Confidential Pursuant to Protective Order — Blue Flame Medical LLC v. Chain Bridge Bank, N.A., et al., No. 1:20-cv-00658

Source document: Confidential Pursuant to Protective Order — Blue Flame Medical LLC v. Chain Bridge Bank, N.A., et al., No. 1:20-cv-00658; document type: Deposition transcript excerpts (18 pages), Confidential Pursuant to Protective Order.

Full text

EXHIBIT 100
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UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
(ALEXANDRIA DIVISION)
BLUE FLAME MEDICAL LLC
Plaintiff
)Civil Action No.
)1:20-cv-00658(LMB/IDD)
)
vs.
CHAIN BRIDGE BANK, N.A.,
JOHN J. BROUGH and
DAVID M. EVINGER
Defendants
)
)
)
)
)
)
CHAIN BRIDGE BANK, N. A.
)
Third-Party Plaintiffs
vs.
JPMORGAN CHASE BANK, N.A.
Third-Party Defendant
)
)
)
)
)
)
- CONFIDENTIAL PURSUANT TO PROTECTIVE ORDER -
Remote Videotaped Deposition of John Brough
February 2, 2021
9:35 a.m.
Reported by:
Bonnie L. Russo
Job No. 4398587
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Page 4
1 Remote Videotaped Deposition of John Brough
1 APPEARANCES (CONTINUED):
2
2 held through:
On behalf of Third-Party Defendant:
3
3
ALAN SCHOENFELD, ESQ.
WILMERHALE, LLP
4
4
7 World Trade Center
250 Greenwich Street
5
5
New York, New York 10007
6
Veritext Legal Solutions
alan.schoenfeld@wilmerhale.com
6
-and-
7
1250 I Street, N.W.
ALBINAS PRIZGINTAS, ESQ.
8
Washington, D. C.
7
WILMERHALE, LLP
1875 Pennsylvania Avenue, N.W.
9
8
Washington, D.C. 20006
10
albinas. prizgintas@wilmerhale.com
9
-and-
11
MARGARITA BOTERO, ESQ.
10
WILMERHALE, LLP
12
1225 17th Street, Suite 1660
13
11
Denver, Colorado 80202
margarita. botero@wilmerhale.com
14
12
15
13
Also Present:
16
14 Beth Sharon, Chain Bridge Bank
17
David Evinger
15 Ethan Bearman, Blue Flame Medical, LLC
18 Pursuant to Notice, when were present on behalf
Bill Gussman
16 Geoff Bassett, Videographer
19 of the respective parties:
17
20
18
19
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22
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Page 3
Page 5
1 APPEARANCES:
1
C O NT ENT S
2
2 EXAMINATION O F  JOHNBROUGH
PAGE
3 On behalf of the Plaintiff:
3 BY MR. WHITE
9
4
PETER WHITE, ESQ.
4 BY MR. O RSECK
343
JASON T. MITCHELL, ESQ.
5
5
EKENEDILICHUKWU E. UKABIALA, ESQ.
GREGORY KETCHAM-COLWILL, ESQ.
6
6
SCHULTE ROTH & ZABEL, LLP
7
901 Fifteenth Street, N.W.
8
7
Washington, D.C. 20005
9
pete. white@srz.com
10
EXHIBITS
8
jason.mitchell@srz.com
11 Exhibit 73 Handwritten Notes
135
ekenedilichukwu.ukabiala@srz.com
CBB00004445
9
gregory.ketchum-colwill@srz.com
10
12
11 On behalf of the Defendants/1bird-Party
Exhibit 74 E Mail Chain dated 3 25 20
151
Plaintiffs:
13
BFM0000 1344 5 448
12
14 Exhibit 75 Incoming Wire Confirmation
181
GARY ORSECK, ESQ.
CBB000019939
13
LESLIE ESBROOK, ESQ.
15
CAROLYN FORSTEIN, ESQ.
Exhibit 76 E Mail Chain dated 3 26 20
190
14
ROBBINS RUSSELL ENGLERT ORSECK & UNTEREINER
2000 K Street, N.W., Fourth Floor
16
CBB0000272572 9
15
Washington, D.C. 20006
17 Exhibit 77 E Mail Chain dated 3 26 20
192
gorseck@robbinsrussell.com
CBB000000807
16
lesbrook@robbinsrussell.com
18
cforstein@robbinsrussell.com
Exhibit 78 Audio Recording
262
17
19
CBB0000254 l
18
20 Exhibit 79 Audio Recording
288
19
20
CBB00002544
21
21
22
22
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So there are --
2
Q.
And--
Page 34
3
A -- are many different areas in the
4 bank that are involved in -- in processing tht
5 transactions through client accounts.
6
Q.
Understood.
7
As to wire transfers, all of those
8 credits and debits would run through Ms.
9 Ribeiro, through her group; is that correct?
10
A
That's correct.
11
Q.
Do you have any role in preparing 01
12 reviewing the bank's balance sheet?
13
MR. ORSECK: Object to form.
14
THE WITNESS: I -- I do, yes.
15
BY MR. WHITE:
16
Q.
What is that role?
17
A
Well, I monitor the balance sheet.
18 I look at it every day. I review financial
19 reports at the end of the month. I review
20 the -- the financial reports when they --
21 before they go to the board of directors.
22
So I -- I closely monitor the
Page 35
1 financial reports of the bank.
2
Q. Why is the bank's balance sheet
3 something important for you to monitor?
4
A. Well, the bank relies upon its
5 balance sheet to generate income.
6
Q. Can you explain what --does --does
7 --let me start over.
8
Does Chain Bridge Bank have a
9 general ledger account.
10
Is that terminology accurate?
11
A. Yes. Yes. Chain Bridge --
12
Q. What --
13
A
--Bank has a general ledger
14 account.
15
Q. What is Chain Bridge Bank's general
16 ledger account?
17
A. Chain Bridge Bank's general ledger
18 account is the internal accounting function of
19 the bank.
20
Q. Do monies that come into or go out
21 of the bank go through the bank's general
22 ledger account?
Page 36
1
A. There are entries posted to the
2 general ledger account, yes, for --for --for
3 entries that come in and go out of the bank --
4 for --for --I'm sorry --for --for money
5 that comes into and goes out of the bank.
6
Q. Specifically as to wire transfers,
7 do wire transfers come into the bank's general
8 ledger account before being credited to a
9 particular customer account?
10
A. I --I don't --the --the general
11 ledger account is going to mirror the activity
12 in --in different various types of --of cash
13 accounts.
14
So if we receive a wire into our Fed
15 account, then there'll be a corresponding entry
16 into the general ledger account.
17
Q. And then, when that money goes into
18 a client account, is there another entry
19 entered into the general ledger account?
20
MR. ORSECK: Object to form.
21
THE WITNESS: No, there's not.
22 There's an --when money --when money goes
Page 37
1 into a client account, there's no entry to the
2 --to the cash account, but there would be an
3 entry to reflect the deposits increased by that
4 amount.
5
BY MR. WHITE:
6
Q. And by "deposits" there you mean the
7 deposit into the client account; is that
8 correct?
9
A. Correct. If money was to be
10 deposited into a client's account, it would be
11 reflected on the general ledger.
12
Q. Understood.
13
A In --in the deposit, the liability
14 section of the general ledger.
15
Q. In connection with your role at the
16 bank, do you interface with the Office of the
17 Comptroller of the Currency or OCC?
18
A. Yes, I do interacted with the Office
19 of the Controller [sic] of the Currency.
20
Q. And what is your role in connection
21 with the banks's interactions with OCC?
22
A. I am the primary contact with the
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Page 54
1 the $456 million plus wire, if that is put into
2 a zero risk weighted --account? Is that the
3 right word? Or asset?
4
What is the right word to use there?
5 Is it asset?
6
A. If --if it's --if it's in --it
7 depends on what we invest those funds into. So
8 yes, I mean that would be an asset of the bank.
9
Q. Right.
10
And at that point assets that have
11 zero risk rating were --were making --were
12 returning 0.1 percent per year; is that right?
13
A. Yes. That's correct.
14
Q. And the bank was making higher
15 returns on commercial loans, for example, than
16 the return on zero risk weighted assets,
17 correct?
18
MR. ORSECK: Object to form.
Page 56
1 difference. Because we didn't have any
2 problems satisfying our reserve requirement
3 with the cash that we held on hand.
4
The reason --
5
Q. Is there an interplay --I'm sorry.
6 Go ahead.
7
A. Go ahead. No. I --I'm done.
8
Q. Okay. Is there an interplay between
9 the bank's reserve requirements and the capital
10 requirements that you were speaking about
11 previously?
12
A. No. There's not.
13
Q. We spoke a little bit earlier about
14 Regulation J. I think you indicated a general
15 familiarity with --with it and with the fact
16 that it regulates the handling of wire
17 transfers by banks.
18
Is that an accurate statement?
19
THE WITNESS: Simply answering your 19
A. Yes. That's an accurate statement.
Q. And are --are --are --have you
20 question, yes. The --the --the yield on
20
21 commercial loans, which are a hundred percent 21 ever revere --reviewed U CC Article 4 A?
22 risk weighted, is higher than the yield on
22
A. I have since the lawsuit was filed.
Page 55
1 interest on reserves, which is zero percent
2 risk weighted.
3
MR. WHITE: Okay.
4
THE WITNESS: And that --but that
5 was at that point in time.
6
BY MR. WHITE:
7
Q. As of March 25th, 2020, are you
8 familiar with what the bank's reserve
9 requirements were at that point?
10
A. Yes. I'm familiar with what the
11 banks reserve requirements were at that point.
12
Q. And what were those requirements at
13 that point?
14
A. Well, on March 15th, the Fed came
15 out and said that they were going to lower the
16 reserve requirements to --for banks to zero
1 7 percent. I'm not sure what date that was
18 effective, but I think it was effective before
19 the end of the month.
20
Q. How did that affect your ability to
21 manage the bank and its balance sheet?
22
A. For us it didn't really make much
Page 57
1
Q. Prior to the filing of the lawsuit,
2 had you ever reviewed that, to your knowledge?
3
A. I wasn't as familiar with the
4 details of 4A at the time, no.
5
Q. Were you aware --and this is prior
6 to the filing of the lawsuit --that
7 Regulation J makes a reference to universal --
8 Uniform Commercial Code Article 4A?
9
A. I --I didn't know that
10 specifically. What I do know is that there are
11 a number of --of specifically Federal Reserve
12 Bank regulations that will refer to the UCC.
13
Q. So that's not unusual that a Federal
14 Reserve regulation would refer to the UCC, in
15 your experience; is that right?
16
A. I know that's the case --
17
MR. ORSECK: Object to form.
18
THE WITNESS: --with --with
19 regulation CC. It's the case with Reg J. I'm
20 not --I'm not sure what else it is the case
21 with, to be honest with you.
22
BY MR. WHITE:
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MR. ORSECK: Object to form.
Page 102
2
THE WITNESS: I --I think it does,
3 doesn't it? I --maybe I'm wrong. I --
4
BY MR. WHITE:
5
Q. And perhaps it --perhaps you know
6 better.
7
I --the initial voice is, "All
8 right. And I think Heather's there."
9
Do you know is that you, or is that
10 Mr. Evinger?
11
A. I --I think what happened was David
Page 104
1 from, correct?
2
A. That's correct.
3
Q. And she also indicates that some of
4 the money would be wired out but not all of it,
5 correct?
6
A. That's correct.
7
Q. I'd like to play you a later portion
8 of this. I want to skip forward a bit, but
9 it's only about 45 seconds. If you --that's
10 the way I have it set up. It's starting at
11 2:46.
12 and I were talking, and we conferenced Heather 12
(Whereupon, the tape was played.)
MR. WHITE: Pause there for a
13 in. So --
14
Q. Okay. So there was a --I'm sorry.
15 Go ahead.
16
A. So the recording would have started
17 when Heather came on the line.
18
Q. What do you recall about the
19 conversation you had with David before the
20 recording began?
21
A. I --I'm --I'm being honest with
22 you. I --I do not know what that --what that
Page 103
1 call was in reference to. I don't know.
2
Q. Well, presumably it was in reference
3 to this incoming wire and the --the account,
4 correct?
5
A. It --it could have been. I don't
6 know. It probably --it --it probably was,
7 Mr. White. Probably was.
8
Because I would have received the
9 e-mail, and --and then we would have seen the
10 e-mail, and we probably would have conferenced
11 Heather in. So yeah, yeah. Probably was.
12
Q. Which one of you, you or David,
13 said, "What the heck is going on?"
14
Was that you, or is that
15 Mr. Evinger?
16
A. Oh, gosh. I don't recall.
17
Q. That's okay. I don't want to waste
18 your time with that.
19
During this part of the phone call,
20 Ms. Schoeppe repeats much of the information
21 that was in the e-mail communication regarding
22 the amount of the wire and where it was coming
13
14 moment, Mr. Brough.
15
BY MR. WHITE:
16
Q. Was it you or Mr. Evinger who said,
17 "If this is true, we can't hold that money on
18 our balance sheet"?
19
A. That was me.
20
Q. Why did you say that you could not
21 hold that money on your balance sheet?
22
A. Well, thinking in the interest of
Page 105
1 the client, a deposit that large is --I mean
2 they --they --they should want protection.
3 They should want FDIC insurance or --or some
4 other measure of protection for --for a sum of
5 that size.
6
So --so that's why we immediately
7 went to those FDI --full FDIC insurance
8 options, which are CDARS and ICS.
9
Q. So your only concern here was for
10 protection of the client?
11
A. That was my primary concern. I
12 mean, it --like I said, before we had many
13 questions about the transaction. And --and
14 protecting the interest of the client was
15 certainly one of them.
16
Q. So it's your testimony that, when
17 you said, "We can't hold that money on our
18 balance sheet," you were not concerned about
19 the impact on the bank; you were concerned
20 about protection of the customer; is that
21 right?
22
MR. ORSECK: Object to form.
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1
Q. The source of the money ultimately
2 was indeed an account for the State of
3 California, correct?
4
A. That is correct.
5
Q. And that's where Mr. Gula had
1
(Whereupon, the tape was played.)
2
BY MR. WHITE:
3
Q. Mr. Brough, that's the part I was
Page 124
4 asking about. There is a, "Yeah, I know. I
5 don't like the smell of this."
6 represented the money was going to come from,
6
And then, "It seems like someone has
7 correct?
8
A. That is correct.
9
Q. As a matter of fact, everything in
10 the header data of the wire was completely
11 consistent with what Mr. Gula had told the
12 bank; isn't that right?
13
MR. ORSECK: Object to form.
14
THE WITNESS: As far as we could
15 tell, yes.
16
MR. WHITE: I'd like the play a
17 later portion starting at 10:30, please.
18
(Whereupon, the tape was played.)
19
BY MR. WHITE:
20
Q. Mr. Brough, who is it who says, "I
21 don't like the smell of this"?
22
Is that you?
7 penetrated state coffers."
8
Can you tell who was speaking there?
9
A. Part of that was me. And then, when
10 it says, "I don't like the smell of this,"
11 somebody --the state coffers thing, that's
12 David.
13
Q. The state coffers part is David?
14
A. And the, "I don't like the smell of
15 this."
16
Q. Okay. And do you --what did you
17 understand Mr. Evinger to mean when he said
18 that?
19
20
MR. ORSECK: Objection. Foundation.
MR. WHITE: The --actually, let me
21 ask a more specific question.
22
BY MR. WHITE:
Page 123
Page 125
1
A. I think we both said that, didn't
1
Q. What did you understand Mr. Evinger
2 we?
3
Q. There's a --there's an initial
4 portion --I can play it again if you want.
5 But there's an initial portion that, as I
6 understand it, talks about a press release from
7 Gavin Newsom --
8
A. Yeah. That's David.
9
Q.
--and go --that's David.
10
A. That's David.
11
Q. And then it sounded like a --it
12 sounded like a different voice to me that said,
13 "Yeah, I know. I don't like the smell of this.
14 It seems like someone has penetrated the state
15 coffers and is raiding the tax."
16
Who said that?
17
A. That was David.
18
Q. That was David as well?
19
A. Yes. If you want to replay it, I
20 can --I can confirm that.
21
MR. WHITE: Can you go to that part?
22 My guess is it's a quarter of the way through.
2 to mean when it said, "It seems like someone
3 has penetrated the state coffers and is raiding
4 the tax"?
5
6
MR. ORSECK: Objection. Foundation.
THE WITNESS: I can't tell you
7 specifically what David was thinking.
8
I'll tell you that at the time, you
9 know, we had --we had so many unanswered
10 questions. And one question was the legitimacy
11 of the --of the whole --of the wire.
12
In other words, if you --if you
13 think back, this was the time of COVID. And
14 people were working from home. And -- and who
15 knows what could have happened.
16
So --so that was just one of the
17 many questions that we had.
18
BY MR. WHITE:
19
Q. Did you have a concern at that time
20 that someone was raiding the State of
21 California's tax coffers?
22
A. That certainly was one of the
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Page 126
1 questions that we wanted to get answered.
2
Q. And I --another question you had
3 was about the legitimacy of the wire. And
4 we'll get into more details of it --this
5 later.
6
But ultimately you determined that
7 the wire was a legitimate wire meant to be sent
8 by the State of California to Chain --to Chain
9 Bridge Bank for the benefit of Blue Flame
10 Medical, correct?
11
MR. ORSECK: Object to form.
12
THE WITNESS: It is correct that
13 that was one of the many questions that we had.
14 And it is correct that --that we were able to
15 verify --or, to the best of our ability,
16 verify that the transaction was --was --that
1 7 the --the wire itself was an authorized wire.
18
But we still had many unanswered
19 questions in regards to the --the transaction.
20
BY MR. WHITE:
21
Q. As a matter of fact, more than to
22 the best of your ability.
Page 127
1
The State of California informed you
2 that it was an authorized wire, correct?
3
A. They did inform us that it was an
4 authorized wire. However, we had many other
5 unanswered questions about the transaction.
6
Q. After this phone call, there was a
7 subsequent call with Mr. Gula, ifl have that
8 timing correct; is that right?
9
A. That is correct.
10
Q. And did --did the --someone from
11 the bank call him, or did he call the bank at
12 that point?
13
A. We called Mike. David and I called
14 Mike.
15
Q. I --I take it --I think you said
16 you were working remotely.
17
So you weren't in the same location;
18 is that right?
19
A. No. We were not.
20
Q. Do you know if you continued,
21 directly after this conversation with Ms.
22 Schoeppe, on the same line and then just
Page 128
1 patched Mr. Gula in?
2
A. I don't recall that.
3
Q. What do you recall the sequence
4 being from this call with Ms. Schoeppe to the
5 call with Mr. Gula?
6
A. We concluded our call with Heather.
7 And then --and then we --we --we decided to
8 call Mike Gula to discuss the transaction.
9 Just David and I. Not Heather.
10
Q. Just the two of you?
11
A. Yes. Just David and I.
12
Q. Was there any recording of that
13 phone call?
14
A. No. There wasn't.
15
Q. Why not?
16
A. It wasn't placed on a recorded line
17 at the bank. And it wasn't recorded in any
18 other manner.
19
Q. There were a number of other phone
20 calls that were recorded in connection with the
21 transact --this transaction by some method
22 other than the bank's recorded lines; isn't
Page 129
1 that correct?
2
A. After the wire arrived, that's
3 correct.
4
Q. And how were those recorded, the
5 ones that weren't on the bank's recorded lines?
6
A. They were recorded on my --on my
7 phone with a --with a --
8
Q. On your --
9
A.
--recording option on the phone --
10 on the --not the phone itself but on a --like
11 a tape-recording option.
12
Q. On your cell phone?
13
A. Yes.
14
Q. And was it recorded on the phone you
15 were actually using to have the conversation?
16
A. No. Because those conversations
17 were on David's land line.
18
Q. And you used a recording function on
19 your cell phone to record at least parts of
20 those calls; is that correct?
21
A. That's correct.
22
Q. Why didn't you record this one with
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Page 166
1
It's just --it was just a --it was
2 a --it was a comment on the fact that there
3 are a lot of unanswered questions, and we need
4 to make sure that we vet the transaction fully.
5
BY MR. WHITE:
6
Q. But by "scam" I take it what you're
7 referring to there is the --what we were
8 referencing earlier, the --the Nigerian
9 Prince-type scam.
10
Is that what --
11
A. Correct.
12
Q.
--you were concern about?
13
A. That --
14
MR. ORSECK: Object to form.
15
THE WITNESS: That was one of the
16 many things we were worried about, yes.
17
BY MR. WHITE:
18
Q. You then state: "In the event we do
19 receive the cash, there is no way we can hold
20 it on our balance sheet."
21
What did you mean by that?
22
A. Well, what I meant by that, again,
Page 167
1 was similar to the conversation that we had
2 earlier about making sure that we do the right
3 thing for the client and make them fully aware
4 that --that their deposit --that the --the
5 --the vast amount of their deposit would not
6 be FDIC insured but that we had solutions for
7 that.
8
Q. So your --
9
A. And that --that's why --
10
Q. Were you finished?
11
A. That's why it's followed by the ICS
12 and CDARS comment.
13
Q. So your concern about holding it on
14 the bank's balance sheet was exclusively a
15 concern for the customer's security?
16
MR. ORSECK: Objection. Asked and
17 answered.
18
THE WITNESS: Again, as I --as I
19 had said previously, it was --that was our
20 primary concern, was the protection of the
21 client.
22
BY MR. WHITE:
Page 168
1
Q. What were the secondary concerns
2 with holding it on your balance sheet?
3
A. Our secondary concerns were --were
4 not just balance-sheet related but all sorts of
5 other unanswered questions that we had, all --
6 all of --all of them concerns about the
7 transaction.
8
Q. And what about the ones that were --
9 the secondary concerns that were balance
10 sheet-related; what were those?
11
MR. ORSECK: Objection. Foundation.
12
THE WITNESS: Well, like I said,
13 when I wrote the e-mail, my --my primary
14 concern was about the client and making sure
15 that they were aware that the deposit would be,
16 for the most part, for the majority --vast
17 majority, uninsured.
18
And when a client deposits that size
19 of --of --of money, we always make them awac
20 of that. And that's why we have many clients
21 who are in the ICS or CDARS program, so that
22 they can receive full FDIC insurance.
1
BY MR. WHITE:
Page 169
2
Q. Do you know what an ICS shadow
3 account is?
4
A. I do know what an ICS shadow account
5 1s, yes.
6
Q. What is that?
7
A. Well, the way --the way the
8 accounting works is money is deposited into a
9 client's account. And in the event that they
10 are in the ICS program, there's a --there's a
11 --there's a benchmark that's set on that
12 account.
13
So let's just say the benchmark is
14 the FDIC limit of $250,000. So any dollar
15 amount over the 250 is swept into what's called
16 a shadow account. And then that money is sent
17 to the ICS or the CDARS network for placement
18 amongst other banks. So it serves --it serves
19 that purpose.
20
It also serves the purpose of
21 when --when you do that, the client can then
22 have access to that shadow account and see wha1
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Page 170
1 their total balance is.
2
Q. Was an ICS shadow account prepared
3 for Blue Flame Medical?
4
A. We prepared account opening
5 documents for Blue Flame, but they were not
6 executed.
7
Q. Were those documents shared with
8 Mr. Gula or others at Blue Flame?
9
A. I don't think that they were shared
10 with Mr. Gula other than the fact that we --we
11 would have told him that --when --when we
12 explained the program to him, we --we said
Page 172
1 "balance sheet" are used twice.
2
Q. And the bank's balance sheet doesn't
3 have anything to do with the FDIC insurance
4 limit, does it?
5
MR. ORSECK: Object to form.
6
THE WITNESS: I'm not sure exactly
7 what you mean by that question.
8
BY MR. WHITE:
9
Q. Well, the FCI --FDIC insurance
10 limit you referenced is 250,000 per account.
11
I think you said that previously,
12 correct?
13 that, "There'll be some --some documents that
13
14 you'll have to sign to --to set up the
14
A. That's correct.
Q. That's not a bank balance sheet
15 account."
16
Q. So those are --an ICS account would
1 7 have to be signed by the beneficiary of that
18 account, in this case a representative of Blue
19 Flame Medical, to become active; is that right?
20
A. That's correct.
21
Q. None of those documents were ever
22 shared with anyone from Blue Flame Medical,
Page 171
1 correct?
2
A. That is correct. But we did
3 instruct them that, if we were to go this
4 route, that there would be documents that would
5 have to be signed.
6
Q. Your e-mail also mentions that you
7 had told Mike: "We would need to move the
8 money off balance sheet into the ICS program."
9
Do you see that?
10
A. Sorry?
11
Q. Last part of the e-mail?
12
A. Yes.
13
Q. Anywhere in this e-mail is there a
15 issue, is it?
16
MR. ORSECK: Object to form.
17
THE WITNESS: That is not a bank
18 balance sheet issue, no.
19
BY MR. WHITE:
20
Q. But you're not referencing FDIC
21 here; you're representing the bank's balance
22 sheet, correct?
Page 173
1
MR. ORSECK: Objection. Foundation.
2
THE WITNESS: I am referencing the
3 fact that there are --there are two ways you
4 can structure an ICS transaction.
5
You can structure it so that it is a
6 reciprocal transaction, in which case you
7 receive that same amount of deposits in return
8 from the ICS program; or you can do what's
9 called a one-way sell, in which case you simply
10 just place that money with ICS, and you do not
11 get any deposits in return.
12
BY MR. WHITE:
13
Q. What was contemplated here?
14 reference to FDIC insurance?
14
A. The one-way sell.
15
A. There is not in this e-mail. But
15
Q. Which would take the asset
16 when we explained the program to him, I know 16 completely off the bank's balance sheet,
17 that we did mention it, yes.
18
Q. There are multiple references to
19 your balance sheet in this e-mail though; isn't
20 that correct?
21
A. There --there --it looks like it
22 --the word "balance sheet" --or the two words
17 correct?
18
A. Correct.
19
Q. If you could open Plaintiffs
20 Exhibit 65. It's a March 25, 2020 e-mail from
21 Mr. Gula to you and Mr. Evinger at 6:26 p.m.
22
A. 65. Okay. I have it.
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1
Q. Did you tell Mr. Gula that your bank
2 was not in a position to handle a $450 million
3 wire into a company that had been formed three
4 days before when you spoke with him on March
5 25th?
6
A. When we spoke --
7
MR. ORSECK: Object to foundation.
8
THE WITNESS: When we spoke to Mih
9 the night before, you know, of course the
10 transaction was all new. We had found out
11 about it minutes before. Mike had been a
12 client for ten years, you know. Nothing like
13 this had ever come up.
14
So it was a very cordial
15 conversation. He'd been a good client at the
16 bank for many years. And --but, you know,
17 we --we were all just --this is true? I mean
18 this --really? I mean a $456 million wire?
19
And, you know, he --he seemed about
20 as surprised as we did, to be honest with you,
21 in regards to what was going on.
22
BY MR. WHITE:
1
Q. Did you --
2
MR. ORSECK: Are you finished?
Page 243
3
THE WITNESS: Yeah. I'm finished.
4
BY MR. WHITE:
5
Q. Did you tell Mr. Gula that the fact
6 that Blue Flame Medical was just formed was a
7 red flag that was going to cause a problem for
8 the transaction when you spoke with him on the
9 25th?
10
A. Well, I think that we --we said to
Page 244
1 are handled through some type of a letter of
2 credit.
3
So perhaps we didn't --we never
4 accused Mike of the transaction not being
5 legitimate. We were simply asking him many
6 questions about it and expressing our surprise
7 that this was all happening.
8
Q. Did you tell him, on the 25th when
9 you spoke with him, that there were red flags
10 around this transaction that would cause
11 problems for you in terms of processing it?
12
Did you tell him that?
13
MR. ORSECK: Object to form.
14
THE WITNESS: I don't recall telling
15 him that, no. And I --
16
BY MR. WHITE:
1 7
Q. And why --
18
A. I think I actually said to him that,
19 you know, "Well, we can handle this. We need
20 to make sure that we put you into fully FDIC
21 insured product." And that's when we talked
22 about ICS and CDARS.
1
But no. I --I guess we were a bit
Page 245
2 surprised that this was coming up and didn't
3 come up when the account was being opened.
4 But, you know, what's done is done. It's
5 unfortunate that he didn't say it then.
6
Q. Didn't say what then?
7
A. When he was opening the account with
8 Mariano that he was expecting a $456 million
9 Wlfe.
10
Q. What makes you think he didn't?
11 him that it was a very unusual transaction, and
11
A. Well, that's not what was recorded
12 that's why we were asking him questions
13 about --about the transaction, about the State
14 of California, about his suppliers, was he
15 versed in international trade.
16
So, you know, I think it was David
17 who asked him, "Well, do you have an
18 international letter of credit set up to handle
19 this transaction?"
20
And, you know, he didn't really even
12 in our records. When an --when an account is
13 opened, we ask questions about wire
14 transactions. And --
15
Q. Didn't he open this contract with --
16
MR. ORSECK: Wait. Wait. Wait.
17 No. No. No. No. No. You can't interrupt
18 him.
19
20
MR. WHITE: He had paused.
BY MR. WHITE:
21 know what that was, which was another red flag 21
Q. Go ahead.
22 Because typically international transactions
22
You got more to say?
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1
A. Yes.
2
When he opened the account with
Page 246
Page 248
1 correct?
2
A. We --we wanted to find out if the
3 Mariano, he provided wire volumes, which were 3 State of California had done their due
4 not consistent with the large transaction that
4 diligence on the seller.
5 came into his account.
5
Q. Why?
6
Q. What was the time sequence between
6
A. It's our obligation, under the --
7 then and when Ms. --I thought he had --didn't
7 under the laws of the United States and
8 he open the account with Ms. Schoeppe, or was
8 specifically the Bank Secrecy Act, to --to do
9 it Mariano?
9 our --our customer due diligence and our
10
A. It was with Mariano.
11
Q. When did he tell Ms. Schoeppe about
12 the wire transaction?
13
A. After the account was open.
14
Q. The account opening documents did
15 indicate that there would be wire transfers in
16 the tens of millions of dollars, correct?
17
A. The individual wires would not be
18 over 10 million. The volume for the month I
19 think was going to be over 10 million.
20
Q. I think what I had said was 25
21 million; isn't that correct?
22
A. I don't recall the exact amounts.
Page 247
1 But I think it was maybe five wires, and the
2 total the amount for the month 25 million. So
3 that would be 5 million each.
4
Q. When you called the California
5 Department of General Services, were you
6 seeking to obtain information from them?
7
A. I think it was expected to be
8 sharing of information. So, for example, if --
9 you know, once --once we were comfortable that
10 they had done their due diligence on the
11 seller, then we would have moved to the next
12 step, but --but that --the con --the --the
13 telephone conversation didn't last very long at
14 all, maybe three minutes, and --and --and
15 that was it.
16
Q. And the aspect of sharing
17 information about the seller --the seller, by
18 the way, that's your client, right, Blue Flame
19 Medical?
20
A. Yes.
21
Q. You sought to share information with
22 California about your customer; is that
10 transaction monitoring.
11
Q. Well, your customer due diligence is
12 in connection with opening the account,
13 correct?
14
A. Oh, no. The ongoing monitoring
15 lasts for the life of the account.
16
Q. So this was in connection with your
17 monitoring responsibility for the account?
18
A. Yes.
19
Q. Correct?
20
A. Correct. Yes. Correct. Sorry.
21
Q. Why did you want the State of
22 California to know this information about your
Page 249
1 customer?
2
MR. ORSECK: Object to form.
3 Foundation.
4
THE WITNESS: It was more us wanting
5 to make sure that they knew who they were
6 transacting business with.
7
BY MR. WHITE:
8
Q. Was it your intention to get the
9 State of California to recall the wire?
10
A. No. That was not our intention.
11
Q. Why did you tell the bank --why did
12 you tell the State of California that the
13 company had just been set up?
14
A. When we asked the State of
15 California if --if they had done due diligence
16 on the seller, they didn't have any response to
1 7 that. They --they indicated that they --that
18 they didn't know anything about them. And --I
19 don't know if that's the exact words they used.
20
But it was pretty clear that --
21 because we --we did tell them that the
22 business was formed three days ago, and they
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1 didn't know that.
2
Q. Had they been told something else?
3
A. I don't --I don't know what they
4 were told, but they didn't have that piece of
5 information.
6
Q. If a counterparty bank called you
7 out of the blue as the originating bank and
8 gave you information about your transaction
9 counterparty, as you did with California here,
10 wouldn't you expect their reaction would be to
11 get suspicious about the transaction?
12
MR. WHITE: Tell you what. I'm
13 going to withdraw that question before you
14 object, Gary.
15
BY MR. WHITE:
16
Q. Was your purpose in this call to let
1 7 the State of California know about the red
1
2
Page 252
MR. ORSECK: Object to form.
THE WITNESS: I --I know that they
3 are political operatives. I mean, for me it's
4 all kind of the same thing: political
5 fund-raiser, lobbyist.
6
I will tell you that Mike Gula, when
7 he was opening another account with us that I
8 guess is somehow or another tied into all of
9 this --Redline Strategies is the account --he
10 did say that it was going to be their lobbying
11 arm. And that was --
12
BY MR. WHITE:
13
Q. But you're aware --
14
A. And that was about --
15
Q. I'm sorry.
16
A.
--a week before the --the
17 transaction.
18 flags that you had seen in connection with the
18
Q. You're aware that Mr. Gula's
19 transaction?
20
A. I would portray the purpose of our
21 call to simply answer many of the questions
22 that we had about the transaction.
Page 251
19 business during the time he was the bank's
20 customer for those ten years was as a political
21 fundraiser, correct?
22
MR. ORSECK: Object to form.
1
Q. Was the State of California asking
1
Page 253
THE WITNESS: Like I said before,
2 you questions about the transaction?
3
A. Yeah, they --they did. I don't
4 remember the specific questions that they asked
5 us. But I think they asked us, "Well, you
6 know, what else about this company?"
7
And that's when we --so what we
8 told them was that --that the company had been
9 opened three days before, that the bank account
10 had been opened the day before, and that we
11 knew that one of the principals had --and
12 actually we told them that both of the
13 principals --because Mike Gula told us a
14 little about John Thomas --did not have any
15 experience in providing medical supplies.
16
Q. Did you tell them that they were
17 lobbyists?
18
A. I think we did, yeah. I think we
19 did.
20
Q. You're aware that they are --
21 neither of them are, in fact, lobbyists,
22 correct?
2 I --I knew that he was a political operative.
3 I mean, we --we have clients who are
4 lobbyists. We have client --clients who are
5 political fundraisers.
6
All the same to me, to be honest
7 with you.
8
MR. WHITE: One second.
9
Sorry about that.
10
BY MR. WHITE:
11
Q. Could you bring up Plaintiffs
12 Exhibit 28, please.
13
A. Are we looking for --did you say
14 28?
15
Q. 28, yes.
16
A. Okay. I have it up. It looks like
17 it's many pages.
18
Do you want to focus in on a
19 specific area?
20
Q. The area I want to ask you about
21 starts on page CBB 00663, which is the third
22 page.
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1
A. Okay. I'm on the third page.
Page 254
2
Q. That e-mail has I believe the same
3 document about the wire transfer notice into
1
And because this entity was just
2 formed, I assumed that they weren't
3 participating in any other type of FDIC
Page 256
4 the Blue Flame Medical account ending 7459 in
5 the middle of that page that Claudia Mojica
4 insurance program, which means that the --the
6 sends to Mike Richardson and others?
5 individual limit for Blue Flame would have been
6 higher than the 150. I can't tell you how much
7
A. Yeah.
7 higher, but it would have been higher than 150.
8
Q. Do you see that?
9
A. Yes.
10
Q. And --and there appears to be a
11 response to Mr. Richardson's question about
12 forwarding the details of the incoming wire?
13
A. That's correct.
14
Q. And then Mr. Richardson responds,
8
Q. Would it have been as much as 450,
9 450 million?
10
A. I --I can't answer that question.
11
But what I can tell you is that we
12 had other options to --to secure that
13 additional amount for him. We could have
14 purchased treasury bills, short-term treasury
15 bills, and held them in custody for him.
16
Q. Do you know why Mr. Richardson
15 and you are added to the chain at this point at
16 12:29 p.m. on March 26th: "Everyone --the
17 wire from the State of California was received
18 @ 15 minutes ago. See the details Claudia
17 wanted some clarity around how long these funds
18 would be in deposit?
19 passed along below. We have the ICS
20 documentation ready and, once we have the
21 instructions from you and David, will be
22 sending Mike Gula --sending to Mike Gula to
19
MR. ORSECK: Object to form.
20
THE WITNESS: I don't know why he
21 was asking for that information.
22
BY MR. WHITE:
Page 257
Page 255
1 sign so that these funds can be moved off
1
Q. Did you consider contacting Mr. Gula
2 balance sheet. However, the ICS program has a
2 at this point?
3 maximum limit of 125 million. Need to have
3
A. No, we didn't.
4 some clarity around how long these funds would 4
Q. Did there come a time when you were
5 be on deposit."
5 on a phone call with Tim Coffey at JPMorgan?
6
What does the --the limitation of
6
A. I was on a call with Tim Coffey at
7 the ICS program represented by Mr. Richardson 7 some point, yes.
8 here, is that accurate?
8
Q. What do you recall about that
9
A. No. It's not accurate.
9 conversation?
10
Q. What is the accurate --what's
10
A. There were a number of calls with
11 inaccurate about it?
11 JPMorgan. They called us first and asked us to
12
A. Well, two things are inaccurate
12 hold the funds.
13 about it. The limit's actually 150 million.
13
Excuse me. I --let me just be in
14 And there's a separate limit for CDARS, which
15 is 50 million.
16
But ICS is very flexible with its
17 clients. In other words, what they'll do is
18 they'll give you far more than that. What --
19 what they to is they take the tax ID number of
14 general about representatives from JPMorgan.
15 I --I know there were two: Rakesh and --and
16 Tim Coffey.
17
Probably the longer conversation was
18 with Rakesh. And he was --he was obviously
19 doing due diligence on the transaction and
20 your client, and they run it through their
20 asking us a number of different questions.
21 network, and they see how many banks they can 21
We also had a couple of
22 place the deposits at.
22 conversations with Tim Coffey. I know I was or
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Page 320
1 Flame Medical LLC"?
1 Flame Medical LLC, that mirrors what happenec
2
A
Yes. That's the top entry.
2 to our reserve account.
3
Q.
You're talking about the one beneath 3
So when the money left our reserve
4 that.
5
A
I'm talking about the one that's:
6 WT - Blue Flame Medical LLC."
7
Q.
And I see the number for the wire
8 amount there.
9
What does that line entry indicate?
10
A
That line entry indicates the --
11 the -- the incoming wire transfer into our
12 Federal Reserve Bank reserve account.
13
Q.
So the incoming F edLine transfer
14 from JPMorgan from California is reflected
15 there?
16
A
Correct.
17
Q.
And does that have an effect on the
18 balance that is in the second column to the
19 right?
20
A
No. It -- it doesn't. There's
21 always an offsetting entry.
22
So normally, if -- if -- if the
Page 319
1 deposit had credited --if --if --if the
2 deposit was made to the account, which it
3 wasn't --but had it been made to the account,
4 the offsetting entry to that general ledger
5 debit would have been a general ledger credit
6 to a liability account reflecting an increase
7 in the deposit balance of the account.
8
So it would have been an increase in
9 the liabilities of the bank, the deposit
10 liabilities of the bank. But the --
11
Q. I see a --
12
A. But because --
13
Q. Go ahead?
14
A. But --but because the wire did not
15 --was not deposited into the client's account,
16 that entry posted to the Fed account --the Fed
1 7 general ledger account.
18
Q. I see an offsetting credit as well.
19
What --what does that mean?
20
A. There are two offsetting credits --
21 or there --there are two --two credits there.
22 The first line, so wire transfer return, Blue
4 account, then the general ledger account was
5 credited that night when everything posted.
6
And the offset to that was the other
7 entry to the debit to the same general ledger
8 account. And that's the third item down, wire
9 transfer return California State Treasurer.
10
Q. I'm sorry.
11
What entry would we see if the money
12 had flowed through the normal course to the
13 Blue Flame Medical account?
14
A. If the --if the --if the money
15 was --was deposited into the client's account,
16 then the offsetting entry on general ledger
1 7 would have been a credit to a liability account
18 at the bank. And that liability account would
19 be noninterest bearing demand accounts.
20
Q. And that's different from the credit
21 that's shown here on the general ledger?
22
A. Yes. The credit that's shown here
Page 321
1 is made to the Fed account.
2
Q. Now --
3
A. Now --go ahead. Sorry.
4
All of these entries are made to the
5 same account. They're all made to the --to
6 the Federal Reserve Bank general ledger
7 account.
8
And you can see that up at the top
9 where it says: Title Due From Fed Reserve Bank
10 Interest Bearing.
11
Q. And would this account --if the --
12 if --if the money had been credited to the
13 Blue Flame Medical account, would this ledger
14 show that information, or would that be
15 somewhere else?
16
A. It would be on the same ledger. It
17 would be in a different account.
18
Q. And where would that account be
19 reflected on the document that we have?
20
A. I'm seeing if it's actually in here.
21 No. It's not in here.
22
I --it's --it's a --it's a
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1 liability account. It begins with a 2. I
1 checking.
2 don't know it off the top ofmy head. It's --
2
BY MR. WHITE:
3 all of our different deposit account types have
4 a corresponding general ledger account applied
5 to them. And it would have gone to the --the
6 business demand general ledger account,
7 there --
8
Q. So --
9
A. Increasing --
10
Q. Go ahead.
11
A.
--our deposit liabilities.
12
Q. So if this document alone doesn't
13 answer the question of whether the money was
14 credited to the Blue Flame Medical account,
3
Q. Business demand checking; that's
4 your best recollection of what the report would
5 be entitled?
6
A. That's my best understanding, yes,
7 based on the account type that --that --that
8 was open for Blue Flame.
9
Q. And would --would all business
10 demand checking accounts have their debits and
11 credits in that same ledger?
12
A. There would not be separate entries.
13 They'd be done in a aggregate. So you'd see
14 one big entry for all the different
15 there's another document you --you would need 15 transactions.
16 to look to for that?
16
Q. Okay. Thank you.
1 7
Do I have --
1 7
In your conversation with Mr. Gula
18
MR. ORSECK: Object to --
18 at the bank, did you tell him to find a bank
19
BY MR. WHITE:
19 that could handle the wire when you spoke with
20
Q.
--that correct?
20 him?
21
MR. ORSECK: Object to form.
21
A. When we spoke to him, we did inform
22
THE WITNESS: This information shows 22 him that we were going to be closing the
Page 323
1 the entry going through the Federal Reserve
2 Bank account. There wasn't an entry that
3 posted to the deposit liabilities account. So
4 there's nothing to show you.
5
BY MR. WHITE:
6
Q. But that --the deposit liabilities
7 account is not included in this --in this
8 exhibit; is that right?
9
A. Looks like it --this --this covers
10 certain asset accounts. It does not cover any
11 liability accounts.
12
Q. What is the name of the account that
13 we would need to see in order to confirm that
14 there had not been a deposit of these funds
15 into the Blue Flame Medical account?
16
A. 1 --
17
MR. ORSECK: Object to form.
18 Foundation.
19
THE WITNESS: I don't have any notes
20 right in front of me. So I can't tell you
21 exactly what it is. But it's going to be
22 something along the lines of business demand
Page 325
1 account; and that, should he work things out
2 with the State of California, that he should
3 make sure that --that he sends the funds to a
4 new bank account at another bank.
5
Q. Did you tell Mr. Gula that he should
6 find a bank that could handle the wire?
7
A. I don't know if I phrased it that
8 way or not. I do know that I suggested that he
9 approach JPMorgan. Because they were the
10 county --counterparty to the transaction. So
11 they may be willing to open the account.
12
Q. Did Chain Bridge Bank close the Blue
13 Flame Medical account at that point?
14
A. Yes, we did.
15
Q. Why?
16
A. We closed the account because of the
1 7 unusual nature of the transaction and the --
18 the numerous red flags that --that had popped
19 up on this transaction.
20
Q. Did you mention to Mr. Gula when you
21 met with him why the bank had refused to be in
22 contact with him that day --
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Page 350
1 roll it up --roll it down? You know, why do
2 you feel like you have to immediately just
3 disappear?
4
Q. Okay. Thank you.
5
You --you mentioned, during your
6 testimony today on a few occasions, that you
7 believed there were red flags presented
8 regarding this transaction; is that accurate?
9
A. Yes. "Red flags" has come up a lot.
10
Q. All right. I want to focus your
Page 352
1 amount of the transactions didn't match up with
2 press releases from the State of California.
3
So I think it was before we called
4 Mike --or that evening. I'm not sure when it
5 was --we looked up any press releases from the
6 State of California. We did find one that had
7 been issued a couple days before that mentioned
8 that $30 million had been allocated for the
9 purchase of a million masks and the hiring of
10 nurses and the purchase of ventilators. And
11 attention on the time period at which JPMorgan 11 that was a press release issued by
12 told you, Mr. Coffey told you, that it was
12 Governor Newsom.
13 recalling the wire.
13
But there was nothing about this
14
You remember we listened to that
14 transaction, which would have been 20 times
15 phone call?
15 larger.
16
A. Yes.
16
Q. Mr. --sorry.
17
Q. As of that point in time, what red
17
Mr. Brough, by the --by the time
18 flags were on your mind regarding this
19 transaction?
20
A. There were many. Every --every --
21 every few minutes another one would pop up.
22 But I mean just going back to the --the sheer
Page 351
1 size of the wire.
2
Q. Why was the size of the wire itself
3 a red flag?
4
A. A wire of $456 million is multiple
5 times larger than any other wire that the bank
6 had received, I --I think by a multiple of
7 about 22 times. So in other words, the
8 previous largest wires that we got were around
9 $20 million. And so that's --that's --that's
10 the biggest red flag right there.
11
And the fact that it was --it was
18 that JPMorgan recalled the wire, you knew the
19 transaction was larger than that, right, than
20 one you'd read about?
21
A. Oh, yes. Definitely. Oh, yeah.
22 We --we knew about that on the --the 25th.
Page 353
1
Q. So far as you're aware, did
2 Mr. Gula, at the time he opened the account on
3 the 25th, let anybody at the bank know that he
4 was expecting a wire of more than $450 millionň
5
A. No, he did not.
6
Q. Was that a red flag, in your mind?
7
A. Yes. That's --
8
Q. Why?
9
A. Well, he knew at the time that he
10 was going to be receiving a wire of $456
11 million. And when asked about --when --in
12 sent into --or I'm sorry --it was sent to a
12 order to open the account, we asked that
13 company that had just opened their bank accoun 13 question, you know: What are your anticipated
14 the previous day and had --had opened their
15 business three days before. That's a --that's
16 a very standard red flag.
1 7
There was the red flag that Mike
18 Gula and John Thomas were not in the medical
19 supply business. They were in the political
20 influence business. And that's quite a
21 different profession than medical supplies.
22
The number of masks and the dollar
14 wire volumes?
15
And he gave us an answer. And it
16 was nowhere near $450 million. As a matter of
1 7 fact, I think the average wire size was going
18 to be about 5 million.
19
Q. Were you aware of this as of the
20 time that JPMorgan recalled the wire?
21
In other words, did you know what
22 Mr. Gula had said to Mariano Castagnello at the
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Page 354
1 time of the account opening?
2
A. We --we knew that Heather didn't
3 find out about the dollar amount of the
4 transaction until after the account was open.
5
Q. Why is that a red flag?
6
A. Because it's inconsistent with the
7 activity that's --that's --that's being --
8 being expected by the client.
9
We always ask that question when we
10 open an account. We put it into our platform.
11 And if the volumes are greater than that, then
12 that's always a red flag.
13
Q. Let me ask a more direct question.
Page 356
1 bank is referenced as an indicator of
2 potentially suspicious activity in the Bank
3 Secrecy Act?
4
A. I do not know if that is
5 specifically in the Bank Secrecy Act. I do not
6 know the answer to that. I do know that it
7 would qualify as a red flag.
8
Q. You also testified to your
9 impression, during your conversation with
10 Natalie Gonzales and Mark Hariri on the 26th,
11 that they seemed surprised to learn that
12 Mr. Thomas and Mr. Gula had just open the
13 account or just opened the business and did not
14
If you are aware that a new customer
14 have prior experience in this field.
15 is not forthcoming with what you consider to be 15
Am I --am I correctly
16 important information that the bank is
17 requesting, does that, all else equal, give you
18 cause to question the customer's integrity?
19
MR. WHITE: Object to leading.
20
THE WITNESS: I would --I would
21 agree with that, yes. It has to go with
22 whether or not we can --we can rely on what
16 characterizing your testimony?
17
A. Yes. They were surprised. They
18 were very surprised.
19
Q. Did you didn't infer one way or the
20 other from their surprise whether anyone at
21 Blue Flame had advised California officials of
22 those facts?
Page 355
Page 357
1 they tell us in the future.
2
BY MR. ORSECK:
3
Q. You testified earlier today --and I
4 think we've seen documents --that you and
5 Mr. Evinger asked Mr. Gula for certain document
6 --documents to back up the transaction when
7 you spoke to him on the afternoon of the 25th,
8 correct?
9
A. That is correct.
10
Q. And Mr. Evinger sent him a follow-up
11 e-mail making that request?
12
A. Yes. We asked in the telephone
13 call. And then David sent a follow-up e-mail.
14
Q. Did Mr. Gula provide the requested
15 information?
16
A. Mr. Gula never supplied the
17 requested information.
18
Q. Was that, to you, a red flag?
19
A. Yes. That certainly was a red fag.
20 Absolutely.
21
Q. Is the --do you know whether the
22 failure to provide requested information to a
1
A. I assumed that, if the people who
2 were responsible for sending the wire didn't
3 know about the --the recipient of the wire,
4 then yes, that's a red flag.
5
MR. WHITE: Objection to the
6 assumption.
7
BY MR. ORSECK:
8
Q. Why --why would it be a red flag
9 that they didn't know those facts?
10
A. I think, with the transaction of
11 $456 million, everybody who's involved in that
12 transaction is going to know the legitimacy of
13 the transaction.
14
Q. What do you mean by that?
15
A. I mean they're going to know whether
16 or not the --the purchaser --I'm sorry --the
17 seller of the product is legitimate, they've
18 been vetted and --and been approved and gone
19 through that due diligence process.
20
And --yeah. It was a surprise to
21 hear that they didn't know that the company had
22 been formed three --three days ago.
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