This is Bloomberg Law with June Brusso from Bloomberg Radio. We have said that the burden that you're assuming of disentangling race and politics in a situation like this is very, very difficult.
The Chief Justice aptly described the problem in the case before the Supreme Court the limits of parties in jerrymandering when it intersects with race. It's a case that could help determine which party controls the House after next year's election. A panel of three federal judges, after an eight day trial, concluded that Republican lawmakers had engaged in unconstitutional racial gerrymandering in drawing South Carolina's first congressional district, but at oral arguments.
The conservative justice has expressed skepticism about that panel's decision and suggested they will reinstate the Republican drawn map. Here's Chief Justice John Roberts, but.
We've never had a case where there's been no direct evidence, no map, no strangely configured districts, a very large amount of political evidence, whether the district court chose to credit it or not, and instead it all resting on circumstantial evidence.
While the three liberal justices suggested the lower court had adequate evidence to conclude that South Carolina lawmakers improperly relied on race to get to its established target of seventeen percent black voters in the district by shifting thirty thousand black voters out of the district to hit that goal. Here's Justice Elena Kagan.
You have two experts here, Reguso and Lou who answered the exact question that is supposed to be answered in such a case. In other words, is this gerrymander based on politics or is it a way to get to an ultimate goal? An ultimate political goal? But the gerrymanderin is based on race. And what the two of them do is that they show that black Democrats are excluded from District one at a far greater percentage than white Democrats are joining.
Me is elections law expert Richard Brefald, a professor at Columbia Law School. So Rich tell us about the case and the main issue here.
So, this case is about a challenge to the redistricting of South Carolina's congressional plan in twenty twenty two following the twenty twenty census. The major development affected District one, which is basically around Charleston, and it made the district more Republican by moving out of a significant number of
black voters into an adjacent black majority district. District one had been a Republican district, but in recent years had been more closely contested, and in twenty eighteen the Democrats actually won it for one term. Twenty twenty the Republicans wanted that very narrowly. So one of the things the legislature did in twenty twenty two was changed the composition to make it more Republican, and it's so doing It basically moved about thirty thousand black voters from Charleston out
of the district into an adjacent district. By the way, District one is the district that elects Nancy Mace, who had been previously considered a moderate that since her district was change, seems to become more conservative. But she's one of the eight who voted to depose Kevin McCarthy. So the question before the court, it's a tough question, is whether the legislature was motivated by race or by party. You might say that in a state where race and
party are so intertwined, that's an impossible question answers. It's the same thing, but It's crucial because the Supreme Court has said that racial gerrymandering, that is to say, the intentional movement of voters because of their race from one district into another is unconstitutional. But partisan jerry mandering, as we all know since the RUCO decision in twenty nineteen, is non justiciable. So it's okay for the state to engage in partisan gerrymandering, it's not okay for the state
to engage in racial gerrymandering. South Carolina says it was both the following traditional district lines but also had a
partisan political purpose. What the lower court found was that actually the movements of voters did exhibit racial predominance, that given away the voters, which voters were targeted, and relying on the testimony of experts, they basically said that a disproportionate number of black Democrats relative to white Democrats were the ones who were moved, and therefore the district court was able to conclude that this was a racial gerrymander.
That's what's being tested in the Supreme Court right now, whether this is a racial or a partisan gerrymander. Did the district court do it right? To what extent is the Supreme Court required to defer to the findings of the district Court, and the district Court's findings are really sort of factual. They basically made a determination based on the testimony of a person who wrote the South Carolina Plan and of other experts that this was racially motivated.
So one of the big issues before the court is what difference the district court finding was supposed to gets. Normally, the standard that applies to something called clearly erroneous, which
means the district court gets a lot of difference. But you saw some of the more conservative justices pushing back on that here, saying that given the fact that the district Court doesn't appear to have given trusted in the good faith of the legislature, and given some of the other challenges to the evidence in front of the district Court, maybe the district Court doesn't get the kind of difference that the clearly erroneous standard normally would give them.
Okay, so let's take those That's a lot of issues, one one by one. So the three judge federal panel referred to the revised map as effective bleaching of African American voters out of the Charleston County portion of the district and they came to that conclusion after an extensive eight day trial featuring forty two witnesses and six hundred and fifty two exhibits. So doesn't the court usually defer to the factual findings of lower court judges?
Yes, I mean, indeed, that is the standard they're supposed to apply, with col the clearly erroneous standard, not just with the district court right on balance, but as long as the district court did was plausible, long as they didn't do something which was clearly wrong as opposed to
debatably wrong, they're supposed to defer. And you definitely heard the liberal justices emphasizing the importance of adhering to the clearly erroneous standard that there was evidence to support with the district court found, and indeed the United States came in the United States had not been a party to the case originally, but this listener General's Office came if the United States had actually emphasized the importance of following the clearly erroneous standard.
Chief Justice John Roberts said that the challengers of the map had no direct evidence that race had predominated in the decision making process, just circumstantial evidence. This would be breaking new ground in our voting rights jurisprudence. Is that true? I mean, isn't circumstantial evidence enough?
Right? They've often found circums relied on circumstantial evidence. But his full statement was there were there's no direct evidence. He also said it was not an oddly shaped district, and the number of the early other cases in which the Court has found racial gerrymandering, the district was oddly shaped. On this one, there was a big change in the district. People were moved around a lot, but the district itself didn't flunk any kind of test of odd shape, which
is somethings the Court has sometimes used. And the other issue that came up before the court was the fact that the plaintiffs had not presented an alternative map. Basically, the question was could the state have gotten its partisan goals without moving as many black voters around? And the question came up, should the plaintiffs have been required to present an alternative map showing that the state could have made the district just as republican without moving as many
black voters. And there was a debate in the court as to whether the plaintiffs had to do that, and the president is that they don't have to. Indeed, Justice Kagan was quite strong on that, because she'd actually written the case that said that, a case called Cooper about five years ago. But nonetheless, the other justices sort of came back and said, well, maybe you didn't have to, but why didn't you Why wouldn't that have helped your case if you could have shown that they could obtained
their partisan goals without using race quite as much. I mean, it really went into the question this difficulty of separating out race and party an effect the conservative justices were sort of creating it, even though the prior case Cooper had said there's no such requirement. You saw some of them basically kind of suggesting that either that there is, or that there should be, or that it's a problem when there isn't.
Justice Kagan argued that the map makers wouldn't just have relied on the twenty twenty election results. She said this to the lawyer arguing for South Carolina. Your defense was we didn't look at the racial data for this purpose, and what the lower court said was I don't believe that. And she also said they had not only the opportunity, it was sit they're on their computers, but the clear
incentive to be looking at this race data. So explain what you was getting at there and did you find it persuasive.
So the couple questions here are one is why would they Why would the state bother using race when they could just use party? And if their goal was to make the district more Republican, why not just use the party voting? Why use race as approxy when you actually have the party data. One response to that is, actually, they had much more information on race than on party. They only had because of the way in which votes
were counted in South Carolina. They only had one election in which they had good party data, and that was the twenty twenty presidential election, and the least the argument was that wasn't a good predictor because there had been more kind of a white crossover voting for Biden over Trump in that election. So the plaintiffs argued, and Justice Kagan suggested she agreed that in this case, actually the state used the race data because race data was more reliable,
better predicted value than the more limited party data. The next question was, well, again this goes to Justice roberts point about there's no direct evidence, nobody got up in the state legislature and said, let's move the black voters. Her point was that it was on their computers, that was in their data, was in their face, and they
couldn't have been unaware of it. And indeed, at one point in the trial, the lead witness for South Carolina, the principal map maker, basically said, well, we weren't doing this for race, but yes, of course we were aware of the racial data. And this is where the lower court basically concluded they really didn't believe him on that.
They said that given the omnipresence of the race data as they were joining the maps, that they simply didn't believe his statement that the state was not rowing on the race data when it drew the maps.
Coming up next, we'll take a look at how the court might rule.
This is Bloomberg.
I've been talking to Columbia Law School professor Richard Brefalt about Supreme Court arguments this week over whether it will reinstate a Republican drawn congressional map in South Carolina after a lower court concluded that Republican lawmakers engaged in unconstitutional racial gerrymandering in drawing what is now a Republican held district. Justice Samuel Alito was the most aggressive questioner of the validity of the lower court's decision. He posed nearly forty
questions to the NAACP's attorney. What was the thrust of his questions or problems?
I think he basically said that this is politics and that the burden was heavy on the plaintiffs to show that it wasn't politics and that it was race. Much of this went into some of the details about what some of the experts testify to or their failure to address every point that the state raised. Some of the experts testify to whether or not the district complied with traditional districting criteria, but not whether or not it was Others focused on whether it was partisan or racial, but
not in the district criteria. So he felt that the expert testimony was inadequate to support the trial court's find He repeatedly raised the question about the alternative map, even as he acknowledged that an alternative map was not required.
He sort of found that the absence of an alternative map undermined the plaintiff's case, and again he basically said that in some sense suggests that there was a heavier burden on the District Court to prove that it was race and not party, given the way that the two were so tightly intertwined.
Justice Katanji Brown Jackson kept stressing that the court relies on the factual findings of lower courts, and she said it would be a dramatic shift to precedent if they overturned the trial court's findings. Is that true or if they find clear error, which Justice Clarence Thomas brought up right at the beginning, would it not be violative of precedent?
Well, if they found clear error, it wouldn't be because the standard is clearly ironing. Is the district Court's findings are not immune from review to be clear error, as opposed to whether or not it was debatable in some sense. The US government, as I said, they came in on the side of the plaintiffs, on the side of the NAACP, and said, in effect, we think that the three judge
court could have gone either way. There was evidence to support either position, but the position that the District Court found was reasonable given the evidence they had, and so that's why you should defer to them. I mean, one question that Justice Barrett raised to just maybe whether the standard should be higher in a case involving a state legislature. Maybe there should be more burden on the district court to show that the legislature wasn't acting in good faith.
There's a kind of presumption that legislators state legislatures act in good faith, so maybe there should be a higher legal burden on the district court. And you're right. Justice Jackson was very heavy on it, sort of sticking to the traditional role of the district court in finding the facts and the duty of appellate court so that the
first year had been at district court judge. It was kind of a civil procedure argument as much as anything else, that the traditional role of the court is to see whether the lower court applied the law properly, but to defer to their factual finding. The liberals were the strongest on this about the importance of following this traditional judicial role of deferring to lower courts on their factual findings.
Most legal commentators concluded after hearing the arguments that the conservative majority is going to uphold the Republican drawn map. Do you agree with that?
There were certainly a lot of negative questioning, even from some of the so called more moderate conservative justices. Remember the most recent case involving race and voting, Allen versus Milligan went off five to four, with two of the conservatives, Roberts and Kavanaugh, joining the liberals. Roberts was clearly pretty skeptical about the lower courts finding in this case. He seemed less likely. Kavanaugh's questions were a little bit harder
to read. I mean, some of it was again about the evidence, but some of it also seemed to be indicated he was thinking about, what's the burden on the defendants in this case? Who are the appellants to show that the district court was clearly wrong? I think it was only a tough argument for the NAACP defending the lower court's finding. I think if they have any chance, it's going to be to the extent that the Court decides to rally around the idea that unless it's clearly erroneous,
there should be difference in lower courts finding. On the other hand, this is the court's first sort of race party intertwined case since Rucho four years ago, when the Court said that partisan gerrymandering is not on conceiutional, it's non justiciable so it's the first time that they will speak to the how do you separate out race and party? And one could imagine they may want to shut down the idea that you could get around Rucho by reframing
things around race. Now, the Court in the past has said, even if there's a partisan factor, that the state can't use the race as approxy for party when it draws lines to favor a party. But one could imagine this is a case where the Court might want to address the how do you disentangle race and party in a world in which racial jerry mannering is unconstitutional but partisan jerry mannering is not.
Explain why this case is different from the case you referred to, the Alabama case, where it was surprising that the Chief and Justice Kavanaugh sided with the liberals there.
That case was really about whether or not the Alabama violated the Voting Rights Act. This one is whether or not South Carolina violated the Constitution. Although the result in Alabama will have a partisan consequence, there wasn't an argument that the state was doing it to help the Republicans. It wasn't really an argument about the intent of the state at all. That case, under the Voting Rights Act.
The plaintiffs can win if they show disparate impact, if they show that the state drew lines in a way that had the effect of minimizing minority voting power. I mean, the thing is, in South Carolina, the district that was changed, District one, was not going to be a majority minority district. It was going to be a white majority district either way, although for the larger black share of the voting population it might have been a democratic district, probably a white
Democratic district. And that's sort of one of the differences here is that the court is somewhat sensitive to state actions that dilute minority voting power, but they don't care about state actions that chap on one party over another. And so the Alabama case was argued entirely around minority voting rights, although it turns out if you increase minority voting power in that state you were likely to get it was all I could have a partisan consequence here.
Wasn't really a claim the minority votes were being diluted, just that voters were being moved around from one district to another. And so the case was broad as a case about intentional racial discrimination. But there was no claim that if the voters had all been just left alone, that district one would have been black majority district. It would have been a white majority district, although one that might have tilted more democratic.
This case is the third time in two years that the Court has heard arguments about state's congressional lines, and two other cases are advancing in the lower courts in Georgia and Louisiana that challenge maps under the Voting Rights Act. Is it that the Court's precedent is not clear or are these kinds of cases always challenged?
Well, I think anything evolving redistricting is going to be challenged. This case is different from the old ones. The other two cases, the one you mentioned our Voting Rights Act challenges where the plaintiffs are arguing that the way the lines are drawn reduces the ability of black voters to elect the candidates of their choice in districts which might generate more minority representation. Louisiana clearly so. And this one again, there wasn't a claim that you would have created another
black majority district. Interestingly, the Court has tend to look at these things as to whether the going to be a sort of a majority minority or district where minority voters are likely to prevail at least have the opportunity prevail. They've been less sympathetic to arguments about, well, maybe minority voters must be more influential if they're a bigger share, but not nearly a majority, and so they haven't bought
that argument. And so the voting rights arguments are always difficult because the plaintiffs have to show that there could have been another minority district, that there is racially polarized voting, and that under the totality of the circumstances, the setup is unfaired minority voters, and that's a tough standard to meet. And many people thought that the court just didn't seem
that interested. The Allen case kind of maybe not revived that standard, but confirm that that is still the standard. And so I think it's what's given to wind at the backs of the people bringing the challenges. Nonetheless, there's a slow slog through the courts, even if the district courts are favorable. What's happening in Louisiana is the appellate court,
the Fifth Circuit, is slowing everything down. So so it's not clear we're going to get any decisive changes in those two states before the twenty four election.
Lately, it always seems to be the fifth circuit that's a hang up. Thanks so much, rich that's Professor Richard Brafalt of Columbia Law School. Coming up next, we'll talk about the star witness in Sam Bankman Freed's trial, his former girlfriend. I'm June Grossow and you're listening to Bloomberg. Prosecutors have built their case against Sam Bankman Freed by tapping into his inner circle and reaching cooperation deals with
some of his closest confidants. And this week, the government's star witness, Caroline Ellison, the former CEO of Alameda Research, testified against her former boss and boyfriend. From her first minutes on the witness stand, Ellison pointed to Bankman Freed as the man responsible for the loss of billions in customer funds and the collapse of the cryptocurrency platform FTX. My guest is former federal prosecutor Jordan Estez, a partner at Kramer Leans. It seems like the government here has
an overwhelming amount of evidence against Bankman Freed. Witnesses who were in on the alleged fraud code that was altered balance sheets, texts, internal documents. As a defense attorney, how do you defend against that kind of a case.
It's certainly very challenging in these circumstances. The one thing I think the defense is doing, and they're trying to do, is create a record that this was actually legitimate business. Nobody thought they were doing anything wrong, So they're going to try to do that through the cross examination of the witnesses of the company. I do think it's a real challenge in a case where witnesses like Caroline Ellison seem to have fully embraced that the conduct was wrongful.
So if you have a witness like that, they're really going to have to attack her credibility through cross examination. And there seemed to be some angles for given her prior relationship with the defendant. You know, perhaps they have some documents up their sleeve that nobody knows about. That is a benefit of being a defense attorney is that you can hold some things back that can be surprising during cross examination. But I do think from my read
of her testimony it was very overwhelming. It's in very dramatic and compelling, So they're going to have to do a lot of work in discrediting her, which will be hard.
I mean, she is the state star witness. How much depends on the jury believing her.
So I think in a cooperator case, the government really does need the jury to believe the cooperators. They need them to believe not necessarily every cooperator, but at least one of the principal wands, like Caroline Ellison. They're certainly going to have to believe her. But you can imagine the government has documents lined up that support her testimony.
I have not seen the full trial transcript, but often as the cooperator testifies, you then introduce exhibits that confirm what the cooperating witness is saying, or perhaps another witness from FTX who testifies later may say something that's consistent with Caroline Ellison's testimony. So there are a number of ways to try to get the jury to believe the witness, but that is ultimately it's very critical to the case.
The first four witnesses, one is his former girlfriend, another is one of his oldest friends, another an mit friend. Does that help or hurt their credibility that they were friends who turned on him when things fell apart?
I think for the government's view is typically that that helps their credibility. These were the people who were closest to the defendant. They were inside the conspiracy, and they're the ones who can tell you every detail of what happened. If you have an outsider, it's easier to distance them from the defendant and suggest how would they actually know
what he intended or what was really going on. But because they have people that were right on the inside, that worked side by side with him, that have admitted their guilt, that's really tough for the defense, and I think the government probably views that very favorably.
Do you think there could be an element of looking for during nullification in that you have these people who were also responsible to his three top lieutenants, and they're all getting a deal and hanging it on him.
Maybe I don't know that that's the way to go. I think it's maybe not dury nullification, but I would use that to suggest they're lying. They threw him under the bus because they knew they were sort of caught red handed, and they knew there was only one way to save themselves, and that's that the government wanted the top guy, and so they had to give him up.
Was there anything about Caroline Ellison's testimony that struck you.
So I thought a lot of the anecdotes he provides are the kinds of things that really stick out to a juror. They may not be direct evidence of fraud, but they're dramatic moments, like when she said that he said there was a five percent chance that he would be president. I'm sure that's something that stands out and just I think raises questions about his judgment. But she seemed to have a lot of dramatic moments in her testimony.
I think, in particular, given their relationship, there's this added drama on top of what you have in a fraud case. So it's very good for the government that when there is drama when you have a complicated case, jurors can go to sleep if you're talking about code and cryptocurrency
and things like that. But when you have a witness who was in a romantic relationship when there was this power dynamic, that's something that certainly captures the jury's attention and I think creates this extra element there that her boss and her former boyfriend is also asking her to commit fraud or committing fraud with her. It's an interesting power dynamic that I think will stand out to a jury.
Yeah. I think also what'll stand out is that she talked about things like his concerns with his public image and that he thought his long, unkempt hair was valuable in contributing to the narrative. And he swapped a luxury car for a Toyota Corolla because it was better for his public image, So that also paints a picture of him.
Right.
There are many things that are they're not directly relevant to fraud charges, and maybe in certain courts these may not be admissible. There could be sustained objections. There were things like his hair, But these are things that give the jurors an image of the defendant that's not necessarily favorable. So you can certainly see why the government would want to elicit them, and why why the defense might I'm not sure if they objected here, but why they might want to object to topics like that.
Just like FTX co founder Gary Wang, who testified before her, Ellison was adamant that bankman Freed was the ultimate decision maker. Right at the start of her testimony, she said, he directed me to commit these crimes at every turn. She told jurors it was Bankman Freed calling the shots. Is that constant repetition important even though it makes it seem like she's not taking responsibility, just pointing at him.
So I think the prosecutors certainly see that as important, and that's something you want the jury to take home. And that sort of goes back to this concept in the government that you often don't want somebody to cooperate down. You always want the cooperator to be a level lower, for instance, than the person going to trial. So this
is something that the government hammer's home. In an array of cases, whether it's a drug case or a fraud case, they usually have a cooperator who will be talking about the person above them and the criminal conspiracy. So it is certainly important from the government's perspective now as to
whether whether it undercuts that she's accepted responsibility. I think the defense may argue that, although it is a little hard when she has in other instances on the stand acknowledged her role in the scheme, and she is of course pled guilty.
The defense landed some small victories so far. In its cross examination. She said there were periods of time when Bankman Freed wasn't paying attention to Alameda or interacting with the firm's executives, and she recalled telling prosecutors that it seemed like he might not know that Legacy FTX customers continued to wire money to Alameda bank accounts even after the exchange got its own account. So the defense is poking some holes in the idea that bankman Freed was
always calling the shots at Alameda. But how many holes would they need to negate her testimony?
I think they are going to need a lot. But one thing defense attorneys do is through the cross examination of many witnesses, you try to establish these small, good facts for your client, and then ultimately in summation at the very end, you pull them together and sometimes you can pull them together in a way in a closing statement that is unexpected. Those little victories, as you say, could be setting up their arguments and closing. So it's important that they're getting them.
And so as prosecutors almost always do. They brought out her cooperation agreement on direct but they said she faces a maximum prison sentence of one hundred and ten years. Is that disingenuous? I mean, no one's getting one hundred and ten years here, Even Sam bankman freed.
It is contained in the cooperation agreement that the statutory maximum sentence is in there, so that's why they tend to elicit it. I mean, in practice, most cooperating when is especially in fraud cases, do get time served. So here it's very likely she could get no time at all. But it is something that's ultimately up to a judge, so a prosecutor cannot promise it, and even if they're hoping to get that, it is hard to tell until sentencing comes whether that will actually happen.
The prosecutors, in opening statements contended that Sam magmun Fried orchestrated this fraud, engaged his top lieutenants in this conspiracy to lie about their crimes, that he was this criminal mastermind. And I'm wondering if that's a bridge too far saying that he was the only one responsible when the prosecution has given deals to three members of his inner circle.
There can certainly be arguments that that was a bridge too far. They do seem to be painting him, though. Is the leader of the scheme, the leader of this company, the one that had most of the power. I don't know the details of the evidence to the contrary but from a lot of what I've read in the press and the news, that also seems consistent, So it may not be entirely inappropriate for them to do that. If he is the one that is the most powerful person in the company, it is a little easier to make
that leap and make that argument. The defense. Of course, though, that gives them something to shoot at. When prosecutors do say things that maybe overstating the case, that's an easy thing to try to knock down insummation.
I ask everyone about whether they think that sam Begminfried will take the stand.
Great question. My view is that, based on his relationship with the press and the media, is that he will take the stand. He's the sort of person that wants to get his story out there. And I think at some point when the prosecution's case appears very strong and I haven't been in court, but from what I've read it seems strong, than taking the stand is a hail Mary. You may not have much to lose at that point.
It also gives the jurors a real alternative narrative, and often when a defendant takes the stand, it becomes a credibility question. Do the jurors believe him. If he's convinced people before with his companies that they should believe in his companies, maybe he believes he can convince the jurors here or that he's innocent. It will be very interesting to see what the defense is and whether he testifies. You know, that's something you don't often get a window
in before a criminal trial begins. You may not know if there are going to be defense witnesses who they will be. So I think it'll be really interesting to see what the defense case is and how they present their narrative.
And jurors always want to hear from the defendant, even though the judge will tell them that they don't have to testify.
I mean I was talking about dramatic moments with Caroline Ellison. That would be a hugely dramatic moment where all eyes will be on him and they will be on the edge of their seeds listening to his testimony. So that's an opportunity for the defense to really change the game.
Thanks for being on the show. At Jordan, that's Jordan Estes, a partner at Kramer Levin. And that's it for this edition of The Bloomberg Law Show. Remember you can always get the latest legal news on our Bloomberg Law Podcast. You can find them on Apple Podcasts, Spotify, and at www dot bloomberg dot com, slash podcast slash Law, and remember to tune into The Bloomberg Law Show every weeknight at ten pm Wall Street Time. I'm June Grosso and you're listening to Bloomberg