EFTA01130141

Page I Page 3 I UNITED STATES BANKRUPTCY COURT I APPEARANCES: 2 On behalf WED Bank. NA.: SOUTHER DISTRICT OF FLORIDA WILLIAM OL 'WEN" HUTCHINSON. Esquire 3 JOSEPH SHEERIN. Esquire 2 FORT LAUDERDALE DIVISION MCGUIREWOODS 3 4 201 North Tyro* Street Suite 4 IN RE: NO.: 09-34791-RBR 5 i1M10NorthCard= 28202 Charlotte. 5 ROTHSTEIN ROSENFELDT ADLER, P.A. 6 On behalf Herbert Stettin. Twine: JOHN H. GO:OVESE. Esquire 6 MICIIAll. A. FRIEDMAN. Esquire 7 GENOVESE .10BLOVE & BATTISTA. P.A. 8 WO Flouter Second Street 8 VIDEOTAPED 44th Floor 9 DEPOSITION 9 Miami. Florida 33131 10 OF 10 DAVID-and.GAY. Equirc 11 JOHN JACK SCAROLA BERGER SINGIRMAN II 3 S50 East Las Olas Boulevard 12 uite MCO 13 12 Fon Lamierdale. Florida 33301 13 On behalf of Robert Fun. Enlace: 14 JASON S. RIGOLI. Estate 15 350 East Las Olas Boulevard 14 FURR & COHEN. P.A. One Boca Place. Susie 337W Fort Lauderdale, Florida 15 2255 Glades Road Boca Raton. Florida 33431 16 July 2, 2013 16 Scheduled for 10:00 a.m. On behalf of the Plaintiffs: 17 ADAM MOSKOWITZ Esquire 17 Commencing at 10:07 a.m. to 5:23 p.m. KOZYAK IRONS & THROCKMORTON. P.A. 18 IS 1525 Ponce de Leon Boakvard Ninth floor 19 19 Miami. Florida 33131.2335 20 20 On behalf oft& Plaintiffs: William Scherer. Esquire 21 21 CONRAD & SCHERER. LLP 22 633 South Federal Ilighnuy 22 Eashth Flom 23 Fon Lasakidale. Florida 33301 24 23 25 24 25 Page 2 Page 4 1 UNITED STATES BANKRUPTCY COURT 1 CONT. APPEARANCES: SOUTHERN DISTRICT OF FLORIDA 2 On behalf of Unsecured Creditors Committee: 2 FORT LAUDERDALE DIVISION MICHAEL J. GOLDBERG. Esquire 3 3 350 East Las Olas Boulevard 4 IN RE: CHAPTER 7 Suite 1600 5 4 Fort Lauderdale. Florida 33301-2229 BANYON 1030-32. LLC CASE NOS: 10-36691-RBR 5 On behalf of Morse Operations and 6 BANYON INCOME FUND. L.P. I I-40929-RBR The Estate of Ed Morse: 7 Debtors. Jointly Administered Under 6 JOHN M. MULLIN. Esquire Case No. 10-33691-RBR TRIPP SCOTT 8 7 110 Southeast Sixth Street / Fifteenth Floor 9 8 Fort Lauderdale. Florida 33301 10 9 11 10 ALSO PRESENT: 12 VIDEOTAPED 11 Patricia Diaz. FPR. RPR 13 DEPOSITION 12 Dean J. Chimerakis. Videographer 14 OF Custom Video Services. Inc. 15 JOHN JACK SCAROLA 13 16 14 17 15 - - - 18 16 19 350 East Las Olas Boulevard 17 Fort Lauderdale. Florida 18 20 July 2. 2013 19 Scheduled for 10:00 a.m. 20 21 Commencing at 10:07 a.m. to 5:23 p.m. 21 22 22 23 23 24 24 25 25 I (Pages I to 4) OUELLETTE & MA LDIN UHRT REPORTERS, INC. EFTA01130141 Page 5 Page 7 I INDEX I behalf of the Estate of Ed Morse and Morse 2 WITNESS: PAGE 3 JOHN JACK SCAROLA 2 Operations, Inc. 0 DIRECT EXAMINATION BY MR. HUTCHINSON 7 3 MR. GOLDBERG: Mike Goldberg on behalf of the CROSS-EXAMINATION BY MR_ GENOVESE 173 5 CROSS-EXAMINATION BY MR_ MOSKOWITZ 216 4 Creditors Committee. 6 5 MR. GAY: David Gay with Berger Singerman 7 --- 6 counsel on behalf of Herbert Stettin. 8 EXHIBITS 9 - - - 7 Thereupon, 10 NO. DESCRIPTION PAGE 8 JOHN SCAROLA 11 Exhibit No. 1 Subpoena 7 12 Exhibit No. 2 Subpoena for Christian 9 9 was called as a witness and, having been duly sworn, was Searcy 10 examined and testified as follows: 13 Exhibit No. 3 Transcript of May 17_ 2013 48 11 THE WITNESS: I do. 14 Hearing 12 DIRECT EXAMINATION 15 Exhibit No. 4 Plaintiffs First Request 68 for Production of Documents 13 BY MR HUTCHINSON: 16 to TD Bank 14 Q. Good morning, Mr. Scarola. We met before the I? Exhibit No. 5 TD Bank Victims Notice of 79 15 deposition. Would you please state your name for the Filing Expert Disclosures HI 16 record? Exhibit No. 6 Time Summary 81 17 A. Good morning. My name is John Scarola. I am 19 Exhibit No. 7 Conspiracy Chart III 18 also most commonly known as Jack. 20 19 Q. Mr. Scarola, I will show you what I marked as Exhibit No. 8 Statute 768.72 124 21 20 Exhibit 1. Do you recognize Exhibit 1? Exhibit No. 9 Statute 768.73 148 21 (Exhibit No. I, Subpoena, was marked for 22 22 identification.) Exhibit No. 10 Handwritten Notes 163 23 23 A. It appears to be a copy of the subpoena for Exhibit No. II Handwritten Notes 168 24 this deposition that was served upon my office and 24 25 25 accepted at my direction. Page 6 Page 8 I THE VIDEOGRAPHER: Today's date is July 2nd. I BY MR. HUTCHINSON: 2 2013. The time is approximately 10:10 a.m. Eastern 2 Q. And are you appearing here today pursuant to 3 Standard Time. We are here to videotape the 3 this subpoena? 4 deposition of John Jack Scarola in regard to 4 A. I am. 5 Rothstein, Rosenfeldt, Adler, PA, Case 09.34791 5 Q. And this subpoena includes a document request, 6 BKCRVR. 6 does it not? 7 The court reporter is Patty Diaz with 7 A. It does. 8 Ouellette and Mauldin Court Reporting. My name is 8 Q. And have you produced all documents that are 9 Dean Chimerakis, videographer, with Custom Video 9 responsive to the request included therein? 10 Services of Miami. 10 A. I believe I have. 11 Will counsel please state your appearance for 11 Q. Does that include some documents that you have 12 the record? 12 brought with you here today? 13 MR. HUTCHINSON: Wayne Hutchinson with 13 A. That is correct. 14 McGuireWoods on behalf of TD Bank, N.A., and with 14 Q. Based on what was previously produced and what 15 me is Joe Sheerin. 15 you brought here today, you believe that all documents 16 MR. GENOVESE: John Genovese, Genovese, 16 responsive to these requests have now been provided. 17 Joblove and Battista on behalf of Herb Stettin. 17 Correct? 18 Along with me is my colleague, Michael Friedman. 18 A. I don't have personal knowledge of the 19 MR. RIGOLI: Jason Rigoli, Furr & Cohen on 19 production that was not made by me. I am told that you 20 behalf of Robert Fun, Chapter 7 Trustee for Banyon 20 have already received duplicate copies of most of the 21 1030-32 and Banyon Income Fund. 21 materials that I brought today, but I have brought with ?2 MR. MOSKOWITZ: Adam Moskowitz, Bill Scherer 22 me all of those materials in my possession that are 23 and Javi Lopez on behalf of the plaintiffs in the 23 responsive to the subpoena. ?el. case. 24 Q. And you are fine with us looking through those 25 MR. MULLIN: John Mullin from Tripp, Scott on 25 materials to confirm that we have them and if not, 2 (Pages 5 to 8) OUELLETTE & MA LD1NCOURT REPORTERS, INC. EFTA01130142 Page 9 Page II 1 making any copies that we need to make so that we have I have been asked to express opinions with regard to the 2 them for our records? 2 punitive damage value of claims against TD Bank and I 3 A. Yes. I know that there are documents that are 3 present myself as having sufficient expertise in that 4 included in the group of documents that I brought this 4 area to express those opinions. 5 morning that were not produced to you because they are 5 Q. So it's your understanding that your opinions 6 my personal notes with regard to my review of the other 6 in this matter are limited to the value of potential 7 materials. 7 punitive damages claims against TD. Is that correct? 8 Q. But you are not aware of any additional 8 A. That certainly is the primary focus of what I 9 materials that either have not been provided or are not 9 have been asked to do, and while I may have formed som 10 with you here today? 10 tangential opinions that relate to that primary area, A. I am not. 11 that is the focus of what I have done. 12 Q. Let me show you what I marked -- is marked as 12 Q. What qualifies you as an expert on punitive 13 Exhibit 2. 13 damages and the values of punitive damages claims? 14 (Exhibit No. 2, Subpoena for Christian Searcy. 14 A. The total of 40 years experience that I have I5 was marked for identification.) 15 had litigating both criminal and civil cases, including 16 A. Yes, sir. 16 many punitive damages claims. 17 BY MR. HUTCHINSON: 17 Q. At what point during that 40-year career did I8 Q. Do you recognize Exhibit 2, sir? 18 you become an expert on valuating punitive damages 19 A. I do. 19 claims? 20 Q. What is Exhibit 2? 20 A. I cannot tell you the point in time at which 21 A. Exhibit 2 is a copy of a subpoena that was 21 someone would have independently recognized my 22 accepted by my office on behalf of Christian Searcy and 22 expertise. It has been an evolving process, so that's a 23 I have seen a copy of this subpoena as well. 23 question that I can't answer for you, except to tell you 24 Q. And am I correct that this subpoena also 24 that it is my personal assessment that I am certainly 25 includes certain document requests? 25 there now. Page to Page 12 I A. It does. Q. Are there any specific factors that you 2 Q. And we have not received a separate response believe makes you qualified to be an expert on the 3 to this subpoena from your law firm. Is your document 3 valuation of punitive damages claims other than your 4 production individually supposed to respond to this 4 general experience? 5 subpoena as well? 5 A. Yes. It is an area of the law that I have 6 A. his. 6 studied. It is an area of the law that I have focused 7 Q. So as we sit hem today, you have no knowledge 7 study upon. That is, I am sure that over the course of 8 of additional documents responsive to the request, 8 particularly the last 35 years I have taken CLE courses 9 including Exhibit 2, that are responsive therein that 9 that have dealt with the topic of punitive damages as 10 have not either been provided to us previously or are 10 well as having taught multiple courses dealing with the 11 not in the materials that you brought here today? I topic of punitive damages. 12 A. That is correct. Certainly, it's possible 12 So, it is as a consequence of practical 13 that I may have overlooked something, but I don't think 13 experience, formal education and self-study that I have 14 so. 14 accumulated the degree of expertise that I have in this IS Q. Mr. Scarola, in what fields are you an expert? 15 area. 16 A. I am a trial lawyer who has been practicing in 16 Q. Let's talk about the CLE courses that you have 17 the area of litigation since 1972. I am Board-certified 17 taught that deal with the valuation of punitive damages 18 in personal injury and in business litigation as well 18 claims. Can you please tell me about those courses, 19 and I believe that both certifications have been in 19 their titles and when they were offered? 20 place since they were offered by the Florida Bar. 20 A. I'm sorry, but I cannot give you the course 21 Q. And if you were going to list the fields in 21 titles nor can I tell you the specific dates on which 22 which you believe that you are an expert, what fields -- 22 the courses were offered. 23 how would you describe those fields and what would they 23 What I can tell you is that I have lectured on 24 be? 24 both the state and local level on the topic of punitive 25 A. Well, for purposes of the deposition today. I 25 damages and have also been invited to give lectures on 3 (Pages 9 to 12) OUELLETTE & MA LDINCOURT REPORTERS, INC. EFTA01130143 Page 13 Page 15 1 punitive damages in front of at least one other state 1 wherein you lectured on punitive damages? 2 Bar Association. 2 A. Palm Beach County Bar Association, Palm Beach 3 Q. What state Bar Association was that that you 3 County Justice Association, Florida Justice Association. 4 are referring to? 4 Q. And over how many years did those lectures 5 A. Ohio. 5 occur? 6 Q. Were they the sponsor of the continuing 6 A. Certainly within the past 20 years, and I 7 education class? 7 don't know that I can accurately narrow it down beyond 8 A. They were. 8 that. It's a topic that I have been dealing with 9 Q. And where was that lecture? 9 significantly over at least the last 20 years. 10 A. It actually occurred when that Bar Association 10 Q. Have you lectured on the punitive damages 11 met in Palm Beach County. 11 aspect of the Florida Tort Reform Acts that were 12 Q. And when was that? 12 implemented in the late 1990s? 13 A. I can't give you the date. 13 A. I have. 14 Q. Was it in the last five years? 14 Q. What would have been your topics on -- what's 15 A. I'm not sure. 15 been the subject matters of those lectures on those 16 Q. What's your best estimate of when that would 16 topics? 17 have been? 17 A. The implications from both the legal and 18 A. Approximately, five years ago. 18 practical standpoint of the legislative changes. 19 Q. And did you prepare materials for that CLE 19 Q. And what do you recall about those 20 presentation? 20 implications? 21 A. I don't know whether I prepared materials 21 A. I recall that the Florida legislature has, 22 specifically for that CLE presentation or whether I 22 from time to time, been imposing various restrictions on 23 relied upon materials previously prepared and having 23 the common law ability to recover punitive damages. 24 lectured on the topic prior to that lecture. 24 Q. In your opinion, does the Florida Legislature 25 Q. Would you still have the materials that you 25 have the right to do that? Page 14 Page 16 1 would have used in these past lectures? 1 A. It is my personal opinion that the Florida 2 A. Probably some of them. 2 Legislature has a limited right to deal with imposing 3 Q. Is the information contained in those 3 restrictions on the ability to recover punitive damages, 4 materials anything that you relied upon in forming the 4 that there are constitutional limitations on how those 5 opinions in this case? 5 restrictions may be imposed. 6 A. The information contained within those 6 Q. What constitutional limitations are you 7 materials include principles that I relied upon in 7 referring to? 8 formulating my opinions in this case, I think would be a 8 A. The due process and equal protection clauses 9 more accurate way to state the relationship between 9 of both the United States Constitution and the Florida 10 those materials and my opinion. 10 Constitution. 11 Q. And to the extent that you can find any of 11 Q. Are you claiming -- is it your -- are you 12 those --- 12 offering an opinion in this matter that there is a 13 A. You've got them. 13 property right with respect to a punitive damages claim? 14 Q. Okay. Are those materials with you here 14 A. No. I am not offering that opinion. I am 15 today? 15 assuming for purposes of the opinions that I will be 16 A. They are. If they exist, they are in that 16 expressing today that the current legislative 17 box. 17 limitations that have been imposed upon the ability to 18 Q. Thank you very much. 18 recover punitive damages pass constitutional muster. 19 A. You are welcome. 19 Q. They do pass constitutional muster? 20 Q. Other than the lectures at the Ohio State Bar 20 A. I have assumed that for purposes of the 21 Association, were your other CLE lectures all 21 opinions that I am expressing today. 22 sponsored -- were the classes all sponsored by the 22 Q. So, you are not offering an opinion in this 23 Florida Bar Association? 23 matter that the current statutes limiting punitive 24 A. No. 24 damage awards are somehow unconstitutional or not 25 Q. Who were the other CLE classes sponsored by 25 applicable to this matter? 4 (Pages 13 to 16) OUELLETTE & MA LDINCOURT REPORTERS, INC. EFTA01130144 Page 17 Page 19 I A. I am not offering that opinion today. 1 Q. Is that -- is it your opinion that it's 2 Q. And you are not planning on offering that 2 outside the statutory limitations because they are not 3 opinion at the confirmation hearing? 3 product liability claims? 4 A. I don't plan on offering that opinion at the 4 A. It's my opinion that they are outside the 5 confirmation hearing, no. 5 statutory limitations for multiple reasons; one, because 6 Q. Let's go back. You talked about that you've 6 they are not within those provisions of the statute that 7 lectured on the practical implications of the new -- of 7 impose limitations, but secondly, because the nature of 8 the punitive damages tort reform that was implemented in 8 the misconduct is such that I believe that that 9 the late 1990s. What is your understanding of the 9 misconduct takes the claims outside of the statutory 10 practical implications of those reforms? 10 limitations. 11 A. That really is a very broad question and I 11 Q. And we will certainly get into that in more 12 would prefer that it be more focussed before I attempt 12 detail, but generally, are those the two reasons why you 13 to answer it. 13 believe that the conduct at issue in the underlying 14 In what regard? 14 claims in this matter are outside the punitive damages 15 Q. Well, are there limits on the -- the amount of 15 limitations? 16 punitive damages? Is it your understanding there are 16 A. Generally, yes. When we are talking about 17 limits on the amount of punitive damages that can be 17 punitive damages limitations right now, we are simply 18 recovered as a result of such reforms? 18 focusing on statutory limitations. 19 A. Yes, under some circumstances. 19 Q. Yes, sir. 20 Q. And what are those circumstances? 20 Did you have any involvement with the punitive 21 A. Those that are specifically described in the 21 damages tort reform that was implemented in the late 22 statute. 22 1990s? 23 Q. Do you recall any of those circumstances 23 A. I am not sure what it is you are asking me. 24 without referencing the statute? 24 If you are asking whether I had any involvement in 25 A. I think I can recall some of them without 25 formulating the law, the answer to that question is I Page 18 Page 20 I referencing the statute. Certainly, if you want the I did not. 2 most accurate answer I am able to give you, I've got a 2 Q. Who did? To your knowledge, who did formulate 3 copy of the statute in the materials that have been 3 the law? 4 provided, and it would be easier to have it in front of 4 A. The Florida Legislature. 5 me. But if what you would like to do is test my memory, 5 Q. Do you have any idea who wrote the law? 6 you know, I will play that game with you. 6 A. I don't know the names of any of the 7 Q. Well, we are not playing games. 7 draftsmen, and I would be surprised if the end result 8 A. Okay. 8 were not the product of input from multiple sources. 9 Q. But what do you recall about the statutory 9 Q. Do you have any personal knowledge of that? 10 limitations? 10 A. I don't, no, at least none that I recall. 11 A. I recall that there are limitations that would 11 There may have been some point in time when I had 12 impose a three times compensatory damage limit under 12 occasion to attempt to review the legislative history, 13 some circumstances, limitations that impose a four time 13 but I don't remember that. 14 compensatory damage limitation under some circumstances. 14 Q. Would the draftsmen of the punitive damages 15 There is expressed statutory language that indicates 15 statute be the best resource in terms of trying to 16 that there is no statutory limitation under other 16 determine the intent behind the statutes? 17 circumstances, and I recall that there is specific 17 A. Not necessarily, no. 18 language in the statute that indicates that the statute 18 Q. Who would be? 19 is primarily applicable to products liability claims. 19 A. The Florida Supreme Court ultimately. 20 Q. Are you offering an opinion in this matter 20 Q. And the Supreme Court looks to legislative 21 that the statutes are somehow not applicable to the 21 history at times to determine the intent of the statute; 22 claims at issue? 22 does it not? 23 A. It is my opinion that the circumstances of the 23 A. If it is necessary to go beyond the plain 24 punitive damage claims against TD Bank take those damage 24 meaning of the language of the statute, that is a 25 claims outside the statutory limitations. 25 consideration that the Court might view. I don't -- I 5 (Pages 17 to 20) OUELLETTE & MA LDINCOURT REPORTERS, INC. EFTA01130145 Page 21 Page 23 1 don't know that that would be necessary under the 1 over the years some fairly extensive research materials 2 circumstances of this statute and it certainly does not 2 with regard to punitive damages. They certainly don't 3 appear to have been necessary up to this point in time. 3 include everything that I have reviewed, but it has been 4 Q. But you are not going to offer any opinions in 4 my standard operating procedure as a trial lawyer to 5 this matter on the nature and the intent of the statute 5 preserve copies of materials that I think may be of some 6 beyond the statutory language. Correct? 6 significance with regard to a matter that I am currently 7 A. That is correct. 7 involved in or that I might reasonably anticipate would 8 Q. And you have no personal knowledge of the 8 become relevant to future matters, and I have kept those 9 nature and intent of the enactment of the statute. 9 research files and produced them for you today. 10 Correct? 10 I selected from those files the punitive 11 A. I do not have any personal knowledge regarding 11 damage files that I thought might be most relevant to 12 the drafting process nor the deliberative process of the 12 the inquiry that is being conducted. 13 Legislature, nor do I think that either of those matters 13 Q. Thank you. So you keep a punitive damage -- 14 is relevant. 14 A. I am not sure once you see them you are going 15 Q. Do you know what groups were involved in the 15 to want to say thank you, but I have them here. 16 lobbying effort for the tort reform effort? 16 Q. We appreciate it. How many times --- 17 A. I can make reasoned assumptions in that 17 A. Nor do I think you are going to appreciate it 18 regard, but I don't have any direct knowledge. 18 when you get a chance to look at them, but they are 19 Q. In addition to the CLE courses you have taken 19 here. 20 and taught on punitive damages, you also said that you 20 Q. Thank you. 21 have done a good bit of studies conducted for punitive 21 How many times have you testified as an expert 22 damage purposes. Is that correct, or you have 22 on punitive damages? 23 researched punitive damages? 23 A. I don't have a recollection of ever having 24 A. I have, yes. 24 served as a punitive damage expert before today. 25 Q. Can you please describe those research efforts 25 Q. Have you ever been --- Page 22 Page 24 1 over the years? 1 A. I am a virgin. 2 A. I have read case law. I have read treatises. 2 Q. Have you ever -- I will move on. 3 I have read articles in professional journals. That's 3 Have you ever been asked to serve as a 4 what comes to mind immediately. 4 punitive damages expert before today? 5 Q. Is there any treatise out there that you have 5 A. I have not, no. 6 read that you believe to be the most authoritative 6 Q. Have you ever heard of a punitive damages 7 treatise on the status of damages in the State of 7 expert before today? 8 Florida? 8 A. Certainly not in the context of someone 9 A. There is no treatise that I would accept as 9 testifying about the value of a punitive damage claim 10 generally authoritative on all issues with regard to 10 but there are -- there are certainly a lot of folks out 11 punitive damages. 11 there who have training and experience that formulate 12 Q. Is there any treatises that you would accept 12 opinions with regard to the punitive damage value of 13 as authoritative on some of the issues with respect to 13 cases in the ordinary course of their litigation 14 punitive damages? 14 practice. 15 A. Well, that would depend upon a particular 15 Q. But you have never heard -- how long, sir, 16 issue and my review of the way in which the treatise 16 have you been litigating cases? 17 treats that issue. So, I can't answer that broadly. 17 A. Since 1972. 18 Q. Are there any issues in this matter that you 18 Q. Since 1972, have you ever heard of another 19 intend to opine upon that you believe a certain treatise 19 person offering an opinion as to the value of a punitive 20 would be authoritative? 20 damages claim? 21 A. I have not expressly reviewed any treatise for 21 A. Many times, yes. 22 purposes of formulating my opinions in this matter and 22 Q. And -- 23 ascertaining whether those opinions conform with that 23 A. As a routine matter. 24 treatise so I can't answer that question. 24 Q. Testifying in court? 25 What I will tell you is that I have assembled 25 A. No, sir. No. That wasn't the question. 6 (Pages 21 to 24) OUELLETTE & MA LDINCOURT REPORTERS, INC. EFTA01130146 Page :' Page 27 1 That's not how I understood your question. I punitive damage claims that you or your client was 2 Q. I'm sorry. Then let me repeat or rephrase my 2 asserting? 3 question. 3 A. Only the circumstances that I just described, 4 Since 1972, have you ever heard or seen 4 and -- well, that's the best answer I can give at this 5 someone testify as an expert as to the value of a 5 time. 6 punitive damages claim? 6 Q. Other than the research and studies that you 7 A. You know, as you are asking that question, I 7 have previously described, have you performed any other 8 am thinking back to one occasion where I believe that, 8 type of research during your career that supports your 9 in fact, did occur in a case that I personally 9 purported expertise? 10 litigated. 10 A. The process of evaluating punitive damages 11 Q. Can you tell me about that case and the II claims is a process that goes on on a very frequent 12 circumstances of that testimony? 12 basis in the course of my practice. So, to that extent, 13 A. Yes. The case was a claim against Bankers 13 the answer to your question is certainly yes. 14 Multiple Line Insurance Company. The full style of the 14 Q. So you are saying you evaluate the punitive IS case was Farish versus Bankers Multiple Line. It was a 15 claims of your own cases? 16 tortious interference claim against John D. MacArthur 16 A. And sometimes -- well, often the cases of 17 and Bankers Multiple, which was a liability insurer that 17 others in my law firm and occasionally the cases of 18 was owned by MacArthur. 18 lawyers outside my law firm who seek my opinion or my 19 Joseph Parish was a trial lawyer who had been 19 firm's opinions with regard to the value of their cases. 20 hired by the widow of a young man who was walking down 20 Q. So, other than evaluating the claims that you 21 the street when a truck came by carrying concrete 21 just described, your own cases, others in the firm, 22 culverts. The truckload was not properly secured. A 22 other lawyers and so forth, have you done any other 23 culvert fell off the truck and crushed him as he was 23 research during your career that supports your purported 24 walking down the street. The truck was owned by a 24 expertise? 25 MacArthur Company and insured by Bankers Multiple Line 25 A. The study that I have described to you Page 26 Page 28 I Insurance Company. 1 earlier. 2 The widow was an employee of John D. MacArthur 2 Q. Other than what we have talked about here 3 at a hotel that MacArthur also owned called The 3 today? 4 Colonnades, and when MacArthur found out about the 4 A. I can't think of anything else that would 5 widow's claim against his company and his insurance 5 directly be relevant. Something else may come to mind. 6 company, he befriended the widow and convinced her to 6 If it does, I will let you know. That's All can think 7 terminate the services of MacArthur and to retain the 7 of right now. 8 services of a young woman who had virtually no 8 Q. Okay. You referred to the process of 9 litigation experience whatsoever who proceeded then to 9 evaluating a punitive damages claim. 10 settle the widow's claim very cheaply. 10 A. Yes, sir. 11 I represented Mr. Farish in a tortious II Q. Is that a process that you developed or was 12 interference claim, and one of the issues was the value 12 that developed by some other punitive damages expert? 13 of the underlying case. And there was expert witness 13 A. It is a process that has developed over the 14 testimony that was given in that case about the value of 14 course of my personal practice. That is, I haven't IS the claim absent the tortious interference. 15 taken somebody else's evaluative process and adopted 16 I am blanking on the name of the trial lawyer 16 that as my own. 17 or trial lawyers who gave that testimony. That was 17 Q. And is your process an accepted process in the 18 probably 25 years ago. I8 legal industry for evaluating the value of punitive 19 Q. So you did not present such testimony? 19 damages claims? 20 A. I'm surprised myself by remembering how much I 20 A. I think the answer to that question is yes. 21 remembered about that. 21 Q. Okay. And how do you know that it's -- would 22 Q. You did not present such testimony? 22 you say it's widely accepted in the legal industry as a 23 A. I did not present the testimony, no. 23 process for evaluating the value of punitive damages 24 Q. In all your years of trying cases, have you 24 claims? 25 ever retained an expert to opine on the value of 25 A. Yes. 7 (Pages 25 to 28) OUELLETTE & MA LDINCOURT REPORTERS, INC. EFTA01130147 Page 29 1 Page 31 1 Q. Has your method been published? 1 punitive damages claims in the underlying cases? 2 A. It has been. 2 A. Except for my own materials, which obviously 3 Q. Where has this been published? 3 include my name, I am not aware and would be very 4 A. It has been published in court opinions of 4 surprised to find any case or treatise or other 5 which I am aware. It has been published in legal 5 publication that attributes the identification of 6 treatises of which I am aware, and it has been published 6 aggravating and mitigating circumstances to Jack 7 in the CLE materials that I, myself, have written in 7 Scarola. This is not something that I authored, except 8 connection with lectures in this area that I have given. 8 to the extent that it's incorporated in CLE outlines. 9 Q. Okay. So, there is a court opinion out there 9 It is a recognition of the appropriateness of 10 that discusses your internal process for evaluating the 10 specifically identified factors in both cases and 11 value of punitive damages claims? 11 treatises to asses the appropriate amount of punitive 12 A. There is a court opinion out there that 12 damages in order to serve the dual function of 13 addresses the issue of how punitive damages should be 13 punishment and deterrence. 14 evaluated, yes. 14 Q. Punishment and deterrence, are those the IS Q. And let's make sure we are talking, using the 15 purposes of punitive damages under Florida law? 16 same words here. How a punitive damages claim should 16 A. Yes, sir. 17 evaluated versus how you -- how one values a purported 17 Q. Are punitive damages under Florida law meant 18 punitive damages claim. Are we talking about the same 18 to compensate a plaintiff? 19 thing? 19 A. They are not, except to a limited extent that 20 A. That's a distinction that I don't understand. 20 is recognized in the case law, and that is that there is 21 Maybe I can be helpful to you here so we don't spend a 21 a recognition in the case law that the plaintiff who 22 lot of time mis-communicating. 22 undertakes the prosecution of a punitive damage claim is 23 Q. That would be great. 23 serving a function in effect as a public prosecutor to 24 A. There are authorities that identify 24 preserve the integrity of the judicial system and to ?5 aggravating and mitigating circumstances that are 25 preserve appropriate standards within, in this context, Page 30 Page 32 I appropriately taken into consideration in assessing the 1 the business community. So, to motivate individuals to 2 amount of punitive damages necessary to serve the dual 2 undertake the difficult task of prosecuting a punitive 3 purpose of punitive damages recognized in the State of 3 damage claim, one of the factors that is taken into 4 Florida, punishment and deterrence. The case that most 4 consideration are the costs involved in prosecuting that 5 specifically addresses those factors is the 5 claim. 6 Johns-Manville case, which is included in the materials 6 Q. And what case --- 7 that have been provided to you. 7 A. So punitive damages help to compensate the 8 Q. Just so we are clear, when we are talking 8 plaintiff for undertaking that broader societal purpose. 9 about the publication of your process to evaluate 9 Q. To recoup the costs incurred in protecting 10 punitive damages, do these cases say this is how Jack 10 society's or the state's interest in pursuing punitive 11 Scarola does it and we think that that's the proper way 11 damages? 12 to do it, or do these cases discuss different factors 12 A. Yes, sir. 13 that a court should consider in evaluating punitive 13 Q. And what case do you believe best describes 14 damages and you have adopted parts of that in your 14 that function? 15 process? 15 A. Well, I know it's described in more than one 16 A. There is no published opinion that attributes 16 case, but the one that comes to mind immediately is 17 this process to me. There are published opinions that 17 Johns-Manville. 18 identify appropriate factors to be taken into 18 Q. What is your process for placing a value on 19 consideration by both judges and juries in determining 19 potential punitive damages claims? 20 the appropriate amount of punitive damages necessary to 20 A. It is to review the evidence in the light of 21 serve the dual purpose of punishment and deterrence. 21 recognized aggravating and mitigating circumstances, to 22 Q. Are there any publications, other than the 22 assess the way in which those factors impact upon the 23 court opinions, that discuss Jack Scarola's process, 23 intended purpose of punitive damages to punish the 24 your individual process that you have utilized in this 24 wrongdoer and to deter others similarly situated from 25 matter to evaluate or to place a value on the potential 25 engaging in the same kind of wrongdoing, to review any 8 (Pages 29 to 32) OUELLETTE & MA LDINCOURT REPORTERS, INC. EFTA01130148 Page 33 Page 35 1 statutory limitations that might apply and to consider Q. And arc you accepting all of the 2 any constitutional limitations that might apply in 2 representations from Mr. Scherer and Mr. Moskowitz as 3 arriving at an opinion as to what 1believe the range of 3 true with respect to the underlying facts? 4 punitive damage value of a case is likely to be. 4 A. They have been very limited, but I have 5 I would also take into consideration the 5 assumed that what they have told me is true, yes. 6 extent to which the same or similar circumstances have 6 Q. And what have they told you? 7 already been assessed by an independent finder of fact. 7 A. I probably need to look at my notes to 8 Q. Let me make sure I got all of this down. It 8 identify for you, if I am able, specific representations 9 seems like there is several different factors. First, 9 that have been made by them. 10 the evidence with respect to the claims at issue. You 10 Q. To the extent --- 11 would review that. You would review any statutory II A. Most of what we talked about are matters that 12 limitations. 12 were separately identified in the materials that I 13 A. May I interrupt for just a moment? 13 reviewed and I am not sure I can separate out the verbal 14 Q. Yes, sir. 14 representations that they made to me from the materials IS A. Because the evidence I am reviewing is 15 themselves, except to the very limited extent that they 16 particularly that evidence that relates to the 16 spoke about deposition testimony that was very recently 17 aggravating and mitigating circumstances with respect to 17 taken that I have not reviewed transcripts of. 18 punitive damages. I would not necessarily find it 18 Q. To the extent you arc relying on any 19 necessary to review all of the evidence with respect to 19 representations from Mr. Scherer, Mr. Moskowitz on with 20 a given matter and have not undertaken to attempt to 20 respect to the underlying facts, would those 21 review all of the evidence with regard to this case. 21 representations be reflected in your notes that you have 22 Q. Would you review any of the evidence to 22 provided here today? 23 ascertain the viability of the underlying claims? 23 A. I believe that they would be. I can also tell 24 A. Certainly to some extent, yes, and I need in 24 you that there wasn't anything that I remember as I sit 25 circumstances such as this to make some assumptions with 25 here right now that altered the opinion that I had Page 34 Page 36 1 regard to the viability of the underlying case and have 1 formed before those depositions were taken. That is, 2 done so here. Obviously, if this is were my own case, I 2 the information simply corroborated and reinforced those 3 would be assessing all of the evidence with regard to 3 opinions. It did not change them. 4 the viability of the underlying case. 4 Q. You said there was some information that was 5 Q. You said you had made certain assumptions in 5 relayed to you by Mr. Scherer and Mr. Moskowitz 6 this matter concerning the viability of the underlying 6 regarding recent depositions that have been taken. What 7 claims. Correct? 7 factual information do you recall from those 8 A. That is correct. 8 conversations? 9 Q. What assumptions have you made? 9 A. I remember discussions about the testimony of 10 A. That the underlying claims are accurately 10 a corporate representative and disclosures concerning II described in the complaints that I have reviewed, that II information that has been relayed to TD Bank's board of 12 they are accurately described in court orders that I 12 directors confirming that the board has been 13 have reviewed, that they are accurately described in 13 periodically and routinely updated with respect to what 14 pleadings and memoranda that I have reviewed, and to a 14 is going on in connection with this litigation. There 15 limited extent that they have been accurately described 15 was some discussion about the apparent absence of any 16 in verbal communications that I have had with both 16 significant change in policy practice or procedure on 17 Mr. Moskowitz and Mr. Scherer. 17 the part of TD Bank that was identified as having been 18 Q. So, for your analysis of the viability of the IS intended to address the issues that give rise to 19 underlying claims in this matter, are you accepting all 19 TD Bank's liability in these matters, some discussion 20 of plaintiffs' allegations to be true? 20 with regard to the absence of disciplinary action tied 21 A. Yes. I have accepted the allegations in the 21 to the misconduct that occurred in connection with these 22 complaint to be true to the extent that any particular 22 matters. That's what I am able to recall off the top of 23 allegation was or is shown not to be accurate that may 23 my head. 24 or may not affect my opinion, and that's something that 24 MR. MOSKOWITZ: Whenever you think appropriate 25 I would need to view in the context of the overall case. 25 for a five-minute break, we have been going for 9 (Pages 33 to 36) OUELLETTE & MA LDINCOURT REPORTERS, INC. EFTA01130149 Page 37 Page 39 1 about an hour. But whenever you think -- you are A. I have never been invited to a TD board bank 2 done --- 2 meeting. I don't expect I ever will be. If there were 3 MR. HUTCHINSON: Let me just followup on a 3 any chance of that before, it's gone now. And there was 4 couple of those answers, then it would be probably 4 probably no chance of that before either. 5 a good place stop. 5 MR. HUTCHINSON: Adam, this is as good a time 6 MR. MOSKOWITZ: Sum. 6 as any to take a break. 7 BY MR. HUTCHINSON: 7 THE VIDEOGRAPHER: We arc off the record. 8 Q. You discussed or you mentioned discussion 8 It's 11:05. 9 about reports being given to the TD board relating to 9 (A recess was taken from 11:05 a.m. until 10 this litigation. What timeframe is your understanding 10 11:15 a.m.) 11 that these reports to the board were made? 11 THE VIDEOGRAPHER: It's 11:15 a.m. We are 12 A. I don't have a specific recollection of the 12 back on the video record. 13 timeframe when the reports began, but my impression 13 BY MR. HUTCHINSON: 14 right now is that they have been going on for some 14 Q. Mr. Scarola, I believe you previously 15 significant period of time, which was not a surprise to 15 testified that in forming your opinions in this matter 16 me in any respect. I would have been very surprised had 16 you accepted the allegations of the -- the plaintiff's 17 that not been occurring given the magnitude of these 17 allegations in the complaint as true. Correct? 18 claims, and I have assumed that the board was being kept 18 A. Yes, sir, that's correct. 19 informed with regard to this litigation over an extended 19 Q. And you accepted the representations by 20 period of time. 20 plaintiffs counsel as true. Correct? 21 Q. And, again, just so we are clear here, your 21 A. That is also correct. 22 understanding is reports concerning the litigation, this 22 Q. Did you do any research to verify the veracity 23 litigation, the underlying litigation. Correct? 23 of those allegations and representations? 24 A. Well, when I am referring to this litigation, 24 A. Well, I certainly took other materials into 25 I am referring broadly to TO Bank's implication in the 25 consideration that corroborated those representations. Page 38 Page 40 1 Rothstein Ponzi scheme. I Those include court orders and related jury verdicts. 2 Q. TD Bank's involvement in the numerous 2 Q. Okay. What court orders are you referring to? 3 litigation matters that are pending, is that what you 3 A. I remember in particular an order from Judge 4 am referring to? 4 Good. 5 A. Well, it's my understanding that there are 5 Q. What did that order pertain to? 6 some litigation matters relating to TD Bank that TD Bank 6 A. It pertained to significant litigation 7 has settled. 7 misconduct. 8 Q. Correct. 8 MR. MOSKOWITZ: Judge Cooke, you mean? 9 A. So, I am not only talking about pending 9 A. Yes, thank you. Judge Cooke, sorry. That's 10 litigation. I am talking about TD Bank's overall 10 what happens when you take all my materials away from me 11 involvement in the Rothstein Ponzi. 1I and test my 66-year old memory. 12 Q. But you am also -- you am not talking about 12 BY MR. HUTCHINSON: 13 any -- it's not your understanding that the reports to 13 Q. If, at any time, you need your materials, sir, 14 the board prior to the implosion of the Ponzi scheme. 14 just ask and you are welcome to have them back. 15 Correct? 15 A. Sure. Give them all back to me. Yes, if you 16 A. I don't have any reason to believe that there 16 are offering them to me, I'd rather have them. 17 were specific reports regarding the Ponzi scheme at any 17 MR. HUTCHINSON: Just give him back the 18 time before the implosion of the Ponzi scheme. There is 18 originals. We've got the copies. 19 certainly reason to believe that the magnitude of the 19 THE WITNESS: We can proceed and when you get 20 transactions that were being conducted locally in South 20 them assembled, just send them all this way. 21 Florida may have reached the board's attention, but I 21 BY MR. HUTCHINSON: 22 don't recall seeing any direct evidence that would 22 Q. So your recollection is an order from Judge 23 either confirm or deny that basic assumption. 23 Cooke? 24 Q. And you don't have any personal knowledge on 24 A. Yes. 25 that issue. Correct? 25 Q. What's your recollection of Judge Cooke's 10 (Pages 37 to 40) OUELLETTE & MA LDINCOURT REPORTERS, INC. EFTA01130150 Page 41 Page 43 1 order? 1 allegations of discovery misconduct in those cases 2 A. That it dealt with significant litigation 2 themselves at this point, would you agree with that? 3 misconduct. 3 A. I would have no reason to doubt Mr. Scherer's 4 Q. In what matter? 4 testimony in that regard. I don't know that it's 5 A. On the part of TD Bank. 5 particularly significant in the overall context of this 6 Q. In what matter? 6 matter, but I wouldn't question his accuracy. 7 A. I don't remember the name of the case offhand. 7 Q. Why would you say that it's not particularly 8 Q. Was it in the Coquina matter? 8 significant in this matter? 9 A. Yes. 9 A. Because the magnitude of the litigation 10 Q. And what's your understanding of the status of 10 misconduct that occurred in related matters and the 11 the Coquina matter? 11 extent to which TD Bank has engaged in efforts to cover 12 A. I believe that it is on appeal. 12 up its misconduct, whether those efforts occurred in 13 Q. Any other court orders that you remember? 13 this particular case or whether those efforts took place 14 A. I think I have reviewed something from Judge 14 in the related litigation really wouldn't make very much 15 Streitfeld. 15 difference in terms of assessing the aggravating impact 16 Q. What do you recall about what you reviewed 16 that those efforts would have in evaluating a punitive 17 from Judge Streitfeld? 17 damage claim. 18 A. I don't remember right now, but it's in my 18 I will volunteer a little bit more that may be 19 materials. 19 helpful to you. It is my opinion that evidence with 20 MR. MOSKOWITZ: Do you want to hand him the 20 regard to that litigation misconduct would be relevant, 21 materials? I thought we had agreed we would do 21 admissible and highly probative in the second phase of a 22 that. 22 punitive damage claim against TD Bank. 23 A. All of the case related materials that I 23 Q. And what do you base that opinion on? 24 reviewed are in this bankers box. Most of it assembled 24 A. My understanding of Florida law. 25 into large binders so that's what I have reviewed. 25 Q. And what is that Florida law that you are Page 42 Page 44 1 BY MR. HUTCHINSON: I referring to? 2 Q. Okay. But you don't have any independent 2 A. Well, again, the best synopsis of that law as 3 recollection of what you reviewed from Judge Streitfeld? 3 it relates to this case is Johns-Manville. 4 A. If this is a memory test, I just failed. I 4 Q. What is does Johns-Manville say on that point? 5 just know that Judge Streitfeld has been involved in 5 A. That litigation misconduct efforts to cover up 6 these matters. I have read references related to Judge 6 the ratification of misconduct are highly probative 7 Streitfeld's concern about the manner in which the 7 aggravating factors. The wrongdoer's response to the 8 litigation has been conducted by TD Bank. I remember 8 wrongdoing is extremely significant, which obviously 9 either reading directly or having information provided 9 makes good common sense as well to anyone who has ever 10 to me indirectly about Judge Streitfeld's reaction to 10 been a parent, or, for that matter, has had any 11 learning about substantial transactions that occurred in 11 involvement in the criminal law. 12 Rothstein's IOTA account and the significance that Judge 12 Q. Okay. Well, we've got a lot to cover here so 13 Streitfeld attributed to TD Bank's failure to 13 let's go back and start from the beginning, sir. 14 appropriately address those IOTA transactions. 14 What is your -- in which matters do you 15 Q. Anything else that you recall? 15 believe this alleged litigation misconduct occurred? 16 A. Not off the top of my head, no. 16 A. It certainly occurred in Coquina and I am -- 17 Q. Are you aware of any alleged underlying 17 as I sit here right now, I am not sure which other 18 discovery misconduct in the Beverly or Marlin actions 18 cases. 19 themselves? 19 Q. So you are offering an opinion on this and you 20 A. I don't remember anything specifically. 20 don't even know which matters the conduct occurred in? 21 Q. Did you review Mr. Scherer's deposition at 21 A. Well, it occurred in the matter of 22 that point? 22 prosecutions against TD Bank for TD Bank's involvement 23 A. I did not, no. That was only recently taken 23 in the Rothstein Ponzi scheme. 24 and I have not reviewed that transcript. 24 Q. So, let's go to the Coquina matter. Has the 25 Q. If Mr. Scherer testified that there are no 25 alleged misconduct in that matter been addressed by the II (Pages 41 to 44) OUELLETTE & MA LDINCOURT REPORTERS, INC. EFTA01130151 Page 45 Page 47 I Court? 1 A. I am not sure which transcript you are 2 A. It has been addressed by the Court in Judge 2 referencing. What I reviewed is included in the 3 Cooke's opinion, yes. 3 materials in this box. So, if that transcript is in the 4 Q. And did Judge Cooke sanction TD as a result of 4 box, I have at least looked at it to some extent. If 5 the alleged misconduct? 5 it's not in the box, I haven't seen it yet. 6 A. Yes. 6 Q. Do you recall looking at a transcript where 7 Q. But it's your opinion that TD should be 7 Judge Streitfeld considered the motion to strike the 8 punished or potentially punished again for the alleged 8 discovery allegations from the underlying Beverly and 9 misconduct? 9 Marlin claims? 10 A. It is my opinion that the reaction of TD Bank 10 A. I don't have a specific recollection of that, 11 to the allegations of wrongdoing against it is a highly 11 no. 12 relevant and material factor to be taken into 12 Q. Would that be important to you in formulating 13 consideration in assessing the appropriate amount of 13 your opinions in this matter? 14 punitive damages in order to serve the dual purpose of 14 A. Well, it depends on what the issue was that 15 punishment and deterrence, and whether that misconduct 15 was presented before the Court and the way in which the 16 occurred in this particular prosecution or in an earlier 16 Court resolved those issues, if they were resolved. 17 prosecution where the issues were being addressed, where 17 Q. I am going to show you what I am marking as 18 the same issues were being addressed, is not of any 18 Exhibit 3, which is the transcript of the hearing before 19 significance to me. 19 Judge Streitfeld on May 17th, 2013? 20 Q. Do you know whether it's of significance to 20 MR. MOSKOWITZ: I'm sorry, Wen, is this in 21 Judge Streitfeld? 21 some type of order? 22 A. I don't know whether it's of significance to 22 Mine starts on Page 100 and then it goes 23 Judge Streitfeld, but I would be surprised if it were of 23 backwards and then forward and then it skips 24 significance to Judge Streitfeld in his assessment of 24 around. 25 the appropriate amount of punitive damages because I 25 MR. HUTCHINSON: Sorry. You just must have a Page 46 Page 48 1 have a great deal of respect for Judge Streitfeld's 1 bad copy. 2 legal acumen and I am sure that he would recognize the 2 MR. MOSKOWITZ: That's okay. 3 relevance and materiality of that misconduct in a second 3 (Exhibit No. 3, Transcript of May 17, 2013 4 phase punitive damage proceeding. 4 Hearing, was marked for identification.) 5 Q. Have you reviewed the transcript from Judge 5 BY MR. HUTCHINSON: 6 Streitfeld discussing this issue? 6 Q. To your knowledge, sir, have you reviewed 7 MR. MOSKOWITZ: Objection. Mischaracterizes 7 Exhibit 3 before? 8 what actually occurred before Judge Streitfeld. 8 A. I don't remember. 9 A. I am not aware that Judge Streitfeld has 9 MR. MOSKOWITZ: I'd guess I have an objection, 10 addressed the issue that I am addressing and that is 10 Wen. If you want him to -- he says he hasn't read 11 whether evidence of TD Bank's coverup would be 11 it, so if you want him to read the whole thing, 12 admissible in a second stage punitive damages proceeding 12 this is on a motion to strike certain allegations 13 in this case. 13 in the complaint. It has nothing to do with 14 BY MR. HUTCHINSON: 14 punitive damages or Phase 2, but if you are going IS Q. Are you aware that TD Bank filed motions in 15 to ask specific questions about certain lines, I 16 the Beverly and Marlin matter to strike the allegations 16 kind of have to ask you to let him read most of the 17 of alleged discovery misconduct from other matters? 17 transcript so he can understand the context, 18 MR. MOSKOWITZ: Objection. Mischaracterizes 18 because this is not about Phase 2 discovery. This 19 again what was actually filed. 19 was your motion to strike certain sentences from 20 A. I have some recollection of a related issue 20 the complaint at this time. 21 having been raised but not reached as a consequence of 21 But, please, proceed and we will take it 22 the stay imposed by the bankruptcy court. So, that's my 22 question by question. 23 understanding. 23 BY MR. HUTCHINSON: 24 BY MR. HUTCHINSON: 24 Q. If you will turn to Page 48, please. 25 Q. Have you reviewed the transcript, sir? 25 A. I am there. 12 (Pages 45 to 48) OUELLETTE & MA LDINCOURT REPORTERS, INC. EFTA01130152 Page 49 Page 51 1 Q. Can you read the part where it starts: 1 A. What I am referring to is that these issues -- 2 "THE COURT: Well, that's problematic for a 2 these issues are dealt with by appropriate instructions 3 number of reasons"? 3 to the jury and that doesn't mean exclusion of the 4 MR. MOSKOWITZ: And then, again, Mr. Scarola, 4 evidence. It means informing the jury as to the manner 5 I'd ask you, I guess, to read, you know, I don't 5 in which the evidence is to be used by it. 6 know how we are going to do this, but you can pick 6 Q. And how is the jury to use this evidence? 7 out paragraph. This was a long hearing. 7 A. Which evidence are you talking about? 8 If you need to, you can also read, you know, 8 Q. The evidence that you have taken as true from 9 much of the other part of this transcript. 9 the representations of plaintiffs counsel. 10 THE WITNESS: How far would you like me to 10 A. You mean the evidence of an ongoing course of 11 continue? 11 attempts to cover up wrongdoing and the refusal to 12 BY MR. HUTCHINSON: 12 acknowledge any wrongdoing and the ratification of 13 Q. You can continue to the top of 49. 13 wrongdoing? 14 MR. MOSKOWITZ: And I would ask you to read a 14 Q. Is that what they have represented to you? IS least to Page 52 where the Court rules. 15 A. Is that what who has represented to me? 16 BY MR. HUTCHINSON: 16 Q. Plaintiffs' counsel. Is that the evidence 17 Q. Yes, the Court issues an order on 52 striking 17 that you are referring to? 18 those paragraphs? 18 A. That's what the record materials that I have 19 A. So I should continue to read all of Page 49? 19 reviewed indicates that there has been a coverup, that 20 Q. I don't think you need to, but you can read 20 there has been a refusal to acknowledge any wrongdoing 21 whatever you think you need to, but if you go to 52 --- 21 with respect to that coverup, and that there has been an 22 A. Well, I don't know the purpose for which you 22 effective ratification of the wrongdoing as a 23 are asking me to read so I don't know. I can't make a 23 consequence of a persistent refusal to acknowledge any 24 judgment about what I need to read, so why don't you 24 misconduct, to punish the misconduct or to address the 25 tell me what you'd like me to read? 25 misconduct through appropriate changes to policy, Page 50 Page 52 Q. Well, wouldn't you agree that on Page 48 of I practice and procedure. 2 this transcript, Judge Streitfeld says that you arc 2 Q. Okay. And we will get into that in minute 3 suggesting that another case a jury can give punishment 3 detail and your total understanding of the alleged 4 again for the same conduct, I have a real problem with 4 misconduct. Let's go back to the question that we were 5 that. Do you see that? 5 addressing. 6 A. So do I. 6 A. I thought that that's what I was doing. I'm 7 Q. Isn't that what you arc suggesting? 7 sorry if I misunderstood your question. 8 A. No. No, I am not suggesting that. I am 8 Q. You were saying how Judge Streitfeld handles 9 suggesting that it is relevant and material information 9 similar issues in the tobacco cases. 10 that would be admissible in a second stage proceeding. 10 A. Yes, sir. 11 I think that it would be necessary through appropriate 11 Q. And how does he handle such issues, or did he? 12 jury instructions to assure that the jury was not 12 A. Evidence with regard to the magnitude of the 13 imposing punishment for misconduct other than the 13 wrong is admitted in tobacco cases, including the number 14 misconduct that was involved with these particular 14 of other victims of the tobacco industry's longstanding IS plaintiffs. 15 pattern of wrongdoing. 16 There is a very good analogy that Judge 16 Q. But you are saying --- 17 Streitfeld has dealt with repeatedly in the past and 17 A. That evidence gets admitted. 18 that is in the context of tobacco cases. And I know how 18 Q. But the jury -- you are saying the jury should 19 Judge Streitfeld has dealt with that before as a 19 not punish based on that evidence. Correct? 20 consequence of my personal experience in the prosecution 20 A. What I am saying is that there is a recognized 21 of tobacco cases, so I don't have any reason to believe 21 constitutional limitation on imposing punishment against 22 that his rulings in this case would be inconsistent with 22 a defendant in a case being prosecuted by one plaintiff 23 what he has done previously. 23 for injury that has occurred to other plaintiffs. That 24 Q. And what are you referring to as to what he 24 doesn't mean that the jury is not informed -- God bless 25 has done in the tobacco? 25 you -- is not informed about those other injuries. It 13 (Pages 49 to 52) OUELLETTE & MA LDINCOURT REPORTERS, INC. EFTA01130153 Page 53 Page 55 1 is essential for the jury to know about the magnitude of I Could you try to ask it of me in a different 2 the wrong and the extent, nature and length of coverup 2 way. 3 activities. 3 Q. I am going to ask you to answer the question I 4 And to draw an analogy for you, when you are 4 asked. What wrongdoing has occurred in the Beverly and 5 prosecuting a criminal case with the exception of the 5 Marlin matters post-blowup? 6 Williams' rule evidence, you are only looking at one 6 MR. MOSKOWITZ: Objection. I think it was 7 crime during the proceedings before the jury that 7 already asked and answered. 8 address the issue of guilt or innocence. But when it 8 A. Well, we dealt with that issue before and you 9 comes to sentencing, there is a presentence 9 have asked me to assume that Mr. Scherer has 10 investigation that's conducted and you take a look at 10 acknowledged that there was no litigation misconduct II the entire history of wrongdoing on the part of the 11 directly in the Beverly and Marlin matters and I have 12 criminal defendant in order to determine what an 12 accepted that representation. So, if the question is 13 appropriate punishment is. Has this individual shown 13 was there any litigation misconduct in the Beverly and 14 remorse or hasn't the individual shown remorse? Is 14 Marlin matters, there is no reason for me to change the 15 there an admission of wrongdoing? Was there an effort 15 answer that I gave you previously. I accept the 16 to cover it up, and those same kinds of factors are 16 accuracy of Mr. Scherer's testimony. 17 appropriately taken into consideration based upon 17 BY MR. HUTCHINSON: 18 relatively clear Florida precedent in determining what 18 Q. Are there any cases that you can point to that 19 an appropriate amount of punitive damages should be to 19 support your opinion relating to the jury's 20 serve the purpose of punishment and deterrence. 20 consideration, the Beverly and Marlin jury's 21 Q. What Florida precedent supports your opinion 21 consideration of the litigation misconduct in the other 22 that the jury should be able to consider alleged 22 matters? 23 discovery conduct in another case when that plaintiff 23 A. Johns-Manville. I am sure there are others 24 was not involved in that case? 24 but that's the one that I deal with most frequently and 25 A. Let me make sure that you understand what my 25 have found to be most persuasive. Page 54 Page 56 1 position is in that regard. It is that the jury should 1 Q. Any others that support your position? 2 clearly be permitted to consider the course of conduct 2 A. As I said, I am sure there are but they are 3 relating to the pattern of wrongdoing in the case being 3 not cases or citations that I have memorized. 4 prosecuted before the jury, even if that pattern of 4 Q. If you will turn to Page 52 of Exhibit 3 -- 5 wrongdoing involves injuries to other plaintiffs. 5 A. I am there. 6 That's my position. 6 Q. -- do you see where the Court states, "But 7 Q. What is the pattern of wrongdoing in the 7 right now those allegations don't belong in this 8 Beverly and Marlin actions that you are referring to? 8 pleading"? 9 A. TD Bank's participation in the Rothstein Ponzi 9 A. Can you give me a line number, please? 10 scheme. 10 Q. Starting at line ten, "The motion to strike 11 Q. Okay. So, you are talking pre-blowup, pre- 11 paragraphs 18, 19, 180 to 185 is granted." 12 blowup of the Ponzi scheme? 12 MR. MOSKOWITZ: Objection, the document speaks 13 A. And -- and post-blowup of the Ponzi scheme as 13 for itself. And, again, it's taking it out of 14 well. 14 context because on Page 47 he says, "We haven't yet 15 Q. What wrongdoing has occurred in the Beverly 15 reached punitive damages." So you are showing him 16 and Marlin matters post-blowup? 16 something that is not what the Court actually 17 A. It is my position that the efforts to cover up 17 ruled. 18 involvement in the Rothstein Ponzi scheme are relevant 18 BY MR. HUTCHINSON: 19 and material to all of the victims of the Rothstein 19 Q. Were you aware that the Court struck the 20 Ponzi scheme. 20 discovery allegations from those complaints? 21 Q. Can we go back and can you answer my question, 21 A. The discovery misconduct allegations from the 22 sir? 22 complaint. 23 A. I thought that I had and if I didn't that's as 23 Q. Correct. 24 a result of my not understanding your question. I 24 A. Yes, I was aware of that. I was also aware 25 apologize. 25 that the punitive damage motion, the motion for leave to 14 (Pages 53 to 56) OUELLETTE & MA LDINCOURT REPORTERS, INC. EFTA01130154 Page 57 Page 59 1 amend to assert a claim for punitive damages had not yet I entirety in the first phase of the proceedings. I think 2 been reached by the Court. 2 it very unlikely that evidence with regard to the 3 Q. And still has not. Correct? 3 litigation misconduct, including litigation misconduct 4 A. That's my understanding, yes. 4 to cover up the very same wrongdoing that led to the 5 Q. And it's your understanding that there are no 5 injury to these plaintiffs would be excluded in a second 6 punitive damages claims currently in Beverly or Marlin? 6 phase proceeding, very unlikely that it would be 7 A. It is my understanding that procedurally that 7 excluded. 8 issue has not yet been reached as a consequence of the 8 Q. So your opinion is that it would come in when 9 imposition of the bankruptcy stay. That is not a factor 9 determining the amount of punitive damages, but would 10 that I consider to be significant because of the very 10 not come in in the first phase when determining whether 11 obvious conclusion that once that issue is reached, the 11 punitive damages were warranted? 12 motion for leave to assert a claim for punitive damages 12 A. That's not quite what I said. What I said was 13 will be granted. 13 that there may very well be some exclusion of litigation 14 Q. And where did you get the understanding that 14 misconduct relating to other cases in the first phase of IS the bankruptcy stay somehow affected the motion practice 15 the trial. It is highly unlikely that any of that 16 with respect to the pleadings? 16 litigation misconduct evidence would be excluded in a 17 A. It's my understanding that the bankruptcy stay 17 second phase. 18 precluded in general the ongoing prosecution of this 18 I can -- I can envision the admission of at 19 claim. 19 least some of the evidence with regard to litigation 20 Q. Where did you get that understanding from? 20 misconduct in Coquina coming in in Beverly and Marlin in 21 A. I don't recall. 21 the first phase. 22 Q. Are you aware that we have continued to argue 22 Q. On what basis? 23 motions on the pleadings and Judge Streitfeld indicated 23 A. On the basis that it is relevant to the issue 24 that he was proceeding with anything relating to the 24 of whether punitive damages should be assessed. 25 pleadings, that it was simply discovery that was stayed? 25 Q. And why is it relevant? Page 58 Page 60 1 A. I don't know that I was specifically aware of 1 A. Because of all of those factors that are 2 that, but the stay of discovery would certainly have an 2 identified in Johns-Manville having been addressed and 3 impact on proceeding with a motion for leave to amend to 3 approved in general terms in -- by the Florida Supreme 4 assert a claim for punitive damages. So, I don't know 4 Court as appropriate to consider in determining whether 5 that that's a distinction that is of much significance 5 punitive damages ought to be assessed. 6 tome. 6 Q. And, again, your basis is primarily 7 Q. Okay. Let's discuss how your theory of this 7 Johns-Manville for this. Correct? 8 discovery misconduct is relevant to Beverly and Marlin 8 A. Well, when you say my basis is primarily 9 actions and how it comes into evidence. You are saying 9 Johns-Manville, that is not accurate. What I have tried 10 it comes into evidence during a separate punitive phase. 10 to convey to you is that that's the most convenient and 11 Is that correct? 11 clear summary of relevant aggravating and mitigating 12 A. Current State of Florida law requires upon 12 circumstances. So, it's the one that I turn to most 13 motion of either party that the proceedings be 13 frequently because it provides that clear and convenient 14 bifurcated, that the issues of compensatory liability 14 summary. 15 and the amount of compensatory damages together with 15 Q. Let's talk about how this would work. So, 16 entitlement to punitive damages are tried in the first 16 let's assume the Beverly case is tried first. 17 phase. 17 A. Okay. 18 Assuming the jury determines that it is 18 Q. It was filed first. Correct? 19 appropriate to consider the issue of punitive damages, 19 A. I will accept your representation that it was. 20 there is a second phase where the amount of punitive 20 I don't remember. 21 damages is addressed and evidence not otherwise 21 Q. So, it was -- Beverly was filed first. Assume 22 admissible in the first phase is admissible in the 22 it's tried first. You are saying during the first phase 23 second phase. 23 of Beverly trial there may be some evidence that conies 24 I would think it unlikely that evidence with 24 in with respect to the litigation misconduct in Coquina 25 regard to the litigation misconduct would come in in its 25 and you believe there would certainly be evidence that 5 (Pages 57 to 60) OUELLETTE & MA LD1NCOURT REPORTERS, INC. EFTA01130155 Page 6I Page 63 I would come in with respect to that conduct in a punitive 1 this. I realize it was wrong. I am ready to correct it 2 damages phase. Correct? 2 right now, and I am ready to pay all the penalties that 3 A. Correct. 3 have been imposed upon me before. 4 Q. And then assume the Beverly jury finds first 4 That's when I think the evidence stops coming 5 that punitive damages are warranted and then, you know, 5 in, maybe. 6 listens to this additional evidence in Phase 2 and 6 Q. Mr. Scarola, when were these cases filed, 7 assesses punitive damages against TD Bank. Okay. With 7 Beverly and Marlin? 8 me? 8 A. I don't remember the dates. I can look at the 9 A. So far. 9 pleadings, I am sure, and find out the -- it would 10 Q. So, what happens in the Marlin matter that's 10 appear that the Marlin case was filed in 2013. 11 tried after Beverly? 11 Q. Well, let's use that as an example. 12 A. What happens after Beverly? 12 A. Okay. 13 Q. There is an award, a punitive award. 13 Q. How has any alleged litigation misconduct in 14 A. Is there subsequently an admission of 14 Coquina damaged the Marlin plaintiffs' prosecution of 15 wrongdoing by TD Bank, an apology for the wrongdoing, 15 their case filed in 2013 long after the order in Coquina 16 appropriate corrective measures taken and a payment of 16 and Coquina's judgment came out? 17 the punitive damages, or is there a continuation of the 17 A. The Marlin plaintiffs and the Beverly 18 denial of wrongdoing, a continuation of the coverup and 18 plaintiffs have been obliged to litigate issues that 19 a refusal to pay the punitive damage award? 19 they never should have had to litigate if TD Bank did 20 Q. Assume all you have is a punitive damages 20 the right thing. 21 award on one day and the Marlin trial starts on the next 21 Q. What issues? 22 day. 22 A. TD Bank's liability for the underlying 23 A. Then it would be my position that it would be 23 misconduct. 24 very likely that the evidence admitted in the Marlin 24 Q. So you are saying because of alleged discovery 25 trial would look very much like the evidence admitted in 25 misconduct in Coquina. TD should admit underlying Page 62 Page 64 I the Beverly trial. I liability in Beverly and Marlin? 2 Q. So, this evidence just keeps each plaintiff 2 A. What I am saying is that because of the 3 becomes, no matter what, that the litigation misconduct 3 established litigation misconduct on the part of 4 had nothing to do with their cast, had nothing to do 4 TD Bank, which was specifically designed to conceal the 5 with their claims, and in no way injured them, keeps 5 extent of TD Bank's involvement in the Rothstein Ponzi 6 getting presented trial after trial after trial? 6 scheme, victims of the Rothstein Ponzi scheme have been 7 A. Well, when you say in no way had anything to 7 obliged to undertake efforts to prove TD Bank's 8 do with injuring them, that's wrong. It did have 8 underlying misconduct that would otherwise have been 9 something to do with injuring them because it 9 unnecessary. 10 complicated the prosecution of their claims and will 10 Q. Well, the alleged litigation misconduct was 11 continue to prosecute the complicate -- the prosecution 11 made public long before the Marlin complaint was filed. 12 of every victim of the Rothstein Ponzi scheme until 12 Correct? 13 TD Bank finally says, you know what, we have been told 13 A. Yes, accepting this date of filing, that's 14 over and over and over again that what we did was wrong. 14 true, uh-huh. IS And it's time for us to take our heads out of the sand 15 Q. So, it has in no way hampered the Marlin 16 and to stand up and acknowledge that what we did was 16 plaintiffs prosecution of their matter. 17 wrong, and to make sure that it never happens again, 17 A. Well, we are just not quite connecting. It is 18 instead of continuing to deny wrongdoing and ratifying 18 my opinion and my understanding of the available record 19 that wrongdoing. 19 evidence that TD Bank refused to acknowledge any 20 So the answer to your question is, yes, they 20 liability, that TD Bank actively sought to conceal 21 keep being faced with the same evidence of what they did 21 liability through the alteration of documents in 22 wrong at least until they change their ways and the 22 discovery, through the presentation of perjured 23 purpose of punitive damages is finally served. 23 testimony, through the concealment of other documents to 24 The wrongdoer has been punished enough and the 24 a significant extent, and that TD Bank bank's covcrup 25 wrongdoer finally says, yes, I shouldn't have ever done 25 and ratification of its misconduct continues even though 16 (Pages 61 to 64) OUELLETTE & MA LDINCOURT REPORTERS, INC. EFTA01130156 Page 65 Page 67 I the extent of that wrongdoing has been publicly I BY MR. HUTCHINSON: 2 disclosed, judicially recognized, but not yet 2 Q. Are you good going a little while longer? 3 acknowledged or accepted by TD Bank. 3 A. I'm good going a little while longer, yeah. 4 Q. So, until TD admits liability on the 4 I'm working without breakfast so I'd like to have lunch. 5 underlying Ponzi scheme claims, you believe that this 5 Q. Let's get in, you keep alleging all of your -- 6 alleged litigation misconduct in other matters that was 6 or talking about all this alleged litigation. 7 made public long ago is relevant in these subsequent 7 MR. MOSKOWITZ: Is this going to be like a 8 matters? 8 half-hour? I mean, he hasn't had breakfast at all. 9 A. I am the father of five children and the 9 We've got all day. 10 grandfather of 15 and until my children and my 10 Do you want to eat now? We've got all day. 11 grandchildren are willing to acknowledge whatever minor 11 THE WITNESS: Let's go another 15 minutes. 12 wrongdoing they may have been involved in, that 12 Find a convenient stopping point in about 13 continues to impact upon the way in which I respond to 13 15 minutes from now. 14 the things that they have done wrong. 14 BY MR. HUTCHINSON: 15 Once they have acknowledged their wrongdoing 15 Q. Okay. Can you please describe your 16 and accept responsibility for it, I don't need to 16 understanding of the specifics of the alleged litigation 17 continue to say, you keep doing the same thing over and 17 misconduct that you arc referring to? 18 over and over again, and the punishment doesn't need to 18 A. Yes, sir. There was a --- 19 continue to escalate because they have been punished and 19 Q. You arc referring to a document, sir? 20 they have been deterred. But until they have been 20 A. I am, yes. 21 punished and they have been deterred, the answer is, 21 Q. What document is that? 22 yes, I keep bringing up the past until their punishment 22 A. It's plaintiffs first request for production 23 has effectively altered their conduct. 23 of documents to TD Bank relating to the sanctions motion 24 TD Bank has had punishment assessed against 24 filed in the Razorback Funding, LLC, et al., versus 25 them. They have refused to acknowledge the 25 Scott Rothstein matter, 17th Judicial Circuit Court. Page 66 Page 6S 1 appropriateness of that punishment. They continue to 1 Case Number 09-062943-19. 2 appeal it. They continue to contend we did nothing 2 Q. Let me show you what I am marking as 3 wrong, and as long as they continue to appeal and to 3 Exhibit 4. Is Exhibit 4 what you are referring to, sir? 4 contend that they did nothing wrong, then the facts of 4 A. Yes, assuming that this document is an 5 the history of their misconduct are relevant and 5 accurate copy of all of the pages following the first 6 material in deciding what is appropriate punitive 6 page, the first page is identical so I assume that it 7 damages to be imposed against them. 7 is. 8 Q. Let's get into detail of what your 8 (Exhibit No. 4, Plaintiffs First Request for 9 understanding is of the alleged discovery. 9 Production of Documents to TD Bank, was marked for 10 MR. MOSKOWITZ: When would you like to take a 10 identification.) 11 break? We have gone another hour. I certainly 11 BY MR. HUTCHINSON: 12 want to let you do your depo. 12 Q. So what is your understanding of the first 13 MR. GENOVESE: Lunch was to arrive -- keep 13 alleged specific litigation misconduct? 14 asking questions. I will see when lunch is 14 A. The litigation misconduct that I am 15 arriving, give you that information. That will be I5 referencing is the litigation misconduct that is 16 a convenient time in my mind. 16 described in each of the introductory paragraphs to the 17 Is that all right? 17 requests that are made in this document, specifically I 18 THE WITNESS: Sure. Assuming lunch is going I8 am referring to the description that is included on Page 19 to be here within the next half-hour, that's fine 19 5 under the title, background to this request, on Page 20 with me. Otherwise, I'd like to take a break 20 6, background to this request. 21 before lunch. 21 It continues on Page 7 and 8. On Page 8, 22 MR. GOLDBERG: Lunch is here already. 22 background to this request. It continues on Page 9, 23 MR. GENOVESE: Whenever Wen wants to conclude 23 Page 10, Page II, Page 12. The description under 24 within the next half-hour. 24 background to this request that appears on Page 13 and 25 THE WITNESS: That's fine. 25 continues onto Page 14, background to this request that 17 (Pages 65 to 68) OUELLETTE & MA LD1NCOURT REPORTERS, INC. EFTA01130157 Page 69 Page 71 I appears on Pagc 14, Page 15, Page 16 and Page 17. I am from the exhibit. He has the request for 2 also referring to the allegations in paragraph 13 of the 2 production and the interrogatories. So he is 3 complaint and paragraphs 86 through 153 of the complaint 3 flipping through those. I just don't want to make 4 where allegations of wrongdoing are specifically 4 a miscommunication. 5 described in paragraphs 15, 17, 18 and 154 through 196 5 He is on Page 5 of the interrogatories. I 6 where post-collapse coverup facts are alleged. 6 don't know if you want to mark those after lunch. 7 Q. And you arc referring to certain notes now, 7 You see, this is two things together. 8 sir? 8 THE WITNESS: Yeah, but what I am looking at 9 A. I am, yes. These are notes that I prepared 9 right now is the request to produce. 10 myself when reviewing certain of the materials that were 10 MR. MOSKOWITZ: Request for production. 11 provided to me. 11 BY MR. HUTCHINSON: 12 Q. Okay. We will mark those in due course, but 12 Q. Okay. Page 5? 13 who were the individuals that were responsible, to your 13 A. Page 5 of the request for production. 14 knowledge, for the alleged wrongdoing, and we will start 14 Q. Isn't it true that even the plaintiffs allege IS with the alleged wrongdoing on Pagc 5 of Exhibit 4? 15 that this document, the CDD form, what was provided 16 It's a section titled, documents relating to the RRA 16 to -- TD Bank provided that form in its electronic state 17 customer due diligence CDD form. 17 to outside counsel? 18 A. Uh-huh. The specific individuals whose 18 A. Yeah, that is true. 19 identity I have any knowledge of arc those who are 19 Q. And isn't the complaint with respect to that 20 identified by name within that document. I do not have 20 is that outside counsel produced that in a black and 21 knowledge outside the scope of the documents that I have 21 white form as opposed to a color form? 22 described of involvement by other individuals by name. 22 A. Yes, the gist of the complaint is that a 23 Q. And, again, these are all documents drafted by 23 highly relevant legend at the top of the page was 24 plaintiffs counsel. Correct? 24 obscured by the manner in which the production was made. 25 A. I think that this particular document was 25 Q. And is it your opinion -- are you offering an Page 70 Page 72 I drafted by Mr. Moskowitz. I opinion here today that outside counsel's production of 2 Q. And the comments in your notes were based on 2 that document that was provided to outside counsel in 3 receipt of information from plaintiffs counsel. 3 full color, outside counsel's production of that in 4 Correct? 4 black and white is evidence of some underlying scheme by 5 A. Which comments in my notes? The specific 5 TD Bank to cover up certain conduct? 6 paragraphs in the complaint that I referenced? 6 A. Yes. 7 Q. Answer me that. Well, you were reading from 7 Q. What evidence do you have that anyone at 8 your notes earlier. Correct? 8 TD Bank as opposed to their outside counsel was involved 9 A. When I identified the specific paragraphs in 9 in any such scheme to produce that document in anything 10 response to your earlier question, I was reading from my 10 other than its electronic color form? II notes, that was not information that was provided to me 11 A. You are drawing a distinction that I do not l2 by plaintiffs counsel. That was my identification from 12 draw. TD Bank's outside counsel was acting as an agent l3 my reading of the complaint -- 13 of TD Bank. What TD Bank's outside counsel did, TD Banl 14 Q. Okay. 14 was responsible for, and this was what I consider to be 15 A. -- of the relevant paragraphs because I 15 part of an overall pattern of coverup. l6 assumed that -- I anticipated I would be asked a 16 Q. Sir, will you answer my question, please? l7 question such as the one that you posed to me and I 17 MR. MOSKOWITZ: Objection. 18 didn't want to have to go through the complaint 18 A. I did. l9 paragraph by paragraph to identify the specific 19 BY MR. HUTCHINSON: 20 paragraphs, so I made a note of them. 20 Q. No, answer my question. What evidence do you 2l Q. Okay. Let's go back to Page 5 of the 21 have that anyone at TD Bank was -- anyone at TD Bank, 22 Exhibit 4. 22 not their outside counsel, was involved in the 23 A. Yes. 23 production of this in a black and white format versus a 24 MR. MOSKOWITZ: Wen, just for the record, I 24 color format? 25 think he has two things here, so it's different 25 A. And I responded to that question by telling 18 (Pages 69 to 72) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130158 Page 73 Page 75 I you that you are drawing a distinction that I do not 1 BY MR. HUTCHINSON: 2 believe is appropriate. What TD Bank's agents do is 2 Q. Mr. Scarola, before we broke, we were talking 3 conduct on the part of TD Bank. 3 about the CD form on page five of the Razorback request 4 If you are asking me, if the intent of your 4 for production. Do you recall that? 5 question is to ask me to identify direct employees of 5 A. I do. 6 TD Bank as opposed to agents of TD Bank who were 6 Q. The issue there was that outside counsel did 7 involved in this particular misconduct, I can't do that. 7 not produce it in color. Correct? 8 Q. Sir, you are not here to determine what is 8 A. That certainly was one of the relevant issues 9 relevant and what is not and what distinctions should be 9 with regard to that document, yes. 10 drawn and what distinctions should not be drawn. You 10 Q. And if that same document has been produced in 11 are here to answer questions. I would appreciate if you 11 color in the Beverly matter, would you agree that that 12 would answer my questions and move forward. 12 alleged misconduct has been rectified in the Beverly 13 MR. MOSKOWITZ: Objection. Move to strike. 13 matter? 14 MR. HUTCHINSON: You are not the Judge in this 14 A. I would agree that that portion of the coverup IS matter and the Judge can decide what's relevant and 15 has ended. 16 what's not. 16 Q. And would you agree that that alleged 17 MR. MOSKOWITZ: Why don't we take a break for 17 misconduct would not be relevant in the Beverly matter 18 lunch now because we don't have to get to that 18 since it has ended and been produced in color? 19 level. I think everything has been good today so 19 A. No, I would not agree to that. 20 far. 20 Q. So, even if the production occurred in color 21 MR. SHEERIN: There is a question pending. 21 in Beverly, you still believe the prior production in 22 MR. MOSKOWITZ: The question you're not here 22 another matter in another format would be relevant to 23 to tell -- that's not a question, that's a lecture 23 the punitive damages in Beverly? 24 to the expert witness. 24 A. I believe that that aspect of the ongoing 25 Sir, that's a lecture to the witness. That's 25 coverup would be relevant in Beverly, correct. Page 74 Page 76 1 not necessary here. Please, come on. That's not Q. But you said it's not ongoing anymore, it's necessary. 2 ended? 3 MR. HUTCHINSON: Can I finish that question? 3 A. No, no, what I have said is that that aspect 4 MR. SCHERER: No. 4 of the coverup has been uncovered. The covcrup 5 A. I'm sorry, I haven't heard another question 5 continues. Because the coverup continues, all of the 6 yet. 6 efforts that have been part of the coverup remain 7 BY MR. HUTCHINSON: 7 relevant and material. 8 Q. So, is it true that you have no evidence or 8 Q. We won't go through all the alleged 9 understanding that anyone at TD Bank, any employee of 9 allegations of what you are calling the coverup but -- 10 TD Bank was involved in that production of the document? 10 A. Thank you. 11 MR. MOSKOWITZ: Asked and answered three 11 Q. -- I just want to make sure that I understand 12 times. 12 what allegations are encompassed of what you are calling 13 A. If you are drawing a distinction between 13 the coverup. 14 agents ofID Bank and direct employees of TD Bank, I 14 Is it the allegations with respect to that's 15 have no information that direct employees of TD Bank 15 in these request for productions and the complaint 16 were involved in this particular misconduct as opposed 16 paragraphs that you referred to earlier? 17 to the agents of TD Bank. 17 A. And the interrogatories also that are part of 18 MR. MOSKOWITZ: Would it be good to break now? 18 this package, yes. 19 MR. HUTCHINSON: Yes. We can take a break. 19 Q. Okay. So, if we take all of that together, 20 THE VIDEOGRAPHER: We are off the record. 20 that would be the universe of the alleged coverup as you 21 (Lunch recess.) 21 understand it? 22 THE VIDEOGRAPHER: This is the beginning of 22 A. That identifies all of the coverup aspects of 23 tape number two. The time is 12:46. We are on the 23 which I am aware, although I can't represent to you that 24 video record. 24 it encompasses all of the information with regard to 25 25 those aspects of the coverup. These are good summaries 19 (Pages 73 to 76) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130159 Page 77 Page 79 I of everything that I know -- 1 (Exhibit No. 5, TD Bank Victims Notice of 2 Q. And it's what your -- 2 Filing Expert Disclosures, was marked for 3 A. And that's why I pointed to this. 3 identification.) 4 Q. And it's what you are basing your opinions on. 4 BY MR. HUTCHINSON: 5 Correct? 5 Q. Do you recognize Exhibit 5? 6 A. That's correct, yes. 6 A. I don't know that I have seen this in its 7 Q. And you have no personal knowledge of the 7 final form. I have discussed its contents with counsel 8 veracity of any of the allegations contained within the 8 but I don't know whether I've seen this in final form 9 request for production, the interrogatories and the 9 now. I may have. I just don't remember. 10 interrogatory. Correct? 10 Q. Are you aware it identifies you as an expert 11 A. Well, I do have some personal knowledge to the II witness? 12 extent that I know these lawyers and know them quite 12 A. That I do. 13 well. And I'm not dealing with allegations that have 13 Q. And it describes the nature and substance of 14 been made by strangers. I am dealing with allegations 14 your opinion? 15 from individuals whom I believe to be highly respected 15 A. I see that heading. I haven't had a chance to 16 members of the Bar who certainly would not intentionally 16 read it yet. 17 misrepresent any of these things. So, I have accepted 17 Q. Did you draft the language with respect to the 18 their representations as being true. 18 nature and substance of your opinion? 19 Q. Have you ever disputed an allegation in your 19 A. I don't think I drafted the language, but I do 20 years of practice since 1972 made by a highly respected 20 recall having discussed it with counsel. 21 member of the Bar and a friend of yours? 21 Q. Did you review it for its accuracy before this 22 A. Sure, yeah, that has occurred, but I have no 22 was filed? 23 reason whatsoever to dispute any of these allegations. 23 A. That's what I don't remember. I can read it 24 If you want me to assume that some aspect of what I have 24 right now for you and tell you whether I believe it to 25 assumed to be true is not true, I will be happy to do 25 be an accurate description if you'd like me to do that. Page 78 Page 80 1 that for purposes of telling you whether it has any 1 Q. Please do so. 2 impact upon the ultimate opinions that I'm rendering in 2 A. Sure. Yes, I think that that's an accurate 3 this matter, but I have assumed these representations to 3 general description of my anticipated testimony. 4 be true. If there is a -- if there is a quotation in 4 Q. Okay. 5 here from a deposition or from a transcript, I have 5 A. The focus will clearly be on the second and 6 assumed the accuracy of that. If it turns out not to be 6 third paragraphs as opposed to the first, but it is 7 accurate, then you point that out to me and I will tell 7 accurate in its entirety. 8 you what, if any, impact that has on my opinion. 8 Q. Are you predicting an outcome in the Beverly 9 Q. Is it your opinion that under Florida law if 9 and Marlin matters? 10 an outside attorney is responsible for the alleged 10 A. I am opining as to the value of the punitive II discovery misconduct that the client should be punished II damage claims in those cases. 12 for that misconduct instead of the attorney? 12 Q. So you're not predicting what would happen if 13 A. Oh, I understand from Florida law that the 13 Beverly and Marlin were tried to a jury? 14 courts draw a distinction between misconduct in which 14 A. No, I think that inherent in my opinion is 15 the client had no involvement and misconduct that the 15 what I believe is likely to happen if those cases were 16 client did not participate in or ratify, that the courts 16 tried to a jury. That's a different question than the 17 will not hold the client responsible for that misconduct 17 one you asked me am I predicting an outcome. 18 but will visit the appropriate sanctions upon the lawyer 18 This case may very well be settled before it's 19 rather than the client. That, however, was not the case 19 tried and I haven't -- I haven't attempted to form an 20 with regard to this document as has been found by Judge 20 opinion as to the likelihood of settlement as opposed to 21 Cooke, and I have relied upon that finding. 21 a trial outcome. I am focusing upon what I believe is 22 Q. Let me show you what I am marking as 22 likely that a jury would do if these claims were 23 Exhibit 5, which is a document titled TD Bank Victims 23 presented to a jury. 24 Notice of Filing of Expert Disclosures. 24 Q. Okay. So, you are opining -- let's just take 25 A. Yes, sir. 25 the Beverly action that was filed first -- as to what 20 (Pages 77 to 80) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130160 Page SI Page 83 1 the result in the Beverly matter would be if it were 1 A. A lot. 2 tried to a jury. 2 Q. And you determined that each one of their 3 A. Yes. 3 claims were viable, nonspeculative and valuable with a 4 Q. And how many hours did it take you to reach a 4 high probability of success in 5.1 hours? 5 decision or an opinion as to what would happen if the 5 A. I viewed them collectively and not separately. 6 Beverly matter were tried to a jury? 6 I did not believe that it was necessary to view them 7 A. To the extent that my opinion is reflected in 7 separately. 8 this summary, it didn't take very long at all, and I -- 8 Q. Each one of them arc asserting individual 9 I can look at my time sheets and I can tell you 9 claims. Correct? 10 approximately how long it took. 10 A. They are asserting individual claims arising 11 Q. That would be great. 11 out of the same course of misconduct, arising out of the 12 A. The summary of my time. 12 same conspiracy to engage in that misconduct, arising 13 Q. And are you referring to what I am marking as 13 out of the same acts of aiding and abetting that 14 Exhibit 6? 14 misconduct. 15 (Exhibit No. 6, Time Summary, was marked for 15 Now, if you ask me to assume that someone's 16 identification.) 16 name is listed who was not an investor in the Ponzi and 17 A. I am referring to, yes, Exhibit 6. 17 is unable to prove that they invested in the Ponzi 18 BY MR. HUTCHINSON: 18 scheme, that would change my opinion with regard to that 19 Q. And Exhibit 6 is a summary of all of the time 19 claim. 20 that you have expended in relation to your engagement in 20 Q. So, how in the world did you determine in 21 this matter? 21 5.1 hours that these plaintiff's claims in this massive 22 A. Probably not, but it is a summary of time that 22 Ponzi scheme were viable, nonspeculative and valuable 23 1have spent. In other words, if the time is reflected, 23 with a high probability of success if tried to a jury? 24 it's time that I spent. There may have been time that I 24 A. Well, let me explain first that I approached 25 spent that's not reflected. I don't think that there is 25 these matters with some significant degree of knowledge Page 82 Page 84 1 any significant amount of time reflected -- excuse me, 1 regarding the general matters that gave rise to those 2 any significant amount of time that I have spent on this 2 claims. I have been involved in at least tangentially 3 matter that is not reflected but there certainly may be 3 related litigation for, I guess it's now years, in that 4 some. 4 I represent Bradley Edwards in a claim for abusive 5 Q. These expert disclosures were filed on 5 process and malicious prosecution against Mr. Epstein, 6 June 19th. Correct? 6 whose criminal activities formed at least in part a 7 A. Yes, that's what the certificate of service 7 basis for some of Mr. Rothstein's solicitations. As a 8 says. 8 consequence of the responsibilities that I have had in 9 Q. And you state that -- your opinion was 9 representing Bradley Edwards, it has been necessary for 10 disclosed on 6/19 that TD's victims' claims for aiding 10 me to follow somewhat closely the prosecution of the 11 and abetting, fraud and conspiracy to commit fraud by TD 11 claims relating to the Rothstein Ponzi scheme. 12 Bank are viable, nonspeculative and valuable claims with 12 I personally attended a fairly lengthy session 13 a high probability of success if tried to a jury. 13 of Mr. Rothstein's deposition. I have read transcripts 14 Correct? 14 of Mr. Rothstein's very lengthy testimony. I have IS A. Yes, that is correct. 15 closely followed press reports with regard to these 16 Q. And at that point your time sheets indicate 16 matters. So, it was not without some sort of 17 that you had spent approximately 5.1 hours on this 17 significant degree of other knowledge that I was called 18 matter. Is that correct? 18 upon to form my opinions and I have, at least to some 19 A. I will accept your math. 19 extent, relied upon that knowledge gained independently 20 Q. How many plaintiffs are involved in the 20 and built upon that foundation. 21 Beverly and Marlin matters? 21 Q. Well, during all that other activity, what did 22 A. I don't remember counting them. 22 you learn about Mr. Beverly's claims against TD Bank and 23 Q. Over 50? 23 his, the facts and circumstances surrounding his 24 A. I don't remember counting them. 24 investment? 25 Q. Do you have any idea, sir? 25 A. I learned about all of the basic underlying 21 (Pages 81 to 84) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130161 Page 85 Page 87 1 aspects of the Ponzi scheme. I learned about TD Bank's 1 A. Yes, sir, that's correct. 2 involvement in aiding and abetting that scheme and in 2 Q. So in total --- 3 conspiring to assist Mr. Rothstein in the perpetration 3 A. Since the disclosure of what has now been 4 of his fraud. All of those facts, obviously, are highly 4 marked as Exhibit Number -- 5 relevant to Mr. Beverly's individual claim. But, again, 5 Q. Five? 6 I have not undertaken to separately evaluate each of the 6 A. -- 5, thank you. Yes. 7 individual claims being prosecuted by Mr. Moskowitz' 7 Q. So, in total you have spent a total of -- 8 firm and Mr. Scherer's firm. And if you would like me 8 before today, 13.1 hours on this matter? 9 it assume some facts that would cause me to distinguish 9 A. No. I have spent 13.1 hours that have been 10 any of the individual plaintiffs claims from the claims 10 recorded since having been retained as an expert witness II generally being prosecuted against TD Bank, I would be II but I have significant time involved relating to these 12 happy to do that, and I would tell you whether those 12 issues prior to my retention as an expert witness. 13 separate facts have any impact on my opinion or do not 13 Q. Let's discuss an individual plaintiff, 14 have any impact on my opinion. 14 Mr. Beverly. What claims is Mr. Beverly asserting? 15 In light of the nature of the underlying 15 A. He is asserting the claim that TD Bank 16 claims, I have seen no reason whatsoever to distinguish 16 conspired with Scott Rothstein to engage in a fraud and 17 TD Bank's liability to any of these victims from its 17 that TD Bank aided and abetted Scott Rothstein in the 18 liability to any of the other victims. 18 perpetration of that fraud. 19 Q. But you have not attempted to do so. Correct? 19 Q. And you have not gone through the elements of 20 A. No, I have not. That has just -- that has not 20 both of those claims with respect to Mr. Beverly to 21 been part of my evaluation, which is why I am telling 21 determine whether both of those claims for Mr. Beverly 22 you if there are facts that you think would make a 22 are, in fact, viable and nonspeculative and valuable 23 difference, tell me what they are and I will tell you 23 claims with high probability of success if tried to a 24 whether I agree they would make a difference or not. I 24 jury? 25 am not aware of any. 25 A. That's not accurate. That is not accurate. Page 86 Page 88 1 Q. So in your 5.1 hours of preparation of your 1 Q. So, you have gone through each plaintiff and 2 opinions in this matter you didn't have concern to 2 determined that each plaintiff can present evidence to 3 determine whether there are any facts that make a 3 satisfy all of the elements of each of those claims? 4 difference, did you? 4 A. I have viewed these claims as conspiracy and 5 A. It is incorrect to say that I have only had 5 aiding and abetting claims collectively. I have not 6 5.1 hours with regard to these matters. There were 6 viewed them separately. I don't believe that there is 7 5.1 hours that were specifically devoted to my 7 any need to view them separately. The only victim 8 performance of my responsibilities as an expert witness 8 specific element that exists is proving a causal 9 in this case prior to the filing of this document on 9 connection between TD Bank's conspiracy and aiding and 10 June 19th. 10 abetting and the particular loss that was suffered by a 11 My investigation continued, as is reflected in 11 specific plaintiff. So, if you want me to assume that 12 my time records. There was nothing in the subsequent 12 Mr. Beverly was not an investor in the Ponzi scheme and 13 investigation that causes me to alter my opinions in any 13 didn't lose any money as a consequence of that 14 respect at all, and the knowledge, the fact or case 14 investment in the Ponzi scheme, I will make that 15 specific knowledge upon which I base my opinions began 15 assumption on a hypothetical basis and I will then tell 16 to be accumulated significantly prior to having been 16 you that Mr. Beverly doesn't have a viable claim but I 17 retained as an expert witness in this case. That's all 17 have read the complaint. I have told you that I have 18 I am trying to communicate to you, and if there is 18 assumed the accuracy of the complaint and the complaint 19 something -- I will tell you again, if there is 19 alleges otherwise. 20 something that you think might make a difference, tell 20 Q. So you agree that for an aiding and abetting 21 me about it. I will tell you whether it does. 21 claim, Mr. Beverly has to show that acts by TD Bank 22 Q. And the subsequent investigation you are 22 proximately caused his damages. Correct? 23 referring to is the eight hours that you spent on this 23 A. Yes, I do agree with that. 24 matter since the disclosure of your expert opinions. 24 Q. Okay. What acts by TD Bank proximately caused 25 Correct? 25 Mr. Beverly's damages in this matter? 22 (Pages 85 to 88) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130162 Page 89 Page 91 I A. Mr. Rothstein's Ponzi scheme could not have 1 A. I'm sorry, but I really don't understand your 2 been carried out without the substantial assistance of 2 question. 3 TD Bank. TD Bank's substantial assistance to 3 Q. In all your years of practicing law, have you 4 Mr. Rothstein enabled Mr. Rothstein to conduct the Ponzi 4 ever heard of but for causation? 5 scheme. Mr. Beverly was an investor in the Ponzi 5 A. I have heard that phrase, yes. 6 scheme. Mr. Beverly sustained a loss as a consequence 6 Q. What is your understanding of what but for 7 of that investment. 7 causation means? 8 Q. Do you have any case law to support your 8 A. It means that in the absence of some conduct a 9 stance that TD's action would be sufficient for a 9 result would not have occurred. 10 proximate cause finding when it had no interaction with 10 Q. And is it your understanding that there is a 11 Mr. Beverly? 11 difference between proximate causation and but for 12 A. Yes. 12 causation? 13 Q. And what case law is that? 13 A. There may be under certain circumstances. I 14 A. It is the general common law of the State of 14 don't believe there is any difference under the 15 Florida. 15 circumstances of this case. 16 Can I cite to you a specific case as I sit 16 Q. Do you have any law supporting that? 17 here right now? The answer to that question is, no, I 17 A. I am not aware that that issue has been 18 cannot. But it is for want of a better description, 18 addressed in this case so I couldn't have any law that 19 Hornbook law that if you aid and abet or conspire to 19 supports that in this case. 20 commit a fraud, you are liable to the victims of that 20 Q. What act was conducted by an individual 21 fraud. 21 'ID Bank employee that was the proximate cause of 22 Q. If you prove the elements of that claim. 22 Mr. Beverly's damages? 23 Correct? 23 A. The gross disregard of all of the indications 24 A. Yes, you must prove that there was aiding and 24 of fraudulent financial transactions over an extended 25 abetting or conspiracy of a fraud before there is any 25 period of time that enabled Mr. Rothstein to comingle Page 90 Page 92 1 liability to the victims of a fraud. But if what you 1 what effectively were trust funds being held by TD Bank 2 are suggesting is that that somehow requires some direct 2 in a variety of different accounts, the misuse of IOTA 3 action between Mr. Beverly and any given plaintiff and 3 accounts, the use of a variety of fraudulent documents, 4 TD Bank, I reject that assertion. 4 direct contact between victims of the Ponzi scheme and 5 Q. Okay. So, it's your opinion that while you 5 TD Bank representatives in the solicitation of Ponzi 6 agree that each plaintiff has to show proximate 6 investments. You know, there are others, I am sure. 7 causation between a specific act of TD Bank and these 7 And, again, those are matters that are detailed in the 8 plaintiffs' injuries, that that doesn't require any 8 complaint and I have assumed the accuracy of the 9 contact or involvement with these individual plaintiffs? 9 allegations that are included in the complaint. They 10 A. I cannot accept that compound question. There 10 form the factual basis for my opinions. So, if you want 11 is involvement with these plaintiffs by virtue of 11 to get it all, it's there. 12 TD Bank's participation in the conspiracy and aiding and 12 Q. Let's go back -- I want your understanding of 13 abetting the fraud. That is the required involvement. 13 what you are basing your opinions on that you had 14 Q. What's your understanding of the definition of 14 formulated --- 15 proximate causation, sir? 15 A. I am basing my opinions on the allegations 16 A. A proximate cause is a cause that 16 included on the complaint. 17 substantially and in natural and probable sequence 17 Q. What's your understanding of how many of the 18 contributes to a given result. 18 Beverly and Marlin plaintiffs had any contact, 19 Q. What's the difference in proximate causation 19 communications or contact in any way with TD Bank? 20 and but for causation? 20 A. I cannot tell you how many. I can tell you 21 A. I don't know that under the circumstances of 21 that there have -- there were some that had some 22 this matter I would draw any distinction between the 22 contact. I cannot detail that contact for you, nor do I 23 two. 23 believe that it is particularly relevant or material 24 Q. That wasn't my question, sir. What's your 24 whether these particular plaintiffs had any direct 25 understanding of but for causation under Florida law? 25 contact or didn't have any direct contact. 23 (Pages 89 to 92) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130163 Page 93 Page 95 What is significant is that Ponzi scheme 1 of aiding and abetting without any contact whatsoever 2 investors did have direct contact with TD Bank 2 with the defendant? 3 representatives during the course of this Ponzi scheme 3 MR. MOSKOWITZ: Objection. Asked and 4 and that direct contact facilitated the investments and 4 answered. 5 the fraud. 5 A. Well, I can give you a line of cases in the 6 Q. How many of the Beverly and Marlin plaintiffs 6 conspiracy area. 7 saw any documents produced by TD Bank? 7 Q. I am not talking about conspiracy, sir. I am 8 A. I can't answer that question for you. I don't 8 talking about aiding and abetting. 9 know how many nor do I believe that that is significant 9 A. No, as I sit here right now, I cannot cite a 10 as long as there were some victims of the Ponzi scheme 10 case to you. It is what I consider to be a very well 11 who saw fraudulent documents produced by TD Bank that 11 accepted general proposition of law, but I haven't 12 demonstrates that TD Bank was aiding and abetting in and 12 memorized the case citations. I can't give it to you. 13 conspiring to commit the overall fraud that gives rise 13 Q. During your 5.1 hours of engagement in this 14 to liability to all of the victims of the fraud. 14 matter before your opinion was disclosed, did you take IS Q. So contacts with TD Bank were not important to 15 the time to go look at any Ponzi scheme cases to see 16 you in formulating your opinions in this matter? 16 whether the substantial assistance element could be 17 MR. MOSKOWITZ: Objection. Mischaractcrizes 17 satisfied and the proximate cause or climate thereunder 18 the testimony. 18 without any contact with the bank? 19 A. That is clearly a misstatement of what I just 19 A. No, I did not. And if you are prepared to 20 said. 20 cite to me binding authority that demonstrates that what 21 BY MR. HUTCHINSON: 21 I have long understood to be the law of the State of 22 Q. Were contacts with TD Bank important to you in 22 Florida is, in fact, not the law of the State of 23 formulating your opinion in this matter? 23 Florida, I'd be happy to take a look at that and that 24 A. Yes, sir. The contacts that arc described in 24 might change my opinion about the first part of my 25 some detail in the complaint, they were significant to 25 disclosed opinion in that disclosure. Page 94 Page 96 I me. Whether those contacts were specifically with I don't think you are going to find that 2 Mr. Beverly or any other named plaintiff in this case, 2 binding authority but, you know, l have been practicing 3 that's what is of less significance because regardless 3 law for 40 years. I have made mistakes before and if I 4 of whether a particular named victim of the Ponzi scheme 4 have made a mistake here, I promise you, I am ready to 5 had direct contact with TD Bank, TD Bank was aiding and 5 acknowledge that. But I don't think I have. 6 abetting and conspiring to commit this fraud. 6 Q. Sir, you are the expert here. I am just 7 Q. Can you give me any case that supports that 7 asking whether you took the time to go back and confirm 8 position? 8 the status of the law and the issues that you are 9 A. No, I can't. As I told you -- as I sit here 9 opining upon? 10 right now, I cannot name a case for you that has ever 10 A. Every single day that I am engaged in 11 addressed that issue in this case. This case hasn't 11 professional activities, I make decisions on the basis 12 reached the point were those issues could be addressed. 12 of my understanding of existing law without reconfirming 13 If you're asking me whether the general 13 that understanding every single time I have to deal with 14 proposition of law has been addressed by cases in the 14 a legal proposition. I didn't reconfirm it under this IS past, that is the proposition that if an individual aids IS circumstance nor do I consider it to be necessary to 16 and abets the commission of a fraud, that it doesn't 16 reconfirm it under this circumstance. 17 require direct contact between that victim and the aidcr 17 Q. And, sir, we are not here as your part of your 18 and abetter in order for the victim to recover, the 18 everyday practice of law, are we? 19 answer to that question is, yes, that proposition has 19 We are here because you have been designated 20 been addressed. 20 as an expert witness to opine on the viability of these 21 Can I give you the citation to the cases where 21 underlying claims. Correct? 22 it has been addressed, not as I sit here today, no. 22 A. That is my understanding of why we are here, 23 Q. Can you tell me any cases that support a 23 yes. 24 proposition that a plaintiff can show the proximate 24 Q. And you didn't take the time to go back and 25 causation required by the substantial assistant clement 25 confirm the law with respect to the underlying claims 24 (Pages 93 to 96) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130164 Page 97 Page 99 I before your opinion was disclosed, did you? 1 negligence claims. 2 MR. MOSKOWITZ: Objection. Asked and answered 2 Q. Sir, when I asked you what specific acts were 3 three times. 3 done that proximately caused Mr. Beverly's harm, you 4 A. I did not take the time to do anything that I 4 talked about failure to monitor accounts, IOTAs and 5 considered to be absolutely unnecessary and superfluous. 5 stuff that you talked about. Do you recall that? 6 There is probably a long list of things that we could 6 A. I gave the testimony that I gave, yes. 7 identify that I didn't take the time to do because I 7 Q. So what duty did TD Bank owe to Mr. Beverly to 8 considered it to be absolutely unnecessary and 8 monitor anything? 9 inappropriate to waste anybody's time in doing it. 9 A. TD Bank had an obligation not to conspire to 10 BY MR. HUTCHINSON: 10 commit a fraud and not to aid and abet in the commission 11 Q. Are you offering an opinion in this matter 11 of a fraud. 12 that TD Bank owed any of the Beverly and Marlin 12 Q. Okay, sir. That's not my question. 13 plaintiffs a duty? 13 MR. MOSKOWITZ: Objection. He has answered it 14 A. If you want to ask me that question, I would 14 twice. You don't like his answer but that's his 15 render an opinion in that area, but the primary focus of 15 answer. That is his answer. That was your 16 my testimony will be on the value of the punitive damage 16 question. That's his answer. 17 claims in this case. Obviously, inherent in that 17 BY MR. HUTCHINSON: 18 opinion is the opinion that there is underlying 18 Q. I am not talking about aiding and abetting. 19 compensatory liability. Without underlying compensatory 19 I'm not talking about conspiracy. I am talking about 20 liability, there cannot be a punitive damage award. 20 the answer you gave. 21 Q. Did -- or how many of these plaintiffs were 21 Does TD Bank owe any duty to Mr. Beverly to 22 TD Bank customers? 22 monitor Rothstein's accounts? 23 A. I can't answer that question for you. I don't 23 MR. MOSKOWITZ: Same objection. He answered 24 know. 24 four times already. Account monitoring it is not 25 Q. Are you aware that the law is well settled as 25 the same as aiding and abetting. You know this is Page 98 Page WO 1 to whether a bank owes a non customer a duty to monitor Judge Streitfeld's ruling when he denied the motion 2 accounts or transactions? 2 to strike those paragraphs on account monitoring. 3 A. Are you talking about a general duty to non 3 He answered it. You shouldn't allow him to aid and 4 customers to monitor transactions or are you talking 4 abet the conspiracy. That was his answer. 5 about a duty not to aid and abet or conspire to commit a 5 MR. HUTCHINSON: You can answer my question. 6 fraud. 6 A. If what I have now told you more than once is 7 Q. You testified earlier that there were 7 not responsive to your question it's because I don't 8 transactions that TD should have caught. Correct? 8 understand your question so you are going to have to ask 9 A. I don't remember using those words. 9 in a different way because what I have now said more 10 Q. *you talked about disregard of all indicators 10 than once is the best answer that I can give to the 11 of fraudulent transactions, spent a period of time with 11 question that you have asked as I have understood it. 12 the trust funds. Misuse of IOTA accounts, do you 12 BY MR. HUTCHINSON: 13 remember your testimony about that? 13 Q. Does TD Bank owe any duty to non customers to 14 A. I do, yes. 14 monitor other's account transactions for potential 15 Q. Is it your opinion in this matter that TD Bank 15 wrongdoing? 16 owed any duty to any of these plaintiffs with respect to 16 MR. MOSKOWITZ: Objection. Asked and answered 17 those transactions? 17 five times. 18 A. Yes. Yes, they did. 18 A. It is the obligation of TD Bank not to aid and 19 Q. And what is the relationship between TD Bank 19 abet a fraud and not to conspire in the commission of a 20 and these plaintiffs that gives rise to any duty owed to 20 fraud. To the extent that TD Bank is placed on notice 21 these plaintiffs? 21 that a fraud is being committed with its assistance, I 22 A. There is a duty not to conspire to commit a 22 don't know that I need to go beyond that. 23 fraud and there is a duty not to aid and abet in the 23 Once that point is reached, TD Bank clearly 24 commission of a fraud. This is not a negligence case. 24 owes a duty to those that are being defrauded, not to 25 These are conspiracy and aiding and abetting claims, not 25 aid and abet that fraud, not to conspire in the 25 (Pages 97 to 100) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130165 Page 101 Page 103 1 commission of that fraud. 1 A. Every single one of them. It would be exactly 2 BY MR. HUTCHINSON: 2 the same response. 3 Q. Let's go back to my original question. 3 Q. So, other than what you have testified to, are 4 What -- tell me the TD Bank employee and the specific 4 there any additional acts based on your expert opinion 5 act that proximately caused Mr. Beverly's injuries? 5 that caused any of these, proximately caused any of 6 MR. MOSKOWITZ: Objection. Asked and answered 6 these plaintiffs their damages? 7 a couple of times earlier. 7 A. Only those acts specified in the complaint. 8 A. Well, the one TD Bank employee that 8 That is the extent of my knowledge. 9 immediately coma to mind is Mr. Spinosa. There are 9 Q. Have you spoken with any of the Beverly and 10 others, including the other named defendants in this 10 Marlin plaintiffs? 11 action. The conduct on their part that aided and 11 A. I don't know. Certainly not in connection 12 abetted the fraud and that indicates participation in 12 with or since my retention as an expert. 13 the conspiracy is that conduct that is detailed in the 13 Q. How many of TD Bank's briefs did you read 14 complaint. That's what I -- those are the facts that I 14 before formulating your opinion in this matter? 15 have assumed to be true and to the extent that I would 15 A. Whatever is included in those materials that 16 be called upon to express an opinion as to whether those 16 have already been produced to you. 17 facts were adequate to give rise to liability as an 17 Q. As you sit here, do you recall reading any 18 underlying predicate for my punitive damage claim, I 18 TD Bank briefs on the --- 19 believe that they are clearly sufficient to give rise to 19 A. I think that there were some TD Bank materials 20 liability. 20 that were included in the materials that I reviewed. 21 That opinion is confirmed by verdicts already 21 Whatever it is, it's in there. 22 rendered against TD Bank. 22 Q. Do you recall any, reading a single dismissal 23 BY MR. HUTCHINSON: 23 brief? 24 Q. If we can go back to my question, sir. As we 24 A. I don't remember. 25 sit here today, can you name a single act by Mr. Spinosa 25 Q. Wouldn't -- you would agree that there are two Page 102 Page 104 1 or any other TD Bank employee that proximately caused 1 sides to every story, correct, wouldn't you, sir? 2 Mr. Beverly's injuries? 2 A. No, sir, I wouldn't. 3 MR. MOSKOWITZ: Asked and answered six times. 3 Q. When you litigate cases one side is always a 4 You can try one more, but then we are going to move 4 hundred percent right and there no other side to the 5 on, and if you want to go to Judge Ray, you can 5 story? 6 tell him that Mr. Scarola needs to come back to 6 A. Oh, no, I certainly wouldn't agree to that 7 answer your questions. He has answered it I think 7 either, but I would not agree that there is always two 8 every which way respectfully stated. I don't think 8 sides to every story. Sometimes there are defendants 9 we are going to get much more on this. 9 that actually admit their wrongdoing. 10 A. You are not going to get anymore. That's the 10 Q. Did you make any attempt to evaluate, 11 answer I have given you. It's the best answer I can 11 understand, evaluate and understand the legal defenses 12 give. I'm sorry you don't like it, but I will not an 12 to plaintiff's claims in this matter? 13 that same question again. 13 A. I have some general understanding of the 14 BY MR. HUTCHINSON: 14 defenses to this matter, yes, as a result of the 15 Q. Okay. Let's talk about Mr. Minkowitz. Can 15 materials that I have read. 16 you name a single act by a TD Bank employee that 16 Q. In the 5.1 hours you spent formulating your 17 proximately caused Mr. Minkowitz' damages? 17 opinion, did you read any of TD's dismissal briefs in 18 A. My answer would be exactly the same. 18 the Beverly and Marlin matters? 19 Q. That you couldn't name a single act as we sit 19 MR. MOSKOWITZ: Objection. Mischaracterizes 20 here? 20 every time you say 5.1 when Mr. Scarola has told 21 A. That was not my answer. My answer would be 21 you there is an extensive history before this case. 22 the same as the answer I gave. It would not be your 22 I would ask you to stop saying it's 5.1 and I would 23 mischaracterization of my answer. 23 stop objecting to that. 24 Q. So that's going to be your same answer for all 24 MR. HUTCHINSON: You can answer the question. 25 the plaintiffs. Correct? 25 A. The amount of time that has been involved in 26 (Pages 101 to 104) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130166 Page 105 Page 107 I the formulation of my opinions is not limited to those I the rules -- 2 hours that are reflected on this time sheet to the 2 MR. MOSKOWITZ: Wait, we have one lawyer. We 3 extent that I have already explained that. 3 have one lawyer. 4 Q. Did you take the time to read any of TD's 4 MR. SHEERIN: No, the rules of civility 5 dismissal briefs, sir? 5 require you to take great patience and great 6 A. I think that I have answered that question now 6 caution before saying that lawyers committed 7 on more than one occasion. The answer remains the same. 7 fraudulent conduct 8 I don't remember. The materials are right here. You 8 MR. MOSKOWITZ: I'm sorry, who an you? 9 have had those, I understand, for some time in advance 9 MR. SHEERIN: I have been introduced to the 10 of this deposition. Those are the materials that I 10 Court. I'm Joseph Sheerin of McGuireWoods. 11 reviewed that are case specific to Beverly and Marlin. II MR. SCHERER: How do you spell your last name? 12 Q. I didn't see any dismissal briefs in those 12 MR. SHEERIN: It's different than yours. 13 materials, sir. 13 MR. SCHERER: Thank God. 14 Do you mind telling me whether you have any of 14 MR. MOSKOWITZ: We have a rule in this IS TD's dismissal briefs in those materials? 15 deposition. We have one lawyer on each side. 16 MR. MOSKOWITZ: Do you want him to spend au 16 That's why I've been talking and not Mr. Scherer. 17 hour to go through the material that we gave you? 17 MR SCHERER: I will be happy to stipulate that 18 If you're representing what's there and what's 18 you can and we will double team. 19 not, we produced this to you well before the 19 MR. MOSKOWITZ: We don't want that. 20 deposition the materials you relied upon. 20 MR. GENOVESE: Since I am the only lawyer here 21 Whatever is in there, is in there. He tells 21 who is speaking for my client, Mr. Scherer, I 22 you he doesn't remember. 22 believe we may have sent an e-mail saying that we 23 MR. HUTCHINSON: No, most of these materials 23 hadn't received any documents. In fact, there was 24 were produced this morning. 24 a production to TD. 25 MR. MOSKOWITZ: The materials that we produced 25 You referred to your team in your addressing Page 106 Page 108 I to you are what we gave to him. These are copies, 1 counsel. I don't think that's fairly directed at 2 as he told you. 2 him. We never received --- 3 The e-mail that we got was wrong. Somebody on 3 MR. MOSKOWITZ: It came from your office. 4 your team sent this fraudulent e-mail that you 4 MR. GENOVESE: We never received a production. 5 never got any materials from Mr. Scarola. That was 5 I'm not sure that we requested it or assumed we 6 a little offensive. We gave you the significant 6 would get it. So, your suggestion that this was 7 materials that Mr. Scarola was provided. 7 fraudulent was misplaced if directed at 8 MR. HUTCHINSON: But these briefs were not in 8 Mr. Hutchinson. 9 there. 9 MR. MOSKOWITZ: Absolutely. I will agree. 10 MR. MOSKOWITZ: There are some few extra 10 MR. SHEERIN: Thank you. 11 materials, and that's why we have given you all 11 MR. MOSKOWITZ: Of course. 12 morning to go through them. 12 BY MR. HUTCHINSON: 13 BY MR. HUTCHINSON: 13 Q. Mr. Scarola, in all your years of litigating 14 Q. And I haven't seen any dismissal briefs. 14 cases, are the facts developed in discovery usually 15 And I just want to confirm you didn't take the 15 relevant to the outcome of a case? 16 time to review any of TD's dismissal briefs before you 16 A. That is the purpose of discovery, to uncover 17 offered your opinion in this matter? 17 relevant and material information. 18 A. I will tell you, again, I don't remember. I 18 Q. And how far has discovery proceeded with 19 reviewed a lot of materials. If I reviewed dismissal 19 respect to the Beverly and Marlin matters? 20 briefs, they are included in that banker's box in those 20 A. There has been very significant discovery 21 binders. If they are not in the banker's box and the 21 conducted with regard to the issues in the Beverly and 22 binders, I did not review them. 22 Marlin cases. 23 MR. MOSKOWITZ: He can take time now to go 23 Q. Can you answer the question I asked, sir? 24 through each materials if you want him to. 24 A. I did. That is my answer to your question. 25 MR. SHEERIN: Sir, I'd also caution you that 25 Q. Well, I will ask the question again and see if 27 (Pages 105 to 108) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130167 Page 109 Page 111 I I can get an answer to the actual question I asked. How 1 What conspiracy claim -- you are saying that 2 far was discovery provided in the Beverly and Marlin 2 the conspiracy claim is viable, nonspeculative and 3 matters? 3 valuable with a high probability of success. What 4 A. If you would like me to ignore the fact that 4 conspiracy claim are you talking about? 5 there has been very significant discovery conducted and 5 A. The conspiracy claim that is stated in the 6 completed relating directly to the identical issues that 6 complaint in the Beverly and Marlin cases. 7 are raised in the Beverly and Marlin matters, I will do 7 Q. And what's your understanding of the 8 that. I will ignore the fact that all of that other 8 conspiracy claim because I don't have a good 9 discovery has been conducted and then if I ignore all of 9 understanding of it from the complaint so I am hoping 10 the discovery conducted in those related matters, there 10 you as an expert who are opining on the veracity of the 11 has not been very much discovery completed in Beverly 11 conspiracy claim will have a better understanding of it 12 and Marlin before the discovery in those matters was 12 than I do? 13 basically halted, as I understand it. 13 A. The only understanding I have is the 14 Q. And arc you offering an opinion in this matter 14 understanding derived from the reading of the complaint. IS that there is nothing that TD Bank could discover, no 15 (Exhibit No. 7, Conspiracy Chart, was marked 16 evidence that TD Bank could discover during the discover 16 for identification.) 17 process that would change your opinion that there is a 17 BY MR. HUTCHINSON: 18 high probability of success on all of these claims if 18 Q. I am just seeing if I can nail this down. I 19 tried to a jury? 19 am marking this as Exhibit 7. I want to ask you to help 20 A. No, that clearly is not my opinion. I can -- 20 me fill this out, sir, if you would. 21 I can imagine all sorts of scenarios that would have an 21 During your -- when you were researching the 22 impact upon the viability of the Beverly and Marlin 22 veracity of this conspiracy claim, what's your 23 claims, and I've made reference to one of them. If you 23 understanding -- if you will write in on Exhibit 7 what 24 are able to prove that somebody has falsely and 24 your understanding of the agreement is of the conspiracy 25 fraudulently claimed to have been a Rothstein Ponzi 25 claim? Page 110 Page 112 I scheme investor when they never invested any money in 1 MR. MOSKOWITZ: I'd object to this. I have 2 the Rothstein Ponzi scheme, that would have a pretty 2 never seen where you ask an expert witness to write 3 significant impact on the viability of their claim. 3 into a chart that you had basic things. If you 4 I have assumed, as I will tell you again, that 4 have questions for him, he said he also needs to 5 the allegations in the complaint are true and those 5 see the complaint. I am sure you can make the 6 allegations include the fact that all of these 6 complaint available to him. He says the complaint 7 plaintiffs were investors in the Rothstein Ponzi scheme. 7 speaks for itself. So I object to making an expert 8 Ask me to assume facts contrary to the 8 tell you agreement -- just for the record, it 9 allegations in the complaint on a hypothetical basis, I 9 says -- let me just say, this is a document you 10 would be happy to do that, and then I will tell you 10 have typed up yourself under the heading II whether it has any impact on any of my opinions. I was 11 conspiracy. It's something I guess you made. It 12 not an eyewitness to any of these things. I am obliged 12 has number one, agreement; two, parties to 13 as an expert to make certain assumptions. If you ask me 13 agreement; three, date of agreement; four, unlawful 14 to make different assumptions, I will do that and I will 14 act; five, common goal. I5 tell you whether those different assumptions have an 15 I would object to them having to write certain 16 impact on my opinion. 16 things that you used. If you have questions for 17 Q. And if you spend very minimal time preparing 17 him he will try his best to answer your questions I8 your opinion before it's released, you have to make a 18 but I don't think an expert needs to write into 19 lot more assumptions than you otherwise would. Isn't 19 this kind of questionnaire that you've created for 20 that correct, sir? 20 him. 21 A. No, not necessarily. I can't agree with that. 21 BY MR. HUTCHINSON: 22 Q. In your -- the nature and substance of the 22 Q. That's your objection and you noted for the 23 opinion you talked about -- well, first of all, we have 23 record but I am going to ask him because I don't 24 talked a lot about aiding and abetting. Let's talk 24 understand the conspiracy and you're the expect in this 25 about the conspiracy claim. 25 case and you're the one that's opining on the veracity 28 (Pages 109 to 112) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130168 Page 113 Page 115 1 and viability of this conspiracy claim. So, can you 1 was an agreement? 2 please write in what your understanding is of the 2 A. Yes, either expressed or implied. 3 agreement that forms the basis of this conspiracy? 3 Q. Among two parties? 4 A. No, sir. I am going to follow the direction 4 A. At least two. 5 of the party that retained me in this matter. I have 5 Q. Two parties to commit an unlawful act? 6 been directed not to do that. I won't do it. I will be 6 A. Correct. 7 happy to answer any questions that you have. 7 Q. In pursuit of a common goal? 8 MR. HUTCHINSON: So are you instructing him 8 A. Yes. 9 not to? 9 Q. What is your understanding of the agreement 10 MR. MOSKOWITZ: I am not instructing him not 10 that forms the basis of the conspiracy claims and the II to answer. I just can't imagine — I am going to II underlying matters? 12 state my objection. I can't imagine a lawyer says 12 A. There was an agreement to commit a fraud. 13 I have no idea and I am really confused. And I 13 Q. And what fraud was there an agreement to 14 think that's really hyperbole. I have no idea what 14 commit? 15 they are alleging. 15 A. The Ponzi fraud, the sale of fraudulent 16 The witness said I am relying upon the 16 nonexistent interests in the settlement of, the 17 complaint itself for my testimony. Obviously, it 17 nonexistent interests in the settlement of legal claims. 18 specks for itself. If you want to ask questions 18 Q. Is that the extent of the agreement? 19 about it, but I don't think it's appropriate of you 19 A. I don't know if it extended beyond that, but 20 to require an expert of Mr. Scarola's stature to 20 that certainly is a description of the essential terms 21 sit there and fill in your questionnaire. 21 of the agreement. 22 It's outside the scope of his testimony to 22 Q. And what individuals were parties to that 23 fill in your questionnaire. So I think it's 23 agreement? 24 inappropriate. Of course, I am going to let 24 A. Scott Rothstein on the one hand, and TD Bank 25 Mr. Scarola do what he's going to do. He has more 25 on the other. Page 114 Page 116 1 years experience than I do, but I think it's 1 Q. I ask for individuals, sir. 2 inappropriate. If you have any questions we are 2 TD Bank acts through its employees. Correct? 3 here for the full federal rules to answer them. 3 A. Yes, it does. 4 BY MR. HUTCHINSON: 4 Q. So, what individuals with TD Bank made this 5 Q. You are not receiving an instruction, sir, so 5 agreement with Mr. Rothstein? 6 are you refusing to comply with my request? 6 A. At least Mr. Spinosa. 7 A. I would be happy to answer whatever questions 7 Q. Anyone else with TD Bank? 8 you have. 8 A. The other named defendants in the complaint. 9 Q. But you will not write out your understanding 9 Q. Do you remember their names? 10 of that the conspiracy claim of which you are opining on 10 A. Not offhand. I've got them in my notes and 11 the veracity on this matter? I the complaint themselves. 12 A. That's correct. I don't choose to write out 12 Q. Which complaint are you referring to, sir? 13 answers to a compound question. I would be happy to 13 A. Both of them. 14 answer any questions that you have but I am not going to 14 Q. When was this agreement made? 15 write these out. 15 A. I don't recall the date. 16 Q. Okay. 16 Q. Isn't that important to your analysis to their 17 A. I would prefer to expedite this process and 17 viability? 18 that will slow it down rather than expediting it. 18 A. Only to the extent that it was within the 19 Q. Okay. So you are refusing to comply? 19 statute of limitations. 20 A. I am. 20 Q. What about with extent to when individuals 21 Q. What's your understanding of the alleged -- 21 invested? 22 first of all, to prevail on a --- 22 A. That would be a statute of limitations issue. 23 A. Do you want this back? 23 Q. It would have no impact on the elements of a 24 Q. To prevail on a conspiracy claim, isn't it 24 conspiracy claim? 25 true, sir, that the plaintiffs have to prove that there 25 A. I am not sure that I understand that question. 29 (Pages 113 to 116) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130169 Page 117 Page 119 1 I don't understand that question. I limited review of the record in this matter, that it was 2 Q. When did these individuals that are plaintiffs 2 Frank Spinosa's goal to defraud investors in the Beverly 3 that you are opining on their claims, when did they 3 and Marlin matter whom he never met, never had any 4 start investing? 4 contact with and who invested through Banyon, it was his 5 A. I don't recall those dates. 5 goal to defraud those individuals? 6 Q. Was that not important to your analysis of the 6 A. Yes, sir. 7 viability of their claims? 7 Q. And you had -- you have seen no evidence that 8 A. No, I am not saying that. What I am telling 8 supports that, have you? 9 you is that the specific date upon which an investment 9 A. No, that's not true. I have seen and heard 10 was made was not a matter that I focused attention on 10 Scott Rothstein's testimony, personally. I attended a 11 beyond noting that the claim was timely filed within the 11 session of his deposition. I have read his testimony 12 statute of limitations and that these investments were 12 directly, but I have assumed the accuracy of the facts 13 made during the ongoing Ponzi scheme in which TD Bank 13 alleged in the complaint. 14 was an aider and abetter and conspirator. 14 If you would like me hypothetically to assume 15 Q. So you are offering an opinion in this matter 15 that any of those facts are not true, I would be happy 16 that all investments at issue in the Beverly and Marlin 16 to do that hypothetically and tell you whether that has 17 claim were made after there was some agreement between 17 any impact upon the opinions that I have expressed. 18 Mr. Spinosa and Mr. Rothstein to conduct a Ponzi scheme? 18 Q. Sir, I am asking you about evidence. What 19 A. Yes, and if that is an incorrect assumption, 19 evidence? 20 any investment that was not in place during the ongoing 20 A. Isn't Mr. Rothstein's testimony evidence? 21 conspiracy would not be a viable claim. 21 Q. Did Mr. Rothstein testify that Frank Spinosa 22 Q. But you have done in your -- in your limited 22 intended to defraud Mr. Beverly? 23 time in preparing your opinions, you did not take the 23 A. Those words were not spoken. 24 time to figure out whether investments were made prior 24 Q. And do you believe Mr. Rothstein to be a 25 to any alleged conspiracy? 25 credible witness? Page 118 Page 120 1 A. I have assumed the accuracy of the allegations I A. I believe that some of Mr. Rothstein's 2 included within the complaint. If any of those 2 testimony is credible. I would not rely upon 3 allegations are proven not to be true, then I will be 3 Mr. Rothstein's inherent uncorroborated credibility 4 happy to take that into consideration and I will let you 4 myself. 5 know whether that has an impact on my opinion or whethe 5 Q. Can you tell me about Frank Spinosa's 6 it does not. 6 knowledge of the Banyon investment setup and scheme? 7 Q. Is there an allegation of when this agreement 7 A. No, nor do I think that that's particularly 8 was even made? 8 relevant. 9 A. I don't recall a specific date. I don't know 9 Q. Are you aware that mostly all these investors 10 as I sit here right now. 10 invested through Banyon? 11 MR. MOSKOWITZ: We have been going about an 11 A. I am aware that most of these investors, if 12 hour and 15 minutes. Whenever you think it's an 12 not all of them, invested through Banyon. 13 appropriate time, maybe give Mr. Scarola a 13 Q. Did Mr. Rothstein have a separate conspiracy 14 five-minute break. 14 with respect to the Banyon investments? 15 MR. HUTCHINSON: I just have a couple 15 A. No, that is exactly the point that I am 16 questions. 16 attempting to suggest to you is of significance, that 17 MR. MOSKOWITZ: Of course. 17 is, that this was a general conspiracy to defraud anyone 18 BY MR. HUTCHINSON: 18 and everyone who Mr. Rothstein, with the substantial 19 Q. And what's your understanding of the common 19 assistance of TD Bank, was able to entice to make these 20 goal with respect to this alleged conspiracy? 20 investments. 21 A. To defraud victims of their money. 21 Q. Who, again, were the individuals at TD Bank to 22 Q. Which victims? 22 provide this substantial assistance? 23 A. All of those who were investors in the Ponzi 23 MR. MOSKOWITZ: Objection. That was answered 24 scheme, including the named plaintiffs. 24 seven times before. Why don't we take a break now 25 Q. So your -- it's your opinion, based on your 25 if that's okay. 30 (Pages 117 to 120) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130170 Page 121 Page 123 1 MR. HUTCHINSON: Let's answer this question. 1 not. The names of the plaintiffs are different. They 2 Then we will take a break. 2 are different plaintiffs. Those are different facts but 3 MR. MOSKOWITZ: Asked and answered seven 3 I don't believe those to be material differences. As to 4 times. I don't think he needs to answer it. It's 4 the material facts, I don't think that there are any 5 going to be the same answer, but go ahead. 5 significant distinctions. 6 A. Frank Spinosa. Rosanne Caretsky, the named 6 Q. Either way, did any of the wrongful conduct in 7 defendants in the action. I can't, from memory, give 7 the Beverly and Marlin matters occur outside the State 8 you the names of other TD Bank employees that were 8 of Florida? 9 directly involved. 9 A. Nothing in particular is coming to mind right 10 MR. HUTCHINSON: Let's take a break. 10 now, so there is nothing I can identify as I am sitting 11 MR. MOSKOWITZ: Thank you. 11 here right now. I don't remember. I don't recall 12 THE VIDEOGRAPHER: We are off the record. 12 having focused on the issue of the geographic location 13 It's 2:01 p.m. 13 of facts that I thought would make a difference. 14 (A recess was taken from 2:01 p.m. to 14 Q. Is a Florida jury permitted to award punitive 15 2:22 p.m.) 15 damages for conduct that occurred outside of the State 16 THE VIDEOGRAPHER: Back on the record. It's 16 of Florida? 17 2:22. 17 A. There is United States Supreme Court opinion 18 (There was a discussion off the record.) 18 language that places geographic limitations on the 19 BY MR. HUTCHINSON: 19 ability of a jury to punish for wrongdoing. I don't 20 Q. If you turn back to Exhibit 5 in your stated 20 believe that those limitations would have any material 21 opinions, the last sentence, the first paragraph says, 21 bearing upon the punitive damages claims in this case. 22 "based on the outcome of similar cases." What cases are 22 Q. And why is that? 23 you referring to there? 23 A. Because I believe that those facts upon which 24 A. Coquina, Razorback, the opinions issued in 24 I base my opinion with regard to punitive damages are 25 this case thus far by Judge Streitfeld. 25 facts that involve Florida conduct. Page 122 Page I24 Q. Did you do anything to research the factual 1 Q. Is the second paragraph on Exhibit 5 2 background, the specific factual background of the 2 describing your opinions, is that set forth in your 3 Coquina case? 3 opinions with respect to the availability of punitive 4 A. No, I did not do anything to independently 4 damages in the Beverly and Marlin matters? 5 research the factual background of the Coquina case. I 5 A. Those statements, as I have previously 6 have relied upon what is contained within the materials 6 testified, are accurate. 7 that were presented to me for review, nothing beyond 7 Q. Is there a statute that controls what a 8 that. 8 plaintiff has to prove to receive punitive damages 9 Q. Do you know whether the Coquina plaintiffs had 9 against an employer for an employees conduct? 10 any contact with TD Bank? 10 A. There is. A. I am aware that there were Coquina plaintiffs 11 Q. And is that Florida Statute 768.72? 12 that did have contact with TD Bank, yes. 12 A. It is. 13 Q. Do you know whether any of the Coquina 13 Q. And in formulating your opinions in this 14 plaintiffs receive written materials from TD Bank? 14 matter, did you conclude that each plaintiff would 15 A. My understanding is there were Coquina 15 present clear and convincing evidence that would satisfy 16 plaintiffs who did. 16 that statute? 17 Q. And how about for Razorback with respect to 17 A. Yes. 18 both of those topics? 18 Q. Let me mark the statute as an exhibit. It 19 A. You know, I don't recall specifically with 19 will be Exhibit 8. 20 regard to Razorback. I am not sure one way or another. 20 (Exhibit No. 8, Statute 768.72, was marked for 21 Q. So it's your understanding, at least at some 21 identification.) 22 level, that the facts in Coquina are different than the 22 BY MR. HUTCHINSON: 23 facts of Beverly and Marlin? 23 Q. Is Exhibit 8 a copy of the correct statute 24 A. Well, there obviously are different facts. 24 which we are referring to? 25 The question is whether the differences are material or 25 A. It is. 31 (Pages 121 to 124) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130171 Page 125 Page 127 1 Q. Would you walk me through the statute and 1 just use Mr. Beverly as an example because he is named 2 explain to me how a plaintiff in the underlying Beverly 2 plaintiff in the first filed suit. 3 and Marlin matters such as Mr. Beverly can recover 3 So, please describe to me how you think 4 punitive damages against TD Bank for his claims under 4 Mr. Beverly can prove that Frank Spinosa committed 5 this statute? 5 intentional misconduct as it is defined in 768.72, 2(a). 6 A. I am not sure what you mean when you request 6 A. By proving the fact alleged in the complaint. 7 that I walk you through the statute. 7 Q. Are there any facts alleged in the complaint 8 Q. Well, am I not correct that for an employer to 8 that Mr. Spinosa knew that injury or damage would result 9 be liable for an employee -- excuse me, for an employer 9 to Mr. Beverly? 10 to be liable for punitive damages for an employee's 10 A. If the intent of the question is to identify 11 conduct, the plaintiff must make a two-step showing 11 factual allegations in the complaint that indicate 12 under the statute. 12 personal knowledge on Mr. Spinosa's part of the 13 First, the plaintiff must show specific 13 particular circumstances of Mr. Beverly's individual 14 conduct by an individual employee and after that must 14 Ponzi scheme victimization, the answer to that question 15 show specific conduct by the employer. Correct? 15 is, I don't remember. However, that is not what would 16 A. That is correct. 16 be required to be proved in order to demonstrate 17 Q. Subsection 2 of 768.72 specifies a conduct 17 TD Bank's liability to Mr. Spinosa for Mr. Spinosa's 18 that a plaintiff must prove with respect to an 18 loss arising out of TD Bank's participation in either 19 individual employee first. Correct? 19 the conspiracy to defraud or in aiding and abetting the 20 A. You are thus far accurately walking me through 20 fraud. 21 the statute. 21 Q. In response to the first part of your answer, 22 Q. Okay. Since you wouldn't walk me, I will walk 22 I just want it to be clear on the record, I am not 23 you. 23 asking you about allegations in the complaint. I am 24 A. Good. 24 asking you about evidence. You were the one that 25 Q. Okay. Subsection 2, so, with respect to the 25 referred to the allegations in the complaint and your Page 126 Page 128 1 individual employee, the plaintiff has to show by clear 1 knowledge and your assumption that everything in the 2 and convincing evidence that the employee was personally 2 complaint is true. So, when I am asking you the 3 guilty of intentional misconduct or gross negligence. 3 question, I am asking you about evidence. 4 Correct? 4 A. Well then let me make sure that you understand 5 A. That is what the statute says. 5 what my role in this case is and it may help to focus 6 Q. And you believe this statute to be applicable 6 your questions more specifically upon what it is that I 7 to the claims in this matter. Correct? 7 am doing and what it is that I am not doing. 8 A. I do. 8 I have not undertaken an assessment of the 9 Q. And do you believe that a plaintiff -- and in 9 plaintiffs ability to prove the allegations in the 10 the statute under Subsection 2 it then describes or 10 complaint. I have assumed the plaintiff's ability to 11 defines intentional misconduct and gross negligence. II prove the allegations in the complaint. I have taken 12 Correct? 12 those allegations as a given, and if the plaintiffs arc 13 A. Yes. 13 unable to prove specific allegations, that may or may 14 Q. Is it your belief that a plaintiff such as 14 not have an impact upon the ultimate opinions that I IS Mr. Beverly would make his showing with respect to an 15 will be expressing. If you identify a specific factual 16 individual TD Bank employee under either intentional 16 allegation and ask me to assume that it cannot be 17 misconduct or gross negligence? 17 established, I will be happy to tell you whether that 18 A. Both. 18 would or would not have an impact upon the ultimate 19 Q. Both. Okay. Well, let's focus on intentional 19 opinions that I am expressing. 20 misconduct first. 20 Q. Let's go back to 2(a), intentional misconduct. 21 First, which employee of TD Bank do you 21 Do you dispute that a claimant such as 22 believe a plaintiff could, Mr. Beverly could present 22 Mr. Beverly in order to satisfy Subsection 2(a) would 23 evidence with respect to satisfy intentional misconduct? 23 have to show -- and, again, we are referring to 24 A. At least Frank Spinosa. 24 Mr. Spinosa because that's who you chose had actual 25 Q. Let's take Mr. Spinosa and, again, we will 25 knowledge --- 32 (Pages 125 to 128) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130172 Page 129 Page 131 1 A. No, I think you chose Mr. -- oh, I'm sorry, I 1 law. It must be construed as narrowly as possible in 2 didn't choose --- 2 terms of the restrictions that it imposes upon the 3 Q. You identified Mr. Spinosa? 3 common law. I do not believe it was intended to, nor do 4 A. I identified Mr. Spinosa. 4 1believe that it does impost a requirement that the 5 Q. You identified Mr. Spinosa? 5 specific identity of victims be known to someone who is 6 A. You chose him, that is, your client chose him. 6 conspiring to defraud or aiding and abetting a fraud. 7 Q. Would you not agree that under the scenario 7 I think it is enough if the conspirator and 8 that we are discussing that Mr. Beverly would have to 8 aider and abettor knows that the individual with whom he 9 show that Mr. Spinosa, according to the statute, had 9 is conspiring or to whom he is providing aid in the 10 actual knowledge of the wrongfulness of the conduct and 10 commission of a fraud is out there trying to get as many 11 that high probability that injury or damage to the 11 people involved in this scheme as he possibly can and 12 claimant, Mr. Beverly, would result? Do you agree with 12 the conspirator and alder and abettor becomes 13 that? 13 responsible for the injury suffered by everyone who gets 14 A. I agree that it would be Mr. Beverly's burden 14 caught in that web of deception. 15 to prove the elements described under 768.72, 2(a). 15 Q. Do you have any case law that supports your 16 Q. And do you have any understanding of whether 16 interpretation of Subsection 2(a)? 17 Mr. Beverly can show or any of the other plaintiffs can 17 A. The long history of common law of the State of 18 show that Mr. Spinosa had actual knowledge of the high 18 Florida. 19 probability that injury or damage would occur to each 19 Q. By the way, you talked about Mr. Rothstein. 20 individual claimant? 20 A. Also, I should clearly extend that as well, 21 A. The statute and the law on conspiracy and 21 Coquina and Razorback addressed those issues. Those 22 aiding and abetting does not require that Mr. Spinosa 22 issues were addressed in argument before the Court in 23 ever know of the existence of Mr. Beverly or any other 23 this case and, it is my understanding of the rulings in 24 individual plaintiff. 24 each of those cases that the same distinctions that you 25 Q. Sir, we have talked about aiding and abetting 25 are attempting to draw, the same statutory Page 130 Page 132 1 and conspiracy before. We are now talking about 1 interpretations that you are by implication advancing 2 punitive damages, which is controlled by the language in 2 through your questions have been rejected by the courts 3 this statute. Correct? 3 previously. 4 A. Yes, that's correct. 4 Punitive damages have already been awarded 5 Q. So, while we are talking, let's stay on 5 under these circumstances and I don't -- I don't think 6 subject here and stick with punitive damages. 6 there is any question about the fact that they were 7 Do you have any understanding of whether the 7 awarded under appropriate circumstances. 8 plaintiffs in the Beverly and Marlin matters can show 8 Q. Name me a case? 9 that Mr. Spinosa had actual knowledge of the high 9 A. The rejection of those arguments was what was 10 probability that injury or damage to each of the 10 required by the law of this state. 11 claimant's would result? 11 Q. Name me a case where punitive damages have 12 A. Yes. 12 been awarded against TD Bank for its involvement in the 13 Q. And what is your understanding of the evidence 13 Rothstein Ponzi scheme where the plaintiffs had no 14 that would show that? 14 contact or communications with TD Bank? 15 A. The evidence are the facts that are alleged in 15 A. I don't remember a name, nor do I think that 16 the complaint which demonstrate that Mr. Spinosa was a 16 that's relevant or material. Once you join the 17 knowing participant in a Ponzi scheme that was intended 17 conspiracy, you become responsible for all of the 18 to cast the broadest possible net over victims who would 18 subsequent conduct as well as all of the proceeding 19 be willing to invest in what was a fraud. 19 conduct of the co-conspirators. You are ratifying their 20 Q. Can you point to me any evidence that Spinosa 20 actions. You joined them at your own peril, responsible 21 had any knowledge of the high probability that injury or 21 exhibit all of the injury done in the course and scope 22 damage would result to each individual plaintiff? 22 of that conspiracy, whether the injury proceeded your 23 A. No, nor do I believe that to be relevant or 23 joining the conspiracy or whether it followed your 24 material or statutorily required. I believe that this 24 joining the conspiracy. That's a very basic principle 25 is a statute that was passed in derogation of the common 25 of conspiracy law. 33 (Pages 129 to 132) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130173 Page 133 Page 135 1 Q. Sir, we previously discussed -- we discussed 1 2(b) that Mr. Spinosa owed Mr. Beverly any duty? 2 conspiracy and aiding and abetting previously. We are 2 A. There is not a requirement under 2(b) that a 3 focusing on the punitive damages statute. I ask that 3 personal duty be owed to Mr. Beverly. 4 you focus your attention on that. 4 Q. A claimant can recover punitive damages under 5 A. I am focusing on that. I don't believe the 5 a gross negligence prong regardless of whether there is 6 statute changes the common law in that regard. As I 6 any duty owed? 7 said, this is a statute that is in derogation of common 7 MR. MOSKOWITZ: Objection. Asked and answered 8 law, and it only changes the common law to the extent 8 a couple of times. 9 that it explicitly addresses those common law principles 9 A. A claimant may recover punitive damages under 10 and constitutionally limits them. This statute does not 10 2(b) if the claimant suffered an injury as a result of 11 change those basic principles of common law 1I conduct that included an intentional or reckless 12 conspiracies. 12 disregard of the rights of persons exposed to such 13 Q. Doesn't Subsection 2(a) also require that the 13 conduct. 14 intentional course of conduct also resulted in the 14 BY MR. HUTCHINSON: 15 injury of the claimant? 15 Q. Isn't intentional misconduct described in 16 A. Yes, and in the case of a conspiracy, that 16 2(a)? 17 means that if you conspire to defraud that the injury 17 A. Intentional misconduct is described in 2(a) 18 result from the fraud. 18 but gross negligence can arise from either an 19 Q. We have already discussed proximate causation 19 intentional or a reckless disregard of the rights of 20 versus but for causation. Correct? 20 persons exposed to such conduct. And Mr. Beverly and 21 A. That's a subject matter that was dealt with 21 the other victims of the fraud had a right not to be 22 earlier, yes. 22 defrauded. 23 Q. Subsection 2(b) you said is also applicable. 23 Q. Have you ever had an experience in your 24 Is that correct? 24 practice of law where someone can be negligent or 25 A. Yes. 25 reckless where they owed no duty to the other person? Page 134 Page 136 Q. And that's for gross negligence? 1 A. That question really doesn't make much sense 2 A. That's correct. 2 to me. You will have to please try to ask it in a 3 Q. It's clear to have a negligence claim there 3 different way. 4 has to be a duty. Isn't that correct? 4 Q. Do you have any cases to support any 5 A. In order for their to be a negligence claim, 5 contention that someone can be negligent or reckless 6 there has to be a duty, but this statute is not defining 6 with respect to another person without a duty? 7 an independent negligence claim. It is defining the 7 A. Negligence, if we are talking about a 8 predicate for the recovery of punitive damages. 8 negligence claim, requires as an element, whether it is 9 Q. So, is it your legal opinion here today that 9 simple negligence or gross negligence the existence of a 10 Subsection 2(b) is applicable regardless of whether any 10 duty. II duty is owed to the claimant? Q. Would you agree that recklessness requires a 12 A. It is my opinion that punitive damages may be 12 duty? 13 recovered against a defendant where the defendant's 13 A. Recklessness as I understand it to be used in 14 conduct was so reckless or wanton in care that it 14 this context is in effect a degree of negligence. 15 constituted a conscious disregard of the rights of 15 Q. Okay. So once a plaintiff makes the required 16 persons exposed to such conduct so that in the context 16 showing under 2(a) or 2(b), the plaintiff then has to 17 of a conspiracy, if TD Bank's conduct was so reckless or 17 make an additional showing under Subsection 3 in order 18 wanting in care that it demonstrated a disregard of the 18 to recover from punitive damages. Correct? 19 rights of victim's of the conspiracy to defraud TD Bank 19 A. Yes. 20 would be subject to punitive damages. 20 Q. And which subsection of -- Subsection 3, I'm 21 Q. So, let's take Mr. Beverly and Mr. Spinosa as 21 sorry, is it 3(a), 3(b) or 3(c) that you claim are 22 the example which we are using because we are not 22 applicable to the claims in the Beverly and Marlin 23 talking about the bank in this subsection. We are 23 matters? 24 talking about an individual. 24 A. My understanding is that Mr. Spinosa was a 25 Did Spinosa or is there a requirement under 25 senior regional vice president of TD Bank. I believe 34 (Pages 133 to 136) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130174 Page 137 Page 139 1 that Mr. Spinosa's conduct as a senior managerial level 1 policy decisions? 2 employee rises to the level of being the conduct of 2 A. He was certainly making some corporate policy 3 TD Bank so that the criteria of 3(a) are met. 3 decisions, yes. 4 I also believe that the criteria of 3(b) are 4 Q. What was Mr. Spinosa doing that you understand 5 met, both through Mr. Spinosa's conduct and through the 5 to put him sufficiently high on the corporate ladder 6 ratification of that misconduct through the subsequent 6 to -- so that his acts would be deemed acts of the 7 actions of TD Bank as a corporate entity rising to the 7 corporation? 8 highest corporate levels, that is, into the board of 8 A. He was holding the title of senior regional 9 directors. 9 vice president and exercising the responsibilities 10 I also believe that the criteria of 3(c) are 10 imposed upon him or vested in him by the corporation of II met in that the corporation, both through Mr. Spinosa 11 senior regional vice president. 12 and others at levels above him engaged in conduct that 12 Q. What were those responsibilities? 13 constituted gross negligence and contributed to the 13 A. He was pretty much in charge of the entire 14 losses suffered by these claimants. So, the answer to 14 relationship with Mr. Rothstein. He seemed to have the 15 your question is, all three. 15 ability to do whatever he wanted on behalf of the 16 Q. So, just so I understand what you're saying is 16 corporation and his relationship with Mr. Rothstein. 17 you are using Mr. Spinosa to meet the requirements of 17 Q. So, you are saying because he was allegedly in 18 Subsection 2 as the employee and you are using III charge of the relationship with Mr. Rothstein that he 19 Mr. Spinosa to satisfy the subsection, the requirements 19 was high enough in the hierarchy for his acts to be 20 of Subsection 3 as the employer? 20 attributable to the corporation? Is that your 21 A. In some respects the answer to that question 21 reasoning? 22 is yes. Yeah — I mean, I'm not relying exclusively 22 A. In light of the magnitude of the relationship 23 upon Mr. Spinosa's conduct as the conduct of TD Bank, 23 with Mr. Rothstein, the answer to that question is, yes. 24 but because Mr. Spinosa occupies the level within the 24 There may be some bank teller who is in charge of the 25 corporate structure that he does, it is in my opinion 25 relationship with me when I walk up to the window and I Page 138 Page 140 I sufficient to satisfy that criteria. deposit my check and I would not consider that bank 2 There are other factors as well but I think teller to be establishing corporate policy. But when 3 that is one and I don't think that the statute changes 3 someone is conducting the level of business with TD Bank 4 the common law in that regard. Again, the statute is in 4 that Mr. Rothstein was conducting and is interfacing 5 derogation of the common law and as you, yourself, have 5 with TD Bank through Mr. Spinosa and Mr. Spinosa was 6 acknowledged earlier, a corporation cannot act except 6 empowered to make decisions on behalf of TD Bank with 7 through its agents, servants and employees and the 7 regard to a relationship of that magnitude, significance 8 common law is clear that managerial level employees are 8 and duration, all of the circumstantial evidence would 9 the corporate entity. 9 indicate that Mr. Spinosa has adequate corporate 10 Q. And what's your understanding of Mr. Spinosa's 10 authority to bind the corporation. II place in the hierarchy of TD Bank management? I Q. Have you researched the case law interpreting 12 A. He is senior regional vice president. 12 Subsection 3? 13 Q. And what's your understanding of where that 13 A. I don't think there is very much case law at 14 puts him in the corporate hierarchy? 14 all that interprets Subsection 3, but it is not 15 A. I don't know how to answer that question. IS something that I have researched with regard to this 16 Q. You don't know the answer? 16 case. 17 A. It puts him at senior regional vice president. 17 Q. You didn't take the time to do that before 18 You want to know how many levels there are above and I8 rendering your opinions? 19 below him? 19 A. I did not, no. But, again, it is common law 20 Q. Sure. 20 with which I am familiar and I don't believe that the 21 A. I don't know. 21 statute has altered the common law in that regard. 22 Q. Do you have any idea how many levels there are 22 Q. Okay. With respect to Subsection 3, you have 23 above him? 23 named Mr. Spinosa. Are there any other individuals at 24 A. No. 24 TD Bank who you say would meet the requirements of the 25 Q. Do you know whether he was making corporate 25 subsections in Subsection 3 or that would meet the 35 (Pages 137 to 140) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130175 Page 141 Page 143 1 requirements of Subsection 3? 1 MR. MOSKOWITZ: Objection. Asked and 2 A. The members of the board of directors. 2 answered. He stated the specific paragraphs in the 3 Q. Any other individuals? 3 complaint, which he has pointed you to a couple of 4 A. There were others in the corporate hierarchy 4 times already. 5 above Mr. Spinosa and I don't recall their names but it 5 A. Yeah. I mean, I have assumed those facts to 6 is my recollection from information provided to me that 6 be true. As I said, if you want me to assume they are 7 it was involvement on the part of the General Counsel's 7 not true, tell me which ones you want me to assume they 8 office. There were other corporate executives above 8 are not true. If you want me to assume they are all not 9 Mr. Spinosa who were involved in relevant transactions 9 true, I have no basis for my opinion. 10 and conducted themselves in ways that clearly indicated 10 BY MR. HUTCHINSON: II at least gross negligence on their part. 11 Q. As you sit here today, you cannot describe how 12 Q. You are referring to gross negligence with 12 any other individuals other than Mr. Spinosa satisfies 13 respect to the Ponzi scheme operations? 13 Section 3(a)? 14 A. Yes. 14 A. No, that's not true. I am pointing you to 15 Q. Okay. Let's take the statute section by 15 paragraphs 13 and 86 through 153. I am also aware that 16 section and make sure I understand what you are 16 there has been subsequent discovery that has been taken 17 referring to in each subsection. 17 in this case, including depositions of corporate 18 Subsection 3(a), who meets the requirements 18 representatives where there have been facts developed 19 for TD Bank to satisfy Subsection 3(a), participation in 19 with regard to reports made to the board of directors 20 such conduct which I assume means -- do you agree that 20 with TD Bank with regard to this conduct. So, I have 21 would mean that the alleged Ponzi scheme conduct? 21 that and clearly it is of significance that these same 22 A. That is not accurate. 22 circumstances have been presented to a jury and there 23 Q. Okay. 23 have been legal rulings made with regard to the 24 A. It is conspiracy and aiding and abetting the 24 sufficiency of the evidence to get to a jury and then 25 Ponzi scheme. 25 there have been factual findings by that jury imposing Page 142 Page 144 1 Q. Okay. So that would be the intentional 1 punitive liability. That's very significant to me in 2 misconduct under Section 2(a)? 2 terms of my ability to express an opinion with regard to 3 A. Active and knowing participation in the 3 these matters. The fact that it already has happened 4 conspiracy and/or the aiding and abetting of the 4 makes a big difference. 5 conspiracy to defraud. 5 Q. Mr. Scarola, you previously testified that the 6 Q. Okay. So, which individual with TD Bank 6 reports of board of directors dealt with the subsequent 7 satisfies Section 3(a) for the employer? 7 litigation, did not deal with the underlying Ponzi 8 A. At least Mr. Spinosa, but my recollection is 8 scheme. Isn't that correct? 9 that there are others above him who at least by virtue 9 A. No, I don't think I said that. I think that 10 of circumstantial evidence had knowing participation in 10 what I said was I am aware that reports were made to the II the fraud and conspiracy in the aiding and abetting of 11 board of directors with regard to the litigation 12 the fraud. 12 misconduct. I never said that there were no reports to 13 Q. Can you explain the facts and circumstances 13 the board of directors regarding the underlying 14 surrounding these other individuals and their 14 liability, and it would astound me if reports were not 15 participation in the fraud? 15 made to the board of directors regarding the underlying 16 A. Those are detailed in paragraph 13 and 86 16 liability and if that were to have been true, that, in 17 through 153 of the complaint. 17 and of itself, would indicate an astounding level of 18 Q. Sir, I am asking for your understanding as we 18 gross negligence. 19 sit here today -- 19 For the board of directors to turn a blind eye 20 A. That is my -- sorry, I didn't mean to 20 to the underlying liability concerns that have been so 21 interrupt you. 21 widely publicly reported would all by itself warrant the 22 Q. -- that you're basing your opinion on. 22 imposition of very significant punitive liability. 23 What is your understanding as to the facts and 23 Q. Mr. Scarola, what evidence can you point me to 24 circumstances surrounding these other individuals 24 that any -- the board of directors was involved in any 25 participating in the fraud? 25 way with the Rothstein Ponzi scheme prior to its 36 (Pages 141 to 144) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130176 Page 145 Page 147 1 implosion? 1 taken the position that there was a rouge employee who 2 A. I haven't stated that the Rothstein -- that 2 was on a venture of his own. There has been an 3 the board of directors was involved in the Rothstein 3 admission that Mr. Spinosa was acting within the course 4 Ponzi scheme prior to its implosion. That isn't the 4 and scope of his employment and a consistent defense of 5 question that you asked, and that's not what I just 5 what he did. 6 said. You asked me whether there was any indication 6 The mere persistent denial of any wrongdoing 7 that the board of directors did not have knowledge of 7 on his part and any need for any change within 'ID Bank 8 the underlying liability as opposed to the subsequent 8 constitutes a ratification of all of that misconduct. 9 litigation misconduct. That's what I was responding to 9 Q. And is your understanding -- did you receive 10 because that's what you asked me. 10 your understanding of those facts during the break that 11 Q. So how does the board of directors satisfy 11 we just took from counsel? 12 Section, Subsection 3? Do they knowingly condone or 12 A. No, sir, I have -- that's from the materials 13 ratify Mr. Spinosa's conduct, alleged aiding and 13 that we have provided to you. It's tabbed in the 14 abetting conduct in the underlying Ponzi scheme? 14 materials as a result of the review that I did long 15 A. They are ratifying it, as we sit here today. 15 before this deposition began. 16 THE VIDEOGRAPHER: Pardon me, I need to go off 16 Q. Did you discuss those matters with counsel 17 the record for one second. 17 during the break? 18 MR. MOSKOWITZ: Can we take like a 18 A. No, sir, that was not a topic of our 19 five-minute, no more than five minutes? 19 discussion. 20 (A recess was taken from 3:08 p.m. to 20 Q. And what's your understanding of how Florida's 21 3:18 p.m.) 21 litigation privilege impacts the allegation of 22 THE VIDEOGRAPHER: This is the beginning of 22 litigation misconduct? 23 tape number three. The time is 3:18 p.m. 23 A. The litigation privilege would preclude a 24 We are back on the video record. 24 separate cause of action for conduct occurring during 25 BY MR. HUTCHINSON: 25 the course of and in direct relation to the conduct of Page 146 Page 148 1 Q. Mr. Scarola, is it your opinion that any of 1 the litigation itself, although the Fourth DCA has 2 the alleged conduct with respect -- any of the alleged 2 recently carved out an exception to the litigation 3 litigation misconduct in the Coquina and Razorback 3 privilege. But I don't think that that's particularly 4 matter can be used to satisfy Subsection 3 of the, of 4 applicable here nor are we talking about a separate 5 768.72? 5 cause of action for the litigation misconduct. 6 A. Are you talking about the litigation 6 Q. So is it your opinion that while it would 7 misconduct? 7 prevent a separate cause of action that the evidence can 8 Q. Yes. 8 still be presented and considered by the jury in 9 A. Yes. 9 assessing punitive damages? 10 Q. What is your opinion with respect to that? 10 A. Absolutely. 11 A. That that litigation misconduct is 11 Q. Do you have any case law that supports that 12 circumstantial evidence of knowledge of the wrongdoing 12 opinion? 13 that extended beyond and above Mr. Spinosa's level and 13 A. Johns-Manville. 14 that it is indicative of the ratification of that 14 Q. Does Johns-Manville address the litigation 15 misconduct, although there is also direct evidence of 15 privilege? 16 the ratification of the misconduct. 16 A. Johns-Manville addresses the attitude of the 17 Q. And what's your understanding of the direct 17 wrongdoer upon discovery of the wrongdoing and efforts 18 evidence of the ratification of misconduct? 18 to coverup the wrongdoing. It does not address the 19 A. There has been testimony -- I'm trying to 19 litigation privilege because it was irrelevant in the 20 remember the names of the individuals, Mr. Torili "SP" 20 context of the Johns-Manville case as it is irrelevant 21 and Mr. Guillen maybe, were asked directly about whether 21 here. We are not talking about the prosecution of a 22 Mr. Spinosa did anything wrong and there has been a 22 separate cause of action arising out of the litigation 23 consistent denial of any wrongdoing on the part of 23 misconduct. We are talking about the admissibility of 24 Mr. Spinosa. 24 the litigation misconduct in evidence in this case. 25 This is not a circumstance where TD Bank has 25 (Exhibit No. 9, Statute 768.73, was marked for 37 (Pages 145 to 14.8) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130177 Page 149 Page 151 1 identification.) 1 of co-conspirators or the offender who engaged in the 2 BY MR. HUTCHINSON: 2 direct wrongdoing so that if it can be demonstrated that 3 Q. Mr. Scarola, I have marked as Exhibit 9 3 Scott Rothstein had the specific intent to harm the 4 Florida Statute 768.73. Are you familiar with this 4 claimants and that Scott Rothstein's conduct did, in 5 statute? 5 fact, harm the claimants, those who conspired with Scott 6 A. I am. 6 Rothstein shared his specific intent. 7 Q. This is the statute that we discussed briefly 7 Those who aided and abetted Scott Rothstein, 8 earlier today that sets certain limits on the award of 8 aided and abetted that specific intent and this statute, 9 punitive damages. Correct? 9 which is in derogation of the common law, must be 10 A. Yes. 10 construed to render those co-conspirators and aiders and 11 Q. What are your opinions with respect to the II abettors liable for punitive damages with no cap. 12 application of 768.73 to any future awarded punitive 12 Q. Which cases support your opinion on that? 13 damages against TD Bank for its alleged role in the 13 A. All cases which talk about construing statutes 14 Rothstein Ponzi scheme? 14 in derogation of the common law as narrowly as they may 15 A. That it imposes no practical limitation under 15 reasonably be construed so as to impose the least 16 the circumstances of this case. 16 restrictive derogation of the common law. 17 Q. Why does it impose no practical limitation on 17 Q. Which cases support your opinion that under 18 the imposition of punitive damages? 18 this statute TD Bank would be charged with any specific 19 A. Because, in my opinion, to the extent that it 19 intent on Mr. Rothstein? 20 recognizes exceptions to the limitations it imposes, the 20 A. The fact that all of those involved in a 21 circumstances of this case meet those exceptions. And 21 conspiracy share the specific intent of their 22 because this is a statute in derogation of common law I 22 co-conspirators. It is no different than one who 23 think that it is unlikely that it would by its expressed 23 conspires with a first degree murderer or one who aids 24 terms apply at all. 24 and abets a first degree murder. A first degree murder 25 Q. Okay. Will you please point us to the 25 requires a specific intent. The conspirators, aiders Page 150 Page 152 I language that includes an exception to the statutes I and abettors share the same criminal liability, the same 2 application that leads you to believe it would not apply 2 punitive liability that the direct actor shares. 3 in this matter? 3 Q. Sir, can you point me to any cases that 4 A. Ycs. Lees take them section by section, if 4 support your opinion that TD Bank would be charged with 5 we could. Section -- I guess what I am volunteering to 5 Mr. Rothstein's specific intent under this statute? 6 do is walk you through the statute. 6 A. Only the common law of conspiracy and aiding 7 Q. I appreciate that. 7 and abetting and the fact that this statute must be 8 MR SCHERER: How about running? 8 construed in accordance with the common law unless the 9 A. Section 1(a) imposts a three times limitation 9 statute specifically clearly and unambiguously requires 10 of the compensatory damage award. Under circumstances 10 a departure from the common law and it does not. And 11 where the fact-finder determines that the wrongful 11 there has been no case that I am aware of that would 12 conduct was motivated solely by unreasonable financial 12 indicate otherwise. 13 gain, that limitation does not apply. 13 Q. Let me ask you, sir, how many of these 14 Q. And what limitation does apply in that 14 plaintiffs in Beverly and Marlin even met Mr. Rothstein? IS circumstance? 15 A. I can't answer that question for you nor do I 16 A. In that circumstance, there is a four times 16 think it's a material fact. 17 the amount of compensatory damage amount that applies. 17 Q. Do you know of any plaintiffs in these cases 18 However, that is not applicable where the fact-finder 18 that actually met Mr. Rothstein? 19 determines that at the time of injury the defendant had 19 A. When you talk about these cases, are you 20 a specific intent to harm the claimant and determines 20 talking about Beverly and Marlin? 21 that the defendant's conduct did in fact harm the 21 Q. Yes. 22 claimant. 22 A. I don't know, nor do I think it's a matter of 23 Under that circumstance, there is no cap on 23 significance. They may have met agents of 24 punitive damages. Both the conspirator and the eider 24 Mr. Rothstein. I mean, their agents may have met 25 and abettor arc charged with sharing the specific intent 25 Mr. Rothstein and that would certainly be adequate, but 38 (Pages 149 to 152) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130178 Page 153 Page 155 1 Mr. Rothstein obviously had a specific intent to defraud 1 dollars worth of these claims. So, somebody at TD Bank 2 all investors. He didn't need to meet them in order to 2 thinks these arguments make sense too. 3 form that specific intent. 3 Q. For Subsection C to be applicable which limits 4 Q. That was my question. So, you are saying 4 the punitives to four times the compensatories isn't it 5 Mr. Rothstein can have a specific intent to harm someone 5 true that the wrongful conduct actually had to be known 6 he doesn't know and has never met and under the claims 6 by the managing agent, director, officer, other person 7 asserted in this matter, assuming they are all true and 7 responsible for making policy decisions on behalf of the 8 they prevail on them, which is your assumption in this 8 defendant? 9 matter that that specific intent is then imputed upon 9 A. Yes, sir, that is true. 10 TD Bank for the statute? 10 Q. And who at TD Bank do you claim would satisfy 11 A. Absolutely, and I think that that 11 that element at subsection B? 12 understanding of the law is confirmed by the fact that 12 A. You don't need to go anywhere past 13 punitive liability has been imposed against TD Bank 13 Mr. Spinosa, but once others above him gain knowledge 14 under exactly those circumstances. 14 and fail to take action or affirmatively ratify his IS Q. In addition, they would have to prove the 15 conduct, they are certainly implicated as well. 16 proximate cause element that we discussed before, would 16 Q. Are you offering any opinions in this matter 17 it not, under Subsection C, the defendant's conduct did, 17 with respect to how the different sections of this 18 in fact, harm the claimant? 18 statute would be implemented if plaintiffs compensatory 19 A. As I have told you on multiple occasions 19 damages are reduced through a payout under the plan? 20 before, if you can show me any of the plaintiffs who 20 A. I am offering no bankruptcy related opinions 21 really didn't invest in this Ponzi scheme and lost no 21 at all. What I am saying is that the punitive damages ?2 money, they don't have a claim for either compensatory 22 to the extent this statute would apply at all would be ?3 damages or punitive damages. An essential element would 23 based upon the amount of the compensatory loss arising 24 be that they invested in this Ponzi scheme and they lost 24 out of the misconduct, and if the question is would 25 money as a consequence of that investment. 25 collateral sources of any kind have an impact upon the Page 154 Page 156 I Q. Sir, if you can answer my question. 1 statutory limitation, my answer to that question would A. That is --- 2 be, no, they would not. And it would seem to me without 3 Q. Isn't it true? 3 offering any bankruptcy opinions because that is clearly 4 A. I'm cony but that is a direct answer to your 4 outside my area of expertise that at best some 5 question. 5 bankruptcy related pay out would be nothing more than 6 Q. Is it not true that they would have to share 6 another collateral source. 7 proximate causation in addition to specific intent for 7 Q. Do you have any law or cases that support your 8 Subsection C to be applicable? 8 opinion on that? 9 A. Yes, and all that would be necessary to show 9 A. About the bankruptcy aspect of my opinion -- 10 proximate causation is that they were Ponzi scheme 10 Q. Yes. 11 investors who lost money in the Ponzi scheme. That 11 A. -- absolutely not. 12 satisfies the proximate cause element both from a common 12 Q. Or how any collateral source recovery would 13 law perspective and from a statutory perspective as 13 affect the computation of compensatory damages under the 14 well. 14 statute? IS Q. When I asked you earlier, you couldn't 15 A. I don't have any specific cases but, once 16 identify any cases that said that, could you. 16 again, this statute is in derogation of the common law 17 MR. MOSKOWITZ: Objection misstates his 17 unless there were a clearly and unequivocally stated 18 testimony. 18 legislative intent to tie the multiplier into a 19 A. I could not identify a case that includes that 19 collaterally, a collaterally sourced reduced amount. It 20 language as I sit here right now -- 20 could not properly be applied to the collateral sourced 21 Q. And then subsection B above -- 21 reduced amount. 22 A. -- except for Coquina, which obviously is a ?2 Q. But you have nothing to, no case law to 23 case that stands for that proposition, Razorback -- and, ?3 support that? 24 you know, it is not irrelevant to my opinion that 24 A. All of those cases that talk about 25 TD Bank has been settling hundreds of millions of ?5 interpreting statutes in derogation of the common law. 39 (Pages 153 to 156) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130179 Page 157 Page 159 1 Q. What's your opinion with respect to the 1 ambiguity and there is nothing ambiguous about the fact 2 application of Subsection 2 to any punitive damages 2 that it is intended to apply to products liability case. 3 request in the Beverly or Marlin matter? 3 Q. Well, it's not -- it doesn't say exclusively 4 A. Well, I have already been addressing 2(c), 4 to product liability case. Isn't the term includes? It 5 which -- are you talking about --- 5 doesn't say only includes? 6 Q. No, I think you are talking about two, on 6 A. You are absolutely correct. The word "only" 7 Subsection 2. I think you were looking at 1(b) 7 does not precede the word includes, and some imaginative 8 A. Subsection parens, 2, close parens? 8 defense lawyer might try to read into this statute an 9 Q. Correct. 9 only word but that effort would be unsuccessful because 10 A. That one? On top of page two of this 10 this is a statute in derogation of the common law and so 11 document? 11 only would not be read into this statute. 12 Q. Correct. 12 Q. Is there another provision in this same 13 A. It is my opinion that this section would not 13 statute that talks about what it applies to? 14 impose any limitation upon the award of punitive damages 14 A. Are you talking about Section 2(a). IS in this case because of the way in which the same act or 15 Q. No, I am talking about Section 5 that says, 16 single course of conduct is statutorily defined. 16 "The provision of this section shall be applied to all 17 Q. Can you further explain that for me, please? 17 causes of action arising after the effective date of 18 A. Yes. This subsection precludes the award of 18 this act." 19 punitive damages against a defendant in a civil action 19 A. Yes, that's true. It does, and that raises an 20 where that defendant establishes that there has been a 20 issue both with regard to this statute and 768.72 as 21 prior award of punitive damages arising out of the same 21 well because our discussions have assumed the 22 act or single course of conduct. The phrase, "the same 22 applicability of this statute, but I suggest to you that 23 act or single course of conduct" is defined in the 23 it may not be applicable at all because these causes of 24 second sentence of that subsection. It is defined as 24 action may very well have accrued prior to the effective 25 including acts resulting in the same manufacturing 25 date of the statute. But nonetheless, for purposes of Page 158 Page 160 1 defect. This case does not involve manufacturing 1 this discussion, I have assumed its applicability to 2 defects. It is defined as including acts resulting in 2 these causes of action. 3 the same defects in design. This case does not involve 3 Q. Sir, are you offering an opinion in this 4 design defects. It talks about failure to warn of the 4 matter that Beverly and Marlin causes of action accrued 5 same hazards. This is not a failure to warn case with 5 before 1999? 6 respect to similar units of a product. 6 A. No, I am not. 7 This entire subsection relates to product 7 Q. That would cause major statute of limitations 8 liability cases. It was, and I acknowledge this to be a 8 problems, sir? 9 pure assumption on my part, the consequence of 9 A. Oh, I think if they accrued before 1999 and 10 successful lobbying experts on the part of product 10 the fraud discovered within the statute of limitations 11 manufacturers to limit their liability in punitive 11 period, it would cause major statute of limitations 12 damages in cases where the same product defect has 12 problems but that's not my opinion. 13 resulted in multiple injuries to consumers. It's the 13 Q. You are not offering an opinion that this is 14 got nothing to do whatsoever with the circumstances of 14 not applicable because these causes of action accrued 15 this case. 15 before 1999, are you? 16 That section could not possibly be construed 16 A. No, I have told you that I have assumed 17 in light of the requirement that it be construed as a 17 throughout the discussions that I had with you about 18 provision in derogation of the common law as least 18 768.72 and 768.73 that these statutes applied but 19 restrictively as possible as applying to the 19 pursuant to their expressed terms don't impose a 20 circumstances of this non-product liability claim. 20 limitation on punitive damages under the circumstances 21 Q. Do you have any personal knowledge of the 21 of these cases. 22 legislative intent behind this section? 22 Q. Have you seen any case law supporting your 23 A. Only to the extent that it's very obvious from 23 opinion that Subsection 2 only applies to product 24 the language that's employed but legislative intent has 24 liability matters? 25 no relevance unless we are attempting to construe some 25 A. I have not seen any cases that say that 40 (Pages 157 to 160) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130180 Page 161 Page 163 1 Subsection 2(a) applies only to product liability cases. 1 A. Well, that would depend on how you define the 2 I have never seen anybody attempt to argue otherwise. 2 same course of conduct, but if we want to define it as I 3 Q. What is your opinion with respect to the 3 think it appropriately is defined, that being the 4 application of the last sentence in Subsection 2(b) to 4 conspiracy to participate in the Rothstein Ponzi scheme 5 this matter? 5 and aiding and abetting the Rothstein Ponzi scheme, then 6 A. Give me just one moment, if you would, please. 6 I would believe that the answer to that question would 7 My opinion is that 2(b) does not apply for the 7 be yes. 8 same reasons that 2(a) does not apply. 2(b) speaks also 8 Q. And how would it work, sir -- I guess you -- 9 in terms of the act and course of conduct which is 9 never mind. I will mark for you Exhibit 10. 10 defined in 2(a), so 2(b) also relates to product 10 Do you recognize Exhibit 10? II liability claims. 11 A. Nice handwriting. 12 Q. Is it your understanding that the groups that 12 (Exhibit No. 10, Handwritten Notes, was marked 13 were lobbying for this tort reform only involved product 13 for identification.) 14 manufacturers? 14 A. I do, yes. 15 A. No. I am -- I would imagine that the, that 15 BY MR. HUTCHINSON: 16 the health care industry was lobbying for these changes, 16 Q. What is Exhibit 10? 17 that the insurance industry was lobbying for these 17 A. Those are handwritten notes that I have made. 18 changes, that there were a lot of vested interests whose 18 Q. What were these notes of? 19 economic concerns favor the imposition of restrictions 19 A. Observations that I made of the contents of 20 on the tort system of a variety of kinds of limitations 20 documents that I reviewed and/or conversations with 21 of punitive damages being only one and they frequently 21 plaintiffs counsel. 22 join together to lobby the legislature for changes like 22 Q. Do you know which are your observations and 23 this. 23 which are notes from conversations with plaintiffs 24 Q. Assuming Subsection 2 does not, is not limited 24 counsel? 25 to product liability actions, would you agree with me 25 A. I didn't attempt to make that distinction. Page 162 Page 164 I that TD Bank there has been a punitive damages award 1 Q. You see the second entry states Coquina had a 2 against TD Bank for the same course of conduct for which 2 lot of direct contact with the bank. Is that correct? 3 the Beverly and Marlin plaintiff seeks to restore 3 Is that a correct reading of your handwriting? 4 damages? 4 A. That is a correct reading of that line except 5 A. You want me to assume that the same act or 5 for the last word that without the T crossed. It is an 6 single course of conduct language is omitted from the 6 incomplete sentence. 7 statute and that the statute instead reads that the 7 Q. Then a couple of entries down it says that 8 limitations of 2(a) apply to all cases regardless of 8 some had direct calls with Spinosa? 9 the, of whether they arise out of the same act or single 9 A. Yes. 10 course of conduct. So, if there is a punitive damages 10 Q. What is that referring to? 11 award against a defendant under any circumstances 11 A. That refers to the fact that there were Marlin 12 anywhere then no punitive damage award may ever be 12 and Beverly plaintiffs who had direct calls with 13 awarded against that defendant again under any 13 Spinosa. 14 circumstances? Is that the assumption you want me to 14 Q. And who were those plaintiffs, sir? IS make? 15 A. I can't give you their names. 16 Q. No, sir. I want you to put the statute down. 16 Q. Are you aware that that contradicts the sworn 17 Assume for me -- no assumptions. 17 discovery provided by the plaintiffs in this case? 18 Has TD Bank -- has there been an award of 18 A. No, I am not aware that it contradicts the 19 punitive damages for TD Bank for its alleged role in the 19 sworn discovery provided by the plaintiffs. If you 20 Rothstein Ponzi scheme? 20 would like me to assume that that is not true, I would 21 A. Yes, although TD Bank continues to challenge 21 be happy to do that and tell you what, if any, impact it 22 that award and hasn't paid it yet. 22 has on my opinion. 23 Q. Is it your understanding that the Beverly and 23 Q. Have you taken the time to review any of the 24 Marlin plaintiffs are seeking an award of punitive 24 bankruptcy discovery that we have been conducting over 25 damages based on the same alleged course of conduct? 25 the last several weeks? 41 (Pages 161 to 164) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130181 Page 165 Page 167 1 A. I have received copies of transcripts, 1 Coquina case was a statement from counsel. The 2 depositions that were taken of Leo Doyle and Craig 2 statement that there was -- that there were plaintiffs 3 Ba'dant I have not read those yet. I have been in 3 who had direct calls with Spinosa was from counsel. The 4 trial myself the last week and a half. 4 statement that some Marlin and Beverly plaintiffs 5 Q. So you have not taken time to review any of 5 received lock letters was from counsel. The statement 6 the discovery, the sworn discovery that's been taken in 6 that TD Bank never paid anything in the -- never paid 7 this case? 7 the punitive damage award in Coquina, that was from 8 A. I don't really believe that that accurately 8 counsel. 9 characterizes the circumstances. I had a meeting, a 9 The description of the Emess settlement was 10 fairly lengthy meeting last weekend during which recent 10 from counsel. The notes regarding the Craig Baldouf II discovery was discussed and so to that extent I have had 11 deposition, which I misspelled in these notes because I 12 the time to review some of what has been going on 12 was spelling it phonetically, that's information 13 recently as far as discovery is concerned. I have not 13 provided by counsel because I had not yesterday had an 14 had the time to review those transcripts. 14 opportunity to review the deposition transcript. 15 Q. Did anyone tell you that your entry here with 15 No regret, no remorse, that's me. The 16 regard to direct cause with Spinosa was incorrect? 16 notation admit only that Frank Spinosa may have had bad 17 A. No, no one has told me that that entry is 17 judgment but did not cause injury to anyone else, that 18 incorrect. To the contrary, I have been told that there 18 was counsel's summary of the position that has been 19 were some direct calls with Spinosa. I have also been 19 taken in the discovery of this case. 20 told that some of the Marlin and Beverly plaintiffs did 20 Q. In which case are you referring to? 21 receive lock letters. 21 A. The Marlin and Beverly proceedings, the 22 Q. And which plaintiffs were those? 22 discovery that has recently been taken. 23 A. I was not given names. I don't know the 23 The 450 to 500 million in losses as a result 24 names. Nor do I think. 24 of 6 plus billion in transactions, that's counsel. 25 Q. Would it surprise you that the record reflects 25 Guillen has been promoted, counsel. Page 166 Page 168 1 that none of the Beverly and Marlin plaintiffs received 1 Ratification is my note. The notation at the 2 lock letters executed by TD Bank? 2 bottom of that page, the first two lines are counsel and 3 A. It would surprise me that that statement is 3 the second two lines are me. The notations about the 4 inaccurate but it wouldn't alter my opinion. 4 pecuniary circumstances of TD Bank that appear on the 5 Q. Where did you get -- did the next statement, 5 next page are my notes on conversation with counsel. 6 the conspiracy and aiding and abetting requires no 6 Q. Okay. Let me show you what I am marking as 7 direct contact, did that come from plaintiffs' counsel? 7 Exhibit 11. Do you recognize Exhibit II, sir? 8 A. That comes from me. That's an observation 8 A. Yes, sir. 9 that I was recording of my own understanding. 9 Q. What is Exhibit II? 10 Q. What about the next entry? It says all 10 A. Those are my notes. 11 evidence of Coquina comes in to prove knowledge. 11 (Exhibit No. II, Handwritten Notes, was marked A. That's me. 12 for identification.) 13 Q. Which statements in these notes came from 13 BY MR. HUTCHINSON: 14 counsel? 14 Q. What are these notes of, sir? 15 MR. MOSKOWITZ: Objection. Asked and 15 A. These are notes that I made as I went through 16 answered. 16 discovery materials provided to me relating to my 17 A. Do you want me to go through each of the 17 assignment. 18 statements and tell you whether they reflect something 18 MR SCHERER: Do you have an extra copy over 19 that was told to me by counsel if I can recall that? 19 there? 20 BY MR. HUTCHINSON: 20 THE WITNESS: I have an extra copy. If you 21 Q. If you can, just briefly skim through it and 21 take these, I can look at the originals. 22 let me know whether any of these statements were 22 BY MR. HUTCHINSON: 23 provided to you by counsel. 23 Q. So these do not reflect notes of calls with 24 A. The statement that there was significant 24 counsel. Correct? 25 direct contact with the bank that was proven in the 25 A. No, these are my own notes. 42 (Pages 165 to 168) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130182 Page 169 Page 171 1 Q. In the middle of the page you discuss TD Bank 1 I would agree with you. 2 misconduct, do you see that or there are notes regarding 2 Q. And, sir, you have done jury research projects 3 TD misconduct? 3 during your time as an attorney. Correct? 4 A. Yes. 4 A. I have. 5 Q. Do either of the first two entries, providing 5 Q. And you have done jury research projects where 6 investors with false TD account statements or fraudulent 6 there are several different pools of juries within those 7 written assurances or lock letters, do either of those 7 research projects. Correct? 8 alleged conduct apply to the Marlin or Beverly 8 A. I have. 9 investors? 9 Q. And those juries have come back with vastly 10 A. Yes. 10 different results at times during those research Q. Do you believe that -- is it your II projects? 12 understanding that those investors received false 12 A. There indeed have been times where different 13 account statements? 13 juries have come back with different results, that is 14 A. I don't remember whether they personally 14 correct. Part of that process is an effort to try to 15 received false account statements nor do I consider it 15 assess the consequences of taking different approaches 16 of particular significance whether they received false 16 to the presentation of evidence in order to see the 17 account statements personally or not. The fact that 17 extent to which it impacts upon the results obtained 18 TD Bank aided and abetted this fraud by providing false 18 from a jury. So, you -- you change the input. You 19 account statements is what is significant, not which 19 anticipate that there is going to be a change in the 20 particular investors received them. 20 output. 21 Q. On your expert disclosure, Exhibit 5, it 21 Q. Have you ever taken a case to verdict where 22 appears that you were just opining on the aiding and 22 you thought you had a good punitive damages claim but 23 abetting claims and the punitive damages that might 23 the jury did not return a punitive damages verdict? 24 result from those claims. Correct? 24 A. I am sure that that has happened to me. 25 A. I'm sorry, but I am not seeing the language 25 Q. How many times? Page 170 Page 172 I from which you draw that conclusion. 1 A. I do my best to forget the losses. I can't 2 Q. Let me ask it another way. 2 tell you how many times and I don't keep -- I don't keep 3 Are you offering opinions on the Razorback 3 a track record like that so it would be impossible for 4 matter on the current pending motion for sanctions in 4 me to tell you but there is no question about the fact 5 the Razorback matter? 5 that there have been times in the past. And it has been 6 A. No, no, but you said aiding and abetting and I 6 more than once when I have prosecuted a punitive damage 7 thought the intent of that question was to carve out 7 claim and have not gotten punitive damages. 8 conspiracy. 8 Q. And isn't it true, sir, that that's just part 9 Q. No, I'm sorry, I was attempting to limit it to 9 of being a trial attorney? In our profession, we really I0 Beverly and Marlin, but it's clear you are not offering 10 don't know what's going to happen when a jury goes back II opinions on the Razorback sanctions proceedings. 11 in that room? A. No. 12 A. It is true that there are significant 13 Q. Wouldn't you agree with me, sir, that 13 uncertainties involved in our profession and if that 14 reasonable juries can reach different results on the 14 were not the case no lawsuits would go to trial. They 15 same evidence? IS would all be settled. It is as a consequence of 16 A. Absolutely. 16 differences in opinion with regard to the value of 17 Q. Wouldn't you also agree with me that there is 17 claims that cases get tried and so the mere fact that I8 no way to reliably predict exactly what a jury will do 18 there are trials is empirical evidence of the fact that 19 with a specified fact pattern? 19 different lawyers and sometimes very experienced lawyers 20 A. I agree with that statement as you have state 20 have different views of the likely outcome of contested 21 it had. 21 litigation, yes. 22 Q. And would you agree with me that there is no 22 Q. I think that's all I have right now, sir. 23 way to reliably predict the amount of punitive damages 23 Thank you. 24 that a jury would award in any specific matter? 24 A. What a relief that is. 25 A. If you are talking about an exact prediction, 25 MR. GENOVESE: You are not done yet. I don't 43 (Pages 169 to 172) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130183 Page 173 Page 175 I have a lot. 1 last clause a little bit later but as to that statement, 2 CROSS-EXAMINATION 2 let me ask you a question by way of clarification. I 3 BY MR. GENOVESE: 3 understand that you have accumulated a vast amount of 4 Q. John Genovese. I said hello this morning, 4 knowledge, per your testimony, about TD Bank's 5 Mr. Scarola. 5 misconduct in the course of the Ponzi scheme. Correct? 6 Have you ever represented a client in 6 A. I don't -- I don't know that -- I don't know 7 connection either the defense or the plaintiff's side in 7 what you mean by vast. I have reviewed a lot of 8 a tort claim arising out of a Ponzi scheme? 8 materials. I have become familiar with TD Bank's 9 A. Yes, and I am trying -- it would not have been 9 misconduct, yes. 10 the defense side. It would have been the plaintiff 10 Q. And I understand your testimony to be that 11 side. I have never defended a Ponzi schemer, and 1 know 11 with respect to the plaintiffs ability to establish his 12 that it has happened in the past but as I am sitting 12 viable nonspeculative and valuable claims as to each 13 here right now, I can't remember the particular 13 individual plaintiff to establish liability, you have 14 circumstances or even whether it was more than one time. 14 suggested to Mr. Hutchinson that you are making that 15 But I am sure that it's been at least once. 15 assumption and you have asked him to show you or suggest 16 Q. So the -- all the testimony you gave regarding 16 to you facts as to a particular plaintiff that would 17 your general understanding of conspiracy and aiding and 17 cause you to recede from that statement. Do I 18 abetting under Florida law would be broadly construed 18 understand that's been your testimony? 19 and not -- you weren't talking about personal experience 19 A. I think in general that's true. What I have 20 and knowledge about how those principle have been 20 said is I have assumed the accuracy of the facts as 21 applied in Ponzi schemes? 21 alleged in the complaint. There are other materials 22 A. That is correct, although I -- I have 22 that have corroborated the accuracy of those allegations 23 prosecuted cases involving conspiracy and aiding and 23 and I am absolutely open to consider any hypothetical 24 abetting frauds in general, although I don't remember 24 that would ask me to alter those assumptions and I will 25 specifically a conspiracy or aiding and abetting Ponzi 25 tell you whether that alters my opinion. Page 174 Page 176 I scheme case. But those are issues that I have Q. Okay. But this statement really is a result 2 researched in the context of fraud claims in the past 2 of significantly more knowledge that you have about TD's 3 and prosecuted in the context of fraud claims. 3 conduct than you have about the bona fides of multiple 4 Q. And 1understand that you believe there is 4 plaintiffs' claims. Is that a fair statement? 5 nothing different about the general application to that 5 A. I am not sure what the distinction is that you 6 law to a Ponzi scheme? 6 are trying to draw. The plaintiffs' claims are based 7 A. Yeah, a Ponzi scheme is just a kind of fraud. 7 upon TD's misconduct. 8 I don't think that there is anything that would 8 Q. No, the plaintiffs' claims have to be based 9 distinguish that from other fraud claims. 9 upon their individual establishment of elements of a 10 Q. It's frequently bigger? 10 cause of action including their damages, their -- those 11 A. That is correct and involves more victims. 11 individual damages were caused by a specific conduct. 12 Q. Agreed. 12 Those are elements of proof that require a case by case 13 I am looking at the TD Bank victims' notice of 13 plaintiff evaluation by a jury to meet each of the 14 filing expert disclosures that was referred to by 14 elements of the cause of action. That's a fair 15 Mr. Hutchinson before and the description I think you 15 statement, isn't it? 16 said that you probably spoke about it, you didn't draft 16 A. Only to a very limited extent in this context. 17 it but it was prepared by counsel or filed by counsel 17 There was a Ponzi scheme that was operated in a uniform 18 who you are appearing in connection with this deposition 18 manner. Scott Rothstein solicited investments in 19 with. 19 nonexistent or fraudulent settlements and he sold those 20 It says that you will testify that the TD Bank 20 investments to a variety of individuals and 21 victim's claims for aiding and abetting fraud and 21 institutional investors, and there was a uniform sales 22 conspiracy to commit fraud against TD Bank are viable, 22 pitch that was used as I understand the facts in order 23 nonspeculative and valuable claims with a high 23 to induce those investments. The facts that are 24 probability of success if tried to a jury. 24 different in each case are the amount that was invested 25 I am not finishing. I will come back to the 25 and the amount that was lost so that's where I have 44 (Pages 173 to 176) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130184 Page 177 Page 179 1 repeatedly gone back to my statement that if you want me 1 Q. And rarely do both counsel say absolutely, 2 to assume that somebody really wasn't an investor in the 2 Judge, we agree to those proposed instructions? 3 Ponzi scheme and really didn't lose money, I can make 3 A. Well, agreement to proposed instructions is 4 that assumption and I will then tell you they don't have 4 very common. Agreement to all proposed instructions is 5 a claim. 5 uncommon. 6 Q. Let me. Since you talked about the Coquina 6 Q. It would be rare. Correct? Unusual? 7 case, let me read you a particular instruction of the 7 A. I don't know that it would be rare but more 8 Coquina case and ask you if in your view it would be an 8 often than not there is something about the proposed 9 agreed instruction or an instruction that a judge in 9 instructions that lawyers wind up disagreeing about and 10 state court were likely to give the jury in connection 10 require the court's intervention to dissolve that 11 with this. I am reading from page 22 to 27 of document 11 disagreement. 12 filed 4599 filed in the Coquina case on its docket. 12 Q. Do you think in Beverly and Marlin cases that 13 TD Bank has asserted a waiver defense. Waiver 13 an instruction to the jury suggesting that they may have 14 is a defense to a charge of fraud where the party 14 waived their claims by not adequately diligently 15 claiming to have been defrauded discovered or reasonably 15 investigating or having actual knowledge of 16 should have discovered the nature of the deception 16 circumstances to put them on notice, don't you think it 17 through ordinary diligence. The intent to weigh the 17 a possibility that that defense will be asserted in the 18 claim of fraud may be inferred from a party's conduct 18 Beverly and Marlin case? 19 and the surrounding circumstances. In order for you to 19 MR. MOSKOWITZ: Objection. Improper 20 find that the plaintiffs waived their rights to recover 20 hypothetical. 21 damages from the alleged fraud you must find that 21 A. Again, there seemed to be multiple questions 22 Coquina had actual or constructive knowledge of 22 there so let me try to break it down and respond as best 23 Rothstein's fraudulent activity yet continued to invest. 23 I can based upon the various issues raised. 24 You understood what I read to you. Right? 24 Do I think that the defense may attempt to 25 A. I did understand what you read. 25 raise a waiver defense? The answer to that question is Page 178 Page 180 1 Q. I take it from your testimony that you are it's pretty likely that if in the context of Coquina the 2 assuming that for each of the plaintiffs that their 2 defense was successful in having a waiver defense raised 3 diligence was reasonable and they had no reason to 3 and having the jury instructed with regard to waiver, 4 suspect that there was a Ponzi and that they didn't 4 the defense will probably try to do the same thing in 5 continue to invest after either having indications of 5 these cases. 6 things that should have led them to conduct diligence or 6 Now, I haven't looked at which claims actually 7 actual knowledge that there was something wrong with the 7 went to the jury in Coquina and I don't know whether any 8 Rothstein investment? 8 difference in the nature of the claims that went to the 9 MR. MOSKOWITZ: If I could just get an 9 jury in Coquina may have an impact upon the ability to 10 objection on the record. It's a hypothetical jury 10 raise a waiver defense but that instruction talks about 11 instruction from another case with different claims 11 two different things, a lack of adequate due diligence, 12 and different -- it's not talking about the Beverly 12 an actual knowledge of the fraud. It is my 13 and Marlin jury instructions. 13 understanding of Florida law that negligence is not a 14 A. I heard a whole lot of questions there. I am 14 defense to an intentional fraud so that to the extent 15 having a little bit of difficulty because there seemed 15 that there is some suggestion that a lack of due 16 to be a lot of questions that you have asked. You first 16 diligence, a negligent investigation could bar a 17 started off by asking me whether I would think that the 17 victim's claim based upon intentional fraud, I have a 18 instruction you were about to read was one that would be 18 very strong opinion that that instruction is erroneous 19 an agreed to instruction. Is that --- 19 in the context of a conspiracy and aiding, abetting and 20 Q. Let me -- I was trying. There is a limited 20 intentional fraud claim. 21 amount of time and I don't want to impose on your time 21 To the extent that the instruction talks about 22 as unnecessary but isn't it the case in your experience 22 intentionally investing in a known fraud as opposed to 23 that counsel submit -- each side submits proposed jury 23 negligence in having failed to detect the fraud, I 24 instructions? 24 wouldn't have any problem with that instruction at all, 25 A. Yes. 25 if, in fact, there were evidence to support it, evidence 45 (Pages 177 to 180) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130185 Page 181 Page 183 1 from which a jury could conclude that somebody actually 1 compensatory recovery but experts are generally not 2 knew this was a Ponzi scheme and they figured I'm 2 testifying as to the amount of punitive damages. 3 getting in early enough so that I can be one of those 3 Q. Well, we will get to that in a moment but they 4 folks who manages to get paid before this all unravels. 4 frequently testify in punitive damages as to the 5 Anybody in that position doesn't have a valid claim and 5 defendant's ability to pay so that you don't put them 6 has waived any ability to prosecute a claim. 6 out of business. That's a frequent source of expert 7 Q. Okay. So you dispute the concept of an 7 testimony on punitive damages? 8 appropriate statement of the law that a party that could 8 A. It is a source of testimony relating to 9 have, reasonably should have discovered through ordinary 9 punitive damages but it's -- the pecuniary circumstances 10 diligence the nature of the deception. Is that your 10 of the defendant very frequently are not a significantly II dispute? II contested matter, particularly when you are talking 12 A. Ycs. 12 about publicly traded entities, entities that are 13 Q. To that instruction? 13 required to file 10Ks and I0Qs. The numbers are there 14 A. Ycs. 14 and the numbers are what the numbers are, and often IS Q. Let's talk about the variables that could 15 there are stipulations with regard to the relevant 16 affect a jury verdict. Let me hit on some of them. 16 issues concerning pecuniary circumstances. 17 Obviously, the facts, the facts are critical to jury 17 Q. Let me revert for a question that's been 18 verdict for both liability and punitive damages? 18 handed to me, so if you think it's out order, it's not 19 A. Clearly. 19 my fault. 20 Q. And the judge has an ability to affect, 20 A. Objection, out of order. 21 certainly, punitive damages because in Florida the judge 21 Q. I don't mean out of order in the sense as 22 makes the initial determination as to whether you get to 22 impolite. I mean out of chronological order. 23 have punitive damages in your case? 23 MR. MOSKOWITZ: Bill does it all the time to 24 A. I agree, leave must be granted to assert a 24 me. 25 claim for punitive damages. 25 BY MR. GENOVESE: Page 182 Page 184 I Q. And while we know Judge Streitfeld is familiar Q. Nobody is passing me stickies. 2 with this case, has these cases, the Beverly and Marlin 2 An investor who used the usurious rate of 3 cases, and he appears to be in good health, judges get 3 return or was intended to receive for the investment 4 ill like the rest of us. While I wouldn't expect it of 4 what appeared to be an usurious rate of return on 5 Judge Streitfeld, judges have problems with JQC 5 investment, would you consider that to be something that 6 periodically or judges change their mind and decide 6 a jury should consider in measuring whether the 7 they're going to retire? 7 plaintiff had knowledge of a fraudulent scheme? 8 A. We can agree without impugning anyone's 8 A. We are taking this out of the context of these 9 integrity that there are a whole variety of reasons why 9 investments. 10 the judge you have today may not be the judge you have 10 Q. I am just asking you this hypothetical. II tomorrow. 11 A. If it were to be a different kind of fraud 12 Q. And appellate courts also come into play as to 12 where there were an obvious violation of the usury 13 whether, as you have testified, you have won them, lost 13 rates, that might have some relevance to the issue of 14 them and gone up and had different results on appeal, 14 whether there was actual knowledge that this was a Ponzi I5 good and bad, that has all happened? 15 scheme, a fraudulent investment, but there would need to 16 A. It 16 be some evidence of actual knowledge. 17 Q. That is a variable that would affect the 17 Q. Correct. But were there evidence or any other I8 ability to get punitives or the amount of punitives. 18 illegalities that the plaintiff was aware of surrounding 19 Correct? 19 the scheme that would go to a jury and a jury would 20 A. Indeed it is. 20 evaluate whether that would create a defense? 21 Q. And the quality of the experts on both sides 21 A. I have difficulty with a question that is as 22 affects the ability to get an amount of punitive 22 vaguely worded as that one is or any other knowledge of 23 damages. Correct? 23 illegality. You know, give me a specific example and I 24 A. In the context of the prosecution of the 24 will try to assess that -- excuse me, I'm sorry for 25 underlying claim, expert testimony may impact upon the 25 moving -- I will try to give you a response to that 46 (Pages 181 to 184) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130186 Page 185 Page 187 1 specific example. 1 doesn't happen. 2 Q. In a hypothetical I gave you that you don't 2 Q. Certainly it's more difficult in federal court 3 think exists, if it is the investor who would be getting 3 because the judges generally are the ones that ask the 4 the usurious rates who is conflicting Florida law as 4 questions, correct, as opposed to state court? 5 well. Correct? 5 A. My most recent experience in federal court has 6 A. An investor who is charging an usurious rate 6 been that you get at least some voir dire. There seems 7 of interest for a loan is violating the usury laws by 7 to be some erosion of the most restrictive approaches to 8 definition. 8 voir dire in federal court. 9 Q. Getting back to the -- getting back to the 9 Q. And you were asked about studies of jury 10 variables, the quality of the lawycring on both sides of 10 verdicts by Mr. Hutchinson a few moments ago. Are you 11 the case affects whether there will be punitive damages 1I aware of any current or did you rely on any current 12 and the amount of punitive damages? I/ studies in Broward County for awards in cases involving 13 A. That is true. 13 Ponzi schemes? 14 Q. And when you are dealing with a large 14 A. No, I did not rely upon any historical results IS plaintiff group, is it possible that certain of the 15 regarding Ponzi scheme. 16 plaintiff group would be delighted with compensatory 16 Q. The only historical report that you have 17 damages or something less and others want to roll the 17 relied upon has been the Coquina case? 18 dice and go the distance for maximum punitive damages is 18 A. That is correct. Well, that's not entirely 19 that fairly the usually the case in a large plaintiff 19 correct. The only historical results I have relied upon 20 group? 20 are the historical results that relate particularly to 21 A. There could be differences of opinion as to 21 claims against TD Bank, not only the jury verdicts but 22 the degree of risk that plaintiffs arc willing to take 22 the settlements as well, which I think are relevant and 23 in a litigation process, yes. 23 material. 24 Q. So it's not uncommon for some plaintiffs to 24 Q. We will get to that in a moment. Let me ask 25 peel off from the plaintiffs' group and settle? 25 you, turning back to the use of financial information in Page 186 Page IN\ A. It really depends upon the circumstances. 1 the punitive phase, I assume you have been involved in 2 There are frequently joint prosecution agreements that 2 offering examining or cross-examining witnesses that are 3 impose limitations on the ability of parties to do that 3 testifying about the financial ability of the defendant 4 when an agreement has been made that the case will be 4 to withstand a punitive award. Correct? 5 prosecuted jointly. 5 A. Yes. 6 Q. You are not aware one way or another in 6 Q. Almost every case against a major corporate 7 connection with the Beverly and Marlin case if that is 7 defendant, a bank, a corporation, an automobile 8 present here? 8 manufacturer, I assume has that kind of evidence that 9 A. Don't know. 9 goes to the jury. Correct? I0 Q. I'll get to probably the most important 10 A. Yes. II question suggesting that your partner Chris Searcy at 11 Q. Have you ever seen in a financial statement, 12 every .INC interview says, how would you treat lawyer 12 in any of those cases, a valuation done by a defendant 13 voir dire to judge applicants. I suspect you know the 13 or its auditors of a contingency recovery, not in that 14 answer to what he wants to hear. 14 case but relating to an asset that they have that is a 15 A. Oh, I absolutely know the answer to what the 15 contingency claim? 16 Chris wants to hear, yes. 16 A. You are talking about a circumstance where 17 Q. Because you want to have the jury 90 percent 17 what appears in the audited financial statement is an IS in your corner by the time you're done with voir dire. 18 evaluation of a claim as an asset as opposed to an 19 Correct? 19 evaluation of a claim as a liability. 20 A. No, sir. No, my desire is to have the jury 20 Q. Value of an asset or a liability of an 21 100 percent in my corner by the time I'm finished with 21 unrelated case, meaning when you look at the defendants 22 voir dire, although we all know that that's an 22 financial condition have you ever seen a financial 23 impractical and unachievable objective. Every trial 23 statement, which lists as an asset or a liability a 24 lawyer would like to know that every juror is 24 projected punitive award? 25 100 percent behind him before opening statements. It 25 A. I have seen in corporate financial statements 47 (Pages 185 to 188) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130187 Page 189 Page 191 1 evaluations of claims as liabilities. I don't have a 1 damage case for that purpose? 2 recollection of seeing in corporate financial statements 2 A. Well, the one circumstance that I told you 3 an assessment or an evaluation of a claim as an asset. 3 about. 4 Q. You may have seen reserves, correct, for 4 Q. The Farish case? 5 litigation? 5 A. The Farish case, right, was a case in which an 6 A. I have seen litigation reserves and 6 opinion was expressed regarding the value of the 7 expressions of the value of potential liabilities in 7 punitive damage claim for purposes of assessing the 8 financial statements. 8 compensatory loss. 9 Q. But not a specific amount for punitive 9 Q. Was that your case? Were you involved in 10 damages? 10 that? A. I don't recall seeing a separate amount 11 A. Ycs. 12 designated as punitive damages. The overall liability 12 Q. Other than that case do you have a belief, 13 is assessed and where there is a punitive damages claim, 13 generally, about if you tried to offer someone just like 14 that's noted as part of the assessment of the overall 14 yourself in the Beverly and Marlin case to express an 15 liability. 15 opinion on the amount of punitive damages to be awarded 16 Q. That's the claim but not the entities' opinion 16 to each plaintiff in that cast, would that be allowed by 17 as to what the punitive award would be? 17 the trial judge? 18 A. It's not separate and apart from the 18 A. No. 19 compensatory award. It is an overall assessment of the 19 Q. Why is that? 20 exposure. 20 A. Because that would be an effort to invade the 21 Q. One last variable was change in the law 21 province of the jury in the context of assessing the 22 regarding the ability to get punitive damages. That's 22 amount of punitive damages that would be appropriate in 23 always a variability that's out there? 23 that case. However, I can think of circumstances where 24 A. Yes, it is. 24 that kind of testimony with regard to the Beverly and 25 Q. And, in fact, the statutes you were asked 25 Marlin cases would be appropriate and Farish is a good Page 190 Page lo: 1 about whereas I understand it changes to the common law 1 example. If someone were to steal Mr. Moskowitz's and 2 or limitations on the amount of the punitives that could 2 Mr. Scherer's cases from them, if they were to 3 be recovered. Correct? 3 tortiously interfere with their contracts with their 4 A. That is correct. 4 clients by lying to their clients about something that 5 Q. Are you aware of Florida cases which suggest 5 caused their clients to leave them, then it very well 6 in the context of the enactment of the statutes we 6 may be appropriate to offer expert witness testimony 7 referred to that the right to punitive damages is not a 7 about the value of those claims in the hands of 8 present property right? 8 Mr. Moskowitz and Mr. Scherer in order to assess their 9 A. I am. 9 compensatory damages for having lost cases that were 10 Q. You agree with that statement? 10 stolen from them that included viable punitive damages 11 A. I must accept it to be true. It is the 11 claims. 12 prevailing law of the State of Florida at the present 12 That's the contention in which this arose from 13 time. 13 Farish. While it is a highly unusual circumstance, it 14 Q. You believe the testimony you are giving today 14 is not one that is outside of what would be easily 15 is relevant? 15 conceivable as appropriate. 16 A. I really think that that's a bankruptcy law 16 Q. And is the only one you could think of in 17 question, and I haven't been asked to form an opinion 17 41 years may have occurred at the time in which you had 18 about that. But my general understanding is that it is 18 two children and no grandchildren? 19 relevant but that's not something that I am opining as 19 A. What's the date on the opinion? 20 an expert on. 20 Q. I thought it was old. 21 Q. Okay. From what I understood from your prior 21 A. It's old. It's pretty old but so are my kids. 22 testimony that you have never testified in this capacity 22 My oldest grandchild is 18, so it was probably before my 23 to opine on the likely range of punitive damage award? 23 first grandchild but we were well into kids by then. 24 A. Correct. 24 MR. MOSKOWITZ: John, do you know about how 25 Q. You have never called a witness in a punitive 25 much time have you left? 48 (Pages 189 to 192) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130188 Page 193 Page 195 1 MR. GENOVESE: I would say not more than half 1 Q. Are you familiar with the plan of 2 hour. 2 reorganization that's before the Court now that this 3 MR. MOSKOWITZ: Do you want a break? 3 deposition is taken in connection with? 4 THE WITNESS: No, I am fine. Press on. 4 A. Fortunately, no. 5 BY MR. GENOVESE: 5 Q. Not all of us can say that. 6 Q. Explain to me what you believe to be the 6 Do you believe that a jury could consider the 7 concept of mitigation as it relates to a jury 7 efforts of TD Bank to support and contribute to 8 instruction. 8 substantial recovery by the Beverly and Marlin 9 A. Mitigation is the obligation on the part of an 9 plaintiffs as an effort to cause mitigation of their 10 injured party to take reasonable measures to limit or 10 damages? 11 avoid damages which may be limited or avoided through 11 A. I think that that might be a relevant factor 12 reasonable measures, and it is generally a jury question 12 in mitigation of punitive damages, yes. It might be. 13 as to what is reasonable under the particular 13 Q. You previously talked about the corrective 14 circumstances of both the case and the injured party. 14 behavior that's required of, that you would like to see 15 Q. The example of one of the cases, if you can 15 TD Bank engage in so as to limit their punitive damages. 16 recall, is I get terminated from my job. I then just 16 Do you recall that testimony? 17 can't sit home for a year. I have to go find another 17 A. There was some reference to it, yes, to that. 18 job. I have to try to minimize the damages to the 18 Q. And you talked about corrective action 19 plaintiff. Right? 19 internally, meaning you streamlined or focused your 20 A. That would be a good example and part of what 20 policies and procedures to prevent this kind of thing 21 I am suggesting to you is that doesn't mean you are 21 that happened. That would be some remedial action that 22 obliged to leave your family and move to Alaska to work 22 they could take? 23 the pipeline. 23 A. It would be. 24 Q. Right, because the case law talks about 24 Q. Are you aware that both the Banyon trustee and 25 reasonable measures without exposing oneself to 25 the RRA trustee have basically mirror image settlements Page 194 Page 196 1 humiliation and undue hardship. Correct? 1 with TD Bank? Are you aware of that? 2 A. Without incurring financial obligations that 2 A. I have read press accounts in that regard. 3 are beyond your means, yeah. I mean, there are --- 3 Q. And are you aware that in those settlements 4 Q. You have seen bankruptcy restitution claims? 4 and in the plan parties that have never made demand on 5 A. I have. 5 TD Bank, never filed lawsuits against TD Bank are to be 6 Q. You have seen that they are always relatively 6 paid? Are you aware of that? 7 simple documents. Correct? 7 MR. MOSKOWITZ: Objection. Mischaracterizes 8 A. Yes. S the evidence in the record. 9 Q. Have you ever seen a criminal restitution 9 A. I don't have knowledge of any of those I0 claim? 10 details, no. II A. I have. 11 BY MR. GENOVESE: 12 Q. A little more complicated? 12 Q. But if, in fact, we assume that that's the 13 A. Yes. 13 case, that there are settlements and a plan which 14 Q. A little? 14 proposes to pay victims of the Rothstein Ponzi that have 15 A. It's been a while since I've seen a criminal 15 not sued TD or made demand on TD and TD otherwise has no 16 restitution claim and I have never compared them for 16 present obligation to pay, do you believe that to be 17 purposes of judging complexity. 17 using your words efforts that a jury could consider to IS Q. Do you think that a jury might conclude that a 18 be corrective or remedial in the context of a punitive 19 victim of the Rothstein Ponzi might believe that the 19 damages award? 20 filing of a criminal restitution claim or bankruptcy 20 A. They may consider them as remedial. They 21 claim is a step towards mitigation of the damages? 21 might also consider them as an effort to avoid a 22 A. Maybe. 22 significantly greater liability. 23 Q. You said it would be a jury question? 23 Q. A jury would evaluate whether that was a 24 A. The reasonableness of mitigation is most 24 positive thing to do or whether it is a self-serving or 25 frequently a jury question, that's correct. 25 self-interested thing to do? 49 (Pages 193 to 1%) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130189 Page Pr." Page 199 A. It may very well be a factor that could I the evidence. 2 appropriately be presented to a jury in a second stage 2 A. I have not undertaken to make any assessment 3 proceeding, yes. 3 of what's going on in the bankruptcy case. 4 Q. But I can tell from the tone of your answers 4 My understanding of my role has been to assess 5 that the opinions you formulated didn't consider what 5 the value of the Beverly and Marlin plaintiffs' claims, 6 I'm asking you now. 6 primarily from a punitive damage perspective, assuming 7 A. I was not in a position to consider facts that 7 those claims were prosecuted in circuit court. 8 I didn't know and I am telling you that I was not 8 BY MR. GENOVESE: 9 specifically aware of those facts, that's correct. 9 Q. Are you aware of any attributes of their 10 Q. If there is a mechanism in place for the 10 claims that would be any different than someone who 11 Beverly and the Marlin plaintiffs to be paid claims from 11 isn't here who just invested money through Banyon, for 12 the bankruptcy estates and potentially still pursue 12 instance, in the Rothstein Ponzi? Are you aware of 13 their state court cases and punitive damage awards, 13 anything separating them from investors generally? 14 would that evidence be something the jury would consider 14 A. I am not aware of anything separating them IS in connection with evaluating the amount of the punitive IS from investors generally that would have an impact upon 16 award against TD Bank? 16 those matters about which I am opining. 17 A. I would need to know more about that mechanism 17 Q. And putting affirmative defenses aside, you do 18 and TD Bank's role and motivation in involving itself in 18 understand that Mr. Stettin, as trustee for the RRA 19 that mechanism. 19 case, is settling a litigation subsumed by the plan 20 Q. Obviously, you don't have the plan so you 20 which asserts that the firm was harmed through 21 can't -- probably if you saw it I guess it would be 21 Rothstein's misuse of the firm and the facilitation of 22 mystery to you because to some of us we forget what's in 22 that misuse by TD Bank, you understand Mr. Stettin has a 23 it because it's like a phone book. 23 pending complaint --- 24 You talk generally about the nature of 24 A. On behalf of RRA, yes. 25 conspiracy and aiding and abetting. 25 Q. And while there is not yet and hopefully not a Page 198 Page 21M) Would every investor -- under your analysis, 1 Banyon case but that the trustee of Banyon has asserted 2 would every investor who lost money in the Rothstein 2 that it has similar claims against TD Bank for aiding 3 Ponzi scheme have the same kind of claims that the 3 and abetting and conspiring with Rothstein and others in 4 Beverly Marlin Group have? 4 perpetuating the Ponzi scheme? 5 A. You have pointed out at least one exception 5 A. Okay. 6 and that one exception would be those who invested with 6 Q. Do you see any difference between those 7 actual knowledge in advance of the fraud. 7 claims, other than the affirmative defenses that could 8 Q. Thank you for pointing that out. 8 be asserted against those plaintiffs, Mr. Stettin and 9 A. You did. 9 Mr. Furr on behalf of Banyon? Do you see any difference 10 Q. I didn't mean one that would have a -- they 10 fundamentally between those claims and the claims 11 would have a claim but not a very successful claim, that 11 asserted in the Beverly and Marlin case? 12 party. That party would get an involuntary dismissal at 12 MR. MOSKOWITZ: Objection. Outside the scope 13 the end of the case? 13 of his expertise. 14 A. Assuming that evidence were uncontested, yes. 14 A. Are you asking me whether there is any 15 Q. So, putting those people aside, every investor 15 difference between the claims by Rothstein, Rosenfeldt 16 in the Rothstein Ponzi scheme, be it directly giving 16 and Adler and the claims of Ponzi scheme investors. 17 money to the Rothstein firm or to the Banyon entities, 17 BY MR. GENOVESE: 18 every one of them could pursue exactly the claims that 18 Q. If you assume that Mr. FUR for Banyon and 19 Beverly and Marlin were pursuing unless they were 19 Mr. Stettin for RRA are seeking to recover for the 20 complicit or co-conspirators. Correct? 20 benefit of Ponzi investors, do you see anything 21 A. I can't think of an exception right now. 21 different with regard to their claims? 22 Q. Do you understand that the damages being 22 A. I'm sorry, but I am confused by that question. 23 sought by Beverly and Marlin are reflected in the proof 23 Whatever losses were sustained by RRA I assume were not 24 of claims filed in the bankruptcy estate? 24 sustained as a consequence of RRA investing in the Ponzi 25 MR. MOSKOWITZ: Objection. Mischaracterizes 25 scheme? Is that an incorrect assumption? 50 (Pages 197 to 200) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130190 Page 201 Page 203 1 Q. I will withdraw and rephrase the question. I the first paragraph? 2 If RRA -- if Stettin, as the Trustee of RRA, 2 A. Yes, I see that language. 3 were seeking to recover from damages from the Ponzi 3 Q. We have only had one jury award in connection 4 scheme measured by the victim's out-of-pocket losses, 4 -- on appeal in connection with the Coquina case. 5 would the claims be essentially the same or you don't 5 Correct? 6 have enough information to evaluate that? 6 A. Yes. 7 A. I really don't. 7 Q. And you do know that that was a group but 8 Q. Do you understand the compensatory damages 8 essentially one plaintiff. It was an entity that was an 9 sought in the Beverly and Marlin actions, putting aside 9 investment entity. You understand that? 10 prejudgment interest, the compensatory damage portion, 10 A. Yes, I was aware of that generally. II do you understand those damages to be the out-of-pocket 11 Q. And the instructions in that case -- did you 12 losses that each of those investor victim's suffered? 12 ever look at the jury instructions? 13 A. Yes. 13 A. I did not. 14 Q. Would you assume that to be a net amount? 14 Q. Would it surprise you that as plead in 15 put in a hundred dollars, I got repaid $50 and my 15 Mr. Scherer's motion for punitives in front of Judge 16 remaining claim is $50? 16 Streitfeld, in Coquina there were direct meetings with 17 A. I have not sought to assess the manner in 17 TD Bank officers, the providing of lock letters by 18 which the compensatory loss has been calculated. I have 18 Spinosa, these shows at the bank with the involvement of 19 expressed my opinion in terms of a multiple of the 19 the bank, you understand that the extent of those 20 compensatory loss, whatever it is determined to be. 20 instructions and the extent of privity between TD and 21 Q. Wouldn't you assume in a Ponzi scheme -- 21 the plaintiffs are significantly different than those 22 because you have analogized it to fraud generally, 22 which exist in the Beverly and Marlin case. Correct? 23 wouldn't you assume that damages in fraud generally for 23 A. I have assumed that the degree of direct 24 a Ponzi scheme would consist of a party's actual 24 contact in Coquina was greater than the degree of direct 25 out-of-pocket losses? 25 contact in Beverly and Marlin, yes. Page 202 Page 204 1 A. No, not necessarily. There are two ways in 1 Q. And in the Coquina case that you're using as 2 which to measure damages for fraud. One is the 2 precedent, the punitives to compensatory damages, what 3 out-of-pocket methodology. The other is the method of 3 was the ratio? 4 the bargain methodology. Florida law recognizes both 4 A. A little bit greater than one-to-one if recall 5 and permits recovery under that theory which best makes 5 correctly. 6 the victim of the fraud whole. 6 Q. Okay. So it's one-to-one. The only 7 Q. My assumption here is that the plaintiffs 7 settlements that would -- let me withdraw that question. 8 would not argue that they deserve the benefit of an 8 Fairly early after the Coquina trial -- let me 9 illegal bargain. Wouldn't that be your assumption? 9 withdraw that question. 10 A. I would assume that the plaintiffs would not 10 There were multiple motions about discovery 11 make an argument that they are entitled to the benefit 11 issues and the failure of TD to comply with discovery 12 of an illegal bargain, yes. 12 request appropriately during the Coquina trial. Are you 13 Q. So, what's remaining is their actual losses, 13 aware of that? 14 their actual net losses. Is that a fair statement? 14 A. Yes. 15 A. If, in fact, the bargain was illegal, what 15 Q. And after the Coquina trial in the subsequent 16 remains is the out-of-pocket measure of damages. 16 case documents that we referred to here today -- is it 17 Q. You have indicated or your counsel has 17 the CDD? 18 indicated in the statement you adopted, the last half of 18 A. CDD. 19 the nature and substance of opinion, the first part you 19 Q. In the Emess case you are aware that an un -- 20 said nonspeculative, valuable with a high probability of 20 I wouldn't say unredacted but an actual color copy of a 21 success. The last part are, or are likely to be 21 document that had been produced in black and white in 22 resolved through pretrial settlement with TD based on 22 the Coquina case came out in the Emess case? 23 the outcome of similar cases in which investors damaged 23 A. Yes. 24 by the Rothstein fraud sued TD Bank. You have that in 24 Q. You understand the lawyer that was to try the 25 front of you apparently. Do you see the last half of 25 Emess case was the same lawyer who tried the Coquina 51 (Pages 201 to 204) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130191 Page 205 Page 207 1 case? I compensatory damages? 2 A. I don't know that I remembered that. 2 A. That's not what it says. It only says -- 3 Q. Would that be a fact that would be material to 3 MR. MOSKOWITZ: Have you read it twice, John. 4 you if it's true? 4 You keep reading in some other words that says in 5 A. Well, it depends on what question you are 5 excess. That's not in there at all. You said 6 going to ask me. 6 based on in excess. 7 Q. Okay. Well, post Coquina verdict and post at 7 BY MR. GENOVESE: 8 least sanction and discovery issues being raised, the 8 Q. Or likely to be resolved through a pretrial 9 only settlement which has occurred in excess of 9 settlement with TD Bank based on the outcome of similar 10 out-of-pocket losses that we talked about is the Emess 10 cases in which investors damaged by the Rothstein fraud 11 case. Are you aware of that? II sued TD Bank? 12 A. I wasn't aware that that was the only 12 MR. MOSKOWITZ: Yeah. 13 settlement that has occurred. I was aware that there 13 A. All this says is that these are viable claims. 14 was a settlement in Emess that was in excess of the 14 They have been successfully prosecuted already and 15 out-of-pocket losses. 15 others have been resolved through pretrial settlement 16 Q. Are you aware of any other settlement that is 16 with TD Bank. 17 in excess of the out-of-pocket losses since the Coquina 17 BY MR. GENOVESE: 18 verdict? 18 Q. But you said or are likely to be resolved? 19 A. What are you referring to as out-of-pocket 19 A. Yeah. 20 losses. 20 Q. So you are suggesting that the Beverly and 21 Q. Well, what we discussed, compensatory damages 21 Marlin plaintiffs may settle this case, do I understand 22 consists of the plaintiffs' group's actual monetary 22 that statement? 23 loss? 23 A. What that statement is intended to convey is 24 A. With or without prejudgment interest, with or 24 that these are viable claims and if they are prosecuted 25 without fees and costs. 25 in front of a jury they are likely to be successfully Page 206 Page 208 1 Q. Exclude fees and cost. Exclude prejudgment I prosecuted and if they are not successfully prosecuted 2 interest, any settlements other than Emess, which 2 in front of a jury, it will be because they will settle 3 exceeded the amount of out-of-pocket losses? 3 favorably. 4 A. I had the impression that there were other 4 MR. MOSKOWITZ: Could we maybe take a break? 5 matters that were resolved that compensated victims 5 We have been going two hours and 40 minutes. I 6 beyond the straight out-of-pocket loss number and 6 know you said you were going to be 20 more minutes. 7 included interest and expenses incurred by the 7 THE WITNESS: How close are we. 8 plaintiffs. 8 MR. MOSKOWITZ: It's been 15 minutes. 9 Q. Can you point to those? 9 MR. GENOVESE: Give me ten minutes, I'll 10 A. I don't have a recollection. 10 finish. 11 Q. Razorback settlement occurred shortly before 11 MR. SCHERER: You've got minutes. 12 its scheduled trial and shortly after the Coquina 12 MR. MOSKOWITZ: It's seven hours time. We can 13 verdict and the damages sought out of pocket in the 13 get technical on tape time but it's been seven 14 Razorback case exclusive of prejudgment interest and 14 hours of depositions. We started at 10:00. 15 attorneys' fees, did you understand to be $186 million? 15 MR. GENOVESE: We started at 10 after 10:00 16 A. That number sounds familiar. 16 but you can penalize me for the ten minutes. 17 Q. So, on the heels of Coquina, Razorback settles 17 BY MR. GENOVESE: 18 for 170 million and doesn't go to trial for punitive 18 Q. Or likely to be resolved through pretrial 19 damages. So, I am trying to understand the statement 19 settlement with 'I'D Bank. 20 here or likely to be resolved through a pretrial 20 What I am trying to understand is, are you 21 settlement with TD Bank based on the outcome of similar 21 suggesting that in the face of potential punitive 22 cases in which the investor was damaged by the Rothstein 22 damages that there will be a settlement -- there may be 23 fraud sued TD Bank. 23 a settlement by the Beverly and Marlin Group? 24 I am trying to understand -- are you 24 A. I think that the potential punitive damage 25 suggesting that there be settlements in excess of 25 exposure is a factor that is likely to be taken into 52 (Pages 205 to 208) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130192 Page 209 Page 211 1 consideration whether the cases are tried or whether I punitive damage claim will necessarily increase the 2 they are settled, but this portion of the opinion is 2 value of the settlement beyond the total compensatory 3 only intended to convey that if the cases are prosecuted 3 losses. It is -- it is often the case where it is the 4 through trial they are likely to be prosecuted 4 presence of a viable punitive damage claim that enables 5 successfully and the only reason that I see for their 5 a plaintiff who has sustained a loss to get 100 percent 6 not being successfully prosecuted through trial is that 6 of their compensatory damages in a settlement context. 7 there is a settlement agreement. 7 You usually don't get a hundred percent of your 8 Q. What I am trying to get at and these are -- 8 compensatory damages when a case settles because a 9 these are not your words but you adopted these words, I 9 settlement is a compromise. 10 am frying to understand if you are suggesting that the 10 Q. I understand. 11 existence of potential punitive damages claims would up 11 A. It is a compromise of the total value of all 12 the likely settlement amount? 12 of your claims. 13 A. That's not addressed in this paragraph. I 13 Q. So, was I -- I mean, I was just inferring that 14 don't think this paragraph says anything at all about 14 this is what you were suggesting by this statement. Am 15 punitive damages. That's simply not addressed in that IS I wrong in making that? 16 paragraph, but if you are asking me whether I have an 16 A. You are wrong. That paragraph says nothing 17 opinion as to whether a viable punitive damage claim has 17 about punitive damages. 18 an influence on the likelihood of settlement, the answer 18 Q. All right. So, with the existence of punitive 19 to that question is absolutely, yes, I believe that a 19 damages claim, put your statement aside, John Mullin is 20 viable punitive damages claim does have an impact on 20 here somewhere representing Morse. Morse settled for 21 settlement negotiations. 21 less than compensatory damages, correct? Do you know? 22 Q. So, Razorback had a viable punitive damages 22 A. I have a general recollection of that, yes. 23 claim. It was about to go to the jury. Are you 23 Q. And FEP, you arc familiar that they settled 24 familiar with the FEP settlement? 24 for less than punitive damages? 25 A. No. 25 A. Okay. Page 210 Page 212 1 Q. You are familiar with the Emess settlement? 1 Q. And Emess got 122 percent or some number of 2 A. Yes. 2 punitives. Razorback got slightly less than 3 Q. And you mentioned other settlements which you 3 compensatory damages? 4 believed had components beyond compensatory damages but 4 A. Okay. 5 you don't recall? 5 Q. Is the only thing that makes your projection 6 A. That is correct, yes. 6 of potential punitive damage here so much larger -- let 7 Q. So the existence of punitive damages claim 7 me rephrase the question. 8 today other than the unnamed ones that you can't respond 8 If we have no settlements for more than 9 to have not increased settlements beyond compensatory 9 122 percent of out-of-pocket losses and you are 10 damage claims? 10 testifying that the presence of punitive damages claims MR. MOSKOWITZ: Misstates again the witness. 11 will likely cause parties to settle for their 12 It's not in here, increasing the amount of the 12 compensatory losses, what relevance is -- what is 13 settlement. 13 your -- is it one to nine times? I forget what your 14 MR. GENOVESE: I am asking him a question. I 14 projected is. 15 am not asking him what he has read. 15 A. Four to nine. 16 MR. MOSKOWITZ: You keep telling him. He 16 Q. Four to nine times. What relevance is that 17 keeps saying he is going to increase the amount of 17 range in this calculus? 18 settlement. 18 A. Let me answer your question by focusing on 19 BY MR. GENOVESE: 19 what it is that I am opining about. I have not been 20 Q. He has conceded that the punitive damages are 20 asked to express an opinion as to the likely figure at 21 likely in a negotiation, as I understand his testimony, 21 which the Marlin and Beverly cases will settle. That's 22 going to increase the amount of the settlement. Isn't 22 a different question than what I consider to be the 23 that what you said? 23 likely range of punitive damages if this case were to be 24 A. Yes, that is what I said. 24 tried to a jury. 25 What I have not said is that the pendency of a 25 Cases settle if they settle at all for less 53 (Pages 209 to 212) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130193 Page 213 Page 215 1 than the full value of the claim because settlements are that you have relied on that you expect to rely on in 2 compromises. So, what I have perceived my role to be is 2 your testimony at the confirmation hearing? 3 not to project the settlement value of the claims but to 3 A. I have described everything that I have relied 4 express an opinion regarding the value of punitive 4 upon and the case specific materials have been provided 5 damages in terms of a multiple of compensatory damages 5 to you in their entirety. 6 if this case were ultimately to be tried. 6 Q. Do you presently or do you anticipate 7 As you, yourself, have pointed out, there are 7 expressing an opinion at the confirmation hearing on 8 a wide variety of factors that influence whether a case 8 matters other than the opinions expressed today? 9 will be tried or will be settled and the risk tolerance 9 A. I intend to answer whatever questions are 10 of the plaintiffs is a major factor in making that 10 asked of me and I think that you have been collectively 11 determination. 11 fairly comprehensive in covering relevant matters, but I 12 The pecuniary circumstances of the plaintiffs 12 don't know. 13 is a major factor in making that determination. I have 13 Q. But you haven't been asked to express opinions 14 had -- I have had clients with very, very strong and 14 other than what we have discussed today. Correct? 15 valuable claims who have decided to settle those claims IS A. I haven't been asked to express opinions 16 for significantly less than I thought they ought to 16 except those that I have described at least in general 17 settle them for because they have been under financial 17 terms today. 18 duress and I understand that and that's an appropriate 18 Q. I lied. That's three questions. I asked you 19 consideration to assess in deciding whether the case is 19 three questions. Thank you for your courtesy, 20 going to be settled. 20 Mr. Scarola. 21 I have had other clients who have had what I 21 A. Thank you for your courtesy and lunch. Thank 22 considered to be extremely strong and valuable claims 22 you for lunch, also, whoever bought lunch. 23 who simply were very risk adverse and preferred to seize 23 MR. GENOVESE: Berger Singerman bought lunch. 24 the opportunity to get a hundred percent of their 24 MR. RIGOLI: I have no questions. 25 compensatory losses rather than take the risks that 25 MR. GOLDBERG: No question. Page 214 Page 216 I might be involved in continuing to prosecute the 1 CROSS-EXAMINATION 2 punitive damage claim. And one of the reasons why 2 BY MR. MOSKOWITZ: 3 plaintiffs get rewarded for going to trial and getting 3 Q. Mr. Scarola, I have one question. 4 punitive damages and having the staying power to 4 How do you compare the conduct regarding 5 withstand the risks of an appeal and ultimately getting S specifically for punitive damages from TD Bank in this 6 those punitive damages to put in their pockets is 6 case as to all other cases that you have dealt with in 7 because they have undertaken and faced all of those 7 your career. 8 risks. 8 A. It is one of the most aggravated and valuable 9 MR. GENOVESE: I think I am done. If we can 9 punitive liability claims that I have seen in my 10 just take a few minutes and consult. 10 experience. 11 MR. MOSKOWITZ: I may have a few questions as 11 MR. MOSKOWITZ: Okay. No further questions. 12 well. 12 Thank you. 13 MR. GENOVESE: If we can confer quickly, we 13 THE VIDEOGRAPHER: We are off the record. 14 can probably avoid any of Mike's questions. 14 It's 5:23. IS (Discussion held off the record.) 15 (The deposition was concluded at 5:25 p.m.) 16 (A recess was taken from 5:15 p.m. to 16 17 5:21 p.m.) 17 18 THE VIDEOGRAPHER: The time is 5:21. We are 18 19 back on the video record. 19 20 BY MR. GENOVESE: 20 21 Q. Mr. Scarola, I think I have two questions. 21 22 A. I have heard that before. 22 23 Q. Other than what you have discussed here today, 23 24 in terms of the materials you reviewed and relied on, 24 25 you have told us all of everything that you can recall 25 54 (Pages 213 to 216) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130194 Page 217 Page 219 I CERTIFICATE OF OATH i ERRATA SHEET 2 2 IN RE: In Re: Rothstein Rosenfeldt & Adler 3 STATE OF FLORIDA DEPOSITION OF: JOHN SCAROLA TAKEN: July 2.2013 COUNTY OF MIAMI-DADE 3 DO NOT WRITE ON TRANSCRIPT - ENTER CHANGES HERE 4 PAGE # UNE # CHANGE REASON 4 5 5 6 I. the undersigned authority, certify that 7 JOHN JACK SCAROLA personally appeared before me and was 6 8 duly sworn. 7 8 9 WITNESS my hand and official seal this 3rd day 9 10 of July, 20'3. tO 11 II 12 12 13 13 14 14 Patricia Din, RPR, FPR 15 15 Notary Public - State of Florida lb My Commission No. DD 973059 17 16 My Commission Expires 04/17/2014 18 17 19 18 20 19 21 20 Please forward the original signed errata sheet to this 21 22 office so that copies may be distributed to all panics. 22 23 Under penalty of perjury. I declare that I have read my 23 deposition and that it is true and correct subject to 24 24 any changes in form or substance entered here. 25 25 DATE: SIGNATURE OF DEPONENT: Page 218 i REPORTERS CERTIFICATE DUB-Milt & MACLDIN COURT RFP0RTERS 2 Elt Weal Fluglet. Sone nos lislfit1)0 3 STATE OF FLORIDA COUNTY OF AllANII.DADE 4 July 3. 2113 S lohnlock Scoots do Adam Motkoveng. Export I. Patsy:la Diaz, Registered Professional Konya. in Pt Throcia Bedewedterion PA. 6 Reporter. Florida Professional Reporter and Notary 23ZIPooceTiep de Leon Public In and for the State of Honda at large. do Ninth Floor 7 hereby certify that JOHN JACK SCAROLA was by me first Man& Melt 33131.2333 duly sworn to testify the whole truth: that I was IN RE theltheln Rthentehli Mks &lawn M30.32 & authorized to and did report saw' deposition m CASE NOS lth.SI0UI.RBR and I0-3369I.R8R stenotype: and that the foregoing pages. numbered from Plethe silt mote to on July 2.1013. 9 Ito 219. inclusive. axe atme and correct you taw you voeoliva tICPSIIKO in Mr tninscnplion of my shorthand notes of said depositton. abor lethotol IIIItIcl Ming tone. you 'Rd not ID waivedpium, Ian. rt. recnory Om Her sap you aldeoupethlepgAmn I further certify that said deposition was Mose OW of(KV du rua Into:IMoo II taken al the time and place hemnabove set forth and to tthothleC an appointmenex t thoreest mb the bouts of that the taking of said deposition was comm.-need and 9m a.m. and 4 30pm. Monday ihroach Prichy. You era 12 completed as hannabove set out. mho hove pm <outset and you a copy of the IIMINIIpl 13 I further certify that I am not an attorney or and mold amine into (mortice At Meador the IIIIMIlpl. yin will lied an COUIISCI of any of the parties. nor WTI I a relative or maim tato. Myths read 'on as:Rowed &tooth& 14 employee of any attorney or counsel of party connected ay nutters Or OXICC11011$ UM you nuto mak should with the action. nor am I financially interested in the he mood on the mats sloth. twig page and line IS slum. numbered you mp DO wnie to die um•rna 16 The foregoing certification of this Uatthenpl Itself Math ou kite rod lieurace t aid treed thy return th aws.eretv me to sign end Joethe err& ago art! does not apply to any reproductmn of the same by any Me' 17 means unless under the direct control and/or direction !Iwo Jo IIIC4 trod arta son the odrouNd of the certifying reporter. depooriun %Alta a insoluble tarttitle Ultplial. Ouch IR ha already teat forwathul as the coktuts swingy. may IN WITNESS WHEREOF. I have hereunto set my he Mid with the clot el Cocoon II you iosh w WJIIrt your signeamer. sign ”N.II same m the Not a: the 19 hand this 3rd day of July. 2013. houom of Mil Inn esta num tt to at 20 21 &heady. Patricia Diaz. RPR. FPR RIIIICISDIth. RPR. FPR 22 I 6> bad, saiw my imagism, 23 24 khrilock Saab 25 - 55 (Pages 217 to 220) OUELLETTE & MA LDIN O COURT REPORTERS, INC. EFTA01130195