White Collar Investigations & Litigation

In US v Bogucki, Brattle was engaged as the expert team on behalf of Barclays FX options trader Robert Bogucki in his criminal defense of charges of wire fraud for allegedly trading against a large FX options order from Hewlett Packard (HP). DOJ prosecutors alleged that Mr. Bogucki, with the benefit of confidential information, lied to HP and engaged in illegal front-running to push down the value of HP’s options. Brattle analyzed the trades at issue, studied communications between traders and HP, reviewed risk and governance practices concerning firm and regulatory expectations, and examined other aspects of the FX market –including trading volumes and the behavior of other market makers. Mr. Bogucki was acquitted by way of a Rule 29 motion after one week of testimony in front of a jury.

Brattle worked on a case relating to actions by the ex-CEO of KIT Digital, a software company, to transfer company funds to a hedge fund and trade the company’s common stock to artificially inflate its share price and trading volume. We analyzed the company’s financial accounting practices and reporting, particularly relating to its revenue recognition practices and its representations to auditors, analysts, and investors regarding certain contracts and acquisition activity. This allowed us to assess the collective impact on the company’s market value and the market performance of its publicly traded common stock over the relevant time period of the fund transfers, hedge fund trading activity, financial reporting, and (mis)representations. In an independent analysis following the verdict in the case, a Brattle expert testified about the stock price impact of the alleged fraud for sentencing purposes.

Brattle experts consulted for and testified on behalf of the DOJ in the criminal case, U.S. v. Ahuja, et al. In this matter, hedge fund managers were accused of overstating the value of illiquid structured finance securities. We summarized and analyzed contemporaneous data, including data relative to various pricing benchmarks, to establish that the hedge fund managers selectively relied on a subset of available information about the value of the securities in question to over-value them. Brattle testified at trial to present this analysis to the court and the jury. The hedge fund managers were found guilty, and the court cited Brattle’s analysis and testimony as a key component in this determination and sentencing.

In SEC v. Ruggeri Administrative Action, a Brattle expert conducted a statistical analysis of trading patterns to assess whether particular trades were correlated with instances in which the defendant had access to inside information in the form of advance copies of analyst reports. The types of reports that were expected to have an effect on share price were evaluated with reference to the economic literature on stock price response to different types of disclosures in analyst reports.

The Criminal Division of the DOJ retained Brattle to support an investigation revolving around an $8 billion digital currency money-laundering scheme. Brattle’s team assisted the DOJ in identifying evidence indicative of money laundering activities within the massive haystack of structured and unstructured data. By assembling, standardizing, and integrating data from different sources and leveraging sophisticated data analytics, Brattle’s team helped uncover anomalies and patterns indicative of illicit activity in one of the largest international money laundering prosecutions to date. The case ultimately resulted in multiple guilty pleas and a 20-year prison sentence for the founder of the target company.

A Brattle team worked with the DOJ and FinCEN on the first-ever federal case brought against a chief compliance officer (CCO) for failure to flag suspicious activity and willfully failing to maintain an effective AML program. Our team leveraged our data analysis capabilities, analyzing structured and unstructured data on all transaction activity during the CCO’s tenure to identify potentially-fraudulent transactions for which the company did, and did not, file currency transaction reports (CTRs) or suspicious activity reports (SARs). This analysis became part of the basis for a settlement in the case.

In an FCA case involving Novartis’ promotional events, a Brattle team helped construct a measure of kickbacks from qualitative information on thousands of promotional events captured from different information sources such as individual files from specific events, PDF scans of expense reports, and company data files reporting on events. Our experts extracted this information from a massive document production and converted it into quantitative model inputs. The team then used code to make unstructured information machine-readable and systematically extract data points into an expense database. The output of this analysis was a list of so-called “sham” events and potential kickbacks by individual doctors and sales reps over time.

In a landmark FIRREA litigation, Brattle helped identify and recruit multiple experts and advise the DOJ on case-specific facts and considerations from inception through trial. Our team coordinated the review of millions of documents produced and used in discovery, as well as analysis of loan-level data to determine the known quality of the loans in question, the underwriting procedures applied to them, the causes of loan defaults, and the extent of resulting damages. We assisted counsel in real-time before and during trial, which ended in an affirmative jury verdict on liability and a $1.3 billion damages award.

We are consulting experts for the CFPB in a case against Ocwen involving whether systematic flaws in the software of a major loan servicing company resulted in wide scale faulty loan information, errors in servicing loans, and abusive foreclosure practices. Brattle has advised the CFPB throughout the investigation to analyze all of the customer-level data produced by the company, identify gaps and shortcomings in the data, request additional data, and comprehensively trace account activity at the consumer level. Our findings during the investigation stage informed the specifics of a filed complaint in the case. Our consulting work is ongoing and, separately, Brattle teams have supported the analysis of three testifying experts.

We advised the CFPB in an investigation involving allegations that a bank steered consumers into costly retail services without their consent and charged fees for those services. The case alleged that the bank designed its account application process to make the services seem mandatory for new customers to open accounts, obscured the related fees, and failed to notify customers of their options to opt-in or opt-out of the services. We analyzed the bank’s account-level data covering several years to identify affected accounts and fees charged to each account, and to develop analytical approaches to estimating the resulting harm to consumers, accounting for the fact that even with full information, some consumers would have opted to accept the services in question, while others would not. Separately, we supported an academic expert on behavioral economic issues.

Brattle conducted a data intensive investigation into violations of US sanctions against Iran by Turkish financial services businesses that were disguising their activity as gold, and later, food trade. The investigation involved tracing financial transactions through accounts at Turkish and UAE banks in multiple currencies and associated US correspondent bank transactions when transfers were made in US dollars. Brattle integrated these data sources onto a single platform, creating metadata and data on communications involving bank employees and the known persons of interest outside the bank. Our analysis also made use of changes in the sanctions regime to identify potentially related activity and communications. Our work contributed to the high-profile criminal conviction.

A Brattle expert testified in US v. David Bergstein, the criminal prosecution of a private equity fund principal on the results of tracing the use of invested funds and misappropriation. Brattle received thousands of pages of bank statements, checks, teller slips, and investment account records from which we created a complete record of financial transactions for multiple entities through multiple banks. Brattle traced the flow of funds in chains of as many as five or six transfers to show how the funds were used. The resulting database contained bank account information, transaction amounts, dates, balances and transaction descriptions that enabled us to categorize and classify transactions. The prosecution led to a conviction.