Court filing
11.A — In re Bank of America California Unemployment Benefits Litigation (Dkt. 591-16, 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. 591-16 · 2025-10-17 · Docket on CourtListener
Full text
DX 11.A
REDACTED VERSION OF
DOCUMENT SOUGHT TO
BE SEALED 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 REBUTTAL REPORT OF TERESA A. PESCE
April 4, 2025
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Table of Contents
I.
ASSIGNMENT ................................................................................................................... 1
II.
SUMMARY OF REBUTTAL OPINIONS ........................................................................ 1
III.
MR. KREIS IGNORES THE COVID-19 CRISIS AND THE ASSOCIATED FRAUD. . 3
IV.
MR. KREIS FAILS TO ACKNOWLEDGE THE RESPONSIBILITY THE BANK HAD
TO RESPOND QUICKLY TO THE CRISIS TO PREVENT FURTHER FRAUD. ........ 4
V.
MR KREIS SUGGESTS ALTERNATIVE METHODS TO ADDRESS THE FRAUD
THAT WOULD NOT HAVE SOLVED THE PROBLEM. ............................................ 11
VI.
THE CLAIMS FRAUD FILTER CAPTURED A SIGNIFICANT AMOUNT OF
FRAUD; EARLY INDICATORS SIGNALED THAT IT WAS WORKING WELL,
AND MR. KREIS’S ATTEMPT TO ASSESS ITS ACCURACY IN HINDSIGHT
RELIES ON FAULTY STATISTICS, AND INAPT COMPARISONS. ........................ 15
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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 expe1t repoit in the matter of In Re Bank of
America California Unemployment Benefits Litig., Case No. 3:21-md-02992-GPC-MSB.
My affinnative repo1t, which includes my qualifications and compensation, was
submitted on March 4, 2025 (the "Pesce Repo1t"). I submit this repo1t in rebuttal of the
expe1t repo1t of J. Daniel Kreis submitted on March 4, 2025 on behalf of the Plaintiffs in
this case ( the "Kreis Repo1t").
2. A list of materials I reviewed and cited, that are in addition to the materials included in
the Pesce Repo1t, is appended hereto at Appendix A. I reserve the right to supplement or
amend my report should new infonnation become available. I am prepared to testify at
trial on the topics addressed in this repo1t.
II.
SUMMARY OF REBUTTAL OPINIONS
3. I have reviewed the Kreis Repo1t and disagree with several of Mr. Kreis's conclusions.
4. Mr. Kreis suggests that the Bank should have applied
-
wholly ignoring the explosion of the EDD program and fraudulent
unauthorized transaction claims seeking to specifically take advantage o-
could not have addressed the scale
of the fraud, and likely would have enabled criminals and fraudsters to continue to steal
additional taxpayer and bank funds.
5. Mr. Kreis ignores the fact that the Bank had a duty to implement processes to prevent
1
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6. Mr. Kreis suggests that the Bank incorrectly applied a rnles-based filter to identify
fraudulent unauthorized transaction claims when it should have implemented a vendor
technology model. Models, and in paiiicular vendor models, are complex and can take
months, or even years, to implement. Due to the unprecedented levels of fraud in the
EDD program, and the tai·geted attack on the Bank's claims system, the Bank had to act
swiftly in order to prevent or deter fmi her fraud against the State and the Bank.
7. Mr. Kreis suggests that the Bank should have sought regulato1y approval to implement
the CFF. Banks do not, in general, request permission to deploy filtering rnles; regulators
would likely not provide guidance. Moreover, the process of receiving a regulato1y no-
action detennination is protracted. The Bank did not have the luxmy of time given the
nature of the fraud that was being pe1petrated against the State and the Bank.
8. Mr. Kreis suggests that the Bank's use of the CFF was improper to the extent it made a
"definitive" detennination of fraud. In fact, the Bank
9. Mr. Kreis suggests alternative measures that the Bank could have used to address
unauthorized transaction claims. None of his suggestions could have addressed the
unprecedented fraud tai·geting the EDD program and the Bank's claims system.
10. Mr. Kreis fails to acknowledge
Additionally,
Mr. Kreis's hindsight assessment of the CFF's accuracy relies on misleading statistics,
2
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11. In addition to the rebuttal opinions I offer in this repo1t, I continue to hold all the opinions
set fo1th in the Pesce Repo1t which are incorporated by reference herein.
III.
MR. KREIS IGNORES THE COVID-19 CRISIS AND THE ASSOCIATED
FRAUD.
12. The Kreis Repo1t is largely focused on the Bank's departure from its-
-
when addressing fraudulent transaction claims during the COVID-19
pandemic. 1 He fails to acknowledge that the Bank's
13. As noted in the Pesce Report, there was massive fraud associated with COVID-19-related
unemployment benefits, such as those granted by EDD. 3 EDD failed to adequately assess
1 See, e.g., Expe1t Repo1t of J. Daniel Kreis, In re: Bank of Amel'ica California Unemployment Benefits Litigation,
Case No.: 3:21-md-02992-GPC-MSB (Mar. 4, 2025) ("Kreis Repo1t"), Section VII.D.
2 Deposition of Shane Daniels, In re: Bank of Amel'ica California Unemployment Benefits Litigation, Case No.:
3:21-md-02992-LAB-MSB (Feb. 6, 2024) ("Daniels Deposition") , Appendix of Exhibits to the Declaration of
• •
• •
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 29.
3 See, e.g., Employment Development Department, State of Califomia, Annual Report California Fraud Detel'rence
and Detection Activities (June 2021) (DX 16) at 3, 7; 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 308 ("EDD
paid about $10.4 billion on claims that it later detennined tnight be fraudulent."). See also, e.g. Expe1t Repo1t of
Teresa A. Pesce, In re: Bank of America California Unemployment Benefits Litigation, Case No.: l-MD-02992-
GPC-MSB (Mar. 4, 2025) ("Pesce Repo1t"), Section V.2.a.
3
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the eligibility and identity of an unprecedented number of beneficiaries before directing
the Bank to issue prepaid cards and provide benefits. 4
IV.
MR. KREIS FAILS TO ACKNOWLEDGE THE RESPONSIBILITY THE
BANK HAD TO RESPOND QUICKLY TO THE CRISIS TO PREVENT
FURTHER FRAUD.
14. Throughout the COVID-19 pandemic, law enforcement and banking regulators, including
the Bank's prirmuy regulator, the Office of the Comptroller of the Currency ("OCC"),
issued warnings to banks to beware of unemployment benefits fraud and to ensure they
had contrnls in place to prevent, detect, and repo1t such fraud. 7
4 Auditor of the State of California, Employment Development Department: ED D's Poor Planning and Ineffective
Management Left it Unprepared to Assist Californians Unemployed by COVID-19 Shutdowns (Jan. 2021) (DX 89)
at 25 ("In March 2020, EDD halted most of its work related to detennining whether UI claimants were eligible for
benefits."); 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."), 316.
6 See Pesce Report, Section V.2.b.
7 See, e.g. Office of the Comptroller of the CwTency, Semiannual Risk Perspective f rom the National Risk
Committee (Spring 2021), https://www.occ.gov/publications-and-resources/publications/semiannual-risk-
perspective/files/pub-semiannual-risk-perspective-spring-2021.pdf (DX 93) at 1, 20; FinCEN, Adviso1y 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/ Adviso1y%20Unemployment%20Insurance%20COVID%2019%20508%20Final.pdf; 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); BANA_EDD _MDL-00205361 (U.S. Secret Service, Massive Fraud Against State
Unemployment Insurance Programs (May 14, 2020)) (DX 96); Office of the Comptroller of the Currency, Bank
4
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15.
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This point of view is consistent with my experience rnnning an AML
team and assisting other banks' financial crimes teams. Mr. Kreis fails to take this into
account in opining on the Bank's actions.
Secrecy Act/Anti-Money Laundering: OCC Supports FinCen 's Regulato1y Relief and Risk-Based Approach for
Financial Institution Compliance in Response to COVID-19 (Apr. 7, 2020), https://wv.rw.occ.gov/news-
issuances/bulletins/2020/bulletin-2020-34.html.
8 BANA_EDD_MDL-00087715-6 (Bank of America, Unemployment Benefits - Prepaid Fraud Analysis: California
Ove1view (Sep. 15, 2020)) (DX 99) at 5; Deposition of Michael Letson, In re: Bank of America California
Unemployment Benefits Litigation, Case No.: 3:21-md-02992-LAB-MSB (Feb. 16, 2024) ("Letson Deposition")
(DX 97) at 76: 17- 77:18; Letson Declaration (DX 6) at ,r,r 10-17; 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.
~
l . 24:5- 7
----; Depos1t10n 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 211 :2- 19;
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) ("Ahmad Deposition") at 151:9- 16. See, Pesce Report at ,r 50.
10 Letson Declaration (DX 6) at ,r 18; BANA_EDD_MDL-00570333-4 (Email chain from Daniel Buttafogo to
Jennifer M. Ehresman, et al., (Sep. 23, 2020)) (DX 100); BANA_EDD_MDL-00087715-6 (Bank of America,
Unemployment Benefits - Prepaid Fraud Analysis: California Ove1view (Sep. 15, 2020)) (DX 99) at 5. See also,
BANA_EDD_MDL-00055974- 81 (Prepaid Activity - ATM Analysis Summa1y (Mar. 2, 2020) at 74, 77- 8;
BANA_EDD_MDL-00154004- 8 (Bank of America, Unemployment Insurance (Ul) Benefits Fraud Model
Development) at 5; BANA_EDD _MDL-00430148- 62 (Bank of America, Benefits Fraud I Patterns Obse1ved) at 48.
11 Kreis Repo1t at ,i,r 34, 45.
5
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16.
12 Letson Deposition (DX 97) at 112:12- 113:8; 147:15- 149:19; 152:5- 153:7; 177:4-22; Letson Declaration (DX 6)
at ifif 27- 28. See, e.g., BANA_EDD_MDL-00055974-81 (Bank of America, Prepaid Activity - ATM Analysis
Summa,y (Mar. 2, 2020) at 74; Fox Deposition at 79:23- 25.
13 Letson Declaration (DX 6) at ,r 27; Schwartz Deposition at 131 :9- 132:2.
14 Declaration of William M. Martin 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. 3-21-md-02992-
GPC-MSB (Jan. 17, 2025) ("Martin Declaration") (DX 7) at ,r 5; Garfield Deposition at 211 :2- 19; Ahmad
Deposition at 60:7- 19.
15 Fox Deposition at 12:15- 21, 26:12- 20.
16 BANA EDD MDL-00019618- 28
-
-
BANA EDD MDL-00125177- 9
Letson Deposition (DX 97) at 69:8- 70:21; Letson
Declaration (DX 6) at ,r,r 30-35; Fox Deposition at 46:19-47:17; Ahmad Deposition at 292:21- 293:17, 304: 15- 24;
Deposition of Anne Holt, In re: Bank of America California Unemployment Benefits Litigation, Case No.: 3:21-md-
02292-GPC-MSB (Jan. 8, 2025) ("Holt Deposition") at 173:8- 15, 230:24-231:5.
17 Fox Deposition at 27:20-22.
18 Letson Declaration (DX 6) at ,r,r 28--31; Letson Deposition (DX 97) at 187:10-24; Fox Deposition at 52:12- 53:8;
BANA_EDD _MDL-00125177- 9 (Email chain from Michael J. Letson to Bradley Garfield, et al., RE: Prepaid
6
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7
19 but appears to conclude that such frauds only occur when the claimant is a
victim and not themselves a fraudster. In my opinion, this conclusion is unreasonable; as
the Bank was aware, there was rampant fraud in connection with the distribution of
unemployment benefits and in the EDD portfolio in particular,20
.21
17. Mr. Kreis criticizes the Bank’s use of a “fraud rule” or “fraud filter” to root out fraud as
opposed to developing a “fraud model”, which he acknowledges would be “more
complex technology that are often developed by third parties, have long leveraged
artificial intelligence and machine learning based on large data sets of known fraud and
non-fraud payment data, and can be tailored to specific geographic regions and lines of
business.”22
23 In my experience,
technology platforms, which deploy models to detect fraud and other suspicious activity,
including those developed by third-party vendors, can take many months or even years to
implement. If the Bank had undertaken such a project, it would have allowed rampant
fraud to run through the Bank while the project was under development and review.
Claims Processing – Benefits Fraud (Sep. 28, 2020)) at 77; BANA_EDD_MDL-00087715–6 (Bank of America,
Unemployment Benefits - Prepaid Fraud Analysis: California Overview (Sep. 15, 2020)) (DX 99) at 5.
19 Kreis Report at ¶ 51(2).
20 Weaknesses in EDD’s Approach, Jan. 2021 (DX 88) at 305, 308; 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 (DX 14) at 28–29. See, e.g.,
Letson Declaration (DX 6) at ¶ 28.
21 Letson Declaration (DX 6) at ¶ 28; Letson Deposition (DX 97) at 115:9–116:10; BANA_EDD_MDL-00125177–
9 at 77 (Email chain from Michael J. Letson to Bradley Garfield, et al., RE: Prepaid Claims Processing – Benefits
Fraud (Sep. 28, 2020)); BANA_EDD_MDL-00430148–62 (Bank of America, Benefits Fraud | Patterns Observed)
at 49, 53; BANA_EDD_MDL-00087715–6 (Bank of America, Unemployment Benefits - Prepaid Fraud Analysis:
California Overview (Sep. 15, 2020)) (DX 99) at 5; BANA_EDD_MDL-00055974–81 (Prepaid Activity – ATM
Analysis Summary (Mar. 2, 2020) at 77–8.
22 Kreis Report at ¶ 59.
23 Fox Deposition at 45:3–8.
-
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8
Moreover, rules-based, “if – then” filtering, or monitoring tools are frequently used by
financial institutions to identify suspicious activity.24
18. Mr. Kreis also suggests that the Bank should have sought regulatory approval before
implementing the CFF highlighting his own experience in seeking prior approval from
the CFPB before implementing an automated process.25 He assumes that the Bank did
not seek such approval because it believed it would not have been granted.26 This
assumption is unsupported and without merit. In my experience, banks do not generally
seek regulatory approval before deploying monitoring rules. Often the OCC, the Bank’s
primary regulator, will decline to opine in advance on how a bank should handle a
particular BSA-related situation. While the OCC encourages communication between a
bank and its examiners,27 the OCC does not have a formal no-action letter process. On-
site examiners would be unlikely to provide approval on behalf of the OCC in any event.
19. While the CFPB does have a No-Action Letter Policy, the policy encourages
communication with the CFPB before submitting an application.28 It states that the
regulator aims to provide a decision within 60-days of the application, but notes that
certain circumstances could lead to longer processing times, placing emphasis on
24 Kreis Report at ¶ 59; Oraz Kereibayev, AML Transaction Monitoring Rules: Best Examples, The Sumsuber (Oct.
3, 2024) https://sumsub.com/blog/aml-transaction-monitoring-rules-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-rules-coverage-
assessment-on-transaction-monitoring-solutions/. See also, Letson Deposition (DX 97) at 61:1–19; FFIEC Manual,
Assessing Compliance with BSA Regulatory Requirements, Customer Due Diligence, Overview (2018),
https://bsaaml.ffiec.gov/manual/AssessingComplianceWithBSARegulatoryRequirements/02 (“[A]ll banks must
develop and implement appropriate risk-based procedures for conducting ongoing customer due diligence,
including, but not limited to … [c]onducting ongoing monitoring to identify and report suspicious transactions.”).
25 Kreis Report at ¶ 49.
26 Id.
27 Office of the Comptroller of the Currency, Comptroller’s Handbook: Examination Process, Bank Supervision
Process (Sep. 2019) https://www.occ.gov/publications-and-resources/publications/comptrollers-
handbook/files/bank-supervision-process/pub-ch-bank-supervision-process.pdf at 1–2 (“High quality bank
supervision … includes ongoing and effective communication with bank management and the board of directors
(board).”).
28 Consumer Finance Protection Bureau, Policy on No-Action Letters, Federal Register, 12 C.F.R. § X (Sep. 13,
2019), https://www.federalregister.gov/documents/2019/09/13/2019-19763/policy-on-no-action-letter.
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thorough analysis rather than the 60-day time frame. 29 In short, the CFPB No-Action
Letter process, when available, is protracted. An institution seeking approval could wait
months for any response at all. Moreover, at the time the Bank made the decision to
implement the CFF, the CFPB and the OCC- like the rest of the countiy - were on
lockdown. 30 The fact that all employees were working remotely could only have
lengthened the wait time. The Bank had a growing problem it needed to address as
quickly as possible. Once again, Mr. Kreis fails to account for the exigencies of COVID-
19 and COVID-19-related fraud.
29 Consumer Finance Protection Bw-eau, Policy on No-Action Letters, 12 C.F.R. § X (Sep. 13, 2019),
https://v.rwv.•.federalregister.gov/documents/2019/09/13/2019-197 63/policy-on-no-action-letters.
30 Tnunp White House, Proclamation on Dec/ming a National Emergency Concerning the Novel Coronavirus
Disease (COVID-19) Outbreak (Mar. 13, 2020), https://trnmpwhitehouse.archives.gov/presidentialactions/
proclamation-declaring-national-emergency-conceming-novel-coronaviius-disease-covid-19-outbreak/.
See, Letson Deposition (DX 97) at 110:20-113:8; Martin
32 Letson Deposition (DX 97) at 182:1- 14; Holt Deposition at 226:21- 227:16; Daniels Deposition (DX 98) at 53:2-
9, 231 :11- 233:3; Deposition of William Matthew Ma11in, In re: Bank of Amel'ica California Unemployment
Benefits Litigation, Case No.: 3:21-md-02992-LAB-MSB (Feb. 14, 2024) ("Ma1tin Deposition") (DX 122) at
197: 1- 20; Deposition of Renee Johnson, In re: Bank of America California Unemployment Benefits Litigation,
Case No.: 3 :21-02992-md-LAB-MSB (May 7, 2024) (DX 29) at 42 :22-43 :3; BANA _EDD_ MDL-00559094 (Letter
from Bank of America to Customer (Oct. 1, 2020)); BANA_EDD_MDL-00556122 (Letter from Bank of America to
Customer (Oct. 8, 2020)). See BANA_EDD _MDL-00118436-37 (Email chain from Jennifer 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 l; BANA_EDD_MDL-00117097- 9 (Email chain from Erica A Nappi Puskarik to MariaDiPietro et al.,
PPD UJ - MTM Bullets due 1 0am 12/28 (Dec. 28, 2020)) at 9.
9
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34 This potential
recourse is consistent with that which may be made available for suspected fraud
identified by fraud rnles like the CFF.
38 When it came to light that EDD's processes
were inefficient, the Bank switched to blocking cards, and permitted cardholders to seek
34 Letson Declaration (DX 6) at ,r 36. See, e.g., BANA_EDD _MDL-00225867 (Bank of America, Prepaid
Summa, :Prior 7 Da sForDaily Vie111 - MTD - YTD
ov. 11 2020 ·BANA_EDD_MDL-00118448 111111
197:1- 20; 224:17- 225:21.
37 Pesce Repo1t at ,r 30; Letson Deposition (DX 97) at 105:10-25, 112:12- 113:8
38 BANA_EDD _MDL-00085577- 80 (Email chain from Dawn E Haddock to Bob~
ing
~690k Pa ments to Bo 'A Oct. 5 2020 at 79- 80· BANA EDD MDL-00085694----
Weaknesses in EDD's Approach, Jan. 2021
(DX 88) at 323.
10
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V.
MR KREIS SUGGESTS ALTERNATIVE METHODS TO ADDRESS THE
FRAUD THAT WOULD NOT HA VE SOLVED THE PROBLEM.
22. Mr. Kreis suggests that the Bank could have addressed the explosion of fraud in this
portfolio, including both the infiltration of the program by individuals the Bank believed
to be engaged in emollment fraud, and the exploitation by those and others of the Bank's
was faced with an unprecedented number of unauthorized transaction claims - an
from the months preceding the COVID-19 pandemic. 42 Mr.
Kreis additionally ignores that EDD provided the Bank with limited info1mation on these
cardholders. As explained in the Pesce Repo1t, when onboarding customers, banks not
only collect identification infonnation, but they must verify the customer's identity. 43
Additionally, they perfonn Customer Due Diligence ("CDD") and collect additional data
that will provide infonnation on the risk presented by the customer, as well as the
39 Letson Deposition (DX 97) at 110:2-112:6; Martin Declaration at (DX 7) ,r,r 6-7.
40 Deposition ofRobe1t A. Chestnut, In re: Bank of America California Unemployment Benefits Litigation, Case
No.: 3:21-md-02992-LAB-MSB (Feb. 8, 2024) (DX 24) at 34: 17-19; Letson Deposition (DX 97) at 105:10-20.
41 Kreis Repo1t at ,rn 53(a)-(d).
42 Pesce Report, ,r 43, Exhibit 2.
43 31 C.F.R. § 1020.220. See FFIEC Manual, Assessing Compliance with BSA Regulato1y Requirements, Customer
Identification Program (2021 ),
https://bsaaml.ffiec.gov/manual/ AssessingCompliance WithBSARegulatoryRequirements/01. See also, Pesce Repo1t
at ,r,r 22, 49.
11
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45 Mr. Kreis' s
alternative suggestions are an inadequate solution to the problem the Bank was facing.
23. Mr. Kreis contends that the Bank could have, but failed to, increase Claims Department
resources, suggesting that the Bank simply did not want to bear that expense. 46 He
ignores the fact that the Bank did, in fact, add hundreds of additional resources in a ve1y
sho1t time, 47 and appears to suggest that the Bank could have easily added even more
resources, sufficient to manage the ban age of claims.48 Based on my experience, I
disagree. Claims analysts are skilled workers who must be trained to both engage in
customer service and conduct potentially complex investigations. The Bank could not
have just hired masses of workers from a temp agency. Mr. Kreis cites his own
experience working with the consulting fom Accenture as evidence that the Bank had
masses of resources at its disposal. To suppo1t his claim, he provides an Accenture
brochure from 2025 detailing Accenture's cmTent headcount of over 700,000 at the end
of the 2024 fiscal year.49 In 2020, Accenture employed approximately 500,000 globally,
44 FFIEC Manual, Assessing Compliance with BSA Regulato1y Requirements, Customer Due Diligence, Ove111ie111
(2018), https://bsaaml.ffiec.gov/manual/AssessingComplianceWithBSARegulatoryRequi.rements/02; 31 C.F.R. §
1020.210; Pesce Repo1t at mf 22, 49.
also Pesce Repo1t at ,r 30.
46 Kreis Repo1t at mf 53(d)-54.
47
DL-00570333-4
m •
•
• m Daniel Butt
•
00117097- 9 (Email chain from Erica A Nappi Puskarik to Maria DiPietro et al., PPD UI - MTM Bullets due 1 Oam
12/28 (Dec. 28, 2020)) (DX 27) at 9; BANA EDD MDL-00416783-4 (Email chain from Kristen R Ciersi to
Jennifer M Ehresman et al., RE:
, (Sep. 17, 2020)) at 4.
48 Kreis Repo1t at ,i,r 53(d)-54.
49 Id. at ,r 53(d), fn 68. See, Accenture, Accenture Fact Sheet (Second Quarter, 2025),
https://newsroom.accenture.com/fact-sheet.
12
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HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
and it laid off 25,000 because of COVID-19. 50 Unlike Mr. Kreis, I did not just supervise
a matter employing consultants, I ran a consulting practice for many years, including
during COVID-19. Consulting finns, like the rest of the world, were in the midst of a
pandemic. 51 In my experience, consulting finns were cutting costs, including
headcount. 52 Employees were on work-from-home orders. Once again, suggesting that
the Bank could have easily hired a consulting fnm with enough knowledgeable resources
to address the Bank's needs wholly disregards the realities of COVID-19.
24. Mr. Kreis also suggests that the Bank could have prioritized the investigation of higher-
dollar-value claims and "increase[ ed] the moneta1y threshold at which low-dollar-value
claims are auto-paid without conducting an investigation .... " 53 -
55 and that the Bank had regulato1y obligations to
prevent such fraud from happening. 56
5° Consulting.US, Global Consulting Finn Accenture is Firing 25,000 Employees (Aug. 26, 2020),
https://www.consulting.us/news/4776/global-consulting-fnm-accenture-is-firing-25000-employees.
51 Tmmp White House, Proclamation on Dec/ming a National Emergency Concerning the Novel Coronavirus
Disease (COVID-19) Outbreak (M.ar. 13, 2020),
https://tmmpwhitehouse.archives.gov/presidentialactions/proclamation-declaring-national-emergency-conceming-
novel-coronavims-disease-covid-19-outbreak/.
52 See e.g., Consulting.US, Global Consulting Firm Accenture is Firing 25,000 Employees (Aug. 26, 2020),
https://www.consulting.us/news/4776/global-consulting-fnm-accenture-is-firing-25000-employees; Consulting.US,
Deloitte cuts 5,000 jobs in US, consulting tak.es largest hit (June 3, 2020),
https://www.consulting.us/news/4308/deloitte-cuts-5000-jobs-in-us.
53 Kreis Repo1t at ,r 53(c).
at 2 .
55 Letson Declaration (DX 6) at ,r 27.
56 Office of the Comptroller of the CwTency, OCC Bulletin 2019-37: Operational Risk: Fraud Risk Management
P1inciples (July 24, 2019), https://www.occ.treas.gov/news-issuances/bulletins/2019/bulletin-2019-37.html (DX
108). See Letson Declaration (DX 6) at ,r 5 ("As a national bank, BANA has a statut01y and regulato1y obligation to
take effo1ts not to pennit BANA's products and systems - including BANA prepaid cards - from being used as
instrunients of fraud, money laundering, other criininal activities.").
13
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25. Mr. Kreis's opinion fails to address any of the extraordinaiy circumstances under which
the events in this matter took place. His suggested alternative strntegies were either
aheady implemented by the Bank or would not have been sufficient to manage the
unprecedented number of unauthorized transaction claims or prevent the unprecedented
volume of actual fraud. He additionally does not address the regulato1y pressme banks
were under to prevent, detect, and repo1i COVID-19-related fraud. 59 Because he ignores
the context in which the Bank's decisions were made, his opinion is fatally flawed.
57 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. See, Pesce Repo1t at ,r 47.
58 Letson Declaration (DX 6) at ,r,r 10--17; Garfield Deposition at 211:2- 19; Ahmad Deposition at 60:7-61 :2; Fox
Deposition at 15:9- 17: 1, 17: 13- 18: 16, 26:9- 25. See, Pesce Report at ,r 47.
59 Office of the Comptroller of the CwTency, Semiannual Risk Perspective from the National Risk Committee(Spring
2021), at ii, 20, 21, https://wwv.•.occ.gov/publications-and-resources/publications/semiannual-
riskperspective/files/pub-semiannual-risk-perspective-spring-2021.pdf (DX 93); FinCEN Press Release, The
Financial Oimes 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-infonnation-financial (DX 92); FinCEN, AdvisOl'y on Medical Scams Related to the Coronavirus
Disease 2019 (COVID-19) (May 18, 2020), https://wwv.•.fincen.gov/sites/default/files/adviso1y/2020-05-
18/Adviso1y%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,
AdvisOl'y on Imposter Scams and Money Mule Schemes Related to Coronavirus Disease 2019 (COVID-19) (July 7,
2020), https://www.fincen.gov/sites/default/files/adviso1y/2020-07-
07/Adviso1y _%20Imposter_and_Money_Mule_ COVID _19 _508_FINAL.pdf (DX 92); FinCEN, Adviso1y on
Cybercrime and Cyber-Enabled Crime Exploiting the Coronavirus Disease 2019 (COVID-19) Pandemic (July 30,
2020), https://www.fincen.gov/sites/default/files/adviso1y/2020-07-
30/FinCEN%20Adviso1y%20Covid%20Cybercrime%20508%20FINAL.pdf (DX 92); FinCEN, Adviso1y on
Unemployment Insurance Fraud During the Coronavirus Disease 2019 (COVID-19) Pandemic (Oct. 13, 2020),
https :/ /www.fincen.gov/sites/ default/files/advisoiy/2020-10-
13/ Adviso1y%20Unemployment%20Insurance%20COVID%20 l 9%20508%20Final.pdf (DX 92); FinCEN,
Consolidated COVID-19 Suspicious Activity Report Key Tenns and Filing Instructions (Feb. 24, 2021),
https :/ /www.fincen.gov/sites/ default/files/shared/Consolidated%20COVID-l 9%20Notice%20508 %20F inal. pdf (DX
92); FinCEN, Adviso,y on Financial Crimes Targeting COVID-19 Economic Impact Payments (Feb. 24, 2021),
https://www.fincen.gov/sites/default/files/adviso1y/202 l-02-24/ Adviso1y%20EIP%20FINAL %20508.pdf (DX 92).
14
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Page 17 of 30
HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
VI.
THE CLAIMS FRAUD FILTER CAPTURED A SIGNIFICANT AMOUNT OF
FRAUD; EARLY INDICATORS SIGNALED THAT IT WAS WORKING
WELL, AND MR. KREIS'S ATTEMPT TO ASSESS ITS ACCURACY IN
HINDSIGHT RELIES ON FAULTY STATISTICS, AND INAPT
COMPARISONS.
However, other fraudsters might still seek reconsideration, pa1ticularly those who would
be able to re-verify with EDD or the Bank using stolen identities and/or taking advantage
of the PU A's limited verification requirements.
27. Mr. Kreis contends that the Ba
60 Letson Declaration (DX 6) at ,r 34.
61 As discussed in the Pesce Report, th
Examples of friction could be requiring multiple points of identification before allowing access to
financial info1mation; it could include installing firewalls in computer systems to deter hackers. A simple example
is when stores put their merchandise behind locked plastic bairiers. 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-crncial-in-the-battle-against-scallllllers/; Elissa
Redmiles, Friction Matters: Balancing the Pursuit of Pe1fect Protection with Target Hardening, IEEE Security and
Privacy (Jan./Feb. 2024), https://wv.rw.computer.org/csdl/magazine/sp/2024/01/10411716/l TV5zSG0BKE; Letson
Deposition (DX 97) at 110:20-112:6, 184:6-25. See also, Pesce Repo1t at ,r 58.
62 Kreis Repo1t at ,r 71.
63 BANA-EDD_MDL-00117097- 9 (Email chain from Erica A Nappi Puskai·ik to Mai·ia DiPietro et al.. PPD UI -
MTM Bullets due 1 Oam 12/28
ec. 22 2020
X 27 at 9: BANA EDD MDL-00118436-7
15
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Page 18 of 30
HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
64 Bank of America's Responses and Objections to PlaintiffYick's Fifth Set of lnte1rngatories, In re: Bank of
A
. •
; Martin Deposition (DX 122) at 223:10-17.
65 BANA_EDD_MDL-00077224- 5 (Bank of America, Prepaid Facts (Oct. 2021)).
66 Daniels Deposition (DX 98) at 231 :11- 233:3; Holt Deposition at 226:21- 227:16; Mait in Deposition (DX 122) at
132:20-133:3; BANA EDD MDL-00118436-7 (Email chain from Jennifer Ehresman to Christine K Channels,■
at 6; BANA _EDD_ MDL-00117097- 9 (Email chain from Erica A Nappi
Puskarik to Maria DiPietro et al., PPD UI - MTM Bullets due 1 Oam 12/28 (Dec. 28, 2020)) (DX 27) at 9.
67 Kreis Repo11 at ,r 74.
68 Kreis Repo11 at ,r 74.
69 See, e.g., BANA_EDD_MDL-00120424-425 (Email chain from Christine K Channels to William Fox, et al., RE:
5pm Proposed Agenda Item - Incoming Claims (Oct. 6, 2020)); Fox Deposition at 88:24-89:3; Letson Declaration
(DX 6) at ,r 7.
16
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HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY
did not render the "definitive detennination," as stated by Mr. Kreis.72
claims the CFF did not deny are also relevant to assessing its accmacy. Next, Mr. Kreis
applies an en or rate that might have been used by some companies under nonnal
operating circumstances and does not consider the unprecedented volume of fraud and
the stress of COVID-19.
70 Ma1tin Declaration (DX 7) at ,r,r 7-8, 12.
71 See, Section IV.
72 Kreis Repo1t at ,r 65(c).
73 Kreis Repo1t at ,r 68.
74 Bank of America's Second Set of Responses and Objections to PlaintiffYick's Seventh Set oflnte1rngatories,
Exhibit 13, In re: Bank of America California Unemployment Benefits Litigation, Case No.: 3-21-md-02992-LAB-
MSB (Apr. 23, 2024) (DX 43).
17
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Page 20 of 30
30.
HIGHLY CONFIDENTIAL-ATTORNEYS' EYES ONLY
76 and (b) even with testing and tuning, false positives will never
be eliminated. Given the fraud crisis the Bank was addressing, its requirement to keep
fraud out of the Bank, and its commitment to law enforcement, the Bank needed to act
expeditiously, and the CFF was a reasonable response.
Executed this 4 of April, 2025
Teresa A. Pesce
75 See e.g., Martin Deposition (DX 122) at 288:10-289:17.
76 Fox Deposition at 45:3- 8; 88:6-12.
18
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HIGHLY CONFIDENTIAL – ATTORNEYS’ EYES ONLY
1
In RE Bank of America California Unemployment Benefits Litigation
Expert Rebuttal Report of Teresa A. Pesce
List of Materials Considered
I incorporate by reference the materials listed in Appendix A to the Pesce Report. In addition, I considered
the following additional materials in preparing this rebuttal report.
Articles
•
Accenture, Accenture Fact Sheet (Second Quarter, 2025),
https://newsroom.accenture.com/fact-sheet
•
Alan S. Kaplinsky, Consumer Finance Monitor CFPB, Federal Agencies, State
Agencies, and Attorneys General (Dec. 10, 2020), Ballard Spahr,
https://www.consumerfinancemonitor.com/2020/12/10/cfpb-issues-new-no-action-
letter-to-upstart/
•
Consulting.US, Deloitte cuts 5,000 jobs in US, consulting takes largest hit (June 3,
2020), https://www.consulting.us/news/4308/deloitte-cuts-5000-jobs-in-us
Depositions
•
Deposition of Renee Johnson, In re: Bank of America California Unemployment
Benefits Litigation, Case No.: 3:21-02992-md-LAB-MSB (May 7, 2024)
Expert Reports and Declarations
•
Expert Report of J. Daniel Kreis, In re: Bank of America California Unemployment
Benefits Litigation, Case No.: 3:21-md-02992-GPC-MSB (Mar. 4, 2025)
•
Expert Report of Teresa A. Pesce, In re: Bank of America California Unemployment
Benefits Litigation, Case No.: 1-MD-02992-GPC-MSB (Mar. 4, 2025)
Government Reports and Releases
•
Consumer Finance Protection Bureau, CFPB Provides Flexibility During Covid-19
Pandemic (Mar. 26, 2020), https://www.consumerfinance.gov/about-
us/newsroom/cfpb-provides-flexibility-during-covid-19-pandemic/
•
Consumer Finance Protection Bureau, Policy on No-Action Letters, Federal Register,
12 C.F.R. § X (Sep. 13, 2019),
https://www.federalregister.gov/documents/2019/09/13/2019-19763/policy-on-no-
action-letter.
APPENDIX A
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HIGHLY CONFIDENTIAL – ATTORNEYS’ EYES ONLY
2
•
Consumer Finance Protection Bureau, Statement on Bureau Supervisory and
Enforcement Response to COVID-19 Pandemic (Mar. 26, 2020),
https://www.consumerfinance.gov/compliance/supervisory-guidance/statement-
bureau-supervisory-enforcement-response-covid-19-pandemic/
•
Office of the Comptroller of the Currency, Bank Secrecy Act/Anti-Money
Laundering: OCC Supports FinCen’s Regulatory Relief and Risk-Based Approach for
Financial Institution Compliance in Response to COVID-19 (Apr. 7, 2020),
https://www.occ.gov/news-issuances/bulletins/2020/bulletin-2020-34.html.
•
Office of the Comptroller of the Currency, Comptroller’s Handbook: Examination
Process, Bank Supervision Process (Sep. 2019) https://www.occ.gov/publications-
and-resources/publications/comptrollers-handbook/files/bank-supervision-
process/pub-ch-bank-supervision-process.pdf
•
Office of the Comptroller of the Currency, Semiannual Risk Perspective from the
National Risk Committee (Fall 2020), https://www.occ.gov/publications-and-
resources/publications/semiannual-risk-perspective/files/pub-semiannual-risk-
perspective-fall-2020.pdf
•
Office of the Comptroller of the Currency, Semiannual Risk Perspective from the
National Risk Committee (Spring 2020), https://www.occ.gov/publications-and-
resources/publications/semiannual-risk-perspective/files/pub-semiannual-risk-
perspective-spring-2020.pdf
•
Office of the Comptroller of the Currency, Semiannual Risk Perspective from the
National Risk Committee (Spring 2021), https://www.occ.gov/publications-and-
resources/publications/semiannual-risk-perspective/files/pub-semiannual-risk-
perspective-spring-2021.pdf
Bates Stamped Documents
•
BANA_EDD_MDL-00118448
Note: Even if not included in this list, I also considered any documents cited in my Report. I
also reviewed the materials listed in Appendix B of the Expert Report of J. Daniel Kreis, dated
March 4, 2025.
APPENDIX A
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Page 23 of 30
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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Page 25 of 30
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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Page 26 of 30
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
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5
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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6
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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