Transcript of Evidentiary Hearing, March 20, 2024 — United States v. Keith Berman (No. 1:20-cr-00278)
Summary
Transcript of an evidentiary hearing in United States of America v. Keith Berman, Criminal Action No. 20-00278, in the U.S. District Court for the District of Columbia, held March 20, 2024, at 11:30 a.m. before the Honorable Trevor N. McFadden, filed as Document 186 on March 22, 2024. The appearances list Mathew Reilly and Christopher R. Fenton for the government and Kevin B. Collins and others from Covington & Burling and the Office of the Federal Public Defender for the defendant. The index lists Joshua Mitts, Ph.D., as a witness for the government and James Reilly as a witness for the defendant, with government and defendant exhibits received in evidence. The reporter is Lisa Edwards.
Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used
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“Transcript of Evidentiary Hearing, March 20, 2024 — United States v. Keith Berman (No. 1:20-cr-00278).”
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Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 1 of 166 1
1 UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
2
* * * * * * * * * * * * * * * * )
3 UNITED STATES OF AMERICA, ) Criminal Action
) No. 20-00278
4 Plaintiff, )
)
5 vs. )
)
6 KEITH BERMAN, ) Washington, D.C.
) March 20, 2024
7 Defendant. ) 11:30 a.m.
)
8 * * * * * * * * * * * * * * * * )
9
10 TRANSCRIPT OF EVIDENTIARY HEARING
BEFORE THE HONORABLE TREVOR N. McFADDEN
11 UNITED STATES DISTRICT JUDGE
12
13 APPEARANCES:
14 FOR THE GOVERNMENT: MATHEW REILLY, ESQ.
CHRISTOPHER R. FENTON, ESQ.
15 U.S DEPARTMENT OF JUSTICE
Criminal Division, Fraud Section
16 1400 New York Avenue, Northwest
Washington, D.C. 20530
17
FOR THE DEFENDANT: KEVIN B. COLLINS, ESQ.
18 LORI TAUBMAN, ESQ.
JOSE R. RAMOS, ESQ.
19 JOSE F. GIRON, ESQ.
BRANDON HOWELL, ESQ.
20 JONAH T. PANIKAR, ESQ.
NICK XENAKIS, ESQ.
21 COVINGTON & BURLING, LLP
850 Tenth Street, Northwest
22 Washington, D.C. 2001
23 MICHELLE PETERSON, ESQ.
OFFICE OF THE FEDERAL PUBLIC
24 DEFENDER
625 Indiana Avenue, Northwest
25 Suite 550
Washington, D.C. 20004
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 2 of 166 2
1 REPORTED BY: LISA EDWARDS, RDR, CRR
Official Court Reporter
2 United States District Court for the
District of Columbia
3 333 Constitution Avenue, Northwest
Room 6706
4 Washington, D.C. 20001
(202) 354-3269
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Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 3 of 166 3
1 I N D E X
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3 Direct Cross Red.
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WITNESSES FOR THE GOVERNMENT:
5
Joshua Mitts, Ph.D. 8 30 117
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7 WITNESS FOR THE DEFENDANT:
8 James Reilly 49 85
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EXHIBITS RECEIVED IN EVIDENCE PAGE
10
11 Government's Exhibit No. 00 11
12 Government's Exhibit No. 6-A2 27
13
14 Defendant's Exhibit No. 5 50
15 Defendant's Exhibit No. 001 62
16 Defendant's Exhibit No. 002 63
17 Defendant's Exhibit No. 012 64
18 Defendant's Exhibit No. 010 69
19 Defendant's Exhibit No. 042 71
20 Defendant's Exhibit No. 004 77
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Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 4 of 166 4
1 THE COURTROOM DEPUTY: Your Honor, this is
2 Criminal Case 20-278, the United States of America versus
3 Keith Berman.
4 Counsel, please come forward to identify
5 yourselves for the record, starting with the Government.
6 MR. REILLY: Good morning, your Honor. Matthew
7 Reilly and Christopher Fenton for the United States. We're
8 joined at counsel table by our paralegals, Rachel Boyer and
9 Grace Souder.
10 Thank you, your Honor.
11 THE COURT: Good morning, folks.
12 MR. COLLINS: Good morning, your Honor. Kevin
13 Collins from Covington on behalf of Mr. Berman, who's now
14 present.
15 I'm joined by a number of colleagues from
16 Covington: Jonah Panikar, José Giron, José Ramos, Lori
17 Taubman, Michelle Peterson from the Federal Defender's
18 Office and Nick Xenakis. And on the bench behind is Brendan
19 Howell.
20 THE COURT: Good morning.
21 And good morning, Mr. Berman.
22 My apologies to everyone for the late start. I
23 know Mr. Berman had -- we didn't get his medications this
24 morning.
25 And I'm sure that's been frustrating for you, sir,
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 5 of 166 5
1 and I know for everyone else. I apologize for that delay.
2 Mr. Collins, while I've got you up here, you are
3 expecting to present two witnesses; is that correct?
4 MR. COLLINS: We are, your Honor. We have a
5 witness on loss amount and a witness on sort of the
6 background, the technology and sort of the product
7 development. We have Professor Williams, who was going to
8 testify during trial. There was some discussion about
9 whether this technology was theoretically feasible and
10 possible.
11 And -- but I don't know. I understand the Court
12 has obviously a busy docket. So we defer to how the Court
13 wants to proceed. But one thought we had as we were sitting
14 here is that the Court take the two experts, the
15 Government's and ours, on loss amount and, if there's time,
16 then have Professor Williams testify or potentially
17 reschedule him to appear remotely.
18 He apparently has a bit of a conflict that starts
19 very soon. He has a project for NASA where he has to be
20 available at his facility. But he can make time to appear
21 remotely. So I just -- I'm giving you sort of all of the
22 arguments.
23 THE COURT: Yes. Thanks.
24 I guess I was a little surprised to see your
25 notice about him. I understood this was going to be about
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 6 of 166 6
1 loss amounts. I'm very interested to hear that
2 back-and-forth.
3 I mean, what he's describing there really doesn't
4 seem related to loss amount. And I don't think you're
5 disagreeing with that --
6 MR. COLLINS: I agree. I don't disagree.
7 THE COURT: -- you know, perhaps more about your
8 client's culpability or something like that. I mean, I feel
9 like there's pretty narrow room for you to be playing on
10 that.
11 MR. COLLINS: Fair enough.
12 I mean, we think it would go to a couple factors
13 under 3553(a): number one, the nature and circumstances of
14 the offense. I mean, this was actual, real development. I
15 mean, Mr. Berman and DECN hired real experts, you know.
16 They were pursuing an FDA application. So this wasn't as if
17 this was just sort of totally made up. There was a
18 theoretical basis for this technology. And in fact,
19 Mr. Berman just got out in front of his skis in the press
20 releases. That's kind of what this case is about.
21 But the Government has refused to acknowledge that
22 this technology was technically feasible to detect a virus.
23 We -- there was a lot of colloquy with the Court and the
24 Government at the pretrial conference in November, and we
25 stipulated. And the Government sort of waffled back and
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 7 of 166 7
1 forth. We never got to it.
2 That's why -- they've injected this issue into the
3 case. So we brought Professor Williams here to say:
4 Actually, this was real technology, you know. They might
5 not agree with that. But the point is, we're not saying it
6 worked; but theoretically, it was possible to get a test
7 that would detect the virus.
8 THE COURT: Okay. Let's see where we are after
9 loss amounts and then chat on that. I'm not thrilled about
10 doing a trial after --
11 MR. COLLINS: Fair enough. But my -- from our
12 perspective, there was going to be testimony from
13 Dr. Williams at trial. So if it was relevant at trial,
14 which, from our perspective, certainly it would be relevant
15 background under 3553(a).
16 THE COURT: Okay.
17 MR. COLLINS: That's our position, your Honor. I
18 understand where you're coming from.
19 A number of my colleagues will be handling some of
20 the exams. I'll act like the Nationals manager and just
21 sort of call them out as the issues arise.
22 THE COURT: That's fine, as long as I'm hearing
23 from one person per thing. I'm not excited about --
24 MR. COLLINS: We're not tag-teaming.
25 THE COURT: Great.
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 8 of 166 8
1 So, Mr. Reilly, you have a professor? Should we
2 get started with your witness? Anything before we get
3 started?
4 MR. REILLY: Your Honor, the only thing is we had
5 anticipated Professor Mitts to testify, listen to the
6 testimony of Mr. Reilly and offer brief rebuttal testimony.
7 And that's the way we had prepared and structured this, and
8 that's what we noticed to the defense. If the Court would
9 be okay with that, that would be our preference.
10 THE COURT: I have no problem with, I mean, all
11 three gentlemen being present for any of this that they
12 wish.
13 MR. COLLINS: I think they're entitled to be
14 present.
15 THE COURT: Yes. Great. Thank you, sir.
16 MR. REILLY: With that, your Honor, the United
17 States calls Professor Joshua Mitts.
18 JOSHUA MITTS, Ph.D., GOVERNMENT WITNESS, SWORN.
19 THE COURT: Good morning, sir.
20 THE WITNESS: Good morning.
21 DIRECT EXAMINATION
22 BY MR. REILLY:
23 Q. Would you please state and spell your name for the
24 record?
25 A. Joshua Mitts, M-I-T-T-S.
Mitts - DIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 9 of 166 9
1 Q. Professor Mitts, would you briefly run through your
2 academic qualifications for the Court.
3 A. I have a bachelor's degree from Georgetown University, a
4 J.D. from Yale Law School and a Ph.D. in finance and
5 economics from Columbia University, Columbia Business
6 School.
7 Q. Professor --
8 THE COURT: You got a J.D. and you got a Ph.D.
9 I'm shocked.
10 THE WITNESS: I'm not the only one.
11 BY MR. REILLY:
12 Q. Where are you currently employed?
13 A. Columbia University. Columbia Law School.
14 Q. What's your role there?
15 A. I am a professor of law at the law school.
16 Q. And does -- do you specialize in any particular area of
17 research?
18 A. My research focuses on trading in the financial markets.
19 Q. Does your research focus on economic theory and
20 quantitative measures of valuation?
21 A. Yes.
22 Q. Are there any other areas of specialty in your research?
23 A. Sure. I write on the nature of information transmission
24 in the financial markets, how informed trading makes its way
25 into stock prices. I write on insider trading, market
Mitts - DIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 10 of 166 10
1 manipulation and other topics in that space.
2 Q. Is it common for an economist to teach at a law school,
3 Professor Mitts?
4 A. It is. Many have J.D.s and Ph.D.s, as I do. But I do
5 have a colleague who does not have a J.D. That's been an
6 increasing trend in recent years.
7 Q. Has your work been published in financial economic
8 publications?
9 A. Yes. I have published in the Journal of Finance, which
10 is a leading peer-reviewed journal in financial economics,
11 and I have also published in peer-reviewed law and economics
12 journals, the Journal of Law and Economics, the Journal of
13 Legal Studies, published interdisciplinary work that is
14 fundamentally economic in methodology.
15 Q. Have you served previously as an expert in federal court
16 securities cases?
17 A. Yes.
18 Q. And have you ever been deemed an expert by a federal
19 court in connection with any of those representations?
20 A. Yes.
21 Q. Would you briefly summarize the judicial findings?
22 A. Sure. I was qualified as an expert in the Set Capital
23 v. Credit Suisse case in the Southern District of Florida of
24 New York. There was a Daubert motion to disqualify me that
25 the Court denied and found that my testimony was reliable.
Mitts - DIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 11 of 166 11
1 My testimony in the Bayer Securities Litigation matter in
2 the Northern District of California was also accepted by the
3 Court. There wasn't a Daubert motion, but the Court
4 essentially adopted my report.
5 Q. Do you have a consulting expert business, Professor
6 Mitts?
7 A. I do.
8 Q. Would you briefly describe what kind of services that
9 business offers?
10 A. I have a consulting LLC that provides both consulting
11 expert services. So generally, let's say, prior to
12 testimony or in a case where counsel are contemplating
13 bringing a case, I'll be engaged as an expert. But I also
14 testify through that consulting LLC.
15 MR. REILLY: And, Ms. Boyer, if you'd please bring
16 up Government's Exhibit 00.
17 BY MR. REILLY:
18 Q. Professor Mitts, is this a current copy of your CV?
19 A. Yes, it is.
20 MR. REILLY: Your Honor, I would offer to admit
21 Government's Exhibit 00 into evidence.
22 MS. TAUBMAN: No objection.
23 THE COURT: Without objection, 00 is in.
24 (Whereupon, Government's Exhibit No. 00 was
25 entered into evidence.)
Mitts - DIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 12 of 166 12
1 MR. REILLY: Your Honor, I would move to certify
2 Professor Mitts as an expert in financial economics.
3 MS. TAUBMAN: No objection.
4 THE COURT: Without objection, Professor Mitts
5 will be recognized as an expert in the area of financial
6 economics.
7 BY MR. REILLY:
8 Q. Professor Mitts, were you engaged by the Department of
9 Justice in this matter?
10 A. I was.
11 Q. What were you asked by the Department to do?
12 A. I was asked to evaluate, one, the losses to investors by
13 applying the modified rescissory method set out in the
14 United States Sentencing Guidelines and, two, to evaluate
15 whether the MRM calculation was a reasonable estimate of the
16 actual loss suffered by investors.
17 Q. And are you being paid for your work on this matter?
18 A. I am.
19 Q. And do you have a contract with the Government where you
20 can bill $600 an hour up to $70,000 for your work in this
21 matter?
22 A. Yes.
23 Q. So now that you've explained what you were engaged to
24 do, would you walk the Court through the process you
25 undertook to complete that work.
Mitts - DIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 13 of 166 13
1 A. Sure. So first, I needed to collect pricing data to
2 evaluate the change in price, which is part of the MRM
3 formula. So I collected pricing data from the OTC Markets
4 database that basically has the closing price and other data
5 points for each OTC traded stock.
6 I collected information on the shares outstanding
7 and other data points concerning the company here, Decision
8 Diagnostics. I applied the methodology, which I'm happy to
9 get into the calculations, and that yielded my estimate of a
10 numerical loss. That was the first opinion.
11 And the second opinion: To evaluate whether it
12 was reasonable, I employed a number of additional analyses
13 to examine whether the price decline reflected in that
14 calculation was the product of other factors, external
15 market forces. And I'm happy to walk through each of those
16 steps.
17 Q. Starting with the mathematical calculation, what method
18 did you use to calculate the loss under the guidelines?
19 A. So generally speaking, the guidelines set out a
20 comparison of average prices over particular intervals.
21 So basically, I needed to collect the prices over
22 the defined intervals that I looked at and then I needed to
23 compute the difference in average prices.
24 Then I needed to multiply that difference in
25 average price by the number of shares that were outstanding.
Mitts - DIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 14 of 166 14
1 And there were actually two different number of shares
2 outstanding that I used for reasons I'm happy to explain.
3 And I simply multiplied the difference in price by
4 the number of shares outstanding to obtain a measure of the
5 total decline in market value caused by the loss according
6 to the MRM -- caused by the fraud; excuse me -- according to
7 the MRM method.
8 Q. And this is the methodology found in the application
9 note to Section 2B1.1 of the sentencing guidelines?
10 A. That's correct.
11 MR. REILLY: Ms. Boyer, would you put up
12 Government's Demonstrative Exhibit 6-X.
13 BY MR. REILLY:
14 Q. Can you see that, Professor Mitts?
15 A. Yes. Thank you.
16 Q. Would you walk the Court through kind of the
17 mathematical process you undertook here to come up with your
18 loss amount figure?
19 A. Sure. So using the closing price data that I described
20 previously, I took the period of the fraud, which is defined
21 as March 3rd, 2020, to December 17th, 2020. I took the
22 average of the closing prices over that period, which is
23 19.54 cents per share. I then calculated the average price
24 over the 90 days following the fraud or following revelation
25 of the fraud, which was December 18th, 2020, to March 17th,
Mitts - DIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 15 of 166 15
1 2021. The average price during that period I calculated to
2 be 2.13 cents per share.
3 And then I simply took the difference of those two
4 numbers, which yielded 17.41 cents per share.
5 THE COURT: Professor, did you come up with the
6 period of the fraud or is that something the Government
7 provided for you?
8 THE WITNESS: The Government provided me with the
9 dates for the period of the fraud. I did evaluate based on
10 the materials that I reviewed that were publicly available,
11 the indictment and so forth, whether that seemed reasonable
12 to me. And it did seem reasonable to me. But I did not
13 select the dates myself.
14 THE COURT: Understood.
15 BY MR. REILLY:
16 Q. And would you just at a high level explain why you
17 thought the date the Government gave you for the period of
18 the fraud was reasonable?
19 A. Sure. So generally speaking, it didn't seem to me that
20 there really was much question concerning the beginning
21 date.
22 But the question of when the truth was revealed to
23 the market, you know, I basically started from the question:
24 Well, when was the entirety of the fraud revealed? And it
25 seemed to me reasonable to look at the publication of the
Mitts - DIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 16 of 166 16
1 indictment as a date when the totality of the Defendant's
2 activities were revealed to the market.
3 Q. Looking at the second chart here on the demonstrative
4 exhibit, Professor Mitts, would you walk through the
5 calculations that you ran here to determine the loss amount?
6 THE COURT: Sorry. I want to go back to that
7 point.
8 As you're probably aware, there's -- a lot seems
9 to turn on that. Is this something that is within your area
10 of expertise to try to determine the appropriate time
11 period? Or is that something that you're looking at as a
12 lawyer yourself and law professor, but not necessarily --
13 that's not where your skill lies?
14 THE WITNESS: Your Honor, I was not asked by the
15 Department to evaluate that question.
16 I think generally my view would be that that's not
17 a question that can be answered by financial economics.
18 What I can say is, it would seem to me that the
19 key question would be for any alternative date what
20 information was released versus other activity potentially
21 by the Defendant. And it did not seem obvious to me that
22 there was a date other than this date where the entirety of
23 the information had been released to the market. And I'm
24 familiar generally with, you know, what's in the record
25 concerning the Defendant's overall conduct in statements
Mitts - DIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 17 of 166 17
1 that were made even after the trading suspension.
2 So again, I wasn't asked to choose the date. But
3 it didn't seem, you know, like there was another date that I
4 just -- I felt like, well, we should have used that date.
5 It seemed to me that there was enough ambiguity that I as an
6 economist could feel comfortable with December 18th. But I
7 don't think the question really can be answered as a matter
8 of financial economics.
9 THE COURT: So I don't think either party is
10 suggesting this. But it occurred to me that looking at how
11 the stocks were trading before the fraud could be at least
12 as instructive as the time afterwards.
13 Does that resonate with you at all? I mean,
14 obviously, that's not what the guidelines suggest. But why
15 might that -- why is that not an equally good kind of
16 baseline?
17 THE WITNESS: I think your Honor is making a good
18 point, that if we have an inflationary period, you know, at
19 least there's another period where there wasn't inflation in
20 the price.
21 So I agree with your Honor that, prior to the
22 initial misstatement, that is a period not characterized by
23 the price inflation and the fraud.
24 I guess my thought would be that, you know, there
25 could be other information that came out after the fraud was
Mitts - DIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 18 of 166 18
1 revealed, and that would be relevant to the company. And I
2 wouldn't necessarily be measuring the impact of that other
3 information, let's say, in late 2020 or early 2021 if I were
4 looking at the prices in 2019, for example, as a direct
5 measure of that counterfactual that we're discussing.
6 But I do use -- and I'm happy to say more about
7 this -- I do use the period before the fraud in my analysis.
8 I just don't use it in this particular calculation.
9 THE COURT: Okay.
10 BY MR. REILLY:
11 Q. Well, why don't you explain for the Court, since this is
12 where we're -- what's of interest: What did you do with
13 regard to the period prior to the fraud in connection with
14 your analysis?
15 A. So I used the year preceding the period of the fraud as
16 a period to examine the extent to which Decision Diagnostics
17 thought price is responding to market-wide or industrywide
18 information. So that's generally the approach that one uses
19 in the economics literature, which is to estimate the
20 relationship between this stock price and the market or
21 industry as a whole to see, you know, does this stock tend
22 to be affected by industry-wide or market-wide news?
23 So I do use the period of the year preceding the
24 fraud to examine that, which ultimately feeds into the
25 reasonableness of this calculation for -- as a measure of
Mitts - DIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 19 of 166 19
1 investor loss.
2 Q. So let's stick with this. You looked at the prior year
3 to determine what?
4 A. To determine whether -- ultimately whether this
5 mathematical calculation is a reasonable estimate of
6 investor loss, but specifically to examine whether this
7 stock was generally affected by external market forces.
8 Q. And walk the Court through what kind of analysis you do
9 based on financial economics principles to conduct that
10 analysis.
11 A. So typically, people use an event study to look at the
12 extent to which other factors might have affected the stock
13 price. That's the standard method in financial economics.
14 What an event study requires as an initial phase,
15 if you will, is that there's some relationship between this
16 stock price and those external market forces. So those
17 external market forces could be the market as a whole,
18 industry index, for example, other standard asset pricing
19 factors.
20 When one estimates a regression model, when one
21 looks at the relationship between a stock price and these
22 other factors, you have to identify a statistically
23 significant relationship for these factors to explain
24 changes in the stock price of the company.
25 And I did not identify such a relationship. So in
Mitts - DIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 20 of 166 20
1 effect, this was the first half of an event study. And I
2 concluded that effectively there was no need to proceed
3 beyond that because this stock price was not tracking market
4 or industrywide factors.
5 Q. That was the regression analysis?
6 A. That's correct.
7 Q. That first part of the event study. Right?
8 A. That's correct.
9 Q. And what factors did you use to conduct your regression
10 analysis?
11 A. So I used the standard asset pricing factors from the
12 literature, which is the market as a whole, the so-called
13 Fama-French factors, which look at small firm returns, value
14 firm returns, and I examined whether there was a
15 statistically significant relationship, correlation, in a
16 regression model between the daily changes in the price of
17 Decision Diagnostics and these factors.
18 Q. And what was your ultimate finding?
19 A. I found no statistically significant relationship with
20 any of those standard asset pricing factors.
21 Q. So taking a step back, what does that mean for kind of
22 the reasonableness of using the MRM approach in calculating
23 loss here?
24 A. Because there was no statistically significant
25 relationship between the price of Decision Diagnostics and
Mitts - DIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 21 of 166 21
1 the market factors that I examined, I concluded that the MRM
2 was an appropriate method to measure the actual loss
3 suffered by victims, because very intuitively, if there's no
4 relationship between this company's stock and the market as
5 a whole, then we can conclude that the price decline was not
6 caused by the market.
7 Q. And turning back to the first question that we jumped
8 off of from here, when looking at one of the dates proposed
9 by the defense, what sort of firm-specific activity would
10 you think would need to be examined in order to select one
11 of those dates?
12 A. Sure. So I mean, I think the key question really as I
13 was answering your Honor's question earlier is: What's the
14 nature of the information that is being brought into the
15 market by the firm or by individuals associated with the
16 firm?
17 So I might be looking at what sort of disclosures
18 are being made, for example, and those -- that would be
19 firm-specific information that could affect the price of the
20 stock.
21 Q. All right. And turning back to the loss amount
22 calculation and the multiplication part of the math, would
23 you walk us through briefly your finding here and why there
24 are two different amounts of outstanding shares that you
25 contemplated.
Mitts - DIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 22 of 166 22
1 A. Sure. So when I reviewed the -- both the data and the
2 disclosures, Decision Diagnostics was selling additional
3 shares during the period of the fraud. When companies do
4 this, they're issuing more shares. So the number of
5 outstanding shares is increasing.
6 And so what we have here are two points in time.
7 So at the beginning of the period of the fraud, there were
8 160 million shares outstanding. At the end of the period of
9 the fraud, there were 349 million shares outstanding.
10 Q. Are these both reasonable numbers to use in calculating
11 the loss amount here?
12 A. In my opinion, yes. They are both reasonable.
13 Q. Do you think one was a better measure than the other of
14 the true loss amount?
15 A. I do. I think that -- I think the latter is -- 349
16 million shares is more reasonable than the 160 million
17 shares number.
18 The reason is because the company was selling
19 shares during the period of the fraud. So there were
20 investors who were buying newly issued shares at inflated
21 prices during the period of the fraud. So those investors'
22 losses would not be captured by the 160 million shares
23 number.
24 Q. So in any event, what are the two loss amount numbers
25 that you found could be used under the MRM?
Mitts - DIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 23 of 166 23
1 A. The 27.8 million number is with the 160 million share
2 figure at the beginning of the period of the fraud. And the
3 60.8 million number is the -- uses the 349 million share
4 figure.
5 Q. In your opinion, are either of these figures an
6 acceptable measurement of the loss amount caused by
7 Defendant Keith Berman in this case?
8 A. Yes.
9 Q. So then we turn to the second part of the analysis that
10 you previewed earlier; and you were asked to then determine
11 if these were reasonable estimates of the actual loss
12 attributable to the change in value of Decision Diagnostics'
13 stock?
14 A. That's correct.
15 Q. Okay. And we've talked a bit about how you worked on
16 determining if it was reasonable. But can you walk us
17 through the totality of what steps you took to evaluate if
18 this was a reasonable measure.
19 A. Sure. So first, I took the daily changes in the price
20 of Decision Diagnostics during the year preceding the fraud.
21 And I estimated a regression model, where I regressed those
22 daily changes in the price on --
23 THE COURT: Sorry. Dr. Mitts, going back to the
24 outstanding shares -- forgive my ignorance on this -- does
25 this mean that there's 350 million shares and all of these
Mitts - DIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 24 of 166 24
1 have been bought by individuals? Or does this mean that
2 there's -- you know, there's shares available, but some of
3 them have not been purchased?
4 THE WITNESS: Your Honor, from the disclosures and
5 the data that I reviewed, it appeared to me that all of
6 those shares had been purchased. They were not all
7 purchased by individuals.
8 Just to respond to that point, many of these were
9 purchased by institutions, for example, who had lent the
10 company money. They might have converted their debt
11 obligations, let's say, to shares, so they might have been
12 cashed out effectively in shares. But that was issued in a
13 sense for value. So in a way, it's economically the same.
14 THE COURT: But the "outstanding shares" term
15 means shares that have been purchased by an entity or
16 person?
17 THE WITNESS: That's correct. Generally, the term
18 "shares," "authorized shares," will refer to the number of
19 shares that the board of directors and the shareholders have
20 authorized to be issued.
21 But "outstanding" is really here being used to
22 represent issued and outstanding. And that number is
23 increasing because these newly issued shares, some of which
24 are being either paid for, as I said, through debt
25 obligations or cash, are being issued by the company; and so
Mitts - DIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 25 of 166 25
1 those shares are not held by the company on its own books,
2 but they're held by these purchasers. So that increases the
3 number of outstanding shares, shares that are outstanding
4 and held by investors.
5 THE COURT: And so I'd imagine these shares are
6 being sold over this period of -- what is it? About six
7 months or so? Maybe more like nine months. And the price
8 is probably fluctuating some.
9 Are you trying to figure out kind of where each
10 share is along there? Or is this kind of an extrapolation
11 or an approximation?
12 THE WITNESS: Your Honor is correct that I am not
13 calculating at each point in time what the purchase price
14 was relative to the average figure here in the MRM.
15 So the number at the end of the period, meaning
16 the 349 million shares, you can say, well, you know, it was
17 less than that at some point during that period. And that's
18 correct. And that's why I use two numbers. I think, you
19 know, either one would be reasonable because, you know, they
20 both reflect the magnitude of the market value loss.
21 But I think, you know, neither one perfectly
22 captures the market cap at each point in time, market
23 capitalization.
24 THE COURT: Okay.
25 BY MR. REILLY:
Mitts - DIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 26 of 166 26
1 Q. We talked about the regression that you ran, and that
2 was the testimony provided a few moments ago. Right?
3 A. Yes.
4 Q. Did you look at peer-reviewed literature to assess the
5 reasonableness of these figures?
6 A. I did look at peer-reviewed literature to assess the
7 reasonableness of the regression results. Yes.
8 Q. And what did it say about companies like Decision
9 Diagnostics and how to think about whether this is a
10 reasonable measure of loss?
11 A. So the literature consistently shows that OTC penny
12 stocks like Decision Diagnostics are generally characterized
13 by idiosyncratic information specific to that firm. So if
14 the concern is, well, maybe this price decline reflects,
15 let's say, the market or industrywide factors, the
16 literature shows that generally these OTC penny stocks are
17 not following market or industrywide factors as a group.
18 MR. REILLY: Would you please put up Government's
19 Exhibit 6-A2.
20 BY MR. REILLY:
21 Q. And, Professor Mitts, is this a chart plotting the stock
22 price of Decision Diagnostics in 2019 and 2020 against the
23 stock price of the NASDAQ biotechnology index?
24 A. Yes, it is.
25 Q. And was this chart generated using data from Bloomberg?
Mitts - DIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 27 of 166 27
1 A. Yes.
2 Q. Was it originally prepared by FINRA's CPAG group?
3 A. That's my understanding. Yes.
4 Q. Do you adopt this chart as your own for purposes of
5 today's proceeding?
6 A. Yes.
7 MR. REILLY: With that, your Honor, I would move
8 to admit Government's Exhibit 6-A2 into evidence.
9 MS. TAUBMAN: No objection.
10 THE COURT: Without objection, 6-A2 is in.
11 (Whereupon, Government's Exhibit No. 6-A2 was
12 entered into evidence.)
13 BY MR. REILLY:
14 Q. Professor Mitts, as the final step in your
15 reasonableness analysis, did you look at whether Decision
16 Diagnostics' stock price was uncorrelated with
17 industry-specific events?
18 A. Yes, I did. And that's --
19 Q. What does that mean? That's very technical terminology.
20 A. Sure.
21 Q. Maybe if you could walk back what that's really looking
22 at.
23 A. Sure. So previously, I discussed the standard asset
24 pricing factors, like the market as a whole, small firms,
25 value firms and so forth.
Mitts - DIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 28 of 166 28
1 But because the sentencing guidelines also refer
2 to industry-specific factors, I examined whether the price
3 of Decision Diagnostics was systematically correlated with
4 biotechnology firms. And I measured price changes in
5 biotechnology firms using the NASDAQ biotech index, which is
6 a standard index consisting of NASDAQ-traded biotechnology
7 firms.
8 Q. Why do you use that particular index?
9 A. So there's a couple points there. One is that you want
10 to make sure you're using a basket of stocks, because any
11 individual comparator stock will have its own set of
12 idiosyncratic information.
13 So if you're trying to evaluate, well, was this
14 price change in Decision Diagnostics correlated with biotech
15 industry information, you have to have an index that nets
16 out the changes in individual stocks so that only the
17 industry news or industry price effects remain. So we
18 definitely need an index of biotechnology firms.
19 In an ideal world, I would have used an
20 over-the-counter biotech index because Decision Diagnostics
21 is an over-the-counter traded stock. But there is no such
22 index that I'm aware of that satisfies the criteria,
23 meaning, for example, the index needs to reflect companies
24 that are traded frequently enough so that the price
25 measurements are meaningful. And I'm not aware of any such
Mitts - DIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 29 of 166 29
1 OTC index.
2 The closest index that I could find was NBI,
3 because there are many small NASDAQ-listed companies that
4 are similar to Decision Diagnostics in many respects.
5 Q. Once you got the relevant data for the NBI, did you
6 conduct another regression analysis?
7 A. I did.
8 Q. And what did that regression analysis look for?
9 A. So I looked for a systematic correlation as measured by
10 regression analysis between Decision Diagnostics' stock
11 price and the NASDAQ biotech index. And I did not find a
12 statistically significant relationship.
13 Q. So what does that tell you about the correlation between
14 Decision Diagnostics and industry-specific events?
15 A. So the absence of a consistent statistically significant
16 relationship between Decision Diagnostics and the NASDAQ
17 biotech index -- the absence of such a correlation indicates
18 that Decision Diagnostics' stock price was not responding to
19 industry-specific news concerning the biotech industry.
20 Q. So taking everything we've talked about today, the
21 regression analysis, the peer-reviewed literature, what is
22 your opinion as to the reasonableness of using the loss
23 figures that you talked us through in Government's Exhibit
24 6-X for the relevant loss amount here?
25 A. It is my opinion that the MRM calculation is a
Mitts - DIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 30 of 166 30
1 reasonable estimate of the actual loss suffered by
2 investors.
3 MR. REILLY: No further questions at this time,
4 your Honor.
5 THE COURT: Thank you.
6 Defense?
7 CROSS-EXAMINATION
8 BY MS. TAUBMAN:
9 Q. Good morning, Dr. Mitts.
10 THE COURT: Remind me of your name, ma'am.
11 MS. TAUBMAN: I am Lori Taubman on behalf of
12 Mr. Berman.
13 THE COURT: Thank you.
14 BY MS. TAUBMAN:
15 Q. You mentioned previously that you have testified in
16 federal court. Have you ever offered testimony on behalf of
17 a defendant?
18 A. I was once engaged to write an expert report on behalf
19 of a defendant in a securities class action. My expert
20 report was submitted under oath, but the case settled before
21 I was deposed. So that's one case I can think of.
22 I also testified in Alberta in a merger case, a
23 merger litigation dispute. I can't recall if the party I
24 was engaged for was technically the defendant. They might
25 have been.
Mitts - CROSS - By Ms. Taubman
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 31 of 166 31
1 Q. Okay. Have you ever testified against the Government?
2 A. No.
3 Q. Your appearance today is not the only engagement you
4 have had with the DOJ's criminal division's fraud section.
5 Is that right?
6 A. That's correct.
7 Q. Okay. Since 2021, you have been paid over $350,000 by
8 the criminal division's fraud section for consulting work.
9 Is that right?
10 A. I would have to check my figures. That sounds
11 approximately correct.
12 Q. And that number does not include work that you've
13 performed in connection with today's hearing. Correct?
14 A. That's correct. I haven't submitted any invoices for
15 this matter yet.
16 Q. It's fair to say that you've read and done a lot of
17 research about securities markets. Is that right?
18 A. Yes.
19 Q. Okay. But I saw from your CV, which was entered earlier
20 as an exhibit, that your only professional experience
21 outside of being a law professor was working at a law firm
22 for one year. Is that accurate?
23 A. I think I might define "professional experience"
24 differently. But if you're referring to full-time
25 employment outside of the academy, I'd say that's correct.
Mitts - CROSS - By Ms. Taubman
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 32 of 166 32
1 Q. So you've never worked in a financial firm?
2 A. I have not.
3 Q. You talked about the OTC literature a fair bit.
4 Have you ever purchased a penny stock?
5 A. I don't believe so, no.
6 Q. We talked a little bit about the shares outstanding and
7 that number. Did you review the stock ledger of DECN?
8 A. I did not.
9 Q. And the additional shares that we spoke about earlier,
10 did you verify whether they were newly issued shares or
11 shares that were the result of conversions of preferenced
12 older shares?
13 A. Well, generally speaking, if preferred shares or
14 convertible notes or other derivative securities are
15 converted to common stock, the common stock is newly issued.
16 So I don't understand that to be an either/or distinction.
17 It just goes to where the newly issued shares came from in
18 the sense of: What was their consideration? Was an
19 investor paying cash for them? Or were they exchanging or
20 converting or trading their existing preferred convertible
21 note or other derivative obligation like a warrant for those
22 newly issued common shares? In all of those cases, the
23 shares that are newly issued, the common shares, are newly
24 issued in all of those cases.
25 Q. Okay. But in this particular case, did you look into
Mitts - CROSS - By Ms. Taubman
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 33 of 166 33
1 that in the documents that you consulted?
2 A. From the disclosures by the company that I reviewed, it
3 was apparent to me that, as I answered the Court's question
4 earlier, these were newly issued common shares.
5 Q. Okay. I want to ask you a few questions about the
6 NASDAQ biotechnology index that you were discussing earlier.
7 So stocks could be traded either on an exchange,
8 like NASDAQ, or over the counter. Is that right?
9 A. That's correct.
10 Q. And then to be in the NASDAQ index, the stock must be
11 listed on NASDAQ. Is that accurate?
12 A. Generally, I think that's correct. I'd have to check
13 exactly what the index inclusion rules are. But that sounds
14 generally correct.
15 Q. And I think you mentioned earlier that the companies
16 that trade exclusively over the counter would not be
17 included in the NASDAQ index. Did I get that right?
18 A. That's correct.
19 Q. Okay. In your expert disclosure, you cited an article
20 called Asset Pricing in the Dark: The Cross-Section of OTC
21 Stocks.
22 Do you remember that article?
23 A. Yes.
24 Q. Okay. And then, as the authors of the article explained
25 in the article's summary, over-the-counter or OTC stocks are
Mitts - CROSS - By Ms. Taubman
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 34 of 166 34
1 far less liquid, disclose less information and exhibit lower
2 institutional holdings than do listed stocks.
3 Is that consistent with your recollection of that
4 article?
5 A. Yes.
6 Q. So there's meaningful differences between OTC stocks and
7 stocks that are listed on exchanges like NASDAQ. Is that
8 right?
9 A. There's certainly differences when one looks at the
10 entire population. NASDAQ has some of the largest publicly
11 traded companies.
12 In the biotech space in particular, biotech
13 companies on NASDAQ by and large tend to be very small,
14 either small caps or micro caps. There are biotechs on
15 NASDAQ which are comparable to OTC stocks like Decision
16 Diagnostics.
17 I don't have the exact numbers in front of me as
18 to the average market cap of each; but from my experience,
19 you know, companies go off and on NASDAQ, particularly
20 biotech companies. And so, you know, there's a general
21 similarity in the nature of those companies in that group.
22 Q. So to kind of follow up about that group, the NASDAQ
23 biotechnology index is constructed from the prices of more
24 than 200 securities. Is that right?
25 A. That's consistent with my recollection.
Mitts - CROSS - By Ms. Taubman
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 35 of 166 35
1 Q. And they include both biotechnology companies and
2 pharmaceutical companies. Is that right?
3 A. I'd have to go back and check the index inclusion
4 criteria. But that sounds correct to me.
5 Q. It would include companies like 23andMe?
6 A. I don't know off the top of my head which companies --
7 Q. So you --
8 A. -- are in --
9 Q. -- don't know --
10 THE COURT REPORTER: I'm sorry. I didn't get the
11 answer.
12 THE WITNESS: I don't know off the top of my head
13 which companies are -- I don't have the entire list of 200
14 companies in front of me.
15 BY MS. TAUBMAN:
16 Q. And you showed us a chart earlier. It was the
17 Government's Exhibit 6-A2.
18 MS. TAUBMAN: I don't have an electronic version,
19 but I have a paper copy.
20 MR. REILLY: We can pull it up.
21 MS. TAUBMAN: That would be great. Thank you.
22 BY MS. TAUBMAN:
23 Q. So according to this chart, it looks like the DECN
24 closing price was never more than 45 cents in 2020. Is that
25 accurate?
Mitts - CROSS - By Ms. Taubman
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 36 of 166 36
1 A. I'm sorry. Could you repeat the question?
2 Q. Yeah. I'm looking at the chart and looking at the trend
3 in the DECN closing price. And it appears that it's never
4 higher than 45 cents. It kind of -- is that right?
5 A. That is consistent with the data on the chart. Yes.
6 Q. Okay. And -- but the price per stocks traded on NASDAQ
7 tends to be higher than that. Is that accurate?
8 A. Not as a general statement. There are NASDAQ issuers
9 who trade below one dollar. They're in danger of being
10 delisted off of NASDAQ if they remain below one dollar. So
11 there are certainly fewer what we would call penny stocks on
12 NASDAQ.
13 Q. And to be in the NASDAQ biotechnology index, the
14 security must have a minimum market capitalization of
15 $200 million. Is that accurate?
16 A. I don't recall the index inclusion criteria. That
17 wouldn't surprise me.
18 Q. And over the period that we are discussing for your
19 estimation, DECN's market capitalization, would it have
20 approached $200 million?
21 A. I'd have to look carefully at the numbers. But I don't
22 think it would be far from that figure if you took, let's
23 say, just round numbers, 50 cents times, you know, 300
24 million shares, for example, you would get 150 million
25 shares -- excuse me -- $150 million.
Mitts - CROSS - By Ms. Taubman
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 37 of 166 37
1 So I don't -- you know, I don't know exactly what
2 the number would be. But I don't think it would be an order
3 of magnitude less than 200 million.
4 Q. But it would be below the minimum of 200 million?
5 A. Again, it might be. But I can't say with certainty
6 because, as I was explaining earlier, there were more than
7 300 million shares issued. I can say probably it would have
8 been below. But I would have to check to be sure.
9 Q. And I believe, as your opinion that you shared earlier,
10 that you believe that DECN's stock price is not impacted by
11 industry-specific events. Is that accurate?
12 A. I didn't identify any evidence to indicate that Decision
13 Diagnostics' stock price was affected by industry-specific
14 events.
15 Q. And you reached that conclusion because you found that
16 the DECN stock price was not correlated with this NASDAQ
17 index we were discussing?
18 A. Well, the NASDAQ biotech index is not a comparator
19 because of the similarity between NBI -- between that index
20 and Decision Diagnostics.
21 The reason why one would compare a stock like
22 Decision Diagnostics to the NASDAQ biotech index is because
23 an index of heavily traded biotech stocks will reflect
24 industry-wide news. So if the price of NBI goes up, that
25 would occur, among other reasons, if there was positive
Mitts - CROSS - By Ms. Taubman
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 38 of 166 38
1 biotech industry news; and, vice versa, if the price of NBI
2 went down, that would occur, among other reasons, if there
3 was negative biotech industry news.
4 So the way that the peer-reviewed literature in
5 financial economics uses indices -- and in fact, many times
6 the indices that are used to compare stock prices are very
7 different from the companies who are being compared, not
8 because one is comparing between two similar companies, but
9 because the external market forces of interest are measured
10 through the changes in the price of the index.
11 So if there was biotech industry news, one would
12 certainly expect that it would be in the price of NBI. And
13 if that news were also affecting Decision Diagnostics' stock
14 price, one would expect to see therefore a correlation
15 between these two prices, even though NBI may be different
16 from Decision Diagnostics in many ways.
17 Q. Right. But if the index also includes stocks that may
18 be dissimilar from DECN, like a pharmaceutical company, for
19 example, then it would potentially reflect news from other
20 types of companies than DECN. Is that right?
21 A. No. I don't think that's a correct description of the
22 financial economics methodology.
23 There are pharmaceutical indices. The reason one
24 uses an index of a particular type is precisely to address
25 the concern identified by your question.
Mitts - CROSS - By Ms. Taubman
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 39 of 166 39
1 Any index will consist of companies that are
2 different from each other in lots of ways. But the purpose
3 of the index is to aggregate together companies that are
4 similar along one dimension, in this case biotechnology. So
5 pharmaceutical-specific company news will be averaged out
6 such that the biotech index reflects on average
7 biotech-relevant information.
8 Q. Let me rephrase a bit.
9 That index reflects information that's relevant to
10 all the companies that are included in the -- in deriving
11 it. Is that right?
12 A. I wouldn't characterize it as information that's
13 relevant to all of the companies.
14 Each company in the index has information that's
15 idiosyncratic to that company. But when you aggregate or
16 average them into an index, what remains from that average
17 is what is a common -- we call it pricing factor to all of
18 the companies in that index.
19 But the information reflected by that pricing
20 factor is the only information that's coming to all of the
21 companies in that index. So if you have information that
22 affects a few companies in the index, but it's not common to
23 all the companies in the index, it would not be measured by
24 the index because the index would be averaging that
25 idiosyncratic information out.
Mitts - CROSS - By Ms. Taubman
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 40 of 166 40
1 Q. So if there was some information that was relevant to a
2 subset of companies in the index, though, that information
3 might get averaged out and not be reflected as strongly in
4 the overall index if there are essentially other types of
5 companies in the index?
6 A. The logic of that statement is correct. But of course
7 it applies both ways. So it applies to information about
8 some of the companies that could be positive on any given
9 day and it applies to information about other companies that
10 could be negative. On average, what's left in the change of
11 the price at NBI is what is consistently correlated or
12 consistently common to all of the companies in that index,
13 meaning it goes the same direction.
14 For an index that consists of biotech companies --
15 and that's the inclusion criteria -- the standard approach
16 in the financial economics literature is to use that sort of
17 index as a measure of biotech's industry news.
18 Q. Did you attempt to identify a peer group of companies
19 for DECN aside from your work with this NASDAQ index?
20 A. I did not.
21 Q. Okay. And you had mentioned earlier when you were
22 discussing your calculations a data source called OTC
23 Markets that tracks stocks that are traded over the counter,
24 like DECN?
25 A. That's correct.
Mitts - CROSS - By Ms. Taubman
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 41 of 166 41
1 Q. And the OTC Markets website also includes some industry
2 classification information. Is that right?
3 A. It includes industry classification information that in
4 my experience, because I've researched the OTC Markets
5 platform, it's very inconsistent. There are classification
6 codes that I personally in my work have not found, you know,
7 persuasive or coherent as a means of organizing companies.
8 Some of the industries have maybe less than ten companies in
9 them, which is not a particularly reliable metric of an
10 industry.
11 Q. Did you make any attempt to replicate the analysis that
12 you performed with a NASDAQ index with that OTC Markets
13 data?
14 A. I did not. For reasons I've explained earlier, the OTC
15 Markets generally are a problematic source of stock prices
16 for constructing an index because in order for an index
17 value to be a reliable measure of industry-specific news,
18 the index needs to be heavily traded such that changes that
19 are relevant to the industry are, in fact, impounded into
20 the price of the index.
21 Unfortunately, while the OTC stocks, as I
22 explained earlier, would have been my first choice, I was
23 not satisfied and did not find a group of OTC stocks whose
24 prices were reacting with sufficient frequency that I felt
25 it was a reliable measure of biotech news.
Mitts - CROSS - By Ms. Taubman
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 42 of 166 42
1 So just to clarify, I did think about this
2 question and look at the stock prices that were available.
3 But I did not identify an index that I thought was a
4 reliable measure of industry-specific news in a way that
5 would be consistent with the financial economics literature
6 and methodology.
7 Q. Okay. I want to turn back to this chart. The chart
8 shows the trendline for the NASDAQ biotech index that we
9 were just discussing as well. Correct?
10 A. Yes.
11 Q. And that trendline looks flatter than the DECN price
12 trendline. Is that right?
13 A. Yes. And that's consistent with the literature we were
14 discussing previously, that penny stocks tend to have
15 idiosyncratic volatility, meaning there's a lot of
16 idiosyncratic information that is specific to the penny
17 stock, which will cause the price of that penny stock to be
18 responsive to what's going on with that company far more and
19 maybe even to the exclusion of market-wide or industrywide
20 information.
21 Q. But these two trend lines are plotted essentially using
22 the different axes, so on the left is the DECN closing price
23 and on the right is the NBI closing price. Was there any
24 syncing up of the percentages or other ways of associating
25 these two lines when you put them on there?
Mitts - CROSS - By Ms. Taubman
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 43 of 166 43
1 A. Yes. The regression analysis that I described earlier
2 of the closing price changes in Decision Diagnostics on the
3 NASDAQ biotech index uses percentage changes, which are
4 scale invariant, meaning they are -- the percentage change
5 essentially bakes in the differences in the scales.
6 And in fact, it's important to recognize that even
7 in a situation where the stock price moves more in magnitude
8 than the index -- so let's say for every 1 percent increase
9 in the index, the stock might go up 2 percent. That would
10 also be captured by the regression analysis.
11 So the regression analysis would not require a
12 one-to-one correlation between the industry factor and the
13 stock price. It would also allow and yield potentially a
14 statistically significant coefficient even if the stock were
15 more volatile but were still correlated with the industry
16 factor.
17 So the absence of any statistically significant
18 correlation means that I can rule that out as well.
19 Q. We can talk about that. I was just -- sorry. I thought
20 it was a simple question.
21 On this particular chart, I just see the two
22 lines. One of them is jumping up and down a lot more than
23 the other. Is there any meaningful way to compare those two
24 lines and the volatility just looking at this chart?
25 A. One wouldn't make that comparison by looking at the
Mitts - CROSS - By Ms. Taubman
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 44 of 166 44
1 chart. One would use the regression analysis that I was
2 describing.
3 Q. Okay. And then on the chart, on April 23rd, 2020, the
4 SEC announced that it would suspend trading of DECN stock.
5 Is that right?
6 A. That's what I recall. Yes.
7 Q. And the SEC suspension order specifically referenced
8 language in DECN's press releases. Correct?
9 A. That's consistent with my recollection. Yes.
10 Q. And the suspension ran from April 24th through May 7th,
11 2020. Correct?
12 A. That's consistent with my recollection. Yes.
13 Q. Would you agree that during that time no one could sell
14 or purchase DECN stock?
15 A. That's what a trading suspension is. Yes.
16 Q. Okay. And the suspension is indicated on this chart
17 with the shaded column; is that right?
18 A. Yes.
19 Q. Okay. Would you agree that the DECN share price
20 decreased immediately following the SEC suspension? Is that
21 correct?
22 A. Yes.
23 Q. So you spoke a bit about your regressions earlier.
24 You're using those regressions as part of your
25 opinion that there were no significant changes in DECN's
Mitts - CROSS - By Ms. Taubman
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 45 of 166 45
1 stock price not related to the fraud. Is that accurate?
2 A. I don't believe that's accurate. I'm using the
3 regression analysis to examine whether external market
4 forces consistently or systematically explain changes in the
5 price of Decision Diagnostics' stock.
6 Q. And when you say "external market forces," are you
7 referring to changed economic circumstances, changed
8 investor expectations and new industry-specific or
9 firm-specific facts, conditions or events?
10 A. Yes.
11 Q. So you are considering firm-specific facts, conditions
12 or events in that statement?
13 A. Well, I agree that that is -- that firm-specific facts
14 are an external market force.
15 For purposes of this analysis, I did not evaluate
16 with a regression analysis firm-specific facts. I don't
17 believe it's possible to do that, because any firm-specific
18 facts would be embedded within the stock price of the firm,
19 so you wouldn't have a comparator. So it's not possible to
20 do that with a regression analysis.
21 Q. Okay.
22 MS. TAUBMAN: The Court's indulgence.
23 BY MS. TAUBMAN:
24 Q. Saying there are newly issued common shares doesn't tell
25 you whether the shares were issued as a result of a
Mitts - CROSS - By Ms. Taubman
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 46 of 166 46
1 preferred shareholder converting its existing preferred
2 shares into common stock that is issued by the company.
3 Correct?
4 A. I think I agree with that. Shares can be newly issued
5 for many different reasons.
6 Q. Did you ever review DECN's public filings?
7 A. As I mentioned earlier, I did review those filings in
8 the course of preparing my analysis.
9 Q. Did you ever review any of DECN's quarterly public
10 reports which contain stock and notes tables that would have
11 told you that the new shares of common stocks were actually
12 the result of preferred shareholders converting existing
13 preferred shares into new shares of common stock?
14 A. As I said before, the fact that shares are issued --
15 newly issued in exchange for cash or in exchange for
16 preferred shares or in exchange for notes or other
17 obligations of the company doesn't change in my view the
18 conclusion that those are newly issued shares.
19 Maybe one way to think about it is a preferred
20 shareholder in that example has, you know, a set of shares
21 that are worth a certain amount.
22 And when they convert, they get a set of common
23 shares that are worth the same amount, so that they're in my
24 view equally injured when the value of those common shares
25 that they received in the conversion is inflated by fraud,
Mitts - CROSS - By Ms. Taubman
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 47 of 166 47
1 because they now become a common shareholder and so they're
2 exposed to the same loss that other common shareholders are
3 exposed to.
4 MS. TAUBMAN: I have no further questions, your
5 Honor.
6 THE COURT: Thank you.
7 Hold on just a second.
8 Can you put 6-A2 back up.
9 So, Dr. Mitts, kind of going back to my idea here
10 about the pre-fraud status quo, it looks to me -- I mean,
11 you indicate the 90 days following the fraud, the stocks
12 were worth about 2 cents a share. Is that right?
13 THE WITNESS: Yes.
14 THE COURT: Eyeballing this, it looks to me like
15 there are probably -- they're worth about the same before.
16 Is that right?
17 THE WITNESS: That's correct, your Honor.
18 THE COURT: And so I guess in some ways it doesn't
19 really matter.
20 Well, let me ask you this: Is there a reason that
21 I'm missing why kind of looking at what happened before as a
22 baseline is wrong?
23 THE WITNESS: No, your Honor. I don't think it's
24 wrong. And in fact, I think as an economic matter, if you
25 think about price inflation as false information that has
Mitts - CROSS - By Ms. Taubman
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 48 of 166 48
1 been put into the market, if the price, you know, started
2 out at what it was and then you added that false
3 information, well, the difference should exactly measure the
4 impact of that false information.
5 So I think my reference earlier was just to the
6 fact that I was asked to apply the MRM formula. But I think
7 it would also be a reasonable estimate of the loss to use
8 the price before.
9 THE COURT: And I mean, again, I think a major
10 question here is: When was the fraud period?
11 Can you draw any conclusions from an economic
12 matter that the window you've taken looked to --
13 essentially, it goes back to the status quo ante as opposed
14 to another period earlier in the year, where it would be
15 significantly different?
16 THE WITNESS: Yes, your Honor. I think that,
17 apart from what's in the record about additional statements
18 that were made during the period that I referred to as the
19 period of the fraud, it would be standard in the financial
20 economics literature to expect that the price after a
21 complete corrective disclosure, after the truth is revealed,
22 would be approximately similar to the price before a
23 material misstatement was made, because they're both
24 measuring in effect the true value of the shares absent the
25 artificial inflation.
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 49 of 166 49
1 THE COURT: Ms. Taubman, any questions based on my
2 questions?
3 MS. TAUBMAN: No, your Honor.
4 THE COURT: Any redirect?
5 MR. REILLY: Subject to recall on rebuttal, no
6 further questions from the Government either.
7 THE COURT: Thank you, Professor. You may step
8 down.
9 (Witness excused.)
10 THE COURT: Anything further from the Government?
11 MR. REILLY: That's all we had, your Honor. Thank
12 you.
13 THE COURT: For defense?
14 MR. COLLINS: Your Honor, if you're ready to
15 proceed, we'll call our witness. I don't know if you wanted
16 to break.
17 THE COURT: We can continue. Justice never
18 sleeps.
19 MR. COLLINS: At this point, on behalf of Keith
20 Berman, we're going to call our expert, Jim Reilly. Brandon
21 Howell, my colleague, will be doing his exam.
22 JAMES REILLY, DEFENSE WITNESS, SWORN.
23 THE COURT: Good afternoon, sir.
24 DIRECT EXAMINATION
25
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 50 of 166 50
1 BY MR. HOWELL:
2 Q. Good afternoon. Please tell us your name.
3 A. James Reilly.
4 Q. Can you spell that?
5 A. R-E-I-L-L-Y.
6 Q. Mr. Reilly, can you tell us about your education?
7 A. Sure. I received a BS in finance from the University of
8 Maryland in 1987.
9 Q. Can you tell us about your work experience?
10 A. Sure. I have been a compliance professional throughout
11 my professional career. I started in the late '80s working
12 as a special investigator for an entity that's now known as
13 FINRA, previously known as NASD, regulation. Various
14 compliance positions throughout the years.
15 The last part of my career, I was managing
16 director and head of global equities compliance at Goldman
17 Sachs.
18 I was then the chief compliance officer, head of
19 all compliance, at TIAA-CREF.
20 Then I became the head of compliance/chief
21 compliance officer for TD Ameritrade.
22 Q. Now, are any of these companies, your prior employment,
23 broker-dealers?
24 A. They're all broker-dealers.
25 Q. Can you explain what a broker-dealer is?
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 51 of 166 51
1 A. Sure. Very simply, a firm that's authorized under the
2 federal securities laws to transact, you know, equities,
3 fixed income, different types of trades with customers on
4 exchanges, OTC pink sheets, whatever the different things.
5 So it's basically a specific type of legal entity that deals
6 with customers and their trading in the capital markets.
7 Q. Have you received any specialized training or licenses
8 in your current field?
9 A. Yes. Throughout my career, I have obtained a number of
10 licenses in the securities industry.
11 Q. And can you tell us a little bit more about those
12 licenses?
13 A. Sure. So they range from the basic general securities
14 license, which is called the Series 7, that trains you in
15 the basics of the rules and regulations and requirements of
16 the industry.
17 Along the way I also received specialized exams:
18 the New York Stock Exchange chief compliance officer
19 examination; a number of general securities principal
20 licenses that allowed me to supervise others; and the
21 futures and commodities exam, the Series 3.
22 Q. How do you obtain those licenses?
23 A. It's standard, you know, study and then taking written
24 tests.
25 Q. And do you consider yourself an expert in any area or
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 52 of 166 52
1 field?
2 A. Sure. Throughout my career, I've become expert in the
3 various federal securities laws and state -- self-regulatory
4 body rules and regulations. So most especially the
5 Securities Act of 1933, the Exchange Act of 1934 and FINRA
6 and NFA rules and regulations as well as the Commodity and
7 Exchange Act.
8 Q. Have you ever testified as an expert before?
9 A. I have.
10 Q. Can you explain that?
11 A. Sure. Since the fall of 2018, I started doing this type
12 of work about half-time.
13 I've appeared in 36 FINRA arbitrations, which is
14 the main part of the work that I do. I've appeared in
15 federal court once in the Middle District of Tennessee and
16 I've got a number of pending state and federal court matters
17 coming up.
18 Q. You just mentioned -- can you explain what your current
19 position is?
20 A. Sure. I'm the managing partner of PNA Consulting, LLC,
21 my own sole-member LLC.
22 Q. Can you explain what your current role and your duties
23 are?
24 A. Sure. In this part of my work, I do some consulting for
25 financial services firms and clients, law firms. I also do
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 53 of 166 53
1 a lot of expert witness appearances, as we just discussed.
2 Q. You said you started in 2018?
3 A. In the fall of 2018. Correct.
4 Q. Have you ever worked specifically with assessing when
5 and whether fraud has been disclosed to the market?
6 A. Yes, I have.
7 Q. Can you explain that?
8 A. Sure. In a couple of arbitrations that I was involved
9 with, that was one of the key elements of at least two
10 cases.
11 Q. Have you ever calculated the amount of potential loss
12 arising from fraud?
13 A. Yes. I do damages calculations in almost all my cases.
14 MR. HOWELL: Your Honor, we offer Mr. Reilly as an
15 expert relating to -- in the field of financial services,
16 complex litigation matters.
17 MR. FENTON: No objection.
18 THE COURT: Without objection, Mr. Reilly will be
19 recognized as an expert in the field of financial services
20 and complex litigation matters.
21 MR. HOWELL: Thank you.
22 BY MR. HOWELL:
23 Q. So in preparation for your testimony today, did you
24 review certain information?
25 A. I did.
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 54 of 166 54
1 Q. What information did you review?
2 A. The variety of information provided by counsel from
3 discovery between the Government and counsel for the
4 Defendant. That included information such as -- one of the
5 things that stuck out for me is the Blue Sheet information
6 from July 9, 2020. You know, the press releases, different
7 pleadings. I mean, it's standard for an expert to look at a
8 wide variety of information in forming his opinions.
9 Q. Let's talk about penny stocks.
10 Are you familiar with over-the-counter securities?
11 A. I am.
12 Q. Can you explain what over-the-counter securities are?
13 A. Sure. So there's a segment of the market,
14 over-the-counter market, where they are -- the securities
15 that trade there are not listed on a major exchange like the
16 NASDAQ or the New York Stock Exchange, typically because
17 they don't meet the listing requirements of those exchanges
18 based on whether it's market capitalization or average daily
19 trading volume, et cetera.
20 And so there's a segment of the market, typically
21 low-value, low-market capitalization securities, that trade
22 on the OTC markets.
23 Q. How does someone actually trade over-the-counter
24 securities?
25 A. Sure. If you wanted to buy shares in a company like
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 55 of 166 55
1 DECN, you would have to go to your broker-dealer. And in
2 this day and age, typically you will enter an order
3 electronically saying, Buy 100 shares of XYZ. That order
4 will be transmitted to -- the OTC market is a little bit
5 different than exchanges. It's all -- it's a
6 dealer-to-dealer market. So there's market makers that make
7 markets in the securities as opposed to an exchange, where
8 you can send your orders to have them executed there.
9 And so your broker will then transmit it to a
10 market maker for execution.
11 Q. Is there, like, a trading system that's generally used
12 for microcap or lower-cap stocks?
13 A. Well, to trade DECN specifically, you'd have to use the
14 OTC link system of otcmarkets.com. That is technically what
15 is known as an alternative trading system. It allows
16 different brokers to trade with each other electronically.
17 Q. So this is OTC Markets Group?
18 A. Correct.
19 Q. Based on the information you reviewed, was DECN stock
20 traded on this OTC Markets Group platform?
21 A. It was.
22 Q. What are penny stocks?
23 A. Penny stocks are defined under the Exchange Act of '34
24 as -- they have basically -- there's a number of different
25 tests, $5 million in market capitalization, a number of
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 56 of 166 56
1 other factors.
2 I think people use that term more broadly as a
3 low-priced -- you know, some people call it microcap
4 securities; some people call them penny stocks. They are
5 all basically these stocks -- about 10,000 to 12,000
6 companies on any -- in any given year that are trading
7 through OTC Markets.
8 THE COURT: So that's basically synonymous? OTC
9 and --
10 THE WITNESS: Yeah. In my experience, if you hear
11 someone say microcap or penny stock or pink sheet stock --
12 that's another term that's kind of a legacy term. They
13 literally used to be -- the quotes were published on pink
14 paper. Those are all kind of used interchangeably in the
15 industry. They have specific meaning, like penny stocks is
16 defined in the '34 act. But people use them more
17 interchangeably.
18 THE COURT: Okay.
19 BY MR. HOWELL:
20 Q. Can you describe how someone trades in over-the-counter
21 securities? Is the trading of penny stocks the same? Is
22 that how penny stocks are traded, the same way?
23 A. Yes. You're going to a broker-dealer. Say I want to,
24 you know, buy or sell whatever shares you're interested in.
25 They will then transmit that order through the OTC Markets
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 57 of 166 57
1 link for execution.
2 Q. So broker-dealers are very involved in the trading of
3 penny stocks?
4 A. Yes. Absolutely.
5 Q. Can you describe the nature of the risks that are
6 involved with investing in penny stocks?
7 A. Sure. Well, it is -- I mean, penny stocks, you know,
8 they have much lower information content than an
9 exchange-traded stock like an Apple or Google. They have
10 much lower liquidity typically. Some don't trade at all on
11 certain days.
12 There's a lot of -- there's -- it's very difficult
13 to access reliable quotations at times for what the best
14 price you can get to buy or sell the security. So there's a
15 number of risk factors involved with trading in this segment
16 of the market.
17 Q. So are penny stocks riskier?
18 A. Yeah. Riskier than -- as an equity security sub-asset
19 class, they are much more risky and speculative than, you
20 know, let's talk about a mid-cap or even a small-cap or a
21 mid-cap or large-capitalization -- and when I say "cap," I
22 mean capitalization, how much the shares are worth.
23 Q. So you mentioned speculation. The penny stock market,
24 based on your experience, is there a fair amount of
25 speculation, speculative trading?
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 58 of 166 58
1 A. Absolutely. While I was at TD Ameritrade, we did --
2 TD Ameritrade had -- its business model is self-directed
3 investors who are making their own choices to do whatever
4 kind of trading they want. Right? So they can decide to
5 buy 100 shares of Apple or they can decide to buy a thousand
6 shares of DECN. They basically -- we would facilitate any
7 kind of transactions that they wanted to do. They'd make
8 their own decisions. We helped facilitate those.
9 And so going through that process, they have to
10 then enter the orders in. And there's -- we'll talk in a
11 second about the different steps that they have to go
12 through in this segment of the market.
13 Q. Based on your experience, could you tell us what was
14 happening in the market in April 2020, the stock market?
15 A. Well, I would go back to March, quite honestly, with the
16 onset of the worldwide pandemic known as COVID-19 --
17 right? -- that had a distinct effect on the markets. We saw
18 things like the massive decrease in value of travel-related
19 stocks, airlines. And then you saw a lot of investors and
20 speculators trying to find buying opportunities to make
21 money in an otherwise-falling market.
22 MR. HOWELL: Your Honor, we'd like to present an
23 exhibit. I think there's a bench binder that has exhibits.
24 We aren't going to display them, but just have him refer to
25 the binder.
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 59 of 166 59
1 THE COURT: Okay.
2 THE WITNESS: Doing it old-school.
3 MR. HOWELL: May I approach, your Honor?
4 (Tenders document to the Court.)
5 THE COURT: Is this for me?
6 MR. REILLY: We have them if you want to put them
7 on the screen for everyone.
8 THE COURT: That might be easier, actually, if we
9 can do that.
10 MR. HOWELL: That's fine.
11 THE COURT: If you want to provide one, that's
12 good. But typically we try to do it electronically.
13 MR. HOWELL: It will be Defense Exhibit 005, DX
14 005.
15 THE COURTROOM DEPUTY: Is it coming up on the
16 screen?
17 MR. HOWELL: I think the Government is going to
18 put it up.
19 THE WITNESS: There we go.
20 BY MR. HOWELL:
21 Q. Have you seen this document before, Mr. Reilly?
22 A. I have.
23 Q. Can you explain what it is?
24 A. Sure. It's a printout of a website of a gentleman who
25 does trading advice for people who subscribe to his blog and
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 60 of 166 60
1 his newsletter, if memory serves.
2 Q. Based on your testimony, the speculation that was taking
3 place, is this a fair example of the penny stock kind of
4 trading patterns and speculation that was taking place in
5 the early 2020 timeframe?
6 A. Yeah.
7 MR. FENTON: Objection to form.
8 THE COURT: Overruled.
9 THE WITNESS: So yes. It was, you know, an
10 example of traders, speculators, looking for buying
11 opportunities in the market around that time. You see this
12 kind of stuff all over the internet all the time.
13 Everyone's got different trading strategies, different
14 ideas, how to express those. Some people will focus on
15 penny stocks because they think they can get bigger bang for
16 their buck there. Other people focus on different segments
17 of the market.
18 MR. HOWELL: Your Honor, we'd move to admit DX 005
19 into evidence.
20 MR. FENTON: No objection.
21 THE COURT: Without objection, 5 is in.
22 (Whereupon, Defendant's Exhibit No. 5 was entered
23 into evidence.)
24 BY MR. HOWELL:
25 Q. Let's talk about SEC trading suspensions.
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 61 of 166 61
1 A. Sure.
2 Q. Does the SEC have the ability to suspend trading of a
3 company's stock?
4 A. Absolutely.
5 Q. What are the reasons that the SEC would suspend or could
6 suspend trading?
7 A. In my professional experience, they've -- they're doing
8 a preliminary investigation. They have what they think is a
9 credible problem with an issuer. It could be many different
10 things. They may not be current in their filings to the
11 Commission; they may find potential indicia of fraud. And
12 they use those -- they review those factors and decide to
13 issue trading suspensions from time to time.
14 Q. Does the SEC publicize its suspension of trading?
15 A. Absolutely.
16 Q. How does the SEC make the public aware that they're
17 suspending --
18 A. On sec.gov --
19 Q. -- a trading?
20 A. They will publish on sec.gov. They will also release as
21 a press release the order and the companion details when
22 they have a trading suspension. That is picked up by all
23 the different exchanges and broker-dealers on Wall Street so
24 that they can take note of that.
25 Q. So the OTC Markets Group, they would -- this
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 62 of 166 62
1 information -- pick it up --
2 A. Yeah. They have a feed where they would subscribe to
3 that kind of -- that kind of news from the SEC so that they
4 could initiate the suspension on their platform.
5 MR. HOWELL: I'd like to pull up DX 001.
6 BY MR. HOWELL:
7 Q. Can you tell me what this document is?
8 A. Sure. It is the trade suspension of DECN dated April
9 23rd, 2020, by the U.S. Securities and Exchange Commission.
10 Q. Have you seen this document before?
11 A. I have.
12 Q. Did you rely on this document in your analysis?
13 A. I did.
14 Q. Is this a fair and accurate copy of the SEC release that
15 you've reviewed?
16 A. It is.
17 MR. HOWELL: Your Honor, we'd move to admit DX 001
18 into evidence.
19 MR. FENTON: No objection.
20 THE COURT: Without objection, 1 is in.
21 (Whereupon, Defendant's Exhibit No. 001 was
22 entered into evidence.)
23 THE COURT: Can we pull up DX 002.
24 BY MR. HOWELL:
25 Q. Can you tell me what this document is?
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 63 of 166 63
1 A. This is the more detailed order of the suspension in
2 trading in Decision Diagnostics. So this was attached to
3 the first document we just reviewed also dated April 23rd,
4 2020.
5 Q. Have you seen this document before?
6 A. I have.
7 Q. Did you rely on this document?
8 A. I did.
9 Q. Is it a fair and accurate copy of the suspension order
10 that you reviewed?
11 A. It is.
12 MR. HOWELL: Judge, we'd move to admit DX 002 into
13 evidence.
14 MR. FENTON: No objection.
15 THE COURT: Without objection, 2 is in.
16 (Whereupon, Defendant's Exhibit No. 002 was
17 entered into evidence.)
18 MR. HOWELL: Turn to DX 012. Sorry. That's not
19 the right one.
20 Your indulgence, your Honor.
21 We have a different 012 in our binder.
22 THE WITNESS: It is now on my screen, Mr. Howell.
23 BY MR. HOWELL:
24 Q. Thank you.
25 Can you tell me what this document is?
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 64 of 166 64
1 A. It is a copy of an investor alert issued by the SEC on
2 April 10th, 2020.
3 Q. Is there another date that you see on the document?
4 A. It was -- it looks like it was subsequently updated on
5 May 6th, 2020.
6 Q. Have you seen this document before?
7 A. I have.
8 Q. What is the title of the document or of the investor
9 alert?
10 A. It talks about -- it says, Frauds Targeting Main Street
11 Investors: Investor Alert. And this one is specifically
12 focused on potential frauds related to COVID-19.
13 Q. Is DECN listed?
14 A. Yes. I believe on Page 2, there are a number of
15 securities that are listed. DECN appears about halfway down
16 the page, roughly.
17 Q. Thank you.
18 MR. HOWELL: Your Honor, we'd move to admit DX 012
19 into evidence.
20 MR. FENTON: No objection.
21 THE COURT: Without objection, 12 is in.
22 (Whereupon, Defendant's Exhibit No. 012 was
23 entered into evidence.)
24 BY MR. HOWELL:
25 Q. I want to talk about protocols after trading
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 65 of 166 65
1 suspensions.
2 A. Uh-huh.
3 Q. So what -- are there protocols in place that alert
4 traders to the fact that, you know, trading with company
5 stock has been suspended?
6 A. Yes. Like -- as I said earlier, OTC Markets is the
7 listing market for these types of -- for DECN; I'll keep it
8 specific -- are getting the feeds from the SEC of trading
9 suspensions so that they can initiate the suspension,
10 prevent trading on their platform in the stock while the
11 suspension is in effect.
12 And then when the suspension is lifted, OTC
13 Markets has another set of protocols where they will append
14 two warnings to -- it changes the characteristic of DECN in
15 the market. They put -- they append a warning that's caveat
16 emptor, whose icon is a skull and crossbones. Pretty
17 straightforward.
18 And there's another thing that says Expert Market,
19 which means that they will no longer publish live quotations
20 of that security. So you can ask your broker to trade it,
21 but they're the ones who have to go find out the quotations
22 for you.
23 THE COURT: And so I'm not an investor. Could I
24 just go online now and buy penny stocks?
25 THE WITNESS: You could. You would have to go
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 66 of 166 66
1 through some processes. I think those processes are
2 important for this case.
3 THE COURT: And so is that -- the skull and
4 crossbones, would that be visible to the average purchaser?
5 THE WITNESS: If you go to otcmarkets.com and pull
6 up -- which is, again, the primary listing venue for these
7 securities -- if you pull up DECN, you could see the caveat
8 emptor warning with the skull and crossbones.
9 If you go to TD Ameritrade or Charles Schwab or
10 Fidelity -- pick your favorite online broker-dealer -- what
11 you will see there is something a little bit different,
12 which is if it's -- the processes and procedures at online
13 broker-dealers are to generally allow electronic trading,
14 like you just enter the order and it goes. But for all OTC
15 market securities, firms have long had policies and
16 procedures from a risk perspective to either flash up, This
17 is a caveat emptor stock. It's speculative. You could lose
18 all your money. Do you want to enter this trade?
19 Or in the case of once it actually does go into a
20 trading suspension, you have to actually call in the order
21 instead of just being able to enter it electronically. And
22 the call center registered representative will read you a
23 script that says: This is a speculative security. You
24 could lose all your money. It's recently been suspended by
25 the SEC. Are you sure you want to enter this trade?
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 67 of 166 67
1 THE COURT: And so just one way or the other,
2 basically anybody who's going to try to buy this stock would
3 be alerted to this?
4 THE WITNESS: Through these channels that I'm
5 talking about, yes. Absolutely.
6 So I find it difficult to see how you could avoid
7 knowing that there was danger ahead, which is the whole
8 purpose of the caveat emptor warning.
9 THE COURT: And does that -- how long does that
10 stay in place?
11 THE WITNESS: It is -- that remains on DECN's
12 stock to this day. So it can be taken down if it's proven
13 by the company that it was not warranted in some way. But
14 in general, they stay there forever.
15 THE COURT: Okay. Thank you.
16 You may proceed.
17 BY MR. HOWELL:
18 Q. Did you collaborate on demonstratives to kind of help
19 illustrate --
20 A. I did. I even tried to enter a trade in a caveat emptor
21 stock on the Schwab platform.
22 MR. HOWELL: Your Honor, with the Court's
23 permission, we have some slides that help demonstrate
24 exactly what you were just questioning Mr. Reilly on with
25 the skull and crossbones, if you would allow us to put those
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 68 of 166 68
1 up.
2 THE COURT: Okay.
3 BY MR. HOWELL:
4 Q. So this is -- is this the skull and crossbones that you
5 were -- just referenced to?
6 A. It is. So if you pull up DECN's page on otcmarkets.com,
7 you will see these warnings. Again, these go into place as
8 soon as the stock is suspended.
9 Q. Even though our slide says July 20, that's -- you're not
10 saying that's --
11 A. Yeah. Well, that's --
12 THE COURT REPORTER: I'm sorry. For the record, I
13 didn't get a complete question.
14 BY MR. HOWELL:
15 Q. I said, even though the slide says July 20th, 2020, just
16 because it says -- the slide says July 20, 2020, does not
17 mean that's the first day that he...
18 A. Well, I like to use primary documents wherever I can.
19 Using the internet archive known as the Wayback Machine,
20 this is the oldest evidence I could find that it was there.
21 I know from my industry experience that as soon as
22 the stock was suspended, OTC Markets, one, stopped trading,
23 as you saw from the gap in one of the charts we reviewed
24 earlier.
25 And, two, these warnings would be appended to the
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 69 of 166 69
1 stock from the resumption of trading forward. And again,
2 this says July 20. It's the oldest fact-based document that
3 I could find. If you look today online, you would see the
4 same warnings.
5 MR. HOWELL: Can we pull up DX 010.
6 BY MR. HOWELL:
7 Q. So is this the document you were talking about where it
8 had the July 20th -- this is the Wayback Machine --
9 A. Correct.
10 Q. -- that you found?
11 A. Correct.
12 Q. Do you recognize this document?
13 A. I do.
14 Q. And can you tell us -- I don't know if you'll -- if you
15 can on the screen. But can you read the date that is on the
16 document?
17 A. You can see -- it's all the way on the top. You can see
18 the URL shows it was retrieved on July -- this is an archive
19 that was done on July 20th, 2020.
20 Q. Thank you.
21 MR. HOWELL: Your Honor, we'd move to admit DX 010
22 into evidence.
23 MR. FENTON: No objection.
24 THE COURT: Without objection, 10 is in.
25 (Whereupon, Defendant's Exhibit No. 010 was
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 70 of 166 70
1 entered into evidence.)
2 MR. HOWELL: Can we turn to DX 042.
3 BY MR. HOWELL:
4 Q. What is this document?
5 A. This is the report I prepared in this case.
6 Q. When did you prepare this report?
7 A. I believe last March. Early March.
8 MR. HOWELL: Could you just kind of scroll through
9 it so he can see the report briefly?
10 BY MR. HOWELL:
11 Q. Let me know if you've had a chance to review it,
12 Mr. Reilly.
13 A. What's that?
14 Q. Let me know when you've had a chance to review the
15 document.
16 A. Sure. This is one of the ones that's easier to do in a
17 physical copy.
18 Yep. It's March 11, 2024, to clarify the record.
19 That's the date of the report.
20 Q. This is the report you filed?
21 A. It is.
22 Q. Do you think differently about this report today?
23 A. No.
24 MR. HOWELL: Your Honor, we'd move to admit DX 042
25 into evidence.
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 71 of 166 71
1 MR. FENTON: No objection.
2 THE COURT: Without objection, 042 is in.
3 (Whereupon, Defendant's Exhibit No. 042 was
4 entered into evidence.)
5 MR. HOWELL: Can we turn to DX -- the same
6 exhibit, 042, Page 1, Paragraph 5.
7 BY MR. HOWELL:
8 Q. You referenced a Blue Sheet. What is a Blue Sheet?
9 A. So the regulators have subpoena power to require all
10 broker-dealers to submit trading records to them. So -- and
11 those are collectively known as Blue Sheet reports. They
12 contain the information of -- for every broker-dealer in the
13 United States that held this particular one, that held -- or
14 customers held shares in DECN as of July 9th, 2020. So you
15 can see the breakdown of which customers held it, which
16 firms.
17 And I did a little bit of an analysis off of this
18 data once I received it from counsel.
19 Q. Did you review the Blue Sheet?
20 A. I did.
21 Q. What was the date?
22 A. July 9, 2020, as I said earlier.
23 MR. HOWELL: Can we ask Mr. Panikar to pull that
24 up.
25
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 72 of 166 72
1 BY MR. HOWELL:
2 Q. What did you observe on this Blue Sheet?
3 A. I summarized it in my report, which is -- this is a
4 section -- or part of this demonstrative it draws from.
5 But not surprisingly to me, that over 86 percent,
6 almost 87 percent of the shares on that date were held at
7 the four largest online broker-dealers in the United States.
8 Once again, TD Ameritrade was kind of the top of that pile.
9 When I was chief compliance officer, we were typically 25 to
10 30 percent of trading in OTC pink sheet securities.
11 Q. And based on your experience, is this of any
12 significance?
13 A. Yeah. It's very much along the lines of what I was
14 talking about before, where the process for anyone who wants
15 to trade in DECN, they're going to primarily do it through
16 an online broker-dealer. Right?
17 And this is evidence of that. Those online
18 broker-dealers have very specific risk-based processes
19 because of the speculative and dangerous nature of trading
20 in OTC securities that they will put up those warnings that
21 I discussed.
22 Either -- if you're buying one that's not caveat
23 emptor, you're going to get a warning screen that says:
24 This is a speculative security. You may lose all your
25 money. Are you sure you want to enter this order? You have
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 73 of 166 73
1 to click "yes" again before entering the order.
2 Or if it's caveat emptor, an expert market, as
3 DECN was coming out of its trading suspension, if you want
4 to enter a trade in the security, you have to call us. And
5 we will -- and then -- I designed a process at TD Ameritrade
6 where those reps had a script to read that said: It's
7 recently been suspended. There's serious questions about
8 the security. Are you sure you want to invest in this?
9 Q. You mentioned you at TD Ameritrade -- you helped
10 design --
11 A. Yes. As the chief compliance officer of a firm that's
12 doing the largest portion of OTC security trading in the
13 United States, it was prudent for us to design policies,
14 processes and procedures to make sure that customers that
15 were -- wanted to do this kind of speculative trading were
16 at least adequately warned about the speculative and
17 dangerous nature of what they were about to enter into. We
18 allow it, because it's their money, their choices.
19 But we wanted to make sure -- assure ourselves
20 that they at least were armed with information sufficient to
21 put them on notice that these were speculative and dangerous
22 investments that they could lose all their money in.
23 MR. HOWELL: Mr. Panikar, if you'd turn to the
24 next slide.
25
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 74 of 166 74
1 BY MR. HOWELL:
2 Q. Does this illustrate what you were just talking about as
3 far as the controls that are in place?
4 A. Yes. I picked an OTC market stock that is currently
5 trading that's expert market and caveat emptor and tried to
6 enter an order from my personal account. As you can see, I
7 was not willing to waste any money on it. But it pops up,
8 the message that I expected to see. But I wanted to have
9 evidence of it for the Court.
10 Q. Thank you.
11 Were you asked to render an opinion as to loss
12 amount in this case?
13 A. I was.
14 Q. Are you familiar with the United States Sentencing
15 Guidelines suggestion as to a formula to calculate that
16 loss?
17 A. I reviewed the note, yes.
18 Q. Can you explain the method?
19 A. Sure. It basically calls on an average price of the
20 security in the fraud period compared with an average price
21 of a 90-day period after the fraud is disclosed.
22 MR. HOWELL: We have a demonstrative that will
23 help his further testimony as he discusses the dates.
24 BY MR. HOWELL:
25 Q. What did you consider to be the period of fraud?
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 75 of 166 75
1 A. So from my perspective, you know -- well, counsel had
2 said, you know -- we talked about the fraud period ending
3 July 10th.
4 I have a very distinct view about this case, to be
5 clear. It's clear that the first press release was from
6 March 3rd, 2020, at the beginning of the onset of the COVID
7 pandemic. It's also very clear that April 23rd was the SEC
8 trading suspension.
9 And from that point forward, from May 8th forward,
10 when trading resumed, you know, as I said, the caveat emptor
11 warning was appended to the stock.
12 So in my professional opinion, it would be, you
13 know, impossible for an investor to miss those warnings when
14 entering into transactions from that point forward.
15 So I did my calculations based off of those key
16 dates.
17 Q. Did you reach an opinion regarding a date that the fraud
18 relating to the DECN press releases was disclosed to the
19 market?
20 A. Yeah. So absolutely. So the SEC suspension of trading
21 order is very explicit. They say there's a potential for
22 fraud with a security, and we're suspending it as a
23 consequence.
24 Q. What was the date of the SEC --
25 A. Oh, that was April 23rd, 2020.
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 76 of 166 76
1 Q. Okay.
2 A. If I might add, SEC trading suspensions are not common
3 events. In 2020, there were 176 trading suspensions issued
4 by the SEC. In 2023, there were only two, if my records are
5 correct.
6 So they are notable events in the market.
7 Q. Once again, kind of going back to when you were the
8 chief compliance officer, what was your understanding in
9 that role of why the SEC would suspend trading of a company?
10 A. Again, they have a very strong and important role to
11 protect market integrity. Right? I very much respect the
12 mission of -- basically, customer protection and market
13 integrity are their two main goals and regulatory purposes.
14 So whenever they detect potential fraud on the
15 market, aberrant trading that could be problematic for
16 investors, they have an absolute duty to suspend trading.
17 And they did so in this case.
18 Q. In addition to April 23rd, 2020, could there be other
19 events and dates that indicate that the fraud was disclosed
20 to the market?
21 A. Sure. Again, I feel very strongly that the SEC trading
22 suspension was the date in my mind in terms of when issues
23 with DECN were disclosed to the market.
24 But there was another release on May 20th by the
25 SEC, the Perkins affidavit, as it's called here in the -- in
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 77 of 166 77
1 this demonstrative. That was from my perspective another
2 very clear date.
3 MR. HOWELL: Can we pull up DX 004.
4 BY MR. HOWELL:
5 Q. Is this the Perkins declaration you just mentioned?
6 A. It is.
7 Q. Have you seen this document before?
8 A. I have.
9 Q. And is this a fair and accurate copy of the document?
10 A. It is.
11 MR. HOWELL: Your Honor, we'd move to admit DX 004
12 into evidence.
13 MR. FENTON: No objection.
14 THE COURT: Without objection, 4 is in.
15 (Whereupon, Defendant's Exhibit No. 004 was
16 entered into evidence.)
17 THE COURT: Did you say that you think the fraud
18 ended on April 23rd?
19 THE WITNESS: I think it was disclosed to the
20 market, the potential for fraud and -- with the trading
21 suspension on April 23rd.
22 It's clear from my review of the record that press
23 releases continued for some time after that. But again, the
24 importance in my world of dealing with traders who are
25 trading in these things is that caveat emptor designation
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 78 of 166 78
1 very clearly being there and how that causes broker-dealers
2 to change their policies and procedures and processes in
3 terms of affirmatively warning anyone from that period
4 afterwards that there was an issue with this security.
5 THE COURT: But yet you agree that wasn't the
6 completion of the fraud, that it continued for months
7 afterwards. Right?
8 THE WITNESS: I saw press releases that went all
9 into July of 2020. So, you know, I wasn't here for that
10 part of it. But in terms of just as -- looking at it, I
11 could easily see how the Court would extend the period to
12 that.
13 I look at it more from a practical industry
14 perspective of, when did I think any potential investor
15 would be warned adequately about the dangers of the
16 security? And that's very clearly the April 23rd period and
17 forward.
18 THE COURT: So I guess I'm wondering how you
19 explain what happened since then.
20 THE WITNESS: Oh, the continued trading?
21 THE COURT: Yes.
22 THE WITNESS: Well, investors and speculators are
23 irrational, would be my shorthand for you. You know, I'm
24 sure you follow the press well enough to have seen the
25 GameStop meme stock craze.
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 79 of 166 79
1 THE COURT: I have a case involving that.
2 THE WITNESS: Excellent. I've had several myself.
3 The trading in cryptocurrencies. You could pick a
4 lot of trading where people seem to do irrational things.
5 And again, my lived experience in that period of
6 time is that people were looking for potential opportunities
7 to profit off of the onset of the COVID pandemic. And
8 traders don't necessarily all do, you know, the deep and
9 thoughtful kind of analysis that Professor Mitts might do.
10 My experience with traders and speculators in this section
11 of the market is they might look at a stock chart and
12 nothing else and make a decision.
13 THE COURT: You may continue, Mr. Howell.
14 BY MR. HOWELL:
15 Q. I want to clarify a piece of your testimony you just
16 talked about.
17 You said in addition to May 20th, 2020, July 20th,
18 2020, could also have been another date the fraud was
19 disclosed to the market. Am I correct?
20 A. Correct.
21 Q. Can you explain that date?
22 A. That was the date when -- that was the date when we --
23 there was absolutely -- with the Wayback Machine, we
24 discovered that there was absolutely without a doubt -- the
25 caveat emptor was appended to the stock.
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 80 of 166 80
1 But again, that -- I know from my professional
2 experience and how OTC Markets worked and how broker-dealers
3 worked that that would have been there from the resumption
4 of trading on May 8th going forward. I like hard evidence
5 and fact-based documents. So that's the oldest one I could
6 find in that regard.
7 MR. HOWELL: If we could put the demonstrative
8 back up so we have all the dates in front of us.
9 Thank you.
10 BY MR. HOWELL:
11 Q. So using the disclosure date of April 23rd, 2020, and
12 using the model that's in the sentencing guidelines, did you
13 determine a loss amount?
14 A. I did the calculations. But they came out with actually
15 a gain as opposed to a loss.
16 Q. How did you come up with your calculated amount?
17 A. Sure. I mean, the note is very straightforward. It's
18 the average price of the period before -- so again, I used
19 the April 23rd date. So March 3rd, 2020, the first press
20 release date, to April 23rd, the SEC's trading suspension.
21 And then I did the 90 days of trading from the resumption of
22 trading onwards.
23 Q. Same thing --
24 THE COURT: Sorry. This demonstrative says the
25 fraud period ends July 10th. Right?
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 81 of 166 81
1 THE WITNESS: Yes.
2 THE COURT: So I guess I'm confused about -- I
3 mean, you're the expert. When do you think the fraud period
4 ends?
5 THE WITNESS: Well, July 10 is my understanding of
6 the record, is the last press release. Right?
7 So in terms of again -- I look at this from a --
8 when was the potential for fraud disclosed to the market
9 very clearly? And that's the April 23rd date.
10 THE COURT: And you're --
11 THE WITNESS: So they're a little bit at odds with
12 each other. I understand that. And that's why you're here.
13 THE COURT: You may proceed.
14 BY MR. HOWELL:
15 Q. You mentioned May 20th, 2020, as being another date of
16 disclosure. If the fraud was disclosed on May 20th, 2020,
17 does that change your opinion of the loss amount?
18 A. It changes the math a little bit, but it still winds up
19 being -- when you do the math required by the note, it winds
20 up being -- also not being a loss. The average price in the
21 subsequent 90-day period is higher than the initial period.
22 Q. If the fraud was disclosed on July 20th, 2020, does that
23 change your analysis with the loss amount?
24 A. Again, it changes the math a little bit. But it doesn't
25 change the fact that the subsequent period was higher. And
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 82 of 166 82
1 therefore, under the -- how the note is calculated that
2 demands its calculation, it would not be a loss.
3 MR. HOWELL: Could I have your Court's indulgence?
4 THE COURT: Yes.
5 MR. HOWELL: Thank you, your Honor.
6 BY MR. HOWELL:
7 Q. I have a couple more questions.
8 This is going to deal with outstanding shares,
9 conversions, preferred stock conversions.
10 A. Uh-huh.
11 Q. So saying there are newly issued common shares doesn't
12 tell you whether the shares were issued as a result of a
13 preferred shareholder converting its existing preferred
14 shares into common stock that is issued by the company. Is
15 that correct?
16 A. You're going to have to restate that question. Sorry.
17 Q. Let's break it down.
18 So just saying that there are newly issued common
19 stock shares, it doesn't tell you whether the shares were
20 issued as a result of preferred shareholders converting
21 existing preferred shares into common stock that was then
22 issued by the company. Is that correct?
23 A. Yeah. If you're looking at outstanding shares at a
24 period of time, you don't know whether they were initially
25 issued in an initial public offering or converted in a
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 83 of 166 83
1 subsequent conversion from a preferred stock. You just know
2 how many shares are outstanding at any point in time what
3 you're looking at.
4 Q. Did you -- you talked about the information you
5 reviewed. Did you review DECN's public filings?
6 A. I did.
7 Q. Did you ever review any of DECN's quarterly public
8 reports which contain stock and notes tables that would have
9 told you that the new shares of common stock were actually
10 the result of preferred shareholders converting existing
11 preferred shares into new shares of common stock?
12 A. Quarterly reports and annual reports typically will
13 recap those kind of conversions. Yes.
14 One other -- based on your Honor's question, on
15 Page 2 of my report, I did calculate the average price for
16 the fraud period as April -- excuse me -- March 3rd, 2020,
17 to July 10th, 2020, when doing my calculations. And then
18 the subsequent periods were as we discussed earlier.
19 MR. HOWELL: I think it's in DX 042, if we could
20 have that, please.
21 THE WITNESS: Page 2.
22 That table there. So the average price for the
23 period of the fraud period, April 3rd, 2020, to July 10th,
24 2020, was 17 cents a share.
25 And then for the 90-day calculations, I used the
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 84 of 166 84
1 three different dates that we discussed: post-trading
2 suspension from May 8th, post-Perkins affidavit from May
3 20th, and post -- the evidence I could give you for caveat
4 emptor from July 20th. So you have all those numbers there
5 available to you.
6 MR. HOWELL: Your indulgence.
7 BY MR. HOWELL:
8 Q. Regarding the loss amounts, can you just state your
9 conclusions again?
10 A. Sure. That, you know, the note says: Take the two
11 periods. Calculate the difference and multiply by
12 outstanding shares.
13 As you can see from my report, I did not multiply
14 by outstanding shares to show a theoretical profit
15 because -- but in all cases we could -- I could have done
16 so.
17 Q. So what is your conclusion as to any loss for the
18 disclosure of April 23rd, 2020?
19 A. You're going to have to repeat that.
20 Q. Will you state your conclusion regarding your -- the
21 opinion of if there was a loss amount if the fraud was
22 disclosed to the market on April 23rd, 2020?
23 A. There was no loss to the market.
24 Q. Can you state your opinion if the loss amount -- or the
25 fraud was disclosed to the market May 20th, 2020?
Reilly - DIRECT - By Mr. Howell
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 85 of 166 85
1 A. As you can see from the math, there is no loss using
2 those dates.
3 The same answer for July 20th, 2020.
4 MR. HOWELL: I have no further questions, your
5 Honor.
6 THE COURT: Thanks.
7 Why don't we take a quick lunch break. I think
8 we'll recess until 2:00, but we've got a short status
9 conference. I think we'll interrupt this and do that and
10 then resume this and we'll push back the sentencing. And so
11 if you can plan to be back by about 2:05 or so.
12 Thank you.
13 (Thereupon, a luncheon recess was taken, after
14 which the following proceedings were had:)
15 THE COURTROOM DEPUTY: Your Honor, we're back on
16 the record in Criminal Case 20-278, the United States of
17 America versus Keith Berman.
18 THE COURT: We'll have cross-examination.
19 Mr. Reilly, I'll remind you you're still under
20 oath.
21 THE WITNESS: Yes, sir.
22 THE COURT: Mr. Fenton.
23 MR. FENTON: Thank you, your Honor.
24 CROSS-EXAMINATION
25
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 86 of 166 86
1 BY MR. FENTON:
2 Q. Good afternoon, Mr. Reilly.
3 A. Good afternoon.
4 Q. You agree the fraud period in this case occurred from
5 March 3rd, 2020, to July 10, 2020. Correct?
6 A. I do.
7 Q. Okay. Now, you applied the modified rescissory method.
8 Is that right?
9 A. Correct.
10 Q. It's the same method that Professor Mitts applied?
11 A. That's correct.
12 Q. The major disagreement between you two is about the date
13 on -- the date on which the truth was revealed to the
14 market. Right? About the Defendant's fraud?
15 A. I would call it adequate disclosure to the market as
16 opposed to truth. But yes.
17 Q. Okay. But it's the date that the truth was revealed.
18 Right?
19 A. The date that the potential for fraud was disclosed to
20 the market. Yes.
21 Q. Now, "the market" is another way of saying the
22 shareholders?
23 A. No, it's not. It's -- any potential investor would be
24 able to see that.
25 Q. And, Mr. Reilly, the market includes shareholders?
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 87 of 166 87
1 A. It does.
2 Q. Okay. And shareholders are the victims of the crime to
3 which the Defendant pleaded guilty here. Right?
4 A. Not necessarily.
5 Q. Mr. Reilly, you understand the Defendant pleaded guilty
6 to securities fraud. Correct?
7 A. I do.
8 Q. And the shareholders who were defrauded by the Defendant
9 are the victims of that crime. Right?
10 A. If they lost money.
11 Q. Okay.
12 A. There would be investors in this case who made money.
13 Q. Mr. Reilly, you understand that loss is not an element
14 of the crime of securities fraud. Correct?
15 A. I'm sorry. In my area of practice, I just try to be
16 specific about these kind of matters.
17 Q. Right. I'm being specific about this particular matter.
18 A. Okay.
19 Q. Securities fraud, Section 10b: Loss is not an element
20 of that crime. Right?
21 A. Correct.
22 Q. Okay. So the shareholders are the victims of the crime
23 to which the Defendant pleaded guilty in this case. Right?
24 A. Correct.
25 Q. Okay. So the question is: When did the victims learn
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 88 of 166 88
1 the truth about the Defendant's fraud? Right?
2 A. I don't know that -- that would vary by individual.
3 Q. Sir, the question you're trying to answer is: When did
4 the victims learn the truth about the Defendant's fraud?
5 Right?
6 A. Well --
7 MR. HOWELL: Objection, your Honor.
8 THE COURT: On what basis?
9 MR. HOWELL: Speculation.
10 THE COURT: Overruled.
11 BY MR. FENTON:
12 Q. It's a yes-or-no question, Mr. Reilly.
13 A. From my professional experience, it is not a yes-or-no
14 question. The reason being is that you don't know when any
15 particular holder of the security is going to be looking at
16 the news or -- and what import they take from what the
17 different type of disclosures that are made.
18 So you keep on using the word "truth." I have to
19 use a more -- from my perspective, when was issues with the
20 security adequately disclosed to the market?
21 I don't know -- it's impossible to know without
22 interviewing each individual holder of the security when
23 they knew the truth.
24 Q. Is it your testimony that it's impossible to know when
25 the truth was revealed to the market?
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 89 of 166 89
1 A. Yes. I mean, that -- it's just -- you know, the idea
2 that when the final -- when the indictment was -- for
3 Mr. Berman was done later in the year, that's a date.
4 But the SEC trading suspension is a very
5 significant disclosure to the market and when you're trading
6 in a security that's traded on the OTC Markets.
7 Q. Let's talk about that date.
8 So the first date that you put forward -- you put
9 forward three dates -- right? -- when you believe the truth
10 was revealed?
11 A. When adequate disclosure was made to the market. I
12 cannot use your word "truth."
13 Q. Not adequate disclosure by the Defendant, though.
14 Right?
15 A. I haven't seen anything about -- in terms of the
16 Defendant. But clearly, the SEC initiated its trading
17 suspension on April 23rd.
18 Q. Okay. So that's the day that the SEC suspended trading
19 of DECN stock. Right?
20 A. Correct.
21 Q. And the SEC suspended trading based on questions
22 regarding the accuracy and the adequacy of information in
23 the marketplace?
24 A. Correct.
25 Q. The questions were specifically about certain DECN press
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 90 of 166 90
1 releases issued in March and April 2020?
2 A. That sounds correct. Yes.
3 Q. Now, on March 7, 2020, the Defendant filed a petition to
4 terminate the trading suspension. Correct?
5 A. I don't remember that.
6 Q. Earlier, you testified that you reviewed the SEC's
7 website with respect to -- for information relating to the
8 DECN trading suspension. Is that correct?
9 A. That's correct.
10 Q. And so if they had filed a petition to terminate that
11 trading suspension, presumably you would have seen that.
12 Right?
13 A. Yeah. I do recall seeing a petition. First of all, I
14 know it wasn't granted. And I don't recall the date, to be
15 more precise.
16 Q. It's a yes-or-no question. Yes, they filed a petition
17 to terminate the trading suspension?
18 A. Yes.
19 MR. FENTON: Ms. Boyer, can you please pull up
20 Government's Exhibit 3-O.
21 BY MR. FENTON:
22 Q. Is this the petition the Defendant filed?
23 A. It appears that it could be. Could you scroll through
24 the entire 15 pages just so I can refresh myself?
25 Q. Yes.
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 91 of 166 91
1 A. You can go pretty quick. You can keep going. I
2 think -- I'm looking for the date at the end, quite
3 honestly. Probably on the last page. Filed November 22nd,
4 2021.
5 MR. REILLY: Ms. Boyer, can you go back two pages
6 to the date of the filing?
7 THE WITNESS: Okay. Filed and certified. That --
8 okay. What I'm looking for is when this was released to the
9 public, if you can find that easily.
10 BY MR. FENTON:
11 Q. So it says here, Certificate of Service: I hereby
12 certify that a true and correct copy of the foregoing was
13 filed on May 7, 2020, by electronic delivery at
14 apfilings@sec.gov.
15 A. Uh-huh.
16 THE COURT REPORTER: Is that yes?
17 THE WITNESS: Yes.
18 BY MR. FENTON:
19 Q. So this is the date on which the Defendant filed a
20 petition to terminate the trading suspension. Correct?
21 A. It is. I don't know if that's when it was publicly
22 available, however.
23 Q. My question is: This is the date on which it was filed,
24 sir?
25 A. Well --
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 92 of 166 92
1 Q. The answer is...?
2 A. Yes.
3 MR. FENTON: Let's go to --
4 MR. HOWELL: Objection, your Honor. Relevance.
5 THE COURT: Overruled.
6 MR. FENTON: Let's go to, Ms. Boyer, Page 12,
7 please.
8 BY MR. FENTON:
9 Q. This is Petitioner Keith M. Berman's sworn statement.
10 Is that right?
11 A. That's what it says. Yes.
12 Q. It says: I, Keith M. Berman, chief executive officer of
13 Decision Diagnostics Corp., being duly sworn, state that I
14 have read the foregoing petition for termination of
15 suspension of trading in the securities of Decision
16 Diagnostics Corp. and have personal knowledge of the facts
17 contained therein and that such facts are true and correct
18 to the best of my knowledge.
19 Is that an accurate reading?
20 A. It is.
21 Q. And the Defendant, Mr. Berman, signed it here. Correct?
22 A. It appears he signed it on May 6th, 2020.
23 Q. It's the Defendant's sworn statement?
24 A. Correct.
25 Q. This is a publicly available document, right, on the SEC
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 93 of 166 93
1 website?
2 A. Eventually. I don't think this was publicly available
3 on May --
4 Q. Sir, it's a yes-or-no question.
5 A. It was --
6 Q. Was this a publicly available document?
7 A. I don't believe this was publicly available on May 6th,
8 2020, based on --
9 Q. My question, sir, is: Was this a publicly available
10 document?
11 A. The earliest I saw in my review of the record was that
12 it was not available until 2021, when the entire file was
13 published.
14 Q. Mr. Reilly, you reviewed the SEC's website for documents
15 relating to the DECN trading suspension. Correct?
16 A. Correct.
17 Q. As a member of the public, did you find this document?
18 A. When it was contained in a filing that was published in
19 2021, yes.
20 Q. And you also reviewed otcmarkets.com. Correct?
21 A. Correct.
22 Q. And are you aware that the Defendant published this on
23 OTC Markets in May 2020?
24 A. I did not see any record of that.
25 Q. But you looked at the website?
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 94 of 166 94
1 A. I did.
2 Q. Okay. Let's look at the specific -- some of the
3 specific paragraphs. Let's look at Page 9, Paragraph 31.
4 It says here: The suspension order is not
5 necessary and not in the public interest because, A, DECN
6 has not acted in a fraudulent, deceitful or manipulative
7 manner.
8 Do you see that, sir?
9 A. I do.
10 Q. That is the Defendant denying that he engaged in fraud.
11 Correct?
12 A. It's what it says, yes.
13 Q. B: As previously stated, each DECN press release was
14 based upon facts that were true at the time the statements
15 were made.
16 That's an accurate reading. Right?
17 A. Correct.
18 Q. Okay. And so the Defendant again is denying that the
19 press releases that he issued were false or misleading.
20 Correct?
21 A. Correct.
22 Q. And in this document, the Defendant specifically
23 addresses each and every press release from March 2020.
24 Right?
25 A. I will take that assertion from you.
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 95 of 166 95
1 Q. Well, let's take a look. There's no need to take it
2 from me.
3 MR. HOWELL: Objection, your Honor. Beyond the
4 scope of direct.
5 THE COURT: Overruled.
6 MR. HOWELL: And I'd renew my relevance objection.
7 THE COURT: Understood. I'm overruling.
8 You may continue, Mr. Fenton.
9 MR. FENTON: Can we go to Paragraph 16, please.
10 BY MR. FENTON:
11 Q. It says here on March 3rd, 2020, DECN issued a press
12 release, a March 3rd press release, prominently quoting
13 Mr. Berman stating, quote, "I want to straight up -- I want
14 to say straight up we have developed a coronavirus screening
15 method, not a cure or a vaccine for this virus.
16 "This press release did not contain any false or
17 misleading statements or omit to state any facts necessary
18 in order to make the statements made not misleading."
19 Is that an accurate reading?
20 A. It is.
21 Q. This is another example of where the Defendant is
22 denying that he engaged in any sort of fraud. Correct?
23 A. Correct.
24 Q. And it's another example of where he said he in fact
25 developed a COVID-19 blood test. Right?
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 96 of 166 96
1 A. I don't see a blood test in here, but it's a test.
2 Q. Right.
3 MR. FENTON: Let's look at Paragraph 17, please.
4 BY MR. FENTON:
5 Q. It says here: On March 4, 2020, DECN issued a press
6 release. In this press release, Mr. Berman stated: I
7 cannot say often enough we are developing a coronavirus
8 screening method. This press release did not contain any
9 false or misleading statements or omit to state any facts
10 necessary in order to make the statements made not
11 misleading.
12 Is that right?
13 A. That's an accurate reading. Yes.
14 Q. This is another denial, right, of any wrongdoing on
15 Mr. Berman's part?
16 A. Correct.
17 Q. Paragraph 18 here talks about the March 11, 2020, press
18 release. Right?
19 A. It does.
20 Q. There's another denial of any wrongdoing. Correct?
21 A. There is.
22 Q. Paragraph 19 talks about the March 16, 2020, press
23 release; is that right?
24 A. It does.
25 Q. It says this press release -- there's another denial
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 97 of 166 97
1 here: This press did not contain any false or misleading
2 statements. Correct?
3 A. It does.
4 Q. The same with Paragraph 20?
5 THE COURT: I get it, Mr. Fenton.
6 BY MR. FENTON:
7 Q. So there are eight such instances here, right? All of
8 the press releases in March 2020?
9 A. Correct.
10 Q. That gave rise to the trading suspension?
11 A. From what I've read in the SEC order, yes.
12 Q. And Mr. Berman went and publicly said there are no false
13 or misleading statements in any of those press releases.
14 A. I don't know that this was a public document. This is a
15 document filed with the SEC in trying to get the trading
16 suspension reversed.
17 Q. Right. And posted by Mr. Berman on otcmarkets.com,
18 which you reviewed, sir. Correct?
19 A. I didn't see evidence of those postings.
20 Q. Let's move on to the second date that you chose, May
21 20th, 2020.
22 A. Uh-huh.
23 Q. That's the date when the SEC filed a brief showing the
24 information on which the trading suspension was based.
25 Right?
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 98 of 166 98
1 A. Correct.
2 Q. That was prepared by SEC staff member Carl Perkins. Is
3 that right?
4 A. I believe it's Carlton Perkins. Yes.
5 Q. I think it's Carlisle.
6 A. Carlisle. Sorry. I know there was --
7 Q. I think they call him Carl.
8 A. Thank you.
9 Q. Now, in response to the Defendant's petition -- this was
10 filed in response to the Defendant's petition to terminate
11 the trading suspension. Right?
12 A. I'm not certain about that.
13 Q. Well, let's look at Defense Exhibit 2 --
14 A. Cool.
15 Q. -- or Defense Exhibit 3. I'm sorry. This is an order
16 requesting additional written submissions. Correct?
17 A. It is. That's what it says.
18 Q. And it says at the bottom here: On May 7th, 2020, DECN
19 filed a petition to terminate the trading suspension?
20 A. I see that.
21 Q. Let's turn to the next page.
22 The SEC ordered a briefing schedule. Right?
23 A. Correct.
24 Q. And Mr. Berman chose to publicly dispute the nature of
25 the allegations underlying the trading suspension. Correct?
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 99 of 166 99
1 A. I don't recall that, but I accept the assertion.
2 Q. Well, it's right here. He filed a petition on May 7th
3 and he's appealing the trading suspension, is he not?
4 A. Oh, he absolutely did appeal the trading suspension.
5 Yes.
6 Q. Right. Okay.
7 So the May 20th, 2020, submission is in response
8 to Mr. Berman's appeal, right, of the trading suspension?
9 A. It's part of the SEC process for that. Yes.
10 Q. Right. Okay.
11 So let's look at -- and the Defendant had an
12 opportunity to respond to that May 20, 2020, filing.
13 Correct?
14 A. As did others. Yes.
15 Q. And, in fact, he did. Right?
16 A. (No response.)
17 Q. I'm going to --
18 THE COURT REPORTER: I'm sorry. I didn't get a
19 response.
20 THE WITNESS: "And he did."
21 THE COURT REPORTER: I mean the answer.
22 THE WITNESS: Oh, "yes." Sorry.
23 BY MR. FENTON:
24 Q. I'm going to show you what's been marked Government's
25 Exhibit 100, please. This is the Petitioner's opening brief
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 100 of 166 100
1 in support of the petition to terminate the trading
2 suspension. Correct?
3 A. That's what it states. Yes.
4 Q. Let's turn to Page 6.
5 MR. FENTON: We have hard copies of this exhibit
6 that we can hand out or that I can put on the ELMO.
7 THE COURT: Okay.
8 MR. COLLINS: Judge, I just want to make a
9 standing objection to this line of questioning. It's
10 irrelevant and beyond the scope. It's frankly a waste of
11 time.
12 THE COURT: I don't see that. I thought the main
13 question here is: What is the appropriate time of the --
14 when was the fraud exposed? And I think this does go
15 directly to that.
16 So I'm overruling the objection.
17 BY MR. FENTON:
18 Q. Can you see the date here, Mr. Reilly?
19 A. I can. Do you have a physical copy? This is -- I'd
20 like to flip through it.
21 Q. (Tenders document to the witness.)
22 A. Thank you.
23 Q. My question, Mr. Reilly, was: What is the date of this
24 filing?
25 A. The date this was filed? It appears to be June 17th,
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 101 of 166 101
1 2020.
2 Q. And that's after the May 20th, 2020, submission by the
3 SEC?
4 A. Correct.
5 Q. In fact, this is in response to the May 20, 2020,
6 submission. Correct?
7 A. Correct.
8 Q. Let's turn to Page 2. Do you see here at the bottom it
9 says: Factors upholding a trading suspension are not
10 present? Is that accurate?
11 A. It is.
12 Q. And at the bottom it says: From the time DECN publicly
13 announced that its existing glucose technology used by
14 diabetics had the potential to be utilized to test for the
15 COVID-19 virus, the date of the trading suspension, the
16 company issued no less than 12 detailed releases concerning
17 its proposed COVID-19 GenViro! test kits and the emergency
18 use applications being sought from the Food and Drug
19 Administration.
20 No corrective disclosures were required or made
21 after the trading suspension, and there has been no showing
22 of any demonstrable falsity.
23 Do you see that, sir?
24 A. I do.
25 Q. This is not an admission that the Defendant in fact lied
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 102 of 166 102
1 about inventing a COVID-19 test. Correct?
2 A. Correct.
3 Q. This is in fact another denial?
4 A. Correct.
5 Q. There's an affidavit attached here from Mr. Berman as
6 well. Correct?
7 A. I believe I saw that in here.
8 Q. It's the affidavit of Keith M. Berman in support of the
9 petition to terminate the trading suspension.
10 Do you see that, sir?
11 A. I do.
12 Q. Let's look at Paragraph 2 of Mr. Berman's sworn
13 affidavit.
14 Can you just read aloud for the Court what
15 Mr. Berman writes here?
16 THE COURT: I don't need you to read it.
17 BY MR. FENTON:
18 Q. Mr. Reilly, this is another denial, right, of the
19 allegation that Mr. Berman did anything wrong. Right?
20 A. Yes.
21 Q. Okay. And in fact, here, he blames the SEC for engaging
22 in a twisted and misleading investigation, right, and
23 colluding with cybercriminals. Right?
24 A. I see those words. Yes.
25 Q. Let's move on.
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 103 of 166 103
1 Now, you're aware that the Defendant pleaded
2 guilty to obstructing the SEC's investigation of his
3 fraudulent scheme. Correct?
4 A. I'm actually not cognizant of his plea agreement. I
5 haven't reviewed that.
6 Q. Right. So my question was: Are you aware that the
7 Defendant pleaded guilty to obstructing the SEC's
8 investigation into his fraudulent scheme?
9 A. No.
10 Q. Is that a fact that you would want to know when opining
11 on whether or not the truth was revealed to the market and
12 when?
13 A. No. As I stated very clearly, I hope, in my testimony,
14 the appending of the caveat emptor designation when trading
15 resumed on May 8th, 2020, constitutes adequate disclosure to
16 the market in my professional opinion.
17 Q. Right. And my question is this: If the Government was
18 trying to investigate whether or not Mr. Berman had
19 committed a crime, would you want to know whether or not he
20 obstructed the investigation of that crime?
21 A. When choosing to invest in or not invest in DECN, that
22 would probably, like, be not particularly material to me.
23 Q. It wouldn't be material to you?
24 A. If a trading suspension, which is not a typical step
25 that the SEC takes, in a penny stock is issued and the
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 104 of 166 104
1 caveat emptor warning is appended to that stock for all the
2 world to see, I view that as adequate disclosure that this
3 is a dangerous instrument to be involved in.
4 Q. Right. Mr. Reilly, my question is: Is that relevant to
5 you, that he continued to engage in fraud?
6 A. For my purposes, no.
7 Q. It doesn't matter to you that after July 2020 the
8 Defendant --
9 MR. HOWELL: Objection. Asked and answered.
10 BY MR. FENTON:
11 Q. -- the Defendant continued to engage in fraud?
12 THE COURT: Sustained.
13 BY MR. FENTON:
14 Q. Are you aware that Mr. Berman convinced some of his
15 victims to in fact disbelieve the SEC?
16 A. I am not.
17 Q. And that he convinced some of his victims to in fact
18 attack the SEC?
19 A. I am not.
20 Q. I'd like to show you Government's Exhibit 102. This is
21 the Defendant's statement in support of the guilty plea.
22 Do you see that, sir?
23 A. I do.
24 MR. FENTON: And let's go to Page 2. Move on to
25 Page 3, please. I'm sorry, Ms. Boyer. Move on to Page 4.
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 105 of 166 105
1 BY MR. FENTON:
2 Q. It says here: Between May and June 2020, Mr. Berman,
3 using an alias, sent private messages to an investor on the
4 website Investors Hangout to influence the investor to draft
5 an independent shareholder letter accusing the SEC of
6 misconduct for its actions against DECN and Mr. Berman.
7 Is that -- that fact is relevant to your analysis.
8 Right?
9 A. It's an individual. Again, I look at this as -- we're
10 talking about fraud on the market.
11 Q. Right.
12 A. Right? So disclosure to the market is relevant.
13 Could there be individuals that are being coerced
14 or otherwise influenced? Of course there could be.
15 But my mandate is to look at what were the
16 policies, processes and procedures after a trade suspension
17 in an OTC stock, and do those constitute adequate notice to
18 the market? Because remember, the sentencing guideline
19 requires you to calculate the price against all outstanding
20 shares.
21 You could certainly calculate the individual
22 damages for this person included in your sentencing. The
23 Court could include that. But that's not dispositive of the
24 market as a whole.
25 Q. Mr. Reilly, would it matter if the Defendant convinced
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 106 of 166 106
1 dozens of victims to disbelieve the SEC and attack them?
2 A. How many investors? How many shares did they hold? You
3 could calculate those specifically.
4 Q. Dozens of investors.
5 A. Okay. The Government --
6 Q. Would that be relevant?
7 A. -- could have easily calculated those specific damages
8 and included them in any charging documents it so chose,
9 that specific information.
10 I could calculate the damage to the market if the
11 SEC gave me access to all the Blue Sheets for all the days
12 in the period involved to a great degree of specificity.
13 Q. So, Mr. Reilly, is your answer no?
14 A. My answer was my answer.
15 Q. Mr. Reilly, is it relevant to your analysis if the
16 Defendant convinced dozens of victims to disbelieve the SEC?
17 A. No.
18 Q. It's not relevant?
19 A. No.
20 Q. Is it relevant if the Defendant publicly posted a
21 shareholder letter attacking the SEC?
22 A. No.
23 MR. HOWELL: Objection. Asked and answered.
24 THE COURT: I'm actually not sure that that was.
25 Overruled.
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 107 of 166 107
1 THE WITNESS: Could you restate -- repeat the
2 question? Sorry.
3 BY MR. FENTON:
4 Q. Sure.
5 Would it be relevant to your analysis that the
6 Defendant publicly published the SEC shareholder letter, the
7 fake SEC shareholder letter, that he describes here?
8 A. That he published it? No. I don't know how many people
9 relied on that. Again, I'm doing a market-wide analysis
10 here against the processes that I know as a professional
11 exist for entering transactions in this type of security
12 with this kind of warning attached to it.
13 Q. What if it was published in otcmarkets.com?
14 A. It doesn't change my answer.
15 Q. Okay. Let's look at Government's Exhibit 3-M. Are you
16 familiar with this document, sir?
17 A. I don't remember seeing -- not particularly. I may have
18 seen it. But...
19 Q. So no?
20 A. No. I don't recall it. I may have seen it in my
21 review.
22 Q. At the bottom it says: Decision Diagnostics Corp.,
23 shareholder letter, dated June 2nd, 2020.
24 Do you see that?
25 A. I do.
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 108 of 166 108
1 Q. This is a letter to Jay Clayton, the SEC chairman.
2 Do you see that?
3 A. I do.
4 Q. And do you see it says at the top: We represent a
5 number of concerned shareholders of Decision Diagnostics
6 Corp. and are writing today in response to the following
7 items. And it lists three different things. Right?
8 A. I see that. Yes.
9 Q. The April 23rd, 2020, trading suspension. Right?
10 A. Correct.
11 Q. The actions associated with the potential theft of
12 company property and its use against Decision Diagnostics in
13 early 2020, and then the administrative proceeding filed
14 before the Commission on the trading suspension dated May
15 20, 2020.
16 A. I see all that. Yes.
17 Q. This directly relates to the two events that you claim
18 provided adequate notice. Right?
19 A. Well, again, they list the -- two of the -- those
20 events. Yes.
21 Q. Well, both of them.
22 A. Yes.
23 Q. There's three. So this addresses two of the three?
24 A. Correct.
25 Q. Okay. And let's look at what they say in the
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 109 of 166 109
1 shareholder letter about this: In the section below, we
2 outline what we believe to be numerous inconsistencies
3 between the two documents filed by the SEC that was dated
4 April 23rd and May 20, 2020, as well as many other issues
5 with the investigators' purported findings and how they used
6 these findings to institute enforcement actions against the
7 company.
8 A. I see that.
9 Q. Right?
10 These are denials, right, that the SEC got it
11 right?
12 A. It questions them. Yes.
13 Q. This is an attack on the SEC. Right?
14 A. If you want to characterize it that way, sure.
15 Q. Well, I'm asking you.
16 A. It's questioning their actions. Absolutely.
17 Q. Okay. And this is the letter to which Mr. Berman
18 pleaded guilty for using to obstruct the SEC investigation.
19 Right?
20 A. I would have to accept that assertion. I don't
21 know what -- on what basis he pled to that charge.
22 Q. But you didn't even know that when you did your
23 analysis?
24 A. Again, as a practitioner, when the caveat emptor
25 designation is appended to a stock that's been suspended by
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 110 of 166 110
1 the SEC, I view that as adequate -- more than adequate
2 notice to the market that anyone who chooses to trade in
3 that security does so at great danger.
4 Q. I understand, sir.
5 But what I'm asking you, sir, is: When you did
6 your analysis, you didn't know that Mr. Berman had pleaded
7 guilty to obstructing the SEC investigation?
8 A. I knew he had taken a plea deal.
9 Q. But you didn't know that he had pled guilty to
10 obstructing the SEC investigation?
11 A. Well, he wasn't particularly effective in obstructing
12 it, was he? But yes.
13 Q. Sir, it's a yes-or-no question. Did you know this?
14 A. I see this. I may have read this in my review. Again,
15 not relevant for my analysis.
16 Q. And you didn't read the shareholder letter even though
17 it was on OTC Markets. Right?
18 A. I read this shareholder letter at some point in my
19 review.
20 Q. And you didn't read the petition appealing the trading
21 suspension?
22 A. Excuse me. Could you repeat that?
23 Q. You did not read the petition appealing the trading
24 suspension?
25 A. I skimmed through it when I was doing my review.
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 111 of 166 111
1 Q. And you didn't read the opening brief challenging the
2 trade suspension?
3 A. I reviewed that. Yes, I did. Again, as a practitioner,
4 those points are not relevant to how the potential for fraud
5 and danger and risk are disclosed to the market. That is as
6 I described in my previous testimony.
7 Q. And that's because it all comes down to the skull and
8 bones, the caveat emptor. Right? The skull and bones
9 symbol? That's it for you?
10 A. I would say that a reasonable investor, faced with the
11 kind of warnings you'd get at TD Ameritrade or Schwab or
12 Fidelity or E*TRADE, when you are given the absolute
13 inability to trade online which you're typically used to,
14 and have to call in and then you're read a script saying:
15 This has been suspended by the SEC; there's a lot of
16 potential risk in trading this security; do you still want
17 to enter this trade? That is an adequate notice.
18 Q. So let's talk about the caveat emptor symbol.
19 So the third day that you choose -- that you claim
20 when the truth was revealed or there was this adequate
21 disclosure was July 20th, 2020. Right?
22 A. That was the earliest day I could find in terms of
23 absolutely closest to the trading suspension when it was
24 captured by the internet or kind of -- that does not mean in
25 my professional experience -- that was -- that that was when
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 112 of 166 112
1 it was disclosed. I know it was disclosed on May 8th. But
2 I wanted evidentiary proof.
3 Q. And so, Mr. Reilly, my question is: The third date that
4 you claim that the truth was revealed was July 20th, 2020.
5 Yes?
6 A. That's the third disclosure date that I chose. Yes.
7 Q. That's based on the Wayback Machine?
8 A. Correct.
9 Q. That's the earliest date when you found that OTC Markets
10 had applied the caveat emptor and skull and bones?
11 A. That I could prove it empirically, yes.
12 Q. And that does not mean that July 20 is the actual date,
13 right, that --
14 A. Correct.
15 Q. -- they put that up?
16 A. Correct.
17 Q. That's just the first date that you found it?
18 A. Correct.
19 Q. Let's look at -- I believe it was Defense Exhibit 10.
20 Let's look at that caveat emptor symbol.
21 So at the bottom here, it says: The caveat emptor
22 designation may be assigned when OTC Markets becomes aware
23 of one or more of the following. Right?
24 A. Uh-huh.
25 THE COURT REPORTER: Is that yes?
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 113 of 166 113
1 THE WITNESS: Yes.
2 BY MR. FENTON:
3 Q. And there's a list that follows. Correct?
4 A. There is -- it follows under the next page.
5 Q. Let's look on to the next page. So there's one bullet.
6 There's four more here. The third bullet is
7 suspension/halt. It says: A regulatory authority or an
8 exchange has halted or suspended trading for public interest
9 concerns, i.e. not a news or earnings halt. Correct?
10 A. Correct.
11 Q. Okay. So if the SEC institutes a trading suspension,
12 this automatically gets put up under OTC Markets for that
13 particular stock, the stock that got suspend?
14 A. Correct.
15 Q. And if that were the case, this information would
16 already be known to the market by then. Right? Because it
17 would have been -- the SEC would have put out notice. They
18 put out their notice on April 23rd. Right? So the market
19 knows about the trading suspension on April 23rd?
20 A. Correct.
21 Q. This information is merely confirmatory. It's just
22 saying the same thing that the SEC has already said?
23 A. In essence, yes.
24 Q. Nothing in this document says that the caveat emptor
25 symbol was applied to DECN for any other reason than the
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 114 of 166 114
1 fact of the trading suspension. Correct?
2 A. Correct.
3 Q. Okay. For example, it does not say that the CEO of DECN
4 was lying to his investors?
5 A. It doesn't have any particular detail like that. No.
6 Q. It just is a generic description?
7 A. Generic in terms of buyer beware and a skull and
8 crossbones, which was picked by OTC Markets to emphasize the
9 "danger ahead" nature of trading in securities like that.
10 Yes.
11 Q. But this same symbol is used regardless of what stock
12 it's applied to?
13 A. Well, every symbol -- everyone -- every stock that
14 trades on OTC Markets that's appended with caveat emptor is
15 viewed as speculative. You could lose all your money.
16 Because, remember, there's a second part to this process:
17 How is it applied at a broker-dealer?
18 Q. But my question is: This caveat emptor symbol and
19 explanation is the same for every stock to which it is
20 applied?
21 A. That is correct.
22 Q. It's generic?
23 A. It is the same for all the stocks, Yes.
24 Q. It's the same for all?
25 A. That have caveat emptor. Correct.
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 115 of 166 115
1 Q. Let's look at Page 2 -- I'm sorry. Let's look at the
2 bottom here, the caveat emptor symbol.
3 So OTC Markets --
4 THE COURT: Mr. Fenton, you've been going for
5 about 40 minutes. I'll give you five more minutes.
6 MR. FENTON: Thank you, your Honor.
7 BY MR. FENTON:
8 Q. OTC Markets does not say that the investor should not
9 buy DECN stock. Right?
10 A. OTC Markets doesn't make any recommendations one way or
11 the other on any stock that's listed on its markets.
12 Q. And it doesn't say that DECN stock is a fraud. Right?
13 A. It doesn't say anything particularly like that. No.
14 Q. Now, all it says here is that investors are encouraged
15 to use caution and due diligence in their investment
16 decisions. Right?
17 A. Correct.
18 Q. One of the things that an investor could do if they were
19 exercising caution and due diligence in their investment
20 decisions would be to look at what the CEO of the company
21 says about the company and says about the stock. Correct?
22 A. That is one of the things they could do. Yes.
23 MR. FENTON: Thank you. No further questions.
24 THE COURT: Any redirect?
25 MR. COLLINS: Your Honor, could we have the
Reilly - CROSS - By Mr. Fenton
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 116 of 166 116
1 Court's indulgence for just 30 seconds?
2 THE COURT: Yes.
3 (Discussion had off the record amongst counsel.)
4 MR. COLLINS: Thank you, your Honor.
5 MR. HOWELL: No redirect, your Honor.
6 THE COURT: Thank you, Mr. Reilly. You may step
7 down. You're free to go.
8 (Witness excused.)
9 THE COURT: Putting aside the other witness issue,
10 anything further on loss?
11 MR. COLLINS: No further testimony. I don't know
12 if the Court was inclined to hear any kind of summation
13 based on the testimony today or if the Court would accept
14 further briefing on this.
15 THE COURT: We'll figure that out later. Thanks.
16 Did you want to re-call Dr. Mitts?
17 MR. REILLY: Just briefly, your Honor.
18 THE COURT: Okay.
19 MR. REILLY: Thank you, your Honor.
20 The Government re-calls Professor Joshua Mitts.
21 THE COURT: Professor, I'll remind you you're
22 still under oath.
23 THE WITNESS: Thank you.
24 Mr. Reilly.
25 MR. REILLY: Thank you, your Honor.
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 117 of 166 117
1 (JOSHUA MITTS, GOVERNMENT WITNESS, PREVIOUSLY SWORN.)
2 REDIRECT EXAMINATION
3 BY MR. REILLY:
4 Q. Professor Mitts, did you hear Mr. Reilly's testimony on
5 caveat emptor?
6 A. I did, yes.
7 Q. Are you yourself familiar with that concept?
8 A. Yes.
9 Q. Are you familiar with the warnings that are attached
10 when a caveat emptor label is put on an OTC stock?
11 A. Yes.
12 Q. And does that label necessarily put investors on notice
13 that officers of a company are engaged in fraud?
14 A. No.
15 Q. Does the caveat emptor disclosure let the market know if
16 the executive of that company is engaged in obstruction in
17 an SEC investigation?
18 A. No, it does not.
19 Q. Professor Mitts, you're familiar that the application
20 note discussing the MRM requires not just the mathematical
21 analysis, but then an assessment as to whether the resulting
22 loss number is reasonable. Right?
23 A. That's correct.
24 Q. And one of the factors the application note suggests
25 that should be looked at when assessing reasonableness is
Mitts - REDIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 118 of 166 118
1 firm-specific facts, conditions and events. Right?
2 A. That's correct.
3 Q. What do firm-specific facts, conditions and events mean
4 to you?
5 MR. XENAKIS: Objection, your Honor. Beyond the
6 witness's legal expertise as -- certified as an expert
7 previously.
8 THE COURT: Sustained.
9 BY MR. REILLY:
10 Q. Professor Mitts, in conducting your own analysis, did
11 you look at firm-specific facts, conditions and events?
12 A. Generally, yes.
13 Q. Is that an important step in determining the
14 reasonableness of a loss number?
15 A. Yes.
16 Q. Why?
17 A. Because to assess whether it's plausible that a
18 particular date revealed the truth of the fraud to the
19 market, one would need to look at the totality of the
20 firm-specific information that was being released on that
21 date or during that time, because otherwise one could
22 mistakenly conclude that the inflation had dissipated from
23 the price when in fact there was some other firm-specific
24 activity that maintained that inflation on a given date.
25 Q. In your view, is it possible to assess the
Mitts - REDIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 119 of 166 119
1 reasonableness of loss amount without a close analysis of
2 firm-specific events?
3 A. No. One needs to consider the totality of the evidence
4 and what happened to determine whether or not the loss
5 amount was reasonable.
6 Q. And would the appeal of a trading suspension or
7 obstruction of an SEC investigation constitute the types of
8 events that could cause continued price inflation?
9 A. Yes. Certainly. As long as there was some disclosure
10 to the market in some way, those events certainly could
11 maintain a preexisting price inflation.
12 Q. And to be clear, what does preexisting price inflation
13 mean?
14 A. Whatever inflationary impact of a prior misstatement is
15 still in the stock price, those additional actions could
16 give the market reason to not, let's say, in this case sell
17 the stock, thereby causing the inflation to dissipate.
18 Q. In conducting the reasonableness analysis called for in
19 the application note, would the reliable principles in
20 financial economics require some sort of systematic or
21 regression-type tool to support a finding of reasonableness?
22 A. Yes. It's generally the case that in order to assess
23 whether a particular measure is a reasonable estimate of
24 loss that one would at least within the basic parameters of
25 the peer-reviewed literature assess questions like whether
Mitts - REDIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 120 of 166 120
1 there's market-specific or industry-specific or other
2 factors that a regression analysis would pick up.
3 Q. Did you hear any of -- any analysis of that type
4 conducted by Mr. Reilly in explaining his assessment of the
5 loss amount?
6 A. No, I did not.
7 Q. What does the financial literature say about the value
8 to the market of statements by a corporate insider as
9 compared to those by third parties or outsiders?
10 A. There's actually a substantial literature on this,
11 because the fact -- it's not even an assumption. It's an
12 understanding that corporate insiders have assymetric
13 information about their firms. They know things the rest of
14 the market doesn't. When a corporate insider speaks, the
15 market takes that very, very seriously. The assumption is
16 that third parties might be getting it wrong, but the
17 insider knows what's really going on.
18 So the assymetric information disparity between
19 the insider and the rest of the market is a basis for the
20 market as a whole to ascribe extra importance to what
21 insiders are saying. And there's a very large literature on
22 this point.
23 Q. And how does that topic apply to the potential to
24 perpetuate price inflation?
25 A. Well, I think what that literature implies is that even
Mitts - REDIRECT - By Mr. Reilly
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 121 of 166 121
1 relatively oblique or indirect or subtle comments by
2 corporate insiders can give investors -- and here, I'm
3 referring to the market as a whole -- a reason not to
4 disbelieve the misstatements, meaning not to sell the stock,
5 not to update their beliefs.
6 It's as if the market looks and says: Well, you
7 know, look. It looks like maybe these third-party
8 accusations are wrong. And so the market's ascribing extra
9 weight to those insider statements.
10 MR. REILLY: No further questions, your Honor.
11 THE COURT: Mr. Xenakis.
12 MR. XENAKIS: Thank you, your Honor.
13 RECROSS-EXAMINATION
14 BY MR. XENAKIS:
15 Q. Professor Mitts, as part of your legal expertise, you're
16 familiar with litigation with the SEC. Correct?
17 A. I'm not sure I understand what you mean by "litigation
18 with the SEC."
19 Q. Well, you're familiar with litigation, for example, the
20 litigation that's been discussed today about a stop trade
21 order with the SEC?
22 A. I'm generally familiar with trading suspensions and
23 attempts to convince the SEC to reverse or overturn a
24 trading suspension.
25 Q. And the attempts to persuade the SEC to overturn a
Mitts - RECROSS - By Mr. Xenakis
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 122 of 166 122
1 trading suspension is a legal right that people have.
2 Correct?
3 A. I'm not entirely sure what you mean by a "legal right."
4 I believe generally the SEC has provided for that as a
5 matter of their own procedure. But I can't recall the exact
6 framework from a procedural standpoint that applies to those
7 sorts of appeals.
8 Q. Okay. I believe you testified on direct that you -- I'm
9 sorry -- on cross-examination that you've testified for the
10 Government before. Right?
11 A. I have advised the Department of Justice, but I have not
12 testified for the Department of Justice before.
13 Q. And have you advised the Department of Justice on issues
14 like -- that have come up today, like the sentencing
15 guidelines?
16 A. I don't believe this level of specificity. We certainly
17 have discussed the general issues that were discussed today.
18 The level of specificity today in preparation for this
19 hearing and the analysis that I was asked to conduct was
20 certainly at a higher level of specificity than our prior
21 discussion.
22 Q. In preparing for that ability to speak with specificity,
23 you reviewed the guidelines closely. Right?
24 A. I reviewed the note that I discussed in my testimony and
25 the associated reasonableness analysis.
Mitts - RECROSS - By Mr. Xenakis
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 123 of 166 123
1 Q. And when you talk about the note, that's the note for
2 Guideline 2B1.1. Right?
3 A. That sounds roughly correct. I'd have to consult my
4 notes as to the exact provision. But --
5 Q. In your review of the guideline, do you remember where
6 it said the word "truth"?
7 A. I can't recall the exact words. What I remember is that
8 the language is in substance examining the date when the
9 fraud was revealed to the market or the fact that the
10 misstatement was false. I don't remember the exact words
11 that were used, but that was my understanding of the
12 formula.
13 Q. And is it possible you don't recall because the
14 guideline doesn't actually use the word "truth"?
15 A. That's possible. As I said, the question as I saw it
16 was whether the dates at issue in fact captured the
17 revelation of the fraud or the dissipation of the price
18 inflation, meaning the market realized that the prior
19 misstatements were false and therefore the inflationary
20 effect of those misstatements came out of the price.
21 MR. XENAKIS: The Court's indulgence.
22 Nothing further, your Honor.
23 THE COURT: Thank you, Professor Mitts. You may
24 step down.
25 (Witness excused.)
Mitts - RECROSS - By Mr. Xenakis
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 124 of 166 124
1 THE COURT: Mr. Collins, I'll give you 20 minutes
2 if you want to have Dr. Williams speak now. I'm happy to
3 hear him speak at sentencing. I have reviewed his
4 disclosure and I'm happy to review something else he says.
5 I don't think I want to do another hearing, though.
6 MR. COLLINS: I understand, your Honor. Can you
7 give me one minute to consult with my team?
8 THE COURT: Sure.
9 (Discussion had off the record amongst counsel.)
10 MR. COLLINS: Your Honor, could I suggest Plan B?
11 THE COURT: Which was that he comes up?
12 MR. COLLINS: No, no. That to the extent that we
13 would rely on Professor Williams or Dr. Williams, we might
14 submit something in support of sentencing.
15 But if the Court has some time, we would like --
16 the Court's heard a lot of information. In our view, we
17 think a summation of some sort for ten minutes would be, we
18 think, beneficial. If it's beneficial -- if the Court's
19 willing, we'd like to have ten minutes to try to --
20 THE COURT: Of course. Yes.
21 MR. COLLINS: So we'd like to do it orally today
22 or we could do it in briefing. Whatever the Court prefers.
23 THE COURT: I don't want briefing.
24 I'll hear from the Government.
25 MR. REILLY: Thank you, your Honor.
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 125 of 166 125
1 The corrective disclosure for the fraud that
2 Mr. Berman engaged in cannot be the trading suspension or
3 the other summer events that the Defendant points to for a
4 number of reasons. I'll go through them briefly.
5 First, as the Defendant has pled guilty to
6 obstruction of the SEC investigation, an obstruction that
7 targeted shareholders of the company, the victims of his
8 crime, who believed his false press releases and invested in
9 this company, the obstruction plays a critical role in the
10 continued inflation of Decision Diagnostics' stock price
11 even after the SEC's trading suspension.
12 As the Court knows and as we've seen today, the
13 Defendant's efforts to continue to besmirch the SEC, their
14 investigation and to outright call the nature of the
15 investigation into question distorted the market and
16 prevented the market from realizing that in fact the conduct
17 the Defendant had engaged in was fraud.
18 As the Court is aware, there were three letters
19 submitted to the SEC over the course of that summer: June
20 2nd, July 28th and August 11th. This was persistent. And
21 those letters were not only sent to the SEC's investigators
22 and the highest levels of the SEC, but they were shared with
23 investors. They were signed by 56 investors.
24 And these promoted to the victims of the fraud,
25 circulated in that community, that this fraud was not in
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 126 of 166 126
1 fact a fraud.
2 And the result of that is the price of this
3 company's stock remained inflated during the summer until
4 the indictment revealed the truth, including that the
5 Defendant was on the message boards under a false identity
6 refuting what the SEC suggested in its trading suspension,
7 pushing back.
8 THE COURT: Well, I guess why -- I, of course,
9 have the greatest respect for the Justice Department. But
10 kind of the average market participant, why would they see
11 an indictment, treat an indictment, differently than the SEC
12 making a very similar claim with these little skull and
13 crossbones?
14 MR. REILLY: Well, first, the SEC of course
15 doesn't attach that. That's the OTC Markets. We've heard
16 about kind of the limitations of what the OTC caveat emptor
17 provides.
18 But the SEC trading suspension is a temporary
19 measure, of course. It's not --
20 THE COURT: But it's also a pretty extraordinary
21 one. Right? Do you disagree with the claim that it happens
22 only a couple times year?
23 MR. REILLY: Well, in most years, but not in 2020.
24 In 2020, I had the benefit of being at the Commission at
25 that time, your Honor.
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 127 of 166 127
1 And because of COVID-19, there was an
2 inordinate -- I believe Mr. Reilly even testified to the
3 large number of trading suspensions that came out around
4 COVID-19 products. I believe the uncertainty of the
5 pandemic, the newness of companies, you know, claiming to
6 have COVID-related products, it resulted in an inordinate
7 number of trading suspensions around that time, which I
8 think significantly undermines kind of the rareness, because
9 that year during that particular time the SEC was suspending
10 a number of stocks in order to make sure that these
11 companies weren't getting ahead of themselves on what they
12 were claiming existed.
13 And what we have here is not only that Decision
14 Diagnostics had this, but then the Defendant rebuts this, we
15 now know perjuriously. Maybe he had a legal right to do it,
16 but he certainly didn't have a legal right -- now that he's
17 pled guilty, we know that the statements he made to the SEC
18 in that document appealing the trading suspension were
19 false, where he denies the press releases --
20 THE COURT: I get that.
21 MR. REILLY: Your Honor, then he circulates that
22 on the OTC Market. And that's so that investors in these
23 penny stocks can see.
24 So the items that he's engaging in to continue the
25 fraud concern circulating a misleading appeal, recruiting
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 128 of 166 128
1 investors and pushing, through obstructive conduct,
2 investors to prepare letters to kind of attack the SEC
3 investigation and then continuing to issue at least one
4 false and misleading press release, all after that point in
5 time.
6 And we see it in the stock pricing because, once
7 the indictment comes out, the stock price returns to where
8 it was before the Defendant began putting out those press
9 releases about having these products.
10 The only time that we see the market being on full
11 notice that the EUA process that the Defendant had continued
12 to tell the market that he was far along in was baseless,
13 that the FDA had told Decision Diagnostics that they would
14 need to conduct additional clinical trials in order to get
15 an EUA. They couldn't afford them. They couldn't do them.
16 They didn't have the protocols to do them. And that gets
17 revealed right there.
18 THE COURT: Is your position in conflict with the
19 indictment and your pretrial claims that the fraud had just
20 existed into that summer?
21 MR. REILLY: I don't think so, your Honor, because
22 it's really two separate questions. Right? The question
23 is, one, how long is the fraud period? And because of the
24 obstructive conduct and the continued perpetuation of the
25 fraud, we believe the correct measure of the fraud period is
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 129 of 166 129
1 all the way until December.
2 But even if the fraud ends on July 10th, the
3 question still remains of: When was the full scope of the
4 fraudulent conduct revealed to the market?
5 And there is no doubt, whether the fraud ends July
6 10th or the fraud ends when Mr. Berman is indicted, it is
7 not revealed to the market what -- that the Defendant has
8 been using aliases to promote additional false information
9 on the message boards, that the press releases were in fact
10 false, that there's no opportunity to get an EUA.
11 A variety of additional conduct is put out there
12 as well as for the first time a finding by a body, the grand
13 jury, that there is probable cause that criminal conduct has
14 existed.
15 And the stock price shows that that is -- had a
16 significant impact on the market, because that is the first
17 time that the stock goes back to and stays at approximately
18 2 to 5 cents, where it has not been since the Defendant
19 began putting out the false and misleading press releases
20 back in March.
21 THE COURT: So I'd think an indictment suggests if
22 I could afford to invest in the stock change and I saw
23 someone indicted, that might have even greater effect, like
24 suggesting this whole firm is going to collapse or whatever.
25 Doesn't that have -- isn't there a danger that
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 130 of 166 130
1 your post-December timeline even overcompensates and really
2 tanked the company's share price beyond just kind of what
3 would have been implicated by the fraud?
4 MR. REILLY: Well, your Honor, I think what it
5 indicates is that the market was not baking in the risk that
6 we've heard from the defense in the other disclosures as the
7 market appreciating the full extent.
8 I think the Court's right that these are extreme
9 risks to the viability of DECN. And had the market had the
10 complete scope of information, including that the Defendant
11 was engaging in obstructive conduct, using pseudonyms and
12 aliases to put out additional false information and that,
13 you know, the core premise of the investment value in this
14 company, which had not been previously disclosed in any of
15 the SEC's public filings, that's really what the indictment
16 is getting at.
17 And I think the comparison shows that if the
18 market had truly appreciated the extent of what the
19 Defendant was doing, the stock price would have reverted to
20 that price over the summer, not until the indictment was
21 revealed.
22 THE COURT: Thank you.
23 MR. REILLY: Any other questions?
24 THE COURT: No.
25 MR. REILLY: Thank you, your Honor.
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 131 of 166 131
1 MR. GIRON: José Giron of Covington & Burling for
2 Mr. Berman.
3 Your Honor, may it please the Court.
4 This Court has heard a lot about what the parties
5 disagree about: the fraud period, the disclosure period.
6 But I'd like to begin by highlighting some of the things the
7 parties do agree about.
8 For instance, the parties all agree that the
9 guidelines method -- excuse me -- the guidelines recommend
10 measuring loss using MRM, the modified rescissory method.
11 And, second, the parties agree about how the
12 method works, at least in principle: You compare the price
13 during the fraud to the price post-disclosure, the idea
14 being that the post-disclosure price is what an investor
15 would have paid if they had complete information.
16 Third, your Honor, the parties -- and
17 importantly -- do not dispute where the burden lies. Quote:
18 "The overall burden of proving loss under the guidelines
19 always remains with the Government." That's United States
20 versus Bikundi, 926 F.3d at 798, D.C. Circuit, 2019, a
21 recent case.
22 I'd like to pivot to some of the things the
23 parties do disagree about, your Honor.
24 First, the period of the fraud. Well, when did it
25 end? When did it begin?
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 132 of 166 132
1 THE COURT: You agree on when it began. Right?
2 MR. GIRON: That's right, your Honor. We both
3 agree that -- the parties do agree that it began on March
4 3rd, 2020, when DECN issued its first fraudulent press
5 release.
6 Now, I think the Government --
7 THE COURT: Isn't a warning sent to me, Mr. Giron,
8 that your method can't be right when the result is that
9 there are no real victims, that they end up better under the
10 fraud than they would have been otherwise? Doesn't that
11 just kind of fly in the face of common sense?
12 MR. GIRON: Not necessarily, your Honor.
13 There can be many market forces, many confounding
14 causation events, that can lead to a price increase without
15 there being loss.
16 So just to give you an example, suppose that
17 Mr. Berman on July 10th had invented OpenAI. You know,
18 anybody who's buying in the market would realize, Whoa, this
19 stock is worth a lot of money. I want to buy it,
20 notwithstanding prior fraud.
21 THE COURT: So have you pointed to anything that
22 would suggest something like OpenAI here?
23 MR. GIRON: No, your Honor. But it's not our
24 burden to do so; it's the Government's burden to do so.
25 THE COURT: I get that. I get that.
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 133 of 166 133
1 But nonetheless, they have a pretty convincing
2 kind of bell curve. You know, it's around 2 to 3 cents;
3 fraud; fraud is exposed; back down to 2 to 3 cents. There's
4 kind of a logical appeal to their position.
5 Yours, not so much.
6 MR. GIRON: I disagree with that, your Honor.
7 Before the guidelines were enacted, courts often
8 stressed that the fraud period or the post-disclosure period
9 should be brief.
10 And there's a reason why they did that. That's
11 because the longer the periods are, whether it's the fraud
12 period or the disclosure period, the likelier it is that
13 there's some other confounding variable that is affecting
14 the stock price and that shouldn't be folded into the loss
15 calculations, because at the end of the day your Honor has
16 to calculate the loss that was, you know, the product of
17 reasonable reliance on the fraudulent statements, not
18 other -- you know, any other confounding variable.
19 And we submit to you the three or four answers
20 that Professor Mitts gave just do not suffice to accomplish
21 that, you know.
22 Moreover, your Honor doesn't need to believe us.
23 The Government's consistent position throughout this
24 litigation has been that the fraud period began in March and
25 ended in July.
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 134 of 166 134
1 THE COURT: So, you know, I thought you were right
2 about that. But I'm looking back at the indictment, and it
3 actually does say securities fraud from at least in or
4 around February 2020 through in or around December 2020.
5 So I'm not sure exactly where you're getting the
6 summer. But it looks to me at least their --
7 MR. GIRON: Your Honor, let me give you --
8 THE COURT: -- indictment looks longer.
9 MR. GIRON: A fine question, your Honor.
10 Let me give you what the Government thought the
11 indictment said.
12 In the pretrial conference held on November 13th,
13 2023, the Government said as follows, quote: "If you look
14 at the indictment, it really is divided into discrete
15 periods of time, with February through July 2020 being the
16 allegedly false and misleading statements and the rest of
17 the time period, basically April through December, related
18 to the obstruction case."
19 I'd like to address for a moment, your Honor, a
20 few of the cases that undermine and I think completely
21 contravene the Government's position.
22 The Government at bottom is saying that
23 Mr. Berman's obstruction somehow extended the period of the
24 fraud.
25 But the case law doesn't back that up. Tellingly,
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 135 of 166 135
1 the Government cannot cite a single solitary case for that
2 proposition, your Honor. Not one.
3 We can for ours. Take, for example, United States
4 versus Lundstrom. That's out of the District of Nebraska,
5 U.S. District Lexus 195507 at *4.
6 There, a bank doctored financial statements.
7 Okay? At a later point in time, it said: We're going to
8 revise those financial statements. That's all it said.
9 At a third date, your Honor, the bank continued to
10 issue Form 8-K filings with the SEC, and in those filings
11 said: There's no fraud. The people who were auditing us,
12 they quit for another reason. We haven't destroyed any
13 evidence.
14 Those are attempts to conceal the fraud.
15 And the Government there, the fraud section of the
16 Justice Department, the same one that brings this case,
17 argued that, you know, the period of the fraud had ended
18 with that initial disclosure, notwithstanding the
19 later-in-time attempts to conceal the fraud.
20 Your Honor, that case was upheld on appeal by the
21 Eighth Circuit in United States versus Lundstrom, 880 F.3d
22 at 444.
23 Likewise, here, the Court should rule that the
24 fraudulent period ended when Mr. Berman issued the last
25 fraudulent press release on July 10th, even though he
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 136 of 166 136
1 continued to post about DECN anonymously.
2 And on the anonymous point, your Honor, a real
3 brief detour: Professor Mitts said that insiders have
4 assymetric access to knowledge, so their word may matter a
5 lot to investors. I totally agree with that.
6 But that actually undercuts the Government's
7 position, your Honor, because many of Mr. Berman's
8 statements in the obstruction half of the case were posted
9 anonymously, so investors didn't -- couldn't attribute those
10 statements to Mr. Berman.
11 THE COURT: But they could in the various filings
12 with the SEC. Right?
13 MR. GIRON: That's correct, your Honor. That's
14 true.
15 I'd like to pivot now to maybe the second half --
16 or maybe the second issue that the parties really disagree
17 about, which is the disclosure period. When was the fraud
18 disclosed?
19 Now, I want to be precise here, your Honor. The
20 sentencing guidelines speak not of truth, but about the
21 period when, quote, "the fraud was disclosed to the market."
22 That's Sentencing Guideline Section 2B1.1, Comment No. 3,
23 Subdivision (F), Subsection (ix).
24 THE COURT: Okay.
25 MR. GIRON: Now, "disclose" is not a term that's
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 137 of 166 137
1 defined in the guidelines. Your Honor decided a case,
2 United States versus Seefried, 639 Federal --
3 THE COURT: I'm familiar with it. Go ahead.
4 MR. GIRON: Excellent. I'm just making a record.
5 -- that held that undefined phrases take their
6 plain meaning. And as a textualist, I totally agree with
7 that.
8 Now -- so what does it mean to disclose something
9 to the market? It means, you know, when did a proposition
10 go from being unknown to generally known to the market?
11 And I think, your Honor, the evidence here is
12 overwhelming that that happened on April 23rd.
13 As you know, the SEC had questions relating to
14 the, quote, "accuracy and adequacy of information in the
15 marketplace" since at least March 3rd, 2020.
16 Cases -- courts have held that suspension orders
17 trigger their 90-day -- the post-disclosure period.
18 So, for instance, United States versus Peppel,
19 2011 U.S. District Lexis 909957, decided in August of 2011
20 and eventually upheld on -- or reversed on appeal for
21 different reasons said that, quote: "The announcement of
22 the SEC investigation is an efficient and highly relevant
23 proxy by which to measure the price effects of the
24 fraudulent conduct," end quote.
25 And that's --
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 138 of 166 138
1 THE COURT: Was that a case where there was
2 post-SEC announcement obstruction, though?
3 MR. GIRON: No, your Honor.
4 But for propositions -- for a case that is more
5 similar to what your Honor is asking about, I would point
6 your Honor to United States versus Lundstrom, where there
7 were -- there was disclosure, there was fraud, disclosure,
8 attempts to conceal. And the outcome there is exactly what
9 we're asking for, which is that, you know, the disclosure
10 happened when it happened.
11 And, your Honor, Lundstrom was actually really
12 instructive for that reason. Many courts have found that
13 disclosure happens when far, far less information is
14 available to the market. And Lundstrom is one such case.
15 So in Lundstrom, all the bank said to trigger the
16 disclosure --
17 THE COURT: That was the Eighth Circuit case you
18 mentioned?
19 MR. GIRON: That's right. That's right, your
20 Honor. Yes.
21 All the company said was: We're revising our
22 earlier financial statements.
23 It contained none of the detail found in the
24 suspension order. It contained none of the detail found in
25 the SEC's May 20th filing, detail by the way, your Honor,
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 139 of 166 139
1 that is found in the Government's indictment several months
2 later.
3 In our briefing -- your Honor, we wanted to
4 highlight how similar the allegations that the SEC made were
5 to the allegations that the Government, you know, makes.
6 And we have a table set up where your Honor and your Honor's
7 clerks can compare the allegations. A lot of times they use
8 very similar language.
9 Now, underlying the Government's position is that
10 the disclosure needs to be complete and that it needs to be
11 uncontested.
12 Again, that is -- your Honor, that's not the case.
13 That's not what the case law says.
14 In United States versus Tuzman from the Southern
15 District of New York -- that's 2021 U.S. District Lexis
16 142715 -- the Southern District of New York held that the
17 fraudulent scheme was disclosed when a company filed a Form
18 8-K that merely announced, quote, "errors and irregularities
19 in its financial statements from prior years."
20 Again, that is a real big contrast between the
21 detail contained in the documents that we submit, humbly,
22 disclosed the fraud here.
23 Your Honor, in United States versus Ferguson, the
24 District of Connecticut -- excuse me -- that's 584 Federal
25 Supplement 2nd 447 -- the District of Connecticut ruled that
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 140 of 166 140
1 when a company announced that it had received a subpoena
2 from a state regulator, that was enough to trigger the
3 disclosure.
4 Your Honor, I'd like to make two more points about
5 why the Government's disclosure argument is fatally flawed.
6 First, it collides with the fact that the
7 Government must prove that investors reasonably relied on
8 fraud to measure loss.
9 Loss that is not incurred as a result of
10 reasonable reliance should be omitted from the loss
11 calculations. That's United States versus Stein, an
12 Eleventh Circuit case, 846 F.3d 1135, and a recent one at
13 that, because it was issued in 2017.
14 So, your Honor, just think about what an investor
15 would have had to do on July 21st to buy DECN stock. When
16 he typed DECN, you know, on otcmarkets.com, he would find a
17 skull and crossbones.
18 He would find that same skull and crossbones on
19 otcmarkets.com once he navigated to DECN's page.
20 There are bright red warnings about how buyers
21 ought to beware as a result of either fraud or, you know,
22 the suspension orders.
23 And if they wanted to place -- if after all of
24 that they wanted to place an order, they couldn't do so
25 online. You heard Mr. Reilly testify that they actually had
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 141 of 166 141
1 to call up broker-dealers. By that point, the SEC has
2 suspended trading. It has issued a detailed analysis
3 identifying specific fraudulent statements made on May 20th.
4 And now you have all these blinking-red neon red lights
5 saying, "Don't do this."
6 We submit to you, your Honor, that an investor
7 buying DECN securities on July 21st was not reasonably
8 relying on Mr. Berman's fraudulent statements.
9 THE COURT: All right.
10 MR. GIRON: As a result, their sustained losses
11 can't be folded into the calculations.
12 Just one last brief point, your Honor. I know
13 we've taken up a lot of your time.
14 The Government's test is inadministrable. They
15 say it has to be a complete disclosure; it has to be
16 uncontested.
17 Well, you can always learn more about a particular
18 fraudulent scheme. What was the Defendant eating on the day
19 he issued the press release? We'll never know that. It's
20 never going to be a part of the record.
21 And so the Government says, Oh, well, the
22 indictment is enough, that, you know, nothing happened
23 before.
24 That doesn't make a lot of sense.
25 Your Honor, because the allegations in the
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 142 of 166 142
1 indictment mirrored so closely the allegations made in the
2 SEC, we don't think it adds much, you know, to learn the
3 information contained in that indictment.
4 And the Government's rule would incentivize it
5 if -- if the rule is, Oh, well, let's just measure it by the
6 time the Government indicts, well, then, the Government has
7 this perverse incentive to maybe indict when -- you know, a
8 lot later, when the price of the security has depreciated.
9 Nothing in the guidelines calls -- or gives the Government
10 that power.
11 Your Honor, even if you assume that the Government
12 is right about the fraud period and you take any one of the
13 three disclosure dates, the investors in this case under the
14 guidelines method, which the parties both agree ought to be
15 applied here, have sustained no loss.
16 Thank you, your Honor.
17 THE COURT: Thank you, Mr. Giron.
18 I appreciate everyone's --
19 MR. REILLY: Judge, may we be heard on one very
20 brief point?
21 THE COURT: No.
22 MR. REILLY: Thank you, your Honor.
23 THE COURT: I appreciate everybody's hard work and
24 briefing on this. I appreciate the experts' presence here
25 today.
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 143 of 166 143
1 I think we have a schedule for memoranda in aid of
2 sentencing and a sentencing date. So I'll see you folks
3 then.
4 Thanks, folks.
5 MR. REILLY: Thank you, your Honor.
6 (Proceedings concluded.)
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Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 144 of 166 144
1 CERTIFICATE
2
3 I, LISA EDWARDS, RDR, CRR, do hereby
4 certify that the foregoing constitutes a true and accurate
5 transcript of my stenographic notes, and is a full, true,
6 and complete transcript of the proceedings produced to the
7 best of my ability.
8
9
10 Dated this 22nd day of March, 2024.
11
12 /s/ Lisa Edwards, RDR, CRR
Official Court Reporter
13 United States District Court for the
District of Columbia
14 333 Constitution Avenue, Northwest
Washington, D.C. 20001
15 (202) 354-3269
16
17
18
19
20
21
22
23
24
25
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 145 of 166 145
$ 117 [1] - 3:5 35:24, 44:3, 44:11, 2B1.1 [3] - 14:9, 60.8 [1] - 23:3
11:30 [1] - 1:7 54:6, 58:14, 60:5, 123:2, 136:22 62 [1] - 3:15
11th [1] - 125:20 62:9, 63:4, 64:2, 64:5, 2nd [3] - 107:23, 625 [1] - 1:24
$150 [1] - 36:25 12 [3] - 64:21, 92:6, 68:15, 68:16, 69:19, 125:20, 139:25 63 [1] - 3:16
$200 [2] - 36:15, 101:16 71:14, 71:22, 75:6, 639 [1] - 137:2
36:20 75:25, 76:3, 76:18,
12,000 [1] - 56:5 3 64 [1] - 3:17
$350,000 [1] - 31:7 13th [1] - 134:12 78:9, 79:17, 79:18, 6706 [1] - 2:3
$600 [1] - 12:20 1400 [1] - 1:16 80:11, 80:19, 81:15, 69 [1] - 3:18
$70,000 [1] - 12:20 81:16, 81:22, 83:16, 3 [6] - 51:21, 98:15,
142715 [1] - 139:16 6th [3] - 64:5, 92:22,
83:17, 83:23, 83:24, 104:25, 133:2, 133:3,
15 [1] - 90:24 93:7
136:22
' 150 [1] - 36:24 84:18, 84:22, 84:25,
85:3, 86:5, 90:1, 90:3, 3-M [1] - 107:15
16 [2] - 95:9, 96:22
91:13, 92:22, 93:8, 3-O [1] - 90:20 7
'34 [2] - 55:23, 56:16 160 [4] - 22:8, 22:16,
93:23, 94:23, 95:11, 30 [3] - 3:5, 72:10,
'80s [1] - 50:11 22:22, 23:1
96:5, 96:17, 96:22, 116:1 7 [3] - 51:14, 90:3,
17 [2] - 83:24, 96:3
97:8, 97:21, 98:18, 300 [2] - 36:23, 37:7 91:13
17.41 [1] - 15:4
/ 176 [1] - 76:3
99:7, 99:12, 101:1, 31 [1] - 94:3 71 [1] - 3:19
101:2, 101:5, 103:15, 333 [2] - 2:3, 144:14 77 [1] - 3:20
17th [3] - 14:21,
104:7, 105:2, 107:23, 349 [4] - 22:9, 22:15, 798 [1] - 131:20
/s [1] - 144:12 14:25, 100:25
108:9, 108:13, 23:3, 25:16 7th [3] - 44:10,
18 [1] - 96:17
108:15, 109:4, 350 [1] - 23:25 98:18, 99:2
0 18th [2] - 14:25, 17:6
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19 [1] - 96:22
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1933 [1] - 52:5
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1934 [1] - 52:5 8 [1] - 3:5
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195507 [1] - 135:5 8-K [2] - 135:10,
62:17, 62:21 31:7, 91:4, 93:12, 3rd [10] - 14:21, 75:6,
1987 [1] - 50:8 93:19, 139:15 139:18
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63:12, 63:16 2023 [2] - 76:4, 86:5, 95:11, 95:12, 846 [1] - 140:12
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69:8, 69:19, 76:24, 4 [4] - 77:14, 96:5, 8th [5] - 75:9, 80:4,
69:21, 69:25 102:12, 104:24,
79:17, 81:15, 81:16, 104:25, 135:5 84:2, 103:15, 112:1
012 [5] - 3:17, 63:18, 115:1, 129:18, 133:2,
81:22, 84:3, 84:4, 40 [1] - 115:5
63:21, 64:18, 64:22 133:3
84:25, 85:3, 97:21, 444 [1] - 135:22 9
042 [7] - 3:19, 70:2, 2.13 [1] - 15:2
99:7, 101:2, 111:21, 447 [1] - 139:25
70:24, 71:2, 71:3, 20 [11] - 1:6, 68:9,
71:6, 83:19 112:4, 138:25, 141:3 45 [2] - 35:24, 36:4
68:16, 69:2, 97:4, 9 [3] - 54:6, 71:22,
21st [2] - 140:15, 49 [1] - 3:8
99:12, 101:5, 108:15, 94:3
1 109:4, 112:12, 124:1 141:7
90 [3] - 14:24, 47:11,
20-00278 [1] - 1:3 22nd [2] - 91:3, 5 80:21
20-278 [2] - 4:2, 144:10
1 [3] - 43:8, 62:20, 90-day [4] - 74:21,
85:16 23andMe [1] - 35:5
71:6 5 [6] - 3:14, 55:25, 81:21, 83:25, 137:17
200 [4] - 34:24, 23rd [21] - 44:3, 62:9,
10 [4] - 69:24, 81:5, 60:21, 60:22, 71:6, 909957 [1] - 137:19
35:13, 37:3, 37:4 63:3, 75:7, 75:25,
86:5, 112:19 129:18 926 [1] - 131:20
20001 [2] - 2:4, 76:18, 77:18, 77:21,
10,000 [1] - 56:5 50 [2] - 3:14, 36:23 9th [1] - 71:14
144:14 78:16, 80:11, 80:19,
100 [3] - 55:3, 58:5, 550 [1] - 1:25
20004 [1] - 1:25 80:20, 81:9, 84:18,
99:25 56 [1] - 125:23 A
2001 [1] - 1:22 84:22, 89:17, 108:9,
102 [1] - 104:20 584 [1] - 139:24
2011 [2] - 137:19 109:4, 113:18,
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2017 [1] - 140:13 a.m [1] - 1:7
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2018 [3] - 52:11,
80:25, 83:17, 83:23, 25 [1] - 72:9
53:2, 53:3 ability [3] - 61:2,
129:2, 129:6, 132:17, 27 [1] - 3:12 6 [1] - 100:4
2019 [3] - 18:4, 122:22, 144:7
135:25 27.8 [1] - 23:1 6-A2 [7] - 3:12,
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11 [3] - 3:11, 70:18, 28th [1] - 125:20 26:19, 27:8, 27:10,
202 [2] - 2:4, 144:15 86:24
96:17 2:00 [1] - 85:8 27:11, 35:17, 47:8
2020 [78] - 14:21, absence [3] - 29:15,
1135 [1] - 140:12 2:05 [1] - 85:11 6-X [2] - 14:12, 29:24
14:25, 18:3, 26:22, 29:17, 43:17
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 146 of 166 146
absent [1] - 48:24 134:19 aid [1] - 143:1 120:3, 122:19, 113:25, 114:12,
absolute [2] - 76:16, addresses [2] - airlines [1] - 58:19 122:25, 141:2 114:17, 114:20,
111:12 94:23, 108:23 Alberta [1] - 30:22 announced [4] - 142:15
absolutely [11] - adds [1] - 142:2 alert [3] - 64:1, 64:9, 44:4, 101:13, 139:18, applies [4] - 40:7,
57:4, 58:1, 61:4, adequacy [2] - 65:3 140:1 40:9, 122:6
61:15, 67:5, 75:20, 89:22, 137:14 Alert [1] - 64:11 announcement [2] - apply [2] - 48:6,
79:23, 79:24, 99:4, adequate [11] - alerted [1] - 67:3 137:21, 138:2 120:23
109:16, 111:23 86:15, 89:11, 89:13, alias [1] - 105:3 annual [1] - 83:12 applying [1] - 12:13
academic [1] - 9:2 103:15, 104:2, aliases [2] - 129:8, anonymous [1] - appreciate [3] -
academy [1] - 31:25 105:17, 108:18, 130:12 136:2 142:18, 142:23,
accept [3] - 99:1, 110:1, 111:17, 111:20 allegation [1] - anonymously [2] - 142:24
109:20, 116:13 adequately [3] - 102:19 136:1, 136:9 appreciated [1] -
acceptable [1] - 23:6 73:16, 78:15, 88:20 allegations [6] - answer [9] - 35:11, 130:18
accepted [1] - 11:2 Administration [1] - 98:25, 139:4, 139:5, 85:3, 88:3, 92:1, appreciating [1] -
access [3] - 57:13, 101:19 139:7, 141:25, 142:1 99:21, 106:13, 130:7
106:11, 136:4 administrative [1] - allegedly [1] - 106:14, 107:14 approach [4] - 18:18,
accomplish [1] - 108:13 134:16 answered [5] - 20:22, 40:15, 59:3
133:20 admission [1] - allow [4] - 43:13, 16:17, 17:7, 33:3, approached [1] -
according [3] - 14:5, 101:25 66:13, 67:25, 73:18 104:9, 106:23 36:20
14:6, 35:23 admit [9] - 11:20, allowed [1] - 51:20 answering [1] - appropriate [3] -
account [1] - 74:6 27:8, 60:18, 62:17, allows [1] - 55:15 21:13 16:10, 21:2, 100:13
accuracy [2] - 89:22, 63:12, 64:18, 69:21, almost [2] - 53:13, answers [1] - 133:19 approximation [1] -
137:14 70:24, 77:11 72:6 ante [1] - 48:13 25:11
accurate [17] - 31:22, adopt [1] - 27:4 aloud [1] - 102:14 anticipated [1] - 8:5 April [28] - 44:3,
33:11, 35:25, 36:7, adopted [1] - 11:4 alternative [2] - apart [1] - 48:17 44:10, 58:14, 62:8,
36:15, 37:11, 45:1, advice [1] - 59:25 16:19, 55:15 apfilings@sec.gov 63:3, 64:2, 75:7,
45:2, 62:14, 63:9, advised [2] - 122:11, ambiguity [1] - 17:5 [1] - 91:14 75:25, 76:18, 77:18,
77:9, 92:19, 94:16, 122:13 America [2] - 4:2, apologies [1] - 4:22 77:21, 78:16, 80:11,
95:19, 96:13, 101:10, affect [1] - 21:19 85:17 apologize [1] - 5:1 80:19, 80:20, 81:9,
144:4 affected [4] - 18:22, AMERICA [1] - 1:3 apparent [1] - 33:3 83:16, 83:23, 84:18,
accusations [1] - 19:7, 19:12, 37:13 Ameritrade [8] - appeal [7] - 99:4, 84:22, 89:17, 90:1,
121:8 affecting [2] - 38:13, 50:21, 58:1, 58:2, 99:8, 119:6, 127:25, 108:9, 109:4, 113:18,
accusing [1] - 105:5 133:13 66:9, 72:8, 73:5, 73:9, 133:4, 135:20, 137:20 113:19, 134:17,
acknowledge [1] - affects [1] - 39:22 111:11 appealing [4] - 99:3, 137:12
6:21 affidavit [5] - 76:25, amount [25] - 5:5, 110:20, 110:23, arbitrations [2] -
act [2] - 7:20, 56:16 84:2, 102:5, 102:8, 5:15, 6:4, 14:18, 16:5, 127:18 52:13, 53:8
Act [4] - 52:5, 52:7, 102:13 21:21, 22:11, 22:14, appeals [1] - 122:7 archive [2] - 68:19,
55:23 affirmatively [1] - 22:24, 23:6, 29:24, appear [2] - 5:17, 69:18
acted [1] - 94:6 78:3 46:21, 46:23, 53:11, 5:20 area [5] - 9:16, 12:5,
action [1] - 30:19 afford [2] - 128:15, 57:24, 74:12, 80:13, appearance [1] - 16:9, 51:25, 87:15
Action [1] - 1:3 129:22 80:16, 81:17, 81:23, 31:3 areas [1] - 9:22
actions [5] - 105:6, afternoon [4] - 84:21, 84:24, 119:1, appearances [2] - argued [1] - 135:17
108:11, 109:6, 49:23, 50:2, 86:2, 119:5, 120:5 1:13, 53:1 argument [1] - 140:5
109:16, 119:15 86:3 amounts [4] - 6:1, appeared [3] - 24:5, arguments [1] - 5:22
activities [1] - 16:2 afterwards [3] - 7:9, 21:24, 84:8 52:13, 52:14 arise [1] - 7:21
activity [3] - 16:20, 17:12, 78:4, 78:7 analyses [1] - 13:12 append [2] - 65:13, arising [1] - 53:12
21:9, 118:24 age [1] - 55:2 analysis [42] - 18:7, 65:15 armed [1] - 73:20
actual [6] - 6:14, aggregate [2] - 39:3, 18:14, 19:8, 19:10, appended [6] - article [4] - 33:19,
12:16, 21:2, 23:11, 39:15 20:5, 20:10, 23:9, 68:25, 75:11, 79:25, 33:22, 33:24, 34:4
30:1, 112:12 ago [1] - 26:2 27:15, 29:6, 29:8, 104:1, 109:25, 114:14 article's [1] - 33:25
add [1] - 76:2 agree [18] - 6:6, 7:5, 29:10, 29:21, 41:11, appending [1] - artificial [1] - 48:25
added [1] - 48:2 17:21, 44:13, 44:19, 43:1, 43:10, 43:11, 103:14 ascribe [1] - 120:20
addition [2] - 76:18, 45:13, 46:4, 78:5, 44:1, 45:3, 45:15, Apple [2] - 57:9, 58:5 ascribing [1] - 121:8
79:17 86:4, 131:7, 131:8, 45:16, 45:20, 46:8, application [5] - aside [2] - 40:19,
additional [10] - 131:11, 132:1, 132:3, 62:12, 71:17, 79:9, 6:16, 14:8, 117:19, 116:9
13:12, 22:2, 32:9, 136:5, 137:6, 142:14 81:23, 105:7, 106:15, 117:24, 119:19 assertion [3] - 94:25,
48:17, 98:16, 119:15, agreement [1] - 107:5, 107:9, 109:23, applications [1] - 99:1, 109:20
128:14, 129:8, 103:4 110:6, 110:15, 101:18 assess [6] - 26:4,
129:11, 130:12 ahead [4] - 67:7, 117:21, 118:10, applied [9] - 13:8, 26:6, 118:17, 118:25,
address [2] - 38:24, 114:9, 127:11, 137:3 119:1, 119:18, 120:2, 86:7, 86:10, 112:10, 119:22, 119:25
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 147 of 166 147
assessing [2] - 53:4, 40:3 bell [1] - 133:2 biotech-relevant [1] brings [1] - 135:16
117:25 averaging [1] - 39:24 below [5] - 36:9, - 39:7 broadly [1] - 56:2
assessment [2] - avoid [1] - 67:6 36:10, 37:4, 37:8, biotechnology [10] - broker [20] - 50:23,
117:21, 120:4 aware [10] - 16:8, 109:1 26:23, 28:4, 28:5, 50:24, 50:25, 55:1,
Asset [1] - 33:20 28:22, 28:25, 61:16, bench [2] - 4:18, 28:6, 28:18, 33:6, 55:9, 56:23, 57:2,
asset [5] - 19:18, 93:22, 103:1, 103:6, 58:23 34:23, 35:1, 36:13, 61:23, 65:20, 66:10,
20:11, 20:20, 27:23, 104:14, 112:22, beneficial [2] - 39:4 66:13, 71:10, 71:12,
57:18 125:18 124:18 biotechs [1] - 34:14 72:7, 72:16, 72:18,
assigned [1] - axes [1] - 42:22 benefit [1] - 126:24 bit [13] - 5:18, 23:15, 78:1, 80:2, 114:17,
112:22 BERMAN [1] - 1:6 32:3, 32:6, 39:8, 141:1
associated [3] - B Berman [34] - 4:3, 44:23, 51:11, 55:4, broker-dealer [7] -
21:15, 108:11, 122:25 4:13, 4:21, 4:23, 6:15, 66:11, 71:17, 81:11, 50:25, 55:1, 56:23,
associating [1] - 6:19, 23:7, 30:12, 81:18, 81:24 66:10, 71:12, 72:16,
bachelor's [1] - 9:3 blames [1] - 102:21 114:17
42:24 49:20, 85:17, 89:3,
back-and-forth [1] - 92:12, 92:21, 95:13, blinking [1] - 141:4 broker-dealers [11] -
assume [1] - 142:11
6:2 96:6, 97:12, 97:17, blinking-red [1] - 50:23, 50:24, 57:2,
assumption [2] -
background [2] - 98:24, 102:5, 102:8, 141:4 61:23, 66:13, 71:10,
120:11, 120:15
5:6, 7:15 102:15, 102:19, blog [1] - 59:25 72:7, 72:18, 78:1,
assure [1] - 73:19
bakes [1] - 43:5 103:18, 104:14, blood [2] - 95:25, 80:2, 141:1
assymetric [3] -
baking [1] - 130:5 105:2, 105:6, 109:17, 96:1 brokers [1] - 55:16
120:12, 120:18, 136:4
bang [1] - 60:15 110:6, 125:2, 129:6, Bloomberg [1] - brought [2] - 7:3,
attach [1] - 126:15
bank [3] - 135:6, 131:2, 132:17, 26:25 21:14
attached [4] - 63:2,
135:9, 138:15 135:24, 136:10 Blue [7] - 54:5, 71:8, BS [1] - 50:7
102:5, 107:12, 117:9
based [20] - 15:9, Berman's [7] - 92:9, 71:11, 71:19, 72:2, buck [1] - 60:16
attack [4] - 104:18,
19:9, 49:1, 54:18, 96:15, 99:8, 102:12, 106:11 bullet [2] - 113:5,
106:1, 109:13, 128:2
55:19, 57:24, 58:13, 134:23, 136:7, 141:8 board [1] - 24:19 113:6
attacking [1] -
60:2, 69:2, 72:11, besmirch [1] - boards [2] - 126:5, burden [4] - 131:17,
106:21
72:18, 75:15, 80:5, 125:13 129:9 131:18, 132:24
attempt [2] - 40:18,
83:14, 89:21, 93:8, best [3] - 57:13, BURLING [1] - 1:21
41:11 body [2] - 52:4,
94:14, 97:24, 112:7, 92:18, 144:7 Burling [1] - 131:1
attempts [5] - 129:12
116:13 better [2] - 22:13,
121:23, 121:25, bones [3] - 111:8, Business [1] - 9:5
baseless [1] - 128:12 132:9
135:14, 135:19, 138:8 112:10 business [3] - 11:5,
baseline [2] - 17:16, between [21] - 18:20, 11:9, 58:2
attributable [1] - books [1] - 25:1
47:22 19:15, 19:21, 20:16,
23:12 bottom [7] - 98:18, busy [1] - 5:12
basic [2] - 51:13, 20:25, 21:4, 29:10,
attribute [1] - 136:9 101:8, 101:12, but.. [1] - 107:18
119:24 29:13, 29:16, 34:6,
auditing [1] - 135:11 107:22, 112:21, buy [10] - 54:25,
basics [1] - 51:15 37:19, 38:8, 38:15, 115:2, 134:22
August [2] - 125:20, 56:24, 57:14, 58:5,
basis [4] - 6:18, 88:8, 43:12, 54:3, 86:12, bought [1] - 24:1 65:24, 67:2, 115:9,
137:19
109:21, 120:19 105:2, 109:3, 120:18, 132:19, 140:15
authority [1] - 113:7 Boyer [7] - 4:8,
basket [1] - 28:10 139:20 11:15, 14:11, 90:19, Buy [1] - 55:3
authorized [3] -
Bayer [1] - 11:1 beware [2] - 114:7, 91:5, 92:6, 104:25 buyer [1] - 114:7
24:18, 24:20, 51:1
became [1] - 50:20 140:21 BRANDON [1] - 1:19 buyers [1] - 140:20
authors [1] - 33:24
become [2] - 47:1, beyond [5] - 20:3, Brandon [1] - 49:20 buying [6] - 22:20,
automatically [1] -
52:2 95:3, 100:10, 118:5, break [3] - 49:16, 58:20, 60:10, 72:22,
113:12
becomes [1] - 130:2 82:17, 85:7 132:18, 141:7
available [13] - 5:20,
112:22 big [1] - 139:20 breakdown [1] - BY [62] - 2:1, 8:22,
15:10, 24:2, 42:2,
BEFORE [1] - 1:10 bigger [1] - 60:15 71:15 9:11, 11:17, 12:7,
84:5, 91:22, 92:25,
began [5] - 128:8, Bikundi [1] - 131:20 Brendan [1] - 4:18 14:13, 15:15, 18:10,
93:2, 93:6, 93:7, 93:9,
129:19, 132:1, 132:3, bill [1] - 12:20 brief [8] - 8:6, 97:23, 25:25, 26:20, 27:13,
93:12, 138:14
133:24 binder [3] - 58:23, 99:25, 111:1, 133:9, 30:8, 30:14, 35:15,
Avenue [4] - 1:16,
begin [2] - 131:6, 58:25, 63:21 136:3, 141:12, 142:20 35:22, 45:23, 50:1,
1:24, 2:3, 144:14
131:25 biotech [21] - 28:5, briefing [6] - 98:22, 53:22, 56:19, 59:20,
average [21] - 13:20,
beginning [4] - 28:14, 28:20, 29:11, 116:14, 124:22, 60:24, 62:6, 62:24,
13:23, 13:25, 14:22,
15:20, 22:7, 23:2, 29:17, 29:19, 34:12, 124:23, 139:3, 142:24 63:23, 64:24, 67:17,
14:23, 15:1, 25:14,
75:6 34:20, 37:18, 37:22, briefly [7] - 9:1, 68:3, 68:14, 69:6,
34:18, 39:6, 39:16,
40:10, 54:18, 66:4, behalf [5] - 4:13, 37:23, 38:1, 38:3, 10:21, 11:8, 21:23, 70:3, 70:10, 71:7,
74:19, 74:20, 80:18, 30:11, 30:16, 30:18, 38:11, 39:6, 39:7, 70:9, 116:17, 125:4 72:1, 74:1, 74:24,
81:20, 83:15, 83:22, 49:19 40:14, 41:25, 42:8, bright [1] - 140:20 77:4, 79:14, 80:10,
126:10 behind [1] - 4:18 43:3 bring [1] - 11:15 81:14, 82:6, 84:7,
averaged [2] - 39:5, beliefs [1] - 121:5 biotech's [1] - 40:17 bringing [1] - 11:13 86:1, 88:11, 90:21,
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 148 of 166 148
91:10, 91:18, 92:8, 119:16, 119:22, certify [3] - 12:1, 125:25 collides [1] - 140:6
95:10, 96:4, 97:6, 131:21, 134:18, 91:12, 144:4 circulates [1] - Collins [3] - 4:13,
99:23, 100:17, 134:25, 135:1, cetera [1] - 54:19 127:21 5:2, 124:1
102:17, 104:10, 135:16, 135:20, chairman [1] - 108:1 circulating [1] - COLLINS [19] - 1:17,
104:13, 105:1, 107:3, 136:8, 137:1, 138:1, challenging [1] - 127:25 4:12, 5:4, 6:6, 6:11,
113:2, 115:7, 117:3, 138:4, 138:14, 111:1 circumstances [2] - 7:11, 7:17, 7:24, 8:13,
118:9, 121:14 138:17, 139:12, chance [2] - 70:11, 6:13, 45:7 49:14, 49:19, 100:8,
139:13, 140:12, 70:14 cite [1] - 135:1 115:25, 116:4,
C 142:13 change [12] - 13:2, cited [1] - 33:19 116:11, 124:6,
Case [2] - 4:2, 85:16 23:12, 28:14, 40:10, claim [5] - 108:17, 124:10, 124:12,
cases [8] - 10:16, 43:4, 46:17, 78:2, 111:19, 112:4, 124:21
calculate [9] - 13:18, 32:22, 32:24, 53:10, 81:17, 81:23, 81:25, 126:12, 126:21 colloquy [1] - 6:23
74:15, 83:15, 84:11, 53:13, 84:15, 134:20, 107:14, 129:22 claiming [2] - 127:5, colluding [1] -
105:19, 105:21, 137:16 changed [2] - 45:7 127:12 102:23
106:3, 106:10, 133:16 cash [3] - 24:25, changes [15] - 19:24, claims [1] - 128:19 COLUMBIA [1] - 1:1
calculated [6] - 32:19, 46:15 20:16, 23:19, 23:22, clarify [3] - 42:1, Columbia [6] - 2:2,
14:23, 15:1, 53:11, cashed [1] - 24:12 28:4, 28:16, 38:10, 70:18, 79:15 9:5, 9:13, 144:13
80:16, 82:1, 106:7
causation [1] - 41:18, 43:2, 43:3, class [2] - 30:19, column [1] - 44:17
calculating [3] -
132:14 44:25, 45:4, 65:14, 57:19 comfortable [1] -
20:22, 22:10, 25:13
caused [4] - 14:5, 81:18, 81:24 classification [3] - 17:6
calculation [9] -
14:6, 21:6, 23:6 channels [1] - 67:4 41:2, 41:3, 41:5 coming [5] - 7:18,
12:15, 13:14, 13:17,
causes [1] - 78:1 characteristic [1] - Clayton [1] - 108:1 39:20, 52:17, 59:15,
18:8, 18:25, 19:5,
causing [1] - 119:17 65:14 clear [6] - 75:5, 75:7, 73:3
21:22, 29:25, 82:2
caution [2] - 115:15, characterize [2] - 77:2, 77:22, 119:12 Comment [1] -
calculations [11] -
115:19 39:12, 109:14 clearly [5] - 78:1, 136:22
13:9, 16:5, 40:22,
caveat [29] - 65:15, characterized [2] - 78:16, 81:9, 89:16, comments [1] -
53:13, 75:15, 80:14,
66:7, 66:17, 67:8, 17:22, 26:12 103:13 121:1
83:17, 83:25, 133:15,
67:20, 72:22, 73:2, charge [1] - 109:21 clerks [1] - 139:7 Commission [4] -
140:11, 141:11
74:5, 75:10, 77:25, charging [1] - 106:8 click [1] - 73:1 61:11, 62:9, 108:14,
California [1] - 11:2
79:25, 84:3, 103:14, Charles [1] - 66:9 client's [1] - 6:8 126:24
cannot [4] - 89:12,
104:1, 109:24, 111:8, chart [16] - 16:3, clients [1] - 52:25 committed [1] -
96:7, 125:2, 135:1
111:18, 112:10, 26:21, 26:25, 27:4, clinical [1] - 128:14 103:19
cap [7] - 25:22,
112:20, 112:21, 35:16, 35:23, 36:2, close [1] - 119:1 commodities [1] -
34:18, 55:12, 57:20,
113:24, 114:14, 36:5, 42:7, 43:21, closely [2] - 122:23, 51:21
57:21
114:18, 114:25, 43:24, 44:1, 44:3, 142:1 Commodity [1] -
capital [1] - 51:6 115:2, 117:5, 117:10, 44:16, 79:11 closest [2] - 29:2, 52:6
Capital [1] - 10:22 117:15, 126:16 charts [1] - 68:23 111:23 common [25] - 10:2,
capitalization [8] - center [1] - 66:22 chat [1] - 7:9 closing [8] - 13:4, 32:15, 32:22, 32:23,
25:23, 36:14, 36:19, cents [11] - 14:23, check [4] - 31:10, 14:19, 14:22, 35:24, 33:4, 39:17, 39:22,
54:18, 54:21, 55:25, 15:2, 15:4, 35:24, 33:12, 35:3, 37:8 36:3, 42:22, 42:23, 40:12, 45:24, 46:2,
57:21, 57:22 36:4, 36:23, 47:12, chief [6] - 50:18, 43:2 46:11, 46:13, 46:22,
caps [2] - 34:14 83:24, 129:18, 133:2, 51:18, 72:9, 73:11, codes [1] - 41:6 46:24, 47:1, 47:2,
captured [4] - 22:22, 133:3 76:8, 92:12 coefficient [1] - 76:2, 82:11, 82:14,
43:10, 111:24, 123:16 CEO [2] - 114:3, choice [1] - 41:22 43:14 82:18, 82:21, 83:9,
captures [1] - 25:22 115:20 choices [2] - 58:3, coerced [1] - 105:13 83:11, 132:11
career [4] - 50:11, certain [5] - 46:21, 73:18 cognizant [1] - 103:4 community [1] -
50:15, 51:9, 52:2 53:24, 57:11, 89:25, choose [2] - 17:2, coherent [1] - 41:7 125:25
carefully [1] - 36:21 98:12 111:19 collaborate [1] - companies [40] -
Carl [2] - 98:2, 98:7 certainly [10] - 7:14, chooses [1] - 110:2 67:18 22:3, 26:8, 28:23,
Carlisle [2] - 98:5, 34:9, 36:11, 38:12, 29:3, 33:15, 34:11,
choosing [1] - collapse [1] - 129:24
98:6 105:21, 119:9, 34:13, 34:19, 34:20,
103:21 colleague [2] - 10:5,
Carlton [1] - 98:4 119:10, 122:16, 34:21, 35:1, 35:2,
chose [4] - 97:20, 49:21
case [40] - 6:20, 7:3, 122:20, 127:16 35:5, 35:6, 35:13,
98:24, 106:8, 112:6 colleagues [2] -
10:23, 11:12, 11:13, certainty [1] - 37:5 35:14, 38:7, 38:8,
Christopher [1] - 4:7 4:15, 7:19
23:7, 30:20, 30:21, Certificate [1] - 38:20, 39:1, 39:3,
CHRISTOPHER [1] - collect [2] - 13:1,
30:22, 32:25, 39:4, 91:11 39:10, 39:13, 39:18,
1:14 13:21
66:2, 66:19, 70:5, CERTIFICATE [1] - 39:21, 39:22, 39:23,
Circuit [4] - 131:20, collected [2] - 13:3,
74:12, 75:4, 76:17, 144:1 40:2, 40:5, 40:8, 40:9,
135:21, 138:17, 13:6
79:1, 86:4, 87:12, certified [2] - 91:7, 40:12, 40:14, 40:18,
140:12 collectively [1] -
87:23, 113:15, 118:6 41:7, 41:8, 50:22,
circulated [1] - 71:11
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 149 of 166 149
56:6, 127:5, 127:11 118:22 constructed [1] - 35:19, 62:14, 63:9, counsel [8] - 4:8,
companion [1] - concluded [3] - 20:2, 34:23 64:1, 70:17, 77:9, 11:12, 54:2, 54:3,
61:21 21:1, 143:6 constructing [1] - 91:12, 100:19 71:18, 75:1, 116:3,
company [34] - 13:7, conclusion [4] - 41:16 core [1] - 130:13 124:9
18:1, 19:24, 22:18, 37:15, 46:18, 84:17, consult [2] - 123:3, coronavirus [2] - counter [11] - 28:20,
24:10, 24:25, 25:1, 84:20 124:7 95:14, 96:7 28:21, 33:8, 33:16,
33:2, 38:18, 39:5, conclusions [2] - consulted [1] - 33:1 Corp [4] - 92:13, 33:25, 40:23, 54:10,
39:14, 39:15, 42:18, 48:11, 84:9 Consulting [1] - 92:16, 107:22, 108:6 54:12, 54:14, 54:23,
46:2, 46:17, 54:25, conditions [5] - 45:9, 52:20 corporate [4] - 56:20
65:4, 67:13, 76:9, 45:11, 118:1, 118:3, consulting [6] - 11:5, 120:8, 120:12, counterfactual [1] -
82:14, 82:22, 101:16, 118:11 11:10, 11:14, 31:8, 120:14, 121:2 18:5
108:12, 109:7, conduct [14] - 16:25, 52:24 correct [107] - 5:3, couple [5] - 6:12,
115:20, 115:21, 19:9, 20:9, 29:6, contain [6] - 46:10, 14:10, 20:6, 20:8, 28:9, 53:8, 82:7,
117:13, 117:16, 122:19, 125:16, 71:12, 83:8, 95:16, 23:14, 24:17, 25:12, 126:22
125:7, 125:9, 130:14, 128:1, 128:14, 96:8, 97:1 25:18, 31:6, 31:11, course [8] - 40:6,
138:21, 139:17, 140:1 128:24, 129:4, contained [6] - 31:13, 31:14, 31:25, 46:8, 105:14, 124:20,
company's [4] - 129:11, 129:13, 92:17, 93:18, 138:23, 33:9, 33:12, 33:14, 125:19, 126:8,
21:4, 61:3, 126:3, 130:11, 137:24 138:24, 139:21, 142:3 33:18, 35:4, 38:21, 126:14, 126:19
130:2 conducted [1] - contemplated [1] - 40:6, 40:25, 42:9, court [5] - 10:15,
comparable [1] - 120:4 21:25 44:8, 44:11, 44:21, 10:19, 30:16, 52:15,
34:15 conducting [2] - contemplating [1] - 46:3, 47:17, 53:3, 52:16
comparator [3] - 118:10, 119:18 11:12 55:18, 69:9, 69:11, COURT [130] - 1:1,
28:11, 37:18, 45:19 conference [3] - content [1] - 57:8 76:5, 79:19, 79:20, 4:11, 4:20, 5:23, 6:7,
compare [5] - 37:21, 6:24, 85:9, 134:12 continue [5] - 49:17, 82:15, 82:22, 86:5, 7:8, 7:16, 7:22, 7:25,
38:6, 43:23, 131:12, confirmatory [1] - 79:13, 95:8, 125:13, 86:9, 86:11, 87:6, 8:10, 8:15, 8:19, 9:8,
139:7 113:21 127:24 87:14, 87:21, 87:24, 11:23, 12:4, 15:5,
compared [3] - 38:7, conflict [2] - 5:18, continued [11] - 89:20, 89:24, 90:2, 15:14, 16:6, 17:9,
74:20, 120:9 128:18 77:23, 78:6, 78:20, 90:4, 90:8, 90:9, 18:9, 23:23, 24:14,
comparing [1] - 38:8 confounding [3] - 104:5, 104:11, 119:8, 91:12, 91:20, 92:17, 25:5, 25:24, 27:10,
comparison [3] - 132:13, 133:13, 125:10, 128:11, 92:21, 92:24, 93:15, 30:5, 30:10, 30:13,
13:20, 43:25, 130:17 133:18 128:24, 135:9, 136:1 93:16, 93:20, 93:21, 35:10, 47:6, 47:14,
complete [8] - 12:25, confused [1] - 81:2 continuing [1] - 94:11, 94:17, 94:20, 47:18, 48:9, 49:1,
48:21, 68:13, 130:10, Connecticut [2] - 128:3 94:21, 95:22, 95:23, 49:4, 49:7, 49:10,
131:15, 139:10, 139:24, 139:25 contract [1] - 12:19 96:16, 96:20, 97:2, 49:13, 49:17, 49:23,
141:15, 144:6 connection [3] - contrast [1] - 139:20 97:9, 97:18, 98:1, 53:18, 56:8, 56:18,
completely [1] - 10:19, 18:13, 31:13 contravene [1] - 98:16, 98:23, 98:25, 59:1, 59:5, 59:8,
134:20 consequence [1] - 134:21 99:13, 100:2, 101:4, 59:11, 60:8, 60:21,
completion [1] - 78:6 75:23 controls [1] - 74:3 101:6, 101:7, 102:1, 62:20, 62:23, 63:15,
complex [2] - 53:16, consider [3] - 51:25, 102:2, 102:4, 102:6, 64:21, 65:23, 66:3,
conversion [2] -
53:20 74:25, 119:3 103:3, 108:10, 67:1, 67:9, 67:15,
46:25, 83:1
compliance [10] - consideration [1] - 108:24, 112:8, 68:2, 68:12, 69:24,
conversions [4] -
50:10, 50:14, 50:16, 32:18 112:14, 112:16, 71:2, 77:14, 77:17,
32:11, 82:9, 83:13
50:18, 50:19, 50:21, considering [1] - 112:18, 113:3, 113:9, 78:5, 78:18, 78:21,
convert [1] - 46:22
51:18, 72:9, 73:11, 45:11 113:10, 113:14, 79:1, 79:13, 80:24,
converted [3] -
76:8 113:20, 114:1, 114:2, 81:2, 81:10, 81:13,
consist [1] - 39:1 24:10, 32:15, 82:25
compliance/chief [1] 114:21, 114:25, 82:4, 85:6, 85:18,
consistent [9] - convertible [2] -
- 50:20 115:17, 115:21, 85:22, 88:8, 88:10,
29:15, 34:3, 34:25, 32:14, 32:20
compute [1] - 13:23 117:23, 118:2, 91:16, 92:5, 95:5,
36:5, 42:5, 42:13, converting [6] -
conceal [3] - 135:14, 121:16, 122:2, 123:3, 95:7, 97:5, 99:18,
44:9, 44:12, 133:23 32:20, 46:1, 46:12,
135:19, 138:8 128:25, 136:13 99:21, 100:7, 100:12,
consistently [4] - 82:13, 82:20, 83:10
concept [1] - 117:7 corrective [3] - 102:16, 104:12,
26:11, 40:11, 40:12, convince [1] -
concern [3] - 26:14, 48:21, 101:20, 125:1 106:24, 112:25,
45:4 121:23
38:25, 127:25 correlated [5] - 28:3, 115:4, 115:24, 116:2,
consisting [1] - 28:6 convinced [4] -
concerned [1] - 28:14, 37:16, 40:11, 116:6, 116:9, 116:15,
consists [1] - 40:14 104:14, 104:17,
108:5 43:15 116:18, 116:21,
constitute [2] - 105:25, 106:16
correlation [7] - 118:8, 121:11,
concerning [5] - 105:17, 119:7 convincing [1] -
20:15, 29:9, 29:13, 123:23, 124:1, 124:8,
13:7, 15:20, 16:25, constitutes [2] - 133:1
29:17, 38:14, 43:12, 124:11, 124:20,
29:19, 101:16 103:15, 144:4 cool [1] - 98:14
43:18 124:23, 126:8,
concerns [1] - 113:9 Constitution [2] - copies [1] - 100:5
Counsel [1] - 4:4 126:20, 127:20,
conclude [2] - 21:5, 2:3, 144:14 copy [9] - 11:18,
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 150 of 166 150
128:18, 129:21, 122:9 70:19, 71:21, 72:6, 28:20, 29:4, 29:10, defendant [3] -
130:22, 130:24, CROSS- 75:17, 75:24, 76:22, 29:14, 29:16, 29:18, 30:17, 30:19, 30:24
132:1, 132:7, 132:21, EXAMINATION [2] - 77:2, 79:18, 79:21, 34:15, 37:12, 37:20, DEFENDANT [2] -
132:25, 134:1, 134:8, 30:7, 85:24 79:22, 80:11, 80:19, 37:22, 38:13, 38:16, 1:17, 3:7
136:11, 136:24, cross-examination 80:20, 81:9, 81:15, 43:2, 45:5, 63:2, Defendant's [24] -
137:3, 138:1, 138:17, [2] - 85:18, 122:9 86:12, 86:13, 86:17, 92:13, 92:15, 107:22, 3:14, 3:15, 3:16, 3:17,
141:9, 142:17, Cross-Section [1] - 86:19, 89:3, 89:7, 108:5, 108:12, 3:18, 3:19, 3:20, 16:1,
142:21, 142:23 33:20 89:8, 90:14, 91:2, 125:10, 127:13, 16:25, 60:22, 62:21,
Court [31] - 2:1, 2:2, crossbones [9] - 91:6, 91:19, 91:23, 128:13 63:16, 64:22, 69:25,
5:11, 5:12, 5:14, 6:23, 65:16, 66:4, 66:8, 97:20, 97:23, 100:18, decision [1] - 79:12 71:3, 77:15, 86:14,
8:8, 9:2, 10:25, 11:3, 67:25, 68:4, 114:8, 100:23, 100:25, decisions [3] - 58:8, 88:1, 88:4, 92:23,
12:24, 14:16, 18:11, 126:13, 140:17, 101:15, 112:3, 112:6, 115:16, 115:20 98:9, 98:10, 104:21,
19:8, 59:4, 74:9, 140:18 112:9, 112:12, declaration [1] - 77:5 125:13
78:11, 102:14, CRR [3] - 2:1, 144:3, 112:17, 118:18, decline [4] - 13:13, DEFENDER [1] -
105:23, 116:12, 144:12 118:21, 118:24, 14:5, 21:5, 26:14 1:24
116:13, 124:15, cryptocurrencies [1] 123:8, 135:9, 143:2 DECN [51] - 6:15, Defender's [1] - 4:17
124:22, 125:12, - 79:3 dated [5] - 62:8, 32:7, 35:23, 36:3, defense [5] - 8:8,
125:18, 131:3, 131:4, culpability [1] - 6:8 63:3, 107:23, 108:14, 37:16, 38:18, 38:20, 21:9, 30:6, 49:13,
135:23, 144:12, cure [1] - 95:15 109:3 40:19, 40:24, 42:11, 130:6
144:13 current [5] - 11:18, Dated [1] - 144:10 42:22, 44:4, 44:14, DEFENSE [1] - 49:22
Court's [9] - 33:3, 51:8, 52:18, 52:22, dates [13] - 15:9, 44:19, 55:1, 55:13, Defense [4] - 59:13,
45:22, 67:22, 82:3, 61:10 15:13, 21:8, 21:11, 55:19, 58:6, 62:8, 98:13, 98:15, 112:19
116:1, 123:21, curve [1] - 133:2 74:23, 75:16, 76:19, 64:13, 64:15, 65:7, defer [1] - 5:12
124:16, 124:18, 130:8 customer [1] - 76:12 80:8, 84:1, 85:2, 89:9, 65:14, 66:7, 71:14, define [1] - 31:23
COURTROOM [3] - customers [5] - 51:3, 123:16, 142:13 72:15, 73:3, 75:18, defined [5] - 13:22,
4:1, 59:15, 85:15 51:6, 71:14, 71:15, Daubert [2] - 10:24, 76:23, 89:19, 89:25, 14:20, 55:23, 56:16,
courts [3] - 133:7, 73:14 11:3 90:8, 93:15, 94:5, 137:1
137:16, 138:12 CV [2] - 11:18, 31:19 days [5] - 14:24, 94:13, 95:11, 96:5, definitely [1] - 28:18
COVID [3] - 75:6, cybercriminals [1] - 47:11, 57:11, 80:21, 98:18, 101:12, defrauded [1] - 87:8
79:7, 127:6 102:23 106:11 103:21, 105:6, degree [2] - 9:3,
COVID-19 [8] - deal [2] - 82:8, 110:8 113:25, 114:3, 115:9, 106:12
58:16, 64:12, 95:25, dealer [9] - 50:25, 115:12, 130:9, 132:4,
101:15, 101:17,
D 55:1, 55:6, 56:23, 136:1, 140:15,
delay [1] - 5:1
delisted [1] - 36:10
102:1, 127:1, 127:4 66:10, 71:12, 72:16, 140:16, 141:7 delivery [1] - 91:13
COVID-related [1] - D.C [7] - 1:6, 1:16, 114:17 DECN's [11] - 36:19, demands [1] - 82:2
127:6 1:22, 1:25, 2:4, dealer-to-dealer [1] - 37:10, 44:8, 44:25, demonstrable [1] -
COVINGTON [1] - 131:20, 144:14 55:6 46:6, 46:9, 67:11, 101:22
1:21 daily [4] - 20:16, dealers [11] - 50:23, 68:6, 83:5, 83:7,
demonstrate [1] -
Covington [3] - 4:13, 23:19, 23:22, 54:18 50:24, 57:2, 61:23, 140:19
67:23
4:16, 131:1 damage [1] - 106:10 66:13, 71:10, 72:7, decrease [1] - 58:18
demonstrative [6] -
CPAG [1] - 27:2 damages [3] - 53:13, 72:18, 78:1, 80:2, decreased [1] - 16:3, 72:4, 74:22,
craze [1] - 78:25 105:22, 106:7 141:1 44:20 77:1, 80:7, 80:24
credible [1] - 61:9 danger [6] - 36:9, dealing [1] - 77:24 deemed [1] - 10:18 Demonstrative [1] -
Credit [1] - 10:23 67:7, 110:3, 111:5, deals [1] - 51:5 deep [1] - 79:8 14:12
CREF [1] - 50:19 114:9, 129:25 debt [2] - 24:10, Defendant [41] - 1:7, demonstratives [1] -
crime [8] - 87:2, dangerous [4] - 24:24 16:21, 23:7, 54:4, 67:18
87:9, 87:14, 87:20, 72:19, 73:17, 73:21, deceitful [1] - 94:6 87:3, 87:5, 87:8, denial [5] - 96:14,
87:22, 103:19, 104:3 December [7] - 87:23, 89:13, 89:16, 96:20, 96:25, 102:3,
103:20, 125:8 dangers [1] - 78:15 14:21, 14:25, 17:6, 90:3, 90:22, 91:19, 102:18
criminal [3] - 31:4, Dark [1] - 33:20 129:1, 130:1, 134:4, 92:21, 93:22, 94:10,
denials [1] - 109:10
31:8, 129:13 data [13] - 13:1, 13:3, 134:17 94:18, 94:22, 95:21,
denied [1] - 10:25
Criminal [4] - 1:3, 13:4, 13:7, 14:19, decide [3] - 58:4, 99:11, 101:25, 103:1,
denies [1] - 127:19
1:15, 4:2, 85:16 22:1, 24:5, 26:25, 58:5, 61:12 103:7, 104:8, 104:11,
denying [3] - 94:10,
criteria [4] - 28:22, 29:5, 36:5, 40:22, decided [2] - 137:1, 105:25, 106:16,
94:18, 95:22
35:4, 36:16, 40:15 41:13, 71:18 137:19 106:20, 107:6, 125:3,
DEPARTMENT [1] -
critical [1] - 125:9 database [1] - 13:4 Decision [36] - 13:7, 125:5, 125:17, 126:5,
1:15
Cross [2] - 3:3, 33:20 date [56] - 15:17, 18:16, 20:17, 20:25, 127:14, 128:8,
Department [8] -
CROSS [2] - 30:7, 15:21, 16:1, 16:19, 22:2, 23:12, 23:20, 128:11, 129:7,
12:8, 12:11, 16:15,
85:24 16:22, 17:2, 17:3, 26:8, 26:12, 26:22, 129:18, 130:10,
122:11, 122:12,
cross [2] - 85:18, 17:4, 64:3, 69:15, 27:15, 28:3, 28:14, 130:19, 141:18
122:13, 126:9, 135:16
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 151 of 166 151
deposed [1] - 30:21 45:5, 125:10 124:4, 125:1, 131:5, Division [1] - 1:15 E
depreciated [1] - difference [6] - 131:13, 131:14, division's [2] - 31:4,
142:8 13:23, 13:24, 14:3, 133:8, 133:12, 31:8
DEPUTY [3] - 4:1, 15:3, 48:3, 84:11 135:18, 136:17, docket [1] - 5:12 E*TRADE [1] -
59:15, 85:15 differences [3] - 137:17, 138:7, 138:9, doctored [1] - 135:6 111:12
derivative [2] - 34:6, 34:9, 43:5 138:13, 138:16, document [32] - earliest [3] - 93:11,
32:14, 32:21 different [26] - 14:1, 139:10, 140:3, 140:5, 59:4, 59:21, 62:7, 111:22, 112:9
deriving [1] - 39:10 21:24, 38:7, 38:15, 141:15, 142:13 62:10, 62:12, 62:25, early [4] - 18:3, 60:5,
describe [3] - 11:8, 39:2, 42:22, 46:5, disclosures [7] - 63:3, 63:5, 63:7, 70:7, 108:13
56:20, 57:5 48:15, 51:3, 51:4, 21:17, 22:2, 24:4, 63:25, 64:3, 64:6, earnings [1] - 113:9
described [3] - 54:6, 55:5, 55:16, 33:2, 88:17, 101:20, 64:8, 69:2, 69:7, easier [2] - 59:8,
14:19, 43:1, 111:6 55:24, 58:11, 60:13, 130:6 69:12, 69:16, 70:4, 70:16
describes [1] - 107:7 60:16, 61:9, 61:23, discovered [1] - 70:15, 77:7, 77:9, easily [3] - 78:11,
describing [2] - 6:3, 63:21, 66:11, 84:1, 79:24 92:25, 93:6, 93:10, 91:9, 106:7
44:2 88:17, 108:7, 137:21 discovery [1] - 54:3 93:17, 94:22, 97:14, eating [1] - 141:18
description [2] - differently [3] - discrete [1] - 134:14 97:15, 100:21, economic [6] - 9:19,
38:21, 114:6 31:24, 70:22, 126:11 discussed [9] - 107:16, 113:24, 10:7, 10:14, 45:7,
design [2] - 73:10, difficult [2] - 57:12, 27:23, 53:1, 72:21, 127:18 47:24, 48:11
73:13 67:6 83:18, 84:1, 121:20, documents [7] - economically [1] -
designation [4] - diligence [2] - 122:17, 122:24 33:1, 68:18, 80:5, 24:13
77:25, 103:14, 115:15, 115:19 discusses [1] - 93:14, 106:8, 109:3, economics [16] -
109:25, 112:22 dimension [1] - 39:4 74:23 139:21 9:5, 10:10, 10:11,
designed [1] - 73:5 direct [3] - 18:4, discussing [8] - DOJ's [1] - 31:4 12:2, 12:6, 16:17,
destroyed [1] - 95:4, 122:8 18:5, 33:6, 36:18, dollar [2] - 36:9, 17:8, 18:19, 19:9,
135:12 DIRECT [2] - 8:21, 37:17, 40:22, 42:9, 36:10 19:13, 38:5, 38:22,
detail [5] - 114:5, 49:24 42:14, 117:20 done [4] - 31:16, 40:16, 42:5, 48:20,
138:23, 138:24, Direct [1] - 3:3 Discussion [2] - 69:19, 84:15, 89:3 119:20
138:25, 139:21 directed [1] - 58:2 116:3, 124:9 doubt [2] - 79:24, Economics [1] -
detailed [3] - 63:1, direction [1] - 40:13 discussion [2] - 5:8, 129:5 10:12
101:16, 141:2 directly [2] - 100:15, 122:21 down [10] - 38:2, economist [2] - 10:2,
details [1] - 61:21 108:17 disparity [1] - 120:18 43:22, 49:8, 64:15, 17:6
detect [3] - 6:22, 7:7, director [1] - 50:16 display [1] - 58:24 67:12, 82:17, 111:7, education [1] - 50:6
76:14 directors [1] - 24:19 dispositive [1] - 116:7, 123:24, 133:3 EDWARDS [2] - 2:1,
determine [7] - 16:5, disagree [6] - 6:6, 105:23 dozens [3] - 106:1, 144:3
16:10, 19:3, 19:4, 126:21, 131:5, dispute [3] - 30:23, 106:4, 106:16 Edwards [1] - 144:12
23:10, 80:13, 119:4 131:23, 133:6, 136:16 98:24, 131:17 Dr [7] - 7:13, 23:23, effect [6] - 20:1,
determining [2] - disagreeing [1] - 6:5 disqualify [1] - 10:24 30:9, 47:9, 116:16, 48:24, 58:17, 65:11,
23:16, 118:13 disagreement [1] - dissimilar [1] - 38:18 124:2, 124:13 123:20, 129:23
detour [1] - 136:3 86:12 dissipate [1] - draft [1] - 105:4 effective [1] - 110:11
developed [2] - disbelieve [4] - 119:17 draw [1] - 48:11 effectively [2] - 20:2,
95:14, 95:25 104:15, 106:1, dissipated [1] - draws [1] - 72:4 24:12
developing [1] - 96:7 106:16, 121:4 118:22 Drug [1] - 101:18 effects [2] - 28:17,
development [2] - disclose [3] - 34:1, dissipation [1] - due [2] - 115:15, 137:23
5:7, 6:14 136:25, 137:8 123:17 115:19 efficient [1] - 137:22
diabetics [1] - disclosed [22] - 53:5, distinct [2] - 58:17, duly [1] - 92:13 efforts [1] - 125:13
101:14 74:21, 75:18, 76:19, 75:4 during [13] - 5:8, eight [1] - 97:7
Diagnostics [28] - 76:23, 77:19, 79:19, distinction [1] - 15:1, 22:3, 22:19, Eighth [2] - 135:21,
13:8, 18:16, 20:17, 81:8, 81:16, 81:22, 32:16 22:21, 23:20, 25:17, 138:17
20:25, 22:2, 23:20, 84:22, 84:25, 86:19, distorted [1] - 44:13, 48:18, 118:21, either [10] - 17:9,
26:9, 26:12, 26:22, 88:20, 111:5, 112:1, 125:15 126:3, 127:9, 131:13 23:5, 24:24, 25:19,
28:3, 28:14, 28:20, 130:14, 136:18, DISTRICT [3] - 1:1, duties [1] - 52:22 33:7, 34:14, 49:6,
29:4, 29:14, 29:16, 136:21, 139:17, 1:1, 1:11 duty [1] - 76:16 66:16, 72:22, 140:21
34:16, 37:20, 37:22, 139:22 district [1] - 144:13 DX [16] - 59:13, either/or [1] - 32:16
38:16, 43:2, 63:2, disclosure [36] - District [14] - 2:2, 60:18, 62:5, 62:17, electronic [3] -
92:13, 92:16, 107:22, 33:19, 48:21, 80:11, 2:2, 10:23, 11:2, 62:23, 63:12, 63:18, 35:18, 66:13, 91:13
108:5, 108:12, 81:16, 84:18, 86:15, 52:15, 135:4, 135:5, 64:18, 69:5, 69:21, electronically [4] -
127:14, 128:13 89:5, 89:11, 89:13, 137:19, 139:15, 70:2, 70:24, 71:5, 55:3, 55:16, 59:12,
Diagnostics' [8] - 103:15, 104:2, 139:16, 139:24, 77:3, 77:11, 83:19 66:21
23:12, 27:16, 29:10, 105:12, 111:21, 139:25, 144:13 element [2] - 87:13,
29:18, 37:13, 38:13, 112:6, 117:15, 119:9, divided [1] - 134:14 87:19
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 152 of 166 152
elements [1] - 53:9 27:12, 31:19, 60:22, 70:1, 70:25, 71:4, 131:9, 139:24 experts' [1] - 142:24
Eleventh [1] - 140:12 62:22, 63:17, 64:23, 72:17, 74:9, 77:12, excused [3] - 49:9, explain [15] - 14:2,
ELMO [1] - 100:6 70:1, 71:4, 77:16 77:16, 80:4, 84:3, 116:8, 123:25 15:16, 18:11, 19:23,
embedded [1] - entering [3] - 73:1, 97:19, 119:3, 135:13, executed [1] - 55:8 45:4, 50:25, 52:10,
45:18 75:14, 107:11 137:11 execution [2] - 52:18, 52:22, 53:7,
emergency [1] - entire [4] - 34:10, EVIDENCE [1] - 3:9 55:10, 57:1 54:12, 59:23, 74:18,
101:17 35:13, 90:24, 93:12 evidentiary [1] - executive [2] - 78:19, 79:21
emphasize [1] - entirely [1] - 122:3 112:2 92:12, 117:16 explained [4] -
114:8 entirety [2] - 15:24, EVIDENTIARY [1] - exercising [1] - 12:23, 33:24, 41:14,
empirically [1] - 16:22 1:10 115:19 41:22
112:11 entitled [1] - 8:13 exact [5] - 34:17, Exhibit [33] - 3:11, explaining [2] - 37:6,
employed [2] - 9:12, entity [3] - 24:15, 122:5, 123:4, 123:7, 3:12, 3:14, 3:15, 3:16, 120:4
13:12 50:12, 51:5 123:10 3:17, 3:18, 3:19, 3:20, explanation [1] -
employment [2] - equally [2] - 17:15, exactly [6] - 33:13, 11:16, 11:21, 11:24, 114:19
31:25, 50:22 46:24 37:1, 48:3, 67:24, 14:12, 26:19, 27:8, explicit [1] - 75:21
emptor [29] - 65:16, equities [2] - 50:16, 134:5, 138:8 27:11, 29:23, 35:17, exposed [4] - 47:2,
66:8, 66:17, 67:8, 51:2 exam [2] - 49:21, 59:13, 60:22, 62:21, 47:3, 100:14, 133:3
67:20, 72:23, 73:2, equity [1] - 57:18 51:21 63:16, 64:22, 69:25, express [1] - 60:14
74:5, 75:10, 77:25, errors [1] - 139:18 examination [3] - 71:3, 77:15, 90:20, extend [1] - 78:11
79:25, 84:4, 103:14, especially [1] - 52:4 51:19, 85:18, 122:9 98:13, 98:15, 99:25, extended [1] -
104:1, 109:24, 111:8, ESQ [10] - 1:14, 1:14, EXAMINATION [6] - 104:20, 107:15, 134:23
111:18, 112:10, 1:17, 1:18, 1:18, 1:19, 8:21, 30:7, 49:24, 112:19 extent [5] - 18:16,
112:20, 112:21, 1:19, 1:20, 1:20, 1:23 85:24, 117:2, 121:13 exhibit [6] - 16:4, 19:12, 124:12, 130:7,
113:24, 114:14, essence [1] - 113:23 examine [5] - 13:13, 31:20, 34:1, 58:23, 130:18
114:18, 114:25, essentially [5] - 18:16, 18:24, 19:6, 71:6, 100:5 external [8] - 13:14,
115:2, 117:5, 117:10, 11:4, 40:4, 42:21, 45:3 exhibits [1] - 58:23 19:7, 19:16, 19:17,
117:15, 126:16 43:5, 48:13 examined [4] - EXHIBITS [1] - 3:9 38:9, 45:3, 45:6,
enacted [1] - 133:7 estimate [7] - 12:15, 20:14, 21:1, 21:10, exist [1] - 107:11 45:14
encouraged [1] - 13:9, 18:19, 19:5, 28:2 existed [3] - 127:12, extra [2] - 120:20,
115:14 30:1, 48:7, 119:23 examining [1] - 128:20, 129:14 121:8
end [7] - 22:8, 25:15, estimated [1] - 23:21 123:8 existing [7] - 32:20, extraordinary [1] -
91:2, 131:25, 132:9, estimates [2] - example [16] - 18:4, 46:1, 46:12, 82:13, 126:20
133:15, 137:24 19:20, 23:11 19:18, 21:18, 24:9, 82:21, 83:10, 101:13 extrapolation [1] -
ended [4] - 77:18, estimation [1] - 28:23, 36:24, 38:19, expect [3] - 38:12, 25:10
133:25, 135:17, 36:19 46:20, 60:3, 60:10, 38:14, 48:20 extreme [1] - 130:8
135:24 et [1] - 54:19 95:21, 95:24, 114:3, expectations [1] - eyeballing [1] -
ending [1] - 75:2 EUA [3] - 128:11, 121:19, 132:16, 135:3 45:8 47:14
ends [5] - 80:25, 128:15, 129:10 exams [2] - 7:20, expected [1] - 74:8
81:4, 129:2, 129:5, evaluate [9] - 12:12, 51:17 expecting [1] - 5:3 F
129:6 12:14, 13:2, 13:11, excellent [2] - 79:2, experience [16] -
enforcement [1] - 15:9, 16:15, 23:17, 137:4 31:20, 31:23, 34:18,
109:6 Exchange [6] - 41:4, 50:9, 56:10, F.3d [3] - 131:20,
28:13, 45:15
engage [2] - 104:5, 51:18, 52:5, 52:7, 57:24, 58:13, 61:7, 135:21, 140:12
event [5] - 19:11,
104:11 54:16, 55:23, 62:9 68:21, 72:11, 79:5, face [1] - 132:11
19:14, 20:1, 20:7,
engaged [11] - exchange [8] - 33:7, 79:10, 80:2, 88:13, faced [1] - 111:10
22:24
11:13, 12:8, 12:23, 46:15, 46:16, 54:15, 111:25 facilitate [2] - 58:6,
events [19] - 27:17,
30:18, 30:24, 94:10, 55:7, 57:9, 113:8 expert [23] - 10:15, 58:8
29:14, 37:11, 37:14,
95:22, 117:13, 45:9, 45:12, 76:3, exchange-traded [1] 10:18, 10:22, 11:5, facility [1] - 5:20
117:16, 125:2, 125:17 76:6, 76:19, 108:17, - 57:9 11:11, 11:13, 12:2, fact [30] - 6:18, 38:5,
engagement [1] - 108:20, 118:1, 118:3, exchanges [5] - 12:5, 30:18, 30:19, 41:19, 43:6, 46:14,
31:3 118:11, 119:2, 119:8, 34:7, 51:4, 54:17, 33:19, 49:20, 51:25, 47:24, 48:6, 65:4,
engaging [3] - 119:10, 125:3, 132:14 55:5, 61:23 52:2, 52:8, 53:1, 69:2, 80:5, 81:25,
102:21, 127:24, eventually [2] - 93:2, exchanging [1] - 53:15, 53:19, 54:7, 95:24, 99:15, 101:5,
130:11 137:20 32:19 73:2, 74:5, 81:3, 101:25, 102:3,
enter [12] - 55:2, excited [1] - 7:23 118:6 102:21, 103:10,
evidence [28] -
58:10, 66:14, 66:18, exclusion [1] - 42:19 Expert [1] - 65:18 104:15, 104:17,
11:21, 11:25, 27:8,
66:21, 66:25, 67:20, exclusively [1] - expertise [3] - 16:10, 105:7, 114:1, 118:23,
27:12, 37:12, 60:19,
72:25, 73:4, 73:17, 33:16 118:6, 121:15 120:11, 123:9,
60:23, 62:18, 62:22,
74:6, 111:17 excuse [6] - 14:6, experts [2] - 5:14, 123:16, 125:16,
63:13, 63:17, 64:19,
entered [10] - 11:25, 36:25, 83:16, 110:22, 6:15 126:1, 129:9, 140:6
64:23, 68:20, 69:22,
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 153 of 166 153
fact-based [2] - 69:2, feeds [2] - 18:24, 119:20, 120:7, 135:6, 113:4, 134:13 128:23, 128:25,
80:5 65:8 135:8, 138:22, 139:19 Food [1] - 101:18 129:2, 129:5, 129:6,
factor [4] - 39:17, felt [2] - 17:4, 41:24 findings [3] - 10:21, FOR [5] - 1:1, 1:14, 130:3, 131:5, 131:13,
39:20, 43:12, 43:16 FENTON [38] - 1:14, 109:5, 109:6 1:17, 3:4, 3:7 131:24, 132:10,
factors [23] - 6:12, 53:17, 60:7, 60:20, fine [3] - 7:22, 59:10, force [1] - 45:14 132:20, 133:3, 133:8,
13:14, 19:12, 19:19, 62:19, 63:14, 64:20, 134:9 forces [8] - 13:15, 133:11, 133:24,
19:22, 19:23, 20:4, 69:23, 71:1, 77:13, FINRA [3] - 50:13, 19:7, 19:16, 19:17, 134:3, 134:24,
20:9, 20:11, 20:13, 85:23, 86:1, 88:11, 52:5, 52:13 38:9, 45:4, 45:6, 135:11, 135:14,
20:17, 20:20, 21:1, 90:19, 90:21, 91:10, FINRA's [1] - 27:2 132:13 135:15, 135:17,
26:15, 26:17, 27:24, 91:18, 92:3, 92:6, firm [24] - 20:13, foregoing [3] - 135:19, 136:17,
28:2, 56:1, 57:15, 92:8, 95:9, 95:10, 20:14, 21:9, 21:15, 91:12, 92:14, 144:4 136:21, 138:7,
61:12, 101:9, 117:24, 96:3, 96:4, 97:6, 21:16, 21:19, 26:13, forever [1] - 67:14 139:22, 140:8,
120:2 99:23, 100:5, 100:17, 31:21, 32:1, 45:9, forgive [1] - 23:24 140:21, 142:12
facts [13] - 45:9, 102:17, 104:10, 45:11, 45:13, 45:16, Form [2] - 135:10, Fraud [1] - 1:15
45:11, 45:13, 45:16, 104:13, 104:24, 45:17, 45:18, 51:1, 139:17 Frauds [1] - 64:10
45:18, 92:16, 92:17, 105:1, 107:3, 113:2, 73:11, 118:1, 118:3, form [1] - 60:7 frauds [1] - 64:12
94:14, 95:17, 96:9, 115:6, 115:7, 115:23 118:11, 118:20, forming [1] - 54:8 fraudulent [13] -
118:1, 118:3, 118:11 Fenton [5] - 4:7, 118:23, 119:2, 129:24 formula [4] - 13:3, 94:6, 103:3, 103:8,
fair [9] - 6:11, 7:11, 85:22, 95:8, 97:5, firm-specific [13] - 48:6, 74:15, 123:12 129:4, 132:4, 133:17,
31:16, 32:3, 57:24, 115:4 21:9, 21:19, 45:9, forth [4] - 6:2, 7:1, 135:24, 135:25,
60:3, 62:14, 63:9, Ferguson [1] - 45:11, 45:13, 45:16, 15:11, 27:25 137:24, 139:17,
77:9 139:23 45:17, 118:1, 118:3, forward [9] - 4:4, 141:3, 141:8, 141:18
fake [1] - 107:7 few [4] - 26:2, 33:5, 118:11, 118:20, 69:1, 75:9, 75:14, free [1] - 116:7
fall [2] - 52:11, 53:3 39:22, 134:20 118:23, 119:2 78:17, 80:4, 89:8, French [1] - 20:13
falling [1] - 58:21 fewer [1] - 36:11 firms [11] - 27:24, 89:9 frequency [1] - 41:24
false [19] - 47:25, Fidelity [2] - 66:10, 27:25, 28:4, 28:5, four [3] - 72:7, 113:6, frequently [1] -
48:2, 48:4, 94:19, 111:12 28:7, 28:18, 52:25, 133:19 28:24
95:16, 96:9, 97:1, field [4] - 51:8, 52:1, 66:15, 71:16, 120:13 framework [1] - front [4] - 6:19,
97:12, 123:10, 53:15, 53:19 first [21] - 13:1, 122:6 34:17, 35:14, 80:8
123:19, 125:8, 126:5, figure [7] - 14:18, 13:10, 20:1, 20:7, frankly [1] - 100:10 frustrating [1] - 4:25
127:19, 128:4, 129:8, 23:2, 23:4, 25:9, 21:7, 23:19, 41:22, fraud [112] - 14:6, full [5] - 31:24,
129:10, 129:19, 25:14, 36:22, 116:15 63:3, 68:17, 75:5, 14:20, 14:24, 14:25, 128:10, 129:3, 130:7,
130:12, 134:16 figures [4] - 23:5, 80:19, 89:8, 90:13, 15:6, 15:9, 15:18, 144:5
falsity [1] - 101:22 26:5, 29:23, 31:10 112:17, 125:5, 15:24, 17:11, 17:23, full-time [1] - 31:24
Fama [1] - 20:13 file [1] - 93:12 126:14, 129:12, 17:25, 18:7, 18:13, fundamentally [1] -
Fama-French [1] - filed [19] - 70:20, 129:16, 131:24, 18:15, 18:24, 22:3, 10:14
20:13 90:3, 90:10, 90:16, 132:4, 140:6 22:7, 22:9, 22:19, futures [1] - 51:21
familiar [11] - 16:24, 90:22, 91:3, 91:7, five [1] - 115:5 22:21, 23:2, 23:20,
54:10, 74:14, 107:16, 91:13, 91:19, 91:23, fixed [1] - 51:3 31:4, 31:8, 45:1, G
117:7, 117:9, 117:19, 97:15, 97:23, 98:10, flash [1] - 66:16 46:25, 47:10, 47:11,
121:16, 121:19, 98:19, 99:2, 100:25, flatter [1] - 42:11 48:10, 48:19, 53:5,
121:22, 137:3 108:13, 109:3, 139:17 flawed [1] - 140:5 gain [1] - 80:15
53:12, 61:11, 74:20,
far [7] - 34:1, 36:22, filing [5] - 91:6, flip [1] - 100:20 74:21, 74:25, 75:2, GameStop [1] -
42:18, 74:3, 128:12, 93:18, 99:12, 100:24, Florida [1] - 10:23 75:17, 75:22, 76:14, 78:25
138:13 138:25 fluctuating [1] - 25:8 76:19, 77:17, 77:20, gap [1] - 68:23
fatally [1] - 140:5 filings [8] - 46:6, fly [1] - 132:11 78:6, 79:18, 80:25, general [6] - 34:20,
favorite [1] - 66:10 46:7, 61:10, 83:5, focus [3] - 9:19, 81:3, 81:8, 81:16, 36:8, 51:13, 51:19,
FDA [2] - 6:16, 130:15, 135:10, 60:14, 60:16 81:22, 83:16, 83:23, 67:14, 122:17
128:13 136:11 focused [1] - 64:12 84:21, 84:25, 86:4, generally [21] -
feasible [2] - 5:9, final [2] - 27:14, 89:2 focuses [1] - 9:18 86:14, 86:19, 87:6, 11:11, 13:19, 15:19,
6:22 finance [2] - 9:4, 87:14, 87:19, 88:1, 16:16, 16:24, 18:18,
folded [2] - 133:14,
February [2] - 134:4, 50:7 88:4, 94:10, 95:22, 19:7, 24:17, 26:12,
141:11
134:15 Finance [1] - 10:9 100:14, 104:5, 26:16, 32:13, 33:12,
folks [3] - 4:11,
Federal [3] - 4:17, financial [25] - 9:18, 104:11, 105:10, 33:14, 41:15, 55:11,
143:2, 143:4
137:2, 139:24 9:24, 10:7, 10:10, 111:4, 115:12, 66:13, 118:12,
follow [2] - 34:22,
12:2, 12:5, 16:17, 117:13, 118:18, 119:22, 121:22,
FEDERAL [1] - 1:23 78:24
17:8, 19:9, 19:13, 123:9, 123:17, 125:1, 122:4, 137:10
federal [7] - 10:15, following [8] - 14:24,
32:1, 38:5, 38:22, 125:17, 125:24, generated [1] - 26:25
10:18, 30:16, 51:2, 26:17, 44:20, 47:11,
52:3, 52:15, 52:16 40:16, 42:5, 48:19, 125:25, 126:1, generic [3] - 114:6,
85:14, 108:6, 112:23
52:25, 53:15, 53:19, 127:25, 128:19, 114:7, 114:22
feed [1] - 62:2 follows [3] - 113:3,
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 154 of 166 154
gentleman [1] - 17:24, 47:18, 78:18, 73:9 83:14, 139:6 130:3
59:24 81:2, 126:8 hereby [2] - 91:11, HONORABLE [1] - implies [1] - 120:25
gentlemen [1] - 8:11 guideline [3] - 144:3 1:10 import [1] - 88:16
GenViro [1] - 101:17 105:18, 123:5, 123:14 high [1] - 15:16 hope [1] - 103:13 importance [2] -
Georgetown [1] - 9:3 Guideline [2] - higher [5] - 36:4, hour [1] - 12:20 77:24, 120:20
GIRON [14] - 1:19, 123:2, 136:22 36:7, 81:21, 81:25, Howell [4] - 4:19, important [4] - 43:6,
131:1, 132:2, 132:12, Guidelines [2] - 122:20 49:21, 63:22, 79:13 66:2, 76:10, 118:13
132:23, 133:6, 134:7, 12:14, 74:15 highest [1] - 125:22 HOWELL [65] - 1:19, importantly [1] -
134:9, 136:13, guidelines [16] - highlight [1] - 139:4 50:1, 53:14, 53:21, 131:17
136:25, 137:4, 138:3, 13:18, 13:19, 14:9, highlighting [1] - 53:22, 56:19, 58:22, impossible [3] -
138:19, 141:10 17:14, 28:1, 80:12, 131:6 59:3, 59:10, 59:13, 75:13, 88:21, 88:24
Giron [4] - 4:16, 122:15, 122:23, highly [1] - 137:22 59:17, 59:20, 60:18, impounded [1] -
131:1, 132:7, 142:17 131:9, 131:18, 133:7, hired [1] - 6:15 60:24, 62:5, 62:6, 41:19
given [4] - 40:8, 136:20, 137:1, 142:9, hold [2] - 47:7, 106:2 62:17, 62:24, 63:12, IN [1] - 3:9
56:6, 111:12, 118:24 142:14 holder [2] - 88:15, 63:18, 63:23, 64:18, inability [1] - 111:13
global [1] - 50:16 guilty [11] - 87:3, 88:22 64:24, 67:17, 67:22, inadministrable [1] -
glucose [1] - 101:13 87:5, 87:23, 103:2, holdings [1] - 34:2 68:3, 68:14, 69:5, 141:14
goals [1] - 76:13 103:7, 104:21, honestly [2] - 58:15, 69:6, 69:21, 70:2, incentive [1] - 142:7
Goldman [1] - 50:16 109:18, 110:7, 110:9, 91:3 70:3, 70:8, 70:10, incentivize [1] -
Google [1] - 57:9 125:5, 127:17 Honor [101] - 4:1, 70:24, 71:5, 71:7, 142:4
Government [32] - 4:6, 4:10, 4:12, 5:4, 71:23, 72:1, 73:23, inclined [1] - 116:12
4:5, 6:21, 6:24, 6:25, H 7:17, 8:4, 8:16, 11:20, 74:1, 74:22, 74:24, include [4] - 31:12,
12:19, 15:6, 15:8, 12:1, 16:14, 17:17, 77:3, 77:4, 77:11, 35:1, 35:5, 105:23
15:17, 31:1, 49:6, 17:21, 24:4, 25:12, 79:14, 80:7, 80:10, included [5] - 33:17,
half [4] - 20:1, 52:12, 81:14, 82:3, 82:5,
49:10, 54:3, 59:17, 27:7, 30:4, 47:5, 39:10, 54:4, 105:22,
136:8, 136:15 82:6, 83:19, 84:6,
103:17, 106:5, 47:17, 47:23, 48:16, 106:8
half-time [1] - 52:12 84:7, 85:4, 88:7, 88:9,
116:20, 122:10, 49:3, 49:11, 49:14, includes [4] - 38:17,
halfway [1] - 64:15 92:4, 95:3, 95:6,
124:24, 131:19, 53:14, 58:22, 59:3, 41:1, 41:3, 86:25
halt [1] - 113:9 104:9, 106:23, 116:5
132:6, 134:10, 60:18, 62:17, 63:20, including [2] - 126:4,
halted [1] - 113:8 humbly [1] - 139:21
134:13, 134:22, 64:18, 67:22, 69:21, 130:10
hand [1] - 100:6
135:1, 135:15, 139:5, 70:24, 77:11, 82:5, inclusion [4] - 33:13,
handling [1] - 7:19
140:7, 141:21, 142:6, 85:5, 85:15, 85:23, I 35:3, 36:16, 40:15
142:9, 142:11 Hangout [1] - 105:4 88:7, 92:4, 95:3, income [1] - 51:3
GOVERNMENT [4] - happy [6] - 13:8, 115:6, 115:25, 116:4,
i.e [1] - 113:9 inconsistencies [1] -
1:14, 3:4, 8:18, 117:1 13:15, 14:2, 18:6, 116:5, 116:17,
icon [1] - 65:16 109:2
Government's [23] - 124:2, 124:4 116:19, 116:25,
idea [3] - 47:9, 89:1, inconsistent [1] -
5:15, 11:16, 11:21, hard [3] - 80:4, 118:5, 121:10,
131:13 41:5
11:24, 14:12, 26:18, 100:5, 142:23 121:12, 123:22,
ideal [1] - 28:19 increase [2] - 43:8,
27:8, 27:11, 29:23, he.. [1] - 68:17 124:6, 124:10,
ideas [1] - 60:14 132:14
35:17, 90:20, 99:24, head [5] - 35:6, 124:25, 126:25,
identified [1] - 38:25 increases [1] - 25:2
104:20, 107:15, 35:12, 50:16, 50:18, 127:21, 128:21,
identify [6] - 4:4, increasing [3] - 10:6,
132:24, 133:23, 50:20 130:4, 130:25, 131:3,
19:22, 19:25, 37:12, 22:5, 24:23
134:21, 136:6, 139:1, hear [7] - 6:1, 56:10, 131:16, 131:23,
40:18, 42:3 incurred [1] - 140:9
139:9, 140:5, 141:14, 116:12, 117:4, 120:3, 132:2, 132:12,
identifying [1] - independent [1] -
142:4 124:3, 124:24 132:23, 133:6,
141:3 105:5
government's [2] - heard [6] - 124:16, 133:15, 133:22,
identity [1] - 126:5 index [59] - 19:18,
3:11, 3:12 126:15, 130:6, 131:4, 134:7, 134:9, 134:19,
idiosyncratic [6] - 26:23, 28:5, 28:6,
Grace [1] - 4:9 140:25, 142:19 135:2, 135:9, 135:20,
26:13, 28:12, 39:15, 28:8, 28:15, 28:18,
grand [1] - 129:12 HEARING [1] - 1:10 136:2, 136:7, 136:13,
39:25, 42:15, 42:16 28:20, 28:22, 28:23,
granted [1] - 90:14 hearing [4] - 7:22, 136:19, 137:1,
29:1, 29:2, 29:11,
31:13, 122:19, 124:5 137:11, 138:3, 138:5, ignorance [1] - 23:24
great [5] - 7:25, 8:15, 29:17, 33:6, 33:10,
heavily [2] - 37:23, 138:6, 138:11, illustrate [2] - 67:19,
35:21, 106:12, 110:3 33:13, 33:17, 34:23,
41:18 138:20, 138:25, 74:2
greater [1] - 129:23 35:3, 36:13, 36:16,
held [12] - 25:1, 25:2, 139:3, 139:6, 139:12, imagine [1] - 25:5
greatest [1] - 126:9 37:17, 37:18, 37:19,
25:4, 71:13, 71:14, 139:23, 140:4, immediately [1] -
group [6] - 26:17, 37:22, 37:23, 38:10,
71:15, 72:6, 134:12, 140:14, 141:6, 44:20
27:2, 34:21, 34:22, 38:17, 38:24, 39:1,
137:5, 137:16, 139:16 141:12, 141:25, impact [4] - 18:2,
40:18, 41:23 39:3, 39:6, 39:9,
help [3] - 67:18, 142:11, 142:16, 48:4, 119:14, 129:16
Group [3] - 55:17, 39:14, 39:16, 39:18,
67:23, 74:23 142:22, 143:5 impacted [1] - 37:10
55:20, 61:25 39:21, 39:22, 39:23,
helped [2] - 58:8, Honor's [3] - 21:13, implicated [1] -
guess [6] - 5:24, 39:24, 40:2, 40:4,
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 155 of 166 155
40:5, 40:12, 40:14, inflation [13] - 17:19, institutions [1] - 12:12, 12:16, 22:20, James [1] - 50:3
40:17, 40:19, 41:12, 17:23, 47:25, 48:25, 24:9 25:4, 30:2, 58:3, Jay [1] - 108:1
41:16, 41:18, 41:20, 118:22, 118:24, instructive [2] - 58:19, 76:16, 78:22, Jim [1] - 49:20
42:3, 42:8, 43:3, 43:8, 119:8, 119:11, 17:12, 138:12 87:12, 106:2, 106:4, joined [2] - 4:8, 4:15
43:9 119:12, 119:17, instrument [1] - 114:4, 115:14, JONAH [1] - 1:20
Indiana [1] - 1:24 120:24, 123:18, 104:3 117:12, 121:2, Jonah [1] - 4:16
indicate [3] - 37:12, 125:10 integrity [2] - 76:11, 125:23, 127:22, JOSE [2] - 1:18, 1:19
47:11, 76:19 inflationary [3] - 76:13 128:1, 128:2, 136:5, JOSHUA [2] - 8:18,
indicated [1] - 44:16 17:18, 119:14, 123:19 interchangeably [2] 136:9, 140:7, 142:13 117:1
indicates [2] - 29:17, influence [1] - 105:4 - 56:14, 56:17 Investors [2] - 64:11, Joshua [4] - 3:5,
130:5 influenced [1] - interdisciplinary [1] 105:4 8:17, 8:25, 116:20
indices [3] - 38:5, 105:14 - 10:13 investors' [1] - 22:21 José [3] - 4:16, 131:1
38:6, 38:23 information [61] - interest [4] - 18:12, invoices [1] - 31:14 Journal [3] - 10:9,
indicia [1] - 61:11 9:23, 13:6, 16:20, 38:9, 94:5, 113:8 involved [6] - 53:8, 10:12
indict [1] - 142:7 16:23, 17:25, 18:3, interested [2] - 6:1, 57:2, 57:6, 57:15, journal [1] - 10:10
indicted [2] - 129:6, 18:18, 21:14, 21:19, 56:24 104:3, 106:12 journals [1] - 10:12
129:23 26:13, 28:12, 28:15, internet [3] - 60:12, involving [1] - 79:1 Judge [1] - 63:12
indictment [19] - 34:1, 39:7, 39:9, 68:19, 111:24 irrational [2] - 78:23, judge [2] - 100:8,
15:11, 16:1, 89:2, 39:12, 39:14, 39:19, interrupt [1] - 85:9 79:4 142:19
126:4, 126:11, 128:7, 39:20, 39:21, 39:25, intervals [2] - 13:20, irregularities [1] - JUDGE [1] - 1:11
128:19, 129:21, 40:1, 40:2, 40:7, 40:9, 13:22 139:18 judicial [1] - 10:21
130:15, 130:20, 41:2, 41:3, 42:16, interviewing [1] - irrelevant [1] - July [34] - 54:6, 68:9,
134:2, 134:8, 134:11, 42:20, 47:25, 48:3, 88:22 100:10 68:15, 68:16, 69:2,
134:14, 139:1, 48:4, 53:24, 54:1, intuitively [1] - 21:3 is.. [1] - 92:1 69:8, 69:18, 69:19,
141:22, 142:1, 142:3 54:2, 54:4, 54:5, 54:8, invariant [1] - 43:4 issue [8] - 7:2, 61:13, 71:14, 71:22, 75:3,
indicts [1] - 142:6 55:19, 57:8, 62:1, invented [1] - 132:17 78:4, 116:9, 123:16, 78:9, 79:17, 80:25,
indirect [1] - 121:1 71:12, 73:20, 83:4, inventing [1] - 102:1 128:3, 135:10, 136:16 81:5, 81:22, 83:17,
individual [6] - 89:22, 90:7, 97:24, invest [4] - 73:8, issued [41] - 22:20, 83:23, 84:4, 85:3,
28:11, 28:16, 88:2, 106:9, 113:15, 103:21, 129:22 24:12, 24:20, 24:22, 86:5, 104:7, 111:21,
88:22, 105:9, 105:21 113:21, 118:20, invested [1] - 125:8 24:23, 24:25, 32:10, 112:4, 112:12,
individuals [4] - 120:13, 120:18, 32:15, 32:17, 32:22, 125:20, 129:2, 129:5,
investigate [1] -
21:15, 24:1, 24:7, 124:16, 129:8, 32:23, 32:24, 33:4, 132:17, 133:25,
103:18
105:13 130:10, 130:12, 37:7, 45:24, 45:25, 134:15, 135:25,
investigation [15] -
indulgence [6] - 131:15, 137:14, 46:2, 46:4, 46:14, 140:15, 141:7
61:8, 102:22, 103:2,
45:22, 63:20, 82:3, 138:13, 142:3 46:15, 46:18, 64:1,
103:8, 103:20, jumped [1] - 21:7
84:6, 116:1, 123:21 informed [1] - 9:24 76:3, 82:11, 82:12,
109:18, 110:7, jumping [1] - 43:22
industries [1] - 41:8 initial [5] - 17:22, 82:14, 82:18, 82:20,
110:10, 117:17, June [4] - 100:25,
industry [33] - 18:21, 19:14, 81:21, 82:25, 119:7, 125:6, 125:14, 82:22, 82:25, 90:1, 105:2, 107:23, 125:19
18:22, 19:18, 27:17, 135:18 125:15, 128:3, 137:22 94:19, 95:11, 96:5, jury [1] - 129:13
28:2, 28:15, 28:17, initiate [2] - 62:4, investigator [1] - 101:16, 103:25, Justice [6] - 12:9,
29:14, 29:19, 37:11, 65:9 50:12 132:4, 135:24, 122:11, 122:12,
37:13, 37:24, 38:1, initiated [1] - 89:16 investigators [1] - 140:13, 141:2, 141:19 122:13, 126:9, 135:16
38:3, 38:11, 40:17, injected [1] - 7:2 125:21 issuer [1] - 61:9 justice [1] - 49:17
41:1, 41:3, 41:10, injured [1] - 46:24 investigators' [1] - issuers [1] - 36:8 JUSTICE [1] - 1:15
41:17, 41:19, 42:4, inordinate [2] - 109:5 issues [6] - 7:21,
43:12, 43:15, 45:8, 127:2, 127:6 76:22, 88:19, 109:4,
51:10, 51:16, 56:15, insider [6] - 9:25,
investing [1] - 57:6
122:13, 122:17
K
investment [3] -
68:21, 78:13, 120:1 120:8, 120:14, 115:15, 115:19, issuing [1] - 22:4
industry-specific 120:17, 120:19, 121:9 130:13 items [2] - 108:7, keep [3] - 65:7,
[10] - 27:17, 28:2, insiders [4] - 120:12, investments [1] - 127:24 88:18, 91:1
29:14, 29:19, 37:11, 120:21, 121:2, 136:3 73:22 ix) [1] - 136:23 Keith [7] - 4:3, 23:7,
37:13, 41:17, 42:4, instance [2] - 131:8, investor [19] - 19:1, 49:19, 85:17, 92:9,
45:8, 120:1 137:18 19:6, 32:19, 45:8, J 92:12, 102:8
industry-wide [2] - instances [1] - 97:7 64:1, 64:8, 64:11, KEITH [1] - 1:6
18:22, 37:24 instead [1] - 66:21 65:23, 75:13, 78:14, Kevin [1] - 4:12
industrywide [5] - institute [1] - 109:6 J.D [3] - 9:4, 9:8, KEVIN [1] - 1:17
86:23, 105:3, 105:4,
18:17, 20:4, 26:15, institutes [1] - 10:5 key [4] - 16:19,
111:10, 115:8,
26:17, 42:19 113:11 J.D.s [1] - 10:4 21:12, 53:9, 75:15
115:18, 131:14,
inflated [3] - 22:20, institutional [1] - JAMES [1] - 49:22 kind [40] - 6:20, 11:8,
140:14, 141:6
46:25, 126:3 34:2 james [1] - 3:8 14:16, 17:15, 19:8,
investors [25] -
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 156 of 166 156
20:21, 25:9, 25:10, 137:15 18:19, 20:12, 26:4, 22:24, 23:6, 23:11, manipulative [1] -
34:22, 36:4, 47:9, ledger [1] - 32:7 26:6, 26:11, 26:16, 25:20, 26:10, 29:22, 94:6
47:21, 56:12, 56:14, left [2] - 40:10, 42:22 29:21, 32:3, 38:4, 29:24, 30:1, 47:2, manner [1] - 94:7
58:4, 58:7, 60:3, legacy [1] - 56:12 40:16, 42:5, 42:13, 48:7, 53:11, 74:11, March [25] - 1:6,
60:12, 62:3, 67:18, legal [7] - 51:5, 48:20, 119:25, 120:7, 74:16, 80:13, 80:15, 14:21, 14:25, 58:15,
70:8, 72:8, 73:15, 118:6, 121:15, 122:1, 120:10, 120:21, 81:17, 81:20, 81:23, 70:7, 70:18, 75:6,
76:7, 79:9, 83:13, 122:3, 127:15, 127:16 120:25 82:2, 84:8, 84:17, 80:19, 83:16, 86:5,
87:16, 107:12, Legal [1] - 10:13 litigation [8] - 30:23, 84:21, 84:23, 84:24, 90:1, 90:3, 94:23,
111:11, 111:24, lent [1] - 24:9 53:16, 53:20, 121:16, 85:1, 87:13, 87:19, 95:11, 95:12, 96:5,
116:12, 126:10, less [7] - 25:17, 34:1, 121:17, 121:19, 116:10, 117:22, 96:17, 96:22, 97:8,
126:16, 127:8, 128:2, 37:3, 41:8, 101:16, 121:20, 133:24 118:14, 119:1, 119:4, 129:20, 132:3,
130:2, 132:11, 133:2, 138:13 Litigation [1] - 11:1 119:24, 120:5, 133:24, 137:15,
133:4 letter [10] - 105:5, live [1] - 65:19 131:10, 131:18, 144:10
kits [1] - 101:17 106:21, 107:6, 107:7, lived [1] - 79:5 132:15, 133:14, marked [1] - 99:24
knowing [1] - 67:7 107:23, 108:1, 109:1, LLC [4] - 11:10, 133:16, 140:8, 140:9, Market [2] - 65:18,
knowledge [3] - 109:17, 110:16, 11:14, 52:20, 52:21 140:10, 142:15 127:22
92:16, 92:18, 136:4 110:18 LLP [1] - 1:21 losses [3] - 12:12, market [126] - 9:25,
known [8] - 50:12, letters [3] - 125:18, logic [1] - 40:6 22:22, 141:10 13:15, 14:5, 15:23,
50:13, 55:15, 58:16, 125:21, 128:2 logical [1] - 133:4 lost [1] - 87:10 16:2, 16:23, 18:17,
68:19, 71:11, 113:16, level [4] - 15:16, look [36] - 15:25, low [3] - 54:21, 56:3 18:20, 18:22, 19:7,
137:10 122:16, 122:18, 19:11, 20:13, 26:4, low-market [1] - 19:16, 19:17, 20:3,
knows [3] - 113:19, 122:20 26:6, 27:15, 29:8, 54:21 20:12, 21:1, 21:4,
120:17, 125:12 levels [1] - 125:22 32:25, 36:21, 42:2, low-priced [1] - 56:3 21:6, 21:15, 25:20,
Lexis [2] - 137:19, 54:7, 69:3, 78:13, low-value [1] - 54:21 25:22, 26:15, 26:17,
L 139:15 79:11, 81:7, 94:2, lower [4] - 34:1, 27:24, 34:18, 36:14,
Lexus [1] - 135:5 94:3, 95:1, 96:3, 55:12, 57:8, 57:10 36:19, 38:9, 42:19,
license [1] - 51:14 98:13, 99:11, 102:12, lower-cap [1] - 55:12 45:3, 45:6, 45:14,
label [2] - 117:10, 48:1, 53:5, 54:13,
licenses [5] - 51:7, 105:9, 105:15, lunch [1] - 85:7
117:12 54:14, 54:18, 54:20,
51:10, 51:12, 51:20, 107:15, 108:25, luncheon [1] - 85:13
language [3] - 44:8, 54:21, 55:4, 55:6,
51:22 112:19, 112:20, Lundstrom [6] -
123:8, 139:8 55:10, 55:25, 57:16,
lied [1] - 101:25 113:5, 115:1, 115:20, 135:4, 135:21, 138:6,
large [4] - 34:13, 118:11, 118:19, 57:23, 58:12, 58:14,
lies [2] - 16:13, 138:11, 138:14,
57:21, 120:21, 127:3 121:7, 134:13 58:21, 60:11, 60:17,
131:17 138:15
large-capitalization looked [6] - 13:22, 65:7, 65:15, 66:15,
lifted [1] - 65:12 lying [1] - 114:4
[1] - 57:21 73:2, 74:4, 74:5,
lights [1] - 141:4 19:2, 29:9, 48:12,
largest [3] - 34:10, 93:25, 117:25 75:19, 76:6, 76:11,
72:7, 73:12
likelier [1] - 133:12 M
looking [21] - 16:3, 76:12, 76:15, 76:20,
likewise [1] - 135:23
last [6] - 50:15, 70:7, 16:11, 17:10, 18:4, 76:23, 77:20, 79:11,
81:6, 91:3, 135:24, limitations [1] -
21:8, 21:17, 27:21, M-I-T-T-S [1] - 8:25 79:19, 81:8, 84:22,
141:12 126:16
36:2, 43:24, 43:25, ma'am [1] - 30:10 84:23, 84:25, 86:14,
late [3] - 4:22, 18:3, line [1] - 100:9
47:21, 60:10, 78:10, Machine [4] - 68:19, 86:15, 86:20, 86:21,
50:11 lines [5] - 42:21,
79:6, 82:23, 83:3, 69:8, 79:23, 112:7 86:25, 88:20, 88:25,
later-in-time [1] - 42:25, 43:22, 43:24,
88:15, 91:2, 91:8, magnitude [3] - 89:5, 89:11, 103:11,
135:19 72:13
134:2 25:20, 37:3, 43:7 103:16, 105:10,
latter [1] - 22:15 link [2] - 55:14, 57:1
looks [11] - 19:21, Main [1] - 64:10 105:12, 105:18,
law [10] - 9:15, 10:2, liquid [1] - 34:1
34:9, 35:23, 42:11, main [3] - 52:14, 105:24, 106:10,
10:11, 16:12, 31:21, liquidity [1] - 57:10
47:10, 47:14, 64:4, 76:13, 100:12 107:9, 110:2, 111:5,
52:25, 134:25, 139:13 LISA [2] - 2:1, 144:3
121:6, 121:7, 134:6, maintain [1] - 119:11 113:16, 113:18,
Law [3] - 9:4, 9:13, Lisa [1] - 144:12 117:15, 118:19,
134:8 maintained [1] -
10:12 list [3] - 35:13, 119:10, 119:16,
LORI [1] - 1:18 118:24
laws [2] - 51:2, 52:3 108:19, 113:3 120:1, 120:8, 120:14,
Lori [2] - 4:16, 30:11 major [3] - 48:9,
lawyer [1] - 16:12 listed [8] - 29:3, 120:15, 120:19,
lose [5] - 66:17, 54:15, 86:12
lead [1] - 132:14 33:11, 34:2, 34:7, 120:20, 121:3, 121:6,
66:24, 72:24, 73:22, maker [1] - 55:10
leading [1] - 10:10 54:15, 64:13, 64:15, 123:9, 123:18,
114:15 makers [1] - 55:6
115:11 125:15, 125:16,
learn [4] - 87:25, loss [61] - 5:5, 5:15, manager [1] - 7:20
88:4, 141:17, 142:2 listen [1] - 8:5 126:10, 128:10,
6:1, 6:4, 7:9, 12:16, managing [2] -
least [11] - 17:11, listing [3] - 54:17, 128:12, 129:4, 129:7,
13:10, 13:18, 14:5, 50:15, 52:20
17:19, 53:9, 73:16, 65:7, 66:6 129:16, 130:5, 130:7,
14:18, 16:5, 19:1, mandate [1] - 105:15
73:20, 119:24, 128:3, lists [1] - 108:7 130:9, 130:18,
19:6, 20:23, 21:2, manipulation [1] -
131:12, 134:3, 134:6, literally [1] - 56:13 132:13, 132:18,
21:21, 22:11, 22:14, 10:1
literature [18] -
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 157 of 166 157
136:21, 137:9, 43:4, 56:15, 121:4, mid [2] - 57:20, 86:7, 131:10 88:11, 90:19, 90:21,
137:10, 138:14 123:18, 137:6 57:21 moment [1] - 134:19 91:5, 91:10, 91:18,
market's [1] - 121:8 meaningful [3] - mid-cap [2] - 57:20, moments [1] - 26:2 92:3, 92:4, 92:6, 92:8,
market-specific [1] - 28:25, 34:6, 43:23 57:21 money [12] - 24:10, 95:3, 95:6, 95:9,
120:1 means [5] - 24:15, Middle [1] - 52:15 58:21, 66:18, 66:24, 95:10, 96:3, 96:4,
market-wide [4] - 41:7, 43:18, 65:19, might [18] - 7:4, 72:25, 73:18, 73:22, 97:6, 99:23, 100:5,
18:17, 18:22, 42:19, 137:9 17:15, 19:12, 21:17, 74:7, 87:10, 87:12, 100:8, 100:17,
107:9 measure [18] - 14:4, 24:10, 24:11, 30:24, 114:15, 132:19 102:17, 104:9,
marketplace [2] - 18:5, 18:25, 21:2, 31:23, 37:5, 40:3, months [4] - 25:7, 104:10, 104:13,
89:23, 137:15 22:13, 23:18, 26:10, 43:9, 59:8, 76:2, 79:9, 78:6, 139:1 104:24, 105:1,
Markets [27] - 13:3, 40:17, 41:17, 41:25, 79:11, 120:16, moreover [1] - 106:23, 107:3, 113:2,
40:23, 41:1, 41:4, 42:4, 48:3, 119:23, 124:13, 129:23 133:22 115:6, 115:7, 115:23,
41:12, 41:15, 55:17, 126:19, 128:25, million [20] - 22:8, morning [9] - 4:6, 115:25, 116:4, 116:5,
55:20, 56:7, 56:25, 137:23, 140:8, 142:5 22:9, 22:16, 22:22, 4:11, 4:12, 4:20, 4:21, 116:11, 116:17,
61:25, 65:6, 65:13, measured [4] - 28:4, 23:1, 23:3, 23:25, 4:24, 8:19, 8:20, 30:9 116:19, 116:25,
68:22, 80:2, 89:6, 29:9, 38:9, 39:23 25:16, 36:15, 36:20, most [2] - 52:4, 117:3, 118:5, 118:9,
93:23, 110:17, 112:9, measurement [1] - 36:24, 36:25, 37:3, 126:23 121:10, 121:12,
112:22, 113:12, 23:6 37:4, 37:7, 55:25 motion [2] - 10:24, 121:14, 123:21,
114:8, 114:14, 115:3, measurements [1] - mind [1] - 76:22 11:3 124:6, 124:10,
115:8, 115:10, 126:15 28:25 minimum [2] - 36:14, move [13] - 12:1, 124:12, 124:21,
markets [8] - 9:18, measures [1] - 9:20 37:4 27:7, 60:18, 62:17, 124:25, 126:14,
9:24, 31:17, 51:6, measuring [3] - 18:2, minute [1] - 124:7 63:12, 64:18, 69:21, 126:23, 127:21,
54:22, 55:7, 58:17, 48:24, 131:10 minutes [5] - 115:5, 70:24, 77:11, 97:20, 128:21, 130:4,
115:11 medications [1] - 124:1, 124:17, 124:19 102:25, 104:24, 130:23, 130:25,
Maryland [1] - 50:8 4:23 mirrored [1] - 142:1 104:25 131:1, 132:2, 132:12,
massive [1] - 58:18 meet [1] - 54:17 misconduct [1] - moves [1] - 43:7 132:23, 133:6, 134:7,
material [3] - 48:23, member [3] - 52:21, 105:6 MR [178] - 4:6, 4:12, 134:9, 136:13,
103:22, 103:23 93:17, 98:2 misleading [12] - 5:4, 6:6, 6:11, 7:11, 136:25, 137:4, 138:3,
materials [1] - 15:10 meme [1] - 78:25 94:19, 95:17, 95:18, 7:17, 7:24, 8:4, 8:13, 138:19, 141:10,
math [5] - 21:22, memoranda [1] - 96:9, 96:11, 97:1, 8:16, 8:22, 9:11, 142:19, 142:22, 143:5
81:18, 81:19, 81:24, 143:1 97:13, 102:22, 11:15, 11:17, 11:20, MRM [12] - 12:15,
85:1 memory [1] - 60:1 127:25, 128:4, 12:1, 12:7, 14:11, 13:2, 14:6, 14:7,
mathematical [4] - 129:19, 134:16 14:13, 15:15, 18:10, 20:22, 21:1, 22:25,
mentioned [10] -
13:17, 14:17, 19:5, miss [1] - 75:13 25:25, 26:18, 26:20, 25:14, 29:25, 48:6,
30:15, 33:15, 40:21,
117:20 missing [1] - 47:21 27:7, 27:13, 30:3, 117:20, 131:10
46:7, 52:18, 57:23,
MATHEW [1] - 1:14 mission [1] - 76:12 35:20, 49:5, 49:11, MS [14] - 11:22, 12:3,
73:9, 77:5, 81:15,
matter [14] - 11:1, 138:18 49:14, 49:19, 50:1, 27:9, 30:8, 30:11,
misstatement [4] -
12:9, 12:17, 12:21, 53:14, 53:17, 53:21, 30:14, 35:15, 35:18,
merely [2] - 113:21, 17:22, 48:23, 119:14,
17:7, 31:15, 47:19, 53:22, 56:19, 58:22, 35:21, 35:22, 45:22,
139:18 123:10
47:24, 48:12, 87:17, 59:3, 59:6, 59:10, 45:23, 47:4, 49:3
merger [2] - 30:22, misstatements [3] -
104:7, 105:25, 122:5, 59:13, 59:17, 59:20, multiplication [1] -
30:23 121:4, 123:19, 123:20
136:4 60:7, 60:18, 60:20, 21:22
message [3] - 74:8, mistakenly [1] -
matters [4] - 52:16, 60:24, 62:5, 62:6, multiplied [1] - 14:3
126:5, 129:9 118:22
53:16, 53:20, 87:16 62:17, 62:19, 62:24, multiply [3] - 13:24,
messages [1] - MITTS [2] - 8:18,
Matthew [1] - 4:6 63:12, 63:14, 63:18, 84:11, 84:13
105:3 117:1
McFADDEN [1] - 63:23, 64:18, 64:20, must [3] - 33:10,
method [15] - 12:13, Mitts [29] - 3:5, 8:5,
1:10 64:24, 67:17, 67:22, 36:14, 140:7
13:17, 14:7, 19:13, 8:17, 8:25, 9:1, 10:3,
mean [29] - 6:3, 6:8, 21:2, 74:18, 86:7, 11:6, 11:18, 12:2, 68:3, 68:14, 69:5,
6:12, 6:14, 6:15, 8:10, 86:10, 95:15, 96:8, 12:4, 12:8, 14:14, 69:6, 69:21, 69:23, N
17:13, 20:21, 21:12, 131:9, 131:10, 16:4, 23:23, 26:21, 70:2, 70:3, 70:8,
23:25, 24:1, 27:19, 131:12, 132:8, 142:14 27:14, 30:9, 47:9, 70:10, 70:24, 71:1,
name [3] - 8:23,
47:10, 48:9, 54:7, methodology [5] - 79:9, 86:10, 116:16, 71:5, 71:7, 71:23,
30:10, 50:2
57:7, 57:22, 68:17, 10:14, 13:8, 14:8, 116:20, 117:4, 72:1, 73:23, 74:1,
narrow [1] - 6:9
80:17, 81:3, 89:1, 38:22, 42:6 117:19, 118:10, 74:22, 74:24, 77:3,
NASA [1] - 5:19
99:21, 111:24, metric [1] - 41:9 121:15, 123:23, 77:4, 77:11, 77:13,
79:14, 80:7, 80:10, NASD [1] - 50:13
112:12, 118:3, MICHELLE [1] - 1:23 133:20, 136:3
81:14, 82:3, 82:5, NASDAQ [30] -
119:13, 121:17, Michelle [1] - 4:17 model [5] - 19:20,
82:6, 83:19, 84:6, 26:23, 28:5, 28:6,
122:3, 137:8 micro [1] - 34:14 20:16, 23:21, 58:2,
84:7, 85:4, 85:23, 29:3, 29:11, 29:16,
meaning [9] - 25:15, microcap [3] - 55:12, 80:12
86:1, 88:7, 88:9, 33:6, 33:8, 33:10,
28:23, 40:13, 42:15, 56:3, 56:11 modified [3] - 12:13, 33:11, 33:17, 34:7,
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 158 of 166 158
34:10, 34:13, 34:15, 113:9 Official [1] - 2:1 84:24, 103:16
O
34:19, 34:22, 36:6, newsletter [1] - 60:1 often [2] - 96:7, opinions [1] - 54:8
36:8, 36:10, 36:12, next [4] - 73:24, 133:7 opportunities [3] -
36:13, 37:16, 37:18, 98:21, 113:4, 113:5 oath [3] - 30:20, old [1] - 59:2 58:20, 60:11, 79:6
37:22, 40:19, 41:12, NFA [1] - 52:6 85:20, 116:22 old-school [1] - 59:2 opportunity [2] -
42:8, 43:3, 54:16 Nick [1] - 4:18 objection [32] - older [1] - 32:12 99:12, 129:10
NASDAQ-listed [1] - NICK [1] - 1:20 11:22, 11:23, 12:3, oldest [3] - 68:20, opposed [4] - 48:13,
29:3 nine [1] - 25:7 12:4, 27:9, 27:10, 69:2, 80:5 55:7, 80:15, 86:16
NASDAQ-traded [1] none [2] - 138:23, 53:17, 53:18, 60:7, omit [2] - 95:17, 96:9 orally [1] - 124:21
- 28:6 138:24 60:20, 60:21, 62:19, omitted [1] - 140:10 order [27] - 21:10,
Nationals [1] - 7:20 nonetheless [1] - 62:20, 63:14, 63:15, once [9] - 29:5, 37:2, 41:16, 44:7,
nature [10] - 6:13, 133:1 64:20, 64:21, 69:23, 30:18, 52:15, 66:19, 55:2, 55:3, 56:25,
9:23, 21:14, 34:21, Northern [1] - 11:2 69:24, 71:1, 71:2, 71:18, 72:8, 76:7, 61:21, 63:1, 63:9,
57:5, 72:19, 73:17, 77:13, 77:14, 88:7, 128:6, 140:19 66:14, 66:20, 72:25,
Northwest [5] - 1:16,
98:24, 114:9, 125:14 92:4, 95:3, 95:6, 73:1, 74:6, 75:21,
1:21, 1:24, 2:3, one [66] - 5:13, 6:13,
navigated [1] - 100:9, 100:16, 104:9, 94:4, 95:18, 96:10,
144:14 7:23, 9:10, 12:12,
140:19 106:23, 118:5 97:11, 98:15, 119:22,
notable [1] - 76:6 18:18, 19:20, 21:8,
NBI [9] - 29:2, 29:5, obligation [1] - 32:21 21:10, 22:13, 25:19, 121:21, 127:10,
note [14] - 14:9,
37:19, 37:24, 38:1, obligations [3] - 25:21, 28:9, 30:21, 128:14, 138:24,
32:21, 61:24, 74:17,
38:12, 38:15, 40:11, 24:11, 24:25, 46:17 31:22, 34:9, 36:9, 140:24
80:17, 81:19, 82:1,
42:23 84:10, 117:20, oblique [1] - 121:1 36:10, 37:21, 38:8, ordered [1] - 98:22
Nebraska [1] - 135:4 117:24, 119:19, observe [1] - 72:2 38:11, 38:14, 38:23, orders [4] - 55:8,
necessarily [6] - 122:24, 123:1 obstruct [1] - 109:18 39:4, 43:12, 43:22, 58:10, 137:16, 140:22
16:12, 18:2, 79:8, notes [6] - 32:14, obstructed [1] - 43:25, 44:1, 44:13, organizing [1] - 41:7
87:4, 117:12, 132:12 46:10, 46:16, 83:8, 103:20 46:19, 53:9, 54:4, originally [1] - 27:2
necessary [3] - 94:5, 123:4, 144:5 obstructing [5] - 59:11, 63:19, 64:11, OTC [52] - 13:3, 13:5,
95:17, 96:10 nothing [5] - 79:12, 103:2, 103:7, 110:7, 67:1, 68:22, 68:23, 26:11, 26:16, 29:1,
need [8] - 20:2, 113:24, 123:22, 110:10, 110:11 70:16, 71:13, 72:22, 32:3, 33:20, 33:25,
21:10, 28:18, 95:1, 141:22, 142:9 obstruction [9] - 80:5, 83:14, 112:23, 34:6, 34:15, 40:22,
102:16, 118:19, notice [10] - 5:25, 117:16, 119:7, 125:6, 113:5, 115:10, 41:1, 41:4, 41:12,
128:14, 133:22 73:21, 105:17, 125:9, 134:18, 115:18, 115:22, 41:14, 41:21, 41:23,
needed [4] - 13:1, 108:18, 110:2, 134:23, 136:8, 138:2 117:24, 118:19, 51:4, 54:22, 55:4,
13:21, 13:22, 13:24 111:17, 113:17, obstructive [3] - 118:21, 119:3, 55:14, 55:17, 55:20,
needs [5] - 28:23, 113:18, 117:12, 128:1, 128:24, 130:11 119:24, 124:7, 56:7, 56:8, 56:25,
41:18, 119:3, 139:10 128:11 obtain [2] - 14:4, 126:21, 128:3, 61:25, 65:6, 65:12,
negative [2] - 38:3, noticed [1] - 8:8 51:22 128:23, 135:2, 66:14, 68:22, 72:10,
40:10 notwithstanding [2] obtained [1] - 51:9 135:16, 138:14, 72:20, 73:12, 74:4,
neon [1] - 141:4 - 132:20, 135:18 obvious [1] - 16:21 140:12, 141:12, 80:2, 89:6, 93:23,
nets [1] - 28:15 November [3] - 6:24, obviously [2] - 5:12, 142:12, 142:19 105:17, 110:17,
never [7] - 7:1, 32:1, 91:3, 134:12 17:14 one-to-one [1] - 112:9, 112:22,
35:24, 36:3, 49:17, number [33] - 4:15, occur [2] - 37:25, 43:12 113:12, 114:8,
141:19, 141:20 6:13, 7:19, 13:12, 38:2 ones [2] - 65:21, 114:14, 115:3, 115:8,
new [5] - 45:8, 46:11, 13:25, 14:1, 14:4, occurred [2] - 17:10, 70:16 115:10, 117:10,
46:13, 83:9, 83:11 22:4, 22:17, 22:23, 86:4 online [9] - 65:24, 126:15, 126:16,
New [6] - 1:16, 23:1, 23:3, 24:18, odds [1] - 81:11 66:10, 66:12, 69:3, 127:22
10:24, 51:18, 54:16, 24:22, 25:3, 25:15, OF [5] - 1:1, 1:3, 72:7, 72:16, 72:17, otcmarkets.com [8]
139:15, 139:16 31:12, 32:7, 37:2, 1:10, 1:15, 1:23 111:13, 140:25 - 55:14, 66:5, 68:6,
newly [15] - 22:20, 51:9, 51:19, 52:16, offense [1] - 6:14 onset [3] - 58:16, 93:20, 97:17, 107:13,
24:23, 32:10, 32:15, 55:24, 55:25, 57:15, offer [3] - 8:6, 11:20, 75:6, 79:7 140:16, 140:19
32:17, 32:22, 32:23, 64:14, 108:5, 117:22, 53:14 onwards [1] - 80:22 otherwise [4] -
33:4, 45:24, 46:4, 118:14, 125:4, 127:3, offered [1] - 30:16 OpenAI [2] - 132:17, 58:21, 105:14,
46:15, 46:18, 82:11, 127:7, 127:10 offering [1] - 82:25 132:22 118:21, 132:10
82:18 numbers [8] - 15:4, offers [1] - 11:9 opening [2] - 99:25, otherwise-falling [1]
newness [1] - 127:5 22:10, 22:24, 25:18, OFFICE [1] - 1:23 111:1 - 58:21
news [17] - 18:22, 34:17, 36:21, 36:23, Office [1] - 4:18 opining [1] - 103:10 ought [2] - 140:21,
28:17, 29:19, 37:24, 84:4 officer [7] - 50:18, opinion [15] - 13:10, 142:14
38:1, 38:3, 38:11, numerical [1] - 13:10 50:21, 51:18, 72:9, 13:11, 22:12, 23:5, ourselves [1] - 73:19
38:13, 38:19, 39:5, numerous [1] - 73:11, 76:8, 92:12 29:22, 29:25, 37:9, outcome [1] - 138:8
40:17, 41:17, 41:25, 109:2 officers [1] - 117:13 44:25, 74:11, 75:12, outline [1] - 109:2
42:4, 62:3, 88:16, official [1] - 144:12 75:17, 81:17, 84:21, outright [1] - 125:14
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 159 of 166 159
outside [2] - 31:21, paragraphs [1] - percent [5] - 43:8, persuasive [1] - 41:7 PNA [1] - 52:20
31:25 94:3 43:9, 72:5, 72:6, perverse [1] - 142:7 point [20] - 7:5, 16:7,
outsiders [1] - 120:9 paralegals [1] - 4:8 72:10 Peterson [1] - 4:17 17:18, 24:8, 25:13,
outstanding [21] - parameters [1] - percentage [2] - PETERSON [1] - 25:17, 25:22, 49:19,
13:6, 13:25, 14:2, 119:24 43:3, 43:4 1:23 75:9, 75:14, 83:2,
14:4, 21:24, 22:5, part [15] - 13:2, 20:7, percentages [1] - petition [15] - 90:3, 110:18, 120:22,
22:8, 22:9, 23:24, 21:22, 23:9, 44:24, 42:24 90:10, 90:13, 90:16, 128:4, 135:7, 136:2,
24:14, 24:21, 24:22, 50:15, 52:14, 52:24, perfectly [1] - 25:21 90:22, 91:20, 92:14, 138:5, 141:1, 141:12,
25:3, 32:6, 82:8, 72:4, 78:10, 96:15, performed [2] - 98:9, 98:10, 98:19, 142:20
82:23, 83:2, 84:12, 99:9, 114:16, 121:15, 31:13, 41:12 99:2, 100:1, 102:9, pointed [1] - 132:21
84:14, 105:19 141:20 perhaps [1] - 6:7 110:20, 110:23 points [7] - 13:5,
over-the-counter [8] participant [1] - period [67] - 14:20, Petitioner [1] - 92:9 13:7, 22:6, 28:9,
- 28:20, 28:21, 33:25, 126:10 14:22, 15:1, 15:6, Petitioner's [1] - 111:4, 125:3, 140:4
54:10, 54:12, 54:14, particular [17] - 9:16, 15:9, 15:17, 16:11, 99:25 policies [4] - 66:15,
54:23, 56:20 13:20, 18:8, 28:8, 17:18, 17:19, 17:22, Ph.D [4] - 3:5, 8:18, 73:13, 78:2, 105:16
overall [3] - 16:25, 32:25, 34:12, 38:24, 18:7, 18:13, 18:15, 9:4, 9:8 pops [1] - 74:7
40:4, 131:18 43:21, 71:13, 87:17, 18:16, 18:23, 22:3, Ph.D.s [1] - 10:4 population [1] -
overcompensates 88:15, 113:13, 114:5, 22:7, 22:8, 22:19, pharmaceutical [4] - 34:10
[1] - 130:1 118:18, 119:23, 22:21, 23:2, 25:6, 35:2, 38:18, 38:23, portion [1] - 73:12
overruled [5] - 60:8, 127:9, 141:17 25:15, 25:17, 36:18, 39:5 position [8] - 7:17,
88:10, 92:5, 95:5, particularly [6] - 48:10, 48:14, 48:18, pharmaceutical- 52:19, 128:18, 133:4,
106:25 34:19, 41:9, 103:22, 48:19, 74:20, 74:21, specific [1] - 39:5 133:23, 134:21,
overruling [2] - 95:7, 107:17, 110:11, 74:25, 75:2, 78:3, phase [1] - 19:14 136:7, 139:9
100:16 115:13 78:11, 78:16, 79:5, phrases [1] - 137:5 positions [1] - 50:14
overturn [2] - parties [11] - 120:9, 80:18, 80:25, 81:3, physical [2] - 70:17, positive [2] - 37:25,
121:23, 121:25 120:16, 131:4, 131:7, 81:21, 81:25, 82:24, 100:19 40:8
overwhelming [1] - 131:8, 131:11, 83:16, 83:23, 86:4, pick [4] - 62:1, 66:10, possible [7] - 5:10,
137:12 131:16, 131:23, 106:12, 128:23, 79:3, 120:2 7:6, 45:17, 45:19,
own [8] - 25:1, 27:4, 132:3, 136:16, 142:14 128:25, 131:5, picked [3] - 61:22, 118:25, 123:13,
28:11, 52:21, 58:3, partner [1] - 52:20 131:24, 133:8, 74:4, 114:8 123:15
58:8, 118:10, 122:5 party [3] - 17:9, 133:12, 133:24, piece [1] - 79:15 post [10] - 84:1, 84:2,
30:23, 121:7 134:17, 134:23, pile [1] - 72:8 84:3, 130:1, 131:13,
P patterns [1] - 60:4 135:17, 135:24, pink [4] - 51:4, 131:14, 133:8, 136:1,
paying [1] - 32:19 136:17, 136:21, 56:11, 56:13, 72:10 137:17, 138:2
peer [8] - 10:10, 137:17, 142:12 post-December [1] -
pivot [2] - 131:22,
PAGE [1] - 3:9 10:11, 26:4, 26:6, periods [4] - 83:18, 136:15 130:1
Page [12] - 64:14, 29:21, 38:4, 40:18, 84:11, 133:11, 134:15
place [8] - 60:3, 60:4, post-disclosure [4] -
71:6, 83:15, 83:21, 119:25 perjuriously [1] - 65:3, 67:10, 68:7, 131:13, 131:14,
92:6, 94:3, 100:4, peer-reviewed [7] - 127:15 74:3, 140:23, 140:24 133:8, 137:17
101:8, 104:24, 10:10, 10:11, 26:4, Perkins [5] - 76:25, plain [1] - 137:6 post-Perkins [1] -
104:25, 115:1 26:6, 29:21, 38:4, 77:5, 84:2, 98:2, 98:4
Plaintiff [1] - 1:4 84:2
page [7] - 64:16, 119:25 permission [1] -
Plan [1] - 124:10 post-SEC [1] - 138:2
68:6, 91:3, 98:21, pending [1] - 52:16 67:23
plan [1] - 85:11 post-trading [1] -
113:4, 113:5, 140:19 perpetuate [1] -
penny [25] - 26:11, platform [5] - 41:5, 84:1
pages [2] - 90:24, 26:16, 32:4, 36:11, 120:24
55:20, 62:4, 65:10, posted [3] - 97:17,
91:5 42:14, 42:16, 42:17, perpetuation [1] -
67:21 106:20, 136:8
paid [4] - 12:17, 54:9, 55:22, 55:23, 128:24
plausible [1] - postings [1] - 97:19
24:24, 31:7, 131:15 56:4, 56:11, 56:15, persistent [1] -
118:17 potential [16] -
pandemic [4] - 56:21, 56:22, 57:3, 125:20
playing [1] - 6:9 53:11, 61:11, 64:12,
58:16, 75:7, 79:7, 57:6, 57:7, 57:17, person [3] - 7:23,
plays [1] - 125:9 75:21, 76:14, 77:20,
127:5 57:23, 60:3, 60:15, 24:16, 105:22
plea [3] - 103:4, 78:14, 79:6, 81:8,
Panikar [3] - 4:16, 65:24, 103:25, 127:23 personal [2] - 74:6,
104:21, 110:8 86:19, 86:23, 101:14,
71:23, 73:23 people [13] - 19:11, 92:16
pleaded [7] - 87:3, 108:11, 111:4,
PANIKAR [1] - 1:20 56:2, 56:3, 56:4, personally [1] - 41:6
87:5, 87:23, 103:1, 111:16, 120:23
paper [2] - 35:19, 56:16, 59:25, 60:14, perspective [7] -
103:7, 109:18, 110:6 potentially [4] - 5:16,
56:14 60:16, 79:4, 79:6, 7:12, 7:14, 66:16,
pleadings [1] - 54:7 16:20, 38:19, 43:13
Paragraph [8] - 71:6, 107:8, 122:1, 135:11 75:1, 77:1, 78:14,
pled [4] - 109:21, power [2] - 71:9,
94:3, 95:9, 96:3, Peppel [1] - 137:18 88:19
110:9, 125:5, 127:17 142:10
96:17, 96:22, 97:4, per [5] - 7:23, 14:23, persuade [1] -
plotted [1] - 42:21 practical [1] - 78:13
102:12 15:2, 15:4, 36:6 121:25
plotting [1] - 26:21 practice [1] - 87:15
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 160 of 166 160
practitioner [2] - previewed [1] - principles [2] - 19:9, 95:12 purchase [2] - 25:13,
109:24, 111:3 23:10 119:19 promote [1] - 129:8 44:14
pre [1] - 47:10 previous [1] - 111:6 printout [1] - 59:24 promoted [1] - purchased [6] - 24:3,
pre-fraud [1] - 47:10 PREVIOUSLY [1] - private [1] - 105:3 125:24 24:6, 24:7, 24:9,
preceding [3] - 117:1 probable [1] - 129:13 proof [1] - 112:2 24:15, 32:4
18:15, 18:23, 23:20 previously [9] - problem [2] - 8:10, property [1] - 108:12 purchaser [1] - 66:4
precise [2] - 90:15, 10:15, 14:20, 27:23, 61:9 proposed [2] - 21:8, purchasers [1] -
136:19 30:15, 42:14, 50:13, problematic [2] - 101:17 25:2
precisely [1] - 38:24 94:13, 118:7, 130:14 41:15, 76:15 proposition [2] - purported [1] - 109:5
preexisting [2] - price [95] - 13:2, procedural [1] - 135:2, 137:9 purpose [2] - 39:2,
119:11, 119:12 13:4, 13:13, 13:25, 122:6 propositions [1] - 67:8
preference [1] - 8:9 14:3, 14:19, 14:23, procedure [1] - 138:4 purposes [4] - 27:4,
preferenced [1] - 15:1, 17:20, 17:23, 122:5 protect [1] - 76:11 45:15, 76:13, 104:6
32:11 18:17, 18:20, 19:13, procedures [5] - protection [1] - pursuing [1] - 6:16
preferred [16] - 19:16, 19:21, 19:24, 66:12, 66:16, 73:14, 76:12 push [1] - 85:10
32:13, 32:20, 46:1, 20:3, 20:16, 20:25, 78:2, 105:16 protocols [4] - pushing [2] - 126:7,
46:12, 46:13, 46:16, 21:5, 21:19, 23:19, proceed [5] - 5:13, 64:25, 65:3, 65:13, 128:1
46:19, 82:9, 82:13, 23:22, 25:7, 25:13, 20:2, 49:15, 67:16, 128:16 put [23] - 14:11,
82:20, 82:21, 83:1, 26:14, 26:22, 26:23, 81:13 prove [2] - 112:11, 26:18, 42:25, 47:8,
83:10, 83:11 27:16, 28:2, 28:4, proceeding [2] - 140:7 48:1, 59:6, 59:18,
prefers [1] - 124:22 28:14, 28:17, 28:24, 27:5, 108:13 proven [1] - 67:12 65:15, 67:25, 72:20,
preliminary [1] - 29:11, 29:18, 35:24, Proceedings [1] - provide [1] - 59:11 73:21, 80:7, 89:8,
61:8 36:3, 36:6, 37:10, 143:6 provided [6] - 15:7, 100:6, 112:15,
premise [1] - 130:13 37:13, 37:16, 37:24, proceedings [2] - 15:8, 26:2, 54:2, 113:12, 113:17,
preparation [2] - 38:1, 38:10, 38:12, 85:14, 144:6 108:18, 122:4 113:18, 117:10,
53:23, 122:18 38:14, 40:11, 41:20, process [8] - 12:24, provides [2] - 11:10, 117:12, 129:11,
prepare [2] - 70:6, 42:11, 42:17, 42:22, 14:17, 58:9, 72:14, 126:17 130:12
128:2 42:23, 43:2, 43:7, 73:5, 99:9, 114:16, proving [1] - 131:18 putting [3] - 116:9,
prepared [4] - 8:7, 43:13, 44:19, 45:1, 128:11 provision [1] - 123:4 128:8, 129:19
27:2, 70:5, 98:2 45:5, 45:18, 47:25, processes [8] - 66:1, proxy [1] - 137:23
48:1, 48:8, 48:20,
preparing [2] - 46:8, 66:12, 72:18, 73:14, prudent [1] - 73:13 Q
122:22 48:22, 57:14, 74:19, 78:2, 105:16, 107:10 pseudonyms [1] -
presence [1] - 74:20, 80:18, 81:20, produced [1] - 144:6 130:11
83:15, 83:22, 105:19, qualifications [1] -
142:24 product [3] - 5:6, public [12] - 46:6,
118:23, 119:8, 9:2
present [6] - 4:14, 13:14, 133:16 46:9, 61:16, 82:25,
119:11, 119:12, qualified [1] - 10:22
5:3, 8:11, 8:14, 58:22, products [3] - 127:4, 83:5, 83:7, 91:9,
119:15, 120:24, quantitative [1] -
101:10 127:6, 128:9 93:17, 94:5, 97:14,
123:17, 123:20, 9:20
press [36] - 6:19, professional [11] - 113:8, 130:15
125:10, 126:2, 128:7, quarterly [3] - 46:9,
44:8, 54:6, 61:21, 31:20, 31:23, 50:10, PUBLIC [1] - 1:23
129:15, 130:2, 83:7, 83:12
75:5, 75:18, 77:22, 50:11, 61:7, 75:12, publication [1] -
130:19, 130:20, questioning [3] -
78:8, 78:24, 80:19, 80:1, 88:13, 103:16, 15:25
131:12, 131:13, 67:24, 100:9, 109:16
81:6, 89:25, 94:13, 107:10, 111:25 publications [1] -
131:14, 132:14, questions [18] -
94:19, 94:23, 95:11, Professor [24] - 5:7, 10:8
133:14, 137:23, 142:8 30:3, 33:5, 47:4, 49:1,
95:12, 95:16, 96:5, 5:16, 7:3, 8:5, 8:17, publicize [1] - 61:14
priced [1] - 56:3 49:2, 49:6, 73:7, 82:7,
96:6, 96:8, 96:17, 10:3, 11:5, 11:18, publicly [13] - 15:10,
prices [13] - 9:25, 85:4, 89:21, 89:25,
96:22, 96:25, 97:1, 12:2, 12:4, 14:14, 34:10, 91:21, 92:25,
13:20, 13:21, 13:23, 109:12, 115:23,
97:8, 97:13, 125:8, 16:4, 26:21, 27:14, 93:2, 93:6, 93:7, 93:9,
14:22, 18:4, 22:21, 119:25, 121:10,
127:19, 128:4, 128:8, 49:7, 79:9, 86:10, 97:12, 98:24, 101:12,
34:23, 38:6, 38:15, 128:22, 130:23,
129:9, 129:19, 132:4, 116:20, 117:4, 106:20, 107:6
41:15, 41:24, 42:2 137:13
135:25, 141:19 117:19, 123:23, publish [2] - 61:20,
Pricing [1] - 33:20 124:13, 133:20, 136:3 quick [2] - 85:7, 91:1
presumably [1] - 65:19
90:11 pricing [9] - 13:1, professor [11] - 8:1, quit [1] - 135:12
published [11] -
pretrial [3] - 6:24, 13:3, 19:18, 20:11, 9:1, 9:7, 9:15, 12:8, quite [2] - 58:15,
10:7, 10:9, 10:11,
128:19, 134:12 20:20, 27:24, 39:17, 15:5, 16:12, 31:21, 91:2
10:13, 56:13, 93:13,
39:19, 128:6 116:21, 118:10, quo [2] - 47:10,
pretty [5] - 6:9, 93:18, 93:22, 107:6,
primarily [1] - 72:15 121:15 48:13
65:16, 91:1, 126:20, 107:8, 107:13
133:1 primary [2] - 66:6, profit [2] - 79:7, quotations [3] -
pull [10] - 35:20,
prevent [1] - 65:10 68:18 84:14 57:13, 65:19, 65:21
62:5, 62:23, 66:5,
prevented [1] - principal [1] - 51:19 project [1] - 5:19 quote [8] - 95:13,
66:7, 68:6, 69:5,
125:16 principle [1] - 131:12 prominently [1] - 131:17, 134:13,
71:23, 77:3, 90:19
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 161 of 166 161
136:21, 137:14, 23:18, 25:19, 26:10, REDIRECT [1] - 91:5, 116:17, 116:19, 106:18, 106:20,
137:21, 137:24, 30:1, 48:7, 111:10, 117:2 116:25, 117:3, 118:9, 107:5, 110:15, 111:4,
139:18 117:22, 119:5, redirect [3] - 49:4, 121:10, 124:25, 137:22
quotes [1] - 56:13 119:23, 133:17, 115:24, 116:5 126:14, 126:23, reliable [7] - 10:25,
quoting [1] - 95:12 140:10 refer [3] - 24:18, 127:21, 128:21, 41:9, 41:17, 41:25,
reasonableness [12] 28:1, 58:24 130:4, 130:23, 42:4, 57:13, 119:19
R - 18:25, 20:22, 26:5, reference [1] - 48:5 130:25, 142:19, reliance [2] - 133:17,
26:7, 27:15, 29:22, referenced [3] - 142:22, 143:5 140:10
117:25, 118:14, 44:7, 68:5, 71:8 Reilly [32] - 3:8, 4:7, relied [2] - 107:9,
R-E-I-L-L-Y [1] - 50:5 119:1, 119:18, 8:1, 8:6, 49:20, 50:3, 140:7
referred [1] - 48:18
Rachel [1] - 4:8 119:21, 122:25 50:6, 53:14, 53:18, rely [3] - 62:12, 63:7,
referring [3] - 31:24,
RAMOS [1] - 1:18 reasonably [2] - 59:21, 67:24, 70:12, 124:13
45:7, 121:3
Ramos [1] - 4:16 140:7, 141:7 85:19, 86:2, 86:25, relying [1] - 141:8
reflect [4] - 25:20,
ran [3] - 16:5, 26:1, reasons [8] - 14:2, 28:23, 37:23, 38:19 87:5, 87:13, 88:12, remain [2] - 28:17,
44:10 37:25, 38:2, 41:14, 93:14, 100:18, 36:10
reflected [3] - 13:13,
range [1] - 51:13 46:5, 61:5, 125:4, 39:19, 40:3 100:23, 102:18, remained [1] - 126:3
rareness [1] - 127:8 137:21 reflects [3] - 26:14, 104:4, 105:25, remains [4] - 39:16,
RDR [3] - 2:1, 144:3, rebuts [1] - 127:14 39:6, 39:9 106:13, 106:15, 67:11, 129:3, 131:19
144:12 rebuttal [2] - 8:6, refresh [1] - 90:24 112:3, 116:6, 116:24, remember [8] -
re [2] - 116:16, 49:5 refused [1] - 6:21 120:4, 127:2, 140:25 33:22, 90:5, 105:18,
116:20 recap [1] - 83:13 reilly's [1] - 117:4 107:17, 114:16,
refuting [1] - 126:6
re-call [1] - 116:16 RECEIVED [1] - 3:9 related [6] - 6:4, 123:5, 123:7, 123:10
regard [2] - 18:13,
re-calls [1] - 116:20 received [6] - 46:25, 80:6 45:1, 58:18, 64:12, remind [3] - 30:10,
reach [1] - 75:17 50:7, 51:7, 51:17, regarding [4] - 127:6, 134:17 85:19, 116:21
reached [1] - 37:15 71:18, 140:1 75:17, 84:8, 84:20, relates [1] - 108:17 remotely [2] - 5:17,
reacting [1] - 41:24 recent [3] - 10:6, 89:22 relating [5] - 53:15, 5:21
read [15] - 31:16, 131:21, 140:12 regardless [1] - 75:18, 90:7, 93:15, render [1] - 74:11
66:22, 69:15, 73:6, recently [2] - 66:24, 114:11 137:13 renew [1] - 95:6
92:14, 97:11, 102:14, 73:7 registered [1] - relationship [11] - repeat [4] - 36:1,
102:16, 110:14, recess [2] - 85:8, 66:22 18:20, 19:15, 19:21, 84:19, 107:1, 110:22
110:16, 110:18, 85:13 regressed [1] - 23:21 19:23, 19:25, 20:15, rephrase [1] - 39:8
110:20, 110:23, recognize [2] - 43:6, 20:19, 20:25, 21:4, replicate [1] - 41:11
regression [20] -
111:1, 111:14 69:12 29:12, 29:16 report [12] - 11:4,
19:20, 20:5, 20:9,
reading [4] - 92:19, recognized [2] - 20:16, 23:21, 26:1, relative [1] - 25:14 30:18, 30:20, 70:5,
94:16, 95:19, 96:13 12:5, 53:19 26:7, 29:6, 29:8, relatively [1] - 121:1 70:6, 70:9, 70:19,
ready [1] - 49:14 recollection [4] - 29:10, 29:21, 43:1, release [22] - 61:20, 70:20, 70:22, 72:3,
real [6] - 6:14, 6:15, 34:3, 34:25, 44:9, 43:10, 43:11, 44:1, 61:21, 62:14, 75:5, 83:15, 84:13
7:4, 132:9, 136:2, 44:12 45:3, 45:16, 45:20, 76:24, 80:20, 81:6, REPORTED [1] - 2:1
139:20 recommend [1] - 119:21, 120:2 94:13, 94:23, 95:12, REPORTER [6] -
realize [1] - 132:18 131:9 regression-type [1] - 95:16, 96:6, 96:8, 35:10, 68:12, 91:16,
realized [1] - 123:18 recommendations 119:21 96:18, 96:23, 96:25, 99:18, 99:21, 112:25
realizing [1] - 125:16 [1] - 115:10 regressions [2] - 128:4, 132:5, 135:25, Reporter [2] - 2:1,
really [14] - 6:3, record [15] - 4:5, 44:23, 44:24 141:19 144:12
15:20, 17:7, 21:12, 8:24, 16:24, 48:17, regulation [1] - released [4] - 16:20, reports [5] - 46:10,
24:21, 27:21, 47:19, 68:12, 70:18, 77:22, 50:13 16:23, 91:8, 118:20 71:11, 83:8, 83:12
120:17, 128:22, 81:6, 85:16, 93:11, regulations [3] - releases [16] - 6:20, represent [2] -
130:1, 130:15, 93:24, 116:3, 124:9, 51:15, 52:4, 52:6 44:8, 54:6, 75:18, 24:22, 108:4
134:14, 136:16, 137:4, 141:20 regulator [1] - 140:2 77:23, 78:8, 90:1, representations [1] -
138:11 records [2] - 71:10, 94:19, 97:8, 97:13, 10:19
regulators [1] - 71:9
reason [11] - 22:18, 76:4 101:16, 125:8, representative [1] -
regulatory [3] - 52:3,
37:21, 38:23, 47:20, RECROSS [1] - 127:19, 128:9, 129:9, 66:22
76:13, 113:7
88:14, 113:25, 121:13 129:19
REILLY [44] - 1:14, reps [1] - 73:6
119:16, 121:3, RECROSS- relevance [2] - 92:4,
4:6, 8:4, 8:16, 8:22, requesting [1] -
133:10, 135:12, EXAMINATION [1] - 95:6
9:11, 11:15, 11:17, 98:16
138:12 121:13 relevant [21] - 7:13,
11:20, 12:1, 12:7, require [3] - 43:11,
reasonable [23] - recruiting [1] - 7:14, 18:1, 29:5,
14:11, 14:13, 15:15, 71:9, 119:20
12:15, 13:12, 15:11, 127:25 29:24, 39:7, 39:9,
18:10, 25:25, 26:18, required [2] - 81:19,
15:12, 15:18, 15:25, Red [1] - 3:3 39:13, 40:1, 41:19,
26:20, 27:7, 27:13, 101:20
19:5, 22:10, 22:12, red [3] - 140:20, 104:4, 105:7, 105:12,
30:3, 35:20, 49:5, requirements [2] -
22:16, 23:11, 23:16, 141:4 106:6, 106:15,
49:11, 49:22, 59:6, 51:15, 54:17
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 162 of 166 162
requires [3] - 19:14, 77:22, 83:5, 83:7, 10:2, 59:2 seconds [1] - 116:1 58:2
105:19, 117:20 93:11, 107:21, Schwab [3] - 66:9, Section [5] - 1:15, self-regulatory [1] -
reschedule [1] - 5:17 110:14, 110:19, 67:21, 111:11 14:9, 33:20, 87:19, 52:3
rescissory [3] - 110:25, 123:5, 124:4 scope [4] - 95:4, 136:22 sell [5] - 44:13,
12:13, 86:7, 131:10 reviewed [27] - 100:10, 129:3, 130:10 section [6] - 31:4, 56:24, 57:14, 119:16,
research [5] - 9:17, 10:10, 10:11, 15:10, screen [5] - 59:7, 31:8, 72:4, 79:10, 121:4
9:18, 9:19, 9:22, 22:1, 24:5, 26:4, 26:6, 59:16, 63:22, 69:15, 109:1, 135:15 selling [2] - 22:2,
31:17 29:21, 33:2, 38:4, 72:23 securities [30] - 22:18
researched [1] - 41:4 55:19, 62:15, 63:3, screening [2] - 10:16, 30:19, 31:17, send [1] - 55:8
resonate [1] - 17:13 63:10, 68:23, 74:17, 95:14, 96:8 32:14, 34:24, 51:2, sense [4] - 24:13,
respect [3] - 76:11, 83:5, 90:6, 93:14, script [3] - 66:23, 51:10, 51:13, 51:19, 32:18, 132:11, 141:24
90:7, 126:9 93:20, 97:18, 103:5, 73:6, 111:14 52:3, 54:10, 54:12, sent [3] - 105:3,
respects [1] - 29:4 111:3, 119:25, scroll [2] - 70:8, 54:14, 54:21, 54:24, 125:21, 132:7
respond [2] - 24:8, 122:23, 122:24, 124:3 90:23 55:7, 56:4, 56:21, sentencing [12] -
99:12 revise [1] - 135:8 SEC [83] - 44:4, 44:7, 64:15, 66:7, 66:15, 14:9, 28:1, 80:12,
responding [2] - revising [1] - 138:21 44:20, 60:25, 61:2, 72:10, 72:20, 87:6, 85:10, 105:18,
18:17, 29:18 rise [1] - 97:10 61:5, 61:14, 61:16, 87:14, 87:19, 92:15, 105:22, 122:14,
response [7] - 98:9, risk [6] - 57:15, 62:3, 62:14, 64:1, 114:9, 134:3, 141:7 124:3, 124:14,
98:10, 99:7, 99:16, 66:16, 72:18, 111:5, 65:8, 66:25, 75:7, Securities [3] - 11:1, 136:20, 143:2
99:19, 101:5, 108:6 111:16, 130:5 75:20, 75:24, 76:2, 52:5, 62:9 Sentencing [3] -
responsive [1] - risk-based [1] - 76:4, 76:9, 76:21, security [21] - 36:14, 12:14, 74:14, 136:22
42:18 72:18 76:25, 89:4, 89:16, 57:14, 57:18, 65:20, separate [1] - 128:22
rest [3] - 120:13, riskier [2] - 57:17, 89:18, 89:21, 92:25, 66:23, 72:24, 73:4, Series [2] - 51:14,
120:19, 134:16 57:18 97:11, 97:15, 97:23, 73:8, 73:12, 74:20, 51:21
restate [2] - 82:16, risks [2] - 57:5, 98:2, 98:22, 99:9, 75:22, 78:4, 78:16, serious [1] - 73:7
107:1 130:9 101:3, 102:21, 88:15, 88:20, 88:22, seriously [1] -
result [11] - 32:11, risky [1] - 57:19 103:25, 104:15, 89:6, 107:11, 110:3, 120:15
45:25, 46:12, 82:12, role [5] - 9:14, 52:22, 104:18, 105:5, 106:1, 111:16, 142:8 served [1] - 10:15
82:20, 83:10, 126:2, 76:9, 76:10, 125:9 106:11, 106:16, see [48] - 5:24, 7:8, serves [1] - 60:1
132:8, 140:9, 140:21, Room [1] - 2:3 106:21, 107:6, 107:7, 14:14, 18:21, 38:14, Service [1] - 91:11
141:10 room [1] - 6:9 108:1, 109:3, 109:10, 43:21, 60:11, 64:3, services [5] - 11:8,
resulted [1] - 127:6 roughly [2] - 64:16, 109:13, 109:18, 66:7, 66:11, 67:6, 11:11, 52:25, 53:15,
resulting [1] - 117:21 123:3 110:1, 110:7, 110:10, 68:7, 69:3, 69:17, 53:19
results [1] - 26:7 round [1] - 36:23 111:15, 113:11, 70:9, 71:15, 74:6, set [7] - 12:13, 13:19,
resume [1] - 85:10 rule [4] - 43:18, 113:17, 113:22, 74:8, 78:11, 84:13, 28:11, 46:20, 46:22,
resumed [2] - 75:10, 135:23, 142:4, 142:5 117:17, 119:7, 85:1, 86:24, 93:24, 65:13, 139:6
103:15 ruled [1] - 139:25 121:16, 121:18, 94:8, 96:1, 97:19, Set [1] - 10:22
rules [4] - 33:13, 121:21, 121:23, 98:20, 100:12, settled [1] - 30:20
resumption [3] -
51:15, 52:4, 52:6 121:25, 122:4, 125:6, 100:18, 101:8, several [2] - 79:2,
69:1, 80:3, 80:21
run [1] - 9:1 125:13, 125:19, 101:23, 102:10, 139:1
retrieved [1] - 69:18
125:22, 126:6, 102:24, 104:2,
returns [3] - 20:13, shaded [1] - 44:17
126:11, 126:14, 104:22, 107:24,
20:14, 128:7 S 126:18, 127:9, 108:2, 108:4, 108:8,
share [10] - 14:23,
revealed [19] - 15:22, 15:2, 15:4, 23:1, 23:3,
127:17, 128:2, 108:16, 109:8,
15:24, 16:2, 18:1, 25:10, 44:19, 47:12,
Sachs [1] - 50:17 135:10, 136:12, 110:14, 126:10,
48:21, 86:13, 86:17, 83:24, 130:2
satisfied [1] - 41:23 137:13, 137:22, 127:23, 128:6,
88:25, 89:10, 103:11, shared [2] - 37:9,
satisfies [1] - 28:22 138:2, 139:4, 141:1, 128:10, 143:2
111:20, 112:4, 125:22
saw [9] - 31:19, 142:2 Seefried [1] - 137:2
118:18, 123:9, 126:4, shareholder [12] -
58:17, 58:19, 68:23, SEC's [9] - 80:20, seeing [2] - 90:13,
128:17, 129:4, 129:7, 46:1, 46:20, 47:1,
78:8, 93:11, 102:7, 90:6, 93:14, 103:2, 107:17
130:21 82:13, 105:5, 106:21,
123:15, 129:22 103:7, 125:11, seem [7] - 6:4, 15:12,
revelation [2] - 107:6, 107:7, 107:23,
scale [1] - 43:4 125:21, 130:15, 15:19, 16:18, 16:21,
14:24, 123:17 109:1, 110:16, 110:18
scales [1] - 43:5 138:25 17:3, 79:4
reverse [1] - 121:23 shareholders [12] -
schedule [2] - 98:22, sec.gov [2] - 61:18, segment [4] - 54:13,
reversed [2] - 97:16, 24:19, 46:12, 47:2,
143:1 61:20 54:20, 57:15, 58:12
137:20 82:20, 83:10, 86:22,
scheme [4] - 103:3, second [10] - 13:11, segments [1] - 60:16
reverted [1] - 130:19 86:25, 87:2, 87:8,
103:8, 139:17, 141:18 16:3, 23:9, 47:7, select [2] - 15:13,
review [20] - 32:7, 87:22, 108:5, 125:7
School [3] - 9:4, 9:6, 58:11, 97:20, 114:16, 21:10
46:6, 46:7, 46:9, shares [84] - 13:6,
9:13 131:11, 136:15, self [2] - 52:3, 58:2
53:24, 54:1, 61:12, 13:25, 14:1, 14:4,
school [3] - 9:15, 136:16 self-directed [1] -
70:11, 70:14, 71:19, 21:24, 22:3, 22:4,
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 163 of 166 163
22:5, 22:8, 22:9, simple [1] - 43:20 speaks [1] - 120:14 statement [6] - 36:8, 43:9, 43:13, 43:14,
22:16, 22:17, 22:19, simply [3] - 14:3, special [1] - 50:12 40:6, 45:12, 92:9, 44:4, 44:14, 45:1,
22:20, 22:22, 23:24, 15:3, 51:1 specialize [1] - 9:16 92:23, 104:21 45:5, 45:18, 46:2,
23:25, 24:2, 24:6, single [1] - 135:1 specialized [2] - statements [22] - 46:10, 46:13, 55:19,
24:11, 24:12, 24:14, sitting [1] - 5:13 51:7, 51:17 16:25, 48:17, 94:14, 56:11, 57:9, 57:23,
24:15, 24:18, 24:19, situation [1] - 43:7 specialty [1] - 9:22 95:17, 95:18, 96:9, 58:14, 60:3, 61:3,
24:23, 25:1, 25:3, six [1] - 25:6 specific [38] - 21:9, 96:10, 97:2, 97:13, 65:5, 65:10, 66:17,
25:5, 25:16, 32:6, skill [1] - 16:13 21:19, 26:13, 27:17, 120:8, 121:9, 127:17, 67:2, 67:12, 67:21,
32:9, 32:10, 32:11, skimmed [1] - 28:2, 29:14, 29:19, 133:17, 134:16, 68:8, 68:22, 69:1,
32:12, 32:13, 32:17, 110:25 37:11, 37:13, 39:5, 135:6, 135:8, 136:8, 74:4, 75:11, 78:25,
32:22, 32:23, 33:4, skis [1] - 6:19 41:17, 42:4, 42:16, 136:10, 138:22, 79:11, 79:25, 82:9,
36:24, 36:25, 37:7, skull [12] - 65:16, 45:8, 45:9, 45:11, 139:19, 141:3, 141:8 82:14, 82:19, 82:21,
45:24, 45:25, 46:2, 66:3, 66:8, 67:25, 45:13, 45:16, 45:17, states [1] - 100:3 83:1, 83:8, 83:9,
46:4, 46:11, 46:13, 68:4, 111:7, 111:8, 51:5, 56:15, 65:8, States [20] - 2:2, 4:2, 83:11, 89:19, 103:25,
46:14, 46:16, 46:18, 112:10, 114:7, 72:18, 87:16, 87:17, 4:7, 8:17, 12:14, 104:1, 105:17,
46:20, 46:23, 46:24, 126:12, 140:17, 94:2, 94:3, 106:7, 71:13, 72:7, 73:13, 109:25, 113:13,
48:24, 54:25, 55:3, 140:18 106:9, 118:1, 118:3, 74:14, 85:16, 131:19, 114:11, 114:13,
56:24, 57:22, 58:5, sleeps [1] - 49:18 118:11, 118:20, 135:3, 135:21, 137:2, 114:19, 115:9,
58:6, 71:14, 72:6, slide [4] - 68:9, 118:23, 119:2, 120:1, 137:18, 138:6, 115:11, 115:12,
82:8, 82:11, 82:12, 68:15, 68:16, 73:24 141:3 139:14, 139:23, 115:21, 117:10,
82:14, 82:19, 82:21, slides [1] - 67:23 specifically [8] - 140:11, 144:13 119:15, 119:17,
82:23, 83:2, 83:9, 19:6, 44:7, 53:4, STATES [3] - 1:1, 121:4, 125:10, 126:3,
small [6] - 20:13,
83:11, 84:12, 84:14, 55:13, 64:11, 89:25, 1:3, 1:11 128:6, 128:7, 129:15,
27:24, 29:3, 34:13,
105:20, 106:2 94:22, 106:3 stating [1] - 95:13 129:17, 129:22,
34:14, 57:20
Sheet [6] - 54:5, specificity [5] - statistically [8] - 130:19, 132:19,
small-cap [1] - 57:20
71:8, 71:11, 71:19, 106:12, 122:16, 19:22, 20:15, 20:19, 133:14, 140:15
so-called [1] - 20:12
72:2 122:18, 122:20, 20:24, 29:12, 29:15, stocks [40] - 17:11,
sold [1] - 25:6
sheet [2] - 56:11, 122:22 43:14, 43:17 26:12, 26:16, 28:10,
sole [1] - 52:21
72:10 speculation [5] - status [3] - 47:10, 28:16, 33:7, 33:25,
sole-member [1] -
sheets [1] - 51:4 57:23, 57:25, 60:2, 48:13, 85:8 34:2, 34:6, 34:7,
52:21
Sheets [1] - 106:11 60:4, 88:9 stay [2] - 67:10, 34:15, 36:6, 36:11,
solitary [1] - 135:1
shocked [1] - 9:9 speculative [10] - 67:14 37:23, 38:17, 40:23,
someone [4] - 54:23,
short [1] - 85:8 57:19, 57:25, 66:17, stays [1] - 129:17 41:21, 41:23, 42:14,
56:11, 56:20, 129:23
shorthand [1] - 66:23, 72:19, 72:24, Stein [1] - 140:11 46:11, 47:11, 54:9,
soon [3] - 5:19, 68:8,
78:23 73:15, 73:16, 73:21, stenographic [1] - 55:12, 55:22, 55:23,
68:21
show [3] - 84:14, 114:15 144:5 56:4, 56:5, 56:15,
sorry [18] - 16:6,
99:24, 104:20 speculators [4] - step [7] - 20:21, 56:21, 56:22, 57:3,
23:23, 35:10, 36:1,
showed [1] - 35:16 58:20, 60:10, 78:22, 27:14, 49:7, 103:24, 57:6, 57:7, 57:17,
43:19, 63:18, 68:12,
showing [2] - 97:23, 79:10 116:6, 118:13, 123:24 58:19, 60:15, 65:24,
80:24, 82:16, 87:15,
101:21 spell [2] - 8:23, 50:4 steps [3] - 13:16, 114:23, 127:10,
98:6, 98:15, 99:18,
shows [6] - 26:11, staff [1] - 98:2 23:17, 58:11 127:23
99:22, 104:25, 107:2,
26:16, 42:8, 69:18, standard [10] - stick [1] - 19:2 Stocks [1] - 33:21
115:1, 122:9
129:15, 130:17 19:13, 19:18, 20:11, still [7] - 43:15, stop [1] - 121:20
sort [12] - 5:5, 5:6,
signed [3] - 92:21, 20:20, 27:23, 28:6, 81:18, 85:19, 111:16, stopped [1] - 68:22
5:21, 6:17, 6:25, 7:21,
92:22, 125:23 40:15, 48:19, 51:23, 116:22, 119:15, 129:3 straight [2] - 95:13,
21:9, 21:17, 40:16,
significance [1] - 54:7 stipulated [1] - 6:25 95:14
95:22, 119:20, 124:17
72:12 standing [1] - 100:9 Stock [2] - 51:18, straightforward [2] -
sorts [1] - 122:7
significant [11] - standpoint [1] - 54:16 65:17, 80:17
Souder [1] - 4:9
19:23, 20:15, 20:19, 122:6 stock [106] - 9:25, strategies [1] - 60:13
sought [1] - 101:18
20:24, 29:12, 29:15, start [1] - 4:22 13:5, 18:20, 18:21, Street [3] - 1:21,
sounds [5] - 31:10,
43:14, 43:17, 44:25, started [7] - 8:2, 8:3, 19:7, 19:12, 19:16, 61:23, 64:10
33:13, 35:4, 90:2,
89:5, 129:16 15:23, 48:1, 50:11, 19:21, 19:24, 20:3, stressed [1] - 133:8
123:3
significantly [2] - 52:11, 53:2 21:4, 21:20, 23:13, strong [1] - 76:10
source [2] - 40:22,
48:15, 127:8 starting [2] - 4:5, 26:21, 26:23, 27:16, strongly [2] - 40:3,
41:15
similar [8] - 29:4, 13:17 28:11, 28:21, 29:10, 76:21
Southern [3] - 10:23,
38:8, 39:4, 48:22, starts [1] - 5:18 29:18, 32:4, 32:7, structured [1] - 8:7
139:14, 139:16
126:12, 138:5, 139:4, state [10] - 8:23, 32:15, 33:10, 37:10, stuck [1] - 54:5
space [2] - 10:1,
139:8 52:3, 52:16, 84:8, 37:13, 37:16, 37:21, Studies [1] - 10:13
34:12
similarity [2] - 34:21, 84:20, 84:24, 92:13, 38:6, 38:13, 41:15, study [5] - 19:11,
speaking [3] - 13:19,
37:19 95:17, 96:9, 140:2 42:2, 42:17, 43:7, 19:14, 20:1, 20:7,
15:19, 32:13
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 164 of 166 164
51:23 supervise [1] - 51:20 49:22, 117:1 Tennessee [1] - 63:22, 64:21, 65:23,
stuff [1] - 60:12 Supplement [1] - symbol [8] - 111:9, 52:15 65:25, 66:3, 66:5,
sub [1] - 57:18 139:25 111:18, 112:20, Tenth [1] - 1:21 67:1, 67:4, 67:9,
sub-asset [1] - 57:18 support [5] - 100:1, 113:25, 114:11, term [6] - 24:14, 67:11, 67:15, 68:2,
Subdivision [1] - 102:8, 104:21, 114:13, 114:18, 115:2 24:17, 56:2, 56:12, 68:12, 69:24, 71:2,
136:23 119:21, 124:14 syncing [1] - 42:24 136:25 77:14, 77:17, 77:19,
subject [1] - 49:5 suppose [1] - 132:16 synonymous [1] - terminate [8] - 90:4, 78:5, 78:8, 78:18,
submission [3] - surprise [1] - 36:17 56:8 90:10, 90:17, 91:20, 78:20, 78:21, 78:22,
99:7, 101:2, 101:6 surprised [1] - 5:24 system [3] - 55:11, 98:10, 98:19, 100:1, 79:1, 79:2, 79:13,
submissions [1] - surprisingly [1] - 55:14, 55:15 102:9 80:24, 81:1, 81:2,
98:16 72:5 systematic [2] - termination [1] - 81:5, 81:10, 81:11,
submit [5] - 71:10, suspend [7] - 44:4, 29:9, 119:20 92:14 81:13, 82:4, 83:21,
124:14, 133:19, 61:2, 61:5, 61:6, 76:9, systematically [2] - terminology [1] - 85:6, 85:15, 85:18,
139:21, 141:6 76:16, 113:13 28:3, 45:4 27:19 85:21, 85:22, 88:8,
submitted [3] - suspended [11] - terms [7] - 76:22, 88:10, 91:7, 91:16,
91:17, 92:5, 95:5,
30:20, 31:14, 125:19 65:5, 66:24, 68:8, T 78:3, 78:10, 81:7,
subpoena [2] - 71:9, 68:22, 73:7, 89:18, 89:15, 111:22, 114:7 95:7, 97:5, 99:18,
140:1 89:21, 109:25, test [8] - 7:6, 95:25, 99:20, 99:21, 99:22,
table [3] - 4:8, 83:22, 96:1, 101:14, 101:17, 100:7, 100:12,
subscribe [2] - 111:15, 113:8, 141:2
139:6 102:1, 141:14 102:16, 104:12,
59:25, 62:2 suspending [3] -
tables [2] - 46:10, testified [9] - 30:15, 106:24, 107:1,
Subsection [1] - 61:17, 75:22, 127:9
83:8 30:22, 31:1, 52:8, 112:25, 113:1, 115:4,
136:23 suspension [69] -
tag [1] - 7:24 90:6, 122:8, 122:9, 115:24, 116:2, 116:6,
subsequent [4] - 17:1, 44:7, 44:10,
44:15, 44:16, 44:20, tag-teaming [1] - 122:12, 127:2 116:9, 116:15,
81:21, 81:25, 83:1,
61:14, 61:22, 62:4, 7:24 testify [5] - 5:8, 5:16, 116:18, 116:21,
83:18
62:8, 63:1, 63:9, 65:9, talks [3] - 64:10, 8:5, 11:14, 140:25 116:23, 118:8,
subsequently [1] -
65:11, 65:12, 66:20, 96:17, 96:22 testimony [19] - 121:11, 123:23,
64:4
73:3, 75:8, 75:20, tanked [1] - 130:2 7:12, 8:6, 10:25, 11:1, 124:1, 124:8, 124:11,
subset [1] - 40:2
76:22, 77:21, 80:20, targeted [1] - 125:7 11:12, 26:2, 30:16, 124:20, 124:23,
substance [1] -
84:2, 89:4, 89:17, Targeting [1] - 64:10 53:23, 60:2, 74:23, 126:8, 126:20,
123:8
90:4, 90:8, 90:11, TAUBMAN [15] - 79:15, 88:24, 103:13, 127:20, 128:18,
substantial [1] -
90:17, 91:20, 92:15, 1:18, 11:22, 12:3, 111:6, 116:11, 129:21, 130:22,
120:10
93:15, 94:4, 97:10, 27:9, 30:8, 30:11, 116:13, 117:4, 122:24 130:24, 132:1, 132:7,
subtle [1] - 121:1
97:16, 97:24, 98:11, 30:14, 35:15, 35:18, tests [2] - 51:24, 132:21, 132:25,
suffered [3] - 12:16,
98:19, 98:25, 99:3, 35:21, 35:22, 45:22, 55:25 134:1, 134:8, 136:11,
21:3, 30:1
99:4, 99:8, 100:2, 45:23, 47:4, 49:3 textualist [1] - 137:6 136:24, 137:3, 138:1,
suffice [1] - 133:20
101:9, 101:15, Taubman [3] - 4:17, 138:17, 141:9,
sufficient [2] - 41:24, THE [178] - 1:1, 1:10,
101:21, 102:9, 30:11, 49:1 142:17, 142:21,
73:20 1:14, 1:17, 1:23, 3:4,
103:24, 105:16, TD [8] - 50:21, 58:1, 142:23
suggest [3] - 17:14, 3:7, 4:1, 4:11, 4:20,
108:9, 108:14, 58:2, 66:9, 72:8, 73:5, theft [1] - 108:11
124:10, 132:22 5:23, 6:7, 7:8, 7:16,
110:21, 110:24, 73:9, 111:11 7:22, 7:25, 8:10, 8:15, themselves [1] -
suggested [1] -
111:2, 111:23, teach [1] - 10:2 8:19, 8:20, 9:8, 9:10, 127:11
126:6
113:11, 113:19, team [1] - 124:7 11:23, 12:4, 15:5, theoretical [2] - 6:18,
suggesting [2] -
114:1, 119:6, 121:24, teaming [1] - 7:24 15:8, 15:14, 16:6, 84:14
17:10, 129:24
122:1, 125:2, 125:11, technical [1] - 27:19 16:14, 17:9, 17:17, theoretically [2] -
suggestion [1] -
126:6, 126:18, technically [3] - 18:9, 23:23, 24:4, 5:9, 7:6
74:15
127:18, 137:16, 6:22, 30:24, 55:14 24:14, 24:17, 25:5, theory [1] - 9:19
suggests [2] -
138:24, 140:22 technology [6] - 5:6, 25:12, 25:24, 27:10, thereby [1] - 119:17
117:24, 129:21
suspension/halt [1] 5:9, 6:18, 6:22, 7:4, 30:5, 30:10, 30:13, therefore [3] - 38:14,
Suisse [1] - 10:23
- 113:7 101:13 35:10, 35:12, 47:6, 82:1, 123:19
Suite [1] - 1:25
suspensions [9] - tellingly [1] - 134:25 47:13, 47:14, 47:17, therein [1] - 92:17
summarize [1] -
60:25, 61:13, 65:1, temporary [1] - 47:18, 47:23, 48:9, Thereupon [1] -
10:21
65:9, 76:2, 76:3, 126:18 48:16, 49:1, 49:4, 85:13
summarized [1] -
121:22, 127:3, 127:7 ten [3] - 41:8, 49:7, 49:10, 49:13, they've [2] - 7:2, 61:7
72:3
sustained [4] - 124:17, 124:19 49:17, 49:23, 53:18, third [9] - 111:19,
summary [1] - 33:25
104:12, 118:8, tend [3] - 18:21, 56:8, 56:10, 56:18, 112:3, 112:6, 113:6,
summation [2] -
141:10, 142:15 34:13, 42:14 59:1, 59:2, 59:5, 59:8, 120:9, 120:16, 121:7,
116:12, 124:17
sworn [4] - 92:9, tenders [2] - 59:4, 59:11, 59:15, 59:19, 131:16, 135:9
summer [6] - 125:3,
92:13, 92:23, 102:12 100:21 60:8, 60:9, 60:21, third-party [1] -
125:19, 126:3,
SWORN [3] - 8:18, tends [1] - 36:7 62:20, 62:23, 63:15, 121:7
128:20, 130:20, 134:6
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 165 of 166 165
thoughtful [1] - 79:9 trading [114] - 9:18, treat [1] - 126:11 83:12, 111:13 62:5, 62:23, 66:6,
thousand [1] - 58:5 9:24, 9:25, 17:1, trend [3] - 10:6, 36:2, 66:7, 66:16, 68:1,
three [9] - 8:11, 84:1, 17:11, 32:20, 44:4, 42:21 U 68:6, 69:5, 71:24,
89:9, 108:7, 108:23, 44:15, 51:6, 54:19, trendline [3] - 42:8, 72:20, 74:7, 77:3,
125:18, 133:19, 55:11, 55:15, 56:6, 42:11, 42:12 80:8, 80:16, 81:18,
56:21, 57:2, 57:15, U.S [5] - 1:15, 62:9, 81:20, 90:19, 95:13,
142:13 TREVOR [1] - 1:10
57:25, 58:4, 59:25, 135:5, 137:19, 139:15 95:14, 112:15,
thrilled [1] - 7:9 trial [4] - 5:8, 7:10,
60:4, 60:13, 60:25, ultimate [1] - 20:18 113:12, 120:2,
throughout [5] - 7:13
61:2, 61:6, 61:13, ultimately [2] - 122:14, 124:11,
50:10, 50:14, 51:9, trials [1] - 128:14
61:14, 61:19, 61:22, 18:24, 19:4 132:9, 134:25, 139:6,
52:2, 133:23 tried [2] - 67:20, 74:5
63:2, 64:25, 65:4, uncertainty [1] - 141:1, 141:13
TIAA [1] - 50:19 trigger [3] - 137:17,
65:8, 65:10, 66:13, 127:4 update [1] - 121:5
TIAA-CREF [1] - 138:15, 140:2
66:20, 68:22, 69:1, uncontested [2] - updated [1] - 64:4
50:19 true [8] - 22:14,
71:10, 72:10, 72:19, 139:11, 141:16 upheld [2] - 135:20,
timeframe [1] - 60:5 48:24, 91:12, 92:17,
73:3, 73:12, 73:15, uncorrelated [1] - 137:20
timeline [1] - 130:1 94:14, 136:14, 144:4,
74:5, 75:8, 75:10, 27:16 upholding [1] -
title [1] - 64:8 144:5
75:20, 76:2, 76:3, undefined [1] - 137:5 101:9
today [14] - 29:20, truly [1] - 130:18
76:9, 76:15, 76:16, under [16] - 6:13, URL [1] - 69:18
31:3, 53:23, 69:3, truth [20] - 15:22,
76:21, 77:20, 77:25, 7:15, 13:18, 22:25, uses [5] - 18:18,
70:22, 108:6, 116:13, 48:21, 86:13, 86:16,
78:20, 79:3, 79:4, 30:20, 51:1, 55:23, 23:3, 38:5, 38:24,
121:20, 122:14, 86:17, 88:1, 88:4,
80:4, 80:20, 80:21, 82:1, 85:19, 113:4, 43:3
122:17, 122:18, 88:18, 88:23, 88:25,
80:22, 84:1, 89:4, 113:12, 116:22, utilized [1] - 101:14
124:21, 125:12, 89:9, 89:12, 103:11,
89:5, 89:16, 89:18, 126:5, 131:18, 132:9,
142:25 111:20, 112:4,
89:21, 90:4, 90:8, 142:13
today's [2] - 27:5, 118:18, 123:6,
undercuts [1] -
V
31:13 90:11, 90:17, 91:20, 123:14, 126:4, 136:20
92:15, 93:15, 97:10, 136:6
together [1] - 39:3 try [5] - 16:10, 59:12,
97:15, 97:24, 98:11, underlying [2] - vaccine [1] - 95:15
took [6] - 14:20, 67:2, 87:15, 124:19
98:19, 98:25, 99:3, 98:25, 139:9 valuation [1] - 9:20
14:21, 15:3, 23:17, trying [6] - 25:9,
99:4, 99:8, 100:1, undermine [1] - value [13] - 14:5,
23:19, 36:22 28:13, 58:20, 88:3,
101:9, 101:15, 134:20 20:13, 23:12, 24:13,
tool [1] - 119:21 97:15, 103:18
101:21, 102:9, undermines [1] - 25:20, 27:25, 41:17,
top [5] - 35:6, 35:12, turn [10] - 16:9, 23:9,
103:14, 103:24, 127:8 46:24, 48:24, 54:21,
69:17, 72:8, 108:4 42:7, 63:18, 70:2,
108:9, 108:14, understood [3] - 58:18, 120:7, 130:13
topic [1] - 120:23 71:5, 73:23, 98:21,
110:20, 110:23, 5:25, 15:14, 95:7 variable [2] - 133:13,
topics [1] - 10:1 100:4, 101:8
111:16, 111:23, undertook [2] - 133:18
total [1] - 14:5 turning [2] - 21:7,
113:8, 113:11, 12:25, 14:17 variety [3] - 54:2,
totality [4] - 16:1, 21:21
113:19, 114:1, 114:9, unfortunately [1] - 54:8, 129:11
23:17, 118:19, 119:3 Tuzman [1] - 139:14
119:6, 121:22, 41:21 various [3] - 50:13,
totally [3] - 6:17, twisted [1] - 102:22
121:24, 122:1, 125:2, UNITED [3] - 1:1, 52:3, 136:11
136:5, 137:6 two [29] - 5:3, 5:14,
125:11, 126:6, 1:3, 1:11 vary [1] - 88:2
tracking [1] - 20:3 12:14, 14:1, 15:3,
126:18, 127:3, 127:7, united [1] - 2:2 venue [1] - 66:6
tracks [1] - 40:23 21:24, 22:6, 22:24,
127:18, 141:2 United [19] - 4:2, 4:7, verify [1] - 32:10
trade [21] - 33:16, 25:18, 38:8, 38:15,
training [1] - 51:7 8:16, 12:14, 71:13, versa [1] - 38:1
36:9, 54:15, 54:21, 42:21, 42:25, 43:21,
trains [1] - 51:14 72:7, 73:13, 74:14, version [1] - 35:18
54:23, 55:13, 55:16, 43:23, 53:9, 65:14,
transact [1] - 51:2 85:16, 131:19, 135:3, versus [12] - 4:2,
57:10, 62:8, 65:20, 68:25, 76:4, 76:13,
transactions [3] - 135:21, 137:2, 16:20, 85:17, 131:20,
66:18, 66:25, 67:20, 84:10, 86:12, 91:5,
58:7, 75:14, 107:11 108:17, 108:19, 137:18, 138:6, 135:4, 135:21, 137:2,
72:15, 73:4, 105:16,
transcript [2] - 108:23, 109:3, 139:14, 139:23, 137:18, 138:6,
110:2, 111:2, 111:13,
144:5, 144:6 128:22, 140:4 140:11, 144:13 139:14, 139:23,
111:17, 121:20
TRANSCRIPT [1] - type [7] - 38:24, University [4] - 9:3, 140:11
traded [14] - 13:5,
1:10 51:5, 52:11, 88:17, 9:5, 9:13, 50:7 viability [1] - 130:9
28:6, 28:21, 28:24,
transmission [1] - 107:11, 119:21, 120:3 unknown [1] - vice [1] - 38:1
33:7, 34:11, 36:6,
9:23 typed [1] - 140:16 137:10 victims [13] - 21:3,
37:23, 40:23, 41:18,
transmit [2] - 55:9, types [5] - 38:20, up [49] - 5:2, 6:17, 87:2, 87:9, 87:22,
55:20, 56:22, 57:9,
56:25 40:4, 51:3, 65:7, 11:16, 12:20, 14:11, 87:25, 88:4, 104:15,
89:6
transmitted [1] - 119:7 14:17, 15:5, 26:18, 104:17, 106:1,
traders [5] - 60:10,
55:4 typical [1] - 103:24 34:22, 35:20, 37:24, 106:16, 125:7,
65:4, 77:24, 79:8,
travel [1] - 58:18 42:24, 43:9, 43:22, 125:24, 132:9
79:10 typically [9] - 19:11,
travel-related [1] - 47:8, 52:17, 59:15, view [8] - 16:16,
trades [3] - 51:3, 54:16, 54:20, 55:2,
58:18 59:18, 61:22, 62:1, 46:17, 46:24, 75:4,
56:20, 114:14 57:10, 59:12, 72:9,
Case 1:20-cr-00278-TNM Document 186 Filed 03/22/24 Page 166 of 166 166
104:2, 110:1, 118:25, willing [2] - 74:7, 121:11
124:16 124:19 XYZ [1] - 55:3
viewed [1] - 114:15 window [1] - 48:12
virus [4] - 6:22, 7:7, winds [2] - 81:18, Y
95:15, 101:15 81:19
visible [1] - 66:4 wish [1] - 8:12
Yale [1] - 9:4
volatile [1] - 43:15 WITNESS [43] - 3:7,
year [10] - 18:15,
volatility [2] - 42:15, 8:18, 8:20, 9:10, 15:8,
18:23, 19:2, 23:20,
43:24 16:14, 17:17, 24:4,
31:22, 48:14, 56:6,
volume [1] - 54:19 24:17, 25:12, 35:12,
89:3, 126:22, 127:9
vs [1] - 1:5 47:13, 47:17, 47:23,
48:16, 49:22, 56:10, years [4] - 10:6,
59:2, 59:19, 60:9, 50:14, 126:23, 139:19
W yes-or-no [5] -
63:22, 65:25, 66:5,
67:4, 67:11, 77:19, 88:12, 88:13, 90:16,
waffled [1] - 6:25 78:8, 78:20, 78:22, 93:4, 110:13
walk [8] - 12:24, 79:2, 81:1, 81:5, yield [1] - 43:13
13:15, 14:16, 16:4, 81:11, 83:21, 85:21, yielded [2] - 13:9,
19:8, 21:23, 23:16, 91:7, 91:17, 99:20, 15:4
27:21 99:22, 107:1, 113:1, York [6] - 1:16,
Wall [1] - 61:23 116:23, 117:1 10:24, 51:18, 54:16,
wants [2] - 5:13, witness [7] - 5:5, 8:2, 139:15, 139:16
72:14 49:15, 53:1, 100:21, yourself [3] - 16:12,
warned [2] - 73:16, 116:9 51:25, 117:7
78:15 Witness [3] - 49:9, yourselves [1] - 4:5
warning [9] - 65:15, 116:8, 123:25
66:8, 67:8, 72:23, witness's [1] - 118:6
75:11, 78:3, 104:1, WITNESSES [1] - 3:4
107:12, 132:7 witnesses [1] - 5:3
warnings [9] - 65:14, wondering [1] -
68:7, 68:25, 69:4, 78:18
72:20, 75:13, 111:11, word [5] - 88:18,
117:9, 140:20 89:12, 123:6, 123:14,
warrant [1] - 32:21 136:4
warranted [1] - 67:13 words [3] - 102:24,
Washington [6] - 123:7, 123:10
1:6, 1:16, 1:22, 1:25, works [1] - 131:12
2:4, 144:14 world [3] - 28:19,
waste [2] - 74:7, 77:24, 104:2
100:10 worldwide [1] -
Wayback [4] - 68:19, 58:16
69:8, 79:23, 112:7 worth [6] - 46:21,
ways [5] - 38:16, 46:23, 47:12, 47:15,
39:2, 40:7, 42:24, 57:22, 132:19
47:18 write [3] - 9:23, 9:25,
website [7] - 41:1, 30:18
59:24, 90:7, 93:1, writes [1] - 102:15
93:14, 93:25, 105:4 writing [1] - 108:6
weight [1] - 121:9 written [2] - 51:23,
Whoa [1] - 132:18 98:16
whole [10] - 18:21, wrongdoing [2] -
19:17, 20:12, 21:5, 96:14, 96:20
27:24, 67:7, 105:24,
120:20, 121:3, 129:24
wide [7] - 18:17,
X
18:22, 37:24, 42:19,
54:8, 107:9 XENAKIS [5] - 1:20,
Williams [7] - 5:7, 118:5, 121:12,
5:16, 7:3, 7:13, 124:2, 121:14, 123:21
124:13 Xenakis [2] - 4:18,
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