heard the criminal side of this case and judge riley your honor called it a complex case this one today is quite a bit simpler here the district court erred in in raising the pleading bar in a civil case to that pleading facts probative of actual knowledge and substantial assistance did not amount to a pleading of aiding and abetting liability under r so the receiver asks for reversal in defending the judgment your honour's the bank repeats an unexplainable error from the court below what you find in the appendix at page eight the bank states and this is a direct quote from page fourteen of their brief that there is no direct allegation of knowledge and i respectfully commend your honor's attention to the complaint that a forty eight a seventy five a seventy eight perhaps other places each of which proves them wrong its says in each of those spots three times at least associated bank had actual knowledge of the fraud and before we hear  from my brother on the other side about all that simply a formulaic recitation of the cause of action before we even get to the plausible facts supporting that allegation page seven of our reply brief cites the authority showing that an allegation of knowledge such as this is a purely factual allegation entitle to fold dignity as a pledge fact when evaluating rule eight rule twelve must be assumed as true at this stage and of course the complaint has so much more so on this on the knowledge point on substantial assistance which by the way both sides agree have to be evaluated in tandem under minnesota law the whitman decision the bank repeats another  funds or repeated executions of wire transfers this is the bank's isolation of re characterization of what the receiver has pled and i respectfully commend your honor's attention to where the record contradicts cashiers checks your honour's these these are documents in complete control by a bank and that possible cation let the appearance of segregated accounts victims of fraud a fifty seven to fifty nine again falsifying account designations as for operating funds not investor funds to escape enhanced due diligence status and to sidestep the fiduciary duties make make the recognition of fiduciary duties that much harder a fifty six visits to the schemes place of business where the bank officers brother worked where we know from yesterday that that person would have encountered a drug miasma a forty three offering advice on how to avoid bank regulator detection a sixty to sixty one against policy against the bank's own internal policies sending an offsite deposit machine to a non account address this is one of those machines where you can dump a bunch of checks in the hopper and they will automatically process as deposits into the depositors accounts the banks are very careful about ought to be very careful about how those of those machines get distributed in this case that that care was not there a forty nine letting account stay open after whistleblowers in the bank found irregularities a seventy to seventy one letting account stay open after learning that the government had liquidated the schemes sole investment vehicle lots of the transactions that we identify in our briefing happened after crown for access they had been with were dated by the swiss government and the bank knew it and then finally a forty six to sixty seven to sixty nine seventy seven and eighty and probably elsewhere this is the clincher letting cook the mastermind have complete dominion complete and total control over the investment funds again and again when they knew that he was not an owner of the account and they knew that he was not a signatory on the accounts these all your honors they defy characterization which we see in the red brief as miss red flags ordinary banking procedures these are all overlooked by the district court and they're all sidestepped in the red brief and i want to close your honour's if you allow with the discussion of the seminal eight circuit decision on pleading standards and judge riley all of all of your honors are familiar with it but of course as reilly you sat on the panel for brayden versus wal mart stores and braden versus wal mart we have this circuit me that's almost understandable because under brayden the question of plausibility of a claim not really what we're here to evaluate and which by the way is a lower standard in our civil justice system but the evaluation of plausibility of the court uses its judicial experience and the court will not demand it and allege fact or that the alleged facts as a whole rule out all lawful explanations the court will not dismiss when the facts are merely consistent with an excuse or a lawful explanation to sum up even the highly improbable passes the test and get at least to the discovery stage this case your honour's is simply a repeat of brain b wal mart sense the view that the district court overlooked this framework it deserves the same outcome and your honors we would respectfully ask for a reversal for further proceedings in the district court and with your permission i'll reserve the rest of my time for a allegations of serious misconduct on the part of the bank and i have two principal points to make in response first concerns the legal standard that governs here and that is the standard of actual knowledge hard to prevail the receiver has to demonstrate that the bank that he knew with a second tours were to the academy and he also knew that somebody was not a signatory was taking money out well i guess we have to look at to think what exactly did he know and did he know that that was a fraudulent act and violation of duty and i would hope the bank wouldn't let somebody take something out of my account that wasn't a signatory that it wasn't just basic banking and that that may well be but i think as a matter of banking practices may well have been a sloppy thing for him to have done but in the context in which there were a number of people who are operating in this business they were all operating together there were a number of accounts they were all operating the accounts that mr cook the person who i think you're referring to what are the pleadings at this stage answer your question well at that i'll say two things about that first of all this is an unusual case in in the sense that the receiver is unusually well situated he has attained substantial discovery and she knows essentially everything he's ever going to know about what happened here if you can't demonstrate now the bank was aware for what he's never going to be able to do it so he is on he is very well situated here to be him second of all mr soros has submit affidavit which the receiver attached to his complaint so i think it is part of the pleadings of the court to take into account in which he says very clearly that he had no concept that fraud was taking place or that he engaged in sloppy banking practices and there's no question that he did but there's a huge difference between negligence sloppiness and actual knowledge of fraud and again it is actual knowledge that is the crucial point in this court has said on what about the fact that at least the allegation is that he knew these these were investors funds that they were being moved from when there's been allegations about whether this encounter was really  scheme so why why it is if the allegations are true why isn't that sufficient at least to be plausible that he he had enough knowledge to be and  somebody walking out kooker somebody was six hundred dollars to buy himself a yacht i mean that with investor ferguson you know the other way that if i may right in it is it is often legitimate for people who are running their accounts and a businesses of this kind to be paid out of the investment funds which are in their accounts the s e c as we demonstrate in our brief allows that to take place and so the fact that at some funds were being transferred from what we thought to be investor accounts into the eight standard continues to apply the state the allegation has to be in context has to be a plausible has to be something that the court can reasonably think leads to the conclusion that's being served by the plaintiff and in the context here and when one looks at the law the whole set of allegations that simply is not satisfied and i think have to emphasize that the the receivers brief states in very provocative terms watch the bank is alleged to have done if you actually look closely at the complaint i think that those out provocative allegations are simply not borne out the things that are certain in the in the brief and there are a relatively small number of allegations which i report which are repeated  multiple red flags the bank should have acted in consequence of these red flags had it done so it would have uncovered the ponzi scheme and had it done that it would have shut down that's the opposite of actual knowledge of fraud that's saying that if there had been actual knowledge the bank would have shut down the scheme and judge doty in the district court who of course looked very closely at these allegations he ran through the allegations are completely considerable detail in his opinion he said that is what is happening if the allegations are that there are red flags there were suspicious because there are many will let me put it that way it should make it that that is plausible allegation of fraud well i'll say two things about that first of all even granting that there may were the case from what that's what i've given you that the fraud is is they're stealing money from people they're defrauding people by the words they're taking their money investors money and they're alleging that this why is that not in and of itself a fraud that it's occurring right under the nose of the bank and they're and they're allowing under the wire i guess the question we have is that they know about it they know that those acts are taking place well i think it is not on the face of the fraud for the reasons i don't understand before there are legitimate reasons why fans can be moved out of investor accounts as agree with you or agree with but and and  reasons that this could be and i'm on tim burton pleading state i don't i recognize that your honor but i think that the allegation is sort of the simple fact that this happened that the fact that it happened is what they are taking to mean subjective awareness that it must have been fraud and illegitimate and i think our responses the simple fact that it happened it does not tell you necessarily that  conversation now i know it certainly is possible that circumstantial evidence can be used to establish knowledge that is the it's not absolutely required that there be a confession of a fraud but it has to be that you know in the what more could they have alleged to allege actual frog knowledge of actual fraud by mr sherry's i think that if they certainly if he had been involved in the fraud going on that he had seen that he had that he had been informed about but all that he knew and again and i urge the court to look closely at the allegations and complaint not as they are we characterized in briefs to this court the allegations of the complaint show that what happened here were essentially were canary business training ordinary banking transactions that money was moved into accounts was transferred between accounts in sort of the usual sort of way unless one knew for unless had one was told that wrongful uses would be needed these fines in the bank you would have no idea the fact is that banks are not expected to look into the businesses of their clients even when banks are  that there was no didn't used to transfer the funds from one place to another if you put comp businesses in that position they are become guarantors of the the honesty of their customers and their clients which is an impossible suspicion that there was wrongdoing is not to shut it down what they're expected to do is file a suspicious activity report with the federal government so that law enforcement authorities can look into it in the terminal whether or not there actually is something fraudulent at the level of the heart of the allegation that i'm familiar with that of of this policy is a policy of secrecy that that one is not supposed to as the bank keep off people who are suspected of wrongdoing what you're supposed to do is keep that confidential you have to keep it confidential as a matter of law you tell federal authorities they five minutes i hope a lot less than that just very briefly your honor although we heard just now is knowledge of the fraud knowledge of the fraud knowledge of the fraud but wissmann the minnesota case with the standard says knowledge of the breach of duty and we actually have four counts here only one of those counts is fraud count two is for breach it is for aiding and abetting conversion so we don't even get to these lofty high minded thoughts about rule nine b and particularity when we talk about conversion and as your honor was riprap reflecting on when one moves monies that are supposed to be under the dominion of one person and you allow them to be moved to the dominion of somebody to whom they don't belong well that's conversion  just again very briefly the receiver does not know everything as i understand it there is one subpoena that was contested documents have to be pried out there are no depositions that will be forthcoming in discovery and then finally banks are expected to shut down a fraud when they learn about it we know that from the very record in this case where there are threats by the the whistleblowers who were silenced within the bank the refracts by the whistleblowers to have the accounts for ozen and as we explained in our briefing that's a poignant demonstration of what could have happened what the bank could have done if the bank were acting innocently and not aiding and abetting the conversion the breach