This is Bloomberg Law with June Grossel from Bloomberg Radio. A Supreme Court fight over the president's power to remove independent agency members has been teed up. On Monday, in a seven to four decision, the US Court of Appeals for the DC's Circuit ruled that two independent agency members could return to their jobs while they continued to challenge
President Trump's efforts to fire them. Well, it didn't take long for Trump to go to the Supreme Court with yet another emergency request today, asking the justices to allow him to immediately fire the two National Labor Relations Board member Gwyn Wilcox and Kathy Harris, a member of the Merit Systems Protection Board. And late this afternoon, Chief Justice John Roberts signed in order pausing that ruling by the DC's Circuit Court of Appeals and asking the two officials
to respond to Trump's request by April fifteenth. My guest is an expert in this area of law, Professor Carry Coliniesi, who directs the University of Pennsylvania Law Schools Program on Regulation. Carry start by telling us about the history of this case, what's happened in the lower courts.
Well, the lower court decided that the president does not have the power to fire the officers here at issue, And we're talking about the two agency heads, Gwen Wilcox from the National Labor Relations Board and Kathy Harris, a member of the Merit Systems Protection Board, And the underlying statutes setting up these agencies provide that the heads of these agencies can only be removed for cause malfeasans misconduct,
something like that. Donald Trump comes along and says, sorry, I'm firing you for no reason, really not showing any cause. I just agree with maybe your approach to how you want to take these agencies. That's something then that they challenged. The lower court said the president doesn't have that power because they're protected from removal at will. They can only
be removed by the president for good cause. And there was a Supreme Court decision going back to nineteen thirty five that says Congress can set up independent agencies and protect them from presidents removing the heads of these agencies at will for no reason whatsoever. So that lower court decided to though put a hold on its order commanding that the two dismissed officials be reinstated to their positions.
The case went up to the Court of Appeals. The Panel of the Court of Appeals then was appealed further to the en banc sitting of the US Court of Appeals for the dist of Columbia Circuit. That's en bank means the full Court and the DC Circuit just issued a decision lifting the stay on the trial court's order to reinstate these officials to their position, and it did so on the similar grounds that the lower court held that.
There's this nineteen thirty five decision called Humphrey's Executor that says Congress can create these good cause protections, and these officials are protected from removal with these good protection clauses. So the President in firing them acted. Therefore, we're going to really force those officials back into office. They can go back and take over their positions.
The majority said that the Supreme Court has repeatedly told lower courts to follow precedents unless and until the Supreme Court changes it, referring to Humphrey's Executor. There but the dissent said, in doing so, the majority threatens to send this court headlong into a clash with the executive.
Well, yeah, there's two issues really at stake here. One is the question that we'd say is on the merits whether what the president did was legal and whether Congress had the constitutional power to make it illegal for a president to remove certain officials that will So that's the question on the merits, and the District of Columbia Circuit Court here said, listen, you know, this is like really a no brainer from the standpoint of this Humphreys Executor
decision still good law. It hasn't been overturned by the Supreme Court. We have to follow it. That's one issue. But the second issue is, then, Okay, once you say that the president impermissibly and illegally removed these two officials, what do you do about it as a court? And the dissent by Judge Row said, you know, there's never really been a remedy where a court has ordered officials to be reinstated in the way that the DC Circuit
now has said the District Court could do. The Humphreys Executor case from nineteen thirty five, for example, rose in a dispute over acclaim for back wages. You know, the court there said, okay, you know that was illegal to remove what was then a member of the Federal Trade Commission. Improperly for no reason, and the members actually a state was entitled to back wages. This is totally different. Judge
Row says, it's totally different. You know, here we have now a court ordering that officials who have been purportedly fired by the president maybe illegally under current law. But while this litigation pending, shouldn't we just as she says, you know, keep things on hold and not force the issue of reinstating these two officials and get this up
to the Supreme Court and let them decide. And if at that point in time, the Supreme Court decides that the president acted illegally, and the Supreme Court can decide whether it's an appropriate remedy to force these folks back into their positions. But right now it is certainly setting up a real confrontation between an order from a lower court judge and a president's order to fire these folks,
which one prevails. I think it's very clear and quite certain that the Supreme Court is going to step into this matter, and we will see what they do, probably on the remedies front, pretty soon. And then the question is, you know how long they'll take to decide the merits.
The Solicitor jen said, it intends to ask the Supreme Court to overturn Humphrey's Executor, and that's a decision that conservatives have been dying to get overturned for years. Do you think it's on the chopping block.
Yeah, I think it is certainly going to be, you know, an all probability modified, if not overturned entirely. The Supreme Court has really for the last fifteen years been cabining the scope of Humphrey's Executor through a number of decisions. In one case saying that you couldn't have a double layer of officials who have this good cause protection. That was a decision in twenty ten, and then in twenty twenty one, the Court said, well, you can't have a
single headed agency with a good cause protection. Fine, Phil for these commissions or these boards that have multi members, Humphrey's Executor still stands for those, but not for agencies headed with just one person. The question is, though, if Humphrey's Executor does go, what happens to a the Federal Reserve,
which I don't know. The Supreme Court and quite frankly, this administration right now is saying that monetary policy still can be kept independent We'll see how long the administration takes that position, But I think the Supreme Court is going to be certainly cognizant of what it could do to the economy if the Federal Reserve Board loses its independence, and the second issue as well, if Humphrey's executor goes, what will happen to the protections for the civil service
and its independence. Maybe there's some ways that the Court could, in overturning Humphrey's executor create a carve out for the Federal Reserve Probably easier to see how it could still keep the civil service protections intact. But we're just, you know, really getting close to restructuring some fundamental aspects of US government that we've had in place for nearly, you know, ninety years now.
I mean, what does it say that the Appeals Court voted seven to four the seven Democratic appointees blocking the firing and the four Republican appointees including three Trump appointees, giving a go ahead to the firing.
Listen, there's no question that these structural questions of administrative governance have taken on a high level of ideological salience, and it's certainly reflective in the judiciary as it is in the polity at large. So you know, we definitely have a good number of folks who have on the political right been trumpeting the unitary executive theory now for several decades, and this is sort of the logical extension and maybe even some might say the last vestiges of
a holdout on the unitary executive theory. And you know, I think it has some real consequences, and I think this is what those who are concerned with how far the Court might go if it does modify or ultimately overturn humph result together. I mean, as I said, there's real concerns about what it would do to the central
bank's independence. And there's an awful lot of really extensive economic research that shows that countries that have central bank independence do better economically, that that's an important thing to protect, to preserve and not have monetary policy interest rates being dictated by what might be in the short term political interests of somebody in the White House of either party.
And there's also concern about you know, political control, presidents having too much control over agencies like the Federal Communications Commission, and you know, having power to make decisions that might be reflective of their own political interests. There's the Federal
Elections Commission. Some of these agencies are ones that really wield a considerable amount of power, and power that can be directly relevant to somebody who's a politician and wants to stay in office and use these powers not for the good of the country, but for the good of staying in office. And that's what's I think at stake with this litigation here, and quite for there's other lawsuits also pending with other officials of independent agencies who President
Trump has fired at will. So this is going to the Supreme Court. It will be a blockbuster decision when it comes out, and we'll have to see what kind of waves it makes for the country and the future of its governance. You know, is it going to be just some heavy waves that we can navigate, or are we unleashing a tsunami for the country where a president can now wield control over some really important government agencies.
The president acting is if Humphrey's executor has already been overturned, I mean, they've taken the position that, as you indicated, they're going to argue in court, a Humphrey's executor should be overturned. But in the meantime, the President has also issued in executive order that says, listen, I'm going to subject all all you independent agencies to white House review of your regulations, white House review of your budgets, Department
of Justice review of your legal opinions and positions. We want to have a say over your strategic planning. This is all now happening, and it's unprecedented. Really, you know, there's never been an administration that has acted as if these independent agencies are no longer independent. And it's in progress. These agencies are submitting their work for review by the White House, and we're already in a world in which there's an incredible degree of White House involvement to a
level we've never seen before. The only question is just whether at the end of the day President's going to be right that if there is some conflict ever between the view of somebody at the head of one of these agencies in the White House, the White House can legally fire him. Right now, that's unclear, But like I said, the administration's taking that position, and in this case and others gone ahead and made those firings.
Anyway, it seems.
Like another big case at the Supreme Court. Thanks so much, Carrie. That's Professor Carrey colinies He of the University of Pennsylvania Law School. Coming up next, the Justice Department shuts down its cryptocurrency fraud unit. This is Bloomberg. The Justice Department is scaling back its cryptocurrency crime investigations to focus on cases related to terrorism, drug cartels, victimizing investors in other
specific categories. The Department will no longer target virtual currency exchanges, mixing and tumbling services, and offline wallets for unintentional violations of regulations, and will also close existing investigations that don't align with the new priorities. Joining me is an expert in securities law, John George Arris of Aarris Law. So tell us about this memo from Deputy Attorney General Todd Blanche about scaling back cryptocurrency enforcement.
Torod Blanche and the Department of Justice have taken a step away now from focusing on crypto enforcement, which was a primary target of the Biden administration, and they've essentially said, listen, the Department of Justice, we're not going to have this
crypto task force anymore. We're not looking at crypto is a key area we're refocusing to issues like immigration issues dealing with that and all human trafficking and that for now, our priority is not looking at crypto that's created or how its end users may take the product and then
use it for something illegal. They're still looking at fraud obviously on a more broad level, or if any of crypto ends up being used for something that fell into those categories, let's say, you know, illegal human trafficking or
something like that. But it's really been a big step by the government across the board, SEC included and the Department of Justice to now take a step back and say crypto is not something that we really even have a regulatory framework for at this time, so it feels like a hands off approach.
How could this affect, you know, the average consumer.
I think it's a buyer beware market now for crypto. I think it's safe to assume that any company that's based in crypto, or any individuals that are trying to start a new crypto based business or launch a coin, whatever it may be, fraud is still fraud, right lying about something to induce some investment and taking that money and misappropriating it or using it for themselves. I think that's still on the table and something that could potentially
be looked at. It'll be consumer driven, right, people complaining, people filing their own lawsuits through their attorneys going after it. It does feel, however, though, that they're not going to approach this in a way anymore where they're saying, hey, this is security's fraud. Crypto is a security. We know there was that huge case with Coinbase where the SEC dropped its enforcement action against them on the basis that Coinbase had challenged what they were engaged in was not
securities that crypto aren't. In fact, that the definition of a security. So without a regulatory framework of where to box this into what this digital asset actually is, fraud is fraud. Wire fraud is fraud, Mail fraud is fraud. However, that applies to everything right across the board, every single industry, and crypto is no longer getting that special treatment or that more intense look just because it's crypto. So it's
a more broad approach. You know, crypto by itself doesn't raise a red flag anymore, which I think has really freed up this industry. Not that long ago, you know, under the Biden administration, crypto was under a heavy, heavy attack across the board, whether it was the SEC or the Department of Justice, that has all really been unwound. And it's at the best of Donald Trump, who is approaching his administration from a very very friendly crypto point of view.
He's also issued his own crypto token just before taking office.
I think that was a big indicator of what regularly was going to head and that quite a ton of people by surprise, you know, myself included, but just following across the industry that it was sort of the silent launch of this I guess what's dubbed as a technically a mean coin or just this token, that it was just a Donald Trump token, as simple as that, and
he launched it. So I think that was an early indicator for Austin, for the public at large that crypto industry was going to be given much broader latitude than it had been because things were getting really narrow and if it was determined that the crypto industry was subject to the regulatory framework of the securities in exchange industry, that changes everything, right, that changes the barriers to entry, that changes every aspect of that business, and how they
would deal with launching a coin. What exceptions they would have to fit into, whether they would need to be registered with the Securities and Exchange Commission is very complex. So now I know people saw this term around a lot, but you know, are we in the wild West of crypto when it comes to regulation. I'd say yes.
And the person who's chosen to lead the SEC has substantial investments in crypto.
Yes, this is an administration now that's saying crypto is its own asset class. The SEC has put together a team that's looking at a proposed framework for what would go around this. Right What rules and regulations would they have to have in place? Right now? We have anti money laundering rules, we have fin send, we have very basic money service businesses that you can be registered with
spin SEN and be regulated by the government. But we don't have anything that's directly on points saying Okay, you're selling a crypto, you're issuing a new crypto to the public, you have to abide by these set of rules. So I think the way that they're going to approach it is I would say security is light. At some point.
If they do issue their regulations or proposed regulations around this, they're really in my opinion going to take a less stringent approach, which I don't know, may or may not be good for consumers and may fall into the hands of plaintiffs attorneys if there is fraud, to go after it through the courts on their own. And I think that was kind of a message from the SEC and the Department of Justice. They're not going to put a big enforcement focus on this anymore.
Do you think that the states will step in? Some states have said that they are going to step in.
I think it's tough.
They could be preempted by federal walls, but obviously there's no law on the books right now. If the state is against not against crypto, but is skeptical of it, or wants to put some rules around that, they could It's quite complex and there's arguments against it too. I mean, it's the free run of capital. It's allowing people to invest, will put their money into a new asset class that we've seen can generate extraordinary wealth. People could lose all
their money. Some states, I think, will be even more crypto friendly and try to attract that business to them. The ones that regular against it may be missing out on those opportunities. Although I can see in some instances then stepping in, but broadly right across the United States, we've seen things that were once highly regulated and illegal
are now following free. For example, the cannabis industry right we have a lot of legalizations and also with sports betting, there's been widespread legalization of it.
So states view this.
As a potential to generate new tax revenue to support other projects. Without federal regulations. On top of this, states could create an attractive environment for crypto businesses to set up there, as opposed to limiting that.
I mean, do you think that cases like that against Sam Bekman freed would still be discovered and go forward or they might be missed.
I think they'll likely be missed. I could say that, you know, personally, I work as a defense attorney in the white collar civil slash criminal space with a specific focus on securities, and I've had investigations where I've represented individuals related to crypto right in one way or another. And during the Biden administration there were a lot of inquiries, there were a lot of subpoenas, there was a lot of trying to figure out what was really going on
in this industry. I can tell you that at the tail end of that administration and into President's Trump administration, it has been completely silent on ongoing investigations. So from my perspective, I don't think it will be looked into. I don't think they're going to issue subpoenas. I don't think that they're going to be investigating it in the
same way. And you bring up something interesting with Sam Bangmin free, who knows maybe his sentence maybe commuted, you know, he maybe put in a position where he gets out of jail much sooner in light of these very recent changes. And we have a precedent for this was Ross Oldbrick, who was the founder of Silk Road, which was sort of the first I guess exchange for lack of a better word, where you could utilize crypto to buy anything you know on the Internet or on the dark web.
And he was sentenced to I think two lifetimes in prison, like two hundred years, and when Trump got into office, he pardoned him right away. He has been in jail for ten years and now Ross Olbrick is free. So I think in regards to your question, it may even go one step further.
Not only will these not.
Be investigated, these type of crypto based frauds. We may see people that have been prosecuted for them, like SBF, get a reduced sentence and be set free.
Before I let you go, do you think any of the cases you were handling that seemed to have stopped could be started up again.
In my work, I've had really tense investigations with the Department of Justice dealing with hundreds of millions of dollars related to various crypto frauds that were out there that completely stopped. I never got another follow up call again. The investigations are, from what I understand, done. They don't send the closing letter, but they're done, so I think
it really has changed. I was just speaking to a friend of mine who's in the crypto industry, and it's like a green light for any project they want to run. The only thing you have to watch out for is, you know, anti money laundering. Really just making sure that the money that you're getting is from real people and not, you know, from some illicit scam.
It all seems to be evolving very quickly. Thanks so much for joining me on the show. That's John. George Arris of Aris Law coming up next on the Bloomberg law show the Justice Department suspended two lawyers involved in the high profile case of a man deported to an El Salvador prison because of an administrative error, a case that illustrates the position government attorneys can now find themselves in while facing the dual demands of loyalty to the
Trump administration and candor to the courts. The Trump administration is facing a barrage of lawsuits challenging President Trump's executive orders, some of which have already led to judges grilling Justice Department lawyers who are defending their legal basis. The suspension of two Justice Department lawyers in a high profile deportation case illustrates the position government attorneys can find themselves in while facing the dual demands of loyalty to the Trump
administration and candor to the court. Joining me is Bloomberg Law reporter Justin Wise just In. The most high profile cases so far are those that involve the deportations of alleged venice a whale and gang members to prison in l Salvador, and one case involves a legal challenge by Abrego Garcia over his removal to a prison in l Salvador where the government has admitted that he was sent there. Tell us what happened at the April fourth hearing before a Maryland federal judge.
Sure so, yeah, Like you said, this is a case that involves instance where the US has admitted that they made a mistake in including a Maryland resident on a flight for alleged gang members to at L Salvador in prison. During that hearing, the judge was pressing the US as to why the US's position was that it could not
return this person to the US. In response to the lawyer for the Justice Department representing the government said basically that when the case landed on his desk, the first thing he did was ask his clients that very question that if they made that mistake, why was not able to return him, and that he'd yet to receive an answer that he found quote satisfactory, and that he also conceded that the US had mistakenly deported this man to El Salvador.
So how long did it take before he and his boss were suspended?
It was the day after, so the hearing was on April fourth. By April fifth, over the weekend, we had reported that he and his boss were put on leave. Some of the reasons. The exact specific reasons surrounding their suspension are not totally clear, but in response to inquiry about them, Attorney General Pambondi did release a statement saying that all attorneys that her direction must zealously advocate for the US and that those who failed to will quote face consequences.
There are concerns about the kind of precedent this sets to suspend a lawyer for telling the truth in court. That's what lawyers are supposed to.
Do, right, I mean, it kind of gets to this idea of zealous advocacy. When Attorney General Pambondi first arrived to the Justice Department, she issued this memo that kind of spelled out her expectations of the DOJ's lawyers in regards to zealous advocacy on behalf of the president and
on behalf of the administration. And while vigorous advocacy on behalf of a client is a core component of the legal system, legal ethics experts and other lawyers I've spoken to as well have brought up how the obligations are balanced by a lawyer's other duties, namely exercising professional judgment and of course being truthful to the court, and.
There have been several instances of exchanges between judges and DOJ lawyers where either the DOJ lawyer couldn't give the judge the information he or she was asking for, or there was a conflict. Can you tell us about some of those.
Right, Yes, this is by no means an isolated instance. You know, so the Justice Department defends the administration in litigation, and that means lawyers are being put in the position of answering for a number of the executive orders from the Trump administration that are subject to litigation, and judges have in a lot of different scenarios been skeptical and grilled lawyers over the certain orders, whether it's related to birthright citizenship or an order that was barring transgender persons
from the military, as well as litigation involving Eon Musk's actual role in the government efficiency effort. A judge had told a lawyer that, you know, the answers he was getting were quote, highly suspicious. So, you know, this episode kind of speaks to the position a lot of lawyers are in right now as they try to defend the legal basis of a lot of these actions in the face of really asking questions from judges who are liberating over the legality of these orders.
Have any of the attorneys been sanctioned by judges.
To date, No, not today. There has been no instance in which an attorney has been sanctioned that has yet to come into play here.
DC Federal Judge James Boseburg was and perhaps still is, considering a contempt order in the case where the Justice Department did not obey his orders to turn two planes around carrying hundreds of Venezuelan deportees. We'll see if he goes forward with that, despite the fact that a Supreme Court decision has said that those cases have to be
challenged in the jurisdictions where the detainees are located. These kind of moves by the Justice Department suspending lawyers who are being candid with judges could damage the Justice Department's reputation as well as hurt the credibility of government lawyers. Right.
I spoke with a lawyer who once trained DOJ attorneys on some of these like professional responsibility issues, and you know, the idea is that when a lawyer is speaking before the court, there's a lot of difference that judges are giving lawyers, especially those representing the government and the you know, the question becomes if the courts begin to have some skepticism about the answers more skepticism about the answers they're getting from the government, what's that mean for how they
deliberate and weigh in on the cases they're they're considering.
Can state bars do anything in this regard?
So what as I understand, just like how courts can get involved on this and perhaps issue sanctioned state bars can get involved and choose to respond. You know, I know that just through you know, the normal course of litigation and lawyering, really that complaints are filed to state bars as well for a certain government official or private lawyer. That those things are common practice in the legal industry.
So I do know that state bars certainly can as far as whether they will or anything that we can learn about them, those things are normally tightly guarded and don't come out publicly until maybe a decision is reached and when that decision actually involves the sanctioning of a lawyer. So the details around that a bit hazy.
Tell me about the person who launched a group to support DOJ employees.
That's right, So Stacey Young a long time DOJ lawyer and alum of the Civil and Civil Rights Divisions, she spent nearly two decades inside the Justice Department. She resigned in January and launched a group called Justice Connection, which, as she has said, is a designed to offer support for DOJ employees come amid a time of massive upheaval
inside the department. In addition, it's clear that she's using her role leading this group as a way to speak out about some of the things going on inside inside the administration and inside particularly the Justice Department, in the ways from which it's shifting under Trump.
It seems like these lawyers, to use an old expression, are stuck between a rock and a hard place as they go into court. Thanks so much, Justin. That's Bloomberg Law reporter Justin Wise, 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