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Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.

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Speaker 1: Alan Weiselberg, the former CFO of the Trump organization, is

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Speaker 1: going back to jail. The seventy six year old pleaded

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Speaker 1: guilty to felony perjury charges, just the latest twist in

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Speaker 1: his legal saga, one where he's always remained loyal to Trump.

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Speaker 1: Manhattan prosecutors have given him a deal for lying on

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Speaker 1: the stand at Trump's civil fraud trial and for lying

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Speaker 1: in deposition testimony. Weiselberg was facing five counts of first

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Speaker 1: degree perjury, a felony punishable by as many as seven

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Speaker 1: years in prison, but under the plea deal, he'll be

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Speaker 1: sentenced to five months in jail and doesn't have to

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Speaker 1: cooperate with prosecutors against his former boss. Joining me is

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Speaker 1: Bloomberg Legal reporter Patricia Hurtado. Why are they giving Weiselberg

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Speaker 1: a deal? He perjured himself several times day depositions and

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Speaker 1: on the stand, and he's not testifying against Trump in

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Speaker 1: the hush money case.

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Speaker 2: Well, the prosecutors said yesterday in court they were giving

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Speaker 2: him credit.

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Speaker 1: For basically his age.

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Speaker 2: He's going to be seventy seven. He's seventy six, right, Now,

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Speaker 2: the fact that he'd already done prison time once before,

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Speaker 2: as well as this willingness to plead guilty and admit responsibility,

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Speaker 2: was a reason to give him credit. So they basically

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Speaker 2: gave him a discount. He had faced five felony counts

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Speaker 2: of a perjury and they gave him credit, and they

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Speaker 2: only made him plead guilty to two.

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Speaker 1: Yeah, So why he's never fully cooperated with prosecutors against

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Speaker 1: Trump and with this perjury at the trial. He's also

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Speaker 1: violated his probation after serving time for another deal he'd

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Speaker 1: made with prosecutors over dodging taxes. So why give him

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Speaker 1: another deal when he's not giving them anything.

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Speaker 2: It's hard to divine why they decided to give him

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Speaker 2: a break. Possibly is because of the fact that you

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Speaker 2: know he is going to be seventy seven years old

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Speaker 2: when he goes to serve five months in prison. Now,

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Speaker 2: maybe they've decided they've got to cut their losses and

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Speaker 2: go on and prosecute other people related to the Trump

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Speaker 2: organization like Donald Trump. I was also advised, sources tell

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Speaker 2: me neither side intends to use him as a witness,

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Speaker 2: and his plea deal was very specific about that. It

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Speaker 2: didn't make any mention as it did last time he

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Speaker 2: pled guilty that he was not going to be expected

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Speaker 2: to testify as part of the terms of his plea deal,

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Speaker 2: and his lawyer basically said, he looks forward to moving

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Speaker 2: on with.

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Speaker 1: His life and he's not going to testify. Even though

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Speaker 1: Michael Cohen says that he was a part of that

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Speaker 1: hush money scheme.

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Speaker 2: Well, you could understand why the prosecutors wouldn't want to

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Speaker 2: call him at all, because, I mean, what kind of

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Speaker 2: credibility does a guy have that has pled guilty and

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Speaker 2: admitted to not only tax fraud chargers. I think it

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Speaker 2: was fifteen counts of tax fraud that he played guilty

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Speaker 2: to in twenty twenty two, and now he faces two

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Speaker 2: more felony counts, so that's like seventeen felonies he pled

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Speaker 2: guilty to, including two perjury counts. I think what's good

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Speaker 2: about this guilty plea from the prosecutor's perspective is if

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Speaker 2: the defense tries to attack or assailed Michael Cohen's credibility

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Speaker 2: as a twice convicted perjurer, as they have been alleging

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Speaker 2: and confronting him with whenever he's shown up as he

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Speaker 2: did when he testified at the state Attorney General's trial

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Speaker 2: as a witness. They can turn around and used Ellen

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Speaker 2: Weisselberg's admissions of he also committed fraud on Donald Trump's behalf.

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Speaker 1: Well, I suppose jurors have believe cooperators with worst records

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Speaker 1: tell us what Weiselberg lied about under oath.

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Speaker 2: Well, there were five counts of perjury that he admitted

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Speaker 2: to committing, and he pled guilty and took responsibility for

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Speaker 2: two of those. So the Pejoria's statements include the fact

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Speaker 2: that he lied when questioned under oath and depositions on

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Speaker 2: three occasions with the New York Attorney General Leticia James's office,

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Speaker 2: and I believe Leticia James was also one of the

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Speaker 2: people questioning him those days and lied about the size

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Speaker 2: of Donald Trump's triplex apartment at Trump Tower. Alan Weiselberg

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Speaker 2: claimed that it was thirty thousand square feet instead of

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Speaker 2: the actual one third, which is just over ten thousand

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Speaker 2: square feet. He also lied repeatedly in other depositions about

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Speaker 2: what statements of financial condition claimed on the size of

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Speaker 2: Trump Tower triplex, as well as other assets and the

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Speaker 2: processes and what they told Forest Magazine or didn't tell

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Speaker 2: Forbes magazine, and he also lied when he testified on

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Speaker 2: behalf of Donald Trump in October of last year at

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Speaker 2: the trial.

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Speaker 1: Whenever it's between the law and Trump, he chooses Trump.

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Speaker 1: And I wonder how much of this has to do

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Speaker 1: with his two million dollars severance package and are they

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Speaker 1: still paying his legal bills?

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Speaker 2: I understood. I did a story last March in which

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Speaker 2: his former lawyers were forced to get off the case

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Speaker 2: unless they were going to deflect any prosecution or any

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Speaker 2: problems for Trump. So they were viewed as disloyal his

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Speaker 2: prior to criminal defense lawyers, and they were forced off

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Speaker 2: the case because the Trump Organization and the Trump family

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Speaker 2: wasn't going to pay his legal bills any longer. Now

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Speaker 2: regarding he did get a two million dollar severance package

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Speaker 2: from the Trump org. And some people have said that's

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Speaker 2: two million reasons to protect Donald Trump. In this case,

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Speaker 2: it came out that he only got paid a million

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Speaker 2: because it was being paid in tranches by the Trump organization,

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Speaker 2: So he had only been paid a one million dollars

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Speaker 2: as of October of last year when he testified, and

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Speaker 2: he was also going to cough up a million dollars

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Speaker 2: in fines as part of the New York ag verdict

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Speaker 2: that the judge imposed in February.

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Speaker 1: And the severanceage requires him not to cooperate with any

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Speaker 1: law enforcement investigation unless legally required to. And Judge and

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Speaker 1: Goren wrote, the Trump organization keeps him on a short leash,

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Speaker 1: and it shows. Did the judge completely discredit Weiselberg's testimony

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Speaker 1: at the civil fraud trial.

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Speaker 2: He did in his opinion in his verdict that he

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Speaker 2: issued that basically anything that Alan Weiselberg said, and he

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Speaker 2: testified on the stand for several hours on behalf of

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Speaker 2: Donald Trump as a star defense witness, that he was

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Speaker 2: not credible and should be discounted.

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Speaker 1: Did he even testify against Trump in the criminal tax

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Speaker 1: fraud trial against the Trump Organization?

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Speaker 2: And he didn't actually testify against Donald Trump in the

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Speaker 2: tax fraud case before Judge Mershawn, who's now presiding over

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Speaker 2: Donald Trump's criminal case. The agreement he had was not

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Speaker 2: a cooperation agreement. It was just that he agreed to testify,

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Speaker 2: but he had to testify truthfully. He basically was very

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Speaker 2: careful in his testimony, and Mershawn later said to him

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Speaker 2: when he sentenced him in January twenty twenty three that

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Speaker 2: he was very concerned with some of Weiselberg's testimony, and

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Speaker 2: if he'd known how he was going to behave and

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Speaker 2: what he was going to testify to on the stand

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Speaker 2: at the tax fraud trial, he would have not agreed

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Speaker 2: to give him that break which the judge had agreed

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Speaker 2: to of five months in prison, which ended up being

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Speaker 2: a very minimal sentence.

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Speaker 1: Let's talk a little bit about the hush money case

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Speaker 1: that's coming up. That's coming up pretty quickly.

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Speaker 3: Well.

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Speaker 2: The case that the Manhattan District Attorney Alvin Bragg has

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Speaker 2: made is that Trump did what was called a catch

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Speaker 2: and kill scheme engaged in just as he was running

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Speaker 2: for president in twenty sixteen, there were stories out there,

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Speaker 2: including salacious stories that he'd had sex with the Stormy Daniels,

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Speaker 2: an adult film actress, and he wanted to kill the story,

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Speaker 2: so he basically broke her to deal through intermediaries like

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Speaker 2: his lawyer, his personal lawyer, Michael Cohen, to buy the

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Speaker 2: story from being published from any national inquirer or any

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Speaker 2: publication that would write about these salacious allegations and bury

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Speaker 2: the news so that wouldn't come out and it would

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Speaker 2: help his chances of getting elected. Alan Bragg is now

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Speaker 2: calling it not a hush money case but actually an

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Speaker 2: election interference case.

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Speaker 1: I know, I noticed that difference, and is the point

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Speaker 1: to make the case seem more important because the case

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Speaker 1: has been put down as the worst of the criminal

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Speaker 1: case is against Trump. So is he trying to make

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Speaker 1: it something different.

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Speaker 2: I mean, some people say it's so taundry the allegations

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Speaker 2: involve a porn star. There are also other allegations that

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Speaker 2: Alvin Bragg wants to include in the evidence, which are

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Speaker 2: two other instances prior to the election, maybe years before,

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Speaker 2: including that he had had sex with a playboy model

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Speaker 2: Karen McDougall, and also that he had bought catch and

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Speaker 2: kill story and buried involving a Trump doorman who had

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Speaker 2: some salacious allegations against Trump. So Alvin Bragg is fending

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Speaker 2: his case that it's a valid case that nobody is

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Speaker 2: above the law, including Donald Trump. I mean, the allegations

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Speaker 2: are pretty serious, including that there were checks cut and

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Speaker 2: written to Michael Cohen to reimburse Michael Cohen for making

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Speaker 2: these payments, and that you know, Trump did them while

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Speaker 2: he was in the White House, so that these canceled

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Speaker 2: checks include Donald Trump at the White House writing out checks,

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Speaker 2: fabricating a protectual reason of why the checks were reading

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Speaker 2: signed that it wasn't hush money, it was for legal expenses.

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Speaker 2: So there goes the allegation that Trump was on falsifying

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Speaker 2: business records. So it sounds like, you know, it's a

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Speaker 2: business crime. Everybody gets accused. Other people who commit these

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Speaker 2: crimes get prosecuted, So why should Donald Trump be different.

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Speaker 1: I understand that the defense is arguing that Bragg shouldn't

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Speaker 1: be allowed to argue election interference. Is the judge decided.

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Speaker 2: Now, there's many many things that judges being asked to decide,

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Speaker 2: including you know, limiting what kind of evidence gets before

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Speaker 2: the jury. The DA is arguing that Trump should be

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Speaker 2: basically gagged from speaking about the jurors and mention them

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Speaker 2: by name. I understand that there's no proviso under New

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Speaker 2: York state law for jurors to be anonymous. And the

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Speaker 2: federal cases that were the Egen Carroll defamation case and

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Speaker 2: sexual assault case, the to federal trials that we just

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Speaker 2: had last year and then in January, both juries were anonymous.

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Speaker 2: But there's no provision for that under state law. And

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Speaker 2: the DA has argued and worried allowed that some people

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Speaker 2: or some Trump followers could get the names of these

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Speaker 2: potential jurors and then release them to the world. And

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Speaker 2: then how could these people operate in kind of secrecy

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Speaker 2: of doing their job as jurors.

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Speaker 1: It's really reminiscent of a mob trial because you don't

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Speaker 1: hear the these kinds of concerns from prosecutors in any

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Speaker 1: other cases. So jury selection starts March twenty fifth. Any

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Speaker 1: idea how long it might take to get a jury.

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Speaker 2: I've heard estimations of at least two weeks and maybe longer.

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Speaker 2: And if we had a controversial case with a high

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Speaker 2: profile defendant, and there was Harvey Weinstein who lived in

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Speaker 2: Manhattan and he was the Hollywood mogul accused of sexually

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Speaker 2: assaulting these women and that trial, I went back and looked,

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Speaker 2: and it was ten days of jury selection.

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Speaker 1: Because the lawyers in New York get to ask questions.

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Speaker 1: It's not like the federal system where the judge asked

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Speaker 1: the questions and it moves along quicker.

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Speaker 2: Yeah, and there's some discussion, and I don't know if

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Speaker 2: it's been decided yet. There was some requests by the

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Speaker 2: DA to have people fill in a jury questionnaire, and

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Speaker 2: it sounded like the judge was shining away from actually

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Speaker 2: agreeing to that. So the jury questionnaire would sort of

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Speaker 2: pre screen people ahead of time. And I think what

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Speaker 2: the judge basically told the lawyers the other day was

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Speaker 2: he would do what Judge cap And did in federal

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Speaker 2: court in the Egene Carroll trial and basically have people

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Speaker 2: raise their hands and say, anyone here feel they can't

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Speaker 2: be fair and impartial to Donald Trump, And if they

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Speaker 2: raise their hands, he would get excused.

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Speaker 1: You'll have to tell us, Patty, how much raising of

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Speaker 1: hands there is at that point. Thanks so much. That's

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Speaker 1: Bloomberg Legal reporter Patricia Hurtado. Up next, Sam Bankman Freed's

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Speaker 1: sentencing is coming up. I'm June Gross. When you're listening

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Speaker 1: to Bloomberg, Sam Bankman Freed remember him. His spectacular fall

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Speaker 1: from grace and trial for masterminding a multi billion dollar

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Speaker 1: fraud kept him in the headlines for months. But since

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Speaker 1: his conviction last November, things have been quiet for SBF,

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Speaker 1: at least in the media, but behind the scenes, he's

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Speaker 1: been preparing for his sentencing and appeal, most notably by

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Speaker 1: changing lawyers. His family and friends have flooded the judge

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Speaker 1: who will sentence him next month with please for leniency,

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Speaker 1: arguing that his public image as a quote freak with

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Speaker 1: evil intentions was dead wrong. His lawyers are asking he'd

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Speaker 1: be given no more than six and a half years

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Speaker 1: in prison, quite a contrast to the one hundred years

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Speaker 1: the Probation Department has suggested. Joining me is Bloomberg Legal

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Speaker 1: reporter chryst O Mesh, what is the maximum he's facing?

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Speaker 1: How long could the judge sentence him too?

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Speaker 4: So obviously there are a lot of factors that play here,

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Speaker 4: given the seriousness of his conduct and the number of

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Speaker 4: charneys he was convicted of. But I talked to a

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Speaker 4: lot of defense attorneys about this, and they he's going

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Speaker 4: to get probably at least a decade in prison, which is,

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Speaker 4: you know, a lot of time for a person of

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Speaker 4: his age. But it's kind of reasonable given what the

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Speaker 4: sentencing guidelines paul for him to sturb, which is a

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Speaker 4: lot of time, which is a life sentence essentially, given

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Speaker 4: the size of the loss in the case. But you know,

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Speaker 4: anybody who follows the criminal justice system America, and especially

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Speaker 4: the federal system, knows that white collar sentences, which are

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Speaker 4: driven by monetary losses are often the proposed sentences under

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Speaker 4: the guidelines are really they're draconian. This the work, so

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Speaker 4: it's very unlikely he would serve you know, twenty five

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Speaker 4: years is probably a little bit on the higher end.

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Speaker 4: See what the government says when they submit their commission

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Speaker 4: later this month. But the judge himself in this case,

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Speaker 4: rush Kaplan has issued skepticism about the guidelines in the past,

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Speaker 4: especially in white collar cases where the lost amount is

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Speaker 4: very high. And if you look back at some of

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Speaker 4: the cases that he sends, he doesn't tend to throw

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Speaker 4: the book at people. He's obviously a tough judge. You know,

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Speaker 4: he gave the SDS defense team a hard time during

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Speaker 4: the trial, but he seems to see sympathetic to the

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Speaker 4: argument at very least that throwing him in prison for

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Speaker 4: the rest of his life is really not going to

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Speaker 4: do society or him any justice.

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Speaker 1: So the Probation office recommended a sentence of one one

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Speaker 1: hundred years. What did they base that on?

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Speaker 4: So the majority of that is based on the Montsterori laws,

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Speaker 4: which is, you know, the estimates very but it's probably

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Speaker 4: at least eight billions, probably upwards of ten FBF attorneys

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Speaker 4: argue that really the victims here are going to made

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Speaker 4: hole by the bankruptcy case, and that they're not really

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Speaker 4: going to be victims, and that he shouldn't really have

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Speaker 4: to pay resolutions. They made a kind of similar argument

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Speaker 4: in the Trevor Milton case with the Nicola founder who

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Speaker 4: was convicted a fraud in his fencing, saying that Nicola

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Speaker 4: paid a lot of money to the SEC and the

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Speaker 4: Centtal shareholder lawsuits to resolve a case.

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Speaker 1: He's gotten a new attorney, Mark mccazy.

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Speaker 4: Yes, Mark mccasey, very well known in the Southern District

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Speaker 4: of New York, is father's former attorney. He's a former

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Speaker 4: federal prosecutor in the Southern District. He's represented many a

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Speaker 4: white collar criminalities, well known to the bar.

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Speaker 1: So his lawyers are arguing that he should serve no

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Speaker 1: more than six and a half years in is. And

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Speaker 1: that's on the very very low end, isn't it.

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Speaker 4: Yes, they couldn't have really logically argued for less. Probably

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Speaker 4: practically that really probably wouldn't have worked with this judge.

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Speaker 4: So they're going to take their shots where they can

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Speaker 4: on the lower end. And you know, their arguments are

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Speaker 4: kind of similar to what a lot of people are saying,

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Speaker 4: is that throwing him in prison for the rest of

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Speaker 4: his life doesn't really serve the purposes of justice, especially

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Speaker 4: for somebody who, you know, despite the fact that junto

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Speaker 4: to tell him arguably has a lot to give in

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Speaker 4: terms of, you know, his contributes to society, and Marky

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Speaker 4: Casey and others have made this comparison to Michael Milkin,

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Speaker 4: who you know, is very young when he was convicted

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Speaker 4: and managed to build up a life of philanthropy, which

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Speaker 4: is really what FBS and that's what they talk about

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Speaker 4: in these letters that he has devoted to plan that's

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Speaker 4: the whole driving force of his life is.

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Speaker 1: Yeah. The quote that you talked about is the genius

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Speaker 1: of both both men is undeniable. Their contributions were vast,

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Speaker 1: their wealth and fame were unplanned, their means and methods

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Speaker 1: were questioned by prosecutors, and their downfall was swift and tragic.

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Speaker 4: Sounds a little poetic, yeah, I mean that's mark me Casey.

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Speaker 4: His submissions are pretty poetic, I would say, and are passionate.

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Speaker 4: He's the passionate advocate for his clients, and that's what

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Speaker 4: kind of a hallmark of his sentencing submissions now.

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Speaker 1: Are they saying that SBF is autistic?

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Speaker 4: He has medication. There's a lot of letters that were

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Speaker 4: submitted along with this. It doesn't seem to really directly

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Speaker 4: say that he is autistic, but you know, it implies that.

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Speaker 1: There were letters about his social awkwardness and inability to

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Speaker 1: read social cues, and that that might have led to

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Speaker 1: see his responses after the implosion of FTX as uncaring

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Speaker 1: and dispassionate. And they're also saying that prison will be

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Speaker 1: especially harmful for him because of that.

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Speaker 4: Yeah, one hundred percent. They definitely argue that some of

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Speaker 4: the social awkwardness that he has and some of the

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Speaker 4: social cues he misses leads people to believe that he's

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Speaker 4: not emotional or not caring, and that instead that's just

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Speaker 4: the way he deals with, you know, his social environment.

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Speaker 4: I know he's had. There's more than a two dozen

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Speaker 4: letters here from friends, family, his mom and dad, but

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Speaker 4: also from people who don't even know him, you know,

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Speaker 4: concerned that throwing him in prison kind of ignores the

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Speaker 4: challenges for people like him.

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Speaker 1: And also a fellow inmate submitted a letter.

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Speaker 4: Yes, fellow inmate, a former New York City police officer,

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Speaker 4: who said he had a bunk right next to him

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Speaker 4: and said, you know, they became pretty good friends, and

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Speaker 4: that he believed that dam is just the kind of

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Speaker 4: person that should not be in prison and would not

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Speaker 4: turn any purpose at all.

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Speaker 1: And his mom wrote, was his mom's letter the most

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Speaker 1: emotional of them.

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Speaker 4: I would definitely say so. His father's letter was pretty

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Speaker 4: much to the point and very direct. It was only

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Speaker 4: a couple of pages. His mother's letter it was about

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Speaker 4: six pages long and was very passionate, even being a

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Speaker 4: law professor and attorney herself, you know, addressed the judges.

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Speaker 4: As his mother. She took aim at the media, for sure.

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Speaker 4: She said that really he's a very misunderstood person. He

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Speaker 4: was empathetic from the time he was a young child,

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Speaker 4: almost to his own detriment. And what a lot of

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Speaker 4: the letters talked about, which I found interesting, is his vegetarianism,

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Speaker 4: which he loved steak and fries, his mother said, and

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Speaker 4: his brother, but he gave them up at an early

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Speaker 4: age out of an ethical responsibility to animals. He wasn't

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Speaker 4: some animal lover, they said, this was just something he

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Speaker 4: felt he needed to do, and they felt that that

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Speaker 4: demonstrated the kind of devotion to plan for being ethical

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Speaker 4: causes that he kind of hat in his life.

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Speaker 1: His lawyers recommended this surprise me, that he not the

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Speaker 1: order to pay restitution or forfeit any assets. Why so.

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Speaker 4: Yeah, So they're basically saying that the victims of this

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Speaker 4: from the FBX investors will be made Hults Bank CONCEI,

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Speaker 4: and that there's no real actual losses to them. It's

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Speaker 4: a pretty interesting argument. And like I said, they kind

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Speaker 4: of made this argument in the Trevor Milton case as well,

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Speaker 4: that Nicola paid a lot of money to settle those

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Speaker 4: cases and to resolve, you know, with the sec some

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Speaker 4: of the allegations. So was the heart of that case.

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Speaker 4: So therefore he shouldn't be on the holtress. What they say,

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Speaker 4: same here with sambank Free.

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Speaker 1: And sam Bgminfried. He was involved in charitable endeavors, wasn't he.

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Speaker 2: Yes?

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Speaker 4: Indeed, I mean that's definitely a hallmark of his life.

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Speaker 4: And I mean that's part of also the the gates

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Speaker 4: is that you know, he would funnel at THEX customer

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Speaker 4: funds into political donations and the charitable donations and the

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Speaker 4: speculative investments. So it was all kind of mixed up

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Speaker 4: in the same bucket.

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Speaker 1: I'm curious as to whether the lawyers that you spoke

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Speaker 1: to thought that, you know, as you mentioned, there was this,

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Speaker 1: I don't know if we could say antagonistic relationship between

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Speaker 1: Judge Caplan and bankman Freed, where bankment Freed disobeyed his

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Speaker 1: orders and so he ordered him to go to jail

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Speaker 1: before trial despite this enormous bail package, and then he

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Speaker 1: made him testify for three hours outside the presence of

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Speaker 1: the jury, before he could testify. I mean, does any

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Speaker 1: of that end up finding its way into a sentence, Well,

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Speaker 1: it definitely could.

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Speaker 4: He definitely could find that he pursioned himself on the

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Speaker 4: spand during this testimony which he implied that you know,

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Speaker 4: happened and that he stroll We would take that into account.

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Speaker 4: I mean, look, they brought it new council, so you

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Speaker 4: can read into that what you will. I'm supposed to say.

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Speaker 4: You know, sometimes that's just a good thing to have,

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Speaker 4: like a fresh spot of eyes. He has another lawyer

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Speaker 4: who is also working with me, Casey's gonna work on

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Speaker 4: the appeal, So they definitely use the sentencing to kind

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Speaker 4: of turning eye towards the appeal. And you know the

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Speaker 4: implication that there wasn't really a lot of intent here

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Speaker 4: to do bold. So it's hard to say whether or

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Speaker 4: not the antagonistic relationship between the judge an SBS former

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Speaker 4: legal team will come into play in the sentencing, but

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Speaker 4: there's certainly one of the reasons you get a new

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Speaker 4: set of lawyers for that part of the see and.

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Speaker 1: Where does the appeal stand.

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Speaker 4: We don't really know that, and I have to have

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Speaker 4: the sentencing first, which is about March twenty eighth, and

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Speaker 4: then they would proceed once the judgment is issued. There's

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Speaker 4: another question involved as to whether or not he would

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Speaker 4: get a discount of any sort for his time spent

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Speaker 4: in the Metropolitan Stations Center in Brooklyn, which is a

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Speaker 4: notoriously bleak jail no more spentologists so certainly get unserved

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Speaker 4: to some story, whether or not the judge's are that's

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Speaker 4: the weight hard to tell. And it's also hard to

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Speaker 4: tell whether or not the judge would order him immediately

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Speaker 4: to go to prison, you know, like designate him to

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Speaker 4: a prison and have him go there while the appeal

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Speaker 4: is pending, or whether he has him sit in Brooklyn.

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Speaker 4: I mean, these are all questions that have to be

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Speaker 4: answered as the sentencing is it the.

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Speaker 1: Judge or the prison system that decides whether he's placed

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Speaker 1: in a medium or a high security prison or low security.

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Speaker 4: It's entirely up to the Bureau of Prisons as to

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Speaker 4: where he goes and where he serves this, but the

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Speaker 4: judge should make a recommendation and almost we'll certainly do

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Speaker 4: so on the recommendations of Castle. I would guess probably

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Speaker 4: somewhere in California, but that's all up to the Bureau

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Speaker 4: of Prisons. And like I said, the judge would have

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Speaker 4: to order him into custody of the Bureau of Prisons

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Speaker 4: after the sentencing proceeding. I mean, he is already in

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Speaker 4: custody technically because he's in jail. But there's a matter

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Speaker 4: of a bureaucracy and how do.

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Speaker 1: Federal prison sentences work. As far as getting any credits

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Speaker 1: for time served or good behavior.

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Speaker 4: There's no parole, but you can get cramp for good

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Speaker 4: behavior basically, so I think it's one year for every

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Speaker 4: ten years or so. I don't know if that's exact,

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Speaker 4: but you know, if he would get say a twenty

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Speaker 4: five years seventy less than twenty one good behavior.

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Speaker 1: That is a lot of time. He does have time,

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Speaker 1: though he is only thirty one years old. Thanks so much, Chris.

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Speaker 1: That's Bloomberg Legal reporter Chris Domesh coming up next on

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Speaker 1: the Bloomberg Law Show. How the anti tax movement hijacked America.

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Speaker 1: It originated as a fringe movement but evolved into a

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Speaker 1: mainstream political force. I'm June Grosso and you're listening to Bloomberg.

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Speaker 1: How much do you know about the anti tax movement

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00:24:54,400 --> 00:24:58,560
Speaker 1: in America? It originated as a fringe movement and developed

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00:24:58,560 --> 00:25:02,840
Speaker 1: into a mainstream police fource that's growing strong and growing

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00:25:02,880 --> 00:25:06,399
Speaker 1: the national debt. Columbia Law School's Michael Grtz has written

443
00:25:06,440 --> 00:25:09,639
Speaker 1: about it in his new book entitled The Power to

444
00:25:09,720 --> 00:25:15,080
Speaker 1: Destroy How the Antijax Movement Hijacked America, And he joins me, Now,

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Speaker 1: we've all heard about the civil rights movement, the women's

446
00:25:18,440 --> 00:25:22,320
Speaker 1: rights movement, not so much the anti tax movement. So

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Speaker 1: how would you describe it?

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00:25:23,960 --> 00:25:27,199
Speaker 3: Well, on the first page of my book, I describe

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00:25:27,240 --> 00:25:31,720
Speaker 3: the anti tax movement as the most important, successful, and

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00:25:31,920 --> 00:25:35,960
Speaker 3: overlooked social and political movement of the past half century.

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00:25:36,440 --> 00:25:38,720
Speaker 3: Like you, When I asked people to name the most

452
00:25:38,720 --> 00:25:42,879
Speaker 3: important social and political movements of the time, they answer

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00:25:42,960 --> 00:25:47,840
Speaker 3: the civil rights movement, the women's movement, sometimes the LGBTQ movement,

454
00:25:48,080 --> 00:25:52,120
Speaker 3: the Christian evangelical movement, and recently the MAGA movement. But

455
00:25:52,160 --> 00:25:54,760
Speaker 3: no one has ever mentioned the anti tax movement.

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00:25:54,920 --> 00:25:55,800
Speaker 1: Why do you think that is?

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00:25:56,200 --> 00:26:00,320
Speaker 3: Well, you know, it's about taxes, and people all like

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00:26:00,400 --> 00:26:02,760
Speaker 3: to talk about taxes, and they all like to think

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00:26:02,800 --> 00:26:06,960
Speaker 3: about taxes, and it's managed to be done largely with

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00:26:07,080 --> 00:26:11,320
Speaker 3: support from elites, but also a lot of popular support.

461
00:26:11,840 --> 00:26:15,240
Speaker 3: I remember when I looked at polling data about the

462
00:26:15,760 --> 00:26:19,800
Speaker 3: repeal of the estate tax in two thousand and one,

463
00:26:20,480 --> 00:26:24,320
Speaker 3: forty percent of the people who answered the questions said

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00:26:24,359 --> 00:26:26,920
Speaker 3: that they expected to be in the top one percent

465
00:26:27,119 --> 00:26:30,760
Speaker 3: when they died. And sixty percent of the people repeal

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00:26:30,800 --> 00:26:33,960
Speaker 3: of the tax suppose the tax. That's hardly surprising. I

467
00:26:33,960 --> 00:26:37,359
Speaker 3: suppose if you ask American public if they'd like to

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00:26:37,400 --> 00:26:40,000
Speaker 3: repeal any tax, if you get about sixty percent who

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00:26:40,000 --> 00:26:41,640
Speaker 3: would say yes, if not more.

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Speaker 1: In resistance to taxes. Can we go back to the

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00:26:44,320 --> 00:26:47,760
Speaker 1: Boston Tea Party? I don't know. You start in your

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00:26:47,800 --> 00:26:52,720
Speaker 1: book in nineteen seventy eight with California's Prop thirteen. Tell

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00:26:52,800 --> 00:26:54,919
Speaker 1: us how that got the ball rolling?

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00:26:55,600 --> 00:27:00,159
Speaker 3: Well, I think the seventies were the prime time for

475
00:27:00,200 --> 00:27:05,359
Speaker 3: an anti government, anti tax movement. We had experienced a

476
00:27:05,480 --> 00:27:10,560
Speaker 3: very rapid inflation along with high unemployment, something that Kynesy

477
00:27:10,600 --> 00:27:13,800
Speaker 3: and economics had said could not happen together. They were

478
00:27:13,840 --> 00:27:17,680
Speaker 3: known as stagflation. At the time, the Civil rights movement

479
00:27:18,280 --> 00:27:22,439
Speaker 3: was very much on people's mind, particularly in California, where

480
00:27:22,880 --> 00:27:26,679
Speaker 3: the Supreme Court in California had said that property tax

481
00:27:26,920 --> 00:27:30,719
Speaker 3: differences in school finance could not be more than one

482
00:27:30,760 --> 00:27:33,919
Speaker 3: hundred dollars per student and that they needed to be

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00:27:33,960 --> 00:27:38,920
Speaker 3: made much more equal. So the public in California thought

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00:27:38,920 --> 00:27:42,040
Speaker 3: they were paying property taxes for other people's children to

485
00:27:42,080 --> 00:27:45,200
Speaker 3: go to school. And many of those other people were

486
00:27:46,040 --> 00:27:50,560
Speaker 3: not only black, but also Latino because of immigration into

487
00:27:50,600 --> 00:27:54,960
Speaker 3: California at that time from the southern border. So you

488
00:27:55,080 --> 00:27:59,239
Speaker 3: had a perfect storm for an anti tax movement. It

489
00:27:59,320 --> 00:28:02,840
Speaker 3: was led by a very interesting fellow. I mean, one

490
00:28:02,880 --> 00:28:05,280
Speaker 3: of the things that I really do spend time in

491
00:28:05,320 --> 00:28:09,639
Speaker 3: my book honor small biographies, if you will, of people

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00:28:09,720 --> 00:28:13,720
Speaker 3: who were crucial in moving the anti tax movement forward.

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00:28:14,200 --> 00:28:18,200
Speaker 3: And here Howard Jarvis, who had been a Republican operative

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00:28:18,480 --> 00:28:23,640
Speaker 3: and had unsuccessfully supported other tax limitation movements in California

495
00:28:23,680 --> 00:28:27,240
Speaker 3: before this, including one a few years earlier that had

496
00:28:27,280 --> 00:28:30,320
Speaker 3: been pushed by Ronald Reagan to limit the income tax.

497
00:28:30,720 --> 00:28:35,280
Speaker 3: Howard Jarvis became the face of the Proposition thirteen movement,

498
00:28:35,359 --> 00:28:39,640
Speaker 3: and he really emphasized that we should not be paying

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00:28:39,720 --> 00:28:43,120
Speaker 3: taxes for things for quote them, and he made it

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00:28:43,120 --> 00:28:46,840
Speaker 3: clear by them. He met welfare and other expenditures for

501
00:28:46,960 --> 00:28:51,760
Speaker 3: African Americans and Latinos particularly, But he was very successful,

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00:28:52,000 --> 00:28:56,440
Speaker 3: and the anti tax movement, like all social movements, was

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00:28:56,760 --> 00:29:01,200
Speaker 3: motivated by a combination of ideology and self interest. And

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00:29:01,240 --> 00:29:06,760
Speaker 3: in California, housing prices had really begun to inflate dramatically,

505
00:29:07,680 --> 00:29:10,960
Speaker 3: and the rise in housing prices wasn't producing any nicer

506
00:29:11,040 --> 00:29:14,280
Speaker 3: housing for anybody. All it was doing was producing greater

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00:29:14,400 --> 00:29:17,400
Speaker 3: property taxes. And there had been a lot of corruption.

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00:29:17,600 --> 00:29:21,960
Speaker 3: There were three property tax assessors who had actually been

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00:29:22,000 --> 00:29:26,400
Speaker 3: convicted of crimes in California shortly before the proposition passed,

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00:29:26,560 --> 00:29:29,840
Speaker 3: And so you had corrupt property tax assessors, and you

511
00:29:29,960 --> 00:29:34,400
Speaker 3: had people, particularly the elderly, who were finding themselves reasoning

512
00:29:34,520 --> 00:29:37,880
Speaker 3: a cash crunch to pay their property tax bills. And

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00:29:37,960 --> 00:29:42,200
Speaker 3: so self interest was an important component Proposition thirteen. But

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00:29:42,280 --> 00:29:44,040
Speaker 3: it took on a new life of its own. And

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00:29:44,200 --> 00:29:48,160
Speaker 3: recently California just rejected an increase in property taxes on

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00:29:48,240 --> 00:29:53,280
Speaker 3: commercial property, which also benefited from the Proposition thirteen tax

517
00:29:53,320 --> 00:29:54,840
Speaker 3: cuts benefited greatly.

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00:29:54,880 --> 00:30:00,040
Speaker 1: I should add, how did Christian evangelicals become part of

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00:30:00,080 --> 00:30:01,280
Speaker 1: the anti tax movement?

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00:30:02,080 --> 00:30:05,240
Speaker 3: Well, this is a really important and interesting and really

521
00:30:05,640 --> 00:30:11,719
Speaker 3: largely unknown story. In nineteen seventy one, the IRS was

522
00:30:11,840 --> 00:30:16,240
Speaker 3: confronted with a case that had been brought in Mississippi

523
00:30:16,640 --> 00:30:19,560
Speaker 3: that said that it was a violation of the law

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00:30:19,880 --> 00:30:25,360
Speaker 3: to provide tax exempt status and allowed charitable contribution deductions

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00:30:25,520 --> 00:30:30,080
Speaker 3: for private segregated schools. The ruling applied only to Mississippi,

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00:30:30,120 --> 00:30:33,160
Speaker 3: but the IRS was in what the Commissioner called a

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00:30:33,240 --> 00:30:36,040
Speaker 3: pickle because they didn't want to have one rule for

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00:30:36,120 --> 00:30:39,600
Speaker 3: Mississippi and a different rule for everybody else. And until

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00:30:39,600 --> 00:30:43,120
Speaker 3: that point they had allowed tax exemptions and charitable deductions

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00:30:43,160 --> 00:30:46,800
Speaker 3: for segregated schools. But the Commissioner, with the support of

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00:30:47,040 --> 00:30:50,880
Speaker 3: President Nixon, ultimately issued a rule that said that if

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00:30:50,880 --> 00:30:54,160
Speaker 3: you were a segregated private school, you were no longer

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00:30:54,200 --> 00:30:58,080
Speaker 3: eligible for these tax benefits, which had been the lifeblood

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00:30:58,200 --> 00:31:01,720
Speaker 3: actually along with some grants from the states of private

535
00:31:01,840 --> 00:31:06,320
Speaker 3: segregation academies, as they were called. These private schools were

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00:31:06,360 --> 00:31:09,600
Speaker 3: limited to whites, and they had arisen in response to

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00:31:09,640 --> 00:31:13,520
Speaker 3: around the Board of Education, which was accompanied by massive

538
00:31:13,560 --> 00:31:18,840
Speaker 3: resistance to desegregation in the South. A couple of Republican operatives,

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00:31:18,960 --> 00:31:23,520
Speaker 3: Paul Weirich and Richard Vigery, both of whom were anti

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00:31:23,800 --> 00:31:28,400
Speaker 3: tax Catholics but important in the Republican Party, and the

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00:31:28,480 --> 00:31:33,760
Speaker 3: two of them convinced Jerry Folwell Senior, an important evangelical

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00:31:33,840 --> 00:31:38,400
Speaker 3: minister from North Carolina, to create what he then named

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00:31:38,440 --> 00:31:42,520
Speaker 3: the Moral Majority. And the impetus for that was a

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00:31:42,680 --> 00:31:47,240
Speaker 3: nineteen seventy eight ruling by Jimmy Carter's Commissioner of Internal

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00:31:47,280 --> 00:31:50,680
Speaker 3: Revenue that basically said that not only did you have

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00:31:50,760 --> 00:31:53,959
Speaker 3: to say that you were not a segregated school, but

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00:31:54,000 --> 00:31:57,680
Speaker 3: you actually had to have minority students. And that created

548
00:31:57,720 --> 00:32:02,200
Speaker 3: a major outcry among the Christian evangelicals and produce an

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00:32:02,280 --> 00:32:06,560
Speaker 3: antiros element in the anti tax movement.

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00:32:07,040 --> 00:32:09,880
Speaker 1: I mean it seems like that continues even today.

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00:32:10,280 --> 00:32:13,840
Speaker 3: Yeah, I mean we've seen Congressional Republicans, for example, basically

552
00:32:13,920 --> 00:32:17,080
Speaker 3: saying they want to repeal the funding that was voted

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00:32:17,120 --> 00:32:20,560
Speaker 3: for in twenty twenty two. To allow the IRS to

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00:32:20,760 --> 00:32:25,440
Speaker 3: enforce the existing tax law, even though the IRS claims

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00:32:25,440 --> 00:32:28,040
Speaker 3: that for every dollar of additional funding it will get

556
00:32:28,120 --> 00:32:32,560
Speaker 3: twelve dollars additional revenue and has committed itself not to

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00:32:32,640 --> 00:32:36,320
Speaker 3: increase audits some people, except those above four hundred thousand

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00:32:36,320 --> 00:32:38,760
Speaker 3: dollars of income. But none of that seems to matter.

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00:32:38,840 --> 00:32:42,719
Speaker 3: That is, anti IRS movement and the anti tax movement

560
00:32:42,760 --> 00:32:45,840
Speaker 3: are bound together, and as a result of the denial

561
00:32:45,920 --> 00:32:50,840
Speaker 3: of these tax deductions, the Christian evangelicals entered politics in

562
00:32:50,920 --> 00:32:55,160
Speaker 3: an anti IRS fashion, anti tax fashion, and became a

563
00:32:55,280 --> 00:32:59,160
Speaker 3: very important part of Ronald Reagan's efforts to become president

564
00:32:59,520 --> 00:33:03,520
Speaker 3: and have been part of that sense. Reagan basically said

565
00:33:03,520 --> 00:33:07,320
Speaker 3: that he was going to overrule the IRS and withdraw

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00:33:07,560 --> 00:33:12,200
Speaker 3: the denial of tax exemptions for Christian evangelical schools, but

567
00:33:12,440 --> 00:33:15,320
Speaker 3: ultimately the Supreme Court had to hear a case and

568
00:33:15,400 --> 00:33:19,480
Speaker 3: they ruled that allowing those deductions and exemptions was illegal.

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00:33:19,520 --> 00:33:21,080
Speaker 3: Who violated the tax law?

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Speaker 1: The national debt is over thirty four trillion dollars. So

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00:33:26,880 --> 00:33:31,280
Speaker 1: how do we lose our sense of fiscal responsibility in

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00:33:31,360 --> 00:33:33,719
Speaker 1: favor of tax cuts and more tax cuts.

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00:33:34,440 --> 00:33:38,120
Speaker 3: Well, I think that that happened after the Reagan administration.

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00:33:38,480 --> 00:33:40,920
Speaker 3: Ronald Reagan. This is a very little known fact, but

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00:33:41,040 --> 00:33:45,520
Speaker 3: Ronald Reagan essentially tripled the federal debt. It went from

576
00:33:45,640 --> 00:33:49,520
Speaker 3: under the trillion dollars when he became president to two

577
00:33:49,520 --> 00:33:53,680
Speaker 3: point seven trillion when he left office, and therefore he

578
00:33:53,760 --> 00:33:58,040
Speaker 3: created more federal debt during his time in office than

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00:33:58,120 --> 00:34:01,200
Speaker 3: all of the presidents before him. This was due not

580
00:34:01,240 --> 00:34:04,680
Speaker 3: only to the tax cuts, but also to increases in spending,

581
00:34:04,760 --> 00:34:08,400
Speaker 3: particularly defense spending, which he was very much in favor of,

582
00:34:08,800 --> 00:34:12,480
Speaker 3: and that meant that his successor, George Herbert Walker Bush,

583
00:34:12,840 --> 00:34:16,680
Speaker 3: who faced a piece of legislation that we've now all forgotten,

584
00:34:16,920 --> 00:34:21,880
Speaker 3: known as Graham Rudman Hollings, which required automatic cuts in

585
00:34:21,920 --> 00:34:26,800
Speaker 3: spending that would produce a balanced budget. When George Herbert

586
00:34:26,800 --> 00:34:29,560
Speaker 3: Walker Bush came into office, those cuts were going to

587
00:34:29,560 --> 00:34:34,440
Speaker 3: be huge, and they were unacceptable to both Republicans and Democrats.

588
00:34:34,640 --> 00:34:39,040
Speaker 3: And the first president Bush had said when he accepted

589
00:34:39,040 --> 00:34:42,840
Speaker 3: the nomination for president, read my lips, no new taxes.

590
00:34:43,040 --> 00:34:46,040
Speaker 3: And then in nineteen ninety he agreed to a budget

591
00:34:46,120 --> 00:34:50,640
Speaker 3: deal that raised taxes, and many people have claimed that

592
00:34:51,320 --> 00:34:54,760
Speaker 3: was at least partially responsible for him losing the election

593
00:34:55,120 --> 00:34:58,560
Speaker 3: of nineteen ninety two to Bill Clinton and then Dell Clinton,

594
00:34:58,640 --> 00:35:02,200
Speaker 3: who had run for office on a tax cut platform,

595
00:35:02,560 --> 00:35:06,320
Speaker 3: decided that because of deficits, he had to raise taxes.

596
00:35:06,400 --> 00:35:08,640
Speaker 3: And what happened is that there was a result of

597
00:35:08,680 --> 00:35:13,640
Speaker 3: these two pieces of legislation and very robust economic growth

598
00:35:13,719 --> 00:35:17,839
Speaker 3: in the latter part of the nineteen nineties. When George W.

599
00:35:17,920 --> 00:35:21,560
Speaker 3: Bush came into office in two thousand and one, the

600
00:35:22,000 --> 00:35:26,560
Speaker 3: budget deficits had disappeared. We were in surplus, and the

601
00:35:26,600 --> 00:35:30,719
Speaker 3: Congressional Budget Office was promising that we would have surpluses

602
00:35:30,760 --> 00:35:33,440
Speaker 3: for at least a decade and perhaps longer, and began

603
00:35:33,520 --> 00:35:37,400
Speaker 3: to pay off the federal debt. And George W. Bush

604
00:35:37,520 --> 00:35:41,399
Speaker 3: proposed a massive tax cut in two thousand and one,

605
00:35:41,960 --> 00:35:46,520
Speaker 3: and it was enacted faster than Reagan got his tax cuts.

606
00:35:46,640 --> 00:35:50,440
Speaker 3: And then nine to eleven happened, and we entered into

607
00:35:50,480 --> 00:35:54,960
Speaker 3: a war on terror that cost well over six trillion dollars,

608
00:35:55,520 --> 00:35:59,840
Speaker 3: and George W. Bush also added a prescription drug benefit

609
00:36:00,160 --> 00:36:03,960
Speaker 3: to Medicare, and the War on Terror was the first

610
00:36:04,040 --> 00:36:07,360
Speaker 3: war in American history that was not paid for with taxes,

611
00:36:07,440 --> 00:36:11,160
Speaker 3: at least in part. And the prescription drug benefit was

612
00:36:11,200 --> 00:36:14,120
Speaker 3: the first new entitlement that was not paid for by

613
00:36:14,160 --> 00:36:18,719
Speaker 3: any new or dedicated taxes, and as a result, we

614
00:36:18,800 --> 00:36:24,160
Speaker 3: started accumulating very large deficits and the debt started growing.

615
00:36:24,520 --> 00:36:28,640
Speaker 3: And the Republicans, i think, having seen what happened to

616
00:36:28,719 --> 00:36:32,640
Speaker 3: George Herbert Walker Bush, were not going to raise taxes,

617
00:36:33,600 --> 00:36:38,279
Speaker 3: and the Democrats abetted the Republicans in two thousand and

618
00:36:38,360 --> 00:36:43,080
Speaker 3: one in reducing taxes. And then when Obama became president,

619
00:36:43,200 --> 00:36:47,600
Speaker 3: he essentially extended ninety percent of Bush's tax cuts, and

620
00:36:47,640 --> 00:36:50,360
Speaker 3: then he agreed that he would only raise taxes on

621
00:36:50,440 --> 00:36:54,120
Speaker 3: people over four hundred thousand dollars of income, which, as

622
00:36:54,160 --> 00:36:57,960
Speaker 3: you know, became Joe Biden's electoral promise and the promise

623
00:36:58,000 --> 00:37:00,320
Speaker 3: that he is stuck to. So I think it's the

624
00:37:00,360 --> 00:37:03,880
Speaker 3: twenty first century story where both the Republicans and the

625
00:37:03,960 --> 00:37:07,359
Speaker 3: Democrats have decided they don't want to raise taxes. The

626
00:37:07,360 --> 00:37:10,200
Speaker 3: Republicans don't want to raise taxes on anyone, and the

627
00:37:10,239 --> 00:37:13,319
Speaker 3: Democrats refuse to raise taxes on anyone but the top

628
00:37:13,360 --> 00:37:15,920
Speaker 3: two percent, so they don't want to raise taxes on

629
00:37:16,000 --> 00:37:19,040
Speaker 3: ninety eight percent of anyone. And in my view, this

630
00:37:19,160 --> 00:37:21,640
Speaker 3: is not a way that you can sustain a government.

631
00:37:21,880 --> 00:37:25,200
Speaker 1: Thanks for joining me. That's Columbia Law School's Michael Gratz.

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Speaker 1: His book is entitled The Power to Destroy. How the

633
00:37:28,440 --> 00:37:32,160
Speaker 1: Anti Tax Movement Hijacked America. And that's it for this

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00:37:32,320 --> 00:37:35,640
Speaker 1: edition of The Bloomberg Law Show. I'm June Grosso. Stay

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00:37:35,640 --> 00:37:38,680
Speaker 1: with us. Today's top stories and global business headlines are

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00:37:38,719 --> 00:37:40,080
Speaker 1: coming up right now