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FILED: NEW YORK COUNTY CLERK 03/31/2016 05:43 PM

NYSCEF DOC. NO. 336

INDEX NO. 451536/2014


RECEIVED NYSCEF: 03/31/2016

EXHIBIT A

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SUPREME COURT OF THE STATE OF NEW YORK


NEW YORK COUNTY:
CIVIL TERM:
PART 15

- -X
In the Matter of an inquiry by ERIC T.
SCHNEIDERMAN, Attorney General of the State of
New York,
Petitioner,

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INDEX NUMBER:
451536-14

- against 7

Pursuant to Article 23-A of the New York


General Business Law in regard to the acts
and practices of

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IAN BRUCE EICHNER, LESLIE H. EICHNER,


STUART P. EICHNER, SCOTT L. LAGER,
T. PARK CENTRAL LLC, 0. PARK CENTRAL LLC,
PARK CENTRAL MANAGEMENT LLC, MANHATTAN CLUB
MARKETING GROUP LLC, and NEW YORK URBAN
OWNERSHIP MANAGEMENT LLC,

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Respondents,
in promoting the issuance, distribution, exchange,
advertisement, negotiation, purchase, investment advice of
sale of securities in or from New York State.
- - - - - - - - - - - - - - - - - - - - - - - -X

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Supreme Court
71 Thomas Street
New York; New York 10007

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March 11, 2016


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BEFORE:
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HONORABLE EILEEN RAKOWER,


Justice of the Supreme Court

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Claudette Gumbs

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APPEARANCES:
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STATE OF NEW YORK


OFFICE OF THE ATTORNEY GENERAL ERIC T.
Attorney for the Petitioner
120 Broadway
New York, New York 10271
BY:
MATTHEW W. WOODRUFF, ESQ.
SERWAT FAROOQ, ESQ.
ERIC STOCK, ESQ.
TANYA TRAKHT, ESQ.

SCHNEIDERMAN

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WINSTON & STRAWN


Attorneys for Respondents Eichner and Urban
200 Park Avenue
New York, New York 10166
BY:
KELLY LIBRERA, ESQ.

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DLA PIPER RUDNICK


Attorneys for Respondent Lager
1251 Avenue of the Americas
New York, New York 10020
BY:
PATRICK J. SMITH, ESQ.
JEFFREY D. ROTENBERG, ESQ.

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Claudette Gumbs, Official Court Reporter


60 Centre Street
New York, New York 10007
646.386.3693

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Proceedings

THE COURT:

So respondents are the original

movants here.

Lager, who originally moved, Mr. Lager separately moved

and the Attorney General's office cross moved.

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So I will hear from the respondents first,


please.

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I have the respondents excluding Mr.

MS. LIBRERA:
Winston Strawn.

My name is Kelly Librera from

I am here on behalf of the Eichner

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respondents and Urban Management.

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also represents the sponsor in this matter, the sponsor

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has not moved in this particular motion.

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Although my firm

We filed our motion to vacate the ex parte

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order as to the Eichners and Urban because the papers

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that were filed with Justice Engoron did not make a

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single allegation as to any involvement of the Eichner

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respondents or Urban in any Martin Act fraud.

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talking about the original papers that were filed in

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excuse me,

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This was two years ago.

THE COURT:

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order.

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Yes.

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in 2014.

I am

We will call it the original

That was the ex parte order that he signed.

MS. LIBRERA:

Now,

your Honor will recall

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that the Attorney General's order focused on the -- the

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petition focused on the alleged sales practices of

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certain salespeople at the Manhattan Club.

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And it

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also alleged the AG had suspicions of overselling.

part of the AG's papers,

sought information concerning each respondent's role in

drafting the sales presentation.

York Attorney General undercover agents were part of

the undercover investigation.

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Now,

As

the Attorney General said it

At that time, New

I am not in a position today to address

the specifics of the sales presentations that were

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offered on those dates.

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so I can't speak to whether they are true or not true

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or excerpted in some way that is unflattering for

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Manhattan Club.

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way that they are presented in the Attorney General's

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papers.

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I have never seen the tapes

They clearly are problematic in the

I will note however,

for the Court, that the

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Rivera affirmation that accompanies the Attorney

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General's ex parte order petition in particular

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presents issues, because as your Honor will recall,

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the Rivera affirmation,

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prospectus or the offering plan and this is really the

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keystone of the Attorney General's position, that the

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offering plan was withheld from prospective buyers.

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in

she says she never got the

But if you take a close look at Ms. Rivera's

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affirmation,

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receive, or at least she said she received, a copy of

it is very clear that she actually did

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the prospectus on the day she bought.

Your Honor,

if you have a copy of the Rivera

affirmation handy,

referring to or I will be happy to hand it up,

whichever you prefer.

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I could point out the page that I am

THE COURT:

I have a lot of papers.

I will

take what you got.

MS. LIBRERA:

Sure.

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(Document handed to the Court.)

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THE COURT:

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(Document handed to counsel).

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MS. LIBRERA:

Thank you.

This is the affirmation of

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Sylvia Rivera,

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the Manhattan Club and you will note, on the second

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page of the affirmation,

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"bought a flexible ownership interest at the end of the

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sales presentation for $17,000 by charging $1,700 on a

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credit card and utilizing sponsor's financing for the

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remainder of the purchase price."

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one of the undercover agents who entered

And then,

Paragraph 4,

she says she

the next paragraph she says "but I

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received no --" and there she bolds it and underlines

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it,

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advised to return to the Manhattan Club's sales office

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the next morning to pick up the documents related to my

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purchase."

"-- documents on that date.

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Instead,

I was

Proceedings

On the very last page that I flagged for you,

your Honor,

from Ms.

appears to be her payment pursuant to the sales pitch.

you will see there is a credit card receipt

Rivera and on there it says $1,700 and that

The second page that I have tabbed for you

which appears earlier in the stack is entitled the

Manhattan Club overview and acknowledgment of receipt

of offering plan.

And you will notice on the bottom,

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that Ms.

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2014.

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Acknowledgment.

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has received a copy of this overview and a copy of the

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timeshare offering plan as amended."

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Rivera signs it on the very same day, May 28,


And right above it,

Now,

it says Purchaser

"Purchaser acknowledges that purchaser

this particular document that Ms. Rivera

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signed was put together in conjunction with the

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Attorney General's office,

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and the Attorney General,

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documentation that people were actually receiving the

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offering plan.

over time, Manhattan Club


so that they had some

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Ms. Rivera did.

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Now, putting that to the side for a moment,

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in addition to moving to vacate the order as to the

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Eichner respondents and Urban, we move the Court to

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allow the Manhattan Club to lift the stay on 21

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purchases that were being held in escrow.

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These are

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21 purchases that were in the process of being

finalized at the time the order came down,

order.

Attorney General's investigation.

the ex parte

The participants have all been notified of the

It is our understanding that some of them,

perhaps all of them, were contacted by the Attorney

General and these individuals still want to go forward

with their purchase, so we are moving to vacate the

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order as to those 21 purchasers.


We also ask the Court to put an end date on

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the investigation.

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straw that broke the camel's back,

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that one year into the investigation, after we had

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produced hundreds of thousands of pages of documents,

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after at least 15 interviews had been done,

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people going in two or three times,

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General sent around a survey monkey by e-mail to

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Manhattan Club owners and the survey monkey,

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have seen it,

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10 pages of questions, not unlike what you get when you

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stay at a hotel, were you pleased with your stay? How

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did you find the presentation?

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the prospectus?

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The reason why we did this, the


if you would, was

some of the

the Attorney

if you

it is an attachment to our papers,

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Did you get a copy of

Things along those lines.

At the outset of the case when the ex parte


order came down, Ms.

Farooq said in the papers there

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Proceedings

were nearly a hundred complaints.

owners,

were complaining.

they are sending out letters to see if there are

additional people who are concerned.

to them as of now,

database.

documents,

If there are 14,000

that is about 0.1 percent of the owners who


Seems to us they had a year and now

We have produced

our reservation database,

our sales

We have produced nearly 500,000 pages of


100 documents themselves as I understand --

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a hundred thousand documents it was,

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as I mentioned,

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two and three days' worth.

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counsel who also been involved.

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extraordinary cost for our client and time.

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time of the order,

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entire sales department has been shut down as it had to

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be per the order.

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and we have made,

about 15 people available,

sometimes

They have had independent


This has resulted in
Since the

100 people have been laid off.

In response to our motion,

The

what the Attorney

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General basically said we were right originally and we

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have the right to bolster our papers now and they cite

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a case In re Cenvill for that proposition, but In re

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Cenvill does not say one year after the facts you get a

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second go at the apple.

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original papers that justifies the ex parte order as to

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our clients.

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Now,

There is nothing in the

the AG claims that it has new evidence

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of egregious conduct at the Manhattan Club and I would

like to address that briefly.

tick off a series of things and I can address each one,

but the one they call "the most egregious" is Urban and

that is the management company and what they say is

that because Urban had no employees before the order,

that means it is a pass-through mechanism and it could

not possibly have been providing the services it

In their papers,

they

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claimed it is providing pursuant to the management

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contract and this is also part of their cross motion,

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to /SKROET the management fee.

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The management contract that Urban operates

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under is a contract that it has with the timeshare

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association.

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existence since the start of the project, which was

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1996.

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plan,

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papers.

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contract.

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contracts are cost plus and basically,

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is that Urban gets all of its costs reimbursed and

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then,

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payment if you will,

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It is a contract that has been in

It is a contract that is part of the offering


and it is a contract that was also in the AG's
That contract is what is called a cost plus
It is a common phenomenon.

it gets something on top of that.

Now,

Many government
what that means

That is the

for being the manager.

what does Urban Management do?

Urban

Management prepares the budgets, does the tax prep,

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Urban Management makes sure there are people cleaning

up the rooms when the rooms need to be cleaned up and

that the bar is fully stocked.

owners who are upset and this is part of a management

company.

every one to believe that the place essentially manages

itself.

business works.

It always deals with

I think what the Attorney General would like

That is not the way it works, not the way any


You think of a law firm.

If we just

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had law firms and there were no people who were

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managing the law,

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the direction would be at a particular law firm.

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take issue with the fact that Scott Lager presides over

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a lot of this.

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is not unusual that you would have a single manager.

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it is questionable as to exactly what


They

This is a single venue timeshare.

Think about a company at one place,

It

you have

a single manager.

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Here it is all in the papers.

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the offering plan, exactly what Urban is doing.

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It is all in

The other thing to keep in mind is that the

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operating plan and the managing agreement says that

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Urban has the right to perform the services itself, use

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a third party or use a related entity such as the

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timeshare association and that is exactly what happened

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here.

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the fact that they didn't have any employees on the

So this is much ado about nothing in terms of

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payroll.

There is no fraud here.


Now,

the next argument they make is that

rooms were rented to the generalpublic in violation of

the offering plan.

And they say that because the

sponsor can do that,

that means that there is a fraud

here.

the owners.

owners have inventory.

The sponsor is not situated in pari passu with


The sponsor owns unsold inventory.
The sponsor does not have

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under the offering plan the same rights and

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obligations.

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The

If you look at the offering plan, the rights

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and obligations of the sponsor are in one section,

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rights and obligations of the owners are in a different

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section.

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the

The Attorney General makes a point that we

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are not bound, the sponsor is not bound by the

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reservation rights and this is problematic, and that we

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have been violating the offering plan.

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the provision they cite,

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rules that apply to the owners,

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It is not even supported by their own cite.

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If you look at

it talks about reservation


not to the sponsor.

They also complain that the sponsor does not

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pay its maintenance bills on time.

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in the offering plan that requires that the sponsor pay

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its share of the maintenance expenses at the same time

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There is nothing

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that the owners do.

It makes sense.

a date on which their contract was entered into and

that date is the trigger for later payments.

There is

nothing like that for the sponsor.

the

sponsor's inventory changes during the year --well,

is static now since the order but prior to the order,

it would have say 20,000 units at the start of the

year, maybe 15,000 at the end of the year.

The owners have

Moreover,

It doesn't

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make sense it will be treated the same as someone who

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uses one interval.

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They also complain about a two or three-room

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discrepancy in the offering plan,

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our offering plan that we have 286 rooms and really

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only have 284.

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we are seeing after two years.

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it

saying that we put in

These are the types of allegations that

The Attorney General also claims that we

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required owners to pay their dues before they were due.

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They are internally inconsistent because Ms.

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affidavit says they are billed,

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believe the testimony has been that there was no

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requirement that these owners have to pay prior to the

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time they are due.

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Now,

Farooq's

not required and I

the Attorney General appears to also

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fault the respondents for allowing people to make

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e-mail requests for rooms.

It says the offering plan

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says in writing,

Attorney General appears to be upset that people can

make reservations by e-mail or calls to one individual

and not the 1-800 number.

to the level of the Martin Act fraud and the fact that

we have been in this case for so long and this is all

the AG has to show for it is telling.

or by calling the 1-800 number.

The

These do not seem to rise

Now, there were a couple of other arguments

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the Attorney General had put in on whether or not the

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Eichners are responsible for what was going on,

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assuming there was something going on at sales level.

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They claim that because we signed or the Eichners

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signed and the sponsor signed the certification that

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that means there is strict liability, but that is not

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the law.

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including Greenberg, make very clear there has to be

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participation in the fraud or knowledge.

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credit the AG's view,

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been known or a reasonable person would have known,

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even if we credit that, there is no allegations.

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are he so far off where we feed to be in terms of

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putting people through what they have been put through

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for the last two years that is it is time to really put

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an end to this.

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The cases that we have cited on this point,

Even if we

it -- even if they should have

The last thing I wanted to address is the

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We

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contempt piece.

the Attorney General moved for criminal and civil

contempt concerning charges that were made out of

frozen account beginning right after the order and

continuing through,

following year.

as is clear from Mr. Lager's papers where he attaches

all of the correspondence back and forth between the

In response to our motion to vacate,

I believe, November of the

And as your Honor can appreciate and

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Attorney General and counsel for the sponsor,

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were a lot of different payments that were going on at

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this point.

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business and all of a sudden bring to screeching halt.

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There are payments -- and that is the issue here that

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we have real concern and confusion about,

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exactly fell within all of these various stipulations

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and Mr. Lager laid that out very clearly in his papers

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and we adopt that by reference.

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there

It is as if you take a functioning

about what

The big issue that the Attorney General seems

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to have is the $125,000 payment that went from an

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account at T.

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sorry, to CapitalSource, which was the lender and as we

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put together in our surreply,

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and your Honor if I may go into the surreply,

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reason for that transfer Chet Zimmerman, who was a

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functioning CFO at the Manhattan Club knew that a

Park the sponsor over to Urban I am

the explanation on this

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the

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payment had to be made.

calling up the bank and saying I need to make a wire

transfer.

the second transfer that he could not run it through

the way that he did and basically, the way it worked

was it was money that came from Urban, the management

company.

within a matter of seconds bounced it from T.

He had made one prior by

He was not thinking at the time when he made

He bounced it -- bounced it to T.

Park and
Park out

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to CapSource.

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the order.

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definitely hide the money this way.

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went to pay or line anybody's pocket.

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payables.

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payments and there is no reason to hold anyone in

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contempt.

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This was not a deliberate violation of

It wasn't as if he was saying oh,

I can

None of this money


These were trade

It was an honest mistake here as to these

Now,

I understand the Attorney General has

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taken the criminal contempt piece off the table,

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what we are talking about now is civil contempt.

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the civil contempt -- the elements of civil contempt,

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you need to show a clear directive and I don't think

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the Attorney General can meet that standard here,

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particularly by clear and convincing evidence.

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clear directive that someone violated to the harm of

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the other party.

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General here.

so
And

Ther is no harm to the Attorney


What -- so they claim that they have a

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right to have this money in escrow.

recognized right of having money in escrow,

no basis for this claim of civil contempt.

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There is no
so there is

Unless your Honor has any further questions,


I will save my time.

THE COURT:

Should we have Lager counsel just speak

first?

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Thank you.

They also moved.


MR.

SMITH:

Thank you,

your Honor.

We will

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be very brief and we join in the moving respondents'

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application.

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Just a couple of observations on Mr. Lager's

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part.

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any of the respondent entities.

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entity that he owns.

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Urban,

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of the entities.

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role at the Manhattan Club, but I would like to just

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note one point in terms of what it is alleged that Mr.

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Lager did or didn't do in the original application and

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basically, there is no particularized application as to

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Mr.

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upon these generalized allegations of his managerial

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role.

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He has no official position with the sponsor or


It was a consulting

He is a ten percent owner of

but has otherwise no official position with any

Lager.

He does have a functional managerial

The entire application as to him is based

And I would also submit -- and to echo what

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Ms. Librera said,

Manhattan Club was overselling timeshare interests,

something they had to back off of,

were served with the order,

of the fractional breakups and the ownership entities

and we were able to trace for them no interest was ever

split up and oversold.

if you excise the allegation that the

shortly after we

we walked them through all

So I think without that allegation, they

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would not have received -- the Attorney General would

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not have received the ex parte order in the first place

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and for that reason alone,

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right to supplement their papers,

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vacated.

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since they don't have the


the order should be

Other than that, we rest on the prior


remarks.

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THE COURT:

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MS.

Thank you.

FAROOQ:

Good afternoon,

your Honor.

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will be arguing in opposition to respondents' motion

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and my colleague Matthew Woodruff will argue in support

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of our cross motion.

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Just as a way of background, the office has

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received over 650 complaints concerning the Manhattan

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Club.

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reservations as well as the high cost of the

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maintenance fees.

Most of them deal with the difficulty to make

These individuals paid thousands of

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dollars initially for the timeshare interest.

paid T.Park for that and they continue to pay thousands

of dollars each year in the form of maintenance fees

which go to the timeshare association.

They

THE COURT:

Just --

MS.

In the spring of 2013, the AG

FAROOQ:

sent undercover investigators to observe the sales

pitch and discovered they were engaging in a bait and

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switch scheme.

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purchasers they they were buying a deed,

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and it had investment value and that it would rise

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overtime.

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to make and they told them that the rooms were not made

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available to the non owners,

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for people who "owned" at the Manhattan Club.

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they bought the timeshare interests, these purchasers

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learned that it is very difficult to find a buyer on

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the resale market.

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the wait list to sell it back to the sponsor.

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people have sold it back for as little as one dollar.

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The reservations are not easy to make.

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timeshare buyers call in to make reservations,

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encouraged to call exactly 9 or 12 months out,

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depending on what reservation they want to make and

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rooms are in fact rented to to the general public.

They were telling the prospective


real property,

They told them that reservations were easy

that it was exclusively

Some of them,

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After

a lot of them are on


Many

When owners or
they are

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The Eichner respondents and Mr. Lager's

motion to vacate the portion of the order enjoining

them should be denied for three reasons:

injunction was based on evidence of Martin Act fraud

and sought to preserve the status quo and therefore is

proper.

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Secondly,

The

it only affects the individuals and

their business capacities and third,

even though it is

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unnecessary to support the 354 order,

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General does have reasonable cause to believe that the

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individuals violated the Martin Act.

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To issue the injunction,

the Attorney

Justice Engoron

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needed to find it was proper and expedient to preserve

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the status quo,

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eventually be found liable of Martin Act violations.

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To establish the need to preserve the status quo,

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Attorney General needed to show reasonable cause to

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believe that Martin Act violations occurred.

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that was done through showing that there were oral

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misrepresentations made in the sale,

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inadequate disclosures in the offering plan that was

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certified by T.

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respondents and that T.

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engaging in sales after their broker/dealer

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registration statements expired.

not that the individuals would

the

Here,

that there were

Park and he will park and the Eichner


Park and 0.

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Park had been

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Here, the injunctions serve to prevent

further fraud and to preserve assets and therefore,

preserve the status quo, preserving the Martin Act's

remedial purpose.

As against the individuals,

the injunctions

serve to enjoin them in their business capacities.

injunctions prohibit violation of the Martin Act,

of timeshare interests,

foreclosures,

The
sales

and withdrawals

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from certain entities' bank accounts.

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evidence to suggest that any of the individuals own any

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interest in the timeshare association in their personal

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capacities,

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selling any timeshare interests and their accounts are

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not frozen and it makes sense to name the respondents

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in the injunctive portion of the order, because they

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are the people who control the entities that -- where

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we found evidence of the fraud.

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There is no

so they are not being prohibited from

The Eichners are the principals of the

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sponsor.

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representations made in the offering plan and they

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signed the certification to that

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They are jointly an severally liable for

effect.

Mr. Lager is involved in operations.

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Regardless of what title he holds or not, he is

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actively involved in Urban's management and he is

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actively involved in sales.

And these individuals

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would have been named in the order anyway, because we

are seeking testimony from all four of them and there's

-- their motion does not seek to vacate that portion of

the order.

anyway,

So they would have been named in the order

due to the fact that we wanted their testimony.

In light of the evidence of Martin Act

violations and because the injunction served to

preserve the status quo,

they were proper and expedient

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when issued.

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that the Eichners signed said that they read --

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conducted due diligence,

13

underlying facts and they certified that the offering

14

plan was true,

15

on that certification and the fact that the offering

16

plans is not current,

17

General has reason to believe that they violated the

18

Martin Act and but I

19

injunctive relief is to preserve the status quo, not to

20

determine whether or not the individual will be found

21

liable.

22

23
24

As far as liability,

complete,

the certification

they investigated the

current and accurate.

is not accurate,

Based

the Attorney

want to emphasize the stand for

This is not a motion to dismiss.

This is not

a motion for summary judgment.


As for the second request, which is as

25

against Urban, we in our initial papers made

26

allegations about our concerns about the maintenance

Claudette Gumbs

22

Proceedings

fees and about the reservation issue and we need

documents from Urban because, according to the offering

plan, they are the ones who have a complete list of the

owners,

from the timeshare association and again, they were

named because we needed documents and to the extent

that the injunction exists,

because it does not allow for foreclosure proceedings.

10

It makes sense that given the evidence of the

they are the ones with the books and records

it preserves the status quo

11

fraud,

12

paying maintenance fees may have done so because they

13

were defrauded,

14

and to the extent that is against Urban,

15

expedient and proper because it preserves the status

16

quo.

17

and the fact that these people who stopped

it makes sense to put a hold on that


it is

As for the other injunctions against Urban,

18

their argument as to the original order does not freeze

19

their accounts and they are just enjoined from

20

violating the Martin Act, which poses no undue burden

21

and maintains the status quo.

22

As for Urban's liability, we found evidence

23

that rooms are being rented to the public in a manner

24

that violates the offering plan.

25

specifically says that those rooms are to be made

26

available to owners exclusively, except for a tiny

Claudette Gumbs

The offering plan

23
1

Proceedings

window which is 72 hours before check-in date, which

makes sense.

days left,

contract and property right written in the offering

plan and was agreed to between the timeshare buyers and

the sponsor when they made the sales and it is not just

the unsold inventory that is being made available to

the general public,

If a room is left over and only three

sure,

let non-owners get it.

But that is a

it is all of the inventory, because

10

they set aside time in advance,

11

it online and that is why when owners call in,

12

see that even though they are not getting a

13

reservation,

14

they are looking for online, which goes back to the

15

heart of most of the complaints that we are getting.

16
17

so that they can market


they can

there ire rooms available for the dates

On this basis alone,

Urban is properly named

in the order and the injunctive order as well.

18

In addition,

as far as Urban's contract,

it

19

is extremely lucrative and the way that it got the

20

contract is because it is related to T.

21

0.

22

management of the property and they contracted with

23

Urban.

24

Urban and T.

25

contract,

26

and to keep the business running and in exchange they

Park.

So T.

Park and 0.

Park and

Park control the

The Eichner respondents are principals of both


Park and 0.

Park.

And under the

they are required to perform lots of services

Claudette Gumbs

24
1

Proceedings

are paid $6.4 million a year.

However,

it does remain

unclear whether Urban does anything.

Lager has been identified as the person who is in

charge of Urban,

is a consultant paid directly from the timeshare

association.

fee and Urban didn't have any employees until 2014,

they,

Even though Mr.

he is paid separately from Urban.

He

That is separate from the $6.4 million

respondents,

and

have not identified one person that

10

is currently on Urban's payroll that provides any

11

services to the timeshare association.

12

Courts have recognized that there is an

13

inherent conflict of interest in the developers'

14

control of the property's Board of Directors, because

15

the developer on the one hand is motivated by profit,

16

whereas the Board of Directors is motivated by making

17

sure everything is running for the benefit of everyone.

18

Because of this conflict,

the Martin Act has

19

specific disclosure requirements concerning the

20

financial information that must be provided and that

21

includes disclosure about any profits of the persons

22

and any profits that the officers make from the

23

management of the property.

24

in the offering plan that are sufficient to satisfy the

25

statutory provisions.

26

Historically,

There are no disclosures

the payments to Urban were

Claudette Gumbs

25
1

Proceedings

forwarded to T.

Hospitality Advisors on a monthly basis.

company is owned I think partly by Mr.

according to the operating documents, by his wife and

children.

two problems:

members of the Board of Directors.

that they cannot be compensated.

10

they are receiving compensation.

11

Park, the Eichner respondents and


That last

Lager,

From a disclosure standpoint,

but

this poses

Stuart Eichner and Mr. Lager are both

Second,

And the bylaws say


Yet,

through Urban,

the offering plan fails to disclose

12

the profits of the Eichner respondents and Mr. Lager in

13

direct violation of the Martin Act.

14

As for the request that the continued

15

investigation should be denied,

16

to impose a cutoff where here,

17

are not answered and the office has acted expeditiously

18

and the injunction is supposed to remain throughout the

19

litigation and in response to our more recent document

20

requests,

21

instances to produce documents.

22

there is no legal basis


there are questions that

respondents have taken months in some

The standard of review is not whether

23

respondents have purported to furnish all of the

24

information, but rather,

25

warrant an investigation.

26

Act empowers the Office of the Attorney General,

if there are questions that


Section 354 of the Martin

Claudette Gumbs

upon

26
1

Proceedings

information and belief that testimony of a person is

material and necessary,

parties or witnesses.

to take pretrial examination of

Here, the office intends to ask the

respondent individuals about their involvement in the

sale of timeshare interests,

the operations, because we believe that is material and

necessary.

about their involvement in

We are eager to have those examinations as

10

they are provided for under the 354 order, and as long

11

as those examinations have not taken place, the order

12

should not be cut off and we have sent -- we know that

13

they have had some concerns about testifying,

14

have sent them a letter.

15

response to see whether they are willing to schedule a

16

date or whether we have to do another motion regarding

17

those examinations.

18

so we

We are waiting for a

A cutoff date is I will also say,

improper

19

because we have acted expeditiously in this

20

investigation.

21

practices of T.

22

misrepresentations in the offering plan that was

23

certified by T.

24

respondents and Urban's violations of the offering

25

plan.

26

We have been investigating the sales


Park and 0.

Park,

0.

Park sales staff,

the

Park and the Eichner

Since the motion was briefed, we have taken

Claudette Gumbs

27

Proceedings

testimony from eight individuals and reviewed a

voluminous document production.

schedule the examinations of the individuals in

December, but there was some motion practice with that,

too.

up and we intend to file a complaint within 90 days of

taking testimony from Mr. Lager and the Eichner

respondents.

10

We attempted to

So we were ready to go as of December to finish

The First Department has held so long as the

11

complaint is brought expeditiously, that the injunction

12

issued under a 354 order may be maintained throughout

13

the litigation.

14

light of respondents' delay in producing documents.

15

The order requires the production of documents and

16

specifically defines that to include e-mails.

17

e-mails were produced in 2014.

18

seek search terms or custodians to start their search

19

until February of 2015 and those documents were not

20

produced -- they were produced on a rolling basis, but

21

that was not completed until August of 2015 and like I

22

said, by December we were ready to go to take those

23

examinations.

24

And a cutoff date is inappropriate in

No

Respondents did not

More recently, we made a document demand in

25

December and they finished their document production in

26

response to that demand yesterday.

Claudette Gumbs

Nor is there any

28
1

Proceedings

basis in law for the Court to direct the office

concerning how to conduct the investigation,

respondents'

General from mass mailings.

such as

request here to prohibit the Attorney

What they are asking for here is in the

nature of a writ of prohibition and absent a clear

legal right which they have not established, their

motion should be rejected.

There is nothing unusual in

10

contacting complainants to understand the situation.

11

Here, we have received a lot of complaints,

12

started by saying over 650.

13

we were talking to the loud minority, or if the

14

concerns that were being raised were widespread.

15

After all,

16

property rights.

17

what we were getting into while we were investigating

18

as far as the scope of what we perceived to be a fraud.

19

I think I

We wanted to know whether

these are individual contract rights and


So we wanted to make sure we knew

For all of these reasons,

respondents'

20

request for a cutoff date and for -- to prohibit the

21

Attorney General's office from mass mailings should be

22

denied.

23

Finally, with respect to the request to close

24

on the pending sales,

25

there were approximately 21 individuals still in

26

contract.

as of when this was briefed,

We do not know how many people are still in

Claudette Gumbs

29
1
2

Proceedings
contract today.

THE COURT:

Well, they said that they

notified them and nobody wanted to rescind their

contract.
MS.

FAROOQ:

But nobody has asked to close

either,

a -- the lack of evidence that any purchaser wanted to

close and that these sales would benefit the timeshare

and that is a critical point, because there is

10

association.

11

from a single purchaser who seeks to close their

12

purchase.

13

out the investigation before they decide what to do and

14

there is no evidence that these people are eager to

15

take on the maintenance fees they would be required to

16

pay once they do close at this juncture with the

17

investigation open.

18

They have not produced direct evidence

It is entirely possible they want to wait

As far as the benefits from the closings,

19

is T.

20

of the sales, not the timeshare association and the

21

amount of maintenance fees that people would pay if

22

they closed is de minimis compared to the annual

23

budget, which,

24

$44 million.

Park and 0.

it

Park who would receive the proceeds

for this year is estimated at

25

So on this basis, we request

26

THE COURT:

The association would benefit

Claudette Gumbs

30
1

Proceedings
from these people then paying maintenance?

MS.

FAROOQ:

Yes.

But the amount is small

and because of the need to preserve the status quo, we

do request this be denied.

inclined to allow the sales to close we ask that the

following procedures be put into place:

preserve assets, we request that the proceeds of the

sales be put into the frozen account to protect the

10

However,

if your Honor is

First, to

purchasers.

11

We request that for each closing, the

12

respondents provide to our office an affidavit from the

13

purchaser and that that affidavit contain four things:

14

First,

15

counsel who has advised him of the risks of closing;

16

second, that the purchaser has been provided with a

17

copy of the Eighth Amendment to the offering plan which

18

discloses the existence of this investigation; third,

19

the purchaser is aware that this investigation is

20

ongoing, and fourth,

21

purchaser's request.

22

that the purchaser is represented by legal

that the closing is at the

And with that,

23

questions,

24

cross motion.

unless you have other

will turn it over to my colleague on the

25

THE COURT:

26

MR. WOODRUFF:

Thank you.
Thank you,

Claudette Gumbs

your Honor.

Let

31
Proceedings

me start by confirming what Ms. Librera said to you

about the withdrawal of the motion for criminal

contempt.

I do confirm that that has been withdrawn.


Second we have also withdrawn as moot our

5
6

request to compel the production of e-mails.

Ms.

produced.

As

Farooq mentioned, these e-mails were ultimately

That leaves just two issues on our cross

The first is a finding of civil contempt

10

motion.

11

against the respondents T.

12

Park Central as well as against Mr. Lager personally.

13

Park Marketing Group, and

And the second is a modification of the

14

July 2014 order to extend the injunction to Urban's

15

bank accounts and that is based on evidence that we

16

have learned since seeking the order.

17

order would include an approximately $6.4 million

18

management fee that Urban receives annually from the

19

timeshare association, but it would not affect the

20

day-to-day operation of the timeshare association

21

itself and the reason is that all of the expenses of

22

the timeshare association,

23

labor costs, electricity,

24

things that counsel mentioned,

25

timeshare association itself out of its own funds.

26

That $6.4 million is taken right off the top of

That modified

its operating expenses,


laundry services, all of the
are being paid by the

Claudette Gumbs

32
1

Proceedings

revenues.

Urban.

by Mr. Lager and is distributed to them.

go to pay any expenses of the timeshare association.

It is just creamed right off the top.

7
8

It is pure profit.

It goes into the -- into

Urban is owned by the Eichners and ultimately


It does not

I will explain why that is problematic in a


just a few minutes.

Before the contempt discussion,

I would like

10

to address one point that Ms. Librera made.

11

list of items that she said that were in dispute.

12

They were trivial items, it seemed.

13

all the Attorney General has to show for the case.

14

That is not it.

15

this is not the time to talk about the merits of the

16

case.

17

investigations, a lot of interviews.

18

attended all but two.

19

these witnesses have testified.

20

learned about the operations of their company.

21

She gave a

She said that is

We have to look at more than that, but

But I want to say we have had a lot of


They have

They have been present when


They know what we have

On the contempt motion in our reply brief, we

22

have identified $368,738.35 of disbursements that T.

23

Park Marketing Group and Park Central wrongfully

24

disbursed from their accounts between August and

25

November of 2014.

26

the Court's injunction.

And those accounts were covered by


There is no dispute that the

Claudette Gumbs

33

Proceedings

accounts were covered by the injunction.

dispute that these disbursements were made after the

order.

our brief in our reply memo and are detailed at pages 5

and 15.

Pages 20 and 21 and I quote their own language.

performs top level decision-making for these companies

and he supervised a team of "experienced and capable

There is no

The disbursements are summarized at Page 15 of

We referred to Respondent Mr. Lager at

10

managers."

11

place without his knowledge and supervision.

12

actual,

13

ensure compliance with this Court's order.

14

He

These disbursements could not have taken

it is actually constructive.

It is not

It is his job to

Now the payments themselves took place

15

against a backdrop of extensive negotiations between

16

our office and respondents'

17

resulted in seven different stipulations which were

18

designed to permit payments to employees,

19

creditors and specifically identified people.

20

were seven of those in all,

21

never withheld consent for them to pay a legitimate

22

business expense.

23

have asked them who owes who,

24

and to provide backup documentation that the payments

25

issued here are the ones that they did that for.

26

counsel.

And those

trade
There

and in every case we have

We have always agreed to that.

We

what they wanted to pay,

None of the payments that are at issue here

Claudette Gumbs

34

Proceedings

in reply come within the terms of any of those

stipulations.

violation of the order and respondents know that for

three reasons:

July 2014 order prohibited them from making any

disbursements from the accounts.

closure of those accounts and that is a clear fact

that Ms. Librera was referring to.

All of the payments are a willful

They knew and understood that the

It was an absolute

It had to be clear,

10

had to be evident from the face of the order and it

11

was.

12

Second,

they understood the terms under which

13

we were willing to consent to agree to certain

14

payments.

15

none of the disbursements at issue here were covered by

16

any of those negotiations.

17

made those disbursements they were making them

18

regardless of those facts.

19

was a willful and knowing violation of the order.

20

refuse to return any of that to the accounts and that

21

is what really constrains us to make the motion for

22

contempt.

23

back.

24

They negotiated that.

So they knew that when they

They took it out.

Our relief,

And they knew that

Their conduct,

we submit,
They

They refuse to put it

our only remedy is to come to you

25

and ask you to enforce the order.

26

remedy.

That is the proper

Their willful conduct has impaired our right

Claudette Gumbs

35
1

Proceedings

to protect the assets, to protect the -- maintain the

status quo,

the dissipation of assets that should be used in the

event there is liability to reward -- or to reward the

injured parties.

extending the investigation and to prevent

Now,

the remedy we seek here is for you to

order them,

civil fine to the Office of the Attorney General in the

10

the three entities and Mr. Lager to pay a

amount of $368,838.35.

11

Insofar as they want to make a claim for

12

release of any of that money,

13

our telephones still ring and we will undertake to

14

properly review those and if they have good reason,

15

they can demonstrate those are in fact valid business

16

expenses, we will consider those,

17

our door is still open,

if

your Honor.

I will pass to the second part of the motion

18

and that is the part that seeks modification to include

19

Urban's bank accounts.

20

originally sought that injunction, we thought Urban was

21

a real management company.

22

real assets,

23

payroll.

24

to the everyday operations of the company, and we were

25

wrong about that.

We learned they don't have any

26

employees at all.

Doesn't appear to have any

Now,

real expenses,

at the time that we

We thought that it had


real employees and a real

We thought all of those things were related

Claudette Gumbs

36

Proceedings

significant property, plant and equipment.

has $5,000 of property, plant and equipment, according

to its financials.

today work for other Eichner-controlled entities, not

for any of the parties hereto.

respondents appear to be using Urban's bank accounts to

pay the individuals because their other accounts are

blocked.

I think it

The employees it has on payroll

And the sponsor

So Urban's account is a loophole in the area

10

that they have exploited and we are seeking to close

11

that loophole.

12

Their major asset appears to be a bank

13

account in which they received the $6 million annual

14

management fee and as I mentioned before, none of the

15

actual expenses of the timeshare association are paid

16

from that account.

17

Lager.

18

Now,

It goes to the Eichners and to Mr.

the issues involving Urban's role as a

19

management company are numerous, complex -- and I won't

20

go into them today, but I can tell that you we have

21

conducted a thorough investigation and it will be part

22

of our claims, but that is not for here,

23

There is no dispute about one thing about the fees:

24

derives from revenues they received from the timeshare

25

association.

26

association.

for today.
It

Revenues come to the timeshare


They are paid as expenses.

Claudette Gumbs

One of those

37

Proceedings

expense items is a fee and those revenues have two main

parts:

people who bought these interests,

fraudulently induced to buy the timeshare interests,

they are also paying that timeshare charge.

timeshare charge in part is going to Urban,

adequate reason in and of itself to include Urban's fee

within the scope of the order.

10

One is timeshare charges that are paid by


so if they have been

That
so that is

It is the proceeds

from what we allege is a fraudulent sale of securities.

11

The second part is revenue that is generated

12

from Urban's rental of rooms to the general public.

13

Ms.

14

renting these rooms.

15

This is inventory that other owners have bought and

16

paid for.

17

offering it to the general public instead of making it

18

available to owners.

19

plan,

20

is a fraud under the offering plan and the management

21

fee is tainted by those acts.

22

THE COURT:

Farooq referred to those.

The fact is, they are

This is not their own inventory.

They are taking that -- those rooms and

That,

too,

is a violation of the

it is a violation of the rights of the owners,

And those fees that come from

23

renting to the general public, are they in that Urban

24

account,

25
26

or are they in a different account?


MR. WOODRUFF:

They come into the timeshare

association as part of the general revenues and Urban

Claudette Gumbs

it

38
1
2

Proceedings
gets up to 20 percent of those as its fee.

Now,

the relief we are seeking with respect

to Urban is very same relief that we would have sought

in 2014, had we known what we know now.

took examinations of people and we now know a lot more

about how Urban operates and I would just mention, they

may say all of this is

the plan.

Instead, we

it is not all disclosed in

We have had to interview a lot of people.

10

We still want to interview Mr.

11

refused,

12

we want to interview the Eichners,

13

will be in a position to close this investigation.

Lager,, but he has

so we may have that issue in front of you and


at which point we

14

Thank you.

15

THE COURT:

16

MS. LIBRERA:

17

I want to start with one point that I just

Thank you.
Thank you,

your Honor.

18

heard Mr. Woodruff raise.

19

fee as an expense of the timeshare association.

20

that reason,

21

not-for-profit corporation laws does not wash.

22

argument on the not for profit law is that the

23

management fee is essentially a profit and that under

24

the not-for-profit corporation laws, that is not

25

allowed.

26

an expense of the timeshare association and that is why

He described the management


For

their argument concerning the

But as Mr. Woodruff just recognized,

Claudette Gumbs

Their

this is

39

1
2

Proceedings
that argument does not work.

The fraud piece that they have talked about

in terms of the management company being a fraud.

listened very carefully and I have not heard a single

thing as to what is fraudulent about the management

company.

management agreement, and I disagree.

management agreement,

Mr. Woodruff said it is not all in the


In the

in particular as to the

10

management company's responsibility,

11

company in its sole discretion shall perform itself or

12

hire personnel to perform or procure providers to

13

perform all services necessary for the operation and

14

maintenance of the timeshare plan.

15

clearer that the management company itself does not

16

have to have employees.

17

it says management

It could not be

If it were up to the Attorney General,

all of

18

the employees would be under Urban and it would be

19

treated the exact same way.

20

expense.

21

Now,

This would still be an

there are a lot of other things that I

22

heard coming out of Mr. Woodruff's mouth just now.

23

talks about the 6.4 management --middle management fee

24

annually, but he denies that that has been capped since

25

2011.

26

20 percent on top of the budgeted revenues of the

The management agreement provides for

Claudette Gumbs

He

40
1

Proceedings

organization.

management company decided to cap that at 2010 levels

basically to try to offset some of the issues with

rising costs.

expensive city, we all know this,

Attorney General seems to be missing and I think your

Honor picked up on it a moment ago,

foreclose the sponsor's ability to foreclose on non

The management agreement and the

We are in New York City,

10

paying owners,

11

co-op.

12

neighbor has to pay it.

13

it is a very

and the point the

is that when you

it affects other owners.

It is like a

If I don't pay my maintenance, my next door

So the entire idea that this investigation is

14

somehow helping the people of the Manhattan Club is

15

really a farce.

16

things that are clearly disclosed in the offering plan.

17

It is over 500 pages long.

18

with your Honor.

19

give it to you if you want.

What we are talking about here is

I brought a copy and I am happy to

20

THE COURT:

21

MS. LIBRERA:

22
23

The entirety of it is not

I would like a copy,


Great.

agreement is part of it.


THE COURT:

The management

The

You don't have to give it to me

24

right now.

25

would like a copy before you leave.

26

actually.

I will not read it as I sit here,

MS. LIBRERA:

Well,

I have it here.

Claudette Gumbs

but I

41

Proceedings

(Document handed to the Court.)

THE COURT:

MS. LIBRERA:

Thank you.
So it is all there.

There is

nothing that has been withheld from anybody.

nothing that has been hidden away in terms of the

management agreement.

specifically about the rentals to transients.

in Ms.

In the budget,

Farooq's opening brief,

There is

it talks
In fact,

there is a discussion of

10

the fact there's --there are rentals to the general

11

public.

12

72-hour period and where that is coming from,

13

interestingly enough,

14

a discussion of something called bonus time.

15

bonus time is available to people who have already used

16

their allotted time for the year and they have the

17

ability to then go back and say I would like to use

18

additional rooms,

19

They are in a line because they have to see to owners

20

who have not used all of their time and the general

21

public who has the ability to get a room within

22

72 hours.

23

coming from,

24

the general public.

25

the Attorney General's opening papers on the rentals.

26

There is no discussion about restriction of a

is in the offering plan there is


And

and those people are in a line.

That is where that 72-hour constriction is


and it has nothing to do with rentals to
And you need look no further than

Another interesting thing that is important

Claudette Gumbs

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Proceedings

to point out is there has been civil litigation.

Attorney General cites some of the cases in the papers,

specifically about what is going on over at the

Manhattan Club.

prejudice and the reason why it has been dismissed with

prejudice is because the offering plan discloses each

and every thing the Attorney General is complaining

about right now.

Each case has been dismissed with

The rentals to the public, the

10

management fee,

11

that is being hidden.

12

The

these are all there.

There is nothing

Another thing on the sponsor rentals to the

13

public.

14

offset maintenance fees that the sponsor owes to the

15

timeshare.

16

Guess where that money goes?

If we cut that off,

It goes to

it hurts the timeshare.

It seems to me that when we are talking about

17

our cases, we are really two ships passing in the night

18

here.

19

every thing that they have raised, but yet, they don't

20

want to look at it and for the life of us, we can't

21

figure out why.

22

There are simple explanations for each and

Mr. Woodruff is right.

We have been sitting

23

in on these examinations.

24

several and shaken my head a few times because I just

25

don't know where this is going.

26

Now they claim they are just about done, but all they

I myself have sat in on

Claudette Gumbs

It has been two years.

43
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Proceedings

need are the individual respondents.

them,

they can't make a commitment on the criminal

side,

so for us, what they are telling us is,

you just need to sit for your deposition and it will be

over.

Unfortunately for

oh no,

Don't worry about that criminal investigation.

And we were before your Honor last year and

if you recall,

the fact there was a criminal investigation, not at

the Attorney General did not commit to

10

least until there was some correction on the record, as

11

I recall.

12

Now, a few other pieces:

Mr. Woodruff said

13

that if the management fee is escrowed,

14

not be any effect on the day-to-day operations.

15

could not be anything further from the truth.

16

Essentially, what you're asking people to do is take

17

the management out of the equation and just have the

18

people do the work.

19

one will work with the lawyers,

20

the tax board.

21

that there will


There

No one will direct the people, no


no one will work with

Okay.

There are people within the organization

22

whose responsibility it is to oversee all of this.

23

There is an HR person, there is Mr. Lager, and Mr.

24

Eichner who provides strategic vision on all this.

25

Mr. Woodruff essentially wants to take them

26

all out of the equation and say they should work for

Claudette Gumbs

44
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free.

contemplates and just because the Attorney General

thinks it is

management fee.

about some sort of misrepresentation that was made to a

person about the management fee.

That is not what the management agreement

lucrative is not a basis to escrow the


I have yet to hear a single thing

Just one more point.

THE COURT:

She is still going.

10

MS. LIBRERA:

11

Urban's account as a loophole.

12

under this order.

13

It is not a loophole.

14

a derivative of their idea that because there is a

15

$6.4 million fee,

16

Mr. Woodruff referred to


There is no loophole

Urban is not subject to the order.


And again,

this is all sort of

there must be a problem.

Unless your Honor asks further questions,

17

that is all I have.

18

THE COURT:

19

MR.

SMITH:

Thank you.
Just focusing on the cross motion

20

for civil contempt as to Mr. Lager,

21

address a few -- actually point out some of the things

22

that Mr. Woodruff didn't say.

23

for civil contempt, they have the burden of showing

24

prejudice and I did not hear a word out of his mouth

25

and did not see in the papers how the Attorney General

26

is prejudiced by any of the payments outlined on

I would like to

Since it is their motion

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Proceedings

Page 15 of the reply brief,

$368,000.

which they say total some

The main reason there could be no prejudice

is the Attorney General is holding $550,000 in an

escrow account of respondents' money, which was paid in

in December of 2014,

regarding the stipulations and the discussion about

what respondents entities would be permitted to pay in

after all of this back and forth

10

terms of making payroll, making benefit payments, and

11

paying vendors who had provided services to the

12

Manhattan Club for the benefit of homeowners.

13

really,

14

enter into any stipulation going forward,

15

not right.

16

So

when Mr. Woodruff says they were willing to


he just is

He was not there.

What happened was,

the Attorney General

17

complained to us that the process was too detailed,

18

burdensome.

19

respondent entities were providing in support of each

20

stipulation to justify each payment and they basically

21

came to us in November of 2014 and said forget,

22

will not do it any more, we need a security interest or

23

some type of security so that you know,

24

protected.

25
26

too

They would not go through the backup that

We went back and forth,

it,

we know we are

and finally,

as part

of an overall settlement structure and to cure any

Claudette Gumbs

we

46
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suggestion that any improper

previously, we entered into this arrangement where

$550,000 was placed in escrow under the control of the

Attorney General in an amount above the $368,000 they

now say is the basis for contempt.

prejudiced when they are already holding funds in an

amount greater than the amount they say was paid out in

violation of the order and on that basis alone,

had been made

10

it all respondent entities,

11

the contempt motion should be denied.

12

They cannot be

as to

in particular Mr. Lager,

Another part of their burden and Mr. Woodruff

13

did try to address this,

14

clear and unequivocal; that is to specifically say what

15

you can't do.

16

does say that no payments can be made out of the

17

accounts,

18

stipulations,

19

stay in business while the investigation proceeds.

20

Pay staff, pay vendors.

21

is that the order has to be

The initial order back in July of 2014

but then there is a series of seven

Ms.

the spirit of which is,

let the company

Librera noted earlier everybody has been

22

fired and the reason they have been fired is the

23

Attorney General refused to enter into further

24

stipulations so that payroll could be made.

25

26

So there is nobody working at any of the


respondent entities any more,

and the only staff left

Claudette Gumbs

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Proceedings

is over at the homeowners'

operation.

September of 2014 and as has been noted in our papers,

one of the things that Mr. Lager did,

his own pocket and he wrote checks to employees of the

respondent entities so they would not miss their

paychecks and they would be able to meet their basic

operating obligations and that is because of the

association,

a skeleton

Mr. Lager has not received any money since

he reached into

10

Attorney General refusing to enter into reasonable

11

discussions to permit continued operation while the

12

investigation proceeded.

13

There has been substantial compliance with

14

the overall order,

15

marketing operation was shut down,

16

were sold and now we are after a year and a half,

17

nearly two years,

18

simply can't function any longer without staff.

19

Now,

your Honor.

the entities,

The entire sales and


no more interests

respondent entities

in terms of the actual payments that are

20

on Page 15 that add up to $368,000,

21

anything,

22

hear from Mr. Woodruff,

23

did to facilitate any of the payments other than this

24

generalized claim that because of his management role

25

at the respondent entities he is somehow responsible

26

for payments going out the door.

I did not hear

I don't see it in the papers and I didn't


as to what Mr. Lager allegedly

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I was not at the

48

Proceedings

testimony of Mr. Chet Zimmerman, but as I understand

it, he personally took responsibility for the mistake

of the $125,000 passthrough, described it on the record

as a mistake, wished it had not happened, but it is

pretty clear from Mr.

Lager had nothing to do with the $125,000.

8
9

Zimmerman's testimony that Mr.

With respect to each of the other payments


that they are still complaining about,

I just don't see

10

any record at all that Mr. Lager had any personal

11

involvement that would rise to the level of being held

12

liable for civil contempt.

13

14

So we think as to Mr. Lager, the civil


contempt motion should be denied.

15

THE COURT:

Thank you.

16

MS.

I want to respond to a couple of

17
18

FAROOQ:

points.
As far as the allegations about Bluegreen and

19

overselling in the original application, it was three

20

paragraphs.

21

the time was going on was not, we have since found

22

problems with the amount of interests sold to Bluegreen

23

with respect to the Metropolitan Suites, which is one

24

of the suite types and so, there is still that issue as

25

far as offering plan violations, or if you want to

26

characterize them as misrepresentations.

While they did clarify what we thought at

Claudette Gumbs

There is a

49
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case we cited in our brief In re Cenvill, which

involves a long-term management fee entered into by a

sponsor-appointed board and the court acknowledged that

the Attorney General looks critically at these granted

fees with affiliates and that was in the context of a

Section 354 order in which assets were preserved.

8
9

This is completely on point to the case at


hand.

As far as the issue of the disclosures and

10

whether they are adequate with respect to Urban,

11

previously mentioned,

12

disclosures about principals and officers and how much

13

they profit off of Urban's management fee and that is

14

not disclosed in the offering plan.

15

Section 352(e)

16

And as far as bonus time,

17

the offering plan in the first section as well as in

18

the timeshare declaration and I want it read it for the

19

record.

20

unreserved 72 hours prior to the first night thereof,

21

which may be reserved by the management company and

22

offered for rent to owners and/or the general public on

23

a first come/first served availability basis.

24

accordance with provisions of the timeshare reservation

25

rules,

26

when you're using time to sell extra time to the

as I

the Martin Act requires specific

That is

Subsection 18 that was in violation.


it is repeatedly defined in

Bonus time means periods which remain

In

it specifically says that bonus time is either

Claudette Gumbs

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Proceedings

timeshare buyers, or when you're selling to the general

public.

selling rooms to the public is to reduce the fees to

the timeshare association.

And as nice as it sounds,

the point of

The fact of the matter remains it is not in

accordance with the governing documents that are

supposed to govern this plan and so,

misrepresentation by the sponsor and a violation of the

10
11
12
13

it is both a

offering plan by Urban.


And with respect to the contempt motion,

will let Mr. Woodruff speak.


MR. WOODRUFF:

Again,

your Honor,

it is our

14

position that we are not here today to dispute all of

15

the merits and the back and forth about how Urban ran

16

the company.

17

today is an incomplete story and it is strongly

18

disputed by us.

19

Again,

I can tell that you what I have heard

I want to give you a fact pattern that

20

we have heard repeatedly from customers, which is a

21

call -- they call up to make a reservation nine months

22

ahead of time.

23

available.

24

Can I get a date?

No.

No rooms are

They then turn and go to an online service

25

like Expedia and Trivago and discover for the very same

26

night at the Manhattan Club,

rooms are available.

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How

51
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Proceedings

is that possible?

owner,

online service and rent exactly the same room?

be paying twice in that case.

timeshare charges to get the reservation,

but pay again and that money goes to the timeshare

association and then to Urban and what happens when

people complain about that fact that they can't get a

How is it possible that if I am an

I can't get a reservation, but I can turn to an

I have to pay my

10

room and still see it online?

11

that our -- the program is closed,

12

owner inventory.

13

I will

can't get it,

They are told by Urban


it does not displace

The fact is, we have documents,

internal

14

documents that show they are taking rooms,

15

rooms a year from owners that have paid for them and

16

putting them into the transient room program to

17

generate revenue.

18

But those are the facts.

thousands of

They have been at

19

the depositions,

20

have heard the testimony.

21

substantive than what they lead you to believe and I

22

will just refer you to the

23

delve into the plan,

24

reservations work and the time that they have to do it.

25

They can rent rooms 72 hours ahead of the date,

26

have discovered they are renting rooms months and

they have seen the documents and they


So it is much more

if you will actually

there is a whole section about how

Claudette Gumbs

and we

52
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Proceedings
months ahead of that date.

On the budgets,

we believe the facts will

show that the budgets themselves are false and

misleading.

Ms. Librera said well,

somebody has to manage

it,

compensation, he gets paid $250,000 a year.

not coming out of the fee.

somebody has to get paid for it.

Mr. Lager's
That is

He has a separate contract

10

that is separately paid by the timeshare association

11

and it would be attached by expanding the order.

12

That $550,000 was secured against future

13

misconduct,

14

bank that they can draw on because of their past

15

misconduct.

not against past misconduct.

16

Thank you.

17

THE COURT:

18

MS. LIBRERA:

19

THE COURT:

20

MS. LIBRERA:

It is not a

Anything else?
Just a few minor points.
It is hard,

right?

On bonus time,

I think

21

Ms.

22

was because the bonus time definition I

23

Page 94 of the offering plan.

24

used all of the nights owner is entitled to reserve or

25

use by virtue of owner's ownership interest during a

26

particular use year or portion thereof, may attempt to

Farooq was reading from a different portion than I


look at is on

It says an owner who has

Claudette Gumbs

53

Proceedings

rent additional nights for a fee on a first come/first

served basis" and then in parentheses and quotations,

"bonus time".

limitation the Attorney General is talking about.

That is where you see the 72-hour

In terms of the rentals to the general

public,

that the rentals to the general public are of inventory

of owners who are delinquent in paying the management

something that Mr. Woodruff did not raise,

is

10

fees.

11

the pool.

12

management company are doing is renting those rooms out

13

to try to offset some of that delinquency.

14

So these are owners who cannot contribute to


What the timeshare association and the

There was some suggestion that the transient

15

rental was used for the benefit of the management

16

company, but the management cap prevents that from

17

happening, because the management cap is reached even

18

before the transient income comes into play.

19

Another fact that is important is that

20

transient income at the outset of the arrangement and

21

going back to 1996, only four percent of it went to the

22

timeshare association and the rest went to the

23

management company.

24

that to give it entirely to the timeshare association,

25

and the reason why they did that is they recognized

26

what an asset it was to the timeshare association.

The management company changed

Claudette Gumbs

54
Proceedings

What the AG is talking about here in terms of

availability, where people supposedly call up nine

months out,

there's --when there are rooms allocated to transient

income nine months out for example like Travelocity.

He said, how is that happening?

possible Travelocity is advertising things they don't

have,

I am not aware of any situation where

I don't know.

It is

it is possible that what people are seeing are

10

sponsor rooms that are listed on Travelocity.

11

are all sorts of reasons as to why these things may

12

happen, but what is not going on is a massive fraud and

13

I think we have carefully tried to lay that out for

14

your Honor here today.

15

There

The other thing that I heard was that Mr.

16

Lager is getting paid $250,000,

17

getting anything paid on top of that.

18

Attorney General's responsibility or frankly

19

jurisdiction to determine how much Mr. Lager should be

20

paid by which organization.

21

paid $250,000 by the timeshare association to do

22

timeshare association work,

23

some portion of the management fee for his management

24

work,

25

contracts, and one thing that we have not touched upon,

26

but which is in our papers,

so he should not be
It is not the

If Mr. Lager is getting

and he is also getting paid

that is totally within the realm of management

and your Honor can see it,

Claudette Gumbs

55
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Proceedings

and if you have any interest in hearing from him we can

certainly bring him in,

Robert Webb, who sits on ARDA,

association organization in the States and Mr. Webb has

looked at the management agreement here,

the management fee,

concerning rentals and has opined that these are all

within industry standards.

and we put in an affidavit of


the largest timeshare

has looked at

has looked at the provisions

10

That is all I have,

11

THE COURT:

Thank you.

12

MS.

With respect to bonus time,

13

FAROOQ:

your Honor.

is in the definitional section.

14

THE COURT:

15

hands on that book.

16

MS.

it

It talks --

This is why I wanted to get my

FAROOQ: On Page 22,

the definition in the

17

definition section of the offering plan for bonus time

18

is the same as the definition I previously read from

19

the declaration.

20

referring to is actually in the reservation rights of

21

the owners,

22

respect to how that affects owners, but the definition

23

of bonus time includes the rental of rooms to non

24

owners and the right to do that is in priority

25

reservation rights of the management company which is

26

Page 476.

The definition that Ms. Librera is

so it is only talking about bonus time with

And so,

owners are able to get reservations

Claudette Gumbs

56
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Proceedings

subject to Urban's priority rights and the only

priority right that even allows for rentals to the

general public is the bonus time one.

not allowed because bonus time refers only to owners,

or it is allowed, but 72 hours out, which I think is

more consistent with the plain reading of the plan and

here,

So it is either

these rooms are being rented out.


We have taken testimony with counsel present

10

from people about how the ownership is allocated and

11

so,

12

believe that this practice is violating the Martin Act

13

and is violating governing documents and as far as

14

owners who are delinquent,

15

the offering plan that authorizes this sort of

16

allocation to run the for profit rentals to the public.

the Attorney General has reasonable cause to

17

The

18

THE COURT:

there is nothing again in

There is something in the

19

offering plan that says if you're delinquent you can't

20

get your week,

21

MS.

right?

FAROOQ:

Yes.

That is definitely in

22

there, but the concept of flexible time which they sold

23

to everybody is the concept that everybody's time is

24

everybody else's time.

25
26

So what is going on is depriving the people


who are paying their fees,

paying extra because other

Claudette Gumbs

57

Proceedings

people aren't,

rooms,

who are paying their maintenance fees their right to

have access to all of the rooms because i t is not a

fixed week,

from their right to have access to the

not until 72 hours out but depriving the people

it is everybody's and that is it.

Thank you.

MR. WOODRUFF:

the timeshare,

I want to point out because of

everybody gets to use everybody else's

10

rooms.

11

doesn't mean Ms.

12

time.

13

and rent it to the general public,

14

invading the rights of the timeshare owners and this is

15

in the timeshare plan and it describes very clearly

16

that one owner has the right to use the rooms of all of

17

the other owners of the same accommodation type.

18

So if I

lose my right to use my room,

it

Farooq loses her right to take my

So when they buy the time from delinquent owners


they are directly

So delinquent rooms does not justify this

19

practice and the other thing,

setting aside the

20

question of delinquent rooms,

setting aside the sponsor

21

inventory and the sponsor rooms are subject to the same

22

rules as everybody else,

23

evidence that shows thousands of room nights a year

24

that belong to people who have paid their timeshare

25

charges, who are current, not delinquent,

26

current and nonetheless it is being taken away.

we have documents and internal

Claudette Gumbs

they are

58

Proceedings

Your Honor,

this is the offering plan.

think we all here have labored mightily in this

vineyard.

parties have taken different inferences from it, but

that is for another day.

It is very complicated, very detailed.

Our application is,

The

it only proper and

expedient to include this order as it plainly was,

is plainly proper and expedient to continue it,

it

it is

10

plainly proper and expedient to include Urban's account

11

with respect to the $6.4 million fee.

12

Thank you.

13

THE COURT:

If there is nothing else,

14

ask you to order the minutes and I will deem it

15

submitted as soon as I have them.

16

MS. LIBRERA:

One final point,

I will

your Honor.

17

The standard for preliminary injunctive relief that the

18

government is talking about which is proper and

19

expedient,

20

do not concede that is the correct standard.

21

I wanted to make clear that the respondents

For purposes of this motion, we didn't

22

challenge it because we don't think that they even meet

23

the proper and expedient standard.

24

which is a Court of Appeals case,

25

that the CPLR standards apply to preliminary

26

injunctions,

State versus Fine,


says specifically

and there is a New York court case I

Claudette Gumbs

59

Proceedings

believe by Justice James who differentiated and found

that State versus Fine does not apply in the context of

a 354 investigation.

decided, but for purposes of the record, we did want to

make clear that the respondents do not concede that it

is a proper and expedient standard on a preliminary

injunction.

We think that case is wrongly

And with that said,

10

MS.

FAROOQ:

have nothing further.

State versus Fine involved an

11

action under Section 353 of the Martin Act.

12

section does not provide for a different injunctive

13

relief standard, does not specify one, and so the

14

default standard that is applied in the CPLR was

15

applied in that action.

16

That

The court specifically distinguished that

17

from statutes that do provide an explicit standard for

18

injunctions citing Section 354 which is at issue here.

19

So the Court of Appeals has already acknowledged the

20

proper and expedient standard applies in 354

21

injunctions.

22

Thank you.

23

MS. LIBRERA:

24

Appeals case on that,

25

Ms.

26

looking at is within 354,

am not aware of a Court of

your Honor and I think what

Farooq is referring to and what Justice James was


in the discussion of taking

Claudette Gumbs

60

Proceedings

testimony,

to examinations before initiation of a matter and that

is exactly what it says and the standard says a

preliminary injunction or stay as may appear to be

proper and expedient.

it says that the CPLR rules shall not apply

The court in Justice James' case looked at

that and said well, the proper and expedient would be

superfluous if it were not for being the standard for

10

example under 354, but there is no standard for a stay,

11

and the language concerning the application of the CPLR

12

in 354 is very clear that it is not applying to

13

preliminary injunction, actually applying just to the

14

examinations.

15

We are happy to brief that for your Honor if

16

you would like, but I wanted to make clear for the

17

record that we didn't concede that that was the

18

appropriate standard.

19

THE COURT:

20

Thank you.

21
22

Nothing else?

23

24
25
26

Certified that the foregoing is a true and


accurate transcript of the original stenographic
minutes of this

Clau tte Gumbs


Senior Court Reporter

Claudette Gumbs

$
$1,700 [2)- 5:18, 6:4
$125,000 [3) - 14:20,
48:4,48:7
$17,000 [1)- 5:18
$250,000 [3) - 52:8,
54:16, 54:21
$368,000 [3) - 45:3,
46:5,47:20
$368,738.35 [1)32:22
$368,838.35 [1)35:10
$44 [1) - 29:24
$5,000 [1)- 36:3
$550,000 [3) - 45:5,
46:4, 52:12

I
/SKROET[1J- 9:12

0
0.1 [1)- 8:3

1
1-800 [2)- 13:2, 13:5
10 [1)- 7:21
100 [2)- 8:9, 8:15
1 0007 [2) - 1:171 2: 18
10020 [1)- 2:14
10166 [1)- 2:10
10271 [1)- 2:5
11 [1)- 1:18
12[1)-18:24
120 [1)- 2:5
1251[1]-2:13
14,000 [1)- 8:2
15[7]-1:2, 7:16,
8:11, 33:4, 33:6, 45:2,
47:20
15,000 [1)-12:9
1996 [2)- 9:17, 53:21
18[1)-49:15

2
20 [3)- 33:7, 38:2,
39:26
20,000 [1]- 12:8
200 [1)- 2:10
2010 [1)- 40:3
2011 [1) - 39:25
2013 [1)- 18:7
2014 [12)- 3:19,
6:11,24:8,27:17,
31:14, 32:25, 34:6,

38:5, 45:7, 45:21,


46:15, 47:4
2015[2)- 27:19,
27:21
2016 [1) - 1:18
21 [5) - 6:25, 7:2,
7:10, 28:25, 33:7
22 [1)- 55:16
23-A [11 - 1:7
28[1)- 6:10
284[1)- 12:15
286 [1)- 12:14

3
352(e [11- 49:15
353 [1)- 59:11
354[11)-19:10,
25:25, 26:10, 27:12,
49:7, 59:4, 59:18,
59:20, 59:26, 60:10,
60:12

4
4[1]-5:16
451536-14 [1)- 1:6
476 [1)- 55:26

5
5[1)- 33:5
500 [1)- 40:17
500,000 [1)- 8:8

6
6[1)-36:13
6.4 [7] - 24:2, 24:7,
31:17,31:26,39:23,
44:15,58:11
60 [1)- 2:17
646.386.3693 [1)2:18
650[2)-17:23, 28:12

7
71 [1)- 1:17
72 [6)- 23:2, 41:22,
49:20, 51 :25, 56:6,
57:3
72-hOUr[3) - 41:12,
41:22, 53:4

8
8 [1)- 7:20

9
9[1)-18:24
90 [1)- 27:7
94 [1)- 52:23

A
ability [31 - 40:9,
41:17,41:21
able [3J- 17:7, 47:8,
55:26
absent[1J- 28:7
absolute [11- 34:7
access [21- 57:2,
57:5
accommodation [11
-57:17
accompanies [1)4:17
accordance [2J49:24, 50:7
according [3J - 22:3,
25:5, 36:3
account[11J-14:5,
14:21, 30:9, 36:9,
36:13, 36:16, 37:24,
44:11, 45:6, 58:10
accounts [14)20:10,20:14,22:19,
31:15, 32:24, 32:25,
33:2, 34:7, 34:8,
34:20, 35:19, 36:7,
36:8,46:17
accurate [3)- 21:14,
21:16, 60:22
acknowledged [2) 49:4, 59:19
acknowledges [1)6:12
acknowledgment [11
-6:8
Acknowledgment
[1)- 6:12
Act[16J- 3:17, 13:6,
19:5, 19:12, 19:16,
19:19,20:8,21:7,
21:18,22:20,24:18,
25:13, 25:26, 49:11,
56:12, 59:11
Act's [11 - 20:4
acted[2J- 25:17,
26:19
action [2)- 59:11,
59:15
actively [21 - 20:25,
20:26
acts [21- 1:8, 37:21
actual [3J- 33:12,
36:15, 47:19

Claudette Gumbs

add [1)- 47:20


addition [21 - 6:23,
23:18
additional [31 - 8:6,
41:18, 53:2
address [71- 4:8,
9:3, 9:4, 13:26, 32:10,
44:21, 46:13
adequate [21 - 37:8,
49:10
ado [11- 10:25
adopt[1J-14:18
advance [11- 23:10
advertisement [11 1:14
advertising [11- 54:8
advice[1]-1:14
advised [2)- 5:24,
30:15
Advisors [11- 25:3
affect [11- 31:19
affects [3J - 19:8,
40:10, 55:22
affidavit [4)- 12:20,
30:12, 30:13, 55:3
affiliates [11- 49:6
affirmation [6J 4:17,4:20,4:25, 5:4,
5:13, 5:16
afternoon [11- 17:18
AG [51 - 4:2, 8:26,
13:8, 18:7, 54:2
AG's [3J- 4:3, 9:18,
13:19
agents [21- 4:6, 5:14
ago [21- 3:19, 40:8
agree [1)- 34:13
agreed [21 - 23:6,
33:22
agreement [9J 10:21, 39:8, 39:9,
39:25, 40:2, 40:22,
41:7,44:2,55:6
ahead [31 - 50:22,
51:25, 52:2
allegation [31 - 3:16,
17:2, 17:9
allegations [51 12:15, 13:21, 16:24,
21:26,48:18
allege[1J- 37:10
alleged [31 - 3:25,
4:2, 16:20
allegedly [1)- 47:22
allocated [21 - 54:5,
56:10
allocation [11- 56:16
allotted [1)- 41:16
allow [3J- 6:25, 22:9,
30:6

allowed [3J - 38:25,


56:5, 56:6
allowing [1J- 12:25
allows [1)- 56:3
alone [31 - 17:12,
23:16,46:9
amended [11- 6:14
Amendment [11 30:17
Americas[1J- 2:13
amount [71- 29:21,
30:3, 35:10,46:5,
46:8,48:22
annual [21 - 29:22,
36:13
annually [2)- 31:18,
39:24
answered [1)- 25:17
anyway [2)- 21:2,
21:6
Appeals [31 - 58:24,
59:19, 59:24
appear [31 - 35:26,
36:7,60:5
APPEARANCES [112:2
apple [11 - 8:23
application [71 16:12, 16:21, 16:22,
16:23,48:19, 58:7,
60:11
applied [2)- 59:14,
59:15
applies [1)- 59:20
apply [4)- 11 :21,
58:25, 59:3, 60:2
applying [21 - 60:12,
60:13
appointed [11- 49:4
appreciate [11- 14:7
appropriate [1J60:18
ARDA [1J- 55:4
area [1]- 36:9
argue [1J- 17:20
arguing[1J-17:19
argument [51- 11 :3,
22:18, 38:20, 38:22,
39:2
arguments [11- 13:9
arrangement [21 46:3, 53:20
Article [11- 1:7
aside [31 - 23:1 0,
57:19, 57:20
asset[2J- 36:12,
53:26
assets [6J - 20:3,
30:8, 35:2, 35:4,
35:22,49:7

association (321 9:15, 10:24, 18:5,


20:12, 22:6, 24:7,
24:11,29:10,29:20,
29:26,31:19,31:20,
31:22, 31 :25, 32:5,
36:15, 36:25, 36:26,
37:26, 38:19, 38:26,
47:2, 50:5, 51 :8,
52:10,53:11,53:22,
53:24, 53:26, 54:21,
54:22, 55:5
assuming 111- 13:12
attached 111- 52:11
attaches 111- 14:8
attachment 111- 7:20
attempt 111- 52:26
attempted 111- 27:3
attended[1J- 32:18
ATTORNEY111- 2:4
Attorney [53]- 1:4,
2:4, 3:5, 3:24, 4:3,
4:6, 4:14, 4:17, 4:22,
6:17, 6:18,7:5, 7:7,
7:17, 8:18, 10:6,
11:16, 12:17, 12:24,
13:3, 13:10, 14:3,
14:10, 14:19, 15:17,
15:22, 15:25, 17:10,
19:10,19:18,21:16,
25:26, 28:4, 28:21,
32:13, 35:9, 39:17,
40:7, 41 :25, 42:3,
42:8, 43:8, 44:3,
44:25,45:5,45:16,
46:5, 46:23, 47:10,
49:5, 53:5, 54:18,
56:11
Attorneys 121- 2:9,
2:13
August 121- 27:21,
32:24
authorizes [1156:15
availability [21 49:23, 54:3
available [9J- 8:11,
18:15, 22:26, 23:8,
23:13,37:18,41:15,
50:23, 50:26
Avenue[2J- 2:10,
2:13
aware [3J- 30:19,
54:4, 59:23

8
backdrop(1J- 33:15
background 11117:22

backup 121 - 33:24,


45:18
bait 111- 18:9
bank [71 - 15:3,
20:10,31:15,35:19,
36:7, 36:12, 52:14
bar[1]-10:4
based (41- 16:23,
19:5,21:14,31:15
basic 111-47:8
basis 1121- 16:4,
23:16, 25:3, 25:15,
27:20, 28:2, 29:25,
44:4, 46:6, 46:9,
49:23, 53:3
BEFORE 111- 1:19
beginning 111- 14:5
behalf[1J- 3:9
belief 111- 26:2
belong 111- 57:24
benefit [6J - 24: 17,
29:9, 29:26, 45:10,
45:12, 53:15
benefits 111-29:18
between [4)- 14:9,
23:6, 32:24, 33:15
big[1]-14:19
billed 111 - 12:20
bills 111- 11:24
blocked 111- 36:9
Bluegreen 121 48:18,48:22
Board [3]- 24:14,
24:16, 25:8
board 121- 43:20,
49:4
bolds 111- 5:22
bolster 111- 8:20
bonus [141- 41:14,
41:15,49:16,49:19,
49:25, 52:20, 52:22,
53:4, 55:12, 55:17,
55:21, 55:23, 56:4,
56:5
book 111- 55:15
books 111- 22:5
bottom 111-6:9
bought[5J- 5:2,
5:17, 18:17, 37:4,
37:15
bounced [31 - 15:8,
15:9
bound 121 - 11 :17
breakups 111- 17:6
brief[7J-16:11,
32:21, 33:5, 41 :9,
45:2, 49:2,60:15
briefed 121 - 26:26,
28:24
briefly 111- 9:3

bring 121- 14:13,


55:3
Broadway 111- 2:5
broke 111- 7:13
broker/dealer 11119:25
brought 121- 27:11,
40:18
BRUCE 111- 1:9
budget [21 - 29:23,
41:7
budgeted 111- 39:26
budgets [31 - 9:26,
52:3, 52:4
burden [3J - 22:20,
44:23, 46:12
burdensome 111 45:18
business [BJ- 10:9,
14:13, 19:9, 20:7,
23:26, 33:22, 35:15,
46:19
Business [1]- 1 :8
buy 121-37:5, 57:12
buyer(1]- 18:18
buyers [41 - 4:23,
18:23, 23:6, 50:2
buying 111- 18:11
BY [3]- 2:6, 2:11,
2:14
bylaws 111- 25:8

c
camel's 111-7:13
cannot [3J- 25:9,
46:6, 53:10
cap [3J- 40:3, 53:16,
53:17
capable 111 - 33:9
capacities [3J- 19:9,
20:7, 20:13
CapitaiSource 11114:22
capped 111- 39:24
CapSource 111 15:10
card 121- 5:19, 6:3
carefully 121 - 39:5,
54:13
case [161 - 7:25,
8:21, 13:7, 32:13,
32:16, 33:20, 42:5,
49:2, 49:8, 51 :5,
58:24, 58:26, 59:4,
59:24, 60:7, 60:22
cases(3J-13:16,
42:3, 42:17
CENTRAL[3J-1:10,
1:11

Claudette Gumbs

Central 121-31:12,
32:23
Centre[1J- 2:17
Cenvill [3J- 8:21,
8:22, 49:2
certain [3J - 3:26,
20:10, 34:13
certainly 111 - 55:3
certification [41 13:14, 20:22, 21:10,
21:15
Certified 111- 60:21
certified [3J - 19:23,
21:13, 26:23
CFO 111- 14:26
challenge 111- 58:22
changed 111- 53:23
changes 111- 12:6
characterize 11148:26
charge [3) - 24:5,
37:6, 37:7
charges [41 - 14:4,
37:3, 51:6, 57:25
charging 111-5:18
check 111- 23:2
check-in [1]- 23:2
checks 111- 47:6
Chet 121 - 14:25, 48:2
children 111- 25:6
cite [31 - 8:20, 11 :20,
11:22
cited[2J-13:16,
49:2
cites 111- 42:3
citing 111-59:18
City 111- 40:5
city 111- 40:6
civil [12] - 14:3,
15:19, 15:20, 16:4,
31:10, 35:9, 42:2,
44:20, 44:23, 48:12,
48:13
CIVIL [11- 1:2
claim [6J- 13:13,
15:26, 16:4, 35:11,
42:26, 47:24
claimed 111 - 9:10
claims [3J - 8:26,
12:17, 36:22
clarify 111- 48:20
Claudette 121- 2:17,
60:25
cleaned 111 - 10:3
cleaning 111- 10:2
clear [15]- 4:25,
13:17, 14:8, 15:21,
15:23, 15:24, 28:7,
34:8, 34:9, 46:14,
48:6, 58:19, 59:6,

60:12,60:16
clearer111- 39:15
clearly (41- 4:13,
14:17,40:16, 57:15
client111- 8:14
clients 111- 8:25
close [9J - 4:24,
28:23, 29:6, 29:9,
29:11, 29:16, 30:6,
36:10,38:13
closed 121- 29:22,
51:11
closing [3]- 30:11,
30:15, 30:20
closings 111- 29:18
closure 111- 34:8
Club [171- 3:26,
4:13, 5:15, 6:8, 6:17,
6:25, 7:19, 9:2, 14:26,
16:19, 17:3, 17:24,
18:16,40:14, 42:5,
45:12, 50:26
CLUB[1]-1:11
Club's 111- 5:24
co [1)- 40:11
co-op 111-40:11
colleague [21 17:20, 30:23
come/first 121 49:23, 53:2
coming [4J- 39:22,
41:12,41:23,52:9
commit 111- 43:8
commitment 11143:3
common 111- 9:20
companies [1]- 33:8
company 1221- 9:6,
10:6, 10:16, 15:8,
25:4, 32:20, 35:21,
35:24, 36:19, 39:4,
39:7,39:11,39:15,
40:3,46:18,49:21,
50:16, 53:12, 53:16,
53:23, 55:25
company's [1)39:10
compared 111- 29:22
compel 111- 31:6
compensated 11125:9
compensation 121 25:10, 52:8
complain (31 - 11 :23,
12:12,51:9
complainants 11128:10
complained 11145:17
complaining [3J -

8:4, 42:8, 48:9


complaint[2J- 27:7,
27:11
complaints [41 - 8:2,
17:23,23:15,28:11
complete [21- 21:14,
22:4
completed [1127:21
completely [11- 49:8
complex [1)- 36:19
compliance [21 33:13,47:13
complicated [11 58:4
concede [31 - 58:20,
59:6, 60:17
concept [21 - 56:22,
56:23
concern [1)- 14:15
concerned [1)- 8:6
concerning [81 - 4:4,
14:4, 17:23, 24:19,
28:3, 38:20, 55:8,
60:11
concerns [3)- 21:26,
26:13,28:14
conduct [41 - 9:2,
28:3, 34:18, 34:26
conducted [21 21:12,36:21
confirm [11- 31:4
confirming [11 - 31:2
conflict [2)- 24:13,
24:18
confusion [1]-14:15
conjunction [116:16
consent [21- 33:21,
34:13
consider[1J- 35:16
consistent(1J- 56:7
constrains [11 34:21
constriction [1141:22
constructive [11 33:12
consultant [11 - 24:6
consulting [1116:15
contacted [1)- 7:7
contacting [1)28:10
contain [11 - 30: 13
contemplates [1)44:3
contempt[20J-14:2,
14:4,15:16, 15:18,
15:19, 15:20, 16:4,

31:4,31:10,32:9,
32:21, 34:22, 44:20,
44:23, 46:6, 46:11,
48:12,48:14, 50:11
context [21 - 49:6,
59:3
continue [21 - 18:3,
58:9
continued [21 25:14, 47:11
continuing [1)- 14:6
contract [18]- 9:11,
9:13,9:14,9:15,9:17,
9:18, 9:19,9:20, 12:3,
23:5, 23:18, 23:20,
23:25, 28:15, 28:26,
29:2, 29:5, 52:9
contracted [11 23:22
contracts [21- 9:21,
54:25
contribute [1)53:10
control [41 - 20:17,
23:21, 24:14, 46:4
controlled [11- 36:5
convincing [1)15:23
copy [9) - 4:26, 5:3,
6:13, 7:23, 30:17,
40:18,40:20,40:25
corporation [21 38:21, 38:24
correct [11- 58:20
correction [1143:10
correspondence [11
- 14:9
COSt[4)- 8:14, 9:19,
9:21, 17:25
costs [3)- 9:22,
31:23,40:5
counsel (71 - 8: 13,
14:10, 16:8,30:15,
31:24, 33:16, 56:9
counsel) [11- 5:12
COUNTY [11- 1:2
couple [31 - 13:9,
16:13, 48:16
COURT [261 - 1:2,
3:2, 3:20, 5:7, 5:11,
16:7, 17:17,18:6,
29:3, 29:26, 30:25,
37:22, 38:15, 40:20,
40:23, 41 :3, 44:9,
44:18,48:15, 52:17,
52:19,55:11,55:14,
56:18, 58:13, 60:19
court [41 - 49:4,
58:26, 59:16, 60:7

Court[13J- 1:16,
1:21,2:17,4:16,5:10,
6:24, 7:11, 28:2, 41:2,
58:24, 59:19, 59:23,
60:25
Court's [21- 32:26,
33:13
courts [1)- 24:12
covered [31 - 32:25,
33:2, 34:15
CPLR [4] - 58:25,
59:14, 60:2, 60:11
creamed [11- 32:6
credit[4J- 5:19, 6:3,
13:19, 13:21
creditors [1)- 33:19
criminal [61- 14:3,
15:18,31:3,43:3,
43:6,43:9
critical [11- 29:7
critically [11- 49:5
cross [6)- 3:5, 9:11,
17:21, 30:24, 31:9,
44:19
cure [11- 45:26
current [41- 21:14,
21:16, 57:25, 57:26
custodians [1127:18
customers [1)50:20
cut[2J- 26:12, 42:15
cutoff[4J- 25:16,
26:18,27:13,28:20

D
database [2) - 8:7,
8:8
date [12]- 5:23, 7:11,
12:3, 12:4, 23:2,
26:16,26:18,27:13,
28:20, 50:22, 51 :25,
52:2
dates [21- 4:10,
23:13
day-to-day (2]31:20, 43:14
days [21 - 23:4, 27:7
days' [1)- 8:12
de [11 - 29:22
deal [1)- 17:24
deals [1)-10:4
December [51- 27:5,
27:6, 27:22, 27:25,
45:7
decide [1)- 29:13
decided [21- 40:3,
59:5
decision [11- 33:8

Claudette Gumbs

decision-making [11
-33:8
declaration [21 49:18, 55:19
deed [11- 18:11
deem [1]- 58:14
default [1)- 59:14
defined [1)- 49:16
defines [1)- 27:16
definitely [21 - 15:12,
56:21
definition [6)- 52:22,
55:16,55:17,55:18,
55:19, 55:22
definitional [1155:13
defrauded [1122:13
delay [1)- 27:14
deliberate [11- 15:10
delinquency [1153:13
delinquent [71- 53:9,
56:14, 56:19, 57:12,
57:18, 57:20, 57:25
delve [1]- 51:23
demand [21- 27:24,
27:26
demonstrate [11 35:15
denied [61 - 19:4,
25:15, 28:22, 30:5,
46:11, 48:14
denies [11- 39:24
department[1J8:16
Department [1127:10
deposition [11- 43:5
depositions [1151:19
depriving (21 - 56:25,
57:3
derivative [1)- 44:14
derives [1)- 36:24
described [2138:18, 48:4
describes [11- 57:15
designed [1)- 33:18
detailed (31 - 33:5,
45:17, 58:4
determine [21 21:20, 54:19
developer[1J- 24:15
developers' [1124:13
different [71 - 11 :14,
14:11, 33:17, 37:24,
52:21, 58:5, 59:12
differentiated [1]-

59:2
difficult [11- 18:18
difficulty [1)- 17:24
diligence [11- 21:12
direct [41 - 25:13,
28:2, 29:10,43:18
direction [1)- 10:12
directive [2)- 15:21,
15:24
directly [21 - 24:6,
57:13
Directors [3) - 24:14,
24:16,25:8
disagree [11- 39:8
disbursed [11 - 32:24
disbursements [71 32:22, 33:3, 33:4,
33:10,34:7,34:15,
34:17
disclose [11- 25:11
disclosed [31 - 38:8,
40:16,49:14
discloses [21 30:18,42:7
disclosure [31 24:19, 24:21, 25:6
disclosures [41 19:22, 24:23, 49:9,
49:12
discover [11 - 50:25
discovered [2) 18:9, 51:26
discrepancy [1112:13
discretion [1)- 39:11
discussion [61 32:9,41:9,41:11,
41:14,45:8, 59:26
discussions [11 47:11
dismiss [1)- 21:22
dismissed [21- 42:5,
42:6
displace [11- 51:11
dispute [5)- 32:11,
32:26, 33:3, 36:23,
50:14
disputed [1)- 50:18
dissipation [1)- 35:4
distinguished [1159:16
distributed [1)- 32:4
distribution [1)1:14
DLA[1J- 2:12
document[5J- 6:15,
25:19, 27:3, 27:24,
27:25
Document(3J- 5:10,
5:12,41:2

documentation 121 6:19, 33:24


documents (19]5:23, 5:25, 7:15, 8:9,
8:10, 22:3, 22:7, 25:5,
25:21,27:14,27:15,
27:19, 50:7, 51:13,
51:14,51:19,56:13,
57:22
dollar 111- 18:21
dollars 121 - 18:2,
18:4
done !41 - 7:16,
19:20, 22:12, 42:26
door (31 - 35:12,
40:11, 47:26
down (41 - 7:3, 7:26,
8:16,47:15
drafting 111- 4:5
draw 111- 52:14
due(4J-12:18,
12:23, 21:6, 21:12
dues 111- 12:18
during 121- 12:6,
52:25

E
e-mail [3]- 7:18,
12:26, 13:4
e-mails [4]- 27:16,
27:17, 31:6,31:7
eager 121- 26:9,
29:14
easy 121- 18:13,
18:22
echo 111- 16:26
effect 121 - 20:22,
43:14
egregious 121 - 9:2,
9:5
EICHNER!3J- 1:9,
1:10
eichner 111- 43:24
Eichner[13J- 2:9,
3:9, 3:16,6:24, 19:2,
19:23, 23:23, 25:2,
25:7, 25:12,26:23,
27:8, 36:5
Eichner-controlled
[1]- 36:5
Eichners (8]- 3:14,
13:11, 13:13, 20:19,
21:11,32:3,36:16,
38:12
eight 111- 27:2
Eighth 111- 30:17
EILEEN 111- 1:20
either [3]- 29:7,
49:25, 56:4

electricity 111- 31:23


elements 111- 15:20
emphasize 11121:18
employees 1101- 9:7,
10:26, 24:8, 33:18,
35:22, 35:26, 36:4,
39:16, 39:18,47:6
empowers 11125:26
encouraged 111 18:24
end !41- 5:17, 7:11,
12:9, 13:25
enforce 111- 34:25
engaging 121 - 18:9,
19:25
Engoron 121 - 3:15,
19:13
enjoin 111- 20:7
enjoined 111- 22:19
enjoining 111- 19:3
ensure111- 33:13
enter [31- 45:14,
46:23,47:10
entered [4]- 5:14,
12:3, 46:3, 49:3
entire !41 - 8: 16,
16:23, 40:13, 47:14
entirely 121-29:12,
53:24
entirety 111-40:17
entities [14]-16:15,
16:18, 17:6, 20:17,
35:8, 36:5, 45:9,
45:19,46:10,46:26,
47:7, 47:17,47:25
entities' 111-20:10
entitled 121- 6:7,
52:24
entity 121 - 10:23,
16:16
equation 121-43:17,
43:26
equipment 121 - 36:2,
36:3
ERIC [31 - 1:3, 2:4,
2:7
escrow [61 - 6:26,
16:2, 16:3, 44:4, 45:6,
46:4
escrowed 111-43:13
ESQ !71 - 2:6, 2:6,
2:7, 2:7, 2:11, 2:14,
2:15
essentially (4]10:7, 38:23, 43:16,
43:25
establish(1J-19:17
established 111-

28:8
estimated 111- 29:23
event 111- 35:5
eventually 11119:16
everyday 111- 35:24
evidence (13]- 8:26,
15:23, 19:5, 20:11,
20:18,21:7,22:10,
22:22, 29:8, 29:10,
29:14, 31:15, 57:23
evident 111- 34:10
ex (71- 3:13, 3:21,
4:18, 7:3, 7:25, 8:24,
17:11
exact111- 39:19
exactly [71 - 10:11,
10:19, 10:24, 14:16,
18:24, 51 :4, 60:4
examination 11126:3
examinations [9] 26:9,26:11,26:17,
27:4, 27:23, 38:6,
42:23, 60:3, 60:14
example 121 - 54:6,
60:10
except 111- 22:26
excerpted [1]- 4:12
exchange [21 - 1:14,
23:26
excise 111- 17:2
excluding 111- 3:3
exclusively [21 18:15, 22:26
excuse [11- 3:19
existence 121- 9:16,
30:18
exists 111- 22:8
expanding (1]52:11
Expedia 111- 50:25
expedient 112119:14,21:9,22:15,
58:8, 58:9, 58:10,
58:19, 58:23, 59:7,
59:20, 60:6, 60:8
expeditiously !31 25:17,26:19,27:11
expense !51 - 33:22,
37:2, 38:19, 38:26,
39:20
expenses [81 11:26, 31 :21, 31 :22,
32:5, 35:16, 35:22,
36:15, 36:26
expensive 111-40:6
experienced 11133:9
expired 111- 19:26

Claudette Gumbs

explain 111- 32:7


explanation 11114:23
explanations 11142:18
explicit 111- 59:17
exploited 111 - 36:10
extend 111- 31:14
extending 111- 35:3
extensive 111 - 33: 15
extent 121- 22:7,
22:14
extra 121 - 49:26,
56:26
extraordinary 1118:14
extremely 111-23:19

F
face(1J- 34:10
facilitate 111- 47:23
fact(18]-10:13,
10:26, 13:6, 18:26,
21:6,21:15,22:11,
34:8, 35:15, 37:13,
41:8,41:10,43:9,
50:6, 50:19, 51:9,
51:13,53:19
facts [5]- 8:22,
21:13,34:18,51:18,
52:3
fails 111- 25:11
false 111- 52:4
far[10J-13:22,
21:10,23:18,28:18,
29:18, 48:18, 48:25,
49:9,49:16, 56:13
farce [11- 40:15
farooq [4] - 7:26,
30:3, 31:7, 59:25
FAROOQ [91 - 2:6,
17:18, 18:7, 29:6,
48:16, 55:12, 55:16,
56:21,59:10
Farooq (3]- 37:13,
52:21, 57:11
Farooq's 111 - 41 :9
farooq's 111- 12:19
fault(1]-12:25
February 111-27:19
fee [231 - 9:12, 24:8,
31 :18, 36:14, 37:2,
37:8, 37:21, 38:2,
38:19, 38:23, 39:23,
42:10, 43:13, 44:5,
44:7, 44:15, 49:3,
49:13, 52:9, 53:2,
54:23, 55:7, 58:11
feed 111- 13:22

fees (14]- 17:26,


18:4, 22:2, 22:12,
29:15, 29:21, 36:23,
37:22, 42:14, 49:6,
50:4, 53:10, 56:26,
57:4
fell 111- 14:16
few (51 - 32:8, 42:24,
43:12, 44:21, 52:18
figure 111- 42:21
file 111- 27:7
filed (31- 3:13, 3:15,
3:18
final 111- 58:16
finalized 111- 7:3
finally 121- 28:23,
45:25
financial 111- 24:20
financials 111- 36:4
financing 111- 5:19
fine 111- 35:9
Fine (3] - 58:23,
59:3, 59:10
finish 111- 27:6
finished 111 - 27:25
fired 121 - 46:22
firm (3]- 3:10, 10:9,
10:12
firms 111- 10:10
First111- 27:10
first 1101- 3:6, 16:9,
17:11, 30:7, 30:14,
31:10,49:17,49:20,
49:23,53:2
fixed 111- 57:6
flagged 111-6:2
flexible 121 - 5:17,
56:22
focused 121 - 3:24,
3:25
focusing 111-44:19
following 121- 14:7,
30:7
foreclose [21 - 40:9
foreclosure 11122:9
foreclosures 11120:9
foregoing 111- 60:21
forget 111- 45:21
form 111 - 18:4
forth [4]- 14:9, 45:7,
45:25, 50:15
forward 121- 7:8,
45:14
forwarded 111- 25:2
fOUr[3]- 21:3, 30:13,
53:21
fourth 111 - 30:20
fractional 111- 17:6

frankly 111-54:18
fraud(14J- 3:17,
11 :2, 11 :6, 13:6,
13:18, 19:5,20:3,
20:18,22:11,28:18,
37:20, 39:3, 39:4,
54:12
fraudulent 121 37:10, 39:6
fraudulently 11137:5
free [11- 44:2
freeze 111- 22:18
front[1J- 38:11
frozen(3)-14:5,
20:15, 30:9
fully 111- 10:4
function 111-47:18
functional 111- 16:18
functioning 121 14:12, 14:26
funds 121- 31:25,
46:7
furnish 111- 25:23
future 111- 52:12

G
General [431 - 1:4,
1:8, 4:3, 4:6, 6: 18,
7:8, 7:18, 8:19, 10:6,
11:16,12:17,12:24,
13:3, 13:10, 14:3,
14:10,14:19, 15:17,
15:22,15:26, 17:10,
19:11,19:18,21:17,
25:26, 28:5, 32:13,
35:9, 39:17,40:7,
42:3, 42:8, 43:8, 44:3,
44:25, 45:5, 45:16,
46:5,46:23, 47:10,
49:5, 53:5, 56:11
GENERAL(1J- 2:4
general (161 - 11 :4,
18:26, 23:9, 37:12,
37:17, 37:23, 37:26,
41:10, 41:20, 41:24,
49:22, 50:2, 53:6,
53:8, 56:4, 57:13
General's 1101- 3:5,
3:24,4:14,4:18,4:22,
6:17, 7:5, 28:21,
41:25,54:18
generalized 121 16:24,47:24
generate111- 51:17
generated 111- 37:11
given 111-22:10
govern 111- 50:8
governing 121 - 50:7,

56:13
government 121 9:20, 58:18
granted 111- 49:5
great 111- 40:21
greater 111- 46:8
Greenberg 11113:17
GROUP 111- 1:11
Group 121- 31:11,
32:23
guess 111- 42:13
Gumbs 121-2:17,
60:25

H
half111- 47:16
halt[1J-14:13
hand [3)- 5:5, 24:15,
49:9
handed [3)- 5:10,
5:12,41:2
hands 111- 55:15
handy 111- 5:4
happy (3] - 5:5,
40:18, 60:15
hard 111- 52:19
harm 121 - 15:24,
15:25
head 111-42:24
hear [5)- 3:6, 44:5,
44:24, 47:20, 47:22
heard [7]- 38:18,
39:5, 39:22, 50:16,
50:20,51:20, 54:15
hearing 111- 55:2
heart 111- 23:15
held [3J- 6:26,
27:10, 48:11
helping 111-40:14
hereto 111 - 36:6
hidden 121 - 41 :6,
42:11
hide[1J-15:12
high (1]- 17:25
hire 111- 39:12
historically 11124:26
hold 121 - 15:15,
22:13
holding 121 - 45:5,
46:7
holds 111- 20:24
homeowners 111 45:12
homeowners' 11147:2
honest 111- 15:14
Honor [26) - 3:23,

4:19, 5:3,6:3, 14:7,


14:24, 16:5, 16:10,
17:18, 30:5, 30:26,
35:16, 38:16, 40:8,
40:18,43:7,44:16,
47:14, 50:13, 54:14,
54:26, 55:10, 58:2,
58:16, 59:24, 60:15
HONORABLE 111 1:20
Hospitality 111- 25:3
hotel 111- 7:22
hours [61 - 23:2,
41:22, 49:20, 51:25,
56:6, 57:3
HR 111- 43:23
hundred 121 - 8:2,
8:10
hundreds 111- 7:15
hurts 111-42:15

I
IAN!1J-1:9
idea 121- 40:13,
44:14
identified !41 - 24:4,
24:9, 32:22, 33:19
impaired 111- 34:26
important 121 41:26,53:19
impose[1J- 25:16
improper 121- 26:18,
46:2
inadequate 11119:22
inappropriate 111 27:13
inclined 111- 30:6
include [6J- 27:16,
31:17, 35:18, 37:8,
58:8, 58:10
includes 121- 24:21,
55:23
including [1)-13:17
income [3J- 53:18,
53:20, 54:6
incomplete 11150:17
inconsistent 11112:19
independent1118:12
INDEX 111- 1:6
individual !41 - 13:4,
21:20, 28:15, 43:2
individuals [13)- 7:8,
17:26, 19:8, 19:12,
19:15,20:6,20:11,
20:26, 26:6, 27:2,

Claudette Gumbs

27:4, 28:25, 36:8


induced 111- 37:5
industry 111- 55:9
inferences 111- 58:5
information [4J- 4:4,
24:20, 25:24, 26:2
inherent(1J- 24:13
initial 121- 21:25,
46:15
initiation 111- 60:3
injunction [13119:5, 19:13,21:8,
22:8,25:18,27:11,
31:14, 32:26, 33:2,
35:20, 59:8, 60:5,
60:13
injunctions [71 20:2, 20:6, 20:8,
22:17, 58:26, 59:18,
59:21
injunctive [5J 20:16,21:19,23:17,
58:17, 59:12
injured 111- 35:6
inquiry 111- 1:3
insofar 111 - 35:11
instances 111- 25:21
instead [3J - 5:23,
37:17, 38:5
intend 111- 27:7
intends 111- 26:5
interest[BJ- 5:17,
17:7, 18:2, 20:12,
24:13, 45:22, 52:25,
55:2
interesting 11141:26
interestingly 11141:13
interests [9)- 17:3,
18:17,20:9,20:14,
26:7, 37:4, 37:5,
47:15, 48:22
internal 121- 51:13,
57:22
internally 111- 12:19
interval 111- 12:11
interview [31- 38:9,
38:10, 38:12
interviews 121- 7:16,
32:17
invading 111- 57:14
inventory (10]- 11 :8,
11 :9, 12:6, 23:8, 23:9,
37:14, 37:15, 51:12,
53:8, 57:21
investigated 11121:12
investigating 12126:20,28:17

investigation 12114:7, 7:5, 7:12, 7:14,


25:15, 25:25, 26:20,
28:3, 29:13, 29:17,
30:18, 30:19, 35:3,
36:21, 38:13, 40:13,
43:6, 43:9, 46:19,
47:12, 59:4
investigations 11132:17
investigators 11118:8
investment 121 1:14,18:12
involved (5)- 8:13,
20:23, 20:25, 20:26,
59:10
involvement [4) 3:16, 26:6, 26:7,
48:11
involves 111- 49:3
involving 111- 36:18
issuance(1]-1:14
issue 1111- 10:13,
14:14, 14:19, 19:13,
22:2, 33:26, 34:15,
38:11, 48:24, 49:9,
59:18
issued(3J- 21:10,
27:12, 33:25
issues [41- 4:19,
31:9,36:18,40:4
items [31 - 32:11,
32:12, 37:2
itself [71- 10:8,
10:22,31:21,31:25,
37:8,39:11,39:15

J
James 121- 59:2,
59:25
James' 111- 60:7
JEFFREY 111-2:15
job 111- 33:12
join 111- 16:11
jointly 111- 20:20
judgment 111- 21:23
July [3J- 31:14, 34:6,
46:15
juncture 111-29:16
jurisdiction 111 54:19
Justice [6J- 1:21,
3:15, 19:13, 59:2,
59:25,60:7
justifies 111- 8:24
justify 121- 45:20,
57:18

K
keep [21 - 10:20,
23:26
KELLY [11- 2:11
Kelly [1J- 3:8
keystone [1J- 4:22
knowing [1)- 34:19
knowledge [21 13:18,33:11
known [31 - 13:20,
38:5

L
labor [11- 31:23
labored [1J- 58:3
lack [11- 29:8
LAGER[1J -1:10
lager [11- 35:8
Lager[31J- 2:13,
3:4, 10:13, 14:17,
16:8, 16:21, 16:23,
20:23, 24:4, 25:4,
25:7, 25:12, 27:8,
31:12, 32:4, 33:6,
36:17, 38:10, 43:23,
44:20,46:10, 47:3,
47:5, 47:22, 48:7,
48:10, 48:13, 54:16,
54:19, 54:20
Lager's [41 - 14:8,
16:13, 19:2, 52:7
laid[2]-8:15, 14:17
language [21- 33:7,
60:11
largest [11- 55:4
last[SJ- 6:2, 13:24,
13:26, 25:3, 43:7
laundry [1J- 31:23
laW[7J-10:9, 10:10,
10:11,10:12,13:16,
28:2, 38:22
LaW[1J-1:8
laws [2J- 38:21,
38:24
lawyers [1]- 43:19
lay [11- 54:13
lead [11- 51 :21
learned [41- 18:18,
31:16,32:20, 35:25
least [31 - 4:26, 7:16,
43:10
leave [1]- 40:25
leaves [1]- 31:9
left [3J - 23:3, 23:4,
46:26
legal [3J- 25:15,
28:8, 30:14
legitimate [11- 33:21

lender[1J- 14:22
LESLIE [1J- 1:9
letter[1J- 26:14
letters [11- 8:5
level [4J - 13:6,
13:12, 33:8, 48:11
levels [1)- 40:3
liability [41 - 13:15,
21:10,22:22,35:5
liable[4J-19:16,
20:20,21:21,48:12
Librera [BJ- 3:8,
17:2,31:2,32:10,
34:9, 46:21, 52:6,
55:19
LIBRERA [141- 2:11,
3:8, 3:23, 5:9, 5:13,
38:16, 40:21, 40:26,
41:4,44:10,52:18,
52:20, 58:16, 59:23
life [11- 42:20
lift [1)- 6:25
light[2)- 21:7,27:14
limitation [1)- 53:5
line[3J-15:13,
41:18,41:19
lines [11- 7:24
list [31 - 18:20, 22:4,
32:11
listed [11- 54:10
listened [1J- 39:5
litigation [3J- 25:19,
27:13,42:2
LLC[SJ-1:10, 1:11,
1:11,1:12
long-term [11- 49:3
look [71 - 4:24,
11:12,11:19,32:14,
41:24, 42:20, 52:22
looked [41 - 55:6,
55:7,60:7
looking [2]- 23:14,
59:26
looks [11- 49:5
loophole [51 - 36:9,
36:11, 44:11, 44:13
lose [11- 57:10
loses [1]- 57:11
loud [11- 28:13
lucrative [21- 23:19,
44:4

M
mail [3]-7:18, 12:26,
13:4
mailings [21 - 28:5,
28:21
mails [4]- 27:16,
27:17, 31:6, 31:7

main [21 - 37:2, 45:4


maintain [11- 35:2
maintained [1127:12
maintains [11- 22:21
maintenance [13]11 :24, 11 :26, 17:26,
18:4, 21:26, 22:12,
29:15, 29:21, 30:2,
39:14, 40:11, 42:14,
57:4
major[1J- 36:12
manage [11 - 52:6
Management [41 3:10, 9:25, 9:26, 10:2
management [53) 9:6,9:10,9:12, 9:13,
10:5, 15:7, 20:25,
23:22, 24:23, 31:18,
35:21, 36:14, 36:19,
37:20, 38:18, 38:23,
39:4, 39:6, 39:8, 39:9,
39:10, 39:15, 39:23,
39:25, 40:2, 40:3,
40:21,41:7,42:10,
43:13, 43:17, 44:2,
44:5, 44:7, 47:24,
49:3, 49:13, 49:21,
53:9, 53:12,53:15,
53:16, 53:17, 53:23,
54:23, 54:24, 55:6,
55:7, 55:25
MANAGEMENT [21 1:11,1:12
manager [31 - 9:24,
10:15, 10:17
managerial [21 16:18, 16:24
managers [11 - 33:10
manages [11 - 10:7
managing [21 10:11,10:21
Manhattan [1 BJ 3:26, 4:13, 5:15, 5:24,
6:8, 6:17, 6:25, 7:19,
9:2, 14:26, 16:19,
17:3, 17:23, 18:16,
40:14,42:5,45:12,
50:26
MANHATTAN [111:11
manner [1J- 22:23
March [11- 1:18
market[2J- 18:19,
23:10
Marketing [21 31:11,32:23
marketing [11- 47:15
MARKETING [111:11

Claudette Gumbs

Martin [17]- 3:17,


13:6, 19:5, 19:12,
19:16, 19:19, 20:4,
20:8, 21:7, 21:18,
22:20, 24:18,25:13,
25:25,49:11,56:12,
59:11
mass [21 - 28:5,
28:21
massive [1)- 54:12
material [21- 26:3,
26:8
matter [41- 3:11,
15:9, 50:6, 60:3
Matteq11- 1:3
Matthew [1)- 17:20
MATTHEW[1J- 2:6
mean [1)- 57:11
means [SJ- 9:8,
9:21,11:6,13:15,
49:19
mechanism [1)- 9:8
meet [3)- 15:22,
47:8, 58:22
members [1)- 25:8
memo [11- 33:5
mention [1) - 38:7
mentioned [SJ - 8:11,
31:7, 31:24, 36:14,
49:11
merits [2]- 32:15,
50:15
Metropolitan [1]48:23
middle [1)- 39:23
mightily [1)- 58:3
million [BJ- 24:2,
24:7, 29:24, 31:17,
31:26,36:13,44:15,
58:11
mind [11 - 10:20
minimis [11- 29:22
minor[1J- 52:18
minority [11- 28:13
minutes [31- 32:8,
58:14, 60:22
misconduct [31 52:13, 52:15
misleading [11- 52:5
misrepresentation
[2)- 44:6, 50:9
misrepresentations
[3) - 19:21, 26:22,
48:26
miss [11- 47:7
missing [11- 40:7
mistake[3J-15:14,
48:3, 48:5
modification [21 31:13,35:18

modified [11- 31:16


moment [21- 6:22,
40:8
money [10J- 15:7,
15:12,16:2,16:3,
35:12,42:13, 45:6,
47:3, 51:7
monkey [2)- 7:18,
7:19
monthly [1)- 25:3
months [71 - 18:24,
25:20, 50:21, 51 :26,
52:2, 54:4, 54:6
moot[1J- 31:5
moreover[1J- 12:5
morning [11- 5:25
most[3J- 9:5, 17:24,
23:15
motion [27]- 3:12,
3:13,8:18,9:11, 14:2,
17:19,17:21,19:3,
21:4, 21:22, 21:23,
26:16, 26:26, 27:5,
28:9, 30:24, 31:3,
31:10,32:21,34:21,
35:17,44:19,44:22,
46:11, 48:14, 50:11,
58:21
motivated [2J 24:15, 24:16
mouth [21 - 39:22,
44:24
movants [1]- 3:3
move [11- 6:24
moved [6]- 3:4, 3:5,
3:12, 14:3, 16:9
moving [3J - 6:23,
7:9, 16:11
MR[6J-16:10,
30:26, 37:25, 44:19,
50:13, 57:8
MS [221 - 3:8, 3:23,
5:9, 5:13, 17:18, 18:7,
29:6, 30:3, 38:16,
40:21, 40:26, 41 :4,
44:10,48:16, 52:18,
52:20, 55:12, 55:16,
56:21, 58:16, 59:10,
59:23
must [21 - 24:20,
44:15

N
name [21- 3:8, 20:15
named [4]- 21:2,
21:5,22:7,23:16
nature [11- 28:7
nearly [31- 8:2, 8:8,
47:17

necessary [3) - 26:3 1


26:91 39:13
need 1101- 10:31
15:31 15:21119:171
22:21 30:41 41 :241
43:21 43:51 45:22
needed [3)- 19:141
19:18122:7
negotiated 11134:14
negotiation 1111:14
negotiations 121 33:151 34:16
neighbor[1J- 40:12
never[3J- 4:10 1
4:201 33:21
NEW !41 - 1:2 11:2 1
1:1112:3
new 111- 8:26
New [16)- 1:411:7 1
1:151 1:1712:512:101
2:141 2:181 4:51 40:51
58:26
next [41 - 5:21 5:25 1
11:3140:11
nice [1)- 50:3
night[3J- 42:17 1
49:201 50:26
nights [31 - 52:24 1
53:21 57:23
nine [31 - 50:21
54:31 54:6
nobody [31 - 29:41
29:6146:25
non [41- 18:15 123:4 1
40:91 55:23
non-owners [1123:4
none [4)- 15:12 1
33:261 34:151 36:14
nonetheless [11 57:26
not-for-profit [21 38:211 38:24
note[3]-4:16 15:15 1
16:20
noted 121 - 46:21
47:4
nothing (141 - 8:23 1
10:251 11 :241 12:51
28:91 41 :51 41 :61
41:231 42:101 48:71
56:141 58:131 59:91
60:19
notice 111- 6:9
notified 121- 7:4 1
29:4
November[3J-14:6 1
32:251 45:21
I

number 121 - 13:21


13:5
NUMBER 111-1:6
numerous 111 36:19

0
obligations 141 11:11111:13111:141
47:9
observations [1116:13
observe 111- 18:8
occurred[1)-19:19
OF !41 - 1:2 12:3 12:4
offered [21- 4:10 1
49:22
offering [42)- 4:21
4:231 6:91 6:141 6:201
9:17110:19111:51
11:101 11:121 11:191
11:251 12:131 12:141
12:26 119:221 20:211
21:13121:15122:31
22:241 23:51 24:241
25:111 26:221 26:24 1
30:17137:17137:201
40:16141:13142:71
48:25149:14149:171
50:101 52:231 55:171
56:151 56:191 58:2
office [10J- 3:51 5:24 1
6:171 17:221 25:171
26:51 28:2 128:21 1
30:121 33:16
Office 121 - 25:26 1
35:9
OFFICE 111-2:4
officers [2)- 24:22 1
49:12
official 121- 16:141
16:17
Official 111- 2:17
offset [31 - 40:4 1
42:141 53:13
once [11- 29:16
one [31)- 5:14 17:14 1
8:221 9:41 9:51 10:71
10:16111:13112:111
13:41 15:21 16:201
18:21 24:9 124:15 1
32:101 36:231 36:261
37:31 38:171 43:181
43:191 44:81 47:51
48:231 54:251 56:41
57:161 58:161 59:13
ones [31 - 22:4 122:5 1
33:25
ongoing 111- 30:20
I

online [5)- 23:11


23:141 50:241 51:41
51:10
op[1J-40:11
open 121-29:171
35:12
opening 121- 41 :9 1
41:25
operates [21- 9:13 1
38:7
operating [41 10:21 25:5 131:22 1
47:9
operation [51 31:20139:13147:31
47:111 47:15
operations [51 20:231 26:81 32:201
35:241 43:14
opined [1)- 55:8
opposition 11117:19
oral [1)-19:20
order[56J- 3:14 1
3:211 3:241 4:181 6:23 1
7:31 7:417:1017:261
8:151 8:171 8:241 9:71
12:7114:5115:111
17:5117:11117:131
19:31 19:101 20:161
21:2121:5122:181
23:17126:10126:111
27:12127:15131:141
31:16131:17133:41
33:131 34:41 34:61
34:101 34:191 34:251
35:81 37:91 44:121
46:9146:13146:151
47:14 149:71 52:11
58:81 58:14
organization [4] 40:21 43:21 54:20 1
55:5
original [BJ - 3:2 1
3:181 3:201 8:241
16:211 22:18148:19 1
60:22
originally [3)- 3:4 1
8:191 35:20
otherwise[1J-16:17
outlined 111 - 44:26
outset 121- 7:25 1
53:20
overall 121 - 45:26 1
47:14
oversee [11- 43:22
overselling [3) - 4:2 1
17:3148:19
oversold [11- 17:8
overtime 111- 18:13
I

Claudette Gumbs

overview 121 - 6:8 1


6:13
owes 121 - 33:23 1
42:14
own [61 - 11 :22 1
20:11 31:25 133:7 1
37:141 47:6
owned (3)- 18:16 1
25:41 32:3
owner [61 - 16:161
51:3151:12152:231
52:241 57:16
owner's [11- 52:25
owners [37)- 7:19 1
8:31 10:51 11 :81 11 :91
11:14111:21112:21
12:181 12:221 18:151
18:221 22:51 22:261
23:41 23:11 37:151
37:181 37:191 40:101
41:191 49:221 51:151
53:91 53:101 55:21
55:221 55:241 55:261
56:51 56:141 57:121
57:141 57:17
OWNERSHIP [111:12
ownership [4)- 5:17 1
17:61 52:251 56:10
owns [21 - 11 :8 1
16:16
I

p
page [41- 5:4 15:161
6:216:6
Page [61 - 33:4 145:2 1
47:201 52:231 55:161
55:26
pages [5)- 7:15 1
7:2118:8133:5140:17
Pages 111 - 33:7
paid 1221 - 17:26 1
18:31 24:21 24:51 24:61
31:241 36:151 36:261
37:31 37:161 45:61
46:81 51:151 52:71
52:81 52:101 54:161
54:17 154:20 154:211
54:221 57:24
papers [221- 3:141
3:181 4:31 4:151 5:71
7:201 7:261 8:201 8:241
9:31 9:191 10:181 14:81
14:171 17:13121:251
41:251 42:31 44:251
47:41 47:21 54:26
paragraph 111- 5:21
Paragraph 111- 5:16
paragraphs 111I

48:20
parentheses 111 53:3
pari 111- 11 :7
Park [23] - 2:10 1
14:21115:8115:91
19:231 19:241 23:201
23:21 23:24 125:2 1
26:21 26:23l 29:19 1
31:11 31:12 132:23
park 121- 19:23 1
23:21
PARK[3]-1:10 11:11
part [151- 4:3 14:6 1
9:1119:17110:51
16:141 35:171 35:181
36:211 37:71 37:111
37:261 40:221 45:251
46:12
PART [11- 1:2
parte [71 - 3:131 3:21
4:181 7:31 7:251 8:241
17:11
participants [11- 7:4
participation 11113:18
particular [7)- 3:12 1
4:1816:15110:121
39:9146:101 52:26
particularized [1116:22
particularly 11115:23
parties [41 - 26:4 1
35:61 36:61 58:5
partly 111- 25:4
parts [11- 37:3
party [21 - 10:231
15:25
pass [21 - 9:81 35:17
pass-through 1119:8
passing 111-42:17
passthrough 11148:4
passu 111- 11:7
past [21 - 52:13 1
52:14
PATRICK 111-2:14
pattern [11- 50:19
pay 1201- 11 :24 1
11:25112:18112:221
15:131 18:31 29:161
29:21 32:51 33:211
33:231 35:81 36:81
40:11 40:12 145:9l
46:201 51:51 51:7
payables 111- 15:14
paychecks 111-47:8
paying 1101- 22:12 1
I

30:2, 37:6, 40:10,


45:11, 51:5, 53:9,
56:26,57:4
payment [51 - 6:5,
9:24, 14:20, 15:2,
45:20
payments [19)- 12:4,
14:11,14:14, 15:15,
24:26, 33:14, 33:18,
33:24, 33:26, 34:3,
34:14, 44:26, 45:10,
46:2, 46:16, 47:19,
47:23, 47:26, 48:8
payroll (61 - 11 :2,
24:10, 35:23, 36:4,
45:10, 46:24
pending 111 - 28:24
people [37]- 6:19,
7:17,8:6,8:11,8:15,
10:2, 10:10, 12:25,
13:3, 13:23, 18:16,
18:21,20:17,22:11,
28:26, 29:14, 29:21,
30:2, 33:19, 37:4,
38:6, 38:9, 40:14,
41:15, 41:18, 43:16,
43:18, 43:21, 51:9,
54:3, 54:9, 56:10,
56:25, 57:2, 57:3,
57:24
per[1J- 8:17
perceived 111- 28:18
percent (51 - 8:3,
16:16,38:2, 39:26,
53:21
perform [51 - 10:22,
23:25, 39:11, 39:12,
39:13
performs 111- 33:8
perhaps 111- 7:7
period 111 - 41 :12
periods 111-49:19
permit 121 - 33:18,
47:11
permitted 111- 45:9
person (61 - 13:20,
24:4, 24:9, 26:2,
43:23,44:7
personal 121- 20:12,
48:10
personally 121 31:12, 48:3
personnel 111-39:12
persons 111- 24:21
petition 121- 3:25,
4:18
Petitioner 121- 1:5,
2:4
phenomenon 111 9:20

pick 111- 5:25


picked 111-40:8
piece [3)- 14:2,
15:18, 39:3
pieces 111- 43:12
PIPER!1J- 2:12
pitch 121 - 6:5, 18:9
place [7]- 10:7,
10:16,17:11,26:11,
30:7, 33:11, 33:14
placed 111-46:4
plain 111- 56:7
plainly (31 - 58:8,
58:9, 58:10
plan [48)- 4:21, 4:23,
6:9, 6:14,6:20, 9:18,
10:19,10:21,11:5,
11:10,11:12,11:19,
11:25, 12:13, 12:14,
12:26, 19:22, 20:21,
21:14, 22:4, 22:24,
23:6, 24:24, 25:11,
26:22, 26:25, 30:17,
37:19, 37:20, 38:9,
39:14,40:16,41:13,
42:7, 48:25, 49:14,
49:17, 50:8, 50:10,
51:23, 52:23, 55:17,
56:7, 56:15, 56:19,
57:15,58:2
plans 111- 21:16
plant 121- 36:2, 36:3
play 111-53:18
pleased 111- 7:22
plus 121-9:19, 9:21
pocket 121- 15:13,
47:6
point [171 - 5:4,
11:16,13:16,14:12,
16:20, 29:7, 32:10,
38:12, 38:17, 40:6,
42:2, 44:8, 44:21,
49:8, 50:3, 57:8,
58:16
points 121 - 48:17,
52:18
pool 111- 53:11
portion (61 - 19:3,
20:16, 21:4, 52:21,
52:26, 54:23
poses 121 - 22:20,
25:6
position (61 - 4:8,
4:22, 16:14, 16:17,
38:13, 50:14
possible [51- 29:12,
51 :2, 54:8, 54:9
possibly 111- 9:9
practice [31 - 27:5,
56:12, 57:19

practices [3)- 1:8,


3:25, 26:21
prefer[1J- 5:6
prejudice [41 - 42:6,
42:7, 44:24, 45:4
prejudiced 121 44:26,46:7
preliminary (51 58:17, 58:25, 59:7,
60:5,60:13
prep 111- 9:26
prepares 111- 9:26
present 121 - 32: 18,
56:9
presentation [3) 4:5, 5:18, 7:23
presentations 1114:9
presented 111-4:14
presents 111- 4:19
preserve (91 - 19:6,
19:14, 19:17, 20:3,
20:4,21:9,21:19,
30:4, 30:8
preserved 111- 49:7
preserves 121- 22:8,
22:15
preserving 111- 20:4
presides 111 - 10:13
pretrial 111- 26:3
pretty 111- 48:6
prevent 121- 20:2,
35:3
prevents 111- 53:16
previously (31 - 46:3,
49:11,55:18
price 111- 5:20
principals [31 20:19, 23:23, 49:12
priority (31 - 55:24,
56:2, 56:3
problem 111-44:15
problematic [31 4:13, 11:18,32:7
problems 121-25:7,
48:22
procedures 11130:7
proceeded 111 47:12
proceedings 11122:9
proceeds [4)- 29:19,
30:8, 37:9, 46:19
process 121- 7:2,
45:17
procure111- 39:12
produce 111- 25:21
produced [8]-7:15,
8:6, 8:8, 27:17, 27:20,

Claudette Gumbs

29:10,31:8
producing 11127:14
production (41 27:3, 27:15, 27:25,
31:6
profit [8)- 24:15,
32:2, 38:21, 38:22,
38:23, 38:24,49:13,
56:16
profits (3)- 24:21,
24:22, 25:12
program 121- 51:11,
51:16
prohibit (31 - 20:8,
28:4, 28:20
prohibited 12120:13, 34:6
prohibition 111- 28:7
project 111- 9:16
promoting 111- 1:14
proper[14J- 19:7,
19:14,21:9,22:15,
34:25, 58:7, 58:9,
58:10, 58:18, 58:23,
59:7, 59:20, 60:6,
60:8
properly 121- 23:16,
35:14
property (71- 18:11,
23:5, 23:22, 24:23,
28:16, 36:2, 36:3
property's 11124:14
proposition 1118:21
prospective 121 4:23, 18:10
prospectus [31 4:21, 5:2, 7:24
protect !31 - 30:9,
35:2
protected 111 - 45:24
provide [41 - 30:12,
33:24, 59:12, 59:17
provided [4)- 24:20,
26:10,30:16,45:11
providers 111 - 39:12
provides [3) - 24:10,
39:25, 43:24
providing (31- 9:9,
9:10,45:19
provision 111- 11 :20
provisions (3) 24:25, 49:24, 55:7
public [20J - 11 :4,
18:26, 22:23, 23:9,
37:12, 37:17, 37:23,
41:11,41:21,41:24,
42:9, 42:13, 49:22,

50:3, 50:4, 53:7, 53:8,


56:4, 56:16, 57:13
purchase [5)- 1:14,
5:20, 5:26, 7:9, 29:12
Purchaser 121 - 6:11,
6:12
purchaser[7J- 6:12,
29:8, 29:11, 30:13,
30:14, 30:16, 30:19
purchaser's 11130:21
purchasers [41 7:10,18:11,18:17,
30:10
purchases 121 - 6:26,
7:2
pure 111- 32:2
purported 111- 25:23
purpose 111- 20:5
purposes 121- 58:21,
59:5
pursuant 121 - 6:5,
9:10
Pursuant 111 - 1:7
put(12]-6:16, 7:11,
12:13, 13:10, 13:23,
13:24, 14:23, 22:13,
30:7, 30:9, 34:22,
55:3
putting [31 - 6:22,
13:23, 51:16

Q
questionable 111 10:11
questions (61- 7:21,
16:5, 25:16, 25:24,
30:23, 44:16
quo(11)-19:6,
19:15, 19:17, 20:4,
21 :9, 21:19, 22:8,
22:16,22:21, 30:4,
35:3
quotations 111- 53:3
quote 111- 33:7

R
raise 121- 38:18,
53:7
raised 121-28:14,
42:19
RAKOWER 111- 1 :20
ran 111- 50:15
rather 111- 25:24
re [31- 8:21, 49:2
reached 121- 47:5,
53:17
read [4)- 21:11,

40:24, 49:18, 55:18


reading 121- 52:21,
56:7
ready 121 - 27:6,
27:22
real [7)-14:15,
18:11,35:21,35:22
really [71- 4:21,
12:14, 13:24,34:21,
40:15,42:17,45:13
realm 111- 54:24
reason[13]-7:12,
14:25,15:15, 17:12,
21:17, 31:21, 35:14,
37:8, 38:20, 42:6,
45:4, 46:22, 53:25
reasonable (5113:20,19:11, 19:18,
47:10, 56:11
reasons [41 - 19:4,
28:19, 34:5, 54:11
receipt 121- 6:3, 6:8
receive 121 - 4:26,
29:19
received (10)- 4:26,
5:22, 6:13, 17:10,
17:11,17:23,28:11,
36:13, 36:24,47:3
receives 111- 31:18
receiving 121- 6:19,
25:10
recent111- 25:19
recently 111- 27:24
recognized [41 16:3, 24:12, 38:25,
53:25
record (61- 43:10,
48:4, 48:10,49:19,
59:5, 60:17
records 111- 22:5
reduce 111- 50:4
refer 111- 51 :22
reference 111- 14:18
referred [31 - 33:6,
37:13,44:10
referring (41 - 5:5,
34:9, 55:20, 59:25
refers 111- 56:5.
refuse 121- 34:20,
34:22
refused 121 - 38:11,
46:23
refusing 111- 47:10
regard 111- 1:8
regarding 12126:16, 45:8
regardless 121 20:24, 34: 18
registration 11119:26

reimbursed 1119:22
rejected 111- 28:9
related [4)- 5:25,
10:23, 23:20, 35:23
release 111 - 35:12
relief (61- 21:19,
34:24, 38:3, 38:4,
58:17, 59:13
remain [3)- 24:2,
25:18, 49:19
remainder[1J- 5:20
remains 111- 50:6
remarks 111- 17:16
remedial 111- 20:5
remedy [3J- 34:24,
34:26, 35:7
rent [51- 49:22, 51 :4,
51 :25, 53:2, 57:13
rental [31- 37:12,
53:15, 55:23
rentals (11)- 41:8,
41:10,41:23,41:25,
42:9, 42:12, 53:6,
53:8, 55:8, 56:3,
56:16
rented (41 - 11 :4,
18:26, 22:23, 56:8
renting [4]- 37:14,
37:23,51:26,53:12
repeatedly 121 49:16, 50:20
reply [41- 32:21,
33:5, 34:2, 45:2
Reporteq21- 2:17,
60:25
representations 11120:21
represented 11130:14
represents 111- 3:11
request 1111- 21:24,
25:14, 28:4, 28:20,
28:23, 29:25, 30:5,
30:8, 30:11, 30:21,
31:6
requests 121 - 12:26,
25:20
required (41 - 12:18,
12:20,23:25, 29:15
requirement 11112:22
requirements 11124:19
requires (31 - 11 :25,
27:15, 49:11
resale 111- 18:19
rescind 111- 29:4
reservation 11218:7, 11:18,11:20,

18:25, 22:2, 23:13,


49:24, 50:21, 51 :3,
51 :6, 55:20, 55:25
reservations !71 13:4, 17:25, 18:13,
18:22, 18:23, 51:24,
55:26
reserve 111- 52:24
reserved 111- 49:21
respect [9) - 28:23,
38:3, 48:8, 48:23,
49:10,50:11,55:12,
55:22, 58:11
respond 111- 48:16
respondent [8116:15, 26:6, 45:19,
46:10, 46:26, 47:7,
47:17, 47:25
Respondent 121 2:13, 33:6
respondent's 1114:4
Respondents 1211:13,2:9
respondents [27)3:2, 3:3, 3:6, 3:10,
3:17, 6:24, 12:25,
19:2, 19:24,20:15,
23:23, 24:9, 25:2,
25:12, 25:20, 25:23,
26:24, 27:9, 27:17,
30:12, 31:11, 34:4,
36:7, 43:2, 45:9,
58:19, 59:6
respondents' [71 16:11, 17:19, 27:14,
28:4, 28:19, 33:16,
45:6
response (51 - 8:18,
14:2,25:19,26:15,
27:26
responsibility [41 39:10, 43:22, 48:3,
54:18
responsible 121 13:11, 47:25
rest[2J-17:15,
53:22
restriction 11141:11
resulted 121 - 8:13,
33:17
return 121 - 5:24,
34:20
revenue 121- 37:11,
51:17
revenues [6) - 32:2,
36:24, 36:25, 37:2,
37:26, 39:26
review 121 - 25:22,

Claudette Gumbs

35:14
reviewed 111- 27:2
reward 121- 35:5
rights 1111- 11:10,
11:12,11:14,11:18,
28:15,28:16,37:19,
55:20, 55:25, 56:2,
57:14
ring 111-35:13
rise (31 - 13:5, 18:12,
48:11
rising 111- 40:5
risks 111- 30:15
Rivera [71- 4:17,
4:20, 5:3, 5:14, 6:10,
6:15, 6:21
rivera 111- 6:4
Rivera's 111-4:24
Robert111- 55:4
role(5]-4:4, 16:19,
16:25, 36:18, 47:24
rolling 111- 27:20
room [8)-12:12,
23:3, 41:21, 51:4,
51:10,51:16,57:10,
57:23
rooms (33) - 10:3,
11 :4, 12:14, 12:26,
18:14, 18:26, 22:23,
22:25, 23:13, 37:12,
37:14,37:16,41:18,
50:4, 50:22, 50:26,
51:14,51:15,51:25,
51:26, 53:12, 54:5,
54:10, 55:23, 56:8,
57:3, 57:5, 57:10,
57:16, 57:18, 57:20,
57:21
ROTENBERG 1112:15
RUDNICK 111- 2:12
rules (41- 11 :21,
49:25, 57:22, 60:2
run[2J-15:5, 56:16
running 121 - 23:26,
24:17

s
sale(4]-1:15, 19:21,
26:7, 37:10
sales 1221- 3:25, 4:5,
4:9, 5:18, 5:24, 6:5,
8:7, 8:16, 13:12, 18:8,
19:25, 20:8, 20:26,
23:7, 26:20, 26:21,
28:24, 29:9, 29:20,
30:6, 30:9, 47:14
salespeople 1113:26

sat 111- 42:23


satisfy 111- 24:24
save 111- 16:6
schedule 121- 26:15,
27:4
scheme 111- 18:10
SCHNEIDERMAN 121
-1:4,2:4
scope 121- 28:18,
37:9
Scott(1J-10:13
SCOTT 111- 1:10
screeching 11114:13
search 121- 27:18
second 1121- 5:15,
6:6, 8:23, 15:5, 21:24,
25:11, 30:16, 31:5,
31:13,34:12,35:17,
37:11
secondly 111- 19:8
secondS[1)-15:9
Section (51 - 25:25,
49:7,49:15,59:11,
59:18
section [71- 11:13,
11:15,49:17,51:23,
55:13,55:17,59:12
secured 111- 52:12
securities 121 - 1:15,
37:10
security 121 - 45:22,
45:23
see1111- 6:3, 8:5,
23:12,26:15,41:19,
44:25, 47:21, 48:9,
51 :10, 53:4, 54:26
seeing 121- 12:16,
54:9
seek [3)- 21:4,
27:18, 35:7
seeking [4)- 21 :3,
31:16,36:10,38:3
seeks 121 - 29:11,
35:18
seem 111- 13:5
sell 121- 18:20, 49:26
selling [3)- 20:14,
50:2, 50:4
sending 111- 8:5
Senior 111- 60:25
sense [6) - 12:2,
12:10,20:15, 22:10,
22:13, 23:3
sent [41 - 7:18, 18:8,
26:12,26:14
separate 121- 24:7,
52:9
separately (3J - 3:4,
24:5, 52:10

September [1)- 47:4


series [21 - 9:4,
46:17
serve [21- 20:2, 20:7
served [41 - 17:5,
21 :8, 49:23, 53:3
service [2)- 50:24,
51:4
services [71 - 9:9,
10:22,23:25, 24:11,
31:23,39:13,45:11
SERWAT[1J- 2:6
set [11- 23:10
setting[2J- 57:19,
57:20
settlement [11 45:26
seven [31- 33:17,
33:20,46:17
several [11- 42:24
severally [1J- 20:20
shaken [1]- 42:24
shall [2)- 39:11, 60:2
share [11 - 11 :26
shipS[1J- 42:17
shortly [1)- 17:4
show [6J - 13:8,
15:21,19:18,32:13,
51:14, 52:4
showing [21 - 19:20,
44:23
shows [11- 57:23
shut[2J- 8:16, 47:15
side [2)- 6:22, 43:4
signed [71- 3:21,
6:16, 13:13,13:14,
20:22,21:11
significant [11- 36:2
signs [1)- 6:10
simple[1J- 42:18
simply [1)- 47:18
single [71- 3:16,
10:14, 10:15, 10:17,
29:11, 39:5, 44:5
sit [2J- 40:24, 43:5
sits [11- 55:4
sitting [11- 42:22
situated [11- 11:7
situation [21- 28:10,
54:4
skeleton [11- 47:2
small [11- 30:3
SMITH [3J- 2:14,
16:10,44:19
sold [4J- 18:21,
47:16,48:22, 56:22
sole [1J- 39:11
someone [21 - 12:10,
15:24

sometimes [11- 8:11


soon [1J- 58:15
sorry [1)- 14:22
sort [3J - 44:6, 44:13,
56:15
sorts [1)- 54:11
sought [41 - 4:4,
19:6, 35:20, 38:4
sounds [11- 50:3
specific [21- 24:19,
49:11
specifically [9J 22:25, 27:16, 33:19,
41 :8, 42:4, 46:14,
49:25, 58:24, 59:16
specifics [1J- 4:9
specify [1)- 59:13
spirit[1J- 46:18
split [1J- 17:8
sponsor [27J - 3:11,
11:6, 11:7,11:8,11:9,
11:13, 11:17, 11:21,
11 :23, 11 :25, 12:5,
13:14, 14:10, 14:21,
16:14, 18:20, 20:20,
23:7, 36:6,42:12,
42:14, 49:4, 50:9,
54:10, 57:20, 57:21
sponsor's [3J- 5:19,
12:6, 40:9
sponsor-appointed
[1)- 49:4
spring [11 - 18:7
stack [1]- 6:7
staff[4J- 26:21,
46:20,46:26, 47:18
stand [1)- 21:18
standard [14)15:22, 25:22, 58:17,
58:20, 58:23, 59:7,
59:13, 59:14, 59:17,
59:20, 60:4, 60:9,
60:10,60:18
standards [21 - 55:9,
58:25
standpoint [1)- 25:6
start [51 - 9:16, 12:8,
27:18,31:2,38:17
started [11- 28:12
STATE [21- 1:2, 2:3
state [2)- 58:23,
59:10
State [3J- 1:4, 1:15,
59:3
statements [11 19:26
States [11- 55:5
static [11- 12:7
status [11)-19:6,
19:15, 19:17,20:4,

21:9,21:19,22:8,
22:15,22:21,30:4,
35:3
statutes [11- 59:17
statutory [1)- 24:25
stay [6J - 6:25, 7:22,
46:19, 60:5, 60:10
stenographic [1160:22
still [11)- 7:8, 28:25,
28:26, 35:12, 35:13,
38:10,39:19,44:9,
48:9,48:24, 51:10
stipulation [2) 45:14, 45:20
stipulations [61 14:16, 33:17, 34:3,
45:8, 46:18, 46:24
STOCK [11- 2:7
stocked [11 - 10:4
stopped [11- 22:11
story [1)- 50:17
strategic [1J- 43:24
straw [1)- 7:13
Strawn [1)- 3:9
STRAWN [1J- 2:9
Street[2]-1:17, 2:17
strict [11 - 13:15
strongly [11- 50:17
structure [1)- 45:26
STUART[1]-1:10
stuart[1J- 25:7
subject [3J- 44:12,
56:2, 57:21
submit [2) - 16:26,
34:18
submitted [11- 58:15
Subsection [1149:15
substantial [1147:13
substantive [1151:21
sudden [1)- 14:13
sufficient [11 - 24:24
suggest [11 - 20: 11
suggestion [21 46:2, 53:14
suite [11- 48:24
Suites [1)- 48:23
summarized [1)33:4
summary [1)- 21:23
superfluous [1160:9
supervised [1)- 33:9
supervision [1133:11
supplement [11 17:13

Claudette Gumbs

support [31 - 17:20,


19:10,45:19
supported [11 11:22
supposed [21 25:18, 50:8
supposedly [1154:3
SUPREME [11- 1:2
Supreme [2)- 1:16,
1:21
surreply [21 - 14:23,
14:24
survey [2) - 7:18,
7:19
suspicions [11- 4:2
switch [1)- 18:10
Sylvia [11- 5:14

T
T.Park [11- 18:3
tabbed [11 - 6:6
table [1J- 15:18
tainted [11- 37:21
talks [41 - 11 :20,
39:23,41:7, 55:13
TANYA[1J- 2:7
tapes [11- 4:10
tax [21 - 9:26, 43:20
team [11- 33:9
telephones [1135:13
ten[1J-16:16
term [11- 49:3
TERM[1J-1:2
terms [121- 10:25,
13:22, 16:20, 27:18,
34:2, 34:12, 39:4,
41:6, 45:10, 47:19,
53:6, 54:2
testified [1J- 32:19
testifying [11 - 26:13
testimony [11) 12:21, 21 :3, 21:6,
26:2, 27:2, 27:8, 48:2,
48:6, 51:20, 56:9,
60:2
THE [271- 1:2, 2:4,
3:2, 3:20, 5:7, 5:11,
16:7, 17:17, 18:6,
29:3, 29:26, 30:25,
37:22, 38:15, 40:20,
40:23, 41 :3, 44:9,
44:18,48:15,52:17,
52:19, 55:11, 55:14,
56:18, 58:13, 60:19
themselves [3)- 8:9,
33:14, 52:4
therefore [21- 19:6,

10

20:3
thereof [21 - 49:20,
52:26
thinking [11- 15:4
thinks [11- 44:4
third [31 - 10:23,
19:9, 30:18
Thomas[1J-1:17
thorough [11- 36:21
thousand [1)- 8:10
thousands [5J- 7:15,
17:26, 18:3, 51:14,
57:23
three [BJ- 7:17, 8:12,
12:12, 19:4, 23:3,
34:5, 35:8, 48:19
three-room [11 12:12
throughout [21 25:18, 27:12
tick [1J- 9:4
time" [1)- 53:4
timeshare [55) 6:14, 9:14, 10:14,
10:24, 17:3, 18:2,
18:5, 18:17, 18:23,
20:9, 20:12, 20:14,
22:6, 23:6, 24:6,
24:11, 26:7, 29:9,
29:20,31:19,31:20,
31:22, 31:25, 32:5,
36:15, 36:24, 36:25,
37:3, 37:5, 37:6, 37:7,
37:25, 38:19, 38:26,
39:14,42:15,49:18,
49:24, 50:2, 50:5,
51:6, 51:7, 52:10,
53:11, 53:22, 53:24,
53:26, 54:21, 54:22,
55:4, 57:9, 57:14,
57:15, 57:24
tiny [1)- 22:26
title [1J- 20:24
today [BJ- 4:8, 29:2,
36:5, 36:20, 36:22,
50:14, 50:17, 54:14
together[2J- 6:16,
14:23
took [41- 33:14,
34:22, 38:6, 48:3
top [6J- 9:23, 31:26,
32:6, 33:8, 39:26,
54:17
total [1)- 45:2
totally [11- 54:24
touched [11- 54:25
trace [11- 17:7
trade [21- 15:13,
33:18
TRAKHT[1J- 2:7

transcript 111- 60:22


transfer [31 - 14:25 1
15:41 15:5
transient(5J- 51:161
53:141 53:181 53:201
54:5
transients 111 - 41 :8
Travelocity (3] 54:61 54:81 54:10
treated 121 - 12:10 1
39:19
tried 111- 54:13
trigger[1J- 12:4
Trivago 111- 50:25
trivial 111-32:12
true(4]-4:11 121:14 1
60:21
truth 111-43:15
try [3]- 40:41 46:131
53:13
turn [31 - 30:23 1
50:241 51:3
twice 111- 51:5
tw0[13]-3:191 7:171
8:121 12:121 12:161
13:241 25:71 31 :91
32:181 37:2142:171
42:25147:17
type 121 - 45:23 1
57:17
types 121 - 12:151
48:24

u
ultimately 121- 31:7 1
32:3
unclear 111- 24:3
under[13J- 9:14 1
11:101 23:241 26:101
27:121 34:121 37:201
38:231 39:18144:121
46:4159:11160:10
undercover [4] - 4:6 1
4:71 5:141 18:8
underlines 111- 5:22
underlying 11121:13
understood 121 34:51 34:12
undertake 111- 35:13
undue 111- 22:20
unequivocal 11146:14
unflattering 111 4:12
unfortunately 111 43:2
units 111- 12:8
unless (3] - 16:5 1

30:221 44:16
unlike 111- 7:21
unnecessary 111 19:10
unreserved 11149:20
unsold 121 - 11 :8 1
23:8
unusual 121- 10:15 1
28:9
up [13]- 5:5 15:25 1
10:31 15:31 17:81 27:71
38:21 39:17140:81
47:201 50:211 54:3
upset 121 - 10:5 113:3
URBAN [1]- 1:11
Urban [46]- 2:9 1
3:101 3:141 3:171 6:241
9:51 9:71 9:131 9:221
9:251 10:21 10:191
10:221 14:211 15:71
16:17121:25122:31
22:141 22:171 23:161
23:231 23:241 24:31
24:51 24:81 24:261
25:9131:18132:31
35:201 37:71 37:231
37:26 138:41 38:7
39:18144:12149:101
50:10150:15151:81
51:10
Urban's [161 - 20:25 1
22:221 23:181 24:101
26:24131:14135:191
36:71 36:91 36:181
37:8 137:121 44:111
49:13156:2158:10
uses [1]-12:11
utilizing(1]- 5:19
I

v
vacate [6]- 3:13 1
6:231 7:91 14:21 19:31
21:4
vacated 111- 17:14
valid 111- 35:15
value 111- 18:12
various 111- 14:16
vendors 121- 45:11
46:20
venue 111- 10:14
versus [3]- 58:23 1
59:31 59:10
view 111- 13:19
vineyard 111- 58:4
violated [3] - 15:241
19:12121:17
violates 111- 22:24
violating (4]- 11:19 1
I

22:201 56:121 56:13


violation [11]- 11:4 1
15:10120:8125:131
34:41 34:19137:181
37:19146:9149:151
50:9
violations (5] 19:161 19:19121:81
26:241 48:25
virtue 111- 52:25
vision 111-43:24
voluminous 11127:3

w
wait 121- 18:20 1
29:12
waiting 111-26:14
walked 111- 17:5
wants 111-43:25
warrant 111- 25:25
wash 111-38:21
Webb 111- 55:4
webb [1]- 55:5
week 121 - 56:20 1
57:6
whereas 111- 24:16
whichever[1J- 5:6
whole 111-51:23
widespread 11128:14
wife 111-25:5
willful [3] - 34:3 1
34:191 34:26
willing [3]- 26:15 1
34:13145:13
window 111- 23:2
WINSTON 111-2:9
Winston 111- 3:9
wire 111- 15:3
wished 111- 48:5
withdrawal 111- 31:3
withdrawals 111 20:9
withdrawn 121- 31:4 1
31:5
withheld [3] - 4:23 1
33:21141:5
witnesses 121- 26:4 1
32:19
WOODRUFF !51 2:61 30:261 37:251
50:131 57:8
Woodruff[14J17:201 38:181 38:251
39:71 42:221 43:121
43:25144:10144:221
45:13146:121 47:221
50:121 53:7

Claudette Gumbs

woodruff's 11139:22
word 111-44:24
works 121- 10:8 1
10:9
worry 111-43:6
worth 111-8:12
writ 111- 28:7
writing 111- 13:2
written 111- 23:5
wrongfully 111 32:23
wrongly 111- 59:4
wrote 111- 47:6

y
year[17J- 7:14 18:4 1
8:221 12:61 12:91 14:71
18:41 24:21 29:231
41:16143:7147:161
51:151 52:81 52:261
57:23
years [5]- 3:19 1
12:161 13:24142:251
47:17
yesterday 111- 27:26
YORK !41- 1:2 11:2 1
1:1112:3
York [16]- 1:41 1:71
1:151 1:1712:512:101
2:141 2:1814:6140:51
58:26

z
Zimmerman 121 14:25148:2
zimmerman's 11148:6

11