Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.
Speaker 1: In what was an elaborate sting operation in which the
Speaker 1: FBI created its own crypto tooken. Fifteen crypto promoters and
Speaker 1: traders were charged with market manipulation and fraud, the first
Speaker 1: ever criminal charges against financial services firms for market manipulation
Speaker 1: and wash trading in the cryptocurrency industry. The acting US
Speaker 1: Attorney for Massachusetts, Joshua Levy, said, these are cases where
Speaker 1: an innovative technology cryptocurrency met a century old scheme, the
Speaker 1: pump and dump. The sting operation also led to the
Speaker 1: seizure of more than twenty five million dollars in cryptocurrency,
Speaker 1: and multiple trading bots responsible for wash trades for about
Speaker 1: sixty different cryptocurrencies were deactivated. Joining me is former federal
Speaker 1: process computer Seth Gertz, a partner at Dorsey and Whitney,
Speaker 1: tell us about this sting operation.
Speaker 2: Set A sting operation is a good way to put it, actually,
Speaker 2: and it's not something you often see in a context
Speaker 2: of investment frauds. And it's an interesting example where I
Speaker 2: can sort of think of the analogy of what is
Speaker 2: good for the goose is apparently also good for the gander,
Speaker 2: and in this case, the FBI created their own cryptocurrency token,
Speaker 2: next fund Ai. Marketed as a novel security related cryptocurrency token.
Speaker 2: It was on the Ethereum blockchain. And actually what the
Speaker 2: FBI did was quite clever, working with the SEC and
Speaker 2: other law enforcement agencies, was they was held a large
Speaker 2: balance of the tokens themselves, and so it was almost
Speaker 2: from its outset, appeared to be a lucrative, novel, unique
Speaker 2: token that attracted a lot of interest from the market
Speaker 2: and in particular to unscrupulous market participants in other cryptocurrency traders.
Speaker 2: And so that was the basic format and the programming
Speaker 2: of the token that the goal was then obviously to
Speaker 2: see how improper traders or cryptocurrency fraudsters were going to
Speaker 2: use and utilize the token. And what's unique in this
Speaker 2: space is that because the token was being traded on
Speaker 2: this Ethereum blockchain, every transaction that occurs for each one
Speaker 2: of these tokens is viewable and can be seen and
Speaker 2: tracked and followed, and so that allows law enforce in
Speaker 2: the FBI an incredible window and to see how the
Speaker 2: coin was going to be utilized and in this case
Speaker 2: manipulated and.
Speaker 1: Tell us about the charges against the defendants here, and
Speaker 1: so they.
Speaker 2: Are alleged to have done what is called wash trading
Speaker 2: that facilitate a pump and dump scheme, and that those
Speaker 2: are the technical investment fraud terms. Wash trading is typically
Speaker 2: traditionally when the same firm or entity buys and sells
Speaker 2: the same instrument like a stock or a bond repeatedly
Speaker 2: to artificially inflate its value and to demonstrate additional trading
Speaker 2: activity to make it team more lucrative, but the entity
Speaker 2: itself suffers no risk or market adjustment because it's simply
Speaker 2: buying and reselling the same instrument. What was interesting about
Speaker 2: this case is that some of the defendants, the cryptocurrency
Speaker 2: markets here had utilized bots to buy and sell the token,
Speaker 2: this token, the next fund Ai token, along with sixty
Speaker 2: others repeatedly, and because it was a bot and realizing bots,
Speaker 2: some of these tokens were being bought and sold like
Speaker 2: ten times a minute, and that activity, that trading activity
Speaker 2: artificially inflated the value of the coins, and one of
Speaker 2: the coins that issue went up to multi billion dollars
Speaker 2: worth of value. And then when they reached the apex
Speaker 2: of value. Defendants then sold off the token, causing their
Speaker 2: value to then plummet, and so that's sort of the
Speaker 2: wash trading was the quick buying and selling. It reaches
Speaker 2: its apex, and then it's sort of part of the
Speaker 2: pump and dump and then is sold off kind of
Speaker 2: in a fire sale. And because all of this is
Speaker 2: occurring on a public ledger, this blockchain, the FBI was
Speaker 2: able to witness all of it, and in some cases
Speaker 2: even there were allegations that there were complete sham transactions
Speaker 2: that were occurring. I mean, that's especially what was occurring,
Speaker 2: but even beyond that, some of the markets were trading
Speaker 2: created multiple different wallets, which is a sort of unique
Speaker 2: cryptocurrency term, but allowed them to really facilitate completely sham
Speaker 2: transactions that would have otherwise likely got unnoticed. But for
Speaker 2: again the ability for the FBI to be almost completely
Speaker 2: embedded in every one of these transactions.
Speaker 1: Were they targeting specific firms when they came up with
Speaker 1: this plan, You.
Speaker 2: Know, that's really interesting. I think it remains to be seen.
Speaker 2: We'll have to see how the case unfolds and what
Speaker 2: discovery shows us. Several defendants of already plead guilty which
Speaker 2: makes you think that perhaps they were at the same time. Though,
Speaker 2: what is so unique about like cryptocurrency is that and
Speaker 2: that this was so novel, is that they postured this
Speaker 2: coin as a really unique security related token, and that
Speaker 2: from the outset was going to attract possible criminals. Criminals
Speaker 2: or their frausters were attempting to use a token with
Speaker 2: other security measures to protect their trading activity, to protect
Speaker 2: their own finances, and so they think they certainly postured
Speaker 2: it in a way that would have been to hopefully
Speaker 2: attract possible bad actors. Whether they intentionally had specific ones
Speaker 2: in mind, I would think that would be a little
Speaker 2: bit difficult to do, just based upon the nature and
Speaker 2: the fluidity of cryptocurrency, But they were certainly posturing it
Speaker 2: from the outset in an attempt to sort of cast
Speaker 2: a broad net and hope to bring in some bad actors. Certainly,
Speaker 2: I mean.
Speaker 1: They're selling this token. Didn't a lot of people buy it,
Speaker 1: like average people or you know, people who didn't have
Speaker 1: a criminal intent.
Speaker 2: Absolutely, that's what's so fascinating about it. And if you
Speaker 2: look at the press release that came out, there's a
Speaker 2: link for anyone who bought this just part of the
Speaker 2: general public. It's still trading. I think I thought it's
Speaker 2: market value was somewhere like two hundred dollars a coin
Speaker 2: or something at least as of a sort of last week.
Speaker 2: So it's still trading. It's still out there. That is
Speaker 2: what's so unique in this case. One of the things
Speaker 2: unique about this the ability to create a cryptocurrency token.
Speaker 2: In this decentralized world of finance, where you can do this,
Speaker 2: it can still have its own independent value. It's being
Speaker 2: utilized for law enforcement purposes, but if I were to
Speaker 2: just go buy it, there's still a potential that I
Speaker 2: could derive some you know, independent value as a result
Speaker 2: of of how it's set up. It is almost impossible
Speaker 2: to think of an analogous situation in the financial world
Speaker 2: similar to this, Like the amount of work that would
Speaker 2: be required they have we had to create a company
Speaker 2: to go public, to sell something on the stock exchange,
Speaker 2: it's just completely inconceivable, really, Whereas in this unique financial
Speaker 2: contact that we have with cryptocurrency, this can be done
Speaker 2: and it's both a value at the law enforcement and
Speaker 2: even those of us who unwittingly bought it because we
Speaker 2: thought it was interesting perhaps are not really being harmed
Speaker 2: necessarily and so it is super interesting and this.
Speaker 1: Also involves Cytoma. Tell me about the connection.
Speaker 2: There, Well, Saitama was one of these coins that was
Speaker 2: also being utilized here and part of the pump and
Speaker 2: dumps game. The reason it is being talked about so
Speaker 2: much is because this activity caused that token loan to
Speaker 2: rise to be worth multi billion dollars, So to the
Speaker 2: extent there was sort of large dollar amounts of fraud.
Speaker 2: It relates to this Sitoma token.
Speaker 1: Are the FEDS targeting cryptocurrency because they're seeing more crimes
Speaker 1: in the area or they're seeing a potential for more
Speaker 1: crimes in.
Speaker 2: The area, Well, certainly, I mean you are saying increased
Speaker 2: heightened regulatory activity within cryptocurrency rit large. I mean you
Speaker 2: see the security is an exchange commission essentially going to
Speaker 2: war with various cryptocurrency exchanges, attempting to regulate all of
Speaker 2: cryptocurrency as a security. And you are seeing now the
Speaker 2: FBI more aggressively target cryptocurrency investment schemes and activities, and
Speaker 2: it is certainly drawing increased regulatory scrutiny. The more ways
Speaker 2: in which cryptocurrency gained mainstream attention and is utilized by
Speaker 2: regular investors, the more you're going to see regulators step
Speaker 2: in to ensure the playing fielder is level and bad
Speaker 2: actors aren't exploiting it. It is one thing to use,
Speaker 2: and cryptocurrency has been used as a powerful money launering device,
Speaker 2: but when you are getting into straight up investment schemes
Speaker 2: and investment frauds, this is what you would hope to
Speaker 2: see from government regulators stepping into police this activity. And
Speaker 2: I think this is certainly a sign of things to come.
Speaker 2: So other bad actors, people with improper investment schemes, certainly,
Speaker 2: I think, are going to be on high alert and
Speaker 2: should be given the increased regulatory and law enforcement scrutiny
Speaker 2: in this space.
Speaker 1: So does the DOJ have a specific team deals with cryptocurrency.
Speaker 2: They do, and they have they have several actually, so
Speaker 2: within DOJ's Made Justice component there is that what's called
Speaker 2: the National Cryptocurrency Enforcement Team, and they do a lot
Speaker 2: of cryptocurrency cyber related fraud. That actually that that team
Speaker 2: and set, as they're known, does not appear to have
Speaker 2: been involved in this investigation, though it's possible they were
Speaker 2: behind the scenes. It looked like there was a lot
Speaker 2: of different components that were helping. Within various US Attorney's
Speaker 2: offices and Department of Justice components, there are specific sections
Speaker 2: that work with financial crimes, cybercrimes, and cryptocurrency related activity.
Speaker 2: And as cryptocurrency becomes more mainstream because we're part of
Speaker 2: the financi system, you are seeing greater capabilities within federal
Speaker 2: law enforcement to both trace cryptocurrency, to follow investment schemes,
Speaker 2: and in this case, a very sophisticated and novel effort
Speaker 2: to really create exactly to describe it, an undercover sting
Speaker 2: operations related to cryptocurrency.
Speaker 1: I mean you.
Speaker 2: Would see stuff like this in like a drug dealer context,
Speaker 2: where you watch that you have an undercover agent deliver
Speaker 2: the drug. You see it sometimes in like money laundered investigations,
Speaker 2: where you have the government or federal agents attempt to
Speaker 2: launder clean funds through a money laundering organization to see
Speaker 2: where the money goes. But even still you don't quite
Speaker 2: have the control and the visibility that you would have
Speaker 2: with cryptocurrency. This is a real demonstration of sophisticated efforts
Speaker 2: by the DOJ to track and to follow cryptocurrency investment fraud.
Speaker 1: Coming up, could the defense raise entrapment. This is Bloomberg.
Speaker 1: We've been talking about an elaborate sting operation in which
Speaker 1: the FBI created its own crypto tokens, and as a result,
Speaker 1: prosecutors were able to bring the first ever criminal charges
Speaker 1: against financial services firms for market manipulation and wash trading
Speaker 1: in the cryptocurrency industry. I've been talking to former federal
Speaker 1: prosecutor Seth Kertz of Dorsey and Whitney. Do you think
Speaker 1: that the defense will raise entrapment claims?
Speaker 2: You know, entrapment is always a potential when you have
Speaker 2: undercover operations, when you have issues like this, But what
Speaker 2: you can always do to well, what the government will
Speaker 2: surely do is that the defendants were doing this with
Speaker 2: or without them anyway, and you show that by their
Speaker 2: repeated pattern of conduct. And so when you have sixty
Speaker 2: other tokens that were being manipulated in the same manner
Speaker 2: that we're being washed, traded and then pumped and dumped
Speaker 2: in the same way as next one, that's a very
Speaker 2: difficult argument to make in good faith the entrapment issue.
Speaker 2: I think one of them certainly will likely make it.
Speaker 2: What becomes difficult cyber and cryptocurrency context is putting a person,
Speaker 2: an individual person behind the keyboard, behind the computer screen,
Speaker 2: attributing specific conduct to an individual when it's occurring digitally,
Speaker 2: and so it will be interesting to see what contemporaneous emails,
Speaker 2: with contemporaneous text messages that the DOJ was able to
Speaker 2: get to attach specific individuals.
Speaker 1: To this conduct because they use bots.
Speaker 2: Because they use bots, because when it's an entity, when
Speaker 2: it's an online and essentially an online decentralized entity that
Speaker 2: is causing the activity to occur, it's hard to know
Speaker 2: which specific you know, human being was actually causing that occur.
Speaker 2: So you're exactly right, it's certainly these entities, these market
Speaker 2: platforms were doing the were guilty of the bad conduct,
Speaker 2: But which actual individuals have the specific criminal intent that
Speaker 2: were causing these activities to occur. That's where it becomes
Speaker 2: tricky in a cyber fraud cryptocurrency related criminal investigation. You know,
Speaker 2: the activities occurred, demonstrate that is no problem in this case,
Speaker 2: you see it, you can watch it. But actually attributing
Speaker 2: that to a specific human being and then demonstrating criminal
Speaker 2: intent to commit a fraud, that's where it becomes a
Speaker 2: little trickier. And so you will need you would think
Speaker 2: specific communications, other types of evidence to attach a person
Speaker 2: to the actual conduct.
Speaker 1: Has the DOJ done many trials involving cryptocurrency or do
Speaker 1: they usually settle beforehand?
Speaker 2: No, the DOJ, this is an area in which they
Speaker 2: are definitely increasing their competence, their capabilities. They are in
Speaker 2: trial routinely on these issues. I think this is the
Speaker 2: first instance in which you have a full fledged undercover
Speaker 2: operations of the creation of their own token. So it
Speaker 2: will be interesting to see how the DOJ has to
Speaker 2: put on that evidence. That's to explain how they did it,
Speaker 2: how they created it, and communicate it in a way
Speaker 2: in which they don't lose the jury, in which they
Speaker 2: can demonstrate the activity of the curve. And there's a
Speaker 2: lot of different concepts going on here. You have cryptocurrency
Speaker 2: just on the one hand, explain that to a jury,
Speaker 2: explain the creation of a token, explaining that the issues
Speaker 2: with the type of investment fraud that was occurring here,
Speaker 2: explaining the crime that occurred, and then having to put
Speaker 2: specific individuals or tax specific individuals to that crime. So
Speaker 2: there is a lot of moving parts. You know, several
Speaker 2: defendants have already played guilty. They're likely going to cooperate
Speaker 2: against those who don't, and so that's going to be
Speaker 2: very powerful evidence. Having cooperating testimony, which will be I
Speaker 2: would imagine its hugely helped with the government here, But
Speaker 2: there is still a lot of moving parts and a
Speaker 2: lot that you would have to prove and a trial
Speaker 2: like this and so well, the dj certainly has experience
Speaker 2: in cybercrimes and cryptocurrency. This is novel, and it will
Speaker 2: be interesting to see how they put this evidence on
Speaker 2: at trials should one occur.
Speaker 1: In researching this, I saw some basically anonymous allegations that
Speaker 1: the FBI, in creating this token had violated the copyright laws,
Speaker 1: perhaps by not getting a license on the code.
Speaker 2: Oh that's interesting, well, you know, and that will be
Speaker 2: that's that's where this does become interesting, because how the
Speaker 2: FBI created its token and you know, the propriety of
Speaker 2: it doing so, and whether it was a you know,
Speaker 2: legally authorized token for any number of reasons. It's certainly
Speaker 2: an interesting question and possibly goes to an entrapment defense. Potentially,
Speaker 2: it is something I would think defense would certainly try
Speaker 2: to raise. But whether that was or not, I think
Speaker 2: the difficult to get defendants have in this case is
Speaker 2: that it wasn't just the FBI token that was manipulated.
Speaker 2: It was the FBI token along with sixty others. And
Speaker 2: what the FBI token allowed FBI to do was to
Speaker 2: get complete visibility into how these defendants were manipulating the
Speaker 2: cryptocurrency market through their activities. And so even if sort
Speaker 2: of there were issues with this FBI tokens, they still
Speaker 2: have all the evidence of the visibility of how they
Speaker 2: were manipulating fifty nine others. That's speculation of my part
Speaker 2: without sort of knowing too much of the weeds of
Speaker 2: how the token was created. But it is interesting, and
Speaker 2: the unique thing about cryptocurrency is once you can get
Speaker 2: a window into the activity that's occurring and you sort
Speaker 2: of get an ability to model it to understand it.
Speaker 2: The nature of a public ledger, a blockchain allows so
Speaker 2: much visibility into how activity is occurring that if you
Speaker 2: are doing it on a wide scale basis, as it
Speaker 2: appears these defendants were, law enforcement is given a tremendous
Speaker 2: amount of information as a result of that.
Speaker 1: And the acting US Attorney said, this is a case
Speaker 1: where an innovative technology cryptocurrency met a century old scheme
Speaker 1: to pump and dump.
Speaker 2: It's an interesting case and that you have in a
Speaker 2: lot of ways, these old school methods, old school types
Speaker 2: of investment fraud being brought forward into a more advanced
Speaker 2: digital age. And you have various investigative tools like undercover
Speaker 2: operations that have existed forever but being brought forward into
Speaker 2: again more advanced digital age. And you're seeing the interplay
Speaker 2: of those and you're seeing, you know, cryptocurrency so often
Speaker 2: hear about how it is utilized by criminals to obviouscate
Speaker 2: in the high activity. Well, the government has now entered
Speaker 2: the playing field, and he was using it in a
Speaker 2: way to hide and to allow a very sophisticated undercover
Speaker 2: operation to go forward.
Speaker 1: Perhaps this is the first of many. Thanks so much, Seth.
Speaker 1: That's Seth Gertz, a partner at Dorsey and Whitney. Turning
Speaker 1: to a trial now in which the jury is being
Speaker 1: selected in Illinois. The defendant's reign over Illinois politics is
Speaker 1: reflected in his nickname the Velvet Hammer, earned because of
Speaker 1: the way he led the Illinois House of Representatives and
Speaker 1: extracted fealty from its members. As the longest serving House
Speaker 1: leader of any state in US history, but now at
Speaker 1: eighty two. Michael Madigan is facing corruption charges for allegedly
Speaker 1: running a criminal enterprise for nearly a decade, a multimillion
Speaker 1: dollar racketeering and bribery scheme that included the state's largest
Speaker 1: utility comm ed and the case will test the government's
Speaker 1: ability to prosecute corruption after the Supreme Court case narrowing
Speaker 1: the scope of a federal bribery law last term. Joining
Speaker 1: me is former federal prosecutor Brian Klein, a partner Waymaker
Speaker 1: tell us about the charges here.
Speaker 3: Yeah, he's charged with racketeering, bribery, and wire fraud. And
Speaker 3: that's expected to be a ten week trial. Obviously, things
Speaker 3: have been going on for quite some time. There's been
Speaker 3: other trials of other defendants tied to these charges. He's
Speaker 3: charged with basically trading on his position as the leader
Speaker 3: of the state House of Representatives. I'm the chairman of
Speaker 3: the Democratic Party in Illinois as well as he's also
Speaker 3: I believe involved an award and he worked at a
Speaker 3: law firm to a tax firm, probably tax firm, So
Speaker 3: basically trading his position of power for financial benefits getting
Speaker 3: things through the legislature.
Speaker 1: How far back to the allegations.
Speaker 3: Go, they switched back to years and he was really
Speaker 3: like a living legend in the state of Illinois because
Speaker 3: of the power he accumulated at length time that he
Speaker 3: was in power. And this is obviously a very important
Speaker 3: case following the Supreme Court Snyder ruling that came out
Speaker 3: earlier this year, which essentially said that you know, just
Speaker 3: giving a politician to gratuity isn't enough to make it
Speaker 3: a federal crime. The federal bribery laws, you actually have
Speaker 3: to have a quid pro quote an exchange, so you
Speaker 3: give them some money or a watch or something in exchange,
Speaker 3: they are going to actually take an official act.
Speaker 1: The government here is alleging that there was this quid
Speaker 1: pro quote, that there was a deal in place before
Speaker 1: the alleged corruption.
Speaker 3: They are his lawyers. After the Snyder ruling came down,
Speaker 3: sought to have certain of the charges dismissed and challenge
Speaker 3: them and they lost that ruling, and they're in the
Speaker 3: Seventh Circuit. That circuit has its view of the bribery
Speaker 3: statutes and how briberry is effectuated, has this stream of
Speaker 3: payments theory, so it's not just one payment for one act.
Speaker 3: You can have an agreement that you reach and then
Speaker 3: over time, there can be these streams of payment, and
Speaker 3: it's I think potentially possible that, like you can't match
Speaker 3: up every payment with some act, but it's sort of
Speaker 3: the theory is there's this ongoing relationship where you're doing
Speaker 3: these quid pro quos and you're getting payments over time.
Speaker 3: So those are the focus of these allegations. Of course,
Speaker 3: his lawyers dispute this. You know, he's presumed innocent, found guilty,
Speaker 3: and you know there's been fighting very hard on his
Speaker 3: behalf before we.
Speaker 1: Get to his possible defenses. So is the heart of
Speaker 1: the prosecution's case, this informant former Chicago alderman appears to be.
Speaker 3: They also have a lot of tastes. Unclear who actually
Speaker 3: made all those tastes, at least right now, but there's
Speaker 3: a lot of you know what you call like secret
Speaker 3: recordings they plan introduced. I think there's hundreds of them.
Speaker 3: I don't know if they're prod uce all of them,
Speaker 3: but it does appear that, you know, their case is
Speaker 3: built on sort of peeking behind the curtain of what
Speaker 3: happened here with recordings, and presumably they're going to call
Speaker 3: witnesses who were around and actually witnessed them, whether they
Speaker 3: knew about them or just were asked to do.
Speaker 1: Something incline of waymaker. The government has already won convictions
Speaker 1: against several people since it started to investigate the former
Speaker 1: speaker and other Illinois politicians. Individuals known as the comment
Speaker 1: for for instance, were convicted of facilitating the hiring of
Speaker 1: Madigan associates for no work jobs. So jurors delivered guilty
Speaker 1: verdicts in those cases for conspiring to bribe Madigan. But
Speaker 1: then but the jury failed to reach a verdict in
Speaker 1: a case charging former at and T Illinois President Paul
Speaker 1: Lochiatza with bribing Madigan. So the government has had mixed
Speaker 1: verdicts having to do with these facts.
Speaker 3: Well, it's a little hard to say because each trial
Speaker 3: is so specific, you know, and Madigan's going to be
Speaker 3: He's the center point, you know, He's the big fish
Speaker 3: here what they're going after. So sometimes, and I'll just
Speaker 3: call it a little fish, trials go mix directions for
Speaker 3: various reasons. But it doesn't mean, you know, I wouldn't
Speaker 3: read too much into it about how successful they may
Speaker 3: be improving their charges against Madigan. Now, there's an advantage
Speaker 3: to the defense here, which is they learn a lot
Speaker 3: about the government theory of the case. They also have
Speaker 3: transcripts from those trials, So the defense has an advantage
Speaker 3: in that sense. It's not walking into you know, there's
Speaker 3: not going to be as many surprises for them, and
Speaker 3: allows them to prepare better for cross examination, exhibit, to
Speaker 3: think through how they're going to challenge the government's case.
Speaker 1: I mean, does the government have any advantage by having
Speaker 1: been through a presentation of something close to what they
Speaker 1: have against Madigan?
Speaker 3: Yeah, they had this. They had a like sort of
Speaker 3: the other side of that coin, which is they now
Speaker 3: can see what was resonating arguably with the jury and
Speaker 3: what wasn't. So in the hung trial hujury trial, they
Speaker 3: may they feel like they can recalibrate some of their
Speaker 3: presentation to deal with issues. They may. I don't know
Speaker 3: that they did, but it's possible they spoke with some
Speaker 3: of the jurors afterwards. Possible they learned things during the
Speaker 3: trial just because observe jurors, how they were responding, whether
Speaker 3: they were paying attention. So each side gains information. You know,
Speaker 3: the real question is who's going to be able to
Speaker 3: put its better use.
Speaker 1: So you mentioned that the Supreme Court has narrowed the
Speaker 1: scope of the federal bribery law. That's the federal bribery
Speaker 1: law that's at issue.
Speaker 3: Here, Snyder case. You know, it's far reaching implications, not
Speaker 3: just for this case with Madigan, but when the federal
Speaker 3: prosecutes are playing federal bribery statutes, you know, the courts
Speaker 3: are going to be looking at whether there was a
Speaker 3: quid pro qo and how that's viewed is open to
Speaker 3: interpretation by lower courts. But you know, not all of
Speaker 3: his charges relate to that either. So he has other
Speaker 3: charges fire fraud right as an example, So that's not
Speaker 3: going to be covered by that. So but you know,
Speaker 3: I think if you're a defense lawyer, and I'm sure
Speaker 3: his lawyers here are looking at them and saying, look,
Speaker 3: we want to maybe we can use those charges to
Speaker 3: help undermine the other charges too, So you know, we
Speaker 3: can knock out, you know, the bribery charges either with
Speaker 3: the jury or the judge at some point along the way,
Speaker 3: and that will expose deficiencies or cause the judge or
Speaker 3: the jury or both to question the government's case overall.
Speaker 3: So I think, you know, it's always helpful with the
Speaker 3: defense lawyer if you have Supreme court precedent coming out
Speaker 3: that generally is supportive or helps you.
Speaker 1: One of the defenses is something that we hear over
Speaker 1: and over again. I mean Eric Adams, who was just
Speaker 1: indicted in New York. The mayor of New York has
Speaker 1: said this, and his attorneys have said it basically, you know,
Speaker 1: this is what politicians do. We do favors for people.
Speaker 3: Yes, And I think that's a common defense in these
Speaker 3: types of cases. And also, frankly, a lot of jurors
Speaker 3: are going to understand or feel that politicians do trade
Speaker 3: on favors, right, that's just the practical reality and perception
Speaker 3: of politicians. Now, a lot of people also think that
Speaker 3: all or most politicians are corrupt, So that cuts both ways, right. Probably,
Speaker 3: you know they're going to get these twelve jurors plus
Speaker 3: six or whatever number of ultimates. They're going to have
Speaker 3: their own real life experiences understanding of politics and their
Speaker 3: views on it. This is going to be vetted during
Speaker 3: the jury selection process. But you know, you ask most
Speaker 3: people in the street, are politicians corrupt? Do they trade favors?
Speaker 3: The answer is going to be yes, A lot of
Speaker 3: them are. So I don't know how that's going to
Speaker 3: play out. With this jury. But I think, you know,
Speaker 3: they're because of these recordings, which is the presumably has
Speaker 3: listened to, and because they've seen a lot of the
Speaker 3: evidence because the government has to give it to him
Speaker 3: in advance. You know, they have to deal with the
Speaker 3: reality of some of the statements, some of the things
Speaker 3: that happened. They can't just pretend it didn't happen. My
Speaker 3: guess is that the government has a lot of proof
Speaker 3: of a number of these things. The question is, how
Speaker 3: do you, you know, look at it overall, like what happened?
Speaker 3: And I think the defense is going to say, Okay,
Speaker 3: each of these may be little trees, but let's look
Speaker 3: at the forest here, right, or maybe the opposite that say,
Speaker 3: government's trying to tell you this is one big forest,
Speaker 3: but let's look at each of these acts and look
Speaker 3: at the trees and it is so you know, that's
Speaker 3: going to be an interesting thing to see play out,
Speaker 3: is how the defense responds to the recordings, however, responds
Speaker 3: to the witnesses who come in. And you know, we
Speaker 3: will learn a lot with the opening statements, because that's
Speaker 3: both sides opportunity to frame the case for the jury
Speaker 3: at the very beginning and how they expect the evidence
Speaker 3: to come in, both witness testimonies and documents and recording.
Speaker 1: So I mean this is a kind of case if
Speaker 1: he loses, that the Supreme Court could take up as
Speaker 1: sort of the next And they're continuing cutting back on
Speaker 1: prosecutions of public corruption.
Speaker 3: Spreme Court has been very interested in public corruption cases
Speaker 3: in the last five to ten years. They've addressed a
Speaker 3: number of it. They've really narrowed prosecutors' views of the
Speaker 3: statutes and the cases. And I think that the defense
Speaker 3: is clearly aware of that. I think brief Snyder recently,
Speaker 3: there's no doubt thinking ahead of it. If our client
Speaker 3: gets convicted, we want to have a good record for appeal.
Speaker 3: We'd want this to be something the Seventh Circuit would
Speaker 3: decide in our favor, but if they don't, then we'd
Speaker 3: want something that the Supreme Court might bite at. Supreme
Speaker 3: Court takes very few cases nowadays, under one hundred cases
Speaker 3: a year typically, so it's very hard to assume the
Speaker 3: Supreme Court is going to take your case. The fact
Speaker 3: that this is a very prominent case, very prominent former politician,
Speaker 3: you know, a very high profile case makes it more likely.
Speaker 3: But it's just really impossible to predict this juncture.
Speaker 1: The Supreme Court's limiting of public corruption cases started quite
Speaker 1: a while ago with the McDonald case, but still, were
Speaker 1: you surprised by how far they went in the Snyder
Speaker 1: case last term?
Speaker 3: I mean, I wasn't surprising, since I think they were
Speaker 3: getting to the right of result, but you just never
Speaker 3: know where they're going to come down. I think this
Speaker 3: Supreme Court often reads statutes fairly narrowly and interprets them
Speaker 3: very narrowly overall because of the composition of them and
Speaker 3: their backgrounds and how they approached statutory interpretation. So I
Speaker 3: guess it wasn't that surprising in this sense, but you
Speaker 3: just really never know. Then the world of criminal defense,
Speaker 3: in the world of criminal law, prosecutors who do these cases,
Speaker 3: that obviously is a seminal case that's gotten a lot.
Speaker 1: Of attentions mentioned it in the Eric Adams case as well.
Speaker 1: So it seems like it's a tougher road for prosecutors
Speaker 1: these days to get someone on bribery.
Speaker 3: I would, says the Temple, It should always be a
Speaker 3: tough road. Proving criminal chargers should always should not be easy.
Speaker 3: I mean, you know, the burden of proof is on
Speaker 3: the government. They have a lot of power and it's
Speaker 3: really important that they be appropriately constrained. You know, both
Speaker 3: sides are going to be very mindful of Snyder and
Speaker 3: they're not going to want to trip over well, the
Speaker 3: government's not going to want to trip over it, and
Speaker 3: the defense is going to be opening that the government
Speaker 3: does right. So I think that's going to be an
Speaker 3: important overlay here.
Speaker 1: Thanks for being on the show. That's former federal prosecutor
Speaker 1: Brian Klein, a partner at Waymaker. And that's it for
Speaker 1: this edition of the Bloomberg Law Podcast. Remember you can
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Speaker 1: dot com, slash podcast, Slash Law. I'm June Grosso and
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