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Friday, June 21, 2024
In Hwang Trial For Archegos $34B Meltdown Tomita on Pre Market Trading in China ADRs
By Matthew Russell Lee, Patreon Substack
SDNY COURTHOUSE, June 21 – In the wake of the Archegos meltdown, the other shoe dropped on April 27, when the US Attorney for the SDNY unsealed and indictment charging Bill Hwang Patrick Halligan, Archegos’s CFO with racketeering conspiracy, securities fraud, and wire fraud offenses.
Inner City Press went to the SDNY press conference to ask, What about Credit Suisse and Nomura and people in those banks? What about the massive family office loophope to the Investment Advisors Act of 1940? This has come up in the OneCoin fraud case, on which the Office used perjured testimony and now agrees to delay after delay.
Damian William referred obliquely to Hwang doing it in the dark, but otherwise the issue - which is addressed by a pending bill in Congress - did not come up. Nor did Lisa Monaco, present in New York for the presser, address it.
On June 1, newly assigned District Judge Alvin K. Hellerstein held a conference in the case. Inner City Press attended and live tweet it here (and asked defense counsel a question later, here). Thread here.
And after, stand-up here, short Q&A here.
On June 20, 2023 Judge Hellerstein pushed the trial back: "Trial in the above-captioned criminal matter, by request of all parties, is adjourned from January 9, 2024 to February 20, 2024 at 10:00 a.m., in Courtroom 14D. The Final Pretrial Conference will be held on February 14, 2024 at 2:30 p.m. Time is excluded in the interest of justice from January 9, 2024 to February 20, 2024 pursuant to 18 U.S.C. § 3161. SO ORDERED (Signed by Judge Alvin K. Hellerstein on 6/20/2023)."
On July 27, Hwang wrote in seeking approval of subpoenas to Goldman Sachs, Morgan Stanley, Bank of Montreal, Credit Suisse, UBS, Nomura, MUFG, Mizuho, Macquarie, Jeffries and Deutsche Bank, to show he did not "use his lawfully executed swaps to artificially impact the prices of the underlying stocks."
Jump cut to November 14, 2023 when Judge Hellerstein held an oral argument on the subpoena requests. Inner City Press attended, in mask, and tweeted, threadette:
Hwang is here at defense table, with COVID mask and foyr lawyers at table, one behind.
Judge Hellerstein: Manipulation for manipulation is meaningless. How was it intended to make money? When? There are many different ways to hedge. I'd like to see them narrowed
Berke: Your Honor, you've done a lot of cases, but this is the 1st one in which DOJ is charging manipulation of swaps
Judge: It's hard to defend against manipulation. Mr Berke deserves a discussion. US v Nixon provides the boundary.
Berke: Thank you
And well he might say that - it seemed the defense won this round. He mocked what he called the prosecution's theory of "pump and brag," that Hwang did it to brag he'd built a family office into a major firm.
On January 3, 2024, still mostly masked, Judge Hellerstein said the proposed experts are qualified, that sufficient notice is the issue. He said he will follow Judge Jed Rakoff's decision in US v. Mrabet, which Inner City Press also covered. At the end Judge Hellerstein said, with a laugh, Don't settle this case, I want to try it.
More details on Substack here
On May 1, 2024, the US Attorney's Office wrote in to specify that at trial they intend to put forward evidence about Archegos' predecessor Tiger Asia, including that the SEC banned Hwang from acting, among other things, as an investment adviser.
On May 6, Halligan's counsel wrote in that the evidence should not be admitted at trial, as little of it involves Halligan but he would be prejudiced by it.
On May 15 in the trial, Mr. Marks of Operations testified about reports only to Bill and Patrick, then Mr. Jones about flying from Dallas amid the meltdown. Thread here
On May 21, the US insisted that evidence of Hwang's "decision not to reimburse employees for lost deferred compensation" should remain in evidence before the jury."
Full letter on Patreon here.
On May 22, Inner City Press live tweeted cross examination of cooperator Becker, here. In the midst of it, an announcement by Judge Hellerstein of the birth of a baby, and applause in the courtroom (it's in the thread).
On May 23, Becker continued - from the thread:
Becker is asked about his message, "Whatevs, we'll just roll with it."
Counsel: Turning to your lost vacation days, Mr. Becker, you felt you had never worked harder than at Archegos, isn't that true? Becker: Yes.
Counsel: You had 3 weeks of vacation - couldn't carry it over and you were angry, right? Becker: Correct.
Halligan's lawyer: You didn't want Mr. Halligan involved in your project, did you? He called you careless-
Judge Hellerstein: Haven't we gone over this? It's done. Finished. Halligan's lawyer: You felt he didn't show appreciation Judge Hellerstein: Move on
Now re-direct: AUSA: Mr. Becker, Mr. Berke didn't show you this sheet, did he? Objection! Overruled. Becker: He didn't.
AUSA: You were asked some questions about conversations with Mr. Halligan. Why was it so frantic? Let me off this March 23 chat, 3745
Judge Hellerstein: Jurors, have a good weekend. [Jurors leave] Defense: Can we discuss schedule for next week? Judge: Tues and Wed 10 to 5. Can't say about Thursday. Government, how are we doing?
AUSA: We expected Becker 1 week, on schedule
Judge Hellerstein: Done in 2 weeks? AUSA: That's aggressive. Adjourned.
On May 28, the US Attorney's Office filed a letter seeking permission in advance to ask "what if you had known" questions of the type blessed by the 2d Circuit in US v. Cuti (2013), starting with Bank of Montreal's Joseph Boccuzzi on May 29. Letter on Patreon here
May 29 ended with a dispute about a government chart, long and short positions, which Hwang's lawyer Berke called argumentative, from the thread
On June 5, Inner City Press live tweeted, thread
On June 6, government expert testified about, among other things, dark pools, thread
On June 10, cooperation William Tomita began on the stand, from thread:
Tomita: Yes. They were traders, executing the trades on behalf of Bill. Bill would yell at me, Don't list to Andy, you answer to me
On June 11, Tomita continues. From thread:
On June 14 to start the trial day after a two day hiatus, counsel for Halligan complained about Bank of America witness / issue, thread.
On June 17, Tomita still on the stand, thread
Scheduling: In US v. Hwang (Archegos) case, Judge Hellerstein was just asked about when closing arguments will / can be. He said he'll tell the jury they will *try* to finish before July 1 - one juror has to end then, or be replaced - but closings on July 8 were also floated
On June 18, Tomita was on the cross, thread
On June 20, after Juneteenth, Tomita was on cross, thread
On June 121, yet more Tomita cross, Inner City Press was there, from the thread:
OK - now Friday in US v. Hwang of Archegos, cooperator Tomita *still* on the stand, testifying about Chinese stocks, cross by Hwang's' lawyer Berke.
Hwang's lawyer Berke: Do you recall that you bought shares of TME in your personal account on February 4? Tomita: I don't remember the timing. Berke: Why did you invest in TME? Tomita: I believed Bill that it was a good investment.
Hwang's lawyer Berke: I want to ask you about pre-market trading - at Archegos in the 2020 to 2021 period, there would be AM notes on the stocks Archegos was invested in?
Tomita: I know we published them before COVID but I think we got too busy \
Hwang's lawyer Berke: Here's an April 2020 AM note.
Judge: Admitted... Excuse me, I need a personal minute. Berke: Of course, Judge.
Back on March 21, 2023 Judge Hellerstein held an hour and a half proceeding in which he denied more than a dozen motions by Team Hwang. Inner City Press was there and live tweeted, thread here.
More including on Halligan on Substack here.
Later - after re-up of book and talk to NYU Journalism School, here and here - in the SDNY Magistrate a defendant was detained until trial, charged as a felon in possession. We'll have more, much more, on this.
The case is US v. Hwang, 22-cr-240 (Hellerstein)
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In Miles Guo Trial Cross of Himalaya Exchange CEO Brown Veers Into Q&A on What Is Crypto
by Matthew Russell Lee, Patreon Substack
SDNY COURTHOUSE, June 21 – After a circus-like civil case involving Guo Wengui in the U.S. District Court for the Southern District of New York, which Inner City Press closely covered, here, March 15, 2023 saw the unsealing of a twelve-count Indictment of Miles Guo onvarious wire fraud, securities fraud, bank fraud, and money laundering charges.
On May 22, Inner City Press live tweeted jury selection, here.
Many were excused from the jury pool.
More detail / some analysis on X for Subscribers here & Substack here
At the end of May 23, Judge Torres told the remaining jurors that the trial would start Friday. Thread.
More details on X for Subscribers here and Substack here
And it did. Inner City Press live tweeted the opening and first two witnesses, an FBI agent about the Greenwich search, and a Dallas based Lamborghini dealer, thread here.
Jump cut to June 15, three weeks and and the trial moving too slowly. The defense wrote in, "We write in response to the Court’s order that trial next week will be held from 9:30 am to 5 pm to allow the government additional time to catch up to its previous trial estimate.... spreadsheet attached as Exhibit A, shows that the defense is regularly left with little time to prepare for cross-examinations, which leads to, among other things, prolonged examinations." Letter and spreadsheet (with witness names) on Patreon here.
On June 17, from the first extended day, thread
On June 18, more from the witness Ms. Reyes, thread
On June 21, Himalaya Exchange CEO Jesse Brown was cross examined about how crypto works, and the claim H Coin was backed by gold that could be seen on live stream, Inner City Press was there, from the thread:
Now in US v Miles Guo, cross examination on crypto.
Guo's lawyer: You can't see transactions can happen inside a wallet and not on the blockchain, right? Witness: Yes. Guo's lawyer: In 2020 crypto was hot and your phone was ringing off the hook?
Witness: My phone always rings off the hook [Laughter in the courtroom
Guo's lawyer: What did you discuss with William Je? Witness: Blockchain. He was very knowledgable. He said we wanted to be the biggest exchange in the world.
Same witness still on the stand. Guo's lawyer: Was it your understanding it would be backed by gold? Witness: It was to be held in another place with a public live stream. Guo's lawyer: Mr Je was the ultimate beneficial owner? Witness: Yes
Guo's lawyer: You say that the exchange had nothing to do with being anti CCP? Witness: Yes. Guo's lawyer: Were the DDOS attacks on the exchange related to being anti-CCP? Witness: There was talk
Guo's lawyer: Mr. Brown, let's talk about your non-prosecution agreement - who determines if you're telling the truth? Witness: I do. Guo's lawyer: No further questions Inner City Press @innercitypress · 4h Judge: We're done for the week.
More detail and analysis on X for Subscribers here and Substack here
The case is US v. Guo, et al., 23-cr-118 (Torres)
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In Felix Sater Almaty Case Talk of Neil Bush and Kazakh Extradition Bots for Arab Spring
By Matthew Russell Lee
SDNY COURTHOUSE, June 21 –The City of Almaty in Kazakhstan is active in the U.S. District Court for the Southern District of New York, with at least two case before SDNY Magistrate Judge Katharine H. Parker.
Inner City Press has covered the litigation with Felix Sater, with another proceeding coming up on August 23, 2022.
On August 16 in a related case, cross defendant Mukhtar Ablyazov was being described as a scoff law with some sort of asylum in France. He was, in fact, on the line; he described himself at the number one political opposition leader in Kazakhstan. His adversary chided him for using the proceeding to make political speeches.
This case is City of Almaty, Kazahkstan, et al. v. Mukhtar Ablyazov, et al., 15-cv-5345 (Koeltl / Parker)
Previously before Judge Parker, Felix Sater was asked if he remembered election day 2016 as a notable day.
It was "a notable day for all Americans," Sater replied, smiling. Moments later when the same lawyer, Matthew Lane Schwartz of Boies Schiller Flexner LLP began a question about Sater knowing it is a felony to lie, Sater shot back, YOU know it is a felony - until Judge Parker cut it off.
Jump cut to March 24, 2022 when Sater had filed motions to extend discovery and to join Arcanum and the Republic of Kazakhstan. Judge Parker convened the parties in her 17th floor courtroom and Inner City Press was there.
Sater's lawyer said his client had initially thought this was just a garden variety commercial case.
Judge Parker said, But it's about money laundering. Is that garden variety commercial?
Sater's lawyer emphasized that Arcanum was hired to find dirt, and that should not be covered by sovereign immunity. It emerged Sater has filed discovery requests about Robert Mueller.
Almaty, Kazakhstan through Boies Flexner said Sater had been on notice and it is too late. Judge Parker took the motions under advisement.
On May 9 the (re-) assigned District Judge John G. Koeltl adopted the report by Magistrate Judge Parker denying Sater's request to amend and add claims against Kazakhstan and Arcanum. Full order on Patreon here.
Back on October 7, 2020 Judge Parker held another discovery conference in the case. Inner City Press covered it. It emerged that a September 30 deposition of Sater had to be called off when he traveled to Guyana and said he had no Internet there.
Jump cut to December 20 when District Judge John G. Koetlt to whom it was reassigned when Judge Nathan was promoted to the Second Circuit set a trial date: "ORDER: As discussed at the conference held today, the trial in this matter is scheduled for June 10, 2024, at 9:00 a.m."
On May 16 in the run-up, this: "JOINT PRETRIAL ORDER The Sater Defendants do not intend to dispute many of the arguments made regarding the underlying business transactions referenced by Plaintiffs in their complaint. The position of the Sater Defendants is that the critical point of this trial will be the validity of the release. This matter can be resolved in no more than 2 (two) days of trial.
On June 10, Sater's lawyer wrote in that "Defendant Felix Sater respectfully moves in limine to preclude Plaintiffs from introducing evidence of Sater’s criminal conviction, entered 15 years ago, and relating to criminal conduct from the 1990s." Full letter on Patreon here.
Later on June 10, amid jury selection, plaintiffs insisted they want the racketeering in - while noting an earlier Sater conviction for assault. They oppose Sater being able to present information about helping the US government, Buzzfeed say he tracked Osama Bin Laden.
On June 11, after the jury was selected and the plaintiffs' opening, with Inner City Press present, defense counsel told the eight jurors - six plus two alternates - that if they find that the claims were released, or that they are time barred, Sater wins. He mocked Mr. Schwartz for showing a photo of Sater "with side glance" - at defense table Sater scoffed or laughed, or perhaps winced.
Defense counsel emphasized that Sater tried to help the plaintiffs get their money back.
On June 12, jurors were shown video of Mr. Schwartz questioning Khrapunov about Petelin paying so that his name would not appear in litigation.
On June 13, an expert was on the stand to authenticate Khrapunov's signature on a letter. Meanwhile, Judge Koeltl denied the motion for judgment on the pleadings by MeM Energy Partners.
On June 14, MeM's lawyer cross examine BTA Bank's consultant-not-lawyer, thread
On June 20, the defense case began with Sater former lawyer Robert Wolf on the stand, under subpoena.
Wolf says he socialized with Sater, family vacations together.
Sater's lawyer: I show you the Confidential Assistance Agreement [of 2015]. Who drafted it? Wolf: One of my corporate partners at Moses & SInger.
Sater's lawyer: You were aware Mr Sater did business with the Khraponovs, about US real estate?
Wolf: Yes
Meanwhile Sater submitted to the court a 2013 La Stampa Moninari interview, that "the deportations happened because the dictator of Kazakhstan wanted two hostages against his major political opponent."
On June 21, Mochkin then Sater again testified, Inner City Press was there, from the thread:
OK - now in Felix Sater case, still defendants' case. Questions about Tri-County and Syracuse projects Q: Do you understand that in this litigation you have been accused of acting as a P.R. agent for Felix Sater and others? A: I've read that.
Q: Let me read from the complaint, alleging that Mendel Mochkin was trying to drum up negative coverage of Kazakhstan Witness: My family has had experience with totalitarians. So I put a journalist who had written about my father in contact.... Q: Kind of like your work with Neil Bush, you put people together
A: Yes. Witness: The Italians pushed the Kazakh to repatriate the woman back to Italy. Q: Did you charge for it? Witness: No. It's what my family does. Q: And how you're being sued for that? Witness: What good deed goes unpunished? After that I got more involved in Bklyn
Q: You live in Brooklyn with your wife and seven children, quiet, right? Witness: Felix, I could not be involved in that rollercoaster. I'm in the next phase, housing in Brooklyn. Q: Have you been paid on the buyer and seller side before? Witness: I am not an adviser, no one likes to pay them.
Q: But when you make it rain, like on Tri-County or Syracuse, you try to get paid while it rains? Witness: We made a deal. Lawyer: I pass the witness Now lawyer Schwartz of Boies Schiller questioning. Schwartz: Mr. Khrapanov lived in Geneva, correct? Witness: Many people do.
Schwartz: You said you have a moral duty - Defense: Objection! Mischaracterizes the testimony. Judge: Overruled. Schwartz: ... They were in Italy on false Central African Republic passports, right? Witness: Yes, but it was later proved incorrect.
Schwartz: Other witnesses in this trial said they paid for Central African Republic passports, you are aware? Witness: No Schwartz: Have you not been paying attention to this trial? Defense: Objection! Judge: Sustained. But don't talk over each other. It's not team-tagging. Schwartz: ... he paid a soccer player from the Central African Republic and said he was CAR's Swiss Ambassador?
Witness: There was something going on between the the Italian government and Kazakhstan Schwartz: I understand that's your story but answer my question - didn't the Italian government rescind the order of deportation, and the Kazakh government returned them? Yes Schwartz: You are saying the Italian government was corrupted here?
Witness: It's not my belief, it's on the Internet. Schwartz: You said the UK government was corrupted? Witness: Yes. Schwartz: You suggested an English High Court justice was bribed? Schwartz: You tried to do business deals in Russia? Witness: I visited cemetaries.
Schwartz: Mining deals? Witness: Maybe. Schwartz: So your claimed moral - Objection! Judge: Sustained. Schwartz: You discussed with Sater using Social Media Interference to falsely amplify certain news sources, using this company which offer avatars and "control and anticipate a social media initiated popular uprising (Arab Spring Egypt)
Witness: I forwarded that Schwartz: You looked at deals in Kazakhstan with Neil Bush, right? Witness: Yes. Schwartz: In a deal, you want to get money out, right? Witness: What does that mean? Schwartz: If you don't know then I don't know. Witness: Yeah, I work. Judge: Just Q&A Felix Sater is back on the stand. Sater: Chevrolet had passed away... Not the car, but a Geneva politician.
Q: On June 5, 2015 was there discussion about Elvira? Sater: Yes. I explained to Peter about her visa - it was later turned into, let's say, a movie Sater: I explained to Peter Garsky the opportunity to put pressure on Elvira - she operated in the US. My approach was, Put pressure from every side and see what cracked. Q: You first brought up Elvira's visa problems? Sater: Yes. The guy in the video owes me
Sater: We discusses how to squeeze lemon juice out of lemon, how Elvira's mother would react. Everything you've seen in the courtroom originated with me. Q: What is AdLux? Sater: A digital network, it broadcast to private jet areas Judge: We'll break The week is over.
more on X for Subscribers here, Substack here
The witnesses, and some tweets from the streets, are on.
The case is City of Almaty, Kazakhstan et al v. Sater et al., 19-cv-2645 (Koeltl / Parker).
Gold Bar Bob Trial Book Has Egypt Bribes Now Menendez Moves to Preclude His Staffer
SDNY COURTHOUSE, June 21 - In US versus Bob Menendez, the corruption trial on Qatar and Egypt and New Jersey bank fraudster Daibes, one month in the trial day was canceled.
That day, a book and audiobook was published of the trial's first month, and Menendez' history: Gold Bar Bob Menendez Trial I, by Matthew Russell Lee, available on Amazon here
It begins: He "pushed the Senate Foreign Relations Committee hard right on Cuba and Iran until he ran into an indictment for helping Egypt" --
On June 21 Menendez's lawyer moved to preclude his staffer, "Any attempt by the government to elicit testimony from Staffer-1 regarding conversations about Senator Menendez’ views or positions on Egypt only as they relate to non-legislative acts (such as Senator Menendez’s “public statements related to Egypt,” Trial Tr. at 4339:22-4340:4) would be an end-run around the Clause." Full filing on Patreon here.
More coverage and another book will be coming.
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UMB Bank Application Buy Heartland Now Challenged on Disparties & As Shaky Regional
by Matthew R. Lee, Patreon Substack
SOUTH BRONX / SDNY, June 21 – When First Republic Bank failed / was given to JP Morgan Chase, a small list of other regional banks came into focus as in danger. Among them was UMB - a bank whose lending Inner City Press and Fair Finance Watch had been scrutinizing, and now challenge.
UMB is asking its regulators to allow it to expand, buying Denver-based Heartland. The application, Fair Finance Watch on June 21 formally told the Fed, should not be approved. In 2022, the most recent year for which Federal data is available, UMB Bank, N.A. made over 2000 mortgage loans to whites, and only 117 loans to African Americans.
For every denial to an African American, it made only 2.02 loans. But for whites, for every denial it made 3.45 loans. It should be referred to DOJ.
There is litigation, there is also this, reported at the time of Silicon Valley Bank's failure: "UMB Bank, a regional bank headquartered in Kansas City, Missouri, and with branches across the Midwest, Southwest, and Western United States, has total assets of $38 billion and deposits totaling $32 billion, according to the FDIC. However, only 16% of deposits fall under the $250,000 FDIC insurance threshold, leaving 74.11% (equivalent to $28.36 billion) vulnerable to potential losses."
Why would regulators even consider approving its expansion? On June 21, Fair Finance Watch filed a formal Community Reinvestment Act challenge to UMB's application to the Federal Reserve, adding state by state data:
UMB Bank in 2022 in Missouri made 842 mortgage loans to whites, and only 76 loans to African Americans. Meanwhile it denied 41 applications from African Americans, and only 257 from whites.
UMB Bank in Colorado - in which it seeks to expand - in 2022 made 378 mortgage loans to whites, and only 13 loans to African Americans. Meanwhile it denied six applications from African Americans, and only 107 from whites.
UMB Bank in 2022 in Texas made 78 mortgage loans to whites, and only six loans to African Americans. Meanwhile it denied two applications from African Americans, and only 27 from whites.
These disparities cry out for a referral to DOJ, and public hearings on, and denial of, UMB's major expansion application.
Watch this site.
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Prisoner Who Passed Balloon of Contraband in Cell Awaiting Release Is Detained for Testing
by Matthew Russell Lee, Patreon Book Substack
SDNY COURTHOUSE, June 21 – Just after being ordered released, a Federal prisoner removed a four-inch balloon of contraband from his colon and threw it to a prison in the next holding cell, wrapped in a T-shirt. The U.S. Marshals saw.
He was brought back before U.S. District Court for the Southern District of New York Magistrate Judge James L. Cott, on his last day presiding of the SDNY Mag court before retiring. Inner City Press was there.
The Assistant US Attorney said the defendant admitted to Marshals that the ballon contained narcotics as well as tobacco. But the Federal Defender insisted it was tobacco only and that he should still be release.
Judge Cott put his previously release order in abeyance, pending testing of the contents of the balloon. He said he retained jurisdiction - so while perhaps his last Mag court case, it may not be his last proceeding.
The case is US v. Colon, 13-cr-376 (Ramos / Cott)
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