Testimony, 2023-09-06

12 13 14 15 THE COURT: My courtroom deputy is absent today and my law clerks are even apparently more technologically challenged than I am, which is saying a good deal, but we need to move this along.¶

16 17 18 19 20 21 22 23 So this is argument on the challenges under Daubert. So my preliminary view is that none of these witnesses should be admitted in any respect. It looks to me like they are mostly either irrelevant, or testifying about matters that are exclusively for the Court, or testifying about matters that are solely within the prerogative of the jury. So I am inclined to strike them all. But I will give you each an opportunity to talk me out of it.¶

24 25 I will ask each side to pick which of their experts they think is most clearly admissible, and tell me why.¶

4 5 THE COURT: So why is trafficking an issue in this case? It’s not in the statute, is it?¶

6 7 MS. BOGGS: Yes, your Honor. Sex trafficking, we need to establish that there was a sex trafficking —¶

8 9 THE COURT: Wait a minute. Let’s take a look, what is it, it’s 18 U.S.C. — give me the section again.¶

10 LAW CLERK: 1591.¶

11 THE COURT: I’m sorry?¶

12 LAW CLERK: 1591.¶

13 THE COURT: 1591. Thank you.¶

14 15 16 17 18 19 20 21 So I don’t see anywhere in the actual language of the statute the word “trafficking.” It is in the title. Of course, the law of the United States has been clear for a hundred years that the titles are irrelevant. So I don’t see anywhere in the statute any reference to the term “trafficking.” Moreover, if it were in the statute, it would be a legal term whose definition would be left to the exclusive province of the Court.¶

22 23 24 25 MS. BOGGS: Your Honor, there are factual determinations that need to be made about whether the commercial sex was engaged in through force, fraud or coercion for adults or whether there was just commercial sex with minors¶

So starting with the government of the Virgin Islands.¶

MS. BOGGS: Good morning, your Honor. Professor Carr is our human trafficking expert and all¶

4 THE COURT: Those are everyday terms that a jury can determine when properly instructed by the Court. I don’t know why we need an expert.¶

5 6 MS. BOGGS: Your Honor, in other cases they have used experts to educate the jury about what human trafficking —¶

7 8 THE COURT: Well, those are other cases not binding on me.¶

9 10 11 12 13 MS. BOGGS: So in sex trafficking cases, there are a lot of misconceptions about sex trafficking and what it looks like. For example, there are a lot of misconceptions that human trafficking victims are going to not have freedom of movement; that they’re going to be locked in a room; that —¶

14 15 16 17 18 19 20 THE COURT: So that is a question of law. If you wanted — I, frankly, am not sure you’re right in your assumption, but assuming you were, you would be entitled to an instruction to the jury that force, fraud, coercion or whatever doesn’t mean that they didn’t have freedom of movement or something like that. That’s a question of law. I don’t see it’s a question for an expert at all.¶

21 MS. BOGGS: I appreciate that —¶

22 23 24 25 THE COURT: If 500 experts testified that in their opinion that was or was not an element of force, fraud or coercion, I would have to strike all 500. They were invading my province to tell the jury what the law is.¶

under the statute.¶

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MS. BOGGS: Well, I think there’s the law force, fraud, and coercion, but what does that look like. In the example I gave you —¶

THE COURT: What do you mean what does that look like? That’s for factual evidence. These are not terms that are exactly unknown to everyday citizens. Force, fraud, coercion are terms that every member of the jury, every jury I’ve ever had, understands from their everyday experience. But if they need a more specific definition like fraud involves misrepresentations or something like that, that’s a legal question, not an expert question.¶

MS. BOGGS: So, your Honor, I appreciate that, but in other cases there has been a view that it’s been helpful to the jury to hear, for example, the bonds that can form and the relationships or that victims may not act or look how you would expect a victim to act. Having that on-the-ground information about what human trafficking looks like, for example, having a victim who may think she is —¶

THE COURT: Let me make sure I understand the argument. The argument is the functional equivalent if someone was on trial for murder, you think an expert could be admitted: Ladies and gentlemen, although I’m not speaking to the facts of this case per se, because I have no personal knowledge of the facts of this case, as an expert on murder, I want to tell you how murders are often carried out. I can’t believe any court¶

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in the United States would admit that, and certainly it doesn’t meet Daubert.¶

MS. BOGGS: Your Honor, I think that’s a distinct scenario. Here, sex trafficking is not very well understood so the examples I have given you, there are a lot of popular misconceptions, and that’s something that both of the proffered experts in this case agree —¶

THE COURT: I don’t agree. I don’t know what their basis is for saying that. But, in any event, as I say, if a jury is under what you believe is a misconception, then you’re entitled to instruction to clean up or counteract those misconceptions. Those are misconceptions about the meaning of the statutory terms, which is a question of law.¶

MS. BOGGS: Well, Professor Carr will also talk about red flags that are used in the field to see whether there’s human trafficking and to identify potential human trafficking, and that’s an industry standard that is also helpful to have an expert’s testimony so that we can identify particular red flags in JP documents.¶

THE COURT: Wait a minute this goes now to what JP should have doped out?¶

MS. BOGGS: Well, it goes to that there were in the field of human trafficking, there are certain red flags that are indicative of human trafficking and whether or not — first establishing what those red flags.¶

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THE COURT: Red flags indicative of human trafficking. Remember, trafficking is not in the statute. So you think you need an expert to tell what there — there are red flags of force, fraud, coercion, threats? Why isn’t that just everyday evidence about what happened in this case?¶

MS. BOGGS: Your Honor, for example, one of the things that Professor Carr opines about is that JP role in setting up an account for young models at a private bank on behalf of Jeffrey Epstein or at his request was indicative of sex trafficking because the modeling industry is one way that girls are sometimes recruited into sex trafficking and how that should be a red flag for sex trafficking at a financial institution.¶

THE COURT: So what element of your causes of action is that related to?¶

MS. BOGGS: It relates both to the existence of a sex trafficking venture that there was commercial sex engaged in with force, fraud, or coercion or minors —¶

THE COURT: So with respect to that, Mr. Epstein’s activity, the evidence is Mr. Epstein’s activity, not whether it suggested something in the abstract that was a red flag of improper sex activity. Either he did it or didn’t, which, to be , I don’t think should be very difficult for you to prove in this case. But in any event, the relevant thing is what he did. Okay.¶

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So then we turn to your second element, which is what you think the bank should have figured out, right?¶

MS. BOGGS: That’s correct. And so having an expert talk through the role of how sex trafficking — the red flags and how it would present in these documents.¶

THE COURT: Red flags to whom? To bankers?¶

MS. BOGGS: Correct, within JP¶

THE COURT: And which expert has the expertise in what a banker should have perceived?¶

MS. BOGGS: Well, Professor Carr can opine about red flags in human trafficking and —¶

THE COURT: Yeah, well, I — yes, and then I — again, it seems to me you’re making — and both sides are making much more complicated what is a straightforward issue. Depending - and it’s still part of the summary judgment motions that I have to decide, but either you’re going to have to show the bank knew or recklessly disregarded evidence that their money was being used to promote sex trafficking or you’re going to have to show that they knew or should have known that it was being done. Under any of those standards, familiar standard standards that have been part of the legal system for about a thousand years, the question is what should a reasonable banker in this position should have known, if it’s the negligence standard, or what should — or what did in fact the banker know or willfully disregard information actually given to him.¶

On the latter, I don’t see the relevance of the expert at all. On the former; that is to say the negligence standard, I think the — I don’t see any of the experts really speaking to that as opposed to just what they think in the abstract are red flags of sex trafficking.¶

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MS. BOGGS: Your Honor, the role of Professor Carr would be to explain to the jury what are the red flags of sex trafficking and also look through JP documents. For example, some of JP own compliance policies talked about sex trafficking and red flags for sex trafficking. And so that would be the role here is to offer that expertise and explain what they should have been looking for when they’re reviewing documents and how those red flags appear in this case.¶

THE COURT: Do you agree that if I adopt on summary judgment the argument made by your adversary, that the standard is either that they knew or willfully — recklessly disregarded knowledge that their money was being used to promote sexual misconduct, that what you just proffered would be irrelevant?¶

MS. BOGGS: No, your Honor. I think it would still be helpful for the jury to be educated about the red flags of sex trafficking so that they can identify along the documents of JP¶

THE COURT: I think it’s a complete diversion from the facts of the case. But, all right, I hear your arguments.¶

4 MS. ELLSWORTH: Thank you, your Honor. We disclosed four experts. Only three have been challenged by the government of the U.S. Virgin Islands —¶

5 6 7 THE COURT: As you may know, under Daubert, the Court has an independent duty to conduct a rigorous analysis, so it doesn’t matter whether it’s been challenged or not.¶

8 9 10 MS. ELLSWORTH: An expert they didn’t challenge would only be responsive to two of the experts that we challenged, your Honor, and not Ms. Carr—¶

11 12 THE COURT: So assuming I knock them out, two of yours go.¶

13 MS. ELLSWORTH: It would be one I think, your Honor.¶

14 15 16 17 18 19 In any event, the expert that has been challenged by the U.S. Virgin Islands that you heard briefing on that I would submit doesn’t fall prey to the any of the problems that you correctly identified I think with Ms. Carr’s report would be Fonseca. He is a retired FBI agent who spent 20 plus years conducting sex trafficking investigations.¶

20 21 THE COURT: Hang on one second. Let me look at my notes on him.¶

22 23 24 25 MS. ELLSWORTH: Your Honor, in particular, if the Court does not grant our summary judgment motion on the obstruction count, Mr. Fonseca’s testimony would be particularly relevant. If the obstruction count is removed¶

Let me hear from defense counsel and their best shot.¶

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from the case, then I think we have to assess whether it would be still be youthful to the jury to still hear from Mr. Fonseca.¶

THE COURT: I’m sorry. I don’t know why I’m having trouble finding my notes on him but hang on. There it is.¶

So as I understand it, he is going to say that based on his prior experience as a special agent, that filing additional SARs by JP would not have caused earlier federal charges against Epstein to be filed. Putting aside completely the hearing that occurred in my court yesterday in which representatives of several government prosecution agencies; namely, the New York City Police Department, the Alcohol Tobacco and Firearms Agency, and the U.S. Attorney’s Office, said that the reason they had investigated Mr. X, the defendant in another case before me, was because of the SARs filed by a little-known bank called JP Chase. Putting that all aside, as I understand it, he has no prior experience with SARs.¶

MS. ELLSWORTH: That’s exactly the point, your Honor. He has experience with sex trafficking investigations on behalf of the Federal Bureau of Investigation. I expect his testimony, if allowed to be presented, would cover the types of material and information that he found useful as a special agent who conducted actual sex trafficking investigations, including the type of financial information that they might go¶

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out and seek in the course of an investigation, which would be sought by subpoena and not by looking at regulatory filings that might be might with another department.¶

THE COURT: I’m not sure what the relevance of this is. The question if I — if Mr. in my hypothetical purposely fails to bring to the attention of a government agency as required, suspicious or even criminal activity, and does so for the purpose of making sure that the government writ large never finds out about this activity, what more is needed for obstruction?¶

MS. ELLSWORTH: Well, I agree that that type of purposeful conduct is what the U.S. Virgin Islands will have to attempt to prove to make out their obstruction claim. What Mr. Fonseca would testify to would be whether additional — the theory, as I understand it, that the plaintiff will seek to establish at trial is that had JP made additional reports to the federal government, that somehow would have spurred more investigation of Mr. Epstein or perhaps a sooner investigation of Mr. Epstein. So in response to that theory, Mr. Fonseca’ testimony —¶

THE COURT: But if they are charging obstruction even from a civil standpoint, they still have to show intent.¶

MS. ELLSWORTH: Correct.¶

THE COURT: So they have to show that the reason these SARs were not filed was because it was believed it would — it¶

4 MS. ELLSWORTH: I think that’s right, your Honor. And won’t re-argue the motion, but I don’t see a world in which they could possibly prove that. Putting that to the side —¶

5 6 7 THE COURT: So assuming that’s what they have to show, what does it matter what a guy in the FBI years ago would have done or would not have done?¶

8 9 10 11 12 13 14 15 MS. ELLSWORTH: Well, then I suppose if the government — if the plaintiff is held to not being allowed to suggest to the fact-finder that filing additional reports would have spurred some action, if they’re not allowed to make that argument, then maybe Mr. Fonseca’s testimony which rebuts the theory that additional federal reports would have somehow spurred some different action, potentially then that testimony would be —¶

16 17 18 19 20 21 THE COURT: Well, yeah, I’m not going to deal today with something that is implicit in any pretrial ruling that the Court makes regarding evidence, which is if the door is opened somehow by the other side, then stuff that is otherwise irrelevant may become relevant. That’s true of motions in limine, and it’s true of a Daubert motion as well.¶

22 23 24 25 But at least operate assumption which I think I will hear from the defense, but I think is very likely where I am not going to come out, which is they’ve got to show obstruction intent to carry their burden on the — to some — you know, it¶

might lead to government action, government criminal action.¶

may be — intent may include reckless disregard, but I’m not sure it would be in the obstruction area. It probably would just be intent straightforward, I don’t see the relevance.¶

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MS. ELLSWORTH: Well, I think, again, most of our experts are responsive to the testimony that the Virgin Islands would put on.¶

THE COURT: And I agree with you if I am persuaded contrary to where I am leaning at moment to allow in some of their experts, then to the extent your experts respond to what I allow in, likely that your experts could be admitted too. But at least at the moment I’m leaning the other way.¶

MS. ELLSWORTH: And the last point I would make about Mr. Fonseca, your Honor, is the testimony that he would provide would — putting aside the obstruction count, which may or may not even be proceeding, to the extent the U.S. Virgin Islands is arguing, as they have throughout this case, that the failure by JP to file enough reports or to include certain information in those reports somehow creates either participation in or knowledge of a sex trafficking venture as they have to prove under the participant beneficiary liability count, then Mr. Fonseca’s testimony about the fact that that was not information he ever used in his 23 years in the FBI and not information that would have been relevant to the actual federal criminal investigation of the sex trafficking, I think could have —¶

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THE COURT: Just out of curiosity, what is his — what does it matter whether he personally would have used this stuff or not? He may have been a lousy investigator for all we know. But his personal experience is not, I think, admissible under Daubert. Under Daubert he has to identify a methodology that would be used by law enforcement generally or something like that, and I am not hearing where he says that.¶

MS. ELLSWORTH: Well, he’s saying the FBI in his division of the FBI this is what they did. So there’s not testimony from the U.S. Virgin Islands that says here’s what the FBI, you know, have a current —¶

THE COURT: Is that why they got so many cases wrong, in all the instances of the Innocence Project has now shown that they got wrong? That’s an unfair comment, but I couldn’t resist.¶

But so how does he say — when he’s saying in his experience the FBI doesn’t look at this stuff —¶

MS. ELLSWORTH: He’s saying that —¶

THE COURT: — and shame on the FBI if that’s correct. But anyway, if that’s what he’s saying, how does he know that? Is that a policy of the FBI do not look at SARs?¶

MS. ELLSWORTH: What he’s saying is that the FBI has at its disposal lots of resources to obtain information, including financial information when it’s conducting an investigation, and that it does not use these types of treasury¶

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reports for a sex trafficking investigation. Whatever the case is that your Honor had yesterday doesn’t sound like it was a sex trafficking case.¶

THE COURT: No, it was an identity theft case, so the — and I am, you know, that was a separate case, but I don’t quite understand if — supposing the SAR in my hypothetical had said: We are very suspicious for the following reasons that Mr. Epstein is using our money to engage in sexual coercion of minors on a massive scale, and you’re saying that he will testify, “II, we couldn’t care less. We don’t want to know that. We would totally ignore that. We wouldn’t expect anyone to bring that — in treasury to bring that to our attention. We don’t do that kind of inquiry.” Is that what he’s going to say?¶

MS. ELLSWORTH: No, your Honor. I think what he would testify to is that the way that a sex trafficking investigation is conducted does not start nor finish nor is it particularly aided by these reports to a completely different branch of government that relate to financial regulations and not to sex trafficking. What a sex trafficking investigation looks like is interviews with victims and subpoenaing potential third parties that might have information. JP never received—¶

THE COURT: We all know what a great job they did with Mr. Epstein. How many decades did they take to finally¶

identify his misconduct?¶

All right. Thank you very much. Let me hear from plaintiff’s counsel on the point just raised.¶

4 5 6 MS. ELLSWORTH: Your Honor, do you want me to respond to the argument about Ms. Carr or do you have on what you need on Ms. Carr?¶

7 8 THE COURT: Let me hear from the other side on the point you’ve just raised.¶

9 MR. ACKERMAN: David Ackerman. Good morning, Judge.¶

10 11 12 13 14 15 16 17 18 19 On the point just raised, I think you did hit the nail on the head when you mentioned that he’s testifying about his own experience because that is all that Mr. Fonseca is doing. He admitted in his deposition he didn’t know what other FBI agents were doing in other FBI field offices. I would also note that although JP briefing describes what they claim is a truism, which is more information is better for law enforcement, Mr. Fonseca for some reason is standing up and saying the opposite, which is, well, we wouldn’t want that information. So those are the responses that I have.¶

20 THE COURT: Okay. All right. Yes?¶

21 22 : Your Honor, if I may speak to another of the U.S. Virgin Islands’ proposed experts Mr. Amador.¶

23 Linda by the way.¶

24 25 So Mr. Amador serves I think a particularly important function in this case. He is the certified forensic accountant¶

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presented by the U.S. Virgin Islands. This case, as your Honor is well aware, involves financial records spanning from 2002 through 2013 and then beyond. Financial information is contained in monthly financial statements for more than 130 different Epstein accounts. As JP has acknowledged, more a billion dollars of transactions flowed through those accounts. Mr. Amador is the expert who uses his professional experience to frame those financial transactions which are really at the heart of the U.S. Virgin Islands’ case. Those are the kinds of voluminous records that particularly lend themselves to an expert’s presentation to the jury which would otherwise have to sort through a dizzying array of financial information. Mr. Amador has presented those financial transactions, including extensive cash payments, payments to women, other forms of payment in charts that we think will be particularly helpful to the jury.¶

THE COURT: So a couple of questions about Mr. Amador first. If I conclude as part of the rulings on summary judgment that the standard is actual knowledge or reckless disregard as opposed to negligence, what’s the relevance of his testimony?¶

: I think what Mr. Amador does is present to the jury exactly the information that was available and actually presented by JP including in its 2019 filing, which we talked about with the Court last week. So I think he¶

4 5 6 7 8 9 THE COURT: Well, also, I mean, for example, as part of his testimony, as I understand it, is that Mr. Epstein’s payments to lawyers were suspicious because they seemed like a large amount of legal fees. What possible relevance is that and how is he arriving at that opinion? I would have thought that counsel in this case are being paid such a huge amount that we also should be very suspicious of all the lawyers in this case.¶

10 11 : If only, your Honor. We do not have that problem, unfortunately.¶

12 13 14 15 16 17 18 19 20 21 22 23 24 25 So Mr. Amador serves two functions: One is the basic presentation organization of the financial information. The second is based on his experience as a certified forensic accountant, he does identify unusual or exceptional transactions. He presents a range of them that in particular would have been available to the financial professionals and compliance officials at JP . The first is cash, of obvious significance in Mr. Epstein’s case, given his known history of paying for victims and recruiters with cash. The payments to women, which he observes, based again on his experience as a certified forensic accountant, were inconsistent with Epstein’s business activities. And then he also does talk about attorneys in a particular regard in light of the other transactional information that was present in this¶

is directly relevant to the reckless disregard standard.¶

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case, but also the trend of it. And that’s what Mr. Amador talks about.¶

So one of the questions obviously at play in the obstruction count is whether there was an ongoing investigation. I would point out, by the way, that Exhibit 4 to Ms. Ellsworth’s declaration in this case also includes information that that was an ongoing investigation because it notes that victims were being interviewed, or at least one victim in 2011. But put that aside, Mr. Amador is able to observe based on his analysis of the financial records that if he wasn’t engaged — if Epstein was not engaged in ongoing traffic, then you would expect his legal expenses to decline over time, but they didn’t. And that itself was a red flag to JP that he continued to engage in conduct and was the subject of ongoing investigation.¶

And Mr. Amador explained that that is the kind of trend information both that he as a forensic accountant, and he cites to standards that he applies, the American Association — I’m sorry — AICPA standards for forensic services. He also cites to the FFIEC manual which points to the red flags that banks should observe in monitoring or conducting due diligence of financial accounts. And, again, excuse me, I lost my train of thought. But, again, that goes directly to the reckless disregard standard in this case, although we stand by our argument that while we meet reckless disregard that the¶

4 Okay. Let me hear from defense counsel.¶

5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MS. ELLSWORTH: So as to Mr. Amador, your Honor, as just indicated, he purports to conduct a comparative analysis of things that should have been suspicious or highly unusual is another opinion he purports to offer, payments out of the Epstein accounts without actually comparing them to anything. He didn’t compare Mr. Epstein’s account activity to any other account activity at the bank or to any other account activity that he was familiar with in the course of his work. He’s a CPA. He’s not a banker. The idea that somehow this flow of funds, the trend, whatever it is that he purports to identify, is suspicious or unusual, he doesn’t have a basis to make those sort of judgments or to experience-wise. He also provides provides no suggestion that here’s offer that type of opinion no comparator. So he an account of similar magnitude of funds, but we see fewer payments to lawyers, or the payments to names that sound female are less than names that sound male. He didn’t even look at whether there were male-sounding names that received payments out of the Epstein account, and of course there were. So the whole sort of comparative analysis that he purports to offer is both not grounded in any reliable methodology but also not something on¶

standard here ought to be negligence for the —¶

THE COURT: I haven’t resolved that yet. I will though as part of the summary judgment motion.¶

4 5 6 7 8 THE COURT: It’s a very funny argument that I understand plaintiffs are saying, well, it’s just one aspect of his opinion, and I will look at all aspects, but to say that a lot of payments to lawyers is somehow proof of anything, you know, so it’s clear that Donald Trump hasn’t committed any crime because he never pays his lawyers, so — but we will regard that comment as facetious.¶

9 So, anyway, the — but I understand your point. Okay.¶

10 11 Is there anything further that any one wanted to say before we conclude this hearing? Yes?¶

12 13 : Your Honor, if I may just briefly respond to counsel’s points on that.¶

14 THE COURT: Yes.¶

15 16 17 18 19 cites no authority for the proposition that a forensic analysis has to be comparative, and I think there is none. In fact, the fact that everybody is doing something, as I frequently told my children, is not proof that it is an appropriate thing to do. You look at —¶

20 THE COURT: Are you offering yourself as an expert?¶

21 22 : No. My children would certainly come in as adverse witnesses on that point.¶

23 24 25 You can certainly have conduct that is suspicious, unusual, or exceptional in light of the prior history of that customer in terms of their business purpose and in terms of the¶

which he has any basis —¶

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bank’s own knowledge. So I think the idea that this needed to be comparative is simply unfounded.¶

I want to respond to the point on men because I know JP extends — takes issue with that in their briefing. Mr. Amador does testify that there was no trend with regard to men that he observed in his analysis of data, and that in fact the payments to men were smaller, they weren’t round dollar and repetitive, or of that kind of significant in volume, which I think again goes to the point of why Mr. Amador’s detailed knowledge and expertise is useful to the jury to address those kinds of misassertions.¶

In terms of other experts to present to your Honor, taking your invitation very briefly, I do want to address the U.S. Virgin Islands banking expert Professor Rush. And I would, by the way, point your Honor to — with hesitancy point your Honor to any legal cases, as I know you are so familiar with them, but Sharkey v. JP case is another case against this defendant makes just this point; that there the expert testified as to what conduct included “red flags of possible fraud and/or money laundering in the financial industry including incomplete due diligence, suspicious fund transfer activity” —¶

THE COURT: If I understand Mr. Rush’s proposed testimony, he is going to say that he looked at all of your evidence, and that he concluded that it showed that Mr. — I’m sorry — that the defendants had committed one violation or another, and, I mean, that’s the ultimate question for the jury, is it not?¶

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: I don’t believe so, your Honor. I think what Professor Rush does importantly is explain, based on regulatory guidance, prudent banking practice, and JP own policies and procedures, first, again, what the red flags of suspicious financial activity are that regulators advise banks to monitor. These are reflected in complicated guidance from regulators like the federal financial institutions examination council which is not going to be familiar to members of the jury. He explains what a financial institution is expected to do when it observes those red flags. He explains why SARs were untimely and inadequate in this case, the importance of SARs to financial regulators. All of those things are the kinds of evidence or expertise —¶

THE COURT: Let me make sure I understand. Is he saying that a banking employee would have seen these red flags or is he saying that if they had had a better are detection program in place, then they would have seen these red flags?¶

: He is saying that they would have seen these red flags.¶

that? THE COURT: So what’s his basis for saying all of¶

He summarizes and explains —¶

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THE COURT: Is he a former banking employee?¶

: Not of JP , your Honor. He was a former compliance official at Wells Fargo, and he was the chair of the interagency task force responsible for financial enforcement in the federal government, so he understands these issues as a regulator, as a prosecutor —¶

THE COURT: Well, no, no. But I don’t think a regulator or prosecutor is relevant to what you just told me. If his testimony is to say that a reasonable bank employee would have seen these suspicious activities, which, by the way, that would only be relevant if the standard was negligence, but assuming for the moment the standard was negligence, then that has to be based on his knowledge and experience of what a bank employee would be called upon to see, do, whatever; not upon what a law professor what see, do, or whatever or what someone handling some commission would see, do, or whatever.¶

: Except, your Honor, to the extent that as a regulator and prosecutor, and he was also head of corruption and bribery at Wells Fargo, so did work in the private sector in compliance, and as an academic understands what an effective BSA-AML compliance program identifies to a bank, and that is confirmed by the evidence that he will point to that shows that it was observed. So it is framing the red flags that would have been evident to JP and then organizing the facts that provide the basis for that opinion.¶

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THE COURT: All right. Let me hear briefly from defense counsel, and then I have another matter, telephone conference at 11:00, so we need to bring this to a close.¶

MS. ELLSWORTH: Thank you, your Honor. I’ll be brief.¶

Professor Rush is, like several of the other disclosed experts of the U.S. Virgin Islands, serving merely as a mouthpiece for counsel. He goes through emails and documents and tells a narrative that is the U.S. Virgin Islands’ theory of the case. That is not the province of an expert. It is the province of a fact-finder to look at those materials.¶

He also does not have experience in evaluating the effectiveness or adequacy of BSA or AML compliance programs. He was a federal prosecutor in fraud. He didn’t do BSA-AML compliance reviews. If he did, he did maybe one or two. Then spent three years at Wells Fargo relatively recently, so not during the time period in question when allegedly these so-called red flags would have been apparent to JP . So I think the testimony is improper for a variety of reasons.¶

The first is it does not provide any expertise or helpfulness to the jury. It is simply a recitation of evidence that the jury can weigh itself.¶

Secondly, he doesn’t actually have the relevant expertise to provide the opinions he purports to offer.¶

And the third is to the extent he offers an opinion that is within the province of expert testimony, it would be¶

simply that the BSA-AML program at JP prior to 2013 was not as good as it could have been, which would simply be a negligence-type this case which demonstrated, a opinion which has no relevant to the claims in require, as your Honor questioning has knowing and intentional obstruction of some sort of investigation, or a knowing and intentional violation of the BSA as opposed to here we’re talking about the TVPA.¶

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The last point I would note is he also has this impermissible attempt to calculate what the criminal sentence would be under the United States Sentencing Guidelines. The Court doesn’t really need any help with that at all, but at a minimum, that should certainly not be presented to the jury.¶

THE COURT: Yes, and I will put out of my mind when addressing that particular question the fact that, as I have stated at least 200 times now on the record, I regard the Sentencing Guidelines as totally irrational. But that’s a separate issue.¶

Very good. Thanks so much.¶

(Adjourned)¶

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