Part 1: 07/15/2008 339 RESPONSE in Opposition re: 191 MOTION for Sanctions and Entry of Contempt against Universal Express, Altomare and Gunderson. Response to Plaintiff's Second Submission on Issue of Contempt and Second Motion for Relief from Contempt. Document filed by Richard A. Altomare. (Tifford, Arthur) (Entered: 07/15/2008)
OCR Extract Part 1
DEFENDANT, RICHARD A. ALTOMARE’S RESPONSE TO PLAINTIFF’S SECOND SUBMISSION ON ISSUE OF CONTEMPT AND SECOND MOTION FOR RELIEF FROM CONTEMPT[1]
Defendant, Richard A. ALTOMARE, by and though his undersigned attorney, files this combined response to the SEC’s second submission on Altomare’s contempt and defendant’s second motion for relief from contempt.[2]
[1] The SEC’s second submission was filed July 2, 2008, Doc.
338.
[2] Mr. Altomare’s first motion for relief from contempt was in letter format dated May 29, 2008 appended to which were eleven attachments. The Court’s telephone conference with counsel for the parties followed on June 2, 2008 at 12 Noon.
I.
Background, the First Motion for Relief From Contempt and the Court’s Conferences
1. On April 18, 2008, the Court found Mr. Altomare in contempt for failing to disgorge and pay prejudgment interest as ordered in the Court’s summary final judgment filed March 2, 2008. In compliance with an April 18, 2008 order, Altomare surrendered to the United States Marshal on May 2, 2008 to be incarcerated.
2. Altomare has been continuously incarcerated at MCC, New York in the Special Housing Unit (“SHU”).[3]
[3] The Court was advised of certain background information prompting supervisory personnel at MCC New York to select the SHU for Altomare’s personal safety and not for disciplinary infractions.
Immediately preceding Mr. Altomare’s surrender on May 2, 2008, Altomare filed then recently discovered additional financial information relating to Washington Mutual Bank, F.A. (“WAMU”) account number XXX1791 which documented the disposition of the net $160,466.00 net proceeds from a WAMU prime equity (second mortgage) account number XXX9286.
That information was reiterated in Altomare’s first motion for relief from contempt.
3. On May 7, 2008, this Court conducted a telephone conference with Altomare’s and SEC trial counsel, Leslie Hughes, Esq., and Julie Lutz, Esq. In that conference the Court made plain that Altomare would be required to make a good faith showing which would include (i) his full compliance with SEC document demands, (ii) submitting to deposition, (iii) evidence of sources of Altomare’s income and the recipients of disbursements made from Altomare’s accounts, and (iv) what financial ability Altomare possesses to make all or any portion of the court ordered disgorgement and prejudgment interest. See Altomare (first) motion for relief from contempt (“first motion for relief” or “first motion”) at ¶4. The Court also suggested use of a forensic accounting office to expedite matters, or words to that effect.
4. Also on May 7, 2008, Altomare forwarded to the SEC WAMU checking account starter kits then recently discovered by Mrs. Altomare which reconfirmed that the $160,466.00 net proceeds from the WAMU prime equity line (second mortgage) were disbursed from account number XXX9286 and not from account number XXX1791. (See first motion for relief at ¶5 and attachment 1.)
5. On May 8, 2008, SEC counsel received 36 additional pages containing the MLS listing for the Toscano condominium. These were not Bates numbered to expedite their delivery.
6. On May 9, 2008, additional documentary confirmation that WAMU account number XXX1791 was never used was delivered to the SEC. (See first motion at ¶6 and attachment 2.)
7. On May 13, 2008, SEC counsel received an additional 622 pages consisting of Wachovia Bank records relating to account number XXX5480 (the Altomares’ joint checking account). (RAA-0528 through RAA-1151). At 5:54 p.m., local time, Miami, Florida, SEC served a second request for production of documents and interrogatories. (See first motion at ¶7 and attachment 3.)[4]
[4] The SEC’s second request for production of documents and interrogatories raised for the first time a request for bank records for 2006.
8. On May 14, 2008, SEC counsel announced their availability for a May 23, 2008 deposition of Altomare from which the SEC withdrew on May 15, 2008. (See first motion at ¶¶9, 10 and attachments 6 and 7.)
9. On May 21, 2008, SEC counsel were sent 82 additional pages of USXP bank records which Altomare’s counsel then received from the Receiver who has worked in close liaison with SEC counsel. (See first motion at ¶11 and attachment 8.)[5]
[5] Altomare first requested SEC counsel to assist in arranging a telephone conference with the Court on May 21, 2008. (First motion for relief at ¶11 and attachment 8.)
10. On May 23, 2008, SEC counsel informed me of three potential forensic accountants. (See first motion at ¶12 and attachments 9 and 10.) As of this filing the SEC has not engaged a forensic accountant.
11. On May 29, 2008 Wachovia Bank acknowledged Mrs. Altomare’s May 16, 2008 request for all bank items relating to account number XXX5480 for 2006 was mishandled and inexplicably delayed. (See first motion at ¶13 and attachment 11).
II.
The Facts Since the June 2, 2008 Conference
12. On June 5, 2008, the 2006 Wachovia records finally arrived, were Bates stamped numbered RAA-1451 through RAA-2093, (DX-36)[6] and immediately delivered to SEC counsel overnight.
[6] At the risk of redundancy, SEC did not ask for bank items for the Wachovia checking account for the year 2007 and did not request bank records for the Wachovia checking account for the year 2006 until its after hours second request for production effectively served May 14, 2008. (See first motion at ¶7 and attachment 4).
13. On June 12, 2008, SEC counsel again wrote expressing their continued consideration of hiring a financial analyst. (DX-37.)[7] SEC counsel invited Altomare to share in the costs. The SEC first requested sharing the cost of a forensic accountant on or about May 13, 2008 and again on May 15, 2008. (See first motion, attachment 7.)
[7] I will designate attachments 1 through 11 of Altomare’s first motion as Exhibits 26 through 36 in order to maintain continuity and consistency for the remainder of these proceedings but not in this filing to avoid any possibility of confusion.
14. Also on June 12, 2008, the SEC served a third request for production of documents and interrogatories. (DX-39). Despite best efforts a response could not be accomplished by June 26, 2008.
15. On June 16, 2008, the SEC received the complete ownership and encumbrance history of the Altomare residence and the Toscano condominium prepared by Attorneys’ Title Insurance Fund, Inc., Palm Beach Branch, PO Box 628601, Orlando, FL 32862-8601. (DX-51; RAA-2094-2344.)
16. Subsequently on June 20, 2008, SEC wrote enclosed two proposals from financial analysts and requesting whether or not I had any objections. (DX-38). No objections were expressed.
17. On June 23, 2008, Altomare confirmed he was financially unable to share in the expenses. (DX-41).
18. On June 26, 2008, Altomare was deposed under difficult environmental circumstances: limited space available for attorney-client conference, extremely poor air conditioning and the number of persons crowding the visiting room.[8] Many of the questions addressed a few large item wire transfers or checks which Altomare could not fully explain but which were quickly explained—and documented--within days after the deposition. Check no. 1246 dated September 6, 2006 issued by Premier Estate Properties, Inc. and payable to Richard & Barbara Altomare,was deposited into account number XXX5480 (depo DX-1; RAA-1905). A second item was the $100,000.00 deposit reflected on the Toscano condominium settlement statement dated November 03, 2006, (PX-61, depo Ex. 2). A third subject was two wire transfers from the USXP account dated March 13, 2006, one for $50,000.00 and one for $49,000.00.[9] Overall, however, the SEC’s interpretation of Altomare’s compliance, responsiveness and candor plainly is wrong.
[8] Present were Altomare and his counsel, SEC counsel, a court reporter and Carl Schafel, counsel for The Estate Department, Inc., intervener. On several occasions the locked door was requested to be opened to better ventilate the room to assist the court reporter’s personal discomfort. Despite the severe environmental conditions, Altomare calmly and patiently endeavored to answer every question posed by SEC counsel.
[9] Additional items on which SEC commented in its second submission to the Court will be addressed more fully throughout this filing.
19. Immediately on the morning of June 27, 2008, I investigated Altomare’s best memory testimony regarding the two wire transfers by contacting Peter Rose, Esq. of the law firm of Rose & Rose, P.A., Boca Raton, Florida (“the Rose law firm” or “Rose”). Rose investigated his trust account ledgers and related correspondence and explained and documented the circumstances surrounding the two wire transfers, all of which were immediately forwarded to SEC counsel. (DX-42, 43, 44; RAA-2429-2450; DX-45, RAA-2386).[10]
[10] I was searching for the answers to the $100,000.00 check returned by Premier Properties, Inc. (Depo DX-1; DX-42; RAA-2429-2431). Rose was able to address the two wire transfers the details of which unfolded thusly: on or about March 10, 2006, the Altomares decided to purchase another free-standing, single family residence, pursuant to which on March 10, 2006 they deposited $1,000.00 with Caldwell Banker, the related broker. (RAA-1598; depo DX-10). On March 13, 2006 the two wire transfers, one for $49,000.00 and the other for $50,000.00 was sent from the USXP account to the Rose & Rose, P.A., Trust Account. While the Caldwell Banker broker maintained the $1,000.00 deposit in escrow the Rose law firm forwarded the $99,000.00 to the seller’s attorney’s trust account. (RAA-2446 and 2433). An additional $40,000.00, non-refundable deposit in consideration of certain extras also was received via the Rose law firm, and ultimately maintained by the seller when the Altomare’s withdrew from the potential deal. (DX-43 at 2432-2433 and DX 43 at RAA-2447-48-49). The $99,000.00 was returned to Universal Express (id.) and the $1,000.00 initial deposit ultimately returned to the Altomares (DX-44 at RAA-2445 and RAA-2453).
The $100,000.00 deposit appearing on depo (DX-2) was addressed by Altomare as best he could during thedeposition (“…if it’s not out of my one checking account, Barbara and my checking account, it would have come from Universal Express and it was credited towards me as income.”) [Depo. at 24]. Further investigation with the Rose law firm indicates its source was a personal check
that was delivered to the Rose law firm on September 1,2006. (DX-45; RAA-2387-88). Regrettably, the Rose law firm did not make a copy of the check. USXP records will resolve this discrepancy.
The $100,000.00 Premier Estate Properties, Inc. check (RAA-1905; depo Ex-1) dated September 6, 2006 was the refund of a deal not executed by the Altomares and apparently deposited into the Altomares’ Wachovia account on September 9, 2006. (DX-46 at RAA-2512). The source of the deposit refunded on September 6, 2006, was the USXP account. Altomares’ bank account does not reflect a $100,000.00 check was debited anytime in September or October 2006. (DX-46 at RAA-2387-88). Those records have been in the exclusive possession of the Receiver since September 7, 2007 and the SEC.
20. Also on June 27, 2008, Altomare produced a copy of his passport which was requested during a recess in the deposition. (DX-46).[11]
[11] I have intentionally omitted attaching a complete copy the Altomare passport for security reasons.
21. On July 2, 2008, SEC counsel received the Wachovia account number XXX5480 monthly statements showing account activity for January through June, 2008.[12] These were first requested on June 26, 2008 during a deposition recess.
[12] The same monthly statements were retransmitted on July 9, 2008 after being Bates numbered RAA-2345-2388.
22. On July 9, 2008 insurance and certain charge account documents relating to property inspection and insurance coverage were produced as a result of a number of SEC counsel questions. (RAA-2389-2428).
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