Speaker 1: Welcome to the Bloomberg Law Podcast. I'm June Grosso. Every
Speaker 1: day we bring you insight and analysis into the most
Speaker 1: important legal news of the day. You can find more
Speaker 1: episodes of the Bloomberg Law Podcast on Apple Podcasts, SoundCloud
Speaker 1: and on Bloomberg dot com Slash Podcasts. The Star Witnesses
Speaker 1: on the Stand and the Paul Manaford Trial Rick Gates,
Speaker 1: who flipped to testify against his former boss Manafort's defense
Speaker 1: is to blame Gates for all his crimes. Joining me
Speaker 1: as former federal prosecutor Jeff Kramer, Managing director at the
Speaker 1: Berkeley Research Group, Jeff, whenever there's a witness who's cooperating,
Speaker 1: you hear people ask, but will the jury believe someone
Speaker 1: who admits to committing crimes and juries? Do it all
Speaker 1: the time? The best example I can think of his
Speaker 1: Sammy the Bullgravana, who admitted to nineteen murders and they
Speaker 1: convicted Gotti. So what steps is the prosecution taking here
Speaker 1: to make sure the jurors believe Gates? You're exactly right,
Speaker 1: I mean, that is always the question. But um, you
Speaker 1: know that's the standard prosecutorial playbook. You know, this flipper
Speaker 1: is testifying, right, now and hundreds of cases in the
Speaker 1: US UM and you have to corroborate that witness and
Speaker 1: and that's what they're doing here, and that can be done,
Speaker 1: you know, you organized crime context usually corroboration with tapes
Speaker 1: or other witnesses, and fraud cases like this usually there's corroboration,
Speaker 1: if not from other witnesses in documents. And that's what
Speaker 1: we have here. So when Mr Gates says we set
Speaker 1: up fifteen, fourteen or fifteen overseas companies to facilitate the payments,
Speaker 1: and the prosecutors have documents showing fourteen or fifteen companies
Speaker 1: were set up overseas well, that corroborates, That corroborates Mr Gates.
Speaker 1: Gates did testify yesterday that he lied in a deposition
Speaker 1: in a civil case against Maunt of Fort. Is that
Speaker 1: going to create a problem for his credibility? You lied, Gants?
Speaker 1: What are you lying? Now? It's definitely fodder on cross examination.
Speaker 1: There's ample things, not only that Mr Gates has lied before,
Speaker 1: but it turns out he was taking money from Mr
Speaker 1: Manafort unbeknownst to Mr Manafort. But again that's hardly you know,
Speaker 1: a man bites dog story. There's a guy in the
Speaker 1: stand who is committing crimes with with Mr Manafort with
Speaker 1: respect to fraud, the fact that he's a fraud ster
Speaker 1: and a lawyer is not shocking. Uh. Jury is not
Speaker 1: gonna like Mr Gates. They're not going to trust them
Speaker 1: with their last dollar or their investment portfolio. But will
Speaker 1: they believe him? I think once he's corroborated by the
Speaker 1: documents and other witnesses and just the logic that it's
Speaker 1: doubtful Mr Gates would be the mastermind of a twenty
Speaker 1: or thirty million dollar scheme in order to benefit Mr Manaford.
Speaker 1: You know that's a hard lift for the defense. Now,
Speaker 1: I just want to get your take on what's going
Speaker 1: on as far as the body language and the looks
Speaker 1: between Manafort and Gates. Many people have said that Manaford
Speaker 1: is sort of shooting Daggers, staring Gates down. But Gates
Speaker 1: is not looking at at Manafort as a prosecutor. What
Speaker 1: would you in sucked your witness to do exactly what
Speaker 1: he's doing is you look at the person asking the questions,
Speaker 1: you look at the jury. He don't get involved with
Speaker 1: the defendant at all. And again, this is not shocking.
Speaker 1: There's someone on the stand that Mr. Manafort trusted for
Speaker 1: literally a generation, they've been doing business together, so he
Speaker 1: views this as a betrayal, which in some respects it is.
Speaker 1: So it's not shocking he's throwing him daggers because Mr Gates,
Speaker 1: with every time he answers a question again that's corroborated
Speaker 1: by other witnesses or documents, is really just building another
Speaker 1: brick and with the prosecution's case, so Mr Gates is
Speaker 1: doing exactly what he should be doing. Tensions seem to
Speaker 1: also be high between the judge and the prosecutors. The
Speaker 1: judge has been on the prosecutor's case to move the
Speaker 1: trial along, not to call people oliguarts, even not to
Speaker 1: make faces. And there's some odd things like the judge
Speaker 1: yesterday suggesting that the prosecute one of the prosecutors was
Speaker 1: crying and the prosecutors saying, no, I'm not what's going
Speaker 1: on here? This judges is pretty active and on trial,
Speaker 1: some judges are more active than others. Uh, this one
Speaker 1: seems to be holding the prosecutor's feet to the fire,
Speaker 1: especially because they're the ones. The prosecutors are the ones
Speaker 1: they're gonna be dictating the time they're the ones that
Speaker 1: will be calling the witnesses and have to get through
Speaker 1: certain things. So if you want to keep this trial moving,
Speaker 1: especially in August, which this judge does, you're gonna be
Speaker 1: on the prosecutors, the faces, the crying, there's some other
Speaker 1: odd things coming from this judge who's been on the
Speaker 1: bench for a while. That's just he's a character, for
Speaker 1: lack of a better term, And again, this is not
Speaker 1: the prosecutor's first first rodeo. They've been in for in
Speaker 1: front of difficult judges before. At the end of the day,
Speaker 1: it does not matter. The judge does not determine guilt.
Speaker 1: You're just arguing to the people in the box. Only
Speaker 1: about thirty seconds here, Gates didn't specify what how much
Speaker 1: the prosecutors would give him for a prison sentence. If
Speaker 1: you know, he went forward with his testimony, do you
Speaker 1: think that that's already been hammer down with his lawyers
Speaker 1: or that's up in the air now It is up
Speaker 1: in the air. If it was hammered down, he would
Speaker 1: have to say, you know, I've been promised ten years
Speaker 1: or whatever. He's been giving what's called basically a discount
Speaker 1: based upon his testimony. Needs to be truthful, so the
Speaker 1: prosecutors will see how the testimony goes, not if there's
Speaker 1: a conviction, just if he's truthful. Will make an argument
Speaker 1: to the judge, but it's up to the judge to
Speaker 1: agree to a sentence. All right, Thanks so much, Jeff,
Speaker 1: I have so many questions. That's Jeff Framer, managing director
Speaker 1: the Berkeley Research Proop. Just after Judge Richard Leon cleared
Speaker 1: the billion dollar deal between A. T and T and
Speaker 1: Time Warner, A T and T S lawyer Daniel Petrick
Speaker 1: Shelly talked about the court's verdict the government could present
Speaker 1: no credible proof in support of any of its theories.
Speaker 1: This decision was a sound and proper rejection of all
Speaker 1: of the government's arguments to stop this merger. But the
Speaker 1: government says it could have presented that proof if the
Speaker 1: judge and constrained its presentation of evidence, and it's appealing
Speaker 1: its decision even though the deal is done. Joining me
Speaker 1: is Nicholas Economy. He is professor at m y U
Speaker 1: Sturn School of Business. Nick Unsealed transcripts of the trial
Speaker 1: show that during private the sidebar conversations, the judge repeatedly
Speaker 1: shot down the prosecution's arguments that he decided were repetitive
Speaker 1: or unhelpful in lines of testimony. Is that a strong
Speaker 1: argument that the prosecution is making. Uh. No, I think
Speaker 1: that by itself is not going to be able to
Speaker 1: reverse the decision. I mean, it's true that the the
Speaker 1: judge did not allow the government all the time the
Speaker 1: government wanted to present its case, but this actually happens
Speaker 1: in trials. I mean, it's up to the judge. I
Speaker 1: I don't think that's enough to to reverse the decision.
Speaker 1: What could make the difference is that the judge was
Speaker 1: pretty absolute in the rejects of the government's theory. Um.
Speaker 1: That is, he said, the judge said that the merger
Speaker 1: will not will not lead to any increases in prices
Speaker 1: to consumers. Uh. That's a bit extreme, and he, you know,
Speaker 1: to reject the government's position that does didn't have to
Speaker 1: conclude that. All he needed to conclude was that the
Speaker 1: increases would not be substantially reducing competition. But he went
Speaker 1: to the extreme and said there would be no uh
Speaker 1: increases at all in prices to consumers for for delivered content,
Speaker 1: for for cable service. So UM, that is something that
Speaker 1: um is weak. So it is conceivable that the Court
Speaker 1: of Appeals will reverse based on that point. What about
Speaker 1: the government's claim that the core ignored fundamental principles of
Speaker 1: economics and common sense, is that in addition to what
Speaker 1: you mentioned, Well, I don't think the judge understood at
Speaker 1: all the government's case. Didn't understand the economics of bargaining.
Speaker 1: So that's why the government comes now to the Court
Speaker 1: of Appeal and says, look, I mean this judge didn't
Speaker 1: understand the economics of bargaining. The economics of bargaining are
Speaker 1: an important part of mainstream economics. Uh, therefore you should
Speaker 1: reverse based on on that. At the same time, to
Speaker 1: a large extent, it's a government responsibility to explain these
Speaker 1: economics to the judge, who is not an economist, right
Speaker 1: he's he's a judge. So the government should have explained
Speaker 1: much much better, Uh, these economics of of bargaining and
Speaker 1: how they apply. So one thing is how they apply.
Speaker 1: The other thing is what are what they are. If
Speaker 1: the judge completely ignored significant parts of economic theory, that
Speaker 1: would be grounds or reversal. On the other hand, if
Speaker 1: the judge understands the basic idea of economics of bargaining
Speaker 1: but rejects the way the government specifically interprets the facts
Speaker 1: that could not be reversed. Well do you do you
Speaker 1: from looking at the evidence, do you think that the
Speaker 1: judge didn't understand the economic theories? I actually think that
Speaker 1: the economic theory went way over his head. Yes, I
Speaker 1: could think he understood it. Now, a T and T
Speaker 1: S General Counsel David McAtee said in a statement, appeals
Speaker 1: aren't due overs, which exactly what appeals are. But what
Speaker 1: do you expect a T and T to our unit's response, Well,
Speaker 1: a D is going to say, well, the judge understands
Speaker 1: the basic theory. He doesn't need to understand anything more
Speaker 1: than what he understood, and that, in fact, uh, the
Speaker 1: interpretation by the judge of the various facts was correct,
Speaker 1: and the in fact, nothing bad is going to happen
Speaker 1: because of this murder. I mean you have to keep
Speaker 1: in mind that the judge side with a T and T.
Speaker 1: So a T T will find nothing wrong in what
Speaker 1: the judge said. Now, so, Nick, the deal is already done.
Speaker 1: If the government does win, what will happen They'll have
Speaker 1: to unravel the deal, They'll have to sell time Warner. Yes,
Speaker 1: they I don't think when you say the deal is done. Yeah,
Speaker 1: the deal is done on paper, but the disagreement between
Speaker 1: the government and A T and T that time Warner
Speaker 1: will be I think until the end of February of
Speaker 1: nineteen run as a separate company. So I don't think
Speaker 1: there is going to be anything that cannot be reversed.
Speaker 1: So what are the odds that this will be reversed?
Speaker 1: I would say the probably that the Court of Appeals
Speaker 1: will reverse this is small. I mean I would say
Speaker 1: it's it's it's teen percent or or less. I wouldn't
Speaker 1: say that it's much more on that. So they have
Speaker 1: to find an error of law. And if they if
Speaker 1: they find that there are there are a lot of
Speaker 1: inequities in the trial, might that be enough? My that
Speaker 1: add up to enough? Uh? It's it's hard to It's
Speaker 1: hard to say. Uh. Ultimately, it will depend on whether
Speaker 1: the general theory of the government makes sense to the
Speaker 1: Court of Appeals, if they think, if we were the judge,
Speaker 1: we would really rule completely differently. There is its possibility,
Speaker 1: but usually courts of appeal try to be very specific
Speaker 1: to the case and try to limit their intervention two
Speaker 1: very specific actions of of the judge. Nick, do you
Speaker 1: see any signs in the market of reactions or the
Speaker 1: ramifications of this deal being approved. Well, I mean, you
Speaker 1: have to keep in mind that somehow the market in
Speaker 1: the very beginning thought that this was a good deal
Speaker 1: for a t n T. I'm not completely sure. Suppose
Speaker 1: that there is no legal challenge and it goes through,
Speaker 1: is it clear that a tm T is going to
Speaker 1: be able to run Time Warner. A tm T is
Speaker 1: a company that is great in engineering and has great lawyers,
Speaker 1: but there has no expertise whatsoever in running a company
Speaker 1: like Time Warner. Right. Thanks so much, Nick, It's always
Speaker 1: a pleasure. Nick Knamti is Professor M y U. Stern
Speaker 1: School of Business. Thanks for listening to the Bloomberg Law Podcast.
Speaker 1: You can subscribe and listen to the show on Apple Podcasts, SoundCloud,
Speaker 1: and on Bloomberg dot com slash podcast. I'm June Brosso.
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