Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio, Fred,
Speaker 1: what are we gonna do? We won the election and
Speaker 1: it's not fair to take it away from us like this.
Speaker 1: That now infamous phone call from former President Donald Trump
Speaker 1: to the Georgia's Secretary of State to find just enough
Speaker 1: votes to flip the state to him is at the
Speaker 1: center of the investigation by the Fulton County District Attorney
Speaker 1: into criminal interference in the presidential election. In May, District
Speaker 1: Attorney Fannie Willis took the unusual step of requesting a
Speaker 1: special grand jury, and in an interview with CNN, she
Speaker 1: was clear about her intent to cast a wide net,
Speaker 1: including this election of a fake slate of Trump electors
Speaker 1: in Georgia. We're gonna look at anything connected with interference
Speaker 1: with the election, and so I've allowed that to be
Speaker 1: a broad scope, not just the president's phone call that
Speaker 1: you played there, but other things that indicate that there
Speaker 1: may have been interference with that election, to include fake electorate.
Speaker 1: Now it appears she may be closer to announcing charges.
Speaker 1: Willis has sent so called target letters to sixteen Republicans
Speaker 1: who served as fake Trump electors to warn them that
Speaker 1: they could be indicted. My guest is Michael Moore, the
Speaker 1: former U S Attorney for the Middle District of Georgia
Speaker 1: and a partner with Moore Hall. Did willis really have
Speaker 1: to call a special grand jury because that special grand
Speaker 1: jury can indict? Well, she's using the special grand jury
Speaker 1: because she's limited on what she can do investigative wives
Speaker 1: with a regular criminal grand jury in Georgia. So in Georgia,
Speaker 1: the criminal grand jury, the rule is that you have
Speaker 1: to present them with an indictment. We would call it
Speaker 1: laying an indictment on the table before the grand jury,
Speaker 1: and that would mean you had already determined which parties
Speaker 1: you were going to ask to and diet what charges
Speaker 1: specifically you're going to ask to die at all. And
Speaker 1: she didn't have that information yet, and she could have
Speaker 1: done that on some limited charges and sort of the
Speaker 1: target approach, But here she's using the special grand jury
Speaker 1: statue to allow her to investigate. And that's sort of
Speaker 1: the difference in federal and state grand juries. The federal
Speaker 1: grand jury has the party issues to penas, to investigate cases,
Speaker 1: to call witnesses before them as they appropriate, and the
Speaker 1: special grand jury mirrors a little bit of the federal
Speaker 1: grand jury. The only difference, as you mentioned, is that
Speaker 1: this special grand jury does not have the power under
Speaker 1: the state statue to issue a diet. They would send
Speaker 1: the issue a report or a recommendation that'd be given
Speaker 1: to her answer the court, and she would then make
Speaker 1: a decision with orne. She then wants to present a
Speaker 1: limited case to a regular criminal grand jury. So she's
Speaker 1: using this to gather information, to bring in witnesses who
Speaker 1: may have been relurked to testify, to gather documents and
Speaker 1: text messages, this kind of thing, and then she'll ultial
Speaker 1: in making decision whether or she wants to present that
Speaker 1: to a to a regular criminal granjeur. Michael, what does
Speaker 1: it tell you that Willis sent these target letters. It's
Speaker 1: an interesting play of events right now. That is, I
Speaker 1: think there's some interest in this fake elector scheme, and
Speaker 1: she has been digging into that. You wouldn't have to
Speaker 1: look very hard to feel like that she's in fact
Speaker 1: expanding the scoop of what could have been a very
Speaker 1: narrowly tailored case, a clean cut case against Trump if
Speaker 1: she wanted to do it, based on the telephone called Raffersburg.
Speaker 1: But it appears that she's broadening it out to other
Speaker 1: people maybe in that orbit or closer to the inner circle,
Speaker 1: and dealing with the efforts to basically avoid out the
Speaker 1: electors who were from Georgia and to avoid apple votes
Speaker 1: that have been cast here. So I'm not surprised to
Speaker 1: see or do that. It's a little interesting that she
Speaker 1: would do it in such a public way, especially given
Speaker 1: some of the political alliances that she has, And I
Speaker 1: think that may come into play here that she has
Speaker 1: actually sent out to notice in the middle of a
Speaker 1: peated campaign season, because typically you don't always see a
Speaker 1: prosecutor be quite as public about those types of things,
Speaker 1: and I think for a good reason. So I think
Speaker 1: she's clearly broad in the scoop. I think she may
Speaker 1: be fishing with a little bit too broad and met
Speaker 1: right Naviga. Sometimes that's where you get caught, you tangled
Speaker 1: up in your own men. And I think some of
Speaker 1: the public comments about the target letters who they went
Speaker 1: to in the time of the may open rose some
Speaker 1: questions down the road a public courts. She last week
Speaker 1: subpoenaed members of Trump's inner circle, former lawyer Rudy Giuliani,
Speaker 1: Senator Lindsey Graham's six other attorneys, and Graham has already
Speaker 1: indicated that he's going to fight it. So this will
Speaker 1: drag out. If she's trying to get people from out
Speaker 1: of state, it will. And I think you know there
Speaker 1: you've seen I think it was yesterday or the day before,
Speaker 1: Georgia Congressman. And he also now has served notice that
Speaker 1: he intends to have the challenge heard in the federal court.
Speaker 1: I think there's a federal court here and set up
Speaker 1: for next week has been scheduled there on the Chavison
Speaker 1: subpoenas you to him. There's a specific provision under the
Speaker 1: federal statutes that allows for sort of a high ranking
Speaker 1: member of the executive brand, if there's a civil or
Speaker 1: criminal action in which their allegations against it, you can
Speaker 1: serve notice and assets case be transferred to the federal court.
Speaker 1: And I think you're gonna see them taking advantage of that.
Speaker 1: And it's a good process in the sense that sort
Speaker 1: of limits overreach by the as who may be aggressive.
Speaker 1: We're not saying she is in this case, but as
Speaker 1: a general principle, it's a sort of a safety valve there.
Speaker 1: But it also is naturally going to drag out the time,
Speaker 1: and her grandjeury is authorized. The special purpose Granders author
Speaker 1: us to convene for about a year. But you also
Speaker 1: have to be thinking that we're getting into election seasons,
Speaker 1: and prosecutors must be they must be conscious of how
Speaker 1: the actions that they undertake may be perceived around election time.
Speaker 1: You simply cannot if the goal is to preserve the
Speaker 1: confidence in the court system and in the prosecutor's decisions
Speaker 1: and then charge of decisions that are made, you cannot
Speaker 1: be seen is somebody who's attempted to be be used the
Speaker 1: criminal process to influence the outcome of an election. You'll
Speaker 1: remember that was one of the big issues with Trump
Speaker 1: and the Department of Justice. I mean he wanted to
Speaker 1: use the department sort of look at political enemies. Well,
Speaker 1: you can't do that as a prosecutor. I mean, they're
Speaker 1: bar implications, their coat of ethics implications. And so the
Speaker 1: timing may become a factor for her, and the law
Speaker 1: ofness goes out whether we're in the federal court having
Speaker 1: federal judges rule on motions to quash that may be
Speaker 1: found for certain sutainas, or whether or not we're in
Speaker 1: the appellate court system. Because their privilege issues and a
Speaker 1: turning client protection issues that come up. Then that is
Speaker 1: maxually going to delay ultimately this this special purpose grand
Speaker 1: jury issue, and they report thinking about all the evidence
Speaker 1: she started out with, including that taped phone call, and
Speaker 1: now she also has the testimony she's taken from state officials.
Speaker 1: I'm wondering why it's taking so long for her to
Speaker 1: decide whether or not to indict Trump. Sure, and I
Speaker 1: think that's a question is well placed. I don't think
Speaker 1: there's any questions she could have based on the tape
Speaker 1: recording as she had, which is for two of us.
Speaker 1: I mean, how many times do you get bostly recorded confession.
Speaker 1: She could have tried to bring charges forward in a
Speaker 1: regular ranger without the nief the special grander. She simply
Speaker 1: could have, you know, in between two regular alleged felons.
Speaker 1: She could have stuck the truck in Nightinga right in
Speaker 1: the middle of it, and and the grudgery could decided
Speaker 1: with him out there going to issue the indictment. You know,
Speaker 1: I understand that she may have had some reticence on
Speaker 1: the part of Rappensburger, who was at the time in
Speaker 1: the middle of a heated primary battle and he may
Speaker 1: have been fact and reticence to come forward because it
Speaker 1: would have appeared that he was cooperating against the former president.
Speaker 1: But she had the recording, and so he tells me
Speaker 1: that she's simply broadened it out. She's looking for other
Speaker 1: people who may have been involved in the planning or
Speaker 1: the efforts to overturn at least the vote totals in Georgia,
Speaker 1: and making it more of a guess, more of a
Speaker 1: spider web and which she can catch more flight as
Speaker 1: opposed to support of the clean cut case. At the
Speaker 1: end of the day, I don't know if that have
Speaker 1: been the right call. And again I don't I don't
Speaker 1: want to second guess everything she's doing. I mean, she
Speaker 1: may have and does have access to facts and evidence
Speaker 1: that I don't have and the pelic doesn't have. But
Speaker 1: as you look at it, I mean, one principle usually
Speaker 1: remains true, and that is that when you keep it simple,
Speaker 1: it often makes for a better case. It's easier to prove,
Speaker 1: it takes less confusion for a jury, it creates less defenses.
Speaker 1: It also creates less pellet issues that would be often
Speaker 1: decided about pelt courts, which in Georgia as you may
Speaker 1: know our pelt courts are basically controlled by Republican appointees
Speaker 1: are good judges and friends of behind and such. But
Speaker 1: you have to wonder about the survival of some of
Speaker 1: these allegations that may be pushing an envelope a little
Speaker 1: bit if they got to the a Pelic court. In
Speaker 1: recent court filing, she has indicated I understand that charges
Speaker 1: including racketeering and conspiracy are being considered. That would become
Speaker 1: a really complicated case, wouldn't it. It's an extraordinary complicated case.
Speaker 1: And you think about racketeering and conspiracy cases when you
Speaker 1: think about organized crime rings, and you know, if you're
Speaker 1: trying to bring down a mafia family in New York,
Speaker 1: he might be talking about racketeering cases. So you're bringing
Speaker 1: it down a drug distribution enterprise somewhere. You think about
Speaker 1: reco cases um conspiracy cases, and so it is legally permissible,
Speaker 1: I will say in in circumstances, the question of is
Speaker 1: whether or not it's wise In a case like this,
Speaker 1: there are many prosecutors who will tell you that you
Speaker 1: should not consider sort of the policy implications and what
Speaker 1: may be out there, other than just following the fact
Speaker 1: and following evidence. We're a little bit in uncharted waters here, No,
Speaker 1: not a little bit. We just from off the Deacon
Speaker 1: and uncharted water. So that is that, you know, we're
Speaker 1: talking about whether or not an indictment is going to
Speaker 1: issue for a former president for conduct that he is
Speaker 1: alleged you have committed while in fact he was president
Speaker 1: out his states, and you have to consider that, and
Speaker 1: you have to consider what it means for the country,
Speaker 1: for the future people who hold that office. And again,
Speaker 1: I think the appellate courts were then we're talking about
Speaker 1: the Supreme Court of Georgia, where we're talking about the
Speaker 1: Eleventh Circuit Court of Appeals, a federal quarter, where we're
Speaker 1: talking about the United States Supreme Court, I think they're
Speaker 1: gonna be cognitive. The fact that this could be setting
Speaker 1: a president that is dangerous. And so when you overreach
Speaker 1: and when you sort of fish with too big a net,
Speaker 1: you bring a lot of these issues at play. If
Speaker 1: you had taken a simple approach and you said, look,
Speaker 1: as a prosecutor, I feel like this is called Rapidsburger
Speaker 1: was in fact illegal, that it was an effort to
Speaker 1: put pressure on the elections official, that it was an
Speaker 1: effort to solicit somebody to commit election fraud and this
Speaker 1: is a very clear case. Or you say, well, look
Speaker 1: there's evidence of witness tampering. And I'm thinking now about
Speaker 1: the prominent justice looking at if in fact allegations coming
Speaker 1: out from a general cist committing or true. Do you
Speaker 1: look at those and so that was conduct committed post presidency,
Speaker 1: that's something that may not have those same policy implications
Speaker 1: going forward. Those soon to me to be much cleaner
Speaker 1: cases for appellate course to the side, and I think
Speaker 1: maybe less dangerous as a president going forward. Again, we've
Speaker 1: not faced this, and I can tell you State d
Speaker 1: a's don't face this where they have to sit down
Speaker 1: and make a decision whether or not they're going to
Speaker 1: die upon the president and so um, it's a little
Speaker 1: bit maybe some decisions may be a little bit made
Speaker 1: on the fly. I think there's no text put to
Speaker 1: go back and look at this the side, but this
Speaker 1: is how we ought to do it, this is what
Speaker 1: we're going to do. I just worry sometimes it's complicating
Speaker 1: a case. As I say, not only gives issues for
Speaker 1: the defense and the appellate courts, it makes it more
Speaker 1: confusing for a jury and it brings in other factors
Speaker 1: that I think in reality we have to consider. Aside
Speaker 1: from that, does she have the chops to prosecute a
Speaker 1: former president because we've seen that the new Manhattan d
Speaker 1: A doesn't seem too he backed off that case as
Speaker 1: soon as he got into office. Well, she's a good lawyer,
Speaker 1: she's a good prosecutor. She has experienced. Again, not the
Speaker 1: second guessing her at all. If you think about it
Speaker 1: from sort of a general rule or general principle, I
Speaker 1: think it's better if we talked about the Department of
Speaker 1: Justice acting when it comes to a case like this
Speaker 1: than just a local be a. I mean, think about
Speaker 1: what happens if Joe Biden goes to Texas and he
Speaker 1: makes a speech near the border about America wealth and
Speaker 1: all people and all people ought to come and you know,
Speaker 1: and then suddenly some local DA decides that they're going
Speaker 1: to prosecute Joe Biden for solicited people to commit immigration
Speaker 1: crimes or something. You know. That may sound extreme, but
Speaker 1: weird extreme waters here, and so I think you have
Speaker 1: to think about it that way. You know, the Congress
Speaker 1: obviously they were the statute says that when this kind
Speaker 1: of thing happens, you can ask that if we transferred
Speaker 1: to the federal course, So that strikes me as a
Speaker 1: place where this type of case is probably more appropriately heard.
Speaker 1: The prosecutors have a duty to prosecute crimes within the
Speaker 1: jurisdiction if they think that something is there. She clearly
Speaker 1: has moved forward with some belief that she thinks there
Speaker 1: may be evidence of a crime committed. But again, you
Speaker 1: are talking about prosecuting for a state crime a formal
Speaker 1: president for crimes that he committed while he was president
Speaker 1: of the United States, and that we take Trump out
Speaker 1: of it and bring in and you can choose, you know,
Speaker 1: bring in whoever you believe was the most beloved prison history.
Speaker 1: I'm sure you may find some state prosecutor somewhere who
Speaker 1: disagreed with something that he had done. Would it be
Speaker 1: appropriate for that state prosecutor to a dike that president
Speaker 1: for crimes that he committed while he was president of
Speaker 1: the United States? And that's a question I think that
Speaker 1: is looming out because we have these kind of discussions.
Speaker 1: A lot of people say that the Georgia investigation is
Speaker 1: the most serious case facing Trump. Do you disagree with that? Then?
Speaker 1: I disagree in the sense that I think a case
Speaker 1: brought forward by the Department of Justice would be the
Speaker 1: most serious case, no matter what that case may be.
Speaker 1: And really the reason is this, I think the likel
Speaker 1: here that you would ever find the former president sitting
Speaker 1: in a Georgia penitentiary be slim or none. I just
Speaker 1: don't think that's going to and even just logistics, just
Speaker 1: because he would have been convicted of that crime with
Speaker 1: former presidents that the private the Secret Services Texas, so
Speaker 1: I don't think you're gonna find a secret service bucking
Speaker 1: up with him, you know, at the state prison. And
Speaker 1: I just don't think so happened. So when I think
Speaker 1: about cases and whether or not they're serious, jail tip
Speaker 1: sort of offer table, I do think there's self than
Speaker 1: to be said about the message of his fins to
Speaker 1: have the United States Department of Justice moved forward on
Speaker 1: the case with career prosecutors that are to be a
Speaker 1: political and free the allegations against a sense of the
Speaker 1: chief executive of the United States. And I don't know
Speaker 1: if they'll be able to produce the evidence to prove
Speaker 1: their allegation or not, but if in fact they can
Speaker 1: prove that either the former president ordered someone to try
Speaker 1: to influence a witness or he himself tried to influence
Speaker 1: a witness to this telephone call. They're able to tie
Speaker 1: those ins together. I think that makes a pretty strong
Speaker 1: rope that would be used to tie not around it.
Speaker 1: That to me is conduct. Again, not to repeat myself,
Speaker 1: but when I look at it, I think about conducts
Speaker 1: that would be performed after it was president of the
Speaker 1: United States. You know, we have an impeachment process that
Speaker 1: is really supposed to clean up messes about the aptitude,
Speaker 1: and we have a twenty put the amendment process. Just
Speaker 1: because somebody is reckless while they're in office, or somebody
Speaker 1: negigent while they're in office, or somebody is derelict, it
Speaker 1: is part of his duties while they're office. That's why
Speaker 1: we have the impeachment process for a president president. That's
Speaker 1: why we have ah amendment process for the cabin to
Speaker 1: come in if they think that there's been something here.
Speaker 1: I think that, you know, looking back and based on
Speaker 1: the evidence that we say, we could say at least
Speaker 1: I will say hopefully, I think the Senate failed. I
Speaker 1: think that they there was a clear evidence that would
Speaker 1: have supported the conviction, but only impeachment charges. They didn't
Speaker 1: do that, and that is our system. So we they're
Speaker 1: just going to rely on state d as to do
Speaker 1: the job that the Senate didn't do. And I would
Speaker 1: just lean towards the fact that I think that charges
Speaker 1: brought by the United States Department of Justice within that
Speaker 1: ben not only more serious, but would sort of carry
Speaker 1: the weight of the justice system behind behind those charges.
Speaker 1: Is Trump's intent the biggest problem and all these the
Speaker 1: biggest challenge in all these cases, it's certainly a required
Speaker 1: element for criminal prosecution, ands in is a sort of
Speaker 1: the cornerstone from bringing criminal charges, and I think to
Speaker 1: come to play in a number of cases. In the
Speaker 1: Georgia case presence the telephone call, well, you know, I
Speaker 1: can think of ways that who could argue that he
Speaker 1: was simply a tender who was calling saying, can't we
Speaker 1: find more votes? Can't you just find that twelve hundred,
Speaker 1: twelve thousand, eleven thousands of under eighty votes? Whatever it was?
Speaker 1: To so I overcome this depths that I mean, I can,
Speaker 1: I can think of ways you can argue, and I'm
Speaker 1: not that's not how I happen to feel about his call,
Speaker 1: but I could I can see as somebody can make
Speaker 1: that argument that he didn't really have the intent. He
Speaker 1: was simply a losing candidate who was searching for ways
Speaker 1: to overcome an elect election. That's when you think about
Speaker 1: any of the allegations against him. I mean, there's been
Speaker 1: much made about, you know, whether or not his direction
Speaker 1: to allow people to come into the speech on January
Speaker 1: six and not worried about going through battle detectives and
Speaker 1: somehow that's some indication that he was intending to send
Speaker 1: him down to the to the Capitol. Well, you could
Speaker 1: also be argued that he's just a narcissist and he
Speaker 1: was trying to build his crowd size, which we know
Speaker 1: from the inauguration day for has been a cornerstone for
Speaker 1: him or something that's the extraordinary portant. How many people
Speaker 1: show up in his rallies, how many people attended as
Speaker 1: an auguration, how big the crowd coming to hear everything.
Speaker 1: Is he adored by his fan and so you can
Speaker 1: make arguments, I think, you know, one way or another.
Speaker 1: That's why things like emails, that's why things like text messages.
Speaker 1: That's why direct statements that people bring in and not
Speaker 1: just hear such statements that that to me is important
Speaker 1: improveing intent. You know, we we we really have to
Speaker 1: be careful not to as we talk about charges against
Speaker 1: a former president, and we don't need to just get
Speaker 1: kind of lost in our onn echo chamber. You know,
Speaker 1: the fact that he threw a plate against the wall
Speaker 1: and some ketchup was on the wall, or the fact
Speaker 1: that he slammed his hands on the desk and yelled
Speaker 1: at people in the meeting, Well, let me tell you
Speaker 1: my belief at the bottom of my heart is that
Speaker 1: it's not the first time of plate's been thrown in
Speaker 1: the lighter, the first time somebody has yelled in the
Speaker 1: oval office. And so it makes for sexy commentary, but
Speaker 1: it's not necessarily I think, indicative of and in and
Speaker 1: it may be out of what we'd call societal norms
Speaker 1: and and social graces, but that's not enough the end
Speaker 1: of itself, to to to prove a criminal intent. It's
Speaker 1: a big bourden, and it should be when you're talking
Speaker 1: about people's liberty and proving that they did violated criminal statute.
Speaker 1: It's a It's a big birden and we want it
Speaker 1: to be. And we don't want to shift that or
Speaker 1: change that just because it might be a Trump's scenario.
Speaker 1: We still want prosecutes to have to prove intent, and
Speaker 1: that's why they I think going through the witnesses and
Speaker 1: at the end of the day, we're seeing witness the
Speaker 1: subpoena and even in the federal grand jury case to
Speaker 1: find out was there any direct communication, with any direct
Speaker 1: orders of commands from Trump. You don't prosecute inner circles,
Speaker 1: you know, outside of conspiracy charges. We talked about that.
Speaker 1: You have to look and see can I prove it?
Speaker 1: If you think about it this way, So, think about
Speaker 1: the Godfather and he sends a direct command to somebody. Well,
Speaker 1: the fact that the horse head is of being in
Speaker 1: somebody's bed in the Godfather, unless you could prove that
Speaker 1: the Godfather ordered to be slipt, you can't prove his intent.
Speaker 1: But if you've got somebody who said the Godfather told
Speaker 1: me to cut the horse head off and take it
Speaker 1: to sell us those bed, that's a different thing. And
Speaker 1: so they've got to sort of get to that place
Speaker 1: and build that bridge between both the facts and the allegations.
Speaker 1: And that's that's where intent comes in. She hasn't ruled
Speaker 1: out subpoena Trump, but if she's after Trump, if he's
Speaker 1: the target, can she subpoena him, or should she subpoena him.
Speaker 1: She should not subpoena him. I mean, generally a prosecutor
Speaker 1: would not be putting somebody up who's a target just
Speaker 1: to claim the Fifth Amendment in front of the grand jury.
Speaker 1: So I would I would be surprised that she would
Speaker 1: be subpoena him, and maybe that she's talking about her.
Speaker 1: She's wanting to subpena him for evidence in another case
Speaker 1: that he's not a target. But I can't believe at
Speaker 1: this stage. And that's a that's a great example two
Speaker 1: of um you know folks who say, well, prosecutors shouldn't
Speaker 1: take into account of policy and that should just move
Speaker 1: forward by still the fact of others and anybody who
Speaker 1: believes that somehow this case is not being handled differently
Speaker 1: because as a former president, let me just ask him
Speaker 1: to tell me how many special grand juries are going
Speaker 1: on in flolting counterybody. Of course it's being handled different
Speaker 1: because it's the former president, you know. I mean, that's
Speaker 1: we know that. And so I think it would be
Speaker 1: a mistake to subpoena him in and with the legal
Speaker 1: challenges that would come with that. And I also think
Speaker 1: that if the prosecutors generally are they know not to
Speaker 1: bring in people who have constitutional rights even if they
Speaker 1: were there, they certainly have costUS rights to take the
Speaker 1: fifth and you did typically don't bring them in. You
Speaker 1: never see that, and you know, I don't think you'll
Speaker 1: be at the pointer or folks in the d as
Speaker 1: al should be able to point to cases where they
Speaker 1: bring in criminal defendants to mostly sit there in front
Speaker 1: of a grand jury and say well, I'm gonna make
Speaker 1: you take the fifth in front of the strandur. You
Speaker 1: don't often see that. You have the cases where you
Speaker 1: bring people in and say well, I'll give you immunity
Speaker 1: to testify, and we're gonna allow you know, use of
Speaker 1: immunity here. But I just would be surprised if she
Speaker 1: actually subpending to him to come in and testify in
Speaker 1: a case against himself. Thanks Michael. That's Michael Moore of
Speaker 1: more Hall. Michael Novak was once the most powerful person
Speaker 1: in the gold market. Now he's on trial with two
Speaker 1: other former JP Morgan Chase employees for operating a criminal
Speaker 1: conspiracy inside one of Wall Street's largest banks. Facing decades
Speaker 1: in prison. Prosecutors set a corrupt group of traders and
Speaker 1: sales staff manipulated gold and silver markets for the benefit
Speaker 1: of the bank and its prized clients, scamming the market
Speaker 1: for years with so called spoofing trades. Joining me a
Speaker 1: securities law expert James Cox, a professor at Duke Law School,
Speaker 1: Jim explain what spoofing is well is keep the fun simple.
Speaker 1: Ground is submitting on order to buy in order to
Speaker 1: sell without the intent of really wanting to buy an
Speaker 1: up seller the price order stated, and it's intended to
Speaker 1: allure the unsuspecting into thinking that the market is moving
Speaker 1: one direction or another. The whole purpose of spoofing isn't
Speaker 1: to close and order, but rather to create the impression
Speaker 1: that prices are moving or rightly to move in a
Speaker 1: certain direction because of a build up of demand demand
Speaker 1: on the sales side or demand on the buy side.
Speaker 1: So all it is is a false order that's being
Speaker 1: sent to the marketplace and a series of false orders
Speaker 1: to create an idea that there's like a surge or price.
Speaker 1: For example, let's assume that you said a whole bunch
Speaker 1: of false orders to buy to create the image that
Speaker 1: there's a lot of demand out there at ten dollars,
Speaker 1: and maybe the price will go up to ten ten,
Speaker 1: and so therefore you should be wanting to go out
Speaker 1: and buy in the market at ten or tennel five
Speaker 1: with the expectation that those markets will suddenly go to
Speaker 1: ten ten. So you go out in the market and
Speaker 1: you're willing to pay more than the current market price
Speaker 1: of ten because you think it's going to go up
Speaker 1: to tennel five, and you close the pennel five minute
Speaker 1: the market stays at ten, So you've gotten clipped. So
Speaker 1: the whole idea of spoofing is to dupe another person
Speaker 1: of believing that there's a shift in the marketplace. So
Speaker 1: now in this case, unlike past cases of allegistrating fraud,
Speaker 1: the prosecutors have sort of up the anti here. They're
Speaker 1: accusing the defendants of a racketeering conspiracy. That's a lot
Speaker 1: you usually see more with the mafia than banks. This
Speaker 1: is true. They're using the RICO and other legislation that's
Speaker 1: been passed over the decades is designed to go after
Speaker 1: purposeful intentional misconduct. We rarely see that used in most
Speaker 1: securities or commodities cases, but they're doing it in this case.
Speaker 1: And I believe it's the fact that we now find
Speaker 1: that certainly with this administration. When you look at who
Speaker 1: the use attorneys are, who's at the SEC, who's at
Speaker 1: the Commodity's Future Trading Commission, those are all now democtratically
Speaker 1: controlled prosecutor offices. And there has been the belief that
Speaker 1: the markets have gotten more and more up through a
Speaker 1: variety of practices, not just spoofing, but spoofing is one
Speaker 1: of those practices where it's rampant. And what's interesting in
Speaker 1: the case that's being prosecuted now is that part of
Speaker 1: the defense is the fact that, look, I came in
Speaker 1: a young broker here and I saw how things were working,
Speaker 1: and people did this practice which turns out to be spoofing,
Speaker 1: doing it all the time, and I just thought that
Speaker 1: was normal and routine processes, and I had no corrupt
Speaker 1: criminal attempt behind it. And the fact that that defense
Speaker 1: in this case has some salience to itself where I
Speaker 1: think that that could be actually the key defense to
Speaker 1: this case is that everybody's doing it indicates that this
Speaker 1: is a pervasive problem. But it also explains why we're
Speaker 1: suddenly seeing spoofing cases being brought, and particularly this spoofing
Speaker 1: case being brought in the criminal arena. That is that
Speaker 1: this is not a question of just getting an injunction
Speaker 1: against somebody making them disgorge the commissions that they may
Speaker 1: have earned by spoofing, or maybe even the gains that
Speaker 1: they made by spoofing. This is the perhaps put somebody
Speaker 1: away for some period of time in prison, and the
Speaker 1: reason for that is that the markets are filled with spoofing.
Speaker 1: Some of the prosecution's witnesses are former traders who are
Speaker 1: cooperating after pleading guilty. So would they be able to
Speaker 1: testify as to what the intent was? Yes, you know,
Speaker 1: the important thing is to describe the phenomenal so the
Speaker 1: trier of fact can really understand why this is manipulative
Speaker 1: conduct and not legitimate business practices. So they would be
Speaker 1: explaining that to explain the consequences of the misconduct. So
Speaker 1: the witnesses are doing that, and I think that they're
Speaker 1: also going to be helpful in describing the likely mental
Speaker 1: state of the defendants in this case. That is that
Speaker 1: brokers all knew that this conduct was illegal, that it
Speaker 1: was pervasively practiced and there was a way to making money,
Speaker 1: and that there were victims, not those who were practicing spoofing,
Speaker 1: but rather the other traders on the other side who
Speaker 1: are innocent, and we're victimized by false appearances about market movements.
Speaker 1: So I think that all of that's important. And the
Speaker 1: fact that they'll be able to get some other traders
Speaker 1: to cooperate while at the same time admitting that they
Speaker 1: had engaged in this conduct makes it more likely that
Speaker 1: the defendants in this case could be found guilty. According
Speaker 1: to the defense evidence that the trial will show that
Speaker 1: the vast majority of all market orders are canceled and
Speaker 1: the typical lifespan of an order is just a couple
Speaker 1: of seconds, and I think that that would understanding pretty
Speaker 1: much in the literature for some time that spoofing has
Speaker 1: been a problem. It's surprising that it took as long
Speaker 1: as it did to be prescribed as a violation, and
Speaker 1: it's surprising that we haven't had more cases brought to
Speaker 1: you know, it's hard to say this is gonna be
Speaker 1: a watershed case, but it's certainly going to be a case.
Speaker 1: It's going to change industry practices if the prosecution sticks.
Speaker 1: Federal prosecutes have been going after spoofing for years, haven't they.
Speaker 1: They have been, and they're they're complicated cases. You know,
Speaker 1: the difficulty you have is the defense are well aware
Speaker 1: that they're probably in better shape if they can have
Speaker 1: the case before not a judge, but have the trial
Speaker 1: effect be a jury since it's a criminal case, because
Speaker 1: juries are persuaded by the many times the equities. When
Speaker 1: the defendant comes and said, what this wasn't manipulative because
Speaker 1: everybody was doing it. It was at the practice and
Speaker 1: everybody knew what was going on out there. Prosecutors can
Speaker 1: say what they want to about that they're innocent people
Speaker 1: who don't expect there to be spoofing, But at the
Speaker 1: same time the defense that everybody's doing it has had
Speaker 1: an effect on juries. Thanks Jim. That's James Cox of
Speaker 1: Duke Law School. Coming up, we'll talk to Bloomberg Special
Speaker 1: Medals reporter Eddie Spence, who's covering the trial. We've been
Speaker 1: talking about the trial of three former JP Morgan employees,
Speaker 1: including the veteran head of the press just Metals Desk,
Speaker 1: the most ambitious government effort yet in the crackdown on
Speaker 1: market manipulation and spoofing. Joining me is Bloomberg Special Metals
Speaker 1: reporter Eddie Spence, who's covering the trial. Tell me a
Speaker 1: little bit about who these defendants are basically all three
Speaker 1: of these guys work. Take Morgan, one of them, Mike
Speaker 1: Novak used to run the precious metals business at Jape Morgan,
Speaker 1: which is by far the biggest precious metals business are
Speaker 1: a commercial bank in the world. Pretty much, you can
Speaker 1: really think of Mike Novak as the top guy in
Speaker 1: the entire gold market. And along with him is Greg Smith,
Speaker 1: who was Mike Novak's top trader, and Jeffrey Ruffo, who
Speaker 1: used to handle sales to hedge funds like more Capital
Speaker 1: and Tudor. It's a really really big players in the
Speaker 1: concert to this market. The prosecution's attempt to prove a
Speaker 1: criminal conspiracy here, is that a reach. It's really difficult
Speaker 1: to say at this point, but it's a pretty crucial
Speaker 1: part of their indictment in trying to prove a criminal comperiracy.
Speaker 1: What they're trying to do is stand up the rico
Speaker 1: charges they've they've put against them, which are they're basically
Speaker 1: charges that are usually used against like Matthews and gangs,
Speaker 1: and they're applying it to white collar crime essentially. So
Speaker 1: it makes it very interesting, and it also makes the
Speaker 1: kind of sense that these guys might get significally more
Speaker 1: severe and if the prosecution a lot more leeway when
Speaker 1: it comes to introducing evidence, and also a lot more
Speaker 1: kind of plot with the jury. You know, if you're
Speaker 1: being told for deeply Morgan traders are equivalent to you know,
Speaker 1: Gambino crime family or something like that, that's a pretty
Speaker 1: striking thing that gives it a bit more jury appeal.
Speaker 1: So tell me about the prosecution's case here. So basically
Speaker 1: what they are trying to prove is these three guys
Speaker 1: conspired to spoof precious metals markets, in this case cold
Speaker 1: and silver, over the courts of about eight years. So
Speaker 1: spoofing is a form of market manipulation where basically you
Speaker 1: show the market huge false orders on one side in
Speaker 1: order to get your orders that are smaller on the
Speaker 1: other side fill other participants. It's considered these days essentially
Speaker 1: a form of fraud because you're basically misleading the market
Speaker 1: about what your true trading intentions are in order to prices.
Speaker 1: A lot. The prosecutors are basically trying to improve is
Speaker 1: that over eight years, these guys use spooping to essentially
Speaker 1: enrich themselves, enrich their clients, and also to enrich the
Speaker 1: precious meat of disks and what does the defense appear
Speaker 1: to be. So the defense in these type of cases
Speaker 1: a lot of the time it's focused around intent. So
Speaker 1: basically what they say is these markets moving incredibly fast,
Speaker 1: party fans, you know, the advent of algorithmic trading, so
Speaker 1: it's necessary for traders to cancel sometimes when they feel
Speaker 1: like an algorithm is trying to pee back off them.
Speaker 1: It really is that frucial point of intent. Basically, whether
Speaker 1: these guys intended to spook the markets when they were
Speaker 1: placing these orders, or whether they were canceling them for
Speaker 1: legitimate reasons. And there are logismic reasons to cancel orders
Speaker 1: after you've placed them, but you can't intend to cancel
Speaker 1: them before you place them. So that's what the defense
Speaker 1: is really going to focus on. That intent point is
Speaker 1: quite because in previous cases or someone has come down
Speaker 1: to is you know a Bloomberg message or you know
Speaker 1: WhatsApp text or something like that where one of the
Speaker 1: defendants has kind of explicitly said that he knows what
Speaker 1: he's doing is is illegal, or you know that he
Speaker 1: actually intends to cancel the orders. But that's the real
Speaker 1: crucial point, is intent among the first witnesses was a
Speaker 1: former trader who made a plea deal with the government,
Speaker 1: John Edmonds. So John Edmins was an interesting one. At
Speaker 1: the time he was working with these guys at jp Morgan,
Speaker 1: he was quite a junior trader. I guess what was
Speaker 1: striking in his testimony is he seemed to suggest that
Speaker 1: he was basically just taking part in what was considered
Speaker 1: standard practice on the desks entire career. And he said
Speaker 1: he knew it was wrong, but to an extent, the
Speaker 1: fact that everyone else is doing it made him feel
Speaker 1: like he didn't really have a choice but to do
Speaker 1: the spoofing. You know. I mean, he had a pretty
Speaker 1: great career ahead of him, um and you know these
Speaker 1: days he's a car salesman because of this. That that
Speaker 1: was pretty striking. The defense tried to attack his credibility,
Speaker 1: Edmund's credit ability on cross How did that go? That
Speaker 1: was a pretty interesting moment. So what they were basically
Speaker 1: doing was bringing up a previous civil case regarding spoofing
Speaker 1: involving JPMorgan, where it turns out that John Edvans had
Speaker 1: lied basically about what the reason was for one of
Speaker 1: his colleagues being fired. It turned out the reason was spooping,
Speaker 1: but he said he lies because his attorney told them
Speaker 1: to do so. And obviously, as soon as you start
Speaker 1: lying on drow, you know, even in the civil case,
Speaker 1: that really does affect your credibility. It was interesting in
Speaker 1: that moment because in the courtroom got quite heated, should
Speaker 1: we say, is the kind of defense laid into into
Speaker 1: edmands in that case, And it was a really long
Speaker 1: cross examination as well, so it was pretty grueling for Fred.
Speaker 1: Do you have any inkling as to whether any of
Speaker 1: the defendants is going to testify? We don't at this stage, essentially,
Speaker 1: the reason being the defense can wait until the prosecution
Speaker 1: respece case before they made that decision. But I've asked
Speaker 1: the defense laways about this um. That's what they've essentially
Speaker 1: told me. It will depend on the prosecution's case goes
Speaker 1: and whether the defense lawys feel like they need to
Speaker 1: put up the defendants to I guess have a better
Speaker 1: chance of getting a not guilty verdict. Thanks so much.
Speaker 1: That's Eddie Spence, Bloomberg Precious Metals Reporter, and that's it
Speaker 1: for this edition of the Bloomberg Law Show. Remember you
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Speaker 1: Grosso and you're listening to Bloomberg