1 00:00:02,040 --> 00:00:03,800 Speaker 1: This is Bloomberg Law. 2 00:00:03,920 --> 00:00:06,760 Speaker 2: What does a prosecutor have to prove in order to 3 00:00:06,760 --> 00:00:09,959 Speaker 2: get a rico conviction? Tell us why the Solicitor General 4 00:00:10,000 --> 00:00:12,280 Speaker 2: is sometimes referred to as the tenth Justice. 5 00:00:12,320 --> 00:00:15,520 Speaker 1: Interviews with prominent attorneys in Bloomberg Legal Experts. 6 00:00:15,560 --> 00:00:18,360 Speaker 2: That's Jennifer k for Bloomberg Law. Joining me is former 7 00:00:18,440 --> 00:00:20,160 Speaker 2: federal prosecutor Robert miss. 8 00:00:20,040 --> 00:00:23,200 Speaker 1: And analysis of important legal issues, cases and headlines. 9 00:00:23,239 --> 00:00:27,040 Speaker 2: It's the toughest hurdle for prosecutors proving Trump's intent. Alito 10 00:00:27,120 --> 00:00:30,479 Speaker 2: took on Congress, saying Congress has no power to regulate 11 00:00:30,520 --> 00:00:31,520 Speaker 2: the Supreme Court. 12 00:00:31,520 --> 00:00:34,600 Speaker 1: Bloomberg Law with June Grosso from Bloomberg Radio. 13 00:00:38,520 --> 00:00:41,320 Speaker 2: Welcome to a special best of edition of the Bloomberg 14 00:00:41,400 --> 00:00:44,559 Speaker 2: Law Show. Ahead in this hour, we'll take a closer 15 00:00:44,600 --> 00:00:47,760 Speaker 2: look at a case that could help determine which party 16 00:00:47,880 --> 00:00:52,920 Speaker 2: controls the House after next year's election. Plus FTX investors 17 00:00:52,960 --> 00:00:56,480 Speaker 2: are suing celebrities, bankers, accountants, and lawyers. 18 00:00:59,080 --> 00:01:02,360 Speaker 3: We have said that the burden that you're assuming of 19 00:01:02,400 --> 00:01:07,840 Speaker 3: disentangling race and politics in a situation like this is very, 20 00:01:07,959 --> 00:01:08,759 Speaker 3: very difficult. 21 00:01:09,440 --> 00:01:12,839 Speaker 2: The Chief Justice aptly described the problem in the case 22 00:01:12,880 --> 00:01:16,680 Speaker 2: before the Supreme Court. The limits of parties in jerrymandering 23 00:01:17,000 --> 00:01:20,199 Speaker 2: when it intersects with race. It's a case that could 24 00:01:20,200 --> 00:01:23,880 Speaker 2: help determine which party controls the House after next year's election. 25 00:01:24,640 --> 00:01:28,160 Speaker 2: A panel of three federal judges, after an eight day trial, 26 00:01:28,560 --> 00:01:34,000 Speaker 2: concluded that Republican lawmakers had engaged in unconstitutional racial gerrymandering 27 00:01:34,360 --> 00:01:38,759 Speaker 2: in drawing South Carolina's first congressional district, but at oral arguments. 28 00:01:38,800 --> 00:01:43,280 Speaker 2: The conservative justice has expressed skepticism about that panel's decision. 29 00:01:43,560 --> 00:01:45,360 Speaker 2: Here's Chief Justice John Roberts. 30 00:01:46,080 --> 00:01:49,760 Speaker 3: We've never had a case where there's been no direct evidence, 31 00:01:50,440 --> 00:01:56,240 Speaker 3: no map, no strangely configured districts, a very large amount 32 00:01:56,320 --> 00:01:59,800 Speaker 3: of political evidence, whether the district court chose to credit 33 00:01:59,840 --> 00:02:01,360 Speaker 3: it or not. 34 00:02:02,240 --> 00:02:05,720 Speaker 2: While the three liberal justices suggested the lower court had 35 00:02:05,800 --> 00:02:11,160 Speaker 2: adequate evidence to conclude that South Carolina lawmakers improperly relied 36 00:02:11,200 --> 00:02:14,840 Speaker 2: on race to get to its established target of seventeen 37 00:02:14,880 --> 00:02:19,079 Speaker 2: percent black voters in the district by shifting thirty thousand 38 00:02:19,080 --> 00:02:22,000 Speaker 2: black voters out of the district to hit that goal. 39 00:02:22,240 --> 00:02:23,920 Speaker 2: Here's Justice Elena Kagan. 40 00:02:24,680 --> 00:02:28,240 Speaker 4: You have two experts here, Reguso and Lou who answered 41 00:02:28,280 --> 00:02:30,880 Speaker 4: the exact question that is supposed to be answered in 42 00:02:30,919 --> 00:02:34,320 Speaker 4: such a case. In other words, is this gerrymander based 43 00:02:34,360 --> 00:02:37,360 Speaker 4: on politics or is it a way to get to 44 00:02:37,400 --> 00:02:41,480 Speaker 4: an ultimate goal? An ultimate political goal, but the gerrymandarin 45 00:02:41,600 --> 00:02:43,400 Speaker 4: is based on race. And what the two of them 46 00:02:43,440 --> 00:02:47,919 Speaker 4: do is that they show that black Democrats are excluded 47 00:02:48,240 --> 00:02:52,639 Speaker 4: from District one at a far greater percentage than white 48 00:02:52,720 --> 00:02:54,400 Speaker 4: Democrats are joining. 49 00:02:54,400 --> 00:02:57,360 Speaker 2: Me is elections law expert Richard Breffald, a professor at 50 00:02:57,360 --> 00:03:00,520 Speaker 2: Columbia Law School. So Rich tell us about the case 51 00:03:00,560 --> 00:03:01,720 Speaker 2: and the main issue here. 52 00:03:01,919 --> 00:03:05,600 Speaker 5: So this case is about a challenge to the redistricting 53 00:03:05,639 --> 00:03:09,760 Speaker 5: of South Carolina's congressional plan in twenty twenty two following 54 00:03:09,800 --> 00:03:14,519 Speaker 5: the twenty twenty census. The major development affected District one, 55 00:03:14,560 --> 00:03:17,959 Speaker 5: which is basically around Charleston, and it made the district 56 00:03:17,960 --> 00:03:20,560 Speaker 5: more Republican by moving out of a significant number of 57 00:03:20,600 --> 00:03:24,560 Speaker 5: black voters into an adjacent black majority district. District one 58 00:03:24,600 --> 00:03:27,360 Speaker 5: had been a Republican district, but in recent years had 59 00:03:27,360 --> 00:03:30,960 Speaker 5: been more closely contested, and in twenty eighteen the Democrats 60 00:03:30,960 --> 00:03:34,000 Speaker 5: actually won it for one term. Twenty twenty, the Republicans 61 00:03:34,000 --> 00:03:36,440 Speaker 5: want it back with very narrowly. So one of the 62 00:03:36,440 --> 00:03:39,720 Speaker 5: things the legislature did in twenty twenty two was changed 63 00:03:39,760 --> 00:03:42,480 Speaker 5: the composition to make it more republican, and in so 64 00:03:42,680 --> 00:03:46,760 Speaker 5: doing it basically moved about thirty thousand black voters from 65 00:03:46,840 --> 00:03:50,040 Speaker 5: Charleston out of the district into an adjacent district. By 66 00:03:50,040 --> 00:03:52,480 Speaker 5: the way, District one is the district that elects Nancy Mace, 67 00:03:52,840 --> 00:03:55,720 Speaker 5: who had been previously considered a moderate that since her 68 00:03:55,960 --> 00:03:58,480 Speaker 5: district was change, seems to become more conservative. She's one 69 00:03:58,480 --> 00:04:01,800 Speaker 5: of the eight who voted to pose Kevin McCarthy. So 70 00:04:01,960 --> 00:04:04,920 Speaker 5: the question before the court, it's a tough question, is 71 00:04:04,960 --> 00:04:09,160 Speaker 5: whether the legislature was motivated by race or by party. 72 00:04:09,680 --> 00:04:11,760 Speaker 5: You might say that in a state where race and 73 00:04:11,800 --> 00:04:15,320 Speaker 5: party are so intertwined, that's an impossible question answers. It's 74 00:04:15,320 --> 00:04:18,400 Speaker 5: the same thing, but it's crucial because the Supreme Court 75 00:04:18,400 --> 00:04:20,919 Speaker 5: has said that racial gerrymandering, that is to say, the 76 00:04:21,040 --> 00:04:24,560 Speaker 5: intentional movement of voters because of their race from one 77 00:04:24,640 --> 00:04:29,200 Speaker 5: district to another is unconstitutional. But partisan jerrymandering, as we 78 00:04:29,240 --> 00:04:32,359 Speaker 5: all know since the RUCO decision in twenty nineteen, is 79 00:04:32,400 --> 00:04:35,800 Speaker 5: non justiciable. So it's okay for the state to engage 80 00:04:35,800 --> 00:04:38,640 Speaker 5: in partisan gerrymandering. It's not okay for the state to 81 00:04:38,680 --> 00:04:42,240 Speaker 5: engage in racial gerrymandering. South Carolina says it was both 82 00:04:42,279 --> 00:04:45,760 Speaker 5: the following traditional district lines but also had a partisan 83 00:04:45,800 --> 00:04:49,320 Speaker 5: political purpose. What the lower court found was that actually 84 00:04:49,720 --> 00:04:54,080 Speaker 5: the movement of voters did exhibit racial predominance, that given 85 00:04:54,080 --> 00:04:57,080 Speaker 5: away the voters, reve which voters were targeted, and relying 86 00:04:57,120 --> 00:05:00,120 Speaker 5: on the testimony of experts, they basically said that a 87 00:05:00,120 --> 00:05:03,960 Speaker 5: proportionate number of black Democrats relative to white Democrats were 88 00:05:03,960 --> 00:05:06,279 Speaker 5: the ones who were moved, and therefore the District Court 89 00:05:06,640 --> 00:05:10,080 Speaker 5: was able to conclude that this was a racial gerrymander. 90 00:05:10,440 --> 00:05:13,080 Speaker 5: That's what's being tested in the Supreme Court right now, 91 00:05:13,400 --> 00:05:16,240 Speaker 5: whether this is a racial or a partisan jerrymander. Did 92 00:05:16,240 --> 00:05:18,839 Speaker 5: the district court do it right? To what extent is 93 00:05:18,880 --> 00:05:22,680 Speaker 5: the Supreme Court required to defer to the findings of 94 00:05:22,760 --> 00:05:25,040 Speaker 5: the district court. And the district Court's findings are really 95 00:05:25,400 --> 00:05:28,920 Speaker 5: sort of factual. They basically made a determination, based on 96 00:05:29,440 --> 00:05:32,239 Speaker 5: the testimony of a person who wrote the South Carolina 97 00:05:32,279 --> 00:05:35,839 Speaker 5: Plan and of other experts, that this was racially motivated. 98 00:05:35,880 --> 00:05:38,560 Speaker 5: So one of the big issues before the court is 99 00:05:38,560 --> 00:05:42,800 Speaker 5: what difference the district court finding was supposed to get. Normally, 100 00:05:42,880 --> 00:05:46,080 Speaker 5: the standard applies to something called clearly erroneous, which means 101 00:05:46,120 --> 00:05:48,640 Speaker 5: the district court gets a lot of difference. But you 102 00:05:48,800 --> 00:05:52,560 Speaker 5: saw some of the more conservative justices pushing back on 103 00:05:52,640 --> 00:05:56,279 Speaker 5: that here, saying that given the fact that the district 104 00:05:56,279 --> 00:05:58,680 Speaker 5: Court doesn't appear to have given trusted in the good 105 00:05:58,760 --> 00:06:01,120 Speaker 5: faith of the legislature, and given some of the other 106 00:06:01,240 --> 00:06:03,559 Speaker 5: challenges to the evidence in front of the district court, 107 00:06:04,240 --> 00:06:07,320 Speaker 5: maybe the district court doesn't get the kind of difference 108 00:06:07,560 --> 00:06:10,279 Speaker 5: that the clearly erroneous standard normally would give them. 109 00:06:10,400 --> 00:06:12,920 Speaker 2: Okay, so let's take those that's a lot of issues 110 00:06:12,960 --> 00:06:17,120 Speaker 2: one by one. So the three judge federal panel referred 111 00:06:17,120 --> 00:06:20,640 Speaker 2: to the revised map as effective bleaching of African American 112 00:06:20,760 --> 00:06:23,799 Speaker 2: voters out of the Charleston County portion of the district. 113 00:06:24,240 --> 00:06:27,040 Speaker 2: And they came to that conclusion after an extensive eight 114 00:06:27,160 --> 00:06:30,920 Speaker 2: day trial featuring forty two witnesses and six hundred and 115 00:06:30,960 --> 00:06:35,039 Speaker 2: fifty two exhibits. So doesn't the court usually defer to 116 00:06:35,120 --> 00:06:38,080 Speaker 2: the factual findings of lower court judges? 117 00:06:38,440 --> 00:06:40,800 Speaker 5: Yes, I mean, indeed, that is the standard they're supposed 118 00:06:40,800 --> 00:06:43,960 Speaker 5: to apply, what's called the clearly erroneous standard. Not just 119 00:06:44,120 --> 00:06:46,840 Speaker 5: but the district court right on balance, But as long 120 00:06:46,880 --> 00:06:49,440 Speaker 5: as the District Court did was plausible long as they 121 00:06:49,440 --> 00:06:52,440 Speaker 5: didn't something which was clearly wrong, as opposed to debatably wrong. 122 00:06:52,800 --> 00:06:55,680 Speaker 5: They're supposed to defer. And you definitely heard the liberal 123 00:06:55,760 --> 00:06:59,440 Speaker 5: justices emphasizing the importance of adhering to the clearly erroneous 124 00:06:59,480 --> 00:07:02,279 Speaker 5: standard that it was evidence to support with the District 125 00:07:02,320 --> 00:07:05,600 Speaker 5: Court found. And indeed the United States came in. The 126 00:07:05,680 --> 00:07:07,760 Speaker 5: United States had not been a party to the case originally, 127 00:07:08,080 --> 00:07:10,120 Speaker 5: but this listener General's Office came in. If the United 128 00:07:10,160 --> 00:07:13,680 Speaker 5: States had actually emphasized the importance of following the clearly 129 00:07:13,800 --> 00:07:14,640 Speaker 5: erroneous standard. 130 00:07:15,520 --> 00:07:19,280 Speaker 2: Chief Justice John Roberts said that the challengers of the 131 00:07:19,360 --> 00:07:23,440 Speaker 2: map had no direct evidence that race had predominated in 132 00:07:23,480 --> 00:07:27,440 Speaker 2: the decision making process, just circumstantial evidence. This would be 133 00:07:27,520 --> 00:07:32,000 Speaker 2: breaking new ground in our voting rights jurisprudence. Is that true? 134 00:07:32,240 --> 00:07:34,679 Speaker 2: I mean, isn't circumstantial evidence enough? 135 00:07:35,440 --> 00:07:39,400 Speaker 5: Right? They've often found circumstance relied on circumstantial evidence. But 136 00:07:39,560 --> 00:07:43,160 Speaker 5: his full statement was there was no direct evidence. He 137 00:07:43,280 --> 00:07:45,960 Speaker 5: all said it was not an oddly shaped district, and 138 00:07:46,040 --> 00:07:48,240 Speaker 5: the number of the early other cases in which the 139 00:07:48,280 --> 00:07:52,880 Speaker 5: Court has found racial gerrymandering, the district was oddly shaped 140 00:07:53,000 --> 00:07:55,400 Speaker 5: On this one, there was a big change the district. 141 00:07:55,440 --> 00:07:58,440 Speaker 5: People were moved around a lot, but the district itself 142 00:07:58,480 --> 00:08:02,040 Speaker 5: didn't flunk any kind of test of odd shape, which 143 00:08:02,080 --> 00:08:05,520 Speaker 5: is somethings the Court has sometimes used. And the other 144 00:08:05,560 --> 00:08:08,640 Speaker 5: issue that came up before the court was the fact 145 00:08:08,680 --> 00:08:13,560 Speaker 5: that the plaintiffs had not presented an alternative map. Basically, 146 00:08:13,760 --> 00:08:17,080 Speaker 5: the question was could the state have gotten its partisan 147 00:08:17,160 --> 00:08:21,560 Speaker 5: goals without moving as many black voters around? And the 148 00:08:21,680 --> 00:08:25,160 Speaker 5: question came up, should the plaintiffs have been required to 149 00:08:25,200 --> 00:08:28,040 Speaker 5: present an alternative map showing that the state could have 150 00:08:28,080 --> 00:08:31,440 Speaker 5: made the district just as Republican without moving as many 151 00:08:31,440 --> 00:08:33,640 Speaker 5: black voters. And there was a debate in the court 152 00:08:33,640 --> 00:08:36,440 Speaker 5: as to whether the plaintiffs had to do that, and 153 00:08:36,559 --> 00:08:39,480 Speaker 5: the President is that they don't have to. Indeed, Justice 154 00:08:39,520 --> 00:08:41,960 Speaker 5: Kagan was quite strong on that because she'd actually written 155 00:08:41,960 --> 00:08:45,040 Speaker 5: the case that said that, a case called Cooper about 156 00:08:45,040 --> 00:08:48,280 Speaker 5: five years ago. But nonetheless, the other justices sort of 157 00:08:48,320 --> 00:08:50,760 Speaker 5: came back and said, well, maybe you didn't have to, 158 00:08:51,200 --> 00:08:53,920 Speaker 5: but why didn't you Why wouldn't that have helped your 159 00:08:53,960 --> 00:08:56,360 Speaker 5: case if you could have shown that they could obtain 160 00:08:56,440 --> 00:09:00,040 Speaker 5: their partisan goals without using race quite as much I 161 00:09:00,080 --> 00:09:02,240 Speaker 5: mean it really went into the question, this difficulty of 162 00:09:02,280 --> 00:09:06,240 Speaker 5: separating out race and party. In effect, the conservative justices 163 00:09:06,320 --> 00:09:09,960 Speaker 5: were sort of creating it. Even though the prior case, 164 00:09:10,280 --> 00:09:13,000 Speaker 5: Cooper had said there's no such requirement. You saw some 165 00:09:13,040 --> 00:09:16,360 Speaker 5: of them basically kind of suggested that either that there is, 166 00:09:16,559 --> 00:09:18,640 Speaker 5: or that there should be, or that it's a problem 167 00:09:18,720 --> 00:09:19,800 Speaker 5: when there isn't. 168 00:09:20,160 --> 00:09:23,760 Speaker 2: Justice Kagan argued that the map makers wouldn't just have 169 00:09:23,880 --> 00:09:27,440 Speaker 2: relied on the twenty twenty election results. She said this 170 00:09:27,559 --> 00:09:31,400 Speaker 2: to the lawyer arguing for South Carolina. Your defense was, 171 00:09:31,520 --> 00:09:33,880 Speaker 2: we didn't look at the racial data for this purpose. 172 00:09:34,200 --> 00:09:36,920 Speaker 2: And what the lower court said was, I don't believe that. 173 00:09:37,160 --> 00:09:41,000 Speaker 2: And she also said they had not only the opportunity 174 00:09:41,120 --> 00:09:43,800 Speaker 2: it was sitting there on their computers, but the clear 175 00:09:43,880 --> 00:09:47,439 Speaker 2: incentive to be looking at this race data. So explain 176 00:09:47,480 --> 00:09:49,720 Speaker 2: what she was getting at there and did you find 177 00:09:49,720 --> 00:09:50,480 Speaker 2: it persuasive? 178 00:09:51,000 --> 00:09:53,880 Speaker 5: So the couple questions here are one is why would 179 00:09:53,880 --> 00:09:56,600 Speaker 5: they Why would the state bother using race when they 180 00:09:56,640 --> 00:09:59,280 Speaker 5: could just use party? And if their goal was to 181 00:09:59,280 --> 00:10:02,680 Speaker 5: make the district more Republican, why not just use the 182 00:10:02,720 --> 00:10:05,480 Speaker 5: party voting? Why use race as approxy when you actually 183 00:10:05,520 --> 00:10:08,840 Speaker 5: have the party data? One response to that is, actually 184 00:10:08,920 --> 00:10:11,880 Speaker 5: they had much more information on race than on party. 185 00:10:11,920 --> 00:10:14,400 Speaker 5: They only had because of the way in which kind 186 00:10:14,400 --> 00:10:17,800 Speaker 5: of votes were counted in South Carolina. They only had 187 00:10:17,880 --> 00:10:21,000 Speaker 5: one election in which they had good party data, and 188 00:10:21,040 --> 00:10:23,840 Speaker 5: that was the twenty twenty presidential election, and the least 189 00:10:23,880 --> 00:10:26,920 Speaker 5: the argument was that wasn't a good predictor because there 190 00:10:26,920 --> 00:10:30,200 Speaker 5: had been more kind of a white crossover voting for 191 00:10:30,320 --> 00:10:33,959 Speaker 5: Biden over Trump in that election. So the plaintiffs argued, 192 00:10:34,160 --> 00:10:36,920 Speaker 5: Justice Kagan suggest that she agreed that in this case, 193 00:10:36,960 --> 00:10:40,120 Speaker 5: actually the state used the race data because race data 194 00:10:40,200 --> 00:10:42,839 Speaker 5: was more reliable that a predicted value than the more 195 00:10:42,880 --> 00:10:46,360 Speaker 5: limited party data. Her point was that it was on 196 00:10:46,440 --> 00:10:48,200 Speaker 5: their computers, it was in their data, it was in 197 00:10:48,240 --> 00:10:51,000 Speaker 5: their face, and they couldn't have been unaware of it. 198 00:10:51,200 --> 00:10:54,400 Speaker 5: And indeed, at one point in the trial, the lead 199 00:10:54,679 --> 00:10:58,560 Speaker 5: witness for South Carolina and the principal map maker basically said, well, 200 00:10:58,880 --> 00:11:01,280 Speaker 5: we weren't doing this race, but yes, of course we 201 00:11:01,280 --> 00:11:03,920 Speaker 5: were aware of the racial data. And this is where 202 00:11:04,040 --> 00:11:07,240 Speaker 5: the lower court basically concluded they really didn't believe him 203 00:11:07,240 --> 00:11:07,600 Speaker 5: on that. 204 00:11:07,800 --> 00:11:09,440 Speaker 2: Coming up next, we'll take a look at how the 205 00:11:09,440 --> 00:11:11,239 Speaker 2: court might rule. This is Bloomberg. 206 00:11:20,440 --> 00:11:25,199 Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio. 207 00:11:26,280 --> 00:11:28,920 Speaker 2: You're listening to a special best of edition of the 208 00:11:28,960 --> 00:11:32,560 Speaker 2: Bloomberg Law Show. I've been talking to Columbia Law School 209 00:11:32,559 --> 00:11:36,640 Speaker 2: professor Richard Rfalt about Supreme Court arguments over whether it 210 00:11:36,679 --> 00:11:40,960 Speaker 2: will reinstate a Republican drawn congressional map in South Carolina 211 00:11:41,400 --> 00:11:45,400 Speaker 2: after a lower court concluded that Republican lawmakers engaged in 212 00:11:45,640 --> 00:11:50,320 Speaker 2: unconstitutional racial gerrymandering in drawing what is now a Republican 213 00:11:50,320 --> 00:11:55,680 Speaker 2: health district. Justice Samuel Alito was the most aggressive questioner 214 00:11:55,840 --> 00:11:58,679 Speaker 2: of the validity of the lower court's decision. He posed 215 00:11:58,720 --> 00:12:03,280 Speaker 2: nearly forty questions to the NAACP's attorney. What was the 216 00:12:03,320 --> 00:12:06,080 Speaker 2: thrust of his questions or problems? 217 00:12:07,000 --> 00:12:10,199 Speaker 5: I think he basically said that this is politics and 218 00:12:10,240 --> 00:12:13,160 Speaker 5: that the burden was heavy on the plaintiffs to show 219 00:12:13,200 --> 00:12:16,040 Speaker 5: that it wasn't politics and that it was race. Much 220 00:12:16,080 --> 00:12:18,000 Speaker 5: of this went into some of the details about what 221 00:12:18,080 --> 00:12:21,360 Speaker 5: some of the experts testified to, or their failure to 222 00:12:21,640 --> 00:12:24,520 Speaker 5: address every point that the state raised. Some of the 223 00:12:24,559 --> 00:12:28,120 Speaker 5: experts testified to whether or not the district complied with 224 00:12:28,200 --> 00:12:31,480 Speaker 5: traditional districting criteria, but not whether or not it was 225 00:12:31,480 --> 00:12:33,360 Speaker 5: part of an Others focused on whether it was partisan 226 00:12:33,920 --> 00:12:36,520 Speaker 5: or racial, but not in the district criteria. So he 227 00:12:36,600 --> 00:12:40,160 Speaker 5: felt that the expert testimony was inadequate to support the 228 00:12:40,240 --> 00:12:43,400 Speaker 5: trial court's finding. He repeatedly raised the question about the 229 00:12:43,440 --> 00:12:46,480 Speaker 5: alternative map, even as he acknowledged that an alternative map 230 00:12:46,559 --> 00:12:49,360 Speaker 5: was not required. He sort of found that the absence 231 00:12:49,400 --> 00:12:53,679 Speaker 5: of an alternative map undermined the plaintiff's case. And again 232 00:12:54,000 --> 00:12:57,080 Speaker 5: he basically said that in some sense suggests that there 233 00:12:57,120 --> 00:13:00,200 Speaker 5: was a heavier burden on the District Court to prove 234 00:13:00,760 --> 00:13:03,680 Speaker 5: that it was race and not party, given the way 235 00:13:03,720 --> 00:13:05,640 Speaker 5: that the two were so tightly intertwined. 236 00:13:06,400 --> 00:13:11,280 Speaker 2: Justice Katanji Brown Jackson kept stressing that the court relies 237 00:13:11,360 --> 00:13:15,560 Speaker 2: on the factual findings of lower courts, and she said 238 00:13:16,320 --> 00:13:19,280 Speaker 2: it would be a dramatic shift to precedent if they 239 00:13:19,360 --> 00:13:23,920 Speaker 2: overturned the trial court's findings. Is that true or if 240 00:13:23,960 --> 00:13:28,600 Speaker 2: they find clear error, which Justice Clarence Thomas brought up 241 00:13:28,679 --> 00:13:32,400 Speaker 2: right at the beginning, would it not be violentive of precedent? 242 00:13:32,679 --> 00:13:35,320 Speaker 5: Well, if they found clear error, it wouldn't be because 243 00:13:35,360 --> 00:13:38,600 Speaker 5: the standard is clearly ironing. Is the District Court's findings 244 00:13:38,600 --> 00:13:41,320 Speaker 5: are not immune from review, but it has to be 245 00:13:41,559 --> 00:13:44,240 Speaker 5: clear error as opposed to whether or not it was 246 00:13:44,240 --> 00:13:47,480 Speaker 5: debatable in some sense. The US government, as I said, 247 00:13:47,480 --> 00:13:50,199 Speaker 5: they came in on the side of the plaintiffs, on 248 00:13:50,200 --> 00:13:52,640 Speaker 5: the side of the NAACP, and said, in a fact, 249 00:13:52,960 --> 00:13:55,240 Speaker 5: we think that the three judge court could have gone 250 00:13:55,280 --> 00:13:58,880 Speaker 5: either way. There was evidence to support either position, but 251 00:13:59,000 --> 00:14:02,000 Speaker 5: the position that the district first found was reasonable given 252 00:14:02,040 --> 00:14:04,760 Speaker 5: the evidence they had, and so that's why it's you 253 00:14:04,800 --> 00:14:07,439 Speaker 5: should defer to them. I mean, one question that Justice 254 00:14:07,480 --> 00:14:10,760 Speaker 5: Barrett raised to just maybe whether the standard should be 255 00:14:10,880 --> 00:14:13,920 Speaker 5: higher in a case involving a state legislature. Maybe there 256 00:14:13,960 --> 00:14:17,760 Speaker 5: should be more burden on the district court to show 257 00:14:17,800 --> 00:14:20,760 Speaker 5: that the legislature wasn't acting in good faith. There's a 258 00:14:20,840 --> 00:14:23,680 Speaker 5: kind of presumption that legislators state legislatures act in good faith, 259 00:14:23,760 --> 00:14:26,800 Speaker 5: so maybe there should be a higher legal burden on 260 00:14:26,840 --> 00:14:30,240 Speaker 5: the district court. And you're right. Justice Jackson was very 261 00:14:30,240 --> 00:14:34,120 Speaker 5: heavy on it, sort of sticking to the traditional role 262 00:14:34,160 --> 00:14:36,840 Speaker 5: of the district court in finding the facts and the 263 00:14:36,920 --> 00:14:38,920 Speaker 5: duty of appellate courts that the first you had been 264 00:14:38,920 --> 00:14:41,280 Speaker 5: at district court, judge, it was kind of a civil 265 00:14:41,320 --> 00:14:45,200 Speaker 5: procedure argument as much as anything else, that the traditional 266 00:14:45,320 --> 00:14:47,440 Speaker 5: role of the court is to see whether the lower 267 00:14:47,480 --> 00:14:50,040 Speaker 5: court applied the law properly, but to defer to the 268 00:14:50,160 --> 00:14:53,400 Speaker 5: factual finding. The liberals were the strongest on this about 269 00:14:53,440 --> 00:14:59,040 Speaker 5: the importance of following this traditional judicial role of deferring 270 00:14:59,080 --> 00:15:01,080 Speaker 5: to lower courts on the factual findings. 271 00:15:01,560 --> 00:15:06,600 Speaker 2: Most legal commentators concluded after hearing the arguments, that the 272 00:15:06,600 --> 00:15:11,200 Speaker 2: conservative majority is going to uphold the Republican drawn mapp 273 00:15:11,440 --> 00:15:12,320 Speaker 2: Do you agree with that? 274 00:15:12,640 --> 00:15:15,120 Speaker 5: There were certainly a lot of negative questioning, even from 275 00:15:15,160 --> 00:15:19,200 Speaker 5: some of the so called more moderate conservative justices. Remember 276 00:15:19,520 --> 00:15:22,920 Speaker 5: the most recent case involving race and voting, Allen versus 277 00:15:22,960 --> 00:15:26,280 Speaker 5: Milligan went off five to four, with two of the conservatives, 278 00:15:26,520 --> 00:15:30,480 Speaker 5: Roberts and Kavanaugh joining the liberals. Roberts was clearly pretty 279 00:15:30,520 --> 00:15:33,720 Speaker 5: skeptical about the lower courts finding in this case. He 280 00:15:33,840 --> 00:15:36,920 Speaker 5: seemed less likely. Kavanaugh's questions were a little bit harder 281 00:15:36,920 --> 00:15:38,960 Speaker 5: to read. I mean, some of it was again about 282 00:15:38,960 --> 00:15:41,360 Speaker 5: the evidence, but some of it also seemed to be 283 00:15:41,520 --> 00:15:44,200 Speaker 5: indicated he was thinking about what's the burden on the 284 00:15:44,240 --> 00:15:47,040 Speaker 5: defendants in this case? Who are the appellants to show 285 00:15:47,040 --> 00:15:49,920 Speaker 5: that the district court was clearly wrong. I think it 286 00:15:50,000 --> 00:15:53,520 Speaker 5: was certainly a tough argument for the NAACP defending the 287 00:15:53,560 --> 00:15:55,720 Speaker 5: lower court's finding. I think if they have any chance, 288 00:15:55,800 --> 00:15:57,680 Speaker 5: it's going to be to the extent that the Court 289 00:15:57,680 --> 00:16:01,960 Speaker 5: decides to rally around the idea that unless it's clearly erroneous, 290 00:16:02,200 --> 00:16:04,720 Speaker 5: there should be difference in lower court's finding. On the 291 00:16:04,720 --> 00:16:07,960 Speaker 5: other hand, this is the court's first sort of race 292 00:16:08,040 --> 00:16:12,120 Speaker 5: party intertwined case since Rucho four years ago, when the 293 00:16:12,160 --> 00:16:16,680 Speaker 5: Court said that partisan gerrymandering is not on constitutional, it's 294 00:16:16,680 --> 00:16:19,480 Speaker 5: notn justiciable. So it's the first time that they will 295 00:16:19,520 --> 00:16:22,880 Speaker 5: speak to the how do you separate out race and party? 296 00:16:23,440 --> 00:16:26,520 Speaker 5: And one could imagine they may want to shut down 297 00:16:27,240 --> 00:16:30,520 Speaker 5: the idea that you could get around Rucho by reframing 298 00:16:30,560 --> 00:16:33,320 Speaker 5: things around race. Now, the Court in the past has said, 299 00:16:33,440 --> 00:16:36,760 Speaker 5: even if there's a partisan factor, that the state can't 300 00:16:36,840 --> 00:16:39,320 Speaker 5: use the race as approxy for party when it draws 301 00:16:39,320 --> 00:16:42,440 Speaker 5: lines to favor a party. But one could imagine this 302 00:16:42,480 --> 00:16:45,400 Speaker 5: is a case where the Court might want to address 303 00:16:45,920 --> 00:16:49,280 Speaker 5: the how do you disentangle race and party in a 304 00:16:49,320 --> 00:16:54,360 Speaker 5: world in which racial gerrymandering is unconstitutional but partisan jerrymandering 305 00:16:54,480 --> 00:16:54,680 Speaker 5: is not. 306 00:16:55,240 --> 00:16:59,160 Speaker 2: Explain why this case is different from the case you 307 00:16:59,280 --> 00:17:02,880 Speaker 2: referred to, you know, the Alabama case where it was 308 00:17:02,920 --> 00:17:07,639 Speaker 2: surprising that the Chief and Justice Kavanaugh sided with the 309 00:17:07,720 --> 00:17:08,480 Speaker 2: liberals there. 310 00:17:08,840 --> 00:17:11,000 Speaker 5: That case was really about whether or not the Alabama 311 00:17:11,119 --> 00:17:13,800 Speaker 5: violated the Voting Rights Act. This one is whether or 312 00:17:13,840 --> 00:17:17,760 Speaker 5: not South Carolina violated the Constitution. Although the result in 313 00:17:17,760 --> 00:17:21,200 Speaker 5: Alabama will have a partisan consequence, there wasn't an argument 314 00:17:21,280 --> 00:17:24,520 Speaker 5: that the state was doing it to help the Republicans. 315 00:17:24,600 --> 00:17:26,320 Speaker 5: It wasn't really an argument about the intent of the 316 00:17:26,359 --> 00:17:29,280 Speaker 5: state at all that case. Under the Voting Rights Act, 317 00:17:29,480 --> 00:17:32,680 Speaker 5: the plaintiffs can win if they show disparate impact, if 318 00:17:32,720 --> 00:17:36,160 Speaker 5: they show that the state drew lines in a way 319 00:17:36,680 --> 00:17:40,399 Speaker 5: that had the effect of minimizing minority voting power. I mean, 320 00:17:40,440 --> 00:17:43,160 Speaker 5: the thing is, in South Carolina, the district that was changed, 321 00:17:43,200 --> 00:17:46,560 Speaker 5: District one, was not going to be a majority minority district. 322 00:17:46,720 --> 00:17:49,560 Speaker 5: It was going to be a white majority district either way, 323 00:17:49,880 --> 00:17:52,920 Speaker 5: although for the larger black share of the voting population 324 00:17:53,359 --> 00:17:55,840 Speaker 5: it might have been a democratic district, probably a white 325 00:17:55,840 --> 00:17:58,679 Speaker 5: democratic district. And that's sort of one of the differences 326 00:17:58,720 --> 00:18:02,040 Speaker 5: here is that the core it is somewhat sensitive to 327 00:18:02,520 --> 00:18:06,359 Speaker 5: state actions that dilute minority voting power, but they don't 328 00:18:06,400 --> 00:18:09,399 Speaker 5: care about state actions that chap from one party over another. 329 00:18:09,560 --> 00:18:13,080 Speaker 5: And so the Alabama case was argued entirely around minority 330 00:18:13,160 --> 00:18:15,720 Speaker 5: voting rights, although it turns out if you increase minority 331 00:18:15,800 --> 00:18:18,480 Speaker 5: voting power in that state, you were likely to get 332 00:18:18,880 --> 00:18:21,760 Speaker 5: at likely to have a partisan consequence. Here wasn't really 333 00:18:21,760 --> 00:18:24,679 Speaker 5: a claim that minority votes were being diluted, just that 334 00:18:24,800 --> 00:18:27,760 Speaker 5: voters are being moved around from one district to another. 335 00:18:28,440 --> 00:18:31,680 Speaker 2: This case is the third time in two years that 336 00:18:31,880 --> 00:18:35,840 Speaker 2: the Court has heard arguments about state's congressional lines, and 337 00:18:35,960 --> 00:18:38,760 Speaker 2: two other cases are advancing in the lower courts in 338 00:18:38,800 --> 00:18:42,640 Speaker 2: Georgia and Louisiana that challenge maps under the Voting Rights Act. 339 00:18:42,920 --> 00:18:45,879 Speaker 2: Is it that the Court's precedent is not clear or 340 00:18:46,000 --> 00:18:48,520 Speaker 2: are these kinds of cases always challenged? 341 00:18:48,920 --> 00:18:51,760 Speaker 5: Well, I think anything evolving redistricting is going to be challenged. 342 00:18:52,160 --> 00:18:54,120 Speaker 5: This case is different from the other ones. The other 343 00:18:54,160 --> 00:18:57,320 Speaker 5: two cases, the one you mentioned, our Voting Rights Act 344 00:18:57,400 --> 00:19:00,240 Speaker 5: challenges where the plaintiffs are arguing that the the way 345 00:19:00,280 --> 00:19:03,919 Speaker 5: the lines are drawn reduces the ability of black voters 346 00:19:04,359 --> 00:19:07,720 Speaker 5: to elect the candidates of their choice in districts, which 347 00:19:07,920 --> 00:19:13,520 Speaker 5: might generate more minority representation Louisiana clearly, so in this one, 348 00:19:13,600 --> 00:19:16,200 Speaker 5: again there wasn't a claim that you would have created 349 00:19:16,200 --> 00:19:19,920 Speaker 5: another black majority district. Interestingly, the court has tend to 350 00:19:19,920 --> 00:19:21,880 Speaker 5: look at these things as to whether you know they're 351 00:19:21,880 --> 00:19:23,879 Speaker 5: going to be a sort of a majority minority, or 352 00:19:23,920 --> 00:19:26,520 Speaker 5: district where minority voters are likely to prevail at least 353 00:19:26,520 --> 00:19:30,800 Speaker 5: have the opportunity prevail. They've been less sympathetic to arguments about, well, 354 00:19:30,840 --> 00:19:33,720 Speaker 5: maybe minority voters must be more influential if they're a 355 00:19:33,720 --> 00:19:36,399 Speaker 5: bigger share, but not nearly a majority, and so they 356 00:19:36,440 --> 00:19:40,080 Speaker 5: haven't bought that argument. And so the voting rights arguments 357 00:19:40,280 --> 00:19:44,240 Speaker 5: are always difficult because the plaintiffs have to show that 358 00:19:44,320 --> 00:19:48,320 Speaker 5: there could have been another minority district, that there is 359 00:19:48,440 --> 00:19:53,000 Speaker 5: racially polarized voting, and that under the totality of the circumstances, 360 00:19:53,440 --> 00:19:56,080 Speaker 5: the setup is unfaired minority voters. And that's a tough 361 00:19:56,119 --> 00:19:58,520 Speaker 5: standard to meet. And many people thought that the court 362 00:19:58,640 --> 00:20:01,760 Speaker 5: just didn't seem that interested. The Allen case kind of 363 00:20:01,880 --> 00:20:04,760 Speaker 5: let me not revive that standard, but confirm that that 364 00:20:04,920 --> 00:20:07,560 Speaker 5: is still the standard. And so I think it's what's 365 00:20:07,600 --> 00:20:10,399 Speaker 5: given to wind at the backs of the people bringing 366 00:20:10,440 --> 00:20:13,560 Speaker 5: the challenges. Nonetheless, there's a slow slog through the court. 367 00:20:14,000 --> 00:20:17,440 Speaker 2: Thanks so much, rich that's Professor Richard Raffault of Columbia 368 00:20:17,520 --> 00:20:22,560 Speaker 2: Law School. Coming up next, we'll discuss lawsuits from FGX investors. 369 00:20:22,920 --> 00:20:25,000 Speaker 2: I'm June Grosso and this is Bloomberg. 370 00:20:33,520 --> 00:20:38,240 Speaker 1: This is Bloomberg Law with June Grosso from Bloomberg Radio. 371 00:20:39,040 --> 00:20:41,639 Speaker 2: You're listening to a special best of edition of the 372 00:20:41,680 --> 00:20:42,760 Speaker 2: Bloomberg Law Show. 373 00:20:50,480 --> 00:20:55,679 Speaker 1: I call it the Wheel. I don't think so. 374 00:20:56,119 --> 00:20:56,600 Speaker 5: What does it do? 375 00:20:58,320 --> 00:21:00,879 Speaker 1: Yeah? So does a bagel? Okay? A bangle? Here, Kenny. 376 00:21:01,920 --> 00:21:03,280 Speaker 1: One of the worst ideas I've ever. 377 00:21:03,160 --> 00:21:06,080 Speaker 6: Heard, Like I was saying, it's FTX, it's a safe 378 00:21:06,119 --> 00:21:07,199 Speaker 6: and easy way to get into crypto. 379 00:21:09,920 --> 00:21:10,520 Speaker 1: I don't think so. 380 00:21:11,320 --> 00:21:13,000 Speaker 5: And I'm never wrong about this stuff. 381 00:21:13,480 --> 00:21:17,880 Speaker 2: Never remember that Larry David commercial for FTX that had 382 00:21:17,880 --> 00:21:20,600 Speaker 2: them laughing at the Super Bowl in twenty twenty two. 383 00:21:21,080 --> 00:21:24,800 Speaker 2: And there was also Tom Brady touting FTX and commercials 384 00:21:25,080 --> 00:21:29,520 Speaker 2: Giselle Bunchen, Steph Curry, and Shaquille O'Neil, among others. Well, 385 00:21:29,640 --> 00:21:32,960 Speaker 2: investors who claim they lost billions in the collapse of 386 00:21:33,119 --> 00:21:36,479 Speaker 2: FTX are trying to pin the blame not just on 387 00:21:36,600 --> 00:21:40,159 Speaker 2: Sam bankman freed in his inner circle, but also on 388 00:21:40,240 --> 00:21:43,360 Speaker 2: the celebrities who were paid to endorse it, as well 389 00:21:43,400 --> 00:21:47,040 Speaker 2: as bankers, accountants, and lawyers who propped up the crypto 390 00:21:47,119 --> 00:21:51,479 Speaker 2: Exchange's legitimacy. Joining me is Braden Perry, a former federal 391 00:21:51,520 --> 00:21:55,359 Speaker 2: regulatory enforcement attorney and a partner at Kenny Hurtz Perry. 392 00:21:55,720 --> 00:21:58,560 Speaker 2: So this is a class action lawsuit. Tell us about it. 393 00:21:58,880 --> 00:22:01,120 Speaker 6: Yeah, So this is a loss. It is brought by 394 00:22:01,920 --> 00:22:05,040 Speaker 6: a number of individuals who where the investors or had 395 00:22:05,040 --> 00:22:08,720 Speaker 6: some sort of financial interest in FTX, and they brought 396 00:22:08,720 --> 00:22:14,080 Speaker 6: it against a number of various entities, including celebrity endorsers, accountants, 397 00:22:14,200 --> 00:22:17,679 Speaker 6: the actual members of FTX itself, as well as others. 398 00:22:17,720 --> 00:22:23,359 Speaker 6: So it's a wide ranging case that essentially boils down 399 00:22:23,440 --> 00:22:28,640 Speaker 6: to FTX was falsely providing information to the public, and 400 00:22:28,760 --> 00:22:31,679 Speaker 6: the public somehow either invested or had some sort of 401 00:22:31,680 --> 00:22:34,280 Speaker 6: financial interest in FTX and therefore were harmed. 402 00:22:34,800 --> 00:22:39,080 Speaker 2: So let's start with the celebrities, because that's where everyone starts, correct, 403 00:22:40,200 --> 00:22:43,960 Speaker 2: And those advertisements by Larry David and Tom Brady, the 404 00:22:43,960 --> 00:22:48,040 Speaker 2: commercials were played at the beginning of SBF's trial. So 405 00:22:48,200 --> 00:22:51,600 Speaker 2: what does the law require of celebrity endorsers. 406 00:22:52,000 --> 00:22:55,080 Speaker 6: So generally the law requires not much, and what it 407 00:22:55,160 --> 00:22:58,520 Speaker 6: requires is that the celebrity endorser knows what the product 408 00:22:58,600 --> 00:23:01,840 Speaker 6: is and how it works. You that generally there's some 409 00:23:01,880 --> 00:23:04,880 Speaker 6: sort of disclaimer, ordinarily at the bottom of the advertisement 410 00:23:04,960 --> 00:23:08,200 Speaker 6: or elsewhere, it indicates celebrity endorser is a paid endorser 411 00:23:08,200 --> 00:23:11,280 Speaker 6: for that product as well as the truthfulness and so 412 00:23:11,600 --> 00:23:15,040 Speaker 6: the endorser cannot provide information that's false or misleading to 413 00:23:15,080 --> 00:23:15,520 Speaker 6: the public. 414 00:23:16,200 --> 00:23:19,760 Speaker 2: So then does that mean that Jennifer Garner actually has 415 00:23:19,800 --> 00:23:23,000 Speaker 2: to use the drugstore creams she claims she uses. 416 00:23:23,400 --> 00:23:26,920 Speaker 6: Generally that's the case, and so you'll see these advertisements 417 00:23:26,960 --> 00:23:30,280 Speaker 6: with certain restaurants where celebrities are at or certain products 418 00:23:30,280 --> 00:23:33,600 Speaker 6: that they're using, and it's not an exclusive use, and 419 00:23:33,680 --> 00:23:35,479 Speaker 6: so it can be a very high level. So if 420 00:23:35,560 --> 00:23:39,320 Speaker 6: Jenner Garner has used a product that's been provided to her, 421 00:23:39,600 --> 00:23:42,119 Speaker 6: she can certainly endorse that product. And so it's not 422 00:23:42,359 --> 00:23:46,800 Speaker 6: a lifelong or a over the top type of use requirement. 423 00:23:46,880 --> 00:23:49,800 Speaker 6: But generally, yeah, if a celebrity endorser is going to 424 00:23:49,880 --> 00:23:53,360 Speaker 6: endorse a product, that celebrity endorser should be using that product. 425 00:23:53,800 --> 00:23:56,480 Speaker 2: So does that mean that Tom Brady and Larry David 426 00:23:56,480 --> 00:23:59,919 Speaker 2: and all the others should have been invested in FTX. 427 00:24:00,480 --> 00:24:01,919 Speaker 6: Yeah, I don't know if they should have been invested 428 00:24:01,920 --> 00:24:05,080 Speaker 6: in the FTX. Obviously they should have known what FTX 429 00:24:05,240 --> 00:24:07,960 Speaker 6: is and what it does, and that would likely be 430 00:24:08,160 --> 00:24:10,760 Speaker 6: their exchange of choice if they were going to be 431 00:24:10,800 --> 00:24:15,000 Speaker 6: part of the crypto movement, not necessarily a needed part 432 00:24:15,160 --> 00:24:15,919 Speaker 6: of that movement. 433 00:24:16,080 --> 00:24:20,560 Speaker 2: That's why I'm wondering, when sophisticated investors didn't know about 434 00:24:20,720 --> 00:24:24,720 Speaker 2: FTX and the government found out much later, how are 435 00:24:24,800 --> 00:24:26,560 Speaker 2: celebrities supposed to know? 436 00:24:27,040 --> 00:24:28,520 Speaker 6: And that's the big question that's going to be the 437 00:24:28,600 --> 00:24:32,280 Speaker 6: legal question is what did the celebrities know? What influence 438 00:24:32,320 --> 00:24:35,800 Speaker 6: did they have on these investments? And that's really the 439 00:24:35,880 --> 00:24:39,119 Speaker 6: crux of the legal argument in this case. The class 440 00:24:39,160 --> 00:24:44,480 Speaker 6: action is so wide with all the different entities associated 441 00:24:44,520 --> 00:24:47,119 Speaker 6: with FTX. You know, the accountant stand Backman Freed is 442 00:24:47,160 --> 00:24:50,880 Speaker 6: one of the defendants, all these celebrity endorsers, everyone is involved, 443 00:24:50,880 --> 00:24:53,800 Speaker 6: and so there's going to be from the defense side 444 00:24:54,280 --> 00:24:56,560 Speaker 6: lots of finger pointing as to who knew what and 445 00:24:56,600 --> 00:24:59,240 Speaker 6: when and where and how, and so that's really going 446 00:24:59,320 --> 00:25:01,920 Speaker 6: to be what the plans to prove is whether or 447 00:25:01,960 --> 00:25:06,439 Speaker 6: not these celebrity endorsers were intricate in this false and 448 00:25:06,520 --> 00:25:07,640 Speaker 6: misleading product. 449 00:25:08,440 --> 00:25:11,680 Speaker 2: Some of the lawyers for the celebrities are saying that 450 00:25:12,280 --> 00:25:16,000 Speaker 2: the investors have no valid claim against them because the 451 00:25:16,040 --> 00:25:20,880 Speaker 2: advertisements and sponsorships they were involved and didn't specifically encourage 452 00:25:20,920 --> 00:25:24,720 Speaker 2: anyone to deposit money in FTX accounts. That seems weird 453 00:25:25,440 --> 00:25:28,200 Speaker 2: because that's what the ad is for, right. Also that 454 00:25:28,680 --> 00:25:32,679 Speaker 2: they never pitched the accounts at issue in the SBF case. 455 00:25:33,080 --> 00:25:35,679 Speaker 2: Do those sound like typical defenses? 456 00:25:36,240 --> 00:25:38,440 Speaker 6: They sound like typical defenses. Whether or not they will 457 00:25:38,480 --> 00:25:42,720 Speaker 6: be successful is another story. The defense teams have several 458 00:25:42,720 --> 00:25:45,720 Speaker 6: different lines of defense. As you mentioned, you know, they 459 00:25:45,760 --> 00:25:49,399 Speaker 6: weren't specific to the actual accounts. They didn't provide terms 460 00:25:49,520 --> 00:25:52,600 Speaker 6: or conditions of the accounts. They weren't detailing what the 461 00:25:52,600 --> 00:25:55,960 Speaker 6: accounts could or could not do, and so that's general 462 00:25:55,960 --> 00:25:59,560 Speaker 6: of defense to the claims. However, they knew or should 463 00:25:59,560 --> 00:26:03,800 Speaker 6: have known, that there was misleading information by not providing 464 00:26:03,840 --> 00:26:06,080 Speaker 6: some of that information about these accounts, and that can 465 00:26:06,119 --> 00:26:10,240 Speaker 6: be counterproductive to their case. Also, if I'm sitting on 466 00:26:10,240 --> 00:26:14,359 Speaker 6: the defense table and I see that the main group, 467 00:26:14,800 --> 00:26:18,920 Speaker 6: the head of FTX, has been convicted of crimes. I'm 468 00:26:18,920 --> 00:26:23,000 Speaker 6: certainly pointing to that, saying, hey, these people were committing crimes, 469 00:26:23,040 --> 00:26:24,880 Speaker 6: were victims just as much as you were. 470 00:26:25,440 --> 00:26:29,760 Speaker 2: Yeah, So the Sam bankman freed conviction and the guilty 471 00:26:29,840 --> 00:26:34,119 Speaker 2: please of his inner circle should be helpful to the 472 00:26:34,160 --> 00:26:38,600 Speaker 2: defendants here. Now, some of the other targets of the 473 00:26:38,840 --> 00:26:45,119 Speaker 2: lawsuit are professional advisors, ranging from an accounting firm, investment firm, 474 00:26:45,480 --> 00:26:50,040 Speaker 2: and a bank. Those seem like more reasonable defendants to me. 475 00:26:51,119 --> 00:26:54,720 Speaker 6: Yeah, and they should be. And ordinarily, when you find 476 00:26:54,760 --> 00:26:59,680 Speaker 6: and you look at the past history of massive frauds 477 00:27:00,000 --> 00:27:03,480 Speaker 6: and finance made off as the best picture of that, 478 00:27:03,920 --> 00:27:09,320 Speaker 6: there is still ongoing litigation involving countants, professional individuals who 479 00:27:09,800 --> 00:27:13,040 Speaker 6: had some part of his scheme. That's the case here. 480 00:27:13,080 --> 00:27:15,919 Speaker 6: You know, obviously, the accountants, the investment firms, all of 481 00:27:15,960 --> 00:27:20,960 Speaker 6: these pieces were part of the ongoing massive dollars that 482 00:27:21,119 --> 00:27:25,040 Speaker 6: FTX was bringing in and maintaining during its lifetime. And 483 00:27:25,480 --> 00:27:30,360 Speaker 6: those are the traditional defendants you'd see celebrity endorsers. Frankly, 484 00:27:30,680 --> 00:27:34,000 Speaker 6: you don't see that often, and I think that you know, 485 00:27:34,040 --> 00:27:37,560 Speaker 6: obviously there have been a group that have settled just 486 00:27:37,600 --> 00:27:39,879 Speaker 6: because likely they didn't want to be bothered with the 487 00:27:39,920 --> 00:27:43,480 Speaker 6: litigation or part of the litigation, and there's a valid 488 00:27:43,560 --> 00:27:45,960 Speaker 6: reason to settle and get out. But I think the 489 00:27:45,960 --> 00:27:49,000 Speaker 6: ones that are still in there have relatively valid defenses 490 00:27:49,040 --> 00:27:52,120 Speaker 6: that one they were victims two and two that their 491 00:27:52,200 --> 00:27:56,760 Speaker 6: endorsements had no input on what the actual underlying fraud 492 00:27:56,840 --> 00:27:58,080 Speaker 6: of FTCH was about. 493 00:27:58,800 --> 00:28:03,760 Speaker 2: Last year, a federal judge dismissed a lawsuit from investors 494 00:28:03,760 --> 00:28:08,119 Speaker 2: that accused Kim Kardashian, boxer Floyd Mayweather, and others of 495 00:28:08,240 --> 00:28:13,240 Speaker 2: endorsing a cryptocurrency known as Ethereum Max. So I mean 496 00:28:13,240 --> 00:28:15,720 Speaker 2: that could happen here, But is there a lot of 497 00:28:15,800 --> 00:28:18,640 Speaker 2: pressure on the celebrities to settle. 498 00:28:19,640 --> 00:28:22,919 Speaker 6: So it's the big gamble on litigation in the end, 499 00:28:23,000 --> 00:28:26,199 Speaker 6: as a gamble, you can spend a lot of money 500 00:28:26,920 --> 00:28:31,520 Speaker 6: trying to defend yourself and either get dismissed through summary judgment, 501 00:28:31,840 --> 00:28:36,680 Speaker 6: through motion to dismiss, through other type of non trial activity, 502 00:28:37,280 --> 00:28:39,560 Speaker 6: and it's still at the end of the day going 503 00:28:39,640 --> 00:28:41,920 Speaker 6: to cost you money. And so there's a lot of 504 00:28:42,760 --> 00:28:45,440 Speaker 6: times and you know, when I'm I'm dealing with litigation 505 00:28:45,520 --> 00:28:47,920 Speaker 6: and my clients, I talk to them about the financial 506 00:28:47,960 --> 00:28:50,800 Speaker 6: aspects of taking something to trial. You know what what 507 00:28:50,840 --> 00:28:53,680 Speaker 6: will that cost number one, and what is the actual 508 00:28:54,080 --> 00:28:57,800 Speaker 6: potential cost from it an adverse decision at trial? And 509 00:28:57,840 --> 00:29:01,400 Speaker 6: a lot of times, you know, you find a middle 510 00:29:01,440 --> 00:29:05,240 Speaker 6: ground with the other side from a litigation standpoint, where 511 00:29:06,000 --> 00:29:09,240 Speaker 6: it makes more sense to settle and move on as 512 00:29:09,240 --> 00:29:13,160 Speaker 6: opposed to trying to defend yourself months and months down 513 00:29:13,160 --> 00:29:15,240 Speaker 6: the road. It takes an emotional toll, it takes a 514 00:29:15,240 --> 00:29:19,280 Speaker 6: financial toll. Litigation is not fun and many times. 515 00:29:19,080 --> 00:29:21,680 Speaker 1: Speak lawyers not well. 516 00:29:21,840 --> 00:29:23,520 Speaker 6: Some of these lawyers, I think are probably having a 517 00:29:23,520 --> 00:29:25,920 Speaker 6: good time with this, but it's certainly from a defendant 518 00:29:26,000 --> 00:29:28,920 Speaker 6: or plaintiff standpoint, there's a lot that goes into it, 519 00:29:29,000 --> 00:29:32,680 Speaker 6: and it's certainly you know, when when I have large 520 00:29:32,720 --> 00:29:37,880 Speaker 6: cases that involved a long time of litigation, it's not 521 00:29:38,000 --> 00:29:41,120 Speaker 6: easy on on either defendants or plaintiffs. It takes a 522 00:29:41,160 --> 00:29:44,239 Speaker 6: lot of emotional toll from individuals when you're dealing with 523 00:29:44,280 --> 00:29:45,640 Speaker 6: litigation day in and day out. 524 00:29:45,840 --> 00:29:48,760 Speaker 2: It certainly does not to mention the cost of litigation. 525 00:29:49,640 --> 00:29:52,240 Speaker 2: Coming up next on the Bloomberg Lawn Show, I'll continue 526 00:29:52,280 --> 00:29:56,880 Speaker 2: my conversation with former federal Regulatory Enforcement attorney Braden Perry. 527 00:29:57,280 --> 00:30:02,320 Speaker 2: Will the case involving FTX more complicated to unwind than 528 00:30:02,360 --> 00:30:06,520 Speaker 2: the made Off case was, and attorneys looking for legal research. 529 00:30:07,040 --> 00:30:10,200 Speaker 2: Whether you're an in house council or in private practice, 530 00:30:10,280 --> 00:30:13,320 Speaker 2: Bloomberg Law gives you the edge with the latest in 531 00:30:13,440 --> 00:30:18,480 Speaker 2: AI powered legal analytics, business insights, and workflow tools. With 532 00:30:18,640 --> 00:30:21,600 Speaker 2: guidance from our experts, you'll grasp the latest trends in 533 00:30:21,640 --> 00:30:25,080 Speaker 2: the legal industry, helping you achieve better results for the 534 00:30:25,160 --> 00:30:28,280 Speaker 2: practice of law, the business of law, the future of law. 535 00:30:28,520 --> 00:30:38,080 Speaker 2: Visit Bloomberg Law dot com. 536 00:30:38,280 --> 00:30:43,080 Speaker 1: This is Bloomberg Law with June Brusso from Bloomberg Radio. 537 00:30:43,640 --> 00:30:46,240 Speaker 2: You're listening to a special best of edition of the 538 00:30:46,280 --> 00:30:50,280 Speaker 2: Bloomberg Law Show. I've been talking to Braden Perry, a 539 00:30:50,320 --> 00:30:56,080 Speaker 2: former regulatory enforcement attorney, about the FTX investors lawsuits. As 540 00:30:56,120 --> 00:31:00,320 Speaker 2: you mentioned, Bernie Madeoff, the investor suits played out for 541 00:31:00,360 --> 00:31:03,280 Speaker 2: well over a decade, still some playing out. Do you 542 00:31:03,320 --> 00:31:08,520 Speaker 2: think the SBF case is even more complicated to unwind 543 00:31:08,600 --> 00:31:09,280 Speaker 2: than the maid Off? 544 00:31:09,760 --> 00:31:09,960 Speaker 1: Yeah? 545 00:31:09,960 --> 00:31:12,360 Speaker 6: I do. You know. We've been talking strictly about this. 546 00:31:12,360 --> 00:31:15,240 Speaker 6: This one plane of case involves a number of celebrity endorsers. 547 00:31:15,480 --> 00:31:19,160 Speaker 6: You have to remember that the criminal case is essentially over. 548 00:31:19,280 --> 00:31:21,600 Speaker 6: There will be appeals. There will be other issues in this, 549 00:31:21,720 --> 00:31:24,640 Speaker 6: although I don't think many of those peel issues. He 550 00:31:24,800 --> 00:31:26,600 Speaker 6: was convicted. I think he'll be sentenced and I don't 551 00:31:26,600 --> 00:31:29,200 Speaker 6: think any appeals will be successful. Then you got the 552 00:31:29,200 --> 00:31:33,040 Speaker 6: regulatory action, so you got the CFTC, you got the SEC. Ordinarily, 553 00:31:33,120 --> 00:31:36,520 Speaker 6: within these parallel criminal cases, those cases likely will be 554 00:31:36,520 --> 00:31:39,760 Speaker 6: settled because there's not much else to go after. The 555 00:31:39,800 --> 00:31:43,720 Speaker 6: big issue is going to be bankruptcy receiverships in the 556 00:31:44,000 --> 00:31:48,480 Speaker 6: different jurisdictions and trying to claw back as much of 557 00:31:48,720 --> 00:31:52,000 Speaker 6: this lost money as possible to provide to investors. So 558 00:31:52,360 --> 00:31:54,520 Speaker 6: that's going to be the main focus for the next 559 00:31:54,680 --> 00:31:58,560 Speaker 6: decade is the sivership action to claw back all this 560 00:31:58,720 --> 00:32:02,440 Speaker 6: individual funds from all these various entities. And then you'll 561 00:32:02,440 --> 00:32:05,880 Speaker 6: have these civil cases that are trying to find those 562 00:32:05,960 --> 00:32:09,120 Speaker 6: that may not have exposure otherwise, so these celebrity endorsers, 563 00:32:09,160 --> 00:32:12,080 Speaker 6: those types of things, and so it's going to be complicated. 564 00:32:12,160 --> 00:32:16,760 Speaker 6: And the fact that that crypto wasn't regulated like Madoff's 565 00:32:16,960 --> 00:32:21,560 Speaker 6: Ponzi scheme was, there's no central regulator, and you get 566 00:32:21,560 --> 00:32:24,000 Speaker 6: the SEC, you got the CFTC that are part of this, 567 00:32:24,160 --> 00:32:27,400 Speaker 6: But unlike Madeoff, where you could point directly at the SEC. 568 00:32:27,440 --> 00:32:31,400 Speaker 6: There's really no nexus of jurisdiction between anyone. So it's 569 00:32:31,440 --> 00:32:33,719 Speaker 6: going to take a long time. You know FTX at 570 00:32:33,760 --> 00:32:37,040 Speaker 6: offices all over the place, there's multiple jurisdictions. It will 571 00:32:37,080 --> 00:32:40,240 Speaker 6: take a while to unwind what this is becoming. It 572 00:32:40,280 --> 00:32:42,920 Speaker 6: could be could be longer than what Madoff's looked at. 573 00:32:43,280 --> 00:32:46,880 Speaker 2: And at the sentencing of Sam Bankman Freed, and the 574 00:32:46,960 --> 00:32:50,680 Speaker 2: three people who flipped, will the judge order restitution The 575 00:32:50,720 --> 00:32:51,080 Speaker 2: way it. 576 00:32:51,080 --> 00:32:54,960 Speaker 6: Generally works when it comes to parallel criminal slash regulatory 577 00:32:55,040 --> 00:32:58,960 Speaker 6: slash liquidation proceedings is anything the government gets, and so 578 00:32:59,040 --> 00:33:04,120 Speaker 6: as part of sentencing for Sam Bekund Free, for Carolyn Ellison, 579 00:33:04,200 --> 00:33:06,640 Speaker 6: for Wang, for all of these individuals, there'll be a 580 00:33:06,680 --> 00:33:11,400 Speaker 6: restitution element as their sins and that will go into 581 00:33:11,640 --> 00:33:15,920 Speaker 6: the bucket of the receiver. So you'll likely see any 582 00:33:16,080 --> 00:33:19,160 Speaker 6: ill gotten gains these individuals received will be part of 583 00:33:19,160 --> 00:33:23,080 Speaker 6: that restitution order under the sentencing, that will flow into 584 00:33:23,120 --> 00:33:26,080 Speaker 6: the receivership action that will be part of that bucket 585 00:33:26,120 --> 00:33:29,520 Speaker 6: to provide to investors. So yeah, they will likely have 586 00:33:30,040 --> 00:33:33,000 Speaker 6: large restitution positions as part of their sensing. 587 00:33:33,440 --> 00:33:36,040 Speaker 2: Are there more of these class action lawsuits? Or has 588 00:33:36,080 --> 00:33:38,120 Speaker 2: this one been certified as a class Do you know? 589 00:33:38,480 --> 00:33:42,920 Speaker 6: When it comes to all of these different actions, there's 590 00:33:42,960 --> 00:33:46,480 Speaker 6: lots of priority, and the priority number one was the 591 00:33:46,520 --> 00:33:50,080 Speaker 6: criminal case. And while criminal case is ongoing, generally all 592 00:33:50,080 --> 00:33:52,280 Speaker 6: the civil cases are stayed due to a number of 593 00:33:52,280 --> 00:33:57,880 Speaker 6: different evidentiary issues, issues with certain constitutional rights, those types 594 00:33:57,920 --> 00:34:00,719 Speaker 6: of things. That's the case in the Florida action. At 595 00:34:00,760 --> 00:34:04,800 Speaker 6: this point in time, there's been ongoing discovery about that 596 00:34:04,920 --> 00:34:07,720 Speaker 6: class action. There's not been a decision to certify the 597 00:34:07,720 --> 00:34:10,160 Speaker 6: class action as of yet, but I do know that 598 00:34:10,239 --> 00:34:12,800 Speaker 6: there's a number of different motions, a number of different 599 00:34:13,080 --> 00:34:16,480 Speaker 6: procedural elements that have been put on hold while the 600 00:34:16,520 --> 00:34:19,560 Speaker 6: criminal case was ongoing. Now the criminal case is over, 601 00:34:19,960 --> 00:34:22,560 Speaker 6: I think all of these courts are going to get 602 00:34:22,600 --> 00:34:26,120 Speaker 6: back in full gear to be addressing all of these 603 00:34:26,120 --> 00:34:27,879 Speaker 6: issues now. I mean there's going to be a number 604 00:34:27,920 --> 00:34:32,719 Speaker 6: of evidentiary issues from the trial. The vast government investigation 605 00:34:33,080 --> 00:34:35,880 Speaker 6: could be a treasure trove of information for the plaintiffs 606 00:34:35,920 --> 00:34:37,560 Speaker 6: when it comes to these types of things, and so 607 00:34:37,760 --> 00:34:39,319 Speaker 6: the courts are now going to have to face that 608 00:34:39,400 --> 00:34:44,360 Speaker 6: issue and begin moving again procedurally on these cases. Obviously, 609 00:34:44,800 --> 00:34:47,719 Speaker 6: these are interesting times. That we live in when it 610 00:34:47,760 --> 00:34:51,320 Speaker 6: comes to crypto and I think this is another indication 611 00:34:51,360 --> 00:34:53,319 Speaker 6: that at some point there needs to be some sort 612 00:34:53,320 --> 00:34:56,440 Speaker 6: of regulation too, sure that this doesn't happen again, but 613 00:34:56,480 --> 00:34:59,120 Speaker 6: it's been interesting in the process. And think, you know, 614 00:34:59,320 --> 00:35:02,799 Speaker 6: several years ago, looking at this, you wouldn't think that 615 00:35:03,239 --> 00:35:07,360 Speaker 6: Sam bad mcfreed, who had provided money to politicians to businesses. 616 00:35:07,480 --> 00:35:11,560 Speaker 6: I mean, FTX had its name on every umpire's church 617 00:35:11,680 --> 00:35:13,719 Speaker 6: in Major League Baseball, so you would have thought of this. 618 00:35:13,920 --> 00:35:16,239 Speaker 6: And now we're here. So it's been an interesting time 619 00:35:16,280 --> 00:35:18,399 Speaker 6: and I think it will be certainly interesting for the 620 00:35:18,440 --> 00:35:21,279 Speaker 6: next few years and more in seeing how this. 621 00:35:21,280 --> 00:35:24,200 Speaker 2: All plays out along Road Ahead. Thanks so much, Braiden. 622 00:35:24,400 --> 00:35:27,600 Speaker 2: That's Braiden Perry of Kenny Hurts Perry. And that's it 623 00:35:27,640 --> 00:35:30,239 Speaker 2: for this edition of The Bloomberg Law Show. Stay with us. 624 00:35:30,280 --> 00:35:33,879 Speaker 2: Today's top stories and global business headlines are coming up 625 00:35:33,960 --> 00:35:34,520 Speaker 2: right now.