1 00:00:03,120 --> 00:00:07,920 Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio. 2 00:00:10,000 --> 00:00:14,400 Speaker 2: Former billionaire investor Bill Huang was sentenced to eighteen years 3 00:00:14,440 --> 00:00:18,720 Speaker 2: in federal prison today over the stunning collapse of Arcago's 4 00:00:18,800 --> 00:00:23,920 Speaker 2: capital management, which the prosecutor called a national calamity. In July, 5 00:00:24,079 --> 00:00:27,800 Speaker 2: a jury convicted h Wong on ten criminal charges, including 6 00:00:27,880 --> 00:00:32,760 Speaker 2: wire fraud, securities fraud, and market manipulation for orchestrating a 7 00:00:32,800 --> 00:00:36,760 Speaker 2: scheme to mislead banks into providing Arkagos with billions of 8 00:00:36,800 --> 00:00:40,920 Speaker 2: dollars in trading capacity, which ultimately led to the collapse 9 00:00:41,000 --> 00:00:44,240 Speaker 2: that cost Wall Street Banks more than ten billion dollars. 10 00:00:44,479 --> 00:00:48,080 Speaker 2: Joining me as Bloomberg Legal reporter Chris Domesh who covered 11 00:00:48,080 --> 00:00:51,440 Speaker 2: the trial and was in the courtroom for the sentencing. Chris, 12 00:00:51,640 --> 00:00:57,160 Speaker 2: this sentencing didn't follow this sort of normal script or procedures. 13 00:00:57,680 --> 00:01:01,440 Speaker 3: It was really just very bisarreble knowing procedures are very 14 00:01:01,480 --> 00:01:05,560 Speaker 3: straightforward and move it a very time capted script. You know, 15 00:01:05,959 --> 00:01:08,959 Speaker 3: the two sides get up, they argue over sentencing guidelines 16 00:01:09,200 --> 00:01:12,200 Speaker 3: and other things in the presending report, and then you know, 17 00:01:12,240 --> 00:01:14,399 Speaker 3: the government gets up, they make their arguments for whatever 18 00:01:14,440 --> 00:01:16,520 Speaker 3: their recommendation is. The defense gets up and they make 19 00:01:16,560 --> 00:01:20,080 Speaker 3: their recommendation. In this case, it kind of proceeded very slowly, 20 00:01:20,160 --> 00:01:23,160 Speaker 3: in an odd way, and the judge said at the beginning, oh, well, 21 00:01:23,280 --> 00:01:25,319 Speaker 3: this might take all day long. We might have to 22 00:01:25,360 --> 00:01:28,839 Speaker 3: come back tomorrow morning, which everyone was like, that's very bizarre. 23 00:01:28,920 --> 00:01:31,640 Speaker 3: We don't see many two day sentencing hearings. In the end, 24 00:01:31,640 --> 00:01:33,800 Speaker 3: that is what happened. But he did pronounce sentence today, 25 00:01:34,360 --> 00:01:37,000 Speaker 3: and there was a lot of back and forth between 26 00:01:37,000 --> 00:01:38,800 Speaker 3: the judge and the defense lawyers. 27 00:01:38,840 --> 00:01:41,600 Speaker 4: It just didn't go, you know, by scripts. 28 00:01:41,280 --> 00:01:44,399 Speaker 3: As it usually does, and in the end, the judge 29 00:01:44,400 --> 00:01:47,720 Speaker 3: pronounced sentence without kind of making this the soliloquy that 30 00:01:47,800 --> 00:01:50,600 Speaker 3: he usually does when when they're pronouncing sentences, which is 31 00:01:50,640 --> 00:01:54,600 Speaker 3: to repeat all the factors they have to take into consideration, deterrence, 32 00:01:55,480 --> 00:01:58,360 Speaker 3: the seriousness of the offense, all those things, and instead 33 00:01:58,400 --> 00:02:01,320 Speaker 3: he just kind of pronounced them in a very succinct, 34 00:02:01,400 --> 00:02:04,280 Speaker 3: quick manner. And they're coming back tomorrow morning to talk 35 00:02:04,320 --> 00:02:08,600 Speaker 3: about some remaining issues, which include forfeiture and possible bail 36 00:02:08,680 --> 00:02:09,360 Speaker 3: pending appeal. 37 00:02:09,720 --> 00:02:12,840 Speaker 2: The prosecutors had asked for twenty one years, which is 38 00:02:13,240 --> 00:02:16,160 Speaker 2: a heavy sentence in a white collar case, and the 39 00:02:16,280 --> 00:02:20,440 Speaker 2: judge gave them close to what they wanted. Eighteen years. 40 00:02:20,520 --> 00:02:25,320 Speaker 2: That's a long sentence, especially considering that he's sixty years old. 41 00:02:25,760 --> 00:02:27,799 Speaker 3: Yes, the one thing you can kind of take from 42 00:02:27,800 --> 00:02:30,160 Speaker 3: that his attorneys that asked for no jail time, and 43 00:02:30,200 --> 00:02:33,000 Speaker 3: the judge called that ridiculous. He took the defense attorneys 44 00:02:33,040 --> 00:02:35,440 Speaker 3: to task on that request and kind of drilled down 45 00:02:35,440 --> 00:02:37,240 Speaker 3: on them to get them to come up with what 46 00:02:37,280 --> 00:02:40,359 Speaker 3: they thought was a more reasonable sentencing recommendation, which in 47 00:02:40,400 --> 00:02:42,919 Speaker 3: the end was forty six to fifty seven months. 48 00:02:42,960 --> 00:02:45,160 Speaker 4: And clearly the judge felt that. 49 00:02:45,520 --> 00:02:48,080 Speaker 3: Given the amount of losses in this case, he didn't 50 00:02:48,080 --> 00:02:51,160 Speaker 3: really have the opportunity to send a lesser sentence here. 51 00:02:51,360 --> 00:02:54,440 Speaker 3: If you get more than I think it's eleven and 52 00:02:54,440 --> 00:02:56,960 Speaker 3: a half years, you have to go basically a higher 53 00:02:56,960 --> 00:03:00,960 Speaker 3: security prison that leads to all kinds of others, whereas 54 00:03:00,960 --> 00:03:03,080 Speaker 3: a lesser sentence would maybe send him to a minimum 55 00:03:03,120 --> 00:03:04,919 Speaker 3: security or a camp or something like that. 56 00:03:05,000 --> 00:03:05,919 Speaker 4: So that's what they. 57 00:03:05,800 --> 00:03:08,360 Speaker 3: Wanted, but in the end the judge clearly was not 58 00:03:08,440 --> 00:03:10,560 Speaker 3: swayed by any of that. And this is a pretty 59 00:03:10,600 --> 00:03:12,320 Speaker 3: heavy sentence for a sixty year old man. 60 00:03:12,760 --> 00:03:18,600 Speaker 2: Hwang is a devout Christian and his nonprofit foundation has 61 00:03:18,639 --> 00:03:22,040 Speaker 2: donated something like six hundred million dollars to different causes 62 00:03:22,120 --> 00:03:23,079 Speaker 2: like homelessness. 63 00:03:23,360 --> 00:03:25,480 Speaker 5: Did the judge take that into consideration. 64 00:03:26,040 --> 00:03:28,640 Speaker 3: Well, he did to actually take that into consideration, he 65 00:03:28,720 --> 00:03:31,040 Speaker 3: just didn't seem to give it much weight, and he 66 00:03:31,120 --> 00:03:34,120 Speaker 3: said essentially that a lifetime of good work doesn't offset 67 00:03:34,160 --> 00:03:36,720 Speaker 3: the massive clauses in this case. You know, one of 68 00:03:36,760 --> 00:03:39,040 Speaker 3: the factors that the judges have to consider when they're 69 00:03:39,080 --> 00:03:42,720 Speaker 3: sentencing people is specific deterrence as to whether the individual 70 00:03:42,840 --> 00:03:46,119 Speaker 3: would you do it again? And clearly the judge said, look, 71 00:03:46,120 --> 00:03:48,400 Speaker 3: I'm not worried about that year. You know, he's a 72 00:03:48,440 --> 00:03:50,240 Speaker 3: sixty year old man. He's probably not going to commit 73 00:03:50,280 --> 00:03:52,520 Speaker 3: another crime. But he's a little worried about, you know, 74 00:03:52,600 --> 00:03:55,120 Speaker 3: his indifference towards what happened to him in the past 75 00:03:55,160 --> 00:03:58,960 Speaker 3: when his former firm, Tigler Global pleaded guilty and that 76 00:03:59,080 --> 00:04:02,080 Speaker 3: led to the formation Barkingos. But like I said, in 77 00:04:02,120 --> 00:04:04,880 Speaker 3: the end, the judge was not swayed by that. Look, 78 00:04:04,920 --> 00:04:08,040 Speaker 3: Bill has a great reputation in terms of outside of 79 00:04:08,080 --> 00:04:11,480 Speaker 3: these allegations. You know, he's well liked by his friends, 80 00:04:11,520 --> 00:04:13,920 Speaker 3: he's known for his charitable works, he's a religious man. 81 00:04:14,560 --> 00:04:18,400 Speaker 3: But just those things alone don't offset a thirty six 82 00:04:18,480 --> 00:04:19,480 Speaker 3: billion dollar loss. 83 00:04:19,880 --> 00:04:23,159 Speaker 2: What was the prosecutor's argument for why they wanted so 84 00:04:23,320 --> 00:04:24,279 Speaker 2: much jail time? 85 00:04:24,720 --> 00:04:26,760 Speaker 5: Was it under the sentencing guidelines. 86 00:04:27,160 --> 00:04:31,200 Speaker 3: The sentencing guidelines are actually much more draftonian than that. 87 00:04:31,320 --> 00:04:33,360 Speaker 3: They would call for him to serve two hundred years 88 00:04:33,400 --> 00:04:35,520 Speaker 3: in prison, and that's the kind of sentences that are 89 00:04:35,520 --> 00:04:39,600 Speaker 3: normally reserved for people who commit mass murder or terrorists 90 00:04:39,720 --> 00:04:43,000 Speaker 3: or things like that. So they were well within their 91 00:04:43,440 --> 00:04:46,480 Speaker 3: bounds to argue for this, And there arguments that are really 92 00:04:46,560 --> 00:04:49,279 Speaker 3: driven by the losses and the fact that other people 93 00:04:49,320 --> 00:04:52,799 Speaker 3: were hurt by this, not just the banks, including his employees, 94 00:04:53,080 --> 00:04:55,680 Speaker 3: some of whom lost millions of dollars into third compensation 95 00:04:55,760 --> 00:04:58,600 Speaker 3: and lost their job. The prosecution clearly wanted him to 96 00:04:58,640 --> 00:04:59,640 Speaker 3: go to jail for a long time. 97 00:05:00,000 --> 00:05:00,440 Speaker 4: Seeded. 98 00:05:00,880 --> 00:05:04,520 Speaker 3: Usually in white collar crime we see much lower sentences 99 00:05:04,600 --> 00:05:07,240 Speaker 3: just because the losses tend to drive up the guidelines 100 00:05:07,279 --> 00:05:10,000 Speaker 3: and what they recommend. You don't usually see the government 101 00:05:10,040 --> 00:05:11,920 Speaker 3: get close to what it wants when it wants to 102 00:05:12,000 --> 00:05:15,719 Speaker 3: draw cunning and. 103 00:05:14,120 --> 00:05:17,200 Speaker 2: That's what made it surprising when I saw the number. 104 00:05:17,480 --> 00:05:19,160 Speaker 2: What was Wong's reaction? 105 00:05:19,600 --> 00:05:21,800 Speaker 3: He really didn't react, which is kind of keeping with 106 00:05:21,839 --> 00:05:24,200 Speaker 3: how he's been throughout the trial, very stoic and drinking 107 00:05:24,279 --> 00:05:27,800 Speaker 3: water throughout, staring straight ahead, and you know, presumably he 108 00:05:27,800 --> 00:05:29,919 Speaker 3: thinks he has a shot on appeal. They've asked for 109 00:05:29,920 --> 00:05:32,880 Speaker 3: bail pending appeals. You know, the judge himself acknowledges their 110 00:05:32,960 --> 00:05:34,800 Speaker 3: issues that are right for appeal. The one thing he 111 00:05:34,880 --> 00:05:38,159 Speaker 3: kind of took the prosecution it's pasked for, is the 112 00:05:38,400 --> 00:05:41,840 Speaker 3: argument that he is unrepentant. And the judge said, he's 113 00:05:41,880 --> 00:05:44,960 Speaker 3: always kind of uncomfortable with arguments like that by the 114 00:05:45,000 --> 00:05:47,560 Speaker 3: prosecutors because people have a right to fight the charges 115 00:05:47,600 --> 00:05:51,400 Speaker 3: against them. And he said, vastly maintain he's not guilty here, 116 00:05:51,480 --> 00:05:54,240 Speaker 3: so he has that right. And the judge said, you know, 117 00:05:54,279 --> 00:05:56,640 Speaker 3: he doesn't really like this kind of arguments. Whether that 118 00:05:56,680 --> 00:06:00,680 Speaker 3: appeal will be successful is obviously something at it for 119 00:06:00,760 --> 00:06:01,640 Speaker 3: the future. 120 00:06:02,279 --> 00:06:03,200 Speaker 5: On that point. 121 00:06:03,520 --> 00:06:07,120 Speaker 2: That's what makes it difficult sometimes for these defendants who 122 00:06:07,120 --> 00:06:10,719 Speaker 2: are appealing to then speak to the judge and tell 123 00:06:10,760 --> 00:06:11,760 Speaker 2: them they're remorseful. 124 00:06:11,800 --> 00:06:13,320 Speaker 5: What did Wang say. 125 00:06:14,040 --> 00:06:16,080 Speaker 3: Yeah, he stopped short of that, for sure. That's a 126 00:06:16,120 --> 00:06:19,720 Speaker 3: good question. Often you see defendants kind of, you know, 127 00:06:19,800 --> 00:06:23,000 Speaker 3: make their case to the judge, get emotional Bill thanks 128 00:06:23,040 --> 00:06:26,200 Speaker 3: the judge for taking the time to be thorough in 129 00:06:26,279 --> 00:06:29,760 Speaker 3: reading his sentencing letters that his friends and family sent 130 00:06:29,839 --> 00:06:31,920 Speaker 3: to him, and he praised his friends and family for 131 00:06:32,000 --> 00:06:34,119 Speaker 3: writing the sentencing them most and he said he felt 132 00:06:34,120 --> 00:06:36,880 Speaker 3: bad for the people who suffered. But I would say 133 00:06:36,920 --> 00:06:40,560 Speaker 3: that the statements stopped short of admitting that he did 134 00:06:40,560 --> 00:06:43,440 Speaker 3: something wrong. And maybe that is because of the appeal. 135 00:06:43,480 --> 00:06:45,320 Speaker 3: And certainly, you know, we see that often. 136 00:06:45,200 --> 00:06:47,440 Speaker 2: Not during the trial. A lot of his supporters came 137 00:06:47,640 --> 00:06:51,039 Speaker 2: every day. Did they have any reaction to the sentence? 138 00:06:51,440 --> 00:06:54,320 Speaker 3: They seem to hang their heads. They were here every day. 139 00:06:54,720 --> 00:06:57,719 Speaker 3: They spent a lot of time in the courtroom, in 140 00:06:57,760 --> 00:07:01,280 Speaker 3: the cafeteria, in the courthouse, and they were there for 141 00:07:01,360 --> 00:07:03,200 Speaker 3: him the whole time. And he thanked them and he 142 00:07:03,240 --> 00:07:05,880 Speaker 3: greeted them today just like he did every day of 143 00:07:05,880 --> 00:07:06,360 Speaker 3: the trial. 144 00:07:06,800 --> 00:07:09,560 Speaker 2: Did the defense ever tell his story, I mean, he 145 00:07:09,680 --> 00:07:13,120 Speaker 2: has an amazing story, really a rags to Riches's story. 146 00:07:13,400 --> 00:07:15,440 Speaker 2: He came here from Korea and had nothing. 147 00:07:15,760 --> 00:07:18,520 Speaker 3: They did go into that. That was kind of the 148 00:07:18,560 --> 00:07:21,440 Speaker 3: heart of their initial argument, is that you know that 149 00:07:21,520 --> 00:07:23,840 Speaker 3: he came here when he was a teenager. His father 150 00:07:23,920 --> 00:07:27,080 Speaker 3: had gotten a job as a pastor, and he emigrated 151 00:07:27,080 --> 00:07:30,160 Speaker 3: when he was nineteen, came here seeking better, you know, 152 00:07:30,280 --> 00:07:33,920 Speaker 3: treatment options for a legally blind brother, and then his 153 00:07:34,040 --> 00:07:37,400 Speaker 3: father died within years of him arriving here, and they 154 00:07:37,400 --> 00:07:39,920 Speaker 3: had to find a way to survive because a job 155 00:07:39,960 --> 00:07:42,239 Speaker 3: as a line cook a McDonald's worked at swap meets, 156 00:07:42,720 --> 00:07:44,920 Speaker 3: and then moved to la with three thousand dollars to 157 00:07:44,960 --> 00:07:47,320 Speaker 3: his name and lived in the shed in the back 158 00:07:47,360 --> 00:07:49,760 Speaker 3: of a church with his family. They played up the charity, 159 00:07:50,040 --> 00:07:52,640 Speaker 3: you know, they said this was not a scheme. Really, 160 00:07:52,680 --> 00:07:55,600 Speaker 3: it was an effort to help people. They don't want 161 00:07:55,640 --> 00:07:58,880 Speaker 3: to make everything he did seem like some sort of 162 00:07:59,200 --> 00:08:02,840 Speaker 3: nefarious when they argued these were just for you know, 163 00:08:03,040 --> 00:08:06,240 Speaker 3: he's a god fearing man and these were his attempts 164 00:08:06,320 --> 00:08:07,840 Speaker 3: to do good by his community. 165 00:08:08,480 --> 00:08:09,600 Speaker 5: What about restitution? 166 00:08:10,120 --> 00:08:13,920 Speaker 2: How much do the prosecutors say was lost here and 167 00:08:14,240 --> 00:08:17,920 Speaker 2: how much restitution do they expect? I understand he says 168 00:08:17,920 --> 00:08:19,240 Speaker 2: he's not a billionaire anymore. 169 00:08:19,760 --> 00:08:22,280 Speaker 3: Yeah, he says he only has fifty five million dollars, 170 00:08:22,280 --> 00:08:25,320 Speaker 3: some of which are in enjoying assets with his wife. Yeah. Actually, 171 00:08:25,360 --> 00:08:27,880 Speaker 3: restitution is being deferred for a little while. They're going 172 00:08:27,960 --> 00:08:32,319 Speaker 3: to talk about forfeiture tomorrow and possibly any other issues 173 00:08:32,400 --> 00:08:35,600 Speaker 3: like bail, pending appeal and maybe you know, reporting dates, 174 00:08:35,600 --> 00:08:37,640 Speaker 3: the kind of things that come at the end of 175 00:08:37,679 --> 00:08:40,199 Speaker 3: sentencing hearings. After somebody's been pronounced with. 176 00:08:40,240 --> 00:08:43,200 Speaker 2: Forfeiture, would they have to trace it back to his 177 00:08:43,480 --> 00:08:47,239 Speaker 2: alleged misdeeds somehow? I mean, how would they decide forfeiture? 178 00:08:47,880 --> 00:08:50,880 Speaker 4: So that's probably the most difficult proposition here. 179 00:08:50,960 --> 00:08:54,280 Speaker 3: The defense says there should be no forfeiture. That argument 180 00:08:54,320 --> 00:08:56,719 Speaker 3: seems to be a little less forceful than they're one 181 00:08:56,760 --> 00:09:00,839 Speaker 3: about restitution. But the government is seeking nine point eight 182 00:09:00,880 --> 00:09:04,839 Speaker 3: billion dollars in restitution as reimbursement for the victims the 183 00:09:04,880 --> 00:09:09,920 Speaker 3: counterparty banks, and they're seeking more than twelve billion dollars 184 00:09:09,960 --> 00:09:14,680 Speaker 3: in forfeiture. Now, the government acknowledges here that he doesn't 185 00:09:14,720 --> 00:09:15,360 Speaker 3: have the money. 186 00:09:15,440 --> 00:09:17,280 Speaker 4: They say that regardless of the fact. 187 00:09:17,040 --> 00:09:19,959 Speaker 3: That he doesn't have the money, these shills should be 188 00:09:20,000 --> 00:09:23,840 Speaker 3: subject to the forfeiture amount, just like say drug dealers 189 00:09:23,880 --> 00:09:26,720 Speaker 3: who are convicted, who do a drug deal and lose 190 00:09:26,760 --> 00:09:29,840 Speaker 3: the drugs. It was a very interesting artist, you know 191 00:09:29,880 --> 00:09:32,640 Speaker 3: it often that often is a confusing proposition for people. 192 00:09:33,320 --> 00:09:35,600 Speaker 3: Why are you going to ask somebody to forfeit money 193 00:09:35,600 --> 00:09:39,959 Speaker 3: they don't have, But I guess it's a tempting to 194 00:09:40,080 --> 00:09:42,960 Speaker 3: establish a framework for anyone who would would seek to 195 00:09:43,160 --> 00:09:44,240 Speaker 3: recover money in the kid. 196 00:09:45,000 --> 00:09:48,280 Speaker 2: Does the judge think he has more money than he's saying, 197 00:09:48,320 --> 00:09:52,360 Speaker 2: because I noticed the judge said something about Huong buying 198 00:09:52,480 --> 00:09:55,439 Speaker 2: a new condo in Hudson Yards. 199 00:09:55,720 --> 00:09:58,120 Speaker 3: Yes, he did, note that it's hard to say the 200 00:09:58,200 --> 00:10:01,160 Speaker 3: judge did. There's an extended question on that, so he's 201 00:10:01,200 --> 00:10:04,520 Speaker 3: definitely not clear on what he needs to do here 202 00:10:05,120 --> 00:10:07,480 Speaker 3: or how it could be done. So that that is 203 00:10:07,480 --> 00:10:09,400 Speaker 3: going to be the meat of tomorrow's argument. 204 00:10:09,800 --> 00:10:12,600 Speaker 2: And as far as appellet issues, do we already know 205 00:10:12,720 --> 00:10:16,680 Speaker 2: one of the issues because the judge kirktailed Wong's defense. 206 00:10:17,160 --> 00:10:19,280 Speaker 3: Yeah, that's certainly one of the issues that they're going 207 00:10:19,320 --> 00:10:21,760 Speaker 3: to raise. You know, they certainly raised it in some 208 00:10:21,800 --> 00:10:25,000 Speaker 3: of their post trial briefings, in their in their applications 209 00:10:25,080 --> 00:10:28,720 Speaker 3: for bail pending appeal, they've noted that they call out 210 00:10:28,800 --> 00:10:33,400 Speaker 3: some of the expert testimony for the prosecution's expert when 211 00:10:33,440 --> 00:10:36,840 Speaker 3: she calculated that some of the the trading losses were 212 00:10:36,920 --> 00:10:43,400 Speaker 3: directly attributable to to Wong conduct or misrepresentations, and they 213 00:10:43,440 --> 00:10:46,400 Speaker 3: say that that can't be proven. So, you know, whether 214 00:10:46,520 --> 00:10:50,600 Speaker 3: or not he actually they can they can attribute that there. 215 00:10:51,360 --> 00:10:53,800 Speaker 3: That might be one of the main things for appeal. 216 00:10:53,920 --> 00:10:55,640 Speaker 2: So a lot more to come, Chris, and I know 217 00:10:55,679 --> 00:10:58,680 Speaker 2: you'll be there tomorrow to tell us about it. Thanks 218 00:10:58,720 --> 00:11:02,960 Speaker 2: so much. That's bloom Our legal reporter Christopher Domesh coming 219 00:11:03,040 --> 00:11:05,959 Speaker 2: up next on the Bloomberg Law Show. Donald Trump has 220 00:11:06,040 --> 00:11:09,240 Speaker 2: vowed to get revenge on a long list of prosecutors, 221 00:11:09,280 --> 00:11:13,720 Speaker 2: political opponents, and private citizens. Will he use the Justice 222 00:11:13,800 --> 00:11:17,600 Speaker 2: Department to do that? I'm June Grosso and you're listening 223 00:11:17,640 --> 00:11:18,280 Speaker 2: to Bloomberg. 224 00:11:18,440 --> 00:11:21,480 Speaker 1: It's the enemy from within, all the scum that we 225 00:11:21,559 --> 00:11:24,720 Speaker 1: have to deal with that hate our country. That's a 226 00:11:24,760 --> 00:11:28,839 Speaker 1: bigger enemy than China and Russia. 227 00:11:29,000 --> 00:11:33,000 Speaker 2: Donald Trump has long railed against his perceived enemies from 228 00:11:33,080 --> 00:11:35,959 Speaker 2: within and vowed to get revenge on a long list 229 00:11:36,000 --> 00:11:40,600 Speaker 2: of prosecutors, political opponents, and private citizens. And there seems 230 00:11:40,640 --> 00:11:43,760 Speaker 2: to be little doubt that the President elect intends to 231 00:11:43,880 --> 00:11:47,160 Speaker 2: use the Justice Department to help him get his revenge. 232 00:11:47,400 --> 00:11:52,240 Speaker 1: We will completely overhaul Kamala's corrupt Department of Injustice. 233 00:11:51,840 --> 00:11:55,000 Speaker 2: And now Trump is putting together a team of loyalists 234 00:11:55,000 --> 00:11:58,240 Speaker 2: at the Justice Department that would be positioned to carry 235 00:11:58,280 --> 00:12:01,720 Speaker 2: out his vows of retribution. Joining me is Steven Gillers, 236 00:12:01,760 --> 00:12:05,439 Speaker 2: an ethics professor at NYU Law School. What does the 237 00:12:05,559 --> 00:12:10,640 Speaker 2: choice of Matt Gates as Attorney General signal to you? 238 00:12:12,440 --> 00:12:15,400 Speaker 4: Well, a lot of things. His selection has created a 239 00:12:15,520 --> 00:12:21,040 Speaker 4: kind of apocalyptic response in the American bar. He is 240 00:12:21,080 --> 00:12:26,920 Speaker 4: subsingularly inappropriate to serve as Attorney General by experience or 241 00:12:27,160 --> 00:12:32,439 Speaker 4: temperament or knowledge that the only explanation for this election 242 00:12:32,800 --> 00:12:36,560 Speaker 4: is that Trump wants someone heading Justice who will be 243 00:12:36,880 --> 00:12:41,400 Speaker 4: devoted to Trump over any other consideration, and who will 244 00:12:41,400 --> 00:12:47,160 Speaker 4: follow Trump's instructions about targeting what Trump views as his enemies. 245 00:12:48,120 --> 00:12:51,800 Speaker 2: Trump has been very open on the campaign trail about 246 00:12:51,840 --> 00:12:57,000 Speaker 2: getting revenge against those who supposedly wronged him, and reportedly 247 00:12:57,120 --> 00:13:01,760 Speaker 2: some current and former Justice depart and FBI officials are 248 00:13:01,840 --> 00:13:06,560 Speaker 2: already contacting lawyers in anticipation of being investigated. I mean, 249 00:13:06,640 --> 00:13:08,760 Speaker 2: do you think that they need to be worried even 250 00:13:08,800 --> 00:13:10,920 Speaker 2: if they don't think they did anything wrong. 251 00:13:11,559 --> 00:13:14,400 Speaker 4: Yeah, they need to be worried because even if they 252 00:13:14,440 --> 00:13:18,200 Speaker 4: did nothing wrong, and even if they are vindicated in 253 00:13:18,240 --> 00:13:22,240 Speaker 4: any civil or criminal case that the Justice Department brings 254 00:13:22,280 --> 00:13:27,199 Speaker 4: against them, the cost of the vindication can be enormous 255 00:13:27,240 --> 00:13:33,280 Speaker 4: in terms of lawyer fees, anxiety, lost time at their job. 256 00:13:33,720 --> 00:13:36,800 Speaker 4: So yeah, they should be worried. They should lawyer up. 257 00:13:36,960 --> 00:13:40,280 Speaker 4: They should take Trump at his word. They should expect 258 00:13:40,400 --> 00:13:45,000 Speaker 4: to be a subject of investigation. Remember back in the 259 00:13:45,360 --> 00:13:51,160 Speaker 4: first Trump administration, there was an IRS investigation of James Comy. 260 00:13:51,400 --> 00:13:55,360 Speaker 4: Now that's the IRS, not the Justice Department, but a 261 00:13:55,520 --> 00:14:01,800 Speaker 4: full IRS Audit is I'm consuming expensive. It has been 262 00:14:01,840 --> 00:14:07,839 Speaker 4: described as the legal equivalent of a colonoscopy. It's very 263 00:14:08,000 --> 00:14:10,880 Speaker 4: dispiriting to have to go through that, and Komi had 264 00:14:10,920 --> 00:14:13,840 Speaker 4: to go through that. As it happened, it turned out 265 00:14:13,880 --> 00:14:19,200 Speaker 4: that the RS found that he overpaid his taxes. But nonetheless, 266 00:14:19,200 --> 00:14:22,560 Speaker 4: the cost of getting to that point for Coombe in 267 00:14:22,680 --> 00:14:25,400 Speaker 4: money and anxiety would have been enormous. Well, the same 268 00:14:25,400 --> 00:14:29,920 Speaker 4: thing can happen in civil or criminal investigations by the 269 00:14:30,040 --> 00:14:30,960 Speaker 4: Justice Department. 270 00:14:31,560 --> 00:14:34,800 Speaker 2: Also, if you investigate someone long and hard enough, you 271 00:14:34,880 --> 00:14:37,920 Speaker 2: can find other things in their past that may be 272 00:14:38,200 --> 00:14:43,280 Speaker 2: illegal but not connected to the investigation, like tax infractions 273 00:14:43,400 --> 00:14:47,720 Speaker 2: or smoking marijuana where it isn't legal. Special Counsel John 274 00:14:47,800 --> 00:14:52,640 Speaker 2: Durham conducted years and years of investigations and the only guilty. 275 00:14:52,680 --> 00:14:55,720 Speaker 2: Ply he got was from an FBI lawyer who had 276 00:14:55,800 --> 00:14:59,880 Speaker 2: lied on some documents. So something not related to the 277 00:15:00,040 --> 00:15:02,320 Speaker 2: purpose of an investigation, right. 278 00:15:02,280 --> 00:15:07,000 Speaker 4: You know, a thorough investigation can turn up evidence or 279 00:15:07,080 --> 00:15:11,840 Speaker 4: a parent evidence of wrongdoing civil or criminals that wasn't 280 00:15:11,880 --> 00:15:15,360 Speaker 4: on your radar screen when you started the investigation. When 281 00:15:15,400 --> 00:15:18,760 Speaker 4: you turn over every document, when you look at every email, 282 00:15:19,200 --> 00:15:23,880 Speaker 4: you could find things that arguably indicate some basis for 283 00:15:24,080 --> 00:15:27,600 Speaker 4: a lawsuit or an indictment that you didn't know about 284 00:15:27,600 --> 00:15:30,960 Speaker 4: at the beginning. But again, you know, if someone is 285 00:15:31,160 --> 00:15:36,000 Speaker 4: charged with a crime in fact or suits civilly, ultimately 286 00:15:36,000 --> 00:15:39,520 Speaker 4: there's a trial. If there's no settlement and there's a judge, 287 00:15:39,880 --> 00:15:43,360 Speaker 4: the government can cause a lot of pain without ever 288 00:15:43,480 --> 00:15:48,440 Speaker 4: having to prove a case a trial. Just by conducting 289 00:15:48,480 --> 00:15:52,520 Speaker 4: the investigation. It can bring a case to trial and 290 00:15:52,640 --> 00:15:57,280 Speaker 4: drop the case. So vindication is not a victory for 291 00:15:57,440 --> 00:16:02,400 Speaker 4: the target of the government. Hostility and eviction or a 292 00:16:02,680 --> 00:16:07,520 Speaker 4: money judgment is not necessarily the goal of a justice 293 00:16:07,560 --> 00:16:13,400 Speaker 4: department that is out for revenge. The cost in money, 294 00:16:13,600 --> 00:16:18,240 Speaker 4: time and anxiety alone can be extremely punishing. 295 00:16:18,680 --> 00:16:21,320 Speaker 2: Special Counsel Jack Smith is one of the people that 296 00:16:21,400 --> 00:16:25,760 Speaker 2: Trump has mentioned over and over and over again. What 297 00:16:25,880 --> 00:16:30,120 Speaker 2: kind of investigation or prosecution of Smith. 298 00:16:29,840 --> 00:16:31,200 Speaker 5: Can they do well? 299 00:16:31,200 --> 00:16:34,960 Speaker 4: Smith is an interesting situation and from Trump's point of 300 00:16:35,000 --> 00:16:39,080 Speaker 4: view judgment from what he has said, Smith is Trump 301 00:16:39,240 --> 00:16:42,960 Speaker 4: Enemy number one. He must be in the President's site 302 00:16:43,480 --> 00:16:49,480 Speaker 4: as the dominant person to terrorize with legal remedies and 303 00:16:49,560 --> 00:16:54,480 Speaker 4: legal threats. Now anything Jack Smith did to antagonize the President, 304 00:16:54,600 --> 00:16:56,920 Speaker 4: as Trump saw it, he would have done as an 305 00:16:56,920 --> 00:16:59,960 Speaker 4: employee the Justice Department. Jack Smith is in a summer 306 00:17:00,120 --> 00:17:04,000 Speaker 4: different positions than other potential alleged enemies. He would have 307 00:17:04,160 --> 00:17:08,080 Speaker 4: to be defended by the government. That is, a Justice 308 00:17:08,119 --> 00:17:11,920 Speaker 4: Department lawyer who is accused of wrongdoing after leading government 309 00:17:12,119 --> 00:17:15,640 Speaker 4: is entitled to a government defend. There are some exceptions, 310 00:17:15,680 --> 00:17:20,520 Speaker 4: but if the wrongdoing or the alleged wrongdoing is within 311 00:17:20,560 --> 00:17:25,040 Speaker 4: the scope of the lawyer's job, the government will defend him. 312 00:17:25,160 --> 00:17:27,919 Speaker 4: Now Here, that's not possible because there will be the 313 00:17:27,960 --> 00:17:31,960 Speaker 4: government itself that is targeting Jack Smith. So the Justice 314 00:17:32,000 --> 00:17:35,760 Speaker 4: Department can't be both the prosecutor and the defense lawyer, 315 00:17:36,040 --> 00:17:40,320 Speaker 4: and so Jack Smith will have to be provided with 316 00:17:40,640 --> 00:17:45,560 Speaker 4: the cost of a highly skilled defense law firm to 317 00:17:45,680 --> 00:17:52,160 Speaker 4: respond to any DOJ effort to investigate or prosecute him. 318 00:17:52,400 --> 00:17:54,520 Speaker 4: That may be good for Jack Smith in the sense 319 00:17:54,560 --> 00:17:57,240 Speaker 4: that he doesn't have to pay out of his own pocket, 320 00:17:57,520 --> 00:18:02,120 Speaker 4: although even there I imagine that DOJ might argue that 321 00:18:02,440 --> 00:18:05,400 Speaker 4: Smith is not entitled to the cost of a defense 322 00:18:05,480 --> 00:18:09,080 Speaker 4: for some reason that justice comes up with, and then 323 00:18:09,200 --> 00:18:12,200 Speaker 4: that question has to be litigated, and Smith will need 324 00:18:12,200 --> 00:18:15,280 Speaker 4: a lawyer to represent him on the question of whether 325 00:18:15,400 --> 00:18:18,360 Speaker 4: or not the government has to defend him or pay 326 00:18:18,400 --> 00:18:22,760 Speaker 4: for his defense when the charge comes from the government itself. 327 00:18:23,080 --> 00:18:27,640 Speaker 2: So litigation before the litigation. What about Manhattan District Attorney 328 00:18:27,680 --> 00:18:31,000 Speaker 2: Alvin Bragg, who brought the hush money case, the only 329 00:18:31,080 --> 00:18:34,240 Speaker 2: case against Trump to actually go to trial. Trump has 330 00:18:34,440 --> 00:18:39,600 Speaker 2: excoriated him, and also New York Attorney General Letitia James, 331 00:18:39,760 --> 00:18:42,639 Speaker 2: who won that four hundred and fifty million dollar verdict 332 00:18:42,640 --> 00:18:43,400 Speaker 2: against Trump. 333 00:18:43,520 --> 00:18:47,800 Speaker 4: Well, Bragg and James are also in the Trump target range. 334 00:18:48,000 --> 00:18:51,160 Speaker 4: Both of them will get a defense from New York States, 335 00:18:51,200 --> 00:18:54,840 Speaker 4: so neither of them would expect to have to pay 336 00:18:54,840 --> 00:18:58,240 Speaker 4: out of their own profit for the court of a defense. Indeed, 337 00:18:58,359 --> 00:19:02,640 Speaker 4: the state might defend them through a state agency, or 338 00:19:02,680 --> 00:19:07,880 Speaker 4: it might pay for private counsel, so that's beneficial for them. 339 00:19:08,040 --> 00:19:12,399 Speaker 4: They don't have to bankrupt themselves defending themselves. But again, 340 00:19:12,560 --> 00:19:16,960 Speaker 4: the anxiety and the time commitment of fighting the government 341 00:19:17,480 --> 00:19:22,879 Speaker 4: can be extremely painful, even if the cost of the 342 00:19:22,960 --> 00:19:25,400 Speaker 4: defense is borne by the government itself. 343 00:19:26,280 --> 00:19:29,240 Speaker 2: I'm trying to think of what kind of prosecution the 344 00:19:29,359 --> 00:19:33,000 Speaker 2: Justice Department could bring against either one of them. I mean, 345 00:19:33,040 --> 00:19:36,679 Speaker 2: Trump has said over and over again that they brought 346 00:19:36,720 --> 00:19:41,800 Speaker 2: these cases for political reasons. That claim fail before the 347 00:19:41,960 --> 00:19:45,040 Speaker 2: trial judges. I mean, is any of that actionable? 348 00:19:45,359 --> 00:19:49,360 Speaker 4: There is no doubt that Trump lawyers, be the publical 349 00:19:49,480 --> 00:19:54,720 Speaker 4: private would be able to articulate a remotely plausible theory 350 00:19:54,880 --> 00:19:58,600 Speaker 4: for targeting James or Bratt, a theory that will fail 351 00:19:58,680 --> 00:20:01,000 Speaker 4: in court. But all you need to do to get 352 00:20:01,040 --> 00:20:04,920 Speaker 4: revenge is to conduct the investigation. Now, it is unlikely 353 00:20:05,040 --> 00:20:10,600 Speaker 4: that the Justice Department will ever represent Trump against Bragg 354 00:20:10,720 --> 00:20:14,879 Speaker 4: or James. Trump would have to get private counsel to 355 00:20:14,920 --> 00:20:19,240 Speaker 4: bring those cases. I don't see how the investigations by 356 00:20:19,320 --> 00:20:24,359 Speaker 4: Bragg and James can be turned into a DOJ case 357 00:20:24,920 --> 00:20:29,800 Speaker 4: as opposed to a private case brought by Trump himself. 358 00:20:30,160 --> 00:20:32,960 Speaker 4: He may do that. Another option for Trump if he 359 00:20:33,000 --> 00:20:36,720 Speaker 4: wants to get even with Bragg and James. He doesn't 360 00:20:36,760 --> 00:20:40,080 Speaker 4: have to pursue his own claims. He can just call 361 00:20:40,160 --> 00:20:45,000 Speaker 4: up any of the relevant regulatory agencies. Of course, the 362 00:20:45,080 --> 00:20:48,080 Speaker 4: irs is the most obvious, but truly not the only 363 00:20:48,400 --> 00:20:52,840 Speaker 4: to look into their behavior in going after him, and 364 00:20:52,920 --> 00:20:55,760 Speaker 4: that could be enough to cause them a great deal 365 00:20:55,960 --> 00:20:58,520 Speaker 4: of anguish even if nothing comes of it. 366 00:20:58,840 --> 00:21:01,560 Speaker 2: I assume out the wind though, is the idea of 367 00:21:01,640 --> 00:21:07,040 Speaker 2: the Justice Department being nonpartisan and being independent of the 368 00:21:07,080 --> 00:21:07,679 Speaker 2: White House. 369 00:21:09,160 --> 00:21:12,880 Speaker 4: Yeah, you know at Bonham. The problem here is that 370 00:21:12,920 --> 00:21:17,280 Speaker 4: the Supreme Court has told us that the president controls 371 00:21:17,320 --> 00:21:20,680 Speaker 4: all power of the executive branch, all of it. That's 372 00:21:20,960 --> 00:21:24,679 Speaker 4: a direct quote, all of it, And so Trump can 373 00:21:25,280 --> 00:21:30,920 Speaker 4: control the agenda for DJ There's no check and balance 374 00:21:31,200 --> 00:21:36,040 Speaker 4: within the executive branch, and Trump is the decider all 375 00:21:36,119 --> 00:21:39,840 Speaker 4: by himself about what the executive branch will will not 376 00:21:39,960 --> 00:21:44,399 Speaker 4: do in the way of exercise of executive power. So 377 00:21:45,000 --> 00:21:50,040 Speaker 4: the tradition of norms by which the Justice Department operates 378 00:21:50,080 --> 00:21:55,360 Speaker 4: independently of the president, that tradition is not legally mandated, 379 00:21:55,760 --> 00:22:00,840 Speaker 4: and Trump did change it by an effect through Gates 380 00:22:00,880 --> 00:22:04,800 Speaker 4: taking control of the decisions of the Justice Department that 381 00:22:04,960 --> 00:22:09,400 Speaker 4: are of particular interest to him. Ninety nine point ninety 382 00:22:09,520 --> 00:22:12,280 Speaker 4: nine percent of what DOJ does will be of no 383 00:22:12,440 --> 00:22:16,160 Speaker 4: interest in Trump at all, But a sliver of matters 384 00:22:16,760 --> 00:22:19,960 Speaker 4: will be of great interest to him because they benefit 385 00:22:20,080 --> 00:22:25,120 Speaker 4: him or friends of his, or because they target his enemies. 386 00:22:25,560 --> 00:22:29,720 Speaker 4: And where those matters arise or could rise, Trump is 387 00:22:29,760 --> 00:22:33,480 Speaker 4: the decider. And so what we've done is flip the 388 00:22:33,520 --> 00:22:37,800 Speaker 4: switch so that at one time the Attorney General was 389 00:22:37,840 --> 00:22:42,159 Speaker 4: the decider and the executive the White House stayed away 390 00:22:42,359 --> 00:22:46,960 Speaker 4: from those decisions. Now, for a very small but important 391 00:22:47,000 --> 00:22:51,480 Speaker 4: sliver of DOJ decisions, the White House will be the decider. 392 00:22:51,960 --> 00:22:55,639 Speaker 4: And there's nothing that DOJ lawyers can do to resist that, 393 00:22:56,280 --> 00:22:59,600 Speaker 4: and the ones that Trump has chosen may not wish 394 00:22:59,680 --> 00:23:00,359 Speaker 4: to reap. 395 00:23:01,480 --> 00:23:05,800 Speaker 2: Trump also has chosen two of his personal lawyers who 396 00:23:05,920 --> 00:23:10,359 Speaker 2: represented him at the Hushbunny trial for top positions at 397 00:23:10,359 --> 00:23:14,320 Speaker 2: the Justice Department, with his attorney Todd Blanche taking the 398 00:23:14,400 --> 00:23:16,200 Speaker 2: number two spot at DOJ. 399 00:23:16,640 --> 00:23:18,760 Speaker 5: Does that raise alarms or is it concerning? 400 00:23:19,440 --> 00:23:22,359 Speaker 4: Yeah? It is concerning because you want people running Justice 401 00:23:22,400 --> 00:23:25,960 Speaker 4: Department who have no sense of loyalty to the president 402 00:23:26,080 --> 00:23:29,640 Speaker 4: other than the loyalty of following the law. But there's 403 00:23:29,640 --> 00:23:33,000 Speaker 4: a personal relationship there you know, this goes way back 404 00:23:33,040 --> 00:23:36,800 Speaker 4: to President Kennedy chose his brother to be Attorney General, 405 00:23:36,840 --> 00:23:39,680 Speaker 4: and there was a lot of criticism of that selection 406 00:23:40,400 --> 00:23:44,600 Speaker 4: because Robert Kennedy would not be independent, or so it 407 00:23:44,760 --> 00:23:49,040 Speaker 4: was seen of his president brother. Well, there's an analogy here. 408 00:23:49,640 --> 00:23:55,600 Speaker 4: The relationship between Trump and his former defense lawyers could 409 00:23:55,720 --> 00:23:58,520 Speaker 4: be seen to give rise to a sense of loyalty 410 00:23:59,520 --> 00:24:07,080 Speaker 4: to Trump that will undermine the need for distance and 411 00:24:07,200 --> 00:24:11,240 Speaker 4: independence on the part of the people who run Justice. 412 00:24:11,000 --> 00:24:13,960 Speaker 2: The Finally, Professor, can you think of a president in 413 00:24:14,000 --> 00:24:17,720 Speaker 2: the past who used the Justice Department in a similar 414 00:24:17,720 --> 00:24:20,040 Speaker 2: way or in a way that Trump seems to want to. 415 00:24:20,480 --> 00:24:23,880 Speaker 4: Well, there's some reason to believe that Nixon did had 416 00:24:23,880 --> 00:24:26,640 Speaker 4: his enemies list and did use the department that way. 417 00:24:26,920 --> 00:24:29,480 Speaker 4: There has never been the kind of overt threats of 418 00:24:29,600 --> 00:24:36,200 Speaker 4: retaliation against enemies that Trump has prominently anticipated, even during 419 00:24:36,240 --> 00:24:41,199 Speaker 4: the Nixon years when John Mitchell was Attorney General. We 420 00:24:41,280 --> 00:24:44,480 Speaker 4: don't have the same degree of evidence of a tent 421 00:24:44,840 --> 00:24:50,119 Speaker 4: in the Nixon Mitchell years that we have exclicitly in 422 00:24:50,200 --> 00:24:51,359 Speaker 4: Trump's threats. 423 00:24:51,760 --> 00:24:53,159 Speaker 5: Thanks so much for being on the show. 424 00:24:53,359 --> 00:24:57,679 Speaker 2: That's Professor Steven Gillers of NYU Law School, mass tourt 425 00:24:57,720 --> 00:25:01,520 Speaker 2: lawyers and their investors have a problem. The pay add 426 00:25:01,600 --> 00:25:05,439 Speaker 2: on some huge cases is taking longer than expected, and 427 00:25:05,480 --> 00:25:08,159 Speaker 2: the hunt to find the next big case has not 428 00:25:08,240 --> 00:25:12,000 Speaker 2: been fruitful. So those high interest loans that law firms 429 00:25:12,080 --> 00:25:16,000 Speaker 2: use to fund their work are coming due, forcing firms 430 00:25:16,040 --> 00:25:20,440 Speaker 2: to refinance under less than optimal conditions. Joining me is 431 00:25:20,480 --> 00:25:24,479 Speaker 2: Emily Siegel, senior Bloomberg Law reporter who's written about this. 432 00:25:25,040 --> 00:25:30,160 Speaker 2: Mass tort lawyers typically work on contingency. Explain how they 433 00:25:30,280 --> 00:25:34,360 Speaker 2: fund these huge cases that go on for years and years. 434 00:25:34,760 --> 00:25:37,919 Speaker 6: Sometimes math tort firms will have their own money that 435 00:25:37,960 --> 00:25:40,840 Speaker 6: they can put towards cases, but as these cases take 436 00:25:40,920 --> 00:25:44,040 Speaker 6: longer and longer, litigation funders have come in and sort 437 00:25:44,040 --> 00:25:47,640 Speaker 6: of like filled this gap for them. So while they 438 00:25:48,200 --> 00:25:51,640 Speaker 6: wait and they pay all the fees to litigate these cases, 439 00:25:51,720 --> 00:25:54,879 Speaker 6: they can get funding from a litigation funder, and that 440 00:25:54,960 --> 00:25:59,080 Speaker 6: has been an increasingly more popular alternative in the math 441 00:25:59,119 --> 00:25:59,880 Speaker 6: tort and like plan. 442 00:26:00,080 --> 00:26:03,800 Speaker 2: It's laws based, and these are not necessarily based on 443 00:26:04,280 --> 00:26:05,680 Speaker 2: the outcome of the case. 444 00:26:06,440 --> 00:26:08,439 Speaker 5: They're more like regular loans. 445 00:26:08,960 --> 00:26:12,040 Speaker 6: They're not based on the outcome in the traditional sense 446 00:26:12,160 --> 00:26:16,639 Speaker 6: of litigation funding, but they do evaluate the case docket 447 00:26:16,840 --> 00:26:19,560 Speaker 6: before they fund them, so that's how the pricing is based. 448 00:26:19,640 --> 00:26:23,240 Speaker 6: So they'll look at a law firms like list of cases, 449 00:26:23,440 --> 00:26:26,800 Speaker 6: go through them, see what stages they're in. And you know, 450 00:26:26,920 --> 00:26:29,719 Speaker 6: some of these mass tort firms have thousands of cases, 451 00:26:29,800 --> 00:26:32,360 Speaker 6: so they may not be looking at every single one, 452 00:26:32,440 --> 00:26:34,080 Speaker 6: but they do want to get a sense of them 453 00:26:34,280 --> 00:26:37,000 Speaker 6: and how far along they are and what torts they're 454 00:26:37,080 --> 00:26:39,639 Speaker 6: involved in and how diverse it is, and that is 455 00:26:39,920 --> 00:26:43,399 Speaker 6: how they determine the total amount of the loans. So 456 00:26:43,520 --> 00:26:46,760 Speaker 6: it does still relate to the actual the lawsuits that 457 00:26:46,800 --> 00:26:47,359 Speaker 6: they're funding. 458 00:26:48,000 --> 00:26:50,680 Speaker 2: And the interest rates are high, double digits. 459 00:26:50,359 --> 00:26:54,360 Speaker 6: Sometimes, yeah, I think because these are high risk, they're 460 00:26:54,440 --> 00:26:57,080 Speaker 6: often double digit interest rates. You know, in the teens 461 00:26:57,160 --> 00:27:00,159 Speaker 6: and twenties. As years go on, the interest rates can 462 00:27:00,200 --> 00:27:00,480 Speaker 6: go up. 463 00:27:00,720 --> 00:27:03,840 Speaker 2: Two of the largest multi district tort cases are against 464 00:27:04,080 --> 00:27:06,280 Speaker 2: Jay and Jay and Bayer, and they're hitting the ten 465 00:27:06,400 --> 00:27:08,800 Speaker 2: year mark with no resolution in sight. 466 00:27:08,880 --> 00:27:11,800 Speaker 5: Tell us about a little about those cases, sure well. 467 00:27:11,880 --> 00:27:14,159 Speaker 6: Johnson and Johnson is one of the ones that we 468 00:27:14,280 --> 00:27:18,360 Speaker 6: often hear about. They've filed for bankruptcy three times now 469 00:27:18,560 --> 00:27:22,040 Speaker 6: to try to resolve these cases. It's just been dragging 470 00:27:22,119 --> 00:27:26,560 Speaker 6: along the allegations are their calculm powder caused cancer and 471 00:27:26,680 --> 00:27:29,360 Speaker 6: its users. So that is the gist of the case, 472 00:27:29,400 --> 00:27:31,239 Speaker 6: and it has been going on for ten years. They 473 00:27:31,359 --> 00:27:34,240 Speaker 6: just filed for bankruptcy again, I think earlier this year, 474 00:27:34,880 --> 00:27:39,520 Speaker 6: and they have proposed global settlements that haven't been approved yet. 475 00:27:39,920 --> 00:27:43,720 Speaker 6: So there's a lot of disagreement amongst even the attorneys 476 00:27:43,800 --> 00:27:47,560 Speaker 6: about whether they should approve the bankruptcy proceedings. It's just 477 00:27:47,640 --> 00:27:51,159 Speaker 6: become a totally different type of tort because of that. 478 00:27:51,440 --> 00:27:54,240 Speaker 6: So they're really tied up in the bankruptcy proceedings and 479 00:27:55,080 --> 00:27:58,240 Speaker 6: the infighting amongst the lawyers. It's just been delayed and 480 00:27:58,880 --> 00:28:01,919 Speaker 6: there's not really a clear timeline on when it's going 481 00:28:01,960 --> 00:28:04,280 Speaker 6: to be resolved. So that's one of the main ones. 482 00:28:04,359 --> 00:28:07,280 Speaker 6: And then another one that has sort of a different 483 00:28:07,320 --> 00:28:11,120 Speaker 6: set of issues is against there for its roundup product 484 00:28:11,400 --> 00:28:14,520 Speaker 6: and also I believe causing cancer. And that one that 485 00:28:14,680 --> 00:28:17,800 Speaker 6: there has been three circuits that have had differing opinions 486 00:28:17,840 --> 00:28:20,040 Speaker 6: on it, which is called the circuit split, so two 487 00:28:20,160 --> 00:28:21,920 Speaker 6: are in one direction and one is in the other. 488 00:28:22,200 --> 00:28:25,960 Speaker 6: So because of that there can be some delays in 489 00:28:26,480 --> 00:28:29,280 Speaker 6: dispersing settlements, and it could be something that the Supreme 490 00:28:29,400 --> 00:28:30,840 Speaker 6: Court has to rule on. 491 00:28:31,680 --> 00:28:36,240 Speaker 2: Brendan Barreff contingency capital at a litigation finance conference said 492 00:28:36,520 --> 00:28:40,160 Speaker 2: there's a degree of stress and distress in the space. 493 00:28:40,720 --> 00:28:42,040 Speaker 5: What was he talking about? 494 00:28:42,320 --> 00:28:44,560 Speaker 6: So there are two things going on, and I think 495 00:28:44,640 --> 00:28:47,720 Speaker 6: they're related. One is that a lot of these law 496 00:28:47,800 --> 00:28:52,400 Speaker 6: firms are sed up in these loans that are reaching 497 00:28:52,480 --> 00:28:55,200 Speaker 6: maturity dates and there is not a payout yet on 498 00:28:55,280 --> 00:28:58,320 Speaker 6: the cases that they were expecting to be paid on, 499 00:28:58,680 --> 00:29:01,320 Speaker 6: So then they refinance their loans either with the same 500 00:29:01,520 --> 00:29:04,400 Speaker 6: thunder or a different thunder, and they have to take 501 00:29:04,440 --> 00:29:08,160 Speaker 6: confessions when they do that. So that sort of creates 502 00:29:08,200 --> 00:29:12,960 Speaker 6: this environment of constant refinancing from investors, and the money 503 00:29:13,040 --> 00:29:15,160 Speaker 6: is not necessarily coming from the cases, it's coming from 504 00:29:15,200 --> 00:29:18,920 Speaker 6: other investors in the space. And on top of that, 505 00:29:19,520 --> 00:29:24,240 Speaker 6: there's not another calcum powder right now. There's not another roundup, 506 00:29:24,280 --> 00:29:27,600 Speaker 6: there's not another camp lasions. There are lots of mass 507 00:29:27,680 --> 00:29:29,600 Speaker 6: torts that are going on, but there's not this like 508 00:29:29,760 --> 00:29:33,160 Speaker 6: gigantic one that they're all looking towards or that's farther along. 509 00:29:33,480 --> 00:29:35,800 Speaker 6: So there are two things going on, and that the 510 00:29:36,080 --> 00:29:39,920 Speaker 6: firms are refinancing rates more often than they expected to 511 00:29:39,920 --> 00:29:44,240 Speaker 6: be and also there's not this big tort that everyone 512 00:29:44,480 --> 00:29:47,520 Speaker 6: is putting their money towards, or at least you know, 513 00:29:47,600 --> 00:29:50,320 Speaker 6: a lot of these law firms are really excited about 514 00:29:50,400 --> 00:29:53,600 Speaker 6: and thinks could be you know, could be helpful to 515 00:29:53,680 --> 00:29:56,680 Speaker 6: their clients, but also you know, result in a big payout. 516 00:29:57,000 --> 00:30:00,840 Speaker 2: I found that fascinating that as they're liv getting these cases, 517 00:30:00,880 --> 00:30:04,640 Speaker 2: they're looking for the next big tort that they can 518 00:30:04,760 --> 00:30:05,240 Speaker 2: go after. 519 00:30:06,120 --> 00:30:08,840 Speaker 6: Yes, I mean, they always are, I think to some extent. 520 00:30:09,480 --> 00:30:13,160 Speaker 6: And there was one I believe it was last year 521 00:30:13,680 --> 00:30:17,280 Speaker 6: that was against thail and All, alleging that Thailand All 522 00:30:17,320 --> 00:30:21,480 Speaker 6: when taken by a pregnant person would cause autism and ADHD, 523 00:30:22,120 --> 00:30:24,480 Speaker 6: and it ended up going to a Dowbert hearing, which 524 00:30:24,520 --> 00:30:27,640 Speaker 6: you know, would test the science of the claims, and 525 00:30:28,000 --> 00:30:31,360 Speaker 6: it failed. So that was one that I think some 526 00:30:31,640 --> 00:30:33,720 Speaker 6: had thought could be the next big one because a 527 00:30:33,840 --> 00:30:36,239 Speaker 6: lot of women take tail and All when pregnant. It's 528 00:30:36,240 --> 00:30:40,240 Speaker 6: approved and it could have been really massive group of people. 529 00:30:40,720 --> 00:30:43,560 Speaker 6: But then since it failed, it did not become a 530 00:30:43,880 --> 00:30:48,640 Speaker 6: multi district religation, and that was something I think not everyone, 531 00:30:48,760 --> 00:30:50,840 Speaker 6: I think there were some skepticism around it, but they 532 00:30:50,920 --> 00:30:54,680 Speaker 6: were intrigued by that one and so there isn't something 533 00:30:55,000 --> 00:30:57,280 Speaker 6: like that. I mean, one of the ones that's referenced 534 00:30:57,320 --> 00:31:01,760 Speaker 6: in the piece is Deco Privera, which is a contraceptive injection, 535 00:31:02,320 --> 00:31:05,000 Speaker 6: and that is one that they think will be like 536 00:31:05,080 --> 00:31:07,080 Speaker 6: a big tourt because there are a lot of injuries. 537 00:31:07,520 --> 00:31:09,240 Speaker 6: But you know, I haven't heard of others. 538 00:31:09,320 --> 00:31:14,280 Speaker 2: At this point, some of the experienced tourt lawyers are 539 00:31:14,400 --> 00:31:18,160 Speaker 2: blaming the new players and firms. One told you the 540 00:31:18,280 --> 00:31:22,240 Speaker 2: market has blown up exponentially, so they're blaming the new guys. 541 00:31:22,800 --> 00:31:23,280 Speaker 4: I think so. 542 00:31:23,480 --> 00:31:25,560 Speaker 6: I think that some of the mass tort or some 543 00:31:25,680 --> 00:31:29,680 Speaker 6: of the plaintiffs attorneys believe that there are other law 544 00:31:29,720 --> 00:31:31,520 Speaker 6: firms that are entering the space because they want to 545 00:31:31,520 --> 00:31:35,240 Speaker 6: get rich and they want to build up their case book, 546 00:31:35,280 --> 00:31:36,680 Speaker 6: and the way they want to do that is through 547 00:31:36,880 --> 00:31:39,880 Speaker 6: litigation funding. So they get all these cases, they use 548 00:31:39,960 --> 00:31:44,280 Speaker 6: the money to market and put out commercials, They retain 549 00:31:44,360 --> 00:31:47,240 Speaker 6: a lot of different claimants, and then they have to 550 00:31:47,320 --> 00:31:50,400 Speaker 6: work up those cases and they're not really at least 551 00:31:50,440 --> 00:31:52,680 Speaker 6: this is what those attorneys are saying. They're not prepared 552 00:31:52,920 --> 00:31:56,760 Speaker 6: for the work that goes into working up each individual case. 553 00:31:56,880 --> 00:31:59,120 Speaker 6: So if you're a law firm of two people and 554 00:31:59,240 --> 00:32:02,440 Speaker 6: you have thousands of cases because of your litigation funding, 555 00:32:02,480 --> 00:32:05,320 Speaker 6: how how do you attend to all of those clients. 556 00:32:05,480 --> 00:32:07,600 Speaker 6: So that's what they are saying that there's just a 557 00:32:07,680 --> 00:32:11,479 Speaker 6: lot of new firms, not necessarily new lawyers, but new 558 00:32:11,560 --> 00:32:13,840 Speaker 6: to the space coming in and wanting to be part 559 00:32:13,920 --> 00:32:17,000 Speaker 6: of this, and it's creating an environment where there's a 560 00:32:17,040 --> 00:32:20,560 Speaker 6: lot of lending going on and also making it more crowded. 561 00:32:21,040 --> 00:32:24,160 Speaker 2: So it's a difficult area of litigation. It takes a 562 00:32:24,240 --> 00:32:26,800 Speaker 2: lot of money, it takes a lot of time. But 563 00:32:27,720 --> 00:32:31,920 Speaker 2: if you win, are the rewards for lawyers, would you 564 00:32:32,000 --> 00:32:33,040 Speaker 2: say astronomical? 565 00:32:33,320 --> 00:32:33,800 Speaker 4: It can be. 566 00:32:34,520 --> 00:32:37,320 Speaker 6: I think it depends on the quality of the cases 567 00:32:37,400 --> 00:32:40,960 Speaker 6: that you have. Are they quality, meaning are the injuries 568 00:32:41,080 --> 00:32:44,880 Speaker 6: within like the defined realm for the MDL, you know, 569 00:32:45,200 --> 00:32:47,200 Speaker 6: and if you have a lot of cases like that, 570 00:32:47,720 --> 00:32:50,680 Speaker 6: you know a lot of these mass toward lawyers are 571 00:32:50,840 --> 00:32:54,680 Speaker 6: quite wealthy. So yes, but it's also not easy to 572 00:32:54,800 --> 00:32:58,080 Speaker 6: find good cases and to work them up. So I 573 00:32:58,120 --> 00:33:00,320 Speaker 6: think there's that sort of tension going on right now. 574 00:33:00,680 --> 00:33:04,040 Speaker 2: Let's say the inexperienced lawyers or the lawyers that are 575 00:33:04,120 --> 00:33:07,959 Speaker 2: new to this field have a lot of clients they 576 00:33:08,120 --> 00:33:12,360 Speaker 2: benefit if there's a settlement, right, sort of writing on 577 00:33:12,440 --> 00:33:15,960 Speaker 2: the coattails of the more experienced lead lawyers. 578 00:33:16,520 --> 00:33:19,680 Speaker 6: They could be. It sort of depends on what they're 579 00:33:19,720 --> 00:33:22,880 Speaker 6: putting their money towards, right, So if they get a 580 00:33:22,960 --> 00:33:25,560 Speaker 6: lot of funding and they put it towards marketing, but 581 00:33:25,680 --> 00:33:29,040 Speaker 6: they hire a marketing company that's not doing a great 582 00:33:29,160 --> 00:33:32,880 Speaker 6: job getting calls as they come in, you could end 583 00:33:33,000 --> 00:33:36,280 Speaker 6: up with thousands of cases that are not very valuable. 584 00:33:37,040 --> 00:33:39,920 Speaker 6: Or you can do your research, you can put them 585 00:33:40,000 --> 00:33:43,000 Speaker 6: towards marketing with the companies that you trust, and you 586 00:33:43,080 --> 00:33:45,080 Speaker 6: can be working them up as they're coming in, And 587 00:33:45,480 --> 00:33:49,400 Speaker 6: there's just different approaches. But I think the concern is 588 00:33:49,720 --> 00:33:52,920 Speaker 6: that some of these firms may have lots of cases 589 00:33:53,000 --> 00:33:57,560 Speaker 6: that actually don't qualify for the tourt. Maybe like for instance, 590 00:33:57,560 --> 00:33:59,880 Speaker 6: if we talk about Camp La June, which I wrote 591 00:33:59,880 --> 00:34:02,640 Speaker 6: a peace on this last year, you know, some of 592 00:34:02,720 --> 00:34:05,400 Speaker 6: the law firms had clients who were faked, like they 593 00:34:05,440 --> 00:34:07,320 Speaker 6: gave them a fake address. They just wanted to get 594 00:34:07,360 --> 00:34:10,560 Speaker 6: in on potential settlement because they see these advertisements. So 595 00:34:10,920 --> 00:34:12,640 Speaker 6: I think, yes, they could be a big part of 596 00:34:12,680 --> 00:34:15,440 Speaker 6: the settlement, but their cases still have to qualify. It's 597 00:34:15,480 --> 00:34:18,120 Speaker 6: all to have used the product and been injured by 598 00:34:18,200 --> 00:34:19,279 Speaker 6: it in a specific way. 599 00:34:20,080 --> 00:34:23,640 Speaker 2: And is there any concern that the lawyers are thinking 600 00:34:23,719 --> 00:34:28,799 Speaker 2: about their investors and their investment before their clients' concerns. 601 00:34:29,160 --> 00:34:31,839 Speaker 6: Some attorneys believe that that is the case. It's hard 602 00:34:31,880 --> 00:34:35,440 Speaker 6: to know really what's going on behind closed doors, but 603 00:34:35,680 --> 00:34:39,400 Speaker 6: there have been allegations of that. In particular and the 604 00:34:39,480 --> 00:34:42,960 Speaker 6: Johnson and Johnson talcum powder cases, there have been law 605 00:34:43,040 --> 00:34:46,239 Speaker 6: firms accusing other law firms of wanting to accept the 606 00:34:46,280 --> 00:34:51,120 Speaker 6: bankruptcy proposal, but then only because they're motivivated by having 607 00:34:51,160 --> 00:34:54,160 Speaker 6: to pay back their loans and they're to the investors. 608 00:34:54,280 --> 00:34:58,720 Speaker 6: So that's definitely alleged a lot. Whether it's actually happening, 609 00:34:58,760 --> 00:35:00,759 Speaker 6: it's hard to say. I know that a lot of 610 00:35:00,840 --> 00:35:02,480 Speaker 6: lawyers are concerned that that's happening. 611 00:35:02,800 --> 00:35:05,759 Speaker 2: Are there firms that have decided to get away from 612 00:35:05,920 --> 00:35:08,759 Speaker 2: mass torts because of the length of time involved in 613 00:35:08,840 --> 00:35:09,480 Speaker 2: these cases? 614 00:35:10,280 --> 00:35:12,560 Speaker 6: I think that there are some, at least on the 615 00:35:12,640 --> 00:35:15,800 Speaker 6: funding side. There are litigation funders that try to have 616 00:35:15,920 --> 00:35:18,840 Speaker 6: a more diverse portfolio. So if they're going to invest 617 00:35:18,960 --> 00:35:21,680 Speaker 6: in firms that have mass torts, they also want those 618 00:35:21,760 --> 00:35:25,799 Speaker 6: firms to be handling other personal injury cases because those 619 00:35:25,840 --> 00:35:29,239 Speaker 6: are shorter term, and you know that can sort of 620 00:35:29,360 --> 00:35:32,480 Speaker 6: keep money coming in while they wait on these big torts. 621 00:35:32,880 --> 00:35:35,799 Speaker 6: I think that as they enter this period where they're 622 00:35:35,800 --> 00:35:39,480 Speaker 6: looking for another sport, they're just looking for firms that 623 00:35:39,880 --> 00:35:42,960 Speaker 6: are really aware of that and are just trying to 624 00:35:43,120 --> 00:35:45,640 Speaker 6: be as diverse as possible. There are many funders who 625 00:35:45,680 --> 00:35:48,400 Speaker 6: don't do mass torts at all because they do not 626 00:35:48,600 --> 00:35:50,920 Speaker 6: like the duration issues. You know what I heard from 627 00:35:50,960 --> 00:35:53,560 Speaker 6: Andrew at s Fire Bank. You know, he saw this 628 00:35:53,719 --> 00:35:56,480 Speaker 6: happening years ago and thought I need to move farther 629 00:35:56,600 --> 00:36:00,600 Speaker 6: away from this while still having some money closure in 630 00:36:00,840 --> 00:36:04,280 Speaker 6: mass tours but also the smaller single cases. 631 00:36:04,760 --> 00:36:07,640 Speaker 2: Well, your story is really fascinating. Emily, thanks so much. 632 00:36:08,280 --> 00:36:12,400 Speaker 2: That's Emily Siegel, Bloomberg Law Senior Reporter, and that's it 633 00:36:12,520 --> 00:36:15,080 Speaker 2: for this edition of The Bloomberg Law Show. Remember you 634 00:36:15,120 --> 00:36:17,600 Speaker 2: can always get the latest legal news on our Bloomberg 635 00:36:17,680 --> 00:36:21,279 Speaker 2: Law Podcast. You can find them on Apple Podcasts, Spotify, 636 00:36:21,480 --> 00:36:26,480 Speaker 2: and at www dot Bloomberg dot com, slash podcast Slash Law, 637 00:36:26,920 --> 00:36:29,480 Speaker 2: and remember to tune into The Bloomberg Law Show every 638 00:36:29,560 --> 00:36:33,440 Speaker 2: weeknight at ten pm Wall Street Time. I'm June Grosso 639 00:36:33,600 --> 00:36:35,200 Speaker 2: and you're listening to Bloomberg