After thinking about how the manual review process might work, my guess would be as follows:
Step 1. The Google algorithm detects a possible problem and refers the site for manual review, along with details about the problem.
Step 2. A low-level reviewer checks the site, determines that it probably should be penalized or banned, and passes this information to a high-lever reviewer.
Step 3. The high-level reviewer makes the final decision about what to do and then implemebts it.