Dear Margaret,
I am writing to confirm receipt of Ridgeline Advisory Group LLC's final forensic accounting report in connection with Engagement No. RAG-2022-0319 (Calderwood & Harkness Matter No. 1016-00009). Thank you for delivering the report ahead of the formal April 1 deadline — we appreciate the effort that took given the scope of the engagement. Please extend our thanks to your entire team. Since Ridgeline was retained on May 2, 2022, this has been a nearly eleven-month engagement, and the thoroughness and rigor of the work product reflect that investment of time and expertise. We would ask that you confirm that the version we received is the final report, so that we can update our engagement records accordingly with the April 1, 2023 formal delivery date.
**Key Findings Acknowledged**
We have conducted an initial review of the report's principal findings, and I wanted to note several areas that will be central to our integration work.
First, the report's identification and analysis of the 14 crude oil swap transactions executed between June 2020 and February 2022, totaling approximately $218.7 million in notional value, with counterparties Petronova Trading FZE and Zenith Petroleum DMCC, is comprehensive and well-documented. We note Ridgeline's conclusion that 9 of the 14 transactions — approximately $156.3 million in notional value — involved crude oil ultimately sourced from or destined for entities controlled by or connected to Volkhov Industrial Group JSC. As the report details, Volkhov Industrial Group JSC was designated under OFAC Directive 2 (sectoral sanctions pursuant to E.O. 13662) as of November 15, 2019, and was subsequently added to the OFAC SDN List (full blocking under E.O. 14024) on April 6, 2022.
Second, the forensic tracing of $34.2 million in payments across 127 individual transactions routed through intermediary accounts at Crescent Commercial Bank PJSC (Dubai) between March 2020 and March 2022 is particularly significant. Your team's analysis of the structuring patterns designed to obscure the ultimate beneficial ownership of Volkhov-connected entities will be a critical component of our presentation to the Department.
Third, the report's analysis of $12.4 million in oilfield equipment exports facilitated via Caspian Logistik GmbH (Hamburg), classified under EAR ECCNs 2B350 and 2B999, and the identification of potentially false end-user certifications, adds an important export controls dimension to the investigation.
Finally, we note the net margin analysis supporting the potential disgorgement calculation: the 9 tainted crude oil swap transactions at an estimated 5.6% net margin on $156.3 million notional, yielding approximately $8.75 million in estimated net profits. This figure will be significant in our discussions with the government regarding potential resolution.
**Integration into the Internal Investigation Report**
Our team — Victoria, Conrad, Liam, and I — is now drafting the comprehensive internal investigation report, which we are targeting at approximately 176 pages for submission to the DOJ by May 15, 2023. Ridgeline's forensic findings will form a central chapter of that report, and we anticipate relying heavily on the following components: (a) the transaction flow analysis across the 14 swap transactions; (b) the beneficial ownership tracing linking Petronova Trading FZE and Sergei Volkov to Volkhov Industrial Group JSC and Arkady Volkhov; (c) the payment structuring analysis through Crescent Commercial Bank PJSC; and (d) the equipment export tracing through Caspian Logistik GmbH and its principal, Klaus Weidemann.
In addition, the forensic findings will support the OFAC voluntary self-disclosure that Conrad Reeves is preparing for filing, currently targeted for June 1, 2023.
As you know, we have prepared separate memoranda addressing the roles of several key individuals whose conduct was illuminated by the forensic analysis. Specifically:
- **Natasha Sorokin** — the forensic analysis corroborated her role as the primary point of contact with Sergei Volkov of Petronova Trading FZE, and we are integrating those findings with her interview testimony. - **Derek Hargrave** — the report's findings regarding his approvals of the flagged transactions are consistent with the documentary record we reviewed during the first and second interview rounds. - **Rajesh Malhotra** — the tracing of Malhotra's involvement as Controller at DTI in the payment routing through Crescent Commercial Bank was among the report's most significant contributions and materially advanced our understanding of the internal approval chain. - **Omar Al-Rashidi** — I should note that Al-Rashidi's account, provided in his capacity as a cooperating witness, was largely consistent with Ridgeline's independent forensic findings, which strengthens the credibility of both. We anticipate the DOJ may wish to interview Al-Rashidi as a follow-up, and the forensic report will help frame those discussions.
We would welcome the opportunity to have you or members of your team review and comment on the draft sections of the investigation report that incorporate or cite Ridgeline's findings, to ensure we have accurately characterized the methodology, data sources, and conclusions. Victoria will want to review the fully integrated draft sections before we proceed to any proffer session with AUSA Meredith Calloway at the DOJ National Security Division.
**Document Production Context**
For your reference, the two document productions to the DOJ have been completed: the first production on November 1, 2022 (287,412 documents, Bates-stamped DEH-DOJ-000001 through DEH-DOJ-287412) and the second production on January 30, 2023 (151,504 documents, Bates-stamped DEH-DOJ-287413 through DEH-DOJ-438916), for a total of 438,916 responsive documents out of 2,347,812 collected. The forensic report itself, as privileged work product prepared at counsel's direction, was not included in either production, though its factual findings will be summarized in the investigation report we submit to the DOJ.
**Timeline and Next Steps**
As you may be aware, our third round of witness interviews — 10 interviews in total — concluded on March 15, 2023. Certain insights from those re-interviews may warrant a brief addendum or point of clarification from Ridgeline, and I would like to discuss those with you directly.
To that end, would you or your team be available for a call or virtual meeting during the week of April 3? I would like to cover three items: (a) any outstanding questions we may have regarding the report's methodology and analytical assumptions; (b) finalization of the exhibit schedules and supporting workpapers that will accompany the relevant sections of the investigation report; and (c) alignment on the integration timeline so that we remain on track for the May 15 submission. Please let me know what works for your schedule, and I will send a calendar invitation.
Thank you again, Margaret. The quality of Ridgeline's work on this engagement has been exceptional, and it has materially strengthened the investigation. We look forward to the final phase of this process.
With best regards,
Jasmine
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**Jasmine R. Thornton** Associate
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*PRIVILEGED & CONFIDENTIAL — ATTORNEY WORK PRODUCT*
*This email and any attachments are protected by the attorney-client privilege and/or the work product doctrine. The forensic accounting report referenced herein was prepared by Ridgeline Advisory Group LLC at the direction and under the supervision of Calderwood & Harkness LLP in connection with a privileged internal investigation undertaken in response to a DOJ inquiry and grand jury subpoena (GJ No. 22-418). This communication is intended solely for the named recipients and may not be disclosed, distributed, or reproduced without the prior written consent of Calderwood & Harkness LLP. If you have received this email in error, please notify the sender immediately and delete all copies.*