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Speaker 1: This is Bloombird Law with June Brusso from Bloomberg Radio.

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Speaker 1: It's the twenty nine lawsuit brought by Texas to challenge

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Speaker 1: Biden administration policies, and this week the Supreme Court justices

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Speaker 1: seemed divided over the administration shifting its deportation priorities the

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Speaker 1: law meant reality when the justices were confronted with the

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Speaker 1: fact that Congress has never provided the funds that would

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Speaker 1: be needed to arrest and report all of the estimated

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Speaker 1: eleven million undocumented immigrants in the US despite what the

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Speaker 1: law says. Here are the Chief Justice and Justice Brett Kavanaugh. Now,

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Speaker 1: it's our job to say what the law is, not

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Speaker 1: whether or not it can be possibly implemented or whether

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Speaker 1: there are difficulties there um. And I don't think we

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Speaker 1: should change that responsibility just because Congress and Executive can't

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Speaker 1: agree on something that's possible to address this this problem.

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Speaker 1: I don't think we should let them off the hook.

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Speaker 1: Trying to figure out how this will play out if

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Speaker 1: you were to prevail. Uh So the government uh uh

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Speaker 1: says we don't have the money to comply, then then

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Speaker 1: what do you do? And Justice Elena Kagan question the

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Speaker 1: right of states like Texas to challenge and frequently block

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Speaker 1: every new immigration policy. Immigration policy is supposed to be

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Speaker 1: the zenith of federal power, and it's supposed to be

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Speaker 1: the zenith of executive power. And instead we're creating a

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Speaker 1: system where a combination of states and courts can bring

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Speaker 1: immigration policy to a dead halt. My guest is immigration

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Speaker 1: law expert Leon Fresco, a partner at Hollanden Knight. Leon,

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Speaker 1: there are several issues going on in this case. Explain

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Speaker 1: the basics for us well. This case is about a

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Speaker 1: memorandum that was issued by the Biden administration that said

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Speaker 1: that they're going to prioritize basically violent offenders, national security risk,

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Speaker 1: and very very recent border crossers as the people that

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Speaker 1: are prioritizing for removal and everybody else would be de

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Speaker 1: prioritized for removal, including some people and people with certain

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Speaker 1: criminal convictions that the statute would require that they be

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Speaker 1: detained and removed if they were apprehended by I Because

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Speaker 1: the idea of the memo is that even though some

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Speaker 1: people might nominally fit these categories, such as someone, for instance,

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Speaker 1: who stole a chocolate bar from a store, that individual

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Speaker 1: in the parameters of all of the equities, might not

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Speaker 1: be someone you would want to remove if they had

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Speaker 1: five U. S. Citizen children and where the sole breadwinner

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Speaker 1: for that family, And so that memmo says to look

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Speaker 1: into all of that information and make a decision. And

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Speaker 1: what the State of Texas is doing, is it challenging

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Speaker 1: that memo saying that at the end of the day,

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Speaker 1: there shouldn't be any discretion to de prioritize anybody from removal.

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Speaker 1: I find someone, they should remove someone. End of the story,

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Speaker 1: no further discussion. The first question is a threshold question

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Speaker 1: whether Texas has standing or the legal right to challenge

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Speaker 1: the administration's guidelines. Correct. The Court was actually very concerned

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Speaker 1: about this fact because what they were looking at was,

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Speaker 1: first of all, to the Administrative Procedure Act, did someone

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Speaker 1: have to be specially affected? And even just as the

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Speaker 1: Leado sort of said, you know, specially offended, I think,

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Speaker 1: was the m used to have standing as opposed to

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Speaker 1: what states have been doing previously and what the courts

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Speaker 1: have been ruling previously. The states get whatever it's called

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Speaker 1: a special solicitude, which is they get a little bit

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Speaker 1: of an exception from standing because they have these interests

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Speaker 1: in terms of all of their state residents that they

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Speaker 1: could bring that prompt any individual resident couldn't bring. And

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Speaker 1: so the court was talking about that issue. But then

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Speaker 1: the court was also talking about, well, what about these

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Speaker 1: Texas actually affected even if you make them give a

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Speaker 1: standing analysis? So, first of all, do they even have

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Speaker 1: to have one? Could they just have this special collissitude

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Speaker 1: to sue? But if they have to have one, well

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Speaker 1: what about their justification that they gave that their healthcare

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Speaker 1: costs are going to be higher because of this demo

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Speaker 1: that the prioritizes people. And at the end of the day,

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Speaker 1: that's sort of such a speculative claim because I don't

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Speaker 1: think there's any economic analysis that really works these things

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Speaker 1: out in terms of a very large picture. I mean,

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Speaker 1: you sort of have, in general, more people equals more

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Speaker 1: GDP equals more government revenue, and then you have to

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Speaker 1: figure out where each person is from the point of

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Speaker 1: view of how much they take, and the standing require

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Speaker 1: that kind of analysis or does it require just a

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Speaker 1: harm irrespective of the benefit. And so they're trying to

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Speaker 1: weigh all of that. But I think they will continue

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Speaker 1: by allowing the standing. I think that's ultimately not going

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Speaker 1: to be the issue where this case gets decided. I

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Speaker 1: think the court will do something it familiarly does in

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Speaker 1: many cases, which they will assume but not decide that

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Speaker 1: Texas has standing and punt that issue for another day

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Speaker 1: and get to other issues. In this case, probably another issue,

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Speaker 1: perhaps the issue is that the law says that some

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Speaker 1: immigrants quote shall be taken into custody or removed. Correct.

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Speaker 1: There's a law called iron A Section to thirty six

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Speaker 1: or tital A U. S Coat, depending on where you're

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Speaker 1: looking in the statutes that says that there's a specific

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Speaker 1: type of foreign national. If you commit certain types of crime,

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Speaker 1: you have to be detained mandatorially and removed from the country.

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Speaker 1: And so there was some gradation there with Avy Coney,

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Speaker 1: Barrett and Neil Morrisage where they were saying to the

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Speaker 1: Department of Justice, well, look, maybe you have this broad

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Speaker 1: power for people you haven't maintained that you don't know

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Speaker 1: anything about it. They're just your run of the mill

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Speaker 1: undocumented person that overstayed their visa or that crossed the

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Speaker 1: border on lawfully ten years ago. But that's different than

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Speaker 1: when you literally know of somebody who's one of the

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Speaker 1: two thirty six foreign nationals who has a criminal conviction.

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Speaker 1: What gives you the authority to have a memo that

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Speaker 1: the prioritizes within that category when Congress clearly said prioritize

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Speaker 1: people in that category. And so there I can see

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Speaker 1: a compromise decision which strikes maybe that part of the memo,

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Speaker 1: but says that the administration has broad this present with

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Speaker 1: regard to people for border crossers and visa overstays to

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Speaker 1: figure out what groups of those people to prioritize or

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Speaker 1: not prioritize, given that there isn't sufficient funds for all

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Speaker 1: of those people. Some of the justices, particularly the Chief Justice, said,

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Speaker 1: challis shall and we follow the law. We don't decide

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Speaker 1: how the law is going to be implemented, But then

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Speaker 1: question how you could force the government into doing something

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Speaker 1: it just doesn't have the money to do. So I

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Speaker 1: think there was a very interesting philosophical debate that Justice

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Speaker 1: Roberts was saying, which is, look, at the end of

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Speaker 1: the day, there isn't probably funding to enforce any law.

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Speaker 1: But the point is that's a different question than whether

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Speaker 1: the government can exempt people. So you know, you say

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Speaker 1: we're gonna exempt this group of offenders from tax prosecution

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Speaker 1: or this group of labor law offenders from labor law prosecents. Sure,

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Speaker 1: you don't have enough fun each to prosecute every labor

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Speaker 1: law by later. But that's a different thing than writing

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Speaker 1: a memo for people. And so what Justice Roberts says is, look,

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Speaker 1: and we just say, there's a world where you can't

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Speaker 1: write a memo, but you just do your best within

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Speaker 1: the limited constraints that you have. And I think that

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Speaker 1: is an important discussion. But then it gets balanced with

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Speaker 1: the question of Okay, let's say it's true. What now

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Speaker 1: what does the agency do. Now do you actually let

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Speaker 1: it sort of run as this rudderless agency without any priorities,

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Speaker 1: or does the state of Texas actually get the rights

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Speaker 1: the priorities for I or does the judge get to

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Speaker 1: write the priority for ice enforce them to support specific people.

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Speaker 1: And I think that's where this thing falls apart. That's

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Speaker 1: where I think you'll see a comment together coalition of

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Speaker 1: justices say, look, you can't write a memo that the

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Speaker 1: prioritizes people that Congress prioritize a k A. People with

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Speaker 1: certain criminal convictions. But within the categories of people where

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Speaker 1: there's clearly not enough funding, those you can actually create

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Speaker 1: a prioritization. Given the historical basis of immigration law and

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Speaker 1: the broad authority it gives to the federal government, the

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Speaker 1: executive brank to deal with these issues so lely on

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Speaker 1: what happened to the federal government being in charge of

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Speaker 1: immigration policies not the states. Well, I think that's going

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Speaker 1: to be the underlying issues, And I think you're gonna

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Speaker 1: get a topple together group of justices. You already had

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Speaker 1: Justice Cony Barrett who would have granted an injunction in

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Speaker 1: the first place. So now the question is can you

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Speaker 1: get I don't think you're gonna get Alito. I don't

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Speaker 1: think you're gonna get Thomas. I don't think you're gonna

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Speaker 1: get Kavanaugh. But can you get either one of Roberts

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Speaker 1: or Gorsage to come along to the principle of fine?

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Speaker 1: Even if we say that this memo is unlawful, what's

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Speaker 1: the remedy really, at the end of the day, Are

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Speaker 1: we gonna have a court system that dictates to the

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Speaker 1: federal government what they do via the Immigration Enforcement No,

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Speaker 1: of course not. And so because of that, what we're

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Speaker 1: gonna do is we're going to basically write out the

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Speaker 1: little section of this memo that we think actually violates

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Speaker 1: the statute, the one that basically tells people to be

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Speaker 1: prioritize even the people with criminal convictions, but give broad

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Speaker 1: latitude during the rest of the group of people who

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Speaker 1: are basically eleven million border crossters and these over space

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Speaker 1: that they be prioritized into groups where some are more

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Speaker 1: serious and some are less serious. I thought it was

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Speaker 1: really interesting that Justice Kagan brought out the fact that

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Speaker 1: has been forum shopping for judges that will issue nationwide

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Speaker 1: injunctions in these cases. In Texas, there are divisions within districts.

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Speaker 1: You can pick your trial court judge. Um. Uh, you

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Speaker 1: know you played by the rules. That's fine, but you

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Speaker 1: picked your trial court judge. One judge stops a federal

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Speaker 1: immigration policy in its tracks. It's certainly an issue that,

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Speaker 1: no matter who's doing it, needs to be addressed that

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Speaker 1: there perhaps needs to be three judge panels that get

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Speaker 1: convened in cases where people are challenging the constant and

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Speaker 1: tumality and pumping. But in the end that won't be

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Speaker 1: the basis upon which this case is the side of

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Speaker 1: You've given hints here and there, but tell us what

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Speaker 1: you think the decision will be based on the oral argument.

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Speaker 1: I think they will say we will assume enough the

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Speaker 1: fighting that they're staying it. We will say that at

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Speaker 1: the end of the day, we're not going to get

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Speaker 1: to the issue here as to whether a vacant or

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Speaker 1: is the same thing as a as an injunction, because

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Speaker 1: all we're gonna do here is we're gonna say that

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Speaker 1: this memo can survive, but no part of the memo

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Speaker 1: can survive moving forward if it conflicts with a federal statute.

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Speaker 1: And so the parts of the memo that conflict with

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Speaker 1: the shall detain parts have to be written again, and

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Speaker 1: we're gonna leave that to the disrecord to figure out

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Speaker 1: which parts conflict with that. Something like that I could

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Speaker 1: see happening, and then we will see where that goes

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Speaker 1: moving forward. But I think that's where this is likely

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Speaker 1: to go. I think they're likely to fund a lot

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Speaker 1: of the big issues. I could be proven wrong, and

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Speaker 1: and that would certainly not be the first time. But

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Speaker 1: you know, it would take one justice moving a a

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Speaker 1: from where they were in previous court decisions to do this.

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Speaker 1: So we'll see if that ends up being the way.

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Speaker 1: But I think given what we saw in the remain

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Speaker 1: in Mexico case, I think you'll see a practical five

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Speaker 1: judge coelligence created that basically allows the federal government to

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Speaker 1: create these priorities, but not for places where they clearly

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Speaker 1: conflict with PATO. Thanks Leon be'st Leon Fresco of Hollanden

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Speaker 1: Night coming up. F t X investors, SUS celebrities. This

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Speaker 1: is Bloomberg. I call it the wheel. Sure, I don't

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Speaker 1: think so. What does it do? Yeah? So does a bagel? Okay, bagel?

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Speaker 1: You KENI one of the worst ideas I've ever heard.

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Speaker 1: Larry David played a skeptic about f t X in

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Speaker 1: a Super Bowl ad that went viral, and it turned

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Speaker 1: out it was smart to treat the crypto cur and

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Speaker 1: cy platforms claims with skepticism. But David is now being

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Speaker 1: sued for luring unsophisticated investors into the f t X debaco.

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Speaker 1: And he's not the only celebrity. Tom Brady, Gisele Bunch

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Speaker 1: and Shaquille O'Neal and Steph Curry are also being sued,

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Speaker 1: and some of their endorsements were more straightforward. Okay, chryp,

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Speaker 1: messing around, man, give me some tips from crypto, but

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Speaker 1: you are an expert. Right now, I'm not an expert,

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Speaker 1: and I don't need to be with f t X.

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Speaker 1: Everything I need to buy, sell, and trade crypto safely.

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Speaker 1: My guest is Shane's Sappini, founder of Subpini l LP.

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Speaker 1: There are lots of people to sue here, lots of

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Speaker 1: entities as well, So why sue celebrity some with a

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Speaker 1: tenuous connection to what happened? I think what's going on

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Speaker 1: here mostly is that the celebrities aren't individually bankrupt, So

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Speaker 1: if the Blankets were to sue f t X, that

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Speaker 1: lawsuit would be paused during the pendency of the bankruptcy,

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Speaker 1: or at least for parts of the bankruptcy. And you

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Speaker 1: don't have that same issue if you see somebody like

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Speaker 1: Chiquille O'Neill, who is certainly not bankrupt. But is there

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Speaker 1: also an added factor of drawing attention to the lawsuit.

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Speaker 1: I think there is definitely an aspect of wanting to

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Speaker 1: draw attention to the lawsuit by bringing in people whose

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Speaker 1: names are regularly in the news. For example, I don't

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Speaker 1: think that Larry David was included in this lawsuit necessarily

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Speaker 1: because of the claims against him are particularly strong, but

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Speaker 1: rather because he was participant in one of the most

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Speaker 1: popular and widely shared Super Bowl ads of all time.

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Speaker 1: I don't think that's a coincidence. The celebrity's liability depends

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Speaker 1: on whether the products they promoted. Our Securities tell us

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Speaker 1: more about that. Securities law is something that's developed over

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Speaker 1: hundreds of years to protect the investing public from the

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Speaker 1: exact types of issues that have arisen in the wild

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Speaker 1: wild West of cryptocurrency trading. They're there to make sure

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Speaker 1: that when people are promoting stocks and other types of

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Speaker 1: securities that what they're promoting actually is real and actually exists,

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Speaker 1: and isn't just a complete sham or a fraud. And

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Speaker 1: if it turns out that it is a shammera fraud,

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Speaker 1: then the investing public has some modicum of protection at least.

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Speaker 1: And so basically you have everybody other than crypto boosters

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Speaker 1: who say that cryptocurrencies should or our securities. They have

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Speaker 1: many of the hallmarks of a traditional security. The problem

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Speaker 1: is that people who boost cryptos say what's great about

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Speaker 1: it is the lack of regulation, so to the extent

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Speaker 1: that they are found to these securities, it's a big

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Speaker 1: problem for the cryptocurrency industry as a whole because it

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Speaker 1: will bring them under much tighter and in my opinion,

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Speaker 1: much needed regulatory scrutiny, And the Securities and Exchange Commission

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Speaker 1: has indicated that it thinks their securities. So let's say

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Speaker 1: they're found to be securities, what are the implications the

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Speaker 1: security should have been registered with the state so that

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Speaker 1: they could be reviewed and monitored and regulated for compliance

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Speaker 1: of all types of different consumer protection laws. The reason

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Speaker 1: I think, from a legal perspective, why they're bringing unregistered

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Speaker 1: security actions rather than say outright fraud is with a

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Speaker 1: fraud action, they would have to approve knowledge on the

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Speaker 1: part of the celebrities as well as intent to defraud

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Speaker 1: the consumers. And from all the reporting that I've seen

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Speaker 1: and read, it was Sam Bankman, Freed and maybe only

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Speaker 1: a few other people who had any intimate knowledge of

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Speaker 1: what was actually going on at the company. So that

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Speaker 1: would be a much harder hill to climb than just

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Speaker 1: saying these are actually securities. They in fact were not registered,

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Speaker 1: and then when they were marketed, they were illegally marketed

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Speaker 1: as unregistered security, whether the celebrity knew that at the

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Speaker 1: time or not. So now does it matter the kind

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Speaker 1: of commercial I mean we talked, Larry David was actually saying,

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Speaker 1: you know, I don't buy it. And you know, the

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Speaker 1: Golden State Warriors are named. They unveiled the company's logo

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Speaker 1: on the court at the team's arena, but then other celebrities,

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Speaker 1: you know, promoted it more directly. I think it does

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Speaker 1: depend on how they're moded. Putting the name of a

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Speaker 1: company up on something or saying you know, they're the

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Speaker 1: official sponsor of Golden State Warriors or whatever. You know,

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Speaker 1: that's a far cry from somebody specifically saying, you know,

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Speaker 1: they have these yield bearing accounts, these are great. You

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Speaker 1: basically earned free money for nothing. Those kinds of statements

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Speaker 1: are very different. And the thrust of your question, I

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Speaker 1: think is correct that there's going to be a much

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Speaker 1: harder time showing that link between the yield bearing accounts

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Speaker 1: if they are deemed to be securities and uh commercial

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Speaker 1: activity like naming something after ft X or doing a

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Speaker 1: commercial where the celebrity like Larry David stays, you know, no,

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Speaker 1: no thanks, I'll pass on this. But that said, I

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Speaker 1: mean those commercials were all about getting people to put

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Speaker 1: money into the yield bearing accounts. It's not like f

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Speaker 1: t X ran the Larry David commercial to scare people

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Speaker 1: away from their company. They did it because they know

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Speaker 1: that he's like, you know, the curmugion that everybody loves

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Speaker 1: to disagree with. So what might the Aberti's defense be

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Speaker 1: at trial. I mean, it's unlikely that any of these

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Speaker 1: cases will get before a jury, but if they did,

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Speaker 1: the kind of argument they would make, like, look, we

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Speaker 1: had no idea, and even if we had done reasonable

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Speaker 1: due diligence, we couldn't have figured this out. Even you know,

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Speaker 1: some of the smartest people in the most important executive

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Speaker 1: agencies disagree on this question. Courts disagree on this question.

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Speaker 1: How could you expect Steph Curry, who in the advertisement

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Speaker 1: itself was saying, I don't know anything about crypto. I

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Speaker 1: trust somebody else about it to determine whether these are

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Speaker 1: securities or not. But they may run up against the

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Speaker 1: old adage that every lawyer learns in law school, which

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Speaker 1: is that ignorance of the law is not a defense.

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Speaker 1: Why do you say that this is unlikely to get

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Speaker 1: to a jury. I think there is so much uncertainty

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Speaker 1: on both sides, and there's a lot of money at stake,

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Speaker 1: and I think the celebrities realize that they're the only

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Speaker 1: solvent parties here, and so I think it's highly likely

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Speaker 1: that this is the type of case that will settle

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Speaker 1: before going to trial, like most cases do. There may

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Speaker 1: not be any they're solving parties besides these celebrities. But

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Speaker 1: if you're talking about what thousands of people in this

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Speaker 1: class action, what can they settle for that will satisfy

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Speaker 1: a class like this? That's the potentially billion dollar question.

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Speaker 1: I can't give a coaching answer on that, and I

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Speaker 1: think that they're probably pretty intense discussions on this exact

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Speaker 1: question going on between plaintiffs Council and the various defense

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Speaker 1: council in this case. It's anybody's guests, what a number

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Speaker 1: like that will look like a lot of litigation going

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Speaker 1: on over f t X. Thanks so much, Shane. That's

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Speaker 1: Shane Sabpoini of Sabboini LLLP. Coming up next on the

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Speaker 1: Bloomberg Law Show. What do Jack Daniels, a Squeaky dog toy,

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Speaker 1: and Ginger Rogers have in common? I'm June Grosso and

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Speaker 1: you're listening to Bloomberg