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BANKRUPTCY JUDGE December 13, 2011 10:04 AM United States Bankruptcy Court 824 North Market Street Wilmington, Delaware - - - - - - - - - - - - - - - - - - - - -x Debtors. NEW CENTURY TRS HOLDINGS, INC., ET AL., UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE Case No. 07-10416 (KJC) - - - - - - - - - - - - - - - - - - - - -x In the Matter of:
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Page 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Transcribed by: Dena Page Helen Galope's Motion to Investigate Appearance of Inappropriateness on Intertwined Representations by Counsel Hahn & Hessen, LLP and Blank Rome, LLC Helen Galope's Objection to the Exemption Granted to the Liquidating Trustee and/or New Century TRS Holdings, Inc., et al., from Responding to the Plaintiff's Propounded Discovery. Helen Galope's Motion to Compel Discovery New Century Liquidating Trust's Forty-Second Omnibus Objection to Claims Pursuant to 11 U.S.C. Section 502(b) and Fed. R. Bankr. P. 3001, 3007 and Local Rule 3007-1 [Non-Substantive] Debtors' Twenty-Second Omnibus Objection: Substantive
Objection Pursuant to 11 U.S.C. Sections 502, 503, 506 and 507, Fed. R. Bankr. P. 3007 and 9014, and Del. Bankr. L.R. 3007-1 to Certain (A) Books and Records Claims; (B) Insufficient Documentation Claims; and (C) Reduced and/or Reclassified Claims
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Page 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
VERITEXT REPORTING COMPANY www.veritext.com
A P P E A R A N C E S : HAHN & HESSEN LLP Attorneys for New Century Liquidating Trustee BY: MARK S. INDELICATO, ESQ. EDWARD L. SCHNITZER, ESQ. CHRISTOPHER J. HUNKER, ESQ. NICHOLAS C. RIGANO, ESQ., Telephonically
BLANK ROME LLP Attorneys for New Century Liquidating Trustee BY: ALAN M. ROOT, ESQ.
ALSO PRESENT: HELEN GALOPE, In Propria Persona LESLIE P. MARKS, In Propria Persona ANNETTE LAMORE, In Propria Persona
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Be seated, please. THE COURT: Good morning, everyone. Good morning, Your Honor. Mark
MR. INDELICATO:
Indelicato from Hahn & Hessen on behalf of the liquidating trustee. Your Honor, going right to the calendar, items 1 through 6 have been adjourned to our next omnibus hearing. Matters 7, I believe, through 11 are matters that are still under advisement. Matter number 12, Your Honor, is a resolved matter; that is, our twenty-second omnibus objection. One of the
claims that remained on that objection was the claims of New Jersey. As we had indicated to the Court previously, we have
entered a closing agreement with New Jersey that resolved the majority of their claims, and there were some stragglers that were hanging out. We did some more additional research; we They have -- we've sent them a copy They have indicated to us
that they have no objection, so I would ask the Court to enter the order, which I think might close the twenty-second omnibus objection, but it certainly resolves all the balance of the claims of New Jersey. THE COURT: Do you have a form of order?
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You may.
All right, does anyone else wish to be heard in connection with this objection? MS. LAMORE: THE COURT: MS. LAMORE: you connect me? THE COURT: MS. LAMORE: THE COURT: MS. LAMORE: THE COURT: MS. LAMORE: THE COURT: claim objection? MS. LAMORE: Correct, and Im here on the issue Who is this? This is Ms. Lamore. It's who? Ms. Lamore. And what is your interest in this? I'm actually a party to the action. To the debtors' twenty-second omnibus Hello? Yes. Okay, can you give me one second before
regarding discovery requests from Hahn & Hessen. MR. INDELICATO: pro se borrowers. Your Honor, Ms. Lamore is one of our
yet, today, but she is, as far as I know, not part of the twenty-second omnibus objection, particularly not the claims that relate to New Jersey. THE COURT: MS. LAMORE: Okay. Ms. Lamore, did you hear that? I apologize.
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was -- I did receive a scheduling order by overnight from Hahn & Hessen regarding the issue that we have regarding discovery requests. THE COURT: MS. LAMORE: I don't know. Is that --
resolved all our issues with respect to the scheduling order? UNIDENTIFIED SPEAKER: MR. INDELICATO: Yes.
of caution, provided notice of today's agenda to all of the pro se borrowers just because we want to make sure we're not accused of not providing notice to parties. So we have
provided notice of the hearing and the agenda to all of the borrowers. THE COURT: MS. LAMORE: per Mr. Hunker -Okay, well, I -But also, you rejected all these claims,
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wish to say two things in response to trustee's counsel's statement. Number one, there is nothing on today's agenda And secondly, while I
understand why the trustee's giving notice to the hearings to the individuals who represent themselves, those should not be considered invitations to engage the Court in a discussion at successive hearings. So you understand, Ms. Lamore, what we do here is when there's a dispute that's properly before the Court or a request, for example, that there be a status hearing, as the trustee and/or individuals sometimes request, I have them, they're placed on the agenda, and then I'm able to prepare for those matters. MS. LAMORE: THE COURT: All right. But there's nothing on today's agenda that So it's not my intention to
And I guess the third thing I would say is I wouldn't want -- I don't want individuals unnecessarily to feel as if
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want to know about them and the trustee wants to advise people of the hearings, that's fine with the Court. But it shouldn't
be considered an open invitation to have ongoing discussions with the Court. things. MS. LAMORE: Okay, and that's not what I'm intending It appeared that I was This is not the appropriate process for those
on the agenda for us to discuss the matter or for the issue to the be discussed, regarding the discovery requests. only reason why I'm here. THE COURT: MS. LAMORE: Oh, Mr. Indelicato -Because I was told they were going to be That's the
collectively objected to, per Mr. Hunker. THE COURT: MS. LAMORE: on December 1st. THE COURT: Mr. Indelicato, can you explain this? All I can explain, Your Honor, is Can you explain -And that was in a letter that I received
MR. INDELICATO:
that first, we have some issues with discovery with Ms. Lamore, much as we've had with some other borrowers. As the Court will
recall, we will be going forward today with the forty-second omnibus objection, as we discussed at our last hearing. THE COURT: Helen Galope. But solely with respect to the claim of
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informed the Court at our last conference that we were going to have a witness come in from California to address the notice issues. So I'm not sure if that's what Ms. Lamore is referring
to or if she's referring -MS. LAMORE: No, that's not what Im referring to. We are not addressing -- and we'll
MR. INDELICATO:
represent to the Court today, we're not discussing any specific discovery issues as it relates to Ms. Lamore. To the extent
that we can't resolve them with Ms. Lamore, either we will have some motion practice before the Court at another hearing or we will schedule it for a status conference at our February hearing. THE COURT: Okay. Ms. Lamore, you're welcome to
remain on the phone if you like. MS. LAMORE: unnecessarily. No, Im not going to stay on the line
objecting to their objection for my request for discovery that I submitted because there -THE COURT: MS. LAMORE: THE COURT: All right, well --- there are issues. Okay. There are issues.
the Court to order, you must file a motion asking the Court -MS. LAMORE: Okay.
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MR. INDELICATO:
is the forty-second omnibus, and matter number 14 which is Ms. Galope's motion to compel discovery. If it's all right with And I can
give the Court, at least from the trustee's perspective, a quick update, and then I can turn the floor over to Ms. Galope if there are any unresolved issues. As the Court will recall, we had a conference or a discovery conference with the Court last week, and we addressed many of the issues raised in the motion to compel discovery with Ms. Galope. We indicated to her previously, and I think
the Court made clear, that discovery on matters other than the threshold issues, as defined in the scheduling order, would not
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the trustee's perspective as indicated in our response, that resolves, at least for now, her motion to compel. The second portion of her motion to compel was titled "the motion to investigate appearance of inappropriateness on intertwined representations by counsel Hahn & Hessen and Blank Rome". I think we set forth in detail in our response, Your
Honor, the nature by which Hahn & Hessen came to represent the liquidating trustee. It was something that was discussed with
all of the constituencies at the time we were involved in plan and the plan negotiations and the plan process. It was
disclosed in the plan and in the disclosure statement that the trustee had the right to retain counsel either from the debtor or from the creditors' committee and there would not be an issue of a conflict of interest. his own choice: The trustee was free to make
he could choose from that group; he could The trustee did his diligence with And as
this Court knows, over the last three years, various parties have appeared on behalf of the trustee, whether it was Hahn & Hessen, Blank Rome, or O'Melveny & Myers, as the need arose in matters in which they had particular interest in. I'm not sure how else to respond to her issues. I
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over to Ms. Galope -- it was her motion -- and then respond, if the Court wishes, to any additional issues that she still feels are unresolved. THE COURT: MS. GALOPE: THE COURT: MS. GALOPE: Okay, Ms. Galope. Yes, good morning, Your Honor. Good morning. Thank you for giving me this opportunity On the matter of the intertwined
representation by counsel, I guess I have put forth all of the arguments I have made, and I'm just waiting for the Court to decide on that matter. THE COURT: Court to do. MS. GALOPE: Well, basically, Your Honor, this is a Well, tell me what it is you want the
bankruptcy, and what I'm seeing is counsel -- there's so many counsels here, I don't know how to count them. may not be here. Some of them
what Im seeing here is he is represented by the counsel from a former creditor, the major creditor of this bankruptcy who actually did get the lion's share of the allowances here, is also representing the trustee now. Now, it brings the question, what is the nature of the relationship here of the counsel, now, with the trustee and
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made mention of several situations where previous cases have this scenario before where counsel represented many parties like the debtor -- the same way that is happening here. Now,
while it had happened so many times before, that does not make it right. There's rules of the court that says you can only do
so by -- counsel from the debtor should represent the counsel from the trustee. THE COURT: me to order today. MS. GALOPE: Well, Your Honor, as a pro se litigant Tell me specifically what you would like
here today, I am just as handicapped as many of the pro se litigants here, and to be fighting against -- litigating against counsels in their expertise and there are so many of them, the scales of justice is just so tipped to one side. And
I just would like to, with your blessing, Your Honor, let it be a fair playing field. that. THE COURT: Okay, but you need to tell me what it is And it's up to the Court to decide on
you would like me to do to achieve the goal that you just stated. MS. GALOPE: Like, you know, let me tell you what
happened when I was looking for all these binders, Your Honor. It was so hard for someone like me who is also working and taking care of my parents and to be up against these
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be -- accord me some leeway here, like my binders, for instance, they don't have the tabs like the Court so requests. And some leeway here, Your Honor. THE COURT: it this way. All right. Ms. Galope, let's just leave
asked for or that I can grant in the way of the motion that's listed at number 14 on the agenda today. But when you say to
me "as someone who represents themselves, will you grant me some leeway", that's typically what we do here. And if you
think in any respect I've not done that, you're free to tell me. But I've conducted as a judge litigation in which parties
have represented themselves the entire time I've been on the bench, and I think I know how to do it. But if you think I
fall short of what I owe to you, as a litigant, let me know. MS. GALOPE: I don't know, Your Honor. So far, you've
been so far, and Im very glad that you are. THE COURT: MS. GALOPE: Okay. It's just that there's some court-coming Let me say
that now, like the exhibits that I have presented, Your Honor. Some of them just, when they propounded on the discovery upon me, I was only -- I cited my objections saying that the question is limiting and that I may be able to produce some
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it was just -- I just don't have that much time to look back at what I have. So I'm presenting them now on the binders, and And
counsel is now attacking it saying that they would probably say that this -- they would counter that it's inadmissible because they were not presented before. THE COURT: Well, look. There are rules, which the
Court must follow and the parties must follow, but let's deal with that on an individual document-by-document basis -MS. GALOPE: THE COURT: MS. GALOPE: Okay, thank you, Your Honor. -- as the need arises. Okay. Okay? I am amenable
Mr. Indelicato. MR. INDELICATO: Your Honor, just briefly now, I think
we'll turn to matter 13, which is the debtor's forty-second omnibus objection to claims. And just before I turn it over to
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trustee, some of the Pioneer standards, and then we will address -- Ms. Galope will have an opportunity to crossexamine, and then we will deal with those issues on her side, and we're limiting to the discoverable issues today. So with
that background, Your Honor, as to what we intend to do and establish today, I will -- unless Ms. Galope has any comments she wants to make to the Court, as it is the trustee's motion, I will turn it over to Mr. Schnitzer to put on the trustee's evidence. THE COURT: All right, thank you.
Mr. Schnitzer, how many witnesses do you have and how much time do you anticipate that you will consume on direct examination? MR. SCHNITZER: Your Honor, I have two witnesses. I
don't anticipate the direct examination of the two of them taking more than forty minutes. THE COURT: intend to testify. your behalf? MS. GALOPE: THE COURT: No, Your Honor, it's just me. All right, thank you. Okay. Ms. Galope, I expect that you would
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I may give one to your clerk, one to you, one for the witness stand? THE COURT: Thank you. Your Honor, the trust calls Suzzanne
MR. SCHNITZER:
Uhland as its first witness. THE COURT: THE CLERK: All right. Please remain standing. Raise your right
hand and place your left hand on the Bible. (Witness sworn) THE WITNESS: THE CLERK: in front of you. I do. Please be seated and adjust the microphone
record and spell it. THE WITNESS: Uhland is U-H-L-A-N-D. THE CLERK: DIRECT EXAMINATION BY MR. SCHNITZER: Q. A. Q. A. Good morning, Ms. Uhland. Good morning. How are you today? Pretty good. Thank you. Suzzanne Uhland, that's S-U-Z-Z-A-N-N-E,
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the restructuring practice for O'Melveny. Q. A. Q. A. I guess I should have asked, are you an attorney? Yes, I am. How long have you been with O'Melveny & Myers? I've been with O'Melveny & Myers for twenty-three years,
except for a one-year clerkship with the federal district court. Q. A. Q. A. Q. And how long have you been an attorney? Twenty-three years. Did you work on the New Century bankruptcy matter? Yes, I did. And what was your role in the New Century bankruptcy
matter? A. Q. I co-led the representation with my partner, Ben Logan. And when you say representation, was your firm
representing the debtor, New Century? A. Yes, I'm sorry, we were the debtors' counsel for New
Century. Q. And when did your work on the New Century bankruptcy
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approximately how many other bankruptcy matters have you worked on? A. Q. It's hard to gauge, but at least -- more than thirty. And can you name some of the large bankruptcy cases that
you worked on before the New Century bankruptcy case? A. The large debtor cases I worked on included Advanced
Marketing Services, Phar-Mor Drugstores, Wherehouse Entertainment, Excite@Home. Q. Thank you. Prior to the New Century -Sorry, strike that.
MR. SCHNITZER:
had you worked on in which notice of a bar date was an issue in the matter? A. Well, in the debtor representations, I was usually
responsible in some way or another for the bar date, so about seven to ten debtor matters I was involved in. And I've
represented creditors in bar date matters in many cases. Q. Thank you. Turning back to New Century, as part of your
representation of New Century, were you involved with the preparation and filing of the debtors' motion to establish the bar date? A. Yes, I supervised the preparation and filing of that
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Century case. Q. If you can look through it briefly, is this a true and
accurate copy of that motion? MR. SCHNITZER: And Your Honor, I will represent for
the Court, we pulled this from PACER. A. Q. Yes, this is a correct copy. If you turn to page 12 of the motion, can you tell the
Court when this motion was filed? A. Q. A. June 8th, 2007. Could you explain why this motion was filed? Well, in general, the debtors desired at this point in the
case to obtain an understanding of their creditors so that they were able to formulate a plan and move the case forward. as part of that process, they undertook to provide actual notice to all the known creditors and publication notice to the unknown creditors to enable them to obtain as complete a picture as possible of the total creditor universe. Q. Thank you. If you could turn to page 10 of the motion, Let me know when you get there. And
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debtors seek authority to publish the bar date notice in certain publications? A. Q. Yes, we did. And were you involved with the determination of where the
bar date would be published? A. Q. Yes, I was. And what considerations were taken into account when
determining where the bar date notice would be published? A. Well, in general, we considered the relevant case law with
respect to notice and the desire to provide notice intended to reach as many creditors as possible. And I was familiar with
that case law both from preparing this bar date motion and from preparing other bar date motions as well as engaging in litigation related to bar date motions in other matters. We also consulted with RLF based on their experience with preparing those and providing publication notice in other large debtor cases. But in general, we were trying to comply with the legal standards and provide notice as widely as possible to reach as many creditors as possible. Q. Do you believe this motion and the accompanying order and
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probably knows this -- what does RLF stand for, when you refer to RLF? A. Oh, I'm sorry. Richards, Layton & Finger; they're our
local counsel, and they were -- we co-wrote this motion with Richards, Layton. Q. A. Q. A. Thank you. Okay. What is Exhibit 2? This appears to be the entered order -- yeah, this is the If you could flip to Exhibit 2 in the binder.
entered order establishing the bar date. Q. As far as you know, did this Court enter the order that
the debtors had sought in the motion which is Exhibit 1? A. As far as I know. We did -- there were some issues with
respect to the deferred compensation claimants, so there might have been some modifications to the order, but with respect to publication, it was as requested. Q. Thank you. If you could turn to the last page of the
order, page 8, and specifically, I want to look a paragraph 18. If you could read paragraph out loud, please. A. "The debtors shall cause the publication notice to be
published once in the national edition of The Wall Street Journal and any such other local publications as the debtors deem appropriate no less than thirty days period to the general bar date."
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had sought in the motion we looked at? A. Q. Yes. I want to focus first on The Wall Street Journal. How was
The Wall Street Journal chosen as a paper for which the publication notice would be published? A. A variety of reasons led us to The Wall Street Journal. Also, New I
Century was in the business of engaging in transactions with other financial institutions, and we believed that The Wall Street Journal was likely to reach other parties to transactions with New Century. Moreover, we use The Wall
Street Journal in other large debtor cases to provide notice, after taking into account similar considerations with respect to the size of the case and them magnitude of notice required. And finally, it had become somewhat customary to provide notice for large debtor cases in The Wall Street Journal, so it was becoming sort of a customary place to provide such legal notices. Q. Thank you. If we can flip back to the motion for just a
brief minute, go back to page 10, paragraph 19. MS. GALOPE: Excuse me, which one is paragraph 19? It's on page 10 of tab 1.
MR. SCHNITZER:
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the order, as well? A. Q. That's correct. When this motion was filed, did you, as debtors' counsel,
believe that any other local publication was actually necessary? A. We did not. We believed that The Wall Street Journal was
would merely be supplementary? A. Q. That's correct. After the order, which is tab 2, was entered, at some
point in time, did the debtors deem it appropriate to publish the bar date notice in an additional publication, other than The Wall Street Journal? A. Yes, after the order was entered, we determined to provide
supplementary notice by filing -- by publishing in the Orange County Register. Q. A. And do you know approximately when that decision was made? It was -- it was shortly after the order was entered, as
we were arranging for the publication notice to be made in accordance with the order.
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is located in Orange County. Q. And where were the majority of New Century's employees
believe it was, at the time of the bankruptcy filing, the largest private employer in Orange County. Q. From your experience in representing New Century in the
bankruptcy, do you know if the Orange County Register was covering the New Century bankruptcy? A. Q. Yes, and the Register was covering the case regularly. Why was the Orange County Register chosen as this
supplementary publication notice? A. Well, at the -- after the order was entered, we considered
whether we might file additional notice, and at the time, one of the focuses that we had was on the employees. At that point
in the case, it appeared that the vast majority of our creditors, or certainly a large number of our creditors were employed creditors, and there were many former employees located in Orange County who could have been potential unknown creditors. And so based on that, we determined that And
since the Orange County Register was following the case, we concluded that providing supplementary notice in the Orange
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that the debtors had limited resources? A. We were -- we certainly had limited resources. I mean, it
was a tight liquidating case. Q. And at the time, were the debtors also -- were there any
concerns with respect to increased administrative costs? A. Yes. There had been quite a bit of attention paid to the
incredible administrative expenses with respect to noticing the case and with respect to the preparation of the schedules. we were concerned which -- were trying to address the administrative cost of the case. Q. Thank you. Prior to filing the bar date notice, did the So
debtors consider providing individualized notice to any borrowers of New Century? A. The debtors considered the borrowers of New Century to be So we didn't
consider them as, like I said, as creditors, unless and until those creditors filed a complaint or commenced litigation, at
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categorically -- our view is that the creditors -- I'm sorry, the borrowers were akin to customers, rather than creditors. Q. 1. Thank you. If you can turn to page 2 of the motion in tab
lines on page 2. A. Q. Um-hum. Is it correct that during the fiscal year ending December
31 of '06 the debtors originated or purchased approximately sixty billion dollars in mortgage loans? A. time. Q. Did you have any idea at the time of doing the bar date That's the information we obtained from New Century at the
motion how many loans -- in number, not dollar amount -- New Century had originated to its borrowers since its existence? A. I knew it was -- I hadn't done a calculation in the number
of borrowers, but at the time I knew it was an overwhelming number. Q. Having since done the math, it's over a million. I want to direct your attention to tab 4 in
Thank you.
the binder. A.
was filed. Q. Do you know if at some point in the New Century bankruptcy
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with a normal process. Q. Do you have any reason to doubt that tab 4, which again, I
will represent was pulled from PACER is, in fact, an accurate copy of that affidavit? A. Q. I have no reason to doubt that. If you can flip to tab 5. And do you know what this
document is? A. This is the affidavit of publication for The Wall Street
after publication of bar date, notice was made in The Wall Street Journal that an affidavit of publication was in fact filed with the Court? A. Q. I was generally aware that such an affidavit was filed. Okay, do you have any reason to doubt that tab 5, which
again, I represent is pulled from PACER, is, in fact, an accurate copy of that affidavit? A. Q. I have no reason to doubt that. Okay, and I suppose I should have asked you first, was it
your understanding that, in fact, the bar date was published in both The Wall Street Journal and in the Orange County Register?
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date notice were in accordance with the order which was tab 2? A. Q. Yes, that's my understanding. If I could just briefly talk to you about New Century's Was the New Century bankruptcy covered in the
Yes, it was, extensively. Did you see it covered in, for instance, The New York
Times? A. Q. A. Q. A. Q. A. Q. Yes. The L.A. Times? Yes. The Wall Street Journal? Yes. The Orange County Register? Yes, very extensively in the Register. Do you know if it was also discussed on any news programs
on TV? A. Q. A. Q. Yes, both. And do you know if it was discussed on any radio programs? Yes. Thank you. MR. SCHNITZER: questions for her. Your Honor, I have no further
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about how you addressed the borrowers, considered them as creditors on this bankruptcy, when you were -- when all these considerations were being made of how you would put out these ads. Could you give us some -- an idea of what the thoughts
were at that time, how -- what considerations were made about borrowers? A. So as I stated before, the borrowers -- since the
borrowers owed money to New Century, the borrowers weren't factored into the calculus until the borrowers raised a complaint of some kind. And once borrowers raised a complaint
or filed litigation, then New Century had an extensive legal department, and they would track the borrower complaints and borrower litigation, and we would -- what we did was we provided a list of those, all of the litigation, and we included them in the schedules that were filed, and so those borrowers that had raised complaints or filed litigation at that time were provided actual notice.
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time, when they were -- as you recall? A. Q. A. Q. A. Q. I don't recall. You don't recall. No. How much do you recall? 5,000? Would it be 10,000?
No, we didn't have that many creditors. Okay, but you understand that as borrowers in this
bankruptcy, that the -- your position changed; we now became creditors and New Century becomes the debtor. that fact? A. Q. I guess I don't understand. I don't understand either, but that is the fact of the Are you aware of
matter here. A. I guess I don't agree with it. I don't think that the
borrowers became creditors. Q. here. Well, that's why we are, unsecured creditors, they call us And I think I -- let me take back what I said, that I So at
don't understand, but I have an idea of how it happened. that time, nobody knew within your group that made this decision that that is a reversal, there's going to be a reversal when New Century files for bankruptcy? A.
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borrowers were account debtors; the borrowers owed money under their loans. Q. They weren't creditors.
Now, is that the reason why you chose Wall Street Journal
as your newspaper to put the posting on? A. Q. No, that's not the reason. No? If you wanted to -- was there really an intention --
I'm trying to get to the effort at reaching borrowers here. Why Wall Street Journal? A. Wall Street Journal for that matter?
nationwide paper, and so could be -- publishing in The Wall Street Journal provides nationwide notice, it's got broad circulation. At the time their actual creditors, which are the
parties that we engaged -- that New Century engaged in transactions with, were expected to be financial institutions and likely to read The Wall Street Journal. Also, publishing
in The Wall Street Journal in large debtor cases is a customary place to publish bar date notices. And based on prior
experience of large debtor cases, it's an appropriate place to file bar date notices. Q. Now, I think I should give you my binder of my -- hold on,
please. (Pause) THE COURT: Do you have two binders? All right, thank
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actually aiming for the financial institutions when you did the posting for The Wall Street Journal. A. Q. That was one of our considerations, yes. Now, I think -- would it be fair to say that not many
borrowers, especially the ones that were targeted by New Century, would usually read The Wall Street Journal? A. Q. 23. I don't know if that's true or not. Okay. So when you mention -- let me refer you to Exhibit
where this -- for a Sunday circulation, number one on the list is New York Times, second one is Los Angeles Times, and you don't see the Orange County Register in here. This is the top
twenty-five U.S. papers in 2007 for a Sunday circulation. MR. SCHNITZER: the question. Your Honor, we're going to object to
understand the Court's general premise to give leeway to a pro se litigant. Particularly for this question, we have concerns.
This goes to perhaps what Ms. Galope was referring to before. These are documents that were produced late, not actually included in the -- I don't think actually included in the -- it wasn't included in the original exhibit list. And more importantly, two concerns with this particular document. One, other than its top heading, we don't
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most importantly, and I supposed it depends on where Ms. Galope is going with her next question, as this Court is probably aware, certain papers do not have a Sunday distribution, so if we're just talking about the first page here, which covers Sunday, as opposed to the next page which covers Monday through Friday, I think it could be misleading, Your Honor. I apologize for the lengthy -MS. GALOPE: THE COURT: Im getting there. Ms. Galope, where did you get this
information and when did you get this information? MS. GALOPE: I got this information on the day of -- I
think a few days ago, Your Honor, when I sent them the PDF files. THE COURT: MS. GALOPE: Okay, and where did you get it? It's from the Internet. You look up
Audit Bureau of Circulations put together this data, and I found that they have the 2008 -- 2007 data. it's not just this one, Your Honor. that can verify this information. THE COURT: Circulations? Okay. And they had --
MS. GALOPE:
particular task of identifying the readership of the top one hundred circulations of the U.S. And you can look them up on
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to contradict what was said about Wall Street Journal being the top -- the most read newspaper, for one, and the Orange County Register, second, as the better choice for California when you have Los Angeles Times way up there, and second in California was the San Francisco Chronicle. Now, the other item that I was trying to get at is -MR. SCHNITZER: Your Honor, again, we're going to
This time I'm going to object because I don't think I believe Ms. Galope will have ample I think if she has a
question for Ms. Uhland then she should let her have an opportunity to explain it if she chooses to. THE COURT: Ms. Galope? Okay. Do you understand the objection,
MS. GALOPE:
Journal, is it fair to say that no consideration -- I mean, from what you said before in responding to my questions, is it fair to say that very little consideration was made for the
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didn't consider the borrowers to be creditors, so we weren't -we were trying to provide a nationwide process, nationwide notice. Q. That's why we selected The Wall Street Journal.
Okay. MS. GALOPE: THE COURT: I have no further questions, Your Honor. All right, thank you.
Any redirect? MR. SCHNITZER: REDIRECT EXAMINATION BY MR. SCHNITZER: Q. Ms. Uhland, at the time that the bar date notice was being I'll try to be very brief, Your Honor.
filed and the bar date notice was being considered, did New Century have any non-financial institution creditors? A. Q. It had many. Okay. So is it fair to say when the debtors considered
publication of the bar date notice, you were considering not just financial institution creditors but any creditors that New Century was aware of that it had? A. Q. That's correct. And did you believe that publication in The Wall Street
Journal would accomplish that? A. Q. That's right. Is it fair to say from your understanding that it's not
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Street Journal to obtain a nationwide publication notice for all sorts of creditors. Q. And can you turn to the second page of Exhibit 23 that was
in Ms. Galope's binder? A. Q. A. Q. Yes. Do you see The Wall Street Journal referenced there? Yes. And what do you see its circulation to be, according to
this exhibit, for 2007? A. 2,011,882. MR. SCHNITZER: Your Honor. I have no further questions. Thank you, Ms. Uhland. THE COURT: All right. Thank you, Your Honor. You If I could just take one quick second,
have one more chance to ask follow-up questions based on the ones Mr. Schnitzer just asked now. RECROSS-EXAMINATION BY MS. GALOPE: Q. As a lawyer representing the debtor here, you must be
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that New Century had many subprime loans. Q. A. Q. That's right. They had a variety of different types of borrowers. Um-hum. So going in that direction, is it fair to say --
would you assess that a creditor with spotted credits would be engaged -- I mean, let me rephrase the question. Borrowers with spotted credits would probably put their money into the homes and not to get involved with stocks at all, because this is the only investment that they have. Is it
fair to say -- is it fair for you to say that many borrowers would not be able to -- would not be interested at all in reading Wall Street Journal? A. I don't know that I agree with that. I mean, the limited
borrowers that we had contact with at the beginning of the case seemed to be -- there were many borrowers engaged in speculation and a variety of different -- in business endeavors. about -Q. Now, these borrowers that you're referring to, these are I mean, I wouldn't arrive to that conclusion
the ones that were able to -- is this after you posted the notices, when they came to you?
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individuals, based on my experience with them. Q. Okay, I guess I have to get back again the question How many of these borrowers came to you before you
before.
posted the notices? A. That's -- I don't have that number. How many did we
schedule in the -Q. A. Q. Would it be a hundred, over a hundred? I just don't have that number. But would it be over a hundred? MR. SCHNITZER: THE COURT: Objection, Your Honor.
What's the objection? Ms. Uhland had answered the question, She's also
said you can look to the schedules if that's what she wants. THE COURT: MS. GALOPE: how many -THE COURT: I've sustained the objection. Ask your Sustained. The point that I'm making, Your Honor, is
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Our intention was to file broad notice to reach nationwide -because New Century had business nationwide, so that it was important to provide nationwide notice when we provided publication notice. And so that was the -- the primary goal That was the -- of all the
considerations, I listed many, number one was we had to get a paper of national circulation because we had creditors everywhere, we had borrowers everywhere. business everywhere. So we had -- we did
were -- that was the goal, was to provide a blanket notice as broadly as possible across the country. And The Wall Street
Journal was a customary place to provide such legal notices. So our analysis was it was better to provide notice in The Wall Street Journal where maybe parties might expect to be finding a bar date notice or might look for a bar date notice because it has become more standard to advertise in The Wall Street Journal. So we were trying to provide the best nationwide Whoever
our creditors were, of any type of business engagement or however their claims arose, that was the intent, providing the
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that you sent out mailers, too? A. Q. We sent actual notice to scheduled creditors. To creditors. Define your creditors; what do you mean by
creditors here? A. So at the time, the known creditors were determined at the
beginning of the bankruptcy case by reviewing the company's books and records and the company determining those individual creditors to which it knows it owes money or it has actual knowledge that it may have a contingent claim and there may be a claim or dispute. Q. A. Q. As far as identified creditors that are borrowers -Um-hum. -- how did -- because you mentioned earlier that creditors
are -- I mean, borrowers owe money, so they are not creditors, so how did you identify creditors who are borrowers and send them notices? A. We provided notice to the borrowers that had either filed
litigation or had otherwise contacted New Century to make a complaint. Q. So there's -- okay. So that's -- and you don't have an
idea how much that number is? A. Q. No, I just don't, as I sit here today, have that number. Okay. Now, I have here on one of the exhibits I have
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Monsters: How a Gang of Predatory Lenders and Wall Street Bankers Fleeced America--and Spawned a Global Crisis." one page of this, it says here -MR. SCHNITZER: Your Honor, I'm going to object. This Now, on
discovery, not produced in the original witness (sic) list. More importantly, I think it's entirely irrelevant both to -definitely to today's hearing, particularly since we're talking about a publication book. THE COURT: All right, well, Ms. Galope, let me ask
you what line of questioning you wish to pursue here. MS. GALOPE: Well, on this book, Your Honor, there's a
reference to a letter to Elizabeth Warren (ph.) stating -okay, "Based on" -- I'm reading -- this was an accountant for her. Okay, "Based on the data compiled by the U.S. Office of
the Controller" -THE COURT: question -MS. GALOPE: THE COURT: Okay. -- before you can go forward. How do you Ms. Galope, you need to answer my
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Your Honor, a to how many foreclosed borrowers New Century had at that time. So it would be relevant to say that these are
potential victims of New Century that should have been sent notices. THE COURT: Well, if you wish to ask questions of Ms.
Uhland based upon what you've read in the book, you may do so, but don't read me the book. MS. GALOPE: THE COURT: disagrees -MS. GALOPE: THE COURT: Okay, yes, Your Honor. -- with what's said or if she knows. Okay. No, I won't.
"Now, in those zones, the following ten lenders had the highest foreclosure for those loans made between 2005 and 2007." note the year 2005 and 2007. Now,
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had 14,000 subprime of a loan foreclosures, and New Century comes second with 14,120. Now, that is a number that I think
is a list of potential New Century borrowers that should have gotten notices. A. Q. A. No, I don't. Why? Because somebody borrowed money and had their home Do you agree?
foreclosed by the holder of the loan originated by New Century does not necessarily make that individual, that borrower a creditor of New Century. Q. Okay, but granting that that is true, this is not looking
at the picture of New Century becoming a -- being a predatory lender, and that is a factor to be considered why most of them have foreclosed so early on the terms of the loans. THE COURT: MS. GALOPE: THE COURT: MS. GALOPE: THE COURT: You need to get to a question. I guess that's it, Your Honor. If you have -I have no further questions. Okay. You may step down.
is Al Jacobs, the New Century liquidating trustee. THE COURT: THE CLERK: Okay. Please remain standing. Raise your right
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Michael, Jacobs, J-A-C-O-B-S. DIRECT EXAMINATION BY MR. SCHNITZER: Q. A. Q. Good morning, Mr. Jacobs. Good morning. Are you currently the liquidating trustee of the New
Century Liquidating Trust? A. Q. A. Q. I am. When did you become that trustee? Effective August 1st, 2008. As part of your job as the trustee, do your duties include
oversight of the claims reconciliation process? A. Q. Yes, they do. And those are claims that are asserted against the debtors
that are subjected to administration through the trust? A. Q. That is correct. As part of your job as trustee, do you have the authority
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authority and power to make claim distributions? A. Q. A. Q. A. Yes, I do. As of today, has the trust made any interim distributions? Yes, it has made two. And when were those interim distributions made? In approximately -- toward the end of December 2010, made
a distribution of approximately seventy-five million dollars to general unsecured creditors, and then again, at the end of May, beginning of June 2011, made another distribution of thirteen to fifteen million dollars to general unsecured creditors. Q. As of today, could you describe for the Court, what is the
This is a liquidating case, correct? That is correct. Could you describe for the Court, as of today, what is the
status of the liquidation of the debtors' estates? A. Well, starting on the assets side, primarily all of the
liquidated assets have been distributed through the distributions that I just described. There are two significant
remaining assets, one of which, in fact, is subject to a handshake and subject to finalization. Another one is an asset
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litigations have been resolved, and I believe that they will all be resolved in the very short term. And then looking at the claims side, of the in excess of 4,000 claims that were filed in this case, all but approximately 30 unresolved. Q. If we could put aside claims from borrowers such as Ms.
Galope, as well as others, how much time do you believe is necessary to conclude this case? A. Subject to the finalization of that one significant asset
which I just described, I believe that a third interim distribution can be made in this case hopefully in the second quarter of 2012 and the case can be closed in 2012. Q. A. Is it your goal to close the case in 2012, if possible? That is what I have advised my plan advisory committee,
and that is my intent. Q. Thank you. As part of your job as the trustee, have you
caused the debtors' books and records to be reviewed with respect to Ms. Galope? A. Q. A. Yes, I have. And why did you do that? I did that so that we can determine whether, in fact, the
books and records reflect her as a known creditor. Q. And was this review caused to be done prior to the trustee
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determined from the books and records is that the debtor originated a loan to Ms. Galope in I believe the amount of about 522,000. Q. And from a review of the books and records, can you
determine if the debtors sold that loan? A. Q. Yes, they did. And is it fair to say that New Century sold many of its
loans? A. Q. Yes. Is it fair to say the sale of that loan, there was nothing
unusual about that? A. Q. No, that was part of their business strategy. And could you determine from the review of the books and
records when that loan was sold? A. Q. Prior to the bankruptcy. Is it correct that -- you've seen a copy of Ms. Galope's
claim, correct? A. Q. A. Q. Yes, I have. And it was filed this summer, is that correct? I believe so, yes. Prior to receiving a copy of her claim, did you have any
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reviewed reflect any complaints from Ms. Galope concerning her loan? A. Q. No. Did the review of the books and records reflect any
records that would have caused the debtors to believe that Ms. Galope had a claim against the debtors? A. Q. No. And from a review of the books and records, could you
determine if Ms. Galope's property had been foreclosed upon prior to the petition date? A. Q. No. And do you know if her property was foreclosed upon prior
to the bar date notice being issued? A. Q. That I don't know. Is it correct that in the claim objection that was filed
with respect to Ms. Galope's claim, the trust asserts that allowing her claim to be considered timely filed would prejudice the trust. A. Q. A. That is correct. And is that your belief? Yes, it is. Is that correct?
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Ms. Galope's claim as an individual claim, once we get past the bar date issue, determining whether that claim should be allowed in any amount or otherwise liquidated and allowed as a claim will cost the estate significant administrative funds to reach that determination because it will be a disputed claim, notwithstanding whether it's to be dealt with pursuant to the actual -- the substantive merits of the claim, as opposed to the late claim. Secondly, as we have argued in this court before, there are others waiting in line, we believe, to file similar claims late in connection with their mortgages, and we believe that the costs of administering each one of those claims could be significant and, in the aggregate, could be very significant. And finally, I've already made distributions to creditors, as I've indicated, and it would cause me to have to go back to the distribution model, recalculate distributions. There would
be a potential dilution, depending on the amount of the claim that might be allowed to creditors, and so the creditors, themselves, who have already received distributions would be effected. Q. If we could talk about that last point you just made. How
do you believe -- how would allowing this claim affect claimants that had complied with the bar date?
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will dilute the amount that will be available to other creditors. Secondly, as I've indicated, the administrative
costs are costs that if not spent on administrative costs, would be available for distribution to creditors. So whether
it's the administrative costs of disputing Ms. Galope's claim individually or the cost of objecting to what I believe could be a significant number of unknown claims at the moment dealing with them in the aggregate, those costs have to be borne somewhere, and they're borne out of amounts that are held by the trust. Q. And earlier in one of your answers, you did mention other Is it fair to say that other New Century borrowers
borrowers.
have contacted the trust asserting claims? A. Borrowers or alleged borrowers have contacted -- I
received a call yesterday from Hawaii to ask me some questions, and clearly it was -- while it wasn't specified that it was a borrower making a claim, clearly the inference was that there's somebody lurking out there to do something. Q. Is it fair to say that over the last year or two, these
contacts have continued? A. Q. Yes. And do you believe that if these additional claims were to
be continued to be permitted, it would affect your ability to close these cases in a timely manner?
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unknown group in an unknown amount out there, it's difficult to close a case, maintain the appropriate reserves, and actually have the Court direct that the case is closed and that I can go home as the trustee. Q. Thank you. MR. SCHNITZER: I have no further questions for Mr.
trust agreement and the plan of liquidation and make distributions to creditors. Q. Okay, isn't one of your duty also to make sure that you
avoid some of those preferential transfers? A. Q. I don't understand the question. That as a trustee, it is your duty to recover some assets
that have been transferred illegitimately. A. As a trustee, I have brought many, many preference
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In fact, litigation recoveries in this case exceed 100 million dollars. Q. Okay, what would be the criteria to recover an asset?
Could you please expound on that matter? A. Q. I really don't understand your question. Like, for instance, for a borrower's case, my case -- my
loan had been transferred, according to a letter there, transferred before the bankruptcy and service released on the day itself, on the day of the bankruptcy. candidate for recovering? illegal transfer? A. Q. A. I did not believe so in your case? Why so? I -MR. SCHNITZER: questions. Your Honor, the trust objects to these Isn't that a
The primary basis is they're outside of the scope The purpose of this hearing was to discuss
of this hearing.
the publication notice and perhaps any -- and the Pioneer standards. This -So that would be relevance, Mr. Schnitzer? Yes, correct, Your Honor. Ms. Galope, do you have a response
THE COURT:
Okay.
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that the answer to the question will not be relevant to what the Court has before it today. MS. GALOPE: Okay. So we're here today to decide on
the late filed claim, Your Honor, right? THE COURT: MS. GALOPE: THE COURT: That's correct. Okay. I'm sorry. I went beyond that. Just ask your next
No need to apologize.
that you have remaining for the funds of the trust, how much is that compared to the borrowers' claim, now, to the remaining borrowers' claims? A. I've not made that comparison, number one, and number two,
many of the borrowers' claims are unliquidated, so it's entirely uncertain at this time. Q. Would you give us an idea how much -- how much is
administrative costs every month? A. Well, the administrative costs include a number of things
that are unrelated to claims administration, for example tax matters, et cetera. Those are going to be ongoing, regardless
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mentioned this earlier when you asked me about the intertwined representations. And I would like to make a question here
regarding that matter. THE COURT: Well, I've already determined that no
relief should be granted today with respect to that part of the motion, not having heard any ground upon which I can grant any relief, and honestly, Ms. Galope, you were unable to articulate what it was that you wanted the Court to do, so Im not going to allow that. hand here. MS. GALOPE: If I may explain, Your Honor, that the I'd like you to stick with the matter that's at
cost -- this relates to the remaining funds that would be -that would have been seen, if representations -THE COURT: Well, if you have a question regarding
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Hahn & Hessen is representing you in this proceeding. A. Q. A. Is that the end of your question? Yes. I have many counsel, depending on the nature of the For example, Hahn & Hessen represents me generally in
matter.
claims administration, trust administration, and has represented me in connection with many of the litigation matters. O'Melveny & Myers has represented me in connection Blank
Rome is my general counsel and has also handled on a conflict basis some of the preference matters. I had Thomas, Alexander
& Forrester, a California firm, assist me in connection with a significant litigation matter which brought in close to fifty million dollars. in this case. Q. And I understand that the cost of working with those So there are many firms that I have retained
counsels had amounted to about fifty million now. A. Q. I don't recall. That is what I read from the last report of the
distribution. A. Q. I don't have that report in front of me; I don't recall. Okay. There's another thing. On the matter of the
payments made to Deutsche Bank on this bankruptcy, is it true that they have -- they do get the lion's share of this
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that Deutsche Bank is the largest unsecured creditor in the case. MS. GALOPE: report, Your Honor? THE COURT: MS. GALOPE: THE COURT: (Pause) MS. GALOPE: THE COURT: MS. GALOPE: THE COURT: Can I use this? Um-hum. Okay, hold on. All right, hold on. I think -If I may pull up that report, the latest May I pull up the report? Online? Distribution report. Well, sure. Go ahead.
minute recess while you do that. Five minutes. THE WITNESS: THE COURT: THE WITNESS: THE COURT:
May I step down, Your Honor? You may. Thank you. Mr. Jacobs, do not discuss your testimony
with anyone during the break. THE WITNESS: THE COURT: Understood. Thank you.
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record what you pulled up and put on the monitors and where it's from. MS. GALOPE: exhibit -- I'm sorry. Your Honor, this was part of my This is part of my attachment to I
believe my motion to compel. THE COURT: MS. GALOPE: that it's untabbed. way. THE COURT: MS. GALOPE: Okay. So on this table -- this is a Okay. But it's not in the exhibit binder? It's just
distribution made to -THE WITNESS: Ms. Galope, if I may ask, don't move it
because my bifocals do not accept it that way. MS. GALOPE: THE WITNESS: I'm sorry. Let me focus it a little bit. But
when you move it, I cannot see. MS. GALOPE: THE WITNESS: MS. GALOPE: Oh, okay. There. Is that better?
RESUMED CROSS-EXAMINATION BY MS. GALOPE: Q. So this one is a distribution for the Deutsche Bank
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allowed for of a claim of over seventy-two million dollars, it was converted to a seventy-one million dollar claim. And I
believe, if I can get -- are you familiar with this at all, Mr. Jacobs? A. I don't know the source of this document. It looks
familiar in a certain way, but I don't want to speculate what it is. Q. Yes. It is a claim for -- I'm sorry. THE COURT: Ms. Galope, what it looks like to me is
like the schedules that have been attached from time to time to requests to prove settlements between the trustee and creditors. I can't say that's what it is for sure, but it
looks familiar to me in that respect. But if this witness can't identify it, then you need to move on to your next question. MS. GALOPE: The way as I recall it, Your Honor, I
believe this is an allowance by Deutsche Bank for an unsecured claim, and this is for the master repurchase agreement, the RP6 -- or OP6B. Q. A. Q. Are you familiar with that, Mr. Jacobs? I'm familiar with that claim classification. Okay, you're not familiar with the seventy-one million
allowance of the claim? A. Not off the top of my head. I don't disagree with what
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Ms. Galope, we do have to move on here. Yes, Your Honor. Sorry. I'm telling you.
That's part of that attachment. MS. GALOPE: this aside. I'm sorry, Your Honor, I'll have to push
MR. INDELICATO:
stipulate, we've tracked the allowed amount of the DBNT claim. And those two amounts in the left-hand side -- I'm sorry, the seventy-one million on the right-hand side, are the correct amounts of the allowed amount of the claims. We believe this came from the exhibit to the stipulation approving the claims. stipulation with us. We do not have that
can confirm we've checked the debtors' records, and those are the allowed amounts of the claim. THE COURT: Okay. Say the amounts for the record,
71,650,516 dollars, an unsecured claim under Class OP6B. THE COURT: Okay. Thank you.
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is the report I filed with the United States Trustee's Office. Q. A. Q. A. Yes. This is the entire report here.
I'd appreciate if I could see the entire document, though. Yes, here. Thank you. Your question? Okay. So that is an unsecured claim from Deutsche Bank
that had been converted to almost a hundred cents to a dollar? A. Q. A. Q. A. That is incorrect. Almost? That is incorrect. Okay. Please explain?
distributions to general unsecured creditors of eighty-nine million dollars through August -- I'm sorry, through September 30, 2011. This is the most recent report I have filed. Those
are distributions to unsecured creditors in the aggregate and not individually to any specific creditor. Deutsche Bank and
other creditors received their distribution pursuant to the distribution scheme in the plan of liquidation, I would say pari passu, but it's a very complicated distribution scheme.
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a hundred percent distribution to them of what they might otherwise be entitled to. But they did -- they clearly did not receive eighty-nine million dollars. They received substantially less than that, And the creditors
in this case aggregate -- and I don't have the entirety of -entire amount of the claims, but they are quite significant, Deutsche Bank being only one of those creditors. Q. Okay. Let me take you back to this page, Mr. Jacobs.
This is -- as identified by counsels here, this is the unsecured amount of the claim that Deutsche Bank had filed with this court for an OP6 class of distribution. familiar with this format, Mr. Jacobs? A. Q. A. I'm familiar. Okay. -- this is the allowed amount of 71,650,516 dollars, was They were And as my counsel described -And are you
allowed in the NC Capital case in the Class OP6B. allowed that claim.
They did not receive a hundred percent They received a fraction of that
claim in my first and second distribution. Q. So does that column that says "allowed amounts of claim",
that does not mean that is the amount that they actually received?
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available for distribution to allowed unsecured creditors. I had zero dollars to distribute, they could still have been allowed at seventy-one million dollars and receive zero.
If I
had unlimited funds, they would receive seventy-one million dollars, or if I had enough funds to cover all of the allowed unsecured claims. But there was a significant shortfall.
There were not -- there may have been eighty-nine million dollars of dollars to distribute, but the pool of unsecured creditors far and exceeds eighty-nine million dollars. Q. I understand. Okay. But how much -- so are you saying
this tabulation is not a representation of what they actually got? A. That is correct. That is what they got as an allowed
claim, but not what they got as an actual distribution, either under my first or second interim distribution. Q. Now, but according to the report, there had been
distributions made amounting to eighty-nine million dollars for unsecured claims? A. Q. I believe I've described that, yes. That's not incorrect.
Would you be able to tell the Court how much of that went
to Deutsche Bank that refers to this seventy-one million allowed claim? A. I could. But I don't recall the exact distribution So I cannot at this time.
percentage.
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tell the Court, went to the borrowers? A. To the extent that there were any allowed claims in
respect to a borrower, and that was because there was some dispute of some sort, they received their -- and the Court will excuse me for the pari passu -- but they would have received whatever they were entitled to under the plan, consistent with the distribution scheme in the plan. Q. You must be familiar, then, with how the prioritization
has been decided on, like from -- Deutsche Bank would be given how many cents to the dollar, as opposed to the borrower, on the same level of unsecured claim standing. allowed the same conversion? A. If a borrower -- and I don't believe they would be -- but Would they be
if a borrower had an allowed claim in plan Class OP6B, they would be treated exactly identical. Q. A. But normally how were the borrowers rated or classified? It depends on against which debtor and which class they
fell into under the plan of liquidation. Q. You said it depends on which debtor. Could you explain on
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liquidation scheme, I'll call it -- and that's a legitimate term scheme, not in the British sense, I mean -- and pursuant to that distribution scheme, distributions are made to allowed unsecured claims. Q. Please explain how that would differ between debtors or a
distribution is a much lower percent than the OpCo class debtor distributions. So again, it depends on which company you had a
specific claim against. Q. And you are not aware how many borrowers were granted a
relief from this bankruptcy? A. I am not aware of how many borrowers were allowed a
general unsecured claim. Q. How long have you been involved with bankruptcy, Mr.
Jacobs? A. Q. Over thirty years, now. More than thirty years. This reversal of standing of
debtor becoming a creditor in a bankruptcy, how does that happen? A. Q. Would you please explain to the --
I don't understand the question nor am I a lawyer. You have the experience of thirty years, like you said.
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That's not a -- to the extent that's a legal conclusion, I can't reach it. But I don't believe in it as a general
creditor, New Century sells a note to another lender, and with that, sometimes, and it's said in many of what I read, that the creditors, New Century earn more than what's the face value of that note. get at. A. Is there a question there? MR. SCHNITZER: irrelevant. questions. THE COURT: Sustained. Ms. Galope find another Your Honor, I object. It's I don't know how. And that's what I'm trying to
question if you have one. Q. Let's go back to the avoidance of the preferential Would you consider a transfer on the
day of the bankruptcy illegitimate? A. Q. It depends on circumstances. Okay. Let's say, for most of the cases for pro se
litigants here, a loan that is transferred within ninety days of the bankruptcy?
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of a mortgage note to a secured lender pursuant to a court order, pursuant to, therefore, the -Q. A. Okay. -- a default under their note. And I don't believe that's They're secured
Now, you said pursuant to an order, but this did not This was done --
And I gave other circumstances as well. -- these were -- let's talk about those loans that were
transferred without an order and were done prior to the bankruptcy. A. No -MR. SCHNITZER: to the case. THE COURT: Do you have any response, Ms. Galope? Objection, Your Honor. Relevance as Would you consider them illegitimate?
Because it seems to me we're getting far afield of what's before the Court today for a decision. MS. GALOPE: I guess I'm very limited here, Your I have an opportunity to ask Mr.
Jacobs what I wanted to know, but I guess I'm -- I'm limited with the discoverable issues as the client -THE COURT: Well, you are. It's not a deposition.
The focus is, as has been explained to you I know more than
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of this line of questioning I think is well taken. any more questions? MS. GALOPE: Im very limited. THE COURT: All right.
Is there any redirect? MR. SCHNITZER: be very brief. REDIRECT EXAMINATION BY MR. SCHNITZER: Q. Mr. Jacobs, there was some questioning regarding avoidance As trustee, did you direct Yes, Your Honor. Your Honor, I will
counsel on your behalf to bring certain preference actions? A. sums. MS. GALOPE: THE COURT: MS. GALOPE: Objection, Your Honor. What's the objection? I think that he is treading on the same I believe I indicated I did and recovered significant
questions that I'd like to ask, and I was limited. THE COURT: that you asked. There wasn't an objection to that question
Overruled.
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actions, did you also consider what's called the Safe Harbor provisions of the Bankruptcy Code? A. Q. Yes, I did. Okay. And going back to some of what was discussed with It's correct that neither DB nor any party
respect to claims.
holding an allowed unsecured claim has received a hundred percent distribution on their allowed unsecured claim, correct? A. Q. That is correct. Everybody has received the same percentage for whichever
class they're entitled to? A. Pursuant to the plan. MS. GALOPE: I object, Your Honor. I think this is
beyond the scope of your -- the defined discoverable issues. THE COURT: Overruled.
Is it fair to say that if a borrower had an allowed -THE COURT: Let me just add this. Mr. Schnitzer could I
didn't insert myself into that process, which I typically don't do. But now that you've opened that door, I'm going to allow I frankly don't think either But if you're
line is relevant to what I have to decide today. going to be brief, I'll let you finish. MR. SCHNITZER: Thank you, Your Honor.
I just wanted
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opportunity, could you? MR. SCHNITZER: I didn't want the record to be one-
particular debtor in the same class that DBNT had their allowed unsecured claim, would they get the same distribution DB has received? A. Q. A. Yes. I believe I already testified to that.
Thank you, Mr. Jacobs. You're welcome. THE COURT: All right. Ms. Galope, do you have any
recross-examination? MS. GALOPE: THE COURT: Would I be allowed on the same level? The purpose is to ask questions limited to
what Mr. Schnitzer asked on redirect? MS. GALOPE: RECROSS-EXAMINATION BY MS. GALOPE: Q. Okay, Mr. Jacobs. I guess you must be familiar with how Let me think about this.
much went to whom, so a general profile of how the distribution went or that -A. Are you referring to this case?
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I signed every check individually. I'm sorry? I signed every check individually. You -- okay. All right. Now, how many creditors -- how
many borrowers -- you answered that, I guess, that you were not sure how much. Now, my question is -- let's go back to how you When you
said that I didn't have a case here, that I didn't have a right to a claim, could you please tell us why you came to that determination -- how you came to that determination? A. Q. I didn't testify to that just now, I don't believe. You said that you looked at my claim and you have
indicated to this Court that I didn't have a right to a claim here? A. I indicated -MR. SCHNITZER: Your Honor, the trust objects. It's
Court's discretion, if she's referring to Mr. Jacobs' initial testimony to me -- I think it is outside my redirect. THE COURT: MS. GALOPE: THE COURT: It is, Ms. Galope. But it was started -Let me ask you this. How many more
questions do you have? MS. GALOPE: I guess -- I just wanted to know -- the
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verifying it. THE COURT: MS. GALOPE: THE COURT: MS. GALOPE: THE COURT: MS. GALOPE: How many -Just one. -- questions do you have left? I'll try to limit to three. You may go ahead. Okay.
respond to him earlier that you looked at the -- what is -- the justification of whether my claim would be allowed or not? A. Ms. Galope, if you allow me a latitude to answer your
question, which I'm not sure you actually articulated, I specifically testified that we looked at books and records and had not indication in the books and records that you were a creditor or that there was any dispute that existed prior to the bar date. However, I also filed an objection to your And I will
claim, which sets forth the basis of my objection. stand by that objection. Q. that? A. Q. You filed an objection as to what?
I filed a claim objection in this case against your claim. Oh, I see, yes. And you -- because I was not a known
creditor?
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ask questions on how a determination is made about -- whether a transfer it's illegal or not, then I -- I cannot ask the next questions. THE COURT: MS. GALOPE: THE COURT: MS. GALOPE: THE COURT: All right, then don't. Okay. Do you have any others? I can't think of any questions. All right. Thank you, sir. You may step
in support of his objection? MR. SCHNITZER: Your Honor, the trustee has no further
witnesses to call, but the trustee does have some of the evidence listed in its exhibit binder that the trustee would like to move into evidence. THE COURT: Okay. Tell me specifically what you would
like to move into evidence. MR. SCHNITZER: Sure. The first five exhibits: 1, 2,
And then I'll skip to the next group, but those are
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All right.
admission of Trustee's Exhibits 1 through 5 or 13 through 46? Mr. Schnitzer, there's no -- there's nothing behind my tab 13 in my binder. MR. SCHNITZER: I apologize, Your Honor. I should
have explained; 13 is actually an audio file. THE COURT: Oh. I do have it available on computer.
MR. SCHNITZER:
To the extent that becomes difficult or troubling, I don't specifically need 13. I should also note, for 14 and 15, I
also have audio for that as well, although what I printed for you -- for the Court -- was transcripts, because I could get them. For 13, a transcript was not available, so all I have is
an audio file, if necessary. THE COURT: So are you moving its admission? I would like to, Your Honor.
Has it been provide to Ms. Galope? Did you say 13 to which tab? Your Honor, if it would be easier, I
MR. SCHNITZER:
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Okay.
legitimate -- they look legitimate enough, Your Honor. THE COURT: Okay. So there's no objection, Ms.
are admitted without objection. (Trustee's Exhibits were hereby received into evidence as Trustee's Exhibits 1 to 5 and 14 to 46, as of this date.) MR. SCHNITZER: Thank you, Your Honor. That is all
right to cross-examine any witnesses Ms. Galope has. THE COURT: Okay. Now, Ms. Galope, the way I
typically handle presentations by parties who represent themselves and who wish to testify is in this way. You're
welcome to remain at counsel table or to go to the podium. Either way, I'll have you sworn in. would be your direct testimony. And you can give me what
wishes to cross-examine you, I will then ask you to take the witness stand and be cross-examined there, okay? MS. GALOPE: THE COURT: Yes, okay, Your Honor. All right. So will you please stand to be
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for the record and spell it. THE WITNESS: G-A-L-O-P-E. THE CLERK: THE COURT: to tell me? Thank you. All right, Ms. Galope, what would you like My name is Helen Galope. Oh, H-E-L-E-N
tell me the facts that you wish to offer in support of the proposition that you should be entitled to file a late claim. DIRECT NARRATIVE TESTIMONY BY MS. GALOPE: THE WITNESS: Yes, Your Honor. Once again, I'd like
to thank you, Your Honor, for giving me this opportunity. I guess, as many other pro se litigants who are filing late claims, I have only come to understand some time in 2010 the harm that New Century had inflicted upon me. From the slow
trickle of exposes from major media, from "60 Minutes", I have exhibits, Your Honor, but they're just references to that site -- the website of "60 Minutes". Let me explain to Your Honor that my list of exhibits had been modified. Please refer to those pages. They would
be -- they would start where they would have a page number at the bottom. Those are the modified list of exhibits. Okay. So where should I look in the
THE COURT:
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episodes on "60 Minutes", Exhibit -- it starts with Exhibit E-33. There won't be any on the tab, Your Honor, because these This one is on December 4th I'm sorry,
2011, it's entitled "Prosecuting Wall Street". there's two items listed as E-33. is "60 Minutes:
Collapse Part 2", where Michael Lewis talks about the current situation on Wall Street and everything -- I mean, this is just all the information that I gathered way back in -- starting in 2010, Your Honor. And in addition to that, I have seen the film "Inside Job", and I have a DVD here, but I don't think I need to present that to you. THE COURT: Well, if you want the Court to consider
it, you need to present it. THE WITNESS: THE COURT: THE WITNESS: Yes, oh. Has it been provided to trustee's counsel? No, I have not. But I have provided
them a guide on Exhibit E-34 -- I'm sorry, E-30, Your Honor. This is a student guide on this movie. "Inside Job" is a
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And it talks about -- it's called the And this "It Takes a
definitive film about the economic crisis of 2008. came to in 2010. Then two books that I've read:
Pillage", that I have read in 2011, and "The Monsters", that I have here, that Im reading currently. This was copyrighted -- published -THE COURT: Okay. Ms. Galope, let me ask you to pause
a minute and ask what the purpose of your requesting admission of these items is? question. And let me focus you in on why I ask that
practices in the mortgage industry, I know about that too. Those are not relevant to what I have before me. If, however, they're being offered by you to say it's only now that -- it's only at this time that I knew I had a claim, then -THE WITNESS: THE COURT: THE WITNESS: to the dates here. That is the relevance there, Your Honor. Okay. That is the -- that's why Im referring That is
the time that I -- it's close to the time that I became aware of this fraud, too. THE COURT: Okay. Now, I will tell you, normally, I
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counsel; and secondly, that copies that the Court could -- on DVD or some other form or hard copy form, could review. let's hold those issues till the end. THE WITNESS: THE COURT: Okay. Given the purpose for which you're But
offering those things, it may not be necessary for me to see them all, but I'll leave that to hear from the trustee too. haven't solicited his view on that. want these things admitted. Is there anything else -- let me put it this way. Since we're on the exhibit list; is there anything that's on your exhibit list that you're not offering? THE WITNESS: THE COURT: THE WITNESS: THE COURT: That I'm not offering? Yes. No, everything here. So it's your intention that all of this in But let's go down -- you I
your exhibit binder be taken into evidence? THE WITNESS: THE COURT: Yes, that's right. Okay. Now, normally -- let's do this. Is there anything else
you wish to tell the Court as part of your direct testimony? THE WITNESS: As far as accepting admissibility of
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last time -- the last chance -- opportunity for me to expound on what happened? THE COURT: It's the chance for you to make the
That's correct. THE WITNESS: Okay. Then I'd like to read what I --
what happened to me, Your Honor. THE COURT: THE WITNESS: Go ahead. So these are the readings from the
materials that I have read that made me away of what happened. While I knew about the New Century bankruptcy in 2007, and that I admitted to you the first time I attended a hearing, within weeks from a radio broadcast, my realization of the fraud by New Century did not come until I filed for the Chapter 7 bankruptcy in 2010. Bankruptcy was not something I wanted to do. humiliating. The stigma stayed with me for so long. It was But then
I realized that I had been targeted, Your Honor, and that had eaten away the stigma. home at that time. But it was the only option to save my
time to find a lawyer. The bankruptcy lawyer that I hired gave me six months to leave the house. And prior to that, I hired another lawyer
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he was -- I found out later, he was just a scam -- a lawyer that helped me with the loan modification after I made the payments to him. So this bankruptcy lawyer that I hired, he excused himself from representing me in an adversarial proceeding action, so I was left to myself. So I tried to find a second And after making
payments, he left my adversarial proceeding to be dismissed without prejudice unchallenged, so that's why it was dismissed unchallenged, Your Honor, in 2010 -- May 2010, I believe, if I'm not mistaken. So when I admitted knowledge of the bankruptcy of New Century, counsel was quick to insist that my knowledge of that bankruptcy was ground enough to dismiss my case, you know, ignoring the fact that realization of the fraud came much later to me. So now, as I tried to prove in the exhibits that was presented by counsel earlier, from the Orange County Register, Your Honor I have not known of the existence of Orange County Register before I came to this court, before I read your ruling that the postings that they did were inadequate or insufficient. I did not know about Orange County -I have not made that ruling. Huh?
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notification and the publication notice is insufficient. THE WITNESS: It was a memorandum. THE COURT: I did not write that. THE WITNESS: Oh, okay. It was something that you Yes, I'm familiar with what I wrote. But Or a memorandum. I'm sorry, Your Honor.
said about those postings. THE COURT: THE WITNESS: THE COURT: they were sufficient. THE WITNESS: Okay. So I had only known of the I did. On the White's case. I did. And I reserved ruling on whether
existence of Orange County Register sometime in July 2011, when I read about what you said about the White's case, posting them on two notices on Wall Street Journal and the Orange County Register. As a resident of California, I was oblivious of its existence before July 2011. This tells how much -- this tells Such low
readership and limited reach is evidenced by the report from the audit bureau -- the ones that I presented earlier, Exhibits 23, 24, and 25. Where postings could have been made on a
Sunday in the New York Times or in a Los Angeles Times newspaper, and a U.S.A. Today, for that matter, for a Monday
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time that I took a loan, I didn't know about the predatory -- I mean the pre-payment penalty. on in the discussion. It was imposed on me much later
I thought I was going to get a thirty-year fixed payment, and I was happy to get that. But later on, when the -- when it came
down to the loan consultant -- the first time that I took a loan, I had this pre-payment penalty set up and I -- it was so hard, that I wanted to get out of it, but, you know, I didn't make the right decision at that time. So borrowers who
generally would not be expected to keep a portfolio of stocks, because all their investment is put on the house, the house is their investment. So the selection of Wall Street Journal claimed to be the most read, but evidenced now to be untrue in March 2007, where you see other newspapers were leading above him on the list. And also, the class of readership is much different.
These are not the kind of Wall Street people who have extra money and put their monies on stock. Borrowers are usually -And suffice
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as creditors on this bankruptcy case. While I knew of the bankruptcy, I never got a notice by mail from New Century. Had I received notice that I could
file a claim I would have gone and filed within the prescribed deadline. All New Century ex-borrowers would have similarly
done so and competed for priority ranking against the unsecured creditor claims. Now, I don't know about how they rank unsecured borrowers against unsecured creditors -- creditor banks, Your Honor. Im just assuming that we could be competing with them. The rules of the court provide that if no claim is filed by a potential creditor, the debtor has the right to file a claim. Now, that is another matter that would be found out
in discovery, Your Honor, whether such indiscretion may have occurred. So it was evident from the letter of Monika McCarthy -- this is Exhibit E-8, Your Honor. of response by Ms. McCarthy to me. This is a letter
a bankruptcy notice that they got when I filed my bankruptcy in 2010. It was dated March 30, 2010. And on this she mentioned
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of the bar date being on August 31, 2007, and that we should have filed a petition -- I mean, a claim by that time. Somewhere here she said that because I did not file a claim -somewhere here she mentioned that because I did not file a claim I had missed that bar date. And also on the last paragraph on page 2, she mentioned that, "Our records indicate that your loan was sold to Barclays Bank and subsequently your service released to HomeEq Servicing Corporation on April 2, 2007." of the bankruptcy, Your Honor. That's the day
owns or services any of the loans it originated." So this was -- this was actually the triggering notice, the indication that, oh, I missed the payment, I missed the bar date, and I no longer have -- I've missed that opportunity is what -- you know, relying upon what was said here. And I didn't pursue to file a claim any further. This
is on March 30, 2010, Your Honor. THE COURT: THE WITNESS: Okay. Anything else, Ms. Galope?
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pushing for some more information from Mr. Jacobs there. So the exhibit list counsel have provided will prove -- you know, counsel have provided many newspaper articles that indicate the news of New Century bankruptcy. none of those indicated what fraud had happened on the borrowers. So while there may be plenty of those, it was just But
news that I already know that New Century had filed for bankruptcy. information. And also because those articles, again, were mostly from Orange County Register. I had no clue of what -- I had no But that is not to say that I I knew about the That is all that I could get out of those
didn't know about the bankruptcy, Your Honor. bankruptcy at that time.
that my loan had been transferred, even before the letter by Ms. McCarthy, I was told immediately after the loan signing that my loan will be transferred within days or after the signing, and I relied upon that information to be true. So when New Century filed for bankruptcy I knew I was no longer affected. My concern at that time was only that, oh,
I'm lucky to have been transferred over; then I don't have any more -- I don't have to deal with the bankruptcy with New Century. So that was the circumstances. That was the thinking
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and -- but nothing made to regain my status back. The spotted credit and the incorrect perception of my rates on some of those documents that the counsels have provided me in discovery, Your Honor, had identified me to be a Latino. And I believe New Century were aiming or targeting for So I was -- it was also in evidence
that the broker did not fill out those forms, the loan modification, because he knew that I was Filipino at that time. So something happened -- the fraud happened beyond him, which I didn't know. or hidden away. All these information were concealed
I did not know what happened when I signed the And let me bring you to what I
signed on the night of that signing. THE COURT: This is a document in connection with your
cover that part for this purpose. THE WITNESS: But just to let you know that I did not
know the fraud, Your Honor, at that time that I signed the loan. I was really unaware. And it was different from what I
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late at the night -- in the night that we didn't realize what should have happened at that night. And the fabrication of HUD Many of those
Erica Halston (ph.) purporting to assign the loan from separate funding to Deutsche Bank, which I haven't seen before also. So I filed my claim on July 8, 2011, immediately upon my realization that New Century may still have my promissory note. That is -- that late, Your Honor, July 8, 2011. I came
to such a conclusion after taking notice of many failed attempts by Deutsche Bank and Ocwen Servicing and previously by Barclays Bank doing business as HomeEq Servicer, at recordation of assignments with the county recorder. There were many attempts, Your Honor. And they
were -- there was even an instance where Judge Schack identified Christina Carter as a robo-signer. And on one of
those documents that Deutsche Bank filed against my property, it was Christina Carter. And after that news of Christina
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THE COURT:
little bit again from -THE WITNESS: THE COURT: Okay. -- from what we need to be focused on
Do you have anything further? MS. GALOPE: I guess there's -- I'm going to the I'm going to divert from the scope of this I guess that would cover it. All right. Thank you. Mr. Schnitzer, would you like to cross-
fraud, Your Honor. evidentiary hearing. THE COURT: MS. GALOPE: THE COURT: examine Ms. Galope?
MR. SCHNITZER:
I will try to be
Galope, would you kindly take the witness stand. MS. GALOPE: (Pause) MR. SCHNITZER: Your Honor, as a preface, I chose not Yes, Your Honor.
to object to any of Ms. Galope's testimony so as not to interrupt her and allow the Court to hear the full
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agreement by us that most of it was relevant. want to be rude. THE COURT: I understand. Thank you, Your Honor.
I appreciate that.
bankruptcy, you filed an action which you named New Century as a defendant? A. Q. I named him on one of them, yes. Okay. Could you turn to Exhibit 10 in my binder that you
have in front of you? A. Q. Okay. Is that the document in which you named New Century as a
defendant within your bankruptcy matter? A. There were two filings on that adversary proceeding. It was One
something that a good Samaritan had helped me put together the first time. And on that -- I believe, on one of them I have There was a
response that I made where I may have a copy on my laptop of it. So what I have identified New Century on one -- on my
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filed in your bankruptcy on or about March 24th, 2010, correct? A. Q. That is correct? And as you can see on the first page, you named New
Century down at the bottom, correct? A. one? Q. Exhibit 10, the bottom of the first page, three lines up. New Century at the bottom -- are you looking at -- which
It says New Century Mortgage Corporation, correct? A. I don't have E-10 on me. THE COURT: THE WITNESS: THE COURT: THE WITNESS: MR. SCHNITZER: (Pause) Yes. Okay. Yes. Is it correct that prior to this filing, you Sorry.
Look in the trustee's binder, Ms. Galope. Oh, in the trustee's binder. Yeah. Hold on. Thank you, Your Honor. Sorry.
Thank you.
never filed a complaint against New Century? A. Q. No. Prior to this document, you filed a complaint against New
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mentioned the assistance of a good Samaritan. Samaritan a lawyer? A. home. (Pause) MR. SCHNITZER: THE COURT: (Pause) THE WITNESS: MR. SCHNITZER: questions for Ms. Galope. Excuse me, Your Honor. No, he was not.
All right.
evidence certain of her responses in her interrogatories as admissions for this Court to consider. are in tab number 7. in mind. THE COURT: In your tab number 7. Correct, Your Honor. Go ahead. And Those interrogatories
Okay.
MR. SCHNITZER:
interrogatory 5 and its response. THE COURT: Any others? No, Your Honor. Is there any objection, Ms.
All right.
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have no problems with these responses. THE COURT: objection. (Interrogatories 1 and 5 with their responses, were hereby admitted as of this date.) THE COURT: questions for you. All right. Now I do have a couple of All right. They're admitted without
of -- civil engineering. THE COURT: THE WITNESS: THE COURT: And what degree do you have? Bachelor of science. Okay. And do you have any other
educational experience beyond the B.S. degree? THE WITNESS: I took a programming courses, too, Your
Honor, and anything that interests me. THE COURT: THE WITNESS: And when did you -Not in -- not formally. Just reading
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experience as a civil engineer, probably three, five years as a programmer. And I'm working -- are you going to ask about my
employer, too? THE COURT: THE WITNESS: California. Yes. By whom are you presently employed?
And I work for the state lands commission. For the lands commission? State lands commission where we monitor We review the structural adequacy of the So we
have -- some audits have been conducted and we are reviewing those audits. THE COURT: And you're employed in your capacity as a
civil engineer, I take it. THE WITNESS: THE COURT: in this position? THE WITNESS: Your Honor. THE COURT: THE WITNESS: Okay. And what did you do before that? Coming to three years or four years now, As a civil engineer, yes, Your Honor. Okay. And how long have you been employed
switching between a programming job and an engineer and I decided that an engineering job would be better.
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have any follow-up questions limited to the area that I explored? MR. SCHNITZER: THE COURT: may step down. THE WITNESS: THE COURT: Okay. Okay. Thank you. Mr. Schnitzer, Ms. Galope has No, Your Honor. Thank you. You
All right.
indicated she'd like to move the admission of all of the exhibits in her exhibit binder. MR. SCHNITZER: Are there any objections? There are. As --
subject to your suggestion, as the number that we agreed to are less than the ones we object to, I'm happy to name those first. I'm also, of course, happy to go one by one. THE COURT: Let's just go one by one. We object to the admission of Exhibits
Okay.
Are you referring to E-1 through E-6? Yes. I should have said E, correct.
MR. SCHNITZER: MS. GALOPE: THE COURT: MS. GALOPE: THE COURT:
Then what's the reason for the objection? I get to ask that question, Ms. Galope. Oh, I'm sorry. You'll have a chance to respond.
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would also note, with respect to some of the documents that are loan documents, to the extent they have personal identifiable information, I would suggest if Your Honor believes they should come in, something should perhaps be done to protect Ms. Galope. But the basis for the objection is these do not
concern the present hearing before this Court. THE COURT: authenticity? MR. SCHNITZER: Your Honor, for the loan documents, Okay. Is there any question about
E-2, assuming those are from what we produced to her, I have no question concerning authenticity. With respect to Exhibit 5,
since it appears from its top that it's pulled from PACER -and the same -- and perhaps the same for -- and the same for Exhibit 6, I have no question as to authenticity. THE COURT: Ms. Galope -The rest of them, I would. Ms. Galope, are the documents
Okay.
behind tab E-2 that which was produced to you by the liquidating trustee? MS. GALOPE: No, Your Honor. These are my documents.
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Schnitzer to admit E-2 and E-5 and E-6. (Loan documents signed by Ms. Galope were hereby received into evidence as Plaintiff's Exhibits 2, 5 and 6 as of this date.) THE COURT: Tell me your issues with the others. Your Honor, E-1 -- I mean, it would be I don't think it's
MR. SCHNITZER:
Court doesn't view it as related to this matter, I have no other objection to it. The same for 3. 3 is regarding --
appears to be regarding a loan modification after the bankruptcy, after the bar date, after New Century had served the loan. So again, we don't see how it's relevant to today's And similar to 4. 4 relates to, I believe,
hearing at all.
the dispute Ms. Galope testified to regarding an attorney who may have offered incorrect advice on how to get a loan modification but which we don't believe relates to this claim in any way. THE COURT: All right. Ms. Galope, tell me what E-1
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E-1?
actually taken from the file that had been put in PACER. that if you look at it, it has those dates. when they were filed. THE COURT: MS. GALOPE: Who filed them? Do you know?
I'm not
sure if I -- I believe I have filed -- let me see, Your Honor. Who filed it? I'm trying to recall, Your Honor. Your Honor, the document appears to be
MR. SCHNITZER:
Appears to be -- it would have been recorded by New Aside from the relevance thing, I will withdraw an The Court -Okay. -- can consider it for what it is.
THE COURT:
(Copy of deed of trust was hereby received into evidence as Plaintiff's Exhibit 1 as of this date.) THE COURT: Let's go to E-3? What's the relevance of
this document, Ms. Galope? MS. GALOPE: The relevance of this document, Your
Honor, is to prove to the Court of my late realization of what happened to my loan. And it started -- that's why -- it
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surface at that time when I filed the adversary proceeding. THE COURT: MS. GALOPE: THE COURT: MS. GALOPE: I'm talking about E-3. E-3, Your Honor, is --- a fax. Yes. This is the loan modification from It's a --
base of my realization of the fraud. THE COURT: MS. GALOPE: It's dated April 14, 2008. Yes. But this is fraud by Barclays not At this time, I relied upon the
information that my loan had been transferred to Barclays. THE COURT: Okay. And are you telling me this is a
cover sheet and enclosure which was faxed to you? MS. GALOPE: THE COURT: MS. GALOPE: THE COURT: Yes. It was done by fax --
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again, if you look at the time when I filed it, this is what happened as a progress into my realization of the fraud by New Century. role. THE COURT: MS. GALOPE: THE COURT: MS. GALOPE: THE COURT: MS. GALOPE: Well, where in the -It's in --- e-mail chain is this reflected? E-4, Your Honor. But show me where in the e-mail. E-mails on E-4? So, in here, Your Honor, At this time, I still am not aware of New Century's
this is talking about telling them that I made a payment already, what's happened to my loan modification with Barclays -- with HOMEX. back to me. And they refused to refund the money These people
have ill-advised me not to make payments anymore with Barclays. THE COURT: What's next. MR. SCHNITZER: Your Honor, we are fine with E-7. We're fine I Okay. The objection is sustained to E-4.
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MR. SCHNITZER:
the objections start again at E-11 and go until E-20. THE COURT: without objection. (Various documents were hereby received into evidence as Plaintiff's Exhibits 7 through 10, as of this date.) THE COURT: Let's go to E-11. Your Honor, my objections for E-11 Okay. So E-7 through E-10 are admitted
MR. SCHNITZER:
through E-19 are all on the similar ground as both relevance and also having questions as to authenticity, obviously except for E-19, which she is representing is documents that we produced to her. THE COURT: Well, on the reverse side of the second
page of E-11, there is a stamp from the registrar recorder county clerk of Los Angeles County. MR. SCHNITZER: you're correct. no objection. I do see that, Your Honor. Then
At least for authenticity, we haven't -- then We do question the relevance given that this
appears to refer to a notice of default in 2010. THE COURT: Ms. Galope, what's the basis for offering
this document or these documents into evidence? MS. GALOPE: It was to prove, Your Honor, that after
the bankruptcy, we noticed -- I raised the matter of their assignments being illegitimate. So they made this decision
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but not the former proposition, but I'll admit it. (Document filed with the registrar recorder county clerk of Los Angeles County was hereby received into evidence as Plaintiff's Exhibit 11 as of this date.) THE COURT: E-12? Mr. Schnitzer?
Your Honor, just a quick point of Is it correct that the dialogue here is And the point I ask is it
almost sounded like Ms. Galope was testifying as to what she did with E-11. the case. THE COURT: She was. Okay. And I'm just admitting it -And that I would have issues with if that were
I'm just admitting the document. Your Honor, E-12, on the grounds of
MR. SCHNITZER:
relevance as well on the ground of since it's not a letter from us nor signed by us nor apparently signed by anybody. THE COURT: MS. GALOPE: Ms. Galope? Your Honor, this is the first realization This is where I saw my
four signatures in here that was -- I mean, I assume had been done -- permitted at loan origination.
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believe I may have asked about -- at this time, Your Honor, it used to be Barclays who was the servicer. Then they took over
and then they were enforcing the loan again against me and foreclosure action if I don't make a payment. THE COURT: MS. GALOPE: them here with me. THE COURT: The objection is sustained. Next. Are you able to answer my question? Okay. Where's the loan -- I do not have
MR. SCHNITZER:
assuming that it's, in fact, an accurate copy of what it, I guess, says it is, it -- we see no basis for relevance here. Nowhere mentions New Century. It involves a Sutton (ph.) Bank
and a purported person that Ms. Galope is claiming as a robo signer who has nothing to do with New Century. THE COURT: MS. GALOPE: Ms. Galope? Your Honor, this is the reason -- the You
know, this document I have with me, this is not something that counsel had produced. It was from my files. And my files, I was unable to
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earlier that I am handicapped here just doing this all by myself and doing my work and commuting from my home to my job in two hours traffic. So it really consumes a lot of time. I
could not put the time to put together all these evidences timely as required by the scheduling order. THE COURT: The objection is sustained. Next.
MR. SCHNITZER:
14, it appears to have a website on the bottom, so I am going to assume, for these purposes, that it's an accurate print from that, in fact, web page. authenticity. So I'm not questioning its
relevance in general and, particularly, with respect to this hearing given what we're talking about. It's a report from '07
that hasn't been discussed by Ms. Galope in her testimony so I don't see how it bears on this hearing. THE COURT: MS. GALOPE: Ms. Galope, what's the relevance of E-14? I guess the relevance of these documents,
Your Honor, with respect to the limitations of the scheduling order, is we need to establish a finding of my realization of New Century's implication with my loan -- with what they have done with my loan. All of these are presented here for that purpose, the finding, Your Honor. THE COURT: Well, okay. But tell me what you think it
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the last filing of the SABR, the trust, for which Deutsche Bank is -- my understanding of this, Your Honor, is that the trust had dissolved in 2008. Nothing -- no reports came after this.
And also, in the REMIC (ph.) report, this SABR 2007, Your Honor, is not even listed there for that year which makes it -they have missed that closing date for that year. So this is
another fraud that was being laid upon this fraud upon the American people establishing this trust to be -THE COURT: The objection is sustained. Next?
I will assume for these purposes that this is an But similar to 14, we don't
believe it's relevant to this hearing in any way. THE COURT: MS. GALOPE: Okay. Ms. Galope? I'm sorry.
MR. SCHNITZER: THE COURT: MS. GALOPE: that I mentioned. limit trust.
And it's not even listed on this report. The objection is sustained. E-16.
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proceeding that I have filed this for. THE COURT: on its own merits. MS. GALOPE: Okay, Your Honor. Thank you. If we get to that, it will be considered
MR. SCHNITZER:
has a website at the bottom, assuming this is an accurate printout, I will withdraw our objection as to this exhibit. We
do question its relevance but since it's at least with respect to this respect to this particular loan, we won't object to its admission, Your Honor. THE COURT: Okay. E-16's admitted.
(County recordings from 2006 was hereby received into evidence as Plaintiff's Exhibit 16, as of this date.) MS. GALOPE: Excuse me, Mr. Schnitzer. Are you Or you might
looking at this list for the page number below? be referring to this, I guess. THE COURT: MS. GALOPE: THE COURT: MS. GALOPE: E-16. E-16 -Is admitted.
-- is all county recordings from 2006. Yeah. That's what I'm looking at.
Okay.
Okay.
MR. SCHNITZER:
And it's --
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MR. SCHNITZER:
again, assuming because if there's a stamp that this is an accurate copy, while we question its relevance, I won't object to its inclusion. THE COURT: Is this the notice of the sale of your
residence, Ms. Galope? MS. GALOPE: THE COURT: Yes, Your Honor. It's admitted. And --
(Notice of sale of residence was hereby received into evidence as Plaintiff's Exhibit 17 as of this date.) THE COURT: Mr. Schnitzer? Do object to E-18. Object to it on
MR. SCHNITZER: several grounds. if it's authentic. before this Court. THE COURT: MS. GALOPE:
the timing of my realization of the fraud. THE COURT: Well, you filed your claim in July of This is
a letter from August of 2011. anything to your argument. Schnitzer? MR. SCHNITZER:
Mr.
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do see Bates-stamped numbers at least on most of them. that's the case, I have no objection.
since there is information in here that could be considered personally identifiable, I believe it would be in the interest of Ms. Galope to -- we should either seal this particular exhibit or if she could take steps to remove what she would like to keep private. THE COURT: I'll admit it under seal.
(Loan documents provided by counsel in response to plaintiff's discovery were hereby received into evidence under seal as Plaintiff's Exhibit 19, as of this date.) MR. SCHNITZER: We have no objection to 20. It's the
(Proof of claim was hereby received into evidence as Plaintiff's Exhibit 20, as of this date.) MR. SCHNITZER: vacate dismissal. 21, I have described as the motion to While it appears to
We do object to that.
be authentic from the stamp, we don't see how that is relevant to what's before you today. THE COURT: MS. GALOPE: Ms. Galope? This is just to see how bad of a conduct They went to the point of
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did need a recordation saying that they now own the property. THE COURT: your proof of claim. Okay. Well, it post-dates the filing of
It's referring to something going on in her A possible stay violation doesn't concern us and
is after her proof of claim. THE COURT: MS. GALOPE: THE COURT: Ms. Galope? No objection, Your Honor. Okay. I'll just say the objection is Okay. E-23?
Your Honor, for E-23, 24, 25, I would I don't even believe
note they were not produced in discovery. with their original exhibit list.
said that we don't know their source which you already heard and questioned. in their whole. THE COURT: Okay. So that's E-21 through what? 21 and 22, you already We have no objection to them being admissible
MR. SCHNITZER:
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(Press documents from the internet were hereby received into evidence as Plaintiff's Exhibits 23, 24 and 25, as of this date.) MR. SCHNITZER: We then move to the remainder of the 26 -- I'm not sure I can't
what it is other than perhaps some type of log entry. tell if it's really a real court decision or not.
Either way,
I don't believe it has any relevance to what's before this Court today. THE COURT: Ms. Galope? MS. GALOPE: This is just the fact that -- the fraud Okay. What are 27 and -- well, 25, 27,
by the affiants on the recordations, Your Honor, and the notices. THE COURT: MS. GALOPE: THE COURT: MS. GALOPE: THE COURT: Are these newspaper reports? They were internet -Or news reports? Yes. Internet reports, Your Honor. The
I'm going to sustain the objection to both. Thank you, Your Honor. What about E-28?
MR. SCHNITZER:
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is a payment history, we don't see how it's relevant to the issues -THE COURT: Ms. Galope? -- at hand.
saying that I've tried to commit -- I've tried to make my commitments on the payments. Until -- until -- even after I And it just came
was hospitalized, I was making the payment. to be too harsh already. of 2008. MR. SCHNITZER:
saying this is an accurate document that she received. withdraw the objection to it. THE COURT: Okay
(Payment history was hereby received into evidence as Plaintiff's Exhibit 28 as of this date.) THE COURT: E-29. We object to Exhibit 29 for many Second, it's
MR. SCHNITZER:
entirely irrelevant.
which is not before this Court today. THE COURT: MS. GALOPE: THE COURT: Ms. Galope, any response? I can agree to that, Your Honor. I'm sorry. I didn't hear you.
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MR. SCHNITZER:
together 'cause I think they were together, I believe, in Ms. Galope's testimony. This is the movie and the two books. We
object to the movie or the movie summary and the two books coming in as irrelevant. testimony. Obviously, this Court heard her But we would
object to any of these matters coming in particularly for the truth of the matter since they're not relevant to here. And I
don't even know if they mention New Century as I've never been given the books or the movie. THE COURT: MS. GALOPE: Ms. Galope? Again, Your Honor, this is for time in That's why this is being
said, New Century was mentioned on the "Monsters", like I've indicated -- as already indicated, how many foreclosures happened between 2005 and 2007. MR. SCHNITZER: Your Honor, if I could respond
Inside Job is a movie, depicts a pillage, as I take it, a work of nonfiction but not an academic work. MS. GALOPE: That is true, Your Honor. But this is a
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MR. SCHNITZER:
Ms. Galope explained we don't actually have. have a clip to it. issues.
One, it's only dated a few days ago so I'm not sure But secondly, even its description doesn't So I once again question its relevance. Ms. Galope? Your Honor, I made a mistake on this one. Again, this
how it's relevant. mention New Century. THE COURT: MS. GALOPE:
The date of the document is not for December 11. is to establish my realization of the fraud. THE COURT: All right.
The objection is sustained. MR. SCHNITZER: That objection would be similar, Your
Honor, to Exhibit 33, 34, both 34s, and 35. THE COURT: All right. Ms. Galope, I'm going to Well, finally --
sustain the objection for the same reason. (Pause) THE COURT: (Pause) THE COURT: Finally E-34. Bear with me.
MR. SCHNITZER:
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Well, one of the tables anyway. Right. I mean, there seem to be three If we're
MR. SCHNITZER:
referring to the e-mail dated December 8th, 2011 from Ms. Galope to Ms. McCarthy, we have no objection -THE COURT: I believe we are. -- to that. It's admitted.
Okay.
(E-mail dated 12/8/11 from Ms. Galope to Ms. McCarthy was hereby received into evidence as Plaintiff's Exhibit 34, as of this date.) THE COURT: you'd like to offer? MS. GALOPE: THE COURT: That is all, Your Honor. All right. I will take the matter under Is there All right. Ms. Galope, any other evidence
advisement and issue a decision in due course. anything further for today? MR. INDELICATO: Yes, Your Honor.
Just briefly.
As
Ms. Galope did mention, there is an adversary proceeding that has been filed. The trustee's answer or otherwise motion would I would just request that our time to
answer or otherwise move with respect to that be stayed until this Court renders a decision. And then we could address
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if discovery is needed, we can all deal with that after this Court has had an opportunity to render a decision. THE COURT: Indelicato's request? MS. GALOPE: THE COURT: MS. GALOPE: THE COURT: Yes, Your Honor. Do you have an objection? No objection, Your Honor. Okay. Mr. Indelicato, would you prepare a Okay. Ms. Galope, do you understand Mr.
form of order, run it by Ms. Galope and submit it memorializing the stay of the adversary? MR. INDELICATO: THE COURT: We will do that, Your Honor. I will tell you, I'm also now
All right.
considering -- now when's the next round of hearings on persons similarly situated? Isn't it in February sometime? I believe it's February 15th, Your
MR. INDELICATO:
Cromwell, Goines, Russell, Silva and Lamore are scheduled for hearing on that date. Is that correct? I believe that's correct, Your Honor.
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will recall, Cromwell was filed prior to the last batch of claims in which we filed the forty-second omnibus. technically scheduled for trial. Cromwell is
technically is not on the same scheduling order as the rest of them. It's just scheduled on the same day. THE COURT: All right. Now we moved most of them from
the January 17th hearing to February so we could devote the day to it. But frankly, as I said in conflict, what I've heard
today, it doesn't make sense to me to move forward with those until I've made the decision on this case. So what I'd like
the trustee to do is put down all of those matters and any others if there are others not calendared that I'm not aware of for status on January 17th. Frankly, it's my intention as I
sit here today to postpone any action on those matters until I've decided this one. But I'll have -- I'll let the parties
have their opportunity to have their say about that before I enter any order. But that's presently my intention. So, Your Honor, just so I'm clear,
MR. INDELICATO:
you want us to move them from February back to January as a status conference. THE COURT: Just as a status because I want to give
the claimants enough notice for travel reasons and any other
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be inappropriate for at least -- our contacting them and letting them know -- to let them know that that's what the Court's inclination is. then -THE COURT: I would, too. Okay. So we will let them know that I would hate people to buy tickets and
MR. INDELICATO:
we will move everything back to the 17th as a status conference and, in fact, they will have the opportunity to address the scheduling with the Court. THE COURT: Yes. But it's your present intent that it
MR. INDELICATO:
probably will not be heard in February. THE COURT: Not likely. But maybe the best thing to
do would be to attach a few pages of this transcript to send to the claimants as well. MR. INDELICATO: THE COURT: Okay. We will do that, Your Honor. Is there anything further for
record will include the arguments of the earlier hearing and the testimony today.
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MR. INDELICATO:
sorry, off the top of my head. information to chambers. THE COURT: All right.
Thank you.
MR. INDELICATO:
And then the final issue is just -She's not on the same But --
She was set for trial in February. If it's the same issue, yes. Okay.
THE COURT:
All right. And that is all for today. That concludes this
Court will stand in recess. MR. INDELICATO: MR. SCHNITZER: Thank you, Your Honor. Thank you, Your Honor.
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Page 119 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 1 3 PLAINTIFF'S 2,5,6 Loan documents signed by Ms. Galope Copy of deed of trust Loan modification from Barclays
VERITEXT REPORTING COMPANY www.veritext.com
I N D E X
WITNESS Suzzanne Uhland Suzzanne Uhland Suzzanne Uhland Suzzanne Uhland Alan M. Jacobs Alan M. Jacobs Alan M. Jacobs Alan M. Jacobs Helen Galope Helen Galope
EXAMINATION BY Mr. Schnitzer Ms. Galope Mr. Schnitzer Ms. Galope Mr. Schnitzer Ms. Galope Mr. Schnitzer Ms. Galope Ms. Galope Mr. Schnitzer
PAGE 17 30 36 37 45 52 68 70 76 90
E X H I B I T S TRUSTEE'S 1 to 5 and 14 to 46 -Interrogatories 1 and 5 with their Responses 93 DESCRIPTION Trustee's Exhibits PAGE 75
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VERITEXT REPORTING COMPANY www.veritext.com
received for limited purpose of establishing plaintiff's realization of what happened to her loan 7-10 11 Various documents Document filed with the registrar recorder county clerk of Los Angeles County 16 17 19 County recordings from 2006 Notice of sale of residence Loan documents provided by counsel in response to plaintiff's discovery 20 23-25 28 34 Proof of claim Press documents from the internet Payment history E-mail dated 12/8/11 from Ms. Galope to Ms. McCarthy 108 110 111 114 106 107 108 101 102
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Page 121 1 2 3 4 5 6 7 8 I, Dena Page, certify that the foregoing transcript is a true and accurate record of the proceedings. C E R T I F I C A T I O N
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10 DENA PAGE 11 AAERT Certified Electronic Transcriber CET**D-629 12 13 Veritext 14 200 Old Country Road 15 Suite 580 16 Mineola, NY 11501 17 18 19 20 21 22 23 24 25 DATE
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