Excerpts From
Motion to Suppress
"The government’s warrant affidavit (“Affidavit”) shows why this case is unusual. "
"To create the veneer of criminality, the Affidavit relies on false and misleading statements and material omissions."
NO
TERMINATION
"The Affidavit claims that Shetty made the investment after receiving a notice of termination, perhaps to imply that he had some nefarious motive to make the investment. But this is false. Shetty never received a notice of termination. According to an FBI FD-302a (“302”) summary of interview of Alex Shimamoto drafted by Beckley, Shimamoto confirmed that “Shetty did not receive a formal termination letter or paperwork.”
"Shetty never received a notice of termination and had full authority to make investments on Fabric’s behalf at the time of the HighTower investment."
NOT
SECRET
"...while the Affidavit claims that Shetty did not notify Fabric about the investment before making it, it omits the fact that there was no disclosure or approval requirement in place for the CFO. Although there was no approval or disclosure requirements in place, Shetty commonly discussed his financial activities with members of the finance team—including the HighTower investment."
"The Affidavit also omits the facts that multiple employees knew about Shetty’s investment in HighTower and that it was booked both in Fabric’s accounting system and on its balance sheet."
"Leung confirmed that Shetty told her about it. Specifically, “Shetty told [her] that he opened the HighTower account to gain more interest for Fabric and that the HighTower account provided an opportunity to make money.” Leung even had a login to the HighTower account."
Investment Policy
"To begin, the Investment Policy describes its “objectives” and “investment guidelines”."
“[t]o begin with, the Treasury Program will invest in money market, deposit accounts, and treasury accounts with daily liquidity.”
"Finally, and most critical here, is the policy’s final section: “Policy Review & Exceptions.” Id. at 3. It addresses investments that fall outside the quantitative guidelines—i.e., the preapproved “list.” It explains that both the COO and CFO have authority to approve investments beyond those delineated in the policy:
The investment policy is intended to provide operational guidelines for the management of the investment portfolio. Under some circumstances, Investment Managers may learn of an investment transaction which falls outside of this investment policy but may present financial merits of the Company. In those circumstances, a written exception to the quantitative guidelines may be approved by the Company’s Chief Operating Officer or Chief Financial Officer.
Put more simply, both the COO and CFO were not bound by the investment guidelines in the policy and could approve any investment."
