Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio.
Speaker 2: Bankman Freed and his co conspirators sold billions of dollars
Speaker 2: from FTX customers. He used that money for his personal benefit,
Speaker 2: including to make personal investments and to cover expenses and
Speaker 2: debts of his hedge fund Alometer research.
Speaker 3: And now a jury will decide whether sam Bankman Freed
Speaker 3: is guilty of orchestrating a scheme to build investors and
Speaker 3: FDx customers out of billions of dollars. In the ten
Speaker 3: months since Manhattan US Attorney Damian Williams announced the charges,
Speaker 3: prosecutors have collected millions of pages of evidence, including financial records, spreadsheets, memos,
Speaker 3: Google documents, and private communications. They've also flipped three of
Speaker 3: SBF's top lieutenants, who will now be testifying against him.
Speaker 3: My guest is former federal prosecutor Brian Klein, a partner
Speaker 3: at make Or Law. Tell us about the case against
Speaker 3: Sambank and Freed.
Speaker 4: Sure, well, there's a number of charges there, but overall
Speaker 4: the focus is that the defrauded people who place their
Speaker 4: money and trust into FTX. So there's a variety of
Speaker 4: different charges and how they get there. But that's the
Speaker 4: center of the allegation. So that's what the trial is
Speaker 4: going to be focused on, is what happened at FTX,
Speaker 4: how that related to Alameda, which was this as alleged
Speaker 4: to venture Arm essentially an affiliate of FTX, And then
Speaker 4: where the money went?
Speaker 3: Is it a mix of substantive and conspiracy charges and
Speaker 3: you know, tell us what the difference is.
Speaker 4: There's a number of charges here, including conspiracy charges like
Speaker 4: conspiracies commit wire fraud as well as the underlying wirefraud
Speaker 4: charge itself. And conspiracy charges can pose some difficulties for
Speaker 4: prosecutors because often jurors innately can understand a straightforward charge
Speaker 4: like you committed wire fraud, that's the allegation, Whereas when
Speaker 4: you have a conspiracy oftentimes the actual jury instruction can
Speaker 4: be difficult to follow, and that juror can get sometimes confused.
Speaker 4: In this case, though you have a number of his
Speaker 4: alleged co conspirators who everyone expects to testify, former senior
Speaker 4: officials at FTX. You know, the prosecutors, I imagine, think
Speaker 4: they're going to paint a very vivid picture of what
Speaker 4: happened here through this testimony of actual witnesses who were
Speaker 4: there when this was all going down, And so I
Speaker 4: think that's going to put a lot of meat on
Speaker 4: the bone here that sometimes, isn't there A lot of
Speaker 4: times there is a case where the alleged co conspirators
Speaker 4: aren't available to testify for one reason or another, or
Speaker 4: actually are co defendants and don't testify. But in this case,
Speaker 4: Sam is facing these charges alone. He'll be the one
Speaker 4: person there sitting at the table with his lawyers, and
Speaker 4: his former colleagues and former underlings will be getting on
Speaker 4: the stand as we understand it, and testifying against him
Speaker 4: and pointing the finger at him.
Speaker 3: Three FGX and Aalomeda executives, his top lieutenants, including supposedly
Speaker 3: the star witness is likely to be Carolyn Ellison, who
Speaker 3: ran alimed and was in and on again off again
Speaker 3: relationship with Sam Bankman freed. So how does the defense
Speaker 3: go after them when there are three of them saying
Speaker 3: the same thing.
Speaker 4: Well, we don't know that they're all going to be
Speaker 4: saying exact same thing. So that's one area that the
Speaker 4: defense can try to probe on cross examination. We can
Speaker 4: expect them also to attack the credibility of each of
Speaker 4: the three and the fact that they pleaded guilty and
Speaker 4: are probably hoping for some benefit for their testimony. And
Speaker 4: particularly with miss Ellison, I think, you know, just if
Speaker 4: we follow what Sam said about her since he's been arrested,
Speaker 4: and what we learned through the New York Times, you know,
Speaker 4: we can expect the defense to make some issue about
Speaker 4: their relationship and you know, maybe try a sort of
Speaker 4: guilted lover defense, which is, you know, she is actually
Speaker 4: responsible for things kept him in the dark and that
Speaker 4: he is upset in him, or how they break up tended.
Speaker 4: That seems to be a defense they're angling for, but
Speaker 4: we won't know until she gets on the stand.
Speaker 3: Besides those witnesses, prosecutors have apparently amassed millions of pages
Speaker 3: of evidence. The evidence includes financial records, spreadsheets, Google documents,
Speaker 3: and private communications and notes that Ellison took after conversations
Speaker 3: with him, so they'll use that to buttress the testimony
Speaker 3: of their witnesses.
Speaker 4: Absolutely, if you're a prosecutor, you want to try to
Speaker 4: find the quote independent pieces of evidence that support what
Speaker 4: the person's saying. So those could be emails that were
Speaker 4: sent contemporaneously, text methoges that were sent contemporaneously, or they
Speaker 4: could be financial records that show what happens. So you're
Speaker 4: trying to buttress that person's testimony with other pieces of
Speaker 4: evidence that really can't be disputed or will be very
Speaker 4: difficult to dispute. So we can expect that to be
Speaker 4: their plan, and that they'll see that way with her,
Speaker 4: but also with the other witnesses too. You know, they're
Speaker 4: going to want to not just have people get up
Speaker 4: there and say things and point the finger at Sam.
Speaker 4: They're going to want people to get up there and
Speaker 4: say things and show them documents that help paint the
Speaker 4: portrait of what happened, or at least what they claim
Speaker 4: happened there. And then Sam's lawyers probably have their own
Speaker 4: documents they're going to show to the witnesses, you know.
Speaker 4: I mean one thing the defense does is, you know,
Speaker 4: they try to the legal word is impeach, you know,
Speaker 4: undercut the testimony. And they will probably be some documents
Speaker 4: out there that maybe miss Elison hasn't seen or the
Speaker 4: others haven't seen, or even aware of that they'll show
Speaker 4: to her and try to catch them off guard. You know,
Speaker 4: these are savvy prosecutors though, and they're expecting that and
Speaker 4: so prosecutors often build into their examination of the witness
Speaker 4: undirect They'll try to front some of those issues and
Speaker 4: have the witness make statements about some of the things
Speaker 4: that may be vulnerabilities to undercut that attack on the defense.
Speaker 4: They try to get in front of the issue as
Speaker 4: much as they can without undermining the credibility of their
Speaker 4: own witness.
Speaker 3: Before he was arrested, Sam bangmanfre You'd made all kinds
Speaker 3: of statements that seem like admissions of some of the
Speaker 3: facts here. How does the defense deal with that?
Speaker 4: That's a real struggle for any defense lawyer if your
Speaker 4: client is making statements before charged that really to the
Speaker 4: impending charges, or in this case, he's made statements since
Speaker 4: being charged to various people. I suspect that was not,
Speaker 4: you know, his lawyer's advice to keep talking to Tuckman,
Speaker 4: and probably went against his lawyer's device. And there were
Speaker 4: reports that a number of lawyers for lawyers has now
Speaker 4: had given him that advice and sort of withdrawn from
Speaker 4: representing him. Even so, that makes sure the defense order's
Speaker 4: job just that much more difficult, because now you've got
Speaker 4: statements that are sort of immediately after the collapse of
Speaker 4: FTX you know, he went on various podcasts and made
Speaker 4: statements to reporters and etc. And then you have statements
Speaker 4: after even he's been arrested, or he's making different claims
Speaker 4: and putting forth his own narrative of what happened here.
Speaker 4: And so he's really giving the prosecutors a big advantage
Speaker 4: here in terms of how they prepare their case because
Speaker 4: now they got a whole wealth of statements. They also
Speaker 4: get a sense of where he thinks he might be
Speaker 4: raising defenses, so they can start to plan for that.
Speaker 4: More So, I don't think his lawyers would have ever
Speaker 4: recommended he talked to the press or make these statements
Speaker 4: that really only hurts their ability to try to get
Speaker 4: him acquitted.
Speaker 3: So do prosecutors have to prove his intent? And will
Speaker 3: that be hard?
Speaker 4: Absolutely, they have to approve his intent. I mean, this
Speaker 4: is not a drug case where it's like, oh, you
Speaker 4: were in possession of a suit case full of cocaine,
Speaker 4: which you just can't have a suitcase full of cocaine, right,
Speaker 4: The question is did you have it? You know, it's
Speaker 4: usually not like what were you thinking when you were
Speaker 4: carrying the due case full of cocaine? It's like self
Speaker 4: evident here. It's different though with any type of white
Speaker 4: collar fase and these type of charges, you know, fraud charges,
Speaker 4: you have to show often specific intents. So that means
Speaker 4: that the person set out knowing what they were trying
Speaker 4: to do to defraud the person and actually did then
Speaker 4: defraud them, or at least attempted to defraud them. So
Speaker 4: that's a pretty eye burden, and you have to show
Speaker 4: up i by proof beyond a reasonable doubt too. Here though,
Speaker 4: the prosecutors have a wealth of apparent inside witnesses, the
Speaker 4: lieutenants you mentioned, as well as tens of thousands, millions
Speaker 4: of pages of documents and communications. Now, this case isn't
Speaker 4: going to be you know, ten thousand exhibits, you know,
Speaker 4: hundreds of thousands of communications. That's just an overwhelming amount.
Speaker 4: Even in a case with voluminous discovery or luminous document
Speaker 4: sized or obtained. Usually the prosecutors focused on a set
Speaker 4: of key documents or communications and they try to show
Speaker 4: the jewelry as easily as possible and as in a
Speaker 4: non confusing manner, what happened here, And they're going to
Speaker 4: highlight I'm sure certain types of statements, certain communications, and
Speaker 4: certain key documents. Even the case is this bit, it
Speaker 4: often comes down to maybe ten or twenty documents that
Speaker 4: are really central to the prosecution's theory, and the same
Speaker 4: number that may be central to the defense. So even
Speaker 4: though this may seem like millions and millions of pages
Speaker 4: of documents, I'm sure it is. Often these cases come
Speaker 4: down to a very discreete set of communications and documents.
Speaker 3: He's had some pre trial setbacks, including that he's now
Speaker 3: in jail. Judge Kaplan put him in jail because of
Speaker 3: communications he made. How much more difficult does it make
Speaker 3: it if your client is in jail in the final
Speaker 3: weeks of preparation for the trial.
Speaker 4: It's just magnitudes more difficult. I mean even in the
Speaker 4: months before, at any point before. It's more difficult when
Speaker 4: your client is detained leaving up the trial because you're
Speaker 4: often wanting to meet with them talk about different pieces
Speaker 4: of evidence. And when someone's in jail, you can't just
Speaker 4: pick up the phone or send them an email or
Speaker 4: a text message or whatever. And these jails have rules
Speaker 4: about when you know you can meet for how long. Now,
Speaker 4: lawyers are given a lot more leeway than just a
Speaker 4: family member or a friend trying to visit somebody, but
Speaker 4: there are still you know, rules and times, and they
Speaker 4: can't communicate in a certain manner. So it just makes
Speaker 4: it a lot more difficult for the defense lawyers to prepare.
Speaker 4: I suspect there are people there with him every day
Speaker 4: and the lead up to it, whether it's more junior
Speaker 4: attorneys or pairalegals, and sometimes the lead attorneys will of
Speaker 4: course be visiting and talking through issues with them. But
Speaker 4: then those attorneys have to leave their offices, go through security.
Speaker 4: They can't bring their phones in, they can usually only
Speaker 4: bring a laptop. They set up in a special way
Speaker 4: that the jail permits, and so it just makes it
Speaker 4: a lot more difficult for everybody involved in preparing the defense.
Speaker 4: And the prosecutors don't have that disadvantage. You know, they're
Speaker 4: at their offices, they're meeting with their witnesses outside. Though
Speaker 4: you know, this was a major stepback for Sam's legal
Speaker 4: defense team. I don't think there's any way to sugarcoat.
Speaker 3: That Bankman Freed's lawyers want to use an advice of
Speaker 3: council defense and the judge hasn't decided yet whether he's
Speaker 3: going to allow them to do so. Tell us about
Speaker 3: that defense. In the context of this case.
Speaker 4: That's a defense that is often considered and rarely deployed.
Speaker 4: And the reason why is if you rely on an
Speaker 4: advice of council defense. And basically what you're saying is, hey,
Speaker 4: my lawyers told me this was fine. You know, they
Speaker 4: may have been wrong ultimately, but that's not my fault
Speaker 4: because I actually went to lawyers and sought legal advice
Speaker 4: and they gave me their legal opinion, and I am
Speaker 4: good faith relied on it. The difficulty with that is
Speaker 4: that defense in general is one and this is the
Speaker 4: biggest hurdle. You have to disclose to your lawyer under
Speaker 4: this defense all the facts that were relevant to them
Speaker 4: giving you their opinion, and that's usually the major hang up.
Speaker 4: So you can't just tell them, Okay, here are facts
Speaker 4: AB and D and forget to tell him about B.
Speaker 4: Is if you don't tell him C, that would change
Speaker 4: their legal opinion, and so that defense is often thought,
Speaker 4: but usually the issue is coming down to the missing
Speaker 4: factual disclosure that would allow the lawyer to render legal advice.
Speaker 4: I am skeptical that they'll raise that defense, or if
Speaker 4: they do that it would succeed, But you know, I'm
Speaker 4: not inside the interworkings defensive course and don't know. But
Speaker 4: judges do want to know in advance a trial if
Speaker 4: that defense is being raised, because it creates a lot
Speaker 4: of different hurdles for the prosecution, because the prosecution will
Speaker 4: want to know kind of what's coming down the pipe.
Speaker 4: And so I think it's unlikely this defense is actually raised,
Speaker 4: but if it is, it will make for a much
Speaker 4: more interesting trial. It's already an interesting trial.
Speaker 3: The judge is ruled that SBF can't call seven expert
Speaker 3: witnesses he wanted to call, though he left the door
Speaker 3: open to call. I think too in response to the
Speaker 3: government's witnesses, perhaps, what do you think about the judge
Speaker 3: just ruling out these witnesses.
Speaker 4: I think judges are fine. In trial is often involved
Speaker 4: about all of experts. So the offense will put on
Speaker 4: some experts, and the prosecution will put on some experts,
Speaker 4: and they'll be talking about the same things, and then
Speaker 4: it's up to the jury to decide whose testimony they
Speaker 4: want a credit of those experts. What they don't want
Speaker 4: is a lot of duplicative experts, A bunch of experts
Speaker 4: on one side all saying the exact same thing. So
Speaker 4: that it feel like, well, we have six experts say this,
Speaker 4: you only have two, and so that's not really what
Speaker 4: they're looking for. And so I think judges like to
Speaker 4: narrow down the number of experts to make sure that
Speaker 4: they're touching on the same issues and not being duplicative. Also,
Speaker 4: there's sometimes areas that aren't really the subject of expert testimony.
Speaker 4: Both the prosecutors and the defense may try to call
Speaker 4: somebody and actually it's really a factual issue. So the
Speaker 4: judge instructs on the law and the jury decides the facts,
Speaker 4: and the experts can offer an opinion in a specialized
Speaker 4: area for the jurors to consider, but they can't tell
Speaker 4: the jurors ultimately like this means this right, Like you
Speaker 4: should assume, based on this set of fact that there
Speaker 4: is no way this person couldn't have the intent to
Speaker 4: do this. You know, they can't go to the ultimate issue,
Speaker 4: that's what it's called. That's up for the jury. So
Speaker 4: this judge is a very sophisticated, smart deson judge who
Speaker 4: was known to run a tight ship, and it's not
Speaker 4: surprising to me that he would rule a way to
Speaker 4: try to keep the trial moving along and eliminate some
Speaker 4: of the experts.
Speaker 3: I mean, besides possibly advice of counsel. What do you
Speaker 3: think might be his defense.
Speaker 4: Well, it seems to be his defense is that he
Speaker 4: was out of the loop, that things were happening, that
Speaker 4: he was busy doing certain things, and that other things
Speaker 4: behind the scenes people were doing either without his permission
Speaker 4: or knowledge. Now we won't know intel opening statements how
Speaker 4: he's going to present his defense, but that seems to
Speaker 4: be the angle they are if you tease out things
Speaker 4: from the defense filings, they they're going and it may
Speaker 4: be the added layer of not only getting not to
Speaker 4: know exactly what was going on, but the things he
Speaker 4: did know that were going on, he had sought legal
Speaker 4: advice far and thought they were fine. That appears to
Speaker 4: be the direction of defense is headed. But we really
Speaker 4: won't know, and they may pivot or spand or narrow
Speaker 4: the scope of the defense. So we really won't know
Speaker 4: until opening statements, and we frankly may not even know
Speaker 4: until his closing statement because the government has the burden
Speaker 4: of proof, and you know they're going to put on
Speaker 4: a very thorough open statement that explains their case and
Speaker 4: why they think, you know, Sam committed these crimes and
Speaker 4: that they can prove that they meet all the elements
Speaker 4: of the charges. Sometimes the defense puts on a much
Speaker 4: more higher level opening statement that asks the jurors to,
Speaker 4: for example, pay attention to the evidence, to keep an
Speaker 4: open mind, reminds the jury that the defendant, you know,
Speaker 4: is in the centutel proven guilty, and the high burden
Speaker 4: the government has to meet hereof be on a reasonable
Speaker 4: doubt that seems less likely in this case. The case
Speaker 4: is obviously gotten a lot of attention, and I think
Speaker 4: when you talked about the billions of dollars at issue here,
Speaker 4: the sheer number of things that went on here, I
Speaker 4: think the defense is going to offer a pretty robust
Speaker 4: opening statement.
Speaker 3: Do you think that Sam Bankman Freed will take the stand.
Speaker 4: I think that's more of a possibility here than is
Speaker 4: regularly the case. Ultimately, that is not his lawyer's decision.
Speaker 4: That's his decision based on his talks with the media,
Speaker 4: his vocal personality on social media, and sort of his
Speaker 4: need to stay in the limelight here. I would be
Speaker 4: surprised if he didn't take the stand, but I think
Speaker 4: it's possible he won't because it's is very unusual I'm
Speaker 4: with put a study on it, but I bet at
Speaker 4: least ninety percent of the time the defendant does not
Speaker 4: get on the stand. But here I will put the
Speaker 4: odds at at least fifty to fifty that he gets
Speaker 4: on the stand. And that's just because of the way
Speaker 4: his personality. He seems like the type of person that
Speaker 4: wants to get up there and give his version of events.
Speaker 4: I think if he does do that, you're going to
Speaker 4: have days of testimony here, and it could be very
Speaker 4: similar to what happened in the Arena's Child of Elizabeth Holmes,
Speaker 4: where she got on the stand, you know, tried to
Speaker 4: convince the jury of her version of events, obviously unsuccessfully.
Speaker 3: Is this a case where it would be difficult to
Speaker 3: find a jury?
Speaker 4: No, I mean every case you can get a jury, right,
Speaker 4: even in the most high profile cases in the United
Speaker 4: States throughout the last you know, fifty years, they've been
Speaker 4: able to find juries. You know, it's going to take
Speaker 4: some time here because obviously this case has gotten so
Speaker 4: much attention, and a number of people probably do have
Speaker 4: preconceived notions about his guilt or innocence. Most likely, I
Speaker 4: guess they have preconceived notions that he's guilty, and so
Speaker 4: I think it will take some time, at least a
Speaker 4: few days to get it very selected. This judge, these
Speaker 4: lawyers will work their way through the perspective jurors and
Speaker 4: find them. I think they're going to call a large
Speaker 4: group of people though well over one hundred I would
Speaker 4: guess as a pool of jurors to work their way through.
Speaker 4: But ultimately, even knowing about a case doesn't preclude you
Speaker 4: from being a juror. The real test is are you
Speaker 4: willing to be fair and impartial? That's what the judge
Speaker 4: is going to be looking for is to see twelve
Speaker 4: fare and impartial jurors.
Speaker 3: Jurors who can sit for the up to six weeks
Speaker 3: the trial is expected to take. Thanks so much for
Speaker 3: being on the show, Brian. That's Brian Klein, a partner
Speaker 3: Waymaker Law. Coming up next on the Bloomberg Lawn Show,
Speaker 3: What happens when jury deliberations descend into chaos. I'm June
Speaker 3: Grosso and you're listening to Bloomberg. An Atlanta trial threatened
Speaker 3: to descend into chaos after jurors clashed over race and
Speaker 3: class while wayne charges against a wealthy developer and two
Speaker 3: others accused of arranging one point three billion dollars in
Speaker 3: phony two tax deductions. Problems began to emerge soon after
Speaker 3: the jurors began deliberating last week and deteriorated into acrimony,
Speaker 3: causing jurors to complain to the judge. Federal Judge Timothy
Speaker 3: Batton then interviewed jurors in open court and in his chambers,
Speaker 3: met with lawyers, and finally, after a change of heart,
Speaker 3: dismissed one juror. My guest is Bloomberg Legal reporter David
Speaker 3: Voriacis David tell us what this trial was about.
Speaker 1: Jack Fisher is a developer and accountant who was on
Speaker 1: trial for selling tax deductions to wealthy taxpayers in exchange
Speaker 1: for investments in a group financing known as syndicated conservation easements. Now,
Speaker 1: this is an arrangement that the IRS hates and has
Speaker 1: been cracking down on. And essentially what happened was partnerships
Speaker 1: would promise that they would not develop land, and in return,
Speaker 1: the investors would get inflated tax deductions. According to the IRS,
Speaker 1: and those tax deductions in the Jack Fisher case relied
Speaker 1: on inflated appraisals and on backdated documents. The IRS had
Speaker 1: been investigating this process for several years, and Jack Fisher
Speaker 1: was the first promoter of syndicated conservation easements to be indicted.
Speaker 1: He went to trial in Atlanta over the summer, and
Speaker 1: his trial lasted nine weeks.
Speaker 3: Jury deliberations are secret. How did you find out that
Speaker 3: there was trouble in the jury room?
Speaker 1: The jurors themselves complained to the judge that one of
Speaker 1: the jurors, who was referred to in court papers as
Speaker 1: Juror twenty six, was refusing to deliberate, and that juror
Speaker 1: walked out of the deliberation room and went upstairs in
Speaker 1: the courthouse. Now, jurors are not supposed to deliberate unless
Speaker 1: all twelve are together at the same time in the
Speaker 1: same room, So without her in the room, they could
Speaker 1: not deliberate. What was a very complicated fraud case that
Speaker 1: involved dozens of charges against Jack Fisher and two other defendants.
Speaker 3: There were no racial aspects of the trial, but racist
Speaker 3: comments were made in the jury room.
Speaker 1: That's correct. This was a pure financial trial that turned
Speaker 1: on complicated testimony about partnerships and about tax deductions. And
Speaker 1: so what happened was the judge on Monday of last week,
Speaker 1: decided that he would interview several of the jurors in chambers,
Speaker 1: and this is very unusual because during jury deliberations it's
Speaker 1: considered a sacro saying process that no one is supposed
Speaker 1: to know what goes on. So what came out as
Speaker 1: a result of those interviews by the judge was that
Speaker 1: one of the jurors during number twenty six, who's white,
Speaker 1: said that another jur during forty four, who is black,
Speaker 1: had said weeks earlier that he would convict these defendants
Speaker 1: because they're rich, white, and entitled. And then juror twenty six,
Speaker 1: again who's white, said that she felt that she was
Speaker 1: standing up for white people during the deliberations, and this
Speaker 1: she said in the privacy of the judge's chambers. However,
Speaker 1: it was transcribed so the other lawyers could see it,
Speaker 1: and then they put essentially that exchange in court filings,
Speaker 1: which is how I was able to see it now.
Speaker 1: This then escalated into a very tense and emotional conflict
Speaker 1: in which the Justice Department moved to dismiss during twenty
Speaker 1: six based on her comments about standing up for white people.
Speaker 1: And they also said that if in fact, juring number
Speaker 1: forty four had said that he was going to base
Speaker 1: his verdict on whether the defendants were rich, white, and entitled,
Speaker 1: that he should be dismissed as well. So what happened
Speaker 1: was that last week, last Monday, the judge said that
Speaker 1: he would not dismiss the jurors and that he would
Speaker 1: urge them to continue deliberating. And then on Wednesday of
Speaker 1: last week, the judge said that he had reconsidered and
Speaker 1: that he was going to dismiss during twenty six because
Speaker 1: of her comments and because he concluded that she was
Speaker 1: still not to live.
Speaker 3: So I assumed that the defense objected to removing juror
Speaker 3: twenty six who seemed to be leaning in favor of
Speaker 3: their client.
Speaker 1: Yes, she had made clear that she was leaning toward acquittal,
Speaker 1: and they said that it's improper under the procedure set
Speaker 1: up in a Supreme Court decision on removing a juror
Speaker 1: for racial animus. And they essentially said that the jury
Speaker 1: deliberations were no longer deadlocked as they had been earlier
Speaker 1: or stalled because she wouldn't deliberate, because the jury had
Speaker 1: indicated that they had reached a verdict on eight or
Speaker 1: nine of the dozens of charges. But The judge ignored
Speaker 1: that and said that the other considerations were so powerful
Speaker 1: that he was left with no choice but to remove
Speaker 1: that juror.
Speaker 3: Did anything happen between Monday and Wednesday that made him
Speaker 3: or Tuesday and Wednesday that made him change his mind?
Speaker 1: He said that he was anguishing over this and had
Speaker 1: given it a lot of thought and it didn't essentially
Speaker 1: didn't sit right with him, and so that's why he
Speaker 1: was reconsidering and did it as they say Sue Sponte,
Speaker 1: which is on his own, without anyone requesting him to
Speaker 1: do that.
Speaker 3: So then how did it work after that?
Speaker 1: After that, he replaced that juror with another juror who
Speaker 1: happened to be black, and this was a predominantly black
Speaker 1: jury to begin with. They then deliberated two days and
Speaker 1: on Friday of last week, they found Jack Fisher and
Speaker 1: one of his co defendants, Jim Sinnett, who's a lawyer,
Speaker 1: guilty of all the charges. They also acquitted Clay Wible,
Speaker 1: who was a real estate appraiser and was charged with
Speaker 1: being part of the scheme.
Speaker 3: So I assume that the defense is going to appeal
Speaker 3: based on the judge removing this juror.
Speaker 1: The defense indicated in the many motions that were filed
Speaker 1: last week that that's exactly what they were going to do.
Speaker 3: It sounds like a good issue for appeal.
Speaker 1: It's clearly very sensitive and fraught issue that's been litigated
Speaker 1: in the courts, and part of what the defense was
Speaker 1: doing is they were trying to lay down a clear
Speaker 1: record for the appeals courts.
Speaker 3: Yeah, because, I mean, as you mentioned, it's so rare
Speaker 3: that a juror is dismissed from a trial in the
Speaker 3: middle of deliberations. I mean, it's incredibly rare.
Speaker 1: It's quite unusual, and in this case, the defense felt
Speaker 1: it was really unfair to them and to their clients' rights.
Speaker 1: And one of the reasons that the judge delayed so
Speaker 1: much is that he made planes several times that he's
Speaker 1: trying to protect the rights of the defendants in this case.
Speaker 3: And the kind of deal involved in this case is
Speaker 3: something the IRS has been going after.
Speaker 1: The IRS for several years now has been going after
Speaker 1: promoters of this type of investment again called syndicated conservation easements,
Speaker 1: because they believe that while the practice of donating conservation
Speaker 1: easements is allowed by Congress, the reality of the way
Speaker 1: it was carried out in syndicates like this one abused
Speaker 1: the letter and spirit of the law and was essentially
Speaker 1: robbing the US Treasury of tax revenue that it deserved.
Speaker 3: You're going to stay with me, David, and coming up,
Speaker 3: we're going to discuss New Jersey Senator Bob Menendez's first
Speaker 3: news conference since his indictment on corruption charges. This is Bloomberg.
Speaker 5: I firmly believe that when all the facts are presented,
Speaker 5: not only will I be exonerated, but I still will
Speaker 5: be the New Jersey's senior Senator. To those who have
Speaker 5: to judgment, you have done so based on a limited
Speaker 5: set of facts framed by the prosecution.
Speaker 3: Today, New Jersey Senator Bob Menendez held his first news
Speaker 3: conference since his criminal indictment on corruption charges, rebuffing calls
Speaker 3: for him to resign and saying he'll be exonerated. Prosecutors
Speaker 3: alleged that Menendez accepted gifts including a luxury car, gold,
Speaker 3: and hundreds of thousands of dollars in cash, in exchange
Speaker 3: for using his influence to bolster US assistance to Egypt
Speaker 3: and to benefit three New Jersey businessmen. I've been talking
Speaker 3: to Bloomberg Legal reporter David Voriakis David tell us about
Speaker 3: the charges.
Speaker 1: Federal prosecutors unsealed an indictment on Friday that charged him,
Speaker 1: his wife, and three New Jersey businessmen in a bribery conspiracy.
Speaker 1: This came after US authorities had raided the senator's house
Speaker 1: where he lived with his wife in Inglewood Cliff's, New Jersey,
Speaker 1: and found nearly half a million dollars in cash that
Speaker 1: was in envelopes, that was in his closet, that was
Speaker 1: in a safe. They found tens of thousands of dollars
Speaker 1: more in cash in a safe deposit box for his wife.
Speaker 1: And what they said was that the Senator had engaged
Speaker 1: in several conspiracies to help the government of Egypt and
Speaker 1: to help these three businessmen in their various legal disputes,
Speaker 1: one of whom was facing indictment in New Jersey and
Speaker 1: the other one had an associate who was under indictment
Speaker 1: in New Jersey. So they asked the senator to help
Speaker 1: them to use his influence in all of these cases.
Speaker 1: What's quite shocking in this case is the amount of
Speaker 1: cash as well as gold bars that were found in
Speaker 1: the senator's home. So on Monday, Menendez resisted a number
Speaker 1: of calls that came over the weekend for his resignation,
Speaker 1: including by the New Jersey Governor Murphy, by several representatives
Speaker 1: in Congress from New Jersey. And he said quite defiantly
Speaker 1: on Monday that he was not resigning, that he was
Speaker 1: going to fight the charges in court, that he was
Speaker 1: not guilty.
Speaker 3: He also gave an explanation for the cash right.
Speaker 1: He is the son of Cuban immigrants, and he grew
Speaker 1: up in Union City, New Jersey, which is a heavily
Speaker 1: Cuban community. He had been the mayor there, he'd been
Speaker 1: an elected official representing Union City, and his press conference
Speaker 1: was in Union City at a community college. And he
Speaker 1: said that because of his family's experience in Cuba, where
Speaker 1: they feared confiscation of money by the government, that he
Speaker 1: had been in the regular habit over the past thirty
Speaker 1: years of withdrawing cash that he legally earned.
Speaker 3: Did he say anything about the gold bars.
Speaker 1: He did not mention the gold bars. He also didn't
Speaker 1: mention the mercedes that prosecutors said one of the co
Speaker 1: defendants used to bribe him.
Speaker 3: What happens next in this case?
Speaker 1: The Senator, his wife, and the three New Jersey businessmen
Speaker 1: will make an initial appearance on Wednesday in Federal Court
Speaker 1: in Manhattan. It's expected that they would all enter not
Speaker 1: guilty please, assuming they're arraigned, and the judge would then
Speaker 1: probably set a calendar for motions and future hearings. He
Speaker 1: may set a trial date.
Speaker 3: And remind us about Menendez's last trial.
Speaker 1: Senator Menendez was indicted in twenty fifteen in a different
Speaker 1: bribery case involving a Florida physician. He went to trial
Speaker 1: in twenty seven in federal court in Newark, New Jersey,
Speaker 1: where the jury deadlocked and a judge declared to hung jury,
Speaker 1: and the Justice Department later dismissed the case rather than
Speaker 1: bringing it again. Menendez was reelected in twenty eighteen, and
Speaker 1: now he's up for reelection again in twenty twenty four,
Speaker 1: but he hasn't said since his indictment whether he intends
Speaker 1: to run for reelection or not.
Speaker 3: Thanks so much for being on the show, David. That's
Speaker 3: Bloomberg Legal reporter David Voriacis, and that's it for this
Speaker 3: edition of the Bloomberg Law Show. Remember you can always
Speaker 3: get the latest legal news on our Bloomberg Law podcast.
Speaker 3: You can find them on Apple podcasts Spotify and at
Speaker 3: www dot bloomberg dot com, slash podcast, Slash Law, and
Speaker 3: remember to tune into The Bloomberg Law Show every weeknight
Speaker 3: at ten pm Wall Street Time. I'm June Grosso and
Speaker 3: you're listening to Bloomberg