Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.
Speaker 1: The Supreme Court stepped into the twenty twenty four election
Speaker 1: this week, allowing Virginia to carry out a purge of
Speaker 1: residents from its voter rolls on the eve of the
Speaker 1: election without any explanation. The Court's conservative justices overrode the
Speaker 1: decision of a federal court and a unanimous appeals court,
Speaker 1: which had found that the state's purge of about sixteen
Speaker 1: hundred voters violated federal law. The National Voter Registration Act
Speaker 1: prohibits systematic removals of voters in the ninety days before
Speaker 1: an election. Republican Virginia Governor Glenn Younkin defended his order
Speaker 1: for the purge, which was issued on August seventh, the
Speaker 1: ninetieth day before the November fifth election here on CNN.
Speaker 2: Because it is done on an individualized basis by person,
Speaker 2: and because that person has in fact self identified as
Speaker 2: a non citizen, this is not subject to the ninety
Speaker 2: day blackout period in my view.
Speaker 1: The three liberal justices dissented, joining me is Elections law
Speaker 1: expert Richard brough Fault, a professor at Columbia Law School.
Speaker 1: Were you surprised that the Supreme Court intervened to reverse
Speaker 1: the Fourth Circuit and the District Court.
Speaker 3: Judge, Yes, maybe I shouldn't have been, but yes I was.
Speaker 3: So the case involves a state effort to purge people
Speaker 3: from the roles on the claim that they're non citizens.
Speaker 3: Non citizens are not entitled to vote. It's illegal, and
Speaker 3: states are allowed to remove any non citizens that are
Speaker 3: on the ballot. But there is a provision in federal
Speaker 3: law National Voter Registration Act, that prohibits mass purchase so
Speaker 3: called systematic purchase within ninety days before the election, because
Speaker 3: it makes it two difficult. People may be purged by mistake,
Speaker 3: and if it's a mass purge, it's actually difficult for
Speaker 3: people to be aware of that and to respond. And
Speaker 3: so that is illegal. But Virginia a conscious they adopted
Speaker 3: such a program. The governor you shouldn't executive words to
Speaker 3: that effect literally on the day that this so called
Speaker 3: quiet or non virtually was supposed to begin, and basically
Speaker 3: used some mix of DMV data and other databases to
Speaker 3: conclude that people were not citizens DMV. When you get
Speaker 3: a driver's license, you may be asked whether or not
Speaker 3: you were a citizens. Some people checked non citizen by mistake,
Speaker 3: some people check not aisms because they are not a
Speaker 3: citizen when they get their driver's license, but some years
Speaker 3: later become naturalized as citizens. So the state, using that
Speaker 3: data and other data, went ahead and concluded that something
Speaker 3: like sixteen hundred people were not citizens and needed to
Speaker 3: be purged from the roles. And that was challenged on
Speaker 3: the theory that violated the federal law. And also there
Speaker 3: was evidence a number of these people who were bridge
Speaker 3: were in fact citizens and were challenging th as individuals.
Speaker 1: So that challenge went up the chain, so to speak,
Speaker 1: to the federal district court and the appellate court tell
Speaker 1: us what happened there.
Speaker 3: The Federal District Court in Virginia concluded that this was
Speaker 3: a pretty straightforward violation the federal law, that it was
Speaker 3: going on in this so called quiet period, that it
Speaker 3: was a systematic removal effort, not based on individualized information
Speaker 3: about individual voters, but basically a massive database information that
Speaker 3: they were loading from one database to another. And the
Speaker 3: Fourth Circuit Court of Appeals agreed rather refused to overturn
Speaker 3: the District Court's injunction. The Court of Appeals basically said
Speaker 3: yes on the fact, it appears to us that this
Speaker 3: is a violation of federal law and it should be stopped.
Speaker 3: The Supreme Court rather quickly by well, I'm coming to
Speaker 3: say six three, but you know that three liberal justices
Speaker 3: dissented because it was just an order. It's not clear
Speaker 3: that all six of the others agreed, but looks like
Speaker 3: by pretty much a party line vote without an opinion,
Speaker 3: basically reversed a fourth circuit and allowed this purge to
Speaker 3: go forth. The purchase actually stopped, but the sixteen hundred
Speaker 3: voters who were removed remain removed unless they can as
Speaker 3: individuals go in and Virginia allows same day registration, go
Speaker 3: in and prove that they are citizens and re register
Speaker 3: and then vote.
Speaker 1: Virginia made several arguments, and one was that the quiet
Speaker 1: period doesn't apply to non citizens. Another was that courts
Speaker 1: shouldn't get involved because of what's known as the personal
Speaker 1: principle right, so taking.
Speaker 3: Them in reverse order. The problem with the per cl
Speaker 3: principle in this case is, I mean, the only basis
Speaker 3: for judicial intervention is that the state has violated the
Speaker 3: ninety day rule, So any effort to enforce the ninety
Speaker 3: day rule would occur within ninety days before the election,
Speaker 3: so it makes no sense to invoke the for cell
Speaker 3: principle here. The only real question is did the plaintiffs
Speaker 3: and the US government, which also participated, move quickly once
Speaker 3: they became aware of what was going on, and the
Speaker 3: lower courts degree that they did that there was no
Speaker 3: delay once it became clear what the state was doing.
Speaker 3: The lawsuit was brought in terms of whether or not
Speaker 3: the quiet period applies to removal and non citizens. Nothing
Speaker 3: in it any case that it doesn't. In other words,
Speaker 3: the law is simply there to say that there should
Speaker 3: be no removals based on a system and no systematic removals,
Speaker 3: and it doesn't say no removal only for non residency.
Speaker 3: It just has no removals that period. So there's nothing
Speaker 3: in the law that limits the grounds of ineligibility to
Speaker 3: something or other, such as to moving, and it does
Speaker 3: permit removals for death. So it's not quite clear what
Speaker 3: this law would be doing if it doesn't also apply
Speaker 3: to removals on a theory that the individual is not
Speaker 3: a citizen.
Speaker 1: So, as you mentioned, we don't know why the justices
Speaker 1: voted as they did, but the three liberal justices made
Speaker 1: their public dissent clear. What does it tell you that
Speaker 1: this was down ideological lines.
Speaker 3: It's very troubling. It's very troubling. The lower court decision
Speaker 3: was well reasoned. The Court of Appeals agreed with it,
Speaker 3: and there is irreparable injury to those voters who might
Speaker 3: be eligible to vote, who have been denied the right
Speaker 3: to vote. Now, some of them will be able to
Speaker 3: re establish their eligibility because they can re register in
Speaker 3: the coming day. So it's possible some of them will
Speaker 3: be back in, but you know, it takes time, it
Speaker 3: takes efforts. Quite possible some of them will not.
Speaker 1: Although Virginia is not a battleground state. This was based
Speaker 1: on an order by the Republican governor and was backed
Speaker 1: at the Supreme Court by the country's twenty six other
Speaker 1: Republican state attorneys general, the Republican National Committee, and several
Speaker 1: conservative groups. And it revolves around a flashpoint in Donald
Speaker 1: Trump's campaign, yes, which is that you know, there's widespread
Speaker 1: voting by non citizens.
Speaker 3: Right, And for years he's been making that argument, even
Speaker 3: when he won in twenty sixteen, although he lost the
Speaker 3: popular vote, he says, well, I really won the popular
Speaker 3: vote because Hillary Clinton's numbers were inflated by all the
Speaker 3: non citizens. There is absolutely no evidence of more than
Speaker 3: a minuscule number of non citizens voting, and you received
Speaker 3: by mistake. It's illegal for non citizens to vote. There
Speaker 3: are severe penalties. The number of non citizens who are
Speaker 3: registered vote, who or actually vote is absolutely minusculine. It
Speaker 3: is a non fact, but it's been used so heavily
Speaker 3: by Republicans to try and undermine the legitimacy if there
Speaker 3: was just no evidence that it occurs.
Speaker 1: So do you think this lawsuit is to set the
Speaker 1: stage or the groundwork for contesting election results?
Speaker 3: Yes, I think anything that raises the issue of non citizens. Now.
Speaker 3: Of course Republicans won this lawsuit, so they won't be
Speaker 3: able to make this argument in Virginia now, but you know,
Speaker 3: it is an issue they've been raising all over the country.
Speaker 3: There was a similar student Alabama where the federal District
Speaker 3: Court ordered the governor to stop the PERGE program in
Speaker 3: Alabama and undo it there. I think about three thousand
Speaker 3: people have been removed from the roles, and there was
Speaker 3: evidence that it's often by a mistake. Again, they're using
Speaker 3: old databases. Sometimes it's the wrong person. There may be
Speaker 3: that the DMV numbers may indicate this person with a
Speaker 3: certain name is a non citizen. Somebody with the same name,
Speaker 3: but a different person might be removed from the roles
Speaker 3: because their matching is pretty basic. Basically, if you have
Speaker 3: the same first and last name as the person at
Speaker 3: least been identified as a non citizen, you can be removed.
Speaker 3: And that's not so uncommon. And it also again using
Speaker 3: DMV data, since your driver's license can be good for
Speaker 3: four years or more. In that time, you could have
Speaker 3: naturalized from being a non citizen to a citizen, but
Speaker 3: that naturalized person will be removed from the roles. And
Speaker 3: so I think it's very much a way of keeping
Speaker 3: the issue alive and in front of people all the time.
Speaker 3: And indeed people will think, oh, there were sixteen hundred
Speaker 3: non citizens voting in Virginia, but it's not clear that
Speaker 3: any of them were non citizens. Certain names popped up
Speaker 3: on databases, and certainly there are been individual cases in
Speaker 3: the newspapers and people showing that they were not non citizens,
Speaker 3: that they were citizens, some citizens from birth and some
Speaker 3: naturalized citizens.
Speaker 1: A lot of election experts have been saying that this
Speaker 1: year's election won't be a repeat of Bush vy Gore,
Speaker 1: the Supreme Court is unlikely to play a pivotal role.
Speaker 1: But does this decision indicate differently that the Justices may
Speaker 1: get involved.
Speaker 3: Yes, I don't know why you would think that the
Speaker 3: Justices will be uninvolved. It will turn on what the
Speaker 3: issues are. And you know, I think Bush versus Gore
Speaker 3: was unusual and that the issue the Supreme Court dealt
Speaker 3: with was effect a post election issue. In other words,
Speaker 3: how to take care of a recount to ord how
Speaker 3: do take care of the counting of ballots in Florida
Speaker 3: where it wasn't completely clear how people had voted, and
Speaker 3: so that was an issue that could not have come
Speaker 3: up before the election this time. I mean, I think
Speaker 3: they're deciding issues that could be relevant to the election beforehand,
Speaker 3: like this one. As for things after the election, there
Speaker 3: may still be things that come up, so it's hard
Speaker 3: to know. In some ways, you could argue that this
Speaker 3: earlier this year on Trump's immunity in some sense plays
Speaker 3: into the election, or he's getting on the ballot in
Speaker 3: the first place. So I don't understand the argument as
Speaker 3: to why anyone thinks that they would be more or
Speaker 3: less engaged than in twenty or in twenty twenty, where
Speaker 3: they did a bunch of things before the election, but
Speaker 3: not so much after the election.
Speaker 1: Well, some people are pointing to those cases as an
Speaker 1: indication that the Supreme Court won't get involved, saying Donald
Speaker 1: Trump and his allies brought around sixty cases challenging the
Speaker 1: election in different ways, and the Supreme Court didn't take
Speaker 1: up any appeals right right.
Speaker 3: And including the original jurisdiction case that Texas brought against Pennsylvania,
Speaker 3: it's not count Pennsylvania's vote sexist, joined by twenty other
Speaker 3: Republican states. They didn't hear that. No, they stayed pretty
Speaker 3: much out of it after the election in twenty twenty.
Speaker 3: But you know, the result in twenty twenty was pretty clear.
Speaker 3: It's hard to speculate about the Supreme Court, but this
Speaker 3: decision is not a great sign about the courts wanting
Speaker 3: to stay out of the election. This was an unnecessary decision.
Speaker 3: The law was pretty strongly on the side of the plaintiffs,
Speaker 3: the ones trying to stop the purge.
Speaker 1: I do want to point out that on Tuesday, the
Speaker 1: Supreme Court did refuse to order the removal of Robert F.
Speaker 1: Kennedy Junior's name from presidential election ballots in Michigan and Wisconsin.
Speaker 1: The officials there said his request came too late under
Speaker 1: the laws of the two states where voting has already begun,
Speaker 1: and the Supreme Court didn't get involved.
Speaker 3: Yeah, I mean again, it's hard to figure out. It
Speaker 3: could be that maybe they want to be deferring to
Speaker 3: the states both ways. I mean, refusing to order the
Speaker 3: removal is consistent with deferring to the state and in
Speaker 3: this case, allowing them to go forward with the purchase
Speaker 3: consistent with the differing of the state. Maybe that's part
Speaker 3: of it, but I'm not even trying to tempt it
Speaker 3: to say that there's a consistent logic.
Speaker 1: It's hard to see it. A lot more election disputes
Speaker 1: to be resolved in the courts before the election, and
Speaker 1: I'm sure after the election as well. I'm glad I
Speaker 1: have you on speed Die rich Thanks so much. That's
Speaker 1: Professor Richard Brefault of Columbia Law School. Coming up next
Speaker 1: on The Bloomberg Law Show. The Philadelphia District Attorney sues
Speaker 1: Elon Musk over his one million dollar a day giveaway
Speaker 1: to registered voters, but a judge in the battleground state
Speaker 1: ends a hearing without ruling on the request to block it.
Speaker 1: We'll tell you why. I'm June Grosso and this is Bloomberg.
Speaker 4: Every day, every day from now and so the election.
Speaker 4: We're giving out a million dollar prize, that is, and
Speaker 4: all you have to do is sign a petition in
Speaker 4: support of a constitution. It's very straightforward. You don't even
Speaker 4: have to vote.
Speaker 3: You don't have to vote.
Speaker 4: You just have to sign a petition saying you believe
Speaker 4: in the Constitution, which if you already believe in the Constitution,
Speaker 4: you're just signing something you already believe. And you can
Speaker 4: ruin a million dollars.
Speaker 5: That's awesome.
Speaker 1: But Elon Musk's one million dollars a day voter sweepstakes
Speaker 1: doesn't seem to be the very straightforward proposition he's made
Speaker 1: it out to be. In order to enter, you must
Speaker 1: be registered to vote in one of seven swing states.
Speaker 1: The Department of Justice has already worn Musk and his
Speaker 1: pro Trump America pack that his sweepstakes might violate federal law,
Speaker 1: and this week Philadelphia District Attorney Larry Krasner sued Musk
Speaker 1: to stop the sweepstakes, saying it violates state lottery and
Speaker 1: consumer protection laws. Joining me is election law expert Douglas Spencer,
Speaker 1: a professor of law at the University of Colorado. Doug
Speaker 1: tell us about the concerns about this sweepstakes.
Speaker 6: The concern is that Elon Musk is using this lottery
Speaker 6: to encourage voter registration and voting, which on its face
Speaker 6: doesn't sound bad. We want more people to be registered
Speaker 6: and to vote. It does promote democracy, but there are
Speaker 6: federal laws that prevent people from paying or buying votes,
Speaker 6: or paying people to register, and so there's been allegations
Speaker 6: that this scheme that he has created is doing just that,
Speaker 6: rewarding people for registering and then turning out to vote.
Speaker 6: The da in Philadelphia is challenging this not just as
Speaker 6: a violation of these federal laws, but there's also some
Speaker 6: state laws about consumer protection and some other issues related
Speaker 6: to fraud. There is some sense of seriousness about the
Speaker 6: allegations that these federal laws are being violated with why
Speaker 6: the Department's Justice itself has commenced an investigation. They haven't
Speaker 6: charged him with any clime, but they see some of
Speaker 6: the concerns about the way this program is being run
Speaker 6: and they're investigating it.
Speaker 1: So the DNA in Philadelphia is going on a different
Speaker 1: kind of track. He's saying that this is a lot
Speaker 1: and as such, it's illegal in Pennsylvania because all lotteries
Speaker 1: have to be operated and administered by the state. So
Speaker 1: he's trying to get around the questions about federal law.
Speaker 6: That sounds right. There's been a concern about operating a lottery,
Speaker 6: you know, and whether it's been regulated or registered or
Speaker 6: as you said, as operated by the state itself. And
Speaker 6: then also, at least in the statement that I read,
Speaker 6: says that the lottery is being used to kind of
Speaker 6: lull or dupe Philadelphians and Pennsylvanians into giving away their
Speaker 6: personal data in exchange for money, which could be a
Speaker 6: violation of you know, a state false advertising or consumer
Speaker 6: protection law.
Speaker 1: I mean, it would put it into a whole different
Speaker 1: sphere because now he would have to follow all the
Speaker 1: rules for sweep stakes in Pennsylvania and the other swing states.
Speaker 6: That's right, And what I don't know is in the
Speaker 6: state how to define a sweet steak or a lottery.
Speaker 6: Because nobody's buying a ticket or giving musk any cash
Speaker 6: in order to enter the lottery. They're entering the lottery
Speaker 6: by signing a political petition, and so one, there could
Speaker 6: be an argument that the active signing a petition is
Speaker 6: different than buying a lottery ticket, which would distinguish this.
Speaker 6: And secondly, the active signing a petition is a First
Speaker 6: Amendment protected act that buying a lottery ticket is not.
Speaker 6: And so you'd have to see the interaction of this
Speaker 6: regulation of lotteries to the First Amendment. But if the
Speaker 6: state defines sweepstakes as you know, entering yourself for a
Speaker 6: chance to win a large sum of money based on
Speaker 6: chance or random draw, then this lottery is in violation
Speaker 6: of that state laws. He has not properly registered or
Speaker 6: operating under those state regulations.
Speaker 1: What's also interesting is that Musk said this is a
Speaker 1: random draw, but the Philadelphia DA says that appears false
Speaker 1: because multiple winners are people who have shown up at
Speaker 1: Trump rallies in Pennsylvania.
Speaker 6: Correct. So that's an allegation that in order to prove it,
Speaker 6: if a judge is willing to take the case, then
Speaker 6: one element of a lawsuit is what's called discovery, and
Speaker 6: Elon Musk would have to provide some evidence of the
Speaker 6: selection mechanism to prove that the decisions were being made randomly.
Speaker 6: He'd have to have a record of the random number
Speaker 6: generation or a video of him pulling a ping pong
Speaker 6: ball out. And if he's not, then he's not actually
Speaker 6: running a lottery, in which case he's falsely advertising what
Speaker 6: he's actually doing. But at the same time, if he's
Speaker 6: not randomly choosing people, then what he's doing may not
Speaker 6: be a lottery, and that could cut in favor of
Speaker 6: Elon Musk because then he can say, I'm not actually
Speaker 6: violating the state's prohibition because I'm just giving money away
Speaker 6: to the people that I want to give money away to.
Speaker 1: Elon Musk obviously ignored the letter from the Justice Department.
Speaker 1: I mean, what's the import of that letter if it
Speaker 1: didn't stop the sweepstakes.
Speaker 6: I think the letter from the Department of Justice does
Speaker 6: two things. Once, it's to a public statement that lets
Speaker 6: everyone in the public know that what Elon Musk is
Speaker 6: doing may be a violation of the law, but under
Speaker 6: the federal life of violation is punishable by a fine
Speaker 6: up to ten thousand dollars unless you are knowingly and
Speaker 6: willingly violating the law, in which case then you can
Speaker 6: serve jail time up to five years. So I think
Speaker 6: this letter from the DOJ puts the pack on notice
Speaker 6: that you are doing something willfully and knowingly, even though
Speaker 6: we've told you that what you're doing risks of violation,
Speaker 6: so that the potential penalties which will come after the
Speaker 6: election in any case, could be much more serious. Trying
Speaker 6: to get them to change. I will note that the
Speaker 6: lottery has changed a little bit since the DJ Center
Speaker 6: its letter. It used to expire. Eligibility used to expire
Speaker 6: on midnight October twenty first, which was the deadline for
Speaker 6: voter registration in Pennsylvania, which was a really strong signal
Speaker 6: that the motivation for this lottery was to pay people
Speaker 6: to register, not something else. That deadline has now changed
Speaker 6: until election day, so there was some recognition that that
Speaker 6: was a problem for them, and they have changed their
Speaker 6: tactics a little bit so they are aware in their
Speaker 6: reading these letters, and the question will be after the facts,
Speaker 6: if there's any accountability.
Speaker 1: I mean, they also changed it a little bit, and
Speaker 1: that he said at one of the giveaways, one of
Speaker 1: the early ones, that all you have to do is
Speaker 1: now be a spokesperson for us, so sort of making
Speaker 1: it into a job offer.
Speaker 6: I guess correct. He's trying lots of different ways. A
Speaker 6: judge will have to determine whether or not they think
Speaker 6: that's his true intent or not. If I pay you
Speaker 6: to register to vote, but I also say that you
Speaker 6: have to walk outside and breathe fresh air and then
Speaker 6: you get the money, a judge will say, I know
Speaker 6: you told me that you're paying these people for breathing
Speaker 6: fresh air, but they also have to register. I just
Speaker 6: think that's a scam. So the question is for somebody
Speaker 6: signing a petition that doesn't ask for anything, just says
Speaker 6: I think the First and Second Amendment are important. Is
Speaker 6: that something that's a legitimate petition, or do we think
Speaker 6: that the Musk has been using it as a way
Speaker 6: to insulate himself from just out and out buying people
Speaker 6: to register to vote. To make look somewhat differently, and
Speaker 6: that will be a fact determination by a judge if
Speaker 6: it gets to this litigation. They can look at emails
Speaker 6: between Musk and his pack and other communications. They can
Speaker 6: make determinations based on public statements where America Pack says
Speaker 6: we want to get a million people registered to vote
Speaker 6: in the Swing States, and they'll make a determination whether
Speaker 6: or not that was the intent of this lottery, even
Speaker 6: though there are facts that cut in different directions.
Speaker 1: A lot of people are going to say this is
Speaker 1: a move by a Democratic da against Musk who's spending
Speaker 1: millions to get Trump elected.
Speaker 6: I will say I think the political side of this
Speaker 6: is as important as the legal side. So the Department
Speaker 6: of Justice sending this letter does send a signal for voters,
Speaker 6: whether or not there's an actual violation, that what they're
Speaker 6: doing is a close violation of the law. And it
Speaker 6: could be the same for a district attorney who wants
Speaker 6: to make sure that this issue is framed in the
Speaker 6: press and in the political sphere as a legal mumbo
Speaker 6: jumbo as opposed to a really exciting money giveaway. So
Speaker 6: there's a political aspect where bringing these charges changes the
Speaker 6: news coverage, changes the dynamics, and that may be just
Speaker 6: as important as any finding of guilt or innocence. And
Speaker 6: so that's not something that the lawyers like me can
Speaker 6: really comment on whether that's the right way to go
Speaker 6: about it. But there's definitely a political angle to this.
Speaker 1: Do you remember anything else like this in our history,
Speaker 1: any kind of giveaways like this.
Speaker 6: Not in our modern history. Way back in the seventeen
Speaker 6: and eighteen hundreds, So this was before the ballot was secrets.
Speaker 6: You'd have parties who would basically give away free booze
Speaker 6: to people. You'd vote for their party, you'd get whiskey,
Speaker 6: and it's very well known, and in part to avoid
Speaker 6: that kind of bribery, we adopted the secret ballot and
Speaker 6: since then nothing so open with payments. The parties, of course,
Speaker 6: are always trying to incentivize and motivate people to get
Speaker 6: out to vote. No lottery like this, specifically from a
Speaker 6: wealthy buildaire either.
Speaker 1: Thanks so much for joining me, Doug. That's Douglas Spencer,
Speaker 1: a professor of law at the University of Colorado. In
Speaker 1: just a few days, the case has bounced between state
Speaker 1: and federal court and back again. On Thursday, there was
Speaker 1: a hearing before a state court judge over Musk's motion
Speaker 1: to move the case to federal court. Bloomberg Legal reporter
Speaker 1: Chris Dolmesh was at the hearing, So Chris, the state
Speaker 1: judge did send the case over to federal court for
Speaker 1: a determination. Was there any discussion about the merits of
Speaker 1: the DA's lawsuit at the hearing?
Speaker 7: Not specifically, Essentially, the DA's lawyer kind of launched into
Speaker 7: a bit of a soliloquy at some point on why
Speaker 7: you know this shouldn't be removed to federal court. But
Speaker 7: the judge clearly from the beginning was not going to
Speaker 7: discuss the merits, just given it's kind of an automatic
Speaker 7: move when they removed the federal court to at least
Speaker 7: have the federal judge determined as a threshold matter whether
Speaker 7: it's a matter of federal law.
Speaker 1: So explain what their grounds are for removing this to
Speaker 1: federal court.
Speaker 7: They're saying it's essentially a quintessential matter of election law,
Speaker 7: even though the DA's claims are essentially state law claims
Speaker 7: under the Pennsylvania's lottery laws and consumer protection laws. So
Speaker 7: they say, look, this is an election dispute, it should
Speaker 7: be heard in federal court. They classify it as you know,
Speaker 7: he's trying to stage a show ahead of the election
Speaker 7: because he disagrees with Musk and trying to suppress his
Speaker 7: First Amendment rights.
Speaker 1: And what's the response of the Philadelphia DA.
Speaker 7: Now, the DA says it's a state law case. He
Speaker 7: argued that while it touches on elements of federal election law,
Speaker 7: he argues that there are plenty of disputes that are
Speaker 7: related to the election that are heard in state court.
Speaker 1: And Chris, we have seen this removal to federal court
Speaker 1: gambit before.
Speaker 7: Yes, in many cases, it's a typical move. That's one
Speaker 7: of the reasons a lot of times when you see
Speaker 7: civil litigation between state corporations, a lot of the time
Speaker 7: they have an automatic law that determines where the case
Speaker 7: will be heard if there is a dispute, you know,
Speaker 7: that kind of eliminates that problem from the beginning.
Speaker 1: This is a really serious issue, but from reading about
Speaker 1: it, it seemed to me like the hearing was pretty lighthearted.
Speaker 7: Yeah, there are a lot of laughs. It was when
Speaker 7: the DA noted that Elon wasn't there and looked around
Speaker 7: the room. His lawyer said, he can't just show up
Speaker 7: anywhere on you know, a moment's notice. And then the
Speaker 7: DA got up and said, well, as to that notion,
Speaker 7: he owned SpaceX. And then the judge kind of shot
Speaker 7: that down real quick. He's like, he can't land a
Speaker 7: rocket on top of the building. Let's be serious, And
Speaker 7: that got some laughs.
Speaker 3: You know.
Speaker 7: The judge was clearly in a kind of jovial mood,
Speaker 7: and one assumes because he knew he wasn't gonna have
Speaker 7: to do anything with it that day.
Speaker 1: But now the ball is back in his court since
Speaker 1: the federal judge ruled that there was no issue of
Speaker 1: federal law involved in the case. Well see what happens next.
Speaker 1: Thanks so much, Chris. That's Bloomberg Legal reporter Chris don Mesh.
Speaker 1: In other election news related to Pennsylvania, on Friday, the
Speaker 1: court refused to intervene in a clash over provisional ballots
Speaker 1: in the state, rejecting a Republican emergency appeal. This leaves
Speaker 1: in place a state Supreme Court ruling that elections officials
Speaker 1: must count provisional ballots cast by voters whose mail in
Speaker 1: ballots were rejected. Coming up, Sam Bankman Fried's former lieutenant
Speaker 1: is the first to avoid prison in the FTX case.
Speaker 1: I'm June Grosso and you're listening to Bloomberg.
Speaker 7: I call it the wheel. I don't think so.
Speaker 3: What does it do the rules? Yeah, so does a bagel?
Speaker 7: Okay, a bengel.
Speaker 6: You can eat.
Speaker 3: One of the worst ideas I've ever heard.
Speaker 2: Like I was saying, it's FTX, it's a safe and
Speaker 2: easy way to get into crypto.
Speaker 7: I don't think so.
Speaker 4: And I'm never wrong about this stuff.
Speaker 1: Never remember back when FTX was the world's most popular
Speaker 1: cryptocurrency exchange with select britty endorsements and a Super Bowl ad.
Speaker 1: Of course, that was before a gaping hole in customer
Speaker 1: deposits was exposed and FTX collapsed into bankruptcy. Federal indictments
Speaker 1: followed a founder, Sam Bankman Freed, and his top executives,
Speaker 1: and it didn't take long for three of those executives
Speaker 1: to turn on Bankman Freed, accepting plea deals in return
Speaker 1: for cooperating with prosecutors and testifying against him. Bankman Freed
Speaker 1: is serving twenty five years in prison after a jury
Speaker 1: found him guilty of the multi billion dollar fraud late
Speaker 1: last year, and now the three cooperators are learning what
Speaker 1: the consequences will be for them. In September, the prosecution's
Speaker 1: star witness, Caroline Ellison, a top executive and Bankman Freed's
Speaker 1: on again, off again girlfriend, was sentenced to two years
Speaker 1: in prison. In October, Ryan Slome, one of Bankman Freed's
Speaker 1: top lieutenants FTX, who did not testify against him, was
Speaker 1: sentenced to seven and a half years in prison. But
Speaker 1: on Wednesday, former FTX chief engineer Nashad Singh walked out
Speaker 1: of Judge Lewis Kaplan's courtroom a free man. Why a
Speaker 1: get out of jail free card for Singh when Judge
Speaker 1: Caplan sentenced the others to prison time. Here to explain
Speaker 1: is Bloomberg Legal reporter Eva Benny Morrison, who covered bankman
Speaker 1: Fried's trial as well as singh sentencing. Ava tell us
Speaker 1: a little about Singh.
Speaker 5: Nishad Singh was one of three top executives at FTX
Speaker 5: who turned on Sam Banks and Freed and signed up
Speaker 5: his corporating witnesses to the government. They all testified at
Speaker 5: Stateman Fred's broad trial and eventually helped land his conviction
Speaker 5: to statement. Freed's currently serving twenty five years in jail,
Speaker 5: and after his sentenced, it was time for the corporators
Speaker 5: to face their own punishment for their role in the
Speaker 5: collapse and the years on board at FTX. Mad Scene
Speaker 5: turned up in court and we heard some pretty compelling
Speaker 5: arguments from his attorney about why he should avoid spending
Speaker 5: a day in prison. Only a couple of months ago,
Speaker 5: Caroline Ellison, the foremost CEO of Alimenta Research, was sentenced
Speaker 5: to two years in jail. This is unusual. Most cooperators
Speaker 5: end up avoiding any jail time whatsoever. But fortunately for
Speaker 5: Nishad Singh, that was what happened. Judge Lewis Caplan found
Speaker 5: that he deserved more corporation credit than Caroline Ellison and
Speaker 5: he was essentially less culpable than the flord at FTX
Speaker 5: than Ellison.
Speaker 1: Singh's lawyers apparently succeeded in setting him apart from Ellison
Speaker 1: and Gary Wang, who's yet to be sentenced. Was a
Speaker 1: factor also that Singh was involved in the front for
Speaker 1: a shorter period of time.
Speaker 5: Judge Chaplin certainly seemed to focus on the amount of
Speaker 5: time Mischad sing knew about the fraud, so Nishad, who
Speaker 5: was the chief engineer at FTX, only found out of
Speaker 5: twenty twenty two that STX had been sending customer funds
Speaker 5: billions of dollars worth for customer funds to Alimtor Research.
Speaker 5: In contrast, Caroline Allison knew about this for years and
Speaker 5: was an accomplice to Sam bankman Bridge and Caplan found
Speaker 5: that this certainly helped Mishad Thing's case, the fact that
Speaker 5: he only knew about it for a couple of months
Speaker 5: before STX collapsed. You know the poe. The prosecution and
Speaker 5: the defense did admit even when Mishad things found out
Speaker 5: about this massive board and that STX couldn't afford to
Speaker 5: cover the whole and customer deposits, he continued to allow
Speaker 5: campaign donations to be made in his name and forged
Speaker 5: ahead with a purchase of a beautiful house in Washington State,
Speaker 5: something that his lawyer said he will forever be ashamed.
Speaker 1: Of three point seven million dollar house.
Speaker 5: Yes, that's right. It was worth three point seven million
Speaker 5: dollars and he bought it with his friends. Was a
Speaker 5: place to go and when he could relax and go
Speaker 5: on holidays. This was kind of the only luxury, maybe
Speaker 5: indulge in purchase that Mishad Seine had made when he
Speaker 5: was FTX. His lawyers, you know, really stressed that he
Speaker 5: was a true believer in effect of altruism, his philosophy
Speaker 5: that drew a lot of the STX and alimed to
Speaker 5: research folks together this idea that you could earn a
Speaker 5: lot of money and give most of your way to
Speaker 5: make the world better place. Miss shadd was very interested
Speaker 5: in charity. You know, he's been involved in giving away
Speaker 5: a lot of concernings since he was in college and
Speaker 5: his lawyers really tried to push that point that this was,
Speaker 5: you know, yeah, a big purchase, but it didn't look
Speaker 5: like his philosophies.
Speaker 1: And he's been working all this time, unlike Caroline Ellison.
Speaker 5: In Caroline Ellison's case, her lawyers had said that she
Speaker 5: was really struggling to find an employment after the STS collapse,
Speaker 5: mainly because of the reputational damage that came and being
Speaker 5: associated with STX and elem to research. She had been
Speaker 5: working on writing a non fiction book and a math
Speaker 5: book that Mishad Seine had been lucky enough to find
Speaker 5: a job. He's been working as a software engineer for
Speaker 5: a firm in California since FPX collapsed, and he's also
Speaker 5: been volunteering at a homeless shelter not far from his
Speaker 5: house in the Bay Area, and at night he's working
Speaker 5: on code for a affordable housing project. So this certainly
Speaker 5: went towards his argument for someone that is trying to
Speaker 5: build his life back up again and certainly doesn't have
Speaker 5: any interest in getting involved in a multi billion dollar
Speaker 5: thought again.
Speaker 1: Sing addressed the judge before he was sentenced, saying, quote,
Speaker 1: I strayed so far from my values and words can
Speaker 1: express how sorry I am how did he come across.
Speaker 5: Something that struck me about Michadd in court was that
Speaker 5: he remained very calm and very composed the entire time.
Speaker 5: When he got up to speak to Judge Kaplan, we
Speaker 5: approached the lectern with a piece of paper with his
Speaker 5: written words on it in his hand and said how
Speaker 5: remorseful he was and how gutted he was about the
Speaker 5: harm that he caused to so many innocent people. He
Speaker 5: spoke about wanting to prove to not only the judge
Speaker 5: but others that he was on the path to redemption,
Speaker 5: and he wanted to do good and be a forced
Speaker 5: good in the world since being part of the calamity
Speaker 5: at Aps.
Speaker 1: And what was the reaction when he learned that he
Speaker 1: wasn't going to have to go to prison.
Speaker 5: I think the big question mark was whether Judge Caplan
Speaker 5: was going to send Mishad's prison or save him from that,
Speaker 5: especially after the two years Tent said he handed to
Speaker 5: Caroline Elepent. So when he got to the pointing end
Speaker 5: of delivering his judgment, michhad was standing between his two
Speaker 5: lawyers and Judge Caplan said, I order you to report
Speaker 5: to the Attorney General of the United States for time served,
Speaker 5: and at that point Shad seeing barely reacted. There was
Speaker 5: a very saint smile that came across his face. While
Speaker 5: his family, of which there were many, seated in the
Speaker 5: public gallery behind him, augaf his Beyonce Claire put a
Speaker 5: hand and over her mouth. His mother kissed his fiance
Speaker 5: on the cheek and they held hands and you could
Speaker 5: see that how emotional that they were. They were crying,
Speaker 5: but you could just sense the kind of utter relief
Speaker 5: that was borught across support room.
Speaker 1: What seemed a little unusual is that the judge addressed
Speaker 1: Singh's parents and said, I don't see anything you did wrong.
Speaker 1: Tell us what led to that.
Speaker 5: That's right. As part of seeing sentencing, his parents, along
Speaker 5: with his brother and other friends and former colleagues that FTX,
Speaker 5: submitted letters in support of him. And his parents' letters
Speaker 5: were pretty heartbreaking. They spoke about raising their sons as
Speaker 5: best as they could, spoke about how intelligent and talented
Speaker 5: he was, and then discovering that he had been caught
Speaker 5: up and explored at FTX, And there were some pretty
Speaker 5: harrowing parts in there about the impact that the FTX
Speaker 5: collapse had had on the Shad and how he had
Speaker 5: contemplated suicide in the weeks and months after FTX. His
Speaker 5: parents spoke about the impact on his mental health, and
Speaker 5: Mishad's lawyerly made a point of saying, you know, every
Speaker 5: time Chad flew over from California to New York to
Speaker 5: meet with us at our offices, his father was there
Speaker 5: in the conference room sitting across from him, or his
Speaker 5: younger brother was there. So he had the unwavering support
Speaker 5: of his family. And that was very clear from the
Speaker 5: amount of people that turned up in the court yard.
Speaker 5: And the judge addressed that at the end of his sentence,
Speaker 5: after he told the Shad that he wouldn't have to
Speaker 5: serve danger and he said, you know, I'd like to
Speaker 5: just address this thing's parents on a personal note, and
Speaker 5: he said, there is nothing I can see that you
Speaker 5: did wrong, and then he walked out of the courtroom.
Speaker 5: And I think that was there was quite an emotional
Speaker 5: moment in the courtroom, especially I from the Shad parents
Speaker 5: could see that they were I think quite receptive to
Speaker 5: what he said and almost grateful because you can imagine
Speaker 5: the impact that he's had on his family.
Speaker 1: So this case is over. What's the next sentencing. Is
Speaker 1: that the final sentencing in this case.
Speaker 5: Yes, we've got one final sentencing hearing left in this
Speaker 5: FTX saga, and that is of Gary Wong. Gary Wong
Speaker 5: was the co founder at STX and helped build the
Speaker 5: exchange with Sam Bak mcfreed. He became the chief technology
Speaker 5: officer and he was also a corporating witness and get
Speaker 5: testimony at Sam's trial. He's due to be sentenced at
Speaker 5: the end of November, so it'll be interesting to see
Speaker 5: where Judge Kaplan puts him on the culpability scale because
Speaker 5: he knew about the that before STX and Animator Research
Speaker 5: a little bit earlier than Mishad Thing did. But from
Speaker 5: the evidence that we heard a trial, he wasn't as
Speaker 5: deeply involved as Caroline Ellison was.
Speaker 1: So the judge will have to balance all that out.
Speaker 1: I know you'll be there for that, Ava, Thanks so
Speaker 1: much for bringing us inside the courtroom. That's Bloomberg Legal
Speaker 1: reporter Eva Benny Morrison, and that's it for this edition
Speaker 1: of the Bloomberg Law Podcast. Remember you've can always get
Speaker 1: the latest legal news by subscribing and listening to the
Speaker 1: show on Apple Podcasts, Spotify and at Bloomberg dot Com,
Speaker 1: slash podcast, slash Law. I'm June Grosso and this is
Speaker 1: Bloomberg