Stadtmauer Reply

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY

_______________________________ ) UNITED STATES OF AMERICA ) ) ) Crim. No.: 05-249 (JLL) v. ) ) ORAL ARGUMENT MARCI PLOTKIN ) REQUESTED STANLEY BEKRITSKY ) RICHARD STADTMAUER ) ANNE AMICI ) ______________________________ )

REPLY MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT RICHARD STADTMAUERS MOTION TO COMPEL

DISCOVERY PURSUANT TO FED. R. CRIM. P. 16 (Stadtmauer Pretrial Motion No. 1)

KOSTELANETZ & FINK, LLP 530 5th Ave., 22nd Fl. New York, NY 10036 (212) 808-8100 Counsel to Richard Stadtmauer Dated: March 5, 2007

Case 2:05-cr-00249-JLL Document 80 Filed 03/05/07 Page 1 of 22 PageID: 2661

TABLE OF CONTENTS Preliminary Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1 ARGUMENT POINT I

THE GOVERNMENT SHOULD BE DIRECTED TO IDENTIFY THOSE DOCUMENTS THAT IT INTENDS TO USE IN ITS CASE-IN-CHIEF. . 3 POINT II THE GOVERNMENT SHOULD BE COMPELLED TO PRODUCE

DOCUMENTS REQUESTED BY DEFENDANTS WHICH ARE MATERIAL TO THE DEFENSE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

A. Documents Related to the Concealment Allegations . . . . . . . . . . . . . 6 B. Internal IRS Documents 1. The Internal IRS Documents Are Material to the Defense . . . 7 2. The Internal IRS Documents Are in the Governments

Possession, Custody or Control . . . . . . . . . . . . . . . . . . . . . . . 9 C. Civil Audit Files. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 POINT III THE COURT SHOULD ORDER A HEARING TO DETERMINE WHETHER THE GOVERNMENT IMPROPERLY GAINED KNOWLEDGE OR POSSESSION OF DOCUMENTS AND COMPUTER RECORDS STOLEN BY A PRIVATE CITIZEN. . . . . . . .13 CONCLUSION. . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16


iii

TABLE OF AUTHORITIES

FEDERAL CASES Brady v. Maryland, 373 U.S. 83 (1963) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Lustig v. United States, 338 U.S. 74 (1949) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Nordstrom v. United States, 360 F.2d 734 (8th Cir.), cert. denied, 385 U.S. 826 (1966) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8 United States v. Auten, 632 F.2d 478 (5th Cir. 1980)). . . . . . . . . . . . . . . . . . . . . . 10 United States v. Bennett, 709 F.2d 803 (2d Cir. 1983) . . . . . . . . . . . . . . . . . . . . . .14 United States v. Bridell, 180 F. Supp. 268 (N.D. Ill.1960) . . . . . . . . . . . . . . . . . . . 8 United States v. Causey, 356 F. Supp. 2d 681 (S.D. Tex. 2005) . . . . . . . . . . . . . . . 5 United States v. Chalmers, 410 F. Supp. 2d 278 (S.D.N.Y. 2006). . . . . . . . . . 10-12 United States v. Critzer, 498 F.2d 1160 (4th Cir. 1974) . . . . . . . . . . . . . . . . . . . .8-9 United States v. Ferguson, Crim. No. 3:06 CR 137 (CFD), 2007 WL 196668 (D. Conn. Jan. 24, 2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 United States v. Garber, 607 F.2d 92 (5th Cir. 1979) . . . . . . . . . . . . . . . . . . . . . . 8 United States v. McDonald, 01 Cr. 1168, 2002 WL 2022215 (E.D.N.Y. Aug. 6, 2002) (JS). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 United States v. Nachamie, 91 F. Supp. 2d 565 (S.D.N.Y. 2000). . . . . . . . . . . . . . 4 United States v. Knoll, 16 F.3d 1313 (2d Cir. 1994) . . . . . . . . . . . . . . . . . . . . . . . 14 United States v. Palermo, No. 99 Cr. 1199, 2001 WL 185132 (S.D.N.Y. Feb. 26, 2001) (LMM) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 United States v. Pelullo, 399 F.3d 197 (3d Cir. 2005) . .. . . . . . . . . . . . . . . . . . . . 11


iv

United States v. Perdomo, 929 F.2d 967 (3d Cir. 1991) . . . . . . . . . . . . . . . . . . . . 10 United States v. Poindexter, 727 F. Supp. 1470 (D.D.C. 1989) . . . . . . . . . . . . . . . 4 United States v. Risha, 445 F.3d 298 (3d Cir. 2006) . . . . . . . . . . . . . . . . . . . . . . . 10 United States v. Safavian, 233 F.R.D. 12 (D. D.C. 2005) . . . . . . . . . . . . . . . . . . . 10 United States v. Skulsky, 786 F.2d 558 (3rd Cir. 1986) . . . . . . . . . . . . . . . . . . . . . . 8 United States v. Stein, 424 F. Supp. 2d 720 (S.D.N.Y. 2006) . . . . . . . . . . . . . . . . 12

United States v. Turkish, 458 F. Supp. 874 (S.D.N.Y. 1978). . . . . . . . . . . . . . . . . 4 United States v. Upton, 856 F. Supp. 727 (E.D.N.Y. 1994). . . . . . . . . . . . . . . . . . 4 FEDERAL STATUTE 26 U.S.C. 7206(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 FEDERAL RULE Fed. R. Crim. P. 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . passim MISCELLANEOUS AUTHORITY Guidance Regarding Deduction and Capitalization of Expenditures, 67 Fed. Reg. 3461 (Jan. 24, 2002) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7


IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY

_______________________________ ) UNITED STATES OF AMERICA ) ) ) Crim. No.: 05-249 (JLL) v. ) ) ORAL ARGUMENT MARCI PLOTKIN ) REQUESTED STANLEY BEKRITSKY ) RICHARD STADTMAUER ) ANNE AMICI ) ______________________________ )

REPLY MEMORANDUM OF LAW IN SUPPORT OF DEFENDANT RICHARD STADTMAUERS MOTION TO COMPEL

DISCOVERY PURSUANT TO FED. R. CRIM. P. 16 (Stadtmauer Pretrial Motion No. 1)

Preliminary Statement

Defendant Richard Stadtmauer respectfully submits this reply

memorandum of law in further support of his discovery motion. First, Mr.

Stadtmauer seeks an Order pursuant to Fed. R. Crim. P. 16(a)(1)(E) and (d)(2),

directing the government to identify all documents that it intends to rely on in its

case-in-chief well in advance of trial. This Order is necessary because the

government has produced an overwhelming volume of documents, and it will take

an inordinate amount of time and resources for counsel to review each document in

preparation for trial.


2

Second, Mr. Stadtmauer seeks an Order pursuant to Rule 16

compelling the government to supplement its discovery. 1 In contrast to the

governments unrestricted production of documents that may or may not be used to

support its case, the limited response to defendants specific discovery requests is

hampering the their ability to prepare their defense. The particular items of most

concern are (i) the third-party subpoenas, and responses from those third parties,

which will allow the defense to ascertain whether the government has produced all

of documents material to the defense;2 (ii) internal Treasury Department and IRS

documents that Mr. Stadtmauer believes will establish uncertainty in the

application of the capitalization rules; and (iii) certain civil audit files relating to

1 Mr. Stadtmauers arguments with respect to Brady v. Maryland, 373 U.S. 83, 87 (1963), are discussed in the Reply Memorandum in Support of Defendant Richard Stadtmauers Motion to Compel Disclosure of Brady/Giglio Material and for Early Production of Jencks Act Material, filed herewith. 2 In the Memorandum of Law in Support of Defendant Richard Stadtmauers Motion to Compel Discovery Pursuant to Fed. R. Crim. P. 16 (Def. Mem.) at 29-31), Mr. Stadtmauer requested the tax returns of the individual partners of the Real Estate Partnerships on the ground that they were necessary to establish the tax loss to government (if any) resulting from the conduct charged in the Indictment. However, since the government has now represented that the Superseding Indictment does not allege, and the government does not intend to prove, that any non-co-conspirator partner filed a false personal tax return or that any such partner understated the tax due and owing by that partner to the IRS (Gov. Mem. at 74), we no longer require the tax returns of those partners. We accordingly withdraw this discovery request with the express caveat that we fully expect that the government will not deviate from this position and attempt to offer at trial evidence of any tax benefit to any non-co-conspirator partners.


3

other Kushner Companies entities. Each of these items is material to the defense

and should be produced promptly.

Finally, Mr. Stadtmauer requests a hearing to determine how the

government came to have knowledge of or to possess stolen records. Because the

government has not provided a satisfactory answer to Mr. Stadtmauers legitimate

concerns, a hearing is necessary to determine whether there was an

unconstitutional search and seizure.

ARGUMENT

POINT I

THE GOVERNMENT SHOULD BE DIRECTED TO IDENTIFY THOSE DOCUMENTS THAT IT INTENDS TO USE IN ITS CASE-IN-CHIEF

The government has produced millions of documents in this case,

many mislabeled or haphazardly thrown into bankers boxes. The indices provided

by the government offer little help in sorting out the contents of the over 900

bankers boxes of documents that have been produced so far. Indeed, several

categories of documents do not appear on the index at all. (See March 5, 2007

Reply Affidavit of Lauren Hoffman in Support of Reply Memorandum in Support

of Marci Plotkins Motion for Bill of Particulars (Hoffman Dec.)) at 12). In

addition, items have been removed from the discovery boxes, id. at 4, Bates

numbers are missing without adequate explanation, id. at 6, and the governments


4

reorganization of the third-party productions has created considerable confusion,

id. at 13. Moreover, the sheer volume of materials in this case sets it apart, and

requires that the government specifically identify, from amongst the millions of

documents which it has produced, the documents that it intends to rely on or refer

to during its case-in-chief.

As explained in the opening Memorandum (Def. Mem. at 18-19),

various Courts have interpreted Rule 16(a)(1)(E)(ii) to require the government to

specifically identify those documents that will be relied on or referred to at trial

from the governments massive production. See, e.g., United States v. Upton, 856

F. Supp. 727, 746 (E.D.N.Y. 1994); United States v. Poindexter, 727 F. Supp.

1470, 1484 (D.D.C. 1989); United States v. Turkish, 458 F. Supp. 874, 882

(S.D.N.Y. 1978). We acknowledged in our opening Memorandum that there is

contrary authority, see e.g., United States v. Nachamie, 91 F. Supp. 2d 565

(S.D.N.Y. 2000), however, in the rare case such as this where the government has

produced such a staggering volume of documents, the better interpretation of Rule

16 is to require the government to specifically identify those documents that it

intends to rely on or refer to in its case-in-chief.

Nonetheless, the Court need not decide what is required in all cases

under Rule 16(a)(1)(E)(ii), as it unquestionably has discretion, where warranted, to

order the government to identify the documents which it intends to use in its case-


5

in-chief. See United States v. McDonald, 01 Cr. 1168, 2002 WL 2022215 at *3

(E.D.N.Y. Aug. 6, 2002) (JS); United States v. Palermo, No. 99 Cr. 1199, 2001

WL 185132 at *6 (S.D.N.Y. Feb. 26, 2001) (LMM). This case warrants the

exercise of this discretionary power.3

The government argues that it should not be required to specifically

identify the documents that will be relied on or referred to by a witness because it

cannot predict all of the documents that they may refer to at trial. (See

Memorandum of the United States in Opposition to Defendants Pretrial Motions

(Gov. Mem.) at 70-71). To be clear, we are asking only for what the government

now knowingly intends to rely on at trial, whether or not admitted into evidence.

The volume of documents that the government has produced to date

is overwhelming, and it will take an inordinate amount of time and resources for

counsel to give each document a cursory review, let alone read each page. In

3 The government urges the Court not to exercise this discretion, citing United States v. Ferguson, Crim. No. 3:06 CR 137 (CFD), 2007 WL 196668, at *20 (D. Conn. Jan. 24, 2007), in which the Court denied a request for specific identification of documents to be used in the governments case in chief. The circumstances, in Ferguson, however, were markedly different from those in the present case. There, the government provided the defense with a discrete number of hot docs before the defendant was indicted, provided its exhibit list two months before trial, and gave the defense access to a text-searchable database containing all of the documents. Id. The governments reliance on United States v. Causey, 356 F. Supp. 2d 681, 687 (S.D. Tex. 2005), is also misguided. There, well in advance of trial, the government voluntarily produced a rough cut of what the government believe[d] is the central evidence for both the government and the defense.


6

addition, because the government has not produced the documents in the order they

were kept in the ordinary course of business or in the order in which they were

produced, the requested relief is essential. Accordingly, the Court should require

the government to identify substantially in advance of trial the documents it

intends to either refer to or use as evidence in its case-in-chief.

POINT II

THE GOVERNMENT SHOULD BE COMPELLED TO PRODUCE DOCUMENTS REQUESTED BY DEFENDANTS WHICH ARE

MATERIAL TO THE DEFENSE During discovery, the government has refused to provide several

categories of documents which are material to the defense and must be produced

pursuant to Fed. R. Crim. P. 16(a)(1)(E)(i).

A. Documents Related to the Concealment Allegations

The defendants requested documents relating to the allegation in the

Indictment that certain partners were denied access to the books and records of the

Real Estate Partnerships, or to accurate information about partnership expenses and

distributions. See Indictment, Count 1, 8(L) & (K). The government represents

that it has turned over all material in its possession that originates from the

Murray Kushner litigation. (Gov. Mem. at 75). However, we do not believe that

the government has produced all documents relating to this allegation. For

example, we have not been provided with documents relating to the partners


7

accounting and tax reporting that we believe the government subpoenaed from

PriceWaterhouseCooper, the forensic accountant in the arbitration.

In order to resolve this dispute, the government should be required to

produce copies of the grand jury subpoenas and the production letters from the

subpoenaed parties in order to determine whether it has, in fact, turned over all of

the materials requested by the defense.

B. Internal IRS Documents

1. The Internal IRS Documents are Material to the Defense

The defendants requested that the government produce internal IRS

communications relating to the capitalization rules and regulations. One of the

primary allegations in the Indictment is that the Real Estate Partnerships

improperly characterized capital improvements and depreciable items as ordinary

business expenses. See Indictment, Counts 2-25. As explained in the Defendants

Joint Motion to Dismiss and Strike, In Part, Counts 1-25 of the Superseding

Indictment, the determination of whether an item should be capitalized or expensed

is a complex question that the government itself has conceded is highly uncertain.

Based on the IRS and Treasury Departments statements in public documents

regarding the capitalization of expenses, see e.g., Guidance Regarding Deduction

and Capitalization of Expenditures, 67 Fed. Reg. 3461 (Jan. 24, 2002) (recognizing

the current level of uncertainty and controversy), Mr. Stadtmauer believes


8

internal IRS documents exist that further demonstrate official government

recognition of uncertainty in this area of the law.4

The existence of such uncertainty is material to the defense in this

case. Mr. Stadtmauer has been charged with aiding and assisting in the filing of

fraudulent and false returns pursuant to 26 U.S.C. 7206(2). Willfulness is an

element of this offense. Id.; United States v. Skulsky, 786 F.2d 558, 563 (3rd Cir.

1986). Evidence showing uncertainty within the IRS and the Treasury Department

over the interpretation and application of the capitalization rules will aid Mr.

Stadtmauer in defending against the allegation that he acted willfully. As

explained by one court, the unresolved nature of the law is relevant to show that

defendant may not have been aware of a tax liability or may have simply made an

error in judgment. United States v. Garber, 607 F.2d 92, 98 (5th Cir. 1979)

(citing Nordstrom v. United States, 360 F.2d 734 (8th Cir.), cert. denied, 385 U.S.

826 (1966); United States v. Bridell, 180 F. Supp. 268 (N.D. Ill.1960)). Further, in

United States v. Critzer, 498 F.2d 1160 (4th Cir. 1974), the Court reversed a

criminal tax conviction where there was a disputed question of law, explaining the

4 The government speculates that the internal IRS communications would not be helpful to the defense but does not represent that it undertook any review of these materials. (See Gov. Mem. at 76-77).


9

relevance of uncertainty within the government ranks as to the tax treatment of a

particular item:

We hold that defendant must be exonerated from the charges lodged against her. As a matter of law, defendant cannot be guilty of willfully evading and defeating income taxes on income, the taxability of which is so uncertain that even coordinate branches of the United States Government plausibly reach directly opposing conclusions. As a matter of law, the requisite intent to evade and defeat income taxes is missing. The obligation to pay is so problematical that defendants actual intent is irrelevant. Even if she had consulted the law and sought to guide herself accordingly, she could have had no certainty as to what the law required.

Id. at 1162. Clearly, evidence of the uncertainty within the IRS and Treasury

Department on the application of the capitalization rules is material to the motion

to dismiss and the trial defense and should be produced pursuant to Rule 16.

2. The Internal IRS Documents Are In the Governments Possession, Custody, or Control The government also asserts that the requested documents are not in

its possession and thus need not be turned over. (Gov. Mem. at 78-79). This is an

overly narrow view of the governments discovery obligations. Rule 16 requires

the government to permit the defendant to inspect and to copy or photograph

books, papers, documents . . . if the item is within the governments possession,

custody, or control. Fed. R. Crim. P. 16(a)(1)(E)(i) (emphasis added). The term

government does not refer solely to the United States Attorneys Office, but may


10

include other federal agencies. As explained by the Third Circuit in the context of

exculpatory material, [t]here is no question that the governments duty to disclose

under Brady reaches beyond evidence in the prosecutors actual possession.

United States v. Risha, 445 F.3d 298, 303 (3d Cir. 2006). In this context, the Third

Circuit has adopted the Fifth Circuits view that [i]n the interests of inherent

fairness the prosecution is obligated to produce certain evidence actually or

constructively in its possession or accessible to it. . . To do otherwise would be

inviting and placing a premium on conduct unworthy of representatives of the

United States Government. United States v. Perdomo, 929 F.2d 967, 970 (3d Cir.

1991) (quoting United States v. Auten, 632 F.2d 478, 481 (5th Cir. 1980)).

In the context of Rule 16, courts have also ordered the government to

search for documents in the possession of federal agencies not part of the

prosecution team. See United States v. Safavian, 233 F.R.D. 12, 18-19 (D. D.C.

2005) (The documents must be produced if they are in the possession, custody or

control of any agency of the Executive Branch of the government.) (emphasis in

original); but see United States v. Stein, 424 F. Supp. 2d 720, 723 (S.D.N.Y. 2006).

The documents should also be produced because they are not merely

in the possession of the government, but are in the possession of an agency that is

part of the prosecution team in this case. See United States v. Chalmers, 410 F.

Supp. 2d 278, 289-90 (S.D.N.Y. 2006) (prosecution must produce documents


11

material to defense that are in the possession, custody, or control of a government

agency so closely aligned with the prosecution so as to be considered part of the

prosecution team.). Here, Mr. Stadtmauer is not seeking to compel production

of documents in the possession of some unrelated federal agency, but from the

IRS, which has conducted a joint investigation with the United States Attorneys

Office and is part of the prosecution team in this case.

The government cites United States v. Pelullo, 399 F.3d 197 (3d Cir.

2005), in an attempt to support its position that it has no obligation to produce the

requested document. In Pelullo, the Court clearly articulated the general

principle that the prosecution is obligated to disclose information known to

others acting on the governments behalf in a particular case. Id. at 218.

However, the court determined that the government was not required to produce

certain documents in the possession of the Pension and Welfare Benefits

Administration (PWBA) because the PWBA was not a member of the

prosecution team and there was no indication that there was a joint investigation or

that the prosecution had any control over the PWBA officials. Id. Here, in

marked contrast, Mr. Stadtmauer seeks documents from the IRS and agency that

has been an integral part of the prosecution team.

In sum, the requested documents are material to the defense and are in

the possession of the IRS, an agency that is part of the prosecution team in this


12

case. Accordingly, the government should be required to produce the requested

documents pursuant to Rule 16.

C. Civil Audit Files

The defendants have requested the production of certain civil audit

files relating to audits performed by the IRS of various Kushner Companies

entities. The government has produced some documents in response to this

request, but has advised the defense that the remaining records have been

destroyed several years prior to the start of the grand jury investigation. (Def.

Mem. at 79). Despite repeated requests, the government has not produced any

attestations from the IRS concerning the alleged destruction of this evidence, nor

provided the defense with any details as to when these records were destroyed, at

whose direction they were destroyed, or the IRS records retention policy upon

which the government relies.

The governments position is that it has no obligation to produce these

records because they are not required to produce information in the possession of

the IRS. (Def. Mem. at 79). As explained, in Section II(B), supra, the IRS is a

member of the prosecution team and information in its possession is with the

possession, custody or control of the government under Rule 16.


13

POINT III

THE COURT SHOULD ORDER A HEARING TO DETERMINE WHETHER THE GOVERNMENT IMPROPERLY GAINED KNOWLEDGE OR POSSESSION OF DOCUMENTS AND

COMPUTER RECORDS STOLEN BY A PRIVATE CITIZEN The governments response to Mr. Stadtmauers request for

information as to the manner in which the government came to know of, and then

obtained, certain documents and computer records is inadequate. This is a serious

concern that may implicate Mr. Stadtmauers Fourth Amendment rights and should

not be lightly brushed aside.

As an initial matter, the government did not submit an affidavit or

declaration on this issue. Rather, it baldly asserts, in the most general of terms,

that it at no time authorized [Robert] Yontef, or anyone else, to conduct searches

and seizures on its behalf. (Gov. Mem. at 88). Putting aside the conclusory

nature of this statement, it is phrased wholly in negative terms it purports to state

how the government didnt obtain the materials. Notably absent is any

representation by a single employee of the Department of Justice about the manner

in which it did obtain knowledge of or possession of the stolen records, and that

absence, is in itself troubling.

Moreover, the government merely denies that it authorized any search

or seizure; it does not deny that its officers or employees knew about the search


14

and seizure. (See Gov. Mem. at 88). As explained in the opening Memorandum,

the Fourth Amendments restraints are not limited to searches and seizures by

private citizens that were authorized by the government. (Def. Mem. at 50). The

Fourth Amendment also applies to searches of which the government was aware of

and in which it was complicit, United States v. Bennett, 709 F.2d 803, 805 (2d Cir.

1983) (citing Lustig v. United States, 338 U.S. 74, 78-79 (1949)), and is

immaterial whether the government originated the idea for a search or joined it

while it was in progress, United States v. Knoll, 16 F.3d 1313, 1320 (2d Cir.

1994) (internal citation omitted). The governments carefully-worded response

raises additional concerns about its conduct.

The government also asserts that Mr. Stadtmauer has no basis for his

request for information as to how the government came to have knowledge of or to

possess Westminster Management (Westminster) records stolen from the

Kushner Companies. (Gov. Mem. at 89). This is simply not the case. The

opening Memorandum set forth sufficient facts none of which the government

disputes that the theft was ongoing when the government became involved with

or aware of it. Indeed, the government does not deny that: (i) from at least July

2001 through June 2002, Mr. Yontef stole documents and computer records


15

containing financial and accounting information of Westminster;5 (ii) Mr. Yontef

downloaded onto CD-Roms all of Westminsters primary accounting system; (iii)

Mr. Yontef stole these records with the intent to give them to the United States

Attorney; (iv) during the period from at least October 2001 through June 2002, Mr.

Yontef funneled this information to Murray Kushner; (v) at Murray Kushners

request, Mr. Yontef forwarded the stolen records to the forensic accountant

retained by his counsel, Herbert Stern, who in turn, forwarded them to Mr. Stern;

(vi) as a result of the litigation between Charles and Murray Kushner, the United

States Attorneys Office opened an investigation of Charles Kushner, which in turn

led to the investigation of the defendants; and (vi) the original stolen records came

into the possession of the FBI and the United States Attorneys Office. (See Def.

Mem. at 46-49).

In addition to these facts, which in themselves form a basis for further

inquiry into the governments knowledge of and eventual possession of the stolen

records, during the time period of the arbitration, Yontefs theft of the records, and

through the initiation of the criminal investigation, Herbert Stern, who was Murray

Kushners attorney, counseled the United States Attorney in his capacity as a

prosecutor (and was something of a mentor to him) meeting with him every few

5 Mr. Stadtmauer is a 50% partner in Westminster Management, and thus has standing to object to the search and seizure.


16

months. (See January 1, 2006 Star Ledger, attached to the March 2, 2006 Reply

Declaration of Robert S. Fink in Support of Defendant Richard Stadtmauers

Motion to Compel Discovery Pursuant to Fed. R. Crim. P. 16 (Fink Dec.) as

Exhibit (Ex.) A). Moreover, at the same time that the government was receiving

information regarding Charles Kushner and the defendants in this case, the

government also was receiving information regarding potential criminal conduct of

Murray Kushner. (See Certification of Marc L. Kaplan, Fink Dec. Ex. B).

However, it was Charles Kushner and the defendants, and not Murray Kushner,

who were investigated and ultimately prosecuted.

Because the government has refused to provide information as to the

time and manner in which it first acquired knowledge of or possession of the stolen

records, we respectfully request a hearing on the matter. Mr. Stadtmauer has made

out a prima facie case for violation of his Fourth Amendment rights, and an inquiry

is warranted.

Conclusion

For all of the foregoing reasons, Mr. Stadtmauers motion should be

granted in its entirety.


17

Dated: New York, New York March 5, 2007 Respectfully submitted, KOSTELANETZ & FINK, LLP By: /s/ Robert S. Fink Robert S. Fink (RSF-7924) Caroline Rule (CR-6503) Megan L. Brackney (MLB-6870) 530 Fifth Avenue New York, New York 10036 (212) 808-8100 Counsel to Richard Stadtmauer


18

CERTIFICATE OF SERVICE

The undersigned counsel hereby certifies that the forgoing document

was served on the parties of record by electronic notification and by mailing a copy

thereof by First Class Mail, postage prepaid, to the following:

Thomas J. Eicher, AUSA United States Attorneys Office District of New Jersey U.S. Department of Justice 970 Broad Street, Suite 700 Newark, NJ 07102 Richard J. Schaeffer, Esq. Brian T. Rafferty, Esq. Dornbush Schaeffer Strongin & Venaglia, LLP 747 Third Avenue New York, NY 10017 Justin P. Walder, Esq. Walder, Hayden & Brogan, P.A. 5 Becker Farm Road Roseland, NJ 07068 Edward J. Plaza, Esq. Weir & Plaza, LLC 321 Broad Street Red Bank, NJ 07701

This, the 5th day of March 2007. /s/ Robert S. Fink Robert S. Fink
