WEBVTT - Can Justice Jackson Shift the Court's Crime Docket?

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<v Speaker 1>This is Bloomberg Law with June Brasso from Bloomberg Radio.

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<v Speaker 1>During her confirmation hearings, Justice Katangi Brown Jackson said her

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<v Speaker 1>experiences as a public defender, a member of the Sentencing Commission,

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<v Speaker 1>and appellate judge, and a trial judge would inform her

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<v Speaker 1>role on the Supreme Court. I was a trial judge,

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<v Speaker 1>and my methodology has developed in that context. I don't

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<v Speaker 1>know how many other justices other than Justice so do

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<v Speaker 1>mayor have that same perspective. But it informs me with

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<v Speaker 1>respect to what I understand to be my proper judicial role. Now,

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<v Speaker 1>some defense lawyers are hoping that Jackson will become a

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<v Speaker 1>voice for criminal defendants unlike her predecessor, and use the

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<v Speaker 1>weight of her experience to form a new majority on

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<v Speaker 1>the court in some criminal cases. An early task will

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<v Speaker 1>come in a case that asks whether judges can punish

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<v Speaker 1>defendants for crimes a jury has acquitted them of. Joining

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<v Speaker 1>me is Ohio State University law professor Douglas Burman. Do

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<v Speaker 1>do you think that Justice Jackson's background will give her

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<v Speaker 1>more gravity toss than a normal junior justice at the

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<v Speaker 1>conference table when it comes to criminal justice issues? Yeah, so,

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<v Speaker 1>Judge Jackson has a really rich history both in the

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<v Speaker 1>work of the judiciary. So you know, he clerked for

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<v Speaker 1>three different judges, you know, two judges and a justice.

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<v Speaker 1>In that in and of itself is exceptional, and I

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<v Speaker 1>think gives her a rich set of perspectives about the

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<v Speaker 1>work of judging, in particularly the kinds of cases that

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<v Speaker 1>work their way through the federal court. You it's quite

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<v Speaker 1>common now, I'm almost I think all but maybe Justice Hagan,

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<v Speaker 1>of the current justices, had experienced as a circuit judge,

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<v Speaker 1>so seeing cases that made their way to Screme Court

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<v Speaker 1>from the appellate stage. But Justice Jackson both clerked the

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<v Speaker 1>District Court, the Circuit Court, and the Supreme Court, and

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<v Speaker 1>then had a pretty extensive period as a district judge,

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<v Speaker 1>then a short period as a circuit judge. And so

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<v Speaker 1>that piece, even apart from her time as a federal

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<v Speaker 1>public defender and serving on the Sentencing Commission, that piece

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<v Speaker 1>already not only distinguishes her from her colleagues, but I

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<v Speaker 1>think particularly gives her a set of insights and perhaps

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<v Speaker 1>an extra bit of confidence in kind of knowing how

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<v Speaker 1>federal courts deal with the range of issues at every level.

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<v Speaker 1>And then the piece that really carries over to the

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<v Speaker 1>criminal justice space that I work in, is that she

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<v Speaker 1>has a background as a federal public defender, one of

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<v Speaker 1>the few justices who in the Court's entire history have

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<v Speaker 1>had a role in that respect, and then also served

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<v Speaker 1>a number of years on the U. S Sentencing Commission

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<v Speaker 1>and so particularly looked at sentencing practice and policy that way.

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<v Speaker 1>And so you've got to add all that up. And

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<v Speaker 1>even though she's the youngest justice, she's in some sense

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<v Speaker 1>the most experience in sort of watching the federal justice

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<v Speaker 1>system function from all these different perspectives. Her predecessor, she's saying,

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<v Speaker 1>just as Stephen Bryer, and everyone knows him as a

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<v Speaker 1>liberal justice, but he wasn't necessarily so liberal in criminal

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<v Speaker 1>defense matters, was he? That's right? I mean, I think

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<v Speaker 1>over the course of you know, a couple decades on

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<v Speaker 1>the court, you could point to, Oh, these were some

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<v Speaker 1>very liberal positions he had on some criminal justice matters.

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<v Speaker 1>And the most obvious one there might be the death penalty,

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<v Speaker 1>where he seemed, especially in his later years, to be

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<v Speaker 1>trying to build an argument that the way the death

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<v Speaker 1>penalty functions our country is unconstitutional. But then you look

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<v Speaker 1>at some other matters sometimes his rulings on Fourth Amendments

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<v Speaker 1>for concesure issues, his rulings on the right to jury

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<v Speaker 1>trials under the Sixth Amendments, some other issues as well.

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<v Speaker 1>He was much more inclined to be leaning towards the prosecution,

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<v Speaker 1>or at least in some sense was maybe valuably unpredictable,

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<v Speaker 1>very eager to kind of hear the pros and cons.

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<v Speaker 1>But but often that was kind of styled in the

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<v Speaker 1>context of being a very pragmatic justice who was very

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<v Speaker 1>concerned about whether and how any limits on law enforcement

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<v Speaker 1>and he limits on prosecutors might function to undermine some

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<v Speaker 1>broader goals in the criminal justice system. And so in

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<v Speaker 1>many respects, every justice is open minded to these issues.

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<v Speaker 1>But I think definitely Justice Prior, especially compared more recently

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<v Speaker 1>to Justice sodomy Or, was less likely to be critical

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<v Speaker 1>or at least questioning of a lot of assertions that

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<v Speaker 1>you couldn't limit the police this way or you couldn't

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<v Speaker 1>restrict trial rights that way without having a found impact

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<v Speaker 1>on the operation of the criminal justice system. Tell us

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<v Speaker 1>about the case of Dante McClinton, a case of the

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<v Speaker 1>justices are considering whether or not they'll take so this

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<v Speaker 1>case involved the young man who got involved with a

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<v Speaker 1>number of other young men and they robbed a pharmacy. Sadly,

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<v Speaker 1>in the course of doing so, garrid and awful lot

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<v Speaker 1>of people there, but didn't directly hurt anybody and only

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<v Speaker 1>were able to get away with a few hundred dollars. Then,

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<v Speaker 1>in the course of dividing up the loot that they

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<v Speaker 1>got and kind of fighting over it, seems how the

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<v Speaker 1>robbery didn't go well, one of the robbers involved got

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<v Speaker 1>shot and shot and killed. And the prosecution's claim was

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<v Speaker 1>that Mr McClinton was the shooter and was guilty of

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<v Speaker 1>speaking to try to rob his cohort of his part

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<v Speaker 1>of the loot, and when he couldn't get it, he

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<v Speaker 1>then shot this individual ultimately, and this is a key

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<v Speaker 1>part of the story. The jury didn't agree with that theory,

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<v Speaker 1>and there was evidence presented a trial that suggested somebody

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<v Speaker 1>else may have done that, and the details were unclear.

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<v Speaker 1>What was clear is this Hurry was not convinced was

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<v Speaker 1>not certain that Mr McClinton should be held accountable because

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<v Speaker 1>they acquitted him on the charges at trial that related

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<v Speaker 1>to the other young man being shot and killed. When

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<v Speaker 1>the case got to sentence thing. However, the government said, hey, judge,

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<v Speaker 1>remember all that evidence he put forward, you know, arguing

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<v Speaker 1>that he was guilty of killing his co conspirator. Well,

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<v Speaker 1>even though the jury acquitted on those counts, we still

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<v Speaker 1>think the evidence should convince you by a preponderance the evidence,

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<v Speaker 1>which is typically the standard applied at sentencing as opposed

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<v Speaker 1>to the beyond a reasonable doubt standard applied at trial.

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<v Speaker 1>We think you should still be convinced that he was

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<v Speaker 1>responsible for that other young man's death. And so when

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<v Speaker 1>you sentenced him for the robbery that he was convicted of,

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<v Speaker 1>consider also the fact that he is responsible for causing

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<v Speaker 1>this death, that he really is a murderer, even though

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<v Speaker 1>the jury acquitted him on that. So the judge sentenced

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<v Speaker 1>him to twenty years as opposed to the about five

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<v Speaker 1>years he would have gotten if he'd been sentenced just

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<v Speaker 1>for the robbery he was actually convicted of. That's pretty

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<v Speaker 1>much right. And again, exactly what he would have gotten

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<v Speaker 1>for just the robbery could be debated. And this is

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<v Speaker 1>where things get complicated because fundamentally there could be other

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<v Speaker 1>aggravating factors that judge might rely on. But the judge said,

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<v Speaker 1>I think you were responsible for this death. I think

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<v Speaker 1>because of that, I have to increase your guideline range,

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<v Speaker 1>because the guideline range was even in the thirty year

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<v Speaker 1>rain and the judge decided to only I put that

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<v Speaker 1>in air quote give twenty and the rich lo hung

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<v Speaker 1>detailed backstory is there's a case from almost twenty five

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<v Speaker 1>years ago now with the Supreme Court said a judge

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<v Speaker 1>is consideration of evidence, even related to counts on which

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<v Speaker 1>a defendant has been acquitted, doesn't violate to process. And

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<v Speaker 1>that older decision came before some more recent rulings about

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<v Speaker 1>the right to jury trial and the reach of the

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<v Speaker 1>sixth Amendment. And so there's been lots of complaints by

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<v Speaker 1>by me and lots of other people saying we don't

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<v Speaker 1>think that's good precedent anymore, and the McClinton cases being

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<v Speaker 1>pressed as an opportunity for the court to reconsider that

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<v Speaker 1>older precedent. Does this come up often? I would think

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<v Speaker 1>it doesn't. However, since there's a term for this acquitted

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<v Speaker 1>conduct issue, I guess it does. You know, again, it

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<v Speaker 1>depends on how you wanted to fine office. So given

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<v Speaker 1>the fact that roughly speaking, nineteen out of twenty cases

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<v Speaker 1>in the federal system are resolved by please then you know,

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<v Speaker 1>in the vast majority of cases this can't come up

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<v Speaker 1>because the case has been resolved by a plea and

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<v Speaker 1>the terms of sentencing are defined by what's been admitted

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<v Speaker 1>as part of the police But in a lot of

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<v Speaker 1>cases they go to trial, it's quite common that there's

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<v Speaker 1>multiple counts and that the defendant isn't convicted on all

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<v Speaker 1>the multiple accounts. And there can actually be different variations

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<v Speaker 1>on this theme. One variation that's fairly high profile, that's

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<v Speaker 1>not exactly the same issue, but but I made reference

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<v Speaker 1>to it, and some of my writings about these matters

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<v Speaker 1>is the Elippus Holmes. There a Noose trial where there

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<v Speaker 1>were multiple fraud counts brought to the jury. She was

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<v Speaker 1>convicted on a few of them, and then there was

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<v Speaker 1>a hung jury on some of the others, and those

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<v Speaker 1>have now been dismissed because the prosecution said, we don't

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<v Speaker 1>want to bother We've got enough convictions here. We're not

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<v Speaker 1>going to try to retry those those hung counts. But

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<v Speaker 1>one of the reasons the prosecutor feels comfortable doing that

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<v Speaker 1>is under these doctrines there and completely entitled to they

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<v Speaker 1>might even think they're obliged to put forward that evidence

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<v Speaker 1>to the judges sentences. A judge still think that the

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<v Speaker 1>amount of loss or the other aggravating factors under those

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<v Speaker 1>counts that led to a hung jury, we still think

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<v Speaker 1>we proved them close enough for government work, so to speak,

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<v Speaker 1>and that should be part of your calculations as to

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<v Speaker 1>what kind of sentence you should be facing. And there's

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<v Speaker 1>a bunch of other examples like this too. What what

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<v Speaker 1>often very common in the drug settings, which are part

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<v Speaker 1>and parts of about bill at least a quarter is

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<v Speaker 1>not more of the federal cases that get brought, is

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<v Speaker 1>the government will charge the defendant with multiple accounts of

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<v Speaker 1>drug dealing or being part of a broader conspiracy in

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<v Speaker 1>which there was lots and lots of dealing going on.

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<v Speaker 1>If the case goes to trial, again, that's the exception.

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<v Speaker 1>But if the case goes to trial, it's not at

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<v Speaker 1>all uncommon that a jury will reach a mixed verdict. Oh, yes,

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<v Speaker 1>we think the defendant was definitely involved in these five

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<v Speaker 1>transactions where they were personally doing the sales. But you

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<v Speaker 1>say he's also part of these twenty other transactions and

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<v Speaker 1>he says he wasn't. We have a doubt about that

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<v Speaker 1>we're going to quit on those other charges. And then

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<v Speaker 1>still the prosecution can say, they often say in those

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<v Speaker 1>kinds of cases, well, using the preponderance of evidence standard judge,

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<v Speaker 1>we think we put enough evidence the show he was

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<v Speaker 1>connected to these other twenty sales, and so you should

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<v Speaker 1>use the amount of drugs that were involved not just

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<v Speaker 1>in these sales that he was convicted of, but all

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<v Speaker 1>these other sales that we think we have evidence to

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<v Speaker 1>connect into, that all should be part of the guideline

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<v Speaker 1>calculation that drives up the sentence. And that's basically the

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<v Speaker 1>fact pattern that led to a case about ten years ago,

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<v Speaker 1>really the same basic issue where the late Justice Scalia

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<v Speaker 1>and Justice Ginsburg joined with Justice Thomas in the sending

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<v Speaker 1>from the denial of Sirt. There was a case called Jones,

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<v Speaker 1>where again it was this drug setting where the prosecution

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<v Speaker 1>claimed the series of defendants were involved in all sorts

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<v Speaker 1>of drug dealings. The jury came back with a very

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<v Speaker 1>mixed and limited verdict, and then the prosecution went back

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<v Speaker 1>to the judge of sentencing and said all the drug

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<v Speaker 1>dealing we are led should be considered for deciding what

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<v Speaker 1>the guideline ranges and the judge concluded at sentencing, Yeah,

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<v Speaker 1>I guess I'm convinced that that's more likely than not,

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<v Speaker 1>and so I've got to drive up the guideline sentencing range,

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<v Speaker 1>which is often, you know, tethered to these quantifiable factors

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<v Speaker 1>like how much drugs are involved or how much loss

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<v Speaker 1>is involved. And that's why this can become not just

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<v Speaker 1>common in the cases that go to trial, but have

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<v Speaker 1>such significant impacts in the length of sentence being recommended

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<v Speaker 1>by the guidelines and the amount of prison time ultimately

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<v Speaker 1>given by judge in that case. In case they needed

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<v Speaker 1>one more vote to take the case, why do you

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<v Speaker 1>think they didn't have the vote of Justice soda Mayor

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<v Speaker 1>or Justice Kagan. Well, thanks for quewing that up, because

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<v Speaker 1>this gets back to our earlier points about Justice Brier

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<v Speaker 1>has been consistently concerned about extending jury trial rights that

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<v Speaker 1>would limit in some respect how judges used their discretion

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<v Speaker 1>as sentences, and so my read on that was always

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<v Speaker 1>the Justices Sotomayor and Kagan, even though they might be

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<v Speaker 1>inclined to vote with the defendant in the case like that,

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<v Speaker 1>we're quite concerned about what Justice Brier might think, and

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<v Speaker 1>even was concerned that maybe Justice Brier would convince are

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<v Speaker 1>members of the Court to not want to limit the

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<v Speaker 1>use of acquitted conduct once the case actually got taken up.

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<v Speaker 1>So their instinct maybe was, let's just let this issue

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<v Speaker 1>percolates the more and hope, you know, to get addressed

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<v Speaker 1>some other way. You know. Among the things that's interesting

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<v Speaker 1>on this particular topic is there have been both congressional

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<v Speaker 1>bills to rewrite the sentencing rules in statute to say

0:12:21.800 --> 0:12:24.880
<v Speaker 1>that judges shouldn't consider this kind of acquitted conducts And

0:12:25.000 --> 0:12:29.720
<v Speaker 1>just recently, the newly constituted U S Sentencing Commission has

0:12:29.800 --> 0:12:32.480
<v Speaker 1>indicated that one of their possible priorities for the coming

0:12:32.559 --> 0:12:34.920
<v Speaker 1>year would be to speak to this issue as well.

0:12:34.960 --> 0:12:37.560
<v Speaker 1>And so I think there's an argument to be made

0:12:37.640 --> 0:12:39.959
<v Speaker 1>or more accurately, this is what the Supreme Court is

0:12:40.000 --> 0:12:41.920
<v Speaker 1>likely going to be struggling with, even if they think

0:12:41.960 --> 0:12:45.000
<v Speaker 1>this is a problematic practice. She should we be addressing

0:12:45.000 --> 0:12:48.199
<v Speaker 1>this through broad constitutional rules or is this the kind

0:12:48.200 --> 0:12:51.199
<v Speaker 1>of matter that it makes more sense to envision Congress

0:12:51.240 --> 0:12:53.400
<v Speaker 1>and the Sentencing Commission to dress in the ways that

0:12:53.559 --> 0:12:56.800
<v Speaker 1>they're arguably more able to craft nuanced rules to deal with.

0:12:57.280 --> 0:13:00.520
<v Speaker 1>So you need the votes of for justices to take

0:13:00.559 --> 0:13:03.680
<v Speaker 1>the case. Let's say you have Clarence Thomas because he

0:13:03.760 --> 0:13:06.839
<v Speaker 1>was in dissent on the last one. Let's big. You

0:13:06.920 --> 0:13:09.800
<v Speaker 1>never know how these things go right exactly, and so

0:13:10.040 --> 0:13:15.120
<v Speaker 1>you might have Justice Jackson and Justices Soda, Mayor and Kagan. Maybe,

0:13:15.160 --> 0:13:17.560
<v Speaker 1>I actually think, although again this gets to, you know,

0:13:18.000 --> 0:13:22.400
<v Speaker 1>the kind of inside baseball speculations. Justice Gorset has actually

0:13:22.440 --> 0:13:26.880
<v Speaker 1>been one of the most vocal advocates for jury trial rights,

0:13:26.960 --> 0:13:29.800
<v Speaker 1>kind of stepping into the shoes of Justice Scalia, who

0:13:29.880 --> 0:13:32.400
<v Speaker 1>was one of the most vocal ones. So I think

0:13:32.760 --> 0:13:35.960
<v Speaker 1>Justice Corsets might be a fourth vote, maybe a fifth vote,

0:13:35.960 --> 0:13:38.480
<v Speaker 1>depending on how all this comes together. In addition, and

0:13:38.520 --> 0:13:42.199
<v Speaker 1>I think not to be overlooked, Justice Kavanaugh has actually

0:13:42.320 --> 0:13:46.400
<v Speaker 1>written when he was a DC circuit to say that

0:13:46.440 --> 0:13:48.280
<v Speaker 1>he thinks this is a problem and that the Supreme

0:13:48.320 --> 0:13:50.600
<v Speaker 1>Court ought to take it up to kind of clarify things.

0:13:50.640 --> 0:13:53.760
<v Speaker 1>Although that's sometimes easier to say when you're a circuit

0:13:54.240 --> 0:13:57.720
<v Speaker 1>you're telling what other than when you're a justice yourself.

0:13:57.880 --> 0:14:02.040
<v Speaker 1>So you know, I think he's another possible vote. And last,

0:14:02.040 --> 0:14:06.160
<v Speaker 1>but absolutely not least, Chief Justice Roberts also has been

0:14:06.800 --> 0:14:11.480
<v Speaker 1>relatively quiet but not disengaged justice with respect to some

0:14:11.559 --> 0:14:14.800
<v Speaker 1>of these jury trial right issues. And so I think

0:14:15.000 --> 0:14:17.760
<v Speaker 1>there's reasons to speculate there could be ample votes. But

0:14:17.800 --> 0:14:20.000
<v Speaker 1>I also think there's a way one could say, yeah,

0:14:20.080 --> 0:14:22.320
<v Speaker 1>but you know what, Now it looks like Congress is

0:14:22.480 --> 0:14:24.480
<v Speaker 1>interested in maybe addressing this. Now it looks like the

0:14:24.520 --> 0:14:27.280
<v Speaker 1>centen In Commission is interested in addressing this. If we

0:14:27.360 --> 0:14:30.720
<v Speaker 1>jump in, that will disrupt that process, or at least

0:14:30.760 --> 0:14:33.960
<v Speaker 1>we're worried maybe we can't craft a rule as a

0:14:33.960 --> 0:14:37.040
<v Speaker 1>matter of constitutional law that will be as nuanced and

0:14:37.120 --> 0:14:40.320
<v Speaker 1>helpful as the development of a rule through some other process,

0:14:40.760 --> 0:14:43.680
<v Speaker 1>legislative or commission based. It's never easy to figure out

0:14:43.720 --> 0:14:46.400
<v Speaker 1>whether or not the court is going to take a case,

0:14:46.560 --> 0:14:50.359
<v Speaker 1>is it? Thanks so much, Doug? That's Ohio State University

0:14:50.440 --> 0:14:57.760
<v Speaker 1>law professor Douglas Berman. Twenty million, million, million, You get

0:14:57.760 --> 0:14:59.520
<v Speaker 1>a million, You got hunter, a million, You got a

0:14:59.520 --> 0:15:03.880
<v Speaker 1>famili On his Info War show, Alex Jones mocked the

0:15:03.920 --> 0:15:07.760
<v Speaker 1>nearly one billion dollar jury verdict against him for spreading

0:15:07.760 --> 0:15:10.880
<v Speaker 1>the myth that the deadliest school shooting in US history

0:15:11.320 --> 0:15:15.000
<v Speaker 1>never happened, saying he could keep the Sandy Hook families

0:15:15.080 --> 0:15:19.000
<v Speaker 1>in court for years. People actually they're getting money. Getting

0:15:19.000 --> 0:15:21.520
<v Speaker 1>the verdict is only the first hurdle in a long

0:15:21.640 --> 0:15:25.520
<v Speaker 1>legal process for the families, one complicated by the fact

0:15:25.560 --> 0:15:29.520
<v Speaker 1>that Jones company, Free Speed Systems, has filed for bankruptcy.

0:15:29.920 --> 0:15:33.960
<v Speaker 1>Joining me is bankruptcy attorney Nicholas Kroft a Fox Rothschild.

0:15:34.520 --> 0:15:38.320
<v Speaker 1>This verdict n five million and then another fifty million

0:15:38.400 --> 0:15:43.840
<v Speaker 1>in Texas. How often are these huge verdicts collected? Well,

0:15:43.840 --> 0:15:46.160
<v Speaker 1>I mean it's tough when you have a bankruptcy case

0:15:46.240 --> 0:15:48.960
<v Speaker 1>intervening in particularly here we have a bankrupcy case that

0:15:49.080 --> 0:15:53.040
<v Speaker 1>was filed kind of strategically before these judgments were entered.

0:15:53.400 --> 0:15:56.240
<v Speaker 1>When you have a billion dollar judgment, it's pretty tough

0:15:56.360 --> 0:15:58.600
<v Speaker 1>to collect on it. And certainly there's a lot of

0:15:58.640 --> 0:16:01.400
<v Speaker 1>motivation ox Jones his part to come up with as

0:16:01.440 --> 0:16:05.440
<v Speaker 1>many maneuverings in court as possible, you know, appropriate or

0:16:05.480 --> 0:16:09.320
<v Speaker 1>not to delay payment on these debts, and these makeups

0:16:09.320 --> 0:16:11.520
<v Speaker 1>to cases are certainly kind of part of that strategy

0:16:11.800 --> 0:16:14.560
<v Speaker 1>to prolong payment and to at least come up with

0:16:14.560 --> 0:16:18.120
<v Speaker 1>a narrative that Free Speech System doesn't have the money

0:16:18.120 --> 0:16:22.600
<v Speaker 1>for it. He's personally liable for the damages if he

0:16:22.640 --> 0:16:25.240
<v Speaker 1>doesn't file for personal bankruptcy, and he claims he has

0:16:25.320 --> 0:16:27.960
<v Speaker 1>less than two million to his name. If he doesn't

0:16:28.000 --> 0:16:31.680
<v Speaker 1>file for personal bankruptcy, can the plaintiffs continue to go

0:16:31.800 --> 0:16:35.440
<v Speaker 1>after him, you know, chase down his assets, go after

0:16:35.600 --> 0:16:38.400
<v Speaker 1>his wages. Yeah, they'll be able to chase him to

0:16:38.440 --> 0:16:40.960
<v Speaker 1>the ends of the earth if they want to. It's

0:16:41.000 --> 0:16:43.160
<v Speaker 1>not kind of the typical judgment that you'd see in

0:16:43.200 --> 0:16:46.200
<v Speaker 1>a torque case where someone is injured incurring medical bills,

0:16:46.480 --> 0:16:49.120
<v Speaker 1>hospital bills that need to get paid. With this judgment,

0:16:49.400 --> 0:16:51.280
<v Speaker 1>you know, there is a little bit more flexibility on

0:16:51.320 --> 0:16:53.760
<v Speaker 1>the plaintiffs part to sit around and wait for Alex

0:16:53.840 --> 0:16:56.480
<v Speaker 1>Jones to start coming up with the money. But again,

0:16:56.800 --> 0:16:59.320
<v Speaker 1>Alex Jon's is going to be motivated to continue trying

0:16:59.360 --> 0:17:02.040
<v Speaker 1>to come up with it's legal fictions that suggests that

0:17:02.080 --> 0:17:04.400
<v Speaker 1>he has no money to pay a judgment. Let's talk

0:17:04.400 --> 0:17:08.679
<v Speaker 1>about the bankruptcy proceedings at his company, Free Speech Systems.

0:17:09.560 --> 0:17:12.879
<v Speaker 1>Is in what stage are they in the bankruptcy proceedings?

0:17:13.560 --> 0:17:16.320
<v Speaker 1>You know, they've they've kind of come to an interesting stage,

0:17:16.400 --> 0:17:18.920
<v Speaker 1>particularly for sub chapter five, And if you don't mind

0:17:18.920 --> 0:17:22.679
<v Speaker 1>them kind of quickly go into just for context, what

0:17:22.800 --> 0:17:26.560
<v Speaker 1>sub chapter five is so so in Congress enacted this

0:17:26.680 --> 0:17:30.200
<v Speaker 1>new sub chapter to Chapter eleven. Chapter eleven's what we're

0:17:30.240 --> 0:17:34.080
<v Speaker 1>all familiar with as a business bankruptcy that's reorganized. What

0:17:34.119 --> 0:17:36.880
<v Speaker 1>has happened over the years is Chapter eleven has become

0:17:37.000 --> 0:17:40.200
<v Speaker 1>very expensive and very time consuming for small mom and

0:17:40.280 --> 0:17:43.479
<v Speaker 1>pop businesses and small mom and pop business owners. So

0:17:43.520 --> 0:17:46.080
<v Speaker 1>what Congress came up with was sub Chapter five, which

0:17:46.119 --> 0:17:49.440
<v Speaker 1>created this kind of expedited proceeding for mom and pop

0:17:49.480 --> 0:17:53.879
<v Speaker 1>businesses to quickly move through something really similar to a

0:17:54.240 --> 0:17:57.280
<v Speaker 1>Chapter eleven but within only a couple of months. And

0:17:57.520 --> 0:17:59.920
<v Speaker 1>the way that Congress came up with that was they

0:18:00.000 --> 0:18:02.560
<v Speaker 1>eliminated some of the oversight that you would typically see

0:18:02.560 --> 0:18:05.119
<v Speaker 1>in the Chapter eleven case. A big one is the

0:18:05.119 --> 0:18:08.400
<v Speaker 1>Committee of Unsecured Creditors, which is this body that kind

0:18:08.400 --> 0:18:11.080
<v Speaker 1>of solves the collective action problem of a bunch of

0:18:11.119 --> 0:18:15.600
<v Speaker 1>small unsecured creditors. They get to help supervise the case

0:18:15.680 --> 0:18:18.359
<v Speaker 1>and appear in the case and and monitor the debtic

0:18:18.480 --> 0:18:20.919
<v Speaker 1>rout it. That's been eliminated in sub Chapter five and

0:18:21.000 --> 0:18:23.400
<v Speaker 1>replaced with a sub Chapter five trustee that has very

0:18:23.480 --> 0:18:26.959
<v Speaker 1>limited oversight roles at the outset, just really to kind

0:18:26.960 --> 0:18:30.480
<v Speaker 1>of help shepherd the plan along to confirmation, and so

0:18:30.560 --> 0:18:34.480
<v Speaker 1>alex Jones used sub Chapter five to file Free Speech

0:18:34.520 --> 0:18:39.520
<v Speaker 1>Systems bankruptcy and that eliminated the oversight of, you know,

0:18:39.600 --> 0:18:42.800
<v Speaker 1>a creditors committee which would probably be populated by these

0:18:43.000 --> 0:18:45.840
<v Speaker 1>victims because they have significant At the time, they had

0:18:45.880 --> 0:18:49.920
<v Speaker 1>significant contingent judgments. And the timing of when alex Jones

0:18:49.960 --> 0:18:53.399
<v Speaker 1>filed Free Speech Systems bankruptcy case is really important. He

0:18:53.440 --> 0:18:57.040
<v Speaker 1>did it before the judgments were entered. Now, again, this

0:18:57.119 --> 0:18:59.760
<v Speaker 1>is really only a provision of the Bankrupty Code intended

0:18:59.800 --> 0:19:02.080
<v Speaker 1>for small mom and pop businesses. But what we've learned

0:19:02.240 --> 0:19:06.640
<v Speaker 1>is Free Speech Systems generates a significant amount of revenue annually.

0:19:06.960 --> 0:19:08.639
<v Speaker 1>So the way that he was able to sneak into

0:19:08.680 --> 0:19:11.399
<v Speaker 1>sub Chapter five was one these massive judgments hadn't been

0:19:11.480 --> 0:19:14.040
<v Speaker 1>entered yet, so those didn't count against him for the

0:19:14.119 --> 0:19:17.639
<v Speaker 1>debt cap that Congress placed on following some Chapter five bankruptcy.

0:19:18.040 --> 0:19:20.160
<v Speaker 1>You can only have a company that has seven point

0:19:20.280 --> 0:19:22.760
<v Speaker 1>five million dollars worth of debt that files. Obviously, these

0:19:22.800 --> 0:19:25.120
<v Speaker 1>judgments were much more significant, but they hadn't been entered yet.

0:19:25.200 --> 0:19:28.719
<v Speaker 1>And the other kind of machination that alex Jones had

0:19:28.720 --> 0:19:31.240
<v Speaker 1>worked out along the way is there's this other n

0:19:31.400 --> 0:19:34.560
<v Speaker 1>p p QPR that he owns, and essentially what p

0:19:34.720 --> 0:19:39.120
<v Speaker 1>QPR does is acts as a middleman between Alex Jones's

0:19:39.320 --> 0:19:43.800
<v Speaker 1>podcasting company, free Speech Systems, and the companies from which

0:19:43.840 --> 0:19:46.720
<v Speaker 1>Free Speech Systems buys all the kind of supplements that

0:19:46.800 --> 0:19:49.879
<v Speaker 1>they sell on the Alex Jones and Worse podcast That

0:19:50.000 --> 0:19:52.600
<v Speaker 1>is a tremendous source of their revenue. Now, it's pretty

0:19:52.600 --> 0:19:56.840
<v Speaker 1>contrived what Free Speech Systems alleged to have occurred between

0:19:56.880 --> 0:20:00.600
<v Speaker 1>p QPR in itself, but apparently p QPR, without their

0:20:00.600 --> 0:20:04.000
<v Speaker 1>middle manning, and Free Speech Systems wracked up a significant

0:20:04.000 --> 0:20:07.680
<v Speaker 1>amount of debt for these middle manning services. And so

0:20:07.760 --> 0:20:11.200
<v Speaker 1>just before Free Speech Systems filed bankruptcy, it entered into

0:20:11.280 --> 0:20:15.760
<v Speaker 1>a secured loan with p QPR in the millions of

0:20:15.760 --> 0:20:19.240
<v Speaker 1>dollars range. And what Free Speech Systems claims is well,

0:20:19.240 --> 0:20:22.520
<v Speaker 1>this was a way to create a repayment plan to

0:20:22.680 --> 0:20:26.080
<v Speaker 1>this other entity that's been doing services for us. The

0:20:26.200 --> 0:20:29.720
<v Speaker 1>contrived part of it looks like it was created to

0:20:30.040 --> 0:20:33.360
<v Speaker 1>at least form an argument that Hay, free Speech Systems

0:20:33.520 --> 0:20:37.919
<v Speaker 1>is insolvent and judgment proof the debt between p QPR

0:20:37.960 --> 0:20:41.800
<v Speaker 1>and Free Speech Systems. These affiliate entities is not counted

0:20:41.800 --> 0:20:44.159
<v Speaker 1>towards the debt limit. So this is how a company

0:20:44.240 --> 0:20:46.400
<v Speaker 1>with a lot of debt and a lot of revenue

0:20:46.960 --> 0:20:51.359
<v Speaker 1>was able to sneak in to this new provision of

0:20:51.400 --> 0:20:55.760
<v Speaker 1>the bankruptcy code that doesn't automatically have the same kind

0:20:55.760 --> 0:20:59.120
<v Speaker 1>of oversight systems in place that a regular Chapter eleven

0:20:59.200 --> 0:21:02.480
<v Speaker 1>case would have. The Sandy Hook families have intervened in

0:21:02.520 --> 0:21:07.200
<v Speaker 1>the bankruptcy case. They accused Jones of burdening his company,

0:21:07.280 --> 0:21:12.160
<v Speaker 1>Free Speech Systems with fifty four million dollars in concocted debt.

0:21:12.800 --> 0:21:15.760
<v Speaker 1>When will those claims be settled? Well, part of the

0:21:15.760 --> 0:21:18.600
<v Speaker 1>early litigation of the bankruptcy case was the victim saying, hey,

0:21:18.640 --> 0:21:22.919
<v Speaker 1>this debt with PQPR is concocted, and it's going to

0:21:23.000 --> 0:21:25.520
<v Speaker 1>form the basis of an argument that Free Speech Systems

0:21:25.640 --> 0:21:29.320
<v Speaker 1>is insolvent and judgment proof. So the victims said to

0:21:29.359 --> 0:21:32.720
<v Speaker 1>the bankruptcy court, look, you know they filed their schedules

0:21:32.720 --> 0:21:36.120
<v Speaker 1>and their financial disclosures free Speech Systems dead, indicating these

0:21:36.160 --> 0:21:40.160
<v Speaker 1>debts were legitimate. The only person in charge of confirming

0:21:40.160 --> 0:21:43.800
<v Speaker 1>weather their legitimate is Alex Jones and his cronies who

0:21:43.800 --> 0:21:48.080
<v Speaker 1>are running this business. We don't trust that. Please appoint

0:21:48.119 --> 0:21:51.200
<v Speaker 1>a committee in this case to look into this, and

0:21:51.240 --> 0:21:54.760
<v Speaker 1>the court kind of took a middle ground approach. Instead

0:21:54.760 --> 0:21:56.840
<v Speaker 1>of appointing a committee, The court said, what I'm gonna

0:21:56.840 --> 0:21:58.480
<v Speaker 1>do if I already have a sub chapter of five

0:21:58.520 --> 0:22:01.679
<v Speaker 1>trustee who is a disinterested person, I'm going to expand

0:22:01.840 --> 0:22:04.280
<v Speaker 1>the scope of her and I'm going to have her

0:22:04.320 --> 0:22:07.600
<v Speaker 1>investigate whether or not these debts actually are legitimate. And

0:22:07.680 --> 0:22:09.800
<v Speaker 1>so the debtors are going to have to respond to

0:22:10.400 --> 0:22:13.880
<v Speaker 1>document request the trustee has issued. The bankruptcy court has

0:22:13.920 --> 0:22:18.320
<v Speaker 1>kind of pumped the brakes on moving the bankruptcy process forward,

0:22:18.840 --> 0:22:23.919
<v Speaker 1>so this independent and kind of unusual investigation can take place.

0:22:24.200 --> 0:22:27.240
<v Speaker 1>Because the bankruptcy court seriously doubt of the legitimacy of

0:22:27.359 --> 0:22:32.560
<v Speaker 1>those debts, could the bankruptcy court eventually order liquidation of

0:22:32.920 --> 0:22:35.760
<v Speaker 1>Jones's business? I don't think the bankruptcy court could or

0:22:35.800 --> 0:22:40.000
<v Speaker 1>would necessarily order a liquidation. But the position that the

0:22:40.040 --> 0:22:43.400
<v Speaker 1>debtor finds himself and now is a little difficult because

0:22:43.680 --> 0:22:46.920
<v Speaker 1>we now have an independent investigation into the legitimacy of

0:22:47.040 --> 0:22:50.600
<v Speaker 1>this major secured debt, and if the investigation determines that

0:22:50.680 --> 0:22:53.679
<v Speaker 1>this debt is not legitimate. The gambit that seems to

0:22:53.680 --> 0:22:56.280
<v Speaker 1>have motivated this bankruptcy filing in the first place of

0:22:56.320 --> 0:23:00.439
<v Speaker 1>an otherwise healthy company before the judgments were entered kind

0:23:00.480 --> 0:23:04.000
<v Speaker 1>of evaporates, and then you're left with a debtor under

0:23:04.000 --> 0:23:07.280
<v Speaker 1>bankruptcy court supervision that is required to file a plan

0:23:07.680 --> 0:23:11.000
<v Speaker 1>that pays creditors in some way, at least with revenue

0:23:11.000 --> 0:23:14.199
<v Speaker 1>over the next five years. And you don't have this

0:23:14.280 --> 0:23:17.439
<v Speaker 1>kind of manufactured debt to serve as an argument that

0:23:17.800 --> 0:23:19.760
<v Speaker 1>the only entity that can get paid is an Alex

0:23:19.840 --> 0:23:22.040
<v Speaker 1>Jones affiliate. But debtor would then have to contend with

0:23:22.080 --> 0:23:25.240
<v Speaker 1>the fact that it's able to and obligated to pay

0:23:25.320 --> 0:23:28.439
<v Speaker 1>these judgments, at least in part. The interesting problem for

0:23:28.680 --> 0:23:31.520
<v Speaker 1>Free speech Systems is its revenue is based on Alex

0:23:31.600 --> 0:23:36.240
<v Speaker 1>Jones podcasting, and nobody can force Alex Jones to continue

0:23:36.240 --> 0:23:40.240
<v Speaker 1>podcasting for free speech systems. So one of the significant

0:23:40.280 --> 0:23:43.720
<v Speaker 1>points of leverage the debtor has is if Alex Jones says, look,

0:23:43.880 --> 0:23:46.479
<v Speaker 1>I'm not podcasting for Free Speech Systems anymore, you can

0:23:46.520 --> 0:23:48.760
<v Speaker 1>have the liquidation value of the company, which is probably

0:23:48.800 --> 0:23:50.679
<v Speaker 1>not going to be significant since they don't really have

0:23:50.760 --> 0:23:55.280
<v Speaker 1>significant assets. Could he then podcast for a different company. Yeah,

0:23:55.280 --> 0:23:58.359
<v Speaker 1>he could. I think that there would be significant arguments

0:23:58.480 --> 0:24:01.320
<v Speaker 1>that this company would essentially end up being an alter

0:24:01.440 --> 0:24:05.439
<v Speaker 1>ego of free speech systems. But the problem is that

0:24:05.600 --> 0:24:10.240
<v Speaker 1>just creates more litigation, more delay, and more time investigating

0:24:10.680 --> 0:24:13.840
<v Speaker 1>this kind of web of companies that Alex Jones has

0:24:13.880 --> 0:24:16.639
<v Speaker 1>built up. There's a separate question that you also raised

0:24:16.680 --> 0:24:20.000
<v Speaker 1>about his own personal liability if he's continuing to generate

0:24:20.240 --> 0:24:23.760
<v Speaker 1>income that might be a source of collection against him personally.

0:24:24.119 --> 0:24:27.040
<v Speaker 1>One thing is sure a lot more litigation ahead. Thanks Nick.

0:24:27.359 --> 0:24:30.960
<v Speaker 1>That's Nicholas cow Rop a Fox roth Child, and that's

0:24:30.960 --> 0:24:33.720
<v Speaker 1>it for the edition of the Bloomberg Law Show. Remember

0:24:33.760 --> 0:24:36.000
<v Speaker 1>you can always get the latest legal news by listening

0:24:36.000 --> 0:24:39.800
<v Speaker 1>to our Bloomberg Law podcast wherever you get your favorite podcasts.

0:24:39.960 --> 0:24:42.480
<v Speaker 1>I'm June Grasso, and you're listening to Bloomberg