Case: 1:19-cr-00864 Document #: 628 Filed: 12/07/23 Page 1 of 5 PageID #:23087
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`UNITED STATES DISTRICT COURT
`NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
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`UNITED STATES OF AMERICA
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`No. 19 CR 864
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`Judge Thomas M. Durkin
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`RISHI SHAH,
`SHRADHA AGARWAL, and
`BRAD PURDY
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`GOVERNMENT’S MEMORANDUM REGARDING HEARING ON DEFENDANTS’
`POST-TRIAL MOTION TO DISMISS
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`An evidentiary hearing is not needed for this Court to dispose of the claims raised in
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`defendants’ post-trial motions to dismiss. R. 488, 490. The record establishes that defendants had
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`all the information necessary to raise their claims before trial, yet they did not file the motion until
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`three months after their convictions at trial. R. 512 at 4-6. This delay is fatal to their claims, as is
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`the total lack of substantive merit to the motions. Because defendants delayed raising their claims
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`until after trial, they have failed to preserve them. And the three factual issues raised by defendants
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`are irrelevant, not dispositive, and/or not subject to serious dispute.
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`Defendants first raise the issue of bona fide need for the restrained, non-traceable assets.
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`Though defendants claim otherwise, there is no serious factual dispute here as defendants run
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`headlong into the same problem: their extraordinary wealth. If the Court takes them at their word,
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`they needed about $10 million to retain Quinn Emanuel and McGuireWoods, after taking into
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`account the $4 million retainer that was in Quinn Emanuel’s possession. And Shah on his own
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`spent more than $15 million post-indictment. R. 512-4 & 512-5. Though Shah has not provided
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`precise numbers, he admitted that he spent more than $7 million on attorneys fees and costs for
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`Case: 1:19-cr-00864 Document #: 628 Filed: 12/07/23 Page 2 of 5 PageID #:23088
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`the trial, including fees paid to Hueston Hennigan. Ex. A.1 And Agarwal’s declarations make clear
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`that she had plenty of assets with which to retain McGuireWoods.2
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`On the second issue, the government’s knowledge that some commingled assets were
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`restrained is simply not relevant to the Due Process claim. That claim—which, like the other
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`claims, is untimely and waived—is predicated entirely on the FBI accountant’s supposedly false
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`testimony to the grand jury. R. 491 at 12-15. Yet the testimony was not false. R. 512 at 9-11. At
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`no point in her grand jury testimony did the accountant state that the subject assets were acquired
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`exclusively with tainted proceeds. And in any event defendants cannot show prejudice in light of
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`the conviction and because the testimony did not relate to an element of the offense. R. 512 at 8.
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`Therefore, proof that members of the government team knew that some assets were partially
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`acquired with untainted proceeds would not make any identified testimony or statement by the
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`government false, or give any further substantiation to the Due Process claim.3
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`On the third issue, the Court need not undertake further inquiry into the timeliness of
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`defendants’ motions. In reply, defendants admitted that the underpinning of their claim was
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`inaccurate; in fact, they received the grand jury testimony and the supporting exhibits (to include
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`1 As noted in the email from Mr. Finneran, Shah paid Hueston Hennigan at least $6.5 million in legal fees and well
`over $500,000 in costs and expenses. Those fees did not include Hueston Hennigan’s fees for the SEC case. Bank
`records reflect that Shah paid Vadim Glozman at least $150,000. Shah’s counsel has not provided the exact amount
`Shah spent on fees and costs, or broken down the fees in detail. It is unclear if these amounts include monies paid for
`the defense experts.
`2 Defendants continue to assert that their Sixth Amendment claim guarantees automatic reversal as structural error.
`This is inaccurate and inconsistent with precedent, as defendants did not preserve their claim. See United States v.
`Anderson, 881 F.3d 568, 572-73 (7th Cir. 2018) (explaining that the trial process would be subverted “if an
`unpreserved structural error were interpreted as guaranteeing an automatic reversal” after citing the Supreme Court’s
`holding in Johnson v. United States, 520 U.S. 461, 466 (1997) that “the plain error standard applied to errors for which
`no objection was made at trial, including structural errors.”). By failing to challenge the pretrial restraint of
`commingled assets, defendants would be unable to satisfy even the first prong of plain error review. See United States
`v. Clark, 717 F.3d 790, 802 (10th Cir. 2013) (no plain error by district court because “[a] defendant cannot successfully
`establish that a district court's decision deprived him of the affirmative protections inherent in a [post-restraint] hearing
`when the defendant has not properly alerted the court to the need for such a hearing”).
`3 Defendants do not suggest that any government agent’s knowledge is relevant to the Sixth Amendment claim. R.
`626 at 1-3. The government agrees that it is irrelevant to the Sixth Amendment claim.
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`Case: 1:19-cr-00864 Document #: 628 Filed: 12/07/23 Page 3 of 5 PageID #:23089
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`GX 1029, see Ex. B, then labeled Grand Jury Exhibit Forfeiture 1, 2 & 3, see R. 512-1 at 40-42)
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`on January 17, 2020, over three years before the start of trial. R. 537 at 7. As the Court already
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`knows from ruling on the forfeiture motion, R. 580 at 10-12, GX 1029 reflects every asset listed
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`in the indictment and quantifies the amount of criminal proceeds traceable to each asset. From the
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`indictment and GX 1029, and considering that they made the investments, defendants had ample
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`opportunity to analyze the scope of the protective order and assess the grand jury testimony before
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`trial. Thus, the basis for the Due Process and Sixth Amendment claims were reasonably available
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`to them pretrial.
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`However, if the Court is nevertheless inclined to hold an evidentiary hearing, the
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`government submits that the Court should allow discovery on the reasonableness of Quinn
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`Emanuel and McGuireWoods’ fee estimate. See Luis v United States, 578 U.S. 5, 22-23 (2016)
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`(substitute property may be used to “pay a reasonable fee for the assistance of counsel”). Further,
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`defendants never explained how much of the $14-15 million was for Shah and how much was for
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`Agrawal, which would be a relevant inquiry at a hearing.
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`Similarly, if the Court is inclined to inquire into defendants’ bona fide need for the
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`restrained assets, it should permit discovery into not only defendants’ copious assets and spending
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`(on both legal fees and otherwise), but the liquidity of the restrained, non-traceable assets during
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`2020 when Shah retained Hueston Hennigan. Defendants continue to ignore a key fact: The
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`restrained commingled assets were largely illiquid in 2020. As one example, a Guild Capital
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`representative advised the government in September 2020 that the Guild Capital investments—the
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`source of 95% of the $10.5 million recently released to Shah, R. 555—were illiquid at that time,
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`and only notified the government of a future liquidity event in January 2021. Ex. C. That fact
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`underscores an aspect of Shah’s claim that has never made sense; he swore in a February 2020
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`3
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`Case: 1:19-cr-00864 Document #: 628 Filed: 12/07/23 Page 4 of 5 PageID #:23090
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`affidavit that he needed the liquid funds being held by Quinn Emannuel—despite their tainted
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`origin—because his unrestrained assets were illiquid with no secondary market, R. 93-1, and yet
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`the restrained, non-traceable assets were precisely the same types of illiquid investments. In light
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`of this reality and these sworn statements, Shah can hardly claim that if he had access to restrained,
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`non-traceable portions of those same kinds of investments in 2020, then he would have continued
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`to retain Quinn Emanuel. If the Court decides to explore this issue at a hearing, with appropriate
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`permissions, the government will seek documents and/or testimony from the investment funds,
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`financial
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`institutions, Rishi Shah, Shradha Agarwal, Baroda Trust, Quinn Emanuel,
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`McGuireWoods, Hueston Hennigan, Vadim Glozman, Blegan & Garvey, and Larson O’Brien.
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`Shah and Agarwal indicated that they may testify at any such hearing. If they are not called by
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`their own attorneys, the government anticipates calling Shah, Agarwal, William Burck and other
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`Quinn Emanual attorneys, and Christina Egan and other McGuireWoods attorneys, along with
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`representatives of the funds, among others, as witnesses.4
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`On the second and third issues identified by Shah, defendants should not be allowed to call
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`government attorneys or agents as witnesses. As set forth above, any knowledge of the government
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`that some portions of some investments were non-traceable is irrelevant to the claims before the
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`Court. And the source of defendants’ investments in the funds at issue was available to anyone
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`with access to or knowledge of Shah and Agarwal’s financial records, which of course included
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`Shah and Agarwal and their attorneys. The government objects to the requests for documents from
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`the government on grounds of privilege and relevance and because the requests are overbroad, and
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`reserves the right to advance additional objections.
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`4 Notably, Agarwal provided retainer agreements she entered into with her trial attorneys. R. 528. Shah has not shared
`any such documents with the Court. The government would seek such discovery if the Court orders a hearing on this
`issue.
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`4
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`Case: 1:19-cr-00864 Document #: 628 Filed: 12/07/23 Page 5 of 5 PageID #:23091
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`Assuming the Court sets a hearing, it is difficult to predict how long it would last without
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`knowing the issues that the Court would like to explore and which witnesses would testify. Shah
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`suggested that a hearing may take two days to complete. The government can provide a more
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`realistic estimate with greater knowledge of the scope of the hearing, but anticipates that the
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`government’s evidence may take approximately one day.
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`Respectfully submitted,
`MORRIS PASQUAL
`Acting United States Attorney
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` s/ Matthew F. Madden
`Matthew F. Madden
`Assistant United States Attorney
`219 S. Dearborn Street
`Chicago, Illinois 60604
`(312) 886-2050
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`GLENN S. LEON
`Chief, Fraud Section
`Criminal Division
`U.S. Department of Justice
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` s/ William E. Johnston
`William E. Johnston
`Assistant Chief
`1400 New York Ave NW
`Washington, D.C. 20530
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`By:
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`By:
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