1
00:00:03,200 --> 00:00:08,000
Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.

2
00:00:10,280 --> 00:00:13,520
Speaker 1: In what was an elaborate sting operation in which the

3
00:00:13,680 --> 00:00:18,520
Speaker 1: FBI created its own crypto tooken. Fifteen crypto promoters and

4
00:00:18,600 --> 00:00:22,799
Speaker 1: traders were charged with market manipulation and fraud, the first

5
00:00:22,880 --> 00:00:27,760
Speaker 1: ever criminal charges against financial services firms for market manipulation

6
00:00:27,960 --> 00:00:32,520
Speaker 1: and wash trading in the cryptocurrency industry. The acting US

7
00:00:32,600 --> 00:00:37,160
Speaker 1: Attorney for Massachusetts, Joshua Levy, said, these are cases where

8
00:00:37,200 --> 00:00:42,920
Speaker 1: an innovative technology cryptocurrency met a century old scheme, the

9
00:00:43,040 --> 00:00:46,400
Speaker 1: pump and dump. The sting operation also led to the

10
00:00:46,440 --> 00:00:50,239
Speaker 1: seizure of more than twenty five million dollars in cryptocurrency,

11
00:00:50,640 --> 00:00:54,880
Speaker 1: and multiple trading bots responsible for wash trades for about

12
00:00:54,960 --> 00:00:59,600
Speaker 1: sixty different cryptocurrencies were deactivated. Joining me is former federal

13
00:00:59,600 --> 00:01:03,200
Speaker 1: process computer Seth Gertz, a partner at Dorsey and Whitney,

14
00:01:03,680 --> 00:01:05,280
Speaker 1: tell us about this sting operation.

15
00:01:05,480 --> 00:01:09,280
Speaker 2: Set A sting operation is a good way to put it, actually,

16
00:01:09,319 --> 00:01:12,240
Speaker 2: and it's not something you often see in a context

17
00:01:12,240 --> 00:01:16,120
Speaker 2: of investment frauds. And it's an interesting example where I

18
00:01:16,160 --> 00:01:17,920
Speaker 2: can sort of think of the analogy of what is

19
00:01:18,000 --> 00:01:20,640
Speaker 2: good for the goose is apparently also good for the gander,

20
00:01:21,240 --> 00:01:25,920
Speaker 2: and in this case, the FBI created their own cryptocurrency token,

21
00:01:26,600 --> 00:01:32,919
Speaker 2: next fund Ai. Marketed as a novel security related cryptocurrency token.

22
00:01:33,000 --> 00:01:37,039
Speaker 2: It was on the Ethereum blockchain. And actually what the

23
00:01:37,120 --> 00:01:41,000
Speaker 2: FBI did was quite clever, working with the SEC and

24
00:01:41,040 --> 00:01:44,479
Speaker 2: other law enforcement agencies, was they was held a large

25
00:01:44,840 --> 00:01:48,440
Speaker 2: balance of the tokens themselves, and so it was almost

26
00:01:48,480 --> 00:01:52,960
Speaker 2: from its outset, appeared to be a lucrative, novel, unique

27
00:01:53,000 --> 00:01:56,480
Speaker 2: token that attracted a lot of interest from the market

28
00:01:56,720 --> 00:02:02,560
Speaker 2: and in particular to unscrupulous market participants in other cryptocurrency traders.

29
00:02:03,080 --> 00:02:05,520
Speaker 2: And so that was the basic format and the programming

30
00:02:05,520 --> 00:02:08,240
Speaker 2: of the token that the goal was then obviously to

31
00:02:08,360 --> 00:02:13,840
Speaker 2: see how improper traders or cryptocurrency fraudsters were going to

32
00:02:13,960 --> 00:02:17,200
Speaker 2: use and utilize the token. And what's unique in this

33
00:02:17,320 --> 00:02:20,320
Speaker 2: space is that because the token was being traded on

34
00:02:20,360 --> 00:02:25,000
Speaker 2: this Ethereum blockchain, every transaction that occurs for each one

35
00:02:25,000 --> 00:02:28,040
Speaker 2: of these tokens is viewable and can be seen and

36
00:02:28,120 --> 00:02:31,200
Speaker 2: tracked and followed, and so that allows law enforce in

37
00:02:31,240 --> 00:02:36,760
Speaker 2: the FBI an incredible window and to see how the

38
00:02:36,840 --> 00:02:39,200
Speaker 2: coin was going to be utilized and in this case

39
00:02:39,520 --> 00:02:40,800
Speaker 2: manipulated and.

40
00:02:40,720 --> 00:02:44,000
Speaker 1: Tell us about the charges against the defendants here, and

41
00:02:44,040 --> 00:02:44,440
Speaker 1: so they.

42
00:02:44,360 --> 00:02:47,560
Speaker 2: Are alleged to have done what is called wash trading

43
00:02:48,200 --> 00:02:51,040
Speaker 2: that facilitate a pump and dump scheme, and that those

44
00:02:51,080 --> 00:02:56,239
Speaker 2: are the technical investment fraud terms. Wash trading is typically

45
00:02:56,440 --> 00:02:59,960
Speaker 2: traditionally when the same firm or entity buys and sells

46
00:03:00,320 --> 00:03:03,799
Speaker 2: the same instrument like a stock or a bond repeatedly

47
00:03:04,120 --> 00:03:09,320
Speaker 2: to artificially inflate its value and to demonstrate additional trading

48
00:03:09,320 --> 00:03:11,760
Speaker 2: activity to make it team more lucrative, but the entity

49
00:03:11,840 --> 00:03:17,240
Speaker 2: itself suffers no risk or market adjustment because it's simply

50
00:03:17,360 --> 00:03:20,720
Speaker 2: buying and reselling the same instrument. What was interesting about

51
00:03:20,800 --> 00:03:23,880
Speaker 2: this case is that some of the defendants, the cryptocurrency

52
00:03:24,000 --> 00:03:29,360
Speaker 2: markets here had utilized bots to buy and sell the token,

53
00:03:29,639 --> 00:03:32,720
Speaker 2: this token, the next fund Ai token, along with sixty

54
00:03:32,800 --> 00:03:37,080
Speaker 2: others repeatedly, and because it was a bot and realizing bots,

55
00:03:37,400 --> 00:03:39,960
Speaker 2: some of these tokens were being bought and sold like

56
00:03:40,280 --> 00:03:44,880
Speaker 2: ten times a minute, and that activity, that trading activity

57
00:03:45,400 --> 00:03:48,760
Speaker 2: artificially inflated the value of the coins, and one of

58
00:03:48,760 --> 00:03:51,360
Speaker 2: the coins that issue went up to multi billion dollars

59
00:03:51,360 --> 00:03:54,720
Speaker 2: worth of value. And then when they reached the apex

60
00:03:54,760 --> 00:03:58,840
Speaker 2: of value. Defendants then sold off the token, causing their

61
00:03:58,920 --> 00:04:01,120
Speaker 2: value to then plummet, and so that's sort of the

62
00:04:01,880 --> 00:04:05,040
Speaker 2: wash trading was the quick buying and selling. It reaches

63
00:04:05,080 --> 00:04:07,600
Speaker 2: its apex, and then it's sort of part of the

64
00:04:07,640 --> 00:04:10,440
Speaker 2: pump and dump and then is sold off kind of

65
00:04:10,480 --> 00:04:13,640
Speaker 2: in a fire sale. And because all of this is

66
00:04:13,680 --> 00:04:18,000
Speaker 2: occurring on a public ledger, this blockchain, the FBI was

67
00:04:18,040 --> 00:04:21,159
Speaker 2: able to witness all of it, and in some cases

68
00:04:21,200 --> 00:04:24,920
Speaker 2: even there were allegations that there were complete sham transactions

69
00:04:24,920 --> 00:04:27,240
Speaker 2: that were occurring. I mean, that's especially what was occurring,

70
00:04:27,279 --> 00:04:31,840
Speaker 2: but even beyond that, some of the markets were trading

71
00:04:31,880 --> 00:04:35,640
Speaker 2: created multiple different wallets, which is a sort of unique

72
00:04:35,640 --> 00:04:40,200
Speaker 2: cryptocurrency term, but allowed them to really facilitate completely sham

73
00:04:40,240 --> 00:04:43,880
Speaker 2: transactions that would have otherwise likely got unnoticed. But for

74
00:04:44,320 --> 00:04:48,440
Speaker 2: again the ability for the FBI to be almost completely

75
00:04:48,520 --> 00:04:51,200
Speaker 2: embedded in every one of these transactions.

76
00:04:51,600 --> 00:04:55,240
Speaker 1: Were they targeting specific firms when they came up with

77
00:04:55,279 --> 00:04:56,560
Speaker 1: this plan, You.

78
00:04:56,600 --> 00:04:59,000
Speaker 2: Know, that's really interesting. I think it remains to be seen.

79
00:04:59,200 --> 00:05:01,080
Speaker 2: We'll have to see how the case unfolds and what

80
00:05:01,240 --> 00:05:04,920
Speaker 2: discovery shows us. Several defendants of already plead guilty which

81
00:05:04,920 --> 00:05:08,040
Speaker 2: makes you think that perhaps they were at the same time. Though,

82
00:05:08,080 --> 00:05:11,400
Speaker 2: what is so unique about like cryptocurrency is that and

83
00:05:11,800 --> 00:05:14,640
Speaker 2: that this was so novel, is that they postured this

84
00:05:14,800 --> 00:05:19,320
Speaker 2: coin as a really unique security related token, and that

85
00:05:19,880 --> 00:05:24,440
Speaker 2: from the outset was going to attract possible criminals. Criminals

86
00:05:24,480 --> 00:05:26,599
Speaker 2: or their frausters were attempting to use a token with

87
00:05:26,680 --> 00:05:31,320
Speaker 2: other security measures to protect their trading activity, to protect

88
00:05:31,320 --> 00:05:34,800
Speaker 2: their own finances, and so they think they certainly postured

89
00:05:34,839 --> 00:05:37,120
Speaker 2: it in a way that would have been to hopefully

90
00:05:37,560 --> 00:05:42,440
Speaker 2: attract possible bad actors. Whether they intentionally had specific ones

91
00:05:42,440 --> 00:05:44,240
Speaker 2: in mind, I would think that would be a little

92
00:05:44,240 --> 00:05:46,440
Speaker 2: bit difficult to do, just based upon the nature and

93
00:05:46,480 --> 00:05:50,560
Speaker 2: the fluidity of cryptocurrency, But they were certainly posturing it

94
00:05:50,600 --> 00:05:54,200
Speaker 2: from the outset in an attempt to sort of cast

95
00:05:54,240 --> 00:05:59,520
Speaker 2: a broad net and hope to bring in some bad actors. Certainly,

96
00:06:00,000 --> 00:06:00,400
Speaker 2: I mean.

97
00:06:00,520 --> 00:06:03,800
Speaker 1: They're selling this token. Didn't a lot of people buy it,

98
00:06:03,920 --> 00:06:06,800
Speaker 1: like average people or you know, people who didn't have

99
00:06:06,800 --> 00:06:07,680
Speaker 1: a criminal intent.

100
00:06:08,640 --> 00:06:11,440
Speaker 2: Absolutely, that's what's so fascinating about it. And if you

101
00:06:11,480 --> 00:06:13,440
Speaker 2: look at the press release that came out, there's a

102
00:06:13,480 --> 00:06:16,080
Speaker 2: link for anyone who bought this just part of the

103
00:06:16,080 --> 00:06:18,920
Speaker 2: general public. It's still trading. I think I thought it's

104
00:06:19,000 --> 00:06:21,760
Speaker 2: market value was somewhere like two hundred dollars a coin

105
00:06:21,880 --> 00:06:24,320
Speaker 2: or something at least as of a sort of last week.

106
00:06:24,400 --> 00:06:27,560
Speaker 2: So it's still trading. It's still out there. That is

107
00:06:27,560 --> 00:06:30,920
Speaker 2: what's so unique in this case. One of the things

108
00:06:31,000 --> 00:06:34,320
Speaker 2: unique about this the ability to create a cryptocurrency token.

109
00:06:34,720 --> 00:06:38,400
Speaker 2: In this decentralized world of finance, where you can do this,

110
00:06:38,480 --> 00:06:40,800
Speaker 2: it can still have its own independent value. It's being

111
00:06:40,880 --> 00:06:44,240
Speaker 2: utilized for law enforcement purposes, but if I were to

112
00:06:44,279 --> 00:06:46,640
Speaker 2: just go buy it, there's still a potential that I

113
00:06:46,680 --> 00:06:49,440
Speaker 2: could derive some you know, independent value as a result

114
00:06:49,560 --> 00:06:52,840
Speaker 2: of of how it's set up. It is almost impossible

115
00:06:52,880 --> 00:06:56,640
Speaker 2: to think of an analogous situation in the financial world

116
00:06:57,000 --> 00:06:59,400
Speaker 2: similar to this, Like the amount of work that would

117
00:06:59,400 --> 00:07:01,360
Speaker 2: be required they have we had to create a company

118
00:07:01,400 --> 00:07:04,039
Speaker 2: to go public, to sell something on the stock exchange,

119
00:07:04,040 --> 00:07:08,680
Speaker 2: it's just completely inconceivable, really, Whereas in this unique financial

120
00:07:08,720 --> 00:07:11,280
Speaker 2: contact that we have with cryptocurrency, this can be done

121
00:07:11,360 --> 00:07:13,800
Speaker 2: and it's both a value at the law enforcement and

122
00:07:13,880 --> 00:07:16,520
Speaker 2: even those of us who unwittingly bought it because we

123
00:07:16,520 --> 00:07:20,040
Speaker 2: thought it was interesting perhaps are not really being harmed

124
00:07:20,120 --> 00:07:23,440
Speaker 2: necessarily and so it is super interesting and this.

125
00:07:23,480 --> 00:07:27,600
Speaker 1: Also involves Cytoma. Tell me about the connection.

126
00:07:27,280 --> 00:07:30,480
Speaker 2: There, Well, Saitama was one of these coins that was

127
00:07:30,600 --> 00:07:33,600
Speaker 2: also being utilized here and part of the pump and

128
00:07:33,680 --> 00:07:36,160
Speaker 2: dumps game. The reason it is being talked about so

129
00:07:36,240 --> 00:07:40,280
Speaker 2: much is because this activity caused that token loan to

130
00:07:40,520 --> 00:07:43,760
Speaker 2: rise to be worth multi billion dollars, So to the

131
00:07:43,840 --> 00:07:46,800
Speaker 2: extent there was sort of large dollar amounts of fraud.

132
00:07:47,200 --> 00:07:48,920
Speaker 2: It relates to this Sitoma token.

133
00:07:49,720 --> 00:07:54,480
Speaker 1: Are the FEDS targeting cryptocurrency because they're seeing more crimes

134
00:07:54,480 --> 00:07:57,000
Speaker 1: in the area or they're seeing a potential for more

135
00:07:57,040 --> 00:07:57,520
Speaker 1: crimes in.

136
00:07:57,480 --> 00:08:00,720
Speaker 2: The area, Well, certainly, I mean you are saying increased

137
00:08:00,960 --> 00:08:05,320
Speaker 2: heightened regulatory activity within cryptocurrency rit large. I mean you

138
00:08:05,400 --> 00:08:08,800
Speaker 2: see the security is an exchange commission essentially going to

139
00:08:08,880 --> 00:08:13,120
Speaker 2: war with various cryptocurrency exchanges, attempting to regulate all of

140
00:08:13,120 --> 00:08:16,680
Speaker 2: cryptocurrency as a security. And you are seeing now the

141
00:08:16,760 --> 00:08:23,120
Speaker 2: FBI more aggressively target cryptocurrency investment schemes and activities, and

142
00:08:23,920 --> 00:08:27,600
Speaker 2: it is certainly drawing increased regulatory scrutiny. The more ways

143
00:08:27,640 --> 00:08:32,040
Speaker 2: in which cryptocurrency gained mainstream attention and is utilized by

144
00:08:32,240 --> 00:08:36,800
Speaker 2: regular investors, the more you're going to see regulators step

145
00:08:36,880 --> 00:08:39,839
Speaker 2: in to ensure the playing fielder is level and bad

146
00:08:39,880 --> 00:08:43,560
Speaker 2: actors aren't exploiting it. It is one thing to use,

147
00:08:43,880 --> 00:08:48,200
Speaker 2: and cryptocurrency has been used as a powerful money launering device,

148
00:08:48,520 --> 00:08:51,440
Speaker 2: but when you are getting into straight up investment schemes

149
00:08:51,480 --> 00:08:53,840
Speaker 2: and investment frauds, this is what you would hope to

150
00:08:53,840 --> 00:08:58,320
Speaker 2: see from government regulators stepping into police this activity. And

151
00:08:58,800 --> 00:09:01,360
Speaker 2: I think this is certainly a sign of things to come.

152
00:09:01,520 --> 00:09:06,960
Speaker 2: So other bad actors, people with improper investment schemes, certainly,

153
00:09:07,280 --> 00:09:10,320
Speaker 2: I think, are going to be on high alert and

154
00:09:10,360 --> 00:09:14,199
Speaker 2: should be given the increased regulatory and law enforcement scrutiny

155
00:09:14,240 --> 00:09:14,760
Speaker 2: in this space.

156
00:09:15,240 --> 00:09:20,080
Speaker 1: So does the DOJ have a specific team deals with cryptocurrency.

157
00:09:20,440 --> 00:09:22,640
Speaker 2: They do, and they have they have several actually, so

158
00:09:22,720 --> 00:09:26,160
Speaker 2: within DOJ's Made Justice component there is that what's called

159
00:09:26,200 --> 00:09:30,120
Speaker 2: the National Cryptocurrency Enforcement Team, and they do a lot

160
00:09:30,240 --> 00:09:35,160
Speaker 2: of cryptocurrency cyber related fraud. That actually that that team

161
00:09:35,400 --> 00:09:37,360
Speaker 2: and set, as they're known, does not appear to have

162
00:09:37,360 --> 00:09:40,600
Speaker 2: been involved in this investigation, though it's possible they were

163
00:09:40,640 --> 00:09:42,199
Speaker 2: behind the scenes. It looked like there was a lot

164
00:09:42,200 --> 00:09:46,760
Speaker 2: of different components that were helping. Within various US Attorney's

165
00:09:46,760 --> 00:09:51,359
Speaker 2: offices and Department of Justice components, there are specific sections

166
00:09:51,480 --> 00:09:55,920
Speaker 2: that work with financial crimes, cybercrimes, and cryptocurrency related activity.

167
00:09:56,000 --> 00:09:59,559
Speaker 2: And as cryptocurrency becomes more mainstream because we're part of

168
00:09:59,600 --> 00:10:04,560
Speaker 2: the financi system, you are seeing greater capabilities within federal

169
00:10:04,600 --> 00:10:09,520
Speaker 2: law enforcement to both trace cryptocurrency, to follow investment schemes,

170
00:10:09,559 --> 00:10:13,120
Speaker 2: and in this case, a very sophisticated and novel effort

171
00:10:13,480 --> 00:10:17,439
Speaker 2: to really create exactly to describe it, an undercover sting

172
00:10:17,520 --> 00:10:19,319
Speaker 2: operations related to cryptocurrency.

173
00:10:19,360 --> 00:10:19,680
Speaker 1: I mean you.

174
00:10:19,679 --> 00:10:22,800
Speaker 2: Would see stuff like this in like a drug dealer context,

175
00:10:22,800 --> 00:10:25,560
Speaker 2: where you watch that you have an undercover agent deliver

176
00:10:25,679 --> 00:10:29,520
Speaker 2: the drug. You see it sometimes in like money laundered investigations,

177
00:10:29,520 --> 00:10:32,440
Speaker 2: where you have the government or federal agents attempt to

178
00:10:32,559 --> 00:10:36,600
Speaker 2: launder clean funds through a money laundering organization to see

179
00:10:36,600 --> 00:10:39,080
Speaker 2: where the money goes. But even still you don't quite

180
00:10:39,120 --> 00:10:41,360
Speaker 2: have the control and the visibility that you would have

181
00:10:41,480 --> 00:10:46,319
Speaker 2: with cryptocurrency. This is a real demonstration of sophisticated efforts

182
00:10:46,320 --> 00:10:50,559
Speaker 2: by the DOJ to track and to follow cryptocurrency investment fraud.

183
00:10:50,720 --> 00:10:54,679
Speaker 1: Coming up, could the defense raise entrapment. This is Bloomberg.

184
00:10:56,080 --> 00:10:59,320
Speaker 1: We've been talking about an elaborate sting operation in which

185
00:10:59,320 --> 00:11:04,080
Speaker 1: the FBI created its own crypto tokens, and as a result,

186
00:11:04,120 --> 00:11:07,480
Speaker 1: prosecutors were able to bring the first ever criminal charges

187
00:11:07,760 --> 00:11:12,760
Speaker 1: against financial services firms for market manipulation and wash trading

188
00:11:13,080 --> 00:11:16,800
Speaker 1: in the cryptocurrency industry. I've been talking to former federal

189
00:11:16,840 --> 00:11:20,880
Speaker 1: prosecutor Seth Kertz of Dorsey and Whitney. Do you think

190
00:11:20,920 --> 00:11:24,079
Speaker 1: that the defense will raise entrapment claims?

191
00:11:24,400 --> 00:11:27,240
Speaker 2: You know, entrapment is always a potential when you have

192
00:11:27,480 --> 00:11:31,360
Speaker 2: undercover operations, when you have issues like this, But what

193
00:11:31,520 --> 00:11:34,120
Speaker 2: you can always do to well, what the government will

194
00:11:34,120 --> 00:11:37,480
Speaker 2: surely do is that the defendants were doing this with

195
00:11:37,640 --> 00:11:40,559
Speaker 2: or without them anyway, and you show that by their

196
00:11:40,600 --> 00:11:43,640
Speaker 2: repeated pattern of conduct. And so when you have sixty

197
00:11:43,679 --> 00:11:47,440
Speaker 2: other tokens that were being manipulated in the same manner

198
00:11:47,480 --> 00:11:49,960
Speaker 2: that we're being washed, traded and then pumped and dumped

199
00:11:49,960 --> 00:11:52,120
Speaker 2: in the same way as next one, that's a very

200
00:11:52,160 --> 00:11:55,800
Speaker 2: difficult argument to make in good faith the entrapment issue.

201
00:11:55,880 --> 00:11:58,800
Speaker 2: I think one of them certainly will likely make it.

202
00:11:59,040 --> 00:12:03,600
Speaker 2: What becomes difficult cyber and cryptocurrency context is putting a person,

203
00:12:04,040 --> 00:12:07,600
Speaker 2: an individual person behind the keyboard, behind the computer screen,

204
00:12:08,160 --> 00:12:12,480
Speaker 2: attributing specific conduct to an individual when it's occurring digitally,

205
00:12:12,559 --> 00:12:16,559
Speaker 2: and so it will be interesting to see what contemporaneous emails,

206
00:12:16,600 --> 00:12:20,360
Speaker 2: with contemporaneous text messages that the DOJ was able to

207
00:12:20,400 --> 00:12:24,120
Speaker 2: get to attach specific individuals.

208
00:12:23,400 --> 00:12:26,319
Speaker 1: To this conduct because they use bots.

209
00:12:26,400 --> 00:12:29,880
Speaker 2: Because they use bots, because when it's an entity, when

210
00:12:29,880 --> 00:12:33,080
Speaker 2: it's an online and essentially an online decentralized entity that

211
00:12:33,200 --> 00:12:35,280
Speaker 2: is causing the activity to occur, it's hard to know

212
00:12:35,360 --> 00:12:38,480
Speaker 2: which specific you know, human being was actually causing that occur.

213
00:12:38,600 --> 00:12:42,000
Speaker 2: So you're exactly right, it's certainly these entities, these market

214
00:12:42,080 --> 00:12:45,440
Speaker 2: platforms were doing the were guilty of the bad conduct,

215
00:12:45,440 --> 00:12:49,160
Speaker 2: But which actual individuals have the specific criminal intent that

216
00:12:49,240 --> 00:12:52,960
Speaker 2: were causing these activities to occur. That's where it becomes

217
00:12:53,000 --> 00:12:58,120
Speaker 2: tricky in a cyber fraud cryptocurrency related criminal investigation. You know,

218
00:12:58,200 --> 00:13:01,720
Speaker 2: the activities occurred, demonstrate that is no problem in this case,

219
00:13:01,920 --> 00:13:04,599
Speaker 2: you see it, you can watch it. But actually attributing

220
00:13:04,600 --> 00:13:08,200
Speaker 2: that to a specific human being and then demonstrating criminal

221
00:13:08,240 --> 00:13:10,760
Speaker 2: intent to commit a fraud, that's where it becomes a

222
00:13:10,800 --> 00:13:13,160
Speaker 2: little trickier. And so you will need you would think

223
00:13:13,480 --> 00:13:18,600
Speaker 2: specific communications, other types of evidence to attach a person

224
00:13:18,840 --> 00:13:20,160
Speaker 2: to the actual conduct.

225
00:13:20,679 --> 00:13:25,080
Speaker 1: Has the DOJ done many trials involving cryptocurrency or do

226
00:13:25,160 --> 00:13:27,480
Speaker 1: they usually settle beforehand?

227
00:13:28,200 --> 00:13:30,040
Speaker 2: No, the DOJ, this is an area in which they

228
00:13:30,080 --> 00:13:34,160
Speaker 2: are definitely increasing their competence, their capabilities. They are in

229
00:13:34,240 --> 00:13:37,120
Speaker 2: trial routinely on these issues. I think this is the

230
00:13:37,160 --> 00:13:41,199
Speaker 2: first instance in which you have a full fledged undercover

231
00:13:41,280 --> 00:13:44,120
Speaker 2: operations of the creation of their own token. So it

232
00:13:44,120 --> 00:13:46,480
Speaker 2: will be interesting to see how the DOJ has to

233
00:13:46,520 --> 00:13:49,000
Speaker 2: put on that evidence. That's to explain how they did it,

234
00:13:49,240 --> 00:13:51,440
Speaker 2: how they created it, and communicate it in a way

235
00:13:51,440 --> 00:13:53,920
Speaker 2: in which they don't lose the jury, in which they

236
00:13:53,920 --> 00:13:56,199
Speaker 2: can demonstrate the activity of the curve. And there's a

237
00:13:56,240 --> 00:13:59,439
Speaker 2: lot of different concepts going on here. You have cryptocurrency

238
00:13:59,640 --> 00:14:01,800
Speaker 2: just on the one hand, explain that to a jury,

239
00:14:01,840 --> 00:14:05,000
Speaker 2: explain the creation of a token, explaining that the issues

240
00:14:05,040 --> 00:14:07,440
Speaker 2: with the type of investment fraud that was occurring here,

241
00:14:07,920 --> 00:14:11,040
Speaker 2: explaining the crime that occurred, and then having to put

242
00:14:11,080 --> 00:14:15,040
Speaker 2: specific individuals or tax specific individuals to that crime. So

243
00:14:15,080 --> 00:14:17,240
Speaker 2: there is a lot of moving parts. You know, several

244
00:14:17,280 --> 00:14:20,280
Speaker 2: defendants have already played guilty. They're likely going to cooperate

245
00:14:20,440 --> 00:14:22,520
Speaker 2: against those who don't, and so that's going to be

246
00:14:22,680 --> 00:14:26,880
Speaker 2: very powerful evidence. Having cooperating testimony, which will be I

247
00:14:26,880 --> 00:14:29,240
Speaker 2: would imagine its hugely helped with the government here, But

248
00:14:29,320 --> 00:14:31,160
Speaker 2: there is still a lot of moving parts and a

249
00:14:31,200 --> 00:14:33,360
Speaker 2: lot that you would have to prove and a trial

250
00:14:33,480 --> 00:14:36,200
Speaker 2: like this and so well, the dj certainly has experience

251
00:14:36,200 --> 00:14:39,640
Speaker 2: in cybercrimes and cryptocurrency. This is novel, and it will

252
00:14:39,640 --> 00:14:42,080
Speaker 2: be interesting to see how they put this evidence on

253
00:14:42,160 --> 00:14:43,400
Speaker 2: at trials should one occur.

254
00:14:44,160 --> 00:14:49,880
Speaker 1: In researching this, I saw some basically anonymous allegations that

255
00:14:49,960 --> 00:14:55,320
Speaker 1: the FBI, in creating this token had violated the copyright laws,

256
00:14:55,960 --> 00:14:58,760
Speaker 1: perhaps by not getting a license on the code.

257
00:14:59,240 --> 00:15:01,520
Speaker 2: Oh that's interesting, well, you know, and that will be

258
00:15:02,240 --> 00:15:06,280
Speaker 2: that's that's where this does become interesting, because how the

259
00:15:06,360 --> 00:15:11,000
Speaker 2: FBI created its token and you know, the propriety of

260
00:15:11,080 --> 00:15:13,720
Speaker 2: it doing so, and whether it was a you know,

261
00:15:14,040 --> 00:15:18,560
Speaker 2: legally authorized token for any number of reasons. It's certainly

262
00:15:18,560 --> 00:15:22,560
Speaker 2: an interesting question and possibly goes to an entrapment defense. Potentially,

263
00:15:22,920 --> 00:15:25,160
Speaker 2: it is something I would think defense would certainly try

264
00:15:25,160 --> 00:15:29,080
Speaker 2: to raise. But whether that was or not, I think

265
00:15:29,320 --> 00:15:31,720
Speaker 2: the difficult to get defendants have in this case is

266
00:15:31,760 --> 00:15:34,600
Speaker 2: that it wasn't just the FBI token that was manipulated.

267
00:15:35,200 --> 00:15:38,360
Speaker 2: It was the FBI token along with sixty others. And

268
00:15:38,400 --> 00:15:41,280
Speaker 2: what the FBI token allowed FBI to do was to

269
00:15:41,360 --> 00:15:45,840
Speaker 2: get complete visibility into how these defendants were manipulating the

270
00:15:45,880 --> 00:15:50,760
Speaker 2: cryptocurrency market through their activities. And so even if sort

271
00:15:50,760 --> 00:15:53,360
Speaker 2: of there were issues with this FBI tokens, they still

272
00:15:53,360 --> 00:15:55,600
Speaker 2: have all the evidence of the visibility of how they

273
00:15:55,640 --> 00:15:59,960
Speaker 2: were manipulating fifty nine others. That's speculation of my part

274
00:16:00,600 --> 00:16:02,640
Speaker 2: without sort of knowing too much of the weeds of

275
00:16:02,680 --> 00:16:05,840
Speaker 2: how the token was created. But it is interesting, and

276
00:16:06,400 --> 00:16:09,720
Speaker 2: the unique thing about cryptocurrency is once you can get

277
00:16:09,720 --> 00:16:12,240
Speaker 2: a window into the activity that's occurring and you sort

278
00:16:12,240 --> 00:16:15,560
Speaker 2: of get an ability to model it to understand it.

279
00:16:15,640 --> 00:16:19,640
Speaker 2: The nature of a public ledger, a blockchain allows so

280
00:16:19,800 --> 00:16:23,800
Speaker 2: much visibility into how activity is occurring that if you

281
00:16:23,840 --> 00:16:27,080
Speaker 2: are doing it on a wide scale basis, as it

282
00:16:27,080 --> 00:16:30,920
Speaker 2: appears these defendants were, law enforcement is given a tremendous

283
00:16:30,960 --> 00:16:32,640
Speaker 2: amount of information as a result of that.

284
00:16:33,800 --> 00:16:36,160
Speaker 1: And the acting US Attorney said, this is a case

285
00:16:36,200 --> 00:16:42,200
Speaker 1: where an innovative technology cryptocurrency met a century old scheme

286
00:16:42,560 --> 00:16:43,400
Speaker 1: to pump and dump.

287
00:16:43,760 --> 00:16:47,120
Speaker 2: It's an interesting case and that you have in a

288
00:16:47,160 --> 00:16:50,320
Speaker 2: lot of ways, these old school methods, old school types

289
00:16:50,320 --> 00:16:53,760
Speaker 2: of investment fraud being brought forward into a more advanced

290
00:16:53,800 --> 00:16:57,600
Speaker 2: digital age. And you have various investigative tools like undercover

291
00:16:57,680 --> 00:17:01,760
Speaker 2: operations that have existed forever but being brought forward into

292
00:17:01,800 --> 00:17:05,119
Speaker 2: again more advanced digital age. And you're seeing the interplay

293
00:17:05,160 --> 00:17:08,679
Speaker 2: of those and you're seeing, you know, cryptocurrency so often

294
00:17:08,760 --> 00:17:12,040
Speaker 2: hear about how it is utilized by criminals to obviouscate

295
00:17:12,080 --> 00:17:15,359
Speaker 2: in the high activity. Well, the government has now entered

296
00:17:15,440 --> 00:17:17,480
Speaker 2: the playing field, and he was using it in a

297
00:17:17,520 --> 00:17:21,119
Speaker 2: way to hide and to allow a very sophisticated undercover

298
00:17:21,160 --> 00:17:22,439
Speaker 2: operation to go forward.

299
00:17:22,800 --> 00:17:26,080
Speaker 1: Perhaps this is the first of many. Thanks so much, Seth.

300
00:17:26,359 --> 00:17:29,359
Speaker 1: That's Seth Gertz, a partner at Dorsey and Whitney. Turning

301
00:17:29,440 --> 00:17:31,760
Speaker 1: to a trial now in which the jury is being

302
00:17:31,800 --> 00:17:36,560
Speaker 1: selected in Illinois. The defendant's reign over Illinois politics is

303
00:17:36,600 --> 00:17:40,879
Speaker 1: reflected in his nickname the Velvet Hammer, earned because of

304
00:17:40,920 --> 00:17:44,080
Speaker 1: the way he led the Illinois House of Representatives and

305
00:17:44,200 --> 00:17:48,359
Speaker 1: extracted fealty from its members. As the longest serving House

306
00:17:48,480 --> 00:17:52,040
Speaker 1: leader of any state in US history, but now at

307
00:17:52,080 --> 00:17:56,800
Speaker 1: eighty two. Michael Madigan is facing corruption charges for allegedly

308
00:17:56,880 --> 00:18:01,520
Speaker 1: running a criminal enterprise for nearly a decade, a multimillion

309
00:18:01,600 --> 00:18:06,320
Speaker 1: dollar racketeering and bribery scheme that included the state's largest

310
00:18:06,440 --> 00:18:10,040
Speaker 1: utility comm ed and the case will test the government's

311
00:18:10,080 --> 00:18:15,000
Speaker 1: ability to prosecute corruption after the Supreme Court case narrowing

312
00:18:15,040 --> 00:18:18,879
Speaker 1: the scope of a federal bribery law last term. Joining

313
00:18:18,920 --> 00:18:22,959
Speaker 1: me is former federal prosecutor Brian Klein, a partner Waymaker

314
00:18:23,359 --> 00:18:24,879
Speaker 1: tell us about the charges here.

315
00:18:25,400 --> 00:18:29,560
Speaker 3: Yeah, he's charged with racketeering, bribery, and wire fraud. And

316
00:18:29,600 --> 00:18:33,000
Speaker 3: that's expected to be a ten week trial. Obviously, things

317
00:18:33,000 --> 00:18:35,520
Speaker 3: have been going on for quite some time. There's been

318
00:18:35,560 --> 00:18:40,000
Speaker 3: other trials of other defendants tied to these charges. He's

319
00:18:40,080 --> 00:18:43,200
Speaker 3: charged with basically trading on his position as the leader

320
00:18:43,240 --> 00:18:46,280
Speaker 3: of the state House of Representatives. I'm the chairman of

321
00:18:46,320 --> 00:18:49,440
Speaker 3: the Democratic Party in Illinois as well as he's also

322
00:18:49,880 --> 00:18:52,480
Speaker 3: I believe involved an award and he worked at a

323
00:18:52,560 --> 00:18:55,439
Speaker 3: law firm to a tax firm, probably tax firm, So

324
00:18:55,520 --> 00:19:00,320
Speaker 3: basically trading his position of power for financial benefits getting

325
00:19:00,359 --> 00:19:02,080
Speaker 3: things through the legislature.

326
00:19:02,440 --> 00:19:04,680
Speaker 1: How far back to the allegations.

327
00:19:04,000 --> 00:19:06,960
Speaker 3: Go, they switched back to years and he was really

328
00:19:07,440 --> 00:19:10,240
Speaker 3: like a living legend in the state of Illinois because

329
00:19:10,280 --> 00:19:13,520
Speaker 3: of the power he accumulated at length time that he

330
00:19:13,720 --> 00:19:16,919
Speaker 3: was in power. And this is obviously a very important

331
00:19:17,000 --> 00:19:20,560
Speaker 3: case following the Supreme Court Snyder ruling that came out

332
00:19:20,800 --> 00:19:25,280
Speaker 3: earlier this year, which essentially said that you know, just

333
00:19:25,320 --> 00:19:28,960
Speaker 3: giving a politician to gratuity isn't enough to make it

334
00:19:29,000 --> 00:19:31,760
Speaker 3: a federal crime. The federal bribery laws, you actually have

335
00:19:31,840 --> 00:19:35,080
Speaker 3: to have a quid pro quote an exchange, so you

336
00:19:35,119 --> 00:19:38,160
Speaker 3: give them some money or a watch or something in exchange,

337
00:19:38,240 --> 00:19:40,160
Speaker 3: they are going to actually take an official act.

338
00:19:40,600 --> 00:19:43,359
Speaker 1: The government here is alleging that there was this quid

339
00:19:43,400 --> 00:19:46,400
Speaker 1: pro quote, that there was a deal in place before

340
00:19:47,000 --> 00:19:48,920
Speaker 1: the alleged corruption.

341
00:19:50,240 --> 00:19:52,960
Speaker 3: They are his lawyers. After the Snyder ruling came down,

342
00:19:53,200 --> 00:19:55,600
Speaker 3: sought to have certain of the charges dismissed and challenge

343
00:19:55,680 --> 00:19:58,399
Speaker 3: them and they lost that ruling, and they're in the

344
00:19:58,480 --> 00:20:03,080
Speaker 3: Seventh Circuit. That circuit has its view of the bribery

345
00:20:03,119 --> 00:20:06,359
Speaker 3: statutes and how briberry is effectuated, has this stream of

346
00:20:06,440 --> 00:20:09,960
Speaker 3: payments theory, so it's not just one payment for one act.

347
00:20:10,480 --> 00:20:12,800
Speaker 3: You can have an agreement that you reach and then

348
00:20:12,840 --> 00:20:15,800
Speaker 3: over time, there can be these streams of payment, and

349
00:20:15,840 --> 00:20:18,560
Speaker 3: it's I think potentially possible that, like you can't match

350
00:20:18,640 --> 00:20:21,919
Speaker 3: up every payment with some act, but it's sort of

351
00:20:22,400 --> 00:20:26,000
Speaker 3: the theory is there's this ongoing relationship where you're doing

352
00:20:26,080 --> 00:20:29,280
Speaker 3: these quid pro quos and you're getting payments over time.

353
00:20:29,320 --> 00:20:32,440
Speaker 3: So those are the focus of these allegations. Of course,

354
00:20:32,480 --> 00:20:36,840
Speaker 3: his lawyers dispute this. You know, he's presumed innocent, found guilty,

355
00:20:37,040 --> 00:20:40,000
Speaker 3: and you know there's been fighting very hard on his

356
00:20:40,119 --> 00:20:41,560
Speaker 3: behalf before we.

357
00:20:41,560 --> 00:20:45,119
Speaker 1: Get to his possible defenses. So is the heart of

358
00:20:45,160 --> 00:20:51,040
Speaker 1: the prosecution's case, this informant former Chicago alderman appears to be.

359
00:20:51,119 --> 00:20:54,040
Speaker 3: They also have a lot of tastes. Unclear who actually

360
00:20:54,080 --> 00:20:56,560
Speaker 3: made all those tastes, at least right now, but there's

361
00:20:56,600 --> 00:20:59,280
Speaker 3: a lot of you know what you call like secret

362
00:20:59,320 --> 00:21:02,959
Speaker 3: recordings they plan introduced. I think there's hundreds of them.

363
00:21:02,960 --> 00:21:04,240
Speaker 3: I don't know if they're prod uce all of them,

364
00:21:05,040 --> 00:21:08,159
Speaker 3: but it does appear that, you know, their case is

365
00:21:08,200 --> 00:21:11,080
Speaker 3: built on sort of peeking behind the curtain of what

366
00:21:11,359 --> 00:21:14,359
Speaker 3: happened here with recordings, and presumably they're going to call

367
00:21:14,400 --> 00:21:17,800
Speaker 3: witnesses who were around and actually witnessed them, whether they

368
00:21:17,920 --> 00:21:20,359
Speaker 3: knew about them or just were asked to do.

369
00:21:20,240 --> 00:21:25,240
Speaker 1: Something incline of waymaker. The government has already won convictions

370
00:21:25,240 --> 00:21:30,080
Speaker 1: against several people since it started to investigate the former

371
00:21:30,160 --> 00:21:34,600
Speaker 1: speaker and other Illinois politicians. Individuals known as the comment

372
00:21:34,840 --> 00:21:38,879
Speaker 1: for for instance, were convicted of facilitating the hiring of

373
00:21:38,880 --> 00:21:43,160
Speaker 1: Madigan associates for no work jobs. So jurors delivered guilty

374
00:21:43,240 --> 00:21:47,399
Speaker 1: verdicts in those cases for conspiring to bribe Madigan. But

375
00:21:47,480 --> 00:21:51,240
Speaker 1: then but the jury failed to reach a verdict in

376
00:21:51,320 --> 00:21:54,960
Speaker 1: a case charging former at and T Illinois President Paul

377
00:21:55,040 --> 00:21:59,600
Speaker 1: Lochiatza with bribing Madigan. So the government has had mixed

378
00:21:59,680 --> 00:22:02,160
Speaker 1: verdicts having to do with these facts.

379
00:22:03,200 --> 00:22:05,840
Speaker 3: Well, it's a little hard to say because each trial

380
00:22:05,920 --> 00:22:09,679
Speaker 3: is so specific, you know, and Madigan's going to be

381
00:22:09,800 --> 00:22:12,040
Speaker 3: He's the center point, you know, He's the big fish

382
00:22:12,080 --> 00:22:16,199
Speaker 3: here what they're going after. So sometimes, and I'll just

383
00:22:16,240 --> 00:22:19,280
Speaker 3: call it a little fish, trials go mix directions for

384
00:22:19,359 --> 00:22:22,959
Speaker 3: various reasons. But it doesn't mean, you know, I wouldn't

385
00:22:23,000 --> 00:22:26,160
Speaker 3: read too much into it about how successful they may

386
00:22:26,200 --> 00:22:29,919
Speaker 3: be improving their charges against Madigan. Now, there's an advantage

387
00:22:29,920 --> 00:22:32,800
Speaker 3: to the defense here, which is they learn a lot

388
00:22:32,880 --> 00:22:35,480
Speaker 3: about the government theory of the case. They also have

389
00:22:35,520 --> 00:22:40,680
Speaker 3: transcripts from those trials, So the defense has an advantage

390
00:22:40,680 --> 00:22:44,040
Speaker 3: in that sense. It's not walking into you know, there's

391
00:22:44,080 --> 00:22:45,720
Speaker 3: not going to be as many surprises for them, and

392
00:22:45,840 --> 00:22:51,600
Speaker 3: allows them to prepare better for cross examination, exhibit, to

393
00:22:51,640 --> 00:22:54,000
Speaker 3: think through how they're going to challenge the government's case.

394
00:22:55,359 --> 00:22:57,840
Speaker 1: I mean, does the government have any advantage by having

395
00:22:57,880 --> 00:23:02,400
Speaker 1: been through a presentation of something close to what they

396
00:23:02,400 --> 00:23:03,360
Speaker 1: have against Madigan?

397
00:23:04,359 --> 00:23:06,240
Speaker 3: Yeah, they had this. They had a like sort of

398
00:23:06,240 --> 00:23:08,840
Speaker 3: the other side of that coin, which is they now

399
00:23:08,960 --> 00:23:11,960
Speaker 3: can see what was resonating arguably with the jury and

400
00:23:11,960 --> 00:23:15,000
Speaker 3: what wasn't. So in the hung trial hujury trial, they

401
00:23:15,000 --> 00:23:18,480
Speaker 3: may they feel like they can recalibrate some of their

402
00:23:18,520 --> 00:23:21,159
Speaker 3: presentation to deal with issues. They may. I don't know

403
00:23:21,160 --> 00:23:22,959
Speaker 3: that they did, but it's possible they spoke with some

404
00:23:23,000 --> 00:23:27,240
Speaker 3: of the jurors afterwards. Possible they learned things during the

405
00:23:27,280 --> 00:23:30,400
Speaker 3: trial just because observe jurors, how they were responding, whether

406
00:23:30,440 --> 00:23:34,879
Speaker 3: they were paying attention. So each side gains information. You know,

407
00:23:34,920 --> 00:23:36,359
Speaker 3: the real question is who's going to be able to

408
00:23:36,400 --> 00:23:37,280
Speaker 3: put its better use.

409
00:23:38,119 --> 00:23:41,480
Speaker 1: So you mentioned that the Supreme Court has narrowed the

410
00:23:41,520 --> 00:23:45,040
Speaker 1: scope of the federal bribery law. That's the federal bribery

411
00:23:45,119 --> 00:23:46,600
Speaker 1: law that's at issue.

412
00:23:46,240 --> 00:23:49,720
Speaker 3: Here, Snyder case. You know, it's far reaching implications, not

413
00:23:49,840 --> 00:23:52,960
Speaker 3: just for this case with Madigan, but when the federal

414
00:23:52,960 --> 00:23:56,119
Speaker 3: prosecutes are playing federal bribery statutes, you know, the courts

415
00:23:56,119 --> 00:23:58,359
Speaker 3: are going to be looking at whether there was a

416
00:23:58,400 --> 00:24:01,480
Speaker 3: quid pro qo and how that's viewed is open to

417
00:24:01,520 --> 00:24:05,040
Speaker 3: interpretation by lower courts. But you know, not all of

418
00:24:05,040 --> 00:24:07,400
Speaker 3: his charges relate to that either. So he has other

419
00:24:07,480 --> 00:24:11,040
Speaker 3: charges fire fraud right as an example, So that's not

420
00:24:11,240 --> 00:24:14,080
Speaker 3: going to be covered by that. So but you know,

421
00:24:14,720 --> 00:24:16,800
Speaker 3: I think if you're a defense lawyer, and I'm sure

422
00:24:17,400 --> 00:24:19,320
Speaker 3: his lawyers here are looking at them and saying, look,

423
00:24:19,359 --> 00:24:22,480
Speaker 3: we want to maybe we can use those charges to

424
00:24:22,520 --> 00:24:25,240
Speaker 3: help undermine the other charges too, So you know, we

425
00:24:25,240 --> 00:24:29,000
Speaker 3: can knock out, you know, the bribery charges either with

426
00:24:29,040 --> 00:24:31,280
Speaker 3: the jury or the judge at some point along the way,

427
00:24:32,000 --> 00:24:35,680
Speaker 3: and that will expose deficiencies or cause the judge or

428
00:24:35,680 --> 00:24:38,600
Speaker 3: the jury or both to question the government's case overall.

429
00:24:39,320 --> 00:24:41,200
Speaker 3: So I think, you know, it's always helpful with the

430
00:24:41,240 --> 00:24:44,640
Speaker 3: defense lawyer if you have Supreme court precedent coming out

431
00:24:44,760 --> 00:24:48,359
Speaker 3: that generally is supportive or helps you.

432
00:24:50,560 --> 00:24:53,120
Speaker 1: One of the defenses is something that we hear over

433
00:24:53,160 --> 00:24:55,760
Speaker 1: and over again. I mean Eric Adams, who was just

434
00:24:55,800 --> 00:24:58,160
Speaker 1: indicted in New York. The mayor of New York has

435
00:24:58,160 --> 00:25:02,159
Speaker 1: said this, and his attorneys have said it basically, you know,

436
00:25:02,720 --> 00:25:05,800
Speaker 1: this is what politicians do. We do favors for people.

437
00:25:06,720 --> 00:25:09,679
Speaker 3: Yes, And I think that's a common defense in these

438
00:25:09,720 --> 00:25:12,760
Speaker 3: types of cases. And also, frankly, a lot of jurors

439
00:25:12,760 --> 00:25:15,640
Speaker 3: are going to understand or feel that politicians do trade

440
00:25:15,680 --> 00:25:19,360
Speaker 3: on favors, right, that's just the practical reality and perception

441
00:25:19,440 --> 00:25:21,760
Speaker 3: of politicians. Now, a lot of people also think that

442
00:25:22,600 --> 00:25:28,120
Speaker 3: all or most politicians are corrupt, So that cuts both ways, right. Probably,

443
00:25:28,520 --> 00:25:32,760
Speaker 3: you know they're going to get these twelve jurors plus

444
00:25:32,800 --> 00:25:34,920
Speaker 3: six or whatever number of ultimates. They're going to have

445
00:25:34,960 --> 00:25:38,880
Speaker 3: their own real life experiences understanding of politics and their

446
00:25:38,960 --> 00:25:41,120
Speaker 3: views on it. This is going to be vetted during

447
00:25:41,160 --> 00:25:45,040
Speaker 3: the jury selection process. But you know, you ask most

448
00:25:45,080 --> 00:25:48,760
Speaker 3: people in the street, are politicians corrupt? Do they trade favors?

449
00:25:48,760 --> 00:25:50,600
Speaker 3: The answer is going to be yes, A lot of

450
00:25:50,600 --> 00:25:54,320
Speaker 3: them are. So I don't know how that's going to

451
00:25:54,359 --> 00:25:57,320
Speaker 3: play out. With this jury. But I think, you know,

452
00:25:57,480 --> 00:26:00,960
Speaker 3: they're because of these recordings, which is the presumably has

453
00:26:01,000 --> 00:26:02,480
Speaker 3: listened to, and because they've seen a lot of the

454
00:26:02,480 --> 00:26:04,159
Speaker 3: evidence because the government has to give it to him

455
00:26:04,160 --> 00:26:06,879
Speaker 3: in advance. You know, they have to deal with the

456
00:26:06,920 --> 00:26:09,400
Speaker 3: reality of some of the statements, some of the things

457
00:26:09,440 --> 00:26:12,359
Speaker 3: that happened. They can't just pretend it didn't happen. My

458
00:26:12,440 --> 00:26:14,679
Speaker 3: guess is that the government has a lot of proof

459
00:26:15,440 --> 00:26:18,240
Speaker 3: of a number of these things. The question is, how

460
00:26:18,240 --> 00:26:21,320
Speaker 3: do you, you know, look at it overall, like what happened?

461
00:26:21,600 --> 00:26:23,240
Speaker 3: And I think the defense is going to say, Okay,

462
00:26:23,960 --> 00:26:25,960
Speaker 3: each of these may be little trees, but let's look

463
00:26:25,960 --> 00:26:29,520
Speaker 3: at the forest here, right, or maybe the opposite that say,

464
00:26:30,240 --> 00:26:32,439
Speaker 3: government's trying to tell you this is one big forest,

465
00:26:32,960 --> 00:26:34,760
Speaker 3: but let's look at each of these acts and look

466
00:26:34,760 --> 00:26:38,160
Speaker 3: at the trees and it is so you know, that's

467
00:26:38,160 --> 00:26:40,120
Speaker 3: going to be an interesting thing to see play out,

468
00:26:40,200 --> 00:26:45,040
Speaker 3: is how the defense responds to the recordings, however, responds

469
00:26:45,080 --> 00:26:48,639
Speaker 3: to the witnesses who come in. And you know, we

470
00:26:48,760 --> 00:26:51,479
Speaker 3: will learn a lot with the opening statements, because that's

471
00:26:51,800 --> 00:26:55,000
Speaker 3: both sides opportunity to frame the case for the jury

472
00:26:55,000 --> 00:26:57,920
Speaker 3: at the very beginning and how they expect the evidence

473
00:26:58,119 --> 00:27:01,320
Speaker 3: to come in, both witness testimonies and documents and recording.

474
00:27:02,240 --> 00:27:04,480
Speaker 1: So I mean this is a kind of case if

475
00:27:04,520 --> 00:27:08,960
Speaker 1: he loses, that the Supreme Court could take up as

476
00:27:08,960 --> 00:27:12,639
Speaker 1: sort of the next And they're continuing cutting back on

477
00:27:12,880 --> 00:27:14,680
Speaker 1: prosecutions of public corruption.

478
00:27:15,240 --> 00:27:18,320
Speaker 3: Spreme Court has been very interested in public corruption cases

479
00:27:18,359 --> 00:27:20,840
Speaker 3: in the last five to ten years. They've addressed a

480
00:27:20,920 --> 00:27:25,000
Speaker 3: number of it. They've really narrowed prosecutors' views of the

481
00:27:25,000 --> 00:27:28,520
Speaker 3: statutes and the cases. And I think that the defense

482
00:27:29,040 --> 00:27:32,720
Speaker 3: is clearly aware of that. I think brief Snyder recently,

483
00:27:32,880 --> 00:27:36,359
Speaker 3: there's no doubt thinking ahead of it. If our client

484
00:27:36,400 --> 00:27:38,960
Speaker 3: gets convicted, we want to have a good record for appeal.

485
00:27:39,480 --> 00:27:42,240
Speaker 3: We'd want this to be something the Seventh Circuit would

486
00:27:42,400 --> 00:27:44,840
Speaker 3: decide in our favor, but if they don't, then we'd

487
00:27:44,840 --> 00:27:47,399
Speaker 3: want something that the Supreme Court might bite at. Supreme

488
00:27:47,400 --> 00:27:50,600
Speaker 3: Court takes very few cases nowadays, under one hundred cases

489
00:27:50,640 --> 00:27:55,600
Speaker 3: a year typically, so it's very hard to assume the

490
00:27:55,640 --> 00:27:59,200
Speaker 3: Supreme Court is going to take your case. The fact

491
00:27:59,200 --> 00:28:03,080
Speaker 3: that this is a very prominent case, very prominent former politician,

492
00:28:03,600 --> 00:28:06,800
Speaker 3: you know, a very high profile case makes it more likely.

493
00:28:06,920 --> 00:28:09,320
Speaker 3: But it's just really impossible to predict this juncture.

494
00:28:09,720 --> 00:28:14,400
Speaker 1: The Supreme Court's limiting of public corruption cases started quite

495
00:28:14,440 --> 00:28:17,280
Speaker 1: a while ago with the McDonald case, but still, were

496
00:28:17,280 --> 00:28:20,879
Speaker 1: you surprised by how far they went in the Snyder

497
00:28:21,000 --> 00:28:22,840
Speaker 1: case last term?

498
00:28:23,160 --> 00:28:25,760
Speaker 3: I mean, I wasn't surprising, since I think they were

499
00:28:25,800 --> 00:28:28,440
Speaker 3: getting to the right of result, but you just never

500
00:28:28,600 --> 00:28:31,480
Speaker 3: know where they're going to come down. I think this

501
00:28:31,560 --> 00:28:37,960
Speaker 3: Supreme Court often reads statutes fairly narrowly and interprets them

502
00:28:38,080 --> 00:28:41,520
Speaker 3: very narrowly overall because of the composition of them and

503
00:28:41,600 --> 00:28:46,320
Speaker 3: their backgrounds and how they approached statutory interpretation. So I

504
00:28:46,320 --> 00:28:49,200
Speaker 3: guess it wasn't that surprising in this sense, but you

505
00:28:49,320 --> 00:28:52,920
Speaker 3: just really never know. Then the world of criminal defense,

506
00:28:53,000 --> 00:28:56,080
Speaker 3: in the world of criminal law, prosecutors who do these cases,

507
00:28:56,120 --> 00:28:58,800
Speaker 3: that obviously is a seminal case that's gotten a lot.

508
00:28:58,640 --> 00:29:02,680
Speaker 1: Of attentions mentioned it in the Eric Adams case as well.

509
00:29:02,800 --> 00:29:07,120
Speaker 1: So it seems like it's a tougher road for prosecutors

510
00:29:07,360 --> 00:29:09,120
Speaker 1: these days to get someone on bribery.

511
00:29:09,360 --> 00:29:11,400
Speaker 3: I would, says the Temple, It should always be a

512
00:29:11,400 --> 00:29:15,400
Speaker 3: tough road. Proving criminal chargers should always should not be easy.

513
00:29:15,680 --> 00:29:17,600
Speaker 3: I mean, you know, the burden of proof is on

514
00:29:17,640 --> 00:29:21,000
Speaker 3: the government. They have a lot of power and it's

515
00:29:21,040 --> 00:29:24,360
Speaker 3: really important that they be appropriately constrained. You know, both

516
00:29:24,400 --> 00:29:26,560
Speaker 3: sides are going to be very mindful of Snyder and

517
00:29:26,600 --> 00:29:28,200
Speaker 3: they're not going to want to trip over well, the

518
00:29:28,240 --> 00:29:30,120
Speaker 3: government's not going to want to trip over it, and

519
00:29:30,160 --> 00:29:32,840
Speaker 3: the defense is going to be opening that the government

520
00:29:32,880 --> 00:29:35,160
Speaker 3: does right. So I think that's going to be an

521
00:29:35,200 --> 00:29:36,400
Speaker 3: important overlay here.

522
00:29:36,680 --> 00:29:40,160
Speaker 1: Thanks for being on the show. That's former federal prosecutor

523
00:29:40,320 --> 00:29:43,760
Speaker 1: Brian Klein, a partner at Waymaker. And that's it for

524
00:29:43,800 --> 00:29:46,840
Speaker 1: this edition of the Bloomberg Law Podcast. Remember you can

525
00:29:46,880 --> 00:29:49,800
Speaker 1: always get the latest legal news by subscribing and listening

526
00:29:49,840 --> 00:29:53,560
Speaker 1: to the show on Apple Podcasts, Spotify, and at Bloomberg

527
00:29:53,600 --> 00:29:57,720
Speaker 1: dot com, slash podcast, Slash Law. I'm June Grosso and

528
00:29:57,760 --> 00:29:59,040
Speaker 1: this is Bloomberg