DOJ Ramping Up Probe Into Trump's Inner Circle

And a federal judge, David Carter, has basically given prosecutors a blueprint for how they can indict the former president and wrote, based on the evidence, the court finds it more likely than not that President Trump corruptly attempted to obstruct the joint session of Congress on January six. It's been a year and a half since thousands of Trump die hards overran the capital, and the House is January six.

Committee will hold hearings in primetime Thursday. But as far as the Justice Department's massive investigation into the most serious attack on American democracy in the modern era, seventeen months in and prosecutors have scored relatively few felony convictions and face growing pressure to go after higher level targets, including

the organizers and the former president himself. However, there are indications that the investigation is entering a more aggressive phase with respect to potential felonies committed by lawyers and organizers ahead of January six to stop the vote certification. Joining me is Chris Strom Bloomberg Legal Reporter. Give a sort of the scorecard for the investigation so far. You know how many prosecutions, how many convictions? Give a sort of the scorecard for the investigation so far. You know how

many prosecutions, how many convictions. The investigation has been criticized for moving at the glacial pace, and I think the statistics back up some of the criticism. So far, as the Department has brought charges against about eight hundred and fifty individuals, but by far most of the charges are for misdemeanors on the day of January six, such as, you know, illegally entering the Capitol building, as opposed to

any kind of major offenses like felony offenses. Those offenses are much more limited in terms of the charges that the Department is bringing. So far, the department has charged about two hundred fifty people with assaulting or resisting officers, which is one of the most serious charges that has been brought. In terms of resolutions to some of these cases, two hundred fifty people have pleaded guilty to misdemeanors and

sixty impleatly guilty to felony. In terms of sentencing, by far, most people are getting probation or finds that are very limited, and the most serious punishment so far has gone to one person who was sentenced to about five years in prison, So that's a significant prison sentence, but that's an exception.

It's believed that two thousand to two thousand people are ultimately going to be charged, but the Department has only brought charges against eight hundred and fifty people so far, and there's been no charges brought for the potentially criminal activities that were taking place before January six by former President Trump and his lawyers and his inner circle in terms of bringing charges related to creating false electors or trying to alter vote, or organizing and fundraising to prevent

the certification of the election. Attorney General Merrick Garland has said, I think several times that they're going to follow the evidence wherever it leads, but there seems to be no confidence that they will pursue the former president, if that's where the evidence leads, well, there's an interesting dichotomy that that's happening with the investigation now. The charges against people who had stormed the capital in January six are moving very,

very slow and have seemed to stagnate. But the investigative activity against the small group of people who were part of Trump's inner circle who were working to overturn the election, the investigative activity against them is actually increasing at a

greater pace. The Justice Department has started issuing grand jury subpoenas for information about organizing and fundraising activities in the days before January six, about efforts to create false electors in key states, and the Justice Department is now increasing the pace of the investigation in the amount of investigative activity into the actions of Trump and the key people that we're working with Trump to try to overturn the election.

Deputy Attorney General Lisa Monico said, it's the most complex and wide ranging investigation that I've seen in the Department's history.

Why so so current and former law enforcement officials, including police of Monico will say that the volume of material that has to be sorted through in order to bring criminal charges is immense they are looking through terabytes of data that includes surveillance footage, that includes mobile device location history, that includes social media activity, and they have to piece together these disparate pieces of information and connect them to

an individual who they positively identify in order to bring charges against one person. And so just bringing charges against one person for something they did on January six is a complex process that investigators have to go through because they need to bring charges that they believe they will be able to prove in court to a jury and that will withstand the criticism of judges and defense lawyers. So the amount of material in order to bring charges

is significant for the activity on January six. And then when you add in the additional investigative activity to look at what was happening in the days and weeks leading up to January six with efforts to prevent the certification of the election and overturn the results of the election, that is a whole another can of worms that the Department is undertaking now, which includes grand jury subpoenas to get information about activities and communications that Trump and Trump

allies and Trump lawyers were doing. And so the Department is only really beginning that second process of getting at information related to the activities that were taking place in the days and weeks before January six, and the Department has to collect that information and is facing resistance from some of the people who are being subpoenas, and so the Department has to go to court in order to try to win rulings to force people to turn over

that information. And then the department has to use that information and sort through it and determine what, if any, criminal charges can actually be brought again with the standard of proving to a jury that crimes were committed. So in totality, the amount of information and the activity of the investigation is what people describe as the most significant

undertaking that the Department has ever has ever done. While we're on this point, do we know why the department decided not to file charges against Mark Meadows and Dance Cavino. So the department has provided very limited information about its decision making process and specifically with regard to Meadows and Scavino.

The Department sent a letter to the Health Committee that did the criminal referrals, telling the committee that a prosecution is not is not justified because Meadows and Scoveno have provided some cooperation to the committee and to the Department, and also that they also have executive privileged claim and so the Department hasn't provided a full explanation, but those

are two reasons that that they've cited. How large a staff does d o J have handling the investigation in the cases, so the investigation is involved d o J staff across the country, including FBI field offices across the country. The number of people who are actually dedicated to the investigation full time is actually pretty small. It's about fifty

people on a full time basis. But the department rotates in people as needed for certain cases, and it assigns field offices and u S attorney offices to people in those offices across the country to do certain work as needed. And the Justice Department is looking for thirty four million dollars to hire a hundred thirty one more lawyers to work on the case. Now. Just this week, prosecutors added charges of seditious conspiracy to its case against members of

the Proud Boys. Do we know why they're amping up the charges? Does it tell you anything? Yeah? The new charges against against members of the Proud Boys are the most significant charges that the Department has brought to dates. Uh, the seditious conspiracy charge is the most significant charge that the Department has brought. It's been brought against a few members of the oath Keepers, and now it's been added to previous charges against some members of the Proud Boys.

And so what it signals is that, um, the government is getting more information about how many people were involved in actively plotting to stop the certification of the election and has what the Department believes is enough evidence to prove that in court. And so it just shows the progression of the investigation and that the Department will bring the most significant charges possible when it's warranted. You write that among the cases well along the courts, the Justice

Department's biggest test will come in August. Tell us about that. So in August, the members of the Proud Boys are going to go on trial. The Justice Department will will begin a trial against members of the Proud Boys on felony charges of obstructing Congress from from certifying the election. The new charges have been added to members of the

Proud Boys or seditious conspiracy. It's not clear that the Department is going to proceed with those charges in August, but the Department does plan to begin the first trial alleging a conspiracy against one of the you know, extremist organizations that were actively working to stop the certification. Has the Department lost any of the trials. The Department has

not lost any jury trials. The department lost one bench trial that that is the trial that was before a judge and it was on a misdemeanor that the judge acquitted the defendant and that's the only trial that the Department has lost. But there's only been six trials. Three oath keepers pleaded guilty to seditious conspiracy. Are they testifying in any of the trials or are they just helping the government behind the scenes, because there is a trial

of oath keepers on seditious conspiracy in September. Right now, we don't have any statement that they're going to testify during the trials. They have earned in cooperation agreements with the government, so right now is providing investigatives information behind the scenes. So from your reporting, the Justice Department is entering a more aggressive phase of the investigation. There's kind of two massive investigations that are that are going on.

One is very public in the sense that it's an investigation to what happened on January six in the attack on the Capitol, and that's where all of the charges

have focused so far. But the other part of the investigation is now picking up momentum, which is looking at the conspiracy by Trump and his allies to come up with ways to prevent the certification of the election in the days and weeks before January six, which includes creating false electors, and the Department has now shown that it is actively investigating that element of the whole effort to stop the election certification. Thanks for being on the show, Chris.

That's Chris Strom. Bloomberg legal reporter Elon Musk is threatening to walk away from his deal to buy Twitter if the social network doesn't do more to prove that its users are real people. In the securities filing on Monday, Musk said he thinks Twitter is in material breach of their merger agreement by not meeting his demands for more

information about spam and fake accounts. Complicating Musk's claims is the fact that he's been complaining about Twitter's bots publicly since before he made an offer to buy the company. Here's Mosk at a Ted Talk in April. Well, a top priority I have I would have is eliminating the spam and scam butts um and the butt armies that are on Twitter. Um. You know, I think I think these these fun influence that they're not there, they make the product much worse. Um if I you know, if

I had a dose coin for every cryptoscataway soul. The problem for a mosque is not only that the merger includes a one billion dollar breakup fee, but that he can't just walk away by paying that The agreement includes a specific performance provision that allows Twitter to force Musk to consummate the deal in court if necessary. My guest is Eric Tallely, a professor at Columbia Law School. Tell me about this security filing on Monday. So this was

a letter from Elon Musk's attorney to Twitter. It probably wasn't even something that had to be filed as an SEC filing. This was a type of a private correspondence that wouldn't necessarily be required to be sent out to all public investors. But of course a lot of times people do that if they want more optics for it as well. So I view this as a type of correspondence that was intended not just for Twitter, but also

for a broader audience. But the lawyers saying that Twitter breached their agreement by not meeting more demands for information about spam and fake accounts. So is this a legitimate claim that his lawyer is making. It could be in theory, depending on the nature of the context of the claim.

But this context already has some history behind it. So Elon Musk has now for weeks been talking about the spam and bought account issues that have caused him to reconsider whether he wants to go forward with this transaction. But the way that he had been phrasing this that didn't really line up with the contract that he signed. The contract that he signed didn't really directly allow him to walk away just because there were spam or bought accounts.

In fact, he was loudly proclaiming that was the reason that he should buy Twitter, so that he could get

rid of the spam and bought accounts. So the newest strategy that he's undertaken, the one that you know clearly has a little bit of involved in by his lawyer, is to focus on a different part of the contract, but one that still relates to his already professed concern about spam accounts, and that's a disclosure obligation that Twitter has to make if Musk makes information request to them, And in this case, Musk had requested more information about

how they verify the fraction of accounts at Twitter that our spam accounts, and presumably Twitter has been responding to those requests for information. This letter states that at least in Elon Musk's view, they have not responded adequately, and their responses have been so inadequate so as to breach the contract from their perspective. Now, that's an interesting move because it now re focuses the attention on the conduct of Twitter. But we don't know an awful lot about

exactly what the conduct of Twitter has been. It's pretty clear they really want to close this deal. It's pretty clear that they have the incentive to try to play ball. If there are various types of request for information, they're

made forward by the same token. Twitter is also under a contractual obligation itself to avoid making disclosures that would breach someone's privacy rights, or that would be illegal, or that would ultimately be inconsistent with their long term strategic positioning and so there may be some sort of situations where Twitter had said to Musk, yeah, we can give you some information, but we can't give you so much information that it would essentially undermine our ability to be

a competitor in this in this space, or would violate some regulation or law, or might undermine someone's privacy rights. And so my guess is at least viewed in a microscope that to where this conflict really is living. But in some sense this is all a bit of a side show that is fronting for some buyer's remorse that Elon Musk, no doubt has having signed up a deal for fifty four dollars for a company that's in a sector that has been somewhat in free fall for the

last couple of months. So the context in this situation is that everyone kind of knew that he was desperately looking around for a way to either get out of the deal or renegotiate the price. His first strategy wasn't a very good one. His second strategy has gotten lawyered up a little bit more. But in the hindsight of knowing that he was always trying to do this anyway, it makes anyone, including a judge potentially much more skeptical about whether this strategy is a bona fide strategy either.

So let's suppose that Twitter hasn't given all the information because of privacy concerns. Is that enough to be a material breach of Twitter's obligations under this agree No, generally not. So there are two reasons why it's not. First of all, explicitly, in the very same section of the contract that Mr Musk's lawyer has been citing, Twitter retains the right not to hand over information that would be confidential, that might cause it to breach someone's privacy rights, or that might

undermine its future competitive position. And so it's conceivable to me that that's the exact claim they're making. He's not satisfied with it, but it is in fact baked into their contract rights already. Moreover, if these are the types of infirmities that can be cured over time, it also wouldn't get him off the hook from the deal. It would essentially possibly delay the closing of the deal until they could resolve what would and would not be disclosed.

But it's not going to be a likely excuse to walk away from the deal. So just explain, we've talked about this before. Why it's more than just a one billion dollar termination fee. Twitter can can force him to go through the contract. Yeah, that as a general matter,

they can. Now, there are some situations in which he would be able to walk away from the contract and pay a one billion dollar termination fee, but those are relatively small compared to the situations under which, you know, Twitter could just force him to go through with his

side of the deal. Probably the biggest potential out he has, and the way that kind of toggle onto this idea that he could just walk away with a billion dollars is if his financing fails for the transaction, and you know, significant component of the purchase price is going to be through money that's borrowed from third party lenders who have

themselves made commitment letters to Twitter. So one of the possible reasons why Musk is trying to be so focal and vocal about this particular issue is, you know, possibly he is trying to encourage the very folks that he arranged to lend him money to start getting cold feet about lending him money, because if they get cold feet and say, sorry, the deal is off, We're not going

to lend anymore. That's the one or one of a few scenarios where he would plausibly be able to walk away and be exposed only up to this billion dollar termination feet. How long does Twitter have to wait before it says, okay, we're going to court to enforce this contract. Well,

in principle, they could file suit anytime they wanted. I think one of the things that you really want to try to balance from Twitter's perspective is to assemble a track record of acting in good faith, moving things along in the direction of trying to close this transaction without

yourself getting hotheaded or overly demanding. So, you know, the executives of Twitter and their legal team has no doubt sort of taken this lesson to heart that they're in a relatively strong position based on the contract to the extent that Musk is trying to goad them into a public spat or a spat that causes them to start acting petty and withholding things that could just put them

in breach of this contract. So I think, you know, their approach is probably the right one is to say, navigate this boat as steadily as we can, realizing that we're going to get hit by a tidal wave every once in a while that's got Elon Musk's fingerprints all

over it, but keep sailing towards the north Star. And if at some point he does something definitive as a move to walk away from the deal, that's when we will go ahead and file suit, having put together a fairly lengthy track record of all the things that we've done to try to consummate this deal, and all the things that Mr Musk has done and possibly people who are allied with him to try to kneecap the deal.

And both of these parties are under an obligation to try to expend their efforts at at least not to undermine the deal, if not to cause the deal to close. Does it fit in any way or that must waved a chance to look at Twitter's finances beyond what was publicly available? Does that count against him in any way? In principle it it hugely counts against him. You know, this is endemically a problem when a buyer of a

large company that these are always relatively complex entities. You know, it doesn't have always the same information that the seller might. So there are a couple different ways to deal with it. One is that you could just say, look, I want to be able to do what's called due diligence on this this purchase, and I want to investigate the value of this company. I want access to your detailed proprietary

books and records. As a very very common way to UH to engineer a deal involving, you know, situations where buyers are worried that they don't know all the information. He waived that, you know, and he was kind of public about waiving it. The other way to do it is potentially to have the sellers say, Okay, look, you don't have to investigate these, but we're going to provide various types of warranties and guarantees and representations that this

is going to be you know, completely fine. Um, you'll you'll discover that, you know, what you're buying is as advertised. And so I think that's kind of a corner that he's backed himself into having not done any of the due diligence. You know, He's been trying to formulate arguments that suggests that Twitter made a concrete warranty about how many spam accounts there are out there. The problem is that that's not even all that clear either, there's nothing

explicitly in the contract. There's an indirect reference to their prior securities filings, and that's essentially what he's seizing on. But those prior securities filings that talk about the spam accounts are themselves heavily lawyered and equivocal as to whether they are definitive estimates as opposed to, well, this is our best shot at telling you, you know, based on our own sampling, what the fraction looks like, but we might be wrong, and there are a bunch of different

ways to measure this. So to sum this all up, this letter is it an attempt by Musk to create a paper trail in his goal of blowing up the deal. I think that's probably the best interpretation of what's going on, at least to to create a colorable chance that he could blow up the deal so that he could walk back into a negotiating room with Twitter representatives and at

least negotiate for a lower price. It is not the strongest hands to be playing, however, it's a It's not an uncommon thing to do to sort of say, oh, can I get a better price? But usually something really unexpected has to happen. Or an egregious breach of a covenant or a prominense has to have occurred, but that doesn't seem to be the case, at least with what's publicly known this far, other than the allegations that Mr Musk or Mr Musk's lawyer have made. So he's not

playing a particularly strong hand. But people can sometimes win on a bluff of a strong hand, and so I think that's kind of the hope that Twitter will at least back down enough to allow him to give a slight haircut to the price of the deal that he signed up at fifty four and twenty cents. From Twitter's perspective, I think they also know that they're playing a relatively strong hand legally, and they're not going to be that

willing to give ground. They might give ground a little bit because litigation is costly, and it's time consuming and it's distracting. So it's possible they would give a little bit of ground just to grease the wheels. But Twitter's negotiating posture is a relatively strong one. Now, if the mailstrom, the public mailstrom, the letters like this kick up cause the lenders to get cold feet, obviously, that could change the equation a little bit, but it could also complicate it,

both for Musk and for the lenders. If he ends up sort of being seen as deliberately trying to sabotage his own deal. UH, that could put him on the hook for various types of liabilities, both inside and outside the terms of the contract. UH. And in addition, the lenders themselves, to the extent that they're seen is effectively, you know, conspiring with him to blow up the deal. UH. They may not be able to walk away scott free either.

So it's somewhat perilous terrain. If in fact, what the calculated approaches here is to try to sneakily or coyly recruit the lenders to bail out of a deal so as to give Mr Musk an easier set of walking papers himself. We'll see what Musk's next move is. Thanks Eric. That's Professor Eric Talley of Columbia Law School, and that's it for this edition of The Bloomberg Law Show. Remember you can always get the latest legal news honor 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 week night at ten pm Wall Street Time. I'm June Grossow, and you're listening to Bloomberg