united states district court district of...

UNITED STATES DISTRICT COURT

DISTRICT OF CONNECTICUT

)

SECURITIES AND EXCHANGE COMMISSION, )

)

Plaintiff, )

)

v. ) Civil Action No.

) 3:17-cv-00155-KAD

MARK J. VARACCHI and )

SENTINEL GROWTH FUND )

MANAGEMENT, LLC, )

)

Defendants, )

and )

)

RADAR ALTERNATIVE FUND LP and )

RADAR ALTERNATIVE MASTER FUND SPC, )

)

Relief Defendants. )

)

RECEIVER’S MEMORANDUM OF LAW IN SUPPORT OF MOTION TO COMPEL

Pursuant to Fed. R. Civ. P. 37 and 45 and Local Rules 7 and 37, Jed Horwitt, Esq., the

Court-appointed receiver in this action (the “Receiver”) for defendant, Sentinel Growth Fund

Management, LLC, and relief defendants, Radar Alternative Fund LP (“Radar LP”) and Radar

Alternative Master Fund SPC (“Radar SPC,” and together with Radar LP, the “Relief Defendants,”

and together with Sentinel, the “Receivership Defendants”), by and through his counsel, Zeisler &

Zeisler, P.C. (“Z&Z”), hereby submits the following Memorandum of Law in Support of his

Motion (the “Motion”) to Compel directed to A.L. Sarroff Management, LLC (“Sarroff

Management”) and A.L. Sarroff Fund, LLC (the “Sarroff Fund,” referred to collectively along

with Sarroff Management as the “Sarroff Entities”). In support thereof, the Receiver asserts as

follows:

Case 3:17-cv-00155-KAD Document 78 Filed 11/16/18 of 14

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I. NATURE OF THE PROCEEDINGS AND BACKGROUND

On February 2, 2017, the plaintiff, the Securities and Exchange Commission (the

“Commission”) commenced this action by filing its Complaint against the defendants, Mark J.

Varacchi (“Varacchi”) and the Receivership Defendants. The Commission’s Complaint alleged

that the Defendants engaged in a fraudulent scheme to misappropriate the assets of certain

individuals and businesses who sought to invest in the Relief Defendants (collectively, the

“Investors”), and that in the course of their scheme, the Defendants commingled their assets with

the Investors’ funds.

Varacchi has since admitted to operating a Ponzi scheme through the Receivership

Defendants. On April 10, 2017, Varacchi consented to the entry of a judgment (the “Consent

Judgment”) in this action. (Doc. No. 11-1). In a separate criminal proceeding pending before the

Southern District of New York, United States v. Varacchi, Crim. No. 1:17-cr-00076-NRB

(S.D.N.Y.), Varacchi also pleaded guilty to a criminal information charging him with counts of

securities fraud, wire fraud, and conspiracy to commit securities and wire fraud. “The criminal

information charged Defendant Varacchi with misappropriating, for the benefit of himself and

others, funds that investors provided Sentinel for the purchase and sale of securities, and then

obtaining funds from other investors in order to make payments to investors whose funds he had

misappropriated.” (Id., ¶ 2).

On May 1, 2017, the Connecticut District Court (Bolden, J.) entered the Consent Judgment,

inter alia, enjoining Varacchi and the Receivership Defendants from further federal securities law

violations and entered an Order appointing the Receiver (the “Original Receivership Order”).

(Doc. Nos. 12-13). On February 14, 2018, the Court entered an amended order appointing the

Receiver (the “Amended Receivership Order,” referred to collectively along with the Original


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Receivership Order as the “Receivership Orders”).1 (Doc. No. 47). The Receiver’s investigation

indicates that approximately twenty-five investors who deposited funds with the Receivership

Defendants have unredeemed principal investments totaling approximately $20 million.

“Receivership Assets” and the “Receivership Estate” are defined in the Receivership

Orders as “all property of whatever kind of Sentinel and the Relief Defendants….” (Id., ¶ 1).

Pursuant to the Receivership Orders, the Receiver is authorized to assume control of, marshal,

pursue, and preserve the Receivership Assets with the objective of maximizing the recovery of

assets, and, to the extent that assets recovered are inadequate to make defrauded Investors whole,

ensuring that the distribution of those assets is as just and equitable as practicable; (id., ¶ 2.); to

take necessary and appropriate actions for the preservation of Receivership Assets or to prevent

the dissipation or concealment of those Assets; (id., ¶ 5. C.); and to issue subpoenas, bring legal

actions, and pursue, resist, and defend all suits and legal proceedings concerning the Receivership

Assets. (Id., ¶ 5. D.-G.).

Further, the Receivership Orders authorize the Receiver to “investigate [or] prosecute . . .

actions in any state, federal or foreign court or proceeding (id., ¶ 19), and “to investigate the

manner in which the financial and business affairs of the Receivership Defendants were conducted

and, after obtaining leave of this Court, to institute such actions and legal proceedings as the

Receiver deems necessary and appropriate to recover funds transferred from the Receivership

Defendants . . . .” (Id., ¶ 20). Fraudulent transfer claims thus belong to the Receivership Estate

and are Receivership Assets.

Pursuant to the Original Receivership Order, on November 8, 2017, the Receiver filed a

Motion on Consent for Leave to Commence Litigation Against Alan L. Sarroff (“Sarroff) and

1 The Receiver requested the Amended Receivership Order for procedural reasons that are not germane to

the Motion.


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Sarroff Management, which the Court granted on November 9, 2017. (Doc. Nos. 37-38). On

November, 13, 2017, the Receiver filed a complaint against Sarroff and Sarroff Management,

thereby commencing litigation captioned Horwitt v. Alan L. Sarroff and A.L. Sarroff Management,

LLC, Doc. No. 3:17-cv-01902 (D. Conn) (hereinafter, the “Sarroff Litigation”). (Sarroff Lit., Doc.

No. 1). On February 9, 2018, the Receiver filed an Amended Complaint to specify the dates of

the alleged transfers received by Sarroff and Sarroff Management. (Sarroff Lit., Doc. No. 15).

Through the Sarroff Litigation, the Receiver seeks to avoid and recover approximately $15 million

in fraudulent transfers made from the Receivership Defendants to Sarroff and Sarroff Management

(collectively, the “Sarroff Transfers”).

On May 11, 2018, the Receiver served Sarroff and Sarroff Management with Requests for

Production (the “Receiver’s Requests for Production”) in the Sarroff Litigation. Thereafter, the

Receiver, Sarroff and Sarroff Management met and conferred numerous times to discuss and

narrow the Receiver’s Requests for Production in hopes of working through a complicated

discovery process as efficiently as possible without judicial intervention.

The Receiver’s Request for Production # 10 (“RFP #10”) sought “all documents or

communications concerning any transfer between [Sarroff or Sarroff Management] and Varacchi

or a Receivership [Defendant] (including transfers made by Varacchi or a Receivership

[Defendant] for [Sarroff or Sarroff Management’s] benefit).” (Receiver’s Request for Production

in the Sarroff Litigation, #10, attached hereto as Exhibit A). In response to RFP #10, Sarroff and

Sarroff Management produced heavily redacted bank statements that appear to only show transfers

directly between Sarroff or Sarroff Management, on the one hand, and a Receivership Defendant,

on the other hand. These redacted statements do not purport to show the sources from which

Sarroff Management obtained funds to invest with the Receivership Defendants or, more


5

importantly, the persons to whom Sarroff Management subsequently transferred funds that it

received from the Receivership Defendants.

Through information obtained during discovery in the Sarroff Litigation, as well as

publicly available information, the Receiver believes that Sarroff Management either (1) received

the Sarroff Transfers as an agent or conduit for the Sarroff Fund and/or other Sarroff affiliated

entities; or (2) at minimum, subsequently transferred the funds it received from the Receivership

Defendants to the Sarroff Fund or one or more affiliated parties. Without limitation, the Receiver’s

belief is based on the following:

• A March, 2014 Investment Management Agreement (“IMA”) with Sentinel refers

to Sarroff Management as the client in certain instances and it refers to the Sarroff

Fund as the client in another, but the Receivership Defendants appear to have made

all transfers to any Sarroff Entity to Sarroff Management;

• The Sarroff Fund is the sole client to a second IMA with Sentinel, dated January 1,

2015;

• Electronic communications produced by Sarroff and Sarroff Management in the

Sarroff Litigation indicate that Sarroff Management lacked the financial

wherewithal to engage in transactions of the size at issue in the Sarroff Litigation

on its own account;2

• The New York Department of State’s Website indicates that the Sarroff Fund and

Sarroff Management both made their initial corporate filings on the same date: May

2 The Receiver describes these communications only generally for purposes of the Motion because Sarroff

and Sarroff Management have marked them as “confidential” pursuant to the Court’s Standing Protective

Order (See Sarroff Litigation, Doc. No. 5). The Receiver reserves the right to contest this designation at a

later time.


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21, 2012, and that both Sarroff Entities share the same address for service of

process: 43 Meadow Woods Road, Great Neck, New York, 11020;

• Private investment funds customarily contract with affiliated entities to manage

their assets; and

• On June 28, 2012, the Sarroff Fund filed with the Commission a Notice of Exempt

Offering of Securities, Form D, which was signed by an individual in his capacity

as “Managing-Member of [the Sarroff Fund’s] Manager, A.L. Sarroff

Management, LLC.”

In an effort to balance any potentially legitimate privacy concerns that Sarroff and Sarroff

Management may have regarding truly unrelated financial activity with the Receiver’s right to

discovery concerning the subsequent transfer of funds initially made from the Receivership

Defendants, the Receiver proposed that Sarroff and Sarroff Management produce the following

(without waiver of the right to seek additional information at a later time):

[C]opies of the statements that have already been produced, but with

all redactions removed that concern (i) the subsequent transfer of

funds received by either Defendant from a Receivership

[Defendant]; and (ii) the consideration received by either Defendant

in exchange for the subsequent transfer of funds they received from

a Receivership [Defendant]. In addition, if the production of

additional statements is necessary to provide this information, we

request the production of those statements as well.

Counsel for Sarroff and Sarroff Management refused, claiming that because the Receiver had not

plead any subsequent transfer claims, the Receiver is not entitled to discovery on subsequent

transfers.

Rather than engage in a protracted dispute about whether the Receiver was or was not

entitled to discovery regarding subsequent transfers in the Sarroff Litigation before he plead a

claim to avoid subsequent transfers, the Receiver instead issued and served the Sarroff Fund and


7

Sarroff Management with subpoenas (the “Subpoenas”) in this action, because the Receivership

Orders entered in this action charge the Receiver with the duty and power to investigate and

prosecute actions to avoid and recover fraudulent transfers made by the Receivership Defendants.

(See Amended Receivership Order, Doc. No. 47, ¶¶ 19-20). In relevant part, the Receiver sought

the following through the Subpoenas:

As to Sarroff Management:

• #2: Produce all Documents (Including Communications) Concerning the Transfer of the

proceeds derived, to any extent, from the Transfers of Property [from the Receivership

Defendants to Sarroff Management] identified in Schedule A (attached hereto); and

• #3: Produce all statements for the bank account [in which Sarroff Management received

all transfers from the Receivership Defendants] number XXXXXX06 held at Citibank N.A.

for the period of November 1, 2013, through and including August 31, 2018.

As to the Sarroff Fund:

• #1: Produce all Documents (Including Communications) Concerning Your legal

relationship with each of the following: (i) Sarroff [Management], (ii) Sarroff, and (iii)

[Lawrence] Smith;

• #3: Produce all Documents (Including Communications) Concerning any Transfer of

Property between You and Sarroff [Management] made at any time during the period of

November 1, 2013 through and including August 31, 2018; and

• #4: Produce all Documents (Including Communications) Concerning any Transfer of

Property between You and either (i) Varacchi or (ii) any Receivership [Defendant]

(including Transfers of Property made by Varacchi or any Receivership [Defendant] for Your


8

benefit) at any time during the period of November 1, 2013 through and including August 31,

2018.

On October 12, 2018, Sarroff Management, through counsel, filed a single set of objections

(the “Objection”) to both Subpoenas (notwithstanding that one of them was directed to the Sarroff

Fund—thereby implicitly conceding that Sarroff Management is, in fact, the Sarroff Fund’s agent).

More importantly, notwithstanding that Sarroff Management refused to provide documents

concerning subsequent transfers in the Sarroff Litigation on the grounds that the Receiver had not

yet alleged any subsequent transfers, Sarroff Management objected to the production of similar

information requested through the Subpoenas in this action, arguing that the Subpoenas seek

“documents the Receiver has already obtained or had the opportunity to obtain in [the Sarroff

Litigation].” Thus, Sarroff Management refused to provide this information in the Sarroff

Litigation because it claimed that subsequent transfers were not relevant to the Sarroff Litigation,

and the Sarroff Entities object to producing this information in this case because they claim it

relates to the Sarroff Litigation.3

Sarroff Management further asserted boilerplate objections claiming that each of the

above-mentioned requests were overly broad, unduly burdensome, “confidential and private and

of a sensitive nature” and “disproportionate to the needs of the case.” The Subpoenas are attached

hereto as Exhibits B and C, respectively, and Sarroff Management’s Objection to the Subpoenas

is attached hereto as Exhibit D.

3 On October 26, 2018, Plaintiff filed a Motion to Amend his Amended Complaint in the Sarroff Litigation

and Cite in the Sarroff Fund as an Additional Defendant (the “Motion to Amend”), seeking to allege that

Sarroff Management received the Sarroff Transfers on the Sarroff Fund’s behalf and/or for its benefit.

(Sarroff Litigation, Doc. No. 52). The Receiver has not yet sought to allege subsequent transfers in the

Sarroff Litigation, because all information concerning subsequent transfers made by Sarroff Management

remains under Sarroff Management’s exclusive knowledge and control.


9

On November 1, 2018, the Receiver’s counsel and counsel for Sarroff Management and

the Sarroff Fund engaged in a telephonic conference to meet and confer regarding the Subpoenas

and the Objection thereto. During that conference, the Receiver indicated that the Receiver would

likely accept documents sufficient to evidence (i) transfers between Sarroff Management and the

Sarroff Fund that relate to investments in or transfers from the Receivership Defendants (subject

to an agreement regarding how the relationship between transfers and the Receivership Defendants

would be determined); and (ii) the relationship between Sarroff Management and the Sarroff Fund

as it concerns transfers to or from, or their relationship with, the Receivership Defendants. Sarroff

Management and the Sarroff Fund communicated their outright refusal to provide any statements

identifying transfers beyond the heavily redacted statements that Sarroff Management already

provided (which are limited to Sarroff Management’s direct transfers to, and receipts from, the

Receivership Defendants). They further indicated that they would discuss internally the Receiver’s

request concerning the legal relationship between Sarroff Management and the Sarroff Fund.

However, to date they have not yet provided any additional information or communicated any

intent to do so.

The Receiver hereby moves to compel Sarroff Management and the Sarroff Fund to

produce: (1) documents sufficient to show their legal relationship in all respects that concern the

Receivership Defendants; and (2) documents identifying all transfers between Sarroff

Management and the Sarroff Fund that in any way concern investments into the Receivership

Defendants and the transfer or subsequent transfer of funds received from the Receivership

Defendants.


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II. ARGUMENT

Fed. R. Civ. P. 26(b)(1) permits discovery “on any nonprivileged matter that is relevant to

any party’s claim or defense and proportional to the needs of the case, considering the importance

of the issues at stake in the action, the amount in controversy, the parties’ relative access to relevant

information, the parties’ resources, the importance of the discovery in resolving the issues, and

whether the burden or expense of the proposed discovery outweighs its likely benefit.” Fed. R.

Civ. P. 45 permits a party to issue a subpoena to command a third-party to produce documents.4

Fed. R. Civ P. 45(d)(2)(B) permits the recipient of a subpoena to object to the subpoena and it

permits the person serving the subpoena to move to compel compliance in response to an objection.

In the present case, the Receivership Orders direct the Receiver to, inter alia, investigate

and prosecute actions related to fraudulent transfers made by the Receivership Defendants. (See

Amended Receivership Order, Doc. No. 47, ¶¶ 19-20). All transfers made in furtherance of a

Ponzi scheme constitute fraudulent transfers because “transfers made in the course of a Ponzi

scheme could have been made for no other purpose other than to hinder, delay or defraud

creditors.” Gowan v. Patriot Group, LLC (In re Dreier LLP), 452 B.R. 391, 423 (Bankr. S.D.N.Y.

2011). Moreover, “[i]n the Second Circuit, when transfers are made by a corporation that is

dominated by the wrongdoer, a receiver appointed to recover assets for the receivership entity—

rather than for a wrongdoer who manipulated the dominated entity—has standing to bring claims

on the corporation’s behalf.” Carney v. Horizon Invs., 107 F. Supp. 3d 216, 229 (D. Conn. 2015)

(quoting Carney v. Montes, 2014 U.S. Dist. LEXIS 21769 (D. Conn. Feb. 21, 2014)).5

4 The Sarroff Entities are not parties to this enforcement action.

5 Copies of unreported decisions cited herein are included in an appendix hereto.


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Conn Gen. Stat. § 52-552i(b) permits a creditor of a debtor who has made a fraudulent

transfer to recover the value of the transfer from “(1) the first transferee of the asset or the person

for whose benefit the transfer was made, or (2) any subsequent transferee other than a good-faith

transferee who took for value . . .” Therefore, the Receivership Orders direct the Receiver to

investigate and prosecute fraudulent transfer actions against initial transferees of fraudulent

transfers from the Receivership Defendants, “the person for whose benefit the[se] transfer[s] were

made” and subsequent transferees who received fraudulently transferred property from initial

transferees.

Federal courts routinely allow discovery of third-party’s financial information where it

relates to a pending action. See e.g., Griffith v. United States, 2007 U.S. Dist. LEXIS 36672, at

*6-7 (S.D.N.Y. Apr. 24, 2007) (permitting discovery into a non-party tax debtor’s financial

information to determine the non-party debtor’s relationship to a trust purportedly established by

the plaintiff); Sierra Rutile Ltd. v. Katz, 1994 U.S. Dist. LEXIS 6188, at *8-10, 13 (S.D.N.Y. May

11, 1994) (permitting third-party financial discovery, because (i) it was relevant to alleged claims

of collusion between the plaintiff’s executive and a third-party judgment debtor; (ii) confidentiality

orders protect against proprietary concerns implicated by financial production; and (iii) the Rule

26 standard for discovery, applicable to subpoenas through Rule 45, is very broad). In addition,

because bankruptcy trustees and receivers are “outsiders” to fraudulent transactions made in

furtherance of Ponzi schemes, “discovery to identify the specific subsequent transfers by date,

amount and the manner in which they were effected” are necessary, particularly where an initial

transferee and potential subsequent transferees “are part of a group of interrelated individuals and

entities . . .” Picard v. Estate of Chais (In re Barnard L. Madoff Inv. Sec., LLC), 445 B.R. 206,


12

236 (Bankr. S.D.N.Y. 2011). Whether parties received subsequent transfers “from one another is

a question to which they, and they alone, have the requisite information to respond.” Id.

In the present case, the Court has charged the Receiver with the duty of investigating and

prosecuting fraudulent transfers made by the Receivership Defendants. While the Receiver’s

preference and inclination was to conduct discovery concerning transfers to the Sarroff Fund

and/or its relationship to, and interest in, the Sarroff Transfers within the Sarroff Litigation,

notwithstanding that the Sarroff Fund is not yet a party to that litigation, Sarroff and Sarroff

Management elected to resist the Receiver’s necessary and legitimate document requests

propounded therein by objecting on, at best, hyper-technical relevancy grounds. However,

because the Receivership Orders, which entered in this action, expressly permit the Receiver to

investigate fraudulent transfer claims that are not yet the subject of pending litigation, the Receiver

respectfully requests that the Court grant the Motion. Simply stated: the information sought

through the Motion is discoverable by the Receiver, the result is the same regardless of whether

the Sarroff Entities produce it in this action or the Sarroff Litigation, and the Sarroff Entities

implicitly elected to submit the issue to this Court by objecting to the Receiver’s request in the

Sarroff Litigation on relevancy grounds.

WHEREFORE, the Receiver respectfully requests that the Court (1) grant the Motion; (2)

enter an order requiring the Sarroff Fund and Sarroff Management to produce: (i) documents

sufficient to show their legal relationship in all respects that concern the Receivership Defendants;

and (ii) documents identifying all transfers between Sarroff Management and the Sarroff Fund that

in any way concern investments into the Receivership Defendants and the transfer or subsequent

transfer of funds received from the Receivership Defendants; and (3) grant such further relief as

the Court deems just and proper.


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Dated at Bridgeport, Connecticut, this 16th day of November, 2018.

Respectfully submitted,

JED HORWITT, ESQ., RECEIVER

By: /s/Aaron A. Romney

Stephen M. Kindseth (ct14640)

Aaron A. Romney (ct28144)

Rion M. Vaughan (ct30440)

Zeisler & Zeisler, P.C.

10 Middle Street, 15th Floor

Bridgeport, CT 06604

Telephone: 203-368-4234 X 245

Facsimile: 203-549-0872

Email: [email protected]

[email protected]

[email protected]

His Attorneys


mailto:[email protected]



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CERTIFICATE OF SERVICE

I, Aaron A. Romney, hereby certify that a copy of the foregoing, all Exhibits hereto and

the Motion were filed electronically and served by mail on anyone unable to accept electronic

filing on the date hereof. Notice of the foregoing, all Exhibits hereto and the Motion will be sent

by e-mail to all parties by operation of the Court’s electronic filing system or by mail to anyone

unable to accept electronic filing as indicated on the Notice of Electronic Filing. Parties may access

this filing through the Court’s CM/ECF System. In addition, copies of the foregoing, all Exhibits

hereto and the Motion were sent by email on the date hereof to:

Counsel to A.L. Sarroff Management, LLC and A.L. Sarroff Fund, LLC

Barry Lax, [email protected]

Mary Grace White, [email protected]

Dated this 16th day of November, 2018

/s/Aaron A. Romney

Aaron A. Romney (ct28144)


Case 3:17-cv-00155-KAD Document 78-1 Filed 11/16/18 Page 1 of 8

EXHIBIT

B


EXHIBIT

C


EXHIBIT

D


1

UNITED STATES DISTRICT COURT DISTRICT OF CONNECTICUT _______________________________________________ SECURITIES AND EXCHANGE COMMISSION, )

) Plaintiff, )

) v. ) Civil Action No.

) 3:17-cv-00155-VAB MARK VARACCHI and ) SENTINAL GROWTH FUND MANAGEMENT, LLC ) ) Defendants. ) _______________________________________________ )

RESPONSES AND OBJECTIONS OF NON-PARTY A.L. SARROFF MANAGEMENT, LLC TO THE

RECEIVER’S SUBPOENAS FOR THE PRODUCTION OF DOCUMENTS

Pursuant to Rule 45(d) of the Federal Rules of Civil Procedure, non-party A.L. Sarroff

Management, LLC (“Sarroff Management”) hereby responds and objections to the Receiver’s

August 31 “Transfer” and “Background” Subpoenas (the “Subpoenas”).

GENERAL OBJECTIONS

Sarroff Management makes the following general objections (“General Objections”) to the

Subpoenas and each and every Document Request, definition, and instruction set forth therein.

These General Objections are incorporated into each specific response set forth below. Nothing

in these responses should be construed as a waiver of any of these General Objections.

1. Sarroff Management objects to the Subpoenas on the grounds that they are overly broad

and unduly burdensome and that the Receiver and his counsel have failed to “take reasonable steps

to avoid imposing undue burden or expense on” Sarroff Management as required by F.R.C.P.

45(d).

2. Sarroff Management objects to the Subpoenas to the extent they seek production of


2

documents the Receiver can otherwise obtain from Defendants in this action. As a non-party,

Sarroff Management should not be required to assume the burden and expense of collecting,

reviewing, and producing documents that the Receiver can obtain from Defendants.

3. Sarroff Management objects to the Subpoena to the extent that it seeks information

that is not relevant to any party’s claims or defenses and proportional to the needs of the case.

4. Sarroff Management objects to each Request to the extent it seeks documents from

November 1, 2013 though the present on the grounds that it is overly broad, burdensome,

irrelevant, and disproportionate to the needs of the case.

5. Sarroff Management objects to Requests seeking “all” documents or “every” document to

the extent that such requests require Sarroff Management to do more than use reasonable diligence

to locate responsive and non-privileged documents based on an examination of those files that may

reasonably be expected to yield such documents. Such requests are overly broad, unduly

burdensome, and oppressive.

6. Sarroff Management objects to the Subpoenas to the extent they call for the production of

documents that are privileged or exempt from discovery under the attorney-client privilege, work

product doctrine or other privilege or protection at law.

7. Sarroff Management objects to the Subpoenas to the extent they seek confidential, private,

proprietary, or other sensitive documents or information.

8. Sarroff Management objects to the Subpoenas to the extent they seek production of

electronically stored information (“ESI”) on the grounds that it is unduly burdensome.

9. Sarroff Management objects to the extent a Request seeks documents the Receiver has

already obtained or had the opportunity to obtain in Horwitt v. Alan L. Sarroff, et al,

3:17−CV−01902−VLB.


3

10. Sarroff Management objects to Definition and Instruction 2, 3 and 9 as overly broad,

burdensome, irrelevant and disproportionate to the needs of the case and to the extent they seek

confidential, private, proprietary, privileged, or other sensitive documents or information

belonging to third-parties.

11. Sarroff Management objects to Definition and Instruction 10 and 12 to the extent it requires

Sarroff Management to conduct more than a good faith, diligent search for responsive documents

in its possession, custody and control.

SPECIFIC RESPONSES AND OBJECTIONS – “Transfer” Subpoena

Request No. 1: Produce all documents (Including Communications) Concerning the Transfers of Property identified in Schedule A (attached hereto).

Response: Sarroff Management incorporates its foregoing General Objections as if fully set forth in this response. Sarroff Management further objects to Request 1 to the extent that it seeks production of documents that the Receiver can otherwise obtain from Defendants in this action or that are already in the possession, custody or control of the Receiver. Sarroff Management further objects that Request 1 is extraordinarily broad, burdensome and vague. “All documents (including communications) concerning the transfers of property identified in Schedule A” would encompass thousands of pages of bank statements, financial records and, if read literally, tax returns and other sensitive documents. Sarroff Management further objects on the ground that Request 1 seeks documents that are confidential, private and of a sensitive nature and is disproportionate to the needs of this case. Sarroff Management further objects on the ground that Request 1 seeks documents that are irrelevant to the claims and defenses in this case. Sarroff Management further objects to the extent that Request 1 seeks documents the Receiver has already obtained or had the opportunity to obtain in Horwitt v. Alan L. Sarroff, et al, 3:17−CV−01902−VLB. Sarroff Management further objects to the extent that Request 1 would require production of documents that are privileged.

Request No. 2: Produce all Documents (Including Communications) Concerning the Transfer of the proceeds derived, to any extent, from the Transfers of Property identified in Schedule A (attached hereto).

Response: Sarroff Management incorporates its foregoing General Objections as if fully set forth in this response. Sarroff Management further objects to Request 2 to the extent that it seeks production of documents that the Receiver can otherwise obtain from Defendants in this action or that are already in the possession, custody or control of the Receiver. Sarroff Management further objects that Request 2 is extraordinarily broad, burdensome and vague. The Request would


4

encompass thousands of pages of bank statements, financial records and, if read literally, tax returns and other sensitive documents. Sarroff Management further objects on the ground that Request 2 seeks documents that are confidential, private and of a sensitive nature and is disproportionate to the needs of this case. Sarroff Management further objects on the ground that Request 2 seeks documents that are irrelevant to the claims and defenses in this case. Sarroff Management further objects to the extent Request 2 seeks documents or information concerning subsequent transfers. Sarroff Management further objects to the extent that Request 2 seeks documents the Receiver has already obtained or had the opportunity to obtain in Horwitt v. Alan L. Sarroff, et al, 3:17−CV−01902−VLB. Sarroff Management further objects to the extent that Request 2 would require production of documents that are privileged.

Request No. 3: Produce all statements for bank account number 0006 held at Citibank, N.A. for the period of November 1, 2013, through and including August 31, 2018.

Response: Sarroff Management incorporates its foregoing General Objections as if fully set forth in this response. Sarroff Management further objects that Request 3 is overly broad, burdensome and vague and seeks a vast amount of information contained in five years of bank statements that is irrelevant to the claims and defenses in this case. Sarroff Management further objects to the extent the Request seeks documents outside the relevant time period. Sarroff Management further objects on the ground that Request 3 seeks documents that are confidential, private and of a sensitive nature and is disproportionate to the needs of this case. Sarroff Management further objects to the extent Request 3 seeks documents or information concerning subsequent transfers. Sarroff Management further objects to the extent that Request 3 seeks documents the Receiver has already obtained or had the opportunity to obtain in Horwitt v. Alan L. Sarroff, et al, 3:17−CV−01902−VLB.

SPECIFIC RESPONSES AND OBJECTIONS – “Background” Subpoena

Request No. 1: Produce all Documents (Including Communications) Concerning Your legal relationship with each of the following: (i) Sarroff, LLC, (ii) Sarroff, and (iii) Smith.

Response: Sarroff Management incorporates its foregoing General Objections as if fully set forth in this response. Sarroff Management further objects that Request 1 is burdensome and vague. “All documents” concerning “legal relationships” is so broad as to be meaningless. Sarroff Management further objects on the ground that Request 1 seeks documents that are confidential, private and of a sensitive nature and is disproportionate to the needs of this case. Sarroff Management further objects on the ground that Request 1 seeks documents that are irrelevant to the claims and defenses in this case. Sarroff Management further objects to the extent that Request 1 seeks documents the Receiver has already obtained or had the opportunity to obtain in Horwitt v. Alan L. Sarroff, et al, 3:17−CV−01902−VLB. Sarroff Management further objects to the extent that Request 1 would require production of documents that are privileged.


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Request No. 2: Produce all Documents (Including Communications) Concerning any loan to, investment in or deposit with either (i) Varacchi or (ii) any Receivership Entity, Including such Documents provided to You by Sarroff, LLC or Communications between You and Sarroff, LLC.

Response: Sarroff Management incorporates its foregoing General Objections as if fully set forth in this response. Sarroff Management further objects that Request 2 is overly broad and burdensome. Sarroff Management further objects on the ground that Request 2 seeks documents that are confidential, private and of a sensitive nature and is disproportionate to the needs of this case. Sarroff Management further objects on the ground that Request 2 seeks documents that are irrelevant to the claims and defenses in this case. Sarroff Management further objects to the extent that Request 2 seeks documents the Receiver has already obtained or had the opportunity to obtain in Horwitt v. Alan L. Sarroff, et al, 3:17−CV−01902−VLB. Sarroff Management further objects to the extent that Request 2 would require production of documents that are privileged.

Request No. 3: Produce all Documents (Including Communications) Concerning any Transfer of Property between You and Sarroff, LLC made at any time during the period of November 1, 2013 through and including August 31, 2018.

Response: Sarroff Management incorporates its foregoing General Objections as if fully set forth in this response. Sarroff Management further objects that Request 3 is overly broad, burdensome and vague. Sarroff Management further objects on the ground that Request 3 seeks documents that are confidential, private and of a sensitive nature and is disproportionate to the needs of this case. Sarroff Management further objects on the ground that Request 3 seeks documents that are irrelevant to the claims and defenses in this case. Sarroff Management further objects to the extent Request 3 seeks documents or information concerning subsequent transfers. Sarroff Management further objects to the extent that Request 3 seeks documents the Receiver has already obtained or had the opportunity to obtain in Horwitt v. Alan L. Sarroff, et al, 3:17−CV−01902−VLB. Sarroff Management further objects to the extent that Request 3 would require production of documents that are privileged.

Request No. 4: Produce all Documents (Including Communications) Concerning any Transfer of Property between You and either (i) Varacchi or (ii) any Receivership Entity (including Transfers of Property made by Varacchi or any Receivership Entity (including Transfers of Property made by Varacchi or any Receivership Entity for Your benefit) at any time during the period of November 1, 2013 through and including August 31, 2018.

Response: Sarroff Management incorporates its foregoing General Objections as if fully set forth in this response. Sarroff Management further objects to Request 4 to the extent that it seeks production of documents that the Receiver can otherwise obtain from Defendants in this action or that are already in the possession, custody or control of the Receiver. Sarroff Management further objects that Request 4 is overly broad, burdensome and vague. Sarroff Management further objects on the ground that Request 4 seeks documents that are confidential, private and of a


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sensitive nature and is disproportionate to the needs of this case. Sarroff Management further objects on the ground that Request 4 seeks documents that are irrelevant to the claims and defenses in this case. Sarroff Management further objects to the extent that Request 4 seeks documents the Receiver has already obtained or had the opportunity to obtain in Horwitt v. Alan L. Sarroff, et al, 3:17−CV−01902−VLB. Sarroff Management further objects to the extent that Request 4 would require production of documents that are privileged.

Request No. 5: Produce all Documents (Including Communications) Concerning Varacchi or any of the Receivership Entities, Including any Transfers of Property, loans, investments or deposits with any of them.

Response: Sarroff Management incorporates its foregoing General Objections as if fully set forth in this response. Sarroff Management further objects to Request 5 to the extent that it seeks production of documents that the Receiver can otherwise obtain from Defendants in this action or that are already in the possession, custody or control of the Receiver. Sarroff Management further objects that Request 5 is overly broad, burdensome and vague. Sarroff Management further objects on the ground that Request 5 seeks documents that are confidential, private and of a sensitive nature and is disproportionate to the needs of this case. Sarroff Management further objects on the ground that Request 5 seeks documents that are irrelevant to the claims and defenses in this case. Sarroff Management further objects to the extent that Request 5 seeks documents the Receiver has already obtained or had the opportunity to obtain in Horwitt v. Alan L. Sarroff, et al, 3:17−CV−01902−VLB. Sarroff Management further objects to the extent that Request 5 would require production of documents that are privileged.

Request No. 6: Produce all Documents (Including Communications) Concerning Sarroff, LLC’s decision or contemplation of whether or not to enter into, or continue, an investment or asset management relationship, or other business relationship, with Varacchi or a Receivership Entity.

Response: Sarroff Management incorporates its foregoing General Objections as if fully set forth in this response. Sarroff Management further objects to Request 6 to the extent that it seeks production of documents that the Receiver can otherwise obtain from Defendants in this action or that are already in the possession, custody or control of the Receiver. Sarroff Management further objects that Request 6 is overly broad, burdensome and vague. Sarroff Management further objects on the ground that Request 6 seeks documents that are confidential, private and of a sensitive nature and is disproportionate to the needs of this case. Sarroff Management further objects on the ground that Request 6 seeks documents that are irrelevant to the claims and defenses in this case. Sarroff Management further objects to the extent that Request 6 seeks documents the Receiver has already obtained or had the opportunity to obtain in Horwitt v. Alan L. Sarroff, et al, 3:17−CV−01902−VLB. Sarroff Management further objects to the extent that Request 6 would require production of documents that are privileged.


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Dated: New York, New York LAX & NEVILLE LLP October 12 2018 By: /s/ Barry R. Lax Barry R. Lax, Esq. Mary Grace White, Esq. 1450 Broadway, 35th Floor New York, NY 10018 Tel: (212) 696-1999

Attorneys for Defendants
