Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.
Speaker 1: Alan Weiselberg, the former CFO of the Trump organization, is
Speaker 1: going back to jail. The seventy six year old pleaded
Speaker 1: guilty to felony perjury charges, just the latest twist in
Speaker 1: his legal saga, one where he's always remained loyal to Trump.
Speaker 1: Manhattan prosecutors have given him a deal for lying on
Speaker 1: the stand at Trump's civil fraud trial and for lying
Speaker 1: in deposition testimony. Weiselberg was facing five counts of first
Speaker 1: degree perjury, a felony punishable by as many as seven
Speaker 1: years in prison, but under the plea deal, he'll be
Speaker 1: sentenced to five months in jail and doesn't have to
Speaker 1: cooperate with prosecutors against his former boss. Joining me is
Speaker 1: Bloomberg Legal reporter Patricia Hurtado. Why are they giving Weiselberg
Speaker 1: a deal? He perjured himself several times day depositions and
Speaker 1: on the stand, and he's not testifying against Trump in
Speaker 1: the hush money case.
Speaker 2: Well, the prosecutors said yesterday in court they were giving
Speaker 2: him credit.
Speaker 1: For basically his age.
Speaker 2: He's going to be seventy seven. He's seventy six, right, Now,
Speaker 2: the fact that he'd already done prison time once before,
Speaker 2: as well as this willingness to plead guilty and admit responsibility,
Speaker 2: was a reason to give him credit. So they basically
Speaker 2: gave him a discount. He had faced five felony counts
Speaker 2: of a perjury and they gave him credit, and they
Speaker 2: only made him plead guilty to two.
Speaker 1: Yeah, So why he's never fully cooperated with prosecutors against
Speaker 1: Trump and with this perjury at the trial. He's also
Speaker 1: violated his probation after serving time for another deal he'd
Speaker 1: made with prosecutors over dodging taxes. So why give him
Speaker 1: another deal when he's not giving them anything.
Speaker 2: It's hard to divine why they decided to give him
Speaker 2: a break. Possibly is because of the fact that you
Speaker 2: know he is going to be seventy seven years old
Speaker 2: when he goes to serve five months in prison. Now,
Speaker 2: maybe they've decided they've got to cut their losses and
Speaker 2: go on and prosecute other people related to the Trump
Speaker 2: organization like Donald Trump. I was also advised, sources tell
Speaker 2: me neither side intends to use him as a witness,
Speaker 2: and his plea deal was very specific about that. It
Speaker 2: didn't make any mention as it did last time he
Speaker 2: pled guilty that he was not going to be expected
Speaker 2: to testify as part of the terms of his plea deal,
Speaker 2: and his lawyer basically said, he looks forward to moving
Speaker 2: on with.
Speaker 1: His life and he's not going to testify. Even though
Speaker 1: Michael Cohen says that he was a part of that
Speaker 1: hush money scheme.
Speaker 2: Well, you could understand why the prosecutors wouldn't want to
Speaker 2: call him at all, because, I mean, what kind of
Speaker 2: credibility does a guy have that has pled guilty and
Speaker 2: admitted to not only tax fraud chargers. I think it
Speaker 2: was fifteen counts of tax fraud that he played guilty
Speaker 2: to in twenty twenty two, and now he faces two
Speaker 2: more felony counts, so that's like seventeen felonies he pled
Speaker 2: guilty to, including two perjury counts. I think what's good
Speaker 2: about this guilty plea from the prosecutor's perspective is if
Speaker 2: the defense tries to attack or assailed Michael Cohen's credibility
Speaker 2: as a twice convicted perjurer, as they have been alleging
Speaker 2: and confronting him with whenever he's shown up as he
Speaker 2: did when he testified at the state Attorney General's trial
Speaker 2: as a witness. They can turn around and used Ellen
Speaker 2: Weisselberg's admissions of he also committed fraud on Donald Trump's behalf.
Speaker 1: Well, I suppose jurors have believe cooperators with worst records
Speaker 1: tell us what Weiselberg lied about under oath.
Speaker 2: Well, there were five counts of perjury that he admitted
Speaker 2: to committing, and he pled guilty and took responsibility for
Speaker 2: two of those. So the Pejoria's statements include the fact
Speaker 2: that he lied when questioned under oath and depositions on
Speaker 2: three occasions with the New York Attorney General Leticia James's office,
Speaker 2: and I believe Leticia James was also one of the
Speaker 2: people questioning him those days and lied about the size
Speaker 2: of Donald Trump's triplex apartment at Trump Tower. Alan Weiselberg
Speaker 2: claimed that it was thirty thousand square feet instead of
Speaker 2: the actual one third, which is just over ten thousand
Speaker 2: square feet. He also lied repeatedly in other depositions about
Speaker 2: what statements of financial condition claimed on the size of
Speaker 2: Trump Tower triplex, as well as other assets and the
Speaker 2: processes and what they told Forest Magazine or didn't tell
Speaker 2: Forbes magazine, and he also lied when he testified on
Speaker 2: behalf of Donald Trump in October of last year at
Speaker 2: the trial.
Speaker 1: Whenever it's between the law and Trump, he chooses Trump.
Speaker 1: And I wonder how much of this has to do
Speaker 1: with his two million dollars severance package and are they
Speaker 1: still paying his legal bills?
Speaker 2: I understood. I did a story last March in which
Speaker 2: his former lawyers were forced to get off the case
Speaker 2: unless they were going to deflect any prosecution or any
Speaker 2: problems for Trump. So they were viewed as disloyal his
Speaker 2: prior to criminal defense lawyers, and they were forced off
Speaker 2: the case because the Trump Organization and the Trump family
Speaker 2: wasn't going to pay his legal bills any longer. Now
Speaker 2: regarding he did get a two million dollar severance package
Speaker 2: from the Trump org. And some people have said that's
Speaker 2: two million reasons to protect Donald Trump. In this case,
Speaker 2: it came out that he only got paid a million
Speaker 2: because it was being paid in tranches by the Trump organization,
Speaker 2: So he had only been paid a one million dollars
Speaker 2: as of October of last year when he testified, and
Speaker 2: he was also going to cough up a million dollars
Speaker 2: in fines as part of the New York ag verdict
Speaker 2: that the judge imposed in February.
Speaker 1: And the severanceage requires him not to cooperate with any
Speaker 1: law enforcement investigation unless legally required to. And Judge and
Speaker 1: Goren wrote, the Trump organization keeps him on a short leash,
Speaker 1: and it shows. Did the judge completely discredit Weiselberg's testimony
Speaker 1: at the civil fraud trial.
Speaker 2: He did in his opinion in his verdict that he
Speaker 2: issued that basically anything that Alan Weiselberg said, and he
Speaker 2: testified on the stand for several hours on behalf of
Speaker 2: Donald Trump as a star defense witness, that he was
Speaker 2: not credible and should be discounted.
Speaker 1: Did he even testify against Trump in the criminal tax
Speaker 1: fraud trial against the Trump Organization?
Speaker 2: And he didn't actually testify against Donald Trump in the
Speaker 2: tax fraud case before Judge Mershawn, who's now presiding over
Speaker 2: Donald Trump's criminal case. The agreement he had was not
Speaker 2: a cooperation agreement. It was just that he agreed to testify,
Speaker 2: but he had to testify truthfully. He basically was very
Speaker 2: careful in his testimony, and Mershawn later said to him
Speaker 2: when he sentenced him in January twenty twenty three that
Speaker 2: he was very concerned with some of Weiselberg's testimony, and
Speaker 2: if he'd known how he was going to behave and
Speaker 2: what he was going to testify to on the stand
Speaker 2: at the tax fraud trial, he would have not agreed
Speaker 2: to give him that break which the judge had agreed
Speaker 2: to of five months in prison, which ended up being
Speaker 2: a very minimal sentence.
Speaker 1: Let's talk a little bit about the hush money case
Speaker 1: that's coming up. That's coming up pretty quickly.
Speaker 3: Well.
Speaker 2: The case that the Manhattan District Attorney Alvin Bragg has
Speaker 2: made is that Trump did what was called a catch
Speaker 2: and kill scheme engaged in just as he was running
Speaker 2: for president in twenty sixteen, there were stories out there,
Speaker 2: including salacious stories that he'd had sex with the Stormy Daniels,
Speaker 2: an adult film actress, and he wanted to kill the story,
Speaker 2: so he basically broke her to deal through intermediaries like
Speaker 2: his lawyer, his personal lawyer, Michael Cohen, to buy the
Speaker 2: story from being published from any national inquirer or any
Speaker 2: publication that would write about these salacious allegations and bury
Speaker 2: the news so that wouldn't come out and it would
Speaker 2: help his chances of getting elected. Alan Bragg is now
Speaker 2: calling it not a hush money case but actually an
Speaker 2: election interference case.
Speaker 1: I know, I noticed that difference, and is the point
Speaker 1: to make the case seem more important because the case
Speaker 1: has been put down as the worst of the criminal
Speaker 1: case is against Trump. So is he trying to make
Speaker 1: it something different.
Speaker 2: I mean, some people say it's so taundry the allegations
Speaker 2: involve a porn star. There are also other allegations that
Speaker 2: Alvin Bragg wants to include in the evidence, which are
Speaker 2: two other instances prior to the election, maybe years before,
Speaker 2: including that he had had sex with a playboy model
Speaker 2: Karen McDougall, and also that he had bought catch and
Speaker 2: kill story and buried involving a Trump doorman who had
Speaker 2: some salacious allegations against Trump. So Alvin Bragg is fending
Speaker 2: his case that it's a valid case that nobody is
Speaker 2: above the law, including Donald Trump. I mean, the allegations
Speaker 2: are pretty serious, including that there were checks cut and
Speaker 2: written to Michael Cohen to reimburse Michael Cohen for making
Speaker 2: these payments, and that you know, Trump did them while
Speaker 2: he was in the White House, so that these canceled
Speaker 2: checks include Donald Trump at the White House writing out checks,
Speaker 2: fabricating a protectual reason of why the checks were reading
Speaker 2: signed that it wasn't hush money, it was for legal expenses.
Speaker 2: So there goes the allegation that Trump was on falsifying
Speaker 2: business records. So it sounds like, you know, it's a
Speaker 2: business crime. Everybody gets accused. Other people who commit these
Speaker 2: crimes get prosecuted, So why should Donald Trump be different.
Speaker 1: I understand that the defense is arguing that Bragg shouldn't
Speaker 1: be allowed to argue election interference. Is the judge decided.
Speaker 2: Now, there's many many things that judges being asked to decide,
Speaker 2: including you know, limiting what kind of evidence gets before
Speaker 2: the jury. The DA is arguing that Trump should be
Speaker 2: basically gagged from speaking about the jurors and mention them
Speaker 2: by name. I understand that there's no proviso under New
Speaker 2: York state law for jurors to be anonymous. And the
Speaker 2: federal cases that were the Egen Carroll defamation case and
Speaker 2: sexual assault case, the to federal trials that we just
Speaker 2: had last year and then in January, both juries were anonymous.
Speaker 2: But there's no provision for that under state law. And
Speaker 2: the DA has argued and worried allowed that some people
Speaker 2: or some Trump followers could get the names of these
Speaker 2: potential jurors and then release them to the world. And
Speaker 2: then how could these people operate in kind of secrecy
Speaker 2: of doing their job as jurors.
Speaker 1: It's really reminiscent of a mob trial because you don't
Speaker 1: hear the these kinds of concerns from prosecutors in any
Speaker 1: other cases. So jury selection starts March twenty fifth. Any
Speaker 1: idea how long it might take to get a jury.
Speaker 2: I've heard estimations of at least two weeks and maybe longer.
Speaker 2: And if we had a controversial case with a high
Speaker 2: profile defendant, and there was Harvey Weinstein who lived in
Speaker 2: Manhattan and he was the Hollywood mogul accused of sexually
Speaker 2: assaulting these women and that trial, I went back and looked,
Speaker 2: and it was ten days of jury selection.
Speaker 1: Because the lawyers in New York get to ask questions.
Speaker 1: It's not like the federal system where the judge asked
Speaker 1: the questions and it moves along quicker.
Speaker 2: Yeah, and there's some discussion, and I don't know if
Speaker 2: it's been decided yet. There was some requests by the
Speaker 2: DA to have people fill in a jury questionnaire, and
Speaker 2: it sounded like the judge was shining away from actually
Speaker 2: agreeing to that. So the jury questionnaire would sort of
Speaker 2: pre screen people ahead of time. And I think what
Speaker 2: the judge basically told the lawyers the other day was
Speaker 2: he would do what Judge cap And did in federal
Speaker 2: court in the Egene Carroll trial and basically have people
Speaker 2: raise their hands and say, anyone here feel they can't
Speaker 2: be fair and impartial to Donald Trump, And if they
Speaker 2: raise their hands, he would get excused.
Speaker 1: You'll have to tell us, Patty, how much raising of
Speaker 1: hands there is at that point. Thanks so much. That's
Speaker 1: Bloomberg Legal reporter Patricia Hurtado. Up next, Sam Bankman Freed's
Speaker 1: sentencing is coming up. I'm June Gross. When you're listening
Speaker 1: to Bloomberg, Sam Bankman Freed remember him. His spectacular fall
Speaker 1: from grace and trial for masterminding a multi billion dollar
Speaker 1: fraud kept him in the headlines for months. But since
Speaker 1: his conviction last November, things have been quiet for SBF,
Speaker 1: at least in the media, but behind the scenes, he's
Speaker 1: been preparing for his sentencing and appeal, most notably by
Speaker 1: changing lawyers. His family and friends have flooded the judge
Speaker 1: who will sentence him next month with please for leniency,
Speaker 1: arguing that his public image as a quote freak with
Speaker 1: evil intentions was dead wrong. His lawyers are asking he'd
Speaker 1: be given no more than six and a half years
Speaker 1: in prison, quite a contrast to the one hundred years
Speaker 1: the Probation Department has suggested. Joining me is Bloomberg Legal
Speaker 1: reporter chryst O Mesh, what is the maximum he's facing?
Speaker 1: How long could the judge sentence him too?
Speaker 4: So obviously there are a lot of factors that play here,
Speaker 4: given the seriousness of his conduct and the number of
Speaker 4: charneys he was convicted of. But I talked to a
Speaker 4: lot of defense attorneys about this, and they he's going
Speaker 4: to get probably at least a decade in prison, which is,
Speaker 4: you know, a lot of time for a person of
Speaker 4: his age. But it's kind of reasonable given what the
Speaker 4: sentencing guidelines paul for him to sturb, which is a
Speaker 4: lot of time, which is a life sentence essentially, given
Speaker 4: the size of the loss in the case. But you know,
Speaker 4: anybody who follows the criminal justice system America, and especially
Speaker 4: the federal system, knows that white collar sentences, which are
Speaker 4: driven by monetary losses are often the proposed sentences under
Speaker 4: the guidelines are really they're draconian. This the work, so
Speaker 4: it's very unlikely he would serve you know, twenty five
Speaker 4: years is probably a little bit on the higher end.
Speaker 4: See what the government says when they submit their commission
Speaker 4: later this month. But the judge himself in this case,
Speaker 4: rush Kaplan has issued skepticism about the guidelines in the past,
Speaker 4: especially in white collar cases where the lost amount is
Speaker 4: very high. And if you look back at some of
Speaker 4: the cases that he sends, he doesn't tend to throw
Speaker 4: the book at people. He's obviously a tough judge. You know,
Speaker 4: he gave the SDS defense team a hard time during
Speaker 4: the trial, but he seems to see sympathetic to the
Speaker 4: argument at very least that throwing him in prison for
Speaker 4: the rest of his life is really not going to
Speaker 4: do society or him any justice.
Speaker 1: So the Probation office recommended a sentence of one one
Speaker 1: hundred years. What did they base that on?
Speaker 4: So the majority of that is based on the Montsterori laws,
Speaker 4: which is, you know, the estimates very but it's probably
Speaker 4: at least eight billions, probably upwards of ten FBF attorneys
Speaker 4: argue that really the victims here are going to made
Speaker 4: hole by the bankruptcy case, and that they're not really
Speaker 4: going to be victims, and that he shouldn't really have
Speaker 4: to pay resolutions. They made a kind of similar argument
Speaker 4: in the Trevor Milton case with the Nicola founder who
Speaker 4: was convicted a fraud in his fencing, saying that Nicola
Speaker 4: paid a lot of money to the SEC and the
Speaker 4: Centtal shareholder lawsuits to resolve a case.
Speaker 1: He's gotten a new attorney, Mark mccazy.
Speaker 4: Yes, Mark mccasey, very well known in the Southern District
Speaker 4: of New York, is father's former attorney. He's a former
Speaker 4: federal prosecutor in the Southern District. He's represented many a
Speaker 4: white collar criminalities, well known to the bar.
Speaker 1: So his lawyers are arguing that he should serve no
Speaker 1: more than six and a half years in is. And
Speaker 1: that's on the very very low end, isn't it.
Speaker 4: Yes, they couldn't have really logically argued for less. Probably
Speaker 4: practically that really probably wouldn't have worked with this judge.
Speaker 4: So they're going to take their shots where they can
Speaker 4: on the lower end. And you know, their arguments are
Speaker 4: kind of similar to what a lot of people are saying,
Speaker 4: is that throwing him in prison for the rest of
Speaker 4: his life doesn't really serve the purposes of justice, especially
Speaker 4: for somebody who, you know, despite the fact that junto
Speaker 4: to tell him arguably has a lot to give in
Speaker 4: terms of, you know, his contributes to society, and Marky
Speaker 4: Casey and others have made this comparison to Michael Milkin,
Speaker 4: who you know, is very young when he was convicted
Speaker 4: and managed to build up a life of philanthropy, which
Speaker 4: is really what FBS and that's what they talk about
Speaker 4: in these letters that he has devoted to plan that's
Speaker 4: the whole driving force of his life is.
Speaker 1: Yeah. The quote that you talked about is the genius
Speaker 1: of both both men is undeniable. Their contributions were vast,
Speaker 1: their wealth and fame were unplanned, their means and methods
Speaker 1: were questioned by prosecutors, and their downfall was swift and tragic.
Speaker 4: Sounds a little poetic, yeah, I mean that's mark me Casey.
Speaker 4: His submissions are pretty poetic, I would say, and are passionate.
Speaker 4: He's the passionate advocate for his clients, and that's what
Speaker 4: kind of a hallmark of his sentencing submissions now.
Speaker 1: Are they saying that SBF is autistic?
Speaker 4: He has medication. There's a lot of letters that were
Speaker 4: submitted along with this. It doesn't seem to really directly
Speaker 4: say that he is autistic, but you know, it implies that.
Speaker 1: There were letters about his social awkwardness and inability to
Speaker 1: read social cues, and that that might have led to
Speaker 1: see his responses after the implosion of FTX as uncaring
Speaker 1: and dispassionate. And they're also saying that prison will be
Speaker 1: especially harmful for him because of that.
Speaker 4: Yeah, one hundred percent. They definitely argue that some of
Speaker 4: the social awkwardness that he has and some of the
Speaker 4: social cues he misses leads people to believe that he's
Speaker 4: not emotional or not caring, and that instead that's just
Speaker 4: the way he deals with, you know, his social environment.
Speaker 4: I know he's had. There's more than a two dozen
Speaker 4: letters here from friends, family, his mom and dad, but
Speaker 4: also from people who don't even know him, you know,
Speaker 4: concerned that throwing him in prison kind of ignores the
Speaker 4: challenges for people like him.
Speaker 1: And also a fellow inmate submitted a letter.
Speaker 4: Yes, fellow inmate, a former New York City police officer,
Speaker 4: who said he had a bunk right next to him
Speaker 4: and said, you know, they became pretty good friends, and
Speaker 4: that he believed that dam is just the kind of
Speaker 4: person that should not be in prison and would not
Speaker 4: turn any purpose at all.
Speaker 1: And his mom wrote, was his mom's letter the most
Speaker 1: emotional of them.
Speaker 4: I would definitely say so. His father's letter was pretty
Speaker 4: much to the point and very direct. It was only
Speaker 4: a couple of pages. His mother's letter it was about
Speaker 4: six pages long and was very passionate, even being a
Speaker 4: law professor and attorney herself, you know, addressed the judges.
Speaker 4: As his mother. She took aim at the media, for sure.
Speaker 4: She said that really he's a very misunderstood person. He
Speaker 4: was empathetic from the time he was a young child,
Speaker 4: almost to his own detriment. And what a lot of
Speaker 4: the letters talked about, which I found interesting, is his vegetarianism,
Speaker 4: which he loved steak and fries, his mother said, and
Speaker 4: his brother, but he gave them up at an early
Speaker 4: age out of an ethical responsibility to animals. He wasn't
Speaker 4: some animal lover, they said, this was just something he
Speaker 4: felt he needed to do, and they felt that that
Speaker 4: demonstrated the kind of devotion to plan for being ethical
Speaker 4: causes that he kind of hat in his life.
Speaker 1: His lawyers recommended this surprise me, that he not the
Speaker 1: order to pay restitution or forfeit any assets. Why so.
Speaker 4: Yeah, So they're basically saying that the victims of this
Speaker 4: from the FBX investors will be made Hults Bank CONCEI,
Speaker 4: and that there's no real actual losses to them. It's
Speaker 4: a pretty interesting argument. And like I said, they kind
Speaker 4: of made this argument in the Trevor Milton case as well,
Speaker 4: that Nicola paid a lot of money to settle those
Speaker 4: cases and to resolve, you know, with the sec some
Speaker 4: of the allegations. So was the heart of that case.
Speaker 4: So therefore he shouldn't be on the holtress. What they say,
Speaker 4: same here with sambank Free.
Speaker 1: And sam Bgminfried. He was involved in charitable endeavors, wasn't he.
Speaker 2: Yes?
Speaker 4: Indeed, I mean that's definitely a hallmark of his life.
Speaker 4: And I mean that's part of also the the gates
Speaker 4: is that you know, he would funnel at THEX customer
Speaker 4: funds into political donations and the charitable donations and the
Speaker 4: speculative investments. So it was all kind of mixed up
Speaker 4: in the same bucket.
Speaker 1: I'm curious as to whether the lawyers that you spoke
Speaker 1: to thought that, you know, as you mentioned, there was this,
Speaker 1: I don't know if we could say antagonistic relationship between
Speaker 1: Judge Caplan and bankman Freed, where bankment Freed disobeyed his
Speaker 1: orders and so he ordered him to go to jail
Speaker 1: before trial despite this enormous bail package, and then he
Speaker 1: made him testify for three hours outside the presence of
Speaker 1: the jury, before he could testify. I mean, does any
Speaker 1: of that end up finding its way into a sentence, Well,
Speaker 1: it definitely could.
Speaker 4: He definitely could find that he pursioned himself on the
Speaker 4: spand during this testimony which he implied that you know,
Speaker 4: happened and that he stroll We would take that into account.
Speaker 4: I mean, look, they brought it new council, so you
Speaker 4: can read into that what you will. I'm supposed to say.
Speaker 4: You know, sometimes that's just a good thing to have,
Speaker 4: like a fresh spot of eyes. He has another lawyer
Speaker 4: who is also working with me, Casey's gonna work on
Speaker 4: the appeal, So they definitely use the sentencing to kind
Speaker 4: of turning eye towards the appeal. And you know the
Speaker 4: implication that there wasn't really a lot of intent here
Speaker 4: to do bold. So it's hard to say whether or
Speaker 4: not the antagonistic relationship between the judge an SBS former
Speaker 4: legal team will come into play in the sentencing, but
Speaker 4: there's certainly one of the reasons you get a new
Speaker 4: set of lawyers for that part of the see and.
Speaker 1: Where does the appeal stand.
Speaker 4: We don't really know that, and I have to have
Speaker 4: the sentencing first, which is about March twenty eighth, and
Speaker 4: then they would proceed once the judgment is issued. There's
Speaker 4: another question involved as to whether or not he would
Speaker 4: get a discount of any sort for his time spent
Speaker 4: in the Metropolitan Stations Center in Brooklyn, which is a
Speaker 4: notoriously bleak jail no more spentologists so certainly get unserved
Speaker 4: to some story, whether or not the judge's are that's
Speaker 4: the weight hard to tell. And it's also hard to
Speaker 4: tell whether or not the judge would order him immediately
Speaker 4: to go to prison, you know, like designate him to
Speaker 4: a prison and have him go there while the appeal
Speaker 4: is pending, or whether he has him sit in Brooklyn.
Speaker 4: I mean, these are all questions that have to be
Speaker 4: answered as the sentencing is it the.
Speaker 1: Judge or the prison system that decides whether he's placed
Speaker 1: in a medium or a high security prison or low security.
Speaker 4: It's entirely up to the Bureau of Prisons as to
Speaker 4: where he goes and where he serves this, but the
Speaker 4: judge should make a recommendation and almost we'll certainly do
Speaker 4: so on the recommendations of Castle. I would guess probably
Speaker 4: somewhere in California, but that's all up to the Bureau
Speaker 4: of Prisons. And like I said, the judge would have
Speaker 4: to order him into custody of the Bureau of Prisons
Speaker 4: after the sentencing proceeding. I mean, he is already in
Speaker 4: custody technically because he's in jail. But there's a matter
Speaker 4: of a bureaucracy and how do.
Speaker 1: Federal prison sentences work. As far as getting any credits
Speaker 1: for time served or good behavior.
Speaker 4: There's no parole, but you can get cramp for good
Speaker 4: behavior basically, so I think it's one year for every
Speaker 4: ten years or so. I don't know if that's exact,
Speaker 4: but you know, if he would get say a twenty
Speaker 4: five years seventy less than twenty one good behavior.
Speaker 1: That is a lot of time. He does have time,
Speaker 1: though he is only thirty one years old. Thanks so much, Chris.
Speaker 1: That's Bloomberg Legal reporter Chris Domesh coming up next on
Speaker 1: the Bloomberg Law Show. How the anti tax movement hijacked America.
Speaker 1: It originated as a fringe movement but evolved into a
Speaker 1: mainstream political force. I'm June Grosso and you're listening to Bloomberg.
Speaker 1: How much do you know about the anti tax movement
Speaker 1: in America? It originated as a fringe movement and developed
Speaker 1: into a mainstream police fource that's growing strong and growing
Speaker 1: the national debt. Columbia Law School's Michael Grtz has written
Speaker 1: about it in his new book entitled The Power to
Speaker 1: Destroy How the Antijax Movement Hijacked America, And he joins me, Now,
Speaker 1: we've all heard about the civil rights movement, the women's
Speaker 1: rights movement, not so much the anti tax movement. So
Speaker 1: how would you describe it?
Speaker 3: Well, on the first page of my book, I describe
Speaker 3: the anti tax movement as the most important, successful, and
Speaker 3: overlooked social and political movement of the past half century.
Speaker 3: Like you, When I asked people to name the most
Speaker 3: important social and political movements of the time, they answer
Speaker 3: the civil rights movement, the women's movement, sometimes the LGBTQ movement,
Speaker 3: the Christian evangelical movement, and recently the MAGA movement. But
Speaker 3: no one has ever mentioned the anti tax movement.
Speaker 1: Why do you think that is?
Speaker 3: Well, you know, it's about taxes, and people all like
Speaker 3: to talk about taxes, and they all like to think
Speaker 3: about taxes, and it's managed to be done largely with
Speaker 3: support from elites, but also a lot of popular support.
Speaker 3: I remember when I looked at polling data about the
Speaker 3: repeal of the estate tax in two thousand and one,
Speaker 3: forty percent of the people who answered the questions said
Speaker 3: that they expected to be in the top one percent
Speaker 3: when they died. And sixty percent of the people repeal
Speaker 3: of the tax suppose the tax. That's hardly surprising. I
Speaker 3: suppose if you ask American public if they'd like to
Speaker 3: repeal any tax, if you get about sixty percent who
Speaker 3: would say yes, if not more.
Speaker 1: In resistance to taxes. Can we go back to the
Speaker 1: Boston Tea Party? I don't know. You start in your
Speaker 1: book in nineteen seventy eight with California's Prop thirteen. Tell
Speaker 1: us how that got the ball rolling?
Speaker 3: Well, I think the seventies were the prime time for
Speaker 3: an anti government, anti tax movement. We had experienced a
Speaker 3: very rapid inflation along with high unemployment, something that Kynesy
Speaker 3: and economics had said could not happen together. They were
Speaker 3: known as stagflation. At the time, the Civil rights movement
Speaker 3: was very much on people's mind, particularly in California, where
Speaker 3: the Supreme Court in California had said that property tax
Speaker 3: differences in school finance could not be more than one
Speaker 3: hundred dollars per student and that they needed to be
Speaker 3: made much more equal. So the public in California thought
Speaker 3: they were paying property taxes for other people's children to
Speaker 3: go to school. And many of those other people were
Speaker 3: not only black, but also Latino because of immigration into
Speaker 3: California at that time from the southern border. So you
Speaker 3: had a perfect storm for an anti tax movement. It
Speaker 3: was led by a very interesting fellow. I mean, one
Speaker 3: of the things that I really do spend time in
Speaker 3: my book honor small biographies, if you will, of people
Speaker 3: who were crucial in moving the anti tax movement forward.
Speaker 3: And here Howard Jarvis, who had been a Republican operative
Speaker 3: and had unsuccessfully supported other tax limitation movements in California
Speaker 3: before this, including one a few years earlier that had
Speaker 3: been pushed by Ronald Reagan to limit the income tax.
Speaker 3: Howard Jarvis became the face of the Proposition thirteen movement,
Speaker 3: and he really emphasized that we should not be paying
Speaker 3: taxes for things for quote them, and he made it
Speaker 3: clear by them. He met welfare and other expenditures for
Speaker 3: African Americans and Latinos particularly, But he was very successful,
Speaker 3: and the anti tax movement, like all social movements, was
Speaker 3: motivated by a combination of ideology and self interest. And
Speaker 3: in California, housing prices had really begun to inflate dramatically,
Speaker 3: and the rise in housing prices wasn't producing any nicer
Speaker 3: housing for anybody. All it was doing was producing greater
Speaker 3: property taxes. And there had been a lot of corruption.
Speaker 3: There were three property tax assessors who had actually been
Speaker 3: convicted of crimes in California shortly before the proposition passed,
Speaker 3: And so you had corrupt property tax assessors, and you
Speaker 3: had people, particularly the elderly, who were finding themselves reasoning
Speaker 3: a cash crunch to pay their property tax bills. And
Speaker 3: so self interest was an important component Proposition thirteen. But
Speaker 3: it took on a new life of its own. And
Speaker 3: recently California just rejected an increase in property taxes on
Speaker 3: commercial property, which also benefited from the Proposition thirteen tax
Speaker 3: cuts benefited greatly.
Speaker 1: I should add, how did Christian evangelicals become part of
Speaker 1: the anti tax movement?
Speaker 3: Well, this is a really important and interesting and really
Speaker 3: largely unknown story. In nineteen seventy one, the IRS was
Speaker 3: confronted with a case that had been brought in Mississippi
Speaker 3: that said that it was a violation of the law
Speaker 3: to provide tax exempt status and allowed charitable contribution deductions
Speaker 3: for private segregated schools. The ruling applied only to Mississippi,
Speaker 3: but the IRS was in what the Commissioner called a
Speaker 3: pickle because they didn't want to have one rule for
Speaker 3: Mississippi and a different rule for everybody else. And until
Speaker 3: that point they had allowed tax exemptions and charitable deductions
Speaker 3: for segregated schools. But the Commissioner, with the support of
Speaker 3: President Nixon, ultimately issued a rule that said that if
Speaker 3: you were a segregated private school, you were no longer
Speaker 3: eligible for these tax benefits, which had been the lifeblood
Speaker 3: actually along with some grants from the states of private
Speaker 3: segregation academies, as they were called. These private schools were
Speaker 3: limited to whites, and they had arisen in response to
Speaker 3: around the Board of Education, which was accompanied by massive
Speaker 3: resistance to desegregation in the South. A couple of Republican operatives,
Speaker 3: Paul Weirich and Richard Vigery, both of whom were anti
Speaker 3: tax Catholics but important in the Republican Party, and the
Speaker 3: two of them convinced Jerry Folwell Senior, an important evangelical
Speaker 3: minister from North Carolina, to create what he then named
Speaker 3: the Moral Majority. And the impetus for that was a
Speaker 3: nineteen seventy eight ruling by Jimmy Carter's Commissioner of Internal
Speaker 3: Revenue that basically said that not only did you have
Speaker 3: to say that you were not a segregated school, but
Speaker 3: you actually had to have minority students. And that created
Speaker 3: a major outcry among the Christian evangelicals and produce an
Speaker 3: antiros element in the anti tax movement.
Speaker 1: I mean it seems like that continues even today.
Speaker 3: Yeah, I mean we've seen Congressional Republicans, for example, basically
Speaker 3: saying they want to repeal the funding that was voted
Speaker 3: for in twenty twenty two. To allow the IRS to
Speaker 3: enforce the existing tax law, even though the IRS claims
Speaker 3: that for every dollar of additional funding it will get
Speaker 3: twelve dollars additional revenue and has committed itself not to
Speaker 3: increase audits some people, except those above four hundred thousand
Speaker 3: dollars of income. But none of that seems to matter.
Speaker 3: That is, anti IRS movement and the anti tax movement
Speaker 3: are bound together, and as a result of the denial
Speaker 3: of these tax deductions, the Christian evangelicals entered politics in
Speaker 3: an anti IRS fashion, anti tax fashion, and became a
Speaker 3: very important part of Ronald Reagan's efforts to become president
Speaker 3: and have been part of that sense. Reagan basically said
Speaker 3: that he was going to overrule the IRS and withdraw
Speaker 3: the denial of tax exemptions for Christian evangelical schools, but
Speaker 3: ultimately the Supreme Court had to hear a case and
Speaker 3: they ruled that allowing those deductions and exemptions was illegal.
Speaker 3: Who violated the tax law?
Speaker 1: The national debt is over thirty four trillion dollars. So
Speaker 1: how do we lose our sense of fiscal responsibility in
Speaker 1: favor of tax cuts and more tax cuts.
Speaker 3: Well, I think that that happened after the Reagan administration.
Speaker 3: Ronald Reagan. This is a very little known fact, but
Speaker 3: Ronald Reagan essentially tripled the federal debt. It went from
Speaker 3: under the trillion dollars when he became president to two
Speaker 3: point seven trillion when he left office, and therefore he
Speaker 3: created more federal debt during his time in office than
Speaker 3: all of the presidents before him. This was due not
Speaker 3: only to the tax cuts, but also to increases in spending,
Speaker 3: particularly defense spending, which he was very much in favor of,
Speaker 3: and that meant that his successor, George Herbert Walker Bush,
Speaker 3: who faced a piece of legislation that we've now all forgotten,
Speaker 3: known as Graham Rudman Hollings, which required automatic cuts in
Speaker 3: spending that would produce a balanced budget. When George Herbert
Speaker 3: Walker Bush came into office, those cuts were going to
Speaker 3: be huge, and they were unacceptable to both Republicans and Democrats.
Speaker 3: And the first president Bush had said when he accepted
Speaker 3: the nomination for president, read my lips, no new taxes.
Speaker 3: And then in nineteen ninety he agreed to a budget
Speaker 3: deal that raised taxes, and many people have claimed that
Speaker 3: was at least partially responsible for him losing the election
Speaker 3: of nineteen ninety two to Bill Clinton and then Dell Clinton,
Speaker 3: who had run for office on a tax cut platform,
Speaker 3: decided that because of deficits, he had to raise taxes.
Speaker 3: And what happened is that there was a result of
Speaker 3: these two pieces of legislation and very robust economic growth
Speaker 3: in the latter part of the nineteen nineties. When George W.
Speaker 3: Bush came into office in two thousand and one, the
Speaker 3: budget deficits had disappeared. We were in surplus, and the
Speaker 3: Congressional Budget Office was promising that we would have surpluses
Speaker 3: for at least a decade and perhaps longer, and began
Speaker 3: to pay off the federal debt. And George W. Bush
Speaker 3: proposed a massive tax cut in two thousand and one,
Speaker 3: and it was enacted faster than Reagan got his tax cuts.
Speaker 3: And then nine to eleven happened, and we entered into
Speaker 3: a war on terror that cost well over six trillion dollars,
Speaker 3: and George W. Bush also added a prescription drug benefit
Speaker 3: to Medicare, and the War on Terror was the first
Speaker 3: war in American history that was not paid for with taxes,
Speaker 3: at least in part. And the prescription drug benefit was
Speaker 3: the first new entitlement that was not paid for by
Speaker 3: any new or dedicated taxes, and as a result, we
Speaker 3: started accumulating very large deficits and the debt started growing.
Speaker 3: And the Republicans, i think, having seen what happened to
Speaker 3: George Herbert Walker Bush, were not going to raise taxes,
Speaker 3: and the Democrats abetted the Republicans in two thousand and
Speaker 3: one in reducing taxes. And then when Obama became president,
Speaker 3: he essentially extended ninety percent of Bush's tax cuts, and
Speaker 3: then he agreed that he would only raise taxes on
Speaker 3: people over four hundred thousand dollars of income, which, as
Speaker 3: you know, became Joe Biden's electoral promise and the promise
Speaker 3: that he is stuck to. So I think it's the
Speaker 3: twenty first century story where both the Republicans and the
Speaker 3: Democrats have decided they don't want to raise taxes. The
Speaker 3: Republicans don't want to raise taxes on anyone, and the
Speaker 3: Democrats refuse to raise taxes on anyone but the top
Speaker 3: two percent, so they don't want to raise taxes on
Speaker 3: ninety eight percent of anyone. And in my view, this
Speaker 3: is not a way that you can sustain a government.
Speaker 1: Thanks for joining me. That's Columbia Law School's Michael Gratz.
Speaker 1: His book is entitled The Power to Destroy. How the
Speaker 1: Anti Tax Movement Hijacked America. And that's it for this
Speaker 1: edition of The Bloomberg Law Show. I'm June Grosso. Stay
Speaker 1: with us. Today's top stories and global business headlines are
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