1 1 IN THE UNITED STATES DISTRICT COURT. FOR THE DISTRICT OF NEW JERSEY 2 Civil 07-1342 3 ROYALE LUAU RESORT, LLC, 4 PLAINTIFFS, Transcript of Proceedings 5 V. 6 KENNEDY FUNDING, INC., JEFFREY WOLFER, JOSEPH WOLFER, 7 JOHN DOES 1-10. 8 DEFENDANTS. - - - - - - - - - - - - - - - - - - - - - 9 Newark, New Jersey 10 June 28, 2007 11 B E F O R E: HONORABLE HAROLD A. ACKERMAN UNITED STATES DISTRICT JUDGE 12 A P P E A R A N C E S: 13 TRAUTMANN & ASSOCIATES 14 BY: GREGG D. TRAUTMANN, ESQ. AND: ROBERT T. TRAUTMANN, ESQ. 15 For the Plaintiff. 16 COLE, SCHOTZ, MEISEL, FORMAN & LEONARD BY: STEVEN R. KLEIN, ESQ. 17 AND: DAVID M. KOHANE, ESQ. AND: DAMIAN L. ALBERGO, ESQ. 18 AND: NEOMA M. AYALA, ESQ. For the Defendants. 19 - - - - - - - - - - - - - - - - - - - - 20 LYNNE JOHNSON, CSR, CM, CRR 21 OFFICIAL COURT REPORTER UNITED STATES DISTRICT COURT 22 P.O. BOX 6822 LAWRENCEVILLE, NEW JERSEY 08648 23 PHONE: 609-896-1836 EMAIL: CHJLAW@AOL 24 25 2 1 THE COURT: May we have the appearances, please? 2 MR. GREGG TRAUTMANN: Good morning, your Honor. 3 Gregg Trautmann on behalf of the plaintiffs in this matter. 4 I have with me Robert Trautmann from my office. 5 MR. ROBERT TRAUTMANN: Good morning, your Honor. 6 MR. KLEIN: Steven Klein from Cole Schotz for 7 defendants, my firm. 8 THE COURT: Mr. Klein, I have heard of you, but in 9 terms of this case, you are a stranger, are you not? 10 MR. KLEIN: Totally. 11 THE COURT: Okay. Thank you. Welcome, in any 12 event. 13 MR. KLEIN: I am here also -- 14 THE COURT: Go ahead. 15 MR. KLEIN: -- with my partner and associates. 16 David Kohane. Damian Albergo and Neoma Ayala. 17 THE COURT: Thank you. Please be seated. 18 I called for a hearing this morning because, as the 19 record should reflect, on the 25th day of June of this year 20 this Court was in receipt of a letter sent to me by Mr. Gregg 21 Trautmann who is here in court. I want to read the letter. 22 Then I will carry on from there. 23 "I am writing to request permission to file a 24 motion seeking the disqualification of Cole Schotz Meisel, 25 Forman & Leonard, PA, and the individual attorneys who have 3 1 entered an appearance in this matter from that firm from 2 further representation of the defendants in the above- 3 referenced matter, which is Royale Luau Resorts, LLC, versus 4 Kennedy, as well as for sanctions against Kennedy Funding, 5 Inc., Jeffrey Wolfer, and Joseph Wolfer. This request is 6 based upon the extreme and outrageous conduct of my 7 adversaries and their attorneys. 8 "On Wednesday, June 20, 2007, I received a 9 telephone call from Donald Campbell, Esquire. This 10 gentleman is outside general counsel to a neighborhood bank 11 located in Bayonne, New Jersey. That bank is Pamrapo Savings 12 Bank. My wife and I have had a personal banking relationship 13 with Pamrapo Savings Bank for approximately nine years. 14 Currently I have three purchase money mortgages with that 15 institution and a line of credit. 16 "Mr. Campbell contacted me to inform me that he had 17 received a telephone call from an attorney who identified 18 himself as Damian Albergo, Esquire. Mr. Albergo informed Mr. 19 Campbell that he was an associate in the firm of Cole Schotz 20 Meisel Forman & Leonard. Mr. Albergo went on to inform Mr. 21 Campbell that his investors were desirous of purchasing only 22 certain notes and mortgages and specifically he told Mr. 23 Campbell that his investors wished only to purchase my notes 24 and mortgages. 25 "Mr. Campbell then inquired of Mr. Albergo as to 4 1 who his investors were. 2 "At some point Mr. Campbell realized that the 3 investors were in fact none other than Kennedy Funding, Inc.. 4 It is apparent that prior to attempting to implement this 5 absurd scheme Mr. Albergo had neglected to review answers to 6 interrogatories which were provided to him by the undersigned 7 in both J M Realty and Investments versus Kennedy Funding, 8 Inc., docket number 2:07-218 FSH, PS, as well as Kennedy 9 Funding versus Ruggers Acquisition and Development, et al. 10 Docket number 2.07 EB 669 FSH, PS, which had been served on 11 his offices on June 4, 2007. Had Mr. Albergo or anyone from 12 Cole Schotz reviewed my client's answers to interrogatories 13 prior to making his ill-advised offers to purchase my notes 14 and mortgages, they would have realized that Donald Campbell, 15 Esquire, had been named as an expert witness on behalf of my 16 client in each of these cases. I must assume that while Mr. 17 Albergo, the partners who supervise him, and the Wolfers are 18 reckless in their conduct, their stupidity did not reach so 19 far as to permit them to make such an outrageous offer to my 20 bank had they bothered to first read the answers to 21 interrogatories that had been provided to them. Their 22 actions now beg the question of what else they have done, and 23 what else they are capable. 24 "The conduct of Damian Albergo, Esquire, and by 25 implication the partners for whom he works and the law firm, 5 1 Cole Schotz Meisel Forman & Leonard, PA, leads to the 2 inescapable conclusion that they are capable both of acts of 3 extreme malice, as well as unethical conduct, neither of 4 which have any place in order of litigation let alone 5 society. 6 "Furthermore, insofar as Mr. Albergo identified 7 that the investors who were seeking to purchase my notes and 8 mortgages were in fact Kennedy Funding, Inc., likewise makes 9 it appropriate for the entry of sanctions against them. 10 "Therefore, based upon the former, it is 11 respectfully requested that the undersigned," it says "by" 12 granted, that should be "be granted" -- "be granted 13 permission to file a motion seeking the disqualification of 14 Damian Albergo, Esquire, David Kohane, Esquire, Neoma Ayala, 15 and the law firm, Cole Schotz Meisel Forman & Leonard, PA, 16 from further representation of any party to this litigation 17 as well as the motion for sanctions against Kennedy Funding, 18 Inc., Jeffrey Wolfer, and Joseph Wolfer. 19 Because of the serious nature of these charges, I 20 immediately made it my business to read the respective 21 certifications filed in support of this application. 22 Particularly pertinent, I found, the affidavit filed by Mr. 23 Campbell, who is an attorney at law of the State of New 24 Jersey. 25 He told us that he was admitted to practice in the 6 1 State of New Jersey in 1971, and maintains a private practice 2 in the city of Bayonne. 3 The name of the firm is Campbell and Campbell. He 4 tells us that a portion of his practice is devoted to acting 5 as outside general counsel to Pamrapo Savings Bank. He 6 states in paragraph 3, "Gregg D. Trautmann, Esquire, 7 approached me in late 2006 about acting as an expert witness 8 on behalf of clients he was going to be representing in 9 lawsuits against a private commercial lender known as Kennedy 10 Funding, Inc.. Mr. Trautmann and I discussed the basic 11 facts of lawsuits on at least two occasions. I indicated to 12 Mr. Trautmann that I would be willing to provide services to 13 his clients as an expert witness. 14 "I know Gregg D Trautmann, Esquire, on account of 15 having utilized Pamrapo as his savings bank as his personal 16 mortgage lender for many years. Mr. Trautmann and his wife 17 currently have three purchase money mortgages, and a line of 18 credit with Pamrapo Savings Bank. My recollection is that 19 Mr. Trautmann and his wife have had a banking relationship 20 with Pamrapo Savings Bank for approximately nine years. 21 "On June 20, 2007, I received a telephone call from 22 an attorney who identified himself, identified himself to me, 23 as Damian Albergo, Esquire. Mr. Albergo advised me that he 24 was associated with the law firm of Cole Schotz Meisel Forman 25 & Leonard, PA. He told me that he represented certain 7 1 unnamed investors who were interested in purchasing mortgages 2 from Pamrapo. 3 "Mr. Albergo went on to advise me that his clients 4 were interested in purchasing the notes and mortgages of only 5 one person, and that person was Gregg D. Trautmann, Esquire. 6 At some point during our conversation Mr. Albergo inquired as 7 to what happened as a result of a foreclosure action, Pamrapo 8 Savings Bank instituted against Mr. Trautmann. 9 "I then recall that Mr. Trautmann had informed me 10 that the law firm of Cole Schotz Meisel Forman & Leonard, PA, 11 was representing Kennedy Funding, Inc., in the various 12 lawsuits that had been filed by his firm against that entity. 13 I then asked Mr. Albergo if he represented Kennedy Funding, 14 Inc. He said yes. And asked me if I had heard of them. I 15 told him that Kennedy Funding was notorious in the lending 16 industry. 17 "At the close of our conversation I told Mr. 18 Albergo I would get back to him. Upon ending the telephone 19 call with Mr. Albergo, I immediately contacted Mr. 20 Trautmann's offices. Gregg Trautmann was unavailable so 21 instead I spoke with his brother, Robert Trautmann," who I 22 understand is here today. Is that correct? 23 MR. ROBERT TRAUTMANN: Yes, Judge. 24 THE COURT: Thank you. 25 "I informed Robert Trautmann of Mr. Albergo's 8 1 telephone call. Within approximately an hour later I 2 received a call from Gregg Trautmann and likewise advised 3 that Mr. Albergo -- a telephone call, Mr. Trautmann requested 4 that I advise him if I received any further communications, 5 whether in the form of telephone calls or letters from Mr. 6 Albergo." 7 When I read these submissions, I must confess that 8 I was astonished because if the accusations had any scintilla 9 of truth, the alleged conduct on the part of Mr. Albergo left 10 a lot of questions open. And so I signed an order to show 11 cause which brings you gentlemen here today. 12 And yesterday I said to my clerk who was, it was 13 around 4:30, I said, "Have we heard from Mr. Kohane?" He 14 said we hadn't. I said call him, and he informed me that he 15 reached Mr. Kohane, who is here today and I thank you, sir, 16 Mr. Kohane told him that he was about to communicate with me, 17 getting his papers together and that he would fax the 18 submission to me. And I told my clerk as soon as you get 19 them, call me. We received them, he received them and read 20 them to me over the phone and I have refreshed my 21 recollection again this morning. To astonishment, chagrin, 22 and sadness -- on the date of June 27, Mr. Kohane wrote to 23 me. 24 "Dear Judge Ackerman: We are the attorneys for 25 defendants Kennedy Funding, Inc., Jeffrey Wolfer, and Joseph 9 1 Wolfer, in this and other pending civil matters. We 2 apologize to Gregg D. Trautmann, Esquire, and the Court for 3 the ill-considered inquiry described in Mr. Trautmann's 4 submission. We made the inquiry without due consideration 5 and in excessive enthusiasm for our client's cause. We 6 explained in the certification of Mr. Damian Albergo the 7 circumstances of litigated matters that lead to our inquiry. 8 Who did so only to provide context, not to make any excuses 9 for our improvident conduct." 10 Mr. Kohane, may I ask you a couple of questions? 11 MR. KOHANE: Certainly. You want me to come to the 12 podium? 13 THE COURT: Before Mr. Albergo made his phone calls 14 which are the subject of other submissions, did he talk to 15 you and explain what he was going to do? Did he tell you 16 what he was going to do? 17 MR. KOHANE: He told me. 18 THE COURT: Keep your voice you up. 19 MR. KOHANE: You want me to come up -- 20 THE COURT: Yes, come on up here. Center stage, so 21 to speak. 22 MR. KOHANE: Your Honor, he advised me that he 23 intended -- he asked me. 24 THE COURT: I am sorry? 25 MR. KOHANE: He mentioned to me and told me that he 10 1 was thinking of making that call, and I approved him doing 2 so. It was a very brief conversation. 3 THE COURT: What? 4 MR. KOHANE: It was a very brief conversation. It 5 was obviously ill-considered and ill thought out, not thought 6 out, but -- 7 THE COURT: Did you glean that he was going to ask 8 this lawyer, Campbell, the questions that were asked, namely, 9 information relating to who Mr. -- whether Mr. Trautmann had 10 mortgages with Pamrapo and he wanted to purchase those 11 mortgages, his clients wanted to purchase those mortgages? 12 Did he indicate he was going to do that? 13 MR. KOHANE: Yes. 14 THE COURT: He did? 15 MR. KOHANE: He told me, yes, he told me that that 16 is what he -- 17 THE COURT: What did you say, sir? You are a 18 partner in this firm. What did you say? 19 MR. KOHANE: To the best of my memory, and it was a 20 very brief conversation, which I said -- 21 THE COURT: However brief. 22 MR. KOHANE: Only because I don't remember it well. 23 But I am sure that I said something to the effect of, go 24 ahead. And I obviously deeply regret having done that and 25 not having -- both not supervised him better, and in my own 11 1 role in approving that phone call. 2 THE COURT: Mr. Kohane, I have never had the 3 pleasure of meeting you before, and I don't know the 4 Trautmanns who are here in court, at least to the best of my 5 knowledge. But I do know your firm. And I have had the 6 pleasure and privilege of dealing with them 35 years, and 7 Mr., is Mr. Cole still with the firm? 8 MR. KOHANE: He is, your Honor. 9 MR. KLEIN: Yes. 10 THE COURT: Thank God. I have had the privilege of 11 having him appear before me in any number of matters. Mr. 12 Meisel, and others, and I must tell you, Mr. Kohane, I 13 thought about this late last night. I have never had one 14 single solitary incident which even caused me any 15 apprehension from them. What I am trying to say, not in 16 defense of the firm, but astonishment, I am listening to you 17 and I haven't spoken to Mr. Albergo, it strikes me as totally 18 out of character with the reputation -- how many lawyers you 19 have in the firm, 130, 120? 20 MR. KOHANE: 110, I think we are at 110 or so. 21 THE COURT: When I say I was astonished, I mean my 22 reaction is based upon the fact that insofar as I know, and I 23 may have been living on another planet, I never heard one 24 solitary complaint which caused me any apprehension from that 25 firm, your firm. And when you tell me you spoke to him, I 12 1 mean, this is outrageous. I mean if you hadn't told me what 2 you just told me, and I am going to give Mr. Albergo the time 3 and opportunity to talk, believe me. If anyone had said that 4 to me, I would have been incredulous with respect to the 5 happening of the event. And I have learned this morning that 6 Mr. Trautmann has filed -- have you filed similar papers with 7 the judges who have also had these actions? 8 MR. GREGG TRAUTMANN: Your Honor, I filed papers in 9 each of the five cases that are pending. 10 THE COURT: That is Judge Hochberg. 11 MR. GREGG TRAUTMANN: And Judge Sheridan. 12 THE COURT: Judge Sheridan. 13 MR. GREGG TRAUTMANN: I believe Judge Sheridan has 14 two cases I filed in. Judge Hochberg has two and your Honor 15 has one. Judge Sheridan has another case that I didn't file 16 in prior to today because that case, Kennedy Funding hadn't 17 been served in yet and Cole Schotz hadn't entered an 18 appearance. That is the class action suit. 19 THE COURT: Thank you. Mr. Kohane, you use words 20 like improvident, exuberant. Forgive me, sir, forgive me. 21 My reaction was this is shameful. Lawyers should not behave 22 in such ways, under no circumstances. I have been 53 years. 23 I am not a babe in the woods. But I can sit on this side of 24 the bench and tell you that I have never and would never 25 tolerate, countenance in any way a situation, I don't care 13 1 what since you placed on the heads of the Trautmanns, and I 2 read that in your papers this morning, two wrongs don't make 3 a right. If they are guilty of any wrong, and I am not 4 pointing a finger at either you, Mr. Trautmann, or your 5 brother. 6 MR. GREGG TRAUTMANN: I understand. 7 THE COURT: But what I am trying desperately to 8 say, and I am not articulating it as well as I should, is 9 this, in my judgment, casts a blemish, not only on Mr. 10 Albergo himself, but the firm. 11 It is incomprehensible to me how this could come, I 12 don't care how bitter it gets, you don't engage in back alley 13 tactics. It is not ethical. 14 I have several questions I want to ask Mr. Albergo. 15 Mr. Klein, I haven't let you talk and I am going to let you 16 talk right now. 17 Thank you, sir. Would you come up here to center 18 stage and keep your voice up? 19 MR. KLEIN: Yes. 20 THE COURT: I have read in the few minutes before I 21 came out here, I know that you are head of the hiring section 22 of the firm. Is that correct? 23 MR. KLEIN: That's correct, your Honor. 24 THE COURT: And you have had a distinguished career 25 in the firm and you are an adjunct professor I believe at 14 1 Seton Hall. Is that correct? 2 MR. KLEIN: That's correct. 3 THE COURT: Go on. 4 MR. KLEIN: I am here because I have been with the 5 firm for -- 6 THE COURT: Keep your voice up. 7 MR. KLEIN: I am here because I, having been with 8 the firm for 27 years, and now being part of its executive 9 committee, we are, I am here to try to make certain that this 10 Court is aware that we are, we fully understand the gravity 11 of the situation. 12 We are not pleased, and hearing your Honor this 13 morning, you probably saw me shaking my head. It is not 14 something that we are proud of having happened. Most of, I 15 am mostly the administrative chair of the litigation 16 department, so I am actively involved, I haven't been 17 involved in any of these cases at all, but I am actively 18 involved in supervising that department. 19 Your Honor, the genesis of their order to show 20 cause was a telephone inquiry, and I believe if you peel it 21 away, there was one very bad question, one, the inquiry about 22 Mr. Trautmann, the notes that might be available for 23 purchase. That question, call it what you want, we have 24 called it improvident, we have called it ill considered. I 25 think Mr. Trautmann called it ill advised. It is all of 15 1 those things. I wouldn't even attempt to try to change your 2 Honor's mind about that. 3 But it was all of those things in hindsight. And 4 as hard as that might be to swallow, and in perception, it is 5 easy to look at now, Mr. Kohane was asked, your Honor asked 6 the question, which we knew your Honor would ask, whether Mr. 7 Albergo was supervised and Mr. Kohane was asked the question 8 by Mr. Albergo, and as he points out, it was a brief 9 conversation. That is no excuse. And maybe he wasn't paying 10 attention. Maybe he was distracted. It doesn't really 11 matter. He did say yes. 12 So it does fall back on the firm. It is a blemish 13 which we will obviously work as hard as we can, as we have 14 for almost the 80 years of our existence now to remedy and 15 rectify. But it turns out that it was one question, and 16 again, not to make excuses, but after a record that your 17 Honor knows how hard we worked to develop a reputation that 18 we have worked so hard to earn, it is a question in looking, 19 in the quest for an edge we were clearly wrong, we were 20 clearly looking for an edge. 21 I guess I am throwing myself on this Court, it is 22 wrong, but it is a question that we don't know, we don't even 23 know where it would have gone. Thankfully, thankfully. I 24 can tell you where it would have gone. Somewhere along the 25 line, these are good attorneys. These are talented, 16 1 reputable. They don't have blemishes. They are terrific. 2 Somebody would have filtered back to me or someone else, I am 3 standing here to tell you that we regret it, but it would 4 have gone no further. And the facts on this record before 5 this Court are that a question was asked and it went no 6 further. Not by way of excuse, but it went no further and I 7 am absolutely firmly convinced and my hope your Honor, based 8 on what you know about the caliber, the quality -- forget 9 quality, the reputations that we work so hard to earn, that 10 your Honor would agree with me that some -- that this would 11 not, that somewhere along the line they shouldn't have 12 requested the question, why are you trying to obtain the 13 information. It is to get an edge. Obviously we were 14 looking -- 15 THE COURT: Forgive me for interrupting, Mr. Klein. 16 Let me argue a little bit. First, why was the call made in 17 the first place? I am going to, if I may carry this a bit 18 forward. I asked myself. Mr. Albergo, is it Albergo or 19 Damian? 20 MR. ALBERGO: It is Albergo, my first name is 21 Damian. 22 THE COURT: Mr. Albergo wanted information. Why 23 did he want information? Let me try to supply a few answers. 24 He wanted information and he wanted information about Mr. 25 Trautmann. And he wanted information about Mr. Trautmann, I 17 1 have said to myself, why? He is in litigation. Why would he 2 want to know who, if that bank, was holding any of the 3 mortgages, purchase money mortgages, of Trautmann. So he 4 could buy them. So his clients could buy them. 5 And I am going to ask, I am going to find out down 6 the road how much they knew because that is a relevant 7 question as well. 8 I am not letting them off the hook either and they 9 should understand that if they are in the courtroom today. 10 Why would they want this information? I came to the 11 conclusion, an evil conclusion, because I have a perhaps a 12 mind that works overtime. Perhaps he wanted the information 13 on behalf of the clients so he could purchase the mortgages 14 so he could, so that his clients could put the squeeze, as 15 we use that colloquial phrase, on him, and on the 16 litigation. 17 Now, I don't know what you call that. If I went 18 across the street to the United States Attorney's office 19 under the proper circumstances, some people make, might 20 characterize that as extortion. I am not accusing the firm 21 or this attorney or Mr. Kohane. But what -- I am letting you 22 know because you have been around since 1987, correct? 23 MR. KLEIN: '87 as a partner. 24 THE COURT: A partner, pardon me. That that 25 pernicious thought went through my mind. 18 1 MR. KLEIN: And I understand that. 2 THE COURT: They wanted to use this as a tool to 3 further their own personal pernicious interests. That is not 4 right. That is not right. I don't know whether it is 5 criminal, attempted criminal behavior or not. I don't know. 6 But I am going to find out. I am going to find out. And 7 what saddens me is what I said on the record because, I mean, 8 I have had nothing but pleasurable experiences with your law 9 firm and I say that without any hesitation, perhaps 10 aggravating Mr. Trautmann and his brother who is sitting 11 there. 12 These are things that your law firm knows should 13 never, never be done under any circumstances, never mind 14 exuberance. Lawsuits, you can get awfully frisky. We all 15 know that. And in the heat of battle, I see lawyers lose it. 16 I am sure you have seen it also. But that I respectfully 17 submit does not excuse in any way, shape or form the kind of 18 back alley tactic which has been described to me and now 19 conceded in an affidavit. 20 I want to let you know, Mr. Klein, what is going 21 through my mind. 22 MR. KLEIN: I appreciate that. Quite frankly, I 23 know what is going through your mind. I really know. 24 THE COURT: I want to know how far I should go with 25 this, to the Bar Association in terms of the ethical aspects 19 1 of the situation, and in light of what I said a few moments 2 ago, which I was thinking out loud, but I don't think I am 3 completely off the reservation when I talk about behavior 4 which could conceivably lead to actions which will be so 5 reprehensible that they might attract the interest of the 6 United States Attorney in this state. 7 I have an obligation to tell you because it is not 8 the first time I have come across behavior which should be 9 rightly condemned. But generally speaking, I must tell you 10 that when I have been occasionally confronted with 11 allegations which sink to that level, most of the time I have 12 said to myself, what else could I have expected under the 13 circumstances. 14 But I can't say that, I could not say that is the 15 reason, I am very glad to see you here today. I never had 16 the pleasure of meeting you. Because of comments I made 17 about the ethical behavior of your firm in the past, which 18 was absolutely justified and which speaks glowingly, this 19 comes as a terrible shock. 20 Now, I interrupted you. You may continue. 21 MR. KLEIN: Your Honor, we are clearly here to take 22 responsibility for our actions. 23 Having said that, your Honor has reached a 24 conclusion which is a conclusion which I understand is very 25 easily reached. I understand that. But I ask your Honor to 20 1 think about the leap that is being taken. And I say this so 2 gently. 3 We are here, again, it is wrong, with bad thinking. 4 Evil, call it what you want, evil thinking. At the outset. 5 But all it was thinking. There was a question asked. We do 6 not know what would have happened. I am telling your Honor, 7 nothing would have happened. Let me, your Honor has to 8 understand how, just bear with me for a moment. There was a 9 reason. 10 Your Honor, there is more than one reason. We put 11 it into the certification. We were looking at Mr. 12 Trautmann's background. We told the Court we were. But he 13 had just filed a class action complaint. We were looking 14 into how we might defeat it or him as class counsel, if there 15 is legitimate arguments that can be made and we were looking 16 to see what we might, might argue, in opposition to him being 17 class counsel. 18 We came across a fact, and that is where the 19 trouble began. It went too far. We used that fact. What 20 was, the fact their appeared to have been a foreclosure 21 action. And Mr. Albergo, with Mr. Kohane's blessing, made 22 the phone call. What he did was he asked the question. A 23 horrible question. I will use the adjectives. I don't have 24 to repeat myself. Ill considered, ill advised, at that 25 point. But to reach the conclusion of what was going to be 21 1 done, if it would have been purchased, I mean, when you buy a 2 mortgage, you buy a file. Who knows what was in there. Mr. 3 Trautmann was the defendant. Could have said all kinds of 4 things. There could have been admissions. We don't know. 5 We are surmising, we are speculating. We are so far down the 6 road. Nobody, the only fact that is before this Court which 7 is a horrible fact, I am admitting, is that the question was 8 asked. And boy, do we wish the question wasn't asked. 9 Everybody involved in this, up and down the line in the firm. 10 But it was asked. 11 THE COURT: I am as sanguine as you are at the 12 moment. I say that with the greatest respect. I don't know 13 Mr. Campbell from a hole in the ground. Suppose he had said, 14 "Oh, yes, Trautmann, he has the following mortgages. You 15 want to purchase them?" 16 Where would we have gone from there? 17 MR. KLEIN: That is what I am asking the Court. 18 Because I am telling the Court, nowhere. 19 THE COURT: But coming from an attorney's lips, 20 under those circumstances, -- 21 MR. KLEIN: There was bad thinking. I agree. What 22 likely was being thought about was wrong. At best. That is 23 what we will take responsibility for. But to take the leap 24 to what would have -- if it had happened, as your Honor plays 25 it out, I don't know what I would have said to this Court. 22 1 But today I can say to this Court that what is in 2 front of your Honor is one horribly worded question. And we 3 totally respect this Court's inherent authority and 4 appreciate why your Honor entered the order to show cause, 5 but, and again, we are here apologizing but I do ask this 6 Court to recognize that there was one question, and 7 everything that follows is speculation. 8 And when you add all of the backgrounds of the 9 lawyers involved in the firm, I don't think the inference 10 that your Honor is going to be drawing, and I say that with 11 all due respect, I don't say it to make an excuse because we 12 are here to take responsibility, but the harsh and 13 extraordinary remedies that are being sought based on a bad 14 question seem, I would submit, are excessive, and I would ask 15 the Court to accept our proffer that this was the worst 16 exercise of judgment that could have been made, but that 17 thankfully it ended there and we ask you to consider that it 18 did end there. 19 There is nothing, nothing that proves or from which 20 it could even be or should be inferred anything more would 21 have happened. And again, I don't say it by way of an excuse 22 because we are, we are not here in a coverup or anything like 23 that. 24 THE COURT: May I ask -- pardon me for 25 interrupting. 23 1 MR. KLEIN: I was done any way. 2 THE COURT: May I ask Mr. Albergo a few questions? 3 MR. KLEIN: Certainly. He is here for that very 4 reason. 5 THE COURT: As an officer of the Court, Mr. 6 Albergo. 7 MR. ALBERGO: Your Honor, would you like me to step 8 up to the podium? 9 THE COURT: Yes, come on up here. 10 We know you had these conversations, they are 11 admitted. Correct. 12 MR. ALBERGO: Correct. 13 THE COURT: Why did you tell Mr. Campbell you had, 14 quote, "a client who might be interested in buying the notes 15 and mortgages?" 16 MR. ALBERGO: Your Honor, I believe that the answer 17 to that question would require me to disclose potential 18 attorney-client confidences, and I am not in a position to 19 waive that attorney-client privilege. 20 I can say how I came to -- the chronology of 21 events, how I came to ask that question, which is laid out in 22 my certification. 23 That day we had gotten class action, a putative 24 class action complaint by Mr. Trautmann. I had discussed it 25 with one of the partners in the firm, Mr. Leighton, about the 24 1 likelihood that there would be a motion for a certification 2 of a class. 3 Now, one of the ways we may want to try to pose 4 that is to look to see if class counsel can adequately 5 represent the class. I did a search on Westlaw, and found 6 about Mr. Trautmann's name in the dockets and I found this 7 case where he had been sued by a mortgage lender in '05. In 8 about the span of five minutes, I saw that. I spoke to Mr. 9 Kohane about, inquiring about the status of that foreclosure 10 action and we discussed potentially acquiring that mortgage. 11 And I called Mr. Campbell right after that, which 12 was a very short conversation, which all happened within a 13 few minutes and I want to say that I also signed that letter 14 of apology. I deeply apologize. I sincerely apologize. It 15 was wrong and I am not making my excuse is for the questions 16 I asked whatsoever. 17 THE COURT: Suppose Campbell indicated that the 18 bank was doing sub mortgages, what would you have done? 19 MR. ALBERGO: I would have told Mr. Leighton and 20 Mr. Kohane that the bank was interested in it, but there was 21 nothing that I could have done about that. 22 THE COURT: What would be your intention? 23 MR. ALBERGO: I would pass that information along 24 to my superiors to see if there was any real interest in 25 actually going forward and buying these things. If it was 25 1 something that would actually be consummated, contemplated, 2 more than just an inquiry. 3 THE COURT: Without indicating what your client 4 said, if anything, may I assume that before you made this 5 phone call you had discussions with your clients? 6 MR. ALBERGO: I had no discussions with my clients 7 directly on this topic. 8 THE COURT: None? 9 MR. ALBERGO: I did not. 10 THE COURT: How long you been working on the 11 Kennedy Funding matters? 12 MR. ALBERGO: Since about November of '05, is when 13 I got involved. 14 THE COURT: November when? 15 MR. ALBERGO: '05, your Honor. 16 THE COURT: Over two years. A little less. 17 MR. ALBERGO: Approximately. 18 THE COURT: Thank you. 19 Mr. Klein, is there anything more you want to say, 20 sir? 21 MR. KLEIN: No, your Honor. Thank you very much 22 for hearing us. 23 THE COURT: I will hear from which Trautmann, 24 Gregg? 25 MR. GREGG TRAUTMANN: Yes, your Honor. 26 1 THE COURT: Thank you. I don't believe I have ever 2 had the pleasure of meeting you before. I don't think so. 3 MR. GREGG TRAUTMANN: No, your Honor, I have not 4 been before you previously. 5 May it please the Court, your Honor, I apologize to 6 the Court for having to bring this application as a result of 7 the conduct of Mr. Albergo, Mr. Kohane, Mr. Leighton, and 8 Kennedy Funding and its principals. 9 I have been the subject, your Honor, of an 10 unprecedented attack upon my personal life for representing 11 clients against Kennedy Funding, Inc.. Now, your Honor has 12 explored a lot of the areas that I wanted to talk about. 13 Clearly Kennedy Funding wanted to purchase my notes and 14 mortgages, and something that I don't have the judgment of 15 conviction, your Honor, but I did see a newspaper article on 16 this and I saw submissions in a case, Shelton v. KFI of 17 Arkansas, but it is my understanding on May 30, 1990, Joseph 18 Wolfer who is the defendant in this case, who is the 19 patriarch of this Wolfer clan, was convicted by then U.S. 20 attorney Sam Alito of bank and securities fraud. He was 21 sentenced as I recall to five years probation, maybe $750,000 22 fine. That is my understanding of the background of the 23 Kennedy clan. Clearly, your Honor, what they would have done 24 here -- 25 MR. KLEIN: Your Honor, I -- 27 1 MR. GREGG TRAUTMANN: -- was purchase my notes and 2 mortgages and then attempted to use them to extort from me 3 either in the existing cases that are pending presently, that 4 are in the suit, or the ones that is about to be served upon 5 them, the class action suit. They couldn't beat me in court, 6 your Honor, so they are trying to take me out another way. 7 Your Honor, when I got this call from Don Campbell, 8 it was actually on my anniversary. My wife and I were going 9 out to dinner. 10 Needless to say, I was angry. My first thoughts 11 were not of submitting papers to the Court. I read this 12 certification from Albergo, and frankly, your Honor, they, in 13 my view, they compounded their unethical conduct with what 14 they have submitted. It takes them eight paragraphs to get 15 to what is before the Court. The first paragraph is an 16 introduction. The second paragraph complains that I filed 17 other lawsuits, and they complain about that. That is not 18 before the Court. 19 The third paragraph complains that the cases that 20 we are involved in with that firm are unusually acrimonious. 21 That is not before the Court. Paragraph 4 states that they 22 filed Rule 11 sanctions against my office. That is not the 23 issue now before the Court. Paragraph 5 complains that in 24 the past I have purchased Google ad word accounts to try to 25 find what is going on with this. It is all over the country, 28 1 really, what is going on. In fact, one of them I knew the 2 client is from Ireland. I have clients in Mexico, Georgia, 3 Florida, Wisconsin, Michigan, Nevada, Arizona, against 4 Kennedy Funding. All different individuals. They complain 5 about, they complain that I have argued about their unethical 6 behavior in other instances. Paragraph 5. Paragraph 6. 7 They complain that I brought RICO claims against the law firm 8 of Cole Schotz in the Lion's Gate matter. And I did. Those 9 claims were dismissed. 10 Frankly, I respectfully disagree with the Court, 11 but those were dismissed. 12 Paragraph 7. They attempt to argue the merits of 13 the class action complaint. What they have done, your Honor, 14 with their letter to the Court, the transmittal letter where 15 they profess to apologize, it is almost childish. They say 16 they are sorry. Then they say in the first seven paragraphs, 17 but he made us do it. 18 Paragraph 8, this is where we learn that Mr. 19 Albergo was not willing to take the fall for either Mr. 20 Leighton or Mr. Kohane. Now, nobody mentioned when your 21 Honor asked the questions, the conversations with Mr. 22 Leighton, but Mr. Albergo made sure it is in there because he 23 knows he is in hot water. He is not going down alone. He is 24 coming in here and telling you he spoke with the two 25 partners. Leighton is the senior partner, as I understand 29 1 it. Nobody mentions that. 2 He mentions the conversations with his client, but 3 he doesn't want to reveal privilege. That is fine. I 4 wouldn't expect him to. 5 But clearly Kennedy Funding, he identifies it to 6 Mr. Campbell were the investors that wanted to buy my notes 7 and mortgages. That is what they do. 8 So we know that Leighton, Mr. Leighton and Mr. 9 Kohane are his, in essence, coconspirators. He claims that 10 the plan, this plan took two to three minutes between them 11 and another one or two minutes on the phone with Mr. 12 Campbell. 13 Now, he claims he got this information on the class 14 action that morning. The phone call to our office which Mr. 15 Campbell says came immediately after he hung up with Mr. 16 Albergo was in the afternoon, I think about three o'clock. I 17 think I called him back about 3:30 or four o'clock. They 18 had all day to think about this, think about what they were 19 doing. 20 I believe him when he says he got it in the 21 morning. The phone call didn't come until the afternoon. 22 And this charge I don't make light of. But based 23 on this certification of Mr. Albergo, we know that he is a 24 liar. And I say that because in the certification he tells 25 Mr. Campbell, he says, I have clients who want to buy notes 30 1 and mortgages. He said that in his certification. Mr. 2 Campbell confirms that. But here today he is saying, well, 3 it wasn't that. So either he lied to Mr. Campbell when he 4 made the inquiry or he is lying here today. But both of the 5 positions can't co-exist. 6 Frankly, your Honor, I don't believe much of what 7 Mr. Albergo puts in his certification is worthy of belief. 8 Frankly, I don't think Mr. Kohane, Mr. Albergo or Mr. 9 Leighton should be members of the bar of this state. But 10 that is for another day, I suppose. 11 Your Honor, I have no doubt what the next step 12 would have been for Kennedy Funding, for Damian Albergo, Mr. 13 Kohane and Mr. Leighton. They would have purchased these 14 mortgages. If they wanted to use them in the class action to 15 say that I didn't have the requisite independence to 16 represent the class against Kennedy Funding because Kennedy 17 Funding was my mortgagee, they might have been successful in 18 getting me out of that position. Okay. 19 But then the vengeance would have began, your 20 Honor. There is no doubt in my mind when they held those 21 notes and mortgages, then the vengeance would have began on 22 my house, and office building that I own and my law office 23 building. 24 THE COURT: People carry out vengeful acts in a 25 vengeful manner, who knows as human beings, they do many 31 1 things, and sometimes people step over the line. That is 2 what is bothering me here very much. 3 MR. GREGG TRAUTMANN: The words on your bench I 4 believe in Latin are "Let justice be done though the heavens 5 fall." Across the bench. 6 Your Honor, this is a case, it is unbelievable. I 7 ask the Court to impose harsh sanctions. I don't think the 8 firm of Cole Schotz as a firm is a bad firm. Let me say 9 that. I think they are a reputable firm by and large. I 10 think there are certain members of that firm who have 11 displayed just unbelievable bad behavior, well thought out in 12 concert with their client bad behavior. 13 As a firm, I don't believe it is a bad firm. But I 14 would ask your Honor to impose sanctions against Mr. Albergo, 15 Mr. Kohane, Mr. Leighton, the firm if your Honor feels is 16 appropriate, and as well, whether it is today or in the 17 future, against Kennedy Funding, and their principals for 18 what they have tried to do as well. 19 An attorney, your Honor, shouldn't have to worry 20 about his family. I am not going to tell the Court, because 21 I don't want to give them the satisfaction, of the thoughts 22 that went through my mind for my three children because of 23 what they did. 24 THE COURT: I am not going to decide this today. 25 Mr. Klein, what I would really appreciate you 32 1 doing, because it is obvious to me that you have certain 2 responsibilities in this law firm, and your appearance here 3 today I think, I suspect, is indicative of the fact that 4 hopefully responsible members of the firm are going to look 5 at this matter very carefully, very maturely, very 6 responsibly, and very ethically. 7 I want you to sit down with your colleagues. I 8 mentioned a couple of them. You know the rest. These are 9 the people who have built the reputation of this firm which I 10 assume they are very proud of. And do not want that 11 reputation sullied. 12 What has been brought to my attention here today 13 and yesterday, I must tell you, is, maybe I have been as 14 subtle as a sledge hammer, so to speak, has caused deep 15 concern on my part. And I want you to sit down and I want 16 you and hopefully one or more members of that firm to come 17 back here next week, Monday, July 2, at 2:30. I have another 18 matter on in the morning. And I don't know what I am going 19 to do here. 20 I say that to you, your adversaries, because while 21 I am deeply saddened, I am resolute, I will not allow things 22 like this to happen as long as I have a breath in this 23 courtroom. I will not allow it. For obvious reasons. It 24 goes against every principal that I believed in and I have 25 tried, conveyed to lawyers who I have had the privilege of 33 1 having before me. 2 I want you to go back to them, and I want a report 3 from your firm as to what action, if any, has been taken. I 4 don't believe this case calls for a slap on the wrist. I 5 don't believe it does. It is much too serious when a 6 person's good name is involved. And I know you will agree 7 with me. And a firm's good name. 8 I want action. Can you be here next week, Mr. 9 Trautmann? 10 MR. GREGG TRAUTMANN: Yes, your Honor. 11 THE COURT: See you next week, at 2:30, Monday. 12 (Off the record discussion) 13 THE COURT: Four days from now, that is the 2nd. 14 Monday, July 2. I want you here on the second day of July. 15 Let me know what your thoughts are. And if you have any 16 other thoughts, I will be delighted to hear them. 17 Mr. Trautmann, I invite you, if you have any other 18 information which sheds light on what I consider a very 19 sordid chapter. Don't be bashful. Let me know. I want 20 truth. I don't want reckless charges. I want truth. Then I 21 will endeavor to make a decision which comports with justice. 22 I don't know whether the heavens are going to fall or not, 23 but I will attempt, I will endeavor to do justice in this 24 very sad situation. 25 I will see you on Monday. That is the second of 34 1 July. 2 Thank you. 3 Anybody have an objection to getting a transcript 4 of today's proceeding? I am ordering it. Thank you. 5 (Adjourned at 12:45 p.m.) 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 35 1 C E R T I F I C A T E 2 3 Pursuant to Section 753 Title 28 United States 4 Code,the following transcript is certified to be an accurate 5 record as taken stenographically in the above-entitled 6 proceedings. 7 8 9 ______________________ 10 LYNNE JOHNSON, CSR, CM 11 Official Court Reporter 12 13 LYNNE JOHNSON, CSR, CM 14 Official U.S. District Court Reporter 15 P.O. Box 6822 16 Lawrenceville, New Jersey 08648 17 973-645-2513 18 19 20 21 22 23 24 25