case on for argument is in re made off excuse me different from goldman the answer is in this case bernie madoff has provided evidence that shows or answers the question as to whether plaintiffs are asserting a bona fide a control person claim or whether they are asserting the skies structural inconvenience claim i don't position and declaration made off testified that mr pic our created is fraud after putting made off under enormous financial pressure did he ever explain what he meant by created the fraud not in the record before us and what as you as you are about to say what mr made up does say whether or not this is what he meant by creating the fraud what he does say is that pinko or other people put him under financial pressure by various kinds of what are you able misconduct failing to comply with agreements and so on and then he made off made what he characterizes as the mistake of st getting trying to make this up by doing business with hedge funds and then when he couldn't meet the hedge funds expectations falsifying records is there any place in the deposition where made up says pick over told him to do that there is not anything in the record that says precisely that about approximately tell me about tell me the best approximation of that that made up said in the deposition that picower at the greatest responsibility for the fraud at anyone other than madoff himself and that made off believe that the best thing he could do is to try to get picower and the others who were complicit in the fraud to return the money to the investors that doesn't sound very that doesn't sound like being a control person to me why would you say that do you have cases in which someone was held to be a control person that is to say someone who had control over the kinds of misrepresentations that were made based on anything like such a vague assertions by the person who also acknowledges that he personally is the one who actually made the key decisions your honor and goldman the court has said that was to disseminate false information to investors no evidence that picower created that or directed it and i would respectfully submit to another then mr made up saying he's the one who's really responsible for this and he created the fraud in very general terms there is still no evidence of that in any concrete way there is still no statement by men off is there that i'm just picking our said bernie how about you do this or i think a good idea would be to falsify all these records and pretend to people that your and or anything like that that would mean that he is the one running the show i think your honor that's a very good reason why there should be discovery of made off we know that he said created the fraud we know that he set responsible for her and we know that he said complicit in the fraud it would be good i think if the court is looking beyond the question of do we have a good faith basis he was asked he was asked why were they complicit in the answers well because they violated tax laws based upon what i had discussed with them and other things that i knew they were doing with people in my firm and yes your honor he also said in that same portion of his deposition i said at the time that the best thing i could do for my clients was to get the money back from the people that were complicit in the crime namely pick our shapiro levy and some others and he wanted to let these people know that unless they came forward with money returned it and made the investors whole he could go to the government and ha put in jail now this had nothing to do with the tax scheme it off wasn't saying i want the people responsible to return the money to the i r s he's saying he wanted the people responsible for the crime to return the money to the investors who were victimized by the crime that doesn't sound like a tax scheme respectfully but i'm still i'm still you know the control person is not someone who is complicit right i mean a control person this is a technical term of art within the securities laws yes complicit may be some indication of control but does not control itself  also i would say read in conjunction with the other evidence we had pointed to earlier they take on a different coloration when read in conjunction with the madoff declaration and deposition for example one of the things that has been played out and i think no one disputes is that picower directed made off employees to commit fraud and dr documents on a regular basis now even though that might have been in madoff's own account the point is you don't walk into a broker and say do me a favor commit fraud on my account risk going to jail for tax fraud cleared made off had a net worth i believe of about one hundred and twenty five million pick our something north of ten billion you look at that and i think it's a commonsense matter you say well who was running this fraud made off or pick our why else we pick our have gotten such outsized returns to made off really like take care of that much more again was there a control relationship and i thought one of the things that you said was an indicator of the control relationship was that mr made up said he was a very good friend i couldn't say no to him that's correct so well does that does that make you control person if  somebody you know counsels you to do wrong and you say gee i really like this guy so i'll do it it's an indicator of control but i don't think even in that context when you look at the disparity between what made off recover monies from pick our essentially was going after him as a person whether denominate i don't believe the trustee has standing to bring of control person claim he went after pick our for money correct i believe the amount was six billion two hundred million why is it that the trustee doesn't have standing to bring a control person claiming can speak out because any control person claim is individual to the investor and is not a claim brought by the trustee but you have a whole bunch of investors who are with the category of creditors who have claims against the bank robbers right they do so why isn't the trustee standing in their shoes whatever their shoes may be when he's going after pick our he's standing in their shoes for the damage to the estate which is comprised in part of the claims that the creditors have yes right th their editors some of the creditors are ones who have section twenty claims some of the creditors also have section twenty claims right so why isn't the trustee standing in the shoes of those creditors and essentially making a deal with  our and extinguishing all the claims that those creditors have i don't believe the trustee can bring those claims they are particularized to the investors and the what is particularized this is the puzzle that i have  this i think i understand the distinction that you make between being defrauded and the fraudulent conveyance claims which are essentially taking the view that take our got too much money that he wasn't really entitle to out of this and was aware that made off was really insolvent so ok as a result of that he pays a total of seven plus one billion dollars to the trustee and to the government what did pick our do to your clients specifically that he did not do to all the creditors collectively which is essential to take all this money that you said you got this enormous amount of money made off and he did it knowing that made really was insolvent and was not making the profits that  he was paying over to pick our controlled mate off and making false statements to the investors that's that's exactly the point then what is the evidence that he somehow got made off to make false statements to the investors rather then that made up his making false statements to all the investors pick our nose that that's happening and nevertheless collects all the money that made up attributes to him because madoff says he created the fraud and was primarily responsible for the fraud so so made up so self serving statement that this is the guy who really should have been gone after and i could have gone to the government and got them all put in jail which apparently he did not do is evidence that in fact there is a concrete allegation of what pick howard did to control this set up the fraud and make all these false statements happen to your clients it shows that we have a good faith basis for a good faith basis is not enough wondered why we are what fifteen years into a new regime of what you have to put in a complaint to make it plausible respect your honor we're not u different from and lower than the standard for twelve the six but i would say that rather than six doesn't apply to control oh no it absolutely applies to control claims but the issue before the court is whether we derivative claim or a control claim which with the claim i see so what you're saying is there is a lower standard for that determination because it is the court in the district court in florida that will ultimately decide if this complaint is allowed to go forward that will decide the twelve the six issue what is it issue here is simply whether this claim falls within the injunction against bringing derivative claims that's correct and you are saying that even a complaint that does not meet the twelve days six standard should be allowed nevertheless to go to florida and make the judge down there decide that will be six issue if it reaches the standard of a good faith on a five days control claim yes i don't understand why the twelve basic standards shouldn't be the standard that we adopt to see whether this complaint is one that does or doesn't come within the within the injunction i believe you said in goldman it doesn't that one doesn't have the twelve the th standard does not apply this is a separate standard there's other wise you take away the what this court it said and marshal the perhaps we can articulate a claim that would be a particular not a question as to whether it is bona fide and i take it that means something more than that the plaintiff subjectively believes that it's a control claim yes you have to have something to show that's not fanciful or recent recent decision from this court essentially resolve the issues before you today and once again the claims in this complaint continue to be derivative the vast majority of the allegations contained therein have been considered and rejected iterations mr got have st said just that they should be looked at differently this time around that the context is different that this time around it's simply not true five of the six prior complaints were control person complaints they had the same allegations of activities and pick  tronics that we look behind the label that are placed on their claims to see if there is really something there we can consider the factual context we can consider what appellate say they relied upon in crafting this allegations and that's exactly what the bankruptcy court and district court didn't hear it was twenty six dollars plus a little bit and so the concept of a car book him claimed seems a little bit less you know it's not necessarily legal sufficiency but what the bankruptcy court look at in reaching majority owners of the company they are the people are that the defendants are officers they are directors they have a contractual arrangement arrangement that allows them to control the operations of the company they're simply more there than they took out a lot of money from their account without me and it can be other things to attend to it it doesn't have to be based on contract can't it simply be based on an influence over over the person if somebody if somebody simply by reason of family or or any kind of relationship has influence over the the persons who are persons who make the decisions for the company and exercises that influence with respect to the making of those decisions  mean there are certainly cases that talk about family relationships but the control is that person or fired by an ability to influence the day to day management and policies of the company and we simply don't see that here we simply don't see any allegations any non conclusory allegations that pick our dad saying that if the person if the alleged control person influences major policies of the company but doesn't get involved in the salaries of personnel of the company and and day to day stuff like that you're saying they're not a control person even though even though they effectively direct the decisions on important policy matters i was i didn't intend to please the court the facts re complaint suffers from the same defect as the facts to complain and the goldman three complaint namely it fails to set forth even a colorable control person claim indeed as to the vast majority of the allegations in the facts three complaint the immortal words of yogi berra apply it's deja vu all over again very literally the same allegations that were made and rejected in facts two and goldman three as in permissible attempts to plead around the permanent injunction and it's also deja vu all over again in terms of what the fact three complaint does not say there's no allegation of the truth any of the traditional indicia of control no allegation that picower had any position as an officer or director no allegation he held any stock or held any ownership interest and be on my ass no allegation about rights to buy contract control and perhaps most importantly no allegation that he either made or misrepresentation and the little that is here doesn't come close to a genuine control person claim which this has to be to get past the permanent injunction let's talk about the claim that made off said that his deposition that pickerel was complicit in the fraud it's not a genuine allegation of control for two reasons st it's just a flat misstatement of the actual testimony as the judge is below concluded made up was asked why why do you say he was not just he but all the big four investors were complicit in that it was because they had violated tax laws based upon two things one what he discussed with them and two other things he knew they were doing with other people in my firm he didn't say as plaintiffs claim that the four investors violated tax laws and other things that violated other laws there's another yogi berra ism that i think comes to mind here which is you can observe a lot b just watching and you can also observe a lot by just reading and what the judges below did is they read the actual transcripts and they determine that the plaintiffs were misstating it that's also true with regard to the characterization of made up deposition testimony that he carried out the fraud it took hours behest and direction i may have simply never testified to any such thing it's all laid out in our brief i won't belabor the point but if you read the testimony may have testified that he decided to take over the short option positions these hedges of the big four investors not that picower directed him to he testified that he made up decided to get the hedge funds to invest to cover his losses not take hours losses his losses on those  positions not the pick our direct into and most critically he testified that he decided to begin falsifying trade confirmations to the hedge fund investors not that picower directed him or even or even knew about it  then we get to mr madoff's declaration again the judges below are entirely correct in saying that those statements were entirely conclusory and also don't give rise to a colorable control person claim let's not forget that this declaration was drafted by plaintiff's counsel at a time when they were litigating the sufficiency of the fact three complaint and these were things that were stuck in completely gratuitously to a declaration submitted for other purposes it has no detail no supporting facts  and he says what he says is post nine hundred and ninety i was put under enormous financial pressure by jeffry picower who created the fraud i treated when you read that with the deposition transcript there is an explanation what he's saying is that picower put him under financial pressure which is what he talked about in the deposition and as a result of that he began the fraud but being a butt for causing it's all ours fault because pink our created the conditions that led many to engage in this fraud is what at least one reasonable reading i think is the only reasonable reading your honor and obviously being a but for cause of a fraud is isn't a genuine control  he was then asked and was complicit he was then asked how and then he answered with because they while the tax laws and based upon what i discussed with them are the things that i knew they were doing people have but what if he had only said that the word created with created the st put under financial pressure by jeffry picower who created the fraud who created the fraud so why doesn't why doesn't don't the words he created the fraud why doesn't that make the claim color two reasons number one it's completely conclusory as the judges below concluded that wouldn't be enough to survive anything but but secondly we do have context within which to read that gratuitous statement often narrowed it by what he later said in explanation of what he meant that's what judges bernstein and broderick both concluded and they were right to do so both by both by what he did say and also by what he did not that is to say did not elaborate on what he meant by create other than the account he gave of the financial situation and the account he gave of what he himself decided to do in response to that situation that's right yeah so in summary this is just another contrived attempt to plead around the permanent injunction by slapping the label of a control prison claim on allegations that aren't actually control person allegations and to allow pla proceed with his complaint would deprive my clients the picower parties of a critical element of what they bargained for when they entered into their historic settlement with the maid of trustee the vet the banks the judge exercising his gatekeeping function properly enforced the permanent injunction here their their their turf but certainly there are individual ised particularize claims that would belong to actual creditors and be outside the scope of the you your honors and one thing just on the correct timing of events the deposition preceded the declaration so the testimony in the deposition wasn't directed to clarifying what made off man when he said take care of created the fraud and the fact is we can argue over what we think he meant i don't think that's the best way to resolve a case of this kind given that made off did say pick our created the fraud and have the primary responsibility for the for anyone but himself if the logical course particularly if were in the context of an injunction is to have made off testified a deposition well you see there is where you're invoking the twelve the six standard aren't you because you won't get you won't get that unless you get past twelve these six so if you are the one who is saying we should make sure there discovery what you're effectively saying is that there should be some analysis of whether this is a complaint that's even going to get you any discovery i think there should be some analysis as to whether the claim has a good faith or bonafide a controlled person claim the question goes to florida as to whether that claim is sustainable if it's going to be a decision made upon what made off meant when he said complicit or whatever the question is not whether the fairest way to resolve this is to get discovery the question that you are really asking is the fairest way to do this to send it to a judge in florida to decide whether the twelve the six standard is met yes or create just we think of the downstream policy of all of this somebody walks in here who  has some participation in a bankruptcy or potential participation in a bankruptcy proceeding the bankruptcy proceeding is going forward it is it has restrained further claims and all you have to do is come in you're saying and get to that to this other court now let us go down there and they'll sort it out why shouldn't we in the course of our analysis as the bankruptcy judge did and i was the district court did analyze that saying doesn't make it your honor shouldn't allies that we should analyze it from a different perspective and for a different purpose if the claim is a claim and sounding in control person liability and then we have standing to bring it if the claim is a need to sky's fraudulent conveyance claim and you in other contexts you do this all the time somebody sues for breach if i do cherie duty against a lawyer because he's trying to avoid a short malpractise statute of limitations and you look at it and you say look is the graph i'm in of this claim breach if i do sherry duty or is the graph i'm in of the claim malpractise because if  malpractise we're going to apply the shorter statute i think you look here to to cern to grab them and if the claim but once you've to cern that there is a an effort if you will to assert and control person claim and there is something that supports it it is not simply ginned up out of plaintiff's cancels imagination that's when you say sent it to florida for the rest of the proceedings subject to questions from the court nothing further thank you mr robert thank you your honors thank you all will reserve decision in this case