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Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio, Fred,

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Speaker 1: what are we gonna do? We won the election and

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Speaker 1: it's not fair to take it away from us like this.

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Speaker 1: That now infamous phone call from former President Donald Trump

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Speaker 1: to the Georgia's Secretary of State to find just enough

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Speaker 1: votes to flip the state to him is at the

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Speaker 1: center of the investigation by the Fulton County District Attorney

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Speaker 1: into criminal interference in the presidential election. In May, District

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Speaker 1: Attorney Fannie Willis took the unusual step of requesting a

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Speaker 1: special grand jury, and in an interview with CNN, she

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Speaker 1: was clear about her intent to cast a wide net,

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Speaker 1: including this election of a fake slate of Trump electors

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Speaker 1: in Georgia. We're gonna look at anything connected with interference

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Speaker 1: with the election, and so I've allowed that to be

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Speaker 1: a broad scope, not just the president's phone call that

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Speaker 1: you played there, but other things that indicate that there

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Speaker 1: may have been interference with that election, to include fake electorate.

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Speaker 1: Now it appears she may be closer to announcing charges.

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Speaker 1: Willis has sent so called target letters to sixteen Republicans

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Speaker 1: who served as fake Trump electors to warn them that

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Speaker 1: they could be indicted. My guest is Michael Moore, the

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Speaker 1: former U S Attorney for the Middle District of Georgia

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Speaker 1: and a partner with Moore Hall. Did willis really have

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Speaker 1: to call a special grand jury because that special grand

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Speaker 1: jury can indict? Well, she's using the special grand jury

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Speaker 1: because she's limited on what she can do investigative wives

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Speaker 1: with a regular criminal grand jury in Georgia. So in Georgia,

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Speaker 1: the criminal grand jury, the rule is that you have

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Speaker 1: to present them with an indictment. We would call it

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Speaker 1: laying an indictment on the table before the grand jury,

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Speaker 1: and that would mean you had already determined which parties

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Speaker 1: you were going to ask to and diet what charges

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Speaker 1: specifically you're going to ask to die at all. And

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Speaker 1: she didn't have that information yet, and she could have

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Speaker 1: done that on some limited charges and sort of the

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Speaker 1: target approach, But here she's using the special grand jury

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Speaker 1: statue to allow her to investigate. And that's sort of

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Speaker 1: the difference in federal and state grand juries. The federal

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Speaker 1: grand jury has the party issues to penas, to investigate cases,

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Speaker 1: to call witnesses before them as they appropriate, and the

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Speaker 1: special grand jury mirrors a little bit of the federal

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Speaker 1: grand jury. The only difference, as you mentioned, is that

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Speaker 1: this special grand jury does not have the power under

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Speaker 1: the state statue to issue a diet. They would send

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Speaker 1: the issue a report or a recommendation that'd be given

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Speaker 1: to her answer the court, and she would then make

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Speaker 1: a decision with orne. She then wants to present a

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Speaker 1: limited case to a regular criminal grand jury. So she's

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Speaker 1: using this to gather information, to bring in witnesses who

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Speaker 1: may have been relurked to testify, to gather documents and

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Speaker 1: text messages, this kind of thing, and then she'll ultial

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Speaker 1: in making decision whether or she wants to present that

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Speaker 1: to a to a regular criminal granjeur. Michael, what does

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Speaker 1: it tell you that Willis sent these target letters. It's

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Speaker 1: an interesting play of events right now. That is, I

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Speaker 1: think there's some interest in this fake elector scheme, and

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Speaker 1: she has been digging into that. You wouldn't have to

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Speaker 1: look very hard to feel like that she's in fact

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Speaker 1: expanding the scoop of what could have been a very

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Speaker 1: narrowly tailored case, a clean cut case against Trump if

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Speaker 1: she wanted to do it, based on the telephone called Raffersburg.

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Speaker 1: But it appears that she's broadening it out to other

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Speaker 1: people maybe in that orbit or closer to the inner circle,

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Speaker 1: and dealing with the efforts to basically avoid out the

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Speaker 1: electors who were from Georgia and to avoid apple votes

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Speaker 1: that have been cast here. So I'm not surprised to

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Speaker 1: see or do that. It's a little interesting that she

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Speaker 1: would do it in such a public way, especially given

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Speaker 1: some of the political alliances that she has, And I

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Speaker 1: think that may come into play here that she has

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Speaker 1: actually sent out to notice in the middle of a

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Speaker 1: peated campaign season, because typically you don't always see a

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Speaker 1: prosecutor be quite as public about those types of things,

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Speaker 1: and I think for a good reason. So I think

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Speaker 1: she's clearly broad in the scoop. I think she may

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Speaker 1: be fishing with a little bit too broad and met

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Speaker 1: right Naviga. Sometimes that's where you get caught, you tangled

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Speaker 1: up in your own men. And I think some of

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Speaker 1: the public comments about the target letters who they went

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Speaker 1: to in the time of the may open rose some

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Speaker 1: questions down the road a public courts. She last week

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Speaker 1: subpoenaed members of Trump's inner circle, former lawyer Rudy Giuliani,

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Speaker 1: Senator Lindsey Graham's six other attorneys, and Graham has already

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Speaker 1: indicated that he's going to fight it. So this will

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Speaker 1: drag out. If she's trying to get people from out

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Speaker 1: of state, it will. And I think you know there

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Speaker 1: you've seen I think it was yesterday or the day before,

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Speaker 1: Georgia Congressman. And he also now has served notice that

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Speaker 1: he intends to have the challenge heard in the federal court.

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Speaker 1: I think there's a federal court here and set up

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Speaker 1: for next week has been scheduled there on the Chavison

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Speaker 1: subpoenas you to him. There's a specific provision under the

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Speaker 1: federal statutes that allows for sort of a high ranking

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Speaker 1: member of the executive brand, if there's a civil or

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Speaker 1: criminal action in which their allegations against it, you can

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Speaker 1: serve notice and assets case be transferred to the federal court.

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Speaker 1: And I think you're gonna see them taking advantage of that.

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Speaker 1: And it's a good process in the sense that sort

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Speaker 1: of limits overreach by the as who may be aggressive.

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Speaker 1: We're not saying she is in this case, but as

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Speaker 1: a general principle, it's a sort of a safety valve there.

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Speaker 1: But it also is naturally going to drag out the time,

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Speaker 1: and her grandjeury is authorized. The special purpose Granders author

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Speaker 1: us to convene for about a year. But you also

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Speaker 1: have to be thinking that we're getting into election seasons,

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Speaker 1: and prosecutors must be they must be conscious of how

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Speaker 1: the actions that they undertake may be perceived around election time.

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Speaker 1: You simply cannot if the goal is to preserve the

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Speaker 1: confidence in the court system and in the prosecutor's decisions

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Speaker 1: and then charge of decisions that are made, you cannot

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Speaker 1: be seen is somebody who's attempted to be be used the

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Speaker 1: criminal process to influence the outcome of an election. You'll

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Speaker 1: remember that was one of the big issues with Trump

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Speaker 1: and the Department of Justice. I mean he wanted to

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Speaker 1: use the department sort of look at political enemies. Well,

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Speaker 1: you can't do that as a prosecutor. I mean, they're

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Speaker 1: bar implications, their coat of ethics implications. And so the

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Speaker 1: timing may become a factor for her, and the law

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Speaker 1: ofness goes out whether we're in the federal court having

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Speaker 1: federal judges rule on motions to quash that may be

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Speaker 1: found for certain sutainas, or whether or not we're in

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Speaker 1: the appellate court system. Because their privilege issues and a

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Speaker 1: turning client protection issues that come up. Then that is

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Speaker 1: maxually going to delay ultimately this this special purpose grand

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Speaker 1: jury issue, and they report thinking about all the evidence

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Speaker 1: she started out with, including that taped phone call, and

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Speaker 1: now she also has the testimony she's taken from state officials.

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Speaker 1: I'm wondering why it's taking so long for her to

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Speaker 1: decide whether or not to indict Trump. Sure, and I

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Speaker 1: think that's a question is well placed. I don't think

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Speaker 1: there's any questions she could have based on the tape

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Speaker 1: recording as she had, which is for two of us.

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Speaker 1: I mean, how many times do you get bostly recorded confession.

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Speaker 1: She could have tried to bring charges forward in a

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Speaker 1: regular ranger without the nief the special grander. She simply

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Speaker 1: could have, you know, in between two regular alleged felons.

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Speaker 1: She could have stuck the truck in Nightinga right in

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Speaker 1: the middle of it, and and the grudgery could decided

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Speaker 1: with him out there going to issue the indictment. You know,

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Speaker 1: I understand that she may have had some reticence on

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Speaker 1: the part of Rappensburger, who was at the time in

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Speaker 1: the middle of a heated primary battle and he may

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Speaker 1: have been fact and reticence to come forward because it

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Speaker 1: would have appeared that he was cooperating against the former president.

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Speaker 1: But she had the recording, and so he tells me

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Speaker 1: that she's simply broadened it out. She's looking for other

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Speaker 1: people who may have been involved in the planning or

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Speaker 1: the efforts to overturn at least the vote totals in Georgia,

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Speaker 1: and making it more of a guess, more of a

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Speaker 1: spider web and which she can catch more flight as

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Speaker 1: opposed to support of the clean cut case. At the

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Speaker 1: end of the day, I don't know if that have

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Speaker 1: been the right call. And again I don't I don't

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Speaker 1: want to second guess everything she's doing. I mean, she

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Speaker 1: may have and does have access to facts and evidence

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Speaker 1: that I don't have and the pelic doesn't have. But

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Speaker 1: as you look at it, I mean, one principle usually

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Speaker 1: remains true, and that is that when you keep it simple,

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Speaker 1: it often makes for a better case. It's easier to prove,

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Speaker 1: it takes less confusion for a jury, it creates less defenses.

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Speaker 1: It also creates less pellet issues that would be often

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Speaker 1: decided about pelt courts, which in Georgia as you may

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Speaker 1: know our pelt courts are basically controlled by Republican appointees

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Speaker 1: are good judges and friends of behind and such. But

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Speaker 1: you have to wonder about the survival of some of

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Speaker 1: these allegations that may be pushing an envelope a little

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Speaker 1: bit if they got to the a Pelic court. In

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Speaker 1: recent court filing, she has indicated I understand that charges

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Speaker 1: including racketeering and conspiracy are being considered. That would become

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Speaker 1: a really complicated case, wouldn't it. It's an extraordinary complicated case.

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Speaker 1: And you think about racketeering and conspiracy cases when you

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Speaker 1: think about organized crime rings, and you know, if you're

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Speaker 1: trying to bring down a mafia family in New York,

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Speaker 1: he might be talking about racketeering cases. So you're bringing

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Speaker 1: it down a drug distribution enterprise somewhere. You think about

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Speaker 1: reco cases um conspiracy cases, and so it is legally permissible,

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Speaker 1: I will say in in circumstances, the question of is

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Speaker 1: whether or not it's wise In a case like this,

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Speaker 1: there are many prosecutors who will tell you that you

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Speaker 1: should not consider sort of the policy implications and what

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Speaker 1: may be out there, other than just following the fact

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Speaker 1: and following evidence. We're a little bit in uncharted waters here, No,

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Speaker 1: not a little bit. We just from off the Deacon

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Speaker 1: and uncharted water. So that is that, you know, we're

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Speaker 1: talking about whether or not an indictment is going to

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Speaker 1: issue for a former president for conduct that he is

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Speaker 1: alleged you have committed while in fact he was president

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Speaker 1: out his states, and you have to consider that, and

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Speaker 1: you have to consider what it means for the country,

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Speaker 1: for the future people who hold that office. And again,

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Speaker 1: I think the appellate courts were then we're talking about

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Speaker 1: the Supreme Court of Georgia, where we're talking about the

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Speaker 1: Eleventh Circuit Court of Appeals, a federal quarter, where we're

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Speaker 1: talking about the United States Supreme Court, I think they're

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Speaker 1: gonna be cognitive. The fact that this could be setting

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Speaker 1: a president that is dangerous. And so when you overreach

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Speaker 1: and when you sort of fish with too big a net,

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Speaker 1: you bring a lot of these issues at play. If

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Speaker 1: you had taken a simple approach and you said, look,

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Speaker 1: as a prosecutor, I feel like this is called Rapidsburger

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Speaker 1: was in fact illegal, that it was an effort to

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Speaker 1: put pressure on the elections official, that it was an

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Speaker 1: effort to solicit somebody to commit election fraud and this

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Speaker 1: is a very clear case. Or you say, well, look

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Speaker 1: there's evidence of witness tampering. And I'm thinking now about

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Speaker 1: the prominent justice looking at if in fact allegations coming

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Speaker 1: out from a general cist committing or true. Do you

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Speaker 1: look at those and so that was conduct committed post presidency,

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Speaker 1: that's something that may not have those same policy implications

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Speaker 1: going forward. Those soon to me to be much cleaner

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Speaker 1: cases for appellate course to the side, and I think

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Speaker 1: maybe less dangerous as a president going forward. Again, we've

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Speaker 1: not faced this, and I can tell you State d

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Speaker 1: a's don't face this where they have to sit down

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Speaker 1: and make a decision whether or not they're going to

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Speaker 1: die upon the president and so um, it's a little

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Speaker 1: bit maybe some decisions may be a little bit made

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Speaker 1: on the fly. I think there's no text put to

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Speaker 1: go back and look at this the side, but this

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Speaker 1: is how we ought to do it, this is what

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Speaker 1: we're going to do. I just worry sometimes it's complicating

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Speaker 1: a case. As I say, not only gives issues for

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Speaker 1: the defense and the appellate courts, it makes it more

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Speaker 1: confusing for a jury and it brings in other factors

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Speaker 1: that I think in reality we have to consider. Aside

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Speaker 1: from that, does she have the chops to prosecute a

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Speaker 1: former president because we've seen that the new Manhattan d

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Speaker 1: A doesn't seem too he backed off that case as

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Speaker 1: soon as he got into office. Well, she's a good lawyer,

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Speaker 1: she's a good prosecutor. She has experienced. Again, not the

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Speaker 1: second guessing her at all. If you think about it

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Speaker 1: from sort of a general rule or general principle, I

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Speaker 1: think it's better if we talked about the Department of

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Speaker 1: Justice acting when it comes to a case like this

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Speaker 1: than just a local be a. I mean, think about

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Speaker 1: what happens if Joe Biden goes to Texas and he

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Speaker 1: makes a speech near the border about America wealth and

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Speaker 1: all people and all people ought to come and you know,

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Speaker 1: and then suddenly some local DA decides that they're going

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Speaker 1: to prosecute Joe Biden for solicited people to commit immigration

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Speaker 1: crimes or something. You know. That may sound extreme, but

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Speaker 1: weird extreme waters here, and so I think you have

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Speaker 1: to think about it that way. You know, the Congress

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Speaker 1: obviously they were the statute says that when this kind

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Speaker 1: of thing happens, you can ask that if we transferred

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Speaker 1: to the federal course, So that strikes me as a

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Speaker 1: place where this type of case is probably more appropriately heard.

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Speaker 1: The prosecutors have a duty to prosecute crimes within the

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Speaker 1: jurisdiction if they think that something is there. She clearly

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Speaker 1: has moved forward with some belief that she thinks there

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Speaker 1: may be evidence of a crime committed. But again, you

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Speaker 1: are talking about prosecuting for a state crime a formal

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Speaker 1: president for crimes that he committed while he was president

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Speaker 1: of the United States, and that we take Trump out

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Speaker 1: of it and bring in and you can choose, you know,

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Speaker 1: bring in whoever you believe was the most beloved prison history.

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Speaker 1: I'm sure you may find some state prosecutor somewhere who

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Speaker 1: disagreed with something that he had done. Would it be

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Speaker 1: appropriate for that state prosecutor to a dike that president

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Speaker 1: for crimes that he committed while he was president of

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Speaker 1: the United States? And that's a question I think that

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Speaker 1: is looming out because we have these kind of discussions.

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Speaker 1: A lot of people say that the Georgia investigation is

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Speaker 1: the most serious case facing Trump. Do you disagree with that? Then?

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Speaker 1: I disagree in the sense that I think a case

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Speaker 1: brought forward by the Department of Justice would be the

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Speaker 1: most serious case, no matter what that case may be.

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Speaker 1: And really the reason is this, I think the likel

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Speaker 1: here that you would ever find the former president sitting

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Speaker 1: in a Georgia penitentiary be slim or none. I just

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Speaker 1: don't think that's going to and even just logistics, just

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Speaker 1: because he would have been convicted of that crime with

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Speaker 1: former presidents that the private the Secret Services Texas, so

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Speaker 1: I don't think you're gonna find a secret service bucking

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Speaker 1: up with him, you know, at the state prison. And

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Speaker 1: I just don't think so happened. So when I think

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Speaker 1: about cases and whether or not they're serious, jail tip

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Speaker 1: sort of offer table, I do think there's self than

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Speaker 1: to be said about the message of his fins to

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Speaker 1: have the United States Department of Justice moved forward on

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Speaker 1: the case with career prosecutors that are to be a

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Speaker 1: political and free the allegations against a sense of the

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Speaker 1: chief executive of the United States. And I don't know

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Speaker 1: if they'll be able to produce the evidence to prove

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Speaker 1: their allegation or not, but if in fact they can

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Speaker 1: prove that either the former president ordered someone to try

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Speaker 1: to influence a witness or he himself tried to influence

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Speaker 1: a witness to this telephone call. They're able to tie

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Speaker 1: those ins together. I think that makes a pretty strong

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Speaker 1: rope that would be used to tie not around it.

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Speaker 1: That to me is conduct. Again, not to repeat myself,

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Speaker 1: but when I look at it, I think about conducts

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Speaker 1: that would be performed after it was president of the

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Speaker 1: United States. You know, we have an impeachment process that

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Speaker 1: is really supposed to clean up messes about the aptitude,

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Speaker 1: and we have a twenty put the amendment process. Just

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Speaker 1: because somebody is reckless while they're in office, or somebody

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Speaker 1: negigent while they're in office, or somebody is derelict, it

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Speaker 1: is part of his duties while they're office. That's why

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Speaker 1: we have the impeachment process for a president president. That's

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Speaker 1: why we have ah amendment process for the cabin to

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Speaker 1: come in if they think that there's been something here.

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Speaker 1: I think that, you know, looking back and based on

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Speaker 1: the evidence that we say, we could say at least

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Speaker 1: I will say hopefully, I think the Senate failed. I

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Speaker 1: think that they there was a clear evidence that would

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Speaker 1: have supported the conviction, but only impeachment charges. They didn't

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Speaker 1: do that, and that is our system. So we they're

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Speaker 1: just going to rely on state d as to do

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Speaker 1: the job that the Senate didn't do. And I would

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Speaker 1: just lean towards the fact that I think that charges

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Speaker 1: brought by the United States Department of Justice within that

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Speaker 1: ben not only more serious, but would sort of carry

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Speaker 1: the weight of the justice system behind behind those charges.

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Speaker 1: Is Trump's intent the biggest problem and all these the

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Speaker 1: biggest challenge in all these cases, it's certainly a required

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Speaker 1: element for criminal prosecution, ands in is a sort of

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Speaker 1: the cornerstone from bringing criminal charges, and I think to

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Speaker 1: come to play in a number of cases. In the

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Speaker 1: Georgia case presence the telephone call, well, you know, I

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Speaker 1: can think of ways that who could argue that he

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Speaker 1: was simply a tender who was calling saying, can't we

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Speaker 1: find more votes? Can't you just find that twelve hundred,

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Speaker 1: twelve thousand, eleven thousands of under eighty votes? Whatever it was?

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Speaker 1: To so I overcome this depths that I mean, I can,

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Speaker 1: I can think of ways you can argue, and I'm

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Speaker 1: not that's not how I happen to feel about his call,

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Speaker 1: but I could I can see as somebody can make

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Speaker 1: that argument that he didn't really have the intent. He

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Speaker 1: was simply a losing candidate who was searching for ways

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Speaker 1: to overcome an elect election. That's when you think about

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Speaker 1: any of the allegations against him. I mean, there's been

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Speaker 1: much made about, you know, whether or not his direction

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Speaker 1: to allow people to come into the speech on January

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Speaker 1: six and not worried about going through battle detectives and

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Speaker 1: somehow that's some indication that he was intending to send

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Speaker 1: him down to the to the Capitol. Well, you could

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Speaker 1: also be argued that he's just a narcissist and he

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Speaker 1: was trying to build his crowd size, which we know

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Speaker 1: from the inauguration day for has been a cornerstone for

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Speaker 1: him or something that's the extraordinary portant. How many people

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Speaker 1: show up in his rallies, how many people attended as

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Speaker 1: an auguration, how big the crowd coming to hear everything.

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Speaker 1: Is he adored by his fan and so you can

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Speaker 1: make arguments, I think, you know, one way or another.

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Speaker 1: That's why things like emails, that's why things like text messages.

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Speaker 1: That's why direct statements that people bring in and not

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Speaker 1: just hear such statements that that to me is important

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Speaker 1: improveing intent. You know, we we we really have to

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Speaker 1: be careful not to as we talk about charges against

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Speaker 1: a former president, and we don't need to just get

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Speaker 1: kind of lost in our onn echo chamber. You know,

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Speaker 1: the fact that he threw a plate against the wall

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Speaker 1: and some ketchup was on the wall, or the fact

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Speaker 1: that he slammed his hands on the desk and yelled

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Speaker 1: at people in the meeting, Well, let me tell you

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Speaker 1: my belief at the bottom of my heart is that

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Speaker 1: it's not the first time of plate's been thrown in

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Speaker 1: the lighter, the first time somebody has yelled in the

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Speaker 1: oval office. And so it makes for sexy commentary, but

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Speaker 1: it's not necessarily I think, indicative of and in and

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Speaker 1: it may be out of what we'd call societal norms

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Speaker 1: and and social graces, but that's not enough the end

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Speaker 1: of itself, to to to prove a criminal intent. It's

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Speaker 1: a big bourden, and it should be when you're talking

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Speaker 1: about people's liberty and proving that they did violated criminal statute.

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Speaker 1: It's a It's a big birden and we want it

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Speaker 1: to be. And we don't want to shift that or

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Speaker 1: change that just because it might be a Trump's scenario.

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Speaker 1: We still want prosecutes to have to prove intent, and

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Speaker 1: that's why they I think going through the witnesses and

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Speaker 1: at the end of the day, we're seeing witness the

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Speaker 1: subpoena and even in the federal grand jury case to

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Speaker 1: find out was there any direct communication, with any direct

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Speaker 1: orders of commands from Trump. You don't prosecute inner circles,

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Speaker 1: you know, outside of conspiracy charges. We talked about that.

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Speaker 1: You have to look and see can I prove it?

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Speaker 1: If you think about it this way, So, think about

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Speaker 1: the Godfather and he sends a direct command to somebody. Well,

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Speaker 1: the fact that the horse head is of being in

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Speaker 1: somebody's bed in the Godfather, unless you could prove that

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Speaker 1: the Godfather ordered to be slipt, you can't prove his intent.

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Speaker 1: But if you've got somebody who said the Godfather told

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Speaker 1: me to cut the horse head off and take it

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Speaker 1: to sell us those bed, that's a different thing. And

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Speaker 1: so they've got to sort of get to that place

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Speaker 1: and build that bridge between both the facts and the allegations.

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Speaker 1: And that's that's where intent comes in. She hasn't ruled

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Speaker 1: out subpoena Trump, but if she's after Trump, if he's

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Speaker 1: the target, can she subpoena him, or should she subpoena him.

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Speaker 1: She should not subpoena him. I mean, generally a prosecutor

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Speaker 1: would not be putting somebody up who's a target just

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Speaker 1: to claim the Fifth Amendment in front of the grand jury.

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Speaker 1: So I would I would be surprised that she would

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Speaker 1: be subpoena him, and maybe that she's talking about her.

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Speaker 1: She's wanting to subpena him for evidence in another case

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Speaker 1: that he's not a target. But I can't believe at

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Speaker 1: this stage. And that's a that's a great example two

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Speaker 1: of um you know folks who say, well, prosecutors shouldn't

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Speaker 1: take into account of policy and that should just move

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Speaker 1: forward by still the fact of others and anybody who

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Speaker 1: believes that somehow this case is not being handled differently

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Speaker 1: because as a former president, let me just ask him

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Speaker 1: to tell me how many special grand juries are going

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Speaker 1: on in flolting counterybody. Of course it's being handled different

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Speaker 1: because it's the former president, you know. I mean, that's

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Speaker 1: we know that. And so I think it would be

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Speaker 1: a mistake to subpoena him in and with the legal

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Speaker 1: challenges that would come with that. And I also think

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Speaker 1: that if the prosecutors generally are they know not to

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Speaker 1: bring in people who have constitutional rights even if they

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Speaker 1: were there, they certainly have costUS rights to take the

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Speaker 1: fifth and you did typically don't bring them in. You

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Speaker 1: never see that, and you know, I don't think you'll

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Speaker 1: be at the pointer or folks in the d as

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Speaker 1: al should be able to point to cases where they

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Speaker 1: bring in criminal defendants to mostly sit there in front

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Speaker 1: of a grand jury and say well, I'm gonna make

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Speaker 1: you take the fifth in front of the strandur. You

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Speaker 1: don't often see that. You have the cases where you

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Speaker 1: bring people in and say well, I'll give you immunity

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Speaker 1: to testify, and we're gonna allow you know, use of

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Speaker 1: immunity here. But I just would be surprised if she

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Speaker 1: actually subpending to him to come in and testify in

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Speaker 1: a case against himself. Thanks Michael. That's Michael Moore of

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Speaker 1: more Hall. Michael Novak was once the most powerful person

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Speaker 1: in the gold market. Now he's on trial with two

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Speaker 1: other former JP Morgan Chase employees for operating a criminal

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Speaker 1: conspiracy inside one of Wall Street's largest banks. Facing decades

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Speaker 1: in prison. Prosecutors set a corrupt group of traders and

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Speaker 1: sales staff manipulated gold and silver markets for the benefit

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Speaker 1: of the bank and its prized clients, scamming the market

433
00:21:31,680 --> 00:21:35,440
Speaker 1: for years with so called spoofing trades. Joining me a

434
00:21:35,520 --> 00:21:39,520
Speaker 1: securities law expert James Cox, a professor at Duke Law School,

435
00:21:40,000 --> 00:21:44,399
Speaker 1: Jim explain what spoofing is well is keep the fun simple.

436
00:21:44,440 --> 00:21:47,560
Speaker 1: Ground is submitting on order to buy in order to

437
00:21:47,600 --> 00:21:50,399
Speaker 1: sell without the intent of really wanting to buy an

438
00:21:50,440 --> 00:21:54,040
Speaker 1: up seller the price order stated, and it's intended to

439
00:21:54,240 --> 00:21:58,240
Speaker 1: allure the unsuspecting into thinking that the market is moving

440
00:21:58,320 --> 00:22:01,760
Speaker 1: one direction or another. The whole purpose of spoofing isn't

441
00:22:01,800 --> 00:22:06,520
Speaker 1: to close and order, but rather to create the impression

442
00:22:06,800 --> 00:22:09,439
Speaker 1: that prices are moving or rightly to move in a

443
00:22:09,480 --> 00:22:13,480
Speaker 1: certain direction because of a build up of demand demand

444
00:22:13,520 --> 00:22:16,520
Speaker 1: on the sales side or demand on the buy side.

445
00:22:16,960 --> 00:22:19,360
Speaker 1: So all it is is a false order that's being

446
00:22:19,400 --> 00:22:22,399
Speaker 1: sent to the marketplace and a series of false orders

447
00:22:22,520 --> 00:22:25,040
Speaker 1: to create an idea that there's like a surge or price.

448
00:22:25,200 --> 00:22:27,440
Speaker 1: For example, let's assume that you said a whole bunch

449
00:22:27,520 --> 00:22:30,320
Speaker 1: of false orders to buy to create the image that

450
00:22:30,400 --> 00:22:33,960
Speaker 1: there's a lot of demand out there at ten dollars,

451
00:22:34,040 --> 00:22:36,280
Speaker 1: and maybe the price will go up to ten ten,

452
00:22:37,040 --> 00:22:39,800
Speaker 1: and so therefore you should be wanting to go out

453
00:22:39,840 --> 00:22:42,639
Speaker 1: and buy in the market at ten or tennel five

454
00:22:43,040 --> 00:22:45,800
Speaker 1: with the expectation that those markets will suddenly go to

455
00:22:45,840 --> 00:22:48,399
Speaker 1: ten ten. So you go out in the market and

456
00:22:48,520 --> 00:22:51,280
Speaker 1: you're willing to pay more than the current market price

457
00:22:51,320 --> 00:22:53,840
Speaker 1: of ten because you think it's going to go up

458
00:22:53,840 --> 00:22:56,399
Speaker 1: to tennel five, and you close the pennel five minute

459
00:22:56,400 --> 00:22:59,439
Speaker 1: the market stays at ten, So you've gotten clipped. So

460
00:22:59,480 --> 00:23:03,040
Speaker 1: the whole idea of spoofing is to dupe another person

461
00:23:03,119 --> 00:23:07,000
Speaker 1: of believing that there's a shift in the marketplace. So

462
00:23:07,040 --> 00:23:12,040
Speaker 1: now in this case, unlike past cases of allegistrating fraud,

463
00:23:12,119 --> 00:23:14,960
Speaker 1: the prosecutors have sort of up the anti here. They're

464
00:23:15,000 --> 00:23:19,520
Speaker 1: accusing the defendants of a racketeering conspiracy. That's a lot

465
00:23:19,600 --> 00:23:22,440
Speaker 1: you usually see more with the mafia than banks. This

466
00:23:22,560 --> 00:23:25,680
Speaker 1: is true. They're using the RICO and other legislation that's

467
00:23:25,720 --> 00:23:29,560
Speaker 1: been passed over the decades is designed to go after

468
00:23:29,720 --> 00:23:34,720
Speaker 1: purposeful intentional misconduct. We rarely see that used in most

469
00:23:34,760 --> 00:23:37,680
Speaker 1: securities or commodities cases, but they're doing it in this case.

470
00:23:38,040 --> 00:23:40,679
Speaker 1: And I believe it's the fact that we now find

471
00:23:40,960 --> 00:23:44,240
Speaker 1: that certainly with this administration. When you look at who

472
00:23:44,280 --> 00:23:48,000
Speaker 1: the use attorneys are, who's at the SEC, who's at

473
00:23:48,040 --> 00:23:52,800
Speaker 1: the Commodity's Future Trading Commission, those are all now democtratically

474
00:23:52,960 --> 00:23:57,280
Speaker 1: controlled prosecutor offices. And there has been the belief that

475
00:23:57,320 --> 00:24:00,600
Speaker 1: the markets have gotten more and more up through a

476
00:24:00,680 --> 00:24:04,680
Speaker 1: variety of practices, not just spoofing, but spoofing is one

477
00:24:04,720 --> 00:24:08,359
Speaker 1: of those practices where it's rampant. And what's interesting in

478
00:24:08,400 --> 00:24:12,320
Speaker 1: the case that's being prosecuted now is that part of

479
00:24:12,359 --> 00:24:15,800
Speaker 1: the defense is the fact that, look, I came in

480
00:24:16,320 --> 00:24:19,280
Speaker 1: a young broker here and I saw how things were working,

481
00:24:19,600 --> 00:24:22,920
Speaker 1: and people did this practice which turns out to be spoofing,

482
00:24:23,160 --> 00:24:24,760
Speaker 1: doing it all the time, and I just thought that

483
00:24:24,800 --> 00:24:28,520
Speaker 1: was normal and routine processes, and I had no corrupt

484
00:24:28,640 --> 00:24:33,760
Speaker 1: criminal attempt behind it. And the fact that that defense

485
00:24:33,960 --> 00:24:37,440
Speaker 1: in this case has some salience to itself where I

486
00:24:37,480 --> 00:24:40,000
Speaker 1: think that that could be actually the key defense to

487
00:24:40,119 --> 00:24:44,240
Speaker 1: this case is that everybody's doing it indicates that this

488
00:24:44,320 --> 00:24:47,920
Speaker 1: is a pervasive problem. But it also explains why we're

489
00:24:47,920 --> 00:24:52,040
Speaker 1: suddenly seeing spoofing cases being brought, and particularly this spoofing

490
00:24:52,080 --> 00:24:55,040
Speaker 1: case being brought in the criminal arena. That is that

491
00:24:55,080 --> 00:24:58,760
Speaker 1: this is not a question of just getting an injunction

492
00:24:58,800 --> 00:25:02,400
Speaker 1: against somebody making them disgorge the commissions that they may

493
00:25:02,400 --> 00:25:05,040
Speaker 1: have earned by spoofing, or maybe even the gains that

494
00:25:05,119 --> 00:25:08,320
Speaker 1: they made by spoofing. This is the perhaps put somebody

495
00:25:08,320 --> 00:25:11,399
Speaker 1: away for some period of time in prison, and the

496
00:25:11,480 --> 00:25:15,440
Speaker 1: reason for that is that the markets are filled with spoofing.

497
00:25:16,040 --> 00:25:19,720
Speaker 1: Some of the prosecution's witnesses are former traders who are

498
00:25:19,800 --> 00:25:23,399
Speaker 1: cooperating after pleading guilty. So would they be able to

499
00:25:23,440 --> 00:25:27,280
Speaker 1: testify as to what the intent was? Yes, you know,

500
00:25:27,400 --> 00:25:30,000
Speaker 1: the important thing is to describe the phenomenal so the

501
00:25:30,040 --> 00:25:33,720
Speaker 1: trier of fact can really understand why this is manipulative

502
00:25:33,800 --> 00:25:37,080
Speaker 1: conduct and not legitimate business practices. So they would be

503
00:25:37,119 --> 00:25:40,879
Speaker 1: explaining that to explain the consequences of the misconduct. So

504
00:25:41,240 --> 00:25:44,240
Speaker 1: the witnesses are doing that, and I think that they're

505
00:25:44,280 --> 00:25:48,679
Speaker 1: also going to be helpful in describing the likely mental

506
00:25:48,760 --> 00:25:51,760
Speaker 1: state of the defendants in this case. That is that

507
00:25:52,240 --> 00:25:56,359
Speaker 1: brokers all knew that this conduct was illegal, that it

508
00:25:56,560 --> 00:25:59,919
Speaker 1: was pervasively practiced and there was a way to making money,

509
00:26:00,280 --> 00:26:03,840
Speaker 1: and that there were victims, not those who were practicing spoofing,

510
00:26:03,960 --> 00:26:07,520
Speaker 1: but rather the other traders on the other side who

511
00:26:07,520 --> 00:26:12,040
Speaker 1: are innocent, and we're victimized by false appearances about market movements.

512
00:26:12,160 --> 00:26:14,359
Speaker 1: So I think that all of that's important. And the

513
00:26:14,400 --> 00:26:17,240
Speaker 1: fact that they'll be able to get some other traders

514
00:26:17,320 --> 00:26:20,919
Speaker 1: to cooperate while at the same time admitting that they

515
00:26:20,960 --> 00:26:23,560
Speaker 1: had engaged in this conduct makes it more likely that

516
00:26:23,720 --> 00:26:27,160
Speaker 1: the defendants in this case could be found guilty. According

517
00:26:27,200 --> 00:26:29,840
Speaker 1: to the defense evidence that the trial will show that

518
00:26:29,880 --> 00:26:33,199
Speaker 1: the vast majority of all market orders are canceled and

519
00:26:33,240 --> 00:26:35,679
Speaker 1: the typical lifespan of an order is just a couple

520
00:26:35,680 --> 00:26:39,119
Speaker 1: of seconds, and I think that that would understanding pretty

521
00:26:39,160 --> 00:26:41,840
Speaker 1: much in the literature for some time that spoofing has

522
00:26:41,880 --> 00:26:44,720
Speaker 1: been a problem. It's surprising that it took as long

523
00:26:44,760 --> 00:26:48,119
Speaker 1: as it did to be prescribed as a violation, and

524
00:26:48,160 --> 00:26:50,760
Speaker 1: it's surprising that we haven't had more cases brought to

525
00:26:50,920 --> 00:26:52,280
Speaker 1: you know, it's hard to say this is gonna be

526
00:26:52,320 --> 00:26:55,080
Speaker 1: a watershed case, but it's certainly going to be a case.

527
00:26:55,119 --> 00:26:58,320
Speaker 1: It's going to change industry practices if the prosecution sticks.

528
00:26:58,800 --> 00:27:03,800
Speaker 1: Federal prosecutes have been going after spoofing for years, haven't they.

529
00:27:03,920 --> 00:27:07,919
Speaker 1: They have been, and they're they're complicated cases. You know,

530
00:27:08,000 --> 00:27:11,800
Speaker 1: the difficulty you have is the defense are well aware

531
00:27:11,920 --> 00:27:15,199
Speaker 1: that they're probably in better shape if they can have

532
00:27:15,400 --> 00:27:18,359
Speaker 1: the case before not a judge, but have the trial

533
00:27:18,400 --> 00:27:21,199
Speaker 1: effect be a jury since it's a criminal case, because

534
00:27:21,600 --> 00:27:25,040
Speaker 1: juries are persuaded by the many times the equities. When

535
00:27:25,040 --> 00:27:28,080
Speaker 1: the defendant comes and said, what this wasn't manipulative because

536
00:27:28,080 --> 00:27:30,440
Speaker 1: everybody was doing it. It was at the practice and

537
00:27:30,440 --> 00:27:33,360
Speaker 1: everybody knew what was going on out there. Prosecutors can

538
00:27:33,480 --> 00:27:35,960
Speaker 1: say what they want to about that they're innocent people

539
00:27:35,960 --> 00:27:38,560
Speaker 1: who don't expect there to be spoofing, But at the

540
00:27:38,640 --> 00:27:42,439
Speaker 1: same time the defense that everybody's doing it has had

541
00:27:42,480 --> 00:27:45,879
Speaker 1: an effect on juries. Thanks Jim. That's James Cox of

542
00:27:45,960 --> 00:27:49,159
Speaker 1: Duke Law School. Coming up, we'll talk to Bloomberg Special

543
00:27:49,200 --> 00:27:54,560
Speaker 1: Medals reporter Eddie Spence, who's covering the trial. We've been

544
00:27:54,600 --> 00:27:58,040
Speaker 1: talking about the trial of three former JP Morgan employees,

545
00:27:58,160 --> 00:28:01,000
Speaker 1: including the veteran head of the press just Metals Desk,

546
00:28:01,400 --> 00:28:04,679
Speaker 1: the most ambitious government effort yet in the crackdown on

547
00:28:04,800 --> 00:28:09,960
Speaker 1: market manipulation and spoofing. Joining me is Bloomberg Special Metals

548
00:28:10,040 --> 00:28:13,399
Speaker 1: reporter Eddie Spence, who's covering the trial. Tell me a

549
00:28:13,480 --> 00:28:17,120
Speaker 1: little bit about who these defendants are basically all three

550
00:28:17,119 --> 00:28:19,720
Speaker 1: of these guys work. Take Morgan, one of them, Mike

551
00:28:19,800 --> 00:28:23,440
Speaker 1: Novak used to run the precious metals business at Jape Morgan,

552
00:28:23,560 --> 00:28:26,880
Speaker 1: which is by far the biggest precious metals business are

553
00:28:27,000 --> 00:28:29,600
Speaker 1: a commercial bank in the world. Pretty much, you can

554
00:28:29,640 --> 00:28:32,399
Speaker 1: really think of Mike Novak as the top guy in

555
00:28:32,440 --> 00:28:35,480
Speaker 1: the entire gold market. And along with him is Greg Smith,

556
00:28:35,520 --> 00:28:39,360
Speaker 1: who was Mike Novak's top trader, and Jeffrey Ruffo, who

557
00:28:39,440 --> 00:28:42,720
Speaker 1: used to handle sales to hedge funds like more Capital

558
00:28:42,760 --> 00:28:44,880
Speaker 1: and Tudor. It's a really really big players in the

559
00:28:44,960 --> 00:28:48,840
Speaker 1: concert to this market. The prosecution's attempt to prove a

560
00:28:48,960 --> 00:28:53,360
Speaker 1: criminal conspiracy here, is that a reach. It's really difficult

561
00:28:53,400 --> 00:28:55,920
Speaker 1: to say at this point, but it's a pretty crucial

562
00:28:56,000 --> 00:29:00,440
Speaker 1: part of their indictment in trying to prove a criminal comperiracy.

563
00:29:00,520 --> 00:29:02,520
Speaker 1: What they're trying to do is stand up the rico

564
00:29:02,720 --> 00:29:05,440
Speaker 1: charges they've they've put against them, which are they're basically

565
00:29:05,520 --> 00:29:09,400
Speaker 1: charges that are usually used against like Matthews and gangs,

566
00:29:09,560 --> 00:29:12,840
Speaker 1: and they're applying it to white collar crime essentially. So

567
00:29:12,960 --> 00:29:14,920
Speaker 1: it makes it very interesting, and it also makes the

568
00:29:15,240 --> 00:29:18,120
Speaker 1: kind of sense that these guys might get significally more

569
00:29:18,120 --> 00:29:21,080
Speaker 1: severe and if the prosecution a lot more leeway when

570
00:29:21,120 --> 00:29:24,680
Speaker 1: it comes to introducing evidence, and also a lot more

571
00:29:24,760 --> 00:29:26,320
Speaker 1: kind of plot with the jury. You know, if you're

572
00:29:26,360 --> 00:29:29,520
Speaker 1: being told for deeply Morgan traders are equivalent to you know,

573
00:29:29,760 --> 00:29:32,520
Speaker 1: Gambino crime family or something like that, that's a pretty

574
00:29:32,560 --> 00:29:35,080
Speaker 1: striking thing that gives it a bit more jury appeal.

575
00:29:35,280 --> 00:29:38,600
Speaker 1: So tell me about the prosecution's case here. So basically

576
00:29:38,600 --> 00:29:42,320
Speaker 1: what they are trying to prove is these three guys

577
00:29:42,440 --> 00:29:46,400
Speaker 1: conspired to spoof precious metals markets, in this case cold

578
00:29:46,440 --> 00:29:49,360
Speaker 1: and silver, over the courts of about eight years. So

579
00:29:49,560 --> 00:29:53,000
Speaker 1: spoofing is a form of market manipulation where basically you

580
00:29:53,080 --> 00:29:56,360
Speaker 1: show the market huge false orders on one side in

581
00:29:56,440 --> 00:29:59,040
Speaker 1: order to get your orders that are smaller on the

582
00:29:59,040 --> 00:30:03,120
Speaker 1: other side fill other participants. It's considered these days essentially

583
00:30:03,160 --> 00:30:06,000
Speaker 1: a form of fraud because you're basically misleading the market

584
00:30:06,040 --> 00:30:09,640
Speaker 1: about what your true trading intentions are in order to prices.

585
00:30:09,920 --> 00:30:11,920
Speaker 1: A lot. The prosecutors are basically trying to improve is

586
00:30:11,920 --> 00:30:15,920
Speaker 1: that over eight years, these guys use spooping to essentially

587
00:30:16,120 --> 00:30:19,360
Speaker 1: enrich themselves, enrich their clients, and also to enrich the

588
00:30:19,600 --> 00:30:22,640
Speaker 1: precious meat of disks and what does the defense appear

589
00:30:22,680 --> 00:30:26,360
Speaker 1: to be. So the defense in these type of cases

590
00:30:26,440 --> 00:30:28,880
Speaker 1: a lot of the time it's focused around intent. So

591
00:30:29,000 --> 00:30:32,320
Speaker 1: basically what they say is these markets moving incredibly fast,

592
00:30:32,440 --> 00:30:35,440
Speaker 1: party fans, you know, the advent of algorithmic trading, so

593
00:30:35,480 --> 00:30:38,800
Speaker 1: it's necessary for traders to cancel sometimes when they feel

594
00:30:38,800 --> 00:30:41,080
Speaker 1: like an algorithm is trying to pee back off them.

595
00:30:41,160 --> 00:30:44,160
Speaker 1: It really is that frucial point of intent. Basically, whether

596
00:30:44,200 --> 00:30:47,200
Speaker 1: these guys intended to spook the markets when they were

597
00:30:47,200 --> 00:30:49,280
Speaker 1: placing these orders, or whether they were canceling them for

598
00:30:49,360 --> 00:30:52,720
Speaker 1: legitimate reasons. And there are logismic reasons to cancel orders

599
00:30:52,720 --> 00:30:55,000
Speaker 1: after you've placed them, but you can't intend to cancel

600
00:30:55,080 --> 00:30:57,520
Speaker 1: them before you place them. So that's what the defense

601
00:30:57,640 --> 00:30:59,560
Speaker 1: is really going to focus on. That intent point is

602
00:30:59,640 --> 00:31:02,920
Speaker 1: quite because in previous cases or someone has come down

603
00:31:02,960 --> 00:31:06,600
Speaker 1: to is you know a Bloomberg message or you know

604
00:31:06,680 --> 00:31:09,120
Speaker 1: WhatsApp text or something like that where one of the

605
00:31:09,160 --> 00:31:12,040
Speaker 1: defendants has kind of explicitly said that he knows what

606
00:31:12,080 --> 00:31:14,640
Speaker 1: he's doing is is illegal, or you know that he

607
00:31:14,680 --> 00:31:17,360
Speaker 1: actually intends to cancel the orders. But that's the real

608
00:31:17,360 --> 00:31:20,360
Speaker 1: crucial point, is intent among the first witnesses was a

609
00:31:20,400 --> 00:31:23,240
Speaker 1: former trader who made a plea deal with the government,

610
00:31:23,600 --> 00:31:27,040
Speaker 1: John Edmonds. So John Edmins was an interesting one. At

611
00:31:27,040 --> 00:31:29,480
Speaker 1: the time he was working with these guys at jp Morgan,

612
00:31:29,560 --> 00:31:31,560
Speaker 1: he was quite a junior trader. I guess what was

613
00:31:31,640 --> 00:31:34,360
Speaker 1: striking in his testimony is he seemed to suggest that

614
00:31:34,400 --> 00:31:37,400
Speaker 1: he was basically just taking part in what was considered

615
00:31:37,480 --> 00:31:41,280
Speaker 1: standard practice on the desks entire career. And he said

616
00:31:41,320 --> 00:31:44,000
Speaker 1: he knew it was wrong, but to an extent, the

617
00:31:44,000 --> 00:31:45,880
Speaker 1: fact that everyone else is doing it made him feel

618
00:31:45,880 --> 00:31:48,160
Speaker 1: like he didn't really have a choice but to do

619
00:31:48,200 --> 00:31:50,440
Speaker 1: the spoofing. You know. I mean, he had a pretty

620
00:31:50,840 --> 00:31:53,479
Speaker 1: great career ahead of him, um and you know these

621
00:31:53,520 --> 00:31:55,440
Speaker 1: days he's a car salesman because of this. That that

622
00:31:55,520 --> 00:31:59,240
Speaker 1: was pretty striking. The defense tried to attack his credibility,

623
00:31:59,360 --> 00:32:02,600
Speaker 1: Edmund's credit ability on cross How did that go? That

624
00:32:02,680 --> 00:32:04,560
Speaker 1: was a pretty interesting moment. So what they were basically

625
00:32:04,560 --> 00:32:09,120
Speaker 1: doing was bringing up a previous civil case regarding spoofing

626
00:32:09,440 --> 00:32:13,600
Speaker 1: involving JPMorgan, where it turns out that John Edvans had

627
00:32:13,800 --> 00:32:16,840
Speaker 1: lied basically about what the reason was for one of

628
00:32:16,960 --> 00:32:20,200
Speaker 1: his colleagues being fired. It turned out the reason was spooping,

629
00:32:20,280 --> 00:32:23,520
Speaker 1: but he said he lies because his attorney told them

630
00:32:23,560 --> 00:32:26,000
Speaker 1: to do so. And obviously, as soon as you start

631
00:32:26,120 --> 00:32:28,360
Speaker 1: lying on drow, you know, even in the civil case,

632
00:32:28,560 --> 00:32:31,479
Speaker 1: that really does affect your credibility. It was interesting in

633
00:32:31,480 --> 00:32:35,080
Speaker 1: that moment because in the courtroom got quite heated, should

634
00:32:35,080 --> 00:32:37,240
Speaker 1: we say, is the kind of defense laid into into

635
00:32:37,320 --> 00:32:39,120
Speaker 1: edmands in that case, And it was a really long

636
00:32:39,200 --> 00:32:42,280
Speaker 1: cross examination as well, so it was pretty grueling for Fred.

637
00:32:42,680 --> 00:32:45,560
Speaker 1: Do you have any inkling as to whether any of

638
00:32:45,600 --> 00:32:50,120
Speaker 1: the defendants is going to testify? We don't at this stage, essentially,

639
00:32:50,160 --> 00:32:53,440
Speaker 1: the reason being the defense can wait until the prosecution

640
00:32:53,480 --> 00:32:56,160
Speaker 1: respece case before they made that decision. But I've asked

641
00:32:56,160 --> 00:32:58,800
Speaker 1: the defense laways about this um. That's what they've essentially

642
00:32:58,800 --> 00:33:01,920
Speaker 1: told me. It will depend on the prosecution's case goes

643
00:33:01,960 --> 00:33:04,840
Speaker 1: and whether the defense lawys feel like they need to

644
00:33:04,880 --> 00:33:07,880
Speaker 1: put up the defendants to I guess have a better

645
00:33:07,960 --> 00:33:10,600
Speaker 1: chance of getting a not guilty verdict. Thanks so much.

646
00:33:10,800 --> 00:33:14,840
Speaker 1: That's Eddie Spence, Bloomberg Precious Metals Reporter, and that's it

647
00:33:14,920 --> 00:33:17,480
Speaker 1: for this edition of the Bloomberg Law Show. Remember you

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Speaker 1: can always get the latest legal news on our Bloomberg

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Speaker 1: Law Podcast. You can find them on Apple Podcasts, Spotify,

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Speaker 1: and at www dot bloomberg dot com slash podcast, slash Law,

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Speaker 1: and remember to tune into The Bloomberg Law Show every

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Speaker 1: week night at ten pm Wall Street Time. I'm June

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Speaker 1: Grosso and you're listening to Bloomberg