Page l

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:

OUELLETTE & MAULDIN COURT REPORTERS

305-358-8875
Case 97 14687 AJC Document 1733 Filed 12/22/2005 Page 3 of 31
- -

Page 2

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.

OUELLETTE & MAULDIN COURT REPORTERS

305-358-8875
 Page 3
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.

OUELLETTE & MAULDIN COURT REPORTERS

305-358-8875
 Page 4

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

OUELLETTE & MAULDIN COURT REPORTERS

305-358-8875
 Page 5

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 REPORTERS

305-358-8875
 Page 6
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

OUELLETTE & MAULDIN COURT REPORTERS

305-358-8875
 Page 7

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

OUELLETTE & MAULDIN COURT REPORTERS

305-358-8875
 Page 8

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.

OUELLETTE & MAULDIN COURT REPOR I ERS

305-358-8875
 Page 9

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

OUELLETTE & MAULDIN COURT REPORTERS

305-358-8875
 Page 10

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

OUELLETTE & MAULDIN COURT REPORTERS

305-358-8875
 Page 11

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

OUELLETTE & MAULDIN COURT REPORTERS

305-358-8875
 Page 12

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

OUELLETTE & MAULDIN COURT REPORTERS

305-358-8875
 Page 13

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

OUELLETTE & MAULDIN COURT REPORTERS

305-358-8875
 Page 14

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

OUELLETTE & MAULDIN COURT REPORTERS

305-358-8875
 Page 15

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.

OUELLETTE & MAULDIN COURT REPORTERS

305-358-8875
 Page 16

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.

OUELLETTE & MAULDIN COURT REPORTERS

305-358-8875
 Page 17
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

OUELLETTE & MAULDIN COURT REPORTERS

305-358-8875
 Page 18

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

OUELLETTE & MAULDIN COURT REPORTERS

305-358-8875
 Page 19

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,

OUELLETTE & MAULDIN COURT REPORTERS

305-358-8875
 Page 20

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

OUELLET I E & MAULDIN COURT REPORTERS

305-358-8875
 Page 21
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,

OUELLETTE & MAULDIN COURT REPORTERS

305-358-8875
 Page 22

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

OUELLE'TTE & MAULDIN COURT REPORTERS

305-358-8875
 Page 23

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

OUELLETTE & MAULDIN COURT REPORTERS

305-358-8875