Case 1:19-cv-03192-RC Document 15-7 Filed 08/07/20 Page 1 of 4 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA – – – – – – – – – – – – – – – – – – – X JASON LEOPOLD and BUZZFEED, INC., DECLARATION Plaintiffs, Civil Action No. 19-3192 (RC) v. UNITED STATES DEPARTMENT OF JUSTICE, Defendant. – – – – – – – – – – – – – – – – – – – X I, David K. Kessler, set forth the following: 1. I am an Assistant United States Attorney in the United States Attorney’s Office for the Eastern District of New York (“USAO-EDNY”). I am also one of the USAOEDNY’s coordinators for Freedom of Information Act (“FOIA”) requests. I submit this declaration in connection with the plaintiffs’ request in this matter pursuant to FOIA. 2. I was provided with a copy of the plaintiffs’ FOIA request for “A copy of independent monitor Michael Cherkasky’s 1,000-page report to the Justice Department detailing HSBC’s compliance with a 2012 agreement with the Justice Department to fix faulty money-laundering controls as part of a $1.9 billion deferred-prosecution agreement with [the Department of Justice], which found that HSBC had allowed billions of dollars to be moved throughout its network in violation of sanctions laws and anti-money-laundering statutes.” 3. I have conducted a search of records retained by USAO-EDNY. USAO- EDNY’s records contain, among other documents, an approximately 1,000 page “First Annual Case 1:19-cv-03192-RC Document 15-7 Filed 08/07/20 Page 2 of 4 Follow-Up Review Report” and appendices submitted by the independent monitor in January 2015 (the “Report”). 4. In June 2015, the Report was filed under seal with the United States District Court in the Eastern District of New York. See United States v. HSBC Bank USA, N.A., et al., 12-CR-0763 (AMD) (E.D.N.Y.) (“HSBC Bank USA, N.A.”). A third party subsequently moved to unseal the report, and the district court ordered that portions of the report be unsealed. Both the government and the defendants in HSBC Bank USA, N.A., HSBC Bank USA, N.A. and HSBC Holdings PLC (collectively, “HSBC”), appealed that decision, and the Second Circuit reversed the district court’s order to unseal the report. See United States v. HSBC Bank USA, N.A., 863 F.3d 125, 142 (2d Cir. 2017). The Report filed on the docket remains under seal. A copy of the government’s submission in the district court in opposition to unsealing the Report is attached as Exhibit A to this affidavit. See HSBC Bank USA, N.A., Dkt. No. 35. 5. The Report contains extensive commercial information obtained from HSBC by the independent monitor, which information is the confidential information of a third party, namely HSBC, as well as information about certain HSBC customers, which information is the confidential information of that customer. See 5 U.S.C. § 552(b)(4). HSBC described some of the kinds of information, and concerns about confidentiality, in a letter submitted in support of the government’s original application to file the Report under seal. See HSBC Bank USA, N.A., Dkt. No. 38. A copy of that letter is attached as Exhibit B to this declaration. 2 Case 1:19-cv-03192-RC Document 15-7 Filed 08/07/20 Page 3 of 4 6. In addition, the Report contains statements attributed to named individual employees of HSBC, the production of which could constitute a clearly unwarranted invasion of personal privacy. See 5 U.S.C. §§ 552(b)(6), (b)(7)(C). 7. The Report is a “report[] prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions,” in that it was provided to the United States Department of Justice (“DOJ”) by the independent monitor of HSBC, a financial institution, in the context of HSBC’s deferred prosecution agreement with the DOJ, and provided to the Board of Governors of the Federal Reserve System (the “Federal Reserve”) and to the United Kingdom’s Financial Conduct Authority (the “FCA”) in connection with their respective regulation and supervision of HSBC. See 5 U.S.C. § 552(b)(8). The Federal Reserve and the FCA each submitted a letter explaining how making the Report public would undermine the interests of those regulators, and many of their concerns were not limited to public disclosure during the period of the monitorship. See Exhibit A at 18-28. Moreover, the Report was submitted to the DOJ at a time when the DOJ was supervising HSBC for purposes of monitoring compliance with the DPA. The DOJ relied on the Monitor’s ability to access and analyze confidential information from HSBC in preparing the Report and related documents. 8. Finally, production of the Report at this time also can reasonably be expected to interfere with enforcement proceedings. See 5 U.S.C. § 552(b)(7)(A). It is the assessment of the prosecution team in an ongoing criminal prosecution being conducted by USAO-EDNY in the Eastern District of New York that making the Report public at this time would interfere with that prosecution. I respectfully request that the government be permitted 3 Case 1:19-cv-03192-RC Document 15-7 Filed 08/07/20 Page 4 of 4 to file ex parte and under seal a further description of the potential interference with enforcement proceedings. 9. This declaration sets forth only certain facts, and references only certain FOIA exemptions, related to the document sought by the Plaintiffs. The limited information provided herein is not meant to limit in any way the information the government subsequently may provide, or the exemptions the government subsequently may assert, in this or any other proceeding. Dated: Brooklyn, New York August 7, 2020 David K. Kessler Assistant U.S. Attorney United States Attorney’s Office Eastern District of New York 4