transcript december 5, 2000 secret bankruptcy court wiretap hearing excerpts

OUELLETTE & MAULDIN COURT REPORTERS305-358-8875

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UNITED STATES BANKRUPTCY COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NO. 97 - 14687-BKC-AJC

IN RE:

STEPHAN JAY LAWRENCE,

Debtor.

DECEMBER 5, 2000

HEARING RE: TRUSTEE'S EX-PARTE MOTION TO RESET STATUS

CONFERENCE - UNDER SEAL

The above-entitled cause came on for hearing

before the HONORABLE THOMAS UTSCHIG, at the Claude

Pepper Federal Building, 14th Floor, Miami, Dade

County, Florida, at or about 1:30 p.m. on Tuesday,

December 5, 2000, and the following proceedings were

had:


Case 97-14687-AJC Document 1733 Filed 12/22/2005 Page 3 of 31

APPEARANCES:

BERGER DAVIS & SINGERMAN

by: JAMES FIERBERG, ESQUIRE

PAUL AVRON, ESQUIRE

on behalf of the Trustee

U.S. ATTORNEY'S OFFICE

by: GRISEL ALONSO, ATTORNEY-AT-LAW

on behalf of the U.S. Attorney's Office.

FEDERAL BUREAU OF PRISONS

by: RICHARD DEAGUIAR, ESQUIRE

on behalf of the Federal Bureau of Prisons.

MR. FIERBERG: Good afternoon, Judge. Nice

to see you again.

THE COURT: Yeah, pleasure to be here. It's

cold everywhere in the nation, but it's even cold

down here which is surprising.

MR. FIERBERG: We wanted you to feel

comfortable and not suffer shock when you got

here, Judge.

THE COURT: Right. Well, this is the matter

of Stephan Jay Lawrence, Case 97-14687. The

matter before the Court is the Trustee's ex-parte

motion under seal to reset status conference, and

I would ask for the appearances, please.

MR. FIERBERG: Thank you, Judge. James

Fierberg, Berger Davis & Singerman, on behalf of

Alan Goldberg the Chapter 7 Trustee.

MR. AVRON: Paul Avron, Your Honor, Berger

Davis & Singerman, for the Chapter 7 Trustee, Alan

Goldberg.

MR. DEAGUIAR: Richard Deaguiar, counsel for

the Bureau of Prisons.

MS. ALONSO: Good afternoon, Your Honor.

Grisel Alonso, Assistant United States Attorney,

co-counsel.

THE COURT: Okay. Very good. Mr. Fierberg.


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MR. FIERBERG: Yes, Judge. First, let me

thank you for setting this on an expedited basis.

I'm hopeful that after the argument and discussion

here today we will hopefully resolve many of these

issues.

By way of background, Judge, you are uniquely

familiar with the history of this case.

Mr. Lawrence was incarcerated on September 15th.

He surrendered to the Federal Detention Center as

a result of his contempt of the turnover order

that you issued and Judge Cristol had it amended.

You'll also recall that District Judge Gold

released Mr. Lawrence two days after his initial

incarceration pending appeal. That appeal was

resounding affirmance of your order and the orders

of Judge Cristol and as a result Mr. Lawrence is

back in jail.

I have shared some confidential matters with

Mr. Deaguiar and so I will repeat them in court to

the extent I can to try and underscore the urgency

of what we are seeking.

Judge, you're obviously familiar with the

Lawrence Family 1991 Inter Vivos Trust, the trust

that Mr. Lawrence established in the Mauritius

Republic. You previously ruled that that trust

was property of the estate, that Mr. Lawrence had

continuing managerial and beneficial interest in

the trust.

Pursuant to certain orders that Judge Cristol

has entered under seal there are representatives

of the estate who are seeking diligently to locate

those assets and have made significant progress in

Europe in doing so.

We seek the tapes that the Bureau of Prisons

routinely make of inmate calls in order to tie

together the materials we need in order to seek a

Morava Injunction in England and potentially other

countries where we believe the assets to be.

When we were before Judge Cristol on this on

November 16th, initially, Mr. Deaguiar presented a

log to Judge Cristol and that log revealed,

although I've not seen it nor has Mr. Avron,

revealed approximately 354 telephone calls made by

Mr. Lawrence in the short stay of 60 days

incarceration. On that log Judge Cristol remarked

that there were some international calls as well,

these were all made from prison.

We know that Mr. Lawrence signed for a

handbook when he was incarcerated which advised

him that his calls would be taped. I believe that

OUELLET1E & MAULDIN COURT REPORTERS305-358-8875

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there are stickers on the telephone and in the

telephone area advising Mr. Lawrence that his

calls are subject to being taped. We, therefore,

submit that there is no privacy interest, no

legitimate privacy interest of Mr. Lawrence as to

the conversations that he may have had on those

telephone calls.

We believe that the Trustee has made a

reasonable request. We think it is in furtherance

of the orders of Your Honor and Judge Cristol, and

we think under the equitable powers under Section

105 (a) the order we're seeking does enforce --

does in fact assist in the enforcement of process

and orders this Court has previously issued.

The Bureau of Prisons has responded in prior

hearing that there are certain regulations in the

Code of Federal Regulations for certain statutes

which preclude the release we're seeking. We were

advised to make a formal written request to the

Bureau of Prisons. We did that. We did that with

the assistance of Mr. Deaguiar.

We were told after we sought this emergency

hearing that the Bureau of Prisons had declined to

voluntarily provide those tapes to us.

Prior to this hearing we were having some

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discussions with the Bureau of Prisons'

representatives and I think that there may be some

manner to assuage their concerns, give them

comfort, to not over burden them unduly given the

volume of calls Mr. Lawrence seems to be making,

and yet still provide the estate with the much

needed information in order to tie up what we need

to satisfy the courts in Europe.

With that said, I will turn the lecturing

over to counsel and let them present their

position. Thank you very much, Judge.

THE COURT: Very well.

MR. DEAGUIAR: Good afternoon, Your Honor.

THE COURT: Good afternoon.

MR. DEAGUIAR: The Bureau basically is

objecting to the release of the records sought on

three bases. The Bureau believes that there are

some privacy interests involved and not

necessarily going specifically to the inmate in

our custody, but to those individuals who he is

calling on the telephone. We don't believe that

we can release their conversations absent a court

order from this Court pursuant to the Privacy Act.

The Bureau also objects to the release based

on the argument that the Bureau is precluded from

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releasing the telephone tapes by Title 3, and that

rational is based on the fact that the Bureau is

able to monitor inmate telephone calls based on

the Law Enforcement Exception to Title 3, and the

Bureau monitors those calls exclusively for law

enforcement purposes to maintain the security and

orderly running of the institution. We don't

believe that Title 3 would permit us to release

the calls to the Trustee as requested.

Finally, Your Honor, the Bureau would object

to the release of the records based on the

burdensome nature of the request. As counsel

pointed out during the last hearing I presented

Judge Cristol with a log of the calls made, and I

can present Your Honor with a copy of that log if

you'd like.

THE COURT: Yes.

MR. DEAGUIAR: Now, according to this log --

this is a log run by the inmate's register number

indicating how many calls he has made, and the log

was run covering his date of incarceration on

September 15th and covered through November 9th.

I didn't have time to update the log in the short

notice regarding the change in the status

conference.

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According to that log there are approximately

354 telephone calls that this particular inmate

has made, and part of the Bureau's objection is

that it would be overly burdensome to require

Bureau staff to record and provide each of those

conversations.

According to my conversation with officers in

the special investigative section, it takes up to

20 minutes to record a single call. So given the

number of calls that could take quite a bit of

time and it would divert the Bureau's resources

and specifically the Federal Detention Center's

resources from maintaining security and monitoring

inmate telephone calls which they're doing to

maintain security and to protect the public and it

would focus those resource instead on providing

recorded telephone conversations which we are not

certain would yield any evidence. Consequently,

if the Court were to require production we would

seek to narrow the scope of the Trustee's request.

THE COURT: Very well.

MR. FIERBERG: Your Honor, as to the privacy

issue which really is the only one that I would

address, I don't know any case that provides, nor

has counsel delivered to me a case, which allows



them to have standing to assert certain privacy

rights of third-party recipients of these phone

calls, so I don't really think that's an issue

here.

We are prepared to narrow the scope of our

request both in terms of time and number. I was

advised by Mr. Deaguiar that many of the calls in

the log you have which, again, I have not seen,

are considered zero calls, they are zero minutes.

We would obviously not be asking for those to be

pulled out of the tapes and recorded.

We also would hope that after we reviewed the

log we could further reduce the scope of the

actual tapes that needed to be recorded. There is

a procedure, Judge, that we've been told exists

for this kind of undertaking. I have been advised

this morning that it is, unfortunately, the law

enforcement officers themselves, the F.B.I.

agents, or whoever, come in and sit down and go

through the tapes, and I've also been told that

there is a $27 per hour rate for this kind of

thing to be done. The estate is ready and willing

to make that expenditure for whatever hours it

takes to get these tapes.

I would suggest as a first step if we could

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have the log, review the log. We, therefore,

could then with our representatives who have been

retained under seal, identify the calls that are

important and hopefully reduce the scope

significantly.

We would also ask, Judge, that if an order is

going to be entered with the appropriate comfort

to the Bureau that this be a continuing process

where logs are delivered to us on some basis and

we will go through the process again of

identifying those calls which are recorded.

We had initially asked for tapes every two

weeks, that's aggressive and that's burdensome,

and we would withdraw from that, and I guess

that's my position, Judge. We're happy to try and

work out whatever gives the Bureau appropriate

comfort.

THE COURT: All right. Is there any other

comment on this request?

MR. DEAGUIAR: If I may briefly?

THE COURT: Yes.

MR. DEAGUIAR: I would just request if the

Court is inclined to grant the order that the

Trustee seeks, if it would weigh the privacy

interests of the individuals involved against the

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benefit of ordering the production of these

records; and also we would object to the

continuing nature of this request and would

request instead that if the Court is inclined to

enter an order it be for a one-time disclosure and

any future disclosures to be addressed at the time

that the Trustee finds anything that may be of

relevance on the tapes.

THE COURT: Okay.

MR. FIERBERG: Judge, one brief response? I'm

sorry, were you done?

MR. DEAGUIAR: Yes.

MR. FIERBERG: Judge, Mr. Lawrence is a

unique character and, again, you have the unique

knowledge of the background of Mr. Lawrence. To

have a cutoff date, basically gives Mr. Lawrence

carte blanche to continue his money-moving

operations. We are convinced by what our

representatives, which have been retained under

seal, tell us and the documents we've received

from their undertaking that money is being moved

at a precipitous rate through Mr. Lawrence and his

operatives. It is imperative that we are able to

continue tracing them until such time as the -- a

Morava Injunction, hopefully is entered, which

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freezes those assets.

So we would ask that it be continuing at

least until that Morava Injunction is sought and

approved by courts in the Commonwealth.

THE COURT: Okay. Tell me how that would

work, the Morava Injunction.

MR. FIERBERG: I'm not sure I understand your

question, Judge.

THE COURT: You would seek this in England?

MR. FIERBERG: Yes. Are you familiar with

Morava injunctions?

THE COURT: No, I am not.

MR. FIERBERG: I'm sorry. A Morava

Injunction -- Morava was the name of a ship, it's

the name of a case, the Morava Injunction, and

under it courts in England and other Commonwealth

nations will put a freeze on assets assuming that

sufficient evidence is presented.

Now, we have gotten already an order from the

court in England to compel certain financial

institutions to deliver reams of evidence. The

judge was satisfied over there by the amount of

information we had, but before we go to the next

step of actually freezing the assets, we need some

more information, and once we get that information

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there would obviously -- and we get the Morava

Injunction, there would be no need -- or the need

would be significantly diminished, I should say,

to get these further logs and tapes because we

would have frozen Mr. Lawrence's assets in the UK

and other places.

THE COURT: Okay. Well, let me ask you,

Mr. Fierberg, the first thing that came to my mind

when I thought about access to these records would

be, what about privileged communications with, for

instance, you're the man who's incarcerated,

what's his attorney informed? How is he protected

in that regard?

MR. FIERBERG: I'm told, and perhaps

Mr. Deaguiar can expand on this, that there is a

separate procedure if he needs to talk to his

attorneys, and we're not looking for that. I

mean, if he's foolish enough to have made a phone

call to his attorney on an open line that is

recorded then that's his loss, he's waived his

privilege, there's no expectation of privacy on

those phone calls. However, I understand there is

a separate procedure for those calls.

MR. DEAGUIAR: The way that works, Your

Honor, is that the inmate can request an


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unmonitored legal telephone call and he can make

those calls on a staff telephone, but there is

obviously the possibility that he is speaking with

counsel on the monitored telephone.

THE COURT: Okay. Let me ask you as well, if

you don't mind, what kind of precedent is there

for this type of request?

MR. DEAGUIAR: Well, generally, Your Honor,

these requests are made in the course of a

criminal case by criminal counsel and the

government objects and usually at a minimum the

court requires that the request be narrowed in

scope.

In those cases, Your Honor, the United States

is a party to the case. Here, the United States

-- the Bureau doesn't feel that the United States

is necessarily a party to the case, so we would

request that the Court look at this with more of a

skeptical eye. There is some precedent that was

referred to me by the U.S. Attorney's Office for

the assertion that the United States is not a

party. Given the short notice, however, Your

Honor, I have not been able to review that

precedent, although I can provide you with some

cites to the case law.


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THE COURT: Okay. Mr. Fierberg, you have

some comment?

MR. FIERBERG: Did you want me to respond to

that, Judge?

THE COURT: Yes.

MR. FIERBERG: At the last hearing

Mr. Deaguiar presented us with a number of Federal

regulations on this issue and among those entities

that are considered the United States is the U.S.

Trustee, and I'm citing to the Code of Federal

Regulations to Title 28, Chapter 1, Section 16.21.

While clearly Mr. Goldberg is not a U.S.

Trustee he derives his existence through the

Office of the United States Trustee, he's

appointed by the United States Trustee, he

operates under the guidelines of the United States

Trustee, he can be removed by the U.S. Trustee, he

can be suspended by the U.S. Trustee. So I think

that there is enough of a nexus between

Mr. Goldberg and the U.S. Trustee and that which

is recognized in the regulations to justify this

action.

THE COURT: Well, let's just assume for a

moment that he is a representative of the United

States through this nexus he has to the U.S.


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Trustee, part of the Department of Justice, then

what does that mean?

MR. DEAGUIAR: The Government would argue,

Your Honor, that providing the tapes to the

Trustee would still be outside of the scope of

Title 3 because Title 3 is specifically excepting

law enforcement from the wire tapping requirements

if they're monitoring calls for the purpose of law

enforcement activity in the ordinary course of

business.

It isn't in the Bureau's ordinary course of

business to record inmate telephone conversations

for any purpose other than institutional security

and ensuring public safety. It is our position

that it would still fall outside the scope to

provide it even to another arm of the United

States Government.

MR. FIERBERG: Mr. Avron can address our

Title 3.

THE COURT: Yes.

MR. AVRON: Judge, just very briefly. It is

true that the ordinary course of Law Enforcement

Exception is one of the exceptions to Title 3, but

there is another exception and that is the Consent

Exception, and that derives from Mr. Lawrence's


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actual knowledge that all the calls monitored are

subject to recording.

In the letter dated November 21 attached to

our motion to reset the status conference we cited

case law, and I've previously given copies of

those cases to Mr. Deaguiar and I have copies to

give to Your Honor, and they specifically find

that when an inmate has knowledge that his calls

are really monitored and are subject to recording

he has in fact consented, and therefore that is no

exception to Title 3.

Therefore, we think it's applicable here, and

I have those cases with me if you'd like me to

submit them to Your Honor and Mr. Deaguiar. I've

cited them specifically on Page 2 of the letter

and Footnote Number 1, it's specifically Footnote

Number 1, I addressed that very issue on the

second page of the letter, Your Honor.

THE COURT: Okay. One question I would have,

Mr. Fierberg, so if you had this information I'm

just curious what you would do with it? For

instance, let's say that I gave a limited order

and said you may have access to the log and you

need a further court order to go beyond that,

would that be sufficient to get you started and


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would that be useful to you?

MR. FIERBERG: It certainly would be a step

in the right direction, Judge, but I think that we

need to know what Mr. Lawrence is saying to

certain parties in order to provide an affidavit

to the British Court. So just having the log

means we're going to have investigators go out and

do the things that they do when the evidence may

be right on the tape and all we have to do is

listen to it.

So, yes, we would very much appreciate the

log, but I don't think it gives us really what we

need. Again, I'm willing to -- the Trustee is

willing to narrow the scope significantly, we're

willing to undertake the expenses, but as you know

this has been a three year hard court battle.

We're so close to recovering this money for the

estate that we think that the Holy Grail is in

those tapes and it's very critical, Judge.

THE COURT: Let me ask you as well, as you

know the grant of jurisdiction to the Bankruptcy

Court is extremely broad, and sometimes people

looking at the bankruptcy system from the outside

think, well, that's probably not very interesting

because all they do is debtor/creditor type law,

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OUELLET I E & MAULDIN COURT REPORTERS305-358-8875

but this case actually proves otherwise.

MR. FIERBERG: That is right.

THE COURT: Nevertheless, one of the things

that we don't do in Bankruptcy Court, of course,

is criminal matters, it's one of the only things,

even things like divorce law, for instance, are

often in this court and questions of

dischargeability of maintenance versus property

division.

So I'm just wondering, Mr. Fierberg, if you

really want this relief from this court or if

you'd rather have this court defer and bring it to

the District Court that would have more experience

in these matters than the Bankruptcy Court would?

MR. FIERBERG: Judge, actually, I think not.

I think that, respectfully, Judge Cristol at the

prior hearing found he had jurisdiction over this

matter, he found that he was a court of the United

States in a matter we've litigated, and I'm

satisfied with the jurisdiction of this court to

enter the relief we're seeking.

THE COURT: Okay. Specifically, what would

you do to narrow the scope of your request,

Mr. Fierberg?

MR. FIERBERG: Judge, we would review the log

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and those many, many calls that I believe are on

that log which are zero, those are clearly calls

we don't need. Beyond that, and I understand it's

well over a third of the calls is what you're

telling me? I don't recall the number, but a

significant number of the calls are zero minute

calls. That automatically excises a tremendous

amount.

There are calls that I think we'll be able to

match up numbers for that have no interest to us,

personal type things, that have no interest to us.

It is the calls to people that are connected with

Lawrence directly or tertiary that are going to

put this together.

So once I see the log, Judge, I'll have a

better idea. I don't want to keep running back to

court to get this tape and that tape and the next

tape. I'd rather have a tight order that perhaps

we could draft together which satisfies the

concerns of the Bureau, gives them the comfort

that they need in terms of third-party, whatever

they're looking for, and yet allows the Trustee to

get the information that he so desperately needs.

THE COURT: All right. Another item which is

of interest to me would be the fact that,


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Mr. Fierberg, if you had this order from this

court, ex-parte order, at some point Lawrence and

his counsel may learn of course of the order, and

I'm wondering if you're concerned that you may

have any exposure in that regard? I'm not talking

malpractice wise, but in terms of what you intend

to accomplish here.

MR. FIERBERG: I thought a lot about that,

Judge. I don't think it's that much of a concern

to us. I think Mr. Lawrence is incarcerated for a

simple contempt of this Court's order. I think

that the Bankruptcy Code allows you under 105 (a)

with the power to do whatever is necessary to

enforce orders. I think it would be clearly an

act of absurdity to give Mr. Lawrence notice that

we're trying to get tapes and then suddenly stop

making phone calls. So the Trustee is willing to

take the risk and the responsibility for his

action.

THE COURT: Okay. Anything further at this

point?

MR. DEAGUIAR: May I just rebut briefly, Your

Honor?

THE COURT: Yes.

MR. DEAGUIAR: Merely referring to Counsel's

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assertion to the cases provided to the Government

and cited in his letter, I would merely

distinguish them. I've read the cases provided by

Counsel, and they specifically address Title 3 in

the perspective of whether evidence would be

admissible against someone in a Criminal Court

when Title 3 would ordinarily preclude telephone

monitoring, and they address the fact that the

Bureau does fall within the Law Enforcement

Exception to Title 3, so the Bureau can monitor

the telephone calls; and also that the inmate has

consented to monitoring of phone calls and

consequently they're admissible in a law

enforcement proceeding, and that is a very

different context than seeking to admit the call

or the tapes for non-law enforcement purposes. I

just wanted to make that clarification to the

Court.

I would seek perhaps if the calls are sought,

if the order could be narrow in scope, perhaps to

a specific area code, time of day, or number. I

just wanted to reiterate that to the Court.

THE COURT: All right. Anything further?

The Court will recess briefly. I ask that

you remain. You may want to discuss how you could


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transcript december 5, 2000 secret bankruptcy court wiretap hearing excerpts

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Transcript of transcript december 5, 2000 secret bankruptcy court wiretap hearing excerpts