetera. 4 Q. What did you talk about? 5 A. We talked about his family, my 6 family. Glenn and I were kind of close. 7 Q. You testified that when he called 8 you, he told you that he wanted to get together 9 withyou? 10 A. Yes. 11 Q. And you asked him if — you asked 12 him if he wanted something from you? 13 Yes. 14 And he said yes? 15 Yes. 16 So what did you learn at the 17 beginning Mr. Budin wanted from you? 18 A. He wanted to know if in addition to 19 everything in the investor letter, if there was 20 anything else at Zwim, anything else out there 21 untoward. And I said, first of all, I wasn't, 22 but I have no idea what you mean. 23 He wanted me to have a conversation 24 with one of Dan's investors who was suing Dan. 25 He just wanted me to have a conversation with him A- Q. A. Q. 57 (Pages 222 - 225) VERITEXT REPORTING COMPANY EFTA01124929 Page 276 1 Oruss - CONFIDENTIAL 2 telling him that there's nothing else there, just 3 drop it. I don't know. 4 Q. Which investor? 5 A. Jeffrey Epstein. 6 Q. Did Mr. Budin express support for 7 Mr. Epstein's case? 8 A. I don't -- I don't think he -- he 9 didn't know -- I don't think he knew the 10 specifies of his case because he mentioned to 11 me -- he mentioned to me how Mr. Epstein 12 redeemed -- was told that he couldn't redeem, and 13 Glenn said he thinks that's not true. And I 14 said, Well, you know, I have no idea, but — I 15 don't know. 16 So he said to me, Would you mind 17 telling -- would you mind speaking to Jeffery and 18 just telling Jeffery just to get on with life, 19 there's nothing to sue Zwim about. 20 Q. Why would he be asking you to do 21 that? 22 A. He's extremely close to Jeffrey 23 Epstein. 24 Q. Why would Mr. -- why did Mr. Budin 25 tell you that he wanted you to have that Page 228 1 Grass - CONFIDENTIAL 2 Mr. Budin was in litigation with Dan? 3 A. No. 4 Q. Did you learn otherwise that 5 Mr. Budin was in litigation with Dan? 6 A. I had heard that he was in 7 litigation, but I didn't think him personally. I 8 thought something to do with Corbitt. 9 Q. What do you understand Corbitt was? 10 A. It was — it waS, I believe, a 11 fund-to-funds underneath the Dubin and Zwirn 12 umbrella. It was around for a long time. 13 Q. Did you understand — did you know 14 before October 4, 2006, that Dan Zwirn was an 15 investor in that fund-to-funds? 16 A. Yes. 17 Q. Did you know before the dinner with 18 Dubin that in fact Dubin through that 19 fwd-to-funds had refused to pay Dan Zwim money 20 that was owed? 21 A. No, I had no idea. 22 Q. Did you know that because of that 23 refusal to pay, there was a lawsuit about it? 24 k Yeah, yeah. 25 Q. So then you knew that he bad refused Page 227 1 Grins - CONFIDENTIAL 2 conversation? 3 MR. BRECHER: Objection. 4 A. I don't — 5 Q. What did he say to you was the 6 reason that he wanted you to have that 7 conversation? 8 A. He didn't really say I think 9 the -- I don't know. 10 Q. What else did he want from you? 11 A. I was a partner with Glenn. Maybe 12 he thought that I was objective. I don't know. 13 Q. What else did Mr. Budin want from 14 you, was the question? 15 A. He said to me that -- he said to me, 16 I can't believe it, Dan Pd me as bad as he Pd 17 you. And I said, Somehow I doubt that's the 18 case, Glenn. 19 Q. In what way did you understand that 20 Dan — that Dan made it difficult for Mr. Budin 21 or Pd you? 22 A. For Mr. Budin, I don't know. I 23 didn't get into — I didn't get into why he 24 thought that. 25 Q. Did you learn from Mr. Budin that Page 229 1 Gross - CONFIDENTIAL 2 to pay? 3 A. No, you asked did I know before 4 then. 5 Q. Did you 6 A. I thought that's what you said. 7 Q. Did you know that there was a 8 lawsuit between Dubin and Zwim over the Corbitt 9 investment? 10 A. Yes, yes. 11 Q. Did Dubin tell you about that? 12 A. No, he did not tell me. 13 Q. Did you talk about that at all at 14 lunch — dinner? 15 A. No. 16 Q. Was the Epstein lawsuit filed by 17 that time? 18 A. I have no idea. I don't know if 19 there even was an Epstein lawsuit. 20 Q. Did you talk to Mr. Epstein — 21 A. Un-un. 22 Q. -- at his request? 23 A. Un-un. 24 MR. BRECHER: You have to answer 25 audibly. 58 (Pages 226 - 229) VERITEXT REPORTING COMPANY EFTA01124930 Page 230 1 Gruss - CONFIDENTIAL 2 A. rm sorry. No. 3 Q. Had you ever met Mr. Epstein? 4 A. No. 5 Q. Did you know who Mr. Epstein was? 6 A. Insofar as he was an early investor, 7 he was close with Glenn and that he was wrapped 8 up with his own issues down in Florida, that's 9 all I 'mow. 10 Q. Did you ever ask Mr. Budin if he 11 could put you together with Mr. Epstein to find 12 out what Mr. Epstein would have been told in one 13 of those investor calls? 14 A. Never. 15 Q. Did you ask Mr. Budin what happened 16 in one of the investor calls? 17 A. Never. 18 Q. Did you discuss about that at 19 dinner? 20 A. No. 21 Q. So did you have any conversation at 22 dinner with Glenn Dubin about what was allegedly 23 defamatory-- 24 A. No. 25 Q. — that Mr. Zwim said? Page 232 1 Gruss - CONFIDENTIAL 2 have any conversations with him? 3 A. No, I don't believe so. 4 Q. Mike Fuller? 5 A. No. 6 Q. So these are investors; correct? 7 A. Those are investors. 8 Q. You don't know what these investors 9 will say as to what Dan Zwirn said to them? 10 A. Exactly. 11 Q. You've never talked to them? 12 A. I've never talked to them. 13 Q. And you've never talked to anybody 14 that's talked to them? 15 A. I shouldn't say that. Earlier 16 said that Dan definitely put me in touch with one 17 or two of his investors right after I left. 18 don't recall -- I had earlier said I don't recall 19 who it is. I don't know if it was one of those. 20 I did not have any conversations 21 about this lawsuit with Mike Fuller, Dave Small, 22 Dave Matter. 23 Q. The question is, did you have any 24 conversation with any of the investors, Item 24, 25 25, 26, 27, 28, 29 or 30, did you talk to any of Page 231 1 Gruss - CONFIDENTIAL 2 A. No. 3 Q. Is there anything else Mr. Dubin 4 wanted from you at dinner? 5 A. No. He just wanted me to talk to -- 6 to Jeffery. 7 Q. And you — 8 A. I referred it to Ethan. Ethan told 9 me it's not a good idea — 10 MR. BRECHER: Well, don't say what 11 we discussed. 12 TILE WITNESS: Sorry. 13 MR. BRECHER: I'd ask that be 14 stricken from the record. 15 THE WITNESS: Strike that. 16 MR. LEVINE: Strike that. 17 A. No. he did not ask me anything else. 18 Q. What about Henry Swieca? 19 A. Swieca. 20 Q. Did you talk to Henry Sweica -- 21 A. No. 22 Q. — about any statements made by Dan 23 Zwim? 24 A. No. 25 Q. Rafael Astmc, A-S-T-R-U-C, did you Page233 1 Gruss - CONFIDENTIAL 2 those investors about what Dan Zwim said to any 3 of them, if anything, immediately after your 4 departure in October 2006? 5 A. No. 6 Q. Do you have any idea as you sit here 7 today what any of those eight investors were told 8 by Dan Zwim or anybody speaking on behalf of Dan 9 Zwim? 10 A. Individually, no. 11 Q. Go to the next page. Jeffery 12 Epstein, Brian O'Neal, Byline Wagner, Matt Stone, 13 those are four other investors. Is there any of 14 those investors that you have discussed what Dan 15 Zwim said to them after you left in October of 16 2006? 17 A. No. 18 Q. Do you have any idea as you sit here 19 today what any of these 12 investors would say 20 about what was said to them by Dan Zwim or 21 anyone acting on behalf of Dan Zwim as to the 22 circumstances surrounding your departure? 23 A. Fm sure they would say exactly what 24 Dan said to them. 25 Q. Apart from what you're assuming, did 59 (Pages 230 - 233) VERITEXT REPORTING COMPANY EFTA01124931 Page 234 1 Gruss - CONFIDENTIAL 2 you have any mason to believe that any of those 3 investors were told anything other than what 4 Shulte Roth or Gibson Dunn told Dan to say? 5 A. I don't know. 6 Q. Are there any other investors whose 7 names you know? 8 A. Yes. 9 Q. Did you talk to any of them? 10 A. No, except for what I said earlier, 11 Eric Felton, Ashok Chacra and this other party 12 that I — 13 Q. Did Eric Felton -- or let's take 14 them separately. 15 Did you talk to Eric Felton about 16 what Dan Zwim said to him after you left in 17 October 2006? 18 A. No. 19 Q. Did you talk to Ashok Cheers about 20 what Dan Zwim said to him after you left in 21 October of 2006? 22 A. No. 23 Q. Is there any investor as you sit 24 here today that you spoke to after you left in 25 October 2006 in which you learned what Mr. Zwim Page 236 1 Owes - CONFIDENTIAL 2 A. No. 3 Q. Did Ned Qffitt and Offitt Hall 4 invest? 5 A. I believe they were an adviser to 6 investors. 7 Q. That would have been after the SEC 8 started the investigation? 9 A. Correct. 10 Q. That would have been during your 11 testimony? 12 A. Correct 13 Q. Is there any other event other than 14 that circumstance in which you learned from an 15 investor what actually Dan Zwim or someone 16 acting on behalf of Dan Zwim said about you? 17 A. Up to this point, no. 18 Q. Did you ask any lawyer to do that 19 for you? 20 MR. BRECHER: Objection. 21 I instruct you not to answer any 22 discussion with any counsel. 23 Q. Do you know whether any investor has 24 been contacted on your behalf to learn what I 25 just asked you? Page 235 1 Gruss - CONFIDENTIAL 2 or someone acting on his behalf said about the 3 circumstances of your departure? 4 A. I earn recall. S Q. It's pretty important Have you 6 wracked your brain? 7 A. Answer the question again. 8 Q. Pm asking; you're answering. 9 A. Right 10 Q. Is there any investor in all of the 11 time since you left that you actually picked up 12 the phone, asked them what Dan Zwim said to you 13 and learned with your own ears what was said 14 about you? 15 A. I don't believe so. 16 Q. Did anyone suggest that before you 17 filed a federal action for defamation claiming 18 that Dan Zwirn and others acting on his behalf 19 acted improperly in talking to investors, that 20 maybe you ought to find out whether that 21 happened? 22 A. The SEC showed me an e-mail from 23 Offitt Hall, Ned Offitt, where it is recounting a 24 direct conversation with Dan. 25 Q. Anything other than Ned Offitt? Page 237 I Gruss - CONFIDENTIAL 2 A. I don't know. 3 Q. Is there any banker, any person 4 working for a bank that was engaged in financial 5 transactions with the management company that you 6 spoke to who has recited to you wind Dan Zwim 7 allegedly said to them about the circumstances 8 under which you left? 9 A. Yes. 10 Q. Who? ll A. Michael Hopson. 12 Q. Where does he work? 13 A. He worked at Natixis. 14 Q. What's Natixis? 15 A. It's a French government-controlled 16 private bank hat in the US. Theyre based in 17 the US. 18 Q. What was their relationship? 19 A. They were the investment banker for 20 all of our — not all oL our but our largest or 21 his largest CLO. 22 Q. What's a CLO? 23 A. Collateralized loan obligation. 24 Q. What are collateralized loan 25 obligations? n4_ nen earn VERITEXT REPORTING COMPANY • • a 60 (Pages 234 - 237) • e• ens% n en^ EFTA01124932 Parma 1 Gruss - CONFIDENTIAL 2 A. They are similar to CMBS where you 3 package a bunch of originated assets, or it could 4 be secondary assets, you pool them together and 5 then you sell trenches. Although in this 6 respect, they weren't publicly traded. So 7 there's no secondary market for these assets. 8 Q. What was the relationship of CDOs to 9 D.B. Zwim? 10 A. We didn't have CDOs. It was a CLO. 11 Q. I misspoke. 12 A. Oh. 13 Q. What was the relationship of CLOs to 14 D.B. Zwim & Co.? 15 A. It was a funding vehicle for some of 16 the private assets, the private corporate 17 originated assets. 18 Q. Tell me what you mean by that. 19 A. We set up a vehicle and I believe -- 20 I believe we had two-to-one leverage. So every 21 dollar of equity I put in, the CLO would give you 22 a dollar of debt So you were able to go out and 23 buy a $10 million loan by only putting up 24 $5 million in equity. 25 Once you pooled those together, you Page 240 1 Gruss - CONFIDENTIAL 2 Q. So the onshore fund had CLOs on its 3 books? 4 A. Well, it was a -- careful, because 5 you're not buying CLOs. You're issuing CLOs. 6 And both the onshore fund had one and the 7 offshore fund had one. 8 Q. So both the onshore fund and the 9 offshore hind had equity derived from the CLO as 10 it related to its own fund? 11 A. Exactly. 12 Q. And the equity of each of the CLOs 13 had to be kept separate as between the funds? 14 A. Yes. 15 Q. And what did Mr. Hopson tell you 16 that Mr. Zwim said? 17 A. Again, consistent theme. Consistent 18 theme. 19 Q. When did the conversation take 20 place? 21 A. I've spoken to Mike scores and 22 scores and scores of times. That did not come up 23 scores and scores and scores of times, but I've 24 spoken to him so often since I left. 25 Q. What kind of relationship do you Page 239 1 Gruss - CONFIDENTIAL 2 then sold those — all of the debt offend you 3 retain the equity on your imbalance sheet. And 4 Natixis was the banker responsible for placing S the debt. 6 Q. And was that CLO vehicle used by the 7 onshore fund and the offshore fund as part of 8 their investment strategy? 9 A. Yes, both. 10 Q. And was that vehicle used to 11 increase the liquidity of the onshore fund and 12 the offshore fund? 13 A. Most definitely. 14 Q. Whose idea was it to develop that 15 source of liquidity? 16 A. I don't recall how it originally -- 17 but it must have been Dan. 18 Q. Was the -- did the CLO then become 19 an asset investment of the particular fund? 20 A. The equity, correct. The equity 21 was. 22 Q. The equity was unique and separate 23 to the particular fund? 24 A. Yes, exactly. Well, the equity in 25 the CLO was an asset of the fund- Page 241 1 Gruss - CONFIDENTIAL 2 have with him? Is he a good friend? 3 A. I wouldn't say he's a good friend. 4 He's a very good guy. He's a very good guy who 5 remains in touch with me. 6 Q. Scores and scores is very difficult 7 What do you mean by that? 8 A. Once a month. 9 Q. And when you say "consistent theme," 10 what do you mean by that? 11 A. Just that Dan said -- you know, 12 originally had said or after the fact said that 13 was, you know, responsible for all this stuff and 14 I would be -- was dishonest and committed fraud. 15 It's the same theme. Apparently he echoed the 16 same thing to a lot of people. 17 Q. Did he say — did Mr. Hopson say 18 that Dan had said that in Dan's opinion, you 19 would be criminally prosecuted? 20 A. I don't know if that's — if those 21 were his exact words. I don't know. 22 Q. So Pm trying to understand exactly 23 what parts of the theme Mr. Hopson has told you 24 Dan said. If you don't have a memory that he 25 told you about Dan expressing the view that you 61 (Pages 238 - 241) VER1TEXT REPORTING COMPANY EFTA01124933 Page 242 1 Crust - CONFIDENTIAL 2 would be criminally prosecuted, I'd like to know 3 what you do remember Mr. Hopson told you. 4 A. 1 don't -- I don't remember 5 specifically. I don't remember specifically. 6 Q. So as you sit here today, it is 7 possible that Dan Zwim only told Mr. Hopson 8 about the reports that were issued and not of 9 these other comments that were Dan's opinion? 10 A. No, 1 believe it was — I believe 11 there was commentary behind those reports, behind 12 the investment memos. 13 Q. And have you made an effort to do 14 business with Mr. Natixis -- 15 A. Yes, yes. 16 Q. — with Mr. Hopson at Natixis? 17 A. Yes. 18 Q. And have you? '19 A. No. 20 Q. What kind of business did you try to 21 do with Mr. Hopson? 22 A. We just -- we just discussed 23 opportunities and leverage opportunities, 24 etcetera. 25 Q. Did Mr. Hopson have an opportunity 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 244 Gross - CONFIDENTIAL Q. Well, did he express the view to you that he thought less of you because of what Dan said? A. We never — we never discussed — Q. Do you think if he felt less of you based on what Dan Zwim said, that he would continue to see you and be with you? A. Possibly. Q. Has he said that? A. No,' said -- Q. Has he said to you notwithstanding all these terrible things Dan Zwim said, you're still my best buddy? A. No, because he's not. Q. But can you tell me in any way, shape or form that Mr. Hopson been unable to help you in business in any way because of what Dan Zwim said to him? A. I have no idea. Q. Okay. A. I have no idea. Q. Have you actually seen this March 2007 letter? A. Yes. Page 243 1 Gnus - CONFIDENTIAL 2 to employ you? 3 A. I don't know. Never came up. 4 Q. Has Mr. Hopson tried to help you 5 find a job? 6 A. I've never asked. 7 Q. Did Mr. Hopson did you try to 8 have Babcock do business with Natixis? 9 A. It didn't get — Ewe had — Mike 10 was over our offices and we discussed certain 11 investment opportunities, et cetera, but nothing 12 ever came of it 13 Q. Have you remained friendly with 14 Mr. Hopson? 15 A. Yes, yes. 16 Q. And you like him and he likes you? 17 A. Very good guy. 18 Q. Has he told you that he didn't pay 19 much mind to what Mr. Zwim told him about you? 20 A. We really didn't — we really didn't 21 get into it 22 Q. Well, has Mr. Hopson told you that 23 he considers you less worthy of a person because 24 of what Dan Zwim told him? 25 A. We would never get into that. 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 gave it to me. I may have received a copy from A Q. Q. ten. Q. A. Q. A. Q. A. Q. Page 243 Gross - CONFIDENTIAL MR. LEVINE: And what are we up to, 21. (Gans Exhibit 21, Bates Nos. DBZCO_PG 004268 through 275, 3/26/07 Memo to Investors from D.B. Zwim & Co., marked for identification.) Q. Have you seen this? A. Yes. When did you first see it? Shortly after it came out. Who gave it to you? More than five people, less than What five people? Industry people. What industry people? I don't recall exactly who. Did you get it from any investor? No, no investor gave it to me. Did you get it from Mr. Natixis? No. Hopson. But, no, I did not. Who gave it to you? A. Other — dying to recall who 62 (Pages 242 - 245) VERITEXT REPORTING COMPANY EFTA01124934 Page 246 1 GrusS - CONFIDENTIAL 2 Ivan Zinn. I forget who. 3 Q. Who's Ivan Zinn? 4 A. He's just a person in the industry. 5 Q. Where does he work? 6 A. He works at Atalaya Capital. 7 Q. What's their business relationship 8 with D.B. Zwirn & Co. L.P.? 9 A. I believe they have crossover 10 investors. As I said, it's a very small II community. 12 Q. You don't need to persuade me, 13 Mr. truss. I'm trying to learn the facts. 14 A. Okay. 15 Q. So did Mr. Zinn send it to you by 16 hand, walk it over to you, meet you fora drink? 17 How did you get it? 18 A. 'don't — 'don't remember how I 19 got it. I believe — I believe e-mail. 20 Q. And then you would have printed it 21 out? 22 A. My counsel may have given this to 23 me. If I were to have received it by e-mail, I 24 would have printed it out. 25 Q. I'm asking you whether and who Page248 I Gross - CONFIDENTIAL 2 A. Yes. 3 MR. BRECHER: Objection. 4 Q. And you don't know as you sit here 5 anything other than what's in the March 2007 6 investor letter that Mr. Zinn learned Dan Zwirn 7 said or might have said to any investor? 8 A. I don't know that 9 Q. Is there anyone else that you got 10 this investor letter from? 11 A. I may have, but I don't recall. 12 Q. You said at least five, but less 13 than — I forget what number you used. Is Ivan 14 Zinn actually the only person that you can 15 remember gave this to you? 16 A. That's the only person I can recall 17 giving it to me, besides, like I said, my 18 counsel. 19 Q. When did you get a copy of this? 20 A. Like I said, shortly alter it came 21 out. 22 Q. Who did you discuss this document 23 with when you received it other than your lawyer? 24 A. i discussed it with Eric Felton from 25 Grosvenor. I discussed it — but the contents at Page 247 1 Grins - CONFIDENTIAL 2 actually physically gave this to you at or about 3 March 26, 2007. 4 A. I don't recall who else gave it to 5 me. I'm -- I'm -- 6 Q. Who else — I haven't even heard of 7 one person yet. 8 A. I said Ivan Zinn. 9 Q. You just testified, then, you're not 10 sure whether Ivan Zinn -- 11 A. No, no. 12 Q. — or your lawyer gave it to you? 13 A. No, Ivan Zinn gave it to me. Ivan 14 Zinn gave it to me. IS Q. Where -- 16 A. I was implying maybe also my lawyer. 17 Q. Where were you when Ivan Zinn gave 18 it to you? 19 A. I was probably home. 20 Q. Did Ivan Zinn give you any 21 information about what Mr. Zwirn said about you? 22 A. No, no. 23 Q. So Ivan Zinn's comments, knowledge 24 of this case are solely confined to the March '07 25 investor letter? Page 249 1 Gnus - CONFIDENTIAL 2 some point or another with some of the cmployccs 3 as well of Zwirn. 4 Q. And I think I asked you this, but if S I didn't, did Eric Felton tell you about anything 6 that Dan Zwirn or anyone else said beyond what's 7 in this report? 8 A. No, no. 9 Q. Now, you met with lawyers at Gibson 10 Dunn; correct? 11 A. Correct. 12 Q. In fact, you were interviewed on 13 five occasions by lawyers at Gibson Dunn; isn't 14 that right? 15 A. I don't 'mow the number. 16 Q. You were interviewed by them 17 November 14th, December 11th, December 19th, 18 December 12th, March 6th, and March 19th. 19 Does that refresh your recollection? 20 A. If — I met with them several times. 21 Q. And on each occasion that you met 22 with them, you had a lawyer present; correct? 23 A. Correct. 24 Q. And that lawyer was there to 25 represent you; correct? 63 (Pages 246 - 249) VERITEXT REPORTING COMPANY EFTA01124935 Page 250 1 Gums CONFIDENTIAL 2 A. Correct. 3 Q. And you understood that Gibson Dunn 4 was conducting an independent investigation on 5 behalf of the management company; correct? 6 A. Correct. 7 Q. And you understood, because you'd 8 been working for the company for a long time, 9 that actually Gibson Dunn hadn't represented 10 Zwirn, the management company or the funds before 11 this investigation started; correct? 12 A. To the best of my knowledge, that's 13 correct. 14 Q. And do you recall being interviewed 15 by Fried Frank in October 2007? 16 A. I was — I don't recall the date, 17 but I was absolutely interviewed by Fried Frank. 18 Q. And that's Mr. Witzel? 19 A. More than once. 20 Q. And that's by Mr. Witzel? 21 A. I believe Mr. Witzel was there. 22 Q. And at that time, were you shown a 23 copy of this investor letter front March 2007? 24 A. I believe so. 25 Q. And weren't you asked by Mr. Witzel Page 252 1 Gress - CONFIDENTIAL 2 Take a Look at the complaint 3 again-- 4 A. Exhibit? 5 Q. It's Exhibit 1. 6 A Yep. 7 Q. Paragraphs 34, 35, 36. 8 A. Yes. 9 Q. Other than the October report and 10 the March report, are there any other statements 11 that you believe Mr. Zwirn made that were false 12 statements about you? 13 A. Other than to the investors, 14 employees and service providers? 15 Q. Right. 16 A. I don't know. 17 Q. And other than -- 18 A. I don't know. 19 Q. Other than you've identified 20 actually no investor that has told you or that 21 you have learned was told anything of the nature 22 of what you're suing for here; isn't that right? 23 A. No, that's not right. I had said 24 earlier Offitt, Ned Offitt 25 Q. That's not an investor, is it? Page 251 1 Gruss - CONFIDENTIAL 2 at that time if there were any facts or 3 allegations in this letter that you wanted to 4 identify as inaccurate? 5 A. I don't know. 6 Q. Weren't you asked in that meeting or 7 interview to identify for Fried Frank any events 8 or circumstances in the letter that were 9 inaccurate? 10 A 1 don't recall if I did. 11 Q. Isn't it a fact that you were asked 12 that question and you didn't identify any event 13 or circumstance described in this report as 14 inaccurate? 15 A. I don't believe that's the case. 16 Q. Do you realize, as you sit here 17 today, that this is the Gibson Dunn report and 18 that's not a summary of the report? 19 A. No. 20 Q. Do you realize that this document 21 doesn't summarize the report, it is the re-port? 22 A. . No. 23 Q. Other than this report, the calls to 24 the investors that you've described in 25 paragraph 34, 35 — withdrawn. Page 253 Gruss CONFIDENTIAL 2 A. I believe they represent investors. 3 Q. So with the -- I just want to 4 understand who all of the people are that you've 5 heard this from. The employees that you 6 identified — 7 A. Yes. 8 Q. —Ned Offitt, Mr. Hopson. Anybody 9 else? 10 A. There's more employees that I didn't II identify that I just thought of. 12 Q. I'll get those in a second. 13 A. Okay. 14 Q. Any other people outside D.B. Zwirn 15 & Co. L.P., besides Mr. Offitt, Mr. Hopson? 16 A. Up to this point, no. No. 17 Q. What other employees are there? 18 A. Susan Conley. 19 Q. What did she tell you? 20 A. She specifically had a conversation 21 about when she was leaving the management company 22 for whatever reason, David Lee took her 23 downstairs to have lunch at 8 1/2 and she said, I 24 don't want to deal with this crap any more. And 25 he said to her, I assure you that Dan Zwim had 64 (Pages 250 - 253) VERITEXT REPORTING COMPANY EFTA01124936 Page254 1 Gams - CONFIDENTIAL 2 nothing to do with it and that Perry is going to 3 be criminally prosecuted for this. 4 That was David Lee's conversation 5 with her over a lunch, so said she. 6 Q. And when did she tell you that? 7 A. I don't recall when. I don't recall 8 when. After she left, but I don't recall. 9 MR. LEVINE: Let's mark this. 10 (Gruss Exhibit 22, Bates Nos. 11 DBZSECPR-0000551859 through 912, 12 Confidential Memorandum dated May 2003, 13 marked for identification.) 14 (Witness penises the exhibit.) 15 BY MR. LEVINE: 16 Q. Pm showing you what's been marked 17 Gross 22. Can you identify it? 18 A. It's the offering memoranda for the 19 onshore fund, the confidential memorandum for the 20 onshore fund. 21 Q. And this is one of the documents 22 that you would have had access to in your job? 23 A. Correct. 24 Q. This is one of the documents that 25 set forth what the financial relationships were • Page 256 1 Gruss - CONFIDENTIAL 2 A. Yes. 3 Q. So was it clear and unambiguous that 4 the management fees were paid quarterly? 5 A. Yes. 6 Q. And was it clear and unambiguous 7 that the management fees were paid after they 8 were earned, thus, after the close of a quarter? 9 A. Yes. 10 Q. Did you understand that because of 11 liquidity issues in the onshore fluid, that the 12 management company took management fees before 13 they were due under this confidential memorandum? 14 A. As of what date? 15 Q. How about -- 16 A. Or in general? 17 Q. In general. 18 A. Yes. 19 Q. In fact -- 20 MR. LEVINE: Mark this. 21 (Gross Exhibit 23, Bates Nos. DI3Z 0000247 through 261, E-mail dated 5/26/04 23 from Wu to Myers with attachments, marked 24 for identification.) 25 Q. Pm showing you composite exhibit 22 Page 255 1 Gruss - CONFIDENTIAL 2 between the management company and the fund and 3 its investors? 4 A. Correct. 5 Q. So this was one of the madmaps that 6 you and the people working for you would need to 7 run the financial operation side of the business; 8 correct? 9 A. Correct 10 Q. And take a look at page 3. What is 11 a management fee? 12 A. It's the fee that is charged as a 13 percentage of assets under management. 14 Q. Paid by the fund to the management 15 company; is that correct? 16 A. Exactly. 17 Q. And does this memorandum -- 18 confidential memorandum of the onshore fund 19 provide that the fund pays a management fee to 20 the trading manager accrued monthly and payable 21 quarterly? 22 A. Yes. 23 Q. Equal to one-twelfth of one and a 24 half percent of each limited partner's month end 25 capital account balance? 1 Gruss - CONFIDENTIAL 2 identified as Gruss 23, which is a series of 3 e-mails from Sylvia Wu to Greg Meyers with copies 4 to you directing the payment of management fees 5 for the end of the quarter? 6 A. Yes. 7 Q. And there's some 20-plus examples 8 there, aren't there? 9 A. I didn't count them, but yes. 10 Q. Starting sometime in May of '04 and 11 continuing up through March of'06? 12 A. Yes. 13 Q. And in fact, you knew, because you 14 were copied, that management fees were paid early 15 without authority? 16 A. Yes. 17 Q. And you approved that? 18 A. Yes. 19 Q. And that's one of the items that 20 Shulte Roth looked at in the spring of'06? 21 A. Yes, I believe that's true. 22 Q. And you actually admitted to the SEC 23 that that was a practice that you knew of and 24 approved? 25 A. Yes. Page 257 65 (Pages 254 - 257) VERITEXT REPORTING COMPANY EFTA01124937 Page 258 1 Gress - CONFIDENTIAL 2 Q. And it was wrong? 3 A. Yes. 4 Q. And you actually admitted to Gibson 5 Dunn in one of the interviews in November '07 6 that you knew of the practice and that it was 7 wrong? 8 A. Yes. 9 Q. And one of the problems, if not the 10 problem, with the practice was that the fund was 11 then not earning income on the expenses that were 12 paid earlier than they were obligated to be paid; 13 cottcre? 14 A. I was not aware of that. 15 Q. Well, if they're paid early, what 16 did you understand was wrong about it if it 17 wasn't taking funds away from the investors 18 before they were obligated to pay them? 19 A. You just said it was the interest 20 I'm saying that based on the offering memorandum, 21 they should not have been collected early, but 22 they were. 23 Q. And that the investors, thus, were 24 deprived of hundreds of thousands of dollars 25 before they were obligated to pay them? Page 260 Grump- CONFIDENTIAL 2 Q. Who worked for you? 3 A. Yes. She was the controller. 4 Q. Did you ask a lawyer whether it was 5 required to document the loan? 6 A. I don't recall. 7 Q. Did you ask anybody senior to you 8 whether if this practice was going to proceed, 9 interest should be paid to the fund? 10 A. No, I don't think I did. 11 Q. Would you agree with me that if the 12 fund was paying hundreds of thousands of dollars 13 for expenses to the management company before the 14 fund was obligated to pay that money, that it 15 should have been paid interest on the use of its 16 money? 17 A. Yes, it should have been paid 18 interest. 19 Q. And you took no steps while you were 20 CFO to be sure that that happened; isn't that 21 tight? 22 A. No, that's not right. 1 asked the 23 question of the controller whose responsibility 24 it is to collect the management fees. I asked 25 her whether or not she needed to paper a loan, Page 259 1 Gruss - CONFIDENTIAL 2 A. Yes. 3 Q. So it's like the management company 4 prepaid its expenses — withdrawn. 5 The management company caused the 6 investors to prepay their expenses without giving 7 them any benefit for doing it? 8 A. No. They prepaid the expenses. You 9 said "without giving them interest." 10 Q. Did — was interest paid for the 11 prepayment? 12 A. I don't know. 13 Q. Not under your watch; isn't that 14 right? 15 A. No, I don't know. I'm told — 16 Q. ISn't it a fact — 17 A. I'm told now that there wasn't. 18 Q. Did you ever inquire at the time you 19 approved any of these payments what the interest 20 rate was that the funds were receiving from the 21 management company? 22 A. No. But I did inquire whether or 23 not we should be papering a loan for these. 24 Q. And who did you inquire of that? 25 A. Sylvia Wu. Pagc 261 1 Oruss - CONFIDENTIAL 2 and she said no. 3 Q. Paper a loan is different than 4 paying interest? 5 A. If you're going to paper a loan, it 6 means you have to charge interest. Its not an 7 interest fee loan. 8 Q. You never asked that, did you? 9 A. Whether or not we had to paper a 10 loan? 11 Q. You never asked whether the funds 12 were entitled to receive interest for the money 13 that it was prepaying; isn't that right? 14 A. I don't recall whether or not I 15 asked that 16 Q. In fact, in all of the documents — 17 withdrawn. 18 In any of the documents that we have 19 produced to your lawyer, have you found or seen 20 an e-mail from you in which you expressed the 21 view that the fund should receive interest on the 22 use of its money? 23 A. I didn't ford any e-mails like that. 24 Q. In fact, you never asked that 25 question; isn't that right? VERITEXT REPORTING COMPANY • Ma 4% /NMI • •es es% 66 (Pages 258 - 261) re e ••••••• oft aaA EFTA01124938 Page 262 1 Gruss - CONFIDENTIAL 2 A. No, that's not right 3 Q. Are you referring -- 4 MR. LEVINE: Lees mark this 24. S (Gruss Exhibit 24, Bates Nos. DBZ 6 0009065 through 67, E-mail Chain, marked 7 for identification.) 8 (Witness peruses the exhibit.) 9 BY MR. LEVINE: 10 Q. Do you see this e-mail -- 11 A. Yes. 12 Q. — in or about June of 2004, which 13 we've marked as Exhibit 24? 14 A. Yes. 15 Q. And this is an e-mail exchange in 16 response to a standard request for authority to 17 wire the management fees early? 18 A. Yes. I believe the first time it 19 was ever done. 20 Q. And in fact, this was used as a form 21 of liquidity for the onshore fund; isn't that 22 right? 23 A. No, that's not right It was used 24 as a form of liquidity for the management 25 company. Page 264 1 Gruss - CONFIDENTIAL 2 Q. There isn't anything in this e-mail 3 or any of the other e-mails seeking your 4 approval, any reference by you to making sure 5 that the fund was paid interest on the use of its 6 money? 7 A. I have not seen that in an e-mail. 8 Q. And would you agree with me that it 9 is one thing to keep record of the early payment 10 of fees by creating a loan for it and another 11 thing all together to actually cause interest to 12 be paid? 13 A. No. 14 Q. Well, you could have still, without 15 any record of a fact of early payment, caused at 16 the end of the year a payment to be made for the 17 early payment of fees; isn't that right? 18 A. Absolutely. 19 Q. You didn't need a loan to cause that 20 interest payment to be made; isn't that right? 21 A. Correct 22 Q. And you didn't tell Sylvia Wu that 23 she needed to be sure that she caused interest to 24 be paid whether she papered it as a loan or not, 25 did she — did you? Page 263 1 Gnus - CONFIDENTIAL 2 Q. I'm sony. Yes? 3 A. Yes, for the management company. 4 Q. And your response was, We need to 5 paper a loan to the management company, don't we? 6 A. Yes. 7 Q. And she said, No, just prepay 8 management fee ahead of schedule? 9 A. Yes. 10 Q. You don't say in this, do we need to 11 pay the — do we need to pay interest to the 12 limited -- to the onshore timd, do you? 13 A. No, not in this e-mail. 14 Q. And in fact, you approved the 15 transaction; isn't that right? 16 A. Correct. 17 Q. Isn't that okay, body of the memo 18 from you to Sylvia Wu? 19 A. Correct. 20 Q. And there isn't anything in this 21 document -- this exchange in which you asked or 22 directed Sylvia Wu to determine whether interest 23 was due the funds for the early payment of the 24 fees? 25 A. Say again. Page 265 1 Gross -CONFIDENTIAL 2 A. I don't know if I did or I didn't. 3 Q. The fact it is didn't even occur to 4 you to do that, did it? 5 A. No, that's not the fact. 6 Q. So you actually knew that you were 7 using their money early, depriving them of 8 interest and not making sure that they got paid 9 for the use of their money? 10 A. No, I said I don't recall whether or 11 not I asked her to do so. 12 Q. As you sit here today, you can't 13 testify to any event or circumstance that you 14 recall with Sylvia Wu in which you directed her 15 to cause interest to be paid to the fund for the 16 early withdrawal of the management fees? 17 A. I don't recall whether I did or 18 whether I didn't 19 Q. And in Eve interviews with Gibson 20 Dunn -- 21 A. Yes. 22 Q. — and three, maybe four depositions 23 with the SEC, you didn't tell any of them that 24 either, did you? 25 A. I didn't tell them whether I did or 67 (Pages 262 - 265) VERITEXT REPORTING COMPANY EFTA01124939 Page 266 Gross-CONFIDENTIAL 2 didn't I don't recall, that's correct. 3 Q. The fact of the matter is, whether 4 you said something to her or not, under your 5 watch interest was never paid; isn't that right? 6 A. I was not aware of that until Gibson 7 and Dunn or Deloitte & Touche came up with that. 8 Q. Came up with that or learned that? 9 A. Learned that 10 Q. Did you ever have a conversation I I with Dan Zwim in which you understood that it 12 was the management company's — withdrawn? 13 MR. LEVINE: Let's take a break for 14 five minutes. 15 (Recess from the record.) 16 MR. LEVINE: We are up to 25. 17 (Gross Exhibit 25, Bates Nos. DBZ 18 0009009 through 9013, E-mail Chain, marked 19 for identification.) 20 BY MR. LEVINE: 21 Q. Du showing you what's been marked 22 Giros 25. 23 A. Okay. 24 (Witness penises the exhibit) 25 Q. Is this a series of e-rnails between 1 2 3 4 5 6 7 8 9 10 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 268 Gruss - CONFIDENTIAL Q. The calculation -- withdrawn. Am I correct that the calculation of the rate of return was done by Li Anne Law or by Sylvia Wu? A. Or — or others that they may have delegated it to, but yes. Q. Do you recall if it was a monthly report or a less frequent report? A. It was monthly. Q. And did investors in the onshore fund get a report of the monthly return for investors in the offshore fund? A. No, I don't believe so. Q. And did investors of any of the managed accounts get the report of the return for the investors in the onshore or the offshore fund? A. No, I don't believe so. Q. So the only people or entity that understood how the returns compared as between funds was the management company? A. No. MR. BRECHER: Objection. A. No, that's incorrect. Page 267 Gruss - CONFIDENTIAL 2 you and Li Anne Law — 3 A. Yes. 4 Q. — from March of '06? 5 A. Yes. 6 Q. Please go to the last two pages. 7 A. Okay. 8 Q. Did the management company issue 9 reports to the investors on the respective rates 10 of returo? 11 A. Yes. 12 Q. How regularly? 13 A. I don't know if it vras the 14 management company on behalf of the funds or it 15 was actually the funds; but the funds' returns 16 were produced in e-mail every month to the 17 investors. 18 Q. And the communication sent on behalf 19 of the fund, it nonetheless was prepared by the 20 management company? 21 A. Yes. 22 Q. And it was prepared by employees who 23 worked and reported directly or indirectly to 24 you? 25 A. Yes. I 2 3 4 5 6 7 8 9 10 II 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 269 Gruss - CONFIDENTIAL Q. Who knew? A. If you were an investor in both the onshore and the offshore, you would know individually. So you could be a fund-to-funds and have an offshore vehicle and an onshore vehicle, you were invested in both, and if you were the CIO of that fund, you would know the difference. Q. And aro I correct that because of tax laws and other rules relating to -- what's it called — ECI -- A. (Witness nods head in the affirmative.) Q. E capital, C capital, 1. — that the onshore fund and the offshore fund didn't always invest in the same assets or in the same amounts? A. That's accurate. Q. Am I also correct that by virtue of those kinds of tax laws and related laws that apply to the treatment of income and expenses, that there was — it would have been simply coincidence if the onshore fund and the offshore fund actually earned the equivalent amount for VERITEXT REPORTING COMPANY 68 (Pages 266 - 269) .••••••• a wag% EFTA01124940 Page 270 Grass - CONFIDENTIAL 2 any particular time period? 3 MR. BRECHER: Objection. 4 A. I think because of the differences 5 in the amount of capital available, the EC! 6 issues, that it would be -- coincidence is not 7 the right word, but it would be very seldom that 8 they would be exactly the same. 9 Q. And there wasn't any business reason 10 to make them identical; isn't that right? 11 A. No business reason or -- well -- 12 Q. There was no business reason to make 13 them equivalent, was there? 14 A. Yes. Dan would constantly tell 15 investors that the two funds would have similar 16 returns. 17 Q. Did Dan tell — did you ever hear 18 those conversations? 19 A. Yes. 20 Q. Did Dan tell the investors that 21 the — 22 A. He frequently — 23 MR. BRECHER: Wait. 24 THE WITNESS: Sorry. 25 Q. Did Dan tell the investors why 1 2 3 4 S 6 7 8 9 I0 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 272 Gruss - CONFIDENTIAL Q. — so that you didn't make a liar out of Dan? A. No, no. Q. Okay. So it's a fact, is it not, that to the extent that Dan felt that there was a fiduciary obligation not to be -- withdrawn. Isn't it a fact that what Dan was saying to the investors is he had a fiduciary duty not to treat one group of investors better to the disadvantage of the other group of investors? A. That's -- that's probably accurate. Q. Dan understood that he had a fiduciary duty to treat all of the investors in the same way, correct? MR. BRECHER: Objection. A. That should have been his thought process. Q. And consistent with that fiduciary duty, the management company tried to maximize the return of each fund to the extent that it could? A. Yes. Dan spent a vast majority of time trying to make sure that delta between the Page 271 1 Gruss - CONFIDENTIAL 2 withdrawn. 3 You said Dan would constantly tell 4 investors that the two funds would have similar 5 returns; is that your testimony? 6 A. Yes. 7 Q. Did you understand by his statement 8 to that effect that the management company had an 9 obligation to make them similar? 10 A. Yes. He used — he used to say 11 that — and I'm paraphrasing — something to the 12 effect he has a fiduciary responsibility to make 13 sure, on a risk-adjusted basis -- the returns of 14 both funds would be similar on a risk-adjusted 15 basis. He used the wrong term. 16 Q. Did you understand that to mean that 17 the investors should be told that their returns 18 were different than they actually were so that it 19 looked like Dan lived up to that obligation? 20 A. Repeat that, please. 21 Q. Did you understand that to mean, as 22 an instruction to you, that, therefore, the 23 investors should be told that the returns were 24 different than they actually were 25 A. No. 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 Page 273 Gruss - CONFIDENTIAL onshore fund and the offshore fund was as small as possible. And we used to have arguments to that effect all the time. Q. Did Dan ever tell you -- A. Not all the time. That's an exaggeration. Q. Did Dan ever tell you to change information relating to one of the fund's investments in order to falsely portray their rate of return of that fund? A. Said slightly differently, Dan would absolutely tell me to overweight certain investments to the offshore fund. Q. By overweight the investments, what did you mean that to be? A. If there was - for instance, there was a 5W50 split between the two funds and there was one investment that should have been split 50/50, he would absolutely tell me to overstuff the offshore fund. Q. What are you overstuffing with? A. An investment, an asset. Q. So he would tell you to allocate the investman more to the offshore fund than to the 69 (Pages 270 - 273) VERITEXT REPORTING COMPANY EFTA01124941 Page 274 1 Gruss - CONFIDENTIAL 2 onshore fund? 3 A. Exactly. 4 Q. And would the actual investment 5 reflect what the adjustment was? 6 A. I'm sorry, say again. 7 Q. Did the actual adjustment follow the 8 actual dollars? 9 A. The yes. If it should have been 10 50/50, and there was $100 of P&L, he would say 11 put in 80 to the offshore flutd, 20. So the P&L 12 would be associated with the 80 to 20. I don't 13 blow if - 14 Q. Is there a document that reflects 15 that? 16 A. That he would — 17 Q. Are you saying that he told to you 18 falsely allocate expenses as between the onshore 19 fund and the offshore fund? 20 A. No, not -- he didn't I didn't say 21 expenses. I said assets. And falsely, I didn't 22 say falsely. 23 I said he would have us overallocate 24 certain investments to the offshore fund. 25 Q. And when you did that, did the 2 3 4 5 7 8 10 11 12 13 14 15 16 17 18 19 Page 276 Gruss - CONFIDENTIAL "FYI, the returns include the effects of Ynun promote. Manually put in for Summerville 600K L.P., 400K Ltd.? A. Q. A. Q. A. Yes. What does a 1MM promote relate to? A $1 million promote. What's a promote? In a general sense, it is when you have a JV — a joint venture partner — you're funding the joint venture. The joint venture partner is the one that's actually making the investment. For that, he gets a, quote-unquote, promote. So whether it he gets 10 percent allocation over a 20 percent return back to us, he gets compensated for that. I have no idea what the promote structure was here, et cetera. 20 Q. But promotes are in the nature of 21 expenses or reductions of the profit or return 22 for a fund for the particular time? 23 A. Unless you're receiving the promote, 24 yes. 25 Q. And did you review with Dan on a Page 275 1 Gruss - CONFIDENTIAL 2 dollars follow the allocation? 3 A. Yes, yes. 4 Q. Did he ever tell you to allocate 5 expenses different between the onshore fund and 6 the offshore fuod? 7 A. I don't — I don't recall. 8 Q. Isn't it a fact that that's not 9 something that you would have asked him for 10 permission to do or gotten a direction from him I I to do? 12 A. I don't know. I don't know. 13 Q. So Exhibit 25, page 4 — 14 A. Yes. 15 Q. — were you responding to the 16 difference between the rate of return in the 17 onshore fund and the offshore fund when you wrote 18 "Why is the spread growing, BT, uar 19 A. That's what it looks like. 20 Q. And did she respond to you that it 21 was, quote, -The effect of increase in New Comm 22 mark, although, has larger absolute impact on 23 Ltd; has smaller impact on Ltd's return"? 24 A. Yes. 25 Q. And then is Li Anne Law telling you Pagc 271 Gruss - CONFIDENTIAL 2 regular basis the monthly returns of the 3 different finds? 4 A. Yes. 5 Q. And would you go in and talk to him 6 and show him information like what is on the last 7 page of Exhibit 25, which was the list of the 8 particular funds and the rate of returns for the 9 time period? 10 A. Yes. He would probably have 11 received this. This is March 15th. I'm to 12 take this to say that the returns have not been 13 released yet, which is kind of long; but — he 14 would have received this similar return analysis 15 several times up until this date. 16 Q. And — 17 A. Almost daily. 18 Q. And you responded to her, "Ahhh -- 19 A-H-H-H — "please back it out. Pm going 20 through all right now with Dr. Death." 21 A. Right. 22 Q. First of all, is Dr. Death Dan? 23 A. Oh. Yeah. 24 Q. And by "please back it out," are you 25 instructing her to take the promote out of the VERITEXT REPORTING COMPANY et. • 4". n en 70 (Pages 274 - 277) a' • I an. /a • PG EFTA01124942 Page 278 1 Gruss - CONFIDENTIAL 2 calculation for both returns? 3 A. I don't know what -- it appears that 4 way. 5 Q. And does that have the effect of 6 increasing the returns in the respective funds? 7 A. Hold on. 8 (Witness penises the exhibit.) 9 A. It depends on -- again, it depends 10 on which way the promote was going. 11 Q. Well -- 12 A. I don't !mow. 13 Q. Well, if you look at page 5 -- 14 A. Right. 15 Q. — the return for L.P. is 16 1.28 percent. 17 A. Right. 18 Q. And then it goes to 1.32 percent and 19 then after she backs it out, according to your 20 instruction, it goes to 1.37 percent -- 21 A. Right. 22 Q. -- correct? 23 Right? 24 A. Yea. 25 Q. And she told you that once she did Page 280 1 Gruss - CONFIDENTIAL 2 there could have been - someone could have made 3 an error. 4 Q. Didn't the report in March of 2007 5 refer to such a finessing that was done 6 improperly, on page 2, referring to February -- 7 March of 2006 and an attribution of expenses of 8 some three and a half million dollars? 9 A. Where are you? Hold on. 10 (Witness peruses the exhibit) 11 MR. SIEFERT: It's Exhibit 1 on the 12 record. 13 MR. O'BRIEN: Exhibit 21. 14 A. Okay. 15 Q. Isn't that what the report found? 16 A. Yes, that's what it's saying. 17 Q. Didn't you have knowledge and 18 approve of the particular instance finessing the 19 returns as between the onshore fund and offshore 20 fund in February and March of 2006 as it's 21 reflected in the memo? 22 A. I don't know if I did. 23 MR. LEVINE: We'll adjourn for 24 today. Next time we will return to this 25 subject. Page 279 1 Gruss - CONFIDENTIAL 2 that, the next comment was "but the spread 3 widens"? 4 A. Correct. 5 Q. So is it fair to say that you arc 6 talking with her and engaging with her in a 7 discussion to literally finesse the returns that 8 are going to be reported? 9 A. This is -- this process goes on just 10 about everyday several times a day from the date 11 that the P&L is closed — I'm sorry — the date 12 the month is closed and the date that the P&L is 13 actually released. 14 Q. And the process of finessing the 15 returns is something that went on monthly; isn't 16 that right? 17 A. Finesse- 18 MR. BRECIIER: Objection. 19 A. Finesse -- not finesse. Updating, 20 allocating, et cetera, yes. 21 Q. And there's allocating that can be 22 done properly and there's allocating that might 23 have been done improperly; isn't that right? 24 MR. BRECHER: Objection. 25 A. [don't — I don't disagree that Page 281 1 Gruss - CONFIDENTIAL 2 MR. SIFFERT: The record should 3 reflect that we're supposed to have two 4 seven-hour deposition dates. So we'll have 5 to take this up again. 6 (The examination adjourned. The 7 time is 4:22 p.m.) 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 71 (Pages 278 - 281) VERITEXT REPORTING COMPANY EFTA01124943 P 282 1 2 STATE OF NEW YORK ) 3 ss: 4 COUNTY OF WESTCHESTER ) 6 7 I, PERRY GRUSS, the witness herein, 8 having read the foregoing testimony of the pages 9 of this deposition, do hereby certify it to be a 10 true and correct transcript, subject to the 11 correction, if any, shown on the attached page. 12 13 oOo 14 15 16 17 18 PERRY GRUSS 19 20 21 Subscribed and sworn before me 22 this day of 2010. 23 24 25 Page 284 1 2 (Continued) 3 EXHIBITS 4 5 Exhibit 7 Bates Nos. PG0402 through 420, 70 6 Confidentiality, Noncompetc 7 and Nonsolicit Agreement 8 Exhibit 8 Bates Nos. 790 through 791, 101 9 E-mail Chain 10 Exhibit 9 Bates No. JSB0158, E-mail 140 11 Chain 12 Exhibit 10 Bates Nos. PG 00595 through 148 13 600, 11/26107 Letter to Gruss 14 from Cambra 15 Exhibit II Bates No. PG 00585 through 149 16 604, 2007 Form 1040 17 Exhibit 12 Bates Nos. PG00605 through 150 18 612, 2008 Font 1040 19 Exhibit 13 Bates Nos. PG0613 through 621, 151 20 2009 Form 1040 21 Exhibit 14 Bates No. OG0622, Earnings 152 22 Statement 23 Exhibit 15 Bates No. 729, Wage and Income 153 24 Transcript 25 1 2 3 4 5 Page 283 June 28, 2010 INDEX WITNESS EXAMINATION BY PAGE PERRY GROSS 6 7 8 9 10 GRUSS 11 Exhibit 1 12 Exhibit 2 13 39, 6/7/02 Letter to CrruSs 14 from Zwim 15 Exhibit 3 Answer and Counterclaims of 39 16 Defendants D.B. Zwim & Co., 17 L.P. and D.B. Zwirn Partners, 18 LLC 19 Exhibit 4 Plaintiffs Reply to 52 20 Defendants' Counterclaims 21 Exhibit 5 Bates Nos. DBZ 0000173 through 61 22 206, limited Partnership 23 Agreement 24 Exhibit 6 Bates Nos. PG00388 through 69 25 401, Supplementary Agreement MR. LEVINE 4 EXHIBITS PAGE Complain and Jury Demand 18 Bates Nos. DBZ 0000038 through 21 Page 255 1 2 (Continued) 3 EXHIBITS 4 5 Exhibit 15 Bates No. 729, Wage and Income 156 6 Transcript 7 13/tidbit 16 Bates Nos. JSB0126 through 161 8 128, E-mail Chain 9 Exhibit 17 Bates Nos. JSB0101 through 162 10 103, E-mail Chain 11 Exhibit 18 Bates No. JSBO 112, E-mail 163 12 Chain 13 Exhibit 19 E-mail Chain 164 14 Exhibit 20 Plaintiffs Initial 194 15 Disclosures 16 Exhibit 21 Bates Nos. DBZCO PG 004268 245 17 through 275, 3/26/07 Memo to 18 Investors from D.B. Zwim 19 Co. 20 Exhibit 22 Bates Nos. DBZSECPR-0000551859 254 21 through 912, Confidential 22 Memorandum dated May 2003 23 Exhibit 23 Bates Nos. DBZ 0000247 through 256 24 261, E-mail dated 5/26/04 from 25 Wu to Myers with attachments VERITEXT REPORTING COMPANY a • a a :I. al /a /a 72 (Pages 282 - 285) • e ./Ae• a en" EFTA01124944 Page 286 1 2 (Continued) 3 EXHIBITS 4 5 Exhibit 24 Bates Nos. DBZ 0009065 through 262 6 67, E-mail Chain 7 Exhibit 25 Bates Nos. DBZ 0009009 through 266 8 9013, E-maiI Chain 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Page 288 (NOTARY PUBLIC) MY COMMISSION EXPIRES: 288 2 STATE OF NEW YORK ) 3 es: 4 COUNTY OF NEW YORK ) 5 6 I, Eileen Mulvertna, Notary Public 7 within ad for the State of New York, do hereby 8 certify: 9 10 That I reported the proceedings in II the within entitled matter, and that the within 12 transcript is a true record of said proceedings. 13 14 I further certify that I am not 15 related to any of the parties to the action by 16 blood or marriage, am; that 1 aro in no way 17 interested in the outcome of this matter. 18 19 IN WITNESS WHEREOF, I have hereunto 20 set my hand this 30th day of June, 2010. 21 22 23 Eileen MnIvenna, CSR/RMR 24 25 Page 287 2 ERRATA SHEET VESUTEXT/NEW YORK REPORTING, INC. 3 1.800.727.6396 4 200 OLD COUNTRY ROAD 1250 BROADWAY-SUITE 2400 MINEOLA, NEW YORK 11501 NEW YORK, N13W YORK 10001 S 6 NAME OP CASE: GRUSS V. ZWIRN DATE OF DEPOSITION: JUNE 28, 21010 7 NAME! OP DEPONENT: PERRY GRUSS 8 9 PAGE LJNE(S) CHANGE REASON 10 l I I1 I I 12 I I 13 I I 14 1 I IS I 1 16 I 1 17 _j I 18 I I 19 I I 20 21 PERRY GRUBS 22 Subscribed sod swan to Bebe me 23 tbs. day of 2010. 24 25 73 (Pages 286 - 288) VERITEXT REPORTING COMPANY • ••• wee Om• EFTA01124945 [& - 2006] Page 1 & 1:8 2:4,10,18 5:6 5:19 17:8,12 39:8 39:14 46:3,7 64:5 81:5 145:5,8 148:16 148:22 150:7 151:2 152:11,23 160:21 163:14 167:17 168:12 170:17 238:14 245:6 246:8 253:15 266:7 283:16 285:18 07726 4:11 09 1:3 096441 5:10 1 0 0000038 21:11 283:12 0000173 61:18 283:21 0000247 256:22 285:23 0000551859 254:11 285:20 0009009 266:18 286:7 0009065 262:6 286:5 004268 245:5 285:16 00585 149:18 284:15 00595 148:5 284:12 02 60:8 03 59:1960:5 04 60:5 257:10 05 165:24 06 60:8 165:24 193:10 194:16 257:11,20 267:4 07 101:22 102:22 146:24 148:25 149:4,7 164:13,17 165:23,23 166:23 168:3,7 193:3,10 194:13 219:22,22 247:24 258:5 1 18:13,14 64:22 72:5,15 82:19 133:12,17 160:9,15 160:18 176:24 252:5 276:7 280:11 283:11 1400-727-6396 287:3 1.03 121:3 1.2 155:17 1.2. 156:12 1.28 278:16 1.32 278:18 1.37 278:20 1.6 154:6,15 155:9 1.8 155:17,18 1/2 220:7 253:23 10 148:4,14238:23 276:15 284:12 100 274:10 100,000 152:14 10001 287:4 10022 2:6 10036 2:19 101 284:8 10110 2:12 103 161:8 285:10 1040 149:18,25 150:17 151:9,12 284:16,18,20 1040s 150:22 10th 140:12 11 149:16,17,24 153:14 197:13 284:15 11/26/07 148:5 284:13 1114 1:192:19 11501 287:4 11th 249:17 12 53:11 117:6,18 150:15,16 151:15 233:19 284:17 122 41:22 1250 287:4 128 156:20 285:8 12th 249:18 13 151:7,8,11,16 284:19 131 40:5,8 43:10 14 152:6,7,10 284:21 140 284:10 148 284:12 149 284:15 14th 249:17 15 153:21,22 284:23 285:5 150 284:17 151 284:19 152 284:21 153 284:23 156 285:5 15th 277:11 16 72:3,19 77:15 156:14,18,19,22 285:7 161 285:7 162 53:16 117:18 285:9 163 285:11 164 285:13 17 161:6,7 163:3 164:5 285:9 18 162:15,16,20 163:21 164:6 283:11 285:11 19 164:10,12 173:17 173:18 285:13 194 285:14 1989 7:6,22 135:19 1994 7:23 9:4 19th 162:21 249:17 249:18 1:13 148:3 lm 160:10 1mm 276:6 1st 77:11 2 2 21:9,10 115:18 149:10 154:2,16 156:17 161:I7 163:2 173:17 280:6 283:12 2.02 78:25 80:11 81:3 120:20 2.6 108:15 2.63 135:9 20 5:9 40:4 73:9 89:4 147:19 194:21 194:22 195:6 257:7 274:11,12 276:16 285:14 200 287:4 2000 165:16 2002 10:17 16:23 17:10,21,23 21:21 21:23 22:3,17,21 23:5,17 24:17,24 25:25 34:16,18 41:5 45:7 54:15 2003 57:4 254:12 285:22 2004 154:20 156:10 222:16 262:12 2005 154:14 155:11 155:15 161:3 165:11 2006 45:7 64:21,22 75:23 77:10,11 79:6 79:8 80:21 84:2,5,8 85:5,8 86:15 88:7 88:11 91:3 92:2,18 93:6 103:24 122:17 123:7 132:23 133:11,16 140:12 154:2,5,9,9,13,17,18 154:19 155:20 212-267-6868 VERITEXT REPORTING COMPANY www.veritextcom 516-608-2400 EFTA01124946 Page 2 [2006 - 7th] 156:24 157:5 165:11 177:5,7,25 178:7 179:11,11 180:15 182:9 189:17,23 190:3 192:18 196:12 197:11,14,23 198:3 198:7,22,23205:8 211:14 220:2 221:13,21 223:19 223:24 228:14 233:4,16 234:17,21 234:25 280:7,20 2007 101:12 109:6 145:25 147:16 148:15 149:18,25 150:5,5,8,12 151:5 151:21 152:24 161:13 162:21 165:8 167:14,20,23 169:18 173:7 175:3 179:8 182:20 192:19 244:24 247:3 248:5 250:15 250:23 280:4 284:16 2008 145:23 150:17 150:22 151:5,18 284:18 2008-2009 151:16 2009 5:9 151:9,12 151:17 152:19 181:16 195:8 217:11 220:16 284:20 2010 1:13 152:12,15 152:20 282:22 283:2 287:23 288:20 206 61:18 283:22 21 73:7 245:3,4 280:13 283:12 285:16 21010 287:6 22 254:10,17 285:20 225,000 154:11 23 256:21 257:2 285:23 24 157:4 232:24 262:4,5,13 286:5 2400 287:4 245 285:16 25 232:25 266:16,17 266:22 275:13 277:7 286:7 250,000 153:9 254 285:20 256 285:23 26 148:15 149:4 150:5,12 232:25 247:3 260 44:16 49:20 53:21,24 54:9,11,12 115:23,25117:20 117:25 118:7,13,24 261 256:22 285:24 262 286:5 266 286:7 26th 174:2 27 232:25 275 245:5 285:17 28 1:13 232:25 283:2 287:6 287,000 150:25 288 288:1 29 232:25 30th 288:20 32 83:4 88:24112:2 112:5 33 82:23 83:2 100:15,23 34 177:2178:8,11 179:16 251:25 252:7 35 251:25 252:7 36 252:7 360 54:6,11 37 44:16 375 153:6,15 39 21:11283:13,15 3rd 101:25 5/26/04 256:22 285:24 50 16:10 50,000 150:3 50/50 273:18,20 274:10 500 2:11 52 283:19 55 4:10 57th 220:8 6 4 3 3 39:6,7,12 78:22 101:12 115:18,18 120:20 155:22 161:18,21 162:2 175:25 223:8 255:10 283:15 3/26/07 245:5 285:17 30 82:22 83:2 100:15,23 232:25 4 52:19,20,24 78:9 78:23 117:5,9,14 123:7 182:9 189:17 189:22 190:3 192:18 197:11,14 197:22 198:3,7,22 198:23 205:8 211:14 219:25 221:21 223:19,24 228:14 275:13 283:7,19 400k 276:4 401 69:15 283:25 420 70:14 284:5 4:22 281:7 4th 139:3,19 183:19 187:25 193:22 198:10 6 69:13,14,24 71:7 78:6,11,11 112:19 136:23 196:11 283:24 6.01 73:11,16 75:8 80:17 82:13 121:9 6/7/02 21:11 283:13 600 148:5 284:13 600k 276:3 604 149:18 284:16 61 283:21 612 150:17 284:18 621 151:9284:19 6441 1:3 67 262:6 286:6 69 283:24 6th 249:18 7 5 5 61:16,17,20 63:23 70:10 71:6 73:7 78:21,23 79:9 80:14 112:18 117:10,11 117:14 120:16,17 133:8 154:22,23 238:24 278:13 283:21 7 70:12,13,18,21,25 71:9 72:2,8,11,12 77:13,23 78:3 112:20 193:22 196:19 284:5 70 284:5 729 153:22 284:23 285:5 75,000 150:9 790 101:5 284:8 791 101:6 284:8 7th 174:2 212-267-6868 VER1TEXT REPORTING COMPANY www.veritext.com 516-608-2400 EFTA01124947 [8 - allegations] Page 3 8 8 82:21 101:4,5,11 156:12,15 220:7 253:23 284:8 80 274:11,12 800 2:5 800,000 156:15 9 9 82:21 140:5,6,11 177:3 195:8220:16 284:10 900,000 151:17 9013 266:18 286:8 90s 16:9 912 254:11 285:21 94 13:18 95 121:8 975 149:11,11 975,000 152:2 9:30 1:13 a a.m. 1:13 abide 129:5 abilities 114:22 ability 67:12 165:7 able 238:22 absolute 275:22 absolutely 18:7 163:10,12,13 185:23,25 194:11 223:20 250:17 264:18 273:13,20 acceptable 207:2 access 31:8 254:22 account 22:25 40:23 55:7 255:25 accountant 7:12 36:18 54:21 accounting 7:13,15 45:24 55:2 58:2 209:2 accounts 15:14 61:15 62:3,7 116:15 133:11,16 268:16 accrual 156:5 accrued 255:20 accumulating 13:11 accuracy 19:22 20:3 accurate 19:12,14 20:16,19,22 21:6 107:16 119:6 132:11 165:12 206:23 269:19 272:13 accurately 50:9,17 50:25 51:14,22 52:9 117:2 149:8 acknowledged 164:25 act 191:14 acted 169:10 235:19 acting 130:12,14 131:5,20,24 148:24 191:16 193:25 197:10 198:20 201:13 205:19 206:11 233:21 235:2,18 236:16 action 1:3,17 18:19 120:24 235:17 288:15 actions 99:17 activities 134:2 192:7 acts 121:3 179:12 actual 18:9 33:23 156:5 274:4,7,8 add 142:3 adding 69:3,4 addition 40:14 182:5 190:14 225:18 address 4:8 addresses 37:4 195:13 adhering 114:17 adjourn 280:23 adjourned 281:6 adjusted 41:20 271:13,14 adjustment 274:5,7 administer 3:15 administrative 27:2 116:2 167:3 admits 53:20 117:19 admitted 47:19,23 54:5 257:22 258:4 advice 62:2,3 98:21 98:24 99:12 100:5 103:9 118:14 122:9 advisable 121:5 adviser 26:25 236:5 advisers 177:20 advisory 31:19 affairs 50:8,16,24 51:13,21 116:6 affect 184:23 affirm 77:4 affirmative 44:23 104:15 269:14 affirmatively 126:21 agencies 11:6 12:19 agency 11:25 12:16 agenting 192:23 aggregate 12:7 133:9,14 ago 31:5 76:5 109:18 194:9,10,10 220:14,15 224:2 agree 42:5,24 52:7 117:22118:4,21 126:13 129:9 143:20 165:7 173:12 184:7,12 201:3,5,24 206:10 208:8 210:13 260:11 264:8 agreed 3:2,7,12 136:6,11 144:2,13 agreeing 167:10 agreement 21:21 61:19 64:4,14 69:15 70:4,6,9,10,15,25 71:6,7,9 73:12 74:21,24 75:2,15 76:13,18 77:5,13,17 78:7,10,22 80:11 81:10,12 82:3,7,10 94:15,22 112:12,13 112:13,18,19,20 118:25 120:22 121:18 122:19 124:2,12 127:9 134:23 135:2,4,5,6 135:11 136:5,10,25 137:4,24 138:9 143:10 148:19,25 151:5 152:3,22,24 283:23,25 284:7 agreements 28:20 29:3 46:18,23 47:7 47:8,15,21 48:12 71:2,10,14,19 72:16 76:2,16 113:4,21 114:11,24 115:3,11 116:12,16 125:14 126:5,10,15,24 127:4,21 128:3,16 129:5 135:24 136:20 143:21 144:4,15 187:14 188:3,17 ahead 124:16 263:8 ahhh 277:18 aig 7:18 135:21 airplane 86:19,20 93:2,3 94:21 113:16 114:3 118:5 Alan 2:20 5:5 alec 2:15 alevine 2:20 allegation 116:21 allegations 20:9,12 53:20 117:20 251:3 212-267-6868 VERITEXT REPORTING COMPANY www.veritext.com 516-608-2400 EFTA01124948 Page 4 [allege - awn] allege 83:4 112:4 alleged 142:18 197:6 allegedly 230:22 237:7 alleging 179:18 allocate 273:24 274:18 275:4 allocated 40:16 allocating 279:20,21 279:22 allocation 30:20 186:17 275:2 276:16 allowed 142:5 181:12 alluded 201:22 american 7:8 americas 1:19 2:19 amount 103:23 104:3 132:25 151:25 152:17 269:25 270:5 amounts 269:18 analysis 10:25 11:3 277:14 analyst 13:5,7 analyzing 15:7 andrew 2:14 anne 57:19 60:14 61:4,9 63:14 267:2 268:4 275:25 announced 65:23 answer 6:6,8,9,22 11:13 19:8 22:4 39:7,13 51:7 53:24 67:24 115:19 120:11,14 140:15 146:20160:2,3 189:6 190:17 195:20,20 203:20 229:24235:7 236:21283:15 answered 87:17 answering 235:8 anybody 18:3 37:25 38:13,21 45:10 56:15 59:24 88:5 122:25 128:5 166:16 177:11 180:20 196:15 197:10 210:17 212:12,22 232:13 233:8 253:8 260:7 apart 46:21 51:9,16 69:17 209:19,19 233:25 apologize 19:9 138:11 apparently 241:15 appears 21:16,19 278:3 applied 13:15 21:21 24:12 33:23 34:23 35:15 36:8 37:7 38:7 71:2,10,23 72:8 75:8,10,16 77:5,17 81:4,20,23 112:14 135:6 137:25 applies 77:23 78:3 78:18 apply 34:3 38:3 75:3 75:12,19 98:4 112:21 135:24 269:22 applying 89:18 apportionment 32:13 appreciate 200:7 appropriate 32:16 127:8 150:11 189:8 189:11 approval 264:4 approve 280:18 approved 257:17,24 259:19 263:14 approximately 15:20 57:3 150:9 152:14 154:5 april 153:9 area 14:19 54:18 57:5,8,23 59:10 91:20 areas 117:25 118:6 145:13 177:15 argue 4:23 arguments 273:3 arrangement 150:13 151:2 arranging 42:16 article 181:10 ashok 183:24 234:11,19 asked 13:25 50:14 86:22 87:11,16,18 93:16 124:20 126:20 185:20 195:21 205:17 214:2 215:5 216:4 225:11,11229:3 235:12 236:25 243:6 249:4 250:25 251:6,11 260:22,24 261:8,11,15,24 263:21 265:11 275:9 asking 35:21,22 37:16,17 87:15 110:18 122:13 179:7 180:8,10 181:15 184:14,17 191:9 218:10 220:24 226:20 235:8 246:25 aspects 106:24 208:5,6 asserted 19:6 asset 32:15,17,21,22 55:9 239:19,25 273:23 assets 27:8 32:8 55:20 60:24,25 172:21 216:19 238:3,4,7,16,17 255:13 269:18 274:21 assigned 116:4 assignment 13:17 assistance 166:8 assistant 196:22 assisting 11:6 associated 86:19 179:13 274:12 assume 36:19,20 45:11 49:16 51:20 157:14 assumed 135:10 assuming 188:22 233:25 assure 46:15 47:5 48:9,16 49:25 50:7 50:11,15 51:12 52:8 253:25 assured 48:13 assuring 47:13 48:1450:23 114:18 115:10 116:10,13 astruc 231:25 atalaya 246:6 attached 72:11 282:11 attachments 256:23 285:25 attesting 19:22 attorney 202:12 203:3 210:17 211:19 attorneys 2:5,11,18 3:3 attributable 27:19 29:8,16 186:25 attributed 29:20 attribution 280:7 audibly 229:25 august 164:13,17 175:3 awn 156:6 212-267-6868 VERTTEXT REPORTING COMPANY www.veritext.com 516-608-2400 EFTA01124949 Eaustralla - blows] Page 5 australia 146:13 australian 145:9,10 153:18 authority 79:2 80:10,15,22 81:4 82:6,11 118:22 120:23 121:17 122:18 123:2,9,14 123:19 129:10 130:20 169:10 257:15 262:16 authorized 3:14 192:7 available 24:20 143:4 270:5 avenue 1:19 2:5,11 2:19 aware 52:16 258:14 266:6 b babcock 145:5,8 148:15,22 150:7,25 152:11,23 160:21 163:14 164:18 167:17 243:8 back 13:914:14,14 16:11,11,22 22:8 46:12 59:4 73:6 78:20,21 109:5 118:17 128:4 140:23 148:12 175:22 176:10 182:17 193:21 199:25 276:16 277:19,24 backed 8:24 9:3,12 10:9 12:4 15:10,11 background 8:12 backs 278:19 bad 65:17 171:17 173:13 227:16 balance 255:25 bank 237:4,16 banker 237:3,19 239:4 bankers 177:19 bankrupt 145:15 bankruptcy 145:18 149:14 151:24 barr 139:21 140:11 140:18 141:2,8 144:18,20,21,25 146:5 147:2,14 156:23 157:4,22 159:9 160:10 161:15 164:22,25 barr's 166:8 base 150:25 153:15 154:6,18,24155:5 based 35:6 36:4,19 36:22 99:17 103:16 188:11,15 205:6 207:19 209:16 211:4 237:16 244:7 258:20 basic 189:I7,22 basically 79:24 80:4 80:8 111:23 154:17 160:20 204:7 218:22 basis 30:24 31:4 156:5 164:18 179:19 192:11 271:13,15 277:2 bates 21:10 61:17 69:14 70:13 101:5 140:6 148:4 149:17 150:16 151:8 152:7 153:22 156:19 -161:7162:16 163:21 245:4 254:10 256:21 262:5 266:17 283:12,21,24 284:5 284:8,10,12,15,17 284:19,21,23 285:5 285:7,9,11,16,20,23 286:5,7 becoming 65:11,20 66:19 began 137:4178:18 223:4 beginning 38:19,23 103:24 120:20 132:23 217:23 225:17 begrudge 223:4 begrudged 223:11 behalf 10:14 19:14 22:19 23:2 27:8 31:19 39:25 53:6 54:4 96:8 107:12 120:23,24 130:14 131:6 132:8,17 157:10 183:17 I91:16 193:25 196:15 197:11,23 198:21 205:19 206:12 233:8,21 235:2,18 236:16,24 250:5 267:14,18 believe 5:16,24 14:23 18:10 19:12 21:2 23:6 26:10 29:4 31:14 34:25 46:20 64:9 67:17 68:2,3 69:8,22 70:11 71:4,12 76:9 79:11,16 80:24 81:25 87:3 91:8,25 92:10 94:3 95:14,18 96:6,16 103:12 108:14,15 109:11 111:24 114:5 122:25 123:8 131:3 133:5 135:10 138:14 139:14,20 144:17 145:23 147:9 149:7 150:6 151:6 153:6 155:3 160:8 168:17 169:2 171:11 177:16,18 178:18 179:16,17 180:3,16,25 181:2 181:10 182:15 183:15,18,20 184:18 185:18 192:6193:11 195:5 196:25 197:15 198:4 200:20 204:20 207:13 210:14 211:9 213:23 215:3 217:6 220:17 221:10,10 224:3 227:16 228:10 232:3 234:2 235:15 236:5 238:19,20 242:10 242:10 246:9,19,19 250:21,24 251:15 252:11 253:2 257:21 262:18 268:14,19 believes 108:13 believing 188:23 benedict 85:9 benefit 259:7 benefits 149:9 best 20:15 86:2 93:8 102:3,14,15,18 109:6,9110:5,25 114:22 244:14 250:12 better 107:12 272:10 beyond 36:9 249:6 big 140:24 billion 133:5,7,8,12 133:17 223:8 bit 81:11 223:16 blab 213:6,6,6 blame 89:25 blamed 83:6 209:9 blaming 106:15 blanket 76:25 blood 288:16 blows 173:22 212-267-6868 VERITEXT REPORTING COMPANY www.veritext.00m 516-608-2400 EFTA01124950 Page 6 [blue - 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company[ Page 7 celebration 65:14 center 103:19 centers 199:7 ceo 43:16 49:3,7 51:3 59:14 131:8 certain 49:18 98:3 138:8 179:18 194:11 203:12,22 243:10 273:13 274:24 certainly 166:3 178:23 194:14 202:20 208:16 certified 1:21 certify 282:9 288:8 288:14 cetera 13:12 197:20 199:14 225:3 242:24 243:11 276:19 279:20 cfo 16:17 17:13 22:23 29:5,18,24 40:10 43:12,20 44:3 44:8,11 45:6,11,23 46:11,15 48:25 49:12,16,25 58:6 60:9 62:16 68:24 69:2,4 114:4,13,21 115:6,14 118:11 138:20 143:5 153:14,16,19 158:4 159:16 162:24 167:4,18 186:10 190:14 191:19 260:20 cfo's 91:20 191:22 cheers 234:11,19 chain 101:6 140:7 156:20 161:8 162:17 163:22 164:10 262:6 266:18 284:9,11 285:8,10,12,13 286:6,8 challenge 30:14 chan 216:15,17,18 217:13,22,25 218:12,17 change 190:16 222:13 223:3 273:8 287:9 changed 222:14,14 chapter 153:14 charge 58:7 62:3 124:6 261:6 charged 28:15 255:12 charlotte 18:6 chen 198:9 211:15 212:5,25 214:22 215:16,20 216:12 chief 35:23 83:16 115:25 116:2 chris 64:25 65:2,3,5 66:13,16,24 67:11 69:8 198:2,3 do 269:8 circle 4:10 circumstance 69:19 216:4 236:14 251:13 265:13 circumstances 74:21 75:3 83:10 87:4,7,12 88:24 90:7,16 91:7,13,24 94:2,10 95:4 97:5 103:23 105:6,15 113:8,19 119:15 125:8 159:19 181:21 186:24 233:22 235:3 237:7 251:8 civ 1:3 5:10 civil 1:3 4:14,16,20 claim 192:11 204:22 205:5,6 208:12 claiming 208:2 235:17 claims 195:17 clarification 40:25 clarify 76:20 clear 22:2,15 47:20 55:18 56:7 61:13 62:24 63:14175:11 176:17 184:7 193:16 256:3,6 cleared 139:12 clearing 173:20 175:2 clearly 36:9 37:14 42:11 79:15 137:7 165:21 174:8,10 181:13 client 166:10 do 237:21,22 238:10 238:21239:6,18,25 240:9 dos 238:13 240:2,5 240:5,12 close 83:14 104:13 173:19 174:23,25 225:6 226:22 230:7 256:8 closed 279:11,12 crab 11:10 dubs 8:22,23 10:23 12:4 238:2 code 173:22 174:5,8 174:10,16 coffee 157:17 coincidence 269:24 270:6 collateralized 8:24 9:3,12 10:8 237:23 237:24 colleagues 177:21 collect 260:24 collected 258:21 collection 86:17 89:20 94:14 113:14 114:2,8,10 115:5 117:23 collectively 43:5 college 7:3,13,16 coining 173:19 174:23,25 comm 275:21 comment 279:2 commentary 242:11 comments 194:13 201:6 211:5 242:9 247:23 commercial 11:5,15 12:4,7 13:2,14 15:10 commission 288:1 committed 193:5 202:14 219:5 241:14 committee 114:20 171:2 205:20 communication 267:18 community 129:20 183:3,6 205:23 246:11 company 22:14 26:19 27:3,5,7 29:17 41:19 43:19 46:2,8,16 47:6 48:10 50:2 58:3 60:2 61:10,13 62:5 62:6,9,13,14,17 63:2,8,16,21 64:14 64:17,20,24 65:4,12 65:16,19 66:2,8,15 68:15,25 70:7 71:3 83:7,11,14 84:19,22 86:6 94:16,23 104:12 112:6 113:2 113:22 114:12 115:4,12 116:3,6,7 116:11 117:24 118:10 119:5 129:16 137:17,18 137:22 143:22 144:5,16 145:21 212-267-6868 VERITEXT REPORTING COMPANY www.veritext.com 516-608-2400 EFTA01124952 Page 8 (company - 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counsel] Page 9 conformity 121:18 124:11 confronted 23:18 confused 135:3 205:2 confusion 79:13 139:9,11 connect 123:21 connecting 125:3 connection 100:18 100:25 215:4 consciously 74:8 consequences 87:6 consider 65:8 135:21 203:9,13,23 205:15 207:10 215:23 considered 127:4 185:12 considers 243:23 consistent 142:20 150:12 151:4 240:17,17 241:9 272:20 constantly 270:14 271:3 constitutes 126:15 consulted 220:24 consulting 149:6 150:4 164:18 cont'd 148:10 contact 221:12,13 221:24 222:3,6 contacted 217:7,8 236:24 contacting 193:14 contained 53:20 117:20 contemplating 67:6 175:8 214:23 contend 119:15 171:16 179:12 205:10,18 contending 136:14 136:17 contents 248:25 contingent 134:22 continue 244:8 continued 284:2 285:2 286:2 continuing 257:11 contract 76:12,24 76:25 212:3 contracts 76:10 121:4 control 116:5 controlled 31:16 79:21 237:15 controller 8:4 9:8 58:13 60:15 61:6,10 62:19 260:3,23 controls 4:21 59:10 199:23 convenience 28:19 36:7,10 37:13 convenient 37:5 conversation 66:24 83:17,19,20 88:13 89:13 91:10 92:8 93:6,24 95:7,21 96:19 99:23 103:15 106:6,7,14,19,23 107:2,6,13,18 108:2 130:20,24 131:5 134:10 136:16,18 137:8 138:18 139:2 139:16,17,25 144:2 144:12,13 187:24 196:13 212:25 213:25 214:10 215:5,9 216:12,14 219:25 221:7 223:25 225:23,25 227:2,7 230:21 232:24 235:24 240:19 253:20 254:4 266:10 conversations 88:19 88:19,22 89:5,10 90:21 92:10,12 93:15 95:7 98:16 99:23 104:7 142:24 179:25 182:12 190:2 192:12 211:15,16 212:4 214:2,19,22 218:7 218:13 219:12,20 219:21 232:2,20 270:18 coo 45:21 158:3 167:4,16,18 cooky 1:19 2:17 cooley.com 2:20,21 2:22 copied 257:14 copies 24:15 257:3 copy 18:18 101:10 224:10 245:25 248:19 250:23 corbitt 228:8,9 229:8 corporate 15:9 238:16 correct 6:12 10:5 12:18 14:7 16:3,4 17:2,24 20:10,13,14 21:4,7 29:12,18 30:2,6 31:15 34:4,7 45:8,9 46:8,9 47:17 48:7 49:2,7,13,14 49:21 52:14,15 57:14 63:4 68:13 75:19,20,24 77:22 78:19 82:15 83:3 84:23,24 86:4 87:13 87:14 100:3 101:23 102:17,19 103:2 104:9,16,18 105:6 107:4,8 110:15,17 110:20,24111:3,18 112:6,9 113:16,17 113:22,23 114:4 115:7 116:23 117:3 117:20,21 121:10 121:15 122:10 123:24 124:3,12 126:24 127:5 128:7 128:13,16,20 129:24 130:6 131:I1,13 133:18 133:20,23,24 136:15,18 137:21 139:11 141:25 142:18,19 143:6,16 145:7 146:4 148:16 152:4,13 157:12,19 159:3 164:24 170:5 170:6 172:17,21,23 173:15,15 185:16 186:11,12,14 187:3 187:7,11 191:4,5,7 194:17,20 201:19 203:14,24 205:8 207:11,11,18 210:7 215:12 232:6 236:9. 236:12 239:20 249:10,11,22,23,25 250:2,5,6,11,13 254:23 255:4,8,9,15 258:13 263:16,19 264:21 266:2 268:3 269:10,20 272:16 278:22 279:4 282:10 corrected 128:3 155:4 correction 282:11 corrections 18:25 19:16 correctly 19:19,24 29:20 30:21 51:25 67:22 204:6 corroboration 110:22 counsel 35:20 46:21 84:21 88:12 101:17 122:3 123:22 137:6 236:22 246:22 248:18 212-267-6868 VER1TEXT REPORTING COMPANY www.vaitext.com 516-608-2400 EFTA01124954 Page 10 [count - decided) count 257:9 counterclaim 117:13,17 counterclaims 39:8 39:13 52:21 53:2,25 115:19 283:15,20 country 287:4 county 282:4 288:4 couple 6:5 38:14 95:6 96:21 99:23 116:9 course 6:21 58:21 200:3,3 210:15 courses 7:15 court 1:2 5:8 crap 253:24 created 32:20 creating 264:10 credit 12:16 criminal 199:22 criminally 193:5,19 194:3 199:3,12 200:6 202:17 204:13 209:24 211:6,7 212:16 217:18 219:4 241:19 242:2 254:3 criteria 36:5 41:20 68:24 criticisms 69:20 crossed 126:7 crossover 246:9 csr 1:20 288:23 cup 157:17 currently 145:15 152:23 customary 76:6,8 cutler 83:15 87:21 87:23 88:14,21,23 89:13 90:20 91:10 91:11 92:3 93:4 94:5 95:2,10,12,16 95:21 96:20,23 97:2 97:16,24 98:7,16,21 98:24 99:3,6,11,16 99:24,24 100:5,17 100:24 103:10,15 103:16 104:17,18 104:20,21 105:4,9 106:7,14,20 108:17 130:23 139:16 181:4 d d.b 81:5 d.b. 1:8,9 2:18,18 5:6,7,18 17:8,12,15 18:8 39:8,9,14,14 46:3,6,7 64:5 178:23 179:2 238:9 238:14 245:6 246:8 253:14 283:16,17 285:18 daily 277:17 damage 172:8,25 176:21 178:6,18 180:14 damaged 179:2 damages 176:4,20 dan 17:17 22:25 26:23 31:21,25 40:18 43:3,5,9,12 43:14,22,24 44:2,15 49:11,15 64:25 65:22,25 66:6 67:5 67:11 69:8 79:12,16 79:21 80:2,6,11,15 82:2 85:9,25 93:13 94:21 95:15,16 102:7,8,10,12 108:3 109:13,16 111:13 111:18,22 118:5 122:17 123:13,14 125:4 129:12 130:12 131:7,14 133:21 134:11 138:13,18 139:2,17 139:25 143:10,19 143:25 144:11,11 155:22 179:4,13,17 183:17 184:3,5 187:24 188:21,23 189:9,15,20,25 192:22 193:25 196:14 197:22 198:20 199:15,22 200:4,14,20,21 201:6,23 204:11 205:7 206:11212:6 212:10,22 214:14 217:17 218:7,13 219:16,21 222:15 222:24 223:4,4,12 223:15,18,21 224:18,19,21,24 225:24 227:16,20 227:20 228:2,5,14 228:19 231:22 232:9,16 233:2,8,8 233:14,20,21,24 234:4,16,20 235:12 235:18,24 236:15 236:16 237:6 239:17 241:11,18 241:24,25 242:7 243:24 244:3,7,13 244:18 248:6 249:6 253:25 266:11 270:14,17,20,25 271:3,19 272:3,6,8 272:14,24 273:5,8 273:12 276:25 277:22 dam's 86:19,20 113:16 129:15 183:16 188:8 196:21 225:24 241:18 242:9 daniel 1:8 2:11,12 date 77:9 139:5,9 178:20 179:23 198:24 221:20 250:16 256:14 277:15 279:10,11 279:12 287:6 dated 148:15 195:8 254:12 256:22 285:22,24 dates 57:2 194:5 281:4 dave 232:21,22 davld 88:10,11,14 88:19 101:16,25 180:24 189:15,20 190:2 192:4 196:11 196:13,17 199:16 253:22 254:4 davis 96:3 day 8:15 30:24,24 31:4,4 69:18 77:5,8 131:11,15 134:11 137:5 196:18 198:5 279:10 282:22 287:23 288:20 dbz 21:1061:17 116:3 256:21 262:5 266:17 283:12,21 285:23 286:5,7 dbzco 245:5 285:16 dbzsecpr 254:11 285:20 de 1:3 deal 65:8 160:20 216:18 253:24 dealer 11:21 dealing 63:7,8 81:23 187:14 dealings 86:8 dealt 62:10 85:4,8 177:19,20,21,21 death 277:20,22 debt 238:22 239:2,5 december 195:8 217:11 220:16 249:17,17,18 decide 12:19 119:20 121:18,24 122:5,19 123:2,9 decided 83:5 97:3 103:16 127:21 212-267-6868 VER1TEXT REPORTING COMPANY www.veritext.com 516-608-2400 EFTA01124955 [decided - dittmannj Page 11 141:7 143:12 decision 13:14 65:23 66:19,21,22 93:24 108:8 123:13,15,17 123:19 124:23 128:11,14,21 129:3 188:9,11 199:21 decisions 31:19 87:9 120:24 deem 121:5 deeply 209:6 defamation 176:3,5 179:13 197:19 204:23 205:5,6 235:17 defamatory 197:6. 203:10,13,23 204:7 205:10,16 206:2 208:7,12 209:15 230:23 defame 180:15 detained 192:12,24 defendant 2:11,18 defendants 1:11,18 39:8,14 52:21 53:2 53:25 116:22 117:13,17 283:16 283:20 defending 5:7 defenses 195:17 deference 223:17 defined 79:4 definitely 88:3 89:8 183:13 216:24 220:20 232:16 239:13 definition 72:15 74:5 77:15 107:17 degree 160:13 delegate 44:2 delegated 268:7 delivered 208:16 deloitte 168:8,12 170:17 185:16 266:7 delta 154:13 272:25 demand 18:15 283:11 department 59:22 departure 221:8 233:4,22 235:3 depend 160:14 depends 214:20 278:9,9 deponent 287:7 deposed 5:13 deposition 1:16 3:13 3:17 106:3 281:4 282:9 287:6 depositions 265:22 deprive 6:16 deprived 258:24 depriving 265:7 derivative 175:13 derived 240:9 describe 210:12,22 described 14:3 16:2 43:10 75:15 80:17 82:12 117:2 118:13 121:9 131:22 174:21 209:4 251:13,24 deserved 66:14 desire 149:22 detail 10:25 11:2 determine 44:4 80:16,22 82:11 121:8 263:22 determined 35:10 35:10 203:14,24 204:2 determining 40:12 40:15 44:8,9,11 develop 239:14 difference 23:10 165:21 269:9 275:16 differences 270:4 different 10:19 13:2 13:14,21 14:3 15:14 21:24 23:3 32:23 33:9 58:16 59:5 63:13 76:12,17 107:18 124:2 152:24 165:9 202:24,25 204:7 261:3 271:18,24 275:5 277:3 differently 273:12 difficult 108:4,6 109:21 111:20 227:20 241:6 difficulty 166:19 dinner 220:10 224:2 228:17 229:14 230:19,22 231:4 direct 55:21 60:24 62:23 235:24 directed 192:7 263:22 265:14 directing 257:4 direction 192:23 275:10 directly 59:19 60:5 60:11 61:23 267:23 director 14:18 16:12 16:21 directs 6:24 disadvantage 272:11 disagree 118:15 130:7 206:17,18 208:11,15,16,17,21 279:25 disagreement 128:21 129:3 disappointed 119:7 disclose 185:25 disclosing 104:6 169:4 disclosures 194:23 195:7 285:15 discoverable 195:15 discovery 181:12,22 194:7 discretion 120:8 127:14 discuss 197:18 230:18 248:22 discussed 88:6 135:8 175:18,24 212:14 222:25 223:13 231:11 233:14 242:22 243:10 244:5 248:24,25 discussing 143:11 discussion 31:17 54:17 98:6 120:15 134:20,22 138:13 140:8 201:18 236:22 279:7 discussions 143:18 225:2 dishonest 193:6,20 194:4 202:23 203:4 209:25 211:7 212:17,18 219:6 241:14 dispute 77:22,24,25 78:18 81:7,10,14 82:14 108:22 109:14,18 155:21 170:13,24 disputing 170:15 disrespect 105:18 106:2 distinct 27:12 distinction 59:8 62:8,25 79:18 131:7 201:16 220:17 distressed 17:14 distribution 154:19 distributions 154:25 district 1:2,2 5:9 202:11 203:3 210:16 dittmann 211:23 215:17 216:11,14 212-267-6868 VER1TEXT REPORTING COMPANY www.veritext.com 516-608-2400 EFTA01124956 Page 12 [division - entity's) division 15:8 document 21:13 39:19,23 52:25 53:5 53:12 64:8,11 75:23 77:19 81:6 117:8 137:11,11,12,12,13 137:14,19 195:3,9 195:18 248:22 251:20 260:5 263:21 274:14 documentation 181:13 documented 50:4 documents 46:18 96:14 114:16,17 116:13,17 187:22 254:21,24 261:16 261:18 doing 7:1013:20 24:17 31:3 38:15 43:10 52:13 67:22 68:20 69:2,5,9,11 69:17,21 74:19 87:2 87:6 91:15 96:24 125:4,4,6 128:6 200:22 211:17 259:7 dollar 132:24 238:21,22 dollars 133:4154:15 258:24 260:12 274:8 275:2 280:8 domestic 23:14 35:8 domestically 36:12 dots 125:3 double 11:17 12:14 216:8 doubt 79:13 81:2,16 81:18,19,21,22,25 227:17 downstairs 253:23 dr 277:20,22 dreynolds 2:13 drink 216:23 220:25 246:16 drop 226:3 drum 20:7 drybsg 167:5 dubin 17:17 67:6,11 69:8,20 219:24,25 220:4,6,9,21 221:6 223:25 228:11,18 228:18 229:8,11 230:22 231:3 due 256:13 263:23 duly 4:3 dunn 168:8,11,23 169:5 170:17 171:4 172:4,24 185:15 205:12 234:4 249:10,13 250:3,9 251:17 258:5 265:20 266:7 dunn's 205:22 duties 13:6 27:6 45:22 113:10 116:7 118:13 138:19 170:3 duty 29:6 33:4 47:18 48:3,8 116:4 126:16,22 127:5 170:9 272:10,15,21 e earlier 12:15 28:21 47:19,24 84:5,6,6 89:22 113:18 126:21 134:8 166:7 170:2 184:6 185:11 186:22 191:21 201:22 206:24 207:5 210:14 212:14 214:18,21 218:19 232:15,18 234:10 252:24 258:12 early 86:17 89:20 91:3,5 94:14 113:14 113:25 114:7,10 115:5 122:17 230:6 257:14 258:15,21 262:17 263:23 264:9,15,17 265:7 265:16 earned 65:21,23 152:18 154:14 256:8 269:25 earning 258:11 earnings 152:8 284:21 ears 235:13 easily 166:4 ebrecher 2:7 echoed 241:15 echoing 219:17 eci 269:12 270:5 economic 165:15 economy 164:25 165:9,10 effect 3:16 73:23 108:16,20 136:20 143:8 160:17 209:23 271:8,12 273:4 275:21 278:5 effective 64:21 effects 276:2 effort 18:4 242:13 eight 10:18 146:2 159:18 160:7 233:7 eileen 1:20 4:3 22:7 54:11 288:6,23 either 37:22 58:12 63:13 91:24 94:9 113:19 155:16 156:11,12 158:2 205:21 265:24 else 181:2 emerging 14:24 employ 218:17 243:2 employed 7:8 16:7 31:25 32:3 58:19,24 60:9 145:16 153:14 217:25 218:14 219:9 222:4 employee 198:9 217:22 employees 180:19 181:24182:6 249:2 252:14 253:5,10,17 267:22 employer 18:9 employers 141:9,15 141:25 143:4 employment 21:20 41:13 74:24 76:9,12 76:18 148:19 151:2 152:2,22 ended 134:12,13 189:25 engaged 194:2 204:13 211:7 237:4 engaging 279:6 england 163:7,9 enormous 172:8,16 172:25 enormously 119:12 entail 8:6 enter 121:3 entered 148:21 entire 107:6 140:23 155:24 180:6 192:17 entities 9:24 33:7,8 35:24 39:24 40:2 55:3 84:19 86:4 133:22 188:20 entitled 6:22 52:25 66:7 117:12 119:16 206:20 261:12 288:11 entity 26:4 31:25 32:3,19,23 79:18,19 79:20,20 80:9 96:9 125:4 151:25 153:12 157:9 162:23 163:25 164:7 186:4 268:20 entity's 121:14 212-267-6868 VERITEXT REPORTING COMPANY www.veritextcom 516-608-2400 EFTA01124957 Iepstein - facts] Page 13 epstein 226:5,11,23 229:16,19,20 230:3 230:5,11,12 233:12 epstein's 226:7 equal 255:23 equity 238:21,24 239:3,20,20,22,24 240:9,12 equivalent 269:25 270:13 eric 183:15184:2 234:11,13,15 248:24 249:5 errata 5:3 287:2 error 280:3 esq 2:6,7,12,13,14 2:20,21,22 essence 33:15 essentially 32:22 61:12 223:7 estate 8:5 11:4,5 13:12 14:22 15:5 et 13:12 197:20 199:14 225:3 242:24 243:11 276:19 279:20 ethan 2:6 231:8,8 event 69:19 72:19 72:22,24 75:15 77:16 80:16,22 82:12 113:5 118:24 121:8,19,25 122:5 122:19 123:3,10 130:25 131:2 138:7 236:13 251:12 265:13 events 73:17 94:2 170:7 174:21 184:9 184:21 186:5 251:7 eventual 154:12 everybody 166:18 everyday 279:10 exact 201:23 241:21 exactly 5:19 9:20 14:5 30:23,25 57:10 57:11 63:19,22 65:13 82:5,9 93:7 102:11 109:4 134:13 144:10 145:20 151:19,22 155:3,13 164:20 206:21 208:9 232:10 233:23 239:24 240:11 241:22 245:18 255:16 270:8 274:3 exaggeration 273:7 examination 4:6 148:10 281:6 283:4 examined 4:5 example 12:7,15 42:16 examples 257:7 exception 185:20,23 188:23 exceptions 173:25 exchange 101:11 262:15 263:21 exclusive 63:20 excuse 119:22 120:4 executed 81:6,8 executive 139:22 146:7,15 exercised 124:16 exhibit 18:14 21:10 39:7,12 40:6 42:3 44:20 52:20 53:13 61:17 63:24 69:14 69:25 70:13,19 72:4 78:13 79:3,10 82:19 82:24 100:20 101:5 101:8 112:18,19,20 115:21 136:22 137:2 140:6 148:4 148:14 149:17 150:16,19 151:8 152:7 153:22 154:8 156:19,22,25 158:19 161:7,10,19 162:5,12,15,16 163:20,21 164:10 164:15 165:5 174:6 176:24 177:4 178:9 178:13 194:21,22 245:4 252:4,5 254:10,14 256:21 256:25 262:5,8,13 266:17,24 275:13 277:7 278:8 280:10 280:11,13 283:11 283:12,15,19,21,24 284:5,8,10,12,15,17 284:19,21,23 285:5 285:7,9,11,13,14,16 285:20,23 286:5,7 exhibits 149:22 164:5 existed 23:25 168:2 exists 137:12 expect 65:18 155:19 176:17,20 expectation 156:2 expected 155:21 expense 27:25 28:4 28:22,23 expensed 28:2,5,22 28:24 29:2 expenses 27:18,21 27:22,23 28:8,11,12 28:15,19 29:8,16,16 29:20 30:20 86:19 126:14 186:17,24 190:11,11 258:11 259:4,6,8 260:13 269:22 274:18,21 275:5 276:21 280:7 expert 34:15 expertise 77:3 expires 288:1 explain 11:8 62:8 151:16 171:15 explained 181:21 explanation 11:10 125:21,22 explore 41:21 express 226:6 244:2 expressed 166:6 261:20 expressing 200:7,23 201:7,25 202:4,9 241:25 expressly 120:21 extent 19:20,25 38:7 48:13 52:3,5 201:5 205:18,23 272:6,22 extremely 108:4 226:22 eyes 129:20 f fd 227:16,16,21 face 142:7,7 fact 67:17 85:15 90:8 111:22,25 112:10,16 114:7,9 118:9 119:4 123:12 127:7 132:4,14 133:6,9,14 138:25 144:8 158:12,14 163:11,13 165:13 165:18 167:19 168:25 169:3,17 172:12 182:14,19 182:24 184:12,13 186:10 187:12 188:25 192:5 200:23 202:13 208:21 213:5 216:2 216:3 228:18 241:12 249:12 251:11 256:19 257:13 259:16 261:16,24 262:20 263:14 264:15 265:3,5 266:3 272:5 272:8 275:8 facts 105:23 174:4 189:17,22,25 191:11 209:20 212-267-6868 VERITEXT REPORTING COMPANY www.vcritext.com 516-608-2400 EFTA01124958 Page 14 [facts - fraud] 246:13 251:2 failed 74:3 113:10 115:6 failing 118:12,23 failure 118:23 129:5 fair 49:14 103:22 104:3 166:8 279:5 faith 67:15 fall 191:22 false 207:22 252:11 falsely 273:10 274:18,21,22 familiar 18:16 24:11 47:8 family 202:20,22 225:5,6 far 85:11 166:16 february 147:16 161:13 162:21 280:6,20 federal 4:14,16,20 5:8 34:12,23 195:10 235:17 fee 89:21 156:7,8 255:11,12,19 261:7 263:8 feel 38:18 39:2 fees 86:18 94:14 113:15 114:2,8,10 115:5 117:23 150:4 256:4,7,12 257:4,14 260:24 262:17 263:24 264:10,17 265:16 fell 191:19 felt 65:21 119:10 129:25 244:6 272:6 felton 183:15 184:2 184:4 234:11,13,15 248:24 249:5 fiduciary 29:6 33:4 47:18,24 48:3,8 126:16,22 127:5 170:3,9 271:12 272:7,9,15,20 fifth 2:11 file 145:18 filed 5:8,11 18:19,23 19:2,17 39:23,25 53:6,9 107:9,11 117:5,18 181:16 195:9 217:11 220:19 224:5 229:16 235:17 filing 3:4 175:8,15 final 66:22 83:19 92:10,12 finance 42:16 45:17 45:23 54:20,23 57:12 58:2 166:3 financed 48:17 financial 35:23 46:16,24 47:5,14,20 48:10,24 49:4,6 50:2,7,15,23 51:12 51:21 55:2 59:10 114:19115:11,25 116:6,10,14 165:2 165:10 177:12,15 187:14 188:3,19 213:15,15 237:4 254:25 255:7 financially 176:18 financing 60:23,25 find 139:25 144:18 144:20,22,25 145:3 164:22 195:25 230:11 235:20 243:5 261:23 fine 159:19 finesse 279:7,17,19 279:19 finessing 279:14 280:5,18 finish 14:8 fire 99:7 111:13 fired 73:24 74:3,9 74:14 99:13 110:22 111:5,7,8 112:8 125:6 firing 174:18 firm 43:19 84:16,18 88:12 90:24 109:21 114:23 115:2 119:23 145:9,10 179:5 208:25 209:2 210:18 firm's 60:24,25 firms 85:16 86:3 190:4 first 9:2 23:17 34:18 38:9,14 41:2 64:6 64:10 83:20,21 87:24 88:2,3,15 94:12,18 106:3,10 106:11 152:11,15 152:19 155:10 180:10 187:18 189:19 218:3 223:8 225:21 245:10 262:18 277:22 firsthand 180:14 five 89:3 149:6 193:24194:10 245:13,15 248:12 249:13 265:19 266:14 fixed 14:23 15:8 florida 230:8 flowers 219:7,15 flying 197:2 focusing 179:10 follow 82:2 274:7 275:2 followed 135:11 190:3 following 83:5 106:7 195:13 follows 4:5 148:9 force 3:15 34:7 124:24 forced 83:7,11,14 104:12 112:2,5 119:5 124:20 141:10 186:16 187:6 foregoing 282:8 foreign 23:15 forever 143:20 196:5 forever's 143:23 forfeiting 72:19,21 72:24 73:17 75:15 77:16 80:16,22 82:12 113:5 118:24 121:8,19,25 122:5 122:19 123:3,10 138:7 forget 174:13 222:15 246:2 248:13 form 3:8 149:18,24 150:17,21 151:9,11 244:17 262:20,24 284:16,18,20 formal 39:23 forth 78:23 113:3 121:2 137:6 149:4 254:25 fortress 101:17,20 110:2,13,14,16,21 110:25 111:4 141:16,18 142:21 142:25 146:17,23 147:3 172:21 found 86:9 183:2 205:24 207:20 208:4 261:19 280:15 four 5:16 131:21 156:11 194:10 201:20 233:13 265:22 frame 59:17 180:5 frank 250:15,17 251:7 frankly 202:8 fraud 193:5,15,19 194:3 202:14 204:14 211:8 212-267-6868 VER1TEXT REPORTING COMPANY www.ventextcom 516-608-2400 EFTA01124959 [fraud - going] Page 15 212:15,16 219:5 241:14 free 140:24 french 237:15 frequent 268:9 frequently 270:22 freshman 11:9 fried 250:15,17 251:7 friend 108:5146:11 241:2,3 friendly 243:13 front 8:8,16,19 53:14 142:22 154:11 frustrating 173:19 frustration 166:7 fuller 232:4,21 functioned 10:21 functions 9:21 41:4 fund 22:13,17 23:8 23:11,12 26:8 27:19 28:3,4,5,8,14,15 29:21 32:18,21 33:5 33:9,25 34:20,20,24 34:24 36:2,4,13 43:19 55:6,14 58:8 58:9 62:10,10 70:7 86:6 133:10,11,15 133:15 156:6,6,7 158:4,4,6 165:3,16 166:11 167:3 169:6 169:6 183:3,6 185:14 186:5 187:2 187:3 190:10,12 228:11,15,19 239:7 239:7,11,12,19,23 239:25 240:2,6,7,8 240:9,10 254:19,20 255:2,14,18,19 256:11 258:10 260:9,12,14 261:21 262:21 263:12 264:5 265:15 267:19 268:12,13 268:18 269:5,8,16 269:17,24,25 272:22 273:2,2,11 273:14,21,25 274:2 274:11,19,19,24 275:5,6,17,17 276:22 280:19,20 fund's 273:9 funded 40:13 44:5 44:13 funding 41:17 42:17 42:22 43:3 238:15 276:11 funds 10:1422:15 22:24 23:3,5,9 24:5 24:9,13,22 26:15,25 27:2,14,16,23 29:17 31:20 32:15 33:16 34:11 37:22 40:17 40:20 46:17,25 47:6 47:14 48:3,9,11,17 50:3,3,8,16,24 51:13 57:13 58:2 61:15 62:6,12 63:2 63:9,12 84:22 85:16 86:18 94:16,20,22 113:15,21 114:3,11 114:19 115:4,12 116:7,11,15 117:24 118:5,10126:9,14 126:17,23 127:2,5 128:4 132:15,24,25 133:9,14,23 134:3 138:8 143:21 144:5 144:16 166:22 167:5 168:22 169:12 170:9 171:4 184:9,10,20,23 186:5,7,17,18 187:15 188:4,18 190:10 228:11,15 228:19 240:13 250:10 258:17 259:20 261:11 263:23 267:14,15 267:15 268:22 269:5 270:15 271:4 271:14 273:18 277:3,8 278:6 further 3:7,12 148:9 288:14 fyi 276:2 g general 35:20 46:21 79:2,8,25 80:5,10 81:23 82:11 88:12 101:17 113:9 118:11,21 119:16 119:22,23 120:7,22 121:15 122:4,8 123:2,9,18,22 124:3 124:6,9 127:8,14 128:2,22 129:4,10 129:16 130:2,16,19 131:6,9 132:2,17 133:22 137:22 138:6 164:25 168:13 169:7,10,18 170:10 171:3 172:2 184:8,18 185:13 186:3 188:14 191:14 256:16,17 276:9 generally 19:10 24:11,14 26:20,21 34:16 44:8,11,14 47:3 67:3 71:15 124:14 165:9 generic 147:13 gentleman 96:3 getting 146:6 147:2 209:14 gibson 168:8,11,23 169:5 170:17171:4 172:3,24 185:15 205:12,21 234:4 249:9,13 250:3,9 251:17 258:4 265:19 266:6 gist 89:12 109:13 212:24 213:3 give 8:14 11:9 12:20 31:2 56:20 84:3 98:21 100:5 157:21 158:5,15 197:5 224:10 238:21 247:20 given 5:20 189:3 195:19 217:4 246:22 giving 118:14157:8 248:17 259:6,9 glenn 17:17 67:6,11 69:8 219:24,25 220:4,6,9,12 221:6 222:6,16 223:5,6,25 225:6 226:13 227:11,18 230:7,22 go 13:917:7,10 39:21 40:7 44:16 53:16 59:4 61:20 73:6 78:21 82:19 85:16 92:23 93:12 97:18,23 98:7 99:4 99:25 105:10 106:13 108:8,17,22 109:14,19 111:19 115:23 116:9 129:13 145:24 147:21 157:17 163:9 191:8 195:24 196:11 210:19 223:14 233:11 238:22 267:6 277:5 goes 28:3 278:18,20 279:9 going 6:6,9 22:23 77:12 92:23 93:9,14 97:22 98:9,12,18 99:25 107:17 109:5 110:14 111:14 122:3 136:4,9,21 141:7 157:3,16,17 158:22 159:3,5 212-267-6868 VERITEXT REPORTING COMPANY www.veritext.com 516-608-2400 EFTA01124960 Page 16 [going - 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income] Page 17 handing 148:13 handled 206:4,7 happen 58:14 98:10 98:13,18 110:3 128:6 162:14 happened 19:5 102:6 119:8 200:23 230:15 235:21 260:20 happens 174:11 happy 91:12 hard 6:7 hardest 106:9 harm 207:13 harold 180:25 harry 96:3 hats 131:16,21 201:20 head 13:1144:22 60:18 104:14 269:13 headhunter 141:24 143:3,13,16 hear 173:21 270:17 heard 6:15 90:12 140:20 147:10 199:15,18 200:18 214:7 217:25 228:6 247:6 253:5 heck 93:14 hedge 22:13,15,17 62:6,10,10,12 63:2 63:9,12 85:16 158:4 158:4,6 165:3,16 166:11,22 167:3,5 183:3,5 held 1:18 118:12 119:11 125:8,13 126:4 144:4,14 190:14 208:18,22 hell 108:25 help 139:25 145:3 146:15 164:22 215:14 243:4 244:17 helped 144:18,22,25 215:13 helping 13:10 helps 211:10 henry 231:18,20 hereto 121:6 hereunder 120:25 hereunto 288:19 hey 213:10 hi 197:2 hierarchy 59:22 high 11:10 highbridge 17:12,13 18:10 21:17,25 22:11,13,21,24 23:2 23:4,7,8 31:15 40:11,23 55:5,6 higher 108:15 highest 68:20 hire 45:13 55:22 56:18,25 57:15,18 58:25 59:2 71:16 hired 17:22 56:14 56:23 57:16 86:2 163:14 164:19 hiring 35:2 hit 140:24 hold 78:24 115:20 115:20,20 120:5 127:8 128:5,15,22 129:4 154:7 162:4 193:17 278:7 280:9 holding 95:3,11 105:5 home 247:19 honest 86:12 hope 67:16 145:3 hopefully 175:12 hoping 164:22 hopson 237:11 240:15 241:17,23 242:3,7,16,21,25 243:4,7,14,22 244:17 245:22 253:8,15 host 179:5 hour 147:20 281:4 houston 211:19 how's 197:2 hugs 181:2 hugshire 181:2 huh 16:13 100:2 101:13,15 140:13 141:21 146:19 157:11 160:12,16 161:14 166:24 177:14 192:20 210:2 hundreds 133:3 258:24 260:12 husar 54:16 55:22 57:7 61:8 husar's 54:18 57:10 hymie 233:12 hypothetical 191:9 idea 8:14 87:8 118:20 157:9 161:22 165:19 199:14,17 200:17 200:17 219:23 225:22 226:14 228:21 229:18 231:9 233:6,18 239:14 244:20,22 276:18 identical 105:20 270:10 identification 18:15 21:12 39:10 52:22 61:19 69:16 70:16 101:7 140:7 148:6 149:19 150:18 151:10 152:9 153:24 156:21 161:9 162:18 163:23 164:11 194:24 245:7 254:13 256:24 262:7 266:19 identified 23:11,12 41:19,22 63:3 86:9 132:6 252:19 253:6 257:2 identify 56:22 63:25 69:24 70:18 151:13 184:3 195:20 202:8 203:7 251:4,7,12 253:11 254:17 identifying 42:15 imbalance 239:3 immediately 93:16 233:3 impact 275:22,23 imply 112:7 implying 200:10 247:16 important 47:20 106:24 158:25 235:5 imposed 185:3 improperly 235:19 279:23 280:6 inaccurate 21:3 204:16 216:6 251:4 251:9,14 inappropriate 207:10 inappropriately 127:3 incentive 156:8 incidental 121:6 include 40:11,15 41:3 42:15 45:23 47:13 151:17 276:2 included 41:8 57:13 75:2 116:8 126:22 includes 72:15 152:17 155:9 including 24:8 49:19 78:3 121:6 167:4 income 14:23 15:8 150:7 151:17 212-267-6868 VERITEXT REPORTING COMPANY www.veritext.com 516-608-2400 EFTA01124962 Page 18 [income - investors] 153:23 154:5 156:10 159:6,9 258:11 269:22 284:23 285:5 incompetent 39:2 incomplete 107:23 inconsistent 142:17 incorporated 72:11 incorrect 143:7 144:24 205:14 268:25 increase 239:11 275:21 increasing 278:6 incredibly 177:18 incur 28:10 Incurred 27:25 28:11 independent 43:9 43:21 250:4 indicating 136:22 indirectly 267:23 individual 12:12 43:18 130:12 131:8 211:20,22 individually 121:13 133:21 233:10 269:5 individuals 15:3 25:9,16,18 29:23 30:16,19,23 33:6 40:3 43:6 50:19 51:17,19,23 195:14 industry 165:2 166:4,12,17,18 177:13,16 193:13 193:13,24 245:16 245:17 246:4 inform 41:17 42:21 43:3 Information 110:21 181:23 195:15,16 197:6,9 198:20 247:21 273:9 277:6 infrastructure 145:10,12 inherently 215:23 Initial 17:19 194:23 195:7 285:14 initiated 214:11 injury 173:9 208:2 inquire 259:18,22 259:24 inside 200:25 Insofar 30:23 32:16 230:6 instance 11:14 24:2 52:12 87:24 273:17 280:18 instances 34:5,9 institution 165:10 institutions 19:21 instruct 236:21 instructing 277:25 instruction 271:22 278:20 instructions 157:21 intend 111:16 175:21 Intent 207:13 intention 175:10,14 interest 131:23,25 258:19 259:9,10,19 260:9,15,18 261:4,6 261:7,12,21 263:11 263:22 264:5,11,20 264:23 265:8,15 266:5 interested 288:17 internal 170:18 international 7:9 interpreted 131:24 interrupt 6:7 interview 96:15 162:8 251:7 interviewed 91:13 91:24 96:18 249:12 249:16 250:I4,17 interviews 258:5 265:19 introduced 216:25 introduction 147:15 invest 23:14 32:20 33:24,24 36:2,4,13 236:4 269:17 invested 23:15 26:3 32:5,8,17 269:7 investigate 87:12 investigated 125:9 186:23 205:13,13 investigating 86:16 87:2 91:7 94:13,19 113:14 investigation 83:22 83:25 84:25 87:7 88:7,15 90:8,12 91:19 92:19 96:8 105:11 168:8,12,14 168:23 169:5,11 170:20 171:5 172:4 185:15 187:6,17 191:11 203:14,24 204:2 205:21,22,25 206:5,13,15 207:23 211:5 236:8 250:4 250:11 investigations 204:10 investing 32:15 205:23 206:14 investment 13:11 21:24 23:18 26:25 31:19 32:13 33:23 55:11,13,13 133:10 133:15 170:16 2291 237:19 239:8 239:19 242:12 243:11 273:19,23 273:25 274:4 276:13 investments 22:19 27:17 29:7,8 32:5 33:4,6,8 40:13,16 41:18 42:16 43:4 44:5,12 48:16 55:12 62:11,13 101:18,20 273:10,14,15 274:24 investor 26:2,4,7 27:17 35:7,8,8,11 35:11,12,25 36:3 37:22 55:13 86:18 94:20 113:15 114:3 118:5 126:14127:2 129:20 143:20 173:8 174:2 179:8 183:17 206:16 207:15 208:15,25 209:13,19,20,21 225:19 226:4 228:15 230:6,13,16 234:23 235:10 236:15,23 245:19 245:20 247:25 248:6,7,10 250:23 252:20,25 269:3 investors 22:19 23:13,14,15 24:5,13 25:3,14,22 27:9,11 27:12 28:6,14 29:6 34:11 48:3,9 126:9 126:16,23 129:20 132:5,15 143:12 144:3,14 167:7 168:4,7,15,22 169:5 169:12,19 170:5,7 171:3,9,10,12,17,21 172:4179:18 180:17 182:11,25 183:6,11,12 184:9 184:21,21,23 185:14 186:4 188:24 189:16,22 190:3 191:10 192:4 192:24 196:15,16 198:22 205:22 206:14 212:7,8,12 225:24 232:6,7,8,17 212-267-6868 VERITEXT REPORTING COMPANY www.veritext.com 516-608-2400 EFTA01124963 (investors - knowf Page 19 : 232:24 233:2,7,13 233:14,19 234:3,6 235:19 236:6 245:6 246:10 251:24 252:13 253:2 255:3 258:17,23 259:6 267:9,17 268:11,13 268:15,17 270:15 270:20,25 271:4,17 271:23 272:9,10,12 272:15 285:18 invests 32:22 145:12 145:13 Involve 10:24 30:5 54:22 55:15,17 involved 12:22,25 62:25 Involvement 192:5 ir 181:3 Irish 4:10 Issue 128:11 169:17 169:19 170:25 171:9 206:5 267:8 Issued 169:18 170:16 171:24 193:3 209:11,12 242:8 issues 83:6 84:17 87:19 89:21 190:9 199:8 212:14 217:15 230:8 256:11 270:6 Issuing 173:12 240:5 item 232:24 items 54:5 257:19 Ivan 246:2,3 247:8 247:10,13,13,17,20 247:23 248:13 j Jack 174:8,11 january 64:22 77:10 77:11 79:6,8 80:21 80:21 Jason 60:13 Jeffery 226:17,18 231:6 233:11 Jeffrey 226:5,22 jennifer 2:7 jersey 4:11 jim 60:12 182:2,12 job 8:6 10:24 13:4 22:20 24:17 27:4 29:19,22 30:2,6,15 30:19 32:11 38:8,18 38:22 39:3 40:10 41:3 43:10 47:2,4,9 49:15 50:20 54:22 55:15,17 58:16,17 59:5,6 60:22 62:4 62:15,25 63:11 65:5 67:22 68:20 69:2,5 69:10,11,17,21 74:4 74:8,14,19 85:5 90:9 115:6 118:23 126:22 128:6,15 129:16 140:2 144:19,20,22 145:2 145:4 146:6,9,10,18 146:24 158:25 165:8,14,22 167:16 167:18 243:5 254:22 jobs 14:4 51:24 58:6 166:4 167:3,4,4 joe 143:18 John 2:13 joined 13:18 18:8 22:3 56:16 joint 276:10,11,11 joseph 139:21 156:23 166:7 jrodrlquez 2:8 jsb0101 161:8 285:9 jsb0112 162:17 163:22 285:11 jsb0126 156:20 285:7 jsb0158 140:6 284:10 jsiffert 2:14 judge 206:6 judgment 186:3 July 5:9 22:3,17,21 23:5,17 24:24 25:25 34:16,18 41:4 45:7 149:7 181:16 jump 6:15 June .1:13 21:21,23 22:3 262:12 283:2 287:6 288:20 jury 18:14 200:14 283:11 jv 276:10 k kahn 45:20 180:25 keep 18:433:437:4 37:12 47:20 189:12 264:9 keeping 33:6,16 34:10,10 36:15 kept 27:15,24 32:12 87:8 89:15 168:21 189:9 240:13 kesavan 76:24 198:6 kind 5:23 8:21 11:2 11:2 23:19 27:22 108:25 157:24 202:15 204:21 210:25 213:3 214:6 216:11 225:6 240:25 242:20 277:13 kinds 192:22 199:9 203:9 204:7 211:3,3 269:21 knew 31:7,9 35:17 36:24 52:3,6,12 69:9 74:12 84:24 85:23,25 177:11 188:14 224:6,19,25 226:9 228:25 257:13,23 258:6 265:6 269:2 know 12:21 16:6 26:13 28:17 33:14 34:15 35:13,14 36:5 36:14,14,21 43:11 46:23 47:23 56:6 57:3 58:15 64:12 67:21 68:8 73:18 75:17 76:4,8 77:20 85:21 88:2 90:11 93:13,22 99:2 104:24 106:11,19 107:21 108:4,18 111:11 I13:12 119:3 120:13 125:20 126:19 131:18 134:13 138:2,21,24 143:23 147:12 160:13,19 166:21 168:16,19 169:8 171:7 172:6 172:15,19 173:4 174:7,9,17,19,22 175:4 178:19 179:22 180:14 181:6,12,18 182:15 182:16183:4,14 184:11,13,24 185:5 186:21 187:19,21 191:3,4,24 192:2,9 192:16 193:12 196:20 197:14 198:24,24 199:12 199:13,16 201:15 202:3 206:9 207:25 207:25 210:11,20 213:5 217:20 219:6 219:23 225:18 226:3,9,14,15 227:9 227:12,22 228:13 228:17,22 229:3,7 229:18 230:5,9 232:8,19 234:5,7 236:23 237:2 212-267-6868 VERITEXT REPORTING COMPANY www.veritext.com 516-608-2400 EFTA01124964 Page 20 [know - levine] 241:11,13,20,21 242:2 243:3 248:4,8 249:15 251:5 252:16,18 259:12 259:15 265:2 267:13 269:4,8 274:13 275:12,12 278:3,12 280:22 knowing 159:20 165:14 knowledge 20:15 59:8 75:23 90:16,19 210:18 212:9 247:23 250:12 280:17 knowledgeable 38:12 known 85:15 knows 197:10 1 Lp. 5:6 23:8,11,13 25:3 26:3 32:8 39:9 39:14 46:3,7 64:5 70:7 81:5,10 132:25 169:6 246:8 253:15 275:18 276:4 278:15 283:17 Lp.'s 27:14 language 74:23 75:2 76:6 78:11 lankier 2:10 large 15:22 16:5 59:7 160:13 204:4,5 larger 275:22 largest 237:20,21 late 169 84:10 93:10,11,20 97:10 97:11,17,21,22 122:16 177:25 178:7 law 36:12 37:7 57:19 58:18,25 59:2 59/5 60:14 61:9 63:14 84:16,18 86:2 114:23 115:2 119:23 185:2 190:4 208:25 267:2 268:4 275:25 law's 58:16 59:5 61:4 lawrence 83:15 87:20,23 88:14,21 88:22 89:13 90:20 91:10,11 92:3 93:4 95:21 96:20 108:17 108:20 130:23 135:16 139:16 181:4 laws 34:6,12,23 35:14,18 36:7 269:11,21,21 lawsuit 5:8,11,25 175:10,15 192:11 211:21,24 213:14 213:17,21 214:23 214:25 215:5,11 225:3 228:23 229:8 229:16,19 232:21 lawyer 6:14,22 35:22 36:19 71:16 77:2 104:7,8 118:14 195:9 236:18 247:12,16 248:23 249:22,24 260:4 261:19 lawyers 53:6,9 54:5 85:4,11 96:5 107:12 117:18 118:9 188:16 216:8 217:2 217:4,7,9 224:14 249:9,13 lay 59:16 layman's 124:5 lead 135:9 192:6 learn 9:2,5 23:21 64:23 83:13,24 84:13 86:15,21 87:16,20 91:5 94:4 187:23 193:20 197:21 225:16 227:25 228:4 236:24 246:13 learned 34:19 65:10 65:19 66:20 87:6 88:15 90:6 94:13,19 95:2,9,10,16 98:17 106:20,21 122:24 178:5 187:25 188:6 188:7,12,15 191:8 193:23 196:2 219:20 234:25 235:13 236:14 248:6 252:21 266:8 266:9 leave 83:7,11,14 104:12 109:20 112:6 119:5 124:21 124:24 186:16 187:6,7 leaving 221:15 253:21 led 94:2 104:22 122:24 123:7 187:6 lee 2:14 180:24 189:15,21 190:2 192:4 253:22 lee's 254:4 left 16:24,24 17:4,9 17:24 110:19 137:5 138:13 146:3 155:25 178:23 179:2,22,25 180:4 182:9 187:10 196:12,18,23 198:5 211:18 212:5,7,11 216:21 218:7,17 222:5 232:17 233:15 234:16,20 234:24 235:11 237:8 240:24 254:8 legal 29:3 39:23 46:23 52:25 74:5 78:2 117:19 118:22 120:4 121:17 122:9 122:18 123:14 126:10134:23 135:2,24 136:19 170:25 171:8 184:15,20,24 185:12,19,24 207:6 207:8 legally 119:16120:5 124:11 144:2,13 lending 55:21 letter 21:11,16 109:25 148:5,14 149:4 182:20 206:16 207:16 208:13,15 209:13 225:19 24:24 247:25 248:6,10 250:23 251:3,8 283:13 284:13 letting 111:19128:6 129:13 level 68:21 75:22 159:6,10 193:8 leverage 238:20 242:23 levine 2:20 4:7,15 4:22 5:4,5 21:8 22:7 39:5,11 49:10 52:19 52:23 54:11,13 61:16 69:12 70:12 70:17 82:16,18 101:3,9 125:20,23 126:2 140:4,9 147:18 148:11 149:20,23 150:20 152:5 153:20 156:13,18 161:6,11 162:11,15,19 194:21 195:2 199:25 211:11,13 231:16 245:2 254:9 254:15 256:20 262:4,9 266:13,16 266:20 280:23 283:7 212-267-6868 VERITEXT REPORTING COMPANY www.veritextcom 516-608-2400 EFTA01124965 [li - 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month] 262:24 263:3,5,8 265:16 266:12 267:8,14,20 268:22 271:8 272:21 manager 26:15,20 27:2 255:20 managing 15:3 30:5 30:19 43:16 45:23 47:11 131:8 170:8 manalapan 4:11 manner 48:18 manually 276:3 march 101:12,22,25 102:22 109:6 168:3 168:7 169:18 173:7 174:2,21 179:8 180:6 182:20 192:19 193:3,10 194:13 208:13 219:22,22 244:24 247:3,24 248:5 249:18,18 250:23 252:10257:11 267:4 277:11 280:4 280:7,20 mark 18:13 21:8 39:5 52:19 61:16 69:12 70:12 101:3 140:4 149:15 152:5 153:20 156:13 161:6 162:11 194:21 254:9 256:20 262:4 275:22 marked 18:12,15 21:12 39:10,12 52:21 61:19 69:16 69:23 70:15 101:6 140:7,10 148:6,14 149:18 150:17 151:9 152:8 153:23 156:20 161:8 162:17,20 163:22 164:11 194:23 245:6 254:13,16 256:23 262:6,13 266:18,21 market 9:16 10:8 140:24 143:4 166:2 166:5 167:20,23 238:7 marketer 153:18 markets 14:24 marking 151:11 156:18 marriage 288:16 material 23:24 170:7,19 184:9,21 186:5 materials 24:7,16,20 math 8:12 50:20,22 51:10,19,25 52:4 matt 54:16,18 57:7 61:8 233:12 matter 5:18 6:3 36:12 37:13 65:14 126:11 232:22 266:3 288:11,17 mattered 37:12 matters 5:17 19:5 49:6,18,19 90:7 91:19 117:22 205:12 maximize 272:21 maxine 2:22 mean 11:8,22 25:6,8 54:9 55:10,13 58:22 58:23 81:8,9 89:23 103:19 105:13 112:7 129:19 132:18 135:12 156:15 158:21 159:18 162:13 169:23 173:23 174:5,15,18,20 176:6,8 194:12 206:25 210:18 211:4 225:22 238:18 241:7,10 271:16,21 273:16 meaning 173:16 means 68:11 113:12 207:2 261:6 meant 72:22,25 174:9 meet 17:15 220:6 221:5 246:16 meeting 43:7 251:6 meetings 17:19 91:2 91:6 member 66:7 116:3 memo 167:25 168:4 168:6 174:2,21 245:5 263:17 280:21 285:17 memoranda 24:4,8 24:12 254:18 memorandum 37:18,21 170:16 254:12,19 255:17 255:18 256:13 258:20 285:22 memorandums 31:8 memory 107:13,18 107:21 241:24 memos 13:11242:12 men 174:14 mentioned 87:19 89:22 226:10,11 merit 1:21 messrs 55:22 met 17:17 50:11 218:17 220:4 221:11 230:3 249:9 249:20,21 meyers 257:3 michael 237:11 michelle 61:25 62:15,22 63:7,11,18 ralcromanage 30:25 mid 57:4 86:15 88:7 88:11 92:2 165:16 middle 6:7 145:25 173:18 mike 232:4,21 240:21 243:9 million 108:15 154:6,15 155:17,17 155:18,22 156:17 159:18,22 160:7,15 160:18,24 161:3 175:25 238:23,24 276:7 280:8 millions 133:3 mind 75:18 79:14 81:2,16,19,22 90:14 125:2,5,7,12 126:3 126:7 132:6 138:23 139:9 170:24 189:14,20 226:16 226:17 243:19 mine 76:24 mineola 287:4 minimal 158:6 minus 55:12 minutes 31:5 76:5 109:18 266:14 miscommunication 42:12 misspoke 117:15 238:11 mistake 52:13,14,16 misuse 186:16 modified 77:16 modifying 78:11 moment 44:18 money 126:9 134:20 134:22 135:8,16,17 136:10 154:12 176:10 190:12 212:2 213:16 223:17,23 228:19 260:14,16 261:12 261:22 264:6 265:7 265:9 month 54:25 84:3 241:8 255:24 267:16 279:12 212-267-6868 VERITEXT REPORTING COMPANY www.veritext.com 516-608-2400 EFTA01124967 (monthly - objee.tionj Page 23 monthly 156:4 255:20 268:8,10,12 277:2 279:15 months 38:10,14 146:2 149:6 155:11 193:24 220:14,15 224:2 morning 139:18 morphed 62:4 mortgage 8:24 9:3 9:12 10:9 12:4 15:10,11 mortgages 11:15 motive 171:17 172:2 173:13 mouth 6:11 106:10 106:12 moved 18:5 movie 174:9,13 moving 166:19 msleeper 2:22 muivenna 1:20 4:3 288:6,23 rivers 256:23 285:25 n name 4:8 5:5 25:6 26:18 57:18 61:21 147:13 173:20 174:13 175:2,11 183:24 217:5 287:6 287:7 named 96:3 names 57:17 195:13 195:25 234:7 medals 237:13,14 239:4 242:14,16 243:8 245:21 nature 13:6 15:6 25:13,15 154:19 189:4 221:12,19 222:2 252:21 276:20 nay 54:25 55:4,8 156:6 necessarily 68:22 125:11 127:12,16 142:11 203:25 necessary 41:21 121:5 neck 163:18 ned 235:23,25 236:3 252:24 253:8 need 4:22 8:9 29:15 45:2 47:2,7137:10 203:2,3 246:12 255:6 263:4,10,11 264:19 needed 46:22 48:9 129:17,19 130:3 132:16,19 159:21 260:25 264:23 needs 108:8 negatives 216:9 negotiated 76:24 137:4 negotiating 137:5 neither 41:14 103:8 210:17 net 55:9 new 1:2,19,20,22 2:6,6,12,12,19,19 4:4,11 5:9 7:4 42:15 163:4 275:21 282:2 287:2,4,4,4 288:2,4 288:7 news 140:19,20 nice 198:18 nicholson 174:8,12 nine 155:10,23 220:7 nodding 6:12 44:24 128:12 166:25 167:9 nods 44:22104:14 269:13 nomura 7:25 8:2 9:6 9:11 10:14,16,21 14:6,11 15:24 16:3 16:8,24 17:4,10,25 18:4 noncompete 70:14 70:23 71:8 284:6 nonpartner 159:16 nonrecourse 42:17 nonsollcit 70:15,23 71:9 284:7 nos 21:10 61:17 69:14 70:13 101:5 148:4 150:16 151:8 156:19 161:7 245:4 254:10 256:21 262:5 266:17 283:12,21,24 284:5 284:8,12,17,19 285:7,9,16,20,23 286:5,7 notary 1:22 4:4 288:1,6 note 49:8 203:18 notice 195:19 notify 184:21 185:13 186:4 notwithstanding 153:11,13 244:12 november 148:15 148:25 149:4 150:5 150:12 151:5,20 179:11 180:9,11,15 182:17 192:14 193:22 249:17 258:5 number 108:14 196:11,19197:13 248:13 249:15 numbers 108:17 137:7 175:18,19,20 175:23 195:14 0 o'brien 2:21 280:13 o'hara 61:22,24,25 62:22 63:7,11,18 o'hara's 62:15 o'neal 233:12 oath 3:15 20:18 77:4 119:14 object 6:15 165:20 objection 4:24 11:12 15:23 19:7 20:6,23 23:23 25:4 28:9,16 29:9 30:10 31:6 33:10,17 34:8,14 35:16 36:17 37:3,6 37:9 43:15 47:22 48:5 49:8,9,17,22 51:2,15 52:10 56:5 67:23 68:7 73:3 74:10 85:13,18 86:5 86:13 88:17 90:17 93:21 97:1499:19 107:15,20 113:11 114:14 115:8 118:16 119:2,18,25 120:6121:21 122:21 123:4,20 124:13 125:17 126:6,18 127:11,15 127:17,23 128:8,17 128:25 129:7 130:9 130:17 131:17 132:10 134:7 142:8 144:6,23 165:25 166:13,15,20 167:8 169:13 170:11 171:6,14 172:5,10 172:14,18,22 173:3 173:10 176:12 178:10 185:4,9,17 186:8,20 189:2,5 190:7,18 191:15,17 191:20 200:9,16 202:2,18 203:16,19 204:15,19 206:3,8 207:24 210:8 227:3 236:20 248:3 268:24 270:3 272:17 279:18,24 VERTTEXT REPORTING COMPANY 212-267-6868 WWW. veritext. com 516-608-2400 EFTA01124968 Page 24 [objections - owning] objections 3:8 4:23 objective 227:12 obligated 82:2 169:7 258:12,18,25 260:14 obligation 52:14 96:12 129:25 168:13 171:8 184:8 184:16,20,25 185:3 185:12,19,24 188:24 206:23 207:4,6,8 237:23 271:9,19 272:7 obligations 132:16 237:25 observe 116:2 obviously 135:9 137:5 221:3 occasion 249:21 occasions 249:13 occur 265:3 occurred 58:11 80:18 82:13 90:4 121:9,19,25 122:20 190:9 194:9 october 45:7 103:24 122:17 123:7 132:23 133:11,16 139:3,19 140:12 156:23 157:4 177:5 177:8,25 178:7 179:2,11 180:5,11 180:15 182:9,17,20 183:19 187:25 189:17,22 190:3 192:13,18,25 193:2 193:10,22194:16 196:12 197:11,14 197:22 198:3,7,10 198:22,23 205:8 211:14 219:25 221:21223:19,24 228:14233:4,15 234:17,21,25 250:15 252:9 offer 21:16 91:23 offered 147:15 162:8 215:6,8 offering 24:4,7,8,12 31:8 37:18,21 254:18 258:20 office 8:8,16,19 14:14 16:11,22 24:16 46:12 89:7 140:23 200:13 214:7 officer 3:14,17 35:24 83:16116:2 officers 170:4 offices 1:18 138:13 138:15 243:10 official 77:10 81:9 offitt 235:23,23,25 236:3,3 252:24,24 253:8,15 offshore 23:15 26:8 27:19 28:4,5,8,15 28:23,24 29:21 32:18,21 33:25 34:20,24 35:8,11 36:3,4,13 58:9 133:10,15 168:22 184:20 185:14 187:2 239:7,12 240:7,9 268:13,17 269:4,6,17,24 273:2 273:14,21,25 274:11,19,24 275:6 275:17 280:19 og0622 152:7 284:21 oh 18:219:9 29:10 42:7,10 50:18 56:21 57:9 58:23 67:2,25 68:16 83:21 120:10 140:17 160:5 162:2 189:7 200:3,24 218:11 221:15 238:12 277:23 okay 4:17 6:17 78:24 82:25 102:20 149:12 155:7 173:19 185:22 195:10,23 196:7 203:11 213:7 244:21 246:14 253:13 263:17 266:23 267:7 272:5 280:14 old 287:4 once 13:8 60:14 83:5 108:3 119:23 168:11 197:17 218:21 238:25 241:8 250:19 278:25 one's 118:23,23 oneonta 7:4 ones 10:11,12 ongoing 180:3 onshore 23:13 26:3 27:20 28:2,3,7,10 28:14,22,23 29:21 32:17,20 33:20,24 34:20,23 35:11,25 36:2 58:8133:10,15 168:22 184:19 185:14 187:2 239:7 239:11 240:2,6,8 254:19,20 255:18 256:11 262:21 263:12 268:11,17 269:4,6,16,24 273:2 274:2,18 275:5,17 280:19 000 282:13 operated 81:17 operation 255:7 operations 45:17,24 55:16 60:18 opine 170:21 207:5 opinion 106:24 170:23 177:19 178:3 191:18 200:8 200:23 201:8,9,25 202:10,15,19 203:5 204:11 210:7,16 241:18 242:9 opinions 210:13 opportunities 17:14 22:24 23:7,11 242:23,23 243:11 opportunity 5:2 6:17 23:5,9 55:6 93:17 95:12,17 242:25 opposed 79:19 options 41:21 order 68:21 273:10 ordered 173:22 ordering 174:16,18 174:20 original 18:20 59:4 65:4 152:24 originally 88:8 222:5 239:16 241:12 originated 10:12 55:20 238:3,17 originator 9:18 oshinsky 85:9 ought 196:5 235:20 outcome 288:17 outside 84:21 253:14 overallocate 274:23 overstuff 273:20 overstuffing 273:22 overweight 273:13 273:15 owe 213:16 owed 47:19 108:19 135:16,25 175:16 212:2 228:20 owes 108:14 owned 79:21 owning 223:5 212-267-6868 VERITEXT REPORTING COMPANY www.veritextcom 516-608-2400 EFTA01124969 [p&I - people) Page 25 p p&1 8:7,18,19 9:25 10:3 13:20,22 15:4 15:4,7,13 54:24 55:4 274:10,11 279:11,12 p&Is 14:15 p.m. 148:3 281:7 package 11:2412:3 238:3 packaged 9:14 packaging 11:4,9 page 40:4 44:16 53:11 72:3,19 73:7 73:9 77:15 78:9,21 78:22 80:14 82:21 117:6,18 120:17,20 121:8 148:19 149:10 157:3 160:9 161:17,18,21 162:2 163:2 173:17 177:3 233:11 255:10 275:13 277:7 278:13 280:6 282:11 283:4,10 287:9 pages 149:24 267:6 282:8 paid 27:20 151:5,24 255:14 256:4,7 257:14 258:12,12 258:15 259:10 260:9,15,17 264:5 264:12,24 265:8,15 266:5 paper 260:25 261:3 261:5,9 263:5 papered 264:24 papering 259:23 paragraph 40:5,8 41:22 43:10 44:16 44:19 49:20 53:16 53:21,24 54:6 72:3 83:4 88:24 112:2,5 115:23 117:17,20 117:25 118:7,13,24 177:2 178:8 251:25 paragraphs 82:22 83:2 100:15,23 252:7 paraphrasing 109:3 271:11 pardon 93:14 134:17 part 30:7,14,19 32:11 33:3 34:11 41:11 42:14,18 44:14,15 46:10,14 47:4,9 48:8,15,19 48:21 49:24 50:6,14 51:11,2452:7 54:6 63:17 70:25 71:19 87:11 102:2 114:20 115:12 143:12 150:4 169:9 170:9 171:13 175:14 239:7 participating 13:13 particular 32:21 157:9 158:5 204:12 239:19,23 270:2 276:22 277:8 280:18 particularly 165:2 171:2 190:5 parties 3:4136:6,12 288:15 partner 26:5,9 43:16 64:16,19,24 65:7,11,15,18,20 66:2,7,14,20 67:7 68:2,6,15,21,25 69:18 71:8,11,14,21 73:4,13,20,21 75:9 75:11 76:3,22,23 77:6 79:2,8,25 80:5 80:10,18 81:4,23 82:11,13 90:24 97:25 98:4 108:5 113:2,9 116:2 118:11,22 119:16 119:22,24 120:7,22 121:10,15,20 122:4 122:9,20 123:2,9,18 124:6,10,10 127:8 127:14128:2,22 129:4,10,16 130:2 130:16,19 131:6,9,9 132:2,17 133:22 135:7 137:23 138:6 154:19,21 155:6,10 155:12,20 159:15 161:4 168:13 169:7 169:10,18,23 170:10 171:3 172:3 184:8,18 185:13 186:3 188:14 191:14 219:8 227:11 276:10,12 partner's 124:3 255:24 partners 1:9 2:18 5:7 39:9,15 65:4 85:7 86:2,9 91:23 147:8,11,16 154:18 161:25 162:9,24 164:2,7 283:17 partnership 27:11 61:18 64:4,13 70:4 70:6,10,22 71:2,6 73:12 74:24 75:2 76:2,13,16,25 77:5 77:17 78:22 79:9 80:11 91:2,6 112:12 112:18 113:3 118:25 120:23,25 121:2 122:18 124:2 124:7,12,21,25 132:9 135:4 136:5 136:10 137:22,24 138:9 154:10 194:2 197:23 198:21 283:22 partnerships 25:17 parts 107:2 241:23 party 182:5 202:21 234:11 passed 164:3,8 . passing 224:9 patricia 196:19,20 196:24 197:5 pay 28:7,7 33:8 58:20 90:14152:10 190:12 228:19,23 229:2 243:18 258:18,25 260:14 263:11,11 payable 62:3 153:9 154:13 156:8 255:20 paying 128:4 260:12 261:4 payment 154:10 257:4 263:23 264:9 264:15,16,17,20 payments 259:19 pays 255:19 pearly 108:10 129:14,17,21 130:3 130:13 132:8,20 pecora 60:13 pecora's 60:19 pendency 153:13 people 15:15,17 16:7,18 17:18 19:21 20:13 31:2 32:12 33:8,20 37:8 45:13 45:16 47:11,13 54:14 56:19,20,22 58:4,7,7 60:4,10 88:3 132:6,19 135:25 141:8 142:5 166:3,11 167:12 173:21 177:22,22 179:5 183:7 191:16 192:23 193:13,23 194:2 195:19 196:4 198:20 209:11,12 212-267-6868 VERITEXT REPORTING COMPANY www.veritesttcom 516-608-2400 EFTA01124970 Page 26 [people - problems) 210:7 241:16 245:13,15,16,17 253:4,14 255:6 268:20 percent 255:24 276:15,16 278:16 278:18,20 percentage 172:17 255:13 perform 49:15 113:10 121:3,4 138:19 160:14 performing 68:20 period 42:9 60:8 165:17 178:7,21 179:10,24 180:5,6 180:11 192:17 193:21 194:11 270:2 277:9 permanently 149:5 permission 275:10 permit 126:10 perry 1:4,164:2,10 148:7 170:23,23 171:18,21,22,23 173:14 192:5 254:2 282:7,18 283:5 287:7,21 person 36:11 61:21 79:25 80:5,9,9 88:2 106:3 131:4 237:3 243:23 246:4 247:7 248:14,16 personally 5:25 58:23 79:19 128:5 132:7,18,20 200:5 228:7 persons 127:9 persuade 246:12 pertaining 217:14 219:16 peruses 40:6 42:3 44:20 53:13 63:24 69:25 70:19 72:4 78:13 79:3,10 82:24 100:20 101:8 115:21 137:2 150:19 154:8 156:25 158:19 161:10,19 162:5 164:15 165:5 174:6 177:4 178:9,13 254:14 262:8 266:24 278:8 280:10 peters 196:19,20,24 197:4,5 pg 148:4 149:17 245:5 284:12,15 285:16 pg00388 69:14 283:24 pg00605 150:17 284:17 pg0402 70:13 284:5 pg0613 151:8 284:19 ph 213:24 phlilipe 85:9 phone 91:22 180:16 180:21,24,25 181:3 181:6 189:16,21 195:14 198:17 235:12 phoned 217:6,7 physically 247:2 pick 91:22 198:17 picked 235:11 picking 189:16,21 piece 103:19 223:5 pin 215:18 pinning 194:5 pipeline 43:7 place 17:20 80:23 83:18 89:6 92:6,9 92:11 113:20 122:6 123:3,10 139:2,18 152:23 165:16 166:11 179:21 180:2 186:6 215:10 220:13 240:20 places 139:7 placing 239:4 plaintiff 1:6,17 2:5 195:16 plaintiff's 52:20,25 117:12,16 194:22 195:6,7 283:19 285:14 pleading 117:5 please 4:9 6:8 22:4 39:21 40:4 51:6 63:23 82:19,22 112:15 117:16 125:25 151:16 203:18 267:6 271:20 277:19,24 plus 55:11 156:6 160:11,11 257:7 point 15:15,17 41:12 50:20 67:10 96:22 135:22 146:16 156:16 170:23 178:17 197:18 222:10 236:17 249:2 253:16 pointing 127:18 pool 11:15 22:18 238:4 pooled 238:25 poorly 69:21 portion 150:8 151:18 152:17 154:10 portray 273:10 position 16:25 56:15 94:6 143:5 153:17 157:24 158:3 171:25 188:15 189:4 208:10 positions 209:21 possible 62:12 135:17 175:7 194:12,14,15 242:7 273:3 possibly 17:18 36:25 88:10 89:7 100:9 142:9 174:22 183:16 244:9 potential 141:9,15 141:25143:3 power 121:7 practice 257:23 258:6,10 260:8 preferred 127:20,25 premises 95:25 prepaid 259:4,8 prepared 20:18 39:23 143:2,3 267:19,22 prepay 259:6 263:7 prepaying 261:13 prepayment 259:11 present 89:9 220:11 249:22 pretty 215:15 235:5 previously 87:19 148:8 prick 157:16 pride 143:14 213:9 213:13 principal 54:14 56:20,22 printed 246:20,24 prior 85:7 214:24 221:15 private 55:20 237:16 238:16,16 probably 107:16 119:6 132:11 140:22 158:3 192:9 247:19 272:13 277:10 problem 128:4 160:11 190:6 258:10 problems 94:7 258:9 212-267-6868 VER1TEXT REPORTING COMPANY www.veritext.com 516-608-2400 EFTA01124971 [procedure - reason] Page 27 procedure 4:14,21 proceed 260:8 proceedings 288:10 288:12 process 12:22 272:19 279:9,14 produce 8:18 produced 8:20 261:19 267:16 product 8:4 168:7 173:13 204:10 207:23 production 10:22 14:12 profit 10:3,7 276:21 promote 276:3,6,7,8 276:14,18,23 277:25 278:10 196:17 prospects 165:14 protect 109:3 132:13,21 134:5 protection 145:19 provide 153:2,4 168:14 255:19 provided 46:24 47:15 73:12 74:21 82:7 120:21 138:8 providers 177:20 252:14 provides 4:16 192:10 provisions 75:8 76:16 78:2,12 136:9 137:24 188:17 prudently 206:4,7 quarterly 255:21 256:4 question 3:9 4:25 6:19,23 14:9 22:4 29:11,13,14 30:8,11 30:13,14,17,18 33:19 42:4 43:11 48:2 50:12 51:7,7 56:12,13 59:475:18 99:20 100:21 105:19,21 110:8,11 125:18,19,24 144:21 169:15 178:15 185:20 195:21 203:21 204:4,5 227:14 232:23 235:7 251:12 260:23 random 197:2 range 157:15 158:15 158:18 rate 11:25 259:20 268:4 273:11 275:16 277:8 rates 50:8,11,16,24 51:13,21 52:6,8 267:9 rating 11:6,2512:16 12:19,20 ratings 12:17 rattle 57:16 ray 216:15,17,18,18 218:16 ray's 219:8 reaching 193:14 reaction 90:13 promoted 16:12 public 1:22 4:4 261:25 read 22:8,9 24:2,7 17:3 145:21 169:12 question's 6:9 32:25 33:13 37:17 promotes 276:20 177:6 206:14 288:1 questions 6:6,16 37:23 41:24 44:19 proof 108:10129:14 288:6 24:21 120:12,15 45:3,4 72:23 75:7,7 129:17,22 130:3,13 publication 173:7 quibble 191:13 75:25 83:2 100:13 132:8,20 192:19 quibbling 169:16 100:19 118:2,17,19 proper 28:14 46:17 publications 181:11 quit 99:4 128:24 199:25 47:6 48:11,17 publicly 238:6 quote 83:11,14 200:2 282:8 116:11,15 purchase 86:18 104:12,13 109:18 reading 23:24 78:17 properly 50:4,9,17 94:20 113:16 114:3 112:2,5 117:19 reads 41:16 42:20 50:25 51:14,22 52:9 118:5 132:13 134:5 115:25 206:12 279:22 purport 19:21 140:18,19 157:8,14 real 8:5 11:4,5 13:12 proposed 162:23 purpose 31:25 173:18 275:21 14:22 15:5 157:16 proposing 161:22 purposes 77:16 276:13 realize 196:5 251:16 proprietary 10:13 79:25 80:5 92:19 quotes 19:20 251:20 10:15 15:14 16:2,8 121:2 203:8 r really 38:14 66:3,5 prosecuted 193:6,19 194:3 199:3,12 200:6,6 202:17 204:13 209:24 211:6,7 212:16 217:18 219:5 241:19 242:2 254:3 prosecution 199:22 prosecutor's 200:13 proshan 88:10,11 88:14,20 196:11,13 put 97:6,8 108:7 149:20 178:20,21 198:17 230:11 232:16 238:21 274:11 276:3 putting 238:23 90:14 108:18 134:20 165:13 219:17 227:8 243:20,20 reason 35:4 36:9,15 37:2 67:20,25 69:7 187:9,23 196:5 213:13,16 227:6 234:2 253:22 270:9 270:11,12 287:9 racusin 54:16 55:23 60:6,12 163:19 182:2,12,21 racusin's 55:15 rafael 231:25 raised 223:17 raising 223:7 ran 22:25 29:17 183:22 q qualified 37:21 quarter 152:11,15 152:19 256:8 257:5 212-267-6868 VERITEXT REPORTING COMPANY www.veritext.com 516-608-2400 EFTA01124972 Page 28 [recall - reply] recall 10:2 15:19 16:20 17:5 19:3,18 21:22 22:10 25:5,12 25:13,19,22 26:16 26:17,18,19,21 31:11 32:2 33:2 35:5,17 36:23 37:10 37:15,23 38:16,18 41:6,7 53:10 56:9 57:2 59:3 60:6 65:10,13,24 66:12 67:2,3 71:22 72:9 72:13,23,24 73:5 74:5,11 75:22 77:9 77:21 78:17 81:13 81:15 83:21 85:10 86:23 88:6,13,18 89:11 90:22 92:16 93:4,7,8 96:4 97:6 98:20,23 99:5,9,10 99:14 100:8 101:2 102:9,11 103:18 104:20 105:3,4,7 106:17,22,23 109:4 110:6 111:15 123:11 133:2 138:16 139:15 145:20 155:15 158:11,16,17,20 159:17 176:2,6 183:22 184:5 199:19 214:16,16 216:13 219:19 232:18,18 235:4 239:16 2A5:18,24 247:4 248:11,16 250:14,16 251:10 254:7,7,8 260:6 261:14 265:10,14 265:17 266:2 268:8 275:7 receipts 150:3 receive 261:12,21 received 13:8 154:12 211:18 245:25 246:23 248:23 277:11,14 receivership 145:14 receiving 140:22 259:20 276:23 recess 82:17 147:22 211:12 266:15 recited 31:4 237:6 recites 20:2 reciting 136:18 recognize 21:13 53:5 169:22 184:7 210:6 recognized 127:20 recollection 91:15 154:4 156:9 162:7 162:22 163:25 164:6 249:19 recommended 100:17,24 104:19 118:11 119:24 reconcile 54:24 reconciling 55:3 record 4:9 6:23 22:9 31:17 32:25 33:13 54:17 82:17 106:4 118:19 128:24 140:8 147:22 148:12 191:10,25 200:2 201:18 211:12 231:14 264:9,15 266:15 280:12 281:2 288:12 recording 190:23 records 29:7 recounting 235:23 recruiter 17:11 139:22,23 146:8 recruiters 146:16 red 173:22 174:5,8 174:10,16 redeem 226:12 redeemed 226:12 redeeming 167:6 redemption 172:17 reductions 276:21 refer 24:16 53:24 117:16 121:7 280:5 reference 158:18 174:9179:17 264:4 referenced 70:11 178:7 referencing 178:11 referred 231:8 referring 46:3 80:14 115:18 132:14 134:6 138:4 163:6 168:3 174:7 183:5 262:3 280:6 reflect 274:5 281:3 reflected 191:10 280:21 reflects 274:14 refresh 162:7,22 163:24 164:6 249:19 refusal 228:23 refused 228:19,25 regard 167:13 regarding 96:19 registered 1:21 regular 221:24 277:2 regularly 267:12 regulating 116:13 relate 276:6 related 91:19 186:24 188:18 190:10 203:13,23 240:10 269:21 288:15 relating 46:18 116:17 117:22 179:7 269:11273:9 relation 179:16 187:2 relations 46:16,19 46:25 47:5,14,20 48:10 114:19 115:11 116:10,13 116:14,17 187:15 188:3,19 relationship 198:15 222:9,11,12 223:2 237:18 238:8,13 240:25 246:7 relationships 254:25 released 277:13 279:13 relevant 187:14 188:2 relied 51:19,23 77:3 relies 205:5 relocate 158:8,13 rely 49:15 relying 50:21 51:9 51:16 99:16 100:10 100:16,23 200:21 204:18,22 remain 108:10 129:14 remained 243:13 remains 241:5 remember 89:12 90:15,18 94:8 100:12 106:6 107:3 107:6,25 134:15 139:5 140:3 147:14 158:23 212:21 242:3,4,5 246:18 248:15 repeat 19:23 22:5 32:24 144:10 203:21 271:20 repeated 218:18 repeats 19:25 rephrase 4:25 6:20 49:10 129:2 replaced 57:7 replacement 18:6 reply 52:20,25 117:12,17 283:19 212-267-6868 VERITEXT REPORTING COMPANY www.veritext.com 516-608-2400 EFTA01124973 [report - tight] Page 29 report 16:14 26:22 56:10 60:2 169:18 169:20 171:3,8,10 171:12,16,22,24 172:7,25 173:8,13 179:8 192:19 193:3 205:11,24,25 207:20 208:3,4,6,8 208:12,14,25 209:11,19,20,22 211:5 249:7 251:13 251:17,18,21,21,23 252:9,10 268:9,9,12 268:16 280:4,15 reported 16:18 26:23 45:20 50:9,17 50:25 51:14,22 52:9 54:15 56:4,8 60:3,5 61:2 62:20 80:2,6 177:22,22 205:20 206:13,16 209:20 267:23 279:8 288:10 reporter 1:21,22 4:12,17 reporting 45:18 49:6 51:10 59:19 60:10 61:21 62:16 62:19 171:20172:3 287:2 reports 8:16,17,18 242:8,11 267:9 repos 15:12,12 represent 5:6 19:4 86:3 150:4 249:25 253:2 represented 79:9 250:9 representing 211:20 reputation 175:22 176:11,18,21 177:6 177:17 178:2,6,18 179:3 194:18 request 184:3,5 229:22 262:16 requests 172:17 required 28:20 29:3 47:4 195:9 260:5 requirement 159:9 reserved 3:9 residential 15:9 resign 102:3,14,19 103:4,7 104:19 109:7,10 110:5 111:8,14 resignation 109:24 109:25 resigned 102:2 110:23 111:2 112:7 140:20 141:3,9,13 141:15,20 143:5,9 143:13 resigning 111:5 respect 9:12 46:24 80:18 82:13 121:10 121:19 122:20 127:10,22 188:3 190:17 205:12 238:6 respective 3:3 267:9 278:6 respects 126:5 128:3 129:6 172:12 respond 39:24 275:20 responded 277:18 responding 275:15 response 108:24 116:22 160:10 262:16 263:4 responsibilities 41:9 42:18 43:9,2144:3 44:15 45:11,22 46:11 47:24 48:20 49:16 55:2 57:24 60:17 61:5,7 116:8 117:2 121:14 191:19 responsibility 14:16 14:20,22 15:2 29:23 29:25 30:3,7,2/ 41:12,15,17 42:14 42:21 43:2 46:15 48:16,22 49:5,25 50:7,10,15,18,23 51:4,12,20 52:8 54:7,19 57:6,8 60:15,20,24 62:18 63:15,17,21 91:20 113:25 114:4,13,20 115:13,13 116:4 117:25 118:7 159:2 170:25 191:22 260:23 271:12 responsible 31:3 41:15 43:18 44:8,11 47:10 48:23 50:19 57:12,25 58:8 59:9 59:11 60:23 61:6 62:5 93:25 94:6 95:3,11 97:4105:5 105:15 113:7 118:12 I19:11 120:5 125:13 126:4 127:9 128:5,15,22 129:4 133:22 144:4 144:15 147:2 170:8 186:6 190:15 191:12 199:13 208:18,22 209:3 223:7 239:4 241:13 rest 5:19 restaurant 197:16 220:7 result 105:10 results 168:14,23 169:4,11 170:19 171:4 172:3,24 185:15 187:5 205:20 206:13,15 206:21,22 resumed 148:8 retain 18:7 239:3 return 41:20 50:8 50:11,16,24 51:13 51:21 52:7,9 138:15 267:10 268:4,12,16 272:22 273:11 275:16,23 276:16 276:21 277:14 278:15 280:24 returns 55:12 267:15 268:21 270:16 271:5,13,17 271:23 276:2 277:2 277:8,12 278:2,6 279:7,15 280:19 reverse 15:12 review 5:2 18:22 53:8 71:13 77:19 82:22 170:18 276:25 reviewed 54:2 156:4 reynoids 2:12 ridiculous 93:2 185:7,10 right 6:14 13:24 25:7 30:9 33:7 34:13 42:8,9 48:4 59:15 68:6 69:5 77:11 82:4,8 103:20 103:25 104:4,13 105:11,22 107:14 107:19 110:9,14 111:9 115:14 123:19,23 124:17 125:10,11 130:16 130:21,22 132:2 133:12,19 134:6,23 135:7,25 137:9 143:9 144:9 155:7 157:23 159:18 160:21 165:6 166:19,23 168:9 169:24,25 170:10 172:13 173:2 180:12 182:7 186:19,21 187:17 188:20 189:10,13 195:22 201:14 212-267-6868 VERITEXT REPORTING COMPANY www.veritext.com 516-608-2400 EFTA01124974 Page 30 [right - shooters] 207:7,17,22 208:22 rules 4:14,16,20 6:5 screw 171:21 seniority 189:3 209:17 232:17 31:4,7,10,13 33:23 screwed 171:22,23 sense 4:24 185:8 235:9 249:14 33:23 34:3,6 38:3,6 script 190:4 276:9 252:15,22,23 98:3 195:10269:11 sealing 3:4 sent 267:18 259:14 260:21,22 run 17:14 197:16 sec 5:18 139:6,13 sentence 41:16 42:6 261:13,25 262:2,22 255:7 235:22 236:7 42:20,23 53:23 83:5 262:23 263:15 running 184:19 257:22 265:23 195:12 264:17,20 266:5 186:7 second 10:20 157:3 separate 27:12,15 270:7,10 277:20,21 195:12 253:12 28:19 29:7 32:19 278:14,17,21,23 279:16,23 secondary 9:15 10:8 238:4,7 33:16 34:10,11 35:4 36:16 37:5,13 43:8 salaries 149:9 150:24 rightly 77:2 salary 58:20 150:25 secondhand 180:14 43:21 47:21 58:6 rights 112:23 113:2 153:5,6,15 154:25 191:6 203:8 219:12 123:25 124:3 135:6 135:12,13 138:8 rise 193:7 risk 12:11 41:20 158:15,18 sat 43:6 satisfying 41:19 saturday 101:25 secret 189:9,12 section 73:11,16 78:11,25 80:11,17 81:3 82:12 120:20 239:22 240:13 separated 102:9 143:12 separately 27:24 271:13,14 rmr 1:20 288:23 road 287:4 roadmaps 255:5 saw 19:16 64:10 128:2 saying 12:6 20:25 66:11 78:14 87:25 121:3,9 securities 7:25 8:3 8:25 9:3,11,13 10:9 11:17 12:5,11 15:10 33:5 234:14 separating 179:6 separation 37:2 I36:24 137:3 rob 219:7 89:15 93:19 125:15 15:11 17:25 18:6 september 84:5 92:7 robinson 2:4 125:16 129:15 securitize 11:16,22 92:18 93:6 103:24 robust 165:15 rodriquez 2:7 136:15 137:10 165:18 170:17 securitized 9:14 14:12 122:17 series 156:22 179:18 role 162:24 174:3 198:21 securitizing 10:23 179:21 183:11 room 96:4130:15 199:15 200:25 security 12:8,9,10 257:2 266:25 roth 83:22,24 84:14 84:15,18,21 85:5,7 85:15 86:16,21,25 87:6,11 88:7,15 202:5 213:10 214:3 215:6,21 222:21 258:20 272:9 274:17 280:16 seeking 176:5,7,10 264:3 seen 64:8 75:25 187:21,22 195:3 serious 126:11 132:15 service 177:20 252:14 90:13 91:6,23 92:19 says 6:22 22:2 82:10 244:23 245:8 set 8:9 29:19 55:19 94:5,13,19 95:2,9 102:2,23 104:11,11 261:19 264:7 78:23,25 113:3 95:11,13,17,19,20 95:23 96:2,19,24 97:3,12,18 98:17 120:20 121:23 122:7 195:13 schedule 72:5,7,10 segregated 27:15 seldom 270:7 selecting 12:25 121:2,13 137:5 238:19 254:25 288:20 105:5,11,14 106:15 72:15 78:3 150:4 selective 157:16 sets 149:4 108:7 113:7,14 263:8 158:22 159:3,6 setup 106:22 125:9 186:23 187:5 school 11:10 self 131:23,25 seven 281:4 187:13,16 188:5,7 scope 148:25 sell 11:2012:2 238:5 shape 244:17 188:12 234:4 scores 45:15 47:11 semimillion 155:9 share 198:19 257:20 47:13 56:19 240:21 send 246:15 sheet 5:3 239:3 roth's 205:21 240:22,22,23,23,23 senior 48:25 56:15 287:2 rottman 9:10 16:15 16:16,19 18:3,5 241:6,6 167:12 260:7 shooters 86:12 212-267-6868 VERITEXT REPORTING COMPANY www.veritext.com 516-608-2400 EFTA01124975 [shorted - statement] Page 31 shorted 213:6 shorthand 1:21 shortly 26:2 139:24 245:11 248:20 show 18:12 96:14 163:16 223:16 277:6 showed 137:8 235:22 showing 101:10,11 140:10 149:15 150:15 156:4 162:20 254:16 256:25 266:21 shown 250:22 282:11 shows 54:10 136:25 shrug 206:25,25 shulte 83:22,24 84:13,15,18,21 85:4 85:7,15 86:16,21,25 87:6,11 88:7,14 90:13 91:6,23 92:19 94:5,13,19 95:2,9 95:11,13,17,19,20 95:23 96:2,19,23 97:3,12,18 98:17 105:5,11,14 106:15 108:7 113:6,13 125:9 186:23 187:5 187:12,16 188:5,7 188:12 205:13,21 234:4 257:20 shutting 166:23 sic 11:10 54:6 125:8 126:10 181:2 side 10:22 45:17 48:24 49:4 54:20,23 55:16 57:13 58:18 58:18 108:20 255:7 sfffert 2:10,13 4:13 4:20 159:25 180:8 215:18 280:11 281:2 sign 5:3 81:12 137:19 signature 21:18 148:18 signed 3:13,16 81:14,14 137:14,15 137:16 195:8 similar 56:15 238:2 270:15 271:4,9,14 277:14 simple 62:11 simpler 33:19 simply 36:7 110:23 191:11 269:23 single 11:18 12:14 sit 7521 81:3 88:6 99:10 104:25 107:3 158:18 168:17 169:3 173:6 179:12 190:20 210:21 233:6,18 234:23 242:6 248:4 251:16 265:12 situation 32:14 196:10 six 146:2 155:23 194:9 size 132:24 158:6 skill 8:9 sleeper 2:22 slightly 273:12 slowed 165:3 small 157:16 183:4 232:21 246:10 273:2 smaller .275:23 smart 216:19 sold 9:14 12:8 172:20 239:2 sole 41:14 48:22 63:20 solely 41:15 48:23 62:5 247:24 somebody 38:17 50:21 51:9 123:8 125:5,7 126:3 131:5 170:22 184:2 198:14 200:5,14 202:14 208:18 209:4,9 someone's 203:4 somewhat 154:15 166:9 sorry 14:10 19:9 22:5,6 29:10 32:24 42:11 73:9 80:3 93:10 109:15 122:15 135:2 137:3 138:10146:22 164:4213:11 230:2 231:12 263:2 270:24 274:6 279:11 sort 137:6 199:7 212:14 224:9 sound 185:10 sounds 185:6,7 source 239:15 sources 42:15 southern 1:2 5:9 speak 183:17191:25 speaking 4:22 131:15,19226:17 233:8 special 17:14 22:24 23:4,7,8,11 55:5 216:19 specific 26:18 37:24 40:12 44:4,12 57:2 88:18 178:14 specifically 86:24 178:11 182:22 199:20 212:21 242:5,5 253:20 specifics 99:9 226:10 speculate 134:14 spent 104:7 272:24 split 273:18,19 splitting 204:2 spoke 131:10,14 182:16 183:13,13 183:14,16 184:3 234:24 237:6 spoken 196:17 197:3 198:4,6 216:22 221:11 240:21,24 spread 275:18 279:2 spreading 12:11 spreadsheets 156:3 spring 84:10,10 85:5,8 146:24 257:20 ss 282:3 288:3 stamos 183:24,25 stand 55:8 148:9 155:4 standard 68:5,8 74:23 76:11,18 262:16 stands 10:3 138:22 staring 123:5 start 140:22 147:20 149:3,3 started 14:15 38:2,6 38:9 41:2,4 83:23 8325 85:2 149:5 209:18 215:10 222:15 236:8 250:11 starting 54:15 159:14 178:17 257:10 starts 120:19 state 1:22 4:4,8 7:4 149:8 174:4 282:2 288:2,7 stated 134:8 statement 19:4,11 20:4 117:19 152:8 154:2,16 204:21 210:25 211:3 271:7 284:22 212-267-6868 VERITEXT REPORTING COMPANY www.veritext.com 516-608-2400 EFTA01124976 Page 32 [statements - telling) statements 19:13,16 21:2,5 197:7 203:9 203:12,22 204:8,9 204:11 205:7 207:15,21 209:22 210:5,6 211:3,4 217:14,21,24 219:21 231:22 252:10,12 states 1:2 34:7 53:19 stating 216:2,3 stay 10:16 16:21 stellar 177:9,16,25 194:18 step 187:18 steps 31:12 99:7 260:19 sterling 183:23,25 stip 149:21 stipulated 3:2,7,12 stipulations 4:12,18 stone 233:12 stopped 222:20 straight 86:12 180:4 strategic 147:8,10 147:15 161:24 162:8,23 164:2,7 strategy 239:8 street 135:18,19,21 167:12,13 183:23 stricken 231:14 strike 231:15,16 structure 21:24 23:18,22 276:19 structuring 10:23 11:7 13:11 stub 152:10 stuff 241:13 suan 64:25 65:2,3 66:13,16,25 67:11 69:8,20 198:2,3 suan's 65:5 subject 6:21 88:23 139:6 140:19 280:25 282:10 subjects 195:15 subscribed 282:21 287:22 subsequent 143:18 subsequently 181:11 substance 92:4 111:13 substantial 132:14 173:9 substantially 165:3 sue 226:19 suggest 95:12 235:16 suing 213:19,20 214:14 224:17,19 224:20,23 225:24 252:22 suit 175:8 suite 287:4 summarize 251:21 summary 251:18 summer 17:21,23 84:7 165:8,23 stumnerville 276:3 superb 69:2 supervise 46:11 116:5 supervising 63:18 supplementary 69:15 71:7 78:7,10 112:12,19 135:5 283:25 support 195:17 226:6 supposed 22:21 281:3 sure 5:19 14:24 24:5 24:10 29:25 30:6,20 31:9,12 32:11 40:9 41:25 50:19 51:4,8 51:20 68:12 76:21 85:19 91:14 132:19 140:19143:17 173:24 179:15 182:18,18 193:18 196:21 221:4,16 233:23 247:10 260:20 264:4,23 265:8 271:13 272:25 surprises 6:10 surrounding 233:22 survives 153:12 susan 198:9 211:15 212:5,25 214:22 215:16,20 216:12 253:18 swear 20:21 sweica 231:20 swieca 231:18,19 sworn 3:14,16 4:3 5:20 148:8 282:21 287:22 sylvia 56:24 58:12 58:19,19 60:3,11 61:7 62:2 63:13,14 257:3 259:25 263:18,22 264:22 265:14 268:5 syhia's 62:2 system 29:19 55:19 systems 7:12,19,21 t taken 1:18 3:18 70:9 99:7 122:5 130:7 209:21 talk 95:13,17,18,20 95:23 96:2,23 97:18 147:7 157:9 177:12 183:12 196:23 197:13 198:10 215:10 216:21 220:21 224:7 225:4 229:13,20 231:5,20 232:25 234:9,15,19 277:5 talked 97:12 146:17 146:23 161:24 198:2 225:5 232:11 232:12,13,14 talking 101:19 104:8 110:13 133:3 143:15 163:18,19 201:24 235:19 279:6 tape 190:23 taught 9:7 tax 34:3,12,15,23 36:18,19,21 269:10 269:21 team 15:18 telephone 182:10 tell 6:19 37:25 38:13 38:21 65:22 66:13 89:17 90:4 91:11 96:12 97:2199:3,6 103:6,10 106:5 107:25 141:2,8,12 143:3,19,20,25 144:2,12,14 158:10 159:9,21 160:6 184:9 188:24 192:21 200:14 212:6,10,19,24 218:6,25 219:2,15 224:4,14,17,20,23 226:25 229:11,12 238:18 240:15 244:16 249:5 253:19 254:6 264:22 265:23,25 270:14,17,20,25 271:3 273:5,8,13,20 273:24 275:4 telling 67:5 97:16 100:6,18,25110:2,6 129:24 132:5 136:15 142:11 143:8,11,13 170:7 189:16,21 196:14 196:16 200:4 218:12,18 223:12 226:2,17,18 275:25 212-267-6868 VER1TEXT REPORTING COMPANY www.veritext.com 516-608-2400 EFTA01124977 (tells - told] Page 33 tells 97:2 ten 11:14,2412:7 13:9,10 15:21 147:20 245:14 term 153:18 271:15 terminate 124:10 127:21 130:4 terminated 73:21 74:22 75:4 111:23 138:7 terminating 112:11 112:17 131:2 thanks 42:2 theme 219:18 240:17,18 241:9,15 241:23 thing 65:17 106:9 111:20 218:23 241:16 264:9,11 things 44:3 73:16 86:22 87:2 90:12 109:21 116:5,9 131:11 142:6 144:7 144:9 173:18 179:4 206:22 209:5,7 212:2 227:12,24 228:8 229:6 244:3 253:11 272:18 thousand 16:10 thousands 258:24 260:12 three 67:15,21 89:3 149:21 154:17 220:14 265:22 280:8 till 180:8 192:25 times 5:15 44:6 47:16 59:16 63:13 96:18 126:20 I98:12 240:22,23 249:20 277:15 279:10 timothy 197:14 title 14:17 16:12 49:11 159:2 tkt 140:24 today 37:16 81:3 88:6 99:10 104:25 termination 73:13 179:19 192:22 222:5 107:3,14 126:21 76:17 78:12 113:3 193:7,9 197:2 199:9 tim 197:13 142:15 158:18 terms 17:25 24:12 214:6,8 218:20 time 3:9 9:8 14:17 168:18 169:4 173:7 24:21 59:22 72:15 244:13 16:9,17 17:13 23:6 179:12192:25 74:21 118:25 124:5 think 22:3 28:18 23:17 24:18 25:10 210:21 233:7,19 128:4 153:4 156:5 35:19 36:25 37:12 25:14 26:16 34:19 234:24 242:6 terrible 244:I3 59:13 67:21 69:6 34:25 37:10,14,18 251:17 265:12 testified 4:5 49:20 74:18 84:9 104:25 38:11,25,25 40:21 280:24 49:23 76:5 98:19 115:15 122:11 40:22,25 45:10 todd 211:23 215:17 99:22 105:9 109:17 154:24 155:17 56:14 59:16 60:12 216:11,14 113:8,18,24 116:25 159:19,25 160:14 60:12,13,13,14 toes 190:25 121:12126:21 165:12 171:7,23 61:11 64:6,10 67:11 told 38:4 64:25 128:10 139:17 173:15 174:19 67:14,19 73:2 76:22 83:16 86:23 87:23 148:9 170:2 I76:9 175:6,25 183:24 78:17 79:11 85:17 88:2,4 92:3,21 184:6 185:11 184:4 185:19 186:2 89:14,17 90:23 91:9 99:11,17,24 100:10 186:22 191:21 197:16,18 202:24 92:2 94:4,25 95:24 102:21 103:17 225:7 247:9 203:2,3 204:16 96:22 101:19,21 10422 105:4,10 testify 173:6 213:20 210:22 215:8 223:5 104:8 111:9 138:10 110:8,25 111:4,4,19 214:8 265:13 224:16,22,25 226:8 143:24 147:21 132:12 141:16,17 testifying 106:25 226:9 227:8 228:7 166:11,14 175:7 141:18 142:20 107:5,14 244:6 249:4 260:10 178:21 179:24 143:15 158:12 testimony 5:21 270:4 180:5,11 181:8 160:17 168:20,24 51:18 78:16 87:10 thinking 214:14 183:14 205:3 181:8,24 182:13,21 92:17 97:3,17,19 217:8 211:18 214:20 183:9 188:5,13,21 102:24 103:13 thinks 226:13 217:21,24218:3,4 191:11 193:4,25 115:17 125:12 third 2:5 61:9 182:5 218:19 222:4,5,8,15 194:2 196:14 139:6,12 142:15 191:4 202:21 228:12 229:17 199:19 200:11 151:23 161:2 thought 13:25 37:11 235:11 250:8,22 214:13,17,22 177:24 182:4,8 79:12,22 80:24 251:2 259:18 215:13 218:3,4,20 193:23 218:16 85:14 87:17 103:22 262:18 270:2 218:22 223:9,15 236:11271:5 282:8 104:3 117:14 272:25 273:4,6 225:8 226:12 thank 21:7174:14 119:21 127:24 276:22 277:9 230:12 231:8 233:7 128:9 153:7 185:21 280:24 281:7 234:3,4 241:23,25 212-267-6868 VERITEXT REPORTING COMPANY www.veritextcom 516-608-2400 EFTA01124978 Page 34 [told - vasan] 242:3,7 243:18,19 243:22,24 252:20 252:21 259:15,17 271:17,23 274:17 278:25 top 157:4 162:2 touch 232:16 241:5 touche 168:9,12 170:17 266:7 tough 166:3 town 86:3 toxic 173:20 track 32:12 33:6 200:25 trade 8:17 9:15 traded 15:8,9 238:6 trader 9:19 trades 8:21,22,23 10:7,13,14 55:18,19 55:20 trading 15:14 16:8 255:20 tranche 11:16 12:13 13:14 trenches 12:12,20 13:2 238:5 transaction 263:15 transactions 10:6 50:2 237:5 transcript 5:2 47:25 153:23 282:10 284:24 285:6 288:12 transferred 172:21 treasurer 60:21,22 61:2 treasuries 15:11 treasury 45:24 treat 272:10,15 treatment 269:22 trial 3:10 tried 18:7 145:3 243:4 272:21 triple 11:17 12:14 trish 197:3,12 true 141:5,22 142:6 143:16 188:22 226:13 257:21 282:10 288:12 trusted 67:15 truth 96:12 142:11 142:14,16 143:15 173:20 175:2 try 6:7 105:20 144:25 178:16 242:20 243:7 trying 20:8 105:23 166:11 175:21 203:7 241:22 245:24 246:13 272:25 turn 78:20,22 139:24 turned 220:10 twelfth 255:23 type 25:8 27:21 92:12 uh 16:13 100:2 101:13,15.140:13 141:21 146:19 157:11 160:12,16 161:14 166:24 177:14 192:20 210:2 ultimate 49:5 50:22 115:13 ultimately 29:24 83:15 89:24 137:19 137:23 172:20 208:17 209:2 umbrella 228:12 un 159:23,23 229:21 229:21,23,23 unable 244:17 unambiguous 256:3 256:6 underneath 191:19 228:11 understand 6:12,18 6:19,25 19:19,24 20:25 22:20 24:24 25:2,25 26:7,11,14 26:24 27:4,6,10,14 27:18,23 28:6,13 29:5 31:18,22,24 32:4,7 33:3,22 34:22 35:3 36:6,7 36:11 37:20 38:2,15 39:22 43:17,20,24 44:7,10 46:4,23 47:3 51:11 53:23 56:3 63:6 67:10,14 67:19 68:10,23 70:5 70:8,24 71:5,20 72:7,10,21 73:6,11 73:15,19,23 74:2,13 74:16,20,25 75:6,14 76:11,15 77:12,20 78:10,20 79:5,7,24 80:4,8,15,20 86:25 87:5 91:18 93:23 94:9,12,18 96:7,11 99:20 105:13,25,25 106:15 108:21 109:2 112:10,16,23 112:25 113:6 122:12,16 126:8 129:15 131:20 136:3,8 137:18,21 138:3,5 159:8,24 169:4,14 177:6 178:14,17,25 179:8 179:20,25 180:20 184:18 185:2 192:3 192:22 194:8 196:9 199:21 204:6 207:2 209:15 210:6 213:8 222:7 223:15 227:19 228:9,13 241:22 253:4 256:10 258:16 271:7,16,21 understanding 22:16 35:22,23 75:22 170:3 200:12 understood 38:6 46:22 47:18 48:7 52:2,3,5 68:13,17 68:19 71:23 74:7 85:12 92:18 98:7 109:17 113:13,19 113:25 122:8 123:25 124:5,9 134:21 135:24 168:6,11 186:23 250:3,7 266:11 268:21272:14 undertakings 121:4 unfairly 119:10 unique 239:22 united 1:2 34:7 university 7:4 unquote 132:13 276:13 unreliable 215:24 unsuccessful 145:4 untoward 225:21 unwilling 137:19 158:13 163:9 updating 279:19 upset 123:12,16 use 86:18 94:20 113:15 114:2 118:4 126:23 179:15 195:16 201:23 260:15 261:22 264:5 265:9 usual 4:12 utter 45:2 value 55:9 69:3,4 147:8,10,15 162:9 162:23 164:2,7 vasan 76:23,25 198:6 212-267-6868 VERITEXT REPORTING COMPANY www.veritext.com 516-608-2400 EFTA01124979 [vast - 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