FILED: NEW YORK COUNTY CLERK 05/25/ :37 PM INDEX NO /2009 NYSCEF DOC. NO RECEIVED NYSCEF: 05/25/2016

Transcription

1 FILED: NEW YORK COUNTY CLERK 0//0 0: PM INDEX NO. 0/00 NYSCEF DOC. NO. 0 RECEIVED NYSCEF: 0//0 SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK : CIVIL TERM : PART x ORLY GENGER, : Index: 00/00 Plaintiff(s). : - against - : SAGI GENGER, : MOTION Defendant(s). : x 0 Centre Street New York, N.Y. 00 March, 0 B E F O R E: HONORABLE BARBARA JAFFE, J U S T I C E A P P E A R A N C E S: KASOWITZ, BENSON, TORRES & FRIEDMAN LLP Attorneys for the Plaintiff Broadway New York, New York 00 BY: MICHAEL PAUL BOWEN, ESQ. MORGAN, LEWIS & BOCKIUS LLP Attorneys for the Defendant 0 Park Avenue New York, New York 0 BY: JOHN DELLAPORTAS, ESQ. SHAMEEKA HARRIS, CSR, RMR, CLR Senior Court Reporter

2 0 0 THE COURT: What can I do for you? MR. BOWEN: Good afternoon, Judge. Mike Bowen, Kasowitz firm on behalf of the plaintiff. So we asked for the status conference, your Honor, to basically do a couple of housekeeping matters in anticipation of the damages stage of the trial in light of your Honor's recent trial decision. Our goal is to get this done and to resolve all of these issues as fast as we can and get the case to a final judgment. That's all we are interested with at this point. We had put in place because of -- I'm sure you recall, Judge, the trial waiver, the mid-trial waiver that Sagi effected during the bench trial on the issue of liability that opened the need to take part in this deposition and the development of discovery that went along with that. And we put into place a procedure in order to get all of the relevant documents relating to Mr. Parnes into the waiver to include all of the documents that were subject to the waiver. That process never ended. It hasn't been completed. Mostly because Sagi had, in our view, stopped cooperating whatsoever including taking the extreme of not paying fees to the Special Master so the Special Master delayed hearings and there has been just this foot dragging. We haven't been able to actually get the data that the court ordered to be produced. We haven't been able to implement

3 0 0 the process that was going to be overseen by the court appointed referee to get those documents. Related to that issue, we know there are other documents that came to light during the trial including financial documents that relate to the Canadian entities that are directly related to the damages issue that is coming up that are available that is subject to Sagi's control because the witness who's the custodian said if he ever asked I would have provided the documents. So we -- our position is that they should, Sagi, should produce those documents and he should finish the process that the Court has put in place in terms of getting the electronic data and the computer files from Parnes because Parnes, if you recall, was the custodian of the documents and Sagi testified he was the repository for the documents relating to the Genger related companies and Sagi testified to that and Parnes admitted that was true. But in any event, they had not produced the files. They just refused to produce it. They refused to cooperate with the procedure. There is an appeal now of the Special Master's order that was appealed to you under 0(d) that was affirmed and that affirmness is now on the appeal to the First Department. It is a non-enumerated appeal. We expect it to be resolved very shortly. In that event, we want to continue that process to

4 0 0 get that data before we're put in a position to put on our damages case. All of that information is relevant to our damages case. At the very least, there really is no doubt here that the reason we don't have the information is because Sagi took the position that he took for many, many years leading up to trial. Then at trial, all of a sudden, he turned around and waived privilege between him and Parnes. So because they took that step and made that tactical maneuver, we're entitled to the data. All we are trying to do is get some clarity and some direction from the Court about when we can get this data, to set some deadlines really in getting the data so we can then talk about scheduling the hearing. MR. DELLAPORTAS: As you know, your Honor, there is really no relationship to reality. THE COURT: Just the facts, sir. MR. DELLAPORTAS: Just the facts, your Honor. The first fact is that discovery closed on April 00. It closed pursuant to a note of issue they filed. It closed at their insistence where they certified to this court that it's ready except for the letters of rogatory which now your Honor issued. Your Honor issued it. Two years later, they never followed up on it. Now, they want -- THE COURT: 0. MR. DELLAPORTAS: 0. The years roll by, your

5 Honor. 0 0 THE COURT: They sure do. MR. DELLAPORTAS: So for two years, they have been sitting on an order that your Honor issued to them at their request. Now, I was prior counsel, I can't keep track of how many lawyers Orly had, where your Honor gave them a order to go to Canada to get whatever else they need. They haven't done it. Now, they want to delay. He starts by saying, oh, we want to get the damages trial done. No, we want to get the damages trial done. We filed the paperwork that your Honor asked us to do. We asked them to collaborate with us because one of the forms need both parties to put in their positions. They ignored us. They refused to do it. They are the ones holding up this process. We are ready to proceed. Just so your Honor remembers, the bifurcation order that your Honor issued came a half year after they filed their certificate of readiness. Damages was never bifurcated. Damages, and your Honor gave us six years, was both on liability and damages. They said they were ready. They certified that they were ready on both liability and damages. They had no further discovery except for that letters of rogatory which they abandoned. And then six months later your Honor had the trial and bifurcated the trial.

6 0 0 So discovery is over. It's closed. Now, if there is one thing that there may be an exception to, that your Honor wishes to make, we learned at trial that now on the damages phase, the allegation of damages relates to a fraud which allegedly occurred from 00 to 00. We know that Mr. Fischer was both the bookkeeper and the tax accountant and the bookkeeping accountant from 00 to 00 and that he in collaboration with Orly -- and your Honor's decision recognizances this -- lost the documents. I have never heard of documents being lost in this fashion, but they lost them. But they did claim they gave them to the attorney general. If we're going to open -- THE COURT: District Attorney? MR. DELLAPORTAS: District Attorney. If we are going to open up for one thing, Orly should go and get those documents back from the District Attorney that she gave over. Those are the financial records. I don't know how my client can have a fair damages trial when they went and deliberately gave away all of the financial records. Now, as far as Sagi refusing the process, Sagi has not refused to do one single solitary thing. They came to your Honor. They said because of this waiver they needed a half day deposition which then became a seven-day deposition. They then wanted a privilege log. We gave them a privilege log. We then had Mr. Crane rule on the

7 0 0 privilege log and everything he requested we turned over. There's nothing left in the process here. They have a separate dispute with Mr. Parnes about his computer. We have nothing to do with that. Mr. Parnes has appealed to the Appellate Division. The ruling will be what it will be. If they want to await that, we agree that the Appellate Division will probably rule on that matter within weeks or probably a month or so. There is no oral argument. Sagi has complied with everything. We have nothing further to produce. We produced everything that we have. Your Honor gave them two years to pursue the letters of rogatory. They abandoned it. Discovery is closed. We would like to get this process done. If there is anything that should be open, it should be for Orly to find the documents that she and Bill Fischer gave away. THE COURT: I have a question for you. In reading, I think, maybe, something from Mr. Bowen, there is some kind of representation, perhaps, you can clarify, that Sagi has continually said he has the Canadian records where he can get them, he could bring them. MR. DELLAPORTAS: We had them. We produced 0,000 pages. We produced everything in our possession, custody and control to the extent they then said that's not enough. They said they wanted every rent check, every utility bill, everything out of the Domaine La Renaissance. We said we

8 0 0 can't get that. But if you want, go take the letters of rogatory and we stipulated to it. They, for two years, haven't pursued the letters of rogatory. This is nonsense. If they wanted it, they would have pursued it for two years. We have produced every single scrap of paper relating to this matter in our possession, custody and control. At your Honor's request, Sagi found an affidavit to that effect with this court. It has never been challenged. It remains the case. The only missing documents are the ones that Bill Fischer gave to the District Attorney. We desperately want those because those are the financial records of this case. MR. BOWEN: The issue about the Canadian document is -- Mr. Dellaportas and Mr. Sagi -- THE COURT: Somebody is taking a video. MR. BOWEN: There are three things. The first thing on the Canadian documents is there was a representation, as Mr. Dellaportas just said again today, anything subject to their control will be turned over. That's what they told us in an that was addressed to Bryan Leinbach in October 0 where Mr. Dellaportas says I told you many times we would join in any request you wish to make for such relief talking about getting the Canadian documents. MR. DELLAPORTAS: And we did.

9 0 0 MR. BOWEN: The issue is Mr. Glasberg testified at the trial. It was their witness. And in our cross-examination, I was questioning him, I asked him, did Mr. Dellaportas or did Sagi ever ask you to produce the documents, the financial documents, that you have in Canada relating to these Canadian entities and he said no. I said, was there some reason why you wouldn't produce those. He said no. If Sagi had asked me, I would have produced them. It is as simple as that. So we've asked them to just produce the documents if it is subject to their control. Now, we have a witness who actually has the documents. They asked that witness to come to court without bringing the documents was them. Then I asked them would you turn it over if Sagi asked you to do it. He said, yes, it is subject to his control. There is really no issue about that. THE COURT: It is just for Mr. Glasberg? MR. BOWEN: Right. MR. DELLAPORTAS: Your Honor, Mr. Glasberg, he may have forgot. They have 0,000 pages of a general ledger. They have,000 pages of Royal Bank of Scotland bank documents. Where do they think they got those from, your Honor? THE COURT: We are going to get to that. MR. DELLAPORTAS: First, he said we promise to

10 0 0 0 join. We did join. This is docket number 0. We executed a stipulation authorizing letters of rogatory which we proceeded to your Honor. Your Honor signed it. This is in April. This is dock ID number to go get from Canada whatever they want. They haven't done it for two years and now they want to hold up the trial. THE COURT: What about that? MR. BOWEN: We didn't need the subpoena. That's the whole point. If it is subject to his control -- because the witness came here and said all I had to do was ask. We don't have to go through the expense and the time of using the Hague Convention. If we had known that back then, we never would have bothered getting a stipulation to file the Hague Convention. MR. DELLAPORTAS: It is not the Hague Convention. MR. BOWEN: It is subject to his control. He is not even disputing now -- MR. DELLAPORTAS: We have produced every single solitary scrap of paper subject to our control. That's why we produced forty thousand pages and they produced eighty pages. That's why we produced 0,000 pages of a general ledger,,000 pages of bank statements because they have that and we got that from either Mr. Dionne or Mr. Glasberg. THE COURT: I would like to know why you think you don't have enough. I mean, voluminous evidence at the

11 0 0 liability trial, voluminous. What more could you possibly need and why? I mean -- MR. BOWEN: Bank records. You need the bank records to understand where the money went. If they give a general ledger that Sagi created himself, somebody that is -- MR. DELLAPORTAS: Their star witness created the general ledger. MR. BOWEN: Or the ledger was created at Sagi's direction and he informed people how to characterize certain payments or how to characterize certain receivables. It doesn't tell you anything because you can put anything into a computer system and characterize the money in a transaction to whatever you want to characterize it. What matters is what does the underlying details show. THE COURT: You mention the bank records. MR. BOWEN: Right. THE COURT: For what year? MR. DELLAPORTAS: They are the ones who lost the bank records for 00. THE COURT: What years? MR. BOWEN: Well, the years that we would want from the Canadian entity, the years that the Canadian entity have in their possession and custody right now. So they would go back as far as they go back. I assume that any legitimate

12 0 0 accountant that has this information would keep it going back indefinitely so going back to the 00 time frame. MR. DELLAPORTAS: Mr. Glasberg wasn't -- THE COURT: Mr. Dellaportas, it is very difficult trying to -- MR. DELLAPORTAS: He should learn the facts because he knows, your Honor, Mr. Glasberg was not the accountant in 00. THE COURT: Mr. Dellaportas, I can certainly understand your frustration. You can't throw it on me. MR. BOWMEN: Clearly, our accountant in Canada who was handling the Canadian entity and presumably Mr. Glasberg inherited that information. It doesn't really matter because no matter who the accountant is or was, it is still their agent and they still have control over it. We know for a fact Mr. Glasberg has documents, was told or somehow not told to bring them and would do that if he was so directed by his boss which is Sagi. That's, in our view, a kind of a no-brainer. THE COURT: So let's just deal with something Mr. Dellaportas brought up and that is the records that went to the D.A.'s Office because, frankly, the testimony, it was a tad unclear. It was clear enough that I could address it finding no spoliation then because he is not a party. But in any event, I'm not quite sure. There was a lawyer

13 0 0 involved that he sent the documents to, right? Ortiz? MR. DELLAPORTAS: The background is as follows. THE COURT: I asked Mr. Bowmen. MR. BOWEN: Well, two responses to that. The first response is we are not looking to reopen all of the discovery. We are looking to get what they were ordered to produce. THE COURT: I understand. MR. BOWEN: Looking at what Mr. Fischer testified about was that he had the documents and they were subpoenaed by the District Attorney's Office. And he sent it to a service to be copied and then delivered to the District Attorney's Office and he never got back his -- I guess he was either getting the copy back or the original back. They never came back to him. THE COURT: He sent the originals to a copy service? MR. BOWEN: I believe that's right. THE COURT: What's your understanding of it? We can go back to the testimony. MR. DELLAPORTAS: He claims through counsel that he sent it to a copying service like Kinkos. He said he copied all of the records from all of the relevant time period, 00 to 00. He was both the bookkeeping and the tax accountant and the copy service never sent back his copies.

14 0 0 It was lost in transit. THE COURT: It was a copy service. MR. DELLAPORTAS: The one thing I know is that the D.A.'s Office has a set. All she has to do, Orly, is instruct her accountant, Mr. Fischer, now that the D.A.'s investigation is long since over, to say dear D.A., please return the documents you got from Mr. Fischer or please allow us to make a copy if you are preserving them for some future investigation. Then we would have them. I can see why they don't want them because they just want a liability phase based on things that Mr. Fischer said. To the extent there is a damage element here, the fraud happened from 00 to 00. Mr. Fischer was both the accountant for all purposes until 00. And now they want to see things from Brian Glasberg, who got appointed after Fischer, and has absolutely nothing to do with this and we have given it. So, meanwhile, the critical documents dealing with the financials they lost and they want to make no effort, even though they can simply bring it up the D.A. and say give it back to us. Do both people have to speak on one side? MR. HERSCHMANN: Why don't we both jointly ask the D.A.'s Office if they have a copy of the documents to return it. Therefore, it would be abundantly clear we are not looking not to get them back. I have no problem going from

15 0 0 here right over to the D.A.'s Office and jointly putting in a request if we can get the documents back since they were delayed to us. Is that, okay, Mr. Dellaportas? Do you support that? MR. DELLAPORTAS: Yes. MR. HERSCHMANN: The second one, your Honor, is this. The issue of certain documents, if your Honor recalls at trial, the claim that they made is that the Vladimir Gusinski note made the business completely have zero value. That was their claim. Yet Sagi Ganger brought back the note. Clearly, the records that had occurred from 00 until that time are relevant evaluations. One of the things that we need to understand, because the general ledger is no different than just telling you here is an entry, the backup document in a wire -- if there is an entry that says David Parnes got $,000 for legal work, yet there is an entry that shows it went to his wife or it says book this as this, we're entitled to see that. How else would you trace the money? I presume, since we are going to try to get back all of the bank records, Mr. Dellaportas will be supportive to say we will give you any bank records that show monies from the AG Properties to any Ganger entities. If it went

16 0 0 to TPR, it was an AG Properties. We get to see it. It was our money. There is no question it was a fraud. That's all we want to know. You should be supportive of this because it will tell us whether it was worth two million, five million, twenty million or zero. Let's give the hearing officer the information so we can understand what we are dealing with. MR. DELLAPORTAS: The problem here is the tag team. You should have done a better job. So we produced all of the bank records in our possession, custody and control. They now have new theories because they brought on new counsel. Your Honor gave them six years of discovery. They certified the discovery was complete. It is complete. They are now seeking to reopen discovery. You can't reopen discovery after trial six years into the case. THE COURT: Except to the extent your client agreed to do it. MR. DELLAPORTAS: My client didn't agree to do anything. My client agreed prior to April 00 to stipulate on the letters of rogatory which we did and they abandoned it. THE COURT: Are you referring to something else, Mr. Bowen, that he said? Did he say something during trial here, oh, I have this. I have that. I am willing to produce it.

17 0 0 MR. BOWEN: What I am saying is that his agent came and testified, at his request, as his witness, Mr. Glasberg, and he says -- THE COURT: We're assuming it is not Mr. Glasberg even if he was hired afterwards but -- MR. DELLAPORTAS: Mr. Glasberg is not his agent unless Mr. Fischer is Orly's agent as her accountant to which case your Honor is ruling that a nonparty spoliation occurred become a party spoliation. We would like to revisit that ruling. It can't be that Mr. Glasberg and Mr. Geinbay (Phonetic) and Mr. Fischer who destroys all of the relevant documents. It is not Orly's agent. You can't have it both ways. MR. BOWEN: He is an agent in a sense, this is a sense that applies under the CPLR just as it applies under the Federal Rules of Civil Procedure, that if you say to him please give me the documents relating to this topic and he says sure, he is obligated to respond to your request; he is your agent. No matter how much numbers you want to throw around, when Mr. Glasberg was here, he said he was never asked to bring the documents from Canada. We have nothing from Canada, no bank records, no financial documents, nothing. He said had they asked, he would have produced it. MR. DELLAPORTAS: We should hold this proceeding -- he made a representation to the Court that there are no bank

18 0 0 records, nothing from Canada. This is becoming fraud on the Court, your Honor. He is just lying to your Honor. I can come back here in two hours with ten boxes of backup documents from Canada which we produced to them. I want that retracted or I would like to have a sanctions hearing on it. I can't sit here and have someone lying to your Honor. THE COURT: What you are doing is you are making me not want to rely on what you say by the way you say it and by the way you comport yourself. I would be very careful. Was there bank documents? Were they already produced to you? MR. BOWEN: Not the records that Mr. Glasberg is talking about because he was never asked of them. THE COURT: Was it Mr. Dellaportas? MR. BOWEN: I don't know what he is talking about. MR. DELLAPORTAS: What records was Mr. Glasberg talking about? MR. BOWEN: The records that Mr. Glasberg testified that had he been asked, he could have even brought to the trial but nobody ever asked him. THE COURT: If the question was to him was not specific, his answer is pretty useless, won't you agree? MR. BOWEN: No, because the question to him was very specific.

19 0 0 THE COURT: What was it? MR. BOWEN: Let me get the actual testimony. MR. DELLAPORTAS: Am I also asked that they asked for Mr. Dionne. THE COURT: Either one. MR. DELLAPORTAS: I am happy to show your Honor everything that was produced. MR. BOWEN: The fact of the matter was is that he was specifically asked whether anyone ever asked him for the documents and the records that he had in his possession relating to the Canadian entities and he said no. It was a very clear answer, no. Then he was asked was there some issue would you not produce them had he been asked. He said no, of course not. In fact, I remember distinctly he said something like I am a very agreeable person. THE COURT: Why don't we get these documents. MR. DELLAPORTAS: We produced them. They have them. THE COURT: Mr. Dellaportas calm down. If that is true, we will deal with it. So you're saying -- I have no reason to doubt your word, but obviously they do so... MR. DELLAPORTAS: I will give bates ranges; is that good enough? THE COURT: Yes. Double check it. Mr. Bowen, double check it. He is saying he produced it. I have no

20 0 0 0 reason to doubt that, but I am asking him to produce the proof that he produced it just like I would on an ordinary slip and fall. Let's just get it done. MR. BOWEN: The issue obviously is that we don't know what Mr. Glasberg has. THE COURT: We will find out. You are asking for it. We will find out. MR. BOWEN: He will produce whatever he has and he will give us the bates numbers. MR. DELLAPORTAS: I don't know what they are looking for. He said bank records. I am asking him. MR. BOWEN: I am looking for the records that Mr. Glasberg has. You're telling me you've already produced records that Mr. Glasberg has? MR. DELLAPORTAS: I am not telling you I have. You have them in your file. Go look for once. THE COURT: What I want you to do, Mr. Dellaportas, is the bates numbers and try to identify them, try to get specific. Double check yourself. I mean, we all make mistakes. You might be wrong about it, about whether they are, indeed, the bank records from the particular years. Just double check. They can tell him this is what he has, that you already have. You will check it out. What can I do? I don't know which it is going to be. MR. BOWEN: If we know what Mr. Glasberg has, we

21 0 0 can cross-check against what Mr. Dellaportas is saying it's already been produced from his file. We would need to know that too. MR. DELLAPORTAS: They have a letter of rogatory. They have been sitting on it for two years. If they think there is more in Canada, they have a letter of rogatory. I don't think your Honor put a deadline on it. MR. BOWEN: The law is very clear, the party has an obligation to produce the records under his control. He led us to believe these records were not under his control. Now we know that they are. THE COURT: Did you ever move to compel it? MR. BOWEN: Yes, those -- THE COURT: When was that? MR. BOWEN: There was a motion to compel. MR. DELLAPORTAS: Back in 0. MR. BOWEN: They were ordered. That's when the whole situation came about. THE COURT: And the stipulation. MR. DELLAPORTAS: Your Honor told us to work it out. We agreed to the letters of rogatory. They haven't filed the letters of rogatory for two years. That was the relief that they requested. THE COURT: I understand. Tell him what he produced. You'll check it out. You will let me know. Now,

22 0 0 the computer search. Do you really need that? Aren't the bank records going to do this? I mean, I don't want a free ranging search of everything that Mr. Parnes did when you're only talking about damages arising from this case. I don't want it to be used in any other case. It shouldn't be used in any other case. Why the hell do you need it? MR. BOWEN: Because Sagi and Mr. Parnes were talking about the various transactions that they were doing both in , even relating up until the time of this litigation. They were discussing with each other what they were doing. Our theory, which we submit we established at trial, was that they were doing that in a way that was designed to mislead Orly and commit fraud on Orly. THE COURT: You already have the liability findings, so what. MR. BOWEN: I understand. THE COURT: If you get the bank records and trace where the money went, why do you need this? MR. BOWEN: Because it will have discussions about certain transactions and why the transactions were being done. So if they characterize the transaction in a certain way but we had them talking to each other characterizing the transaction in the actual way, the reality of what they were doing, for example, the payments that Mr. Parnes received from the Genger related entities for his MBA. He testified

23 0 0 he had no idea how much money he got paid. Well, there is a record out there that shows exactly where that money came from. THE COURT: Why don't you -- how about this? Why don't you make a list of interrogatories and serve it on them and maybe they can answer those questions directly. MR. BOWMEN: The problem with that, Judge, is that we haven't been able to get the kind of frank, candid answers from them that we really need to get. And these questions, by the way, Judge, you know, this came up in the course of the mid-trial deposition, and there were findings made by Judge Crane about Mr. Parnes being less than forthright and being evasive and equivocal in his answers and about the fact that when this mid-trial waiver occurred your Honor ordered them to produce all of the documents that we would need in order to question Mr. Parnes before his deposition started and gave him a procedure to log stuff if they still felt it was a basis to log it. In the course of that proceeding, Mr. Parnes was asked what efforts did he make to search his computer files or his other files specific to the fact that there was this mid-trial subject matter waiver. His answer was none. The question was did Sagi direct you to make a search. He said no. So there is no effort made. THE COURT: Excuse me a minute. I can interrupt.

24 0 0 He can't. Now that you have told me what exactly you want, we can narrow the search terms, can't we? MR. BOWEN: We designed the search terms and litigated this in front of Judge Crane and Mr. Dellaportas submitted countervailing set of terms. We kind of hashed that out in front of Judge Crane already. We are not averse to having further discussions about that. THE COURT: Let's try to narrow this further to bring it to a halt. This is only about damages. It is not about liability. It is not about any of the other cases. It is simply where the money went and you just mentioned about the MBA, MBA, wonderful search term, and get specific about it so that -- it's in your interest to get specific about it. MR. BOWEN: I agree. MR. HERSCHMANN: Sorry to do this again. If Mr. Dellaportas would participate with us, which is what we wanted to do, one of the issues, your Honor, we suggested that -- this was the issue. We said to them if you have other clients, identify all of the other clients so we could -- we can negative search them. If their client was Jaffe or any other name, we can say, okay, that's a negative search. You won't see any documents relating to that person. You won't have to worry about it. So we were going to eliminate any other potential

25 0 0 clients that exist. We can take that entire bucket and it never even comes anywhere near Judge Crane. The issue with the damages -- and this is one of the things that we were trying to work through -- if I say transfer money to E&G, transfer a million dollars out of the AG Properties to E&G, have AG Canadian Properties assign their claims to TPR and now let's book it as this, you are going to indemnify me. This is what the document says. But there's an that says, oh, that transfer is really going to be this. And the only way the hearing officer is going to know what's legitimate and what's not legitimate is if we can see the documents that deal with that and see the bank records. All we need to see in reality, give us the TPR bank records -- which we've asked for a long time ago -- give us the AG Properties and give us the documents that reflect communication amongst each other. If you are going to assign a litigation from AG Properties to TPR and then AG Properties is obligated to pay for that litigation, that is taking money away from Orly. It is money. We are going to be able to trace it if they will give the hearing officer the documents. That's all that has to happen. There is nothing more, nothing less than that. THE COURT: Can you meet with them, meet and confer really in good faith to try to iron out these search terms?

26 0 0 It is really -- fairly black and white. MR. DELLAPORTAS: They gave us a list of 0,000 search terms for like John, I guess it is me. Yora (Phonetic) which is Sagi's nanny. We went through and found or that were reviewed. We sent it to them and Mr. Herschmann, as he does, sent me back an threatening to send me to the Bar for bad faith. I've never heard from him again. He never, ever, ever offered to me and conferred about anything. The only thing he has ever done in this case -- THE COURT: You don't have to answer. Let's do it. MR. DELLAPORTAS: There is a broader issue that it's not our computer. THE COURT: For the record, I don't see Mr. Marino here. MR. HERSCHMANN: This has been honestly the issue that we have dealt with because there are two ways that I see it breaking down. One is some indication. Maybe, Mr. Dellaportas is prepared to make the representation now that Sagi has directed Parnes to produce all of Genger related documents on the computer consistent with Judge Crane's order today. I don't know if he ever even made that representation and said I directed my custodian of records to produce the documents. I directed my attorney and told them in writing to produce the documents.

27 0 0 MR. DELLAPORTAS: I submitted an affidavit to that effect that your Honor requested it in the middle of the trial. MR. HERSCHMANN: That is not correct. If Sagi Genger will submit an affidavit that says I have directed David Parnes since trial and the rulings of the Court and Judge Crane's order to produce from his computers and hard drives all of the documents that relate to the Gengers, right, if he would -- the reason I say it this way, your Honor, we're in the Appellate Division this week. There are replies due this week. There is no oral argument. We are going to get a decision in a short period of time. The Appellate Division may say, listen, you are not entitled to it. The Appellate Division may affirm your Honor and then that's the end of it. Then I am still willing to sit with Mr. Dellaportas. We want these things to come to an end. We were successful in getting the apartment case that lingered for seven years, right, by overseeing it with another attorney to completion. Sagi's father-in-law finally moved out of the apartment and surrendered the keys. We are done with that case. Our goal is to end the Genger litigation. Toward that end, the simplest way in the world is give us the bank records, give us the information, turn it over, ask Parnes to produce the documents on a hard drive

28 0 0 that only relates to the Gengers and we will narrow the terms. What we did to help you with the terms is we gave a reference to every single term that we picked, where it came from, what was the site, what was the document, what was the reference so you would see it. But if you are going to sit there and say the nanny became an employee and got paid out of an entity or AG Properties where Orly have an interest and she was defrauded out of that interest, she is entitled to know. Maybe, it is a legitimate payment. Maybe, it isn't. But we're at least entitled to know where her monies went. We know some of it went to Parnes. We know he got an interest. That's what we are entitled to know. If we do that, we will get to the damages phase and complete it. If they are going to tell us, listen, it doesn't matter what the Appellate Division does, we're not going to sit, Mr. Marino doesn't respond to us at all, doesn't respond to Judge Crane at all, doesn't show up, does not care at all and he is going to say, well, you won in the Appellate Division. The Appellate Division ruled in your favor but it is in Parnes and Israel land, then we have to deal with that legal issue when we get there. At least what we're asking for is a clear direction that Sagi had given to Parnes that says I am asking you, as my custodian of records and my attorney who has waived the

29 0 0 privilege, that you produce the documents. That will make everyone lives much easier. THE COURT: What do you say? MR. DELLAPORTAS: We submitted an affidavit to that effect. We filed it. We stand by it. It is 00 percent correct. I am happy to hand it up. It was at your Honor's direction. It is 00 percent correct. THE COURT: Why is that not -- MR. HERSCHMANN: I will tell you why. This affidavit, I questioned him. This is before we started the deposition. This was the basis for the privilege log. This was not, not dealing with the documents on the computers. I'll give you the sequential thing having lived through it. I can remember pretty clearly. We had the mid-trial waiver. Judge Crane came. We both supported Judge Crane because he had settled the one case Sagi ever settled with Gusinski. We then went to the deposition. Documents weren't produced. We had a hearing, telephonic hearing, with your Honor whether to proceed with the deposition that day or not. We then fast forward, got a production. Judge Crane ruled that 0 percent of the documents on the privilege log were not privileged. Some of them were just press releases. It wasn't remotely possible to actually end up on the privilege log. Going through that and going through all of days of his testimony, it was clear documents were missing.

30 0 0 0 Parnes testified all of the documents I got and the hard drives I had I never erased anything. I've never done anything. I got the documents on the computer. I asked him did you search the computer. Did you make any efforts since Judge Jaffe ruled and the answer was no. We have two major things that have occurred. We have a custodian of records. Sagi testified he was the custodian and Parnes said, yes, I was the custodian who never served since your Honor ruled. The second part is there was a waiver of privilege. If he says his affidavit doesn't, it is -- our position is it really doesn't. I know. It doesn't say I directed Parnes to produce it because, honestly, he should be willing, based on everything that Mr. Dellaportas said, Sagi Genger should, in one second, say I swear that I have directed David Parnes to produce all of the documents that are on his hard drive that had been ordered to produce since the subject matter waiver. You are my custodian of records, produce them even though you are in Israel. You are the attorney, we waive, produce them even though you are in Israel. That solves the issue. That solves all of the issues. What John is trying to do, with all due respect, is go pre-deposition. We needed a certification on the privilege log and ignore all of the testimony that came out. MR. DELLAPORTAS: Your Honor gave them six years of discovery. They served discovery request. We produced

31 0 0 forty thousand pages of response. Your Honor then had a question of Mr. Genger in the middle of trial April 0 testified that he got all of the documents from Mr. Parnes and he produced them. That's why we have such a huge production. We stand by this affidavit. It is one hundred percent correct. There is no further document request subsequent to that except for the privilege log and we produced everything on the privilege log that Mr. Crane directed us to produce. That's all we have. So trying to reopen discovery two years after they certified discovery is closed is really, in our view, outrageous. And I don't know why they are going with this except it is obvious that they have no damages and so they want to come down the line and ask for various adverse inferences. This is the strategy that we have seen played all along. And I do know that we produced everything under our custody -- possession, custody or control that was in Mr. Parnes' control. They have it. They now sought to scam Mr. Parnes' computer directly. That's between them and Mr. Parnes. Good luck to them. But we've produced everything. MR. HERSCHMANN: And I don't want to burden the Court anymore. One is the hard drive, we agreed on two things. The hard drive, that is going to be decided by the Appellate Division in a very short order one way or the

32 0 0 other. Maybe, we don't need to burden the Court at all. We can deal with it in two or three weeks when we get a decision. Two, we agreed to go to the District's Attorney Office jointly and ask that they turn over all of the documents. The last thing we ask your Honor, it is not a question of what Mr. Dellaportas represents. Obviously what matters is what Mr. Glasberg testifies to under oath. He wasn't asked to produce the documents and he would produce all of the documents. It seems it is self-evident to me. Give us all of the bank records. Let's -- it's easy to figure out. We can sit there and say payment went to "X" person. We can say, okay, who's "X." If "X" is the nanny of Segi Genger, that's just an example that we need to figure out. THE COURT: Can we agree if you get the documents from the D.A.'s Office that will obviate getting this from Mr. Glasberg? MR. HERSCHMANN: No, your Honor. This is the issue. This is the break down that we have. On a date certain, Bill Fischer turns over the documents to the D.A.'s Office pursuant to a grand jury subpoena. This alleviates Mr. Dellaportas concern that we are being disingenuous. I want to go straight from this courtroom straight over to the D.A.'s Office. The other issue, they take it all the way

33 0 0 through the Gusinski trial. Their whole argument is post-trial Gusinski. Sagi buys the note. The argument is Gusinski bankrupted them. If he took out, for argument sake, he paid himself a million dollars a year out of the entity, well, we are going to argue that that's inappropriate and Orly is entitled to recruit her share. The whole argument as to -- if your Honor remembers the trial, he says, I paid TPR but that's okay because Orly had an interest in TPR. So I am allowed to do that. Well, payments of money between AG Properties and TPR and his theory is I can take whatever money I want out of that because Orly has an interest in TPR, we are entitled to know that. If you take a claim that belongs to AG Properties and you transfer it to TPR and you spend a million dollars on litigation that fails, that was a million dollars that Orly Genger should have been asked do you want to pursue a claim against Gilad Sharon. Do you want to pursue a claim against Vladimir Gusinski. Is it legit or is it a waste of corporate assets. We are entitled to know that. MR. DELLAPORTAS: What part of this were they not entitled to know during the seven years of discovery? THE COURT: Let's talk about non-privilege documents. MR. HERSCHMANN: The non-privilege documents are we

34 0 0 asked for the TPR bank records. One of the things -- I know there are a lot of cases. We are focused predominately on this one. This is the issue. You have a representation by Sagi, and you have a representation by Sagi's counsel as to certain facts which means in the we've tried to get you all of the documents we can. We can't get any more documents. That's what Mr. Dellaportas said. We can't get any more documents, right. We will join in any request you wish to make to the court for such release. That's a representation that as officers of the court we rely upon. We don't know what Mr. Glasberg is going to say. Mr. Glasberg, when he got up there and said Mr. Dellaportas asked me for all of the documents when I understand you wanted it, Sagi asked me for all of the documents. I produced all of the documents so there are no other documents. That would be perfectly appropriate. But when the witness at trial tells us for the first time when he comes from Canada outside of the U.S. into the jurisdiction -- THE COURT: Mr. Dellaportas says that that's not so, that you should but procedurally he says you should have moved. You should have gone and pursued the letters of rogatory. MR. HERSCHMANN: We have one or two choices. The issues with the letters of rogatory are this. They are

35 0 0 premised on the representation, the representation as we asked. We got you everything we can. We asked the person that works for us for the records. We asked the person who's the custodian and Glasberg in charge of the records. MR. DELLAPORTAS: Why does that -- MR. HERSCHMANN: It doesn't make a difference. It says any custodian. Your custodian of records is the person who works for you who has them. If you are holding documents that belongs to Sagi Genger, they are still Sagi Genger's documents. MR. DELLAPORTAS: We got them from Mr. Gusinski. THE COURT: Mr. Dellaportas, please, you are giving more than your share of words in at his expense. You are talking over him. You are talking over me. You shouldn't be doing that. MR. HERSCHMANN: So the representation is if you want any other documents, you have to submit them directly from the Canadian managing agent. THE COURT: What day? MR. HERSCHMANN: This is October, 0. MR. DELLAPORTAS: And the reason I said that is because Mr. Diaz -- if we can have a little precision. THE COURT: He is not finished. MR. HERSCHMANN: Your Honor, this is the issue that we deal with. It is just a question of process. You asked

36 0 0 Sagi Genger, as the defendant in this case, to produce the documents. Counsel represents these are all the documents we can get. Here they are. Thank you very much. Glasberg is important enough for them to call him as a witness at trial. Presumably, they expected that he had knowledge and that was relevant to the causes of action at trial. He comes and testifies and Mr. Bowmen asked him did you ever get asked for any documents. He says, no. That in and of itself is all anyone needs to hear because that means you have to. He's your managing agent. You have to ask him. It is not a question whether you asked someone else. That's the end of it. THE COURT: Listen. MR. DELLAPORTAS: Can I just briefly. THE COURT: Yes. MR. DELLAPORTAS: Mr. Glasberg is not the managing agent. This is what I said. For any additional Canadian documents, you will need to subpoena them directly from the Canadian managing agent who has custody or control of any further documents. As I have told you many times, we will join in in any request you wish to make to the Court for such relief. Subsequent to that, we agreed on the letters of rogatory. We joined in that application. Your Honor issued the letters of rogatory and two years later they still

37 0 0 haven't sought any relief under that letters of rogatory. The managing agent, just so we are clear, is not Brian Glasberg. He is a tax accountant. The managing agent who maintains the records relating to Domaine La Renaissance is Vincent Dionne who also testified. They didn't ask him any questions about that. He is the managing agent. Mr. Dionne provided us with tens of thousands of cases of materials and we produced those. To the extent they think Mr. Dionne has any more materials, there are still open letters of rogatory which they can go pursue. Mr. Glasberg is a tax accountant and so what he does is he files Canadian tax returns. That's all he does. So they have the Canadian tax returns. I don't know why it is significant to them. THE COURT: The bank records, would Mr. Dionne have those bank records? MR. DELLAPORTAS: We will ask Mr. Dionne for any further bank records as well. MR. HERSCHMANN: Could we ask Mr. Glasberg as well? MR. DELLAPORTAS: We will ask them both. THE COURT: If he doesn't have them, he will say no. Do you want to write up a stip on this? MR. HERSCHMANN: Sure. We will definitely write up a stip. THE COURT: We are leaving the computer stuff with

38 0 0 the Appellate Division and we will write up a stip on this about you going to the D.A. and -- MR. HERSCHMANN: What about them giving us the bank records they have from TPR during the time period that would show any payments that go between the entities of TPR and I'll limit it to Sagi Genger, David Parnes, I guess, E&G, things that directly relate to what the evidence was at trial. I am more than happy to put them together for your Honor, based on the trial transcripts, the specific dates -- I mean, the specific entities so your Honor knows this is what we are looking for so we can show a direct link between this entity and this entity especially with TPR where his entire premise was why he didn't pay Orly and why the payments from AG Properties to TPR millions of dollars in consulting fees were legit. Clearly, we should be able to see that. THE COURT: It is from TPR to E&G, Parnes and... MR. HERSCHMANN: Sagi. MR. DELLAPORTAS: Your Honor, that has nothing to do with this case. It was not requested. Now, we are reopening discovery. THE COURT: Mr. Herschmann, when did you ask for them and why didn't you move to compel them? MR. HERSCHMANN: I can pull it out. It may take me a few minutes.

39 0 0 THE COURT: He makes a point about this. MR. DELLAPORTAS: They did move to compel, your Honor, and they lost both parts of it and the rest was resolved by stipulation which is the stipulation we executed. Now, we are trying, post-trial, to reopen it on a fishing expedition. All payments between TPR is a separate entity. It has no relations to E&G and the Canadian bank records will pick those up. THE COURT: What Mr. Dellaportas said is very important. The bank records will pick them up. Which bank records? MR. DELLAPORTAS: The Canadian bank records. THE COURT: Won't they? MR. HERSCHMANN: No, the Canadian bank records will show us two things. This is one of the issues. The Canadian bank records will show us where the money went. THE COURT: From TPR? MR. HERSCHMANN: Right. But the defense, some of this is -- you take discovery. As your Honor knows, there were new things that never ever came out including the part of being Orly's lawyer until trial. If you take discovery and you say, okay, you know, and you hear for the first time at trial this whole thing about TPR and this was all okay, whatever went there was all okay, then... MR. DELLAPORTAS: I have no idea what he is talking

40 0 0 0 about. This is gibberish. MR. HERSCHMANN: I have no problem if your Honor would allow us to submit a very short letter that has the page and line cite to the testimony, which entity, why we think based on the record it is directly relevant to damages. We can make it very, very simple and not waste the Court's time. THE COURT: I would like to make it simpler. I would like to make it simpler by giving me a basis for believing that, one, you asked for it, when you asked for, how you asked for it, and, two, when you moved to compel, if he already said it, and then you resolve it in a stip and tell me why the stip does not answer everything, right, Mr. Dellaportas? It was stiped. MR. DELLAPORTAS: We resolved it. Now, they certified subsequent to that that discovery was over. THE COURT: Well, what they can do though is if the issue rears its ugly head at trial in a way it prejudices them and deprives them of information, they can seek it out for damages. Only on those conditions, no? MR. DELLAPORTAS: Your Honor, I have no doubt that in the damages phase of this we are going to get more discovery motions just like we did in the other phase because -- THE COURT: Well, one could assume sometimes or one

41 0 0 may infer reasonably that if that's the case it might have something to do with your client. One may. MR. DELLAPORTAS: It is hard for me to do here, your Honor, in a situation where we produced forth thousand pages where they got all of the documents lost no transit where most of the exhibits that they marked and used at trial were not produced at all. I can foresee the context. It is not this context. THE COURT: We are going to take each step as it comes and will deal with it. MR. DELLAPORTAS: Are we allowed to issue discovery requests? THE COURT: I don't issue advisory. MR. HERSCHMANN: If you want something, John, call me up and ask me. Anything else on this? THE COURT: I think it is okay. MR. HERSCHMANN: I will say it one more time, even though it is after the decision, we are still prepared to try to mediate, to resolve this, to resolve all of the Genger litigation. I am putting it out there yet again. MR. DELLAPORTAS: Without getting into too much specifics, your Honor, we mediated days and days and days and days. The only offer we got from them was multiple times of my client's net worth, never moved off of it. I don't know what to do. I tried.