/>iHeadlines that Matter for Companies and Executives in Regulated Industries
Court Rejected Former Theranos Executive Sunny Balwani’s Request For New Trial
On October 11, 2022, a California federal court rejected former Theranos Chief Operating Officer Sunny Balwani’s request for a new trial, based on a key government witness’s attempt to contact former Theranos CEO, Elizabeth Holmes. According to papers filed by Holmes’ counsel in her own case, the key government witness—Adam Rosendorff, a former Theranos lab director—attempted to contact her to express his regrets about his testimony during her own trial. Balwani argued that Rosendorff’s conduct is new evidence that warranted a new trial and that Balwani should have the opportunity to examine Rosendorff at an evidentiary hearing scheduled for Monday, October 17, 2022, in Holmes’ case.
US District Judge Davila rejected these requests. According to Judge Davila’s short order, the October 17 evidentiary hearing was to explore the meaning of Rosendorff’s statements—which related exclusively to his testimony during Holmes’ trial, not Balwani’s—and whether any government misconduct occurred in regards to Rosendorff’s testimony. Judge Davila found that there was “no basis” for Balwani to examine Rosendorff at the October 17 hearing.
The order is available here.
Bittrex Inc. Agrees To Pay $29.2 Million For Alleged Violations of Sanctions and Bank Secrecy Act Violations
On Tuesday, October 11, 2022, the US Department of Treasury announced that it had reached two deals with Bittrex Inc., a virtual currency exchange, for allegations that it violated sanctions programs and the Bank Secrecy Act. According to the Department of Treasury, this is the first parallel enforcement action by the Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN). Across both enforcement actions, Bittrex will pay more than $29.2 million.
According to FinCEN’s Consent Order, Bittrex was aware of its obligations under the Bank Secrecy Act to develop, implement, and maintain an effective anti-money laundering program that is reasonably designed to prevent the platform from being used to facilitate money laundering and terrorist financing activities, but that it failed to do so. For example, while the platform averaged approximately 11,000 transactions per day, instead of utilizing widely available transaction monitoring tools, Bittrex relied on two employees with minimal anti-money laundering training to manually review all transactions for suspicious activity. This continued to be the case when, a year later, the platform was averaging 23,800 transactions—more than double—per day.
According to the Consent Order, FinCEN’s investigation revealed that Bittrex failed to detect suspicious transactions through its platform, in addition to thousands of transactions that were prohibited by OFAC.
With respect to OFAC-prohibited transactions, from February 2014 through February 2016, Bittrex knew that it was required to ensure that it did not process transactions that violated OFAC sanctions, but failed to do so. While it finally hired a third-party vendor in February 2016 to automatically screen transactions for compliance, the vendor’s software screened transactions only to identify potentially matches to OFAC’s SDN List and did not begin screening some customers for a nexus to sanctioned jurisdictions, despite Bittrex having recognized geographic risk as part of its anti-money laundering program, until at least October 2017. As a result, between February 2014 and December 2018, Bittrex conducted over 116,000 transactions, valued at over $260 million, with entities and individuals located in jurisdictions subject to comprehensive OFAC sanctions, including transactions with entities and individuals operating openly from OFAC-sanctioned jurisdictions such as Iran, Cuba, Sudan, Syria, and the Crimea region of Ukraine. This matter also marks OFAC’s largest virtual currency enforcement action to date.
FinCEN’s consent order is available here.
“Serial” Podcast’s Adnan Syed Exonerated By DNA Evidence
On October 11, 2022, Baltimore prosecutors announced that they were dismissing the murder charges against Adnan Syed, whose case rose to national attention when it became the subject of the hit podcast “Serial,” after new touch DNA tests on items that belonged to the victim, which had never been tested before, revealed new information.
The touch DNA technology analyzed skin cells left behind on evidence found at the crime scene. Though the underlying technology has been available since 2003, recent advances allowed new DNA to be extracted from the victim’s shoes. Syed’s DNA was not found.
This announcement comes weeks after a Baltimore Circuit judge granted the State’s request to vacate Syed’s conviction, ruling that his trial was unfair because prosecutors had failed to disclose key exculpatory evidence, including evidence of additional suspects. Syed was convicted of murdering his ex-girlfriend in February 2000 when he was a teenager and was sentenced to life in prison.
