This is Bloomberg Law with June Brusso from Bloomberg Radio.
Prosecutors anticipate resting their criminal case against Sam Bankman Freed by next Thursday. They've built their case around the testimony of three members of Bankman Freed's inner circle who pleaded guilty and testified against him. Now the question is whether Bankman Freed will testify in his own defense, a question
that's fraught with perils for the defense. Joining me to discuss the case, as former federal prosecutor Michael Weinstein of Cole Shotts, it seems like the prosecution has built an almost insurmountable case against Sam Bankman Freed. How strong is this case compared to others you've seen.
It's an extremely strong case for three reasons. Number one, because they have first hand individuals who were in the room at the table discussing certain acts those being criminal, which present a problem for Sam Bacon Freed. They also have documents and slack messages and text messages which are problematic as well, which supports the discussions, the improper discussions
that were being held. And then number three, they have the industry itself is fraught with problems and the representations that were made to investors and things of that nature which he has said publicly prior to the criminal charges being brought. So that's a trifecta of problems for mister Freed, and I think his defense lawyers are having a difficult time chipping away at some of the things that are being said through testimony, notwithstanding the great efforts that they are trying to make.
Yeah, it seems as if even in pre trial motions, the defense seemed to lose almost every important pre trial motion. Judge Caplan also seems to be keeping them very tightly in check. One of the reporters in the courtroom told me that, for example, during the cross examination of Caroline Ellison, there were objections to form, objections, objections that were constantly sustained and they really couldn't make much headway.
Yeah, so that's correct. So not only is the defense up against testimony and documents, they're up against the judge and the structure of the proceeding, and the judge prior to trial, for example, you know, prohibited certain of the defense witnesses that they wanted to bring in. Example number one is the expert from Britain that they wanted to bring in to talk about the terms and conditions. So their hands were tied from the start of this case, and that's really playing out now.
In reality, those will be appealed. But how much are issues like that left to the discretion of the judge. I mean, we all know it's very difficult to get a conviction, assuming he's convicted overturned.
How much is that in the discretion of the judge.
A tremendous amount. The judge is the referee essentially, and he is able to call balls and strikes when necessary. And there is guidance through the appellate courts, through the Second Circuit for example, or through other rulings that the courts have made, or for instance, the Federal rules of
criminal procedure guide the court in making those decisions. But the judge has given great latitude in determining the type of evidence, the relevance of that evidence, how it comes in, whether it comes in, whether it can be challenged, things of that nature.
So you had these three witnesses who decided to cooperate with the state to our longtime friends of his ones a former girlfriend. Does that make their testimony more believable?
I think it does, And the reason is because they're not nuanced to the scene. It's not as though for six months, you know, they dropped in out of the sky and then in that six month period there were some criminal acts. They gave a little bit of the longer history that they had with Sam Bank and free the run up to him starting the business, their involvement, their role in the company, and then ultimately it's spiraling
out of control. And I think that gives them a little bit of credibility in the jury's eyes, because you know, they can give a little bit more context, and when they speak to things like what Sam Bankuenfried was saying at some of those meetings and some of the decisions he was making, they can give some context to that because they've known him so long. And so from my perspective, when you've got that longtime relationship that favors the government.
Insofar as the testimony coming out and really hurting the defendant, what do.
You think about I mean, it happens all the time, but the judge allowing in all the evidence about you know, Caroline Nelson testifying about his image and how he thought his hair helped his image and trading in luxury cars, for more inexpensive cars and then even profane messages he sent to reporters about regulators after the collapse. When is that kind of testimony too much?
And that's the judge's kind of role as a referee, to say, come on, that's a little too much. Is it relevant for the nice time for you to emphasize that he wanted to have a nice image. But look, the government's putting it in because they want to show what was his motivation in stealing the money and moving
the money and transferring the money. They want to show that his motivation was to look good and feel good and to give this impression to people throughout, you know, the United States or throughout the world that he was this successful mogul and that he really was an ourcle into the future, and you know, him being an oracle is the aura that he tried to create. But of course the reality is much different.
By all accounts, the defense didn't make much headway in the cross examination of those three Inner Circle witnesses. They did poke some holes in the testimony here and there. Does that really help in the.
End, I think the answers probably know. It's like chopping down an oak tree. You can make a couple of swings with an axe, but that's not going to take down the tree.
Is there any point at which the jury looks at these three, who are you saying, yeah, I took part in this, but he directed me to do it, and then all of a sudden, you know, maya copo, may a couple when things collapse and they get caught and decide to flip. Is there any point that the jury says, why are these three getting off?
And he's here?
Well, that certainly is how the defense wants to frame it. I think the difficulty with that is they're not getting off. They've played guilty to very significant and very material criminal charges which will carry with its significant penalties. And that's the response if and when the defense says to them during a cross examination and did say to them, well,
aren't you getting a sweetheart deal now? And that's always the push and pull when you have a cooperating witness on the witness stand, is you know, are they getting really a sweetheart deal? And that's where the jury to assess their credibility to a jury to assess are they testifying only to get a better deal? Here? It doesn't
look like they got a great deal here. They knew that they were kind of in their tracks and wanted to save some semblance of the remainder of their life by pleading guilty and then moving on with their life. But as a consequence of that, they had to testify against their former friend.
Do you think they'll actually serve jail time.
I think they have real exposure. Yes, there's a lot of money here. I think a lot of eyes are going to be looking at all of these pleas and I think they have some real problems here.
What do you think.
About the prosecution portraying him as a criminal mastermind?
Look, I mean, I think that's somewhat of the narrative that the government has to tell. They don't want to suggest that he was this ninety twenty year old kid just you know, playing with house money. I think they have to make him out to be a little bit more sinister, a little bit more systematic. I'm a little bit more conniving. That is just part of their narrative.
I mean, when I look at all of these guys, the three cooperating witnesses who played guilty in Sambank and Free, it just reminds me of when I sit in the room, and I look at my nieces and nephews who were in their twenties, and I look and I think to myself, could they be entrusted with ten? I need thirty billion dollars? And he answers no, you know, And it's remarkable to me that very sophisticated investors gave so much money repeatedly to a group of people that were in their mid twenties.
And we're, you know, waving a shiny object, which was cryptocurrency. So that's a larger takeaway from this situation. But I think all four of them have some real exposure here.
The big question is at every criminal trial is whether the defendant will take the stand in his own defense?
What do you think?
I think that's a great question, and someone in Vegas is probably betting on that. I think he may want to do something. His lawyers may want to do something very different, although I think they're setting it up with the recent argument that he's not getting his medication, he's
not able to assist in his own defense. So you can kind of see the ground work being laid where they may not call him because he's not getting his medication, and maybe they're setting up an appeal issue that he maybe would have testified, But look, the reason testify is because they believe that they can tell their story better and they can provide an explanation and they can justify
what they did and how they did it. Here, that's very, very difficult because he's going to have to counter three people who were in the room during these discussions, who all gave pretty consistent testimony. And for him to testify, of course, he's opening himself up and risking a pretty ferocious cross examination, and that is a real problem for him.
In all the prior statements he's made. But well, I want to say it's his only hope, his only chance to convince perhaps one or two jurors correct.
I mean, he may feel, and his defense lawyers may feel, what have I got to lose? We're deep in the hole here, and this may be the only ladder out is to have him testify and to humanize the situation and to talk about how he really tried to do all the right things and he wasn't misleading anyone, and he really tried to make, you know, good decisions, and he relied upon other people. He relied upon Miss Ellison,
relied upon mister Gary Wong, things of that nature. But again, as good as he thinks his testimony is going to come off, the prosecution is salivating, waiting in the wings to cross examine him and to use a multitude of statements he's made previously in their examination, and that's going to be quite fascinating.
If he does take the stand, one thing is sure, the courtroom will be packed. Thanks so much, Michael. That's former federal prosecutor Michael Weinstein of Coal Shots. Coming up next, the latest gag order on Donald Trump. My speech has been taken away from me.
I'm a candidate that's running for office, and I'm not allowed to stay.
This is a real road.
It's all coming out of the Developer of Justice.
Is all set up by bike and is thuff that he's surrounded with.
Of course, contrary to his statements, Donald Trump was in fact speaking to the media after federal Judge Tanya Chuckkin imposed a partial gag order on him. The order bars the former president from publicly criticizing witnesses, prosecutors, court staff, and their families involved in the Special Council's case against
him for attempts to overturn the twenty twenty election. The judge found that Trump's barrage of attacks on those in the case posed a significant and immediate risk of intimidating witnesses and jeopardizing the safety of the public servants involved. Joining me is former prosecutor Rebecca Roythee, a professor at New York Law School. Do Trump's attacks on the judiciary stand alone?
Have we ever seen anything quite like this before?
I mean, I think the unique thing about it. Normally, you know, somebody who's embroiled in a legal system, a criminal defendant, you know, it doesn't seem so unusual for that person to attack the system that has targeted him or her. But of course the scale and the prominence of this defendant makes a difference.
This goes back to when he was president and he was calling out judges and the chief Justice. There are no Trump judges or Obama judges.
Right.
It goes back, and it's a little bit relentless, like it's not just you know, one individual instance of a court case or a lawsuit or a ruling that came out against him, Because you know, I do think that you know, you can see politicians saying similar sorts of things in isolated instances, But I think it's the repeated nature of the comments and his styles of the way that they're made an exaggerated, extreme version of what somebody else might say in those instances.
Do you think because they're exaggerated and extreme, a lot of people, most people just you know, disregard them. Or do you think that his attacks do have an effect on the standing of the judiciary in the public's eye.
It's an empirical question and a hard one to know for sure, but I think it's effective. You know, I think people are already skeptical, as we Americans are bred to be about government institutions, and that's a healthy kind of suspicion or questioning. But you know, I think he feeds on this and turns it into something that's closer to kind of paranoia that is not necessarily based in fact,
and more concerning than anything else. And so, you know, I think he's been particularly effective in this particular regard lloiding both you know, vulnerabilities in the system and a culture of healthy questioning among citizens in America.
So let's discuss what judges have done and can do. Tell us about the competing interests the judges have to consider so.
Judges are in a difficult position because they're weighing the importance of the integrity of their proceedings and concern for manipulation of witnesses, potential jurors, and any other kind of undermining of the fairness of the process, along with a extremely important First Amendment right that anyone has to speak out, but particularly somebody who's running for president of the United States.
At the hearing, Judge chuck In apparently was a pretty heated discussion at times. She said, one could come away from these arguments with a mistake in understanding that the First Amendment is an absolute right.
That's false.
The First Amendment yields to the administration of justice. I know it's not an absolute right, but does it always yield to the administration of justice?
Well, whenever there is a compelling government interest for limiting speech, speech can be limited in certain ways. And so you know, it is true that there are often restrictions on people's speech when that speech interferes with the administration of justice
or the integrity of a judicial system. I think it would be wrong to say absolutely the administration of justice is a more important value than First Amendment rights, and I don't think that's exactly what she was trying to say, but it would be misinterpreted it and it would be
wrong if that's what she was suggesting. But what I think is accurate is that First Amendment law is designed to balance different interests than While the First Amendment weighs extremely strongly, and especially in the context of political speech, is almost absolute, it's not entirely and it does, in certain circumstances give way, and the law is clear about that. So she's right in saying that it's not an absolute right, but I think it is an exaggeration to say it always yields.
She decided to sort of come to some middle ground almost not quite right.
So what she decided to do was to draw a limited gag order that restricts the former president's speech in a certain regard, but allows him to engage in sort of broader, more rhetorical criticisms of the justice system, but limits his ability or restricts his ability to single out particular players and criticize those particular individuals actors you know, who are involved in this particular prosecution.
You know, he's slammed judges and the district attorneys who are prosecuting him. For example, he's unleashed a barrage of criticism and ridicule against the New York Attorney General who's coming after his business empire for years, and even in court has made motions saying this is a political prosecution, et cetera. So I'm wondering if that's on the same level as calling out the judges in.
Terms of the level of harm. I think it's even potentially greater in part because, especially on the federal level, what he's doing is exploiting a kind of weakness in our system, which is our federal system of prosecution is embedded under the executive So even if there is a special prosecutor, which there is in this case, that prosecutor report to the Attorney General, who in turn is a
cabinet member, and at that's chosen by the president. So while I believe President Biden when he says he's not involved in this prosecution, there are no legal limits or are no absolute barriers to his involvement. That you know, that is the way that our system works. So I think that on some level the public is aware of this, and therefore he gets more traction from arguing that prosecutors are at least in the federal system, you know, dominated
or driven by this political animus. And I think that judges, while it's true, you know, are also political appointees, it is a separate branch. And I think on some level people grasp that. And there's still a greater faith, even if it is waning, in judges and the judicial system than there is in these individual prosecutions. And so, you know, I do think it's it does more damage in part because of the weaknesses that are built into our system.
That even his attorney, John Lauro argued in the court that Trump was being punished by the Biden administration during an election cycle. He also argued that this was the sign of a nation veering into totalitarianism. And those arguments seem to me more like for the public than they are for the judge.
Yeah, I mean, I don't think any of that is going to be effective before the judge, but this is a refrain that they are going to repeat at every moment that they possibly can. And I think the separation of these legal cases from the political case that he's making has collapsed, and essentially he has combined both. And of course, in the courtroom. There will be restrictions, but insofar as they bleed over and that there's so much public attention that he's going to use every moment he
can to hammer this political message. But has been relatively successful for him.
And I've listened to some of his speeches on the campaign trail recently.
It may be difficult for him.
He's going to have to have a whole new shtick because he goes back again and again to talking about the judges and the prosecutors. You know, they're deranged, talking about the system being against him, and he circles back to that over and over. So he's going to have to do a complete redo of his rallies, I guess right.
You know, it also raises the question of how the judge is going to enforce her order, because you know, it's one thing to issue this s gag order and in a way it's throwing down a gauntlet. I mean, if he does decide to violate that order, what is she going to do? And so you know there are a lot of legal options open to her, but you
know those options again are problematic. I mean, we are in this unique situation not because the prosecution, you know, is being handled and manipulated by the Biden administration that has a grudge against its adversary, but rather because the former president has created the situation, and you know, he's created it and he you know, plans to run with it in this particular way, and that is largely what's
unique about it. What's unique about it is not just the alleged crimes that he may have committed, but of course the way that he approaches litigation and approaches these criminal cases. It's just so belligerent and you know, pushing
every last limit and forcing the judge to respond. And so, you know, I don't know what she would do under those circumstances, but I think it's equally possible that he ignores her order as it would be that he, you know, alters his speech entirely on the campaign trail.
Hours after the gag order, at a campaign event in Iowa, Trump said, quote, a judge doesn't like me too much. Her whole life is not liking me.
Then you know what a gag order is.
You can't speak badly about your opponent. Maybe he got the message, at least for the time being, because it doesn't seem like.
That really violates her order, does it.
Judge doesn't like A judge doesn't like.
Me much, right, So that's what I mean. He's going to push the limits of this order.
I don't know.
If I were interpreting it, I certainly wouldn't say he's crossed over line. But he's come very very close. And given the fact that he's not the most precise with language, No, when what point does he actually walk over to the other side? And I mean, at this point it's useful to him. I think now he can use the gag order because the gag order itself has political value for him,
because he doesn't have to attack the judge. If he's attacking the gag order, you know, if he's saying, well, here it is, you know, proof positive the Biden administration is now muzzling me and I can't speak. You know, this is just a different way of saying the exact same things. And you know that he's allowed to do and he'll do that so long as that's effective. You know, when it wears out, does he go back to his old stick? I just don't really know.
She mentioned some options if he violates the gag order, including admonishing Trump in court, which I believe has been done before by a couple of roses, imposing financial penalties, home detention, or evoking his pre trial release.
She also said that.
The prosecutors wouldn't have to make a motion for her to rule on this. You know, she could do it to a sponte And I wonder why she added that, I mean, does she really want to get into monitoring his speech.
I definitely don't think she does. I think what she is trying to do is to emphasize the power of a court order that once it's in place, that it's easier to enforce, you know, than these vague conditions of release that you know may or may not have been violated, and that requires some kind of adversary process that she's saying this could be very quick and very swift and severe, and that is just a way of trying to get
him not to do it. Whether that's successful, I don't know, because he also understands that her hands are tied in part by his role. That to put him on home arrest, or to put him in prison while he's running for president, I mean, that would be so extreme and there's no chance that she's going to do that. So she puts it on the table. Of course, legally she's allowed to
do it, but she's never going to do it. And to what extent is he here to, you know, push that to the point at which she either does it or she doesn't do it. And if she does it, it's this great political windfall for him because he can pretend that, you know, I mean, he can say this is a Biden administration locking me up so I won't win, you know, or he gets away with it, and so you know, in a way, it's sort of a genius move.
I mean, this is Trump's particular genius, his ability to do this and his willingness to do this.
Maybe she's hoping that at least it will stop him from commenting about witnesses if nothing else. I mean, that seems to be the greatest say.
I mean, right, I think that's right, and that she has to assert herself as controlling her courtroom in some manner. I mean, she can't just let this go by, and so, you know, I think this is as good a solution as any. There are certain restrictions. You know, she's not and my guess is going to these things when he
runs right up to the line. But you know, there's an outer limit and he can't go too far beyond it, and I think, you know, threatening particular witnesses, calling people out by name, the kind of thing he did in the New York civil case where he posted a picture of a core clerk, like, none of that is going to happen, I mean, and that's just making a mockery of the court room like that that you know, it's appropriate for her to say no there.
A day after the judge issued this order, Trump filed notice that he's going to appeal it. Do you think that this order will withstand and appeal?
My guess is it will. It was narrowly drawn, and it isn't you know, too far away from what judges do in situations like this. I think the you know, untested territory is just the stature and the nature of the defendant here. And he is running for president and so the core political speech is like at the very core of the very core, and so you know, it is possible that an appellate court could disagree with her.
But Mike, you know, there's a lot of deference here and she hasn't done anything wild or extremely unusual here. So my guess is that there won't be a reversal of the gag order.
You know.
My guess is it stands and he runs right up to the line and kind of pushes it, and she admonishes them. And this is kind of a game that goes all the way up until March.
It'll be interesting to see how the Appellate Court rules on this. Thanks so much, Rebecca. That's professor Rebecca Royfie of New York Law School coming up. What the ghost gun decision says about the Supreme Court.
This is bloomberg.
The Supreme Court seems to be telling the Fifth Circuit and a Texas federal judge no means no. In August, the Court voted to allow the Biden administrations regulations aimed at ghost guns to remain in effect, blocking a nationwide injunction by Texas Federal Judge Rit O'Connor. But after that order was issued, O'Connor again stepped in to block the regulations as applied to two manufacturers, and so on Monday, court once again reinstated the Biden Administration's regulation on ghost guns.
Joining me is Heidi Lee Feldman, a professor at Georgetown Law.
So let's go.
Back to the August decision five to four, where the Supreme Court blocked a nationwide injunction by Texas Federal Judge Ried O'Connor and allowed the government to keep enforcing the regulations on ghost guns.
Should that have.
Been the end of this until the case was fully litigated.
One would have thought so. And that's certainly ultimately the position the government took. It was very peculiar that after O'Connor ruled that, they then sought an injunction pending appeal. But that is an alteration in the procedural posture of the case. They didn't give any new reasons for seeking an injunction while the case was pending, and that was I think the really controversial thing. Nothing had changed in the facts or the law that would be relevant to
granting an injunction. So ordinarily, if a party did that, the judge would just deny it because they had just had an injunction overturned by the Supreme Court. And of course in this case, Judge O'Connor granted the injunction and didn't give any new reasons, and the court really just put the kebash on that and said no, no.
Also, the Fifth Circuit upheld his order.
Yeah.
Look, there's several very contested matters that were that are driving this litigation. Ghost gun manufacturers come in and say, we object to this ATF rule making which seems to require us to take all sorts of steps that people who make firearms have to take. We're arguing we're not firearms manufacturers, were parts suppliers. So that dynamic introduces guns
into the mix. Then we have a federal agency ATF, which has its own long complicated history, But we have a judiciary, certainly O'Connor and the Fifth Circuit, that's very keen to invalidate agency rulemaking. So I think the Fifth Circuit as a whole was very moved by that agenda, and so they do uphold O'Connor's order, and so ultimately, of course, the Supreme Court is rejecting the Fifth Circuits
position as well as O'Connor's position on the injunction. But the fact that the Supreme Court took that position isn't an indication of how they would ultimately rule on the merits, as much as I think it was a rejection of the challenge to the authority of their earlier ruling.
The Solicitor General seemed to emphasize that. In an unusually sharp filing, she told the justices that the Fifth Circuit and District Court Judge O'Connor have effectively countermanded this court's authoritative determinations about the status quo that should prevail during appellate proceedings in this case, and that.
The courts should not tolerate that affront.
So the Court's August order that we just talked about was a five to four decision where Chief Justice John Roberts and Justice Amy Cony Barrett joined.
The Court's three liberals.
No justice publicly dissented from this order that was handed down. Do you think that that suggests just that they're even getting annoyed with the Fifth Circuit and judges like Federal Judge O'Connor, or is it more that they're not opposed to the ghost gun regulations.
It's very hard to read tea leaves from these orders that are issued without opinions, and these are, you know, orders that relate to not the final merits on the case.
So I want to sound a note of caution. Having founded that note of caution, I think that there are judges that justice is on the court who may be very unsympathetic to the ATF rulemaking related to ghost guns, who realize that you simply cannot operate our system of litigating cases case by case and letting different courts reach different conclusions if they disagree and seeing what emerges up through the process, and that what rit O'Connor and the
Fifth Circuit wanted to do absolutely disrupts that process. It also wastes the Supreme Court's time. I mean, they do not want to have to keep issuing redundant interlocutory orders. That's just completely inefficient for them. So I think you could have justices who may be less sympathetic to the idea of letting the ATF rule making stand or more sympathetic to relatively unfettered sales of ghost guns, who nevertheless
see procedural chaos. That's a real threat from what the Fifth Circuit and Judge O'Connor did.
The Fifth Circuit last term lost I think seven out of a cases at the Supreme Court, and they have a lot of cases before the Court this year, and many of them are from judges in Texas like rit O'Connor that seem to have novels, shall we say novel legal reasoning and their decisions.
I mean, do you think we have to I think we have to use a stronger word. And the reason I think we have to use a stronger words than novel is look in sophisticated litigation in federal courts, advocates and courts are advancing the law. So there's often something novel in what they argue, in what courts hold. That's neither unexpected nor unusual. What is problematic is when you have a court and the federal judiciary in Texas, the district court level is like this and the Fifth Circuit
is like this, that is receptive to extreme arguments. They're not just creative novel. They are highly contentious. Now, if you have a court that is receptive to that, maybe some of those highly contentious and highly extreme arguments will ultimately be vindicated. But the more extreme the substance is of a position that's being taken, the more cautious general courts are in imposing big procedural consequences until those big arguments and positions go through the appellate pros of review.
So I think that the Fifth Circuit and the Texas district courts in general generate a lot of extreme positions. What we saw here was this intersection of extreme positions and willingness first to issue a very sweeping injunction on the basis of the extreme position nationwide injunction, and then to sort of double down on that after the Supreme
Court said it wasn't appropriate. The combination of extreme positions and aggressiveness about imposing consequences before the appellate process has played out thoroughly is a way of really throwing a spanner in the gears of adjudication, as the Federal Court understands it, and they're just not going to tolerate that.
More to come on this, that's for sure, Thanks so much. That's Professor Heidi Lee Felman of Georgetown Law