PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT

PRIVILEGED AND CONFIDENTIAL ATTORNEY-CLIENT PRIVILEGE / ATTORNEY WORK PRODUCT
CALDERWOOD & HARKNESS LLP 555 California Street, 40th Floor San Francisco, California 94104
Matter No.: 1039-00001
MEMORANDUM
Date: March 1, 2023
To: Elaine Forsythe, Responsible Partner, Antitrust & Competition Practice Group
From: Aaron Liu, Lead Associate, Antitrust & Competition Practice Group
Re: Preparation of Sandra Chu for Voluntary Proffer Session with U.S. Department of Justice, Antitrust Division — Scheduled March 10, 2023
Client: Torchlight Mining Corp.
PRIVILEGE DESIGNATION: This memorandum is protected by the attorney-client privilege and the work-product doctrine. It is prepared in anticipation of litigation and for the purpose of providing legal advice to Torchlight Mining Corp. ("TMC") in connection with Grand Jury Investigation No. GJ-22-0194, pending in the U.S. District Court, Northern District of California, San Francisco Division. This memorandum contains the mental impressions, conclusions, opinions, and legal theories of counsel. Do not distribute, copy, or disclose this memorandum or any portion thereof without prior written authorization from Elaine Forsythe, Responsible Partner. Any inadvertent disclosure of this memorandum does not constitute a waiver of any applicable privilege or protection.
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I. Purpose and Overview
The purpose of this memorandum is to memorialize the comprehensive preparation plan for Sandra Chu's voluntary proffer session with the U.S. Department of Justice, Antitrust Division, San Francisco Field Office, currently scheduled for March 10, 2023, at the DOJ's offices located at 450 Golden Gate Avenue, Room 10-0101, San Francisco, California 94102. This memorandum is intended to serve as the primary working document for counsel throughout the preparation process, including the two in-person preparation sessions and the final check-in call, and to ensure that all relevant factual, legal, and strategic considerations are addressed before Ms. Chu appears before the government.
Background on the Witness. Sandra Chu is the Director of Pricing Analytics within the U.S. Specialty Minerals Division of Torchlight Mining Corp. She has held this position since approximately 2015 and has been continuously employed by TMC throughout the entirety of the relevant period encompassed by the DOJ's investigation. Ms. Chu remains a current employee of TMC in good standing. From 2016 until his departure effective September 30, 2021, Ms. Chu reported directly to Gavin Holt, who served as Vice President of U.S. Specialty Minerals Sales and who led TMC's commercial pricing function for the U.S. Specialty Minerals Division during the period that overlaps substantially with the alleged conspiracy.
Investigative Context. As this practice group is aware, TMC received a target letter from the DOJ Antitrust Division on May 20, 2022, notifying the company that it was a target of a federal grand jury investigation into suspected price-fixing, bid-rigging, and market-allocation agreements in the U.S. specialty minerals industry. Calderwood & Harkness, on behalf of TMC, communicated TMC's willingness to cooperate fully with the DOJ investigation in a letter dated June 8, 2022, addressed to Trial Attorney Denise Kowalski. Following extensive engagement with the DOJ and the completion of substantial phases of the internal investigation, Calderwood & Harkness submitted a formal cooperation proffer to the DOJ on February 15, 2023, outlining the scope and substance of TMC's anticipated cooperation, including the presentation of witness testimony from key TMC employees.
The Chu proffer session is a critical and central element of TMC's cooperation strategy. Ms. Chu's testimony is expected to provide the DOJ with corroborating detail regarding the pricing-adjustment mechanism through which the alleged conspiracy was implemented at TMC — specifically, the manner in which Gavin Holt directed pricing changes that correlated with competitor price movements. Ms. Chu's testimony is expected to be consistent with, and supportive of, TMC's cooperation narrative: that the alleged conspiracy was driven by Holt, who operated without the knowledge or authorization of TMC's senior management or compliance infrastructure, and that Ms. Chu implemented Holt's directives in the ordinary course of her employment without awareness of any underlying agreement with competitors.
Representation. Calderwood & Harkness LLP will represent Ms. Chu at the proffer session in its capacity as corporate counsel to TMC. Ms. Chu has not retained personal counsel, and her interests remain aligned with TMC's interests at this time. This assessment is based on the findings of the internal investigation, which revealed no evidence that Ms. Chu knowingly participated in or was aware of the alleged conspiracy. The potential for a future conflict is addressed in Section VIII below.
DOJ Personnel. The DOJ prosecutors expected to be present at the March 10, 2023, proffer session are Trial Attorney Denise Kowalski and Senior Trial Attorney Marcus Reeves, both of the Antitrust Division, San Francisco Field Office. It is possible that an FBI special agent or a paralegal specialist may also attend, though this has not been confirmed. We will seek to confirm the full attendee list with Ms. Kowalski prior to the session.
Proffer Ground Rules. The proffer session will be governed by the terms of a proffer letter currently being negotiated between Calderwood & Harkness (Elaine Forsythe) and the DOJ (Denise Kowalski). The proffer letter is expected to be formalized and executed by both parties no later than March 5, 2023. The proffer letter will establish standard "queen-for-a-day" protections, including use restrictions on Ms. Chu's statements, as detailed in Section III of this memorandum. The finalization of the proffer letter is a condition precedent to Ms. Chu's appearance at the session; if the proffer letter is not executed by March 5, 2023, we will request a postponement of the session.
II. Summary of Sandra Chu's Relevant Knowledge
This section summarizes the key areas of Ms. Chu's factual knowledge as developed through the internal investigation, including her witness interview conducted by Calderwood & Harkness on July 18, 2022, and the review of documents and electronic records associated with her custodial files. This summary is based on the information presently available and may be supplemented as additional preparation sessions are conducted.
A. Role and Responsibilities
Sandra Chu has served as Director of Pricing Analytics in the U.S. Specialty Minerals Division of Torchlight Mining Corp. since approximately 2015. In this capacity, Ms. Chu is responsible for maintaining and updating the published price lists for the three principal product categories sold by the U.S. Specialty Minerals Division: high-purity feldspar, industrial talc, and rare-earth concentrates. These products are sold to a customer base consisting primarily of U.S. industrial manufacturers and chemical-manufacturing companies.
Ms. Chu's day-to-day responsibilities include the following:
•  Maintaining and updating published price lists for TMC's U.S. Specialty Minerals product lines, including list prices, volume discount schedules, and customer-specific pricing arrangements;
•  Running quantitative pricing models used by the division to evaluate pricing scenarios, including cost-plus models, competitive benchmarking models, and margin-analysis tools;
•  Analyzing publicly available and proprietary market data related to specialty minerals pricing, including trade-publication indices, import/export data, and customer purchasing trends;
•  Executing pricing-adjustment directives received from her superiors, including updating pricing in TMC's internal systems, distributing updated price lists to the sales team, and communicating pricing changes to affected customer accounts;
•  Preparing periodic pricing reports and market-analysis summaries for senior management within the U.S. Specialty Minerals Division.
From 2016 through Holt's resignation effective September 30, 2021, Ms. Chu reported directly to Gavin Holt, who served as Vice President of U.S. Specialty Minerals Sales. In that role, Holt led TMC's commercial pricing function for the U.S. Specialty Minerals Division and had the authority to set and adjust pricing for all three product categories within the division. Ms. Chu's role was principally operational and analytical; she executed pricing decisions made by Holt and provided analytical support for pricing strategy but did not herself have authority to set or independently modify pricing.
B. Key Factual Knowledge — Pricing Adjustment Instructions from Holt
Based on the internal investigation — including Ms. Chu's witness interview conducted by Calderwood & Harkness on July 18, 2022, and the comprehensive document review of the approximately 555,000 documents reviewed to date — Ms. Chu received instructions from Gavin Holt to adjust published price lists on at least twelve (12) occasions that correlated, in timing and magnitude, with competitor price movements by Ridgecrest Minerals Inc. and/or Pinnacle Earth Resources Ltd. These twelve occasions were identified and documented in the Pricing Data Analysis Memorandum dated November 1, 2022, prepared jointly by Calderwood & Harkness and Hargrove Forensic Advisory LLC, our retained forensic economics consultants.
These pricing-adjustment instructions occurred between approximately 2017 and 2021, a period that overlaps substantially with the alleged conspiracy period of January 2017 through August 2021 as set forth in the DOJ's target letter and related subpoena materials.
Ms. Chu's account of these events, as provided during her July 18, 2022, interview with Calderwood & Harkness, may be summarized as follows:
•  Holt would contact Chu — typically by email but sometimes by phone or in person at TMC's offices — and direct her to adjust pricing on specific product lines (high-purity feldspar, industrial talc, and/or rare-earth concentrates) by specified percentages or specified dollar amounts per unit;
•  In most instances, Holt did not provide a detailed business rationale for the pricing adjustment beyond generalized references to "market conditions," "competitive positioning," "where the market is going," or similar language;
•  In some instances, the pricing adjustments were accompanied by a brief email from Holt, and in other instances the instruction was communicated verbally with no contemporaneous written record;
•  Chu did not independently verify the basis for Holt's pricing-adjustment directives. She understood Holt to be the authorized decision-maker for pricing within the division and implemented his instructions accordingly;
•  Chu noted during her interview that, in retrospect, she observed that pricing adjustments appeared to follow a pattern — they were sometimes clustered around quarterly intervals or around the timing of NASMC conferences — but she did not, at the time, draw any conclusions from this observation.
Critically, Ms. Chu did not have direct knowledge of or access to Holt's inter-competitor communications conducted via the VaultChat encrypted messaging application, by telephone, or at meetings held in connection with NASMC quarterly conferences. No evidence in the 555,000 documents reviewed to date indicates that Chu was aware of the existence of pricing agreements or understandings between Holt and Carl Edgerton of Ridgecrest Minerals Inc. or Kevin Tsang of Pinnacle Earth Resources Ltd. Ms. Chu's expected testimony is that she implemented pricing changes as directed by her supervisor in the ordinary course of her employment, that she may have had inchoate suspicions about the timing or frequency of certain pricing changes, but that she did not have affirmative knowledge of the alleged conspiracy.
C. Key Factual Knowledge — TMC Pricing Processes
Ms. Chu possesses detailed knowledge of TMC's internal pricing workflow for the U.S. Specialty Minerals Division. Her understanding of this workflow, as described in her July 18, 2022, interview, is as follows:
•  Gavin Holt, as VP of U.S. Specialty Minerals Sales, had authority to set and adjust pricing for all product lines within the division. Holt reported to Thomas Eriksen (Regional Sales Manager, Western Region) on certain operational matters, but pricing authority for the division rested with Holt;
•  When a pricing adjustment was determined, Holt would communicate the adjustment to Chu, who would then update the relevant price lists in TMC's pricing systems (including both the internal database and the Excel-based pricing spreadsheets maintained by Chu);
•  Updated price lists were then distributed by Chu to the regional sales team, including Thomas Eriksen and other sales managers, via email;
•  Customer-facing price-change notifications were typically issued by the sales team directly, though Chu occasionally prepared or reviewed draft notifications;
•  Pricing adjustments for high-value or strategically significant customer accounts sometimes required additional review or approval from TMC's CFO, Richard Fong, though Chu's understanding was that this process was informal and not consistently followed during Holt's tenure.
Ms. Chu maintained pricing spreadsheets and historical price lists that are among the documents TMC has produced to the DOJ. These documents were included in the first rolling production of approximately 42,000 documents delivered to the DOJ on April 4, 2022, and in subsequent rolling productions that cumulatively totaled approximately 487,000 documents by December 15, 2022. An additional 68,000 documents were produced in connection with the second grand jury subpoena compliance on June 30, 2023 (though this production postdates this memorandum and will be addressed in supplemental preparation materials). Ms. Chu's pricing spreadsheets and price lists are central to the DOJ's analysis of pricing patterns and are likely to be among the documents the DOJ presents during the proffer session.
Ms. Chu has knowledge of TMC's pricing for the three product categories — high-purity feldspar, industrial talc, and rare-earth concentrates — from 2015 through the present. This knowledge base encompasses both the pre-conspiracy baseline period (2015–2016) and the alleged conspiracy period (January 2017 through August 2021), providing the DOJ with a potential witness who can speak to pricing patterns, deviations, and changes across both timeframes.
D. Key Factual Knowledge — TMC Compliance Program
During her July 18, 2022, interview, Ms. Chu recalled attending an antitrust compliance training session at TMC in approximately 2017 or 2018. She described the training as a general presentation, likely conducted in a group setting, covering basic antitrust principles including prohibitions on price-fixing and agreements with competitors. Ms. Chu does not recall the identity of the presenter or whether the training was conducted by internal counsel, external counsel, or a third-party compliance provider.
Ms. Chu does not recall receiving any subsequent antitrust compliance training prior to the commencement of the DOJ investigation in 2022. This is consistent with the findings of the internal investigation, which determined that TMC conducted no annual or periodic antitrust compliance training at any time after 2018. The original TMC antitrust compliance policy was adopted in 2014, but the internal investigation found no evidence that the policy was meaningfully updated, distributed to employees, or reinforced through training after 2018.
Ms. Chu stated during her interview that she was not aware of any formal TMC policies specifically governing competitor contacts, information sharing at trade-association events, or monitoring of pricing-related communications during Holt's tenure as VP of U.S. Specialty Minerals Sales. This lack of awareness is consistent with the broader finding that TMC's compliance infrastructure during the relevant period was inadequate and did not include mechanisms for monitoring or detecting the type of conduct alleged in the investigation.
E. Limitations of Chu's Knowledge
It is important to delineate clearly the boundaries of Ms. Chu's knowledge, both for the purposes of preparation and because the DOJ is likely to probe these boundaries during the proffer session. Based on the internal investigation and Ms. Chu's July 18, 2022, interview, the following limitations have been identified:
•  Ms. Chu did not attend any NASMC (National Association of Specialty Minerals Companies) quarterly conferences or other trade-association events during the relevant period or at any other time during her employment with TMC. She has no firsthand knowledge of meetings, conversations, or interactions between Gavin Holt and Carl Edgerton (Ridgecrest Minerals Inc.) or Kevin Tsang (Pinnacle Earth Resources Ltd.) at NASMC conferences or elsewhere;
•  Ms. Chu was not aware of the existence of the VaultChat encrypted messaging application and did not use VaultChat or any other encrypted messaging platform for work-related communications. She communicated with Holt and other TMC colleagues through standard corporate channels, including email, telephone, and in-person meetings;
•  Ms. Chu has no knowledge of any bid-rigging or customer-allocation arrangements beyond her role in executing pricing adjustments as directed by Holt. She was not involved in the preparation of competitive bids or responses to requests for proposal (RFPs) from customers, except to the extent that she may have provided pricing data from the published price lists for use in bid preparation;
•  Ms. Chu had no communications — by any medium — with personnel at Ridgecrest Minerals Inc., Pinnacle Earth Resources Ltd., or Cascade Chemical Supply Co. during the relevant period or at any other time. Her contacts were limited to internal TMC personnel and, in her pricing-analytics capacity, to certain TMC customers.
These limitations are significant and favorable to Ms. Chu's position. They support the conclusion that Ms. Chu was an unwitting instrument of Holt's pricing directives rather than a knowing participant in the alleged conspiracy.
III. Proffer Session Legal Framework and Protections
A. Queen-for-a-Day Proffer Agreement
The proffer session will be conducted pursuant to a written proffer agreement ("proffer letter") currently being negotiated between Calderwood & Harkness LLP (Elaine Forsythe) and the DOJ Antitrust Division (Trial Attorney Denise Kowalski). The proffer letter is expected to be finalized and executed by both parties no later than March 5, 2023. Execution of the proffer letter is a condition precedent to Ms. Chu's appearance at the proffer session; if the proffer letter is not fully executed by March 5, 2023, counsel will request a postponement.
Based on the current state of negotiations, the proffer letter is expected to establish the following terms and protections:
1.  Direct Use Restriction. Ms. Chu's statements made during the proffer session will not be used directly against her in any criminal prosecution by the DOJ. This is the core "queen-for-a-day" protection. The DOJ may not introduce Ms. Chu's proffer statements as evidence-in-chief in any criminal case against Ms. Chu personally.
2.  Standard Exceptions. The direct use restriction is subject to the standard exceptions applicable to proffer agreements of this type. Specifically, the DOJ reserves the right to use Ms. Chu's proffer statements in a prosecution for perjury (18 U.S.C. § 1621), making false statements to federal officials (18 U.S.C. § 1001), or obstruction of justice (18 U.S.C. § 1503 or § 1512), in the event that Ms. Chu's statements during the proffer session are materially false, misleading, or incomplete.
3.  Derivative Use. The proffer letter is expected to permit the DOJ to use Ms. Chu's proffer statements to develop derivative evidence — that is, as investigative leads to identify and obtain other evidence — but the DOJ may not use Ms. Chu's actual statements as evidence-in-chief against her in any criminal proceeding. This is a critical distinction. While Ms. Chu's statements cannot be quoted or played back in a prosecution, the government may follow leads generated by those statements to discover independently admissible evidence.
4.  No Immunity. The proffer agreement does not constitute a grant of immunity, whether formal (statutory) or informal, to Ms. Chu. Ms. Chu remains potentially subject to investigation, indictment, and prosecution. The proffer agreement protects only against the direct use of her proffer statements; it does not preclude the government from bringing charges based on independently obtained evidence.
5.  Impeachment Use. The proffer letter may include a provision permitting the DOJ to use Ms. Chu's proffer statements for impeachment purposes in the event that Ms. Chu testifies at trial or in other proceedings in a manner materially inconsistent with her proffer statements. This is a standard provision in DOJ proffer agreements and underscores the importance of truthfulness and consistency.
6.  Corporate Authorization. The proffer letter will reflect that TMC, as Ms. Chu's employer, has authorized her participation in the proffer session as part of TMC's cooperation with the DOJ investigation. TMC's authorization is provided through its corporate counsel, Calderwood & Harkness LLP.
Counsel will review the final executed proffer letter with Ms. Chu during the preparation sessions to ensure she understands its terms and implications before appearing at the proffer session.
B. Representation at the Session
Ms. Chu will be represented at the proffer session by Calderwood & Harkness LLP, acting in its capacity as corporate counsel to Torchlight Mining Corp. The attorneys attending on behalf of Ms. Chu and TMC will be Elaine Forsythe, Responsible Partner, and Aaron Liu, Lead Associate, both of the Antitrust & Competition Practice Group.
Calderwood & Harkness's representation of Ms. Chu is undertaken in its capacity as counsel to TMC. Ms. Chu has not retained personal counsel at this time, and based on the findings of the internal investigation, her interests remain aligned with TMC's interests. Specifically:
•  The internal investigation found no evidence that Ms. Chu knowingly participated in, facilitated, or was aware of the alleged conspiracy between Holt and counterparts at Ridgecrest Minerals Inc. and Pinnacle Earth Resources Ltd.;
•  Ms. Chu's expected testimony — that she implemented pricing changes as directed by her supervisor without knowledge of any underlying agreement with competitors — is consistent with TMC's cooperation narrative and does not create an adversarial posture between Ms. Chu and TMC;
•  The potential for a future conflict between Ms. Chu's individual interests and TMC's corporate interests has been identified and is being monitored. This potential conflict was discussed with Ms. Chu during her July 18, 2022, interview with Calderwood & Harkness, at which time Ms. Chu was advised of her right to retain personal counsel and indicated that she did not wish to do so at that time.
Conflict Monitoring. If, at any point during the preparation process or during the proffer session itself, evidence or circumstances emerge that create or suggest a material conflict between Ms. Chu's individual interests and TMC's corporate interests, Calderwood & Harkness will advise Ms. Chu to retain personal counsel immediately and will take appropriate steps, including potentially pausing or terminating the proffer session. The criteria for triggering this assessment are discussed further in Section VIII below.
C. Scope Limitations
Calderwood & Harkness counsel will be present throughout the proffer session and will have the ability to confer with Ms. Chu during breaks and, in limited circumstances, during questioning. Counsel may object to or intervene regarding questions that fall outside the agreed-upon scope of the proffer agreement, that seek information protected by the attorney-client privilege, or that are otherwise improper.
The following general scope principles will govern Ms. Chu's participation:
•  Ms. Chu should answer each question truthfully and completely within the scope of the question asked. She should not volunteer information beyond the question asked, and she should not provide narrative answers that go beyond the specific facts requested;
•  Ms. Chu should not speculate about facts, events, or the state of mind of other persons. If she does not know the answer to a question, she should state clearly, "I don't know." If she does not recall a fact or event, she should state clearly, "I don't recall." These are entirely acceptable and appropriate responses;
•  If Ms. Chu is uncertain whether a question calls for information that may be privileged or outside the scope of the proffer, she should pause and look to counsel before answering. Counsel will provide guidance or, if necessary, request a brief recess to confer with Ms. Chu privately;
•  Ms. Chu should not discuss the substance of any conversations she has had with Calderwood & Harkness attorneys, including the preparation sessions, the internal investigation interview, or any other privileged communications. These communications are protected by the attorney-client privilege and must not be disclosed.
IV. Anticipated Questions from DOJ — Organized by Topic
Based on Calderwood & Harkness's experience with DOJ Antitrust Division proffer sessions, the scope of the investigation as reflected in the target letter and grand jury subpoenas, and the DOJ's prior communications with C&H regarding the areas of interest for Ms. Chu's proffer, the following categories of questions are anticipated. This section is organized by topic and is designed to guide the mock question-and-answer exercises during the preparation sessions.
A. Background and Role at TMC
The DOJ will likely begin with foundational questions designed to establish Ms. Chu's background, tenure, and responsibilities at TMC. These questions will serve as a baseline for the more substantive questioning that follows and will allow the prosecutors to assess Ms. Chu's demeanor, credibility, and level of cooperation. Anticipated questions in this area include:
•  Ms. Chu's employment history at TMC: when she began her employment, the positions she has held, and her current title and role;
•  Her educational background and professional qualifications relevant to her pricing-analytics role;
•  A description of her responsibilities as Director of Pricing Analytics in the U.S. Specialty Minerals Division, including the specific tasks she performs on a daily and weekly basis;
•  Her reporting structure within the U.S. Specialty Minerals Division: to whom she reported at various times during her tenure, with particular focus on her reporting relationship with Gavin Holt from 2016 through September 2021;
•  The nature and frequency of her communications with Holt: how often they communicated, by what means (email, phone, in-person meetings), and the typical subject matter of their communications;
•  The nature of their working relationship: whether it was collaborative, directive, or otherwise; whether Holt solicited her input on pricing decisions or simply communicated decisions for execution;
•  Her familiarity with the three product categories at issue in the investigation: high-purity feldspar, industrial talc, and rare-earth concentrates, including her understanding of the market dynamics, customer base, and competitive landscape for each product.
B. Pricing Processes and Price-Adjustment Instructions
This is expected to be the central and most extensive area of questioning. The DOJ's objective will be to develop a detailed understanding of how pricing decisions were made within the U.S. Specialty Minerals Division and, in particular, the mechanism by which Holt's pricing directives were implemented. Anticipated questions include:
•  A detailed explanation of the pricing decision-making process within the U.S. Specialty Minerals Division: who had authority to set and adjust pricing, what internal approvals (if any) were required, and how pricing changes were implemented and communicated to the sales team and to customers;
•  Specific instances where Holt instructed Ms. Chu to adjust published price lists: the frequency of such instructions, the timing of each instruction, the specific products affected, the magnitude of the adjustments (expressed as percentage changes or dollar-per-unit changes), and any written communications (emails, memoranda, or other records) associated with those instructions;
•  The at least twelve (12) occasions identified in the internal investigation and the Pricing Data Analysis Memorandum where Holt's pricing-adjustment instructions correlated with competitor price movements: what Ms. Chu knew about the basis for each adjustment; what explanation, if any, Holt provided; and whether Ms. Chu observed any pattern or regularity in the timing, direction, or magnitude of these adjustments;
•  Whether Holt ever instructed Ms. Chu to adjust prices in response to specific competitor actions — for example, whether Holt ever stated or implied that a pricing change was being made because a competitor had raised or lowered its prices;
•  Whether Holt ever referenced specific competitors (Ridgecrest Minerals Inc., Pinnacle Earth Resources Ltd., or others) when communicating pricing-adjustment instructions to Ms. Chu;
•  Whether Ms. Chu ever raised questions, concerns, or objections about the timing, frequency, or rationale of price adjustments directed by Holt, and if so, how Holt responded;
•  Whether Ms. Chu ever discussed the pricing adjustments or her concerns (if any) with anyone else at TMC, including Thomas Eriksen, Richard Fong, Priya Anand, or Søren Dalmqvist;
•  The documentation practices associated with pricing changes: what records were created, where they were stored, and whether any records were destroyed, deleted, or altered.
C. Knowledge of Competitor Communications
The DOJ will seek to determine whether Ms. Chu was aware, at any level, of communications between Holt and his counterparts at competitor companies. This line of questioning is designed to test whether Ms. Chu was a knowing participant or facilitator in the alleged conspiracy or whether she was genuinely unaware of Holt's inter-competitor contacts. Anticipated questions include:
•  Whether Ms. Chu was aware, at any time during the relevant period, that Gavin Holt communicated with counterparts at Ridgecrest Minerals Inc. or Pinnacle Earth Resources Ltd. about pricing, customer allocation, bidding, or any other competitive matters;
•  Whether Ms. Chu ever saw, was shown, or was made aware of any communications (written, electronic, or otherwise) between Holt and Carl Edgerton of Ridgecrest Minerals Inc. or Kevin Tsang of Pinnacle Earth Resources Ltd.;
•  Whether Ms. Chu was aware of the existence of the VaultChat encrypted messaging application or its use by Holt, or by any other person at TMC, for work-related or any other communications;
•  Whether Holt ever mentioned, referenced, or alluded to meetings, conversations, or contacts with competitors — whether at NASMC conferences, by telephone, or through any other channel;
•  Whether Ms. Chu ever observed Holt using an encrypted messaging application, a personal phone, or any non-standard communication device for work-related communications;
•  Whether Ms. Chu was aware of any other TMC employee communicating with competitors about pricing, market allocation, or bidding.
D. NASMC and Trade Association Activity
Although Ms. Chu did not attend NASMC conferences, the DOJ may probe whether she had any indirect involvement in conference-related activities, particularly the preparation of materials that Holt may have used during meetings with competitors. Anticipated questions include:
•  Whether Ms. Chu attended any NASMC quarterly conferences or other trade-association events at any time during her employment with TMC;
•  Whether Ms. Chu prepared any materials for Holt or other TMC personnel in connection with NASMC conferences, including pricing presentations, market-data summaries, competitive-analysis reports, or any other documents;
•  Whether Holt requested specific data, pricing information, or analyses from Ms. Chu in advance of NASMC conferences;
•  Whether Ms. Chu received any instructions, follow-up communications, or new pricing directives from Holt in the days immediately before or after NASMC conferences;
•  Whether Ms. Chu was aware of the agenda, attendees, or substance of NASMC conference meetings.
E. Other TMC Personnel
The DOJ may seek to understand the broader organizational context and to identify other potential witnesses or subjects. Anticipated questions include:
•  Whether Ms. Chu discussed pricing decisions, pricing strategies, or competitor contacts with Thomas Eriksen (Regional Sales Manager, Western Region), and if so, the substance and frequency of those discussions;
•  Whether Ms. Chu had any communications with Richard Fong (CFO), Priya Anand (General Counsel), or Søren Dalmqvist (CEO) regarding pricing decisions, competitor contacts, or any matters relevant to the investigation;
•  Whether anyone at TMC other than Gavin Holt gave Ms. Chu pricing-adjustment instructions during the relevant period, and if so, who and under what circumstances;
•  Whether Ms. Chu was aware of any other TMC employees who communicated with competitors about pricing, market allocation, customer assignments, or bidding;
•  Whether Ms. Chu was aware of any internal complaints, concerns, or reports regarding potentially anticompetitive conduct at TMC.
F. Compliance Program and Training
The DOJ is likely to inquire about TMC's antitrust compliance program, both to assess the adequacy of the program during the relevant period and to evaluate TMC's cooperation narrative regarding organizational reforms. Anticipated questions include:
•  Whether Ms. Chu received antitrust compliance training during her employment at TMC — and if so, when, how often, in what format (in-person, online, written materials), and what topics were covered;
•  Whether Ms. Chu was aware of TMC's antitrust compliance policy adopted in 2014, whether she received a copy of the policy, and whether she understood its requirements;
•  Whether Ms. Chu understood TMC's policies (if any) regarding contacts with competitors, information sharing with competitors, or participation in trade-association events;
•  Whether Ms. Chu was aware of any reporting mechanism (hotline, ombudsperson, or similar channel) for reporting suspected antitrust violations or other compliance concerns;
•  Whether Ms. Chu ever reported or considered reporting any concerns about Holt's pricing directives through TMC's compliance channels.
G. Cascade Chemical Supply Co.
The DOJ may inquire about Cascade Chemical Supply Co., which is understood to be a cooperating witness in the investigation (represented by Whitfield, Strauss & Tully LLP). Anticipated questions include:
•  Whether Ms. Chu had any interactions — by email, phone, in-person meeting, or any other means — with any personnel at Cascade Chemical Supply Co.;
•  Whether Ms. Chu was aware of Cascade's role as a downstream distributor and processor of specialty minerals products;
•  Whether Ms. Chu was aware of any pricing discussions, agreements, or arrangements involving Cascade, TMC, or any other company;
•  Whether Holt ever mentioned Cascade in the context of pricing decisions or competitive strategy.
H. Post-Holt Period
The DOJ may be interested in understanding whether the alleged conspiracy's effects persisted or dissipated after Holt's departure from TMC. Anticipated questions include:
•  How pricing practices in the U.S. Specialty Minerals Division changed (if at all) after Holt's departure effective September 30, 2021;
•  Whether the pattern of pricing adjustments that characterized Holt's tenure continued, diminished, or ceased after his departure;
•  Who assumed pricing authority for the U.S. Specialty Minerals Division after Holt's departure, and whether the new decision-maker's approach to pricing differed from Holt's;
•  Whether Ms. Chu observed any changes in the frequency, timing, or rationale of pricing adjustments after Holt left TMC;
•  Whether Ms. Chu's role or responsibilities changed after Holt's departure.
V. Document Walk-Through — Key Documents for Session Preparation
A central component of the preparation sessions will be walking Ms. Chu through the key documents that the DOJ is likely to present or reference during the proffer session. The objective is to ensure that Ms. Chu is familiar with and comfortable recognizing these documents, can provide accurate contextual explanations, and is not surprised or unsettled by the presentation of documents during questioning. The following categories of documents have been identified for the document walk-through.
A. Internal Pricing Spreadsheets and Price Lists
Ms. Chu maintained the Excel-based pricing spreadsheets and published price lists for the three product categories — high-purity feldspar, industrial talc, and rare-earth concentrates — throughout the relevant period. These documents are central to the DOJ's analysis and are among the most likely exhibits to be presented during the proffer session.
During the preparation sessions, counsel will:
•  Identify and assemble the specific pricing spreadsheets maintained by Ms. Chu for each of the three product categories, covering the period from 2017 through 2021;
•  Walk Ms. Chu through each spreadsheet, ensuring she can identify the document, explain its format and content, and describe how pricing changes were recorded and tracked within the spreadsheet;
•  Cross-reference the at least twelve (12) pricing adjustments correlated with competitor price movements, as identified in the internal investigation and documented in the Pricing Data Analysis Memorandum of November 1, 2022, prepared jointly by Calderwood & Harkness and Hargrove Forensic Advisory LLC. For each of these twelve adjustments, counsel will walk Ms. Chu through the specific pricing change reflected in her spreadsheets and the corresponding documentary evidence (if any) of Holt's directive;
•  Ensure Ms. Chu is comfortable recognizing and explaining these documents if presented by DOJ prosecutors, including the ability to explain data fields, column headings, formulas, and any annotations or notes contained in the spreadsheets;
•  Identify and flag any documents that Ms. Chu does not recognize or that appear to have been modified or reformatted after leaving her custody, so that she is prepared to note any discrepancies if such documents are presented.
B. Email Communications Between Chu and Holt
The document productions to the DOJ include email communications between Ms. Chu and Gavin Holt that are directly relevant to the investigation, particularly emails in which Holt instructs Ms. Chu to adjust published price lists. During the preparation sessions, counsel will:
•  Review with Ms. Chu the key emails from the document productions in which Holt communicates pricing-adjustment instructions, including any emails where Holt references "market conditions," "competitive positioning," "where the market is heading," or similar language;
•  For each key email, prepare Ms. Chu to explain the context of the communication: when it was sent, what pricing action she took in response, and her understanding of the basis for the instruction at the time she received it;
•  Identify any emails in which Holt's instructions are unusually specific, unusually timed, or otherwise notable — for example, emails sent immediately before or after NASMC conferences, emails referencing specific competitors, or emails directing pricing changes of unusual magnitude;
•  Prepare Ms. Chu to answer questions about emails she authored, including pricing reports, market-analysis summaries, and communications distributing updated price lists to the sales team;
•  Note that these emails are among the approximately 555,000 documents produced to the DOJ across all rolling productions (approximately 487,000 documents in the first production series through December 15, 2022, plus approximately 68,000 documents in the second subpoena compliance). The DOJ has had access to these documents for a substantial period and is likely to have analyzed them in detail.
C. VaultChat Records (for Context Only)
Ms. Chu is not a participant in the VaultChat encrypted messaging exchanges between Gavin Holt and his counterparts at Ridgecrest Minerals Inc. (Carl Edgerton) and Pinnacle Earth Resources Ltd. (Kevin Tsang). However, the DOJ may present VaultChat messages during the proffer session and ask Ms. Chu to review them for the purpose of determining whether she recognizes the pricing information or data discussed therein. This is a sensitive area that requires careful preparation.
Based on the information available from the investigation, at least thirty-seven (37) documented VaultChat exchanges occurred between Holt and Edgerton and/or Tsang during the period from March 14, 2017, through July 2021. Some of these exchanges reference specific pricing data — product prices, percentage adjustments, customer names, or volume figures — that may have originated from or been reflected in Ms. Chu's pricing spreadsheets.
During the preparation sessions, counsel will:
•  Review with Ms. Chu a representative sample of VaultChat messages (to the extent available from the DOJ's productions or from TMC's own records) that reference pricing data, product categories, or other information within Ms. Chu's domain of knowledge;
•  Prepare Ms. Chu to confirm or deny familiarity with the underlying pricing data referenced in VaultChat messages — for example, to confirm that a particular price figure is consistent with TMC's published price list for a given product at a given time — without speculating about the context of the inter-competitor communications or the purpose for which the data was being shared;
•  Instruct Ms. Chu that she should not offer opinions or interpretations about the meaning, intent, or significance of VaultChat messages. If asked about the content of a VaultChat message, she should limit her response to confirming or denying recognition of specific data points and should defer to counsel if the questioning moves beyond the scope of her knowledge;
•  Alert Ms. Chu to the possibility that certain VaultChat messages may reference her by name or by title — for example, Holt may have told Edgerton or Tsang that he would "have Sandra run the numbers" or similar — and prepare her to respond calmly and accurately to questions about such references.
D. Bid Response Documents
The DOJ may present bid documents, requests for proposal (RFPs), or customer-solicitation materials relating to U.S. industrial and chemical-manufacturing customers where TMC competed against Ridgecrest Minerals Inc. or Pinnacle Earth Resources Ltd. The DOJ's objective would be to probe whether Ms. Chu was involved in the preparation of competitive bids and whether she was aware of or participated in any coordinated bidding practices.
During the preparation sessions, counsel will:
•  Review with Ms. Chu any bid or RFP documents from the document productions that bear her name, involve her pricing data, or were routed through her office;
•  Prepare Ms. Chu to explain her role (if any) in the bid-preparation process, which is expected to be limited to providing pricing data from published price lists and pricing models for use by the sales team in formulating bid responses;
•  Prepare Ms. Chu to confirm clearly that she had no knowledge of any bid-rigging, bid rotation, or coordinated bidding between TMC and any competitor.
E. NASMC Conference Materials
Although Ms. Chu did not attend NASMC conferences, the DOJ may ask whether she prepared pricing summaries, market-analysis documents, competitive-benchmarking reports, or other materials that Gavin Holt used or may have used at conferences held at various locations, including Arlington, Virginia; Scottsdale, Arizona; and Orlando, Florida. During the preparation sessions, counsel will:
•  Review with Ms. Chu any documents from the productions that appear to have been prepared by her in connection with or in advance of NASMC conferences;
•  Prepare Ms. Chu to identify any materials she may have prepared at Holt's request around the time of NASMC conferences and to explain the intended purpose of those materials — specifically, whether they were prepared for internal market-analysis purposes, for TMC presentations at the conference, or for external distribution;
•  Prepare Ms. Chu to confirm that she did not prepare materials for the purpose of sharing competitive pricing information with competitors and that she was not aware that any materials she prepared were used for that purpose.
VI. Preparation Session Logistics and Schedule
A. Pre-Session Preparation Meetings
Three preparation touchpoints have been scheduled in advance of the March 10, 2023, proffer session:
First Preparation Session
•  Date: March 3, 2023
•  Time: 10:00 a.m. – 4:00 p.m. (with a one-hour break for lunch)
•  Location: Calderwood & Harkness LLP, San Francisco Office, 555 California Street, 40th Floor, Conference Room 40-A
•  Focus: Review of this memorandum with Ms. Chu; comprehensive discussion of Ms. Chu's substantive knowledge; walk-through of anticipated questions organized by topic (Section IV); discussion of the proffer agreement terms and legal framework (Section III); initial discussion of general witness guidance (Section VII). Counsel will use this session to identify any gaps in knowledge, any areas of uncertainty or discomfort, and any factual details that require further investigation or clarification before the proffer session.
Second Preparation Session
•  Date: March 7, 2023
•  Time: 10:00 a.m. – 2:00 p.m. (with a 30-minute break)
•  Location: Calderwood & Harkness LLP, San Francisco Office, 555 California Street, 40th Floor, Conference Room 40-A
•  Focus: Document walk-through (Section V), covering pricing spreadsheets, key emails, VaultChat records (for context), bid documents, and NASMC conference materials. Followed by a mock question-and-answer session in which Aaron Liu will act as the DOJ questioner, presenting questions in the manner and style anticipated from Trial Attorney Kowalski and Senior Trial Attorney Reeves. This mock session will emphasize scope discipline, the proper use of "I don't know" and "I don't recall" responses, handling of documents presented for the first time, and maintaining composure under probing or adversarial questioning. Following the mock Q&A, counsel will provide feedback to Ms. Chu and address any areas for improvement.
Final Preparation Check-In
•  Date: March 9, 2023
•  Time: 4:00 p.m.
•  Format: Telephone call (conference line to be provided)
•  Focus: Address any remaining concerns or questions from Ms. Chu following the two in-person preparation sessions. Confirm logistics for March 10, 2023, including arrival time, meeting location within the DOJ building, and identification requirements. Provide any updates on the proffer letter, the expected DOJ attendees, or other developments.
B. Day-of Logistics (March 10, 2023)
The proffer session is scheduled at the DOJ Antitrust Division, San Francisco Field Office, located at 450 Golden Gate Avenue, Room 10-0101, San Francisco, California 94102. The following logistical details apply:
•  Arrival time: Ms. Chu and C&H counsel should arrive at the DOJ building no later than 9:00 a.m. to allow time for building security screening and check-in procedures. Counsel will meet Ms. Chu in the lobby of the DOJ building at 8:45 a.m. for a brief pre-session check-in;
•  Session start time: The proffer session is expected to begin at approximately 9:30 a.m.;
•  Attendees — TMC/C&H side: Sandra Chu (witness), Elaine Forsythe (Calderwood & Harkness LLP, Responsible Partner), and Aaron Liu (Calderwood & Harkness LLP, Lead Associate);
•  Attendees — DOJ side: Trial Attorney Denise Kowalski and Senior Trial Attorney Marcus Reeves. Additional DOJ personnel (FBI special agent, paralegal) may be present; this will be confirmed in advance if possible;
•  Estimated duration: The proffer session is estimated to last approximately three to five hours, including breaks. The DOJ typically conducts proffer sessions in the morning and early afternoon, with periodic breaks at approximately 60- to 90-minute intervals. Ms. Chu or counsel may request additional breaks at any time;
•  Recording: The DOJ may take handwritten notes during the proffer session. The session will not be audio or video recorded, consistent with standard DOJ Antitrust Division proffer practice. Calderwood & Harkness counsel will take detailed notes for the purpose of preparing the post-proffer debriefing memorandum;
•  Personal items: Ms. Chu should bring a valid government-issued photo identification for building access. She should not bring any documents, electronic devices, or notes to the proffer session unless specifically authorized by counsel. Calderwood & Harkness counsel will bring copies of any documents needed for reference.
VII. General Witness Guidance
The following guidance should be reviewed with Ms. Chu during the preparation sessions and reinforced during the final check-in call on March 9, 2023. These principles are fundamental to the success of the proffer session and to the protection of Ms. Chu's interests and TMC's cooperation posture.
A. Truthfulness and Accuracy
Ms. Chu must be completely truthful in all of her statements during the proffer session. This is the single most important instruction for the session. The consequences of providing false or misleading statements to federal officials are severe and independent of the underlying investigation.
Specifically, false statements made during a proffer session to DOJ attorneys or FBI agents may result in criminal charges under 18 U.S.C. § 1001, which prohibits knowingly and willfully making any materially false, fictitious, or fraudulent statement or representation to a federal official in connection with any matter within the jurisdiction of the executive branch of the United States government. A violation of 18 U.S.C. § 1001 is punishable by up to five years' imprisonment and significant fines. Importantly, the queen-for-a-day protections in the proffer agreement expressly carve out an exception for perjury, false statements, and obstruction — meaning that if Ms. Chu makes false statements during the proffer, those statements can be used against her directly.
If Ms. Chu does not know the answer to a question, she should say clearly: "I don't know." If she does not recall a specific fact, event, date, or detail, she should say clearly: "I don't recall." These are entirely proper and acceptable responses. The DOJ does not expect a witness to have perfect recall of every detail of events that occurred years ago. What the DOJ does expect — and what is legally required — is honesty. Ms. Chu should not guess, speculate, or provide approximate answers in an attempt to be helpful. If she is uncertain, she should say so.
If Ms. Chu is uncertain whether a particular question calls for privileged information or is outside the agreed-upon scope of the proffer, she should pause and look to counsel before answering. Counsel will either signal that it is appropriate to answer or will intervene to address the issue with the DOJ prosecutors.
B. Scope Discipline
Ms. Chu should answer the question asked — no more and no less. Each response should be directed precisely at the question posed by the prosecutor. Ms. Chu should not volunteer additional facts, names, dates, documents, or contextual information that was not requested. Volunteering information beyond the scope of the question can inadvertently expand the scope of the investigation, create new lines of inquiry, or introduce facts that may be used to generate derivative evidence.
Ms. Chu should not offer interpretations, opinions, or conclusions about what other people — including Gavin Holt — may have intended, known, believed, or communicated, unless the question specifically asks for her understanding or perception. If asked what she believed or understood at the time, Ms. Chu may testify to her own state of mind. She should not speculate about the state of mind of others.
Ms. Chu should not discuss the substance of any conversations she has had with Calderwood & Harkness attorneys, including the preparation sessions described in this memorandum, the witness interview conducted on July 18, 2022, or any other communications with counsel. These communications are protected by the attorney-client privilege and must not be disclosed. If the DOJ asks about Ms. Chu's communications with counsel, C&H will assert the privilege.
C. Document Review Guidance
If the DOJ presents a document during the proffer session, Ms. Chu should adhere to the following protocol:
1.  Take time to review. Ms. Chu should take sufficient time to read and review the document carefully before answering any questions about it. There is no obligation to respond immediately, and taking time to read a document thoroughly demonstrates care and accuracy;
2.  Confirm recognition. Ms. Chu should confirm whether she has seen the document before and, if so, in what context — for example, whether she created it, received it, or reviewed it in the ordinary course of her work;
3.  Do not assume authenticity. Ms. Chu should not assume the authenticity, completeness, or accuracy of any document presented by the DOJ unless she independently recognizes it. If a document appears to be altered, incomplete, or unfamiliar, she should say so;
4.  Limit responses to the document. When answering questions about a document, Ms. Chu should limit her responses to what the document says and what she knows about the document. She should not speculate about the purpose, intent, or significance of documents she did not create or was not involved in.
D. Demeanor and Presentation
Ms. Chu should remain calm, professional, and cooperative throughout the proffer session. The proffer session is not a cross-examination, and it is not adversarial in nature — though the questioning may at times be probing, detailed, or challenging. Ms. Chu's cooperation and demeanor are an important component of TMC's broader cooperation strategy. A credible, forthcoming, and professional witness will enhance TMC's standing with the DOJ and support the case for maximum cooperation credit.
Specific guidance on demeanor:
•  Maintain eye contact with the questioner and respond in a clear, measured tone;
•  Avoid defensive, evasive, or combative responses, even if the questioning feels repetitive or confrontational;
•  Do not argue with the prosecutors or challenge the premise of their questions. If a question contains an inaccurate premise, Ms. Chu should correct the inaccuracy in her answer without becoming argumentative;
•  If fatigue, confusion, or emotional distress arises at any point during the session, Ms. Chu should request a break. Counsel will facilitate the break. There is no obligation to continue questioning while fatigued or distressed, and breaks are both normal and expected;
•  Dress in professional business attire appropriate for a meeting at a government office.
VIII. Risk Assessment and Contingency Planning
A. Potential Risks to Chu
Although the internal investigation found no evidence that Ms. Chu had direct knowledge of or participated in inter-competitor communications or agreements, the proffer session presents certain risks to Ms. Chu individually. These risks must be identified, assessed, and addressed as part of the preparation process.
The primary risk is that the DOJ may probe whether Ms. Chu should have been aware of, or was willfully blind to, suspicious patterns in Holt's pricing directives. The legal standard for willful blindness — sometimes referred to as "conscious avoidance" or "deliberate ignorance" — permits a jury to find that a defendant had the requisite knowledge of unlawful activity if the evidence establishes that (1) the defendant was aware of a high probability that the unlawful activity was occurring, and (2) the defendant deliberately avoided confirming that fact. If the DOJ concludes that Ms. Chu was willfully blind to the existence of the price-fixing conspiracy, Ms. Chu could face potential criminal exposure.
The following factors mitigate this risk:
•  The internal investigation found no direct evidence that Ms. Chu was aware of or participated in the alleged conspiracy;
•  Ms. Chu's role was operational and analytical, not strategic or commercial. She executed pricing decisions made by her supervisor in the ordinary course of her employment;
•  There is no evidence that Ms. Chu took affirmative steps to avoid learning about the basis for Holt's pricing directives. Her lack of inquiry is consistent with a subordinate employee following the instructions of an authorized decision-maker;
•  TMC's compliance program was inadequate during the relevant period and did not provide Ms. Chu with training or mechanisms that would have alerted her to suspicious pricing patterns.
Notwithstanding these mitigating factors, if the DOJ's questioning during the proffer session suggests escalating interest in Ms. Chu individually — for example, if the DOJ begins asking questions that assume or imply that Ms. Chu had knowledge of the conspiracy, or if the DOJ presents evidence (such as VaultChat messages) that references Ms. Chu in a manner suggesting active participation — C&H counsel will request a break to confer privately with Ms. Chu and to assess whether Ms. Chu should continue the session, invoke her right to remain silent, or retain personal counsel.
B. Potential DOJ Lines of Attack
Based on our assessment of the evidence and the DOJ's likely investigative strategy, the following lines of attack are anticipated:
1.  Pattern Evidence. The DOJ may attempt to establish that the at least twelve (12) correlated pricing adjustments were so obviously and consistently linked to competitor price movements — in timing, direction, and magnitude — that Ms. Chu must have been aware of, or at a minimum willfully blind to, the existence of a coordinated pricing scheme. The DOJ may present comparative pricing data showing near-simultaneous price changes by TMC, Ridgecrest, and Pinnacle and ask Ms. Chu to explain why she did not find this pattern suspicious;
2.  VaultChat References. The DOJ may present VaultChat messages between Holt and Carl Edgerton or Kevin Tsang that reference Ms. Chu by name, by title, or by function — for example, messages in which Holt states that he will "have pricing run the new numbers" or "Sandra is updating the lists." The DOJ may use these references to test whether Ms. Chu was a knowing intermediary in the conspiracy, even if she did not directly participate in the inter-competitor communications;
3.  Concealment. The DOJ may probe whether Holt directed Ms. Chu to conceal the true rationale for pricing changes from other TMC personnel — for example, whether Holt instructed Ms. Chu to use innocuous language (such as "market adjustment" or "cost-driven change") in communications with the sales team, in order to disguise the fact that the pricing changes were the product of an agreement with competitors;
4.  Cumulative Suspicion. The DOJ may pursue a line of questioning designed to establish, cumulatively, that the totality of circumstances — the frequency o