Free Motion for Miscellaneous Relief - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Honorable Marcia S. Krieger Case No. 04-cv-1225-MSK-BNB (Consolidated with 04-cv-1226-MSK-BNB) MALIK M. HASAN, M.D., an individual; and SEEME G. HASAN, an individual, Plaintiffs, v. GOLDMAN SACHS 1998 EXCHANGE PLACE FUND, L.P., a Delaware limited partnership; GOLDMAN SACHS 1999 EXCHANGE PLACE FUND, L.P., a Delaware limited partnership; GOLDMAN SACHS MANAGEMENT PARTNERS, L.P., a Delaware limited partnership; GOLDMAN SACHS MANAGEMENT, INC., a Delaware corporation; THE GOLDMAN SACHS GROUP, INC., a Delaware corporation; GOLDMAN, SACHS & CO., a New York limited partnership; JOHN DOES 1-100, individual persons whose true identities are unknown; and LENDER PARTIES 1-100, business entities whose true identities are unknown, Defendants. T EN ME D F N A T ' T O F RP E L SO A DO H RR L E H A D E E D N S MO I N O R C U I N N T E E I F

This Motion seeks relief against plaintiffs for their false and misleading testimony, discovery responses, and assertions concerning the execution and notarization of the "usr t n gem n ad net et er eti s ( usr t n gem n )n S bc p o A r etn Ivs nR pe n t n"" bc p o A r et ad ii e m s ao S ii e " r a d ou etfrh 19 ad 99 xhne ud. usato h C ut i e n e t dcm n o t 98 n 19 E cag F ns P r ntt orsn r t le s e u e ' he power to remedy such testimonial and discovery abuse, the Named Defendants seek: A. An order precluding plaintiffs from disputing that the Subscription Agreements for the 1998 and 1999 Funds were executed, notarized and agreed to by Dr. Malik H sn " aa"(98 ad o H sn (99,epcvl aa ( sn)19)n bt aas19)r et e . H h s i y An order precluding plaintiffs from disputing that Hasan (for 1998) and plaintiffs (for 1999) are bound by the arbitration clause in the Limited Partnership Agreements for the Funds (including any amendments thereto). 1

B.

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C.

Fees and costs sufficient to compensate the Named Defendants for the additional bres rnfl c a d y ln f ' i odc ad l t snt n udn w ogu y r t b p i ism s nut n a o o aco l ee a tf c , s i plaintiffs for their misconduct. Such other relief1 as the Court may find just and appropriate.2

D. I.

P A N IF ' N A U E C N E N N T E19 A D1999 L I T F S MA Y B S S O C R I G H 98 N SUBSCRIPTION AGREEMENTS AND SUBCRIPTION BOOKLETS The 1998 (Ex. A) and 1999 (Ex. B) Subscription Agreements are material matters in this

cs. h N m d e nat e ottr ep i isc i so riao a bsdi ae T e a e D f dn 'f r o e r ln f 'lm ta t t n r ae, e s f s f a tf a bri e n significant part, on the binding representations, warranties, and agreements that were created when Hasan (1998) and plaintiffs jointly (1999) executed the Subscription Agreements (which are sections of the Subscription Booklets) as required to make their investments in the Exchange Funds. By these Agreements, plaintiffs represented and warranted that they received, read, udrodad ged oh t m o t Pi tPae et m r dm ( P " ad ne t ,n ar t t e s fh r a l m n Me oa u s" Ms)n so e e r e ve c n P Forms of Limited Partnership Agreements (both of which include the arbitration provision). (Ex. A at 30-32; Ex. B at 32, 34). Plaintiffs were admitted into the Funds only after executing and delivering these Agreements. Plaintiffs have sought to dispute the effect of the Subscription Agreements by raising specious claims and arguments including: (a) Hasan refuses to acknowledge that he executed and had notarized the complete 1998 Subscription Agreement on October 22, 1998, despite the dcm n s ln v ec tt cn a ;b p i is ae s r dht aa's ou et p iei neoh ot r () ln f hv as t t H snsignature to ' a d e ry a tf ee a the 1998 Subscription Agreement was improperly notarized, making it invalid; (c) plaintiffs have
1

The Named Defendants request leave to amend their exhibit list to add the two new documents referenced herein; and to add Morris Sandler to their witness list. These requests of course would be rendered academic if the Court grants the requested preclusion order at or before trial. 2 Pursuant to D.C.COLO.LCivR 7.1A, prior to filing this motion, the Named Defendants conferred in good faith with counsel for plaintiffs regarding the relief sought in this motion. The parties communicated by email on October 17 and 18, 2005. The parties were unable to resolve the dispute.

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asserted that the Named Defendants manufactured the bound 1998 and 1999 Subscription Booklets after plaintiffs received and executed only selected signature pages; and (d) Hasan has maintained frivolous, dishonest, and contradictory claims about the documents plaintiffs received in 1998 and 1999 before plaintiffs made their decisions to invest in these Funds. As detailed at pp. 11-12, infra, the Named Defendants have been forced to expend substantial resources to r u p i is( nt t sii ) otvd lm . e t ln f 'c s n y h t g cn i c i s f e a tf o a l fn re a A. Dsoey f h T uhC nenn H sns o ca n A dF l i vr O T e rt o crig aa 'C nel t n a e c me s Statements Regarding The 1998 Subscription Agreement

The immediati pt frh Mo o it N m d e nat d cvr o em e so t s t n sh a e D f dn ' i oe n u i i e e s s y September 27, 2005 of a 1999 Hasan affidavit (Ex. C) which puts the lie to the charge plaintiffs have leveled against the notary.3 H snsi a rt t 19 S bc p o A r m n w s aa's nt eoh 98 usr t n ge et a g u e ii e notarized by Lorraine Tozzo, a New York notary, who worked at Halcyon Asset Management, LLC, at 477 Madison, 8th Floor, New York City. Hasan has asserted and testified that he did not hv h s nt e o r e frh S bc p o A r m n Pa tf Second Amended ae i i a rnt i d o t usr t n ge et ln f ' sg u az e ii e . i is Complaint asserts that the Agreement is invalid as a result. (Sec. Am. Compl. (Doc. #32) at ¶63(d)(ii).) Plaintiffs have charged that Ms. Tozzo ­ person who has no connection to the a parties or to this case ­ violated her oath by notarizi H snsi a rtt 19 n aa's nt eoh 98 g g u e Subscription Agreement in his absence. In his 1999 Affidavit, at paragraph 7, Hasan admits that he met with Morris Sandler and Marc Ostrow, as representatives of AEQ, LLC, on October 22, 1998, in New York City. Another cuteod rmt sm cs a H sns 99 fdv so shth ades f orr r f h a e ae s aa'19 A f ai hw t t dr o c o e i t a e s
3

The 1999 affidavit was submitted in September 1999, in the matter of AEQ, LLC v. Monument Systems Inc. and Malik Hasan, No. 99CIV4665 (WHP), United States District Court, Southern District of New York ­ which in Hasan was personally named as a defendant.

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AEQ was 477 Madison Avenue, 8th Floor ­ very building, on the very floor where Ms. the Tozzo works. (See Ex. D) The Named Defendants located Mr. Sandler, who has submitted an affidavit in this case dated October 7, 2005. (Sandler Aff. (Ex. E).) Snl 'a i v aett t aa m t i Snl ad so o O t e2 a47 ad r fd i ts h H sn ewt ad rn O t w n c br 2 t 7 es fa t t s a h e r o Mai nFor ( niet i H sns 99 fdv ) hrT zo okdad ht d o, l 8 c s t wt aa'19 A f ai w e oz w re,n t s o o sn h i t e a Sandler introduced Hasan to notary Tozzo on that day for the purpose of notarization of a dcm n Snl 'a i v sur wtt nt i t nt l adh s on et oy f ou et ad r fd i qa s i h o r ao ie ,n t w r t i n o . es fa t e h e az i s f e sm Ms. Tozzo that she worked at that address, that she notarized the signature on October 22, that she did not know Hasan, and that she would not have notarized his signature unless he personally appeared before her. (Tozzo Tr. 4:8-5:23; 25:20-27:10; 33:16-34:21; 37:9-16; 40:18-25 (Ex. F).) The Named Defendants first learned of H sns 99 fdv olt og df s aa'19 A f ai n h uh e ne i t y r e cusl i eedn r er i o r i sigt n ea i H sn T e one sn pnete a hn pe o li i r r n aa. h AEQ case was ' d s c t v u t ao g d g resolved and the case file closed on January 19, 2000. Counsel obtained a copy of the court record (including the 1999 Affidavit) from the federal archives on September 27, 2005. It is clear that Hasan thought that his prior affidavit would never be discovered and his lies exposed. In this proceeding, Hasan lied about and concealed the circumstances of his 1998 notarization in his sworn interrogatory answers, at deposition, and in his several sworn affidavits. H snsw r r pneo nn r gt y ek g pc idtlr a ig iat ie at aa's on e os ta i e oa r sei seic e i e r n h cv i th s tr o n f as g d s i ts e time he executed and had notarized the 1998 Agreement did not state the truth: In the next two days [October 21 and 22, 1998] he [Hasan] had various business meetings with Mr. Waxman, Mr. Andy Paul, and an associate of Dr. Steinberg and Mr. Shulman. He also made a day trip to Philadelphia to see his eye specialist.

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(Resp. to Int. 11 (Ex. G).) Pa tf r pne os oi n f A Q Snl , so o a ln f 'e os de ntd ty E , ad rO t w r i is s ei e r meeting at 477 Madison on October 22. Hasan has never supplemented this particular interrogatory answer to provide a complete and honest answer. H sns eoion testimony was similarly dishonest. He flatly claimed that he was not aa'dpsi t present at the notarization of his signature (Hasan Tr. 141:1-143:8 (Ex. H)); he did not provide any details of the locations where he held meetings in New York in October 1998; and he asserted he could not remember whether his meetings took place midtown, uptown or downtown. (Hasan Tr. 152:14-18 (Ex. H).) Hasan further misled the defendants by testifying that after signing it he gave the signature page to his driver, Perry Allen, for mailing to Goldman Sachs in Houston. (Hasan Tr. 158:2-8 (Ex. H) MrAl , og,antorbr e aa'c i s . . lnt uhcno cr oa H sns lm . ) e h o t a H snsw s on fdv sn h poed g A gs20 ( o.6)n Sp m e aa'to w r a i i it s rcei ( uut04 D c#9 ad et br fa t i n e 2005 (Doc. #191)) also misrepresent and concealed the facts. Neither identifies the meeting with A Q Snl ad so ,rd i tH sns r ec a47 d o A eu o O t e E , ad rn O t w o am t o aa'pe ne t7 Mai n vne n c br e r s s s o 2,98 A t btpre'oes ea i rm d t ii pcos n gv t ir ot 219. f r o a i fr i xm n s aeh rn et n ad aeh re r, e h ts nc e e s i e p s Hasan provided his second false affidavit in order to try to cover his tracks. This September A f aic i s " f se r o et n btaso i l eh t taot c br 2 fdv lm a r r hd e lco" uf ltd c s t r h buO t e2. i ta ee cl i i so e u o H sns uli ad a e ei r u e ip i iscusl bd ah uestioning. aa'dp cy n f s dn le ldn ln f 'one s a f t q it l a st a tf ' i F rxm l H sns onepth fl wn qet n o o r T zo o ea p , aa'cuslut o o i uso t nt y oz: e e l g i a Q. If Dr. Hasan were to testify that he has never been in the offices of Halcyon or even in the building in which your office is located, can you explain how your signature got on this document? A. Absolutely not. I have absolute -- absolutely not.

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(Tozzo Tr. 33:9-1 (xF. T e uso,s hae, cusl r r eti tt wt s 5 E . ) h qet na pr di one se e n t noh i es ) i s s ' p s ao e n , defense counsel, and the Court that Hasan would so testify ­ truthfully. See Colo. RPC 3.1. H sns 99 fdv , e t rorr od,n Snl 'a i v so t tuhet oy aa'19 A f ai t o ecute rsad ad r fd i hw h sc t i n i th h c es fa t a sm could not be truthful. B. Pa tf O nF rniE iec H s h w H sns et n T B l nis w oes v ne a S o n aa 'T smo y o e i f' c d i False

Only a few weeks before discovery of the foregoing evidence conclusively disproving one Hasan claim, his own forensic document expert put the lie to other Hasan claims about the Subscription Agreements. The Court may recall that the Named Defendants have produced the original bound Subscription Booklets for the plaintiffs for the 1998 and 1999 Funds (Dep. Exs. 1Aad 1 ) H w vrbcue f ln f 'lm t thy ee e ad o p t ol 0 n 1A . o ee eas o p i isc i sh t r i d n cm le n , a tf a a e cv ed y selected individual pages from these Booklets, the Named Defendants retained a forensic document examiner (J. Donald Vacca of Colorado) to inspect and conduct analyses of the original Booklets to refute these claims. Vacca reported his findings on July 11, 2005. Plaintiffs thereafter retained their expert, Paige Doherty, whose findings were reported September 5. Both set of findings refute key assertions of Hasan. 1. The 1998 Subscription Agreement and Booklet

At the hearing on March 8 and at his deposition, Hasan claimed that he received only pages 7, 18, 39, 47, and 49 from the 1998 Subscription Booklet. (March 8 Hearing at 26:18-28:6 (Doc. # 116).) He further claimed that on October 22, 1998, when he signed the Subscription Agreement, the only page he had of that Agreement was page 39. (Hasan Tr. 190:7-11 (Ex. H); March 8 Hearing at 37:1-3: ( o.16. Pa tf o n oes ei ne a so nht 7 1 D c#1) ln f ' w fr i v ec hshw t 1 ) i is nc d a this testimony is false. 6

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The 1998 Subscription Agreement begins at page 29 of the Booklet, labeled "U S RP I NA R E N A DI V S ME TR P E E T TO S" n ed o S B C ITO G E ME T N N E T N E R S N A I N ,ad ns n page 39, with t sbc br s nt e n nt i t n ( A). The original Booklet is h usr e si a rad o r ao. Ex. e i ' g u az i printed on double-sided pages, meaning (in this case) that pages 29-30 of the Agreement appear o t f nad ak f n pi e set B t pre'oes dcm n ea nh r tn bc o oe r t he o a i fr i ou etxminers agree that eo nd . h ts nc there was no alteration or tampering with the binding of the original pages of the 1998 S bc p o B ol (ep e ln f 'one s a i sget n rcuao o t pr g. usr t n ok tdsi p i iscusl ere ugso o acst n fa e n) ii e t a tf ' lr i i m i Hasan printed his name on page 29 (the first page of the Subscription Agreement), when he made his decision to invest in the 1998 Fund, which means that he also then possessed page 30. (Hasan 2005 Affidavit (Doc. #191) a¶. B ts e'xm nrfudht aa'pi i o t8 o i sea i son t H sns r t g n ) h d e a nn pg 2 " dn d ot page 31, meaning that he also possessed pages 31-32 (the front and ae 9 i et " n n e o bc o ao esetaeeu o,ot r tH snsetimony. (Vacca Rpt. at 2-3 (Ex. I); ak fnt rhe txct ncn a o aa't h ) i ry s Doherty Rpt. at 3 (Ex. J); Doherty Tr. 91:24-93:6 (Ex. K).) Hasan signed the last page (39) of the Subscription Agreement (Doc. #191 at ¶8), and it was notarized, on October 22, 1998. (Ex. A; Tozzo Tr. 17:18-18:5 (Ex. F).) Because of the twosided printing, pages 39-40 are the front and back of a single sheet, and preceding pages 37-38 are the front and back of a single sheet. Both document examiners agree that ink from the notary sao pg 3 " as r d t pg 3 w e t tae a p cd vr ae 9m eie eln ae 9 t nf r "o ae 8 hnh pg w s l e oepg 3 i m d ty r ee a a al a ent i t n w e t B ol w s c sd) (Vacca Rpt. at 2 (Ex. I); Doherty Rpt. at 3 f r o r ao ( hn h ok t a "l e" t az i e e o . (Ex. J).) On the indisputable forensic evidence alone, Hasan possessed at least pages 29-30, 3132, 37-38, and 39-40 when he executed the 1998 Subscription Agreement.

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2.

The 1999 Subscription Agreement and Booklet

In his November 2004 Affidavit (Doc. #69), Hasan admitted receiving the 1999 Subscription Booklet. However, at the March 8 hearing before Judge Krieger he recanted his Affidavit testimony, previously scripted by his lawyer, and claimed that he received only selected pages of the Booklet. (March 8 Hearing at 41:9-43:1 (Doc. # 116).) At deposition, Hasan claimed that he did not receive pages 33-34 and 37-38 of the 1999 Subscription Agreement. (Hasan Tr. 293:9-20 (Ex. H).) The testimony contradicted his November Affidavit and is refuted by both forensic examinations. The 1999 Subscription Agreement (which has the same headings, representations, agreements and signature blocks as the 1998 Subscription Agreement) appears at pages 31-40 of the 1999 Subscription Booklet (Ex. B), which also is printed on double-sided pages. Both document examiners found no evidence of tampering with the binding of the 1999 Booklet. Hasan printed his name and other information on the first page of the Subscription Agreement (31), which had page 32 on the reverse side. (Hasan Tr. 291:24-293:8 (Ex. H).) Pa tf o n ou etxm nron t t aa'pi i f mpg 3 " dn d ot ln f ' w dcm n ea i fudh H sns r t g r ae 1 i et " n i is e a nn o n e o page 33, meaning that he also had pages 33-34 (the front and back of the next sheet) at the time he executed the Subscription Agreement, contrary to his deposition testimony. (Doherty Rpt. at 5 (Ex. J); Doherty Tr. 76:19-78:5 (Ex. K).) The Hasans admit that they both signed and notarized the last page (40) of the Subscription Agreement on August 18, 1999. (Hasan Tr. 294:3-10 (Ex. H); March 8 Hearing at 46:4-46:14 (Doc. #116); Seeme Hasan Tr. 103:2-17 (Ex. L).) Because of the two-sided printing, t y a t f n s epg 3. o dcm nea i rar t tln f ' ad ri h hd h r ti ,ae 9 B t ou etxm n s ge h p i ishnw in e eo d h e e a a tf tg 8

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from page 40 indented onto page 38, meaning that plaintiffs also had pages 37-38, again contrary tH sns lm . D hr T. o aa'c i s ( oe y r78:7-79:3 (Ex. K).) On this evidence alone, plaintiffs possessed a t pages 31-32, 33-34, 37-38, and 39-40 when they executed the 1999 Subscription Agreement. 3. Incontrovertibly, the Hasans executed the key representations and warranties in the Subscription Agreements

The foregoing, incontrovertible evidence means, at a minimum, that at execution plaintiffs knew of all the following key terms and provisions from the Subscription Agreements: From pages 30-31 (1998) and 32 (1999): Plaintiffs knew that the offering documents for the investment included a Form of Limited Partnership Agreement and a Confidential Private Placement Memorandum. These matters are confirmed in the capitalized printing at the top of these pages and in the two other paragraphs on the page. From pages 30-3 (98 ad 2 19)Pr r h ,A ko l gm n o 1 19)n 3 (99, a ga 1" cnwe e et f a p d R ci " T e xct g ln f"cnwegs r e tfh Private ee t h eeu n p i i ako l e" e i o t p: i a tf d cp e Placement Memorandum for the 1998 and 1999 Funds as well as the Form of Limited Partnership Agreement for both Funds. These contemporaneous ako l g etr u p i ist t oy n c i sfsm d a et cnwe m n e t ln f 'e i n ad lm ,it ae f rh d s f e a tf sm a r t e N m d e nat m t no a e D f dn ' o o ttransfer and/or stay for arbitration (Doc. #50), that e s i plaintiffs did not receive either the PPM or a Form of Partnership Agreement at the time of investment. From pages 32 (1998) and 34 (1999), Paragraph 5(d): The executing plaintiff " peet w r n ad ges t t e hs a fl r d n udrad"h r r n , a at n ar "h h "a cr u y e ad ne t s t e s s r s e a e l a sn e PPM, the Partnership Agreement, and other Offering Documents. The 1998 and 1999 PPMs include, at pages 69 (1998) and 74 (1999), a description of the arbitration provision in the Partnership Agreement. Both Partnership Agreements, at Article 16.17, sets forth the arbitration agreement. These cn m oaeu r r eti s n w r n e cnl i lr u p i is ot pr ose e n t n ad a ats oc s e e t ln f ' e n p s ao r i u v y f e a tf c i sfsm d a et N m d e nat m t nor s rn/ s for lm ,it ae f rh a e D f dn ' o o tt nf ad rtay a r t e e s i a e o arbitration, that plaintiffs did not receive either the PPM or a Form of Partnership Agreement at the time of investment. From pages 39 (1998) and 40 (1999): The executing plaintiff " peetad rr n n e s s warrants that each of the above representations,gem n o udrad g" ar et r ne t i s e s sn n applied to him/her. Paragraphs 1 and 5(d) contain such representations and warranties respecting the PPM and Form of LPA for the 1998 and 1999 Funds. 9

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From page 37, Paragraph 10, of the 1999 Subscription Agreement: Each plaintiff "cet aot ad geso lo t t m ad rv i s fh Pr e h acp ,dp ,n ar t a fh e s n poio o t a nr i s s e l e r sn e t sp A r m n ad geso e on t r y L t it ta e a gahec ge etn ar t b bud h e . a rnh sm pr r ,ah e e eb" e a a p p i i api e G l a Scs s ihrt e n l flgnad t reln f po t o m n ah a h / " u ada u aetn aony a tf nd d se r w t in-fac t a og t rh g,xctt Pr e h A r m nad n t o m n o et nseeu h a nr i ge etn ay " , h i e e t sp e amendments thereto. These same provisions appear in the 1998 Subscription Agreement, executed by Hasan, at Paragraph 10, page 36. The record shows that Goldman Sachs did execute a Partnership Agreement and several amendments t r o o t 19 F n ad 99 udo p i isbhl h e frh 98 ud n 19 F n,n ln f ' ea . et e a tf f Thus, the Hasans ­ execution of the Subscription Agreements ­ before them and at had made the representations and warranties that render their key claims in this case false. C. E e H sns C ret " f vn aa '" orc d A fidavit Is False e

Pa tf f s c i s x n ee tt a edd fdv t t aa fe o ln f 'a e lm et d vnoh m ne a i i h H sn id n i is l a e e fa t a l September 12, 2005 (Doc. #191), only after his own forensic examiner revealed his previous testimony to b f s. h "m ne" fdv if s, ied g n i o p ti al s ea e T e a edd a i i sa em s ai adn m len te t l fa t l l n c e a three respects: If slc i shth a edd fdv isb ie bcue aa' ta e lm t t m ne a i i sum td eas H sns l y a a e fa t t r o et n a be r r hd y ir i o "eoio eh i" n e lco hs en e e e b h e e fdpsi xi t ad cl i fs s vw tn bs "eo dpsition testimony. N sc im a i n f d T e te etsa e " o uht s r d ti . h s t n if s e e e ie am l because the amended affidavit was motivated and submitted to protect Hasan from further impeachment by the findings of his own document examiner. H sns ou etxm nro p t her examination on September 2. aa'dcm n ea i cm le e ed H snsa e m ne a i v w s xct o Sp m e 7 f r aa ad aa'f s a edd fd i a eeu d n et br a eH sn n l fa t e e t counsel prepared it to try to rehabilitate Hasan. It falsely claims that Hasan now recalls that he received more than just signature pages to the 1998 Subscription Booklet. The statement falsely proclaims a refreshed recollection on this matter. Hasan all along has known the truth. The nwc i ir l a m nf t e r o et n i edd n t cnom tt e lm se l " aua u d e lco"n ne ol o ofr oh a ay cr cl i t y e findings of his document examiner. The September affidavit does not provide any further details of his execution and notarization of the 1998 Subscription Agreement on October 22, 1998. It continues to conceal important details about those events, notwithstanding his attempt to manipulate his September 2005 affidavit and prot e oto cm upr d f rt "o e e f clean. " 10

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D.

T e udn I oe U o T e a dD f d ns y aa ' h B res mp sd p n h N me e n a tB H sns e Concealments, Falsehoods And Dissembling

Exhaustive discovery and investigation (at substantial cost) was required to refute m t i apc o H sns lm : a r lset f aa'c i s ea s a 1. Deposition and investigations involving printers and binders. H snsn i aa'i tl ia

accusation was that the Named Defendants originally provided only signature pages and later assembled and manufactured the 1998 and 1999 Subscription Agreements and Subscription Booklets. To refute these allegations, the Named Defendants have produced current and former employees who have denied providing only signature pages and manufacturing booklets. The Named Defendants have located and also helped to arrange depositions from printers and binders of the bound offering documents, who denied they ever provided only signature pages or unbound booklets. (Graziano Tr. 4:13-6:24; 13:14-16:7; 65:4-14; 66:6-13; 67:11-16; 68:6-69:10; 72:7-73:14; 77:8-19; 81:5-82:20; 113:23-114:18 (Ex. M); DeLuca Tr. 4:10-6:1; 13:5-14:8; 32:521; 50:5-51:1; 99:11-23 (Ex. N).) 2. Engagement, investigation and depositions of document examiners. The

Named Defendants hired a forensic document examiner (Vacca) to inspect the 1998 and 1999 Subscription Booklets. His report is supported by the forensic examiner hired by plaintiffs (Doherty). Both examiners agree that Exhibits 10A and 11A (the Subscription Booklets) have not been altered. Both found indentations from writing of plaintiffs proving that plaintiffs had in their possession pages and agreements they denied having. (Vacca Rpt. at 2-3 (Ex. I); Doherty Rpt. at 3, 5 (Ex. J).) Both examiners were deposed and confirmed these matters.4

4

There is only one respect in which the two experts differ: Mr. Vacca is confident that the Hasans filled out and executed bound subscription Booklets. Ms. Doherty did not deny that; rather, she said that either there were bound

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3.

Discovery and investigation concerning the 1998 Notary. The Named

Defendants contacted and produced for deposition the notary, Ms. Tozzo, from the 1998 B ol. h t ti t hr o r ao,ei t th pea dtte nat r us ad ok t S ee ie o ent i t ndn d h se r r iadf dn 'e et n e sf d az i e a pe e s q , confirmed that she would have notarized the document only if Hasan appeared before her. (Tozzo Tr. 4:8-5:23; 25:20-27:10; 33:16-34:21; 37:9-16; 40:18-25 (Ex. F).) 4. Sac o ohr aa li t nt f dH sns 99 fd v . detailed erh f te H sn ig i o i aa '19 A f ai As tao n i t

above, counsel was able to find Hasns 99 fdv , e t rorr od,n t n r ne a'19 a i i t o ecute rsad h a ag f a th h c e r fr . ad r a i v ola ea i eednsa h fr i digt n eod, o MrSnl ' fd i n f rnn pneter o a h e li i r rs es fa t y t d c c v t ao c because Hasan provided false interrogatory answers and other responses concealing his meeting at the o r'of e n c br 219. nt ys fc o O t e2,98 a i o Al fh ( d oew s eesa d y aa'f s c i shteee e ad lo t sa m r a ncs te b H snsa e lm t h r i d n i n ) it l a a cv executed only signature pages for the 1998 Booklet, and selected pages for the 1999 Booklet, and his repeated concealment of material information that would refute the claim. II. THIS COURT SHOULD ENTER THE REQUESTED PRECLUSION ORDER AND OTHERWISE SANCTION PLAINTIFFS FOR THEIR MISCONDUCT Federal courts have the inherent power to sanction a party for testimonial and discovery misconduct. Chavez v. City of Albuquerque, 402 F.3d 1039, 1044-46 (10th Cir. 2005); Archibeque v. Atchinson, Topeka and Santa Fe Ry. Co., 70 F.3d 1172, 1174 (10th Cir. 1995); C m u r s c.n l IcvA . ud aeIc 133 F.R.D. 166, 168-69 (D. Colo. 1990). o pt As sIt. n.. m F nw r,n., e o ',

B ols rh pgs e "t kd i pr cagm n B t r i o hr eoio v e r elhw ok to t ae w r s ce"n e etl n et u a e e f edpsi i o e a o e e e a f i . vw tn d v s absurdly improbable is her alternative hypothesis of maintaining perfectly aligned stacking while writing on the pages she found the Hasans had at execution. In any event, it is no longer relevant whether the Booklets were bound or unbound, now that it has been conclusively established that plaintiffs had, at execution, the pages containing the key representations and warranties.

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In Archibeque, frxm l t T n Cr ia i e ar lors re d m s n a o ea p , e et i u fr d tacut odr i i i eh h c t fm i ' s sg lawsuit for false statements and concealment during discovery. In that case, the plaintiff brought suit against her employer seeking to recover damages for a back injury allegedly sustained during her employment. 70 F.3d at 1173. Pa tf i e oa r r pne w ogu y ae t ln fsn r gt y e oss rnfl f l o i i' t r o s l id disclose that she had suffered and had been treated for back pain prior to the alleged accident. Id. At deposition, plaintiff testified that she had no recollection of prior back pain. Id. After independently learning that the plaintiff had sought and received medical treatment for such pain prior to the alleged accident, the defendant moved to dismiss for discovery misconduct. Id. at 1173-7. h d tccuti i e p i i'at n Id. at 1174. Affirming, the Tenth 4 T e ir tord m s d ln fs co. si s s a tf i Circuit stated: Our case law makes it clear that a district judge may dismiss an action for discovery violations. . . . The district court in the instant case noted the degree of pe d esf r b [e nat adt i pc [ln fs at n hdwt r ui uf e y df dn n h m at p i i' cos a i j c ed e ] e a tf ] i h r a t [e nat] b i t pea frr l e r o df dn sait o r r o ta gd e ' ly pe i.The court noted the culpability of [plaintiff] which we described above, specifically addressing the failure to disclose, the false statements, and the court's determination as to the credibility of [ln fs s t et t t e f l e w r m r oe i t The court found p i i' te n h hr au s e e vrg . a tf ] a m s a ir e e sh t tp i i' wlu cnute os i e e d i t judicial process, and h [ln fs iflodcsr ul n r r wt h a a tf ] l i y tf e h e expressly stated that it had considered lesser sanctions and determined that they were not appropriate. . . . We conclude that the district court's order of dismissal did not constitute an abuse of discretion under the circumstances of this case. Id. at 1174-75. Here, plaintiffs have raised numerous specious factual claims regarding the Subscription Agreements for the Funds and have withheld important evidence refuting those specious claims. Pa tf m sodcad bt co goes to the heart of the dispute regarding arbitrability and ln f ' i nutn osut n i is c r i has unnecessarily prolonged, complicated, and confused these proceedings. The misconduct has caused defendants to incur significant burdens and expense in defending against false and 13

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baseless charges, prejudicing defendants. See Chavez, 402 F.3d at 1044 (finding prejudice to defendant from perjury by plaintiff regarding facts material to the claims at issue). Federal courts also have the inherent power to sanction parties for abuse of the judicial process. Chambers v. NASCO Inc.,0 US 3,3 19) " i oi t i e npw ro 51 ..23 (91. I n k gh n r to et n v n e he punish conduct which abuses the judicial process, a court must exercise discretion in fashioning an appropriate sanction, which may range from dismissal of a lawsuit to an assessment of aonyses Id. ln f ' i odchsee li e e d i t j iapoes See t re'f . t e" Pa tf m s nuta svr yn r r wt h u c l rcs i is c e tf e h e d i . Chavez, 402 F.3d at 1045 (plaintiff substantially interfered with the judicial process by misleading the court and defendant rea i eet" a r loh dt m nt n fh cn a gr n vn m t i tt e r i i o t et l dg s ea e e ao e r i u it cs.; s en h ae )Archibeque, 7 F d t15 a i i f d ght ln fsa e n s e " 0 . a17 ( fm n i i t p i i'f s ad 3 fr g n n a a tf l dcp v dpsi adn r gt yet oy r ui d e natn "e os i e e d eet e eoio n i e oa r t i n pe d e df dnad sr ul n r r i tn t r o sm j c e i y tf e wit t j iapoes) T eathtln f ' ier eti s n o i i s ae en hh u c l rcs . h f t p i ism s pe n t n ad m s o hv be e di " c a a tf r s ao sn uncovered does not ameliorate the interference and obstruction that has taken place. See Chavez, 42 . a14 ( t e atht ln fm y ae a e nothing as a result of his perjury 0 F d t05 " ] f t Pa tf a hv gi d 3 [h c a i i n de nt enhte hu nte acoe fr icnut . os om a t h sol ob snt nd o h odc ) a d i s " T e v ec so sht ln f ' i odchs en ifln ibd ah T e h ei ne hw t p i ism s nut a be wluadn a f t h d a a tf c l i. requested preclusion order should be entered. See Archibeque, 70 F.3d at 1175 (dismissing action despite the fact that plaintiff was not warned that her misleading discovery responses could lead to dismissal). False and misleading testimony and discovery responses indisputably have serious consequences. See Chavez, 402 F.3d a14 ( r vrbcueh pr r u t05 " e e eas t e ui s Mo o , e jo testimony was given under oath, an additional warning would have been superfluous at best. . . . there is no requirement . . . to direct [a sworn witness] ttlh t t" oe t r h ) l e u .. 14

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Indeed, the requested preclusion order is an appropriate in limine order independent of p i ism sodc T ea ic at tnet s rcnl i lbud y er eti s ln f ' i nut h l s l rh i s ra oc s e on b r e n t n a tf c . w e a v o e uv y p s ao and warranties such as those made by the Hasans here ­ whether or not they read the documents the attested they read. Zobrist v. Coal-X, Inc., 708 F.2d 1511, 1517-18 (10th Cir. 1983); Adams v. Merrill Lynch, Pierce, Fenner & Smith, 888 F.2d 696, 701 (10th Cir. 1989); Dodds v. Cigna Securities, Inc., 12 F.3d 346, 351 (2d Cir. 1993); DaPuzzo v. Globalvest Mgmt. Co., L.P., 263 F.Supp.2d 714, 733-34 (S.D.N.Y. 2003); Cheshire Place Assocs. v. West of England Ship O nrMu IsAs .L xm or)815 F. Supp. 593, 597 (E.D.N.Y. 1993); Silas La Bier v. w es t n. s n(ue bug, . ' Merrill Lynch, Pierce, Fenner & Smith, 177 A.D.2d 767, 768 (N.Y. App. Div. 1991). Finally, the Court should also order plaintiffs to pay the expenses incurred by the Named D f dn a ar u o t ad i a bresc a db p i is m sodc ada a e nat s e l f h dio l udn r t y ln f ' i nut n s e s st e tn ee a tf c sanction, and the Court should grant the additional relief requested at p. 2, fn. 1, supra. DATED: October 18, 2005 Respectfully submitted, s/ Bruce Featherstone Bruce A. Featherstone Matthew D. Collins FEATHERSTONE DESISTO LLP 600 17th Street, Suite 2400 Denver, Colorado 80202 Telephone: (303) 626-7100 E-mail: [email protected] Max Gitter Nancy I. Ruskin CLEARY GOTTLIEB STEEN & HAMILTON LLP One Liberty Plaza New York, New York 10006 Telephone: (212) 225-2000 E-mail: [email protected] ATTORNEYS FOR THE NAMED DEFENDANTS 15

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CERTIFICATE OF MAILING I hereby certify that on October 18, 2005, I electronically filed the foregoing THE N ME D F N A T ' A D E E D N S MOTION FOR PRECLUSION AND OTHER RELIEF with the Clerk of Court using the CM/ECF system, which will send notification of such filing to the following e-mail addresses: Glenn W. Merrick SENN VISCIANO KIRSCHENBAUM MERRICK P.C. [email protected]

s/ Bruce Featherstone Bruce A. Featherstone FEATHERSTONE DESISTO LLP 600 17th Street, Suite 2400 Denver, Colorado 80202 Telephone: (303) 626-7100 Facsimile: (303) 626-7101 E-mail: [email protected] ATTORNEYS FOR THE NAMED DEFENDANTS

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