Videotape Deposition of Sean O'Malley — Blue Flame Medical LLC v. Chain Bridge Bank, N.A. (Dkt. 131-9)
Summary
Case 1:20-cv-00658, Document 131-9, is Exhibit 74, the transcript of the remote videotape deposition of Sean O'Malley, taken by Zoom on Tuesday, April 6, 2021, in Blue Flame Medical LLC v. Chain Bridge Bank, N.A. In the pages shown, Mr. Madden questions the witness about anti-money laundering review of the account, including the expected activity Mr. Gula reported in DX-48 and a California wire transfer of just over $450 million. The witness agrees that the wire was six times larger than the monthly total of incoming domestic wires Mr. Gula had reported before account opening. The witness testifies that advance notice the day before the wire is less suspicious, since money laundering typically involves concealment, and calls it speculative to say whether the bank would have opened the account.
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“Videotape Deposition of Sean O'Malley — Blue Flame Medical LLC v. Chain Bridge Bank, N.A. (Dkt. 131-9).”
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Case 1:20-cv-00658-LMB-IDD Document 131-9 Filed 05/07/21 Page 1 of 6 PageID#
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EXHIBIT 74
Sean O’Malley CONFIDENTIAL 4/6/2021
Case 1:20-cv-00658-LMB-IDD Document 131-9 Filed 05/07/21 Page 2 of 6 PageID#
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1 IN THE UNITED STATES DISTRICT COURT
2 FOR THE EASTERN DISTRICT OF VIRGINIA
3 (Alexandria Division)
4 - - - - - - - - - - - - - - - X
5 BLUE FLAME MEDICAL LLC, :
6 Plaintiff, :
7 v. : Civil Action No.
8 CHAIN BRIDGE BANK, N.A., : 1:20-cv-00658
9 JOHN J. BROUGH and DAVID M. :
10 EVINGER, :
11 Defendants. : CONFIDENTIAL
12 _____________________________ :
13 CHAIN BRIDGE BANK, N.A., :
14 Third-Party Plaintiff, :
15 v. :
16 JPMORGAN CHASE BANK, N.A., :
17 Third-Party Defendant. :
18 - - - - - - - - - - - - - - - X
19 Remote Deposition
20 Tuesday, April 6, 2021
21 Videotape deposition via Zoom of SEAN
22 O'MALLEY, a witness herein, called for examination by
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Sean O’Malley CONFIDENTIAL 4/6/2021
Case 1:20-cv-00658-LMB-IDD Document 131-9 Filed 05/07/21 Page 3 of 6 PageID#
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1 counsel for Defendants/Third-Party Plaintiff in the 1
APPEARANCES (Continued):
2 above-entitled matter, pursuant to notice, the 2
3 witness being duly sworn by MARY GRACE CASTLEBERRY, a 3
On behalf of the Defendants/Third-Party
4 Notary Public in and for the State of Maryland, taken 4
Plaintiff Chain Bridge Bank, N.A.:
5 at 9:32 a.m. EDT, Tuesday, April 6, 2021, and the 5
MATTHEW M. MADDEN, ESQ.
6 proceedings being taken down by Stenotype by MARY 6
LESLIE ESBROOK, ESQ.
7 GRACE CASTLEBERRY, RPR, and transcribed under her 7
Robbins Russell Englert, Orseck,
8 direction. 8
Untereiner & Sauber
9 9
2000 K Street, N.W., 4th Floor
10 10
Washington, D.C. 20006
11 11
(202) 775-4500
12 12
mmadden@robbinsrussell.com
13 13
lesbrook@robbinsrussell.com
14 14
15 15
16 16
17 17
18 18
19 19
20 20
21 21
22 22
Page 3 Page 5
1 1 APPEARANCES (Continued):
APPEARANCES:
2 2
3 3 On behalf of the Third-Party Defendant JPMorgan
On behalf of the Plaintiff Blue Flame Medical
4 4 Chase Bank:
LLC and Mr. O'Malley:
5 5 ALBINAS PRIZGINTAS, ESQ.
JASON MITCHELL, ESQ.
6 6 Wilmer Cutler Pickering Hale & Dorr LLP
ANGIE GARCIA, ESQ.
7 7 1875 Pennsylvania Avenue, N.W.
Schulte Roth & Zabel
8 8 Washington, D.C. 20006
901 15th Street, N.W., Suite 800
9 9 (212) 663-6981
Washington, D.C. 20005
10 10 albinas.prizgintas@wilmerhale.com
(202) 729-7476
11 11 and
jason.mitchell@srz.com
12 12 GABRIEL TORRES, ESQ.
angela.garcia@srz.com
13 13 JPMorgan Chase
14 14 Assistant General Counsel
15 15 383 Madison Avenue
16 16 New York, New York 10179
17 17 (212) 270-6000
18 18
19 19 ALSO PRESENT:
20 20 JASON AQUI, Videographer
21 21
22 22
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Sean O’Malley CONFIDENTIAL 4/6/2021
Case 1:20-cv-00658-LMB-IDD Document 131-9 Filed 05/07/21 Page 4 of Page
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1 hey, we're going to have this wire come in, you 1 THE WITNESS: Expected activity is
2 should tell the bank in advance, did so. 2 essentially what it states itself to be, what the
3 BY MR. MADDEN: 3 customer expects the general activity to be. And
4 Q. Do you agree with me that, given the 4 based on my experience, in many instances, there are
5 expected activity reported by Mr. Gula and reflected 5 circumstances that occur that change that when you're
6 in DX-48, that Mr. Gula -- you would have expected 6 dealing with actual activity versus expected.
7 Mr. Gula to promptly inform Chain Bridge Bank as soon 7 BY MR. MADDEN:
8 as he knew that a $450 million wire -- domestic wire 8 Q. Okay. But my question is whether, when a
9 transfer was coming into the account; is that fair to 9 bank asks a customer to report its expected activity
10 say? 10 during a due diligence process, it expects that
11 MR. MITCHELL: Object to the form. 11 customer to report only absolute certain activity.
12 THE WITNESS: I would expect him to 12 A. Well, it's reporting what they expect the
13 provide advance notice of the wire transfer coming 13 activity to be. If they do not have certitude about
14 in. Based on the facts I've reviewed, I believe that 14 something happening, they probably won't report it as
15 prior notice was provided being that it was the day 15 expected activity. That would not be surprising to
16 before the wire transfer arrived. 16 me at all.
17 BY MR. MADDEN: 17 Q. Do you agree as a general principle that a
18 Q. And if Mr. Gula knew about the incoming 18 difference in actual activity versus expected
19 $450 million wire transfer at the time he reported to 19 activity can raise red flags under certain
20 Chain Bridge Bank the expected activity that's 20 circumstances?
21 described in Defense Exhibit 48, would that concern 21 MR. MITCHELL: Object to the form.
22 you from an anti-money laundering/BSA perspective? 22 THE WITNESS: Differences in actual
Page 91 Page 93
1 MR. MITCHELL: Object to the form. 1 activity versus expected activity are typically,
2 THE WITNESS: If Mr. Gula had confirmation 2 based on my experience, evaluated as part of the
3 that the wire transfer was definitely coming from the 3 periodic review process for customer risk rating and,
4 state of California, that -- you know, that should 4 upon review, it may or may not impact the risk rating
5 have been provided when it was an absolute certainty. 5 of the customer profile.
6 BY MR. MADDEN: 6 BY MR. MADDEN:
7 Q. But not before that? 7 Q. Okay. My question, though, was whether
8 A. Well, otherwise it's a prospective 8 you agree that a difference in actual activity versus
9 transaction. You don't know if it's going to happen. 9 expected activity can raise red flags under certain
10 It's potential business. Nothing is confirmed. 10 circumstances.
11 Q. Well, what Mr. Gula is reporting that's 11 MR. MITCHELL: Object to the form.
12 reflected in Defense Exhibit 48 is expected -- 12 THE WITNESS: And the answer I provided
13 expected activity, is he not? 13 was within the context of my experience. Expected
14 MR. MITCHELL: Object to the form. 14 activity -- the way that you're phrasing the question
15 THE WITNESS: That is an expected activity 15 appears to be that expected activity will be known
16 form, yes. 16 instantly.
17 BY MR. MADDEN: 17 In the vast majority of cases, when you're
18 Q. Right. And it's not your understanding 18 conducting ongoing customer due diligence, you
19 that when a customer reports expected activity, it 19 evaluate the actual activity versus expected activity
20 reports only transactions that have -- that are an 20 at a certain point in time in the future. It is not
21 absolute certainty, is it? 21 something that is evaluated instantaneously, you
22 MR. MITCHELL: Object to the form. 22 know, for each and every customer, you know, as --
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1 you know, as it happens. It's part of the periodic 1 it's larger, much larger.
2 review process. 2 Q. And earlier we calculated, based on
3 BY MR. MADDEN: 3 Defense Exhibit 48, an average incoming domestic wire
4 Q. Just a second. Turn if you will to page 4 of $3 million. Do you recall that?
5 12 of your rebuttal report, DX-117. 5 A. Yes.
6 A. Yes. 6 Q. You agree with me that the California wire
7 Q. I'm reading from the second sentence of 7 transfer was more than 150 times that average
8 the first full paragraph on that page, the beginning. 8 domestic incoming wire transfer, correct?
9 MR. MITCHELL: If anyone can hear me, 9 A. Mathematically, you are correct.
10 my -- 10 Q. Okay. Is that a significant enough
11 MR. MADDEN: I heard somebody. Let's 11 difference in actual activity versus reported
12 go -- 12 expected activity to raise red flags in your
13 MR. MITCHELL: Yeah, I think it's okay 13 experience?
14 now. I froze momentarily, but I seem to be back. 14 A. Looking at the size of the wire transfer
15 MR. MADDEN: Okay. All right. 15 versus the total activity expected, that's enough to
16 BY MR. MADDEN: 16 raise questions that you'd want to get answered.
17 Q. The beginning of that sentence reads, 17 Q. As you sit here today, do you know for a
18 "While a difference in actual activity versus 18 fact one way or the other whether Chain Bridge Bank
19 expected activity can raise red flags under certain 19 would have opened an account for Blue Flame Medical
20 circumstances." 20 if Mr. Gula had disclosed beforehand that he was
21 Do you see that? 21 expecting a $450 million-plus wire transfer?
22 A. Yes. 22 MR. MITCHELL: Object to the form.
Page 95 Page 97
1 Q. I've been trying to ask you, sir, whether 1 THE WITNESS: That -- to answer would be
2 it is in fact your opinion that a difference in 2 speculative.
3 actual activity versus expected activity can raise 3 BY MR. MADDEN:
4 red flags under certain circumstances. Can you 4 Q. And so you don't know, correct?
5 answer that question? 5 A. I'm not purporting to know what Chain
6 A. Yes. If it's -- if it's substantial 6 Bridge Bank would or would not have done regarding
7 enough, it can raise a red flag, yeah. 7 opening the account.
8 Q. Okay. Thank you. You agree with me that 8 Q. If you turn to page 12 of your rebuttal
9 the California wire transfer of just over $450 9 report, which is Defense Exhibit 117.
10 million was six times larger than what Mr. Gula had 10 A. Isn't that where we are now?
11 told Chain Bridge Bank prior to account opening that 11 Q. Oh, maybe it was. I apologize.
12 he expected to be Blue Flame Medical's average 12 A. That's okay. I just want to make sure
13 monthly total of incoming domestic wires, correct? 13 we're on the same page quite literally.
14 MR. MITCHELL: Object to the form. 14 Q. Exactly. In any case, page 12 of your
15 THE WITNESS: Yes. The actual wire -- 15 rebuttal report that is Defense Exhibit 117. Just
16 size of the wire transfer from California was much 16 let me know when you're there.
17 larger than the expected activity. 17 A. Yeah. Uh-huh.
18 BY MR. MADDEN: 18 Q. Great. Excuse me. I lost my place. Let
19 Q. And you agree with me that when you say 19 me come back to that. I can't find the passage I was
20 much larger, it was six times larger, correct? 20 looking for, so I'll direct you somewhere else.
21 A. Well, for domestic wires. For total 21 Is it your opinion that Mr. Gula's
22 activity, it's a different ratio. But let's just say 22 disclosure of the size of the California wire the
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Case 1:20-cv-00658-LMB-IDD Document 131-9 Filed 05/07/21 Page 6 ofPage
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1 afternoon of March 25th diffused any red flag that 1 what -- is part of the facts surrounding those
2 otherwise might have arisen from the difference 2 typologies of money laundering.
3 between the size of that wire on the one hand and the 3 BY MR. MADDEN:
4 expected account activity that Mr. Gula had disclosed 4 Q. Do those typologies of money laundering
5 that morning before account opening on the other 5 have a name or a category that you refer to in your
6 hand? 6 profession?
7 A. As an anti-money laundering professional, 7 A. Well, the one I'm thinking of in
8 yes, the fact that Mr. Gula came forth the day before 8 particularly are -- are funnel accounts where an
9 informing Chain Bridge Bank of the expected wire 9 account will be opened and then left dormant for a
10 transfer means that, okay, if any questions that 10 period of time and then a large wire transfer will be
11 would have come up regarding, hey, why is your 11 sent in typically internationally.
12 expected activity so much larger than your actual 12 These are used primarily by drug kingpins
13 activity, have been addressed. 13 and transnational crime organizations. And then once
14 Frequently, in money laundering, the 14 that one wire hits, it will quickly be sent off in,
15 objective is concealment or obfuscation. That is not 15 you know, various directions and so the effect is
16 the case here. He was forthcoming about the 16 that the account will be filled and then emptied very
17 transaction in advance. 17 rapidly, often before the bank knows really what's
18 Q. But not at account opening, correct? 18 going on.
19 MR. MITCHELL: Object to the form. 19 Q. And am I right that a part of that
20 THE WITNESS: Clearly based on the 20 typology that you're referring to involves not
21 expected transaction amounts, the wire transfer from 21 alerting the bank to the incoming filling transfers
22 California is not included in those numbers. 22 prior to them occurring?
Page 99 Page 101
1 BY MR. MADDEN: 1
A. Correct. It's the very fact that the bank
2 Q. Okay. Why isn't it more suspicious from 2 is unaware and, for all intents and purposes, prior
3 an anti-money laundering/Bank Secrecy Act 3 to the filling action, as you describe it, it seems
4 perspective, not less suspicious, that Mr. Gula 4 to be a very sleepy account. There is actually
5 changed his account activity expectation so 5 little or no -- frequently no transaction activity
6 significantly in only just a few hours? 6 whatsoever for quite some time.
7 MR. MITCHELL: Object to the form. 7 Q. Would it increase your level of concern
8 THE WITNESS: It's less suspicious again 8 from an AML perspective if, hypothetically, at the
9 because one of the primary objectives in money 9 time Mr. Gula informed the bank of the California
10 laundering is concealment, obfuscation. Anonymity is 10 wire transfer, he had reason to believe that the wire
11 another factor. And if someone was trying to engage 11 transfer was already in process?
12 in activity that I would regard as suspect for money 12 MR. MITCHELL: Objection to the form.
13 laundering, I would expect, based on my professional 13 THE WITNESS: I'm sorry, can you repeat
14 experience, that they would not disclose the fact 14 that again?
15 that they're expecting a very large wire transfer to 15 BY MR. MADDEN:
16 come in. 16 Q. Sure can. Would it increase your level of
17 In fact, there are specific typologies of 17 concern from an AML perspective if, at the time
18 money laundering where that very fact is exploited, 18 Mr. Gula informed the bank -- informed the bank of
19 the fact that an account will be open with certain 19 the California wire transfer, he had reason to
20 information and then, without informing the bank, the 20 believe that the wire transfer was already in
21 actual activity will be very different. But it is 21 process?
22 the fact that they don't inform the bank that is 22 MR. MITCHELL: Object to the form.
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