Baker Hostetler LLP 45 Rockefeller Plaza New York, New York 10111 Telephone: (212) 589-4200 Facsimile: (212) 589-4201 David J. Sheehan Fernando A. Bohorquez, Jr. Keith R. Murphy Att0rneysf0r Irving H. Picard, Trustee for the Substantively C0ns0lidated SIPA Liquidation 0f Bernard L. adof 1 nvestrnent Securities LLC and Bernard L. adof UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK SECURITIES INVESTOR PROTECTION CORPORATION, Adv. Pro. No. 08-01789 (BRL) Plaintiff-Applicant, SIPA LIQUIDATION v. (Substantively Consolidated) BERNARD L. MADOFF INVESTMENT SECURITIES LLC, AMENDED Defendant. COMPLAINT In re: BERNARD L. MADOFF, Debtor. IRVING H. PICARD, Trustee for the Liquidation of Bernard L. Madoff Investment Securities LLC, Plaintiff Adv. Pro. No. 10-5287 (BRL) v. SAUL B. KATZ, in his individual capacity, and as trustee ofthe Katz 2002 Descendants' Trust, FRED WILPON, in his individual capacity, as trustee ofthe Wilpon 2002 Descendants' Trust, and as co-executor ofthe Estate Of Leonard Schreier, RICHARD WILPON, in his individual capacity, as trustee ofthe Fred Wilpon Family Trust, and as trustee ofthe Saul B. Katz Family Trust; MICHAEL KATZ, in his individual capacity, and as the trustee of the Saul B. Katz Family Trust; JEFFREY WILPON, in his individual capacity, and as beneficiary ofthe Fred Wilpon Family Trust; DAVID KATZ, in his individual capacity, as trustee ofthe Saul B. Katz Family Trust, and as beneficiary ofthe Saul B. Katz Family Trust; GREGORY KATZ, in his individual capacity, and as beneficiary ofthe Katz 2002 Descendants' Trust; ARTHUR L. THOMAS MARVIN B. ESTATE OF LEONARD SCHREIER, JASON BACHER as co-executor ofthe Estate of Leonard Schreier; METS LIMITED STERLING METS STERLING METS STERLING METS ASSOCIATES METS ONE METS II METS PARTNERS, C.D.S. CONEY ISLAND BASEBALL HOLDING COMPANY BROOKLYN BASEBALL COMPANY FS COMPANY 157 J.E.S. AIR STERLING BAS AIRCRAFT BON MICK FAMILY PARTNERS BON-MICK, CHARLES 15 CHARLES 15 CHARLES STERLING CHARLES STERLING SUB COLLEGE PLACE ENTERPRISES FFB AVIATION IRIS J. KATZ AND SAUL B. KATZ FAMILY FOUNDATION, JUDY AND FRED WILPON FAMILY FOUNDATION, RED VALLEY ROBBINSVILLE PARK RUSKIN GARDEN APARTMENTS SEE HOLDCO SEE HOLDINGS SEE HOLDINGS STERLING l0 STERLING 15C STERLING 20 STERLING AMERICAN ADVISORS II STERLING BRUNSWICK STERLING BRUNSWICK SEVEN STERLING DIST PROPERTIES STERLING STERLING EQUITIES AS STERLING EQUITIES STERLING HERITAGE STERLING INTERNAL STERLING JET STERLING JET II STERLING PATHOGENESIS STERLING THIRD STERLING THIRTY VENTURE STERLING TRACING STERLING TWENTY FIVE STERLING VC IV STERLING VC VALLEY HARBOR SAUL B. KATZ FAMILY FRED WILPON FAMILY KATZ 2002 WILPON 2002 IRIS in her individual capacity; and as trustee ofthe Saul B. Katz Family Trust; JU DITH in her individual capacity; and as trustee ofthe Fred Wilpon Family Trust; DAYLE in her individual capacity; as trustee ofthe Katz 2002 Descendants' Trust; and as beneficiary ofthe Katz 2002 Descendants' Trust; DEBRA in her individual capacity; as trustee ofthe Fred Wilpon Family Trust; and as trustee of Wilpon 2002 Descendants' Trust; VALERIE AMY BETH HEATHER KATZ in her individual capacity; as trustee ofthe Saul B. Katz Family Trust; and as beneficiary of the Saul B. Katz Family Trust; HOWARD in his individual capacity; and as beneficiary ofthe Katz 2002 Descendants' Trust; NATALIE KATZ in her individual capacity; as trustee ofthe Saul B. Katz Family Trust; and as beneficiary of the Saul B. Katz Family Trust; TODD in his individual capacity; and as beneficiary ofthe Katz 2002 Descendants' Trust; BRUCE N. in his individual capacity; and as beneficiary ofthe Fred Wilpon Family Trust; DANIEL in his individual capacity; and as beneficiary ofthe Wilpon 2002 Descendants' Trust; JESSICA in her individual capacity; and as beneficiary of the Wilpon 2002 Descendants' Trust; ROBIN WILPON in her individual capacity; and as beneficiary of the Fred Wilpon Family Trust; PHILIP WACHTLER, KIMBERLY WACHTLER, in individual capacity, and as of Wilpon Family Trust, SCOTT WILPON, in his individual capacity, and as bcnciiciary of Wilpon 2002 Trust, MINOR (REDACTED), MINOR 2 (REDACTED), RUTH FRIEDMAN, REBELL OSTERMAN, ELISE C. TEPPER, JACQUELINE G. TEPPER, EDWARD M. TEPPER, DEYVA SCHREIER ARTHUR, in individual capacity, and as of Estatc of Lconard MICHAEL SCHREIER, in his individual capacity, and as bcnciiciary of Estatc of Lconard REALTY ASSOCIATES MADOFF II, STERLING ACQUISITIONS LLC, STERLING AMERICAN PROPERTY LP, STERLING AMERICAN PROPERTY IV LP, STERLING AMERICAN PROPERTY LP, TABLE OF CONTENTS Page I. NATURE OF THE ACTION 1 II. JURISDICTION AND VENUE 6 BACKGROUND, THE TRUSTEE AND STANDING 7 IV. THE FRAUDULENT PONZI SCHEME 11 V. STERLING DEFENDANTS 14 A. Overview 14 B. Sterling Partners 18 C. Sterling Entity Defendants 34 1. New York Mets and Related Entities 34 2. Other Sterling Entities 47 D. Katz/Wilpon Trust Defendants 86 E. Sterling Family Member Defendants 90 F. Madoff Investment Entity Defendants 114 VI. INVESTMENTS WITH MADOFF WERE PART OF ITS REAL ESTATE, PROFESSIONAL BASEBALL, PRIVATE EQUITY AND HEDGE FUND BUSINESS 118 A. The Sterling Partners Are Sophisticated Investors With A Deep Bench Of Financial And Business Experience Across Numerous Asset Classes 121 1. Real estate 121 2. Professional baseball and sports media 122 3. Private equity 123 B. The Sterling Partners Relied On Madoff To Assist The Growth Of Their Businesses 123 1. The Sterling Partners exploited their Madoff access by opening and administering 483 BLMIS accounts for themselves, their families, various related trusts and entities, their friends and employees. 124 2. The Sterling Partners structured their Madoff investments to ensure that Madoff money flowed through every arm of their business 128 C. Sterling Partners Expanded Their Business To Include Their Own Hedge Fund--Sterling Stamos--As An Alternative To Madoff 130 VII. QUARTER-CENTURY RELATIONSHIP WITH MADOFF 135 A. The Madoffs, Wilpons And Katzes Had A Close Friendship And Business Relationship 135 TABLE OF CONTENTS (continumb Page B. The Sterling Partners, Families, Trusts And Entities Withdrew Approximately $300 Million Of Other People's Money From Their BLMIS Accounts 138 C. Sterling Steered Dozens Of Friends, Business Associates, And Their Own Employees To Madoff 139 D. Sterling Administered 483 BLMIS Accounts On Behalf Of The Sterling Partners, Families, Trusts, Entities, Friends, Business Associates, and Employees 140 1. Sterling Partner Arthur Friedman tracked, monitored, and acted as BLMIS liaison for all 483 BLMIS Accounts 140 2. Sterling manipulated tenant-in-cornrnon BLMIS Accounts to maximize SIPC protection 143 E. Madoff Invested Approximately $12 Million In Sterling Business Ventures 144 MADOFF MONEY AIDED THE GROWTH OF THE STERLING BUSINESSES, WHICH PROVIDED EVERY INCENTIVE TO IGNORE INDICIA OF FRAUD 146 A. Sterling Used BLMIS Accounts To Support The Operations Of The New York Mets 148 B. Sterling Employed BLMIS Accounts To Meet Capital Commitments 150 C. Sterling Depended On BLMIS Accounts To Provide Cash Flow To Its Businesses Through Its Internal Bank, Sterling Equities Funding 151 D. Sterling Used BLMIS Accounts As Leverage To Borrow Capital And Double Its Returns 153 1. Sterling's leveraged BLMIS accounts relied upon Madoff' implausible returns 153 2. Sterling used other fonns of leverage across various BLMIS accounts 159 E. Sterling Depended On Its BLMIS Investments To Consurnrnate Key Deals And Secure Access To Capital Under Favorable Lending Tenns 160 F. Post-12/11/08 Debt Restructuring Proves Sterling's Dependency on Madoff 161 IX. THE STERLING PARTNERS WILLFULLY TURNED A BLIND EYE TO SUBSTANTIAL INDICIA OF FRAUD 164 A. Numerous Financial Industry Professionals Warned Sterling About Madoff 165 1. Sterling Stamos warned Sterling of its Madoff concerns 165 -ii- TABLE OF CONTENTS (continumb Page 2. Merrill confinned Stamos' concerns and rejected Saul Katz's proposal to invest with Madoff 172 3. Other financial institutions and industry professionals advised Sterling of additional concerns, including that Madoff" "math wasn't right." 175 4. American Securities' Chuck Klein recornrnended that Sterling obtain fraud insurance for its investments with Madoff 180 B. Sterling Was Aware Of--And Even Enabled--Madoff" Attempts To Avoid Regulatory And Other Third Party Scrutiny 182 1. Madoff" concerns regarding SEC disclosures forced Sterling Stamos to reorganize its business prior to registering as an investment adviser 182 2. By February 2006, Sterling knew or should have known that Madoff was evading his requirement to register with the SEC as an investment adviser. 186 3. Sterling insulated Madoff from scrutiny in connection with its BLMIS 401(k) plan investment option 187 4. Sterling protected Madoff by insulating referral accounts 189 5. Sterling only used Madoff" approved bank for Double Up Loans 190 C. The Sterling Partners Knew That Madoff Was Dishonest In His Investment Advisory Business 191 1. Madoff and Sterling falsely documented a $54 million bridge loan 191 2. Madoff and Sterling misled regulators in an inquiry by the New York Attorney General's office. 194 3. The Sterling Partners knew that Madoff lied about not accepting investments from funds of funds 195 D. Sterling Was Aware Of The Indicia Of Fraud In The Bayou Ponzi Scheme And Chose To Ignore Them When It Came To Madoff 196 E. Madoff" Returns Were Too Good To Be True And Sterling Knew It 201 X. THE STERLING INEXCUSABLE LACK OF DILIGENCE ON MADOFF AND BLMIS AFTER REPEATED INDICIA OF FRAUD 208 XI. THE STERLING KNOWLEDGE INQUIRY NOTICE MUST BE IMPUTED TO ALL DEFENDANTS 210 XII. TRANSFERS 213 A. Overview 213 B. Sterling Partners 218 C. Sterling Entity Defendants 240 TABLE OF CONTENTS (continumb Page 1. New York Mets and Related Entities 240 2. Other Sterling Entities 256 D. Katz/Wilpon Trust Defendants 309 E. Sterling Family Member Defendants 319 F. Madoff Investment Entity Defendants 352 CUSTOMER CLAIMS 356 COUNT ONE: STERLING TWO YEAR ACTUAL FRAUD DEFENDANTS FRAUDULENT TRANSFER -- 11 U.S.C. 550(a), AND 551 357 COUNT TWO: STERLING TWO YEAR CONSTRUCTIVE FRAUD DEFENDANTS FRAUDULENT TRANSFER -- 11 U.S.C. 550(a), AND 551 358 COUNT THREE: STERLING SIX YEAR DCL ACTUAL FRAUD DEFENDANTS FRAUDULENT TRANSFER -- NEW YORK DEBTOR AND CREDITOR LAW 276, 276-a, 278, 279, AND 11 U.S.C. 544(b), 550(a), AND 551 359 COUNT FOUR: STERLING SIX YEAR DCL CONSTRUCTIVE FRAUD DEFENDANTS (INSOLVENCY) FRAUDULENT TRANSFER -- NEW YORK DEBTOR AND CREDITOR LAW 273, 278, 279, AND 11 U.S.C. 544(b), 550(a), 551 361 COUNT FIVE: STERLING SIX YEAR DCL CONSTRUCTIVE FRAUD DEFENDANTS (UNREASONABLY SMALL CAPITAL) FRAUDULENT TRANSFER -- NEW YORK DEBTOR AND CREDITOR LAW 274, 278, 279, AND 11 U.S.C. 544(b), 550(a), AND 551 362 COUNT SIX: STERLING SIX YEAR DCL CONSTRUCTIVE FRAUD DEFENDANTS (DEBTS BEYOND ABILITY TO PAY) FRAUDULENT TRANSFER -- NEW YORK DEBTOR AND CREDITOR LAW 275, 278, 279, AND 11 U.S.C. 544(b), 550(a), AND 551 363 COUNT SEVEN: STERLING INITIAL TRANSFEREE DEFENDANTS RECOVERY OF ALL FRAUDULENT TRANSFERS -- NEW YORK CIVIL PROCEDURE LAW AND RULES 203(g) AND 213(8), NEW YORK DEBTOR AND CREDITOR LAW 276, 276-a, 278, 279, AND 11 U.S.C. 544(b), 550(a), AND 551 364 COUNT EIGHT: STERLING PREFERENTIAL TRANSFEREE DEFENDANTS PREFERENTIAL TRANSFER -- 11 U.S.C. 547(b), 550(a), AND 551 365 COUNT NINE: STERLING SUBSEQUENT TRANSFEREE DEFENDANTS RECOVERY OF SUBSEQUENT TRANSFER -- NEW YORK DEBTOR AND CREDITOR LAW 278 AND 279 AND 11 U.S.C. 544(b) AND 550(a) 366 COUNT TEN: STERLING CLAIMS DEFENDANTS DISALLOWANCE OF CUSTOMER CLAIMS 367 COUNT ELEVEN: STERLING CLAIMS DEFENDANTS EQUITABLE SUBORDINATION 368 -iV- Irving H. Picard (the "Trustee"), as trustee for the substantively consolidated liquidation ofthe business of Bernard L. Madoff Investment Securities LLC and Bernard L. Madoff under the Securities Investor Protection Act et seq., by and through his undersigned counsel, for this Complaint, states as follows: I. NATURE OF THE ACTION l. There are thousands of victims of Madoff' massive Ponzi scheme. But Saul Katz is not one of them. Neither is Fred Wilpon. And neither are the rest of the paxtners at Sterling Equities ("Sterling")1 who, along with Fred Wilpon and Saul Katz, are sophisticated investors who oversee and control Sterling and its many businesses and investments. 2. The Sterling partners, their family members, their related trusts, and various entities they own, operate, and control were collectively one of the largest beneficiaries of Madoff' fraud, reaping hundreds of millions in fictitious profits over their quarter-century relationship with Madoff The Sterling partners, their family members, trusts and Sterling- related entities made so much easy money from Madoff for so long that despite the many objective indicia of fraud before them, the Sterling paxtners chose to simply look the other way. 3. Sterling is a closely-held family run business that over the last several decades has evolved into a multi-billion dollar real estate, professional baseball, private equity, and hedge fund empire with the New York Mets Maj or League Baseball franchise standing at the helm. Many of Sterling's businesses were fueled by Sterling's tremendous investments with Madoff, the steady flow of fictitious profits, and the myriad leverage opportunities presented by Madoff' consistent returns. In fact, over the last three decades, the Sterling partners, their family members, their trusts and related entities received approximately $300 million in fictitious profits I Sterling Equities4collectively, the partners and the entities that they own, operate, and control--will hereinafter be referred to as "Sterling." from Madoff and used the purported equity in their BLMIS accounts to, among other things, secure hundreds of millions more in loans and lines of credit. 4. The Sterling partners capitalized on their close personal connection to Madoff and deep bench of financial and business experience to use their BLMIS investments as the ann of the Sterling business that anchored the rest. The Sterling partners opened and administered 483 BLMIS accounts: approximately 300 for themselves, their families, their trusts and entities, and the rest for their closest friends, employees, and business associates. Madoff money flowed through every aspect of Sterling's business. Be it real estate, professional baseball, or private equity, every part of Sterling's business held investments with Madoff through approximately 65 BLMIS accounts in the name of various entities created, owned, and controlled by the Sterling partners. The Mets alone had sixteen related BLMIS accounts from which Sterling withdrew over $90 million in fictitious profits. 5. But the Sterling partners' reliance on Madoff' consistent and steady returns ran further than just opening hundreds of accounts. Sterling used its BLMIS accounts as a substantial source of liquidity to develop and sustain its businesses, including professional baseball and real estate. For instance, much of the approximately $90 million of other people's money withdrawn from the Mets' BLMIS accounts helped fund its day-to-day operations. Sterling also used BLMIS returns to generate sufficient profits to meet capital cornrnitrnents for its Sterling American Property real estate funds. Further, BLMIS returns provided the necessary cash flow to Sterling's internal bank--Sterling Equities Funding, a clearing house for the rnovernent of intenningled funds and financial obligations between and among the Sterling partners, their families, and their related trusts and entities. 2 6. The Sterling partners also leveraged their investments with Madoff by employing the purported equity in certain BLMIS accounts as collateral for a multitude of bank loans and then invested the proceeds of those loans into BLMIS and/or other facets ofthe Sterling business. In addition, the Sterling partners used the purported equity in their hundreds of BLMIS accounts to prove their net worth and creditworthiness and convince banks to extend them credit facilities, which allowed Sterling access to capital to consu1n1nate key deals that otherwise 1nay not have been available. 7. The Sterling partners' reliance on Madoff to not only generate retums to help support their businesses, but also to provide them with collateral and creditworthiness, led to a cycle of dependency whereby Madoff money helped create and expand new and existing Sterling businesses that in turn generated profits to re-invest in BLMIS. Much of the new capital the Sterling partners invested in BLMIS was generated by Madoff' retums and acted to propel and sustain their successful businesses. 8. Sterling was so heavily invested in BLMIS and the financing provided by Sterling's lenders was so tied to these BLMIS investments that upon revelation of Madoff' fraud, Sterling faced a liquidity crisis. This crisis prompted a complete and comprehensive restructuring of over half a billion dollars of Sterling's debt, not just the multiple millions in defaulted loans collateralized by Sterling's various BLMIS accounts. 9. Given Sterling's dependency on Madoff, it comes as no surprise that the Sterling paxtners willfully tumed a blind to every objective indicia of fraud before them. The Sterling pa1tners' willful blindness is even more inexcusable because they had their very own hedge fund, Sterling Stamos, a partnership between Sterling and Peter Stamos--a highly sophisticated and 3 experienced businessman with personal ties to Saul Katz--created as an alternative investment vehicle to BLMIS in which Sterling partners Saul Katz and David Katz played integral roles. l0. The warning signs were many and varied, ranging from cautionary counsel from financial industry experts and trusted advisors, to Madoff' schemes to avoid regulatory scrutiny, to the Sterling partners' knowledge from their personal experience that Madoff was dishonest in his Investment Advisory business, to the fact that the Sterling partners had even invested in a Ponzi scheme before collapse that bore similar markings to another fraud right under their collective noses. But the Sterling partners were simply in too deep--having substantially supported their businesses with Madoff money--to do anything but ignore the gathering clouds. Despite being on notice and having every resource at their disposal to investigate the litany of legitimate questions surrounding Madofi the Sterling partners chose to do nothing. Among the many red flags the Sterling partners consciously disregarded: a. Sterling Stamos rejected Madoff and '"told . . . the Wilpon and Katz families about [its] concerns. Notwithstanding [its] concerns, the Wilpon and Katz families continued to invest with Madoff . . . and maintained their investments independent of [Sterling Stamos'] advice," see infra Section b. Merrill acquired a 50% non-controlling share of Sterling Stamos in 2007 and had a long-standing prohibition against investing with Madoff--parroted Sterling Stamos' Madoff warnings to Saul Katz on several occasions, even going so far as telling him that Madoff would not pass Merrill due diligence protocols, see infra Section IX.A.2, c. Ivy Asset Management--which strongly suspected fraud or illegality at BLMIS by the time Sterling approached it in April 2002 to help generate funding for Sterling 4 Stamos--told Sterling partners Saul Katz, David Katz, and Arthur Friedman about its concerns with Madoff and cautioned the1n that it had redeemed all of its BLMIS investments years before, see infra Section IX.A.3, d. At least one Sterling consultant advised Saul Katz in or around 2003 that he "couldn't make Be1nie's 1nath work and something wasn't right," see id., e. Madoff was so concemed with the possible disclosures he and Sterling would have had to make if Sterling Stamos registered with the SEC as an investment adviser that the Sterling partners appeased Madoff by undertaking a significant structural overhaul of Sterling Stamos to ensure that Sterling Stamos could register without having to disclose the Sterling pa1tners' business relationship with Madofi including the extent of their BLMIS investments, see infra Section Madoff and certain Sterling partners were together willing to create a fraudulent letter agreement falsely describing a $54 1nillion loan from Madoff to Sterling as an "investment" by Madoff' wife, Ruth, in the predecessor entity to SportsNet New York, see infra Section IX.C, g. The Sterling partners invested, through Sterling Sta1nos, in the prior Bayou Ponzi scheme and were aware that Sterling Stamos' due diligence had uncovered many red flags--similar in kind to Madoff--that led to full redemption of Sterling Stamos' Bayou investments, see infra Section and h. The Sterling partners knew or should have known that Madoff' consistently high and extremely non-volatile retums over almost a quarter-century were '"too good to be true" because they were at odds with the strategy Madoff purported to employ, were 5 suspiciously unaffected by major market dislocation events, and could not be duplicated by their own hedge fund, Sterling Sta1nos, see infra Section IX.E. 11. The Sterling partners knew or should have known that with every withdrawal from their BLMIS accounts they reaped the benefits of a fraud, and for the reasons described below, the Sterling partners' actual and/or inquiry notice must be imputed to all defendants named herein. See infra Section XI. 12. Despite the objective indicia of fraud before them, despite being sophisticated real estate and maj or league baseball 1noguls with their very own hedge fund, and despite steering hundreds of imiocent investors to Madoff--including their own employees through a 401(k) plan that was 90% invested with Sterling partners conducted no diligence on Madoff or BLMIS, instead choosing to blindly accept their good fortune without conducting any investigation whatsoever. 13. The purpose of this proceeding is to recover the avoidable transfers from BLMIS of approximately $$00,000,000 in fictitious profits and over $700,000,000 in principal received by the Sterling partners, their families, their trusts and related entities, including the Mets. The Trustee seeks to set aside such transfers and preserve the property for the benefit of the victims ofthe Madoff fraud. II. JURISDICTION AND VENUE 14. This is an adversary proceeding co1n1nenced before the same Court before which the main underlying Securities Investors Protection Act proceeding, No. 08-01789 (BRL) (the Proceeding"), is pending. The SIPA Proceeding was originally brought in the United States District Court for the Southern District of New York as Securities Exchange C0rnrnissi0n v. Bernard L. adof Investment Securities LLC et al., No. 08 CV 10791 (the "District Court Proceeding") and has been referred to this Court. This Court has jurisdiction 6 over this adversary proceeding under 28 U.S.C. 1334(b) and 15 U.S.C. 15. This Court has personal jurisdiction over all ofthe defendants captioned herein pursuant to NY CPLR 301 and 302 and Bankruptcy Rule 7004. All defendants have maintained 1nini1nu1n contacts with New York in connection with the claims alleged herein. 16. This is a core proceeding pursuant to 28 U.S.C. (B), (F), (H) and (O). 17. Venue in this district is proper under 28 U.S.C. 1409. BACKGROUND, THE TRUSTEE AND STANDING 18. On December 11, 2008 (the "Filing Madoff was arrested by federal agents for violation ofthe criminal securities laws, including, inter alia, securities fraud, investment adviser fraud, and mail and wire fraud. Contemporaneously, the Securities and Exchange Commission filed a complaint in the District Court that commenced the District Court Proceeding against Madoff and BLMIS. The District Court Proceeding remains pending in the District Court. The SEC complaint alleged that Madoff and BLMIS engaged in fraud through the investment adviser activities of BLMIS. 19. On December 12, 2008, The Honorable Louis L. Stanton ofthe District Court entered an order appointing Lee S. Richards, Esq. as receiver (the "Receiver") for the assets of BLMIS. 20. On December 15, 2008, pursuant to 15 U.S.C. of SIPA, the SEC consented to a combination of its own action with an application ofthe Securities Investor 2 Section of SIPA states that the filing date is "the date on which an application for a protective decree is filed Lmder except where the debtor is the subject of a proceeding pending before a United States court "in which a receiver, trustee, or liquidator for such debtor has been appointed and such proceeding was commenced before the date on which such application was filed, the term 'filing date' means the date on which such proceeding was commenced." 15 U.S.C. Thus, even though the application for a protective decree was filed on December 15, 2008, the Filing Date in this action is December 11, 2008. 7 Protection Corporation Thereafter, pursuant to 15 U.S.C. of SIPA, SIPC filed an application in the District Court alleging inter alia, that BLMIS was not able to 1neet its obligations to securities customers as they ca1ne due and, accordingly, its customers needed the protections afforded by SIPA. 21. Also on December 15, 2008, Judge Stanton granted the SIPC application and entered an order pursuant to SIPA (the "Protective Decree"), which, in pertinent part: a. appointed the Trustee for the liquidation ofthe business of BLMIS pursuant to 15 of SIPA, b. appointed Baker Hostetler LLP as counsel to the Trustee pursuant to 15 U.S.C. of SIPA, and c. removed the case to this Bankruptcy Court pursuant to 15 U.S.C. of SIPA. By this Protective Decree, the Receiver was removed as Receiver for BLMIS. 22. By orders dated December 23, 2008 and February 4, 2009, respectively, the Bankruptcy Court approved the Trustee's bond and found that the Trustee was a disinterested person. Accordingly, the Trustee is duly qualified to serve and act on behalf ofthe estate of BLMIS. 23. At a Plea Hearing on March 12, 2009, in the case captioned United States v. adojf Case No. Madoff pled guilty to an eleven-count criminal infonnation filed against him by the United States Attomeys' Office for the Southern District of New York. At the Plea Hearing, Madoff admitted that he "operated a Ponzi scheme through the investment advisory side of See Plea Allocution of Bernard L. Madoff at 23, United States v. Madojf No. 09-CR-213 (DC) (S.D.N.Y. March 12, 2009) (Docket No. 50). Additionally, 8 Madoff asserted I engaged in my fraud, I knew what I was doing [was] wrong, indeed criminal." Id Madoff was sentenced on Iune 29, 2009 to 150 years in prison. 24. On August ll, 2009, a fonner BLMIS employee, Frank DiPascali ("DiPascali"), pled guilty to participating and conspiring to perpetuate the Ponzi scheme. At a Plea Hearing on August ll, 2009 in the case entitled United States v. DiPascali, Case No. 09-CR-764 (RIS), DiPascali pled guilty to a ten-count criminal information. Among other things, DiPascali admitted that the fictitious scheme had begun at BLMIS since at least the l980s. See Plea Allocution of Frank DiPascali at 46, United States v. DiPascali, No. 09-CR-764 (RIS) (S.D.N.Y. August ll, 2009) (Docket No. ll). 25. As the Trustee appointed under SIPA, the Trustee has the job of recovering and paying out customer property, as defined below, to customers, assessing claims, and liquidating any other assets of the finn for the benefit ofthe estate and its creditors. The Trustee is in the process of rnarshalling assets, and the liquidation of assets is well underway. However, such assets will not be sufficient to reimburse the customers of BLMIS for the billions of dollars that they invested with BLMIS over the years. Consequently, the Trustee must use his authority under SIPA and the Bankruptcy Code to pursue recovery from customers and others who received preferences, payouts of fictitious profits, and/or other avoidable transfers to the detriment of other defrauded customers whose money was consumed by the Ponzi scheme. Absent this or other recovery actions, the Trustee will be unable to satisfy the claims described in subparagraphs (A) through (D) of SIPA section 26. Pursuant to section the Trustee has the general powers of a bankruptcy trustee in a case under the Bankruptcy Code in addition to the powers granted by SIPA pursuant 9 to section Chapters l, 3, 5 and subchapters I and II of chapter 7 ofthe Bankruptcy Code are applicable to this case. 27. Pursuant to section and of SIPA, the Filing Date is deemed to be the date of the filing of the petition within the meanings of sections 547 and 548 ofthe Bankruptcy Code and the date of the co1n1nence1nent ofthe case within the meaning of section 544 ofthe Bankruptcy Code. 28. The Trustee has standing to bring these clai1ns pursuant to section of SIPA and the Bankruptcy Code, including sections 323(b) and 704(a)(l), because, a1nong other reasons: a. Defendants received customer property as defined in l5 U.S.C. (hereinafter "Customer Property"), b. BLMIS incurred losses as a result ofthe clai1ns set forth herein, c. customers were injured as a result ofthe conduct detailed herein, d. SIPC cannot by statute advance funds to the Trustee to fully reimburse all custo1ners for all of their losses, e. the Trustee will not be able to fully satisfy all claims, the Trustee, as bailee of Customer Property, can sue on behalf of customer bailors, g. the Trustee is the assignee of clai1ns paid, and to be paid, to customers of BLMIS who have filed clai1ns in the liquidation proceeding (such claim-filing customers, collectively, "Accountholders"). As ofthe date hereof the Trustee has received multiple express unconditional assignments ofthe applicable Accountholders' causes of action, which actions could have been asserted against the defendants herein. As assignee, the Trustee stands in the l0 shoes of persons who have suffered injury in fact and a distinct and palpable loss for which the Trustee is entitled to reimbursement in the fonn of monetary damages. The Trustee brings this action on behalf of a1nong others, those defrauded customers of BLMIS who invested 1nore money in BLMIS than they withdrew; h. SIPC is the subrogee of clai1ns paid, and to be paid, to customers of BLMIS who have filed clai1ns in the liquidation proceeding. SIPC has expressly conferred upon the Trustee enforcement of its rights of subrogation with respect to payments it has 1nade and is making to customers of BLMIS fro1n SIPC funds, and i. the Trustee has the power and authority to avoid and recover the transfers pursuant to sections 544, 547, 548, 550(a) and 551 ofthe Bankruptcy Code and SIPA sections IV. THE FRAUDULENT PONZI SCHEME 29. BLMIS was founded in 1959 by Madoff and, for 1nost of its existence, operated fro1n its principal place of business at 885 Third Avenue, New York, New York. Madoff as founder, chainnan, chief executive officer, and sole owner, operated BLMIS together with several of his friends and family 1ne1nbers. BLMIS was registered with the SEC as a securities broker-dealer under Section l5(b) ofthe Securities Exchange Act of 1934, SIPA 78o(b). By virtue of that registration, BLMIS is a 1ne1nber of SIPC. BLMIS had three business units: Investment Advisory (the Business"), market making, and proprietary trading. 30. Outwardly, Madoff ascribed the consistent success ofthe IA Business to his so- called "split-strike conversion" strategy Strategy"). Pursuant to that strategy, Madoff purported to invest BLMIS customers' funds in a basket of co1n1non stocks within the 100 Index--a collection ofthe 100 largest publicly traded companies. Madoff claimed that his basket of stocks would 1ni1nic the 1nove1nent of the 100 Index. He also asserted that he 1 1 would carefully ti1ne purchases and sales to maximize value, and correspondingly, BLMIS customers' funds would, intennittently, be out of the equity markets. While out of the market, those funds were purportedly invested in United States Treasury bills or in mutual funds holding Treasury bills. The second part ofthe SSC Strategy was the hedge of Madoff's stock purchases with 100 Index option contracts. Those option contracts functioned as a "collar," limiting both the potential gains and the potential losses. Madoff purported to use proceeds from the sale of l00 Index call options to finance the cost of purchasing l00 Index put options. Madoff also told IA Business customers, including, upon infonnation and belief so1ne of the defendants named herein, that he would enter and exit the market between six and ten times each year. 3 l. IA Business customers received fabricated or quarterly statements showing that securities were held in, or had been traded through, their accounts. The securities purchases and sales shown in such account statements never occurred and the profits reported were entirely fictitious. At the Plea Hearing, Madoff admitted that he never purchased any ofthe securities he claimed to have purchased for the IA Business' customer accounts. In fact, there is no record of BLMIS having cleared a single purchase or sale of securities in connection with the SSC Strategy. Madoff' SSC Strategy was entirely fictitious. 32. At times prior to his arrest, Madoff generally assured customers and regulators that he purchased and sold the put and call options over-the-counter rather than through an exchange. Yet, like the underlying securities, the Trustee has yet to uncover any evidence that Madoff ever purchased or sold any of the options described in customer statements. The Options Clearing Corporation, which clears all option contracts based upon the stocks of l2 100 companies, has no record ofthe IA Business having bought or sold any exchange-listed options on behalf of any of IA Business customers. 33. For all periods relevant hereto, the IA Business was operated as a Ponzi scheme. The 1noney received fro1n investors was not invested in stocks and options. Rather, BLMIS used its IA Business customers' deposits to pay redemptions by other customers, and to make other transfers, which are avoidable by the Trustee. Many of these transfers were to enrich Madofi his associates, and his fa1nily. 34. The falsified account state1nents reported that the accounts of IA Business custo1ners had 1nade substantial gains, but, in reality, because it was a Ponzi sche1ne, BLMIS did not have the funds to pay investors on account of their new investments. BLMIS was only able to survive for as long as it did by using the stolen principal invested by so1ne custo1ners to pay other customers. 35. The payments to investors constituted an intentional misrepresentation of fact regarding the underlying accounts and were an integral and essential part of the fraud. The payments were necessary to validate the false account state1nents, and were 1nade to avoid detection of the fraud, to retain existing investors, and to lure other investors into the Ponzi scheme. 36. At all ti1nes relevant hereto, the liabilities of BLMIS were billions of dollars greater than its assets. BLMIS was insolvent in that: its assets were worth less than the value of its liabilities, it could not 1neet its obligations as they ca1ne due, and at the ti1ne ofthe transfers, BLMIS was left with insufficient capital. l3 37. Madoff' sche1ne continued until December 2008, when the requests for redemptions overwhelmed the flow of new investments and caused the inevitable collapse of the Ponzi sche1ne. 38. In an effort to hinder, delay, or defraud authorities from detecting the fraud, BLMIS did not register as an investment adviser until August 2006. 39. In or about January 2008, BLMIS filed with the SEC an Amended Uniform Application for Investment Adviser Registration. The application represented, inter alia, that BLMIS had 23 custo1ner accounts and assets under 1nanage1nent of approximately $68 billion. In fact, in January 2008, BLMIS had approximately 4,900 active client accounts with a purported value of approximately $68 billion under 1nanage1nent. 40. Not only did Madoff seek to evade regulators, Madoff also had false audit reports "prepared" by Friehling Horowitz, a three-person accounting finn located in a Rockland County, New York strip 1nall. Of the two accountants at the finn, one was se1ni-retired and living in Florida for many years prior to the Filing Date. 4l. This and similar complaints are being brought to recapture 1nonies paid to or for the benefit of certain investors so that this Custo1ner Property can be distributed a1nong all of the victims of BLMIS in accordance with the provisions of SIPA. V. STERLING DEFENDANTS A. Overview 42. The Sterling partners, their family 1ne1nbers, trusts and Sterling-related entities withdrew 1nore 1noney than they invested in BLMIS ("Fictitious Profits"). Pursuant to the Bankruptcy Code, the DCL, and SIPA, this Complaint seeks to avoid and recover: $295,465,565 in fraudulent transfers of Fictitious Profits from the Ponzi scheme received by the Sterling partners, their family 1ne1nbers, trusts, and Sterling-related entities; $7l0,60l,377 in l4 additional fraudulent transfers of principal received by the Sterling partners, their family members, trusts, and Sterling-related entities within the six years prior to the Filing Date, including $14,191,667 in transfers of principal withdrawn during the 90-day Preference Period, as defined below, and $12,031,257 in fraudulent transfers of payments made by Madofi his wife Ruth Madof? and/ or Peter Madoff to certain Sterling entities using BLMIS Customer Property, other people's money. 43. As discussed below, Sterling is a closely held, family run general partnership that owns, operates, and controls many businesses and related entities and invests in numerous asset classes across various lines of business, including real estate, professional baseball and sports media, and private equity. See infra Section V1. 44. The general partners of Sterling include Saul B. Katz, Fred Wilpon, Michael Katz, Richard Wilpon, David Katz, Thomas Osterinan, Jeffrey Wilpon, Arthur Friedman, Gregory Katz, Marvin B. Tepper, and the late Leonard Schreier, whose BLMIS account interests after his death through the Filing Date were held by his estate (the "Sterling Partners"). 45. As set forth below, the Sterling Partners are sophisticated investors who--for almost a quarter-century--collectively opened BLMIS accounts on behalf of and for the benefit of themselves, their family rnernbers, trusts, and Sterling-related entities, and then directed, operated, and administered these BLMIS accounts as part and parcel of Sterling's overall business. See infra Section V1. 46. The Sterling Partners and their family rnernbers held interests in numerous BLMIS accounts in various capacities, including as individuals holding accounts in their own names, as joint tenants and tenants-in-common, through trusts forined, funded, and controlled by the Sterling Partners, and through corporations, limited liability companies, and/or partnerships 15 fonned by and for the benefit ofthe Sterling Partners that were principally owned, controlled, and operated by the Sterling Partners. 47. Specifically, BLMIS 1nade transfers from approximately 305 BLMIS accounts directly or indirectly to the defendants na1ned herein, including the Sterling Partners, their family 1ne1nbers (the "Sterling Family Member Defendants"), their trusts (the "Katz/Wilpon Trust Defendants"), and certain Sterling-related entities (the "Sterling Entity Defendants"). 48. Of these 305 BLMIS accounts, l85 accounts are the subject of this action (the "Sterling BLMIS Accounts") and are identified in Appendix I, Exhibit A. 49. The transfers for each Sterling BLMIS Account constituting: transfers that are in whole or in part Fictitious Profits, and/or transfers of principal during the six years prior to the Filing Date, including preferential transfers within the 90 day period prior to the Filing Date (the "Preference Period Transfers") are identified in each account's corresponding Exhibit to Appendix I.3 50. Moreover, Madofi his wife Ruth Madoff, and/ or his brother Peter Madoff used BLMIS Custo1ner Property to invest in several Sterling-related entities na1ned as defendants herein (the "Madoff Investment Entity Defendants"). See infra Section VII.E. As a result, the Madoff Invest1nent Entity Defendants also received fraudulent transfers of BLMIS Custo1ner Property. 3 For each transfer, Exhibit to AppendixI provides the following: Column identifies the date of the transfer, Colmnn 2 provides the transaction description, Colmnn 3 identifies the transaction amount of deposits, withdrawals and transfers in each respective Sterling Accotmt as reflected in that accoLmt's BLMIS statement, Colmnn 4 identifies cash deposits, Colmnn 5 identifies cash withdrawals, 6 and 7, respectively, identify the transfers of principal in and out of the corresponding Sterling Account, Colmnn 8 represents the balance of principal within the corresponding Sterling BLMIS Account, Colmnn 9 identifies the portion of each transfer constituting Preference Period Transfers, l0 through I3 identify the portion of each transfer constituting principal and Fictitious Profits within the two year and six year period prior to the Filing Date, respectively, and Colmnn l4 identifies the portion of each transfer constituting Fictitious Profits during the full history of the corresponding Sterling BLMIS Account. l6 5l. The Sterling Partners, Sterling Family Member Defendants, Katz/Wilpon Trust Defendants, Sterling Entity Defendants, and Madoff Investment Entity Defendants (collectively, the "Sterling Defendants") are listed in Appendix II, Exhibit A. 52. As set forth in Section XII below, a number of the Sterling Defendants received avoidable transfers from one or more ofthe Sterling BLMIS Accounts or, in the case ofthe Madoff Investment Entity Defendants, from BLMIS (the "Initial Transfers"). 53. The Initial Transfers received by each Sterling Defendant are identified in each Sterling Defendant's corresponding Exhibit to Appendix II. 54. A number of Initial Transfers were transfers of principal in the 90-day Preference Period prior to the Filing Date. The Preference Period Transfers received by each Sterling Defendant from any Sterling BLMIS Account(s) are identified in each Sterling Defendant's corresponding Exhibit to Appendix II, Column 4. 55. A number ofthe Initial Transfers were subsequently transferred to a number of Sterling Defendants (the "Subsequent Transfers"). The Subsequent Transfers that, in whole or in paxt, include Fictitious Profits are identified in each Sterling Defendant's corresponding Exhibit to Appendix II. 56. To the extent the funds transferred from BLMIS were for the benefit of a Sterling Defendant who received Subsequent Transfers, each Sterling Defendant in receipt of Subsequent Transfers is the initial transferee of such transfers and is included in the definition of Sterling Defendant for purposes ofthe allegations herein. 57. In addition to Fictitious Profits, this Complaint seeks to avoid and recover from the Sterling Defendants $7lO,60l,377 in additional fraudulent transfers of principal received in the six years prior to the Filing Date based on the Trustee's investigation concluding that the l7 Sterling Partners knew or should have known ofthe fraud at BLMIS, see infra Section IX, and that the Sterling Partners' actual or constructive notice ofthe fraud at BLMIS 1nust be imputed to all other Sterling Defendants na1ned herein, see infra Section XI. 58. The Initial and Subsequent Transfers referenced herein and detailed in Section XII infra are avoidable and recoverable from the Sterling Defendants described, in tum, below: the Sterling Partners, the Sterling Entity Defendants, including the Mets and Related Entities and Other Sterling Entities, the Katz/Wilpon Trust Defendants, the Sterling Family Member Defendants, and the Madoff Investment Entity Defendants. B. Sterling Partners Saul B. Katz 59. Upon infonnation and belief Defendant Saul B. Katz (hereinafter "Saul Katz") maintains his residence in Glen Cove, New York and, for purposes of the Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, Great Neck Road, Suite 408, Great Neck, New York ll02l. 60. Defendant Saul Katz is a general paxtner of Sterling Equities. He is the brother of Sterling Partner Michael Katz and the father of Sterling Partner David Katz. 6l. Defendant Saul Katz co-founded the Sterling partnership in 1972 with his brother- in-law, Fred Wilpon. He currently serves as Sterling's President and Chief Operating Officer and as President ofthe New York Mets and the Brooklyn Cyclones. Saul Katz oversees all aspects of Sterling's businesses, directs Sterling's day-to-day real estate operations, and presides over Sterling's non-real estate businesses. Saul Katz, a Certified Public Accountant is primarily responsible for Sterling's overall finances and the long-tenn plamiing of Sterling's businesses, including real estate, the New York Mets, Brooklyn Cyclones and SNY. As chief strategist at Sterling, Saul Katz is also primarily responsible for Sterling's investments, including l8 those in real estate, private equity, Sterling Sta1nos, and--up until December 11, 2008--BLMIS. In addition, Saul Katz sits on the Board of Directors of Sterling Sta1nos. Accordingly, as President, Chief Operating Officer, and general partner of Sterling, Saul Katz is intimately involved in Sterling's operations and investments, including those in BLMIS. 62. At all ti1nes relevant hereto, Defendant Saul Katz was a client ofthe IA Business. Saul Katz opened his first account with BLMIS through Sterling in October of 1985. 63. Saul Katz held an interest in approximately sixty-eight (68) Sterling BLMIS Accounts in one or 1nore capacities, including as a direct interest-holder, and as a partner, 1ne1nber, and/or shareholder in various Sterling entities. In many cases, Saul Katz's interests overlap, in that he owned multiple interests in the sa1ne account in different capacities. 64. Saul Katz is na1ned as a Defendant in this action in his individual capacity, as trustee ofthe Katz 2002 Descendants' Trust, as settlor ofthe Saul B. Katz Family Trust, and as tenant-in-co1n1non in the accounts identified in Section XII below. 65. As set forth 1nore fully in Section XII below, BLMIS 1nade transfers directly to Saul Katz totaling $13,960,991 in Fictitious Profits fro1n the opening dates of his Sterling BLMIS Accounts to the Filing Date and $17,874,068 in principal during the six years prior to the Filing Date, totaling approximately $31,835,059. Appendix II, Saul B. Katz Exhibit B. In addition, Saul Katz received avoidable and recoverable Subsequent Transfers fro1n Sterling BLMIS Accounts held by other Sterling Defendants totaling $31,143,050 in Fictitious Profits fro1n the opening dates of such Sterling BLMIS Accounts to the Filing Date and $57,106,710 in principal during the six years prior to the Filing Date, totaling approximately $88,249,759. Appendix II, Saul B. Katz Exhibit C. 19 Fred Wilpon 66. Upon infonnation and belief Defendant Fred Wilpon maintains his residence in Locust Valley, New York and, for purposes ofthe Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 1 1021. 67. Defendant Fred Wilpon is a general partner of Sterling Equities. Fred Wilpon is the brother of Sterling Partner Richard Wilpon and the father of Sterling Partner Jeffrey Wilpon. 68. Defendant Fred Wilpon co-founded the Sterling partnership in 1972 with his brother-in-law, Saul Katz. He currently serves as Sterling's Chainnan ofthe Board, as well as Chief Executive Officer and Chainnan of the New York Mets. Fred Wilpon is also Chainnan of the Brooklyn Cyclones. Fred Wilpon oversees all aspects of Sterling's businesses. Accordingly, as Chainnan and general partner of Sterling, Fred Wilpon is intimately involved in Sterling's operations and investments, including those in BLMIS. 69. At all ti1nes relevant hereto, Defendant Fred Wilpon was a client ofthe IA Business. Fred Wilpon opened his first account with BLMIS through Sterling in October 1985. 70. Fred Wilpon held an interest in approximately fifty-seven (57) Sterling BLMIS Accounts in one or 1nore capacities, including as a direct interest-holder, and as a partner, 1ne1nber, and/or shareholder in various Sterling entities. In many cases, Fred Wilpon's interests overlap, in that he owned multiple interests in the sa1ne account in different capacities. 71. Fred Wilpon is named as a Defendant in this action in his individual capacity, as trustee ofthe Wilpon 2002 Descendants' Trust, as settlor of Fred Wilpon Family Trust, as co- executor of Estate of Leonard Schreier, and as tenant-in-co1n1non in the accounts identified in Section XII below. 20 72. As set forth more fully in Section XII below, BLMIS 1nade transfers directly to Fred Wilpon totaling $8,094,733 in Fictitious Profits from the opening dates of his Sterling BLMIS Accounts to the Filing Date and $32,483,062 in principal during the six years prior to the Filing Date, totaling approximately $40,577,796. Appendix II, Fred Wilpon Exhibit B. In addition, Fred Wilpon received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $44,818,855 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $82,056,209 in principal during the six years prior to the Filing Date, totaling approximately $l26,875,064. Appendix II, Fred Wilpon Exhibit C. Richard Wilpon 73. Upon infonnation and belief Defendant Richard Wilpon maintains his residence in Port Washington, New York and, for purposes of the Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, Great Neck Road, Suite 408, Great Neck, New York ll02l. 74. Defendant Richard Wilpon is a general partner of Sterling Equities. Richard Wilpon is the brother of Sterling Partner Fred Wilpon. 75. Defendant Richard Wilpon joined Sterling in or around l972 and beca1ne a partner shortly thereafter. He currently serves as Sterling's Senior Executive Vice President. Richard Wilpon is primarily involved in the real estate side of the business, and is currently Co- Chief Executive Officer of SAP, where he 1nanages its investments and oversees its real estate acquisitions and dispositions. Richard Wilpon is also a Board 1ne1nber of the New York Mets. Accordingly, as Senior Executive Vice President and general paxtner of Sterling, Richard Wilpon is intimately involved in Sterling's operations and investments, including those in BLMIS. 2l 76. At all times relevant hereto, Defendant Richard Wilpon was a client of the IA Business. Richard Wilpon opened his first account with BLMIS through Sterling in December of 1986. 77. Richard Wilpon held an interest in approximately sixty (60) Sterling BLMIS Accounts in one or more capacities, including as a direct interest-holder, and as a partner, member, and/or shareholder in various Sterling entities. In many cases, Richard Wilpon's interests overlap, in that he owned multiple interests in the same account in different capacities. 78. Richard Wilpon is named as a Defendant in this action in his individual capacity, as trustee ofthe Fred Wilpon Family Trust and the Saul B. Katz Family Trust, as settlor of Wilpon 2002 Descendants' Trust, as joint tenant, and as tenant-in-common in the accounts identified in Section XII below. 79. As set forth more fully in Section XII below, BLMIS made transfers directly to Richard Wilpon totaling $6,925,067 in Fictitious Profits from the opening dates of his Sterling BLMIS Accounts to the Filing Date and $14,961,751 in principal during the six years prior to the Filing Date, totaling approximately $21,886,818. Appendix II, Richard Wilpon Exhibit B. In addition, Richard Wilpon received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $16,241,651 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $33,207,078 in principal during the six years prior to the Filing Date, totaling approximately $49,448,729. Appendix II, Richard Wilpon Exhibit C. Michael Katz 80. Upon infounation and belief Defendant Michael Katz maintains his residence in Old Westbury, New York and, for purposes ofthe Sterling BLMIS Accounts at issue, received 22 correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 1 1021. 81. Defendant Michael Katz is a general partner of Sterling Equities. Michael Katz is the brother of Sterling Partner Saul Katz and the father of Sterling Partner Gregory Katz. 82. Defendant Michael Katz joined Sterling in or around 1973 and became a partner shortly thereafter. Michael Katz, a CPA, currently serves as Sterling's Senior Executive Vice President and, up until 2001, was Sterling's Chief Financial Officer. He is primarily involved in the real estate side ofthe business, and is currently Co-Chief Executive Officer of SAP where he is responsible for the day-to-day 1nanage1nent of its investments. Michael Katz is also a Board 1ne1nber of the New York Mets. Accordingly, as Senior Executive Vice President, general paitner, and fonner Chief Financial Officer of Sterling, Michael Katz is intimately involved in Sterling's operations and investments, including those in BLMIS. 83. At all times relevant hereto, Defendant Michael Katz was a client ofthe IA Business. Michael Katz opened his first account with BLMIS through Sterling in October of 1985. 84. Michael Katz held an interest in approximately fifty-nine (59) Sterling BLMIS Accounts in one or more capacities, including as a direct interest-holder, and as a partner, 1ne1nber, and/or shareholder in various Sterling entities. In many cases, Michael Katz's interests overlap, in that he owned multiple interests in the sa1ne account in different capacities. 85. Michael Katz is named as a Defendant in this action in his individual capacity, as trustee ofthe Saul B. Katz Family Trust, as settlor of Katz 2002 Descendants' Trust, as joint tenant, and as tenant-in-co1n1non in the accounts identified in Section XII below. 23 86. As set forth more fully in Section XII below, BLMIS 1nade transfers directly to Michael Katz totaling $4,901,745 in Fictitious Profits from the opening dates of his Sterling BLMIS Accounts to the Filing Date and $9,180,758 in principal during the six years prior to the Filing Date, totaling approximately $14,082,503. Appendix II, Michael Katz Exhibit B. In addition, Michael Katz received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $14,209,601 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $29,504,875 in principal during the six years prior to the Filing Date, totaling approximately $43,714,476. Appendix II, Michael Katz Exhibit C. Jeffrey Wilpon 87. Upon infonnation and belief Defendant Jeffrey Wilpon maintains his residence in Greenwich, Comiecticut and, for purposes ofthe Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 1 1021. 88. Defendant Jeffrey Wilpon is a general partner of Sterling Equities. Jeffrey Wilpon is the son of Sterling Partner Fred Wilpon. 89. Defendant Jeffrey Wilpon joined Sterling in or around 1986 and beca1ne a partner shortly thereafter. He currently serves as Sterling's Senior Executive Vice President, and as Chief Operating Officer, Senior Executive Vice President, and Board 1ne1nber of the New York Mets. Jeffrey Wilpon is also the Senior Executive Vice President and Chief Operating Officer of the Brooklyn Cyclones. He is primarily responsible for overseeing the day-to-day baseball and business operations of the New York Mets. Accordingly, as Senior Executive Vice President and general partner of Sterling, Jeffrey Wilpon is intimately involved in Sterling's operations and investments, including those in BLMIS. 24 90. At all times relevant hereto, Defendant Jeffrey Wilpon was a client of the IA Business. Jeffrey Wilpon opened his first account with BLMIS through Sterling in October of 1987. 91. Jeffrey Wilpon held an interest in approximately sixty-tvvo (62) Sterling BLMIS Accounts in one or more capacities, including as a direct interest-holder, and as a partner, member, and/or shareholder in various Sterling entities. In many cases, Jeffrey Wilpon's interests overlap in that he owned multiple interests in the same account in different capacities. 92. Jeffrey Wilpon is named as a Defendant in this action in his individual capacity, as beneficiary ofthe Fred Wilpon Family Trust, as joint tenant, and as tenant-in-common in the accounts identified in Section XII below. 93. As set forth more fully in Section XII below, BLMIS made transfers directly to Jeffrey Wilpon totaling $3,339,296 in Fictitious Profits from the opening dates of his Sterling BLMIS Accounts to the Filing Date and $9,434,973 in principal during the six years prior to the Filing Date, totaling approximately $l2,774,269. Appendix II, Jeffrey Wilpon Exhibit B. In addition, Jeffrey Wilpon received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $33,731,951 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $148,480,979 in principal during the six years prior to the Filing Date, totaling approximately $182,212,930. Appendix II, Jeffrey Wilpon Exhibit C. David Katz 94. Upon infounation and belief Defendant David Katz maintains his residence in Glen Cove, New York and, for purposes ofthe Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 1 1021. 25 95. Defendant David Katz is a general partner of Sterling Equities. David Katz is the son of Sterling Partner Saul Katz. 96. Defendant David Katz joined Sterling in 1987 and became a partner shortly thereafter. He currently serves as Sterling's Executive Vice President and is a Board member of the New York Mets. David Katz holds responsibilities within Sterling's real estate business and private equity investments. He was also integral in the founding and 1nanage1nent of Sterling Stamos and previously served as one of its board 1ne1nbers. Accordingly, as Executive Vice President and general partner of Sterling, David Katz is intimately involved in Sterling's operations and investments, including those in BLMIS. 97. At all times relevant hereto, Defendant David Katz was a client ofthe IA Business. David Katz opened his first account with BLMIS through Sterling in December of 1989. 98. David Katz held an interest in approximately fifty-eight (58) Sterling BLMIS Accounts in one or more capacities, including as a direct interest-holder, and as a partner, 1ne1nber, and/or shareholder in various Sterling entities. In many cases, David Katz's interests overlap, in that he owned multiple interests in the same account in different capacities. 99. David Katz is named as a Defendant in this action in his individual capacity, as trustee ofthe Saul B. Katz Family Trust, as beneficiary ofthe Saul B. Katz Family Trust, as joint tenant, and as tenant-in-co1n1non in the accounts identified in Section XII below. 100. As set forth 1nore fully in Section XII below, BLMIS made transfers directly to David Katz totaling $4,039,917 in Fictitious Profits from the opening dates of his Sterling BLMIS Accounts to the Filing Date and $1,674,656 in principal during the six years prior to the Filing Date, totaling approximately $5,714,572. Appendix 11, David Katz Exhibit B. In 26 addition, David Katz received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $31,797,164 in Fictitious Profits fro1n the opening dates of such Sterling BLMIS Accounts to the Filing Date and $116,297,142 in principal during the six years prior to the Filing Date, totaling approximately $148,094,306. Appendix II, David Katz Exhibit C. Gregony Katz 101. Upon infonnation and belief, Defendant Gregory Katz maintains his residence in Syosset, New York and, for purposes ofthe Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 1 1021. 102. Defendant Gregory Katz is a general partner of Sterling Equities. Gregory Katz is the son of Sterling Partner Michael Katz. 103. Defendant Gregory Katz joined Sterling in 2001 and became a partner shortly thereafter. He currently serves as Sterling's Vice President. Gregory Katz focuses on the real estate aspect of Sterling's business where he acquires 1nulti-fa1nily, co1n1nercial and retail real estate properties and arranges financing for SAP. Accordingly, as Vice President and general partner of Sterling, Gregory Katz is intimately involved in Sterling's operations and investments, including those in BLMIS. 104. At all ti1nes relevant hereto, Defendant Gregory Katz was a client ofthe IA Business. Gregory Katz opened his first account with BLMIS through Sterling in January of 1992. 105. Gregory Katz held an interest in approximately thirty-one (31) Sterling BLMIS Accounts in one or 1nore capacities, including as a direct interest-holder, and as a partner, 27 1ne1nber, and/or shareholder in various Sterling entities. In many cases, Gregory Katz's interests overlap, in that he owned multiple interests in the same account in different capacities. 106. Gregory Katz is named as a Defendant in this action in his individual capacity, as beneficiary ofthe Katz 2002 Descendants' Trust, as joint tenant, and as tenant-in-co1n1non in the accounts identified in Section XII below. 107. As set forth 1nore fully in Section XII below, BLMIS made transfers directly to Gregory Katz totaling $98,488 in Fictitious Profits from the opening dates of his Sterling BLMIS Accounts to the Filing Date and $1,426,939 in principal during the six years prior to the Filing Date, totaling approximately $1,525,427. Appendix II, Gregory Katz Exhibit B. In addition, Gregory Katz received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $1,962,314 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $21,564,999 in principal during the six years prior to the Filing Date, totaling approximately $23,527,313. Appendix II, Gregory Katz Exhibit C. Arthur Friedman 108. Upon infonnation and belief Defendant Arthur Friedman maintains his residence in Glen Cove, New York and, for purposes ofthe Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 1 1021. 109. Defendant Arthur Friedman is a general partner of Sterling Equities. 110. Defendant Arthur Friedman, who is a CPA and holds a law degree, joined Sterling in or around 1986 and became a partner shortly thereafter. He currently serves as Sterling's Senior Vice President and Board 1ne1nber of the Mets. Arthur Friedman is currently responsible for coordinating Sterling's cash management. Fro1n the ti1ne he joined Sterling 28 through Dece1nber 11, 2008, Arthur Friedman administered all 483 BLMIS accounts opened through Sterling, including those held by the Sterling Partners, the Sterling Family Member Defendants, the Katz/Wilpon Trust Defendants, and the Sterling Entity Defendants. Accordingly, as Senior Vice President and general partner of Sterling, Arthur Friedman is intimately involved in Sterling's operations and investments, including those in BLMIS. 111. At all ti1nes relevant hereto, Defendant Arthur Friedman was a client of the IA Business. Arthur Friedman opened his first account with BLMIS through Sterling in Dece1nber of 1986. 112. Arthur Friedman held an interest in approximately fifty-four (54) Sterling BLMIS Accounts in one or 1nore capacities, including as a direct interest-holder, and as a partner, 1ne1nber, and/or shareholder in various Sterling entities. In many cases, Arthur Freidman's interests overlap, in that he owned multiple interests in the same account in different capacities. 113. Arthur Friedman is named as a Defendant in this action in his individual capacity, as joint tenant, and as tenant-in-co1n1non in the accounts identified in Section XII below. 114. As set forth 1nore fully in Section XII below, BLMIS 1nade transfers directly to Arthur Friedman totaling $1,325,671 in Fictitious Profits fro1n the opening dates of his Sterling BLMIS Accounts to the Filing Date and $1,929,814 in principal during the six years prior to the Filing Date, totaling approximately $3,255,485. Appendix II, Arthur Friedman Exhibit B. In addition, Arthur Friedman received avoidable and recoverable Subsequent Transfers fro1n Sterling BLMIS Accounts held by other Sterling Defendants totaling $929,732 in Fictitious Profits fro1n the opening dates of such Sterling BLMIS Accounts to the Filing Date and $4,607,244 in principal during the six years prior to the Filing Date, totaling approximately $5,536,976. Appendix II, Arthur Friedman Exhibit C. 29 L. Thomas Osterman 115. Upon infonnation and belief Defendant L. Thomas Ostennan (hereinafter "Thomas Ostennan") maintains his residence in Stamford, Comiecticut and, for purposes ofthe Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 116. Defendant Thomas Ostennan is a general partner of Sterling Equities. 117. Defendant Thomas Ostennan joined Sterling in or around 1975 and beca1ne a partner shortly thereafter. He currently serves as Sterling's Executive Vice President. Thomas Ostennan is responsible for overseeing the development and construction of Sterling's co1n1nercial and residential properties in Manhattan, as well as for the strategic 1nanage1nent of SAP's real estate assets. Thomas Ostennan is also a Board 1ne1nber of the New York Mets. Accordingly, as Executive Vice President and general partner of Sterling, Thomas Osterman is intimately involved in Sterling's operations and investments, including those in BLMIS. 118. At all times relevant hereto, Defendant Thomas Ostennan was a client ofthe IA Business. Thomas Ostennan opened his first account with BLMIS through Sterling in February of 1987. 119. Thomas Ostennan held an interest in approximately fifty-five (55) Sterling BLMIS Accounts in one or 1nore capacities, including as a direct interest-holder, and as a partner, 1ne1nber, and/or shareholder in various Sterling entities. In many cases, Thomas Ostennan's interests overlap, in that he owned multiple interests in the same account in different capacities. 120. Thomas Ostennan is na1ned as a Defendant in this action in his individual capacity, as joint tenant, and as tenant-in-co1n1non in the accounts identified in Section XII below. 30 121. As set forth 1nore fully in Section XII below, BLMIS 1nade transfers directly to Thomas Ostennan totaling $3,313,813 in Fictitious Profits from the opening dates of his Sterling BLMIS Accounts to the Filing Date and $578,741 in principal during the six years prior to the Filing Date, totaling approximately $3,892,555. Appendix II, Thomas Ostennan Exhibit B. In addition, Thomas Ostennan received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $10,181,803 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $12,973,496 in principal during the six years prior to the Filing Date, totaling approximately $23,155,299. Appendix II, Thomas Ostennan Exhibit C. Marvin B. Tepper 122. Upon infonnation and belief Defendant Marvin B. Tepper (hereinafter "Marvin Tepper") maintains his residence in Sands Point, New York and, for purposes ofthe Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 123. Until 2008, Defendant Marvin Tepper was a general partner of Sterling Equities. 124. Defendant Marvin Tepper joined Sterling in or around 1990 as general counsel and partner after serving as Sterling's outside counsel for many years. Marvin Tepper retired from Sterling in or around 2005, but upon infonnation and belief retained (and currently retains) his partnership interests in Sterling and related entities. Marvin Tepper remains listed as a partner on Sterling's website. Accordingly, as general counsel and general partner of Sterling, Marvin Tepper is intimately involved in Sterling's operations and investments, including those in BLMIS. 3 1 125. At all ti1nes relevant hereto, Defendant Marvin Tepper was a client of the IA Business. Marvin Tepper opened his first account with BLMIS through Sterling in December of 1986. 126. Marvin Tepper held an interest in approximately fifty-eight (58) Sterling BLMIS Accounts in one or 1nore capacities, including as a direct interest-holder, and as a partner, member, and/or shareholder in various Sterling entities. In many cases, Marvin Tepper's interests overlap in that he owned multiple interests in the sa1ne account in different capacities. 127. Marvin Tepper is named as a Defendant in this action in his individual capacity, as joint tenant, and as tenant-in-co1n1non in the accounts identified in Section XII below. 128. As set forth 1nore fully in Section XII below, BLMIS 1nade transfers directly to Marvin Tepper totaling $4,091,935 in Fictitious Profits from the opening dates of his Sterling BLMIS Accounts to the Filing Date and $4,352,853 in principal during the six years prior to the Filing Date, totaling approximately $8,444,788. Appendix II, Marvin B. Tepper Exhibit B. In addition, Marvin Tepper received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $5,562,276 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $24,709,145 in principal during the six years prior to the Filing Date, totaling approximately $30,271,421. Appendix II, Marvin B. Tepper Exhibit C. Estate of Leonard Schreier, of the Estate Fred Wilpon and Jason Bacher 129. Upon infonnation and beliei prior to his death, Leonard Schreier maintained his residence in Huguenot, New York and, for purposes of the Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 32 130. Leonard Schreier served as a Sterling Partner until his death in 2001. Upon infonnation and belief after Leonard Schreier's death, his partnership interests in Sterling and related entities were held and maintained by the Estate of Leonard Schreier by co-executors Fred Wilpon and Jason Bacher. Leonard Schreier remains listed as a partner on Sterling's website. Accordingly, as general partner of Sterling up until his death in 2001, Leonard Schreier was intimately involved in Sterling's operations and investments, including those in BLMIS. 131. Leonard Schreier died on October 28, 2001. Upon infonnation and belief, the Estate of Leonard Schreier was administered in the Surrogate's Court of the State of New York, County of Orange under File No. 103-2002. Leonard Schreier's Last Will and Testament was admitted to probate, and letters testamentary were issued to Fred Wilpon and Jason Bacher, as co-executors of his estate. Leonard Schreier's surviving children, Deyva Schreier Arthur and Michael Andrew Schreier, were the sole beneficiaries of his estate. 132. At all ti1nes relevant hereto, Defendant Estate of Leonard Schreier and/ or Leonard Schreier was a client ofthe IA Business. Leonard Schreier opened his first account with BLMIS through Sterling in June of 1987. 133. The Estate of Leonard Schreier held an interest in approximately forty-five (45) Sterling BLMIS Accounts in one or 1nore capacities, including as a direct interest-holder, and as a partner, 1ne1nber, and/or shareholder in various Sterling entities. In many cases, the Estate of Leonard Schreier's interests overlap, in that it owned multiple interests in the same account in different capacities. 134. Jason Bacher and Fred Wilpon are named as Defendants as co-executors of the Estate of Leonard Schreier in the accounts identified in Section XII below. 33 135. As set forth more fully in Section XII below, BLMIS 1nade transfers directly to the Estate of Leonard Schreier and/or Leonard Schreier totaling $6,963,209 in Fictitious Profits from the opening dates of the estate's or his Sterling BLMIS Accounts to the Filing Date, and $7,813,322 in principal during the six years prior to the Filing Date, totaling approximately $14,776,531. Appendix II, Estate of Leonard Schreier Exhibit B. In addition, the Estate of Leonard Schreier and/or Leonard Schreier received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $11,161,695 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $8,662,947 in principal during the six years prior to the Filing Date, totaling approximately $19,824,641. Appendix II, Estate of Leonard Schreier Exhibit C. C. Sterling Entity Defendants 1. New York Mets and Related Entities 136. The Sterling Partners acquired their first interest in the Mets in 1980. In or around August 2002, the Sterling Partners through various holding companies acquired Nelson Doubleday's 50% interest in the Mets. The acquisition of Doubleday's interest gave Fred Wilpon, Saul Katz, and the other Sterling Partners ultimate ownership and control of the Mets. 137. Upon infonnation and belief the Mets are owned, operated and otherwise controlled by the Sterling Partners through two limited partnerships: Sterling Mets LP and Mets Limited Partnership. As detailed below, Sterling Mets LP and Mets Limited Paxtnership are held by intennediate LLCs and partnerships that are ultimately owned and controlled by the Sterling Partners. 138. The following Sterling Partners are officers ofthe Mets: Fred Wilpon is Chief Executive Officer and Chainnan ofthe Board of Directors, Saul Katz is President, and Jeffrey Wilpon is Senior Executive Vice President and Chief Operating Officer. Sterling Partners 34 Richard Wilpon, Michael Katz, David Katz, Thomas Ostennan, Arthur Friedman, and, upon infonnation and belief Marvin Tepper, are members of the Board of Directors ofthe Mets. Mets Limited P:11?tne1?shig 139. Upon infonnation and belief Defendant Mets Limited Partnership is a limited partnership fonned under the laws of the state of Delaware. Its principal place of business is located at Citi Field, Flushing, New York 11368. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 140. The sole general partner of Mets Limited Partnership is C.D.S. Corp. Fred Wilpon is the sole shareholder of C.D.S. Corp, and Saul Katz, a1nong others, is an officer and/or director of C.D.S. Corp. 141. The limited partners of Mets Limited Partnership are Mets One LLC and Mets II LLC, both Delaware limited liability companies. 142. The sole 1ne1nber of Mets One LLC is Sterling Mets Associates, a New York general partnership. The partners of Sterling Mets Associates are Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, Jeffrey Wilpon, Thomas Ostennan, Arthur Friedman, Marvin Tepper, the Estate of Leonard Schreier, the Fred Wilpon Fa1nily Trust, and the Saul B. Katz Family Trust. Fred Wilpon is the managing partner. 143. The sole 1ne1nber of Mets II LLC is Sterling Mets Associates II, a New York general partnership. The partners of Sterling Mets Associates II are Fred Wilpon, Saul Katz, Jeffrey Wilpon, David Katz, Thomas Ostennan, Marvin Tepper, Arthur Friedman, the Fred Wilpon Family Trust, the Saul B. Katz Family Trust, the Wilpon 2002 Descendants' Trust, the Katz 2002 Descendants' Trust, and the L. Thomas Ostennan Family Trust. Arthur Friedman and Fred Wilpon are the managing partners. 35 144. Upon infonnation and belief the Sterling Partners owned, operated and controlled Mets Limited Partnership and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in Mets Limited Partnership's name and in which Mets Limited Partnership held an interest. 145. At all ti1nes relevant hereto, Defendant Mets Limited Partnership was a client of the IA Business. Mets Limited Partnership opened its first account with BLMIS through Sterling in December of 1990. 146. As set forth 1nore fully in Section XII below, BLMIS made transfers directly to Mets Limited Partnership totaling $84,618,667 in Fictitious Profits fro1n the opening dates of its Sterling BLMIS Accounts to the Filing Date and $282,878,055 in principal during the six years prior to the Filing Date, totaling approximately $367,496,722. Appendix II, Mets Limited Partnership Exhibit B. In addition, Mets Limited Partnership received avoidable and recoverable Subsequent Transfers fro1n Sterling BLMIS Accounts held by other Sterling Defendants totaling $9,388,295 in Fictitious Profits fro1n the opening dates of such Sterling BLMIS Accounts to the Filing Date and $37,429,289 in principal during the six years prior to the Filing Date, totaling approximately $46,817,584. Appendix II, Mets Limited Partnership Exhibit C. Sterling Mets LP 147. Upon infonnation and belief Defendant Sterling Mets LP is a limited partnership fonned under the laws ofthe state of Delaware. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 148. The sole general partner of Sterling Mets LP is Mets Partners, Inc., a New York corporation whose sole shareholder is Fred Wilpon and whose officers and/or directors include Fred Wilpon, among others. 36 149. The sole limited partner of Sterling Mets LP is Mets Limited Partnership, a Delaware limited partnership. 150. The sole general partner of Mets Limited Partnership is C.D.S. Corp. Fred Wilpon is the sole shareholder of C.D.S. Corp, and Saul Katz, is an officer and/or director, among others not listed as defendants herein. 151. The limited partners of Mets Limited Partnership are Mets One LLC and Mets II LLC, both Delaware limited liability companies. 152. The sole 1ne1nber of Mets One LLC is Sterling Mets Associates, a New York general partnership. The partners of Sterling Mets Associates are Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, Jeffrey Wilpon, Thomas Ostennan, Arthur Friedman, Marvin Tepper, the Estate of Leonard Schreier, the Fred Wilpon Family Trust, and the Saul B. Katz Family Trust. Fred Wilpon is the managing partner. 153. The sole 1ne1nber of Mets II LLC is Sterling Mets Associates II, a New York general partnership. The partners of Sterling Mets Associates II are Fred Wilpon, Saul Katz, Jeffrey Wilpon, David Katz, Thomas Ostennan, Marvin Tepper, Arthur Friedman, the Fred Wilpon Family Trust, the Saul B. Katz Family Trust, the Wilpon 2002 Descendants' Trust, and the Katz 2002 Descendants' Trust. Arthur Friedman and Fred Wilpon are the managing partners. 154. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling Mets LP and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in Sterling Mets LP's name. 155. At all ti1nes relevant hereto, Defendant Sterling Mets LP was a client ofthe IA Business. Sterling Mets LP opened its first account with BLMIS through Sterling in February of 1998. 37 156. As set forth 1nore fully in Section XII below, BLMIS 1nade transfers directly to Sterling Mets LP totaling $9,388,295 in Fictitious Profits from the opening dates of its Sterling BLMIS Accounts to the Filing Date and $37,429,289 in principal during the six years prior to the Filing Date, totaling approximately $46,817,584. Appendix II, Sterling Mets LP Exhibit B. Sterling Mets Associates 157. Upon infonnation and belief Defendant Sterling Mets Associates is a general partnership fonned under the laws of the state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 158. The general partners of Sterling Mets Associates are Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, Jeffrey Wilpon, Thomas Ostennan, Arthur Friedman, Marvin Tepper, the Estate of Leonard Schreier, the Fred Wilpon Fa1nily Trust, and the Saul B. Katz Family Trust. 159. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling Mets Associates and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in Sterling Mets Associates' na1ne and in which Sterling Mets Associates held an interest. 160. At all ti1nes relevant hereto, Defendant Sterling Mets Associates was a client of the IA Business. Sterling Mets Associates opened its first account with BLMIS through Sterling in May of 1999. 161. As set forth 1nore fully in Section XII below, BLMIS 1nade transfers directly to Sterling Mets Associates totaling $111,653 in Fictitious Profits from the opening date of its Sterling BLMIS Account to the Filing Date. Appendix II, Sterling Mets Associates Exhibit B. 38 In addition, Sterling Mets Associates received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $46,550,814 in Fictitious Profits fro1n the opening dates of such Sterling BLMIS Accounts to the Filing Date and $158,552,135 in principal during the six years prior to the Filing Date, totaling approximately $205,102,949. Appendix II, Sterling Mets Associates Exhibit C. Sterling Mets Associates II 162. Upon infonnation and belief Defendant Sterling Mets Associates II is a general partnership fonned under the laws of the state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 163. The general partners of Sterling Mets Associates II are Fred Wilpon, Saul Katz, Jeffrey Wilpon, David Katz, Thomas Ostennan, Marvin Tepper, Arthur Friedman, the Fred Wilpon Family Trust, the Saul B. Katz Family Trust, the Wilpon 2002 Descendants' Trust, the Katz 2002 Descendants' Trust, and the Thomas Ostennan Family Trust. Arthur Friedman and Fred Wilpon are the managing partners. 164. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling Mets Associates II and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in which Sterling Mets Associates II held an interest. 165. Defendant Sterling Mets Associates II received transfers fro1n one or 1nore Sterling BLMIS Accounts as early as September of 1988. 166. As set forth 1nore fully in Section XII below, Sterling Mets Associates II received avoidable and recoverable Subsequent Transfers fro1n Sterling BLMIS Accounts held by other Sterling Defendants totaling $46,533,446 in Fictitious Profits fro1n the opening dates of such 39 Sterling BLMIS Accounts to the Filing Date and $165,394,999 in principal during the six years prior to the Filing Date, totaling approximately $211,928,445. Appendix II, Sterling Mets Associates II Exhibit C. Mets One LLC 167. Upon infonnation and belief Defendant Mets One LLC is a limited liability company fonned under the laws ofthe state of New York. Its principal place of business is located at Citi Field, Flushing, New York. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 168. The sole 1ne1nber of Mets One LLC is Sterling Mets Associates, a New York general partnership. 169. The partners of Sterling Mets Associates are Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, Jeffrey Wilpon, Thomas Ostennan, Arthur Friedman, Marvin Tepper, the Estate of Leonard Schreier, the Fred Wilpon Family Trust, and the Saul B. Katz Family Trust. Fred Wilpon is the managing paxtner. 170. Upon infonnation and belief the Sterling Partners owned, operated and controlled Mets One LLC and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in which Mets One LLC held an interest. 171. Defendant Mets One LLC received transfers from one or more Sterling BLMIS Accounts as early as September of 1988. 172. As set forth more fully in Section XII below, Mets One LLC received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $46,533,446 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $158,552,135 in principal during the six years prior to the Filing Date, totaling approximately $205,085,581. Appendix II, Mets One LLC Exhibit C. 40 Mets II LLC 173. Upon infonnation and belief Defendant Mets II LLC is a limited liability company fonned under the laws of the state of Delaware. Its principal place of business is located at Citi Field, Flushing, New York, 11368. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 174. The sole 1ne1nber of Mets II LLC is Sterling Mets Associates II, a New York general partnership. 175. The partners of Sterling Mets Associates II are Fred Wilpon, Saul Katz, Jeffrey Wilpon, David Katz, Thomas Ostennan, Marvin Tepper, Arthur Friedman, the Wilpon 2002 Descendants' Trust, the Katz 2002 Descendants' Trust, the Thomas Ostennan Family Trust, the Fred Wilpon Family Trust, and the Saul B. Katz Family Trust. 176. Upon infonnation and belief the Sterling Partners owned, operated and controlled Mets II LLC and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in Mets II LLC's na1ne and in which Mets II LLC held an interest. 177. Defendant Mets II LLC received transfers fro1n one or 1nore Sterling BLMIS Accounts as early as September of 1988. 178. As set forth 1nore fully in Section XII below, BLMIS made transfers of principal directly to Mets II LLC totaling $6,842,864 during the six years prior to the Filing Date. Appendix II, Mets II LLC Exhibit B. In addition, Mets II LLC received avoidable and recoverable Subsequent Transfers fro1n Sterling BLMIS Accounts held by other Sterling Defendants totaling $46,533,446 in Fictitious Profits fro1n the opening dates of such Sterling BLMIS Accounts to the Filing Date and $158,552,135 in principal during the six years prior to the Filing Date, totaling approximately $205,085,581. Appendix II, Mets II LLC Exhibit C. 41 Mets Partners, Inc. 179. Upon infonnation and belief Defendant Mets Partners, Inc. is a corporation fonned under the laws ofthe state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 180. The sole general partner of Mets Partners, Inc. is Fred Wilpon. 181. Upon infonnation and belief the Sterling Partners owned, operated and controlled Mets Partners, Inc. and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in which Mets Partners, Inc. held an interest. 182. Defendant Mets Partners, Inc. received transfers from one or more Sterling BLMIS Accounts as early as September of 1988. 183. As set forth more fully in Section XII below, Mets Partners, Inc. received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $9,388,295 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $37,429,289 in principal during the six years prior to the Filing Date, totaling approximately $46,817,584. Appendix II, Mets Partners, Inc. Exhibit C. C.D.S. Corp. 184. Upon infonnation and belief Defendant C.D.S. Corp. is a corporation fonned under the laws of the state of New York. Its principal place of business is located at Citi Field, Flushing, New York, 11368. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 185. Fred Wilpon is the sole shareholder of C.D.S. Corp., and Saul Katz, among others, is an officer and/or director of C.D.S. Corp. 42 186. Upon infonnation and belief the Sterling Partners owned, operated and controlled C.D.S. Corp. and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in which C.D.S. Corp. held an interest. 187. Defendant C.D.S. Corp. received transfers from one or 1nore Sterling BLMIS Accounts as early as September of 1988. 188. As set forth 1nore fully in Section XII below, C.D.S. Corp. received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $940,070 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $3,203,073 in principal during the six years prior to the Filing Date, totaling approximately $4,143,143. Appendix II, C.D.S. Corp. Exhibit C. Coney Island Baseball Holding Company LLC 189. Upon infonnation and belief, Defendant Coney Island Baseball Holding Company LLC ("Coney Island Baseball is a limited liability company fonned under the laws of the state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 190. The 1ne1nbers of Coney Island Baseball LLC include FS Company LLC, among others not named as defendants herein. 191. The sole 1ne1nber of FS Company LLC is Sterling Heritage LLC. 192. The 1ne1nbers of Sterling Heritage LLC are Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, the Estate of Leonard Schreier, Thomas Ostennan, Arthur Friedman, Jeffrey Wilpon, David Katz, and Marvin Tepper. 193. The managers of Coney Island Baseball LLC are FS Company LLC, Fred Wilpon, Michael Katz, and Marvin Tepper. 43 194. Upon infonnation and beliei the Sterling Partners owned, operated and controlled Coney Island Baseball LLC and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in Coney Island Baseball LLC's name and in which Coney Island Baseball LLC held an interest. 195. At all times relevant hereto, Defendant Coney Island Baseball LLC was a client of the IA Business. Coney Island Baseball LLC opened its first BLMIS Account through Sterling in November of 2001. 196. As set forth more fully in Section XII below, BLMIS made transfers directly to Coney Island Baseball LLC constituting a 1nini1nal amount of Fictitious Profits from the opening date of its Sterling BLMIS Account to the Filing Date. Appendix II, Coney Island Baseball LLC Exhibit B. In addition, Coney Island Baseball LLC received avoidable and recoverable Subsequent Transfers from a Sterling BLMIS Account held by another Sterling Defendant totaling $329,354 in Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date and $700,000 in principal during the six years prior to the Filing Date, totaling approximately $1,029,354. Appendix II, Coney Island Baseball LLC Exhibit C. Brooklyn Baseball Company LLC 197. Upon infonnation and beliei Defendant Brooklyn Baseball Company LLC ("Brooklyn Baseball is a limited liability company fonned under the laws ofthe state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 198. The sole owner and managing 1ne1nber of Brooklyn Baseball LLC is Coney Island Baseball LLC. 44 199. The 1ne1nbers of Coney Island Baseball LLC include FS Company LLC, among others. The managers of Coney Island Baseball LLC Holding Company LLC are FS Company LLC, Fred Wilpon, Michael Katz, and Marvin Tepper. 200. The sole 1ne1nber of FS Company LLC is Sterling Heritage LLC. 201. The 1ne1nbers of Sterling Heritage LLC are Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, the Estate of Leonard Schreier, Thomas Osterman, Arthur Friedman, Jeffrey Wilpon, David Katz, and Marvin Tepper. 202. Upon infonnation and belief the Sterling Partners owned, operated and controlled Brooklyn Baseball LLC and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in Brooklyn Baseball LLC's name and in which Brooklyn Baseball LLC held an interest. 203. At all ti1nes relevant hereto, Defendant Brooklyn Baseball LLC was a client ofthe IA Business. Brooklyn Baseball LLC opened its first account with BLMIS through Sterling in February of 2001. 204. As set forth 1nore fully in Section XII below, BLMIS made transfers directly to Brooklyn Baseball LLC totaling $329,354 in Fictitious Profits from the opening date of its Sterling BLMIS Account to the Filing Date and $700,000 in principal during the six years prior to the Filing Date, totaling approximately $1,029,354. Appendix II, Brooklyn Baseball LLC Exhibit B. FS Company LLC 205. Upon infonnation and belief Defendant FS Company LLC is a limited liability company fonned under the laws ofthe state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent 45 for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 206. The sole member of FS Company LLC is Sterling Heritage LLC. 207. The members of Sterling Heritage LLC are Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, the Estate of Leonard Schreier, Thomas Ostennan, Arthur Friedman, Jeffrey Wilpon, David Katz, and Marvin Tepper. 208. The managers of FS Company LLC are Arthur Friedman, Fred Wilpon, Saul Katz, Michael Katz, and Richard Wilpon. 209. Upon infonnation and belief the Sterling Partners owned, operated and controlled FS Company LLC and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in FS Company LLC's name and in which FS Company LLC held an interest. 210. At all times relevant hereto, Defendant FS Company LLC was a client of the IA Business. FS Company LLC opened its first account with BLMIS through Sterling in October of 2001. 211. As set forth more fully in Section XII below, BLMIS made transfers of principal directly to FS Company LLC totaling $9,643,000 during the six years prior to the Filing Date. Appendix II, FS Company LLC Exhibit B. In addition, FS Company LLC received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $358,780 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $700,000 in principal during the six years prior to the Filing Date, totaling approximately $1,058,780. Appendix II, FS Company LLC Exhibit C. 46 2. Other Sterling Entities 157 J.E.S. LLC 212. Upon infonnation and belief Defendant 157 J.E.S. LLC is a limited liability company fonned under the laws ofthe state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 213. The members of 157 J.E.S. LLC are Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, the Estate of Leonard Schreier, Thomas Ostennan, Arthur Friedman, Jeffrey Wilpon, David Katz, Marvin Tepper, the Fred Wilpon Family Trust, and the Saul B. Katz Family Trust. 214. Upon infonnation and belief the Sterling Partners owned, operated and controlled 157 .E.S. LLC and authorized, directed, controlled, and administered the Sterling BLMIS Account in 157 J.E.S. LLC's name. 215. At all times relevant hereto, Defendant 157 J.E.S. LLC was a client ofthe IA Business. 157 .E.S. LLC opened its first account with BLMIS through Sterling in October of 2001. 216. As set forth more fully in Section XII below, BLMIS made transfers directly to 157 .E.S. LLC totaling $389,682 in Fictitious Profits from the opening date of its Sterling BLMIS Account to the Filing Date and $695,000 in principal during the six years prior to the Filing Date, totaling approximately $1,084,682. Appendix II, 157 J.E.S. LLC Exhibit B. Air Sterling LLC 217. Upon infonnation and belief, Defendant Air Sterling LLC is a limited liability company fonned under the laws ofthe state of New York. Its principal place of business is 47 located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 218. The sole member of Air Sterling LLC is Sterling Mets Associates. 219. Sterling Mets Associates is a New York general partnership whose general partners are Fred Wilpon, the Fred Wilpon Family Trust, Saul Katz, the Saul B. Katz Family Trust, Richard Wilpon, Michael Katz, Jeffrey Wilpon, the Estate of Leonard Schreier, Thomas Ostennan, Arthur Friedman and Marvin Tepper. 220. Upon infonnation and belief the Sterling Partners owned, operated and controlled Air Sterling LLC and authorized, directed, controlled, and administered the Sterling BLMIS Account in Air Sterling LLC's name. 221. At all times relevant hereto, Defendant Air Sterling LLC was a client ofthe IA Business. Air Sterling LLC opened its first account with BLMIS through Sterling in March of 2001. 222. As set forth 1nore fully in Section XII below, BLMIS made transfers directly to Air Sterling LLC constituting a 1nini1nal amount of Fictitious Profits from the opening date of its Sterling BLMIS Account to the Filing Date. Appendix II, Air Sterling LLC Exhibit B. BAS Aircraft LLC 223. Upon infonnation and belief Defendant BAS Aircraft LLC is a limited liability company fonned under the laws ofthe state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 48 224. The 1ne1nbers of BAS Aircraft LLC are Richard Wilpon, Marvin Tepper, and Jeffrey Wilpon. 225. Upon infonnation and belief the Sterling Partners owned, operated and controlled BAS Aircraft LLC and authorized, directed, controlled, and administered the Sterling BLMIS Account in BAS Aircraft LLC's name. 226. At all times relevant hereto, Defendant BAS Aircraft LLC was a client of the IA Business. BAS Aircraft LLC opened its first account with BLMIS through Sterling in March of 200 l. 227. As set forth 1nore fully in Section XII below, BLMIS 1nade transfers directly to BAS Aircraft LLC constituting a 1nini1nal amount of Fictitious Profits fro1n the opening date of its Sterling BLMIS Account to the Filing Date. Appendix II, BAS Aircraft LLC Exhibit B. Bon Mick Family Partners LP 228. Upon infonnation and belief, Defendant Bon Mick Family Partners LP is a limited partnership fonned under the laws ofthe state of Delaware. Its principal place of business is located at Great Neck Road, Suite 408, Great Neck, New York ll02l. Its registered agent for service of process is Sterling Equities, Great Neck Road, Suite 408, Great Neck, New York ll02 l. 229. The sole general partner of Bon Mick Family Partners is Bon-Mick, Inc., a Delaware corporation whose sole shareholder is Arthur Friedman. Michael Katz is also an officer and/or director of Bon-Mick, Inc. 230. The limited partners of Bon Mick Fa1nily Partners include individuals who are not named as defendants in this action. 49 231. Upon infonnation and belief the Sterling Partners owned, operated and controlled Bon Mick Family Partners LP and authorized, directed, controlled, and administered the Sterling BLMIS Account in Bon Mick Family Partners LP's name. 232. At all times relevant hereto, Defendant Bon Mick Family Partners LP was a client ofthe IA Business. Bon Mick Family Partners LP opened its first account with BLMIS through Sterling in December of 1989. 233. As set forth 1nore fully in Section XII below, BLMIS made transfers of principal directly to Bon Mick Family Partners LP totaling $107,000 during the six years prior to the Filing Date. Appendix II, Bon Mick Family Partners LP Exhibit B. Bon-Mick, Inc. 234. Upon infonnation and belief Defendant Bon-Mick, Inc. is a corporation formed under the laws of the state of Delaware. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 235. The sole shareholder of Bon-Mick, Inc. is Arthur Friedman. Michael Katz is also an officer and/or director of Bon-Mick, Inc. 236. Upon infonnation and belief the Sterling Partners owned, operated and controlled Bon-Mick, Inc. and authorized, directed, controlled, and administered the Sterling BLMIS Account in which Bon-Mick, Inc. held an interest. 237. Defendant Bon-Mick, Inc. received transfers from one or more Sterling BLMIS Accounts as early as December of 1989. 238. As set forth 1nore fully in Section XII below, BLMIS made transfers of principal directly to Bon-Mick, Inc. totaling $107,000 during the six years prior to the Filing Date. Appendix II, Bon Mick Inc. Exhibit B. 50 Charles 15 Associates 239. Upon infonnation and belief Defendant Charles 15 Associates is a general paxtnership fonned under the laws of the state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 240. The general partners of Charles 15 Associates are Cross Charles, Inc. and Charles 15 LLC. 241. Cross Charles, Inc. is a New York corporation whose sole shareholder is SC Acquisition Corp. 242. SC Acquisition Corp. is a New York corporation whose sole shareholder is Sterling Argent, Inc. 243. Sterling Argent, Inc. is a New York corporation whose shareholders are Fred Wilpon, Richard Wilpon, Saul Katz, Michael Katz, David Katz, Arthur Friedman, Jeffrey Wilpon, Thomas Osterman, and the Estate of Leonard Schreier. 244. Charles 15 LLC is a New York limited liability company whose sole 1ne1nber is Charles Sterling Sub LLC. 245. Charles Sterling Sub LLC is a New York limited liability co1npany whose sole 1ne1nber is Charles Sterling LLC. 246. Charles Sterling LLC is a New York limited liability company whose 1ne1nbers are Charles Sterling 15 LLC and Charles Sterling, Inc. 247. Charles Sterling 15 LLC is a New York limited liability company whose 1ne1nbers are Fred Wilpon, Saul Katz, Michael Katz, Richard Wilpon, Arthur Friedman, David Katz, 5 1 Jeffrey Wilpon, the Estate of Leonard Schreier, Thomas Ostennan, the Saul B. Katz Family Trust, the Fred Wilpon Family Trust, Marvin Tepper, and Robin and Philip Wachtler. 248. Charles Sterling, Inc. is a New York corporation whose shareholders are Fred Wilpon, Saul Katz, Michael Katz, Richard Wilpon, Arthur Friedman, David Katz, Jeffrey Wilpon, the Estate of Leonard Schreier, Thomas Osterman, the Saul B. Katz Family Trust, the Fred Wilpon Family Trust, Marvin Tepper, and Robin and Philip Wachtler. 249. Upon infonnation and belief the Sterling Partners owned, operated and controlled Charles 15 Associates and authorized, directed, controlled, and administered the Sterling BLMIS Account in Charles 15 Associates' name. 250. At all times relevant hereto, Defendant Charles 15 Associates was a client ofthe IA Business. Charles 15 Associates opened its first account with BLMIS through Sterling in January of 1995. 251. As set forth more fully in Section XII below, BLMIS made transfers directly to Charles 15 Associates totaling $437,531 in Fictitious Profits from the opening date of its Sterling BLMIS Account to the Filing Date. Appendix II, Charles 15 Associates Exhibit B. Charles 15 LLC 252. Upon infonnation and belief Defendant Charles 15 LLC is a limited liability company fonned under the laws ofthe state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 253. The sole 1ne1nber of Charles 15 LLC is Charles Sterling Sub LLC. 254. Charles Sterling Sub LLC is a New York limited liability company whose sole 1ne1nber is Charles Sterling LLC. 52 255. Charles Sterling LLC is a New York limited liability company whose members are Charles Sterling l5 LLC and Charles Sterling, Inc. 256. Charles Sterling l5 LLC is a New York limited liability company whose members are Fred Wilpon, Saul Katz, Michael Katz, Richard Wilpon, Arthur Friedman, David Katz, Jeffrey Wilpon, the Estate of Leonard Schreier, Thomas Osterinan, the Saul B. Katz Family Trust, the Fred Wilpon Family Trust, Marvin Tepper, and Robin and Philip Wachtler. 257. Charles Sterling, Inc. is a New York corporation whose shareholders are Fred Wilpon, Saul Katz, Michael Katz, Richard Wilpon, Arthur Friedman, David Katz, Jeffrey Wilpon, the Estate of Leonard Schreier, Thomas Osterman, the Saul B. Katz Family Trust, the Fred Wilpon Family Trust, Marvin Tepper, and Robin and Philip Wachtler. 258. Upon inforination and belief the Sterling Partners owned, operated and controlled Charles l5 LLC and authorized, directed, controlled, and administered the Sterling BLMIS Account in which Charles l5 LLC held an interest. 259. Defendant Charles l5 LLC received transfers from one or more Sterling BLMIS Accounts as early as January of 1995. 260. As set forth more fully in Section XII below, Charles l5 LLC received avoidable and recoverable Subsequent Transfers from a Sterling BLMIS Account held by another Sterling Defendant totaling $437,093 in Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date. Appendix II, Charles l5 LLC Exhibit C. Charles Sterling LLC 26l. Upon inforination and belief Defendant Charles Sterling LLC is a limited liability company forined under the laws ofthe state of New York. Its principal place of business is located at Great Neck Road, Suite 408, Great Neck, New York ll02l. Its registered agent 53 for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 262. Upon infonnation and belief the members of Charles Sterling LLC are Charles Sterling 15 LLC and Charles Sterling, Inc. Charles Sterling 15 LLC is the managing member. 263. Upon infonnation and belief the members of Charles Sterling 15 LLC are Fred Wilpon, Saul Katz, Michael Katz, Richard Wilpon, Arthur Friedman, David Katz, Jeffrey Wilpon, the Estate of Leonard Schreier, Thomas Osterman, the Saul B. Katz Family Trust, the Fred Wilpon Family Trust, Marvin Tepper, and Robin and Philip Wachtler. 264. Upon infonnation and belief the shareholders of Charles Sterling, Inc. are Fred Wilpon, Saul Katz, Michael Katz, Richard Wilpon, Arthur Friedman, David Katz, Jeffrey Wilpon, the Estate of Leonard Schreier, Thomas Osterman, the Saul B. Katz Family Trust, the Fred Wilpon Family Trust, Marvin Tepper, and Robin and Philip Wachtler. 265. Upon infonnation and belief the Sterling Partners owned, operated and controlled Charles Sterling LLC and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in Charles Sterling LLC's name and in which Charles Sterling LLC held an interest. 266. At all times relevant hereto, Defendant Charles Sterling LLC was a client of the IA Business. Charles Sterling LLC opened its first account with BLMIS through Sterling in August of 2001. 267. As set forth more fully in Section XII below, BLMIS made transfers of principal directly to Charles Sterling LLC totaling $489,000 during the six years prior to the Filing Date. Appendix II, Charles Sterling LLC Exhibit B. In addition, Charles Sterling LLC received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $437,531 in Fictitious Profits from the opening dates of such 54 Sterling BLMIS Accounts to the Filing Date and $8,977,000 in principal during the six years prior to the Filing Date, totaling approximately $9,414,531. Appendix II, Charles Sterling LLC Exhibit C. Charles Sterling Sub LLC 268. Upon infonnation and belief Defendant Charles Sterling Sub LLC is a limited liability company fonned under the laws of the state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 269. The sole 1ne1nber of Charles Sterling Sub LLC is Charles Sterling LLC. 270. The 1ne1nbers of Charles Sterling LLC are Charles Sterling 15 LLC and Charles Sterling, Inc. 271. Upon infonnation and belief the 1ne1nbers of Charles Sterling 15 LLC are Fred Wilpon, Saul Katz, Michael Katz, Richard Wilpon, Arthur Friedman, David Katz, Jeffrey Wilpon, the Estate of Leonard Schreier, Thomas Ostennan, the Saul B. Katz Family Trust, the Fred Wilpon Family Trust, Marvin Tepper, and Robin and Philip Wachtler. 272. Upon infonnation and belief the shareholders of Charles Sterling, Inc. are Fred Wilpon, Saul Katz, Michael Katz, Richard Wilpon, Arthur Friedman, David Katz, Jeffrey Wilpon, the Estate of Leonard Schreier, Thomas Osterman, the Saul B. Katz Family Trust, the Fred Wilpon Family Trust, Marvin Tepper, and Robin and Philip Wachtler. 273. Upon infonnation and belief the Sterling Partners owned, operated and controlled Charles Sterling Sub LLC and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in Charles Sterling Sub LLC's name and in which Charles Sterling Sub LLC held an interest. 55 274. At all times relevant hereto, Defendant Charles Sterling Sub LLC was a client of the IA Business. Charles Sterling Sub LLC opened its first account with BLMIS through Sterling in October of 2004. 275. As set forth 1nore fully in Section XII below, BLMIS made transfers of principal directly to Charles Sterling Sub LLC totaling $8,977,000 during the six years prior to the Filing Date. Appendix II, Charles Sterling Sub LLC Exhibit B. In addition, Charles Sterling Sub LLC received avoidable and recoverable Subsequent Transfers from a Sterling BLMIS Account held by another Sterling Defendant totaling $437,531 in Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date. Appendix II, Charles Sterling Sub LLC Exhibit C. College Place Enterprises LLC 276. Upon infounation and belief Defendant College Place Enterprises LLC is a limited liability company fonned under the laws ofthe state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 277. The 1ne1nbers of College Place Enterprises LLC include Fred Wilpon and Saul Katz, among others not named as defendants herein. 278. Upon infounation and belief the Sterling Paxtners owned, operated and controlled College Place Enterprises LLC and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in College Place Enterprises LLC's name. 279. At all times relevant hereto, Defendant College Place Enterprises LLC was a client ofthe IA Business. College Place Enterprises LLC opened its first account with BLMIS through Sterling in May of 1986. 56 280. As set forth more fully in Section XII below, BLMIS 1nade transfers directly to College Place Enterprises LLC totaling $5,492,275 in Fictitious Profits from the opening dates of its Sterling BLMIS Accounts to the Filing Date and $601,932 in principal during the six years prior to the Filing Date, totaling approximately $6,094,207. Appendix II, College Place Enterprises LLC Exhibit B. FFB Aviation LLC 281. Upon infonnation and belief Defendant FFB Aviation LLC is a limited liability co1npany fonned under the laws ofthe state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 282. The 1ne1nbers and managers of FFB Aviation LLC include Saul Katz and Michael Katz, among others who are not named as defendants herein. 283. Upon infonnation and belief the Sterling Partners owned, operated and controlled FFB Aviation LLC and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in FFB Aviation LLC's na1ne and in which FFB Aviation LLC held an interest. 284. At all ti1nes relevant hereto, Defendant FFB Aviation LLC was a client ofthe IA Business. FFB Aviation LLC opened its first account with BLMIS through Sterling in May of 2006. 285. As set forth more fully in Section XII below, BLMIS 1nade transfers directly to FFB Aviation LLC totaling $112,975 in Fictitious Profits from the opening date of its Sterling BLMIS Account to the Filing Date and $400,000 in principal during the six years prior to the Filing Date, totaling approximately $512,975. Appendix II, FFB Aviation LLC Exhibit B. In addition, FFB Aviation LLC received avoidable and recoverable Subsequent Transfers of 57 principal from a Sterling BLMIS Account held by another Sterling Defendant totaling $725,479 during the six years prior to the Filing Date. Appendix II, FFB Aviation LLC Exhibit C. Iris J. Katz and Saul B. Katz Family Fomulationa Inc. 286. Upon infonnation and belief the Iris J. Katz and Saul B. Katz Family Foundation, Inc. (the "Iris J. Katz and Saul B. Katz Family Foundation") is a corporation fonned under the laws of the state of Delaware. Saul Katz is the President and a director ofthe Iris J. Katz and Saul B. Katz Family Foundation. Iris J. Katz and David Katz are also directors ofthe Iris J. Katz and Saul B. Katz Family Foundation. 287. Upon infonnation and belief the Sterling Partners owned, operated and controlled Iris J. Katz and Saul B. Katz Family Foundation and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in Iris J. Katz and Saul B. Katz Fa1nily Foundation's name. 288. At all ti1nes relevant hereto, Defendant Iris J. Katz and Saul B. Katz Fa1nily Foundation was a client ofthe IA Business. The Iris J. Katz and Saul B. Katz Family Foundation opened its first account with BLMIS through Sterling in July of 1990. 289. The Iris J. Katz and Saul B. Katz Family Foundation held approximately six (6) Sterling BLMIS Accounts in one or 1nore capacities, including as a direct interest-holder and as a 1ne1nber in a Sterling entity. 290. As set forth 1nore fully in Section XII below, BLMIS 1nade transfers directly to the Iris J. Katz and Saul B. Katz Family Foundation totaling $3,272,382 in Fictitious Profits fro1n the opening dates of its Sterling BLMIS Accounts to the Filing Date and $3,009,403 in principal during the six years prior to the Filing Date, totaling approximately $6,281,785. Appendix II, Iris J. Katz and Saul B. Katz Family Foundation Exhibit B. In addition, the Iris J. Katz and Saul B. Katz Family Foundation received avoidable and recoverable Subsequent Transfers of 58 principal from a Sterling BLMIS Account held by another Sterling Defendant constituting a rninirnal amount of Fictitious Profits from the opening date of such Sterling BLMIS account to the Filing Date. Appendix II, Iris J. Katz and Saul B. Katz Family Foundation Exhibit C. Judy and Fred Wilpon Family Foundation, Inc. 291. Upon infonnation and belief Defendant Judy and Fred Wilpon Family Foundation, Inc. (the "Judy and Fred Wilpon Family Foundation") is a corporation fonned under the laws of the state of Delaware. The directors ofthe Judy and Fred Wilpon Family Foundation are Fred Wilpon, Judith Wilpon, Jeffrey Wilpon, Robin Wilpon Wachtler, and Bruce N. Wilpon. 292. Upon infonnation and belief the Sterling Partners owned, operated and controlled the Judy and Fred Wilpon Family Foundation and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in Judy and Fred Wilpon Family Foundation's name. 293. At all times relevant hereto, Defendant Judy and Fred Wilpon Family Foundation was a client ofthe IA Business. The Judy and Fred Wilpon Family Foundation opened its first account with BLMIS through Sterling in February of 1989. 294. The Judy and Fred Wilpon Family Foundation held a direct interest in approximately four (4) Sterling BLMIS Accounts. 295. As set forth more fully in Section XII below, BLMIS made transfers directly to the Judy and Fred Wilpon Family Foundation totaling $2,230,588 in Fictitious Profits from the opening dates of its Sterling BLMIS Accounts to the Filing Date and $398,820 in principal during the six years prior to the Filing Date, totaling approximately $2,629,408. Appendix II, Judy and Fred Wilpon Family Foundation Exhibit B. Red Valley Partners 296. Upon infonnation and belief Defendant Red Valley Partners is a general partnership fonned under the laws of the state of New York. Its principal place of business is 59 located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service ofprocess is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 297. The general partners of Red Valley Partners are David Katz, Heather Katz Knopf, and Natalie Katz O'Brien. 298. Upon infonnation and belief the Sterling Partners owned, operated and controlled Red Valley Partners and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in Red Valley Partners' name and in which Red Valley Partners held an interest. 299. At all times relevant hereto, Defendant Red Valley Partners was a client ofthe IA Business. Red Valley Partners opened its first account with BLMIS through Sterling in August of 1997. 300. As set forth 1nore fully in Section XII below, BLMIS made transfers directly to Red Valley Partners totaling $3,296,336 in Fictitious Profits from the opening dates of its Sterling BLMIS Accounts to the Filing Date and $275,000 in principal during the six years prior to the Filing Date, totaling approximately $3,571,336. Appendix II, Red Valley Partners Exhibit B. In addition, Red Valley Partners received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $249,172 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $3,317,769 in principal during the six years prior to the Filing Date, totaling approximately $3,566,941. Appendix II, Red Valley Partners Exhibit C. Robbinsville Park LLC 301. Upon infonnation and belief Defendant Robbinsville Park LLC is a limited liability company fonned under the laws of the state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its 60 registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 302. The members of Robbinsville Park LLC are Sterling Rte 130 LLC and SC Acquisition Corp. The managers of Robbinsville Park LLC are Saul Katz, Richard Wilpon, Michael Katz, and Fred Wilpon. 303. Sterling Rte 130 LLC is a New York limited liability company whose 1ne1nbers are the Fred Wilpon Family Trust, Saul Katz, the Saul B. Katz Family Trust, Richard Wilpon, Michael Katz, the Estate of Leonard Schreier, Marvin Tepper, Thomas Ostennan, Arthur Friedman, Jeffrey Wilpon, David Katz, and Robin and Philip Wachtler as joint tenants. 304. SC Acquisition Corp. is a New York corporation whose sole shareholder is Sterling Argent, Inc. 305. Sterling Argent, Inc. is a New York corporation whose shareholders are the Fred Wilpon Family Trust, Saul Katz, the Saul B. Katz Family Trust, Richard Wilpon, Michael Katz, the Estate of Leonard Schreier, Marvin Tepper, Thomas Ostennan, Arthur Friedman, Jeffrey Wilpon, David Katz, and Robin and Philip Wachtler as joint tenants. 306. Upon infonnation and belief the Sterling Partners owned, operated and controlled Robbinsville Park LLC and authorized, directed, controlled, and administered the Sterling BLMIS Account in Robbinsville Park LLC's na1ne. 307. At all times relevant hereto, Defendant Robbinsville Park LLC was a client ofthe IA Business. Robbinsville Park LLC opened its first account with BLMIS through Sterling in October of 2001. 61 308. As set forth 1nore fully in Section XII below, BLMIS 1nade transfers of principal directly to Robbinsville Park LLC totaling $2,279,000 during the six years prior to the Filing Date. Appendix II, Robbinsville Park LLC Exhibit B. Ruskin Garden Apartments LLC 309. Upon infonnation and belief Defendant Ruskin Garden Apartments LLC is a limited liability company fonned under the laws ofthe state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 310. The 1ne1nbers of Ruskin Garden Apartments LLC are Fred Wilpon and Saul Katz, a1nong others who are not na1ned as defendants herein. Fred Wilpon and Saul Katz are the managing 1ne1nbers of Ruskin Garden Apartments LLC. 311. Upon infonnation and belief the Sterling Partners owned, operated and controlled Ruskin Garden Apartments LLC and authorized, directed, controlled, and administered the Sterling BLMIS Account in Ruskin Garden Apartments LLC's na1ne. 312. At all ti1nes relevant hereto, Defendant Ruskin Garden Apartments LLC was a client ofthe IA Business. Ruskin Garden Apartments LLC opened its first account with BLMIS through Sterling in June of 1997. 313. As set forth 1nore fully in Section XII below, BLMIS 1nade transfers directly to Ruskin Garden Apartments LLC totaling $117,623 in Fictitious Profits from the opening date of its Sterling BLMIS Account to the Filing Date. Appendix II, Ruskin Garden Apartments LLC Exhibit B. 62 SEE H0ldC0 LLC 314. Upon inforination and belief Defendant SEE HoldCo LLC is a limited liability company fonned under the laws of the state of Delaware. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 315. The rnernbers of SEE HoldCo LLC are SEE Management LLC, SEE Holdings I, and SEE Holdings II. SEE Management LLC is the managing rnernber of SEE HoldCo LLC. 316. SEE Management LLC is a Delaware limited liability company whose rnernbers and managers are Fred Wilpon and Saul Katz. Upon information and belief SEE Management LLC owns 1.99% of SEE HoldCo LLC. 317. SEE Holdings I is a New York general partnership whose partners are Fred Wilpon, Jeffrey Wilpon, Saul Katz, Scott Wilpon, Richard Wilpon, Michael Katz, Marvin Tepper, Thomas Ostennan, Arthur Friedman, Gregory Katz, the Estate of Leonard Schreier, the Fred Wilpon Family Trust, and the Saul B. Katz Family Trust. Fred Wilpon is the managing partner of SEE Holdings I. Upon inforination and belief SEE Holdings I owns 49.005% of SEE HoldCo LLC. 318. SEE Holdings II is a New York general partnership whose partners are Fred Wilpon, Jeffrey Wilpon, Saul Katz, David Katz, Scott Wilpon, Marvin Tepper, Thomas Ostennan, Arthur Friedman, the Thomas Ostennan 2002 Grantor Trust, the Fred Wilpon Family Trust, the Saul B. Katz Family Trust, the Wilpon 2002 Descendants' Trust, and the Katz 2002 Descendants' Trust. Fred Wilpon is the managing partner of SEE Holdings II. Upon inforination and belief SEE Holdings II owns 49.005% of SEE HoldCo LLC. 63 319. Upon infonnation and belief the Sterling Partners owned, operated and controlled SEE HoldCo LLC and authorized, directed, controlled, and administered the Sterling BLMIS Account in SEE HoldCo LLC's name. 320. At all times relevant hereto, Defendant SEE HoldCo LLC was a client of the IA Business. SEE HoldCo LLC opened its first account with BLMIS through Sterling in January of 2007. 32l. As set forth 1nore fully in Section XII below, BLMIS made transfers directly to SEE HoldCo LLC totaling $60,000 in Fictitious Profits from the opening date of its Sterling BLMIS Account to the Filing Date and $6,600,000 in principal during the six years prior to the Filing Date, totaling approximately $6,660,000. Appendix II, SEE HoldCo LLC Exhibit B. SEE Holdings I 322. Upon infonnation and belief Defendant SEE Holdings I is a general partnership fonned under the laws ofthe state of New York. Its principal place of business is located at Great Neck Road, Suite 408, Great Neck, New York ll02l. Its registered agent for service of process is Sterling Equities, Great Neck Road, Suite 408, Great Neck, New York ll02l. 323. The partners of SEE Holdings I are Fred Wilpon, Jeffrey Wilpon, Saul Katz, Scott Wilpon, Richard Wilpon, Michael Katz, Marvin Tepper, Thomas Ostennan, Arthur Friedman, Gregory Katz, the Estate of Leonard Schreier, the Fred Wilpon Family Trust, and the Saul B. Katz Family Trust. Fred Wilpon is the managing partner of SEE Holdings I. 324. Upon infonnation and belief the Sterling Partners owned, operated and controlled SEE Holdings I and authorized, directed, controlled, and administered the Sterling BLMIS Account in which SEE Holdings I held an interest. 325. Defendant SEE Holdings Ireceived transfers from one or more Sterling BLMIS Accounts as early as January of 2007. 64 326. As set forth more fully in Section XII below, SEE Holdings I received avoidable and recoverable Subsequent Transfers from a Sterling BLMIS Account held by another Sterling Defendant totaling $29,403 in Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date and $3,234,330 in principal during the six years prior to the Filing Date, totaling approximately $3,263,733. Appendix II, SEE Holdings I Exhibit C. SEE Holdings II 327. Upon infonnation and belief Defendant SEE Holdings II is a general partnership fonned under the laws ofthe state of New York. Its principal place of business is located at Great Neck Road, Suite 408, Great Neck, New York ll02l. Its registered agent for service of process is Sterling Equities, Great Neck Road, Suite 408, Great Neck, New York ll02l. 328. The partners of SEE Holdings II are Fred Wilpon, Jeffrey Wilpon, Saul Katz, David Katz, Scott Wilpon, Mawin Tepper, Tho1nas Ostennan, Arthur Friedman, the Thomas Ostennan 2002 Grantor Trust, the Fred Wilpon Family Trust, the Saul B. Katz Family Trust, the Wilpon 2002 Descendants' Trust, and the Katz 2002 Descendants' Trust. Fred Wilpon is the managing partner of SEE Holdings II. 329. Upon infonnation and belief the Sterling Partners owned, operated and controlled SEE Holdings II and authorized, directed, controlled, and administered the Sterling BLMIS Account in which SEE Holdings II held an interest. 330. Defendant SEE Holdings II received transfers from one or more Sterling BLMIS Accounts as early as January of 2007. 33l. As set forth more fully in Section XII below, SEE Holdings II received avoidable and recoverable Subsequent Transfers from a Sterling BLMIS Account held by another Sterling Defendant totaling $29,403 in Fictitious Profits from the opening date of such Sterling BLMIS 65 Account to the Filing Date and $3,234,330 in principal during the six years prior to the Filing Date, totaling approximately $3,263,733. Appendix II, SEE Holdings II Exhibit C. Sterling 10 LLC 332. Upon infonnation and belief Defendant Sterling l0 LLC is a limited liability co1npany fonned under the laws ofthe state of New York. Its principal place of business is located at Great Neck Road, Suite 408, Great Neck, New York ll02l. Its registered agent for service of process is Sterling Equities, Great Neck Road, Suite 408, Great Neck, New York ll02l. 333. The 1ne1nbers of Sterling l0 LLC include Richard Wilpon, Robin Philip Wachtler as joint tenants, Robin Wilpon Wachtler, the Scott Wilpon 2000 Trust, the Jessica Wilpon 2000 Trust, Daniel Wilpon, David Katz, Michael Katz, Gregory Katz, Natalie Katz O'Brien, Todd Katz, Daniel and Heather Katz Knop? Howard Katz, A1ny Beth Katz, Dayle Katz, the Dayle Michael Katz Foundation, Ruth Friedman, Elise C. Tepper, and the Tepper Family Foundation, a1nong others not named as defendants herein. 334. The managing 1ne1nbers of Sterling l0 LLC are Richard Wilpon, Michael Katz, Arthur Friedman, and David Katz. 335. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling l0 LLC and authorized, directed, controlled, and administered the Sterling BLMIS Account in Sterling l0 LLC's na1ne. 336. At all ti1nes relevant hereto, Defendant Sterling l0 LLC was a client ofthe IA Business. Sterling l0 LLC opened its first account with BLMIS through Sterling in September of 2003. 66 337. As set forth more fully in Section XII below, BLMIS 1nade transfers of principal directly to Sterling 10 LLC totaling $15,470,000 during the six years prior to the Filing Date. Appendix II, Sterling 10 LLC Exhibit B. Sterling 15C LLC 338. Upon infonnation and belief, Defendant Sterling 15C LLC is a limited liability co1npany fonned under the laws ofthe state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 339. The 1ne1nbers of Sterling 15C LLC are Saul Katz, Richard Wilpon, Fred Wilpon, Michael Katz, the Estate of Leonard Schreier, Thomas Ostennan, Jeffrey Wilpon, David Katz, Arthur Friedman, the Saul B. Katz Fa1nily Trust, the Fred Wilpon Fa1nily Trust, Marvin Tepper, and Robin and Philip Wachtler as joint tenants. 340. Michael Katz and Richard Wilpon are the 1nanaging 1ne1nbers of Sterling 15C LLC. 341. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling 15C LLC and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in Sterling 15C LLC's na1ne. 342. At all ti1nes relevant hereto, Defendant Sterling 15C LLC was a client ofthe IA Business. Sterling 15C LLC opened its first account with BLMIS through Sterling in March of 1996. 343. As set forth more fully in Section XII below, BLMIS 1nade transfers directly to Sterling 15C LLC totaling $17,731,193 in Fictitious Profits from the opening date of its Sterling 67 BLMIS Accounts to the Filing Date and $5,683,798 in principal during the six years prior to the Filing Date, totaling approximately $23,414,991. Appendix II, Sterling 15C LLC Exhibit B. Sterling 20 LLC 344. Upon infonnation and belief Defendant Sterling 20 LLC is a limited liability co1npany fonned under the laws ofthe state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 345. The 1ne1nbers of Sterling 20 LLC include Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, Thomas Ostennan, Arthur Friedman, Jeffrey Wilpon, Marvin Tepper, Elise C. Tepper, David Katz, the Fred Wilpon Fa1nily Trust, Daniel Wilpon, the Jessica Wilpon 2000 Trust, and the Scott Wilpon 2000 Trust, among others not named as defendants herein. 346. The managing 1ne1nbers of Sterling 20 LLC are Fred Wilpon, Saul Katz, Richard Wilpon, and Michael Katz. 347. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling 20 LLC and authorized, directed, controlled, and administered the Sterling BLMIS Account in Sterling 20 LLC's na1ne. 348. At all ti1nes relevant hereto, Defendant Sterling 20 LLC was a client ofthe IA Business. Sterling 20 LLC opened its first account with BLMIS through Sterling in February of 2002. 349. As set forth 1nore fully in Section XII below, BLMIS 1nade transfers directly to Sterling 20 LLC totaling $181,023 in Fictitious Profits fro1n the opening date of its Sterling BLMIS Account to the Filing Date and $24,773,977 in principal during the six years prior to the Filing Date, totaling approximately $24,955,000. Appendix II, Sterling 20 LLC Exhibit B. 68 Sterling American Advisors II LP 350. Upon infonnation and belief Defendant Sterling American Advisors II LP is a limited partnership fonned under the laws ofthe state of Delaware. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 351. The partners of Sterling American Advisors II LP include Sterling Advisors II Corp., Sterling American Advisors II Corp., Sterling R. I. II LLC, Sterling Intemal II LLC, the Fred Wilpon Family Trust, and the Saul B. Katz Family Trust, among others not listed as defendants herein. 352. Sterling Advisors II Corp. is a Delaware corporation whose shareholders are Fred Wilpon and Saul Katz. 353. Sterling American Advisors II Corp. is a Delaware corporation whose shareholders are Fred Wilpon and Saul Katz. 354. Sterling R.I. II LLC is a New York limited liability company whose members include Arthur Friedman, David Katz, Fred Wilpon, Jeffrey Wilpon, Thomas Osterman, Marvin Tepper, Michael Katz, Richard Wilpon, and Saul Katz, among others not listed as defendants herein. 355. Sterling Intemal II LLC is a New York limited liability company whose members include Arthur Friedman, David Katz, Michael Katz, Saul Katz, Thomas Ostennan, Leonard Schreier, Marvin Tepper, Fred Wilpon, Jeffrey Wilpon, and Richard Wilpon, among others not listed as defendants herein. 69 356. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling American Advisors II LP and authorized, directed, controlled, and administered the Sterling BLMIS Account in Sterling American Advisors II LP's name. 357. At all times relevant hereto, Defendant Sterling American Advisors II LP was a client ofthe IA Business. Sterling American Advisors II LP opened its first account with BLMIS through Sterling in September of 2006. 358. As set forth more fully in Section XII below, BLMIS made transfers directly to Sterling American Advisors II LP totaling $177,415 in Fictitious Profits from the opening date of its Sterling BLMIS Account to the Filing Date and $1,300,000 in principal during the six years prior to the Filing Date, totaling approximately $1,477,415. Appendix II, Sterling American Advisors II LP Exhibit B. Sterling C0l`20l`?lti0H 359. Upon infonnation and belief Defendant Sterling Brunswick Corporation is a corporation fonned under the laws ofthe state of New Jersey. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 360. The shareholders of Sterling Brunswick Corporation are Fred Wilpon, Saul Katz, Michael Katz, Richard Wilpon, Estate of Leonard Schreier, Thomas Ostennan, the Saul B. Katz Family Trust, David Katz, Arthur Friedman, Jeffrey Wilpon, Marvin Tepper, and Edward M. Tepper. 361. Richard Wilpon and Michael Katz are officers and/ or directors of Sterling Brunswick Corporation. 70 362. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling Brunswick Corporation and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in Sterling Brunswick Corporation's name and in which Sterling Brunswick Corporation held an interest. 363. At all times relevant hereto, Defendant Sterling Brunswick Corporation was a client ofthe IA Business. Sterling Brunswick Corporation opened its first account with BLMIS through Sterling in March of 2000. 364. As set forth 1nore fully in Section XII below, BLMIS made transfers directly to Sterling Brunswick Corporation of a minimal amount in Fictitious Profits from the opening date of its Sterling BLMIS Account to the Filing Date. Appendix II, Sterling Brunswick Corporation Exhibit B. In addition, Sterling Brunswick Corporation received avoidable and recoverable Subsequent Transfers of principal from a Sterling BLMIS Account held by another Sterling Defendant totaling $5,716,000 during the six years prior to the Filing Date. Appendix II, Sterling Brunswick Corporation Exhibit C. Sterling Brunswick Seven LLC 365. Upon infonnation and belief Defendant Sterling Brunswick Seven LLC is a limited liability company fonned under the laws ofthe state of New York. Its principal place of business is located at Great Neck Road, Suite 408, Great Neck, New York ll02l. Its registered agent for service of process is Sterling Equities, Great Neck Road, Suite 408, Great Neck, New York ll02 l. 366. The sole 1ne1nber of Sterling Brunswick Seven LLC is Sterling Brunswick Corporation. 367. Sterling Brunswick Corporation is a New Jersey corporation whose shareholders are Fred Wilpon, Saul Katz, Michael Katz, Richard Wilpon, Estate of Leonard Schreier, L. 7l Thomas Ostennan, the Saul B. Katz Family Trust, David Katz, Arthur Friedman, Jeffrey Wilpon, Marvin Tepper, and Edward M. Tepper. 368. The managers of Sterling Brunswick Seven LLC are Richard Wilpon and Michael Katz. 369. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling Brunswick Seven LLC and authorized, directed, controlled, and administered the Sterling BLMIS Account in Sterling Brunswick Seven LLC's name. 370. At all times relevant hereto, Defendant Sterling Brunswick Seven LLC was a client ofthe IA Business. Sterling Brunswick Seven LLC opened its first account with BLMIS through Sterling in March of 2005. 37l. As set forth more fully in Section XII below, BLMIS made transfers of principal directly to Sterling Brunswick Seven LLC totaling $5,716,000 during the six years prior to the Filing Date. Appendix II, Sterling Brunswick Seven LLC Exhibit B. Sterling DIST Properties LLC 372. Upon infonnation and belief Defendant Sterling DIST Properties LLC is a limited liability company fonned under the laws ofthe state of New York. Its principal place of business is located at Great Neck Road, Suite 408, Great Neck, New York ll02l. Its registered agent for service of process is Sterling Equities, Great Neck Road, Suite 408, Great Neck, New York ll02 l. 373. The members of Sterling DIST Properties LLC include Fred Wilpon, the Wilpon 2002 Descendants' Trust, Jeffrey Wilpon, Richard Wilpon, Saul Katz, the Saul B. Katz Family Trust, the Katz 2002 Descendants' Trust, David Katz, Gregory Katz, Arthur Friedman, Marvin Tepper, and Thomas Ostennan, among others. 72 374. The managers of Sterling DIST Properties LLC are Michael Katz, Arthur Friedman, and Richard Wilpon. 375. Upon inforination and belief the Sterling Partners owned, operated and controlled Sterling DIST Properties LLC and authorized, directed, controlled, and administered the Sterling BLMIS Account in Sterling DIST Properties LLC's name. 376. At all times relevant hereto, Defendant Sterling DIST Properties LLC was a client ofthe IA Business. Sterling DIST Properties LLC opened its first account with BLMIS through Sterling in June of 2008. 377. As set forth more fully in Section XII below, BLMIS made transfers of principal directly to Sterling DIST Properties LLC totaling $736,139 during the six years prior to the Filing Date. Appendix II, Sterling DIST Properties LLC Exhibit B. Sterling Eg uities 378. Upon inforination and belief Defendant Sterling Equities is a general partnership fonned under the laws ofthe state of New York. Its principal place of business is located at Great Neck Road, Suite 408, Great Neck, New York ll02l. Its registered agent for service of process is Sterling Equities, Great Neck Road, Suite 408, Great Neck, New York ll02l. 379. The current general partners of Sterling Equities are Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, David Katz, Arthur Friedman, Gregory Katz, Thomas Ostennan, and Jeffrey Wilpon. Marvin Tepper is a fonner Sterling Partner who maintains his partnership interests, though he has retired from Sterling Equities. The late Leonard Schreier was a Sterling Partner until 200l and his partnership interests, upon infonnation and belief are held by his estate. 380. Upon inforination and belief all of the above-listed Sterling Partners authorized, directed, and/or managed the Sterling BLMIS Account in Sterling Equities' name. 73 381. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling Equities and authorized, directed, controlled, and administered the Sterling BLMIS Account in Sterling Equities' name. All Sterling Partner Defendants, Sterling Entity Defendants, and Katz/Wilpon Trust Defendants transact business through Sterling Equities. 382. At all times relevant hereto, Defendant Sterling Equities was a client of the IA Business. Sterling Equities opened its first account with BLMIS through Sterling in October of 1985. 383. As set forth 1nore fully in Section XII below, BLMIS made transfers directly to Sterling Equities totaling $38,499 in Fictitious Profits from the opening date of its Sterling BLMIS Account to the Filing Date and $171,273 in principal during the six years prior to the Filing Date, totaling approximately $209,772. Appendix II, Sterling Equities Exhibit B. Sterling Eguities Associates 384. Upon infonnation and belief Defendant Sterling Equities Associates is a general partnership fonned under the laws of the state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 385. The general partners of Sterling Equities Associates are Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, David Katz, Arthur Friedman, Marvin Tepper, Gregory Katz, Thomas Ostennan, and Jeffrey Wilpon. 386. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling Equities Associates and authorized, directed, controlled, and administered the Sterling BLMIS Account in Sterling Equities Associates' name. 74 387. At all times relevant hereto, Defendant Sterling Equities Associates was a client ofthe IA Business. Sterling Equities Associates opened its first account with BLMIS through Sterling in July of 2000. 388. As set forth 1nore fully in Section XII below, BLMIS made transfers directly to Sterling Equities Associates totaling $800,000 in Fictitious Profits from the opening date of its Sterling BLMIS Account to the Filing Date and $14,400,000 in principal during the six years prior to the Filing Date, totaling approximately $15,200,000. Appendix II, Sterling Equities Associates Exhibit B. Sterling Eg uities Investors 389. Upon infonnation and belief Defendant Sterling Equities Investors is a general partnership fonned under the laws ofthe state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service ofprocess is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 390. The general partners of Sterling Equities Investors are Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, Thomas Ostennan, Jeffrey Wilpon, Arthur Friedman, David Katz, Marvin Tepper, and the Estate of Leonard Schreier. 391. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling Equities Investors and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in Sterling Equities Investors' name. 392. At all ti1nes relevant hereto, Defendant Sterling Equities Investors was a client of the IA Business. Sterling Equities Investors opened its first account with BLMIS through Sterling in February of 1997. 75 393. As set forth more fully in Section XII below, BLMIS 1nade transfers directly to Sterling Equities Investors totaling $316,371 in Fictitious Profits from the opening dates of its Sterling BLMIS Accounts to the Filing Date. Appendix II, Sterling Equities Investors Exhibit B. Sterling Heritage LLC 394. Upon infonnation and belief Defendant Sterling Heritage LLC is a limited liability co1npany fonned under the laws of the state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 395. The 1ne1nbers of Sterling Heritage LLC are Fred Wilpon, Saul Katz, Richard A. Wilpon, Michael Katz, Estate of Leonard Schreier, Thomas Ostennan, Arthur Friedman, Jeffrey Wilpon, David Katz, and Marvin Tepper. 396. The managing 1ne1nbers of Sterling Heritage LLC are Fred Wilpon, Richard Wilpon, Saul Katz, Michael Katz, and Arthur Friedman. 397. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling Heritage LLC and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in Sterling Heritage LLC's na1ne and in which Sterling Heritage LLC held an interest. 398. At all ti1nes relevant hereto, Defendant Sterling Heritage LLC was a client of the IA Business. Sterling Heritage LLC opened its first account with BLMIS through Sterling in May of 2000. 399. As set forth more fully in Section XII below, BLMIS 1nade transfers directly to Sterling Heritage LLC totaling $79,325 in Fictitious Profits from the opening date of its Sterling BLMIS Account to the Filing Date. Appendix II, Sterling Heritage LLC Exhibit B. In addition, Sterling Heritage LLC received avoidable and recoverable Subsequent Transfers from Sterling 76 BLMIS Accounts held by other Sterling Defendants totaling $358,780 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $10,343,000 in principal during the six years prior to the Filing Date, totaling approximately $10,701,780. Appendix II, Sterling Heritage LLC Exhibit C. Sterling Internal LLC 400. Upon infonnation and belief Defendant Sterling Internal LLC is a limited liability company fonned under the laws of the state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 401. The 1ne1nbers of Sterling Internal LLC include Fred Wilpon, the Fred Wilpon Family Trust, the Wilpon 2002 Descendants' Trust, Jeffrey Wilpon, Richard Wilpon, Saul Katz, the Saul B. Katz Family Trust, the Katz 2002 Descendants' Trust, Michael Katz, Gregory Katz, Arthur Friedman, Marvin Tepper, and Thomas Ostennan, among others not named as defendants herein. 402. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling Internal LLC and authorized, directed, controlled, and administered the Sterling BLMIS Account in Sterling Internal LLC's name. 403. At all ti1nes relevant hereto, Defendant Sterling Internal LLC was a client of the IA Business. Sterling Internal LLC opened its first account with BLMIS through Sterling in July of 2006. 404. As set forth 1nore fully in Section XII below, BLMIS 1nade transfers of principal directly to Sterling Internal LLC totaling $51,102,500 during the six years prior to the Filing Date. Appendix II, Sterling Internal LLC Exhibit B. 77 Sterling Jet Ltd. 405. Upon infonnation and belief Defendant Sterling Jet Ltd. is a corporation fonned under the laws of the state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 406. Fred Wilpon is the sole shareholder of Sterling Jet Ltd. 407. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling Jet Ltd. and authorized, directed, controlled, and administered the Sterling BLMIS Account in Sterling Jet Ltd.'s name. 408. At all times relevant hereto, Defendant Sterling Jet Ltd. was a client ofthe IA Business. Sterling Jet Ltd. opened its first account with BLMIS through Sterling in May of 1999. 409. As set forth more fully in Section XII below, BLMIS made transfers directly to Sterling Jet Ltd. totaling $316,058 in Fictitious Profits from the opening date of its Sterling BLMIS Account to the Filing Date. Appendix II, Sterling Jet Ltd. Exhibit B. Sterling Jet II Ltd. 410. Upon infonnation and belief Defendant Sterling Jet II Ltd. is a corporation fonned under the laws ofthe state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 411. Saul Katz and Marvin Tepper are the shareholders of Sterling Jet II Ltd. 412. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling Jet II Ltd. and authorized, directed, controlled, and administered the Sterling BLMIS Account in Sterling Jet II Ltd. 's name. 78 413. At all ti1nes relevant hereto, Defendant Sterling Jet Ltd. II was a client ofthe IA Business. Sterling Jet II Ltd. opened its first account with BLMIS through Sterling in May of 1999. 414. As set forth 1nore fully in Section XII below, BLMIS made transfers directly to Sterling Jet II Ltd. totaling $144,007 in Fictitious Profits from the opening date of its Sterling BLMIS Account to the Filing Date. Appendix II, Sterling Jet II Ltd. Exhibit B. Sterling PathoGenesis Company 415. Upon infonnation and belief Defendant Sterling PathoGenesis Company ("Sterling PathoGenesis") is a general partnership fonned under the laws ofthe state of New York. Its principal place of business is located at 111 Great Neck Road, Great Neck, NY 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 416. The general partners of Sterling PathoGenesis are Arthur Friedman, David Katz, Michael Katz, Saul Katz, Thomas Ostennan, Leonard Schreier, Marvin Tepper, Fred Wilpon, Richard Wilpon, Jeffrey Wilpon, the Fred Wilpon Family Trust, and the Saul B. Katz Family Trust. 417. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling PathoGenesis and authorized, directed, controlled, and administered the Sterling BLMIS Account in Sterling PathoGenesis' name. 418. At all ti1nes relevant hereto, Defendant Sterling PathoGenesis was a client ofthe IA Business. Sterling PathoGenesis opened its first account with BLMIS through Sterling in November of 1996. 79 419. As set forth more fully in Section XII below, BLMIS 1nade transfers directly to Sterling PathoGenesis totaling $19,037,261 in Fictitious Profits from the opening date of its Sterling BLMIS Account to the Filing Date. Appendix II, Sterling PathoGenesis Exhibit B. Sterling Third Associates 420. Upon infonnation and belief Defendant Sterling Third Associates is a general partnership fonned under the laws of the state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service ofprocess is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 421. The general partners of Sterling Third Associates are Richard Wilpon, Michael Katz, Thomas Osterman, the Estate of Leonard Schreier, the Saul B. Katz Fa1nily Trust, the Fred Wilpon Family Trust, and Valley Harbor Associates. 422. Valley Harbor Associates is a New York general partnership whose general paxtners are Fred Wilpon, Saul Katz, the Fred Wilpon Family Trust, and the Saul B. Katz Family Trust. 423. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling Third Associates and authorized, directed, controlled, and administered the Sterling BLMIS Account in Sterling Third Associates' name. 424. At all ti1nes relevant hereto, Defendant Sterling Third Associates was a client of the IA Business. Sterling Third Associates opened its first account with BLMIS through Sterling in May of 1986. 425. As set forth more fully in Section XII below, BLMIS 1nade transfers directly to Sterling Third Associates totaling $6,868,419 in Fictitious Profits from the opening date of its Sterling BLMIS Account to the Filing Date. Appendix II, Sterling Third Associates Exhibit B. 80 Sterling Thirty Venture LLC 426. Upon infonnation and belief Defendant Sterling Thirty Venture LLC is a limited liability company fonned under the laws of the state of New York. principal place of business is located at 111 Great Neck Road Suite 408, Great Neck, New York 11021. registered agent for service of process is Sterling Equities, 111 Great Neck Road Suite 408, Great Neck, New York 11021. 427. The managing members of Sterling Thirty Venture LLC are Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, Arthur Friedman, and David Katz. 428. The members of Sterling Thirty Venture LLC are Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, Arthur Friedman, David Katz, the Estate of Leonard Schreier, Thomas Ostennan, Jeffrey Wilpon, Valerie Wilpon, Marvin Tepper, Gregory Katz, Todd Katz, Howard Katz, Dayle Katz, and Red Valley Partners. Elise C. Tepper is a fonner member of Sterling Thirty Venture LLC. 429. Red Valley Partners is a New York general partnership whose partners are David Katz, Heather Katz Knopf and Natalie Katz O'Brien. 430. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling Thirty Venture LLC and authorized, directed, controlled, and administered the Sterling BLMIS Accounts in Sterling Thirty Venture LLC's name. 431. At all times relevant hereto, Defendant Sterling Thirty Venture LLC was a client ofthe lA Business. Sterling Thirty Venture LLC opened its first account with BLMIS through Sterling in November of 2000. 432. As set forth more fully in Section XII below, BLMIS made transfers directly to Sterling Thirty Venture LLC totaling $3,559,601 in Fictitious Profits from the opening dates of its Sterling BLMIS Accounts to the Filing Date and $47,396,706 in principal during the six years 81 prior to the Filing Date, totaling approximately $50,956,307. Appendix II, Sterling Thirty Venture LLC Exhibit B. Sterling Tracing LLC 433. Upon infonnation and belief Defendant Sterling Tracing LLC is a limited liability company fonned under the laws of the state of New York. Its principal place of business is located at Great Neck Road, Suite 408, Great Neck, New York ll02l. Its registered agent for service of process is Sterling Equities, Great Neck Road, Suite 408, Great Neck, New York ll02 l. 434. The rnernbers of Sterling Tracing LLC are Michael Katz, Richard Wilpon, Gregory Katz, Scott Wilpon, Jeffrey Wilpon, Thomas Ostennan, Arthur Friedman, Ruth Friedman, and Arthur and Ruth Friedman as joint tenants. 435. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling Tracing LLC and authorized, directed, controlled, and administered the Sterling BLMIS Account in Sterling Tracing LLC's name. 436. At all times relevant hereto, Defendant Sterling Tracing LLC was a client ofthe IA Business. Sterling Tracing LLC opened its first account with BLMIS through Sterling in April of 2007. 437. As set forth more fully in Section XII below, BLMIS made transfers of principal directly to Sterling Tracing LLC totaling $4,095,000 during the six years prior to the Filing Date. Appendix II, Sterling Tracing LLC Exhibit B. Sterling Twenty Five LLC 438. Upon infonnation and belief Defendant Sterling Twenty Five LLC is a limited liability company fonned under the laws of the state of New York. Its principal place of business is located at Great Neck Road, Suite 408, Great Neck, New York ll02l. Its 82 registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 439. The members of Sterling Twenty Five LLC include FFB Aviation LLC, Michael Katz, Howard Katz, Arthur and Ruth Friedman as joint tenants, the Dayle H. and Michael Katz Foundation, the Katz 2002 Descendants' Trust, the Wilpon 2002 Descendants' Trust, Dayle Katz, the Thomas Ostennan 1999 Trust, the Thomas Ostennan Family 2006 Guarantor Trust, Richard Wilpon, Marvin Tepper, Robin and Philip Wachtler as joint tenants, Gregory and A1ny Beth Katz as joint tenants, Todd Katz, the Jessica Wilpon 2000 Trust, the Scott Wilpon 2000 Trust, and Daniel Wilpon, a1nong others not named as defendants herein. 440. FFB Aviation LLC is a New York limited liability company whose 1ne1nbers include Saul Katz and Michael Katz, a1nong others not named as defendants herein. 441. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling Twenty Five LLC and authorized, directed, controlled, and administered the Sterling BLMIS Account in Sterling Twenty Five LLC's name. 442. At all times relevant hereto, Defendant Sterling Twenty Five LLC was a client of the IA Business. Sterling Twenty Five LLC opened its first account with BLMIS through Sterling in January of 2007. 443. As set forth 1nore fully in Section XII below, BLMIS made transfers of principal directly to Sterling Twenty Five LLC totaling $7,762,450 during the six years prior to the Filing Date. Appendix II, Sterling Twenty Five LLC Exhibit B. Sterling VC IV LLC 444. Upon infonnation and belief Defendant Sterling VC IV LLC is a limited liability company fonned under the laws ofthe state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent 83 for service ofprocess is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 445. The members of Sterling VC IV LLC include Fred Wilpon, the Fred Wilpon Family Trust, Jeffrey Wilpon, Richard Wilpon, Saul Katz, the Saul B. Katz Family Trust, the Katz 2002 Descendants' Trust, David Katz, Michael Katz, Gregory Katz, Natalie Katz O'Brien, Heather Katz Knopf the Iris Saul B. Katz Family Foundation, Arthur Friedman, Marvin Tepper, and Thomas Ostennan, a1nong others not named as defendants herein. 446. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling VC IV LLC and authorized, directed, controlled, and administered the Sterling BLMIS Account in Sterling VC IV LLC's name. 447. At all times relevant hereto, Defendant Sterling VC IV LLC was a client of the IA Business. Sterling VC IV LLC opened its first account with BLMIS through Sterling in June of 2008. 448. As set forth more fully in Section XII below, BLMIS made transfers of principal directly to Sterling VC IV LLC totaling $825,000 during the six years prior to the Filing Date. Appendix II, Sterling VC IV LLC Exhibit B. Sterling VC LLC 449. Upon infonnation and belief Defendant Sterling VC LLC is a limited liability company fonned under the laws ofthe state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 450. The members of Sterling VC LLC include Fred Wilpon, the Fred Wilpon Family Trust, the Wilpon 2002 Descendants' Trust, Jeffrey Wilpon, Richard Wilpon, Scott 84 Wilpon, Saul Katz, the Saul B. Katz Family Trust, the Katz 2002 Descendants' Trust, David Katz, Michael Katz, Gregory Katz, Arthur Friedman, Marvin Tepper, and Tho1nas Ostennan, among others not named as defendants herein. 45l. The managers of Sterling VC LLC are Michael Katz, Arthur Friedman, and Richard Wilpon. 452. Upon infonnation and belief the Sterling Partners owned, operated and controlled Sterling VC LLC and authorized, directed, controlled, and administered the Sterling BLMIS Account in Sterling VC LLC's na1ne. 453. At all ti1nes relevant hereto, Defendant Sterling VC LLC was a client of the IA Business. Sterling VC LLC opened its first account with BLMIS through Sterling in June of 2008. 454. As set forth more fully in Section XII below, BLMIS 1nade transfers of principal directly to Sterling VC LLC totaling $633,556 during the six years prior to the Filing Date. Appendix II, Sterling VC LLC Exhibit B. Valley Harbor Associates 455. Upon infonnation and belief Defendant Valley Harbor Associates is a general partnership fonned under the laws of the state of New York. Upon infonnation and belief its principal place of business is located at Great Neck Road, Suite 408, Great Neck, New York ll02l. Its registered agent for service of process is Sterling Equities, Great Neck Road, Suite 408, Great Neck, New York ll02l. 456. The general partners of Valley Harbor Associates are Fred Wilpon, Saul Katz, the Fred Wilpon Family Trust, and the Saul B. Katz Family Trust. 85 457. Upon infonnation and belief the Sterling Partners owned, operated and controlled Valley Harbor Associates and authorized, directed, controlled, and administered the Sterling BLMIS Account in which Valley Harbor Associates held an interest. 458. Defendant Valley Harbor Associates received transfers fro1n one or 1nore Sterling BLMIS Accounts as early as May of 1986. 459. As set forth 1nore fully in Section XII below, BLMIS made transfers directly to Valley Harbor Associates totaling $6,868,419 in Fictitious Profits fro1n the opening date of its Sterling BLMIS Account to the Filing Date. Appendix II, Valley Harbor Associates Exhibit B. D. Katz/Wilpon Trust Defendants Saul B. Katz Family Trust 460. Upon infonnation and belief the Saul B. Katz Family Trust is a trust fonned under the laws of the state of New York. The settlor ofthe Saul B. Katz Family Trust is Saul Katz and the trustees ofthe Saul B. Katz Family Trust are Michael Katz, Richard Wilpon, Iris Katz, David Katz, Natalie Katz O'Brien and Heather Katz Knopf The fonner trustee ofthe Saul B. Katz Family Trust is Fred Wilpon. The Saul B. Katz Family Trust, trustees and fonner trustee are collectively referred to herein as the "Saul B. Katz Family Trust." Upon infonnation and belief the beneficiaries ofthe Saul B. Katz Family Trust are David Katz, Natalie Katz O'Brien and Heather Katz Knopf 461. At all ti1nes relevant hereto, the Saul B. Katz Family Trust was a client ofthe IA Business. The Saul B. Katz Family Trust opened its first account with BLMIS through Sterling in Dece1nber of 1986. 462. The Saul B. Katz Family Trust held an interest in approximately thirty-five (35) Sterling BLMIS Accounts in one or 1nore capacities, including as a direct interest-holder, and as a partner, 1ne1nber, and/or shareholder in various Sterling entities. 86 463. As set forth more fully in Section XII below, BLMIS 1nade transfers directly to the Saul B. Katz Family Trust totaling $6,484,806 in Fictitious Profits from the opening dates of its Sterling BLMIS Accounts to the Filing Date and $19,117,079 in principal during the six years prior to the Filing Date, totaling approximately $25,601,884. Appendix II, Saul B. Katz Family Trust Exhibit B. In addition, the Saul B. Katz Fa1nily Trust received avoidable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $23,623,899 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $84,650,760 in principal during the six years prior to the Filing Date, totaling approximately $108,274,659. Appendix II, Saul B. Katz Family Trust Exhibit C. Fred Wilpon Family Trust 464. Upon infonnation and belief the Fred Wilpon Fa1nily Trust is a trust fonned under the laws of the state of New York. The settlor ofthe Fred Wilpon Fa1nily Trust is Fred Wilpon and the trustees ofthe Fred Wilpon Family Trust are Judith Wilpon, Debra Wilpon and Richard Wilpon. The fonner trustees of the Fred Wilpon Fa1nily Trust are Saul Katz, Michael Katz, and Marvin Tepper. The Fred Wilpon Family Trust, trustees, and fonner trustees are collectively referred to herein as the "Fred Wilpon Fa1nily Trust." Upon infonnation and belief the beneficiaries of the Fred Wilpon Family Trust are Jeffrey Wilpon, Bruce N. Wilpon, MINOR 1, MINOR 2, Robin Wilpon Wachtler, and Kimberly Wilpon Wachtler. 465. At all ti1nes relevant hereto, the Fred Wilpon Fa1nily Trust was a client ofthe IA Business. The Fred Wilpon Fa1nily Trust opened its first account with BLMIS through Sterling in December of 1986. 466. The Fred Wilpon Family Trust held approximately thirty-seven (37) Sterling BLMIS Accounts in one or more capacities, including as a direct interest-holder, and as a partner, 1ne1nber, and/or shareholder in various Sterling entities. 87 467. As set forth 1nore fully in Section XII below, BLMIS 1nade transfers directly to the Fred Wilpon Family Trust totaling $7,947,258 in Fictitious Profits from the opening dates of its Sterling BLMIS Accounts to the Filing Date and $29,274,240 in principal during the six years prior to the Filing Date, totaling approximately $37,221,498. Appendix II, Fred Wilpon Family Trust Exhibit B. In addition, the Fred Wilpon Fa1nily Trust received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $22,339,808 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $86,170,395 in principal during the six years prior to the Filing Date, totaling approximately $108,510,203. Appendix II, Fred Wilpon Family Trust Exhibit C. Katz 2002 Descend:1nts' Trust 468. Upon infonnation and belief Defendant Katz 2002 Descendants' Trust is a trust fonned under the laws ofthe state of New York. The settlor of the Katz 2002 Descendants' Trust is Michael Katz and the trustees ofthe Katz 2002 Descendants' Trust are Saul Katz and Dayle Katz. The Katz 2002 Descendants' Trust and trustees are collectively referred to herein as the "Katz 2002 Descendants' Trust." Upon infonnation and belief the beneficiaries ofthe Katz 2002 Descendants' Trust are Dayle Katz, Gregory Katz, Howard Katz and Todd Katz. 469. At all ti1nes relevant hereto, the Katz 2002 Descendants' Trust was a client ofthe IA Business. The Katz 2002 Descendants' Trust opened its first account with BLMIS through Sterling in August of 2003. 470. The Katz 2002 Descendants' Trust held approximately seventeen (17) Sterling BLMIS Accounts in one or more capacities, including as a direct interest-holder and as a partner, 1ne1nber, and/or shareholder in various Sterling entities. 471. As set forth 1nore fully in Section XII below, BLMIS 1nade transfers directly to the Katz 2002 Descendants' Trust totaling $396,003 in Fictitious Profits from the opening dates 88 of its Sterling BLMIS Accounts to the Filing Date and $2,393,648 in principal during the six years prior to the Filing Date, totaling approximately $2,789,652. Appendix 11, Katz 2002 Descendants' Trust Exhibit B. In addition, the Katz 2002 Descendants' Trust received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $1,894,747 in Fictitious Profits fro1n the opening dates of such Sterling BLMIS Accounts to the Filing Date and $17,056,931 in principal during the six years prior to the Filing Date, totaling approximately $18,951,678. Appendix II, Katz 2002 Descendants' Trust Exhibit C. Wilpon 2002 Descend:1nts' Trust 472. Upon infonnation and belief Defendant Wilpon 2002 Descendants' Trust is a trust fonned under the laws ofthe state of New York. The settlor ofthe Wilpon 2002 Descendants' Trust is Richard Wilpon and the trustees ofthe Wilpon 2002 Descendants' Trust are Fred Wilpon and Debra Wilpon. The Wilpon 2002 Descendants' Trust and trustees are collectively referred to herein as the "Wilpon 2002 Descendants' Trust." Upon infonnation and belief the beneficiaries ofthe Wilpon 2002 Descendants' Trust are Jessica Wilpon, Daniel Wilpon, and Scott Wilpon. 473. At all ti1nes relevant hereto, the Wilpon 2002 Descendants' Trust was a client of the IA Business. The Wilpon 2002 Descendants' Trust opened its first account with BLMIS through Sterling in January of 2007. 474. The Wilpon 2002 Descendants' Trust held approximately sixteen (16) Sterling BLMIS Accounts in one or 1nore capacities, including as a direct interest-holder, and as a paxtner, 1ne1nber, and/or shareholder in various Sterling entities. 475. As set forth 1nore fully in Section XII below, BLMIS 1nade transfers directly to the Wilpon 2002 Descendants' Trust totaling $528,446 in Fictitious Profits fro1n the opening 89 dates of its Sterling BLMIS Accounts to the Filing Date and $2,025,303 in principal during the six years prior to the Filing Date, totaling approximately $2,553,749. Appendix II, Wilpon 2002 Descendants' Trust Exhibit B. In addition, the Wilpon 2002 Descendants' Trust received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $2,528,442 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $20,374,004 in principal during the six years prior to the Filing Date, totaling approximately $22,902,446. Appendix II, Wilpon 2002 Descendants' Trust Exhibit C. E. Sterling Family Member Defendants Iris Katz 476. Upon infonnation and belief Defendant Iris Katz maintains her residence in Glen Cove, New York and, for purposes ofthe Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, Great Neck Road, Suite 408, Great Neck, New York 1021. 477. Defendant Iris Katz is the wife of Sterling Partner Saul Katz. 478. At all ti1nes relevant hereto, Defendant Iris Katz was a client ofthe IA Business. Iris Katz opened her first account with BLMIS through Sterling in December of 1986. 479. Iris Katz held an interest in approximately six (6) Sterling BLMIS Accounts in one or 1nore capacities, including as a direct interest-holder and as trustee and/or director of various trusts and/or foundations related to Sterling. 480. Iris Katz is named as a Defendant in this action in her individual capacity, and as trustee ofthe Saul B. Katz Family Trust. 48l. As set forth 1nore fully in Section XII below, BLMIS made transfers directly to Iris Katz totaling $34,997,05l in Fictitious Profits from the opening dates of her Sterling BLMIS 90 Accounts to the Filing Date and $2,198,313 in principal during the six years prior to the Filing Date, totaling approximately $37,195,364. Appendix 11, Iris Katz Exhibit B. Judith Wilpon 482. Upon infonnation and beliei Defendant Judith Wilpon maintains her residence in Locust Valley, New York and, for purposes ofthe Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 1 1021. 483. Defendant Judith Wilpon is the wife of Sterling Partner Fred Wilpon. 484. At all times relevant hereto, Defendant Judith Wilpon was a client of the IA Business. Judith Wilpon opened her first account with BLMIS through Sterling in December of 1986. 485. Judith Wilpon held an interest in approximately six (6) Sterling BLMIS Accounts in different capacities, including as a direct interest-holder, as trustee and/or director of various trusts and/or foundations, and as tenant-in-co1n1non. 486. Judith Wilpon is named as a Defendant in this action in her individual capacity, as trustee ofthe Fred Wilpon Family Trust, and as tenant-in-co1n1non in the accounts identified in Section XII below. 487. As set forth 1nore fully in Section XII below, BLMIS made transfers directly to Judith Wilpon totaling $24,679,509 in Fictitious Profits from the opening dates of her Sterling BLMIS Accounts to the Filing Date and $4,796,698 in principal during the six years prior to the Filing Date, totaling approximately $29,476,207. Appendix 11, Judith Wilpon Exhibit B. Dayle Katz 488. Upon infonnation and beliei Defendant Dayle Katz maintains her residence in Old Westbury, New York and, for purposes ofthe Sterling BLMIS Accounts at issue, received 91 correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 1 1021. 489. Defendant Dayle Katz is the wife of Sterling Partner Michael Katz. 490. At all times relevant hereto, Defendant Dayle Katz was a client ofthe IA Business. Dayle Katz opened her first account with BLMIS through Sterling in December of 1986. 491. Dayle Katz held an interest in approximately twenty-two (22) Sterling BLMIS Accounts in one or more capacities, including as a direct interest-holder, and as a partner, member, and/or shareholder in various Sterling entities. 492. Dayle Katz is named as a Defendant in this action in her individual capacity, as trustee ofthe Katz 2002 Descendants' Trust, as beneficiary ofthe Katz 2002 Descendants' Trust, and as joint tenant in the accounts identified in Section XII below. 493. As set forth 1nore fully in Section XII below, BLMIS made transfers directly to Dayle Katz totaling $553,483 in Fictitious Profits from the opening dates of her Sterling BLMIS Accounts to the Filing Date and $3,645,267 in principal during the six years prior to the Filing Date, totaling approximately $4,198,750. Appendix II, Dayle Katz Exhibit B. In addition, Dayle Katz received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $2,011,040 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $21,798,502 in principal during the six years prior to the Filing Date, totaling approximately $23,809,542. Appendix II, Dayle Katz Exhibit C. Debra Wilpon 494. Upon infonnation and belief Defendant Debra Wilpon maintains her residence in Port Washington, New York and, for purposes of the Sterling BLMIS Accounts at issue, 92 received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 495. Defendant Debra Wilpon is the wife of Sterling Partner Richard Wilpon. 496. At all times relevant hereto, Defendant Debra Wilpon was a client ofthe IA Business. Debra Wilpon opened her first account with BLMIS through Sterling in December of 1986. 497. Debra Wilpon held an interest in approximately three (3) Sterling BLMIS Accounts in one or more capacities, including as a direct interest-holder and as trustee of various Sterling-related trusts. 498. Debra Wilpon is named as a Defendant in this action in her individual capacity, as trustee ofthe Fred Wilpon Family Trust and the Wilpon 2002 Descendants' Trust, as joint tenant, and as tenant-in-common in the accounts identified in Section XII below. 499. As set forth more fully in Section XII below, BLMIS made transfers directly to Debra Wilpon totaling $2,020,180 in Fictitious Profits from the opening dates of her Sterling BLMIS Accounts to the Filing Date and $12,739,443 in principal during the six years prior to the Filing Date, totaling approximately $14,759,623. Appendix 11, Debra Wilpon Exhibit B. Valerie Wilpon 500. Upon infonnation and belief Defendant Valerie Wilpon maintains her residence in Greenwich, Connecticut and, for purposes ofthe Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 1 1021. 501. Defendant Valerie Wilpon is the wife of Sterling Partner Jeffrey Wilpon. 93 502. At all times relevant hereto, Defendant Valerie Wilpon was a client ofthe IA Business. Valerie Wilpon opened her first account with BLMIS through Sterling in March of 1990. 503. Valerie Wilpon held an interest in approximately four (4) Sterling BLMIS Accounts in one or more capacities, including as a direct interest-holder, as a director of a Sterling-related foundation, and as a member in a Sterling entity. 504. Valerie Wilpon is named as a Defendant in this action in her individual capacity and as joint tenant in the accounts identified in Section XII below. 505. As set forth more fully in Section XII below, BLMIS made transfers of principal directly to Valerie Wilpon totaling $8,182,163 during the six years prior to the Filing Date. Appendix II, Valerie Wilpon Exhibit B. In addition, Valerie Wilpon received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $117,111 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $1,559,352 in principal during the six years prior to the Filing Date, totaling approximately $1,676,463. Appendix II, Valerie Wilpon Exhibit C. Amy Beth Katz 506. Upon infounation and belief Defendant Amy Beth Katz maintains her residence in Syosset, New York and, for purposes ofthe Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 1 1021. 507. Defendant Amy Beth Katz is the wife of Sterling Partner Gregory Katz. 508. At all times relevant hereto, Defendant Amy Beth Katz was a client of the IA Business. Amy Beth Katz opened her first account with BLMIS through Sterling in October of 2001. 94 509. Amy Beth Katz held an interest in approximately four (4) Sterling BLMIS Accounts in one or 1nore capacities, including as a direct interest-holder and as a 1ne1nber in various Sterling entities. 510. A1ny Beth Katz is na1ned as a Defendant in this action in her individual capacity, and as joint tenant in the accounts identified in Section XII below. 511. As set forth 1nore fully in Section XII below, BLMIS 1nade transfers directly to A1ny Beth Katz totaling $40,460 in Fictitious Profits fro1n the opening dates of her Sterling BLMIS Accounts to the Filing Date and $874,544 in principal during the six years prior to the Filing Date, totaling approximately $915,005. Appendix II, A1ny Beth Katz Exhibit B. In addition, A1ny Beth Katz received avoidable and recoverable Subsequent Transfers of principal fro1n Sterling BLMIS Accounts held by other Sterling Defendants totaling $357,136 during the six years prior to the Filing Date. Appendix II, A1ny Beth Katz Exhibit C. Heather Katz Knopf 512. Upon infonnation and belief Defendant Heather Katz Knopf maintains her residence in Glen Cove, New York and, for purposes of the Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 513. Defendant Heather Katz Knopf is the daughter of Sterling Partner Saul Katz. 514. At all ti1nes relevant hereto, Defendant Heather Katz Knopf was a client ofthe IA Business. Heather Katz Knopf opened her first account with BLMIS, or such account was opened on her behalf through Sterling in March of 1989. 515. Heather Katz Knopf held an interest in approximately forty-four (44) Sterling BLMIS Accounts in one or 1nore capacities, including as a direct interest-holder, trustee, director 95 and/or beneficiary of various Sterling-related trusts and/or foundations, and as a partner, member, and/or shareholder in various Sterling entities. 516. Heather Katz Knopf is named as a Defendant in this action in her individual capacity, as trustee of the Saul B. Katz Family Trust, as beneficiaxy ofthe Saul B. Katz Family Trust, as joint tenant, and as tenant-in-co1n1non in the accounts identified in Section XII below. 517. As set forth 1nore fully in Section XII below, BLMIS made transfers directly to Heather Katz Knopf totaling $117,977 in Fictitious Profits from the opening dates of her Sterling BLMIS Accounts to the Filing Date and $104,500 in principal during the six years prior to the Filing Date, totaling approximately $222,477. Appendix II, Heather Katz Knopf Exhibit B. In addition, Heather Katz Knopf received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $33,107,927 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $120,498,256 in principal during the six years prior to the Filing Date, totaling approximately $153,606,184. Appendix II, Heather Katz Knopf Exhibit C. Howard Katz 518. Upon infonnation and beliei Defendant Howard Katz maintains his residence in New York, New York and, for purposes ofthe Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 1 1021. 519. Defendant Howard Katz is the son of Sterling Partner Michael Katz. 520. At all times relevant hereto, Defendant Howard Katz was a client of the IA Business. Howard Katz opened his first account with BLMIS through Sterling in March of 1991. 96 521. At all times relevant hereto, Defendant Howard Katz was a client ofthe IA Business. Howard Katz opened his first account with BLMIS, or such account was opened on his behalf through Sterling in March of 1991. 522. Howard Katz held an interest in approximately twenty-three (23) Sterling BLMIS Accounts in one or more capacities, including as a direct interest-holder and as a member in various Sterling entities. 523. Howard Katz is named as a Defendant in this action in his individual capacity, as beneficiary ofthe Katz 2002 Descendants' Trust, and as tenant-in-common in the accounts identified in Section XII below. 524. As set forth more fully in Section XII below, BLMIS made transfers directly to Howard Katz totaling $7,589 in Fictitious Profits from the opening dates of his Sterling BLMIS Accounts to the Filing Date and $180,000 in principal during the six years prior to the Filing Date, totaling approximately $187,589. Appendix II, Howard Katz Exhibit B. In addition, Howard Katz received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $1,907,525 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $19,918,881 in principal during the six years prior to the Filing Date, totaling approximately $21,826,406. Appendix II, Howard Katz Exhibit C. Natalie Katz O'B1?ien 525. Upon infounation and beliei Defendant Natalie Katz O'Brien maintains her residence in Glen Cove, New York and, for purposes of the Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 526. Defendant Natalie Katz O'Brien is the daughter of Sterling Paxtner Saul Katz. 97 527. At all times relevant hereto, Defendant Natalie Katz O'Brien was a client of the IA Business. Natalie Katz O'Brien opened her first account with BLMIS, or such account was opened on her behalf through Sterling in January l989. 528. Natalie Katz O'Brien held an interest in approximately forty-six (46) Sterling BLMIS Accounts in one or more capacities, including as a direct interest-holder, as a director and/or beneficiary of various Sterling-related trusts and/ or foundations, and as a partner, member, and/or shareholder in various Sterling entities. 529. Natalie Katz O'Brien is named as a Defendant in this action in her individual capacity, as trustee of the Saul B. Katz Family Trust, as beneficiary ofthe Saul B. Katz Family Trust, as joint tenant, and as tenant-in-common in the accounts identified in Section XII below. 530. As set forth more fully in Section XII below, BLMIS made transfers directly to Natalie Katz O'Brien totaling $98,827 in Fictitious Profits from the opening dates of her Sterling BLMIS Accounts to the Filing Date and $288,000 in principal during the six years prior to the Filing Date, totaling approximately $3 86,827. Appendix II, Natalie Katz O'Brien Exhibit B. In addition, Natalie Katz O'Brien received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $28,745,384 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $l03,070,726 in principal during the six years prior to the Filing Date, totaling approximately $l3l,8l6,l09. Appendix II, Natalie Katz O'Brien Exhibit C. Todd Katz 53l. Upon infounation and belief Defendant Todd Katz maintains his residence in Old Westbury, New York and, for purposes ofthe Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, Great Neck Road, Suite 408, Great Neck, New York l02 l. 98 532. Defendant Todd Katz is the son of Sterling Partner Michael Katz. 533. At all times relevant hereto, Defendant Todd Katz was a client ofthe IA Business. Todd Katz opened his first account with BLMIS, or such account was opened on his behalf through Sterling in March 1991. 534. Todd Katz held an interest in approximately twenty-three (23) Sterling BLMIS Accounts in one or more capacities, including as a direct interest-holder and as a partner, member, and/or shareholder in various Sterling entities. 535. Todd Katz is named as a Defendant in this action in his individual capacity, as beneficiary ofthe Katz 2002 Descendants' Trust, and as tenant-in-co1n1non in the accounts identified in Section XII below. 536. As set forth 1nore fully in Section XII below, BLMIS made transfers directly to Todd Katz of a 1nini1nal amount in Fictitious Profits from the opening date of his Sterling BLMIS Account to the Filing Date. Appendix II, Todd Katz Exhibit B. In addition, Todd Katz received avoidable and recoverable Subsequent Transfers fro1n Sterling BLMIS Accounts held by other Sterling Defendants totaling $1,913,327 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $20,173,591 in principal during the six years prior to the Filing Date, totaling approximately $22,086,917. Appendix II, Todd Katz Exhibit C. Bruce N. Wilpon 537. Upon infonnation and belief Defendant Bruce N. Wilpon maintains his residence in New York, New York and, for purposes of the Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 1 1021. 538. Defendant Bruce N. Wilpon is the son of Sterling Partner Fred Wilpon. 99 539. At all times relevant hereto, Defendant Bruce N. Wilpon was a client ofthe IA Business. Bruce N. Wilpon opened his first account with BLMIS, or such account was opened on his behalf through Sterling in February of l994. 540. Bruce N. Wilpon held an interest in approximately thirty-seven (37) Sterling BLMIS Accounts in one or 1nore capacities, including as a direct interest-holder. 54l. Bruce N. Wilpon is named as a Defendant in this action in his individual capacity, as beneficiary ofthe Fred Wilpon Family Trust, and as tenant-in-co1n1non in the accounts identified in Section XII below. 542. As set forth 1nore fully in Section XII below, BLMIS made transfers directly to Bruce N. Wilpon totaling $349,880 in Fictitious Profits from the opening dates of his Sterling BLMIS Accounts to the Filing Date. Appendix II, Bruce N. Wilpon Exhibit B. In addition, Bruce N. Wilpon received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $27,442,966 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $l14,909,334 in principal during the six years prior to the Filing Date, totaling approximately $l42,3 52,300. Appendix II, Bruce N. Wilpon Exhibit C. Daniel Wilpon 543. Upon infounation and belief Defendant Daniel Wilpon maintains his residence in New York, New York and, for purposes ofthe Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, Great Neck Road, Suite 408, Great Neck, New York l02 l. 544. Defendant Daniel Wilpon is the son of Sterling Partner Richard Wilpon. l00 545. At all times relevant hereto, Defendant Daniel Wilpon was a client ofthe IA Business. Daniel Wilpon opened his first account with BLMIS, or such account was opened on his behalf through Sterling in December 1994. 546. Daniel Wilpon held an interest in approximately eighteen (18) Sterling BLMIS Accounts in one or more capacities, including as a direct interest-holder, and as a partner, member, and/or shareholder in various Sterling entities. 547. Daniel Wilpon is named as a Defendant in this action in his individual capacity, and as beneficiary ofthe Wilpon 2002 Descendants' Trust. 548. As set forth more fully in Section XII below, Daniel Wilpon received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $2,530,194 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $23,396,254 in principal during the six years prior to the Filing Date, totaling approximately $25,926,448. Appendix II, Daniel Wilpon Exhibit C. Jessica Wilpon 549. Upon infounation and belief Defendant Jessica Wilpon maintains her residence in New York, New York and, for purposes of the Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 1 1021. 550. Defendant Jessica Wilpon is the daughter of Sterling Partner Richard Wilpon. 551. At all times relevant hereto, Defendant Jessica Wilpon was a client of the IA Business. Jessica Wilpon opened her first account with BLMIS, or such account was opened on her behalf through Sterling in December of 1994. 101 552. Jessica Wilpon held an interest in approximately sixteen (16) Sterling BLMIS Accounts in one or more capacities, including as a direct interest-holder, and as a partner, member, and/or shareholder in various Sterling entities. 553. Jessica Wilpon is named as a Defendant in this action in her individual capacity, and as beneficiary ofthe Wilpon 2002 Descendants' Trust. 554. As set forth 1nore fully in Section XII below, Jessica Wilpon received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $2,528,442 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $21,892,973 in principal during the six years prior to the Filing Date, totaling approximately $24,421,415. Appendix II, Jessica Wilpon Exhibit C. Robin Wilpon Wachtler 555. Upon infonnation and belief Defendant Robin Wilpon Wachtler maintains her residence in Oyster Bay, New York and, for purposes of the Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 556. Defendant Robin Wilpon Wachtler is the daughter of Sterling Partner Fred Wilpon. 557. At all times relevant hereto, Defendant Robin Wilpon Wachtler was a client ofthe IA Business. Robin Wilpon Wachtler opened her first account with BLMIS, or such account was opened on her behal? through Sterling in July of 1988. 558. Robin Wilpon Wachtler held an interest in approximately forty-three (43) Sterling BLMIS Accounts in one or more capacities, including as a direct interest-holder, and as a partner, 1ne1nber, and/or shareholder in various Sterling entities. 102 559. Robin Wilpon Wachtler is na1ned as a Defendant in this action in her individual capacity, as beneficiary of the Fred Wilpon Family Trust, as joint tenant, and as tenant-in- co1n1non in the accounts identified in Section XII below. 560. As set forth 1nore fully in Section XII below, BLMIS 1nade transfers directly to Robin Wilpon Wachtler totaling $729,120 in Fictitious Profits from the opening dates of her Sterling BLMIS Accounts to the Filing Date and $2,367,500 in principal during the six years prior to the Filing Date, totaling approximately $3,096,620. Appendix II, Robin Wilpon Wachtler Exhibit B. In addition, Robin Wilpon Wachtler received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $27,913,548 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $113,932,794 in principal during the six years prior to the Filing Date, totaling approximately $141,846,342. Appendix II, Robin Wilpon Wachtler Exhibit C. Philip Wachtler 561. Upon infonnation and belief Defendant Philip Wachtler maintains his residence in Oyster Bay, New York and, for purposes of the Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 1 1021. 562. Defendant Philip Wachtler is the husband of Robin Wilpon Wachtler, daughter of Sterling Partner Fred Wilpon. 563. At all ti1nes relevant hereto, Defendant Philip Wachtler was a client of the IA Business. Philip Wachtler opened his first account with BLMIS through Sterling in July of 1988. 103 564. Philip Wachtler held an interest in approximately twelve (12) Sterling BLMIS Accounts in one or 1nore capacities, including as a direct interest-holder and as partner, 1ne1nber, and/or shareholder in various Sterling entities. 565. Philip Wachtler is named as a Defendant in this action in his individual capacity, as joint tenant, and as tenant-in-co1n1non in the accounts identified in Section XII below. 566. As set forth 1nore fully in Section XII below, BLMIS 1nade transfers directly to Philip Wachtler totaling $351,137 in Fictitious Profits fro1n the opening dates of his Sterling BLMIS Accounts to the Filing Date and $2,367,500 in principal during the six years prior to the Filing Date, totaling approximately $2,718,637. Appendix II, Philip Wachtler Exhibit B. In addition, Philip Wachtler received avoidable and recoverable Subsequent Transfers fro1n Sterling BLMIS Accounts held by other Sterling Defendants totaling $545,062 in Fictitious Profits fro1n the opening dates of such Sterling BLMIS Accounts to the Filing Date and $1,289,780 in principal during the six years prior to the Filing Date, totaling approximately $1,834,842. Appendix II, Philip Wachtler Exhibit C. Kimberly Wachtler 567. Upon infonnation and belief Defendant Kimberly Wachtler maintains her residence in Oyster Bay, New York and, for purposes of the Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 568. Defendant Kimberly Wachtler is the daughter of Robin Wilpon Wachtler, and the granddaughter of Sterling Partner Fred Wilpon. 569. Kimberly Wachtler held an interest in approximately thirty-five (35) Sterling BLMIS Accounts in her capacity as beneficiary ofthe Fred Wilpon Family Trust. 104 570. Kimberly Wachtler is named as a Defendant in this action in her individual capacity, and as beneficiary of the Fred Wilpon Family Trust. 571. As set forth 1nore fully in Section XII below, Kimberly Wachtler received avoidable and recoverable Subsequent Transfers fro1n Sterling BLMIS Accounts held by other Sterling Defendants totaling $27,368,486 in Fictitious Profits fro1n the opening dates of such Sterling BLMIS Accounts to the Filing Date and $112,643,014 in principal during the six years prior to the Filing Date, totaling approximately $140,011,500. Appendix II, Kimberly Wachtler Exhibit C. Scott Wilpon 572. Upon infonnation and belief Defendant Scott Wilpon maintains his residence in New York, New York and, for purposes ofthe Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 1 1021. 573. Defendant Scott Wilpon is the son of Sterling Partner Richard Wilpon. 574. At all ti1nes relevant hereto, Defendant Scott Wilpon was a client of the IA Business. Scott Wilpon opened his first account with BLMIS, or such account was opened on his behalf, through Sterling in November of 1992. 575. Scott Wilpon held an interest in approximately seventeen (17) Sterling BLMIS Accounts in one or 1nore capacities, including as a direct interest-holder, as beneficiary ofthe Wilpon 2002 Descendants' Trust, and as a partner, 1ne1nber, and/or shareholder in various Sterling entities. 576. Scott Wilpon is named as a Defendant in this action in his individual capacity, and as beneficiary ofthe Wilpon 2002 Descendants' Trust. 105 577. As set forth more fully in Section XII below, Scott Wilpon received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $2,530,805 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $22,201,046 in principal during the six years prior to the Filing Date, totaling approximately $24,731,852. Appendix II, Scott Wilpon Exhibit C. MINOR 1 578. Upon infonnation and belief Defendant MINOR 1 is a minor who maintains her residence at her parents' address in Greenwich, Connecticut and, for purposes of the Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 579. Defendant MINOR 1 is the daughter of Sterling Partner Jeffrey Wilpon. 580. At all times relevant hereto, Defendant MINOR 1 was a client ofthe IA Business. MINOR 1 opened her first account with BLMIS, or such account was opened on her behalf through Sterling in May of 1997. 581. MINOR 1 held an interest in approximately thirty-six (36) Sterling BLMIS Accounts in her capacity as beneficiary of the Fred Wilpon Family Trust. 582. MINOR 1 is named as a Defendant in this action as beneficiaxy ofthe Fred Wilpon Family Trust. 583. As set forth more fully in Section XII below, MINOR 1 received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $27,510,896 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and in principal during the six years prior to the Filing Date, totaling approximately $141,760,796. Appendix II, MINOR 1 Exhibit C. 106 MINOR 2 584. Upon infonnation and belief Defendant MINOR 2 is a minor who maintains his residence at his parents' address in Greenwich, Comiecticut and, for purposes ofthe Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 585. Defendant MINOR 2 is the son of Sterling Partner Jeffrey Wilpon. 586. At all ti1nes relevant hereto, Defendant MINOR 2 was a client ofthe IA Business. MINOR 2 opened his first account with BLMIS, or such account was opened on his behalf through Sterling in September of 1995. 587. MINOR 2 held an interest in approximately thirty-six (36) Sterling BLMIS Accounts in his capacity as beneficiary ofthe Fred Wilpon Family Trust. 588. MINOR 2 is named as a Defendant in this action as beneficiaxy ofthe Fred Wilpon Family Trust. 589. As set forth 1nore fully in Section XII below, MINOR 2 received avoidable and recoverable Subsequent Transfers fro1n Sterling BLMIS Accounts held by other Sterling Defendants totaling $27,510,896 in Fictitious Profits fro1n the opening dates of such Sterling BLMIS Accounts to the Filing Date and $114,249,900 in principal during the six years prior to the Filing Date, totaling approximately $141,760,796. Appendix II, MINOR 2 Exhibit C. Ruth Friedman 590. Upon infonnation and belief Defendant Ruth Friedman maintains her residence in Glen Cove, New York and, for purposes ofthe Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 1 1021. 591. Defendant Ruth Friedman is the wife of Sterling Partner Arthur Friedman. 107 592. At all ti1nes relevant hereto, Defendant Ruth Friedman was a client of the IA Business. Ruth Friedman opened her first account with BLMIS through Sterling in May of 199 l. 593. Ruth Friedman held an interest in approximately five (5) Sterling BLMIS Accounts in one or 1nore capacities, including as a direct interest-holder, as a director of a Sterling-related foundation, and as paxtner, 1ne1nber, and/or shareholder in various Sterling entities. 594. Ruth Friedman is named as a Defendant in this action in her individual capacity, and as joint tenant in the accounts identified in Section XII below. 595. As set forth 1nore fully in Section XII below, BLMIS 1nade transfers directly to Ruth Friedman totaling $539,437 in Fictitious Profits fro1n the opening dates of her Sterling BLMIS Accounts to the Filing Date and $387,963 in principal during the six years prior to the Filing Date, totaling approximately $927,400. Appendix II, Ruth Friedman Exhibit B. In addition, Ruth Friedman received avoidable and recoverable Subsequent Transfers of principal fro1n Sterling BLMIS Accounts held by other Sterling Defendants totaling $960,526 during the six years prior to the Filing Date. Appendix II, Ruth Friedman Exhibit C. Rebell Osterman 596. Upon infonnation and belief Defendant Rebell Ostennan maintains her residence in Stamford, Connecticut and, for purposes ofthe Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, Great Neck Road, Suite 408, Great Neck, New York ll02l. 597. Defendant Rebell Ostennan is the wife of Sterling Partner Thomas Ostennan. l08 598. At all times relevant hereto, Defendant Rebell Ostemian was a client of the IA Business. Rebell Ostemian opened her first account with BLMIS through Sterling in October of 1999. 599. Rebell Ostemian held an interest in approximately one (1) Sterling BLMIS Account as a direct interest-holder. 600. Rebell Ostemian is named as a Defendant in this action in her individual capacity in the account identified in Section XII below. 601. As set forth more fully in Section XII below, BLMIS made transfers directly to Rebell Ostemian totaling $107,000 in Fictitious Profits from the opening date of her Sterling BLMIS Account to the Filing Date and $426,000 in principal during the six years prior to the Filing Date, totaling approximately $533,000. Appendix II, Rebell Ostennan Exhibit B. Elise C. Tepper 602. Upon infounation and belief Defendant Elise C. Tepper maintains her residence in Sands Point, New York and, for purposes of the Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 1 1021. 603. Defendant Elise C. Tepper is the wife of Sterling Partner Marvin Tepper. 604. At all times relevant hereto, Defendant Elise C. Tepper was a client of the IA Business. Elise C. Tepper opened her first account with BLMIS through Sterling in December of 1990. 605. Elise C. Tepper held an interest in approximately eight (8) Sterling BLMIS Accounts in one or more capacities, including as a direct interest-holder, and as a partner, member, and/or shareholder in various Sterling entities. 109 606. Elise C. Tepper is na1ned as a Defendant in this action in her individual capacity, as joint tenant, and as tenant-in-co1n1non in the accounts identified in Section XII below. 607. As set forth more fully in Section XII below, BLMIS 1nade transfers directly to Elise C. Tepper totaling $854,441 in Fictitious Profits from the opening dates of her Sterling BLMIS Accounts to the Filing Date and $579,043 in principal during the six years prior to the Filing Date, totaling approximately $1,433,484. Appendix II, Elise C. Tepper Exhibit B. In addition, Elise C. Tepper received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $525,904 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $4,780,230 in principal during the six years prior to the Filing Date, totaling approximately $5,306,134. Appendix II, Elise C. Tepper Exhibit C. Jacgueline G. Tepper 608. Upon infonnation and belief Defendant Jacqueline G. Tepper maintains her residence in Stamford, Connecticut and, for purposes ofthe Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 609. Defendant Jacqueline G. Tepper is the daughter of Sterling Paxtner Marvin Tepper. 610. At all ti1nes relevant hereto, Defendant Jacqueline G. Tepper was a client of the IA Business. Jacqueline G. Tepper opened her first account with BLMIS, or such account was opened on her behalf through Sterling in April of 2005. 611. Jacqueline G. Tepper held an interest in approximately three (3) Sterling BLMIS Accounts in one or more capacities, including as a direct interest-holder and as a general partner. 1 10 612. Jacqueline G. Tepper is named as a Defendant in this action in her individual capacity, and as tenant-in-co1n1non in the accounts identified in Section XII below. 613. As set forth more fully in Section XII below, BLMIS made transfers directly to Jacqueline G. Tepper totaling $363,292 in Fictitious Profits from the opening dates of her Sterling BLMIS Accounts to the Filing Date and $329,123 in principal during the six years prior to the Filing Date, totaling approximately $692,415. Appendix II, Jacqueline G. Tepper Exhibit B. In addition, Jacqueline G. Tepper received avoidable and recoverable Subsequent Transfers from a Sterling BLMIS Account held by another Sterling Defendant totaling $92,807 in Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date. Appendix II, Jacqueline G. Tepper Exhibit C. Edward M. Tepper 614. Upon infonnation and belief Defendant Edward M. Tepper maintains his residence in Madison, New Jersey and, for purposes ofthe Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 615. Defendant Edward M. Tepper is the son of Sterling Partner Marvin Tepper. 616. At all times relevant hereto, Defendant Edward M. Tepper was a client ofthe IA Business. Edward M. Tepper opened his first account with BLMIS, or such account was opened on his behalf through Sterling in April of 1995. 617. Edward M. Tepper held an interest in approximately seven (7) Sterling BLMIS Accounts in one or more capacities, including as a direct interest-holder, and as a partner, 1ne1nber, and/or shareholder in various Sterling entities. 618. Edward M. Tepper is named as a Defendant in this action in his individual capacity, and as tenant-in-co1n1non in the accounts identified in Section XII below. 1 1 1 619. As set forth more fully in Section XII below, BLMIS 1nade transfers directly to Edward M. Tepper totaling $652,238 in Fictitious Profits from the opening dates of his Sterling BLMIS Accounts to the Filing Date and $490,238 in principal during the six years prior to the Filing Date, totaling approximately $1,142,476. Appendix II, Edward M. Tepper Exhibit B. In addition, Edward M. Tepper received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $92,837 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $114,320 in principal during the six years prior to the Filing Date, totaling approximately $207,157. Appendix II, Edward M. Tepper Exhibit C. Deyva Schreier Arthur 620. Upon infonnation and belief Defendant Deyva Schreier Arthur maintains her residence in Troy, New York and, for purposes ofthe Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 621. Defendant Deyva Schreier Arthur is the daughter ofthe late Leonard Schreier, a fonner Sterling Partner, whose Sterling BLMIS Account interests after his death through the Filing Date were held by his estate. 622. At all ti1nes relevant hereto, Defendant Deyva Schreier Arthur was a client ofthe IA Business. Deyva Schreier Arthur opened her first account with BLMIS, or such account was opened on her behalf through Sterling in December of 1991. 623. Deyva Schreier Arthur held an interest in approximately forty-six (46) Sterling BLMIS Accounts. 1 12 624. Deyva Schreier Arthur is na1ned as a Defendant in this action in her individual capacity, as beneficiary of the Estate of Leonard Schreier, and as tenant-in-co1n1non in the accounts identified in Section XII below. 625. As set forth more fully in Section XII below, BLMIS 1nade transfers directly to Deyva Schreier Arthur totaling $20 in Fictitious Profits from the opening dates of her Sterling BLMIS Accounts to the Filing Date and $74,000 in principal during the six years prior to the Filing Date, totaling approximately $74,020. Appendix II, Deyva Schreier Arthur Exhibit B. In addition, Deyva Schreier Arthur received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $18,124,884 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $16,476,268 in principal during the six years prior to the Filing Date, totaling approximately $$4,601,152. Appendix II, Deyva Schreier Arthur Exhibit C. Michael Schreier 626. Upon infonnation and belief Defendant Michael Schreier maintains his residence in New York, New York and, for purposes of the Sterling BLMIS Accounts at issue, received correspondence at Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 1 1021. 627. Defendant Michael Schreier is the son ofthe late Leonard Schreier, a fonner Sterling Partner, whose Sterling BLMIS Account interests after his death through the Filing Date were held by his estate. 628. At all ti1nes relevant hereto, Defendant Michael Schreier was a client ofthe IA Business. Michael Schreier opened his first account with BLMIS, or such account was opened on his behalf through Sterling in December of 1991. 1 13 629. Michael Schreier held an interest in approximately forty-five (45) Sterling BLMIS Accounts. 630. Michael Schreier is named as a Defendant in this action in his individual capacity, as beneficiary ofthe Estate of Leonard Schreier, and as tenant-in-co1n1non in the accounts identified in Section XII below. 631. As set forth 1nore fully in Section XII below, BLMIS made transfers directly to Michael Schreier of a minimal amount in Fictitious Profits from the opening date of his Sterling BLMIS Account to the Filing Date. Appendix II, Michael Schreier Exhibit B. In addition, Michael Schreier received avoidable and recoverable Subsequent Transfers from Sterling BLMIS Accounts held by other Sterling Defendants totaling $18,124,904 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $16,476,268 in principal during the six years prior to the Filing Date, totaling approximately $34,601,172. Appendix II, Michael Schreier Exhibit C. F. Madoff Investment Entity Defendants Realty Associates Madoff II 632. Upon infonnation and belief Defendant Realty Associates Madoff II is a general partnership fonned under the laws of the state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 633. The general partners of Realty Associates Madoff II are Ruth Madoff the Saul B. Katz Family Trust, and the Fred Wilpon Family Trust. 634. Realty Associates Madoff II was an investment vehicle designed to enable Madoff' investment in Sterling American Property II. See infra Section VII.E. 1 14 635. Upon infonnation and belief Madoff Ruth Madoff and/or Peter Madoff made transfers using BLMIS funds, comprised of other people's money, to Realty Associates Madoff II. 636. As set forth 1nore fully in Section XII below, BLMIS made transfers directly to Realty Associates Madoff II totaling $983,420. Appendix II, Realty Associates Madoff II Exhibit B. Sterling Acguisitions LLC 637. Upon infonnation and belief Defendant Sterling Acquisitions LLC is a limited liability corporation fonned under the laws ofthe state of New York. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 638. The 1ne1nbers of Sterling Acquisitions LLC include Ruth Madoff the Saul B. Katz Family Trust, Fred Wilpon, Richard Wilpon, Michael Katz, Arthur Friedman, Marvin Tepper, Saul Katz, the Fred Wilpon Family Trust, Gregory Katz, Howard Katz, Todd Katz, the Thomas Ostennan 1999 Trust, Jeffrey Wilpon, David Katz, Jacqueline G. Tepper, Edward M. Tepper, Heather Katz Knopf Natalie Katz O'Brien, and the Estate of Leonard Schreier, a1nong others not listed as defendants herein. 639. Upon infonnation and belief Sterling Acquisitions LLC was an investment vehicle through which Madoff Ruth Madoff and/ or Peter Madoff invested in Pathogenesis Corporation. See infra Section VII.E. 640. Upon infonnation and belief Madoff Ruth Madoff and/ or Peter Madoff made transfers using BLMIS funds, comprised of other people's money, to Sterling Acquisitions LLC. 1 15 641. As set forth more fully in Section XII below, BLMIS 1nade transfers directly to Sterling Acquisitions LLC totaling $592,521. Appendix II, Sterling Acquisitions LLC Exhibit B. Sterling American Property LP 642. Upon infonnation and belief Defendant Sterling American Property LP is a limited partnership fonned under the laws ofthe state of Delaware. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 643. The limited paxtners of Sterling American Property LP include Ruth Madoff and Peter Madoff a1nong others not na1ned as defendants herein. The general partner of Sterling American Property LP is Sterling American Advisors LLC. 644. Upon infonnation and belief Sterling American Property LP was a Sterling real estate investment vehicle in which Madoff Ruth Madoff and/or Peter Madoff invested using BLMIS funds, comprised of other people's 1noney. See infra Section VII.E. 645. As set forth more fully in Section XII below, BLMIS 1nade transfers directly to Sterling American Property LP totaling $4,848,408. Appendix II, Sterling American Property LP Exhibit B. Sterling American Property IV LP 646. Upon infonnation and belief Defendant Sterling American Property IV LP is a limited partnership fonned under the laws ofthe state of Delaware. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 1 16 647. The limited partners of Sterling American Property IV LP are Ruth Madoff and Peter Madoff, among others not named as defendants herein. The general partner of Sterling American Property IV LP is Sterling American Advisors IV LLC. 648. Upon infonnation and belief Sterling American Property IV LP was a Sterling real estate investment vehicle in which Ruth Madoff and/ or Peter Madoff invested using BLMIS funds comprised of other people's money. See infra Section VII.E. 649. As set forth more fully in Section XII below, BLMIS made transfers directly to Sterling American Property IV LP totaling $3,102,156. Appendix II, Sterling American Property IV LP Exhibit B. Sterling American Property LP 650. Upon infonnation and belief Defendant Sterling American Property LP is a limited partnership fonned under the laws ofthe state of Delaware. Its principal place of business is located at 111 Great Neck Road, Suite 408, Great Neck, New York 11021. Its registered agent for service of process is Sterling Equities, 111 Great Neck Road, Suite 408, Great Neck, New York 11021. 651. The limited partners of Sterling American Property LP include Ruth Madoff and Peter Madoff among others not listed as defendants herein. The general partner of Sterling American Property LP is Sterling American Advisors LLC. 652. Upon infonnation and belief Sterling American Property LP was a Sterling real estate investment vehicle in which Madoff Ruth Madoff and/or Peter Madoff invested using BLMIS funds, comprised of other people's money. See infra Section VII.E. 653. As set forth more fully in Section XII below, BLMIS made transfers directly to Sterling American Property LP totaling $2,504,752. Appendix II, Sterling American Property LP Exhibit B. 1 17 VI. INVESTMENTS WITH MADOFF WERE PART OF ITS REAL ESTATE, PROFESSIONAL BASEBALL, PRIVATE QUITY AND HEDGE FUND BUSINESS 654. Sterling Equities (as defined above the partners and the entities that they own, operate, and control--was founded in 1972 as a partnership between brothers-in-law Saul Katz, a Certified Public Accountant and Fred Wilpon to manage and acquire real estate. Within a year of founding Sterling, they were joined by Fred Wilpon's brother, Richard Wilpon, and Saul Katz's brother, Michael Katz, a CPA who also holds a master's degree in business administration. These four partners--Fred Wilpon, Saul Katz, Richard Wilpon and Michael Katz--have been with Sterling from the beginning and fonn the core of the paxtnership with close to 40 years of extensive business experience. 655. The Katz-Wilpon brothers were followed into the Sterling partnership by Thomas Ostennan, who holds two master's degrees in urban and regional planning and public administration, Leonard Schreier, Marvin Tepper, who holds a law degree with over 30 years of private practice experience, and Arthur Friedman, a CPA who also holds a law degree. Around the sa1ne ti1ne that Arthur Friedman became a partner in 1986, the next generation of Katz- Wilpon family 1ne1nbers began to join the ranks ofthe partnership, including Jeffrey Wilpon, David Katz, and Gregory Katz, sons of Fred Wilpon, Saul Katz and Michael Katz, respectively. 656. The Sterling Partners stand at the helm of a group of businesses with interests across numerous asset classes. The Sterling businesses have evolved over the last four decades into a diverse network of companies focused on the creation of wealth and preservation of capital. What began as a modest two-1nan real estate partnership transfonned over ti1ne into a multi-tiered business that includes the purchase, development and 1nanage1nent of over 23 million square feet of commercial and residential real estate, a real estate investment fund, Sterling American Property fonned and operated by Sterling and American Securities 1 18 Capital Partners, LLC ("American Securities"), a leveraged buyout finn, a professional sports and entertainment business comprised of full ownership of the New York Mets (the "Mets"), the Maj or League Baseball franchise, and maj ority ownership of SportsNet New York the network responsible for broadcasting New York-based sporting events, including all Mets games, many private equity and venture capital investments, and part ownership of a hedge fund with reportedly over $6 billion in assets under 1nanage1nent, Sterling Stamos.4 657. The Sterling Partners operate and control a network of privately-held entities that they created, including the Sterling Entity Defendants. The Sterling Partners are officers, principals, 1ne1nbers, and/or partners of all the Sterling-related entities, including the Sterling Entity Defendants, which they operate for their benefit. 658. The Sterling Partners operate 1nost ofthe Sterling-related entities, including the Sterling Entity Defendants, out ofthe sa1ne office in Great Neck, NY, where many of the sa1ne personnel provide services to all Sterling-related entities. 659. Sterling remains a closely-held partnership and all aspects ofthe Sterling business are overseen by 1ne1nbers ofthe Katz-Wilpon family and, ultimately, the Sterling Partners. Founding partners Saul Katz and Fred Wilpon play a leadership role with respect to each and every Sterling business, however, all major decisions conceming any ofthe Sterling businesses and Sterling-related entities, including the Sterling Entity Defendants, are 1nade on a partnership level in the ordinary course of business after discussion a1nong the Sterling Partners collectively, including where to invest and how much to allocate to each particular investment, such as BLMIS. 4 Sterling Stam os is comprised of Sterling Stam os Capital Management, LP and Sterling Stam os Associates GP - LLC. See infra ll 7l l. Upon infomation and belief, Sterling Stamos was formerly known as Stamos Partners Capital, Stamos Partners Management, Stamos Partners Capital, and./or SP Capital Management. All references hereinafter to "Sterling Stam os" refer to Sterling Stam os Capital Management, LP, Sterling Stam os Associates GP LLC, and any predecessor entity. l9 660. As early as about October l985--when the Sterling Partners 1nade their first BLMIS investments--through December 2008, the Sterling Partners treated their BLMIS investments, including those 1nade in their own names, the names of their family 1ne1nbers, and in the na1nes of certain Sterling-related entities and trusts, as an integral component of Sterling's core business. 66l. Over their near quarter-century business relationship with Madofi the Sterling Partners decided collectively to invest much of their and their businesses' excess cash with Madofi which resulted in them holding interests in hundreds of BLMIS accounts individually, as joint tenants, tenants-in-co1n1non, or through trusts and Sterling-related entities that they owned, operated and controlled. See infra Section 662. The Sterling Partners also decided collectively to open and administer BLMIS accounts not only on behalf of themselves, their fa1nily1ne1nbers, related trusts, and Sterling- related entities, but also on behalf of their friends, employees, and business acquaintances--483 BLMIS accounts in total. See id. 663. The Sterling Partners' investments with Madoff anchored Sterling's business empire whereby the hundreds of millions of Fictitious Profits they withdrew fro1n BLMIS, as well as the capital they accessed as a result of their purported equity in their BLMIS accounts, supported their many businesses. 664. All Defendants named herein, including the Sterling Partners, their family 1ne1nbers, their related trusts, and the various entities they own, operate and control, including the Mets, benefited greatly from Madoff' massive Ponzi sche1ne, collectively withdrawing from BLMIS approximately $300 million of Fictitious Profits, and over $700 million in principal during the six years prior to the Filing Date. l20 A. The Sterling Partners Are Sophisticated Investors With A Deep Bench Of Financial And Business Experience Across Numerous Asset Classes 1. Real estate. 665. Before Sterling got into professional baseball, its calling card was real estate. Over the years, Sterling has purchased or developed more than 23 million square feet of commercial property, 57,000 residential units, eight million square feet of retail property and four major sports complexes. Sterling has also owned and managed an additional 1,900 residential properties and 1.2 million square feet of commercial real estate, wherein it relied on its expertise in managing, developing, marketing and repositioning real estate to maximize the value of each asset. Moreover, the Sterling Project Development Group has supervised and coordinated over $4 billion of construction and development of properties throughout Manhattan and beyond, including the "Lipstick Building" located at 885 Third Avenue, Madoff' fonner office space. 666. Richard Wilpon, Michael Katz and Thomas Ostennan are the Sterling Partners and senior management most closely involved in the real estate management and development portion of Sterling's business, however, upon infonnation and belief any major items concerning this aspect of the business are discussed at every bi-weekly Sterling Partners meeting. 667. In addition to developing and managing real estate properties, starting in or around 1990, Sterling and American Securities partnered to fonn SAP, which operates multiple real estate investment funds that acquire and manage rnulti-family and commercial properties in at least 43 states. To date, SAP has launched at least five funds--SAP I in or around 1991, SAP II in 1996, SAP in 1999, SAP IV in 2002 and SAP in 2006. Collectively, these five SAP funds have invested in over $4.5 billion of real estate assets. 121 668. Richard Wilpon, Michael Katz, Gregory Katz and Thomas Osterinan are the Sterling Partners and senior management directly responsible for managing the various SAP funds, however, upon inforination and belief any major items concerning this aspect ofthe business are discussed at every bi-weekly Sterling Partners meeting. 2. Professional baseball and sports media. 669. Sterling has held an interest in the Mets since 1980 when it initially shared ownership with Nelson Doubleday ("Doubleday"). In 2002, Sterling purchased Doubleday's 50% interest and acquired full ownership ofthe Mets. The Sterling Partners and the Katz/Wilpon Trust Defendants, through various holding companies, including Mets Limited Partnership, own 100% of Sterling Mets LP, the entity through which the Sterling Partners control and operate the Mets. Sterling also owns and operates the Mets' Class A affiliate, the Brooklyn Cyclones. 670. Fred Wilpon, Jeffrey Wilpon, and Saul Katz are the Sterling Partners and senior rnanagernent most closely involved in the business operations ofthe Mets and Brooklyn Cyclones, however, upon inforination and belief any major items concerning this aspect ofthe business are discussed at every bi-weekly Sterling Partners meeting. 671. In or around 2004, Sterling branched into the sports and entertainment media industry when it exercised its option under its agreement with Cablevision to purchase the cable and broadcast rights of the Mets. This decision eventually led to the creation of SNY, a regional sports and entertainment network launched in 2006 that produces sports-related prograrnrning, including all regular season Mets baseball games and other local sporting events programming, such as the New York Jets and the Big East conference. SNY is available to viewers throughout New York, Connecticut, New Jersey and northeastern and nationally on DIRECTV, Dish Network and U-Verse. SNY is operated by Sterling Entertaimnent 122 Enterprises, LLC which was fonned in August 2004 and is majority-owned by Sterling through SEE HoldCo, LLC. 672. Fred Wilpon, Jeffrey Wilpon and Saul Katz are the Sterling Partners and senior 1nanage1nent 1nost closely involved in the business operations of SNY, however, upon infonnation and belief any major ite1ns conceming this aspect ofthe business are discussed at every bi-weekly Sterling Partners meeting. 3. Private equity. 673. Sterling also has invested and continues to invest in various private equity ventures across a diverse range of early stage to completed companies. For example, Sterling owns or owned substantial interests in Changing World Technologies, a company that identifies and develops emerging technologies, and PathoGenesis Corporation, a phannaceutical research co1npany dedicated to developing drug treatments for human infectious diseases. Sterling also holds investments in Twistage, a web-based service that enables businesses to rapidly deploy massively scalable video applications on their websites, as well as certain middle market leveraged buyout vehicles through American Securities. 674. Saul Katz and David Katz are the Sterling Partners and senior 1nanage1nent 1nost closely involved in the business operations of Sterling's private equity ventures, however, upon infonnation and belief any major ite1ns conceming this aspect ofthe business are discussed at every bi-weekly Sterling Partners meeting. B. The Sterling Partners Relied On M:1d0ffT0 Assist The Growth Of Their Businesses 675. After their initial investments with Madoff in 1985, the Sterling Partners structured--and in so1ne cases leveraged--their BLMIS investments to assist the overall growth of their businesses and ensure that they, their family 1ne1nbers, related trusts, and virtually every 123 Sterling-related entity they owned, operated and controlled benefited as much as possible from Madoff" guaranteed positive returns. 676. Sterling's BLMIS investments provided a ready cash flow in the fonn of steady, consistent, non-volatile returns for its real estate, professional baseball and private equity businesses. 1. The Sterling Partners exploited their Madoff access by opening and administering 483 BLMIS accounts for themselves, their families, various related trusts and entities, their friends and employees. 677. For most of the near quarter-century long business relationship between the Sterling Partners and Madoffi Sterling maintained approximately 90% of its securities investments in BLMIS. Starting with a handful of accounts and $3 million in 1985, the Sterling Partners eventually opened and administered 483 BLMIS accounts (the BLMIS Accounts"), the vast majority of which were given a unique identifier by Madof`f-- "Katz/Wilpon" or for short--followed by three distinct digits. 678. The Sterling Partners, their family rnernbers, related trusts and Sterling-related entities controlled and operated by the Sterling Partners held approximately 305 out ofthe 483 KW BLMIS Accounts, 185 of which are the subject of this action and identified in Exhibit A to Appendix I. 679. The remaining approximately 178 KW BLMIS Accounts were opened on behalf of referrals, including friends, business acquaintances, and Sterling employees, all of whom were steered by the Sterling Partners to invest with Madof`f. 680. The Sterling Partners collectively decided to internally track and administer all 483 KW BLMIS Accounts, including those held by individuals whom Sterling referred to Madoff 124 681. As part of this tracking process, Sterling tasked one of its partners, Arthur Friedman ("Friedman"), with the primary responsibility of administering all 483 KW BLMIS Accounts. As part of his duties, Friedman opened and closed accounts, cornrnunicated all BLMIS transaction requests, such as deposits and withdrawals, maintained all BLMIS account paperwork, monitored account balances, and tracked the rnovernent of funds into and out of BLMIS. Friedman also perfonned tax-related tasks and a analysis of the average perforinance across all ofthe KW BLMIS Accounts. To accomplish these tasks, Friedman enlisted the help of his assistant and the staff within Sterling's Partners' Accounting Department. See infra Section VII.D.1. 682. The Sterling Partners and their family rnernbers held approximately 196 KW BLMIS Accounts from which they withdrew approximately $133 million in Fictitious Profits, and approximately $140 million in principal during the six years prior to the Filing Date. These accounts were held individually or structured as joint tenancies (wherein two family rnernbers held interests), or tenancies-in-cornrnon (wherein various Sterling Partners together with their family rnernbers and/or friends pooled their investments and maintained a fixed percentage interest that corresponded to the proportion of funds initially invested). 683. For example, Saul Katz's wife, Iris, and her children (excluding Sterling Partner David Katz) held approximately 30 KW BLMIS Accounts from which approximately $40 million in Fictitious Profits, and approximately $5 million in principal during the six years prior to the Filing Date, were withdrawn. Similarly, Fred Wilpon's wife, Judith, and her children (excluding Sterling Partner Jeffrey Wilpon) held approximately 24 KW BLMIS Accounts from which approximately $30 million in Fictitious Profits, and approximately $7.5 million in principal during the six years prior to the Filing Date, were withdrawn. 125 684. The Sterling Partners, including Saul Katz and Fred Wilpon, had access to the KW BLMIS Accounts held in the names of their wives and children. Saul Katz and Fred Wilpon, and, upon inforination and belief the rest of the Sterling Partners, counted the purported equity in their wives' accounts toward their own total net worth, and also used funds withdrawn from their wives' accounts to meet their personal and/or business financial obligations. 685. The Sterling Partners also opened approximately 44 KW BLMIS Accounts in the names of various trusts. Four of these trusts--the Katz/Wilpon Trust Defendants--held interests across many Sterling businesses, including the Mets, and functioned essentially as entities for the benefit ofthe Sterling Partners, including those who acted as their settlors, namely Saul Katz, Fred Wilpon, Richard Wilpon, and Michael Katz, and those who acted as their Trustees, namely Saul Katz, Fred Wilpon, David Katz, Richard Wilpon, Michael Katz, and Marvin Tepper. See supra Section V.D. Overall, at the direction of the Sterling Partners, the Katz/Wilpon Trust Defendants received approximately $15 million in Fictitious Profits, and almost $54 million in principal during the six years prior to the Filing Date, from BLMIS. 686. Upon inforination and belief each Sterling Partner who acted as a settlor of each Katz/Wilpon Trust Defendant retained beneficial use of his respective trust by counting its assets as his own, directing the rnovernent funds into and out ofthe BLMIS accounts it held for his benefit, and engaging in self-dealing by "selling" it his interests in certain Sterling-related entities at discounted prices. Further, under the direction ofthe Sterling Partners, certain ofthe Katz/Wilpon Trust Defendants also leveraged their BLMIS investments in the same way as many Sterling-related entities by borrowing funds to invest with Madoff using their BLMIS accounts as collateral. See infra Section 126 687. Further, the Sterling Partners collectively decided to open approximately 65 KW BLMIS Accounts in the na1ne of certain entities that they owned, fonned, funded, operated, and controlled. At the direction of the Sterling Partners, approximately $153 million in Fictitious Profits, and approximately $537 million in principal during the six years prior to the Filing Date were withdrawn from these 65 KW BLMIS Accounts for the benefit of the Sterling Partners and/or other Sterling-related entities that they owned, operated, and controlled. 688. In many cases, the Sterling Partners benefitted from such Fictitious Profits and withdrawals of principal by receiving pro rata portions based on their fixed percentage interests in particular Sterling-related entities, which was commensurate with the amount of funds they initially invested in those Sterling-related entities. 689. Moreover, so1ne of the approximately 65 Sterling-related entity KW BLMIS Accounts were opened by the Sterling Partners in the na1nes of limited liability corporations they created for the sole purpose of investing with Madoff and, in many instances, structured to use the existing equity in the account as collateral to borrow funds to invest in the account and double their BLMIS retums with no additional capital outlay. 690. The Sterling Paxtners, their family 1ne1nbers, related trusts, and Sterling-related entities benefitted tremendously from the complex structure ofthe 305 KW BLMIS Accounts opened on their behalf 691. By December 11, 2008, approximately $300 million in Fictitious Profits, and approximately $700 million in principal during the six years prior to the Filing Date, had been withdrawn from the 305 KW BLMIS Accounts held by the Sterling Partners, their fa1nily 1ne1nbers, related trusts and Sterling-related entities. In other words, the Sterling Partners, their families, related trusts and Sterling-related entities benefitted from Madoff's fraud with 127 approximately $300 million of other people's money and withdrawals of over $700 million in principal during the six years prior to the Filing Date. 2. The Sterling Partners structured their Madoff investments to ensure that Madoff money ilowed through every arm of their business. 692. Upon infonnation and belief a substantial portion ofthe BLMIS funds withdrawn by the Sterling Partners, their family members, related trusts and entities out of their 305 KW BLMIS Accounts, including approximately $300 million in Fictitious Profits and, during the six years prior to the Filing Date, over $700 million in principal, was used to develop, grow and sustain Sterling's business. In fact, every aspect of Sterling's business--real estate, professional baseball, and private equity--held investments with Madoff through approximately 65 BLMIS accounts, which benefitted from Madoff' Ponzi scheme. 693. Specifically, Sterling opened at least a dozen KW BLMIS Accounts with Madoff related to its real estate ventures, including, but not limited to, l57 .E.S. LLC which was related to property located at l57 Second Avenue, New York, NY, Charles l5 Associates (lKWl34) and other associated accounts (lKWl56, lKWl80, lKW34l, lKW4l3, and lKW4l4), which were related to residential, retail and garage condominium units located at l5 Charles Street, New York, NY, Ruskin Gardens (lKWl89), which was related to Ruskin Gardens apartments located in Kansas City, Missouri, College Place Enterprises and which were related to a Sterling company that owned and operated property located at 48 Love Lane in Brooklyn, NY, and Robbinsville Park LLC which was related to property located in Robbinsville, NJ. 694. Moreover, Sterling created KW BLMIS Accounts to house the Sterling Partners' capital commitments to various SAP funds while at the same time earning steady returns. For instance, Sterling opened a KW BLMIS Account in the name of Sterling Internal LLC l28 (1KW43 5), which was funded with $75 million in loan proceeds and subsequently used to 1neet a substantial portion of Sterling Partners' capital co1n1nit1nents to SAP V. See infra Section 695. Sterling's real estate business had an additional tie to Madoff. Along with the Sterling Partners, Madoff--through his wife Ruth--invested millions of dollars in all five SAP funds, and Peter Madoff Madoff's brother, invested millions of dollars in at least three ofthe five SAP funds. See infra Section VII.E. Upon infonnation and belief at least $11.4 million of the Madoffs' investments in SAP were funded by other people's 1noney as they were transferred to Sterling fro1n Madoff' business-related bank accounts. 696. Sterling's professional baseball and sports media business also benefited fro1n the Madoff fraud. See infra Section The Mets and the Brooklyn Cyclones had approximately 16 BLMIS accounts (the "Mets-related KW BLMIS Accounts"). 697. Sterling withdrew over $94 million of Fictitious Profits fro1n the opening dates of the Mets-related KW BLMIS Accounts to the Filing Date and approximately $344 million in principal during the six years prior to the Filing Date fro1n the Mets-related KW BLMIS Accounts. 698. Thus, al1nost one-third ofthe approximate $300 million in Fictitious Profits Sterling made fro1n its Madoff investments supported Sterling's professional baseball and sports media business and, specifically, the Mets. Upon infonnation and belief a significant a1nount of the $94 million Sterling received of other people's money went to fund the day-to-day operations of this Major League Baseball franchise. [al 699. Madoff 1noney played other 1nore nuanced roles in Sterling's professional baseball and sports media business. For instance, upon infonnation and belief to help secure 129 refinancing ofthe Mets' debt in 2004, Sterling cited Madoff" near-perfect returns and steady, impressive gains as proof ofthe organization's financial stability. See infra Section V1I1.E. 700. Sterling's private equity investments also benefitted from KW BLMIS Accounts. For example, one of Sterling's most profitable private equity investments was PathoGenesis Corporation, Sterling held a KW BLMIS Account called Sterling Pathogenesis (1KW175) from which it withdrew approximately $19 million in Fictitious Profits before it closed in 2001. The Sterling Pathogenesis BLMIS account was also one of the first so-called "double up" accounts wherein the Sterling Partners used their BLMIS accounts as collateral to borrow funds to double the amount invested in these accounts and thereby double their returns. See infra Section V1II.D.1. 701. Finally, Sterling used its internal bank, Sterling Equities Funding which is 100% owned by the Sterling Partners, to move Madoff funds to many of its business ventures. Upon inforination and beliei between 2003 and 2008 alone, at least $135 million in withdrawn funds from Sterling's KW BLMIS Accounts passed through SEF, which thereafter fueled Sterling's diverse businesses. See infra Section C. Sterling Partners Expanded Their Business T0 Include Their Own Hedge Fund--Sterling Stam0s--As An Alternative T0 Madoff 702. In June 2002, Sterling entered the hedge fund business creating Sterling Stamos, a partnership between Sterling and Peter Stamos ("Stamos"), a highly sophisticated, educated, and experienced businessman with personal ties to Saul Katz. 703. Sterling Stamos was forined to provide the Sterling Partners with an alternative to investing with Madoff 130 704. In just six years, by September 2008, Sterling had moved millions of dollars out of BLMIS to Sterling Stamos, leaving a little over $400 million with Madoff and approximately $393 million with Sterling Stamos, a roughly equal division of Sterling's liquid assets. 705. Upon inforination and belief over the period from June 2002 to December 2008, the Sterling Partners became familiar with the business and investment operations and rnanagernent of a hedge fund, including due diligence requirements and the various investment industry red flags typically associated with potentially fraudulent investment funds or managers. 706. Upon inforination and belief as early as the late 1990s, Sterling Partner and Saul Katz's son, David Katz, expressed concerns to the Sterling partnership about the large concentration of Sterling's securities investments in one single investment manager, Madoff especially in light of Madoff' non-transparent black box strategy. 707. In 200l, on the heels of Sterling learning about various financial industry players' concerns about Madoff and BLMIS (see infra Section IX.A), as well as the Sterling Partners' futile attempt to obtain fraud insurance to cover the full breadth of their Madoff investments (see infra Section upon information and belief Saul Katz finally agreed with David Katz's recornrnendation. 708. David and Saul Katz began discussing in earnest the possibility of creating an alternative investment vehicle to Madoff that could house some ofthe Katz-Wilpon family's liquid investments. The end result was the creation of a fund of funds hedge fund that invested capital into numerous funds run by a variety of managers headed by Stamos.5 5 Stamos has a wide array of professional experience, including forming his own health care consulting company, Stam os Associates, Inc., which he sold in l997, Senior Management Consultant at consulting firm, McKinsey Co., Chief of Staff and Chief Economist to former U.S. Senator Bill Bradley, and Professor of Economics at both Harvard University and Stanford University. Stamos currently serves on Major League Baseball's investment advisory board, on which he has served as the inaugural Chairman since 2007. l3l 709. Stamos met Saul Katz in the rnid-1990s through Stamos' involvement with North Shore Long Island Jewish Health System ("North Shore Stamos worked as a health care consultant and Katz served as Chairrnan ofthe North Shore LU Board. Through Saul Katz, Stamos came to know David Katz, Fred Wilpon and the other Sterling Partners. 710. In June 2002, Stamos and Sterling created Sterling Stamos as the vehicle for the Sterling Partners to move money out of Madoff 711. Sterling Stamos was forrned as a 50-50 partnership between Stamos and Sterling, with all ofthe Sterling Partners contributing a pro rata share of that 50% interest. Sterling and Stamos forrned Sterling Stamos Capital Management, LP to provide rnanagernent and administrative services to the various private investment funds. At the time SSCM was forrned, Sterling and Stamos each had a 50% interest in SSCM. Sterling Stamos Associates GP, LLC served as the general partner for the funds. As the general partner, SSA GP is responsible for the rnanagernent and investment strategy for the investment funds. Upon the creation of Sterling Stamos, the Sterling Partners were investors in SSCM and also general partners in SSA GP. As general partners, the Sterling Partners were ultimately responsible for the rnanagernent and investment strategy for the funds. 712. The Sterling Partners provided much of the start-up capital for the venture. Upon inforrnation and belief at least a portion of that funding was derived from withdrawals from various KW BLMIS Accounts. 713. In addition to providing start up capital as general partners, the Sterling Partners invested substantial capital into the various Sterling Stamos funds as limited partners. Upon inforrnation and belief a substantial portion of these contributions were funded by withdrawals from various KW BLMIS Accounts. 132 714. From 2002 through July 2005, Sterling Stamos ran its business out of Sterling's New York City office, located at 575 Fifth Avenue, where it shared office space and operational capabilities, such as infonnation technology, with Sterling. 715. Sterling Stamos had an infonnal investment co1n1nittee that discussed and evaluated potential managers and funds in which to invest. In addition to Stamos, Saul Katz, and David Katz, other 1ne1nbers of this infonnal investment co1n1nittee included Chuck Klein, head of American Securities, and Ezra Merkin, who managed his own hedge funds, some of which invested with Madoff 716. Many Sterling Stamos investors were also invested in BLMIS, including so1ne of the sa1ne friends and business acquaintances whom the Sterling Partners had referred to BLMIS. 717. Shortly after Sterling Stamos was established, it attracted the interest of Merrill ("Merrill"). In or around June 2004, Merrill became a distribution agent for Sterling Stamos and marketed Sterling Stamos' funds to its institutional clients. In early 2007, Merrill first expressed an interest in acquiring a stake in Sterling Sta1nos. 718. On or about July 1, 2007, Sterling Stamos sold Merrill a 50% non-controlling interest in the company half of Sterling's 50% interest, and half of Stamos' 50% interest. For its stake, Sterling received $115 million. After the acquisition, Merrill added three representatives to the Sterling Stamos Board of Directors, including one of its senior executives who raised serious concerns about Madoff and BLMIS. See infra Section IX.A.2. In connection with the acquisition, Merrill also insisted that Sterling Stamos undergo certain structural changes, such as improving its due diligence policies and protocols to confonn with Merrill's standards. 133 719. Upon infonnation and belief Sterling Stamos' partnership with Merrill exposed the Sterling Partners, especially Saul Katz and David Katz, to Merrill's due diligence standards and opinions conceming certain investment managers, including Madoff Id. 720. As discussed in more detail below, various Merrill officers, including one senior executive in particular, communicated concems about Madoff and BLMIS to 1ne1nbers of the Sterling paxtnership. Indeed, as explained in Sections IX.A.1 and 2, the Sterling Partners' ownership of and involvement in Sterling Sta1nos exposed the1n to a litany of red flags conceming Madoff and BLMIS, including those raised by Sta1nos and Merrill. Id. 721. While Stamos served as President and Chief Executive Officer of Sterling Sta1nos, Saul Katz and David Katz had significant roles in rumiing and growing the business. 722. Upon infonnation and belief, between approximately June 2002 and June 2005, Saul Katz and David Katz were involved in the operational and business management, as well as certain investment decisions of Sterling Sta1nos, including, but not limited to, the selection of certain funds and fund managers. 723. Prior to June 2005, Saul Katz and David Katz were identified in Sterling Stamos marketing materials as part ofthe "Senior Investment Team," along with CEO Sta1nos and chief investment strategist, Ashok Chachra ("Chachra"). 724. Prior to June 2005, Saul Katz and David Katz were also identified in hedge fund questionnaire responses as two ofthe four primary portfolio decision makers for Sterling Sta1nos, the other two being Stamos and Chachra. 725. Upon infonnation and belief prior to June 2005, no significant business decision at Sterling Sta1nos was 1nade without Saul Katz's approval. 134 726. David Katz managed one of Sterling Stamos' funds, SP Trading, for approximately one year. 727. Upon infonnation and belief in their roles at Sterling Stamos, Saul Katz and David Katz became familiar with indicators often tracked by hedge funds to gauge fund perfonnance, including average rate of return, percentage of positive months, standard deviation, and Sharpe Ratio an investment's risk-to-return trade off). Sterling--through Saul Katz and David Katz--had access to, and on occasion received, sophisticated analyses by Sterling Stamos that compared the perfonnance of various Sterling Stamos funds to BLMIS and included the commonly used hedge fund indicators listed above. 728. Upon infonnation and belief Saul Katz and David Katz were familiar with Sterling Stamos' due diligence processes for vetting potential investment managers. 729. Upon infonnation and belief as both general partners and limited partners of Sterling Stamos, all the Sterling Partners also became familiar with Sterling Stamos' due diligence process. 730. And as discussed in detail in Section IX.A.1 below, upon infonnation and belief the Sterling Partners were aware that Madoff did not and, in fact, could not pass Sterling Stamos' due diligence standards. 731. Despite having access to these resources, Sterling conducted no diligence in response to the serious concerns raised about Madoff and BLMIS. See injimr Section X. VII. QUARTER--CENTURY RELATIONSHIP WITH MADOFF A. The Madofi`s, Wilpons And Katzes Had A Close Friendship And Business Relationship 732. The begir1r1ing of Madoff' and Sterling's relationship dates back to the late 1970s when the Madoff and Wilpon families lived in Roslyn, Long Island. Fred Wilpon's son, Jeffrey, 135 and Madoff' sons, Mark and Andrew, attended school together and became close friends. Through their children's friendship, Fred and Judith Wilpon became close friends with Madoff and his wife, Ruth. Fred Wilpon knew at that time that Madoff was in the investment business and, thereafter, Madoff learned that Fred Wilpon's family-run business, Sterling, invested in real estate, held a partnership interest in the Mets, and had venture capital investments. 733. It was not long before Madoff and Fred Wilpon fonned a mutually beneficial relationship whereby Madoff invested in some of Sterling's real estate ventures and Fred Wilpon invested in BLMIS. 734. As the business relationship with Madoff grew, so did the personal relationship between the Madoff and Katz/Wilpon families. Fred Wilpon and his wife, Judith, frequently socialized with Madoff and his wife, Ruth. Madoff also became integrated into the close family network at Sterling. For example, Madoff was often invited to and attended family events ofthe Katz and Wilpon families, such as Jeffrey Wilpon's wedding and the bar mitzvahs of the Sterling Partners' children and grandchildren, where many members ofthe Sterling partnership were often present. Madoff in tum, often invited the Katz and Wilpon families to family celebrations, such as the weddings of his sons and cocktail parties and dinners at his home. 735. Madoff held Mets season tickets with seats close to Saul Katz and Fred Wilpon. Madoff and his wife, Ruth, even accompanied Saul Katz and Fred Wilpon (and their wives) to Japan one year when the Mets played exhibition games overseas. 736. Sterling assisted Madoff with moving into the now infamous Lipstick Building. At the time, Sterling was involved in the development ofthe Lipstick Building. Wanting to move uptown, Madoff approached Fred Wilpon regarding renting available office space and Madoff eventually negotiated a deal with Sterling and Sterling's partner, Hines. 136 737. Madoff and his wife Ruth also worked with Katz and Wilpon family members and other Madoff investors on boards of various charitable organizations. For example, Fred Wilpon was a board member of a charity called "Gift of Life," along with Madoff (who was Chainnan of the Board), Ruth Madofi and other individuals closely associated with Madofi including Edward Blumenfeld, Maurice Cohen, Robert Jaffe, and Ezra Merkin. Indeed, this group held a meeting at Madoff' office on December 8, 2008, merely days before the collapse of BLMIS. 738. Saul Katz and Fred Wilpon were also members of a charity called "Partners for Life," together with Madofi Ruth Madofi members of Madoff' family, Robert Jaffe and his wife, Ellen, Edward Blumenfeld and his wife, Susan, Maurice Cohen and his wife Marilyn, Stanley Chais and his wife, Pamela, and Carl Shapiro. 739. BLMIS and/or Madoff also frequently donated to charitable organizations in which Saul Katz, Fred Wilpon, and their family members participated. For example, BLMIS donated funds to City Center, a charity for which Judith Wilpon was co-chair of the board and to the National Center for Disability Services, with which Iris Katz was involved. Madoff made large donations to the North Shore LIJ, in which Saul Katz was intimately involved. 740. Based on the deep personal relationship between Saul Katz and Fred Wilpon and Madofi Sterling had unique and direct access to Madoff and his staff whenever necessary--a privilege very few enjoyed. 74l. Fred Wilpon and Saul Katz had meetings with Madoff in his office at least once a year to discuss the status of Sterling's investments and projected retums. Upon infonnation and belief Saul Katz also spoke directly with Madoff frequently--for certain periods of time, on a l37 daily basis. With few exceptions, when Saul Katz called BLMIS, he did not speak to anyone other than Madoff B. The Sterling Partners, Families, Trusts And Entities Withdrew Approximately $300 MiHion Of Other People's Money From Their BLMIS Accounts 742. Between 1985 and 2001--before the creation of Sterling Stamos--Sterling's Madoff investments grew exponentially both in tenns of the amount invested and the number of accounts. Since at least 1994 through 2001, Sterling held approximately 90% of its securities investments in BLMIS. 743. The Sterling Partners first opened a handful of KW BLMIS Accounts in or around October 1985: one in Fred Wilpon's name, one in Saul Katz's name, and one in the name of Sterling Equities Funding c/o Michael Katz. 744. Within a little over a year, the Sterling Partners had opened an additional 12 KW BLMIS Accounts, including accounts in the name of at least one real estate venture, and those held as joint tenancies between various Sterling Partners and their wives, family trust accounts for Fred Wilpon and Saul Katz, and tenant-in-co1n1non accounts with various Sterling Partners and family members holding fixed percentage interests. 745. By 1990, Sterling had opened approximately 58 KW BLMIS Accounts with about $50 million invested, and by 2001, Sterling had opened approximately 246 KW BLMIS Accounts with about $798 million invested. This constituted an increase of almost 1,500% in just over 10 years. 746. Over the course of Sterling's and Madoff' almost quarter-century business relationship, the Sterling Partners opened at least 305 KW BLMIS Accounts on behalf of themselves, their family members, trusts, and Sterling-related entities. By December of 2008, the Sterling Partners, family members, trusts and entities had withdrawn approximately $300 138 million of Fictitious Profits, and over $700 million in principal during the six years prior to the Filing Date, from BLMIS. C. Sterling Steered Dozens Of Friends, Business Associates, And Their Own Employees To Madoff 747. Soon after the Sterling Partners opened their own KW BLMIS Accounts, they began opening KW BLMIS Accounts for friends, close business acquaintances, and Sterling employees--all of whom they referred to Madoff 748. By December 2008, Sterling had referred approximately l78 "outsider" investor accounts to Madoff The list of outsiders with KW BLMIS Accounts opened by Sterling is as varied as it is long. Sterling's referrals of outsiders provided Madoff with hundreds of millions of dollars in additional capital to further his fraud. Moreover, these outsiders profited from the fraud as they withdrew approximately $67 million in Fictitious Profits from BLMIS. 749. To obtain a coveted BLMIS account through Sterling, however, was not easy. Sterling internally needed to approve the account, and Saul Katz had the final say. Far more outsiders were turned down than actually got into the elite pool of Madoff investors through Sterling. 750. Sterling took great strides to insulate the outsider account-holders from Madoff as one of the requirements to obtain a BLMIS account through Sterling was that all cornrnunications regarding the account had to go through Sterling, never directly through Madoff or anyone else at BLMIS. 75l. Sterling also used the ability to obtain a Madoff account as an employee incentive. Upon cornrnencing ernployrnent with Sterling, many employees were told that they could have an opportunity to open a BLMIS account. 139 752. Similarly, Sterling also offered its employees the opportunity to invest with BLMIS through its 40l(k) plan. See infn Section IX.B.3. By December 2008, approximately 90% of the Sterling 40l(k) plan was invested in BLMIS. 753. Despite referring its friends, business acquaintances, and employees to BLMIS-- indeed, even offering BLMIS as a 40l(k) plan investment option--Sterling perfonned no diligence on Madoff or BLMIS in response to any of the various red flags to which it was exposed. See infn Section X. D. Sterling Administered 483 BLMIS Accounts On Behalf Of The Sterling Partners, Families, Trusts, Entities, Friends, Business Associates, and Employees 1. Sterling Partner Arthur Friedman tracked, monitored, and acted as BLMIS liaison for all 483 BLMIS Accounts. 754. Madoff requested that Sterling have a single point person with respect to its hundreds of KW BLMIS Accounts. In response to Madoff' request, Sterling developed an elaborate system to monitor and administer the KW BLMIS Accounts. This system was run by Sterling Partner Arthur Friedman individual designated by Sterling as the intennediary between Sterling and BLMIS. 755. Friedman was responsible for opening and closing all Sterling-related BLMIS accounts, as well as cornrnunicating to BLMIS all transaction requests, including deposits, transfers and withdrawals. Friedman had frequent contact on a weekly, if not daily, basis with BLMIS and, typically, Frank DiPascali ("DiPascali"), Sterling's assigned point of contact with respect to the day-to-day administration of its hundreds of accounts. Over the course of Sterling's investment relationship with Madoff Friedman wrote hundreds of letters to DiPascali detailing transaction requests with respect to the KW BLMIS Accounts. 140 756. Friedman maintained the paperwork provided by BLMIS concerning all Sterling- related KW BLMIS Accounts, including account opening statements, trade confinnations, statements, and portfolio management reports. 757. Friedman supervised Sterling's tracking of KW BLMIS Account balances and transactions, such as deposits, withdrawals and transfers using Sterling's internal accounting system. Friedman worked with the Partners' Accounting Department to ensure that it received the BLMIS-related data to be tracked on the internal accounting system. 758. Friedman monitored rates of return for Sterling's KW BLMIS Accounts. Friedman calculated average and yearly rates of return across all Sterling-related KW BLMIS Accounts typically using a random sampling of accounts, and then reported this infonnation to the Sterling Partners. 759. Friedman had the responsibility of reporting on Madoff' perfonnance at the bi- weekly Sterling Partners meetings where Madoff was always its own agenda topic. 760. In addition to monitoring Madoff' rates of return, Friedman closely tracked the balances within the KW BLMIS Accounts and calculated each Sterling Partner's purported equity in BLMIS taking into account the varying interests held in each of their dozens of accounts with Madoff 76l. Friedman and the Partners' Accounting Department created what was known at Sterling as the "Hell Sheet," which calculated the balances ofthe hundreds of KW BLMIS Accounts held by each Sterling Partner or family member, and the percentage of that balance held by each Sterling Partner or family member based on his or her interest in a particular account. l4l 762. Friedman oversaw the year-end tax reporting process for all the KW BLMIS Accounts, including the "outsider" referral accounts. This entailed, among other things, receiving infonnation from BLMIS and reconciling that infonnation with each Sterling Partner's interests across a multitude of accounts. 763. Friedman even devised a calculus to maximize the "efficiency" factor of the KW BLMIS Accounts. This efficiency factor was based on his understanding of Madoff' alleged strategy and the number of puts Madoff claimed to purchase based on the funds in a particular account. Friedman calculated the amount of money necessary to purchase one put and then often notified accountholders--Sterling Partners, family rnernbers, employees, and "outsiders"--of the money required to be added to their BLMIS accounts to ensure that they maximized the number of puts Madoff would purchase and, in doing so, received the most beneficial returns on their investments. 764. Moreover, in or around the late 1980s, Friedman tried--unsuccessfully--to replicate Madoff' split-strike conversion strategy by mimicking the transactions reflected on trade confinnations. Friedman carefully applied the strategy as Madoff had described it, but he always lagged behind Madoff by a significant percentage return. Friedman cornrnunicated the results of his analysis to the Sterling Partners, yet Sterling in response failed to undertake any diligence regarding Madoff 765. Years later, Friedman enlisted the help of others to try to reverse engineer Madoff' strategy--again to no avail. Specifically, in or around 1nid-2005, Friedman tasked his executive assistant ("Friedman's Executive Series 6 licensee who formerly worked as a financial consultant--with the job of trying to understand how Madoff applied the split-strike conversion strategy. Despite her financial background and detailed knowledge ofthe l42 KW BLMIS Accounts, Friedman's Executive Assistant was never able to fully understand or duplicate Madoff's strategy. 2. Sterling m:mipul:1ted ten:1nt--in--common BLMIS Accotmts to maximize SIPC protection. 766. Very early on, 1nany of Sterling's KW BLMIS Accounts were fonned as TIC accounts. These TIC accounts typically were funded with the partners' (and so1neti1nes their fa1nily members' and/or related trusts') excess cash on hand, and thereafter each partner's fixed percentage interest in that particular TIC account corresponded to the percentage of his initial investment. Every time a withdrawal was made from a TIC account, each TIC interest-holder received his or her corresponding percentage interest. Over time, the Sterling Partners opened and invested in close to 100 TIC accounts. 767. At the outset, Sterling created the TIC accounts as a method to maximize the protections provided by the Securities Investment Protection Corporation 768. As administrator of the KW BLMIS Accounts, one of Friedman's early assigmnents was to verify that Madoff was a SIPC member and clarify its coverage rules. In or around February and March 1987, Friedman confinned with the Sterling Partners his understanding that SIPC provided protection of up to $500,000 for each realistically different BLMIS account and that each joint and/or TIC account would be separately covered by SIPC protection so long as each co-owner of the account possessed the authority to act with respect to the entire account. 769. Friedman co1n1nunicated the results of this inquiry to the Sterling Partners in writing and also wrote a letter to Annette Bongiomo at BLMIS infonning her that with respect to the Sterling accounts currently open at BLMIS, for every account with more than one owner, each co-owner possessed the authority to act with respect to the entire account. 143 770. Initially, the Sterling Partners intentionally structured their BLMIS accounts to be under $500,000 so the accounts could receive what they believed to be the 1naxi1nu1n amount of SIPC coverage. For example, in May 1986, Sterling withdrew $838,000 and $72,000 from two Prudential accounts, respectively, in the name of Sterling Third Associates and College Place Enterprises Profit Sharing Plan, each of which were associated with real estate ventures, with the intention of investing these assets with Madoff Sterling then opened KW BLMIS Accounts in the same names as the Prudential accounts, however, rather than deposit $838,000 into the Sterling Third Associates KW BLMIS Account and $72,000 into the College Place KW BLMIS Account, Sterling transferred approximately $430,000 into the Sterling Third Associates KW BLMIS Account and approximately $480,000 into the College Place KW BLMIS Account so that each of these two accounts would fall under $500,000, thereby maximizing the SIPC protection as understood by Friedman. 771. This practice infonned the opening and administration of many subsequent KW BLMIS Accounts. It only ended when Sterling's investments in BLMIS became too large to break up into discrete $500,000 incremental TIC accounts. E. Madoff Invested Approximately $12 Million In Sterling Business Ventures 772. In the early stages of Sterling's and Madoff' relationship, Madoff was offered the opportunity to invest in Sterling's lucrative real estate deals and business ventures. When the Sterling Partners looked for outside investors, they often turned to Madoff as a potential source of capital. 773. Over the years, Madoff invested at least $12 million in half a dozen Sterling investment vehicles. Upon infonnation and belief Madoff used other people's money to make most--if not all--of these Sterling-related investments. 144 774. The only ti1ne Sterling offered Madoff an opportunity to invest that he declined was in the Mets, when in 2002, Doubleday sold its 50% ownership of the Mets and Sterling offered Madoff partial ownership interests in the franchise. 775. Madoff first invested in Sterling in or around 1991 when Sterling fonned the first of five SAP real estate investment funds. To execute this investment in SAP I, a Sterling-related entity called "Madoff Realty Associates" was fonned as a partnership between two Sterling- related trusts and Madoff wherein Madoff owned 60%. This investment proved lucrative to Madoff who made over $2 million off of his initial contribution of just over $4 million--a rate of retum of over 50%. 776. Madoff invested in each ofthe four subsequent SAP funds: SAP II in December of 1996 through a Sterling-related entity called "Realty Assoc Madoff in which two Sterling-related trusts owned 20% and Madoff owned 60%, SAP in April 1999, SAP IV in July 2002, and SAP in 2006. 777. Madoff' brother, Peter Madoff also invested 778. Approximately $11.4 million of the Madoffs' investments in SAP--including those in the name of Ruth Madoff and Peter Madoff--were funded out of BLMIS bank accounts. 779. Madoff also held an interest of more than 4% in a Sterling-related entity called Sterling Acquisitions, which invested venture capital in various companies, including an energy business called Changing World Technologies. In connection with this investment, Madoff transferred over $592,000 to Sterling from BLMIS bank accounts. Additionally, Madoff invested in at least one other Sterling venture capital business, a medical research company called PathoGenesis Corporation. Further, Madoff invested in two Sterling-related entities called 145 Sterling Carl Marks Capital, a small business investment company, and Sterling Vessels, an entity created to invest in various maritime carriers. 780. Each of Madoff' investments in Sterling-related businesses, ventures, or entities was placed in Ruth Madoff' name, even though none ofthe Sterling Partners ever had any business dealings with Ruth Madoff; their dealings were always with Madoff himself. 781. Although Madoff placed these investments in Ruth Madoff' name, the funds for each of these investments never came from Ruth Madoff but instead from BLMIS. MADOFF MONEY AIDED THE GROWTH OF THE STERLING WHICH PROVIDED EVERY INCENTIVE TO IGNORE INDICIA OF FRAUD 782. Sterling treated its millions of dollars in BLMIS investments as the fourth ann of its business. In addition to Sterling's long-tenn investments with Madoff the Sterling partners regularly put excess cash into BLMIS and moved money in and out on a short-tenn basis, often using BLMIS withdrawals to fund business operations. Implicit in this use of BLMIS for short- tenn cash rnanagernent was the assumption that Madoff would consistently generate positive, non-volatile, and essentially risk-free returns. Typically, such an assumption can only be made for FDIC-insured savings and checking accounts--not for investment accounts purportedly invested in volatile securities and options. 783. Rather than follow a traditional cash rnanagernent strategy, the Sterling Partners relied on BLMIS accounts as a primary source of liquidity--even though the funds in these BLMIS accounts were purportedly invested in inherently volatile and risky securities and options. 784. To irnplernent this strategy, Sterling opened approximately 65 KW BLMIS Accounts in the name of dozens of different Sterling-related entities, including many of the Sterling Entity Defendants, across all lines of Sterling's business. 146 785. Upon infonnation and belief the Sterling Partners directed and controlled the Sterling Entity Defendants and their KW BLMIS Accounts and retained the beneficial use of the funds in such accounts. 786. The Sterling Partners directed the Sterling Entity Defendants' BLMIS investments, including the withdrawal and disbursement of funds fro1n their KW BLMIS Accounts, as well as the transfer of funds between and among such accounts and the other KW BLMIS Accounts in which they, their family 1ne1nbers, trusts and other related entities held interests. 787. Under the direction and control of the Sterling Partners, many ofthe Sterling Entity Defendants' KW BLMIS Accounts were used as the primary sources of liquidity out of which many business expenses were paid, while others were created for the specific purpose of investing in BLMIS. 788. Over the course of its almost quarter-century investment relationship with Madofi Sterling withdrew over $153 million in Fictitious Profits from the Sterling Entity Defendants' KW BLMIS Accounts. Such funds benefitted both new and existing Sterling ventures, including the Mets and various real estate ventures, and also provided cash flow to Sterling's intemal bank--SEF, a clearing house for the 1nove1nent of inter-mingled funds and obligations among the Sterling Partners, their family 1ne1nbers, trusts, and Sterling-related entities. 789. The Sterling Partners also utilized certain KW Entity Accounts to leverage Sterling's BLMIS investments by exploiting the purported equity within the accounts as collateral for a multitude of bank loans, the proceeds of which were either invested in other facets ofthe Sterling business or re-invested into BLMIS. The Sterling Partners also used the 147 purported equity in Sterling's BLMIS accounts to support their net worth and creditworthiness and convince banks to extend them other business loans thereby allowing the1n access to the capital needed to consu1n1nate key business deals that might not have been otherwise available. 790. Sterling was so dependent upon Madoff' investment retums to fund its operations, provide collateral on vital loans, and support its creditworthiness that upon revelation of Madoff' fraud, Sterling faced a severe and i1n1nediate liquidity crisis. Because Sterling considered its BLMIS investments so highly liquid, when BLMIS collapsed, it had very little actual cash on hand. This prompted a complete and comprehensive restructuring of Sterling's debt facilities, not just the millions of dollars of debt secured by KW BLMIS Accounts. A. Sterling Used BLMIS Accounts To Support The Operations Of The New York Mets 791. The quintessential example ofthe intertwined nature of Sterling's business and its investments with Madofi as well as Sterling's unorthodox use of its BLMIS accounts in lieu of a traditional cash 1nanage1nent strategy, is the Mets. 792. As discussed earlier, the Sterling Paxtners withdrew over $94 million in Fictitious Profits fro1n the opening dates of the Mets-related KW BLMIS Accounts to the Filing Date and approximately $344 million in principal during the six years prior to the Filing Date fro1n the Mets-related KW BLMIS Accounts. 793. Many of these Mets-related KW BLMIS Accounts were used to provide the cash flow necessary to run the day-to-day operations ofthe Mets. Specifically, the cash withdrawals fro1n Sterling's Mets-related KW BLMIS Accounts, which included Fictitious Profits, were critical to Sterling's ability to run the Mets because they were used to cover significant expenses, such as payroll, players' deferred compensation, and stadium operations. In fact, the estimated 148 returns from the Mets-related KW BLMIS Accounts were consistently built into the Mets' cash flow projections and budget analyses. 794. The pattern of Sterling's deposits and withdrawals into and out ofthe Mets- related KW BLMIS Accounts reflect the seasonality ofthe Mets' business. Approximately 80% ofthe total deposits into the Mets-related KW BLMIS Accounts were during baseball's off- season months of October through March. Conversely, approximately 75% ofthe total withdrawals from the Mets-related KW BLMIS Accounts were during baseball's regular season months of April through September. 795. When the Mets needed money, the Sterling Partners withdrew funds from the Mets-related KW BLMIS Accounts. For example, when faced with liquidity issues, such as lags in ticket sales, Sterling frequently "scraped" from these accounts to address the cash shortages. 796. In addition, the withdrawals from the Mets-related KW BLMIS Accounts were so important to the smooth operation of the Mets that Sterling often provided Madoff with advance notice of these withdrawals, specifying dates and amounts. This process ensured that Madoff had adequate ti1ne to make the cash available to the Mets--regardless of whether he was supposedly in or out ofthe market. 797. Sterling's use of the Mets-related KW BLMIS Accounts in lieu of traditional cash 1nanage1nent practices evidences the Sterling Pa1tners' willingness to ignore the risks and volatility nonnally associated with owning stocks and options, as well as their unrealistic confidence in Madoff' high and consistent retums. Despite this reliance and the implausibility of such consistent retums month after month and year after year--including during periods of significant fluctuations in the market--Sterling conducted no diligence on Madoff or BLMIS in response to the red flags of which it was aware. See infra Section X. l49 B. Sterling Employed BLMIS Accounts To Meet Capital Commitments 798. SAP V, the fifth real estate fund created out of Sterling's partnership with American Securities, is another example of how the Sterling Partners funded and grew one of their key businesses using their BLMIS investments. 799. SAP was forrned in April 2006 by Sterling and American Securities as general partners holding a 90% and 10% interest, respectively. SAP was comprised of limited partner capital commitments of $150 million from Sterling, at least $15 million from American Securities, and approximately $444 million from third-party investors. 800. Upon inforrnation and beliei undisclosed to the third-party limited partner investors, however, Sterling used very little of its own money to meet this $150 million commitment and instead relied on borrowed funds and BLMIS investment proceeds. In fact, upon inforrnation and beliei Sterling was only able to meet this funding commitment because of its investments with Madoff 801. Specifically, in or around June 2006, Sterling funded at least half of its $150 million commitment through Sterling Internal LLC, an entity in which various Sterling-related trusts, partners, and employees held membership interests and that, upon inforrnation and beliei invested exclusively with Madoff 802. Sterling Internal LLC borrowed $75 million--half of Sterling's $150 million commitment--from Bank of America via a syndicated loan. Upon inforrnation and beliei in evaluating this loan, Bank of America was influenced by both the large purported balances in BLMIS accounts held by the Sterling Partners and related entities, and the consistent returns generated by those accounts. 803. In or around July 2006, Sterling opened a KW BLMIS Account in the name of Sterling Internal LLC (IKW435) to house the proceeds of this loan for safekeeping. Upon 150 infonnation and belief Sterling withdrew funds from this account--including the Fictitious Profits generated by its purported rate of return of approximately 10%--to cover both the interest payments on the loan, as well as half ofthe funds necessary to meet SAP V's capital calls. To accomplish this objective, the Sterling Partners withdrew over $51 million from the Sterling Internal LLC BLMIS account between December 2006 and July 2008. 804. Upon infonnation and belief the other half of Sterling's portion of SAP V's capital calls were typically advanced by SEF, which was then reimbursed by various Sterling Partners and related entities, at least in part, via withdrawals from various KW BLMIS Accounts. 805. Indeed, upon infonnation and belief every mechanism in place to enable Sterling to meet its $150 million capital co1n1nit1nent to SAP touched BLMIS directly or indirectly and allowed the Sterling Partners to claim that they made a substantial commitment without having to put up much of their own capital. 806. As ofthe first quarter of 2010, SAP acquired approximately 4,600 residential units and 2.8 million square feet of office space. Sterling derived significant income from SAP as a result of its 90% general partnership interest, which entitled it to 90% ofthe general partners' management fee of 1.5% ofthe capital committed during the investment period. For example, in 2009 alone, Sterling received approximately $9 million in management fees as a result of its general partner interest in SAP V. C. Sterling Depended On BLMIS Accounts To Provide Cash Flow To Its Businesses Through Its Internal Bank, Sterling Equities Funding 807. An integral part of the funding strategy for expanding Sterling's businesses over the last tl1ree decades was Madoff" purported earnings. Over the history of the Madoff/ Sterling relationship, the BLMIS investments made by the Sterling Partners, their family members, related trusts and entities collectively netted approximately $300 million in Fictitious Profits, and 151 over $700 million in principal withdrawals during the six years prior to the Filing Date, which were, in part, used as fuel for Sterling's businesses. A core component of this funding strategy was SEF, Sterling's internal bank that is 100% owned by the Sterling Partners and acts as a clearing house for the 1nove1nent of inter-mingled personal and business funds used to 1neet various obligations a1nong the Sterling Partners, their fa1nily 1ne1nbers, related trusts, including the Katz/Wilpon Trust Defendants, and entities, including the Sterling Entity Defendants. 808. SEF funds were used to develop and grow Sterling's businesses because they were used for Sterling's business-related expenses, including starting new businesses or investments, 1neeting capital co1n1nit1nents necessary to grow existing businesses or investments, paying operating expenses for existing businesses, and servicing debt held by both established and newly-created businesses. 809. SEF operated with available credit lines fro1n at least six banks totaling over $90 million, which were available to Sterling Partners and certain Sterling-related entities to enable the1n to borrow funds quickly and conveniently without having to approach a bank in every instance to negotiate separate lines of credit. 810. Upon infonnation and belief one factor in extending the credit lines to the Sterling Partners and certain Sterling-related entities was the value of the purported equity in their KW BLMIS Accounts. 811. Sterling Partners bypassed business fonnalities in their treat1nent of SEF. SEF routinely extended loans to the Sterling Partners and certain Sterling-related entities and, occasionally, certain Sterling Partners and Sterling-related entities extended loans to SEF. These loans, however, were not properly documented and were simply tracked by Sterling internally. Although interest 1nay have been charged for the loans SEF extended to the Sterling Partners, the 152 interest rates were set internally by the Sterling Partners themselves, typically allowing for a relatively small profit to SEF, which they wholly owned. 812. Further, SEF endorsed and deposited checks from BLMIS that were made payable to various tenancies-in-cornrnon, which pooled the investments of the Sterling Partners, often with the investments of their family members, friends, and/ or trusts. 813. SEF benefitted from a constant stream of capital from BLMIS. Sterling Partners, family rnernbers, related trusts or entities often withdrew funds from their KW BLMIS Accounts, which were then deposited directly into SEF and, upon infonnation and belieft subsequently used as capital to fund various Sterling business-related expenses. Upon information and belieft at least $135 million in withdrawals from KW BLMIS Accounts passed directly through SEF between 2003 and 2008. 814. In certain circumstances, Sterling entities or Sterling Partners needed quick access to capital and had to draw on SEF's many credit lines to advance the necessary funds to a Sterling entity or individual partner(s). In such cases, the Sterling entity or individual partner(s) receiving the loan(s) would owe a corresponding debt to SEF. Therefore, it was not uncornrnon for some Sterling entities or individual Sterling Partners to incur substantial debts to SEF. Often, the indebted Sterling entities or individual Sterling Partners would pay down their debts to SEF by withdrawing funds from their KW BLMIS Accounts. D. Sterling Used BLMIS Accounts As Leverage To Borrow Capital And Double Its Returns 1. Sterling's leveraged BLMIS accounts relied upon Madofi" implausible returns. 815. Another way the Sterling Partners capitalized on their BLMIS investments was through the use of leverage. At the time Madoff" fraud was revealed, Sterling had approximately $216 million in outstanding debt secured by KW BLMIS Accounts. 153 816. Specifically, at least 28 KW BLMIS Accounts in which Sterling Partners, family members, trusts and related entities held interests were used as collateral for bank loans, the proceeds of which were used for the specific purpose of investing in BLMIS (the "Leveraged KW BLMIS Accounts"). 817. The Leveraged KW BLMIS Accounts were funded by credit agreements between the various Sterling Partners, family 1ne1nbers, trusts and entities (collectively, the "Sterling Borrowers") on the one hand, and Fleet National Bank or Bank of America, which later acquired Fleet National Bank--on the other. 818. Madoff requested that the Sterling Borrowers use only Fleet National Bank (and then Bank of America) as their lender. 819. At the direction of the Sterling Partners, approximately $84 million in Fictitious Profits were withdrawn from the Leveraged KW BLMIS Accounts. 820. The Sterling Partners referred to many ofthe Leveraged KW BLMIS Accounts as "double up" accounts because they received borrowed funds that doubled the amount invested in the accounts and thereby doubled their retums (the "Double Up Accounts"). For each Double Up Account, the Sterling Borrowers entered into a loan agreement to borrow up to 50% ofthe amount held in a particular Double Up Account and invest the proceeds into the same Double Up Account (the "Double Up Loans"). 821. For example, Sterling 20 LLC, an entity that was created by the Sterling Partners for the sole purpose of investing with Madofi held a Double Up Account: 1KW358. The various 1ne1nbers of Sterling 20 LLC pooled approximately $20 million into 1KW358. Sterling 20 LLC then used that $20 million as collateral to borrow an additional $20 million to invest into 154 The Double Up Loan enabled the Sterling Borrowers for Sterling 20 LLC to invest $40 million in and double their investment gains purportedly generated by Madoff 822. As conditions to the Double Up Loans, BLMIS, the Sterling Borrowers and Fleet National Bank or Bank of America entered into pledged collateral account control agreements that required, among other things, that: the Sterling Borrowers maintain 1nini1nu1n balances in their Double Up Accounts, BLMIS deliver reports to the lender on the Double Up Accounts, and BLMIS or Sterling notify the lender if the market value ofthe Double Up Accounts fell below the 1nini1nu1n required balance for any given day. Many ofthe Double Up Loans also required the Sterling Borrowers to provide personal and unconditional guarantees. 823. Because the credit agreements in connection with the Double Up Loans required that a 1nini1nu1n amount of funds--typically two-times the amount of funds borrowed--remain invested in BLMIS, the "double up" strategy assisted Madoff to perpetuate his Ponzi scheme by ensuring millions of dollars remain invested in BLMIS without the risk of redemption 824. The first Sterling Borrowers to "double up" their investments were Judith Wilpon and Iris Katz, who on March 8, 1996 obtained Double Up Loans from Fleet National Bank relating to their respective KW BLMIS Accounts, lKW0l4 and In connection with these Double Up Loans, both Judith Wilpon and Iris Katz granted Fleet National Bank security interests in their respective KW BLMIS Accounts as collateral for the loans and borrowed up to 50% ofthe value in their respective BLMIS accounts. 825. In October 2000, the Sterling Partners began to fonn limited liability companies for the sole purpose of investing Double Up Loan proceeds into BLMIS. By 2008, the Sterling Partners had created at least seven entities for the express purpose of investing in BLMIS (collectively, the "Double Up Entities") and had opened at least nine Double Up Accounts to 155 house Double Up Loan proceeds. The Double Up Entities and their respective Double Up Accounts include: Sterling Thirty Venture LLC (1KW313, 1KW314, and 1KW315), Sterling 20 LLC (1KW358), Sterling 10 LLC (1KW402), Sterling Brunswick Seven LLC (1KW420), Sterling Twenty Five LLC (1KW447), Sterling Tracing LLC (1KW455), and RV-RJW LLC (1KW467). 826. Between 2000 and 2008, the Sterling Borrowers used the Double Up Entities' Double Up Accounts as collateral to borrow in the aggregate approximately $114 million from Fleet (and later Bank of America), which was then deposited into BLMIS in order to "double" their retums. 827. Typically, the Double Up Entities were fonned when the Sterling Partners accumulated excess funds and then made a collective decision to create an entity for the sole purpose of investing Double Up Loan proceeds with Madoff 828. Generally, the Double Up Entities were owned, dominated, and controlled by the Sterling Partners, many of who1n served as their officers, directors, and/or1ne1nbers. 829. Upon infonnation and belief the Double Up Entities operated without corporate fonnalities. The Double Up Entities did not conduct any business other than investing in BLMIS. The Double Up Entities' "officers" had no responsibilities. The Double Up Entities did not have separate corporate records, office space, addresses, telephone numbers or personnel. Upon infonnation and belief the Sterling Partners withdrew the purported profits from certain Double Up Accounts held by Double Up Entities to cover miscellaneous expenses for individual Sterling Partners or Sterling-related businesses with no relation to the respective Double Up Entity. 156 830. The Double Up Entities were investment vehicles through which the Sterling Partners, and sornetirnes their family members and trusts, leveraged their investments with Madoff to double their returns. 831. The Sterling Borrowers provided overlapping guarantees across a number ofthe Double Up Loans issued to the various Double Up Entities, effectively tying these entities together. 832. Significantly, Sterling managed its Double Up Accounts as if Madoff' returns were guaranteed. The Sterling Partners made frequent withdrawals from the Double Up Accounts consisting of both automatic withdrawals and large periodic withdrawals of the "excess" funds above the rninirnurn account balance mandated by the lender bank under the Double Up Loan agreements. This withdrawal pattern often left razor thin margins between the Double Up Account balance and the rninirnurn balance required under the Double Up Loan agreement, which--as discussed below--was extremely risky due to the volatility typically associated with equity investments and the substantial financial consequences for Sterling if Madoff had a down month. 833. Eor each Double Up Entity's Double Up Account, Sterling routinely and rnethodically plotted the amount of excess cash above the required rninirnurn balance under the corresponding Double Up Loan agreement. Sterling then "swept" the excess funds out ofthe Double Up Accounts. Upon information and beliei Sterling often deposited the excess funds into Sterling's internal bank, SEE, which thereafter were used to support Sterling's businesses. 834. Eor example, on or about April 26, 2005, SAP IV, one of SAP's real estate funds that had no ownership interest in any Double Up Entity, made a capital call to its partners to raise money to fund its operations. SEE sent the funds to SAP IV to meet the capital call, however, 157 the funds sent consisted of "excesses" above the required rninirnurn account balances withdrawn from the Double Up Accounts associated with two Double Up Entities: Sterling Thirty Ventures LLC and Sterling 20 LLC. 835. By making automatic withdrawals, as well as sweeping the "excess" funds from the Double Up Accounts, the Sterling Partners kept the Double Up Account balances at or above their required rninirnurn despite the fact that they were purportedly invested in volatile equities and options. By doing so, the Sterling Partners, along with the rest ofthe Sterling Borrowers, assumed the risk that they would breach the Double Up Loan agreements if the Double Up Accounts suffered even a rnodicurn of loss and fell below their required rninirnurn balance. 836. By maintaining such thin margins, the Sterling Partners relied on the implausible assumption that their Madoff returns would always be positive and never experience even short tenn volatility. 837. Consistent with this assumption, the Double Up Accounts rarely experienced a loss that resulted in a breach of their rninirnurn balance requirement. For example, the Sterling Brunswick Seven LLC Double Up Account, 1KW420, experienced only two down months during its four years of activity and was consistently maintained at or very above its required $14 million rninirnurn account balance. The Sterling Tracing LLC Double Up Account, IKW45 5, experienced no down months during its existence from April 2007 through December 2008, a time when the Standard and Poor's 100 Index 100") lost more than 250 points. The Sterling Partners knew or should have known that the implausibly consistent returns were too good to be true and in no way characteristic of investments in equities. 158 838. Despite borrowing millions to invest in BLMIS using their Leveraged KW BLMIS Accounts as collateral--and often even providing personal and unconditional guarantees--the Sterling Partners conducted no diligence on Madoff in connection with their use of Double Up Loans. 839. Overall, the Sterling Partners' double up strategy was yet another way they structured their BLMIS investments to exploit the implausibly low volatility ofthe returns fabricated by Madoff and further increase their profits. 2. Sterling used other forms of leverage across various BLMIS accounts. 840. At least five KW BLMIS Accounts in the name of Sterling entities, including Sterling Mets LP (1KW218) and Mets LP (1KW192, 1KW423), were used as collateral for loans, the proceeds of which were used to fund the business needs of those entities. 841. Sterling also pledged at least one of its Mets-related KW BLMIS Accounts as collateral to obtain a loan from Bank of A1nerica in July 2005 on behalf of Mets LP, which was integral to Sterling's ability to tenninate its broadcasting agreement with Cablevision and eventually fonn SNY. 842. In addition to accepting at least one of Sterling's KW BLMIS Accounts as collateral for this loan, upon infonnation and belief Bank of A1nerica justified extending the loan based upon the balances and consistent earnings from all of Sterling's related KW BLMIS Accounts. This justification also supported Bank of America's agreement to reduce the amount ofthe Sterling Partners' individual guarantees ofthe loan. 843. At least three Sterling entities without BLMIS accounts, Sterling Twenty Sub LLC, Sterling Thirty Venture Sub LLC, and Charles 15 Associates LLC, used their parent entities' BLMIS accounts as collateral for loans, the proceeds of which were purported used for business purposes. 159 844. Finally, at least four KW BLMIS Accounts, including Sterling Intemal LLC 5), Sterling VC IV LLC (IKW463), Sterling VC LLC and Sterling DIST Properties LLC were held by Sterling-related entities that entered into loan agreements specifying that the loan proceeds could be invested with BLMIS, even though no BLMIS accounts were used as collateral. E. Sterling Depended On Its BLMIS Investments T0 Consummate Key Deals And Secure Access T0 Capital Under Favorable Lending Terms 845. In addition to leveraging many KW BLMIS Accounts, the Sterling Partners received many other benefits by taking advantage of the sizeable purported equity in their KW BLMIS Accounts. 846. First, Sterling took out loans where its BLMIS accounts were not used as the collateral, but rather were required to maintain 1nini1nu1n balances to 1neet the liquidity mandates ofthe loan. 847. Moreover, upon infonnation and belief Sterling used the purported equity in its BLMIS accounts as leverage when negotiating loans for major business deals. Specifically, upon infonnation and belief Sterling used its BLMIS account balances to prove its net worth, as well as the value of its business. In fact, upon infonnation and belief Sterling's total assets invested with Madoff were a major consideration in lender evaluations of its creditworthiness. 848. Upon infonnation and belief these loans--many of which were extended, in part, based on an evaluation ofthe Sterling Partners' BLMIS investments--assisted the growth of Sterling's businesses. 849. For example, upon infonnation and belief Sterling's investments with Madoff were a factor in the subsequent re-financing ofthe Mets' credit facilities in or around 2004. 160 850. Specifically, upon infonnation and beliei the Sterling Partners used the purported equity in their BLMIS accounts to convince the participating lenders of their creditworthiness when extending the credit facilities necessary to re-finance certain loans that enabled Sterling to purchase full ownership of the Mets in 2002. 851. In or around 2004, when Sterling re-financed the Mets credit facilities, upon infonnation and beliei the Sterling Partners made representations to the participating lenders concerning the purported equity in their BLMIS Accounts and the consistently high and steady nature of Madoff" returns. Sterling touted that Madoff "provide[d] a safe alternative to unattractive money market yields" and that over the previous 25-year period, Madoff" average returns were 18% with an extremely low standard deviation of Further, the Sterling Partners pointed out that these "statistics predict positive amiual returns 99.9% ofthe time." 852. The overall Fictitious Profits Sterling received from its BLMIS investments-- although staggering in their own right--do not fully reflect the true breadth ofthe benefits Sterling enjoyed as a result of being heavily invested with Madoff BLMIS funds were a driving force behind the expansion of Sterling's businesses and this reality only further deepened the Sterling Partners' dependency on Madoff F. P0st--12/ 11/08 Debt Restructuring Proves StEURl`liIlg,S Dependency on Madoff 853. Perhaps the 1nost telling evidence of Sterling's dependency on Madoff is the mere fact that post-revelation of Madoff" fraud, the Sterling Partners were forced to negotiate with at least seven lender banks, including Bank of America, JPMorgan Chase, Citibank, HSBC, Wachovia, and Bank of New York (the "Lender Banks"), to restructure over half a billion dollars in collective debt--not just the millions of dollars of debt secured by the Leveraged KW BLMIS Accounts. 161 854. Because the Sterling Partners had invested most--if not all--of their and their entities' available cash in BLMIS, after Madoff' fraud was exposed, Sterling faced a liquidity crisis. collapse also caused the Sterling Partners, their trusts, and/or Sterling-related entities to breach numerous loan agreements for which their KW BLMIS Accounts served as collateral and, upon infonnation and belief called into question the liquidity representations made by the Sterling Partners to certain Lender Banks in connection with several other loans. 855. During the restructuring negotiations it was detennined that the finances, debt and structures ofthe numerous Sterling-related entities and trusts, along with the financial condition ofthe Sterling Partners, were simply too interrelated for their debt to be treated separately. For example, the Sterling Partners had provided many guarantees across a multitude of loans extended to numerous trusts and Sterling-related entities, which effectively linked together the Sterling Partners and these trusts and Sterling-related entities. 856. As such, upon infonnation and belief in order to accomplish the restructuring, the Sterling Partners decided to remove the facade of separate entities and trusts that they had attempted to construct over the decades of their relationship with Madoff 857. As a result, the final restructuring plan consolidated at least forty loans owed by the Sterling Partners, their trusts, and Sterling-related entities into five new secured credit facilities. 858. Upon infonnation and belief two of these five new credit facilities involved the Katz/Wilpon Trust Defendants, as these two facilities were comprised of $100 million each in new debt owed to the banks by the Saul Katz Family Trust and the Fred Wilpon Family Trust with the Katz 2002 Descendants' Trust and the Wilpon 2002 Descendants' Trust providing limited guarantees. Upon infonnation and belief by taking on debt previously owed to the 162 banks by various Sterling Partners and Sterling-related entities, the Saul Katz Family Trust and the Fred Wilpon Family Trust more than doubled the amount of their previously outstanding debt for no apparent value. 859. Notably, upon infonnation and belief a joint and several payment guaranty for the two new $100 million facilities owed by the Saul Katz Family Trust and the Fred Wilpon Family Trust was provided by SEF, certain entities created in comiection with the restructuring, and the vast majority ofthe Sterling Partners, including Fred Wilpon, Richard Wilpon, Saul Katz, Michael Katz, Thomas Ostennan, Arthur Friedman, Jeffrey Wilpon, and David Katz. 860. Notwithstanding both Sterling's and the Lender Banks' full notice of the potential liability to the Trustee faced by the Sterling Partners, their trusts, and Sterling-related entities in this case, the restructuring credit facilities entered into by these parties and the Lender Banks attempted to circumvent, or at the very least, mitigate the effects of any potential recovery action initiated by the Trustee. Specifically, the restructuring credit facilities provide, among other things, that "one or more final, nonappealable judgments or orders, and/or one or more settlements or agreements to settle, in comiection with any Madoff Action or Actions" by or against certain Sterling Partners, Sterling-related entities and trusts in aggregate amounts of $50,000,000 or more in certain circumstances and $100,000,000 or more in others constitutes an event of default under those facilities (a "Madoff 861. In addition, the Lender Banks, with Sterling's concurrence, knew that a Madoff- related judgment could be far in excess of $100,000,000 and protected themselves with conditional guarantees. Various Sterling Mets and SNY related entities entered into guarantees with the Lender Banks, which are triggered by, among other things, a Madoff EOD. These guarantees provide that, in the event of a Madoff EOD and the disposition of any direct or 163 indirect interest of certain Sterling entities in the Mets or SNY, the amount ofthe net cash proceeds or net consideration received by the guarantors from a sale of such interest(s) are to be paid over to the Lender Banks upon demand to satisfy the obligations incurred under the restructuring credit facilities. 862. Upon infonnation and belief the provisions ofthe restructuring credit facilities set forth in paragraphs 860 and 86l herein evidence Sterling's and the Lender Banks' knowledge of and serious concerns with, potential avoidance actions by the Trustee against the Sterling Defendants. 863. In short, despite being on full notice of the Trustee's claims, Sterling and the Lender Banks attempted to elevate the payment priority of Sterling's restructured debt ahead of the Trustee's recovery of funds on behalf ofthe Estate -- effectively trying to ensure that Sterling's repayment obligations to the Lender Banks are senior to thousands of innocent BLMIS investors waiting to be compensated from Customer Property recovered by the Trustee, as well as Sterling's other unsecured creditors. 864. The across the board restructuring of debt owed by the Sterling Partners, their trusts, and Sterling-related entities after collapse provides even further proof of Sterling's dependency on Madoffi as well as the inextricably intertwined relationship between the Sterling Partners, their trusts, and Sterling-related entities, the vast maj ority of which benefitted either directly or indirectly from Madoff' fraud. IX. THE STERLING PARTNERS WILLFULLY TURNED A BLIND EYE TO SUBSTANTIAL INDICIA OF FRAUD 865. The Sterling Partners were well aware ofthe integral role their investments with Madoff played in growing and sustaining various Sterling businesses--it was this dependency that motivated the Sterling Partners to turn a blind to the red flags paraded before them. l64 866. The warning signs were many and varied, ranging from cautionary counsel from financial industry experts and trusted advisors, to Madoff' schemes to avoid regulatory scrutiny, to the Sterling Partners' knowledge from their personal experience that Madoff was dishonest in his Investment Advisory business, to the fact that the Sterling Pa1tners--through Sterling Stamos--had even invested in a Ponzi scheme before collapse that bore similar markings to the fraud right under their collective noses. Sterling was simply in too deep-- having supported its substantial business empire with Madoff money and having reaped the benefits of its purported equity in do anything but ignore the gathering clouds. Despite being on notice and having every resource at their disposal to investigate the litany of legitimate questions surrounding Madoff the Sterling Partners did nothing. A. Numerous Financiznl Industry Professionals Warned Sterling About Madoff 867. Numerous financial industry professionals warned Sterling about Madoff and even speculated that he was operating a fraud. The Sterling Partners, however, categorically rejected any criticisms of Madoff--even those voiced by their most trusted, financially- sophisticated advisors and business associates. 1. Sterling Stamos warned Sterling of its Madoff concerns. 868. As discussed above in Section VI.C, Sterling Stamos was fonned as a partnership between Stamos and the Sterling Partners for the purpose of diversifying Sterling's BLMIS investments with the intent to replicate Madoff-like returns. 869. Upon infonnation and belief Sterling Stamos persomiel repeatedly warned the Sterling Partners that Madoff was '"too good to be true" based on a number of factors including, but not limited to: Sterling Stamos' rejection of Madoff on due diligence grounds, Sterling Stamos' inability to duplicate the consistency of Madoff' returns, the lack of transparency associated with Madoff' black box strategy, Madoff' practice of self-clearing and self- 165 custodying trades, widespread recurring rumors of Madoff illegally front-rumiing stepping in front of incoming trades from market making customers and placing trades on behalf of his investment advisory customers), Madoff' access to the very infonnation that would allow one to front-run, and three-person audit shop, Friehling Horowitz. 870. Upon infonnation and belief some or all of these warnings were discussed between or among the Sterling Partners, including, but not limited to, at one or more bi-weekly Sterling Partners meetings. 871. Emails sent by Sterling Stamos employees following Madoff' arrest on December 11, 2008 demonstrate that Sterling Stamos openly questioned Madoff' legitimacy for years and recommended to the Sterling Partners that they should redeem their BLMIS investments. 872. For instance, in atelling December 12, 2008 email exchange, one Sterling Stamos employee confinned that Sterling Stamos' Chief Investment Officer had fingered Madoff as a fraud for years: lot of our investors gave us crap about not generating returns like Madoff's[. . .]and I guess our CIO always said it was a scam, 'too good to be Well there [sic] go, it was too good to be true[.] The Chief Investment Officer that this employee referred to in her email is Chachra, who had the official title of Chief Investment Strategist and worked at Sterling Stamos from its inception in June 2002 through late 2009. 873. In a December 13, 2008 email, Chachra confinned that since shortly after Sterling Stamos' fonnation in 2002, Sterling Stamos persistently told the Katz and Wilpon families that Sterling Stamos had concerns about Madoff and that BLMIS had failed Sterling Stamos' due diligence process. Chachra's email provides, in pertinent part: 166 In fact, we turned down the Madoff Funds more then [sic] 6 years ago and told 1nany of our investors including the Wilpon and Katz families about our concerns. Notwithstanding our concerns, the Wilpon and Katz families continued to invest with Madoff Securities. Please let me know if you would like to discuss this further as we are trying to infonn all of our investors that our due diligence process rejected Madoff but, unfortunately, the Katz and Wilpon families maintained their investment independent of our advice. 874. In a December 15, 2008 email, Stamos stated that Sterling Stamos would not invest with Madoff because BLMIS would not pass Sterling Stamos' due diligence requirements and that he had warned Saul Katz and Fred Wilpon not to invest. Despite Stamos' advice, Saul Katz, Fred Wilpon, and Sterling as a whole defied his recornrnendations to withdraw their money from BLMIS. Stamos states in his email: Fortunately, our finn did not invest with Madoff That finn and fund wouldn't make it through our risk and ops controls--lack of transparency, no third party administrator, etc. Unfortunately, our partners--Saul and Fred--against our recornrnendations invested as individuals and through their real estate finn. 875. As these and other emails confinn, Sterling Stamos alerted the Sterling Partners to its concerns about Madoff for years and despite that advice, they continued to invest with Madoff 876. For starters, there was the simple fact that Sterling Stamos could never quite match Madoff' consistently high returns and improbable lack of volatility. 877. The Sterling Partners compared the perfonnance of BLMIS against that of Sterling Stamos on a regular basis--usually every month. 878. Upon infonnation and belief these comparisons were discussed between or among the Sterling Partners, including, but not limited to, at bi-weekly Sterling Partners l67 meetings wherein Saul Katz and/ or David Katz would typically present these comparisons to the other Sterling Partners. 879. Upon infonnation and belief Sterling Stamos continually failed to live up to the Madoff standard expected by Sterling. The Sterling Stamos funds were never able to duplicate the non-volatile, positive returns Madoff purportedly generated month after month and year after year. Some ofthe Sterling Partners, including Saul Katz and Michael Katz, often expressed disappointment to Stamos and other Sterling Stamos employees about their inability to generate Madoff-like returns. 880. The inability of Sterling Stamos--the hedge fund created by the Sterling Partners and entrusted with a substantial amount of their assets--to generate similarly high and consistent returns as compared to BLMIS should have caused Sterling to question the legitimacy of Madoff' enterprise. Yet the Sterling Partners refused to conduct any inquiry into why Madoff' returns could not be duplicated or, more pointedly, why, when Sterling Stamos was suffering like everyone else during periods of market dislocation, Madoff was still able to generate consistent, positive returns. 881. Upon infonnation and belief beginning with the fonnation of Sterling Stamos in June 2002 and frequently thereafter, Stamos had candid discussions with Saul Katz regarding not only his concerns about Madoff but the astounding amount of cash Sterling had invested in BLMIS that was potentially at risk. Over the years, Stamos frequently pointed out to Saul Katz that because he and the rest ofthe Sterling Partners were so heavily invested with Madofi they assumed the "single manager risk." Stamos specifically wamed that all of the capital Sterling invested with Madoff could be frozen indefinitely if Madoff was investigated for wrong-doing. 168 882. Stamos' concems about Madoff however, went 1nuch further. First, Stamos expressed concern to Saul Katz about Madoff' overall lack of transparency, especially as it related to his mysterious black box strategy. 883. Stamos infonned Saul Katz that black box funds were inherently risky because the investor cannot detennine the precise strategy being employed. Further, other problematic characteristics of BLMIS, such as the single manager risk, compounded the risks associated with Madoff' black box strategy. 884. In addition to Madoff' black box strategy, Stamos and Saul Katz discussed the lack of transparency conceming the structure of various business operations. Specifically, insofar as Madoff was both a broker-dealer and an investment manager, Madoff purportedly initiated, executed and cleared his own trades. Because Madoff cleared and maintained custody ofthe securities he purportedly traded, there was no independent safeguard in place to verify that Madoff was actually making the trades he reported. 885. Although Saul Katz was well aware ofthe risks associated with operational deficiencies, he never once attempted to confinn through any third party that Madoff actually traded the securities identified on his or other Sterling-related BLMIS account statements. 886. In addition to the self-executing, self-clearing, and self-custodying issues discussed above, the operational structure of BLMIS gave rise to other risks. For example, Madoff' roles as an investment manager, a broker-dealer and a market maker not only created a conflict of interest, it raised fundamental questions about the legality of Madoff' operation. 169 887. On multiple occasions, Stamos discussed with Saul Katz the frequent rumor that Madoff engaged in illegal front-running. Other Sterling Starnos employees, including Chachra, also discussed with Saul Katz the possibility that Madoff was front-running. 888. Upon infonnation and belief Saul Katz infonned the other Sterling Partners about his discussions concerning Madoff with various Sterling Starnos employees, including, but not limited to, at one or more bi-weekly Sterling Partners meetings. 889. As a result, Sterling knew that because Madoff was an investment manager, a broker-dealer and a market maker, Madoff had access to the very infonnation that would allow a person to front-run. 890. In light of Madoff' remarkable market timing and inexplicably smooth positive returns, the frequent front-running rumors should have given Sterling pause. Moreover, the Sterling Partners--unlike most BLMIS investors--had easy personal access to Madoff and an array of internal staff and outside consultants to verify, or at the very least, investigate the rumors. Yet the Sterling Partners conducted absolutely no diligence to detennine whether Madoff was breaking the law. 89l. Upon infonnation and belief, another red flag identified by Starnos and shared with the Sterling Partners related to three-person audit shop, Friehling Horowitz.6 As discussed in Section IX.D below, upon infonnation and belief as of approximately August 2005 when the Bayou Ponzi was revealed, a key component of Sterling Stamos' due diligence 6 Friehling Horowitz was purportedly a three-person operation in Rockland County, New York, consisting of David Friehling, a Certified Public Accotmtant, a semi-retired accountant living in Florida, and an assistant. No experienced business person could have reasonably believed it possible for any such firm to have competently audited an entity the size of BLMIS. ln fact, on November 3, 2009, David Friehling pled guilty to seven cou.nts of securities fraud, investment adviser fraud, obstructing or impeding the administration of lntemal Revenue laws, and making false filings with the SEC in connection with the services he performed for Madoff and BLMIS. ln addition, Friehling Horowitz had reported to the American Institute of Certified Public Accountants or for l5 years prior to the collapse of Madoff scheme that it did not conduct audits. Meanwhile, Friehling Horowitz pretended to do just that for BLMIS. l70 protocol was the investigation of a hedge fund's audit finn. Upon infonnation and belief Saul Katz and the other Sterling Partners were aware of that protocol. 892. Upon infonnation and belief Sterling knew that Friehling Horowitz was auditor and knew or should have known that Friehling Horowitz was not a legitimate auditor for an institution as large as BLMIS. 893. Sterling was on notice that Friehling Horowitz was auditor as early as 1991 when Sterling received written correspondence from BLMIS that identified this three- person audit shop. In addition, at least for the years 1994 through 1997, Sterling received BLMIS financial statements identifying Friehling Horowitz as auditor. Finally, as recently as August 2008, Sterling communicated directly with Friehling Horowitz regarding Madoff' investments with Sterling. 894. Upon infonnation and belief Stamos expressed concerns to Sterling regarding Madoff' use of Friehling Horowitz as an auditor. 895. Rather than undertake a reasonable inquiry into the red flags identified by Stamos or his colleagues at Sterling Stamos--all highly sophisticated, trusted advisors--Sterling categorically dismissed each and every one of them without undertaking any diligence. 896. Upon infonnation and belief in addition to Saul Katz, the rest ofthe Sterling Partners had knowledge of Sterling Stamos' warnings about Madoff Upon infonnation and belief at least as early as March 2006, Stamos' concerns about Madoff were discussed between or amongst the Sterling Partners, including, but not limited to, at one or more bi-weekly Sterling Partners meetings. Upon infonnation and belief the various Madoff concerns discussed between Saul Katz and Stamos were relayed to the other Sterling Partners by either Saul Katz and/or Stamos. 171 2. Merrill coniirmed St:1m0s' concerns and rejected Saul K:1tz's proposal to invest with Madoff. 897. Many--if not all--of Stamos' concerns about Madoff gained even 1nore credibility and significance when echoed by Merrill ("Merrill"), Sterling's eventual business partner in Sterling Stamos. Despite Merrill's confinnation of many of Stamos' warnings about Madoff Sterling again chose to look the other way. 898. Upon infonnation and beliei Merrill had concerns regarding Madoff as early as l998. At that time, Merrill flatly refused to deal with BLMIS because of concerns that Madoff' investment advisory business operations were not legitimate. Such concerns were well-known and widespread throughout Merrill. Merrill did not pennit its own money to be invested directly or indirectly through BLMIS. Merrill's internal prohibition on conducting trades involving exposure to Madoff or any Madoff feeder fund dates back to the late l990s and was enforced by the highest authorities at Merrill. Not only did Merrill not allow its own money to be invested in Madoff it also refused to recommend that its customers expose themselves to Madoff and did not include Madoff or any Madoff feeder funds on its "approved" list for investment recommendations. 899. Merrill's relationship with Sterling Stamos began in or around June 2004, when Merrill become a distribution agent for Sterling Stamos and agreed to market Sterling Stamos to investors. 900. In or around February 2007, Merrill commenced fonnal discussions to acquire an interest in Sterling Stamos. In or around July 2007, after conducting months of additional due diligence of both Sterling Stamos and Sterling, Merrill acquired a 50% non-controlling interest in Sterling Stamos. l72 901. As early as 2007, at least one Senior Merrill executive at the time (the "Merrill Executive") discussed numerous red flags regarding Madoff with Saul Katz and Stamos. 902. The Merrill Executive expressed to Saul Katz and Stamos his concern that Madoff was both an investment manager and a broker-dealer who cleared his own trades. He also pointed out that Merrill's due diligence requirements would reject such a manager because independent checks on the manager's truthfulness were lacking. A related concern that the Merrill Executive raised with both Stamos and Saul Katz was the possibility that Madoff was front-running by using infonnation he gained as a market maker inappropriately to the benefit of the investment rnanagernent side of his business. He also cornrnunicated his opinion to both Saul Katz and Stamos that Sterling simply had too much capital invested with Madoff 903. Although the Merrill Executive echoed and reinforced Stamos' criticisms of Madofi Saul Katz rejected the Merrill Executive's concerns. 904. Upon infonnation and belief the Merrill Executive's concerns with Madoff were discussed between and amongst the Sterling Partners, including, but not limited to, at one or more bi-weekly Sterling Partners meetings. 905. Neither Saul Katz nor any other Sterling Partner conducted any diligence on Madoff despite the Merrill Executive's confinnation of serious red flags questioning the legitimacy of BLMIS. 906. The Sterling Partners were further apprised of red flags regarding Madoff during Merrill's acquisition of the interest in Sterling Stamos. During the acquisition, Merrill mandated several changes to Sterling Stamos' due diligence process. One of these changes involved requiring all investment managers to complete a transparency report disclosing, among other things, details about their investment strategy. By instituting this requirement, Merrill 173 effectively prevented Sterling Stamos from investing with any investment managers who refused to disclose their trading strategy and employed black box strategies, like Madoff 907. Saul Katz was aware of this new due diligence requirement. In fact, the Merrill Executive told Saul Katz that such a requirement would disallow any investments in BLMIS. 908. During a Sterling Stamos board meeting in early 2008, given the uncertainty in the market and Madoff' miraculously consistent returns, Saul Katz proposed that Sterling Stamos create a fund to invest in BLMIS. 909. Although Sterling Stamos at the time was facing increased pressure from Sterling to match Madoff' high returns and consistency during a challenging period of market volatility, the Merrill Executive rejected Saul Katz's proposal and told him that Madoff would not pass Merrill's due diligence requirements. 910. Stamos similarly rejected Saul Katz's proposal and told him that a black box like Madoff' would not pass Sterling Stamos' due diligence process because of its lack of transparency and operational deficiencies. 911. Upon infonnation and belief the Sterling Partners discussed Sterling Stamos' new due diligence protocol, the fact that Madoff could not pass Merrill's or Sterling Stamos' due diligence processes, and that the Sterling Stamos board rejected Saul Katz's proposal to invest in BLMIS, including, but not limited to, at one or more bi-weekly Sterling Partners meetings. 912. Despite this knowledge, their abundant resources, and special access to Madoff neither Saul Katz nor any ofthe Sterling Partners undertook any diligence on BLMIS. 174 3. Other f'mancial institutions and industry professionals advised Sterling of additional concerns, including that Madofi" "math wasn't right." 913. Sterling Stamos, and Starnos in particular, and the Merrill Executive were not the first financial industry professionals to caution the Sterling Partners about the questionable nature of Madoff" business. 914. Indeed, in or around 1996, multiple banks declined to serve as custodian of Sterling's 401(k) plan--which included a BLMIS investment option--because of concerns about BLMIS. Specifically, these financial institutions refused to serve as custodian due to Madoff" lack of transparency and inability to provide account balance information on a daily basis. Friedman--one ofthe Trustees of Sterling's 401(k) plan--and, upon information and beliefi the rest of the Sterling Partners were well aware of the potential custodian ba.nks' sentiments. Despite this early warning sign about the legitimacy of Madoff" business, the Sterling Partners did not conduct any diligence on BLMIS in response. 915. Moreover, prior to the fonnation of Sterling Starnos in June 2002, the investment advisory firm Ivy Asset Management expressed concerns about Madoff to Saul Katz, David Katz and Arthur Friedman. 916. In addition to offering investment advice to other investment advisers and asset managers, Ivy managed proprietary funds of funds that began investing with Madof`f` in or about October 1987. However, upon infonnation and beliefi Ivy redeemed all of its proprietary investments with Madof`f` by 2000. 917. Upon infonnation and belief, by no later than December 1998, Ivy knew or should have known of Madof`f"s fraud based on numerous red flags it had observed, including, but not limited to, the following: Ivy had detennined that there were insufficient Standard Poor's 100 Index options options") available in the marketplace to support Madoff" 175 purported strategy, when Ivy confronted Madoff regarding this discrepancy, Ivy caught Madoff in a lie--Madoff tried to explain that he traded OEX options over the counter on exchanges other than the Chicago Board Options Exchange, which was impossible because OEX options do not trade on any other exchange, Ivy theorized that Madoff was conducting illegal activity at BLMIS, such as using 1noney from his investment advisory clients as subordinated loans to his market making operation, and Ivy was aware of troubling inconsistencies in BLMIS account state1nents. 918. Moreover, upon infonnation and belief by January 2002, Ivy told current and prospective clients that it did not reco1n1nend any investment with Madoff In fact, as far back as 1998, the indicia of fraud surrounding Madoff were so strong that Ivy's co-founder Howard Wohl ("Wohl") concluded he could not 'justify any investments with Madoff" 919. In or around April and/or May 2002, Saul Katz, David Katz, and Arthur Friedman met with representatives of Ivy, including Wohl, to discuss Sterling's plan to fonn a fund of funds that later beca1ne Sterling Sta1nos. During the meeting, Saul Katz explained that Sterling wanted to create a fund of funds to diversify away fro1n Madoff In response, Wohl told Saul Katz, David Katz, and Arthur Friedman about the concems he had regarding Madoff and cautioned that Ivy had redeemed all of its proprietary investments in BLMIS years earlier. 920. Further, a successful venture capitalist retained as a consultant by Sterling Sta1nos and Sterling who had strategy consulting experience across a variety of industries, including investment 1nanage1nent, high-technology, and energy (the "Sterling Consultant"), wamed Saul Katz about Madoff' inexplicable retums. 921. In or around 2003, the Sterling Consultant infonned Saul Katz that Madoff' retums did not make sense. In an email to Stamos, the Sterling Consultant specifically recounted 176 that he had told Saul Katz that he "couldn't make Bernie's 1nath work and something wasn't right." 922. Moreover, upon infonnation and belief Saul Katz and Richard Wilpon were aware that the chair ofthe Brooklyn College Foundation's investment committee (the "lnvestment Committee Chair") believed that BLMIS was not a legitimate investment. 923. Saul Katz is an Honorary Governor ofthe Brooklyn College Foundation and Richard Wilpon is a Trustee. 924. The Investment Co1n1nittee Chairprominent investment 1nanage1nent finn, advised the Brooklyn College Foundation that he "considered [Madoff's] fund a 'black box' and [his investment management] finn was very skeptical due to Madoff' unwillingness to provide transparency or discuss his Philosophy, Process or Strategy which produced unrealistically high positive retums every year."7 925. Many of the foregoing concerns raised by Sterling's financial industry partners and associates were previewed in May 2001 MAR/Hedge and Barron 's articles. 926. Upon infonnation and belief in May 2001, the Sterling Partners read two trade articles that questioned Madoff' unusually consistent retums and secretive operations. On their dates of publication, at least one Sterling Partner received: the article in the May 2001 issue of edge, a newsletter, that was widely read by hedge fund industry professionals, entitled "Madoff Tops Charts, Skeptics Ask How," and the May 27, 2001 article in Barron 's entitled "Don't Ask, Don't Tell: Bemie Madoff is so secretive, he even asks investors to keep mum." Both axticles were then circulated to all of the Sterling Partners. 71n 1991, pursuant to a gift agreement, the Saul Katz Family Fotmdation made a conditional donation to the Brooklyn College Foundation, which required that the donated be invested with Madoff through Sterling. Consequently, although the Brooklyn College Fotmdation did have an account with Madoff, the Brooklyn College Fotmdation lacked the authority to redeem that investment in spite of the lnvestm ent Committee Chair's skepticism regarding Madoff. 177 927. Upon infonnation and belief the two articles were discussed between or a1nong the Sterling Partners, including, but not limited to, at one or more bi-weekly Sterling Partners meetings. 928. The two articles cited numerous hedge fund professionals, including options specialists, and current and fonner BLMIS traders, who questioned why no one using the sa1ne strategy could duplicate Madoff's consistent, non-volatile retums month after month. The articles also raised questions concerning operational structure, specifically that Madoff used revenue from his market making operation to subsidize or smooth the retums of his investment advisory clients. 929. Additionally, the MAR/Hedge and Barron 's articles noted the skepticism of many hedge fund professionals regarding Madoff's compensation structure. As the Sterling Partners were aware, Madoff did not charge any 1nanage1nent fees or perfonnance fees. Although hedge fund managers typically charge their clients an amiual 1nanage1nent fee of 1% to 2% of assets under 1nanage1nent and an annual perfonnance fee of 10% to 20% ofthe fund's profit, Madoff charged no fees for his investment 1nanage1nent services. The Sterling Partners believed Madoff only charged the1n s1nall "commission equivalents" for trades he placed on their behalf which were related to the bid-ask spreads he collected as a market maker. 930. Madoff's decision not to collect fees should have see1ned suspicious to the Sterling Partners given the sheer amount of revenues that Madoff was foregoing annually. By failing to charge industry standard 1nanage1nent fees and perfonnance fees, Madoff left huge amounts of 1noney on the table each year. For example, rather than charge a 1% to 2% 1nanage1nent fee and a 10% to 20% perfonnance fee--the industry standard--Madoff charged a co1n1nission of $0.04 per share and $1 per option contract. Just with respect to the KW BLMIS 178 Accounts active in 2001, Madoff conceded approximately $8 to $20 million in fees in that year alone. 931. The Sterling Partners should have known based on their BLMIS investments alone that Madoff was unrealistically giving up millions of dollars in fees with no legitimate explanation. 932. Notwithstanding the concerns raised by the MAR/Hedge and Barron 's articles and the fact that these concerns were later validated by Sterling's own advisors and business partners, the Sterling Partners did not conduct any diligence on Madoff in response. 933. Upon infonnation and beliei financial professionals also questioned the archaic technology being employed by Madoff on the investment advisory side of his business, which should have raised concerns and prompted additional inquiry by Sterling. 934. In fact, in connection with one or more of Sterling's Double Up Loans, on October 30, 2000, Steven Kemiy of Fleet National Bank (and later Bank of America) faxed Arthur Friedman a copy of the company profile page of website, and specifically directed Friedman's attention to a paragraph describing advanced technological capabilities, which stated: "Moreover, Madoff Securities' computerized processing means that the firm can customize client reports and deliver them electronically in whatever fonnat best meets the needs of customers." 935. However, the BLMIS investment advisory business could not generate electronic trade tickets, had no website where investors could view their accounts and assets in real-tirne, and could only deliver paper confinnations by mail several business days after trades were supposedly executed. These attributes were cornrnonly recognized in the financial industry to be rife with the risk of fraud. 179 936. The Sterling Partners should have been particularly concemed by the investment advisory business' primitive technology systems because they knew that BLMIS touted its market making business as one ofthe 1nost technologically advanced financial institutions in the world. Indeed, Sterling retained a file containing articles about BLMIS that included, among others, articles discussing the advanced technology being employed by its market making business. 937. The Sterling Partners never made any inquiry to detennine why Madoff' investment advisory business used primitive technology systems, especially while his market making operation was well-known for its cutting-edge technology. 4. American Securities' Chuck Klein recommended that Sterling obtain fraud insurance for its investments with MadofiZ 938. As discussed in Section above, Sterling and American Securities have had a longstanding business relationship dating back to approximately 1990 when they partnered to fonn the first of many SAP real estate investment funds. American Securities was founded in the 1940s as a family office to manage the wealth of William Rosenwald, heir to the Sears Roebuck Company fortune. 939. Since its inception, in addition to managing investments for the Rosenwalds and other high net worth families, American Securities has grown to become a leading middle- market private equity finn. In addition to partnering with American Securities in connection with the SAP funds, Sterling has also invested in a number of American Securities' private equity funds, including more than $22 million in at least four American Securities' leveraged buyout funds, as well as the affiliated American Securities Opportunities Fund. 940. Charles "Chuck" Klein is American Securities' managing director and also played a prominent role with many ofthe finn's affiliates, including two entities--PJ Administrator 180 LLC and PJ Associates Group LP (collectively, the held KW BLMIS Accounts through Sterling dating back to approximately September 1996. 941. Throughout their relationship, Klein remained a trusted advisor to Sterling. In 2001, when David Katz and Saul Katz began discussing the possibility of fonning a fund of funds business, they first considered a potential partnership with A1nerican Securities and Klein. Although David Katz and Saul Katz chose not to partner with American Securities, they continued to consult with Klein regarding the creation of a fund of funds business to manage the family's fortune. After the fonnation of Sterling Stamos, upon infonnation and belief Klein served as a 1ne1nber of Sterling Stamos' infonnal investment co1n1nittee. 942. Over the years, Klein at various ti1nes raised certain concems about Madoff with Saul Katz, including the fact that Madoff was the sole manager at BLMIS, which carried various risks, such as complications in the event Madoff were to die, retire, or be investigated. 943. Klein's concems regarding Madoff were apparently profound. In approximately March 2000, American Securities procured a specialized one-of-a-kind insurance to protect its Madoff investments fro1n fraud. 944. Upon infonnation and belief in or around February 2001, Klein reco1n1nended A1nerican Securities' Madoff fraud insurance policy to Saul Katz and Sterling. 945. In an internal 1ne1norandu1n to Fred Wilpon and Saul Katz dated February 26, 2001, Friedman su1n1narized his conversation with Klein regarding the Madoff fraud insurance A1nerican Securities obtained. Handwritten notes on the 1ne1norandu1n state, "how to define fraud," and also indicate that Sterling wanted to 1neet with the Senior Managing Director of the insurance brokerage finn that American Securities had used. 181 946. Shortly after the May 2001 MAR/Hedge and Bc1rr0n's articles, Friedman and Michael Katz met with the Senior Managing Director ofthe insurance brokerage finn that American Securities had used to discuss purchasing fraud insurance for Sterling's BLMIS investments. Based on their meeting, Friedman prepared a memorandum dated June 13, 2001, which noted that a fraud insurance policy for Sterling's investments with Madoff would cover Fraud Fidelity [and] 2) Insolvency for any reason." 947. Notably, in the course of Sterling's possible procurement of fraud insurance for its BLMIS investments, Friedman prepared handwritten notes that specifically stated that coverage would include a Ponzi scheme. Friedman described the scope of coverage as: Fraud or Fidelity (Ponzie) [sic] 2- Insolvency for whatever reason Only investment losses not covered." 948. Upon infonnation and belief the Sterling Partners ultimately decided against obtaining the fraud insurance because they detennined that due to unfavorable coverage limits that were dwarfed by the vast sums they invested in BLMIS, the bulk of their Madoff exposure was an uninsurable risk. B. Sterling Was Aware Of--And Even Enabled--Madofi" Attempts To Avoid Regulatory And Other Third Party Scrutiny 1. Madoff' concerns regarding SEC disclosures forced Sterling Stamos to reorganize its business prior to registering as an investment adviser. 949. In or around July 2003, Sterling Stamos began to consider registering with the SEC as an investment adviser for the purpose of growing its business and expanding its customer base to include institutional clients. There was one major roadblock standing in Sterling Stamos' way: Madoff's insistence on avoiding regulatory scrutiny. 182 950. After learning that Sterling Stamos was considering registering as an investment adviser with the SEC, Madoff infonned Saul Katz of his concern that the Sterling Partners 1nay have to disclose infonnation related to their investments with BLMIS and his investments in Sterling ventures. 951. Further, as discussed in Section IX.B.2 below, upon infonnation and belief an additional concern for Madoff was that Sterling Stamos' registration would result in the disclosure of infonnation that could lead to BLMIS having to register as well. Because registration meant greater regulatory scrutiny, Madoff did not register with the SEC as an investment adviser until the SEC forced him to do so in 2006. 952. Due to Madoff' preference for secrecy and ongoing concern that this level of disclosure might trigger further scrutiny into his operations, upon infonnation and belief, Madoff specifically cornrnunicated to Saul Katz that he had concerns about Sterling Stamos registering as an investment adviser. 953. Sornetirne before October 2003, Saul Katz--on behalf of Sterling--infonned Peter Stamos and others at Sterling Stamos of Madoff' concerns regarding Sterling Stamos' potential registration as an investment adviser. Saul Katz explained that it would complicate Madoff' business and require Madoff--given Saul Katz's role at Sterling Stamos--to disclose certain infonnation he was otherwise disposed to keep secret. 954. Sornetirne before October 2003, Saul Katz also infonned individuals at Sterling Stamos that its registration would interfere with his close relationship with Madoff and cause all of Sterling's related BLMIS investments to be disclosed against Madoff' wishes. 955. Accordingly, to appease Madoff's concerns and avoid certain Madoff-related disclosure requirements, Sterling, together with Sterling Stamos, undertook substantial steps to 183 restructure Sterling Stamos and attempted to institute a fonnal separation between Sterling and Sterling Stamos that would obviate the requirement to disclose details about Sterling's and Madoff' business dealings, including the amount of Sterling's investments with Madoff 956. Because many disclosure requirements related to registration were comiected to those individuals at Sterling Sta1nos who were involved in its investment decision-making, the 1nost important step in this fonnal separation was attempting to draw a distinct line--or at least the appearance of one--between the respective 1nanage1nent and investment decision-making sides of Sterling Stamos' business. 957. To accomplish this, the initial integral role that Saul Katz and David Katz played with respect to investment decisions at Sterling Stamos changed dramatically. Saul Katz and David Katz allegedly could no longer participate on Sterling Stamos' investment co1n1nittee or attend any other meetings wherein certain investment managers and funds were considered or discussed. 958. Further, because at the ti1ne Saul Katz and David Katz were both 1ne1nbers ofthe company's board of directors, Sterling Stamos had to establish separate board meetings to discuss business issues and investment co1n1nittee meetings to discuss investment issues--again, a distinction that did not previously exist. This action was a necessary attempt to create the appearance that Saul Katz and David Katz were not involved in the investment decisions of Sterling Stamos as they had been before. 959. Similarly, whereas before Saul Katz and David Katz were identified as part ofthe "Senior Investment Team" in Sterling Stamos' marketing materials and as "key" individuals with respect to Sterling Stamos' investment decisions in hedge fund questionnaires, these references were removed in post-registration materials. 184 960. In addition, Sterling Stamos underwent physical changes to its business in an attempt to further separate its day-to-day operations from Sterling. 961. Whereas prior to registering as an investment adviser, Sterling Stamos shared an office with Sterling, upon registration Sterling Stamos moved to a different location at 450 Park Avenue, New York, NY. 962. Whereas prior to registering as an investment adviser, Sterling Stamos shared its inforrnation technology system with Sterling, upon registration Sterling Stamos created and then utilized its own system. 963. Sterling Stamos also ensured that its legal structure was changed to reflect its more formal physical and internal separation from Sterling, which included instituting changes in how documents were presented, written, and signed. 964. All of these steps were taken to accommodate Madoff' insistence on avoiding certain disclosures and potential regulatory scrutiny. 965. Indeed, by the time Sterling Stamos finally registered as an investment adviser in or around July 2005, the Sterling Partners concluded that no disclosures related to their business relationship with Madoff were necessary. 966. This is not to say, however, that Saul Katz and David Katz and the rest ofthe Sterling Partners played no role at Sterling Stamos after registration. As general partners of Sterling Stamos, the Sterling Partners were still involved in the major issues concerning the company. Further, Sterling Stamos' affairs remained an agenda item at every bi-weekly Sterling Partners meeting. 185 967. Sterling, however, had placed enough distance--at least physically and on paper--between itself and Sterling Stamos to assuage Madoff' concerns and, in the Sterling Partners' minds, avoid any Madoff-related SEC disclosure requirements. 2. By February 2006, Sterling knew or should have known that Madoff was evading his requirement to register with the SEC as an investment adviser. 968. Upon infonnation and belief in comiection with Sterling Stamos' registration as an investment adviser and Madoff' concerns with the same, the Sterling Partners became familiar with the SEC's registration and disclosure rules for investment advisers and hedge funds and, by February 2006, knew or should have known that Madoff was in violation ofthe SEC's registration rules. 969. Upon infonnation and belief, between July 2003, when Sterling Stamos first considered registering as an investment adviser, and July 2005, when it did in fact register, the Sterling Partners became familiar with the SEC rules governing hedge fund advisers' registration obligations. During that same time period, the Sterling Partners received consultation from counsel and others concerning these rules, as well as how best to address Madoff's disclosure- related concerns in comiection with Sterling Stamos' pending registration. See supra Section IX.B.1. 970. Upon infonnation and belief the Sterling Partners knew about the SEC rules adopted in October 2004 that, in effect, required hedge funds with 15 or more investors and over $30 million in assets under rnanagernent to register with the SEC. According to Sterling's bi- weekly partner meeting minutes, the "Registered Investment Advisor Issue" at Sterling Stamos was a re-occurring agenda topic beginning October 18, 2004 and continuing through July 25, 2005. In fact, at their November 1, 2004 bi-weekly Sterling Partners meeting, the Sterling 186 Partners discussed the passage of "Hedge Fund Regulations," which, upon infonnation and belief refers to the adoption ofthe aforementioned SEC rules. 971. Upon infonnation and belief the Sterling Partners were aware that the SEC's hedge fund registration rules had a compliance date of February 1, 2006. 972. Upon infonnation and belief the Sterling Partners were aware that Madoff did not comply with the SEC's registration rules until August 2006, and only then after investigation and direction from the SEC. Indeed, the Sterling Partners knew that BLMIS fell squarely within the requirements mandating registration because BLMIS obviously had more than 15 investors and far more than $30 million in assets under management based on the KW BLMIS Accounts alone. The Sterling Partners, therefore, knew that between February and August 2006, Madoff was in violation of the SEC's registration rules. 973. Despite knowing that Madoff was in violation ofthe SEC's hedge fund registration requirements, the Sterling Partners did nothing. 3. Sterling insulated Madoff from scrutiny in comiection with its BLMIS 401 plan investment option. 974. Sterling further demonstrated a pattern of enabling Madoff to avoid scrutiny in connection with the fonnation and administration of Sterling's 401(k) plan which, as discussed in Section above, was heavily invested with Madoff since it was created in or around 1997. 975. As trustees of the Sterling employee 401(k) plan, Arthur Friedman and Michael Katz had a fiduciary duty to conduct due diligence on Madoff but failed to satisfy this duty. 976. As they did with other "outsider" investors they referred to Madoff Sterling purposefully maintained a layer of separation between Madoff and their employees by 187 prohibiting them from contacting BLMIS directly. Sterling employees were required to direct all inquiries regarding BLMIS through Sterling. 977. Sterling also structured the 401(k) plan to avoid drawing unnecessary attention to Madoff Sterling had the choice of creating either a participant directed plan, which would include BLMIS and several other investment options, or a trustee directed plan under which all investments would be made with Madoff Upon inforination and belief, the Sterling Partners decided against a trustee directed plan because they thought it would increase their fiduciary liability exposure and if BLMIS were the only investment option offered, "everyone [would] ask and know about [Bernard Madoff]." 978. Sterling also coordinated with Madoff to assume many administrative responsibilities related to the 401(k) plan's BLMIS investment option that would typically be handled by a third party administrator, thereby minimizing scrutiny of BLMIS. When the 401(k) plan was first established in 1997, Madoff was involved in drafting and approving the BLMIS description that Sterling distributed to 401(k) plan participants along with enrollment materials. The BLMIS description stated: The partners of Sterling Equities have been investing with Madoff since October 1985. Their returns in any year have never averaged lower than 16.5% and have averaged in excess of 19% during this eleven year period. Their average return on this strategy was 18.3% for 1996. There are no rnanagernent fees or expenses with regard to this mode of investment. 979. From 1997 until approximately 2005, Sterling circulated to its employees a similar version ofthe original BLMIS description touting Madoff' historical returns and stating that Madoff did not charge any rnanagernent fees or expenses. 188 980. In approximately 2005, Sterling revised the BLMIS description after a consultant retained by Sterling pointed out that several aspects ofthe description might increase Sterling's fiduciary liability exposure. 98l. In an April 28, 2005 email to the head of Sterling's human resources department, the consultant recommended that Sterling "be careful" with any statements that "could be construed as an endorsement of [the investment by the [Sterling P]artners." Specifically, the consultant recommended amending the portion ofthe BLMIS description that read: "The partners of Sterling Equities have been investing with Madoff since October of l985." Moreover, the consultant pointed out that the BLMIS description's statement, "There are no management fees or expenses with regard to this mode of investment," should be revised because it appeared to misrepresent Madoff' compensation arrangement. Finally, the consultant issued a general caveat about the BLMIS 40l(k) plan investment option in line with the constant drumbeat of red flags of which Sterling was aware, stating that '"this is an unusual fund from a 40l(k) perspective in that it isn't publicly traded and, therefore, there is little infonnation to go by and no independent analysis of this investment to follow." 982. Having been advised that the wording of the BLMIS description distributed to 40l(k) plan participants could increase its fiduciary liability exposure, Sterling revised the description to eliminate references to the Sterling Partners' investments with Madoff as well as the statements regarding Madoff' lack of fees and expenses. 4. Sterling protected Madoff by insulating referral accotmts. 983. As discussed in Section VII.A above, based on the Sterling Pa1tner's close relationship with Madoff they were in the unique position to open KW BLMIS Accounts for their friends, close business acquaintances, and other Sterling employees--all of whom they referred to Madoff To obtain a coveted KW BLMIS Account through Sterling, however, was 189 not easy. The Sterling Partners needed to approve the account internally and Saul Katz, in paiticular, had the final say. Indeed, there were far 1nore outsiders who were turned down than actually got into the elite pool of Madoff investors with KW BLMIS Accounts opened through Sterling. 984. Sterling took great strides to insulate the outsider account-holders from Madofi as one of the requirements to obtain a KW BLMIS Account through Sterling was that all communication regarding any account had to go through Sterling, never directly to Madoff 985. Sterling further protected Madoff from scrutiny by carefully screening certain types of sophisticated investors who were denied access to BLMIS. Similar to Madoff' request that Sterling Stamos not register as an investment adviser, Madoff also told Sterling that he did not accept investments from anyone who was a registered representative or investment adviser. 986. The Sterling Partners, however, never took any steps to independently investigate why Madoff refused to accept investments from registered representatives or investment advisers. 5. Sterling only used Madoff' approved bank for Double Up Loans. 987. Sterling also took steps to limit scrutiny of BLMIS from third party financial institutions. As discussed in Section above, Sterling borrowed millions of dollars via Double Up Loans to "double up" its investments with Madoff However, Madoff requested that Sterling procure these Double Up Loans only from Fleet National Bank (and then Bank of America), with whom Madoff had an existing relationship. When Sterling's CFO inquired about securing Double Up Loans from other banks, upon infonnation and belief the Sterling Partners rejected his proposal due to Madoff' unwillingness to deal with any bank other than Fleet National Bank (and then Bank of America). 190 988. Madoff" Double Up Loan bank request--which amounted to a limitation--was financially disadvantageous to Sterling because it prevented Sterling from contacting other lending institutions to seek out 1nore favorable loan tenns, such as lower interest rates. Nonetheless, Sterling complied with Madoff" limitation by only taking out Double Up Loans from Fleet National Bank (and then Bank of America). 989. Madoff" reluctance to work with banks other than Fleet National Bank (and then Bank of America) should have caused Sterling to question whether Madoff was attempting to avoid subjecting his finn to stricter scrutiny from new lenders. C. The Sterling Partners Knew That Madoff Was Dishonest In His Investment Advisory Business 1. Madoff and Sterling falsely documented a $54 million bridge loan. 990. The Sterling Partners had such a close relationship with Madof`f that they were willing -- together with Madof`f -- to create a fraudulent letter agree1nent that falsely described an interest- and cost- free $54 1nillion loan from Madof`f as an "investment" by his wife, Ruth. 99l. In May 2004, Sterling sought to buy-out the broadcast rights of the New York Mets from Cablevision to launch the television network SNY. To finance the buy-out, Sterling applied to two banks for loans totaling $54 1nillion. However, as the deadline for closing the buy-out approached, the Sterling Partners grew concerned that the bank loans would not provide funding in time, so they turned to Madof`fl 992. On or about May 25, 2004, the Sterling Partners inquired with Madoff about making a large redemption from their BLMIS accounts. In response, Madof`f told Saul Katz, Fred Wilpon, and Marvin Tepper, in particular, that Sterling's BLMIS accounts were "in the market" and, as a result, redeeming funds at that ti1ne would lower their returns. As an l9l alternative to such a large redemption from Sterling's BLMIS accounts, Madoff offered to send Sterling the $54 million needed to finance the buy-out ofthe broadcast rights. 993. On or about May 26, 2004, Madoff wired to Sterling $54 million, which was comprised of other people's money. 994. Shortly thereafter, the bank loans totaling $54 million closed. 995. On or about May 27, 2004, Sterling repaid the $54 million it had borrowed from Madoff and instead used the bank loan proceeds to finance the buy-out ofthe broadcast rights. 996. Although Madoff and Sterling agreed that the $54 million transfer from Madoff was a loan, Sterling prepared on Mets letterhead a letter agreement dated May 25, 2004 from Fred Wilpon and Saul Katz to Ruth Madoff that falsely described the transaction as an investment by Ruth Madoff in the company that would later become SNY. 997. Sterling Partner Marvin Tepper was involved in the drafting ofthe May 25, 2004 letter agreement. 998. The May 25, 2004 letter agreement characterized Madoff' loan to Sterling as an "investment" by Madoff' wife, Ruth. 999. The May 25, 2004 letter agreement provided, in relevant part: This will confinn the conversations with respect to an investment by you [Ruth Madoff] in the Network. Over the years you have invested with us in, among other things, real estate funds, and we contemplate extending this relationship to the Network You are simultaneously wiring to Sterling Equities Associates the sum of $54 million which is expected to be the approximate amount of your proposed investment with the Network. l000. The May 25, 2004 letter agreement also provided for the payment of a pre1niu1n of so1ne undetennined amount to Ruth Madoff in the event she, Fred Wilpon, or Saul Katz tenninated the agree1nent: If at any ti1ne you [Ruth Madoff] or the undersigned [Fred Wilpon and Saul Katz] elect to tenninate this arrangement in the sole discretion ofthe terminating party, l92 the tenninating party shall give written notice to the other party and in either of such events, the undersigned shall pay to you the su1n of $54 million. In addition, the undersigned shall pay to you a pre1niu1n to be mutually agreed, having due regard to all the circumstances including, but not limited to, our long and beneficial business and personal relationships. 1001. The May 25, 2004 letter agreement was signed by Fred Wilpon, Saul Katz, and Ruth Madoff 1002. Fred Wilpon and Saul Katz, and, upon infonnation and beliei Mawin Tepper knew that the letter falsely described the transaction as an "investment" by Ruth Madoff when in fact it was a no interest, no cost loan from Madoff 1003. Furthennore, although the letter agreement stated that Fred Wilpon and Saul Katz had conversations with Ruth Madoff regarding the "investment," neither Fred Wilpon nor Saul Katz ever actually spoke to Ruth Madoff about any investment related to SNY or the predecessor co1npany. 1004. Fred Wilpon, Saul Katz, and Marvin Tepper knew or should have known that it was highly unusual for such a sizable transaction to be supported by only 1nini1nal documentation, such as the May 25, 2004 letter agreement. 1005. Fred Wilpon, Saul Katz, and Marvin Tepper knew or should have known that it was even 1nore suspect for the only documentation of such a substantial transaction to not even accurately reflect the true nature of the deal. 1006. The $54 million loan transaction between Sterling and Madoff and the accompanying letter agreement between Saul Katz, Fred Wilpon and Ruth Madoff demonstrate that Saul Katz, Fred Wilpon, and Marvin Tepper were on notice that Madoff would work with the1n to knowingly falsify a significant business transaction. 193 2. Msuloff and Sterling misled regulators in an inquiry by the New York Attorney ofiice. 1007. Sterling concealed Madoff' identity and role with respect to certain foundations in response to an inquiry by the New York Attorney General's office 1008. On or about July 6, 2000, the NYAG sent separate letters to the Iris Saul Katz Family Foundation, lnc. and the Judy Fred Wilpon Family Foundation, lnc.--both Sterling Defendants that had investments with Madoff--noting that their 1998 annual report was overdue and requesting certain documents and infonnation regarding the foundations' investment activity, which engaged in a high volume of securities trading. 1009. The NYAG specifically requested an explanation of each respective foundation's investment strategy, who makes the investment decisions, whether commissions are paid on trades, to whom, and the amount of those commissions. 1010. Sterling faxed both of these letters to BLMIS, and upon information and belief Madoff and/or other BLMIS employees were involved in drafting the responses. 1011. The Iris Saul Katz Family Foundation responded via letter dated August 21, 2000 and signed by Saul Katz (the "August 21st Katz Foundation Letter"), which generally described Madoff' investment strategy but failed to identify either Madoff or BLMIS by name in response to NYAG's request for the Foundation's investment decision--maker and to whom commissions were paid. 1012. The August 21st Katz Foundation Letter identified Saul Katz and Iris Katz as responsible for all investment decisions when, in fact, it was Madoff who detennined when he would allegedly enter or exit the market and what securities he would buy--none of these decisions were made by Saul Katz or Iris Katz. 194 1013. The August 21st Katz Foundation Letter also stated that cornrnissions are paid to the "executing broker" ofthe Iris Saul Katz Family Foundation's transactions, but it did not identify Madoff by name. 1014. The Judy Fred Wilpon Family Foundation responded via letter dated July 20, 2000 and signed by Fred Wilpon (the "July 20th Wilpon Foundation Letter"). 1015. Like the August 21st Katz Foundation Letter, the July 20th Wilpon Foundation Letter: generally described Madoff' investment strategy but failed to identify either Madoff or BLMIS by name; identified Fred Wilpon and Judy Wilpon as responsible for all investment decisions; and stated that commissions are paid to the "executing broker" ofthe Judy Fred Wilpon Family Foundation without identifying Madoff by name. 3. The Sterling Partners knew that Madoff lied about not accepting investments from funds of funds. 1016. While Sterling Stamos was in its infancy, Stamos and Saul Katz discussed creating one large portfolio for Sterling and the Sterling Partners comprised of investments with at least 10 different managers, one of whom Saul Katz insisted would be Madoff This plan would enable Sterling Stamos to manage and oversee all of Sterling's and the Sterling Partners' assets. 1017. Saul Katz raised this proposal to Madoff, who rejected it, noting that he did not accept investments from funds of funds, such as Sterling Stamos. 1018. Upon infonnation and belief Saul Katz explained Madoff' response to this proposal to the other Sterling partners, including, but not limited to, at one or more bi-weekly Sterling Partners meetings. 195 1019. Saul Katz and the rest of the Sterling Partners knew or should have known that Madoff--as he had done before--was attempting to avoid scrutiny by industry professionals who may challenge him or ask him questions. 1020. At some point later, Stamos learned that Madoff did in fact accept investments from funds of funds. Indeed, there were several funds of funds profiting substantially off of Madoff' fraudulent scheme, including Fairfield Sentry and Kingate. 1021. Stamos advised Saul Katz that Madoff had funds of funds investors and that Madoff' claim that he would not accept Sterling Stamos on that basis was inaccurate. Saul Katz had no explanation for the Madoff lie that was revealed. 1022. Upon infonnation and belief Saul Katz infonned the other Sterling Partners that Madoff in fact had funds of funds investors, including, but not limited to, at one or more bi- weekly Sterling Partners meetings. 1023. Saul Katz and, upon infonnation and belief the rest ofthe Sterling Partners knew that Madoff lied when he said to Saul Katz that he would not accept investments from funds of funds. 1024. Rather than conduct additional diligence to uncover some further explanation for the blatant lie told by Madoff Saul Katz and the rest of the Sterling Partners did nothing to investigate yet another indication of Madoff' dishonesty in conducting his Investment Advisory business. D. Sterling Was Aware Of The Imlicia Of Fraud In The Bayou Ponzi Scheme And Chose To Ignore Them When It Came To Madoff 1025. Madoff was not the first Ponzi scheme in which the Sterling Partners were involved. 196 1026. In or around October 2003, Sterling Stamos invested in certain funds managed by Bayou Superfund LLC ("Bayou"). In or around March 2005, Sterling Stamos redeemed its investments in Bayou because of concerns identified during its extensive due diligence process. Several months later, Bayou collapsed under the revelation that it was a $400 million Ponzi scheme. 1027. On May 30, 2006, various Bayou entities filed petitions for relief under Chapter 11 of the Bankruptcy Code. Sterling Stamos was sued by the bankruptcy trustee in the Bayou matter on or about September 8, 2006, and settled in or around May 2009 for $12.9 million. That settlement amount included 100% ofthe fictitious profits and approximately 44% ofthe principal Sterling Stamos withdrew from Bayou just months before it was revealed to be a Ponzi scheme. 1028. In addition to being general partners of Sterling Stamos during its involvement with Bayou, upon inforination and belief the Sterling Partners were also limited partners in the Sterling Stamos funds that invested in Bayou. As a result, the Sterling Partners were put on notice of core red flags present in a Ponzi scheme, many of which equally applied to Madoff 1029. Specifically, during the course of its investments in Bayou, Sterling Stamos' due diligence process identified various red flags that were cause for serious concern. This diligence process, which evolved and became more formalized over time, consisted of three co1nponents: (1) investment due diligence, which analyzed a given investment manager's style, strategy, and process, (2) operational due diligence, which investigated the internal processes of a business (often through on-site checks) and emphasized an appropriate segregation of duties, the use of an external auditor (preferably, a large, reputable one) and an external, third-party administrator and broker-dealer, and (3) risk due diligence, which perfonned various analyses to understand a 197 given fund manager's underlying strategy, trades, volatility, and return spread and flagged unusual characteristics like super-steady returns and no negative months. 1030. As general partners and limited partners of Sterling Stamos, upon infonnation and belief the Sterling Partners were familiar with this process and each of its three components. 1031. The Bayou red flags identified by the Sterling Stamos due diligence process included an extremely high single man risk together with the following: (1) a style drift an abrupt change in investment strategy), (2) the use of a non-traditional audit firing (3) a fund manager who lacked transparency and was not receptive to Stamos' inquiries and suggestions, (4) low volatility and positive returns, (5) non-standard legal documentation, including a lack of an offering memorandum, (6) a lack of organizational strength, including an incompetent back office, and (7) a huge jump in the amount of assets under rnanagernent. 1032. These issues became so disconcerting to Sterling Stamos that it requested a full redemption of its investments in Bayou in or around late February through early March 2005. 1033. Further, as a result of the revelation ofthe Bayou Ponzi scheme in 2005, Sterling Stamos made several significant changes to its fonnal due diligence procedures. First, given Bayou's use of a non-traditional audit finn, Sterling Stamos added a requirement to its due diligence checklist that if it was not familiar with the audit finn used by a given fund manager, it must conduct an on-site visit to the particular audit finn. Second, Sterling Stamos afforded the operational due diligence team full veto power over an investment. 1034. The Sterling Partners were aware of the reasons why Sterling Stamos made a full redemption of its investment in Bayou, as well as the changes Sterling Stamos irnplernented to its due diligence protocol following Bayou. 198 1035. Specifically, Saul Katz had discussions with Stamos and other Sterling Stamos personnel regarding the specific reasons for the Bayou redemptions. In fact, during the course of these discussions, Sta1nos explained to Saul Katz that it was Sterling Stamos' ongoing due diligence that exposed enough red flags about Bayou to cause hi1n to request full redemption of their investments. 1036. Moreover, prior to Bayou's collapse, Sterling Stamos' Chachra met with Saul Katz to discuss why Sterling Stamos redeemed its Bayou investments. Chachra explained to Saul Katz the reasons for the redemption, including, but not limited to, Bayou's style drift, plan to drastically increase the amount of assets under 1nanage1nent, and deficiencies in its back office infrastructure. 1037. Upon infonnation and belief Sterling Stamos' redemption of funds from Bayou and the bases for doing so were discussed between or amongst the Sterling Partners, including, but not limited to, at one or more bi-weekly Sterling Partners meetings. 1038. Upon infonnation and belief, the Sterling Stamos Bayou litigation was discussed between or amongst the Sterling Partners, including, but not limited to, at one or more bi-weekly Sterling Partners meetings. 1039. Sterling Stamos' involvement in the Bayou litigation put the Sterling Partners on notice of the indicia of fraud associated with a Ponzi scheme, many of which were easily applicable to Madoff 1040. For example, despite purporting to have hundreds of millions, or billions, of dollars of assets under 1nanage1nent, neither Bayou nor BLMIS was audited by a large, well- known accounting fi1m--Bayou's auditor was a fictitious organization and auditor was a three-person shop, Friehling Horowitz. Both Bayou and BLMIS provided their customers 199 unusually consistent, positive, but not necessarily spectacular, returns, with no volatility despite the condition of the market. In addition, neither investment manager charged a 1nanage1nent fee, which is how 1nost investment managers eam 1noney. 1041. Moreover, Madoff also exhibited the same style drift that was deemed a red flag with respect to Bayou when he offered Sterling the "special" investment opportunity in November 2005, which involved managing funds pursuant to a new, radically different strategy. In fact, Madoff--who in November 2005 was facing liquidity problems--represented to Sterling that this "special" investment opportunity would involve experimenting with a new way of trading options and generate retums of up to 50% more than usual. Madoff mandated, however, that Sterling fund the investment with new capital rather than via transfers from existing BLMIS accounts. 1042. Despite the fact that the Sterling Partners neither understood Madoff's new strategy nor his mandate for only new capital--and even questioned the legality ofthe investment opportunity--on or about November 30, 2005, they wired $22 million to Madoff to fund their new "special" KW BLMIS Account (1KW427). 1043. Upon infonnation and belief prior to making this investment, the Sterling Partners knew that one reason Sterling Stamos had redeemed its Bayou investments was due to a style drift. 1044. Even well after they had opened their "special" KW BLMIS Account--despite Friedman noticing that the special account traded a 1nuch larger number of options than usual-- the Sterling Partners never understood Madoff' new "special" strategy or why it could not be employed with respect to their other hundreds of KW BLMIS Accounts. 200 1045. Madoff "special" investment opportunity involved a dramatic change in strategy that should have stood out to the Sterling Partners not only after approximately 20 years of investing with Madoff but especially in light ofthe similar red flag that was raised by Bayou. Yet despite Madoff' style drift and the other suspicious circumstances surrounding the "special" investment opportunity, the Sterling Partners failed to conduct any diligence to detennine the nature of Madoff new strategy or whether it was legitimate. 1046. Despite being on notice ofthe foregoing, including the remarkable similarity between the red flags applicable to Bayou and Madoff the Sterling Partners ignored yet further indicia of fraud at BLMIS and conducted no diligence of Madoff in response. E. M:1doff' Returns Were Too Good To Be True And Sterling Knew It 1047. As discussed above, several of Sterling's 1nost trusted advisors cautioned the Sterling Partners to be skeptical of Madoff' returns. As one Sterling Stamos employee put it shortly after Madoff' arrest, "our CIO always said it was a sca1n, 'too good to be Well there [you] go, it was too good to be See supra Section 1048. Sterling's own observations about Madoff' strategy and perfonnance only corroborated those concerns. The Sterling Partners knew or should have known that Madoff' returns were implausible based on their knowledge of the split-strike conversion strategy and meticulous observation of Madoff' returns. The BLMIS perfonnance data tracked by Sterling confirmed that Madoff's non-volatile, positive returns were sharply at odds with the strategy he claimed to e1nploy. 1049. The Sterling Partners knew or should have known that Madoff fund was too good to be true because it consistently yielded positive gains coupled with ultra low volatility. Between 1998 and 2008--a period during which the 100 produced negative returns for nearly 60 months--Sterling's KW BLMIS Accounts rarely reported negative rates of 201 return. During that same ten-year period, ofthe 483 KW BLMIS Accounts administered by Sterling, none purportedly experienced more than five down months, and many purportedly never had a single down month. 1050. Upon infonnation and belief Saul Katz even confessed to his friends that he could not figure out how Madoff generated such smooth positive returns. According to an internal Sterling rnernorandurn dated January 6, 2004, during a telephone conversation, Friedman asked Madoff about the BLMIS investment cornrnittee that purportedly executed Madoff's strategy--a cornrnittee that the Sterling Partners had just learned about on or around January 6, 2004. During the call, Madoff reportedly became annoyed and complained to Friedman about how Saul Katz told his "country club friends" that "nobody knows how Madoff does it." l05l. Moreover, given Sterling's knowledge ofthe split-strike conversion strategy Madoff claimed to employ, the Sterling Partners knew or should have known that Madoff' returns were cornprornised. Sterling understood that the split-strike conversion strategy was an equity-based one that involved using options to hedge investments in stock. More particularly, Sterling knew that Madoff claimed the strategy first consisted of purchasing baskets of stock from approximately 35 ofthe top 50 l00 stocks and, second, involved applying an options- based "collar" around the underlying equities position by purchasing out-of-the-rnoney l00 puts and selling out-of-the-1noney l00 calls. l052. Because Madoff purportedly traded baskets of stocks that were highly correlated to the l00, the l00 fonned the core tenet of Madoff's split-strike conversion strategy. However, based on their analysis of Madoff' perfonnance, the Sterling Partners knew that there was essentially no correlation between Madoff' returns and the equity market. 202 1053. The Sterling Partners were intimately familiar with Madoff' historical perfonnance. From as early as the mid-1980s, Sterling spent countless hours monitoring the perfonnance of its Madoff investments. Using account statements, trade confinnations and quarterly portfolio rnanagernent reports, Sterling regularly input investment perfonnance data into spreadsheets to detennine its rates of return and gain an understanding of Madoff' perfonnance, which was reported and discussed at the bi-weekly Sterling Partners meetings. 1054. Sterling also tracked Madoff' historical perfonnance over longer periods. For example, in or around November 2005, the Sterling Partners prepared charts and tables comparing nearly two decades worth of perfonnance data for their BLMIS accounts against certain benchmarks, including U.S. Treasuries and the Dow Jones Industrial Average equity market index that is highly correlated to the 100 and comprised of many ofthe stocks Madoff purported to trade. These and other analyses perfonned by Sterling confirmed that there was virtually no correlation between Madoff' returns and either the DJIA or the 100. 1055. The discomiect between Madoff' returns and the equity market was particularly obvious during periods of market dislocation, which should have caused the Sterling Partners to question Madoff' prophetic market timing. Remarkably, Sterling's BLMIS investments were effectively irnrnune from any number of market catastrophes, enjoying steady rates of return at times when the rest of the market was experiencing financial crises. 1056. Sterling's BLMIS accounts maintained suspiciously consistent positive rates of return even during events that otherwise devastated financial markets. For example, even in the face ofthe Black Monday crash in 1987, the bursting ofthe dotcom bubble in 2000, the terrorist 203 attacks of September 11, 2001, and the recession and housing crisis of 2008--just to name a few--Sterling's KW BLMIS Accounts produced positive returns. 1057. This lack of correlation should have caused Sterling to question whether Madoff was actually applying the strategy he claimed to employ. Nonetheless, the Sterling Partners did not perfonn any independent diligence or follow-up to detennine how Madoff produced such smooth positive returns even during periods of market tunnoil. 1058. Just as the Sterling Partners should have been concerned that Madoff was virtually never in the market during adverse market events and almost always in the market as it rallied, they should have been equally concerned by Madoff' practice of selling all equity positions shortly before the end of each quarter regardless of underlying market conditions, especially given that market timing played such a prominent role in Madoff' strategy. If the market were to have jumped shortly before the end of each quarter, Madoff' habitual practice of selling all equity positions at quarter-end would have detrirnentally impacted returns and, thus, would have been inconsistent with a strategy that relied so heavily on market timing. Because Sterling closely monitored whether and when Madoff had purportedly moved in or out ofthe market, it knew that Madoff would artificially take his customers' investments out of the market near the end of each quarter for reasons having nothing to do with his split-strike conversion strategy. 1059. Indeed, Sterling knew or should have known that Madoff' behavior was yet another example of avoiding regulatory scrutiny into his investment advisory business because as a broker-dealer, he was required to file quarterly financial statements with regulators. By liquidating all of his equity positions at quarter-end, Madoff effectively avoided reporting the 204 true financial condition of his investment advisory business, including its assets under 1nanage1nent. 1060. Year after year, throughout Sterling's near quarter-century business relationship with Madoff, it was no accident that Madoff was conveniently out of the market at the end of each quarter, when he would have had reporting obligations to the regulators had he remained in the market. Madoff" departure from the market at the end of each quarter regardless of market conditions should have been a clear indication to Sterling that he was seeking to conceal his trading activities from regulators and that Madoff" operation was possibly fraudulent. 1061. Notwithstanding the foregoing, Sterling did not perforin any diligence regarding Madoff" practice of moving out ofthe market near the end of each quarter. 1062. Similarly, Sterling should have questioned the legitimacy of Madoff" operation based on an utterly nonsensical explanation he gave regarding how his returns were derived. As a "rule of thumb," Madoff repeatedly assured Sterling that, no matter what happened in the equity market, his future amiual returns would be about two and a half ti1nes the yield of U.S. Treasuries. 1063. The Sterling Partners tested Madoff" "rule of thumb" against the historical perforinance of their own KW BLMIS Accounts. Internal Sterling documents calculated Madoff" returns as a multiple ofthe 10-year U.S. Treasury bond and compared Madoff" perforinance to various short and long terin U.S. Treasuries over a period of approximately 15 years. Sterling's analysis showed that Madoff" returns were generally about two and a half ti1nes the yield ofthe 10-year U.S. Treasury bond in any market environment. 1064. The fact that Madoff" reported returns correlated not with the equity market, but with risk-free U.S. Treasuries 1nade no sense whatsoever. However, Sterling failed to perform 205 any independent diligence to try to understand why Madoff' returns correlated to U.S. Treasuries and not the 100. 1065. Madoff' nonsensical "rule of thumb" should have caused the Sterling Partners to question whether Madoff' operation was fraudulent. Instead, as discussed in Section V1I1.D supra, the Sterling Partners accepted it as a guarantee of positive future returns upon which they heavily levered their BLMIS investments. 1066. The Sterling Partners also knew or should have known that Madoff' returns were too good to be true based on their access to sophisticated quantitative infonnation showing that Madoff' historical perfonnance was almost impossible statistically. By way of example, in connection with its efforts to re-finance a $136.9 million Mets loan in 2004, Sterling prepared a presentation for its bank lenders that emphasized the strength of the organization's cash management and working capital positions as a result of its BLMIS investments. Citing Madoff' average annual return of 18% with a standard deviation of 4% over a 25 year period, Sterling represented to the lenders that future annual returns with Madoff were predicted to be positive 99.9% ofthe time. 1067. Finally, the simple fact that Sterling Starnos could never quite match Madoff' consistently high returns and improbable lack of volatility was an early and obvious sign that should have alerted the Sterling Partners to a high likelihood of illegality at BLMIS. 1068. Because one ofthe main goals of Sterling Starnos was to re-create Madoff-like returns, the Sterling Partners at all times compared the perfonnance of Madoff against that of Sterling Stamos. 206 1069. On a regular basis--usually Stamos provided Sterling-- typically Saul Katz or David Katz--with rate of return information for various Sterling Stamos funds, which was then compared against Madoff' perfonnance. 1070. Saul Katz or David Katz analyzed the perforinance of Sterling Stamos versus Madoff and presented the results to the Sterling Partners at their bi-weekly meetings. To supplement this analysis, Stamos or another member of Sterling Stamos had a conversation with Saul Katz or David Katz about the results of this comparison. 1071. More often than not, Madoff outperfonned similar highly liquid funds at Sterling Stamos. In addition, the Sterling Stamos funds achieved rates of return nowhere near the consistency of Madoff' s. In fact, some ofthe Sterling Partners, including Saul Katz and Michael Katz, would often express disappointment to Stamos and other Sterling Stamos employees about their inability to generate Madoff-like returns. While Madoff returns were always solid and steady, Sterling Stamos' returns lacked the same consistency. The inability of Sterling Stamos-- the hedge fund created by Sterling itself with which it entrusted a substantial amount of its assets--to generate similarly high and consistent returns as compared to Madoff should have been a basic red flag. Yet, the Sterling Partners refused to conduct any inquiry into why Madoff' returns were so unbelievably consistent and could not be replicated. 1072. All ofthe BLMIS performance data that the Sterling Partners monitored and analyzed pointed to the same conclusion reached by Stamos and others--Madoff' returns were simply too good to be true. 1073. Although the Sterling Partners knew that Madoff's returns were almost statistically impossible and sharply at odds with his split-strike conversion strategy, they willfully disregarded any criticisms of Madoff and simply buried their heads in the sand. 207 X. THE STERLING INEXCUSABLE LACK OF DILIGENCE ON MADOFF AND BLMIS AFTER REPEATED INDICIA OF FRAUD 1074. Unlike the majority of BLMIS investors, Sterling had the sophistication and resources, unique access to Madofi and hedge fund experience to conduct meaningful due diligence on Madoff This fact alone makes it all the more egregious that in the face of the parade of red flags, the Sterling Partners chose to do nothing. 1075. As discussed above, the Sterling Partners are not your average investors. They are a team of sophisticated professionals who built a business empire spanning four major industries, including real estate, professional baseball and sports media, private equity, and hedge funds. Notably, very early on in their almost quarter-century long business relationship with Madofi the Sterling Partners discovered Madoff' anomalous and implausibly high and consistent returns, and then found endless ways to exploit those returns. In doing so, the Sterling Partners, their families, related trusts and entities profited from the Madoff fraud by approximately $300 million of other people's money. Yet despite the availability of these vast resources, the Sterling Partners never used them to conduct any diligence on Madoff and his illegitimate business operations in response to the roster of red flags to which they were exposed. 1076. Further, unlike most BLMIS investors, the Sterling Partners had unique direct access to Madoff and BLMIS staff whenever necessary. Indeed, Fred Wilpon and Saul Katz had meetings with Madoff himself in his office at least once a year to discuss the status of their investments and his projected returns--a privilege few BLMIS investors enjoyed. Moreover, Saul Katz spoke directly with Madoff at some points in time at least once a day, and Friedman was in constant daily contact with various BLMIS employees in connection with his administration ofthe 483 KW BLMIS Accounts. Despite ample opportunities to question 208 Madoff and other BLMIS e1nployees about various indicia of fraud, Sterling chose to do nothing and look the other way. 1077. The Sterling Pa1tners' lack of diligence on Madoff is even 1nore indefensible considering their ownership of their very own hedge fund, Sterling Stamos. Upon infonnation and belief as both general partners and limited partners of Sterling Sta1nos, the Sterling Partners were knowledgeable ofthe due diligence process developed and utilized by Sterling Sta1nos to vet potential investment managers, which should have prompted their own due diligence on Madoff 1078. Upon infonnation and belief the Sterling Partners were not only aware that Sterling Stamos' due diligence process had uncovered another Ponzi sche1ne, Bayou, but also that it would have rejected Madoff See supra Section 1. Indeed, Madoff would have failed every level of due diligence in place at Sterling Stamos. As owners of Sterling Stamos, the Sterling Partners were aware of the types of infonnation and issues that this due diligence process would monitor. Given their unique role at Sterling Sta1nos and involvement in investment decisions, Saul Katz and David Katz, in particular, should have been even 1nore aware that Madoff did not stand a chance of passing any level of Sterling Stamos' due diligence process. See supra Section VI.C. 1079. The Sterling Pa1tners' inside access to a hedge fund due diligence process that vetted--and often rejected--potential investment managers further enhanced their financial industry expertise and should have infonned their analysis and diligence in connection with their Madoff investments. Rather than use the extensive due diligence process applied to other investment managers by the very hedge fund they created or their abundant resources and access to industry liaisons to inquire further, the Sterling Pa1tners instead chose to continue their al1nost 209 quarter-century pattern of burying their heads in the sand to the clarion calls of Madoff' potential fraud. XI. THE STERLING KNOWLEDGE QUIRY NOTICE MUST BE IMPUTED TO ALL DEFENDANTS 1080. Under the circumstances set forth above, the Sterling Partners either knew, or should have known, that the returns they received from their BLMIS investment accounts were being manipulated, and were not the product of legitimate trading activity. Alternatively, under Section 23 of New York Partnership Law, the knowledge and/or inquiry notice of any Sterling Partner should be imputed to all ofthe Sterling Partners. Despite being aware of such facts and red flags as detailed above, the Sterling Partners failed to conduct any reasonable diligence. See supra Section X. For the reasons set forth below, the Sterling Partners' knowledge and/ or inquiry notice must be imputed to all of the Defendants. 1081. Sterling is a closely-held, family business, and all aspects of the business are overseen by the Katz-Wilpon family and the Sterling partnership. 1082. The Sterling Partners are the ultimate controlling principals, managing rnernbers, or partners of all the Sterling-related entities, including the Sterling Entity Defendants, which they operate for their benefit. 1083. The Sterling Partners effectively dominated and controlled the Sterling Entity Defendants, operating and directing all day-to-day decisions for the entities, including all decisions related to the Sterling Entity Defendants' BLMIS accounts. 1084. Every maj or decision concerning Sterling and the Sterling Entity Defendants were and are made on a partnership level after discussion amongst the Sterling Partners collectively including, in particular, decisions regarding their investments in BLMIS. 210 1085. Because the Sterling Partners were agents of all ofthe Sterling Entity Defendants, their knowledge and/or inquiry notice in connection with their investments in BLMIS should be imputed to the Sterling Entity Defendants. 1086. As detailed above, the Sterling Partners were also the equitable owners ofthe Sterling Entity Defendants and retained beneficial use over the Sterling Entity Defendants and all of their assets, including their BLMIS accounts. 1087. The Sterling Partners freely transferred funds between and a1nong the hundreds of inter-connected KW BLMIS Accounts in which they, their families, related trusts and entities that they controlled held interests. 1088. Upon infonnation and belief the Sterling Partners used the Sterling Entity Defendants' assets for their own purposes including, in particular, for the financial restructuring of Sterling's collective debt after the revelation of Madoff's fraud. 1089. The Sterling Partners and the Sterling Entity Defendants are effectively one and the sa1ne, thus the Sterling Partners' knowledge and/ or inquiry notice of irregular and/or fraudulent activity at BLMIS is attributable to the Sterling Entity Defendants. 1090. Furthennore, the corporate form ofthe Sterling Entity Defendants should be disregarded because, as set forth above, they were dominated and/or controlled by the Sterling Partners and/or through other entities controlled and owned by the Sterling Partners. 1091. The Sterling Partners are thus the alter egos of the Sterling Entity Defendants, and their knowledge and inquiry notice must be imputed to the Sterling Entity Defendants. 1092. Accordingly, under principles of agency, equitable ownership and veil piercing, the Sterling Partners' knowledge and/ or inquiry notice must be imputed to the Sterling Entity Defendants. 21 1 1093. Similarly, the Sterling Partners' knowledge and inquiry notice must also be imputed to the Katz/Wilpon Trust Defendants. 1094. The Sterling Partners dominated and controlled the Katz/Wilpon Trust Defendants, including the Saul B. Katz Family Trust, Katz 2002 Descendants' Trust, Fred Wilpon Family Trust, and Wilpon 2002 Descendants' Trust. 1095. The Sterling Partners were also the equitable owners of the Katz/Wilpon Trust Defendants. As noted above, every Sterling Partner who was a settlor of each Katz/Wilpon Trust Defendant funded the trust entities, directed the movement of funds into and out of each trust's BLMIS account(s), and even directed the leveraging of the BLMIS accounts held by each Katz/Wilpon Trust Defendant. Upon infonnation and belief each Sterling Partner that was a settlor of a Katz/Wilpon Trust Defendant treated the trust's assets as his own, and the Sterling Partners even used the assets ofthe Katz/Wilpon Trust Defendants in Sterling's collective financial restructuring. 1096. Upon infonnation and belief the Sterling Partners also used the Katz/Wilpon Trust Defendants to shield from their creditors--including from the Plaintiff herein--the Fictitious Profits and other fraudulent transfers from BLMIS, which the Sterling Partners knew, or should have known, were the product of illegitimate trading activity. 1097. Accordingly, under principles of equitable ownership and veil piercing, the Sterling Partners' knowledge and/ or inquiry notice must be imputed to the Katz/Wilpon Trust Defendants. 1098. Agency and equitable ownership principles similarly require the imputation ofthe Sterling Partners' knowledge and/or inquiry notice to the Sterling Family Member Defendants. 212 1099. The Sterling Family Member Defendants expressly authorized the Sterling Partners, Arthur Friedman, and/or each Family Member Defendant's respective related family rnernber Sterling Partner to act as their agents in opening, administering, and/or otherwise managing their BLMIS accounts. All actions undertaken by any Sterling Partner related to each Sterling Family Member Defendants' BLMIS account fell within the scope of the Sterling Partners' responsibilities, and the facts giving rise to the Sterling Partners' knowledge and/or inquiry notice in connection with BLMIS were acquired within the scope of the Sterling Partners' agency relationship. 1100. Likewise, each Sterling Partner who held an interest in a BLMIS account as tenant-in-cornrnon and/or a joint-tenant acted as the agent ofthe other including certain Sterling Family Member Defendant(s). Accordingly, the knowledge and/or inquiry notice of the Sterling Partners acquired in the course ofthe Sterling Partners' responsibilities as agents in connection with tenant-in-cornrnon and/ or joint tenant BLMIS accounts must be imputed to the other including certain Sterling Family Member Defendants. 1101. Alternatively, upon information and belief each of the Sterling Partners was otherwise the equitable or beneficial owner ofthe BLMIS accounts held by their wives and children named as Sterling Family Member Defendants herein. XII. TRANSFERS A. Overview 1102. According to and Sterling's records, a number of Sterling Defendants maintained multiple accounts with BLMIS, including, but not limited to, the accounts set forth in Appendix I, Exhibit A (collectively, the "Sterling BLMIS Accounts"). 1103. Upon inforination and belief for each Sterling BLMIS Account, a Customer Agreement, an Option Agreement, and/ or a Trading Authorization Limited to Purchases and 213 Sales of Securities and Options (collectively, the "Sterling BLMIS Account Agreements") was executed and delivered to BLMIS at its headquarters located at 885 Third Avenue, New York, New York. 1104. The Sterling BLMIS Account Agreements were to be perfonned in New York, New York through securities trading activities that would take place in New York, New York. The Sterling BLMIS Accounts were held in New York, New York, and from their account opening dates to December 11, 2008, a number of Sterling Defendants--through the Sterling Partners and/or Arthur Friedman--sent funds to BLMIS and/or to account at JPMorgan Chase Co., Account X1703 (the Bank Account") in New York, New York for application to the Sterling BLMIS Accounts and the conducting of purported trading activities. From at least 23 years prior to December 11, 2008, a nu1nber of Sterling Defendants--through the Sterling Partners and/or Arthur Friedman--made deposits to BLMIS and/or into the BLMIS Bank Account for application to the Sterling BLMIS Accounts. 1105. Prior to the Filing Date, BLMIS 1nade direct transfers to a nu1nber of Sterling Defendants totaling $1,018,098,199 (collectively, the "Total Initial Transfers"). Of the Total Initial Transfers, approximately $295,465,565 constitutes Fictitious Profits comprised of other people's 1noney received by certain Sterling Defendants fro1n the opening dates of their Sterling BLMIS Accounts to the Filing Date, $710,601,377 constitutes principal received by certain Sterling Defendants within the six years prior to the Filing Date, including $14,191,667 of principal in the ninety day Preference Period prior to the Filing Date, and $12,031,257 of investments by Madofi Ruth Madofi and/or Peter Madoff constituting BLMIS Customer Property, other people's 1noney, received by the Madoff Investment Entity Defendants. 214 1106. The Total Initial Transfers to the Sterling Defendants were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery by the Trustee pursuant to sections 544(b), 547, 548, and 550(a) ofthe Bankruptcy Code, sections 273-279 ofthe DCL, and NY CPLR sections 203(g) and 213(8). 1107. Of the Total Initial Transfers, during the six years prior to the Filing Date, BLMIS made direct transfers to the Sterling Defendants of approximately $162,726,768 in Fictitious Profits, $710,601,377 in principal, and $6,608,642 in BLMIS Customer Property received by the Madoff Investment Entity Defendants (the "Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. 1108. Of the Total Initial Transfers, during the two years prior to the Filing Date, BLMIS made direct transfers to the Sterling Defendants of approximately $83,309,162 in Fictitious Profits, $301,027,523 in principal, and $2,371,478 in BLMIS Customer Property received by the Madoff Investment Entity Defendants (the "Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section 1109. In the ninety-day Preference Period prior to the Filing Date, BLMIS transferred approximately $14,191,667 of principal to a number of Sterling Defendants (the "Preference Period Transfers"). The total Preference Period Transfers are avoidable and recoverable under sections 547, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section 215 1110. A number of Sterling Defendants received Subsequent Transfers that are recoverable under section 550(a) ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section 1111. To the extent that any of the recovery counts 1nay be inconsistent with each other, they are to be treated as being pled in the alternative. 1112. Appendix I, Exhibit A to this Complaint identifies the 185 Sterling BLMIS Accounts that received Initial Transfers fro1n BLMIS. 1113. Appendix I, Exhibit provides the Initial Transfers for each Sterling BLMIS Account identified in Exhibit A to Appendix I. 1114. Appendix II, Exhibit A lists the Sterling Defendants that received Initial and/ or Subsequent Transfers fro1n the Sterling BLMIS Accounts. 1115. Appendix II, Exhibits and identify the Initial and Subsequent Transfers, respectively, for each Sterling Defendant. 1116. The Initial Transfers received by any Sterling Defendant and related infonnation are identified in each Sterling Defendant's corresponding Exhibit to Appendix II. 1117. The Preference Period Transfers received by any Sterling Defendant are identified in Column 4 of each Sterling Defendant's corresponding Exhibit to Appendix II. 1118. The Subsequent Transfers received by any Sterling Defendant are identified in each Sterling Defendant's corresponding Exhibit to Appendix II. 1119. To the extent applicable, the internal records of BLMIS and/or Sterling identify each Sterling Defendant's fixed percentage interest in the Sterling BLMIS Accounts opened in their name or for their benefit. Such Sterling Defendant's applicable percentage interest in each Sterling BLMIS Account is identified in Column 3 of Exhibits and to Appendix II. Upon 216 infonnation and belief each Sterling Defendant received Initial Transfers and/or Subsequent Transfers from each Sterling BLMIS Account equal to that Sterling Defendant's percentage ownership interest in the applicable Sterling BLMIS Account. 1120. In a minority of cases, neither nor Sterling's records identify the applicable percentage interest of a Sterling Defendant in a particular Sterling BLMIS Account. Pending discovery, such Sterling Defendants are attributed the 1naxi1nu1n percentage ownership interest allocable in these Sterling BLMIS Accounts as identified in Exhibit and/or Exhibit of Appendix II for such Sterling Defendants. 1121. The following section provides the relevant Sterling BLMIS Account(s) and avoidable transfer infonnation for each Sterling Partner Defendant, Sterling Entity Defendant, Katz/Wilpon Trust Defendant, Sterling Family Member Defendant, and Madoff Investment Entity Defendant, ad seriatim. 1122. With respect to Initial Transfers, the section below provides for each Sterling Defendant, to the extent applicable: the Sterling BLMIS Account(s) from which the Sterling Defendant received Initial Transfers, the total Initial Transfers, the total Six Year Initial Transfers, the total Two Year Initial Transfers, and the total Preference Period Transfers. Further infonnation for each Sterling Defendant's Initial Transfers is provided in each Sterling Defendant's corresponding Exhibit to Appendix II. 1123. With respect to Subsequent Transfers, the section below provides for each Sterling Defendant: the Sterling BLMIS Account(s) from which the Sterling Defendant received Subsequent Transfers, and the total Subsequent Transfers from each Sterling BLMIS Account. Further infonnation regarding each Sterling Defendant's Subsequent Transfers is provided in each Sterling Defendant's corresponding Exhibit to Appendix II. 217 1124. The Trustee's investigation is ongoing and the Trustee reserves the right to: supplement the infonnation regarding the total and each Sterling Defendant's Initial Transfers and Subsequent Transfers, and any additional transfers; and seek avoidance and recovery of such additional transfers. B. Sterling Partners Saul Katz 1125. According to and Sterling's records, Defendant Saul Katz received Initial Transfers from approximately twenty-one (21) Sterling BLMIS Accounts: Nos. 1KW024, 1KW089, 1KW098, 1KW120, 1KW121, 1KW197, 1KW220, 1KW222, 1KW238, 1KW278, 1KW289, 1KW329, 1KW336, 1KW337, 1KW362, 1KW363, 1KW376, 1KW412, 1KW427, 101149, and 1KW007. Appendix II, Saul B. Katz Exhibit B. a. BLMIS made direct transfers to Defendant Saul Katz totaling $13,960,991 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $17,874,068 in principal during the six years prior to the Filing Date, totaling approximately $31,835,059 (the "Saul Katz Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Saul B. Katz Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Saul Katz of approximately $29,382,183 (the "Saul Katz Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code, applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Of the Saul Katz Six Year Initial Transfers, 218 $11,508,115 were Fictitious Profits and the remaining $17,874,068 constituted the retum of principal. Appendix II, Saul B. Katz Exhibit B. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Saul Katz of approximately $9,572,831 (the "Saul Katz Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Of the Saul Katz Two Year Initial Transfers, $6,778,120 were Fictitious Profits and the remaining $2,794,710 constituted the retum of principal. Appendix II, Saul B. Katz Exhibit B. 1126. Upon infonnation and beliei Defendant Saul Katz is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers from approximately forty-seven (47) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW040, 1KW057, 1KW084, 1KW134, 1KW156, 1KW175, 1KW178, 1KW180, 1KW189, 1KW192, 1KW218, 1KW223, 1KW247, 1KW254, 1KW255, 1KW259, 1KW279, 1KW287, 1KW300, 1KW313, 1KW314, 1KW315, 1KW323, 1KW328, 1KW339, 1KW341, 1KW346, 1KW347, 1KW348, 1KW349, 1KW358, 1KW374, 1KW378, 1KW413, 1KW420, 1KW423, 1KW434, 1KW435, 1KW436, 1KW447, 1KW449, 1KW463, 1KW464, 1KW465, 1KW466, 1KW059, and 1KW359 (collectively, the "Saul Katz Subsequent Transfer Accounts"). Appendix II, Saul B. Katz Exhibit C. a. Defendant Saul Katz received Subsequent Transfers from the Saul Katz Subsequent Transfer Accounts totaling $31,143,050 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $57,106,710 in principal during the six years prior to the Filing Date, totaling approximately $88,249,759 (the "Saul Katz Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property 219 within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Saul Katz pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Saul B. Katz Exhibit C. Fred Wilpon 1127. According to and Sterling's records, Defendant Fred Wilpon received Initial Transfers from approximately twelve (12) Sterling BLMIS Accounts: Nos. 1KW067, 1KW098, 1KW220, 1KW222, 1KW288, 1KW329, 1KW337, 1KW362, 1KW392, 1KW412, 1KW427, and 102343. Appendix II, Fred Wilpon Exhibit B. a. BLMIS made direct transfers to Defendant Fred Wilpon totaling $8,094,733 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $32,483,062 in principal during the six years prior to the Filing Date, totaling approximately $40,577,796 (the "Fred Wilpon Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Fred Wilpon Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Fred Wilpon of approximately $37,628,174 (the "Fred Wilpon Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Of the Fred Wilpon Six Year Initial Transfers, $5,145,111 were Fictitious Profits and the remaining $32,483,062 constituted the return of principal. Appendix II, Fred Wilpon Exhibit B. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Fred Wilpon of approximately $26,866,384 (the "Fred Wilpon Two Year 220 Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Of the Fred Wilpon Two Year Initial Transfers, $4,649,562 were Fictitious Profits and the remaining $22,216,822 constituted the return of principal. Appendix II, Fred Wilpon Exhibit B. 1128. Upon infonnation and belief Defendant Fred Wilpon is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers from approximately forty-five (45) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW040, 1KW057, 1KW084, 1KW134, 1KW156, 1KW175, 1KW178, 1KW180, 1KW189, 1KW192, 1KW218, 1KW223, 1KW247, 1KW254, 1KW255, 1KW257, 1KW279, 1KW287, 1KW300, 1KW313, 1KW314, 1KW315, 1KW323, 1KW328, IKW339, 1KW341, IKW346, IKW347, IKW348, IKW349, IKW358, IKW374, IKW378, 1KW413, 1KW420, 1KW423, IKW435, IKW436, IKW449, IKW463, IKW464, IKW465, IKW466, 1KW059, and IKW359 (collectively, the "Fred Wilpon Subsequent Transfer Accounts"). Appendix II, Fred Wilpon Exhibit C. a. Defendant Fred Wilpon received Subsequent Transfers from the Fred Wilpon Subsequent Transfer Accounts totaling $44,818,855 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $82,056,209 in principal during the six years prior to the Filing Date, totaling approximately $126,875,064 (the "Fred Wilpon Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Fred Wilpon pursuant to section 550(a) of the Bankruptcy Code. Appendix II, Fred Wilpon Exhibit C. 221 Richard Wilpon 1129. According to and Sterling's records, Defendant Richard Wilpon received Initial Transfers from approximately seventeen (17) Sterling BLMIS Accounts: Nos. 1KW022, 1KW080, 1KW098, 1KW161, 1KW207, 1KW208, 1KW209, 1KW220, 1KW250, 1KW290, IKW337, 1KW362, 1KW403, 1KW412, 1KW427, 102343, and 1KW081. Appendix II, Richard Wilpon Exhibit B. a. BLMIS made direct transfers to Defendant Richard Wilpon totaling $6,925,067 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $14,961,751 in principal during the six years prior to the Filing Date, totaling approximately $21,886,818 (the "Richard Wilpon Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Richard Wilpon Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Richard Wilpon of approximately $16,871,186 (the "Richard Wilpon Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Of the Richard Wilpon Six Year Initial Transfers, $1,909,436 were Fictitious Profits and the remaining $14,961,751 constituted the return of principal. Appendix II, Richard Wilpon Exhibit B. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Richard Wilpon of approximately $11,929,467 (the "Richard Wilpon Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section 222 Of the Richard Wilpon Two Year Initial Transfers, $1,909,436 were Fictitious Profits and the remaining $10,020,032 constituted the return of principal. Appendix II, Richard Wilpon Exhibit B. d. In the ninety days before the Filing Date, BLMIS 1nade direct transfers of principal to Defendant Richard Wilpon totaling $368,533 (the "Richard Wilpon Preference Period Transfers"), which are avoidable and recoverable under sections 547, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Richard Wilpon Exhibit B. 1130. Upon infonnation and belief Defendant Richard Wilpon is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers fro1n approximately forty-three (43) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW040, 1KW057, 1KW134, 1KW156, 1KW175, 1KW178, 1KW180, 1KW192, 1KW218, 1KW223, 1KW247, 1KW254, 1KW255, 1KW279, 1KW287, 1KW300, 1KW313, 1KW314, 1KW315, 1KW323, 1KW325, 1KW339, 1KW341, 1KW346, 1KW347, 1KW348, 1KW349, 1KW358, 1KW378, 1KW402, 1KW413, 1KW420, 1KW423, 1KW435, 1KW436, 1KW447, 1KW449, 1KW455, 1KW463, 1KW464, 1KW465, 1KW059, and 1KW359 (collectively, the "Richard Wilpon Subsequent Transfer Accounts"). Appendix II, Richard Wilpon Exhibit C. a. Defendant Richard Wilpon received Subsequent Transfers fro1n the Richard Wilpon Subsequent Transfer Accounts totaling $16,241,651 in Fictitious Profits fro1n the opening dates of such Subsequent Transfer Accounts to the Filing Date and $33,207,078 in principal during the six years prior to the Filing Date, totaling approximately $49,448,729 (the "Richard Wilpon Subsequent Transfers"). Such Subsequent Transfers were and continue to be 223 Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Richard Wilpon pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Richard Wilpon Exhibit C. Michael Katz 1131. According to and Sterling's records, Defendant Michael Katz received Initial Transfers fro1n approximately seventeen (17) Sterling BLMIS Accounts: Nos. 1KW019, 1KW022, 1KW098, 1KW109, 1KW110, lKWl2l, lKWl6l, 1KW220, 1KW291, 1KW337, 1KW345, 1KW354, 1KW362, 1KW412, 1KW427, 101149, and 1KW020. Appendix II, Michael Katz Exhibit B. a. BLMIS made direct transfers to Defendant Michael Katz totaling $4,901,745 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $9,180,758 in principal during the six years prior to the Filing Date, totaling approximately $14,082,503 (the "Michael Katz Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Michael Katz Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Michael Katz of approximately $10,450,928 (the "Michael Katz Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Of the Michael Katz Six Year Initial Transfers, $1,270,170 were Fictitious Profits and the remaining $9,180,758 constituted the return of principal. Appendix II, Michael Katz Exhibit B. 224 c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Michael Katz of approximately $4,428,938 (the "Michael Katz Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Of the Michael Katz Two Year Initial Transfers, $689,187 were Fictitious Profits and the remaining $3,739,751 constituted the return of principal. Appendix II, Michael Katz Exhibit B. d. In the ninety days before the Filing Date, BLMIS made direct transfers of principal to Defendant Michael Katz totaling $1,500,000 (the "Michael Katz Preference Period Transfers"), which are avoidable and recoverable under sections 547, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Michael Katz Exhibit B. 1132. Upon infonnation and belief Defendant Michael Katz is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers fro1n approximately forty-two (42) Sterling BLMIS Accounts held by other Sterling-related individuals: Nos. 1KW040, 1KW057, 1KW134, 1KW156, 1KW175, 1KW178, 1KW180, 1KW192, 1KW218, 1KW223, 1KW247, 1KW254, 1KW255, 1KW279, 1KW287, 1KW300, 1KW313, 1KW314, 1KW315, 1KW323, 1KW339, 1KW341, 1KW346, 1KW347, 1KW348, 1KW349, 1KW358, 1KW378, 1KW402, 1KW413, 1KW420, 1KW423, 1KW434, 1KW435, 1KW436, 1KW447, 1KW449, 1KW455, 1KW463, 1KW464, 1KW059, and 1KW359 (collectively, the "Michael Katz Subsequent Transfer Accounts"). Appendix II, Michael Katz Exhibit C. a. Defendant Michael Katz received Subsequent Transfers fro1n the Michael Katz Subsequent Transfer Accounts totaling $14,209,601 in Fictitious Profits fro1n the opening 225 dates of such Subsequent Transfer Accounts to the Filing Date and $29,504,875 in principal during the six years prior to the Filing Date, totaling approximately $43,714,476 (the "Michael Katz Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Michael Katz pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Michael Katz Exhibit C. Jeffrey Wilpon 1133. According to and Sterling's records, Defendant Jeffrey Wilpon received Initial Transfers from approximately ten (10) Sterling BLMIS Accounts: Nos. 1KW098, 1KW161, 1KW195, 1KW220, 1KW295, 1KW337, 1KW412, 1KW427, 101149, and 1KW076. Appendix II, Jeffrey Wilpon Exhibit B. a. BLMIS made direct transfers to Defendant Jeffrey Wilpon totaling $3,339,296 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $9,434,973 in principal during the six years prior to the Filing Date, totaling approximately $12,774,269 (the "Jeffrey Wilpon Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Jeffrey Wilpon Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Jeffrey Wilpon of approximately $10,349,364 (the "Jeffrey Wilpon Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Of the Jeffrey Wilpon Six Year Initial 226 Transfers, $914,391 were Fictitious Profits and the remaining $9,434,973 constituted the retum of principal. Appendix II, Jeffrey Wilpon Exhibit B. c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Jeffrey Wilpon of approximately $2,737,364 (the "Jeffrey Wilpon Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Of the Jeffrey Wilpon Two Year Initial Transfers, $914,391 were Fictitious Profits and the remaining $1,822,973 constituted the retum of principal. Appendix II, Jeffrey Wilpon Exhibit B. 1134. Upon infonnation and belief Defendant Jeffrey Wilpon is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers fro1n approximately fifty-five (55) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KWO40, IKWO57, 1KW134, 1KW156, 1KW175, 1KW178, 1KW180, 1KW192, 1KW218, 1KW223, 1KW247, 1KW254, 1KW255, 1KW279, 1KW287, 1KW300, 1KW313, 1KW314, 1KW315, 1KW323, 1KW325, IKW339, 1KW341, 1KW346, IKW347, IKW348, IKW349, IKW358, IKW374, IKW378, 1KW413, 1KW420, 1KW423, IKW435, 1KW436, IKW449, IKW455, 1KW463, 1KW464, 1KW465, IKWO37, IKWO59, 1KWO63, 1KWO72, IKWO74, IKWO75, 1KWO82, 1KW220, 1KW260, 1KW298, IKW337, IKW359, 1KW362, 1KW408, and 1KW427 (collectively, the "Jeffrey Wilpon Subsequent Transfer Accounts"). Appendix II, Jeffrey Wilpon Exhibit C. a. Defendant Jeffrey Wilpon received Subsequent Transfers fro1n the Jeffrey Wilpon Subsequent Transfer Accounts totaling $33,731,951 in Fictitious Profits fro1n the opening dates of such Subsequent Transfer Accounts to the Filing Date and $148,480,979 in 227 principal during the six years prior to the Filing Date, totaling approximately $182,212,930 (the "Jeffrey Wilpon Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable fro1n Defendant Jeffrey Wilpon pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Jeffrey Wilpon Exhibit C. David Katz 1135. According to and Sterling's records, Defendant David Katz received Initial Transfers from approximately fourteen (14) Sterling BLMIS Accounts: Nos. 1KW012, 1KW017, 1KW063, 1KW119, 1KW161, 1KW201, 1KW220, 1KW296, IKW337, 1KW362, 1KW412, 1KW427, 1KW011, and 1KW037. Appendix II, David Katz Exhibit B. a. BLMIS made direct transfers to Defendant David Katz totaling $4,039,917 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $1,674,656 in principal during the six years prior to the Filing Date, totaling approximately $5,714,572 (the "David Katz Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, David Katz Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant David Katz of approximately $2,814,265 (the "David Katz Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Of the David Katz Six Year Initial Transfers, $1,139,609 were Fictitious Profits and the remaining $1,674,656 constituted the retum of principal. Appendix II, David Katz Exhibit B. 228 c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant David Katz of approximately $2,361,605 (the "David Katz Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Of the David Katz Two Year Initial Transfers, $738,609 were Fictitious Profits and the remaining $1,622,996 constituted the retum of principal. Appendix II, David Katz Exhibit B. 1136. Upon infonnation and belief Defendant David Katz is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers fro1n approximately forty-nine (49) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW057, 1KW134, 1KW156, 1KW175, 1KW178, 1KW180, 1KW192, 1KW198, 1KW218, 1KW223, 1KW247, 1KW254, 1KW255, 1KW279, 1KW287, 1KW300, 1KW313, 1KW314, 1KW315, 1KW323, 1KW346, 1KW347, 1KW348, 1KW349, 1KW358, 1KW374, 1KW378, 1KW402, 1KW413, 1KW420, 1KW423, 1KW427, 1KW436, 1KW449, 1KW463, 1KW464, 1KW465, 1KW030, 1KW037, 1KW059, 1KW220, 1KW242, 1KW299, 1KW337, 1KW341, 1KW359, 1KW362, 1KW407, and 1KW435 (collectively, the "David Katz Subsequent Transfer Accounts"). Appendix II, David Katz Exhibit C. a. Defendant David Katz received Subsequent Transfers fro1n the David Katz Subsequent Transfer Accounts totaling $31,797,164 in Fictitious Profits fro1n the opening dates of such Subsequent Transfer Accounts to the Filing Date and $116,297,142 in principal during the six years prior to the Filing Date, totaling approximately $148,094,306 (the "David Katz Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof 229 are recoverable from Defendant David Katz pursuant to section 550(a) of the Bankruptcy Code. Appendix II, David Katz Exhibit C. Gregony Katz 1137. According to and Sterling's records, Defendant Gregory Katz received Initial Transfers from approximately seven (7) Sterling BLMIS Accounts: Nos. 1KW037, 1KW072, 1KW108, 1KW427, 1KW453, 1KW345, and 1KW426. Appendix II, Gregory Katz Exhibit B. a. BLMIS made direct transfers to Defendant Gregory Katz totaling $98,488 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $1,426,939 in principal during the six years prior to the Filing Date, totaling approximately $1,525,427 (the "Gregory Katz Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Gregory Katz Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Gregory Katz of approximately $1,517,658 (the "Gregory Katz Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Of the Gregory Katz Six Year Initial Transfers, $90,718 were Fictitious Profits and the remaining $1,426,939 constituted the return of principal. Appendix II, Gregory Katz Exhibit B. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Gregory Katz of approximately $1,235,593 (the "Gregory Katz Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of 230 the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Of the Gregory Katz Two Year Initial Transfers, $90,718 were Fictitious Profits and the remaining $1,144,874 constituted the retum of principal. Appendix II, Gregory Katz Exhibit B. 1138. Upon infonnation and belief, Defendant Gregory Katz is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers from approximately tvventy-four (24) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW063, 1KW300, 1KW313, 1KW314, 1KW315, 1KW402, 1KW435, 1KW449, 1KW455, 1KW463, 1KW464, 1KW465, 1KW057, 1KW192, 1KW218, 1KW223, 1KW247, 1KW254, 1KW359, 1KW374, 1KW378, 1KW391, 1KW423, and 1KW447 (collectively, the "Gregory Katz Subsequent Transfer Accounts"). Appendix II, Gregory Katz Exhibit C. a. Defendant Gregory Katz received Subsequent Transfers from the Gregory Katz Subsequent Transfer Accounts totaling $1,962,314 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $21,564,999 in principal during the six years prior to the Filing Date, totaling approximately $23,527,313 (the "Gregory Katz Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Gregory Katz pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Gregory Katz Exhibit C. Arthur Friedman 1139. According to and Sterling's records, Defendant Arthur Friedman received Initial Transfers from approximately twelve (12) Sterling BLMIS Accounts: Nos. 1KW005, 1KW098, 1KW161, 1KW220, 1KW294, 1KW337, 1KW412, 1KW427, 100625, 101149, 1KW004, and 1KW388. Appendix II, Arthur Friedman Exhibit B. 231 a. BLMIS made direct transfers to Defendant Arthur Friedman totaling $1,325,671 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $1,929,814 in principal during the six years prior to the Filing Date, totaling approximately $3,255,485 (the "Arthur Friedman Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Arthur Friedman Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Arthur Friedman of approximately $2,177,039 (the "Arthur Friedman Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Of the Arthur Friedman Six Year Initial Transfers, $247,225 were Fictitious Profits and the remaining $1,929,814 constituted the return of principal. Appendix II, Arthur Friedman Exhibit B. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Arthur Friedman of approximately $444,906 (the "Arthur Friedman Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Of the Arthur Friedman Two Year Initial Transfers, $181,635 were Fictitious Profits and the remaining $263,271 constituted the return of principal. Appendix II, Arthur Friedman Exhibit B. 1140. Upon infonnation and belief Defendant Arthur Friedman is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers from 232 approximately forty-two (42) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KWO40, 1KWO57, 1KW134, 1KW156, 1KW175, 1KW178, 1KW180, 1KW192, 1KW218, 1KW223, 1KW247, 1KW254, 1KW255, 1KW279, 1KW287, 1KW300, 1KW313, 1KW314, 1KW315, 1KW323, 1KW339, 1KW341, 1KW346, 1KW347, 1KW348, 1KW349, 1KW358, 1KW374, 1KW378, 1KW402, 1KW413, 1KW420, 1KW423, 1KW435, 1KW436, 1KW449, 1KW455, 1KW463, 1KW464, 1KW465, 1KWOO1, and 1KW359 (collectively, the "Arthur Friedman Subsequent Transfer Accounts"). Appendix II, Arthur Friedman Exhibit C. a. Defendant Arthur Friedman received Subsequent Transfers from the Arthur Friedman Subsequent Transfer Accounts totaling $929,732 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $4,607,244 in principal during the six years prior to the Filing Date, totaling approximately $5,536,976 (the "Arthur Friedman Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Arthur Friedman pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Arthur Friedman Exhibit C. Thomas Ostermsm 1141. According to and Sterling's records, Defendant Thomas Ostennan received Initial Transfers from approximately fourteen (14) Sterling BLMIS Accounts: Nos. 1KWO44, 1KWO62, 1KWO98, 1KW161, 1KW190, 1KW220, 1KW292, 1KW337, 1KW362, 1KW365, 1KW384, 1KW412, 1KW427, and 101149. Appendix II, Thomas Ostennan Exhibit B. a. BLMIS made direct transfers to Defendant Thomas Ostennan totaling $3,313,813 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the 233 Filing Date and $578,741 in principal during the six years prior to the Filing Date, totaling approximately $3,892,555 (the "Thomas Ostennan Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Thomas Osterman Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Thomas Ostennan of approximately $2,203,989 (the "Thomas Ostennan Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Of the Thomas Ostennan Six Year Initial Transfers, $1,625,247 were Fictitious Profits and the remaining $578,741 constituted the return of principal. Appendix II, Thomas Ostennan Exhibit B. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Thomas Ostennan of approximately $984,407 (the "Thomas Ostennan Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Of the Thomas Osterman Two Year Initial Transfers, $515,995 were Fictitious Profits and the remaining $468,411 constituted the return of principal. Appendix II, Thomas Ostennan Exhibit B. d. In the ninety days before the Filing Date, BLMIS made direct transfers of principal to Defendant Thomas Ostennan constituting a minimal amount (the "Thomas Ostennan Preference Period Transfers"), which are avoidable and recoverable under sections 547, 550(a), 234 and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Thomas Ostennan Exhibit B. 1142. Upon infonnation and belief Defendant Thomas Ostennan is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers fro1n approximately forty-one (41) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW040, 1KW057, 1KW134, 1KW156, 1KW175, 1KW178, 1KW180, 1KW192, 1KW218, 1KW223, 1KW247, 1KW254, 1KW255, 1KW279, 1KW287, 1KW300, 1KW313, 1KW314, 1KW315, 1KW323, 1KW339, 1KW341, 1KW346, 1KW347, 1KW348, 1KW349, 1KW358, 1KW374, 1KW378, 1KW413, 1KW420, 1KW423, 1KW435, 1KW436, 1KW449, 1KW455, 1KW463, 1KW464, 1KW465, 1KW059, and 1KW359 (collectively, the "Thomas Ostennan Subsequent Transfer Accounts"). Appendix II, Thomas Ostennan Exhibit C. a. Defendant Thomas Ostennan received Subsequent Transfers fro1n the Thomas Ostennan Subsequent Transfer Accounts totaling $10,181,803 in Fictitious Profits fro1n the opening dates of such Subsequent Transfer Accounts to the Filing Date and $12,973,496 in principal during the six years prior to the Filing Date, totaling approximately $23,155,299 (the "Thomas Ostennan Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable fro1n Defendant Thomas Osterman pursuant to section 550(a) of the Bankruptcy Code. Appendix II, Thomas Ostennan Exhibit C. Marvin Tepper 1143. According to and Sterling's records, Defendant Marvin Tepper received Initial Transfers fro1n approximately sixteen (16) Sterling BLMIS Accounts: Nos. 1KW063, 1KW098, 1KW112, 1KW161, 1KW211, 1KW220, 1KW263, 1KW322, 1KW337, 1KW362, 235 1KW366, 1KW412, 1KW427, 1KW064, 1KW168, and 1KW297. Appendix II, Marvin B. Tepper Exhibit B. a. BLMIS made direct transfers to Defendant Marvin Tepper totaling $4,091,935 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $4,352,853 in principal during the six years prior to the Filing Date, totaling approximately $8,444,788 (the "Marvin Tepper Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Marvin B. Tepper Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Marvin Tepper of approximately $5,583,550 (the "Marvin Tepper Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Of the Marvin Tepper Six Year Initial Transfers, $1,230,697 were Fictitious Profits and the remaining $4,352,853 constituted the return of principal. Appendix II, Marvin B. Tepper Exhibit B. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Marvin Tepper of approximately $4,369,006 (the "Marvin Tepper Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Of the Marvin Tepper Two Year Initial Transfers, $1,203,690 were Fictitious Profits and the remaining $3,165,316 constituted the return of principal. Appendix II, Marvin B. Tepper Exhibit B. 236 d. In the ninety days before the Filing Date, BLMIS made direct transfers of principal to Defendant Marvin Tepper totaling $120,000 (the "Marvin Tepper Preference Period Transfers"), which are avoidable and recoverable under sections 547, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Marvin B. Tepper Exhibit B. 1144. Upon infonnation and belief Defendant Marvin Tepper is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers from approximately forty-two (42) Sterling BLMIS Accounts held by other Sterling-related entities and/or individual: Nos. 1KW040, 1KW057, 1KW134, 1KW156, 1KW175, 1KW178, 1KW180, 1KW192, 1KW218, 1KW223, 1KW247, 1KW254, 1KW255, 1KW259, 1KW279, 1KW287, 1KW300, 1KW313, 1KW314, 1KW315, 1KW323, 1KW325, 1KW339, 1KW341, 1KW346, 1KW347, 1KW348, 1KW349, 1KW358, 1KW374, 1KW378, 1KW413, 1KW420, 1KW423, 1KW435, 1KW436, 1KW447, 1KW449, 1KW463, 1KW464, 1KW465, and 1KW359 (collectively, the "Marvin Tepper Subsequent Transfer Accounts"). Appendix II, Marvin B. Tepper Exhibit C. a. Defendant Marvin Tepper received Subsequent Transfers fro1n the Marvin Tepper Subsequent Transfer Accounts totaling $5,562,276 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $24,709,145 in principal during the six years prior to the Filing Date, totaling approximately $30,271,421 (the "Marvin Tepper Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Marvin Tepper pursuant to section 550(a) of the Bankruptcy Code. Appendix II, Marvin B. Tepper Exhibit C. 237 Estate of Leonard Schreier 1145. According to and Sterling's records, Defendant Estate of Leonard Schreier and/or Leonard Schreier received Initial Transfers from approximately fourteen (14) Sterling BLMIS Accounts: Nos. 1KW052, 1KW053, 1KW056, 1KW063, 1KW098, 1KW161, 1KW220, 1KW293, IKW337, 1KW412, 1KW427, 102343, 1KW054, and 1KW372. Appendix II, Estate of Leonard Schreier Exhibit B. a. BLMIS made direct transfers to Defendant Estate of Leonard Schreier or Leonard Schreier totaling $6,963,209 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $7,813,322 in principal during the six years prior to the Filing Date, totaling approximately $14,776,531 (the "Estate of Leonard Schreier Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Estate of Leonard Schreier Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Estate of Leonard Schreier of approximately $8,412,770 (the "Estate of Leonard Schreier Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Of the Estate of Leonard Schreier Six Year Initial Transfers, $599,448 were Fictitious Profits and the remaining $7,813,322 constituted the return of principal. Appendix II, Estate of Leonard Schreier Exhibit B. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Estate of Leonard Schreier of approximately $1,622,130 (the "Estate of Leonard Schreier Two Year Initial Transfers"), which are avoidable and recoverable under 238 sections 548, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Of the Estate of Leonard Schreier Two Year Initial Transfers, $599,448 were Fictitious Profits and the remaining $1,022,682 constituted the retum of principal. Appendix II, Estate of Leonard Schreier Exhibit B. 1146. Upon infonnation and belief Defendant Estate of Leonard Schreier and/or Leonard Schreier is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers from approximately thirty-one (31) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KWO40, 1KWO57, 1KWO59, 1KW134, 1KW156, 1KW175, 1KW178, 1KW180, 1KW192, 1KW218, 1KW223, 1KW247, 1KW254, 1KW255, 1KW279, 1KW287, 1KW313, 1KW314, 1KW315, 1KW323, 1KW339, 1KW341, 1KW346, 1KW347, 1KW348, 1KW349, 1KW378, 1KW413, 1KW420, 1KW423, and 1KW449 (collectively, the "Estate of Leonard Schreier Subsequent Transfer Accounts"). Appendix II, Estate of Leonard Schreier Exhibit C. a. Defendant Estate of Leonard Schreier and/or Leonard Schreier received Subsequent Transfers from the Estate of Leonard Schreier Subsequent Transfer Accounts totaling $11,161,695 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $8,662,947 in principal during the six years prior to the Filing Date, totaling approximately $19,824,641 (the "Estate of Leonard Schreier Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof, are recoverable from the Estate of Leonard Schreier pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Estate of Leonard Schreier Exhibit C. 239 1147. Upon infonnation and belief so1ne or all of the Estate of Leonard Schreier transfers were subsequently transferred by Defendant Estate of Leonard Schreier to the following subsequent transferees: Deyva Schreier and Michael Schreier (collectively, the "Estate of Leonard Schreier Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the Estate of Leonard Schreier Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. C. Sterling Entity Defendants 1. New York Mets and Related Entities Mets Limited Partnership 1148. According to and Sterling's records, Defendant Mets Limited Partnership received Initial Transfers from approximately four (4) Sterling BLMIS Accounts: Nos. 1KW040, 1KW192, 1KW247, and Appendix II, Mets Limited Partnership Exhibit B. a. BLMIS made direct transfers to Defendant Mets Limited Partnership totaling $84,618,667 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $282,878,055 in principal during the six years prior to the Filing Date, totaling approximately $$67,496,722 (the "Mets Limited Partnership Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Mets Limited Partnership Exhibit B. b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Mets Limited Partnership of approximately (the "Mets Limited Partnership Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 240 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Mets Limited Partnership Exhibit B. Of the Mets Limited Partnership Six Year Initial Transfers, $53,921,945 were Fictitious Profits and the remaining $282, 878,055 constituted the return of principal. c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Mets Limited Partnership of approximately $111,000,000 (the "Mets Limited Partnership Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Mets Limited Partnership Exhibit B. Of the Mets Limited Partnership Two Year Initial Transfers, $27,770,108 were Fictitious Profits and the remaining $83,229,892 constituted the return of principal. 1149. Upon infonnation and belief Defendant Mets Limited Partnership is also a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers fro1n approximately five (5) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: 1KW254, 1KW057, 1KW218, 1KW223, and IKW378 (collectively, the "Mets Limited Partnership Subsequent Transfer Accounts"). Appendix II, Mets Limited Partnership Exhibit C. a. Defendant Mets Limited Partnership received Subsequent Transfers fro1n the Mets Limited Partnership Subsequent Transfer Accounts totaling $9,388,295 in Fictitious Profits fro1n the opening dates of such Subsequent Transfer Accounts to the Filing Date and $37,429,289 in principal during the six years prior to the Filing Date, totaling approximately $46,817,584 (the "Mets Limited Partnership Subsequent Transfers"). Such Subsequent 241 Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Mets Limited Partnership pursuant to section 550(a) of the Bankruptcy Code. Appendix II, Mets Limited Partnership Exhibit C. ll50. Upon infonnation and belief some or all of the Mets Limited Partnership transfers were subsequently transferred by Defendant Mets Limited Partnership to the following subsequent transferees: C.D.S. Corp., Mets One LLC, Mets II LLC, Sterling Mets Associates, and Sterling Mets Associates II. Upon infonnation and belief, such transfers were subsequently transferred to the ultimate owners ofthe Mets Limited Partnership, including: Fred Wilpon, Saul Katz, Richard Wilpon, David Katz, Michael Katz, Jeffrey Wilpon, Thomas Ostennan, Arthur Friedman, Marvin Tepper, the Estate of Leonard Schreier, the Fred Wilpon Family Trust, the Saul B. Katz Family Trust, the Wilpon 2002 Descendants' Trust, and the Katz 2002 Descendants' Trust (collectively, the "Mets Limited Partnership Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. Such Subsequent Transfers, or the value thereof, are recoverable from the Mets Limited Partnership Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. Sterling Mets LP ll5l. According to and Sterling's records, Defendant Sterling Mets LP received Initial Transfers from approximately five (5) Sterling BLMIS Accounts: Nos. and which were held under the partnership's fonner name, Sterling Doubleday Enterprises LP, and Nos. lKW2l8, and which were held under the name Sterling Mets LP. Appendix II, Sterling Mets LP Exhibit B. a. BLMIS made direct transfers to Defendant Sterling Mets LP totaling $9,388,295 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the 242 Filing Date and $37,429,289 in principal during the six years prior to the Filing Date, totaling approximately $46,817,584 (the "Sterling Mets LP Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling Mets LP Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Sterling Mets LP of approximately $39,450,000 (the "Sterling Mets LP Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Sterling Mets LP Exhibit B. Of the Sterling Mets LP Six Year Initial Transfers, $2,020,711 were Fictitious Profits and the remaining $37,429,289 constituted the return of principal. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Sterling Mets LP of approximately $11,500,000 (the "Sterling Mets LP Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling Mets LP Exhibit B. Of the Sterling Mets LP Two Year Initial Transfers, $1,670,711 were Fictitious Profits and the remaining $9,829,289 constituted the return of principal. 1152. Upon infonnation and belief, so1ne or all of the Sterling Mets LP transfers were subsequently transferred by Defendant Sterling Mets LP to the following subsequent transferees: Mets Partners, Inc., Mets Limited Partnership, C.D.S. Corp., Mets One LLC, Mets II LLC, Sterling Mets Associates, and Sterling Mets Associates II. Upon infonnation and belief such 243 transfers were subsequently transferred to the ultimate owners of Sterling Mets LP, including: Fred Wilpon, Saul Katz, Richard Wilpon, David Katz, Michael Katz, Jeffrey Wilpon, Thomas Ostennan, Arthur Friedman, Marvin Tepper, the Estate of Leonard Schreier, the Fred Wilpon Family Trust, the Saul B. Katz Family Trust, the Wilpon 2002 Descendants' Trust, and the Katz 2002 Descendants' Trust (collectively, the "Sterling Mets LP Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the Sterling Mets LP Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. Sterling Mets Associates 1153. According to and Sterling's records, Defendant Sterling Mets Associates received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. IKW339. Appendix II, Sterling Mets Associates Exhibit B. a. BLMIS made direct transfers to Defendant Sterling Mets Associates totaling $111,653 in Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date (the "Sterling Mets Associates Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling Mets Associates Exhibit B. 1154. Upon inforination and belief Defendant Sterling Mets Associates is also a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers from approximately ten (10) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW040, 1KW192, 1KW218, 1KW223, 1KW247, 1KW254, 1KW328, 1KW378, 1KW423, and 1KW057 (collectively, the "Sterling Mets Associates Subsequent Transfer Accounts"). Appendix II, Sterling Mets Associates Exhibit C. 244 a. Defendant Sterling Mets Associates received Subsequent Transfers from the Sterling Mets Associates Subsequent Transfer Accounts totaling $46,550,814 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $158,552,135 in principal during the six years prior to the Filing Date, totaling approximately $205,102,949 (the "Sterling Mets Associates Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Sterling Mets Associates pursuant to section 550(a) of the Bankruptcy Code. Appendix II, Sterling Mets Associates Exhibit C. 1155. Upon infonnation and belief so1ne or all of the Sterling Mets Associates transfers were subsequently transferred by Defendant Sterling Mets Associates to the following subsequent transferees: Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, Jeffrey Wilpon, Thomas Ostennan, Arthur Friedman, Marvin Tepper, the Estate of Leonard Schreier, the Fred Wilpon Family Trust, and the Saul B. Katz Family Trust (collectively, the "Sterling Mets Associates Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the Sterling Mets Associates Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. Sterling Mets Associates II 1156. Upon infonnation and belief Defendant Sterling Mets Associates II is a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers from approximately ten (10) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW040, 1KW192, 1KW218, 1KW223, 1KW247, 1KW254, 1KW378, 245 1KW423, 1KW057, and 1KW374 (collectively, the "Sterling Mets Associates II Subsequent Transfer Accounts"). Appendix II, Sterling Mets Associates II Exhibit C. a. Defendant Sterling Mets Associates II received Subsequent Transfers fro1n the Sterling Mets Associates II Subsequent Transfer Accounts totaling $46,533,446 in Fictitious Profits fro1n the opening dates of such Subsequent Transfer Accounts to the Filing Date and $165,394,999 in principal during the six years prior to the Filing Date, totaling approximately $211,928,445 (the "Sterling Mets Associates II Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable fro1n Defendant Sterling Mets Associates II pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Sterling Mets Associates II Exhibit C. 1157. Upon infonnation and belief so1ne or all of the Sterling Mets Associates II transfers were subsequently transferred by Defendant Sterling Mets Associates II to the following subsequent transferees: Fred Wilpon, Saul Katz, Jeffrey Wilpon, David Katz, Thomas Ostennan, Marvin Tepper, Arthur Friedman, the Fred Wilpon Family Trust, the Saul B. Katz Family Trust, the Wilpon 2002 Descendants' Trust, and the Katz 2002 Descendants' Trust (collectively, the "Sterling Mets Associates II Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable fro1n the Sterling Mets Associates II Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. Mets One LLC 1158. Upon infonnation and belief Defendant Mets One LLC is a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers fro1n approximately nine (9) Sterling BLMIS Accounts held by other Sterling-related entities and/ or 246 individuals: Nos. lKWl92, lKW2l8, and (collectively, the "Mets One LLC Subsequent Transfer Accounts"). Appendix II, Mets One LLC Exhibit C. a. Defendant Mets One LLC received Subsequent Transfers from the Mets One LLC Subsequent Transfer Accounts totaling $46,533,446 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $158,552, l35 in principal during the six years prior to the Filing Date, totaling approximately $205,085,58l (the "Mets One LLC Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Mets One LLC pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Mets One LLC Exhibit C. ll59. Upon infonnation and belief so1ne or all ofthe Mets One LLC transfers were subsequently transferred by Defendant Mets One LLC to the following subsequent transferee: Sterling Mets Associates. Upon infonnation and belief such transfers were subsequently transferred to the ultimate owners of Mets One LLC, including: Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, Jeffrey Wilpon, Thomas Ostennan, Arthur Friedman, Marvin Tepper, the Estate of Leonard Schreier, the Fred Wilpon Family Trust, and the Saul B. Katz Family Trust (collectively, the "Mets One LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the Mets One LLC Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. 247 Mets II LLC 1160. According to and Sterling's records, Defendant Mets II LLC received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. IKW374. Appendix II, Mets II LLC Exhibit B. a. BLMIS made transfers of principal directly to Defendant Mets II LLC totaling $6,842,864 during the six years prior to the Filing Date (the "Mets II LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Mets II LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Mets II LLC of approximately $6,842,864 in principal (the "Mets II LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Mets II LLC Exhibit B. 1161. Upon infonnation and belief Defendant Mets II LLC is also a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers from approximately nine (9) Sterling BLMIS Accounts held by other Sterling-related entities and/ or individuals: Nos. 1KWO40, 1KW192, 1KW218, 1KW223, 1KW247, 1KW254, IKW378, 1KW423, and IKWO57 (collectively, the "Mets II LLC Subsequent Transfer Accounts"). Appendix II, Mets II LLC Exhibit C. a. Defendant Mets II LLC received Subsequent Transfers from the Mets II LLC Subsequent Transfer Accounts totaling $46,533,446 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $158,552,135 in principal during the six years prior to the Filing Date, totaling approximately $205,085,58l (the "Mets II 248 LLC Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Mets II LLC pursuant to section 550(a) of the Bankruptcy Code. Appendix II, Mets II LLC Exhibit C. 1162. Upon infonnation and belief some or all of the Mets II LLC transfers were subsequently transferred by Defendant Mets II LLC to the following subsequent transferee: Sterling Mets Associates II. Upon infonnation and belief such transfers were subsequently transferred to the ultimate owners of Mets II LLC, including: Fred Wilpon, Saul Katz, Jeffrey Wilpon, David Katz, Thomas Ostennan, Marvin Tepper, Arthur Friedman, the Wilpon 2002 Descendants' Trust, the Katz 2002 Descendants' Trust, the Fred Wilpon Family Trust, and the Saul B. Katz Family Trust (collectively, the "Mets II LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the Mets II LLC Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. Mets Partners, Inc. 1163. Upon infonnation and belief Defendant Mets Partners, Inc. is a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers from approximately five (5) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW057, 1KW218, 1KW223, 1KW254, and 1KW378 (collectively, the "Mets Partners, Inc. Subsequent Transfer Accounts"). Appendix II, Mets Partners, Inc. Exhibit C. a. Defendant Mets Partners, Inc. received Subsequent Transfers from the Mets Partners, Inc. Subsequent Transfer Accounts totaling $9,388,295 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $37,429,289 in principal during the six years prior to the Filing Date, totaling approximately $46,817,584 (the 249 "Mets Partners, Inc. Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Mets Partners, Inc. pursuant to section 550(a) of the Bankiuptcy Code. Appendix II, Mets Partners, Inc. Exhibit C. 1164. Upon infonnation and belief so1ne or all of the Mets Partners, Inc. transfers were subsequently transferred by Defendant Mets Partners, Inc. to Fred Wilpon (the "Mets Partners, Inc. Subsequent Transferee Defendant"). Appendix II, Fred Wilpon Exhibit C. The Subsequent Transfers, or the value thereof, are recoverable from the Mets Partners, Inc. Subsequent Transferee Defendant pursuant to section 550(a) ofthe Code. C.D.S. Corp. 1165. Upon infonnation and belief Defendant C.D.S. Corp. is a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers from approximately nine (9) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW040, 1KW192, 1KW247, 1KW423, 1KW057, 1KW218, 1KW223, 1KW254, and 1KW378 (collectively, the Corp. Subsequent Transfer Accounts"). Appendix II, C.D.S. Corp. Exhibit C. a. Defendant C.D.S. Corp. received Subsequent Transfers from the C.D.S. Corp. Subsequent Transfer Accounts totaling $940,070 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $3,203,073 in principal during the six years prior to the Filing Date, totaling approximately $4,143,143 (the Corp. Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the 1neaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant C.D.S. Corp. pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, C.D.S. Corp. Exhibit C. 250 1166. Upon infonnation and belief so1ne or all of the C.D.S. Corp. transfers were subsequently transferred by Defendant C.D.S. Corp. to Fred Wilpon (the Corp. Subsequent Transferee Defendant"). Appendix II, Fred Wilpon Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the C.D.S. Corp. Subsequent Transferee Defendant pursuant to section 550(a) of the Bankruptcy Code. Coney Island Baseball LLC 1167. According to and Sterling's records, Defendant Coney Island Baseball LLC received Initial Transfers fro1n approximately one (1) Sterling BLMIS Account: No. IKW349. Appendix II, Coney Island Baseball LLC Exhibit B. a. BLMIS made direct transfers to Defendant Coney Island Baseball LLC constituting a 1nini1nal amount of Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date (the "Coney Island Baseball LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Coney Island Baseball LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Coney Island Baseball LLC constituting a 1nini1nal amount of Fictitious Profits (the "Coney Island Baseball LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Coney Island Baseball LLC Exhibit B. 1168. Upon infonnation and belief, Defendant Coney Island Baseball LLC is also a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers from approximately one (1) Sterling BLMIS Account held by another Sterling-related entity: No. 251 (the "Coney Island Baseball LLC Subsequent Transfer Account"). Appendix II, Coney Island Baseball LLC Exhibit C. a. Defendant Coney Island Baseball LLC received Subsequent Transfers fro1n the Coney Island Baseball LLC Subsequent Transfer Account totaling $329,354 in Fictitious Profits fro1n the opening date of such Sterling BLMIS Account to the Filing Date and $700,000 in principal during the six years prior to the Filing Date, totaling approximately $l,029,354 (the "Coney Island Baseball LLC Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable fro1n Defendant Coney Island Baseball LLC pursuant to section 550(a) of the Bankruptcy Code. Appendix II, Coney Island Baseball LLC Exhibit C. ll69. Upon infonnation and belief so1ne or all of the Coney Island Baseball LLC transfers were subsequently transferred by Defendant Coney Island Baseball LLC to the following subsequent transferee: FS Company LLC. Upon infonnation and belief such transfers were subsequently transferred to the ultimate owners of Coney Island Baseball LLC, including: Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, the Estate of Leonard Schreier, Thomas Ostennan, Arthur Friedman, Jeffrey Wilpon, David Katz, and Marvin Tepper (collectively, the "Coney Island Baseball LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable fro1n the Coney Island Baseball LLC Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. 252 Brooklg Baseball LLC 1170. According to and Sterling's records, Defendant Brooklyn Baseball LLC received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. 1KW323. Appendix II, Brooklyn Baseball LLC Exhibit B. a. BLMIS made direct transfers to Defendant Brooklyn Baseball LLC totaling $329,354 in Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date and $700,000 in principal during the six years prior to the Filing Date, totaling approximately $1,029,354 (the "Brooklyn Baseball LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Brooklyn Baseball LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Brooklyn Baseball LLC of approximately $1,029,354 (the "Brooklyn Baseball LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Brooklyn Baseball LLC Exhibit B. Of the Brooklyn Baseball LLC Six Year Initial Transfers, $329,354 were Fictitious Profits and the remaining $700,000 constituted the retum of principal. 1171. Upon infonnation and belief some or all of the Brooklyn Baseball LLC transfers were subsequently transferred by Defendant Brooklyn Baseball LLC to the following subsequent transferees: Coney Island Baseball LLC, FS Company LLC, and Sterling Heritage LLC. Upon infonnation and belief such transfers were subsequently transferred to the ultimate owners of Brooklyn Baseball LLC, including: Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, the Estate of Leonard Schreier, Thomas Ostennan, Arthur Friedman, Jeffrey Wilpon, David Katz, 253 and Marvin Tepper (collectively, the "Brooklyn Baseball LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the Brooklyn Baseball LLC Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. FS Company LLC ll72. According to and Sterling's records, Defendant FS Company LLC received Initial Transfers from at least one Sterling BLMIS Account: No. IKW347. Appendix II, FS Company LLC Exhibit B. a. BLMIS made transfers of principal directly to Defendant FS Company LLC totaling $9,643,000 during the six years prior to the Filing Date (the Company LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, FS Company LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant FS Company LLC of approximately $9,643,000 in principal (the Company LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 55l of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, FS Company LLC Exhibit B. c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant FS Company LLC of approximately $4,200,000 in principal (the Company LLC Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 55l ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, FS Company LLC Exhibit B. 254 d. In the ninety days before the Filing Date, BLMIS made direct transfers of principal to Defendant FS Company LLC totaling $75,000 (the Company LLC Preference Period Transfers"), which are avoidable and recoverable under sections 547, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, FS Company LLC Exhibit B. 1173. Upon infonnation and belief Defendant FS Company LLC is also a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers fro1n approximately two (2) Sterling BLMIS Accounts held by other Sterling-related entities and/ or individuals: Nos. 1KW323 and 1KW349 (collectively, the Company LLC Subsequent Transfer Accounts"). Appendix II, FS Company LLC Exhibit C. a. Defendant FS Company LLC received Subsequent Transfers from the FS Company LLC Subsequent Transfer Accounts totaling $358,780 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $700,000 in principal during the six years prior to the Filing Date, totaling approximately $1,058,780 (the Company LLC Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable fro1n Defendant FS Company LLC pursuant to section 550(a) of the Bankruptcy Code. Appendix II, FS Company LLC Exhibit C. 1174. Upon infonnation and belief so1ne or all of the FS Company LLC transfers were subsequently transferred by Defendant FS Company LLC to the following subsequent transferees: Sterling Heritage LLC, Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, the Estate of Leonard Schreier, Thomas Osterman, Arthur Friedman, Jeffrey Wilpon, David Katz, and Marvin Tepper (collectively, the Company LLC Subsequent Transferee Defendants"). 255 Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the FS Company LLC Subsequent Transferee Defendants pursuant to section 550(a) of the Code. 2. Other Sterling Entities 157 J.E.S. LLC 1175. According to and Sterling's records, Defendant 157 J.E.S. LLC received Initial Transfers fro1n approximately one (1) Sterling BLMIS Account: No. IKW348. Appendix II, 157 J.E.S. LLC Exhibit B. a. BLMIS 1nade direct transfers to Defendant 157 .E.S. LLC totaling $389,682 in Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date and $695,000 in principal during the six years prior to the Filing Date, totaling approximately $1,084,682 (the "l57 .E.S. LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Code, SIPA, and the DCL. Appendix II, 157 J.E.S. LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant 157 J.E.S. LLC of approximately $1,084,682 (the "l57 J.E.S. LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankiuptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, 157 J.E.S. LLC Exhibit B. Ofthe 157 .E.S. LLC Six Year Initial Transfers, $389,682 were Fictitious Profits and the remaining $695,000 constituted the retum of principal. 1176. Upon infonnation and belief so1ne or all ofthe 157 .E.S. LLC transfers were subsequently transferred by Defendant 157 .E.S. LLC to the following subsequent transferees: 256 Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, the Estate of Leonard Schreier, Thomas Ostennan, Arthur Friedman, Jeffrey Wilpon, David Katz, Marvin Tepper, Fred Wilpon Family Trust, and Saul B. Katz Family Trust (collectively, the "157 .E.S. LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the 157 .E.S. LLC Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. Air Sterling LLC 1177. According to and Sterling's records, Defendant Air Sterling LLC received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. 1KW328. Appendix II, Air Sterling LLC Exhibit B. a. BLMIS made direct transfers to Defendant Air Sterling LLC constituting a rninirnal amount of Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date (the "Air Sterling LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Air Sterling LLC Exhibit B. 1178. Upon inforination and belief some or all ofthe Air Sterling LLC transfers were subsequently transferred by Defendant Air Sterling LLC to the following subsequent transferee: Sterling Mets Associates. Upon inforination and belief such transfers were subsequently transferred to the ultimate owners of Air Sterling LLC, including: Fred Wilpon, the Fred Wilpon Family Trust, Saul Katz, the Saul B. Katz Family Trust, Richard Wilpon, Michael Katz, Jeffrey Wilpon, the Estate of Leonard Schreier, Thomas Ostennan, Arthur Friedman and Marvin Tepper (collectively, the "Air Sterling LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are 257 recoverable from the Air Sterling LLC Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. BAS Aircraft LLC 1179. According to and Sterling's records, Defendant BAS Aircraft LLC received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. 1KW325. Appendix II, BAS Aircraft LLC Exhibit B. a. BLMIS made direct transfers to Defendant BAS Aircraft LLC constituting a 1nini1nal amount of Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date (the Aircraft LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, BAS Aircraft LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant BAS Aircraft LLC constituting a 1nini1nal amount of Fictitious Profits (the Aircraft LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, BAS Aircraft LLC Exhibit B. 1180. Upon infonnation and belief so1ne or all of the BAS Aircraft LLC transfers were subsequently transferred by Defendant BAS Aircraft LLC to the following subsequent transferees: Richard Wilpon, Marvin Tepper, and Jeffrey Wilpon (collectively, the Aircraft LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from 258 the BAS Aircraft LLC Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. Bon Mick Family Partners LP 1181. According to and Sterling's records, Defendant Bon Mick Family Partners LP received Initial Transfers fro1n approximately one (1) Sterling BLMIS Account: No. 1KW001. Appendix II, Bon Mick Family Partners LP Exhibit B. a. BLMIS made transfers of principal directly to Defendant Bon Mick Family Partners LP totaling $107,000 during the six years prior to the Filing Date (the "Bon Mick Family Partners LP Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Bon Mick Family Partners LP Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Bon Mick Family Partners LP of approximately $107,000 in principal (the "Bon Mick Family Partners LP Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Bon Mick Family Partners LP Exhibit B. 1182. Upon infonnation and belief so1ne or all of the Bon Mick Family Partners LP transfers were subsequently transferred by Defendant Bon Mick Family Partners LP to the following subsequent transferees: Bon-Mick, Inc. Upon information and belief Bon-Mick, Inc. subsequently transferred such funds to Arthur Friedman (the "Bon Mick Family Partners LP Subsequent Transferee Defendant"). Appendix II, Arthur Friedman Exhibit C. The Subsequent 259 Transfers, or the value thereof are recoverable from the Bon Mick Family Partners LP Subsequent Transferee Defendant pursuant to section 550(a) of the Bankruptcy Code. Bon-Mick, Inc. 1183. According to and Sterling's records, Defendant Bon-Mick, Inc. received Initial Transfers fro1n approximately one (1) Sterling BLMIS Account: No. 1KW001. Appendix II, Bon-Mick, Inc. Exhibit B. a. BLMIS 1nade transfers of principal directly to Defendant Bon-Mick, Inc. totaling $107,000 during the six years prior to the Filing Date (the "Bon-Mick, Inc. Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Bon-Mick, Inc. Exhibit B. b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Bon-Mick, Inc. of approximately $107,000 in principal (the "Bon-Mick, Inc. Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Bon-Mick, Inc. Exhibit B. 1184. Upon infonnation and belief so1ne or all of the Bon-Mick, Inc. transfers were subsequently transferred by Defendant Bon-Mick, Inc. to the following subsequent transferee: Arthur Friedman (the "Bon-Mick, Inc. Subsequent Transferee Defendant"). Appendix II, Arthur Friedman Exhibit C. The Subsequent Transfers, or the value thereof are recoverable fro1n the Bon-Mick, Inc. Subsequent Transferee Defendant pursuant to section 550(a) ofthe Bankruptcy Code. 260 Charles 15 Associates 1185. According to and Sterling's records, Defendant Charles 15 Associates received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. 1KW134. Appendix II, Charles 15 Associates Exhibit B. a. BLMIS made direct transfers to Defendant Charles 15 Associates totaling $437,531 in Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date (the "Charles 15 Associates Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Charles 15 Associates Exhibit B. 1186. Upon infonnation and belief some or all of the Charles 15 Associates transfers were subsequently transferred by Defendant Charles 15 Associates to the following subsequent transferees: Charles 15 LLC, Charles Sterling Sub LLC, and Charles Sterling, Inc. Upon infonnation and belief such transfers were subsequently transferred to the ultimate owners of Charles 15 Associates, including: Fred Wilpon, Saul Katz, Michael Katz, Richard Wilpon, Arthur Friedman, David Katz, Jeffrey Wilpon, the Estate of Leonard Schreier, Thomas Ostennan, the Saul B. Katz Family Trust, the Fred Wilpon Family Trust, Marvin Tepper, Robin Wilpon Wachtler, and Philip Wachtler (collectively, the "Charles 15 Associates Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof, are recoverable from the Charles 15 Associates Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. Charles 15 LLC 1187. Upon infonnation and belief Defendant Charles 15 LLC is a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers from 261 approximately one (1) Sterling BLMIS Account held by another Sterling-related entity: No. 1KW134 (the "Charles 15 LLC Subsequent Transfer Account"). Appendix II, Charles 15 LLC Exhibit C. a. Defendant Charles 15 LLC received Subsequent Transfers from the Charles 15 LLC Subsequent Transfer Account of $437,093 in Fictitious Profits from the opening date of such Subsequent Transfer Account to the Filing Date (the "Charles 15 LLC Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof, are recoverable from Defendant Charles 15 LLC pursuant to section 550(a) of the Bankruptcy Code. Appendix II, Charles 15 LLC Exhibit C. 1188. Upon infonnation and belief some or all of the Charles 15 LLC transfers were subsequently transferred by Defendant Charles 15 LLC to the following subsequent transferees: Charles Sterling Sub LLC, Charles Sterling LLC, Charles Sterling 15 LLC and Charles Sterling, Inc. Upon information and belief such transfers were subsequently transferred to the ultimate owners of Charles 15 LLC, who are Fred Wilpon, Saul Katz, Michael Katz, Richard Wilpon, Arthur Friedman, David Katz, Jeffrey Wilpon, the Estate of Leonard J. Schreier, Thomas Ostennan, the Saul B. Katz Family Trust, the Fred Wilpon Family Trust, Marvin B. Tepper, and Robin and Philip Wachtler as joint tenants (collectively, the "Charles 15 LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the Charles 15 LLC Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. 262 Charles Sterling LLC 1189. According to and Sterling's records, Defendant Charles Sterling LLC received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. 1KW341. Appendix II, Charles Sterling LLC Exhibit B. a. BLMIS 1nade transfers of principal directly to Defendant Charles Sterling LLC totaling $489,000 during the six years prior to the Filing Date (the "Charles Sterling LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankiuptcy Code, SIPA, and the DCL. Appendix II, Charles Sterling LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Charles Sterling LLC of approximately $489,000 in principal (the "Charles Sterling LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Charles Sterling LLC Exhibit B. 1190. Upon infonnation and belief Defendant Charles Sterling LLC is also a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers from approximately two (2) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW134 and 1KW413 (collectively, the "Charles Sterling LLC Subsequent Transfer Accounts"). Appendix II, Charles Sterling LLC Exhibit C. a. Defendant Charles Sterling LLC received Subsequent Transfers from the Charles Sterling LLC Subsequent Transfer Accounts totaling $437,531 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $8,977,000 in principal during the six years prior to the Filing Date, totaling approximately $9,414,531 (the 263 "Charles Sterling LLC Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Charles Sterling LLC pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Charles Sterling LLC Exhibit C. 1191. Upon infonnation and belief so1ne or all ofthe Charles Sterling LLC transfers were subsequently transferred by Defendant Charles Sterling LLC to the following subsequent transferees: Charles Sterling 15 LLC and Charles Sterling, Inc. Upon infonnation and belief such transfers were subsequently transferred to the ultimate owners of Charles Sterling LLC, including Fred Wilpon, Saul Katz, Michael Katz, Richard Wilpon, Arthur Friedman, David Katz, Jeffrey Wilpon, the Estate of Leonard Schreier, Thomas Ostennan, the Saul B. Katz Family Trust, the Fred Wilpon Family Trust, Marvin Tepper, Robin Wilpon Wachtler and Philip Wachtler (collectively, the "Charles Sterling LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the Charles Sterling LLC Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. Charles Sterling Sub LLC 1192. According to and Sterling's records, Defendant Charles Sterling Sub LLC received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. 1KW413. Appendix II, Charles Sterling Sub LLC Exhibit B. a. BLMIS made transfers of principal directly to Defendant Charles Sterling Sub LLC prior to the Filing Date totaling $8,977,000 during the six years prior to the Filing Date (the "Charles Sterling Sub LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to 264 avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Charles Sterling Sub LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Charles Sterling Sub LLC of approximately $8,977,000 in principal (the "Charles Sterling Sub LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 55l ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Charles Sterling Sub LLC Exhibit B. c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Charles Sterling Sub LLC of approximately $5,300,000 in principal (the "Charles Sterling Sub LLC Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 55l ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Charles Sterling Sub LLC Exhibit B. d. In the ninety days before the Filing Date, BLMIS made direct transfers of principal to Defendant Charles Sterling Sub LLC totaling $850,000 (the "Charles Sterling Sub LLC Preference Period Transfers"), which are avoidable and recoverable under sections 547, 550(a), and 55l of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Charles Sterling Sub LLC Exhibit B. ll93. Upon infonnation and belief Defendant Charles Sterling Sub LLC is also a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers from approximately one Sterling BLMIS Account held by another Sterling-related entity: No. lKWl34 (the "Charles Sterling Sub LLC Subsequent Transfer Account"). Appendix II, Charles Sterling Sub LLC Exhibit C. 265 a. Defendant Charles Sterling Sub LLC received Subsequent Transfers from the Charles Sterling Sub LLC Subsequent Transfer Account totaling $437,531 in Fictitious Profits from the opening date of such BLMIS Account to the Filing Date (the "Charles Sterling Sub LLC Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Charles Sterling Sub LLC pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Charles Sterling Sub LLC Exhibit C. 1194. Upon infonnation and belief so1ne or all of the Charles Sterling Sub LLC transfers were subsequently transferred by Defendant Charles Sterling Sub LLC to the following subsequent transferees: Charles Sterling LLC, Charles Sterling 15 LLC, and Charles Sterling, Inc. Upon information and belief such transfers were subsequently transferred to the ultimate owners of Charles Sterling Sub LLC, including Fred Wilpon, Saul Katz, Michael Katz, Richard Wilpon, Arthur Friedman, David Katz, Jeffrey Wilpon, the Estate of Leonard Schreier, Thomas Ostennan, the Saul B. Katz Family Trust, the Fred Wilpon Family Trust, Marvin Tepper, Robin Wilpon Wachtler, and Philip Wachtler (collectively, the "Charles Sterling Sub LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof, are recoverable from the Charles Sterling Sub LLC Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. College Place Enterprises LLC 1195. According to and Sterling's records, Defendant College Place Enterprises LLC received Initial Transfers from approximately two (2) Sterling BLMIS Accounts: Nos. 1KWO84 and 1KW466. Appendix II, College Place Enterprises LLC Exhibit B. a. BLMIS made direct transfers to Defendant College Place Enterprises LLC totaling $5,492,275 in Fictitious Profits from the opening dates of such Sterling BLMIS 266 Accounts to the Filing Date and $601,932 in principal during the six years prior to the Filing Date, totaling approximately $6,094,207 (the "College Place Enterprises LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, College Place Enterprises LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant College Place Enterprises LLC of approximately $6,094,207 (the "College Place Enterprises LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, College Place Enterprises LLC Exhibit B. Of the College Place Enterprises LLC Six Year Initial Transfers, $5,492,275 were Fictitious Profits and the remaining $601,932 constituted the return of principal. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant College Place Enterprises LLC of approximately $6,009,358 (the "College Place Enterprises LLC Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, College Place Enterprises LLC Exhibit B. Of the College Place Enterprises LLC Two Year Initial Transfers, $5,492,275 were Fictitious Profits and the remaining $517,083 constituted the return of principal. d. In the ninety days before the Filing Date, BLMIS made direct transfers of principal to Defendant College Place Enterprises LLC totaling $305,711 (the "College Place Enterprises LLC Preference Period Transfers"), which are avoidable and recoverable under 267 sections 547, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, College Place Enterprises LLC Exhibit B. 1196. Upon infonnation and belief some or all ofthe College Place Enterprises LLC transfers were subsequently transferred by Defendant College Place Enterprises LLC to the following subsequent transferees: Fred Wilpon and Saul Katz (collectively, the "College Place Enterprises LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the College Place Enterprises LLC Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. FFB Aviation LLC 1197. According to and Sterling's records, Defendant FFB Aviation LLC received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. IKW434. Appendix II, FFB Aviation LLC Exhibit B. a. BLMIS made direct transfers to Defendant FFB Aviation LLC totaling $112,975 in Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date and $400,000 in principal during the six years prior to the Filing Date, totaling approximately $512,975 (the Aviation LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, FFB Aviation LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant FFB Aviation LLC of approximately $512,975 (the Aviation LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section 268 and applicable provisions of DCL sections 273-279. Appendix II, FFB Aviation LLC Exhibit B. Of the FFB Aviation LLC Six Year Initial Transfers, $112,975 were Fictitious Profits and the remaining $400,000 constituted the retum of principal. c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant FFB Aviation LLC of approximately $512,975 (the Aviation LLC Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, FFB Aviation LLC Exhibit B. Of the FFB Aviation LLC Two Year Initial Transfers, $112,975 were Fictitious Profits and the remaining $400,000 constituted the retum of principal. 1198. Upon infonnation and belief Defendant FFB Aviation LLC is also a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers fro1n approximately one (1) Sterling BLMIS Account held by another Sterling-related entity: No. IKW447 (the Aviation LLC Subsequent Transfer Account"). Appendix II, FFB Aviation LLC Exhibit C. a. Defendant FFB Aviation LLC received Subsequent Transfers of principal fro1n the FFB Aviation LLC Subsequent Transfer Account totaling $725,479 during the six years prior to the Filing Date. Such Subsequent Transfers were and continue to be Custo1ner Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable fro1n Defendant FFB Aviation LLC pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, FFB Aviation LLC Exhibit C. 1199. Upon infonnation and belief so1ne or all ofthe FFB Aviation LLC transfers were subsequently transferred by Defendant FFB Aviation LLC to the following subsequent 269 transferees: Saul Katz and Michael Katz (collectively, the Aviation LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof, are recoverable from the FFB Aviation LLC Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. Iris J. Katz and Saul B. Katz Family Foundation 1200. According to and Sterling's records, the Iris J. Katz and Saul B. Katz Family Foundation received Initial Transfers from approximately five (5) Sterling BLMIS Accounts: Nos. lKW0l6, lKW0l7, 1KW083, 1KW252, and 1KW427. Appendix II, Iris J. Katz and Saul B. Katz Family Foundation Exhibit B. a. BLMIS made direct transfers to Defendant Iris J. Katz and Saul B. Katz Family Foundation totaling $3,272,382 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $3,009,403 in principal during the six years prior to the Filing Date, totaling approximately $6,281,785 (the "Iris J. Katz and Saul B. Katz Family Foundation Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Iris J. Katz and Saul B. Katz Family Foundation Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Iris J. Katz and Saul B. Katz Family Foundation of approximately $5,579,106 (the "Iris J. Katz and Saul B. Katz Family Foundation Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Iris J. Katz and Saul B. Katz Family Foundation Exhibit 270 B. Of the Iris J. Katz and Saul B. Katz Family Foundation Six Year Initial Transfers, $2,569,703 were Fictitious Profits and the remaining $3,009,403 constituted the return of principal. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Iris J. Katz and Saul B. Katz Family Foundation of approximately $l,905,368 (the "Iris J. Katz and Saul B. Katz Family Foundation Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 55l ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Iris J. Katz and Saul B. Katz Family Foundation Exhibit B. Of the Iris J. Katz and Saul B. Katz Family Foundation Two Year Initial Transfers, $505,288 were Fictitious Profits and the remaining $l,400,080 constituted the return of principal. l20l. Upon infonnation and belief the Iris J. Katz and Saul B. Katz Family Foundation is also a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers from the following approximately one Sterling BLMIS Account held by another Sterling-related entity: No. (the "Iris J. Katz and Saul B. Katz Family Foundation Subsequent Transfer Account"). Appendix II, Iris J. Katz and Saul B. Katz Family Foundation Exhibit C. a. Defendant Iris J. Katz and Saul B. Katz Family Foundation received Subsequent Transfers of principal from the Iris J. Katz and Saul B. Katz Family Foundation Subsequent Transfer Account constituting a 1nini1nal amount during the six years prior to the Filing Date. Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from the Iris J. Katz and Saul B. Katz Family Foundation pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Iris J. Katz and Saul B. Katz Family Foundation Exhibit C. 27l 1202. Upon infonnation and belief so1ne or all ofthe Iris J. Katz and Saul B. Katz Family Foundation transfers were subsequently transferred by the Iris J. Katz and Saul B. Katz Family Foundation to the following Defendants: Saul Katz, Iris J. Katz, and David Katz (collectively, the "Iris J. Katz and Saul B. Katz Family Foundation Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. Such Subsequent Transfers, or the value thereof are recoverable from the Iris J. Katz and Saul B. Katz Family Foundation Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. Judy Wilpon and Fred Wilpon Family Foundation 1203. According to and Sterling's records, the Judy and Fred Wilpon Family Foundation received Initial Transfers from approximately four (4) Sterling BLMIS Accounts: Nos. 1KW016, 1KW074, 1KW082, and 1KW086. Appendix II, Judy Wilpon and Fred Wilpon Family Foundation Exhibit B. a. BLMIS made direct transfers to Defendant Judy Wilpon and Fred Wilpon Family Foundation totaling $2,230,588 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $398,820 in principal during the six years prior to the Filing Date, totaling approximately $2,629,408 (the "Judy Wilpon and Fred Wilpon Family Foundation Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Judy Wilpon and Fred Wilpon Family Foundation Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Judy Wilpon and Fred Wilpon Family Foundation of approximately $2,587,000 (the "Judy Wilpon and Fred Wilpon Family Foundation Six Year Initial Transfers"), which are 272 avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Judy Wilpon and Fred Wilpon Family Foundation Exhibit B. Of the Judy Wilpon and Fred Wilpon Family Foundation Six Year Initial Transfers, $2,188,180 were Fictitious Profits and the remaining $398,820 constituted the return of principal. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Judy Wilpon and Fred Wilpon Family Foundation constituting a 1nini1nal amount of Fictitious Profits (the "Judy Wilpon and Fred Wilpon Fa1nily Foundation Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Judy Wilpon and Fred Wilpon Family Foundation Exhibit B. 1204. Upon infonnation and belief so1ne or all of the Judy Wilpon and Fred Wilpon Family Foundation transfers were subsequently transferred by the Judy Wilpon and Fred Wilpon Family Foundation to the following Defendants: Fred Wilpon, Judith Wilpon, Jeffrey Wilpon, Robin Wilpon Wachtler, and Bruce N. Wilpon (collectively, the "Judy and Fred Wilpon Family Foundation Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. Such Subsequent Transfers, or the value thereof are recoverable from the Judy Wilpon and Fred Wilpon Family Foundation Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. Red Valley Partners 1205. According to and Sterling's records, Defendant Red Valley Partners received Initial Transfers from approximately two (2) Sterling BLMIS Accounts: Nos. 1KW198 and 1KW427. Appendix II, Red Valley Partners Exhibit B. 273 a. BLMIS 1nade direct transfers to Defendant Red Valley Partners totaling $3,296,336 in Fictitious Profits fro1n the opening dates of such Sterling BLMIS Accounts to the Filing Date and $275,000 in principal during the six years prior to the Filing Date, totaling approximately $3,571,336 (the "Red Valley Partners Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Red Valley Partners Exhibit B. b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Red Valley Partners of approximately $579,136 (the "Red Valley Partners Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Red Valley Partners Exhibit B. Of the Red Valley Partners Six Year Initial Transfers, $304,136 were Fictitious Profits and the remaining $275,000 constituted the return of principal. c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Red Valley Partners of approximately $346,136 (the "Red Valley Partners Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Red Valley Partners Exhibit B. Of the Red Valley Partners Two Year Initial Transfers, $71,136 were Fictitious Profits and the remaining $275,000 constituted the return of principal. 1206. Upon infonnation and belief Red Valley Partners is also a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers fro1n the following 274 approximately three (3) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW313, 1KW314, and 1KW315 (collectively, the "Red Valley Partners Subsequent Transfer Accounts"). Appendix II, Red Valley Partners Exhibit C. a. Defendant Red Valley Partners received Subsequent Transfers from the Red Valley Partners Subsequent Transfer Accounts totaling $249,172 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $3,317,769 in principal during the six years prior to the Filing Date, totaling approximately $3,566,941 (the "Red Valley Partners Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Red Valley Partners pursuant to section 550(a) of the Bankruptcy Code. Appendix II, Red Valley Partners Exhibit C. 1207. Upon infonnation and belief, so1ne or all of the Red Valley Partners transfers were subsequently transferred by Defendant Red Valley Partners to the following subsequent transferees: David Katz, Heather Katz Knopf and Natalie Katz O'Brien (collectively, the "Red Valley Partners Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the Red Valley Partners Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. Robbinsville Park LLC 1208. According to and Sterling's records, Defendant Robbinsville Park LLC received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. 1KW346. Appendix II, Robbinsville Park LLC Exhibit B. a. BLMIS made transfers of principal directly to Defendant Robbinsville Park LLC totaling $2,279,000 during the six years prior to the Filing Date (the "Robbinsville 275 Park LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Robbinsville Park LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Robbinsville Park LLC of approximately $2,279,000 in principal (the "Robbinsville Park LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 55l ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Robbinsville Park LLC Exhibit B. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Robbinsville Park LLC of approximately $630,000 in principal (the "Robbinsville Park LLC Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 55l ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Robbinsville Park LLC Exhibit B. l209. Upon infonnation and belief so1ne or all of the Robbinsville Park LLC transfers were subsequently transferred by Defendant Robbinsville Park LLC to the following subsequent transferees: Sterling Rte l30 LLC and SC Acquisition Corp. Upon infonnation and belief such transfers were subsequently transferred to the ultimate owners of Robbinsville Park LLC, including the Fred Wilpon Family Trust, Saul Katz, the Saul B. Katz Family Trust, Richard Wilpon, Michael Katz, the Estate of Leonard Schreier, Marvin Tepper, Tho1nas Ostennan, Arthur Friedman, Jeffrey Wilpon, David Katz, Robin Wilpon Wachtler and Philip Wachtler (collectively, the "Robbinsville Park LLC Subsequent Transferee Defendants"). Appendix II, 276 Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the Robbinsville Park LLC Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankiuptcy Code. Ruskin Garden Apartments LLC 1210. According to and Sterling's records, Defendant Ruskin Garden Apartments LLC received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. 1KW189. Appendix II, Ruskin Garden Apaitments LLC Exhibit B. a. BLMIS made direct transfers to Defendant Ruskin Garden Apartments LLC totaling $117,623 in Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date (the "Ruskin Garden Apartments LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Code, SIPA, and the DCL. Appendix II, Ruskin Garden Apartments LLC Exhibit B. b. Upon infonnation and belief so1ne or all of the Ruskin Garden Apartments LLC transfers were subsequently transferred by Defendant Ruskin Garden Apartments LLC to the following subsequent transferees: Fred Wilpon and Saul Katz (collectively, the "Ruskin Garden Apartments LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the Ruskin Garden Apartments LLC Subsequent Transferee Defendants pursuant to section 550(a) of the Bankiuptcy Code. SEE H0ldC0 LLC 1211. According to and Sterling's records, Defendant SEE HoldCo LLC received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. IKW449. Appendix II, SEE HoldCo LLC Exhibit B. 277 a. BLMIS 1nade direct transfers to Defendant SEE HoldCo LLC totaling $60,000 in Fictitious Profits fro1n the opening date of such Sterling BLMIS Account to the Filing Date and $6,600,000 in principal during the six years prior to the Filing Date, totaling approximately $6,660,000 (the HoldCo LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, SEE HoldCo LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant SEE HoldCo LLC of approximately $6,660,000 (the HoldCo LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 55l of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, SEE HoldCo LLC Exhibit B. Of the SEE HoldCo LLC Six Year Initial Transfers, $60,000 were Fictitious Profits and the remaining $6,600,000 constituted the return of principal. c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant SEE HoldCo LLC of approximately $6,660,000 (the HoldCo LLC Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 55l ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, SEE HoldCo LLC Exhibit B. Of the SEE HoldCo LLC Two Year Initial Transfers, $60,000 were Fictitious Profits and the remaining $6,600,000 constituted the return of principal. d. Upon infonnation and belief so1ne or all of the SEE HoldCo LLC transfers were subsequently transferred by Defendant SEE HoldCo LLC to the following 278 subsequent transferees: SEE Management LLC, SEE Holdings I, and SEE Holdings II. Upon infonnation and belief such transfers were subsequently transferred to the ultimate owners of SEE HoldCo LLC, including Fred Wilpon, Jeffrey Wilpon, Richard Wilpon, Saul Katz, Michael Katz, Gregory Katz, David Katz, Scott Wilpon, Marvin Tepper, Thomas Osterman, Arthur Friedman, the Estate of Leonard Schreier, the Fred Wilpon Family Trust, the Saul B. Katz Family Trust, the Wilpon 2002 Descendants' Trust, and the Katz 2002 Descendants' Trust (collectively, the HoldCo LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the SEE HoldCo LLC Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. SEE Holdings I l2l2. Upon infonnation and belief Defendant SEE Holdings I is a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers from approximately one (1) Sterling BLMIS Account held by another Sterling-related entity: No. (the Holdings I Subsequent Transfer Account"). Appendix II, SEE Holdings I Exhibit C. a. Defendant SEE Holdings Ireceived Subsequent Transfers from the SEE Holdings I Subsequent Transfer Account totaling $29,403 of Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date and $3,234,330 in principal during the six years prior to the Filing Date, totaling approximately $3,263,733 (the Holdings I Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant SEE Holdings I pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, SEE Holdings I Exhibit C. 279 1213. Upon infonnation and belief some or all of the SEE Holdings Itransfers were subsequently transferred by Defendant SEE Holdings Ito the following subsequent transferees: Fred Wilpon, Jeffrey Wilpon, Saul Katz, Scott Wilpon, Richard Wilpon, Michael Katz, Marvin Tepper, Thomas Ostennan, Arthur Friedman, Gregory Katz, the Estate of Leonard Schreier, the Fred Wilpon Family Trust, and the Saul B. Katz Family Trust (collectively, the Holdings I Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the SEE Holdings I Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. SEE Holdings II 1214. Upon infonnation and belief Defendant SEE Holdings II is a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers from approximately one (1) Sterling BLMIS Account held by another Sterling-related entity: No. 1KW449 (the Holdings II Subsequent Transfer Account"). Appendix II, SEE Holdings II Exhibit C. a. Defendant SEE Holdings II received Subsequent Transfers from the SEE Holdings II Subsequent Transfer Account totaling $29,403 of Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date and $3,234,330 in principal during the six years prior to the Filing Date, totaling approximately $3,263,733 (the Holdings II Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant SEE Holdings II pursuant to section 550(a) of the Bankruptcy Code. Appendix II, SEE Holdings II Exhibit C. 1215. Upon infonnation and belief some or all of the SEE Holdings II transfers were subsequently transferred by Defendant SEE Holdings II to the following subsequent transferees: 280 Fred Wilpon, Jeffrey Wilpon, Saul Katz, Scott Wilpon, Richard Wilpon, Michael Katz, Marvin Tepper, Thomas Ostennan, Arthur Friedman, Gregory Katz, the Estate of Leonard Schreier, the Fred Wilpon Family Trust, and the Saul B. Katz Family Trust (collectively, the Holdings II Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the SEE Holdings II Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. Sterling 10 LLC 1216. According to and Sterling's records, Defendant Sterling 10 LLC received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. 1KW402. Appendix II, Sterling 10 LLC Exhibit B. a. BLMIS made transfers of principal directly to Defendant Sterling 10 LLC totaling $15,470,000 during the six years prior to the Filing Date (the "Sterling 10 LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling 10 LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Sterling 10 LLC of approximately $15,470,000 in principal (the "Sterling 10 LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Sterling 10 LLC Exhibit B. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Sterling 10 LLC of approximately $9,250,000 in principal (the "Sterling 10 LLC Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 281 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling 10 LLC Exhibit B. d. In the ninety days before the Filing Date, BLMIS 1nade direct transfers of principal to Defendant Sterling 10 LLC totaling $1,510,000 (the "Sterling 10 LLC Preference Period Transfers"), which are avoidable and recoverable under sections 547, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling 10 LLC Exhibit B. 1217. Upon infonnation and belief so1ne or all ofthe Sterling 10 LLC transfers were subsequently transferred by Defendant Sterling 10 LLC to the following subsequent transferees: Richard Wilpon, Robin Wilpon Wachtler, Philip Wachtler, Daniel Wilpon, David Katz, Michael Katz, Gregory Katz, Natalie Katz O'Brien, Todd Katz, Heather Katz Knopf Howard Katz, Amy Beth Katz, Dayle Katz, Ruth Friedman and Elise C. Tepper (collectively, the "Sterling 10 LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable fro1n the Sterling 10 LLC Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. Sterling 15C LLC 1218. According to and Sterling's records, Defendant Sterling 15C LLC received Initial Transfers fro1n approximately two (2) Sterling BLMIS Accounts: Nos. 1KW156 and 1KW180. Appendix II, Sterling 15C LLC Exhibit B. a. BLMIS 1nade direct transfers to Defendant Sterling 15C LLC totaling $17,731,193 in Fictitious Profits fro1n the opening dates of such Sterling BLMIS Accounts to the Filing Date and $5,683,798 in principal during the six years prior to the Filing Date, totaling approximately $23,414,991 (the "Sterling 15C LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and 282 are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling 15C LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Sterling 15C LLC of approximately $23,012,800 (the "Sterling 15C LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Sterling 15C LLC Exhibit B. Of the Sterling 15C LLC Six Year Initial Transfers, $17,329,002 were Fictitious Profits and the remaining $5,683,798 constituted the return of principal. c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Sterling 15C LLC of approximately 7,430,000 in Fictitious Profits (the "Sterling 15C LLC Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling 15C LLC Exhibit B. 1219. Upon infonnation and belief so1ne or all of the Sterling 15C LLC transfers were subsequently transferred by Defendant Sterling 15C LLC to the following subsequent transferees: Saul Katz, Richard Wilpon, Fred Wilpon, Michael Katz, Thomas Ostennan, Jeffrey Wilpon, David Katz, Arthur Friedman, Marvin Tepper, Robin Wilpon Wachtler, Philip Wachtler, the Estate of Leonard Schreier, the Saul B. Katz Family Trust, and the Fred Wilpon Family Trust (collectively, the "Sterling 15C LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable fro1n the Sterling 15C LLC Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. 283 Sterling 20 LLC 1220. According to and Sterling's records, Defendant Sterling 20 LLC received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. IKW358. Appendix II, Sterling 20 LLC Exhibit B. a. BLMIS made direct transfers to Defendant Sterling 20 LLC totaling $181,023 in Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date and $24,773,977 in principal during the six years prior to the Filing Date, totaling approximately $24,955,000 (the "Sterling 20 LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling 20 LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Sterling 20 LLC of approximately $24,955,000 (the "Sterling 20 LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankiuptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Sterling 20 LLC Exhibit B. Of the Sterling 20 LLC Six Year Initial Transfers, $181,023 were Fictitious Profits and the remaining $24,773,977 constituted the retum of principal. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Sterling 20 LLC of approximately $11,685,000 (the "Sterling 20 LLC Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling 20 LLC Exhibit B. Of the Sterling 20 LLC Two Year Initial 284 Transfers, $181,023 were Fictitious Profits and the remaining $11,503,977 constituted the return of principal. d. In the ninety days before the Filing Date, BLMIS made direct transfers of principal to Defendant Sterling 20 LLC totaling $1,458,977 (the "Sterling 20 LLC Preference Period Transfers"), which are avoidable and recoverable under sections 547, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling 20 LLC Exhibit B. 1221. Upon inforination and belief some or all ofthe Sterling 20 LLC transfers were subsequently transferred by Defendant Sterling 20 LLC to the following subsequent transferees: Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, Thomas Osterinan, Arthur Friedman, Jeffrey Wilpon, Marvin Tepper, Elise C. Tepper, David Katz, and the Fred Wilpon Family Trust (collectively, the "Sterling 20 LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the Sterling 20 LLC Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. Sterling American Advisors II LP 1222. According to and Sterling's records, Defendant Sterling American Advisors II LP received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. 1KW436. Appendix II, Sterling American Advisors II LP Exhibit B. a. BLMIS made direct transfers to Defendant Sterling American Advisors II LP totaling $177,415 in Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date and $1,300,000 in principal during the six years prior to the Filing Date, totaling approximately $1,477,415 (the "Sterling American Advisors II LP Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the 285 meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling American Advisors II LP Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Sterling American Advisors II LP of approximately $1,477,415 (the "Sterling American Advisors II LP Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Sterling American Advisors II LP Exhibit B. Of the Sterling American Advisors II LP Six Year Initial Transfers, $177,415 were Fictitious Profits and the remaining $1,300,000 constituted the retum of principal. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Sterling American Advisors II LP of approximately $1,402,415 (the "Sterling American Advisors II LP Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling American Advisors II LP Exhibit B. Of the Sterling American Advisors II LP Two Year Initial Transfers, $177,415 were Fictitious Profits and the remaining $1,225,000 constituted the retum of principal. 1223. Upon infomiation and belief some or all of the Sterling American Advisors II LP transfers were subsequently transferred by Defendant Sterling American Advisors II LP to the following subsequent transferees: Sterling Advisors II Corp., Sterling American Advisors II Corp., Sterling R.I. II LLC, American SAP II Associates LP, Sterling Internal II LLC, the Fred Wilpon Family Trust, and the Saul B. Katz Family Trust. Upon infomiation and belief such 286 transfers were subsequently transferred to the ultimate owners of Sterling American Advisors II LP, including Fred Wilpon, the Fred Wilpon Family Trust, Saul Katz, the Saul B. Katz Fa1nily Trust, Jeffrey Wilpon, Richard Wilpon, David Katz, Michael Katz, Arthur Friedman, Marvin Tepper, the Estate of Leonard Schreier, and Thomas Ostennan (collectively, the "Sterling American Advisors II LP Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable fro1n the Sterling American Advisors II LP Subsequent Transferee Defendant pursuant to section 550(a) ofthe Bankruptcy Code. Sterling C0l`20l`?lti0H 1224. According to and Sterling's records, Defendant Sterling Brunswick Corporation received Initial Transfers fro1n approximately one (1) Sterling BLMIS Account: No. 1KW279. Appendix II, Sterling Brunswick Corporation Exhibit B. a. BLMIS 1nade direct transfers to Defendant Sterling Brunswick Corporation of a 1nini1nal a1nount in Fictitious Profits fro1n the opening date of such Sterling BLMIS Account to the Filing Date (the "Sterling Brunswick Corporation Initial Transfers"). Such Initial Transfers were and continue to be Custo1ner Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling Brunswick Corporation Exhibit B. b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Sterling Brunswick Corporation constituting a 1nini1nal a1nount of Fictitious Profits (the "Sterling Brunswick Corporation Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Sterling Brunswick Corporation Exhibit B. 287 1225. Upon infonnation and belief Defendant Sterling Brunswick Corporation is also a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers from the following approximately one (1) Sterling BLMIS Account held by another Sterling- related entity: No. 1KW420 (the "Sterling Brunswick Corporation Subsequent Transfer Account"). Appendix II, Sterling Brunswick Corporation Exhibit C. a. Defendant Sterling Brunswick Corporation received Subsequent Transfers of principal from the Sterling Brunswick Corporation Subsequent Transfer Account prior to the Filing Date totaling $5,716,000 during the six years prior to the Filing Date (the "Sterling Brunswick Corporation Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Sterling Brunswick Corporation pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Sterling Brunswick Corporation Exhibit C. 1226. Upon infonnation and belief so1ne or all of the Sterling Brunswick Corporation transfers were subsequently transferred by Defendant Sterling Brunswick Corporation to the following subsequent transferees: Fred Wilpon, Saul Katz, Michael Katz, Richard Wilpon, Estate of Leonard Schreier, Thomas Ostennan, Saul B. Katz Family Trust, David Katz, Arthur Friedman, Jeffrey Wilpon, Marvin Tepper, and Edward M. Tepper (collectively, the "Sterling Brunswick Corporation Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the Sterling Brunswick Corporation Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. 288 Sterling Brunswick Seven LLC 1227. According to and Sterling's records, Defendant Sterling Brunswick Seven LLC received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. 1KW420. Appendix II, Sterling Brunswick Seven LLC Exhibit B. a. BLMIS made transfers of principal directly to Defendant Sterling Brunswick Seven LLC totaling $5,716,000 during the six years prior to the Filing Date (the "Sterling Brunswick Seven LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling Brunswick Seven LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Sterling Brunswick Seven LLC of approximately $5,716,000 in principal (the "Sterling Brunswick Seven LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Sterling Brunswick Seven LLC Exhibit B. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Sterling Brunswick Seven LLC of approximately $4,500,000 in principal (the "Sterling Brunswick Seven LLC Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling Brunswick Seven LLC Exhibit B. d. In the ninety days before the Filing Date, BLMIS made direct transfers of principal to Defendant Sterling Brunswick Seven LLC totaling $455,000 (the "Sterling 289 Brunswick Seven LLC Preference Period Transfers"), which are avoidable and recoverable under sections 547, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling Brunswick LLC Exhibit B. 1228. Upon infonnation and belief some or all of the Sterling Brunswick Seven LLC transfers were subsequently transferred by Defendant Sterling Brunswick Seven LLC to the following subsequent transferees: Sterling Brunswick Corporation. Upon infonnation and belief such transfers were subsequently transferred to the ultimate owners of Sterling Brunswick Seven LLC including Fred Wilpon, Saul Katz, Michael Katz, Richard Wilpon, Estate of Leonard Schreier, Thomas Osterman, the Saul B. Katz Family Trust, David Katz, Arthur Friedman, Jeffrey Wilpon, Marvin Tepper, and Edward M. Tepper (collectively, the Sterling Brunswick Seven LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the Sterling Brunswick Seven LLC Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. Sterling DIST Properties LLC 1229. According to and Sterling's records, Defendant Sterling DIST Properties LLC received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. 1KW465. Appendix II, Sterling DIST Properties LLC Exhibit B. a. BLMIS made transfers of principal directly to Defendant Sterling DIST Properties LLC totaling $736,139 during the six years prior to the Filing Date (the "Sterling DIST Properties LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling DIST Properties LLC Exhibit B. 290 b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Sterling DIST Properties LLC of approximately $736,139 in principal (the "Sterling DIST Properties LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Sterling DIST Properties LLC Exhibit B. c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Sterling DIST Properties LLC of approximately $736,139 in principal (the "Sterling DIST Properties LLC Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling DIST Properties LLC Exhibit B. d. In the ninety days before the Filing Date, BLMIS 1nade direct transfers of principal to Defendant Sterling DIST Properties LLC totaling $736,139 (the "Sterling DIST Properties LLC Preference Period Transfers"), which are avoidable and recoverable under sections 547, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling DIST Properties LLC Exhibit B. 1230. Upon infonnation and belief, so1ne or all of the Sterling DIST Properties LLC transfers were subsequently transferred by Defendant Sterling DIST Properties LLC to the following subsequent transferees: Fred Wilpon, the Wilpon 2002 Descendants' Trust, Jeffrey Wilpon, Richard Wilpon, Saul Katz, the Saul B. Katz Family Trust, the Katz 2002 Descendants' Trust, David Katz, Gregory Katz, Arthur Friedman, Marvin Tepper, and Tho1nas Ostennan (collectively, the "Sterling DIST Properties LLC Subsequent Transferee Defendants"). 291 Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the Sterling DIST Properties LLC Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. Sterling Eg uities 1231. According to and Sterling's records, Defendant Sterling Equities received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. 1KW3 59. Appendix II, Sterling Equities Exhibit B. a. BLMIS made direct transfers to Defendant Sterling Equities totaling $38,499 of Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date and $171,273 in principal during the six years prior to the Filing Date, totaling approximately $209,772 (the "Sterling Equities Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling Equities Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Sterling Equities of approximately $209,772 (the "Sterling Equities Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Sterling Equities Exhibit B. Of the Sterling Equities Six Year Initial Transfers, $38,499 were Fictitious Profits and the remaining $171,273 constituted the return of principal. 1232. Upon infonnation and belief so1ne or all of the Sterling Equities transfers were subsequently transferred by Defendant Sterling Equities to the following subsequent transferees: Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, David Katz, Arthur Friedman, Marvin 292 Tepper, Gregory Katz, Tho1nas Ostennan, and Jeffrey Wilpon (collectively, the "Sterling Equities Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the Sterling Equities Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. Sterling Eguities Associates 1233. According to and Sterling's records, Defendant Sterling Equities Associates received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. 1KW300. Appendix II, Sterling Equities Associates Exhibit B. a. BLMIS 1nade direct transfers to Defendant Sterling Equities Associates totaling $800,000 in Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date and $14,400,000 in principal during the six years prior to the Filing Date, totaling approximately $15,200,000 (the "Sterling Equities Associates Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling Equities Associates Exhibit B. b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Sterling Equities Associates of approximately $15,200,000 (the "Sterling Equities Associates Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Sterling Equities Associates Exhibit B. Of the Sterling Equities Associates Six Year Initial Transfers, $800,000 were Fictitious Profits and the remaining $14,400,000 constituted the retum of principal. 293 c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Sterling Equities Associates of approximately $6,300,000 (the "Sterling Equities Associates Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling Equities Associates Exhibit B. Of the Sterling Equities Associates Two Year Initial Transfers, $800,000 were Fictitious Profits and the remaining $5,500,000 constituted the return of principal. 1234. Upon infonnation and belief so1ne or all of the Sterling Equities Associates transfers were subsequently transferred by Defendant Sterling Equities Associates to the following subsequent transferees: Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, David Katz, Arthur Friedman, Marvin Tepper, Gregory Katz, Thomas Ostennan, and Jeffrey Wilpon (collectively, the "Sterling Equities Associates Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable fro1n the Sterling Equities Associates Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. Sterling Eg uities Investors 1235. According to and Sterling's records, Defendant Sterling Equities Investors received Initial Transfers fro1n approximately two (2) Sterling BLMIS Accounts: Nos. 1KW178 and 1KW255. Appendix II, Sterling Equities Investors Exhibit B. a. BLMIS made direct transfers to Defendant Sterling Equities Investors totaling $316,371 in Fictitious Profits fro1n the opening dates of such Sterling BLMIS Accounts to the Filing Date (the "Sterling Equities Investors Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and 294 are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling Equities Investors Exhibit B. 1236. Upon infonnation and belief so1ne or all of the Sterling Equities Investors transfers were subsequently transferred by Defendant Sterling Equities Investors to the following subsequent transferees: Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, Thomas Ostennan, Jeffrey Wilpon, Arthur Friedman, David Katz, Marvin Tepper, and the Estate of Leonard Schreier (collectively, the "Sterling Equities Investors Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable fro1n the Sterling Equities Investors Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. Sterling Heritage LLC 1237. According to and Sterling's records, Defendant Sterling Heritage LLC received Initial Transfers fro1n approximately one (1) Sterling BLMIS Account: No. 1KW287. Appendix II, Sterling Heritage LLC Exhibit B. a. BLMIS 1nade direct transfers to Defendant Sterling Heritage LLC totaling $79,325 in Fictitious Profits fro1n the opening date of such Sterling BLMIS Account to the Filing Date (the "Sterling Heritage LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling Heritage LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Sterling Heritage LLC constituting a 1nini1nal amount of Fictitious Profits (the "Sterling Heritage LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, 295 particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Sterling Heritage LLC Exhibit B. 1238. Upon infonnation and belief Defendant Sterling Heritage LLC is also a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers from the following approximately three (3) Sterling BLMIS Accounts held by other Sterling- related entities and/or individuals: Nos. 1KW323, 1KW347, and 1KW349 (collectively, the "Sterling Heritage LLC Subsequent Transfer Accounts"). Appendix II, Sterling Heritage LLC Exhibit C. a. Defendant Sterling Heritage LLC received Subsequent Transfers fro1n the Sterling Heritage LLC Subsequent Transfer Accounts totaling $358,780 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $10,343,000 in principal during the six years prior to the Filing Date, totaling approximately $10,701,780 (the "Sterling Heritage LLC Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Sterling Heritage LLC pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Sterling Heritage LLC Exhibit C. 1239. Upon infonnation and belief so1ne or all of the Sterling Heritage LLC transfers were subsequently transferred by Defendant Sterling Heritage LLC to the following subsequent transferees: Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, the Estate of Leonard Schreier, Thomas Ostennan, Arthur Friedman, Jeffrey Wilpon, David Katz, and Marvin Tepper (collectively, the "Sterling Heritage LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are 296 recoverable from the Sterling Heritage LLC Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. Sterling Internal LLC 1240. According to and Sterling's records, Defendant Sterling Internal LLC received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. IKW435. Appendix II, Sterling Internal LLC Exhibit B. a. BLMIS made transfers of principal directly to Defendant Sterling Internal LLC totaling $51,102,500 during the six years prior to the Filing Date (the "Sterling Internal LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling Internal LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Sterling Internal LLC of approximately $51,102,500 in principal (the "Sterling Internal LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Sterling Internal LLC Exhibit B. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Sterling Internal LLC of approximately $51,102,500 in principal (the "Sterling Internal LLC Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling Internal LLC Exhibit B. 297 1241. Upon infonnation and belief some or all of the Sterling Internal LLC transfers were subsequently transferred by Defendant Sterling Internal LLC to the following subsequent transferees: Fred Wilpon, the Fred Wilpon Family Trust, the Wilpon 2002 Descendants' Trust, Jeffrey Wilpon, Richard Wilpon, Saul Katz, the Saul B. Katz Family Trust, the Katz 2002 Descendants' Trust, Michael Katz, Gregory Katz, Arthur Friedman, Marvin Tepper, and Thomas Ostennan (collectively, the "Sterling Internal LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the Sterling Internal LLC Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. Sterling Jet Ltd. 1242. According to and Sterling's records, Defendant Sterling Jet Ltd. received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. 1KW257. Appendix II, Sterling Jet Ltd. Exhibit B. a. BLMIS made direct transfers to Defendant Sterling Jet Ltd. totaling $316,058 in Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date (the "Sterling Jet Ltd. Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling Jet Ltd. Exhibit B. 1243. Upon infonnation and belief, some or all of the Sterling Jet Ltd. transfers were subsequently transferred by Defendant Sterling Jet Ltd. to Fred Wilpon (the "Sterling Jet Ltd. Subsequent Transferee Defendant"). Appendix II, Fred Wilpon Exhibit C. The Subsequent Transfers, or the value thereof, are recoverable from the Sterling Jet Ltd. Subsequent Transferee Defendant pursuant to section 550(a) ofthe Bankruptcy Code. 298 Sterling Jet II Ltd. 1244. According to and Sterling's records, Defendant Sterling Jet II Ltd. received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. 1KW259. Appendix II, Sterling Jet II Ltd. Exhibit B. a. BLMIS made direct transfers to Defendant Sterling Jet II Ltd. totaling $144,007 in Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date (the "Sterling Jet II Ltd. Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling Jet II Ltd. Exhibit B. 1245. Upon infonnation and belief some or all of the Sterling Jet II Ltd. transfers were subsequently transferred by Defendant Sterling Jet II Ltd. to the following subsequent transferees: Saul Katz and Marvin Tepper (collectively, the "Sterling Jet II Ltd. Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof, are recoverable from the Sterling Jet II Ltd. Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. Sterling P:1th0Genesis 1246. According to and Sterling's records, Defendant Sterling PathoGenesis received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. 1KW175. Appendix II, Sterling PathoGenesis Exhibit B. a. BLMIS made direct transfers to Defendant Sterling PathoGenesis totaling $19,037,261 in Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date (the "Sterling PathoGenesis Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject 299 to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling PathoGenesis Exhibit B. 1247. Upon infonnation and belief so1ne or all of the Sterling PathoGenesis transfers were subsequently transferred by Defendant Sterling PathoGenesis to the following subsequent transferees: Arthur Friedman, David Katz, Michael Katz, Saul Katz, Thomas Ostennan, Leonard Schreier, Marvin Tepper, Fred Wilpon, Richard Wilpon, Jeffrey A. Wilpon, the Fred Wilpon Family Trust, and the Saul B. Katz Family Trust (collectively, the "Sterling PathoGenesis Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable fro1n the Sterling PathoGenesis Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. Sterling Third Associates 1248. According to and Sterling's records, Defendant Sterling Third Associates received Initial Transfers fro1n approximately one (1) Sterling BLMIS Account: No. 1KW059. Appendix II, Sterling Third Associates Exhibit B. a. BLMIS 1nade direct transfers to Defendant Sterling Third Associates totaling $6,868,419 in Fictitious Profits fro1n the opening date of such Sterling BLMIS Account to the Filing Date (the "Sterling Third Associates Initial Transfers"). Such Initial Transfers were and continue to be Custo1ner Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling Third Associates Exhibit B. 1249. Upon infonnation and belief so1ne or all of the Sterling Third Associates transfers were subsequently transferred by Defendant Sterling Third Associates to the following subsequent transferees: Richard Wilpon, Michael Katz, Thomas Ostennan, the Estate of Leonard Schreier, the Saul B. Katz Family Trust, the Fred Wilpon Family Trust, and Valley Harbor 300 Associates. Upon information and belief such transfers were subsequently transferred to the ultimate owners of Sterling Third Associates, who are Richard Wilpon, Michael Katz, Thomas Ostennan, the Estate of Leonard Schreier, the Saul B. Katz Family Trust, the Fred Wilpon Family Trust, Fred Wilpon, and Saul Katz (collectively, the "Sterling Third Associates Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the Sterling Third Associates Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. Sterling Thirty Venture LLC 1250. According to and Sterling's records, Defendant Sterling Thirty Venture LLC received Initial Transfers fro1n approximately three (3) Sterling BLMIS Accounts: Nos. 1KW313, 1KW314, and 1KW315). Appendix II, Sterling Thirty Venture LLC Exhibit B. a. BLMIS made direct transfers to Defendant Sterling Thirty Venture LLC totaling $3,559,601 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $47,396,706 in principal during the six years prior to the Filing Date, totaling approximately $50,956,307 (the "Sterling Thirty Venture LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling Thirty Venture LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Sterling Thirty Venture LLC of approximately $50,956,307 (the "Sterling Thirty Venture LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, 301 Sterling Thirty Venture LLC Exhibit B. Of the Sterling Thirty Venture LLC Six Year Initial Transfers, $3,559,601 were Fictitious Profits and the remaining $47,396,706 constituted the retum of principal. c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Sterling Thirty Venture LLC of approximately $22,741,249 (the "Sterling Thirty Venture LLC Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 ofthe Bankiuptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling Thirty Venture LLC Exhibit B. Of the Sterling Thirty Venture LLC Two Year Initial Transfers, $2,861,249 were Fictitious Profits and the remaining $19,880,000 constituted the retum of principal. d. In the ninety days before the Filing Date, BLMIS 1nade direct transfers of principal to Defendant Sterling Thirty Venture LLC totaling $2,193,751 (the "Sterling Thirty Venture LLC Preference Period Transfers"), which are avoidable and recoverable under sections 547, 550(a), and 551 ofthe Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling Thirty Venture LLC Exhibit B. 1251. Upon infonnation and belief so1ne or all ofthe Sterling Thirty Venture LLC transfers were subsequently transferred by Defendant Sterling Thirty Venture LLC to the following subsequent transferees: Fred Wilpon, Saul Katz, Richard Wilpon, Michael Katz, Arthur Friedman, David Katz, Leonard Schreier, Thomas Ostennan, Jeffrey Wilpon, Valerie Wilpon, Marvin Tepper, Gregory Katz, Todd Katz, Howard Katz, Dayle Katz, and Red Valley Partners (collectively, the "Sterling Thirty Venture LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the 302 value thereof are recoverable from the Sterling Thirty Venture LLC Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. Sterling Tracing LLC 1252. According to and Sterling's records, Defendant Sterling Tracing LLC received Initial Transfers from approximately one Sterling BLMIS Account: No. IKW455. Appendix II, Sterling Tracing LLC Exhibit B. a. BLMIS made transfers of principal directly to Defendant Sterling Tracing LLC totaling $4,095,000 during the six years prior to the Filing Date (the "Sterling Tracing LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling Tracing LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Sterling Tracing LLC of approximately $4,095,000 in principal (the "Sterling Tracing LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 55l ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Sterling Tracing LLC Exhibit B. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Sterling Tracing LLC of approximately $4,095,000 in principal (the "Sterling Tracing LLC Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 55l ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling Tracing LLC Exhibit B. d. In the ninety days before the Filing Date, BLMIS made direct transfers of principal to Defendant Sterling Tracing LLC totaling $895,000 (the "Sterling Tracing LLC 303 Preference Period Transfers"), which are avoidable and recoverable under sections 547, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling Tracing LLC Exhibit B. 1253. Upon infonnation and belief some or all of the Sterling Tracing LLC transfers were subsequently transferred by Defendant Sterling Tracing LLC to the following subsequent transferees: Michael Katz, Richard Wilpon, Gregory Katz, Scott Wilpon, Jeffrey Wilpon, Thomas Ostennan, Arthur Friedman, and Ruth Friedman (collectively, the "Sterling Tracing LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the Sterling Tracing LLC Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. Sterling Twenty Five LLC 1254. According to and Sterling's records, Defendant Sterling Twenty Five LLC received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. 1KW447. Appendix II, Sterling Twenty Five LLC Exhibit B. a. BLMIS made transfers of principal directly to Defendant Sterling Twenty Five LLC totaling $7,762,450 during the six years prior to the Filing Date (the "Twenty Five LLC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling Twenty Five LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Sterling Twenty Five LLC of approximately $7,762,450 in principal (the "Sterling Twenty Five LLC Six Year Initial Transfers"), which are avoidable and recoverable under 304 sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Sterling Twenty Five LLC Exhibit B. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Sterling Twenty Five LLC of approximately $7,762,450 in principal (the "Sterling Twenty Five LLC Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling Twenty Five LLC Exhibit B. d. In the ninety days before the Filing Date, BLMIS made direct transfers of principal to Defendant Sterling Twenty Five LLC totaling $1,930,000 (the "Sterling Twenty Five LLC Preference Period Transfers"), which are avoidable and recoverable under sections 547, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling Twenty Five LLC Exhibit B. 1255. Upon infonnation and belief some or all of the Sterling Twenty Five LLC transfers were subsequently transferred by Defendant Sterling Twenty Five LLC to the following subsequent transferees: Arthur Freidman, Ruth Friedman, Dayle Katz, Michael Katz, Howard Katz, Gregory Katz, Amy Beth Katz, Todd Katz, Richard Wilpon, Daniel Wilpon, Robin Wilpon Wachtler, Philip Wachtler, Marvin Tepper, the Katz 2002 Descendants' Trust, the Wilpon 2002 Descendants' Trust, and FFB Aviation LLC (which, upon infonnation and belief, transferred such funds to its owners, who include Saul Katz and Michael Katz) (collectively, the "Sterling Twenty Five LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from 305 the Sterling Twenty Five LLC Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. Sterling VC IV LLC 1256. According to and Sterling's records, Defendant Sterling VC IV LLC received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. 1KW463. Appendix II, Sterling VC IV LLC Exhibit B. a. BLMIS made transfers of principal directly to Defendant Sterling VC IV LLC totaling $825,000 during the six years prior to the Filing Date (the "Sterling VC IV Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling VC IV LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Sterling VC IV LLC of approximately $825,000 in principal (the "Sterling VC IV LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Sterling VC IV LLC Exhibit B. c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Sterling VC IV LLC of approximately $825,000 in principal (the "Sterling VC IV LLC Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling VC IV LLC Exhibit B. d. In the ninety days before the Filing Date, BLMIS made direct transfers of principal to Defendant Sterling VC IV LLC totaling $825,000 (the "Sterling VC IV LLC 306 Preference Period Transfers"), which are avoidable and recoverable under sections 547, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling VC IV LLC Exhibit B. 1257. Upon infonnation and belief some or all of the Sterling VC IV LLC transfers were subsequently transferred by Defendant Sterling VC IV LLC to the following subsequent transferees: Fred Wilpon, the Fred Wilpon Family Trust, Jeffrey Wilpon, Richard Wilpon, Saul Katz, the Saul B. Katz Family Trust, the Katz 2002 Descendants' Trust, David Katz, Michael Katz, Gregory Katz, Natalie Katz O'Brien, Heather Katz Knopf the Iris J. Katz Saul B. Katz Family Foundation, Arthur Friedman, Marvin Tepper, and Thomas Ostennan (collectively, the "Sterling VC IV LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the Sterling VC IV LLC Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. Sterling VC LLC 1258. According to and Sterling's records, Defendant Sterling VC LLC received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. IKW464. Appendix II, Sterling VC LLC Exhibit B. a. BLMIS made transfers of principal directly to Defendant Sterling VC LLC totaling $633,556 during the six years prior to the Filing Date (the "Sterling VC Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling VC LLC Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Sterling VC LLC of approximately $633,556 in principal (the "Sterling VC 307 LLC Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Sterling VC LLC Exhibit B. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Sterling VC LLC of approximately $633,556 in principal (the "Sterling VC LLC Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling VC LLC Exhibit B. d. In the ninety days before the Filing Date, BLMIS made direct transfers of principal to Defendant Sterling VC LLC totaling $633,556 (the "Sterling VC LLC Preference Period Transfers"), which are avoidable and recoverable under sections 547, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling VC LLC Exhibit B. 1259. Upon infonnation and belief so1ne or all of the Sterling VC LLC transfers were subsequently transferred by Defendant Sterling VC LLC to the following subsequent transferees: Fred Wilpon, the Fred Wilpon Family Trust, the Wilpon 2002 Descendants' Trust, Jeffrey Wilpon, Richard Wilpon, Scott Wilpon, Saul Katz, the Saul B. Katz Family Trust, the Katz 2002 Descendants' Trust, David Katz, Michael Katz, Gregory Katz, Arthur Friedman, Marvin Tepper, and Thomas Ostennan (collectively, the "Sterling VC LLC Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof are recoverable from the Sterling VC LLC Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. 308 Valley Harbor Associates 1260. Upon infonnation and belief Defendant Valley Harbor Associates received Initial Transfers fro1n approximately one (1) Sterling BLMIS Account: No. 1KW059. Appendix II, Valley Harbor Associates Exhibit B. a. BLMIS made direct transfers to Defendant Valley Harbor Associates totaling $6,868,419 in Fictitious Profits fro1n the opening date of such Sterling BLMIS Account to the Filing Date (the "Valley Harbor Associates Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Valley Harbor Associates Exhibit B. 1261. Upon infonnation and belief some or all of the Valley Harbor Associates transfers were subsequently transferred by Defendant Valley Harbor Associates to the following subsequent transferees: Fred Wilpon, Saul Katz, the Fred Wilpon Family Trust, and the Saul B. Katz Family Trust (collectively, the "Valley Harbor Associates Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. The Subsequent Transfers, or the value thereof, are recoverable fro1n the Valley Harbor Associates Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. D. Katz/Wilpon Trust Defendants Saul B. Katz Family Trust 1262. According to and Sterling's records, the Saul B. Katz Family Trust received Initial Transfers fro1n approximately ten (10) Sterling BLMIS Accounts: Nos. 1KW030, 1KW037, 1KW220, 1KW242, 1KW299, IKW337, 1KW362, 1KW407, 1KW412, and 1KW427. Appendix II, Saul B. Katz Family Trust Exhibit B. 309 a. BLMIS 1nade direct transfers to Defendant Saul B. Katz Family Trust totaling $6,484,806 in Fictitious Profits fro1n the opening dates of such Sterling BLMIS Accounts to the Filing Date and $19,117,079 in principal during the six years prior to the Filing Date, totaling approximately $25,601,884 (the "Saul B. Katz Family Trust Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Saul B. Katz Family Trust Exhibit B. b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Saul B. Katz Family Trust of approximately $23,461,074(the "Saul B. Katz Family Trust Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Saul B. Katz Family Trust Exhibit B. Of the Saul B. Katz Family Trust Six Year Initial Transfers, $4,343,995 were Fictitious Profits and the remaining $19,117,079 constituted the return of principal. c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Saul B. Katz Family Trust of approximately $13,046,411 (the "Saul B. Katz Family Trust Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Saul B. Katz Family Trust Exhibit B. Of the Saul B. Katz Family Trust Two Year Initial Transfers, $3,889,233 were Fictitious Profits and the remaining $9,157,178 constituted the return of principal. 3 10 d. In the ninety days before the Filing Date, BLMIS made direct transfers of principal to Defendant Saul B. Katz Family Trust totaling $300,000 (the "Saul B. Katz Family Trust Preference Period Transfers"), which are avoidable and recoverable under sections 547, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Saul B. Katz Family Trust Exhibit B. 1263. Upon infonnation and belief the Saul B. Katz Family Trust is also a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers from approximately twenty-five (25) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW057, 1KW134, 1KW156, 1KW175, 1KW180, 1KW192, 1KW218, 1KW223, 1KW247, 1KW254, 1KW279, 1KW341, 1KW346, 1KW348, 1KW374, 1KW378, 1KW413, 1KW420, 1KW423, 1KW435, 1KW449, 1KW463, 1KW464, 1KW465, and 1KW059 (the "Saul B. Katz Family Trust Subsequent Transfer Accounts"). Appendix II, Saul B. Katz Family Trust Exhibit C. a. Defendant Saul B. Katz Family Trust received Subsequent Transfers from the Saul B. Katz Family Trust Subsequent Transfer Accounts totaling $23,623,899 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $84,650,760 in principal during the six years prior to the Filing Date, totaling approximately $108,274,659 (the "Saul B. Katz Family Trust Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from the Saul B. Katz Family Trust pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Saul B. Katz Family Trust Exhibit C. 3 1 1 1264. Upon infonnation and belief so1ne or all of the Saul B. Katz Family Trust transfers were subsequently transferred by the Saul B. Katz Family Trust to the following Defendants: Michael Katz, Richard Wilpon, Iris Katz, David Katz, Natalie Katz O'Brien and Heather Katz Knopf (collectively, the "Saul B. Katz Family Trust Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. Such Subsequent Transfers, or the value thereof are recoverable from the Saul B. Katz Family Trust Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. Fred Wilpon Family Trust 1265. According to and Sterling's records, the Fred Wilpon Family Trust received Initial Transfers from approximately fourteen (14) Sterling BLMIS Accounts: Nos. 1KW037, 1KW063, 1KW072, 1KW074, 1KW075, 1KW082, 1KW220, 1KW260, 1KW298, 1KW337, 1KW362, 1KW408, 1KW412, and 1KW427. Appendix II, Fred Wilpon Family Trust Exhibit B. a. BLMIS made direct transfers to Defendant Fred Wilpon Family Trust totaling $7,947,258 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $29,274,240 in principal during the six years prior to the Filing Date, totaling approximately $37,221,498 (the "Fred Wilpon Family Trust Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Fred Wilpon Family Trust Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Fred Wilpon Family Trust of approximately $34,702,561 (the "Fred Wilpon Family Trust Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA 3 12 section and applicable provisions of DCL sections 273-279. Appendix II, Fred Wilpon Family Trust Exhibit B. Of the Fred Wilpon Family Trust Six Year Initial Transfers, $5,428,321 were Fictitious Profits and the remaining $29,274,240 constituted the return of principal. c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Fred Wilpon Fa1nily Trust of approximately $11,019,535 (the "Fred Wilpon Family Trust Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Fred Wilpon Family Trust Exhibit B. Of the Fred Wilpon Family Trust Two Year Initial Transfers, $4,111,737 were Fictitious Profits and the remaining $6,907,798 constituted the retum of principal. 1266. Upon infonnation and belief the Fred Wilpon Fa1nily Trust is also a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers fro1n the following approximately twenty-three (23) Sterling BLMIS Accounts held by other Sterling- related entities and/or individuals: Nos. 1KW057, 1KW134, 1KW156, 1KW175, 1KW180, 1KW192, 1KW218, 1KW223, 1KW247, 1KW254, 1KW341, IKW346, IKW348, IKW358, IKW374, IKW378, 1KW413, 1KW423, IKW435, IKW449, IKW463, IKW464, and 1KW059 (the "Fred Wilpon Family Trust Subsequent Transfer Accounts"). Appendix II, Fred Wilpon Family Trust Exhibit C. a. Defendant Fred Wilpon Family Trust received Subsequent Transfers fro1n the Fred Wilpon Family Trust Subsequent Transfer Accounts totaling $22,339,808 in Fictitious Profits fro1n the opening dates of such Subsequent Transfer Accounts to the Filing Date and $86,170,395 in principal during the six years prior to the Filing Date, totaling approximately 3 13 $108,510,203 (the "Fred Wilpon Family Trust Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from the Fred Wilpon Family Trust pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Fred Wilpon Family Trust Exhibit C. 1267. Upon infonnation and belief, so1ne or all of the Fred Wilpon Family Trust transfers were subsequently transferred by the Fred Wilpon Family Trust to the following Defendants: Fred Wilpon, Judith Wilpon, Debra Wilpon, Richard Wilpon, Jeffrey Wilpon, Robin Wilpon Wachtler, Bruce N. Wilpon, MINOR 1, MINOR 2, and Kimberly Wilpon (collectively, the "Fred Wilpon Family Trust Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. Such Subsequent Transfers, or the value thereof are recoverable from the Fred Wilpon Family Trust Subsequent Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code. Katz 2002 Descend:1nts' Trust 1268. According to and Sterling's records, the Katz 2002 Descendants' Trust received Initial Transfers from approximately two (2) Sterling BLMIS Accounts: Nos. 1KW391 and 1KW412. Appendix II, Katz 2002 Descendants' Trust Exhibit B. a. BLMIS made direct transfers to Defendant Katz 2002 Descendants' Trust totaling $396,003 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $2,393,648 in principal during the six years prior to the Filing Date, totaling approximately $2,789,652 (the "Katz 2002 Descendants' Trust Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Katz 2002 Descendants' Trust Exhibit B. 3 14 b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Katz 2002 Descendants' Trust of approximately $2,789,652 (the "Katz 2002 Descendants' Trust Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 55l ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Katz 2002 Descendants' Trust Exhibit B. Of the Katz 2002 Descendants' Trust Six Year Initial Transfers, $396,003 were Fictitious Profits and the remaining $2,393,648 constituted the return of principal. c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Katz 2002 Descendants' Trust of approximately $2,664,072 (the "Katz 2002 Descendants' Trust Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 55l ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Katz 2002 Descendants' Trust Exhibit B. Of the Katz 2002 Descendants' Trust Two Year Initial Transfers, $396,003 were Fictitious Profits and the remaining $2,268,068 constituted the return of principal. l269. Upon infonnation and belief the Katz 2002 Descendants' Trust is also a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers fro1n the following approximately fifteen (15) Sterling BLMIS Accounts held by other Sterling- related entities and/or individuals: Nos. lKWl92, lKW2l8, and (the "Katz 2002 Descendants' Trust Subsequent Transfer Accounts"). Appendix II, Katz 2002 Descendants' Trust Exhibit C. 3 l5 a. Defendant Katz 2002 Descendants' Trust received Subsequent Transfers from the Katz 2002 Descendants' Trust Subsequent Transfer Accounts totaling $1,894,747 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $17,056,931 in principal during the six years prior to the Filing Date, totaling approximately $18,951,678 (the "Katz 2002 Descendants' Trust Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from the Katz 2002 Descendants' Trust pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Katz 2002 Descendants' Trust Exhibit C. 1270. Upon infonnation and belief some or all ofthe Katz 2002 Descendants' Trust transfers were subsequently transferred by the Katz 2002 Descendants' Trust to the following Defendants: Michael Katz, Saul Katz, Dayle Katz, Gregory Katz, Howard Katz and Todd Katz (collectively, the "Katz 2002 Descendants' Trust Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. Such Subsequent Transfers, or the value thereof are recoverable from the Katz 2002 Descendants' Trust Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. Wilpon 2002 Descend:1nts' Trust 1271. According to and Sterling's records, the Wilpon 2002 Descendants' Trust received Initial Transfers from approximately two (2) Sterling BLMIS Accounts: Nos. 1KW412 and 1KW445. Appendix II, Wilpon 2002 Descendants' Trust Exhibit B. a. BLMIS made direct transfers to Defendant Wilpon 2002 Descendants' Trust totaling $528,446 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $2,025,303 in principal during the six years prior to the Filing Date, totaling approximately $2,553,749 (the "Wilpon 2002 Descendants' Trust Initial 3 16 Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Wilpon 2002 Descendants' Trust Exhibit B. b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Wilpon 2002 Descendants' Trust of approximately $2,553,749 (the "Wilpon 2002 Descendants' Trust Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Wilpon 2002 Descendants' Trust Exhibit B. Of the Wilpon 2002 Descendants' Trust Six Year Initial Transfers, $528,446 were Fictitious Profits and the remaining $2,025,303 constituted the return of principal. c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Wilpon 2002 Descendants' Trust of approximately $2,386,169 (the "Wilpon 2002 Descendants' Trust Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Wilpon 2002 Descendants' Trust Exhibit B. Of the Wilpon 2002 Descendants' Trust Two Year Initial Transfers, $528,446 were Fictitious Profits and the remaining $1,857,723 constituted the retum of principal. 1272. Upon infonnation and belief the Wilpon 2002 Descendants' Trust is also a Subsequent Transferee Defendant that received avoidable and recoverable Subsequent Transfers fro1n approximately fourteen (14) Sterling BLMIS Accounts held by other Sterling-related 3 17 entities and/or individuals: Nos. 1KW057, 1KW192, 1KW218, 1KW223, 1KW247, 1KW254, 1KW374, 1KW378, 1KW423, 1KW435, 1KW447, 1KW449, 1KW464, and 1KW465 (the "Wilpon 2002 Descendants' Trust Subsequent Transfer Accounts"). Appendix II, Wilpon 2002 Descendants' Trust Exhibit C. a. Defendant Wilpon 2002 Descendants' Trust received Subsequent Transfers from the Wilpon 2002 Descendants' Trust Subsequent Transfer Accounts totaling $2,528,442 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $20,374,004 in principal during the six years prior to the Filing Date, totaling approximately $22,902,446 (the "Wilpon 2002 Descendants' Trust Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from the Wilpon 2002 Descendants' Trust pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Wilpon 2002 Descendants' Trust Exhibit C. 1273. Upon infonnation and belief so1ne or all of the Wilpon 2002 Descendants' Trust transfers were subsequently transferred by the Wilpon 2002 Descendants' Trust to the following Defendants: Richard Wilpon, Fred Wilpon, Debra Wilpon, Jessica Wilpon, Daniel Wilpon, and Scott Wilpon (collectively, the "Wilpon 2002 Descendants' Trust Subsequent Transferee Defendants"). Appendix II, Each Defendant's Corresponding Exhibit C. Such Subsequent Transfers, or the value thereof are recoverable from the Wilpon 2002 Descendants' Trust Subsequent Transferee Defendants pursuant to section 550(a) of the Bankruptcy Code. 3 18 E. Sterling Family Member Defendants Iris Katz 1274. According to and Sterling's records, Defendant Iris Katz received Initial Transfers from approximately six (6) Sterling BLMIS Accounts: Nos. 1KW014, 1KW154, 1KW235, 1KW236, 1KW237, and 1KW272. Appendix II, Iris Katz Exhibit B. a. BLMIS made direct transfers to Defendant Iris Katz totaling $34,997,051 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $2,198,313 in principal during the six years prior to the Filing Date, totaling approximately $37,195,364 (the "Iris Katz Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankiuptcy Code, SIPA, and the DCL. Appendix II, Iris Katz Exhibit B. b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Iris Katz of approximately $24,921,080 (the "Iris Katz Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Iris Katz Exhibit B. Of the Iris Katz Six Year Initial Transfers, $22,722,767 were Fictitious Profits and the remaining $2,198,313 constituted the return of principal. c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Iris Katz of approximately $2,223,000 in Fictitious Profits (the "Iris Katz Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Iris Katz Exhibit B. 3 19 Judith Wilpon 1275. According to and Sterling's records, Defendant Judith Wilpon received Initial Transfers from approximately six (6) Sterling BLMIS Accounts: Nos. 1KW077, 1KW155, 1KW232, 1KW233, 1KW234, and 1KW273. Appendix II, Judith Wilpon Exhibit B. a. BLMIS made direct transfers to Defendant Judith Wilpon totaling $24,679,509 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $4,796,698 in principal during the six years prior to the Filing Date, totaling approximately $29,476,207 (the "Judith Wilpon Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Judith Wilpon Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Judith Wilpon of approximately $17,615,000 (the "Judith Wilpon Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Judith Wilpon Exhibit B. Of the Judith Wilpon Six Year Initial Transfers, $12,818,302 were Fictitious Profits and the remaining $4,796,698 constituted the retum of principal. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Judith Wilpon of approximately $6,000,000 in Fictitious Profits (the "Judith Wilpon Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Judith Wilpon Exhibit B. 320 Dayle Katz 1276. According to and Sterling's records, Defendant Dayle Katz received Initial Transfers from approximately two (2) Sterling BLMIS Accounts: Nos. 1KW013 and 1KW020. Appendix II, Dayle Katz Exhibit B. a. BLMIS made direct transfers to Defendant Dayle Katz totaling $553,483 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $3,645,267 in principal during the six years prior to the Filing Date, totaling approximately $4,198,750 (the "Dayle Katz Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Dayle Katz Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Dayle Katz of approximately $4,198,750 (the "Dayle Katz Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Dayle Katz Exhibit B. Of the Dayle Katz Six Year Initial Transfers, $553,483 were Fictitious Profits and the remaining $3,645,267 constituted the return of principal. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Dayle Katz of approximately $500,000 in principal (the "Dayle Katz Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Dayle Katz Exhibit B. 321 1277. Upon infonnation and belief Defendant Dayle Katz is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers from approximately twenty (20) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW313, 1KW314, 1KW315, 1KW402, 1KW057, 1KW192, 1KW218, 1KW223, 1KW247, 1KW254, 1KW374, 1KW378, 1KW391, 1KW423, 1KW435, 1KW447, 1KW449, 1KW463, 1KW464, and 1KW465 (collectively, the "Dayle Katz Subsequent Transfer Accounts"). Appendix II, Dayle Katz Exhibit C. a. Defendant Dayle Katz received Subsequent Transfers from the Dayle Katz Subsequent Transfer Accounts totaling $2,011,040 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $21,798,502 in principal during the six years prior to the Filing Date, totaling approximately $23,809,542 (the "Dayle Katz Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Dayle Katz pursuant to section 550(a) of the Bankruptcy Code. Appendix II, Dayle Katz Exhibit C. Debra Wilpon 1278. According to and Sterling's records, Defendant Debra Wilpon received Initial Transfers from approximately three (3) Sterling BLMIS Accounts: Nos. 1KW066, 1KW307, and 1KW081. Appendix II, Debra Wilpon Exhibit B. a. BLMIS made direct transfers to Defendant Debra Wilpon totaling $2,020,180 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $12,739,443 in principal during the six years prior to the Filing Date, totaling approximately $14,759,623 (the "Debra Wilpon Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are 322 subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Debra Wilpon Exhibit B. b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Debra Wilpon of approximately $13,946,510 (the "Debra Wilpon Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Debra Wilpon Exhibit B. Of the Debra Wilpon Six Year Initial Transfers, $1,207,067 were Fictitious Profits and the remaining $12,739,443 constituted the return of principal. c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Debra Wilpon of approximately $9,441,710 (the "Debra Wilpon Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Debra Wilpon Exhibit B. Of the Debra Wilpon Two Year Initial Transfers, $1,131,467 were Fictitious Profits and the remaining $8,310,243 constituted the return of principal. d. In the ninety days before the Filing Date, BLMIS 1nade direct transfers of principal to Defendant Debra Wilpon totaling $368,533 (the "Debra Wilpon Preference Period Transfers"), which are avoidable and recoverable under sections 547, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Debra Wilpon Exhibit B. 323 Valerie Wilpon 1279. According to and Sterling's records, Defendant Valerie Wilpon received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. IKWO76. Appendix II, Valerie Wilpon Exhibit B. a. BLMIS made transfers of principal directly to Defendant Valerie Wilpon totaling $8,182,163 during the six years prior to the Filing Date. Such transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Valerie Wilpon Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Valerie Wilpon of approximately $8,182,163 in principal (the "Valerie Wilpon Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Valerie Wilpon Exhibit B. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Valerie Wilpon of approximately $822,163 in principal (the "Valerie Wilpon Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Valerie Wilpon Exhibit B. 1280. Upon infonnation and belief, Defendant Valerie Wilpon is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers from approximately three (3) Sterling BLMIS Accounts held by other Sterling-related entities and/or 324 individuals: Nos. 1KW313, 1KW314, and 1KW315 (collectively, the "Valerie Wilpon Subsequent Transfer Accounts"). Appendix II, Valerie Wilpon Exhibit C. a. Defendant Valerie Wilpon received Subsequent Transfers fro1n the Valerie Wilpon Subsequent Transfer Accounts totaling $117,111 in Fictitious Profits fro1n the opening dates of such Subsequent Transfer Accounts to the Filing Date and $1,559,352 in principal during the six years prior to the Filing Date, totaling approximately $1,676,463 (the "Valerie Wilpon Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable fro1n Defendant Valerie Wilpon pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Valerie Wilpon Exhibit C. Amy Beth Katz 1281. According to and Sterling's records, Defendant Amy Beth Katz received Initial Transfers fro1n approximately two (2) Sterling BLMIS Accounts: Nos. 1KW345 and 1KW426. Appendix II, Amy Beth Katz Exhibit B. a. BLMIS 1nade direct transfers to Defendant Amy Beth Katz totaling $40,460 in Fictitious Profits fro1n the opening dates of such Sterling BLMIS Accounts to the Filing Date and $874,544 in principal during the six years prior to the Filing Date, totaling approximately $915,005 (the "Amy Beth Katz Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Amy Beth Katz Exhibit B. b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Amy Beth Katz of approximately $915,005 (the "Amy Beth Katz Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe 325 Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Amy Beth Katz Exhibit B. Of the Amy Beth Katz Six Year Initial Transfers, $40,460 were Fictitious Profits and the remaining $874,544 constituted the return of principal. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Amy Beth Katz of approximately $915,005 (the "Amy Beth Katz Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 55l of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Amy Beth Katz Exhibit B. Of the Amy Beth Katz Two Year Initial Transfers, $40,460 were Fictitious Profits and the remaining $874,544 constituted the return of principal. l282. Upon infonnation and belief Defendant Amy Beth Katz is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers from approximately two (2) Sterling BLMIS Accounts held by other Sterling-related entities and/ or individuals: Nos. and (collectively, the "Amy Beth Katz Subsequent Transfer Accounts"). Appendix II, Amy Beth Katz Exhibit C. a. Defendant Amy Beth Katz received Subsequent Transfers of principal from the Amy Beth Katz Subsequent Transfer Accounts totaling $357,136 during the six years prior to the Filing Date (the "Amy Beth Katz Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Amy Beth Katz pursuant to section 550(a) of the Bankruptcy Code. Appendix II, Amy Beth Katz Exhibit C. 326 Heather Katz Knopf 1283. According to and Sterling's records, Defendant Heather Katz Knopf received Initial Transfers from approximately four (4) Sterling BLMIS Accounts: Nos. 1KW012, 1KW116, 1KW037, and 1KW309. Appendix II, Heather Katz Knopf Exhibit B. a. BLMIS made direct transfers to Defendant Heather Katz Knopf totaling $117,977 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $104,500 in principal during the six years prior to the Filing Date, totaling approximately $222,477 (the "Heather Katz Knopf Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Heather Katz Knopf Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Heather Katz Knopf of approximately $104,500 in principal (the "Heather Katz Knopf Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Heather Katz Knopf Exhibit B. 1284. Upon inforination and belief Defendant Heather Katz Knopf is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers from approximately forty-one (41) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW017, 1KW063, 1KW198, 1KW313, 1KW314, 1KW315, 1KW427, 1KW463, 1KW030, 1KW037, 1KW057, 1KW059, 1KW134, 1KW156, 1KW175, 1KW180, 1KW192, 1KW218, 1KW220, 1KW223, 1KW242, 1KW247, 1KW254, 1KW279, 1KW299, IKW337, 1KW341, 1KW346, IKW348, 1KW362, IKW374, IKW378, 1KW402, 1KW407, 327 1KW413, 1KW420, 1KW423, 1KW435, IKW449, 1KW464, and 1KW465 (collectively, the "Heather Katz Knopf Subsequent Transfer Accounts"). Appendix II, Heather Katz Knopf Exhibit C. a. Defendant Heather Katz Knopf received Subsequent Transfers from the Heather Katz Knopf Subsequent Transfer Accounts totaling $33,107,927 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $120,498,256 in principal during the six years prior to the Filing Date, totaling approximately $153,606,184 (the "Heather Katz Knopf Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Heather Katz Knopf pursuant to section 550(a) of the Bankruptcy Code. Appendix II, Heather Katz Knopf Exhibit C. Howard Katz 1285. According to and Sterling's records, Defendant Howard Katz received Initial Transfers from approximately two (2) Sterling BLMIS Accounts: Nos. 1KW072 and 1KW424. Appendix II, Howard Katz Exhibit B. a. BLMIS made direct transfers to Defendant Howard Katz totaling $7,589 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $180,000 in principal during the six years prior to the Filing Date, totaling approximately $187,589 (the "Howard Katz Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Howard Katz Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Howard Katz of approximately $180,000 in principal (the "Howard Katz Six Year 328 Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Howard Katz Exhibit B. 1286. Upon infonnation and belief Defendant Howard Katz is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers from approximately twenty-one (21) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW063, 1KW313, 1KW314, 1KW315, 1KW447, 1KW057, 1KW109, 1KW192, 1KW218, 1KW223, 1KW247, 1KW254, 1KW374, 1KW378, 1KW391, 1KW423, 1KW435, 1KW449, 1KW463, 1KW464, and 1KW465 (collectively, the "Howard Katz Subsequent Transfer Accounts"). Appendix II, Howard Katz Exhibit C. a. Defendant Howard Katz received Subsequent Transfers from the Howard Katz Subsequent Transfer Accounts totaling $1,907,525 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $19,918,881 in principal during the six years prior to the Filing Date, totaling approximately $21,826,406 (the "Howard Katz Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Howard Katz pursuant to section 550(a) of the Bankruptcy Code. Appendix II, Howard Katz Exhibit C. Natalie Katz O'B1?ien 1287. According to and Sterling's records, Defendant Natalie Katz O'Brien received Initial Transfers from approximately seven (7) Sterling BLMIS Accounts: Nos. 1KW012, 1KW017, 1KW023, 1KW197, 1KW227, 1KW037, and 1KW458. Appendix II, Natalie Katz O'Brien Exhibit B. 329 a. BLMIS 1nade direct transfers to Defendant Natalie Katz O'Brien totaling $98,827 in Fictitious Profits fro1n the opening dates of such Sterling BLMIS Accounts to the Filing Date and $288,000 in principal during the six years prior to the Filing Date, totaling approximately $386,827 (the "Natalie Katz O'Brien Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Natalie Katz O'Brien Exhibit B. b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Natalie Katz O'Brien of approximately $288,000 in principal (the "Natalie Katz O'Brien Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 55l of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Natalie Katz O'Brien Exhibit B. c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Natalie Katz O'Brien of approximately $l9l,000 in principal (the "Natalie Katz O'Brien Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 55l ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Natalie Katz O'Brien Exhibit B. l288. Upon infonnation and belief Defendant Natalie Katz O'Brien is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers fro1n approximately forty (40) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. lKWl98, lKW3l3, lKW3l4, lKW3l5, lKWl34, lKWl56, lKWl75, lKWl80, 330 1KW192, 1KW218, 1KW220, 1KW223, 1KW242, 1KW247, 1KW254, 1KW279, 1KW299, 1KW337, 1KW341, 1KW346, 1KW348, 1KW362, 1KW374, 1KW378, 1KW407, 1KW413, 1KW420, 1KW423, 1KW435, 1KW449, 1KW464, and 1KW465 (collectively, the "Natalie Katz O'Brien Subsequent Transfer Accounts"). Appendix II, Natalie Katz O'Brien Exhibit C. a. Defendant Natalie Katz O'Brien received Subsequent Transfers fro1n the Natalie Katz O'Brien Subsequent Transfer Accounts totaling $28,745,384 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $103,070,726 in principal during the six years prior to the Filing Date, totaling approximately $131,816,109 (the "Natalie Katz O'Brien Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Natalie Katz O'Brien pursuant to section 550(a) of the Bankruptcy Code. Appendix II, Natalie Katz O'Brien Exhibit C. Todd Katz 1289. According to and Sterling's records, Defendant Todd Katz received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. 1KWO72. Appendix II, Todd Katz Exhibit B. a. BLMIS made direct transfers to Defendant Todd Katz constituting a minimal amount of Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date (the "Todd Katz Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Todd Katz Exhibit B. 331 1290. Upon infonnation and belief Defendant Todd Katz is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers from approximately tvventy-two (22) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW063, 1KW313, 1KW314, 1KW315, 1KW402, 1KW057, 1KW110, 1KW192, 1KW218, 1KW223, 1KW247, 1KW254, IKW374, 1KW378, 1KW391, 1KW423, 1KW435, IKW447, IKW449, 1KW463, 1KW464, and 1KW465 (collectively, the "Todd Katz Subsequent Transfer Accounts"). Appendix II, Todd Katz Exhibit C. a. Defendant Todd Katz received Subsequent Transfers from the Todd Katz Subsequent Transfer Accounts totaling $1,913,327 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $20,173,591 in principal during the six years prior to the Filing Date, totaling approximately $22,086,917 (the "Todd Katz Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Todd Katz pursuant to section 550(a) of the Bankruptcy Code. Appendix II, Todd Katz Exhibit C. Bruce N. Wilpon 1291. According to and Sterling's records, Defendant Bruce N. Wilpon received Initial Transfers from approximately three (3) Sterling BLMIS Accounts: Nos. 1KW017, 1KW082, and 1KW118. Appendix II, Bruce N. Wilpon Exhibit B. a. BLMIS made direct transfers to Defendant Bruce N. Wilpon totaling $349,880 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date (the "Bruce N. Wilpon Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to 332 avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Bruce N. Wilpon Exhibit B. b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Bruce N. Wilpon of approximately $236,770 in Fictitious Profits (the "Bruce N. Wilpon Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Bruce N. Wilpon Exhibit B. 1292. Upon infonnation and belief Defendant Bruce N. Wilpon is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers from approximately thirty-five (35) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW037, 1KW057, 1KW059, 1KW063, 1KW074, 1KW075, 1KW082, 1KW134, 1KW156, 1KW175, 1KW180, 1KW192, 1KW218, 1WK220, 1KW223, 1KW247, 1KW254, 1KW260, 1KW298, 1KW337, 1KW341, 1KW346, 1KW348, 1KW358, 1KW362, 1KW374, 1KW378, 1KW408, 1KW413, 1KW423, 1KW427, 1KW435, 1KW449, 1KW463, and 1KW464 (collectively, the "Bruce N. Wilpon Subsequent Transfer Accounts"). Appendix II, Bruce N. Wilpon Exhibit C. a. Defendant Bruce N. Wilpon received Subsequent Transfers from the Bruce N. Wilpon Subsequent Transfer Accounts totaling $27,442,966 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $114,909,334 in principal during the six years prior to the Filing Date, totaling approximately $142,3 52,300 (the "Bruce N. Wilpon Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the 333 value thereof are recoverable from Defendant Bruce N. Wilpon pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Bruce N. Wilpon Exhibit C. Daniel Wilpon 1293. Upon infonnation and belief Defendant Daniel Wilpon is a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers fro1n approximately eighteen (18) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW358, 1KW402, 1KW447, 1KWO57, 1KW192, 1KW209, 1KW218, 1KW223, 1KW247, 1KW254, 1KW374, 1KW378, 1KW423, 1KW435, 1KW445, 1KW449, 1KW464, and 1KW465. Appendix II, Daniel Wilpon Exhibit C. a. Defendant Daniel Wilpon received Subsequent Transfers fro1n the Daniel Wilpon Subsequent Transfer Accounts totaling $2,530,194 in Fictitious Profits fro1n the opening dates of such Subsequent Transfer Accounts to the Filing Date and $23,396,254 in principal during the six years prior to the Filing Date, totaling approximately $25,926,448 (the "Daniel Wilpon Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable fro1n Defendant Daniel Wilpon pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Daniel Wilpon Exhibit C. Jessica Wilpon 1294. Upon infonnation and belief Defendant Jessica Wilpon is a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers fro1n approximately the following sixteen (16) Sterling BLMIS Accounts held by other Sterling- related entities and/or individuals: Nos. 1KWO57, 1KW192, 1KW208, 1KW218, 1KW223, 1KW247, 1KW254, 1KW374, 1KW378, 1KW423, 1KW435, 1KW445, 1KW447, 1KW449, 1KW464, and 1KW465. Appendix II, Jessica Wilpon Exhibit C. 334 a. Defendant Jessica Wilpon received Subsequent Transfers from the Jessica Wilpon Subsequent Transfer Accounts totaling $2,528,442 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $21,892,973 in principal during the six years prior to the Filing Date, totaling approximately $24,421,415 (the "Jessica Wilpon Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Jessica Wilpon pursuant to section 550(a) of the Bankruptcy Code. Appendix II, Jessica Wilpon Exhibit C. Robin Wilpon Wachtler 1295. According to and Sterling's records, Defendant Robin Wilpon Wachtler received Initial Transfers from approximately seven (7) Sterling BLMIS Accounts: Nos. 1KW017, 1KW082, 1KW117, 1KW210, 102352, 1KW096, and IKW367. Appendix II, Robin Wilpon Wachtler Exhibit B. a. BLMIS made direct transfers to Defendant Robin Wilpon Wachtler totaling $729,120 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $2,367,500 in principal during the six years prior to the Filing Date, totaling approximately $3,096,620 (the "Robin Wilpon Wachtler Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Robin Wilpon Wachtler Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Robin Wilpon Wachtler of approximately $2,385,532 (the "Robin Wilpon Wachtler Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA 335 section and applicable provisions of DCL sections 273-279. Appendix II, Robin Wilpon Wachtler Exhibit B. Of the Robin Wilpon Wachtler Six Year Initial Transfers, $18,032 were Fictitious Profits and the remaining $2,367,500 constituted the return of principal. c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Robin Wilpon Wachtler of approximately $1,352,000 in principal (the "Robin Wilpon Wachtler Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Robin Wilpon Wachtler Exhibit B. d. In the ninety days before the Filing Date, BLMIS 1nade direct transfers of principal to Defendant Robin Wilpon Wachtler constituting a 1nini1nal amount (the "Robin Wilpon Wachtler Preference Period Transfers"), which are avoidable and recoverable under sections 547, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Robin Wilpon Wachtler Exhibit B. 1296. Upon infonnation and belief Defendant Robin Wilpon Wachtler is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers approximately thirty-seven (37) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW134, 1KW156, 1KW180, 1KW341, 1KW346, 1KW402, 1KW413, 1KW447, 1KW037, 1KW057, 1KW059, 1KW063, 1KW074, 1KW075, 1KW082, 1KW175, 1KW192, 1KW218, 1KW220, 1KW223, 1KW247, 1KW254, 1KW260, 1KW298, 1KW337, 1KW348, 1KW358, 1KW362, 1KW374, 1KW378, 1KW408, 1KW423, 1KW427, 1KW435, 1KW449, 1KW463, and 1KW464 (collectively, the "Robin Wilpon Wachtler Subsequent Transfer Accounts"). Appendix II, Robin Wilpon Wachtler Exhibit C. 336 a. Defendant Robin Wilpon Wachtler received Subsequent Transfers from the Robin Wilpon Wachtler Subsequent Transfer Accounts totaling $27,913,548 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $113,932,794 in principal during the six years prior to the Filing Date, totaling approximately $141,846,342 (the "Robin Wilpon Wachtler Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Robin Wilpon Wachtler pursuant to section 550(a) of the Bankruptcy Code. Appendix II, Robin Wilpon Wachtler Exhibit C. Philip Wachtler 1297. According to and Sterling's records, Defendant Philip Wachtler received Initial Transfers from approximately four (4) Sterling BLMIS Accounts: Nos. 1KW210, 102352, 1KW096, and IKW367. Appendix II, Philip Wachtler Exhibit B. a. BLMIS made direct transfers to Defendant Philip Wachtler totaling $351,137 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $2,367,500 in principal during the six years prior to the Filing Date, totaling approximately $2,718,637 (the "Philip Wachtler Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Philip Wachtler Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Philip Wachtler of approximately $2,385,532 (the "Philip Wachtler Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and 337 applicable provisions of DCL sections 273-279. Appendix II, Philip Wachtler Exhibit B. Of the Philip Wachtler Six Year Initial Transfers, $18,032 were Fictitious Profits and the remaining $2,367,500 constituted the return of principal. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Philip Wachtler of approximately $1,352,000 in principal (the "Philip Wachtler Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Philip Wachtler Exhibit B. d. In the ninety days before the Filing Date, BLMIS made direct transfers of principal to Defendant Philip Wachtler constituting a minimal amount (the "Philip Wachtler Preference Period Transfers"), which are avoidable and recoverable under sections 547, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Philip Wachtler Exhibit B. 1298. Upon infonnation and belief Defendant Philip Wachtler is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers from approximately the following eight (8) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW134, 1KW156, 1KW180, 1KW341, 1KW346, 1KW402, 1KW413, and 1KW447 (collectively, the "Philip Wachtler Subsequent Transfer Accounts"). Appendix II, Philip Wachtler Exhibit C. a. Philip Wachtler received Subsequent Transfers from the Philip Wachtler Subsequent Transfer Accounts totaling $545,062 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $1,289,780 in principal during the six years prior to the Filing Date, totaling approximately $1,834,842 (the "Philip Wachtler 338 Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable fro1n Defendant Philip Wachtler pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Philip Wachtler Exhibit C. Kimberly Wachtler 1299. Upon infonnation and belief Defendant Kimberly Wachtler is a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers fro1n approximately the following thirty-five (35) Sterling BLMIS Accounts held by other Sterling- related entities and/or individuals: Nos. 1KWO37, 1KWO57, 1KWO59, 1KWO63, 1KWO74, 1KWO75, 1KWO82, 1KW134, 1KW156, 1KW175, 1KW180, 1KW192, 1KW218, 1KW220, 1KW223, 1KW247, 1KW254, 1KW260, 1KW298, 1KW337, 1KW341, 1KW346, 1KW348, 1KW358, 1KW362, 1KW374, 1KW378, 1KW408, 1KW413, 1KW423, 1KW427, 1KW435, 1KW449, 1KW463, and 1KW464 (collectively, the "Kimberly Wachtler Subsequent Transfer Accounts"). Appendix II, Kimberly Wachtler Exhibit C. a. Defendant Kimberly Wachtler received Subsequent Transfers fro1n the Kimberly Wachtler Subsequent Transfer Accounts totaling $27,368,486 in Fictitious Profits fro1n the opening dates of such Subsequent Transfer Accounts to the Filing Date and $112,643,014 in principal during the six years prior to the Filing Date, totaling approximately (the "Kimberly Wachtler Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable fro1n Defendant Kimberly Wachtler pursuant to section 550(a) of the Bankruptcy Code. Appendix II, Kimberly Wachtler Exhibit C. 339 Scott Wilpon 1300. Upon infonnation and belief Defendant Scott Wilpon is a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers from approximately the following seventeen (17) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW455, 1KW464, 1KW057, 1KW192, 1KW207, 1KW218, 1KW223, 1KW247, 1KW254, 1KW374, 1WK378, 1KW423, 1KW43 5, 1KW445, and 1KW465 (collectively, the "Scott Wilpon Subsequent Transfer Accounts"). Appendix II, Scott Wilpon Exhibit C. a. Defendant Scott Wilpon received Subsequent Transfers from the Scott Wilpon Subsequent Transfer Accounts totaling $2,530,805 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $22,201,046 in principal during the six years prior to the Filing Date, totaling approximately $24,731,852 (the "Scott Wilpon Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Scott Wilpon pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Scott Wilpon Exhibit C. MINOR 1 1301. Upon infonnation and belief Defendant MINOR 1 is a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers from approximately the following thirty-six (36) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW037, 1KW057, 1KW059, 1KW063, 1KW072, 1KW074, 1KW075, 1KW082, 1KW134, 1KW156, 1KW175, 1KW180, 1KW192, 1KW218, 1KW220, 1KW223, 1KW247, 1KW254, 1KW260, 1KW298, 1KW337, 1KW341, 1KW346, 1KW348, 1KW358, 1KW362, 1KW374, 1KW378, 1KW408, 1KW413, 1KW423, 1KW427, 1KW435, 1KW449, 340 IKW463, and IKW464 (collectively, the 1 Subsequent Transfer Accounts"). Appendix II, MINOR 1 Exhibit C. a. Defendant MINOR 1 received Subsequent Transfers fro1n the MINOR 1 Subsequent Transfer Accounts totaling $27,510,896 in Fictitious Profits fro1n the opening dates of such Subsequent Transfer Accounts to the Filing Date and in principal during the six years prior to the Filing Date, totaling approximately $141,760,796 (the 1 Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable fro1n Defendant MINOR 1 pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, MINOR 1 Exhibit C. MINOR 2 1302. Upon infonnation and belief Defendant MINOR 2 is a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers fro1n approximately the following thirty-six (36) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW037, 1KW057, 1KW059, 1KW063, 1KW072, 1KW074, 1KW075, 1KW082, 1KW134, 1KW156, 1KW175, 1KW180, 1KW192, 1KW218, 1KW220, 1KW223, 1KW247, 1KW254, 1KW260, 1KW298, IKW337, 1KW341, IKW346, IKW348, IKW358, 1KW362, IKW374, IKW378, 1KW408, 1KW413, 1KW423, 1KW427, IKW435, IKW449, IKW463, and IKW464. Appendix II, MINOR 2 Exhibit C. a. Defendant MINOR 2 received Subsequent Transfers fro1n the MINOR 2 Subsequent Transfer Accounts totaling $27,510,896 in Fictitious Profits fro1n the opening dates of such Subsequent Transfer Accounts to the Filing Date and in principal during the six years prior to the Filing Date, totaling approximately $141,760,796 (the 2 Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property 341 within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant MINOR 2 pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, MINOR 2 Exhibit C. Ruth Friedman l303. According to and Sterling's records, Defendant Ruth Friedman received Initial Transfers from approximately three (3) Sterling BLMIS Accounts: Nos. and Appendix II, Ruth Friedman Exhibit B. a. BLMIS made direct transfers to Defendant Ruth Friedman totaling $539,437 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $387,963 in principal during the six years prior to the Filing Date, totaling approximately $927,400 (the "Ruth Friedman Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Ruth Friedman Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Ruth Friedman of approximately $468,400 (the "Ruth Friedman Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 55l ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Ruth Friedman Exhibit B. Of the Ruth Friedman Six Year Initial Transfers, $80,437 were Fictitious Profits and the remaining $387,963 constituted the retum of principal. c. During the two years prior to the Filing Date, BLMIS made direct transfers of approximately $60,000 in Fictitious Profits to Defendant Ruth Friedman (the "Ruth Friedman Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 342 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Ruth Friedman Exhibit B. 1304. Upon infonnation and belief Defendant Ruth Friedman is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers from the following approximately two (2) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW402 and KW455 (collectively, the "Ruth Friedman Subsequent Transfer Accounts"). Appendix II, Ruth Friedman Exhibit C. a. Defendant Ruth Friedman received Subsequent Transfers of principal from the Ruth Friedman Subsequent Transfer Accounts totaling $960,526 during the six years prior to the Filing Date (the "Ruth Friedman Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Ruth Friedman pursuant to section 550(a) of the Bankruptcy Code. Appendix II, Ruth Friedman Exhibit C. Rebell 1305. According to and Sterling's records, Defendant Rebell Ostennan received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. 1KW269. Appendix II, Rebell Ostennan Exhibit B. a. BLMIS made direct transfers to Defendant Rebell Ostennan totaling $107,000 in Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date and $426,000 in principal during the six years prior to the Filing Date, totaling approximately $533,000 (the Rebell Ostennan Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Rebell Ostennan Exhibit B. 343 b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Rebell Ostennan of approximately $533,000 (the Rebell Ostennan Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Rebell Ostennan Exhibit B. Of the Rebell Ostennan Six Year Initial Transfers, $107,000 were Fictitious Profits and the remaining $426,000 constituted the return of principal. c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Rebell Ostennan of approximately $150,000 (the Rebell Ostennan Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Rebell Ostennan Exhibit B. Of the Rebell Ostennan Two Year Initial Transfers, $107,000 were Fictitious Profits and the remaining $43,000 constituted the return of principal. Elise C. Tepper 1306. According to and Sterling's records, Defendant Elise C. Tepper received Initial Transfers from approximately six (6) Sterling BLMIS Accounts: Nos. 1KW427, 1KW062, 1KW064, 1KW168, 1KW297, and 1KW308. Appendix II, Elise C. Tepper Exhibit B. a. BLMIS made direct transfers to Defendant Elise C. Tepper totaling $854,441 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $579,043 in principal during the six years prior to the Filing Date, totaling approximately $1,433,484 (the "Elise C. Tepper Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are 344 subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Elise C. Tepper Exhibit B. b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Elise C. Tepper of approximately $1,006,861 (the "Elise C. Tepper Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Elise C. Tepper Exhibit B. Of the Elise C. Tepper Six Year Initial Transfers, $427,818 were Fictitious Profits and the remaining $579,043 constituted the return of principal. c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Elise C. Tepper of approximately $1,006,861 (the "Elise C. Tepper Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Elise C. Tepper Exhibit B. Of the Elise C. Tepper Two Year Initial Transfers, $427,818 were Fictitious Profits and the remaining $579,043 constituted the return of principal. 1307. Upon infonnation and belief Defendant Elise C. Tepper is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers fro1n approximately two (2) Sterling BLMIS Accounts held by other Sterling-related entities and/ or individuals: Nos. 1KW175 and 1KW402 (collectively, the "Elise C. Tepper Subsequent Transfer Accounts"). Appendix II, Elise C. Tepper Exhibit C. a. Defendant Elise C. Tepper received Subsequent Transfers fro1n the Elise C. Tepper Subsequent Transfer Accounts totaling $525,904 in Fictitious Profits fro1n the opening 345 dates of such Subsequent Transfer Accounts to the Filing Date and $4,780,230 in principal during the six years prior to the Filing Date, totaling approximately $5,306,134 (the "Elise C. Tepper Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Elise C. Tepper pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Elise C. Tepper Exhibit C. Jacgueline G. Tepper 1308. According to and Sterling's records, Defendant Jacqueline G. Tepper received Initial Transfers from approximately two (2) Sterling BLMIS Accounts: Nos. 1KW062 and 1KW308. Appendix II, Jacqueline G. Tepper Exhibit B. a. BLMIS made direct transfers to Defendant Jacqueline G. Tepper totaling $363,292 in Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $329,123 in principal during the six years prior to the Filing Date, totaling approximately $692,415 (the "Jacqueline G. Tepper Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Jacqueline G. Tepper Exhibit B. b. During the six years prior to the Filing Date, BLMIS made direct transfers to Defendant Jacqueline G. Tepper of approximately $692,293 (the "Jacqueline G. Tepper Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Jacqueline G. Tepper Exhibit B. Of the Jacqueline G. Tepper Six Year Initial Transfers, $363,170 were Fictitious Profits and the remaining $329,123 constituted the return of principal. 346 c. During the two years prior to the Filing Date, BLMIS made direct transfers to Defendant Jacqueline G. Tepper of approximately $692,293 (the "Jacqueline G. Tepper Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Jacqueline G. Tepper Exhibit B. Of the Jacqueline G. Tepper Two Year Initial Transfers, $363,170 were Fictitious Profits and the remaining $329,123 constituted the return of principal. 1309. Upon infonnation and belief Defendant Jacqueline G. Tepper is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers fro1n approximately one (1) Sterling BLMIS Account held by other Sterling-related entities and/or individuals: No. 1KW175 (the "Jacqueline G. Tepper Subsequent Transfer Account"). Appendix II, Jacqueline G. Tepper Exhibit C. a. Defendant Jacqueline G. Tepper received Subsequent Transfers fro1n the Jacqueline G. Tepper Subsequent Transfer Account totaling $92,807 in Fictitious Profits fro1n the opening date of such BLMIS Account to the Filing Date (the "Jacqueline G. Tepper Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable fro1n Defendant Jacqueline G. Tepper pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Jacqueline G. Tepper Exhibit C. Edward M. Tepper 1310. According to and Sterling's records, Defendant Edward M. Tepper received Initial Transfers fro1n approximately four (4) Sterling BLMIS Accounts: Nos. 1KW231, 1KW332, 1KW062, and 1KW308. Appendix II, Edward M. Tepper Exhibit B. 347 a. BLMIS 1nade direct transfers to Defendant Edward M. Tepper totaling $652,238 in Fictitious Profits fro1n the opening dates of such Sterling BLMIS Accounts to the Filing Date and $490,238 in principal during the six years prior to the Filing Date, totaling approximately $1,142,476 (the "Edward M. Tepper Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Edward M. Tepper Exhibit B. b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Edward M. Tepper of approximately $1,059,754 (the "Edward M. Tepper Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Edward M. Tepper Exhibit B. Of the Edward M. Tepper Six Year Initial Transfers, $569,516 were Fictitious Profits and the remaining $490,238 constituted the return of principal. c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Edward M. Tepper of approximately $692,293 (the "Edward M. Tepper Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Edward M. Tepper Exhibit B. Of the Edward M. Tepper Two Year Initial Transfers, $363,170 were Fictitious Profits and the remaining $329,123 constituted the return of principal. 1311. Upon infonnation and belief Defendant Edward M. Tepper is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers fro1n 348 approximately three (3) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 1KW175, 1KW279, and 1KW420 (collectively, the "Edward M. Tepper Subsequent Transfer Accounts"). Appendix II, Edward M. Tepper Exhibit C. a. Defendant Edward M. Tepper received Subsequent Transfers fro1n the Edward M. Tepper Subsequent Transfer Accounts totaling $92,837 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $114,320 in principal during the six years prior to the Filing Date, totaling approximately $207,157 (the "Edward M. Tepper Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Edward M. Tepper pursuant to section 550(a) of the Bankruptcy Code. Appendix II, Edward M. Tepper Exhibit C. Deyva Schreier 1312. According to and Sterling's records, Defendant Deyva Schreier Arthur received Initial Transfers from approximately two (2) Sterling BLMIS Accounts: Nos. 1KW396 and 1KW054. Appendix II, Deyva Schreier Arthur Exhibit B. a. BLMIS made direct transfers to Defendant Deyva Schreier Arthur totaling a minimal amount of Fictitious Profits from the opening dates of such Sterling BLMIS Accounts to the Filing Date and $74,000 in principal during the six years prior to the Filing Date, totaling approximately $74,020 (the "Deyva Schreier Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Deyva Schreier Arthur Exhibit B. b. During the six years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Deyva Schreier Arthur of approximately $74,000 in principal (the "Deyva Schreier 349 Arthur Six Year Initial Transfers"), which are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273-279. Appendix II, Deyva Schreier Arthur Exhibit B. c. During the two years prior to the Filing Date, BLMIS 1nade direct transfers to Defendant Deyva Schreier Arthur of approximately $56,000 in principal (the "Deyva Schreier Arthur Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Deyva Schreier Arthur Exhibit B. 1313. Upon infonnation and belief Defendant Deyva Schreier Arthur is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers from the following approximately forty-four (44) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 102343, 1KW040, 1KW052, 1KW053, 1KW056, 1KW057, 1KW059, 1KW063, 1KW098, 1KW134, 1KW156, 1KW161, 1KW175, 1KW178, 1KW180, 1KW192, 1KW218, 1KW220, 1KW223, 1KW247, 1KW254, 1KW255, 1KW279, 1KW287, 1KW293, 1KW313, 1KW314, 1KW315, 1KW323, IKW337, IKW339, 1KW341, IKW346, IKW347, IKW348, IKW349, 1KW372, IKW378, 1KW412, 1KW413, 1KW420, 1KW423, 1KW427, and IKW449. (collectively, the "Deyva Schreier Arthur Subsequent Transfer Accounts"). Appendix II, Deyva Schreier Arthur Exhibit C. a. Defendant Deyva Schreier Arthur received Subsequent Transfers from the Deyva Schreier Arthur Subsequent Transfer Accounts totaling $18,124,884 in Fictitious Profits from the opening dates of such Subsequent Transfer Accounts to the Filing Date and $16,476,268 in principal during the six years prior to the Filing Date, totaling approximately 350 $34,601,152 (the "Deyva Schreier Arthur Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable from Defendant Deyva Schreier Arthur pursuant to section 550(a) of the Bankruptcy Code. Appendix II, Deyva Schreier Arthur Exhibit C. Michael Schreier 1314. According to and Sterling's records, Defendant Michael Schreier received Initial Transfers from approximately one (1) Sterling BLMIS Account: No. 1KW056. Appendix II, Michael Schreier Exhibit B. a. BLMIS made direct transfers to Defendant Michael Schreier constituting a 1nini1nal amount of Fictitious Profits from the opening date of such Sterling BLMIS Account to the Filing Date (the "Michael Schreier Initial Transfers"). Such Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Michael Schreier Exhibit B. 1315. Upon infonnation and belief Defendant Michael Schreier is also a Subsequent Transferee Defendant who received avoidable and recoverable Subsequent Transfers from the following approximately forty-five (45) Sterling BLMIS Accounts held by other Sterling-related entities and/or individuals: Nos. 102343, 1KW040, 1KW052, 1KW053, 1KW054, 1KW056, 1KW057, 1KW059, 1KW063, 1KW098, 1KW134, 1KW156, 1KW161, 1KW175, 1KW178, 1KW180, 1KW192, 1KW218, 1KW220, 1KW223, 1KW247, 1KW254, 1KW255, 1KW279, 1KW287, 1KW293, 1KW313, 1KW314, 1KW315, 1KW323, IKW337, IKW339, 1KW341, 1KW346, IKW347, 1KW348, IKW349, 1KW372, 1KW378, 1KW412, 1KW413, 1KW420, 3 51 1KW423, 1KW427, and 1KW449 (collectively, the "Michael Schreier Subsequent Transfer Accounts"). Appendix II, Michael Schreier Exhibit C. a. Defendant Michael Schreier received Subsequent Transfers fro1n the Michael Schreier Subsequent Transfer Accounts totaling $18,124,904 in Fictitious Profits fro1n the opening dates of such Subsequent Transfer Accounts to the Filing Date and $16,476,268 in principal during the six years prior to the Filing Date, totaling approximately $34,601,172 (the "Michael Schreier Subsequent Transfers"). Such Subsequent Transfers were and continue to be Customer Property within the meaning of section of SIPA, and such transfers, or the value thereof are recoverable fro1n Defendant Michael Schreier pursuant to section 550(a) ofthe Bankruptcy Code. Appendix II, Michael Schreier Exhibit C. F. Madoff Investment Entity Defendants Realty Associates Madoff II 1316. According to and Sterling's records, Defendant Realty Associates Madoff II received payments fro1n BLMIS. a. Prior to the Filing Date, BLMIS 1nade direct transfers to Realty Associates Madoff II totaling approximately $983,420 (the "Realty Associates Madoff II Initial Transfers"). The Realty Associates Madoff II Transfers were and continue to be Custo1ner Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Realty Associates Madoff II Exhibit B. Sterling Acguisitions LLC 1317. According to and Sterling's records, Defendant Sterling Acquisitions LLC received pay1nents fro1n BLMIS. a. Prior to the Filing Date, BLMIS 1nade direct transfers to Sterling Acquisitions LLC totaling approximately $592,521 (the "Sterling Acquisitions LLC Initial 352 Transfers"). The Sterling Acquisitions LLC Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling Acquisitions LLC Exhibit B. b. Of the Sterling Acquisitions LLC Transfers, BLMIS made direct transfers to Defendant Sterling Acquisitions LLC of approximately $376,503 during the six years prior to the Filing Date (the "Sterling Acquisitions LLC Six Year Initial Transfers") that are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273--279. Appendix II, Sterling Acquisitions LLC Exhibit B. c. Of the Sterling Acquisitions LLC Transfers, BLMIS made direct transfers to Defendant Sterling Acquisitions LLC of approximately $211,478 during the two years prior to the Filing Date (the "Sterling Acquisitions LLC Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling Acquisitions LLC Exhibit B. Sterling American Property LP 1318. According to and Sterling's records, Defendant Sterling American Property LP received payments from BLMIS. a. Prior to the Filing Date, BLMIS made direct transfers to Sterling American Property LP totaling approximately $4,848,408 (the "Sterling American Property LP Initial Transfers"). The Sterling American Property LP Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject 353 to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling American Property LP Exhibit B. b. Of Sterling American Property LP Initial Transfers, BLMIS made direct transfers to Defendant Sterling American Property LP of approximately $708,483 during the six years prior to the Filing Date (the "Sterling American Property LP Six Year Initial Transfers") that are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273--279. Appendix II, Sterling American Property LP Exhibit B. Sterling American Property IV LP 1319. According to and Sterling's records, Defendant Sterling American Property IV LP received payments from BLMIS. a. Prior to the Filing Date, BLMIS made direct transfers to Sterling American Property IV LP totaling approximately $3,102,156 (the "Sterling American Property IV LP Initial Transfers"). The Sterling American Property IV LP Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling American Property IV LP Exhibit B. b. Of Sterling American Property IV LP Initial Transfers, BLMIS made direct transfers to Defendant Sterling American Property IV LP of approximately $3,018,904 during the six years prior to the Filing Date (the "Sterling American Property IV LP Six Year Initial Transfers") that are avoidable and recoverable under sections 544, 550(a), and 551 ofthe Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and 354 applicable provisions of DCL sections 273--279. Appendix II, Sterling American Property IV LP Exhibit B. Sterling American Property LP 1320. According to and Sterling's records, Defendant Sterling American Property LP received payments from BLMIS. a. Prior to the Filing Date, BLMIS made direct transfers to Sterling American Property LP totaling approximately $2,504,752 (the "Sterling American Property LP Initial Transfers"). The Sterling American Property LP Initial Transfers were and continue to be Customer Property within the meaning of section of SIPA, and are subject to avoidance and recovery pursuant to the Bankruptcy Code, SIPA, and the DCL. Appendix II, Sterling American Property LP Exhibit B. b. Of Sterling American Property LP Initial Transfers, BLMIS made direct transfers to Defendant Sterling American Property LP of approximately $2,504,752 during the six years prior to the Filing Date (the "Sterling American Property LP Six Year Initial Transfers") that are avoidable and recoverable under sections 544, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section and applicable provisions of DCL sections 273--279. Appendix II, Sterling American Property LP Exhibit B. c. Of the Sterling American Property LP Initial Transfers, BLMIS made direct transfers to Defendant Sterling American Property LP of approximately $2,160,000 during the two years prior to the Filing Date (the "Sterling American Property LP Two Year Initial Transfers"), which are avoidable and recoverable under sections 548, 550(a), and 551 of the Bankruptcy Code and applicable provisions of SIPA, particularly SIPA section Appendix II, Sterling American Property LP Exhibit B. 355 1321. All the foregoing Sterling Defendant Total Initial Transfers in paragraphs 1102- 1320 and identified in Exhibits to Appendix II are hereinafter collectively referred to as the "Total Initial Transfers." 1322. All the foregoing Sterling Defendant Two Year Transfers in paragraphs 1102- 1320 and identified in Exhibits to Appendix II are hereinafter collectively referred to as the "Total Two Year Initial Transfers." 1323. All the foregoing Sterling Defendant Six Year transfers in paragraphs 1102-1320 and identified in Exhibits to Appendix II are hereinafter collectively referred to as the "Total Six Year Initial Transfers." 1324. All ofthe foregoing Sterling Defendant Preference Period Transfers in paragraphs 1102-1320 and identified in Exhibits to Appendix II are hereinafter collectively referred to as the "Total Preference Period Transfers." 1325. All ofthe foregoing Sterling Defendant Subsequent Transfers in paragraphs 1102- 1320 and identified in Exhibits to Appendix II are hereinafter collectively referred to as the "Total Subsequent Transfers." CUSTOMER CLAIMS 1326. From February 26, 2009 to June 18, 2009, a number of Sterling Defendants and other Sterling-related entities filed 93 customer clai1ns with the Trustee. These claims are referred to herein as the "Customer Claims" and are identified by BLMIS account number in Exhibit to Appendix II. 1327. Exhibit to Appendix II lists the following infonnation for each Customer Claim: the BLMIS account number to which the Customer Claim refers, the name ofthe BLMIS account and Customer Claim holder, the date the Customer Claim was filed, the Claim Number designated by the Trustee for each Customer Claim, the status of each 356 Customer Claim, including whether the claim was denied, and the date an objection, if any, was filed with respect to the Trustee's detennination of each Customer Claim. 1328. On December 23, 2008, the Court entered an Order on the Application for Entry of an Order Approving Fonn and Manner of Publication and Mailing of Notices, Specifying Procedures for Filing, Detennination and Adjudication of Claims, and Providing Other Relief (the "Claims Procedures Order," Docket No. 12). The Claims Procedures Order includes a process for detennination and allowance of claims under which the Trustee has been operating. The Trustee intends to resolve the Customer Claims and any related objections to the Trustee's detennination of such claims through a separate hearing as contemplated by the Claims Procedures Order. 1329. As discussed below, the Trustee seeks to disallow the Customer Claims of the Sterling Defendants and certain Sterling-related entities and trusts in which one or more Sterling Defendants hold an equitable and/ or beneficial ownership therein identified in Exhibit to Appendix II. COUNT ONE: STERLING TWO YEAR ACTUAL FRAUD DEFENDANTS FRAUDULENT TRANSFER- 11 U.S.C. AND 551 1330. The Trustee incorporates by reference the allegations contained in the previous paragraphs of this Complaint as if fully rewritten herein. 1331. Each ofthe Total Two Year Initial Transfers was made on or within two years before the Filing Date. 1332. Each ofthe Total Two Year Initial Transfers constituted a transfer of an interest of BLMIS in property within the meaning of sections 101(54) and 548 of the Bankruptcy Code and pursuant to section of SIPA. 357 1333. Each ofthe Total Two Year Initial Transfers was made by BLMIS with the actual intent to hinder, delay, or defraud so1ne or all of then existing or future creditors. 1334. Each ofthe Total Two Year Initial Transfers constitutes a fraudulent transfer avoidable by the Trustee pursuant to section 548(a)(1)(A) ofthe Bankruptcy Code and recoverable fro1n the Sterling Defendants identified in the Count I column of Appendix II, Exhibit (the "Sterling Two Year Actual Fraud Defendants") pursuant to section 550(a) ofthe Bankruptcy Code and section of SIPA. 1335. As a result ofthe foregoing, pursuant to sections 550(a), and 551 of the Bankruptcy Code and section of SIPA, the Trustee is entitled to a judgment against the Sterling Two Year Actual Fraud Defendants: avoiding and preserving the Total Two Year Initial Transfers, directing that the Total Two Year Initial Transfers be set aside, and recovering the Total Two Year Initial Transfers, or the value thereof fro1n the Sterling Two Year Actual Fraud Defendants for the benefit ofthe estate of BLMIS. COUNT TWO: STERLING TWO YEAR CONSTRUCTIVE FRAUD DEFENDANTS FRAUDULENT TRANSFER- 11 U.S.C. 551 1336. The Trustee incorporates by reference the allegations contained in the previous paragraphs of this Complaint as if fully rewritten herein. 1337. Each ofthe Total Two Year Initial Transfers was made on or within two years before the Filing Date. 1338. Each ofthe Total Two Year Initial Transfers constitutes a transfer of an interest of BLMIS in property within the meaning of sections 101(54) and 548 ofthe Bankruptcy Code and pursuant to section of SIPA. 1339. BLMIS received less than a reasonably equivalent value in exchange for each of the Two Year Initial Transfers. 358 1340. At the time of each of the Total Two Year Initial Transfers, BLMIS was insolvent or became insolvent as a result ofthe Total Two Year Initial Transfer in question. 1341. At the time of each of the Total Two Year Initial Transfers, BLMIS was engaged in a business or a transaction, or was about to engage in a business or a transaction, for which any property remaining with BLMIS was an unreasonably small capital. 1342. At the time of each of the Total Two Year Initial Transfers, BLMIS intended to incur, or believed that it would incur, debts that would be beyond ability to pay as such debts matured. 1343. Each ofthe Total Two Year Initial Transfers constitutes fraudulent transfers avoidable by the Trustee pursuant to section 548(a)(1)(B) of the Bankruptcy Code and recoverable from the Sterling Defendants identified in the Count II column of Appendix II, Exhibit (the "Sterling Two Year Constructive Fraud Defendants") pursuant to section 550(a) ofthe Bankruptcy Code and section of SIPA. 1344. As a result ofthe foregoing, pursuant to sections 550(a), and 551 of the Bankruptcy Code and section of SIPA, the Trustee is entitled to a judgment against the Sterling Two Year Constructive Fraud Defendants: avoiding and preserving the Total Two Year Initial Transfers; directing that the Total Two Year Initial Transfers be set aside; and recovering the Total Two Year Initial Transfers, or the value thereof from the Sterling Two Year Constructive Fraud Defendants for the benefit ofthe estate of BLMIS. COUNT THREE: STERLING SIX YEAR DCL ACTUAL FRAUD DEFENDANTS FRAUDULENT TRANSFER -- NEW YORK DEBTOR AND CREDITOR LAW 276, 276-:1, 278, 279, AND 11 U. S.C. 544[b), 550(a), AND 551 1345. The Trustee incorporates by reference the allegations contained in the previous paragraphs of this Complaint as if fully rewritten herein. 359 1346. At all relevant times there was and is at least one or more creditors who held and hold matured or unmatured unsecured claims against BLMIS that were and are allowable under section 502 ofthe Bankruptcy Code or that were and are not allowable only under section 502(e) ofthe Bankruptcy Code. 1347. Each ofthe Total Six Year Initial Transfers constitutes a conveyance by BLMIS as defined under DCL section 270. 1348. Each ofthe Total Six Year Initial Transfers was made by BLMIS with the actual intent to hinder, delay, or defraud the creditors of BLMIS. BLMIS made the Total Six Year Initial Transfers to or for the benefit of the Sterling Defendants identified in the Count column of Appendix II, Exhibit (the "Sterling Six Year DCL Actual Fraud Defendants") in furtherance of a fraudulent investment scheme. 1349. The Total Six Year Initial Transfers were received by the Sterling Six Year DCL Actual Fraud Defendants with intent to hinder, delay, or defraud creditors of BLMIS at the ti1ne of each of the transfers, and/or future creditors of BLMIS. 1350. As a result ofthe foregoing, pursuant to DCL sections 276, 276-a, 278, and/or 279, sections 544(b), 550(a), and 551 ofthe Bankruptcy Code, and section of SIPA, the Trustee is entitled to a judgment against the Sterling Six Year DCL Actual Fraud Defendants: avoiding and preserving the Total Six Year Initial Transfers, directing that the Total Six Year Initial Transfers be set aside, recovering the Total Six Year Initial Transfers, or the value thereof fro1n the Sterling Six Year DCL Actual Fraud Defendants for the benefit ofthe estate of BLMIS, and recovering attorneys' fees fro1n the Sterling Six Year DCL Actual Fraud Defendants. 360 COUNT FOUR: STERLING SIX YEAR DCL CONSTRUCTIVE FRAUD DEFENDANTS FRAUDULENT TRANSFER -- NEW YORK DEBTOR AND CREDITOR LAW 273, 279, AND 11 U.S.C. 550(a), 551 1351. The Trustee incorporates by reference the allegations contained in the previous paragraphs of the Complaint as if fully rewritten herein. 1352. At all relevant times there was and is at least one or more creditors who held and hold matured or uninatured unsecured claims against BLMIS that were and are allowable under section 502 ofthe Bankruptcy Code or that were and are not allowable only under section 502(e) ofthe Bankruptcy Code. 1353. Each ofthe Total Six Year Initial Transfers constitutes a conveyance by BLMIS as defined under DCL section 270. 1354. BLMIS did not receive fair consideration for the Total Six Year Initial Transfers. 1355. BLMIS was insolvent at the time it made each of the Total Six Year Initial Transfers or, in the alternative, BLMIS became insolvent as a result of each ofthe Total Six Year Initial Transfers. 1356. As a result ofthe foregoing, pursuant to DCL sections 273, 278, and/or 279, sections 544(b), 550(a), and 551 ofthe Bankruptcy Code, and section of SIPA, the Trustee is entitled to a judgment against the Sterling Defendants identified in the Count IV column of Appendix II, Exhibit (the "Sterling Six Year DCL Constructive Fraud Defendants"): avoiding and preserving the Total Six Year Initial Transfers; directing that the Total Six Year Initial Transfers be set aside; and recovering the Total Six Year Initial Transfers, or the value thereof from the Sterling Six Year DCL Constructive Fraud Defendants for the benefit of the estate of BLMIS. 361 COUNT FIVE: STERLING SIX YEAR DCL CONSTRUCTIVE FRAUD DEFENDANTS SMALL CAPITAL) FRAUDULENT TRANSFER -- NEW YORK DEBTOR AND CREDITOR LAW 274, 278, 279, AND 11 U.S.C. 544[b), AND 551 1357. The Trustee incorporates by reference the allegations contained in the previous paragraphs of the Complaint as if fully rewritten herein. 1358. At all relevant times there was and is at least one or 1nore creditors who held and hold matured or unmatured unsecured clai1ns against BLMIS that were and are allowable under section 502 ofthe Bankruptcy Code or that were and are not allowable only under section 502(e) ofthe Bankruptcy Code. 1359. Each ofthe Total Six Year Initial Transfers constitutes a conveyance by BLMIS as defined under DCL section 270. 1360. BLMIS did not receive fair consideration for the Total Six Year Initial Transfers. 1361. At the ti1ne BLMIS made each ofthe Total Six Year Initial Transfers, BLMIS was engaged or was about to engage in a business or transaction for which the property remaining in its hands after each of the Total Six Year Initial Transfers was an unreasonably s1nall capital. 1362. As a result ofthe foregoing, pursuant to DCL sections 274, 278, and/or 279, sections 544(b), 550(a), and 551 ofthe Bankruptcy Code, and section of SIPA, the Trustee is entitled to a judgment against the Sterling Six Year DCL Constructive Fraud Defendants as identified in the Count column of Appendix II, Exhibit E: avoiding and preserving the Total Six Year Initial Transfers; directing that the Total Six Year Initial Transfers be set aside; and recovering the Total Six Year Initial Transfers, or the value thereof from the Sterling Six Year DCL Constructive Fraud Defendants for the benefit ofthe estate of BLMIS. 362 COUNT SIX: STERLING SIX YEAR DCL CONSTRUCTIVE FRAUD DEFENDANTS BEYOND ABILITY TO PAY) FRAUDULENT TRANSFER -- NEW YORK DEBTOR AND CREDITOR LAW 275, 279, AND 11 U.S.C. 551 1363. The Trustee incorporates by reference the allegations contained in the previous paragraphs of the Complaint as if fully rewritten herein. 1364. At all relevant ti1nes there was and is at least one or more creditors who held and hold matured or unmatured unsecured clai1ns against BLMIS that were and are allowable under section 502 ofthe Bankruptcy Code or that were and are not allowable only under section 502(e) ofthe Bankruptcy Code. 1365. Each of the Total Six Year Initial Transfers constitutes a conveyance by BLMIS as defined under DCL section 270. 1366. BLMIS did not receive fair consideration for the Total Six Year Initial Transfers. 1367. At the ti1ne BLMIS 1nade each of the Total Six Year Initial Transfers, BLMIS had incurred, was intending to incur, or believed that it would incur debts beyond its ability to pay them as the debts matured. 1368. As a result ofthe foregoing, pursuant to DCL sections 275, 278, and/or 279, sections 544(b), 550(a), and 551 ofthe Bankruptcy Code, and section of SIPA, the Trustee is entitled to a judgment against the Sterling Six Year DCL Constructive Fraud Defendants as identified in the Count VI column of Appendix II, Exhibit E: avoiding and preserving the Total Six Year Initial Transfers; directing that the Total Six Year Initial Transfers be set aside; and recovering the Total Six Year Initial Transfers, or the value thereof from the Sterling Six Year DCL Constructive Fraud Defendants for the benefit ofthe estate of BLMIS. 363 COUNT SEVEN: STERLING INITIAL TRANSFEREE DEFENDANTS RECOVERY OF ALL FRAUDULENT TRANSFERS -- NEW YORK CIVIL PROCEDURE LAW AND RULES 203[g) AND 213[8), NEW YORK DEBTOR AND CREDITOR LAW 276, 276-:1, 278, 279, AND 11 U.S.C. 544[b), AND 551 1369. The Trustee incorporates by reference the allegations contained in the previous paragraphs of this Complaint as if fully rewritten herein. 1370. At all times relevant to the Total Initial Transfers, the fraudulent scheme perpetrated by BLMIS was not reasonably discoverable by at least one unsecured creditor of BLMIS. 1371. At all times relevant to the Total Initial Transfers, there have been one or more creditors who have held and still hold matured or unmatured unsecured clai1ns against BLMIS that were and are allowable under section 502 ofthe Bankruptcy Code or that were and are not allowable only under section 502(e) of the Bankruptcy Code. 1372. Each ofthe Total Initial Transfers constitutes a conveyance by BLMIS as defined under DCL section 270. 1373. Each ofthe Total Initial Transfers were made by BLMIS with the actual intent to hinder, delay, or defraud the creditors of BLMIS. BLMIS made the Total Initial Transfers to or for the benefit ofthe Sterling Defendants identified in the Count VII column of Appendix II, Exhibit (the "Sterling Initial Transferee Defendants") in furtherance of a fraudulent investment scheme. 1374. Each ofthe Total Initial Transfers was received by the Sterling Initial Transferee Defendants with actual intent to hinder, delay or defraud creditors of BLMIS at the time of each ofthe Total Initial Transfers, and /or future creditors of BLMIS. 1375. As a result ofthe foregoing, pursuant to NY CPLR sections 203(g) and 213(8), DCL sections 276, 276-a, 278, and/or 279, sections 544(b), 550(a), and 551 ofthe Bankruptcy 364 Code; and section of the Trustee is entitled to a judgment against the Sterling Initial Transferee Defendants: avoiding and preserving the Total Initial Transfers; directing that the Total Initial Transfers be set aside; recovering the Total Initial Transfers; or the value thereof from the Sterling Initial Transferee Defendants for the benefit of the estate of and recovering attorneys' fees from the Sterling Initial Transferee Defendants. COUNT EIGHT: STERLING PREFERENTIAL TRANSFEREE DEFENDANTS PREFERENTIAL TRANSFER -- 11 U.S.C. 547[b), 550[ah AND 551 1376. The Trustee incorporates by reference the allegations contained in the previous paragraphs of this Complaint as if fully rewritten herein. 1377. At the time of each of the Total Preference Period Transfers; each of the Sterling Defendants identified in the Count column of Appendix Exhibit (the "Sterling Preferential Transferee Defendants") were "creditors" of BLMIS within the meaning of section l0l(l0) ofthe Bankruptcy Code and pursuant to section of SIPA. 1378. Each ofthe Total Preference Period Transfers constitutes a transfer of an interest of BLMIS in property within the meaning of section l0l(54) of the Bankruptcy Code and pursuant to section of SIPA. 1379. Each ofthe Total Preference Period Transfers was to or for the benefit of Sterling Preferential Transferee Defendants. 1380. Each ofthe Total Preference Period Transfers was made for or on account of an antecedent debt owed by BLMIS before such transfer was made. 1381. Each ofthe Total Preference Period Transfers was made while BLMIS was insolvent. 1382. Each ofthe Total Preference Period Transfers was made within 90 days ofthe Filing Date. 365 1383. Each ofthe Total Preference Period Transfers enabled the Sterling Preferential Transferee Defendants to receive more than they would receive if: this case was a case under chapter 7 of the Bankruptcy Code; the transfers had not been made; and the Sterling Preferential Transferee Defendants received payment of such debt to the extent provided by the provisions ofthe Bankruptcy Code. 1384. Each ofthe Total Preference Period Transfers constituted a preferential transfer avoidable by the Trustee pursuant to section 547(b) ofthe Bankruptcy Code and recoverable from the Sterling Preferential Transferee Defendants pursuant to section 550(a) ofthe Bankruptcy Code and section of SIPA. 1385. To the extent that any of the Sterling Preferential Transferee Defendants is not found to have a valid antecedent debt claim, then such transfers are avoidable and recoverable pursuant to, or inter alia, sections 544(b), 548, 550(a), and 551 ofthe Bankruptcy Code, sections 273-279 ofthe DCL, and/or section of SIPA. 1386. As a result ofthe foregoing, pursuant to sections 547(b), 550(a), and 551 ofthe Bankruptcy Code and section of SIPA, the Trustee is entitled to a judgment against the Sterling Preferential Transferee Defendants: avoiding and preserving the Total Preference Period Transfers; directing that the Total Preference Period Transfers be set aside; and recovering the Total Preference Period Transfers, or the value thereof for the benefit ofthe estate of BLMIS. COUNT NINE: STERLING QUENT TRANSFEREE DEFENDANTS RECOVERY OF SUBSEQ QUENT TRANSFER -- NEW YORK DEBTOR AND CREDITOR LAW 278 AND 279 AND 11 U.S.C. 550(a) 1387. The Trustee incorporates by reference the allegations contained in the previous paragraphs of this Complaint as if fully rewritten herein. 366 1388. Each ofthe Total Two Year Initial Transfers, Total Six Year Initial Transfers, Total Initial Transfers, and Total Preference Period Transfers as identified in Appendix II, Exhibits and is avoidable and recoverable under DCL sections 273-279, sections 544(b), 547, and 548 ofthe Bankruptcy Code, and section of SIPA. 1389. Upon infonnation and belief so1ne or all of the Total Two Year Initial Transfers, Total Six Year Initial Transfers, Total Initial Transfers, and Total Preference Period Transfers were subsequently transferred to the Sterling Defendants (as defined earlier, collectively the "Total Subsequent Transfers") identified in the Count IX column of Appendix II, Exhibit (the "Sterling Subsequent Transferee Defendants"). 1390. The Sterling Subsequent Transferee Defendants were i1n1nediate or mediate transferees of so1ne portion ofthe Total Subsequent Transfers, which are recoverable pursuant to section 550(a) ofthe Bankruptcy Code. 1391. Each ofthe Total Subsequent Transfers identified in Appendix II, Exhibit was made directly or indirectly to or for the benefit of the Sterling Subsequent Transferee Defendants. 1392. As a result ofthe foregoing, pursuant to DCL sections 278 and/or 279, sections 544(b) and 550(a) ofthe Bankruptcy Code, and section of SIPA, the Trustee is entitled to a judgment against the Sterling Subsequent Transferee Defendants recovering the Total Subsequent Transfers, or the value thereof fro1n the Sterling Subsequent Transferee Defendants for the benefit ofthe estate of BLMIS. COUNT TEN: STERLING CLAIMS DEFENDANTS DISALLOWANCE OF CUSTOMER CLAIMS 1393. The Trustee incorporates by reference the allegations contained in the previous paragraphs of this Complaint as if fully rewritten herein. 367 1394. The Sterling Defendants identified in the Count column of Appendix II, Exhibit (the "Sterling Claims Defendants") filed Customer Claims in the SIPA proceeding which have not yet been detennined, or which were the subject of timely filed objections. Appendix II, Exhibit D, Sterling Claims Defendants' Customer Claims. 1395. Such Customer Claims should not be allowed pursuant to section 502(d) of the Bankruptcy Code because the Sterling Claims Defendants are the recipients of transfers of property which are avoidable and recoverable under sections 544(b), 547, 548, and/ or 550(a) ofthe Bankruptcy Code, DCL sections 273-279 and section of SIPA as set forth above, and the Sterling Claims Defendants have not returned such avoidable transfers to the Trustee. 1396. The Claims Procedures Order includes a process for detennination and allowance of claims under which the Trustee has been operating. As a result of the foregoing, the Trustee intends to resolve the Sterling Claims Defendants' Customer Claims and any related objections through the rnechanisrns contemplated by the Claims Procedures Order. 1397. As a result ofthe foregoing, the Trustee is entitled to an order disallowing the Customer Claims held by the Sterling Claims Defendants as listed in Appendix II, Exhibit D. COUNT ELEVEN: STERLING CLAIMS DEFENDANTS EQ QUITABLE SUBORDINATION 1398. The Trustee incorporates by reference the allegations contained in the previous paragraphs of this Complaint as if fully rewritten herein. 1399. The Sterling Claims Defendants identified in the Count XI column of Appendix II, Exhibit engaged in inequitable conduct, including behavior described in this Complaint, that has resulted in injury to the customers and creditors ofthe estate and has conferred an unfair advantage on the Sterling Claims Defendants. 368 1400. Based on the Sterling Claims Defendants' inequitable conduct as described above, the customers of BLMIS have been misled as to the true financial condition ofthe debtor, customers have been induced to invest without knowledge of the actual facts regarding financial condition, and/or customers and creditors are less likely to recover the full amounts due to the1n because ofthe conduct ofthe Sterling Claims Defendants. 1401. The Court should exercise the full extent of its equitable powers to ensure that claims, payments, or benefits, of whatever kind or nature, which are asserted or sought by the Sterling Claims Defendants directly or indirectly against the estate--and only to the extent such clai1ns are allowed--are subordinated for distribution purposes pursuant to sections 510(c)(1) and 105(a) of the Bankruptcy Code. 1402. Equitable subordination as requested herein is consistent with the provisions and purposes ofthe Bankruptcy Code. WHEREFORE, the Trustee respectfully requests that this Court enter judgment in favor ofthe Trustee and against the Sterling Defendants as follows: i. On the First Claim for Relief pursuant to sections 550(a), and 551 ofthe Bankruptcy Code and section of SIPA: avoiding and preserving the Total Two Year Initial Transfers, directing that the Total Two Year Initial Transfers be set aside, and recovering the Total Two Year Initial Transfers, or the value thereof from the Sterling Two Year Actual Fraud Defendants for the benefit ofthe estate of BLMIS, ii. On the Second Claim for Relief pursuant to sections 550(a), and 551 ofthe Bankruptcy Code and section of SIPA: avoiding and preserving the Total Two Year Initial Transfers, directing that the Total Two Year Initial 369 Transfers be set aside, and recovering the Total Two Year Initial Transfers, or the value thereof from the Sterling Two Year Constructive Fraud Defendants for the benefit of the estate of BLMIS, On the Third Claim for Relief pursuant to DCL sections 276, 276- a, 278, and/or 279, sections 544(b), 550(a), and 55l ofthe Bankruptcy Code, and section of SIPA: avoiding and preserving the Total Six Year Initial Transfers, directing that the Total Six Year Initial Transfers be set aside, recovering the Total Six Year Initial Transfers, or the value thereof, from the Sterling Six Year DCL Actual Fraud Defendants for the benefit ofthe estate of BLMIS, and recovering attorneys' fees from the Sterling Six Year DCL Actual Fraud Defendants, iv. On the Fourth Claim for Relief pursuant to DCL sections 273, 278, and/or 279, sections 544(b), 550(a), and 55l ofthe Bankruptcy Code and section of SIPA: avoiding and preserving the Total Six Year Initial Transfers, directing that the Total Six Year Initial Transfers be set aside, and recovering the Total Six Year Initial Transfers, or the value thereof, from the Sterling Six Year DCL Constructive Fraud Defendants for the benefit ofthe estate of BLMIS, v. On the Fifth Claim for Relief pursuant to DCL sections 274, 278, and/or 279, sections 544(b), 550(a), and 55l ofthe Bankruptcy Code and section of SIPA: avoiding and preserving the Total Six Year Initial Transfers, directing the Total Six Year Initial Transfers be set aside, and recovering the Total Six Year Initial Transfers, or the value thereof from the Sterling Six Year DCL Constructive Fraud Defendants for the benefit of the estate of BLMIS, vi. On the Sixth Claim for Relief pursuant to DCL sections 275, 278, 370 and/or 279; sections 544(b); 550(a); and 551 ofthe Bankruptcy Code; and section of SIPA: avoiding and preserving the Total Six Year Initial Transfers; directing that the Total Six Year Initial Transfers be set aside; and recovering the Total Six Year Initial Transfers; or the value thereof from the Sterling Six Year DCL Constructive Fraud Defendants for the benefit ofthe estate of vii. On the Seventh Claim for Relief pursuant to NY CPLR sections 203(g) and 213(8); DCL sections 276; 276-a, 278; and/or 279; sections 544(b); 550(a); and 551 ofthe Bankruptcy Code; and section of SIPA: avoiding and preserving the Total Initial Transfers; directing that the Total Initial Transfers be set aside; recovering the Total Initial Transfers; or the value thereof from the Sterling Initial Transferee Defendants; and recovering attorneys' fees from the Sterling Initial Transferee Defendants; On the Eighth Claim for Relief pursuant to sections 547(b); 550(a); and 551 of the Bankruptcy Code and section of SIPA: avoiding and preserving the Total Preference Period Transfers; directing that the Total Preference Period Transfers be set aside; and recovering the Total Preference Period Transfers; or the value thereof from Sterling Preferential Transfers Defendants for the benefit ofthe estate of ix. On the Ninth Claim for Relief pursuant to DCL sections 278 and/or 279; sections 544(b) and 550(a) of the Bankruptcy Code; and section of SIPA recovering the Total Subsequent Transfers; or the value thereof from Sterling Subsequent Transferee Defendants for the benefit ofthe estate of x. On the Tenth Claim for Relief that the claim or claims of the Sterling 502(d) Defendants be disallowed pursuant to section 502(d) ofthe Bankruptcy Code unless and until the Total Two Year Initial Transfers; Total Six Year Initial Transfers; Total 371 Initial Transfers, Total Preference Period Transfers, and Total Subsequent Transfers are retumed, xi. On the Eleventh Claim for Relief for subordination of all Customer Claims or proofs of claim which have been filed or brought or which 1nay hereafter be filed or brought by, on behalf of or for the benefit of any ofthe Equitable Subordination Defendants or their affiliated entities, against the Debtor's estate, in the related bankruptcy proceedings, pursuant to sections 5l0(c)(l) and l05(a) of the Bankruptcy Code and section of SIPA, xii. On all Claims for Relief pursuant to federal co1n1non law and NY CPLR 500l and 5004, awarding the Trustee prejudgment interest from the date on which the Total Initial Transfers, Total Preference Period Transfers, and Total Subsequent Transfers were received, On all Claims for Relief establishment of a constructive trust over the proceeds ofthe transfers in favor ofthe Trustee for the benefit of estate, xiv. On all Claims for Relief assignment ofthe Sterling Defendants' income tax refunds from the United States, state, and local govermnents paid on Fictitious Profits during the course of the scheme, xv. Awarding the Trustee all applicable interest, costs, and disbursements of this action, and xvi. Granting the Trustee such other, further, and different relief as the Court deems just, proper, and equitable. 372 Date: March 18, 2011 By: Fernando A. Bohorguez Jr. New York, New York Of Counsel: BAKER HOSTETLER LLP 45 Rockefeller Plaza BAKER HOSTETLER LLP New York, New York 10111 PNC Center, 1900 East 9th Street Telephone: (212) 589-4200 Suite 3200 Facsimile: (212) 589-4201 Cleveland, Ohio 44114-3485 Fernando A. Bohorquez, Jr. Telephone: (216) 621-0200 Email: ibohorquez@bakerlaw.com Facsimile: (216) 696-0740 David J. Sheehan Thomas R. Lucchesi Email: dsheehan@bakerlaw.co1n Email: tlucchesi@bakerlaw.co1n Lauren Resnick Email: lresnick@bakerlaw.co1n BAKER HOSTETLER LLP Keith R. Murphy 1000 Louisiana St. Email: k1nurphy@bakerlaw.co1n Suite 2000 Marc Skapof Houston, Texas 77002-5009 Email: mskapof@bakerlaw.com Telephone: (713) 751-1600 M. Zumio Facsimile: (713) 751-1717 Email: kzum1o@bakerlaw.com Dean D. Hunt George Klidonas Email: dhunt@bakerlaw. com Email: gklidonas@bakerlaw.com Matthew R. Raley A1nanda E. Fein Email: 1nraley@bakerlaw.co1n Email: afein@bakerlaw.com Michelle Benavides Email: 1nbenavides@bakerlaw.com Att0rneysf0r Irving H. Picard, Trustee for the Joshua C. Thomas Substantively C0ns0lidated Liquidation Email: jthomas@bakerlaw.com 0f Bernard L. ad0)j' Investment Securities Jesus J. Castillon LLC and Bernard L. Madof Email: jcastillon@bakerlaw.com 373