EXHIBIT 3

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Exhibit 3 Page 1 of 42
IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF VIRGINIA 

Richmond Division 

RENEE GALLOWAY, et al, 

plaintiffs, 

 versus 3:18CV406

BIG PICTURE LOANS, LLC, et al, 

 defendants, 

and 

LULA WILLIAMS, et al, 

plaintiffs 

 versus 3:17CV461 

BIG PICTURE LOANS, LLC, et al, 

defendants 

Before: HONORABLE ROBERT E. PAYNE 

Senior United States District Judge 

MOTIONS HEARING 

October 18, 2024 

Richmond, Virginia 

GILBERT F. HALASZ 

Official Court Reporter 

U. S. Courthouse 

701 East Broad Street 

Richmond, VA 23219 

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APPEARANCES 

KELLY, GUZZO, PLC 

by: Kristi Cahoon Kelly, Esq. 

Drew David Sarrett, Esq. 

for the Plaintiffs 

SANDS ANDERSON 

by: Cullen Seltzer, Esq. 

LOEB & LOEB 

by: John D. Taliaferro, Esq. 

BROPHY & BLAND 

by: Charlie Bland, Esq. 

for Matt Martorello 

JACKSON LEWIS 

by: William Jackson, Esq. 

for Rebecca Martorello 

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THE CLERK: Case number 3:18 CV 406 Renee

Galloway, et al versus Big Picture Loans, LLC, et

al.

Case 3:17 CV 461. Lula Williams, et al versus

Big Picture Loan, LLC, et al.

The plaintiffs are represented by Kristi Kelly

and Drew Sarrett.

The defendant Matt Martorello is represented by

John Taliaferro, Cullen Seltzer, Charlie Bland. 

Defendant Rebecca Martorello is represented by

Billy Jackson.

Are counsel ready to proceed?

MS KELLY: Plaintiffs are.

MR. JACKSON: Ms Martorello is, Your Honor.

MR BLAND: Mr. Martorello is, Your Honor.

THE COURT: Mr. Martorello is not here? 

MR BLAND: Mr. Martorello is not here today.

THE COURT: Ms Martorello is here.

MR. JACKSON: She is here, Your Honor.

THE COURT: All right.

Well, as I understand it, the structural basis

for the proposed settlement, which was to have a

final approval hearing on soon, has collapsed.

And there is a pending bankruptcy for Mr.

Martorello.

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The final approval is set for October the 28th.

Did notices and so forth go out? Where do we

stand on all that? That is the first thing is how

to deal with that issue in view of the fact that the

predicates for approval as specified in the

agreement and the order have not and will not occur

at least in the order, in the time frame that they

are to occur based on the documents.

So where do we stand on the settlement approval

hearing on October 28th? 

MS KELLY: Judge, Kristi Kelly on behalf of the

plaintiff in the class. So to answer Your Honor's

question, notice was sent out. We provided a

declaration about the notice process when we filed

our paper work in support of final approval of the

settlement.

THE COURT: When did the notice go out?

MS KELLY: It went out, I believe it was over

the summer. And the deadlines to opt out and object

have passed. Class members were notified. My

office and and my co-counsel's office have been in

communication with the class members providing them

their estimated the settlement proceeds.

THE COURT: Were there any opt outs? 

MS KELLY: There were some opt outs, Judge.

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Hold on a second.

THE COURT: When was the notice issued?

MS KELLY: I believe it was issued the --

THE COURT: Get to work over there, Mr.

Sarrett, and look it up while she is talking.

MR. SARRETT: I am looking it up, Your Honor.

THE COURT: Thank you.

MS KELLY: It was in June or July, Judge. But

I am not sure of the exact --

THE COURT: How many opt outs were there, and

when were they filed?

You can look that up.

Go ahead with your presentation.

MS KELLY: Judge, if Your Honor --

THE COURT: Were objections filed?

MS KELLY: There was one objection that was

filed. We filed a response to that objection this

Monday. I have personally spoken with the objector.

And I can represent to The Court that his main gripe

is that Big Picture withdrew funds from his account

and has an issue with his bank and Big Picture, but

he also would like to obtain more money from the

settlement. So that is his objection position, but

we did file our response to the objection on Monday.

THE COURT: All right.

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MS KELLY: So, Judge, in the settlement

agreement, as you may be aware the parties were with

Judge Colombell yesterday --

THE COURT: Yes.

MS KELLY: -- to try to work through issues

relating to the lack of any non-binding indications

of interest that were received to purchase the

shares. And we spent at least a few hours with

Judge Colombell trying to work through issues so

that we could jointly propose an extension of time

to see if there would be a way for the shares to be

sold so that these class members can get paid.

I can represent to Your Honor that the

plaintiff believes a brief extension is appropriate,

but we were not able to agree to certain conditions

for that extension. But we do believe --

THE COURT: Extension for what?

MS KELLY: To receive any bids from .

THE COURT: Do what?

MS KELLY: Pardon?

THE COURT: Brief extension to do what?

MS KELLY: To receive any bids for the shares

of . We believe that the best chances of

getting this case resolved is to have a brief

extension of time to get a bid so that there are

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funds to pay these class members.

THE COURT: What reason is there to believe

that anybody will submit a bid, given that they have

had all this time to submit a bid and nobody

submitted a bid?

What reason is there to believe that that is a

viable course of action?

Excuse me a minute.

One moment. All right. Go ahead. I don't

understand the reason why we have any hope that this

process will do anything if given more time to

mature. So I would like to understand that.

Because there are alternative resolution ways to

resolve this case moving forward. To begin with,

there are pending motions to repatriate assets that

are ripe and ready to be dealt with.

MS KELLY: Judge --

THE COURT: I believe that I asked you all to

research, and you can check and see that there is

some authority that not withstanding the pendency of

the bankruptcy considering that these assets are not

in the hands of the person who is taking bankruptcy,

that The Court can go forward with the repatriation

process.

There is also the alternative of communicating

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with the bankruptcy court. And it is not unheard of

that where an antecedent case is pending and it has

reached a place where it can be dealt with at a

reasonable way, that the bankruptcy court will take

that matter as an adversary proceeding and it will

proceed in the court where it is pending.

Ordinarily the proper way to deal with that is

for me to communicate, or for all you to tell me if

you are interested in that, and for me to

communicate with the bankruptcy judge, for I do not

wish to intrude upon the jurisdiction of the

bankruptcy court. But it is not at all unusual for

federal courts in the district and the bankruptcy

courts to work together where there is a common --

where it makes sense efficiently to do so even

though they are not in the same district.

That is not unusual, and it has been done

before. But I am interested in getting things

moving.

MS KELLY: Judge, and I as class counsel I

completely agree and that is what we want. I would

propose this, Judge, if you can hear out what class

counsel thinks would be the best course of action.

We do agree that Mr. Martorello's filing of

bankruptcy in the middle of this process was a death

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knell for the sale of the shares, because

he is --

THE COURT: It had to be.

MS KELLY: He is the founder of this company.

THE COURT: He is going to buy it.

MS KELLY: Yes, he is the founder of this

company for which we are trying to sell shares to

resolve this case. And any prudent buyer is going

to think twice about buying a company where the

founder is bankrupt, right?

THE COURT: I wouldn't think they would think

twice. I think they would think once, and that

would be the end of it.

MS KELLY: So it was a real surprise, shock,

and it was very disheartening for plaintiffs'

counsel to see about the filing and learn about it

through ECF. And it caused a lot of concern for us

about the viability of moving forward.

With that being said --

THE COURT: I have an interest in that topic

that I believe needs to get pursued as part of the

agenda.

This Court was invited to do certain things

with the knowledge of Mr. Martorello. At the time

it seems to me nobody mentioned to me the

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possibility that Mr. Martorello would take

bankruptcy, and in so doing render most unlikely, if

not an utter nullity, the likelihood of implementing

what people in the public were told had the

imprimatur of a District Court as a logical way to

do things on the premise and assumption that it

would not be frustrated by any bankruptcy. To begin

with, there is a question about when these

discussions about Mr. Martorello's bankruptcy ever

began, and whether this Court has been induced to

act improperly, or inappropriately by virtue of

circumstances that are highly suspect, particularly

given Mr. Martorello's conduct in this case and the

fact that he has been adjudicated to be untruthful

and confirmed as an untruthful person by the Fourth

Circuit. So The Court has an interest in

ascertaining exactly how that bankruptcy came to

pass in perspective of the timing of it. It may be

that it is utterly innocent, and circumstances

entirely arose after the -- after the settlement.

The Court was told to, and advised to issue orders

in the settlement of the case, and that there wasn't

anything inappropriate at all. But it is also

somewhat suspicious under the circumstances.

MS KELLY: Judge --

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THE COURT: So, I need to hear from you all

about what you all know about that.

MS KELLY: So, yes. So plaintiffs' counsel,

class counsel were totally in the dark. We had

communication and ZOOM calls with Mr. Martorello's

counsel and Judge Colombell on at least two

occasions, two occasions that week that he filed for

bankruptcy. It was never once mentioned to us that

he intended to file for bankruptcy. Judge, I think

that there is a lot of things that --

THE COURT: When was the bankruptcy filing made

in respect to the filing of the motion in this case

upon their approval? Number 648 was filed May 21,

2024. When was the bankruptcy filing?

MS KELLY: It was filed on September 20th.

THE COURT: All right.

MS KELLY: Which is just one month --

THE COURT: And a motion for final approval was

filed on October 1 --

MS KELLY: That's right.

THE COURT: -- of 2024. 

MS KELLY: Judge --

THE COURT: All right.

MS KELLY: -- I want to first try to offer a

productive compromise for the class, and then I have

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some, class counsel has some suggestions on what we

think would be an appropriate path forward if Your

Honor is willing to --

THE COURT: That is why I asked you to be here.

MS KELLY: Okay.

So, we think that a brief time frame to see if

any bids will come in is appropriate because that

will also give us time to file motions in the

bankruptcy case to lift the stay so that Your Honor

can decide the pending motions as to Mr. Martorello

since they were properly filed before this court if

a settlement does not go through. We also intend to

file a motion to confirm that the RICO judgment

would not be discharged pursuant to Mr. Martorello's

bankruptcy filing. There is ample case law to

suggest that RICO conduct is non dischargeable. It

is considered like mail and wire fraud are regularly

considered false pretenses, and that is a non

dischargeable course of conduct under the bankruptcy

code. So we intend to get that on file right away

during this time frame. And also seek to lift the

stay so that this Court can have the jurisdiction to

decide those motions. The other --

THE COURT: This Court as the jurisdiction.

MS KELLY: That's correct. Sorry, Judge.

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THE COURT: But the jurisdiction, the exercise

of that jurisdiction is stayed under the bankruptcy

authorities. And you are saying you don't think

that there is any independent authority to proceed

without the approval of the bankruptcy court. So

you want time to file before the bankruptcy court?

MS KELLY: We are not -- we don't, we do not

contented that, Judge, because as you properly

noted, Mr. Martorello has said, none of these assets

that we are seeking are his. They are not listed in

his schedule. They are not anywhere in his

bankruptcy filing. And so the assets that we are

seeking to repatriate, the fraudulent transfer that

we are seeking to avoid, are not listed in Mr.

Martorello's schedules, so as far as we are

concerned it shouldn't be a problem for us to

proceed.

But, we do think it would be prudent to seek to

lift the stay with that in mind so that there is no

excess motions practice by the defendant in this

case.

Because we just think that would be the most

prudent practice. We don't disagree that none of

these assets are listed on his schedule or are

claimed in statements under penalty of perjury to be

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Mr. Martorello's.

Additionally -- 

THE COURT: What about the assets that are the

subject of ECF number 1409, plaintiff's motion to

repatriate foreign assets in 3:17 461 and the

supplemental briefing in that case about the

proposed asset freeze order, 1456 dash one. And

statement of position about known transfers made

during the pendency of the case, 1454?

MS KELLY: Yes, Judge, and also docket 1491,

that is plaintiffs' motion to set aside all

transfers and conveyances.

THE COURT: 1491?

MS KELLY: Yes. Yes, Judge. 

That is a motion that plaintiffs believe we

could file in the Galloway matter as to Ms

Martorello because she received certain transfers.

THE COURT: 1491 in what case?

MS KELLY: It is in the same case, Judge. It

is in Williams.

THE COURT: Seventeen CV 461?

MS KELLY: Correct.

THE COURT: Okay. You filed that?

MS KELLY: It is not filed in another case, it

is just filed in 3:17 461 right now.

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THE COURT: Which you are going to file?

MS KELLY: We certainly can file it next week

if we needed to in the case where Ms Martorello is

because a lot of those transfers --

THE COURT: Where is that case? Is that --

MS KELLY: Sorry, Judge. That is 3:19 CV 314,

I believe.

THE COURT: That is commonly referred to as

Galloway what?

MS KELLY: It is Galloway versus Justin

Martorello.

THE COURT: Is Ms Martorello a defendant in

that case?

MS KELLY: Yes, Judge.

THE COURT: Okay. You are going to file that

motion, number 1491, in 17 461. You are going to

file that in 3:19 CV 314?

MS KELLY: Yes. But we would like to wait to

file the motion until after a brief extension of the

settlement agreement because I can represent that Ms

Martorello has been here, she has been engaged in

trying to get something done. And she is willing to

come and attend another settlement conference on

November 14 with Judge Colombell.

THE COURT: Does she have any authority to do

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that without Mr. Martorello? 

MS KELLY: Well, Judge, I think --

THE COURT: I accept your representation that

she is proceeding in good faith, but even people

proceeding in good faith have limitations depending

upon extrinsic circumstances. It may well be that

the extrinsic circumstances here may based on the

information accumulated in this case over several

years, these cases, need Mr. Martorello himself. We

don't have any indication that he is interested in

being here and helping try to settle the case or

solve the problems --

MS KELLY: But --

THE COURT: -- or not?

MS KELLY: You know, I will say that

Mr. Martorello's proposal to participate in the

subsequent settlement conference is unacceptable to

plaintiff. That is all I will say, because it was

part of a settlement communication.

However, I believe, Your Honor has authority to

order the trustee, the current trustee of the

 shares to participate in an in-person

settlement conference on November 13th.

That trustee --

THE COURT: Is that person represented here

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today?

MS KELLY: He is not. But he is --

THE COURT: Who represents that person?

MS KELLY: It is my understanding he does not

have counsel. But he is a business partner, former

business partner, of Mr. Martorello. He was a -- he

founded a company with Mr. Martorello that is

actually listed in our ECF 1454 regarding the

unlawful asset transfers we have identified called

Green Tea Technology. But in the settlement

agreement, and in section --

THE COURT: What page?

MS KELLY: Three point five. It is at ECF, The

Court document, 653 dash one in 3:19 CV 314.

THE COURT: Settlement agreement is 652 dash

one. Paragraph is what?

MS KELLY: It is three point five. It is page

15 of 71.

THE COURT: All right.

Where are you reading from? In what paragraph?

MS KELLY: It is three pinot five, called

trustee engagement. If you go down into the middle

of the page, subsection three.

It is actually not sub, it is number three.

THE COURT: I have a 652 dash one, page 13

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paragraph five, trustee engagement. Now, where do

you want me to go?

MS KELLY: Do you see where there is a section

three?

THE COURT: I see there is a subparagraph

parentheses one, two, and three. And three --

actually --

MS KELLY: Sorry.

THE COURT: The trustees consent to participate

in monthly updates with Judge Colombell. Is that

what you are talking about?

MS KELLY: Yes.

Today neither Judge Colombell nor plaintiffs'

counsel have heard from the trustee at all regarding

any monthly updates. So we believe that the trustee

consented and agreed to this provision, and could be

required to participate in the in-person update

slash settlement conference with Judge Colombell on

November 13, because it is my understanding that the

Martorellos believe it is the trustee who has the

discretion to determine whether to accept, and what

terms to settle for with the shares of .

THE COURT: Where did that come out? Not in

anything in the papers that I have.

MS KELLY: The trustee's position --

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THE COURT: I thought you said it was the

Martorello's position.

MS KELLY: Right. Judge, that is more of a

settlement communication.

THE COURT: Not in any papers I have.

MS KELLY: That's correct, Judge.

THE COURT: All right.

MS KELLY: But it is plaintiffs' counsel belief

that is an impediment to getting this deal over the

finish line because the trustee has not participated

in any manner so far in the settlement --

THE COURT: The trustee is who?

MS KELLY: He is one of Mr. Martorello --

THE COURT: What is the name?

MS KELLY: Anthony Tassone.

THE COURT: How do you spell that?

MS KELLY: Sorry. I don't want to get it

wrong. T-A-S-S-O-N-E. 

THE COURT: All right.

MS KELLY: Mr. Sarrett has pointed out that in

the bankruptcy filing Mr. Martorello has asserted

that he does not control the trust, nor is he the

beneficiary, and that he is owed money pursuant to

the transfer of shares. So he is agreeing that he

has no control over the trust or the trustee in that

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statement in the bankruptcy court.

THE COURT: Let's see.

So how do you spell this fellow's name?

MS KELLY: T-A-S-S-O-N-E.

THE COURT: Where is Mr. Tassone?

MS KELLY: I believe in Chicago. But am not

just not a hundred percent sure.

THE COURT: What do you want me to do with him?

Don't tell me that they have all of these

millions of dollars in the trust and nobody knows

who the trustee is or where he is. That somebody

knows that. One of the people who would know, I

would think, would be a beneficiary because under

most trusts the trustee has to make reports

regularly to beneficiaries. So some -- who are

beneficiaries?

MS KELLY: So, it is my understanding that

initially the beneficiaries were Ms Martorello and

her children. And then, of course, during the

pendency of this litigation there was a subsequent

transfer to the trust where Mr. Tassone is trustee.

And I believe those trusts, the beneficiaries are

just the children. But I am not a hundred percent

sure. Perhaps Mr. Jackson can speak to that and the

knowledge of the trustee.

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THE COURT: I am sure Ms Martorello knows who

is the trustee for her children.

MS KELLY: Probably she will know where he

lives.

THE COURT: Do you have documents by which the

trust changed from Ms Martorello to the trustee, to

the trust?

MS KELLY: Yes. It was a Wyoming company that

was created. I don't know if Mr. Jackson or if

anyone from the defense --

THE COURT: The transactions in this case are

not unlike those in the John Gresham novel The Firm.

MS KELLY: So we know the trust names are BB&T

I and BB&T II. And it is my understanding that the

children are the beneficiaries. But I don't know

that we have received all of those documents in

discovery. We just know --

THE COURT: What all? What documents?

MS KELLY: The creation of the, the trust

creation documents and the transfer.

THE COURT: Have you asked for them?

MS KELLY: Yes, we have. But, I think --

THE COURT: In one of these cases?

MS KELLY: It was in the post judgment

collection action in Williams. I just don't

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remember actually seeing it. I might have, but

there have been a lot of them, but I just don't one

hundred percents remember that.

THE COURT: If you want me to order somebody to

attend somewhere I have to know who they are, where

they are, and how to get jurisdiction over them.

MS KELLY: Well, he signed a consent to agree

to participate in these updates pursuant to this

agreement. And we have his consent signed as a

condition of moving forward with the settlement. So

we could --

THE COURT: Well, you could file a motion that

precipitates all this and get the relevant

information.

MS KELLY: We will do that, Judge.

THE COURT: How long do you want to proceed,

or -- then you have to file -- you have to -- you

tell me you are going to file a motion to lift the

stay as to the various motions here, 1491, 14 --

MS KELLY: That motion has already been --

THE COURT: -- 09. And another one, the one I

just mentioned. And that would be, those

supplemental briefs filed -- there were several

motions about repatriation and assets. You are

going to file those? And then you are going to file

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a motion in the bankruptcy court to do what about

the RICO charge?

MS KELLY: There would be, we are still

conferring with our local counsel there as to

whether it is just a motion. But we believe it

might be like an adversary proceeding or declaratory

judgment proceeding to confirm that the RICO

judgment is not a judgment that can be discharged.

And we believe there is -- 

THE COURT: Would that be something that you

would be asking the bankruptcy court there to have

this court determine or the bankruptcy court?

MS KELLY: That would be in the bankruptcy

court for the bankruptcy court to determine.

But certainly this court has already made

numerous findings that we believe Mr. Martorello

would be bound by that would clearly meet any

threshold necessary to make the necessary findings

in that action. And we don't see how those facts

can be changed at this point by Mr. Martorello.

THE COURT: So what date do you want me to

extend out of what document, so I can know what

order to enter?

MS KELLY: Judge, the plaintiff would agree to

extend the settlement agreement compliance deadline.

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THE COURT: Which deadline is that? What page

of the settlement agreement am I amending? That is

in settlement agreement 652 dash one in 3:19 314.

So I have that in front of me.

MS KELLY: The deadline that we are seeking to

extend is the funding deadline of October 21st,

2024.

THE COURT: Let's have the paragraph that we

are talking about. I have 652 dash 1 in front of

me.

MS KELLY: It is 3.7, liquidation of interest

in .

THE COURT: Just a moment.

All right. It says it must be completed, the

liquidation of the interests must be completed by no

later than October 21, 2024. Is that the date you

want continued?

MS KELLY: Yes, Judge. That is the date that

we would like continued.

THE COURT: Have you talked with other counsel,

and do they all agree with that?

MR. JACKSON: Your Honor, Billy Jackson for

Rebecca Martorello. We agree with that extension

with that date.

THE COURT: To what date?

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MR. JACKSON: To November 13, which is the, I

think one of the only days Judge Colombell is

available. I can't speak for Mr. Martorello.

THE COURT: You are not his counsel.

MR. JACKSON: That is right.

THE COURT: Well, that would be a venture I

wouldn't undertake either. All right. But his

counsel is here. 

So, does he agree?

MR. BLAND: Charlie Bland here for Mr.

Martorello, Your Honor. 

THE COURT: Yes, sir.

MR. BLAND: Mr. Martorello would agree. Let my

back up, Your Honor. Mr. Martorello would agree to

a brief extension on that deadline as that is the

best opportunity to fully fund the settlement and to

reach a final resolution.

Now, Mr. Martorello's bankruptcy estate has

bankruptcy counsel. That is Mr. Dan Winikka.

THE COURT: Who?

MR. BLAND: Mr. Dan Winikka, Your Honor. That

is Mr. Martorello's bankruptcy estate's lawyer.

THE COURT: They were invited to be here, I

think, and they chose not to be.

MR. BLAND: Yes, Your Honor.

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THE COURT: So what point do you make?

MR. BLAND: That Mr. Martorello and Mr. Winikka

will consent to a meeting here with Judge Colombell

provided that we, receives a bid that is

sufficient to fully fund the settlement agreement. 

In an amount that is sufficient to plaintiffs'

counsel and to the plaintiffs' class. If that is

the case, Mr. Martorello and Mr. Winikka are willing

to come here to Virginia to fully consummate the

deal.

THE COURT: What do you need to do to

consummate the deal?

MR. BLAND: Your Honor, the idea is to be here

together to work through any issues that arise in

connection with the bankruptcy, and do so with Judge

Colombell.

THE COURT: All right.

So that is what Martorello agrees to?

MR. BLAND: Yes, Your Honor.

THE COURT: And anybody else got a dog in the

fight that I need to talk to?

MR. TALIAFERRO: Mr. Taliaferro, Your Honor,

Mr. Martorello's counsel in the 18 465, I don't have

anything to add beyond what Mr. Bland said.

THE COURT: All right. 

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Anything else from you? Mr. Seltzer?

MR. SELTZER: No, sir, Judge.

THE COURT: You are counsel in what case?

MR. SELTZER: Judge, in the Williams matter. I

am local counsel for Mr. Bland.

THE COURT: So the record is clear, that's all.

Do you object to that that condition? You said

something earlier?

MS KELLY: Yes, Judge, the condition that

Mr. Martorello will only participate if we agree to

whatever amount the shares get, even if it is less

than the $65 million number. But we are --

THE COURT: I didn't hear him say that. I

thought he said sufficient to fund the settlement.

MS KELLY: So it would have --

THE COURT: To fund the settlement would be the

amount as appears in the settlement agreement I

interpreted. Now, if I misunderstood that, I need

to be straightened out on that.

MS KELLY: So Mr. Martorello's position is we

would only have a settlement conference if there was

an offer for at least $65 million. For 50 percent.

But, there could be an offer for 80 percent of the

shares at 90 million, and that may only net 63

million dollars. And in that case Mr. Martorello

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wouldn't participate. So to us, you know, if we

satisfy the terms of the settlement there is really

not much that would need to be done on November 13th

because we are almost there. And we could simply

have a ZOOM call with Judge Colombell.

THE COURT: But he said, I thought, that he,

Mr. Martorello and Winikka would meet if 

gets a bid sufficient to fund the settlement. That

is what he just said. He didn't say anything

about -- he just said the ultimate amount of the

settlement. So if he got offers of what percent you

said, eighty percent that is funded it at 65 million

they would be here.

MS KELLY: Well, if that is their

position then --

THE COURT: That is what I understood him to

say.

MS KELLY: Then I misunderstood him.

THE COURT: Did I misunderstand you or not? 

MR. BLAND: Your Honor, that is correct. There

is a fifty percent cap, Your Honor. That was an

economic material term of the settlement agreement.

THE COURT: I guess I have this question. 

What is the machination going on here that I

see that if you get an offer of some kind you don't

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want to come talk about it? That is what I think I

am having difficulty understanding. It bespeaks a

certain amount of confusion in my minted, and I

would like to have it clarified so I understand what

the dog in the fight is all about.

MR. BLAND: Your Honor, I understand. That is

the instruction that I have been given both by

Mr. Martorello and his bankruptcy counsel.

THE COURT: Did you ask them why they were

taking that position?

MR. BLAND: No, Your Honor. This developed

this morning. The Court should be aware as a result

of the bankruptcy filing automatic stay my

authorization is limited. I want to be as helpful

and as candid as I can, consistent with being a way

that I make sure that I don't violate the rights of

the bankruptcy and the automatic stay. So that is

an instruction that I have been given by

Mr. Martorello.

THE COURT: I am coming to the conclusion

rather quickly that the conduct of Mr. Martorello

and his bankruptcy counsel are standing as an

obstruction to justice and the administration of

justice in this court. And that they need to come

to reality. And there is nothing -- they don't

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forfeit anything by agreeing to come to talk about

something, that I know of. It is a -- seems to me

to be a position that you can't explain, and I can't

understand, but that makes no sense to me when it is

presented as a -- in the fashion that operates as an

impediment to the resolution of a pending matter in

the court and has a consequence to it. And that

consequence is the obstruction of the process. If

there is a legitimate reason why they don't want to

be here I can understand that. But I don't

understand it, and you haven't been able to express

it, and I gather that you are not authorized and

don't feel comfortable in your representation of Mr.

Martorello to speak that way. I understand that is

a position that you have, and I respect that. But

that doesn't change the fact that Mr. Martorello and

Mr. Winikka are acting in the way they are acting. 

So it doesn't make any sense to me. If I had

some understanding of why it was the way it was I

perhaps could deal with it in a different way.

But right now, I am of the view that this is

conduct that is not appropriately engaged in that is

standing in the way of resolving the matter.

So what do you want to do if they, Ms Kelly,

want to -- don't want to come unless the fifty

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percent threshold is also established?

MS KELLY: I think --

THE COURT: Do you want to go forward with the

people, with the people and with Ms

Martorello, or not?

MS KELLY: Judge, I think we do. If

Mr. Jackson and Ms Martorello have been clear that

they want to see this through and they want to get

it done despite Mr. Martorello's conduct. And we

believe them, that they want to get it done. And we

think it is in the best interests of everyone to

give it that time to try to get it done. We are

incredibly disappointed with Mr. Martorello's

conduct. It is shocking and unbelievable to us.

But it is actually not shocking. I shouldn't say

that, because, you know, we should know better by

now. But we want to get the money for the class

members. They are happy about it, they are

grateful. They have expressed to us how much it

would mean to them and their families.

THE COURT: I understand that. But that is,

the feelings of desire of joy are not what is on the

table now. It is the process of figuring out how to

penetrate an apparently impenetrable wealth wall,

and breaking down the matter so that it can in fact

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proceed in a court of law. That is what we are

looking for. If they don't to settle it, that is

their business. We can't do anything about that.

But we can adjudicate. The interposition of the,

unexpected interposition of the bankruptcy of

Mr. Martorello is a very unusual circumstance

because it is being used to stand in the way of

assets, obtaining assets that he doesn't have any

control over and has eschewed any responsibility

for. That can't be allowed to continue. So we need

to move forward on several fronts to get the case so

that it is manageable and in the hands of the

judiciary in a manageable way, giving everybody

their process that they are due under the law.

Under whatever law it is.

So you want to extend that date on page 15

paragraph three point seven to November 13 --

MS KELLY: Yes, Judge. And we propose

having --

THE COURT: -- 2024.

MS KELLY: Yes. And we propose at the

conclusion of that conference having a status

conference or something with Your Honor to report on

whether we were successful in a resolution, and if

not, set dates for depositions in the courthouse and

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evidentiary, other evidentiary or motions hearings

for motions we will file in the interim.

THE COURT: But also, are you going to file in

that time period the motion to lift the stay that

you were -- on these motions respecting assets here

so that they can proceed, and the motion to have an

adjudication that the RICO claims are not barred by

bankruptcy?

MS KELLY: Yes. I don't know that we will have

an adjudication on the -- whether the claims are

dischargeable or not.

THE COURT: I am not talking about this. I am

talking about filing by November.

MS KELLY: We will definitely have it filed.

We have the motion to lift the stay already drafted.

Given The Court's position here, I understand that

that is a very urgent matter, and we will notice it

as an emergency hearing so we can get an expedited

hearing with the bankruptcy court in Texas on that

issue.

We will also file the motion to request the

full participation of Mr. Tassone pursuant to the

settlement agreement.

THE COURT: When are you going to file that?

MS KELLY: Could we have until the end of next

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week, please?

THE COURT: What is the date?

MS KELLY: Twenty-fourth. No. Twenty-fifth.

THE COURT: By October 25. All right.

You are going to file the 1491 motion in 17 CV

416 in 3:19 341. When are you going to do that?

MS KELLY: So the 1491 motion, we can have that

filed by the 25th as well, Judge. And --

THE COURT: That is to be filed as a new motion

in 3:19 CV 314; is that right?

MS KELLY: That's correct, Judge.

THE COURT: All right.

Is there anything else that we need to do?

You talked about a status conference on

November 13th or 14th. Let me look at that.

I am not here on the 13th or 14th. I will be

back on the 15th.

MS KELLY: Fifteenth works for plaintiff.

THE COURT: I will expect the parties and

counsel to be here. I am inviting Mr. Martorello

and his bankruptcy counsel to be here. Advising

them that they run the risk that decisions might be

made that affect their business if they don't come

here to be represented. That their appearance here

waives no rights that they have in the bankruptcy

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proceedings or elsewhere. But they are important

people based upon what I have heard today in

figuring out a way for the litigation, and the

litigation involves many people many, many cases, to

move forward.

We will meet on the 15th at 10:00 a.m.

You said you wanted to have a conference

respecting the various topics, and the topics were

what?

MS KELLY: On the 15th?

THE COURT: You mentioned inter alia deposition

schedules and what else?

MS KELLY: That's correct, Judge.

If you recall, we were scheduled to take I

believe Mr. Martorello's deposition in the

courthouse, and also Ms Martorello's deposition. We

would also want to take her as well, Judge. We had

those scheduled. Regarding the transfers, if we are

not able to get to a resolution, we will also, we

also think it would be appropriate --

THE COURT: You don't want to take those

depositions on the 15th? You want to schedule the

depositions?

MS KELLY: Yes, Judge.

THE COURT: I suggest you have an itinerary for

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this meeting. Get the itinerary to me by the 13th

of November so I understand what we are looking at

and can plan whatever it is that either side wishes

to discuss positively or negatively.

MS KELLY: I understand, Judge. 

Just so I understand so we can represent to the

bankruptcy court your position, is that you would

want confirmation whether or not the bankruptcy

court would lift the stay prior to that time so that

you could freely schedule whatever you need to

schedule?

THE COURT: Yes.

MS KELLY: Okay.

THE COURT: Nothing would take place until I

heard the parties on the scheduling. But their

papers are already here.

MS KELLY: Right.

THE COURT: There were testimonies set to be

heard. And then the settlement occurred. And then

the bankruptcy unexpectedly occurred. So we need to

get the matter back on schedule.

MS KELLY: Given your familiarity --

THE COURT: I think it is the responsibility of

this Court to handle those matters in order that

cases pending here can move forward. I also happen

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to think that from what I have been able to discern

from the bankruptcy proceedings so far that it might

facilitate use of the bankruptcy court.

MS KELLY: Yes, Judge. Plaintiffs would agree

that given your extensive knowledge and familiarity

with these issues, and the facts given the

seven-year history of the case so far, that is

probably best to be determined here.

THE COURT: All right.

Is there anything else that needs to be done

today by anybody?

MR. JACKSON: Yes. I will go first.

THE COURT: Yes, sir.

MR. JACKSON: This is billy Jackson for Rebecca

Martorello again.

One of the conditions of the settlement

agreement is that the proceedings, including the

bankruptcy proceeding, will be stayed during the

pendency of the agreement. I ask that if this were

to be extended to November 13th and 15th that class

counsel not make those fillings in the bankruptcy

proceeding or against Ms Martorello in her actions

here in the EDVA until after that point.

THE COURT: Why?

MR. JACKSON: It is in the agreement that class

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counsel promised they would not.

THE COURT: What are you talking about? Let me

see what you are talking about.

MR. JACKSON: Certainly. This is section

eleven on page 36 of the settlement agreement.

THE COURT: 652 dash 1?

MR. JACKSON: Yes, Your Honor.

THE COURT: Just a minute. What paragraph is

it?

MR. JACKSON: It is going to be --

THE COURT: What page? What paragraph am I

talking about?

MR. JACKSON: Page 37. It is eleven point five

and and eleven point six.

THE COURT: Just a minute.

Well, I don't -- I don't understand that that

has anything to do with what we are talking about

doing here. How would that -- all we are doing is

asking the bankruptcy court for its view on whether

the matters that need to be proceeded with here

respecting pending matters on the transfer of assets

would continue and how they would be dealt with. I

don't understand those paragraphs to constitute an

agreement not to do anything. How does that -- I

don't understand that. How does that language work

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that way?

MR. JACKSON: I interpret that to mean that an

assurance from both parties that we wouldn't file

anything, or create any work for anybody to respond

to on those motions or to produce those motions in

the first place.

THE COURT: Well, it doesn't say that, and

beyond that it has been overtaken by events. The

filing of the bankruptcy that Mr. Martorello filed

render it necessary for the things that I am talking

about here to get done to get done so that we can,

the bankruptcy that he filed that was after this

document, nobody knew about. So it can't -- that

provision, these provisions can't be in

contemplation of his filing the bankruptcy. I don't

think that applies, eleven point five or eleven

point six. So file them and get to work.

MR. JACKSON: At the very least, Your Honor, we

ask that class counsel hold off on filing the motion

against Ms Martorello until after that time.

THE COURT: Why? I want them here to be

decided. If you want time to -- I mean, what are

you trying to accomplish? It doesn't make any --

looks like it just delay. So I know that is not

what you have in mind, so tell me why you have this

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problem. Is it spending money?

MR. JACKSON: At the very least, Your Honor,

the settlement agreement does that the proceedings

in the EDVA should be stayed during the pendency of

the settlement agreement proceedings.

THE COURT: Upon the assumption that it was

proceeding. And all of the assumptions upon which

that was operating, that stay operated has

dissipated into the ether by virtue of

Mr. Martorello's bankruptcy. And we need to make

sure that these proceedings may proceed

notwithstanding his bankruptcy. So I am not -- I am

going to ask them to go on and file them. I don't

think that eleven point five and eleven point six

have anything to do with the filings that need to be

made by virtue of Mr. Martorello's bankruptcy, which

has impeded the progress of this settlement. And

that changed circumstances necessitate that The

Court get the matter appropriately back on track so

that it can be dealt with and accord all parties the

rights to which they are entitled under the law.

Otherwise, nothing happens in the case, as I

understand it. 

All right?

MR. JACKSON: Yes, Your Honor.

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THE COURT: All right.

Anything else anybody needs?

MS KELLY: Judge, the only thing for plaintiffs

is I just wanted to represent there were eight

exclusions to the settlement, the first question of

the day --

THE COURT: The what?

MS KELLY: -- to the settlement, the first

question of the day was you asked how many

exclusions.

THE COURT: Opt outs.

MS KELLY: Yes, I am sorry. Opt outs. That is

ECF 674 dash 1. And the exclusions are attached to

the declaration. So there were eight.

THE COURT: The objection is what is it, ECF

what?

MS KELLY: It was 672. ECF 672 is the

objection.

THE COURT: In which case?

MS KELLY: In 3:19, and 3:14.

THE COURT: All right.

I think that takes care of it for now.

Thank you very much. We will be in recess.

The foregoing is a true and correct transcript.

GILBERT F. HALASZ, OCR 

Official Court Reporter 

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Case 24-90016-mxm11 Doc 46-3 Filed 11/01/24 Entered 11/01/24 10:32:03 Desc

Exhibit 3 Page 42 of 42