Court filing

Exhibit 18 — In re Bank of America California Unemployment Benefits Litigation (Dkt. 564-13, S.D. Cal. No. 3:21-md-02992)

Filed October 17, 2025 in In re Bank of America California Unemployment Benefits Litigation; one of 1415 filings from this case.

Record facts

Court	U.S. District Court for the Southern District of California
Filed	2025-10-17

U.S. District Court for the Southern District of California · No. 3:21-md-02992-GPC-MSB · Doc. 564-13 · 2025-10-17 · Docket on CourtListener

Full text

HX 18
FILED
PROVISIONALLY
UNDER SEAL WITH
REDACTIONS
PURSUANT TO
STIPULATED
PROTECTIVE ORDER
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UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF CALIFORNIA
SAN DIEGO DIVISION
IN RE: BANK OF AMERICA
CALIFORNIA UNEMPLOYMENT
BENEFITS LITIGATION

Case No. 1-MD-02992-GPC-MSB

EXPERT REPORT OF TERESA A. PESCE
March 4, 2025

FILED PROVISIONALLY UNDER SEAL
PURSUANT TO STIPULATED PROTECTIVE ORDER

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Table of Contents

I.
ASSIGNMENT ................................................................................................................... 1
II.
QUALIFICATIONS ........................................................................................................... 2
III.
SUMMARY OF RELEVANT FACTS CONSIDERED .................................................... 4
IV.
SUMMARY OF OPINIONS .............................................................................................. 5
V.
EXPERT OPINION ............................................................................................................ 7
1.
BACKGROUND ........................................................................................................ 7
a. Banks Have a Duty to Implement Processes to Prevent Potentially Criminal Activity.
......................................................................................................................................... 7
b. National Crisis ............................................................................................................ 9
c. California’s Employment Development Department ................................................ 10
d. Bank of America’s Role in Distributing EDD Benefits ............................................ 14
e. Warnings from Regulatory Agencies and Law Enforcement ................................... 16
2.
THE BANK MUST ADMINISTER THE PROGRAM FACING BOTH AN
UNPRECEDENTED NUMBER OF CLAIMS AND AN UNPRECEDENTED
VOLUME OF FRAUD. .................................................................................................... 19
a. Unemployment Insurance Enrollment Increased and the EDD Relaxed Eligibility
Controls ......................................................................................................................... 19
b. Unauthorized Transaction Claims and Resulting Fraud Skyrocketed ...................... 23
c. The Bank Took Reasonable Steps to Analyze and Address Fraud ........................... 26
d. The Fraud Filter was a Reasonable Attempt to Expeditiously Address a Growing
Fraud Problem ............................................................................................................... 32
3.
PLAINTIFFS’ ASSUMPTION THAT NON-EXCLUSION FROM THE BANK’S
REGULATORY REMEDIATION PLAN ELIMINATES FRAUDSTERS FROM THE
PROPOSED CLASS IS WITHOUT BASIS. ................................................................... 38
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I.
ASSIGNMENT
1. I have been engaged by Goodwin Procter LLP (“Counsel”), counsel for Bank of
America, N.A. (“the Bank”) to provide an expert report in the matter of In Re Bank of
America California Unemployment Benefits Litig., Case No. 3:21-md-02992-GPC-MSB.
This report is based upon my expertise, experience, and knowledge of the regulatory
environment and industry practices in the area of financial crimes, in particular with
respect to fraud and anti-money laundering (“AML”) requirements and expectations
driven by the Bank Secrecy Act (“BSA”) as amended by the USA PATRIOT Act.
Counsel has asked me to provide my opinion on the regulatory and law enforcement
environment during a period when there was an unprecedented volume of fraudulent
claims driven by lax controls deployed by the State of California’s Employment
Development Department (“EDD”) when conferring unemployment benefits pursuant to
COVID-19 related relief programs.

2. In furtherance of this assignment and to assist in my understanding of the facts and
circumstances surrounding this matter, Counsel provided me with materials pertaining to
this case, including materials in response to my requests, such as pleadings and other
court documents, deposition transcripts, and materials produced in discovery which are
referenced and cited herein. A list of materials reviewed and cited is appended hereto at
Appendix A. I reserve the right to supplement or amend my report should new
information become available. I am prepared to testify at trial on the topics addressed in
this report.

3. Any and all opinions stated herein are mine and mine alone. My compensation in this
matter is not dependent on my opinions in or the outcome of this case. I am being
compensated at my standard rate of $800 per hour for work related to preparing my
report and $1,000 per hour for deposition and trial testimony. In addition, staff at
Cornerstone Research assisted me by performing research and other tasks under my
direction in this matter.
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II.
QUALIFICATIONS
4. I am an industry leader and subject matter expert in financial-crimes regulatory
enforcement and compliance, with an extensive and varied history of working in and with
the financial services industry, including in government, industry, and consulting. I have
led large teams and managed significant projects for global financial institutions, and I
have designed and implemented financial-crimes compliance programs and
organizational structures. I have been called upon by boards of directors and senior
management of large, international financial institutions to provide guidance and support
as those institutions navigated enforcement actions.

5. I have served, and currently serve, as an expert witness and expert consultant in
litigations and investigations relating to financial crimes, including AML, sanctions, and
fraud. I have provided expert opinions in cases in the United States and abroad.

6. I currently own and operate an independent consulting firm, Terry Pesce & Co. LLC,
established in September 2020. My clients range from multinational financial institutions
to fintechs and non-traditional firms. I have worked as an independent consultant with
some of the largest global financial institutions headquartered and/or doing business in
North America, Europe, and Asia. In addition to more traditional depository institutions,
I have worked with the world’s largest investment banks, money service businesses,
insurance companies, and more regional institutions.

7. Prior to establishing my consulting firm, I spent 13 years as a Principal in KPMG LLP’s
(“KPMG”) Forensic Advisory Services, serving as Global Head of Anti-Money
Laundering and Head of the firm’s Financial Crimes group. I spearheaded diverse
engagements for financial institutions addressing numerous issues concerning financial
crimes and sanctions. My work was both proactive, assisting firms in designing new
compliance programs and conducting independent assessments, and reactive, assisting
firms responding to enforcement actions. I have often been called upon to report directly
to law enforcement agents, prosecutors, and regulatory agencies.

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8. Before joining KPMG in early 2007, I was Executive Vice President and AML Director
for HSBC North America (“HSBC”). I joined HSBC in late 2003 to build out the AML
compliance function for all U.S. business lines and products in response to a regulatory
order imposed by the Federal Reserve Bank of New York earlier that year and lifted by
the Office of the Comptroller of the Currency (“OCC”) during my tenure in 2006. I left
HSBC to join KPMG shortly thereafter.

9. Prior to joining HSBC, I was an Assistant United States Attorney in the Southern District
of New York, serving as Chief of the Major Crimes Unit, and Deputy Chief of the
Criminal Division. From 1999 through 2003, I was responsible for supervision and
oversight of all money-laundering and tax prosecutions. I worked closely with law
enforcement officers and agents and the financial regulatory agencies responsible for
oversight of AML enforcement. During my tenure at the U.S. Attorney’s office, I
investigated and prosecuted numerous cases involving and charging money laundering
and other complex fraud cases.

10. I have served as an Associate Professor for the Case Western School of Law, Masters of
Financial Integrity program, lecturing students from around the globe on a variety of
subjects relevant to financial crimes enforcement and compliance, as well as criminal
law.

11. I serve on the Advisory Board of AML RightSource, a financial crimes advisory and
managed services provider.

12. I hold a Bachelor of Arts from Columbia University, where I graduated magna cum
laude, Phi Beta Kappa, and I hold a Juris Doctor from Columbia Law School.

13. I am a recognized industry speaker and have published numerous pieces on financial
crimes and enforcement. A complete CV, including a list of publications and matters in
which I have provided testimony, is appended hereto at Appendix B.
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III.
SUMMARY OF RELEVANT FACTS CONSIDERED
14. The Bank’s partnership with EDD predated the COVID-19 pandemic. Pre-COVID-19,
the Bank

15. During the COVID-19 pandemic, the paradigm shifted dramatically. Federal government
programs made unemployment benefits available to individuals who either did not need
them before or were not entitled to them before. The Bank was directed by EDD to
provide prepaid cards to an unprecedented number of recipients –

In an effort to get funds into the hands of the masses of
claimants, EDD relaxed its identification and eligibility controls, allowing claimants to
apply for unemployment benefits without verifying their identity, former employment,
wage, or salary history (adopting a “pay and chase” model), which resulted in cards being
issued to fraudsters – e.g., recipients fraudulently claiming entitlement and identity
thieves. As the number of cardholders increased and fraud controls were relaxed, the
number of benefits recipients making claims and seeking reimbursement from the Bank
for purportedly unauthorized transactions on their cards increased exponentially.

16. At the same time the Bank

, the Bank received numerous
warnings from both its regulators and law enforcement to be vigilant to prevent, detect,
and report rampant fraud associated with COVID-19-related relief, and, in particular,
unemployment insurance. Regulators and law enforcement instructed banks to take
action in the face of COVID-19-related fraud. Banks have an obligation to prevent,
detect, and report financial crime, an obligation that was stressed by regulators in their
alerts.

17. Regulatory warnings of rampant fraud were substantiated by the Bank’s own review of
EDD account information and related unauthorized transaction claims. The Bank
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uncovered significant fraud in the EDD portfolio.

IV.
SUMMARY OF OPINIONS
18. Bank of America is required to have processes in place to detect and prevent fraud to
protect its customers, the Bank, and the financial system. This duty was heightened
during the COVID-19 pandemic. The Bank was required to distribute unemployment
benefits to recipients in an EDD portfolio rife with fraudsters.

19. Recognizing its responsibility to law enforcement to prevent rampant fraud, and facing
unprecedented volumes of unauthorized transaction claims, the Bank

To better address
these unique circumstances, the Bank

In my experience, friction is often used as a preventive measure and was a

1 The concept of “friction” means making it more difficult for a criminal to commit a crime. Examples of friction
could be requiring multiple points of identification before allowing access to financial information; it could include
installing firewalls in computer systems to deter hackers. A simple example is when stores put their merchandise
behind locked plastic barriers. The crime can still be committed, but friction makes it more difficult. See NAB
News, Why ‘Helpful Friction’ is Crucial in the Battle Against Scammers (Nov. 30, 2023),
https://news.nab.com.au/news/why-helpful-friction-is-crucial-in-the-battle-against-scammers/; Elissa Redmiles,
Friction Matters: Balancing the Pursuit of Perfect Protection with Target Hardening, IEEE Security and Privacy
(Jan./Feb. 2024), https://www.computer.org/csdl/magazine/sp/2024/01/10411716/1TV5zSG0BKE.
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reasonable and appropriate measure in this case given the prevalence of fraud in the EDD
portfolio and the abuse of the Bank’s claims system during the COVID-19 pandemic.

20. In my experience, banks routinely use automated detection technology to detect fraud and
other suspicious activity. Regulators expect banks to deploy technology to attempt to
detect such activity. There would be no other way to monitor the volume of transactions
processed daily. As with any fraud strategy, no automated system is perfect; there are
always false positives. Nevertheless, the use of automated detection technology is often
the best way to discern fraudulent activity from legitimate transactions or unauthorized
transaction claims in that it does, in fact, identify suspicious activity. In my opinion, the
Bank’s deployment of the CFF was a reasonable effort to fulfill its duty to law
enforcement, its customers, the Bank, and the financial system.

21. Moreover, Plaintiffs’ assumption that all fraudsters have been excluded from the
proposed class population is unsupported. There can be no blanket application or
assumption that the remaining individuals in the proposed claim denial class are all
legitimately entitled to unemployment benefits or submitted a legitimate unauthorized
transaction claim. Based on my experience, review, and understanding of the rampant
fraud prevalent in connection with COVID-19-related unemployment insurance benefits,
which has been estimated to exceed $32 billion of EDD’s portfolio and nearly 40 percent
of benefits issued pursuant to the Pandemic Unemployment Assistance (“PUA”), as well
as my review and understanding of EDD’s failure to verify the identity and eligibility of
EDD cardholders, it is my opinion that fraudsters remain in the population.

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V.
EXPERT OPINION
1.
BACKGROUND
a. Banks Have a Duty to Implement Processes to Prevent Potentially
Criminal Activity.
22. The BSA requires banks to implement compliance programs with processes in place to
prevent, detect, and report potentially suspicious activity, including fraud, to the
Financial Action Criminal Enforcement Network (“FinCEN”) of the U.S. Department of
the Treasury.2 Crime prevention under the BSA is furthered by banks knowing the
identity of their customers pursuant to Customer Identification Program (“CIP”)3
requirements, and knowing the risk the customer poses to the bank through Customer
Due Diligence (“CDD”).4 CIP requires banks not only to collect, but also to verify a
customer’s identifying information so they can form a reasonable belief that the customer
is who they purport to be.5 CDD requires banks to collect risk-based information on the
customer, such as occupation, purpose of the account, and expected activity to enable
banks to identify potentially unlawful activity.6 Through these controls, banks can better
understand who is transacting through their bank, and what transactions are expected and

2 FinCEN is the federal agency charged with administering and enforcing the BSA. FinCEN, What We Do,
https://www.fincen.gov/what-we-do. See also Federal Financial Institution Examination Counsel Bank Secrecy
Act/Anti-Money Laundering Examination Manual (“FFIEC Manual”), Introduction, Role of Government Agencies
in the BSA (2015), https://bsaaml.ffiec.gov/manual/Introduction/01. Banks are required to file Suspicious Activity
Reports (“SARs”) upon the identification of potentially suspicious activity. 31 C.F.R. § 1020.320.
3 31 C.F.R. § 1020.220. See FFIEC Manual, Assessing Compliance with BSA Regulatory Requirements, Customer
Identification Program (2021),
https://bsaaml.ffiec.gov/manual/AssessingComplianceWithBSARegulatoryRequirements/01.
4 FFIEC Manual, Assessing Compliance with BSA Regulatory Requirements, Customer Due Diligence, Overview
(2018), https://bsaaml.ffiec.gov/manual/AssessingComplianceWithBSARegulatoryRequirements/02; 31 C.F.R. §
1020.210.
5 31 C.F.R. § 1020.220. See FFIEC Manual, Assessing Compliance with BSA Regulatory Requirements, Customer
Identification Program (2021),
https://bsaaml.ffiec.gov/manual/AssessingComplianceWithBSARegulatoryRequirements/01.
6 FFIEC Manual, Assessing Compliance with BSA Regulatory Requirements, Customer Due Diligence, Overview
(2018), https://bsaaml.ffiec.gov/manual/AssessingComplianceWithBSARegulatoryRequirements/02; 31 C.F.R. §
1020.210.
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normal for the customer.7 In the absence of these controls,8 banks risk providing services
to illicit actors who would use the bank for criminal purposes.

23. Two critical purposes of fraud detection are to attempt to prevent fraud and to attempt to
prevent loss.9 Banks deploy fraud software and technology solutions to assist with anti-
fraud efforts. These include detection scenarios to stop transactions before they occur
and, where necessary, cancel access, by, for example, cancelling prepaid, debit, or credit
cards.10

24. Regulators do not expect banks merely to report repeated or egregious instances of
criminal activity; regulators expect banks to have processes in place to close accounts
and/or terminate relationships.11 Per regulatory guidance, banks are expected to have
policies, procedures, and processes in place on when to terminate relationships in the face

7 FFIEC Manual, Assessing Compliance with BSA Regulatory Requirements, Customer Due Diligence, Overview
(2018), https://bsaaml.ffiec.gov/manual/AssessingComplianceWithBSARegulatoryRequirements/02 (“The objective
of CDD is to enable the bank to understand the nature and purpose of customer relationships, which may include
understanding the types of transactions in which a customer is likely to engage. These processes assist the bank in
determining when transactions are potentially suspicious.”).
8 Id. (“CDD policies, procedures, and processes are critical to the bank because they can aid in … [a]voiding
criminal exposure from persons who use or attempt to use the bank’s products and services for illicit purposes.”).
9 Office of the Comptroller of the Currency, OCC Bulletin 2019-37: Operational Risk: Fraud Risk Management
Principles (July 24, 2019), https://www.occ.treas.gov/news-issuances/bulletins/2019/bulletin-2019-37.html,
Appendix of Exhibits to the Declaration of Laura Brys in Support of Defendant’s Opposition to Plaintiffs’ Motion
for Class Certification, Ex. (“DX”) 108.
10 Office of the Comptroller of the Currency, OCC Bulletin 2019-37: Operational Risk: Fraud Risk Management
Principles (July 24, 2019), https://www.occ.treas.gov/news-issuances/bulletins/2019/bulletin-2019-37.html (DX
108). See Federal Trade Commission, When a Company Declines Your Credit or Debit Card, Consumer Advice
(Aug. 2022), https://consumer.ftc.gov/articles/when-company-declines-your-credit-or-debit-card (“Your card may
be declined for a number of reasons . . . the card issuer sees suspicious activity that could be a sign of fraud.”).
11 Board of Governors of the Federal Reserve System, FDIC, FinCEN, NCUA, OCC, Answers to Frequently Asked
Questions Regarding Suspicious Activity Reporting and Other Anti-Money Laundering Considerations (Jan. 19,
2021), https://www.fincen.gov/sites/default/files/2021-01/Joint%20SAR%20FAQs%20Final%20508.pdf (“The
decision to maintain or close a customer relationship as a result of the identification of suspicious activity is a
determination for a financial institution to make based on the information available to it, its assessment of money
laundering or other illicit financial activity risks, and established policies, procedures, and processes. Financial
institutions have the flexibility to develop risk-based procedures and monitoring processes for the purpose of
updating the customer risk profile and determining when to maintain or close accounts. Generally, financial
institutions have policies, procedures, and processes in place that establish an escalation process for decisions to
maintain or terminate customer relationships based on relevant factors, including SAR filing(s). These processes
establish criteria, including when review by senior management and legal staff is warranted, for the decision to
maintain or terminate the customer relationship in light of elevated risk factors.”).
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of elevated risk factors.12 In my experience, banks are under constant regulatory
scrutiny, and some have been subject to regulatory criticism and/or potential enforcement
actions when maintaining accounts for bad actors.13
b. National Crisis
25. Beginning in the spring of 2020, the U.S. faced an unprecedented health crisis due to the
COVID-19 pandemic.14 The majority of the country was placed under stay-at-home
orders, which resulted in mass unemployment.15 To address the spike in unemployment
and resulting hardship, Congress passed the Coronavirus Aid, Relief, and Economic
Security (“CARES”) Act at the end of March 2020, which expanded unemployment
benefits to those not traditionally eligible (PUA), and provided additional benefits to
those who had exhausted benefits (Pandemic Emergency Unemployment Compensation
or “PEUC”), and weekly supplements (Federal Pandemic Unemployment Compensation
or (“FPUC”).16 Available funds were drawn down by and distributed by states, with four
states (California, Georgia, Kentucky, and Michigan) taking approximately one-third of
all funds between March 28, 2020 and March 14, 2021.17 As a result of the PUA’s

12 Id.
13 Office of the Comptroller of the Currency, OCC Issues Cease and Desist Order, Assesses $450 Million Civil
Money Penalty, and Imposes Growth Restriction Upon TD Bank, N.A. for BSA/AML Deficiencies (Oct. 10, 2024),
https://www.occ.treas.gov/news-issuances/news-releases/2024/nr-occ-2024-116.html.
14 Trump White House, Proclamation on Declaring a National Emergency Concerning the Novel Coronavirus
Disease (COVID-19) Outbreak (Mar. 13, 2020), https://trumpwhitehouse.archives.gov/presidential-
actions/proclamation-declaring-national-emergency-concerning-novel-coronavirus-disease-covid-19-outbreak/.
15 Centers for Disease Control, Timing of State and Territorial COVID-19 Stay-at-Home Orders and Changes in
Population Movement – United States, March 1–May 31, 2020 (Sep. 4, 2020),
https://www.cdc.gov/mmwr/volumes/69/wr/mm6935a2.htm; Congressional Research Service, Unemployment Rates
During the COVID-19 Pandemic (Aug. 20, 2021) at 5, https://crsreports.congress.gov/product/pdf/R/R46554;
Auditor of the State of California, Employment Development Department: EDD’s Poor Planning and Ineffective
Management Left it Unprepared to Assist Californians Unemployed by COVID-19 Shutdowns (Jan. 2021) (“EDD’s
Poor Planning, Jan. 2021”) (DX 89) at 1, https://information.auditor.ca.gov/pdfs/reports/2020-128and628.1.pdf.
16 U.S. Department of the Treasury, About the CARES Act and the Consolidated Appropriations Act,
https://home.treasury.gov/policy-issues/coronavirus/about-the-cares-act; U.S. Department of Labor Press Release,
U.S. Department of Labor Announces New Guidance to States on Unemployment Insurance Programs (Dec. 30,
2020), https://www.dol.gov/newsroom/releases/eta/eta20201230-1; U.S. Department of Labor, Office of Inspector
General, COVID-19: ETA and States Did Not Protect Pandemic-Related UI Funds From Improper Payments
Including Fraud or From Payment Delays (Sep. 30, 2022) (“DOL OIG Report”) at 1–2,
https://www.oig.dol.gov/public/reports/oa/2022/19-22-006-03-315.pdf.
17 DOL OIG Report at 2.
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elimination of traditional safeguards to benefits eligibility, and in an effort to distribute
funds quickly given the unprecedented number of unemployment claims, states relaxed
eligibility and identification procedures, which resulted in widespread fraud.18 The
EDD’s June 2021 Annual Report states that “[t]raditionally state unemployment agencies
rely on employment or wage records to verify eligibility. The self-certification of prior
wages, made allowable under the PUA program, made it inherently susceptible to fraud.
With the lack of verifiable criteria regarding eligibility, fraud increased with the number
of [benefits] claims filed.”19
c. California’s Employment Development Department
26. EDD was responsible for administering the state unemployment benefits program
generally, including PUA for the State of California.20 Prior to PUA, California had
safeguards in place to determine both the identity of claimants and eligibility to receive
benefits; traditionally, the state could verify the claimant’s prior employment as well as
the date they became unemployed and their wage or salary history.21 The PUA

18 United States Government Accountability Office, GAO-22-105715: Significant Improvements Are Needed to
Ensure Transparency and Accountability for COVID-19 and Beyond (Mar. 17, 2022) (DX 87) (“When reviewing
the federal government’s response to the COVID-19 pandemic, GAO found that agencies had significant
shortcomings in their application of fundamental internal controls and financial and fraud risk management
practices.”), https://www.gao.gov/assets/gao-22-105715.pdf; Employment Development Department, State of
California, Annual Report California Fraud Deterrence and Detection Activities (June 2021) (“EDD Annual Report,
June 2021”) (DX 16) at 3 (“The federal Pandemic Unemployment Assistance (PUA) program, where much of the
current fraud is concentrated, was designed to provide unemployment benefits to independent contractors and the
self-employed.”),
https://edd.ca.gov/siteassets/files/about_edd/pdf/fraud_deterrence_and_detection_activities_2021.pdf;
BANA_EDD_MDL-00080294–352 (Auditor of the State of California, Significant Weaknesses in EDD’s Approach
to Fraud Prevention Have Led to Billions of Dollars in Improper Benefit Payments, (Jan. 2021) (“Weaknesses in
EDD’s Approach, Jan. 2021”) (DX 88) at 310 (“It is almost certain that because of its lax approach, EDD missed
stopping payment on fraudulent claims during the pandemic.”), 342 (“The new federal Pandemic Unemployment
Assistance (PUA) program presented particular challenges, as it did not have the same safeguards as California’s
unemployment program.”).
19 EDD Annual Report, June 2021 (DX 16) at 3.
20 Weaknesses in EDD’s Approach, Jan. 2021 (DX 88) at 300 (“The Employment Development Department (EDD)
is responsible for administering the State’s unemployment insurance (UI) program, which provides partial wage
replacement benefits to eligible Californians who have become unemployed, including those affected by the
COVID‑19 pandemic (pandemic).”).
21 House Committee on Oversight and Accountability Majority Staff, Examining Widespread Fraud in Pandemic
Unemployment Relief Programs (Sep. 10, 2024), https://oversight.house.gov/wp-content/uploads/2024/09/UI-
Report-FINAL.pdf (“House Committee Report”) (DX 14) at 13; Weaknesses in EDD’s Approach, Jan. 2021 (DX
88) at 304–5, 312–3.
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eliminated many of these critical, longstanding eligibility verification measures, and
instead allowed unemployment beneficiaries to self-certify their employment status and
wages.22 This created a perfect opportunity for criminals to apply for benefits.
Moreover, to distribute benefits quickly during the COVID-19 pandemic, the PUA and
California further eliminated many of the identification and eligibility controls previously
in place; EDD continued to rely on antiquated technology, including paper processes.23
For example, for the first seven months of the pandemic, EDD did not employ identity
verification software.24 In September 2020, EDD’s antiquated systems became so
overwhelmed with the volume of new benefits claims and inundated with fraud it shut
down for a “two-week reset.”25 When the system was reactivated in October 2020, EDD
started using the ID.me identity verification software, but by this point the system was
already rife with fraud, and, as explained below, fraudsters also quickly figured out how
to bypass ID.me’s controls.26 The EDD’s June 2021 Annual Report states that “[w]ith
the absence of comparable wage information to validate the claims, the PUA program
was particularly vulnerable to fraud. This was evident at the end of 2020 with an
identified fraud rate in the PUA program of just over 24 percent, or approximately $10.5
billion.”27 Subsequent reports from the DOL-OIG have reported that more than 35
percent of the PUA benefits issued nationwide were likely fraudulent.28

22 Department of Labor, Questions and Answers: Pandemic Unemployment Assistance (PUA) Program,
https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2020/UIPL_16-20_Change_1_Attachment_1.pdf (“An
individual must self-certify that he or she is unemployed, partially unemployed, or unable or unavailable to work …
nor does PUA take into account the individual’s principal source of income”); Weaknesses in EDD’s Approach, Jan.
2021 (DX 88) at 342 (“The new federal Pandemic Unemployment Assistance (PUA) program presented particular
challenges, as it did not have the same safeguards as California’s unemployment program.”).
23 EDD’s Poor Planning, Jan. 2021 (DX 89) at 5–6, 17, 25 (“In March 2020, EDD halted most of its work related to
determining whether UI claimants were eligible for benefits.”).
24 Weaknesses in EDD’s Approach, Jan. 2021 (DX 88) at 305; EDD’s Poor Planning, Jan. 2021 (DX 89) at 17.
25 EDD, EDD Announces Reset in Response to Strike Team Recommendations to Process Claims Faster, Reduce
Fraud and Tackle Backlog Issues (Sep. 19, 2020), https://www.labor.ca.gov/2020/09/19/edd-announces-reset/.
26 Id.; EDD’s Poor Planning, Jan. 2021 (DX 89) at 17; see infra ¶ 36.
27 EDD Annual Report, June 2021 (DX 16) at 7.
28 House Committee Report (DX 14) at 6 (“In August 2023, DOL reported that the PUA program had a total
improper payment rate of 35.9 percent.”).
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27. The PUA's and EDD's removal of guardrails in administering unemployment benefits
led to an unprecedented wave of fraud perpetrated by bad actors, including sophisticated
criminal syndicates.29 Two types of fraud were prevalent: benefits eligibility fraud and
unauthorized transaction claims fraud. First, benefits eligibility fraud involved issuing
EDD prepaid debit cards to benefits claimants who were not entitled to benefits,
including fraudsters who also committed identity theft, by using fake or stolen identities
to obtain prepaid benefits cards. 30 Second,
-· 31 Unauthorized transaction claims fraud was committed by those who
fraudulently sought benefits
29 EDD Annual Report, June 2021 (DX 16) at 3 ("States across the count:Iy faced new levels of criminal fraud,
including fraud perpetrated by sophisticated organized crime groups and criminal opportunists throughout the
count:Iy."); Weaknesses in EDD's Approach, Jan. 2021 (DX 88) at 342-343 ("The new federal Pandemic
Unemployment Assistance (PUA) program presented pa1ticular challenges, as it did not have the same safeguards as
California's unemployment program. While in a September letter from the Department of Labor acknowledged that
the new program is a 'target for criminal ente1prises and other bad actors deploying advanced technologies, stolen or
synthetic identities, and other sophisticated tactics,' the Tmmp Administration provided insufficient suppo1t to states
to address the aggressive attacks by domestic and international criminal syndicates.").
30 EDD Annual Report, June 2021 (DX 16) at 44; Deposition of Michael Letson, In re: Bank of America California
31 Deposition of William Matthew Maitin, In re: Bank of America California Unemployment Benefits Litigation,
Case No.: 3:21-md-02992-LAB-MSB (Feb. 14, 2024) ("Martin Deposition") (DX 122) at 146:19-25; Deposition of
Shane Daniels, In re: Bank of America California Unemployment Benefits Litigation, Case No.: 3:21-md-02992-
LAB-MSB (Feb. 6, 2024) ("Daniels Deposition") (DX 98) at 195:23-196:12.
32 Ma1tin Deposition at 146:19-25 (DX 122); Daniels Deposition (DX 98) at 195:23-196:12 ; EDD Annual Repo1t,
June 2021 (DX 16) at 44 ("Identity Theft and Address Theft - Imposter Claims: PUA claims filed by pe1pet:i·a.tors
12
_
_ 32
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28. The California State Auditor issued a report in January 2021 acknowledging that EDD
had mishandled fraud prevention and had, at that point, already paid approximately $10
billion in fraudulent claims.33 The report noted that fraud in benefits payments had
increased 393 percent.34 More recently, the House Committee on Oversight and
Accountability (the “House Committee”) issued a report setting forth in detail
California’s failures with respect to preventing and/or detecting fraud in its pandemic
unemployment relief programs, including that EDD’s parent agency “clearly … made the
decision to sacrifice preventing fraud for expeditious processing times” and EDD
“adopted a ‘pay and chase’ model” that exposed the system to fraudsters, in the sense
that EDD paid out benefits with essentially no verification, and then attempted to catch
fraudsters after the fact.35 More recent reports estimate COVID-19-related
unemployment benefits fraud to be in the hundreds of billions of dollars. The U.S.
Government Accountability Office estimates that the amount of fraud is likely between
$100 and $135 billion.36 And the Department of Labor (DOL) Office of Inspector
General (OIG) estimates that the amount of improperly paid pandemic unemployment
insurance payments is likely even higher and could be more than $191 billion.37

and sophisticated criminal schemes using stolen or borrowed identities, and using false addresses to obtain
unemployment insurance benefits illicitly for financial gain. These occurrences generally involved filing for
benefits using true wage earner without knowledge or consent.”). Letter from Elaine M. Howle, 2020-502 (Nov. 19,
2020), https://information.auditor.ca.gov/pdfs/reports/2020-502.pdf (DX 17).
33 Weaknesses in EDD’s Approach, Jan. 2021 (DX 88) at 308.
34 The report notes that, in 2019, $116.8 million of $4.9 billion in benefit payments were fraudulent (2.3%).
Between March and December 2020, $10.4 billion of $111 billion in benefit payments were fraudulent (9.4%). See
Weaknesses in EDD’s Approach, Jan. 2021 (DX 88) at 305, 308.
35 House Committee Report (DX 14) at 28.
36 Id. (DX 14) at 23.
37 Id. (DX 14) at 6, 23.
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d. Bank of America's Role in Distributing EDD Benefits
29. The Bank's relationship with EDD long predated the COVID-19 crisis.38 -
-39 The Bank would then issue prepaid cards to the benefits recipients loaded with
funds made available by EDD.
30. In operating the EDD benefits program,
38 Mary Ann Milboum, Unemployment Payouts Go Plastic in July, The Orange County Register (Mar. 16, 2011),
https://www.ocregister.com/201 l /03/16/unemployment-payouts-go-plastic-in-july/ (DX 91) ("Bank of America won
the contract to provide the Visa-branded EDD debit cards. Under the program, EDD will deposit unemployment
payments directly to the claimant's debit card once the BofA account is activated.").
BANA_EDD_MDL-00529872-879 (Bank of America,
California Employment Development Department Electronic Payments Opportunity, (Mar. 28, 2020)) at 74;
Weaknesses in EDD's Approach, Jan. 2021 (DX 88) at 304-309.
41 Letson Deposition (DX 97) at 105:10-20, 112:12-113:8.
14
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31. Before the COVID-19 pandemic, the number of active benefits recipients to whom the
Bank issued prepaid cards was-44 During the COVID-19 pandemic, the number
of active benefits recipients to whom the Bank issued cards grew exponentially to■
, and as the federal government expanded benefits eligibility and
the EDD relaxed identity and eligibility verification and requirements, the result was
massive fraud. 45 Under no1mal circumstances, a bank would be able to address fraud in
the ordinaiy course.
would present
a massive challenge for any bank. This challenge was observed by Bank employees. As
noted by Michael Letson, a Managing Director leading detection and complex
investigations in the Bank's Global Financial Crimes Compliance ("GFCC") group,46
42 Letson Deposition (DX 97) at 105:10-20, 111:9-17, 112: 12 -113:8.
43 Deposition of Robe1t A. Ches
- •
·••
•
e
44 The number of active EDD prepaid debit cards in mid-March of2020 was 666,000. See BANA_EDD_MDL-
00154700-8 (Bank of America, California EDD Program Ove1vie,v (Nov. 2, 2020)) at 1.
45 Id. at 1. See Section V.1.C.
46 Letson Deposition (DX 97) at 35:23-36:3.
15
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47
e. Warnings from Regulatory Agencies and Law Enforcement
32. Recognizing the extent of the fraud resulting from the PUA and the vulnerability of
financial institutions, banking regulatory agencies and law enforcement issued warnings,
alerting banks to be vigilant in detecting fraud.

33. FinCEN issued nine separate warnings to banks between March 2020 and February 2021
directing banks to ensure they detected, prevented, and reported financial crimes related
to COVID-19-related payments, including one warning specifically addressing
unemployment insurance fraud.48 FinCEN encouraged banks to look for red flags
indicating fraud and to implement “innovative approaches to meet their BSA/anti-money
laundering compliance obligations, in order to further strengthen the financial system

47 Id. (DX 97) at 112:16–113:8.
48 FinCEN Press Release, The Financial Crimes Enforcement Network (FinCEN) Encourages Financial Institutions
to Communicate Concerns Related to the Coronavirus Disease 2019 (COVID-19) and to Remain Alert to Related
Illicit Financial Activity (Mar. 16, 2020), https://www.fincen.gov/news/news-releases/financial-crimes-enforcement-
network-fincen-encourages-financial-institutions (DX 92); FinCEN Press Release, The Financial Crimes
Enforcement Network Provides Further Information to Financial Institutions in Response to the Coronavirus Disease
2019 (COVID-19) Pandemic (Apr. 3, 2020), https://www.fincen.gov/news/news-releases/financial-crimes-
enforcement-network-provides-further-information-financial (DX 92); FinCEN, Advisory on Medical Scams
Related to the Coronavirus Disease 2019 (COVID-19) (May 18, 2020),
https://www.fincen.gov/sites/default/files/advisory/2020-05-
18/Advisory%20Medical%20Fraud%20Covid%2019%20FINAL%20508.pdf (DX 92); FinCEN, Notice Related to
the Coronavirus Disease 2019 (COVID-19) (May 18, 2020),
https://www.fincen.gov/sites/default/files/shared/May_18_Notice_Related_to_COVID-19.pdf (DX 92); FinCEN,
Advisory on Imposter Scams and Money Mule Schemes Related to Coronavirus Disease 2019 (COVID-19) (July 7,
2020), https://www.fincen.gov/sites/default/files/advisory/2020-07-
07/Advisory_%20Imposter_and_Money_Mule_COVID_19_508_FINAL.pdf (DX 92); FinCEN, Advisory on
Cybercrime and Cyber-Enabled Crime Exploiting the Coronavirus Disease 2019 (COVID-19) Pandemic (July 30,
2020), https://www.fincen.gov/sites/default/files/advisory/2020-07-
30/FinCEN%20Advisory%20Covid%20Cybercrime%20508%20FINAL.pdf (DX 92); FinCEN, Advisory on
Unemployment Insurance Fraud During the Coronavirus Disease 2019 (COVID-19) Pandemic (Oct. 13, 2020),
https://www.fincen.gov/sites/default/files/advisory/2020-10-
13/Advisory%20Unemployment%20Insurance%20COVID%2019%20508%20Final.pdf (DX 92); FinCEN,
Consolidated COVID-19 Suspicious Activity Report Key Terms and Filing Instructions (Feb. 24, 2021),
https://www.fincen.gov/sites/default/files/shared/Consolidated%20COVID-19%20Notice%20508%20Final.pdf (DX
92); FinCEN, Advisory on Financial Crimes Targeting COVID-19 Economic Impact Payments (Feb. 24, 2021),
https://www.fincen.gov/sites/default/files/advisory/2021-02-24/Advisory%20EIP%20FINAL%20508.pdf (DX 92).
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against illicit financial activity and other related fraud.”49 Recognizing the extent of
criminal activity associated with COVID-19 relief, in February 2021, FinCEN provided
banks with specific instructions for banks filing SARs based on COVID-19-related fraud-
types.50

34. In September 2020, the United States Department of Justice (“DOJ”) established the
National Unemployment Insurance Fraud Task Force. The intent was to marshal the
resources of the DOJ together with other state and federal agencies to combat and prevent
pandemic-related fraud.51 The Task Force noted that “[f]raudsters, some of which are
transnational criminal organizations, are using the stolen identities of U.S. citizens to
open accounts and file fraudulent claims for UI benefits, exploiting the unprecedented
expansion of these benefits provided in response to economic disruption caused by the
COVID-19 pandemic.”52 The Task Force’s most recent report confirms the widespread
criminal activity relating to the issuance of COVID-related unemployment benefits; it
reported the arrests of more than 3,500 defendants, the seizure or forfeiture of over $1.4
billion in stolen COVID-19 relief funds, and the “ongoing investigations into hundreds of
identity thieves, transnational fraud and money laundering networks, large-dollar
individual fraudsters, and the businesses that facilitated these crimes.”53 Banks

49 FinCEN Press Release, The Financial Crimes Enforcement Network Provides Further Information to Financial
Institutions in Response to the Coronavirus Disease 2019 (COVID-19) Pandemic (Apr. 3, 2020),
https://www.fincen.gov/news/news-releases/financial-crimes-enforcement-network-provides-further-information-
financial (DX 92).
50 See FinCEN, Advisory on Financial Crimes Targeting COVID-19 Economic Impact Payments (Feb. 24, 2021),
https://www.fincen.gov/sites/default/files/advisory/2021-02-24/Advisory%20EIP%20FINAL%20508.pdf (DX 92).
51 U.S. Department of Justice, National Unemployment Insurance Fraud Task Force, Unemployment Insurance
Fraud Consumer Protection Guide (Sep. 21, 2020),
https://www.oig.dol.gov/public/Unemployment%20Insurance%20Fraud%20Consumer%20Protection%20Guide,%2
0Final.pdf (DX 95).
52 Id. (DX 95).
53 U.S. Department of Justice Press Release, COVID-19 Fraud Enforcement Task Force Releases 2024 Report (Apr.
9, 2024), https://www.justice.gov/opa/pr/covid-19-fraud-enforcement-task-force-releases-2024-report; U.S.
Department of Justice, COVID-19 Fraud Enforcement Task Force 2024 Report (Apr. 2024),
https://www.justice.gov/coronavirus/media/1347161/dl?inline (DX 94).
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themselves can be, and often are, subject to enforcement actions if they allow criminal
activity to flow through the bank unabated. 54
35. The United States Secret Service also issued a statement warning of massive fraud in
connection with state unemployment insurance programs. 55
36. Kela, a cyber threat security company, published warnings about
Fraudsters posted instructions on the dark web on
54 See, for example, Office of the Comptroller of the Currency, OCC Issues Cease and Desist Order, Assesses $450
Million Civil Money Penalty, and Imposes Growth Restriction Upon TD Bank, N.A. for BSA/AML Deficiencies
(Oct. 10, 2024), https://wwv.•.occ.treas.gov/news-issuances/news-releases/2024/nr-occ-2024-116.html. See also,
FFIEC Manual, Introduction, Role of Govemment Agencies in the BSA (2015),
https://bsaaml.ffiec.gov/manual/Introduction/01; Office of the Comptroller of the CwTency, Bank Secrecy Act
(BSA), https://www.occ.treas.gov/topics/supervision-and-examination/bsa/index-bsa.html.
55 BANA_EDD_MDL-00205361 (U.S. Secret Service, Massive Fraud Against State Unemployment Insurance
Programs (May 14, 2020)) (DX 96).
BANA_EDD_MDL-00088501-5 (Kela, Targeted Cyber Intelligence, RaDark Intelligence Services, ID.me
Bypass (Dec. 14, 2020)) (DX 103) at 4.
18
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2.
THE BANK MUST ADMINISTER THE PROGRAM FACING BOTH
AN UNPRECEDENTED NUMBER OF CLAIMS AND AN
UNPRECEDENTED VOLUME OF FRAUD.
a. Unemployment Insurance Enrollment Increased and the EDD
Relaxed Eligibility Controls
37. During the COVID-19 pandemic, the Bank was
the Bank went from issuing-new EDD prepaid debit
card accounts in Febrnaiy 2020 prior to COVID-19 to issuing- new EDD
prepaid debit card accounts in April 2020, as shown in Exhibit 1. 58
EXHIBIT 1
Sotu·ce: BANA_EDD_MDL-00884198 (DX 120).
58 See Exhibit 1· BANA EDD MDL-00884198 (DX 120).
19
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38. During the period of increased emollment, the EDD relaxed its identity and eligibility
verification processes. Indeed, the California State Auditor admitted that the EDD's
failure to exercise sti·ingent identity and eligibility verification resulted in massive fraud:
[E]arly in the pandemic, EDD decided to remove a key safeguard against paying
[benefits] claims for which staff had identity concerns because of the mistaken
belief that other safeguards would stop payments on these claims. However,
because the EDD leadership who made these decisions did not adequately
understand how the stop payments worked, EDD waived the baniers to payment
for almost 77,000 [benefits] claims and paid more than $1 billion on claims that it
has detennined are potentially fraudulent. 59
39. As noted above, the Bank received warnings from its regulators telling it to be prepared
to prevent, detect, and report fraud. 60 In addition, the House Committee on Oversight
and Accountability recently repo1ted that "EDD failed to cross reference applicants with
databases of incarcerated individuals and lost around $810 million to these fraudulent
claims."61
40.
63 Per Mr. Letson's testimony,
59 Weaknesses in EDD's Approach, Jan. 2021 (DX 88) at 317.
60 See Section V.1.E.
61 House Committee Repo1t (DX 14) at 7.
Deposition of Bradley Garfield, In re: Bank of America California Unemployment Benefits Litigation, Case No.:
3:2 l -md-02992-GPC-MSB (Dec. 10, 2024) ("Garfield Deposition") at 46:2 -6, 354: 17-355:5; Deposition of Anne
Holt, In re: Bank of America California Unemployment Benefits Litigation, Case No.: 3 :2 l-md-02292-GPC-MSB
(Jan. 8, 2025) ("Holt Deposition") at 36:23-37: 10, 134:5-15.
63 Letson Deposition (DX 97) at 126:15-131:6.
20
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41. For example, the Bank's challenges with EDD are illustrated in September 2020 after the
36:22-37:10, 134:11-15, 290:6-10.
65 Declaration of Michael J. Letson in Suppo1t of Defendant's Memorandum in Opposition to Plaintiffs' Motion for
Class Ce1tification, In re: Bank of America California Unemployment Benefits Litigation. Case No. 3-2 l -md-02992-
GPC-MSB (Jan. 17, 2025) ("Letson Declaration)") (DX 6) at ,r 22.
X 97 at 113:22-114:11
67 Weaknesses in EDD's Approach, Jan. 2021 (DX 88) at 323.
68 Weaknesses in EDD's Approach, Jan. 2021 (DX 88) at 322-323; BANA_EDD_MDL-00085577-80 (Email cha.in
from Rita. Gass to Bobby A Chestnut and Sharon Hilliard, Sending ~690k Payments to Bo/A (Oct. 3, 2020)).
69 BANA_EDD_MDL-00085577-80 (Email chain from Dawn E Haddock to Bobby A Chestnut et al., RE,: Sending
~690k Payments to BofA (Oct. 5, 2020)) at 79-80; BANA_EDD _MDL-00085694 (Email chain from Mahendra.
Ma.lliwa.l to Sabrina Clark et al., Accounts to Unfreeze (Oct. 14, 2020)).
21
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42. Based on the record I reviewed, including the California State Auditor repo1is, in my
opinion, EDD did not perfo1m actions sufficient to control the increase in fraud and in
some instances took affomative actions 74 that made the fraud worse. 75
70 BANA_EDD_MDL-00085788 -9 (Bank of America, Prepaid Card-holder Analysis, (Oct. 2020)); BANA_EDD
M DL-00085786 (Email chain from Dawn Haddock to Sharon Hilliard, et al., Meta Data and Unfrozen Accounts on
10/4 (Oct. 16, 2020)).
71 BANA_EDD_MDL-00085788 -9 (Bank of America, Prepaid Card-holder Analysis, (Oct. 2020)).
72 BANA_EDD _MDL-00085803-8 (Email chain from Carole Vigne to Bobby A Chestnut et al., RE: EDD/BOA
Business Meeting, (Oct. 19, 2020)) at 3.
73 BANA EDD MDL-00086221-5
Approach, Jan. 2021 (DX 88) at 323.
74 For example, EDD actually publicly released information regarding its fraud prevention strategies, which gave
fraudsters advance notice ofEDD's effo1ts. See Post by @CA_EDD from X.com (Sep. 30, 2020)
https://x.com/CA_EDD/status/1311335315043475457 ("One of the ways we're stopping fraud is by suspending or
canceling multiple claims filed using the same address. We're also working hard to verify claimants who have the
same address as those being used by scammers and minimize payment delays as soon as possible."). EDD's other
actions also did not help. See, e.g., EDD's Poor Planning, Jan. 2021 (DX 89) at 25 ("In March 2020, EDD halted
most of its work related to determining whether UI claimants were eligible for benefits;"); Weaknesses in EDD's
Approach, Jan. 2021 (DX 88) at 296 ("Specifically, EDD waited a.bout four months to automate a. key anti-fraud
measure, took incomplete action against claims filed from suspicious addresses, and removed a. key safeguard
against improper payments without fully understanding the significance of the safeguard.").
75 Letson Deposition (DX 97) at 97:6-98:22; Section V.1.C.
22
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43.
HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
b. Unauthorized Transaction Claims and Resulting Fraud
Skyrocketed
76 which the Bank was able to manually
investigate in a timely manner. Prior to the COVID-19 pandemic, in Januaiy 2020,
-78 During the COVID-19 pandemic, the number of unemployment benefits
recipients increased dramatically as the federal government broadened eligibility and
EDD abandoned many of its pre-pandemic controls. 79 As the number of benefits
reci ients increased and contrnls were relaxe
As shown·
77 Bank of America's Responses and Objections to PlaintiffYick's Fifth Set oflnte1rngatories, In re: Bank of
America California Unemployment Benefits Litigation, Case No.: 3:21-md-02992-LAB-MSB (Feb. 2, 2024) ("BoA
Responses and Objections"), Exhibit 11 (DX 105).
78 Letson Deposition (DX 97) at 66:18-67:16, 75:13-76:12; Daniels Deposition (DX 98) at 59:8-61:9.
79 Weaknesses in EDD's Approach, Jan. 2021 (DX 88) at 310; House Committee Repo1t (DX 14) at 13-14. See
also, Exhibit 2.
80 See Exhibit 2; BANA_EDD_MDL-00019618-28 (Bank of America, Unemployment Prepaid Debit Card Fraud)
at 18; BANA_EDD_MDL-00118436-7 (Email chain from JenniferM Ehresman to Christine K Channels, RE:
Important pis review (Nov. 5, 2020)) at 6.
23
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Likewise, as shown in Exhibit 3,
24
. See BoA Responses and Objections, Exhibit 11 (DX 105).
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25
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c. The Bank Took Reasonable Steps to Analyze and Address Fraud
44. The increasing volume of fraud was apparent to the Bank
45.
. 83 At the same time, cardholders were
repo1iing alleged unauthorized transactions at unprecedented volumes. While historically
the Bank received approximate!- unauthorized transaction or eITor claims per
month in its unemployment prepaid card program, that number increased -
85
83 Letson Declaration (DX 6) at ,r 13.
85 See Exhibit 2.
87 See, e.g., Jason Bramwell, The COVID-19 Pandemic is Causing Many Accountants (and a Whole Lot of
Consultants) to Freak Out About Losing Their Jobs, going concem (Mar. 26, 2020),
https://v.rww.goingconcem.com/covid-19-accountants-layoffs-survey/; Consulting.US, Global Consulting Fi.Im
Accenture is Firing 25,000 Employees (Aug. 26, 2020), https://www.consulting.us/news/4776/global-consulting
fum-accenture-is-firing-25000-employees. Similarly, the Bank implemented work from home measures. See, e.g.
Holt Deposition at 15 :3-5; Deposition of Paiz A. Ahmad, In re: Bank of America Ca.lifomia Unemployment
Benefits Litigation, Case No.: 3:21-md-02992-GPC-MSB (Jan. 29, 2025) ("Ahtnad Deposition") at 22:3-11;
Deposition of Melissa Ramirez, In re: Bank of America California Unemployment Benefits Litigation, Case No.:
3:21-md-02992-GPC-MSB (Feb. 11, 2025) ("Ramirez Deposition") at 13:6-8.
26
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46. Under ordinaiy circumstances,
opinion, pennitting the funds to be stolen would have been counter to the Bank's
responsibility to combat fraud.
88 Daniels Deposition (DX 98) at 59:8-61:9.
89 Daniels Deposition (DX 98) at 59:8-61:9; Letson Declaration (DX 6) at iJ 27.
BANA_EDD_ MDL_00416783-4 (Email chain from Kristen R Ciersi to Jennifer
M Ehresman et al., RE: Prepaid Card Claims/Losses Update, (Sep. 17, 2020)); Letson Declaration (DX 6) at ,r 29.
91 BANA_EDD_MDL_00416783-4 (Email chain from Kritsen R Ciersi to Jennifer M Ehresman et al., RE: Prepaid
Card Claims/Losses Update, (Sep. 17, 2020)).
92 BANA_EDD_MDL-00088501-5 (Kela, Targeted Cyber Intelligence, RaDark Intelligence Services, ID.me
Bypass (Dec. 14, 2020)) (DX 103) at 3; BANA_EDD_MDL-0088506-21 (PUA/EDD ID.ME Bypass Method) (DX
121) at 06; Letson Declaration (DX 6) at ir,[ 19, 27; Shoreline Mafia, Bandemic (E.D.D), Youtube, (Apr. 20, 2021),
https://www.youtube.com/watch?v=vut-l 7KzZJk; ShotOff & Nuke Bizzle, EDD, Youtube (Oct. 22, 2020),
https://wwv.•.youtube.com/watch?v=K0ck7hTsug8; BANA_EDD_MDL-00705503-510 (Email chain from William
Fox to John Denning, et al., FW: ACP-NYT-Fraud Schemes Exploit Weak Spots in Unemployment Claims System
(Oct. 1, 2020) at 4; BANA_EDD_MDL-00055974-981 (Bank of America, Prepaid Activity -ATM Ana£ysis
Summa,y (Mar. 2, 2020) at 74; Deposition of Ryan Schwartz, In re: Bank of America California Unemployment
Benefits Litigation, Case No.: 3:21-md-02992-LAB-MSB (Dec. 4, 2024) ("Schwa1tz Deposition") at 131:9-132:2,
187:1-20.
27
ll
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47. Increasing the threshold for low-dollar-value unauthorized transaction claims that were
auto-paid would not have solved the problem that the Bank was facing. Even at an
increased threshold there would have been a large volume of fraudulent claims above and
below the threshold. Moreover, in my experience, criminals constantly adapt to changing
prevention strategies and I expect that criminals would have adapted to the Bank's
. 95 Auto-paying more
unauthorized ti·ansaction claims at this time would result in paying more fraudsters.
48. The Bank attempted to address fraud in the EDD po1tfolio
In my opinion, these were reasonable attempts to prevent
fraudulent u-ansactions from being processed. However, they were insufficient to address
the volume of false unauthorized ti·ansactions claims, or what the Bank referred-
93 See e . . BANA EDD MDL-00120424-425
mail chain from Christine K Channels to William Fox. et al .. RE:
94 Letson Declaration (DX 6) at ,r,r 24--31; Ahmad Deposition at 151 :9-16, 216: 16--221 :2; Schwartz Deposition at
187: 14--188:8.
95 Letson Declaration (DX 6) at ,r,r 10--17; Garfield Deposition at 211 :2-19; Ahmad Deposition at 60:7-61 :2;
Deposition of William Fox, In re: Bank of America California Unemployment Benefits Litigation, Case No.: 3:21-
md-02992-GPC-MSB (Feb. 13, 2025) ("Fox Deposition") at 15:9-17:1, 17:13-18:16, 26:9-25.
96 Letson Declaration (DX 6) at ,r 25; BANA_EDD _MDL-00592324--30 (Bank of America, Model Identi zcation
Pre - aid Card Fraud and Claims Fraud MIRJ 102 Oct. 9 2020
"Model Identification" at 26 '
28
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. 99 When a bank onboards a client, it is not only required to collect
identifying info1mation pursuant to CIP, but it must also verify the customer's identity.100
This is because the bank is required to have a reasonable belief that the customer is who
they say they are. Banks also collect info1mation pursuant to CDD/Know Your Customer
("KYC") requirements to learn more about who the customer is, what the customer does,
and what activity the customer might be expected to engage in. 101 Based on the bank's
assessment of this, and other info1mation, it has the ability to refuse to onboard and do
business with that customer. Here, in contrast, the Bank
98 Model Identification at 26.
BANA_EDD_MDL_00416783-4 (Email chain from Kritsen R Ciersi to
Jennifer M Ehresman et al., RE: Prepaid Card Claims/Losses Update, (Sep. 17, 2020)) at 3.
100 31 C.F.R. § 1020.220. See FFIEC Manual, Assessing Compliance with BSA Regulato1y Requirements, Customer
Identification Program (2021 ),
https:/ /bsaa
ml. ffiec. gov/manual/ AssessingCompliance WithBSARegulatory Requirements/01.
101 Financial Crimes Enforcement Netv.•ork, Information on Complying with the Customer Due Diligence (CDD)
Final Rule, https://www.fincen.gov/resources/statutes-and-regulations/cdd-final-rule. See supra ,r 22.
29
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50
HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
. In my experience, banks rely on KYC
infonnation when conducting investigations for potentially suspicious activity. Such
infonnation is critical to a bank in understanding whether transactions are nonnal and
expected for a customer. 102
. 106 In my experience, Financial
Crimes, Fraud, and Cyber Security professionals would view assisting law enforcement
102 See Model Identification at 26 ("A significant majority of cardholders are not Bank of America customers, which
means we are blind to the card holder's other financial activity, which hinders due diligence to determine fraud.")
103 Martin Deposition (DX 122) at 136: 17-137:3, 139:21-140:7, 141 :18-142:7, 142:9-21, 143: 10-15, 143: 18-
144:9, 145:24-146:12; Holt Deposition at 58:15-59:3; Letson Deposition (DX 97) at 73:4-23, 79:25-80:7, 243:23-
244: 3; 261: 1 7 -262: 14. See also, BANA _EDD_ MDL-00154004-8 (Bank of America, Unemployment Insurance
(UJ) Benefits Fraud Model Development) at 4; BANA_EDD _MDL-00430148-62 (Bank of America, Benefits Fraud
I Patterns Obse/'ved) at 48.
104 Martin Deposition (DX 122) at 171: 16-172: 10; Fox De osition at 15:9-17: l; Letson De osition
134:4-10; Schwartz De osition at 31:9-20, 35:3-18;
BANA_EDD_MDL-00087715-6 (Bank of
America, Unemployment Benefits - Prepaid Fraud Analysis: California Oven1ie,v (Sep. 15, 2020)) (DX 99).
105 Martin Deposition (DX 122) at 42:6-13; Letson Deposition (DX 97) at 42:22-43:3, 79:5-80:7;
BANA_EDD _MDL-00057837-78 (Bank of America, Bank of Amer ica 's Prepaid Organizational Structure (Oct.
20, 2023)) at 39.
106 Martin De osition (DX 122) a
30
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with crime prevention and detection as one of their most critical responsibilities. These
departments are not profit centers for banks, and
financial system from fraud.
51.
52.
107 Letson Declaration (DX 6) at ,r 18.
108
Their goal is to protect the Bank and the
Analysis: California Overview (Sep. 15, 2020)) (DX 99) at 5; BANA_EDD _MDL-00055974-81 (Prepaid Activity
ATM Analysis Summa1y (Mar. 2, 2020) at 77-8; BANA_EDD_MDL-00154004-8 (Bank of America,
Unemployment Insurance (UJ) Benefits Fraud Model Development) at 5; BANA_EDD_MDL-00430148-62 (Bank
of America, Benefits Fraud I Patterns Obsel'ved) at 48, 53.
110 Martin Deposition (DX 122) at 136: 17-137:3, 138: 17-140:7, 141 :15-142:7, 142:9-21, 143: 10-15, 143: 18-
144:9, 145:24-146: 12; Letson Deposition (DX 97) at 299:12 -301: 19; Ahmad Deposition at 136:3-137:14;
BANA_EDD_MDL-00076984 -5 (Bank of America, Fraud Prevention & Detection Strategy); BANA_EDD_MDL-
00421427-8 (Email chain from Jose Firpi to William Fox et al., RE: Financial Oimes Weekly (Sep. 23, 2020)).
111 Martin Deposition (DX 122) at 138: 17-144:23; BANA_EDD _MDL-00057837-78 (Bank of America, Bank of
America 's Prepaid Organizational Structure (Oct. 20, 2023); BANA_EDD_MDL-00019618-28 (Bank of America,
Unemployment Prepaid Debit Card Fraud) at 18; BANA_EDD_ MDL-00076983 (Email chain from Melissa
Gargagliano to Renee T Johnson et al., PPD UJ Feedback Requested from Jenn and Renee (Dec. 8, 2020));
BANA_EDD _MDL-00076984-5 (Bank of America, Fraud Prevention & Detection Strategy, (Dec. 8, 2020)) at 4.
31
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53.
HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
112 The team also made two key observations: (1)
The need
for large amounts of cash would have been unusual given the general shift to cashless
payments during the COVID-19 Pandemic. 114
"117 In my opinion, the analyses
perfo1med by the Bank were consistent with the Bank's responsibility to understand the
extent of the fraudulent activity and enable it to unde1iake reasonable measures to
mitigate victimization of the State and the Bank.
d. The Fraud Filter was a Reasonable Attempt to Expeditiously
Address a Growing Fraud Problem
112 Letson Declaration (DX 6) at ,r 34; Fox Deposition at 27:5-23.
53.
114 Square, Making Change, Chapter 4: One Year of Payments and the Pandemic,
https://squareup.com/us/en/press/making-change/2021; Kelsey Coyle, et al., Consumer Payments and the Covid-19
Pandemic, Federal Reserve Bank of San Francisco (Feb. 9, 2021), https://www.frbsf.org/wp
content/uploads/sites/7/conswner-payments-covid-19-pandemic-2020-dia1y-consumer-payment-choice-supplement-
2.pdf.
32
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.118

.119 In my
experience, it is common for banks to cooperate closely with law enforcement, and to
consider or apply information compiled from law enforcement, their own research, and
the analysis of suspected fraud to develop fraud strategies.

54. Based on Mr. Letson’s testimony,

.120
In my experience, automated detection mechanisms are routinely used by banks to
attempt to detect and prevent fraud and other financial crimes, and Financial Crimes
professionals would be very accustomed to working with such systems. Due to the speed
and volume of transactions, banks rely upon automated systems and features to alert them
to fraud and other potentially suspicious activity.121 Indeed, banking regulators expect
banks to deploy technology as part of their required fraud risk management processes.122

118 Letson Deposition (DX 97) at 76:17–77:18.
119 BANA_EDD_MDL-00090640–7 (Email chain from William M Martin to Melissa Gargagliano, et al.,

(Dec. 29, 2020)); BANA_EDD_MDL-00125177–9 at 7 (Email chain from
Michael J. Letson to Bradley Garfield, et al.,
(Sep. 28, 2020));
Letson Deposition (DX 97) at 115:9–117:24.
120 Letson Deposition (DX 97) at 122:1–123:18. See also, Fox Deposition at 27:5–28:13, 45:21–47:17; 51:2–53:21;
Ahmad Deposition at 60:7–61:1, 312:7–25; Holt Deposition at 136:11–137:11; Schwartz Deposition at 41:25–42:17,
99:10–13.
121 F5, How Fraud Detection Works: Common Software and Tools, https://www.f5.com/glossary/fraud-detection.
122 Office of the Comptroller of the Currency, OCC Bulletin 2019-37: Operational Risk: Fraud Management
Principals (July 24, 2019), https://www.occ.treas.gov/news-issuances/bulletins/2019/bulletin-2019-37.html (DX
108); Office of the Comptroller of the Currency, Acting Comptroller of the Currency Michael J. Hsu Remarks for
the Financial Literacy and Education Commission’s Public Meeting (July 10, 2024) at 2,
https://www.occ.treas.gov/news-issuances/speeches/2024/pub-speech-2024-75.pdf.
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55. Typical automated detection systems deploy scenarios or typologies to identify
potentially suspicious activity. Systems are mles-based123 - that is, they are programmed
with mies based on flags for fraud, money laundering, and other criminal activity. The
mies are often "if/then" - that is, if a certain type of behavior is/are detected, the system
will generate an alert or stop the ti·ansaction or behavior. 124 In certain cases of pron-acted
financial crimes or patterns of activity, where the goal is more detection and repo1iing
than interdiction, there is time to investigate using ti·aditional investigative techniques. In
the case of a suspected fraudulent ti·ansaction or behavior, the goal, and a bank's
obligation, is prevention, to stop the money from getting into the fraudsters' hands before
it occms. 125 This protects the bank, its customers, and the financial system. Thus, if a
bank's fraud detection mle ti·iggers, a ti·ansaction may be stopped, and/or a card may be
cancelled. 126
56. Considering the repeated warnings from regulators and law enforcement, 127 the
unprecedented, increasing volume of fraud, and the need to act quickly to prevent fmiher
criminal activity, in my opinion, the Bank acted reasonably in devising an automated
fraud detection-based solution.
123 Oraz Kereibayev, AML Transaction Monitoring Rules: Best Examples, The Sumsuber (Oct. 3, 2024)
https://sumsub.com/blog/aml-transaction-monitoring-mles-scenarios/; Bob Hager, Evaluating Effectiveness: The
Impact of a Rules Coverage Assessment on Transaction Monitoring Solutions, NICE Actimize (June 13, 2024),
https://www.niceactimize.com/blog/aml-evaluating-effectiveness-the-impact-of-a-mles-coverage-assessment-on
transaction-monitoring-solutions/. While banks are beginning to explore more sophisticated methods of transaction
monitoring, such as integrating machine leaming and artificial intelligence into their monitoring solutions, based on
my experience, this advancement is in its infancy.
125 Office of the Comptroller of the Currency, OCC Bulletin 2019-3 7: Operational Risk: Fraud Risk Management
P1inciples (July 24, 2019), https://www.occ.treas.gov/news-issuances/bulletins/2019/bulletin-2019-37.html (DX
108).
126 See Board ofGovemors of the Federal Reserve System, FDIC, FinCEN, NCUA, OCC, Answers to Frequently
Asked Questions Regarding Suspicious Activity Reporting and Other Anti-Money Laundering Considerations (Jan.
19, 2021 ), https:/ /www .fincen.gov/sites/default/files/2021-0 l/Joint%20SAR%20FAQs%20Final%20508.pdf ("The
decision to maintain or close a customer relationship as a result of the identification of suspicious activity is a
determination for a financial institution to make based on the infonnation available to it, its assessment of money
laundering or other illicit financial activity risks, and established policies, procedures, and processes."); see also,
Federal Trade Collllllission, When a Company Declines Your Credit or Debit Card, Consumer Advice (Aug. 2022),
https://consumer.ftc.gov/articles/when-company-declines-your-credit-or-debit-card.
127 See supra ,r,r 33-35.
34
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57.
HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
. 133 In my experience, in a traditional banking
relationship, a bank would have collected identifying infonnation on a customer and
verified that identifying infonnation; they would have confidence that the person was
128 See, e.g., BANA_EDD_MDL-00019618-28
at
18-19; BANA EDD MDL-00125177-9
mail chain from Michael J. Letson to Bradley Garfield, et al. , RE:
(Sep. 28, 2020)) at 77; Letson Deposition (DX 97) at 69:8-70:21;
Letson Declaration (DX 6) at ,rn 30-37; Fox Deposition at 45:21-47: 17; Ahmad Deposition at 292:21-293:17,
304: 15-24; Holt Deposition at 173:8-15, 185:8-186:7, 230:6-231 :5.
•
•
•
Michael J. Letson to Bradley Garfiel
130 Declaration of William M. Ma11in in Suppo11 of Defendant's Memorandum in Opposition to Plaintiffs' Motion
for Class Certification, In re: Banko/ America California Unemployment Benefits Litigation. Case No. 3-21-md-
02992-GPC-MSB (Jan. 17, 2025) ("Ma11in Declaration") (DX 7) at ,r 5.
133 Letson Deposition (DX 97) at 112:8-113:8.
35
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who they said they were. 134 They would have conducted additional customer due
diligence to understand what, if any, risk the customer posed to the bank. 135 A bank
would not be hying to assess a cardholder's entitlement to benefits or verifying their
identity for the first time upon detection of a potential fraud event.
__ 136 The concept of friction means making it more difficult for a criminal to
commit a crime.
38 In my opinion, the lack of prepaid cardholders seeking
reconsideration would have provided the Bank with a good faith basis to believe the CFF
was capturing fraudsters, as fraudsters would be unlikely to challenge the freeze. ■
134 See FFIEC Manual, Assessing Compliance with BSA Regulato,,y Requirements, Customer Identification Program
(2021 ), https://bsaaml.ffiec.gov/manual/ AssessingCompliance WithBSARegulatoryRequirements/01; 31 C.F.R. §
1020.220.
135 31 C.F.R. § 1020.210.
136 Letson Deposition (DX 97) at 110:20-112:6.
137 Letson Deposition (DX 97) at 110:2-112:6.
BANA_EDD_MDL-00117097-9 (Email chain from Erica A Nappi Puskarik to Maria
DiPietro et al., PPD UI - MTM Bullets due 10am 12/28 (Dec. 22, 2020)) at 9; BANA_EDD _MDL-00118436-7
(Email chain from Jennifer M Ehresman to Christine K Channels, RE,: Important pis review (Nov. 5, 2020)) at 6;
BANA_EDD_MDL-00142730-1 (Email chain from Christine K Channels to Faiz Ahmad et al., RE,:
Reconsiderations -Provisional credit recommendation (Dec. 14, 2020)) at 1.
36
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.139

59. In my experience, and as with any fraud strategy, no automated fraud detection system is
perfect or avoids false positives. This is especially so for newly implemented systems.
To capture suspicious activity or fraudulent behavior, a wide net must be cast to prevent
true criminal activity from going undetected. The result can be a significant number of
false positive alerts. Financial institutions must accept and tolerate a certain degree of
false positives.140 Here, given the prevalence of fraudsters in the EDD program and

In my opinion, it reasonably deployed the CFF and froze cards expecting
EDD to verify the identity and eligibility of the cardholders to address potential false
positives – e.g., cardholders with potentially legitimate unemployment benefits claims
and accounts.

.141

.142

139 Holt Deposition at 93:2–13, 104:3–23.
140 See Martin Deposition (DX 122) at 288:10–-289:17.
141 Letson Deposition (DX 97) at 110:2–112:6; Martin Declaration at (DX 7) ¶¶ 6–7.
142 Martin Declaration (DX 7) at ¶ 7.
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3.
60. Plaintiffs define their proposed claim denial class as "[a]ll Bank of America EDD
cardholders who notified the Bank that an unauthorized transaction had occmTed on their
Bank of America EDD debit card account ('Claim') at an automated teller machine
('ATM'), and whose Claim the Bank denied or closed at any time from September 28,
2020 through June 8, 2021, based solely on Indicator 1 of the Bank's CFF."143
61
62.
. 144 The following individuals are
excluded from eligibility under the Remediation Plan: any person who "(i) has been
disqualified by the state from Program eligibility; (ii) has previously engaged in
fraudulent Program conduct, such as submission of fraudulent claims or other abuses of
the claims process; or (iii) has had their card frozen due to legal order processes, as a
result of IntemalN endor fraud investigators, or by Global Financial Crimes
Compliance."145
63. Based on my expe1iise and experience,
143 Regan Report, ,r 4.
144 Id. fn. 11.
145 Remediation Plan at 557.
146 See Memorandum of Points and Authorities in Suppo1t of Motion for Class Ce1tifica.tion, In re: Bank of America
California Unemployment Benefits Litigation, Case No.: 3:21-md-02992-GPC-MSB (Aug. 29, 2024) at 3, citing
Regan Repo1t ,r 35 (emphasis added).
38
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.147

64.

.148 There is nothing to suggest that EDD investigated
the case of every individual it deemed eligible to assess whether it made a mistake. A
report issued by the House Committee on Oversight and Accountability noted a case
where even after EDD made a determination of suspicious fraudulent activity, it
continued to issue benefits to some of the fraudsters.149 The same report notes that, as of
April 2024, the Department of Justice has recovered only $1.4 billion of the more than
$191 billion of improperly paid pandemic unemployment insurance payments, and that
many of the criminals “will likely never even be apprehended.”150

65.

151

In my experience, criminals are

147

148 See Section V.1.C.
149 House Committee Report (DX 14) at 29.
150 House Committee Report (DX 14) at 74–75.
151
Bank of America’s Second Set of Responses and Objections to Plaintiff Yick’s
Seventh Set of Interrogatories (Interrogs. 39 & 42), In re: Bank of America California Unemployment Benefits
Litigation, Case No.: 3-21-md-02992-LAB-MSB (Apr. 23, 2024) (DX 43) at 8–10.
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often one step ahead of detection mechanisms and may be able to commit fraud even
when preventive measmes are in place
66. The volume of fraud in the UI portfolio was unprecedented. By the end of 2020, the
identified fraud rate in the PUA program of just over 24 percent, or approximately $10.5
billion. 153 Subsequent repo1is from the DOL-OIG have reported that more than 35
percent of the PUA benefits issued nationwide were likely fraudulent. 154 The
Department of Labor Office of Inspector General reported that "at least $191 billion in
pandemic UI payments could have been improperly paid with a significant po1iion
attributed to fraud." 155 As the House Committee repo1ied, "California was arguably the
most unprepared state in the United States," and "EDD was especially vulnerable to
fraud ... "156 Bank of America was the exclusive issuer of prepaid cards for EDD.157
Thus, it follows that a significant percentage of the benefits EDD directed the Bank to
pay were going to fraudsters.
· , I· ,
I
Letson De osition DX 97 at 105: 10-20
153 EDD Annual Report, June 2021 (DX 16) at 7.
154 House Committee Repo1t (DX 14) at 6 ("In August 2023, DOL repo1ted that the PUA program had a total
improper payment rate of35.9 percent.").
155 Id (DX 14).
156 Id (DX 14) at 44.
157 Weaknesses in EDD's Approach, Jan. 2021, (DX 88) at 322.
40
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67. Based on my expertise and experience, and my understanding of the rampant nature of
fraud targeting the unemployment benefits program during the pandemic, it is my opinion
that there are likely additional fraudsters within Plaintiffs’ proposed claim denial class.

Executed this 4 of March, 2025

__________________________________
Teresa A. Pesce

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1
Documents Considered List
Articles

Bob Hager, Evaluating Effectiveness: The Impact of a Rules Coverage Assessment on
Transaction Monitoring Solutions, NICE Actimize (June 13, 2024),
https://www.niceactimize.com/blog/aml-evaluating-effectiveness-the-impact-of-a-
rules-coverage-assessment-on-transaction-monitoring-solutions/

Consulting.US, Global Consulting Firm Accenture is Firing 25,000 Employees (Aug.
26, 2020), https://www.consulting.us/news/4776/global-consulting-firm-accenture-is-
firing-25000-employees

Doug Clare, Falcon Intelligence Network: A Fraud Consortium for Fraud-Fighting
Machine Learning Innovation, FICO Blog (Mar. 26, 2021),
https://www.fico.com/blogs/falcon-intelligence-network-fraud-consortium-fraud-
fighting-machine-learning-innovation

Elissa Redmiles, Friction Matters: Balancing the Pursuit of Perfect Protection with
Target Hardening, IEEE Security and Privacy (Jan./Feb. 2024),
https://www.computer.org/csdl/magazine/sp/2024/01/10411716/1TV5zSG0BKE

F5, How Fraud Detection Works: Common Software and Tools,
https://www.f5.com/glossary/fraud-detection

FICO, FICO Falcon Fraud Manager, https://www.fico.com/en/products/fico-falcon-
fraud-manager

Mary Ann Milbourn, Unemployment Payouts Go Plastic in July, The Orange County
Register (Mar. 16, 2011), https://www.ocregister.com/2011/03/16/unemployment-
payouts-go-plastic-in-july/

NAB News, Why ‘Helpful Friction’ is Crucial in the Battle Against Scammers (Nov.
30, 2023), https://news.nab.com.au/news/why-helpful-friction-is-crucial-in-the-battle-
against-scammers/

Jason Bramwell, The COVID-19 Pandemic is Causing Many Accountants (and a
Whole Lot of Consultants) to Freak Out About Losing Their Jobs, going concern
(Mar. 26, 2020), https://www.goingconcern.com/covid-19-accountants-layoffs-
survey/

Oraz Kereibayev, AML Transaction Monitoring Rules: Best Examples, The Sumsuber
(Oct. 3, 2024), https://sumsub.com/blog/aml-transaction-monitoring-rules-scenarios/

Post by @CA_EDD from X.com (Sep. 30, 2020),
https://x.com/CA_EDD/status/1311335315043475457
APPENDIX A
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
Scott Zoldi, FICO Fights Prepaid Card Fraud with AI and Machine Learning, FICO
Blog (Mar. 9, 2020), https://www.fico.com/blogs/fico-fights-prepaid-card-fraud-ai-
and-machine-learning

Shoreline Mafia, Bandemic (E.D.D), Youtube, (Apr. 20, 2021),
https://www.youtube.com/watch?v=vut-17KzZJk

ShotOff & Nuke Bizzle, EDD, Youtube (Oct. 22, 2020),
https://www.youtube.com/watch?v=K0ck7hTsug8

Square, Making Change, Chapter 4: One Year of Payments and the Pandemic,
https://squareup.com/us/en/press/making-change/2021

TJ Horan, The Fraud Consortium: 9,000 Heads Are Better than 1, FICO Blog (Dec.
6, 2017), https://www.fico.com/blogs/fraud-consortium-9-000-heads-are-better-1
Depositions

Deposition of Shane Daniels, In re: Bank of America California Unemployment
Benefits Litigation, Case No.: 3:21-md-02992-LAB-MSB (Feb. 6, 2024)

Deposition of Robert A. Chestnut, In re: Bank of America California Unemployment
Benefits Litigation, Case No.: 3:21-md-02992-LAB-MSB (Feb. 8, 2024)

Deposition of William Matthew Martin, In re: Bank of America California
Unemployment Benefits Litigation, Case No.: 3:21-md-02992-LAB-MSB (Feb. 14,
2024)

Deposition of Michael Letson, In re: Bank of America California Unemployment
Benefits Litigation, Case No.: 3:21-md-02992-LAB-MSB (Feb. 16, 2024)

Deposition of William Golden, In re: Bank of America California Unemployment
Benefits Litigation, Case No.: 3:21-md-02992-LAB-MSB (Feb. 22, 2024)

Deposition of Ryan Schwartz, In re: Bank of America California Unemployment
Benefits Litigation, Case No.: 3:21-md-02992-LAB-MSB (Dec. 4, 2024)

Deposition of Bradley Garfield, In re: Bank of America California Unemployment
Benefits Litigation, Case No.: 3:21-md-02992-GPC-MSB (Dec. 10, 2024)

Deposition of Anne Holt, In re: Bank of America California Unemployment Benefits
Litigation, Case No.: 3:21-md-02292-GPC-MSB (Jan. 8, 2025), and Exhibits

Deposition of Faiz A. Ahmad, In re: Bank of America California Unemployment
Benefits Litigation, Case No.: 3:21-md-02992-GPC-MSB (Jan. 29, 2025), and
Exhibits
APPENDIX A
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
Deposition of Melissa Ramirez, In re: Bank of America California Unemployment
Benefits Litigation, Case No.: 3:21-md-02992-GPC-MSB (Feb. 11, 2025), and
Exhibits

Deposition of William Fox, In re: Bank of America California Unemployment
Benefits Litigation, Case No.: 3:21-md-02992-GPC-MSB (Feb. 13, 2025), and
Exhibits

Deposition of Jennifer Ehresman, In re: Bank of America California Unemployment
Benefits Litigation, Case No.: 3:21:md-02992-GPC-MSB (Feb. 19, 2025)

Deposition of Paul Simpson, In re: Bank of America California Unemployment
Benefits Litigation, Case No.: 3:21-md-02992-GPC-MSB (Feb. 21, 2025), and
Exhibits
Expert Reports and Declarations

Appendix of Exhibits to the Declaration of Laura Brys in Support of Defendant’s
Opposition to Plaintiffs’ Motion for Class Certification, In re: Bank of America
California Unemployment Benefits Litigation, Case No.: 3:21-MD-02992-GPC-MSB
(Oct. 24, 2024)

Expert Class Certification Report of Greg J. Regan, In re: Bank of America
California Unemployment Benefits Litigation, Case No.: 3-21-md-02992-GPC-MSB
(Aug. 29, 2024)

Expert Class Certification Report of J. Daniel Kreis, In re: Bank of America
California Unemployment Benefits Litigation, Case No.: 3:21-md-02992-GPC-MSB
(Aug. 29, 2024)

Expert Declaration of Teresa A. Pesce, In re: Bank of America California
Unemployment Benefits Litigation, Case No.: 1-MD-02992-GPC-MSB (Oct. 24,
2024)

Expert Rebuttal Report of J. Daniel Kreis, In re: Bank of America California
Unemployment Benefits Litigation, Case No.: 3:21-md-02992-GPC-MSB (Nov. 21,
2024)

Declaration of Michael J. Letson in Support of Defendant’s Memorandum in
Opposition to Plaintiffs’ Motion for Class Certification, In re: Bank of America
California Unemployment Benefits Litigation, Case No. 3-21-md-02992-GPC-MSB
(Jan. 17, 2025)

Declaration of William M. Martin in Support of Defendant’s Memorandum in
Opposition to Plaintiffs’ Motion for Class Certification, In re: Bank of America
California Unemployment Benefits Litigation, Case No. 3:21-md-02992-GPC-MSB
(Jan. 17, 2025)
APPENDIX A
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Government Reports and Releases

Auditor of the State of California, Employment Development Department: EDD’s
Poor Planning and Ineffective Management Left it Unprepared to Assist Californians
Unemployed by COVID-19 Shutdowns (Jan. 2021),
https://information.auditor.ca.gov/pdfs/reports/2020-128and628.1.pdf

Board of Governors of the Federal Reserve System, FDIC, FinCEN, NCUA, OCC,
Answers to Frequently Asked Questions Regarding Suspicious Activity Reporting and
Other Anti-Money Laundering Considerations (Jan. 19, 2021),
https://www.fincen.gov/sites/default/files/2021-
01/Joint%20SAR%20FAQs%20Final%20508.pdf

Centers for Disease Control, Timing of State and Territorial COVID-19 Stay-at-Home
Orders and Changes in Population Movement – United States, March 1–May 31,
2020 (Sep. 4, 2020), https://www.cdc.gov/mmwr/volumes/69/wr/mm6935a2.htm

Congressional Research Service, Unemployment Rates During the COVID-19
Pandemic (Aug. 20, 2021), https://crsreports.congress.gov/product/pdf/R/R46554

EDD Strike Team, Employment Development Department Strike Team Detailed
Assessment and Recommendations (Sep. 16, 2020), https://www.govops.ca.gov/wp-
content/uploads/sites/11/2020/09/Assessment.pdf

Employment Development Department, State of California, Annual Report California
Fraud Deterrence and Detection Activities (June 2021),
https://edd.ca.gov/siteassets/files/about_edd/pdf/fraud_deterrence_and_detection_acti
vities_2021.pdf

Federal Financial Institution Examination Counsel Bank Secrecy Act/Anti-Money
Laundering Examination Manual (FFIEC Manual), Introduction, Role of Government
Agencies in the BSA (2015), https://bsaaml.ffiec.gov/manual/Introduction/01

Federal Trade Commission, When a Company Declines Your Credit or Debit Card,
Consumer Advice (Aug. 2022), https://consumer.ftc.gov/articles/when-company-
declines-your-credit-or-debit-card

FFIEC Manual, Assessing Compliance with BSA Regulatory Requirements, Customer
Identification Program (2021),
https://bsaaml.ffiec.gov/manual/AssessingComplianceWithBSARegulatoryRequirem
ents/01

FFIEC Manual, Assessing Compliance with BSA Regulatory Requirements, Customer
Due Diligence, Overview (2018),
https://bsaaml.ffiec.gov/manual/AssessingComplianceWithBSARegulatoryRequirem
ents/02
APPENDIX A
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
Financial Crimes Enforcement Network, Information on Complying with the
Customer Due Diligence (CDD) Final Rule,
https://www.fincen.gov/resources/statutes-and-regulations/cdd-final-rule.

FinCEN, What We Do, https://www.fincen.gov/what-we-do

FinCEN, Advisory on Cybercrime and Cyber-Enabled Crime Exploiting the
Coronavirus Disease 2019 (COVID-19) Pandemic (July 30, 2020),
https://www.fincen.gov/sites/default/files/advisory/2020-07-
30/FinCEN%20Advisory%20Covid%20Cybercrime%20508%20FINAL.pdf

FinCEN, Advisory on Financial Crimes Targeting COVID-19 Economic Impact
Payments (Feb. 24, 2021), https://www.fincen.gov/sites/default/files/advisory/2021-
02-24/Advisory%20EIP%20FINAL%20508.pdf

FinCEN, Advisory on Imposter Scams and Money Mule Schemes Related to
Coronavirus Disease 2019 (COVID-19) (July 7, 2020),
https://www.fincen.gov/sites/default/files/advisory/2020-07-
07/Advisory_%20Imposter_and_Money_Mule_COVID_19_508_FINAL.pdf

FinCEN, Advisory on Medical Scams Related to the Coronavirus Disease 2019
(COVID-19) (May 18, 2020),
https://www.fincen.gov/sites/default/files/advisory/2020-05-
18/Advisory%20Medical%20Fraud%20Covid%2019%20FINAL%20508.pdf

FinCEN, Advisory on Unemployment Insurance Fraud During the Coronavirus
Disease 2019 (COVID-19) Pandemic (Oct. 13, 2020),
https://www.fincen.gov/sites/default/files/advisory/2020-10-
13/Advisory%20Unemployment%20Insurance%20COVID%2019%20508%20Final.
pdf

FinCEN, Consolidated COVID-19 Suspicious Activity Report Key Terms and Filing
Instructions (Feb. 24, 2021),
https://www.fincen.gov/sites/default/files/shared/Consolidated%20COVID-
19%20Notice%20508%20Final.pdf

FinCEN, Notice Related to the Coronavirus Disease 2019 (COVID-19) (May 18,
2020),
https://www.fincen.gov/sites/default/files/shared/May_18_Notice_Related_to_COVI
D-19.pdf

House Committee on Oversight and Accountability Majority Staff, Examining
Widespread Fraud in Pandemic Unemployment Relief Programs (Sep. 10, 2024),
https://oversight.house.gov/wp-content/uploads/2024/09/UI-Report-FINAL.pdf

Kelsey Coyle, et al., Consumer Payments and the Covid-19 Pandemic, Federal
Reserve Bank of San Francisco (Feb. 9, 2021), https://www.frbsf.org/wp-
APPENDIX A
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content/uploads/sites/7/consumer-payments-covid-19-pandemic-2020-diary-
consumer-payment-choice-supplement-2.pdf

Letter from Elaine M. Howle, 2020-502 (Nov. 19, 2020),
https://information.auditor.ca.gov/pdfs/reports/2020-502.pdf.

Office of the Comptroller of the Currency, OCC Bulletin 2019-37: Operational Risk:
Fraud Risk Management Principles (July 24, 2019), https://www.occ.treas.gov/news-
issuances/bulletins/2019/bulletin-2019-37.html

Office of the Comptroller of the Currency, OCC Issues Cease and Desist Order,
Assesses $450 Million Civil Money Penalty, and Imposes Growth Restriction Upon
TD Bank, N.A. for BSA/AML Deficiencies (October 10, 2024),
https://www.occ.treas.gov/news-issuances/news-releases/2024/nr-occ-2024-116.html

Office of the Comptroller of the Currency, Acting Comptroller of the Currency
Michael J. Hsu Remarks for the Financial Literacy and Education Commission’s
Public Meeting (July 10, 2024), https://www.occ.treas.gov/news-
issuances/speeches/2024/pub-speech-2024-75.pdf

Office of the Comptroller of the Currency, Bank Secrecy Act (BSA),
https://www.occ.treas.gov/topics/supervision-and-examination/bsa/index-bsa.html

Trump White House, Proclamation on Declaring a National Emergency Concerning
the Novel Coronavirus Disease (COVID-19) Outbreak (Mar. 13, 2020),
https://trumpwhitehouse.archives.gov/presidential-actions/proclamation-declaring-
national-emergency-concerning-novel-coronavirus-disease-covid-19-outbreak/

U.S. Department of Justice, COVID-19 Fraud Enforcement Task Force 2024 Report
(Apr. 2024), https://www.justice.gov/coronavirus/media/1347161/dl?inline

U.S. Department of Justice, National Unemployment Insurance Fraud Task Force,
Unemployment Insurance Fraud Consumer Protection Guide (Sep. 21, 2020),
https://www.oig.dol.gov/public/Unemployment%20Insurance%20Fraud%20Consum
er%20Protection%20Guide,%20Final.pdf

U.S. Department of Labor, Office of Inspector General, COVID-19: ETA and States
Did Not Protect Pandemic-Related UI Funds From Improper Payments Including
Fraud or From Payment Delays (Sep. 30, 2022),
https://www.oig.dol.gov/public/reports/oa/2022/19-22-006-03-315.pdf

U.S. Department of Labor, Questions and Answers: Pandemic Unemployment
Assistance (PUA) Program,
https://www.dol.gov/sites/dolgov/files/ETA/advisories/UIPL/2020/UIPL_16-
20_Change_1_Attachment_1.pdf
APPENDIX A
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
U.S. Department of the Treasury, About the CARES Act and the Consolidated
Appropriations Act, https://home.treasury.gov/policy-issues/coronavirus/about-the-
cares-act

U.S. Government Accountability Office, GAO-22-105715: Significant Improvements
Are Needed to Ensure Transparency and Accountability for COVID-19 and Beyond
(Mar. 17, 2022), https://www.gao.gov/assets/gao-22-105715.pdf
Legal Codes

31 C.F.R. § 1020.210

31 C.F.R. § 1020.220

31 C.F.R. § 1020.320
Pleadings

Order Re Preliminary Injunction, Jennifer Yick, et al. v. Bank of America, N.A., Case
No.: 21-cv-00376-VC (May 17, 2021)

Preliminary Injunction, Jennifer Yick, et al. v. Bank of America, N.A., Case No.: 21-
cv-00376-VC (June 2, 2021)

Consent Order, In the Matter of: Bank of America, N.A., File No.: 2022-CFPB-0004
(July 14, 2022)

Consent Order, In the Matter of: Bank of America, N.A. Charlotte, North Carolina,
File No.: AA-ENF-2022-21 (July 14, 2022)

Order: (1) Granting in Part and Denying in Part Motion to Dismiss Master
Consolidated Complaint, [Dkt. 64]; (2) Granting in Part and Denying in Part Request
for Judicial Notice, [Dkt. 84-2]; and (3) Granting Request for Judicial Notice, [Dkt.
90-1], In re: Bank of America California Unemployment Benefits Litigation, Case
No.: 21-MD-02992-LAB-MSB (May 25, 2023)

First Amended Master Consolidated Complaint, In re: Bank of America California
Unemployment Benefits Litigation, Case No.: 21-MD-02992-LAB-MSB (June 13,
2023)

Confidential Mediation Statement of Defendant Bank of America, N.A., In re: Bank
of America California Unemployment Benefits Litigation, Case No.: 21-MD-02992-
LAB-MSB (Oct. 10, 2023)

Plaintiffs’ Mediation Statement, In re: Bank of America California Unemployment
Benefits Litigation, Case No.: 3:21-md-02992-LAB-MSB (Oct. 10, 2023)
APPENDIX A
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
Plaintiffs’ Reply Mediation Statement, In re: Bank of America California
Unemployment Benefits Litigation, Case No.: 21-MD-02992-LAB-MSB (Oct. 30,
2023)

Confidential Reply Mediation Statement of Bank of America, N.A., In re: Bank of
America California Unemployment Benefits Litigation, Case No.: 21-MD-02992-
LAB-MSB (Oct. 30, 2023)

Bank of America’s Responses and Objections to Plaintiff Yick’s Fourth Set of
Interrogatories, In re: Bank of America California Unemployment Benefits Litigation,
Case No.: 3:21-md-02992-LAB-MSB (Jan. 2, 2024)

Bank of America’s Responses and Objections to Plaintiff Yick’s Fifth Set of
Interrogatories, In re: Bank of America California Unemployment Benefits Litigation,
Case No.: 3:21-md-02992-LAB-MSB (Feb. 2, 2024), and Exhibit 11

Plaintiffs’ Revised Notice of Deposition of Defendant Bank of America, N.A.
Pursuant to Federal Rule of Civil Procedure 30(b)(6), In re: Bank of America
California Unemployment Benefits Litigation, Case No.: 3:21-MD-02992-LAB-MSB
(Feb. 4, 2024)

Memorandum of Points and Authorities in Support of Defendant’s Motion to
Dissolve Preliminary Injunction, In re: Bank of America California Unemployment
Benefits Litigation, Case No.: 21-MD-02992-LAB-MSB (Feb. 29, 2024)

Order: (1) Granting Motion to Dissolve Preliminary Injunction, [Dkt. 225]; And (2)
Granting Motion to Seal, [Dkt. 246], In re: Bank of America California
Unemployment Benefits Litigation, Case No.: 21-MD-02992-LAB-MSB (Apr. 3,
2024)

Bank of America’s First Set of Responses and Objections to Plaintiff Yick’s Seventh
Set of Interrogatories (Interrogs. 40-41 & 44-46), In re: Bank of America California
Unemployment Benefits Litigation, Case No.: 21-MD-02992-LAB-MSB (Apr. 23,
2024)

Bank of America’s Second Set of Responses and Objections to Plaintiff Yick’s
Seventh Set of Interrogatories (Interrogs. 39 & 42), In re: Bank of America
California Unemployment Benefits Litigation, Case No.: 3-21-md-02992-LAB-MSB
(Apr. 23, 2024), and Exhibit 13

Second Amended Master Consolidated Complaint, In re: Bank of America California
Unemployment Benefits Litigation, Case No.: 3:21-md-02992-GPC-MSB (July 16,
2024)

Memorandum of Points and Authorities in Support of Motion for Class Certification,
In re: Bank of America California Unemployment Benefits Litigation, Case No.:
3:21-md-02992-GPC-MSB (Aug. 29, 2024)
APPENDIX A
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
Reply in Support of Motion for Class Certification, In re Bank of America California
Unemployment Benefits Litigation, Case No.: 3:21-md-02992-GPC-MSB (Nov. 21,
2024)
Press Releases

EDD News Release, EDD Announces Reset in Response to Strike Team
Recommendations to Process Claims Faster, Reduce Fraud, and Tackle Backlog
Issues, (Sep. 19, 2020),
https://web.archive.org/web/20220427091742/https://edd.ca.gov/siteassets/files/Abou
t_EDD/pdf/news-20-49.pdf

FinCEN Press Release, The Financial Crimes Enforcement Network (FinCEN)
Encourages Financial Institutions to Communicate Concerns Related to the
Coronavirus Disease 2019 (COVID-19) and to Remain Alert to Related Illicit
Financial Activity (Mar. 16, 2020), https://www.fincen.gov/news/news-
releases/financial-crimes-enforcement-network-fincen-encourages-financial-
institutions

FinCEN Press Release, The Financial Crimes Enforcement Network Provides Further
Information to Financial Institutions in Response to the Coronavirus Disease 2019
(COVID-19) Pandemic (Apr. 3, 2020), https://www.fincen.gov/news/news-
releases/financial-crimes-enforcement-network-provides-further-information-
financial

U.S. Department of Justice Press Release, COVID-19 Fraud Enforcement Task Force
Releases 2024 Report (Apr. 9, 2024), https://www.justice.gov/opa/pr/covid-19-fraud-
enforcement-task-force-releases-2024-report

U.S. Department of Labor Press Release, U.S. Department of Labor Announces New
Guidance to States on Unemployment Insurance Programs (Dec. 30, 2020),
https://www.dol.gov/newsroom/releases/eta/eta20201230-1
Bates Stamped Documents

BANA_EDD_MDL-00001312–30

BANA_EDD_MDL-00003887–911

BANA_EDD_MDL-00003912–37

BANA_EDD_MDL-00004535–80

BANA_EDD_MDL-00005509–45

BANA_EDD_MDL-00005546–60

BANA_EDD_MDL-00006482–535
APPENDIX A
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
BANA_EDD_MDL-00012738–9

BANA_EDD_MDL-00012790

BANA_EDD_MDL-00019602–3

BANA_EDD_MDL-00019618–28

BANA_EDD_MDL-00028946–9

BANA_EDD_MDL-00057504–6

BANA_EDD_MDL-00057837–78

BANA_EDD_MDL-00077223

BANA_EDD_MDL-00077224–5

BANA_EDD_MDL-00080294–352

BANA_EDD_MDL-00085786

BANA_EDD_MDL-00085577–80

BANA_EDD_MDL-00085788–9

BANA_EDD_MDL-00085694

BANA_EDD_MDL-00085803–8

BANA_EDD_MDL-00086221–5

BANA_EDD_MDL-00087715–6

BANA_EDD_MDL-00088501–5

BANA_EDD_MDL-00088506–21

BANA_EDD_MDL-00090135–7

BANA_EDD_MDL-00090640–7

BANA_EDD_MDL-00090695–8

BANA_EDD_MDL-00090721

BANA_EDD_MDL-00100390

BANA_EDD_MDL-00100506–29

BANA_EDD_MDL-00100530–59

BANA_EDD_MDL-00100616–33

BANA_EDD_MDL-00100634–79
APPENDIX A
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
BANA_EDD_MDL-00100741–59

BANA_EDD_MDL-00102554–77

BANA_EDD_MDL-00104526–7

BANA_EDD_MDL-00107327–35

BANA_EDD_MDL-00117097–9

BANA_EDD_MDL-00118436–7

BANA_EDD_MDL-00120424–5

BANA_EDD_MDL-00125177–9

BANA_EDD_MDL-00125428–30

BANA_EDD_MDL-00125919

BANA_EDD_MDL-00125920–3

BANA_EDD_MDL-00129437–40

BANA_EDD_MDL-00014087–9

BANA_EDD_MDL-00142730–1

BANA_EDD_MDL-00154004–8

BANA_EDD_MDL-00154700–8

BANA_EDD_MDL-00158953

BANA_EDD_MDL-00159469

BANA_EDD_MDL-00159470–4

BANA_EDD_MDL-00163307–8

BANA_EDD_MDL-00181896

BANA_EDD_MDL-00189032–3

BANA_EDD_MDL-00205361

BANA_EDD_MDL-00218256

BANA_EDD_MDL-00225047–8

BANA_EDD_MDL-00225867

BANA_EDD_MDL-00228914–5

BANA_EDD_MDL-00273305–7
APPENDIX A
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
BANA_EDD_MDL-00297295

BANA_EDD_MDL-00406128–30

BANA_EDD_MDL-00411205

BANA_EDD_MDL-00416783–4

BANA_EDD_MDL-00417487–90

BANA_EDD_MDL-00421427–8

BANA_EDD_MDL-00430148–62

BANA_EDD_MDL-00450516–8

BANA_EDD_MDL-00452826–7

BANA_EDD_MDL-00455617–9

BANA_EDD_MDL-00510141

BANA_EDD_MDL-00510142–7

BANA_EDD_MDL-00510148

BANA_EDD_MDL-00517105–26

BANA_EDD_MDL-00547571–2

BANA_EDD_MDL-00556122

BANA_EDD_MDL-00556152

BANA_EDD_MDL-00556324

BANA_EDD_MDL-00556536–7

BANA_EDD_MDL-00558991

BANA_EDD_MDL-00558996

BANA_EDD_MDL-00559094

BANA_EDD_MDL-00559101

BANA_EDD_MDL-00559693–980

BANA_EDD_MDL-00055974–81

BANA_EDD_MDL-00570333–4

BANA_EDD_MDL-00571307–10

BANA_EDD_MDL00571310
APPENDIX A
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BANA_EDD_MDL-00572766–70

BANA_EDD_MDL-00592192–4

BANA_EDD_MDL-00592324–30

BANA_EDD_MDL-00630008–9

BANA_EDD_MDL-00705503–10

BANA_EDD_MDL-00718756–70

BANA_EDD_MDL-00720087–90

BANA_EDD_MDL-00076983

BANA_EDD_MDL-00076984–5

BANA_EDD_MDL-00881823–8

BANA_EDD_MDL-00884198

BANA_EDD_MDL-00004996–5020

BANA_EDD_MDL-00104635

BANA_EDD_MDL-00104636

BANA_EDD_MDL-00104648

BANA_EDD_MDL-00104649

BANA_EDD_MDL-00118379–81

BANA_EDD_MDL-00125012–3

BANA_EDD_MDL-00163796–7

BANA_EDD_MDL-00170234–5

BANA_EDD_MDL-00170239–40

BANA_EDD_MDL-00203187

BANA_EDD_MDL-00293706–7

BANA_EDD_MDL-00450481–2

BANA_EDD_MDL-00496584–6

BANA_EDD_MDL-00570351

BANA_EDD_MDL-00705499–500

BANA_EDD_MDL-00706496–7
APPENDIX A
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Page 57 of 65

HIGHLY CONFIDENTIAL – ATTORNEYS’ EYES ONLY


BANA_EDD_MDL-00706498

BANA_EDD_MDL-00529872–879

Moore_S_0000367

Note: Even if not included in this list, I also considered any documents cited in my
Report.
APPENDIX A
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1
Teresa A. Pesce
Financial Crimes Subject Matter Expert
(914) 602-4103, terry@terrypesceco.com
_____________________________________________________________________________________________
Professional Summary
Teresa (Terry) Pesce is an industry leader and Subject Matter Expert in Financial Crimes regulatory enforcement and
compliance. She has a demonstrated history of working in and with the financial services industry in both an advisory and
expert capacity. Her background includes experience in government, industry, and consulting. She has led large teams and
managed significant projects, and she has designed and implemented financial crimes compliance programs and
organizational structures.
Prior to establishing her independent consulting firm, Terry spent 13 years as a Principal in KPMG’s Forensic Advisory Services,
serving as Global Head of Anti-Money Laundering (AML) and Head of the firm’s Financial Crimes Solution. Terry has
spearheaded engagements for financial institutions addressing numerous financial crimes and sanctions issues. She has
assisted clients facing regulatory enforcement actions, both private and public. She has often been asked to report directly to
law enforcement agents and prosecutors, regulatory agencies, Boards of Directors, and senior management.
Before joining KPMG, Terry was Executive Vice President and AML Director for HSBC North America. She joined the bank to
build out the AML compliance function for all business lines in response to a regulatory order imposed in 2003 and lifted by
the OCC during her tenure in 2006.
Prior to joining HSBC, Terry was an Assistant United States Attorney in the Southern District of New York, serving as Chief of
the Major Crimes Unit, and Deputy Chief of the Criminal Division. From 1999 through 2003, Terry was responsible for
supervision and oversight of all money-laundering and tax prosecutions and worked closely with law enforcement and the
financial regulatory agencies responsible for oversight of AML enforcement. During her tenure at the US Attorney’s office, she
investigated and prosecuted numerous cases involving and charging money laundering.
Terry holds a BA from Columbia University, where she graduated magna cum laud, Phi Beta Kappa, and she holds a JD from
Columbia Law School, where she served as Managing Editor of the Law Review and received prizes in Constitutional Law and
Trial Advocacy. She is a recognized industry speaker and has published numerous pieces on financial crimes and enforcement.
Professional and Industry Experience
•
President and CEO, Terry Pesce & Co LLC
October 2020 to present
Terry provides legal and consulting services to the financial services industry, including assisting clients in the
organizational design of financial crimes compliance programs, assisting with regulatory and enforcement matters,
and advising senior management and Boards of Directors on financial crimes matters. She provides expert witness
services in the areas of financial crime compliance and enforcement. Examples of recent matters include the
following:
•
Terry has provided expert witness and consulting services in connection with a variety of complex civil
litigation and enforcement matters involving, for example, money laundering, sanctions enforcement, fraud,
human trafficking, compliance, and financial industry practices. (See page 6 for representative
engagements.)
•
Terry has been retained by large financial services companies to advise senior leadership and Boards of
Directors with respect to the effectiveness of regulatory responses, remedial actions, and program changes
undertaken in response to enforcement actions and regulatory expectations.
APPENDIX B
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2
•
Terry has assisted a financial institution in the preparation of a response and reports to the Department of
Justice in connection with a criminal enforcement action.
•
Terry has designed the AML framework for a start-up FinTech company.
•
Terry has assisted in designing the AML program for a de novo bank.
•
Terry has advised a Private Equity fund on financial crimes risk and processes.
•
Terry has served as legal counsel in a civil matter alleging financial crimes.
•
Terry has been retained to assist counsel with the financial-crimes component of a FinTech’s independent
compliance assessment.
•
Terry has performed gap analyses of financial crimes compliance programs against legal and regulatory
standards and against industry best practices.
•
Terry is assisting a financial institution with enhancing its anti-money laundering controls in response to
regulatory findings.
•
Advisory Board, AML Rightsource, October 2020 – present
•
Adjunct Professor, Case Western School of Law, Masters in Financial Integrity Program
July 2020 to December 2021
Terry taught in a global program focusing on topics relevant to financial crimes, financial crime prevention, and
criminal law related subjects, including sessions on human trafficking.
•
Principal, KPMG LLP Forensic Advisory Services, Head of Anti-Money Laundering/Financial Crimes Practice
April 2007 – September 2020
Terry served as Global Head of AML Services and Head of Financial Crimes Solutions in the US. As leader of the AML
service line, Terry led numerous engagements, assisting a variety of financial institutions in addressing AML and
sanctions issues, both proactively and reactively.
Representative Project/Engagement Experience
•
Assisted a global financial institution under regulatory order in enhancing its overall BSA/AML program,
including by conducting a gap analysis of the then existing program, recommending and assisting in the
design of enhancements to all required program components. The project also required conducting a
transaction review of correspondent banking for suspicious activity.
•
Assisted a global financial institution under investigation for potential sanctions violations. Assistance
included presentation to the Department of Justice, NYS Department of Financial Services and the Federal
Reserve Bank.
•
Assisted a global broker dealer with an investigation of transactions for suspicious activity, including by
presenting to the SEC and FINRA.
•
Assisted a global financial institution in connection with the assessment and revision of its global AML
Target Operating Model. Terry assisted with BSA/AML program enhancements to the markets division of
this institution in the US by designing and implementing of AML and OFAC risk assessments; the
implementation of tactical transaction monitoring; systems testing for sanctions and information sharing;
and by performing a customer file remediation.
•
Assisted a global financial institution in the creation and implementation of an AML Compliance risk self-
assessment program for roll out across all business lines, measuring for risk against regulatory requirements
APPENDIX B
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3
and expectations. The work involved the measuring of risks and the assessment of internal controls to
measure residual risk to the institution.
•
Assisted a global broker dealer in a KYC remediation of a complex client portfolio migrating from an
unregulated entity to a bank in connection with the institution’s transition to a bank holding company.
•
Assisted a global bank/broker dealer in a customer KYC remediation for both institutional and private wealth
clients to ensure information on file met customer information, customer due diligence and enhanced due
diligence requirements.
•
Assisted a global financial institution operating under a regulatory order in conducting a transaction
lookback for cash and suspicious activity, including engaging in regular regulatory reporting. This matter
involved extensive work with banking regulators.
•
Assisted a global financial institution/MSB by leading a transaction review in connection with the sale of
monetary instruments; in the creation of AML policies and investigative procedures; and in the analysis of
product specific risks in several high-risk jurisdictions globally.
•
Assisted a global MSB/payment processer by conducting an independent gap analysis of its AML program for
compliance with regulatory requirements, regulatory guidance, and industry standards. Terry additionally
assisted in the review of transaction monitoring processes for capturing suspicious activity and in the review
of the suspicious activity reporting process.
•
Assisted a global MSB in connection with its credit card offering to high-net worth individuals by testing the
AML/KYC program in the private banking business.
•
Executive Vice President/Managing Director for Anti-Money Laundering for HSBC North American Holdings, including
HSBC Bank, USA, N.A.; HSBC Securities, Inc., and HSBC Finance Corporation.
September 2003 – March 2007
Terry built out the AML compliance function for all business lines in response to a regulatory order imposed in 2003
and lifted by the OCC during her tenure in 2006. Responsibilities included management and oversight of teams
responsible for the creation and maintenance of policies and procedures; testing; training; investigative/financial
intelligence programs; transaction monitoring; OFAC/sanctions compliance; and business line AML compliance. Terry
served as the primary contact for the bank’s regulators (the FRBNY, OCC inter alia) during all AML-related
examinations.
•
Assistant United States Attorney, Southern District of New York. Positions included Chief of the Major Crimes Unit,
Deputy Chief of the Criminal Division and Senior Trial Counsel.
August 1992 – September 2003
Terry was responsible for the investigation and prosecution of numerous criminal cases ranging from white collar
offenses to narcotics and violent crimes. As Chief of the Major Crimes Unit, Terry supervised the prosecution of
primarily white-collar crimes including, bank fraud, money laundering, wire fraud, tax fraud, investment fraud and
computer crimes. For the last five years of her tenure at the U.S. Attorney’s Office she was the supervisory attorney
on all money laundering and criminal tax matters, reviewing all cases and ultimately providing the final authorization
for the filing and prosecution of such cases within the district. Terry tried numerous criminal cases, including those
charging money laundering.
•
Litigation Associate, Fried, Frank, Harris, Shriver & Jacobson
December 1988 – August 1992
APPENDIX B
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4
•
Law Clerk, Hon. Robert W. Sweet, United States District Judge, S.D.N.Y.
October 1987 – October 1988
Education
•
Columbia University School of Law, New York, NY, JD 1987
•
Columbia Law Review, Managing Editor
•
Harlan Fiske Stone Scholar
•
James A. Elkins Award in Constitutional Law
•
Whitney North Seymour Award in Trial Advocacy
•
Columbia University, New York, NY, BA 1984
•
Magna cum laude
•
Phi Beta Kappa
•
Honors History
Speaking Engagements and Publications
Speaking engagements
Terry is frequently called upon to speak at industry conferences and forums regarding Financial Crimes and regulatory
compliance, as well as the current regulatory landscape, including for the following organizations:
•
American Bankers’ Association
•
American Bar Association
•
ACAMS
•
The Institute for International Research
•
Institutional Investor
•
New York State Society of CPAs
•
Securities Industry and Financial Markets Association (SIFMA)
•
Institution for International Bankers
•
Association of the Bar of the City of NY
•
Association of Certified Sanctions Specialists
Terry has served as a panelist for the New York State Banking Department (now the Department of Financial Services)
conference on money laundering legislation and reporting requirements as applied to money remitters and other non-bank
financial institutions; and participated in post-9/11 Clearing House panels on detecting terrorist financing.
While in industry, Terry was a member of the Clearing House AML and OFAC Committees, as well as a member of the
Subcommittee on Cover Payments.
Terry also participated in the World Bank’s Global Dialogue Series and attended meetings of the Wolfsberg Group and a UN
Committee dedicated to combating terrorist financing.
Publications and Thought Leadership
The New Era of Regulatory Enforcement, Chapter 4, Money Laundering (Girgenti & Hedley 2016)
Managing the Risk of Fraud and Misconduct, Chapter 4, Money Laundering & Trade Sanctions (Girgenti & Hedley 2011)
ABA Bank Compliance – Intelligent Automation in Financial Crimes Compliance: We can’t have a failure to innovate
Article written by Tom Keegan, Terry Pesce and Stephen Marshall
https://advisory.kpmg.us/content/dam/advisory/en/pdfs/aba-aml-article-feb-2018.pdf
APPENDIX B
Case 3:21-md-02992-GPC-MSB Document 564-13 Filed 10/17/25 PageID.33031
Page 62 of 65

Reuters
Coming Clean About Data Analytics in the Anti-Money Space, Nov. 2018
Q&A with Terry Pesce on using Artificial Intelligence in fighting financial crime
https://blogs.thomsonreuters.com/answerson/coming-clean-about-data-analytics-in-the-anti-money-laundering-space/

Risk Intelligence
Discussing the use of technology to improve sanctions compliance:
http://www.garp.org/#!/risk-intelligence/culture-governance/compliance/a1Z1W000003fBo4UAE

RESPA News
Article quotes Terry Pesce and Greg Matthews discussing third-party risk and AML compliance issues within the mortgage
industry:
http://www.respanews.com/RN/ArticlesRN/AML-thirdparty-oversight-hold-similarities-71171.aspx.


Wrote American Banker guest article: Regulators Foster De-Risking More Than They Admit

Terry Pesce quoted in Wall Street Journal article: Treasury Scrutinizes Credit Unions

Terry Pesce quoted in American Banker article: Banks Feat Iron-Fisted Answer to De-risking Dilemma

Terry Pesce quoted in Wall Street Journal article: Banks, Regulators Reach Impasse Over Risky Account Closures

Terry Pesce quoted in Wall Street Journal article: Steering Clear of Sanctions

Intelligent automation in financial crimes: Forging an innovative compliance strategy for the future
https://advisory.kpmg.us/content/kpmg-advisory/risk-consulting/forensics/financial-services/intelligent-automation-in-
financial-crime.html

The future of financial crime: Comply. Integrate. Automate
https://advisory.kpmg.us/content/dam/advisory/en/pdfs/future-of-financial-crime.pdf

Building an effective financial crimes change management program: How financial institutions can keep up with global
regulatory change
https://advisory.kpmg.us/content/dam/advisory/en/pdfs/building-an-effective-financial-crimes-change-managemnet-
program.pdf

Under one agile umbrella: An approach to managing financial crimes risk
https://advisory.kpmg.us/content/dam/advisory/en/pdfs/under-one-agile-umbrella.pdf

Financial Crimes, A Paradigm Shift, December 2022
Contributor
http://bit.ly/3GX0FhF

Videos
Terrorist Financing and Anti-Money Laundering Regulation
Teresa Pesce of KPMG Forensic discusses the new era of anti-money laundering (AML) and terrorist financing regulatory
enforcement that began following 9/11. This extends far beyond the original intent of the USA PATRIOT Act and is something
that both the government and the financial services industry needs to pay attention to.

Webcasts

AML Hot Topics: More Updates to the FFIEC Exam Manual
With AML RightSource
https://vimeo.com/530014556

APPENDIX B
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Page 63 of 65

2021 Regulatory Sanctions Update – Challenges, Considerations, and Pathways
June 23, 2021

What’s New for 2022
With AML RightSource

Valie of FATF to Your Financial Crime Compliance Program
July 27, 2023
https://www.amlrightsource.com/news/aml-voices-the-value-of-fatf-to-your-financial-crime-
compliance?utm content=261543986&utm medium=social&utm source=linkedin&hss channel=lcp-2477367

AML Compliance Programs, Patterns and Trends
December 19, 2024
https://webinars.amlrightsource.com/watch/SXywEceaE7TVDGUhzhQktG

Podcasts

Financial Crimes – Dirty Money Stories
With AML RightSource
https://vimeo.com/543213606

Interagency Guidance on Third Party Risk Management
With AML RightSource

Expert Witness Experience
•
Blue Flame Medical LLC v. Chain Bridge Bank, NA, John J. Brough, and David M. Evinger; Chain Bridge Bank, NA v
JPMorgan Chase Bank, NA, Civil Action No. 1:20-cv-00658 (LMB/IDD) (E.D. VA.).
o
Provided expert report and testimony on behalf of JPMorgan Chase Bank, NA
•
Entesar Omar Kashef, et al. v. BNP Paribas, S.A., et al., Case 1:16-cv-03228-AKH (S.D.N.Y.).
o
Provided expert report and testimony on behalf of BNP Paribas, S.A.
•
Government of the United States Virgin Islands v. JPMorgan Chase Bank, N.A., Case No. 1:22-cv-10904-JSR (S.D.N.Y.)
o
Provided expert report and deposition testimony on behalf of JPMorgan Chase Bank, NA
•
In re J&J Investment Litigation, Case No.: 2:22-cv-00529-GMN-NJK; Winkler v. Wells Fargo Bank, N.A., Case No.: 2-23-cv-
00703-GMN-NJK (D. NV.).
o
Provided expert report, rebuttal report, and deposition testimony on behalf of Wells Fargo Bank. N.A.
•
Terry provided an expert report on behalf of three global financial institutions in a litigation filed in a foreign jurisdiction.
•
Terry is providing expert services to a global financial institution in connection with a pending civil litigation involving
fraud controls.
•
Terry is providing expert services to a global money services business in connection with a pending civil litigation
involving alleged unfair and deceptive practices.
•
Terry is providing expert services to a global financial institution in connection with a pending civil litigation involving the
Anti-Terrorism Act as amended by the Justice Against Sponsors of Terrorism Act.

Relevant Coursework
•
Certificate in Human Trafficking Training from the Polaris Project.

APPENDIX B
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7
Awards & Recognition
ACQ5 Gamechanger Awards 2023
•
Terry Pesce & Co LLC – International Financial Crimes Service Provider of the Year
•
Terry Pesce – International AML Expert of the Year
During Terry’s tenure as Head of AML/Financial Crimes, KPMG won numerous awards from industry publications as the
AML Firm of the Year globally and/or nationally including:
•
Finance Monthly
•
Lawyer International
•
ACQ 5
•
M&A Monthly
Teresa Pesce named International Game Changer of the Year in the field of Anti-Money Laundering by ACQ 5:
•
2015, 2016, 2017, 2020
Directors Award for Superior Performance as an Assistant United States Attorney
US Department of Justice, 1998
Professional Associations
• New York State Bar Association
• American Bankers Association, Associate Member
• Member of the American Bankers/Bar Association, FC Enforcement conference board 2014-2020; Terry continued to serve
as a moderator and/or panelist at this conference, most recently in January 2022.
Bar Admissions
New York State Appellate Division, First Department
United States District Courts: SDNY, EDNY
APPENDIX B
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