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

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Speaker 2: New York City Mayor Eric Adams was one of four

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Speaker 2: Democratic mayors of sanctuary cities who testified before the House

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Speaker 2: Oversight Committee last week as the White House threatens to

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Speaker 2: pull federal funding from Boston, Chicago, Denver, and New York.

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Speaker 2: But the criminal corruption case against Adams took center stage

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Speaker 2: as the mayor was grilled by several Democratic lawmakers about

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Speaker 2: the allegations that the Justice Department agreed to dismiss the

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Speaker 2: charges in return for helping the Trump administration with its

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Speaker 2: deportation efforts. Representative Robert Garcia, a Democrat from California, questioned Adams.

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Speaker 3: And Mayor Adams, I also want to be very clear,

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Speaker 3: are you selling out New Yorkers to save yourself from prosecution?

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Speaker 4: No deal, no quick pro qual and I did nothing

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Speaker 4: wrong and anything dealing with this case. At a deference

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Speaker 4: to Judge Hoe, who's now addressing it, I'm going to

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Speaker 4: refer to his actions.

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Speaker 3: Well, mister Mary, it appears to me at least that

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Speaker 3: you are selling New Yorkers out. It appears that you

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Speaker 3: are working with Tom Homan, who is clearly clearly focused

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Speaker 3: on family separation and deportations.

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Speaker 2: But it appears that Adams is a step closer to

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Speaker 2: getting the criminal charges dismissed. Paul Clement, the former US

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Speaker 2: Solicitor General appointed by Judge dale Hoe as a friend

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Speaker 2: of the Court to advise him, has recommended the case

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Speaker 2: be permanently dismissed. Joining me is former federal prosecutor Robert Mintz,

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Speaker 2: a partner maccarter In English, Bob explain why Judge Hoe

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Speaker 2: appointed Clement.

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Speaker 5: Judge dale Hoe took the very unusual step of appointing

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Speaker 5: Paul Clement, who had been the US Solicitor JAI during

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Speaker 5: the George W. Bush administration and has argued more than

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Speaker 5: one hundred cases before the Supreme Court, to give him

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Speaker 5: advice with regard to how to handle this dismissal motion,

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Speaker 5: essentially based upon his view that he was getting a

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Speaker 5: one sided argument. In other words, both the defense lawyer

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Speaker 5: and the government in this case were seeking to have

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Speaker 5: the indictment dismissed, and the judge wanted to hear the

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Speaker 5: other side of the argument. That's why he appointed Paul

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Speaker 5: Clement to give him advice as to what issues he

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Speaker 5: should be considering. Really, what his options were here. With

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Speaker 5: regard to this motion.

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Speaker 2: Clement wrote a thirty three page brief in response for

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Speaker 2: the judge. One important point was that the executive branch

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Speaker 2: is the one that chooses when to prosecute and when

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Speaker 2: not to prosecute.

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Speaker 5: You're exactly right that Paul Clement did not really get

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Speaker 5: into the merits of these arguments from both sides. If

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Speaker 5: you were called, the acting Deputy Attorney General had ordered

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Speaker 5: the Southern District to dismiss the case, and there were

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Speaker 5: a series of prosecutors, including the acting US Attorney at

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Speaker 5: the time, who resigned rather than follow that order, saying

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Speaker 5: that the reasons for the dismissal were improper, that it

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Speaker 5: was about politics and not about the merits of the case.

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Speaker 5: But ultimately, mister Clement concluded that the judge here doesn't

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Speaker 5: really have much in the way of options. That essentially,

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Speaker 5: if the executive branch, meaning the prosecution and the Department

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Speaker 5: of Justice, choose to dismiss the case, there's not much

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Speaker 5: the judge can do about it. He pointed out that ultimately,

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Speaker 5: even if the court were to order the case to

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Speaker 5: go forward, the government could simply run out the clock,

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Speaker 5: in other words, do nothing with the case. Until there

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Speaker 5: was what's called a speedy trial violation, and then the

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Speaker 5: defense would move to dismiss the case, so short of

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Speaker 5: appointing a special prosecutor, which is rarely done, as it's

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Speaker 5: possible that it's not even constitutional to do it. In

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Speaker 5: this circumstance, mister Clement recommended to the judge that there's

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Speaker 5: really nothing for him to do here but to grant

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Speaker 5: the dismissal. And that's why he didn't get into the

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Speaker 5: back and forth between the former Southern District prosecutors and

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Speaker 5: the Department of Justice as to the motivations behind this

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Speaker 5: motion to dismiss the indictment against Mayor Adam.

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Speaker 2: Clement didn't discuss the evidence against Adams, the strength of

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Speaker 2: the charges against him, he wrote, Private citizens and courts

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Speaker 2: can't force a prosecution, no matter how clearly someone has

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Speaker 2: violated a federal criminal statute. Of course, the Justice Department

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Speaker 2: didn't discuss the evidence when it first ordered the dismissal.

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Speaker 5: If you remember, it was made explicit by the acting

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Speaker 5: Deputy US Attorney Emo Beauvat that this directive to dismiss

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Speaker 5: the case was not done on the merits. He expressly

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Speaker 5: said that he was not looking at either the evidence

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Speaker 5: or the legal theory behind the case. Now, in a

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Speaker 5: more recent in filing by the Department of Justice last Friday,

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Speaker 5: they did mention the merits of the case, so they

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Speaker 5: have shifted slightly to argue in papers they filed before

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Speaker 5: the court that the legal arguments underpinning the bribery charges

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Speaker 5: against Mayor Adams, they said, was weak. That is something

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Speaker 5: that is within the scope of the Department of Justice

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Speaker 5: certainly to consider in deciding whether or not to continue

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Speaker 5: to pursue the case. But it really wasn't the driving force,

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Speaker 5: and they again reiterated the earlier statement that the prosecution

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Speaker 5: of Mayor Adams would interfere with his ability to cooperate

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Speaker 5: with this administration moved to crack down on illegal immigration,

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Speaker 5: and that really was the basis to seek could dismiss

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Speaker 5: the indictment at this time.

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Speaker 2: Danielle says Soon in her letter said she was confident

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Speaker 2: in the case that the charges against Adams could be

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Speaker 2: proved and that's unusual to hear from a prosecutor.

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Speaker 6: Yeah.

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Speaker 5: In the letter that daniel Soon, the former US Attorney

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Speaker 5: for the Southern justic wrote to the Department of Justice

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Speaker 5: in response to that directive. She did discuss the merits

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Speaker 5: of the case, which is highly unusual. Prosecutors generally do

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Speaker 5: not talk about the merits of the case outside of

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Speaker 5: the context of the courtum itself. They don't make these

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Speaker 5: extra judicial statements. They don't talk about where the case

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Speaker 5: might be going. They let all of their talking take

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Speaker 5: place inside the courtroom, during legal arguments or in their briefs.

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Speaker 5: But she did mention that she believed that the case

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Speaker 5: against Mayor Adam was found. She pointed out that the

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Speaker 5: investigation had begun many, many years ago, before the outgoing

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Speaker 5: US Attorney, Damien Williams, had been involved in the case.

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Speaker 5: One of the things that the Department of Justice pointed

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Speaker 5: to was an op ed written by Damien Williams as

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Speaker 5: soon as he left the position of US Attorney for

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Speaker 5: the Southern District, in which he questioned the ethics of

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Speaker 5: the aministration. He didn't mention Mayor Adams by name, but

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Speaker 5: it was a clear reference to the current administration in

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Speaker 5: the sense that he made a comment about the current

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Speaker 5: administration having lost its moral compass. The Department of Justice,

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Speaker 5: in its filing on Friday, had gone through certain text

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Speaker 5: messages and emails from missus soon and from the prosecutor

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Speaker 5: who was leading the Adams case, where they commented upon

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Speaker 5: the op ed written by Damian Williams and how unhappy

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Speaker 5: they were with it, and they thought it was improper

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Speaker 5: and they wanted to distance themselves and the case from

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Speaker 5: those comments. And the Department of Justice pointed out that

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Speaker 5: even the prosecutors who are pursuing the case had some

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Speaker 5: questions about whether it was politically motivated, but in the end,

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Speaker 5: there was never really a discussion here, as you say,

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Speaker 5: about the merits of the case. The decision was made

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Speaker 5: simply based on the fact that they thought that the

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Speaker 5: prosecution would interfere with the mayor's ability to carry out

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Speaker 5: the administration immigration policy, and that that ultimately was enough

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Speaker 5: to dismiss the case.

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Speaker 2: The judge has concluded that Damian Williams hadn't violated any

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Speaker 2: professional obligations in writing the op ed. I mean that

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Speaker 2: was done after he left office, so I don't see

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Speaker 2: what relevance it has.

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Speaker 5: You're exactly right. The judge did conclude that mister Williams

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Speaker 5: hadn't violed any professional obligations. Clearly, as prosecutors, it's not

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Speaker 5: the kind of thing you want to see out there,

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Speaker 5: because it does inject an issue into your case that

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Speaker 5: you do not really want to deal with. But in

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Speaker 5: the end, as you said, Ms. Bethoon and the prosecutor

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Speaker 5: who is leading the case had no question in their

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Speaker 5: mind that this was a case that was found both

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Speaker 5: legally and based on the evidence, and the Department of

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Speaker 5: Justice has not really challenged that in any significant way.

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Speaker 5: Their position has been that it is appropriate for them

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Speaker 5: to have made the decision to dismiss the case. Now,

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Speaker 5: they asked for the case to be dismissed without presudice

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Speaker 5: so that it could possibly be reinstated after the election,

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Speaker 5: but they wanted the case dismissed so that Mayor Adams

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Speaker 5: could continue to focus on his ability to enforce the

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Speaker 5: Trump administration's immigration policy.

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Speaker 2: There is, i believe, just one line in the thirty

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Speaker 2: three pages where Clement says there's evidence that suggests the

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Speaker 2: decision to dismiss the indictment was undertaken in bad faith.

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Speaker 2: So that's one line dropped there, referring to, you know,

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Speaker 2: Emil Beauvey's order to dismiss the indictment being in bad faith.

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Speaker 2: Where does the judge weigh that.

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Speaker 5: Mister Clement did make mention that the evidence and he's

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Speaker 5: quoting here suggests the decision to dismiss the indictment was

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Speaker 5: undertaken in bad face. The Department of Justice has made

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Speaker 5: the argument that the prosecution was politically motivated. Ultimately, Paul

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Speaker 5: Klement decides that the judge does not have the weigh

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Speaker 5: in and it's unnecessary for him to determine whether or

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Speaker 5: not the case was politically motivated from the start, or

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Speaker 5: whether or not this dismissal was motivated by some kind

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Speaker 5: of improper political means. Mister Clement said, ultimately it was

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Speaker 5: unnecessary for Judge Hoe to settle that dispute.

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Speaker 1: Under either view.

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Speaker 5: He wrote, there was little justification for allowing a potential

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Speaker 5: reindictment of the mayor, and that's why he recommended to

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Speaker 5: the judge that he grant the motion to dismiss. But

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Speaker 5: unlike what was requested by the Department of Justice, he

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Speaker 5: said that that dismissal should be with prejudice. In other words,

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Speaker 5: it was going to be dismissed in a way that

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Speaker 5: the prosecution could never bring the case down the road,

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Speaker 5: and that would eliminate the potential for critics of this

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Speaker 5: decision to be able to argue that the Department of

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Speaker 5: Justice was trying to have it both ways, was trying

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Speaker 5: to have the case dismiss now, but leave the prospect

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Speaker 5: of bringing that indictment down the road in order to

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Speaker 5: try to continue to influence the mayor to cooperate with

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Speaker 5: the Trump administration's immigration policies.

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Speaker 2: Stay with me, Bob. Coming up next on the Bloomberg

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Speaker 2: Law Show is the judge likely to follow Clement's advice

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Speaker 2: and the new LA District Attorney does a one to

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Speaker 2: eighty on his predecessor in the Menendez brother's case. I'm

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Speaker 2: June Grosso and you're listening to Bloomberg. New York City

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Speaker 2: Mayor Eric Adams seems to be one step closer to

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Speaker 2: getting the criminal charges against him dismissed. That's because Paul Clement,

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Speaker 2: the former US Solicitor General appointed by the judge to

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Speaker 2: advise him on the dismissal motion, has recommended the case

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Speaker 2: be permanently dismissed. I've been talking to former federal prosecutor

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Speaker 2: Robert Mints of Macarter and English. Bob. Clement wrote that

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Speaker 2: if the charges weren't dismissed with prejudice, meaning they couldn't

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Speaker 2: be brought again, they would hang like the proverbial sort

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Speaker 2: of damocles over Adams. But if you have a public

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Speaker 2: official who's been charged with corruption and the chargers are

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Speaker 2: being dropped for political reasons, why should you give him

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Speaker 2: this free reign.

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Speaker 5: What I think what mister comment was getting at is

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Speaker 5: that one of the reasons that the Southern District Prosecutors

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Speaker 5: objected so strenuously to this dismissal is that they argue

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Speaker 5: that in meetings with the Defense Council there was discussions

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Speaker 5: that amounted to essentially a quid pro quo. In other words,

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Speaker 5: there were discussions about the mayor's ability to continue to

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Speaker 5: cooperate with the Trump administration in its immigration enforcement policies,

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Speaker 5: and whether or not the indictment and the trial that

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Speaker 5: would be upcoming would interfere as his ability to do that,

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Speaker 5: and in acknowledging that it would that obviously, any criminal

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Speaker 5: trial of an elected official is going to take away

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Speaker 5: their attention and their time from carrying out their public duties,

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Speaker 5: that that was a reason in order to dismiss the

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Speaker 5: indictment at this time, the Southern District prosecutor that that

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Speaker 5: was essentially a quid pro quot in agreement on the

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Speaker 5: part of the mayor to support the Trump administration in

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Speaker 5: exchange for a dismissal of the criminal charges, and the

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Speaker 5: Department of Justice, I think was responding to that by saying,

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Speaker 5: we're not asking for a dismissal that is permanent. We're

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Speaker 5: not asking to bar the prosecution forever. We're just saying

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Speaker 5: it should be dismissed at this time until after the election.

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Speaker 5: And that's why the Department of Justice was asking for

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Speaker 5: the dismissal without prejudice. But mister Clement said that the

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Speaker 5: quid pro quot that was hanging over this whole dismissal

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Speaker 5: was something that could only be eliminated if the dismissal

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Speaker 5: was with prejudice, and that way, the argument that the

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Speaker 5: mayor would be taking any actions in order to curry

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Speaker 5: favor with the Trump administration would be removed because there

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Speaker 5: would be no possibility that the Department of Justice could

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Speaker 5: indict him down the road if you failed to cooperate

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Speaker 5: with the Trump administration's immigration policies.

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Speaker 2: I mean talk about a get out of jail free

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Speaker 2: card for Adam because he was accused of agreeing to

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Speaker 2: a quid pro quote. Now the whole case is going

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Speaker 2: to be dropped against him. It doesn't seem like justice

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Speaker 2: is being done.

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Speaker 5: Well, that's a great question, and I think a lot

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Speaker 5: of people are very troubled by this whole scenario. Ultimately,

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Speaker 5: mister Clement concluded that the judge's hands were tied, that

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Speaker 5: he really had no ability to fight the dismissal. If

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Speaker 5: the Department of Justice had decided, almost for whatever reason,

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Speaker 5: to dismiss the case, the judge had no choice but

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Speaker 5: to do that, but to follow through and to dismiss

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Speaker 5: the case. And he even advised against an extensive judicial

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Speaker 5: investigation into the Department of Justice and actions. In other words,

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Speaker 5: he didn't even think it was necessary for the judge

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Speaker 5: to delve into the motivations behind the Department of Justice

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Speaker 5: to seek the dismissal, or likewise, the motivation for the

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Speaker 5: former Southern District prosecutors for refusing to follow that directive.

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Speaker 5: Mister Clement wrote in his submission to the judge, when

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Speaker 5: the publicly available information is sufficient to inform judicial decision making,

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Speaker 5: there are sound reasons to avoid further inquiries. So he

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Speaker 5: basically concluded that nothing good could come of digging into

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Speaker 5: this further, and that the judge did not have discretion

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Speaker 5: here to refuse to dismiss the case, and there was

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Speaker 5: really no reason to get into this dispute between the

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Speaker 5: former Southern District prosecutors and the Department of Justice about

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Speaker 5: who was right, who was wrong, who was insubordinate, and

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Speaker 5: who was acting properly within ethical guidelines and who was

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Speaker 5: acting based upon political motivations.

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Speaker 2: Adams and his attorneys agreed to sign a paper that

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Speaker 2: the charges could be brought against him again, so, in

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Speaker 2: other words, that the charges were going to be dismissed

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Speaker 2: without prejudice. But now his attorneys have come forward and

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Speaker 2: said no, they wanted to be dismissed with prejudice. So

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Speaker 2: they're going against what they promised the Justice Department.

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Speaker 5: Well, sure. What initially happened was the Department of Justice said,

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Speaker 5: we'll dismiss the case against their clients without prejudice, and

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Speaker 5: any defense lawyer is going to take that. They'd prefer

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Speaker 5: to have it be dismissed with prejudice, but if they

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Speaker 5: can only get a dismissal without prejudice, they'll take that

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Speaker 5: ruther than have the case go forward. What the Adams

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Speaker 5: defense team thereafter argued was that in the fallout from

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Speaker 5: this dismissal order, where the Southern District prosecutors had made

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Speaker 5: comments about the strength of the case and where the

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Speaker 5: Department of Justice had attacked the strength of the case,

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Speaker 5: that all of that was highly prejudicial to their clients.

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Speaker 5: And now the situation had changed and there was no

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Speaker 5: way for Mayor Adams to get a fair trial here,

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Speaker 5: and that's why they were seeking dismissal with prejudice.

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Speaker 2: So now Judge Ho doesn't have to take Paul Clement's suggestion, right,

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Speaker 2: he could decide something else.

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Speaker 5: Absolutely, Judge Ho was not legally bound to accept mister

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Speaker 5: Clement's recommendation, but he did independently seek out his guidance,

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Speaker 5: and it seems likely that he's going to follow the

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Speaker 5: recommendation of mister Clement, certainly to the extent that he

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Speaker 5: ultimately dismisses the case with prejudice. And I think again

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Speaker 5: that resolves the question of the Trump administration or the

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Speaker 5: Department of Justice using this dismissal as sort of a

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Speaker 5: cudgel hanging over the mayor's head to stay to the mayor,

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Speaker 5: in so many words, if you don't follow our directive

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Speaker 5: and if you don't cooperate with the immigration policies of

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Speaker 5: his administration. There's always the possibility that this indictment comes

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Speaker 5: back again, that it gets reinstated, and that you're once

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Speaker 5: again facing criminal charges. By dismissing the case with prejudice,

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Speaker 5: that threat is essentially eliminated now.

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Speaker 2: A watchdog organization, Campaign for Accountability, is calling for an

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Speaker 2: investigation into the acting Deputy Attorney General Emil Beauvet's order

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Speaker 2: to dismiss the charges, citing potential violations of New York

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Speaker 2: Attorney ethics rules and DOJ policies. But that complaint's been

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Speaker 2: found with the Office of Professional Responsibility, which Bovey oversees.

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Speaker 5: As complicated and unprecedented. As this whole dispute is, I

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Speaker 5: don't think it's ultimately going to be resolved in the

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Speaker 5: world of ethics complaints. It's something that really goes beyond

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Speaker 5: that and really palls into question what motivations and what

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Speaker 5: considerations are appropriate for the Department of Justice to take

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Speaker 5: into account when deciding whether to prosecute a case in

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Speaker 5: the first place, or whether to dismiss an existing prosecution.

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Speaker 5: Bear in mind, the prosecutors do routinely engage in a

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Speaker 5: quid pro quote in the sense that prosecutors will often

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Speaker 5: turn to a defendant who's facing multiple charges and say,

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Speaker 5: if you cooperate with us, we will recommend a lesser

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Speaker 5: sentence to the court, or we will dismiss nine of

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Speaker 5: the ten charges against you. That is, in some sense

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Speaker 5: a quid pro quo, and that you're saying that if

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Speaker 5: you cooperate in the criminal investigation, which means provide evidence

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Speaker 5: about other crimes about other individuals, agree to testify at

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Speaker 5: the trial. In some cases it amounts to wearing a

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Speaker 5: wire and recording conversations. That is a tool prosecutors used

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Speaker 5: all the time. It is incredibly common and almost invariably

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Speaker 5: happens in every criminal case where there is a cooperating witness.

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Speaker 5: That could be somebody who agrees to cooperate at the

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Speaker 5: beginning of an investigation, or it could be somebody who

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Speaker 5: only agrees to cooperate after they're facing criminal charges themselves.

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Speaker 5: But the difference between what's happened here and that type

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Speaker 5: of quid pro quo arrangement, if you want to call it,

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Speaker 5: that is that the cooperation is limited to the ability

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Speaker 5: of the defendant or the person who might be charged

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Speaker 5: to further the interests of the investigation itself. It's their

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Speaker 5: ability to to help prosecutors make their case or expand

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Speaker 5: their prosecution. What we're seeing here is a Department of

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Speaker 5: Justice staying to a defendant that we are willing to

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Speaker 5: trade away a criminal case, not because you confer the

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Speaker 5: criminal investigation, but for some other political reason that advances

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Speaker 5: the ends of the administration. That's something we've really never

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Speaker 5: seen before, and we're now going to have to see

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Speaker 5: whether that becomes commonplace for the Department of Justice in

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Speaker 5: handling political corruption prosecution.

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Speaker 2: Do you think Clement's recommendation was more about practicalities than

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Speaker 2: about the law.

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Speaker 5: Ultimately, mister Clement's recommendation to the judge was really more

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Speaker 5: practical than it was legal, in the sense that each

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Speaker 5: side got something of a partial victory. The government will

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Speaker 5: get its dismissal, albeit with prejudice. And those who were

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Speaker 5: concerned about the threat that reindictment might mean for the

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Speaker 5: man and how that might color his political decisions and

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Speaker 5: how he serves his constituents as the mayor of New

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Speaker 5: York going forward, whether or not to cooperate with the

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Speaker 5: Trump administration's immigration policies or not. They get a victory

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Speaker 5: because that has been removed by the dismissal with prejudice.

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Speaker 5: So no longer is there the continuing threat to reindict

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Speaker 5: the mayor if he doesn't cooperate. So what mister Clment

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Speaker 5: really did here is he told the judge number one,

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Speaker 5: you've got no practical solution here but to follow the

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Speaker 5: Department of Justices requests that the case be dismissed. But

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Speaker 5: in terms of how you effectuate that dismissal, we're going

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Speaker 5: to do something that really gives each side a bit

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Speaker 5: of victory. The government gets this dismissal. Those who are

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Speaker 5: concerned about the quid pro core arrangement no longer has

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Speaker 5: to worry about that because that threat has effectively been

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Speaker 5: removed by the dismissal with prejudice.

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Speaker 2: This case got very complicated, very fast. Thanks so much, Bob.

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Speaker 2: That's Robert mens I'm maccarter and English. In other legal

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Speaker 2: news today, the new district attorney in Los Angeles is

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Speaker 2: doing a one to eighty on his predecessor. He's not

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Speaker 2: advocating for the resentencing of Eric and Lyle Menendez. The

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Speaker 2: Menendez brothers have served more than thirty five years of

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Speaker 2: a life sentence for the murder of their parents.

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Speaker 6: D A.

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Speaker 2: Nathan Hackman said he believes the Menendez brothers do not

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Speaker 2: meet the threshold to be released from prison, and that

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Speaker 2: they've lied numerous times about the case and the timeline

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Speaker 2: leading up to their parents' murders.

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Speaker 6: While the Menendez brothers persist in telling these lies for

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Speaker 6: the last over thirty years about their self defense defense

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Speaker 6: and persist in insisting that they did not suborn any

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Speaker 6: perjury or attempt to suborn perjury, then they do not

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Speaker 6: meet the standards for Reed's sentencingke.

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Speaker 2: Hawkman also said the brothers pose an unreasonable risk of

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Speaker 2: danger to the community, but if they come clean, he'll

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Speaker 2: reconsider his.

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Speaker 6: Position unequivocal sincere acknowledgments of all the lives they have

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Speaker 6: told for the past over thirty years.

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Speaker 2: Family members of the brothers criticized Hawkmann's assertion that they

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Speaker 2: don't meet the standards for resentencing Tomorrow. Goodall is a cousin.

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Speaker 4: They have always taken ownership of what they chose to

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Speaker 4: do given the circumstances of what went on in their

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Speaker 4: household as they grow up as a family.

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Speaker 1: We believe that they have served their time.

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Speaker 2: The resentencing hearing granted by the judge will go forward

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Speaker 2: later in March. In addition to pursuing resentencing, the Menendez

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Speaker 2: brothers have also submitted a clemency plea to California Governor

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Speaker 2: Gavin Newsom. Coming up next on the Bloomberg Law Show,

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Speaker 2: a courtroom showdown between Pirella Weinberg Partners and a group

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Speaker 2: of former partners who were fired a decade ago. I'm

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Speaker 2: June Grosso. When you're listening to Bloomberg. The courtrooms showdown

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Speaker 2: between Parrella Weinberg Partners and a group of former partners

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Speaker 2: who were fired a decade ago has shown the gulf

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Speaker 2: between M and A bankers and restructuring bankers. Parrella Weinberg

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Speaker 2: claims that Michael Kramer and three others violated their partnership

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Speaker 2: agreement by soliciting most of its restructuring group to leave

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Speaker 2: in twenty fifteen, and subsequently launched the firm of Dussera,

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Speaker 2: costing it tens of millions in lost fees. Kramer and

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Speaker 2: his team claimed they were unjustly fired and denied sixty

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Speaker 2: million dollars in with hell compensation. Joining me is Bloomberg

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Speaker 2: legal reporter chrys Do Mesh tell us about Joseph Perella

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Speaker 2: and Peter Weinberg. You described them as two Harvard Business

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Speaker 2: School graduates who became Wall Street Royalty.

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Speaker 1: I don't think a lot of people are necessarily aware of,

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Speaker 1: you know, how important some of these boutique investments are.

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Speaker 1: You know, even though they don't have a real high profile,

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Speaker 1: they have their hands in a lot of deals. They're

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Speaker 1: well known, and you know, they just know a lot

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Speaker 1: about Wall Street in terms of what's going on with business,

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Speaker 1: who's making deals, you know, who's in trouble, that sort

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Speaker 1: of thing. They're advising on M and A and restructuring.

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Speaker 1: You know, the two founders of the company are pretty

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Speaker 1: legendary bankers. I mean, Joe Perella was he was head

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Speaker 1: of of Morgan's Stanley's, you know, investment banking at one point,

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Speaker 1: and Peter Weinberg was HEO Goldman Sachs. So these are

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Speaker 1: you know, these guys came from very large banks. But

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Speaker 1: around two thousand and six they set up their own

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Speaker 1: boutique kind of firm together that you know, and almost

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Speaker 1: immediately they bought this firm, Kramer Capital, which is the

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Speaker 1: firm of Mike Kramer, who they later fired in twenty fifteen,

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Speaker 1: for allegedly starting, you know, conspiring to form his own

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Speaker 1: with a bunch of bankers from Parola Weinberg, and that's

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Speaker 1: what led to this trial.

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Speaker 2: Were these sort of two separate businesses within the firm.

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Speaker 1: Not really they were all partners, but you know, some

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Speaker 1: partners were responsible for certain areas of the business and

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Speaker 1: some were responsible for others. Mike Kramer was brought in

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Speaker 1: surely as a restructuring banker really because he knew that business.

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Speaker 1: He had done it at other places like cool Hand

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Speaker 1: and Green Hill, and you know, he was he was

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Speaker 1: well known in that that niche kind of business. So

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Speaker 1: in effect it was kind of a hedge in a

440
00:26:35,359 --> 00:26:37,480
Speaker 1: lot of ways, because you know, there's the m and

441
00:26:37,520 --> 00:26:41,640
Speaker 1: a business where you know, they consult companies on companies

442
00:26:41,640 --> 00:26:45,920
Speaker 1: they're buying and acquisitions, and you know, everybody gets together

443
00:26:46,000 --> 00:26:48,440
Speaker 1: and congratulates so other when it's done. But they also

444
00:26:48,560 --> 00:26:51,160
Speaker 1: have on the other hand, these restructuring bankers who put

445
00:26:51,200 --> 00:26:54,080
Speaker 1: the company's really in trouble. You know, they come along

446
00:26:54,119 --> 00:26:55,840
Speaker 1: and they roll up their sleeves and they kind of

447
00:26:55,840 --> 00:26:59,600
Speaker 1: helped them along. So they are distinct pieces of the business.

448
00:26:59,760 --> 00:27:02,240
Speaker 1: But you know, they all kind of are contributing to

449
00:27:02,280 --> 00:27:02,960
Speaker 1: the same pot.

450
00:27:03,800 --> 00:27:08,840
Speaker 2: So Kramer when he testified, said that the restructuring team

451
00:27:08,960 --> 00:27:12,520
Speaker 2: was a revenue engine that was subsidizing the M and

452
00:27:12,560 --> 00:27:13,000
Speaker 2: A group.

453
00:27:13,320 --> 00:27:15,480
Speaker 1: Yeah, so they felt that in some of the lean

454
00:27:15,600 --> 00:27:18,399
Speaker 1: times when M and A wasn't as big, you know,

455
00:27:18,600 --> 00:27:21,720
Speaker 1: especially after the financial crisis and things like that, the

456
00:27:22,240 --> 00:27:27,120
Speaker 1: restructuring group was bringing in lots of money and helping

457
00:27:27,240 --> 00:27:30,080
Speaker 1: shore up the revenues in a way that the M

458
00:27:30,119 --> 00:27:32,920
Speaker 1: and A wasn't bringing in. And I think the way

459
00:27:33,040 --> 00:27:35,000
Speaker 1: that the restructuring group looked at it in a lot

460
00:27:35,000 --> 00:27:38,639
Speaker 1: of ways that they were kind of scrappy entrepreneur like,

461
00:27:38,720 --> 00:27:40,760
Speaker 1: you know, they had built up the business at a

462
00:27:40,880 --> 00:27:43,560
Speaker 1: small shop. They were willing to go in and get

463
00:27:43,560 --> 00:27:45,879
Speaker 1: their hands dirty, and a lot of these kind of partners,

464
00:27:46,880 --> 00:27:50,440
Speaker 1: you know, weren't driven by production. The results didn't necessarily

465
00:27:51,040 --> 00:27:53,960
Speaker 1: line up with what, at least Kramer thought that they should.

466
00:27:54,400 --> 00:27:56,920
Speaker 1: So he was always constantly trying to get the business

467
00:27:56,920 --> 00:27:59,480
Speaker 1: to improve, trying to get more revenue in, trying to

468
00:27:59,480 --> 00:28:02,480
Speaker 1: find new ways of getting business in. And he had

469
00:28:02,520 --> 00:28:03,040
Speaker 1: a lot to.

470
00:28:03,040 --> 00:28:05,199
Speaker 2: Say, you know, I thought it was interesting that he

471
00:28:05,480 --> 00:28:10,359
Speaker 2: talked about the different attitudes of the two groups, right.

472
00:28:10,280 --> 00:28:12,480
Speaker 1: I mean, you know, these are guys who go in

473
00:28:12,560 --> 00:28:15,119
Speaker 1: when companies are in a lot of trouble, you know,

474
00:28:15,240 --> 00:28:19,600
Speaker 1: talk frank to them. They're well respected for their ability

475
00:28:19,680 --> 00:28:22,800
Speaker 1: to kind of counsel these companies through very troubled times.

476
00:28:23,000 --> 00:28:25,399
Speaker 1: You know, things are very tense. It's you have to

477
00:28:25,440 --> 00:28:28,160
Speaker 1: be able to kind of talk to these guys when

478
00:28:28,200 --> 00:28:31,240
Speaker 1: they're in that position. And you know, they had the

479
00:28:31,280 --> 00:28:34,639
Speaker 1: former general counsel of Montanto come in and say he

480
00:28:34,720 --> 00:28:37,919
Speaker 1: had hired them kind of exclusively to get access to

481
00:28:38,000 --> 00:28:40,840
Speaker 1: Mike Kramer and his group, and he was pretty upset

482
00:28:40,880 --> 00:28:43,479
Speaker 1: that they had gotten rid of them. So, you know,

483
00:28:43,520 --> 00:28:47,440
Speaker 1: it's a very interesting relationship when it comes to the

484
00:28:47,480 --> 00:28:50,440
Speaker 1: way that they do restructuring and how they speak to

485
00:28:50,480 --> 00:28:52,960
Speaker 1: these companies because they're in big trouble when when they

486
00:28:53,000 --> 00:28:53,880
Speaker 1: generally are there.

487
00:28:54,440 --> 00:28:56,920
Speaker 2: Did Kramer say they had different backgrounds?

488
00:28:57,240 --> 00:28:59,200
Speaker 1: I mean, that wasn't like the whole focus, but there

489
00:28:59,240 --> 00:29:02,640
Speaker 1: was definitely a thread that you know, there were these

490
00:29:02,720 --> 00:29:05,920
Speaker 1: kind of pedigreed bankers who had worked at these big

491
00:29:05,960 --> 00:29:08,720
Speaker 1: places on Wall Street, you know, and didn't really come

492
00:29:08,760 --> 00:29:12,320
Speaker 1: from this kind of entrepreneurial roll your sleeves up and

493
00:29:12,400 --> 00:29:14,760
Speaker 1: kind of work with the company's kind of attitude That

494
00:29:14,920 --> 00:29:17,720
Speaker 1: was definitely something that they felt like. Kramer went to

495
00:29:17,760 --> 00:29:21,880
Speaker 1: cal State Northridge. You know, he's he's well known at

496
00:29:21,880 --> 00:29:25,480
Speaker 1: that school for being, you know, an unusual for going

497
00:29:25,480 --> 00:29:28,400
Speaker 1: to Wall Street and being such a prominent deal maker.

498
00:29:29,080 --> 00:29:31,280
Speaker 1: So I think there was just a little bit of

499
00:29:32,120 --> 00:29:35,880
Speaker 1: tension between you know, what they did and you know,

500
00:29:36,040 --> 00:29:39,880
Speaker 1: having these big names on the door and being in

501
00:29:39,920 --> 00:29:40,760
Speaker 1: conflict with them.

502
00:29:41,320 --> 00:29:43,800
Speaker 2: Was Kramer unhappy with the amount of money that he

503
00:29:43,960 --> 00:29:47,600
Speaker 2: was making, because apparently he made one hundred million dollars

504
00:29:47,680 --> 00:29:50,600
Speaker 2: during his time at the firm, which was less than

505
00:29:50,640 --> 00:29:51,520
Speaker 2: ten years.

506
00:29:52,040 --> 00:29:54,480
Speaker 1: What he said was he never asked for more money.

507
00:29:54,520 --> 00:29:58,000
Speaker 1: He said he was not necessarily happy with his compensation.

508
00:29:58,120 --> 00:30:00,120
Speaker 1: He felt like he should have been paid more. He

509
00:30:00,240 --> 00:30:02,360
Speaker 1: clearly wanted to be a bigger part of the firm.

510
00:30:02,520 --> 00:30:05,600
Speaker 1: He was at one point co head of the advisory business,

511
00:30:05,600 --> 00:30:08,160
Speaker 1: but they took him out of several managerial positions because

512
00:30:08,160 --> 00:30:11,680
Speaker 1: they kind of felt that his personality kind of graded

513
00:30:11,720 --> 00:30:15,160
Speaker 1: on others at the firm. But to his team, that

514
00:30:15,280 --> 00:30:18,440
Speaker 1: personality was necessary for the way he did business and

515
00:30:19,040 --> 00:30:22,000
Speaker 1: necessary to do restructuring and that kind of nitty gritty

516
00:30:22,120 --> 00:30:23,440
Speaker 1: kind of corporate work.

517
00:30:23,800 --> 00:30:26,480
Speaker 2: What did Perella and Weinberg say when they were on

518
00:30:26,520 --> 00:30:27,880
Speaker 2: the stand, So.

519
00:30:27,880 --> 00:30:31,000
Speaker 1: Weinberg was first. He was pretty matter of fact, he

520
00:30:31,080 --> 00:30:33,960
Speaker 1: was very upset, you know, at learning that they had

521
00:30:34,000 --> 00:30:38,560
Speaker 1: had a meeting at Kramer's house in January twenty fifteen.

522
00:30:39,160 --> 00:30:43,600
Speaker 1: Pirella Weinberg says that meeting was ostensibly to form the

523
00:30:43,600 --> 00:30:46,520
Speaker 1: new firm, to decide on, you know, how the revenue

524
00:30:46,520 --> 00:30:49,480
Speaker 1: would be distributed in equity and that sort of thing.

525
00:30:50,000 --> 00:30:52,720
Speaker 1: Kramer and the others testified that this was more of

526
00:30:52,760 --> 00:30:56,120
Speaker 1: a gripe session just because they were all so unhappy

527
00:30:56,120 --> 00:30:58,800
Speaker 1: at the end of the year in twenty fourteen. So

528
00:30:58,960 --> 00:31:01,360
Speaker 1: really what happened that meaning is kind of the heart

529
00:31:01,400 --> 00:31:04,280
Speaker 1: of what the judge has to decide here. He didn't

530
00:31:04,280 --> 00:31:06,520
Speaker 1: necessarily tip his hand, you know, you have to be

531
00:31:06,560 --> 00:31:10,160
Speaker 1: careful about the way you interpret judges comments during a

532
00:31:10,200 --> 00:31:13,240
Speaker 1: trial or before they've put out an opinion. But he

533
00:31:13,320 --> 00:31:15,800
Speaker 1: clearly said that he thought that Mike Kramer kind of

534
00:31:15,840 --> 00:31:19,720
Speaker 1: had a greater duty as a partner and as head

535
00:31:19,760 --> 00:31:24,120
Speaker 1: of this group to kind of avoid having meetings like

536
00:31:24,160 --> 00:31:27,680
Speaker 1: that that at the very least the appearance of it

537
00:31:27,840 --> 00:31:30,320
Speaker 1: was problematic is the word he used.

538
00:31:30,520 --> 00:31:34,560
Speaker 2: They fired him for cause what was the cause.

539
00:31:35,080 --> 00:31:40,000
Speaker 1: The cause was violating the solicitation the non solicitation covenants

540
00:31:40,080 --> 00:31:43,720
Speaker 1: of his contract with the firm. He was not supposed

541
00:31:43,760 --> 00:31:48,840
Speaker 1: to solicit any clients or any other employees of the firm.

542
00:31:49,120 --> 00:31:50,640
Speaker 1: If he was fired for cause, he would have had

543
00:31:50,640 --> 00:31:53,000
Speaker 1: garden leave, which would have taken, you know, probably up

544
00:31:53,000 --> 00:31:55,160
Speaker 1: to a year or something like that. They say he

545
00:31:55,320 --> 00:31:58,040
Speaker 1: was soliciting employees all the way back in October of

546
00:31:58,040 --> 00:31:59,080
Speaker 1: twenty fourteen.

547
00:31:59,400 --> 00:32:02,280
Speaker 2: How many were fired with him.

548
00:32:02,040 --> 00:32:05,440
Speaker 1: So terminated for cause. There were three others, two partners

549
00:32:05,480 --> 00:32:08,800
Speaker 1: and a managing director who had worked on the thing,

550
00:32:09,240 --> 00:32:12,560
Speaker 1: all of whom went to his new firm eventually, and

551
00:32:12,640 --> 00:32:15,360
Speaker 1: a bunch of managing directors quit right after they were

552
00:32:15,440 --> 00:32:18,920
Speaker 1: terminated for cause, most of whom also went to his

553
00:32:18,960 --> 00:32:22,560
Speaker 1: new firm. Parella is suing Essentially, they want to keep

554
00:32:23,160 --> 00:32:26,240
Speaker 1: the deferred compensation and equity that was taken from them,

555
00:32:26,400 --> 00:32:30,120
Speaker 1: but they also want damages above and beyond that. But

556
00:32:30,200 --> 00:32:33,960
Speaker 1: they also want punitive damages. But that does not seem

557
00:32:34,000 --> 00:32:37,000
Speaker 1: to be something the judge is considering, given that he

558
00:32:37,120 --> 00:32:40,479
Speaker 1: said a lot of this was of the firm' zone creation.

559
00:32:40,840 --> 00:32:46,360
Speaker 1: The other side claims defamation interference with prospective employment prospects.

560
00:32:46,680 --> 00:32:47,280
Speaker 5: Is it just.

561
00:32:47,280 --> 00:32:51,080
Speaker 2: About this particular incident or does it show anything larger

562
00:32:51,160 --> 00:32:54,280
Speaker 2: about you know, boutique investment banks.

563
00:32:54,320 --> 00:32:57,280
Speaker 1: And I think it kind of opens a window and

564
00:32:57,400 --> 00:33:00,000
Speaker 1: kind of just you know, the turmoil that can take place,

565
00:33:00,800 --> 00:33:05,040
Speaker 1: you know, when there are difficult you know, compensation conversations

566
00:33:05,520 --> 00:33:10,080
Speaker 1: and conversations about you know, between partners and management about

567
00:33:10,320 --> 00:33:13,120
Speaker 1: who's gonna run what. It doesn't really matter whether it's

568
00:33:13,120 --> 00:33:16,440
Speaker 1: an investment a big investment bank or a boutique. You know,

569
00:33:16,520 --> 00:33:19,800
Speaker 1: on Wall Street, you have big personalities. They clash and

570
00:33:19,840 --> 00:33:23,920
Speaker 1: when they clash like that, things get tense and can

571
00:33:24,000 --> 00:33:26,040
Speaker 1: kind of break down a little bit. And this is

572
00:33:26,120 --> 00:33:30,200
Speaker 1: like an extreme example of you know, you can see

573
00:33:30,240 --> 00:33:32,760
Speaker 1: a ten year old fight that in terms of the

574
00:33:32,800 --> 00:33:35,960
Speaker 1: amount of money here and you know, Wall Street, this

575
00:33:36,080 --> 00:33:38,920
Speaker 1: is not this is not a huge chunk of change, right.

576
00:33:39,040 --> 00:33:41,680
Speaker 1: I mean, we talk about a lot of money on

577
00:33:41,720 --> 00:33:45,280
Speaker 1: Wall Street all the time. But what's most interesting about

578
00:33:45,280 --> 00:33:48,360
Speaker 1: this is that these people are so upset with each

579
00:33:48,360 --> 00:33:52,320
Speaker 1: other that they are willing to, you know, over a

580
00:33:52,400 --> 00:33:56,640
Speaker 1: month without a jewelry. Ten years after the fact, still

581
00:33:56,720 --> 00:34:00,640
Speaker 1: their gripes on the stand. And you know whether or

582
00:34:00,720 --> 00:34:03,920
Speaker 1: not one side wins or loses. I don't know, you know,

583
00:34:04,040 --> 00:34:06,600
Speaker 1: I'm sure they will claim victory. But in the end,

584
00:34:06,920 --> 00:34:10,920
Speaker 1: like this is, this is a feud, and this finally

585
00:34:11,040 --> 00:34:13,719
Speaker 1: kind of gave them both sides. I mean, look, of

586
00:34:13,719 --> 00:34:15,400
Speaker 1: course both sides are going to say they want to

587
00:34:15,400 --> 00:34:17,160
Speaker 1: win the case. Of course they wouldn't win the case.

588
00:34:17,719 --> 00:34:20,680
Speaker 1: But in a lot of ways you could just see,

589
00:34:21,280 --> 00:34:24,400
Speaker 1: you know that these both sides of this wanted to

590
00:34:24,560 --> 00:34:26,520
Speaker 1: clear the air and at least, you know, get up

591
00:34:26,560 --> 00:34:29,919
Speaker 1: in public and make their you know, make their side known.

592
00:34:30,440 --> 00:34:32,800
Speaker 2: Why did it take ten years to come to trial?

593
00:34:33,480 --> 00:34:36,520
Speaker 1: Well, that's a that's a story of New York State

594
00:34:36,600 --> 00:34:41,680
Speaker 1: Court and a judge that there was another judge that

595
00:34:41,800 --> 00:34:45,280
Speaker 1: was on it. There are a number of appellate rulings

596
00:34:45,320 --> 00:34:48,080
Speaker 1: in the case. It can just take a long time

597
00:34:49,000 --> 00:34:52,000
Speaker 1: for these cases to go to trial. And it would

598
00:34:52,000 --> 00:34:54,920
Speaker 1: have gone to trial actually last year and kind of

599
00:34:55,040 --> 00:34:58,239
Speaker 1: the last minute. The partners Kramer and all wanted a

600
00:34:58,440 --> 00:35:01,040
Speaker 1: wanted a jury trial, and that eventually was shut down.

601
00:35:01,520 --> 00:35:03,359
Speaker 1: So now it's just up to Judge Robert Reid.

602
00:35:04,600 --> 00:35:07,160
Speaker 2: How did they shoot down the jury trail? As far

603
00:35:07,200 --> 00:35:10,000
Speaker 2: as the testimony over a month, what was the testimony

604
00:35:10,040 --> 00:35:11,120
Speaker 2: that struck you the most.

605
00:35:11,600 --> 00:35:14,920
Speaker 1: You know, it was all very interesting. Mike Ramer's was

606
00:35:15,000 --> 00:35:18,760
Speaker 1: probably the most informative of you know. Of course, Perrella

607
00:35:18,880 --> 00:35:21,719
Speaker 1: will claim that he lied throughout the time on the

608
00:35:21,760 --> 00:35:24,279
Speaker 1: stand that this was, you know, an effort to form

609
00:35:24,320 --> 00:35:29,239
Speaker 1: a new firm. Mike consistently said, no, we were just unhappy.

610
00:35:29,400 --> 00:35:32,799
Speaker 1: You know, we hadn't taken any of the real necessary

611
00:35:32,840 --> 00:35:34,960
Speaker 1: steps to form a new firm, like setting up an

612
00:35:35,160 --> 00:35:37,280
Speaker 1: LLC or any of the you know, kind of technical

613
00:35:37,360 --> 00:35:39,800
Speaker 1: things that needed to be done. But there was clearly

614
00:35:40,160 --> 00:35:43,200
Speaker 1: moves being made of some sort. Whether or not they

615
00:35:43,280 --> 00:35:46,759
Speaker 1: violated the four corners of their contract, you know, it's

616
00:35:46,840 --> 00:35:49,759
Speaker 1: really goes as to whether or not they actually violated

617
00:35:49,840 --> 00:35:52,719
Speaker 1: this clause or this provision, and that's that's a very

618
00:35:52,760 --> 00:35:55,160
Speaker 1: difficult question that really has to be done with an

619
00:35:55,160 --> 00:35:56,440
Speaker 1: analysis of the document.

620
00:35:56,760 --> 00:36:00,200
Speaker 2: And the trial ends with closing arguments on Friday, then

621
00:36:00,200 --> 00:36:03,360
Speaker 2: it will be up to the judge. Thanks so much, Chris.

622
00:36:03,560 --> 00:36:06,880
Speaker 2: That's Bloomberg Legal reporter Chris dol Mesh, And that's it

623
00:36:06,920 --> 00:36:09,520
Speaker 2: for this edition of the Bloomberg Law Show. Remember you

624
00:36:09,520 --> 00:36:12,000
Speaker 2: can always get the latest legal news on our Bloomberg

625
00:36:12,080 --> 00:36:15,719
Speaker 2: Law podcast. You can find them on Apple Podcasts, Spotify,

626
00:36:15,920 --> 00:36:20,919
Speaker 2: and at www dot bloomberg dot com, slash podcast, Slash Law,

627
00:36:21,360 --> 00:36:23,920
Speaker 2: and remember to tune into The Bloomberg Law Show every

628
00:36:23,960 --> 00:36:27,880
Speaker 2: weeknight at ten pm Wall Street Time. I'm June Grosso

629
00:36:28,000 --> 00:36:29,600
Speaker 2: and you're listening to Bloomberg