Case 1:16-cv-04155-GHW Document 84 Filed 09/29/17 Page 1 of 99
`USDC SDNY
`DOCUMENT
`ELECTRONICALLY FILED
`DOC #: _________________
`DATE FILED: 9/29/17
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` 1:16-cv-4155-GHW
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`OPINION AND ORDER
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF NEW YORK
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`In re BANCO BRADESCO S.A. SECURITIES
`LITIGATION.
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`GREGORY H. WOODS, United States District Judge:
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`In 2013, an anonymous letter was delivered to the headquarters of the Brazilian Federal
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`Police detailing a widespread practice of corporate bribery of Brazilian tax officials. That letter
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`prompted the Brazilian authorities to open a multi-year investigation into more than seventy
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`Brazilian industrial, agricultural, civil engineering, and financial institutions known as “Operation
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`Zealots.” On May 31, 2016, Defendants Luiz Carlos Trabuco Cappi, Domingos Figueiriedo de
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`Abreu, and Luiz Carlos Angelotti, each senior executives of Defendant Banco Bradesco S.A., were
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`indicted by the Brazilian Federal Police on charges of violating Brazilian anti-corruption laws
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`through an alleged scheme to unlawfully influence the outcome of proceedings pending before a
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`Brazilian tax tribunal.
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`Lead Plaintiff Public Employees’ Retirement System of Mississippi alleges that Defendants
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`made a number of statements that, in light of the alleged misconduct underlying those criminal
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`charges as well as earlier uncharged bribery schemes, were false or misleading in violation of the
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`Securities Exchange Act of 1934. Defendants have moved to dismiss the operative complaint on
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`several grounds. In addition, Defendant Abreu has moved to dismiss the claims against him for lack
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`of personal jurisdiction. For the reasons that follow, Defendants’ motion to dismiss is GRANTED
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`IN PART and DENIED IN PART.
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`I. BACKGROUND1
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`This putative class action arises indirectly out of Operação Zelotes (“Operation Zealots”), a
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`multi-year investigation by Brazilian authorities into allegedly widespread corporate bribery of
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`Brazilian tax officials. As a result of Operation Zealots, Defendants Luiz Carlos Trabuco Cappi
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`(“Trabuco”), Domingos Figueiredo de Abreu (“Abreu”), and Luiz Carlos Angelotti (“Angelotti”)
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`(collectively, the “Individual Defendants”), each senior executives of Defendant Banco Bradesco
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`S.A. (“Bradesco” or the “Company”), were indicted by the Brazilian Federal Police on May 31, 2016
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`on charges of violating Brazilian anti-corruption laws through an alleged scheme to unlawfully
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`obtain favorable tax treatment and tax rulings for Bradesco.
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`Lead Plaintiff, the Public Employees’ Retirement System of Mississippi (“Plaintiff”) brings
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`this lawsuit under Section 10(b) of the Securities Exchange Act (“Exchange Act”) and SEC Rule
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`10b-5 promulgated thereunder, as well as under Section 20(a) of the Exchange Act, on behalf of
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`itself and a putative class of purchasers or acquirers of preferred American Depositary Shares
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`(“PADS”) of Bradesco between April 30, 2012 and July 27, 2016 (the “Class Period”).2 Plaintiff
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`filed an amended complaint on October 21, 2016, naming Bradesco, Trabuco, Abreu, and Angelotti
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`as defendants. ECF No. 45. Defendants filed a motion to dismiss the amended complaint on
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`1 Unless otherwise noted, the facts are taken from the amended class action complaint, and are accepted as true for the
`purposes of this motion. See, e.g., Chambers v. Time Warner, Inc., 282 F.3d 147, 152 (2d Cir. 2002). However, “the tenet
`that a court must accept as true all of the allegations contained in a complaint is inapplicable to legal conclusions.”
`Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). In the amended complaint, Plaintiff represents that, where allegations are not
`made on personal knowledge, they are made on information and belief based upon, “among other things, the ongoing
`investigation that court-appointed Lead Counsel is conducting under Lead Plaintiff’s supervision,” which includes
`review and analysis of (i) documents filed by Bradesco with the SEC and the Brazilian Comissão de Valores Mobiliários
`(“CVM”); (ii) securities analysts’ reports about Bradesco; (iii) transcripts of Bradesco conference calls; (iv) Bradesco
`press releases; (v) media reports, including those published in the U.S. and in Brazil, concerning Bradesco and
`“Operation Zealots”; and (vi) documents, criminal complaints, and other evidence submitted by Brazilian prosecutors
`and other governmental authorities in Brazilian court proceedings. Am. Compl. at 1.
`2 This action was initially filed by purported Bradesco ADS purchaser William Bryan on June 3, 2016. ECF No. 1. In
`accordance with the Private Securities Litigation Reform Act of 1995 (“PSLRA”), 15 U.S.C. § 78u-4(a)(3), the Court
`received motions by members of the putative class for appointment as lead counsel. Following full briefing, the Court,
`by order dated August 15, 2016, appointed the Public Employees’ Retirement System of Mississippi as lead plaintiff and
`approved its choice of lead counsel and liaison counsel. ECF No. 24. The operative amended class action complaint
`was then filed on October 21, 2016. ECF No. 45.
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`2
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`December 23, 2016, ECF No. 63, Plaintiff filed an opposition on February 3, 2017, ECF No. 69,
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`and Defendants filed a reply on March 3, 2017, ECF No. 73.
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`A summary of the factual allegations pleaded in the amended complaint follows.
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`A. The Parties
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`Defendant Banco Bradesco S.A. is one of the largest banks in Brazil. Am. Class Action
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`Compl. (ECF No. 45) (“amended complaint” or “AC”) ¶ 23. It provides a variety of commercial
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`banking services, including loans and deposit-taking, credit card issuance, insurance, leasing,
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`payment collection and processing, asset management, and brokerage services. Id. Bradesco has a
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`number of subsidiaries that operate in the insurance and asset management industries, including
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`Grupo Bradesco Seguros, Bradesco Seguros S.A., Bradesco Asset Management, and Bradesco BBI.
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`Id. Bradesco’s common and preferred shares are listed and traded on the Bolsa de Valores de São
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`Paulo (“BOVESPA”), and its common and preferred American Depositary Shares (“CADS” and
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`“PADS,” respectively) are listed and traded on the NYSE. AC ¶¶ 24-25. Bradesco is subject to
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`reporting requirements of both the SEC and its Brazilian equivalent, the Comissão de Valores
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`Mobiliários (“CVM”). AC ¶ 26.
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`Defendant Luiz Carlos Trabuco Cappi is Bradesco’s Chief Executive Officer and Vice
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`President of its Board of Directors. AC ¶ 29. Prior to his appointment as CEO on March 10, 2009,
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`Trabuco had served as Bradesco’s Vice President since March 1999. Id.
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`Defendant Luiz Carlos Angelotti is Bradesco’s Managing Officer and Investment Relations
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`Officer and is a member of its Executive Board. AC ¶ 30. Angelotti was elected to the position of
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`Managing Officer in January 2012 and served on Bradesco’s Executive Committees for Disclosure
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`and Corporate Governance from 2012 to 2016. AC ¶ 30. According to the amended complaint, he
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`was also responsible for the Company’s “Tax Audit, General Accounting, Social and Environmental
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`Responsibility, as well as its Planning, Budgeting and Control areas during the Class Period.” Id.
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`Prior to his appointment as Managing Officer, Angelotti served as Department Officer from 2002 to
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`2010, and then as Deputy Officer from 2010 to 2012. Id.
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`Defendant Domingos Figueiredo de Abreu is Bradesco’s Executive Vice President and is
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`also a member of the Company’s Executive Board. AC ¶ 31. Abreu served on the Company’s
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`Statutory Committees for Ethical Conduct and Internal Controls and Compliance, and its Executive
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`Committees for Disclosure and Corporate Governance from 2012 to 2016. Id.
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`According to the amended complaint, each of the Individual Defendants was “named as a
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`defendant in the Criminal Complaint for his role in Bradesco’s tax bribery scheme.” AC ¶¶ 29-31.
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`Plaintiff alleges that Trabuco and Angelotti made a series of false or misleading statements in SEC
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`and CVM filings during the Class Period, while Abreu made one false or misleading statement in an
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`SEC filing and, “by virtue of” his committee membership, “was involved in the preparation and
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`review of the false or misleading statements in Bradesco’s SEC and CVM filings.” Id.
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`B. Bradesco’s Alleged Unlawful Scheme
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`According to the amended complaint, Operations Zealots revealed “that Bradesco had been
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`engaged in an eleven-year scheme, beginning in 2004, to improperly influence the outcome of tax
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`adjudications with billions of Brazilian Reais at stake.” AC ¶ 60. The relevant cast of characters in
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`the alleged scheme includes Eduardo Cerqueira Leite (“Leite”), Mario Pagnozzi Junior (“Pagnozzi”),
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`and José Teruji Tamazato (“Tamazato”) (collectively, the “Bribe Facilitation Group”), as well as a
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`number of other non-parties. Leite served as an auditor at the Federal Revenue Service of Brazil
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`(“FRS”). Id. ¶¶ 4, 33. Specifically, he was the Head of the Tax Guidance and Analysis Division at
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`the Delegacia Especial de Receita Federal de Instituições Financeiras em São Paulo (“Specialized
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`Office for Financial Institutions in São Paulo” or “DEINF/SP”), an administrative body within the
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`FRS with responsibility for taxation, collection and recovery, as well as verification with respect to
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`financial institution taxpayers. AC ¶ 33. Leite, who was also named in the Brazilian criminal
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`complaint, is alleged in the amended complaint to have “facilitated Bradesco’s efforts to influence
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`the outcome of” proceedings before CARF, the appellate body responsible for adjudicating tax
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`disputes in Brazil, and to have been “instrumental in Bradesco’s tax bribery scheme, including his
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`role in making determinations favorable to Bradesco in various actions before the DEINF/SP, in
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`exchange for bribes.” Id.
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` Pagnozzi is a Brazilian businessman and lawyer affiliated with Pagnozzi, Calazans &
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`Associados Consultoria Empresarial Ltda., which “purportedly provided ‘tax advice’ to Bradesco.”
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`AC ¶ 34. Plaintiff alleges that Pagnozzi, who was also named in the Brazilian criminal complaint,
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`“served as an intermediary for Bradesco’s illicit actions, facilitating bribe payments from the
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`Company and the improper provision of confidential information to the Company at both the
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`DEINF/SP and CARF levels.” Id.
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`Tamazato, who was also named in the criminal complaint, is a business partner of Pagnozzi’s
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`at Pagnozzi, Calazans & Associados, where he serves as an accountant and “client winner.” AC ¶
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`35. Tamazato “worked with Pagnozzi to facilitate Bradesco’s payment of bribes in exchange for the
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`improper provision of confidential information as well as favorable determinations in various tax
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`proceedings.” Id.
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`Mário da Silveira Teixeira Júnior (“Teixeira”) was a member of Bradesco’s Board of
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`Directors from 2002 to 2015. AC ¶ 41. He served on the Company’s Statutory Committee for
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`Internal Controls and Compliance and acted as it Coordinator from 2012 to 2015. Id. Also named
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`in the criminal complaint, Teixeira allegedly attended at least one meeting between the Individual
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`Defendants, Leite, and Pagnozzi, where he “encouraged the Bradesco attendees to pay for the
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`‘services’ that Leite and Pagnozzi were offering.” Id.
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`Jorge Victor Rodrigues (“Victor”) is a former FRS auditor and CARF councilor. In addition
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`to being named in the criminal complaint, Victor “has also been implicated in CARF bribery
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`schemes involving Banco Safra, Santander[, and] other Brazilian companies.” AC ¶ 37.
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`Otacilio Cartaxo (“Cartaxo”) was the President of CARF from the middle of 2011 until
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`January 2015, prior to which he was Secretary of the FRS from 2009 to 2011. AC ¶¶ 11, 38.
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`Lutero Fernandes do Nascimento (“Nascimento”) is a former FRS tax analyst and former
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`Head of the Technical and Legal Advisory Service of CARF. He served as a legal adviser to Cartaxo
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`as President of CARF in 2013 and 2014, and is also named in the criminal complaint. AC ¶¶ 11, 39.
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`Jeferson Ribeiro Salazar (“Salazar”) is a former FRS auditor with experience presenting tax
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`cases before CARF, and who, according to the amended complaint, “offered to help facilitate
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`Bradesco’s CARF proceeding.” AC ¶¶ 11, 40. Salazar is also named in the criminal complaint. Id.
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`1. 2004 and 2007 Tax Credits
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`Plaintiff alleges that, on several occasions beginning in the early 2000s, Leite accessed
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`confidential tax information related to Bradesco’s prior tax filings, as well as information related to
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`other financial institutions and relevant administrative tax proceedings in order to identify tax credits
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`for which Bradesco could apply. AC ¶ 64. After acquiring that information, Leite provided it to
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`Pagnozzi and worked with Pagnozzi to formulate a written proposal advising the Company to seek
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`“lucrative tax credits.” Id. Pagnozzi would present the proposals, which were allegedly referred to
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`by Leite and Pagnozzi as “papers,” to the Company, which, according to the amended complaint,
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`agreed to pay Pagnozzi a percentage of the requested tax credit in return for a favorable
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`determination in the ensuing tax proceedings. Id. The payments, which were “disguised as
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`remuneration for ‘tax advice,’” were passed on to Leite, who then made determinations in
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`Bradesco’s favor, “effectively approving his own recommendations.” Id.
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`For example, on November 24, 2004, Pagnozzi and Leite proposed to Bradesco that the
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`Company apply for corporate income tax (“IRPJ”) and social contribution over net profits (“CSLL”)
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`credits for calendar years 2000 and 2001 based on a purported overpayment by the Company and
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`related adjustments to its prior tax filings. AC ¶ 65. Utilizing confidential information that he
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`accessed with his DEINF/SP credentials, the amended complaint alleges, Leite put together the
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`“papers” for Bradesco, “proposing how the Company could illegally obtain the tax credits in
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`exchange for a bribe.” AC ¶ 66. Leite reviewed Bradesco’s 1995 and 1999 tax returns to
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`“manufacture an overpayment for the 2000 and 2001 fiscal years, such that Bradesco would be able
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`to claim IRPJ and CSLL credits in the amount of R$200,000,000 (approximately $73,260,000).”3 Id.
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`Pagnozzi then delivered the “papers”—“under the guise of providing ‘tax advice’”—to Angelotti,
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`who was responsible for the Company’s “tax area.” Id. Bradesco then paid Pagnozzi and Leite
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`more than R$1,250,000 (approximately $458,000). Id. As alleged in the amended complaint,
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`Bradesco “did exactly as Pagnozzi and Leite instructed” and instituted a tax proceeding
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`(Administrative Tax Proceeding No. 16327.000683/2003-11) to seek approval of the IRPJ and
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`CSLL credits described in the “papers.” AC ¶ 67. Leite was responsible for approving Bradesco’s
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`request, which he did. Id.
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`Plaintiff describes a number of similar tax credit schemes in 2007, and alleges that
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`“[b]etween 2004 and 2007, Bradesco and its subsidiary Banco Boavista paid Pagnozzi and Leite no
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`less than R$2,717,000 (approximately $1,206,700) in bribes in exchange for more than
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`R$260,250,000 (approximately $103,673,000) in illegally obtained tax credits.” AC ¶¶ 68-72.
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`2. Bradesco’s “Continued Payments” from 2007 to 2015
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`An expert report compiled by the Brazilian Federal Police “establishes that Bradesco made
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`450 payments to Pagnozzi, totaling R$12,981,421.83 (approximately $5,200,000), from 2007 to
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`2015.” AC ¶ 73. In addition, Plaintiff alleges that evidence collected by the Federal Police shows
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`that the Company “made more than 100 payments to” Victor, totaling R$2,073,978.41
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`(approximately $830,000). AC ¶ 74. According to the amended complaint, this evidence of
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`“Bradesco’s transfers to Victor and Pagnozzi” between 2007 and 2015 demonstrates that
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`3 References to “R$” are to amounts in Brazilian Reais. AC at 1 n.1.
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`“Bradesco’s bribe payments continued long after the 2007 payments made in connection with the
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`Company’s scheme to illegally obtain IRPJ and CSLL tax credits.” AC ¶ 76.
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`3. Bradesco’s 2014 Bribery Scheme
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`Plaintiff alleges that, in the course of Operation Zealots, the Federal Police uncovered “three
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`separate bribery schemes that Bradesco put in place in 2014 to reap hundreds of millions of dollars
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`in tax benefits,” including (i) seeking tax credits and reimbursements of R$1,000,000,000
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`(approximately $600,000,000) based on taxes the Company paid from 2009 to 2014; (ii) requesting
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`PIS and COFINS tax credits totaling R$360,000,000 (approximately $144,000,000); and (iii)
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`manipulating a CARF tax appeal pertaining to R$2,736,809,135.03 (approximately $1,232,800,000) in
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`tax credits and associated fines. AC ¶ 77.
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`a. Alleged Scheme to Influence the Adjudication of a 2014 Tax
`Compensation Request
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`In addition to the above-described scheme to obtain tax credits at the DEINF/SP level,
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`Defendants allegedly continued to pay Pagnozzi and Leite in a scheme related to a 2014 review of
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`Bradesco’s prior tax filings. AC ¶ 78. In a proposal dated March 24, 2014, sent to Angelotti by
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`Pagnozzi’s office and bearing Bradesco’s stamp with the date of receipt, Pagnozzi proposed the
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`“verification, review and study, relative to the last five (5) years, of all taxes . . . seeking to make
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`feasible the reduction of [Bradesco’s] current tax burden and the recovery of overpaid taxes.” AC
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`¶ 79. According to the amended complaint, the proposal further provided that Bradesco would file
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`a petition with the DEINF/SP seeking approval of tax credits and reimbursements “in the amounts
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`that Leite had identified and proposed” (roughly R$1,000,000,000, or approximately $392,157,000),
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`and that Leite, as head of the DEINF/SP’s Guidance and Tax Analysis Division, would grant the
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`petition. Id. The proposal also contemplated that Bradesco would pay 15% of any awarded credits
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`or reimbursements at the DEINF/SP level to Leite and Pagnozzi. Id.
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`Plaintiff alleges that “Bradesco accepted the proposal, but sought to negotiate the amount of
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`the bribe to Leite and Pagnozzi.” Id. Pagnozzi and Tamazato met with Angelotti on March 24,
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`2014 and August 12, 2014 to discuss the proposal and renegotiate the “bribe percentage.” AC ¶ 80.
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`On August 14, 2014, Pagnozzi and Tamazato sent Angelotti a revised proposal for his review that
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`reduced the percentage to 5-8% depending on the amount of the credit or reimbursement that Leite
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`was able to secure for the Company. Id. During a November 12, 2014 telephone call that was
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`intercepted and recorded by the Federal Police, Pagnozzi and Tamazato “revisited the bribe
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`amount,” noting that it had been negotiated down to 3% of the value of the expected credits. AC
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`¶ 81.
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`This scheme “was never completed due to the announcement of Operation Zealots in the
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`spring of 2015.” AC ¶ 82.
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`b. Alleged Scheme to Manipulate PIS and COFINS Credits
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`According to the amended complaint, Defendants also agreed to pay bribes to Leite and
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`Pagnozzi to obtain more than $100,000,000 in credits related to PIS and COFINS taxes, which are
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`assessed on the basis of a company’s gross revenues, irrespective of profits. AC ¶¶ 83-84. Pagnozzi
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`and Leite proposed to Bradesco that it seek between R$1,500,000,000 (approximately $600,000,000)
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`and R$360,000,000 (approximately $144,000,000) in potential tax credits. AC ¶ 84. As with the
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`prior tax credit requests, “the Company” agreed to pay a bribe to Pagnozzi and Leite in exchange for
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`a guaranteed favorable outcome. Id.
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`Pagnozzi, Tamazato, and Leite discussed this scheme with Angelotti, Abreu, and Trabuco
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`during an October 9, 2014 in-person meeting at Bradesco’s headquarters. AC ¶ 85. While Trabuco
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`attended the meeting, he left shortly after greeting Pagnozzi, Tamazato, and Leite. Id. During a
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`follow-up meeting on November 12, 2014 attended by Pagnozzi, Abreu, Angelotti, and Trabuco,
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`Abreu told Pagnozzi that Bradesco was “going to close that deal” with Pagnozzi, Tamazato, and
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`Leite. AC ¶ 86. During the same meeting, Trabuco allegedly told Pagnozzi to “tell our friend [Leite]
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`we are interested in hiring you to do this.” Id. (alteration in original).
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`Plaintiff alleges that Bradesco requested additional data concerning other companies that had
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`made similar tax credit applications. AC ¶ 87. Leite used his DEINF/SP credentials to access
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`confidential data, including information and documents protected by tax secrecy laws, as well as
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`information Leite had obtained through a private consultation with an FRS attorney in connection
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`with a separate matter. AC ¶¶ 87-88. He then used that information to put together a proposal for
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`Bradesco purporting to explain why the Company was entitled to R$360,000,000 in PIS and
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`COFINS credits. AC ¶ 88. Leite, Pagnozzi, Tamazato, and Angelotti met again on November 28,
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`2014 to further discuss the arrangement. AC ¶ 89.
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`This scheme was also “never completed due to the announcement of Operation Zealots in
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`the spring of 2015.” Id.
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`c. Alleged Scheme to Manipulate CARF Proceedings
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`Between October 2014 and March 2015, Angelotti and Abreu, “with Trabuco’s and
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`Teixeira’s knowledge,” also agreed to pay bribes to public servants in order to manipulate the
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`outcome of a CARF proceeding concerning a R$2.7 billion (approximately $1.2 billion) Bradesco tax
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`appeal. AC ¶ 90. The amount at stake in the appeal consisted of a R$1,824,539,423.40
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`(approximately $821,865,000) tax credit that had been disallowed and an associated fine of
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`R$912,269,711.63 (approximately $410,932,000) that Bradesco had incurred in connection with the
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`disallowance. AC ¶ 91.
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`After the appeal was docketed as Administrative Tax Proceeding No. 16327.000190/2011-
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`83 and distributed to the CARF, Bradesco and the Bribe Facilitation Group allegedly discussed how
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`they could influence the members of the CARF panel to manipulate the outcome of the proceedings
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`in the Company’s favor. AC ¶ 92. According to the amended complaint, Bradesco could not rely
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`on Leite for this endeavor, since he was not a CARF councilor. Id. Accordingly, the Company
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`enlisted the participation of two additional individuals: Nascimento and Victor. Id. Plaintiff alleges
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`that Nascimento, an FRS tax analyst, Head of the Technical and Legal Advisory Service of CARF,
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`and CARF President Cartaxo’s “right hand,” had the authority to draft CARF orders and decisions.
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`Id. He also had access to internal confidential information and to the CARF computer systems,
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`including the internal system for tracking the progression of proceedings. Id. In addition,
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`Nascimento “had connections with the sitting CARF councilors and was intimately familiar with the
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`internal workings of CARF.” Id. Victor, the retired FRS auditor and CARF councilor “specializ[ed]
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`in the trade of ‘selling facilitations’ within the FRS.” AC ¶ 93. As relevant here, he “served as the
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`go-between with Bradesco and Nascimento as [he] paid Nascimento and certain of his family
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`members a monthly ‘advance’ of R$5,000 on the total amount of expected bribe payments.” Id.
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`Victor also had relationships with sitting CARF councilors. Id.
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`By July 30, 2014, Victor, Salazar, and Leite had scheduled a meeting in Brasilia with
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`Nascimento. AC ¶ 94. Before the meeting, Leite again used his DEINF/SP credentials to access
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`restricted, confidential information and view the current status of Bradesco’s proceeding. Id. As
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`alleged, Victor “also reminded Nascimento to bring his computer and his access token to the
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`meeting so that they could run searches in the CARF internal systems to find information relevant
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`to Bradesco’s appeal.” Id. Plaintiff alleges that Nascimento confirmed his attendance at this
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`meeting to the Brazilian Federal Police, and that he told the Federal Police that the meeting “was set
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`up so that Leite could evaluate Bradesco’s chances of succeeding on appeal,” and that “Victor
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`mentioned to Nascimento that he would receive a percentage of Victor’s bribe proceeds if Bradesco
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`prevailed.” Id.
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`With the CARF proceeding initially set for August 8, 2014, the Bribe Facilitation Group
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`worked with Salazar, Victor, and Nascimento to “devise a plan to corrupt the CARF commissioners
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`who were assigned to Bradesco’s proceeding.” AC ¶ 95. According to the amended complaint, they
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`performed “due diligence” on each of the relevant CARF councilors and determined that Bradesco
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`was likely to lose in the first instance, before the CARF Lower Chamber. Id. An intercepted
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`telephone conversation revealed that they had chosen to focus their efforts on achieving a reversal
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`in the CARF Upper Chamber. Id.
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`Based on confidential information obtained from the internal CARF system, Nascimento
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`informed “the group” that Bradesco’s proceeding had been postponed from its original August 8,
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`2014 date. AC ¶ 96. On September 2, 2014, Victor met with Salazar, Leite, Pagnozzi, and
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`Tamazato in São Paulo. AC ¶ 97. According to the criminal complaint, Plaintiff alleges, the
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`attendees “discussed the need to ‘stoke the fire’ with Bradesco during the delay—i.e., to convince
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`the Company to hire them so that everything could be ‘stitched up’ before the case was placed back
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`on the Lower Chamber’s agenda.” Id.
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`The next day, Nascimento used his CARF credentials to obtain confidential information
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`from the Ministry of Finance’s restricted database regarding the status of Bradesco’s proceeding and
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`the composition of the panel that would hear its case. AC ¶ 98. Leite, Salazar, and Victor then set
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`out to create the “papers” that they would present to Bradesco and which would allegedly
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`“propos[e] a plan for manipulating the proceedings.” AC ¶¶ 96, 98.
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`Shortly thereafter, on approximately September 14, 2014, Victor spoke with CARF councilor
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`Fabíola Cassiano Keramidas (“Keramidas”). AC ¶ 99. During the earlier “due diligence” that had
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`been conducted in August, the Bribe Facilitation Group, along with Salazar, Victor, and Nascimento
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`had assessed that, although two of the relevant councilors were “tough to deal with,” Keramidas was
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`“not dangerous.” AC ¶ 95. During the September conversation, Victor “directed Keramidas to
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`request that the Lower Chamber trial be again postponed.” AC ¶ 99. Plaintiff alleges that
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`Keramidas lodged such a request and that the proceeding was moved to the agenda for the
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`following month. Id.
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`Armed with the additional time, the confidential CARF information from Nascimento
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`concerning the status of Bradesco’s case and the composition of the panel, as well as the “papers”
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`they had prepared, the Bribe Facilitation Group met with Bradesco on October 9, 2014 at
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`Bradesco’s headquarters to “finalize the deal and present their proposal for how to influence the
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`proceedings.” AC ¶ 100. Angelotti, Abreu, and Trabuco attended the meeting on Bradesco’s
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`behalf, though “Trabuco left shortly after greeting” the members of the Bribe Facilitation Group.
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`Id. At the meeting, the Bribe Facilitation Group provided the “papers” they had prepared and also
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`discussed “the three possible outcomes of the Lower Chamber proceedings: (i) conversion of the
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`trial into a diligence investigation,” similar to what had occurred with another banking company; “(ii)
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`further postponement of the trial, which the group could orchestrate for the Company; or (iii) an
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`unfavorable Lower Chamber decision.” AC ¶ 101.
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`During the October 9 meeting, the Bribe Facilitation Group also explained that they could
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`offer Bradesco the ability to influence the outcome of the CARF proceedings, an advantage they
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`described as the “Midas Touch.” AC ¶ 102. Specifically, Cartaxo was the father-in-law of one of
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`Victor’s business partners, and the group planned to use that relationship to influence Cartaxo. Id.
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`According to the amended complaint, the “Midas Touch” strategy was “especially important
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`because, as mentioned in the ‘papers,’ if Bradesco lost before the Lower Chamber, one of the
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`options would be to pursue a special appeal to the Upper Chamber, and the determination of this
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`appeal would be decided by Cartaxo.” Id.
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`Immediately after the October 9 meeting concluded, Leite reported to Salazar in an
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`intercepted telephone call that “the meeting was very good” and that he believed that “it’s going to
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`pan out.” AC ¶ 103. He also relayed that the Bradesco attendees were very interested in the
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`“product” and stated that he “was already someone known to them, with whom they personally
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`interacted.” Id. According to this intercept, Leite told the attendees at the Bradesco meeting:
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`“[Y]ou know me and know that I am a very transparent and determined person, I will work very
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`hard and right now there are positives ‘in our favor.’” Id.
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`As described in the amended complaint, Leite reiterated to Bradesco after the October 9
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`meeting that they could attempt to further delay the Lower Chamber proceedings, which were
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`scheduled for October 14, 2014, but Bradesco opted to allow the proceedings to move forward. AC
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`¶ 104-105. As it turns out, however, the case was not heard on October 14, and was instead
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`postponed until November 12, 2014, “once again at the request of councilor Keramidas, who Victor
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`described as ‘our friend.’” AC ¶ 105. On November 12, Pagnozzi met again with representatives of
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`Bradesco. AC ¶ 106. During the meeting, Abreu questioned Pagnozzi regarding the different
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`options Bradesco could pursue. Id. He also asked whether the Company would prevail on appeal to
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`the CARF Upper Chamber in the event it lost in the Lower Chamber. Id. Trabuco, who attended
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`the meeting only briefly, also asked for Pagnozzi’s proposal on how to proceed if the case were
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`remanded for a diligence investigation. Id.
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`Bradesco lost its case before the CARF Lower Chamber by a unanimous 6-0 vote. AC
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`¶ 107. After learning of the adverse ruling, Plaintiff alleges, Abreu and Angelotti “accused the group
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`of negatively influencing the trial.” Id. Abreu “threatened to expose Leite and have him imprisoned,
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`but Pagnozzi warned against this course of action, stating that it would only result in the Company
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`making ‘the greatest enemy on Earth.’” Id. Teixeira also joined the meeting briefly and “reinforced
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`to Abreu and Angelotti the benefit of the ‘services provided’ by the group.” Id.
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`According to the amended complaint, while Trabuco did not attend the entire November 12,
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`2014 meeting, Pagnozzi confirmed to Leite in an intercepted telephone call the next day that
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`Trabuco knew about Abreu’s and Angelotti’s dealings with the group. AC ¶ 108. During the brief
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`period that Trabuco was at the meeting, he told Pagnozzi, “I’m glad you’re here . . . helping the
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`Bank,” which Pagnozzi “understood to mean that Angelotti and Abreu were ‘relaying’ to Trabuco
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`‘everything we’re talking about.’” Id.
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`Plaintiff alleges that “Bradesco and the group” quickly agreed on a strategy to challenge the
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`adverse Lower Chamber ruling, and that Bradesco executed the first part of the strategy by filing a
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`Petition for Clarification, Rectification and Amendment wit